Q2 2019 Interim report January-June

Q2 2019 highlights

• Viaplay subscribers up 65k quarter on quarter to 1,421k representing 60% of total subscriber base
• Sales of SEK 3,975m (3,719) with 6% organic growth
• Operating income for the combined business segments of SEK 535m (508)
• Total operating income of SEK 455m (415) including IAC of SEK 0m (-48)
• Net income of SEK 348m (329) and basic earnings per share of SEK 5.17 (4.93)
• Total net debt of SEK 4,210m, including net lease liabilities of SEK 636m, equivalent to 2.3x 12 month trailing EBITDA before IAC[1]

[1] 2018 figures included in the calculation of 12 month trailing EBITDA before IAC have been adjusted for the estimated effect as if IFRS 16 had been applied for the full period.
[2] See page 16 for a reconciliation of business segments operating income. Alternative performance measures used in this report are explained and reconciled on pages 19-22. 

President & CEO’s comments

“We made substantial progress during Q2 to seize the significant opportunity we see in the Nordic streaming market. These results clearly demonstrate the strength of our strategy and the ecosystem that we have built. Organic sales were up, and both our operating segments delivered higher profits. We added 65k Viaplay subscribers in what has historically been a seasonally quiet quarter, and we have now grown the Viaplay sub base by over 20% in the last year”

Group sales were up 6% on an organic basis, and operating income for our combined business segments was up 5%. Central operational costs were up significantly as anticipated due to extraordinary investments in our team, branding, culture and values.

Our Broadcasting & Streaming operations delivered yet another quarter of profitable growth. Subscription & Other sales, which accounted for 60% of Group sales, were up 8%. We added 65k Viaplay subscribers in what has historically been a quiet quarter due to the seasonality in the sports subscriber base. We have now added 244k subscribers in the last twelve months and expect to have increased our market share. Viaplay’s 1,421k subscribers now represent 60% of our total subscriber base. The Viaplay intake was above our targets and driven by a combination of healthy gross intake, lower churn levels, and ground-breaking new B2B deals. We have added more original programming and acquired more content and live sports, which have all contributed to Viaplay’s growth, as have our ongoing technology and product developments.

Advertising sales, which accounted for 26% of group sales, were down 3% as double-digit sales growth in both Viafree and Swedish Radio was offset by the fact that we did not have the Ice Hockey World Championship on our Swedish free-tv channels this year, and the continuing soft TV and Radio advertising markets.

We have continued to invest in content, in order to drive our growth. We premiered 5 new Viaplay originals in the quarter, and announced the production of a further 6 new originals. We announced a number of important new sports rights agreements including exclusive coverage of Alpine and cross-country skiing from 2021, the Open golf championship until 2024, and Danish Superliga football until 2024. We have also further enhanced our Hollywood acquired portfolio with the MGM and NBCU deals that we announced earlier in the year, and we have continued to invest in access to high quality content by taking a minority stake in new LA-based studio Picturestart.

We have also signed a series of large scale and long-term strategic distribution agreements with partners such as Tele2 and Telia, which will further extend the reach of our advertising and subscription funded services.

NENT Studios, which accounted for 14% of Group sales, generated 37% sales growth on the back of high scripted drama sales. Operating profits were up significantly as a result. The production pipeline continues to look promising, and we have a high number of very interesting new development projects.

NENT Group comes out of Q2 even better positioned to benefit from the shift to on-demand and online viewing. Scaling Viaplay is the best way to create long-term shareholder value, and we intend to do so while continuing to deliver profitable growth. This is possible because of our unique business model and the dedicated world class Team NENT.

Anders Jensen
President & CEO

Shareholder information

2019 Annual General Meeting

The Annual General Meeting resolved to re-elect the Board members Anders Borg, David Chance, Henrik Clausen, Simon Duffy, Kristina Schauman and Natalie Tydeman. The Annual General Meeting also re-elected David Chance as Chairman of the Board. The Meeting approved the payment of an annual ordinary dividend of SEK 6.50 per share to the shareholders in two equal instalments of SEK 3.25 each. The record date for the first dividend payment was Friday 24 May 2019, and the record date for the second dividend payment will be Friday 11 October 2019.

The Meeting further resolved to adopt a long-term incentive plan for key employees, including the authorisation of the Board to issue and repurchase Class C Shares and resolve on the transfer of its own Class B Shares to the participants in the incentive plan.

The Annual General Meeting also resolved on a bonus issue, which will increase the share capital by SEK 134,184,488.

The Annual General Meeting further resolved to amend the Articles of Association in order to carry out the resolutions regarding the hedged delivery of shares to participants in the long-term incentive plan (by introducing a new Class C share) and bonus issue (by increasing the limits for the share capital) and re-elected KPMG as auditor until the close of the 2020 Annual General Meeting. Joakim Thilstedt will continue as auditor-in-charge.

Financial calendar 2019

Questions?

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

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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 1084102. To listen to the conference call online and for further information, please visit www.nentgroup.com

NOTES TO EDITORS

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 18 July 2019.

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