9M 2015 financial results presentation 26 November 2015 Disclosure - - PowerPoint PPT Presentation

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9M 2015 financial results presentation 26 November 2015 Disclosure - - PowerPoint PPT Presentation

United Group BO 9M 2015 financial results presentation 26 November 2015 Disclosure Regarding Forward-Looking Statements and the Presentation of Certain Financial Information This presentation contains forward-looking statements, which include


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9M 2015 financial results presentation

26 November 2015

United Group BO

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This presentation contains forward-looking statements, which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or including the words “targets”, “believes”, “expects”, “aims”, “intends”, “may”, “anticipates”, “estimates”, “would”, “will”, “could”, “should” or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond our control that could cause our actual performance or achievements to be materially different from future performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our present and future strategies and the environment in which we will operate in the future. These forward-looking statements speak

  • nly as at the date of this presentation. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking

statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any

  • f such statements are based.

In addition, this presentation contains summary unaudited pro forma condensed combined financial information for Adria Midco B.V. and its subsidiaries for the period ended September 30, 2014, which represents the arithmetical addition of the financial information of Adria Midco for the period ended September 30, 2014 (which includes the financial results of Slovenia Broadband S.à r.l. and its subsidiaries from March 1, 2014) and the financial information of Slovenia Broadband S.à r.l. for the two months ended February 28, 2014, after applying certain intercompany eliminations and making certain pro forma adjustments to give effect to the acquisition by United Group B.V. of Slovenia Broadband S.à r.l. and its subsidiaries on March 6, 2014, as though it had occurred on January 1, 2014. The unaudited pro forma financial information for Adria Midco B.V. and its consolidated subsidiaries is presented for informational purposes only and is not intended to represent or be indicative of the results of operations or financial position that we would have reported had the acquisition by United Group B.V.

  • f Slovenia Broadband S.à r.l. and its subsidiaries been completed as of the dates and for the periods presented herein and should not be taken as

representative of our results of operations or financial condition following the completion of such transaction. This presentation also contains summary unaudited condensed financial information for Adria Midco B.V. and its subsidiaries for the period ended September 30, 2015. Both 9M 2014 and 9M 2015 data is based on management results, which may differ from IFRS results. Certain financial measures and ratios related thereto in this presentation, including EBITDA, Adjusted EBITDA, Adjusted EBITDA minus capital expenditure, RGUs and ARPU (collectively, the ‘‘Non-IFRS Measures’’) are not specifically defined under IFRS or any other generally accepted accounting principles. These measures are presented here because we believe that they and similar measures are widely used in our industry as a means of evaluating a company’s

  • perating performance and financing structure. Our management believes this information, along with comparable IFRS measures, is useful to investors

because it provides a basis for measuring the operating performance in the periods presented. These measures are used in the internal management of our business, along with the most directly comparable IFRS financial measures, in evaluating the operating performance. These measures may not be comparable to other similarly titled measures of other companies and are not measurements under IFRS or other generally accepted accounting principles, and you should not consider such items as alternatives to net income (loss), operating income or any other performance measures derived in accordance with IFRS, and they may be different from similarly titled measures used by other companies.

Disclosure Regarding Forward-Looking Statements and the Presentation of Certain Financial Information

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Highlights Financial review Mergers & Acquisitions

Agenda

Introduction Operational review Appendices

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Introduction to United Group

  • South-East Europe’s leading provider of pay-TV and broadband

services, with a strong presence in mobile telephony following the Tušmobil acquisition

  • 2.8 million cable and satellite TV, broadband, fixed-line and mobile

RGUs across the six countries of former Yugoslavia

  • Operating in a market characterised by rapidly growing pay-TV and

broadband that is currently underpenetrated relative to other CEE and Western European markets

  • Broad reach via cable and direct-to-home platforms across the

region, and ethnically targeted over-the-top content platforms internationally

  • Reputation for providing the most attractive content in our respective

markets, available across all devices and formats

  • Group strategy leverages established proven strengths

extensive network,

differentiated content offerings, and

loyal customer base to further strengthen market leadership in the region and to target the region’s expat community with best in class local content delivered through the internet

