MODERN TIMES GROUP MTG AB FINANCIAL RESULTS FOR THE PERIOD JANUARY-MARCH 2001 Stockholm, 25 April 2001 - Modern Times Group MTG AB (MTG) (Stockholmsbörsen: MTGA, MTGB; Nasdaq: MTGNY) today announced the preliminary results of operations for the first quarter of fiscal 2001. · SALES UP 27% TO SEK 1,508 MILLION. · OPERATING INCOME FOR ESTABLISHED OPERATIONS INCREASED BY 442% TO SEK 103 MILLION AFTER DEPRECIATION AND AMORTIZATION. · INCOME AFTER FINANCIAL ITEMS INCREASED 124% TO SEK 38 MILLION, EXCLUDING CAPITAL GAINS. · TV3 SCANDINAVIA SALES GREW BY 6%. · 63,000 NEW SALES OF DIGITAL DECODERS DURING THE FIRST QUARTER; 94% SELECT VIASAT GOLD PREMIUM PACKAGE. FINANCIAL SUMMARY (SEK MILLION) Q1 2001 Q1 2000* Established operations Net sales 1,507 1,189 Income before depreciation and 158 67 amortization Income after depreciation and 103 19 amortization New ventures Net sales 1 0 Income before depreciation and -36 -1 amortization Income after depreciation and -37 -1 amortization Total net sales 1,508 1,189 Income before depreciation and 122 66 amortization Income after depreciation and 66 18 amortization Capital gains and discontinued 0 123 business Income after financial items 38 140 * Adjusted for changes in Swedish GAAP OPERATIONS Since January 1, 2001, the Company has applied new recommendations from the Swedish Financial Accounting Standards Council. The changes include no longer capitalizing new ventures and thus no longer amortizing previously capitalized start-up costs. New projects, such as the new TV channels in Hungary and Russia, are now charged directly to the income statement . The figures for 2000 have been restated to comply with the new recommendations and enable like for like comparisons. In the table above, sales and income for established operations and for new ventures are reported separately to improve disclosure of operations. A business is considered a "new venture" for the first two years after the project commences operations. New ventures include Viasat+, Viasat3 Hungary, and the Everyday.com, Everyday.TV and Everymobile.com businesses within the New Media business area. Organization The number of business areas was increased to seven at the end of 2000 with the formation of the New Media business area. The TV8 channel was also transferred to the Publishing business area. New Media consists of established operations such as text TV, the online advertising sales company Webad, MTG's stake in Everyday.com, as well as new businesses such as the digital-TV portal Everyday.TV and mobile portal services company, Everymobile.com. The pre-existing operations were transferred from the Modern Interactive and Viasat Broadcasting business areas. Following the reorganization, Modern Interactive now consists of businesses in traditional home shopping (TV-Shop), logistics and fulfillment, eCommerce Logistics, the online retail site CDON within MTG Internet Retailing, and the web production company NoName4Us. Modern Sports and Events, a company specializing in the production of boxing events was also launched and operates within Modern Studios. An agreement was signed to acquire 75% of the shares in Darial TV, a Russian commercial terrestrial TV channel, after the end of the Quarter. Darial is one of the eight national TV channels in Russia. The intention is to complete the acquisition in May. The comparative figures in this report have been restated based on the above organizational changes and the new accounting policies. FINANCIAL RESULTS Consolidated Earnings for first quarter 2001 Net sales rose 27%, to SEK 1,508 million. Operating income before depreciation and amortization advanced to SEK 122 (66) million. Operating income for established operations after depreciation and amortization advanced to SEK 103 (19) million. Operating income after depreciation and amortization for new ventures totaled SEK -37 (-1) million. Total operating income after depreciation and amortization rose to SEK 66 (18) million. The Group's net share of earnings in associated companies was SEK -24 (-3) million. Non-recurring items totaled SEK 0 (123) million. Net interest and other financial items ended the quarter at SEK -28 (-1) million, including SEK -1 (12) million in net exchange rate gains and losses on the translation of financial receivables and liabilities denominated in currencies other than Swedish krona. Income after financial items fell to SEK 38 (140) million. Income after tax rose to SEK 24 (89) million. Earnings per share reached SEK 0.34 (1.44 including non-recurring items). MTG's total assets at March 31, 2001, were SEK 6,296 million, compared to 6,040 at December 31, 2000. REVIEW OF OPERATIONS Viasat Broadcasting Net sales: SEK 1,026 (852) million Operating income after depreciation and amortization: SEK 89 (72) million -of which, established operations' operating income after depreciation and amortization: SEK 110 (72) million -of which, new ventures' operating income after depreciation and amortization: SEK -21 (0) million Despite a weak market for advertising, Viasat's