Drillisch AG Company Presentation March 2014
Agenda Highlights 2013 Guidance and Take-Aways Page 2
Financial Highlights 2013 Subscriber 2013 MVNO-subscribers +16.0%. Thereof Budget-subscribers +69.5% Q4-2013 Budget-subscribers +123,000 Gross Profit EBITDA 2013 Gross Profit +9.4% to 119.0 million Margin 41.0% (+7.4 percentage points) Q4-2013 Gross profit +5.8% to 31.9 million Margin 44.0% (+5.8 percentage points) 2013 EBITDA +14.4% to 70.8 million Margin 24.4% (+5.3 percentage points) Q4-2013 EBITDA +27.9% to 18.7 million Margin 25.7% (+7.3 percentage points) Cash-Flow 2013 CF from curr. Business operations +105.5% auf 57.0 million Q4-2013 CF from curr. Business operat. 25.9m (prev. year: 17.2m) ALL EXPECTATIONS REACHED OR OUTPERFORMED xxx Page 3
Drillisch AG at a Glance Independent MVNO in the German Telco Market Price and Innovation Leader MVNO-business model: Drillisch purchases advance services from MNOs Telefonica and Vodafone and distributes own attractive tariffs and products; Focus on profitable post paid market Owner of the contract rights Operates like a network operator without high infrastructure costs Low capex requirements In total 1.900m customers (thereof 1.705m MVNO customers; +16.0% y-o-y) Price and innovation leadership, proved by TÜV seals Focus on cost-effective online distribution Multi-brand strategy with attractive product portfolio and proprietary IT platform; Growth segments: Mobile Internet, LTE and Data monetisation Strong Cashflow generating and attractive dividend policy (yield of 6.5% (1) ) COMPLETED TRANSITION LEADS TO CONSIDERABLE IMPROVEMENT OF PROFITABILITY (1) Based on Xetra share price 24.47 (20 March 2014) Page 4
Drillisch Group at a glance SUCCESSFUL WITH INNOVATIVE RATES AND TRANSPARENT PRODUCTS Drillisch Portfolio (Choice) Awards for Price and Quality (Choice) Highly sustainable Quality Management reconfirmed again CUSTIOMER SATISFACTION AND CLIENT WILLINGNESS TO RECOMMEND (UP TO 89%) Page 5
Multi Brand Strategy* Drillisch SUSTAINABLE QUALITY MANAGEMENT + HIGH CUSTOMER SATISFACTION 4G 2G 3G Voice SMS Transparenz Qualität Preis Budget Tarife * Not all of the brands of the Drillisch-group are listed Page 6
All-in and Flat Tariff in 2013 PRICE LEADER IN ALL SEGMENTS FOR FIRST-TIME USER TO FULL FLAT All-in XS 4.95 50 min./sms 100 MB Price Leadership in all segments From 4.95 for beginners To 24.95 Full-Flat Voice Flat SMS Flat 1 GB Flat XM ab 24.95 All-in XM 7.95 100 min./sms 300 MB Speed Up to 50.0 Mbit/s Data bundles as required LTE Rate All brands up to 50 Mbit/s Voice Flat 500 MB Flat XS ab 16.95 All-in XL 14.95 250 min./sms 500 MB Highspeed as driver Upgrade to LTE Data Monetisation SUCCESSFUL WITH PROVEN QUALITY, EXCELLENT REFERENCES & TRANSPARENT PRODUCTS Page 7
