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DGAP-News: Main investor: Deutsche Entertainment AG: "1st quarter 2006 exceeds annual growth" (Interview)
07.04.2006  (10:39)

Deutsche Entertainment AG / Quarterly Results / Other


Corporate interview announcement transmitted by DGAP - a company of EquityStory AG. Expressed opinions and statements do not reflect the opinion of the publisher.

In the company talk: Peter L.H. Schwenkow, CEO

DEAG Deutsche Entertainment AG

- "We will top the percentage sales growth planned for 2006 in the 1st quarter"

- "I am DEAG CEO with heart and soul, my contract has been extended until 2010."

- "For the construction project on the Jahrhunderthalle, we are working together with other project developers. The JHH balance sheet approach is also operationally justified"

- "Share in Ticketmaster Germany increases automatically"

DEAG Deutsche Entertainment AG is one of the leading live entertainment providers in Europe. The company, founded in 1978, operates in the business areas of Artists & Tours, Urban Entertainment and Theaters. DEAG plays on the Waldbühne in Berlin as well as the Jahrhunderthalle in Frankfurt or the Friedrichsbau in Stuttgart. In addition to tours of the big names such as Paul McCartney, the Eagles or Deep Purple, concerts by young artists have recently been increasingly held. With DEAG Classics, the company also has a strong foothold in the field of classical music. For example, DEAG has tied the world classic star Anna Netrebko to itself with long-term contracts. DEAG recently expanded the value chain and with DEAG music now offers complete support for the artist from CD and ringtone to management and online marketing. Through a joint venture with Ticketmaster, the world market leader in ticket sales, DEAG has been systematically expanding its sales strength since last year. mainvestor spoke to DEAG boss Peter Schwenkow.

mainvestor: Mr. Schwenkow, DEAG has presented its first figures for 2005. The corresponding report states that these were "in line with expectations". How do you come to this conclusion?

Schwenkow: With an EBIT of 2.1 million euros and sales of around 73 million euros before consolidations, we not only met our own expectations, but also the analysts from e.g. First Berlin see their forecast in the latest DEAG update fulfilled. However, the current price trend seems to show that parts of the market may have had different expectations. What was more decisive in this last year of consolidation, however, was that we implemented many important operational things, and we actually exceeded our expectations: The acquisition of Music Pool Europe, KBK and Creative Talent, the start of advance sales for the first classical events in other European countries Countries, the financing agreement with Octagon for major tours - the market expected all of this and we fulfilled it.

mainvestor: You are announcing a sales growth of more than 30% to 100 million euros with a disproportionately high increase in earnings.

Schwenkow: If we weren't sure that we would achieve this increase in sales as a minimum target, we wouldn't have leaned so far out of the window with this forecast. The increase in sales is actually even greater, as some business from 2005, such as Entertainment One's rock / pop business, will not be continued in this form. We're actually talking about 50% growth overall.

mainvestor: That all sounds very nice - so not a disappointment in the 1st quarter?

Schwenkow: It won't happen that way. We now have a very good overview of growth in the first quarter at the beginning of April. Already there we will exceed the announced growth. DEAG also has a seasonality in its business, but the growth rates will come and what is certainly very crucial: the planning with the current employees and partners is much more realistic than in the past. Some investments, such as Marcel Avram's touring business, have shown significant annual deviations from plans of up to double-digit million euros in the past few years, but thankfully we only work with Mr. Avram to a very limited extent. So a clear announcement: first quarter with significant growth, all others too. We are also assuming an improvement in earnings compared to the same quarter of the previous year.

mainvestor: You are now drawn into politics. You are running for the Berlin House of Representatives. Is that the start of leaving DEAG?

Schwenkow: On the contrary. But I actually want something to change in Berlin. I will also spend time on this, but only in my free time. Despite the ongoing candidacy, my weekly working hours for DEAG are still around 80 hours, and the political task will ensure that my free time will be limited. In addition, one may have to explain that the structure of the Berlin House of Representatives is a so-called "after-work parliament", i.e. a full-time job in industry or business is not only possible for the MPs, but expressly desired. Before making my decision, I carefully calculated and analyzed the time required, and for example my predecessor has been fully active in this parliamentary seat for years as the board member of a billion-dollar company. I'm pretty sure these two things go together. Perhaps they even belong together, and I expect mutual impulses in order to be able to do both activities even better.

mainvestor: You can hardly say anything else with decency, right?

