PLT VII Finance S Q2 2021 Resu - Represented by: Nikita Sergienko, CEO Bitė Gro Arūnas Dūda, CFO Bitė Grou - The International Stock ...
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PLT VII Finance S Q2 2021 Resu Represented by: Nikita Sergienko, CEO Bitė Gro Arūnas Dūda, CFO Bitė Grou Strictly private and confidential
Disclaimer This presentation (the “Presentation”) is made available by PLT VII Finance S.a r.l. (“Bite”, and together regarding the Group's financial position, business strategy, plans a with each of its subsidiaries, the “Group”). operations (including development plans and objectives relating to t forward-looking statements. By their nature, such forward-looking st Certain of the financial data included in this Presentation consists of “non-IFRS measures”. These non- risks, uncertainties and other important factors that could cause IFRS measures include, among others, “pro forma revenue”, “EBITDA”, “Adjusted EBITDA”, “Adjusted achievements of the Group to be materially different from the re EBITDA Margin”, “Adjusted EBITAaL”, “Pro Forma Adjusted EBITDA”, “Pro Forma Adjusted EBITDA expressed or implied by such forward-looking statements. Such forw Margin”, “Last Two Quarters Adjusted EBITDA”, “Last Two Quarters Annualized Adjusted EBITDA”, “Last numerous assumptions regarding the Group's present and fu Two Quarters Pro Forma Adjusted EBITDA”, “Last Two Quarters Annualized Pro Forma Adjusted environment in which the Group will operate in the future. Th EBITDA”, “capital expenditures”, “adjusted capital expenditures”, “pro forma adjusted capital applicable only at the date of this Presentation. Each of the Group expenditures”, “last two quarters annualized pro forma capital expenditures”, “last two quarters pro forma respective agents, employees and advisers, expressly disclaim an adjusted cash conversion” and “cash conversion”. The assumptions underlying this adjustment are based any of the forward-looking statements contained herein. You are urg on the Group's current estimates and involve risks, uncertainties and other factors that may cause the in evaluating the forward-looking statements included in this Pres actual results or performance to be materially different from the anticipated future results or performance opinions (including statements, projections, forecasts or other forw expressed or implied by such adjustments. Such non-IFRS financial measures, as defined by the Group, this Presentation represent the assumptions, views or opinions of th may not be comparable to similarly-titled measures as presented by other companies and should not be are subject to change without notice. considered in isolation, nor should they be considered as an alternative to the historical financial results or other indicators of the performance based on IFRS. In addition, certain financial information for the Certain forward-looking statements contained in the Presentation quarter ended June 30 2021, and certain non-financial operating data included in this Presentation, has operate. All information not separately sourced is derived from the in been extracted from the Group's management accounts and is unaudited. The Group's computations and data relating to the past performance contained herein is not an ind the use of such data may not be comparable to the computation and use of similarly titled data reported The information in this Presentation is not intended to predict actual by other companies. with respect thereto. This Presentation is not directed to, or intende person or entity that is a citizen or resident or is located in any loca This Presentation includes “forward-looking statements.” These statements contain the words “anticipate,” where such distribution, publication, availability or use would be cont “believe,” “intend,” “estimate,” “expect” and words of a similar meaning. All statements other than the a jurisdiction, or which would require any registration or licensing wit statements of historical facts included in this Presentation, including, but without limitation to, those 2
Key Highlights Comments Servic Bitė Group • Service revenues increased by 20% YoY to €98.3m in Q2’21, primarily reflecting the solid performance of Mobile business, Media recovery to the pre-pandemic level and the 8 acquisition of Dautcom and Mezon in Fixed Broadband and PayTV segment 1 • The adjusted EBITDA increased by 24% YoY to €42.8m, largely driven by a combination of a 1 strong top-line performance in Mobile, Media recovery and the acquisitions • Operating Cash Flow increased by 29% YoY 5 • The total number of RGUs increased by 16% YoY, reaching 2.9m at the end of Q2’21 Q2 Mobile • The Mobile business grew mainly due to organic base growth, as well as upsell activities including price revisions and the introduction of new fees Opera Fixed Broadband and PayTV Cash F • We have added 141k PayTV and Fixed Broadband RGUs YoY (on proforma for Dautcom and Mezon basis) as a result of the continuous success of our OTT platform Media • In Q2’21, the Media business recovered compared to the same quarter last year, as 26 advertising sales have largely regained pre-Covid-19 levels in the Baltic region Q2 2 (1) Operating cash flow defined as Adjusted EBITDA minus Adjusted Capex Events Occurred after 5 Key Highlights Trading Update the Reporting Date
Mobile Segment Comments Lithuania 1,734 1 • Mobile RGUs increased by 19k YoY in Q2’21, as a decline in Prepaid RGUs of 32k was fully offset by a growth in the Postpaid RGUs of +30k (mostly B2B) and Data only +21k base 1,151 1 • The ARPU increased in Lithuania, both YoY and QoQ, mostly due to the recovery in roaming and interconnect revenue and price revision at the 583 end of Q1’21 Latvia Q2 2020 Q3 • Mobile RGUs increased by 30k YoY in Q2’21, mostly due to growth in Data only of +23k and of +7k for the Handset RGUs base • The ARPU increased QoQ and was flat YoY, mostly due to recovery in 10.9 9.8 10. roaming revenue and price revision in the middle of Q2’21 Q2 2020 Q3 (1) IoT are excluded from Mobile RGUs and ARPU; IoT RGUs at the end of Q2’21 was 234k 6 Key Highlights Trading Update Events Occurred after the Reporting Date
Fixed Broadband & PayTV Segment Comments Fixe Fixed Broadband • The Fixed Broadband RGUs base (proforma for Mezon and Dautcom) 731 7 increased by 2k YoY 115 1 87 33 • The ARPU grew YoY, mostly due to organic growth of the ICT business 33 PayTV 496 5 • During Q2’21, we added 26k RGUs on proforma basis, mostly due to OTT RGUs which grew by 31k during the quarter Q2 2020 Q3 • Strong growth of the OTT RGUs was driven by OTT cross-selling to our Mobile base, which contributed 15k RGUs during the quarter Fixe • The ARPU was almost flat YoY Fixed Bro 11.5 11 7.0 Q2 2020 Q3 (1) VO – sales of premium sports and movie channel packages to end customers via other PayTV operators Fixe 7 Key Highlights Trading Update Events Occurred after the Reporting Date
