mtg q312 presentation final
Post on 22-Oct-2014
11.825 views
DESCRIPTION
TRANSCRIPT
1 CH
AP
TE
R N
AM
E
Modern Times Group
MTG
Third Quarter 2012
Financial Results
2
Forward looking statements
Forward-looking information and Safe Harbour Statement under the U.S. Private Securities Litigation Reform
Act of 1995
This report contains forward-looking information based on the current expectations of MTG management.
Although management deems that the expectations presented by such forward-looking information are
reasonable, such forward-looking information is subject to risks and uncertainties and no guarantee can be
given that these expectations will prove correct. Accordingly, the actual future outcome could vary considerably
when compared to what is stated in the forward-looking information, due to such factors as the prevailing
economic and business environments in certain markets and the impact of the Eurozone crisis in particular;
commercial risks related to expansion into new territories; political and legislative risks related to changes in
rules and regulations in the various territories in which the Group operates; exposure to foreign exchange rate
movements and the US dollar and Euro currencies in particular; and the emergence of new technologies and
competitors. These risks and uncertainties are described in more detail in the 2011 Annual Report, which is
available from the Group’s website at www.mtg.se and in the Group’s registration statement on Form 20-F,
which is available from the website of the U.S. Securities and Exchange Commission.
3
4
Third quarter 2012
• Sales up 2% y-o-y at constant FX when excluding
discontinued or sold operations
• Down 1% y-o-y at constant FX
• OPEX up y-o-y at constant FX
• Investments in the Nordic pay-TV business, offset by
slightly lower costs in the Emerging Markets
businesses & stable cost base in Free-TV
Scandinavia segment
• EBIT before associated company income of
SEK 288 (358) mn
• Total EBIT of SEK 422 (526) mn including SEK 134
(168) mn of associated company income
• PTP of SEK 389 (439) mn
• Including SEK -2 (-64) non-cash impact of change in
value of option element of CDON convertible bond
• Net income of SEK 308 (306) mn & basic EPS of SEK 4.65
(4.71)
• Jørgen Madsen Lindemann appointed President & CEO on
15 Sep 2012 & senior management changes announced on
15 October 2012
• Acquired Swedish communications operator Zitius & Signed
agreement to acquire remaining shares in TV 2 Sport in
Denmark
SEK mn
* EBIT excluding associated income
3.106 2.940
358 288
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
500
1.000
1.500
2.000
2.500
3.000
3.500
Q3 2011 Q3 2012
Revenue EBIT* EBIT margin
5
First nine months of 2012
• Stable sales y-o-y at reported rates & up 1% y-o-y at
constant FX
• OPEX up y-o-y at constant FX
• EBIT before associated company income of
SEK 1,181 (1,382) mn
• Total EBIT of SEK 1,648 (1,900) mn, including SEK
467 (517) of associated company income
• PTP of SEK 1,567 (1,791) mn
• Including SEK -8 (-30) non-cash impact of change
in value of option element of CDON convertible
bond
• Net income of SEK 1,216 (1,276) mn & basic EPS of SEK
17,68 (18,90)
• Received SEK 158 (145) mn of dividends from CTC Media
• Net cash flow from operations of SEK 1,095 (689) mn
SEK mn
* EBIT excluding associated income
9.762 9.716
1.382 1.181
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
2.000
4.000
6.000
8.000
10.000
12.000
9M 2011 9M 2012
Revenue EBIT* EBIT margin
Forward expectations
MTG is increasing its investments in its pay-TV operations in the increasingly competitive
Nordic markets and in the large scale emerging Russian and Ukrainian markets, in order
to ensure that its channels and services have the most attractive consumer content
offerings and capture subscriber market share in the future.
