Q3 2015 Interim report January - September

Q3 2015 Interim report January - September

October 22, 2015
07.30 CEST

Record Q3 sales & accelerating transformation

Q3 2015 Highlights

  • Sales of SEK 3,819m (3,669) and operating income of SEK 240m (221) including M&A transaction costs and adverse currency effects, but before non-recurring items
  • Total non-recurring items of SEK -652m (0), comprising SEK -700m of net restructuring charges and net SEK 48m related to the revaluations of Paprika & Splay
  • Net income from continuing operations of SEK -365m (163) and basic earnings per share of SEK     -5.44 (2.67)
  • Net income from discontinued operations (CTC Media) of SEK -18m (73)
  • Total net income of SEK -384m (236) and total basic earnings per share of SEK -5.71 (3.76)
  • Cash flow from operations of SEK 278m (238)
  • Net debt of SEK 2,134m (928) equivalent to 1.4x trailing 12 month recurring EBITDA
  • Strategic investments in three digital businesses and extension of key international sports rights

Financial Overview

(SEKm) 2015 Jul-Sep 2014 Jul-Sep 2015 Jan-Sep 2014 Jan-Sep 2014 Jan-Dec
Net sales 3,819 3,669 11,674 11,375 15,746
Growth at constant FX 5% 12% 2% 13% 11%
Organic growth at constant FX 3% 5% 1% 4% 4%
EBIT before non-recurring items 240 221 835 812 1,290
Margin before non-recurring items 6.3% 6.0% 7.1% 7.1% 8.2%
Non-recurring items (NRI)* -652 0 -575 -155 -155
Total EBIT -412 221 260 658 1,135
Net income, continuing operations -365 163 158 436 816
Basic earnings per share, continuing operations (SEK) -5.44 2.67 2.15 6.41 11.75
Net income, discontinued operations ** -18 73 -282 266 357
Total net income -384 236 -124 702 1,172
Total basic earnings per share (SEK) -5.71 3.76 -2.08 10.40 17.10
Net debt 2,134 928 2,134 928 362
Cash flow from operations, continuing operations 278 238 762 784 1,040

* Comprising the SEK 77m capital gain from the sale of Swedish cable TV company Sappa in Q1 2015; and the SEK -700m of net restructuring charges and net SEK 48m related to revaluations of Paprika & Splay in Q3 2015. Comprising in Q2 2014 the SEK -159m non-cash net impairment charge related to MTG’s interest in the Ukrainian satellite pay-TV platform; the SEK -70m of organisational restructuring charges and other costs; and the SEK 76m capital gain from the sale of Zitius in Sweden. ** CTC Media has been reclassified from an ‘equity participation’ to a ‘discontinued operation’ as MTG’s shareholding in CTC Media is expected to be sold. Comparable figures for prior periods of 2014 and 2015 have been provided accordingly on www.mtg.com.

President & CEO’s comments

Profitable GrowthWe are reporting record Q3 sales on the back of higher viewing levels, healthy customer intake and rising market shares, as well as the addition of a number of exciting new digital businesses. Profits were also up despite the substantial currency headwinds that we continue to face, and we delivered another quarter of profitable growth for the Group.

Accelerating TransformationOur strategic transformation has now accelerated. We are implementing a large scale restructuring programme to bring our local operating businesses closer to the customer, and over time yield SEK 600 million of savings that we will mostly reinvest. We have made significant steps to resolve the position in Russia before the year-end deadline. CTC Media has signed a definitive agreement to sell 75% of its operations, and we are also working with our advisers on solutions for our Russian pay-TV channels business. We have then invested SEK 1.2 billion in three market leading digital businesses in high growth online video categories, and we have also invested to secure key sports rights and studio deals for years to come. This will enable us to develop our brands and products to deliver even more premium content across even more screens and platforms.

Positive MomentumThe performance of our Nordic businesses during this period of transition underlines the quality and popularity of our entertainment products, as our Scandinavian media houses delivered higher audience shares in each market for the first time in two years, and Viaplay continued to drive the growth in our subscriber bases. This has been complemented by very positive momentum in our CEE markets, and by the 42% organic growth in group-wide digital revenues.    

Sharpening FocusWe will continue to execute on our transformation plan and review the portfolio, in order to ensure that we sharpen the focus on the products and businesses that offer the greatest potential for MTG. We are a more efficient and effective group today, and relevance and execution remain at the centre of all that we do.

Jørgen Madsen LindemannPresident & Chief Executive Officer               

“We are shaping the future of entertainment by creating and growing communities around brands, content and services that consumers love.”

    Conference callThe 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 6539
UK:    +44 (0) 20 3427 1901
US:  +1 646 254 3361

The access pin code for the call is 9248214. To listen to the conference call online and for further information, please visit www.mtg.com.

* * *

Any questions?www.mtg.comFacebook: facebook.com/MTGABTwitter: @mtgabpress@mtg.com (or Per Lorentz +46 73 699 27 09)investors@mtg.com (or Matthew Hooper +44 7768 440 414)

Stockholm, 22 October 2015

Jørgen Madsen Lindemann, President & Chief Executive Officer

Modern 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 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 22 October 2015.

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