ADRIA BIDCO 2013 Financial Results Presentation 29 April 2014 - - PowerPoint PPT Presentation

2013 Financial Results Presentation

29 April 2014

ADRIA BIDCO

2

This presentation includes forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology, including words such as “believes,” “estimates,” “anticipates,” “expects,” “intends,” “may,” “will”, “could” or “should” or, in each case, their negative or other variations thereof or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this presentation and include statements regarding, or based upon, our Management’s current intentions, beliefs or expectations concerning, among other things, our future results of operations, financial condition, liquidity, prospects, growth, strategies, potential acquisitions, or developments in the industry in which we operate. Forward-looking statements are based upon assumptions and estimates about future events or circumstances, and are subject to risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will materialize. Accordingly, our actual results may differ materially from those expressed or implied thereby. Unless otherwise specified, forward-looking statements herein speak only as of the date of this

• presentation. We undertake no obligation, and do not intend, to publicly update or revise any forward-

looking statements, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above. Readers are cautioned not to place undue reliance on any forward-looking statements.

Disclosure Regarding Forward-Looking Statements

3

2013 Highlights Financial Review Appendices

Agenda

Introduction Operational Review

4

Introduction to Adria Bidco



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



1.9 million cable and satellite TV, broadband, fixed 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



Unmatched 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 its respective markets, available across all devices and formats



Group strategy leverages established proven strengths

–

superior 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



Following successful acquisition of the Group in March 2014, Adria Bidco is now indirectly majority-owned by funds affiliated with KKR

2020 Senior Notes

Issuer Adria Bidco B.V. Listed GEM, Irish Stock Exchange Governing Law State of New York Outstanding notes €475 million Coupon 7.875% Maturity 15 November 2020 Coupon dates 15 November & 15 May ISIN code XS0992294388 (Reg. S) XS0992293810 (144A)

5

2013 Highlights Financial Review Appendices

Agenda

Introduction Operational Review

6

2013 operational highlights



Homes passed up by 16% to 1.3 million vs. 2012, primarily as a result of network expansion

–

75,000 added during Q4 2013



RGUs up by 19% to 1.9 million since December 2012

–

57% of new additions resulted from acquisitions of cable companies in Slovenia, Serbia and Bosnia, and world-wide OTT operator Net TV Plus



Number of unique cable subscribers up by 10% to 812,000

–

11,000 unique cable subscribers added during Q4 2013



Blended ARPU up by 10% year-on-year to €17.0

–

Migration from lower-priced analogue to higher-priced digital pay-TV services among key drivers

–

ARPU of €16.8 in Q4 2013 vs. €17.0 for Q3 2014

1.1 1.3 2012 2013

Homes passed (m)

+16% 1.6 1.9 2012 2013

RGUs (m)

+19% 15.4 17.0 2012 2013

Blended cable ARPU (€)

+10%

7

2013 financial highlights



Strong growth in consolidated group revenues to €243.0m

–

SBB Serbia: €126.8 million

–

Telemach Slovenia: €75.2 million

–

Telemach BH: €19.2 million

–

United Media: €26.9 million

–

Q4 2013 revenue up by 12% to €67.0 million vs. Q3 2013



Adjusted EBITDA up 20% to €110 million

–

Acquisitions contributed c.€6.5 million to EBITDA

–

Q4 2013 adjusted EBITDA up by 4% to €28.7 million vs. Q3 2013



Stable annual operating cash inflow of €70.2 million due to

–

positive operating results, and

–

improved working capital,

partially offset by…

–

higher CAPEX compared to 2012 at €81.3million driven by increased investments in all cable groups (SBB Serbia, Telemach Slovenia, Telemach Bosnia) and United Media Group

–

Total capex of €21.9 million in Q4 2013



Net leverage in 2013 at 4.22x

191.5 243.0 2012 2013

Revenues (EUR m)

+27% 91.4 110.0 2012 2013

Adjusted EBITDA (EUR m)

+20%

8

2013 Highlights Financial Review Appendices

Agenda

Introduction Operational Review

9



NetTV.plus - OTT content platform, which distributes local ethnic content to former Yugoslav expats around the world

–

Acquired in Q3 2013

–

Over 150 local-language channels

–

Community of 4.7 million people in Western Europe, North America and Australia

–

59,000 subscribers as at 31 Dec 2013

–

Significant future growth opportunities



Kabel TV & Elektro Turnsek - Slovenian cable companies

–

Acquired in H1 2013

–

Added 72,000 cable pay-TV RGUs to customer portfolio



JET TV and United Media Production acquired in Serbia during H1 2013

–

Added 15,000 cable pay-TV RGUs to customer portfolio



Art Net acquired in Bosnia during Q1 2013



United Group Distribution, operating across the former Yugoslav region, acquired in Q1 2013

