Presentation – Q4 and 2019 Result
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Financial results Q4 and the full year 2019 12 March 2020 Cyfrowy Polsat S.A. Capital Group Disclaimer This presentation may include forward-looking statements, understood as all statements (other than statements of historical facts) regarding our financial results, business strategy, plans and objectives pertaining to our future operations (including development plans related to our products and services). Such forward-looking statements do not constitute a guarantee of future performance and involve risks and uncertainties which may affect the fulfilment of these expectations, as by their nature they are subject to many factors, risks and uncertainties. The actual results may be materially different from those expressed or implied by such forward- looking statements. Even if our financial results, business strategy, plans and objectives pertaining to our future operations are consistent with the forward-looking statements included herein, this does not necessarily mean that these statements will be true for subsequent periods. These forward-looking statements express our position only as at the date of this presentation. We expressly disclaim any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained herein in order to reflect any change in our expectations, change of circumstances on which any such statement is based or any event that occurred after the date of this presentation. Agenda 1. Key events in 2019 2. Operating results 3. Financial results 4. Summary of 2019 and objectives for 2020 1. Key events in 2019 Key events in 2019 Beginning of the implementation of our strategic concept "TV/Internet/Telephone. For everyone. Everywhere. " JV agreement with Discovery and TVN on launching a joint OTT streaming platform Strategic alliance with Asseco Poland Initiating the rollout of the first commercial 5G network in Poland 5 2. Operating results 2.1 Broadcasting and TV production segment Viewership of our channels in Q4’19 • Polsat Group and its main Audience shares(1) channel are the viewership Main channels Thematic channels 15.0% 13.8% leaders in the commercial group 10.4% 11.1% 7.6% 7.9% 6.2% Polsat TVN TVP2 TVP1 POLSAT(2) Discovery TVP Dynamics of audience share results(1) Q4'18 28.0% Q4'19 24.2% 24.2% 26.1% 20.8% 21.7% 17,5% 17,8% 9.6% 10,2% Polsat Discovery TVP Other Other Group(2) Group Group CabSat DTT Source: NAM, All 16‐49, all day, SHR%, including Live+2(1), internal analysis Note: (1) Audience shares include both live broadcasting and broadcasting during 2 consecutive days (i.e. Time Shifted Viewing) (2) Including Eleven channels and Superstacja (from June 2018), excluding partnership channels: Polsat Viasat Explore, Polsat Viasat Nature, Polsat Viasat History, JimJam, CI Polsat, Focus TV, Nowa TV 8 Position on the advertising market in Q4’19 Market expenditures on TV advertising • Revenue from TV advertising and and sponsorship -0.3% sponsorship increased by 2.4% on 1,328 1,324 a stable market • As a result, our share in the TV ) mPLN advertising and sponsorship ( market increased to 28.6% Q4'18 Q4'19 Revenue from advertising and sponsorship of TV Polsat Group(1) 370 +2.4% 379 ) mPLN ( 4Q'18 4Q'19 Source: Starcom, spot advertising and sponsorship; TV Polsat; internal analysis Note: (1) Revenue from advertising and sponsorship of TV Polsat Group according to Starcom’s definition 9 Viewership of our channels in 2019 • Polsat Group’s viewership in line Audience shares(1) with its long-term strategy Main channels Thematic channels 15.5% 11.0% 11.1% 13.3% 7.2% 8.0% 6.3% Polsat TVN TVP2 TVP1 POLSAT(2) Discovery TVP Dynamics of audience share results(1) 2018 27.1% 26.6% 2019 24.3% 24.3% 21.4% 21.5% 17.7% 17.8% 9.4% 9.8% Polsat Discovery TVP Other Other Source: NAM, All 16‐49, all day, SHR%, including Live+2(1), internal analysis Group(2) Group(3) Group CabSat DTT Note: (1) Audience shares include both live broadcasting and broadcasting during 2 consecutive days (i.e. Time Shifted Viewing) (2) Including Eleven channels and Superstacja (from June 2018), excluding partnership channels: Polsat Viasat Explore, Polsat Viasat Nature, Polsat Viasat History, JimJam, CI Polsat, Focus TV, Nowa TV (3) Pro forma, TVN Group channels and Discovery Networks Europe 10 Position on the advertising market in 2019 Market expenditures on TV advertising • Revenue from TV advertising and sponsorship and sponsorship increased by 4,398 -0.6% 4,371 1.9% on a stable market • As a result, our share in the TV ) mPLN advertising and sponsorship ( market reached 28.0% 2018 2019 Revenue from advertising and sponsorship of TV Polsat Group(1) 1,201 +1.9% 1,224 ) mPLN ( 2018 2019 Source: Starcom, spot advertising and sponsorship; TV Polsat; internal analysis Note: (1) Revenue from advertising and sponsorship of TV Polsat Group according to Starcom’s definition 11 2.2 Services to individual and business customers 2 millionth customer joined our multiplay offer in January’20 Number of multiplay customers • Consistent implementation of +11% our multiplay strategy results 1,947 1,993 2 000 1,796 100% 1 800 90% in a stable increase in the 1 600 80% 1 400 ) 70% number of customers with 1 200 60% 1 000 35% 35% 50% bundled services by 197K YoY 800 31% 40% 600 . customers 30% s 400 20% • The number of RGUs owned 200 (thou 10% 0 0% by these customers increased Q4'18 Q3'19 Q4'19 to 6.05m Liczba# of multiplay klientów customersmultiplay %saturation nasycenia ofbazy customer klientów base użytkownikami with multiplay multiplay (%) • Another quarter of record low churn level – mainly due to Churn our multiplay strategy 7.6% 6.8% 6.4% Q4'18 Q3'19 Q4'19 13 We sold almost half a million additional services • An increase in the number of contract +3% services by 469K YoY 14.26m 14.59m 14.73m • The dynamic growth of voice services 1.8m 1.8m 1.8m as a result of positive impact of our 5.0m 5.0m multiplay strategy and the simple Plus 5.1m tariffs which were launched in February 2018, supported by good sales in the B2B segment (m2m) 7.3m 7.8m 7.9m • Stable base of pay TV and Internet services Q4'18 Q3'19 Q4'19 InternetInternetTelefonia komórkowa PayPłatnaPłatna TV telewizja telewizja MobileTelefonia telephony komórkowa 14 Growth of ARPU thanks to the consistent implementation of the multiplay strategy • 1.9% YoY increase in ARPU 95 +1.9% resulting from consistent building 90 85.6 of the value of our existing 85 84.0 84.8 customer base 80 2.58 2.61 250% • Effective upselling of products 2.50 75 ) under our multiplay strategy 70 continues to be reflected in the 65 growing RGU saturation per (ARPU in PLN customer ratio 60 55 50 150% Q4'18 Q3'19 Q4'19 ARPU RGU/Customer 15 High ARPU, stable prepaid base • Stable number of provided 2.65m 2.68m 2.66m prepaid services, mainly thanks to high sales of IPLA packages • High and stable ARPU level Q4'18 Q3'19 Q4'19 PayTelefoniaPłatna TV telewizja komórkowa Internet InternetInternet MobileTelefonia telephony komórkowa 20.3 20.8 20.3 (ARPU in PLN) Q4'18 Q3'19 Q4'19 16 3. Financial results Results of the Group in Q4’19 revenue EBITDA +1.9% 3,059 3,069 3,002 941 -0.3% 938 1.062 Q4'18 Q4'19 Q4'19 Q4'18 Q4'19 Q4'19 (excl. IFRS16) (incl. IFRS16) (excl. IFRS16) (incl. IFRS16) LTM FCF net debt/EBITDA LTM -10.8% 1,495 1,334 2.90x Q4'18 Q4'19 Q4'19 (excl. IFRS16) Source: Consolidated financial statements for the year ended December 31, 2019 and internal analysis 18 Results of the Group in 2019 revenue EBITDA 10,686 +8.9% 11,637 11,676 3,698 +0.6% 3,721 4,197 2018 2019 2019 2018 2019 2019 (excl. IFRS16) (incl. IFRS16) (excl. IFRS16) (incl. IFRS16) LTM FCF net debt/EBITDA LTM -10.8% 1,495 1,334 2.90x 2018 2019 2019 (excl. IFRS16) Source: Consolidated financial statements for the year ended December 31, 2019 and internal analysis 19 Revenue and EBITDA – change drivers Revenue EBITDA +19+9%% +1% YoY change YoY change +436+951m mln +24m 4,197 +665 +302 11,637 11,676 3,698 +27 3,721 10,686 -16 -3 ) ) mPLN ( mPLN ( 35% 36% 32% Revenue Segment of Broadcasting Consolidation Revenue Revenue EBITDA Segment of Broadcasting and EBITDA EBITDA 2018 services to and TV adjustments 2019 2019 2018 services to TV production 2019 2019 individual and production (excl. IFRS16) (incl. IFRS16) individual and segment (excl. IFRS16) (incl. IFRS16) business segment business customers customers EBITDA margin Source: Consolidated financial statements for the year ended December 31, 2019 and internal analysis Note: consolidation of Netia S.A. from 22 May 2018 20 Implementation of synergies in cooperation with Netia according to plan ESTIMATED CUMULATIVE EFFECT (2018-2023) • Extension of smartDOM offer to include FTTH/DOCSIS • Mutual upselling of products and services to B2C and B2B bases Revenue • Improved efficiency of Netia’s sales by exploiting CP POS network • VAS and new products offered by the Group, e.g. IPTV EBITDA • Taking advantage of the economies of scale to optimize synergies content costs implemented • Higher efficiency of marketing activities ca. PLN 600m • Optimization of sales, customer care and customer retention according to Operating costs plan expenses • Reduction of the number of POS’s (overlap) • Reduction of technical costs, including the cost of wholesale access to external infrastructure and MVNO-related costs • Integration of technical and IT departments • Other, including back office • Own production of set-top boxes, modems and routers CAPEX synergies • Exploiting the negotiating power of the two companies implemented CAPEX • Efficient investments into further development of the ca.