Media Segment Comments Media revenue • In Q2’21, the Media business exceeded the same quarter last year, as advertising sales largely regained pre-Covid-19 levels in the Baltic region. Q2’20 advertising sales were negatively impacted by the first wave of Covid- 13.5 19 lockdown measures • Advertising sales growth was mostly driven by a full recovery in Lithuania and Latvia, while Estonia started to recover after the second wave of lockdown measures were lifted mid of May 2021 2020 Q2 Commercial share of viewing TV3, the largest channel in the TV3 group, remains the most-viewed TV channel Com in all 3 countries. TV3 Group has maintained its #1 position in Latvia and Lithuania: -1.7 p.p. • In Lithuania, the TV3 Group CSOV decreased by 1.7 p.p., mainly due to small channels regaining their lost positions during last year Q2’20 44.9% 43.2 • In Latvia, the TV3 Group CSOV increased compared to last year, as our main channel TV3 had strong position in the market supported by other own channels viewership following EURO2020 championship broadcast • In Estonia, the combined TV3 Group CSOV increased by 0.9 p.p. YoY due to Lithuania strong Spring programming performance 8 Key Highlights Trading Update Events Occurred after the Reporting Date
Basis of Preparation • The financials presented herein have been consolidated at the PLT VII • “Adjusted EBITDA” re Finance S.à r.l. level and prepared in accordance with the IFRS that the Group’s man non-recurring in natur • From 1 January 2018 the Group adopted new standards for its IFRS 16 ‘Leases’, IFRS 15 ‘Revenue from Contracts with Customers’ and IFRS 9 • “Adjusted EBITDA pr ‘Financial Instruments‘ 2021 represents the A June 2021, after givi • The analysis is based on unaudited information for the Q2 of 2021; in and Mezon business addition, the Q2 of 2020 is provided as comparable information reflect the estimated twelve months ending • The acquisition of Baltcom was completed on 28 February 2020, and we impact of certain antic began consolidating Baltcom’s results into our consolidated financial realise as a result of t results from 1 March 2020 • The acquisition of Dautcom TV SIA was completed on 30 October 2020, and we began consolidating Dautcom’s results into our consolidated financial results from 1 November 2020 • The acquisition of Mezon business was finalised on 1 January 2021, and we began consolidating Mezon’s results into our consolidated financial results from 1 January 2021 • All financial information is presented in millions of euro, unless it is otherwise stated 10 Key Highlights Trading Update Events Occurred after the Reporting Date
Financial Performance Comments Financials • The Service revenue grew YoY in Q2’21 as the Media revenues €m recovered and advertising sales regained the pre-Covid-19 level. Mobile Mobile grew by 6% due to organic base growth, price revision Fixed Broadband and PayTV and the introduction of new fees. Dautcom and Mezon Media acquisitions contributed €4.0m to Fixed Broadband and PayTV Service Revenue increase. Organic growth of Service revenue is 14% Equipment and other • The Equipment and other revenue grew by 37% YoY in Q2’21, Total Revenue as a result of the expanded equipment offering with TVs and E- Equipment costs sim devices Employee compensation & benefit • The Adjusted EBITDA increased by 24% in Q2’21, while the Content and programming costs Adjusted EBITDA increased by 16% on proforma for Dautcom Roaming and interconnect costs and Mezon basis Other costs • Employee compensation increased mainly due to the One-offs and other adjustments(1) consolidated acquisitions and general inflation / wage growth in Adjusted EBITDA the markets % Margin • Roaming and interconnect costs mostly declined due to the reduced interconnect rates in Lithuania • Content costs grew mainly due to consolidated acquisitions and investment into own productions, both in relation to OTT products and FTVs programming; also, a new partnership started with TNT in Estonia from Q1’21 (1) One-offs and other adjustments mainly include costs related with new acquisitions and integrations, payout of refinancing bonus remaining part 11 Key Highlights Trading Update Events Occurred after the Reporting Date
Group Capex Comments Capex(1) • Mobile Capex remained almost at the same level €m comparing with Q2’20 Mobile • The increase in the Fixed Broadband and PayTV Capex Fixed Broadband and PayTV is related to the scaling of ICT business and acquisitions of Dautcom and Mezon Media Capex % revenue (1) Capex is accounted on a cash basis 12 Key Highlights Trading Update Events Occurred after the Reporting Date
Cash Flow Comments Cash Flow • Bitė achieved strong cash generation with a cash conversion €m Q2 rate(2) of ~79% in Q2’21 Adjusted EBITDA • Negative NWC change in Q2’21 was related to recovery of % margin 3 Media business (growth of accounts receivables by €5m and Adjusted Capex €4m deferred employee-related taxes and VAT payments % of revenue (8 from 2020). In addition, €4-5m is related to preventive inventory build-up to eliminate risk of shortages during Back Operating Cash Flow(1) to School and Christmas campaigns. Remaining negative % Cash Conversion(2) 7 NWC deviation is related to decrease in accounts payables in Change in NWC H1’21 One-offs and other adj. (3) • Part of the purchase prices for Dautcom TV SIA and Mezon Taxes business were paid in Q2’21 Cash Flow pre-acquisitions • Q2’21 tax payments decreased compared to Q2’20. Higher Acquisitions income tax in Q1’20 and Q2’20 was driven by new treatment Cash Flow pre-financing of tax goodwill amortization in Lithuania and the corresponding one-off charge at the beginning of 2020 (1) Operating cash flow is defined as the Adjusted EBITDA minus the Total Adjusted Capex (2) Defined as the Operating Cash Flow / Adjusted EBITDA (3) One-offs and other adjustments for mainly include costs related with new acquisitions and integrations, payout of refinancing bonus remaining part 13 Key Highlights Trading Update Events Occurred after the Reporting Date
Capital structure Capitalisation 30 June 2021 €m x Adj. EBITDA Matur Cash and cash equivalents (52.0) Other financial debt 0.0 Senior Secured Notes 400.0 January Floating Rate Notes 250.0 January Net senior secured debt 598.0 3.8x Lease liabilities 51.6 Net total debt 649.6 4.1x New SSRCF (undrawn) (2) 50.0 April 20 (1) Adj. EBITDA proforma (LTM) 157.0 Total Liquidity 102.0 (1) This reflects the Baltcom, Dautcom and Mezon business proforma impact for the months not consolidated, as well as the estimated annual impact of certain anticipated synergies and cost savings (2) €0.5m of SSRCF limit was reserved for issuing a guarantee, which was necessary for participation in the IoT smart metering tender 14 Key Highlights Trading Update Events Occurred after the Reporting Date
3. Events Occurred after the Reporting Date
