Q4 2007 Presentation
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The document outlines the financial results of Modern Times Group (MTG) for the fourth quarter and full year of 2007, showing a 12% increase in sales and a 40% rise in operating income. Viasat Broadcasting saw a significant growth in net sales and operating margins, particularly in Scandanavia and Central & Eastern Europe. The report also highlights various acquisitions and strategic initiatives, including share buybacks and dividends, aimed at enhancing the company's market position.
Q4 2007 Presentation
- 1. Maximizing the Power of Entertainment Modern Times Group MTG AB Financial Results Fourth Quarter And Full Year 2007 14 February 2008
- 2. Highlights Fourth Quarter 2007 Full Year 2007 Sales up 12% to SEK 3,268 mn Sales up 12% to SEK 11,351 mn Operating income up 40% to SEK 611 mn with Operating income up 14% to SEK 2,027 mn with increased operating margin of 19% an operating margin of 18% Viasat Broadcasting net sales up 17% to SEK Viasat Broadcasting net sales up 13% to SEK 2,571 mn with an increased operating margin 8,842 mn with an operating margin of 23% of 24% Net income up 14% to 1,428 (excluding SEK 241 Scandinavian Free-to-air TV sales up 14% to SEK mn non recurring non cash gain from CTC IPO in 969 mn with 40% increase in operating profit to 2006) SEK 243 mn SEK 307 million repurchase of 719,000 class B Net income up 45% to SEK 458 mn shares between 20 Sept and 31 Dec Tender offer for Gymgrossisten Nordic AB & Board to propose an ordinary dividend of SEK 5 acquisition of Linus-Lotta.com and Bookclub.fi and an extraordinary dividend of SEK 10 per share and seek authorization for potential share Sale of Sonet Film business buy-back mandate 2
- 3. Viasat Broadcasting Geographical Segmentation 2005 2007 26% 13% 46% Sales 35% FTA Swe/No/Dk Pay-TV Nordic Central & Eastern Europe 41% 39% 2005 2007 15% EBIT (Including CTC Media) 22% 29% 6% 39% FTA Swe/No/Dk Pay-TV Nordic Central & Eastern 19% Europe 40% CTC Media 30% 3
- 4. Viasat Broadcasting Operating Results (SEK million) Q4 2007 Q4 2006 Change (%) FY 2007 FY 2006 Change (%) Net Sales Free-to-air TV Scandinavia 969 852 14 3,173 3,038 4 Pay-TV Nordic 946 849 11 3,613 3,183 14 Central & Eastern Europe 750 553 36 2,328 1,841 26 JV, Other & Eliminations -94 -59 - -272 -257 - Total Net Sales 2,571 2,196 17 8,842 7,805 13 Operating income (EBIT) Free-to-air TV Scandinavia 243 174 39 627 562 12 Operating Margin 25% 20% 20% 18% Pay-TV Nordic 170 173 -2 631 597 6 Operating Margin 18% 20% 17% 19% Central & Eastern Europe (excl. CTC Media) 176 111 59 396 304 30 Operating Margin 23% 20% 17% 17% Associated Companies 63 39 63 461 432 7 JV, Other & Eliminations -41 9 - -88 19 - Total EBIT 611 505 21 2,027 1,913 6 4
- 5. Free-to-air TV Scandinavia Ratings Growth Drives Market Share Gains Net sales up 14% to SEK 969 mn in Q4 & 4% to SEK 3,173 mn in 07 Combined ‘Media House’ CSOV (15-49) for Swedish channels up from 32.7% in Q4 06 to 34.3% in Q4 07 - TV6 audience share up to >11% in Q4 Inclusion of TV3 Sweden in Canal Digital satellite pay-TV package from February 08 ’ to gradually increase penetration by 3-5% Norwegian channel Viasat4 launched in September 07 - already achieved 4.1% CSOV (15-49) & increased penetration of 50% in Q4 Ongoing discussions with Canal Digital Norway re inclusion of TV3 on Canal Digital platform - Viasat4 included in January 08 Operating costs up 7% to SEK 726 mn in Q4 & 3% to SEK 2,546 mn in 07 Programming costs up 11% in Q4 & 4.5% in 07 following increased investment in Danish own productions Operating income up 40% to SEK 243 mn in Q4 & 12% to SEK 627 mn in 07 Increased operating margins of 25% (20%) in Q4 & 20% (18%) in 07 5
