Corrected version. Non-controlling interest for Q4 2014 has been changed to SEK 24m (from SEK 0m). No change to the full year number.
Record Sales & Profits Up
Q4 2014 Highlights
Net sales up 6% at constant FX & up 2% on an organic basis
Operating income before associated company income and non-recurring items up 2% to SEK 468m (461)
Total EBIT of SEK 611m (417) and net income of SEK 471m (261)
Basic earnings per share of SEK 6.70 (3.68)
Cash flow from operations of SEK 338m (396), with net debt position of SEK 362m (772) equivalent to 0.2x trailing 12 month EBITDA (excl. non-recurring items)
Board of Directors to propose increased annual cash dividend of SEK 11.00 (10.50) per share, representing pay-out ratio of 57% (56) excluding non-recurring items
Adverse FX movements to impact 2015 reported earnings (see page 2 - CEO comments)
Financial Overview
(SEKm)
2014 Oct-Dec
2013 Oct-Dec
2014 Jan-Dec
2013 Jan-Dec
Net sales
4,371
4,068
15,746
14,073
Growth at constant FX
6%
14%
11%
8%
Organic growth at constant FX
2%
6%
4%
5%
EBIT before associated company income and non-recurring items
468
461
1,272
1,309
Margin before associated company income and non-recurring items
10.7%
11.3%
8.1%
9.3%
Associated company income *
143
104
558
576
EBIT before non-recurring items
611
564
1,830
1,885
Non-recurring items (NRI) **
0
-147
-155
-147
Total EBIT
611
417
1,675
1,738
Net Income
471
261
1,172
1,168
Basic Earnings per Share (SEK)
6.70
3.68
17.10
16.39
Net debt
362
772
362
772
Cash flow from operations
338
396
1,337
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. Including a net positive impact of SEK 18m in Q4 2014 relating to the closure of Raduga TV.
** 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. Comprising in 2013 the non-cash net impairment related to MTG’s interest in the Raduga Russian satellite pay-TV platform.
President & CEO’s comments
Delivering on strategyOur fourth quarter results again delivered a combination of organic and acquisition-led growth to generate higher sales and profits. Our strong cash flow generation and overall financial position are reflected in the proposed 5% higher annual dividend payment of SEK 11 per share, which is equivalent to a 57% pay-out ratio.
We are delivering on our strategic plans and moving towards our objective of being the leading digital entertainment company in each of our major markets. Our Nordic broadcasting business again delivered higher sales and profits, as the growth in our online businesses more than compensated for lower linear viewing levels and declining advertising markets. The Emerging Markets businesses grew their sales on a combined basis but higher profits in the free-TV business were offset by negative pay-TV earnings impacts. We have continued to enrich the content offering across all of our platforms with exclusive deals for premium sports and studio rights. Our commitment to show the best content on multiple devices reflects media consumption trends and has driven higher online and mobile subscriber volumes and viewing shares, and led to the even broader availability of our entertainment products on third party networks.
RussiaThe law prohibiting the sale of advertising on pay-TV channels in Russia has taken effect from the beginning of 2015. An amendment to the law that would allow advertising on pay-TV channels with 75% Russian content is now pending Presidential signature. We are continuing to explore the options available to our Russian operations and holdings in order to comply with the amendments to the Russian law regarding foreign ownership of Russian mass media companies from the beginning of 2016. We are working with a range of potential solutions, in order to best protect the interests of the stakeholders in these entertainment businesses that we have built into some of the most popular in Russia.
FX & OutlookWe are being impacted by significant adverse FX movements and, especially, the impact of the appreciation of the US dollar on our group-wide programming costs, and the depreciation of the Russian ruble on our Russian pay-TV channel business. Based on these changes, our US dollar content costs would be inflated by approximately SEK 200m in 2015, net of forward currency hedges, and the profits for our pay-TV emerging markets business would be negatively impacted by approximately SEK 100m in 2015. We are accelerating and extending actions to balance costs and optimize investments across the Group. The operations continue to perform well independent of the currency effects.
We are both developing our existing businesses and acquiring complementary new companies. As a result, we already have established digital leadership positions in a number of fields and will add to these across our unique footprint. We are offsetting falling linear viewing with higher prices as linear TV continues to offer attractive return on investment for advertisers, and we are attracting larger and larger online audiences, while remaining well positioned to capitalize on media spend growth in the emerging markets. All of which is contributing to our positive operating performance.
“The results for the quarter again demonstrate the progress that we are making towards our strategic goals. We do have substantial FX headwinds right now, but the operations continue to perform well.”
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:
The access pin code for the call is 7523722. To listen to the conference call online and for further information, please visit www.mtg.com.
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Any questions?www.mtg.comFacebook: facebook.com/MTGABTwitter: @mtgabpress@mtg.com (or Per Lorentz +46 73 699 27 09)investors@mtg.com (or Stefan Lycke +46 73 699 27 14)London, 4 February 2015
Jørgen Madsen Lindemann, President & Chief Executive OfficerModern Times Group MTG ABSkeppsbron 18P.O. Box 2094SE-103 13 Stockholm, SwedenRegistration number: 556309-9158
MTG (Modern Times Group MTG AB (publ.)) is an international entertainment group. Our operations span six continents and include TV channels and platforms, online services, content production businesses and radio stations. We are also the largest shareholder in CTC Media, which is Russia’s leading independent media company. Our shares are listed on Nasdaq OMX Stockholm (‘MTGA’ and ‘MTGB’).
The information in this announcement is that which MTG is required to disclose according to the Securities Market Act and/or the Financial Instruments Trading Act, and was released at 07:30 CET on 4 February 2015.
This report has not been reviewed by the Group’s auditors.
