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Mtg q312 presentation final

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  • 1. Modern Times GroupMTGThird Quarter 2012Financial Results CHAPTER NAME 1
  • 2. Forward looking statementsForward-looking information and Safe Harbour Statement under the U.S. Private Securities Litigation ReformAct of 1995This report contains forward-looking information based on the current expectations of MTG management.Although management deems that the expectations presented by such forward-looking information arereasonable, such forward-looking information is subject to risks and uncertainties and no guarantee can begiven that these expectations will prove correct. Accordingly, the actual future outcome could vary considerablywhen compared to what is stated in the forward-looking information, due to such factors as the prevailingeconomic and business environments in certain markets and the impact of the Eurozone crisis in particular;commercial risks related to expansion into new territories; political and legislative risks related to changes inrules and regulations in the various territories in which the Group operates; exposure to foreign exchange ratemovements and the US dollar and Euro currencies in particular; and the emergence of new technologies andcompetitors. These risks and uncertainties are described in more detail in the 2011 Annual Report, which isavailable from the Group’s website at www.mtg.se and in the Group’s registration statement on Form 20-F,which is available from the website of the U.S. Securities and Exchange Commission. 2
  • 3. 3
  • 4. Third quarter 2012 • Sales up 2% y-o-y at constant FX when excluding SEK mn discontinued or sold operations 3.500 40% • Down 1% y-o-y at constant FX 3.106 • OPEX up y-o-y at constant FX 2.940 35% 3.000 • Investments in the Nordic pay-TV business, offset by 30% slightly lower costs in the Emerging Markets 2.500 businesses & stable cost base in Free-TV 25% Scandinavia segment 2.000 • EBIT before associated company income of 20% SEK 288 (358) mn 1.500 15% • Total EBIT of SEK 422 (526) mn including SEK 134 1.000 (168) mn of associated company income 10% • PTP of SEK 389 (439) mn 500 358 288 5% • Including SEK -2 (-64) non-cash impact of change in value of option element of CDON convertible bond 0 0% Q3 2011 Q3 2012 • Net income of SEK 308 (306) mn & basic EPS of SEK 4.65 (4.71) Revenue EBIT* EBIT margin • Jørgen Madsen Lindemann appointed President & CEO on * EBIT excluding associated income 15 Sep 2012 & senior management changes announced on 15 October 2012 • Acquired Swedish communications operator Zitius & Signed agreement to acquire remaining shares in TV 2 Sport in4 Denmark
  • 5. First nine months of 2012 SEK mn• Stable sales y-o-y at reported rates & up 1% y-o-y at 12.000 40% constant FX• OPEX up y-o-y at constant FX 35% 9.762 9.716 10.000• EBIT before associated company income of SEK 1,181 (1,382) mn 30% 8.000 • Total EBIT of SEK 1,648 (1,900) mn, including SEK 25% 467 (517) of associated company income• PTP of SEK 1,567 (1,791) mn 6.000 20% • Including SEK -8 (-30) non-cash impact of change 15% in value of option element of CDON convertible 4.000 bond 10%• Net income of SEK 1,216 (1,276) mn & basic EPS of SEK 2.000 1.382 1.181 5% 17,68 (18,90)• Received SEK 158 (145) mn of dividends from CTC Media 0 0% 9M 2011 9M 2012• Net cash flow from operations of SEK 1,095 (689) mn Revenue EBIT* EBIT margin * EBIT excluding associated income 5
  • 6. Forward expectations MTG is increasing its investments in its pay-TV operations in the increasingly competitive Nordic markets and in the large scale emerging Russian and Ukrainian markets, in order to ensure that its channels and services have the most attractive consumer content offerings and capture subscriber market share in the future. • Increasing investments in Nordic pay-TV content, premium channels and Viaplay online pay-TV service currently expected to result in Nordic pay-TV EBIT margin of approximately 15% in Q4 2012 and 10-12% for full year 2013. The total Nordic premium pay-TV subscriber base (excluding Viaplay) is currently expected to continue to decline in Q4 2012 and for the full year 2013 due to the ongoing decline in the DTH subscriber base