Q3 2019 Interim report January-September

Q3 2019 highlights

• Groundbreaking announcements in Q3 and the beginning of Q4 include new operating model, Viaplay expansion into Iceland, acquisition of major sports rights, and signing of long-awaited agreement to combine Viasat Consumer and Canal Digital
• Sales of SEK 3,799m (3,439) with 10% organic growth
• Viaplay subscribers up 37k q-o-q to 1,459k and up 25% y-o-y
• Operating income for combined business segments of SEK 367m (355)
• Total operating income of SEK 302m (303) including IAC of SEK 0m (3) and SEK 13m of costs related to proposed Viasat Consumer and Canal Digital combination
• Net income of SEK 233m (270) and basic earnings per share of SEK 3.46 (4.04)
• Total net debt of SEK 4,756m, including net lease liabilities of SEK 617m, equivalent to 2.5x 12 month trailing EBITDA before IAC[1]

[1] 2018 figures included in the calculation of trailing 12 months EBITDA before IAC have been adjusted for the estimated effect as if IFRS 16 had been applied for the full period.
[2] See page 17 for a reconciliation of business segment operating income. Alternative performance measures used in this report are explained and reconciled on pages 20-23.

President & CEO’s comments

“Q3 was a historically important quarter for NENT Group. We have not only delivered on our profitable growth commitment, but Viaplay has continued to add subscribers at a healthy rate and are now up 25% in the twelve months. We have shifted to a functional operating model that will make us faster and more efficient, and we will launch Viaplay in Iceland in H1 2020. Furthermore, we yesterday announced an agreement to create a 50/50 joint venture between Viasat Consumer and Canal Digital, which is expected to yield substantial synergies and drive shareholder value.”

The positive momentum seen in H1 continued into Q3 with higher sales and profits for both operating segments. Group sales were up 10% on an organic basis and operating income for our combined business segments was up 3% despite US dollar transactional headwinds of SEK 20m. Our central operation costs were up following initial costs related to the Viasat Consumer / Canal Digital combination.

Our Broadcasting & Streaming operations delivered their 12th consecutive quarter of profitable growth, which demonstrates the positive effect of our investments into the streaming market. Subscription & Other sales, which accounted for 63% of Group sales, were up 11%. We added 37k Viaplay subscribers, compared to a loss of 13k last year, and the base has grown over 25% in the last twelve months to 1,459k. The expansion to Iceland in the first half of next year is in line with our strategy, and reflects the strength of our content, the attraction of such a highly connected society, and the fact that our technology is built to be able to scale efficiently and effectively.

Advertising sales, which accounted for 22% of Group sales, were up 2% as higher prices offset the continuing fall in linear TV viewing levels. We are now entering the 2020 annual advertising contract negotiations and, while it's far too early to indicate the outcome, it is clear that demand for TV advertising remains high even if there is a shortage of inventory supply. We do therefore expect prices to continue to rise.

NENT Studios, which accounted for 15% of Group sales, generated 32% growth, primarily on the back of exceptional performance in the scripted drama but also from double digit growth in non-scripted productions. Operating profits were also up despite the investments we have made into our US based operations.

We also announced a new organisation and operating model in September, which we are now implementing. We are moving from a country based model to a structure based on focused areas of responsibility working across markets, products and brands. The new structure will help us to take decisions faster, scale flexibly, and generate significant savings to enable our continuing investment into content and technology.

We have also acquired the exclusive rights to the Ice Hockey World Championship from 2024 to 2028. We already show the tournament in Sweden and will now expand the coverage to the entire Nordic region as part of our unrivalled winter sports offering.

Yesterday’s announcement of the combination of our satellite and broadband-TV business with Canal Digital is a very important milestone for us. I am convinced that this combination will not only create significant shareholder value, but also allow for continued investments into the business and its subscriber offering. This combination is perfectly in line with our strategy to prioritise the substantial opportunity that we see in the streaming market.

Anders Jensen
President & CEO

Shareholder information

2020 Annual General Meeting
The 2020 Annual General Meeting will be held on Tuesday 19 May 2020 in Stockholm. Shareholders wishing to have matters considered at the meeting should submit their proposals in writing to agm@nentgroup.com or to the Company Secretary, Nordic Entertainment Group AB, Box 17104, 104 62 Stockholm, Sweden, at least seven weeks before the meeting in order for that such proposals may be included in the notice to the meeting. Further details of when and how to register will be published in advance of the meeting.

In accordance with the resolution of the 2019 Annual General Meeting, the Chairman of the Board has convened a Nomination Committee to prepare proposals for the 2020 Annual General Meeting. The Nomination Committee consists of Joachim Spetz, appointed by Swedbank Robur Funds; Erik Durhan, appointed by Nordea Funds; and Oskar Börjesson, appointed by Livförsäkringsbolaget Skandia. The three shareholders which have appointed representatives to the Nomination Committee hold approximately 20 percent of the total voting rights in NENT. The members of the Nomination Committee appointed Erik Durhan as Committee Chairman at their first meeting.

Please see https://www.nentgroup.com/about/corporate-governance/nomination-committee for information about the work of the Nomination Committee.

Financial calendar
Q4 and full year 2019 report   4 February 2020

Questions?
press@nentgroup.com (or Nicholas Smith, Acting Head of Public Relations; +46 73 699 26 95)
investors@nentgroup.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 9657189.To listen to the conference call online and for further information, please visit www.nentgroup.com

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NOTES TO EDITORS

Nordic Entertainment Group AB (publ) (NENT Group) is the Nordic region’s leading entertainment provider. We entertain millions of people every day with our streaming services, TV channels and radio stations, and our production companies create content that is experienced around the world. We make life more entertaining by telling stories, touching lives and expanding worlds – from live sports, movies and series to music and original shows. Headquartered in Stockholm, NENT Group is listed on Nasdaq Stockholm (‘NENT A’ and ‘NENT B’). This information is information that Nordic Entertainment Group AB (publ) (NENT Group) 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 24 October 2019.