Business Services Industry
Modern Times Group MTG AB: Financial Results for the Period January-March 2001
Business Wire, April 25, 2001
Business Editors
STOCKHOLM, Sweden--(BUSINESS WIRE)--April 25, 2001--Modern Times
Group MTG AB (MTG) (NASDAQ:MTGNY)(Stockholmsborsen:MTGA,MTGB) today
announced the preliminary results of operations for the first quarter
of fiscal 2001.
-- SALES UP 27% TO SEK 1,508 MILLION.
-- OPERATING INCOME FOR ESTABLISHED OPERATIONS INCREASED BY 442%
TO SEK 103 MILLION AFTER DEPRECIATION AND AMORTIZATION.
-- INCOME AFTER FINANCIAL ITEMS INCREASED 124% TO SEK 38 MILLION,
EXCLUDING CAPITAL GAINS.
-- TV3 SCANDINAVIA SALES GREW BY 6%.
-- 63,000 NEW SALES OF DIGITAL DECODERS DURING THE FIRST QUARTER;
94% SELECT VIASAT GOLD PREMIUM PACKAGE. FINANCIAL SUMMARY (SEK
MILLION)
*T
Q1 2001 Q1 2000*
Established operations
Net sales 1,507 1,189
Income before depreciation and 158 67
amortization
Income after depreciation and 103 19
amortization
New ventures
Net sales 1 0
Income before depreciation and -36 -1
amortization
Income after depreciation and -37 -1
amortization
Total net sales 1,508 1,189
Income before depreciation and 122 66
amortization
Income after depreciation and 66 18
amortization
Capital gains and discontinued 0 123
business
Income after financial items 38 140
* Adjusted for changes in Swedish GAAP
*T
OPERATIONS
Since January 1, 2001, the Company has applied new recommendations
from the Swedish Financial Accounting Standards Council. The changes
include no longer capitalizing new ventures and thus no longer
amortizing previously capitalized start-up costs. New projects, such
as the new TV channels in Hungary and Russia, are now charged directly
to the income statement. The figures for 2000 have been restated to
comply with the new recommendations and enable like for like
comparisons.
In the table above, sales and income for established operations
and for new ventures are reported separately to improve disclosure of
operations. A business is considered a "new venture" for the first two
years after the project commences operations. New ventures include
Viasat , Viasat3 Hungary, and the Everyday.com, Everyday.TV and
Everymobile.com businesses within the New Media business area.
Organization
The number of business areas was increased to seven at the end of
2000 with the formation of the New Media business area. The TV8
channel was also transferred to the Publishing business area. New
Media consists of established operations such as text TV, the online
advertising sales company Webad, MTG's stake in Everyday.com, as well
as new businesses such as the digital-TV portal Everyday.TV and mobile
portal services company, Everymobile.com. The pre-existing operations
were transferred from the Modern Interactive and Viasat Broadcasting
business areas.
Following the reorganization, Modern Interactive now consists of
businesses in traditional home shopping (TV-Shop), logistics and
fulfillment, eCommerce Logistics, the online retail site CDON within
MTG Internet Retailing, and the web production company NoName4Us.
Modern Sports and Events, a company specializing in the production
of boxing events was also launched and operates within Modern Studios.
An agreement was signed to acquire 75% of the shares in Darial TV,
a Russian commercial terrestrial TV channel, after the end of the
Quarter. Darial is one of the eight national TV channels in Russia.
The intention is to complete the acquisition in May.
The comparative figures in this report have been restated based on
the above organizational changes and the new accounting policies.
FINANCIAL RESULTS
Consolidated Earnings for first quarter 2001
Net sales rose 27%, to SEK 1,508 million.
Operating income before depreciation and amortization advanced to
SEK 122 (66) million.
Operating income for established operations after depreciation and
amortization advanced to SEK 103 (19) million.
Operating income after depreciation and amortization for new
ventures totaled SEK -37 (-1) million.
Total operating income after depreciation and amortization rose to
SEK 66 (18) million.
