United Group BO H1 2016 financial results presentation 30 August 2016
Disclosure regarding forward-looking statements and the presentation of certain financial information 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 only 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 of 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, 2016. Both H1 2015 and H1 2016 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 operating 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. 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, with a strong presence in mobile telephony following the Issuer United Group B.V. Tušmobil acquisition Listed GEM, Irish Stock Exchange 2.95 million cable and satellite TV, broadband, fixed-line and mobile RGUs across the six countries of former Yugoslavia Governing Law State of New York Operating in a market characterised by growing pay-TV and € 625 million Outstanding notes broadband that is currently underpenetrated relative to other CEE Coupon 7.875% and Western European markets Maturity 15 November 2020 Broad reach via cable and direct-to-home platforms across the region, and ethnically targeted over-the-top content platforms Coupon dates 15 November & 15 May 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 4
Agenda Introduction Highlights Operational review Financial review Mergers & Acquisitions Appendices 5
H1 2016: operational highlights RGUs by service (k) Healthy year-on-year RGU growth 928 – across all services 817 – driven predominantly by increased multi – play subscribers and acquisitions in Bosnia and 579 Herzegovina +14% 474 489 454 382 361 324 Homes passed up by 12% to 1,542k YoY due to +11% 296 +4% +15% +18% – expansion of and investment in our network +11% 116 110 +29% 104 96 – acquisition of 6 entities in Bosnia and Herzegovina Cable pay- DTH pay- OTT Broadband Fixed -line Mobile Other Blended cable ARPU up by 3% to € 19.1 YoY as a TV TV internet telephony services services result of H1 2015 H1 2016 – successful execution of our strategy aimed at Homes passed (k) Blended cable ARPU ( € ) selling more services to our cable subscribers 1,542 – increased revenue from cable network-based 19.1 18.5 services + 12 % 1,377 +3% – migration from lower-priced to higher-priced service packages – Blended ARPU growth dampened by one time negative effect of BH acquisitions, which had lower blended ARPU than existing BH H1 2015 H1 2016 H1 2015 H1 2016 operations 6
New reporting structure Prior to January 1 2016, results of DTH operations throughout the region were reported within SBB Serbia segment - as of January 1 2016, results of DTH operations reported within the segment where these operations occur – SBB Serbia includes the results of cable services in Serbia and DTH operations in Serbia, Croatia and Macedonia, including the results of EUnet (acquired in May 2015). Absolut Solutions and Totalna TV Croatia results are included in the SBB Serbia segment, however their results are not reflected in the consolidated results of SBB Serbia Group. In H1 2015 SBB Serbia results also included DTH operations in Slovenia, Bosnia and Herzegovina, and Montenegro – Telemach Slovenia includes the results of cable and mobile services in Slovenia and DTH operations in Slovenia (as of January 1, 2016) – Telemach BH includes the results of cable and DTH services in Bosnia and Herzegovina (as of January 1, 2016) – United Media Group (formerly Adria Media Group) includes the results of media and content business including the results of N1 Info, Grand Production and Orlando Kids and Bambino – Other Businesses includes other operating businesses, such as NetTV and Telemach Montenegro (renamed from Broadband Montenegro) including DTH services in Montenegro (as of January 1, 2016) Please see appendix for a comparisons of revenue, adjusted EBITDA and capital expenditures for H1 2016 vs. restated H1 2015 as per the new reporting structure. 7
H1 2016: financial highlights Revenue in m ( € ) Revenues up 29% YoY to € 221.7 million as a result of 221.7 +29% – 171.4 organic growth and acquisitions – growing number of RGUs – price increases H1 2015 H1 2016 Adjusted EBITDA up 28% YoY to € 94.3 million Adjusted EBITDA in m ( € ) – EBITDA growth in line with revenue growth despite inclusion of mobile business in Slovenia with lower margins than the cable 94.3 28% 73.9 business – Like for like margin improvements in both cable and mobile businesses H1 2015 H1 2016 Leverage Net leverage* down to 3.97x from 4.01x – Leverage decrease due to Adjusted EBITDA growth, despite 4.11x payment of interest for the bond in May 2016 4.04x 4.01x 3.97x * Annualised Last Two Quarter Adjusted Pro Forma EBITDA is calculated as two times the amount of Consolidated Adjusted Pro Forma L2Q EBITDA Q1 2016 H1 2016 Gross leverage Net leverage 8
Agenda Introduction Highlights Operational review Financial review Mergers & Acquisitions Appendices 9
Network expansion Key developments Homes passed across key markets Homes passed (k) SBB Serbia Increase of 6% caused by organic 884 network expansion 831 6% Telemach Slovenia Organic increase against H1 2015, with 3k additional homes passed Telemach BH Increase of 54% due to the +1% acquisition of 6 cable operators in 307 305 302 July 2015 and organic network +54% expansion 200 H1 2015 H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 SBB Serbia Telemach Slovenia Telemach BH 10
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