Events Occurred after the Reporting Date • On 8 July 2021, the Company issued additional fixed rate Senior Secured Notes with a principal amount of €75m • As a core part of Mezon acquisition, the Group acquired the spectrum which was used by Lietuvos radijo ir te the receipt of approval from the Lithuanian Competition Council as well as the Communications Regulatory Aut complaint disputing the decision of the Communications Regulatory Authority to allow the transfer of the spectr Court fully rejected Telia Lietuva AB claim. On 16 July 2021, Telia Lietuva AB filed an appeal to the Supreme these financial statements, the outcome of the appeal is pending • On 1 July 2021, Bite Latvija Retail SIA, Bitės salonų tinklas UAB and Eurocom UAB were merged with their UAB. Bite Latvija SIA and Bitė Lietuva UAB took over all the rights and obligations, assets and liabilities of B Eurocom UAB, which then ceased to exist. This transaction is part of the restructuring of the Group • On 14 July 2021, Star FM SIA signed an agreement to acquire Radio Enterprise SIA for €0.4m. The compan mainly targets Russian audience. As part of this acquisition, the Group increased its assets portfolio by two new 16 Key Highlights Trading Update Events Occurred after the Reporting Date
4. Q&A
Contacts For m https For q inves
PLT VII FINANCE S.à r.l. CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION 30 June 2021
Contents KPIs ............................................................................................................................................................................................................................ 3 Condensed consolidated statement of profit or loss and comprehensive income ........................................................................................................ 4 Condensed consolidated statement of financial position.............................................................................................................................................. 5 Condensed consolidated statement of financial position (continued) ........................................................................................................................... 6 Condensed consolidated statement of changes in equity ............................................................................................................................................ 7 Condensed consolidated statement of cash flows ....................................................................................................................................................... 8 Notes to condensed consolidated interim financial information .................................................................................................................................... 9
PLT VII FINANCE S.à r.l. Condensed consolidated interim financial information for the six months and the three months ended 30 June 2021 (unaudited, all amounts in thousands EUR unless otherwise stated) KPIs 31 December 30 June 2021 2020 RGUs*, end of period in thousands Mobile services Lithuania**** 1,170 1,180 Mobile services Latvia**** 613 597 Fixed broadband*** 204 209 PayTV*** 668 613 Total 2,655 2,599 Three months Three months Six months Six months ARPU**, per month in EUR ended ended ended ended 30 June 2021 30 June 2020 30 June 2021 30 June 2020 Mobile services Lithuania**** 10.3 9.8 10.0 9.8 Mobile services Latvia**** 10.9 10.9 10.8 11.0 Fixed broadband*** 12.8 11.5 12.8 11.3 PayTV*** 7.1 7.0 6.9 6.8 * We count each subscriber as a separate RGU for each of our mobile, PayTV and fixed broadband service. Total RGUs are, therefore, not equal to the total number of subscribers. For example, one subscriber who receives handset mobile services and mobile data services over our network and subscribes to our PayTV service is counted as two RGUs, and one subscriber who receives handset mobile services, mobile data services, PayTV and OTT services over our network is counted as three RGUs. ** ARPU is a measure we use to evaluate how effectively we are realizing potential revenues from subscribers of our various services. ARPU is calculated by adding together, for each month in a given period, the total subscription-related revenues for that particular month divided by the average number of RGUs for that period. *** 2020 ARPU and RGUs are calculated as proforma figures, including the acquisitions of Baltcom, Dautkom TV and Mezon as if consolidated from 1 January 2020. **** IoT is excluded from Mobile RGUs and ARPU. _______________________________________________________________________________________________ 3
PLT VII FINANCE S.à r.l. Condensed consolidated interim financial information for the six months and the three months ended 30 June 2021 (unaudited, all amounts in thousands EUR unless otherwise stated) Condensed consolidated statement of profit or loss and other comprehensive income Three months Three months Six months Six months Note ended ended ended ended 30 June 2021 30 June 2020 30 June 2021 30 June 2020 5,6 REVENUE 119,243 97,291 229,842 193,619 12,13 Depreciation and amortisation (21,327) (19,079) (43,080) (36,738) Equipment costs (19,176) (13,782) (38,236) (28,131) Employee compensation and benefit (17,778) (14,606) (35,383) (29,044) Content and programming costs (12,037) (9,705) (23,020) (19,738) Roaming and interconnect costs (8,433) (8,955) (16,825) (18,161) Materials, consumables and maintenance (3,428) (2,523) (6,791) (5,247) 14 Amortization of capitalized contract costs (2,873) (2,654) (5,695) (5,193) Advertising and marketing costs (2,678) (2,478) (6,119) (5,320) 17 Net impairment losses on trade receivable (1,036) (897) (2,283) (1,723) Media distribution and transponder costs (807) (787) (1,620) (1,550) Rental costs (470) (138) (849) (322) 9 Transaction costs - (44) (7) (483) 15 Reversal of provision on loans at amort. cost - 202 - 45 7 Other expenses (8,576) (8,382) (17,007) (16,146) OPERATING PROFIT 20,624 13,463 32,927 25,868 8 Finance income 11 44 20 259 8 Finance costs (9,202) (6,826) (18,587) (13,267) Total finance income and costs (9,191) (6,782) (18,567) (13,008) Share of loss of joint ventures - (238) - (238) PROFIT BEFORE TAX 11,433 6,443 14,360 12,622 Income tax credit/(expense) (1,316) (1,813) (2,086) (3,254) NET PROFIT 10,117 4,630 12,274 9,368 Profit attributable to: Equity holders of the parent 10,117 4,632 12,275 9,365 Non-controlling interests - (2) (1) 3 Profit for the period 10,117 4,630 12,274 9,368 Other comprehensive income - - - - Total comprehensive income for the period 10,117 4,630 12,274 9,368 Total comprehensive income for the period attributable to: Equity holders of the parent 10,117 4,632 12,275 9,365 Non-controlling interests - (2) (1) 3 The accompanying notes on pages 9 to 31 form an integral part of this condensed consolidated interim financial information. _______________________________________________________________________________________________ 4
