6-K 1 dp33655_6k.htm FORM 6-K
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
 
18 October, 2012
 
Commission File Number: 000-54641
_____________________________________________________________________________________
MODERN TIMES GROUP MTG AB (publ)
(Translation of registrant’s name into English)
 
Skeppsbron 18, P.O. Box 2094, SE-103 13, Stockholm, Sweden
(Address of principal executive offices)
_____________________________________________________________________________________
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
 
Form 20-F _X_   Form 40-F ___
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ___
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ___
 
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
Yes ___   No _X_
 
If ‘‘Yes’’ is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_Not Applicable_
 
 
 
 
 
 
 
 
Q3 2012 Interim Report
18 October 2012 – Modern Times Group MTG AB (publ.) (“MTG” or “the Group”) (Nasdaq OMX Stockholm Large Cap Market: MTGA, MTGB) today announced its financial results for the third quarter and nine months ended 30 September 2012.
 
Investing in Growth
 
Third Quarter Highlights
 
·
Net sales of SEK 2,940 (3,106) million – down 5% year on year at reported exchange rates and down 1% at constant exchange rates
 
 
·
Operating income of SEK 288 (358) million when excluding associated company income
 
 
·
Total operating income of SEK 422 (526) million when including SEK 134 (168) million of associated company income
 
 
·
Pre-tax profit of SEK 389 (439) million including SEK -2 (-64) million negative non-cash impact  of change in value of option element of CDON convertible bond
 
 
·
Net income of SEK 308 (306) million and basic earnings per share of SEK 4.65 (4.71)
 
Year to Date Highlights
 
·
Net sales of SEK 9,716 (9,762) million – stable year on year at reported exchange rates and up 1% at constant exchange rates
 
 
·
Operating income of SEK 1,181 (1,382) million when excluding associated company income
 
 
·
Total operating income of SEK 1,648 (1,900) million when including SEK 467 (517) million of associated company income
 
 
·
Pre-tax profit of SEK 1,567 (1,791) million including SEK -8 (-30) million negative non-cash impact  of change in value of option element of CDON convertible bond
 
 
·
Net income of SEK 1,216 (1,276) million and basic earnings per share of SEK 17.68 (18.90)
 
Forward Expectations for Q4 2012 & Full Year 2013
MTG is increasing its investments in its pay-TV operations in the increasingly competitive Nordic markets and in the large scale emerging Russian and Ukrainian markets, in order to ensure that its channels and services have the most attractive consumer content offerings and capture subscriber market share in the future.
 
 
·
Increasing investments in Nordic pay-TV content, premium channels and Viaplay online pay-TV service currently expected to result in Nordic pay-TV EBIT margin of approximately 15% in Q4 2012 and 10-12% for full year 2013. The total Nordic premium pay-TV subscriber base (excluding Viaplay) is currently expected to continue to decline in Q4 2012 and for the full year 2013 due to the ongoing decline in the DTH subscriber base and lower than anticipated growth in the third party network subscriber base, and result in stable quarter on quarter total Nordic pay-TV sales in Q4 2012 and stable year on year sales for the full year 2013. The fast growing Viaplay online pay-TV service is expected to continue to grow its subscribers and revenues throughout this period
 
 
·
Increasing investments in Russian and Ukrainian pay-TV content, HD channels and pre-paid satellite service in Ukraine currently expected to boost Emerging Markets pay-TV revenue growth levels and result in segment operating losses of less than SEK 20 million in Q4 2012 and less than SEK 50 million for full year 2013
 

 
1 (24)
 
 
Comment from President & CEO
Jørgen Madsen Lindemann, President and Chief Executive Officer, commented: “Group sales in what is the seasonally smallest sales quarter of the year were up 2% year on year at constant exchange rates, when excluding the operations that we have discontinued or sold but including the newly acquired and consolidated businesses. All of our broadcasting segments continued to grow year on year in the quarter at constant exchange rates except our Scandinavian free-TV operations, which were impacted by a deterioration in the Danish advertising market and lower market shares in Sweden and Norway. Group operating expenses were up slightly year on year at constant exchange rates due to higher costs in our Nordic pay-TV business following investments in new channels, the further strengthening of our content offering, and the ongoing investments in our Viaplay service. Operating profits for the business as a whole were therefore down year on year.”
 
“The TV market is changing and the availability of video on demand services is accelerating rapidly in the Nordic region with ever increasing levels of online viewing also bringing in new consumers. We are at the forefront of this change with our well-established, market-leading and fast growing Viaplay online pay-TV offering, and our free-TV channels are already the most watched commercial channels online in Sweden and Denmark. Viaplay complements our premium satellite pay-TV platform and channels in the same way as our catch-up services complement our linear advertising funded channels.
 
“We have invested to substantially strengthen our Nordic pay-TV content offering by signing extended agreements with the Hollywood and independent studios and sports rights holders. Most of these deals are now in place so we will have the most attractive online and offline content offering at competitive prices for years to come. We also have an opportunity in the emerging markets to boost the penetration of our services, which is why we are launching new HD channels in Russia and the CIS, and the new pre-paid satellite service in Ukraine.”
 
“The increasing competition levels in the Nordic region are currently expected to result in the  Nordic premium pay-TV subscriber base (excluding Viaplay) continuing to decline with a stable total Nordic pay-TV sales development in Q4 and 2013. The combination of this with the investments that we are making are therefore also currently expected to result in lower margins for our Nordic pay-TV business in Q4 and 2013 but will position us to grow our subscriber base, revenues and profits  for the longer term. At the same time, the investments that we are making in the Emerging Markets pay-TV business are currently expected to boost our revenue growth but result in operating losses for the segment in Q4 and 2013.”
 
“Our ratings in Scandinavia are growing or have stabilised, following improved execution and with low levels of incremental investment. Our objective is to increase our advertising market shares on the back of these improvements. The outlook for the remainder of 2012 is for continued TV advertising market growth in Sweden and Norway but at lower levels than for the year to date, while the Danish TV advertising market is continuing to decline year on year in the fourth quarter. We have however reduced our full year outlook for year on year operating cost growth for the Scandinavian free-TV operations from mid to low single digit percentage points.”
 
“We have successfully grown our audience and advertising market shares in almost all of the emerging market territories while, at the same time, achieving cost savings and enhancing overall profitability levels. There is no change in the outlook for these markets but we are now even better positioned to benefit from the return to sustained growth when it comes.”
 
“Financially, we are stronger than ever, having used our healthy cash flows and the CTC Media dividend stream to further reduce our borrowing levels in the quarter. We have discontinued or disposed of under-performing or non-core assets and acquired complementary new businesses in the key areas of content, technology and new territories. We have added to our M&A and strategic
 
 
2 (24)
 
development capabilities in order to review opportunities in growth markets, which sit side by side with our commitment to our dividend policy and ongoing shareholder returns.”
 
Significant Events
The Group announced on 8 October 2012 that it had signed an agreement to acquire all of the remaining shares in the 50/50 joint venture company TV 2 Sport A/S (‘TV 2 Sport’) from TV 2 DANMARK A/S. The payment will comprise an undisclosed cash consideration and the transfer of the exclusive Danish broadcasting rights to the European Handball Championships for 2016 and 2018, which are currently held by the Group. The transaction is subject to regulatory approval by the Danish Competition Authorities.

The Group announced on 13 September 2012 that it had signed a number of renewed multi-year licensing agreements with NBC Universal International Television Distribution, Twentieth Century Fox Television Distribution, Nordisk Film and SF Film for free-TV and/or pay-TV rights in the Nordic region.

The Group announced on 14 September 2012 that it had been included in the Dow Jones Sustainability World Index for the first time. MTG’s inclusion in the Dow Jones Sustainability World Index followed a 14% year on year improvement in the Group’s total Corporate Sustainability Assessment score, which reflected a significant improvement in MTG’s environmental ranking, as well as high scores in the Risk and Crisis Management, Stakeholder Engagement and Corporate Governance categories.

The Group announced on 31 July 2012 that Jørgen Madsen Lindemann had been appointed as President and CEO with effect from 15 September 2012, following the resignation of Hans-Holger Albrecht. Jørgen has been a member of the Group’s executive management team since 2000 and was appointed as Executive Vice President of MTG’s Nordic Broadcasting operations in October 2011, after having served as CEO of the Group’s Danish operations and Group Head of Sport since 2002. The Group also announced a number of management changes on 15 October 2012.
 
