2015 EARNINGS CALL PRESENTATION

Transcription

1 2015 EARNINGS CALL PRESENTATION

2 Cautionary Language This presentation contains forward-looking statements, including those relating to our capital needs, business strategy, expectations and intentions. Statements that use the terms believe, anticipate, trend, expect, plan, estimate, forecast, intend and similar expressions of a future or forward-looking nature identify forward-looking statements for purposes of the U.S. federal securities laws or otherwise. For these statements and all other forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy or are otherwise beyond our control and some of which might not even be anticipated. Forward-looking statements reflect our current views with respect to future events and because our business is subject to such risks and uncertainties, actual results, our strategic plan, our financial position, results of operations and cash flows could differ materially from those described in or contemplated by the forward-looking statements contained in this report. Important factors that contribute to such risks include, but are not limited to, those factors set forth under "Risk Factors as well as the following: the success of our efforts to increase our revenues and recapture advertising market share in the Czech Republic; levels of television advertising spending and the rate of development of the advertising markets in the countries in which we operate; the effect of global economic uncertainty and Eurozone instability in our markets and the extent and timing of any recovery; the extent to which our liquidity constraints and debt service obligations restrict our business; our ability to refinance our existing indebtedness; our success in continuing our initiatives to diversify and enhance our revenue streams; our ability to make cost-effective investments in our television businesses, including investments in programming; our ability to develop and acquire necessary programming and attract audiences; changes in the political and regulatory environments where we operate and application of relevant laws and regulations; our exposure to additional tax liabilities; and the timely renewal of broadcasting licenses and our ability to obtain additional frequencies and licenses. The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included in our filings. For a more detailed description of these uncertainties and other features, please see the Risk Factors section in our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the date on when they were made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Non-GAAP Financial Measures CME reports its results in accordance with generally accepted accounting principles in the United States ( GAAP ). However, management believes that certain non-gaap performance measures used in managing the business may provide meaningful information about underlying trends in our business. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, CME s reported results prepared in accordance with GAAP. Please see the attached Financial Review appendix for a reconciliation to the most directly comparable GAAP financial measures. OIBDA, which includes amortization and impairment of program rights, is determined as operating income before depreciation, amortization of intangible assets and impairments of assets and certain unusual or infrequent items that are not considered by our chief operating decision makers when evaluating our performance. 2

3 Management Attending the Call Michael Del Nin Co-Chief Executive Officer Christoph Mainusch Co-Chief Executive Officer David Sturgeon Chief Financial Officer Daniel Penn General Counsel Mark Kobal Head of Investor Relations 3

4 Consolidated Revenues and OIBDA US$ m Net Revenues US$ m OIBDA (108.6) % % (15.1) FY 2014 FX FY 2014@2015 rates FY FY 2014 FX FY 2014@2015 rates FY

5 Net Revenues Trend by Quarter Constant Exchange Rates (Lfl 1 ) Actual Exchange Rates US$ m Q1 Q2 Q3 Q4 US$ m Q1 Q2 Q3 Q4 +3% % +12% % +12% % +10% % Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q ¹ Like-for-Like currency variance reflects the impact of applying the current period average exchange rates to the prior period revenues. 5

6 OIBDA Margin Trend by actual rates 40% 30% 28% 29% 20% 21% 25% 20% 14% 10% 9% 7% 0% -10% (2)% 4% 2% (1)% (8)% -20% (17)% -30% (27)% -40% Q1 Q2 Q3 Q4 FY

7 Last Twelve Months (LTM) OIBDA Trend by Quarter actual rates (31) (48) -70 Q Q Q Q Q Q Q Q Q

8 Audience Performance Overview FY All Day Audience Share 50% 40% 30% 20% 10% 0% % 38.8% 36.2% 36.0% 27.3% 33.0% 35.1% 27.4% 24.9% 31.1% 34.3% 24.7% Bulgaria Croatia Czech Republic Romania Slovak Republic Slovenia FY Prime Time Audience Share 60% 50% 40% 30% 20% 10% 0% % 42.9% 34.5% 40.8% 43.5% 35.1% 40.2% 30.3% 35.3% 42.7% 31.0% 33.3% Bulgaria Croatia Czech Republic Romania Slovak Republic Slovenia Variance in percentage points Source: Local TV data providers (see Segment Performance slides). All shares in main channel sales target group. 8