The Group's net share of earnings in associated companies was SEK
-24 (-3) million.
Non-recurring items totaled SEK 0 (123) million.
Net interest and other financial items ended the quarter at SEK
-28 (-1) million, including SEK -1 (12) million in net exchange rate
gains and losses on the translation of financial receivables and
liabilities denominated in currencies other than Swedish krona.
Income after financial items fell to SEK 38 (140) million.
Income after tax rose to SEK 24 (89) million. Earnings per share
reached SEK 0.34 (1.44 including non-recurring items).
MTG's total assets at March 31, 2001, were SEK 6,296 million,
compared to 6,040 at December 31, 2000.
REVIEW OF OPERATIONS
Viasat Broadcasting
Net sales: SEK 1,026 (852) million
Operating income after depreciation and amortization:
SEK 89 (72) million
-of which, established operations' operating income after depreciation
and amortization: SEK 110 (72) million
-of which, new ventures' operating income after depreciation and
amortization: SEK -21 (0) million
Despite a weak market for advertising, Viasat's
advertising-financed channels reported growth of 8%.
The transition to digital television progressed as planned. All of
Viasat's premium subscribers will have received a digital decoder by
the end of the Spring, which will lock in significant savings on the
cost of satellite distribution. Sales of digital decoders to new
subscribers continued apace and, by the end of the first quarter of
2001, a total of 125,000 new subscriptions had been sold since the
launch, 85% of which opted for the Viasat Gold premium package.
Sales in Free TV totaled SEK 614 (569) million for the TV channels
TV3, ZTV, 3 , Viasat , and Viasat3 Hungary, up 8% from the first
quarter of 2000.
Sales in Pay TV totaled SEK 481 (352) million, up 37% from the
first quarter of 2000. The launch of digital television in the autumn
resulted in robust sales of new subscriptions for the digital
services, in addition to the exchange of decoders for all existing
premium subscribers. Analogue transmission of pay-TV channels will
cease in the second quarter of 2001, saving about SEK 200 million in
distribution costs on an annualised basis.
The project to swap existing premium subscribers into digital has
been in its most intensive period during the past quarter, and will be
completed during spring. The sale of new digital decoders has been
running parallel to this and has resulted in a substantial increase in
volumes. The total number of subscribers has developed during the
first quarter as follows:
*T
(Thousands of subscribers) Basic Premium
Opening balance as of January 1, 1,077 321
2001
New sales during first quarter 63 59 Only Viasat
2001 Gold
Churn during first quarter 2001 -44 -13
1,096 367
Other premium packages as of 39
March 31, 2001
Closing balance as of March 31, 1,096 406
2001
Closing balance as of March 31, 1,089 332
2000
The growth in subscriptions was also reflected in the TV1000
business, which attracted 48,000 more subscribers, up 12% since
December 31 and ending the quarter at 453,000 (378,000).
Operating income for the entire business area was SEK 89 (72)
million. MTG's share of TV4's income is included in the business area
in the share of earnings in associated companies along with the
Group's share of earnings from the TV3 channels in Estonia and Latvia.
The Group's share of earnings in associated companies for the first
quarter of 2001 was lower than in the first quarter of 2000, SEK -11
(6) million, due to TV4's weaker earnings.
New Media
Net sales: SEK 21 (16) million
Operating income after depreciation and amortization: SEK -15 (1)
million
-of which, established operations' operating income after depreciation
and amortization: SEK 1 (2) million
-of which, new ventures' operating income after depreciation and
amortization: SEK -16 (-1) million
Net sales for New Media included both the established operations
and the uplift from both the teletext operation and the sale of
Internet advertising, which generated a total profit of SEK 1.3
million for the first quarter. The new products, digital-TV portal
Everyday.TV and mobile portal Everymobile.com were in the start-up
phase during the reported period and thus did not contribute
significantly to profits.
The result in associated companies, consisting of the company's
share in the Internet portal Everyday.com, was lower than in the first
quarter of 2001, due to geographical expansion and strategic
investments in content and technical services.
