mtg q2 presentation final

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Modern Times Group

MTG

Second Quarter 2012

Financial Results

2

Forward looking statements

Forward-looking information and Safe Harbour Statement under the U.S. Private Securities Litigation Reform

Act of 1995

This report contains forward-looking information based on the current expectations of MTG management.

Although management deems that the expectations presented by such forward-looking information are

reasonable, such forward-looking information is subject to risks and uncertainties and no guarantee can be

given that these expectations will prove correct. Accordingly, the actual future outcome could vary considerably

when compared to what is stated in the forward-looking information, due to such factors as the prevailing

economic and business environments in certain markets and the impact of the Eurozone crisis in particular;

commercial risks related to expansion into new territories; political and legislative risks related to changes in

rules and regulations in the various territories in which the Group operates; exposure to foreign exchange rate

movements and the US dollar and Euro currencies in particular; and the emergence of new technologies and

competitors. These risks and uncertainties are described in more detail in the 2011 Annual Report, which is

available from the Group’s website at www.mtg.se and in the Group’s registration statement on Form 20-F,

which is available from the website of the U.S. Securities and Exchange Commission.

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Second quarter 2012

Stable sales & increased cash flow

• Stable sales y-o-y at constant and reported FX

• OPEX up 1% y-o-y at constant and reported FX

• EBIT before associated company income of

SEK 552 (593) mn

• Total EBIT of SEK 684 (688) mn, including

SEK 133 (95) mn of associated company

income

• PTP of SEK 587 (681) mn including SEK -88 (30)

mn non-cash impact of change in value of option

element of CDON convertible bond

• Net income of SEK 454 (479) mn and Basic EPS

of SEK 6.35 (6.84)

• Receipt of SEK 55 (84) mn of dividends from

CTC Media

• Net cash flow from operations of SEK 728 (705)

mn

Q2 2

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SEK mn

* EBIT excluding associated income

3,531 3,517

593 552

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Q2 2011 Q2 2012

Revenue EBIT* EBIT margin

5

First half year 2012

A period of investments

• Sales up 2% y-o-y at constant and reported FX

• OPEX up 4% y-o-y at constant and reported FX

• EBIT before associated company income of

SEK 892 (1,025) mn

• Total EBIT of SEK 1,226 (1,374) mn,

including SEK 334 (349) mn of associated

company income

• PTP of SEK 1,178 (1,352) mn including SEK -6

(34) mn non-cash impact of change in value of

option element of CDON convertible bond

• Net income of SEK 908 (969) mn and Basic EPS

of SEK 13.04 (14.19)

• Receipt of SEK 107 (145) mn of dividends from

CTC Media

• Net cash flow from operations of SEK 793 (828)

mn

Hq 2

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SEK mn

* EBIT excluding associated income

6,656 6,776

1,025 892

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

H1 2011 H1 2012

Revenue EBIT* EBIT margin

7

Free-TV Scandinavia

Financial Highlights

• Sales down 3% y-o-y in Q2 and 2% y-o-y for H1 at

constant FX

• Negative effect on ratings of World Ice

Hockey Championship and Euro 2012

football Championship

• OPEX up 4% y-o-y in Q2 and 9% y-o-y for H1

• Programming investments in Norway

• Substantially lower y-o-y growth than in Q1

• EBIT margin of 22.6% (27.8%) and 19.1%

(26.7%) for the respective periods amongst

highest in Europe

• Sweden and Denmark profits up y-o-y

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SEK mn

1,146 1,110

2,169 2,134

319 251

580

408

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

500

1,000

1,500

2,000

2,500

Q2 2011 Q2 2012 H1 2011 H1 2012

Revenue EBIT EBIT margin

8

Free-TV Scandinavia

Operating Highlights

Sweden

• World Cup Ice Hockey Championship and Euro

2012 Football on competing channels impacted

TV3 and TV6

• TV8 & TV10 slightly up y-o-y and slightly down q-

o-q

• TV3 benefits from a higher Swedish regional TV

advertising sales

Norway

• Norwegian media house improved its planning

and execution and fall schedule now announced

• Work ongoing to enhance the TV3 brand

Denmark

• TV3 CSOV up y-o-y, but TV3+ negatively

impacted by Euro 2012 Football on competing

channels. TV3 PULS CSOV up q-o-q

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Commercial Audience Share (15-49)

