VEON Ltd. · NASDAQ:VEON
VEON — VimpelCom — Q3 2016 Earnings Presentation
31 slides from VEON's earnings presentation, Nov 3, 2016
Slide 1: Q3 2016 Results Presentation
Q3 2016 Results Presentation Amsterdam – 3 November 2016 Jean-Yves Charlier – Chief Executive Officer Andrew Davies – Chief Financial Officer
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 1 EC: European Commission; MISE: Italian Ministry of Economic Development 2 Year-on-year growth, including Warid consolidation from Q3 2016 3 The record date for the Company’s shareholders entitled to receive the dividends has been set for 18 November 2016 Stable Q3 2016 results in line w
Slide 4: VimpelCom's free float nearly doubled after Telenor's share sale
Potential free float from exchangeable bonds conversion3 (base case scenario 204.1 mln ADS) Telenor equity offering (163.9 mln VimpelCom ADS2) Before Telenor equity offering1 VimpelCom’s free float nearly doubled after Telenor’s share sale 1 21 September 2016 2 Including green shoe of 21.4 million V
Slide 5: Strong performance of Wind ahead of transaction closing
EUR million Wind net leverage evolution2 Net debt – Net debt/EBITDA Wind historical trend1 +2% 40.8% EUR billion 1 Q3 2014 and Q4 2014 EBITDA margin normalized for the impact of approximately EUR 50 million related to settlements accounted in Q3 2014 but commercially related to Q4 2014 2 Q3 2015 LTM
Slide 6: Italy JV key regulatory conditions completed
Italy JV key regulatory conditions completed September 2016 October 2016 On 24 October 2016, MISE1 approved the transaction This approval was: needed to combine the spectrum assets of the two entities required to transfer the spectrum to Iliad (one of the key remedies) the final regulatory authoriza
Slide 7: Performance Transformation accelerating and on track
14%1 net reduction of headcount 30%1 reduction of line managers 8%1 of office space eliminated Global Shared Services up and running: Yaroslavl (covering Russia) Lviv (covering 7 Eurasia countries) Islamabad (covering Pakistan, Bangladesh and HQ) Globally managed contract value doubled to 40%1 Fixed
Slide 8: Financial highlights Q3 2016
Financial highlights Q3 2016 1 Revenue and EBITDA organic growth are non-GAAP financial measures that exclude the effect of foreign currency translation and certain items such as acquisitions (Warid), liquidations, and disposals 2 Underlying EBITDA excludes: in Q3 2016 USD 66 million as a net effect
Slide 9: Financial highlights Q3 2016 – YoY trends
Financial highlights Q3 2016 – YoY trends 1 Organic revenue change is a non-GAAP financial measure that excludes the effect of foreign currency translation and certain items such as liquidations and disposals 2 Underlying EBITDA excludes: in Q3 2016 USD 66 million as a net effect resulting from tran
Slide 10: FOREX movements in VimpelCom's footprint: improving trend
FOREX movements in VimpelCom’s footprint: improving trend 1 VimpelCom currency weightings calculated from the sum of the individual countries’ relative contribution to total countries revenue (= total Group revenue - eliminations - HQ)
Slide 11: Q3 2016 service revenue evolution – organically stable
Q3 2016 service revenue evolution – organically stable -3.3% +0.6 % USD million Reported service revenue declining … … yet organically stable 1 Other consists of operations in Kazakhstan, Kyrgyzstan, Georgia, Armenia, Tajikistan and intercompany eliminations PAK 36 USD mln BAN 3 USD mln ALG (41) USD
Slide 12: Q3 2016 EBITDA evolution – organically stable
Q3 2016 EBITDA evolution – organically stable +0.6% USD million 2 1 Exceptional items in Q3 2015 consist of provisions for investigations (related to SEC/DOJ/OM) and other legal costs of USD 916 million, as well as transformation costs of USD 44 million 2 Exceptional items in Q3 2016 consists of USD
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. D&A and other (490) (538) (9%) EBIT 406 (480) n.m. Net financial expenses (210) (188) 12% FOREX and Other (10) (166) (94%) Profit before tax 18
Slide 14: Q3 2016 net income from continued operations
Q3 2016 net income from continued operations USD million +52 1 In 3Q 2015, exceptional items include USD 959 million above EBITDA and USD (3) million in impairment 2 On an organic basis 3 In 3Q 2016, exceptional items include USD 66 million above EBITDA, USD 3 million in impairments and USD 21 milli
Slide 15: Q3 2016 net debt evolution
Q3 2016 net debt evolution 1 Underlying LTM EBITDA, which excludes USD 310 million related to performance transformations costs and other 2 In Q3 2016, Performance Transformation costs of USD 66 million Net debt/ LTM EBITDA1 1.9x 1.8x 2 1.8x USD million
Slide 16: Strong improvement in cash flow
