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013 Mathias Hermansson Creating Long Term Shareholder Value
 

013 Mathias Hermansson Creating Long Term Shareholder Value

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    013 Mathias Hermansson Creating Long Term Shareholder Value 013 Mathias Hermansson Creating Long Term Shareholder Value Presentation Transcript

    • 11MODERN TIMES GROUPCAPITAL MARKETS DAY 2013CREATING LONG-TERM SHAREHOLDER VALUEMathias HermanssonCHIEF FINANCIAL OFFICER
    • 2MATHIAS HERMANSSONJOINED MTG IN 1999Appointed as Chief Financial Officer of MTG in March 2006Served as Group Financial Controller between 2001 and 2006Has held various senior financial positions at Viasat Broadcasting,MTG Radio and former MTG subsidiary CDON Group ABPreviously served as Finance Director at former subsidiary MetroInternational S.A.’s North American operationsJoined MTG in 1999 as a management trainee after working forUnilever in SwedenFavourite app: Fischer-Price Puppy PlayBest lap: Match Race sailing pre-starts…
    • 3OUR CORNER STONES TO VALUE CREATIONGROWTHGEOGRAPHICALEXPANSION &COUNTRIESDIGITAL CONTENT
    • 4LONG TERM GROWTH STORYTotal EBIT excluding discontinued operations and one-offs0%5%10%15%20%25%30%35%40%45%50%02,0004,0006,0008,00010,00012,00014,00016,00020022003200420052006200720082009201020112012Revenues EBIT* MarginSEKm
    • 5Tight Program Inventory control & managementContinued seasonality within calendar yearsAsset light business model with a low Capex as percentage of revenue.Capex focused on DigitalASSET LIGHT AND STRONG WORKING CAPITAL MANAGEMENT…WORKING CAPITAL AS % OF SALES CAPEX DEVELOPMENT0%2%4%6%8%10%2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Working capital as % of salesSEKm0501001502002503003500.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%2005 2006 2007 2008 2009 2010 2011 2012Capital expenditure % of sales
    • 6Continued high cash generation & conversionAll time high cash conversion 2012Enables us toMake cost efficient larger commitmentsInvest in several key areas simultaneouslyDeliver strong returns to Shareholders…RESULTING IN A HIGHLY CASH GENERATIVE BUSINESS0%20%40%60%80%100%05001,0001,5002,0002,5002003 2004 2005 2006 2007 2008 2009 2010 2011 2012Net operating cash flow % of EBITDA convertedSEKm
    • 7Distributed a value of over SEK 8.1bn in dividends and share distributionsCommitment to distribute at least 30% of recurring net profit as annual ordinary dividendBALANCING INVESTMENTS WITH SHAREHOLDER RETURN34 %14 %8 %25 %19 %DISTRIBUTED VALUE OF SEK 8.1BN SINCE 2006Ordinary dividendExtra dividendShare buy-backCDON distributionMetro distribution
    • 8SIGNIFICANT VALUE CREATION LAST 10 YEARS15%10 YEARANNUAL TSRSales +10 CAGREBIT +24% CAGRAverage ROCE 25%Total dividend SEK 8.1 bnTotal ReturnOMXSB 12%STOXX Europe 600: 7%STOXX Europe 600 Media: 5%Top of the European Broadcasting industry
    • 9UNIQUE POSITION ENABLES COMPETITIVE ADVANTAGELONG TERMSHAREHOLDER BASESTRONG BALANCE SHEETENABLES LONG TERMSTRATEGY0.00.20.40.60.81.01.21.41.62003 2004 2005 2006 2007 2008 2009 2010 2011 2012NET DEBT / LTM EBITDAStrong and long termshareholder structure with16 of our top 50 largestshareholders holds > 50%of the capital & 68% ofvotes and has been withus for the last 5 years
    • SIGNIFICANT INVESTMENTS IN 2012 & 2013TO DRIVE LONG TERM VALUE CREATIONINVESTMENTS OF 1 800 MSEK =13% OF 2012 SALESGEOGRAPHICALEXPANSIONDIGITAL CONTENT…OF WHICH 1 250 MSEKIN ORGANIC GROWTH…OF WHICH 550 MSEKIN M&A ACTIVITIES10
    • RESEARCH AND CONSUMER DRIVEN APPROACHORGANIC INVESTMENTS IN SPORTS CONTENTRegular monitoring of sports opportunities & interests rankingsExisting rightsNew rightsMarket & consumer research for major sports rightsSubscribers dynamics in DTH, 3rd party networks and ViaplayPrice elasticity among existing and new customersChurn effectsScenario modellingOutcomes of buying all or parts of the sport rightOutcomes of different competitor actionsModel scenarios based on past experiencesBuilding the case:Building a thorough business caseMonetization of the rights through Free/Pay/Online business modelsIncremental revenue opportunities11
