1. MODERN TIMES GROUP
Q3 2013 FINANCIAL RESULTS
INVESTMENT PLAN ON TRACK WITH HEALTHY
SALES GROWTH
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2. Q3 2013 – HIGHLIGHTS
INVESTING IN MOMENTUM
Sales up 9% at constant FX - all 5 segments reported local currency sales growth for first time since Q1 2011
FTV Scandi – growing again on a combined basis & positive traction to Fall schedules (new channel coming in Norway)
FTV EM – advertising market share gains in almost all territories in soft markets (new channel coming in Tanzania)
PTV Nordic – rising Viaplay volumes & Viasat ARPU driving sales growth & operating margin of 11.9%
PTV EM – healthy sales growth driven by mini-pay Russia & profitability in line with ongoing HD roll-out
Soon to complete acquisition of Nice Entertainment & establish scale international content production & distribution player +
MTGx digital accelerator established
Continued strong cash flow generation & low gearing enable ongoing investment in growth & shareholder returns
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3. FREE-TV SCANDINAVIA
BACK INTO POSITIVE GROWTH
Sales up 1% at constant FX
2012
2013
Jul-Sep
Jul-Sep
Sales (SEKm)
876
887
Growth (at constant FX)
-7%
1%
CSOV – weak start but strong ending to the quarter
EBIT (SEKm)
135
118
Danish media house achieved its highest Q3 level since 2000
EBIT margin
15.4%
13.3%
Sweden – weak start but strong finish, which is encouraging
Norway – ratings down primarily due to weak performance during the
summer. 3rd channel to be launched in Q4
Sweden
35.8%
34.7%
Denmark
21.6%
25.8%
Norway
18.5%
17.3%
Best y-o-y sales development since Q4 2011
Expected decline in the Danish TV ad market while Sweden and
Norway are expected to have grown
EBIT margin of 13.3%
CSOV (15-49)
OPEX up 4% y-o-y at constant FX. FY OPEX growth still expected to
be at the higher end of the mid-single digit percentage point range
27% of Group sales
MTG’s coverage in Sweden of Winter Olympics will boost sales and
adversely impact Q1 2014 profits
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4. PAY-TV NORDIC
VIAPLAY VOLUME & VIASAT ARPU GROWTH
Sales up 7% at constant FX
Overall subscriber base (incl. Viaplay) up
But premium satellite and 3rd party subscribers were both down
EBIT margin of 11.9%
In line with expectations & ongoing investments
Expectations – look for 11-12% margin for FY13
Revenue growth at constant exchange rates & operating margin of
11-12% for FY13, and a higher margin in 2014
2013
Jul-Sep
1,222
1,308
Growth (at constant FX)
3%
7%
EBIT (SEKm)
Driven by TV3 Sport channels, Viaplay & satellite premium ARPU
2012
Jul-Sep
40% of Group sales
194
156
EBIT margin
15.9%
11.9%
Premium subs ('000)
1,023
970
o/w satellite ('000)
603
563
o/w third party ('000)
420
407
4,916
5,089
Sales (SEKm)
MTG’s coverage in Sweden of Winter Olympics will boost sales and
adversely impact Q1 2014 profits
Satellite premium ARPU (SEK)
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5. FREE-TV EMERGING MARKETS
STRONG GROWTH – TOUGHER COMPS AHEAD
Sales up 21% at constant FX
2012
2013
Jul-Sep
Jul-Sep
Sales (SEKm)
369
457
Growth (at constant FX)
3%
21%
EBIT (SEKm)
-48
-34
-12.9%
-7.4%
Pan-Baltic (15-49)
47.0%
50.0%
EBIT loss reduced y-o-y in seasonally weak sales period
Czech Republic (15-54)
40.4%
36.0%
Profitability impacted by the structure of our sales cooperations but
still improved profitability y-o-y for the 8th consecutive quarter
Bulgaria (18-49)
28.4%
32.8%
OPEX up significantly with similar y-t-d increase anticipated in Q4.