PLT VII FINANCE S.à r.l. Condensed consolidated interim financial information for the six months and the three months ended 30 June 2021 (unaudited, all amounts in thousands EUR unless otherwise stated) Condensed consolidated statement of financial position Note 30 June 2021 31 December 2020 ASSETS NON-CURRENT ASSETS 12 Intangible assets: Goodwill 154,297 153,028 Software 11,941 11,180 License costs 34,590 22,078 Other intangible assets 122,596 131,291 Software under development 2,629 2,013 Total intangible assets 326,053 319,590 12 Property, plant and equipment: Land and buildings 4,941 4,996 Network equipment 87,688 84,618 Other property, plant and equipment 13,225 13,042 Construction in progress 8,038 6,456 Total property, plant and equipment 113,892 109,112 13 Right of use assets 50,984 50,961 14 Capitalized contract costs 13,064 12,683 6 Contract assets 687 666 10 Other investments at FV through other comprehensive income 4,110 4,110 11 Interest in joint ventures 6 6 15 Long-term loans receivable 153 153 Deferred tax asset 1,165 1,145 18 Other non-current assets and receivables 5,043 19,905 TOTAL NON-CURRENT ASSETS 515,157 518,331 CURRENT ASSETS 16 Inventory 35,356 34,853 6 Contract assets 1,016 886 19 Financial assets at fair value through profit or loss 6,654 6,469 15 Current portion of loans receivable at amortised cost 77 62 17 Trade accounts receivable at amortised cost 60,393 55,655 Income tax prepayment 1,308 214 20 Other current assets and prepayments 9,202 5,265 Cash and cash equivalents 51,966 51,406 TOTAL CURRENT ASSETS 165,972 154,810 TOTAL ASSETS 681,129 673,141 The accompanying notes on pages 9 to 31 form an integral part of this condensed consolidated interim financial information. _______________________________________________________________________________________________ 5
PLT VII FINANCE S.à r.l. Condensed consolidated interim financial information for the six months and the three months ended 30 June 2021 (unaudited, all amounts in thousands EUR unless otherwise stated) Condensed consolidated statement of financial position (continued) Note 30 June 2021 31 December 2020 SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Equity attributable to owners of the parent: 21 Share capital 137,485 137,485 21 Share premium 1,700 1,700 21 Reorganization reserve (336,653) (336,653) Legal reserve 9,213 9,213 Retained earnings 31,762 18,987 Capital and reserves attributable to third parties: 21 Non-controlling interests - 384 TOTAL SHAREHOLDER’S EQUITY (156,493) (168,884) NON-CURRENT LIABILITIES 22 Borrowings 637,192 635,952 23 Lease liabilities 35,690 36,736 26 Provisions 12,330 12,306 6 Contract liabilities 1,960 1,960 Deferred tax liability 15,810 16,903 25 Other non-current liabilities 7,029 7,538 TOTAL NON-CURRENT LIABILITIES 710,011 711,395 CURRENT LIABILITIES 22 Borrowings 11,098 11,134 23 Lease liabilities 15,949 14,365 24 Supplier financing arrangements 7,520 6,218 Trade accounts payable 45,978 56,670 6 Contract liabilities 9,311 10,264 Deferred revenue 1,883 998 Current income tax liabilities 517 1,608 25 Accrued expenses and other liabilities 35,355 29,373 TOTAL CURRENT LIABILITIES 127,611 130,630 TOTAL LIABILITIES 837,622 842,025 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 681,129 673,141 The accompanying notes on pages 9 to 31 form an integral part of this condensed consolidated interim financial information. _______________________________________________________________________________________________ 6
PLT VII FINANCE S.à r.l. Condensed consolidated interim financial information for the six months and the three months ended 30 June 2021 (unaudited, all amounts in thousands EUR unless otherwise stated) Condensed consolidated statement of changes in equity Attributable to equity holders of the Company Retained Reorgani- Non- Share Share Legal earnings/ Total zation Total controlling capital premium reserve (accumulated equity reserve interest deficit) 31 December 2019 14,825 - 9,213 - 2,999 27,037 377 27,414 Net profit for the six months period ended - - - - 9,365 9,365 3 9,368 30 June 2020 Total comprehensive - - - - 9,365 9,365 3 9,368 income for the year Transactions with owners in their capacity as owners Increase in share 21 336,665 - - (336,653) - 12 - 12 capital Employee share based - - - - 159 159 - 159 payment schemes 30 June 2020 351,490 - 9,213 (336,653) 12,523 36,573 380 36,953 31 December 2020 137,485 1,700 9,213 (336,653) 18,987 (169,268) 384 (168,884) Net profit for the six months period ended - - - - 12,275 12,275 (1) 12,274 30 June 2021 Total comprehensive - - - - 12,275 12,275 (1) 12,274 income for the period Transactions with owners in their capacity as owners Employee share based - - - - 117 117 - 117 payment schemes 21 Non-controlling interest - - - - 383 383 (383) - 30 June 2021 137,485 1,700 9,213 (336,653) 31,762 (156,493) - (156,493) The accompanying notes on pages 9 to 31 form an integral part of this condensed consolidated interim financial information. _______________________________________________________________________________________________ 7
PLT VII FINANCE S.à r.l. Condensed consolidated interim financial information for the six months and the three months ended 30 June 2021 (unaudited, all amounts in thousands EUR unless otherwise stated) Condensed consolidated statement of cash flows Three months Three months Six months Six months Note ended ended ended ended 30 June 2021 30 June 2020 30 June 2021 30 June 2020 Cash flows from operating activities Net profit before tax 11,433 6,443 14,360 12,622 Adjustments to operating activities: 12,13 Depreciation and amortisation 21,327 19,079 43,080 36,738 14 Amortisation of capitalised contract costs 2,873 2,654 5,695 5,193 (Profit)/loss on disposal of PPE 307 5 449 43 Change in allowances and other provisions 1,039 837 2,289 1,822 11 Share of loss of joint ventures - 238 - 238 Employee share schemes 59 79 117 159 Other finance costs - net 8,567 6,182 17,305 11,826 Changes in working capital: (Increase)/decrease in trade receivables (6,960) (3,934) (7,205) 1,926 (Increase)/decrease in trading inventory 3,099 2,091 (509) 5,071 (Increase)/decrease in contract assets 26 (91) (150) (67) Increase/(decrease) in contract liabilities (846) (406) (953) (768) Change in other assets, payables and liabilities (3,124) 3,498 (16,448) (13,632) Change in outstanding balances with related parties - 15 - 15 24 Change in supplier financing arrangement (103) - 1,197 - 22 Borrowing transaction costs/Arrangement fee - - - (735) Interest paid (3,911) (6,322) (17,196) (15,742) Income tax paid (2,588) (3,862) (5,384) (8,375) Net cash flows from operating activities 31,198 26,506 36,647 36,334 Cash flows from investing activities: Acquisition of subsidiary or business, net of cash 9,25,21 (5,140) (12) (10,783) (24,480) acquired Acquisition of intangible assets and PPE for cash (8,873) (8,340) (17,450) (14,601) Proceeds from sale of intangible assets and PPE 44 54 86 133 Interest received 7 12 11 12 Net cash flows used in investing activities (13,962) (8,286) (28,136) (38,936) Cash flows from financing activities: 21 Increase in share capital - 12 - 12 22 Borrowings from banks - - - 15,000 Borrowings from third parties - 7 - - Repayments of lease (3,957) (4,489) (7,898) (7,949) 9,22 Repayments of borrowings to banks (43) (11,792) (53) (29,963) Net cash flows used in financing activities (4,000) (16,262) (7,951) (22,900) Net increase/(decrease) in cash and cash equivalents 13,236 1,958 560 (25,502) Cash and cash equivalents at the beginning of the 38,730 53,161 51,406 80,621 period Cash and cash equivalents at the end of the period 51,966 55,119 51,966 55,119 The accompanying notes on pages 9 to 31 form an integral part of this condensed consolidated interim financial information. _______________________________________________________________________________________________ 8
