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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.

Published in Investor Relations
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  • 1. Maximizing the Power of Entertainment Financial Results Third Quarter And Nine Months ended 30 September 2007
  • 2. Highlights Q3 2007 Year to Date 2007 Group net sales up 15% to SEK 2,612 mn Group net sales up 12% to SEK 8,083 mn Group operating income up 13% to SEK 279 mn Group operating income up 9% to SEK 1,006 mn excluding SEK 137 mn of associated company excluding SEK 410 mn of associated company income income Viasat Broadcasting net sales up 16% to SEK Viasat Broadcasting net sales up 12% to SEK 2,022 mn and operating margin of 20% 6,272 mn & operating margin of 23% First full Q3 consolidation of BMGL, TV3 Slovenia Net income up 123% to SEK 970 mn when & P4 Radio + >25 new channels launched, excluding SEK 241 mn non recurring non cash acquired or added since Q3 06 gain on CTC IPO Net income up 1% to SEK 292 mn when excluding Establishment of TV2 Sport joint venture SEK 241 mn non recurring non cash gain on CTC Acquisition of 50% of Balkan Media Group IPO Limited for EUR 11.6 mn in February 07 Establishment of Viasat Ukraine joint venture with Acquisition of 90% of Playahead online Strong Media Group community for SEK 102 mn in January 07 Share buyback initiated 2
  • 3. Viasat Broadcasting Geographical Segmentation – Rolling 12 Months Q3 2006 Q3 2007 21% Sales 24% 40% 35% FTA Swe/No/Dk Pay-TV Nordic Central & Eastern Europe 39% 41% Q3 2006 Q3 2007 23% 22% EBIT (Including CTC Media) 28% 31% FTA Swe/No/Dk Pay-TV Nordic 15% 17% Central & Eastern Europe 33% CTC Media 31% 3
  • 4. Viasat Broadcasting Operating Results Change Change (SEK million) Q3 2007 Q3 2006 (%) 9M 2007 9M 2006 (%) FY 2006 Net Sales Free-to-air TV Scandinavia 672 653 3 2,204 2,186 1 3,038 Pay-TV Nordic 909 803 13 2,668 2,334 14 3,183 Central & Eastern Europe 494 367 35 1,578 1,288 23 1,841 JV, Other & Eliminations -53 -76 - -178 -198 - -257 Total Net Sales 2,022 1,748 16 6,272 5,610 12 7,805 Operating income (EBIT) Free-to-air TV Scandinavia 105 84 25 384 387 -1 562 Operating Margin 16% 13% 17% 18% 18% Pay-TV Nordic 153 159 -3 461 424 9 597 Operating Margin 17% 20% 17% 18% 19% Central & Eastern Europe 32 23 36 220 193 14 304 Operating Margin 6% 6% 14% 15% 17% Associated Companies 128 151 -15 398 394 1 432 JV, Other & Eliminations -19 3 - -47 10 - 19 Total EBIT 400 420 -5 1,417 1,408 1 1,913 4
  • 5. Free-to-air TV Scandinavia Audience & Market Share Gains Continued growth with net sales up 3% to SEK 672 mn in Q3 and up 1% to SEK 2,204 mn for year to date Operating costs slightly down at SEK 567 mn in Q3 & up 1% to SEK 1,820 mn for year to date reflecting stable programming costs in Q3 and 2% increase for year to date - due to sharing of sports right costs with TV2 Sport joint venture & less short term spending given ratings performance OUTLOOK - Full year programming cost guidance revised from ‘up to 7%’ to ‘up to 4%’ Operating profits up 25% to SEK 105 mn in Q3 but slightly down to SEK 384 (387) mn for year to date - operating margins of 16% (13%) in Q3 and of 17% (18%) for year to date TV8 penetration expected to increase following inclusion basic analogue package in ComHem cable network Total combined channel CSOV (15-49) in Sweden increased to 35.8% (33.5%) - TV6 now over 13% Viasat4 channel launched in September 07 in Norway – inclusion of TV3 & Viasat4 in Riks-TV DTT offering launched in September 07 will boost penetration levels Agreement signed with Canal Digital opens way for potential inclusion of TV3 on rival satellite platform, which would further boost penetration in Norway 5
