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eircom Results Presentation
February 27, 2015
Second quarter and half year FY14/15 Results Presentation
Richard Moat
Steve Mitchell
© eircom
This presentation contains information and documents for information purposes only. They do not constitute or form part of, and should not be construed as an advertisement, an
offer or an invitation to subscribe to or to purchase securities of eircom Finance Limited or any of its subsidiaries, holding companies and subsidiaries of its holding companies
(together the “Group”) nor are the information or documents contained herein meant to serve as a basis for any kind of contractual or other obligation. This presentation does not
constitute a prospectus or a prospectus equivalent document.
By reviewing the information in this presentation you agree to the terms of this disclaimer.
This presentation should not be treated as giving investment advice. No specific investment objectives, financial situation or particular needs of any recipient have been taken into
consideration in connection with the preparation of this presentation.
This presentation may include forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934 and Section 27A of the US Securities Act
of 1933 regarding certain of the Group’s plans and its current goals, intentions, beliefs and expectations concerning, among other things, the Group’s future results of operation,
financial condition, liquidity, prospects, growth, strategies and the industries in which the Group operates. These forward looking statements can be identified by the fact that they
do not relate only to historical or current facts. Generally, but not always, words such as ‘may,’ ‘could,’ ‘should,’ ‘will,’ ‘expect,’ ‘intend,’ ‘estimate,’ ‘anticipate,’ ‘assume,’ ‘believe,’
‘plan,’ ‘seek,’ ‘continue,’ ‘target,’ ‘goal,’ ‘would’, or their negative variations or similar expressions identify forward looking statements. By their nature, forward-looking statements
are inherently subject to risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Group cautions you that
forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the
industries in which the Group operates may differ materially from those made in or suggested by the forward-looking statements contained in the presentation. In addition, even if
the Group’s results of operations, financial condition and liquidity and the development of the industries in which the Group operates are consistent with the forward-looking
statements contained in this presentation, those results of developments may not be indicative of results or developments in future periods.
The Group does not undertake any obligation to review, update or confirm expectations or estimates or to release publicly any revisions to any forward-looking statements to
reflect events that occur or circumstances that arise after the date of this presentation.
No warranty or representation of any kind, express or implied, is or will be made in relation to, and to the fullest extent permissible by law, no responsibility or liability in contract,
tort, or otherwise is or will be accepted by the Group any of the Group’s officers, employees, advisers or agents or any of their affiliates as to the accuracy, completeness or
reasonableness of the information contained in this presentation, including any opinions, forecasts or projections. Nothing in this presentation shall be deemed to constitute such
a representation or warranty or to constitute a recommendation to any person to acquire any securities or debt of any member of the Group or otherwise become a Lender of any
member of the Group. Any estimates and projections in this presentation were developed solely for the use of the Group at the time at which they were prepared and for limited
purposes which may not meet the requirements or objectives of the recipient of this presentation. Nothing in this presentation should be considered to be a forecast of future
profitability or financial position and none of the information in this presentation is or is intended to be a profit forecast or profit estimate.
The Group and its officers, affiliates, agents, directors, partners and employees accept no liability whatsoever for any loss or damage howsoever arising from any use of this
presentation or its contents or otherwise arising in connection therewith.
The Group has not assumed any responsibility for independent verification of any of the information contained herein including, but not limited to, any FORWARD LOOKING
STATEMENTS MADE herein. In addition, the Group assumes no obligation to update or to correct any inaccuracies which may become apparent in this presentation. This
presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefings provided to the recipient by the Group.
This presentation has not been approved by any regulatory authority. This presentation has been prepared by, and is the sole responsibility of, the Group and has not been
independently verified. All financial and operating information is based on unaudited management information unless otherwise specified.
