Strictly confidential – intended for the recipient only
SBB / Telemach Group €175,000,000 PIK Loan June 2014
0 Strictly confidential – intended for the recipient only
Important information and disclaimer
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1 Strictly confidential – intended for the recipient only
Transaction overview
2 Strictly confidential – intended for the recipient only
Transaction overview
¢ SBB / Telemach (“SBB”) is the leading distributor of cable and satellite pay-TV, broadband internet, fixed-line telephony and supplementary value adding services in Slovenia, Serbia and Bosnia and Herzegovina
− LTM March 2014 revenue of €251m and March 2014 L2QA Adjusted EBITDA of €122m
¢ In the fall of last year, KKR agreed to acquire SBB from Mid-Europa Partners for a total consideration of €1bn (implied valuation of 9.5x)
− Acquisition was backed by a €475m Senior Secured Notes offering, representing a 55% equity contribution
¢ SBB is seeking to raise €175m of PIK Loans out of Adria TopCo B.V. (outside of existing bond restricted group) to fund a return of capital to shareholders
− Over €410m of equity still remains in the business; representing 70% of initial equity invested
− Pro forma for the Transaction, Adria TopCo B.V. will have consolidated net leverage of 5.43x based on March 2014 L2QA Adjusted EBITDA
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Estimated Sources and Uses
Estimated Sources and Uses
Sources €m Uses €m PIK Loan 175 Return of capital to shareholders 171 Estimated transaction costs 4
Total Sources 175 Total Uses 175
Estimated PF Capitalisation
Mar'14 Adj. PF Capitalisation
xAdj. L2QA xAdj. L2QA Amount Amount Maturity Margin in €m EBITDA EBITDA Reference EBITDA 122 122
Cash and Cash Equivalents (19.7) (0.16x) — (19.7) (0.16x) Capital Lease 7.3 0.06x — 7.3 0.06x SSRCF ( €60m) 25.1 0.21x — 25.1 0.21x 2019 E + 4.25% Senior Secured Notes due 2020 475.0 3.89x — 475.0 3.89x 2020 7.875%
Net cash pay leverage 487.7 4.00x 487.7 4.00x New TopCo PIK Loan — — 175.0 175.0 1.43x 2019 [•]%
Net leverage 487.7 4.00x 662.7 5.43x
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Summary termsheet
SBB / Telemach – HoldCo TopCo B.V.
Borrower Adria TopCo B.V.
Issue ranking Senior PIK Loans
Security Pledge over the shares of Adria MidCo B.V.
Guarantees None
Principal amount €175m
Interest [•]%; PIK payable semi-annually, pay-if-you-want (75bps discount if paid in cash)
Maturity 5 years
Currency EUR
Call protection NC1 / 102 / 101
Issue rating Unrated
Ranking Structurally subordinated to the Existing Senior Secured Notes, Senior in respect of indebtedness of the Borrower
Covenants Based on Existing Senior Secured Notes but with customary limitations for PIK instruments
Transferability Freely transferable subject to minimum €1m transfers and €2m per lender
Change of control Lenders put at 101 (100 if borrower does not own 100% of Adria Midco)
Governing Law English Law / New York Law covenants
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Pro Forma organisational structure
KKR, mgmt and co-investors
Adria TopCo B.V. €175m New PIK Loan (the “Borrower”) Share pledge Restricted group
Adria Midco B.V.
