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The ProSiebenSat.1 Group and ProSiebenSat.1 Media AG
Except where specifically stated otherwise, the following notes and the explanations they contain pertain to both the consolidated financial statements and the financial statements for ProSiebenSat.1 Media AG. |
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Basis and methodology
The financial statements for ProSiebenSat.1 Media AG and the ProSiebenSat.1 Group have been prepared in compliance with the requirements of the German Commercial Code and the Stock Corporation Act. As standard procedure, the annual financial statements for all companies included in the ProSiebenSat.1 consolidated financial statements were prepared under uniform reporting and valuation principles. The fiscal year for the individual financial statements of these consolidated companies ended on December 31, 2002.
For greater clarity, certain items have been combined in the balance sheet and statement of income, while an item-by-item explanation is provided in the notes.
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Conversion to the euro
The consolidated financial statements and the financial statements of ProSiebenSat.1 Media AG are prepared and reported in euros. The companies of the former ProSieben Group made the transition to the euro as of January 1, 2000, and the financial statements of the individual companies of the former Sat.1 Group did so as of January 1, 2002, using the euro-to-DM conversion rate of 1:1.95583 established by the Council of the European Union under Article 109 I (4) sentence 1 of the EC Treaty.
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Scope of consolidation
In addition to ProSiebenSat.1 Media AG, the consolidated financial statements include 34 domestic affiliated companies (last year: 33) and three foreign affiliated companies (last year: four) in which ProSiebenSat.1 Media AG directly or indirectly holds a majority of voting rights, or which are under its unified control. Two subsidiaries (last year: four) were not included in the consolidated statements, either because they are not of material significance in providing a fair picture of the ProSiebenSat.1 Group's net assets, financial position and results from operations, or because they are being held only for resale.
During the year, CM Community Media GmbH & Co. KG and CM Community Media Verwaltungs GmbH were removed from the scope of consolidation because they were sold. The resulting net impact on earnings was a gain of EUR 6.279 million. This change in the scope of consolidation had no material influence overall on the Group's net assets, financial position and results from operations.
Six (last year: nine) associated companies are consolidated according to the equity method. The remainder of Kirch Intermedia GmbH was acquired as of September 1, 2002, so that this company is no longer reported at equity but fully consolidated into the consolidated financial statements of ProSiebenSat.1 Media AG. The subsidiaries of Kirch Intermedia GmbH - namely Kirch Intermedia Betriebs GmbH and SevenOne Interactive GmbH - were likewise fully consolidated for the first time.
Affiliated companies are listed under Major subsidiaries and affiliated companies, along with the specific percentage of their capital held by the ProSiebenSat.1 Group. Furthermore, a list of shareholdings of the ProSiebenSat.1 Group and of ProSiebenSat.1 Media AG, stating the details required by law, has been filed with the Companies Registration Office of Munich district court, under registration number HRB 124169.
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Consolidation policies
Capital is consolidated by the book value method, in which acquisition costs for a subsidiary are offset against a prorated share of that subsidiary's equity as of the date of its acquisition or first consolidation. Any difference between current market value and book value is allocated to the subsidiary's assets or liabilities. If the difference represents goodwill, this goodwill is capitalized as an intangible asset and amortized at 25 percent per year, or over the investment's useful life expectancy. The legal option taken here under § 301(1) of the German Commercial Code deviates from German Accounting Standard DRS 4 of the German Standardization
Committee (DRSC).
Where stakes held in Group companies have already been amortized in these companies' individual financial statements, such amounts are recaptured in the consolidated financial statements.
Interests held in companies over whose business policies the Group has a controlling influence (associated companies) are valued at equity by the book method in the consolidated financial statements, unless they are not of material significance for the Group. Equity interests held in associated companies are reported at a figure equivalent to the proportion of equity held in each such company. Goodwill is amortized according to the same principles as are used for capital consolidation.
Receivables, accruals, liabilities, expenses and income between consolidated companies, as well as interim results incorporated into current assets and fixed assets, have been eliminated wherever such amounts were of material significance. Where individual companies' financial statements applied adjustments or amortization on intra-Group receivables, such changes have been reversed and applied to consolidated net profit for the year.
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Valuation and auditing of annual financial statements included in scope of consolidation
The financial statements of consolidated affiliated companies were prepared uniformly according to the reporting and valuation principles adopted by ProSiebenSat.1 Media AG. Where local law requires foreign companies to apply other reporting or valuation principles, appropriate adjustments have been made in the consolidated financial statements. Conservative principles have been applied in the valuation of asset and liability items.
Without exception, all domestic financial statements included in the consolidated financial statements have been audited by the Group's independent auditor, KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Essen. The annual financial statements of SevenOne Media (Schweiz) AG, of Küsnacht, Switzerland, were audited by KPMG Fides Peat, Zurich, Switzerland; those of SevenOne Media Austria GmbH, of Vienna, Austria, were audited by KPMG Alpen-Treuhand Gesellschaft mbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Vienna, Austria; and those of ArtMerchandising & Media, Inc., of New York, USA, were audited by KPMG Deutsche Treuhand-Gesellschaft German Practice, New York, USA.
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Foreign currency conversion
The annual financial statements for SevenOne Media (Schweiz) AG, of Küsnacht, Switzerland and ArtMerchandising & Media, Inc., of New York, USA, are in foreign currency and were converted using a modified current date method. By this method, equity is converted at historical rates of exchange, while other asset and liability items are converted at the year-end exchange rate. Any resulting currency translation differences are added to or charged against other revenue reserves, with no net effect on profit or loss.
SevenOne Media Austria GmbH, of Vienna, Austria, made the change to the euro as of January 1, 2000.
In the statement of income, expenses and income are converted at the average rate for the year, while appropriated net income is converted at the year-end exchange rate. Any difference is reflected in other operating expenses or other operating income.
Receivables in foreign currency are converted at the selling rate on the booking date or the year-end rate, if the latter is lower. Liabilities in foreign currency are converted at the buying rate on the booking date or the selling rate at year's end, if the latter is higher.
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