Disclaimer
2
Agenda
Trading Q2 and YTD FY 14/15
Key business initiatives FY15
Q&A
Business update
Economic update
3
Business highlights
© eircom
Q2 business highlights
4
• QoQ revenue growth of 1%; fixed line stable,
third consecutive quarter of mobile revenue
growth. YoY rate of revenue decline
continues to fall.
• EBITDA of €112 million, in line with
expectations
• FTTC rollout on track with 1,100,000
premises passed and FTTH rollout underway
• Momentum on fibre, TV and 4G continues
• Valuable TV sports content secured
• Sustained postpay growth and strong
Christmas prepay performance
• Group broadband growth of 17,000 driven by
both Retail and Wholesale
• Continued focus on operating cost reductions
- benchmarking exercise complete
• On track at Q2 but challenges remain
© eircom
Agenda
Trading Q2 and YTD FY 14/15
Key business initiatives FY15
Q&A
Business update
Economic update
5
Business highlights
© eircom
Irish macro continues to improve
6
10%
11%
12%
13%
14%
15%
Q32011
Q42011
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Consumer and business confidence improving
91
52
50
(19)
Consumer
Business
Positive GDP growth expected in 2015
Source: ESRI, IBEC
+41 pts.
Sovereign yields in steady decline
Source: Bloomberg
GDP Growth Rate Irish 10 Year Sovereign Yields
+71 pts.
Dec-14 Dec-12
Unemployment fell by over 4 p.p. since Q1 2012
Source: Trading economics/IMF
1.2
1.7
2.2
2.7
3.2
3.7
4.2
Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14
1.25%
10.6%
15%
Source: Deutsche Bank
3.3
2.7
1.9
1.7
1.2
1.0
0.9
0.8
0.8
0.3
0 1 2 3 4
Ireland
Greece
Spain
Netherlands
Portugal
Germany
France
Finland
Austria
Italy% YoY
© eircom
Agenda
Trading Q2 and YTD FY 14/15
Key business initiatives FY15
Q&A
Business update
Economic update
7
Business highlights
© eircom
FTTC rollout on track to reach 1,600,000 premises
and FTTH build underway
8
• Over €270 million invested in fibre
access network to date
• Approx. 70% of rollout now complete
offering speeds of up to 100 Mb/s
• On track to pass 1.6m premises by mid
2016 (>70% of Irish households)
• Rollout of FTTH offering speeds of up
to 1 Gb/s is underway
• Exchange launched VDSL now
available
• Demonstrates the flexibility and
scalability of our fibre network rollout
© eircom
3% 5% 7% 10% 14% 17% 20%
53% 52% 50% 49% 46% 44% 42%
44% 43% 42% 42% 40% 39% 38%
Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Mobile/TV bundles Dual Play Single Play
New capability is delivering increased RGUs per
customer…
9
Successfully driving the take up of triple and quad play1…
…resulting in RGU2 growth
1 Consumer market only – Mobile/TV bundles % include FMC bundles 2 RGUs exclude Standalone Postpay, Prepay & MBB
• Superior fixed and mobile network
underpins bundling strategy and RGU
momentum
• Currently the only provider of quad play
bundles in the market
• 20% of customers now availing of
TV/Mobile bundles
1.59 1.61
1.65
1.68
1.73
1.78
1.82
Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
© eircom
622 601 585 559 546
74 103 133 172 202
696 704 718 731748
Dec-13 Mar-14 Jun-14 Sep-14 Dec-14
Non NGA NGA
3
10
21
28
32
Dec-13 Mar-14 Jun-14 Sep-14 Dec-14
41
51
63
76
89
Dec-13 Mar-14 Jun-14 Sep-14 Dec-14
5675
95
124140
18
28
38
48
62
74
103
133
172
202
Dec-13 Mar-14 Jun-14 Sep-14 Dec-14
Retail Wholesale
10
…and positive growth in KPIs
Growing broadband
efibre customers ‘000 Group Broadband customers ‘000
% penetration of NGA
premises passed
Successfully penetrating
e-fibre with TV
TV customers ‘000
Continued FMC growth1 Strong e-fibre take-up
FMC ‘000
% penetration of
consumer NGA
customers
11%
13%
14%
17%
19%
6%
14%
24%
25%
25%
1. Now includes consumer and SMB