PLT VII FINANCE S.à r.l. Condensed consolidated interim financial information for the six months and the three months ended 30 June 2021 (unaudited, all amounts in thousands EUR unless otherwise stated) Notes to condensed consolidated interim financial information 1. General information PLT VII Finance S.à r.l. (‘the Company’) was incorporated on 3 March 2020 in Luxembourg as a private limited liability company (société à responsabilité limitée). The registered address of the Company is at 18, rue Dicks, L-1417 Luxembourg, the Grand Duchy of Luxembourg. The Company is registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des sociétés, Luxembourg) under number B242945. Text and terms in bold font are defined terms used consistently herein. The sole shareholder of the Company is PLT VII Holding S.à r.l., registration number B242838, a private limited liability company with registered address at 18 rue Dicks, L-1417 Luxembourg, the Grand Duchy of Luxembourg. The ultimate parent entity and controlling parties of the Company are Providence Equity Partners VII-A LP and Providence VII Global Holdings LP which are both registered in the Cayman Islands. The Company is the sole shareholder of PLT VII International S.à r.l. incorporated on 3 March 2020 in Luxembourg as a limited liability company (société à responsabilité limitée), with registered address at 18 rue Dicks, L-1417 Luxembourg, the Grand Duchy of Luxembourg. PLT VII International S.à r.l. is registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des sociétés, Luxembourg) under number B243024. In the course of the restructuring, on 30 April 2020 the Company became an ultimate parent to PLT VII Finance B.V. and its direct and indirect subsidiaries, which are held by the Company’s direct subsidiary PLT VII International S.à r.l. On 30 April 2020 PLT VII International S.à r.l. has received the shares and control of PLT VII Finance B.V. as a share capital contribution from the previous shareholder PLT VII Holdco B.V., registration number 65086120, a private limited liability company with registered address at Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands (on 25 June 2020 restructured in the way of a merger into PLT VII Baltic Topco S.à r.l.). PLT VII Finance B.V. was incorporated on 18 January 2016 in Amsterdam, the Netherlands as a private company with limited liability. The registered address of the company was at Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands. The company was registered with the trade register of the Chamber of Commerce under number 65090551. The main activities of the Company are holding and finance activities. The Company manages and controls the group of entities in the Baltic States (‘the Group’), which are engaged in providing Mobile, PayTV and Fixed Broadband as well as Media and Content services. In addition to these primary businesses the Group sells various equipment to support its above-mentioned services to customers. The Group provides various mobile services to private and business customers through own front-line sales and care channels and own infrastructure companies. The Group mobile business is focused on meeting growing demand in the region for high quality network experience by providing excellent customer service through retail companies that distribute products and services and through real estate companies that are responsible for ownership, management, development and rental of towers and masts. The Group’s Fixed Broadband and PayTV business include fixed broadband internet services, information and communications technology (‘ICT’) services and PayTV offering through Home3 satellite platform and Go3 Over-the-Top (‘OTT’) streaming solution. The Group’s Media and Content business operates through TV3 Group and includes freely accessible TV channels (FreeTV), video on demand (‘VOD’) services, commercial radio, streaming radio, digital advertising, news and entertainment portals, advertising services across own portfolio of media assets as well as through third party channels and digital production and distribution services. The Group implements strategic initiatives to converge the technologies and services offered by the Group of entities. This strategy results in higher effectiveness and revenue synergies, as well as cross-sell opportunities and additional values to the customer, all of which provide competitive advantages over traditional telecommunication operators. In September 2020 the Group has completed the legal mergers of: - Bitė Finance International B.V. (as a discontinuing entity) and PLT VII B.V. (as a continuing entity) merged with effective date 7 September 2020; - PLT VII B.V. (as a discontinuing entity) and PLT VII Finance B.V. (as a continuing entity) merged with effective date 8 September 2020; - PLT VII Finance B.V. (as a discontinuing entity) and PLT VII International S. à r.l. (as a continuing entity) merged with effective date 17 September 2020. _______________________________________________________________________________________________ 9
PLT VII FINANCE S.à r.l. Condensed consolidated interim financial information for the six months and the three months ended 30 June 2021 (unaudited, all amounts in thousands EUR unless otherwise stated) The legal mergers constitute a reorganisation of all Dutch entities of the Group whereby the Dutch entities were ultimately merged into PLT VII International S. à r.l. The purpose of the reorganisation was to simplify the holding structure of the ultimate shareholders in combination with a refinancing that took place at the Company, being the sole shareholder of PLT VII International S. à r.l. After the legal mergers were finalized in September 2020, the discontinuing entities ceased to exist and all assets and liabilities as well as the underlying business activities have passed to PLT VII International S. à r.l. as the surviving entity. On 20 September 2019, Bitė Latvija SIA has signed an agreement regarding the purchase of 100% shares of Baltcom SIA (including its wholly owned subsidiary B-Com Holding SIA) and the deal was finalized on 28 February 2020. Baltcom SIA is one of the largest independent fibre broadband internet, cable TV and IPTV service provider in Latvia, which also provides landline telephony, electricity and OTT services. On 12 August 2020 the Group has signed an agreement to purchase Dautkom TV SIA. The closing of