United Group

Q1 2021 HIGH YIELD BONDHOLDER REPORT

May 27, 2021

Q1 2021 BONDHOLDER REPORT

CONTENTS Page

Q1 2021 Summary ...... 3 Key Operating Measures ...... 6 Results of Operations ...... 9 Liquidity and Capital Resources ...... 15 Subsequent (Material Recent) Events ...... 19 Mergers & Acquisitions ...... 21 Group Background ...... 22 Appendices ...... 27 Appendix 1 - Financial statements ...... 27 Appendix 2 - Key Factors Affecting Our Business and Results of Operations...... 30 Appendix 3 - Definitions of Key Operating Measures...... 39 Appendix 4 - Description of Key Line Items ...... 41 Appendix 5 - Quantitative and Qualitative Disclosures about Market Risk ...... 43 Appendix 6 - Critical Accounting Policies ...... 45

Q1 2021 BONDHOLDER REPORT

Disclaimer

THIS REPORT (THIS “REPORT”) IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES. IT IS SOLELY FOR INFORMATION PURPOSES. BY READING THIS REPORT, ATTENDING A PRESENTATION OF THIS REPORT (THE “PRESENTATION”) AND/OR READING THE SLIDES USED FOR THE PRESENTATION (THE “PRESENTATION SLIDES”) YOU AGREE TO BE BOUND AS FOLLOWS:

This Report, the Presentation and/or the Presentation slides contain 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 Report. 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 Report contains summary unaudited condensed financial information for Adria Midco B.V. and its subsidiaries for the three months ended March 31, 2021 and 2020, unless another source, such as management accounts, is specifically mentioned. The statement of financial position for Adria Midco B.V. and its subsidiaries as at March 31, 2021 and as at March 31, 2020, 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 month 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 or replacement report including such change.

Certain financial measures and ratios related thereto in this Report 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 present ed 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 our 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.

Adria Midco B.V. is providing this information voluntarily, and the material contained in this announcement is presented solely for information purposes and is not to be construed as providing investment advice. As such, it has no regard to the specific investment objectives, financial situation or particular needs of any recipient. No representation or warranty, either express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness, correctness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. None of Adria Midco B.V., or any of its directors, officers, employees, affiliates, direct or indirect shareholders, advisors or agents, accepts any liability for any direct, indirect, consequential or other loss or damage suffered by any person as a result of relying on all or any part of this information, and any liability is expressly disclaimed.

2 Q1 2021 BONDHOLDER REPORT

Q1 2021 Summary

May 27, 2021 – , the leading cable and media player in South Eastern Europe, today reports its financial results for Q1 2021.

Operational Highlights

 Homes passed grew 100% to 3,724 thousand compared to Q1 2020, primarily as a result of the acquisition and organic growth  Number of unique cable subscribers1 increased to 1,937 thousand (Q1 2020: 1,180 thousand)  Revenue Generating Units (“RGUs”) increased 122% year-on-year to 10,890 thousand, driven by the acquisition of Vivacom (4,461 thousand RGUs) and Forthnet (1,375 thousand RGUs) as well as organic growth  Blended Cable Average Revenue Per User (“ARPU”)1 for Q1 2021 declined 21% year- on-year to €18.3 (Q1 2020: €23.3) driven mainly by the Vivacom acquisition

Financial Highlights

 Consolidated Group revenue for Q1 2021 grew 127% year-on-year to €439.4 million (Q1 2020: €194.0 million)  Consolidated Group adjusted EBITDA2 increased 112% in Q1 2021 to €179.2 million (Q1 2020: €84.6 million)  Net cash outflow of €119.4 million versus an inflow of €867.2 million in Q1 2020  As at March 31, 2021, net leverage for United Group (ratio of Group Net Debt to Annualized Last Two Quarters Adjusted Pro Forma EBITDA3) increased to 4.85x (December 31, 2020: 4.70x)

1 Please note that due to the acquisition of Vivacom certain key operating measures definitions have been amended to align methodology across the group (Homes Passed, Unique Cable Subscribers and Blended Cable ARPU). Due to this change, blended cable ARPU for periods from 2018 onwards has been restated.

2 Adjusted EBITDA and Capital expenditure figures are presented post IFRS 16 effect.

3 Annualized Adjusted Pro Forma EBITDA is calculated as two times Q1 2021 + Q4 2020 Adjusted EBITDA plus €13.2m of Forthnet Standalone L2QA Adj. EBITDA Contribution (Oct20) plus €38.5 million of BG Standalone L2QA Adj. EBITDA Contribution (Oct20-Jan21) plus €19.3 million of Other M&A companies (for which the Group signed agreements for acquisition and are in process of receiving regulatory approvals) L2QA Adj. EBITDA. Adj. EBITDA figures are presented pre IFRS 16 effect.

3 Q1 2021 BONDHOLDER REPORT

The following summary describes the operations in each of the Group’s reportable segments or subgroups:

 Vivacom includes the results of the Group’s cable, mobile and DTH services in .  Forthnet includes the results of the Group’s cable and DTH services as well as media and content business in .  SBB includes the results of cable services in Serbia and direct-to-home (“DTH” or Satellite) operations in Serbia and . Absolut Solutions results are also included in the SBB Serbia segment, however their results are not reflected in the statutory consolidated results of the SBB Serbia Group.  SLO includes the results of the Group’s cable, mobile and DTH services in .  Telemach CRO includes the results of the Group’s mobile services in .  Telemach BH includes the results of the Group’s cable and DTH services in .  Telemach includes the results of the Group’s cable and DTH services in Montenegro.  United Media Group includes the results of the Group’s media and content business in the former Yugoslav including the results of N1, , Grand Production, Orlando Kids, IDJ and entities acquired during 2018 (Nova TV and Direct Media Group) and 2021 (Nova Broadcasting Group, hereinafter Nova BG, as well as Dan Graf and Vestnik Telegraf).  Other Businesses includes the results of the Group’s other operating businesses (such as NetTV and Shoppster) and its Holding companies.

United Group generated consolidated revenues of €439.4 million during Q1 2021. The 127% increase in revenue is attributable to the Nova BG, Vivacom, Forthnet and Telemach CRO acquisitions, organic growth of the subscriber base, migration of subscribers to multi- play packages and the impact of other acquisitions in 2020. Adjusted EBITDA2 in Q1 2021 was up 112% to €179.2 million.

Summary financials table in € m Q1 2020 Q1 2021 Change Revenue 194.0 439.4 127% Adjusted EBITDA2 84.6 179.2 112% Result from operating activities 21.4 30.3 42% Profit/(loss) before tax (11.9) (7.2) (39%)

In Q1 2021:  Vivacom generated 29% of consolidated revenues and 34% of consolidated Adjusted EBITDA  Forthnet generated 14% of consolidated revenues and 10% of consolidated Adjusted EBITDA  SBB Serbia generated 13% of consolidated revenues and 17% of consolidated Adjusted EBITDA

4 Q1 2021 BONDHOLDER REPORT

 Telemach SLO generated 14% of consolidated revenues and 13% of consolidated Adjusted EBITDA  Telemach CRO generated 10% of consolidated revenues and 8% of consolidated Adjusted EBITDA  Telemach BH generated 4% of consolidated revenues and 4% of consolidated Adjusted EBITDA  Telemach MNE generated 1% of consolidated revenues and 0% of consolidated Adjusted EBITDA  United Media generated 13% of consolidated revenue and 14% of consolidated Adjusted EBITDA  Other Businesses generated 2% of consolidated revenue and (1%) of consolidated Adjusted EBITDA

Q1 2021 in € m Revenue, net % of total Adj. EBITDA2 % of total Vivacom 129.6 29% 61.5 34% Forthnet 62.1 14% 18.1 10% SBB Serbia 56.1 13% 31.0 17% Telemach SLO 61.2 14% 23.1 13% Telemach CRO 43.8 10% 15.1 8% Telemach BH 18.1 4% 7.1 4% Telemach MNE 3.2 1% 0.8 0% United Media 56.8 13% 24.9 14% Other Businesses 8.6 2% (2.6) (1%) Total 439.4 100% 179.2 100%

As at March 31, 2021, United Group had 10.89 million RGUs, up 122% year-on-year (Q1 2020: 4.90 million). This positive trend was primarily driven by the acquisitions of Vivacom (4,461 thousand RGUs) and Forthnet (1,375 thousand RGUs), organic growth of cable pay- TV, telephony, mobile and internet and Out-of-Footprint services, as well as a growing proportion of multi-play subscribers.

Blended cable average revenue per user (“ARPU”)1 for the period was €18.3, compared to €23.3 for Q1 2020, with the 21% year-on-year decrease driven by the Vivacom acquisition.

Capital expenditure2 (including capitalized inventory) amounted to €91.3 million in Q1 2021, compared to €57.8 million in Q1 2020. The majority of investments during Q1 2021 related to network expansion, customer premise equipment, the purchase of new programming rights and investment in mobile infrastructure.

United Group’s three-month financial statements have been prepared in accordance with International Financial Reporting Standard (“IFRS”) accounting policies.

5 Q1 2021 BONDHOLDER REPORT

Key Operating Measures

United Group uses several key operating measures, including homes passed, unique cable subscribers, RGUs and ARPU, to track the performance of the business. None of these terms are measures of financial performance under IFRS, nor have these measures been reviewed by an outside auditor, consultant or expert. These measures are derived from management information systems. As these terms are defined by management, they may not be comparable to similar terms used by other companies. Please refer to Appendix 3 for definitions of the Group’s key operating measures.

Unique Cable Subscribers, RGUs and ARPU

The following table sets forth key operating measures for United Group as of and for the three months ended, March 31, 2021 and March 31, 2020. in 000 Q1 2020 Q1 2021 Change % Change Key Operating Measures

Homes passed 1,866 3,724 100% 1,858 Unique cable subscribers1 1,180 1,937 64% 757 RGUs 4,902 10,890 122% 5,988 Cable pay-TV 1,172 1,479 26% 307 Broadband internet 871 1,396 60% 525 Fixed-line telephony 704 1,269 80% 564 Mobile services 1,495 4,473 199% 2,977 DTH pay-TV 449 991 121% 542 OTT 128 127 (1%) (1) Out-of Footprint 82 1,156 1310% 1,074 Penetration Cable pay-TV 62.8% 39.7% (37%) (23%) Broadband internet 46.7% 37.5% (20%) (9%) Fixed-line telephony 37.7% 34.1% (10%) (4%) Blended Cable ARPU (in €)1 23.3 18.3 (21%) (5.0)

Homes passed increased by 1,858 thousand, or 100%, from 1,866 thousand on March 31, 2020 to 3,724 thousand as at March 31, 2021, primarily due to the Vivacom acquisition and organic network expansion.

As at March 31, 2021, the Group had 1,479 thousand cable pay-TV RGUs, an increase of 307 thousand compared to 1,172 thousand at March 31, 2020, as a result of the Vivacom acquisition and organic growth.

The total number of DTH pay-TV RGUs amounted to 991 thousand as at March 31, 2021, a 121% increase year-on-year.

