telling stories touching lives expanding worlds Annual & Sustainability Report 2019 Content This is NENT Group At a glance 2019 highlights 2 CEO’s statement 4 Who we are 7 At a glance Perfectly positioned 9 Our investment proposition 26 Sustainability 28 NENT Group is the Nordic region’s leading entertainment provider. The NENT Group Share 42 Our primary revenue stream is the sale of subscriptions, which Governance report 45 Governance and responsibilities 46 have grown significantly in recent years following our early and Internal control report 50 Board of Directors 51 significant investments in streaming. Today, we are the Nordic Group Executive management 53 Risks and risk management 55 region’s leading streaming company, with the broadest and most Administration report 59 relevant content offering spanning all Nordic contries, best-in-class Administration report 60 Business segments 67 content discovery and a stable and scalable technology platform. Financial statements 69 Notes to the accounts 78 Signatures 118 Audit report 119 Historical overview 123 Alternative performance measures 124 Geographical sales split 2019 Sustainability reporting 126 Our key brands Sweden 39% Other Norway 21% Definitions & Glossary 152 Financial calendar 152 Finland Addresses 153 6% Denmark About this report 30% The statutory Annual Report covers pages 59–118. The Sustainability Report (including the statutory sustainability report) covers pages 28–41, 49, 57, 126–150. NENT Group Rest of the reports its sustainability work according to GRI Standards world, 4% – Core option. The Annual & Sustainability Report is pub- lished in Swedish and English. The Swedish version is the original and shall apply in any instance where the two versions differ. Administration Overview CEO’s Perfectly Investment Sustainability The share Governance report & Financial Sustainability statement positioned proposition report statements reporting NENT Group has two reporting segments: Broadcasting & Streaming and NENT Studios Net sales by segment Operating income by Broadcasting & Streaming accounted for 87% segment, before IAC of Group sales in 2019. The segment primarily provides TV and video streaming services in the Nordic region, as well as radio networks and music streaming services in Sweden and Norway. Subscriptions and related services accounted for 71% of segment sales, with the remaining 29% derived from advertising. NENT Studios accounted for 13% of Group sales Broadcasting Broadcasting in 2019. NENT Studios is the leading content crea- & Streaming, 87% & Streaming, 95% tion, production and distribution business in the Studios, 13% Studios, 5% Nordic region, and also operates internationally. The studios comprise 32 companies in 17 countries, and are focused on scripted and non-scripted content, branded entertainment and events. Net sales Number of employees Nationalities (SEKbn) at the end of 2019 in our team 15.7 1,976 40+ GRI 102-4 GRI 102-7 Administration Overview CEO’s Perfectly Investment Sustainability The share Governance report & Financial Sustainability statement positioned proposition report statements reporting 2019 highlights 2019 was an historic year for NENT Group. The highlights included the listing of the company’s shares on Nasdaq Stockholm, healthy organic growth, higher profits for all business segments, strong Viaplay subscriber growth, the implementation of a new operat- ing model, and the announcement of the proposed merger of Viasat Consumer with Canal Digital. This progress has been reflected in a total shareholder return of 41% since the listing of NENT Group on 28 March to 31 December 2019. 2 Administration Overview CEO’s Perfectly Investment Sustainability The share Governance report & Financial Sustainability statement positioned proposition report statements reporting Financial highlights Strategic highlights Sustainability highlights • Net sales increased by 6% on an organic basis • NENT Group completed its split from Modern • A new three-year sustainability strategy, including to SEK 15,671m. Subscriptions and related reve- Times Group MTG AB and successfully listed on integrated goals, has been launched and is nues accounted for 61%, advertising for 26% Nasdaq Stockholm on 28 March 2019. The com- focused on five focus areas: (1) developing Nordic and Studios for 13% of Group sales. pany has a new purpose, brand, culture, values storytelling and the creative industry, (2) promot- and sustainability strategy. ing an equal, diverse and inclusive society, and • The combined operating income for both busi- driving excellence in our (3) culture, (4) conduct ness segments increased by 6% to SEK 1,813m. • A new organisational and operating model was and (5) content. Total operating income before items affecting