Net sales up 13% at constant FX & up 3% on an organic basis
Operating income (EBIT) up to SEK 472m (465) when excluding non-recurring items of SEK -155m (-) and associated company income of SEK 117m (113)
Pay-TV Nordic and acquisitions drive revenue and earnings growth despite soft advertising markets and ongoing investments
Total EBIT of SEK 434m (578)
Net income of SEK 307m (376) and basic earnings per share of SEK 4.21 (4.98)
Cash flow from operations of SEK 491m (472) and net debt position of SEK 987m (206)
Financial Overview
(SEKm)
2014 Apr-Jun
2013 Apr-Jun
2014 Jan-Jun
2013 Jan-Jun
2013 Jan-Dec
Net sales
4,109
3,605
7,706
6,814
14,073
Growth at constant FX
13%
6%
13%
4%
8%
Organic growth at constant FX
3%
6%
4%
4%
5%
EBIT before associated company income and non-recurring items
472
465
589
686
1,309
Margin before associated company income and non-recurring items
11.5%
12.9%
7.6%
10.1%
9.3%
Associated company income *
117
113
300
346
576
EBIT before non-recurring items
589
578
890
1,032
1,885
Non-recurring items (NRI) **
-155
-
-155
-
-147
Total EBIT
434
578
735
1,032
1,738
Net Income
307
376
466
710
1,168
Basic Earnings per Share (SEK)
4.21
4.98
6.64
9.71
16.39
Net debt
987
206
987
206
772
Cash flow from operations
491
472
685
741
1,348
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* Including MTG’s SEK 74m (USD 11.5m) Q1 2014 participation in USD 29.9m of non-recurring charges incurred by associated company CTC Media in Q4 2013
** Comprising in 2014 the SEK 160m non-cash net impairment charge related to MTG’s interest in the Ukrainian satellite pay-TV platform; SEK 70m of organisational restructuring charges and other costs; and the SEK 76m net gain from the sale of Zitius in Sweden, and in 2013 the non-cash net impairment related to MTG’s interest in Raduga, the Russian satellite pay-TV platform
President & CEO’s comments
Profitable growth This quarter has again demonstrated the benefit of the investments that we have made. Not only have we delivered the highest quarterly sales in the Group’s history, but also higher operating profits than last year. Secondly, these results demonstrate the benefit of our uniquely integrated and balanced combination of on and offline advertising, subscription and content production businesses. This enables us to monetize rising video consumption levels, and capitalise on the shift from linear to on-demand viewing with our Viaplay, catch-up and broader digital businesses. MTGx is accelerating this development and our clear objective is to be the leading digital entertainment business in each of our scale markets.
Strategy delivery on track and in line Both Viaplay in the Nordics and our emerging market wholesale channel business performed well in the quarter, and our results were boosted by the content production business. TV advertising market development remains mixed but we grew our online advertising revenues in all markets. We continue to adjust our cost bases to the market development, and to maximize the earnings potential in our traditional businesses so that we can prioritise investments in future growth. This can be seen clearly in the performance of our combined Nordic businesses.
Content you love We continue to focus on delivering relevant experiences that engage and excite consumers around the world. This is why we have recently prolonged our exclusive rights to Denmark’s Superliga football for an unprecedented six further seasons; signed the new multi-year, multi-platform and pan-Scandinavian exclusive content acquisition deal with Sony; launched our TV1000 Russian Kino movie channel in Israel; and launched our advertising funded eSports service. The quarter ended with the completion of our acquisition of global youth media brand Trace, which expands our presence across all of Africa and to 131 countries in total, and reflects our focus on investing in businesses with relevant content, digital presence and geographical expansion potential.
Outlook We continue to expect higher sales and margin expansion in 2014 for the Nordic pay-TV business. The Emerging Markets pay-TV operations are growing and will also now include Trace’s results but, as said before, we are impacted by the devaluation of the Russian and Ukrainian currencies and we are currently analyzing the impact of Russia’s proposed ban on advertising on pay-TV channels from 2015. Advertising spending trends across our 11 free-TV markets are mixed but we will continue to adjust our investments accordingly and to grow our online shares. Finally, the demand for our own content is strong, and both Nice Entertainment and Trace will contribute to our development moving forward.
Jørgen Madsen Lindemann President & Chief Executive Officer
“We are investing in order to be able to monetize rising video consumption levels and become the leading digital entertainer in each of our markets”
* * *
Conference Call
The company will host a conference call today at 15.00 Stockholm local time, 14.00 London local time and 09.00 New York local time. To participate in the conference call, please dial:
Modern Times Group MTG AB Skeppsbron 18 P.O. Box 2094 SE-103 13 Stockholm, Sweden Registration number: 556309-9158
Modern Times Group (MTG) is an international entertainment group with operations that span six continents and include free-TV, pay-TV, radio and content production businesses. MTG’s Viasat Broadcasting operates free-TV and pay-TV channels, which are available on Viasat’s own satellite platforms and third party networks, and also distributes TV content over the internet. MTG is also the largest shareholder in CTC Media, which is Russia’s leading independent television broadcaster.
Modern Times Group is a growth company and generated net sales of SEK 14.1 billion in 2013. MTG’s Class A and B shares are listed on Nasdaq OMX Stockholm’s Large Cap index under the symbols ‘MTGA’ and ‘MTGB’.
The information in this interim report is that which Modern Times Group MTG AB (publ) shall disclose in accordance with the Securities Market Act and/or the law on Trading in Financial Instruments, and was published at 13.00 CET on 17 July 2014.
