Q1 2017 Interim report January-March

Record sales & profits up

Q1 2017 Highlights

  • Record Q1 sales of SEK 4,228m (3,826) with 8% organic growth
  • Operating income up 15% to SEK 183m (159)
  • Net income of SEK 118m (50) and total basic earnings per share of SEK 1.44 (0.55)
  • Cash flow from continuing operations of SEK 187m (75)
  • Net debt of SEK 2,439m (2,688) equivalent to 1.5x trailing 12 month EBITDA before IAC

Financial Overview

(SEKm) Q1 2017 Q1 2016 Full year 2016
Continuing operations
Net sales 4,228 3,826 17,299
Change in reported net sales 10.5% 3.4% 6.7%
   Organic growth 7.9% 3.3% 5.4%
   Acquisitions/divestments 0.4% 1.8% 1.2%
   Changes in FX rates 2.2% -1.7% 0.1%
Operating income 183 159 1,347
Operating margin 4.3% 4.2% 7.8%
Items affecting comparability (IAC) - - -
Net income 118 119 963
Basic earnings per share (SEK) 1.44 1.59 12.88
Cash flow from operations 187 75 940
Discontinued operations
Net income [1] - -70 -1,072
Total operations
Net income 118 50 -109
Basic earnings per share (SEK) 1.44 0.55 -3.19
Net debt 2,439 2,688 2,186

[1] Comprises MTG’s interest in CTC Media, Inc, which was divested in 2016 and gave rise to a non-cash charge due to the reclassification of accumulated currency translation differences.

President & CEO’s comments

High organic growth & higher profits
Sales were up 8% on an organic basis to new record Q1 levels. This was the third consecutive quarter with organic sales growth of more than 5%, which demonstrates that we have more relevant products available to more customers than ever before.

Operating profits were up 15% and driven by higher profits for both the Nordic and International entertainment businesses. This reflected both the sales growth and ongoing positive impact of the cost transformation programme launched in 2015, and more than offset the higher investments in MTGx and esports in particular.


Accelerated transformation

The actions that we have taken to shape our Nordic business for the future reflect the changes in how and when consumers want to be entertained. Our investments in both our linear and streamed entertainment products in the Nordics have driven 11% organic sales growth and delivered 22% EBIT growth. Viaplay had another fantastic quarter and Viafree is rapidly expanding its content offering.

In addition, the portfolio realignment that is a key element of our strategic transformation has accelerated in recent quarters. We have announced the sale of our shareholdings in the Czech and the Baltic operations. The proceeds from these disposals will be used to invest in the development of our Nordic entertainment products and the MTGx businesses, and to increase our ownership in online games developer InnoGames to 51%.


The gaming industry has been transformed by high broadband speeds, the broad availability of connected mobile devices, and the emergence of professional competitive gaming – esports. The evolution of gaming is still in its early stages and we are committed to providing gamers and fans with world-class entertainment experiences such as the recent Intel® Extreme Masters in Katowice, which attracted 173,000 visitors and over 46 million unique online viewers, and by now closing partnerships deals with Facebook, Twitter and others to make esports available to billions of users.


Prioritising opportunities

The steps that we have taken to capitalise on the consumer trends in digital entertainment and become a relevant player for the future, present a number of opportunities, which is why we are more focused than ever on capital allocation. We have leading positions in the Nordic streaming market and are stepping up our investments in original TV drama series. We are the global leader in esports and now have a great first investment in the online gaming market. We are also part of creating the World Boxing Super Series as a new global platform for the sport. All of these initiatives are about generating sustainable value for all of our stakeholders. These are exciting times at MTG as we continue to shape the future of entertainment.

Jørgen Madsen Lindemann
President & Chief Executive Officer

“Our operating profit was up 15% in Q1 due to a combination of organic growth and cost transformation. These are exciting times at MTG with many opportunities, which is why we are more focused than ever on capital allocation.”

2017 Annual General Meeting
The 2017 Annual General Meeting will be held on Tuesday 9 May 2017 in Stockholm. The Board of Directors will propose the payment of an annual ordinary cash dividend of SEK 12.00 (11.50) per share to the Annual General Meeting. The total proposed dividend payment would therefore amount to approximately SEK 801m (767), based on the maximum potential number of outstanding ordinary shares. The Board of Directors will propose that the remainder of the Group’s retained earnings for the year ended 31 December 2016 be carried forward into the accounts for 2017. The proposal is in line with the dividend policy to distribute a minimum of 30 per cent of each year’s recurring net profit to shareholders in the form of an annual ordinary cash dividend.

The notices to the Meeting and related materials can be found at mtg.com.

2017 Financial calendar

Annual General Meeting      
9 May
Q2 2017 interim report 18 July
Q3 2017 interim report 19 October

Conference call
The company will host a conference call today at 09.00 Stockholm local time, 08.00 London local time and 03.00 New York local time. To participate in the conference call, please dial:

Sweden:           
+46 (0) 8 5065 3942
UK: +44 (0) 330 336 9411
US: +1 719 457 2086

The access pin code for the call is 2725910. To listen to the conference call online and for further information, please visit www.mtg.com .

Questions?
press@mtg.com (or Tobias Gyhlénius, Head of Public Relations; +46 73 699 27 09)
investors@mtg.com (or Stefan Lycke; Head of Investor Relations; +46 73 699 27 14)
mtg.com
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MTG (Modern Times Group MTG AB (publ.)) is a leading international digital entertainment group and we are shaping the future of entertainment by connecting consumers with the content that they love in as many ways as possible. Our brands span TV, radio and next generation entertainment experiences in esports, digital video networks and online gaming. Born in Sweden, our shares are listed on Nasdaq Stockholm (‘MTGA’ and ‘MTGB’). This information is information that MTG (Modern Times Group MTG AB (publ.)) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 CET on 21 April, 2017.




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About Us

MTG (Modern Times Group MTG AB (publ.)) is a leading international digital entertainment group and we are shaping the future of entertainment by connecting consumers with the content that they love in as many ways as possible. Our popular entertainment brands span Content Production, TV, Radio and eSports, and are available around the world. Born in Sweden, our shares are listed on Nasdaq Stockholm (‘MTGA’ and ‘MTGB’).

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