MODERN TIMES GROUP MTG AB FINANCIAL RESULTS FOR THE PERIOD JANUARY - DECEMBER 2001 Stockholm, 19 February 2001 - Modern Times Group MTG AB ("MTG") (Stockholmsbörsen: MTGA, MTGB; Nasdaq: MTGNY) today announced its financial results for the full year 2001. · NET SALES UP 18% TO SEK 6,402 (5,431) MILLION · TOTAL OPERATING INCOME EXCLUDING NON-RECURRING ITEMS UP 106% TO SEK 375 (182) MILLION · PROFIT BEFORE TAX INCREASED TO SEK 250 (-274) MILLION · THE DIGITALISATION CONTRIBUTED TO A 49% REVENUE INCREASE AND SUBSTANTIAL COST SAVINGS IN PAY TV · STRONG OPERATING INCOME GROWTH IN MODERN STUDIOS TO SEK 79 (3) MILLION SUMMARY (SEK MILLION) Oct- Oct- Jan-Dec Jan- Dec Dec 2001 Dec 2001 2000 2000 Established operations Net sales 1,830 1,654 6,355 5,428 Earnings before depreciation and 328 199 748 432 amortisation Earnings after 264 145 514 192 depreciation and amortisation New ventures Net sales 22 2 47 3 Earnings before depreciation and -39 -6 -137 -8 amortisation Earnings after -39 -9 -139 -10 depreciation and amortisation Total Net sales 1,852 1,656 6,402 5,431 Earnings before depreciation and 289 192 611 424 amortisation Earnings after 225 136 375 182 depreciation and amortisation Non-recurring items -15 -507 -15 -409 Income after financial 221 -380 317 -271 items* Fully diluted earnings per 1.70 -4.95 1.82 -4.46 share (SEK) * Excluding financial items relating to subordinated convertible debenture loans ORGANISATIONAL AND FINANCIAL REPORTING STRUCTURE The Group has applied the new recommendations of the Swedish Financial Accounting Standards Council since 1 January 2001, amongst which is recommendation RR15 relating to the treatment of intangible assets. As a result, costs arising from new ventures are no longer capitalised or depreciated. Expenses arising from new ventures, such as the TV channels in Hungary and Russia, are therefore charged to the profit and loss account. Established operations and new ventures have been split out in the table above in order to provide a more accurate description of the operating businesses. Businesses are considered to be new ventures for the first two years after launch. The new ventures are Viasat3 Hungary, Darial TV in Russia and Viasat+ in Norway within the business area Viasat Broadcasting; Everyday.TV and Everymobile within New Media, as well as Modern Sports & Events and Modern Games within Modern Studios. The Group structure was reorganised at the end of 2000. This involved the formation of the New Media division and the transfer of TV8 from the Viasat Broadcasting division to MTG Publishing. The New Media division includes the Text TV businesses, the WebAd sales company and MTG's interest in Everyday.com, which are established operations that have been transferred from the Viasat Broadcasting and Modern Interactive divisions respectively. The new ventures that are included in the New Media division are Everyday.TV (digital TV platform) and the mobile internet services provided by Everymobile. The New Media division was integrated into Viasat Broadcasting in January 2002. In October 2001, MTG subscribed to a private placement of new shares in its former operating subsidiary, Metro International S.A. On a fully diluted basis MTG owns 15% of Metro. The comparative figures in this report have been restated to take into account these organisational changes and the changes in the Swedish accounting rules. After the close of the fourth quarter, MTG acquired 36.3% of the shares in the privately owned American company, StoryFirst Communications, Inc., which owns the second largest commercial TV network in Russia as well as shares in six Russian radio stations. The transaction is subject to approval by regulatory authorities. Additional acquisitions were made after the close of the period. MTG acquired the remaining shares in its TV and Radio operations in Estonia, increasing its ownership to 100%. The companies will be consolidated from 1 January 2002. MTG also took over the Swedish radio stations Lugna Favoriter and Wow 105.5, as well as the newspaper Vision. These companies will be consolidated with effect from 1 February 2002. FINANCIAL SUMMARY Group results for the period January - December 2001 Total Group net sales increased by 12% to SEK 1,852 (1,656) million during the fourth quarter and by 18% to 6,402 (5,431) million for the full year. Group operating income before depreciation and amortisation increased by 51% to SEK 289 (192) million during the fourth quarter and by 44% to SEK 611 (424) million for the full year, excluding non-recurring items. Operating income for established operations increased by 83% to 264 (144) million during the fourth quarter and by 168% to 514 (192) million during the full year, excluding non-recurring items. Operating income for new ventures amounted to SEK -39 (-9) million during the fourth quarter and to SEK -139 (-10) million for the full year, excluding non-recurring items. Total operating income increased by 65% to SEK 225 (136) million during the fourth quarter and by 106% to SEK 375 (182) million for the full year, excluding non-recurring items. The Group's net interest in the earnings of associated companies was SEK 4 (20) million during the fourth quarter and SEK 25 (16) million for the full year. Non-recurring items totalled SEK -15 (-507) million during the fourth quarter and SEK -15 (-409) million for the full year. The items in the fourth quarters of 2000 and 2001 relate to the cost of the successful