Q4 2016 Full year report January−December

Record sales, profits up & higher dividend

Q4 & FY 2016 Highlights

  •  Record Q4 sales of SEK 5,019m (4,545) with 8% organic growth
  •  Record FY sales of SEK 17,299m (16,218) with 5% organic growth
  •  Q4 operating income of SEK 554m (434) before SEK 0m (63) of items affecting comparability
  •  FY operating income of SEK 1,347m (1,268) before SEK 0m (-512) of items affecting comparability
  •  Q4 net income of SEK 422m (375) and total basic earnings per share of SEK 5.67 (5.30)
  •  Q4 cash flow from continuing operations of SEK 383m (290)
  •  Net debt of SEK 2,186m (2,124) equivalent to 1.4x trailing 12 month EBITDA before IAC
  •  Board of Directors to propose a dividend of SEK 12.00 (11.50) per share, representing pay-out ratio of 93% (86) of net income from continuing operations before IAC

Financial Overview

(SEKm) Q4 2016 Q4 2015 Full year 2016 Full year 2015
Continuing operations
Net sales 5,019 4,545 17,299 16,218
Change in reported net sales 10.4% 4.0% 6.7% 3.0%
   Organic growth 8.4% -0.2% 5.4% 0.7%
   Acquisitions/divestments -1.2% 4.3% 1.2% 1.9%
   Changes in FX rates 3.2% -0.1% 0.1% 0.4%
Operating income before items affecting comparability 554 434 1,347 1,268
Margin before items affecting comparability 11.0% 9.5% 7.8% 7.8%
Items affecting comparability (IAC) 0 63 0 -512
Operating income 554 497 1,347 756
Net income 422 375 963 533
Basic earnings per share (SEK) 5.67 5.30 12.88 7.45
Cash flow from operations 383 290 940 1,051
Discontinued operations
Net income [1] - 0 -1,072 -282
Total operations
Net income 422 375 -109 251
Basic earnings per share (SEK) 5.67 5.30 -3.19 3.22
Net debt 2,186 2,124 2,186 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 used in this report are explained and reconciled on pages 22-26.

 
President & CEO’s comments

Leading the way
2016 was an important and successful year for MTG. We delivered on our objective to accelerate our sales growth and increase our profits, and we took a number of very important steps to shape our business for the future. We have been on a journey for several years now to adjust our traditional broadcast businesses to new media consumption trends, and we accelerated this strategy even further in 2016. We have rolled out new channels and services including Viafree in Scandinavia and Viaplay in the Baltics, and added fantastic new original programming and sports products.

Aligning the portfolio
We have also taken a number of significant steps in our strategic portfolio realignment. These included exiting the CIS region in general and CTC Media in particular; divesting our free-TV businesses in Africa; and now also signing an agreement to divest our 50% stake in Prima in the Czech Republic. We are putting the proceeds to work by investing in a third global vertical – online gaming. We completed the acquisition of 21% of InnoGames in December and intend to increase our holding to 51% once the Prima sale has been completed. This portfolio realignment will continue as we focus on capitalising on the shift in video consumption.

Driving growth
Our organic sales grew by 5% for the full year and 8% in Q4. This reflects the growth in the number of customers that we are reaching, and the time and money that they are spending with our products, which are more broadly available, more relevant and more popular than ever. Our group wide digital sales almost doubled in 2016. Viaplay had another record year with substantial subscriber growth and price increases reflecting further investments in high quality programming and enhanced user experience. MTGx expanded its operations as we gradually stepped up our investments in esports in particular and added a new vertical, online gaming. These developments all position us well for further growth in 2017.

Delivering shareholder value
Our operating income was up 6% for the full year and 28% in Q4, and this is despite the continued FX headwinds and significant investments that we are making in creating and acquiring content and in our digital transformation. This increased profitability is the result of the organic growth combined with our strategic cost transformation programme. We will reap the benefits of the investments that we are making in the years to come. We are proposing an increased dividend for 2016 to reflect our ongoing commitment to combine reinvestment into content and our digital development with the return of value to shareholders. Finally, I want to thank our employees, our customers and our partners for making these results possible and enabling us to transform MTG into a leading global digital video entertainer.

Jørgen Madsen Lindemann
President & Chief Executive Officer

“We have delivered on our 2016 objective to accelerate our growth and increase our profits. We continue to lead the way by capitalising on changes in consumer behaviour to become a global leader in key digital video entertainment verticals.”

 
2017 Annual General Meeting
 
The 2017 Annual General Meeting will be held on Tuesday 9 May 2017 in Stockholm. Shareholders wishing to have matters considered at the Meeting should submit their proposals in writing to agm@mtg.com or to The Company Secretary, Modern Times Group MTG AB, Box 2094, SE-103 13 Stockholm, Sweden, at least seven weeks before the Meeting, in order that such proposals may be included in the notices to the Meeting. Further details of when and how to register will be published in advance of the Meeting.

The Board of Directors will propose the payment of an annual ordinary cash dividend of SEK 12.00 (11.50) per share to the Annual General Meeting of shareholders in May. The total proposed dividend payment would therefore amount to approximately SEK 800m (767), based on the maximum potential number of outstanding ordinary shares. The Board of Directors will propose that the remainder of the Group’s retained earnings for the year ended 31 December 2016 be carried forward into the accounts for 2017. The proposal is in line with the dividend policy to distribute a minimum of 30 per cent of each year’s recurring net profit to shareholders in the form of an annual ordinary cash dividend.

Financial calendar
MTG’s financial results for the first quarter 2017 will be published on 21 April.

The Annual Report will be made available at www.mtg.com and from the Company’s head office at Skeppsbron 18, Stockholm, Sweden, no later than 7 April 2017.

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 6574
UK: +44 (0) 330 336 9412
US: +1 719 325 2213

The access pin code for the call is 8491480. To listen to the conference call online and for further information, please visit www.mtg.com .

* * *

Questions?

press@mtg.com
(or Tobias Gyhlénius, Head of Public Relations; +46 73 699 27 09)
investors@mtg.com
(or Stefan Lycke; Head of Investor Relations; +46 73 699 27 14)
mtg.com

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MTG (Modern Times Group MTG AB (publ.)) is a leading international digital entertainment group and we are shaping the future of entertainment by connecting consumers with the content that they love in as many ways as possible. Our brands span TV, radio and next generation entertainment experiences in esports, digital video networks and online gaming. Born in Sweden, our shares are listed on Nasdaq Stockholm (‘MTGA’ and ‘MTGB’). This information is information that MTG (Modern Times Group MTG AB (publ.)) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 CET on 2 February, 2017.

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About Us

MTG (Modern Times Group MTG AB (publ.)) is a leading international digital entertainment group and we are shaping the future of entertainment by connecting consumers with the content that they love in as many ways as possible. Our popular entertainment brands span Content Production, TV, Radio and eSports, and are available around the world. Born in Sweden, our shares are listed on Nasdaq Stockholm (‘MTGA’ and ‘MTGB’).

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