Schwenkow: It's not about what I say, but about what I do. And as a clear signal that I am absolutely committed to DEAG, the supervisory board has just extended my contract as CEO until 2010. I will remain CEO of DEAG with all my strength and heart and would be stupid if I had implemented the strenuous restructuring of the last few years so as not to reap the fruits now. And now it's harvest time.

mainvestor: Nice. Let's stay with the agricultural imagery. How is your joint venture with Ticketmaster growing and thriving in ticketing?

Schwenkow: Not only is the number of connected advance booking offices growing, but also the number of organizers who have their tickets sold through Ticketmaster Germany. First quarter sales are on par with the fourth quarter of last year, and that's traditionally the strongest. The final contract with Ticketmaster for cooperation in Germany was signed yesterday. We have a stake that will increase automatically over the next few years without any financial investment. And we are working on solutions as to how the market position can be expanded further quickly. To do this, we use a tried and tested approach called "growing with partners".

I won't say any more about it at the moment. All in good time. But Ticketmaster Germany will continue to serve its customers.

mainvestor: Don't overdo it. On the one hand, ticketing and acquisitions are being switched back to growth; on the other hand, there are still legacy issues. For example, you still have loans from Stadsparkasse Düsseldorf that need to be extended.

Schwenkow: In our ad hoc announcement on the preliminary figures, we already announced that the available credit lines are secured in the long term and we firmly assume that we will be able to achieve our disproportionate growth this year on our own and without further financial inflows. A capital increase to finance this growth is not necessary.

mainvestor: What is the current status of the Jahrhunderthalle in Frankfurt?

Schwenkow: The hall itself is very well used and earns so much money that this alone would justify the assessment in our balance sheet. But the development of the land continues and in the meantime the much larger project developers in the neighborhood such as Deutsche Wohnen AG have joined forces with us. A public discussion is currently taking place about the future of the site, which we very much welcome. It does seem that Infraserv, which largely operates Industriepark Höchst, has to be a little more flexible so that the Seveso 2 directive - and I emphasize that this is a directive and not a legal requirement - can be implemented.

mainvestor: The securities business with Ringier is still pending and the due date is getting closer. If you are not careful, you will lose a large part of the "Good News" pearl of income. There is not much time left.

Schwenkow: We know that. And we watch out! The subject is high on our agenda. Good news is valuable and important to us. A solution must therefore be such that we can get rid of our financial obligations and at the same time have a very large share of good news. We are currently working on solutions that will enable us to reconcile both requirements. When this issue has been dealt with, we have cleared up the last question marks on our balance sheet. And then we find a DEAG that is better positioned than it has been for many, many years.

mainvestor: Sound words, hopefully not just announcements. The last time you answered our questions, you announced three great international artists that were about to be signed. There has been no further information since then. An air number?

Schwenkow: Maybe we made mistakes in the past. Not operationally, but in communication. The artists signed with us. We have big and lucrative names under contract with the Eagles, US5, 50 Cent, Deep Purple, the Bloodhound Gang and Scooter. You will probably see it that way too. But we didn't report the execution of the individual contracts to the financial community because we didn't want to be too pushy. Christine Stürmer, Chris de Burgh and Deep Purple will even give additional concerts. In the classical area, besides Anna Netrebko, Plácido Domingo, Rolando Villazón and Jessye Norman, Lang Lang and Nigel Kennedy have also been added. But you are right. In the future, we will deliver this information more precisely and sustainably optimize the link between the entertainment community and the financial community.

This document does not constitute an offer or an invitation to subscribe for or purchase any security, nor does this document or information contained therein form the basis for any contractual or other obligation of any kind. Before making any securities disposition, please contact your bank advisor or asset manager. The opinions and statements expressed in this interview do not reflect the opinion of mainvestor GmbH i.Gr. again. mainvestor maintains business relationships with the company

DGAP 04/07/2006