Q2 2007 Presentation
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Financial results presentation from the international entertainment broadcasting group Modern Times Group MTG AB.

Financial results presentation from the international entertainment broadcasting group Modern Times Group MTG AB.

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Q2 2007 Presentation Presentation Transcript

  • 1. Maximizing the Power of Entertainment Financial Results Second Quarter And Six Months ended 30 June 2007
  • 2. Results Highlights Second Quarter 2007 First Six Months 2007 Group net sales up 10% to SEK 2,843 mn Group net sales up 11% to SEK 5,471 mn Group operating income up 10% to SEK 532 mn Group operating income up 7% to SEK 1,001 mn including SEK 110 mn of associated company including SEK 273 mn of associated company income income Viasat Broadcasting net sales up 9% to SEK 2,246 Viasat Broadcasting net sales up 10% to SEK mn and operating profit up 1% to SEK 535 mn 4,250 mn and operating profit up 3% to SEK 1,016 mn Net income up 4% to SEK 362 mn Net income up 4% to SEK 678 mn Basic earnings per share up 4% to SEK 4.95 Basic earnings per share up 4% to SEK 9.50 Sale of TV Shop to Guthy Renker for SEK 70 mn in cash - net gain of SEK 17 mn Acquisition of 50% of Balkan Media Group Limited for EUR 11.6 mn in February 07 Distribution of SEK 503 mn dividend & AGM authorisation of up to 10% share buy-back Acquisition of 90% of Playahead online community for SEK 102 mn in January 07 Consolidation of P4 Radio, BMGL, Playahead, TV3 Slovenia & TV2 Sport joint venture for the Establishment of Sports channel joint venture first time in the period with TV2 Denmark 2
  • 3. Strategic Objectives Set in June 2004 Objective On Track Double Viasat Broadcasting revenues in 5 Viasat Broadcasting sales up 79% since years 2003 on rolling 12 month basis Viasat to become #1 commercial free-to-air Finalization of shut-down of Swedish operator in Sweden and TV3 to become #2 analogue terrestrial network increases penetration in Sweden; TV3 Norway commercial free-to-air channel in Norway established as second largest commercial within 5 years channel in comparable universe Export integrated model into new high Rolling 12 month operating income for C&E growth territories - C&E European European operations (incl. CTC Media) of businesses to generate same level of SEK 782 million vs. SEK 1,177 million for broadcasting revenues & profits as Nordic operations Scandinavian operations within 5 years Rolling 12 month operating margins of 18% >15% operating margins in 3 core for Free-to-air TV Scandinavia; 19% for businesses - Free-to-air TV Scandinavia; Pay-TV Nordic; & 16% for C&E Europe (excl. CTC Media) Pay-TV Nordic; C&E Europe 3
  • 4. Strategic Objectives 5 Year Goals announced in June 2007 MTG to report Group Net Sales of SEK 20 billion in 2011 (including selected acquisitions) with >10% organic annual sales growth Sales of SEK 10.1 billion in 2006 Current Viasat Broadcasting C&E Europe operations to generate net sales of SEK 5 billion in 2011 Net sales of SEK 1,841 million in 2006 >20% operating (EBIT) margin for Viasat Broadcasting (excl. CTC Media) by end of 2011 2006 operating (EBIT) margin of 19% Current Viasat Broadcasting C&E Europe operations (incl. CTC Media) to generate higher operating profit (EBIT) than rest of Viasat Broadcasting by 2011 C&E Europe = 38% of Viasat Broadcasting EBIT in 2006 (incl. CTC Media) MTG to report 30% Return on Equity for 2007-2011 5 year period 28% Return on Equity in 2006 4
