Interim report January-March

9% organic growth & profits up 73% - MTG to spin-off Nordic Entertainment Group

Q1 2018 highlights

• Record Q1 sales of SEK 4,674m (3,704) with 9% organic growth
• Operating income before IAC of SEK 237m (137) including transaction costs of SEK 12m (6)
• Total operating income of SEK 220m (137) including SEK -17m (0) of items affecting comparability
• Total net income of SEK 142m (118) including net income from discontinued operations of SEK -4m (35) and total basic earnings per share of SEK 1.62 (1.44)
• Net debt of SEK 2,334m (2,439) equivalent to 1.4x trailing EBITDA before IAC

Financial overview

[1]Discontinued operations comprise MTG’s businesses in Tanzania in the first quarter of 2018 and also MTG’s businesses in the Czech Republic and the Baltics in 2017. The full year 2017 results include a capital gain of SEK 593m from the divestment of the Baltic operations.
Alternative performance measures used in this report are explained and reconciled on pages 21-25.

President & CEO’s comments

Another quarter of profitable growth
Q1 has been a busy and exciting quarter at MTG. We have delivered both top and bottom line growth while also preparing to take the final step in our transformation by splitting MTG into two separate listed companies.

Q1 was the seventh consecutive quarter of more than 5% organic sales growth. This growth is a result of the investments that we have made in our content portfolio and digital products. Our digital sales were up 88% in Q1 and accounted for 35% of total sales. Furthermore, we have translated this growth into higher profits with EBIT up 73%.

Nordic Entertainment delivered another quarter of higher sales and profits, even though we had tough comps from last year and the Winter Olympics on rival channels and services. Viaplay continues to be the main driver of the growth but almost all of our markets and products grew their sales.

MTGx sales were up 226% on a reported basis and 27% on an organic basis. We turned the reported EBITDA loss a year ago into a profit of SEK 45m with the help of the contribution from InnoGames. All three digital verticals all grew with ESL generating particularly high growth from owned and operated events.

One becomes two
We are today the number one integrated entertainment provider in the Nordics, with the best and broadest content offering, and world-class streaming services in Viaplay and Viafree. We have also firmly established MTGx as one of the most exciting players in the digital entertainment space. We are the world’s leading esports company and we have proven concepts in the online gaming space - two industries that are global by nature.

The Nordic Entertainment and MTGx businesses and teams are ready to stand and succeed separately, which is why we are now taking the next step by preparing to split MTG into two separate listed companies. Please read all about it at www.mtg.com/mtg-nordic-entertainment-split/. We are big believers that this will accelerate the development of both companies and create additional shareholder value through a sharpened strategic focus, more flexibility, and faster decision making. It will also provide investors with two distinct and attractive but inherently different investment cases. We intend to propose the distribution and listing of the Nordic Entertainment Group at an Extraordinary General Meeting in the second half of this year and provide regular updates throughout the process

“9% organic growth and 73% profit growth clearly show the potential of this Group. Now we are preparing to split MTG in two in order to accelerate the speed of development and drive shareholder value. We have created two unique businesses that are leaders in their fields and very well positioned for the future."

Jørgen Madsen Lindemann
President & Chief Executive Officer
  

2018 Annual General Meeting
The 2018 Annual General Meeting will be held on 22 May 2018 in Stockholm. The Board of Directors will propose the payment of an annual ordinary cash dividend of SEK 12.50 (12.00) per share to the Annual General Meeting. The total proposed dividend payment would therefore amount to approximately SEK 837m (801), 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 2017 be carried forward into the accounts for 2018. 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 www.mtg.com.

Financial calendar

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)

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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:

The access pin code for the call is 3219383. To listen to the conference call online and for further information, please visit www.mtg.com.
  

Modern Times Group MTG AB (Publ.) - Reg no: 556309-9158 – Phone +46 562 000 50 – mtg.com

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 content 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 23 April, 2018.

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