The Group announced on 31 July  2012 that it had signed an agreement to acquire 80% of Zitius Service Delivery AB (‘Zitius’) for an undisclosed cash consideration. The agreement also provides for the acquisition of the remaining 20% of Zitius in 2016. Zitius is Sweden’s leading independent Open Access Communications Operator, with approximately 150,000 connected fibre households. The results for the operation are reported in the ‘Viasat Broadcasting Central Operations’ line in the segmental matrix at the end of this report. The Group completed the acquisition on 31 August 2012.

CTC Media announced on 7 August 2012 that it would pay a cash dividend of USD 0.13 per share (or approximately USD 20 million in aggregate) on or about 28 September 2012 to shareholders of record as of 1 September 2012. MTG therefore received a total of USD 8 million in dividends from CTC Media at the end of September 2012 and has received a total of USD 23 million in dividends from CTC Media in the first nine months of 2012. CTC Media has announced its intention to pay quarterly cash dividends totalling approximately USD 80 million in aggregate in 2012, subject to approval of each payment by its Board of Directors.

The Group announced on 14 June 2012 that its MTG Studios content production and distribution division had acquired a 53% stake in leading Central and Eastern European production group Paprika Latino for an undisclosed cash consideration. The operation will be consolidated within MTG’s results from 1 October 2012 and its results will be included in the ‘Other Businesses’ segment.

The Group announced on 1 June 2012 that it had completed the acquisition of 100% of AS Latvijas Neatkarīgā Televīzija (‘LNT’) in Latvia for an undisclosed cash consideration. LNT is the second largest free-TV channel operator in Latvia.
 
 
 
3 (24)
 
The Group announced on 3 May 2012 that its Nordic Betting Limited subsidiary had completed the sale of its Bet24 operations to Unibet Group plc (‘Unibet’) for a total cash consideration of approximately EUR 13.5 million.

The Group announced on 5 April 2012 that it had filed a registration statement on Form 20-F with the U.S. Securities and Exchange Commission, in order to register MTG’s class B shares under the U.S. Securities Exchange Act, as amended. The registration became effective on 4 June 2012. MTG has no intention to seek a listing of its securities on any U.S. stock exchange in connection with this registration.

The Group announced on 4 January 2012 that it would be closing down its loss-making free-TV operations in Slovenia. The Slovenian TV3 channel ceased broadcasting on 29 February 2012.
 
Financial Summary
 
2011
      
2012
    
2011
2012
SEK million
Q1
Q2
Q3
Q4
Q1
Q2
Q3
9m
9m
Net sales
3.125
3.531
3.106
3.711
3.259
3.517
2.940
9.762
9.716
Operating income before associates
432
593
358
551
341
552
288
1.382
1.181
Associated company income *
254
95
168
116
201
133
134
517
467
Non-recurring items **
-
-
-
-3.182
-
-
-
-
-
Total operating income (EBIT)
686
688
526
-2.515
542
684
422
1.900
1.648
Net financials
-15
-7
-87
-4
49
-98
-33
-108
-81
Income before tax
671
681
439
-2.519
591
587
389
1.791
1.567
Tax
-181
-202
-133
-46
-137
-133
-81
-516
-351
Net income
490
479
306
-2.564
454
454
308
1.276
1.216
Basic earnings per share (SEK)
7,35
6,84
4,71
-38,87
6,68
6,35
4,65
18,90
17,68
Diluted earnings per share (SEK)
7,29
6,79
4,69
-38,88
6,66
6,34
4,64
18,79
17,62
Total assets
13.905
14.434
14.958
11.281
11.468
11.699
11.324
14.958
11.324
 
 
*
Including MTG’s USD 4.6 million Q1 2012 participation in USD 89.5 million of non-recurring charges incurred by associated company CTC Media in the fourth quarter of 2011.

 
**
Non-recurring items primarily comprise the impairment of goodwill relating to the Group’s Bulgarian broadcasting assets.

 
Operating Review
 
Group sales were down 1% year on year (y-o-y) in the third quarter and up 1% for the year to date at constant exchange rates. The Q3 performance reflected the y-o-y decline in sales for the Scandinavian free-TV and Other Businesses segments, which was offset to a large extent by continued growth in the other three Broadcasting segments. Group sales were up 2% year on year at constant exchange rates, when excluding operations that have been discontinued or sold in 2012 but including newly acquired and consolidated businesses.

Group operating costs were down 4% y-o-y in the third quarter and up 2% for the year to date at reported exchange rates, but were up at constant exchange rates for both periods. The y-o-y increase at constant exchange rates in the quarter reflected investments in the Nordic pay-TV business, which were offset by slightly lower costs in the Emerging Markets businesses and a stable cost base in the Free-TV Scandinavia segment. Group depreciation and amortisation charges were lower y-o-y at
 
 
4 (24)
 
SEK 34 (47) million in the third quarter and SEK 90 (145) million for the year to date, following the ending of charges related to the Bulgarian and Czech TV broadcasting licenses.

Group operating income, when excluding associated company income, was therefore down 19% y-o-y in the quarter and down 15% for the year to date, with operating margins of 10% (12%) and 12% (14%) for the two respective periods. Total Group operating income when including associated company income was down 20% y-o-y in the quarter and down 13% for the year to date.

Group net interest expenses totalled SEK -10 (-17) million in the quarter and SEK -34 (-45) million for the year to date. Other financial items amounted to SEK -23 (-69) million in the quarter and SEK -47 (-63) million for the year to date, and included a SEK -2 (-64) million non-cash financial loss in the quarter and a SEK -8 (-30) million loss for the year to date arising from the change in value of the option element of the SEK 250 million CDON Group convertible bond between the balance sheet dates.

The Group therefore reported income before tax of SEK 389 (439) million in the quarter and SEK 1,567 (1,791) million for the year to date.

Group tax charges amounted to SEK 81 (133) million in the quarter and SEK 351 (516) million for the year to date. The Group therefore reported net income of SEK 308 (306) million in the quarter and SEK 1,216 (1,276) million for the year to date. Basic earnings per share amounted to SEK 4.65 (4.71) in the quarter and SEK 17.68 (18.90) for the year to date, and diluted earnings per share amounted to SEK 4.64 (4.69) and SEK 17.62 (18.79) for the two respective periods.
 
Free-TV Scandinavia
7% sales decline at constant exchange rates & 15% operating margin
 
 
2011
      
2012
    
2011
2012
SEK million
Q1
Q2
Q3
Q4
Q1
Q2
Q3
9m
9m
Net sales
1.023
1.146
984
1.240
1.024
1.110
876
3.153
3.010
Change y-o-y
4%
3%
7%
1%
0%
-3%
-11%
4%
-5%
Change y-o-y at constant exchange rates
11%
7%
7%
1%
-1%
-3%
-7%
8%
-4%
Total costs
-763
-827
-768
-958
-866
-860
-741
-2.358
-2.467
Change y-o-y
0%
1%
9%
9%
14%
4%
-4%
3%
5%
Operating income
260
319
216
282
158
251
135
795
543
Change y-o-y
21%
7%
-2%
-19%
-39%
-21%
-37%
9%
-32%
Operating margin
25,4%
27,8%
21,9%
22,7%
15,4%
22,6%
15,4%
25,2%
18,0%

The y-o-y sales development in the quarter primarily reflected lower advertising sales in all three Scandinavian countries with high sold-out ratios following lower levels of total TV viewing and coverage of the 2012 Summer Olympics on competing channels. The Swedish and Norwegian TV advertising markets are expected to have continued to grow y-o-y in the quarter, while the Danish market is estimated to have declined significantly y-o-y in the period.

Segment operating costs were slightly up y-o-y at constant exchange rates as lower programming costs in Norway were offset by higher programming costs in Denmark and Sweden. Segment operating income was therefore significantly down y-o-y in the quarter.

The Group now anticipates that operating costs will be down year on year in the fourth quarter at constant exchange rates and therefore only up low single digit percentage points for the full year 2012.