- 6. Free-to-air-TV Scandinavia Commercial Share of Viewing (15-49) 40 35 30 (%) 25 20 15 10 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 TV3 & TV6 Sweden TV3 & 3+ Denmark TV3 & Viasat4 Norway* * 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 40% 3,000 35% 30% 2,500 25% 2,000 20% 1,500 15% 1,000 10% 500 5% 0 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 7
- 8. Pay-TV Nordic Subscriber & ARPU Growth (’000 subscribers) (SEK) ARPU up 5% year on year to SEK 3,633 following 800 4,000 introduction of new ‘tiered’ channel packages 700 3,900 Net addition of 23,000 premium subscribers in 07 & 3,800 4,000 in Q4 - total subscriber base of 848,000 at year 600 end 3,700 500 3,600 Viasat+ PVR subscriber base up 2.6x to 73,000 (10% 400 3,500 of premium DTH base) & multi-room subscriber base up 1.3x to 130,000 (18% of premium DTH base) 300 3,400 3,300 Initial 3 channel ‘Hi-Def’ offering launched in 200 January 08 3,200 100 3,100 12 new channels added to Viasat platform since 0 3,000 beginning of 07, including SBS’s Kanal 5 in February 08 Q4 2004 Q4 2005 Q4 2006 Q4 2007 Ongoing negotiations in Norway regarding Premium Subscribers Annualized Premium ARPU inclusion of TV2 & TVN channels on Viasat platform 8
- 9. Pay-TV Nordic Investing in Growth (SEK million) Sales EBIT EBIT Margin 1000 40% 800 30% 600 20% 400 200 10% 0 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 Net sales up 11% to SEK 946 mn in Q4 & 14% to SEK 3,613 mn in 07 Operating expenditure up 15% in Q4 & 07 to SEK 776 mn and SEK 2,982 mn, respectively - investments in channels & technologies BUT stable SAC Stable operating income at SEK 170mn in Q4 & 6% increase to SEK 631 mn in 07 Lower operating margins of 18% (20%) in Q4 & 17% (19%) in 07 reflect ‘investment’ year 9
- 10. Central & Eastern Europe Operating Performance – Rolling 12 Months (Excl. CTC media) (SEK million) 2,500 Sales EBIT EBIT Margin 40% 2,000 30% 1,500 20% 1,000 500 10% 0 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 Net sales up 36% to SEK 750 mn in Q4 & 26% to SEK 2,328 mn in 07 TV Prima returns to growth in Q4 + increasing market shares in other fast growing markets Operating profits (excl. CTC Media contribution) up 59% to SEK 176 mn in Q4 & 30% to SEK 396 mn in 07 despite ongoing investments in Slovenia & Balkans Improved operating margin of 23% (20%) in Q4 & stable margin of 17% (17%) in 07 (excl. CTC Media) 10
- 11. Free-to-air TV Eastern Europe Commercial Share of Viewing Development TV3, 3+ & TV6 Latvia (15-49) TV3 & Tango TV Lithuania TV3 & 3+ Estonia (15-49) 44 (15-49) 46 42 42 40 44 40 38 42 % 38 % 36 % 36 40 34 34 32 38 32 30 36 Q4 Q4 FY FY Q4 Q4 FY FY Q4 Q4 FY FY 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 TV Prima Czech Rep (15 +) DTV Russia (6-54) Viasat3 Hungary (18-49) TV3 Slovenia (15-49) 25 2,6 10 10 24 2,4 8 8 23 6 6 % % 2,2 % % 22 4 4 21 2 2 2 20 1,8 0 0 Q4 Q4 FY FY Q4 Q4 FY FY Q4 Q4 FY FY Q4 Q4 FY FY 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 11
- 12. TV Prima Czech Republic Net sales up 12% to SEK 273 mn in Q4 & 07 sales slightly down at SEK 837 mn following exceptional performance in 06 - Local currency sales up 7% in Q4 Audience share yet to reflect rebranding, programming investments & schedule changes during 07 Operating profits up 56% to SEK 82 mn in Q4 & 8% to SEK 185 mn in 07 Increased operating margins of 30% (22%) in Q4 & 22% (20%) for full year New management introduced at beginning of 08 following completion of organizational changes 12