advertising-financed channels reported growth of 8%. The transition to digital television progressed as planned. All of Viasat's premium subscribers will have received a digital decoder by the end of the Spring, which will lock in significant savings on the cost of satellite distribution. Sales of digital decoders to new subscribers continued apace and, by the end of the first quarter of 2001, a total of 125,000 new subscriptions had been sold since the launch, 85% of which opted for the Viasat Gold premium package. Sales in Free TV totaled SEK 614 (569) million for the TV channels TV3, ZTV, 3+, Viasat+, and Viasat3 Hungary, up 8% from the first quarter of 2000. Sales in Pay TV totaled SEK 481 (352) million, up 37% from the first quarter of 2000. The launch of digital television in the autumn resulted in robust sales of new subscriptions for the digital services, in addition to the exchange of decoders for all existing premium subscribers. Analogue transmission of pay-TV channels will cease in the second quarter of 2001, saving about SEK 200 million in distribution costs on an annualised basis. The project to swap existing premium subscribers into digital has been in its most intensive period during the past quarter, and will be completed during spring. The sale of new digital decoders has been running parallel to this and has resulted in a substantial increase in volumes. The total number of subscribers has developed during the first quarter as follows: (Thousands of subscribers) Basic Premium Opening balance as of January 1, 1,077 321 2001 New sales during first quarter 63 59 Only Viasat 2001 Gold Churn during first quarter 2001 -44 -13 1,096 367 Other premium packages as of 39 March 31, 2001 Closing balance as of March 31, 1,096 406 2001 Closing balance as of March 31, 1,089 332 2000 The growth in subscriptions was also reflected in the TV1000 business, which attracted 48,000 more subscribers, up 12% since December 31 and ending the quarter at 453,000 (378,000). Operating income for the entire business area was SEK 89 (72) million. MTG's share of TV4's income is included in the business area in the share of earnings in associated companies along with the Group's share of earnings from the TV3 channels in Estonia and Latvia. The Group's share of earnings in associated companies for the first quarter of 2001 was lower than in the first quarter of 2000, SEK -11 (6) million, due to TV4's weaker earnings. New Media Net sales: SEK 21 (16) million Operating income after depreciation and amortization: SEK -15 (1) million -of which, established operations' operating income after depreciation and amortization: SEK 1 (2) million -of which, new ventures' operating income after depreciation and amortization: SEK -16 (-1) million Net sales for New Media included both the established operations and the uplift from both the teletext operation and the sale of Internet advertising, which generated a total profit of SEK 1.3 million for the first quarter. The new products, digital-TV portal Everyday.TV and mobile portal Everymobile.com were in the start-up phase during the reported period and thus did not contribute significantly to profits. The result in associated companies, consisting of the company's share in the Internet portal Everyday.com, was lower than in the first quarter of 2001, due to geographical expansion and strategic investments in content and technical services. Radio Net sales: SEK 30 (26) million Operating income after depreciation and amortization: SEK 3 (-10) million The radio stations reported 16% higher sales. Earnings from P4 Radio Hele Norge, Radio Nova in Finland, and the Baltic radio stations are reported as participations in associated companies. The result from the associated companies has improved as a result of the sale of the small radio networks in Finland and the investment in Radio Nova. Publishing Net sales: SEK 53 (48) million Operating income after depreciation and amortization: SEK -14 (-11) million Finanstidningen boosted sales 22% to SEK 40 million, thanks to improvements in products and campaigns to increase penetration that expanded the cumulative audience. Owing to targeted marketing campaigns, Finanstidningen reported a loss, but it was slightly better than in the first quarter of the preceding year. TV8, now part of this business area, lifted earnings as a result of a larger number of subscribers and lower programming costs. Modern Interactive Net sales: SEK 212 (113) million Operating income after depreciation and amortization: SEK 9 (-18) million Sales for the business area rose 88%, thanks to excellent sales results in all companies. The action program initiated in the fourth quarter of 2000 improved sales at TV-Shop, and it only reported a small loss for the first quarter. The logistics company e-CommerceLogistics, eCL, continued its sales expansion from 2000 and further expanded profit due to third party sales. CDON once again reported a loss, although considerably lower than in the previous year. SDI Media Net sales: SEK 84 (79) million Operating income after