Q2 2010 Presentation

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Q2 2010 Financial Results Presentation, Modern Times Group

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Q2 2010 Presentation

  1. 1. Modern Times Group Q2 2010 Financial Results 20 July 2010 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 1
  2. 2. Record Sales with Increased Operating Margin Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 2
  3. 3. Highlights All Broadcasting Businesses Report Growth at Constant FX Group Operations • Record sales – 13% y/y sales growth at constant • Free-TV Scandinavia: 18% sales growth y/y in Q2 at exchange rates in Q2 & 12% in H1 constant exchange rates with increased 27% operating margin following growth in all three countries • Record operating income – up 26% y/y in Q2 & up 30% in • Pay-TV Nordic: 8% sales growth y/y at constant H1 when excluding associated company income exchange rates & 20% operating margin with premium DTH ARPU up 5% y/y at constant exchange rates + • Pre-tax profit up 23% y/y in Q2 & up 53% in H1 continued IPTV subscriber uptake • Free-TV Emerging Markets: 4% sales growth y/y at • Net income up 20% y/y & up 41% in H1 constant exchange rates with operating income up 29% • Pay-TV Emerging Markets: 12% sales growth y/y at • Net debt to EBITDA ratio of 1.2x and SEK 3.5 bn of constant exchange rates & 16% operating margin available liquid funds following subscriber growth + full consolidation of Viasat Ukraine platform • SEK 363 mn dividend paid to shareholders in Q2 • Online: 30% sales growth y/y at constant exchange rates & CDON Group sales up 34% y/y in Q2 at constant exchange rates with stable operating margin Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 3
  4. 4. Second Quarter 2010 13% Sales Growth at Constant FX & EBIT up 26% y/y ex Associates • Record sales of SEK 3,870 (3,584) mn – up 13% y/y at constant exchange rates • Free-TV Scandinavia sales of SEK 1,116 (984) mn – up 5,000 50% 18% y/y at constant exchange rates 4,500 45% • Record operating income of SEK 603 (478) mn - up 26% 4,000 40% y/y 3,500 35% – Increased operating margin of 16% (13%) when excluding associated company income 3,000 30% 2,500 25% • Total operating income up 23% y/y to SEK 726 (588) mn 2,000 20% – Including SEK 123 (111) mn of associated company income 1,500 15% 1,000 10% • Pre-tax profit up 23% y/y to SEK 697 (566) mn 500 5% • Net income up 20% y/y to SEK 522 (436) mn 0 0% • Basic earnings per share up 17% y/y to SEK 7.58 (6.45) Q2 2009 Q2 2010 • Dividend of SEK 363 mn (SEK 5.50 per share) paid to shareholders in May for full year 2009 Sales EBIT* EBIT Margin* * Excluding SEK 123 (111) mn of associated income Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 4
  5. 5. First Half Year 2010 12% Sales Growth at Constant FX & EBIT up 30% y/y ex Associates • Net sales of SEK 7,394 (6,920) mn – up 12% y/y at constant exchange rates • Free-TV Scandinavia net sales of SEK 2,096 (1,870) mn 10,000 50% – up 17% y/y at constant exchange rates 9,000 45% • Operating income up 30% y/y to SEK 1,018 (784) mn 8,000 40% – Increased operating margin of 14% (11%) when excluding 7,000 35% associated company income 6,000 30% • Total operating income up 52% y/y to SEK 1,248 5,000 25% (822) mn – Including SEK 229 (38) mn of associated company income 4,000 20% 3,000 15% • Pre-tax profit up 53% y/y to SEK 1,165 (760) mn 2,000 10% • Net income up 41% y/y to SEK 822 (582) mn 1,000 5% • Basic earnings per share up 41% y/y to SEK 12.18 0 0% (8.65) H1 2009 H2 2010 Sales EBIT* EBIT Margin* * Excluding SEK 229 (38) mn of associated income Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 5
  6. 6. • Operating Review Operating Review Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 6
