1q12 results presentation - nos · 2014-05-13 · results presentation. this presentation contains...
TRANSCRIPT
10 MAY 2012
1Q12
RESULTS PRESENTATION
This presentation contains forward looking information, including statements which constitute forward looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and assumptions of our
management and on information available to management only as of the date such statements were made.
Forward-looking statements include
(a) information concerning strategy, possible or assumed future results of our operations, earnings, industry conditions, demand and pricing for
our products and other aspects of our business, possible or future payment of dividends and share buy back program; and
(b) statements that are preceded by, followed by or include the words “believes”, “expects”, “anticipates”, “intends”, “is confident”, “plans”,
“estimates”, “may”, “might”, “could”, “would”, and the negatives of such terms or similar expressions.
These statements are not guarantees of future performance and are subject to factors, risks and uncertainties that could cause the assumptions
and beliefs upon which the forwarding looking statements were based to substantially differ from the expectation predicted herein. These
factors, risks and uncertainties include, but are not limited to, changes in demand for the company’s services, technological changes, the effects
of competition, telecommunications sector conditions, changes in regulation and economic conditions. Further, certain forward looking
statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may
differ materially from the plans, strategy, objectives, expectations, estimates and intentions expressed or implied in such forward-looking
statements. Additionally, some of these statements refer to board proposals to be submitted to ZON - Multimédia – Serviços de
Telecomunicações e Multimédia, SGPS, S.A. (“Multimedia” or “ZON”) AGM and subject to (i) its approval by Multimedia’s shareholders, (ii) the
market conditions and (iii) the ZON’s financial and accounting position as revealed in the financial statements approved by Multimedia’s AGM.
Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new
information or future developments or to provide reasons why actual results may differ. You are cautioned not to place undue reliance on any
forward-looking statements.
ZON Multimedia is exempt from filing periodic reports with the United States Securities and Exchange Commission (“SEC”) pursuant to Rule
12g3-2(b) under the Securities Exchange Act of 1934, as amended. The SEC file number for PT Multimedia’s exemption is No. 82-5059. Under
this exemption, ZON Multimedia is required to post on its website English language translations, versions or summaries of certain information
that it has made or is required to make public in Portugal, has filed or is required to file with the regulated market Eurolist by Euronext Lisbon or
has distributed or is required to distribute to its security holders.
This presentation is not an offer to sell or a solicitation of an offer to buy any securities.
Disclaimer
Very resillient core Triple Play business despite
tough macro headwinds
Efforts to contain costs and CAPEX are evident in
solid financial performance
New growth options beginning to show interesting
results
3
1Q12 Highlights
Record growth in cable with 26
thousand net adds
Strongest quarter since 2010 in RGU
growth with 65.8 thousand net adds
4
Very encouraging RGU growth
-20
-10
+0
+10
+20
+30
1Q
07
2Q
07
3Q
07
4Q
07
1Q
08
2Q
08
3Q
08
4Q
08
1Q
09
2Q
09
3Q
09
4Q
09
1Q
10
2Q
10
3Q
10
4Q
10
1Q
11
2Q
11
3Q
11
4Q
11
1Q
12
Pay TV – Cable Net Adds [Thousands]
RGU Net Adds [Thousands]
33.9 31.5
43.8
58.565.8
1Q11 2Q11 3Q11 4Q11 1Q12
716 thousand Triple Play customers, up
7.5% yoy
120 thousand IRIS customers, 10% of
cable customer base
Strong take-up of entry-level bundles with
analogue switch-off
5
Good take-up of high-end IRIS bundles and
entry-level offers
Triple Play Customers [Thousands]
536.7
666.0 715.7
45.6%
57.6%
59.4%
30%
50%
70%
90%
110%
130%
150%
-30
70
170
270
370
470
570
670
770
1Q10 1Q11 1Q12
Broadband Net Adds of 9.4 thousand
to 749 thousand subs
62.1% penetration of customer base
53% offers greater than 20 Mbps
and 32% higher or equal to 30 Mbps
ZON Online #1 in Portuguese App
store 6
Robust net additions in Broadband and Fixed Voice
Broadband Subscribers [Thousands, % of Penetration of Cable Base]
635.4704.7
748.6
54.0%
61.0% 62.1%
30%
35%
40%
45%
50%
55%
60%
65%
70%
200
300
400
500
600
700
800
1Q10 1Q11 1Q12
Fixed Voice Subscribers [Thousands; % of Penetration of Cable Base]
Fixed Voice Net Adds of 37.5
thousand to 921.4 thousand subs
74.9% penetration of customer base
Huge success of new fixed voice app
for free fixed line calls out of the
home
646.1
807.5921.4
54.3%
68.2%
74.9%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
00
100
200
300
400
500
600
700
800
900
1,000
1Q10 1Q11 1Q12
Basic ARPU from core TV, BB and Voice
services increased 0.6% yoy
Adjusting for the impact of entry level
offers, basic ARPU would have increased
by 2.4%.
