United Group BO Q1 2019 financial results presentation 29 May 2019 - - PowerPoint PPT Presentation

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United Group BO Q1 2019 financial results presentation 29 May 2019 - - PowerPoint PPT Presentation

United Group BO Q1 2019 financial results presentation 29 May 2019 Disclosure regarding forward-looking statements and the presentation of certain financial information This presentation contains forward-looking statements, which include all


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Q1 2019 financial results presentation

29 May 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 three months ended March 31, 2019. The statement of financial position for Adria Midco B.V. and its subsidiaries as at 31 March 2019 and as at 31 March 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 three 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 Appendices

Agenda

Introduction Operational review

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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 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

  • ur

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 BC Partners, KKR and the management

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 February 15, May 15, August 15 and November 15 United Group B.V. Senior Notes * 2022 Fixed Rate Notes 2024 Fixed Rate Notes Floating Rate Notes *On May 17, 2019, United Group B.V. issued €550 million in aggregate principal amount

  • f Floating Rate Senior Secured Notes due 2025 (the “Floating Rate Notes”). The

proceeds of the Floating Rate Notes were used (i) to redeem in full United Group B.V.’s existing €450 million in aggregate principal amount of floating rate senior secured notes due 2023, plus accrued and unpaid interest, (ii) to repay a portion of the borrowings under United Group B.V.’s Existing Revolving Credit Facility, and (iii) to pay transaction costs associated with the foregoing.

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Financial review Appendices

Agenda

Introduction Operational review

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SBB Serbia

  • Homes

passed up 1% driven by

  • rganic network expansion

Telemach Slovenia

  • Additional 3k homes passed due to
  • rganic growth

Telemach BH

  • Increase
  • f

2% due to

  • rganic

network expansion Telemach MNE

  • Increase of 17% driven by organic

network expansion

Homes passed across key markets Key developments

Network expansion

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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

  • 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 growth in Serbia

and Bosnia to 2.2x, and in Montenegro to 2.1x

Telemach Slovenia

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

Play subscribers

Mobile offering supporting take up

  • f multi-play packages
  • Upgrading

existing customers to premium products Our 1,167k unique cable subscribers order on average between 2.1x 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 Q1 2018* Q1 2019 SBB Serbia 2.1x 2.2x Telemach Slovenia 2.6x 2.7x Telemach BH 2.1x 2.2x Telemach MNE 2.0x 2.1x

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RGUs by service Key developments

Increasing RGUs

Healthy YoY RGU growth across nearly all services

Cable pay TV growth due to organic growth

Broadband internet RGUs increased by 5% as a result of higher number of multi-play subscribers

DTH pay-TV RGUs decreased by 2% YoY

OTT subscribers decreased by 3% YoY

Fixed line telephony RGUs up 14% YoY due to continued growth of this service

Mobile services up 11% due to high organic growth at Telemach Slovenia

Other service RGUs increased by 32% as a result of 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 5% to €22.5 in Q1

2019 as a result of positive trends across all markets SBB Serbia

  • Key drivers include migration to multi-play

packages and price increases as of January 2019 Telemach Slovenia

  • Growth in multi-play subscribers
  • Service revenues positively affected by a

price increase in February 2019 Telemach BH

  • Growth in subscribers for multi-play offering
  • Effect of price increase implemented in April

2018 Telemach MNE

  • Growth in subscribers for multi-play offering

Blended cable ARPU Key developments

ARPU development

in € Q1 2018* Q1 2019 Q1 2018* Q1 2019 Q1 2018* Q1 2019 Q1 2018* Q1 2019 Cable pay-TV 10.2 10.5 18.4 19.0 9.1 10.0 11.1 11.1 Broadband internet 10.0 10.6 17.6 18.2 9.1 9.8 8.1 8.3 Fixed-line telephony 4.3 3.7 3.8 3.3 7.6 6.9 3.4 2.9 Blended cable ARPU 18.6 19.5 35.6 36.5 18.7 20.4 17.3 18.0 Telemach MNE SBB Serbia Telemach Slovenia Telemach BH

* 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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Financial review Appendices

Agenda

Introduction Operational review

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Revenue development Q1 2019 Key drivers