  • Owned by funds affiliated with KKR, EBRD and the management

2020 Senior Notes

Issuer United Group B.V. Listed GEM, Irish Stock Exchange Governing Law State of New York Outstanding notes €625 million Coupon 7.875% Maturity 15 November 2020 Coupon dates 15 November & 15 May

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Highlights Financial review Mergers & Acquisitions

Agenda

Introduction Operational review Appendices

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9M 2015: operational highlights

** Comparability vs. 9M 2014 is affected by the reclassification of B2B cable subscribers at SBB, from unique cable subscribers to “Other” subscribers, in line with Group policy as of 2015. Excluding this effect, the figure would have been 928k vs. 806k in 9M 2014. The significant increase in mobile subscribers is due to the Tušmobil acquisition

  • Healthy year-on-year RGU growth
  • across all services
  • driven predominantly by increased multi-

play subscribers

  • Homes passed up by 8% to 1,487k YoY due to
  • expansion of and investment in our network
  • acquisition of Broadband Montenegro and 6

entities in Bosnia and Herzegovina

  • Blended cable ARPU up by 3% to €18.3 YoY as a

result of

  • successful execution of our strategy aimed at

selling more services to our cable subscribers

  • increased revenue from cable network-based

services

  • migration from lower-priced to higher-priced

service packages

806 420 77 448 218 12 37 912 465 100 541 321 324 113 Cable pay- TV DTH pay- TV OTT Broadband internet Fixed -line telephony Mobile services Other services

RGUs by service (k)**

9M 2014 9M 2015 +13% +11% +30% +21% +47% +201% 2688%

1,375 1,487 9M 2014 9M 2015

Homes passed (k)

+8%

17.8 18.3

9M 2014 9M 2015

Blended cable ARPU (€)

+3%

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9M 2015: financial highlights

  • Revenues up 32% YoY to €272.2 million as a result of
  • rganic growth and acquisitions
  • growing number of RGUs
  • price increases
  • Adjusted EBITDA up 20% YoY to €117.4 million
  • Net leverage* down to 3.84x from 4.11x
  • Additional €150 million of debt issued in April 2015 by tapping the

high yield bond with the interest rate of 7.875%

* Annualised Last Two Quarter Adjusted Pro Forma EBITDA is calculated as two times the amount of Consolidated Adjusted Pro Forma L2Q EBITDA 206.3 272.2 9M 2014 9M 2015

Revenue (EUR m)

+32% 98.0 117.4 9M 2014 9M 2015

Adjusted EBITDA (EUR m)

+20% 4.43x 3.99x 4.11x 3.84x H1 2015 9M 2015 Gross leverage Net leverage

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Highlights Financial review Mergers & Acquisitions

Agenda

Introduction Operational review Appendices

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SBB Serbia

  • Decrease of 4% following elimination
  • f network overlap between SBB and

KDS in Novi Sad after the merger of the two companies Telemach Slovenia

  • Organic increase against 9M 2014,

with 2k additional homes passed Telemach BiH

  • Increase
  • f

52% due to the acquisition of 6 cable operators in July 2015 Telemach Podgorica

  • Additional growth at Group level due

to acquisition

  • f

Broadband Montenegro (renamed Telemach Podgorica), an MMDS platform in Montenegro with 45k homes passed

Homes passed across key markets Key developments

Network expansion

878 839 300 302 198 301 9M 2014 9M 2015 9M 2014 9M 2015 9M 2014 9M 2015 SBB Serbia Telemach Slovenia Telemach BH

Homes passed (k)

  • 4%

+1% +52%

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RGUs vs. Unique cable subscribers Key developments

