Capital Markets Day 2011 Delivering Shareholder Value

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Boris Podolsky – Chief Financial Officer …

Boris Podolsky – Chief Financial Officer
at
CTC Media Capital Markets Day 2011

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  • 1. 2011 Capital Markets DayDelivering Shareholder Value Boris Podolsky Chief Financial Officer
  • 2. Exceptional Profitability by Broadcast Industry Standards 700 46.9% 46.7% 50% 43.8% 41.7% 45% 600 640 36.7% 40% 500 35% 506 601 400 472 30% 25% US$ mln 300 371 280 220 211 221 20% 200 174 15% 10% 100 5% 0 0% 2006 2007 2008 2009 2010 Operating Revenues OIBDA (bef ore one-off items) OIBDA margin Sustainable OIBDA margins above 35% 1
  • 3. High Levels of Cash Conversion 200 84% 90% 180 72% 80% 67% 186 186 160 66% 63% 70% 140 158 60% 120 133 50% US$ mln 100 117 40% 80 60 30% 40 20% 20 10% 0 0% 2006 2007 2008 2009 2010 Operating Cash Flow % of OIBDA converted Over 70% of OIBDA is converted to cash flow 2
  • 4. Investing in Business Development and Returning Cash to Shareholders 450 419 400 350 $515 mln of net acquisitions 300 of businesses since 2006 250 186 186 200 CapEx of 2.5% of revenues US$ mln 158 133 150 117 134 on average annually 100 40 42 Dividends of $ mln in 2010 $80 50 26 0 2006 2007 2008 2009 2010 Dividends Acquisitions CapEx Operating Cash Flow Intention to pay $100 million in cash dividends in 2011 3
  • 5. Expanding Distribution Network to Drive Advertising Revenue Growth Net acquisitions of regional stations in Russia $97 million of net regional 40 35 35 stations acquisitions since 2006 q 30 25 22 27 stations acquired US$ mln 20 15 14 15 11 Added over 500 affiliates 10 5 0 4 0 3 5 3 0 2 5 2 5 3 2 0 1 1 5 1 1 0 5 0 0 6 2 0 0 2 8 0 2 0 0 2 9 1 0 2 c A is u q s n tio e fr o a n io g ta ls , s n io to e n s a fc q c a h r d ie u 2006 2007 2008 2009 2010 +0.8 pp +0.1 pp +3.2 pp +3.0 ppTechnical + $100 mln in $penetration +6.6 pp +6.2 pp +5.4 pp +5.2 pp advertisinggrowth, y-o-y* revenues +6.6 pp +7.4 pp +4.1 pp* 2007: CTC + Domashny 2008-2010: CTC + Domashny + DTV Technical penetration translates into additional revenue 4
  • 6. Stable Cost Structure… Costs as % of revenue* Costs as % of total operating expenses* OIBDA Margin* 46.9% 46.7% 43.8% 41.7% 36.7% 70% 66% 61% Other 20% 16% 18% 20% 58% 59% 58% 22% 60% 13% 11% 8% 6% 9% 8% 6% 12% 13% 3% 7% 5% 4% 4% 50% 2% 3% 4% Advertising and 6% 5% 3% 3% 4% 4% 13% 13% 11% 5% 4% 8% promotion 12% 11% 40% 7% 8% 7% 6% 30% General & administrative 20% 39% 55% 59% 58% 59% 34% 35% 55% 32% 33% Salaries and 10% benefits 0% Amortization of 2006 2007 2008 2009 2010 programming rights 2006 2007 2008 2009 2010 (*) Excluding non-recurring items …and up to 50% of variable costs 5
  • 7. Investing in Programming to Drive Long-Term Audience and Revenue Growth Long-Target aud. g Target aud. g share 12.9% 11.3% 11.8% 12.2% 11.9% 100 share 1.8% 2.2% 2.1% 100% 700 100% 600 80% 80 80% Ad revenue 500 493 60% 60 60% 400 425 49 Amortization of US$ mlnUS$ mln 399 369 progr. rights 300 327 40% 40 40% 41 44U 200 Amortization of 20% 20 20% progr. rights/Ad 100 173 172 28 revenue 125 139 99 16 14 0 0% 0 0% 2006 2007 2008 2009 2010 2008 2009 2010 Target aud. 120 1.3% 2.4% 2.8% 2.8% 3.1% 100% share 100 80% 80 78 76 60% US mln 60 59 S$ 54 40% 40 30 20% 20 32 33 23 25 16 0 0% 2006 2007 2008 2009 2010 6
  • 8. Rising Shareholder Returns 450% 400% +350% CTC Media 350% 300% 250% +213% RTS Index 200% 150% +70% Nasdaq 100% Composite p 50% +24% 0% MSCI Europe Media -50% CTC Media significantly outperforms country and industry indices 7
  • 9. Management Incentive Program Aligned with Shareholders’ Interests Short-Term Long-Term Cash Equity Incentives I ti Incentives I ti Corporate targets Performance-based P f b d 2010: options KPIs 2010: • OIBDA margin • Revenue growth above • Total revenues Russian TV ad market • Audience share growth th • MSCI European Media Index outperformance • ROCE Functional targets Time-based options: • 4 years Project targets • 25% vesting annually Long- Long-term equity incentives represent over 80% of the fair value of the top g y management annual compensation 8
  • 10. To Conclude… OIBDA margin exceptional by industry standards Strong cash generation and low CapEx requirements Investments in the development of th b i I t t i th d l t f the business remain th priority i the i it Intention to increase dividends in absolute terms annually in absence of large scale M&A High return on capital employed g p p y Strong balance sheet with no debt ($177 mln net cash position at December 31, 2010) Commitment to deliver superior shareholder returns 9
  • 11. Full-Full-Year 2011 Outlook Approximately 20% total operating revenues growth in ruble terms* OIBDA margin of 34%-36% Capital expenditures (excluding acquisitions) of $25 million * (when adjusting the 2010 revenues for the commission payable to Video International for direct sales of CTC Media’s advertising inventory in Russia) 10