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2016-10-20

MTG: Q3 2016 Interim Report January?September

Record Q3 sales
Highest organic growth in 5 years
Continued digital innovation
Maintained outlook for the full year

Q3 2016 Highlights

· Record Q3 sales of SEK 4,126m (3,819) with 7% organic growth
· Operating income before items affecting comparability of SEK 162m
(240) reflecting investments in content, expansion of MTGx, adverse
FX effects and disposal of profitable businesses

· Operating income of SEK 162m (-412) including IAC amounting to SEK
0m (-652)

· Reiteration of full year 2016 outlook for accelerated sales growth
and higher profits

· Total net income of SEK 93m (-384) and total basic earnings per
share of SEK 1.30 (-5.71), including net income from discontinued
operations of SEK 0m (-18)

· Cash flow from continuing operations of SEK 172m (278)
· Net debt of SEK 2,100m (2,134) equivalent to 1.4x trailing 12
month EBITDA before IAC

Financial Overview

+-------------------------+-----+-----+------+------+--------------+
|(SEKm) | Q3| Q3| Nine| Nine|Full year 2015|
| | 2016| 2015|months|months| |
| | | | 2016| 2015| |
+-------------------------+-----+-----+------+------+--------------+
|Continuing operations | | | | | |
+-------------------------+-----+-----+------+------+--------------+
|Net sales |4,126|3,819|12,280|11,674| 16,218|
+-------------------------+-----+-----+------+------+--------------+
|Change in reported net | 8.0%| 4.1%| 5.2%| 2.6%| 3.0%|
|sales | | | | | |
+-------------------------+-----+-----+------+------+--------------+
| Organic growth | 7.4%| 2.6%| 4.3%| 1.0%| 0.7%|
+-------------------------+-----+-----+------+------+--------------+
| | 0.5%| 2.4%| 2.0%| 1.0%| 1.9%|
|Acquisitions/divestments | | | | | |
+-------------------------+-----+-----+------+------+--------------+
| Changes in FX rates | 0.1%|-0.9%| -1.1%| 0.6%| 0.4%|
+-------------------------+-----+-----+------+------+--------------+
| | | | | | |
+-------------------------+-----+-----+------+------+--------------+
|Operating income before | 162| 240| 793| 835| 1,268|
|items affecting | | | | | |
|comparability | | | | | |
+-------------------------+-----+-----+------+------+--------------+
|Margin before items | 3.9%| 6.3%| 6.5%| 7.2%| 7.8%|
|affecting comparability | | | | | |
+-------------------------+-----+-----+------+------+--------------+
|Items affecting | -| -652| -| -575| -512|
|comparability (IAC) | | | | | |
+-------------------------+-----+-----+------+------+--------------+
|Operating income | 162| -412| 793| 260| 756|
+-------------------------+-----+-----+------+------+--------------+
| | | | | | |
+-------------------------+-----+-----+------+------+--------------+
|Net income | 93| -365| 541| 158| 533|
+-------------------------+-----+-----+------+------+--------------+
|Basic earnings per share | 1.30|-5.44| 7.22| 2.15| 7.45|
|(SEK) | | | | | |
+-------------------------+-----+-----+------+------+--------------+
|Cash flow from operations| 172| 278| 556| 762| 1,051|
+-------------------------+-----+-----+------+------+--------------+
| | | | | | |
+-------------------------+-----+-----+------+------+--------------+
|Discontinued operations | | | | | |
+-------------------------+-----+-----+------+------+--------------+
|Net income (1) | -| -18|-1,072| -282| -282|
+-------------------------+-----+-----+------+------+--------------+
| | | | | | |
+-------------------------+-----+-----+------+------+--------------+
|Total operations | | | | | |
+-------------------------+-----+-----+------+------+--------------+
|Net income | 93| -384| -531| -124| 251|
+-------------------------+-----+-----+------+------+--------------+
|Basic earnings per share | 1.30|-5.71| -8.86| -2.08| 3.22|
|(SEK) | | | | | |
+-------------------------+-----+-----+------+------+--------------+
|Net debt |2,100|2,134| 2,100| 2,134| 2,124|
+-------------------------+-----+-----+------+------+--------------+

(1) Comprises MTG's interest in CTC Media, Inc, which has been
divested and gave rise to a non-cash charge due to the
reclassification of accumulated currency translation differences.