As at March 31, 2021, the Group had 1,396 thousand broadband internet RGUs, representing an increase of 60%, compared to 871 thousand at March 31, 2020. This is

6 Q1 2021 BONDHOLDER REPORT

primarily attributable to the Vivacom acquisition, an increase in multi-play subscriptions over this period and organic subscriber growth.

The total number of fixed telephony RGUs rose to 1,269 thousand as at March 31, 2021, an increase of 80% compared to 704 thousand at March 31, 2020. The positive trend is primarily due to the Vivacom acquisition, an increase in multi-play subscriptions over this period and organic subscriber growth.

OTT RGUs decreased by 1% to 127 thousand, compared to 128 thousand at March 31, 2020.

Mobile service RGUs increased from 1,495 thousand at March 31, 2020 to 4,473 thousand as at March 31, 2021. This is an increase of 2,977 thousand, or 199%, driven by the acquisition of Vivacom (2,938 thousand mobile RGUs) and organic growth.

Total RGUs increased by 122%, from 4,902 thousand at March 31, 2020 to 10,890 thousand as at March 31, 2021. RGUs added over this period were mainly a result of the acquisitions of Vivacom (4,461 thousand RGUs) and Forthnet (1,375 thousand RGUs), as well as organic growth of cable pay-TV and mobile services and a growing proportion of multi-play subscribers.

The following table provides a breakdown of the Group’s key operating measures for Vivacom, Forthnet, SBB Serbia, Telemach Slovenia, Telemach CRO, Telemach BH and Telemach MNE.4 5

Vivacom4 Forthnet4 SBB Serbia Telemach Telemach Telemach Telemach in 000 SLO CRO5 BH MNE Footprint Q1 20 Q1 21 YoY Q1 20 Q1 21 YoY Q1 20 Q1 21 YoY Q1 20 Q1 21 YoY Q1 20 Q1 21 YoY Q1 20 Q1 21 YoY Q1 20 Q1 21 YoY

Homes passed 1,720 1,797 4% 0 0 1,097 1,137 4% 340 350 3% 0 0 0% 338 344 2% 91 97 6% Unique cable subscribers1 767 739 -4% 0 0 739 737 0% 203 219 8% 0 0 0% 208 209 0% 30 32 6% Cable Pay-TV penetration 15% 16% 0% 0% 0% 0% 67% 65% 0% 58% 61% 0% 0 0 0% 61% 61% 0% 33% 33% 0%

RGUs Cable pay-TV 261 290 11% 0 0 737 736 0% 197 212 8% 0 0 0% 208 208 0% 30 32 6% Broadband internet 464 476 3% 0 0 522 537 3% 166 189 14% 0 0 0% 162 169 5% 21 24 12% Telephony 573 514 -10% 0 0 412 442 7% 172 191 11% 0 0 0% 105 105 (0%) 16 16 4% Mobile services 2,961 2,953 0% - - 0% - - 0% 559 596 7% 936 923 (1%) - - 0% - - 0% DTH pay-TV 228 232 1% 330 313 -5% 225 226 0% 42 40 (5%) 0 0 0% 135 140 3% 47 41 (13%) OTT - - 0% - - 0% 16 23 48% 0 1 364% 0 0 0% - 0 - 0 0 31% Out-of Footprint - - 0% 1,065 1,066 0% 34 34 0% 48 56 18% 0 0 0% 1 1 (25%) - - 0% Total RGUs 4,488 4,465 -1% 1,395 1,379 -1% 1,945 1,997 3% 1,184 1,286 9% 936 923 (1%) 611 624 2% 115 114 (1%)

The following table sets forth the blended cable ARPU for Vivacom, Forthnet, SBB Serbia, Telemach SLO, Telemach CRO, Telemach BH and Telemach MNE generated by the products and services the Group offers.

4 Prior year figures included for presentation purposes only. Vivacom acquired in August 2020, while Forthnet acquired in November 2020.

5 Prior year figures exclude results for the period prior to United Group’s acquisition. Telemach CRO was acquired in March 2020.

7 Q1 2021 BONDHOLDER REPORT

Vivacom4 Forthnet4 SBB Serbia Telemach Telemach Telemach BH Telemach SLO CRO5 MNE in € Q1 20 Q1 21 Q1 20 Q1 21 Q1 20 Q1 21 Q1 20 Q1 21 Q1 20 Q1 21 Q1 20 Q1 21 Q1 20 Q1 21 ARPU

Cable pay-TV 9.0 9.1 0.0 0.0 10.5 10.5 18.6 18.0 0.0 0.0 11.0 10.6 11.7 11.5 Broadband internet 5.2 5.2 0.0 0.0 11.2 10.6 18.3 18.2 0.0 0.0 10.4 9.5 8.3 8.3 Telephony 5.2 5.3 0.0 0.0 3.7 3.4 3.1 2.8 0.0 0.0 6.8 6.0 2.7 2.7 Mobile services 6.8 7.3 0.0 0.0 0.0 0.0 10.9 10.9 12.2 12.1 0.0 0.0 0.0 0.0 Blended Cable ARPU1 10.1 10.5 0.0 0.0 20.4 20.2 35.4 35.4 0.0 0.0 22.4 21.4 18.9 19.0

DTH pay-TV 8.6 9.1 20.2 17.8 10.3 9.5 18.3 18.9 0.0 0.0 10.1 8.7 11.3 10.7 ARPU from broadband internet includes value-added services such as online backup, internet security and anti-virus solutions. One unique cable subscriber can be an RGU for cable pay-TV, fixed-line telephony, broadband internet or other services. DTH subscribers are DTH RGUs.

Vivacom: Blended cable ARPU1 for Vivacom in Q1 2021 increased by 4.2% year-on- year to €10.5. The segment’s mobile ARPU increased to €7.3 in Q1 2021, from €6.8 in Q1 2020.

DTH ARPU for Vivacom increased to €9.1 in Q1 2021, from €8.6 in Q1 2020. Forthnet: DTH ARPU decreased to €17.8 in Q1 2021, from €20.2 in Q1 2020.

SBB Serbia: Blended cable ARPU1 for SBB Serbia in Q1 2021 amounted to €20.2. The 0.9% year-on-year decrease was primarily a result of the negative accounting impact due to IFRS 15.

DTH ARPU for SBB Serbia decreased to €9.5 in Q1 2021, from €10.3 in Q1 2020, affected by the same accounting change.

Telemach SLO: Blended cable ARPU1 and mobile ARPU for Telemach Slovenia remained stable in Q1 2021 at €35.4 and €10.9, respectively, when compared to Q1 2020.

DTH ARPU for Telemach Slovenia increased to €18.9 in Q1 2021, from €18.3 in Q1 2020, mainly as a result of a price increase in October 2020.

Telemach BH: Blended cable ARPU1 for Telemach BH in Q1 2021 decreased by 4.7% year-on-year to €21.4, mainly due to the negative IFRS 15 effect.

DTH ARPU for Telemach BH decreased to €8.7 in Q1 2021 from €10.1 in Q1 2020, as the negative effect of IFRS 15 offset the positive impact of a price increase in March 2020.

Telemach MNE: Blended cable ARPU1 for Telemach MNE in Q1 2021 increased by 0.8% year-on-year to €19.0, mainly as a result of growth in the number of subscribers for the multi-play offering.

DTH ARPU for Telemach MNE decreased to €10.7 in Q1 2021, from €11.3 in Q1 2020, mainly due to the higher number of subscribers with expired discounts in the contract period, as reported under IFRS 15.

Telemach CRO 5: Mobile ARPU for Q1 2021 amounted to €12.1, representing a 1.1% year-on-year decrease.

8 Q1 2021 BONDHOLDER REPORT

Results of Operations

In this report, the Group presents financial data for United Group for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. Please refer to Appendix 2 for the key factors affecting the Group’s business and results of operations. For a description of the key line items, please refer to Appendix 4. in €000 Q1 2020 Q1 2021

Revenue 193,974 439,357 Other income 1,723 1,796 Content cost (28,551) (48,166) Link and interconnection cost (11,434) (44,660) Cost of end-user equipment and other material cost (16,964) (47,974) Staff costs (21,537) (55,342) Media buying (7,944) (8,417) Net impairment loss on trade and other receivables, (2,279) (3,635) including contract assets Other operating expenses (30,630) (63,110)

IFRS EBITDA 76,358 169,849

Depreciation (27,126) (57,574) Depreciation (right-of-use assets) (5,550) (15,799) Amortization of intangible assets (22,254) (66,147) Results from operating activities 21,428 30,329

Finance income 451 826 Finance costs (33,824) (38,388) Net finance costs (33,373) (37,562)

Profit/(loss) before tax (11,945) (7,233)

Income tax (expenses)/benefit (1,433) (2,687) Profit/(loss) for the period (13,378) (9,920)

Revenue

Revenue increased by €245.4 million, or 127%, year-on-year to €439.4 million for Q1 2021. This increase was primarily due to the full effect of acquisitions in 2020 and 2021, as well as continued successful cross-selling and price increases.

9 Q1 2021 BONDHOLDER REPORT

Revenue figures for the business segments below exclude inter-company transactions, which have been eliminated. in €000 Q1 2020 Q1 2021 Change

Vivacom - 129,604 n/a Forthnet - 62,122 n/a SBB Serbia 56,741 56,052 (1%) Telemach SLO 57,870 61,191 6% Telemach CRO 15,462 43,770 183% Telemach BH 18,788 18,052 (4%) Telemach MNE 3,365 3,194 (5%) United Media 37,169 56,769 53% Other 4,579 8,603 88% Total 193,974 439,357 127%

Vivacom: Revenue for Vivacom amounted to €129,604 thousand for the period.

Forthnet: Revenue for Forthnet amounted to €62,122 thousand for the period.

SBB Serbia: Revenue for SBB Serbia decreased by 1% year-on-year to €56,052 thousand in Q1 2021, primarily due to the negative effect of IFRS 15 on Video and Internet Services.

Telemach SLO: Revenue for Telemach Slovenia increased by 6% year-on-year to €61,191 thousand in Q1 2021, primarily due to higher mobile revenues as a result of an increased number of subscribers and a price increase in March and October 2020, higher internet revenues (successful upselling and migration from legacy to EON packages with higher internet ARPU), and higher mobile handsets revenues.

Telemach CRO 5: Revenue for Telemach CRO increased by 183% year-on-year to €43,770 thousand in Q1 2021. The Q1 2020 base period includes only March figures for Telemach CRO which was acquired and consolidated into United Group as of March 2020.

Telemach BH: Revenue for the Telemach BH segment decreased by 4% to €18,052 thousand in Q1 2021, primarily due to the negative effect of IFRS 15 on Video and Internet Services.

Telemach MNE: Revenue for the Telemach MNE segment decreased by 5% year-on- year to €3,194 thousand in Q1 2021, from €3,365 thousand in Q1 2020, mainly due to the continued decline in the number of DTH subscribers.

United Media Group: External revenue at United Media Group increased by 53% year- on-year to €56,769 thousand in Q1 2021, mainly due to the Nova BG acquisition. Total revenues of the Media Segment (including intercompany revenues) increased by 36% year- on-year to €84,646 thousand in Q1 2021.

