Q1 2007 Presentation
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In Q1 2007, the group reported an 11% increase in net sales to SEK 2,629 million and a 4% rise in operating income to SEK 468 million. Key acquisitions included a 50% stake in Balkan Media Group and 90% of Playahead, while Viasat Broadcasting's net sales and operational profit both grew by 11% and 5%, respectively. The document highlights ongoing strategic objectives aimed at revenue growth in the broadcasting sector across different regions.
Q1 2007 Presentation
- 1. Maximizing the Power of Entertainment First Quarter Financial Results 2007 Stockholm, 24 April 2007
- 2. Results Highlights First Quarter 2007 Group net sales up 11% to SEK 2,629 million Group operating income up 4% to SEK 468 million Viasat Broadcasting net sales up 11% to SEK 2,003 million and operating profit up 5% to SEK 481 million Net income up 4% to SEK 316 million Basic earnings per share of SEK 4.55 (4.38) Acquisition of 50% of Balkan Media Group Limited for EUR 11.6 million Acquisition of 90% of Playahead online social networking community for SEK 102 million
- 3. Strategic Objectives Set in June 2004 Objective On Track Double Viasat Broadcasting revenues in 5 Viasat Broadcasting sales up 75% since years 2003 on rolling 12 month basis MTG to become #1 commercial free-to-air Continuation 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 in each month Export integrated model into new high growth territories - C&E European Rolling 12 month operating income for C&E businesses to generate same level of European operations (incl. CTC Media) of broadcasting revenues & profits as SEK 768 million vs. SEK 1,151 million for Scandinavian operations within 5 years Nordic operations >15% operating margins in 3 core Rolling 12 month operating margins of 18% businesses - Free-to-air TV Scandinavia; for Free-to-air TV Scandinavia; 19% for Pay-TV Nordic; & 16% for C&E Europe Pay-TV Nordic; C&E Europe (excl. CTC Media)
- 4. Viasat Broadcasting Operating Results (SEK million) Q1 2007 Q1 2006 Change (%) FY 2006 Net Sales Free-to-air TV Scandinavia 713 723 –1 3,038 Pay-TV Nordic 877 749 17 3,183 Central & Eastern Europe 478 388 23 1,841 Other & eliminations -65 -55 -257 Total net sales 2,003 1,804 11 7,805 Operating income (EBIT) Free-to-air TV Scandinavia 110 140 -21 562 Operating margin 15% 19% 18% Pay-TV Nordic 148 125 18 597 Operating margin 17% 17% 19% Central & Eastern Europe 59 51 16 304 Operating margin 12% 13% 17% Associated Companies 162 138 17 432 Other & Eliminations 2 3 19 Total EBIT 481 457 5 1,913
- 5. Viasat Broadcasting Geographical Segmentation – Rolling 12 Months Q1 2006 Q1 2007 16% Sales 23% 37% 43% FTA Swe/No/Dk Pay-TV Nordic CEE 41% 40% Q1 2006 Q1 2007 17% EBIT (Including CTC Media) 24% 28% 40% FTA Swe/No/Dk 9% Pay-TV Nordic CEE 16% CTC Media 34% 32%
- 6. Free-to-air TV Scandinavia Focus on Ratings & Integrated Approach in Soft Advertising Markets Net sales down 1.3% year on year to SEK 713 million – underlying growth when excluding currency translation effects of strengthening Swedish Krona Weaker advertising markets & soft ratings for TV3 but continued strong performance by TV6 – peak ratings of > 17% TV3/TV6 Sweden penetration levels up to 79% and 78% & TV8 penetration of 46% Total combined channel CSOV (15-49) increased in Sweden to 34.4% (30.6%) Annual upfront advertiser agreements concluded later than usual and low single digit price increases did not impact Q1 sales Danish channel ratings up year on year, but ratings decline in Norway reflects late launch of Spring schedule Operating costs up 4%, primarily due to 6% increase in programming costs & increased distribution costs - in line with previous guidance for up to 10% increase in programming costs in 2007 Operating margin down from 19% to 15%
- 7. Free-to-air-TV Scandinavia Commercial Share of Viewing (15-49) (%) TV3 & TV6 Sweden TV3 & 3+ Denmark TV3 & ZTV Norway 35 30 25 20 15 10 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
- 8. Free-to-air-TV Sweden Commercial Share of Viewing (15-49) Indexed Big 3 Ratings development Media Houses CSOV Development (%) 115 50 Viasat Sweden SBS Broadcasting TV4 TV3 TV4 Kanal 5 110 45 105 40 100 35 95 30 90 25 85 80 20 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2005 2005 2006 2006 2006 2006 2007 2005 2005 2005 2005 2006 2006 2006 2006 2007
- 9. Free-to-air TV Sweden Actions being taken Integrated Media house approach – TV3, TV6, TV8, ZTV bundling Increased investments in sports and acquired programming More scientific approach Regular brand tracking Re-engineered own-production process Earlier targeted use of focus groups Refocused scheduling Increase pressure on local production companies Middle management changes