• Increasing investments in Nordic pay-TV content, premium channels and Viaplay
online pay-TV service currently expected to result in Nordic pay-TV EBIT margin of
approximately 15% in Q4 2012 and 10-12% for full year 2013. The total Nordic
premium pay-TV subscriber base (excluding Viaplay) is currently expected to continue
to decline in Q4 2012 and for the full year 2013 due to the ongoing decline in the DTH
subscriber base and lower than anticipated growth in the third party network subscriber
base, and result in stable quarter on quarter total Nordic pay-TV sales in Q4 2012 and
stable year on year sales for the full year 2013. The fast growing Viaplay online pay-TV
service is expected to continue to grow its subscribers and revenues throughout this
period
• Increasing investments in Russian and Ukrainian pay-TV content, HD channels and
pre-paid satellite service in Ukraine currently expected to boost Emerging Markets pay-
TV revenue growth levels and result in segment operating losses of less than SEK 20
million in Q4 2012 and less than SEK 50 million for full year 2013
6
7
3.153 3.010
795 543
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
500
1.000
1.500
2.000
2.500
3.000
3.500
9M 2011 9M 2012
984
876
216 135
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
200
400
600
800
1.000
1.200
Q3 2011 Q3 2012
Revenue EBIT EBIT margin
8
Free-TV Scandinavia
Financial Highlights
• Sales down 7% y-o-y at constant FX in Q3 & down
4% for YTD
• Lower ad sales in all 3 Scandinavian countries
• High sold-out ratios following lower levels of
total TV viewing & coverage of the Olympics
on competing channels
• OPEX down 4% y-o-y in Q3 & up 5% for YTD
• Up y-o-y at constant FX for both periods
• Lower programming costs in Norway offset by
higher programming costs in Denmark and
Sweden
• EBIT margin of 15% (22%) in Q3 & 18% (25%)
for YTD
• Swedish & Norwegian TV ad markets expected to
have continued to grow y-o-y in Q3, while Danish
market estimated to have declined significantly
• OUTLOOK: The Group now anticipates that
operating costs will be down year on year in the
fourth quarter at constant exchange rates and
therefore only up low single digit percentage points
for the full year 2012
SEK mn
SEK mn
9
Free-TV Scandinavia
Operating Highlights
Sweden
• Significant CSOV improvements q-o-q on all four
channels
• Earlier launch of Fall schedules
• Improved audience shares so far in Q4
• Biggest AVOD media house in July, August & first
half of September
Denmark
• TV3+ affected by Olympic games, but offset by
continued y-o-y ratings increases for TV3 & both
y-o-y & q-o-q ratings gains for TV3 PULS
• Positive CSOV development after end of Olympics
& ratings up y-o-y in Q4 to date
• Focus on the development of AVOD environment
& MTG is leading online media house
Norway
• TV3 CSOV stable q-o-q in Q3
• Viasat4 increased CSOV both q-o-q & y-o-y in Q3
• Continued focus on execution of programming
schedules
Commercial Audience Share (15-49)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Sweden Norway Denmark
10
Pay-TV Nordic
Financial Highlights
• Sales stable y-o-y in Q3 & up 5% for YTD
• Up 3% y-o-y at constant FX in Q3 & up 6%
for YTD
• OPEX up 4% y-o-y in Q3 & 8% for YTD
• Up more at constant FX
• Investments in premium movie & sports
content & Viaplay
• Expansion of HD and catch-up channel
portfolio & rebranding of Viasat Film
• EBIT margin of 16.6% (19.8%) in Q3 & 17.3%
(19.3%) for YTD
• OUTLOOK: The Group currently continues to
anticipate a segment operating margin of
approximately 17% for FY2012 & for the Q4 2012
operating margin to be approximately 15%.
SEK mn
SEK mn
1.184 1.182
234 196
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
200
400
600
800
1.000
1.200
1.400
Q3 2011 Q3 2012
Revenue EBIT EBIT margin
3.509 3.681
677 636
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
9M 2011 9M 2012
0
200
400
600
800
1.000
1.200
Satellite subscribers 3'rd party network subscribers
0
50
100
150
200
250
300
350
400
ViasatPlus HDTV Multi-room11
Pay-TV Nordic
Operating Highlights
• Overall premium subscriber base down q-o-q
• 3’rd party subscriber base up slightly q-o-q
& added 18,000 net new subscribers y-o-y
• DTH affected by increased competition in
Denmark in particular
• Shift in subscriber mix towards basic tier
packages in Norway
• Premium satellite ARPU up 3% y-o-y in Q3 &
slightly down q-o-q