  • 5. Viasat Broadcasting Geographical Segmentation – Rolling 12 Months Q2 2006 Q2 2007 19% Sales 24% 41% 36% FTA Swe/No/Dk Pay-TV Nordic CEE 40% 40% Q2 2006 Q2 2007 19% EBIT (Including CTC Media) 23% 27% 36% FTA Swe/No/Dk 14% Pay-TV Nordic CEE 16% 34% CTC Media 31% 5
  • 6. Viasat Broadcasting Operating Results Change Change (SEK million) Q2 2007 Q2 2006 (%) H1 2007 H1 2006 (%) FY 2006 Net Sales Free-to-air TV Scandinavia 819 810 1 1,532 1,533 0 3,038 Pay-TV Nordic 882 782 13 1,759 1,531 15 3,183 Central & Eastern Europe 606 533 14 1,083 920 18 1,841 JV, Other & Eliminations -60 -68 - -125 -123 - -257 Total Net Sales 2,246 2,057 9 4,250 3,861 10 7,805 Operating income (EBIT) Free-to-air TV Scandinavia 169 163 4 279 303 -8 562 Operating Margin 21% 20% 18% 20% 18% Pay-TV Nordic 160 140 14 308 265 16 597 Operating Margin 18% 18% 17% 17% 19% Central & Eastern Europe 129 119 9 188 170 11 304 Operating Margin 21% 22% 17% 18% 17% Associated Companies 108 105 3 270 243 11 432 JV, Other & Eliminations -31 3 - -29 6 - 19 Total EBIT 535 530 1 1,016 987 3 1,913 6
  • 7. Free-to-air TV Scandinavia Return to Growth & Higher Margins Return to growth with net sales up 1% (2% when excluding currency effects) year on year to SEK 819 mn & increased operating margin of 21% (20%) in Q2 following strong performance by Swedish operations H1 stable sales of SEK 1,532 mn with operating margin of 18% (20%) reflect tough year on year advertising market TV3/TV6/TV8 Sweden penetration levels up to 79% / 79% / 48% Total combined channel CSOV (15-49) in Sweden increased to 36.2% (31.4%) Operating costs slightly up year on year to SEK 650 (647) mn in Q2 and SEK 1,253 (1,230) for H1 Programming cost increases of 1% and 3% for the periods well within previous guidance for programming cost growth of <7% for 2007 OUTLOOK Comps ease in H2 but low visibility in summer months Full year programming cost guidance unchanged with expected acceleration in spending in H2 7
  • 8. Free-to-air-TV Scandinavia Commercial Share of Viewing (15-49) 40 TV3 & TV6 Sweden TV3 & 3+ Denmark TV3 & ZTV Norway 35 30 (%) 25 20 15 10 2003 2003 2004 2004 2005 2005 2006 2006 2007 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 8
  • 9. Free-to-air-TV Sweden Commercial Share of Viewing (15-49) ’Big 3’ channels, (indexed) 120 110 (%)100 90 80 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 TV3 TV4 Kanal 5 Media House Development 50 45 40 (%)35 30 25 20 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Viasat SBS Broadcasting TV4 9
  • 10. Free-to-air TV Scandinavia Sales & Operating Performance – Rolling 12 Months (SEK million) 3,500 Sales EBIT EBIT Margin 50% 45% 3,000 40% 2,500 35% 30% 2,000 25% 1,500 20% 1,000 15% 10% 500 5% 0 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 10