New operation soon to be launched in Tanzania
Driven by high underlying growth + sales cooperations
Baltics (8%); Czech Republic (27%); Bulgaria (32%); Ghana (45%)
Will now begin to face significantly tougher comps in markets that
remain soft
14% of Group sales
Mixed performance when it comes to CSOV
Baltics up due to strong performance in Lithuania
Czech Republic down due weak performance of Prima Family
EBIT margin
Strong performance continued in Bulgaria
CSOV
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6. PAY-TV EMERGING MARKETS
RUSSIA DRIVES GROWTH & INVESTMENTS
Sales up 7% at constant FX
Continued mini-pay subscription growth
9% of Group sales
2012
2013
Jul-Sep
Jul-Sep
Addition of ~16m mini-pay subscriptions y-o-y and >1m q-o-q driven
by Russian intake
Sales (SEKm)
267
281
Added 13k satellite subscribers y-o-y but lost 6k q-o-q due to highly
competitive environment in Ukraine
Growth (at constant FX)
13%
7%
EBIT (SEKm)
48
27
17.9%
9.7%
543
556
75,430
91,380
EBIT margin
EBIT of SEK 27m in line with expectations
Reflects ongoing investments in premium content & HD package rollout – new deal signed with NTV-Plus satellite platform in Russia
Subscribers / subscriptions ('000)
Satellite
Mini-pay wholesale
Retain previous expectations (upped in connection to Q2)
Expect to achieve a better than breakeven full year 2013 EBIT result
with rising profitability levels in 2014
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7. STUDIOS, MTGX, RADIO
NICE TO HAVE + THE X FACTOR
Sales up 29% at constant FX
Sales in MTG Studios up significantly driven by healthy underlying
sales growth boosted by acquisitions
Radio sales down - primarily due to Sweden
11% of Group sales
EBIT loss of SEK 46m compared to a profit of 15m last year
Healthy profitability in MTG Studios (excl. M&A costs) and Radio
Norway. Heavy losses in Radio Sweden
Investments in MTGx – expected to add up to SEK 70m of
operating costs in H2
Growth (at constant FX)
2013
Jul-Sep
Sales (SEKm)
2012
Jul-Sep
297
367
-18%
29%
15
-46
5.1%
-12.5%
EBIT (SEKm)
EBIT margin (excl. associates)
Agreement to acquire Nice Entertainment Group
Nordic´s largest independent group of production companies
Expected to close this month
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8. INCOME STATEMENT
GROWTH & INVESTMENTS
Sales up 9% at constant FX
Acquisitions adding ~ 4 percentage points of growth
2013
Jul-Sep
Jul-Sep
2,940
3,204
Organic growth (at constant FX)
2%
5%
288
162
9.8%
5.0%
422
289
14.4%
9.0%
No impact of divestments / closures
2012
Minimal FX impact of ~ 0 percentage points
Q3 in brief
EBIT margin (excl. associates) of 5.0%
Sales (SEKm)
OpEx up 15% at constant FX and 11% organically
EBIT excl. associates
Primarily driven by pay-TV investments to drive future growth and
acquisitions (incl. M&A)
EBIT margin excl. associates
Effective tax rate of 30%
Expect FY13 rate to be at the higher end of the 25-30% range
Total EBIT
Total EBIT margin
8
9. CASH FLOW
CONTINUED STRONG CASH CONVERSION
Cash generative & asset light
Working capital change in the quarter reflecting the timing of
programming payments. Still under strict control
(SEKm)
2012
2013
Jul-Sep Jul-Sep
Cash flow from operations
237
210
Changes in working capital
65
-160
Net cash flow from operations
302
49
Acquisition of DRG, Novemberfilm & Net Info
Cash flow used in investing activities
-179
-172
Investments in shares of SEK 72m (174)
Cash flow used in financing activities
-335
-6
CapEx of SEK 100m (28)
Net change in cash & cash equivalents
-211
-129
Dividend stream from CTC Media
SEK 62m (51) in Q3 & SEK 184m (158) y-t-d
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10. FINANCIAL POSITION
FIREPOWER & FLEXIBILITY
Net debt of SEK 373m
Available liquid funds of SEK 6 bn
Ended the quarter with a net debt to trailing twelve
month EBITDA ratio of just 0.2 times
Net debt / Trailing 12 month EBITDA
1.2 1.2
1.1
0.8
SEK 1.9 bn book value of 37.9% CTC Media stake
0.7
0.6
0.7
Public equity market value of SEK 4.0 bn as at end Q3
0.2
Q3 13
10
Q2 13
Q1 13
Q3 12
Q2 12
Q1 12
Q4 11
Q3 11
Q2 11
Q1 11
Q4 10
Q3 10
Q2 10
0.0
Q4 12
0.1
0.0
Q1 10
Continuing to balance investment in future growth &
shareholder returns
0.3 0.3 0.3 0.3
11. SUMMARY
INVESTING IN MOMENTUM
Sales up 9% at constant FX - all 5 segments reported local currency sales growth for first time since Q1 2011
Demonstrates that investments in 3 key areas – content, digital and geographical expansion - are having the desired effect
and ensuring that customer offerings are stronger than ever
Committed to invest in momentum to create local, relevant and digital experiences that engage and excite consumers
Upcoming launch of free-TV channels in Norway and Tanzania; and preparations for coverage of Sochi Winter Olympics
(Sweden & Baltics) are clear evidence of this drive
Soon to complete acquisition of Nice Entertainment and create scale player in content production & distribution industry
These investments do impact short-term profitability but are the building blocks of our future growth and cash generation
Continued healthy cash flow generation & low gearing enable ongoing investment & shareholder returns
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12. MTG INVESTOR RELATIONS
FOR FURTHER INFORMATION, PLEASE VISIT
WWW.MTG.SE OR CONTACT:
TEL: +46 (0) 73 699 2714
EMAIL: INVESTOR.RELATIONS@MTG.SE
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