Subscriber Development SUBSCRIBER DEVELOPMENT SUBSCRIBER FOCUS 1,593 1,648 1,705 1,470 1,531 1,389 1,211 1,314 1,216 0,553 0,517 0,441 0,320 0,229 0,207 0,195 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 1.800.000 1.600.000 1.400.000 1.200.000 1.000.000 800.000 600.000 400.000 200.000 0 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 MSP MVNO Total Volume Budget SUBSCRIBER DEVELOPMENT MVNO subscriber growth + 235 k to 1.705 m (prev. Year: 1.470m subscriber) Total Subscribers* - 10k subscribers 2013: 1.900 m subscribers 2012: 1.910 m subscribers *Growth after adjustment of SP-clientele SUBSCRIBER FOCUS Budget subscribers YoY: + 351k to 856k (prev. year: 505k) Q4-13: +123 k; Q3-13: +76k Volumen subscribers YoY: -117 k to 848k (prev. year: 965k) Q4-13: -67 k, Q3-13: -21k Page 8
New Rate Plans as of 1 st April SUITABLE RATE PLANS BETTER PREFORMANCE AT A MORE FAVORABLE PRICE All-in 200 4.95 Voice 50 Min. SMS 50 200 MB Voice Flat SMS Flat 2000 MB 14.4 Mbit/s Flat XM 2000 24.95 All-in 300 6.95 Voice 100 Min SMS 100 300 MB Voice Flat SMS Flat 1000 MB 14.4 Mbit/s Flat XM 1000 19.95 Price Leadership in all segments of the German Market All-in 500 9.95 Voice 250 Min. SMS 250 500 MB Voice Flat SMS Flat 500 MB Flat XS 500S 16.95 All-in 1000 12.95 Voice 250 Min. SMS 250 1000 MB Flat XS 500 14.95 Voice Flat 500 MB Page 9
Comparison old and new OLD WORLD NEW WORLD All-in XS 4.95 (50 Min./ 50 SMS + 100 MB) All-in XM 7.95 (100 Min./ 100 SMS + 300 MB) All-in XL 14.95 (250 Min./ 250 SMS + 500 MB) Flat XS 500 16.95 (Voice Flat + 500 MB) Flat XM ab 24.95 (Voice + SMS Flat + 1GB) Alte Produktfamilie xxx 100 MB more 1 cheaper 5 or33 % cheaper 2 cheaper+ 500 MB more 2 cheaper +SMS Flat 5 or 20 % cheaper 14,4 Mbit/s 1 GB more 14,4 Mbit/s All-in 200 4.95 (50 Min. +50 SMS + 200 MB) All-in 300 6.95 (100 Min. + 100 SMS + 300 MB) All-in 500 9.95 (250 Min. + 250 SMS + 500 MB) All-in 1000 12.95 (250 Min. + 250 SMS + 1000 MB) Flat XS 500 14.95 (Voice Flat + 500 MB) Flat XS 500S 16.95 (Flat Voice/SMS + 500 MB) Flat XM 1000 19.95 (Voice/SMS Flat + 1 GB) Flat XM 2000 24.95 (Voice/SMS Flat + 2 GB) Page 10
EU-Tariff as of April 1 st, 2014 TARIFF REVOLUTION! BUDGET AND FLAT-TARIFF FOR USAGE IN EUROPE! EU Tarif S EU Tarif M EU Tarif L EU Tarif Flat S Target group/ USPs EU-Tariff for Beginners! EU-Tariff for low voice usage! THE Smartphone-EU Tariff! EU-Flat for Travellers and for constant voice usage Terms Monthly Price 7.95 9.95 12.95 19.95 Starter Package 19.95 19.95 19.95 19.95 Contract 1 month 1 month 1 month 1 month Minutes included Price per additional minutes Home Country / EU SMS included Price per additional SMS Home Country / EU Data Internet price per usage 0.15 per MB up to 30 extra MB (Total 130 MB) max. 4.50 Home Country/EU: 50 Home Country/EU: 50 Home Country/ EU: 100 Home Country: FLAT EU:100 0.06 0.06 0.06 0.06 Home Country/EU: 50 Home Country/EU: 50 Home Country/ EU: 100 Home Country: FLAT EU:100 0.06 0.06 0.06 0.06 Home Country/ EU: 100 MB Home Country/ EU: 200 MB Home Country/ EU: 300 MB Home Country: 500 MB EU: 100 MB 0.15 0.15 0.15 0.15 Internet additional data volume + 70 MB + 70 MB + 70 MB + 70 MB 131 MB - 200 MB Speed 7.2 Mbit/s 7.2 Mbit/s 7.2 Mbit/s 7.2 Mbit/s Page 11
