ADRIA BIDCO Q3 2013 Financial Results Presentation 30 January 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” or “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 Q3 2013 Highlights Operational Review Financial Review Appendices 3
Introduction to Adria Bidco South-East Europe’s leading provider of pay-TV and broadband services 2020 Senior Notes Issuer Adria Bidco B.V. 1.82 million cable and satellite TV, broadband, fixed and mobile RGUs across the six countries of former Yugoslavia Listed GEM, Irish Stock Exchange Operating in a market characterized by rapidly growing pay- Governing Law State of New York TV and broadband that is currently underpenetrated relative € 475 million Outstanding notes to other CEE and Western European markets Coupon 7.875% Unmatched reach via cable and direct-to-home platforms Maturity 15 November 2020 across the region, and ethnically targeted over-the-top content platforms internationally Coupon dates 15 November & 15 May XS0992294388 (Reg. S) Reputation for providing the most attractive content in its ISIN code XS0992293810 (144A) respective markets, available across all devices and formats Group strategy leverages established proven strengths superior 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 completion of the transaction, the Group will be majority-owned by funds affiliated with KKR 4
Agenda Introduction Q3 2013 Highlights Operational Review Financial Review Appendices 5
Q3 2013 operational highlights Homes passed (m) Homes passed up by 3.6% to 1.26 million vs. Q2 2013, 1.26 +3.6% primarily as a result of network expansion 1.21 Acquisitions of world-wide OTT operator NetTV.Plus and Slovenian cable operator Elektro Turnsek completed, adding c. 55,000 OTT subscribers and c. 54,000 cable Q2 2013 Q3 2013 RGUs (c. 25,000 unique cable subscribers), respectively RGUs (m) 1.82 Number of unique cable subscribers up to 802,000, from +8.2% 777,000 at end-Q2 2013 1.68 RGUs up by 8.2% to 1.82 million since June 2013, driven by organic growth (c. 30,000 RGUs out of total RGU growth of c.139,000) and acquisitions of NetTV.plus and Elektro Q2 2013 Q3 2013 Turnsek Blended cable ARPU ( € ) Blended ARPU for Q3 2013 at € 17 (vs. € 16.6 for Q2 2013), driven by the migration from lower price analog to 17.00 higher-priced digital pay-TV services +2.4% 16.60 Q2 2013 Q3 2013 6
Q3 2013 financial highlights Revenues (EUR m) Growing consolidated group revenues at € 59.7m 59.7 +2.1% SBB Serbia: € 31.4 million – 58.5 Telemach Slovenia: € 20.0 million +1.2% – 57.8 Telemach BH: € 4.9 million – Adjusted EBITDA up 4.6% to € 27.5 million Acquisitions contributed c. € 1.2 million to EBITDA – Q1 2013 Q2 2013 Q3 2013 Adjusted EBITDA (EUR m) Increase in operating cash flow to € 16.6 million due to 27.5 – positive operating results, and +4.6% – improved working capital, 26.3 partially offset by… higher CAPEX compared to Q2 2013 at € 18.9 million – driven by increased investments at SBB Serbia and Q2 2013 Q3 2013 Telemach Slovenia Operating cash flows (EUR m) 16.6 Net leverage in Q3 2013 improved to 4.19x, from 4.25x in Q2 2013 +500% 3.3 Q2 2013 Q3 2013 7
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Network expansion driven by bolt-on acquisitions Homes passed across key markets Key developments NetTV.plus - OTT content platform, (‘000) which distributes local ethnic content to former Yugoslav expats around the world 772 770 – A cquired in August 2013 – Over 150 local-language channels – Community of 4-7 million people in Western Europe, North America and Australia – 55,000 subscribers as at 30 September 2013 296 257 – Significant future growth opportunities 188 185 Elektro Turnsek - Slovenian cable company – Acquired in September 2013 – Added 25,404 cable pay-TV RGUs, Q2 2013 Q3 2013 Q2 2013 Q3 2013 Q2 2013 Q3 2013 15,206 internet RGUs and 13,800 SBB Serbia* Telemach Slovenia Telemach BH telephony RGUs to customer portfolio *Includes KDS and JET TV subscribers in Serbia 9
RGUs Key developments RGUs by service (‘000) +3.5% RGUs up by 8.2% to 1.82 million since 799 772 June 2013, driven by organic growth, and – acquisitions (NetTV.plus and – +5.2% +3.5% Elektro Turnsek) 403 387 383 374 +16.8% Cable pay-TV RGUs positively affected by organic growth and acquisitions in 153 131 +5.3% Slovenia 55 19 20 - Growth in telephony RGUs driven by Cable pay-TV DTH pay-TV IPTV Broadband Fixed Other services Elektro Turnsek acquisition and internet telephony increase in multi-play subscriptions Q2 2013 Q3 2013 over the period Serbia* Slovenia Bosnia 55,000 IPTV RGUs added through 1% 1% acquisition of NetTV.Plus 2% 1% 9% 20% 27% 44% 43% 30% *Revenues from DTH pay-TV 61% services for all six countries of operation reported under SBB 34% Serbia 27% 10
Continued growth in blended cable ARPU Key developments ARPU per unique subscriber Q3 2013 blended cable ARPU up 2.4% Cable ARPU by country( € ) Blended cable ARPU ( € ) to € 17 on Q2 2013 SBB Serbia 30.4 17.0 28.7 – Delayed price increase expected to come in 2014 +2.4% – Promotional campaigns 13.7 12.9 12.9 12.6 – Lower telephony traffic 16.6 – FX impact Telemach Slovenia – Growth in subscribers for multi-play Q2 2013 Q3 2013 Q2 Q3 Q2 Q3 Q2 Q3 offering 2013 2013 2013 2013 2013 2013 – Subscriber migration from SBB Serbia* Telemach Telemach BH lower-priced analogue cable pay-TV Slovenia services to higher-priced digital pay-TV services – Price increase for triple-play package SBB Serbia* Telemach Slovenia Telemach BH Telemach BH in € Q2 2013 Q3 2013 Q2 2013 Q3 2013 Q2 2013 Q3 2013 Growth in subscribers for multi-play – Cable pay-TV 7.6 7.5 16.9 17.0 6.9 7.2 offering Broadband Price increases for cable pay TV and – internet 11.3 10.9 16.3 17.2 10.0 10.3 broadband internet services Higher telephony services revenues – Telephony 7.5 7.0 5.1 5.0 12.4 12.1 *Includes KDS and JET TV subscribers in Serbia 11
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Revenue development Q3 2013 drivers YTD revenue development Group revenue up by 2.1% to € 59.7 59.7 EUR (m) million due to organic growth, an overall increase in ARPU and acquisitions +2.1% SBB Serbia 58.5 Increased revenue in RSD terms driven by subscriber base growth and migration +1.2% 57.8 to multi-play packages, offset by FX impact, resulting in a 1.4% decline to € 31.4 million Telemach Slovenia Revenue up by 9.9% to € 20.0 million Q1 2013 Q2 2013 Q3 2013 due to: acquisition of Elektro Turnsek – 31.8 31.4 – continued subscriber migration to higher priced digital pay TV services – increase in the number of multi 20.0 18.2 play subscribers Telemach BH Revenue up by 6.7% to € 4.9 million due 6.8 6.7 to organic subscriber base growth and 4.9 4.6 increased service penetration United Media Group SBB Serbia Telemach Slovenia Telemach BH United Media Group Stable revenues at € 6.8 million in line with gradual subscriber base growth Q2 2013 Q3 2013 13
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