Q1 - Record sales with double digit growth Q1 2014

Q1 2014 Highlights · Net sales up 13% at constant FX & up 5% on an organic basis · Winter Olympics coverage in Sweden drives accelerated organic growth in Free -TV Scandinavia and Pay-TV Nordic revenues · Double digit organic growth in Pay-TV Emerging markets & content production businesses · Operating income (EBIT) of SEK 118m (221) excluding associated company & JV income following investments in Olympics coverage, new channel launches and MTGx · Total EBIT of SEK 301m (454) including associated & JV company income of SEK 183m (233) · Net income of SEK 159m (334) and basic earnings per share of SEK 2.43 (4.73) · Cash flow from operations of SEK 195m (267) and net debt position of SEK 738m (net cash of 17) Financial Overview +------------------------------+-------+-------+-------+ |(SEKm) | 2014| 2013| 2013| | |Jan-Mar|Jan-Mar|Jan-Dec| +------------------------------+-------+-------+-------+ |Net sales | 3,597| 3,209| 14,073| +------------------------------+-------+-------+-------+ |Growth at constant FX | 13%| 1%| 8%| +------------------------------+-------+-------+-------+ |Organic growth at constant FX | 5%| 2%| 5%| +------------------------------+-------+-------+-------+ |EBIT before associates & JV | 118| 221| 1,309| |income and non-recurring items| | | | +------------------------------+-------+-------+-------+ |Margin before associates & JV | 3.3%| 6.9%| 9.3%| |income and non-recurring items| | | | +------------------------------+-------+-------+-------+ |Associated & JV company income| 183| 233| 576| |* | | | | +------------------------------+-------+-------+-------+ |EBIT before non-recurring | 301| 454| 1,885| |items | | | | +------------------------------+-------+-------+-------+ |Non-recurring items | -| -| -147| +------------------------------+-------+-------+-------+ |Total EBIT | 301| 454| 1,738| +------------------------------+-------+-------+-------+ |Net Income | 159| 334| 1,168| +------------------------------+-------+-------+-------+ |Basic Earnings per Share (SEK)| 2.43| 4.73| 16.39| +------------------------------+-------+-------+-------+ |Cash flow from operations | 195| 269| 1,348| +------------------------------+-------+-------+-------+ * Including MTG’s SEK 74m (USD 11.5m) Q1 2014 participation in USD 29.9m of non -recurring charges incurred by associated company CTC Media in Q4 2013 Please note that MTG’s 50% ownership interest in the Raduga has been accounted for as an equity participation with effect from 1 January 2014 due to changes in the IFRS rules (IFRS 11 - Joint Arrangements). Results for prior periods have been adjusted in the Group’s reporting for the purposes of comparison. President & CEO’s comments An Olympic quarter The highlight of the quarter was our coverage in Sweden of the Sochi Winter Olympics. This was the most watched winter Olympics and most successful for the Swedish team ever, and we showed every single minute for the first time ever. We achieved record free-TV audience shares of 60% in Sweden during the games and the subscriber intake at Viaplay reached new all-time high levels. Continued growth in volatile markets We delivered 13% constant FX sales growth as the investments that we made last year accelerated our development. This was driven by a mix of organic growth in almost all of our businesses and the acquisition of key new businesses such as Nice Entertainment. Advertising market growth levels remain volatile across our 11 free-TV markets, but we expect to increase our audience and market shares in almost all territories in 2014. We are however running against tough comparisons in the Czech Republic in particular, following the exceptionally high levels of growth in 2013. We continue to see healthy subscriber growth levels in both our Nordic and emerging market pay-TV businesses and reported higher year on year profits for both businesses. Overall Group profitability levels reflected the investments that we have made in the Olympics coverage, new channels in Norway and Tanzania and our Group wide digital ventures, as well as the seasonality of our now much larger content production business. In terms of outlook, we continue to expect a higher Nordic pay-TV operating margin in 2014 given the positive sales and profit momentum that we are seeing. At the same time, we are carefully monitoring the effects of the geopolitical situation in Ukraine but we remain committed to our investments and operations in the region given the substantial market opportunity and our well-established business positions. Based on current exchange rates, we would not expect an increase in pay-TV emerging markets profits in 2014 at this stage. Building momentum We have merged Viaplay and MTGx to create a leading digital entertainment powerhouse that can drive and benefit from the ever increasing levels of online video consumption. Our goal is clear – to be the leading digital entertainment house in each of our markets, which we will achieve through our organic development and acquisitions. I am also excited about the new pan-Scandinavian multi-platform content deal that we have signed with Sony Pictures, because it is the first of its kind, demonstrates the benefit of our integrated structure, and is another example of how we are shaping the future of entertainment with our partners and for our customers. We simply want to make fantastic content, channels and services available as broadly as possible, which is why we have also signed new long term deals with a wide range of third party operators. We are balancing organic investments with cash returns to shareholders and maintaining the flexibility to acquire attractive businesses. We ended the quarter with SEK 6.3 billion of available liquid funds, a 0.4 times ratio of net debt to trailing twelve month EBITDA, and are proposing our highest ever cash dividend. So we are well-positioned to continue to invest in the growth of the business, in order to drive future earnings and returns. Jørgen Madsen Lindemann President & Chief Executive Officer “Next up is our planned acquisition of 75% of Trace - one of the leading youth entertainment brands in Africa and present in 160 countries worldwide” * * * 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:                  +1 646 254 3361 The access pin code for the call is 9161971. 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 Stockholm, 25 April 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 interim report is that which Modern Times Group MTG AB (publ) shall disclose in accordance with the Securities Market Act and/or the law on Trading in Financial Instruments, and was published at 13.00 CET on 25 April 2014.