and lower than anticipated growth in the third party network subscriber base, and result in stable quarter on quarter total Nordic pay-TV sales in Q4 2012 and stable year on year sales for the full year 2013. The fast growing Viaplay online pay-TV service is expected to continue to grow its subscribers and revenues throughout this period • Increasing investments in Russian and Ukrainian pay-TV content, HD channels and pre-paid satellite service in Ukraine currently expected to boost Emerging Markets pay- TV revenue growth levels and result in segment operating losses of less than SEK 20 million in Q4 2012 and less than SEK 50 million for full year 20136
  • 7. 7
  • 8. Free-TV Scandinavia Financial Highlights• Sales down 7% y-o-y at constant FX in Q3 & down SEK mn 4% for YTD 1.200 50% 984 45% • Lower ad sales in all 3 Scandinavian countries 1.000 876 40% • High sold-out ratios following lower levels of 800 35% total TV viewing & coverage of the Olympics 30% on competing channels 600 25% 20%• OPEX down 4% y-o-y in Q3 & up 5% for YTD 400 15% 216 • Up y-o-y at constant FX for both periods 200 135 10% 5% • Lower programming costs in Norway offset by 0 0% higher programming costs in Denmark and Q3 2011 Q3 2012 Sweden Revenue EBIT EBIT margin• EBIT margin of 15% (22%) in Q3 & 18% (25%) SEK mn for YTD 3.500 50% 3.153 3.010• Swedish & Norwegian TV ad markets expected to 3.000 45% have continued to grow y-o-y in Q3, while Danish 40% 2.500 35% market estimated to have declined significantly 2.000 30%• OUTLOOK: The Group now anticipates that 25% operating costs will be down year on year in the 1.500 20% fourth quarter at constant exchange rates and 1.000 795 15% therefore only up low single digit percentage points 543 10% for the full year 2012 500 5% 0 0% 8 9M 2011 9M 2012
  • 9. Free-TV ScandinaviaOperating Highlights Commercial Audience Share (15-49)Sweden 50%• Significant CSOV improvements q-o-q on all four 45% channels 40%• Earlier launch of Fall schedules 35%• Improved audience shares so far in Q4 30%• Biggest AVOD media house in July, August & first half of September 25%Denmark 20%• TV3+ affected by Olympic games, but offset by 15% continued y-o-y ratings increases for TV3 & both 10% y-o-y & q-o-q ratings gains for TV3 PULS 5%• Positive CSOV development after end of Olympics & ratings up y-o-y in Q4 to date 0%• Focus on the development of AVOD environment & MTG is leading online media houseNorway• TV3 CSOV stable q-o-q in Q3 Sweden Norway Denmark• Viasat4 increased CSOV both q-o-q & y-o-y in Q3• Continued focus on execution of programming schedules9
  • 10. Pay-TV NordicFinancial Highlights SEK mn• Sales stable y-o-y in Q3 & up 5% for YTD 1.400 50% 1.184 1.182 45% • Up 3% y-o-y at constant FX in Q3 & up 6% 1.200 40% for YTD 1.000 35%• OPEX up 4% y-o-y in Q3 & 8% for YTD 800 30% 25% • Up more at constant FX 600 20% • Investments in premium movie & sports 400 15% content & Viaplay 234 196 10% 200 5% • Expansion of HD and catch-up channel 0 0% portfolio & rebranding of Viasat Film Q3 2011 Q3 2012• EBIT margin of 16.6% (19.8%) in Q3 & 17.3% Revenue EBIT EBIT margin (19.3%) for YTD SEK mn• OUTLOOK: The Group currently continues to 4.000 3.509 3.681 50% anticipate a segment operating margin of 3.500 45% approximately 17% for FY2012 & for the Q4 2012 40% 3.000 operating margin to be approximately 15%. 35% 2.500 30% 2.000 25% 1.500 20% 15% 1.000 677 636 10% 500 5% 0 0%10 9M 2011 9M 2012
  • 11. Pay-TV NordicOperating Highlights Premium subscribers• Overall premium subscriber base down q-o-q 1.200 • 3’rd party subscriber base up slightly q-o-q 1.000 & added 18,000 net new subscribers y-o-y 800 Thousands • DTH affected by increased competition in 600 Denmark in particular 400 • Shift in subscriber mix towards basic tier 200 packages in Norway 0• Premium satellite ARPU up 3% y-o-y in Q3 & slightly down q-o-q • Q-o-q development due to adverse FX Satellite subscribers 3rd party network subscribers • Y-o-y growth reflected continued growth in value added services & price increases Value added services 400 350 Thousands 300 250 200 150 100 50 011 ViasatPlus HDTV Multi-room
  • 12. Content Leadership TV & Movies1’stPay International titles Local titles2’ndPay
  • 13. Content LeadershipPremium Sports Content * ** * In Sweden & Denmark ** In Denmark & Norway