€60 RCF Adria Bidco B.V. €475m Existing SSN (“The issuer”)
Slovenia Adria Serbia Holdco Broadband S.á.r.l. B.V. (Luxembourg) (Netherlands)
Adria Cable BV BBB S.á.r.l. Adria Media B.V. Telemach Slovenia Adria Bidco d.o.o. (Netherlands) (Luxembourg) (Netherlands) (Slovenia) Beograd
SBB Serbia Telemach Bosnia Telemach Rotovž d.d. (Serbia) (Bosnia) (Slovenia)
Other non-Guarantor Other non-Guarantor Other non-Guarantor Other non-Guarantor Telemach Tabor d.d. subsidiaries subsidiaries subsidiaries subsidiaries (Slovenia)
Other non-Guarantor = Guarantors of SSNs subsidiaries
6 Strictly confidential – intended for the recipient only
SBB / Telemach Group
7 Strictly confidential – intended for the recipient only The Group is the leading provider of cable and satellite pay-TV Services in Slovenia, Serbia and Bosnia with access to 20m population The Group
Slovenia Serbia Bosnia Montenegro Croatia Macedonia United Country Worldwide Media Group
EU Member Candidate N/A Candidate Member Candidate NR NR membership / € / Hard € RSD BAM € HRK MKD € Currency currencies
(1) (2) (3) 30% 45% 10% 2% 1% 0.4% 1% 10% 2013 revenue
Entities / brands
(4) (4) Pay-TV -- -- Broadband (5) (5) (5) ------(within footprint) Telephony ------Positioning (by revenue) (by
(6) Cable 445k 767k 202k ------Cable RGU/sub 2.31x 1.54x 1.73x ------
RGUs DTH (7) (Mar ’14) (Mar 33k 188k 96k 46k 29k 15k -- -- OTT -- 2k ------62k -- Source: Company data Note: Revenue split different versus HY reporting. DTH revenues are split by geographies above. HY report includes DTH revenues under SBB Serbia Group. (1) Represents revenue for Telemach Slovenia Group, including DTH pay-TV services in Slovenia. (2) Revenue for SBB Serbia Group, including DTH pay-TV services for Serbia only. (3) Represents revenue for Telemach BH Group, including DTH pay-TV services in Bosnia and Herzegovina. (4) Company estimate. (5) Leading broadband Internet provider within footprint and second position in overall broadband internet market following the respective incumbent with national footprint. (6) Cable RGUs in markets consist of pay-TV, broadband internet and telephony RGUs. 8 (7) DTH RGUs in Slovenia includes RGUs for DTH International which is in charge of distributing PINK channels in Western Europe. Strictly confidential – intended for the recipient only The group’s cable footprint covers affluent regions in Slovenia, Serbia and Bosnia
Slovenia Serbia Bosnia Novi Sad Štajerska Ljubljana Belgrade Visoco Zenica Mostar Sarajevo Kragujevac
Niš
Low Low Medium-low Medium-low Medium-low Medium-high Medium-high Medium-high High High High (average monthly income) (average monthly income) (average monthly income)
Note: Income distribution data for 2011YE for Serbia, latest available for 2008YE for BH and management best estimates for Slovenia; HP distribution data as of Mar’14.
¢ Homes passed: 298k ¢ Homes passed: 853k ¢ Homes passed: 191k ¢ Network concentrated in high-income capital city ¢ Network concentrated in affluent regions ¢ Network concentrated in affluent regions of Sarajevo; rest of footprint primarily in Mostar, (1) Zenica and Visoko ¢ Unique cable subs: 186k ¢ Unique cable subs: 498k (1) ¢ Unique cable subs: 116k (1) ¢ No cable overbuilds, limited overlap with FTTH ¢ Limited overbuild in footprint (mainly in Belgrade) ¢ Limited overbuild in footprint (mainly in Sarajevo)
Network coverage
Source: Company data. Note: KPI data as of March 31 st , 2014. (1) Unique cable subs represent the number of persons who subscribe for one or more of our services without regard to how many 9 services the end user is subscribed. Strictly confidential – intended for the recipient only
Strong track record of delivering successful innovative products
Revenue Generating Units (RGUs) Launched DTH services in BH, 1.9m RGUs Slovenia and Montenegro Launched Web / Mobile TV (D3GO), fixed Telephony services in Serbia and BH and MVNO in Slovenia Expanded DTH services to Launched Digital TV in Serbia Macedonia and launched international DTH services
1st in the market to launch DVR in Serbia and VoD Launched DTH services in Serbia and services in Serbia Slovenia
Launched DTH services in Croatia
Launched DVR in Acquired NetTV Plus (worldwide OTT Slovenia business), targeting former Yugoslav emigrants in Western Europe, North America and Australia
Launched Wi-Fi hotspot service in Belgrade for SBB Internet subs Launched D3i (OTT) offer outside own cable footprint
2006 2007 2008 2009 2010 2011 2012 2013 2014
10 Strictly confidential – intended for the recipient only Developed through strong organic growth, M&A, greenfield projects and strategic alliances with leading media players
2007 2008 2009 2010 2011 2012 2013 2014
BH
¢ Launched fixed ¢ Launched fixed Telephony in BH Telephony in Greenfield projects Serbia
(1) BH Slovenia Cable acquisitions
PINK INTERNATIONAL COMPANY Strategic alliances
Content Company (3) (2) Contentstrategy Content Content acquisition Source: Company data. (1) Total TV DTH services in Serbia were launched in 2006 as a greenfield operation. (2) 75% stake. (3) Acquisition pending approval from competition authorities.
