Q2 2016 Highlights · Sales of SEK 4,328m (4,155) and operating income of SEK 472m (452) · Net income from continuing operations of SEK 328m (360) and basic earnings per share of SEK 4.33 (4.98) · Total net income of SEK -674m (-58) and total basic earnings per share of SEK -10.70 (-1.30), including net income from discontinued operations of SEK -1,002m (-418) · Cash flow from continuing operations of SEK 310m (373) · Net debt of SEK 1,796m (913) equivalent to 1.2x trailing 12 month EBITDA excl. IAC Financial Overview +-------------------------+------+-----+----------+----------+--------------+ |(SEKm) |Q2 |Q2 |First half|First half|Full year 2015| | |2016 |2015 |year 2016 |year 2015 | | +-------------------------+------+-----+----------+----------+--------------+ |Continuing operations | | | | | | +-------------------------+------+-----+----------+----------+--------------+ |Net sales |4,328 |4,155|8,154 |7,855 |16,218 | +-------------------------+------+-----+----------+----------+--------------+ |Change in reported net |4.2% |1.1% |3.8% |1.9% |3.0% | |sales | | | | | | +-------------------------+------+-----+----------+----------+--------------+ | Organic growth |2.1% |-0.2%|2.7% |0.3% |0.7% | +-------------------------+------+-----+----------+----------+--------------+ | |3.5% |0.4% |2.7% |0.3% |1.9% | |Acquisitions/divestments | | | | | | +-------------------------+------+-----+----------+----------+--------------+ | Changes in FX rates |-1.5% |0.9% |-1.6% |1.3% |0.4% | +-------------------------+------+-----+----------+----------+--------------+ | | | | | | | +-------------------------+------+-----+----------+----------+--------------+ |Operating income before |472 |452 |632 |594 |1,268 | |items affecting | | | | | | |comparability | | | | | | +-------------------------+------+-----+----------+----------+--------------+ |Margin before items |10.9% |10.9%|7.7% |7.6% |7.8% | |affecting comparability | | | | | | +-------------------------+------+-----+----------+----------+--------------+ |Items affecting |- |- |- |77 |-512 | |comparability (IAC) | | | | | | +-------------------------+------+-----+----------+----------+--------------+ |Operating income |472 |452 |632 |672 |756 | +-------------------------+------+-----+----------+----------+--------------+ | | | | | | | +-------------------------+------+-----+----------+----------+--------------+ |Net income |328 |360 |448 |524 |533 | +-------------------------+------+-----+----------+----------+--------------+ |Basic earnings per share |4.33 |4.98 |5.92 |7.59 |7.45 | |(SEK) | | | | | | +-------------------------+------+-----+----------+----------+--------------+ |Cash flow from operations|310 |373 |385 |484 |1,051 | +-------------------------+------+-----+----------+----------+--------------+ | | | | | | | +-------------------------+------+-----+----------+----------+--------------+ |Discontinued operations | | | | | | +-------------------------+------+-----+----------+----------+--------------+ |Net income [1] |-1,002|-418 |-1,072 |-264 |-282 | | | | | | | | +-------------------------+------+-----+----------+----------+--------------+ | | | | | | | +-------------------------+------+-----+----------+----------+--------------+ |Total operations | | | | | | +-------------------------+------+-----+----------+----------+--------------+ |Net income |-674 |-58 |-624 |260 |251 | +-------------------------+------+-----+----------+----------+--------------+ |Basic earnings per share |-10.70|-1.30|-10.16 |3.63 |3.22 | |(SEK) | | | | | | +-------------------------+------+-----+----------+----------+--------------+ |Net debt |1,796 |913 |1,796 |913 |2,124 | +-------------------------+------+-----+----------+----------+--------------+ [1] Comprises MTG’s interest in CTC Media, Inc, which has been divested and gave rise to a non-cash charge due to the reclassification of accumulated currency translation differences. Alternative Performance Measures With effect from the quarter, MTG has introduced the new European reporting guidelines concerning Alternative Performance Measures. The purpose of APMs is to facilitate the analysis of business performance and industry trends that cannot be directly derived from financial statements. MTG is using the following APMs: Operating income & margin before IAC; Change in net sales from Organic growth, Acquisitions/divestments and Changes in FX rates; Net debt and Net debt/EBITDA; Capital employed and Return on Capital Employed (ROCE); and Return on Equity (ROE). The reconciliation of these APMs to lines in the financial statements, with accompanying explanations, is