Increasing subscribers and RGUs

  • Increasing cable subscribers as a

result of organic network growth and acquisitions

  • Faster growth in RGUs per unique

cable subscriber driving

  • verall

performance

SBB Serbia & Telemach BiH

  • Start of telephony liberalization and

cross-selling of multi-play offers to 1- Play subscribers

  • Acquisition of 6 entities in Bosnia

attributed with 144k RGUs

Telemach Slovenia

  • Cross-selling of 3-Play offers to 1-Play

subscribers

  • Mobile offering to provide further boost

(4-Play)

  • Upgrading

existing customers to premium products

  • Acquisition of Tušmobil attributed with

310k RGUs Our 912k** unique cable subscribers order on average between 1.8x and 2.5x different services

** Comparability vs. 9M 2014 is affected by the reclassification of B2B cable subscribers at SBB, from unique cable subscribers to “Other” subscribers, in line with Group policy as of 2015. Excluding this effect, the figure would have been 928k vs. 806k in 9M 2014.

806 912 9M 2014 9M 2015

Unique cable subs (k)

+13% 2,019 2,775 9M 2014 9M 2015

RGUs (k)

+37%

RGUs vs. Unique cable subscribers 9M 2014 9M 2015 SBB Serbia 1.6x 1.8x Telemach Slovenia 2.4x 2.5x Telemach BH 1.8x 1.8x

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RGUs by service Key developments

Increasing RGUs

Healthy YoY RGU growth across all services

DTH pay-TV RGUs increased by 11% compared to 9M 2014 due to higher RGUs and lower churn rate

OTT RGUs increased by 30% mainly driven by acquisition of Bosna TV

Fixed line telephony RGUs up 47% YoY due to continued growth following the introduction of this service at SBB in April 2014

Mobile services – the largest contributor to the total increase in RGUs due to the acquisition of 310k of Tušmobil mobile subscibers

Other service RGUs increased by 201% mostly due to the acquisition of Telemach Podgorica (MMDS service) and re-categorisation of B2B subscribers

* Following theTušmobil acquisition mobile service RGUs are no longer reported under

Other services due to their increased importance.

806 420 77 448 218 12 37 912 465 100 541 321 324 113 Cable pay-TV DTH pay-TV OTT Broadband internet Fixed -line telephony Mobile services Other services

RGUs by service (k)**

9M 2014 9M 2015 +13% +11% +30% +21% +47% +201% +2688%

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Group

  • Blended cable ARPU up 3% to €18.3 in 9M

2015 as a result of positive trends across all

  • f our markets

SBB Serbia

  • Key drivers included migration to multi-play

packages Telemach Slovenia

  • Growth in multi-play subscribers
  • Price increase positively affected pay-TV

and internet revenues Telemach BiH

  • Growth in subscribers for multi-play offering
  • Increase in revenue from internet and fixed-

line telephony services

Blended cable ARPU Key developments

ARPU development

in € 9M 2014 9M 2015 9M 2014 9M 2015 9M 2014 9M 2015 Cable pay-TV 8.0 8.1 16.4 16.8 7.4 7.4 Broadband internet 10.8 9.7 15.8 15.8 9.4 8.7 Fixed-line telephony 6.1 5.3 4.8 3.8 11.5 10.6 Blended cable ARPU 13.7 14.4 30.7 31.1 14.9 15.5 SBB Serbia Telemach Slovenia Telemach BH

13.7 14.4 30.7 31.1 14.9 15.5 9M 2014 9M 2015 9M 2014 9M 2015 9M 2014 9M 2015 SBB Serbia Telemach Slovenia Telemach BH

Blended cable ARPU per segment (€)

+5% +1% +4%

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Key drivers

A comprehensive pay-TV package through content

  • wnership and strategic partnerships
  • Market leadership underpinned by ability

to offer the region’s most popular sports channels

  • Continued enhancement in attractiveness
  • f sports rights portfolio – recently added

ABA League (popular regional basketball league)

  • Ownership of popular children’s

entertainment channels across markets

 Critical for attractiveness of package for families

  • Ownership of attractive local content,

complemented by long term strategic partnerships with international entertainment brands

