Content Contents CEO’s Review 1 CFO’s Review 5 Five Year Summary 7 Directors’ Report 11 The MTG Share 32 Corporate Governance Report 36 Board of Directors 46 Executive Management 49 Consolidated Financial Statements 54 Parent Company Financial Statements 59 Notes to the Accounts 64 Audit Report 119 Definitions 121 Glossary 122 This document is in all respects a translation of the Swedish original Annual Report. In the event of any differences between this translation and the Swedish original, the latter shall prevail. Modern Times Group MTG AB Annual report 2014 1

CEO’s review CEO’s review A Year of Progress We continued to deliver on our strategy in 2014 following the investments that we have made in our three core growth areas – content creation, digital development and geographical expansion – while, at the same time, further improving our execution capabilities and cost control. We now have more customers using more of our products than ever before. The year started with us making every minute of the winter version of the world’s most watched event – the Olympics – available exclusively on our channels and platforms in Sweden. This was the most digital Olympics ever in Sweden and contributed to the accelerated development of our digital services, and the Viaplay OTT service in particular, which continued throughout the year. We also expanded our reach internationally by launching our existing and new channels into more countries. 2014 was also a year in which we faced up to a number of significant challenges – the sudden and rapid fall in the level of traditional TV viewing in Sweden in particular from Q2; the sharp deterioration of the operating environment in Russia and Ukraine; and the large adverse foreign exchange movements during the second half of the year.

to a number of significant challenges – the sudden and rapid fall in the level of traditional TV viewing in Sweden in particular from Q2; the sharp deterioration of the operating environment in Russia and Ukraine; and the large adverse foreign exchange movements during the second half of the year. The headline facts are that net sales for the year were up 11% at constant exchange rates (including 4% organic growth) following the content company acquisitions that we made in 2013, while operating profits (EBIT) were down 3% (4% when including non-recurring items) for the year as we felt the abovementioned headwinds and continued to invest in our digital future. Group cash flow remained strong and we paid out a record high ordinary dividend (equivalent to a 56% payout ratio), to end the year with one of the strongest balance sheets in the industry (with half the net debt of a year ago and equal to only 0.2 times 2014 recurring EBITDA). A Simple Story We are managing the transition of our market leading linear video broadcasting businesses into the number one digital entertainment businesses in our existing markets, while also looking to grow new and internationally scalable digital businesses. Furthermore, our objective is to manage this transition while growing our sales, profits and cash flows. This means that our traditional linear channels (both advertising and subscription funded) will provide the cash to fuel the development of our digital products, which almost doubled their sales in 2014.

e, our objective is to manage this transition while growing our sales, profits and cash flows. This means that our traditional linear channels (both advertising and subscription funded) will provide the cash to fuel the development of our digital products, which almost doubled their sales in 2014. A Convenient Truth Much is made of the highly competitive environment with new online entrants and changing consumer behaviour resulting in falling scheduled TV viewing. We saw and felt these impacts more than ever in 2014, as the PUT (people using television) levels fell sharply in Sweden in particular. However, television remains the reach media of choice because it delivers a high quality and large scale audience, so the lower supply of TV minutes but steady demand for TV airtime is resulting in higher TV advertising prices now in 2015. Modern Times Group MTG AB Annual report 2014 1

CEO’s review CEO’s review There is also another overwhelming truth – global video consumption is still growing and it is being driven by online viewing, which is the primary driver of global internet traffic. Global online video data traffic was up almost 25% in 2014, and the number of minutes of video watched online was up more than 50% in Sweden. More than 25% of global online video viewing was on mobile devices (smart phones and tablets), and more than a third of all video viewing by ‘Millennials’ in the US is now online. So video is delivering a bigger, more accessible and more attractive audience than ever before, which is very good news and only set to grow further! A Huge Opportunity This change in consumer behavior is a huge opportunity for us to make our products more broadly available and relevant than ever before, and that is exactly what we are doing. The Nordic markets have the highest broadband penetration levels and speeds in the world and are often the test beds for what will happen in other markets around the world. Our Viaplay online video business was the first of its kind and combines the best TV series, movies and live sport. This is revolutionising the pay-TV industry and Viaplay’s rapid expansion is being fuelled by the cash flows from our highly profitable Viasat satellite and pay-TV channels businesses. Viaplay is now available on virtually any internet connected device and to almost all Nordic TV households – the first time we have ever been able to address the whole market with our pay-TV services.

led by the cash flows from our highly profitable Viasat satellite and pay-TV channels businesses. Viaplay is now available on virtually any internet connected device and to almost all Nordic TV households – the first time we have ever been able to address the whole market with our pay-TV services. The opportunity is also evident on the free-TV or advertising funded side, where our online TV services across 7 markets are not limited to catch-up TV services but also digital-first online content that is delivering higher online viewing shares and prices than offline. Yes, we still have a lot of work to do with our traditional free-TV business in Sweden and Norway, but our Danish business has continued to perform well and take share, and we remain the clear number two commercial media house in both Sweden and Denmark. And again, the cash flows from these traditional businesses are fuelling our online development. We are the co-owners of the largest multi-channel YouTube network in Sweden (Splay), which we are expanding into new markets, and we are constantly looking to launch new thematic verticals (from cooking to celebrity gossip) that work across both our on and offline platforms.