United Group BO H1 2014 financial results presentation 21 August 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 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 Issuer United Group B.V. 2.0 million cable and satellite TV, broadband, fixed and mobile RGUs Listed GEM, Irish Stock Exchange across the six countries of former Yugoslavia Governing Law State of New York Operating in a market characterised by rapidly growing pay-TV and broadband that is currently underpenetrated relative to other CEE and € 475 million Outstanding notes Western European markets Coupon 7.875% Broad reach via cable and direct-to-home platforms across the region, Maturity 15 November 2020 and ethnically targeted over-the-top content platforms internationally Coupon dates 15 November & 15 May Reputation for providing the most attractive content in its respective markets, available across all devices and formats XS0992294388 (Reg. S) ISIN code XS0992293810 (144A) 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 Following successful acquisition of the Group in March 2014, United Group is now majority-owned by funds affiliated with KKR, EBRD and the management 4
Agenda Introduction Highlights Operational review Financial review Mergers & Acquisitions Appendices 5
H1 2014: operational highlights Homes passed (k) Homes passed up by 12% to 1,353k vs. H1 2013 1,353 Homes passed increased primarily as a result of network expansion and investment in our network as well as organic growth and acquisitions +12% 1,212 Unique cable subscribers up by 4% to 804k vs. H1 2013 H1 2013 H1 2014 The number of subscribers of our cable services increased driven by growing cable network Unique cable subs (k) 804 Blended cable ARPU up by 7% to € 17.7 vs. H1 2013 +4% Driven by increased revenue from cable network based services as a result of: 771 – migration from lower-priced to higher-priced service packages H1 2013 H1 2014 – growth in subscribers for the multi-play offering, and Blended cable ARPU ( € ) – price increases in Serbia (March 2014) and Slovenia (April 2014) 17.7 +7% 16.6 6 H1 2013 H1 2014
H1 2014: financial highlights Revenues ( € m) 136.1 Revenues up 17% year-on-year to € 136.1 million driven by +17% 116.3 – growing RGUs – price increases H1 2013 H1 2014 – organic growth and acquisitions EBITDA ( € m) 65.3 EBITDA up 23% year-on-year to € 65.3 million +23% 53.0 – Group EBITDA grew faster than revenues – Reflects ability to capitalise on customer relationships through sales of additional and higher margin products H1 2013 H1 2014 Net Leverage down to 3.98x from 4.00x at the end of Q1 2014 Leverage 4.16x 4.10x – Improvement in both gross and net leverage since Q1 2014 4.00x 3.98x Q1 2014 Q2 2014 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 Increasing number of homes passed across key markets driven by investments aimed at network extension and Homes passed (k) modernisation +12% 863 Slower than planned rollout at Telemach 770 BH; more intense network expansion expected in H2 2014 Comparison against H1 2013 affected by +16% 299 acquisition of Elektro Turnsek 257 191 +3% 185 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 SBB Serbia Telemach Slovenia Telemach BH 9
Increasing subscribers Key developments RGUs vs. Unique cable subscribers Increasing subscribers Our 804k unique cable subscribers order on average between 1.6x and 2.4x different services Faster growth in RGUs than unique cable subscribers ARPU per subscriber developing RGUs (k) stronger than ARPU per service Unique cable subs (k) 1,972 804 +17% +4% 1,679 771 H1 2013 H1 2014 H1 2013 H1 2014 RGUs vs. Unique cable subscribers H1 2013 H1 2014 SBB Serbia Group 1.5x 1.6x Telemach Slovenia Group 2.3x 2.4x Telemach BH Group 1.6x 1.8x 10
Increasing RGUs Key developments RGUs by service RGUs by service (k) Increasing RGUs during H1 2014 804 Comparison against H1 2013 affected 771 by acquisitions 438 411 374 383 74k IPTV RGUs generated through: 199 131 74 46 – organic growth, 20 Cable pay-TV DTH pay-TV IPTV Broadband Fixed Other – acquisition of Solford (52k), and internet telephony services Q1 2013 Q1 2014 – acquisition of 7k subscribers from H1 2013 H1 2014 Bosna TV in June 2014 Telemach BH Group Telemach Slo Group SBB Serbia Group* 7% 11% 12% 15% 10% 34% 47% 47% 31% 31% 32% 23% 1% Cable pay-TV Broadband Internet Fixed Telephony IPTV *Revenues from DTH pay-TV services for all six DTH pay-TV Other services countries of operation reported under SBB Serbia 11
ARPU development Key developments Blended cable ARPU Group Blended cable ARPU up 7% to € 17.7 in H1 SBB Serbia Telemach Slo Telemach BH 2014 in € H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 SBB Serbia Cable pay-TV 7.6 8.0 16.8 16.3 7.0 7.3 Key drivers: price increase (March 2014) Broadband internet 11.5 11.0 15.9 15.7 10.2 9.5 and positive impact of promotional Fixed telephony 7.6 6.3 5.3 5.0 12.7 11.7 campaigns Blended Cable ARPU 13.0 13.7 30.2 30.5 12.9 14.7 DTH ARPU down slightly to € 8.9 (H1 2013: € 9.2) due to very good sales resulting in a higher number of customers in the initial promotion period Telemach Slovenia Blended cable ARPU per segment ( € ) Subscriber migration from lower-priced to +1% higher-priced service packages continues 30.5 30.2 Price increase positively affected Video and Internet business line Blended cable ARPU impacted by reclassification of B2B subscribers 14.7 +14% 13.7 12.9 13.0 +5% Telemach BH Growth in subscribers for multi-play offering Pressure on Telephony ARPU caused by Internet calls H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 Other SBB Serbia Telemach Slovenia Telemach BH IPTV ARPU (NetTV Plus) at € 11.1 12
Agenda Introduction Highlights Operational review Financial review Mergers & Acquisitions Appendices 13
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