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Key credit highlights
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SBB / Telemach Group: Key credit highlights
1 Leading multi-play provider in the former Yugoslav region
2 Well diversified revenue streams
3 Recognized content leader benefitting from content ownership and strategic partnerships
4 Low churn rates evidence loyal and satisfied customer base
5 Fully invested, advanced network with a broad reach across the region
6 Track-record of delivering top-line growth while generating stable cash flow
7 Low penetration offering significant growth opportunity
8 Experienced management team with a proven track-record and significant investment in the business
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1 Leading multi-play provider in the former Yugoslav region
Business VUnique and scaled regional platform highlights VLeader in Pay-TV and broadband with growing presence in telephony VPioneer in product innovation VStrong platform for market consolidation
Positioning as of Mar 2014 Others Total Other Global markets Slovenia Serbia Bosnia Montenegro Macedonia Croatia
Homes passed 298k 853k 191k 1,342k
~1% Pay-TV / video penetration of Cable expat population V V V – – – OTT with highly DTH attractive ethnic V V V V V V offer
Internet
Footprint
Overall (1)
(1) Telephony
Total RGUs 1,928k
Source: Company data; RGU data as of 31 Mar 2014. (1) #2 in each respective ethnic region, behind respective incumbent. 14 Strictly confidential – intended for the recipient only
1 Leading multi-play provider in the former Yugoslav region
Focus on bundled packages Montenegro / Croatia / Macedonia
Slovenia Serbia Bosnia Worldwide
(Analog CATV) PPPPPPP
(Digital Residential CATV) PPPPPPP PPPPPPPPPPPPP
OTT
PPPPPPP PPPPPPP
Planned launch P in 2014
B2B
15 Strictly confidential – intended for the recipient only
2 Well diversified revenue streams
Geographic diversification as of 2013 Service diversification as of 2013
15% 4% 10% 45% 30%
10%
56% 30%
= Content = DTH = Cable-TV = Serbia = Slovenia = Bosnia = Other businesses (1) = Voice = Data = Carriage fees services services and other Note: Revenue split by geography. DTH revenues from Serbia, Slovenia and Bosnia included in respective countries’. Other DTH operations included in Other businesses. (1) Includes United Media and NetTV revenues, as well as DTH revenues from Macedonia, Montenegro and Croatia.
16 Strictly confidential – intended for the recipient only
3 Recognized content leader benefitting from content ownership and strategic partnerships
PContent leadership secured through content ownership and Sports strategic partnerships
International PUnique access to popular international content
Affiliate Local / Regional P‘Partner of choice’ in the region for content providers
P Attractive content prices locked-in with long-term contracts, supported by pan-regional leadership position P Ability to provide a differentiated Pay-TV offering and compete on quality
Source: Company data.
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3 Strong and long-term content differentiation enabled through ‘partner of choice’ status in the region
Season Historic ownership 2011 2012 2013 2014 2015 2016 2017 Premier Oct ‘10 League Aug - May Since 2010 May
Spanish Aug - May First contract Aug May League
Formula 1 Mar - Sept Since 2011 Jan Dec
NBA Nov - June Since 2007 Jul June
Euroleague Oct - May Since 2006 Jun May Basketball
ATP Jan - Nov Since 2007 Jan
WTA Aug - May Since 2007 Jan Dec
Copa del May Since 2009 Oct Sep Rey finals
Portuguese Since 2009 May May League Aug - May
Russian Since 2006 Mar Dec League Oct - Nov
Moto GP Apr - Nov Since 2010 Jan Dec
US PGA Since channel Oct - Dec Jan Dec Golf inception
European Since channel Jan Dec PGA Tour Oct - Dec inception
Source: Company data.
