36 slides from VEON Ltd. ORD's earnings presentation, May 13, 2015
Slide 1: 1Q15 Earnings Presentation
1Q15 Earnings Presentation © VimpelCom Ltd 2015 Amsterdam – May 13, 2015 Jean-Yves Charlier – CEO Andrew Davies – CFO 1
Slide 2: Disclaimer
Disclaimer This presentation contains “forward-looking statements”, as the phrase is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to, among other things, the Company's anticipated perform
Slide 3: New Group CEO – Jean-Yves Charlier
New Group CEO – Jean-Yves Charlier © VimpelCom Ltd 2015 Strategic update planned for August 6, 2015 3
Slide 4: Strategic highlights
Strategic highlights • Successful closing of Algeria transaction • Repaid USD 3.4 billion of debt • Italian tower sale completed © VimpelCom Ltd 2015 • Concluded 3rd and final stage of refinancing in Italy • Acquired 3G license in Ukraine • 4G/LTE services launched in Georgia • On track to deliver 2
Slide 5: 1Q15 Financial highlights
1Q15 Financial highlights Service revenue Mobile customers • Organic results in line with management (USD billion) (million) expectations 3.4 218 • Marginal organic decline in service revenue: - Delayed 3G launch in Algeria - Continued market weakness in Italy © VimpelCom Ltd 2015 - 2% organic2 YoY
Slide 6: Business Unit Performance
Business Unit Performance © VimpelCom Ltd 2015 1Q15 6
Slide 7: Russia: Continued operational improvements
Russia: Continued operational improvements RUB BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Continued improvements in NPS and -0.3% YoY +1% YoY churn led to sequential YoY growth in 70.6 55.7 mobile customers 64.6 64.3 55.0 • Stable revenue market share • Mobile data
Slide 8: Italy: Continued outperformance in mobile
Italy: Continued outperformance in mobile EUR MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Mobile service revenue declined by 3% -5% YoY -3% YoY YoY - a significant trend improvement versus previous quarters 1,035 1,038 983 22.0 21.4 • Mobile data revenue increased 1
Slide 9: Algeria: Transformation to take two months
Algeria: Transformation to take 12 to 18 months DZD BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Market leader in very attractive growth -11 % YoY +6% YoY market, with a strong local partner 18.7 33.4 33.5 29.8 17.6 • Strengthening local management team • Clear leade
Slide 10: Pakistan: Operational improvements
Pakistan: Operational improvements PKR BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • 2G network modernization completed; –4 % YoY +0% YoY continued investment in mobile data 38.2 38.2 network 24.9 24.0 24.3 • Revenue pressure due to simplified VAS charging and SIM re-
Slide 11: Bangladesh: Continued double digit growth
Bangladesh: Continued double digit growth BDT BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Continued customer and revenue +10 % YoY +8% YoY market share gains 11.3 31.8 10.2 11.2 29.4 • Continued double digit revenue growth YoY despite unstable macro environment © Vi
Slide 12: Ukraine: Solid results in a challenging environment
Ukraine: Solid results in a challenging environment UAH BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • YoY customer and mobile service +5% YoY +2% YoY revenue growth, despite challenging & volatile environment 3.1 3.1 25.6 26.1 2.9 • Improvement in annualized churn of
Slide 13: Kazakhstan: Strong position in competitive market
Kazakhstan: Strong position in competitive market KZT BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers -0.5% YoY (million) • Strong position as a result of attractive 34.9 +5% YoY customer propositions, network and 30.4 30.2 distribution 9.2 9.6 • Excluding MTR reductions mobile ser
Slide 14: Eurasia: Increased competition
Eurasia1: Increased competition USD MILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers (million) • Mobile service revenue increased Reported -8% YoY Organic +3% YoY +1% YoY organically 3% YoY mainly due to solid 263 290 242 16.5 16.6 results in Uzbekistan 21 21 18 • Mobile data revenu