  • “Partner of choice” in the region for

content providers

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Highlights Financial review Mergers & Acquisitions

Agenda

Introduction Operational review Appendices

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Revenue development 9M 2015 Key drivers

Revenue development by segment

Group

  • 9M 2015 revenues up 32% YoY to €272.2 million

driven by growing RGUs, overall increase in ARPU,

  • rganic growth and acquisitions

SBB Serbia

  • Results affected by accounting change with revenues

booked on gross principle since 1 January 2015, no effect on United Group results

  • Reported revenues up by 18% to €124.2 million YoY

Telemach Slovenia

  • Revenue up by 62% to €102.2 million
  • Acquisition of Tušmobil in April 2015
  • Price increase implemented as of April 2014
  • Increase in the number of multi-play subscribers

Telemach BH

  • Revenue up by 34% to €22.6 million
  • Acquisition of 6 entities in July 2015
  • Realization of synergies from past acquisitions
  • Growth of internet and fixed-line telephony segments

United Media

  • Growth of 34% due to increased sales of distribution

rights to various channels and acquisitions

Other Businesses

  • Revenue growth of 67% YoY as a result of Solford

acquisition of Bosna TV and acquisition of Telemach Podgorica

206.3 272.2 9M 2014 9M 2015

Revenue (EUR m)

+32% 105.0 62.9 16.8 24.5 7.1 124.2 102.2 22.6 33.3 11.8 SBB Serbia Telemach Slovenia Telemach BH United Media Group Other Businesses w/o IC

Revenue by segment (EUR m)

9M 2014 9M 2015 +34% +36% +18% +62% +67%

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Key drivers

Adjusted EBITDA development

Group

  • Adjusted EBITDA up by 20% to €117.4 million

YoY as a result of:

  • Increased revenues and cost discipline

and successful integration of acquired companies

  • Acquisition of Tušmobil and 6 Bosnian

entities

SBB Serbia

  • Increase of 11% YoY driven by RGU growth

Telemach Slovenia

  • Increase of 27% compared to 9M 2014 due to
  • rganic growth and acquisition of Tušmobil

Telemach BiH

  • EBITDA

growth

  • f

36% YoY driven by acquisition of 6 entities, higher revenue and lower operating expenses

United Media

  • Higher revenue and acquisitions of Grand

Productions and Orlando Kids among key drivers of EBITDA growth

Other Businesses

  • EBITDA growth of 43% YoY due to Solford

acquisition of Bosna TV and acquisition of Telemach Podgorica

Adjusted EBITDA development 9M 2015

98.0 117.4 9M 2014 9M 2015

Adjusted EBITDA (EUR m)

+20% 46.8 31.6 7.8 8.7 3.3 51.7 39.9 10.6 10.5 4.8 SBB Serbia Telemach Slovenia Telemach BH United Media Group Other Businesses w/o IC

Adjusted EBITDA by segment (EUR m)

9M 2014 9M 2015 +36% +21% +11% +27% +43%

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Capital expenditures

CAPEX development* Key drivers

* Management capex data excl. capitalized inventory for both 9M 2015 and 9M 2014 Group

  • Capex growth as result of network expansion,

acquisition of Tus mobile and bosnian entities and investment in SWAP MPEG 4 project in DTH countries

  • Capex is expected not to exceed depreciation

levels on a long-term basis

SBB Serbia

  • 9M 2015 Capex impacted by investment in

SWAP MPEG 4 project in DTH countries

Telemach Slovenia

  • Higher capex mainly driven by additional

Capex from Tušmobil in 4G network and the acquisition of headquarters building

Telemach BiH

  • Similar rate of network expansion as in 9M

2014; Lower LfL capex United Media

  • Lower Capex due to variations in timing of

content investments Other businesses

  • Decrease due to acquisition of Bosna TV in

2014

63.4 92.8 9M 2014 9M 2015

Group CAPEX (EUR m)

