Freenet Ag · XETR:FNTN
Freenet — FY2019 Earnings Presentation
33 slides from Freenet's earnings presentation, Feb 28, 2020
Slide 1: Management Presentation: Preliminary Results for 2019
MANAGEMENT PRESENTATION Preliminary Results for 2019 CHRISTOPH VILANEK, CEO INGO ARNOLD, CFO 28.02.2020 Analyst and Investor Conference Call
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT This presentation contains forward-looking statements which involve risks and uncertainties. The actual performance, results and timing of the business of freenet AG could differ materially from the expectations regarding performance, results and timing expressed in this present
Slide 3: Agenda
AGENDA 1 ACHI E V EMENTS 2 0 1 9 C. V I L A NEK , CEO 2 F I N ANCI ALS 2 0 1 9 I . AR N OLD, CFO 3 OU T LOOK 2 0 2 0 C. V I L A NEK / I . A R N OL D 4 Q& A
Slide 4: Major KPIs met per year-end 2019
MAJOR KPIS MET PER YEAR-END 2019 2,933 4,238 mEUR REVENUES EMPLOYEES 426.8 8,367,000 mEUR EBITDA SUBSCRIBER BASE 249.0 mEUR FREE CASH FLOW 28.02.2020 4
Slide 5: Operational execution to meet goals set for 2019
OPERATIONAL EXECUTION TO MEET GOALS SET FOR 2019 ▪ Successful lobbying to re-include service provider privileges, technical generation agnostic into auction rules ▪ Almost 100% of postpaid base migrated into LTE MOBILE ▪ New sustainable agreement with Telefónica Deutschland delivering very competiti
Slide 6: Operational achievements translate into delivery on promise
OPERATIONAL ACHIEVEMENTS TRANSLATE INTO DELIVERY ON PROMISE EBITDA SCENARIO Higher impact Lower impact from regulatory effects from regulatory effects GUIDANCE 420.0 mEUR 440.0 mEUR ACTUAL 426.8 mEUR FCF SCENARIO Higher impact Lower impact from regulatory effects From regulatory effects GUIDANCE 240
Slide 7: Group subscriber base growing by 204,800 year on year
GROUP SUBSCRIBER BASE GROWING BY 204,800 YEAR ON YEAR SUBSCRIBER BASE in ´000s +156.5 6,903,000 8,367 P O S T PA I D C U S T O M E R S 34,000 +6.9 +34.3 +7.2 F R E E N E T F U N K (active, not pausing) 8,162 1,021,000 FREENET FUNK1 FREENET TV F R E E N E T T V C U S T O M E R S (revenue generating)
Slide 8: Postpaid customers growing moderately in 2019
POSTPAID CUSTOMERS GROWING MODERATELY IN 2019 (4Q19 +36,700) SUCCESSFUL REPOSITIONING OF MOBILCOM-DEBITEL POSTPAID CUSTOMERS DURING 2019 in ´000s ▪ New marketing campaign with focus on customer experience and the multi channel 6,862 6,866 6,903 delivery of services replacing very promotional 6,834 a
Slide 9: FUNK – a real innovation
FUNK – A REAL INNOVATION FIRST ‘APP ONLY’ TARIFF WORLDWIDE ▪ Real unlimited tariff released on 1 May 2019 ▪ First ‘app only’ tariff – available and operated fully digital ▪ Innovation not copied by others in the German market so far ▪ Successful mainly with digital natives and young data hungry gene
Slide 10: More than 1 million customers
MORE THAN 1 MILLION CUSTOMERS FREENET TV SUBSCRIBERS (RGU) in ´000s Stability maintained ▪ Target of more than 1.0 million RGUs at the end of 2019 achieved 1,001 1,014 1,020 1,037 1,037 1,021 ▪ Termination of freenet TV via satellite due to limited 945 901 interest and with no meaningful impact on c
Slide 11: waipu.tv remains leader for aggregation of linear entertainment
WAIPU.TV REMAINS LEADER FOR THE AGGREGATION OF LINEAR ENTERTAINMENT NEW FEATURES LAUNCHED IN 4Q19 MILESTONES IN 2019 ▪ Signed distribution of 14 regional public channels on a ▪ Sales cooperation with Telefónica Deutschland from May transmission fee basis ▪ Launch of Germany’s largest Turkish languag
