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Financial results presentation from the international entertainment broadcasting group Modern Times Group MTG AB.
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Maximizing the Power of EntertainmentFirst Quarter Financial Results
2007Stockholm, 24 April 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
First Quarter 2007
Results Highlights
Double Viasat Broadcasting revenues in 5 years
MTG to become #1 commercial free-to-air operator in Sweden and TV3 to become #2 commercial free-to-air channel in Norway within 5 years
Export integrated model into new high growth territories - C&E European businesses to generate same level of broadcasting revenues & profits as Scandinavian operations within 5 years
>15% operating margins in 3 core businesses - Free-to-air TV Scandinavia; Pay-TV Nordic; C&E Europe
Strategic ObjectivesSet in June 2004
Objective On Track
Viasat Broadcasting sales up 75% since 2003 on rolling 12 month basis
Continuation of shut-down of Swedish analogue terrestrial network increases penetration in Sweden; TV3 Norway established as second largest commercial channel in comparable universe in each month
Rolling 12 month operating income for C&E European operations (incl. CTC Media) of SEK 768 million vs. SEK 1,151 million for Nordic operations
Rolling 12 month operating margins of 18% for Free-to-air TV Scandinavia; 19% for Pay-TV Nordic; & 16% for C&E Europe (excl. CTC Media)
Viasat BroadcastingOperating Results
5
17
16
18
-21
11
23
17
–1
Change (%)
1,913
19
432
30417%
59719%
56218%
7,805
-257
1,841
3,183
3,038
FY 2006
5113%
5912%
Central & Eastern EuropeOperating margin
388478Central & Eastern Europe
14019%
11015%
Free-to-air TV ScandinaviaOperating margin
723713Free-to-air TV Scandinavia
138162Associated Companies32Other & Eliminations
457481Total EBIT
12517%
14817%
Pay-TV NordicOperating margin
Operating income (EBIT)
1,8042,003Total net sales
-55-65Other & eliminations
749877Pay-TV Nordic
Net Sales
Q1 2006Q1 2007(SEK million)
37%
40%
23%
40%
34%
9%
17%
Viasat BroadcastingGeographical Segmentation – Rolling 12 Months
Sales
EBIT (Including CTC Media)
43%
41%
16%
FTA Swe/No/Dk
Pay-TV Nordic
CEE
Q1 2006 Q1 2007
Q1 2007Q1 2006
FTA Swe/No/Dk
Pay-TV Nordic
CEE
CTC Media
28%
32%
16%
24%
Free-to-air TV ScandinaviaFocus 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%
10
15
20
25
30
35
2003Q1
2003Q2
2003Q3
2003Q4
2004Q1
2004Q2
2004Q3
2004Q4
2005Q1
2005Q2
2005Q3
2005Q4
2006Q1
2006Q2
2006Q3
2006Q4
2007Q1
TV3 & TV6 Sweden TV3 & 3+ Denmark TV3 & ZTV Norway
Free-to-air-TV Scandinavia Commercial Share of Viewing (15-49)
(%)
Free-to-air-TV Sweden Commercial Share of Viewing (15-49)
20
25
30
35
40
45
50
Q12005
Q22005
Q32005
Q42005
Q12006
Q22006
Q32006
Q42006
Q12007
Viasat Sweden SBS Broadcasting TV4
80
85
90
95
100
105
110
115
Q22005
Q32005
Q42005
Q12006
Q22006
Q32006
Q42006
Q12007
TV3 TV4 Kanal 5
(%)
Indexed Big 3 Ratings development Media Houses CSOV Development
Free-to-air TV SwedenActions 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
Free-to-air TV ScandinaviaSales and Operating Performance – Rolling 12 Months
0
500
1 000
1 500
2 000
2 500
3 000
3 500
Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 20070%
5%
10%
15%
20%
25%
30%Sales EBIT EBIT Margin(SEK million)
Pay-TV NordicPremium Subscriber & ARPU Growth
0
100
200
300
400
500
600
700
800
Q1 2004 Q1 2005 Q1 2006 Q1 20072 700
2 900
3 100
3 300
3 500
3 700
Premium Subscribers Annualized ARPU
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
(’000 subscribers) (SEK)
020406080
100120140160180
Q32005
Q42005
Q12006
Q22006
Q32006
Q42006
Q12007
Viasat+ & Multiroom SubscriptionsViast Golf Subscriptions
(’000 subscribers)
0
200
400
600
800
Q12004
Q22004
Q32004
Q42004
Q12005
Q22005
Q32005
Q42005
Q12006
Q22006
Q32006
Q42006
Q12007
0%5%10%15%20%25%30%35%
Sales EBIT EBIT Margin
Pay-TV NordicOperating performance
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 channelsand 12 third party channels since beginning of 2006
Stable total expensed SAC for fourth quarter in succession
(SEK million)
Central & Eastern EuropeOperating Performance – Rolling 12 Months (Excl. CTC media)
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
0
500
1000
1500
2000
Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 20070%5%10%15%20%25%30%35%40%Sales EBIT EBIT Margin
(SEK million)
15
20
25
30
35
40
45
50
55
2003Q1
2003Q2
2003Q3
2003Q4
2004Q1
2004Q2
2004Q3
2004Q4
2005Q1
2005Q2
2005Q3
2005Q4
2006Q1
2006Q2
2006Q3
2006Q4
2007Q1
TV Prima Czech Republic (15+) TV3 & 3+ Estonia (15-49)TV3 & 3+ Latvia (15-49) TV3 & Tango TV Lithuania (15-49)
Free-to-air TV Eastern Europe Commercial Share of Viewing
(%)
0123456789
10
2003Q1
2003Q2
2003Q3
2003Q4
2004Q1
2004Q2
2004Q3
2004Q4
2005Q1
2005Q2
2005Q3
2005Q4
