eniro · july 16th, 2014 . 1. johan lindgren ceo . 3 disappointing development in sweden during q2...
TRANSCRIPT
Eniro
Q2 report
Johan Lindgren, CEO Cecilia Lannebo, Head of IR
July 16th, 2014
1. Johan Lindgren CEO
3
Disappointing development in Sweden during Q2
Multiscreen revenues
All markets except for Sweden report multiscreen growth in Q2
Management
Poor management and sales execution in eniro.se results in negative deviation, primarily for Desktop
Phasing of contracts
Phasing of sales from Q1 to Q2 proves to be a mistake
Management and organization changes Eniro.se under the management of Stefan
Kercza, CEO of Eniro Denmark All other operations in Sweden under the
management of Mattias Wedar
Sales organization New sales planning from start of August Increased focus on new customers and offer to
existing customers Price/packaging structure More segmented packages to target customers
better Improved pricing structure to increase ARPA
Consequence: As a consequence, the group reports decline in multiscreen revenues and changes full year guidance
CEO summary – Q2
Multiscreen revenues decreased 5% organically
Swedish performance not according to plan what results in weak Desktop development
Continued strong mobile growth – “Mobile first”
Total as well as organic revenues increased 58% and 27% of total UB (unique browsers) on mobile
Total revenues down 11% (-11%)
Organic decline 10% (-4%)
Currency positive SEK 7 M
Cost savings
Cost reductions SEK 72 M in Q2
EBITDA was SEK 194 M (234 )
Incl. SEK 6 M in capital gain, SEK 4 M in reversed costs for synthetic share program and SEK 1 M in restructuring reserve
EBITDA margin of 24.5% (26.2%)
Adjusted EBITDA was SEK 187 M (247)
Adj. EBITDA margin 23.6% (27.7%)
Operating cash-flow was SEK 174 M (103) an increase with SEK 71 M
Amortization of loan facility of SEK 186 M on June 30th
4
Financial development Q2 2014
5
793
194 187
73
174
893
234 247
80 103
0
100
200
300
400
500
600
700
800
900
1 000
Revenue EBITDA Adj. EBITDA Net Income Cash Flow
Incl. capital gain of SEK 6 M
Incl. positive reverse effect of synthetic share program of some SEK 4 M
2 232 2 453 Net debt -9%
-11%
-24%
-9% +69%
Q2 2013
Q2 2014
-17%
6
Currency, divestments and moved publications had a negative effect on revenues of SEK 17 M in Q2
Revenue bridge Q2 2014
Reported Organic
-11%
Reported Q2 - 2014
Voice
-9.6%
793
Other
31
19
Campaign
2
84 13
Mobile
38
Desktop Organic baseline Q2-2013
877
Moved publications
2
Divestments
22
Currency effects
7
Reported revenues Q2 - 2013
893
58% -18% 28% -24% -11% -17%
7
Total cost savings in second quarter of SEK 72 M
Total cost savings for 6 M amounted to SEK 148 M
Savings in Q2 include reductions in staff of SEK 37 M and cost of marketing SEK 9 M
Cost savings Q2 2014
1 400
1 350
1 200
1 150
0
1 250
1 300
2
72
Net Savings Q1
76
Currency effect
7
7
Divested Adj
Operating
cost 2014
YTD
17
YTD 2013
1 380
1 380 1 236
1 370 17
Organic baseline YTD 13
47
1 175
61
Net Savings Q2
12
1 323 Cost ex 3rd party
3’rd party cost
Mobile first: rapid growth in revenues and traffic
Mobile revenues increased 58% to SEK 104 M (66) in Q2 compared with last year
Mobile search 13% of total revenues in Q2
27% of all searches are done on mobile devices
Eniro market share in Sweden and Norway ~20%
Mobile growth strengthens financial position
8
Share of search (UB-unique browsers) via mobile devices
2013 Q2 2014
Revenues SEK 287 M SEK 104 M
Growth % 95% 58%
%
0
5
10
15
20
25
30
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014
Activities in Q2 and following close of period
Divesture of Krak Markedsdata (KMD) in Denmark
In line with strategy to concentrate on digital local search
Revenues from KMD in 2013 amounted to approx. SEK 14 M
EBITDA 2013 approx. SEK 2 M
Capital gain in Q2 approx. SEK 6 M Consideration approx. SEK 7 M in Q3 2014
Management/ and organization changes in Eniro Sweden
Stefan Kercza CEO Eniro Denmark appointed acting manager of eniro.se
Mattias Wedar appointed acting manager of remaining Swedish operation
