Q4 2013 Full year report January – December Stronger

Stronger Products. Higher Growth Q4 2013 Highlights · Net sales up 14% at constant FX & up 6% on an organic basis · All five business segments reported sales growth at constant FX and were profitable · Audience share gains in almost all markets · Pay-TV net subscriber growth in Nordic and Emerging Markets on a sequential basis · Operating income (EBIT) of SEK 457m (514), excl. associated company income of SEK 108m (-38) and non-cash asset impairment charge related to Raduga joint venture of SEK 147m (-) · Net income of SEK 261m (378) and basic earnings per share of SEK 3.68 (5.25) · Cash flow from operations of SEK 392m (583) and net debt position of SEK 772m (1) · Board of Directors to propose a dividend for 2013 of SEK 10.50 (10.00) per share, representing a record high pay-out ratio of 56% (44) excl. non-recurring items Financial Overview +-------------------------------+-------+-------+-------+-------+ |(SEKm) | 2013| 2012| 2013| 2012| | |Oct-Dec|Oct-Dec|Jan-Dec|Jan-Dec| +-------------------------------+-------+-------+-------+-------+ |Net sales | 4,083| 3,620| 14,129| 13,336| +-------------------------------+-------+-------+-------+-------+ |Growth at constant FX | 14%| 0%| 8%| 1%| +-------------------------------+-------+-------+-------+-------+ |Organic growth at constant FX | 6%| 2%| 5%| 2%| +-------------------------------+-------+-------+-------+-------+ |EBIT before associated company | 457| 514| 1,301| 1,695| |income and non-recurring items | | | | | +-------------------------------+-------+-------+-------+-------+ |Margin before associated | 11.2%| 14.2%| 9.2%| 12.7%| |company income and non | | | | | |-recurring items | | | | | +-------------------------------+-------+-------+-------+-------+ |Associated company income * | 108| -38| 584| 429| +-------------------------------+-------+-------+-------+-------+ |EBIT before non-recurring items| 564| 476| 1,885| 2,124| +-------------------------------+-------+-------+-------+-------+ |Non-recurring items | -147| -| -147| -| +-------------------------------+-------+-------+-------+-------+ |Total EBIT | 417| 476| 1,738| 2,124| +-------------------------------+-------+-------+-------+-------+ |Net Income | 261| 378| 1,168| 1,594| +-------------------------------+-------+-------+-------+-------+ |Basic Earnings per Share (SEK) | 3.68| 5.25| 16.39| 22.93| +-------------------------------+-------+-------+-------+-------+ |Cash flow from operations | 392| 583| 1,340| 1,655| +-------------------------------+-------+-------+-------+-------+ * Including MTG’s USD 20.5m Q4 2012 participation in USD 82.5m of non-recurring charges incurred by associated company CTC Media (‘CTC Media’) in Q3 2012, and USD 4.6m Q1 2012 participation in USD 89.5m of non-recurring charges incurred by CTC Media in Q4 2011. President & CEO comments A year of investments 2013 was a year of investment in our three key strategic growth areas – content, digital and geographical expansion – and these investments are paying off in accelerated growth as our products become more relevant and more broadly available than ever before. We are totally focused on our customers and the creation of engaging and exciting entertainment experiences, which is why we have acquired even more premium sports and movie rights, further expanded our agreements with leading content producers and distributors, and launched so many more channels and services on so many different networks and platforms. It is also why we have moved further up the value chain by ourselves becoming the number one content production house in the Nordic region and one of the world’s leading content distribution companies. We have grown our audience shares and subscriber bases across almost all of our markets, and captured substantial market share gains during the year. Our digital expansion is also further accelerating as MTGx develops ahead of plan to drive on demand video consumption across our markets and rapidly grow our online advertising and subscription revenues. And we ended the year by entering two entirely new markets for us - Tanzania and Turkey, both of which offer significant growth potential for the future. All of these investments are being made precisely to shape the future of entertainment by creating the entertainment group of the future. Delivering growth We delivered the fifth consecutive quarter of accelerating sales growth with 14% constant FX growth in Q4, and 8% growth for the full year. We achieved record sales growth levels for our emerging market free-TV and pay-TV operations in 2013 and now face tough comps in what continue to be soft advertising markets. Our Scandinavian free-TV operations have returned to growth, and our Nordic pay -TV business has continued to benefit from strong overall subscriber growth and rising prices. We are investing further in 2014 and always looking for opportunities to accelerate the momentum in the business. Our ground breaking exclusive coverage of the Winter Olympics is just one example of such initiatives, and will boost revenues for both our free-TV and pay-TV businesses, generate long term value for the business but also create short term earnings pressure. The competitive environment is more intense than ever but the investments that we are making position us well to capitalise on the ongoing shifts in consumer behavior and revenue models. Enabling continued cash returns We have continued to convert a high proportion of our earnings into cash flow and also benefited from the dividend stream from CTC Media. This has enabled us to invest in organic and acquisition led growth and to return money to shareholders. We ended the year with a net debt to trailing twelve month EBITDA ratio of just 0.5 times, and have also refinanced at attractive rates to ensure that we continue to have the flexibility and firepower to invest in the future growth of the business and deliver cash shareholder returns. The Board is therefore proposing a dividend of SEK 10.50 for 2013, which represents a record high pay-out ratio of 56%. Jørgen Madsen Lindemann President & Chief Executive Officer “Stronger Products. Higher Growth. That is what our business is all about – creating entertainment experiences that people love and want more and more of. Our sales growth has accelerated for the 5th straight quarter and we are investing in this momentum with a clear focus on Content, Digital and Geographical Expansion!” * * * Conference Call The company will host a conference call today at 15.00 Stockholm local time, 14.00 London local time and 09.00 New York local time. To participate in the conference call, please dial: Sweden:                +46(0)8 5065 3936 UK:                       +44(0)20 3427 1908 US:                       +1212 444 0896 The access pin code for the call is 3712067. To listen to the conference call online and for further information please visit www.mtg.se * * * For further information, please visit www.mtg.se, or contact: Jørgen Madsen Lindemann, President & Chief Executive Officer Mathias Hermansson, Chief Financial Officer Tel:                      +46 (0) 8 562 000 50 Investors & Analysts Tel:                      +46 (0) 73 699 2714 Email:                 investor.relations@mtg.se Journalists Tel:                      +46 (0) 73 699 2709 Email:                 press@mtg.se  London, 12 February 2014 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 Modern Times Group (MTG) is an international entertainment group with operations that span four continents and include free-TV, pay-TV, radio and content production businesses. MTG’s Viasat Broadcasting operates free-TV and pay-TV channels, which are available on Viasat’s own satellite platforms and third party networks, and also distributes TV content over the internet. MTG is also the largest shareholder in CTC Media, which is Russia’s leading independent television broadcaster. Modern Times Group is a growth company and generated net sales of SEK 14.1 billion in 2013. MTG’s Class A and B shares are listed on Nasdaq OMX Stockholm’s Large Cap index under the symbols ‘MTGA’ and ‘MTGB’. The information in this Full Year report is that which Modern Times Group MTG AB is required to disclose under the Securities Market Act and/or the Financial Instruments Trading Act. It was released for publication at 13.00 CET on 12 February 2014.