Alternative performance measures used in this report are explained and
reconciled on pages 23-26.

President & CEO's comments
Record Q3 sales and 7% organic growth, the highest since Q2 2011,
indicate the benefits and potential of the investments that we have
made in our products over the past year. They are more relevant, more
available, more popular and more valued than ever before.

Our strongest ever content offering boosted viewing levels,
advertising market shares, subscriber pricing and intake, and
accelerated revenues. We are also premiering a number of new original
dramas on Viaplay and have a pipeline of exciting new projects to
come, a number of which are being produced by our own in-house
studios.

Nordic Entertainment revenues were up 11%, which is the highest growth
rate since Q4 2010. The investments in content, including the
Olympics in Sweden, as well as the adverse currency effects, did
impact profitability in the quarter as expected, but are also the
foundation for profitable growth moving forward.

The international entertainment business continued to perform well on
an underlying basis. Organic sales were up 8%, with a margin of 6%.
Both the Czech Republic and Bulgaria delivered double digit growth
and higher profits.

Our MTG Studios profits were up 68% with an 8% margin, and we have
continued to invest in the expansion of MTGx and our esports
businesses in particular.

As a result, we are maintaining our guidance for accelerated sales
growth and higher profits for the full year, which implies a strong
fourth quarter performance.

Our announcement last week of the acquisition of 35% of InnoGames, a
well-established online gaming company, completes the circle for us
by creating a third digital vertical, which fits perfectly with our
other gaming related digital businesses and communities. This is yet
another important step in our strategic transformation from a
traditional broadcaster into a leading digital entertainment company.
We are leading the way by embracing changing consumer trends and
taking the initiative. Linear viewing has continued to fall, but on
demand streaming services like Viaplay and Viafree, as well as
esports and MPNs, are attracting more and more viewers and customers.

Businesses like InnoGames, ESL, Splay, Nice and Zoomin are also all
about us generating IP - about owning content that we can monetise on
our own platforms and through 3rd party distributors around the
world.

Video consumption is shifting online, on mobile and on demand, and we
have a clear and focused strategy to capitalise on this global
change. We therefore continue to actively review our portfolio of
operations to ensure that we concentrate our resources on those
products and businesses that offer the greatest potential for the
future. Financially, we are in good shape with considerable operating
leverage as a result of the cost transformation that we have made.

Jørgen Madsen Lindemann
President & Chief Executive Officer

"We are on track with our strategic transformation and leading the way
in capitalising on changes in consumer behaviour. We are investing in
the products and businesses that will drive future growth and
profits."

Financial calendar
MTG's financial results for the fourth quarter and full year 2016 will
be published on 2 February 2017.

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 5664 2793
UK: +44 (0) 20 3043 2025
US: +1 719 325 4746

The access pin code for the call is 3363971. To listen to the
conference call online and for further information, please visit
www.mtg.com.

Any questions?
mtg.com
facebook.com/MTGAB
@mtgab
press@mtg.com (or Tobias Gyhlenius +46 73 699 27 09)
investors@mtg.com (or Stefan Lycke +46 73 699 27 14)

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'). This information has been published in
accordance with the EU Market Abuse Regulation and/or the Securities
Markets Act or the Financial Instruments Trading Act. The information
was submitted for publication, through the agency of the contact
person set out above, at 07.30 CET on 20 October 2016.

Stockholm 20 October 2016

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

-----------------------------------------------------------
http://news.cision.com/mtg/r/q3-2016-interim-report-january-september,c2...
http://mb.cision.com/Main/56/2104809/577471.pdf

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