United Group BO H1 2019 financial results presentation 27 August - - PowerPoint PPT Presentation

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United Group BO H1 2019 financial results presentation 27 August - - PowerPoint PPT Presentation

United Group BO H1 2019 financial results presentation 27 August 2019 Disclosure regarding forward-looking statements and the presentation of certain financial information This presentation contains forward-looking statements, which include


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H1 2019 financial results presentation

27 August 2019

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.

This Presentation contains summary unaudited condensed financial information for Adria Midco B.V. and its subsidiaries for the six months ended June 30,

  • 2019. The statement of financial position for Adria Midco B.V. and its subsidiaries as at 30 June 2019 and as at 30 June 2018, as well as the condensed

consolidated interim statements of profit or loss and cash flows for Adria Midco B.V. and its subsidiaries for the six months periods then ended have been prepared in accordance with IFRS, but have not been reviewed by our independent auditors. As a consequence, the summary condensed financial information presented is subject to potential change. If in connection with any review there is any material change to such summary condensed financial information, we intend to present a supplemental report detailing such change. 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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Financial review Mergers & Acquisitions

Agenda

Introduction Operational review Appendices

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Introduction to United Group

§

South-East Europe’s leading multi-play telecommunications and media provider

§

3.8 million cable and satellite TV, broadband, fixed-line and mobile RGUs across the six countries of former Yugoslavia

§

Operating in a market characterized by continued growth in pay-TV and broadband and remains 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

  • ur respective markets, available across all devices and

formats

§

Strategy leverages the Group’s established and proven strengths

extensive network,

differentiated content offerings, and

loyal customer base to reinforce 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 BC Partners, KKR, EBRD and management

* On 04 July 2019 the Group issued an additional €200 million in aggregate principal amount of Senior Secured Fixed Rate Notes due 2024 to finance the acquisition of Tele2 Croatia.

Issuer United Group B.V. Listed International Stock Exchange (Guernsey) Governing Law State of New York Outstanding notes €575 million Coupon 4.375% Maturity 01-Jul-22 Coupon dates 15 January & 15 July Outstanding notes €325 million Coupon 4.875% Maturity 01-Jul-24 Coupon dates 15 January & 15 July Outstanding notes €550 million Coupon Three-month EURIBOR (subject to a zero floor) plus 4.125% Maturity 15-May-25 Coupon dates 15 February, 15 May, 15 August and 15 November United Group B.V. Senior Notes 2022 Fixed Rate Notes 2024 Fixed Rate Notes * Floating Rate Notes

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Financial review Mergers & Acquisitions

Agenda

Introduction Operational review Appendices

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SBB Serbia

§ Homes

passed up 1% driven by

  • rganic network expansion

Telemach Slovenia

§ Homes passed remained stable

Telemach BH

§ Increase

  • f

1% due to

  • rganic

network expansion Telemach MNE

§ Increase of 10% driven by organic

network expansion

Homes passed across key markets Key developments

Network expansion

1,067 1,075 334 334 330 335 77 86 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 SBB Serbia Telemach Slovenia Telemach BH Telemach MNE

Homes passed (k)

+1% 0% +1% +10%

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RGUs vs. Unique cable subscribers Key developments

Increasing subscribers and RGUs

§

Rising number of cable subscribers as a result of organic network growth

§

Faster growth in RGUs per unique cable subscriber driving

  • verall

performance

SBB Serbia, Telemach BH & Telemach MNE

§

Cross-selling of multi-play packages to 1-Play subscribers in all three entities

§

RGU per subscriber in Serbia and Montenegro up to 2.2x, while in Bosnia remained stable at 2.2x

Telemach Slovenia

§

Cross-selling of 3-Play packages to 1- Play subscribers

Mobile offering supporting take up

  • f multi-play packages

§

Existing customers upgrading to premium products Our 1,166k unique cable subscribers order on average between 2.2x and 2.7x different services

* 2018 restated – OTT users on our network reclassified to Cable and Cable services users on other networks reclassified to Other Services from Cable.

