Q2 2010 Presentation
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Transcript of Q2 2010 Presentation
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 1
Modern Times Group
Q2 2010 Financial Results
20 July 2010
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 2
Record Sales with Increased Operating Margin
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 3
Highlights
Group
• Record sales – 13% y/y sales growth at constant
exchange rates in Q2 & 12% in H1
• Record operating income – up 26% y/y in Q2 & up 30% in
H1 when excluding associated company income
• Pre-tax profit up 23% y/y in Q2 & up 53% in H1
• Net income up 20% y/y & up 41% in H1
• Net debt to EBITDA ratio of 1.2x and SEK 3.5 bn of
available liquid funds
• SEK 363 mn dividend paid to shareholders in Q2
Operations
• Free-TV Scandinavia: 18% sales growth y/y in Q2 at
constant exchange rates with increased 27% operating
margin following growth in all three countries
• Pay-TV Nordic: 8% sales growth y/y at constant
exchange rates & 20% operating margin with premium
DTH ARPU up 5% y/y at constant exchange rates +
continued IPTV subscriber uptake
• Free-TV Emerging Markets: 4% sales growth y/y at
constant exchange rates with operating income up 29%
• Pay-TV Emerging Markets: 12% sales growth y/y at
constant exchange rates & 16% operating margin
following subscriber growth + full consolidation of Viasat
Ukraine platform
• Online: 30% sales growth y/y at constant exchange rates
& CDON Group sales up 34% y/y in Q2 at constant
exchange rates with stable operating margin
All Broadcasting Businesses Report Growth at Constant FX
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 4
Second Quarter 2010
• Record sales of SEK 3,870 (3,584) mn – up 13% y/y at
constant exchange rates
• Free-TV Scandinavia sales of SEK 1,116 (984) mn – up
18% y/y at constant exchange rates
• Record operating income of SEK 603 (478) mn - up 26%
y/y
– Increased operating margin of 16% (13%) when
excluding associated company income
• Total operating income up 23% y/y to SEK 726 (588) mn
– Including SEK 123 (111) mn of associated
company income
• Pre-tax profit up 23% y/y to SEK 697 (566) mn
• Net income up 20% y/y to SEK 522 (436) mn
• Basic earnings per share up 17% y/y to SEK 7.58 (6.45)
• Dividend of SEK 363 mn (SEK 5.50 per share) paid to
shareholders in May for full year 2009
0%
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Q2 2009 Q2 2010
Sales EBIT* EBIT Margin*
13% Sales Growth at Constant FX & EBIT up 26% y/y ex Associates
* Excluding SEK 123 (111) mn of associated income
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 5
First Half Year 2010
• Net sales of SEK 7,394 (6,920) mn – up 12% y/y at
constant exchange rates
• Free-TV Scandinavia net sales of SEK 2,096 (1,870) mn
– up 17% y/y at constant exchange rates
• Operating income up 30% y/y to SEK 1,018 (784) mn
– Increased operating margin of 14% (11%) when excluding associated company income
• Total operating income up 52% y/y to SEK 1,248
(822) mn
– Including SEK 229 (38) mn of associated company income
• Pre-tax profit up 53% y/y to SEK 1,165 (760) mn
• Net income up 41% y/y to SEK 822 (582) mn
• Basic earnings per share up 41% y/y to SEK 12.18
(8.65)0%
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H1 2009 H2 2010
Sales EBIT* EBIT Margin*
12% Sales Growth at Constant FX & EBIT up 30% y/y ex Associates
* Excluding SEK 229 (38) mn of associated income
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 6
• Operating Review
Operating Review
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 7
-10%
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500
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Q2 2009 Q2 2010 H1 2009 H1 2010
