Management Presentation Q results

Transcription

1 Management Presentation Q results Christoph Vilanek, CEO and Joachim Preisig, CFO 09 August 2018 Analyst and Investor Conference Call 1 Management Presentation Q August 2018

2 Cautionary statement This presentation contains forward-looking statements which involve risks and uncertainties. The actual performance, results and timing of the business of freenet AG could differ materially from the expectations regarding performance, results and timing expressed in this presentation. This presentation does not constitute an offer to sell or a solicitation to purchase any securities of freenet AG. Any such decision must not be made on the basis of the information provided in this presentation. freenet AG does not undertake any obligation to publicly update or revise information provided during this presentation. 2 Management Presentation Q August 2018

3 Positive 1 st half year 2018 performance Group Mobile Communications TV and Media +5.4 per cent yoy in group revenue before IFRS 15 and +3.8 per cent yoy in recurring EBITDA All operational and qualitative KPI targets achieved Financial investment Sunrise with good performance New strategic investment in CECONOMY closed 2 new board members assigned, Chief Commercial Officer and Chief Customer Experience Officer Continuous growth in postpaid customer base (+4.0 per cent or 264,000 yoy) Postpaid ARPU stable at 21.5 euros Digital lifestyle revenues per cent yoy freenet TV with 1,140,000 paying user (RGU within expected range) Media Broadcast TV B2B contribution/ gross revenues in line with full year prognosis One-off effect amounting to 7.3 million euros effect from the partial sale of VHF infrastructure will be compensated by corresponding lower revenues in VHF in 2 nd half of 2018 waipu.tv with new high in number of registered customers per quarter + 215,000 up to 824,000 per June waipu.tv subscibers up from 133,000 in Q to 174,000 in Q Management Presentation Q August 2018

4 Postpaid net adds in Q amount to approx. 60,000 [in million] Postpaid No frills Customer Ownership Q Q Q Q Q Key drivers Continued improvement of customer structure based on increase of postpaid customers by 4.0 per cent yoy or +264,000 Shrinking no frills customer base (-287,000 yoy) because of new ID regulations and waiving super discount offers Online share of contract related transactions 45 per cent 4 Management Presentation Q August 2018

5 Most important postpaid ARPU stable [EUR/month] Postpaid Q1 Q2 Q3 Postpaid ARPU 21.5 euros. Data revenue share at 35.5 per cent. No-frills Prepaid Q2 No-frills ARPU 3.5 euros as a consequence of offer policy Q2 Prepaid ARPU 3.4 euros again due to lower base 5 Management Presentation Q August 2018

6 Digital Lifestyle revenues constantly increasing [in EUR million] Strong performance million euros or + 12 per cent year on year Q Q Q Q Q Q Main drivers Increasing focus on entertainment products namely freenet Video Integrated multi-channel-platform Digitization of all customer interfaces Management Presentation Q August 2018

7 freenet TV outlook 1.2 million paying user including Satellite Paying user and RGU 454, , , > , > 1,200,000 > 1,022,000 > 454,300 > 974, Paying user 1,022,000 1,138,000 > 2.5 1,001,000 Thereof RGU 1 >1,200,000 > 1.0 mio. RGU DVB-T2 HD Total revenues 13.3 million euros during Q2 Paying user growing to 1.1 million Sat 3 Initial shipments of respective CI+ modules only in May; testing of advertising, promotions and product placements during month of June Real uptake only from Q4 due to summer season Full year outlook remains on 1.2 million paying user 1) RGU as the abbreviation for Revenue Generating User refers to freenet TV subscribers who purchased and also activated the freenet TV access 7 Management Presentation Q August 2018

8 waipu.tv massively broadened its technical reach in Q Aside of Android and ios apps serving Google Chromcast and Amazon Fire, waipu.tv is now available on four more platforms ipad Android Tablet Fire Tablet Web-Client (Browser-Version) Platform extensions Apple TV as well as direct access to Samsung is planned before end of Management Presentation Q August 2018

9 Proof of best quality service with low latency technology Goal Deliver the fastest goal during world championship waipu.tv faster than cable and other IPTV Delay in delivery by access technology ARD ZDF Sat SD 0 0 Sat HD waipu.tv HD * DVB-T 2 HD Kabel HD Telekom Entertain HD Receiver Solution Own fibre network, no buffer or proxy Self developed software in client, server- and traffic-management Patents pending Zattoo * MagineTV * *on Fire-TV all information in seconds Source: c t magazine 9 Management Presentation Q August 2018

