Investor Presentation Espirito Santo & the London Stock Exchange Emerging Markets Conference
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Investor presentation Espirito Santo & The London Stock Exchange Emerging Markets Conference 20th November 2012 Safe Harbour Statement This presentation includes 'forward‐looking statements'. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding our financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to our products and services) are forward‐looking statements. Such forward‐looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements to be materially different from future results, 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 business strategies and the environment in which we will operate in the future. These forward‐looking statements speak only as at the date of this presentation. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward‐ looking statements contained herein to reflect any changeinourexpectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. We caution you that forward‐ looking statements are not guarantees of future performance and that our actual financial position, business strategy, plans and objectives of management for future operations may differ materially from those made in or suggested by the forward‐looking statements contained in this presentation. In addition, even if our financial position, business strategy, plans and objectives of management for future operations are consistent with the forward‐looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. We do not undertake any obligation to review or to confirm or to release publicly any revisions to any forward‐looking statements to reflect events that occur or circumstances that arise after the date of this presentation. The LdiLeading MdiMedia Group 1 in Poland Overview – Investment highlights LdiLeading itintegrat tded media group Strong brand and Attractive custo me r bibusiness modldel satisfaction Strong content port fo lio 4 No. 1 in pay TV…. Poland’s pay‐TV market leader with 3,55m subscribers % share in the total number of paying subscribers at the EOY Cyfrowy Polsat CATV operators2 32% 41% 2011 Other DTH operators 3 IPTV (C+, „n”, TP SA)1 2% 26% Note: (1) Based on own estimates and data published by operators (Annual reports of TVN S.A. Group and TP S.A. Group for 2011) (2) Based on own estimates and data published by PIKE 5 (3) Based on own estimates and data published by operators (Annual report of TP S.A. Group and the website of Telefonia Dialog S.A.) …with unique multi‐play product PREVIOUSLY 100 Polish channels, 28 HD; more than 500 FTA VOD, PPV, CatchUp TV, Multiroom Own STB production Mobile broadband network HSPA+ up to 28.8 Mbit/s LTE (Long Term Evolution) –up to 150 Mbit/s NOW Polkomtel mobile telephony MVNO Pay DTT and mobile offer Online video platform 6 Strong broadcasting segment Audience share Audience share Diversified portfolio of 15 of main channels of thematic channels 16.5% channels, addressing all main 16.1% 2011 13.6% audience groups 11.9% Group audience share at ca. 21% 5.9% 4.4% 3.9% Nearly 23% of TV advertising market share POLSAT TVN TVP 1TVP 2 TVN POLSAT TVP(1) Expenditures on TV Revenues from advertising and advertising and sponsoring sponsoring of TV Polsat Group(2) +0.6% YoY % change 3,859 3,881 +3.4% PLN) 847 876 (mln 2010 2011 2010 2011 Source: NAM, All 16‐49, all day, SHR%; internal analysis Starlink, airtime and sponsoring; TV Polsat; internal analysis Note: (1) Includes a nationwide DTT channel TVP Info, whose audience share is 2.2% 7 (2) Revenues from advertising and sponsoring of TV Polsat Group according to Starlink’s definition Growing revenues and profits Revenues pro forma EBITDA and EBITDA margin pro forma 2 800 2,661 900 40% 822 2,443 2,208 717 2 100 30% 31% 600 578 26% m) Nm) 1 400 N 20% LL (P (PL 300 700 0 0 0% 2009 2010 2011 2009 2010 2011 EBITDA EBITDA margin Source: Cyfrowy Polsat; TV Polsat; internal analysis 8 Diversified income mix in 2011 Revenues structure pro forma EBITDA structure pro forma PLNm/ % share PLNm/ % share 7% 31% 33% 2011 2011 60% 69% Retail subscription Cyfrowy Polsat TV advertising TV PlPolsa t Other (mainly satelite and cable operators subscription fees) Source: Cyfrowy Polsat; TV Polsat; internal analysis 9 2 Group Strategy Our vision We createt and provide ththe mostt attracttt tiive … using the bbtest and lltates t tthechnol og ies to content…. deliver high quality multi‐play services with the highest levels of customer satisfaction news Telephony catch‐up TV