digitalisation of Viasat's premium analogue subscriber base. Net interest and other financial items amounted to SEK 11 (-8) million during the fourth quarter, and SEK -43 (-44) million for the full year, including net exchange rate gains and losses on the translation of financial receivables and liabilities in foreign currencies, but excluding items relating to the convertible debentures. The net financial result relating to the convertible debenture loans was SEK 18 (0) million during the fourth quarter, and SEK -67 (-3) million for the full year, including net exchange rate gains and losses on the translation of foreign currency liabilities into Swedish Kronor. Profit before tax, including the costs for the convertible debentures, increased to SEK 239 (-380) million during the fourth quarter and to SEK 250 (-274) million for the full year. Profit after tax improved to SEK 113 (-328) million during the fourth quarter and to SEK 121 (-297) million for the full year. Fully diluted earnings per share increased to SEK 1.70 (-4.95) for the fourth quarter and to SEK 1.82 (-4.46) for the full year. Total assets were SEK 6,941 million at 31 December 2001, compared to SEK 6,040 million at 31 December 2000. OPERATING REVIEW Viasat Broadcasting Net sales: 1,391 (1.127) million for the fourth quarter and SEK 4,550 (3,789) million for the full year. Operating income: SEK 264 (245) million for the fourth quarter and SEK 550 (500) million for the full year, excluding non-recurring items. -of which, operating income for established operations was SEK 290 (253) million for the fourth quarter and SEK 659 (510) million for the full year. -of which, operating income for new ventures was SEK -26 (-8) million for the fourth quarter and SEK -109 (-10) million for the full year. The Group's share in the earnings of associate companies decreased to SEK 13 (30) million in the fourth quarter and increased to SEK 59 (51) million for the full year, and consisted principally of MTG's share of the operating income of TV4 and the TV3 station in Estonia. Viasat's Free TV channels - TV3, ZTV, 3+, Viasat+, Viasat3 in Hungary and Darial TV - reported a 2% increase in net sales for the full year to SEK 2,651 (2,594) million. Net sales in the fourth quarter also increased by 2% to SEK 802 (783) million. Net sales for the Pay TV operations, which include Viasat, TV1000, TV6 and Viasat Sport, increased by 59% to SEK 690 (435) million in the fourth quarter and by 49% to SEK 2,225 (1,496) million for the full year. Dec Dec 2000 2001 Cardholders 1,125,0 1,077,00 00 0 - of which, digital subscribers 550,000 382,000 Viasat Gold package subscribers 460,000 321,000 Other premium package 40,000 39,000 subscribers TV1000 530,000 405,000 The TV channels Viasat Explorer and Viasat Sport Denmark were launched after the close of the period. In addition, Viasat+ in Norway was re- launched as ZTV. New Media Net sales: SEK 36 (15) million for the fourth quarter and SEK 107 (61) million for the full year. Operating income: SEK -17 (-19) million for the fourth quarter and SEK - 70 (-39) for the full year. -of which, operating income for established operations, including the interest in the earnings of Everyday.com, was SEK -9 (-19) million for the fourth quarter and SEK -46 (-39) for the full year. -of which, operating income for new ventures was SEK -8 (0) million for the fourth quarter and SEK -24 (0) million for the full year. The division's net sales increased by 76%, or SEK 46 million during, the full year. This was due to strong growth both in the established Text TV business and in the new ventures, Everyday.TV and Everymobile. The new ventures reported quadrupled sales in the fourth quarter when compared with the third quarter of 2001. Included within established operations is a loss of SEK 57 million arising from share of earnings in the 50% owned internet portal Everyday.com. The operation was scaled back over the year. Radio Net sales: SEK 30 (36) million for the fourth quarter and SEK 124 (133) million for the full year. Operating income: SEK -1 (15) million for the fourth quarter and SEK 13 (18) million for the full year. Net sales for the radio-channels declined as a result of the weak advertising markets. The group also reported SEK 23 (13) million in 2001 operating income from its share in the earnings of associate companies P4 Radio in Norway, Radio Nova in Finland and Star FM in Estonia. Publishing Net sales: SEK 54 (78) million for the fourth quarter and SEK 196 (234) million for the full year. Operating income: SEK -28 (-8) million for the fourth quarter and SEK - 82 (-53) for the full year. Finanstidningen has strengthened its market position during 2001 through continued investment in marketing campaigns, which increased the newspaper's reach and market share but also resulted in an increased loss for the year. Advertising revenues declined due to the weak advertising market. TV8's results improved due to increased subscriber numbers and cost reductions. Modern Interactive Net sales: SEK 192 (162) million for the fourth quarter and SEK 755 (581) million for the full year. Operating income: SEK -3 (-66) million for the fourth quarter and SEK - 33 (-127) for the full year. Net sales for the business area increased by 30% in 2001. TV-Shop's results improved during the fourth quarter as a result of the restructuring, which has been implemented by management. CDON reported continued strong revenue growth during the