Homes passed across key markets Key developments

Network expansion driven by bolt-on acquisitions

*Includes KDS and JET TV subscribers in Serbia

797 843 243 297 107 191 2012 2013 2012 2013 2012 2013 SBB Serbia* Telemach Slo Telemach BH

'000

10

RGUs by service Key developments

RGUs

*Revenues from DTH pay-TV services for all six countries of operation reported under SBB Serbia 43% 34% 20% 2% 1%

Serbia*

42% 28% 27% 3%

Slovenia

58% 30% 10% 2%

Bosnia



RGUs up by 19% to 1.9 million since 2012, driven by

–

• rganic growth, and

–

acquisitions (Slovenia, Bosnia, Serbia)



Cable pay-TV RGUs positively affected by organic growth and acquisitions in Slovenia



Growth in telephony RGUs driven by acquisitions in Slovenia and increase in multi-play subscriptions over the period



55,000 IPTV RGUs added through the acquisition of Net TV Plus 725 363

• 354

111 26 806 400 59 424 168 29 Cable pay-TV DTH pay-TV IPTV Broadband internet Fixed telephony Other services

'000

2012 2013

+11% +10% +20% +52% +11%

11



2013 blended cable ARPU up 10% to €17.0

–

ARPU of €16.8 in Q4 2013 vs. €17.0 for Q3 2014

SBB Serbia

–

Delayed price increase approved from April 2014

–

Promotional campaigns

–

Lower telephony traffic

–

FX impact

Telemach Slovenia

–

Growth in subscribers for multi-play offering

–

Subscriber migration from lower-priced analogue cable pay-TV services to higher-priced digital pay-TV services

–

Price increase for triple-play package

Telemach BH

–

Growth in subscribers for multi-play offering

–

Price increases for cable pay TV and broadband internet services

–

Higher telephony services revenues

ARPU per unique subscriber Key developments

Continued growth in blended cable ARPU

SBB Serbia* Telemach Slovenia Telemach BH in € 2013 2012 2013 2012 2013 2012 Cable pay-TV 7.6 7.0 16.2 16.3 7.8 6.5 Broadband internet 11.0 10.8 15.6 15.6 10.8 9.3 Telephony 6.3 8.0 5.0 5.8 13.0 11.9

*Includes KDS and JET TV subscribers in Serbia

15.4 16.8 2012 2013

Blended cable ARPU (€)

+9% 11.7 12.9 27.2 28.1 11.4 14.8 2012 2013 2012 2013 2012 2013 SBB Serbia* Telemach Slo Telemach BH

Cable ARPU per country (€)

12

2013 Highlights Financial Review Appendices

Agenda

Introduction Operational Review

13

2013 revenue development Key drivers

Revenue development



Group revenue up by 27% to €243.0 million from 2012 due to acquisitions,

• rganic growth, and overall increase in

ARPU SBB Serbia



Revenue up by 13% to €126.8 million driven by subscriber base growth and migration to multi-play packages Telemach Slovenia



Revenue up by 15% to €75.2 million due to:

– acquisitions – continued subscriber migration to

higher-priced digital pay TV services

– increase in the number of multi-

play subscribers Telemach BH



Revenue up by 40% to €19.5 million due to a mix of acquisitions and organic subscriber base growth United Media Group



Generated revenues of €26.9 million in line with gradual subscriber base growth

• f the Group and overall market

112.2 65.6 13.6 126.8 75.2 19.2 SBB Serbia Telemach Slovenia Telemach Bosnia

2012 2013

57.8 58.5 59.7 67.0 Q1 2013 Q2 2013 Q3 2013 Q4 2013

(EUR m)

+27%

14

EBITDA reconciliation

2013 EBITDA by business segment

EBITDA development



Total annual 2013 adjusted EBITDA up 36% to €110.0 million



Adjusted EBITDA in Q4 2013 at €28.7 million

EUR (‘000) 47% 33% 7% 8% 5% SBB Serbia Tel Slovenia Tel Bosnia United Media Net TV Plus & Other 27.5 28.8 Q3 2014 Q4 2014

Adjusted EBITDA (€ mil)

+4%

80,162 9,526 840 9,654 3,555 228 5,149 109,114 Reported EBITDA Transaction costs Non-cash impairment charges Withholding tax expenses Management fees Rent expenses Other Adjusted EBITDA

15

Capital expenditures

CAPEX development Key drivers



Higher growth-driven CAPEX vs. 2012 at €30.8 million due mainly to more intensive investments in Serbia and content procurement in United Media Group SBB Serbia



Increase due to investments in customer premise equipment and network extension in line with subscriber growth Telemach Slovenia



Increased investments into customer premise equipment, backbone and network upgrades and network extension following integration of newly-acquired entities Telemach BH



Increased investments into customer premise equipment, backbone and network upgrades EUR (m)