 
5 (24)
 
Commercial share of viewing (%)
2011
      
2012
    
(Target audience 15-49)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Sweden
33,8
37,6
38,4
34,0
34,9
33,4
38,1
(TV3, TV6, TV8, TV10)
              
Norway
22,0
23,7
20,7
19,2
18,6
19,5
19,7
(TV3, Viasat4)
              
Denmark
25,4
25,7
23,1
22,2
24,9
25,0
22,4
(TV3, TV3+, TV3 PULS)
              

The combined commercial target audience share for the Group’s Swedish media house was up significantly quarter on quarter (q-o-q) but slightly down y-o-y and reflected the earlier launch of the Fall schedules, which have performed well to date with a number of high rating new shows and new seasons of established formats. Flagship channel TV3 has continued to recover q-o-q and reported stable y-o-y commercial audience shares in the target demographic. TV6 reported continued q-o-q improvements in viewing shares, which were overall lower compared to the levels achieved in Q3 2011. TV8 and TV10’s target audience shares have improved sequentially, as well as y-o-y. The Group’s online catch-up services also continued to develop well during the quarter and the MTG media house was the largest commercial online media house in terms of share of viewing in July, August and the first half of September. TV3’s share of the regional TV advertising market in Sweden has continued to rise following the increase in the number of regional broadcast signals from 6 to 19 in February 2012.

The combined commercial target audience share for the Group’s Danish media house was down y-o-y and q-o-q. TV3+ is a male skewed channel and was impacted the most by the broadcasts of the Summer Olympic Games on competing channels. However, TV3+ lower target audience shares in the quarter was offset by continued y-o-y ratings increases for TV3 and y-o-y and q-o-q improvements for TV3 PULS. The Group has seen a positive development for its Danish commercial audience shares after the end of the Olympic Games. MTG is focused on the ongoing development of the Danish advertising video on demand market, and is also the largest online media house in Denmark, with a clear market leading position in terms of online video advertising inventory in the country.

The combined commercial target audience share for the Group’s Norwegian media house continued to improve q-o-q but was down y-o-y. TV3’s commercial target audience share has remained largely stable q-o-q in 2012, while Viasat4’s share has increased q-o-q and is now also up y-o-y.


 
6 (24)
 
 
Pay-TV Nordic
3% sales growth at constant exchange rates & 17% operating margin
 
 
2011
      
2012
    
2011
2012
SEK million
Q1
Q2
Q3
Q4
Q1
Q2
Q3
9m
9m
Net sales
1.139
1.186
1.184
1.221
1.249
1.250
1.182
3.509
3.681
Change y-o-y
4%
6%
4%
7%
10%
5%
0%
5%
5%
Change y-o-y at constant exchange rates
10%
10%
4%
7%
9%
5%
3%
9%
6%
Total costs
-924
-958
-949
-976
-1.032
-1.027
-986
-2.832
-3.044
Change y-o-y
3%
7%
1%
5%
12%
7%
4%
4%
8%
Operating income
215
228
234
246
217
223
196
677
636
Change y-o-y
12%
3%
17%
18%
1%
-2%
-16%
10%
-6%
Operating margin
18,9%
19,2%
19,8%
20,1%
17,4%
17,9%
16,6%
19,3%
17,3%

The Nordic pay-TV operations market and sell Viasat’s premium pay-TV packages and content on the Viasat satellite platform, the Viaplay online platform, and third party IPTV and cable networks. Viasat also distributes its 29 pay-TV channels via third party pay-TV networks. The y-o-y sales growth in the quarter reflected previously introduced price increases and the continued growth in the penetration of value added services, but was also adversely impacted by the fall in subscriber volumes described below.

Operating costs were up more y-o-y at constant than reported exchange rates in the quarter and reflected continued investments in premium movie and sports content and the Viaplay online pay-TV service, as well as the Viasat Film rebranding and HD & catch-up channels launched earlier in 2012. Segment operating profits were therefore down y-o-y in the quarter.

The Group currently continues to anticipate a segment operating margin of approximately 17% for the full year 2012 and, as above, for the Q4 2012 operating margin to be approximately 15%.

Subscribers
2011
      
2012
    
000's
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Premium subscribers
1.048
1.048
1.042
1.058
1.039
1.031
1.023
- of which, satellite subscribers
653
645
640
638
625
612
603
- of which third party networks subscribers
394
403
402
421
414
419
420
Basic satellite subscribers
42
40
39
38
42
44
46
Satellite value-added service subscribers
              
ViasatPlus
163
172
179
188
191
192
193
Multi-room
237
239
240
250
251
251
252
High definition
232
255
276
297
313
321
336

Viasat’s premium satellite subscriber base continued to decline in the third quarter due to the impact of increased competition on the Danish satellite platform in particular, as well as a shift in the subscriber mix towards basic tier packages in Norway. The third party network subscriber base increased by 18,000 subscribers y-o-y and added 1,000 subscribers q-o-q following subscriber losses in third party cable networks in Sweden and price increases in the Norwegian IPTV networks. Annualised revenue per premium satellite subscriber (ARPU) was up by 3% y-o-y in the quarter to SEK 4,916 (4,751) and was slightly down q-o-q compared to SEK 4,926 in the second quarter of 2012 due to adverse currency exchange rate effects.

 
7 (24)
 
The Group announced on 17 August 2012 that it would be expanding its Viasat offering through the launch of eleven additional High Definition (HD) channels and four catch-up channels across the Nordic region during the fourth quarter of 2012. MTG previously expanded its offering in March 2012 with the launch of four new Viasat Film premium HD channels and five new Viasat Film catch-up channels across the Nordic region.

The Group further strengthened the content offering on both its traditional pay-TV platform and Viaplay online pay-TV service with the signing of a number of exclusive programme licensing agreements with NBC Universal International Television Distribution, Twentieth Century Fox Television Distribution, Nordisk Film and SF Film in September.

The Group also continued to develop Viaplay’s overall reach and service during the quarter. A 30 day ‘Download-to-go’ option for Apple iOS users was added to the service, and Viaplay further extended its reach by adding the service to Philips’ smart-TV platform in Scandinavia. Viaplay also announced that the service will be made available to PlayStation3® users across the Nordic region.

Free-TV Emerging Markets
3% sales growth at constant exchange rates & reduced losses
 
 
2011
      
2012
    
2011
2012
SEK million
Q1
Q2
Q3
Q4
Q1
Q2
Q3
9m
9m
Net sales
420
598
400
655
432
560
369
1.418
1.361
Change y-o-y
-3%
3%
12%
4%
3%
-6%
-8%
3%
-4%
Change y-o-y at constant exchange rates
6%
8%
12%
7%
5%
-3%
3%
8%
1%
Total costs
-451
-526
-476
-588
-423
-469
-417
-1.453
-1.309
Change y-o-y
-10%
-3%
10%
2%
-6%
-11%
-13%
-1%
-10%
Operating income
-31
73
-76
67
8
91
-48
-35
52
Change y-o-y
-
73%
-
19%
-
26%
-38%
-
-
Operating margin
-
12,1%
-
10,2%
1,9%
16,3%
-
-
3,8%

The Group’s Emerging Markets free-TV operations comprise a total of 19 free-TV channels in the Baltics, the Czech Republic, Bulgaria, Hungary and Ghana. The y-o-y sales performance in the quarter reflected y-o-y revenue growth for the combined Baltics businesses and in the Czech Republic, Bulgaria and Ghana, as well as the consolidation of the LNT operations in Latvia, which were offset by lower y-o-y sales in Hungary and the discontinuation of the Slovenian operations earlier in the year.

The reported y-o-y reduction in segment operating costs in the quarter did reflect large currency exchange rate movements but costs were still down at constant exchange rates and reflected the closing down of the Slovenian operations (including lower than anticipated closure cost), the ending of depreciation charges for the Czech and Bulgarian terrestrial broadcasting licenses, and operating cost reductions in the Bulgarian and Hungarian operations, which were partially offset by reorganizing costs for the newly acquired LNT operations in Latvia and continued strategic investments in the Czech operations.

The Group currently continues to not anticipate any increase in segment operating costs for the full year 2012 and, therefore, a largely stable y-o-y cost development in Q4 2012.
 

 
8 (24)
 
 
Baltics, Czech Republic and Bulgaria
 
2011
      
2012
    
2011
2012
SEK million
Q1
Q2
Q3
Q4
Q1
Q2
Q3
9m
9m
Net sales
371
531
352
591
393
516
334
1.254
1.244
Change y-o-y
-2%
4%
14%
6%
6%
-3%
-5%
5%
-1%
Change y-o-y at constant exchange rates
6%
8%
14%
9%
8%
0%
6%
8%
4%
Total costs
-373
-435
-400
-512
-367
-413
-384
-1.209
-1.164
Change y-o-y
-10%
-3%
12%
7%
-2%
-5%
-4%
-1%
-4%
Operating income
-3
96
-48
79
27
103
-50
45
80
Change y-o-y
-
51%
-
5%
-
8%
4%
-
78%
Operating margin
-
18,0%
-
13,4%
6,8%
20,0%
-
3,6%
6,4%

The y-o-y sales development for the Group’s free-TV operations in the Baltics, the Czech Republic and Bulgaria reflected year on year sales growth in all three businesses and the contribution of the recently acquired LNT operations in Latvia.