  • 11. Pay-TV Nordic Premium Subscriber & ARPU Growth (’000 subscribers) (SEK) (’000 subscribers) 800 200 3,700 180 700 160 600 140 3,500 120 500 100 3,300 80 400 60 300 3,100 40 200 20 2,900 0 100 05 05 06 06 06 06 07 07 0 2,700 20 20 20 20 20 20 20 20 3 4 1 2 3 4 1 2 Q2 2004 Q2 2005 Q2 2006 Q2 2007 Q Q Q Q Q Q Q Q Viasat+ & Multiroom Subscriptions Premium Subscribers Annualized ARPU Viast Golf Subscriptions 12% year on year increase in premium subscriber base & addition of 5,000 new subscribers in Q2 reflects almost complete analogue shut down in Sweden 174,000 Viasat+ and Multiroom subscriptions now represent 23% of premium DTH subscriber base ARPU up 4% year on year to SEK 3,502 reflecting price increases & PVR/Multiroom growth 11
  • 12. Pay-TV Nordic Stable Margins despite Increased Investments (SEK million) Sales EBIT EBIT Margin 50% 800 40% 600 30% 400 20% 200 10% 0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 13% sales growth in Q2 and 15% in H1 following subscriber & ARPU growth Stable SAC with operating margins of 18% in Q2 and 17% for H1 despite increased sports programming costs, 15 new channels added to platform since beginning of 2006 & previously announced SEK 160 mn investments in new channels & technologies OUTLOOK Shift to ARPU growth vs. volume subscriber acquisition model Margin guidance of >17% for 2007 unchanged 12
  • 13. Central & Eastern Europe Operating Performance – Rolling 12 Months (Excl. CTC media) (SEK million) Sales EBIT EBIT Margin 50% 2,000 40% 1,500 30% 1,000 20% 500 10% 0 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 Net sales up 14% to SEK 606 mn in Q2 and 18% to SEK 1,083 mn for H1 following strong growth in Russia & Hungary and for Pay-TV East operations TV Prima net sales decline due to exceptional 2006 results + investments in newly consolidated TV3 Slovenia & BMGL result in lower margins of 21% in Q2 & 17% for H1 OUTLOOK Easing comps for Prima in H2 with performance dependent on ratings development 13
  • 14. Free-to-air TV Eastern Europe Commercial Share of Viewing 55 50 45 40 (%) 35 30 25 20 15 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 TV Prima Czech Republic (15+) TV3 & 3+ Estonia (15-49) TV3, 3 & TV6 Latvia (15-49) TV3 & Tango TV Lithuania (15-49) 14
  • 15. Free-to-air TV Eastern Europe Commercial Share of Viewing 12 10 8 (%) 6 4 2 0 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Viasat3 Hungary (18-49) TV3 Slovenia (15-49) DTV Russia (6-54) 15
  • 16. TV Prima Czech Republic 17% decline in net sales to SEK 222 mn in Q2 and -9% to SEK 406 mn for H1 07 reflects tough year on year comps & inclusion of ‘barter’ agreements in 2006 Increased operating margins of 27% (25%) in Q2 and 22% (23%) for H1 reflect discontinuation of ‘barters’ in 2007and SG&A savings from restructuring In process of resolving disagreement with regional broadcasting license partner – continued to restrict channel development in period CSOV (15+) stable for three quarters, up for H1 07 to 21.8% (21.6%), but down slightly to 21.9% (22.7%) in Q2 with ratings improvements at end of the quarter & strong fall schedule line-up Price increases secured for 2007 under annual ‘upfront’ contracts & Prima continues to attract more advertisers than any other channel 16