9 2015 Revenues by Segment Net Revenues US$ m Variance Actual % Lfl % 1 Bulgaria (16.1)% 0.2% Croatia (9.9)% 7.8% Czech Republic (9.9)% 6.3% Romania (11.8)% 5.4% Slovak Republic (6.8)% 11.0% Slovenia (11.6)% 5.5% Intersegment revenues (1.6) (2.0) NM² NM² Total net revenues (11.0)% 5.9% ¹ Like-for-Like currency variance reflects the impact of applying the current period average exchange rates to the prior period revenues. ² Number is not meaningful. The percentage growth figures have been derived from data included in our Form 10-K for the year ended December 31,

10 2015 OIBDA by Segment US$ m OIBDA Variance Actual % Lfl % 1 Bulgaria % 96.1 % Croatia % 21.9 % Czech Republic % 35.1 % Romania % 31.9 % Slovak Republic % % Slovenia % 33.6 % Eliminations 0.0 (0.2) NM 2 NM 2 Operations sub-total % 42.5 % Central costs (30.9) (29.8) 3.4% (11.4)% Total % 52.9 % ¹ Like-for-Like currency variance reflects the impact of applying the current period average exchange rates to the prior period revenues and costs. ² Number is not meaningful. The percentage growth figures have been derived from data included in our Form 10-K for the year ended December 31, See also OIBDA reconciliation on slide

11 Segment Review

12 Czech Republic: 2015 performance 2015 Financials US$ m % Act % Lfl¹ TV advertising revenues (9.9)% 6.3 % Carriage fees & subscription revenues (6.6)% 11.1 % Other revenues (13.3)% 2.9 % All Day Audience Share Prime Time Audience Share Total TV Ad Market Total TV Ad Market Year-on-Year Change, Year-on-Year Change, % 6% 4% Net revenues (9.9)% 6.3 % Market Share TV Ad Market Share by Quarter 2015 TV Ad Market Share Total costs (21.2)% (6.6)% 70 Prima Group: 28% CT Group: 5% OIBDA % 35.1 % 65 63% Others: 6% OIBDA Margin 30.6% 39.3% 8.7 p.p. 8.4 p.p. ¹ Like for-like currency variance reflects the impact of applying the current period average exchange rates to the prior period revenues and costs % 60% 61% 60% 58% 57% Q1 Q2 Q3 Q4 Source: ATO-Nielsen Admosphere; Mediaresearch (all audience share data is for the target group). TV ad market and TV ad market share represents CME s internal estimates at constant currency exchange rates. CME Group: 61% (2014: 60%) 12

13 Romania: 2015 performance 2015 Financials US$ m % Act % Lfl¹ TV advertising revenues (9.8)% 7.7 % All Day Audience Share Prime Time Audience Share Total TV Ad Market Year-on-Year Change, % 6% 8% Carriage fees & subscription revenues (12.1)% 5.3 % Other revenues (45.6)% (34.9)% 20 0 Net revenues (11.8)% 5.4 % Total costs (17.7)% (1.6)% Market Share TV Ad Market Share by Quarter 2015 TV Ad Market Share 70 Kanal D: 8% OIBDA % 31.9 % 65 Others: 6% 60 59% 59% 59% 59% Prima Group : 2% OIBDA Margin 20.9% 26.1% 5.2 p.p. 5.2 p.p % 57% 57% 58% ¹ Like for-like currency variance reflects the impact of applying the current period average exchange rates to the prior period revenues and costs. Source: Kantar Media (all audience share data is for the Urban target group). TV ad market and TV ad market share represents CME s internal estimates at constant currency exchange rates. 50 Q1 Q2 Q3 Q4 Intact Group: 26% CME Group: 58% (2014: 58%) 13