the deal was confirmed by the Latvian regulator on 23 October 2020 and was finalized on 30 October 2020. Dautkom TV SIA is engaged in providing TV and Internet services in Daugavpils, Latvia. This acquisition allows higher penetration of the Group’s services in Daugavpils, Latvia, as well as provides wider and higher quality services to existing customers of acquired entities. On 21 May 2020, the Group has signed an agreement to purchase the “Mezon” business from Lietuvos radijo ir televizijos centras AB. The Lithuanian regulatory approvals to proceed with the business acquisition were received on 27 November 2020 but the business transfer was finalized on 1 January 2021. The acquisition of the business was carried through a Group subsidiary Mezon UAB registered on 23 April 2020. The acquisition allows the Group to grow its customer base as well as expand the fixed broadband business via integration of multifunctional digital channels. More details are provided in note 9. As a core part of business the Group also acquired the spectrum which was used by Lietuvos radijo ir televizijos centras AB in Mezon business, following the approval received from the Lithuanian Competition Council as well as Communications Regulatory Authority. On 1 December 2020, Telia Lietuva AB has filled the complaint disputing the decision of the Communications Regulatory Authority to allow the acquisition of spectrum. On 16 June 2021 Vilnius District Administrative Court has fully rejected Telia Lietuva AB claim. On 16 July 2021 Telia Lietuva AB has filed an appeal to the Supreme Administrative Court and till the issue of these financial statements the outcome of this complaint is pending. On 3 December 2020 the Group has signed the reorganization terms pursuant to which the Group subsidiary Latnet SIA is reorganized in the way of demerger and its assets, rights and liabilities are split and taken over by two acquiring Group companies Bite Latvija SIA and Unistars SIA. The reorganization was finalized and Latnet SIA ceased to exist on 1 April 2021. The transaction is part of the restructuring of the Group. On 28 January 2021 the Group subsidiary Bitės salonų tinklas UAB has sold 100% of share capital in Bite Latvija Retail SIA to another Group subsidiary Bite Latvija SIA. The transaction is part of the restructuring of the Group. On 18 March 2021 the Group has signed the merger terms pursuant to which the Group subsidiary Bite Latvija Retail SIA is merged into its parent company Bite Latvija SIA on 1 July 2021. Bite Latvija SIA took over all the rights and obligations, assets and liabilities of Bite Latvija Retail SIA which then ceased to exist. The transaction is part of the restructuring of the Group. On 26 March 2021 Bitė Lietuva UAB has signed the merger terms pursuant to which its subsidiaries Bitės salonų tinklas UAB and Eurocom UAB are merged into their parent company Bitė Lietuva UAB on 1 July 2021. Bitė Lietuva UAB took over all the rights and obligations, assets and liabilities of Bitės salonų tinklas UAB and Eurocom UAB which then both ceased to exist. The transaction is part of the restructuring of the Group. On 23 March 2021 Bite Lietuva UAB and Bite Latvija SIA have signed an agreement with TV Play Baltics AS according to which as of 1 April 2021 the Bite Lietuva UAB and Bite Latvija SIA have overtaken Lithuanian and Latvian customer bases and distribution of the Pay TV services in Lithuania and Latvia respectively. Pay TV service includes access to real time TV programs via DTH as well as catch-up services. The transaction is part of the restructuring of the Group. On 29 March 2021 All Media Eesti AS acquired from the minority shareholder the remaining 10% of the issued share capital in Artist Media OÜ for an amount of EUR 231 thousand. The shares were fully paid on 29 March 2021. The Notes to the condensed consolidated interim financial information provide more information about the structure of the Company and its subsidiaries, the sectors in which it operates and the products it offers. _______________________________________________________________________________________________ 10
PLT VII FINANCE S.à r.l. Condensed consolidated interim financial information for the six months and the three months ended 30 June 2021 (unaudited, all amounts in thousands EUR unless otherwise stated) As of 30 June 2021, the Group consisted of the Company, PLT VII International S.à r.l. and a group of subsidiaries, all of which details are provided below: Proportion of Proportion of Country of ordinary shares by ordinary shares held Company incorporation and Nature of business the Group (%) by the Group (%) place of business 30 June 2021 31 December 2020 PLT VII Finance S.à r.l. Luxembourg Holding and financing company 100 100 PLT VII International S.à r.l. Luxembourg Holding and financing company 100 100 Bitė Lietuva UAB Lithuania Mobile telecommunication services provider 100 100 Bite Latvija SIA Latvia Mobile telecommunication services provider 100 100 TeleTower UAB Lithuania Towers and masts owner and lessor 100 100 TeleTower SIA Latvia Towers and masts owner and lessor 100 100 EUROCOM UAB Lithuania Mobile telecommunication services provider 100 100 Bitės Salonų tinklas UAB Lithuania ‘bitė’ products distributor in Lithuania 100 100 Bite Latvija Retail SIA Latvia ‘bitė’ products distributor in Latvia 100 100 Bite Broadcasting Services Ltd United Kingdom Television programming and broadcast 100 100 Unistars SIA Latvia Internet services provider 100 100 Latnet SIA Latvia Internet and data transmission services - 100 All Media Lithuania UAB Lithuania Free-TV broadcasting company 100 100 All Media Radijas UAB Lithuania Radio broadcasting company 100 100 All Media Digital UAB Lithuania Internet advertising provider 100 100 All Media Eesti AS Estonia Free-TV broadcasting company 100 100 All Media Digital OÜ Estonia Internet advertising provider 100 100 Mediainvest Holding AS Estonia Radio broadcasting company 100 100 Buduaar Media OÜ Estonia Internet platform provider/ magazine issue 100 100 Artist Media OÜ Estonia Audio systems planning and maintenance 100 90 All Media Latvia SIA Latvia Free-TV broadcasting company 100 100 Star FM SIA Latvia Radio broadcasting company 100 100 TV Play Baltics AS Estonia Satellite television broadcast and PayTV 100 100 Baltcom SIA Latvia Internet and data transmission services 100 100 B-Com Holding SIA Latvia Holding company 100 100 Mīts LV SIA Latvia TV, internet and telephony services 100 100 Esteria 79 SIA Latvia TV, internet and telephony services 100 100 Elektrons S SIA Latvia TV and internet services 100 100 Dautkom TV SIA Latvia TV and internet services 100 100 Mezon UAB Lithuania Internet and IPTV service provider 100 100 _______________________________________________________________________________________________ 11