10 Q1 2021 BONDHOLDER REPORT

Other Businesses: Revenue for the Other Businesses segment increased year-on-year, by €4,024 thousand or 88%, to €8,603 thousand in Q1 2021, mainly due to launch of the Shoppster e-commerce platform.

Other income

Other income increased by 4% year-on-year, from €1,723 thousand in Q1 2020 to €1,796 thousand in Q1 2021.

Content cost

Content costs increased by 69% year-on-year to €48,166 thousand in Q1 2021, mainly as a result of Telco and Media acquisitions.

Link and interconnection cost

Link and interconnection costs increased by 291% year-on-year to €44,660 thousand in Q1 2021, mainly as a result of higher mobile and other link and interconnection costs due to acquisitions.

Cost of end-user equipment and other material costs

Cost of end-user equipment and other material costs increased by 183% year-on-year to €47,974 thousand in Q1 2021. This increase was primarily due to the higher cost of sales for mobile handsets (mainly due to the acquisitions of Vivacom and Telemach CRO), higher energy and fuel costs mainly as a result of acquisitions, higher cost of other end-user equipment and higher cost of goods sold (mainly relates to goods sold by Shoppster which started operations in 2020).

Staff costs

Staff costs increased by 157% year-on-year to €55,342 thousand in Q1 2021, mainly due to the higher number of employees resulting from acquisitions in 2020 and 2021.

Media buying

Media buying increased by 6% year-on-year to €8,417 thousand in Q1 2021 (Q1 2020: €7,944 thousand). This increase was mainly a result of the Nova BG acquisition, which compensated for the effects of the COVID-19 pandemic (lower media buying revenues as a result of lower overall advertising expenditure).

Depreciation

Depreciation increased by 112% year-on-year to €57,574 thousand in Q1 2021. This increase was primarily due to the attainment of new assets as a result of the acquisitions in 2020 and 2021.

11 Q1 2021 BONDHOLDER REPORT

Depreciation (right-of-use assets)

Depreciation increased to €15,799 thousand in Q1 2021, from €5,550 thousand in Q1 2020. This increase was mainly due to acquisitions completed in 2020 and 2021.

Amortization of intangible assets

Amortization of intangible assets increased by 197% year-on-year to €66,147 thousand in Q1 2021, mainly due to the addition of intangible assets of acquired companies.

Other operating expenses

Other operating expenses increased by 106% year-on-year to €63,110 thousand in Q1 2021 mainly as a result of acquisitions completed in 2020 and 2021. While all cost categories saw an increase, the largest increases were in maintenance, license fee and marketing and promotion costs.

Net finance costs

Net finance costs increased by 13% year-on-year to €37,562 thousand in Q1 2021, mainly due to higher interest expenses related to new bond issuance.

Profit/(loss) before tax

Loss before tax decreased to €7,233 thousand in Q1 2021, from a loss of €11,945 thousand in Q1 2020, primarily due to increased operating profit, which partially offset the higher net finance costs.

12 Q1 2021 BONDHOLDER REPORT

EBITDA reconciliation

EBITDA is a supplemental measure of financial performance that is not required by, or presented in accordance with, IFRS. United Group defines “EBITDA” as profit/(loss) for the period plus income tax (benefit)/expense, depreciation, amortization of intangible assets and net finance costs.

EBITDA is not a measurement of performance or liquidity under IFRS and you should not consider EBITDA as alternatives to (a) net income as determined in accordance with IFRS as a measure of the Group’s operating performance, (b) cash flow for the period as a measure of the Group’s ability to meet its cash needs, or (c) any other measure of performance or liquidity under IFRS. United Group presents EBITDA and the ratios derived therefrom, because it believes that they are measures commonly used by investors and they are measures that are used in managing the business. EBITDA, as presented in this report, however, may not be comparable to similarly titled measures reported by other companies due to differences in the way these measures are calculated.

The following table provides a reconciliation of profit/(loss) for the period to EBITDA.

in €000 Q1 2020 Q1 2021 Change

Profit/(Loss) for the period (13,378) (9,920) (26%) Income tax (benefit)/expense 1,433 2,687 88% Depreciation 27,126 57,574 112% Depreciation (right-of-use assets) 5,550 15,799 185% Amortization of intangible assets 22,254 66,147 197% Net finance costs 33,373 37,562 13% EBITDA 76,358 169,849 122% Non-operating expenses 8,236 9,315 13% Adjusted EBITDA2 84,594 179,164 112%

The following table provides a build-up of Annualized Last Two Quarters Adjusted Pro Forma EBITDA6. in €000 L2QA

Annualized L2Q Adjusted EBITDA 618,498

Forthnet L2QA Adj. EBITDA Contribution (Oct20) 13,176 Nova BG L2QA Adj. EBITDA Contribution (Oct20-Jan21) 38,503 Other M&A companies L2QA Adj. EBITDA7 19,258 Annualized Last Two Quarters Adjusted Pro Forma EBITDA 689,435

6 Annualized Last Two Quarters Adjusted Pro Forma EBITDA presented pre IFRS 16 effect.

7 Represent L2QA Adj. EBITDA for Dan Graf, Vesnik Telegraf, Net1, N3, D express, Mainstream and Networx.

13 Q1 2021 BONDHOLDER REPORT

Gross Leverage and Net Leverage Ratio including Forthnet

As at March 31, 2021, United Group’s gross leverage ratio (i.e. the ratio of Group gross debt to Annualized Last Two Quarters Pro Forma EBITDA) decreased to 5.09x, compared to 5.31x as at December 31, 2020. As at March 31, 2021, United Group’s net leverage ratio (i.e. the ratio of Group net debt to Annualized Last Two Quarters Pro Forma EBITDA) increased to 4.85x, compared to 4.70x as at December 31, 2020.

In €000 Q1 2021 a) Annualized Last Two Quarters Pro Forma EBITDA6 689,435 b) Cash and cash equivalents 166,041 c) Lease liabilities 289,680 d) SSRCF 83,000 e) Pro Forma net debt for M&A purposes8 122,721 f) Senior Secured Notes9 3,300,000 g) Other financial liabilities (other loans and borrowings) 2,938 h) IFRS 16 lease liabilities adjustment (287,603) i) As adjusted Group Gross debt (c+d+e+f+g+h) 3,510,737 j) As adjusted Group Net debt (i-b) 3,344,695

k) Gross leverage (i/a) 5.09x l) Net leverage (j/a) 4.85x

8 Pro Forma net debt for M&A purposes includes the effect of additional debt for the acquisition of Nova BG and other companies for which the Group signed agreements for acquisition and are in the process of receiving regulatory approvals, as well as estimated consideration for the acquisition of a minority interest in Forthnet Group.

9 Senior Secured Notes figure represents the aggregate principal amount of notes issued and therefore excludes capitalized transaction costs as shown in the Statement of Financial Position in accordance with IFRS.

14 Q1 2021 BONDHOLDER REPORT

Liquidity and Capital Resources

The Group’s primary sources of liquidity and funds for capital expenditure, acquisitions and other investments are expected to be operating cash flow, the existing revolving credit facility (“RCF”), potential additional issuances of debt securities, ancillary and bilateral lending facilities and finance leases. United Group’s ability to generate cash from its operations will depend on future operating performance, which is in turn dependent, to some extent, on general economic, financial, competitive, market, regulatory and other factors, many of which are beyond the Group’s control.

United Group maintains cash and cash equivalents to fund the day -to-day requirements of the business. The Group holds cash primarily in as well as Serbian , Bosnian mark, Bulgarian levs and .

Historically, the Group has relied primarily on its Existing Revolving Credit Facility and bilateral bank facilities, other debt facilities and cash flow from operations to provide funds required for investments in capital expenditure and operations.

As at March 31, 2021, the Group had €166.0 million in cash and cash equivalents. In addition, United Group had €3,300.0 million in fixed and floating rate Senior Secured Notes10, along with a partially drawn Senior Secured Revolving Credit Facility of €73.0 million, a €10.0 million unsecured bilateral RCF in Serbia, lease liabilities in the amount of €289.7 million and other financial liabilities of €2.9 million. Cash Flow

The table below summarises the Group’s consolidated cash flow for the three months ended March 31, 2021, compared to the three months ended March 31, 2020.

In €000 Q1 2020 Q1 2021 Change Operating net cash flow 49,947 94,018 44,071 Investing net cash flow (181,495) (384,627) (203,132) Financing net cash flow 998,704 171,240 (827,464) Net cash flow 867,156 (119,369) (986,525)

Net cash from / (used in) operating activities

Net cash flows from operating activities increased by €44,071 thousand, from a net cash inflow of €49,947 thousand in Q1 2020 to a net cash inflow of €94,018 thousand in Q1 2021. This is primarily due to increased cash generated from operations, mainly due to the acquisitions, which was partially offset by increased interest payments.

10 Senior Secured Notes figure represents the aggregate principal amount of notes issued and therefore excludes capitalized transaction costs as shown in the Statement of Financial Position in accordance with IFRS.

15 Q1 2021 BONDHOLDER REPORT

Net cash from / (used in) investing activities

Net cash flows used in investing activities increased by €203,132 thousand, from a net cash outflow of €181,495 thousand in Q1 2020 to a net cash outflow of €384,627 thousand in Q1 2021. This increase was primarily due to the payment of the consideration relating to the acquisition of Nova BG and increased capital expenditures.

Net cash from / (used in) financing activities

Net cash flows from financing activities decreased by €827,464 thousand, from a net cash inflow of €998,704 thousand in Q1 2020 to a net cash inflow of €171,240 thousand in Q1 2021, primarily due to the lower amount of issued bonds in Q1 2021 compared to Q1 2020.

16 Q1 2021 BONDHOLDER REPORT

Capital Expenditure

United Group’s capital expenditure relates primarily to the purchase of property and equipment, including expansion of the Group’s network in terms of capacity and new homes connected, purchase of modems and set-top boxes to be installed in customer premises, growth in RGUs and maintenance of the Group’s cable and mobile networks and infrastructure, purchase of intangible assets such as content, software, investments in core infrastructure and systems to facilitate the addition of new services and acquisitions. Therefore, capital expenditure is primarily driven by extending, upgrading and maintaining cable and mobile networks, the installation and in-home wiring for new subscribers, the cost of cable modems, including high-speed modems for subscribers to the Group’s high-speed broadband internet, as well as the acquisition and production of content. The Group’s capital expenditure has also historically included certain investments of a non-recurring nature, as well as costs to integrate acquired businesses.

Capital expenditure also includes increases in intangible assets (except the Group’s customer list and brand names) and does not include financial assets. As part of the Group’s strategy to focus on capital expenditure improving returns, it has implemented measures to ensure a more efficient usage of capital investment. United Group intends to manage capital expenditure to maintain its well-invested asset base. The members of the Group’s board review all material capital expenditure programmes.

Over the next several years, United Group expects that its capital expenditure will be largely success- and capacity-based. Success and capacity-based capital expenditure includes capital expenditure related to the expansion of the Group’s network footprint to additional homes and existing subscribers, the replacement of set-top boxes, expanding network capacity, new product and service development and expenditure incurred when connecting business subscribers to the Group’s network. Success-based capital expenditure does not include capital expenditure for maintenance, upgrade and replacement of systems and infrastructure.