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4 Low churn rates evidence the Group’s loyal customer base
Churn rate (FY 2013) Low churn supported by…
In % of average annual subscribers
SBB / Telemach Peers (1) V Attractive and unique content
V Top quality network 19.0% 20.0% 16.3%
10.3% 7.3% V Relatively low overbuild 4.4% 4.9%
RS SI BH Telenet Com Hem Numericable Ono
SloveniaSerbia Bosnia V Strong customer service
¢ Churn mainly driven by: − Customers moving outside of current geography − Termination of contract due to customers’ inability to pay V Continuous innovation (e.g. VoD, DVR, OTT, etc.) resulting in high level of customer ¢ SBB’s churn rates are well below rates achieved by satisfaction comparable Western European peers
P Loyal customer base is a key to the group’s cash generative growth
Source: Company data. (1) Respective company filings.
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5 Fully invested and advanced network with a broad reach across the region…
Advanced network in Slovenia, Serbia and Bosnia… … with pan-regional connectivity and gateway to rest of Europe
(’000 HPs)
82% 99% 95%
514 392 422 Vienna 853
Austria Budapest Hungary 731 V DOCSIS 3.0 enabled Romania V Top class HP’s Maribor Ljubljana per node ratio, Zagreb Timisoara compares Slovenia favorably to CEE Croatia benchmarks Belgrade Banja Luka Bucharest 298 Bosnia 243 Zenica 184 191 Sarajevo
Mostar Nis Mediterranean Serbia Slovenia Serbia Bosnia Sea Herzegovina Q1 2013 Q1 2014
Internet enabled (%) (1) HPs / Node (1)
Source: Company data. (1) As of March 2013.
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5 …and capability to provide the highest speeds in its markets
Slovenia Serbia Bosnia
Speeds represent max. downstream bandwidth in Mbps, June ’14 Speeds represent max. downstream bandwidth in Mbps, June ’14 Speeds represent max. downstream bandwidth in Mbps, June ’14
120 (2) 100 100
(1) 60 50 (1) 50
25 (1) 20 (3) 20 15
(4)
Incumbent Alternative Incumbent Incumbent Alternative
P Sustainable speed advantage leveraging capex efficient DOCSIS3.0 technology with further speed increase potential up to 360Mbps
Source: SBB, Telemach. (1) Telekom Slovenije, T2, and Zanesljivo Amis can match SBB’s top speed of 100Mbps, but only on FTTH & VDSL ( 25% of subscriber base). (2) 100Mbps for Cable, 120Mbps for FTTH (limited coverage). (3) Telekom Srbija can match SBB’s top speed of 100Mbps, but only on FTTH & VDSL (only 5% homes in SBB footprint). (4) bhT offers up to 50Mbps on VDSL, however the service was only launched in March ‘13 and has a limited number of subscribers.
21 Strictly confidential – intended for the recipient only
6 Track record of delivering top line growth while generating stable cash flow
Robust growth of cable-based revenue per average unique subscriber across group (1) Healthy top line growth In € In € m 1,078 1,147 1,331 5.8% 17.0 243 191 173
15.4 15.2
(2) (5) (4) 2011 PF(2) 2012 PF(4) 2013A 2011 PF 2012 PF 2013A Homes passed Revenue Robust growth of RGU (3) across group Strong operating cash flow generation In thousands of RGU units 16.1% 1,886 70.2 1,579 1,399 14.5%
61.3
2011 PF 2012 PF 2013A 2012 PF (4) (6) 2013A Cash flows from operations (7) Note: BAM pegged to EUR at a rate of 1.9558. (1) Represents cable-based services revenue of the Company for the period divided by the average unique cable subscribers from the beginning to the end of the period. (2) Amounts shown in EUR are converted from RSD at a rate equal to RSD 101.950 per €1.00, which was the average rate during FY 2011 period. (3) Refers to revenue-generating users. (4) Amounts shown in EUR are converted from RSD at a rate equal to RSD 113.128 per €1.00, which was the average rate during FY 2012 period. (5) Unaudited pro forma financial information for 2011 derived from the addition of the results of SBB Serbia, Telemach Slovenia, Telemach BH and other operating entities and making certain consolidation adjustments, incl. excluding intercompany revenues (these amounts are not comparable to the data for 2012PF). (6) Aggregated pro forma for illustration purposes only. 22 (7) Net cash flows from operating activities as per IFRS: net of change in working capital, tax and interest, but before capex. Strictly confidential – intended for the recipient only
7 Low penetration rates offer significant cross-sell and up- sell potential and growth opportunity
Pan-regional operations across former Yugoslavia
Slovenia Serbia Croatia Bosnia MontenegroMacedonia
Pay-TV penetration (2013) BB penetration (2013)
(2) 81% 73% 63% 65% 69% 58% 62% 64% 51%
40% 42% (3) 45%
Median Pay-TV Croatia Bosnia (1) Macedonia Serbia SIovenia penetration Serbia Bosnia Slovenia France Belgium Netherlands
Source: EIU, CIA World Fact Book, IMF, relevant national statistics offices, www.citypopulation.de, Screendigest, Informa, RATEL, RAK, IP RTL, Company data. (1) Based on management estimates. (2) Median Pay-TV penetration based on selected CEE and Western European Pay-TV market penetration. (3) Data for 2012.