© eircom
63%
71%
Q2 14 Q2 15
€82m €79m €80m €82m €83m
€9m€4m €4m
€5m€8m
€90m
€83m €84m€87m
€91m
Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Service revenue Handset revenue
Mobile investment driving growth
Notes: 1 Revenue and EBITDA margin for Q2 has been adjusted for the MTR impact relating to Q1 ’14: Revenue €3.8m/EBITDA €1.5m
2 Smartphone penetration of consumer handset base only 3 Handset numbers relate to the consumer postpay market only
Revenue growth now evident but FY15
margin impacted by commercial
investment…
…to drive smartphone penetration2… …49% of customers on 4G handsets3
11%
EBITDA margin %
11
16% 9% 10%
• Third consecutive quarter of Mobile revenue growth; YoY revenue +1%
• H1 EBITDA margin +1.7ppt YoY to 9%
• Smartphone penetration +8ppt YoY to 71%
• 49% of customers now on 4G enabled device; +25ppt YoY
• 4G data usage 3x that of 3G
• 4G for prepay launched Nov 2014
4%
1
9% 9%
67%
42%
24%
49%
Q1 14 Q2 152G 3G 4G
© eircom
Headcount Evolution… Over €130m savings Operating Costs (€m)
5,097
450
5,547
4,705
3,632 3,400
FY12A FY13A FY14A FY15F
FTE 9 day fortnight
Notes 1 Includes €10m of one-off storm costs incurred in FY14 2 Net of €10m YoY storm cost saving
288 264 230
351 333
324
639 597 554
FY12A FY13A FY14A FY15F
Pay Costs Non Pay Costs
>€130m cost reduction
12
>2100 FTE reduction
On track to achieve c.€40m2 cost savings in FY15…with further scope from bench marking exercise
Continued focus on cost transformation
1
• Expect to deliver cost savings of c.€40m in FY15 driven by both pay and non pay savings
• AT Kearney global competitive benchmarking process completed in Dec-2014
- Indicated significant improvements since 2012
- But further scope for savings in the region of €50m-€80m in total
• Detailed cost plans for FY16-FY18 under preparation and expect to be complete by May 2015
IT rationalisation
Product rationalisation
Outsourcing
Sales efficiencies/brand
Procurement programme
Organisational design
Key areas in scope
Mobile network efficiencies
Customer care efficiencies
© eircom
Focus on improving customer experience
Making it simple for our customers to do business with us
Self Service Process
Improvements Improved Service
INITIATIVE OUTCOME
First call resolution
Reduced customer complaints
Reduced customer effort
Improved Net Promoter Score
• Consolidate contact centre queues
• Create systems and tools to
empower care agents
• Upskill & cross-skill agents
IMPROVED SERVICE
• Improve customer journeys
– Sales to activation
– Billing to cash
– Ticket to resolution
PROCESS IMPROVEMENTS
• Increased online capability
• Mobile App for Bundles
• IVR self service
• Strengthened webchat & social media
SELF SERVICE
Improved call centre operations
13
Customer self service
Progress
Q2 vs. Q1
© eircom
Agenda
Trading Q2 and YTD FY 14/15
Key business initiatives FY15
Q&A
Business update
Economic update
14
Business highlights
© eircom
Trading highlights
Q2 and 6 months to December 31, 2014
15 1 Includes share of Tetra EBITDA under proportional consolidation (€3m EBITDA)
• Q2 Revenues of €316m up 1% QoQ. Rate of YoY revenue
decline continues to fall
• Q2 EBITDA of €112m1 in line with expectations and
reflects seasonal investment in customer growth
• YTD EBITDA of €226m in line with expectations but 4%
down on the prior year
• Group broadband base grew 17,000 in the quarter driven
by investment in fibre and bundling
o Fibre connections at 202,000 – up 30,000 in Q2
o Continued growth in FMC bundles – up 13,000 in Q2
• Strong performance in mobile with 25,000 net adds in the
quarter driven by prepay and postpay. Third consecutive
quarter of mobile revenue growth.