• Q-o-q development due to adverse FX
• Y-o-y growth reflected continued growth in
value added services & price increases
Thousands
Thousands
Premium subscribers
Value added services
Content Leadership
TV & Movies
Local titles
International titles
1’st
Pay
2’nd
Pay
Content Leadership
Premium Sports Content
* In Sweden & Denmark
** In Denmark & Norway
* **
400 369
1.418 1.361
-76
-48 -35
52
-80
-60
-40
-20
0
20
40
60
80
100
0
200
400
600
800
1.000
1.200
1.400
1.600
Q3 2011 Q3 2012 9M 2011 9M 2012
Revenue EBIT
• Total sales down 8% y-o-y & down 4% for YTD
• Up 3% y-o-y and 1% for YTD at constant FX
• Continued growth in all businesses except
Hungary & effect of discontinued Slovenia
• OPEX down y-o-y at reported & constant FX
• Improved operating profit y-o-y for both periods &
operating margin of 3.8% for YTD
• OUTLOOK: The Group currently continues to not
anticipate any increase in segment operating costs
for FY2012 and, therefore, a largely stable y-o-y cost
development in Q4 2012
• Baltic, Czech & Bulgarian sales down 5% y-o-y &
down 1% for YTD
• Up 6% in Q3 & up 4% for YTD at constant FX
• Combined OPEX down 4% y-o-y both in Q3 & for
YTD
• Q3 included reorganisation costs for LNT &
strategic programming investments in Czech
Republic offset by cost savings in Bulgaria
• Improved y-o-y EBIT y-o-y in Q3 & for YTD, with
EBIT margin of 6.4% (3.6%) for YTD
14
Free-TV Emerging Markets
Financial Highlights
Free-TV Emerging Markets
Baltics, Czech Republic & Bulgaria
SEK mn
SEK mn
352 334
1.254 1.244
-48 -50
45
80
-60
-40
-20
0
20
40
60
80
100
120
140
0
200
400
600
800
1.000
1.200
1.400
Q3 2011 Q3 2012 9M 2011 9M 2012
Revenue EBIT
15
Free-TV Emerging Markets
Operating Highlights
Baltics
• Sales up 10% y-o-y in Q3 at constant FX
• Primarily due to consolidation of LNT in
Latvia & higher y-o-y TV ad sales in Estonia
• Pan-Baltic commercial target audience share of
47% (40.6%) – reflected consolidation of LNT in
Latvia
Czech Republic
• Sales up 4% y-o-y in Q3 at constant FX
• CSOV up y-o-y & q-o-q following increased
investments in OP & focus on programming
schedule + Champions League matches on Prima
COOL
Bulgaria
• Sales up 6% y-o-y in Q3 at constant FX
• Combined CSOV up both y-o-y & q-o-q despite
slightly lower programming investments
Commercial Audience Share
* MTG has included the LNT channels in its reported combined CSOV in
Latvia with effect from Q3 2012
10%
20%
30%
40%
50%
60%
70%
Estonia (15-49) Latvia (15-49)*
Lithuania (15-49) Czech Republic (15-54)
Bulgaria (18-49)
240
267
13
48
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
50
100
150
200
250
300
Q3 2011 Q3 2012
Revenue EBIT EBIT margin
685
790
42
139
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
100
200
300
400
500
600
700
800
900
9M 2011 9M 201216
Pay-TV Emerging Markets
Financial Highlights
• Sales up 11% y-o-y in Q3 & 15% for YTD
• Up 13% y-o-y at constant FX both in Q3 &
for YTD
• OPEX down 3% y-o-y in Q3 & up 1% for YTD
• Primarily reflected FX fluctuations
• EBIT more than tripled to SEK 48 (13) mn in Q3 & to
SEK 139 (42) mn for YTD
• OUTLOOK: The Group continues to anticipate higher
y-o-y profit levels for the segment for FY2012 but for
the segment to report an operating loss in Q4 2012
following the investments in the launch of the HD
movie channels and the Ukrainian pre-paid satellite
service
SEK mn
SEK mn
17
Pay-TV Emerging Markets
Operating Highlights
• 83,000 net new subscribers added y-o-y &
9,000 q-o-q
• Continued intake on all 3 satellite platforms
• Wholesale channel business added over 14 mn
subscriptions y-o-y & over 2.6 million subscriptions
q-o-q
• Ongoing growth in Russia
• Launched 3 new HD movie channels in Russia,
Ukraine, CIS & Baltics
• Will feature content from four major
Hollywood studios
Satellite subscribers
Mini-pay TV subscriptions
Thousands
Thousands
400
500
600
40.000
50.000
60.000
70.000
80.000
Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
New HD Channels Launched
Russia, Ukraine, the CIS & Baltics
18
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Countries 7 11 15 22 23 24 25 25 28 31
Channels 2 3 5 6 7 8 10 15 19 23
Satellite platforms Baltics Ukraine Russia
• All 3 channels available in Russia, Ukraine &
CIS
• TV1000 Premium HD – Premium tier movie
channel with focus on first run premieres of
award winning films from Hollywood studios and
independent local distributors
