Q2 2021 interim report January-June
5 year strategy on track – 31% organic sales growth and 21% Viaplay subscriber growth
Viaplay paying subscribers up 21% YoY to 3,287k (2,716) with 140k subscribers added QoQ, of which 113k were Nordic subscribers and 27k were international subscribers. 2021 year end international Viaplay subscriber target upgraded from more than 250k to 500k
31% organic sales growth with reported sales of SEK 3,072m (2,624m including SEK 238m contribution from subsequently deconsolidated Viasat Consumer business)
Operating income before associated company income (ACI) and items affecting comparability (IAC) up 56% to SEK 244m (156) including SEK -50m impact of Viaplay International expansion. Operating income up 98% on an underlying basis when excluding SEK 33m contribution from the Viasat Consumer business in Q2 2020
Total reported operating income of SEK 179m (2,594) including ACI of SEK 9m (54) and previously announced IAC of SEK -74m (2,383 capital gain arising from the merger to create Allente joint venture)
Net income from continuing operations of SEK 87m (2,517)
Adjusted net income from continuing operations of SEK 266m (148) with adjusted EPS of SEK 3.41 (2.20)
Net income from total operations of SEK 92m (2,515), with EPS of SEK 1.18 (37.34)
|Operating income before ACI and IAC
|Associated company income (ACI)
|Operating income before IAC
|Items affecting comparability (IAC)1)
|Net income, continuing operations
|Net income, discontinued operations2)
|Net income, total operations
|Basic earnings per share (SEK)
|Adjusted net income from continuing operations3)
|Adjusted earnings per share from continuing operations (SEK)3)
President & CEO’s comments
“The momentum that we have established continued into the second quarter of our five-year strategy period, and we are well on track to reach our goals. 21% Viaplay subscriber growth, 31% group organic revenue growth and 98% underlying profit growth further demonstrate the strength and potential of the business. This was the first quarter when Viaplay was our largest revenue generating unit, which is a major milestone in our transformation. The pace of our international expansion is now ramping up with the imminent launch in Poland, and we are raising our subscriber and investment targets for the year to reflect the strength of our content offering and the new partnerships that we are forging. Sustainability is at the very heart of what we do, and we are currently developing a new five-year strategy in dialogue with our stakeholders to govern our supply chains, protect privacy, promote diversity and limit our environmental impact.”
Viaplay revenues (35% of sales) were up 36% YoY on an organic basis after 21% YoY subscriber growth. We added 113k Nordic subscribers and 27k international subscribers in the quarter to end the first half of the year with a total of 3,287k paying subscribers. The revenue growth also reflected the price adjustments made in the Spring. Total streamed minutes of viewing of our originals was up 82% YoY and our coverage of the European football championships also boosted subscriber intake in Denmark. We have increased our Viaplay originals ambition to at least 50 for the year, and several major sports rights will now come on stream after the summer. We are well on track to meet our year-end target of adding at least 400k new paying Nordic subscribers.
The launch of Viaplay in the three Baltic countries has gone according to plan. We have a healthy pipeline of subscribers on free trial periods, are introducing a number of attractive new B2B and D2C campaigns, and will soon add the UEFA leagues to our offering. We will launch Viaplay in Poland on 3 August and have a very strong content line-up, as well as several B2B distribution agreements ready to be rolled out. This has led us to double our original year-end international subscriber target to 500k. We have also increased our investments in the international Viaplay expansion and now expect an EBIT impact of approximately SEK -500m in 2021, of which we have incurred SEK -86m in H1. We will provide updates on our five-year plan at our Capital Markets Day in September, including the impact of the newly acquired rights to English Premier League football for five more markets for six years from 2022.
Other subscription revenues (33% of sales) were up 30% YoY on an organic basis when excluding last year’s contribution from the Viasat Consumer business. This reflected the growth in revenues from Allente in particular, as well as the low comp from last year.
Advertising revenues (31% of sales) were up 28% YoY on an organic basis, as advertising spending continued to recover from the lows in Q2 2020. We estimate that our overall Nordic TV and radio advertising market share was up, and demand levels continue to be high.
Revenues for the continuing studios businesses (2% of sales) were up 19% YoY on an organic basis, with the NENT Studios UK content distribution business having been sold in June. Our continuing businesses have seen higher external order and production volumes but are now primarily focused on producing content for Viaplay. We announced the sale of all of the remaining discontinued studios businesses earlier this month and expect to close this deal in Q3 or Q4.
Our EBIT before ACI and IAC was up 98% when excluding last year’s contribution from the Viasat Consumer business but including our investments in the international expansion of Viaplay.
Our joint venture Allente is on track to deliver the SEK 650m of full run-rate cost synergies next year and is also working to upsell Viaplay to the rest of its subscriber base. The quarterly integration costs are now increasing as the planned programme accelerates, which is why we expect limited earnings contribution this year. We will now receive quarterly dividends from Allente from Q3 and expect the full year 2021 dividends to amount to at least SEK 400m.
We are moving ahead quickly with our expansion in the Nordics and internationally, as well as executing on new opportunities as they arise. We are investing in more and more original local content, as well as securing key acquired content for many years to come. In addition to the launches in the US and the Netherlands, we will announce additional international expansion markets at or before our CMD.
We are learning a lot through the pandemic and establishing flexible new ways of working that will serve us well as our offices gradually re-open. It has undoubtedly further accelerated consumer adoption of streaming services and we are, as always, totally focused on delivering the best customer experiences in the most sustainable way for all of our stakeholders.
President & CEO
2021 Annual General Meeting
The AGM resolved to re-elect Board members Anders Borg, Simon Duffy, Pernille Erenbjerg, Kristina Schauman and Natalie Tydeman and to elect Andrew House as a new member of the Board. The AGM also elected Pernille Erenbjerg as the new Chair of the Board.
The AGM resolved to implement a long-term incentive plan for 2021, and that NENT Group enter into a swap agreement with a third party to hedge the long-term incentive plan by acquiring and transferring NENT Group Class B shares to the plan participants. The AGM also resolved to re-elect KPMG as auditor until the end of the 2022 AGM, and Tomas Gerhardsson has been appointed as new auditor-in-charge.
The AGM approved the remuneration to the Board and auditor, in accordance with the Nomination Committee's proposal, and resolved to adopt new updated guidelines for the remuneration of the senior executives, in accordance with the Board’s proposal.
The AGM resolved to authorise the Board to resolve on repurchases of no more than 10%, at any time, of all shares issued by NENT Group, and to amend NENT Group's Articles of Association to reflect formal requirements pursuant to the Swedish Companies Act.
Publication of Q3 interim report 26 October 2021
Publication of Full year report 8 February 2022
Webcast and video message from the CEO
A teleconference and webcast will be held at 09.00 Stockholm local time, 08.00 London local time and 03.00 New York local time. The webcast will be streamed via the following link: https://edge.media-server.com/mmc/p/e9x7gopo
To participate in the conference call, please dial:
Sweden: +46 (0) 8 566 184 67
UK: +44 (0) 2071 928 338
US: +1 646 741 3167
The access code for the call is 8549677.
Notes to editors
Nordic Entertainment Group AB (publ) (NENT Group)'s Viaplay streaming service is available in every Nordic country and in Estonia, Latvia and Lithuania. Viaplay will launch in Poland and the US in 2021 and the Netherlands in 2022, followed by four additional markets by the end of 2023. We operate streaming services, TV channels, radio stations and production companies, and our purpose is to tell stories, touch lives and expand worlds. Headquartered in Stockholm and with a global outlook, 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 and the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 CET on 22 July 2021.