Combined operating costs were up y-o-y at constant exchange rates in the quarter but down slightly for the year to date. The development in the quarter reflected reorganisation costs following the acquisition of the LNT free-TV group in Latvia and continued strategic programming investments in the Czech Republic offset by cost savings in the Bulgarian operations.

Commercial share of viewing (%)
2011
      
2012
    
(Target audience)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Estonia
37,7
39,3
38,0
38,7
40,9
39,2
40,7
(TV3, 3+, TV6) (15-49)
              
Latvia *
36,7
38,3
34,4
39,0
36,1
39,9
60,6
(TV3, 3+, TV6) (15-49)
              
Lithuania
42,2
42,1
45,7
46,3
43,2
41,3
40,2
(TV3, TV6, TV8) (15-49)
              
Czech Republic
32,1
32,0
35,7
37,6
36,9
39,1
40,4
(Prima Family, Prima COOL, Prima Love) (15-54)
              
Bulgaria
28,3
28,2
28,0
27,7
29,1
25,7
28,4
(Nova TV, Diema, Diema Family, Kino Nova) (18-49)
              
 
*
Including  the newly consolidated LNT operations in Latvia in its combined commercial target audience share for the Latvian media house

Sales for the Group’s combined Baltic free-TV businesses were up 10% y-o-y in the quarter at constant exchange rates, which primarily reflected the consolidation of the LNT operations in Latvia, as well as higher y-o-y TV advertising sales in Estonia. The Estonian TV advertising market is estimated to have grown slightly y-o-y in the quarter, whilst the Latvian market is estimated to have been stable and the Lithuanian market is estimated to have declined y-o-y. The Group’s pan-Baltic commercial target audience share increased to 47.0% (40.6%) in the third quarter, with the higher y-o-y Estonian and Latvian viewing shares more than offsetting the y-o-y decline in Lithuania.

Sales for the Group’s Czech operations were up 4% y-o-y in the quarter at constant exchange rates, while the TV advertising market is estimated to have been stable y-o-y. The positive audience share development reflected increased investments in own productions, as well as additional news and current affairs programming, and the airing of UEFA Champions League matches on Prima COOL.

Sales for the Group’s Bulgarian operations were up 6% y-o-y in the third quarter at constant exchange rates and the Bulgarian TV advertising market is also estimated to have been stable y-o-y. The combined commercial audience share for the Group’s Bulgarian channels was up both y-o-y and up q-o-q, despite slightly lower y-o-y programming investments.

Sales for the Group’s Hungarian operations were down 10% y-o-y at constant exchange rates in the quarter. The Hungarian TV advertising market is estimated to have declined by approximately 20% y-o-y.

 
9 (24)
 
The Viasat1 channel in Ghana reported 60% y-o-y sales growth in the quarter at constant exchange rates, following further market share gains. The Group strengthened the channel’s schedule further by launching a number of new own produced formats during the quarter.
 
Pay-TV Emerging Markets
13% sales growth at constant exchange rates & 18% operating margin
 
 
2011
      
2012
    
2011
2012
SEK million
Q1
Q2
Q3
Q4
Q1
Q2
Q3
9m
9m
Net sales
215
230
240
237
251
273
267
685
790
Change y-o-y
-2%
2%
5%
6%
17%
19%
11%
2%
15%
Change y-o-y at constant exchange rates
11%
19%
14%
6%
14%
12%
13%
15%
13%
Total costs
-207
-209
-227
-231
-217
-215
-219
-643
-651
Change y-o-y
16%
11%
2%
18%
5%
3%
-3%
9%
1%
Operating income
7
22
13
7
34
58
48
42
139
Change y-o-y
-82%
-41%
126%
-78%
360%
168%
259%
-49%
230%
Operating margin
3,4%
9,3%
5,5%
2,8%
13,5%
21,1%
17,9%
6,2%
17,6%
 
Viasat’s Emerging Market pay-TV operations market and sell pay-TV packages on the Viasat satellite platforms in the Baltics and Ukraine, and on the joint venture Raduga TV satellite platform in Russia. Viasat also distributes 23 channels via third party pay-TV networks to subscribers in 31 countries across Central and Eastern Europe, Africa and the United States. The Viaplay online pay-TV service was launched in Russia in March 2012.

The y-o-y sales growth in the quarter was driven by wholesale channel subscription additions, especially in Russia, as well as subscriber intake by the Group’s satellite platforms in the Baltics, Russia and Ukraine, and higher ARPU in the Baltics following successful upselling initiatives.

The y-o-y reduction in segment operating costs primarily reflected the fluctuations in currency exchange rates between the reporting periods.

The Group continues to anticipate higher y-o-y profit levels for the segment for the full year 2012 but for the segment to report an operating loss in Q4 2012 following the investments described below in the launch of the HD movie channels and the Ukrainian pre-paid satellite service.

Subscribers
2011
      
2012
    
000's
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Satellite subscribers
438
438
460
532
529
534
543
Mini-pay TV subscriptions
58.197
61.105
61.177
64.285
66.012
72.816
75.430

Viasat’s emerging market satellite pay-TV platforms added 83,000 net new subscribers y-o-y and 9,000 new subscribers q-o-q, following continued subscriber intake on all three satellite platforms.
 
 
10 (24)
 
The wholesale channel business added over 14 million subscriptions y-o-y and over 2.6 million subscriptions q-o-q following continued strong subscription intake in Russia in particular.

The Group launched three new HD movie channels (TV1000 Premium HD, TV1000 Megahit HD and TV1000 Comedy HD) in Russia, Ukraine and other CIS countries on 4 October 2012. The channels will primarily feature content from four major Hollywood studios, with which the Group has signed multi-year exclusive movie licensing agreements.

The Group also launched ‘UA.TV’, a new pre-paid satellite pay-TV service, in Ukraine on 25 September. UA.TV is sold on a monthly pre-paid basis, and is available alongside MTG’s Viasat Ukraine satellite pay-TV platform, which was launched in 2008. The new service complements Viasat Ukraine’s existing premium satellite pay-TV subscription service and will further extend the reach of the Group’s channels and services.
 
CTC Media

The Group reports its equity participation in the earnings of CTC Media with a one quarter time lag due to the fact that CTC Media reports its financial results after MTG. MTG’s participation in CTC Media’s US dollar reported results is translated into MTG’s Swedish krona reporting currency at the average currency exchange rate for the MTG reporting period.

The Group’s ownership in CTC Media amounted to 37.9% of the total number of issued and outstanding shares as at 30 September 2012, compared to 38.2% as at 30 September 2011. The ownership was unchanged from the second quarter of 2012.

CTC Media reported results
2010
2011
      
2012
  
2011
2012
(USD million)
Q4
Q1
Q2
Q3
Q4
Q1
Q2
R9m
R9m
Sales
222
166
204
160
237
191
188
592
616
Operating income
101
36
62
27
-2
50
49
199
97
Income before tax
105
39
64
30
4
51
54
208
109
                   
                   
                   
MTG equity participation in
2011
      
2012
    
2011
2012
CTC Media results (SEK million)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
9m
9m
Associated company income
255
94
164
112
200
132
132
513
464
Dividends received
61
84
-
174
52
55
51
145
158
MTG equity ownership
38,2%
38,2%
38,2%
38,1%
38,1%
37,9%
37,9%
38,2%
37,9%

CTC Media’s Q4 2011 results included USD 89.5 million of non-cash impairment charges, of which USD 4.6 million impacted MTG’s Q1 2012 income statements and were reported in the associated company income line.
 
CTC Media will publish its results for the third quarter and nine months ended 30 September 2012 on 7 November 2012. For further information regarding CTC Media, please visit www.ctcmedia.ru.