CAPEX 2 by Segment in €000 Q1 2020 Q1 2021 Change

Vivacom - 15,550 n/a Forthnet - 6,226 n/a SBB Serbia 15,588 13,619 (13%) Telemach SLO 16,984 20,390 20% Telemach CRO 2,427 11,610 378% Telemach BH 5,129 4,736 (8%) Telemach MNE 1,290 979 (24%) United Media 16,222 17,383 7% Other 176 769 337% Total 57,816 91,262 58%

17 Q1 2021 BONDHOLDER REPORT

Vivacom: Capital expenditure for Vivacom amounted to €15,550 thousand in Q1 2021. Forthnet: Capital expenditure for Forthnet amounted to €6,226 thousand in Q1 2021.

SBB Serbia: Capital expenditure for SBB Serbia decreased by 13% year-on-year to €13,619 thousand in Q1 2021, mostly due to lower investments in customer-premise equipment compared to Q1 2020.

Telemach SLO: Capital expenditure for Telemach Slovenia increased by 20% year-on- year to €20,390 thousand in Q1 2021, mainly due to higher acquisition costs and capitalized inventory, as well as higher investments in IT projects compared to Q1 2020.

Telemach CRO 5: Capital expenditure for Telemach CRO increased by 378% to €11,610 thousand in Q1 2021. Please note that the Q1 2020 period includes only March figures for Telemach CRO which was acquired and consolidated into United Group as of March 2020.

Telemach BH: Capital expenditure at Telemach BH in Q1 2021 decreased by 8% year- on-year to €4,736 thousand, mostly due to lower investments in IP equipment and customer- premise equipment compared to Q1 2020.

Telemach MNE: Capital expenditure for the Montenegro segment decreased by 24% to €979 thousand in Q1 2021, mainly due to lower customer-premises equipment compared to Q1 2020.

United Media: Capital expenditure for United Media increased by 7% to €17,383 thousand in Q1 2021, mainly due to the Nova BG acquisition and investments in new production capacities.

Please refer to Appendix 5 for specific quantitative and qualitative disclosures about market risk and Appendix 6 for the Group’s critical accounting policies.

Adjusted EBITDA-CAPEX increased from €26,779 thousand in Q1 2020 to €87,902 thousand in Q1 2021, mostly due to robust Adjusted EBITDA growth. in €000 Q1 2020 Q1 2021 Change Adjusted EBITDA2 84,594 179,164 112% CAPEX2 57,816 91,262 58% Adjusted EBITDA – CAPEX 26,779 87,902 228%

18 Q1 2021 BONDHOLDER REPORT

Subsequent (Material Recent) Events

Acquisition of minority interest in Forthnet Group

On January 27, 2021, the Hellenic Capital Market Commission (HCMC) approved the Mandatory Tender Offer (MTO) for the shares of Forthnet Group. Following expiration of the defined term, the Group exercised its squeeze-out right to acquire the remaining shares at the MTO price. The HCMC approved the squeeze-out application of the Group on April 9, 2021. On April 29, 2021, the Group paid a consideration of €579 thousand for the squeeze out shares and acquired the remaining free float reaching 100% of Forthnet share capital. Other acquisitions

In February 2021, the Group concluded an agreement to acquire 100% of the share capital of local internet and TV operators Net 1 EOOD and ComNet EAD. The transaction was subject to customary regulatory approvals by the local competition authorities and was closed on April 29, 2020. Intercompany loans amounting to €42,524 thousand have been granted by the Group to the newly acquired subsidiaries at the time of the acquisition. The fair value of the net identifiable assets of the acquired companies at the date of the acquisition has not yet been determined, as the closing accounts as of this date have not been finalized.

In February 2021, the Group concluded an agreement to acquire 100% of share capital of Digital OOD (N3) for a cash consideration of €12,828 thousand. The transaction was subject to customary regulatory approvals by the local competition authorities and was closed on April 29, 2020. The fair value of the net identifiable assets of the acquired company at the date of the acquisition has not been determined yet, as the closing accounts as of this date have not been finalized.

The financial effects of the above transactions have not been brought to account at March 31, 2021. The operating results and assets and liabilities of the companies will be brought to account from May 1, 2021.

On March 29, 2021, the Group concluded an agreement to acquire 100% of the share capital of the Serbian transportation company D Express. This transaction, which is subject to all necessary approvals from the relevant regulatory authorities, will provide the infrastructure needed for the further development of the Group’s e-commerce business as well as operational synergies in logistics. The transaction is expected to close during the second quarter of 2021.

On April 29, 2021, the Group concluded an agreement to acquire the entire share capital of local internet and TV operators Networx-Bulgaria EOOD, TVN Distribution Bulgaria EOOD and Telco Infrastructures EOOD in Bulgaria. The transactions are subject to relevant regulatory approvals.

Disclosures required by IFRS 3 are not presented in this report as the acquisition has not yet reached the stage when management can reliably disclose the full details.

On May 20, 2021, the Group acquired 70% of the share capital of companies Mainstream d.o.o. and IT4Biz d.o.o. in Serbia.

19 Q1 2021 BONDHOLDER REPORT

COVID-19

The existence of novel coronavirus (COVID-19) was confirmed in early 2020 and has spread rapidly from mainland China across the globe, causing disruptions to businesses and economic activity and it continues to affect the global economy in 2021.

While economic development over the coming months will depend on the spread of infection, the continued rollout of vaccines against COVID-19 is expected to substantially reduce the probability of infection.

The impact of this outbreak on macroeconomic forecasts and markets are incorporated into the Group’s estimates of expected credit loss provisions for financial assets and other impairments assessments in 2021, including but not limited to: Goodwill, Property, plant and equipment, Intangible assets and Programming rights.

Management has reasonable expectations that the Group has adequate resources to continue in operational existence for the foreseeable future. The results of management review of the Group’s market, operations and financials in the past year and a forecast for at least twelve months after the date of signing of the financial statements provides a sound basis for the appropriateness of using the going concern assumption in the preparation of the Group’s financial statements for the period ended March 31, 2021, though the existence of COVID-19 means there is generally a level of uncertainty in the wider macro market.

Management has concluded that the range of possible outcomes considered at arriving at this judgment does not give rise to material uncertainties related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern for at least twelve months from the date of authorization of the financial statements for issue.

The Group’s management holds that they are not aware of any other significant post balance sheet events that could affect the consolidated financial statements for March 31, 2021 or require separate disclosure.

20 Q1 2021 BONDHOLDER REPORT

Mergers & Acquisitions

 On January 28, 2021, the Group acquired a 100% stake in Nova BG, Bulgaria’s largest multi-platform media company. Nova BG comprises 10 TV channels, including national NOVA TV, and the country’s largest online platform NetInfo, which reach on average 80% of the Bulgarian population every month. It also operates four radio stations.

 On February 22, 2021 the Group acquired the remaining share of Grand Production d.o.o.

 On March 10, 2021, the Group acquired a 100% stake in Dan Graf d.o.o.

 On March 22, 2021, the Group acquired a 100% stake in Vestnik Telegraf EOOD, as well as its subsidiary IK Borba AD (50% stake).

 On March 29, 2021, the Group agreed to acquire the Serbian transportation company D express.

 On April 29, 2021, the Group acquired a 100% stake in ComNet Sofia EAD, Digital Cable Television EOOD (N3) and Net 1 EOOD.

 On April 29, 2021, the Group agreed to acquire local internet and TV operators Networx-Bulgaria EOOD, TVN Distribution Bulgaria EOOD and Telco Infrastructures EOOD.

 On April 29, 2021, the Group acquired the remaining share of Forthnet.

 On May 20, 2021, the Group acquired 70% of share capital of Mainstream d.o.o. and IT4Biz d.o.o.

United Group continually monitors M&A opportunities and is currently in the early stages of evaluating multiple potential opportunities. In line with its stated strategy, the Group is looking for acquisitions that are value accretive and offer substantial synergies with the Group’s existing operations.

21 Q1 2021 BONDHOLDER REPORT

Group Background

United Group is the leading distributor of cable and satellite pay-TV in Slovenia, Serbia, Bosnia and Herzegovina and Montenegro, where it also provides broadband internet and fixed- line telephony services. Additionally, the Group offers mobile telephony services in Slovenia and Croatia (after Telemach CRO acquisition) and distribute satellite pay-TV across the five countries of former , Slovenia, Serbia, Bosnia and Herzegovina, North Macedonia and Montenegro. In August 2020, the Group acquired Vivacom, the market-leading integrated telecommunications provider in Bulgaria, which offers both fixed and mobile services in Bulgaria. In November 2020, the Group completed its acquisition of a controlling interest in Forthnet, a prominent telecom operator and Pay-TV provider in Greece. In January 2020, the Group completed the acquisition of Bulgaria’s largest multi-platform media company Nova BG.

United Group is the only pan regional distribution platform in a region of approximately 40 million people and is the leading multi-play provider in its primary markets, where the Group combines its services into packages, or bundles, which offer subscribers the convenience of being able to purchase television, broadband internet and telephony services from a single provider. This model provides significant opportunities to cross-sell the Group’s products.

United Group believes that it has been able to establish its business as one of the leading distribution platforms in its region due to the Group’s attractive content portfolio. This has been established through United Group’s ownership of specific key pay -TV channels, long term contracts with third parties, its well invested network that provides, among other things, one of the highest internet download speeds in the Group’s markets, and its high quality customer service which has led to low churn rates that the Group believes evidences a satisfied customer base.

Management Team

Many of the Group’s key management members have been with the business since its inception, including the Executive Chairman and Founder, Dragan Šolak, the Chief Executive Officer of the Group and Group Vice President – Marketing and Media, Victoriya Boklag and the Group Vice President - Operations, Violeta Vasilijević. The Group’s senior management team has substantial experience in the telecommunications, media and technology industries, as well as in banking, private equity and corporate finance. Many members of the senior management team have held a number of different positions within the business and have shaped the direction of its development and its organic growth within the region.

Dragan Šolak—Founder and Executive Chairman of the Group. Mr. Šolak founded SBB in 2000 and has been a member of management since the Group’s inception. In 2009, Mr. Šolak assumed the role of Group Executive Chairman. In his current role, he continues to be involved in all aspects of the business and is responsible for the overall strategic leadership of the Group.

22 Q1 2021 BONDHOLDER REPORT

Victoriya Boklag—Chief Executive Officer of the Group and Group Vice President— Marketing and Media. Ms. Boklag has been with the management team since the Group’s inception in 2000. Before taking over the role of United Group’s chief executive officer and vice president of marketing and media, Ms. Boklag held several positions in finance and commercial operations and acted as the chief executive officer of SBB. Ms. Boklag is also a member of the Board of SBB Foundation. She holds a BA degree from the ICU Kiev.

Violeta Vasilijević—Group Vice President—Operations. Ms. Vasiljević has been with the management team since the Group’s inception in 2000. She is currently responsible for the technical and operating support for all of the Group’s administrative functions and products. Ms. Vasiljević holds a degree in Mechanical Engineering from the University of Kragujevac.