• Cost transformation on plan – Operating costs in the
quarter reduced by €13m or 9% YoY
• On-going capital investment in growth programmes
• Maintaining strong liquidity – closing cash €173m
© eircom
Q2 H1 v Prior Year1 v Prior Year v Prior Year
1 v Prior Year
FY 15 FY 15 Better/(Worse) Better/(Worse) Better/(Worse) Better/(Worse)
€m €m €m % €m %
Fixed Revenue 236 474 (15) (6%) (25) (5%)
Mobile Revenue 91 178 (3) (3%) (2) (1%)
Eliminations (11) (23) (0) (0%) (1) (4%)
Group Revenue 316 629 (18) (5%) (28) (4%)
Cost of Sales (72) (141) 1 2% (4) (3%)
Gross Profit 244 489 (16) (6%) (31) (6%)
% Margin 77.3% 77.7%
Pay Costs (53) (104) 8 13% 19 16%
Non Pay Costs (79) (159) 5 6% 2 1%
Operating Expenses (132) (262) 13 9% 21 7%
Group EBITDA 112 226 (4) (3%) (10) (4%)
Fixed 103 209 (7) (7%) (13) (6%)
Mobile 9 17 4 74% 3 22%
Q2 Movement H1 Movement
1 The above table includes proportionate consolidation of Tetra Ireland at 56% for actual, budget and prior year 2 Operating expenses are pay and non pay costs before non-cash pension charge and lease fair value credits 3 Numbers in the above tables have been presented to the nearest million and therefore totals presented above may vary slightly from the actual arithmetic totals of such information 4 Prior year pay costs have been re-stated to exclude the non cash share incentive related provision of €1.5m, which has been reclassified as an exceptional item
Group EBITDA Q2 and 6 months to December 31, 2014
16
• Q2 Group revenue of €316m broadly in line with expectations but 5% down on Q2 ‘14 (post adjustment for MTR the decrease was 4%)
• YTD Group revenue of €629m broadly in line with expectations and 4% down year on year
• Q2 Group operating costs of €132m were €13m or 9% favourable YoY
• YTD costs of €262m were €21m or 7% favourable YoY. Cost savings year on year have primarily resulted from headcount reduction
• Q2 and YTD Group EBITDA was broadly in line with management expectations.
© eircom
330 329 323 333 315 311 313 316
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15Total Revenues
268 261 259 260 252 250 244 244
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
120 123 121 116121 121
114 112
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
149138 139 145
131 129 130 132
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Quarterly trading to December 31, 2014
17
Operating Costs3 (€m)
1 The above chart includes the proportionate consolidation of Tetra Ireland at 56% for actual, budget and prior year 2 The rate of revenue decline in the prior and current year has been adjusted to reflect the impact of the MTR adjustment made in Q2 FY14 3 Excludes €10 million of one-off storm costs incurred in Q3 FY14 and excludes non cash share incentive related provisions now classed as exceptional 4 FY 13 data presented above excludes results from Phonewatch up to the date of disposal in May 2013 5 Numbers in the above charts have been presented to the nearest million and therefore totals presented above may vary slightly from the actual arithmetic totals of such information
EBITDA (€m)
Revenue (€m) Gross Margin (€m)
• The rate of revenue decline
continues to slow
decreasing from 7% in prior
year to 3.8% in Q2 FY15
• Gross margin reduction
driven by changes in
revenue mix and impact of
one off items in prior year
• Q2 operating costs down
9% YoY reflecting
continued benefit from cost
saving programmes, in
particular from headcount
reductions
• QoQ operating costs
increased due to seasonal
customer acquisition costs