2006Q1
2006Q2
2006Q3
2006Q4
2007Q1
Viasat3 Hungary (18-49) TV3 Slovenia (15-49) DTV Russia (6-54)
Free-to-air TV Eastern Europe Commercial Share of Viewing
(%)
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
TV PrimaCzech Republic
DTV Russia
• 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 Mostelecomdistribution agreement & SEK 45 million invested to connect further 500,000 households
• Increasing profitability despite investments
0
50
100
150
200
250
Q4 200
4Q1 2
005
Q2 200
5Q3 2
005
Q4 200
5Q1 2
006
Q2 200
6Q3 2
006
Q4 200
6Q1 2
007
-30
-20
-10
0
10
20
30Sales EBIT
(SEK million)CSOV (%)
0,0
0,5
1,0
1,5
2,0
2,5
3,0
Q1 200
3Q3 2
003
Q1 200
4Q3 2
004
Q1 200
5Q3 2
005
Q1 200
6Q3 2
006
Q1 200
7
(SEK million)
Rolling 12 Months
Free-to-air TV BalticsRolling 12 Months
8% sales growth & 16% operating margin
Pan-Baltic commercial share of viewing (15-49) up to 40.6% (36.2%) with substantialratings improvements in Latvia and Lithuania offsetting decline in Estonia
200
250
300
350
400
450
500
Q42004
Q12005
Q22005
Q32005
Q42005
Q12006
Q22006
Q32006
Q42006
Q12007
05101520253035404550
Sales EBIT Margin(SEK million) (%)
Pay-TV EastSubscriber Growth
0
20
40
60
80
100
120
Q1 200
4Q2 2
004
Q3 200
4Q4 2
004
Q1 200
5Q2 2
005
Q3 200
5Q4 2
005
Q1 200
6Q2 2
006
Q3 200
6Q4 2
006
Q1 200
7
Premium DTH Subscribers(thousands)
0
5
10
15
20
25
Q4 200
3Q1 2
004
Q2 200
4Q3 2
004
Q4 200
4Q1 2
005
Q2 200
5Q3 2
005
Q4 200
5Q1 2
006
Q2 200
6Q3 2
006
Q4 200
6Q1 2
007
Subscriptions(millions)
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
-50
0
50
100
150
200
250
300
Q4 200
4
Q1 200
5
Q2 200
5
Q3 200
5
Q4 200
5
Q1 200
6
Q2 200
6
Q3 200
6
Q4 200
6
Q4 200
7 -3%
-1%
1%
3%
5%
7%
9%
11%Sales EBIT EBIT Margin
Pay-TV EastRolling 12 Months
Doubling of sales to SEK 83 million
SEK 11 million operating profit with operating margin of 13%
DTH platform still in investment phase
(SEK million)
RadioRolling 12 Months
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
-100
0
100
200
300
400
500
600
Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 -10%
-5%
0%
5%
10%
15%
20%
25%Sales EBIT EBIT Margin
(SEK million) (excl. associated companies)
New business segment comprising CDON.COM, TV-Shop, BET24, Playaheadand MTG New Media
Combined sales of SEK 413 (413) million
Combined operating profit of SEK 14 (19) million
CDON.com sales up 28% to SEK 214 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
Other Businesses
Online Modern Studios
Net sales of SEK 120 (151) million reflect lower sale of TV-productions and format licenses by Strix and the discontinuation of the Bromberg and Engine businesses
SEK 2 (3) million operating profit
Sonet film awarded 6 ‘Guldbaggen’ awards for ‘Kidz in the Hood’ and ‘The Substitute’awarded “Best Documentary” price
All Business AreasOperating Results
1,777
1,91378
-59-155
10,136
-406
4332,192
111
7,805
FY 2006
4
5-18-30
11
86-5
11
Change (%)
453468Total EBIT
4578
23-35
4816
16-35
Viasat BroadcastingRadioOther business areasParent company & other companies
Operating income (EBIT)
2,3622,629Total net sales
-115-81Eliminations
1,8042,003Viasat Broadcasting
81564
28
150533
23
Radio Other business areasParent company & other companies
Net Sales
Q1 2006Q1 2007(SEK million)
Summary Income Statement
21.57
67,042,524
1,499
-517
2,016
-5
244
1,777
10,136
FY 2006
2-Gain/loss from financial assets
-135-151Tax
305316Net Income for the period
66,382,41067,053,405Basic number of shares outstanding
4.384.55Basic earnings per share (SEK)
440467Income before tax
-15-2Net interest and other financial items
453468Operating income (EBIT)
2,3622,629Net Sales
Q1 2006Q1 2007(SEK million)
Cash Flow
-645-83-178Investments in shares in subsidiaries & associates
-78-94-339Changes in working capital
1,294144-60Net cash flow from operations
2121-Proceeds from sales of shares
-533
-877
-950
2
-329
1,372
FY 2006
-30-72Investments in other non-current assets
-92-251Cash flow from/to investing activities
-3105Cash flow from/to financing activities
50-206Net change in cash and cash equivalents for the period
--Other cash flow from investing activities
238279Cash flow from operations
Q1 2006Q1 2007(SEK million)
17% increase in cash flow from operationsIncreased 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
Balance Sheet
10,223
4,377
296
5,549
10,223
4,703
5,520
9,205
3,796
305
5,105
9,205
4,314
4,891
9,799
3,965
343
5,492
9,799
4,450
5,349
Long-term liabilities
Total equity & liabilities
Current liabilities
Shareholders’ equity
Total assets
Current assets
Non-current assets
31 March 2006 31 Dec 200631 March 2007(SEK million)
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
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
OutlookRatings Improvement & Investment in Growth
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