* incl KDS and JET TV in Serbia

27.5 15.3 7.7

• 44.3

17.4 8.2 11.3 SBB Serbia* Telemach Slovenia Telemach BH United Media Group

2012 2013

13.0 4.4 1.5 2.2 12.2 6.7 3.0 0.0 SBB Serbia* Telemach Slovenia Telemach BH United Media Group

Q3 2013 Q4 2013

16

61.3 70.2 2012* 2013 1.1x 4.35x 4.30x 4.19x 4.22x Q3 2013 Q4 2013 Gross leverage Net leverage

Operating cash flow

Cash flow generation and financial position

EUR (m)

Key drivers



Despite higher capex due to increased investments at SBB Serbia, significant increase in operating cash flow driven by:

– positive operating results, and – stable collection of receivables – integration of acquired

companies Factors affecting comparability



As the Group in its current form did not exist in 2012, consolidated annual cash flow for 2012 is not available

Leverage

*aggregated pro forma for illustration purposes only

17

2013 Highlights Financial Review Appendices

Agenda

Introduction Operational Review

18

Income Statement

in €000 2013 Audited 2012 Pro Forma Revenue 243,022 191,454 Other income 3,324 2,674 Content cost (52,795) (36,188) Satellite capacity cost (7,305) (7,087) Internet cost (4,472) (3,724) Materials cost (8,528) (4,933) Staff costs (23,441) (17,971) Depreciation (45,184) (40,772) Amortisation of intangible assets (21,197) (11,596) Other operating expenses (69,643) (44,160) Results from operating activities 13,781 27,697 Finance income 4,906 1,887 Finance costs (27,197) (48,551) Net finance costs (22,291) (46,664) Loss before tax (8,510) (18,967) Income tax (909) 1 Loss for the period (9,419) (18,966) Group

19

Balance Sheet

in €000 31 Dec 2013 31 Dec 2012 Audited Audited Assets Property, plant and equipment 214,339 188,387 Goodwill 419,454 372,809 Intangible assets 131,378 101,959 Investment property 591 633 Deferred costs

• 108

Other financial assets 6,740 8,066 Deferred tax assets 2,181 1,831 Non-current assets 774,683 673,793 Programming rights 3,249 13,259 Inventories 3,300 2,002 Trade and other receivables 43,122 36,986 Other financial assets 3,123 5,754 Prepayments 18,032 6,945 Income tax receivables 1,558 658 Cash and cash equivalents 8,229 15,193 Current assets 80,613 80,797 Total assets 855,296 754,590 Group 31 Dec 2013 31 Dec 2012 Audited Audited Equity Share capital 200 200 Share premium 1,800 1,800 Preferred equity instruments 248,318 248,250 Translation reserves (8,806) (6,241) Contribution by the owner 168,379 168,379 Accumulated (losses)/profits (8,760) 1,105 Equity attributable to owners of the Co 401,131 413,493 Non-controlling interests 10,446 8,250 Total equity 411,577 421,743 Liabilities Loans and borrowings 310,826 242,761 Long term provisions 894 1,970 Deferred revenue 8,471 7,762 Finance lease liabilities 5,093 1,536 Deferred tax liabilities 16,638 14,276 Employee benefits 698 540 Non-current liabilities 342,620 268,845 Trade and other payables 78,925 56,199 Current tax liabilities 496 103 Loans and borrowings 14,158 5,253 Deferred revenue 4,078 1,025 Finance lease liabilities 3,442 1,422 Current liabilities 101,099 64,002 Total liabilities 443,719 332,847 Total equity and liabilities 855,296 754,590 Group

20

Cash Flow Statement

Group in €000 2013 Audited Net cash flows from operating activities 70,235 Net cash used in investing activities (146,334) Net cash used in financing activities 69,151 Net increase in cash and cash equivalents (6,948) Cash and cash equivalents at 1 January 15,193 Effects of movements in exchange rates on cash held (16) Cash and cash equivalents at end of period 8,229

21

Presentation of Financial Information This document presents audited consolidated financial statements of the Group as of and for the year ended December 31, 2013, prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”). As the Group in its current form did not exist in 2012, consolidated annual cash flow and EBITDA reconciliation for 2012 are not available. Starting from Q1 2014, year-on-year comparisons with corresponding periods of 2013 will be presented in the Group’s financial reports. Non-IFRS Financial Measures The Group may present financial information herein that is not prepared in accordance with IFRS or any other generally accepted accounting principles, such as EBITDA, Adjusted EBITDA and other financial measures. This non-IFRS financial information should be considered in addition to, but not as a substitute for, financial information prepared in accordance with IFRS. Since not all companies compute these or other non-IFRS financial measures in the same way, the manner in which the Group has chosen to compute the non-IFRS financial measures presented herein may not be comparable with similarly defined terms used by other companies.

Presentation of Consolidated Financial Data