Q42013 presentation final
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Modern Times Group reported strong financial results for Q4 2013, with accelerated sales growth of 14% driven by increased audience shares and subscriber growth across most markets. Investments in strategic growth areas like content production, digital expansion, and emerging markets delivered higher profits despite rising costs. The company proposed a record high annual dividend as it continues to balance investments for future growth with shareholder returns.
Q42013 presentation final
- 1. MODERN TIMES GROUP Q4 2013 FINANCIAL RESULTS “STRONGER PRODUCTS. HIGHER GROWTH” 1
- 2. Q4 2013 – HIGHLIGHTS Accelerated growth for 5th consecutive quarter - sales up 14% at constant FX & 6% on an organic basis Free-TV Scandi – audience shares up in all 3 markets & segment sales growing again Free-TV Emerging Markets – continued strong growth in soft market conditions with further investments Pay-TV Nordic – net subscriber growth, rising prices & operating margin within the range Pay-TV Emerging Markets – volume growth & profitability above expectations Studios – organic + M&A led growth with rising profitability levels Proposed annual ordinary cash dividend of SEK 10.50 = record high pay-out ratio of 56% excl. non-recurring items 2
- 3. GROUP PERFORMANCE INVESTMENTS DRIVING GROWTH SALES GROWTH (Y-O-Y) 600 20 500 15 400 300 10 200 5 100 Q4 2013 Q3 2013 Q2 2013 Sales growth at constant fx Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% EBIT (SEK MN) AND EBIT MARGIN (%) Organic sales growth 0 0 2012 2012 2012 2012 2013 2013 2013 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 EBIT excl associated income & one-off items EBIT margin 3
- 4. FREE-TV SCANDINAVIA AUDIENCE SHARE GAINS & GROWTH RETURN Sales up 1% at constant FX 2013 2012 Oct-Dec Oct-Dec 1,149 1,147 Growth (at constant FX) 1% -6% Audience share gains in all three markets EBIT (SEKm) 214 250 Denmark - highest Q4 CSOV since 2000 EBIT margin 18.6% 21.8% Sweden - up every month since launch of Fall schedule Norway - boosted by launch of 3rd channel (TV6) at end of November Sweden 31.8% 31.5% Healthy margin with continued investments Norway 16.9% 16.7% OpEx up 5% at constant FX - below original expectation due to later launch of TV6 & lower level of required programming investments Denmark 25.2% 20.6% Exclusive coverage in Sweden of Winter Olympics will boost sales & adversely impact Q1 2014 earnings Growth for 2nd consecutive quarter Swedish & Danish TV ad markets estimated to have been stable with low levels of growth in Norway 27% of Group sales Sales (SEKm) CSOV (15-49) 4
- 5. PAY-TV NORDIC SUBSCRIBER GROWTH + RISING PRICES Sales up 7% at constant FX Driven by Viaplay & satellite premium ARPU & TV3 Sport channels 32% of Group sales 2013 2012 Oct-Dec Oct-Dec 1,368 1,286 Subscriber Growth + Rising Prices Sales (SEKm) 3rd party subscriber volume growth (q-o-q) more than offsets satellite decline for first time in 2 years Growth (at constant FX) 7% 3% EBIT (SEKm) 165 198 Premium satellite ARPU continued to rise following price increases 12.0% 15.4% Continued strong Viaplay subscriber intake + price increases Premium subs ('000) 977 1,019 o/w satellite ('000) 559 592 o/w third party ('000) 418 427 5,075 4,988 Margin within the expected range Continue to expect higher EBIT margin for FY14 Exclusive coverage in Sweden of Winter Olympics will boost sales & adversely impact Q1 2014 earnings EBIT margin Satellite premium ARPU (SEK) 5
- 6. FREE-TV EMERGING MARKETS INVESTING IN MOMENTUM Sales up 18% at constant FX 19% of Group sales Lithuanian, Estonian, Bulgarian & Ghanaian TV ad markets estimated to have grown; Latvian, Czech & Hungarian markets estimated to have declined 2012 Oct-Dec Oct-Dec Sales (SEKm) 784 675 Growth (at constant FX) 18% 8% 83 104 10.6% 15.4% 51.8% 48.5% Czech Republic (15-54) Driven by sales co-operations + good underlying growth + M&A 2013 Pan-Baltic (15-49) 34.1% 39.1% Bulgaria (18-49) 36.9% 34.1% EBIT (SEKm) Record high audience shares in Bulgaria & Baltics EBIT margin 37% Bulgarian media house CSOV – a new record 52% Pan-Baltic CSOV – a new record Czech Republic media house CSOV down due to Prima Family CSOV EBIT impacted by higher investments Profitability (Tanzania) Tough comps, intense competition & soft markets in 2014. Q1 will be impacted by the broadcasting of the Olympics in the Baltics. impacted by programming investments and TV1 6