and lower capitalised
labour in the quarter
• Q2 FY15 EBITDA impacted
by seasonal investment in
customer acquisition
Qtr on qtr reduction compared to the PY
(7.0)%(2) (3.8)%(2)
© eircom
25%27% 27%
21%20%
18%21% 21%
20%22% 21%
19%21%
20% 21%22%
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Consumer Broadband Churn (%)
Consumer Access Churn (%)
37.8 37.6 37.2 36.6 36.7 36.2 35.1 34.5
17.3 16.6 16.1 14.8 15.6 15.7 15.6 14.3
46.1 45.7 45.1 44.1 44.8 44.5 43.6 42.5
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Retail core voice & access Retail broadband
Retail blended ARPU
940 917 896 878 859 844 831 814
455 451 447 451 452 456 458 460
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Retail Access Lines Retail Broadband Lines
Fixed line KPIs - Retail
18
Total Retail Lines (000’s) Fixed Line Churn (%)
Retail Line Movements (000’s)
ARPU1 (€)
• Continued growth in
underlying broadband base
in the quarter (+3,000),
driven by take up of high
speed broadband and
bundles
o Actual BB growth of
1,000 in the quarter
included 2,000 one-off
disconnections following
clean up of DSP base
• Underlying Retail line losses
of 11,000 in Q2 were
significantly lower than the
prior year period losses of
18,000
o Actual Retail access
losses of 17,000 included
6,000 one-off cessations
related to clean up of the
DSP base
• Q2 Retail ARPU impacted
by increased promotional
and retention discounts
1 ARPU’s have been re-stated to include all promotional discounts which have increased as a result of the introduction of new bundles including TV
ARPU’s include core voice, access rental and broadband rental revenues (less voice and bundle discounts) and exclude connection and other ancillary
revenues
(23)(21)
(18)(19)
(15)(13)
(11)(5) (4)
4
1
42
Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Access losses Broadband growth/(losses)
(17)
(6)
Access/BB DSP losses
(2)
3
1
© eircom
7
14
17 17
14
8 7
3 4
10
12
15
7
1011
16
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Wholesale access net growth Broadband net growth
23%
37%
53%
65%
77% 77%
70%
55%
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
18.3 17.3 17.0 17.0 16.7 16.4 16.6 16.7
29.9 29.5 28.7 29.1 29.4 28.3 29.0 29.3
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
WLR PSTN ARPU WLR PSTN & BITSTREAM ARPU
400 414 431 448 462 470 477 479
208 218 230 245 252 262 273 288
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Wholesale Access Lines Wholesale Broadband Lines
Fixed line KPIs - Wholesale
19
Wholesale Lines (000’s) ARPU1 (€)
Wholesale Growth (000’s)
Wholesale Pick Up Rate of Retail Access Losses –
Rolling LTM
• Continued growth in
Wholesale
o Broadband grew strongly
by 16,000 in Q2 and by
44,000 (18%) YoY
o Access lines grew by
3,000 in Q2 and by 31,000
or 7% YoY
o Wholesale ARPUs remain
stable driven by consistent
growth in both access and
broadband lines
• Wholesale growth equals
approximately 55% of Retail
losses (adjusted for the one
off base clean up) for LTM
compared to prior year rate of
65%
• Reduction in Wholesale pick
up of Retail access losses is
due to increased take up of
stand alone broadband (not
reported in access line
growth)
1Wholesale ARPU has been restated to include the impact of the WLR price reduction in Large Exchange Areas (LEA) which are fibre enabled
© eircom
(9)(4) (1) (5) (7) (7) (8)
58
19
8
14 13
Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15Group Access Losses Group Broadband Growth
(2)
(6)
(14)
Access/BB DSP losses
19
17
Group Broadband Market Share %
