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Deutsche Entertainment AG (DEAG) CEO Peter Schwenkow says he is happy with the German promoter’s start to the year, despite slight decreases in revenue and profit and a falling share price.
The value of DEAG’s sales in the first quarter (Q1) of 2017 was €19.5 million, down from €31.3m in Q1 2016, with gross profit and earnings before taxes and interest (EBIT) also both declining, to €6.1m (from €6.7m) and €200,000 (from €300,000), respectively.
Its share price has also fallen more than 15% in the last month alone, from €2.91 on 2 May to €2.47 today.
Despite this, Schwenkow says sales and EBIT in Q1 were “above expectations”, saying the Euro 2016 football championships “resulted in higher sales in Q1 and Q4 2016”.
According to the company’s latest financial results, its core promotion and ticketing businesses remain “very profitable”, with gross profit margin rising to 31.4% compared to 21.7% in Q1 2016.
“For us, 2017 has been going according to plan,” comments company founder Schwenkow. “Our activities in the UK in particular and in the domestic market have developed quite positively across the board.
“For us, 2017 has been going according to plan”
“In view of the good start to the second quarter and the well-filled event pipeline, DEAG will also be offering high-calibre, high-turnover and high-margin events in the quarters to come. These include, among others, the open air event Matapaloz at Hockenheimring that is likely to attract 70,000 visitors, top acts such as Iron Maiden, Anna Netrebko and Aerosmith and the German tour of The Rolling Stones, which is already sold-out.
“The Family Entertainment division will continue the strong growth of the previous quarters. The very successful, in-house Christmas Gardens are also being extended to other locations due to the positive response. For 2017 DEAG expects around 830,000 visitors at seven locations. In addition, the company’s own ticket sales through the online sales platform MyTicket will contribute to the sustained improvement in profitability.”
Schwenkow also reiterates DEAG’s intention to acquire another British promoter, saying the company is in “advanced negotiations” to add a third business to its UK stable (it partially owns Kilimanjaro Live and classical music promoter Raymond Gubbay Ltd). Sources tell IQ the company in question is a regional pop promoter.
DEAG was rebuked by German financial watchdog FREP earlier this month for “substantially overstating” its recent financial success.
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Deutsche Entertainment AG (DEAG) has been criticised by Germany’s Financial Reporting Enforcement Panel (FREP) for allegedly misrepresenting its financial strength in its 2014 full-year and 2015 half-year fiscal reports.
According to German business weekly WirtschaftsWoche, FREP took issue with DEAG’s 2014 financial report describing “very good presales” for its three new festivals, Rock im Revier, Rockavaria and Rock in Vienna – when, in fact, less than a month before the festivals were due to kick off, “not even half of their costs were covered by ticket sales”.
The launch of the new festivals led to a €17.8m million loss in 2015, which on Friday was revised retroactively to -€26.2m as a result of FREP’s investigation. Only Rock in Vienna remains following the cancellations of Rock im Revier and Rockavaria.
According to its 2016 annual report, which followed the release of preliminary figures on 13 April, DEAG was expecting losses relating to the three festivals, but was found by FREP to have failed to take into account the effect a €26.2m loss could have on the health of the company. “For the rock festivals held for the first time in May and June 2015, an expected loss was already becoming apparent as of the reporting date on 31 December 2014, for which a risk provision was made for onerous contracts,” it reads.
FREP took issue with DEAG’s 2014 financial report describing “very good presales” for its three new festivals
“FREP has determined that on the basis of the scenarios assumed by DEAG, and against the background of the possible risk to the survival of the company presented in the group management report, no adequate risk provision was made.”
FREP also ruled that DEAG had, at €7.9m, “substantially overstated” the value of the Jahrhunderthalle Frankfurt convention centre, in which it agreed in March 2016 to sell its 49% stake.
WirtschaftsWoche further reports that DEAG CEO Peter Schwenkow (pictured) is the target of a lawsuit by the Handelsblatt publishing house over an alleged false affidavit in connection with an unspecific “interim injunction”.
In a statement provided to MusikWoche, a DEAG spokesperson denies the allegations, saying: “Contrary to the assertion of Wirtschaftswoche, the public prosecutor has already closed its case [against DEAG].”
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