Q3 2015 Interim report January - September

SWEDEN


Record Q3 sales & accelerating transformation

Q3 2015 Highlights

  · Sales of SEK 3,819m (3,669) and operating income of SEK 240m (221) including
M&A transaction costs and adverse currency effects, but before non-recurring
items
  · Total non-recurring items of SEK -652m (0), comprising SEK -700m of net
restructuring charges and net SEK 48m related to the revaluations of Paprika &
Splay
  · Net income from continuing operations of SEK -365m (163) and basic earnings
per share of SEK     -5.44 (2.67)
  · Net income from discontinued operations (CTC Media) of SEK -18m (73)
  · Total net income of SEK -384m (236) and total basic earnings per share of
SEK -5.71 (3.76)
  · Cash flow from operations of SEK 278m (238)
  · Net debt of SEK 2,134m (928) equivalent to 1.4x trailing 12 month recurring
EBITDA
  · Strategic investments in three digital businesses and extension of key
international sports rights

Financial Overview

+--------------------------+-------+-------+-------+-------+-------+
|(SEKm)                    |   2015|   2014|   2015|   2014|   2014|
|                          |Jul-Sep|Jul-Sep|Jan-Sep|Jan-Sep|Jan-Dec|
+--------------------------+-------+-------+-------+-------+-------+
|Net sales                 |  3,819|  3,669| 11,674| 11,375| 15,746|
+--------------------------+-------+-------+-------+-------+-------+
|Growth at constant FX     |     5%|    12%|     2%|    13%|    11%|
+--------------------------+-------+-------+-------+-------+-------+
|Organic growth at constant|     3%|     5%|     1%|     4%|     4%|
|FX                        |       |       |       |       |       |
+--------------------------+-------+-------+-------+-------+-------+
|EBIT before non-recurring |    240|    221|    835|    812|  1,290|
|items                     |       |       |       |       |       |
+--------------------------+-------+-------+-------+-------+-------+
|Margin before non         |   6.3%|   6.0%|   7.1%|   7.1%|   8.2%|
|-recurring items          |       |       |       |       |       |
+--------------------------+-------+-------+-------+-------+-------+
|Non-recurring items (NRI)*|   -652|      0|   -575|   -155|   -155|
+--------------------------+-------+-------+-------+-------+-------+
|Total EBIT                |   -412|    221|    260|    658|  1,135|
+--------------------------+-------+-------+-------+-------+-------+
|Net income, continuing    |   -365|    163|    158|    436|    816|
|operations                |       |       |       |       |       |
+--------------------------+-------+-------+-------+-------+-------+
|Basic earnings per share, |  -5.44|   2.67|   2.15|   6.41|  11.75|
|continuing operations     |       |       |       |       |       |
|(SEK)                     |       |       |       |       |       |
+--------------------------+-------+-------+-------+-------+-------+
|Net income, discontinued  |    -18|     73|   -282|    266|    357|
|operations **             |       |       |       |       |       |
+--------------------------+-------+-------+-------+-------+-------+
|Total net income          |   -384|    236|   -124|    702|  1,172|
+--------------------------+-------+-------+-------+-------+-------+
|Total basic earnings per  |  -5.71|   3.76|  -2.08|  10.40|  17.10|
|share (SEK)               |       |       |       |       |       |
+--------------------------+-------+-------+-------+-------+-------+
|Net debt                  |  2,134|    928|  2,134|    928|    362|
+--------------------------+-------+-------+-------+-------+-------+
|Cash flow from operations,|    278|    238|    762|    784|  1,040|
|continuing operations     |       |       |       |       |       |
+--------------------------+-------+-------+-------+-------+-------+

* Comprising the SEK 77m capital gain from the sale of Swedish cable TV company
Sappa in Q1 2015; and the SEK -700m of net restructuring charges and net SEK 48m
related to revaluations of Paprika & Splay in Q3 2015. Comprising in Q2 2014 the
SEK -159m non-cash net impairment charge related to MTG’s interest in the
Ukrainian satellite pay-TV platform; the SEK -70m of organisational
restructuring charges and other costs; and the SEK 76m capital gain from the
sale of Zitius in Sweden.
** CTC Media has been reclassified from an ‘equity participation’ to a
‘discontinued operation’ as MTG’s shareholding in CTC Media is expected to be
sold. Comparable figures for prior periods of 2014 and 2015 have been provided
accordingly on www.mtg.com.

President & CEO’s comments

Profitable Growth
We are reporting record Q3 sales on the back of higher viewing levels, healthy
customer intake and rising market shares, as well as the addition of a number of
exciting new digital businesses. Profits were also up despite the substantial
currency headwinds that we continue to face, and we delivered another quarter of
profitable growth for the Group.

Accelerating Transformation
Our strategic transformation has now accelerated. We are implementing a large
scale restructuring programme to bring our local operating businesses closer to
the customer, and over time yield SEK 600 million of savings that we will mostly
reinvest. We have made significant steps to resolve the position in Russia
before the year-end deadline. CTC Media has signed a definitive agreement to
sell 75% of its operations, and we are also working with our advisers on
solutions for our Russian pay-TV channels business. We have then invested SEK
1.2 billion in three market leading digital businesses in high growth online
video categories, and we have also invested to secure key sports rights and
studio deals for years to come. This will enable us to develop our brands and
products to deliver even more premium content across even more screens and
platforms.

Positive Momentum
The performance of our Nordic businesses during this period of transition
underlines the quality and popularity of our entertainment products, as our
Scandinavian media houses delivered higher audience shares in each market for
the first time in two years, and Viaplay continued to drive the growth in our
subscriber bases. This has been complemented by very positive momentum in our
CEE markets, and by the 42% organic growth in group-wide digital revenues.

Sharpening Focus
We will continue to execute on our transformation plan and review the portfolio,
in order to ensure that we sharpen the focus on the products and businesses that
offer the greatest potential for MTG. We are a more efficient and effective
group today, and relevance and execution remain at the centre of all that we do.

Jørgen Madsen Lindemann
President & Chief Executive Officer

“We are shaping the future of entertainment by creating and growing communities
around brands, content and services that consumers love.”


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 5033 6539
UK:      +44 (0) 20 3427 1901
US:      +1 646 254 3361

The access pin code for the call is 9248214. To listen to the conference call
online and for further information, please visit www.mtg.com.

* * *

Any questions?
www.mtg.com
Facebook: facebook.com/MTGAB
Twitter: @mtgab
press@mtg.com (or Per Lorentz +46 73 699 27 09)
investors@mtg.com (or Matthew Hooper +44 7768 440 414)

Stockholm, 22 October 2015

Jørgen Madsen Lindemann, President & Chief Executive Officer

Modern Times Group MTG AB
Skeppsbron 18
P.O. Box 2094
SE-103 13 Stockholm, Sweden
Registration number: 556309-9158

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 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 07:30 CET on 22 October 2015.

Attachments

10222130.pdf