  • 6. Free-to-air-TV Scandinavia Commercial Share of Viewing (15-49) 40 TV3 & TV6 Sweden TV3 & 3+ Denmark TV3 & Viasat4 Norway* 35 30 (%) 25 20 15 10 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 * Includes ZTV prior to September 2007 6
  • 7. 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 Q3 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 7
  • 8. Pay-TV Nordic Subscriber & ARPU Growth (’000 subscribers) (SEK) 800 4,000 3,900 10,000 premium subscribers added in Q3 07 700 3,800 & 9% year on year growth in premium base 600 to 756,000 3,700 500 3,600 Viasat+ PVR subscribers increased to 63,000 400 3,500 in Q3 & multi-room subscriptions increased 300 3,400 to 118,000 and represented 9% and 17% of 3,300 200 premium DTH subscriber base compared to 3,200 100 6% and 15% respectively in Q2 2007 3,100 0 3,000 ARPU up 3% year on year to SEK 3,573 & Q3 2004 Q3 2005 Q3 2006 Q3 2007 New ‘tiered’ channel packages introduced at the end of Q3 Premium Subscribers Annualized ARPU 8
  • 9. Pay-TV Nordic Healthy Margins & 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 Q3 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 13% sales growth in Q3 & 14% for year to date OPEX up 17% year on year in Q3 & up 16% for year to date due to higher total SAC in line with subscriber intake, growing share of Viasat+ & Multiroom subscriptions, & investments in new channels & technologies Operating margins of 17% (20%) in Q3 and 17% (18%) for year to date OUTLOOK Canal Digital agreement enables potential strengthening of Norwegian platform position Expected operating margin of >17% for 2007 unchanged 9
  • 10. 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 Q3 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 Net sales up 35% to SEK 494 mn in Q3 & up 23% to SEK 1,578 mn for year to date Baltic channels, DTV, Viasat3 Hungary & Pay-TV operations all report strong growth & enhanced margins – TV Prima sales stabilise 6% (6%) operating margin in Q3 (excl. CTC Media) & 14% (15%) for year to date Establishment of joint venture satellite pay-TV business in Ukraine – 17 mn h’hold market 10
  • 11. Free-to-air TV Eastern Europe Commercial Share of Viewing 55 50 45 40 (%) 35 30 25 20 15 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 TV Prima Czech Republic (15+) TV3 & 3+ Estonia (15-49) TV3, 3+ & TV6 Latvia (15-49) TV3 & Tango TV Lithuania (15-49) 11
  • 12. Free-to-air TV Eastern Europe Commercial Share of Viewing 10 9 8 7 6 (%) 5 4 3 2 1 0 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Viasat3 Hungary (18-49) TV3 Slovenia (15-49) DTV Russia (6-54) 12
  • 13. TV Prima Czech Republic Sales stabilized year on year at SEK 159 mn in Q3; down to SEK 565 (605) mn for year to date reflecting exceptional performance in 2006 Operating margin of 9% (11%) in Q3 and 18% (20%) for year to date Signed new agreement with regional broadcasting license partner and began utilizing broadcast time slots from September CSOV (15+) of 21.9% in Q3 & for year to date - ratings trending up towards end of quarter with focus on news programming & English Premier League football Management continues to work on improving programming schedules Likely award of new digital terrestrial channel licenses 13