RGUs vs. Unique cable subscribers H1 2018* H1 2019 SBB Serbia 2.1x 2.2x Telemach Slovenia 2.6x 2.7x Telemach BH 2.2x 2.2x Telemach MNE 2.0x 2.2x

1,147 1,166

H1 2018* H1 2019 Unique cable subs (k)

+2% 3,671 3,844

H1 2018* H1 2019 RGUs (k) +5%

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RGUs by service Key developments

Increasing RGUs

n

Healthy YoY RGU growth across nearly all services

n

Cable pay TV growth due to organic growth

n

Broadband internet RGUs increased by 5% YoY as a result of multi-play subscriber growth

n

Fixed line telephony RGUs up 11% YoY due to an increase in multi-play subscriptions and continued growth of this service

n

Mobile services up 10% YoY due to high

  • rganic growth at Telemach Slovenia

n

DTH pay-TV RGUs decreased by 4% YoY

n

OTT subscribers decreased by 4% YoY

n

Other service RGUs increased by 36% YoY

  • wing to organic growth

* 2018 restated – OTT users on our network reclassified to Cable and Cable services users on other networks reclassified to Other Services from Cable.

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Group

§

Blended cable ARPU up 3% YoY to €22.6 in H1 2019 as a result of positive trends across all markets SBB Serbia

§

Key drivers include the migration to multi- play packages and price increases in January 2019 Telemach Slovenia

§

Higher share of multi-play subscribers

§

Service revenues positively affected by a price increase in February 2019 Telemach BH

§

Growth in subscribers to multi-play offering

§

Effect of price increases implemented in April 2019 Telemach MNE

§

Growth in subscribers to multi-play offering

Blended cable ARPU Key developments

ARPU development

in € H1 2018* H1 2019 H1 2018* H1 2019 H1 2018* H1 2019 H1 2018* H1 2019 Cable pay-TV 10.3 10.5 18.7 19.1 9.5 10.3 11.1 11.2 Broadband internet 10.2 10.5 17.7 18.3 9.5 9.8 8.2 8.2 Fixed-line telephony 4.2 3.6 3.6 3.2 7.5 6.9 3.3 2.8 Blended cable ARPU 18.8 19.4 35.7 36.6 19.5 20.8 17.4 18.1 SBB Serbia Telemach Slovenia Telemach BH Telemach MNE

* 2018 restated – OTT users on our network reclassified to Cable and Cable services users on other networks reclassified to Other Services from Cable.

18.8 19.4 35.7 36.6 19.5 20.8 17.4 18.1 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 SBB Serbia Telemach Slovenia Telemach BH Telemach MNE

Blended cable ARPU per segment (€)

+3% +3% +7% +4%

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Financial review Mergers & Acquisitions

Agenda

Introduction Operational review Appendices

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285.4 363.9

H1 2018 H1 2019

Revenues (€ m)

+28%

Revenue development H1 2019 Key drivers

Revenue development by segment

Group

  • H1 2019 revenues up 28% YoY to €363.9 million driven

by growing RGUs, an increase in ARPU, organic growth and acquisitions SBB Serbia

  • Reported revenues up by 5% YoY to €119.3 million

driven by a price increase in January 2019 and organic growth of unique cable subscribers and RGUs Telemach Slovenia

  • Revenue up by 4% YoY to €113.0 million due to a

higher number of mobile subscribers, higher mobile handsets sales and price increases in February 2019 Telemach BH

  • Revenue up by 9% YoY to €36.7 million driven by
  • rganic growth of multi-play subscribers and a price

increase in April 2019 Telemach MNE

  • Revenue up by 7% YoY to €7.3 million as a result of

growth in the number of subscribers for our multi-play

  • ffering

United Media

  • YoY growth of 103% to €137.9 million due to the

acquisitions of NOVA TV (in Croatia, Bosnia and Montenegro) and Direct Media and continued organic growth

Other Businesses

  • Revenue down by 23% YoY as a result of lower

intercompany revenues. External revenues in line with H1 2018

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Key drivers

Adjusted EBITDA development

Group

§ Adjusted EBITDA up by 19% YoY to €150.1 million as a result

  • f:

– Increased revenues, cost discipline and successful integration of acquired companies – Acquisition of content companies (NOVA Croatia, Bosnia and Montenegro) and advertising companies DM (Serbia)

SBB Serbia

  • Growth of 3% YoY driven by a price increase in January 2019

and organic subscriber and RGU growth

Telemach Slovenia

  • Increase of 2% YoY compared to H1 2018 mainly as a result
  • f higher revenues

Telemach BH

  • EBITDA up 19% YoY driven by higher revenues and cost

discipline

Telemach MNE

  • Increase of 31% YoY driven by organic growth in the number
  • f multi-play subscribers and cost discipline

United Media

  • EBITDA up 79% YoY due to acquisitions and organic growth

Other Businesses

  • EBITDA decreased by 40% YoY due to negative contribution
  • f Holding companies. Without this negative effect, Solford‘s

Adjusted EBITDA growth was 2% compared to H1 2018

Adjusted EBITDA development H1 2019

126.7 150.1

H1 2018 H1 2019

Adjusted EBITDA (€ m)

