Kabel Deutschland releases audited results for the fiscal year ended March 31, 2007 and RGU numbers for the quarter ended June 30, 2007
Highlights for Kabel Deutschland’s consolidated audited financials for its fiscal year 2006/2007 ended March 31, 2007 under IFRS:
- Total Revenue Generating Units (‘RGU’)(1) increase by 1.6% to 10,343 thousand on March 31, 2007 compared with 10,177 thousand on March 31, 2006. Total blended ARPU(2) for all KDG products increases by 4.7% to €7.64 during the reporting period from €7.30 in the previous fiscal year ended March 31, 2006.
- Total revenues grow by 8.0% to €1,093.2 million in the fiscal year ended March 31, 2007 compared to €1,012.1 in the prior fiscal year.
- Subscription based revenues grow by more than 9% and reach €949.5 million in the fiscal year ended March 31, 2007 representing 86.9% of revenues during the reporting period – a historic high for the Company (86.1% during the fiscal year 2005/2006).
- Subscription based revenues from digital pay TV and Internet and Phone amount to 11.7% of the Company’s overall subscription based revenues (4.2% for the fiscal year 2005/2006).
- EBITDA as adjusted(3) amounts to €382.5 million for the fiscal year ended March 31, 2007 compared to €401.3 million for the same period in the prior year. This development was according to plan and public guidance and is the result of the Company’s continued investments and marketing activities for its new product areas. As a consequence, EBITDA margin(4) decreases to 35.0% (39.7% in the fiscal year 2005/2006).
- The Company posts a net loss for the fiscal year ended March 31, 2007 of €99.2 million (€68.5 million in the previous year).
Kabel Deutschland (KDG), Germany’s largest cable operator, announced today its audited financial results for the fiscal year ended March 31, 2007. These results underline the successful development of the Company’s Internet and Phone products. At fiscal year end on March 31, 2007, KDG passed 8.6 million homes with two way capable upgraded network (4.0 million upgraded homes on March 31, 2006). This September, the Company will add another 2 million upgraded homes passed for triple play services in the region of Lower Saxony. KDG expects to have up to 90% of its homes passed upgraded for triple play services by the end of the next fiscal year, i.e. by March 31, 2009.
The second pillar of KDG’s strategy is the push in digital penetration in the Company’s TV households. During the reported fiscal year ended March 31, 2007 KDG increased the number of its digital TV programs to over 200 including up to 100 free-to-air TV channels. The attractiveness of its digital TV offering combined with the free set top box offer for KDG’s direct retail customers has increased the number of digital free-to-air RGUs to over 500,000 on March 31, 2007. Combined with the digital pay TV RGUs and the digital Premiere subscribers in KDG’s footprint the digital penetration amounted to approximately 20% at fiscal year end 2006 / 2007.
RGUs as of March 31, 2007 and ARPUs for the fiscal year ended March 31, 2007
The number of total RGUs increased by 1.6% to 10,343 thousand on March 31, 2007 compared with 10,177 thousand on March 31, 2006. Total blended ARPU for all KDG products increased by 4.7% to €7.64 during the reporting period from €7.30 in the previous fiscal year ended March 31, 2006.
Kabel Anschluss RGUs served were 9,320.4 thousand at March 31, 2007 (9,597.3 thousand on March 31, 2006). Included in the 9,320.4 Kabel Anschluss RGUs were approximately 513.9 thousand digital cable access RGUs (approximately 30 thousand on March 31, 2006). The digital cable access product was commercially launched on April 1, 2006 and replaced the analog access product being offered to direct single family homes.
Included in the Kabel Anschluss RGUs were also approximately 44.1 thousand TKS cable TV subscribers on March 31, 2007. One year before, on fiscal year end 2005/2006, the number of TKS cable TV subscribers included in the Kabel Anschluss RGUs amounted to 38.6 thousand.
Monthly ARPU(5) for the Kabel Anschluss product amounted to €7.31 in the fiscal year ended March 31, 2007 compared to €7.26 in the previous year’s same period.
