Financial · January 1, 2018

Annual Report 2018: Shaping the Future of Entertainment

Summary

In 2018 MTG delivered a robust financial rebound while executing a decisive strategic shift toward esports and digital‑video assets. Net sales rose 12‑13 % to SEK 19.7 billion and operating income increased 24 % to SEK 1.57 billion, lifting the operating margin to roughly 8 %. Net profit from continuing operations reached SEK 1.17 billion, yet net debt grew to SEK 2.58 billion (1.3 × EBITDA) and the board elected not to pay a dividend, resulting in a 15 % fall in B‑share price and an overall –11 % total shareholder return. Balance‑sheet strength improved, with total assets climbing to SEK 20.3 billion and equity to SEK 7.0 billion, while retained earnings stood at SEK 3.0 billion. The year culminated in the separation of MTG from Nordic Entertainment Group (NENT), whose shares were listed on Nasdaq Stockholm in March 2019. Post‑split, MTG accelerated its pivot into the esports ecosystem, acquiring ESL, DreamHack, InnoGames and Kongregate, and divesting non‑core holdings such as Trace Partners. These moves positioned the company to capture growth in online gaming and competitive entertainment. Corporate governance adhered to Swedish law and the Swedish Corporate Governance Code. The board, composed of six non‑executive directors, met 14 times and operated through remuneration, audit and risk committees. Executive remuneration remained tied to pre‑determined short‑term and long‑term performance targets, with STI capped at 100 % of fixed salary. Internal‑control and risk‑management frameworks were deemed effective and compliant with IFRS and Nasdaq requirements. Accounting practices followed IFRS, recognising goodwill on acquisitions, applying the equity method for joint ventures, and translating foreign subsidiaries into SEK. A widening deferred‑tax deficit and a tax‑loss carry‑forward of SEK 111 million were disclosed. Capital was underpinned by a SEK 4 billion syndicated facility, of which only SEK 200 million was drawn. Overall, the 2018 results illustrate MTG’s financial resilience, a clear strategic reorientation toward esports, and solid governance and risk controls across its European‑centric media operations.

From the report

Content PRD LEAGUE 2018 IN BRIEF CEO STATEMENT 1 2018 IN BRIEF 2 CEO STATEMENT 4 THE SPLIT 6 THE NEW MTG 10 BUSINESS OPERATIONS 11 SEGMENTAL PERFORMANCE 12 DIRECTOR’S REPORT 13 BUSINESS OPERATIONS 15 BUSINESS REVIEW BUSINESS SEGMENTS 17 BUSINESS SEGMENTS 19 OTHER GROUP INFORMATION 19 OTHER GROUP INFORMATION 20 THE MTG SHARE 20 THE MTG SHARE 22 FINANCIAL POLICIES AND RISK MANAGEMENT 22 FINANCIAL POLICIES AND RISK MANAGEMENT 24 GOVERNANCE AND RESPONSIBILITIES 29 INTERNAL CONTROL REPORT 30 BOARD OF DIRECTORS 32 GROUP MANAGEMENT 34 FINANCIAL STATEMENTS 46 NOTES TO THE ACCOUNTS 83 SIGNATURES 84 AUDIT REPORT AUDIT REPORT 88 FIVE YEAR SUMMARY 88 FIVE YEAR SUMMARY 89 ALTERNATIVE PERFORMANCE MEASURES 89 ALTERNATIVE PERFORMANCE MEASURES 91 DEFINITIONS ESL ESL 91 DEFINITIONS 92 FINANCIAL CALENDER 92 FINANCIAL CALENDER PRO LEAGUE PRO LEAGUE Corporate responsibility and sustainability priorities are covered in MTG’s csAGo Annual Corporate Responsibility Report, published on www.mtg.com Annual Corporate Responsibility Report, published on www.mtg.com

ESL 91 DEFINITIONS 92 FINANCIAL CALENDER 92 FINANCIAL CALENDER PRO LEAGUE PRO LEAGUE Corporate responsibility and sustainability priorities are covered in MTG’s csAGo Annual Corporate Responsibility Report, published on www.mtg.com Annual Corporate Responsibility Report, published on www.mtg.com MTG 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. experiences in esports, digital video content and online gaming Born in Sweden, our shares are listed on Nasdag Stockholm.

2018 in brief Sales, SEKm Operating income before IAC, SEKm 19,742 1,571 +4% organic growth +24% growth Initiative to As in 2017, the Group’s sales, profits and margins Split all improved. The transformation continued as we stepped up our investments into ESL and Splay while exiting our Afro-urban entertainment company Trace Partners. We also worked hard to prepare for the split of MTG into two, which took place at the 1 One became two in Q1 2019 with beginning of 2019 with the distribution and listing of 1 the distribution of NENT Group NENT Group shares on Nasdaq Stockholm.

A record year and a successful split CEO Statement | 2018 was a successful and eventful year for MTG. We delivered higher sales, profits and margins, while at the same time preparing for the split of MTG, which marks the latest chapter in our transformation story. One became two on 28 March 2019 when all the shares that we distributed in NENT Group were successfully listed on Nasdaq Stockholm. Both companies have a bright future ahead of them with attractive offerings and equity stories. 2018 was an eventful year for MTG The transformation journey that we have been on during the past four years acceler - ated even further in 2018. We started the year with the proposed merger of our Nordic businesses with TDC Group, in order to create a scale consumer cham - pion providing unique benefits for customers and significant synergies. This combi - nation was later terminated following the take-over of TDC Group by a financial con - sortium. This was followed by the Board of Directors’ decision to initiate a process to prepare for the split of MTG into two listed companies by distributing all of the shares in Nordic Entertainment Group (NENT Group) to MTG’s shareholders. We have also continued to actively align our portfolio to the new strategy, which included the divestment of Trace Partners and acquisi - tions of further shares in ESL, Zoomin.TV and Splay Networks. The February 2019 Extraordinary General Meeting of MTG shareholders voted in favour of the split, and NENT Group was successfully dis - tributed to our shareholders and listed on Nasdaq Stockholm on March 28 2019. and NE tributed Nasdaq Continued operational performance The transformation has not been without

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The operational with significantly increased sales and prof - its. We signed an agreement at the begin - ning of the year to sell Nova to PPF Group, which was later disallowed by the Bulgar - ian Competition Commission. We have subsequently announced the sale of Nova to Advance Media Group and have now received local regulatory approval. Nova will remain part of MTG until the sale is completed in April 2019. Being at the forefront of the industry MTG is well-known not only for its inno - vation but also for being brave enough to challenge and disrupt itself. We always aim to invest our time, energy and money in those areas where our customers spend most of theirs. The adoption of subscrip - tion-based streaming services has been very fast, and Nordic penetration levels are now close to 50%. We expect that this level will reach near to 100% in the com - ing years with multiple subscriptions per household. I am happy that we took the bold decision many years ago to disrupt our business by aggressively promoting our streaming businesses, and this is a key reason why we now not only have leadership positions in the streaming market, but also have higher online market shares than offline. NENT Group is the home of sports in the Nordic region and we have over the past years increased our invest - ments into original content to further dif - ferentiate and strengthen our position in this highly competitive but fast-growing market. Our investments into esports and online gaming are further evidence of our ability to adapt to changing consumer behaviours.

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