Strong improvement in cash flow 9M 2016 9M 2015 Net cash flow from operating activities Exceptional payments, mainly related to the Algeria closing Underlying net cash flow from operating activities, adjusted for exceptionals Net cash used in investing activities, excl. inflow/(outflow) from deposit
Slide 17: Russia: challenging environment, increasing competition
Mobile customers (million) Russia: challenging environment, increasing competition LCCY BILLION, UNLESS STATED OTHERWISE Mobile Fixed-line -1.1 % YoY -1.5% YoY -6.2% YoY -4.8% YoY (underlying)1 -23.6% YoY 1 Q3 2016 EBITDA negatively impacted by one-offs of transformation costs of RUB 379 million EBI
Slide 18: Pakistan: continued double digit growth, integration on track
PKR BILLION, UNLESS STATED OTHERWISE +47.5% YoY +16.2% YoY organic +45.1% YoY +15.5% YoY organic +44.8% YoY +24.5% YoY organic +13.9% YoY +7.1% YoY organic EBITDA and EBITDA margin Capex excl. licenses and LTM capex/revenue Mobile service revenue Mobile customers (million) Warid contribution, pro-fo
Slide 19: Algeria: continued pressure on results
DZD BILLION, UNLESS STATED OTHERWISE -12.7% YoY -5.8% YoY -18.9% YoY -11.1% YoY (Underlying)1 +28.3% YoY EBITDA and EBITDA margin Capex excl. licenses and LTM capex/revenue Mobile customers (million) Mobile service revenue 1 Q3 2016 EBITDA negatively impacted by one-offs of transformation costs of D
Slide 20: Bangladesh: continued strong EBITDA margin
Bangladesh: continued strong EBITDA margin BDT BILLION, UNLESS STATED OTHERWISE +2.0% YoY -10.4% YoY +7.1% YoY -54.4% EBITDA and EBITDA margin Capex excl. licenses and LTM capex/revenue Mobile customers (million) Service revenue Service revenue increased 2% YoY notwithstanding: Aggressive price comp
Slide 21: Ukraine: strong results
Ukraine: strong results UAH BILLION, UNLESS STATED OTHERWISE Mobile Fixed-line +9.1% YoY +2.0% YoY +18.3% YoY +10.6% YoY EBITDA and EBITDA margin Capex excl. licenses and LTM capex/revenue Mobile customers (million) Service revenue Clear market leader with > 45% market share Customer base growing Yo
Slide 22: Uzbekistan: solid growth in service revenue
Uzbekistan: solid growth in service revenue UZS BILLION, UNLESS STATED OTHERWISE Mobile Fixed-line +5.1% YoY -6.3% YoY +12.5% YoY -3.8% YoY (underlying)1 EBITDA and EBITDA margin Capex excl. licenses and LTM capex/revenue Mobile customers (million) Service revenue +28.8% YoY 1 Q3 2015 EBITDA negativ
Slide 23: Italy: mobile service revenue back to growth
Italy: mobile service revenue back to growth EUR MILLION, UNLESS STATED OTHERWISE Mobile Fixed-line +0.9% YoY -3.1% YoY +10.9 % YoY -11.4% YoY EBITDA and EBITDA margin Capex excl. licenses and LTM capex/revenue Mobile customers (million) Service revenue Mobile service revenue back to YoY growth of 1
Slide 24: FY 2016 guidance confirmed
FY 2016 guidance confirmed - at lower end of range for service revenue, underlying EBITDA margin and capex/revenue Service Revenue1 EBITDA underlying margin1 Capex / revenue1 Leverage2 1 All targets, except leverage are calculated at constant currency. Targets for 2016 assume no major regulatory cha
Slide 25: Paving the way to a meaningful dividend policy
1 VimpelCom currency weightings calculated from the sum of the individual countries’ relative contribution to total countries revenue (= total Group revenue - eliminations - HQ) Allowing the VimpelCom Board to consider adoption of a meaningful dividend policy for its shareholders no later than early
Slide 26: Appendix
Appendix
Slide 27: Group debt maturity schedule
Group debt maturity schedule As at 30 September 2016, in USD billion Group debt maturity schedule 1 After effect of cross currency swaps Group debt maturity schedule by currency1 2016 2017 2018 2019 2020 2021 2022 >2022 USD RUB Other 0.1 0.2 0.2 1.5 1.0 0.2 0.7 0.8 0.2 1.1 0.0 0.2 0.8 0.0 0.0 0.7 0.
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 PJSC VimpelCom 1,784 1,163 82 53 3,082 GTH Finance B.V. 1,200 1,200 Pakistan Mobile Co
Slide 29: Liquidity analysis
Liquidity analysis 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) Unused VF/CF headroom: VimpelCom - CDB RMB 0.7 billion (USD 0.1 billion) Algeria - syndicate DZD 32 billion (USD 0.3 b
Slide 30: Rates of functional currencies to USD
Rates of functional currencies to USD Note: functional currency in Tajikistan is USD Average rates Average rates Closing rates 3Q16 3Q15 YoY FY16 Targets 9M16 9M15 YoY 3Q16 2Q16 QoQ Russian Ruble 64.624499999999998 62.978400000000001 2.6% 70 68.366699999999994 59.277700000000003 0.15332916088174797
Slide 31: Further information
Further information Investor Relations Claude Debussylaan 88 1082 MD Amsterdam The Netherlands T: +31 20 79 77 234 E: ir@vimpelcom.com Visit our website www.vimpelcom.com Q3 2016 FACT BOOK VimpelCom Ltd. Index sheet Consolidated VIP Ltd. Consolidated Customers EBITDA reconciliation Russia Algeria Pa