Kabel Digital pay TV RGUs increased by 44.5% to 691.6 thousand at March 31, 2007 from 478.5 thousand RGUs on the same date in the previous year. ARPU for the fiscal year ended March 31, 2007 grew by 10.6% to €7.71 compared to €6.97 during the same period in the previous year primarily due to a rate increase which was implemented on June 1, 2006 on the Company’s most popular pay TV package Kabel Digital HOME.
Kabel Internet and Phone RGUs more than tripled to 331.0 thousand (thereof 151.9 thousand Phone RGUs) at March 31, 2007 from 101.2 thousand on March 31, 2006 (thereof 40.5 thousand Phone RGUs). Total Internet & Phone subscribers reached approximately 190.3 thousand. From the existing Internet and Phone subscribers almost 75% take the bundle product. Monthly ARPU per RGU during the fiscal year 2006/2007 for Kabel Internet amounted to €16.30 and €28.02 for Kabel Phone.
KDG’s financial results for the fiscal year 2006/2007 ended March 31, 2007
Cash flow and liquidity
Cash flow from operations for the fiscal year ended March 31, 2007 amounted to €360.0 million compared to €399.3 million in the previous fiscal year.
Capital expenditures of €268.8 million recorded in the fiscal year 2006/2007 (€144.4 million in the previous year) included €205.2 million for the expansion and upgrade of the cable television network and €63.6 million in IT systems and other intangible assets. KDG’s Internet and Phone related capital expenditures amounted to €125.7 million in the reporting period ended March 31, 2007 compared to €50.8 million in the previous year. The Company also used €6.4 million (€0.7 million included in fixed assets and €5.7 million in intangible assets) to acquire a number of small level 4 operators.
During the fiscal year ended March 31, 2007 the Company refinanced its existing bank facilities and repaid approximately €75.8 million of its existing debt. The overall negative cash flow from financing activities including interest paid amounted to €254.9 million.
Balance sheet
Total interest bearing indebtedness as of March 31, 2007 amounted to €1,905.6 million nominal value. At March 31, 2007 the Company had no outstandings under its existing €200.0 million Revolver facility. Cash on March 31, 2007 amounted to €54.1 million.
Net debt on March 31, 2007 was €1,851.5 million resulting in a total net debt to adjusted EBITDA (€382.5 million) ratio of approximately 4.8 times.
Significant events between January 1, 2007 and reporting date
- Starting February 1, 2007 KDG upgraded all Internet products from 2.2 Mbit/s to 4.2 Mbit/s free of charge.
- · Effective March 1, 2007 the Company increased the price for its cable access product for approximately one quarter of its subscriber base from €14.13 / month to €16.90. This pricing measure was combined with the offer to convert to KDG’s digital access product and includes a free set top box, Kabel Digital HOME free for one month promotional period and a one time credit of €9.0 to be used for pay per view movies.
- As of March 31, 2007 “THE BIOGRAPHY CHANNEL” was added to KDG’s best selling pay TV product Kabel Digital HOME at no additional cost to its subscribers.
- Starting April 1, 2007 the Company’s digital free to air TV offering was increased from 76 channels to over 100 digital TV channels. The newly added 26 channels include foreign TV programs in 20 different languages.
- On May 9, 2007 the Advisory Board of KDG appointed Dr. Adrian v. Hammerstein as Chief Executive Officer effective May 21, 2007
- On May 18, 2007 KDG announced the acquisition of 3.8 million shares equaling approximately 18.6% of the capital of the stock listed German cable operator PrimaCom AG.
- Starting June 4, 2007 the Company implemented its new highly competitive prices for its Internet and Phone products with free telephony into the German fixed line network for one year and considerable increases in download speeds.
- On July 9, 2007 announced a “lifelong” free telephony product for subscribers in many cities in the Northern part of Germany, including the city of Hamburg and its suburbs.
- On July 19, 2007 the Company closed an agreement with its credit banks to increase the existing revolving credit facility from previously €200.0 million to €325.0 million effective immediately.