Revenue EBIT EBIT Margin
• Q2 sales of SEK 1,116 (984) mn & H1 sales of 2,096 (1,870) mn – up 18% in Q2 & 17% in H1 at constant exchange rates
– Advertising market growth in all three countries
– Sales growth in all three countries
• OPEX up 7% y/y in Q2 & up 9% in H1
– Higher programming investments in all three countries + impact of launch of TV3 PULS in Denmark at end of Q1 2009
• Operating income up 38% y/y to SEK 297 (216) mn in Q2 & up 22% to 513 (419) mn in H1
• Increased operating margins of 27% (22%) in Q2 & 24% (22%) in H1 with incremental margins of approximately 50%
• Ongoing market outperformance due to ’triple-play effect’ of increasing penetration, rising audience shares & enhanced pricing power
Free-TV Scandinavia
Financial Highlights
(SEK mn )
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 8
Sweden
• Commercial target group audience share up 0.8 pp y/y
– Significant target CSOV gains for TV6 & TV8 with stable development for TV3
• Announced launch of new free-TV sports channel TV10 in
Sweden with initial reach of >50% of Swedish TV
households
Denmark
• Commercial target group audience share up 0.3 pp y/y
– Successful spring schedules with strong OP’s, acquired content & sports
Norway
• Commercial target group audience share stable y/y
– High rating own productions, selected FIFA World Cup 2010 matches & increasing penetration for Viasat4 channel
Free-TV Scandinavia
Commercial Share of Viewing (15-49)
Operating Highlights
10
15
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25
30
35
40
45
50
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Sweden: TV3, TV6, TV8, ZTV
Denmark: TV3, TV3+, TV3 PULS
Norway: TV3, Viasat4
(%)
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 9
Pay-TV Nordic
• Sales of 1,115 (1,074) mn in Q2 & H1 sales of SEK
2,207(2,143) mn – up of 8% in Q2 & 7% in H1 at constant
exchange rates
• OPEX stable y/y at SEK 894 (895) mn in Q2 & SEK 1,794
(1,790) mn in H2
– Underlying local currency costs up y/y in Q2 & H1 following addition of 5 new Viasat channels since begininng of 2009 & addition or extension of various key sports rights contracts
– SAC down y/y to SEK 135 (151) mn in Q2
• Operating income up 24% to SEK 221(179) mn in Q2 &
up17% to SEK 413 (353) mn in H1, with increased
operating margins of 20% (17%) and 19% (16%)
,respectively
Financial Highlights
-10%
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Q2 2009 Q2 2010 H1 2009 H1 2010
Revenue EBIT EBIT Margin
(SEK mn )
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 10
• Q/Q net addition of 11,000 net new premium IPTV subscribers & y/y addition of 55,000 new new IPTV subscribers
• Stable premium DTH subscriber base & continued growth of multi-room, ViasatPlus and HDTV subscriptions
• Premium DTH ARPU up y/y to SEK 4,446 (4,397) in Q2 – up 5% y/y at constant exchange rates
– Reflected price increases & ongoing uptake of value-added products and services
• Viasat now only Scandinavian operator to offer coverage of Premier League in all 3 countries following acquisition of three
year exclusive Swedish broadcasting rights in Q1 & carriage agreements with TV 2 in Norway in June and TV 2 in Denmark
in July &
Pay-TV Nordic
Premium Subscribers DTH Value-added Services
Operating Highlights
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1000
Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010
Premium IPTV Premium DTH
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Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010
ViasatPlus subscriptions Multi-room subscriptions
HDTV subscribers
(Thousa
nds)
(Thousa
nds)
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 11
Free-TV Emerging Markets
• Sales of SEK 582 (612) mn in Q2 & SEK 1,016 (1,076)