implemented in the second half of 2019. The new comparability (IAC) was stable at SEK 1,545m set-up is based on focused areas of responsibility • NENT Group is a signatory of the United Nations due to the higher central operating costs of that operate across the Group, and enable NENT (UN) Global Compact and UN Sustainable Devel- becoming an independent and listed company. Group to take decisions faster, ensure strategic opment Goals (SDG) Media Compact, and has alignment, scale flexibly and efficiently, while also committed to the UN’s SDGs and Women • The Viaplay subscriber base grew by 310k, generating significant savings. Empower ment Principles. or 25%, to 1,568k subscribers. Streaming cus- tomers accounted for 62% of NENT Group’s • A 50/50 joint venture between Viasat Consumer • NENT Group stepped up its engagement in total subscriber base at the end of 2019. and Canal Digital was announced (subject to reg- the fight against diabetes by establishing the ulatory approval). This will yield substantial cost pan-Nordic BEAT Diabetes foundation and synergies and shareholder value, enhance the con tinuing to raise awareness of the disease customer proposition and further enhance NENT and funding for diabetes research. Group’s focus on Viaplay. Organic EBIT Stakeholders Viaplay # of Total sales before IAC engaged in setting our subscriber premiered shareholder growth (SEKm) sustainability strategy growth Originals return1) 6% 1,545 3,000+ +25% 21 +41% 1) 28 March–31 December 2019 3 Administration Overview CEO’s Perfectly Investment Sustainability The share Governance report & Financial Sustainability statement positioned proposition report statements reporting CEO’s statement NENT Group has led the way with our early and ambitious investments in streaming, as well as innovative partnerships with content owners and distributors. This clearly yielded results in 2019 with higher sales and profits, and accelerating subscriber growth. The spread of the Coronavirus is bringing significant challenges in 2020, and we are working hard to ensure the well- being of our employees and the continued delivery of the best entertain- ment experiences to our customers and partners. We are well positioned to recover quickly when things start to normalise, and to take advantage of the long-term opportunities that lie ahead of us. An historic and successful year 2019 was an historic year for NENT Group. Our split from MTG, listing on Nasdaq Stockholm and implementation of a new operating model have created an even more engaged, effective and aligned organisation. We have created a culture and brand based on a new purpose and set of values, which we are working hard to imple- ment across the Group, in order to drive future success and make NENT an even better place to be. We have significantly stepped up our content invest- ments, especially in key categories such as sports and originals. Particularly significant are our new long-term Nordic rights to the English Premier League football, the FIS Alpine and cross-country skiing and the IIHF Ice Hockey World Championship, and the 21 high-quality Viaplay originals that we have premiered in 2019. We have also added even more Hollywood content following deals 4 GRI 102-12 GRI 102-14 Administration Overview CEO’s Perfectly Investment Sustainability The share Governance report & Financial Sustainability statement positioned proposition report statements reporting with MGM, NBCUniversal and Disney. Having the broadest We have delivered on our profitable growth commitment, while strengthening and most relevant content offering is vital in realising our our content leadership and growing our Viaplay base by over 25%. Scaling ambition to be the Nordic region’s leading streaming company. Viaplay remains our top priority simply because it’s the best way to drive long Our organic sales were up 6% and our Viaplay sub- term value. We have also continued to transform including the implementation scriber base grew by 310k to 1.6 million. Operating profits for both our segments were up. We are committed to of a new operating model, the announced joint venture with Canal Digital and growing our sales, profits and, most importantly, our the restructuring of NENT Studios. Viaplay subscriber base even further. Scaling Viaplay is simply the best way to drive long-term shareholder value. Iceland in the first half of 2020, which will complete A streaming leader our footprint in all five Nordic countries and showcase The entertainment business is changing rapidly and will Viaplay’s ability to expand internationally in a fast and continue to do so. The growth of streaming has driven cost-efficient way. the rise in total video viewing, even though linear video consumption is declining. Establishing our position as the