  • 14. Free-TV Emerging Markets Financial Highlights • Total sales down 8% y-o-y & down 4% for YTD SEK mn Free-TV Emerging Markets 1.600 100 • Up 3% y-o-y and 1% for YTD at constant FX 1.418 1.361 1.400 80 • Continued growth in all businesses except 60 1.200 52 Hungary & effect of discontinued Slovenia 40 1.000 • OPEX down y-o-y at reported & constant FX 20 800 • Improved operating profit y-o-y for both periods & 0 600 400 operating margin of 3.8% for YTD 369 -20 400 -35 -40 • OUTLOOK: The Group currently continues to not -48 200 -60 anticipate any increase in segment operating costs -76 0 -80 for FY2012 and, therefore, a largely stable y-o-y cost Q3 2011 Q3 2012 9M 2011 9M 2012 development in Q4 2012 Revenue EBIT • Baltic, Czech & Bulgarian sales down 5% y-o-y & SEK mn Baltics, Czech Republic & Bulgaria down 1% for YTD 1.400 1.254 1.244 140 • Up 6% in Q3 & up 4% for YTD at constant FX 1.200 120 100 • Combined OPEX down 4% y-o-y both in Q3 & for 1.000 80 80 YTD 800 60 45 40 • Q3 included reorganisation costs for LNT & 600 20 strategic programming investments in Czech 352 334 400 0 Republic offset by cost savings in Bulgaria -20 200 -40 • Improved y-o-y EBIT y-o-y in Q3 & for YTD, with -48 -50 0 -60 EBIT margin of 6.4% (3.6%) for YTD Q3 2011 Q3 2012 9M 2011 9M 201214 Revenue EBIT
  • 15. Free-TV Emerging MarketsOperating HighlightsBaltics Commercial Audience Share• Sales up 10% y-o-y in Q3 at constant FX 70% • Primarily due to consolidation of LNT in 60% Latvia & higher y-o-y TV ad sales in Estonia• Pan-Baltic commercial target audience share of 50% 47% (40.6%) – reflected consolidation of LNT in Latvia 40% 30%Czech Republic• Sales up 4% y-o-y in Q3 at constant FX 20%• CSOV up y-o-y & q-o-q following increased 10% investments in OP & focus on programming schedule + Champions League matches on Prima COOL Estonia (15-49) Latvia (15-49)*Bulgaria Lithuania (15-49) Czech Republic (15-54)• Sales up 6% y-o-y in Q3 at constant FX Bulgaria (18-49)• Combined CSOV up both y-o-y & q-o-q despite * MTG has included the LNT channels in its reported combined CSOV in slightly lower programming investments Latvia with effect from Q3 201215
  • 16. Pay-TV Emerging Markets Financial Highlights• Sales up 11% y-o-y in Q3 & 15% for YTD SEK mn 300 50% • Up 13% y-o-y at constant FX both in Q3 & 267 45% for YTD 250 240 40%• OPEX down 3% y-o-y in Q3 & up 1% for YTD 35% 200 • Primarily reflected FX fluctuations 30% 150 25%• EBIT more than tripled to SEK 48 (13) mn in Q3 & to 20% SEK 139 (42) mn for YTD 100 15% 50 48 10%• OUTLOOK: The Group continues to anticipate higher 13 5% y-o-y profit levels for the segment for FY2012 but for 0 0% the segment to report an operating loss in Q4 2012 Q3 2011 Q3 2012 following the investments in the launch of the HD Revenue EBIT EBIT margin movie channels and the Ukrainian pre-paid satellite SEK mn service 900 50% 790 45% 800 700 685 40% 600 35% 30% 500 25% 400 20% 300 15% 200 139 10% 100 42 5% 0 0% 16 9M 2011 9M 2012
  • 17. Pay-TV Emerging Markets Operating Highlights• 83,000 net new subscribers added y-o-y & Satellite subscribers 9,000 q-o-q 600 • Continued intake on all 3 satellite platforms Thousands• Wholesale channel business added over 14 mn subscriptions y-o-y & over 2.6 million subscriptions 500 q-o-q • Ongoing growth in Russia• Launched 3 new HD movie channels in Russia, 400 Ukraine, CIS & Baltics • Will feature content from four major Hollywood studios Mini-pay TV subscriptions 80.000 Thousands 70.000 60.000 50.000 40.000 17 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
  • 18. New HD Channels Launched Russia, Ukraine, the CIS & Baltics Top 10 pay-TV channels in Russia • All 3 channels available in Russia, Ukraine & Monthly reach (million people) CIS 21,2 • TV1000 Premium HD – Premium tier movie 20,6 channel with focus on first run premieres of DISCOVERY CHANNEL 19,4 award winning films from Hollywood studios and ANIMAL PLANET 17,9 independent local distributors MOYA PLANETA 15,5 • TV1000 Megahit HD – Premium movie channel EUROSPORT 14,1 featuring first run premieres of the latest NATIONAL GEOGRAPHIC CHANNEL 13,2 blockbuster titles from Hollywood and Russia 12,2SONY ENTERTAINMENT TELEVISION 11,9 • TV1000 Comedy HD – dedicated to US DOM KINO 11,0 comedy movies 0 5 10 15 20 25 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Countries 7 11 15 22 23 24 25 25 28 31Channels 2 3 5 6 7 8 10 15 19 23Satellite platforms 18 Baltics Ukraine Russia