 
11 (24)
 
 
Other Businesses
 
2011
      
2012
    
2011
2012
SEK million
Q1
Q2
Q3
Q4
Q1
Q2
Q3
9m
9m
Net sales
400
452
372
450
407
397
297
1.225
1.101
Change y-o-y
-2%
-6%
-18%
-1%
2%
-12%
-20%
-9%
-10%
Change y-o-y at constant exchange rates
4%
-3%
-18%
-1%
1%
-13%
-18%
0%
-6%
Total costs
-380
-409
-358
-418
-421
-392
-284
-1.147
-1.098
Change y-o-y
-1%
-7%
-12%
4%
11%
-4%
-21%
-7%
-4%
Associated company income
0
1
4
1
0
0
2
4
2
Operating income
20
44
18
32
-14
5
15
82
6
Change y-o-y
-19%
-7%
-64%
-40%
-
-89%
-16%
-33%
-93%
Operating margin
5,1%
9,5%
3,8%
6,9%
-
1,2%
4,3%
6,3%
0,3%

The segment comprises the Group’s Radio and MTG Studios operations. The Group’s radio operations comprise national commercial networks in Sweden and Norway, as well as national and local stations in the Baltics. MTG Studios comprises the Group’s content production businesses in Scandinavia, Europe and Africa.

Segment sales were up 7% y-o-y, and 2% for the year to date at constant exchange rates when excluding the contribution from Bet24 for in both 2012 and 2011 and reflected higher y-o-y sales for MTG Studios and the Norwegian Radio operations offset by significantly lower y-o-y sales for the Swedish radio operations in anticipation of the discontinuation of the NRJ distribution agreement at the end of 2012.

Segment profits were slightly down y-o-y in the quarter, which primarily reflected the losses incurred by the Swedish radio operations, which were offset to an extent by increased profits for the Norwegian radio business and lower losses for the MTG Studios operations.


Financial Review

Cash Flow
The Group’s cash flow from operations before changes in working capital amounted to SEK 237 (345) million in the quarter and SEK 1,072 (1,334) million for the year to date, and included the receipt of SEK 51 (-) million and SEK 158 (145) million of dividend payments from CTC Media for the respective periods.

The Group reported a SEK 65 (-483) million change in working capital in the third quarter and SEK 23 (-645) million change for the year to date which reflected cash tax payments and the timing of payments for certain key sports rights in 2011. Group net cash flow from operations therefore totalled SEK 302 (-138) million in the quarter and SEK 1,095 (689) million for the year to date.

The Group sold all of its remaining shares in Metro International S.A. to Investment AB Kinnevik in the first quarter of 2012 and received SEK 24 million in cash. The Group’s investments in shares amounted to SEK 174 (-) million in the quarter and SEK 274 (-) million for the year to date, which comprised the acquisition of the Paprika Latino content production business, the LNT free-TV business in Latvia and the Zitius communications operator in Sweden. Group capital expenditure on tangible and intangible assets totalled SEK 28 (34) million in the quarter and SEK 70 (86) million for the year to date, which was equivalent to less than 1% of Group net sales. Other cash flow from investing activities of SEK 23 (-) million in the quarter and SEK 84 (-) for the year to date comprised
 
 
12 (24)
 
the net cash received from the sale of the Bet24 operations. Cash flow used in investing activities therefore totalled SEK -179 (-34) million in the quarter and SEK -236 (-86) for the year to date.

Cash flow used in financing activities amounted to SEK -335 (64) million in the quarter, which mainly comprised a SEK -363 (68) million net decrease in borrowings. Cash flow used in financing activities amounted to SEK -863 (-770) million for the year to date and comprised the SEK -600 (-498) million dividend payment to MTG shareholders in May 2012 as well as a SEK -236 (-289) million net decrease in borrowings. The Group had total borrowings of SEK 1,326 (2,458) million at the end of the period, compared to SEK 1,678 (2,382) million at the end of the second quarter of 2012.

The net change in cash and cash equivalents therefore amounted to SEK -211 (-108) million in the quarter and SEK -4 (-167) million for the year to date. The Group had SEK 451 (317) million of cash and cash equivalents at the end of the period, compared to SEK 675 (424) million at the end of the second quarter of 2012.

Net debt
The Group's net debt position, which is defined as interest bearing liabilities less cash and cash equivalents and interest bearing assets, amounted to SEK 634 (1,861) million at the end of the third quarter, and compared to a net debt position of SEK 778 (1,716) million at the end of the second quarter of 2012. The net debt to trailing twelve month EBITDA ratio was therefore reduced year on year to 0.3 (0.6) times at the end of the period, compared to 0.3 (0.6) times at the end of the second quarter of 2012.

Liquid funds
The Group’s available liquid funds, including unutilised credit and overdraft facilities, totalled
SEK 5,784 (4,499) million at the end of the period, compared to SEK 5,655 (4,682) million at the end of the second quarter of 2012.

Holdings in listed companies
The book value of the Group’s shareholding in associated company CTC Media was
SEK 1,888 (2,253) million at the end of the period, and compared with the SEK 3,552 million
(USD 543 million) public equity market value of the shareholding as at the close of trading on the last business day of the second quarter of 2012.

Equity
The Group reported SEK -388 (219) million of currency translation differences in equity in the third quarter and SEK -246 (340) million of differences for the year to date. The Group does not hedge its equity exposure to currency translation effects. The Group’s total equity amounted to SEK 4,635 (7,391) million at the end of the period, compared to SEK 4,714 (6,833) million at the end of the second quarter of 2012.

Shares
The weighted average number of shares outstanding was 66,612,522 (66,403,237) during the third quarter and 66,525,128 (66,385,105) during the first nine months of the year. The Group’s total number of outstanding shares increased from 66,403,237 to 66,612,522 during the year following the award of 209,285 Class B shares to participants in the MTG 2009 long-term incentive program, and excluded the 865,000 Class C shares and 169,602 Class B shares held by MTG in treasury at the end of the period. The total number of issued shares did not change during the period.

Share issues & other changes
Class A
shares
Class B shares
Class C shares
Total
Total number of issued shares as at 1 January 2012 & 30 September 2012
5,878,931
60,903,193
865,000
67,647,124

 
13 (24)
 
Related Party Transactions

Related party transactions in the quarter and for the full year are of the same character and of similar amounts as the transactions described in the 2011 Annual Report, with the exception of the below. The Group sold all of its remaining shares, warrants and subordinated debentures in Metro International S.A. to Investment AB Kinnevik for SEK 24 million in the first quarter of 2012. The sale gave rise to a net gain of SEK 9 million.


Parent Company

Modern Times Group MTG AB is the Group’s parent company and is responsible for Group-wide management, administration and finance functions.

 
2011
      
2012
    
2011
2012
SEK million
Q1
Q2
Q3
Q4
Q1
Q2
Q3
9m
9m
Net Sales
9
10
9
10
14
12
13
28
40
Net interest & other financial items
161
551
137
-80
135
172
171
849
478
Income before tax
126
473
100
-137
80
122
133
699
335

The parent company had cash and cash equivalents of SEK 195 (116) million at the end of the period, compared to SEK 436 (174) million at the end of the second quarter of 2012. SEK 5,333 (4,183) million of the SEK 6,600 million total available credit facilities, including the SEK 100 million overdraft facility, was unutilised as at the end of the reporting period.


Risks & Uncertainties

Significant risks and uncertainties exist for the Group and the parent company. These include the prevailing economic and business environments in certain markets and the impact of the Eurozone crisis in particular; commercial risks related to expansion into new territories; political and legislative risks related to changes in rules and regulations in the various territories in which the Group operates; exposure to foreign exchange rate movements and the US dollar and Euro currencies in particular; and the emergence of new technologies and competitors. These risks and uncertainties are described in more detail in the 2011 Annual Report, which is available from the Group’s website at www.mtg.se and in the Group’s registration statement on Form 20-F, which is available from the website of the U.S. Securities and Exchange Commission.


Other Information

This Group interim report has been prepared according to ‘IAS 34 Interim Financial Reporting’ and ‘The Annual Accounts Act’. The interim report for the parent company has been prepared according to the Annual Accounts Act - Chapter 9 ‘Interim Report’.  The Group's consolidated accounts and the parent company accounts have been prepared according to the same accounting policies and calculation methods as were applied in the preparation of the 2011 Annual Report with the exception that the results arising from new share issues by associated companies are included in the
 
 
14 (24)
 
associated company income and not, as previously, in other financial items. The results for prior periods have been restated accordingly.

2013 Annual General Meeting of shareholders
The 2012 Annual General Meeting will be held on 14 May 2013 in Stockholm. Shareholders wishing to have matters considered at the Annual General Meeting should submit their proposals in writing to agm@mtg.se or to The Company Secretary, Modern Times Group MTG AB, Box 2094, SE-103 13 Stockholm, Sweden, at least seven weeks before the Annual General Meeting, in order that the proposal may be included in the notices to the meeting. Further details on how and when to register will be published in advance of the Meeting.
 