Revenue development by segment

Group

  • Q1 2019 revenues up 28% YoY to €179.4 million

driven by growing RGUs, overall increase in ARPU,

  • rganic growth and acquisitions

SBB Serbia

  • Reported revenues up by 6% YoY to €60.0 million

driven by a price increase in January 2019 and

  • rganic growth of unique cable subscribers and RGUs

Telemach Slovenia

  • Revenue up by 5% to €56.5 million due to a higher

number of multi-play and mobile subscribers, price increase in February 2019 Telemach BH

  • Revenue up by 11% to €18.2 million driven by organic

growth of multi-play subscribers and a price increase in April 2018 Telemach MNE

  • Revenue up by 9% to €3.7 million as a result of

growth in the number of subscribers for our multi-play

  • ffering

United Media

  • Growth of 100% due to organic growth and effect of

acquisitions of NOVA TV in Croatia, Bosnia and Montenegro and Direct Media Acquisition

Other Businesses

  • Revenue down by 13% YoY as a result of lower

intercompany revenues in holding companies. External revenues in line with Q1 2018

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Key drivers

Adjusted EBITDA development

Group

  • Adjusted EBITDA up by 17% YoY to €73.0 million as a result
  • f:

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

SBB Serbia

  • Growth of 2% YoY driven by a combination of a price increase

in January 2019, organic growth of subscribers and RGUs and increased cost of content

Telemach Slovenia

  • Increase of 6% compared to Q1 2018 mainly as a result of

higher revenues

Telemach BH

  • EBITDA up 24% YoY driven by higher revenues due to price

increases and higher number of multi-play subscribers

Telemach MNE

  • Increase of 43% YoY driven by organic growth in subscribers

and RGUs

United Media

  • EBITDA growth due to acquisitions and organic growth

Other Businesses

  • EBITDA decrease due to group costs in Holding companies.

Without this negative effect, Solford‘s Adjusted EBITDA growth was 11% compared to Q1 2018

Adjusted EBITDA development Q1 2018

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Group

  • Group Capex reached 25% of consolidated revenues in Q1

2019

  • The majority of investments during this period were related

to the upgrade and expansion of our network, customer premise equipment, purchase of new programming rights and investment in mobile infrastructure SBB Serbia

  • Increase in Q1 2019 capex mostly due to higher customer

premises equipment Capex resulting from the digitalization

  • f Belgrade

Telemach Slovenia

  • Capex decrease vs Q1 2018 which includes the one-time

purchase of a new building in Ljubljana (€3.8 million) Telemach BH

  • Lower capex in Q1 2019 mostly as a result of lower

investments in network and customer premises equipment Telemach MNE

  • Lower capex in Q1 2019 mostly as a result of lower

network investments United Media

  • Capex up 41% vs. Q1 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. This figure includes capitalized inventory.

Capital expenditures

Capex development Key drivers

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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 4.67x from 4.88x
  • Gross leverage down to 4.94x from

5.04x

  • Deleveraging mainly a result of Adjusted

EBITDA growth

  • Annualized Adjusted Pro Forma EBITDA is calculated as two times Q4 2018 +

Q1 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

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Financial review

Agenda

Introduction Operational review Appendices

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Income statement

in €000 Q1 2018 Q1 2019 Revenue 140,530 179,363 Other income 11,061 1,515 Content costs (23,198) (31,403) Satellite capacity costs (1,662)

  • Link and interconnection costs

(9,835) (9,865) Material costs (10,265) (10,917) Staff costs (14,231) (31,255) Impairment loss on trade and other receivables, inc. contract assets (2,152) (84) Impairment loss on other financial assets

  • (42)

Other operating expenses (21,864) (38,016) IFRS EBITDA 68,384 59,296 Depreciation (22,749) (26,144) Depreciation (right-of-use assets)

  • (4,387)

Amortisation of intangible assets (15,180) (19,431) Results from operating activities 30,455 9,334 Finance income 902 1,689 Finance costs (18,003) (18,230) Net finance costs (17,101) (16,541) Profit/(loss) before tax 13,354 (7,207) Income tax (expenses)/benefit 2,533 (1,274) Minority share

  • Profit/(Loss) for the period

15,887 (8,481) Currency translation differences 87 1,881 Other comprehensive loss (income) for the period 87 1,881 Total comprehensive loss (income) for the period 15,974 (6,600) (Loss)/profit attributable to: Owners of the Company 15,337 (9,426) Non-controlling interests 550 945 (Loss)/profit for the period 15,887 (8,481) Total comprehensive (loss)/income attributable to: Owners of the Company 15,424 (7,545) Non-controlling interests 550 945 Total comprehensive (loss)/income for the period 15,974 (6,600)