37.6% 38.4%

34.0% 34.9% 33.4%

23.7% 20.7% 19.2% 18.6%

19.5%

25.7% 23.1% 22.2%

24.9% 25.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Sweden Norway Denmark

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Pay-TV Nordic


• Sales up 5% y-o-y in Q2 and 7% y-o-y for H1 at

constant FX


• Ongoing investments in Viaplay, higher y-o-

y content costs and marketing for the newly

rebranded Viasat film channels and 4 new

HD movie channels

• EBIT margin of 17.9% (19.2%) and 17.6% (19%)

for H1

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SEK mn

1,186 1,250

2,325

2,499

228 223

443 441

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

500

1,000

1,500

2,000

2,500

3,000

Q2 2011 Q2 2012 H1 2011 H2 2012


10

Pay-TV Nordic


• Premium subscriber base down q-o-q

• Decline in satellite premium subscriber

base offset to an extent by growing third

party network subscriber base

• Premium satellite ARPU up 7% y-o-y in Q2 to SEK

4,926 (4,594)

• Continued growth in penetration of value

added services

• Impact of previously introduced price

increases

• Continued development of Viaplay

• Strengthened content offering

• Launch of first of its kind hybrid internet-

enabled and DTT set-top box in Sweden in

June

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Thousands

Thousands

Premium subscribers

Value added services

0

200

400

600

800

1,000

1,200

Satellite subscribers 3'rd party network subscribers

0

50

100

150

200

250

300

350

ViasatPlus HDTV Multi-room

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Free-TV Emerging Markets


• Total sales down 3% y-o-y in Q2 and stable y-o-y

for H1 at constant FX

• Excluding Slovenia, sales down 1% y-o-y in

Q2 and up 2% y-o-y for H1 at constant FX

• OPEX down 11% y-o-y in Q2 and 9% y-o-y for H1

• Closing down of Slovenian broadcasting

and ending of amortisation of Bulgarian and

Czech licenses

• EBIT margin of 16.3% (12.1%) in Q2 and 10%

(4.1%) for H1

• Baltic, Czech & Bulgarian sales stable y-o-y in

Q2 at constant FX

• Combined OPEX down 5% y-o-y in Q2 and 4% for

H1

• EBIT margin of 20% (18%) in Q2 and 14.3%

(10.3%) for H1


Baltics, Czech Republic & Bulgaria

SEK mn

SEK mn

531 516

901 909

96 103 93 130

0%

10%

20%

30%

40%

50%

0

200

400

600

800

1,000

Q2 2011 Q2 2012 H1 2011 H2 2012


598 560

1,018 992

73 91 41

100

0%

10%

20%

30%

40%

50%

0

200

400

600

800

1,000

1,200

Q2 2011 Q2 2012 H1 2011 H2 2012


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Baltics


constant FX

• Stable pan-Baltic commercial target audience

share of 40.5% (40.4%)

• TV ad market shares up in Estonia and Latvia,

and stable in Lithuania

Czech Republic

• Sales down 2% y-o-y in Q2 but up 5% y-o-y for H1

at constant FX

• Further market share gains following continued

significant audience share gains

Bulgaria

• Sales stable in Q2 y-o-y and down 3% y-o-y for

H1 at constant FX

• Lower market shares in Q2 following lower ratings

due to the airing of Euro 2012 on competing

channels

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Commercial Audience Share

* MTG will include the LNT channels in its reported

combined CSOV in Latvia with effect from Q3 2012

10%

20%

30%

40%

50%

Estonia (15-49) Latvia (15-49)*

Lithuania (15-49) Czech Republic (15-54)