Nomination Committee for the 2013 Annual General Meeting of shareholders
In accordance with the resolution of the 2012 Annual General Meeting, Cristina Stenbeck has convened a Nomination Committee consisting of members representing the largest shareholders in MTG. The Nomination Committee is comprised of Cristina Stenbeck, Investment AB Kinnevik; Thomas Ehlin, Nordea Investment Funds; Johan Ståhl, Lannebo Fonder; and Björn Lind, AMF Försäkring och Fonder.  The members of the Committee will appoint the Committee Chairman at their first meeting. Information about the work of the Nomination Committee can be found on MTG’s corporate website at www.mtg.se.

Shareholders wishing to propose candidates for election to the MTG Board of Directors should submit their proposals in writing to agm@mtg.se or to The Company Secretary, Modern Times Group MTG AB, Box 2094, SE-103 13, Stockholm, Sweden.
 
Fourth Quarter and Full year 2012 Financial Results
MTG’s financial results for the fourth quarter and twelve months ended 31 December 2012 will be published on 13 February 2013.
 
Conference Call
The company will host a conference call today at 15.00 Stockholm local time, 14.00 London local time and 09.00 New York local time. To participate in the conference call, please dial:
 
Sweden:
+46(0)8 5876 9445
UK:
+44(0)20 3140 8286
US:
+1646 254 3366

The access pin code for the call is 8449699.

To listen to the conference call online and for further information please visit www.mtg.se.

For further information, please visit www.mtg.se, or contact:

Jørgen Madsen Lindemann, President & Chief Executive Officer
Mathias Hermansson, Chief Financial Officer
Tel:      
+46 (0) 8 562 000 50
 
 
 
15 (24)
 
Matthew Hooper, Head of Corporate Communications & Planning
Tel:
+44 (0) 7768 440 414
Email:
investor.relations@mtg.se / press@mtg.se

 

* * *


Stockholm, 18 October 2012

Jørgen Madsen Lindemann, President & Chief Executive Officer

Modern Times Group MTG AB
Skeppsbron 18
P.O. Box 2094
SE-103 13 Stockholm, Sweden
Registration number: 556309-9158

 
Forward-looking information and Safe Harbour Statement under the U.S. Private Securities Litigation Reform Act of 1995
 
This report contains forward-looking information based on the current expectation of MTG management. Although management deems that the expectations presented by such forward-looking information are reasonable, such forward-looking information is subject to risks and uncertainties and no guarantee can be given that these expectations will prove correct. Accordingly, the actual future outcome could vary considerably when compared to what is stated in the forward-looking information, due to such factors as described above in the Risks & Uncertainties section.

 
16 (24)
 
 
Auditors’ Review Report
 
 
Introduction
 
We have reviewed the interim report for Modern Times Group MTG AB for the nine month period ended 30 September 2012. The Board of Directors and the President are responsible for the preparation and presentation of this interim report in accordance with ‘IAS 34’ and ‘The Annual Accounts Act’. Our responsibility is to express a conclusion on this interim report based on our review.

 
Focus & Scope of the Review
 
We conducted our review in accordance with ‘The Standard on Review Engagements SÖG 2410’, “Review of Interim Financial Information Performed by the Independent Auditors of the Entity’. A review consists of making enquiries, primarily to persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is substantially less in scope than an audit conducted in accordance with ISA and other generally accepted auditing practices in Sweden. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed on the basis of a review does not give the same level of assurance as a conclusion expressed on the basis of an audit.

 
Conclusion
 
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not, in all material respects, prepared for the Group in accordance with ‘IAS 34’ and ‘The Annual Accounts Act’, and for the parent company in accordance with ‘The Annual Accounts Act’.
 
Stockholm, 18 October 2012
 
 

 
 
KPMG AB
 
 
George Pettersson
 
Authorised Public Accountant
 
 
17 (24)
 



Modern Times Group (MTG) is an international entertainment broadcasting group with operations that span four continents and include free-TV, pay-TV, radio and content production businesses. MTG’s Viasat Broadcasting operates free-TV and pay-TV channels, which are available on Viasat’s own satellite platforms and third party networks, and also distributes TV content over the internet. MTG is also the largest shareholder in CTC Media, which is Russia’s leading independent television broadcaster.

Modern Times Group is a growth company and generated record net sales of SEK 13.5 billion in 2011. MTG’s Class A and B shares are listed on Nasdaq OMX Stockholm’s Large Cap index under the symbols ‘MTGA’ and ‘MTGB’.

The information in this quarterly and nine month  report is that which Modern Times Group MTG AB is required to disclose under the Securities Market Act and/or the Financial Instruments Trading Act. It was released for publication at 13.00 CET on 18 October 2012.

 
18 (24)
 
CONDENSED CONSOLIDATED
2012
2011
2012
2011
2011
INCOME STATEMENT (MSEK)
Jul-Sep
Jul-Sep
Jan-Sep
Jan-Sep
Jan-Dec
           
Net sales
2.940
3.106
9.716
9.762
13.473
Cost of goods and services
-1.810
-1.924
-5.827
-5.873
-8.039
Gross income
1.130
1.182
3.889
3.888
5.434
           
Selling and administrative expenses
-810
-802
-2.637
-2.412
-3.376
Other operating revenues and expenses, net
-32
-22
-71
-94
-125
Share of earnings in associated companies
134
168
467
517
634
Write-down and one-off costs
-
-
-
-
-3.182
Operating income (EBIT)
422
526
1.648
1.900
-615
           
Net interest
-10
-17
-34
-45
-59
Other financial items
-23
-69
-47
-63
-53
Income before tax
389
439
1.567
1.791
-727
           
Tax
-81
-133
-351
-516
-561
Net income for the period
308
306
1.216
1.276
-1.289
           
           
 
          
Equity holders of the parent
310
313
1.176
1.254
-1.327
Non-controlling interests
-1
-7
40
21
38
Net income for the period
308
306
1.216
1.276
-1.289
           
Basic earnings per share (SEK)
4,65
4,71
17,68
18,90
-19,98
Diluted earnings per share (SEK)
4,64
4,69
17,62
18,79
-20,02
           
CONDENSED STATEMENT OF
2012
2011
2012
2011
2011
COMPREHENSIVE INCOME FOR THE GROUP (MSEK)
Jul-Sep
Jul-Sep
Jan-Sep
Jan-Sep
Jan-Sep
           
Net income for the period
308
306
1.216
1.276
-1.289
           
Other comprehensive income
          
Currency translation differences
-388
219
-246
340
-139
Cash flow hedge
-14
26
-30
27
21
Revaluation of shares at market value
0
-8
0
-8
-10
Share of other comprehensive income of associates
2
8
24
65
73
Other comprehensive income for the period
-400
245
-252
425
-55
           
Total comprehensive income for the period
-92
551
964
1.701
-1.344
           
Total comprehensive income attributable to:
          
Equity holders of the parent
-86
558
930
1.679
-1.370
Non-controlling interests
-6
-7
34
21
26
Total comprehensive income for the period
-92
551
964
1.701
-1.344
           
Shares outstanding at the end of the period
66.612.522
66.403.237
66.612.522
66.403.237
66.403.237
           
Basic average number of shares outstanding
66.612.522
66.403.237
66.525.128
66.385.105
66.383.647
Diluted average number of shares outstanding
66.730.243
66.624.103
66.712.450
66.661.569
66.383.647
           


 
19 (24)
 
 
CONDENSED STATEMENT OF
2012
2011
2011
FINANCIAL POSITION (MSEK)
30 Sep
30 Sep
31 Dec
       
Non-current assets
      
Goodwill
2.600
5.040
2.447
Other intangible assets
532
1.166
581
Machinery and equipment
293
289
267
Shares and participations
1.979
2.304
1.993
Other financial receivables
338
357
324
 
5.742
9.156
5.612
       
Current assets
      
Inventory
1.919
1.838
1.591
Current receivables
3.211
3.647
3.608
Cash, cash equivalents and short-term investments
451
317
470
 
5.581
5.802
5.668
Total assets
11.324
14.958
11.281
       
Shareholders’ equity
      
Shareholders’ equity
4.477
7.163
4.128
Non-controlling interests
159
228
222
 
4.635
7.391
4.350
       
Long-term liabilities
      
Interest-bearing liabilities
1.273
2.404
1.524
Provisions
560
625
583
Non-interest-bearing liabilities
69
61
60
 