Janez Živko—Vice President Finance. Mr. Živko joined the management team of United Group in March 2015. Prior to joining, Mr. Živko served as the CFO of the Petrol Group, one of the largest companies in Slovenia. He has also served in numerous roles at Gorenje Group over a period of seven years, including Director of Finance and Deputy CFO. Mr. Živko began his career in 1998 as a financial analyst and subsequently became financial controller for European operations at ACT Teleconferencing in Denver, Colorado. He holds an MBA (in Finance) from the University of Denver in Colorado, USA.

Željko Batistić—Group Vice President—Technology. Mr. Batistić first joined the management team in May 2012. Prior to joining, Mr. Batistić was an experienced CATV manager and served at a Croatian cable operator at B.net Croatia from 2007 to 2012. Mr. Batistić holds a Master’s degree in Electrical Engineering from the Faculty of Electrical Engineering and Computing, University of and an Executive MBA degree from Cotrugli Business School, Zagreb.

Vladislav Ratajac—Group Vice President—Corporate Development. Mr. Ratajac joined the management team in 2011. Mr. Ratajac held positions at Mid Europa Partners from 2008 to 2011 and Deutsche Bank before joining the Group. Mr. Ratajac holds a degree in Economics from Rutgers University in New Jersey, USA.

Dragica Pilipović Chaffey—Group Vice President—Corporate Affairs. Ms. Pilipović Chaffey joined the management team in 2009. Prior to her current role, Ms. Pilipović Chaffey held a number of senior posts within the European Bank for Reconstruction and Development (EBRD) from 2007 to 2009, and the IMF in Washington, D.C. Ms. Pilipović Chaffey holds an MBA from George Washington University, Washington, D.C., and a BA in Economics from the University of Belgrade.

Ianis Girgenson—Group General Counsel. Mr. Girgenson joined United Group in 2020 as Group General Counsel. He oversees all legal matters, as well as interactions with national and EU regulatory agencies. Before joining the Group Mr. Girgenson practiced law in London, Brussels and Paris for over 15 years and served for 4 years as an Associate General Counsel at VEON in Amsterdam. Mr. Girgenson graduated from the University of Paris (Sorbonne) and obtained a Master of Laws from Harvard Law School. He is a member of Paris and New York bars.

23 Q1 2021 BONDHOLDER REPORT

Aleksandra Subotić—Chief Executive Officer—United Media. Ms. Subotić joined the management team in 2014. Previously, Ms. Subotić was a General Manager at Net TV Plus. Prior to joining us, Ms. Subotić worked as General Manager at Daniel SatTV, a satellite and cable network development company in Serbia, and at Total TV Info, a distribution company in Austria. She holds an MBA degree in Economics from Educons University.

Srđan Đurđević—Chief Executive Officer—United Cloud. Mr. Đurđević has been a part of the Group since the end of 2002, which is almost from its inception. During his career in the company, he held several positions in the technology department, where he actively participated in the digital transformation of the company. He holds an MSc degree in Informatics.

Milija Zeković—Chief Executive Officer—SBB Serbia and Telemach Montenegro. Mr. Zeković joined the management team in October of 2018. Previously, he was Chief Executive Officer of Crnogorski Telekom from 2016 to 2017. He was also a member of the Executive Management Board of Crnogorski Telekom from 2008 to 2016. He holds a degree in Economics from the University of Montenegro.

Adrian Ježina—Chief Executive Officer—Telemach Slovenia. Mr. Ježina joined the management team in 2017. Prior to joining, Mr. Ježina was the CEO of Siemens Convergence Creators Adria Region. He graduated in 2009 at the Faculty of Electrical Engineering, Mechanical Engineering and Naval Architecture in Split. He also holds an Executive MBA degree from the Cotrugli Business School.

Atanas Dobrev—Chief Executive Officer—Vivacom. Mr. Dobrev joined the Company as Chief Financial Officer in 2008, taking charge of business planning, financial controlling, fraud prevention, revenue assurance, and customer quality control services. Prior to that, Atanas was the Finance and Administration Manager at Oriflame Bulgaria and Chief Financial Officer at Globul. He holds an MBA in Finance and Accounting from Rollins College, Crummer Graduate School of Business, USA and a Masters in International Economic Relations from the University of National and World Economy in Sofia, Bulgaria.

Viktor Pavlinić—Chief Executive Officer—Telemach CRO. Mr. Pavlinić joined the management team in March of 2020. He has more than 20 years of experience in the telecommunications industry, in a range of positions in finance, sales and logistics. Mr. Pavlinić joined Telemach CRO in 2008 as Head of Controlling and was appointed CFO and Member of the Management Board in 2011. He has been CEO of Telemach CRO Croatia since 2016. He holds a degree in economics from the .

Admir Drinić—Chief Executive Officer—Telemach BH. Mr. Drinić serves as Chief Executive Officer of Telemach Bosnia and Herzegovina, having joined the Company in 2013 as Chief Operating Officer. His previous positions include member of the Securitas BiH Board of Directors, Chief Executive Officer of the B.I.G.A. Sarajevo security agency, and Chief Technology Officer of Gama Sigurnost Sarajevo. He holds a bachelor’s degree in economics from the University for Business Studies, Faculty of Economics, in Banja Luka, in 2009.

24 Q1 2021 BONDHOLDER REPORT

Nikola Francetić—Chief Executive Officer—Net TV Plus. Mr. Francetić joined the management team in October of 2018. Previously, he was head of content, broadcasting and media for Telekom Austria Group from 2014 to 2018 and an executive director for content at T-HT Croatian Telekom from 2011 to 2014. He holds an MBA from the Bled School of Business in Slovenia and a degree in Experimental Physics from the University of Zagreb.

Ljiljana Ahmetović—Chief Executive Officer—Shoppster. Ljiljana Ahmetović joined United Group in 2018, as a CEO of Shoppster. Prior to work in United Group, Ljiljana was the CEO SuperKartica, a leading multi-partner loyalty program in Serbia. Before that she spent 6 years leading renowned retailers Idea and Mercator in Serbia, where she held a range of leadership positions, primarily in trading and category management. She holds a master‘s degree from the University of Belgrade Faculty of Economics.

25 Q1 2021 BONDHOLDER REPORT

Shareholder Structure

Following KKR’s exit from UG shareholding on January 5, 2020, BC Partners now owns approximately 56.0% of the Group’s shares, senior management approximately 41.6% and EBRD approximately 2.4%, as of the date of this report.

BC Partners is a leading global investment firm. Founded in 1986 as one of the first pan-European buy-out investors, BC Partners has grown and evolved into a leading alternative investment firm, investing principally in larger businesses in Europe and North America. Since inception, BC Partners has completed 122 acquisitions with a total enterprise value of over €160 billion and is currently advising funds totaling over €34 billion.

26 Q1 2021 BONDHOLDER REPORT

Appendices

Appendix 1 - Financial statements Income Statement in €000 Q1 2020 Q1 2021 Revenue 193,974 439,357 Other income 1,723 1,796 Content costs (28,551) (48,166) Link and interconnection costs (11,434) (44,660) Cost of end-user equipment and other material cost (16,964) (47,974) Staff costs (21,537) (55,342) Media buying (7,944) (8,417) Net impairment loss on trade and other receivables, including contract assets (2,279) (3,635) Other operating expenses (30,630) (63,110) IFRS EBITDA 76,358 169,849

Depreciation (27,126) (57,574) Depreciation (right-of-use assets) (5,550) (15,799) Amortization of intangible assets (22,254) (66,147) Operating profit 21,428 30,329

Finance income 451 826 Finance costs (33,824) (38,388) Net finance costs (33,373) (37,562)

Profit/(loss) before tax (11,945) (7,233)

Income tax (expenses)/benefit (1,433) (2,687) Profit/(loss) for the period (13,378) (9,920)

Other comprehensive income/(loss) Items that are or may be reclassified subsequently to profit and loss translation differences (2,832) (86) Other comprehensive income/(loss) for the period (2,832) (86)

Total comprehensive income/(loss) for the period (16,210) (10,006)

Profit/(loss) attributable to: Owners of the Company (14,192) (10,311) Non-controlling interests 814 391 Profit/(loss) for the period (13,378) (9,920)

Total comprehensive income/(loss) attributable to: Owners of the Company (17,024) (10,397) Non-controlling interests 814 391 Total comprehensive income/(loss) for the period (16,210) (10,006)

27 Q1 2021 BONDHOLDER REPORT

Statement of Financial Position in €000 Q1 2020 Q1 2021 Assets Property, plant and equipment 504,700 1,056,873 Goodwill 823,955 1,228,811 Intangible assets 299,689 893,218 Investment property 292 70,347 Right-of-use assets 149,149 281,317 Loans to related parties 6,856 7,221 Other financial assets 11,736 56,942 Non-current prepayments 447 5,323 Non-current trade receivables - 15,034 Contract assets 6,122 12,197 Deferred costs 241 145 Deferred tax assets 9,240 20,757 Non-current assets 1,812,427 3,648,185

Inventories 31,499 65,728 Trade and other receivables 192,173 313,360 Short-term loans receivables and deposits 8,891 10,356 Prepayments 45,862 68,517 Contract assets 37,753 65,207 Income tax receivable 10,674 11,110 Restricted cash for acquisition purposes 1,050,000 - Assets classified as held for sale - 793 Cash and cash equivalents 67,213 166,041 Current assets 1,444,065 701,112 Total assets 3,256,492 4,349,297

Equity Issued and fully paid share capital 125 125 Share premium 352,557 527,046 Capital reserves 54,468 54,468 Translation reserves (15,307) (13,754) Accumulated losses (424,729) (577,191) Equity attributable to owners of the Company (32,886) (9,306) Non-controlling interests 10,838 6,121 Total equity (22,048) (3,185)

Liabilities Loans and borrowings 57,010 81,212 Other financial liabilities-bonds 2,719,878 3,266,439 Long-term liabilities 5,827 12,962 Long-term provisions 40,684 95,973 Deferred operating lease income 5,334 5,194 Contract liabilities 1,747 6,220 Lease liabilities 117,092 228,910 Deferred tax liabilities 26,583 98,711 Employee benefits 784 11,816 Non-current liabilities 2,974,939 3,807,437 Trade and other payables 197,522 375,712 Current tax liabilities 16,404 17,575 Loans and borrowings 36,384 1,691 Interest payables (Q120 figure within trade payables) - 22,493 Deferred operating lease income 5,668 4,780 Contract liabilities 16,614 62,024 Lease liabilities 31,009 60,770 Current liabilities 303,601 545,045 Total liabilities 3,278,540 4,352,482 Total equity and liabilities 3,256,492 4,349,297