Slide 15: 1Q15 Income statement
1Q15 Income statement USD million 1Q15 1Q14 YoY Revenue 3,515 5,024 (30%) • Organic decline of 2% due to the delayed 3G launch in Algeria, continued market weakness in Italy, partly offset by growth in Bangladesh, Ukraine and Eurasia of which service revenue 3,358 4,810 (30%) EBITDA 1,396 2,088 (33%
Slide 16: 1Q15 Cash flow statement
1Q15 Cash flow statement USD million 1Q15 1Q14 YoY EBITDA 1,396 2,088 (33%) Changes in working capital and other (1,387) (34) n.m. • Payment of Bank of Algeria fine (USD 1.1 billion), as part of closing transaction in Algeria Net interest paid (429) (652) (34%) • Significant YoY reduction from refin
Slide 17: 1Q15 continued capital structure optimization
1Q15 continued capital structure optimization Bought back USD1.8 bln bonds using Algeria proceeds1 © VimpelCom Ltd 2015 Repaid RUB 35 bln Sale of 90% shares in Italian bonds using Algeria towers Company for EUR 693 mln proceeds Closed transaction 3rd refinancing of Italy in Algeria, USD 3.8 bln net
Slide 18: Substantially reduced the cost of debt
Substantially reduced the cost of debt Pro forma average cost of Average cost of debt 1Q14 Average cost of debt 4Q14 debt 1Q151 © VimpelCom Ltd 2015 8.3% 8.3% 6.3% 6.2% 18 1 Average cost of debt at 1Q15 is pro-forma for the outcome of the tender. Settlement of the tender and cancellation of the bond
Slide 19: Reduced net debt offset by FOREX impact on EBITDA
Reduced net debt offset by FOREX impact on EBITDA Net debt / EBITDA December 31, 2014 March 31, 2015 © VimpelCom Ltd 2015 2.5 2.4 1.2 1.2 Excluding Group Excluding Group Italy Italy 19
Slide 20: Significantly improved debt maturity schedule
Significantly improved debt maturity schedule Group debt maturity schedule (in USD billion) ■ As at December 31, 2014 ■ As at March 31, 2015 Pro Forma1 © VimpelCom Ltd 2015 5.8 6.0 6.3 5.4 3.2 2.7 2.2 2.0 1.9 1.5 1.1 2.1 2.1 1.3 1.6 1.2 1.3 1.1 2015 2016 2017 2018 2019 2020 2021 2022 >2022 20 1 Matu
Slide 21: Cash flow enhancing from financing improvements
Cash flow enhancing from financing improvements during 2014 - 1Q 2015 Targeted potential Expected A&I day Jan 2014 savings In-house finance company USD 50 million USD 20 million © VimpelCom Ltd 2015 Debt optimization USD 150 million USD 400 million Gross debt reduction USD 150 million USD 280 millio
Slide 22: Confirmed annual targets 2015
Confirmed annual targets 2015 Targets 20151 Flat to low single Service Revenue digit decline YoY Flat to minus one © VimpelCom Ltd 2015 EBITDA Margin p.p. YoY EPS2 USD 0.35 – 0.40 CAPEX / Revenue ~20% Leverage (Net Debt / EBITDA) ~3.2x Excl. Italy … ~1.7x 1 The annual targets for 2015 assume constan
Slide 23: Conclusion
Conclusion • Continued operational improvements • Strong increase in EPS • Successful closing of Algeria transaction © VimpelCom Ltd 2015 • Repaid USD 3.4 billion of debt • Completed Italian tower sale & 3rd and final stage of refinancing in Italy • On track to deliver 2015 targets 23
Slide 24: VimpelCom's 4th Analyst & Investor site visit
VimpelCom’s 4th Analyst & Investor site visit Moscow, Russia July 9, 2015 Moscow, Russia © VimpelCom Ltd 2015 Presentations by Group CFO, Head of BU Russia and local management 24
Slide 25: 2Q15 results & strategy update
2Q15 results & strategy update August 6, 2015 London © VimpelCom Ltd 2015 25
Slide 26: Q&A
© VimpelCom Ltd 2015 26 Q&A
Slide 27: Further information
Further information Investor Relations Claude Debussylaan 88 1082 MD Amsterdam The Netherlands T: +31 20 79 77 234 E: ir@vimpelcom.com © VimpelCom Ltd 2015 Visit our awards winning website Install VimpelCom’s App www.vimpelcom.com iPadApp No.1 CORPORATE WEBSITE 2014 -2015 in the Netherlands 27
Slide 28: Thank you!