23 Strictly confidential – intended for the recipient only 7 Low penetration rates offering significant cross-sell and up-sell potential and growth opportunity
Service penetration versus comparables companies
(# of RGU/sub, Mar 2014) 2.8x Average 2.6x (ex. Group operations): 2.2x 2.5x 2.2x 2.3x
1.8x 1.9x 1.9x 1.7x 1.7x 1.5x
Serbia Slovakia Bosnia Romania Poland Poland Belgium Slovenia UK Netherlands Portugal
¢ With the start of liberalisation of telephony markets in Serbia and Bosnia there is significant upside for RGU/sub ratio
¢ Telephony services launched in BH in Q3 ’11 and in Serbia in H2 ’12
¢ Opportunity for cross-selling multi-play offers to c.35% 1-Play subscribers in Slovenia (a good 3-play market)
¢ MVNO launched in Slovenia in May 2012 to provide additional boost (4-Play)
¢ Upgrading existing customers to more premium products Source: Derived from public reports. Companies shown might report RGUs differently from us.
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8 Experienced management team with a proven track-record and significant investment in the business
Group Executive Dragan Šolak Chairman and Founder
Group Vice President – Chief Executive Officer, Dragica Victoriya Sales and Marketing SBB Boklag Pilipovi ć Since inception Joined in 2009
Group Vice President – Chief Executive Officer, Violeta Operations Marko Šter Telemach Slovenia Vasiljevi ć Since inception Since inception
Group Vice President – Chief Executive Officer, Vladislav Corporate Development ć Telemach BH Ratajac Željko Batisti Joined in 2011 Joined 1st May 2012
Interim Group Vice Andreas Satellite Platform Director President – Finance Sr đan Radi ć Melbaum Joined in 2010 Joined in 2014
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Historical financials
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Group historical revenues – strong double-digit growth
Revenues Comments December YE, (€m) ¢ Growth in group revenues driven by: 26.9% 243.0 − Increase in RGUs and ARPUs 39.3 10.4% − Disciplined and accretive acquisitions 191.5 19.1 ¢ Growth factors: 173.5 10.0 13.5 7.3 7.5 74.3 − Organic growth of subscriber base 64.3 − Increase in service penetration 56.9 − Increase in multi-play subscribers in Telemach Slovenia and SBB Serbia
135.3 ¢ Accretive strategic acquisitions: 109.8 116.6 − Telemach Slovenia: Elektro Turnsek and (2) KabelTV
(8.0) (13.0) − Telemach Bosnia: Number of small local (25.0) cable acquisitions 2011 PF(1) (2) 2012 PF(3) 2013A ¢ Subscriber migration to higher priced TV services SBB Serbia Telemach Slovenia Telemach Bosnia Group revenues growth Note: BAM pegged to EUR at a rate of 1.9558. United Media and other entities (4) (1) Unaudited pro forma financial information for 2011 derived from the addition of the results of SBB Serbia, Telemach Intercompany eliminations Slovenia, Telemach BH and other operating entities and making certain consolidation adjustments, incl. excluding intercompany