Acquisition of Idium in Norway Strengthening of Campaign Products Revenue contribution 2014E some SEK 35
M EBITDA contribution 2014E some SEK 2 M Cash consideration SEK 35 M, split
between SEK 22 M upfront and SEK 13 M divided over three years
9
10
Development net debt/EBITDA rolling 12 months
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
5
0
2 000
4 000
6 000
8 000
10 000
2006 2007 2008 2009 2010 2011 2012 2013 Q1 2014
EBITDA Net Debt Net debt/EBITDA
Q2 2014
Change in net debt
Operating cash flow in Q2 increased to SEK 174 M (103)
Amortization on loan facility of SEK 186 M on June 30th
Net debt/ adjusted EBITDA 2.5 (2.5)
11
Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jul-Jun Jan-Dec
SEK M 2014 2013 2014 2013 2013/14 2013
Opening balance -2 374 -2 539 -2 340 -2 704 -2 453 -2 704
Operating cash flow 174 103 121 191 259 329
Acquisitions and divestments 0 0 49 41 41 33
Share issue - - - - 0 0
Translation difference and other changes -32 -17 -62 19 -79 2
Closing balance -2 232 -2 453 -2 232 -2 453 -2 232 -2 340
2,5 2,5 2,5 2,5 2,5 2,4Net debt /adjusted EBITDA, times
Analysis of interest-bearing net debt
Eniro the local search company
12
Desktop search
Mobile search
Listing, ranking and visibility in local search services on desktop and mobile
Campaign products
Keyword advertising, SEO, video, homepages and banners
Hyper local books in Sweden, Norway and Denmark
Voice
Directory assistance service via phone and sms in Sweden, Norway and Finland
Multiscreen growth segments Mature segments
Outlook 2014
Adjusted EBITDA 2014 of some SEK 850 M Long-term net debt/EBITDA not to exceed 2x
Investments approx. SEK 150 M Working capital to be some SEK 120-130 M negative Paid-tax some SEK 25 M Strong cash-flow generation
13
EBITDA and balance sheet
Cash flow and investments
Eniro Q2 report Appendix
Financial commentary
Amortizations
The Norwegian brands Gule Sider and Ditt Distrikt annual amortization of some SEK 95 M. Q2 impact SEK 20 M
Amortization of Norwegian Voice brand 1888 of SEK 8 M in Q2
PRI pensions guarantee in force throughout 2015
Total pledged funds amount to SEK 122 M
Additional SEK 10 M due in March 2015
Print conversion
Conversion of Gula Sidorna in Sweden into digital performing according to expectations
Cash-flow and working capital
Cash-flow increased with SEK 71 M to SEK 174 M compared Q2 last year
Amortization of debt of SEK 186 M in Q2
Voice
Negative market trend for Voice
Further future impairment loss is to be expected
15
Refinancing – terms & conditions
SEK 3bn, were of SEK 250 M in RCF
Three years with an extension to four years, on the condition that Eniro replaces SEK 800 M of bank loan with a corporate bond
Scheduled amortizations for 2014-2016 approx. SEK 375 M annually
SEK 186 M amortized on loan facility in Q2
Base rate Stibor plus 375pp (lowered to 300pp at Net debt/EBITDA below 2x)
16
Loan facility
Amortizations
Interest rates
Revenues
17
Revenue by category
Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jul-Jun Jan-Dec
SEK M 2014 2013 % 2014 2013 % 2013/14 2013
Desktop search 393 483 -19 809 956 -15 1 687 1 834
Mobile search 104 66 58 202 117 73 372 287
Campaign products 60 59 2 135 116 16 265 246
Multiscreen 557 608 -8 1 146 1 189 -4 2 324 2 367
Print 61 80 -24 116 178 -35 445 507
Other products 20 21 -5 31 47 -34 81 97
Local search 638 709 -10 1 293 1 414 -9 2 850 2 971
Voice 155 184 -16 292 365 -20 616 689
Total revenue 793 893 -11 1 585 1 779 -11 3 466 3 660
Revenue by country
Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jul-Jun Jan-Dec
SEK M 2014 2013 % 2014 2013 % 2013/14 2013
Sweden 366 427 -14 721 837 -14 1 603 1 719
Norway1) 193 249 -22 429 514 -17 913 998
Denmark 130 114 14 241 223 8 533 515
Finland 49 56 -13 89 109 -18 187 207
Poland 55 47 17 105 96 9 230 221
Total revenue 793 893 -11 1 585 1 779 -11 3 466 3 660
1) Of which SEK 22 M during the second quarter is attributable to divested businesses and 57 million during the full year
2013.