  • 17. DTV Russia Rolling 12 Months (SEK million) (SEK million) 3.0 250 60 CSOV (%) Sales EBIT 50 2.5 200 40 2.0 30 150 20 1.5 100 10 0 1.0 50 -10 0.5 -20 0 -30 0.0 04 05 05 05 05 06 06 06 06 07 07 Q4 05 Q1 05 Q2 06 Q3 06 03 Q3 03 Q4 03 Q1 03 Q2 04 Q3 04 Q4 04 Q1 04 Q2 05 Q3 05 Q4 06 Q1 06 Q2 07 07 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 • Sales up 33% to SEK 67 mn in Q2 and 45% to SEK 129 mn for H1 07 following increase in CSOV (6-54) to 2.5% & demonstrating ongoing benefit of Video International sales agreement & increasing reach • 1.1 million additional Moscow households connected through Mostelecom distribution agreement & further 400,000 households to be connected • Swing to SEK 6 mn profit in Q2 and SEK 12 mn for H1 07 & 9% margin for both periods 17
  • 18. Free-to-air TV Baltics Rolling 12 Months (SEK million) Sales EBIT Margin 500 60 450 50 400 40 350 30 (%) 300 20 250 10 200 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 14% sales growth to SEK 153 mn in Q2 and 11% to SEK 263 mn for H1 with 35% and 27% operating margins respectively Pan-Baltic commercial share of viewing (15-49) up to 40.7% (36.6%) with improved ratings in Latvia and Lithuania offsetting decline in Estonia Niche channel TV6 launched in Latvia at the end of April and has already achieved CSOV (15-49) of 1% after end of quarter 18
  • 19. Pay-TV East Continued Subscriber Growth 140 Premium DTH Subscribers Subscriptions 25 (thousands) (millions) 120 20 100 80 15 60 10 40 5 20 0 0 Q 003 Q 004 Q 004 Q 004 Q 004 Q 005 Q 005 Q 005 Q 005 Q 006 Q 006 Q 006 Q 006 Q 007 07 Q 04 Q 004 Q 04 Q 004 Q 005 Q 05 Q 005 Q 05 Q 006 Q 06 Q 006 Q 006 Q 07 07 20 2 2 2 2 2 2 2 2 2 2 2 2 2 2 20 20 20 20 20 20 20 2 2 2 2 2 2 2 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 Q 1 2 3 4 1 2 3 4 1 2 3 4 1 2 Q > Doubling of Baltic DTH satellite subscriber base year on year to pass 100,000 mark 48% year on year increase in # of mini-pay subscriptions – 2.2 million added in Q2 alone – 8 channels in 20 countries now reach 9.8 million unique subscribers with new deals signed in Russia & Croatia 19
  • 20. Pay-TV East Rolling 12 Months (SEK million) 350 Sales EBIT EBIT Margin 25% 300 20% 250 200 15% 150 10% 100 5% 50 0% 0 -50 -5% 04 05 05 05 05 06 06 06 06 07 07 20 20 20 20 20 20 20 20 20 20 20 4 1 2 3 4 1 2 3 4 1 2 Q Q Q Q Q Q Q Q Q Q Q Sales > doubled to SEK 108 (51) mn in Q2 and to SEK 191 (94) mn for H1 Substantial increase in operating income to SEK 8 (0) mn in Q2 and SEK 19 (1) mn for H1 with operating margins of 7% and 10% for respective periods Baltic DTH platform in investment phase Balkan Media Group consolidated since 1 April 2007 20
  • 21. Radio Rolling 12 Months (SEK million) (excl. associated companies) 700 50% Sales EBIT EBIT Margin 600 40% 500 30% 400 300 20% 200 10% 100 0% 0 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 -100 -10% > Doubling of net sales to SEK 200 mn in Q2 and SEK 350 mn for H1 including consolidation of P4 Radio from 1 October 2006 > Doubling of subsidiary operating profits to SEK 41 mn in Q2 and SEK 48 mn in H1 with increased operating margins of 21% and 14% MTG Radio Sweden sales growth of 17% in Q2 and 7% in H1 P4 local currency sales growth of 7% in Q2 and 8% in H1 21
  • 22. Other Businesses Online Modern Studios Business segment comprises CDON.COM, Net sales of SEK 70 (117) mn in Q2 and BET24, Playahead and MTG New Media SEK 190 (267) mn for H1 reflect lower TV production levels and format sales by Net sales of SEK 366 (368) mn in Q2 and Strix, less movie releases & DVD sales SEK 779 (782) mn for H1 for Sonet + disposal of Bromberg in Substantial improvement in operating December 2006 and discontinuation of profitability to SEK 27 (-18) mn in Q2 and Engine in January 2007 SEK 41 (2) mn for H1 SEK -15 (3) mn operating loss in Q2 and CDON.COM sales up 21% to SEK 172 mn SEK -13 (7) for H1 in Q2 and 25% to SEK 386 mn for H1 BET24 breakeven following focus on markets where MTG has scale assets TV Shop sold to Guthy Renker and deconsolidated from 21 June 2007 22