revenues (these amounts are not comparable to the data for 2012PF). (2) Amounts shown in EUR are converted from RSD at a rate equal to RSD 101.950 per €1.00, which was the average rate during FY 2011 period. (3) Amounts shown in EUR are converted from RSD at a rate equal to RSD 113.128 per €1.00, which was the average rate during FY 2012 period. (4) Includes United Media Group, AoK, KDS, NetTV, JetTV, Beogrid and Slovenia BB. 2013 HY report includes the 27 smaller Serbian operations under SBB Serbia Group. Strictly confidential – intended for the recipient only
Group historical EBITDA – Solid and increasing margins
Adjusted EBITDA Comments
December YE, (€m) ¢ Strong growth in EBITDA in 2013, driven by 45.6% 47.7% 45.3% revenue growth and acquisitions 110.0 20.4% 5.0 ¢ Margins remain robust at above 45% 15.6% 8.9 91.4 8.2 3.6 79.1 5.5 (4) 2.3 ¢ Recent acquisitions of KabelTV and Elektro Turnsek (4) contributing strongly to EBITDA 36.2 33.4 within few months since becoming part of the 28.5 group
− Synergies realized from successful 48.9 integration of acquired businesses 48.3 51.8
2011 PF (1) 2012 PF (2) 2013A (3) 2011 PF 2012 PF 2013A
SBB Serbia Telemach Slovenia Telemach Bosnia Group EBITDA growth
Note: BAM pegged to EUR at a rate of 1.9558. United Media Group Other EBITDA Margin Note: EBITDA based on management accounts. (1) Amounts shown in EUR are converted from RSD at a rate equal to RSD 101.950 per €1.00, which was the average rate during FY 2011 period. (2) Amounts shown in EUR are converted from RSD at a rate equal to RSD 113.128 per €1.00, which was the average rate during FY 2012 period. (3) Adjusted for transaction costs, non-cash charges, withholding tax, management fees, donations, administrative taxes and rebranding costs. 2013A EBITDA as per IFRS was 28 €109.1m. (4) KabelTV acquired on 1 Mar 2013, Elektro Turnsek acquired on 1 Jun 2013. Strictly confidential – intended for the recipient only
Proven record of FX depreciation pass-through
¢ Consumer Price Index (“CPI”) in Serbia has tracked the depreciation of RSD against €, indicating a consistent history of “pass through” of the impact of RSD depreciation to the consumers
¢ Serbian consumers evaluate prices in €, habit reflective of long-term Deutsche Mark indexation during 90s
¢ SBB’s pricing reflects the “pass through” principle
Revenue split by currency Evolution of CPI, FX and SBB prices
FY 2013 Since Q4’08
180
170 +68% 160
150 +50% +46% 140
45.0% 100 to Indexed 130
55.0% 120
110
100
90
80
(4)
€, pegged to € or other hard currencies RSD Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 SBB prices (1) €/RSD (2)CPI (3)
Source: Management accounts, DataStream, National Bank of Serbia, EIU. (1) SBB monthly analog CATV ARPU in RSD. (2) €/RSD exchange rate quarterly average sourced from DataStream. (3) Inflation measured using the CPI index quarterly average sourced from EIU. (4) Other hard currencies include USD/AUD/CAD/SEK/NOK etc.