28 Q1 2021 BONDHOLDER REPORT

Statement of Cash Flows in €000 Q1 2020 Q1 2021 Cash flows from operating activities (Loss)/profit for the period (13,378) (9,920) Adjustments for: Depreciation 27,126 57,574 Depreciation (right-of-use assets) 5,550 15,799 Amortization 22,254 66,147 Impairment of trade and other receivables 2,132 3,240 Impairment of contract assets 147 395 Impairment loss of subscriber acquisition costs - 103 Impairment loss of goodwill 354 - Write off and disposal of non-current assets - 676 Impairment loss of inventories 176 177 Income tax expense/(benefit) 1,433 2,687 Net change on long-term provisions (372) 272 Share based payment - - Net finance cost 33,373 37,562 Operating cash flows before WC changes 78,795 174,712 Changes in: Trade and other receivables 8,057 9,255 Deferred revenue 215 9,388 Deferred cost (60) 34 Contract assets (5,545) (2,263) Contract liabilities 6,666 (355) Employee benefits (10) 108 Inventories (4,016) 2,540 Prepayments 435 (5,484) Trade and other payables 3,026 (48,020) Cash generated from operations 87,563 139,915 Interest paid (35,747) (43,125) Income tax paid (1,869) (2,772) Net cash from operating activities 49,947 94,018

Cash flows from investing activities Acquisition of property, plant and equipment (37,626) (45,246) Acquisition of intangible assets (18,186) (46,436) Acquisition of subsidiaries, net of cash acquired (123,622) (289,231) Assignment of receivables - - Proceeds from sale of property, plant and equipment and assets held for sale - 584 Prepayments for right-of-use - (859) Short-term loans receivable and deposit inflow - - Short-term loans receivable and deposit outflow (881) (1,339) Cash inflow other non-current financial assets 608 - Cash outflow other non-current financial assets (1,038) (2,315) Other (outflows)/inflows (750) 215 Net cash (used in)/provided by investing activities (181,495) (384,627)

Cash flows from financing activities Proceeds from share premium - - Proceeds from bond issue 1,675,000 150,000 Repayment of bond (587,578) - Proceeds from borrowings 44,000 238,000 Repayment of borrowings (113,928) (157,548) Transaction costs related to loans and borrowings (12,257) (3,448) Acqusition of non-controlling interest (7) (36,646) Repayment from lease liabilities (6,448) (19,118) Dividends paid (78) - Net cash (used in)/provided by financing activities 998,704 171,240 Net (decrease)/increase in cash and cash equivalents 867,156 (119,369) Cash and cash equivalents at 1 January 250,058 285,405 Effects of movements in exchange rates on cash in hands (1) 5 Cash and cash equivalents at 31 March 1,117,213 166,041

29 Q1 2021 BONDHOLDER REPORT

Appendix 2 - Key Factors Affecting Our Business and Results of Operations

The performance of the Group’s businesses, its results of operations and the key operating measures discussed below have been, and will continue to be, affected by a variety of factors. Certain of these factors are discussed below.

Products, Services and Content

United Group’s results are impacted by the product mix as well as the Group’s ability to introduce new products and upgrades and successfully sell those products and upgrades to increase RGUs and ARPUs. United Group continually evaluates the suite of products and services provided to subscribers to ensure that it remains competitive with other providers in its markets and has an opportunity to increase the Group’s subscriber base and the number of products sold to subscribers. United Group accomplishes this through product innovation, investments in technology and acquisitions of complementary businesses. For example, the Group has expanded its product offering by introducing fixed-line services to offer multi play packages in Slovenia, Serbia, Bosnia and Herzegovina and Montenegro, including pay television, broadband internet access, fixed-line telephony, as well as mobile telephony services in Slovenia and following the completion of the acquisition of Croatia in March 2020, in Croatia. Following completion of the Vivacom Acquisition in August 2020, United Group also offers pay television, broadband internet access, fixed line telephony, and mobile telephony services in Bulgaria. Following completion of the acquisition by the Group of Forthnet, United Group also offers home entertainment and communications services in Greece.

United Group believes that media and communications services customers will increasingly choose bundled products because of the convenience and enhanced value resulting from obtaining TV, broadband internet and telephony services from a single provider for one price. As at March 31, 2021, 85% of the Group’s customer base11 in Slovenia, 79% of its customer base11 in Serbia, 87% of its customer base11 in Bosnia and Herzegovina and 54% of its customer base11 in Bulgaria subscribed for one of the Group’s multi-play packages.

United Group seeks to be the leader in its markets in pay television content and has entered into long term strategic partnerships with key international and regional content owners. The Group has also acquired leading regional content owners in key television sub segments (sports, lifestyle, children and films), such as providers of the Sport Klub family of channels (which includes Sport Klub, Golf Klub and fishing and hunting channels), N1, , Pikaboo and Cinemania. With the Forthnet acquisition, the Group acquired Novasports (sports), Novacinema (series and movies) and Novalife (entertainment) channels in Greece. After the Nova BG acquisition, the Group also provides content in Bulgaria (Nova TV, Nova news, KinoNova, , , and other channels). United Group’s ability to

11 Under new methodology: unique cable subscribers by bundle.

30 Q1 2021 BONDHOLDER REPORT

maintain the quality of its content impacts the Group’s ability to sell pay television offerings, as well as bundled packages.

The Group’s product mix can also impact margins. For example, the mobile telephony business and the content business generally have lower margins compared to the cable-based business. The Group’s success in growing these businesses may impact the product mix and therefore may affect UG Adjusted EBITDA margins.

Pricing of our Products and Services

Increasing demand for attractive content and higher broadband speeds allows the Group to increase the prices at which services are provided while maintaining relatively low churn rates. United Group regularly reviews the prices of its products and services, however, and in the past has adjusted subscription fees as necessary in line with inflation, changes in foreign exchange rates or in response to market conditions and content costs. Changes in the pricing of the Group’s products and services will impact the revenues and margins that are generated from these products and services and impact its ability to attract new customers. For example, the Group’s multi play bundles offer subscribers higher value in terms of channels, speeds functionality and add on features. The pricing of all services, including multi play bundles, is dependent on market conditions, pricing by competitors with similar offerings and the perceived quality of the Group’s products versus other products. In relation to the Basic TV package, the Group was also subject to price regulation in Serbia until January 2017. From January 2017, the price of the Basic TV package in Serbia is no longer subject to price regulation. However, such price regulation might be reinstated in the future, and the Group regularly monitors the media market in Serbia to stay aware of market conditions which may lead to price regulation.

Subscriber Churn

The television, broadband internet and telephony industries exhibit churn as a result of high levels of competition. In addition to competitive alternatives, churn levels may be affected by changes in prices or competitors’ prices, the Group’s level of subscriber satisfaction, subscriber mortality and the relocation of subscribers, as well as from the termination of agreements. An increase in churn may lead to increased costs and reduced revenues when subscribers cancel services as the Group incurs additional marketing and advertising costs to find new subscribers.

Increasing demand for attractive content and higher broadband speeds allows the Group to increase the prices at which it provides these services while maintaining relatively low churn rates. United Group believes its relatively low churn rates provides recurring cash flows and visibility with respect to future revenues. The Group has historically experienced low churn rates in its television, broadband internet and fixed-line telephony businesses, and the churn experienced in these businesses has primarily been driven by customers moving outside of the Group’s current geographic area of services as well as termination of services due to their inability to pay, with only a limited amount of churn driven by competition. United

31 Q1 2021 BONDHOLDER REPORT

Group believes that launching telephony in its markets, further driving digitization, providing subscribers with multi play packages (including quad play in Slovenia, as described in more detail below), expanding the Group’s cable footprint to broaden geographic reach and benefiting from increasing disposable incomes in the region (reducing the likelihood of customers’ bad debt), will enable the Group to maintain low churn rates for cable pay -TV. In addition, the Group believes that as a result of the COVID-19 pandemic, churn rates will likely decrease as customers are unlikely or unable to easily migrate to another provider during the pandemic.

The churn rates for mobile post paid subscribers are higher than the churn rates for fixed-line telephony services, as it is easier for mobile subscribers to switch to competitors as there are no infrastructure limitations. Similarly, the churn rate of mobile prepaid subscribers is relatively higher because of the non-contractual nature of the relationship with such subscribers.

United Group believes that it developed an attractive suite of fixed mobile convergence services in Slovenia, which among other things, has had the effect of reducing the churn of mobile postpaid subscribers in Slovenia. Following the consummation of the acquisition of Tele2 Croatia in March 2020, United Group has leveraged its experience and the lessons learned from integrating Tušmobil to guide our integration of Tele2 Croatia. Since the acquisition of Tušmobil, the number of quad play subscribers in Slovenia has increased to 38% of subscribers in Slovenia as of March 31, 2021, from 1% of subscribers prior to the acquisition. This is primarily due to the Group’s attractive products and services and an increase in the number of new mobile postpaid subscribers (each with new contractual obligations). The Group defines blended annual churn as net lost subscribers (the number of customers that either on a voluntary or involuntary basis no longer subscribe for a certain service) divided by the number of all unique cable subscribers at the beginning of period, the result of which is then annualized. United Group intends to use these principles learned through our acquisition of Tušmobil and its experience providing mobile services in Slovenia to inform the operation of Groups mobile telephony business in Bulgaria following the completion of the Vivacom Acquisition in August 2020.

Cost of Services Provided

United Group’s most significant costs include:

(i) carriage fees paid to international and regional broadcasters such as Fox, Discovery and Pink, in order to carry their programs on the Group’s distribution network,

(ii) licensing fees payable to sports rights owners such as UEFA, the English , Spanish Primera League, ATP and Formula 1, in order to develop content for the Group’s own channels

(iii) satellite capacity costs,

32 Q1 2021 BONDHOLDER REPORT

(iv) payroll costs,

(v) internet and interconnection fees,

(vi) costs of materials used to connect subscribers to our network and

(vii) costs for marketing and sales.

Most of the Group’s costs, such as a portion of the network operations, customer care, billing and administration costs, are relatively fixed, while a portion of the Group’s marketing and customer services cost is variable. The Group’s content acquisition costs are mostly fixed, and a decreasing portion of these costs are subscriber based. Where possible, the Group aims to negotiate fixed rate content costs. This approach allows input prices of its content to be anticipated and products priced accordingly. The costs associated with the growth of the business, such as RGU acquisition costs, which are primarily comprised of campaign costs and sales costs for attracting new subscribers, are variable costs.

Content costs represent a large portion of the Group’s costs, accounting for 18% of operating expenses (excluding depreciation and amortization of intangible assets) in Q1 2021. While United Group owns a portion of its content, the Group is dependent on broadcasters and other content owners for most of its programming. The Group pays license fees to several regional and international broadcasters in order to broadcast their programs. For on demand content purchased by subscribers, the Group generally pays a revenue share of the retail price, subject, for certain on demand content, to fixed minimum guarantees. For packaged on demand content (subscription video on demand), the Group pays on a per subscriber basis, sometimes with minimum guarantees. United Group generally expects that its content costs (above the minimum amounts) will increase in line with increased revenues from digital pay - TV and on demand content. In the past, the Group has successfully obtained rebates and discounts for its content, but these may not continue in the future.

United Group pays fees to satellite operators to uplink and transmit its content to DTH subscribers, and also uses other network operators to connect telephone calls of customers to customers of their respective networks (interconnection). Generally, the amount paid in interconnection fees in any period will depend on the level of usage of the Group’s services.

Staff costs are impacted by the number of personnel employed, the experience levels at which such persons are employed and increases in salaries and bonuses due to performance factors. Labor costs of technicians, spent on the construction and upgrade of the network and acquisition of subscribers, are capitalized as tangible and intangible assets.

