MTG notes announcement by CTC Media & changes accounting for holding

MTG notes the announcement by CTC Media, Inc., the leading Russian independent
media company of which MTG owns 37.9%, that it has received a non-binding offer
for the purchase of a 75% interest in its business operations, and that its
Board of Directors has appointed a Special Committee of independent directors to
review and evaluate the offer. CTC Media’s full press release can be found at
http://www.ctcmedia.ru/press-center/releases. CTC Media’s common stock is traded
on the NASDAQ Global Select Market under the symbol “CTCM”.

MTG has decided to reclassify its interest in CTC Media from an ‘equity
participation’ to a ‘discontinued operation’. This reflects the fact that,
following the change in the Russian mass media law regarding foreign ownership
with effect from 1 January 2016, and CTC Media’s consideration of the above
offer, MTG’s shareholding in CTC Media is now for sale.
With effect from its Q2 results to be published later this month, MTG will
therefore report its income from ‘continuing’ and ‘discontinued’ operations
separately, with dividends received from CTC Media; transaction costs incurred
in relation to a sale of MTG’s stake in CTC Media; and the difference between
the market and book value of MTG’s holding in CTC Media at the end of each
quarter, included in a single ‘discontinued operations’ line below ‘net income
from continuing operations’ in the Group’s income statements. Following the
recent sharp fall in the CTC Media share price, the market value of MTG’s
holding in CTC Media was below the book value of the holding on MTG’s balance
sheet as at the end of the second quarter on 30 June, and this will be reflected
in the ‘discontinued operations’ line in the Group’s Q2 results. The results for
CTC Media will not be included in any other line items in the Group’s income
statements for current or comparable prior periods, or in the Group’s segmental
reporting. The Group’s cash flow statements and balance sheets will also include
separate lines for the discontinued operations. Prior periods for 2015 and 2014
will be restated accordingly.

A file will be made available for download from mtg.com before MTG’s Q2 results
announcement, in order to provide restated financial statements for prior
quarterly reporting periods in 2014 and 2015 according to the above revised
accounting treatment.

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MTG (Modern Times Group MTG AB (publ.)) is an international entertainment group.
Our operations span six continents and include TV channels and platforms, online
services, content production businesses and radio stations. We are also the
largest shareholder in CTC Media, which is Russia’s leading independent media
company. Our shares are listed on Nasdaq OMX Stockholm (‘MTGA’ and ‘MTGB’).

The information in this announcement is that which MTG is required to disclose
according to the Securities Market Act and/or the Financial Instruments Trading
Act, and was released at 08.30 CET on 6 July 2015.