PLT VII FINANCE S.à r.l. Condensed consolidated interim financial information for the six months and the three months ended 30 June 2021 (unaudited, all amounts in thousands EUR unless otherwise stated) 2. Basis of preparation and accounting policies In the course of the Group’s legal restructuring, on 30 April 2020 the Company became an ultimate parent to PLT VII Finance B.V. and its direct and indirect subsidiaries (further referred to as PLTF Group), which are now owned by the Company’s direct subsidiary PLT VII International S.à r.l. There was no change in the substance of the reporting entity, and it was not a business combination. The condensed consolidated interim financial information of the Company is presented using the values from the condensed consolidated interim financial information of the previous group holding company. The restructuring was accounted for as a legal reorganization of the Company by PLT VII Finance B.V., therefore this condensed consolidated interim financial information of PLT VII Finance S.à r.l. is presented as a continuation of the former PLTF Group, i.e.: - the assets and liabilities of PLTF Group are recognised and measured at the pre-restructuring carrying amounts, without remeasurement to fair value; - the equity structure reflects the retained earnings and other equity balances of PLTF Group from the first period presented up until immediately before the restructuring. The results of the period from 1 January 2020 to the date of the restructuring are those of PLTF Group. However, the issued share capital appearing in this condensed consolidated interim financial information reflects the reorganised equity structure of the Company as at 30 June 2021, being the parent of the consolidated group. The resulting difference due to elimination of the Company’s investment in PLTF Group upon legal merger is recognised as the reorganization reserve (note 21) in the statement of financial position. This condensed consolidated interim financial information for the six months and the three months ended 30 June 2021 has been prepared in accordance with International Financial Reporting Standards (‘IFRS’) as adopted by the European Union (the ‘EU’) and applicable to interim financial reporting (International Accounting Standards (‘IAS’) 34 ‘Interim financial reporting’). This condensed consolidated interim financial information should be read in conjunction with the annual consolidated financial statements of the Group for the year ended 31 December 2020. The amendments to IFRSs applicable from 1 January 2021 have no effects to Group financial reports for the six months period ended 30 June 2021. This condensed consolidated interim financial information has been prepared under the historical cost convention. The accounting policies and methods of computation applied are consistent with those of the annual consolidated financial statements of the Group for the year ended 31 December 2020, except for taxes on income, which are recognised in each interim period based on the best estimate of the weighted average annual income tax rate expected for the full financial year. A separate estimated average annual effective income tax rate is determined for each taxing jurisdiction and applied individually to the interim period pre-tax income of each jurisdiction. This condensed consolidated interim financial information was approved for issue on 13 August 2021 by the board of directors. 3. Critical accounting estimates and judgements The preparation of consolidated interim financial information in accordance with IAS 34 requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. It also requires management to exercise judgement in the process of applying the Group’s accounting policies. The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual consolidated financial statements of the Group for the year ended 31 December 2020, except of the following: - On 20 September 2019, Bitė Latvija SIA signed an agreement regarding the purchase of 100% shares of Baltcom SIA and the deal was finalized on 28 February 2020. In the context of the above-mentioned acquisition, the Group has granted a call option to a non- related third party to purchase 50% of Baltcom’s share capital from the Group. Management concluded that this call option does not represent a substantive voting right since exercising the option will require upfront approval from the relevant Competition Council which is not deemed to be a routine activity and is therefore outside the control of both the Group and the third party. As a result management concluded that the Group has control over Baltcom SIA. As such the Group should consolidate the financial information of Baltcom SIA until such control is lost, i.e. when the call option is exercised and the approval from the Competition Council has been received. _______________________________________________________________________________________________ 12
PLT VII FINANCE S.à r.l. Condensed consolidated interim financial information for the six months and the three months ended 30 June 2021 (unaudited, all amounts in thousands EUR unless otherwise stated) - In the context of the option granted, management has further assessed and concluded that the investment in Baltcom SIA does not meet the criteria of an asset to be classified as held for sale as at 30 June 2021 because: a) despite the fact that the Group has a put option, management does not intend to exercise the put option; b) the third party has a call option which was extended until 31 December 2021 upon the request from the option holder. The exercise of the call option is out of the control of the Group. Thus, the Group based on the call option outstanding (not having an intention to exercise its own put option) cannot ensure whether or not the call option holder will issue the notice to exercise the call option till the end of the year resulting in a firm purchase commitment till the option is valid. In addition, management estimates that, given the potential formal procedures normally required in such cases (i.e. regulatory approval) and the related timelines in case the third party decides to exercise the option, the closing of such transaction may further extend and would not happen within 2021. Management will reassess this judgement at the end of every reporting period to consider any changes in the circumstances. 4. Financial risk management The Group is exposed to a variety of financial risks: market risk (including foreign currency exchange risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The interim condensed consolidated financial information does not include all financial risk management information and disclosures required in the annual financial statements and should be read in conjunction with the Group annual financial statements as of 31 December 2020. There have been no changes in the Treasury policy and the risk management principles since the year end. Capital risk management The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and maintain an optimal capital structure to reduce the cost of capital. To maintain or adjust the capital structure, the Group may adjust an amount of dividend paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. On 8 July 2020 PLT VII Finance S.