+19%

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Group

§

Group capex reached 25% of consolidated revenues in H1 2019

§

The majority of investments during this period were related to network expansion, customer premise equipment, purchase of new programming rights, IP equipment and investment in mobile infrastructure SBB Serbia

§

Increase in H1 2019 capex mostly due to higher customer premises equipment and network investments Telemach Slovenia

§

Capex decrease vs H1 2018 which included the one-time purchase of a new building in Ljubljana and cable network upgrade Telemach BH

§

Lower capex in H1 2019 mostly as a result of lower investments in customer premises equipment Telemach MNE

§

Lower capex in H1 2019 mostly as a result of lower network investments and fewer capitalized inventories United Media

§

Capex up 57% vs. H1 2018 due to exclusive content production, acquisitions and the increased cost of sports rights * IFRS view of CAPEX at United Group level.

** Management view of Subgroup CAPEX.

Capital expenditures

Capex development Key drivers

25.8 33.5 7.3 2.4 15.2 1.3 31.7 28.9 6.8 1.8 23.8 0.5 SBB Serbia Telemach Slovenia Telemach BH Telemach MNE United Media Group Other Businesses

Capex by segment (€ m) **

H1 2018 H1 2019

  • 6%

+57% +23%

  • 14%
  • 66%
  • 26%

86.4 92.5 H1 2018 H1 2019

Capex Group* (€ m)

+7%

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Adjusted EBITDA-CAPEX and leverage development

Key drivers

§ Adjusted EBITDA-Capex growth due to

EBITDA growth exceeding capex growth

§ Growth in capex mainly at United Media

and SBB as a result of acquisitions and

  • rganic growth

§ Net leverage* down to 4.64x from 4.67x § Gross leverage of 4.74x down compared

to Q1 2019

§ Leverage decrease mainly as a result of

Adjusted EBITDA growth

  • Annualized Adjusted Pro Forma EBITDA is calculated as two times Q1 2019 +

Q2 2019 Adjusted EBITDA plus €4.2 million of expected synergies with Nova Croatia and €12.4 million of expected synergies with DM & PINK.

Leverage Adjusted EBITDA-CAPEX

4.94x 4.74x 4.67x 4.64x Q1 2019 H1 2019

Leverage

Gross leverage Net leverage 40.3 57.6 H1 2018 H1 2019

Adjusted EBITDA - CAPEX (€m)

+43%

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Financial review Appendices

Agenda

Introduction Operational review Mergers & Acquisitions

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Mergers & Acquisitions

§ On April 3, 2019, Netlogic d.o.o. Serbia merged with SBB d.o.o., Serbia. § On May 31, 2019, the Group agreed to acquire Tele2 d.o.o. Croatia for an enterprise value of EUR 220m. The

transaction is expected to close before the end of 2019 and is subject to regulatory approvals. United Group continually monitors M&A opportunities and is currently in the early stages of evaluating multiple potential

  • pportunities. 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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Financial review Appendices

Agenda

Introduction Operational review Mergers & Acquisitions

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Income statement

in €000 H1 2018 H1 2019 Revenue 285,412 363,946 Other income 8,526 5,092 Content costs (44,954) (60,762) Satellite capacity costs (2,509)

  • Link and interconnection costs

(20,397) (19,673) Material costs (20,538) (22,217) Staff costs (36,170) (52,491) Media buying

  • (19,097)

Impairment loss on trade and other receivables, inc. contract assets (5,258) (4,458) Impairment loss on other financial assets

  • (17)

Other operating expenses (48,010) (56,709) IFRS EBITDA 116,102 133,614 Depreciation (46,060) (51,083) Depreciation (right-of-use assets)

  • (8,990)

Amortisation of intangible assets (30,755) (40,449) Results from operating activities 39,287 33,092 Finance income 4,569 2,189 Finance costs (34,183) (42,713) Net finance costs (29,614) (40,524) Profit/(loss) before tax 9,673 (7,432) Income tax (expenses)/benefit 102 (3,578) Profit/(Loss) for the period 9,775 (11,010) Currency translation differences (1,335) 789 Other comprehensive loss (income) for the period (1,335) 789 Total comprehensive loss (income) for the period 8,440 (10,221) (Loss)/profit attributable to: Owners of the Company 8,488 (12,698) Non-controlling interests 1,287 1,688 (Loss)/profit for the period 9,775 (11,010) Total comprehensive (loss)/income attributable to: Owners of the Company 7,153 (11,909) Non-controlling interests 1,287 1,688 Total comprehensive (loss)/income for the period 8,440 (10,221)

