q3 2013 presentation final

1 1

MODERN TIMES GROUP

Q3 2013 FINANCIAL RESULTS

INVESTMENT PLAN ON TRACK WITH HEALTHY

SALES GROWTH

Sales up 9% at constant FX - all 5 segments reported local currency sales growth for first time since Q1 2011

FTV Scandi – growing again on a combined basis & positive traction to Fall schedules (new channel coming in Norway)

FTV EM – advertising market share gains in almost all territories in soft markets (new channel coming in Tanzania)

PTV Nordic – rising Viaplay volumes & Viasat ARPU driving sales growth & operating margin of 11.9%

PTV EM – healthy sales growth driven by mini-pay Russia & profitability in line with ongoing HD roll-out

Soon to complete acquisition of Nice Entertainment & establish scale international content production & distribution player +

MTGx digital accelerator established

Continued strong cash flow generation & low gearing enable ongoing investment in growth & shareholder returns

Q3 2013 – HIGHLIGHTS

INVESTING IN MOMENTUM

2

3

FREE-TV SCANDINAVIA

BACK INTO POSITIVE GROWTH

Sales up 1% at constant FX

Best y-o-y sales development since Q4 2011

Expected decline in the Danish TV ad market while Sweden and

Norway are expected to have grown

CSOV – weak start but strong ending to the quarter

Danish media house achieved its highest Q3 level since 2000

Sweden – weak start but strong finish, which is encouraging

Norway – ratings down primarily due to weak performance during the

summer. 3rd channel to be launched in Q4

EBIT margin of 13.3%

OPEX up 4% y-o-y at constant FX. FY OPEX growth still expected to

be at the higher end of the mid-single digit percentage point range

MTG’s coverage in Sweden of Winter Olympics will boost sales and

adversely impact Q1 2014 profits

27% of Group sales 2012 2013

Jul-Sep Jul-Sep

Sales (SEKm) 876 887

Growth (at constant FX) -7% 1%

EBIT (SEKm) 135 118

EBIT margin 15.4% 13.3%

CSOV (15-49)

Sweden 35.8% 34.7%

Denmark 21.6% 25.8%

Norway 18.5% 17.3%

4

PAY-TV NORDIC

VIAPLAY VOLUME & VIASAT ARPU GROWTH


Driven by TV3 Sport channels, Viaplay & satellite premium ARPU

Overall subscriber base (incl. Viaplay) up

But premium satellite and 3rd party subscribers were both down

EBIT margin of 11.9%

In line with expectations & ongoing investments

Expectations – look for 11-12% margin for FY13

Revenue growth at constant exchange rates & operating margin of

11-12% for FY13, and a higher margin in 2014

MTG’s coverage in Sweden of Winter Olympics will boost sales and

adversely impact Q1 2014 profits


Jul-Sep Jul-Sep

Sales (SEKm) 1,222 1,308

Growth (at constant FX) 3% 7%

EBIT (SEKm) 194 156


Premium subs ('000) 1,023 970

o/w satellite ('000) 603 563

o/w third party ('000) 420 407

Satellite premium ARPU (SEK) 4,916 5,089


Driven by high underlying growth + sales cooperations

Baltics (8%); Czech Republic (27%); Bulgaria (32%); Ghana (45%)

Will now begin to face significantly tougher comps in markets that

remain soft

Mixed performance when it comes to CSOV

Strong performance continued in Bulgaria

Baltics up due to strong performance in Lithuania

Czech Republic down due weak performance of Prima Family

EBIT loss reduced y-o-y in seasonally weak sales period

Profitability impacted by the structure of our sales cooperations but

still improved profitability y-o-y for the 8th consecutive quarter

OPEX up significantly with similar y-t-d increase anticipated in Q4.

New operation soon to be launched in Tanzania

5

FREE-TV EMERGING MARKETS

STRONG GROWTH – TOUGHER COMPS AHEAD


Jul-Sep Jul-Sep



EBIT (SEKm) -48 -34

EBIT margin -12.9% -7.4%

CSOV

Pan-Baltic (15-49) 47.0% 50.0%

Czech Republic (15-54) 40.4% 36.0%

Bulgaria (18-49) 28.4% 32.8%


Continued mini-pay subscription growth

Addition of ~16m mini-pay subscriptions y-o-y and >1m q-o-q driven

by Russian intake

Added 13k satellite subscribers y-o-y but lost 6k q-o-q due to highly

competitive environment in Ukraine

EBIT of SEK 27m in line with expectations

Reflects ongoing investments in premium content & HD package roll-

out – new deal signed with NTV-Plus satellite platform in Russia

Retain previous expectations (upped in connection to Q2)