EBITDA
18
EBITDA by revenue area
Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jul-Jun Jan-Dec
SEK M 2014 2013 % 2014 2013 % 2013/14 2013
Local search 141 181 -22 341 307 11 704 670
Voice 62 73 -15 111 130 -15 232 251
Other -9 -20 55 -31 -33 6 -70 -72
Total EBITDA 194 234 -17 421 404 4 866 849
Items affecting comparability
Restructuring costs -1 13 3 26 83 106
Other items affecting
comparability -6 - -68 - -67 1
Total adjusted EBITDA 187 247 -24 356 430 -17 882 956
Income statement
19
Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jul-Jun Jan-Dec
SEK M 2014 2013 2014 2013 2013/14 2013
Gross operating revenue 794 895 1 587 1 783 3 472 3 668
Advertising tax -1 -2 -2 -4 -6 -8
Operating revenue 793 893 1 585 1 779 3 466 3 660
Production costs -185 -197 -379 -412 -842 -875
Sales costs -264 -257 -532 -562 -1 110 -1 140
Marketing costs -74 -53 -139 -100 -301 -262
Administration costs -89 -125 -206 -246 -463 -503
Product development costs -59 -66 -112 -135 -236 -259
Other income/costs 7 2 72 4 85 17
Impairment of non-current assets - -5 - -5 -99 -104
Operating income** 129 192 289 323 500 534
Financial items, net -50 -56 -100 -69 -173 -142
Income before tax 79 136 189 254 327 392
Income tax -6 -56 -45 -85 -118 -158
Net income 73 80 144 169 209 234
Of which, attributable to:
Owners of the Parent Company 71 78 142 165 209 232
Non-controlling interests 2 2 2 4 0 2
Net Income 73 80 144 169 209 234
Balance sheet
20
Consolidated balance sheet
Jun. 30 Jun. 30 Dec. 31
SEK M 2014 2013 2013
Assets
Non-current assets
Tangible assets 36 39 40
Intangible assets 7 056 7 227 6 948
Deferred tax assets 193 369 209
Financial assets 172 149 148
Total non-current assets 7 457 7 784 7 345
Current assets
Trade receivables 332 452 430
Current tax assets 1 0 0
Other current receivables 306 292 267
Other interest-bearing receivables 1 1 3
Cash and cash equivalents 131 117 113
Total current assets 771 862 813
TOTAL ASSETS 8 228 8 646 8 158
Equity and liabilities
Equity
Share capital 309 2 529 309
Additional paid in capital 5 125 5 125 5 125
Reserves -205 -243 -360
Retained earnings -1 314 -3 830 -1 421
Total equity share holders of the Parent company 3 915 3 581 3 653
Non-controlling interests 62 39 68
Total equity 3 977 3 620 3 721
Non-current liabilities
Borrowing 1 950 2 309 2 115
Deferred tax liabilities 269 278 276
Pension obligations 289 496 273
Provisions 5 7 5
Other non-current liabilities 1 7 6
Total non-current liabilities 2 514 3 097 2 675
Current liabilities
Trade payables 155 171 181
Current tax liabilities 26 32 25
Other current liabilities 990 1 332 1 030
Provisions 30 21 74
Borrowing 536 373 452
Total current liabilities 1 737 1 929 1 762
TOTAL EQUITY AND LIABILITIES 8 228 8 646 8 158
Cash flow statement
21
Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jul-Jun Jan-Dec
SEK M 2014 2013 2014 2013 2013/14 2013
Operating income 129 192 289 323 500 534
Depreciation, amortization and impairment 65 42 132 81 366 315
Other non-cash items 12 -26 -94 -32 -56 6
Financial items, net -35 -40 -70 -79 -143 -152
Income tax paid -11 -25 -22 -56 -25 -59
Cash flow from operating activities before changes in
working capital 160 143 235 237 642 644
Changes in working capital 49 1 -40 33 -236 -163
Cash flow from operating activities 209 144 195 270 406 481
Acquisitions/divestments of group companies and
other assets 0 0 49 41 41 33
Investments in non-current assets, net -35 -41 -74 -79 -147 -152
Cash flow from investing activities -35 -41 -25 -38 -106 -119
Proceeds from borrowings 49 2 738 72 2 738 213 2 879
Repayment of borrowings -186 -2 972 -186 -2 972 -435 -3 221
Long-term investments 0 -50 -10 -50 -10 -50
Dividend on preference shares -12 -12 -24 -24 -48 -48
Dividend minority owners -7 - -7 0 -7 -
Rights issue - - - - 0 0
Cash flow from financing activities -156 -296 -155 -308 -287 -440
Cash flow 18 -193 15 -76 13 -78
Cash and cash equivalents at start of period 111 308 113 198 117 198
Cash flow 18 -193 15 -76 13 -78
Exchange rate difference in cash and cash equivalents 2 2 3 -5 1 -7
Cash and cash equivalents at end of period 131 117 131 117 131 113
Eniro share price and shareholder development
22
Shareholders March 31, 2014 Shareholders March 31, 2014
10 largest holders (grouped), June 300h 2014 Capital % B-shares Preference
shares Changes since
30/12-2013
Swedbank Robur fonder 7,8% 8 012 476 0 +/-0,1%
Danske Capital Sverige AB 7,7% 7 864 482 80 735 +1,7%
Staffan Persson, company and family 6,9% 7 129 671 0 -1%
Fidelity Fund 6,2% 6 435 105 0 +4%
JPM Chase 5,3% 5 480 791 0 -2,8%
Odey Capital 5,4% 5 453 208 90 000 +1%
Unionen 3,8% 3 904 027 0 +/-0,0%
MSIL client account 3,3% 3 401 660 0 +1,9%
Skandinaviska Enskilda Banken 2,8% 2 863 880 1 798 -1,0%
CBLDN 2,1% 2 188 694 0 +2,1%
June 30, 2014
Dec 30, 2013
Total shareholders 9 434 -1 625
Market Cap (MSEK) 5 087 -476
Shareholders March 31, 2014
Share price development year-to-date 2014 = -8% Share price development June 2014 = -16%
Shareholders June 30, 2014
010203040506070