14 Slovak Republic: 2015 performance 2015 Financials All Day Audience Share Prime Time Audience Share Total TV Ad Market Prime Time Year-on-Year Audience Change, Share% US$ m % Act % Lfl¹ TV advertising revenues (7.3)% 10.3% Carriage fees & subscription revenues % 61.9% % 16% Other revenues (5.8)% 13.0% 25 0 Net revenues (6.8)% 11.0% Market Share TV Ad Market Share by Quarter 2015 TV Ad Market Share Total costs (14.1)% 2.5% OIBDA % 164.5% OIBDA Margin 5.1% 12.5% 7.4 p.p. 7.2 p.p % 69% 67% 64% 70% 61% 64% 62% JOJ Group: 32% Other: 4% ¹ Like for-like currency variance reflects the impact of applying the current period average exchange rates to the prior period revenues and costs. Source: PMT / TNS SK (all audience share data is for the target group). TV ad market and TV ad market share represents CME s internal estimates at constant currency exchange rates. Q1 Q2 Q3 Q4 CME Group: 64% (2014: 67%) 14

15 Bulgaria: 2015 performance 2015 Financials US$ m % Act % Lfl¹ TV advertising revenues (17.5)% (1.6)% Carriage fees & subscription revenues (9.9)% 7.8 % All Day Prime Time Audience Share Audience Share Total TV Ad Market Prime Year-on-Year Time Audience Change, Share % (3)% (3)% Other revenues (22.1)% (6.9)% 30-6 Net revenues (16.1)% 0.2 % Market Share TV Ad Market Share by Quarter 2015 TV Ad Market Share Total costs (25.9)% (11.4)% 70 Others: 4% 65 BNT Group: 3% OIBDA % 96.1 % OIBDA Margin 10.8% 21.2% 10.4 p.p p.p. ¹ Like for-like currency variance reflects the impact of applying the current period average exchange rates to the prior period revenues and costs. Source: GARB (all audience share data is for the target group). TV ad market and TV ad market share represents CME s internal estimates at constant currency exchange rates % 58% 60% 57% 56% 56% 56% 54% Q1 Q2 Q3 Q4 MTG Group: 35% CME Group: 58% (2014: 57%) 15

16 Croatia: 2015 performance 2015 Financials US$ m % Act % Lfl¹ TV advertising revenues (11.8)% 5.5% Carriage fees & subscription revenues % 39.8% All Day Prime Time Audience Share Audience Share Total TV Ad Market Year-on-Year Change, % 4% 4% Other revenues % 25.7% 20 0 Net revenues (9.9)% 7.8% Market Share TV Ad Market Share by Quarter 2015 TV Ad Market Share Total costs (11.4)% 5.8% HTV Group: 8% OIBDA % 21.9% OIBDA Margin 12.6% 14.1% 1.5 p.p. 1.6 p.p % 56% 55% 53% 58% 57% 56% 56% RTL Group: 36% ¹ Like for-like currency variance reflects the impact of applying the current period average exchange rates to the prior period revenues and costs. Source: AGB Nielsen Media Research (all audience share data is for the target group). TV ad market and TV ad market share represents CME s internal estimates at constant currency exchange rates. 45 Q1 Q2 Q3 Q4 CME Group: 56% (2014: 55%) 16

17 Slovenia: 2015 performance 2015 Financials US$ m % Act % Lfl¹ All Day Audience Share 50 Prime Time Audience Share Total TV Ad Market Year-on-Year Change, % 7% TV advertising revenues (11.5)% 5.8 % Carriage fees & subscription revenues (2.3)% 16.9 % Other revenues (21.7)% (7.1)% Net revenues (11.6)% 5.5 % (6)% Market Share TV Ad Market Share by Quarter 2015 TV Ad Market Share Total costs (14.0)% 2.8 % OIBDA % 33.6 % % 76% 78% 76% 73% Others: 2% Pink SI: 1% 81% 80% State TV Group: 12% OIBDA Margin 8.7% 11.2% 2.5 p.p. 2.4 p.p % Planet TV Group: 8% 60 ¹ Like for-like currency variance reflects the impact of applying the current period average exchange rates to the prior period revenues and costs. Source: AGB Nielsen Media Research (all audience share data is for target group. TV ad market and TV ad market share represents CME s internal estimates at constant currency exchange rates. Q1 Q2 Q3 Q4 CME Group: 77% (2014: 77%) 17