mn in H1 – up 4% in Q2 y/y & 2% in H1 at constant
exchange rates
– Continued ad market share gains for all free-TV businesses
– Markets gradually improving but almost all markets still down y/y in Q2
• Operating costs down 7% y/y to SEK 541 (580) mn in Q2
& down 7% to SEK1,040 (1,118) mn in H1
– Reflected cost reduction initiatives, ongoing selective programming investments and favourable y/y currency exchange rate movements
• Operating profit up 29% y/y to SEK 42 (32) mn in Q2 with
operating margin of 7% (5%) & significantly reduced
operating loss of SEK -24 (-42) mn in H1
Financial Highlights
-200
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Q2 2009 Q2 2010 H1 2009 H1 2010
Revenue EBIT
(SEK mn)
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 12
Baltics
• Sales of SEK 131 (149) mn in Q2 & SEK 215 (245) mn in H1 – down 2% in Q2 & 3% in H1 at constant exchange rates
• Pan-Baltic CSOV up y/y to 39.3% (37.4%)
• Estonian and Latvian analogue switch-off in Q2 & Lithuania scheduled for 2012 – expected to drive penetration of secondary channels
• Operating profit up 66% y/y to SEK 17 (10) mn in Q2 with an operating margin of 13% (7%) & reduced operating loss of SEK -2 (-3) mn in H1
Czech
• Sales of SEK 250 (254) mn in Q2 & SEK 440 (463) mn in H1 – up 5% y/y in Q2 & stable in H1 at constant exchange rates
• CSOV up y/y to 22.3% (21.0%) reflecting significantly improved performance of own-produced prime-time content & continued success of Prima COOL
• Operating profit up 44% y/y to SEK 35 (24) mn in Q2 & up 7% to SEK 28 (27) mn in H1 with operating margins of 14% (10%) in Q2 & 6% (6%) in H1
Bulgaria
• Sales of SEK 129 (142) mn in Q2 & SEK 233 (248) mn in H1 – up 1% y/y in Q2 & up 4% in H1 at constant exchange rates
• CSOV of 28.0% (36.1%) due to FIFA World Cup coverage on competing channels & exceptional ratings of Big Brother show on Nova in Q2 2009
• Operating profit of SEK 11 (12) mn in Q2 with operating margin of 9% (9%) & 0 (-1) mn in H1
Free-TV Emerging Markets
Commercial Share of Viewing
Operating Highlights
0
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Pan-Baltic (15-49)
Czech Republic (15-54)
Bulgaria (18-49)
Hungary (18-49)
Slovenia (18-49)
Q2 2009 Q2 2010
(%)
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 13
Pay-TV Emerging Markets
• Sales of SEK 225 (219) mn in Q2 & SEK 443 (439) mn in
H1 – up 12% in Q2 & up 13% in H1 at constant exchange
rates
– Reflected consolidation of Russian DTH satellite platform, full consolidation and growth of Ukrainian DTH satellite platform & continued growth in number of mini-pay subscriptions
• OPEX up 2% y/y in Q2 & up 1% in H1
– Reflected launch of 5 new channels since the beginning of 2009, subscriber acquisition campaigns in Ukraine, consolidation of Raduga TV in Russia & full consolidation of Viasat Ukraine
• Operating profit up 6% y/y to SEK 36 (34) mn in Q2 & up
3% to SEK 76 (75) mn in H1
• Stable operating margins of 16% (16%) in Q2 & 17%
(17%) in H1
Financial Highlights
-10%
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Q2 2009 Q2 2010 H1 2009 H1 2010
Revenue EBIT EBIT Margin
(SEK mn )
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 14
• 20,000 net net premium subscribers added y/y on Baltic and Ukrainian DTH satellite platforms
• Russian DTH satellite platform Raduga TV had 93,000 basic subscribers at end of Q2
• Full consolidation of Viasat Ukraine from June following acquisition of additional 35% shareholding
• Acquisition and consolidation of 50% of Raduga TV satellite DTH platform in Russia in February 2010
• New pay-TV channel Nova Sport launched in Bulgaria at end of April
– Broadcasts premium sport content including Premier League, UEFA Champions League, IAAF Diamond League athletics and IIHF World Championship ice hockey