- 13. DTV Russia Full Year (SEK million) 300 60 Sales EBIT 50 250 40 200 30 20 150 10 100 0 -10 50 -20 0 -30 2004 2005 2006 2007 • Net sales up 62% to SEK 83 mn in Q4 & 49% to SEK 269 mn in 07 • Continued audience share gains with channel ratings in target group peaking at 2.8% in July • ~ 1.45 mn households connected under 06 agreement with Mostelecom, increasing penetration in Moscow to 55% - 07 agreement to add further 1.3 mn households & lift City penetration to ~ 98% • New affiliates signed up – DTV broadcast for first time in Miass, Novomoskovsk and Novisibirsk • Operating profits up >3x to SEK 13 mn in Q4 & 9x to SEK 26 mn in 07 - Increased operating margins of 16% (7%) in Q4 & 10% (1%) in 07 13
- 14. Free-to-air TV Baltics Rolling 12 Months (SEK million) Sales EBIT 600 300 550 250 500 450 200 400 150 350 100 300 250 50 200 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 Net sales up 30% to SEK 191 mn in Q4 & 20% to SEK 564 mn in 07 Pan-Baltic CSOV (15-49) up to 40.1% (36.7%) in Q4 TV6 Latvia launched in Q2 07 & already achieved 1.8% CSOV in Q4 Operating profits up 44% to SEK 78 mn & 28% to SEK 163 mn in 07 - Increased operating margins of 41% (37%) in Q4 & 29% (27%) in 07 14
- 15. Pay-TV East Continued Subscriber Intake 200 30 Mini-pay Premium DTH Subscribers 180 Baltics (thousands) Subscriptions 25 (millions) 160 140 20 120 100 15 80 10 60 40 5 20 0 0 04 Q 05 Q 05 Q 05 Q 05 Q 06 Q 06 Q 06 Q 06 Q 07 Q 07 Q 07 07 Q 004 2 5 Q 005 4 5 Q 005 2 6 3 6 Q 006 1 6 Q 007 3 7 Q 007 07 Q 00 Q 00 Q 00 Q 00 Q 00 Q 00 20 20 20 20 20 20 20 20 20 20 20 20 20 20 2 2 2 2 2 2 2 2 2 2 2 2 4 1 2 3 4 1 2 3 4 1 2 3 4 Q Q 4 1 3 1 4 2 4 Q Baltic satellite platform adds 33,000 premium subscribers in Q4 & more than doubles in size to 164,000 by year end Wholesale mini-Pay business adds 875,000 subscriptions in Q4 & almost 8 mn new subscriptions in 07 - Total number of subscriptions up 42% to 26.4 mn for the full year 15
- 16. Pay-TV East Rolling 12 Months (SEK million) 500 Sales EBIT 400 300 200 100 0 -100 04 05 05 05 05 06 06 06 06 07 07 07 07 20 20 20 20 20 20 20 20 20 20 20 20 20 4 1 2 3 4 1 2 3 4 1 2 3 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Net sales doubled to SEK 140 mn in Q4 & SEK 461 mn in 07 Healthy underlying development in operating profitability up from SEK 13 mn to SEK 28 mn Continued investment in Balkan Media Group relaunch, 8.7% CSOV (18-49) in December Preparation for launch of DTH satellite platform in Ukraine – on track 16
- 17. 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 Q4 -10% 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 Net sales up 8% to SEK 183 mn in Q4 & 65% to SEK 715 mn in 07 Full year sales growth reflects consolidation of P4 Radio from Q4 2006 & strong performance Operating profits up 4% to SEK 37 mn in Q4 & more than doubled to SEK 123 mn in 07 (excluding associated companies) - Operating margin of 20% in Q4 & 17% in 07 17
- 18. Online Expansion of MTG Internet Retailing Net sales of SEK 448 mn in Q4 and SEK 1,558 mn in 07 (TV Shop sold in Q2 2007) CDON.COM sales up 22% to SEK 311 mn in Q4 & 22% to SEK 911 mn in 07 BET24 gross winnings up 28% to SEK 38 mn in Q4 & 23% to SEK 122 mn in 07 and profitable in Q4 and full year Nelly.se, Linus-Lotta.com & Bookplus.fi acquired & consolidated within MTG Internet Retailing during 07 Operating profits up 3x to SEK 37 mn in Q4 & up 7x to SEK 81 mn in 07 (excluding SEK 18 mn impact of sale of TV Shop) SEK 196 mn recommended cash offer made for Gymgrossisten - # 1 Nordic online retailer - in December 07 18