455 451 447 451 452 456 458 460
208 218 230 245 252 262 273 288
663 668 677 696 704 718 731 748
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Retail Broadband Lines Wholesale Broadband Lines
940 917 896 878 859 844 831 814
400 414 431 448 462 470 477 479
1,340 1,331 1,327 1,326 1,321 1,314 1,307 1,293
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Retail Access Lines Wholesale Access Lines
Group Access & Broadband movement (000’s)
Fixed line KPIs – Retail and Wholesale
20
Total Group Access Lines (000’s) Total Group Broadband Base (000’s)
• Group access lines
reduced by 8,000 in the
quarter (excluding one off
disconnections 6,000 DSP
connections)
• Group broadband base
continued to grow in Q2
increasing by 19,000
QoQ, same rate of growth
as prior year quarter
o Retail broadband
base up 3,000 in the
quarter (ex DSP)
o Wholesale
broadband lines
increased by16,000
• eircom maintaining a
combined share of the
fixed broadband market at
~66% at Sept, 2014
Source: ComReg Sept ‘14
66%
29%
5%
eircom
Cable
Other
© eircom
58.6 %57.5 % 59.0 % 57.7%
52.5 %
62.1 % 58.6 % 57.9 %
16.1% 15.7% 16.3% 17.0% 19.9% 19.2% 16.9%14.5%
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Prepay Postpay
15
2624
22
12 1214
19
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
331 357 381 403 415 427 441 460
735 702 676 675 657 629 624 630
1066 1059 1057 1,078 1072 1055 1065 1090
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Postpay Subscribers Prepay Subscribers
17.7 18.4 17.3 17.815.7 15.7 16.0 15.9
38.8 39.4 38.041.0
37.7 38.0 38.6 38.1
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Prepay Postpay
Mobile KPIs
21
1 Includes Mobile Broadband and M2M
Total Subscribers1 (000’s) Postpay Growth (000’s)
Annualised Mobile Churn (%) Prepay & Postpay ARPU1 (€)
• Strong growth in mobile base
in the quarter with net
additions of 25,000 customers
in the quarter
• Q2 postpay base of 460,000
customers increased by
58,000 YoY and 19,000 in the
quarter
• 42% of eircom subscribers
now on postpay contracts
compared to 37% as at
Dec’13
• Strong commercial
investment driving postpay
churn improvement to 14.5%
• New prepay proposition
driving stability in ARPU and
improvement in the base (up
6,000 compared to a 1,000
reduction in Q2 ‘14)
• 4G take-up driving continued
postpay ARPU stability
31% 34% 36% 37% 39% 40% 41% 42% 14.0% 14.8% 15.3% 15.8% 15.9% 16.2% 16.5%
Postpay market share - Q2 not yet available
% of postpay customers
© eircom
€84m €84m €79m
€71m€61m
€53m
€155m€145m
€132m
Q2 13 Q2 14 Q2 15
Non Pay Costs Pay Costs
5,444
3,765 3,458
Q2 13 Q2 14 Q2 15
FTE 9 day fortnight
Operating cost breakdown
Operating Costs1
FTE Headcount Evolution…
Notes 1 Opex includes indirect SAC but excludes cost of sales, non-cash pension charge, non-cash lease fair value credits, amortisation, depreciation, and exceptional items
FY13 excludes operating costs in relation to Phonewatch which was disposed of in May 2013
• Operating costs of €132 million are 9% lower than
same period last year and 15% down on Q2 ‘13
• Pay costs 13% lower year on year driven by
continued benefit from headcount reductions
• Non pay costs down 6% YoY
• Focus on delivering cost reduction target of €40m
in the current year
• FTE of 3,458 at end of Q2 compared to 5,444 as
at Dec ’12 – 36% reduction
• Surpassed target set over two years ago of 3,500
FTEs by December 2014
22
© eircom
€44m€54m
€46m €47m €49m
€87m
€39m €43m
€27m
€45m
€28m €28m €21m
€19m
€14m€14m
€71m
€99m
€73m €75m€70m
€107m
€53m€56m
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Non-NGA NGA
