MTG Corporate Presentation November 2010

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MTG Corporate Presentation November 2010

  1. 1. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 1 Modern Times Group MTG AB Corporate Presentation November 2010 Maximizing the Power of Entertainment
  2. 2. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 2 International Entertainment Broadcaster with Largest Broadcast Footprint in Europe • Growth company with integrated Free-TV & Pay-TV operations & centralised play-out facility in London • Largest Free-TV & Pay-TV operator in Scandinavia & the Baltics • Second largest Free-TV operator in Czech Republic & Bulgaria with additional operations in Hungary, Slovenia & Ghana • Emerging Market satellite Pay-TV platforms in Baltics, Russia & Ukraine + Pay-TV channels available in 25 countries incl. US • Largest Nordic Radio Operator & Leading Internet Retailer • 38.3% shareholder in Russia’s largest independent television broadcaster - CTC Media (Nasdaq: ‘CTCM’) * When excluding SEK 270 million of associated company income and SEK -3,352 million of non-recurring items LTM Sales SEK 15,001 million ( USD 2,299 million) LTM Operating Income SEK 2,431 million* ( USD 373 million) No of employees 2,900 Listing Nasdaq OMX Nordic (Large Cap Mkt) Symbol MTGB Market Cap SEK 34.4 billion ( USD 5.3 billion) *Excluding non-recurring items
  3. 3. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 3 Operationally Geared Growth Company 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2002 2003 2004 2005 2006 2007 2008* 2009* 9M 2009 9M 2010 Revenue EBIT (SEK million) * Excluding non-recurring items
  4. 4. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 4 Sustained Market Outperformance • Balanced revenue mix of cyclical advertising sales & linear subscription sales • Unparalleled efficiency due to control of content, packaging, pricing & distribution • Integrated operating structure yields synergies & competitive advantage • Increasing exposure to historically high growth emerging markets with high operating leverage • Proven resilience to economic downturn in 2009 with 3% full year sales growth at constant exchange rates & 12% group operating margin (excluding associated company income) Segmental revenue mix 2009 revenue mix
  5. 5. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 5 6,000 50,000 0 25 50 75 100 125 150 175 Market Dynamics TV Advertising Spend (USD million) 0 200 400 600 TV Advertising Spend Per Capita (USD) TV Ad Spend / Total Ad Spend TV Viewing (minutes per day) 2009 data except * 2008 statistics; ** 2007 statistics USA USA UK USA UK Russia3,000 USA Western Europe
  6. 6. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 6 Business Segment Profile & Performance
  7. 7. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 7 A Modern Media Group for Modern Times Sweden Denmark Norway Estonia Latvia Lithuania Czech Hungary Bulgaria Slovenia Russia #2 #2 #2 #1 #1 #1 #2 #3 #2 #2 #4 Ukraine Russia Raduga Pay-TV Operator Free-TV Operator
  8. 8. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 8 Free-TV Scandinavia Commercial Audience Share (15-49) Operating Performance (SEK million) National Penetration • Sales up 18% y/y at constant exchange rates to SEK 3.02 bn for 9M 2010 following strong market recovery & macro development • Substantial advertising market share gains due to: - rising penetration levels following digitalisation - increasing target audience shares with complementary channel launches - bundled pricing strategy & narrowing of pricing discount to incumbents • Balancing of cost control & programming investments - EBIT up 36% y/y to SEK 732 mn for 9M 2010, with increased operating margin of 24% Rising Audience & Advertising Market Shares
  9. 9. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 9 0 20 40 60 80 100 TV4 Viasat SBS 2003 2009 Source: MMS Advertising sold on bundled 'Total Reach’ basis...Complementary channel profiles... Weekly Reach (15-49) % -11% +32% +5% Free-TV Scandinavia The Multi-Channel Media House Model (Example: Sweden)