- 10. Free-to-air TV Scandinavia Sales and Operating Performance – Rolling 12 Months (SEK million) 3 500 Sales EBIT EBIT Margin 30% 3 000 25% 2 500 20% 2 000 15% 1 500 10% 1 000 5% 500 0 0% Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007
- 11. Pay-TV Nordic Premium Subscriber & ARPU Growth (’000 subscribers) (SEK) (’000 subscribers) 800 180 700 3 700 160 600 3 500 140 500 120 3 300 100 400 80 300 3 100 60 200 40 2 900 20 100 0 0 2 700 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 2004 Q1 2005 Q1 2006 Q1 2007 2005 2005 2006 2006 2006 2006 2007 Viasat+ & Multiroom Subscriptions Premium Subscribers Annualized ARPU Viast Golf Subscriptions 15% year on year increase in premium subscriber base with flat development in Q1 reflecting diminishing effect of analogue shut down 155,000 Viasat+ and Multiroom subscriptions represent 21% of premium DTH subscriber base ARPU up 4% year on year to SEK 3,468
- 12. Pay-TV Nordic Operating performance (SEK million) Sales EBIT EBIT Margin 35% 800 30% 600 25% 20% 400 15% 10% 200 5% 0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 17% sales growth due to price rises and growing Viasat+ / multi-room subscriber base Operating margin of 17% reflects 17% increase in OPEX in line with previously announced investments of SEK 160 million in 2007 + addition of 2 new Viasat channels and 12 third party channels since beginning of 2006 Stable total expensed SAC for fourth quarter in succession
- 13. Central & Eastern Europe Operating Performance – Rolling 12 Months (Excl. CTC media) (SEK million) Sales EBIT EBIT Margin 40% 2000 35% 1500 30% 25% 1000 20% 15% 500 10% 5% 0 0% Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Net sales up 23% to SEK 478 million 12% operating margin in Q1 includes investments in new businesses TV Prima net sales up 2% to SEK 184 million DTV net sales up 61% to SEK 61 million Pay-TV East revenues almost double to SEK 83 million
- 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 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 TV Prima Czech Republic (15+) TV3 & 3+ Estonia (15-49) TV3 & 3+ Latvia (15-49) TV3 & Tango TV Lithuania (15-49)
- 15. Free-to-air TV Eastern Europe Commercial Share of Viewing (%) 10 9 8 7 6 5 4 3 2 1 0 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Viasat3 Hungary (18-49) TV3 Slovenia (15-49) DTV Russia (6-54)
- 16. TV Prima Czech Republic Net sales of SEK 184 (180) million and slightly decreased operating profit of SEK 29 million with 16% operating margin Management continues to implement changes to improve operating efficiency Continued management focus on the delivery of prime time own productions to boost overall ratings & capitalize on Hollywood output deals Increased CSOV year on year as actions implemented in 2006 take effect Seeking to resolve current disagreement with regional broadcasting license partner regarding use of early morning and evening time slots in 5 out of 12 regions - has restricted the development of Prima's viewing performance
- 17. DTV Russia Rolling 12 Months (SEK million) (SEK million) 250 30 3,0 CSOV (%) Sales EBIT 20 2,5 200 10 2,0 150 0 1,5 100 1,0 -10 50 -20 0,5 0 -30 0,0 03 03 04 04 05 05 06 06 07 04 Q 05 Q 05 Q 05 Q 05 Q 06 Q 06 Q 06 Q 06 07 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 1 3 1 3 1 3 1 3 1 4 1 2 3 4 1 2 3 4 1 Q Q Q Q Q Q Q Q Q Q Q • Sales up 61% to SEK 61 million as ratings increase & demonstrating ongoing benefit of Video International sales agreement • 1 million additional Moscow households now connected through Mostelecom distribution agreement & SEK 45 million invested to connect further 500,000 households • Increasing profitability despite investments
- 18. Free-to-air TV Baltics Rolling 12 Months (SEK million) (%) Sales EBIT Margin 500 50 45 450 40 35 400 30 350 25 20 300 15 10 250 5 200 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 8% sales growth & 16% operating margin Pan-Baltic commercial share of viewing (15-49) up to 40.6% (36.2%) with substantial ratings improvements in Latvia and Lithuania offsetting decline in Estonia
- 19. Pay-TV East Subscriber Growth Premium DTH Subscribers Subscriptions 120 (thousands) 25 (millions) 100 20 80 15 60 10 40 5 20 0 0 1 3 2 4 3 4 4 4 1 4 2 5 Q 005 4 5 1 5 2 6 3 6 4 6 1 6 07 Q 004 Q 004 Q 004 Q 004 Q 005 Q 005 Q 005 Q 005 Q 006 Q 006 Q 006 Q 006 07 Q 00 Q 00 Q 00 Q 00 Q 00 Q 00 Q 00 Q 00 Q 00 Q 00 Q 00 Q 00 20 20 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 4 3 1 2 3 4 1 2 3 4 1 2 3 4 1 Q Q Baltic DTH satellite pay-TV Platform more than doubled subscriber base year on year 18 channels in 26 territories reach 8.8 million unique subscribers
