131025 mtg corporate presentation new

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131025 mtg corporate presentation new

  1. 1. MODERN TIMES GROUP SHAPING THE FUTURE OF ENTERTAINMENT OCTOBER 2013 1
  2. 2. A UNIQUE ENTERTAINMENT FOOTPRINT 32 FREE-TV CHANNELS IN 10 COUNTRIES SATELLITE PAY-TV PLATFORMS IN 9 COUNTRIES >90 MILLION WHOLESALE PAYTV CHANNEL SUBSCRIPTIONS IN 36 COUNTRIES 2
  3. 3. BUILT FROM SCRATCH IN 25 YEARS 1987 2013 3
  4. 4. GENERATING 10 YEARS OF SUSTAINED GROWTH SALES EBIT SEK 13.3 BILLION SEK 2.1 BILLION Sales CAGR = 10% 2002 2012 EBIT CAGR = 24% 2002 2012 4
  5. 5. WITH A BALANCED REVENUE MIX INTEGRATED & DIVERSIFIED MTG REVENUE SPLIT – BY SOURCE (2012) REVENUE SPLIT – BY SEGMENT (2012) 9% 25% 34% 42% 49% 41% Advertising Subscription Other Emerging Markets Pay-TV Nordic Free-TV Scandinavia 34% OF PROFITS GENERATED IN EMERGING MARKETS 5
  6. 6. DELIVERING SHAREHOLDER VALUE SIGNIFICANTLY OUTPERFORMING THE INDUSTRY AND THE GENERAL MARKET Sales: +10% CAGR EBIT: +24% CAGR Average ROCE: 25% 15% TSR CAGR (10Y) Total distribution to shareholders: SEK 8.1 bn DRIVEN PRIMARILY BY STRONG GROWTH AND HIGH RETURNS WHICH IS THE DNA OF MTG 6
  7. 7. DRIVEN BY A TRACK RECORD OF CONSTANT INNOVATION 1987 1991 Launch of first Scandinavian free-TV channel Viasat is first in the Nordics to launch satellite pay–TV platform 2001 2005 Viasat 1st in Europe to Viasat launches switch off analogue PVR recordable STB distribution of premium channels after switch to digital satellite platform 2009 2011 2012 Catch-up services introduced in Scandinavia Viaplay launched in the Nordics Like.tv launched in Sweden 7
  8. 8. AND THE CONSTANT EXPORTING OF A SUCCESSFUL OPERATING MODEL 1987 Sweden, Norway & Denmark 1996 Estonia & Finland 1997 Lithuania 1998 Latvia 2000 Hungary 2001 Russia 2003 CIS countries 2005 Czech Republic 2006 Slovenia 2008 Bulgaria, Ukraine & Ghana 2013 Tanzania OUR 60 CHANNELS ARE NOW AVAILABLE IN 36 COUNTRIES SPANNING 4 CONTINENTS & REACHING >100 MILLION PEOPLE WE ARE PRESENT IN MARKETS WITH TOTAL COMBINED ANNUAL TV ADVERTISING SPEND OF 2.7 BILLION DOLLARS AND PAY–TV SUBSCRIPTION SPEND OF ALMOST 12.5 BILLION DOLLARS 8
  9. 9. CONTENT REMAINS KING AND WE ARE THE BIGGEST BUYER IN TOWN TOTAL NUMBER OF BROADCAST HOURS (2013) 1,000,000 900,000 879,470 800,000 700,000 600,000 481,800 500,000 394,200 400,000 297,840 300,000 236,520 210,240 CME Pro7 200,000 100,000 0 MTG RTL Bonnier Mediaset Source: MTG Research 9
  10. 10. ENABLED BY A UNIQUE POSITION AN INTEGRATED MODEL IS INCREASINGLY IMPORTANT SPLIT OF CONTENT HOURS 20 YEARS AGO Sport OP UNIQUE MARKET POSITION MTG TODAY (NORDIC ONLY) 4% 6% Pay-TV Free-TV Channel distr. SVOD AVOD TVOD 30% 10% Acquisition 90% 60% Growth used to come from acquisition, but has now changed to more premium and local MTG has an edge over the competition with local content, sport and strong acquisitions 10