  7. 7. Free-TV Scandinavia Financial Highlights • Q2 sales of SEK 1,116 (984) mn & H1 sales of 2,096 (1,870) mn – up 18% in Q2 & 17% in H1 at constant exchange rates (SEK mn ) – Advertising market growth in all three countries 2,500 70% – Sales growth in all three countries 60% 2,000 • OPEX up 7% y/y in Q2 & up 9% in H1 50% – Higher programming investments in all three countries + impact of launch of TV3 PULS in Denmark at end of Q1 2009 1,500 40% 30% • Operating income up 38% y/y to SEK 297 (216) mn in Q2 & 1,000 up 22% to 513 (419) mn in H1 20% 10% 500 • Increased operating margins of 27% (22%) in Q2 & 24% (22%) in H1 with incremental margins of approximately 0% 50% 0 -10% Q2 2009 Q2 2010 H1 2009 H1 2010 • Ongoing market outperformance due to ’triple-play effect’ of increasing penetration, rising audience shares & enhanced pricing power Revenue EBIT EBIT Margin Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 7
  8. 8. Free-TV Scandinavia Operating Highlights Sweden Commercial Share of Viewing (15-49) • Commercial target group audience share up 0.8 pp y/y (%) – Significant target CSOV gains for TV6 & TV8 with stable development for TV3 50 • Announced launch of new free-TV sports channel TV10 in 45 Sweden with initial reach of >50% of Swedish TV households 40 35 Denmark 30 • Commercial target group audience share up 0.3 pp y/y 25 – Successful spring schedules with strong OP’s, acquired content & sports 20 15 Norway 10 • Commercial target group audience share stable y/y Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 – High rating own productions, selected FIFA World Cup 2010 2008 2008 2009 2009 2009 2009 2010 2010 matches & increasing penetration for Viasat4 channel Sweden: TV3, TV6, TV8, ZTV Denmark: TV3, TV3+, TV3 PULS Norway: TV3, Viasat4 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 8
  9. 9. Pay-TV Nordic Financial Highlights • Sales of 1,115 (1,074) mn in Q2 & H1 sales of SEK 2,207(2,143) mn – up of 8% in Q2 & 7% in H1 at constant (SEK mn ) exchange rates 2,500 70% • OPEX stable y/y at SEK 894 (895) mn in Q2 & SEK 1,794 60% (1,790) mn in H2 2,000 50% – Underlying local currency costs up y/y in Q2 & H1 following addition of 5 new Viasat channels since begininng of 2009 & 40% addition or extension of various key sports rights contracts 1,500 – SAC down y/y to SEK 135 (151) mn in Q2 30% 1,000 20% • Operating income up 24% to SEK 221(179) mn in Q2 & 10% up17% to SEK 413 (353) mn in H1, with increased 500 operating margins of 20% (17%) and 19% (16%) 0% ,respectively 0 -10% Q2 2009 Q2 2010 H1 2009 H1 2010 Revenue EBIT EBIT Margin Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 9
  10. 10. Pay-TV Nordic Operating Highlights • Q/Q net addition of 11,000 net new premium IPTV subscribers & y/y addition of 55,000 new new IPTV subscribers • Stable premium DTH subscriber base & continued growth of multi-room, ViasatPlus and HDTV subscriptions • Premium DTH ARPU up y/y to SEK 4,446 (4,397) in Q2 – up 5% y/y at constant exchange rates – Reflected price increases & ongoing uptake of value-added products and services • Viasat now only Scandinavian operator to offer coverage of Premier League in all 3 countries following acquisition of three year exclusive Swedish broadcasting rights in Q1 & carriage agreements with TV 2 in Norway in June and TV 2 in Denmark in July & Premium Subscribers DTH Value-added Services 1000 250 800 200 (Thousands) (Thousands) 600 150 100 400 50 200 0 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Premium IPTV Premium DTH ViasatPlus subscriptions Multi-room subscriptions HDTV subscribers Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 10