Expect to achieve a better than breakeven full year 2013 EBIT result

with rising profitability levels in 2014

6

PAY-TV EMERGING MARKETS

RUSSIA DRIVES GROWTH & INVESTMENTS


Jul-Sep Jul-Sep



EBIT (SEKm) 48 27


Subscribers / subscriptions ('000)

Satellite 543 556

Mini-pay wholesale 75,430 91,380


Sales in MTG Studios up significantly driven by healthy underlying

sales growth boosted by acquisitions

Radio sales down - primarily due to Sweden

EBIT loss of SEK 46m compared to a profit of 15m last year

Healthy profitability in MTG Studios (excl. M&A costs) and Radio

Norway. Heavy losses in Radio Sweden

Investments in MTGx – expected to add up to SEK 70m of

operating costs in H2

Agreement to acquire Nice Entertainment Group

Nordic´s largest independent group of production companies

Expected to close this month

7

STUDIOS, MTGX, RADIO

NICE TO HAVE + THE X FACTOR


Jul-Sep Jul-Sep


Growth (at constant FX) -18% 29%

EBIT (SEKm) 15 -46

EBIT margin (excl. associates) 5.1% -12.5%

8

INCOME STATEMENT

GROWTH & INVESTMENTS


Minimal FX impact of ~ 0 percentage points

No impact of divestments / closures

Acquisitions adding ~ 4 percentage points of growth

EBIT margin (excl. associates) of 5.0%

OpEx up 15% at constant FX and 11% organically

Primarily driven by pay-TV investments to drive future growth and

acquisitions (incl. M&A)

Effective tax rate of 30%

Expect FY13 rate to be at the higher end of the 25-30% range

Q3 in brief 2012 2013

Jul-Sep Jul-Sep

Sales (SEKm) 2,940 3,204

Organic growth (at constant FX) 2% 5%

EBIT excl. associates 288 162

EBIT margin excl. associates 9.8% 5.0%

Total EBIT 422 289

Total EBIT margin 14.4% 9.0%

9

CASH FLOW

CONTINUED STRONG CASH CONVERSION

Cash generative & asset light

Working capital change in the quarter reflecting the timing of

programming payments. Still under strict control

Dividend stream from CTC Media

SEK 62m (51) in Q3 & SEK 184m (158) y-t-d

Acquisition of DRG, Novemberfilm & Net Info

Investments in shares of SEK 72m (174)

CapEx of SEK 100m (28)

(SEKm) 2012 2013

Jul-Sep Jul-Sep

Cash flow from operations 237 210

Changes in working capital 65 -160

Net cash flow from operations 302 49

Cash flow used in investing activities -179 -172

Cash flow used in financing activities -335 -6

Net change in cash & cash equivalents -211 -129

FINANCIAL POSITION

FIREPOWER & FLEXIBILITY

Net debt of SEK 373m

Available liquid funds of SEK 6 bn

Ended the quarter with a net debt to trailing twelve

month EBITDA ratio of just 0.2 times

SEK 1.9 bn book value of 37.9% CTC Media stake

Public equity market value of SEK 4.0 bn as at end Q3

Continuing to balance investment in future growth &

shareholder returns

10

Net debt / Trailing 12 month EBITDA

1.2 1.2 1.1

0.8 0.7

0.6 0.7

0.3 0.3 0.3 0.3

0.0 0.0

0.1 0.2

Q1

10

Q2

10

Q3

10

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

Q2

12

Q3

12

Q4

12

Q1

13

Q2

13

Q3

13

Sales up 9% at constant FX - all 5 segments reported local currency sales growth for first time since Q1 2011

Demonstrates that investments in 3 key areas – content, digital and geographical expansion - are having the desired effect

and ensuring that customer offerings are stronger than ever

Committed to invest in momentum to create local, relevant and digital experiences that engage and excite consumers

Upcoming launch of free-TV channels in Norway and Tanzania; and preparations for coverage of Sochi Winter Olympics

(Sweden & Baltics) are clear evidence of this drive

Soon to complete acquisition of Nice Entertainment and create scale player in content production & distribution industry

These investments do impact short-term profitability but are the building blocks of our future growth and cash generation

Continued healthy cash flow generation & low gearing enable ongoing investment & shareholder returns

SUMMARY

INVESTING IN MOMENTUM

11

12 12

MTG INVESTOR RELATIONS

FOR FURTHER INFORMATION, PLEASE VISIT

WWW.MTG.SE OR CONTACT:

TEL: +46 (0) 73 699 2714

EMAIL: [email protected]

q3 2013 presentation final

Investor Relations