- 19. Operating Results By Business Area (SEK million) Q4 2007 Q4 2006 Change (%) FY 2007 FY 2006 Change (%) Net Sales Viasat Broadcasting 2,571 2,196 17 8,842 7,805 13 Radio 183 169 8 715 433 65 Online 448 459 -2 1,558 1,611 -3 Other 66 94 - 235 287 - Total Net Sales 3,268 2,918 12 11,351 10,136 12 Operating income (EBIT) Viasat Broadcasting 611 505 21 2,027 1,913 6 Radio 39 33 17 134 78 71 Online 37 12 322 99 12 851 Other -76 -115 - -234 -225 - Total EBIT 611 435 40 2,027 1,777 14 19
- 20. Summary Income Statement (SEK million) Q4 2007 Q4 2006 FY 2007 FY 2006 Net Sales 3,268 2,918 11,351 10,136 Operating Income (EBIT) 611 435 2,027 1,777 Net interest and other financial items -4 -5 -12 -3 Non-cash gain from CTC Media IPO - - - -241 Income before tax 607 431 2,015 2,016 Tax -149 -114 -588 -517 Net income for the period 458 316 1,428 1,499 Basic average number of shares outstanding 66,612,141 66,983,283 66,945,776 66,591,869 Basic earnings per share (SEK) 6.48 4.60 20.35 21.57 20
- 21. Cash Flow (SEK million) Q4 2007 Q4 2006 FY 2007 FY 2006 Cash flow from operations 481 533 1,363 1,372 Changes in working capital -193 141 -433 -78 Net Cash Flow from Operations 288 673 930 1,294 Proceeds from sales of shares - 0 - 21 Proceeds from sales of shares of subsidiaries - - 70 - Investments in shares in subsidiaries & associates -32 -40 -219 -645 Investments in other non-current assets -40 -72 -327 -329 Other cash flow from investing activities - 2 - 2 Cash flow from/to investing activities -71 -110 -475 -950 Cash flow from/to financing activities -230 -593 -594 -877 Net change in cash and cash equivalents for the period -14 -30 -139 -533 Net cash from operations of SEK 288 mn in Q4 and SEK 930 mn in 07 SEK 70 mn realized from sale of TV Shop & SEK 219 mn invested in acquisition of Playahead, Balkan Media Group, Nelly.se, Linus-Lotta.com & Bookplus.fi shares Capital expenditure of SEK 40 (72) mn in Q4 & SEK 327 (329) mn in 07 reflects investment in Nordic satellite platform & enhanced distribution in C&E Europe Distribution of SEK 503 mn dividend + SEK 307 mn committed to share repurchases in 2007 Board to propose ordinary dividend of SEK 5 per share and extraordinary dividend of SEK 10 per 21 share to 2008 AGM - total distribution of SEK 1 billion + seek mandate for potential share buy-back
- 22. Balance Sheet (SEK million) 2007 2006 Non-current assets 5,756 4,891 Current assets 5,203 4,314 Total assets 10,958 9,205 Shareholders' equity 5,875 5,105 Long-term liabilities 430 305 Current liabilities 4,654 3,796 Total equity & liabilities 10,958 9,205 Record 34% ROCE and 26% ROE Equity to assets ratio of 54% Net cash position of SEK 69 (430) mn SEK 3.7 billion of available liquid funds 22
- 23. 5 Year Strategic Objectives “On Track” MTG to report Group Net Sales of SEK 20 billion in 2011 (including selected acquisitions) with >10% organic annual sales growth Sales of SEK 11.4 billion for FY 2007 – 12% sales growth Current Viasat Broadcasting C&E Europe operations to generate net sales of SEK 5 billion in 2011 Net sales of SEK 2.3 billion for FY 2007 – up 26% year on year >20% operating (EBIT) margin for Viasat Broadcasting (excl. CTC Media) by end of 2011 Operating (EBIT) margin of 18 % for FY 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 = 42% of Viasat Broadcasting EBIT (incl. CTC Media) in 2007 MTG to report 30% Return on Equity for 2007-2011 5 year period 26% Return on Equity for FY 2007 23
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