Recapitalisation completed and full focus on operational improvements
Fourth quarter highlights
- 3% Group organic sales growth with reported net sales of SEK 4,903m (4,670)
- Operating income before associated company income (ACI) and items affecting comparability (IAC) of SEK -230m (-284)
- IAC of SEK -2,648m (-86) mainly comprised sports content write-downs and provisions
- Total reported operating income of SEK -2,863m (-294) including ACI of SEK 15m (76)
- Net income of SEK -2,881m (-250) and EPS of SEK -36.83 (-3.19)
- Comprehensive recapitalisation programme completed on 9 February 2024
Financial summary
Full | Full | |||
Q4 | Q4 | year | year | |
(SEKm) | 2023 | 2022 | 2023 | 2022 |
Net sales | 4,903 | 4,670 | 18,567 | 15,691 |
Organic sales growth | 3.4% | 23.9% | 13.2% | 19.7% |
Reported sales growth | 5.0% | 31.4% | 18.3% | 23.9% |
Operating income before ACI and IAC | -230 | -284 | -1,115 | -372 |
Associated company income (ACI) | 15 | 76 | 63 | 275 |
Items affecting comparability (IAC)1) | -2,648 | -86 | -9,224 | 510 |
Operating income | -2,863 | -294 | -10,276 | 413 |
Net income for the period | -2,881 | -250 | -9,747 | 323 |
Basic earnings per share (SEK) | -36.83 | -3.19 | -124.61 | 4.13 |
1) Please see page 22 regarding items affecting comparability.
Alternative performance measures used in this report are explained and reconciled on pages 20-25.
A word from our President & CEO
Our Q4 results were in line with the trading update that we provided in January, and we have reiterated our guidance for 2024. The recently completed recapitalisation is part of the retransformation of Viaplay Group, which is work in progress and will take time. The recapitalisation was a complex process, involving concessions and commitments by many stakeholders, to whom we are grateful for their support. Now, we can fully focus on the many operational improvements that need to be made to the business.
We made further progress in Q4 to reset the business. We agreed the sale of our UK operation, are withdrawing from the Baltics and North America, and will exit Poland by the middle of next year. We have written off and provided for our content costs in these markets, which make up the majority of the IAC this quarter, but we are left with the cash costs for the content that we cannot sell back or sublicence. The exiting of these non-core markets enables us to focus on our core Nordic operations, in markets where we have delivered profitable growth with double digit margins and strong cash conversion in the past. And that, combined with our scale and soon to be profitable business in the Netherlands, is what we are aiming to do again.
In order to achieve these goals, we have reset our content strategy, moving away from large numbers of high-cost original dramas towards more popular and profitable local formats and Hollywood content. We have therefore sold rights to a number of our original productions to global media players, and also sold or closed our production businesses. We are also reducing our sports rights commitments, including sublicensing selected rights, so that we can focus on the rights that really move the needle for us.
We have adjusted our prices to reflect our unique entertainment value proposition, both for our customers and our partners. Viaplay and our TV channels provide fantastic value for money when compared to going to a live sports event, concert, or the movies. We want to grow both our subscriber base and our ARPU, which requires a very disciplined approach to subscriber acquisition costs, pricing, churn management and the lifetime value of our customers. We have ended any expensive and value-destructive hunt for customers and revenue, which was not creating long-term value.
We have become leaner after the measures that we have taken over the last nine months. Moving forward in the coming years, we will work to optimise in all areas, in order to open up new revenue streams and increase efficiency levels. We are beginning the journey now with commercially focused goals, clear operational accountability, and the ability to put the right teams in place now that we have secured the refinancing.
Our priority is to deliver relevant and attractive entertainment that engages audiences, generates meaningful return on investment, and creates long-term and sustainable value for all stakeholders.
Our Q4 organic sales growth of 3% reflected continued growth in the total Viaplay sales, with a slight decline in Viaplay's Nordic sales. The Nordic and international subscriber bases were down year on year following the discontinuation of unprofitable marketing campaigns in the summer, while prices were raised in almost all markets. We are also looking at measures to address account sharing, as well as working with industry peers to increase the fight against piracy. We gained advertising market shares with an organic sales decline of 3% in markets that continue to be challenging. Our digital advertising sales are growing, and we are building our digital inventory as quickly as possible, as well as looking at launching HVOD offerings. The 9% organic sales growth in our linear subscription and other sales line was boosted by the sale of scripted content as we shifted to more popular and commercial genres, as well as the sublicensing of selected sports content.
Our increased Nordic operating profits were offset by the losses in the international markets, which has been the pattern for the whole year and is why we are exiting all but one of these markets.
We are addressing the key sales and cost drivers in order to transform our core Nordic, Netherlands and Viaplay Select operations. We aim to be free cash flow positive for these businesses in 2025, before gradually increasing profitability levels to double-digit margins.
I would like to extend my gratitude again to all our stakeholders for their support and dedication throughout this challenging period. Our commitment to restore profitability and drive stakeholder value is unwavering. This will be done by prioritising commercially viable content, right pricing our entertainment offerings, exploring new revenue streams, nurturing strategic partnerships, and maintaining strict cost control in an accountable organisation.
Jørgen Madsen Lindemann
Viaplay Group President and CEO
Shareholder information
2024 Annual General Meeting
The 2024 Annual General Meeting of Viaplay shareholders will be held on Tuesday 14 May 2024 in Stockholm. Shareholders wishing to have matters considered at the meeting should submit their proposals in writing to agm@viaplaygroup.com or to the Company Secretary, Viaplay Group AB, BOX 17104, 104 62 Stockholm, Sweden, at least seven weeks before the meeting in order that such proposals may be included in the notices to the meeting. Further details of when and how to register will be published in advance of the meeting. The Board of Directors will propose to the Annual General Meeting that no annual cash dividend be paid for 2023.
| Financial calendar | |
| Publication of 2023 Annual Financial & Sustainability report Week commencing 25 March 2024 | |
| Publication of Q1 Interim report | 23 April 2024 |
| Annual General Meeting | 14 May 2024 |
| Publication of Q2 Interim report | 18 July 2024 |
| Publication of Q3 Interim report | 22 October 2024 |
Contact
press@viaplaygroup.com or +46 73 699 17 00
investors@viaplaygroup.com or +44 7768 440 414
Notes to editors
This information is information that Viaplay Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 CET on 22 February 2024.
Viaplay Group AB (publ) is the Nordic region's leading entertainment provider. Our Viaplay streaming service is available in every Nordic country, as well as in the Netherlands and Poland, and our Viaplay Select branded content concept has been added to partner platforms around the world. We also operate TV channels across most of our markets, as well as radio stations in Norway and Sweden. Our talented people come to work every day with a shared passion and clear mission to entertain millions of people with our unique offering of locally relevant storytelling, which spans premium live sports, films, series and music. Our purpose is to grow our business profitably and responsibly, and deliver sustainable value for all our stakeholders. Viaplay Group is listed on Nasdaq Stockholm ('VPLAY B').
This interim report contains statements concerning, among other things, Viaplay Group's financial condition and results of operations that are forward-looking in nature. Such statements are not historical facts but, rather, represent Viaplay Group's future expectations. Viaplay Group believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions; however, forward-looking statements involve inherent risks and uncertainties, and a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements. Such important factors include but may not be limited to Viaplay Group's market position; growth in the streaming industry; and the effects of competition and other economic, business, competitive and/or regulatory factors affecting the business of Viaplay Group, its group companies and the streaming industry in general. Forward-looking statements apply only as of the date they were made and, other than as required by applicable law, Viaplay Group undertakes no obligation to update any of them in the light of new information or future events.
