Record sales of SEK 5,375m (5,307) with 1% organic growth
Operating income before items affecting comparability (IAC) of SEK 568m (478) including transaction costs related to the proposed split of MTG of SEK 6m
Total operating income of SEK 596m (161) including IAC of SEK 28m (-318) 1)
Total net income of SEK 478m (652), including net income from discontinued operations of SEK 6m (587), and total basic earnings per share of SEK 6.71 (9.36)
Net debt of SEK 2,581m (1,812) equivalent to 1.3x trailing EBITDA before IAC
The Board of Directors proposes that MTG does not pay a dividend for 2018 while, subject to the completion of the split, NENT Group’s Board of Directors will propose the payment of a dividend of SEK 6.50 per share 2)
Financial overview
(SEKm)
Q4 2018
Q4 2017
Full year 2018
Full year 2017
Continuing operations
Net sales
5,375
5,307
19,742
17,537
Organic growth
0.7%
9.7%
4.1%
7.7%
Acquisitions/divestments
-2.7%
14.7%
5.0%
8.3%
Changes in FX rates
3.3%
-0.9%
3.5%
1.0%
Change in reported net sales
1.3%
23.5%
12.6%
16.9%
Operating income before IAC
568
478
1,571
1,264
Operating margin before IAC
10.6%
9.0%
8.0%
7.2%
Items affecting comparability
28
-318
10
-340
Operating income
596
161
1,581
923
Net income
472
65
1,165
612
Basic earnings per share (SEK)
6.63
0.57
15.60
8.19
Cash flow from operations
594
539
1,622
1,311
Discontinued operations 3)
Net income
6
587
-5
748
Total operations
Net income
478
652
1,160
1,360
Basic earnings per share (SEK)
6.71
9.36
15.52
18.73
Net debt
2,581
1,812
2,581
1,812
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1) Q4 2018 IAC comprise a reclassification from the IAC line to the tax line due to a previous incorrect classification in the income statement. See page 26 for a comprehensive list of items affecting comparability. 2) Subject to the approval of the distribution and listing of NENT Group by the MTG EGM to be held on 7 February 2019, and the approval of the NENT Group AGM to be held on 22 May 2019. 3) Comprises results of businesses in Tanzania in Q4 2018, and of businesses in the Czech Republic and the Baltics in 2017. Q4 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 24-28.
President & CEO’s comments
Delivering profitable growth
The momentum continued in 2018 with full year sales, profits and margins all up. Sales grew by 4% on an organic basis and operating income before IAC grew by 24%. Nordic Entertainment sustained its strong performance, and MTGx was profitable on a full year basis for the first time.
Q4 organic sales were up and operating income before IAC was up 19%. Nordic Entertainment delivered its ninth consecutive quarter of higher sales and profits, as Viaplay again grew its subscriber base at a very healthy rate. The growth in the streaming platforms has continued to more than offset the falling linear viewing levels. Studios also delivered profitable growth driven by robust demand for scripted drama productions.
MTGx sales were down as expected with the organic growth in InnoGames and DreamHack offset by lower sales for ESL, Kongregate and Zoomin.TV. ESL’s owned and operated sales were up double digit percentage points while work-for-hire volumes were down as we continue to strategically transform the business. MTGx profits were up overall as ESL reported lower losses.
Preparing to split
We have been working for almost a year now to prepare for the split of MTG into two by distributing NENT Group to shareholders and listing the shares on Nasdaq Stockholm. We recently published the information brochure to provide the decision-making material for the shareholder meeting on 7 February. The brochure includes the new financial targets for both companies, as well as the leverage ambition and dividend policy for NENT Group. It is in this context, and subject to the EGM’s approval of the Split, that the NENT Group Board will propose the payment of a dividend of SEK 6.50 per share to the NENT Group AGM to be held in May. MTG’s Board will propose to the MTG AGM on 21 May that no dividend be paid in 2019.
Bright future ahead
We are confident that both MTG and NENT Group have bright futures ahead of them as separate and even more focused organisations. The split will bring even greater clarity and speed, with two talented teams and product portfolios that are more relevant than ever for our customers. Both companies are operating in market segments that offer significant structural growth opportunities. NENT Group is an investment into the leading Nordic streaming and content provider, while MTG is a unique play on global esports and online gaming. We share a common heritage, approach and commitment that will serve both companies well in the future.
Jørgen Madsen Lindemann President & Chief Executive Officer
“We have delivered higher sales, profits and margins in 2018, which demonstrates that our strategy is working. We are now preparing for the split of MTG and the listing of NENT Group on Nasdaq Stockholm in March 2019”
Shareholder information
Extraordinary General Meeting
The MTG Board of Directors has proposed to an Extraordinary General Meeting of MTG shareholders, to be held on Thursday 7 February 2019 in Stockholm, that it resolve to distribute all of the shares in Nordic Entertainment Group AB to MTG’s shareholders. The original proposal also included a request to authorise the Board of Directors to be able to resolve on new issues of class B shares. The share issue authorisation proposal was subsequently withdrawn following consultation with some of MTG’s largest owners. Information regarding the proposals is included in the notices to the meeting and in the information brochure, which have been published and are available at www.mtg.com/mtg-nordic-entertainment-split/.
2019 Annual General Meeting
The 2019 Annual General Meeting of MTG shareholders 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 agm@mtg.com 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 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 line with the new dividend policy for MTG that was communicated in connection with the publication of the information brochure, the Board of Directors will propose that no dividend be paid to MTG shareholders for the financial year 2018. Subject to MTG shareholders’ approval of the distribution and listing of NENT Group, the 2019 Annual General Meeting of NENT Group shareholders will be held on Wednesday 22 May 2019 in Stockholm, and the Board of Directors of NENT Group has informed MTG that it will propose the payment of an annual ordinary cash dividend of SEK 6.50 per share to the meeting. The total proposed NENT Group ordinary cash dividend payment would therefore amount to approximately SEK 435 million, based on the anticipated maximum potential number of outstanding shares. The Board of Directors of NENT Group intends to further propose that the remainder of the Group’s retained earnings for the year ended 31 December 2018 be carried forward into the 2019 accounts. The proposal is in line with the dividend policy for NENT Group that was communicated in connection with the publication of the information brochure.
Financial calendar
Extraordinary General Meeting 7 February 2019 Q1 results announcement 9 May 2019 Annual General Meeting 21 May 2019 Q2 results announcement 22 July 2019 Q3 results announcement 29 October 2019
Questions?
press@mtg.com (or Tobias Gyhlénius, Head of Public Relations; +46 73 699 27 09) investors@mtg.com (or Stefan Lycke, Head of Investor Relations; +46 73 699 27 14)
The company will host a conference call today at 09.00 Stockholm local time, 08.00 London local time and 03.00 New York local time. To participate in the conference call, please dial:
The access pin code for the call is 1874268. To listen to the conference call online and for further information, please visit www.mtg.com.
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 5 February, 2019.