depreciation and amortization: SEK 6 (3) million SDI Media sales grew by 6%, owing to organic growth as well as acquisitions made in 2000. Profitability for the business area doubled during the period. SDI Media, a world leader in translation, subtitling, and dubbing for television, DVDs, and the Internet as well as in applications for the deaf, continued to focus on growth and profitability. DVD, the most profitable segment of the business grew approximately 25% compared with last year. Modern Studios Net sales: SEK 172 (115) million Operating income after depreciation and amortization: SEK 19 (3) million The business area reported a healthy 50% growth in sales and a 533% increase in income due to strong performances from Strix Television, Sonet Film, and Modern Entertainment. Strix Television signed additional international contracts for its existing program formats during the period, as well as contracts in the Nordic countries for new formats that the company has developed. Operations in Nordic Artist were gradually wound up as planned, and the company reported a small loss for the first quarter, resulting from the conclusion of projects previously committed to in contracts. FINANCIAL POSITION Equity/assets ratio As a result of the change in accounting principles, previously reported intangible assets of SEK 850 million were charged directly to non- restricted equity, after correction of SEK 238 million due to the tax effect caused by the write-off. The digital conversion project accounted for SEK 555 million of the total gross write-off. In addition to this has the change of accounting principle caused the proportion of equity in associated companies been adjusted by SEK 52 million, reducing non- restricted equity without tax implications. In addition to this has SEK 85 million been reclassified from intangible assets to deferred expenditures. The Group's equity/assets ratio (defined as consolidated shareholders' equity and minority interests including the convertible debenture loan, divided by total assets) was 29% (37%) at the end of the period. In addition to the assets mentioned above, the Group holds minority equity interests in TV4 and P4, as well as a convertible debenture loan in Metro, which are both reported as long-term financial assets. The aggregate market value was SEK 2,557 (1,472) million at the end of the quarter, representing a surplus value of SEK 2,065 (1,259) million in the balance sheet compared to a book value of SEK 492 (213) million. Taking into account the surplus value and deferred tax, the equity/assets ratio was 43% (49%). Liquidity The Group's liquidity, including unutilized credit facilities, was SEK 200 (357) million at the end of the period. Net borrowings The Group's net borrowings (defined as interest-bearing liabilities, excluding the convertible debenture loan, less interest-bearing assets) totaled SEK 760 (112) million at the end of the period. Investment During the period, the Group invested a total of SEK 26 (27) million, of which half refers to investments in film rights in MTG Modern Entertainment and Sonet Film. The Group follows the new recommendations of the Swedish Financial Accounting Standards Council, so start-up costs for new operations are no longer capitalised as investments but are charged directly to earnings. Depreciation and amortization Group depreciation and amortization totaled SEK 56 (48) million. Accrued retailer commissions resulting from Viasat Gold customers signing up for subscription extensions have been reclassified, from amortization to operating expenses, in order to comply with the accounting principle amendments. The comparative figures for 2000 have been restated accordingly. Earnings per share Fully diluted earnings per share totaled SEK 0.34 (1.44). The calculation of the number of shares have taken into account the option program decided at the extraordinary shareholders meeting on February 16, 2001. If the option scheme is fully used the number of shares will increase with 2,052,840 shares or 3% of the new total of outstanding shares. OTHER INFORMATION Report for the second quarter of 2001 MTG's report for the second quarter of 2001 will be published on August 6, 2001. Annual report MTG's annual report will soon be available at the Company's office: MTG, Skeppsbron 18, Box 2094, SE-103 13 Stockholm, Sweden. Financial information Additional financial information is available on the Internet at www.mtg.se. Annual general meeting MTG will hold its annual general meeting of shareholders at 9:30 a.m. on Thursday May 17, 2001, at Gamla Stans Bryggeri, Tullhus 2, on Skeppsbrokajen in Stockholm. Stockholm, April 25, 2001 Hans-Holger Albrecht President and CEO This interim report has not been subject to a review by the Company's auditors. For additional information, please contact: Hans Holger Albrecht, telephone +46 8 5620 0050 President and CEO, Modern Times Group MTG AB Mia Brunell, telephone +46 8 5620 0033 Chief Financial Officer, Modern Times Group MTG AB Matthew Hooper, telephone +44 20 7321 5010 Investor