Interim report January-March

Q1 2020 highlights

• Viaplay subscribers up 314k from Q119 and 102k from Q419 to a total of 1,671k. New full year Viaplay net subscriber intake target of approximately 400k
• Previous outlook for profitable growth withdrawn for 2020
• Sales of SEK 3,657m (3,727) with organic growth of -2%
• Operating income before IAC of SEK 219m (274)
• Total operating income of SEK 219m (218)
• Net income of SEK 157m (167) and basic earnings per share of SEK 2.33 (2.48)
• Total net debt of SEK 4,754m, including net lease liabilities of SEK 560m, equivalent to 2.6x 12 month trailing EBITDA before IAC¹⁾

President & CEO’s comments

“The strong momentum we had built up in 2019 continued into the start of 2020, but the spread of the Coronavirus has had a material impact on our operations from March and onwards. Our organic sales were down 2%, with the very healthy growth in the number of Viaplay subscribers almost fully offsetting the adverse effects on our advertising and studios businesses. Our operating profits before IAC were down compared to last year and, given the uncertainty caused by the current circumstances, we are withdrawing our profitable growth outlook for 2020.”

Our first priority in this unprecedented situation has been to keep our team safe, and we have consistently worked hard to keep our people healthy, connected and motivated. We also acted early and decisively to announce a SEK 700m cost saving programme, all of which will impact this year. This does not reduce our permanent workforce or our investments in Viaplay, so we can make a swift return to normal when the crisis is over. The SEK 700m comes on top of the SEK 250m of savings from last year’s transformation. Furthermore, we have a flexible financial position with a range of lenders and facilities. The Board’s decision not to propose the payment of a dividend for 2019, or any share based incentive plans for 2020, will further enhance our cash flow and liquidity.

Subscription revenues were up 5% and accounted for 67% of Q1 sales. We added 102k Viaplay subscribers in Q1 and ended the quarter with 1,671k paying subscribers. Subscriber intake remained very strong and viewing levels increased substantially, partly driven by many people staying at home. The launch in Iceland at the beginning of this month has gone very well, and we are planning for further geographical expansion in 2021. We now expect our full year subscriber intake to be approximately 400k, which would be 25% growth in the Viaplay subscriber base in 2020.

We reduced the price of our sports packages in Viaplay from 13 March, due to the postponement or cancellation of sports events around the world. This has led to a significantly lower churn than would have otherwise been the case. We will not make further payments, or amortize previous payments, until the events resume, and we have already received full compensation for this year’s ice hockey world championship.

Advertising sales were down 13% as demand levels have been severely impacted by the crisis. March advertising revenues were down 17% and April revenues will be down 25%. 80% of our estimated annual advertising inventory has been contracted at slightly higher overall net prices than in 2019. Advertising accounted for 23% of Q1 sales. This crisis will have long lasting effects on the media landscape, and reducing our exposure to advertising remains a key focus.

Studios sales were down 17% and accounted for 10% of Q1 sales. A significant number of large-scale productions are now paused, but we have seen very few cancellations. Given the largely variable cost base, we do not expect a material impact on group earnings. We will recommence the previously announced sale of parts of the business as soon as possible, and we have seen high levels of interest from potential buyers.

The combination of safeguarding our investments in streaming, and taking decisive actions to reduce costs and manage cash flows, will take us through the crisis, ready to seize the opportunities that always follow times of challenge and change. The whole NENT team has demonstrated a fantastic ability to continue to go the extra mile for the company every single day, even under these very difficult circumstances, and I have no doubt that we will come out of this crisis even stronger than ever.

Anders Jensen
President & CEO

Shareholder information

2020 Annual General Meeting
The 2020 Annual General Meeting of NENT Group’s shareholders will be held on Tuesday 19 May 2020 in Stockholm. As previously communicated, the Board of NENT Group has decided not to propose a dividend for the fiscal year 2019. NENT Group’s unappropriated earnings, in total SEK 1,759m, are therefore proposed to be carried forward.

The notices to the Meeting and related materials can be found at www.nentgroup.com.
 
Financial calendar 2020

 
Questions?

press@nentgroup.com (or Nicholas Smith, Acting Head of External Communications; +46 73 699 26 95)
investors@nentgroup.com (or Stefan Lycke, Head of Investor Relations; +46 73 699 27 14)

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Nordic Entertainment Group AB (publ) (NENT Group) is the Nordic region’s leading entertainment provider. We entertain millions of people every day with our streaming services, TV channels and radio stations, and our production companies create content that is experienced around the world. We make life more entertaining by telling stories, touching lives and expanding worlds – from live sports, movies and series to music and original shows. Headquartered in Stockholm, NENT Group is listed on Nasdaq Stockholm (‘NENT A’ and ‘NENT B’). This information is information that Nordic Entertainment Group AB (publ) (NENT Group) 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 23 April 2020.

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