  • 14. DTV Russia Rolling 12 Months (SEK million) (SEK million) 250 60 2.8 CSOV (6-54) (%) Sales EBIT 50 2.6 200 40 2.4 30 2.2 150 20 2.0 10 100 1.8 0 -10 1.6 50 -20 1.4 0 -30 1.2 Q2 04 Q3 04 Q4 04 Q1 04 Q2 05 Q3 05 Q4 05 Q1 05 Q2 06 Q3 06 Q4 06 Q1 06 Q2 07 Q3 07 07 04 05 05 05 05 06 06 06 06 07 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 Q1 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 • Sales up 42% to SEK 57 mn in Q3 & 44% to SEK 186 mn for year to date following continuing audience share gains – network profitable for both periods • New agreement signed with Mostelecom to increase Moscow reach by a further 1.3 million households to – close to 100% penetration by end of 2009 • Further investments in distribution in the city of Chelyabinsk and Tula 14
  • 15. 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 Q3 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 25% sales growth to SEK 110 mn in Q3 & 15% growth to SEK 373 mn for year to date with operating margins of 12% (9%) & 23% (23%), respectively Pan-Baltic commercial share of viewing (15-49) up to 41.9% (38.2%) with continued ratings improvement in Latvia and Lithuania & impact of new channel launches Niche channel TV6 launched in Latvia in Q2 reported 1.4% CSOV (15-49) after end of quarter 15
  • 16. Pay-TV East Growth, Growth, Growth 140 Premium DTH Subscribers Subscriptions 30 (thousands) (millions) 120 25 100 20 80 15 60 10 40 5 20 0 0 Q 004 1 4 Q 005 3 5 Q 005 Q 005 2 6 Q 006 4 6 Q 006 2 7 Q 007 07 Q 00 Q 00 Q 00 Q 00 Q 00 04 04 05 05 05 05 06 06 06 06 07 07 07 20 2 2 2 2 2 2 2 2 2 2 2 2 20 20 20 20 20 20 20 20 20 20 20 20 20 3 4 2 4 1 3 1 3 3 4 1 2 3 4 1 2 3 4 1 2 3 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Baltic DTH premium subscriber base up 125% year on year to 133,000 subscribers Wholesale mini-Pay business adds almost 2.5 mn subscriptions in the quarter – 8 channels now present in more than 10 million homes in 20 countries 16
  • 17. Pay-TV East Rolling 12 Months (SEK million) 450 Sales EBIT EBIT Margin 25% 400 350 20% 300 15% 250 200 10% 150 100 5% 50 0% 0 -50 -5% 04 05 05 05 05 06 06 06 06 07 07 07 20 20 20 20 20 20 20 20 20 20 20 20 4 1 2 3 4 1 2 3 4 1 2 3 Q Q Q Q Q Q Q Q Q Q Q Q Sales > doubled to SEK 129 mn in Q3 & SEK 321 mn for year to date with increasing profits of SEK 10 (5) mn and SEK 28 (6) mn, respectively TV1000 Poland launched in March 2007 Balkan Media Group consolidated since 1 April 2007 - sales of SEK 14 mn in Q3 & SEK 22 mn for year to date with operating losses of SEK 6 mn & SEK 10 mn, respectively, reflecting investment phase 17
  • 18. Radio Rolling 12 Months (SEK million) (excl. associated companies) 800 50% Sales EBIT EBIT Margin 700 40% 600 500 30% 400 20% 300 200 10% 100 0% 0 -100 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 -10% 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 More than doubling of net sales to SEK 182 mn in Q3 & SEK 532 mn year to date > Doubled operating margin of 21% (10%) in Q3 & 16% (10%) for year to date MTG Radio Sweden sales growth of 10% in Q3 and 8% for 9 month period P4 local currency sales growth of 18% in Q3 and 11% for 9 month period 18
  • 19. Online Comprises CDON.COM, BET24, Playahead and MTG New Media Net sales of SEK 331 (370) mn in Q3 and SEK 1,110 (1,151) mn for year to date reflect sale of TV Shop & lower sales for BET24 as business refocused on core MTG markets Substantial improvement in operating profitability to SEK 21 (-2) mn in Q3 and SEK 62 (0) mn for year to date CDON.COM sales up 23% to SEK 214 mn in Q3 and 24% to SEK 600 mn for year to date CDON.COM acquired online fashion retailer Nelly.se in August 2007 BET24 reported operating profit of SEK 2 for Q3 & year to date period with gross profit increases of 25% for Q3 and 21% year to date TV Shop sold & deconsolidated from 21 June 2007 – Q2 gain of SEK 17 mn 19