Slide 12: Continued solid growth in waipu.tv subscribers throughout 2019
CONTINUED SOLID GROWTH IN WAIPU.TV SUBSCRIBERS THROUGHOUT 2019 REGISTERED CUSTOMERS WAIPU.TV SUBSCRIBERS in ‘000s in ‘000s 2019 +156,500 2,281 408 1,994 366 2018 332 1,748 1,515 +149,500 286 252 1,264 202 1,007 174 824 133 609 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 18 Q2 18 Q3 18 Q4 18 Q
Slide 13: Group performance totally in line with expectations
GROUP PERFORMANCE TOTALLY IN LINE WITH EXPECTATIONS REVENUE FY19 VS. FY18 in mEUR 794.2 741.0 802.5 689.6 696.6 717.0 689.9 699.1 ▪ Revenue up 35.1 mEUR to 2,932.5 mEUR vs 2,897.5 mEUR in 2018 driven by Mobile segment ▪ Gross profit and EBITDA impacted by effects from inevitable regulatory changes:
Slide 14: Regulatory effects impacted 2019
REGULATORY EFFECTS IMPACTED 2019 ▪ Missing operational results and follow-up costs from divestment ▪ However, H2 19 was not impacted anymore ANALOGUE RADIO ▪ EBITDA effects (yoy) in 2019 w/o gains on disposal (mEUR): (TV AND MEDIA) Q1 19 Q2 19 Q3 19 Q4 19 FY 19 -3 -2 +/-0 +/-0 -5 ▪ EU international
Slide 15: Mobile segment performed stable
MOBILE SEGMENT PERFORMED STABLE REVENUE FY19 VS. FY18 in mEUR 654.2 714.3 672.7 730.2 ▪ Revenue up by 52.3 mEUR to 2,658.9 mEUR vs. 2,606.7 mEUR in 2018; mainly due 621.0 617.2 624.7 631.3 to low-margin hardware revenue ▪ Gross profit impacted by regulatory effects from international calls. Without
Slide 16: Digital lifestyle as growth driver, all else as expected
DIGITAL LIFESTYLE AS GROWTH DRIVER ALL ELSE AS EXPECTED POSTPAID CUSTOMERS FY19 VS. FY18 in ‘000s: 6,770 6,828 6,869 6,896 6,862 6,834 6,866 6,903 ▪ Decline of postpaid customers in 1H19 overcompensated in 2H19, bringing postpaid customers back to guided moderate growth ▪ ARPUs, likewise, impacted f
Slide 17: TV & Media stabilised further in 2019
TV & MEDIA STABILISED FURTHER IN 2019 REVENUE FY19 VS. FY18 in mEUR 77.3 ▪ Revenue declined after divestment of analogue radio to 253.9 mEUR, compared to 71.5 71.3 282.6 mEUR last year; effect now completely processed. 62.5 62.9 63.8 66.1 61.0 ▪ Gross profit increased to 166.2 mEUR after 147.4 mEUR
Slide 18: TV & Media – MB stable while EXARING on customer growth path
TV & MEDIA – MB STABLE WHILE EXARING ON ITS CUSTOMER GROWTH PATH GROSS PROFIT FY18 VS. FY19 in mEUR S -13.2 mEUR ▪ Gross profit without IFRS 16 and inter-segment 17.0 14.7 allocation decreased slightly by 7.5 mEUR to 5.8 -2.3 157.0 mEUR mainly induced by: -10.9 -5.6 164.5 157.0 166.2 − MB B2C: reduc
Slide 19: Free cash flow fully in guided range
FREE CASH FLOW FULLY IN GUIDED RANGE FREE CASH FLOW (FCF) EXPECTED VS ACTUAL QUARTERLY BREAKDOWN in mEUR in mEUR 426.8 -42.4 41.5 -30.6 -40.6 -59.7 -45.6 -0.4 249.0 81.5 72.4 75-85 70-80 45.3 49.8 35-45 50-60 Q1 19 Q2 19 Q3 19 Q4 19 28.02.2020 19
Slide 20: Other main financial KPIs: equity ratio, net debt & leverage
OTHER MAIN FINANCIAL KPIS: EQUITY RATIO, NET DEBT & LEVERAGE TOTAL ASSETS & NET DEBT & ADJ. NET DEBT & EQUITY RATIO LEVERAGE* LEVERAGE* in mEUR/ as indicated in mEUR/ as indicated in mEUR/ as indicated 27.3% 4.8x 27.6% 4.2x 2.5x 4,839.6 2.0x 4,634.7 2,031.1 1,856.8 1,078.0 904.3 31.12.18 31.12.19 31
Slide 21: Divestment from low-margin hardware business without strategical value
DIVESTMENT FROM LOW-MARGIN HARDWARE BUSINESS WITHOUT STRATEGICAL VALUE DIVESTMENT FROM MOTION TM REDUCES Motion TM BUSINESS RISKS AND IMPROVES EBITDA MARGIN in mEUR 2017 2018 2019 Revenue 247.8 314.5 323.5 ▪ In December 2019, freenet agreed with the co-owners of Motion TM to return EBITDA 1.7 1.8 2.