RGU acquisition costs include campaign costs and sales costs. The Group aims to recover RGU acquisition costs over the duration of the service contract. Factors that contribute to the successful recovery of RGU acquisition costs include operational efficiency, the density of the subscriber base and direct relationships with subscribers, which enables the Group’s not to rely on intermediaries to interact with its customers.

33 Q1 2021 BONDHOLDER REPORT

Network and Technological Advances

The Group’s ability to provide new high definition and on demand digital TV services, broadband internet access at higher speeds and telephony services to subscribers depends, in part, on the ability to upgrade and maintain the Group’s network. The Group incurs capital expenditure charges in periods over which these upgrades are made, with the aim of recouping these investments through increased revenues and profitability.

In particular, United Group expects certain communications technologies that are currently under development, 5G technology in particular, to become increasingly important in relevant markets. United Group successfully tested next generation 5G networks across the Balkan region, and it believes that this demonstrated technological readiness for a commercial launch when the necessary spectrum frequencies become available. In Slovenia, 5G sub 3GHz DSS in the 1800 MHz spectrum is in its proof-of-concept phase with deployment expected during 2021, while deployment of the C Band in the 3,600 MHz spectrum is planned to start after the frequency auction in the second quarter of 2021. In Bulgaria, 5G has been launched commercially using 4G 1800 MHz spectrum in October 2020 as a first on the market. C-Band spectrum award is expected in Q2 2021 and deployment to follow in Q2/Q3. In Croatia, first deployment of 5G C-Band is expected during Q2/Q3 2021. Significant investments in 5G technology will be critical to remain competitive in the mobile market and meet customers’ needs.

The Group’s ability to compete effectively and maintain or increase the customer base depends on its ability to anticipate and react quickly to technological developments and evolving industry standards and develop successful new and enhanced products and services to adapt to changes in the market. United Group invests in new or enhanced technologies, products or services in periods over which industry standards change, or to upgrade technologies proactively. Additionally, capital expenditure costs in the future are incured relating to new 4G and 5G frequencies and the installation of new equipment.

Foreign Currency Exchange Rates

United Group operates across the Southeastern Europe, generating revenues in many local , which fluctuate from time to time in relation to the . Revenues in Slovenia, Montenegro and Greece are generated in euro. SBB Serbia and Telemach BH record their financial results in the and the Bosnian and Herzegovinian mark, respectively, which are then translated into euros in preparing Group’s consolidated financial statements. In the period ended March 31, 2021, 72% of revenue was generated in euros or currencies pegged to the euro, with 15% of our revenue generated in Serbian and 13% of revenue generated in Croatian kuna. While the Bosnian and Herzegovinian mark is pegged against the euro at a fixed exchange rate of BAM 1.9558 per €1.00 and the is pegged against the euro at a fixed exchange rate of BGN 1.9558 per €1.00, the Serbian dinar freely fluctuates against the euro. For the period ended on March 31, 2021, the value of the Serbian dinar remained stable relative to the euro. However, due to the historic indexation of

34 Q1 2021 BONDHOLDER REPORT

the Serbian dinar against the German mark, which was replaced by the euro in 2002, United Group believes the Serbian consumer price index closely tracks the depreciation of the Serbian dinar against the euro which has historically allowed the Group to “pass through” a portion of the impact of the depreciation of the dinar to its customers. The Group believes its pricing strategy reflects this “pass through” principle. In the period ended on March 31, 2021, the value of the Croatian kuna increased approximately 1% relative to the euro compared to the period ended on March 31, 2020.

United Group presents consolidated financial statements in euro. As a result, assets, liabilities, revenue and expenses of all operations must be translated with a functional currency other than the euro into euros at then applicable exchange rates. Consequently, increases or decreases in the value of these currencies against the euro may affect the value of Group’s assets, liabilities, revenue and expenses with respect to its non euro businesses in consolidated financial statements, even if their value has not changed in their original currency. These translations could significantly affect the comparability of results between financial periods and result in significant changes to the carrying value of Group’s assets, liabilities and stockholders’ equity.

Additionally, certain expenses, primarily content and satellite costs, are denominated in euros and U.S. dollars. Where United Group is unable to match sales received in foreign currencies with costs paid in the same currency, results of operations are impacted by currency exchange rate fluctuations. A substantial portion of Group’s indebtedness is denominated in euros. In March 2015, United Group entered into a EUR/USD currency hedge agreement, pursuant to which a part of Group exposure was hedged to the U.S. dollar. Additionaly United Group entered in EUR/USD currency hedge agreement in May 2016, pursuant to which it hedged the remaining portion of exposure to the U.S. dollar for 2016. In February 2017, Group then entered into an additional EUR/USD hedge, which hedged most its 2017 U.S. dollar exposure. Given the lack of any material change in exposure to the U.S. dollar in the period ended March 31, 2021, United Group did not enter into any additional currency hedge agreements during this period.

Growth in our Markets

Three of the Group’s markets, Serbia, Bosnia and Herzegovina and Montenegro, are generally characterized by lower internet broadband household penetration rates compared to elsewhere in Western Europe and the CEE region and both Serbia and Bosnia and Herzegovina have lower pay television household penetration rates compared to elsewhere in Western Europe and the CEE region. As a result, growth in the Group’s markets have been higher than in certain CEE region and Western Europe jurisdictions. The Group believes this is primarily due to the increasing importance of high-quality broadband internet and an increasing convergence of the Group’s regions with the EU. Slovenia is a more mature market, with subscriber rates similar to the CEE region, and as a result, growth in that market will depend more on the Group’s ability to effectively compete with other market participants and to continue to offer high quality customer propositions. Following the completion of the Tele2

35 Q1 2021 BONDHOLDER REPORT

Croatia Acquisition in March 2020, United Group expanded operations to include Croatia. As a member of the EU with relatively high GDP per capita and growth rates, Croatia is an attractive market for Group’s continued expansion. The Croatian mobile market is characterized by high market stability, as it has a low level of fragmentation and disruption, with only three MNOs in the market (including Tele2 Croatia), and the country’s telecommunications infrastructure is highly dependent on mobile access, with one of the highest mobile ARPU among CEE countries. United Group believes that growth in this market will depend on several factors, such as the ability to expand territorial coverage as well as improve the quality of network and customer support services, including through investments to increase its capacity and quality levels and through the continued development of digital and sales channels. In addition, following the completion of the Vivacom Acquisition in August 2020, United Group also has operations in Bulgaria. Bulgaria experienced relatively strong GDP growth at an average rate of 3.3% per year between 2017 and 2019 (according to the BNSI), but faces economic and political challenges in sustaining this growth.

Following the Forthnet Acquisition, United Group has operations in Greece. The Greek telecommunications market is characterized by intense competition. The market is concentrated among four main operators with a focus on fixed-mobile convergent offerings. The total fixed-line market, comprised of approximately 4.8 million subscribers, has been stable with limited fixed-to-mobile substitution, while the broadband market, comprised of approximately 4.2 million subscribers, continues to grow at the expense of voice-only lines. NGA subcribers (those with broadband speeds of greater than 30 Mbps) comprise approximately one-third of total broadband subscribers, but this level remains low compared with the EU average of over 60%. Pay-TV penetration is also low compared to EU averages, with 26% of Greek households subscribing to Pay -TV. In Greece, the majority of Pay-TV subsribers are served through DTH technology while the remainder is served through IPTV.

In each of the aforementioned markets, a number of factors will impact the rate of growth of pay television, broadband internet and telephony industries, including economic conditions, political stability, increases in infrastructure and an increased distribution of wealth. Furthermore, these industries may not grow at the same rate as they have in the past.

Regulation

The Group’s operations are subject to various regulations in Europe and in its regional markets. The Group is generally free from price regulation other than, prior to January 2017, with respect to the Basic TV package in Serbia, due to SBB Serbia’s prior SMP in the Serbian pay-TV market. Since the beginning of 2017, the Group is no longer considered a significant market participant in the pay-TV market in Serbia, thus the Basic TV package is no longer subject to price regulation, though this may change in the future, and the Group regularly monitors the market to stay aware of market conditions which may lead to price regulation. In Croatia, United Group is currently subject to price regulation only with respect to fixed and mobile termination rates charged by operators to each other for interconnection services, which are regulated in the whole . In addition, in Serbia United Group is

36 Q1 2021 BONDHOLDER REPORT

subject to price regulation only to the extent it is required to provide access to our wholesale network. SBB Serbia is, however, currently deemed to have SMP on the wholesale market for call termination in public telephone networks and the wholesale market of central access at a fixed location for mass market products, which imposes certain regulatory obligations. The Group also implemented price increases in January 2018, which the Serbian Commission for Protection of Competition investigated, but ultimately accepted. In addition, the Group may be subject to conditions imposed in connection with competition authority clearances as it continues to expand its business through bolt on, value accretive acquisitions and may be subject to market power analysis from the relevant regulators, which could force the Group to adjust its prices or sell various parts of the businesses.

Tax Treatment in Local Jurisdictions

The results of the Group’s operations depend on tax treatment under the tax laws and regulations of local jurisdictions. For instance, in Serbia, taxable income can be reduced in the same proportion as capital expenditure for the year in Serbia divided by the carrying amount of assets in Serbia. Due to significant capital expenditure in Serbia in 2016, the Group believes it has satisfied the requirements to be granted a ten-year tax beneficial status, expiring in 2025, and recorded beneficial tax treatment for the SBB Serbia segment for the period ended March 31, 2021. Additionally, under thin capitalization rules in Serbia, interest and related costs under intercompany loans are recognized as deductible expenses to the extent the intercompany loans do not exceed four times the borrower’s equity. In 2017 and 2018 SBB Serbia did not capitalize any intercompany loans. On December 27, 2018, the Serbian Tax Authority notified United Group that it had begun a tax investigation of SBB Serbia for the year ended December 31, 2012. The Serbian Tax Authority issued a decision in March 2019, that it had recharacterized interest payments made by SBB Serbia under an intragroup loan agreement (and certain other transactions) as dividends, the payments of which would have been subject to a 5% withholding tax. The total contingent liability under this decision amounts to €21 million, including late interest. United Group has assessed these matters internally and through external consultants, and it is United Group’s view that there is no basis for the Tax Authority’s decision. United Group has appealed to the Serbian Ministry of Finance and received a prolongation of its obligation to pay any amounts until resolution of the appeal. United Group has also submitted a request for a mutual agreement procedure (“MAP”) for our Dutch entities to the Dutch Ministry of Finance on the basis that the Serbian taxation decision is not in compliance with the double taxation treaty between the and Serbia. The Dutch Ministry of Finance has notified the Serbian Tax Authority of the MAP procedure. The Dutch Ministry of Finance has also submitted a letter to the Serbian Ministry of Finance stating that Serbia has misclassified the interest payments and is in breach of the bilateral double taxation treaty. On October 12, 2020, the Serbian Ministry of Finance annulled the Serbian Tax Authority’s decision and instructed the Serbian Tax Authority to restart the procedure, taking into account the arguments provided in SBB Serbia’s appeal. The Serbian Tax Authority has also informed SBB Serbia that it is opening a tax review for the years 2013 through 2016. SBB Serbia intends to continue contesting the Serbian Tax Authority’s findings.