  11. 11. Free-TV Emerging Markets Financial Highlights • Sales of SEK 582 (612) mn in Q2 & SEK 1,016 (1,076) mn in H1 – up 4% in Q2 y/y & 2% in H1 at constant (SEK mn) exchange rates 1,200 – Continued ad market share gains for all free-TV businesses – Markets gradually improving but almost all markets still down 1,000 y/y in Q2 800 • Operating costs down 7% y/y to SEK 541 (580) mn in Q2 & down 7% to SEK1,040 (1,118) mn in H1 600 – Reflected cost reduction initiatives, ongoing selective 400 programming investments and favourable y/y currency exchange rate movements 200 • Operating profit up 29% y/y to SEK 42 (32) mn in Q2 with 0 operating margin of 7% (5%) & significantly reduced operating loss of SEK -24 (-42) mn in H1 -200 Q2 2009 Q2 2010 H1 2009 H1 2010 Revenue EBIT Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 11
  12. 12. Free-TV Emerging Markets Operating Highlights Baltics • Sales of SEK 131 (149) mn in Q2 & SEK 215 (245) mn in H1 – down 2% Commercial Share of Viewing in Q2 & 3% in H1 at constant exchange rates • Pan-Baltic CSOV up y/y to 39.3% (37.4%) • Estonian and Latvian analogue switch-off in Q2 & Lithuania scheduled for 2012 – expected to drive penetration of secondary channels (%) • Operating profit up 66% y/y to SEK 17 (10) mn in Q2 with an operating margin of 13% (7%) & reduced operating loss of SEK -2 (-3) mn in H1 50 Czech 40 • Sales of SEK 250 (254) mn in Q2 & SEK 440 (463) mn in H1 – up 5% y/y in Q2 & stable in H1 at constant exchange rates • CSOV up y/y to 22.3% (21.0%) reflecting significantly improved 30 performance of own-produced prime-time content & continued success of Prima COOL 20 • Operating profit up 44% y/y to SEK 35 (24) mn in Q2 & up 7% to SEK 28 (27) mn in H1 with operating margins of 14% (10%) in Q2 & 6% (6%) in H1 10 Bulgaria • Sales of SEK 129 (142) mn in Q2 & SEK 233 (248) mn in H1 – up 1% y/y 0 in Q2 & up 4% in H1 at constant exchange rates • CSOV of 28.0% (36.1%) due to FIFA World Cup coverage on competing Pan-Baltic Czech Bulgaria Hungary Slovenia channels & exceptional ratings of Big Brother show on Nova in Q2 2009 (15-49) Republic (18-49) (18-49) (18-49) • Operating profit of SEK 11 (12) mn in Q2 with operating margin of 9% (15-54) (9%) & 0 (-1) mn in H1 Q2 2009 Q2 2010 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 12
  13. 13. Pay-TV Emerging Markets Financial Highlights • Sales of SEK 225 (219) mn in Q2 & SEK 443 (439) mn in H1 – up 12% in Q2 & up 13% in H1 at constant exchange (SEK mn ) rates 500 70% – Reflected consolidation of Russian DTH satellite platform, full consolidation and growth of Ukrainian DTH satellite platform & 450 continued growth in number of mini-pay subscriptions 60% 400 50% 350 • OPEX up 2% y/y in Q2 & up 1% in H1 40% 300 – Reflected launch of 5 new channels since the beginning of 2009, subscriber acquisition campaigns in Ukraine, 250 30% consolidation of Raduga TV in Russia & full consolidation of Viasat Ukraine 200 20% 150 10% • Operating profit up 6% y/y to SEK 36 (34) mn in Q2 & up 100 3% to SEK 76 (75) mn in H1 50 0% 0 -10% • Stable operating margins of 16% (16%) in Q2 & 17% Q2 2009 Q2 2010 H1 2009 H1 2010 (17%) in H1 Revenue EBIT EBIT Margin Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 13
  14. 14. Pay-TV Emerging Markets Operating Highlights • 20,000 net net premium subscribers added y/y on Baltic DTH Subscribers and Ukrainian DTH satellite platforms (Thousands) 250 200 • Russian DTH satellite platform Raduga TV had 93,000 basic subscribers at end of Q2 150 100 50 • Full consolidation of Viasat Ukraine from June following 0 acquisition of additional 35% shareholding Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Premium Basic • Acquisition and consolidation of 50% of Raduga TV satellite DTH platform in Russia in February 2010 Mini-pay Subscriptions (million) • New pay-TV channel Nova Sport launched in Bulgaria at 50 end of April – Broadcasts premium sport content including Premier League, 40 UEFA Champions League, IAAF Diamond League athletics and IIHF World Championship ice hockey 30 • Viasat Nature East pay-tv channel launched in 25 countries in Central and Eastern Europe at beginning of 20 May Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 14