    • 2. Valuation needs3. Identify content4. Acquire &produce content5. Evaluate contentutilization1. Content needsVisual Planner aggregates needfor more than 30 channels with 3-8 years visibilityResearch used to estimaterevenue potentialStudio,independents,rights and/or OPwith sturdyapproval processCentrally managedacquisition andcoordination of contentpurchasesUsage & views vs costSYSTEMATIC CONTENT ACQUISITION PROCESSORGANIC INVESTMENTS IN US & LOCAL CONTENT12Free-TV ScandinaviaPay-TV NordicOnlineFree-TV Emerging MarketsPay-TV Emerging Markets
    • MARKETASSESSMENTLEGAL &REGULATORYBUSINESS &STRATEGYPLANOPERATIONALPREPARATIONKey infosourcesMacro-economicdataGeneralmarket infoMarketdynamicsCompetitionanalysisMarketdecisioncriteriaRegulatoryenvironmentMarketsizingapproachGeneralassessmentCorporatelawMedia law Tax lawShare-holdingstructuresRational/Timehorizon10 yr plan Investment ROIExecutionplanDecisionsRiskOpportunityEngage centralsupportfunctions……contentacquisition…play-outdistributiontechnology…research &marketingOffice andOrg setupLocal play-out setup…other supportfunctionsEXECUTIONEXTENSIVE EXPERIENCE IN NEW BUSINESS LAUNCHES…ORGANIC GROWTH THROUGH GREEN FIELD LAUNCH IN GHANA13
    • 050100150200250300350400450…RESULTING IN SUCCESSFUL EXECUTIONORGANIC GROWTH THROUGH GREEN FIELD LAUNCH IN GHANASALES CAGR 59%COST CAGR 13%14INDEXED SALES & COST DEVELOPMENT
    • SIGNIFICANT INVESTMENTS IN 2012 & 2013TO DRIVE LONG TERM VALUE CREATIONINVESTMENTS OF 1 800 MSEK =13% OF 2012 SALESGEOGRAPHICALEXPANSIONDIGITAL CONTENT…OF WHICH 1 250 MSEKIN ORGANIC GROWTH…OF WHICH 550 MSEKIN M&A ACTIVITIES15
    • A DISCIPLINED APPROACH TO M&AINTEGRATED PART OF OUR BUSINESS16SCREENING INTEGRATIONEXECUTIONRooted in strategyBased on the corner stones:Geographical expansion(in-market consolidation)Digital (people, tech,capabilities)Content (key themes)Disciplined execution modelClear responsibilities and decisionmakingSystematic control of valuationlevelsContinuous preparedness to walk-awayPMI as key value driverFocus on maintaining and increasingstrengths of targetTailored integration planningRealistic view on synergies and timingDay 1 & 100 day plans
    • SCREENING TO INTEGRATIONWIDE SCREENING PROCESS TO FIND INVESTMENTS17Geographicalexpansion/In-marketconsolidationDigitalContent602418 17114 4 1 2Numberoftargetsin2012SCREENING INTEGRATIONEXECUTION
    • FIRSTROUNDPREPARATORYPHASESECONDROUNDInitial local decisionDeclineWatch listProject start-upProject start-up meetingResource allocationInitial due diligenceWalk-awayPro-active search & In-bound (reactive)Local or Central initiation1st round steering committeeInitial integration planDue diligenceValuation (sign-off procedure)Key risks, anti-corruptionIndicative bidWalk-away2nd round steering committeeIntegration planFull due diligenceValuation update (sign-off procedure)Bid structureRecommended final bidWalk-awayBoard approvalFinal offer and deal structureBidSignCloseEXTERNALEXECUTIONDISCIPLINED TRANSACTION PROCESS18
    • EXECUTIONUNDERSTANDING VALUE VS. PRICE19SEK8.6bnSEK5.4bn2008 2012Aggregated TV ad markets in MTG’s CEE territories (2012 vs peak year 2008)SEK 3.2bn or 60%growth potentialHigher than normalmultiples should not be adeterrent IF believing in amarket recovery
    • 20EXECUTIONIMPACT OF STRENGTHENED M&A CAPABILITIESNumber of M&A transactions per year H2-12 to H1-13AcquisitionsDisposals52453712 252002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201222013(2)(1) (1) (1) (1)(2)(1)
    • INTEGRATIONWHERE MOST VALUE SITS…21Price at acquisitionbased on 2011 (LTM)Delivery 2012 (CY) Expected 2013 (CY+1)11.0xCompetitive price8.2xDelivering the plan<5.5xSignificant valueEV / EBITDA multiples of key transactions 2012MTG currently at 8.7x EV / 2013e EBITDA
    • SIGNIFICANT INVESTMENTS IN 2012 & 2013TO DRIVE LONG TERM VALUE CREATIONINVESTMENTS OF 1 800 MSEK =13% OF 2012 SALESGEOGRAPHICALEXPANSION300 MSEKDIGITAL670 MSEKCONTENT830 MSEK22
    • 23Expect continued strong cash generationAccelerated investments in mainly M&A initiativesSystematic and research driven investment approachProven track record in value creationCommitment to balance shareholder return with re-investments inCountries, Digital & ContentINVESTING FOR THE FUTURE
    • 24THANK YOU