Bulgaria (18-49)

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Pay-TV Emerging Markets



constant FX

• Growth driven by mini-pay in Russia and

Baltic, Ukrainian and Russian satellite

platforms


• Ongoing investments in the satellite

platforms to drive subscriber intake

• Lower costs for the wholesale mini-pay

channel business

• EBIT more than doubled y-o-y in Q2 and more

than tripled for H1

• EBIT margin of 21.1% (9.3%) in Q2 and

17.5% (6.5%) for H1

• Positive FX effects in the quarter

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SEK mn

230

273

445

524

22

58 29

91

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

100

200

300

400

500

600

Q2 2011 Q2 2012 H1 2011 H2 2012


14

Pay-TV Emerging Markets


• 96,000 net new subscribers added y-o-y

• Same seasonal pattern as in 2011

• Addition of sports content and launch of

two new Viasat Sports premium pay-TV

channels in the Baltics

• Successful launch of HD offering in

Ukraine

• Wholesale mini-pay business added nearly 12

mn subscriptions y-o-y and nearly 7 mn q-o-q

• Continued growth in the Russian market

in particular

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Satellite subscribers

Mini-pay TV subscriptions

Thousands

Thousands

0%

5%

10%

15%

20%

25%

30%

0

100

200

300

400

500

600

Satellite subscribers Subscriber growth y-o-y

40,000

50,000

60,000

70,000

80,000

Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012

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Other Businesses

Highlights

• Comprised MTG’s Radio, Bet24 and MTG Studios

operations

• Sales of SEK 397 (452) mn in Q2 and SEK 804

(852) mn for H1

• Down 13% y-o-y in Q1 and 6% for H1 at

constant FX

• Reflects discontinuation of Bet24 from 3

May

• Lower y-o-y sales for the Swedish radio

business and MTG studios to some extent

offset by growth for the Norwegian radio

business

• Combined OPEX down 4% y-o-y in Q2 and up 3%

y-o-y for H1

• Lower sales from Swedish radio and

increased costs for MTG Studios offset to

an extent by net gain from sale of Bet24

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SEK mn

452

397

852

804

44 5

64 -9

-100

0

100

200

300

400

500

600

700

800

900

Q2 2011 Q2 2012 H1 2011 H1 2012

Revenue EBIT

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Looking ahead

Free-TV Scandi & Nordic Pay-TV

• Free-TV Scandinavia

• The outlook for the reminder of 2012 is for continued TV advertising market growth in Sweden

and Norway, but less clear picture for Denmark

• Our objective is to take back and increase Scandinavian advertising market shares but more to

do with execution than incremental investments

• We therefore anticipate that full year OPEX will grow at normalized mid-single digit percentage

point level, rather than previously anticipated mid to high single digit percentage point levels

• Nordic Pay-TV

• We continue to expect sales growth to be driven by rising satellite premium ARPU and 3rd party

network subscriber growth

• Now is the time to invest in our linear channels and the Viaplay on-demand service to drive

further growth, which is why we are adjusting our anticipated full year operating margin from

approximately 18% to approximately 17%

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Looking ahead

Emerging markets operations

• Free-TV Emerging markets

• As before, we are yet to see any trend shift in competitor behavior or a return to growth in

advertising spending or pricing

• However, costs are down and we do not see the need to increase our level of investment

beyond what we have already done ahead of a return to sustained market growth

• We are now restructuring and integrating the recently acquired LNT free-TV operations in Latvia

so the reduction in operating costs will be significantly lower in the second half of the year than

the first half

• Pay-TV Emerging markets

• We expect continued subscriber intake in 2012 on the satellite platforms and continued growth

of mini-pay subscriptions

• As before, we also continue to expect higher full year profits in 2012 than 2011 but that the