  15. 15. Online Financial & Operating Highlights (SEK mn) (SEK mn) • Segment sales of 615 (490) mn in Q2 & SEK 1,239 (1,010) mn CDON Group in H1 – up 30% in Q2 & up 27% in H1 at constant exchange 1,000 40% rates 35% 800 30% • CDON Group – sales up 34% y/y in Q2 & up 28% in H1 at 25% 600 constant exchange rates 20% – Entertainment business reported 15% y/y sales growth in Q2 at 400 15% constant exchange rates – driven by increased home electronics sales & summer promotion campaigns 10% 200 – Sports & Health business reported 36% y/y sales growth at constant 5% exchange rates – driven by increased no. of visitors & higher conversion rates 0 0% – Fashion business reported 112% sales growth in Q2 at constant Q2 2009 Q2 2010 H1 2009 H1 2010 exchange rates – driven by successful magazine, TV and radio promotion campaigns CDON Group sales CDON Group EBIT – Swedish Online toy retailer Lekmer.se acquired and consolidated in Q2 EBIT margin • Operating income up 20% to SEK 29 (24) mn y/y & more than Q2 Revenue per CDON Group Division doubled to SEK 76 (29) mn in H1, with stable operating margin of 5% (5%) in Q2 & increased margin of 6% (3%) in H1 – CDON Group operating income up 28% y/y in Q2 to SEK 28 (22) mn & 25% up 55% to SEK 66 (43) mn in H1 with stable operating margin of 6% (6%) in Q2 & increased margin of 7% (6%) in H1 15% 60% • Continuing work towards demerger & spin-off in Q4 2010 Entertainment Sports & Health Fashion Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 15
  16. 16. Other Businesses Financial & Operating Highlights Radio 500 Radio 50% 400 40% • Sales of SEK 211 (188) mn in Q2 & SEK 393 300 30% (348) mn in H1 – up 13% y/y in Q2 & in H1 at 200 20% constant exchange rates 100 10% – Reflected growth for P4 Radio in Norway & Swedish operations, as well as contribution from newly launched P5 0 0% local station network in Norway Q2 2009 Q2 2010 H1 2009 H1 2010 • Operating costs up 9% y/y in Q2 & up 6% in H1 Sales EBIT EBIT margin – Reflected increased royalty and sales comissions in Norway & launch of new local station network in Norway, offset by lower y/y costs in Sweden and positive currency exchange rate Modern Studios movements • Sales of SEK 113 (134) mn in Q2 & SEK 189 • Operating income up 31% y/y to SEK 36 (28) mn (237) mn in H1 following lower y/y production in Q2 & up more than doubled to SEK 48 (23) mn levels in H1 • Increased operating profits of SEK 5 (3) mn in Q2 • Increased operating margins of 17% (15%) in Q2 & SEK 9 (7) mn in H1 & 12% (7%) in H1 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 16
  17. 17. Financial Review Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 17
  18. 18. Income Statement • Associated company income primarily comprised SEK 115 Q2 Q2 H1 H1 (103) mn of income from 38.9% shareholding in CTC (SEK mn) 2010 2009 2010 2009 Media in Q2 & SEK 219 (28) mn in H1 3,870 3,584 7,394 6,920 Net sales Operating income before associated company income 603 478 1,018 784 • Depreciation & amortisation charges of SEK 56(60) mn in & non-recurring items Q2 & 111 (118) mn in H1 Associated company 123 111 229 38 income* Total operating income 726 588 1,248 822 • Net interest reduced y/y to SEK -19 (-33) mn in Q2 & (EBIT) -37 (-70) mn in H1 Net interest & other financial -30 -23 -83 -61 items • Other financial items of SEK -11 (10) mn in Q2 & SEK -46 (9) mn in H1 reflected FX differences, amortisation of Income before tax 697 566 1,165 760 costs arising from arrangement of new loan facility in 2009 & financial non-cash accounting loss arising from issue of Net income 522 436 822 582 new shares by CTC Media. Basic EPS 7.58 6.45 12.18 8.65 • Increase in number of total outstanding shares to 65,935,207 at end of period following issue of shares in connection with 2005 incentive programme during the quarter Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 18