  • 23. All Business Areas Operating Results Change Change (SEK million) Q2 2007 Q2 2006 (%) H1 2007 H1 2006 (%) FY 2006 Net Sales Viasat Broadcasting 2,246 2,057 9 4,250 3,861 10 7,805 Radio 200 99 103 350 179 95 433 Other business areas 437 485 -10 969 1,049 -8 2,192 Eliminations -67 -96 - -148 -211 - -406 Parent company & other companies 27 32 - 50 60 - 111 Total Net Sales 2,843 2,577 10 5,471 4,939 11 10,136 Operating income (EBIT) Viasat Broadcasting 535 530 1 1,016 987 3 1,913 Radio 43 22 89 49 30 61 78 Other Business Areas 12 -14 - 28 8 - -59 Parent company & other companies -58 -52 - -93 -88 - -155 Total EBIT 532 486 10 1,001 938 7 1,777 23
  • 24. Summary Income Statement (SEK million) Q2 2007 Q2 2006 H1 2007 H1 2006 FY 2006 Net Sales 2,843 2,577 5,471 4,939 10,136 Operating Income (EBIT) 532 486 1,001 938 1,777 Gain/loss from financial assets 0 0 0 2 244 Net interest and other financial items -1 13 -3 -2 -5 Income before tax 531 499 998 939 2,016 Tax -169 -150 -320 -285 -517 Net income for the period 362 348 678 653 1,499 Basic average number of shares outstanding 67,065,495 66,479,130 67,055,823 66,428,352 66,591,869 Basic earnings per share (SEK) 4.95 4.78 9.50 9.16 21.57 24
  • 25. Cash Flow (SEK million) Q2 2007 Q2 2006 H1 2007 H1 2006 FY 2006 Cash flow from operations 307 350 586 587 1,372 Changes in working capital 211 19 -128 -74 -78 Net Cash Flow from Operations 518 369 458 513 1,294 Proceeds from sales of shares - 0 - 21 21 Proceeds from sales of shares of subsidiaries 70 - 70 - - Investments in shares in subsidiaries & associates -1 86 -179 3 -645 Investments in other non-current assets -31 -179 -103 -209 -329 Other cash flow from investing activities - - - - 2 Cash flow from/to investing activities 39 -93 -212 -185 -950 Cash flow from/to financing activities -461 -868 -356 -870 -877 Net change in cash and cash equivalents for the period 95 -592 -110 -542 -533 SEK 70.3 mn received from sale of TV Shop in June 2007 SEK 179 mn invested in acquisition of Playahead & Balkan Media Group in Q1 Capital expenditure of SEK 31 (179) mn in Q2 and SEK 103 (209) mn in H1 primarily reflect investments made in DTV distribution contracts in Russia in Q1 07 Distribution of SEK 503 mn dividend in May 2007 25
  • 26. Balance Sheet (SEK million) 30 Jun 2007 30 Jun 2006 31-Dec-06 Non-current assets 5,424 5,393 4,891 Current assets 4,638 4,144 4,314 Total assets 10,063 9,538 9,205 Shareholders' equity 5,337 5,776 5,105 Long-term liabilities 371 248 305 Current liabilities 4,355 3,514 3,796 Total equity & liabilities 10,063 9,538 9,205 Net cash position of SEK 108 (420) mn SEK 3.7 billion of available liquid funds SEK 9.6 billion surplus to book value for 39.6% shareholding in CTC Media Net change in cash and cash equivalents of SEK 95 (-592) mn in Q2 and SEK -110 (-542) mn for H1 despite payment of SEK 503 million dividend 26
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