Success of lower ARPU, entry level,
offers and continued pressure from
discretionary premium ARPU (-15.3%) led
to decline in Blended ARPU of 2.2%
7
Resilience of Basic ARPU
Basic, Premium and Blended ARPU [1Q11 = Base 1]
-2.2%
+0.6%
-15.3%
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1Q11 2Q11 3Q11 4Q11 1Q12
Blended ARPU Basic ARPU Premium ARPU
Cinema Exhibition:
Outperforming the market in a tough year
Source: ZON, ICA – Gross Revenue Data adjusted for VAT rate change in cinema tickets.
Cinema tickets sold and revenue per ticket [Thousands, Euros]
1Q12 Performance of Gross Revenues and Attendance
[%]
Average revenue per ticket: + 2.1% in 1Q12
Cinema Exhibition gross revenues were down 12.8% in 1Q12, with the market as a whole
falling by 14.6% yoy
8
-12.8%-14.5%-14.6% -14.9%
Gross Revenue Attendance
ZON Market
2,016 2,0942,372 2,260
1,725
4.74.9 5.1
4.8 4.8
03
04
04
05
05
06
06
07
07
0
500
1000
1500
2000
2500
3000
1Q11 2Q11 3Q11 4Q11 1Q12
Tickets Sold Avg. Revenue Per Ticket
Source: ZON, ICA
9 9
Audiovisuals:
Maintaining clear leadership
Cinema Distribution gross revenues market share 1Q12 [%]
ZON46.0%
Columbia24.3%
Big Picture 2
16.4%
Others13.3%
ZON distributed 4 of the Top 10 movies
shown in cinemas in Portugal in 1Q12
46% market share of cinema distribution
gross revenues
New distribution agreements established
with Universal for home video and with
MGM Studios for both theatrical and
home video distribution
10
Growing distribution network
13 own stores
Over 500 agents / points
of sale
Door-to-door sales force
of 200 people in Angola
ZAP – posting good results in Angola
ZAP Subscribers [Thousands]
Very strong operational
performance
EBITDA breakeven reached
in 1Q12
ZAP – the most
recognized brand in the
market
Strong focus on
Portuguese Language
content
ZAP Stores
1Q11 2Q11 3Q11 4Q11 1Q12
2
8
1213
June2010
December2010
June2011
December2011
11 11
Solid revenue performance
Consolidated Operating Revenues [Millions of Euros]
Yoy change in Pay TV, BB and Voice Revenues [%]
1.5%
-3.0%
-2.5%
-2.8%
-1.9%
-4%
-3%
-2%
-1%
0%
1%
2%
1Q11 2Q11 3Q11 4Q11 1Q12
Flat consolidated revenue performance yoy
Proportionate consolidation of Angola JV in 1Q12 (6.4 million euros)
Slowdown in pace of decline of Triple Play revenues
214.1 214.2
1Q11 1Q12
+0.0%
12
ARPU Revenues Growth [1Q11 = Base 1]
12
Growth in underlying core ARPU revenues
ARPU Revenues split [%]
0.80
0.85
0.90
0.95
1.00
1.05
1Q11 2Q11 3Q11 4Q11 1Q12
Total Basic Premium
-1.0%
+1.8%
-14.3% 83% 85%
17% 15%
1Q11 1Q12
Basic Revenues Premium Revenues
Basic ARPU revenue growth of 1.8%
Premium revenues down 14.3% yoy putting pressure on total revenues
Premium revenues now represent 15% of ARPU revenues down from 17% in 1Q11
13 13
17.1 17.1
1Q11 1Q12
+0.5%
13.611.8
1Q11 1Q12
(13.7)%
Solid Audiovisuals revenues; pressure on Cinema
revenues
Cinema revenues affected by combination of:
• Macro pressure and consumer environment
• VAT increase (6% to 13%) on cinema tickets
• Fewer blockbuster and 3D movies
Cinema Revenues [Millions of Euros]
Audiovisuals Revenues [Millions of Euros]
14 14
134.6 134.5
1Q11 1Q12
Costs savings materializing
Consolidated Operating Costs [Millions of Euros]
