United Group BO 9M 2015 financial results presentation 26 November 2015
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. In addition, this presentation contains summary unaudited pro forma condensed combined financial information for Adria Midco B.V. and its subsidiaries for the period ended September 30, 2014, which represents the arithmetical addition of the financial information of Adria Midco for the period ended September 30, 2014 (which includes the financial results of Slovenia Broadband S.à r.l. and its subsidiaries from March 1, 2014) and the financial information of Slovenia Broadband S.à r.l. for the two months ended February 28, 2014, after applying certain intercompany eliminations and making certain pro forma adjustments to give effect to the acquisition by United Group B.V. of Slovenia Broadband S.à r.l. and its subsidiaries on March 6, 2014, as though it had occurred on January 1, 2014. The unaudited pro forma financial information for Adria Midco B.V. and its consolidated subsidiaries is presented for informational purposes only and is not intended to represent or be indicative of the results of operations or financial position that we would have reported had the acquisition by United Group B.V. of Slovenia Broadband S.à r.l. and its subsidiaries been completed as of the dates and for the periods presented herein and should not be taken as representative of our results of operations or financial condition following the completion of such transaction. This presentation also contains summary unaudited condensed financial information for Adria Midco B.V. and its subsidiaries for the period ended September 30, 2015. Both 9M 2014 and 9M 2015 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 2.8 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 rapidly 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
9M 2015: operational highlights RGUs by service (k)** Healthy year-on-year RGU growth 912 across all services 806 driven predominantly by increased multi- 541 play subscribers 465 448 +13% 420 321 324 +201% Homes passed up by 8% to 1,487k YoY due to +30% +21% 218 +11% 2688% 113 100 expansion of and investment in our network 77 37 +47% 12 acquisition of Broadband Montenegro and 6 Cable pay- DTH pay- OTT Broadband Fixed -line Mobile Other entities in Bosnia and Herzegovina TV TV internet telephony services services Blended cable ARPU up by 3% to € 18.3 YoY as a result of 9M 2014 9M 2015 successful execution of our strategy aimed at selling more services to our cable subscribers Homes passed (k) Blended cable ARPU ( € ) increased revenue from cable network-based 18.3 1,487 17.8 services +8% 1,375 +3% migration from lower-priced to higher-priced service packages 9M 2014 9M 2015 9M 2014 9M 2015 ** Comparability vs. 9M 2014 is affected by the reclassification of B2B cable subscribers at SBB, from unique cable subscribers to “Other” subscribers, in line with Group policy as of 2015. Excluding this effect, the figure would have been 928k vs. 806k in 9M 2014. The significant increase in mobile subscribers is due to the Tušmobil acquisition 6
9M 2015: financial highlights Revenue (EUR m) Revenues up 32% YoY to € 272.2 million as a result of 272.2 +32% organic growth and acquisitions 206.3 growing number of RGUs price increases 9M 2014 9M 2015 Adjusted EBITDA (EUR m) Adjusted EBITDA up 20% YoY to € 117.4 million 117.4 +20% 98.0 Net leverage* down to 3.84x from 4.11x 9M 2014 9M 2015 Additional € 150 million of debt issued in April 2015 by tapping the high yield bond with the interest rate of 7.875% 4.43x * Annualised Last Two Quarter Adjusted Pro Forma EBITDA is calculated as two 4.11x times the amount of Consolidated Adjusted Pro Forma L2Q EBITDA 3.99x 3.84x H1 2015 9M 2015 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) Decrease of 4% following elimination of network overlap between SBB and 878 839 KDS in Novi Sad after the merger of -4% the two companies Telemach Slovenia Organic increase against 9M 2014, with 2k additional homes passed Telemach BiH +1% Increase of 52% due to the 301 302 300 acquisition of 6 cable operators in +52% July 2015 198 Telemach Podgorica Additional growth at Group level due to acquisition of Broadband 9M 2014 9M 2015 9M 2014 9M 2015 9M 2014 9M 2015 Montenegro (renamed Telemach Podgorica), an MMDS platform in SBB Serbia Telemach Slovenia Telemach BH Montenegro with 45k homes passed 9
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