18 Debt Maturity Profile and Free Cash Flow 1,000 Maturity as at December 31, 2015 (US$ m) 1 1,000 Pro Forma maturity as at December 31, 2015 (US$ m) Euro Term Loan 2017 PIK Notes 2017 Term Loan 2019 Euro Term Loan 2021 Euro Term Loan 1 Debt in currencies other than US$ are translated at FX rates as at December 31, Includes PIK interest to December 31, Excludes PIK interest from December 1, The maturity of 2018 Euro Term Loan will be extended by one year to 2018 in transaction entered into in February On February 19, 2016 we entered into the 2021 Euro Term Loan to refinance the 2017 Term Loan and redeem the 2017 PIK Notes. Components of free cash flow (US$ m) Year ended 2014 Year ended 2015 Variance OIBDA Change in working capital (11) Interest, taxes, and other (71) (39) 32 Net investment in programming (78) (11) 67 Capex (29) (30) (1) Total (94) Free cash flow excludes the cash impact of certain unusual or infrequent items that are excluded from OIBDA. 18

19 EARNINGS CALL Appendix 19

20 Q4 Audience Performance Overview Q4 All Day Audience Share 50% 40% 30% 20% 10% 0% % 38.9% 36.4% 34.7% 28.7% 33.5% 36.6% 28.6% 31.9% 31.9% 24.2% 23.7% Bulgaria Croatia Czech Republic Romania Slovak Republic Slovenia 60% 50% 40% 30% 20% 10% 0% Q4 Prime Time Audience Share % 41.7% 37.7% 40.9% 45.0% 36.0% 38.9% 29.9% 36.2% 28.9% 33.9% 39.1% Bulgaria Croatia Czech Republic Romania Slovak Republic Slovenia Variance in percentage points Source: Local TV data providers (see Segment Performance slides). All shares in main channel sales target group. 20

21 Q Revenues by Segment Net Revenues US$ m Variance Q Q Actual % Lfl % 1 Bulgaria (15.1)% (2.8)% Croatia (2.3)% 11.5 % Czech Republic (9.6)% 1.2 % Romania (12.9)% 0.2 % Slovak Republic (3.5)% 10.4 % Slovenia (4.2)% 9.7 % Intersegment revenues (0.1) (0.9) NM² NM² Total net revenues (9.5)% 3.0 % ¹ Like-for-Like currency variance reflects the impact of applying the current period average exchange rates to the prior period revenues. ² Number is not meaningful. 21

22 Q OIBDA by Segment OIBDA US$ m Variance Q Q Actual % Lfl % 1 Bulgaria % 85.9 % Croatia (31.6)% (21.8)% Czech Republic (3.4)% 8.2 % Romania (5.1)% 9.1 % Slovak Republic (0.2)% 14.2 % Slovenia % 29.6 % Eliminations (0.4) 0.0 NM 2 NM 2 Operations sub-total % 15.5 % Central costs (9.2) (9.2) 0.1 % (10.7)% Total % 16.3 % ¹ Like-for-Like currency variance reflects the impact of applying the current period average exchange rates to the prior period revenues. ² Number is not meaningful. See also OIBDA reconciliation on slide

23 Summary Consolidated Statements of Operations US$ m Year ended December 31, Net revenues Content costs Other operating costs Depreciation and amortization Selling, general and administrative costs Restructuring costs Operating income Interest expense (142.0) (171.4) Loss on extinguishment of debt (39.2) Non-operating expenses (9.9) (25.9) Credit for income taxes Loss from continuing operations (151.5) (102.3) Loss from discontinued operations, net of tax (80.4) (13.3) Net loss (231.9) (115.6) Net loss attributable to noncontrolling interests Net loss attributable to CME Ltd. (227.4) (114.9) Net loss attributable to CME Ltd. per share (1.66) (0.90) Please refer to our Form 10-K for the year ended December 31, 2015 for the full financial statements and related notes and disclosures. 23