• Viasat Nature East pay-tv channel launched in 25 countries in Central and Eastern Europe at beginning of May
Pay-TV Emerging Markets
DTH Subscribers
Mini-pay Subscriptions
Operating Highlights
0
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Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010
Premium Basic
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Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010
(Thousands)
(million)
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 15
Online
• Segment sales of 615 (490) mn in Q2 & SEK 1,239 (1,010) mn in H1 – up 30% in Q2 & up 27% in H1 at constant exchange rates
• CDON Group – sales up 34% y/y in Q2 & up 28% in H1 at constant exchange rates
– Entertainment business reported 15% y/y sales growth in Q2 at constant exchange rates – driven by increased home electronics sales & summer promotion campaigns
– Sports & Health business reported 36% y/y sales growth at constant exchange rates – driven by increased no. of visitors & higher conversion rates
– Fashion business reported 112% sales growth in Q2 at constant exchange rates – driven by successful magazine, TV and radio promotion campaigns
– Swedish Online toy retailer Lekmer.se acquired and consolidated in Q2
• Operating income up 20% to SEK 29 (24) mn y/y & more than doubled to SEK 76 (29) mn in H1, with stable operating margin of 5% (5%) in Q2 & increased margin of 6% (3%) in H1
– CDON Group operating income up 28% y/y in Q2 to SEK 28 (22) mn & up 55% to SEK 66 (43) mn in H1 with stable operating margin of 6% (6%) in Q2 & increased margin of 7% (6%) in H1
• Continuing work towards demerger & spin-off in Q4 2010
0%
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Q2 2009 Q2 2010 H1 2009 H1 2010
CDON Group sales CDON Group EBIT
EBIT margin
Financial & Operating Highlights
(SEK mn) (SEK mn)
60%15%
25%
Entertainment Sports & Health Fashion
CDON Group
Q2 Revenue per CDON Group Division
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 16
0%
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Q2 2009 Q2 2010 H1 2009 H1 2010
Sales EBIT EBIT margin
Other Businesses
Radio Radio
Modern Studios
• Sales of SEK 113 (134) mn in Q2 & SEK 189
(237) mn in H1 following lower y/y production
levels
• Increased operating profits of SEK 5 (3) mn in Q2
& SEK 9 (7) mn in H1
Financial & Operating Highlights
• Sales of SEK 211 (188) mn in Q2 & SEK 393
(348) mn in H1 – up 13% y/y in Q2 & in H1 at
constant exchange rates
– Reflected growth for P4 Radio in Norway & Swedish operations, as well as contribution from newly launched P5 local station network in Norway
• Operating costs up 9% y/y in Q2 & up 6% in H1
– Reflected increased royalty and sales comissions in Norway & launch of new local station network in Norway, offset by lower y/y costs in Sweden and positive currency exchange rate movements
• Operating income up 31% y/y to SEK 36 (28) mn
in Q2 & up more than doubled to SEK 48 (23) mn
in H1
• Increased operating margins of 17% (15%) in Q2
& 12% (7%) in H1
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 17
Financial Review
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 18
Income Statement
• Associated company income primarily comprised SEK 115
(103) mn of income from 38.9% shareholding in CTC
Media in Q2 & SEK 219 (28) mn in H1
• Depreciation & amortisation charges of SEK 56(60) mn in
Q2 & 111 (118) mn in H1
• Net interest reduced y/y to SEK -19 (-33) mn in Q2 &
-37 (-70) mn in H1
• Other financial items of SEK -11 (10) mn in Q2 & SEK -46
(9) mn in H1 reflected FX differences, amortisation of
costs arising from arrangement of new loan facility in 2009
& financial non-cash accounting loss arising from issue of
new shares by CTC Media.