  11. 11. AND OVERALL VIDEO CONSUMPTION IS CONTINUING TO GROW VIDEO USAGE IN THE USA – MINUTES PER DAY PER USER 2+ NON – LINEAR ONLINE VIDEO MOBILE VIDEO 1 TIME SHIFTED 2 TRADITIONAL LINEAR TV 323 4 7 12 301 337 6 16 7 7 307 19 364 15 11 22 357 11 10 24 318 312 313 358 350 7 317 9 10 CAGR +19% 25 CAGR +1% Q1 ’08 Q1 ’09 Q1 ’10 Q1 ’11 Q1 ’12 Q4 ’12 1 Data for Q1 2008 as of May 2008; Mobile video data referring to watching Video via phone; Historic data not fully comparable due to changes in the methodology 2 Data for all TV households (significantly higher for household that own a DVR) SOURCE: Nielsen Cross Platform reports 11
  12. 12. WE CAN CONTINUE TO INVEST DUE TO OUR ASSET LIGHT & CASH GENERATIVE SET-UP NET DEBT (SEK MN) STRONG CASH FLOW GENERATION (SEK MN) 4,000 2,500 3,500 2,000 3,000 2,500 1,500 2,000 1,000 1,500 1,000 500 500 0 0 2008 2009 2010 2011 2012 9m '13 2004 2005 2006 2007 2008 2009 2010 2011 2012 12
  13. 13. IN LONG TERM VALUE CREATION IN 3 CORE AREAS MAJOR INVESTMENT INITIATIVES: GEOGRAPHICAL EXPANSION 1. CONTENT – WE HAVE SIGNIFICANTLY STRENGTHENED OUR CONTENT POSITION ACROSS OUR PLATFORMS 2. VIAPLAY – FURTHER ESTABLISHING OUR OTT SERVICE AS THE LEADING PROVIDER 3. CIS – EXPANSION INTO THE PREMIUM PAY-TV MARKET 4. AFRICA – NEXT IN LINE IS TANZANIA CONTENT DIGITAL 5. ONLINE – INCLUDING THE LAUNCH OF MTGx 13
  14. 14. COMBINED WITH M&A A LOT OF VALUE SITS IN INTEGRATION EV / EBITDA MULTIPLES OF KEY TRANSACTIONS IN 2012 PRICE AT ACQUISITION BASED ON LTM DELIVERY IN 2012 EXPECTATION FOR 2013 11.0x 8.2x <5.5x COMPETITIVE PRICE DELIVERING THE PLAN MOVING FORWARD MTGB CURRENTLY TRADES ON ~9.5X EV / 2013E EBITDA 14
  15. 15. SEGMENTAL HIGHLIGHTS AND Q3 PERFORMANCE 15
  16. 16. Q3 2013 – HIGHLIGHTS INVESTING IN MOMENTUM  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  Coverage of the Winter Olympics will boost sales and adversely impact Q1 2014 profits for both the Nordic pay-TV and Scandinavian free-TV businesses 16
  17. 17. Q3 IN FIGURES GROWTH & INVESTMENTS Sales up 9% y-o-y at constant FX  Q3 in brief 2012 Jul-Sep 2013 Jul-Sep 2,940 3,204 Growth (at constant FX) -1% 9% 288 162 9.8% 5.0% 422 289 14.4% 9.0% Organic growth at 5% Sales (SEKm) EBIT margin (excl. associates) of 5.0%  OpEx up 15% at constant FX and 11% organically EBIT excl. associates  Significant investments in Nordic & Emerging Markets pay-TV businesses to drive future growth EBIT margin excl. associates Continued strong cash conversion Total EBIT Total EBIT margin  Working capital change in the quarter reflecting the timing of programming payments. Still under strict control Cash flow from operations 237 210  Dividend stream from CTC Media of SEK 62m (51) Changes in working capital 65 -160  Acquisition of DRG, Novemberfilm and Net info Net cash flow from operations 302 49 17