Radio
Net sales: SEK 30 (26) million
Operating income after depreciation and amortization: SEK 3 (-10)
million
The radio stations reported 16% higher sales. Earnings from P4
Radio Hele Norge, Radio Nova in Finland, and the Baltic radio stations
are reported as participations in associated companies.
The result from the associated companies has improved as a result
of the sale of the small radio networks in Finland and the investment
in Radio Nova.
Publishing
Net sales: SEK 53 (48) million
Operating income after depreciation and amortization: SEK -14 (-11)
million
Finanstidningen boosted sales 22% to SEK 40 million, thanks to
improvements in products and campaigns to increase penetration that
expanded the cumulative audience. Owing to targeted marketing
campaigns, Finanstidningen reported a loss, but it was slightly better
than in the first quarter of the preceding year. TV8, now part of this
business area, lifted earnings as a result of a larger number of
subscribers and lower programming costs.
Modern Interactive
Net sales: SEK 212 (113) million
Operating income after depreciation and amortization: SEK 9 (-18)
million
Sales for the business area rose 88%, thanks to excellent sales
results in all companies.
The action program initiated in the fourth quarter of 2000
improved sales at TV-Shop, and it only reported a small loss for the
first quarter.
The logistics company e-CommerceLogistics, eCL, continued its
sales expansion from 2000 and further expanded profit due to third
party sales.
CDON once again reported a loss, although considerably lower than
in the previous year.
SDI Media
Net sales: SEK 84 (79) million
Operating income after depreciation and amortization: SEK 6 (3)
million
SDI Media sales grew by 6%, owing to organic growth as well as
acquisitions made in 2000. Profitability for the business area doubled
during the period. SDI Media, a world leader in translation,
subtitling, and dubbing for television, DVDs, and the Internet as well
as in applications for the deaf, continued to focus on growth and
profitability. DVD, the most profitable segment of the business grew
approximately 25% compared with last year.
Modern Studios
Net sales: SEK 172 (115) million
Operating income after depreciation and amortization: SEK 19 (3)
million
The business area reported a healthy 50% growth in sales and a
533% increase in income due to strong performances from Strix
Television, Sonet Film, and Modern Entertainment. Strix Television
signed additional international contracts for its existing program
formats during the period, as well as contracts in the Nordic
countries for new formats that the company has developed.
Operations in Nordic Artist were gradually wound up as planned,
and the company reported a small loss for the first quarter, resulting
from the conclusion of projects previously committed to in contracts.
FINANCIAL POSITION
Equity/assets ratio
As a result of the change in accounting principles, previously
reported intangible assets of SEK 850 million were charged directly to
non-restricted equity, after correction of SEK 238 million due to the
tax effect caused by the write-off. The digital conversion project
accounted for SEK 555 million of the total gross write-off. In
addition to this has the change of accounting principle caused the
proportion of equity in associated companies been adjusted by SEK 52
million, reducing non- restricted equity without tax implications. In
addition to this has SEK 85 million been reclassified from intangible
assets to deferred expenditures.
The Group's equity/assets ratio (defined as consolidated
shareholders' equity and minority interests including the convertible
debenture loan, divided by total assets) was 29% (37%) at the end of
the period.
In addition to the assets mentioned above, the Group holds
minority equity interests in TV4 and P4, as well as a convertible
debenture loan in Metro, which are both reported as long-term
financial assets. The aggregate market value was SEK 2,557 (1,472)
million at the end of the quarter, representing a surplus value of SEK
2,065 (1,259) million in the balance sheet compared to a book value of
SEK 492 (213) million. Taking into account the surplus value and
deferred tax, the equity/assets ratio was 43% (49%).
Liquidity
The Group's liquidity, including unutilized credit facilities, was
SEK 200 (357) million at the end of the period.
Net borrowings
The Group's net borrowings (defined as interest-bearing
liabilities, excluding the convertible debenture loan, less
interest-bearing assets) totaled SEK 760 (112) million at the end of
the period.
