q3 2013 presentation final
TRANSCRIPT
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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
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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%
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PAY-TV NORDIC
VIAPLAY VOLUME & VIASAT ARPU GROWTH
Sales up 7% at constant FX
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
40% of Group sales 2012 2013
Jul-Sep Jul-Sep
Sales (SEKm) 1,222 1,308
Growth (at constant FX) 3% 7%
EBIT (SEKm) 194 156
EBIT margin 15.9% 11.9%
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
Sales up 21% at constant FX
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
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FREE-TV EMERGING MARKETS
STRONG GROWTH – TOUGHER COMPS AHEAD
14% of Group sales 2012 2013
Jul-Sep Jul-Sep
Sales (SEKm) 369 457
Growth (at constant FX) 3% 21%
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%
Sales up 7% at constant FX
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
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PAY-TV EMERGING MARKETS
RUSSIA DRIVES GROWTH & INVESTMENTS
9% of Group sales 2012 2013
Jul-Sep Jul-Sep
Sales (SEKm) 267 281
Growth (at constant FX) 13% 7%
EBIT (SEKm) 48 27
EBIT margin 17.9% 9.7%
Subscribers / subscriptions ('000)
Satellite 543 556
Mini-pay wholesale 75,430 91,380
Sales up 29% at constant FX
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
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STUDIOS, MTGX, RADIO
NICE TO HAVE + THE X FACTOR
11% of Group sales 2012 2013
Jul-Sep Jul-Sep
Sales (SEKm) 297 367
Growth (at constant FX) -18% 29%
EBIT (SEKm) 15 -46
EBIT margin (excl. associates) 5.1% -12.5%
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INCOME STATEMENT
GROWTH & INVESTMENTS
Sales up 9% at constant FX
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%
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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
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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
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