increase in H2 will be lower than the more than 200% increase in H1

• This reflects the fact that now is the time to invest in our premium content and channel offering,

and the roll-out of Viaplay in Russia, in order to drive future growth

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Income Statement

• Lower y-o-y depreciation &

amortisation charges of SEK 28 (50)

mn in Q2 and SEK 56 (99) mn for H1

following ending of amortisation of

Czech and Bulgarian broadcasting

licensees

• Net interest charges down y-o-y to

SEK -8 (-14) mn in Q2 and SEK -24

(-28) mn for H1

• Y-o-y change in other financial items

included

• SEK -88 (30) mn non-cash

financial impact in Q2 and

SEK -6 (34) mn for H1 from

the change in value of the

option element of the SEK 250

mn CDON Group convertible

bond mn

• Tax charges of SEK 133 (202) mn in

Q1 and SEK 270 (383) mn for H1

• Underlying effective tax rate of

26% in Q2 and H1

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(SEK mn)

Q2

2012

Q2

2011

H1

2012

H1

2011

Net sales 3,517 3,531 6,776 6,656

EBIT before associated

company income 552 593 892 1,025

Associated company income 133 95 334 349

EBIT 684 688 1,226 1,374

Net interest & other financial

items -98 -7 -48 -22

Income before tax 587 681 1,178 1,352

Tax -133 -202 -270 -383

Net income 454 479 908 969

Basic EPS 6.35 6.84 13.04 14.19

Diluted EPS 6.34 6.79 12.99 14.10

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Cash Flow

• Cash flow from operations included

receipt of SEK 55 (84) mn of dividend

payments from CTC Media in Q2 and

SEK 107 (145) mn for H1

• Investment in shares amounted to SEK

100 (-) mn and comprised the acquisition

of the LNT free-TV business in Latvia

• Other cash flow from investing activities

of SEK 61 (-) mn comprised the majority

of the net cash to be received from the

sale of the Bet24 operations

• CAPEX less than 1% of Group net sales

in Q1 and for H1

• Cash flow used in financing activities

included dividend payment of SEK 600

(498) mn

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(SEK mn)

Q2

2012

Q2

2011

H1

2012

H1

2011

Cash flow from

operations 501 528 835 989

Changes in working

capital 227 178 -42 -162

Net cash flow from

operations 728 705 793 828

Cash flow used in

investing activities -58 -20 -57 -52

Cash flow used in

financing activities -582 -646 -528 -834

Net change in

cash & cash

equivalents

88 40 207 -58

21

Financial Position

• Total borrowings of SEK 1,677 (2,382) mn as at

30 Jun 2012 and cash balance of SEK 675

(424) mn

• Net debt of SEK 778 (1,716) mn as at 30 Jun

2012 and available liquid funds of SEK 5,655

(4,682) mn

• SEK 2,170 (1,940) mn book value of 37.9%

shareholding in CTC Media and public equity

market value of SEK 3,345 mn

Fin

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(SEK mn)

30 Jun

2012

30 Jun

2011

Non-current assets 5,884 8,909

Current assets 5,815 5,525

Total assets 11,699 14,434

Shareholders’ equity 4,714 6,833

Long-term liabilities 2,309 3,020

Current liabilities 4,676 4,581

Total equity & liabilities 11,699 14,434

Net debt / EBITDA ratio

1.2 1.2 1.1

0.8 0.7

0.6 0.7

0.3 0.3 0.3

Q110

Q210

Q310

Q410

Q111

Q211

Q311

Q411

Q112

Q212

23

For further information, please visit www.mtg.se or contact:

MTG Investor Relations

Tel: +44 7768 440 414 / +44 7590 098 188

Email: [email protected]

Conta

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mtg q2 presentation final

Investor Relations

commercial

cdon convertible

tv emerging

net cash flow

mn including

cash flow

tv nordic

tv scandinavia