29 Strictly confidential – intended for the recipient only
Group historical capex
Capex Comments
December YE, (€m) ¢ 23.2% 26.4% 33.5% Approximately 50% of total capex relates to acquisition of new customers and cross-selling 81.3 of multi-play packages ¢ Other areas of investment include: 13.3 − Build-out of coaxial cable networks − Fiber network including node segmentation 8.2 − Enhancing capacity of the EuroDOCSIS 3.0 to 50.5 enable increasing broadband speeds 16.4 ¢ Significant increase in Serbia due to 40.3 7.7 investments in CPE equipment and network 4.0 extension in line with subscriber growth 15.3 ¢ United Media Group invested in attractive 15.6 sports rights such as Premier League, NBA 43.4 and Formula 1, which are expected to drive future revenues 27.5 ¢ 2013 capex not representative of capital 20.7 intensity due to: − One off upgrade of SBB’s technical/data 2011 PF(1) 2012 PF (2) 2013A centre (c.€10m); and − Significant investment in CPE in Q4 2013 due to strong subscriber growth / SBB Serbia Telemach Bosnia Capex as % of revenue Telemach Slovenia digitalization Others (3)
Note: BAM pegged to EUR at a rate of 1.9558. (1) Amounts shown in EUR are converted from RSD at a rate equal to RSD 101.950 per €1.00, which was the average rate during FY 2011 period. (2) Amounts shown in EUR are converted from RSD at a rate equal to RSD 113.128 per €1.00, which was the average rate during FY 2012 period. (3) United Media Group, KDS, AoK, JetTV, Beogrid, NetTV. 30 Strictly confidential – intended for the recipient only
Current trading
31 Strictly confidential – intended for the recipient only
Current trading – KPI progression
RGUs Comments (in 000) ¢ In Q1 2014 the Group continued 1,147 1,256 1,331 1,342 expansion of its footprint and RGUs
735 802 813 808 (1) 1,886 1,929 1,817 44 − 11k new HPs 20 29 1,579 153 168 181 26 111 403 424 432 354 55 59 65 − 43k net new RGUs 363 387 400 406
725 799 806 801 (1) ¢ Decline in cable pay-TV RGUs in Q1 due to reclassification of B2B (1) FY2012 Q3 2013 Q4 2013 Q1 2014 pay-TV subscribers in Slovenia Preliminary Cable pay-TV DTH pay-TV IPTV Broadband Fixed Tel. Other services
Homes passed Unique cable subscribers
Blended cable ARPU (€)
17.0 17.0 16.8 17.3 ¢ Positive trend in blended cable 15.4 ARPU driven by increased penetration of services and upselling customers to premium packages
¢ On 1 March 2014 SBB increased prices for analog CATV by RSD100 FY2012 FY2013 Q3 2013 Q4 2013 Q1 2014 (~€0.7 per month, post VAT) Group Preliminary (1) Due to reallocation of 7k B2B Pay-TV subscribers in Slovenia.
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Current trading – Financial review
Revenue Comments (€m) 14.1% ¢ Strong top line performance with revenues up 14% in Q1 2014 vs. Q1 2013, due to increase in customer base and ARPU and acquisitions
65.9 57.8
Q1 2013A Q1 2014A Adjusted EBITDA (€m) 46.2% 20.9% 48.9% ¢ EBITDA up 21% in Q1 2014 vs. Q1 2013, due to tighter cost discipline and continued integration of companies acquired during 2013 32.2 26.7
Q1 2013A Q1 2014A Capex (€m) 54.3% 30.8% ¢ Higher than normal capex as the Group continued investments in network extension and modernisation, as well as content
22.3 ¢ Significant front-loading of full year 2014 capex 12.2 to Q1 2014 Q1 2013A Q1 2014A ¢ About to launch new channel (N1), with Group Growth EBITDA margin Cash conversion (1) capitalised set-up costs leading to increased (1) Cash conversion is defined as (Adj. EBITDA-Capex) / Adj. EBITDA. capex in the period (c. €1.8m)
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Current trading – Deleveraging progression
L2QA EBITDA Comments (€m) 8.4% ¢ Significant increase in L2QA EBITDA between Q4 2013 and Q1 2014
112.5 122.0
Q4 2013A Q1 2014A
Net leverage (Net debt / L2QA EBITDA) (x) ¢ A quarter turn of deleveraging at Q1 2014 vs. (5.9%) opening net leverage at the time of the acquisition by KKR and Management of SBB / Telemach 4.25x 4.00x
@ Acquisition (Nov '13)(1) Q1 2014A
(1) Leverage at time of acquisition of KKR, Management and co-investors. Leverage as disclosed in the Senior Secured Notes Offering Memorandum.
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Concluding remarks
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SBB / Telemach Group: Key credit highlights
1 Leading multi-play provider in the former Yugoslav region
2 Well diversified revenue streams
3 Recognized content leader benefitting from content ownership and strategic partnerships
4 Low churn rates evidence loyal and satisfied customer base
5 Fully invested, advanced network with a broad reach across the region
6 Track-record of delivering top-line growth while generating stable cash flow
7 Low penetration offering significant growth opportunity
8 Experienced management team with a proven track-record and significant investment in the business
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Thank you
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