- 20. Pay-TV East Rolling 12 Months (SEK million) 300 Sales EBIT EBIT Margin 11% 250 9% 200 7% 150 5% 100 3% 50 1% 0 -1% -50 -3% 04 05 05 05 05 06 06 06 06 07 20 20 20 20 20 20 20 20 20 20 4 1 2 3 4 1 2 3 4 4 Q Q Q Q Q Q Q Q Q Q Doubling of sales to SEK 83 million SEK 11 million operating profit with operating margin of 13% DTH platform still in investment phase
- 21. Radio Rolling 12 Months (SEK million) (excl. associated companies) 600 Sales EBIT EBIT Margin 25% 500 20% 400 15% 300 10% 200 5% 100 0% 0 -5% -100 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 -10% Net sales almost doubled year on year to SEK 150 million after consolidation of P4 Radio & price rises in Sweden SEK 6 million operating profit Swedish radio stations achieve record combined reach of 1.9 million daily listeners P4 reports record Q1 sales after introduction of GRP-based pricing model
- 22. Other Businesses Online Modern Studios New business segment comprising Net sales of SEK 120 (151) million reflect CDON.COM, TV-Shop, BET24, Playahead lower sale of TV-productions and format and MTG New Media licenses by Strix and the discontinuation of the Bromberg and Engine businesses Combined sales of SEK 413 (413) million SEK 2 (3) million operating profit Combined operating profit of SEK 14 (19) million Sonet film awarded 6 ‘Guldbaggen’ awards for ‘Kidz in the Hood’ and ‘The Substitute’ CDON.com sales up 28% to SEK 214 awarded “Best Documentary” price million BET24 refocused onto markets where MTG has existing broadcasting operations – in order to increase leverage Internet sales now account for 48% of TV- Shop sales
- 23. All Business Areas Operating Results (SEK million) Q1 2007 Q1 2006 Change (%) FY 2006 Net Sales Viasat Broadcasting 2,003 1,804 11 7,805 Radio 150 81 86 433 Other business areas 533 564 -5 2,192 Parent company & other companies 23 28 111 Eliminations -81 -115 -406 Total net sales 2,629 2,362 11 10,136 Operating income (EBIT) Viasat Broadcasting 481 457 5 1,913 Radio 6 8 -18 78 Other business areas 16 23 -30 -59 Parent company & other companies -35 -35 -155 Total EBIT 468 453 4 1,777
- 24. Summary Income Statement (SEK million) Q1 2007 Q1 2006 FY 2006 Net Sales 2,629 2,362 10,136 Operating income (EBIT) 468 453 1,777 Gain/loss from financial assets - 2 244 Net interest and other financial items -2 -15 -5 Income before tax 467 440 2,016 Tax -151 -135 -517 Net Income for the period 316 305 1,499 Basic number of shares outstanding 67,053,405 66,382,410 67,042,524 Basic earnings per share (SEK) 4.55 4.38 21.57
- 25. Cash Flow (SEK million) Q1 2007 Q1 2006 FY 2006 Cash flow from operations 279 238 1,372 Changes in working capital -339 -94 -78 Net cash flow from operations -60 144 1,294 Proceeds from sales of shares - 21 21 Investments in shares in subsidiaries & associates -178 -83 -645 Investments in other non-current assets -72 -30 -329 Other cash flow from investing activities - - 2 Cash flow from/to investing activities -251 -92 -950 Cash flow from/to financing activities 105 -3 -877 Net change in cash and cash equivalents for the period -206 50 -533 17% increase in cash flow from operations Increased programming investments in Scandinavia and Eastern Europe & prepayments for newly acquired sports rights impact working capital SEK 178 million invested in acquisition of Playahead & Balkan Media Group
- 26. Balance Sheet (SEK million) 31 March 2007 31 March 2006 31 Dec 2006 Non-current assets 5,349 5,520 4,891 Current assets 4,450 4,703 4,314 Total assets 9,799 10,223 9,205 Shareholders’ equity 5,492 5,549 5,105 Long-term liabilities 343 296 305 Current liabilities 3,965 4,377 3,796 Total equity & liabilities 9,799 10,223 9,205 Net cash position of SEK 75 million SEK 3.6 billion of available liquid funds SEK 9.2 billion surplus to book value for 39.6% shareholding in CTC Media SEK 400 million draw down on SEK 3.5 billion credit facility
- 27. Outlook Ratings Improvement & Investment in Growth Measures taken at TV3 Sweden are gradually showing desired effect Growing position as pan-Scandinavian media power house with successful new channel launches & ongoing structural market change – relaunch of ZTV after end of quarter Pay-TV model in Sweden shifts from subscriber acquisition to ARPU growth with investments in new channels and technologies to support medium term growth – launch of TV2 Sport after end of quarter H1 07 year on year comps tough for TV Prima, with market + growth to resume in H2 07 on back of anticipated viewing share increases Ongoing rapid development of DTV & Pay-TV East operations 30% Return on Capital Employed, healthy cash flow generation and net cash position – significant flexibility for investments, acquisitions, and shareholder returns