24 Summary Consolidated Balance Sheet US$ m As at December 31, 2014 As at December 31, 2015 Current assets Assets held for sale 29.9 Total current assets Non-current assets 1, ,095.9 Total assets 1, ,454.2 Current liabilities Liabilities held for sale 10.6 Non-current liabilities Total liabilities 1, ,134.4 Series B Convertible Redeemable Preferred Stock CME Ltd. shareholders' equity Noncontrolling interests (2.6) 1.4 Total liabilities and equity 1, ,454.2 Cash & cash equivalents Gross debt 1 (1,066.0) (1,107.2) Net debt (1,031.7) (1,045.5) ¹ Gross debt is the full face value of all outstanding debt. Please refer to our Form 10-K for the year ended December 31, 2015 for the full financial statements and related notes and disclosures. 24

25 Summary Cash Flow US$ m Year ended December 31, Net cash (used in) / generated from operating activities (65.2) 85.9 Net cash used in investing activities (28.5) (30.4) Net cash provided by / (used in) financing activities 39.0 (28.9) Net cash (used in) / generated from discontinued operations (2.6) 3.5 Impact of exchange rate fluctuations (10.7) (2.7) Net (decrease) / increase in cash and cash equivalents (68.0) 27.4 Net cash (used in) / generated from operating activities (65.2) 85.9 Capex additions, net of disposals (28.5) (30.4) Free cash flow (93.8) 55.5 Supplemental disclosure of cash flow information and noncash financing and investing activities: Cash paid for interest Interest paid in kind Accretion on Series B Convertible Redeemable Preferred Stock Cash paid for income taxes, net of refunds (2.2) 0.8 Please refer to our Form 10-K for the year ended December 31, 2015 for the full financial statements and related notes and disclosures. 25

26 OIBDA Reconciliation US$ m Reconciliation to Consolidated Statements of Operations: Three months ended Year ended December 31, December 31, Operating income Depreciation of property, plant and equipment Amortization of intangible assets Other items (12.0) OIBDA Other items for the year ended December 31, 2015 reflects accruals that were subsequently reversed related to tax audits in Romania. Since the charge of US$ 12.0 million recorded during the fourth quarter of 2014 was not included in OIBDA, our reversal of this charge during 2015 has similarly been excluded from OIBDA (see our Form 10-K for the period ended December 31, 2015 for more information). Other items for the three months ended December 31, 2014 also includes the reversal of a fine the competition committee in Slovenia was seeking to impose which was subsequently overturned in the fourth quarter of Please refer to our Form 10-K for the year ended December 31, 2015 for the full financial statements and related notes and disclosures. 26

27 OIBDA Reconciliation US$ m Reconciliation to Consolidated Statements of Operations: LTM operating (loss) / income Depreciation of property, plant and equipment Amortization of intangible assets Last Twelve Months (LTM) Q Q Q Q Q Q Q Q Q (180.0) (160.9) (133.5) (97.0) Other items (6.9) (12.0) Impairment charge LTM OIBDA (48.4) (31.1) Other items for the year ended December 31, 2015 reflects accruals that were subsequently reversed related to tax audits in Romania. Since the charge of US$ 12.0 million recorded during the fourth quarter of 2014 was not included in OIBDA, our reversal of this charge during 2015 has similarly been excluded from OIBDA (see our Form 10-K for the period ended December 31, 2015 for more information). Other items for the three months ended December 31, 2014 also includes the reversal of a fine the competition committee in Slovenia was seeking to impose which was subsequently overturned in the fourth quarter of Please refer to our Form 10-K for the period ended December 31, 2015 for the full financial statements and related notes and disclosures. 27