1.902
3.090
2.168
       
Current liabilities
      
Interest-bearing liabilities
73
71
50
Non-interest-bearing liabilities
4.713
4.405
4.713
 
4.786
4.476
4.763
Total shareholders’ equity and liabilities
11.324
14.958
11.281
       


 
20 (24)
 

CONDENSED CONSOLIDATED
2012
2011
2012
2011
2011
STATEMENT OF CASH FLOWS (MSEK)
Jul-Sep
Jul-Sep
Jan-Sep
Jan-Sep
Jan-Dec
           
Cash flow from operations
237
345
1.072
1.334
1.853
Changes in working capital
65
-483
23
-645
-56
Net cash flow from operations
302
-138
1.095
689
1.797
           
Proceeds from sales of shares
-
-
24
-
5
Acquisitions of subsidiaries and associates
-174
-
-274
-
-
Investments in other non-current assets
-28
-34
-70
-86
-120
Other cash flow from investing activities
23
-
84
-
-
Cash flow used in investing activities
-179
-34
-236
-86
-115
           
Net change in loans
-363
68
-236
-289
-1.188
Dividends to shareholders
-
-
-600
-498
-498
Other cash flow from/to financing activities
28
-4
-28
16
-51
Cash flow used in financing activities
-335
64
-863
-770
-1.737
           
Net change in cash and cash equivalents for the period
-211
-108
-4
-167
-55
           
Cash and cash equivalents at the beginning of the period
675
424
470
500
500
Translation differencies in cash and cash equivalents
-13
1
-15
-16
25
Cash and cash equivalents at end of the period
451
317
451
317
470
           
           
CONDENSED STATEMENT OF CHANGES
2012
2011
2011
    
IN EQUITY (MSEK)
30 Sep
30 Sep
31 Dec
    
           
Opening balance
4.350
6.239
6.239
    
Net loss/income for the year
1.216
1.276
-1.289
    
Other comprehensive income for the year
-252
425
-55
    
Total comprehensive loss/income for the year
964
1.701
-1.344
    
           
Effect of employee share option programmes
12
6
10
    
Change in non-controlling interests
3
-
-
    
Dividends to shareholders
-600
-498
-498
    
Dividends to non-controlling interests
-94
-56
-57
    
Closing balance
4.635
7.391
4.350
    
           


 
21 (24)
 
 
CONDENSED INCOME STATEMENT
2012
2011
2012
2011
2011
PARENT COMPANY (MSEK)
Jul-Sep
Jul-Sep
Jan-Sep
Jan-Sep
Jan-Dec
           
Net sales
13
9
40
28
38
Gross income
13
9
40
28
38
           
Administrative expenses
-51
-47
-182
-179
-245
Operating income (EBIT)
-38
-37
-143
-151
-207
           
Net interest and other financial items
171
137
478
849
974
Income before tax
133
100
335
699
562
           
Appropriations
-
-
-39
-
-
           
Tax
-24
-26
-75
-78
-47
Net income for the period
109
74
222
621
515
           
           
CONDENSED STATEMENT OF
2012
2011
2012
2011
2011
COMPREHENSIVE INCOME FOR THE PARENT (MSEK)
Jul-Sep
Jul-Sep
Jan-Sep
Jan-Sep
Jan-Dec
           
Net income for the period
109
74
222
621
515
           
Other comprehensive income
          
Revaluation of shares at market value
-
-8
0
-8
-10
Other comprehensive income for the period
0
-8
0
-8
-10
           
Total comprehensive income for the period
109
66
221
613
505
           
           
           
CONDENSED BALANCE SHEET
2012
2011
2011
    
PARENT COMPANY (MSEK)
30 Sep
30 Sep
31 Dec
    
           
Non-current assets
          
Shares and participations
3.676
3.676
3.676
    
Other financial assets
12.668
12.602
12.608
    
Total financial assets
16.347
16.279
16.285
    
           
Current assets
          
Current receivables
444
1.767
842
    
Cash, cash equivalents and short-term investments
195
116
96
    
 
639
1.883
938
    
Total assets
16.986
18.161
17.222
    
           
Shareholders’ equity
          
Restricted equity
338
337
338
    
Non-restricted equity
8.106
8.605
8.501
    
 
8.444
8.942
8.840
    
           
Untaxed reserves
39
-
-
    
           
Long-term liabilities
          
Interest-bearing liabilities
3.125
8.512
4.208
    
Provisions
6
10
6
    
Non-interest-bearing liabilities
61
0
60
    
 
3.192
8.523
4.275
    
           
Current liabilities
          
Other interest-bearing liabilities
5.120
490
3.284
    
Non-interest-bearing liabilities
192
206
823
    
 
5.311
697
4.107
    
Total shareholders’ equity and liabilities
16.986
18.161
17.222
    
 
22 (24)
 
             
 
NET SALES
2011
2011
2011
2011
2011
2012
2012
2012
2012
BUSINESS SEGMENTS (MSEK)
Q1
Q2
Q3
Q4
Full Year
Q1
Q2
Q3
9M
                   
                   
Free-TV Scandinavia
1.023,1
1.146,2
983,9
1.240,1
4.393,3
1.023,7
1.110,4
875,9
3.010,1
                   
Pay-TV Nordic
1.139,1
1.186,1
1.183,6
1.221,1
4.730,0
1.248,7
1.250,2
1.182,0
3.681,0
                   
Free-TV Emerging Markets
419,8
598,2
399,9
655,3
2.073,3
431,6
560,1
369,0
1.360,7
 - of which Baltics, Czech & Bulgaria
370,5
530,9
352,1
591,5
1.845,0
393,4
515,7
334,5
1.243,6
                   
Pay-TV Emerging Markets
214,7
230,1
240,3
237,3
922,4
250,6
273,0
266,8
790,4
                   
Central operations, eliminations & other businesses
-43,0
-37,8
-47,2
-44,6
-172,6
-45,9
-44,8
-34,2
-124,8
                   
Total Viasat Broadcasting
2.753,8
3.122,8
2.760,5
3.309,2
11.946,3
2.908,8
3.149,0
2.659,5
8.717,3
                   
Other Businesses
400,2
452,2
372,5
449,6
1.674,5
407,4
397,0
297,0
1.101,3
                   
Total operating businesses
3.154,0
3.575,0
3.133,0
3.758,9
13.620,9
3.316,2
3.546,0
2.956,5
9.818,6
                   
Group central operations
47,3
45,4
45,6
47,5
185,8
58,9
49,9
54,7
163,4
                   
Eliminations
-76,4
-89,1
-72,9
-95,1
-333,6
-115,6
-79,0
-71,1
-265,7
                   
TOTAL OPERATIONS
3.124,8
3.531,3
3.105,7
3.711,3
13.473,1
3.259,4
3.516,8
2.940,0
9.716,3
                   
                   
OPERATING INCOME (EBIT)
2011
2011
2011
2011
2011
2012
2012
2012
2012
BUSINESS SEGMENTS (MSEK)
Q1
Q2
Q3
Q4
Full Year
Q1
Q2
Q3
9M
                   
                   
Free-TV Scandinavia
260,3
319,2
215,7
282,0
1.077,3
157,7
250,6
134,9
543,2
                   
Pay-TV Nordic
214,8
228,1
234,5
245,6
923,0
217,2
223,4
195,8
636,5
                   
Free-TV Emerging Markets
-31,2
72,5
-76,2
67,0
32,1
8,3
91,3
-47,6
52,1
 - of which Baltics, Czech & Bulgaria
-2,6
95,5
-48,0
79,0
123,9
26,7
103,0
-49,7
80,0
                   
Pay-TV Emerging Markets
7,4
21,5
13,3
6,6
48,7
33,9
57,5
47,7
139,1
                   
Associated company CTC Media
254,7
93,6
164,3
111,8
624,4
199,7
132,0
132,1
463,8
                   
Central operations, eliminations & other businesses
12,5
-0,3
0,6
-5,8
7,0
7,4
-10,7
-6,095
-9,4
                   
Total Viasat Broadcasting
718,5
734,7
552,2
707,1
2.712,4
624,2
744,1
456,9
1.825,2
                   
Other Businesses
20,0
44,3
17,9
31,8
114,0
-13,7
4,7
15,1
6,1
                   
Total operating businesses
738,5
779,0
570,1
738,8
2.826,5
610,5
748,8
472,0
1.831,3
                   
Group central operations & eliminations
-52,4
-91,2
-44,3
-71,9
-259,9
-69,0
-64,4
-49,9
-183,3
                   
