United Group BO 9M 2014 financial results presentation 25 November - PowerPoint PPT Presentation

United Group BO 9M 2014 financial results presentation 25 November 2014

Disclosure Regarding Forward-Looking Statements 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”, “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. 2

Agenda Introduction Highlights Operational review Financial review Mergers & acquisitions Appendices 3

Introduction to United Group South-East Europe’s leading provider of pay-TV and broadband  2020 Senior Notes services Issuer United Group B.V.  2.0 million cable and satellite TV, broadband, fixed and mobile RGUs Listed GEM, Irish Stock Exchange across the six countries of former Yugoslavia Governing Law State of New York  Operating in a market characterised by rapidly growing pay-TV and broadband that is currently underpenetrated relative to other CEE and € 475 million Outstanding notes Western European markets Coupon 7.875%  Broad reach via cable and direct-to-home platforms across the region, Maturity 15 November 2020 and ethnically targeted over-the-top content platforms internationally Coupon dates 15 November & 15 May  Reputation for providing the most attractive content in its respective markets, available across all devices and formats XS0992294388 (Reg. S) ISIN code XS0992293810 (144A)  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  Following successful acquisition of the Group in March 2014, United Group is now majority-owned by funds affiliated with KKR, EBRD and the management 4

Agenda Introduction Highlights Operational review Financial review Mergers & acquisitions Appendices 5

9M 2014: operational highlights RGUs by service (k)  Healthy year-on-year RGU growth 806 799 448  420 +1% Homes passed up by 9% to 1,375k vs. 9M 2013 +42% 387 403 +165% +35% 218 Homes passed increased primarily as a result of network +11% +9% 153 expansion and modernisation 74 55 53 20 Cable pay-TV DTH pay-TV IPTV Broadband Fixed Other (NetTV Plus) internet telephony services  Blended cable ARPU up by 7% to € 17.8 vs. 9M 2013 9M 2013 9M 2014 Stable growth trend driven by increased revenue from cable network-based services as a result of successful execution of our strategy aimed at selling more services to our cable subscribers: Homes passed (k) Blended cable ARPU ( € ) – migration from lower-priced to higher-priced service 1,375 17.8 packages + +9% +7% 1,256 – growth in subscribers for the multi-play offering, and 16.7 – price increases in Serbia (March 2014) and Slovenia (April 2014) 9M 2013 9M 2014 9M 2013 9M 2014 6

9M 2014: financial highlights Revenues ( € m)  Revenues up 17% year-on-year to € 206.3 million as a result of 206.3 +17% – growing number of RGUs 176.0 – price increases 9M 2013 9M 2014 – organic growth and acquisitions EBITDA ( € m)  EBITDA up 22% year-on-year to € 98.0 million +22% 98.0 80.4 – Group EBITDA growing faster than revenues – Reflects ability to capitalise on customer relationships through sales of additional and higher margin products 9M 2013 9M 2014 4.30x  Net leverage down to 3.90x from 3.98x 4.10x 4.22x 4.05x 4.16x 3.98x Annualised Last Two Quarters EBITDA is calculated by 3.90x 4.00x multiplying EBITDA for the two most recent quarters by two. Q4 2013 Q1 2014 Q2 2014 Q3 2014 Gross leverage Net leverage Gross leverage Net leverage 7

Agenda Introduction Highlights Operational review Financial review Mergers & acquisitions Appendices 8

Network expansion Homes passed across key markets Key developments SBB Serbia Homes passed (k)  Organic increase driven by investments aimed at network extension and modernisation in regions +14% where a strong penetration rate is expected. 878 772  YoY comparison affected by addition of 43k HPs from KDS. +1% +5% 296 299 198 188 Telemach Slovenia  Slight organic increase against 9M 2013, with 3k additional homes passed. Higher year-on- year growth in H1 was due to the acquisition of 9M 2013 9M 2014 9M 2013 9M 2014 9M 2013 9M 2014 Elektro Turnsek SBB Serbia Telemach Slovenia Telemach BH Telemach BH  Positive results due to increased rollout and further network expansion during the period  Accelerated network expansion is expected during H2 2014. 9

Increasing subscribers and RGUs Key developments RGUs vs. Unique cable subscribers  Increasing subscribers Our 806k unique cable subscribers order on average between 1.6x and 2.4x different services  Faster growth in RGUs per unique cable subscribers driving overall performance Unique cable subs (k) RGUs (k) 806 2,019 +11% +1% 1,817 799 9M 2013 9M 2014 9M 2013 9M 2014 RGUs vs. Unique cable subscribers 9M 2013 9M 2014 SBB Serbia Segment 1.5x 1.6x Telemach Slovenia Segment 2.3x 2.4x Telemach BH Segment 1.6x 1.8x 10

Increasing RGUs Key developments RGUs by service RGUs by service (k)  Healthy year-on-year RGU growth 806 799  74k NetTV Plus IPTV RGUs generated through 448 420 +1% 403 +42% 387 +35% +165% 218 – organic growth, +11% +9% 153 74 55 53 20 – acquisition of Solford (52k), and Cable pay-TV DTH pay-TV IPTV Broadband Fixed Other (NetTV Plus) internet telephony services – acquisition of 7k subscribers from Bosna TV in June 2014 9M 2013 9M 2014 Revenue split by cable segment and service Telemach Slovenia SBB Serbia* Telemach BH 10% 7% 18% 34% 15% 44% 46% 9% 31% 32% 2% 29% 23% 0% Cable pay-TV Broadband Internet Fixed Telephony IPTV *Revenues from DTH pay-TV services for all six DTH pay-TV Other services countries of operation reported under SBB Serbia 11

ARPU development Blended cable ARPU Key developments Group SBB Serbia Telemach Slo Telemach BH Blended cable ARPU up 7% to € 17.8 in 9M  2014 as a result of increased blended cable in € 9M 2013 9M 2014 9M 2013 9M 2014 9M 2013 9M 2014 ARPUs across all of our markets Cable pay-TV 7.6 8.0 16.8 16.4 7.1 7.4 Broadband internet 11.3 10.8 16.2 15.8 10.2 9.4 SBB Serbia Fixed telephony 7.3 6.1 5.2 4.8 12.5 11.5 Key drivers: price increase (March 2014)  Blended cable ARPU 12.9 13.7 30.2 30.7 13.2 14.9 and fixed number portability. Most of the ported fixed lines (Q3’14: 10k) were ported into SBB DTH ARPU down slightly to € 8.8 (9M 2013:  € 9.0) due to a temporary effect of the strong Blended cable ARPU per segment ( € ) take up during the initial promotion period +2% Telemach Slovenia 30.7 30.2 Price increase positively affected pay-TV  and Internet products Blended cable ARPU impacted by  reclassification of B2B subscribers Strong sales in internet, mobile and VOIP  +6% +13% 14.9 13.7 12.9 13.2 Telemach BH Growth in subscribers for multi-play offering  Pressure on telephony ARPU caused by  internet calls Other 9M 2013 9M 2014 9M 2013 9M 2014 9M 2013 9M 2014 IPTV ARPU (NetTV Plus) at € 11.2, from  SBB Serbia Telemach Slovenia Telemach BH € 11.1 in Q2 2014 12

Agenda Introduction Highlights Operational review Financial review Mergers & acquisitions Appendices 13