  • 20. All Business Areas Operating Results Change Change (SEK million) Q3 2007 Q3 2006 (%) 9M 2007 9M 2006 (%) FY 2006 Net Sales Viasat Broadcasting 2,022 1,748 16 6,272 5,610 12 7,805 Radio 182 85 114 532 264 101 433 Other business areas 474 523 -9 1,444 1,572 -8 2,192 Eliminations -93 -103 - -240 -314 - -406 Parent company & other companies 26 27 -70 76 87 -33 111 Total Net Sales 2,612 2,280 15 8,083 7,219 12 10,136 Operating income (EBIT) Viasat Broadcasting 400 420 -5 1,417 1,408 1 1,913 Radio 46 15 214 95 45 11 78 Other Business Areas 17 0 - 46 9 - -59 Parent company & other companies -48 -31 - -141 -119 - -155 Total EBIT 416 404 3 1,416 1,342 6 1,777 20
  • 21. Summary Income Statement (SEK million) Q3 2007 Q3 2006 9M 2007 9M 2006 FY 2006 Net Sales 2,612 2,280 8,083 7,219 10,136 Operating Income (EBIT) 416 404 1,416 1,342 1,777 Gain/loss from financial assets 2 241 1 243 244 Net interest and other financial items -7 2 -9 0 -5 Income before tax 411 647 1,408 1,586 2,016 Tax -119 -118 -439 -403 -517 Net income for the period 292 529 970 1,183 1,499 Basic average number of shares outstanding 66,971,540 66,527,490 66,971,540 66,527,490 66,591,869 Basic earnings per share (SEK) 4.39 7.82 13.88 16.98 21.57 21
  • 22. Cash Flow (SEK million) Q3 2007 Q3 2006 9M 2007 9M 2006 FY 2006 Cash flow from operations 297 252 882 839 1,372 Changes in working capital -112 -145 -240 -219 -78 Net Cash Flow from Operations 185 107 642 620 1,294 Proceeds from sales of shares - 0 - 21 21 Proceeds from sales of shares of subsidiaries - - 70 - - Investments in shares in subsidiaries & associates -8 -607 -187 -604 -645 Investments in other non-current assets -184 -48 -279 -257 -329 Other cash flow from investing activities - - - - 2 Cash flow from/to investing activities -192 -655 -404 -840 -950 Cash flow from/to financing activities -9 586 -364 -284 -877 Net change in cash and cash equivalents for the period -16 38 -126 -503 -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 184 (48) mn in Q3 & SEK 287 mn for year to date primarily reflects additional investments in distribution in Central and Eastern Europe Changes in working capital of SEK -112 (-145) mn in Q3 & SEK -240 (-219) mn for YTD 22
  • 23. Balance Sheet (SEK million) 30 Sep 2007 30 Sep 2006 31-Dec-06 Non-current assets 5,673 4,797 4,891 Current assets 5,119 4,474 4,314 Total assets 10,791 9,271 9,205 Shareholders' equity 5,595 4,752 5,105 Long-term liabilities 403 281 305 Current liabilities 4,793 4,238 3,796 Total equity & liabilities 10,791 9,271 9,205 Net cash position of SEK 30 (-28) mn SEK 3.7 billion of available liquid funds SEK 6.9 billion surplus to book value for 39.5% shareholding in CTC Media Equity to assets ratio of 52% (51%) as at 30 September 2007, compared to 53% as at 30 June 2007 23
  • 24. 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 11 billion for 12 month period ending 30 September 2007 Current Viasat Broadcasting C&E Europe operations to generate net sales of SEK 5 billion in 2011 Net sales of SEK 2.131 million for 12 month period ending 30 September 2007 >20% operating (EBIT) margin for Viasat Broadcasting (excl. CTC Media) by end of 2011 Rolling 12 month operating (EBIT) margin of 16% in Q3 2007 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 = 40% of Viasat Broadcasting EBIT (incl. CTC Media) in Q3 2007 on rolling 12 month basis MTG to report 30% Return on Equity for 2007-2011 5 year period 25% Return on Equity for 12 months ended 30 September 2007 24
  • 25. 25