  10. 10. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 10 Pay-TV Nordic Premium Subscriber Development (thousands) Operating Performance (SEK million) Premium Satellite ARPU (SEK) • Sales up 8% y/y at constant exchange rates to SEK 3.35 bn for 9M 2010 • Ongoing subscriber growth driven by increasing penetration of IPTV - Virtual Operator agreements with all major Scandinavian broadband networks & development of online Viasat OnDemand platform • Ongoing Premium Satellite ARPU growth driven by price increases and accretive value-added services – multi-room & HDTV • EBIT up 15% y/y to SEK 614 mn for 9M 2010, with operating margin of 18% despite ongoing investments in key programming assets (incl. Swedish rights to English Premier League football) & addition of channels to platform Subscriber & ARPU Growth
  11. 11. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 11 Pay-TV Nordic The New ‘Anytime Anywhere’ Paradigm Owned & Operated Satellite Platform Viasat Channels in 3rd Party Networks Virtual Operator in 3rd Party Networks Gatekeeper Independent Internet Environment • 10 Premium packages of Viasat & 3rd party Free & Pay-TV channels • Subscription & other fees with 12 or 24 month contracts • PVR, HD, Multi-room, on-demand services • Satellite universe excludes city- centres • Viasat channels sold individually on ‘mini-pay’ wholesale basis to cable & DTT network operators • Variable fee per subscriber • No customer relationship • Platform agnostic • Premium Viasat channel packages provided through 3rd party double & triple-play networks • Direct access to customer base including city-centre homes unable to receive satellite service • Revenue sharing model with billing through 3rd party • Lower ARPU & SAC than own satellite platform = equivalent profitability levels • Device & network agnostic • OnDemand offering via internet portal = securing position as the online free & pay-TV content aggregator • Viasat & 3rd party Free-TV channel catch-up services + On demand movies , TV series & exclusive live sports • Subscription / pay per day / pay per event pricing • Availability through over the top solutions
  12. 12. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 12 Free-TV Emerging Markets Operating Performance (SEK million) Commercial Audience Share Return to Growth in Stable Market Conditions • Sales up 3% y/y at constant exchange rates to SEK 1.37 bn for 9M 2010 with sales growth in each territory following advertising market share gains in stabilised market conditions • Muti-channel stategy in scale & established Baltic, Czech & Bulgarian markets • Clear market leader in Baltics with 41% pan-Baltic commercial share of viewing (15-49) following audience share gains in each country • Challenger in duopolistic Czech & Bulgarian markets with rising power ratios • EBIT loss reduced to SEK 100 mn for 9M 2010 following return to growth & y/y reduction in operating costs • Ongoing investments in development of operations in Slovenia & Ghana • Operationally geared to recovery with expectation of gradual return to pre-crisis growth levels • Ongoing review of start-up & acquisition opportunities in Emerging Europé & sub-Saharan Africa
  13. 13. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 13 Pay-TV Emerging Markets Satellite Subscribers (thousands) Operating Performance (SEK million) Mini-pay Subscriptions (millions) • Sales up 14% y/y at constant exchange rates to SEK 671 mn following subscriber & subscription growth • Owner of 100% of largest digital broadcasting platform in Baltics, 85% of Ukrainian satellite platform & 50% of Russian satellite platform + virtual operator in leading Estonian broadband network • 15 Viasat channels sold on min-pay / wholesale basis to 3rd party cable & satellite operators in 25 countries including US • Ongoing investments in development of early stage Ukrainian & Russian satellite platforms • EBIT of SEK 82 mn for 9M 2010, with operating margin of 12% • Geared to emergence of pay-TV & price increases as economies recover & consumer spending power rises over time Satellite Platforms in 5 countries & Channels sold in 25 countries