Relations Bert Willborg, telephone +46 70 727 70 22 Media Relations Operating income, EBIT 2001 2000 (MSEK) Jan 1- Jan 1- March 31 March 31 Established operations Viasat Broadcasting 110 72 MTG New Media 1 2 MTG Radio 3 -10 MTG Publishing -14 -11 MTG Modern Interactive 9 -18 SDI Media 6 3 MTG Modern Studios 19 3 Parent company and other -28 -19 companies Eliminations -3 -3 103 19 New ventures Viasat+ -9 0 Viasat3 Hungary -12 0 New Media -16 -1 -37 -1 Capital gains and discontinued business Sale of TV4 shares 0 105 Metro Sweden's sales 0 18 company, Jan-May 2000 0 123 EBIT 66 141 CONSOLIDATED INCOME STATEMENT 2001 2000 2000 (MSEK) Jan 1- Jan 1- Full year March 31 March 31 Net sales 1 508 1 189 5 431 Cost of goods and services -984 -842 -3 508 Gross income 524 347 1 923 Selling, administration, research and development expenses -383 -288 -1 540 Other operating revenues 5 5 18 Other operating expenses -56 -43 -235 Income from corporate development - - 8 Income from sales of securities - 105 106 Result in Metro Sweden sales - 18 32 company Jan-May 2000 Viasat digital project - 0 -555 Share of earnings in associated -24 -3 16 companies Operating income (EBIT) 66 141 -227 Net financial revenue and expense -28 -1 -44 Income after financial revenue and 38 140 -271 expense excluding interest on convertible debentures Interest on convertible debentures - -7 -3 Income before tax 38 133 -274 Taxes -15 -45 -24 Minority interests 1 1 1 Net income for the period 24 89 -297 Shares outstanding at quarter-end, 68 427 996 64 685 967 66 375 156 incl convertible and option Shares outstanding at quarter-end, 66 375 156 60 118 194 66 375 156 excl convertible and option Denominator for diluted earnings 68 427 996 64 685 967 65 952 859 per share Denominator for basic earnings per 66 375 156 59 697 732 63 944 505 share Diluted earnings per share 0,34 1,44 -4,46 Basic earnings per share 0,35 1,48 -4,63 REVIEW OF THE GROUP (MSEK) 2001 2000 2000 Jan 1- Jan 1- Full year March 31 March 31 Net sales by business area Viasat Broadcasting 1 026 852 3 789 MTG New Media 21 16 61 MTG Radio 30 26 133 MTG Publishing 53 48 234 MTG Modern Interactive 212 113 580 SDI Media 84 79 330 MTG Modern Studios 172 115 551 Parent company and other 24 24 106 companies Eliminations -114 -84 -353 1 508 1 189 5 431 Operating income/loss by business area Viasat Broadcasting 89 72 500 Sale of shares in TV4 - 105 106 Viasat digital project - 0 -555 MTG New Media -15 1 -39 MTG Radio 3 -10 18 MTG Publishing -14 -11 -53 MTG Modern Interactive 9 -18 -127 SDI Media 6 3 18 MTG Modern Studios 19 3 3 Parent company and other -28 -19 -117 companies Result in Metro Sweden sales - 18 32 company Jan-May 2000 Eliminations -3 -3 -13 66 141 -227 CONSOLIDATED BALANCE SHEET 2001-03-31 2000-03-31 2000-12-31 (MSEK) Fixed assets Capitalized development 66 89 111 expenses Beneficial rights 321 114 297 Goodwill 1 020 273 1 046 Machinery and equipment 282 246 252 Shares and participations 304 253 303 Long-term receivables 950 354 896 2 943 1 329 2 905 Current assets Inventories 1 415 872 1 201 Current receivables 1 770 1 438 1 642 Cash, cash equivalents and 168 257 292 short-term investments 3 353 2 567 3 135 Total assets 6 296 3 896 6 040 Shareholders' equity Restricted equity 1 673 393 1 724 Non-restricted equity 173 669 66 1 846 1 062 1 790 Minority interests in equity 3 21 7 Provisions 145 132 124 Long-term liabilities Other interest-bearing 1 303 598 1 277 liabilities Non-interest-bearing 54 0 44 liabilities 1 357 598 1 321 Current liabilities Convertible debenture loan - 377 - 1997/2000 Other interest-bearing 250 105 125 liabilities Non-interest-bearing 2 695 1 601 2 673 liabilities 2 945 2 083 2 798 Total shareholders' equity 6 296 3 896 6 040 and liabilities CONSOLIDATED STATEMENT OF CASH 2001 2000 2000 FLOWS (MSEK) Jan 1- Jan 1- Full year March 31 March 31 Net income for the period 23 89 -297 Adjustments to reconcile net income to net cash provided by operations 97 -8 -3 Changes in working capital -320 -329 194 Net cash flow from operations -200 -248 -106 Acquisition of TV1000 - - -900 Issue of shares to finance TV1000 - - 900 acquisition Other investments in shares 0 0 -164 Investments in other fixed assets -26 -27 -193 Other cash flow from investing 0 125 163 activities Cash flow to investing activities -26 98 -194 Cash flow from/to financing 102 83 234 activities Net change in cash and cash -124 -67 -66 equivalents for the period RECONCILIATION OF SHAREHOLDERS Share Restrict Non- EQUITY ed restrict ed (MSEK) capital reserves reserves Total Closing balance December 31, 332 1 392 730 2 454 2000 Change of accounting principle -664 -664 Opening balance January 1, 2001 with new accounting principle 332 1 392 66 1 790 Net result January-March 2001 23 23 Currency translation 33 33 differences Transfer between restricted and non- -51 51 0 restricted reserves Closing balance March 31, 2001 332 1 341 173 1 846 ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/04/25/20010425BIT01530/bit0002.doc http://www.bit.se/bitonline/2001/04/25/20010425BIT01530/bit0002.pdf