Results presentation Q3 2019 - nentgroup.com - NENT Group
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Results presentation Q3 2019 nentgroup.com
Viasat Consumer & Canal Digital merger highlights
• Combination of NENT Group´s Viasat Consumer (satellite TV + BTV) with Telenor’s Canal Digital (satellite TV) into new JV
• Complete ownership alignment based on equal valuation of each business
Structure • Parties will commit to content supply & satellite services, respectively
• JV is not expected to have any external borrowings from the start & the intention is that the JV will pay out its distributable earnings to its
owners in the form of dividends
• A perfect match that will create a scale Nordic player with world class content
• Shared vision to capture synergies, enhance customer offering and create value for all stakeholders
Rationale • In line with NENT Group strategy to focus on streaming & content businesses
• Will accelerate development of Viaplay in Telenor universe
• Expect annual cost synergies of approximately SEK 650m, with full effect from 2022
Synergies • Expect material sales synergies – higher upsell opportunities and lower churn in the JV due to improved customer offering
• Integration and other related costs expected to total approximately SEK 900m and to be incurred during 2020 and 2021
• The Board of Directors will have an equal representation from Telenor and NENT Group, with a rotating chairmanship
• The CEO of the joint venture will be Bjørn Ivar Moen (current CEO of Canal Digital and Telenor Broadcast), and the CFO and Head of
Operations will be Jonas Gustafsson (current CEO of Viasat Consumer). Other key management positions will be jointly appointed and
Governance announced prior to the completion of the transaction
• The company will be headquartered in Stockholm and Oslo and will operate on an arm’s length basis from its owners with an open
platform providing content from multiple providers
Timetable • The combination is subject to EU regulatory approvals and expected to be completed during the first half of 2020
1
Q3 highlights
10% organic sales growth and 3% EBIT growth Organic sales growth
for combined business segments
+10%
EBIT before IAC up slightly to SEK 302m
despite transactional FX headwind and M&A
advisory costs Segmental EBIT growth
+3%
Viaplay subscribers up 37k QoQ and up over
25% YoY as momentum from recent quarters
continued into Q3 Viaplay subs (QoQ)
+37k
2
Consistent delivery
Net sales (SEKm) EBIT for combined business segments (SEKm) *
15,460 1,777
14,568 1,706
13,688 1,617
12,897 1,427
2016 2017 2018 LTM 2016 2017 2018 LTM
studios advertising subscription & other broadcasting & streaming studios
* Before central operations & IAC. LTM = last twelve months 3
Broadcasting & streaming
SEKm Q3 2019 Q3 2018 Change Highlights
Net sales 3,235 2,985 8%
• Organic sales up 8%
o/w advertising 835 823 2%
• Viaplay continued to be key driver
o/w subscriptions 2,400 2,162 11%
• Subscriptions & Other accounted for 74%, and
Organic growth 8% 2% advertising for 26%, of segment sales
EBIT 330 321 3% • EBIT up 3% including USD transactional headwind of
EBIT margin 10.2% 10.8% 60 bps
c. SEK 20m
4
6
Subscriptions - performance
Total subscriber base Comments
2 377 2 400 • Viaplay added 37k subscribers QoQ compared to a
2 310
2 173 2 130
2 218 decline of 11k in Q3’18
2 111 451
463 465 • Viaplay base up over 25% YoY - driven by high gross
Viasat 3rd party 466 466
455 449 intake and low churn
491 490
493
490 • Viaplay now represents 61% (55) of total base
Viasat DTC 505 498 496
• Viasat DTC base broadly stable QoQ as growth in
broadband-TV was offset by gradual decline in
1 357 1 421 1 459
Viaplay * 1 202 1 177 1 166 1 258 satellite base
• 3rd party base down QoQ, primarily reflecting
Q118 Q218 Q318 Q418 Q119 Q219 Q319 typical seasonal patterns
* Paying standalone subscribers (i.e. not including subscribers that have access to Viaplay through traditional pay-TV packages) 5
7
Advertising - performance
Comments Advertising revenues
• Combined TV & Radio ad markets: All three
Price Volume Sales
markets are estimated to have been down
Up Down Down
free-TV
• TV ad revenues slightly down as higher prices and
higher CSOV in all markets was offset by lower
linear viewing levels Price Volume Sales
viafree Down Up Up
• Viafree revenues up slightly. Viafree has c. 2.3m
registered users & c. 3.8m downloaded apps
Price Volume Sales
• Radio revenues up as growth in Sweden more Down Up Up
radio
than offset weaker performance in Norway
6
Selected tech & content highlights
Originals Tech Sports
33 titles premiered
including 3 in Q3 2019
20+ titles to be premiered
each year
7NENT Studios
SEKm Q3 2019 Q3 2018 Change Comments
Net sales 640 480 33%
• Organic sales up 32%
Organic growth 32% -20%
• Continued high growth in number of scripted drama
EBIT 37 34 9% productions
EBIT margin 5.8% 7.1% -130 bps • Double-digit growth in non-scripted genre
• EBIT up 9% despite investments into US based
operations
8Sales performance
Sales split Q319 Sales bridge Q319
NENT Studios
Advertising 50 3 799
15% 160
22%
238
3 439
12
63%
Subscription & Others
Q3 ’18
Advertising
Subscriptions
NENT Studios
Central & Elims
Q3 ’19
9Financial overview
SEKm Q3 2019 Q3 2018 Change Comments
Net sales 3,799 3,439 10%
• 10% organic sales growth
B&S EBIT 330 321 3%
• 3% EBIT growth for combined business segments,
Studios EBIT 37 34 9% including SEK 20m USD transactional headwind
Segmental EBIT 367 355 3% • Central operations included SEK 13m in advisory
costs related to Canal Digital deal
Central operations -65 -56 -16%
• EBIT before IAC up 1% and total EBIT stable
EBIT before IAC 302 299 1%
• Net financials included SEK 4m of interest costs
IAC 0 3 n.m. related to net lease liabilities
EBIT 302 303 0% • Net income down due primarily to positive FX gains
in Q318 on financial items and increase in tax rate
Net financials -4 16 n.m.
Tax -64 -49 -31%
Net income 233 270 -14%
10Cash flow and leverage
Nine Nine
months months
SEKm Q319 Q318 19 18 2018 SEKm SEKm
Cash flow from operations 316 302 950 945 1,496 LTM EBITDA before IAC 1,877
Change in working capital -879 -185 -1,044 -559 -380 Net debt 4,756
Net operating cash flow -562 117 -93 386 1,116 Net debt / EBITDA before IAC 2.5
CapEx * -47 -37 -124 -137 -185 Financial net debt 4,139
Operating FCF -607 80 -217 249 931 Lease liabilities and dividend payable 617
* Excluding Acquisitions and Divestments as well as the SEK 363m upfront payment in 2018 for Swedish radio licenses for next 8 years 11Business outlook for 2019
outlook
organic growth positive
segmental EBIT positive
approx. SEK -250m excluding transaction costs
central operations EBIT
related to the Canal Digital deal
transactional FX impact on EBIT approx. SEK -75m for 2019 (included in the above)
tax rate to be slightly above the normalised level
tax rate
of approx. 20%
change in working capital 2019 outflow to be approx. SEK 600-700m
capital expenditure approx. 1–1.5% of sales
12Our investor proposition
a unique play on the Nordic
streaming market
a Nordic content champion
with global appeal
a successful track record &
a winning team
a clear capital allocation
strategy
13You can also read
