OREANDA-NEWS. August 04, 2014. CTC Media, Inc. (“CTC Media” or “the Company”) (NASDAQ: CTCM), Russia’s leading independent media company, today announced its unaudited consolidated financial results for the second quarter and six months ended June 30, 2014.

1H 2014 FINANCIAL HIGHLIGHTS

Total revenues up 4% year-on-year in ruble terms to USD370.6 million
Advertising revenues up 7% year-on-year in ruble terms
Combined Russian national inventory was fully sold-out for Q2 and more than 95% contracted for the full year at average prices higher than in 2013
OIBDA up 6% year-on-year in ruble terms to USD 101.4 million, with an OIBDA margin of 27.4%
Fully diluted earnings per share of USD 0.37 (1H 2013: USD 0.38)
Net cash position of USD 190.3 million at the end of the period
Payment of cash dividends of USD 0.35 per share

The Board of Directors currently intends to pay cash dividends of USD 0.70 per share (or up to approximately USD 109 million in the aggregate) in 2014 and has declared a cash dividend of USD 0.175 per share (or approximately USD 27 million in the aggregate) to be paid on or about September 26, 2014 to shareholders of record as of September 5, 2014. Further dividends are anticipated in the remaining quarters of 2014, subject to the Company’s earnings, financial position and cash requirements.

KEY EVENTS AFTER THE REPORTING PERIOD

Cable and satellite CTC Love Channel, targeting the 11-34 year-old audience has reached penetration of approximately 25% in Russia with 40% penetration in St. Petersburg and 30% in Moscow.

The Company launched a joint project with HULU to exclusively supply Russian TV series in the US, including sports drama “Molodezhka,” dramedy “Ranetki,” mystery thriller “The day after” and crime drama “Lavrova’s Method.”

Yuliana Slashcheva, Chief Executive Officer of CTC Media, commented: “The first half of the year has been dominated by a number of major political, economic and social events in our market, but I am pleased to report that we have delivered another period of successful development, and remain on track with our long-term strategy. Our Russian advertising revenues were up 7% in ruble terms during the first 6 months of this year, and we therefore increased our share in the Russian TV advertising market, which is expected have been up 4 to 5%.

“Our Everest advertising sales house fully sold out national inventory in the period and sponsorship revenue growth of 32% in the first half of 2014. Our full-year inventory is now more than 95% committed at higher average prices than in 2013.

“We have also expanded our customer base and attracted new advertisers, despite the less favorable market conditions. The number of new clients grew to 141 in the first half of 2014, compared to 121 for the same period last year and top-25 clients increased their CTC Media inventory demand by 20% during first half of 2014.

“Our US dollar reported financial results for the first six months of 2014 have been negatively impacted by the 11% year-on-year devaluation of ruble. However, our OIBDA margin increased year-on-year by 40 basis points to 27.4% with our OIBDA up 6% due to the initiatives we have taken to control costs. Our revenues increased 4% in ruble terms, while our total costs grew by only 3% and our programming costs were up only 1%. Our net income for the first six months increased 10% in ruble terms and we have continued to convert a high proportion of our earnings into cash flow. We, therefore, have the financial resources available to deliver on our strategic commitments, invest in the development of CTC Media, pay out cash returns to shareholders and create long-term shareholder value.

“We expect the Russian TV advertising market to grow by up to 5% in 2014, and we will aim to outperform this growth with our Russian TV advertising revenues. We expect comparatively less growth in our total revenue due to decrease in sublicensing revenue to Ukraine. We have been actively engaged in the discussions about the timing of second Russian TV digital multiplex, which have resulted in the postponement of the full launch from 2015 to 2019. This will significantly reduce our expenditures over the next five years, and we now expect the inclusion of CTC and Domashny channels in the second multiplex to cost us up to 185 million rubles net of VAT in 2014, compared to the previous forecast of almost 900 million rubles. We will, therefore, see the optimization up to 5 billion rubles of operating costs, with this optimization contributing more than 4 billion rubles to our cash flow, by 2019. Short term, we continue to expect that our full year programming costs will grow at a slower rate than our revenues, and we have upgraded our anticipated OIBDA margin from 28-30% to approximately 30%.

“During the first six months of the year, the audience shares of our core Russian channels were influenced by a shift of focus towards news broadcasts on Ukraine, as well as Sochi Olympic and the FIFA World Cup programming. However, these events increased the overall TV viewership, helping us offset the reduction in audience shares and monetize our advertising inventory to a large extent. Despite this increased competition, nearly every one of our premieres secured a higher than average audience share, including “Last of the Magikyans,” “Two Fathers - Two Sons,” and “Dark World: Equilibrium” on CTC channel; “Svat’yi” on Domashny; and Peretz’s “Moya Rasseya” and “What They Hide.” We have a number of premieres scheduled for the second half of the year, including “Kitchen,” “Molodezhka,” “Voroniny,” “80s,” “Traffic Light” and “Last of the Magikyans,” as well as for several new projects.

“We have also continued to develop new projects. Our newly launched СТС Love channel has already achieved 25% national technical penetration, with 40% penetration in St. Petersburg and 30% in Moscow. We have started selling advertising inventory for this channel, and expect CTC Love to bring in \\$1 million in revenues of its first year.

“Our transmedia business has further expanded our online audiences and extended our leadership in new distribution technologies across multiple delivery platforms. Among the highest were the Q2 launch of Russia’s project based on MARVEL content, which engaged approximately 5 million viewers.

“With episodes of our #Students sketch comedy available free of charge, the first ever Russian television series premiered on social media networks and attracted over 1.3 million views. We are negotiating about partnership terms with the largest Russian video content aggregators including Odnoklassniki, VK, Yandex and Rambler&Co. With some of them we have already reached the agreement and are working on integration.

“We are working on several other breakthrough projects in Russia to provide integrated television and online broadcasting, and we continue to expect to grow our revenues from this digital business lines by 30% in 2014.

“We also made four of our TV series available to Hulu subscribers in the US in Q2. We are evaluating further expansion opportunities for our international distribution, and are currently negotiating with other video platforms and aggregators in the US and Europe.

“The year to date has been a period of significant progress on many fronts and we are focused on maintaining this momentum during the second half.”