TOTAL OPERATIONS
686,1
687,8
525,8
666,9
2.566,6
541,5
684,5
422,1
1.648,1
                   
Non-recurring items
-
-
-
-202,9
-202,9
-
-
-
-
Asset impairment charges Bulgaria
-
-
-
-2.978,8
-2.978,8
-
-
-
-
                   
GROUP TOTAL
686,1
687,8
525,8
-2.514,8
-615,1
541,5
684,5
422,1
1.648,1
                   
 
CONDENSED SALES GROUP
2012
2011
2012
2011
2011
SEGMENTS (MSEK)
Jul-Sep
Jul-Sep
Jan-Sep
Jan-Sep
Jan-Dec
Sales external customers
          
Viasat Broadcasting
2.657
2.756
8.709
8.628
11.932
           
Other Businesses
276
343
992
1.116
1.519
           
Parent company & holding companies
7
6
16
18
22
           
Total
2.940
3.106
9.716
9.762
13.473
           
           
Sales between segments
          
Viasat Broadcasting
3
4
9
9
15
           
Other Businesses
20
30
109
109
155
           
Parent company & holding companies
48
39
148
120
163
           
Total
71
73
266
238
334
 
 
23 (24)
 
 
2011
2011
2011
2011
2011
2012
2012
2012
            
KEY PERFORMANCE INDICATORS
Q1
Q2
Q3
Q4
Full year
Q1
Q2
Q3
            
                             
GROUP
                            
                             
Year on year sales growth (%) *
2,3
3,5
2,9
2,6
2,8
4,3
-0,4
-5,3
            
Year on year sales growth at constant exchange rates (%) **
9,7
8,5
4,1
3,3
6,3
3,9
-0,4
-1,0
            
Year on year change in operating costs (%) *
0,6
3,7
2,5
6,6
3,4
8,4
0,9
-3,5
            
Operating margin (%) *
13,8
16,7
11,5
14,8
14,3
10,5
15,7
9,8
            
                             
Return on capital employed (%)
27
27
28
29
  
30
31
33
            
Return on equity (%)
32
30
28
30
  
31
33
35
            
Equity to assets ratio (%)
47
47
49
39
  
41
40
41
            
Liquid funds (incl unutilised credit facilities), SEK million
4.568
4.682
4.499
5.528
  
5.640
5.655
5.784
            
Net debt (SEK million)
1.863
1.716
1.861
797
  
733
778
634
            
                             
Subscriber data  ('000s)
                            
Group total digital subscribers
1.539
1.526
1.542
1.628
  
1.609
1.608
1.613
            
                             
                             
FREE-TV SCANDINAVIA
                            
                             
Year on year sales growth (%)
4,4
2,7
6,7
0,9
3,4
0,1
-3,1
-11,0
            
Year on year sales growth at constant exchange rates (%) **
10,9
6,7
7,2
1,1
6,2
-0,6
-3,3
-7,2
            
Year on year change in operating costs (%)
-0,2
1,0
9,3
9,0
4,8
13,5
4,0
-3,5
            
Operating margin (%)
25,4
27,8
21,9
22,7
24,5
15,4
22,6
15,4
            
                             
Commercial share of viewing (15-49) (%)
                            
Sweden (TV3, TV6, TV8, TV10/ZTV)
33,8
37,6
38,4
34,0
35,8
34,9
33,4
38,1
            
Norway (TV3, Viasat4) 1
22,0
23,7
20,7
19,2
21,4
18,6
19,5
19,7
            
Denmark (TV3, TV3+, TV3 PULS)
25,4
25,7
23,1
22,2
24,1
24,9
25,0
22,4
            
                             
                             
PAY-TV NORDIC
                            
                             
Year on year sales growth (%)
4,3
6,3
3,8
7,4
5,5
9,6
5,4
-0,1
            
Year on year sales growth at constant exchange rates (%) **
10,3
10,2
4,5
7,3
8,0
8,9
5,2
3,0
            
Year on year change in operating costs (%)
2,7
7,2
1,1
5,0
4,0
11,6
7,2
3,9
            
Operating margin (%)
18,9
19,2
19,8
20,1
19,5
17,4
17,9
16,6
            
                             
Subscriber data  ('000s)
                            
Premium subscribers
1.048
1.048
1.042
1.058
  
1.039
1.031
1.023
            
 - of which, satellite
653
645
640
638
  
625
612
603
            
 - of which, 3rd party networks
394
403
402
421
  
414
419
420
            
Basic satellite subscribers
42
40
39
38
  
42
44
46
            
                             
Premium satellite ARPU (SEK)
4.445
4.594
4.751
4.791
  
4.866
4.926
4.916
            
                             
                             
FREE-TV EMERGING MARKETS
                            
                             
Year on year sales growth (%)
-3,1
2,7
12,0
3,8
3,4
2,8
-6,4
-7,7
            
Year on year sales growth at constant exchange rates (%) **
5,9
7,9
12,1
7,3
8,0
5,2
-3,1
3,2
            
Year on year change in operating costs (%)
-9,7
-2,8
10,1
2,3
-0,3
-6,1
-10,8
-12,5
            
Operating margin (%)
-
12,2
-
10,2
1,5
1,9
16,3
-12,9
            
                             
Commercial share of viewing (%)
                            
Estonia (15-49) 2
37,7
39,3
38,0
38,7
38,4
40,9
39,2
40,7
            
Latvia (15-49) 2
36,7
38,3
34,4
39,0
37,2
36,1
39,9
60,6
            
Lithuania (15-49) 3
42,2
42,1
45,7
46,3
44,0
43,2
41,3
40,2
            
Czech Republic (15-54) 4
32,1
32,0
35,7
37,6
34,7
36,9
39,1
40,4
            
Bulgaria (18-49)
28,3
28,2
28,0
27,7
28,1
29,1
25,7
28,4
            
Hungary (18-49)
7,9
7,5
8,2
8,9
8,1
9,4
9,1
8,2
            
Slovenia (18-49)
10,2
10,2
11,0
10,3
10,4
n/a
n/a
n/a
            
                             
                             
PAY-TV EMERGING MARKETS
                            
                             
Year on year sales growth (%)
-1,5
2,5
5,2
5,5
2,9
16,7
18,7
11,0
            
Year on year sales growth at constant exchange rates (%) **
11,5
18,6
14,3
6,2
12,7
14,3
12,5
13,1
            
Year on year change in operating costs (%)
16,5
10,8
2,0
18,0
11,4
4,5
3,3
-3,5
            
Operating margin (%)
3,4
9,3
5,5
2,8
5,3
13,5
21,1
17,9
            
                             
Subscriber data  ('000s)
                            
Satellite subscribers
438
438
460
532
  
529
534
543
            
Mini-pay subscriptions
58.197
61.105
61.177
64.285
  
66.012
72.816
75.430
            
                             
                             
ASSOCIATED COMPANY CTC MEDIA
                            
Share of viewing
                            
CTC Russia (6-54)
11,2
11,1
9,9
10,6
10,7
11,0
8,9
8,7
            
Domashny Russia (females 25 - 59)
2,8
3,0
3,3
3,3
3,1
3,7
3,8
3,6
            
Peretz (DTV) Russia (25-59)
2,0
2,1
2,0
2,0
2,0
2,6
2,6
2,6
            
Channel 31 Kazakhstan (6-54)
14,8
15,2
17,7
15,7
15,9
14,5
15,6
15,3
            
                             
                             
 
1
The universes for the calculation of commercial share of viewing in Norway has been expanded to include additional channels and theaudience shares for each period have been adjusted accordingly.
2
The universes for the calculation of commercial share of viewing in Estonia and Latvia have been expanded to include additionalchannels and the audience shares for each period have been adjusted accordingly.
3
TV8 Lithuania has been included in the CSOV calculation for the Lithuanian media house from the start of the first quarter of 2012.
4
The universe for the calculation of commercial share of viewing in the Czech Republic has been adjusted to exclude state-ownedCT1 and CT2, as the volume of advertising on these channels is minimal due to changes in Czech broadcasting law. The audience shares for each period have been adjusted accordingly.

* excluding non-recurring items
** the growth is calculated based on prior year's exchange rates


 
 
24 (24)
 
 
SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
MODERN TIMES GROUP MTG AB (publ)
(Registrant)
  
         
Date: 18 October, 2012
By:
/s/ Matthew Hooper  
    Name: Matthew Hooper  
    Title: Head of Corporate Communications and Planning