+47% 24.9 17.3 5.6 12.5 3.0 42.3 31.6 5.6 11.9 1.4 SBB Serbia Telemach Slovenia Telemach BH United Media Group Other Businesses w/o IC

Capex by segment (EUR m)

9M 2014 9M 2015 +1%

  • 5%

+70% +83%

  • 54%
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Adjusted EBITDA-CAPEX and leverage development

Key drivers

  • Adjusted EBITDA-Capex down due to
  • ne off growth in Capex
  • Growth in capex mainly at Telemach

Slovenia, resulting from investments in 4G network and new company headquarters

  • Higher capex at SBB due to MPEG 4

swap project

  • Lower leverage as a result of EBITDA

growth

  • Annualised Last Two Quarter Adjusted

Pro Forma EBITDA is calculated as two times the amount of Consolidated Adjusted Pro Forma L2Q EBITDA

Leverage Adjusted EBITDA-CAPEX

34.6 24.5 9M 2014 9M 2015

Adjusted EBITDA - CAPEX (EUR m)

  • 29%

4.43x 3.99x 4.11x 3.84x H1 2015 9M 2015 Gross leverage Net leverage

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Highlights Financial review Appendices

Agenda

Introduction Operational review Mergers & Acquisitions

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Mergers & Acquisitions

  • Acquisitions of Orlando Kids, Broadband Montenegro and Grand Productions completed in Q4 2014 and

successfully integrated into Media segment during Q1 2015

  • Acquisition of Slovenian mobile operator Tušmobil completed in April 2015
  • EUnet acquisition closed in May 2015

 EUnet develops and implements Cloud technology and provides design and consulting services in Serbia  Initial cash consideration of €600 thousand with additional earn-out amounts subject to certain EBITDA targets being met by the target company

  • In July 2015, we completed the acquisition of a majority interest in BHB Cable TV d.o.o, a cable pay-TV
  • perator in Bosnia and Herzegovina, and five relatively small cable TV operators in Bosnia and
  • Herzegovina. The consideration for these acquisitions consists of an initial cash consideration of €20

million, and an additional €10 million which has been deposited in an escrow account and will be paid out provided certain conditions are met in following 12 months

  • In October 2015 we signed an SPA for the acquisition of M-Kabl, a cable operator in Montenegro with 20k

subscribers, for a total consideration of €12 million. Transaction is expected to close by the end of 2015

  • The Group continually monitors M&A opportunities and is currently in early stages of evaluating multiple

potential opportunities

  • In line with its stated strategy, the Group is looking for acquisitions that are value accretive and offer

substantial synergies with the Group’s existing operations

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Highlights Financial review Appendices

Agenda

Introduction Operational review Mergers & Acquisitions

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Pro Forma Comprehensive Income Data

in €000 9M 2014 9M 2015 Revenue 206.271 272.179 Other income

  • 1.177

Content cost (41.775) (44.780) Satellite capacity cost (5.483) (5.628) Internet link cost (2.282) (1.877) Materials cost (4.172) (5.463) Staff costs (18.665) (27.850) Other operating expenses (84.025) (81.419) IFRS EBITDA 49.870 106.338 Depreciation (41.754) (44.118) Amortisation of intangible assets (16.050) (24.742) Results from operating activities (7.933) 37.478 Finance income 243 9.458 Finance costs (53.202) (43.763) Net finance costs (52.959) (34.305) Profit/(loss) before tax (60.892) 3.172 Income tax (expenses)/benefit (330) (207) Minority share (523) (1.324) Profit/(Loss) for the period (61.746) 1.641

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Historical Balance Sheet Data