Investment
During the period, the Group invested a total of SEK 26 (27)
million, of which half refers to investments in film rights in MTG
Modern Entertainment and Sonet Film.
The Group follows the new recommendations of the Swedish Financial
Accounting Standards Council, so start-up costs for new operations are
no longer capitalised as investments but are charged directly to
earnings.
Depreciation and amortization
Group depreciation and amortization totaled SEK 56 (48) million.
Accrued retailer commissions resulting from Viasat Gold customers
signing up for subscription extensions have been reclassified, from
amortization to operating expenses, in order to comply with the
accounting principle amendments. The comparative figures for 2000 have
been restated accordingly.
Earnings per share
Fully diluted earnings per share totaled SEK 0.34 (1.44). The
calculation of the number of shares have taken into account the option
program decided at the extraordinary shareholders meeting on February
16, 2001. If the option scheme is fully used the number of shares will
increase with 2,052,840 shares or 3% of the new total of outstanding
shares.
OTHER INFORMATION
Report for the second quarter of 2001
MTG's report for the second quarter of 2001 will be published on
August 6, 2001.
Annual report
MTG's annual report will soon be available at the Company's
office: MTG, Skeppsbron 18, Box 2094, SE-103 13 Stockholm, Sweden.
Financial information
Additional financial information is available on the Internet at
www.mtg.se.
Annual general meeting
MTG will hold its annual general meeting of shareholders at 9:30
a.m. on Thursday May 17, 2001, at Gamla Stans Bryggeri, Tullhus 2, on
Skeppsbrokajen in Stockholm.
Stockholm, April 25, 2001
Hans-Holger Albrecht
President and CEO
This interim report has not been subject to a review by the
Company's auditors.
*T
Operating income, EBIT 2001 2000
(MSEK) Jan 1- Jan 1-
March 31 March 31
Established operations
Viasat Broadcasting 110 72
MTG New Media 1 2
MTG Radio 3 -10
MTG Publishing -14 -11
MTG Modern Interactive 9 -18
SDI Media 6 3
MTG Modern Studios 19 3
Parent company and other -28 -19
companies
Eliminations -3 -3
103 19
New ventures
Viasat -9 0
Viasat3 Hungary -12 0
New Media -16 -1
-37 -1
Capital gains and
discontinued business
Sale of TV4 shares 0 105
Metro Sweden's sales 0 18
company, Jan-May 2000
0 123
EBIT 66 141
CONSOLIDATED INCOME STATEMENT 2001 2000 2000
(MSEK)
Jan 1- Jan 1- Full year
March 31 March 31
Net sales 1 508 1 189 5 431
Cost of goods and services -984 -842 -3 508
Gross income 524 347 1 923
Selling, administration, research
and
development expenses -383 -288 -1 540
Other operating revenues 5 5 18
Other operating expenses -56 -43 -235
Income from corporate development - - 8
Income from sales of securities - 105 106
Result in Metro Sweden sales - 18 32
company Jan-May 2000
Viasat digital project - 0 -555
Share of earnings in associated -24 -3 16
companies
Operating income (EBIT) 66 141 -227
Net financial revenue and expense -28 -1 -44
Income after financial revenue and 38 140 -271
\expense
excluding interest on convertible
debentures
Interest on convertible debentures - -7 -3
Income before tax 38 133 -274
Taxes -15 -45 -24
Minority interests 1 1 1
Net income for the period 24 89 -297
Shares outstanding at quarter-end, 68 427 996 64 685 967 66 375 156
incl convertible and option
Shares outstanding at quarter-end, 66 375 156 60 118 194 66 375 156
excl convertible and option
Denominator for diluted earnings 68 427 996 64 685 967 65 952 859
per share
Denominator for basic earnings per 66 375 156 59 697 732 63 944 505