Excluding proportionate consolidation of Angolan JV, OPEX fell by 3.9% to 129.3 million
euros
Consolidated Operating Costs Excluding
Angolan Operation [Millions of Euros]
(0.1)%
134.6129.3
1Q11 1Q12
(3.9)%
15 15
Operating Costs excluding Angolan Operation [Millions of Euros]
Cost savings materializing
14.7
13.6
1Q11 1Q12
61.157.7
1Q11 1Q12
15.2
13.3
1Q11 1Q12
W&S Direct Costs Commercial
Costs
Other Op.
Costs
Operating Costs ex Angola
(millions of euros) 1Q12 Δ % Drivers
Other Operating Costs 44.7 2.6%Excluding the impact of the consolidation of the Angolan Operation, like for like Other Operating Costs would have grown by 2.6% albeit
important savings were achieved in several General and Administrative areas, namely customer service, maintenance and repairs
Commercial Costs 13.3 (12.8%)Excluding the impact of the Angolan Operation commercial costs would have fallen by 12.8%, mainly due to a decrease in the level of
COGS, commissions and marketing costs
W&S 13.6 (7.5%)
Direct Costs 57.7 (5.5%)
Excluding the effect of the proportionate consolidation of the Angolan JV as from 1Q12, W&S like for like would have fallen by 7.5%
reflecting a one-off effect and the effort in the Portuguese operation to contain the level of costs and headcount
Excl. the impact of the consolidation of the Angolan JV, like for like direct costs would have fallen by 5.5%, driven by a reduction in
Programming Costs of 6.6%, due to the lower level of premium subscriptions, as well as the renegotiations of content contracts
43.644.7
1Q11 1Q12
(7.5)% (5.5)% (12.8)% +2.6%
16 16
Strong improvement in EBITDA margin
Core Pay TV, Broadband and Voice margin grew by 2pp yoy to 39.5%
Group Margin remained relatively flat due to lower contribution from other domestic
businesses and consolidation of Angolan JV
Group EBITDA, EBITDA Margin [Millions of Euros, %]
Pay TV, Broadband and Voice EBITDA
and EBITDA Margin [Millions of Euros, %]
73.4 75.5
37.5%
39.5%
30%
32%
34%
36%
38%
40%
42%
30
35
40
45
50
55
60
65
70
75
80
1Q11 1Q12
79.5 79.7
37.1% 37.2%
30%
31%
32%
33%
34%
35%
36%
37%
38%
39%
40%
30
40
50
60
70
80
90
1Q11 1Q12
+0.2% +3.0%
35.4%
39.5%
34.3%
37.2%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
Pay TV, Broadband and Voice Group
EBITDA Margin [%]
17
10.2 10.3
1Q11 1Q12
+1.7%
Net Income [Millions of Euros]
Net Income Growth
(millions of euros) 1Q12 Δ % Drivers
In 1Q11 ZON had a negative contribution from the consolidation of the Angolan Operation of 2.8 million euros, which does not appear in
this line anymore. For comparative purposes, the equivalent impact for 1Q12 was a negative contribution at the EBT level of 1.3 million
euros, therefore reducing considerably the negative impact from 2011
Income Taxes (4.6)
(8.3) (19.1%)Net Financial Expenses
29.3%
D&A in line with the levels recorded in 1Q11 amounting to 55.9 million euros. D&A is still relatively high due to the significant accelerated
CAPEX cycle of the 2008-2010 period
Effective P&L tax rate of 30% due to the higher corporate tax rate applied to companies surpassing pre-defined taxable income thresholds
as a result of austerity measures for 2012/2013. In ZON´s case, the company was generally affected by an increase of 0.5 pp to 29.5%.