Capex breakdown by quarter to December ‘14
23
Capex % Revenue
1 Table represents incurred capex
18%
21%
30%
23% 23% 22%
• Incurred capex of €56m
in Q2 represents 18%
of revenues
o NGA rollout on
track with
1,100,000
premises passed
o Expect run rate to
increase in Q3 and
Q4
• FY15 incurred capex
expected to be approx
21%-23% of Revenue
34%
17%
© eircom
Operating €45m
Financing -€71m
€155m
€10m €12m€5m
€65m €6m
€199m
€226m
€244m
€173m
0
50
100
150
200
250
300
350
400
450
June FY14Cash
EBITDA CashCapex
VL Costs Paymentprovisions
Other Cash beforefinancing
NetInterest
Financing Dec FY15Cash
Strong cash balance of €173m1 at
December 14 despite significant capex investment
24
Notes: 1 Includes eircom share of Tetra cash of €10.5m 2 Other of €5 million includes tax €(8)m, financial restructuring costs of €(3)m offset by working capital/restricted cash of +€5m. 3 Financing costs of €6 million relates to repayment of Tetra debt of €4.2m and Amend & Extend fees of €1.3m
Working capital initiatives commenced to drive improvements to operating cashflow
© eircom
Agenda
Trading Q2 and YTD FY 14/15
Key business initiatives FY15
Q&A
Business update
Economic update
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Business highlights
© eircom
Key business initiatives FY15
• Continue investment in scalable, flexible network
• Execute bundling & convergence strategy
• Deliver improved customer experience
• Continue efficiency drive
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NETWORK
BUNDLING
CUSTOMER EXPERIENCE
EFFICIENCY
Q&A
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Appendix
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© eircom
YTD YTD YTD YTD YTD YTD
FY 14 FY 14 FY 14 FY 15 FY 15 FY 15
Fixed Revenue 499 (8) 491 474 (8) 466
Mobile Revenue 180 - 180 178 - 178
Eliminations (22) - (22) (23) - (23)
Total Revenue 657 (8) 649 629 (8) 621
Operating Costs incl. cost of sales (421) 3 (418) (403) 3 (400)
Adjusted EBITDA 236 (5) 231 226 (5) 221
Cash 246 (10) 236 173 (10) 163
Year to date
Reported
Management
Tetra
Adjustment Statutory
Reported
Management
Tetra
Adjustment Statutory
Q2 Q2 Q2 Q2 Q2 Q2
FY 14 FY 14 FY 14 FY 15 FY 15 FY 15
Fixed Revenue 251 (5) 246 236 (4) 232
Mobile Revenue 94 - 94 91 - 91
Eliminations (11) - (11) (11) - (11)
Total Revenue 334 (5) 329 316 (4) 312
Operating Costs incl. cost of sales (219) 2 (217) (204) 1 (203)
Adjusted EBITDA 115 (3) 112 112 (3) 109
Cash 246 (10) 236 173 (10) 163
Quarter 2
Change in Accounting Policy
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• The Management Accounts presented within this presentation include the proportionate consolidation of the Group’s share (56%) of the results of Tetra
Ireland Communications Limited (“Tetra”)
• On 1 July 2014, the Group adopted IFRS 11 which requires that the group’s joint venture s are incorporated into the consolidated financial statements using
the equity method of accounting rather than proportionate consolidation. Under the new standard the statutory financial statements are prepared using the
equity method of accounting and therefore now present the results of Tetra as an investment in a joint venture.
• In order to allow comparability of group financial information, the financial results of Tetra will continue to be consolidated on a proportionate basis within
investor presentations and within the management’s discussion and analysis section of the quarterly reports.
Thank you
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