share
Diluted earnings per share 0,34 1,44 -4,46
Basic earnings per share 0,35 1,48 -4,63
REVIEW OF THE GROUP (MSEK) 2001 2000 2000
Jan 1- Jan 1- Full year
March 31 March 31
Net sales by business area
Viasat Broadcasting 1 026 852 3 789
MTG New Media 21 16 61
MTG Radio 30 26 133
MTG Publishing 53 48 234
MTG Modern Interactive 212 113 580
SDI Media 84 79 330
MTG Modern Studios 172 115 551
Parent company and other 24 24 106
companies
Eliminations -114 -84 -353
1 508 1 189 5 431
Operating income/loss by
business area
Viasat Broadcasting 89 72 500
Sale of shares in TV4 - 105 106
Viasat digital project - 0 -555
MTG New Media -15 1 -39
MTG Radio 3 -10 18
MTG Publishing -14 -11 -53
MTG Modern Interactive 9 -18 -127
SDI Media 6 3 18
MTG Modern Studios 19 3 3
Parent company and other -28 -19 -117
companies
Result in Metro Sweden sales - 18 32
company Jan-May 2000
Eliminations -3 -3 -13
66 141 -227
CONSOLIDATED BALANCE SHEET 2001-03-31 2000-03-31 2000-12-31
(MSEK)
Fixed assets
Capitalized development 66 89 111
expenses
Beneficial rights 321 114 297
Goodwill 1 020 273 1 046
Machinery and equipment 282 246 252
Shares and participations 304 253 303
Long-term receivables 950 354 896
2 943 1 329 2 905
Current assets
Inventories 1 415 872 1 201
Current receivables 1 770 1 438 1 642
Cash, cash equivalents and 168 257 292
short-term investments
3 353 2 567 3 135
Total assets 6 296 3 896 6 040
Shareholders' equity
Restricted equity 1 673 393 1 724
Non-restricted equity 173 669 66
1 846 1 062 1 790
Minority interests in equity 3 21 7
Provisions 145 132 124
Long-term liabilities
Other interest-bearing 1 303 598 1 277
liabilities
Non-interest-bearing 54 0 44
liabilities
1 357 598 1 321
Current liabilities
Convertible debenture loan - 377 -
1997/2000
Other interest-bearing 250 105 125
liabilities
Non-interest-bearing 2 695 1 601 2 673
liabilities
2 945 2 083 2 798
Total shareholders' equity 6 296 3 896 6 040
and liabilities
CONSOLIDATED STATEMENT OF CASH 2001 2000 2000
FLOWS
(MSEK) Jan 1- Jan 1- Full year
March 31 March 31
Net income for the period 23 89 -297
Adjustments to reconcile net
income to
net cash provided by operations 97 -8 -3
Changes in working capital -320 -329 194
Net cash flow from operations -200 -248 -106
Acquisition of TV1000 - - -900
Issue of shares to finance TV1000 - - 900
acquisition
Other investments in shares 0 0 -164
Investments in other fixed assets -26 -27 -193
Other cash flow from investing 0 125 163
activities
Cash flow to investing activities -26 98 -194
Cash flow from/to financing 102 83 234
activities
Net change in cash and cash -124 -67 -66
equivalents for the period
RECONCILIATION OF SHAREHOLDERS Share Restricted Non-restricted
EQUITY
(MSEK) capital reserves reserves Total
Closing balance December 31, 332 1 392 730 2 454
2000
Change of accounting principle -664 -664
Opening balance January 1,
2001 with new
accounting principle 332 1 392 66 1 790
Net result January-March 2001 23 23
Currency translation 33 33
differences
Transfer between restricted and non- -51 51 0
restricted reserves
Closing balance March 31, 2001 332 1 341 173 1 846
*T
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--30--tjs/in*
CONTACT: Modern Times Group MTG AB
Hans Holger Albrecht, 46 8 5620 0050
or
Modern Times Group MTG AB
Mia Brunell, 46 8 5620 0033
or
Modern Times Group MTG AB
Matthew Hooper, 44 20 7321 5010
or
Modern Times Group MTG AB
Bert Willborg, 46 70 727 70 22
KEYWORD: SWEDEN INTERNATIONAL EUROPE
INDUSTRY KEYWORD: ENTERTAINMENT PUBLISHING TELEVISION/RADIO
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