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Statement of financial position

in €000 Q1 2018 Q1 2019 Assets Property, plant and equipment 379,132 406,072 Goodwill 649,324 761,905 Intangible assets 252,103 298,313 Investment property 374 323 Right-of-use assets

  • 114,719

Loans to related parties 32,011

  • Other financial assets

15,194 7,798 Non current prepayments 39 161 Contract assets 7,714 4,151 Deferred costs 2,033 5,254 Deferred tax assets 9,217 3,808 Non-current assets 1,347,141 1,602,504 Inventories 7,360 23,522 Trade and other receivables 116,092 151,578 Short term loan receivables and deposits 204,902 5,994 Prepayments 32,654 36,151 Contract assets 5,338 20,583 Income tax receivable 1,420 8,872 Cash and cash equivalents 32,176 82,525 Current assets 399,942 329,225 Total assets 1,747,083 1,931,729

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Statement of financial position - continued

in €000 Q1 2018 Q1 2019 Equity Issued and fully paid share capital 125 125 Share premium 337,557 352,557 Capital reserves

  • 45,724

Translation reserves (13,939) (13,161) Accumulated losses (214,398) (356,325) Equity attributable to owners of the Company 109,345 28,920 Non-controlling interests 11,099 10,514 Total equity 120,444 39,434 Liabilities Loans and borrowings 92,581 121,167 Other financial liabilities 1,328,632 1,334,557 Long term liabilities 281 3,539 Long term provisions 10,810 23,664 Deferred income 6,601 3,799 Contract liabilities

  • 1,998

Lease liabilities 861 96,996 Deferred tax liabilities 28,825 29,048 Employee benefits 637 627 Non-current liabilities 1,469,228 1,615,395 Trade and other payables 135,310 222,658 Current tax liabilities 3,644 12,891 Loans and borrowings 1,038 2,582 Deferred income 13,276 6,253 Contract liabilities

  • 13,581

Lease liabilities 4,143 18,935 Current liabilities 157,411 276,900 Total liabilities 1,626,639 1,892,295 Total equity and liabilities 1,747,083 1,931,729

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Consolidated statement of cash flows

Capex data including capitalized inventory

in €000 Q1 2018 Q1 2019 Cash flows from operating activities Profit/(Loss) for the year 15,887 (8,481) Adjustments for: Depreciation 22,749 30,531 Amortization 15,180 19,431 Impairment of trade and other receivables 2,152 (90) Impairment of contract assets

  • 174

Impairment of other financial assets

  • 42

Impairment of property, plant and equipment 101

  • Share based payment
  • 12,915

Long term provisions

  • (92)

Income tax benefit/(expense) (2,533) 1,274 Net finance cost 17,101 16,541 Operating cash flows before WC changes 70,637 72,245 Changes in working capital: Trade and other receivables (9,231) 11,489 Deferred income (1,905) (1,090) Deferred cost 1,142 (869) Contract assets (13,052) (7,834) Contract liabilities

  • 6,072

Employee benefits (2) (4) Inventories (498) (1,350) Prepayments (541) (542) Trade and other payables 5,014 (7,860) Cash generated from operations 51,564 70,257 Interest paid (25,002) (26,164) Income tax paid (748) (1,958) Net cash from operating activities 25,814 42,135 in €000 Q1 2018 Q1 2019 Cash flows from investing activities Acquisition of property, plant and equipment (32,878) (29,196) Acquisition of intangible assets (12,097) (13,291) Short-term loans receivables and deposit inflows 4,446 278 Change in other non-current financial assets 1,227 30,000 Other outflows

  • (282)

Net cash used in investing activities (39,302) (12,491) Cash flows from financing activities Proceeds from share premium

  • 15,000

Proceeds from borrowings 34,000 118,671 Repayment of borrowings (19,240) (67,955) Acqusition of non controlling interest (13) (1,027) Repayment from lease liabilities (2018: Repayment of finance lease liabilities) (1,644) (5,241) Dividends paid

  • (50,000)

Net cash used in financing activities 13,103 9,448 Net increase in cash and cash equivalents (385) 39,092 Cash and cash equivalents at 1 January 32,560 43,430 Effects of movements in exchange rates on cash held 1 3 Cash and cash equivalents at end of period 32,176 82,525