  18. 18. FREE-TV SCANDINAVIA GROWTH BACK INTO POSITIVE TERRITORY STABLE SALES (Y-O-Y) AT CONSTANT FX EBIT (SEK MN) AND EBIT MARGIN (%) 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% 250 25% 200 20% 15.4% 150 13.3% 15% Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011 100 10% 50 5% 0 0% Q3 2012 EBIT Q3 2013 EBIT margin OPEX GROWTH (FY 13) STILL EXPECTED TO BE AT THE HIGHER END OF THE MID-SINGLE DIGIT PERCENTAGE RANGE 18
  19. 19. FREE-TV SCANDINAVIA WEAK START BUT STRONG ENDING TO THE QUARTER CSOV (15-49) – Q3 2013 VS Q3 2012 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 CSOV (15-49) – 2006 TO 2013 (YTD) 40 35.8 34.7 35 25.8 21.6 30 18.5 17.3 25 20 15 10 Sweden Q3 2012 Denmark Norway Q3 2013 2006 2007 Sweden 2008 2009 2010 2011 Denmark 2012 9m 2013 Norway WITH FURTHER OPPORTUNITIES – HOWEVER THERE IS A LAG BETWEEN AUDIENCE SHARES AND AD SHARES 19
  20. 20. FREE-TV EMERGING MARKETS STRONG GROWTH – TOUGHER COMPS AHEAD 21% SALES GROWTH (Y-O-Y) AT CONSTANT FX EBIT (SEK MN) AND EBIT MARGIN (%) 30% 3.8% 50 20% 8% 6% 100 25% 4% 2% 15% 0 10% 0% -50 5% Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011 0% -5% 7.9% 150 35% -2% -100 -4% Q3 2012 9m 2012 EBIT Q3 2103 9m 2013 EBIT margin IMPROVED PROFITABILITY BUT CONTINUED INVESTMENTS AT THE SAME TIME AS GROWTH IS EXPECTED TO MODERATE 20
  21. 21. FREE-TV EMERGING MARKETS AUDIENCE SHARE GAINS IN ALMOST ALL MARKETS CSOV (15-49) – (%) 60 50 TV AD MARKETS IN MTG TERRITORIES 47.0 50.0 40.4 40 28.4 30 32.8 36.0 20 10 0 Baltics Bulgaria Q3 2012 Czech Rep. 10 9 8 7 6 5 4 3 2 1 0 Q3 2013 SEK 8.6 bn 2008 SEK 5.4 bn 2012 SEK 3.2 BN OR 60% GROWTH POTENTIAL IF WE SEE A FULL RECOVERY IN THE TV AD MARKET 21
  22. 22. PAY-TV NORDIC PROFITABILITY INLINE WITH EXPECTATIONS 7% SALES GROWTH (Y-O-Y) AT CONSTANT FX EBIT (SEK MN) AND EBIT MARGIN (%) 12% 300 10% 250 8% 200 6% 150 4% 100 2% 50 Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011 0% 20% 15.9% 15% 11.9% 10% 5% 0 0% Q3 2012 EBIT Q3 2013 EBIT margin LOOK FOR A MARGIN OF 11-12% FOR 2013 AND HIGHER MARGIN 2014 DESPITE THE WINTER OLYMPICS 22
  23. 23. PAY-TV NORDIC VIAPLAY VOLUME & VIASAT ARPU GROWTH PREMIUM SUBSCRIBER DEVELOPMENT (‘000) ARPU FOR PREMIUM DTH (SEK) - ANNUALIZED 1,200 5,200 1,000 5,000 800 4,800 600 400 4,600 200 4,400 Satellite subscribers 3'rd party network subscribers Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 0 4,200 4,000 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 OVERALL SUBSCRIBER BASE UP IF YOU INCLUDE VIAPLAY BUT PREMIUM DTH DOWN AS ANTICIPATED 23
  24. 24. PAY-TV NORDIC OTT OPENS UP A NEW WORLD PC/MAC SMART PHONES TABLETS OVER THE TOP 9 MN HOUSEHOLDS + VIRTUAL OPERATOR GAME CONSOLES SMART TVSETS 4.2 MN HOUSEHOLDS TV SET-TOP BOXES OTT STB DTH 1.6 MN HOUSEHOLDS FIRST TO MARKET DRIVEN BY AN EARLY DECISION TO HAVE A PLATFORM AGNOSTIC APPROACH 24
