mtg q3 2011 presentation final

1

Modern Times Group

MTG

Third Quarter 2011

Financial Results

2 Q3 2

011 F

INA

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3

Third Quarter 2011

Sales Growth & Higher Margins

• Sales up 4% y/y at constant FX & up 3% y/y at

reported FX to SEK 3,106 (3,017) mn

• OPEX up y/y to SEK 2,748 (2,681) mn & up 4%

y/y at constant FX

• EBIT before associated company income up 6%

y/y to SEK 358 (336) mn

• Increased operating margin of 12% (11%)

• Total EBIT of SEK 514 (427) mn

• Including SEK 156 (91) mn of associated

company income

• Income before tax of SEK 439 (472) mn

• Net income from continuing operations of SEK

306 (339) mn & total net income of SEK 306

(359) mn

• Basic EPS of SEK 4.71 (5.31) & total basic EPS

of SEK 4.71 (5.63)

Q3 2

011 F

inancia

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esults

SEK mn

* EBIT excluding associated income

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Q3 2010 Q3 2011

Revenue EBIT* EBIT margin

4

First Nine Months 2011

Sales & EBIT Growth

• Sales up 8% y/y at constant FX & up 3% at

reported FX to SEK 9,762 (9,484) mn

• OPEX of SEK 8,380 (8,195) mn – up 7% y/y at

constant FX

• EBIT before associated company income up 7%

y/y to SEK 1,382 (1,288) mn

• Stable operating margin of 14% (14%)

• Total EBIT up 17% SEK 1,879 (1,608) mn

• Including SEK 497 (320) mn of associated

company income

• Income before tax of SEK 1,791 (1,579) mn

• Net income from continuing operations up 14% y/y

to SEK 1,276 (1,116) mn & total net income of

SEK 1,276 (1,182) mn

• Basic EPS from continuing operations of SEK

18.90 (16.80)

• Total basic EPS of SEK 18.90 (17.81)

9M

2011 F

inancia

l R

esults

SEK mn

* EBIT excluding associated income

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

2,000

4,000

6,000

8,000

10,000

12,000

9M 2010 9M 2011

Revenue EBIT* EBIT margin

Opera

tin

g r

evie

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6

Free-TV Scandinavia

Financial Highlights

• Sales of SEK 984 (922) mn in Q3 & SEK 3,153

(3,018) mn for YTD

• Up 7% y/y in Q3 & 8% for YTD at

constant FX

• OPEX of SEK 768 (703) mn in Q3 & SEK 2,358

(2,286) mn for YTD

• Up y/y at constant FX for both periods

• Investments in local productions and other

programming & y/y effect of launch of TV10

in Sweden in Sep 2010

• EBIT slightly down y/y to SEK 216 (219) mn in

Q3 & up 9% y/y to SEK 795 (732) mn for YTD

• EBIT margin of 21.9% (23.8%) in Q3 &

25.2% (23.8%) for YTD

Opera

tin

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evie

w

SEK mn

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Q3 2010 Q3 2011 9M 2010 9M2011

Revenue EBIT EBIT margin

7

Free-TV Scandinavia

Operating Highlights

Sweden

• Target audience share of 38.4% (38.8%) in Q3

• Up from 37.6% in Q2

• Launch of Fall programming schedules

• Audience share gains for TV8 & TV10

Norway

• Target audience share of 22.0% (29.1%)

• Down from 24.8% in Q2

• Performance reflected impact of new

commercial channels launched in Q4 2010

• Ongoing investments in programming

content with focus on local productions

Denmark

• Target audience share of 23.1% (24.8%)

• Down from 25.7% in Q2

• Performance reflects impact of Danish

general elections

• Fall schedules strengthened with new &

returning formats

Opera

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Commercial Audience Share (15-49)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Q32009

Q42009

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

Sweden Norway Denmark

8

Pay-TV Nordic


Sales of SEK 1,184 (1,140) mn in Q3 & SEK

3,509 (3,347) mn for YTD

Up 4% y/y in Q3 & 8% for YTD at

constant FX

OPEX of SEK 949 (939) mn in Q3 & SEK 2,831

(2,733) mn for YTD

Up y/y at constant exchange rates

Ongoing investments in premium sports

content

Addition of 7 Viasat channels since the

beginning of 2010

EBIT up 17% y/y to SEK 234 (201) mn in Q3 & up

10% to SEK 677 (614) mn for YTD

Increased operating margins of 19.8%(17.6%) in

Q3 & 19.3% (18.3%) for YTD

Opera

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SEK mn

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Q3 2010 Q3 2011 9M 2010 9M 2011


9

Pay-TV Nordic


• Stable premium subscriber base y/y in Q3 & down

slightly q/q

• Third party premium network subscriber

base up y/y & stable q/q

• Performance reflected:

• Ongoing subscriber intake in Sweden offset

by increased churn levels in Denmark due

to high competition

• Premium ARPU up y/y to SEK 4,751 (4,472) mn &

up 8% y/y at constant FX

• Previously introduced price increases

• Rising penetration of value-added services

Opera

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Thousands

Thousands

Premium subscribers

Value added services

0

200

400

600

800

1,000

1,200

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

Satellite subscribers 3'rd party network subscribers

0

50

100

150

200

250

300

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

ViasatPlus HDTV Multi-room

10

Free-TV Emerging Markets


• Total sales of SEK 400 (357) mn in Q3 & SEK

1,418 (1,373) mn for YTD


constant FX

• OPEX of SEK 476 (432) mn in Q3 & SEK 1,453

(1,472) mn for YTD

• Up for both periods at constant FX

• Continued strategic programming

investments across all territories

• EBIT of SEK -76 (-75) mn in Q3 & SEK 65 mn

positive swing to SEK -35 (-100) mn for YTD

• Baltic, Czech & Bulgarian sales of SEK 352

(310) mn in Q3 & SEK 1,254 (1,198) mn for YTD


constant FX

• EBIT of -48 (-49) mn in Q3 & SEK 45 (-22) mn

for YTD

• EBIT margin of 3.6% for YTD


Baltics, Czech Republic & Bulgaria

SEK mn

SEK mn

-500

0

500

1,000

1,500

Q3 2010 Q3 2011 9M 2010 9M 2011

Revenue EBIT

-100

200

500

800

1,100

1,400

Q3 2010 Q3 2011 9M 2010 9M 2011

Revenue EBIT

11



Baltics

• Sales up 19% y/y in Q3 & 11% for YTD at

constant FX

• Increased pan-Baltic target audience share of

41.4% (40.5%)

• New channel TV8 launched in Lithuania after end

of Q3. Targets female 35+ audience

Czech Republic

• Sales up 18% in Q3 & 19% for YTD at constant

FX & gained significant market share in Q3

• Continued significant CSOV gains both y/y and

q/q

• New channel Prima LOVE now fully included in

advertising sales bundle

Bulgaria

• Sales down 3% y/y in Q3 & down 12% for YTD at

constant FX due to continued decline in overall TV

ad market & low pricing levels

• Increased programming investments with launch

on own productions to drive ratings

Opera

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10%

20%

30%

40%

50%

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011

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

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

Bulgaria (18-49)

12

Pay-TV Emerging Markets


• Sales of SEK 240 (228) mn in Q3 & SEK 685

(671) mn for YTD


constant FX

• Growth primarily driven by continued y/y

subscriber intake on the Ukrainian and

Russian platforms

• Y/y effect on YTD sales of consolidation of

50% of Raduga TV from February 2010 &

full consolidation of Viasat Ukraine from

June 2010

• OPEX of SEK 227 (223) in Q3 & SEK 643 (589)

for YTD – even higher growth at constant FX

• Launch of 10 new Viasat channels since

beginning of 2010

• Consolidation of 50% of Raduga TV &

100% of Viasat Ukraine

• Ongoing investments in development of

platforms & offering

• EBIT more than doubled to SEK 13 (6) mn in Q3

but down to SEK 42 (82) mn for YTD

• EBIT margins of 5.5% (2.6%) in Q3 & 6.1%

(12.3%) for YTD

Opera

tin

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evie

w

SEK mn

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

100

200

300

400

500

600

700

800

Q3 2010 Q3 2011 9M 2010 9M 2011


13

Pay-TV Emerging Markets


• 88,000 net new subscribers added y/y

• Significant subscriber uptake in Ukraine &

growth in both Russian and Baltic

subscriber bases

• Wholesale mini-pay business subscriptions up

31% y/y and up from Q2 2011

• Viasat History & Viasat Nature documentary

channels launched in Uganda and Tanzania

after the end Q3 following signing of a

distribution agreement with digital terrestrial

television operator StarTimes

• Channels will also be included on

StarTimes pay-TV offering in Nigeria.