fourth quarter, with an increase of 166% for the full year. The company achieved its second consecutive quarterly profit in the fourth quarter. SDI Media Net sales: SEK 109 (95) million for the fourth quarter and SEK 397 (330) million for the full year. Operating income: SEK 15 (8) million for the fourth quarter and SEK 42 (18) for the full year. SDI Media's net sales increased by 20% in 2001 while operating income was up by 133% to SEK 42 million. The profit margin doubled to 10% for the full year. The division is the global market leader in the field of translating, subtitling and dubbing for TV programming and DVD production. Modern Studios Net sales: SEK 161 (211) million for the fourth quarter and SEK 627 (551) million for the full year. Operating income: SEK 24 (5) million for the fourth quarter and SEK 79 (3) million for the full year. -of which, operating income for established operations was SEK 29 (5) million for the fourth quarter and SEK 85 (3) million for the full year. -of which, operating income for new ventures was SEK -5 (0) million for the fourth quarter and SEK -6 (0) million for the full year. Revenues at Strix increased by 39% during the full year, and the company's operating income more than doubled to SEK 79 (34) million as a result of the successful international sales of its programming formats. Sonet and Modern Entertainment also showed strong revenue and income growth. Net sales for the division decreased year on year during the fourth quarter as a result of the absence of the discontinued Nordic Artist business. The New Ventures within the division comprise Modern Sports & Events, which produces boxing events, and Modern Games, which develops on-line games. FINANCIAL REVIEW Equity/assets ratio The Group's equity to assets ratio was 44% (30%) as at 31 December 2001. The ratio is defined as the sum of total consolidated equity and minority interests, including the E 120 million subordinated convertible debenture loans, as a percentage of total assets. In accordance with the new accounting principle adopted, previously reported intangible assets of SEK 850 million were charged against free equity, after an adjustment of SEK 238 million relating to the tax effect of this write-off. The Group also has minority interests in TV4 and Radio P4, as well as shares in, and a convertible loan to, Metro International. These holdings are treated as fixed assets. The aggregate market value of these securities amounted to SEK 1,825 (3,262) million at 31 December 2001. The combined book value of these securities amounts to SEK 576 million. After adjusting for the premium to book value and the deferred tax, the equity to assets ratio at 31 December 2001 was 51% (47%). Liquid funds The Group's liquid funds, including available credit facilities, amounted to SEK 828 (514) million at 31 December 2001. Net debt The Group's net debt amounted to SEK 889 (520) million at the close of the reporting period. The Group's net debt is defined as interest- bearing liabilities, including the convertible debentures, less interest- bearing assets. Excluding the convertible debenture loan, MTG's net debt amounted to SEK -242 million. Capital expenditure The Group's capital expenditure on non-current assets during the full year amounted to SEK 97 (193) million. In addition to this, the Group invested SEK 160 (164) million in shares. Depreciation The Group's depreciation amounted to SEK 236 (242) million during the year. Earnings per share Fully diluted earnings per share amounted to SEK 1.82 (-4.46) for the full year. OTHER INFORMATION Q1 2002 earnings release MTG's financial results for the first quarter of 2002 will be announced on 24 April 2002. Annual report MTG's annual report is expected to be released in April 2002. It will be available at MTG's head office at Skeppsbron 18, Box 2094, 103 13 Stockholm. Annual General Meeting The shareholders' annual meeting will be held on Thursday 16 May 2002 at 09.30 am at Gamla Stans Bryggeri, Tullhus 2, Skeppsbrokajen, in Stockholm. Dividend The Board of Directors will not be proposing the payment of a dividend to shareholders for 2001 to the AGM. This annual statement has not been subject to review by the Company's auditors. Stockholm, 19 February 2002 The Board of Directors of Modern Times Group, MTG AB For further information, please visit www.mtg.se, email info@mtg.se, or contact: Hans-Holger Albrecht, tel: +46 (0) 8 President & CEO 5620 0050 Mia Brunell, CFO tel: +46 (0) 8 562 000 50 Matthew Hooper, Investor & tel: +44 (0) 20 Press Relations 7321 5010 Modern Times Group, MTG AB has six business areas: Viasat Broadcasting (Free-to-air and Pay TV channels in nine countries, and the new media businesses - teletext operations and the Everyday interactive TV, internet and mobile portals), Radio (local and national networks in five countries), Publishing (financial news and information services), Modern Interactive (home shopping, e-commerce and logistics), SDI Media (subtitling and dubbing services), and Modern Studios (content production and rights library). Modern Times Group MTG AB's class A and B shares are listed on the Stockholmsbörsen O-list (symbols: MTGA and MTGB) and ADRs are listed on the NASDAQ National Market (symbol: MTGNY). ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/02/19/20020219BIT01040/bit0002.doc The full Year-End Report http://www.waymaker.net/bitonline/2002/02/19/20020219BIT01040/bit0002.pdf The full Year-End Report