RGUs as of June 30, 2007
The number of total RGUs increased by 0.5% to 10,362.0 thousand on June 30, 2007 compared with 10,310.8 thousand on June 30, 2006.
Kabel Anschluss RGUs served were 9,257.8 thousand at June 30, 2007 (9,600.1 thousand on June 30, 2006). Included in the 9,257.8 thousand Kabel Anschluss RGUs were approximately 589.8 thousand digital access RGUs (approximately 74.6 thousand at June 30, 2006). Also included were approximately 44.1 thousand TKS cable TV subscribers on June 30, 2007. One year before, on June 30, 2006, the number of TKS cable TV subscribers included in the 9.600.1 cable access RGUs amounted to 39.2 thousand.
Kabel Digital pay TV RGUs increased by 30.8% to 717.7 thousand at June 30, 2007 from 548.7 thousand RGUs on the same date in the previous year.
Kabel Internet and Phone RGUs more than doubled from 162.1 thousand (thereof 70.4 thousand Phone RGUs) at June 30, 2006 to 386.4 thousand (thereof 178.0 thousand Phone RGUs) at June 30, 2007.
Financial calendar
The financials for the first quarter (as of June 30, 2007) of KDG’s fiscal year 2007/2008 ending March 31, 2008 under IFRS will be released at the end of August 2007. At this time, the Company does not intend to hold a conference call with the financial community.
The complete audited financial statements as of March 31, 2007 will be available on our website as of tomorrow.
About Kabel Deutschland
Kabel Deutschland (KDG) operates cable networks in 13 German states and supplies its services to approximately 9 million connected TV households in Germany. Being Germany's largest cable network operator und biggest triple play provider, Kabel Deutschland develops and markets new triple play offers for digital TV, broadband Internet and telephone connection via cable. KDG offers an open digital TV platform for all program providers. The company operates the networks, markets cable connections and provides comprehensive services for all matters of cable connectivity. In fiscal year 2007/2008 (12 months ended March 31, 2008), Kabel Deutschland reported a total revenue of approx. EUR 1.2 billion, EBITDA amounted to EUR 457.8 million. The company has around 2,750 employees
Contact:
Investor Relations and Finance
Betastr. 6-8
85774 Unterfoehring
Germany
Insa Calsow
Director Investor Relations and Finance
Elmar Baur
Investor Relations Manager
Astrid Adamietz
Investor Relations and Finance Assistant
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Footnotes
(1) RGU (Revenue Generating Unit) is related to the sources of revenue, which may not always be the same as subscriber numbers. For example, one person may subscribe to two differ-ent services, thereby accounting for only one subscriber but for two RGUs.
(2) Total blended ARPU is calculated by dividing analog cable television, Kabel Digital, High-speed Internet and Phone subscription revenues for the relevant period by the average number of RGUs for that period and the number of months in the period.
(3) EBITDA as adjusted is defined as earnings before interest, taxes, depreciation, amortiza-tion and before MEP related expenses. EBITDA as adjusted is not a recognized accounting term and should not be used as a measure of liquidity. However, EBITDA as adjusted is a common term used to compare the operating activities of cable television companies.
(4)EBITDA margin is defined as EBITDA as defined above for the period divided by total reve-nues for the period.
(5) ARPU (Average revenue per unit) is calculated by dividing the subscription revenue (exclud-ing installation fees) for a period by the average number of RGU’s for that period and the number of months in that period.
This Investor Relations Release contains forward looking statements within the meaning of the U.S. federal securities laws regarding, among other things, the completion of the Exchange Offer. You can identify these statements by the fact that they use words such as “anticipate”, “estimate”, “project”, “intend”, “plan”, “believe” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or events. Factors that could affect whether the Exchange Offer is completed include, among other things, the risk that the conditions to the Exchange Offer are not satisfied. A further list and description of risks, uncertainties and other matters can be found in the prospectus for the Exchange Offer. We assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Investors and security holders are urged to read our quarterly report available on our website because it will contain important information. We disclaim any obligation to publicly update or revise any forward-looking information.