  19. 19. Cash Flow • SEK -345 (270) mn change in working capital in Q2 and SEK -608 (-27) mn change in working capital in H1 (SEK million) Q2 2010 Q2 2009 H1 2010 H1 2009 included the first and largest payment for three year Swedish broadcasting rights to the Premier League, as Cash flow from operations 570 425 910 593 well as payments for other sports rights & also reflected the low working capital balances at beginning of Q2 Changes in working -345 270 -608 -27 capital • Investments in shares of SEK 136 (1) mn in Q2 & SEK 273 (142) mn in H1 primarily comprised payment for Net cash flow from 35% of Viasat Ukraine in Q2 & payment for 90% of 225 695 302 566 operations MTG’s 50% stake in Russian DTH platform Raduga TV, with payment for the remaining 10% made in Q2 Cash flow to/from -158 -35 -342 -194 investing activities • CAPEX of SEK 22 (34) mn in Q2 & SEK 70 (52) mn in H1 represents less than 1% of Group sales for both Cash flow to/from -372 -287 -133 -262 periods financing activities* • Cash flow to financing activities primarily reflected SEK Net change in cash & cash -305 374 -173 110 363 mn dividend payment to MTG shareholders in Q2 equivalents • SEK 514 (1,084) mn of cash & cash equivalents at end of Q2 * Including SEK 363 (329) in cash dividend paid to shareholders in Q2 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 19
  20. 20. Financial Position • Total borrowings of SEK 3.7 billion (SEK mn) 30 Jun 2010 30 Jun 2009 31 Dec 2009 – Comprises SEK 3.0 billion facility due in 2012 & SEK 650 mn drawn SEK 3.5 billion facility (due 2011) 9,164 12,470 9,026 Non-current assets 6,382 6,414 5,625 Current assets • SEK 3,464 (2,966) mn of available liquid funds (cash & undrawn facilities) of Q1 15,546 18,883 14,651 Total assets • SEK 3,185 (3,603) billion of net debt, equivalent to 5,986 8,559 5,680 1.2x LTM EBITDA Shareholders’ equity 4,353 5,388 4,175 Long-term liabilities • SEK 2.1 billion book value of 38.9% CTC Media stake of 5,207 4,936 4,796 at end of Q2, compared to public equity market value of Current liabilities SEK 6.7 billion (USD 867 mn) = surplus of SEK 4.6 bn 15,546 18,883 14,651 Total equity & liabilities Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 20
  21. 21. Summary Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 21
  22. 22. Summary Set to Continue to Outperform • Record Q2 sales & operating profits, with increased operating margin • Continued audience, subscriber and advertising market share gains • Scandinavian free-TV operations grew in all countries with healthy incremental margins • Premium Nordic IPTV Subscriber & DTH ARPU growth with increased operating margin + now only broadcaster with English Premier League & Champions League coverage across Scandinavia • Emerging Markets free-TV business returned to growth following ad market gains in all territories, with increased operating margin • Growth in Emerging Markets pay-TV subscriber base with stable operating margin • Ongoing process to demerge and distribute fast growing CDON Group to shareholders in Q4 • Financial position as strong as ever with net debt to LTM EBITDA of 1.2x and SEK 3.5 bn of available liquid funds Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 22
  23. 23. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 23
  24. 24. For Further Information, please visit www.mtg.se or contact: MTG Investor Relations Tel: +44 7768 440 414 / +44 779 113 84 86 Email: investor.relations@mtg.se Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 24
  25. 25. Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 25

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