• TV1000 Megahit HD – Premium movie channel
featuring first run premieres of the latest
blockbuster titles from Hollywood and Russia
• TV1000 Comedy HD – dedicated to US
comedy movies
Top 10 pay-TV channels in Russia
Monthly reach (million people)
11,0
11,9
12,2
13,2
14,1
15,5
17,9
19,4
20,6
21,2
0 5 10 15 20 25
DOM KINO
SONY ENTERTAINMENT TELEVISION
NATIONAL GEOGRAPHIC CHANNEL
EUROSPORT
MOYA PLANETA
ANIMAL PLANET
DISCOVERY CHANNEL
Launch of UA.TV
Utilizing growth opportunities
19
TV market structure
(2011)
0%
5%
10%
15%
20%
25%
30%
35%
Cable DTH IPTV
58%
2% 1%
39%
Cable
DTH (pay)
IPTV
DTH (freeview)
Pay-TV market penetration
(%)
• Substantial market opportunity – Europe’s 6th largest country by population
• Pay-TV penetration in 2011 is still low, at close to 19.5% of TV HHs
• Addressable market for DTH – 15.4 million non-cable HHs
20
Other Businesses
Highlights
• Comprises MTG’s Radio operations in Norway &
Sweden and MTG Studios content production
businesses
• Sales up 7% y-o-y & 2% for YTD at constant FX
when excluding Bet24 contribution in 2012 & 2011
• Underlying performance reflected higher y-o-y
sales for MTG Studios & Norwegian radio
operations
• Significantly lower y-o-y sales for Swedish
radio operations
• Profits slightly down y-o-y in Q3
• Losses for Swedish radio operations offset by
profits for Norwegian radio operations & lower
y-o-y losses for MTG Studios
• Paprika Latino to be consolidated in Q4
SEK mn
SEK mn
372
297
18 15
0
50
100
150
200
250
300
350
400
Q3 2011 Q3 2012
Revenue EBIT
1.225
1.101
82 6
0
200
400
600
800
1.000
1.200
1.400
9M 2011 9M 2012
21
22
Income Statement
• Lower y-o-y depreciation & amortisation
charges of SEK 34 (47) mn in Q3 & 90 (145)
mn for YTD following ending of charges
related to Bulgarian & Czech broadcasting
licenses
• Net interest charges down y-o-y to
SEK -10 (-17) mn in Q3 & SEK -34 (-45) mn
for YTD
• Y-o-y change in other financial items
included SEK -2 (-64) mn non-cash financial
impact in Q3 & SEK -8 (-30) mn for YTD
from the change in value of the option
element of the SEK 250 mn CDON Group
convertible bond mn
• Effective tax rate of 21% in Q3 & 22%
for YTD
(SEK mn)
Q3
2012
Q3
2011
9M
2012
9M
2011
Net sales 2,940 3,106 9,716 9,762
EBIT before associated
company income 288 358 1,181 1,382
Associated company income 134 168 467 517
EBIT 422 526 1,648 1,900
Net interest & other financial
items -33 -87 -81 -108
Income before tax 389 439 1,567 1,791
Tax -81 -133 -351 -516
Net income 308 306 1,216 1,276
Basic EPS 4.65 4.71 17.68 18.90
Diluted EPS 4.64 4.69 17.62 18.79
23
Cash Flow
• Cash flow from operations included receipt of SEK
51 (-) mn of dividend payments from CTC Media
in Q3 and SEK 158 (145) mn for H1
• Investment in shares amounted to SEK 174 (-) in
Q3 & SEK 274 (-) mn for YTD & comprised the
acquisition of the Paprika Latino content
production business, the LNT free-TV business in
Latvia and the communications operator Zitius
• CAPEX less than 1% of Group net sales in Q3
and for YTD
• Cash flow from investing activities of SEK 23 (-)
mn in Q3 & SEK 84 (-) mn for YTD comprised net
cash received from sale of Bet24
(SEK mn)
Q3
2012
Q3
2011
9M
2012
9M
2011
Cash flow from
operations 237 345 1,072 1,334
Changes in working
capital 65 -483 23 -645
Net cash flow from
operations 302 -138 1,095 689
Cash flow used in
investing activities -179 -34 -236 -86
Cash flow used in
financing activities -335 64 -863 -770
Net change in
cash & cash
equivalents
-211 -108 -4 -167
24
Financial Position
• Total borrowings of SEK 1.326 (2,458) mn as at
30 Sep 2012 & cash & cash equivalents of
SEK 451 (317) mn
• Net debt of SEK 634 (1,861) mn as at 30 Sep
2012 & available liquid funds of SEK 5,784
(4,499) mn
• SEK 1,888 (2,253) mn book value of 37.9%
shareholding in CTC media & public equity
market value of 3,552 mn as at 30 Sep 2012
(SEK mn)
30 Sep
2012
30 Sep
2011
Non-current assets 5,742 9,156
Current assets 5,581 5,802
Total assets 11,324 14,958
Shareholders’ equity 4,635 7,391
Long-term liabilities 1,902 3,090
Current liabilities 4,786 4,476
Total equity & liabilities 11,324 14,958 Net debt / EBITDA ratio
1,2 1,2 1,1
0,8 0,7
0,6 0,7
0,3 0,3 0,3 0,3
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
Q312
25
26
For further information, please visit www.mtg.se or contact:
MTG Investor Relations
Tel: +44 7768 440 414 / +44 7590 098 188
Email: [email protected]