31 slides from VEON Ltd. ORD's earnings presentation, Nov 3, 2016
Slide 1: Q3 2016 Results Presentation
Q3 2016 Results Presentation © VimpelCom Ltd 2016 Amsterdam – 3 November 2016 Jean-Yves Charlier – Chief Executive Officer Andrew Davies – Chief Financial Officer 1
Slide 2: Disclaimer
Disclaimer This presentation contains “forward-looking statements”, as the phrase is defined in Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by words such as “ma
Slide 3: Highlights
Highlights • Stable Q3 2016 results in line with expectations; operational performance particularly strong in Pakistan and Ukraine • Mobile data revenue grew 28.0% YoY in Q3 2016 • Strong operating cash flow margin of 24.5% in Q3 2016 • FY 2016 guidance confirmed, albeit at lower end of range for se
Slide 4: VimpelCom's free float nearly doubled after Telenor's share sale
VimpelCom’s free float nearly doubled after Telenor’s share sale Before Telenor equity Telenor equity offering Potential free float from offering1 (163.9 mln VimpelCom ADS2) exchangeable bonds conversion3 (base case scenario 204.1 mln ADS) 8.3% 8.3% 8.3% © VimpelCom Ltd 2016 10.8% 20.1% 31.7% 47.9%
Slide 5: Strong performance of Wind ahead of transaction closing
Strong performance of Wind ahead of transaction closing 40.8% EUR million +2% Wind historical trend1 5.0% 41.5% 0.0% 39.5% -5.0% -10.0% 37.5% • Strong recent operational performance: -15.0% 35.5% ► Mobile service revenue back to YoY growth of 2% in Q3 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q1
Slide 6: Italy JV key regulatory conditions completed
Italy JV key regulatory conditions completed All regulatory authorizations have been successfully obtained September 2016 October 2016 © VimpelCom Ltd 2016 • On 1 September 2016, the European Commission • On 24 October 2016, MISE1 approved the transaction approved the transaction and remedy packag
Slide 7: Performance Transformation accelerating and on track
Performance Transformation accelerating and on track… Agile operating model Procurement Supply chain © VimpelCom Ltd 2016 • 14%1 net reduction of headcount • Globally managed contract value • 18%1 reduction in inventory levels • 30%1 reduction of line managers doubled to 40%1 • 7%1 warehouse space r
Slide 8: Financial highlights Q3 2016
Financial highlights Q3 2016 Service revenue EBITDA margin, underlying2 (USD billion) (%) • Reported service revenue declined 3% YoY, reaching an inflection point as a result of an improving trend in FOREX 2.3 40.6 • Service revenue increased 0.6% YoY organically, with strong performance in Pakistan
Slide 9: Financial highlights Q3 2016 – YoY trends
Financial highlights Q3 2016 – YoY trends Total revenue and service revenue YoY organic1 development Underlying EBITDA2 margin development -1.1 p.p. YoY 0.0 p.p. organic YoY Total revenue Service revenue 41.7% 40.6% 0.9% 0.7% 0.8% 0.6% LTM of 40.5% LTM of 40.3% © VimpelCom Ltd 2016 3Q 15/14 3Q 16/15
Slide 10: FOREX movements in VimpelCom's footprint: improving trend
FOREX movements in VimpelCom’s footprint: improving trend VIP coin1 vs USD 100 98 © VimpelCom Ltd 2016 94 82 76 73 +5% vs low 70 66 67 66 64 -4% YoY 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 10 1 VimpelCom currency weightings calculated from the sum of the individual countries’ relative
Slide 11: Q3 2016 service revenue evolution – organically stable
Q3 2016 service revenue evolution – organically stable USD million -3.3% (1) 12 (93) 95 (167) 2,377 77 2,364 Reported service revenue declining … 2,287 © VimpelCom Ltd 2016 Service revenue Voice Data and MFS Interconnect Other Organic service FOREX Warid Service revenue 3Q15 and roaming revenue 3Q16
Slide 12: Q3 2016 EBITDA evolution – organically stable
Q3 2016 EBITDA evolution – organically stable USD million -7.4% 11 118 (122) (82) (66) 20 959 1,017 942 896 Underlying EBITDA declining... 58 © VimpelCom Ltd 2016 1 EBITDA Exceptional Underlying Service revenue Performance Re-investment in Forex Underlying Exceptional Warid EBITDA 3Q15 items EBITDA
Slide 13: Q3 2016 Income statement
Q3 2016 Income statement Note: Q3 2016 numbers include Warid financials USD million Q3 2016 Q3 2015 YoY Revenue 2,372 2,442 (3%) EBITDA reported 896 58 n.m. Q3 2015 EBITDA mainly impacted by USD 916 million charges for investigations (USD 900 million) and other legal costs (USD 16 million) D&A and o
Slide 14: Q3 2016 net income from continued operations
Q3 2016 net income from continued operations USD million +52 41 (18) 9 8 (97) 109 (90) (0) 110 162 72 © VimpelCom Ltd 2016 957 (847) Net Income from Impairment & Net EBITDA 2 Depreciation and 2 Net income Income Impairments & 3 1 NetIncome Income Net financial Tax Net FOREX JV, associates Net underl
Slide 15: Q3 2016 net debt evolution
Q3 2016 net debt evolution USD million 363 185 66 (962) 387 © VimpelCom Ltd 2016 88 6,938 195 6,804 6,575 (94) 6,553 Net debt Warid Net debt EBITDA Change in Net interest Taxes Capex Net debt Exceptionals FOREX and Net debt 30 June 2016 net debt 30 June underlying working before in 3Q16 other 30 201
Slide 16: Strong improvement in cash flow