10 Successful launch of on-demand-content as linear channel waipu.tv can take any content into its CMS and delivers it as a live-channel with the option for the consumer to switch into demand mode to select program and/ or series. Beispiel: Tagesplatzierung MySpass im Senderranking (Viewtime) Brainpool is one of the most successfull comedian, sit-com and fun-series producer in Germany Successfull formats comprise Anke Engelke, Stefan Raab, Carolin Kebekus KPI of my spass on demand channel in Q Market share of up to 2.3 per cent Ranks 9 out of 90 channels Advertising handled exclusively by EXARING AG 10 Management Presentation Q August 2018

11 Uptake of registered as well as paying users accelerates Total registered and paying user 255, ,100 25,000 52, , ,000339,400 71,900 52, , , , , , , , , ,000 >1 Mio. >1,000,000 >250, , Q performance By the end of Q2 waipu.tv has attracted more than 824,000 registered user Out of those 174,000 have decided for a paid service For the first time real time promotions alongside the football championship have been applied with great uptake (conversion tbd.) Those promotions are taken as proof of concept to attract more content partners with own customer bases Paying user Total user 11 Management Presentation Q August 2018

12 Strategic Participation in CECONOMY AG Transaction details Capital increase of 10.0 per cent resulting in a stake of 9.1 per cent (32,633,555 ordinary bearer shares) Purchase price of 8.50 EUR per share (level of the ABB-announcement date) results in 277 million euros Rationale Strategic investment with the aim to strengthen the very successful cooperation, which has been existing for 27 years CECONOMY, the leading retailer in the market in which it operates, is one of freenet s most important sales channels Considerable strategic importance: Focussed on mobile up to now with the intention to extend the cooperation to further areas, including TV access and Digital Lifestyle services Friendly participation, that will benefit both parties Financing Bridge loan (bilateral, duration: 18 months, interest rate 1.4 per cent) Refinancing at favourable market conditions intended; no equity planned Financing strategy confirmed: Leverage target corridor of 1.0 to Management Presentation Q August 2018

13 Financial statements Income statement information [in EUR million] 1 st half st half 2017 Q Q Revenue without the effect of IFRS 15 1, , Revenue 1, , Gross profit EBITDA Depreciation and amortisation Subsequent recognition from Sunrise PPA EBIT Interest result EBT Taxes on income Group result Earnings per share (EUR) The increase in Group revenue without the effect of IFRS 15 by 54.8 million euros to million euros is mainly attributable to increasing hardware sales. Decrease in reported Group revenue due to the reclassification of commissions because of IFRS 15. EBITDA grows to million euros yoy (+8.8 per cent); influenced by a one-off effect from the partial sale of VHF infrastructure amounting to 7.3 million euros. Group result amounts to 61.3 million euros; an increase of 11.1 million euros yoy (+22.2 per cent) 13 Management Presentation Q August 2018

14 Split of the financials into the relevant segments [in EUR million] Revenue Gross profit EBITDA -17.3% -2.8% +7.3% Group 1, , % +0.2% Mobile 1,519.8 Communications 1, % st half st half % -13.9% % TV and Media ) Revenue incl. IFRS 15 effects; Group revenue in the 1 st half 2018 without IFRS 15 effects 1,767.7 million euros; Mobile revenues in the 1 st half 2018 without IFRS 15 effects 1,619.6 million euros. 2) Excluding the profit share of our holding in Sunrise we generated a Group EBITDA of million euros (1 st half 2017: million euros); Excluding the profit share of our holding in Sunrise we generated a Mobile Communications Segment EBITDA of million euros (1 st half 2017: million euros). 14 Management Presentation Q August 2018

15 Financial statements Balance sheet information [in EUR million] Assets Shareholders equity and liabilities Intangible assets ,327.0 Shareholders' equity 1, ,379.9 Goodwill 1,379.9 Borrowings ,102.6 Trade accounts receivable Cash and cash equivalents Other assets , , ,102.2 Trade accounts payable Other liabilities 1, , ,495.8 Total 4, , ,665.7 Total 15 Management Presentation Q August 2018