  14. 14. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 14 CTC Media, Inc. Revenue Growth in RUB Operating Performance (USD thousands) Audience Share Dynamics (9M 2010) • Largest shareholder in Nasdaq quoted company - 38.3% shareholding acquired for USD 83 mn with current equity market value of ~USD 1.4 bn • Sales up 15% y/y in ruble terms to USD 379.0 mn for 9M 2010 following 8% y/y growth in Russian advertising sales in ruble terms - guidance for FY 2010 sales growth of ~13% • 12.8% combined 4+ audience share &19% combined national advertising market share or CTC, Domashny & DTV networks • OIBDA of USD 116 mn for 9M 2010, with margin of 31% & guidance for FY 2010 margin of >35% • Net cash position & payment of USD 80 million dividend in 2010 Equity Participation in #1 Russian Independent Media Company 48% 19% 32% -3% 8% 2006 2007 2008 2009 9M 2010 CTC Media ad sales growth 0 200 400 600 800 2006 2007 2008 2009 9M 2009 9M 2010 Sales EBIT
  15. 15. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 15 Financial Performance & Position
  16. 16. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 16 Strong & Flexible Financial Position SEK million 9M 2010 Sales 10,925 EBIT (incl. Associates) 1,706 Pre-tax profit 1,664 Net income 1,182 Income SEK billion 30 Sep 2010 Total debt Cash & equivalents 3,562 531 Net debt 3,031 Net debt / LTM underlying EBITDA Available liquid funds 1.1x 3,631 Financial Position SEK million 9M 2010 Cash flow from ops 1,294 CAPEX - as % of revenues Dividend Net change in cash & equivalents 118 1% 363 -137 Cash Flow • New unsecured SEK 6.5 bn five year revolving multi-currency credit facility arranged in October 2010 to replace existing facilities with more flexible structure & attractive terms • 24% ROCE & 27% ROE • Significant impact of y/y strengthening of SEK reporting currency vs. operating currencies on reported results – sales growth higher at constant exchange rates than reported • Annual tax rate of 25-30% • Payment of increased annual dividend of SEK 5.50 per share • Increased working capital following key programming rights investments USD 1 = SEK 6.52 (November 4, 2010)
  17. 17. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 17 CDON Group • Sales up 27% y/y at constant exchange rates to SEK 1.44 bn & EBIT up 31% to SEK 97 mn for 9M 2010 , with 7% operating margin • MTG EGM on 21 October 2010 approved distribution of all CDON Group shares to MTG shareholders & listing of shares on Nasdaq OMX Stockholm stock exchange – Shareholders to receive 1 CDON Group share per MTG Class A or Class B share held – Intention to complete spin-off before end of 2010 Operational Performance (MSEK) Online Retail Penetration 2009 Market Leading Internet Retailer to be Spun-Off to Shareholders 0 50 100 150 200 0 500 1,000 1,500 2,000 2005 2006 2007 2008 2009 Entertainment Fashion Health & Sports EBIT The Swedish Online Retail Market 6.0% 4.7% 3.8% 3.7% 3.5% 3.4% 0% 2% 4% 6% 8% US Denmark Nordic average Sweden Norway Finland Source: HUI
  18. 18. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 18 Clear Objectives & Priorities – Annual Organic Sales Growth of more than 10% – Operating Profit Margin of more than 20% for Viasat Broadcasting (even excluding associated company income) – Increasing proportion of Emerging Market Sales & Operating Income – Generation of healthy ROE & ROCE – Generation of healthy Total Shareholder Returns
  19. 19. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 19 The Lean & Mean Broadcasting Machine • Operationally geared growth company with balanced (advertising & subscription revenues) & diversified (geographically) revenue mix • Driving growth primarily through organic expansion & start-ups • Challenger to incumbents in structurally evolving markets • Successful multi-channel, multi-platform, multi-territory media house model • Efficient integrated operating structure yields competitive advantage & synergies • Investing healthy cash flows from Nordic region into emerging markets • Strict cost control, cash management & capital allocation • Strong & flexible financial position • Delivering enhanced shareholder returns
  20. 20. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 20 For further information, please visit www.mtg.se or contact: MTG Investor Relations Tel: +44 7768 440 414 / +44 7791 138 486 Email: investor.relations@mtg.se
  21. 21. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 21

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