provided in tables on pages 22-25 of this report. President & CEO’s comments On track Our products are now more broadly available than ever before and showed further good traction in Q2 with profitable growth for our Nordic and International entertainment businesses, as well as for the whole Group. MTG Studios also delivered a significant profit improvement. Video consumption continues to grow and move more online, on mobile and on demand, and our group-wide digital sales increased by 2.5 times. We are now not only the leading digital entertainment player in most of our markets, but also a global leader in key digital categories such as esports and MCNs. Both our Nordic and International entertainment operations delivered organic sales growth, with Bulgaria again top performing with over 20% total growth and more than 60% digital growth. Furthermore, the increase in group profits reflected the cost saving initiatives that we have implemented, and was achieved despite the ongoing FX headwinds and content cost inflation. The performance of our traditional businesses enables us to invest into the growth of our digital products and services that are proving so popular with consumers. We have adjusted prices as we have added even more content to our Viasat and Viaplay offerings, and Viaplay delivered another high growth sales quarter. We are commissioning more and more original productions for Viaplay; we are about to launch the Viafree digital platform across Scandinavia and provide free streamed video content; we will show exclusive coverage of the Rio Olympics in Sweden next month on all our platforms, as well as in VR and Ultra-HD for the first time; we are launching new premium sports channels in Sweden on the back of the new sports rights we have acquired; and we have launched the world’s first 24/7 dedicated eSports TV channel that we will make as widely available as possible to the world’s 250 million esports fans and more than 2 billion gamers. The multi-year partnerships deals that we have signed with leading distributors like Telenor in the Nordic region demonstrate the relevance and value of our products to consumers, and the importance of the investments that we are making in the long term development of our offerings. We completed the sale of our shareholding in CTC Media in Q2 and have now withdrawn entirely from traditional broadcasting in the CIS region. As part of our ongoing portfolio optimisation, we have also signed an agreement to sell our free-TV and production businesses in Ghana and Tanzania, subject to local regulatory approvals. We are instead focusing on investing further in the expansion of our digital video businesses, while having also paid our highest ever cash dividend in the quarter. Outlook Our objective remains to accelerate our sales growth and increase our operating profits for the full year. Q3 sales are expected to be up again compared to the same period of last year, but profits will be down as we see the impact of the new and renewed sports rights in the Nordics in particular, as well as the ongoing adverse FX effects. Jørgen Madsen Lindemann President & Chief Executive Officer “We are executing on our strategy to deliver profitable growth and shareholder returns by transforming MTG into a leading digital entertainment provider. People are watching more and more video, and our products are more relevant, more available and more innovative than ever before.” Conference call The company will host a conference call today at 09.00 Stockholm local time, 08.00 London local time and 03.00 New York local time. To participate in the conference call, please dial: Sweden: +46 (0) 8 5033 6538 UK: +44 (0) 20 3427 1905 US: +1 646 254 3367 The access pin code for the call is 264200. To listen to the conference call online and for further information, please visit www.mtg.com. This information is information that MTG (Modern Times Group MTG AB (publ.)) is obliged to make public pursuant to the EU Market Abuse Regulation and/or the Securities Markets Act or the Financial Instruments Trading Act. The information was submitted for publication at 07:30 CET on 19 July 2016. Our shares are listed on Nasdaq OMX Stockholm (‘MTGA’ and ‘MTGB’). Any questions? mtg.com facebook.com/MTGAB @mtgab press@mtg.com (or Tobias Gyhlenius +46 73 699 27 09) investors@mtg.com (or Stefan Lycke +46 73 699 27 14) Modern Times Group MTG AB Skeppsbron 18 P.O. Box 2094 SE-103 13 Stockholm, Sweden Registration number: 556309-9158
Q2 2016 Interim report January – June
| Source: Modern Times Group MTG AB
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