- 7. PAY-TV EMERGING MARKETS OUT-PERFORMING EXPECTATIONS Sales up 20% at constant FX Driven by wholesale subscription, satellite subscriber volume growth, ad sales in Russia and some positive timing effects 8% of Group sales 2013 2012 Oct-Dec Oct-Dec Continued subscription/subscriber growth Sales (SEKm) 322 271 Addition of >8m mini-pay subscriptions in 2013 and almost 1m in Q4 Growth (at constant FX) 20% 19% Addition of 24k satellite subscribers in Q4 following growth in Baltics, Russia & Ukraine – base stable y-o-y 51 5 15.9% 1.9% 581 584 92,223 83,950 Higher profits – no change in FY14 expectations EBIT (SEKm) EBIT margin Subscribers / subscriptions ('000) Q4 EBIT boosted by seasonal impact of Russian ad sales, as well as ~SEK 15m positive one-off items Satellite No change to the expectation for rising profitability levels in 2014 Mini-pay wholesale 7
- 8. MTG STUDIOS, MTGX, RADIO STUDIOS DRIVES GROWTH Organic + M&A led sales growth 13% organic sales growth driven by MTG Studios. Radio sales stable in Norway & down in Sweden 2013 2012 Oct-Dec Oct-Dec Sales (SEKm) 13% of Group sales 593 316 Growth (at constant FX) 89% -29% Growth (organic) 13% n/a 11 0 1.9% 0.0% M&A growth from acquisition & consolidation of Nice Entertainment (Nov), DRG & Novemberfilm (Jun) OpEx up, Profits up Healthy profitability in MTG Studios and Radio Norway Reduced losses in Radio Sweden after cost savings Ongoing investment by MTGx to accelerate digital development – Splay & Net Info are two examples of exciting new areas EBIT (SEKm) MTG Studios now a scale player The leading Nordic content production company With a leading global distribution arm in DRG EBIT margin And an Emerging Markets specialist in Paprika Latino 8
- 9. INCOME STATEMENT INVESTMENTS DELIVER GROWTH Sales up 14% at constant FX Negative FX impact of ~ 1 percentage point 6% organic growth Acquisitions add ~ 8 percentage points of growth Q4 in brief 2013 Oct-Dec Oct-Dec Sales (SEKm) 4,083 3,620 14% 0% Organic growth (at constant FX) 6% 2% 457 514 11.2% 14.2% Sales growth (at constant FX) 11% EBIT margin (excl. associates and non-recurring items) 2012 OpEx up 18% at constant FX & 10% organically Driven by previously announced investments + acquisitions EBIT excl. associates & non-recurring items SEK 147m non-cash asset impairment charge related to Raduga joint venture Margin excl. associates & non-recurring items The Raduga revenues that MTG consolidated represented less than 0.5% of Group full year 2013 net sales. Total EBIT excl. non-recurring items 564 476 Non-recurring items -147 - Total EBIT margin excl. one-offs 417 476 Effective tax rate of 30% for FY13 Expect FY14 rate to be in 25-30% range 9
- 10. CASH FLOW HIGH CASH CONVERSION LEVELS Healthy cash flow generation SEK 1.3bn of cash flow from operations 74% of earnings converted into operating cash flow & 65% when including increase in WC from record low levels (SEKm) 2013 2012 Jan-Dec Jan-Dec 1,340 1,655 Changes in working capital Cash flow from operations -120 261 Net cash flow from operations 1,220 1,915 SEK 246m cash dividend payments received from CTCM Investing to drive future growth Investments in shares of SEK 905m to drive growth Higher CapEx of SEK 319m reflects investments in new playout centre in the UK, Zitius, MTGx and Viaplay Cash flow used in investing activities -1,224 -351 Zitius sale proceeds to come in 2014 Cash flow used in financing activities 96 -1,274 Net change in cash & cash equivalents 92 291 10
- 11. FINANCIAL POSITION RECORD HIGH PAY-OUT RATIO Strong financial position Net debt to trailing twelve month EBITDA ratio of just 0.5 times at year end SEK 5.6 bn of available liquid funds Net debt / Trailing 12 month EBITDA Recently refinanced on attractive terms 1.2 1.2 1.1 0.8 0.7 SEK 5.4 bn market value of CTC Media stake as at YE 0.7 0.6 0.5 SEK 1.9 bn book value of 37.9% CTC Media stake 0.3 0.3 0.3 0.3 0.2 0.1 Q4 13 11 Q3 13 Continuing to balance investments in future growth with shareholder returns Q2 13 Q1 13 Q4 12 Q3 12 Q2 12 Q1 12 Q4 11 Q3 11 Q2 11 Q1 11 Q4 10 Q3 10 Record pay-out ratio of 56% excl. non-recurring items Q2 10 0.0 0.0 Q1 10 Board proposes annual cash dividend of SEK 10.50
- 12. Q4 2013 – SUMMARY STRONGER PRODUCTS. HIGHER GROWTH PRODUCTS & CONSUMER OFFERINGS STRONGER, MORE RELEVANT & MORE AVAILABLE THAN EVER AUDIENCE SHARE GAINS & SUBSCRIBER GROWTH IN ALMOST ALL MARKETS CLEAR FOCUS ON STRATEGIC GROWTH DRIVERS – CONTENT, DIGITAL, GEOGRPHICAL EXPANSION ACCELERATING ORGANIC GROWTH BOOSTED BY M&A RECORD HIGH PAY-OUT RATIO & FINANCIAL FIREPOWER 12
- 13. MTG INVESTOR RELATIONS FOR FURTHER INFORMATION VISIT WWW.MTG.SE TEL: +46 (0) 73 699 2714 EMAIL: INVESTOR.RELATIONS@MTG.SE 13