37 Q1 2021 BONDHOLDER REPORT

Furthermore, in Slovenia, Telemach Slovenia may use a tax allowance for investment in equipment and intangible assets (available for investments made after January 1, 2008), whereby the tax allowance is limited to 40% of the value of the assets, up to the amount of the tax base. In 2018, 2019 and 2020 Telemach Slovenia used the tax allowanc e for investments in the amount of €11.5 million, €10.5 million and €9.3 million, respectively.

In Bosnia and Herzegovina, a taxpayer who invests more than BAM 20.0 million (€10.2 million) in production assets (property, plant and equipment) within the territory of Bosnia and Herzegovina for five consecutive years is relieved from 50% of taxation on such investments for a period of five years, starting from the first year in which it has invested at least BAM 4 million (€2.0 million). Pursuant to this provision, in 2018, 2019 and 2020, Telemach BH received a tax allowance for investments in the amount of BAM 6.1 million (€3.1 million), BAM 6.8 million (€3.5 million) and BAM 2.7 million (€1.4 million), respectively. In Bosnia and Herzegovina, a taxpayer receives a tax allowance when it employs certain types of employees, and in 2018, 2019 and 2020, Telemach BH received a tax allowance for certain new employees in the amount of BAM 1.3 million (€0.7 million), BAM 2.0 million (€1.0 million) and BAM 2.9 million (€1.5 million), respectively.

In Greece, the corporate income tax rate was set at 24% in 2019. From January 1, 2020, there was a reduction in dividend withholding tax from 10% to 5% and on July 1, 2020, Greece implemented a participation exemption for capital gains from the sale of Greek and European Union (EU) subsidiaries. For internet services, customers are charged a 5% tax on top of internet subscriptions (in addition to VAT of 24%). Additionally, a 10% tax on top of Pay-TV subscriptions to Greek operators (in addition to VAT of 24%) has been imposed. The Pay-TV tax has been suspended for a term of one year beginning in September 2020.

Implementation of New Accounting Policies

The Group has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2021:

• Interest rate benchmark (IBOR) reform – phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16,

• Amendments to IFRS 4 Insurance Contracts – deferral of IFRS19 (issued on June 25, 2020).

The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

38 Q1 2021 BONDHOLDER REPORT

Appendix 3 - Definitions of Key Operating Measures

Homes passed: represents all homes (households) ready to be connected directly to the United Group’s fixline network.

Unique cable subscribers represent the number of individual end users who have subscribed to one or more of our cable based services. In all of the United Group’ cable markets, cable pay-TV is the basic service that a cable unique subscriber is typically required to subscribe to in order to receive the Group’s other services such as broadband internet access and telephony, with the exception of Bulgaria. A unique cable subscriber may subscribe to several different services, thereby accounting for only one unique cable subscriber, but several RGUs.

Cable pay-TV RGUs includes the sum of the Group’s analog and digital cable pay-TV RGUs in Slovenia and its total analog cable pay-TV RGUs (without separately counting analog cable RGUs that have purchased digital top ups) in Serbia, Bosnia and Herzegovina and Montenegro provided within our network footprint.

OTT RGUs consists of the Group’s NetTV Plus and out of footprint Eon subscribers.

Broadband internet RGUs represents residential broadband internet provided within our network footprint.

Fixed-line telephony RGUs represents residential fixed-line telephony provided within our network footprint.

Mobile RGUs represents mobile telephony services provided to customers in Slovenia where the Group has operated as an MNO since its acquisition of Tušmobil in April 2015. Prior to April 2015, the Group provided mobile services to its customers as an MVNO. After Telemach CRO acquisition in March 2020, the Group provides mobile telephony services as well in Croatia.

Out-of Footprint includes multichannel multipoint distribution service-based services, ADSL internet services and cable services provided outside of the Group’s network footprint.

Penetration represents the number of RGUs at the end of the relevant period as a percentage of the number of homes passed by the Group’s network.

Blended cable ARPU is calculated by adding together, for each month in a given period, the total cable pay-TV, broadband internet and fixed-line telephony revenues (including fixed-line telephony usage revenues and excluding minor installation fees) for that particular month divided by the average number of unique cable subscribers for that month and then dividing that sum by the total number of months in the period. Blended cable ARPU does not include mobile ARPU. The Group calculate mobile ARPU by adding together, for each month in a given period, the total mobile telephony revenues (excluding revenues generated by customers of other networks roaming on the Group’s network and excluding wholesale revenues) for that particular month divided by the average number of mobile RGUs for that

39 Q1 2021 BONDHOLDER REPORT month and then dividing that sum by the total number of months in the period.

DTH subscribers represent the number of individuals across the seven South Eastern European markets (Slovenia, Serbia, Bulgaria, Bosnia and Herzegovina, Greece, Montenegro and North Macedonia) who have subscribed to the Group’s DTH pay-TV services. The Group believes that most of these subscribers are outside of its cable footprint. Typically, DTH subscribers are only able to subscribe to DTH based pay -TV services and represent a single RGU. However, the Group is re selling ADSL services purchased from its competitors in the respective markets to DTH subscribers.

Average monthly revenue per user, (“ARPU”) is a measure used to evaluate how effectively the Group is realizing potential revenues from subscribers. ARPU is calculated by adding together, for each month in a given period, the total subscription-related revenues for that particular month divided by the average number of subscribers for that month and then dividing that sum by the total number of months in the period.

40 Q1 2021 BONDHOLDER REPORT

Appendix 4 - Description of Key Line Items

Revenue: Generated from the following services: cable television, broadband internet, DTH-TV, value-added services (such as OTT), telephony subscriptions and telephony usage, content and other sources (primarily related to the sale of end-user equipment). Revenues generated from the Group’s bundle subscriptions are allocated to the individual products of standard cable, broadband internet and telephony subscriptions based on the individual product prices for each product as a percentage of the sum of the individual product prices. Revenue for these services is charged and recognised in the period in which these services are provided. The Group recognises revenues for connection fees upon delivery of installation and defers and amortizes connection fees over the average remaining useful life of the customer relationship.

Other income: Arises mainly from subventions, reversal of provision for legal cases, charged legal cases and other activities nor related to main business.

Content cost: Include author rights and royalties paid to procure the Group’s content, and include fees paid to channel providers, primarily related to foreign television channels. The Group content fees are predominantly determined on a flat monthly amount and to a lesser extent on a per-subscriber basis.

Link and interconnection cost: These costs relate to fees payable in order to transfer data over third-party networks. Internet connection links are leased from various parties.

Cost of end-user equipment and other material cost: Include costs to procure set-top boxes, other products, such as telephones and routers, and materials used to connect subscribers to our network.

Staff costs: Include wages and salaries, social security costs, pension costs and other post-employment benefits and the cost of temporary and external personnel, adjusted for own work capitalized based on direct labour hours spent on projects which are capitalized.

Depreciation cost: Depreciation cost relates to the depreciation and impairment of our property, plant and equipment over their useful lives.

Amortization of intangible assets: Relates to the amortization and impairment of the Group’s intangible assets over their useful lives. The Group’s intangible assets include its customer base and direct subscriber acquisition costs, which, for its cable and DTH customers, are capitalized and amortized over the estimated useful life of the customer relationship. For the Group’s mobile customers, subscriber acquisition costs are capitalized and amortized over a period of twenty-four months (the estimated life of the post-paid customer contract), while its mobile customer base is capitalized and amortized over its estimated useful life. Intangible assets also include goodwill, computer software, licenses and content such as sport rights.

Other operating expenses: Includes rent of premises, poles and ducts, marketing and promotion expenses, legal and administrative fees and maintenance costs.

41 Q1 2021 BONDHOLDER REPORT

Finance income: Includes interest income on funds invested (including short-term bank deposits) and foreign currency gains. Finance costs: Include interest expense on borrowings and other finance cost.

Income tax (expense)/benefit: Comprises current and deferred income tax and is recognized in the Group’s statement of comprehensive income, except to the extent that such expense or benefit relates to an item that is recognized as equity in its balance sheet, or in its statement of other comprehensive income.

Operating income: Represents the amount of profit generated from business operations, and includes total revenues less total operating expenses (including cost of goods sold, personnel expenses, contracted work, materials and logistics, marketing and sales, office expenses, other operating expenses, amortization, depreciation and impairments).

42 Q1 2021 BONDHOLDER REPORT

Appendix 5 - Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

The Group’s income and cash flow from operations are affected by changes in market interest rates. Some items on the Group’s balance sheet, such as cash and bank balances, interest bearing investments and borrowings, are exposed to interest rate risk.

Borrowings under the Existing Revolving Credit Facility and the Existing Floating Rate Notes bear, and the Notes will bear, interest at varying rates, and as a result the Group will have interest risk with respect to this debt. Interest rate hedging arrangements are not in place as of the Issue Date with respect to the debt under the Group’s Existing Revolving Credit Facility, the Existing Floating Rate Notes and the Notes. For fixed rate debt, interest rate changes affect the fair market value of such debt, but do not impact earnings or cash flow.

Currency Risk

Currency risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the functional currency of the Group entity holding the asset or obligation. As a result of United Group operations in various countries, it generates a significant portion of sales and incurs a significant portion of expenses in currencies other than the euro. Group’s primary exposure is to the Serbian dinar. For the period ended March 31, 2021, 15% of revenue was denominated in Serbian dinar and 85% was denominated in euros or other currency. The Bosnia and Herzegovinian mark is pegged to the euro, while Croatian kuna and North Macedonian dinar are relatively stable. In March 2015, United Group entered into a EUR/USD currency hedge agreement, pursuant to which it hedged its exposure to the U.S. dollar. The Group entered into an additional EUR/USD currency hedge agreement in May 2016, pursuant to which it hedged the remaining portion of its exposure to the U.S. dollar for the year 2016, and in February 2017, the Group entered into an additional EUR/USD currency hedge to cover most of its 2017 U.S. dollar exposure. Given the lack of any material change in exposure to the U.S. dollar in the period ended March 31, 2021, United Group did not enter into any additional currency hedge agreements during the period ended March 31, 2021.

As the Bulgarian lev is pegged to the euro, United Group does not expect to hedge against exposure to the Bulgarian lev. The currency applicable to Forthnet's business in Greece is the euro.

Translation Risk

Translation risk is the risk that the value in euro of the consolidated profit and loss statement and balance sheet will fluctuate due to changes in foreign exchange rates connected with the translation of the Group’s subsidiaries that do not have the euro as their functional currency. Since January 1, 2016, almost all the Group’s indebtedness has been denominated in euro.

43 Q1 2021 BONDHOLDER REPORT

Transaction Risk

Transaction risk is the risk of exchange losses incurred by the Group through purchases and sales in currencies other than the local currency of the subsidiaries concerned.

44 Q1 2021 BONDHOLDER REPORT

Appendix 6 - Critical Accounting Policies

For a description of the Group’s critical accounting estimates and judgments, see Note 6 to the Adria MidCo B.V. Group Consolidated Financial Statements as of and for the year ended December 31, 2020. The Group’s significant accounting policies and changes of accounting policies are described in Note 3 to the Audited Financial Statements.

45