  25. 25. PAY-TV NORDIC WE ARE A LEADING PLAYER – ENABLED BY CONTENT 1st pay window 2nd pay window 25
  26. 26. PAY-TV EMERGING MARKETS RUSSIA DRIVES GROWTH & INVESTMENTS 7% SALES GROWTH (Y-O-Y) AT CONSTANT FX EBIT (SEK MN) AND EBIT MARGIN (%) 25% 80 25% 70 20% 60 50 15% 20% 17.9% 15% 40 10% 9.7% 30 20 5% 5% 10 0 Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011 0% 10% 0% Q3 2012 EBIT Q3 2013 EBIT margin EXPECT TO ACHIEVE A BETTER THAN BREAKEVEN EBIT RESULT FOR FY13 WITH RISING PROFITABILITY LEVELS IN 2014 26
  27. 27. PAY-TV EMERGING MARKETS CONTINUED STRONG SUBSCRIPTION GROWTH SUBSCRIBERS / SUBSCRIPTIONS (‘000) INVESTING INTO THE HD MARKET IN THE CIS 100 90 80 70 60 50 40 30 20 10 0 700 600 500 400 300 200 100 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 9m 2013 Mini-Pay subscriptions (million) DTH ('000) 395 RUB ($13) = ADDED ALMOST 16 MILLION MINI-PAY SUBSCRIPTIONS SINCE LAST YEAR TO A TOTAL OF 91 MILLION 27
  28. 28. PAY-TV EMERGING MARKETS MARKETS DRIVEN BY PENETRATION & DIGITALIZATION DIGITAL PAY-TV HOUSEHOLDS (MILLIONS) IN EASTERN EUROPE RUSSIA & UKRAINE: PREMIUM PAY REVENUES EXPECTED TO THREEFOLD (MILLIONS USD) 35 30 24 25 30 15 12 1 2 2006 2007 10 4 6 15 300 269 250 21 20 212 200 18 161 150 9 114 100 50 8 13 20 40 65 58 64 70 WE OWN 5 OUT OF THE TOP 20 PAY CHANNELS IN RUSSIA INCLUDING THE TOP TWO Note: Measured by Average Monthly Reach 28 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2005 0 0 2004 5 27 322 334 350
  29. 29. STUDIOS, MTGX, RADIO NICE TO HAVE + THE X FACTOR Sales up 29% y-o-y 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 and Radio Norway  Heavy losses in Radio Sweden – restructuring ongoing  11% of Group sales Growth (at constant FX) 2013 Jul-Sep Sales (SEKm) 2012 Jul-Sep 297 367 -18% 29% 15 -46 5.1% -12.5% Investments in MTGx – expected to add up to SEK 70m of operating costs in H2 EBIT (SEKm) EBIT margin (excl. associates) Agreement to acquire Nice Entertainment Group  Nordic´s largest independent group of production companies  Expected to close this month  Following acquisitions of Paprika Latino, DRG & Novemberfilm 29
  30. 30. SUMMARY SHAPING THE FUTURE OF ENTERTAINMENT  Accelerated sales growth with balanced mix of revenues  Investments on track in content, digital and geographical expansion  Leading satellite & OTT operator + recently launched MTGx digital accelerator  Established & expanding emerging market presence in Eastern Europe & Africa  Largest shareholder in leading independent Russian TV broadcaster  High cash conversion levels, low gearing & significant available funds  Commitment to growth + shareholder returns with dividend policy to pay out >30% of recurring net income 30
  31. 31. MTG INVESTOR RELATIONS FOR FURTHER INFORMATION, PLEASE VISIT WWW.MTG.SE OR CONTACT: TEL: +46 (0) 73 699 2714 EMAIL: INVESTOR.RELATIONS@MTG.SE 31

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