© VimpelCom Ltd 2015 28 Thank you!
Slide 29: Appendix
© VimpelCom Ltd 2015 29 Appendix
Slide 30: Credit facilities: USD 3.8 billion in available headroom
Credit facilities: USD 3.8 billion in available headroom USD 0.4 bn credit facilities arranged in 1Q15: Available RCF headroom at the end 1Q15: Financing VimpelCom USD 1.8 billion WIND USD 0.4 billion RCF (EUR 0.4 billion RCF1) OJSC VimpelCom USD 0.3 billion (RUB 15 billion) WIND USD 0.4 billion (EU
Slide 31: Debt maturity profile
Debt maturity profile As at 31 March 2015, in USD billion Group debt maturity schedule by Business Units 6.3 Italy Russia 5.4 Other HQ 3.2 © VimpelCom Ltd 2015 2.1 2.1 1.6 1.2 1.3 1.1 2015 1 2016 2017 2018 2019 2020 2021 2022 >2022 Group debt maturity schedule by currency2 20151 2016 2017 2018 2019
Slide 32: Debt by entity
Debt by entity As at 31 March 2015, USD million Outstanding debt Type of debt/lender Vendor Entity Bonds Loans RCF Other Total Financing VimpelCom Holdings B.V. 3,785 - - - - 3,785 © VimpelCom Ltd 2015 VimpelCom Amsterdam B.V. - 1,000 - 736 - 1,736 OJSC VimpelCom 3,479 1,523 - 186 45 5,233 WIND Tele
Slide 33: FOREX rates used in annual targets for 2015
FOREX rates used in annual targets for 2015 Currency FX rates versus USD Algeria DZD 92.0 Armenia AMD 415.0 © VimpelCom Ltd 2015 Bangladesh BDT 79.0 Egypt EGP 7.5 Georgia GEL 1.8 Italy EUR 0.91 Kazakhstan KZT 190.0 Kyrgyzstan KGS 55.0 Pakistan PKR 105.0 Russia RUB 70.0 Ukraine UAH 25.0 33
Slide 34: Service revenue and EBITDA development in 1Q15
Service revenue and EBITDA development in 1Q15 1Q 2015 vs 1Q 2014 Service Revenue EBITDA FX and Business Units Organic Reported Organic FX and others Reported others Russia 0% (44%) (44%) (2%) (43%) (45%) © VimpelCom Ltd 2015 Italy (5%) (17%) (22%) (5%) (18%) (23%) Algeria (11%) (14%) (25%) (18%) (1
Slide 35: Reconciliation of EBITDA
Reconciliation of EBITDA USD mln 1Q15 1Q14 Unaudited EBITDA 1,396 2,088 Depreciation (584) (758) Amortization (286) (394) Impairment loss (98) - Loss on disposals of non-current assets (15) (12) © VimpelCom Ltd 2015 Gain from sale of towers in Italy 466 - EBIT 879 924 Financial Income and Expenses (
Slide 36: Reconciliation of consolidated net debt
Reconciliation of consolidated net debt Reconciliation of consolidated net debt USD mln 1Q15 4Q14 3Q14 Net debt 17,608 19,992 21,736 C ash and cash equivalents 6,499 6,342 5,852 © VimpelCom Ltd 2015 Long-term and short-term deposits 118 109 126 Gross debt 24,225 26,443 27,714 Interest accrued relate