PVR VOD HD online entertainment TV Internet MOBILNA TV movies Streng then ing our ldleaders hip in enttitertainmen t in PlPolan d. 11 We have a winning strategy Key content New TMT Distribution secured products under control A WINNING STRATEGY 12 Understanding current and future consumer needs TECHNOLOGY CHANGES ACCESS TECHNOLOGIES TERMINAL DEVICES (satellite, cable, Internet, DTT, (TV, STB, laptop, tablet, mobility ...) smartphone…) Have an impact on changing consumer preferences as of content consumption: What? Where? How? 13 Our main priorities Building the business value Building value of our customer base Building channels value Effec tive ly managing costs 14 Headroom for growth The addressable market for pay‐TV Thanks to complete portfolio of our products (DTH, Internet, telephony, Today The future pay DTT, ipla) we can target a bigger 14.5 addressable market and respond 12.5 to more demand in the future 9 illion) (m 11 3.5 2.9 HhldHouseholds in Pay‐TV Users of HhldHouseholds HhldHouseholds Low ARPU Poland connected with 2 or without pay‐ segment 2 mobile more TV sets TV devices 1 Source: Operators reports, GUS, PIKE, IDC, UKE, Report „Diagnoza Społeczna 2011”, Company’s estimates Note: (1) Users of connected mobile devices defined as number of users of smartphones, tablets and laptops 15 (2) Low ARPU segment ‐ below PLN 20 The multi‐play potential Increasing role of multi‐play Multi‐play penetration services seen in all European 70% countries 64% 60% 60% Multi‐play means TV, broadband 51% 49% and telephony for now – but the 50% 44% opportunity is greater than this 43% 40% 31% The Polish market has enormous 30% 28% built‐in potential – catching up with the rest of Europe 20% 10% 0% Source: European Commission ‐ E‐Communications Household Survey, June 2012 16 Maximising loyalty Ensuring customer satisfaction Maintaining best‐in‐class churn with 16% > ~15%(3) ― An attractive product mix ― Excellent customer care 14% 12% Implementing effective retention 11.0% (2) 9.8% (1) programs 10% 8% Increasing numbers of multi‐play customers 6% 4% 2% 0% cp sky c+n Note: (1) Cyfrowy Polsat, 2011 (2) Refers to BSkyB, investor presentation ‘2011 Results”, 23 February 2012 (3) Press conference of President of Canal + Cyfrowy Sp. z o.o. (2 March 2010). TVN S.A., investor presentation ‘TVN Group Financial Results for the fourth 17 quarter and full year 2011 ‘, 15 February 2012 Improving ARPU Several opportunities to increase Scope to increase ARPU ARPU over time 160 ― Upgrade of existing customers 138(2) ― Multi‐play 140 ― Selective price increases ― New products and services 120 ― Migration of customers between the platforms 100 ) NN 80 (PL ~65 60 37 (1) 40 20 0 Cyfrowy Polsat Poland Western Europe Source: Cyfrowy Polsat, 2011; Poland ‐ internal estimates based on PMR’s report „Value added and multimedia services in Poland 2011 ‐ development forecasts for 2011‐2015”, (April 2011) and information published by local market players; Western Europe –Informa, „Western European TV”, 14th edition Note: (1) Blended ARPU 18 (2) Revenue in USD converted into PLN at the rate of PLN 3.0157 per 1 USD Maintaining audience share Stable audience share supported Leading audience share by growing portfolio of channels 25% Maintaining share through 20% ― Increased distribution for thematic channels ― Effective investments in programming 15% share e Grow our revenues at least in line cc 16.5% 18.5% 17.4% 16.0% audien with the advertising market 10% % 5% 444.4% 3.2% 1.9% 2.6% 0% 2008 2009 2010 2011 Polsat ‐ thematic channels Polsat ‐ main channel Source: Nielsen Audience Measurement, all 16‐49, all day, 2008 – 2011 19 Revenue from cable and satellite operator fees Attractive portfolio of the channels, with a strong reach across the market Re‐run channel Sports channel Current level of penetration News channel of our thematic channels within Sports channel Business channel pay‐TV platforms of ca. 60% still HD implies a growth potential Sports news channel Mens’ lifestyle channel Premium sports channel General entertainment commercial channel Womens’ lifestyle Premium sports channel channel HD Movie channel Crime & investigation Kids’ channel channel 20 Enhancing our demographics Improving audience profile 2011(1) results in the increase of our advertisement prices cities/higher income older younger X smaller towns/lower income Y Source: Nielsen Audience Measurement, internal analysis, 2011 Note: (1) X‐axis: average age; crosscut: 45 years Y‐axis: % of group „residents of cities, average and high household income” in presented