16 Financial statements Cash flow information [in EUR million] Cash flow from operating activities 1 st half st half 2017 Q Q Cash flow from operating activities decreased in Q2/2018 by 9.6 million euros to million euros yoy mainly due to the increase in NWC. Cash flow from investing activities thereof net capex Cash flow from financing activities Change in cash and cash equivalents Free cash flow Cash flow from investing activities is significantly lower primarily due to lower investments in TV & Media. Free cash flow of million euros in Q2/2018 representing a decline of 13.7 million euros compared with the corresponding previous year quarter. Fully in line with the quarterly guidance. 1) Free cash flow is defined as cash flow from operating activities, minus investments in property, plant and equipment and intangible assets, plus proceeds from the disposal of property, plant and equipment and intangible assets. 16 Management Presentation Q August 2018

17 Detailed bridge from EBITDA to free cash flow Q1 Q [in EUR million] * EBITDA Change in net working capital Tax payments Capex Sunrise EBITDA (no cash) Sunrise dividends other Free cash flow FY 2017 FY 2018e ** * Incl. gains on the disposal of fixed assets (mainly VHF infrastructure) in the amount of 7.3 million euros ** Free cash flow w/o Sunrise dividends million euros according to guidance 17 Management Presentation Q August 2018

18 freenet AG financial guidance 2018 & perspective 2019 Group revenue 4 Group EBITDA Free cash flow (FCF) 1 Dividend payout Perspective % of FCF incl. Sunrise Guidance m 2 (+ Sunrise) m 3 (+Sunrise) 50-75% of FCF incl. Sunrise Results ,507.3 m m (incl. Sunrise m ) m (incl. Sunrise m ) 1.65 /share Guidance 2017 > m 2 (+ Sunrise) ~310.0 m 3 (+Sunrise) 50-75% of FCF incl. Sunrise 1) Free cash flow is defined as cash flow from operating activities, minus investments in property, plant and equipment and intangible assets, plus proceeds from the disposal of property, plant and equipment and intangible assets. 2) The expected EBITDA contribution of Sunrise Communications Group AG is not included in our guidance. 3) Dividend payment from Sunrise is not included in our guidance. 4) Without effects from IFRS Management Presentation Q August 2018

19 freenet AG KPI guidance 2018 & perspective 2019 Mobile Communication waipu.tv freenet TV Customer ownership Postpaid ARPU Total User Paying User Paying User ARPU 1 Perspective 2019 Guidance 2018 > 250,000 > 1,200,000 Results , , , , Guidance 2017 > 500,000 > 100,000 ~ 950,000 ~ 4.5 1) freenet TV ARPU is referring to number of freenet TV paying users 2) without 72,000 pre-registered users 19 Management Presentation Q August 2018

20 freenet Group management We are looking forward to your questions Christoph Vilanek, CEO Joachim Preisig, CFO CEO of freenet AG since 2009 CFO of freenet AG since 2010 Management positions at debitel AG since 2005 Consultant for telecommunication with McKinsey&Company since 2001 Management positions in Direct Marketing and Media CFO of debitel AG since 2006 CFO of T-Mobile / Head of Group Controlling at Deutsche Telekom AG since 2002 CFO at O 2 since Management Presentation Q August 2018

21 Appendix 21 Management Presentation Q August 2018

22 About CECONOMY AG CECONOMY acts as a platform that brings together various businesses in the area of Consumer Electronics Operational business is handled by several brands, with the main focus on MediaMarktSaturn Retail Group with its brands MediaMarkt and Saturn EBITDA of 704 million euros in financial year 2016/2017 Total sales of 22.2 billion euros in financial year 2016/2017 Market leader in 9 European countries More than 1,000 stores in Europe Approximately 65,000 employees worldwide 22 Management Presentation Q August 2018

23 Overview over current financing and maturity structure Average financing cost below 2.0 per cent p.a. [in EUR million] Issue Instrument Volume Maturity Promissory notes Syndicated bank loan 2012 Promissory note 54.5 m Promissory note 100 m 2020, (March) Promissory note 560 m 2021, 2023, (November) Promissory note 350 m 2020, 2022, (July) Syndicated bank loan Bank loan ( Bridge ) 610 m (+100 m ) m 2020 (Jan) 23 Management Presentation Q August 2018

24 Thank you. Hollerstrasse 126 Investor Relations Büdelsdorf +49 (0) Management Presentation Q August 2018