Group in €000 9M 2014 9M 2015 Assets Property, plant and equipment 222.615 313.623 Goodwill 714.891 680.381 Intangible assets 125.654 227.491 Investment property 776 613 Deferred costs 237 363 Other financial assets 524 1.381 Deferred tax assets 1.481 5.511 Long term loans 306 500 Long term investments Non-current assets 1.066.484 1.229.864 Programming rights held for sale 128 22 Inventories 4.031 4.813 Trade and other receivables 50.570 71.560 Short term loan receivables 60 115 Receivables from government 490 Prepayments 14.309 24.082 Income tax receivable 1.996 2.274 Cash and cash equivalents 20.499 25.926 Other current assets 1.073 10.290 Current assets 93.155 139.081 Total assets 1.159.639 1.368.945

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Historical Balance Sheet Data

Equity Issued and fully paid share capital 125 125 Share premium 564.592 564.592 Preferred equity Contributions by the owner Translation reserves 3.588 (9.610) Accumulated losses (37.611) (75.297) Equity attributable to owners of the Company 530.694 479.809 Non-controlling interests 8.825 12.459 Total equity 539.519 492.268 Liabilities Loans and borrowings 36.439 40.511 Bond loan 475.000 625.000 Amortization of bond and RCF related fees (20.160) (15.010) Long term provisions 878 3.312 Deferred revenue 7.140 7.377 Finance lease liabilities 12.467 9.705 Deferred tax liabilities 12.645 28.734 Employee benefits 695 932 Non-current liabilities 525.103 700.560 Trade and other payables 65.466 137.370 Interest payable 14.564 18.762 Current tax liabilities 409 155 Loans and borrowings 1.922 165 Deferred revenue 5.546 8.878 Finance lease liabilities 7.110 10.786 Current liabilities 95.017 176.117 Total liabilities 620.120 876.677 Total equity and liabilities 1.159.639 1.368.945

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Consolidated Statement of Cash Flows Information

* Capex data including capitalized inventory for 9M 2015 ** Most of interest received is from Bond tap

Group in €000 9M 2014 9M 2015 Cash flows from operating activities Profit/(Loss) for the year (61.746) 1.641 Adjustments for: Depreciation 41.754 44.118 Amortisation 16.050 24.742 Impairment of trade and other receivables

  • Impairment of property, plant and equipment
  • Impairment of other financial assets
  • Tax (income)/expense

330 207 Minority interest 523 1.324 Gain on revaluation of investment/step acquisition

  • Net foreign exchange (gain) / loss

(1.963) Net finance cost 52.959 36.268 Operating cash flows before WC changes 49.870 106.338 Changes in working capital: (Increase)/Decrease in accounts receivables and prepayments (5.287) 1.516 Increase/(Decrease) in deferred income 137 932 (Increase)/Decrease in deferred cost (237) (363) (Increase)/Decrease in inventories (731) 539 (Increase)/Decrease of programming rights (2.509) (Increase)/Decrease in escrow account (10.290) Increase/(Decrease) in trade and other payables (12.497) 6.562 Cash generated from operations 28.747 105.234 Interest paid (23.832) (25.618) interest received 243 7.495 Income tax paid (855) (2.526) Net cash from operating activities 4.303 84.585 Cash flows from investing activities Purchase of property, plant and equipment (48.475) (88.359) Purchase of intangible assets (14.879) (16.375) Decrease in other financial assets 6.216 Increase in long-term investments (1.165) Acquisition of subsidiaries, net of cash acquired (550.450) (88.228) (Increase)/decrease in non-current financial asset

  • (380)

Net cash used in investing activities (608.753) (193.342) Cash flows from financing activities Proceeds from borrowings 45.201 290.263 Repayment of borrowings (320.706) (175.566) Repayment of loan receivables Proceeds from finance lease, net 10.809 28 Capital increase 418.139 Net cash used in financing activities 153.443 114.726 Net increase in cash and cash equivalents (451.008) 5.969 Cash and cash equivalents at 1 January 8.229 16.182 Cash at ESCROW account as at 31.12.2013/2014 465.500 2.105 Effects of movements in exchange rates on cash held (2.222) 1.670 Cash and cash equivalents at end of period 20.499 25.926