Opera

tin

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w

Satellite subscribers

Mini-pay TV subscriptions

Thousands

Thousands

200

250

300

350

400

450

500

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

30,000

40,000

50,000

60,000

70,000

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Mini-pay TV subscriptions

14

Other Businesses

Highlights

• Comprises MTG’s Radio, Bet24 and Modern

Studios operations

• Sales of SEK 372 (456) mn in Q3 & SEK 1,225

(1,349) mn for YTD – down 18% y/y & 6% for YTD

at constant exchange rates

• Lower licensing and production revenues

for Modern Studios & Strong Q3 2010 for

Bet24 due to 2010 World Cup

• Combined OPEX of 358 (406) mn in Q3 1,143

(1,232) mn for YTD

• EBIT before associated company income of SEK

14 (51) mn in Q3 & SEK 78 (117) mn for YTD

• EBIT margins of 3.8% (11.1%) in Q3 &

6.4% (8.7%) for YTD

• Total EBIT of SEK 18 (50) mn in Q3 & 82

(122) mn for YTD including associated

company income of SEK 4 (-1) mn in Q3 &

4 (5) mn for YTD

Opera

tin

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w

SEK mn

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

200

400

600

800

1,000

1,200

1,400

1,600

Q3 2010 Q3 2011 9M 2010 9M 2011


15 Fin

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16

Income Statement

• Depreciation & amortisation charges

of SEK 47 (53) mn in Q3 & SEK 145

(160) mn for YTD

• Net interest and other financial items

of SEK -75 (45) mn in Q3& SEK -88

(-29) mn for YTD

• Y/y reduction in net interest charges

to SEK 17 (24) mn in Q3 &

SEK 45 (55) mn for YTD

• Y/y change in other financial items

also included SEK -64 (-) y/y non-

cash financial gain from the change

in value of the option element of the

SEK 250 mn CDON Group

convertible bond & a non-cash

financial gain of SEK 12 (71) mn

following the new share issues by

CTC Media and the resulting dilution

of MTG’s ownership in the company

Fin

ancia

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w

(SEK mn)

Q3

2011

Q3

2010

9M

2011

9M

2010

Net sales 3,106 3,017 9,762 9,484

EBIT before associated company

income & non-recurring items 358 336 1,382 1,288

Associated company income 156 91 497 320

Total EBIT 514 427 1,879 1,608

Net interest & other financial items -75 45 -88 -29

Income before tax 439 472 1,791 1,579

Net income from continuing

operations 306 339 1,276 1,116

Net income from discontinued

operations - 20 - 66

Net income 306 359 1,276 1,182

Basic EPS from continuing

operations 4.71 5.31 18.90 16.80

Total basic EPS 4.71 5.63 18.90 17.81

17

Cash Flow

• Change in working capital reflected

timing of payments for key sports rights

& cash tax payments

• No investments in businesses during

9M 2011, compared to SEK 136 mn

investment in Raduga TV in Q1 2010 &

SEK 132 mn investment in Viasat

Ukraine in Q2 2010

• CAPEX = less than1% of Group net

sales for the period

• Cash flow from financing activities

included net loan increase of SEK 68

(-90) mn

• Cash flow to financing activities of

SEK -770 (-236) mn for YTD

primarily reflected SEK 498 (363)

mn dividend payment to MTG

shareholders in Q2

Fin

ancia

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w

(SEK mn)

Q3

2011

Q3

2010

9M

2011

9M

2010

Cash flow from

operations 345 371 1,334 1,231

Changes in working

capital -483 -216 -645 -708

Net cash flow from

operations -138 155 689 523

Cash flow to/from

investing activities -34 -47 -86 -383

Cash flow to/from

financing activities 64 -105 -770 -236

Cash flow from

discontinued operations

– CDON Group

- 32 - -42

Net change in cash &

cash equivalents -108 35 -167 -138

18

Financial Position

• SEK 2,417 (3,500) mn of the Group’s available

credit drawn down as at 30 Sep 2011

• Net debt of SEK 1,861 (3,031) mn, compared

to net debt of SEK 1,716 mn as at 30 Jun 2011

• SEK 4,499 (3,631) mn of available liquid funds

(cash & undrawn facilities)

• SEK 2,253 mn book value of 38.2%

shareholding in CTC Media had public equity

market value of SEK 3,674 mn at end of Sep

2011

Fin

ancia

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(SEK mn)

30 Sep

2011

30 Sep

2010

Non-current assets 9,156 8,727

Current assets 5,802 6,641

Total assets 14,958 15,368

Shareholders’ equity 7,391 5,857

Long-term liabilities 3,090 4,232

Current liabilities 4,476 5,278

Total equity & liabilities 14,958 15,368

Net debt / EBITDA

1.2 1.2 1.1

0.8 0.7

0.6 0.7

Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

19

Summary

• Record sales following growth for all four broadcasting divisions

• Continued ad market growth & market share gains in Scandinavia

• Lagging recovery in emerging advertising markets but ongoing audience &

market share gains

• Nordic pay-TV revenues up with best in class margins

• Emerging market pay-TV on track with healthy subscriber & revenue growth

• Increased Group operating margins despite ongoing investments in

programming & platforms

• Healthy cash flow & strong financial position from which to invest further in

future growth

Sum

mary

20

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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info

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mtg q3 2011 presentation final

Entertainment & Humor

mn basic eps

constant fx

total net income

ytd ebit margins

constant fx

cash

raduga tv

financial items