Strong improvement in cash flow Net cash flow from continued operations before financing activities 9M 2015 9M 2016 Net cash flow from operating 619 Net cash from operating activities 808 activities © VimpelCom Ltd 2016 Exceptional payments, mainly related Exceptional payments, mainly to SEC/DOJ/OM
Slide 17: Russia: challenging environment, increasing competition
Russia: challenging environment, increasing competition LCCY BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Senior international management team with (million) experienced CEO and CFO in place -1.1 % YoY -1.5% YoY • Total service revenue decreased due to 11.3 10.1 11.0 challengi
Slide 18: Pakistan: continued double digit growth, integration on track
Pakistan: continued double digit growth, integration on track PKR BILLION, UNLESS STATED OTHERWISE Mobile service revenue Mobile customers • Mobilink and Warid integration is well on track: (million) +47.5% YoY +45.1% YoY ► Merger petition filed with Islamabad High Court early +16.2% YoY organic +15
Slide 19: Algeria: continued pressure on results
Algeria: continued pressure on results DZD BILLION, UNLESS STATED OTHERWISE Mobile service revenue Mobile customers • Regulatory environment continuous to improve: (million) Djezzy’s Significant Market Player status lifted -12.7% YoY -5.8% YoY • Commercial overhaul, actions taken: ► 4G/LTE launch wi
Slide 20: Bangladesh: continued strong EBITDA margin
Bangladesh: continued strong EBITDA margin BDT BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Service revenue increased 2% YoY notwithstanding: (million) +2.0% YoY -10.4% YoY ► Aggressive price competition ► Additional supplementary duties introduced in H1 2016 ► Customers disco
Slide 21: Ukraine: strong results
Ukraine: strong results UAH BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Clear market leader with > 45% market share (million) +9.1% YoY +2.0% YoY • Customer base growing YoY, for the first time 0.3 since Q2 2015 0.2 0.3 • Service revenue increased 9% YoY, driven by 3.3 3.4 3.
Slide 22: Uzbekistan: solid growth in service revenue
Uzbekistan: solid growth in service revenue UZS BILLION, UNLESS STATED OTHERWISE Service revenue Mobile customers • Mobile service revenue grew 5% YoY, despite +5.1% YoY (million) decrease in customer base due to increased -6.3% YoY competition 478.0 478.5 502.1 • Mobile data revenue grew 7% YoY 474
Slide 23: Italy: mobile service revenue back to growth
Italy: mobile service revenue back to growth EUR MILLION, UNLESS STATED OTHERWISE • Mobile service revenue back to YoY growth of 1.8% Service revenue Mobile customers after 20 quarters of decline, supported by market (million) +0.9% YoY -3.1% YoY improvement 272 269 ► Strong double digit growth in m
Slide 24: FY 2016 guidance confirmed - at lower end of range
FY 2016 guidance confirmed - at lower end of range for service revenue, underlying EBITDA margin and capex/revenue Targets FY 2016 9M 2016 Flat to low single digit Service Revenue1 growth YoY +0.8% YoY © VimpelCom Ltd 2016 EBITDA underlying margin1 Flat to +1 p.p. YoY Organic +0.1 pp YoY (41.0%) Cap
Slide 25: Paving the way to a meaningful dividend policy
Paving the way to a meaningful dividend policy Conditions to introduce new dividend policy 1 Completion of Italy transaction in Q4 2016 Allowing the © VimpelCom Ltd 2016 VimpelCom Board to consider 2 adoption of a meaningful Group cash flow improvements dividend policy for its shareholders no later
Slide 26: Appendix
© VimpelCom Ltd 2016 26 Appendix
Slide 27: Group debt maturity schedule
Group debt maturity schedule As at 30 September 2016, in USD billion Group debt maturity schedule Russia GTH HQ 2.8 1.7 1.8 © VimpelCom Ltd 2016 1.3 1.3 0.8 0.7 0.4 2016 2017 2018 2019 2020 2021 2022 >2022 Group debt maturity schedule by currency1 2016 2017 2018 2019 2020 2021 2022 >2022 USD 0.1 1.5
Slide 28: Debt by entity
Debt by entity As at 30 September 2016, USD million Outstanding debt Type of debt/lender Entity Bonds Loans Vendor Financing Other Total VimpelCom Holdings B.V. 3,373 3,373 VimpelCom Amsterdam B.V. 1,000 648 1,648 © VimpelCom Ltd 2016 PJSC VimpelCom 1,784 1,163 82 53 3,082 GTH Finance B.V. 1,200 1,2
Slide 29: Liquidity analysis
Liquidity analysis As at 30 September 2016 Group Cash breakdown by currency (USD 4.0bn) Unused RCF headroom: VimpelCom - syndicate USD 1.8 billion PJSC VimpelCom - Sberbank RUB 15 billion (USD 0.2 billion) © VimpelCom Ltd 2016 49% Unused VF/CF headroom: 51% VimpelCom - CDB RMB 0.7 billion (USD 0.1 b
Slide 30: Rates of functional currencies to USD
Rates of functional currencies to USD Average rates Average rates Closing rates FY16 3Q16 3Q15 YoY 9M16 9M15 YoY 3Q16 2Q16 QoQ Targets Russian Ruble 64.62 62.98 2.6% 70.00 68.37 59.28 15.3% 63.16 64.26 -1.7% Euro 0.90 0.90 -0.4% 0.88 0.90 0.90 -0.2% 0.89 0.90 -1.1% Algerian Dinar 109.77 102.93 6.6%
Slide 31: Further information
Further information Investor Relations Claude Debussylaan 88 1082 MD Amsterdam The Netherlands T: +31 20 79 77 234 © VimpelCom Ltd 2016 E: ir@vimpelcom.com Visit our website www.vimpelcom.com 31