Comprises costs relating to the proposed split of MTG and the previously announced merger agreement to combine MTG Nordics and TDC Group, which was terminated on 19 June 2018 Q3 2018 IAC primarily comprise a non-cash revaluation gain of SEK 172m relating to Turtle Entertainment and a non-cash cost of SEK 164m relating to Zoomin.TV asset write-downs. See page 25 for a comprehensive list of items affecting comparability Comprises results of businesses in Tanzania in Q3 2018, and results of businesses in the Czech Republic and the Baltics in 2017. The full year 2017 results include a SEK 593m capital gain from the divestment of the Baltic operations
Alternative performance measures used in this report are explained and reconciled on pages 23-27
President & CEO’s comments
Profitable growthThis was another quarter of top and bottom line growth. Our continued organic sales growth was complemented by a 28% increase in operating profits, even when including SEK 7m of transaction costs related to the proposed split of MTG.
Solid performanceNordic Entertainment delivered its eighth consecutive quarter of higher sales and profits. The growth continues to be driven by our streaming services in general, and Viaplay in particular. Free-TV sales were down at constant FX but our Swedish Radio business again delivered double digit sales growth after the launch of the new radio licenses from August, and our Viafree streaming service continues to grow rapidly. Studios sales and profits were down but we have a healthy forward pipeline of contracted productions. Overall, we have continued to invest in original local dramas and premium sports, in order to drive up subscription and consumption levels further.
Nova Bulgaria continued to report double digit profitable growth, and we have now appealed the local competition authority ruling regarding the sale of Nova.
MTGx generated double digit organic sales growth, and we converted an EBIT loss last year into a profit this year following significant improvements at both InnoGames and ESL. This was the fifth consecutive quarter of EBITDA profits for MTGx. InnoGames delivered an exceptional quarter following a number of game updates and successful marketing campaigns. We are now ramping up the marketing of Warlords of Aternum, which has had a promising commercial launch.
Esports sales were up and losses were down. Healthy revenue growth in our owned and operated businesses was offset by lower work for hire volumes as we continue to strategically transform the business. We now expect esport sales to be down in Q4 before growing again in 2019, and we expect a significant improvement in the profitability of the esports operations.
Split set for Q1 2019Our former shareholder Kinnevik completed the distribution of all of its MTG shares in August, in order to facilitate the EU approval of the Tele2 / ComHem merger. Following this process, we have now continued our work towards the split of MTG and separate listing of NENT Group, including the appointment of three new NENT board members, securing a five year credit facility and increasing our ownership in ESL. Subject to shareholder approval, we intend to list NENT in March 2019. Jørgen Madsen LindemannPresident & Chief Executive Officer
“This was yet another quarter of profitable growth, and we are on track with the planned split. I would like to welcome Kinnevik’s shareholders as direct owners of MTG now.”
2019 Annual General MeetingThe 2019 Annual General Meeting will be held on Tuesday 21 May 2019 in Stockholm. Shareholders wishing to have matters considered at the meeting should submit their proposals in writing to firstname.lastname@example.org or to the Company Secretary, Modern Times Group MTG AB, Box 2094, SE-103 13 Stockholm, Sweden, at least seven weeks before the meeting in order for that such proposals may be included in the notices to the meeting. Further details of when and how to register will be published in advance of the meeting.
In accordance with the resolution of the 2018 Annual General Meeting, the then largest shareholder in MTG, Kinnevik AB, convened a Nomination Committee to prepare proposals for the 2019 Annual General Meeting. Due to the distribution by Kinnevik AB of its shareholding in MTG to its shareholders and the resignation by its representative from the Nomination Committee, the Nomination Committee currently consists of Joachim Spetz, appointed by Swedbank Robur Funds; John Hernander, appointed by Nordea Funds; and Jimmy Bengtsson, appointed by Skandia Liv. The three shareholders which have appointed representatives to the Nomination Committee hold approximately 21 percent of the total voting rights in MTG. The members of the Nomination Committee appointed Joachim Spetz as Committee Chairman at their first meeting.
Please see www.mtg.com/governance/#nomination-committee for information about the work of the Nomination Committee.
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Modern Times Group MTG AB (Publ.) - Reg no: 556309-9158 – Phone +46 8 562 000 50 – mtg.com
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 brands span TV, radio and next generation entertainment experiences in esports, digital video content and online gaming. Born in Sweden, our shares are listed on Nasdaq Stockholm (‘MTGA’ and ‘MTGB’). This information is information that MTG (Modern Times Group MTG AB (publ.)) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 CET on 23 October, 2018.