D&A (55.9) 0.7%
Net interest costs remained flat at 6 million euros in 1Q12.
18
Continued reduction of CAPEX to more normalized
levels as forecast
38.8
29.6
15.19.1
19.1 18.9
1.7
1.6
2.9
1Q11 1Q12
Pay TV, BB and Voice Infr. Terminal Equipment
Other Baseline CAPEX Non-Recurrent CAPEX
Total CAPEX [Millions of Euros]
Total CAPEX, Total CAPEX / Operating
Revenues [Millions of Euros, %]
(23.7)%
38.8
29.618.1%
13.8%
00%
05%
10%
15%
20%
25%
00
05
10
15
20
25
30
35
40
45
1Q11 1Q12
CAPEX levels significantly down on previous years as forecast, with the conclusion of
major investment programmes regarding the network upgrade and the roll-out of next
generation customer equipment
CAPEX as percentage of total revenues at 13.8% in 1Q12, and at 15.4% as percentage
of Triple Play revenues
19
Strong improvement in OCF
5.7 0.2
(9.2)
(22.3) 37.4
1Q11 ∆ EBITDA ∆ CAPEX ∆ Non-Cash Items and Working Capital
1Q12
Operating Cash Flow After Investment [Millions of Euros]
+ 31.7 M €
Strong improvement in OCF led by solid EBITDA performance, decline in CAPEX, and
lower Working Capital investment when compared with 1Q11
20 20
Change in Net Financial Debt [Millions of Euros]
Solid Capital Structure,
2.1x Net Financial Debt / EBITDA
644.6
23.4
621.2
1.7
2.4
7.5
12.9
12.7
50.1
637.5
1Q12
International BusinessConsolidation
1Q12 Ex. InternationalBusiness
Other Items
Income Taxes Paid
Net Interest Paid
Long Term Contracts
Non-Cash Items andWorking Capital
EBITDA-CAPEX
2011
Improvement led by solid EBITDA and decline in
CAPEX
Consolidation of Net Debt of the
Angolan Operation
2.1x Net Financial Debt / EBITDA
at the end of 1Q12
21
Despite the difficult macroeconomic environment, ZON continues
to post good results in its domestic businesses
Good operational performance of the core Triple Play business with
good growth in cable base
Despite slowdown of Premium subscriptions, optimization of cost
structure has enabled continued EBITDA growth
Strong FCF with very strong quarterly Cash Flow momentum
Excellent results of the Angolan business, on track for EBITDA
positive contribution in 2012
Wrap-up
Appendix Financial Highlights
Operational Highlights
23 23
(Millions of Euros) 1Q11 1Q12 ∆ y.o.y.
Operating Revenues 214.1 214.2 0.0%
Pay TV, Broadband and Voice 195.6 191.9 (1.9%)
Audiovisuals 17.1 17.1 0.5%
Cinema Exhibition 13.6 11.8 (13.7%)
International - 6.4 n.a.
Other (12.1) (13.0) 7.4%
EBITDA 79.5 79.7 0.2%
Income from Operations 24.0 23.7 (1.0%)
Net Income 10.2 10.3 1.7%
CAPEX 38.8 29.6 (23.7%)
EBITDA minus CAPEX 40.7 50.1 23.0%
Net Financial Debt 641.7 644.6 0.5%
EBITDA margin (%) 37.1% 37.2% 0.1pp
CAPEX as % of Revenues 18.1% 13.8% (4.3pp)
Net Financial Debt / EBITDA [x] 2.1x 2.1x n.a.
Financial Highlights
24 24
Operational Highlights
25
José Pedro Pereira da Costa
CFO
Maria João Carrapato
Head of Investor Relations
ZON Multimedia
Avenida 5 de Outubro, 208
1069-203 Lisboa, Portugal
Tel.: +351 21 782 47 25
Fax: +351 21 782 47 35
Operational Highlights