Pantaflix : Annual Report 2022

We can look back on a challenging 2022 fiscal year for the PANTAFLIX Group. 2022 was supposed to be a year in which we branched out - we were hoping to use the growth initiatives already launched to achieve success in the areas of audio and documentary.

Instead, the end of coronavirus protective measures was followed by the war in Ukraine with its economic, political and social impact which also hit the project-driven, cyclical media and entertainment industry.

Due to changes in the market situation, we therefore decided to focus all the PANTAFLIX Group's attention on its profitable business units as we will explain in more detail below. Neverthe- less, even in these turbulent, unpredictable times, we succeeded in completing film and entertainment projects and celebrating creative success. In film and series production, in particular, the PANTAFLIX Group was able to record further success and steadily expand its production pipeline.

THE 2022 FINANCIAL YEAR MARKED BY THE MACROECONOMIC CLIMATE

With sales revenues of EUR 19.7 million, the PANTAFLIX Group was just able to surpass its adjusted forecast of EUR 18 million to EUR 19 million (originally: at least EUR 22 million). While lower project volumes and project postponements until 2023, in particular, adversely affected business growth in 2022, a significant proportion of sales in the previous year was accounted for by the film ARMY OF THIEVES produced exclusively for Netflix. Total operating revenue plus other operating income, standing at EUR 23.2 million, was accordingly below the level of the prior year (2021: EUR 32.6 million), but clearly exceeded the adjusted forecast of at least EUR 21 million (originally: at least EUR 28 million). On the income side, lower sales, project postponements and accounting losses from the disposal of film and series productions left their mark on earnings before interest and taxes (EBIT) of EUR -7.9 million (2021: EUR -1.9 million). Thanks to an additional negative effect resulting from a non-cash deferral in connection with advance payments recei- ved, EBIT came in under the adjusted forecast of between EUR -7.0 million and EUR -6.5 million (originally: EUR -4.5 million to EUR -2.5 million).

SUCCESS WITH FILMS AND SERIES AS WELL AS ADVERTISING AND PODCASTS

Although we were unable to escape the effects of macroeconomic and industry-specific developments in the past financial year of 2022, the PANTAFLIX Group successfully realized numerous entertainment productions even in these turbulent, unpredictable times.

For example, together with our collaboration partner of many years, Warner Bros., Germany, we debuted three films in movie theaters: WOLKE UNTERM DACH, DIE GESCHICHTE DER MENSCHHEIT - LEICHT GEKÜRZT and OSKARS KLEID. The comedy TRAUZEUGEN was created with Paramount.

In the series production area, the PANTAFLIX Group was able to maintain its success of previous years. For example, the reality format MARIO NOVEMBRE - AUCH DAS NOCH! as well as the fourth and final season of the comedy series DAS INTERNAT were produced with the streaming service Joyn. One genuine highlight is the prison drama ASBEST produced with ARD Degeto which not only enjoyed the best start of any series in the ARD media library, ARD Mediathek, with more than three million viewers. In the meantime, more than ten million viewers have streamed this story of clan criminality, turf wars and corruption. ARD Degeto has already announced ASBEST - Season 2.

In addition, our creative agency CC15 posted dynamic growth - entertainment aimed at a specific target market is a genuinely successful model for effective branding and advertising. The furniture chain XXXLutz extended its very well received testimonial campaign, launched in 2020, with actor and director Matthias Schweighöfer, while CC15 was able to win prestigious new clients in the shape of online pet supplies dealer Fressnapf and smartphone manufacturer Xiaomi.

Finally, the PANTAFLIX Group released its first audio productions in the previous year in the form of KEINE ZWEI MÄNNER, TALK OF FAME and MITTEN AM TAG. The resounding success of MITTEN AM TAG was a particular source of pleasure to us. The podcast became the Number 1 fiction podcast across all platforms, topping the charts for weeks.

FOCUS ON PROFITABLE BUSINESS UNITS

As mentioned at the outset, prompted by changes in the market situation, we decided to focus the activities of the PAN- TAFLIX Group exclusively on its profitable business units. For us that included the painful decision no longer to pursue the loss-making Platform business unit (streaming technology) with the wholly owned subsidiary PANTAFLIX Technologies GmbH.

The idea and technology behind the video-on-demand platform were promising when we embarked on the project to realize our ambitious vision of a digital entertainment and adventure world with our own video-on-demand platform. With innovative features and revenue models for users and producers, we were always one step ahead of the times. In the meantime, the world has kept turning. The streaming landscape is dominated by various global competitors and PANTAFLIX today is a different company with different goals.

We have already started concrete negotiations for the sale of the company and signed a corresponding letter of intent. The buyer is to keep PANTAFLIX Technologies GmbH running and meet the commitments given to customers and partners. Although we did not find the decision to sell PANTAFLIX Technologies an easy one, it was the right step to take.

While podcasts in Germany sometimes attract listeners in the millions, they are frequently unprofitable in the current economic climate marked by falling ad revenues. By contrast, the market for documentaries is admittedly booming but there are higher margins to be achieved by focusing on film and series productions. For example, we assume that in the current, tough economic environment, it will take longer for new business ideas to become profitable. Although the PANTAFLIX Group will therefore maintain its investments in the as yet unprofitable growth areas of audio and documentaries over the long term, it will put them on the back burner until further notice.