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Statement of financial position

in €000 H1 2018 H1 2019 Assets Property, plant and equipment 388,131 411,520 Goodwill 650,089 763,325 Intangible assets 244,612 295,317 Investment property 361 310 Right-of-use assets

  • 112,363

Loans to related parties 32,014

  • Other financial assets

12,143 7,562 Non current prepayments 51 132 Contract assets 5,014 5,593 Deferred costs 3,274 5,374 Deferred tax assets 9,118 3,579 Non-current assets 1,344,807 1,605,075 Inventories 7,359 22,538 Trade and other receivables 114,450 156,734 Short term loans receivables and deposits 5,111 7,512 Prepayments 42,449 37,351 Contract assets 8,293 20,797 Income tax receivable 6,364 7,810 Cash and cash equivalents 226,648 33,473 Current assets 410,674 286,215 Total assets 1,755,481 1,891,290

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Statement of financial position - continued

in €000 H1 2018 H1 2019 Equity Issued and fully paid share capital 125 125 Share premium 337,557 352,557 Capital reserves 6,450 47,313 Translation reserves (15,361) (14,253) Accumulated losses (236,725) (359,669) Equity attributable to owners of the Company 92,046 26,073 Non-controlling interests 10,039 9,499 Total equity 102,085 35,572 Liabilities Loans and borrowings 87,461 35,475 Other financial liabilities 1,328,632 1,433,619 Long term liabilities 274 3,522 Long term provisions 21,926 21,524 Deferred income 6,095 3,670 Contract liabilities

  • 1,941

Lease liabilities 966 94,653 Deferred tax liabilities 29,371 28,285 Employee benefits 605 623 Non-current liabilities 1,475,330 1,623,312 Trade and other payables 158,400 173,044 Current tax liabilities 4,876 9,165 Loans and borrowings 1,003 14,008 Deferred income 11,030 4,927 Contract liabilities

  • 11,357

Lease liabilities 2,757 19,905 Current liabilities 178,066 232,406 Total liabilities 1,653,396 1,855,718 Total equity and liabilities 1,755,481 1,891,290

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Consolidated statement of cash flows

in €000 H1 2018 H1 2019 Cash flows from investing activities Acquisition of property, plant and equipment (64,925) (57,993) Acquisition of intangible assets (25,359) (31,303) Acquisition of subsidiaries, net of cash acquired

  • (52,769)

Short-term loans receivables and deposit inflows 204,237 (1,537) Change in other non-current financial assets

  • 30,000

Other inflows 2,259 282 Net cash (used in)/provided by investing activities 116,212 (113,320) Cash flows from financing activities Proceeds from share premium

  • 15,000

Proceeds from bond issue

  • 550,000

Repayment of bond

  • (450,000)

Proceeds from borrowings 84,000 157,800 Repayment of borrowings (74,458) (181,331) Transaction costs related to loans and borrowings

  • (5,500)

Acqusition of non controlling interest (13) (1,096) Repayment from lease liabilities (2018: Repayment of finance lease liabilities) (3,263) (10,600) Dividends paid (1,470) (51,761) Net cash provided by financing activities 4,796 22,512 Net (decrease)/increase in cash and cash equivalents 194,082 (9,958) Cash and cash equivalents at 1 January 32,560 43,430 Effects of movements in exchange rates on cash in hands 6 1 Cash and cash equivalents at end of period 226,648 33,473 in €000 H1 2018 H1 2019 Cash flows from operating activities (Loss)/profit for the period 9,775 (11,010) Adjustments for:

  • Depreciation

46,060 60,073 Amortization 30,755 40,449 Impairment of trade and other receivables 4,769 4,096 Impairment of contract assets 489 362 Impairment of other financial assets

  • 17

Impairment of inventories 138 615 Share based payment 6,450 14,504 Long term provisions

  • (1,171)

Income tax expense/(benefit) (102) 3,578 Gain on sale of subsidiary (7,654)

  • Net finance cost

29,614 40,524 Operating cash flows before WC changes 120,294 152,037 Changes in: Trade and other receivables (10,695) 3,159 Deferred income (4,657) (2,545) Deferred cost (99) (989) Contract assets (6,167) (9,678) Contract liabilities

  • 3,791

Employee benefits (34) (8) Inventories (497) (950) Prepayments (14,646) (1,713) Trade and other payables 22,810 (22,902) Cash generated from operations 106,309 120,202 Interest paid (30,392) (33,531) Income tax paid (2,843) (5,821) Net cash from operating activities 73,074 80,850