  • 19. Launch of UA.TV Utilizing growth opportunities Pay-TV market penetration TV market structure (%) (2011)35%30%25% Cable20% 39% DTH (pay)15%10% 58% IPTV5% DTH (freeview)0% 1% 2% Cable DTH IPTV • Substantial market opportunity – Europe’s 6th largest country by population • Pay-TV penetration in 2011 is still low, at close to 19.5% of TV HHs • Addressable market for DTH – 15.4 million non-cable HHs 19
  • 20. Other Businesses Highlights• Comprises MTG’s Radio operations in Norway & SEK mn Sweden and MTG Studios content production 400 372 businesses 350 297• Sales up 7% y-o-y & 2% for YTD at constant FX 300 when excluding Bet24 contribution in 2012 & 2011 250 200 • Underlying performance reflected higher y-o-y sales for MTG Studios & Norwegian radio 150 operations 100 50 18 • Significantly lower y-o-y sales for Swedish 15 radio operations 0 Q3 2011 Q3 2012• Profits slightly down y-o-y in Q3 Revenue EBIT • Losses for Swedish radio operations offset by profits for Norwegian radio operations & lower SEK mn y-o-y losses for MTG Studios 1.400 1.225 1.200• Paprika Latino to be consolidated in Q4 1.101 1.000 800 600 400 200 82 6 0 20 9M 2011 9M 2012
  • 21. 21
  • 22. Income Statement• Lower y-o-y depreciation & amortisation Q3 Q3 9M 9M charges of SEK 34 (47) mn in Q3 & 90 (145) (SEK mn) 2012 2011 2012 2011 mn for YTD following ending of charges Net sales 2,940 3,106 9,716 9,762 related to Bulgarian & Czech broadcasting licenses EBIT before associated 288 358 1,181 1,382 company income• Net interest charges down y-o-y to Associated company income 134 168 467 517 SEK -10 (-17) mn in Q3 & SEK -34 (-45) mn for YTD EBIT 422 526 1,648 1,900• Y-o-y change in other financial items Net interest & other financial -33 -87 -81 -108 included SEK -2 (-64) mn non-cash financial items impact in Q3 & SEK -8 (-30) mn for YTD Income before tax 389 439 1,567 1,791 from the change in value of the option Tax -81 -133 -351 -516 element of the SEK 250 mn CDON Group convertible bond mn Net income 308 306 1,216 1,276 Basic EPS 4.65 4.71 17.68 18.90• Effective tax rate of 21% in Q3 & 22% for YTD Diluted EPS 4.64 4.69 17.62 18.7922
  • 23. Cash Flow• Cash flow from operations included receipt of SEK 51 (-) mn of dividend payments from CTC Media in Q3 and SEK 158 (145) mn for H1 Q3 Q3 9M 9M (SEK mn) 2012 2011 2012 2011• Investment in shares amounted to SEK 174 (-) in Cash flow from 237 345 1,072 1,334 Q3 & SEK 274 (-) mn for YTD & comprised the operations acquisition of the Paprika Latino content production business, the LNT free-TV business in Changes in working 65 -483 23 -645 Latvia and the communications operator Zitius capital Net cash flow from 302 -138 1,095 689 operations• CAPEX less than 1% of Group net sales in Q3 and for YTD Cash flow used in -179 -34 -236 -86 investing activities• Cash flow from investing activities of SEK 23 (-) Cash flow used in -335 64 -863 -770 mn in Q3 & SEK 84 (-) mn for YTD comprised net financing activities cash received from sale of Bet24 Net change in cash & cash -211 -108 -4 -167 equivalents23
  • 24. Financial Position • Total borrowings of SEK 1.326 (2,458) mn as at 30 Sep 30 Sep 30 Sep 2012 & cash & cash equivalents of (SEK mn) 2012 2011 SEK 451 (317) mn Non-current assets 5,742 9,156 • Net debt of SEK 634 (1,861) mn as at 30 Sep Current assets 5,581 5,802 2012 & available liquid funds of SEK 5,784 (4,499) mn 11,324 14,958 Total assets • SEK 1,888 (2,253) mn book value of 37.9% shareholding in CTC media & public equity Shareholders’ equity 4,635 7,391 market value of 3,552 mn as at 30 Sep 2012 Long-term liabilities 1,902 3,090 Current liabilities 4,786 4,476 Net debt / EBITDA ratio Total equity & liabilities 11,324 14,958 1,2 1,2 1,1 0,8 0,7 0,7 0,6 0,3 0,3 0,3 0,3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 10 10 10 10 11 11 11 11 12 12 1224
  • 25. 25
  • 26. For further information, please visit www.mtg.se or contact: MTG Investor Relations Tel: +44 7768 440 414 / +44 7590 098 188 Email: investor.relations@mtg.se26

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