à r.l. as an original borrower entered into a new Super Senior Facility Agreement with a consortium of banks (ING bank N.V., London branch is acting as agent of the other finance parties) to obtain revolving credit facility in amount of EUR 50 million with maturity in April 2025. The revolving credit facility bears interest at an annual rate of three months EURIBOR (in case of facility utilization in other currencies – LIBOR) plus applicable margin, which depends on the Group’s Leverage Ratio and can be set in the range from 2% to 3%. As of the date of this condensed consolidated interim financial information the margin rate is 2.75%. On 16 July 2020 the Company as an original Issuer has issued senior secured notes in amount of EUR 650,000 thousand, with maturity on 5 January 2026. The Senior secured floating rate notes in amount of EUR 250,000 thousand bear interest at an annual rate of three months EURIBOR (subject to a 0% floor) plus margin 4.625%. The interest on the Senior secured floating rate notes is payable quarterly on 15 January, 15 April, 15 July and 15 October of each year. The Senior secured fixed rate notes in amount of EUR 400,000 thousand bear interest at an annual rate of 4.625%; the interest on the Senior secured fixed rate notes is payable semi-annually on 15 January and 15 July of each year. The transaction costs related to the notes issue are amortized to the finance costs over the Notes’ term. On 16 July 2020 part of the issued senior secured notes were used to fully repay the Group’s line of facilities under the Senior Term and Revolving Facilities Agreement with a consortium of banks (ING bank N.V., London branch is acting as agent of the other finance parties). As a consequence, the associated collaterals were lifted. Under the Super Senior Facility Agreement, the Group is obliged to comply with the Consolidated Secured Leverage Ratio (‘the Consolidated Leverage Ratio’), calculated as a ratio of the consolidated total net debt and the consolidated earnings before interest, tax, depreciation and amortisation expenses (‘EBITDA’). From 31 December 2020 the Consolidated Leverage Ratio is calculated and tested on a rolling quarter basis if the test condition is met, i.e. if the outstanding principal amount of all loans exceeds 35% of total commitment or if Leverage ratio is needed for margin rate review. _______________________________________________________________________________________________ 13
PLT VII FINANCE S.à r.l. Condensed consolidated interim financial information for the six months and the three months ended 30 June 2021 (unaudited, all amounts in thousands EUR unless otherwise stated) The Consolidated Leverage Ratio should not exceed a flat ratio of 8.00:1. The Group has the right to ‘cure’ a breach of the Leverage Ratio covenant by receiving additional shareholder funding in cash (‘the Cure Amount’) within 20 business days after the last day of the relevant period in which the breach would occur without the Cure Amount. Covenants are reviewed by lenders on a regular basis during the term of the senior secured notes and facility. A breach of the Consolidated Leverage Ratio, if not cured by no later than the date falling twenty (20) Business Days after the date of the notice thereof, would enable the holders of the defaulted debt to terminate their commitments thereunder and cause all amounts outstanding with respect to such indebtedness to become due and payable immediately. The Treasury monitors the compliance with covenants on a regular basis as a breach of these ratios would be a major risk for the Group. Fair value estimation During 2021 there were no transfers between levels of the fair value hierarchy used in measuring the fair value of financial instruments and no reclassifications of financial assets. The different levels of methods used to measure the fair value of the financial instruments (which are recognised and measured at fair value in the statement of financial position) have been defined as follows: Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); Level 3 – inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). The Group has longstanding arrangements with customer financing entities to transfer them the receivables owed by customers at the time the equipment is sold to customer. The accounts receivables sold to customer financing entities are less than 1 month old at the time of sale and all credit risk on the sold receivables is transferred to the customer financing entities at that time. In these sale transactions certain portions of the price are initially held back and, depending on the amount of the actual defaults, are only paid to the Group at a later date. To the extent that such portions of the purchase price are expected to be received in the future, they are recognized at fair value. Fair value is determined by using valuation techniques. These valuation techniques maximize the use of observable market data and rely as little as possible on the Group specific estimates. Since the significant inputs required to fair value an instrument is observable, the instrument is included in level 2. The Group’s lease receivables for equipment sales with deferred payment terms are discounted at market interest rate to arrive at the amortised cost basis. The fair values of receivables are determined based on cash flows discounted using applicable statistical country’s interest rates for loans with a maturity more than 1 year reported by state banks of Lithuania and Latvia. The fair value of lease receivables for equipment sales approximates their carrying value as at 30 June 2021. This is a level 3 fair value measurement. As at 30 June 2021 the fair value of the senior secured notes is EUR 655,632 thousand (31 December 2020: EUR 656,005 thousand). The carrying value of the borrowings is disclosed in note 22. On 28 February 2020, the Group has acquired 100% shares of Baltcom SIA together with its 32.12% investment in the shares of Balticom AS, which is classified as an Other investment in the statement of financial position with a gain or loss from the changes in fair value (through annual revaluations performed) recognized in other comprehensive income (note 10). The fair value is determined using level 3 inputs as the company is not listed. Due to the short-term nature of the trade and other current receivables, trade and other current liabilities, their carrying amount is considered to be the same as their fair value. For the majority of the non-current receivables, the fair values are also not significantly different to their carrying amounts. There were no changes in the valuation techniques and the sources of inputs used in the fair value measurement since 31 December 2020. _______________________________________________________________________________________________ 14
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