• Increase in number of total outstanding shares to
65,935,207 at end of period following issue of shares in
connection with 2005 incentive programme during the
quarter
(SEK mn)Q2
2010Q2
2009H1
2010H1
2009
Net sales3,870 3,584 7,394 6,920
Operating income before associated company income & non-recurring items
603 478 1,018 784
Associated company income*
123 111 229 38
Total operating income (EBIT)
726 588 1,248 822
Net interest & other financial items
-30 -23 -83 -61
Income before tax 697 566 1,165 760
Net income 522 436 822 582
Basic EPS 7.58 6.45 12.18 8.65
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 19
Cash Flow
• SEK -345 (270) mn change in working capital in Q2 and
SEK -608 (-27) mn change in working capital in H1
included the first and largest payment for three year
Swedish broadcasting rights to the Premier League, as
well as payments for other sports rights & also reflected
the low working capital balances at beginning of Q2
• Investments in shares of SEK 136 (1) mn in Q2 & SEK
273 (142) mn in H1 primarily comprised payment for
35% of Viasat Ukraine in Q2 & payment for 90% of
MTG’s 50% stake in Russian DTH platform Raduga TV,
with payment for the remaining 10% made in Q2
• CAPEX of SEK 22 (34) mn in Q2 & SEK 70 (52) mn in
H1 represents less than 1% of Group sales for both
periods
• Cash flow to financing activities primarily reflected SEK
363 mn dividend payment to MTG shareholders in Q2
• SEK 514 (1,084) mn of cash & cash equivalents at end
of Q2
(SEK million) Q2 2010 Q2 2009 H1 2010 H1 2009
Cash flow from operations 570 425 910 593
Changes in working capital
-345 270 -608 -27
Net cash flow fromoperations
225 695 302 566
Cash flow to/from investing activities
-158 -35 -342 -194
Cash flow to/fromfinancing activities*
-372 -287 -133 -262
Net change in cash & cash equivalents
-305 374 -173 110
* Including SEK 363 (329) in cash dividend paid to shareholders in Q2
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 20
Financial Position
• Total borrowings of SEK 3.7 billion
– Comprises SEK 3.0 billion facility due in 2012 & SEK 650 mn drawn SEK 3.5 billion facility (due 2011)
• SEK 3,464 (2,966) mn of available liquid funds (cash &
undrawn facilities) of Q1
• SEK 3,185 (3,603) billion of net debt, equivalent to
1.2x LTM EBITDA
• SEK 2.1 billion book value of 38.9% CTC Media stake of
at end of Q2, compared to public equity market value of
SEK 6.7 billion (USD 867 mn) = surplus of SEK 4.6 bn
(SEK mn) 30 Jun 2010 30 Jun 2009 31 Dec 2009
Non-current assets9,164 12,470 9,026
Current assets6,382 6,414 5,625
Total assets15,546 18,883 14,651
Shareholders’ equity5,986 8,559 5,680
Long-term liabilities4,353 5,388 4,175
Current liabilities5,207 4,936 4,796
Total equity & liabilities15,546 18,883 14,651
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 21
Summary
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 22
Summary
• Record Q2 sales & operating profits, with increased operating margin
• Continued audience, subscriber and advertising market share gains
• Scandinavian free-TV operations grew in all countries with healthy incremental margins
• Premium Nordic IPTV Subscriber & DTH ARPU growth with increased operating margin + now only broadcaster with English Premier League & Champions League coverage across Scandinavia
• Emerging Markets free-TV business returned to growth following ad market gains in all territories, with increased operating margin
• Growth in Emerging Markets pay-TV subscriber base with stable operating margin
• Ongoing process to demerge and distribute fast growing CDON Group to shareholders in Q4
• Financial position as strong as ever with net debt to LTM EBITDA of 1.2x and SEK 3.5 bn of available liquid funds
Set to Continue to Outperform
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 23
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 24
For Further Information, please visit www.mtg.se or contact:
MTG Investor Relations
Tel: +44 7768 440 414 / +44 779 113 84 86
Email: [email protected]
Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 25