Slide 22: Operational goals for 2020
OPERATIONAL GOALS FOR 2020 ▪ Finalization of transfer to LTE in all three networks ▪ Launch of new pure app-based tariff plans including improved customer journey and better economics MOBILE ▪ First 5G plans not before Q4 ▪ Nationwide implementation of Local Hero shop concept, taking advantage from
Slide 23: Stable business outlook in all customer segments
STABLE BUSINESS OUTLOOK IN ALL CUSTOMER SEGMENTS MARKET OUTLOOK (w/o freenet FUNK) SUBSCRIBER GUIDANCE FY 2020 ▪ Despite various factors, a slight economical growth expected in Germany based on a steady domestic demand. ▪ Within the mobile communications market a moderate growth is forecasted. solid
Slide 24: Group guidance based on stable operational expectations
GROUP GUIDANCE BASED ON STABLE OPERATIONAL EXPECTATIONS STABLE BUSINESS OUTLOOK in mEUR REVENUES FREE CASH FLOW EBITDA GUIDANCE FY 2020 GUIDANCE FY 2020 GUIDANCE FY 2020 stable 415 - 435 235 - 255 PRELIMINARY RESULT 2019 PRELIMINARY RESULT 2019 PRELIMINARY RESULT 2019 2,609.1* (reported: 2,932.5) 42
Slide 25: Free cash flow bridge and quarterly breakdown in FY 2020
FREE CASH FLOW BRIDGE AND QUARTERLY BREAKDOWN IN FY 2020 FREE CASH FLOW (FCF) FY 2020 QUARTERLY BREAKDOWN in mEUR in mEUR -25 + 40 -50 -40 -60 415-435 75-85 70-80 -45 235-255 40-50 40-50 Q1 20 Q2 20 Q3 20 Q4 20 28.02.2020 25
Slide 26: Financial policy guarantees stability
FINANCIAL POLICY GUARANTEES STABILITY ADJ. LEVERAGE ALREADY BELOW REDUCED TARGET INSURES ATTRACTIVE DIVIDEND POLICY PROPOSED DIVIDEND LEVERAGE EQUITY RATIO MEDIUM-TERM TARGET LOWER LIMIT DIVIDEND PROMISE at least 80% of FCF ≤ 3.0x > 25.0% PRELIMINARY RESULT 2019 PRELIMINARY RESULT 2019 DIVIDEND PAID
Slide 27: High cash flow generation leads to stable and reliable dividend payout
HIGH CASH FLOW GENERATION LEADS TO A STABLE AND RELIABLE DIVIDEND PAYOUT YEARLY OPTION TO PAY AN ADDITIONAL DIVIDEND IMPLIES STABLE FUTURE DPS Financial year 2019 in mEUR 2018 in mEUR Free Cash Flow (FCF) 249.0 263.8 80% 80% 80% Minimum dividend (guaranteed) 199.2 211.0 Remaining 20% FCF Net debt re
Slide 28: Open for your questions
OPEN FOR YOUR QUESTIONS. Untertitel (optional) FOR FOLLOW-UP QUESTIONS REACH OUT TO: freenet AG Investor Relations [email protected] www.freenet-group.de Tel.: +49 (0) 40 513 06 778
Slide 29: Mobile – detailed revenue split
MOBILE – DETAILED REVENUE SPLIT REVENUES 2,606.7 2,658.9 in mEUR 115 120 730.2 323 714.3 315 672.7 654.2 22 624.7 631.3 28 621.0 617.2 31 108 479 37 97 539 32 30 26 30 85 76 68 75 67 65 142 134 116 159 129 192 104 100 110 108 35 35 37 36 33 34 35 32 383 388 396 389 1,555 387 385 387 381 1,541 Q1 18
Slide 30: Overview of key financials
OVERVIEW OF KEY FINANCIALS In mEUR/ as indicated 2019 2018 Operations Revenues 2,932.5 2,897.5 Gross profit 896.2 903.7 EBITDA 426.8 441.2 EBIT 270.0 312.0 EBT 238.1 234.0 Consolidated profit 184.7 212.2 EPS in EUR1 1.49 1.74 DPS in EUR1 1.652 1.65 Balance Sheet Total equity and liabilities 4,839.6
Slide 31: Segment changes evaporate at adjusted level, underlying stable
SEGMENT CHANGES EVAPORATE AT ADJUSTED LEVEL, UNDERLYING STABLE AS OF DEC. in mEUR MOBILE TV & MEDIA OTHER/ HOLDING GROUP EBITDA 441.2 426.8 (reported) 366.0 367.3 86.3 73.5 2018 2019 2018 2019 2018 2019 -11.1 -14.0 2018 2019 IFRS16 23.5 17.7 2.0 43.3 Analogue radio divestment 36.6 -7.3 36.6 -7.3 Int
Slide 32: Overview of cash flow statement (shortened)
OVERVIEW OF CASH FLOW STATEMENT (SHORTENED) In mEUR/ as indicated 2019 2018 Finances and investments Cash flows from operating activities 364.2 328.9 Cash flows from investing activities -38.8 -333.1 thereof net capex 40.6 43.3 Cash flows from financing activities -318.0 -192.3 Net change in cash fu
Slide 33: Financing and maturity structure end of December 2019
FINANCING AND MATURITY STRUCTURE END OF DECEMBER 2019 2018 2019 Maturity mEUR % Maturity mEUR % 2019 15.0 1 2020 258.5 15 2020 274.5 16 2021 428.0 25 2021 428.0 25 2022 163.5 10 2022 163.5 10 2023 210.0 12 2023 780.0 45 2024 582.0 34 beyond 59.0 3 beyond 47.0 3 Total 1,720.0 100 Total 1,689.0 100 No