EU-Tarif as of July 1 st, 2014 VOICE & MOBILE INTERNET (EU) UP TO 37% CHEAPER THAN ROAMING REDULATION EU-Roaming-Regulation Prices as per 1.7.2014: Min. outgoing 0.2261 Min. incoming 0.0595 SMS 0.0714 Daten / MB 0.2380 Drillisch EU-Roaming-Prices as per 1.4.2014: Min. outgoing 0.15 Min. incoming 0.05 SMS 0.07 Daten / MB 0.15 EU Light 1.20 mtl. Min. outgoing 0.06 Min. incoming 0.00 SMS 0.06 Daten / MB 0.06 EU 100 4.50 monthly Min. + SMS 100 Min. incoming 0.00 Further Min. 0.09 SMS 0.07 EU Internet 4.50 monthly Daten / MB 100 Per additional MB 0.15 CAP 30: max. 4.50 for a further 100 MB (automatically) EU 100 + Internet 7.95 Min. + SMS 100 Daten / MB 100 Further Min. 0.09 Min. incoming 0.00 Further SMS 0.07 Further MB 0.15 WITH INNOVATIVE OPTIONS A CARELESS USAGE IN EU-COUNTRIES Page 12
Financials Increase in relevant KPIs and comparative Service Revenues in m 2013 2012 IV/2013 IV/2012 Service Revenues* 285.1 292.1 72.2 74.9 Gross Profit 119.0 108.9 31.9 30.2 EBITDA 70.8 61.9 18.7 14.6 Service Revenues* Gross Profit EBITDA 292,1 285,1 108,9 119,0 61,9 70,8 74,9 72,2 30,2 31,9 14,6 18,7 2012 2013 Q4-12 Q4-13 2012 2013 Q4-12 Q4-13 2012 2013 Q4-12 Q4-13 Moderate decline Increase Q4 compared with Q3 +2,8% Increase 2013 Gross Profit +9.4% Margin for first time > 40% Increase 2013 EBITDA +14.4% Margin > 25% * Service Revenues adjusted for already sold prepaid subscribers and impact from the reduction of the termination rates Page 13
Average Gross Profit per User (AGPPU) POSITIVE DEVELOPMENT SUSTAINABLE AGPPU CONTRIBUTION 1.800.000 12,00 1.600.000 1.400.000 10,00 1.200.000 8,00 1.000.000 800.000 6,00 600.000 4,00 400.000 200.000 2,00 0 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 0,00 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Total Volume Budget Blended Volume Budget I/2013 II/2013 III/2013 IV-2013 2012 2013 AGPPU Budget Subscribers 9.35 9.72 9.90 9.33 9.98 9.40 AGPPU Volume Subscribers 3.76 3.77 3.74 3.58 4.17 3.81 AGPPU Subscribers (blended) 5.80 6.16 6.40 6.38 5.67 6.23 Page 14
Balance Sheet 31.12.2012 ASSETS 31.12.2013 31.12.2012 LIABILITIES 31.12.2013 53,5 Other Current Assets 65,9 Short-Term Liabilities 77,3 Cash 55,0 336,5 Long-Term Liabilities 41,4 93,3 391,7 187,0 Fixed Assets 110,3 120,2 Equity 217,6 522.6m 352.3m 522.6m 352.3m EQUITY RATIO REACHES 61.8 PERCENT (31.12.2012: 23.0%) Page 15
Keypoints from Cashflow (1) In m 2013 2012 Comment Cashflow from current business activities 57.0 27.7 Transformation to MVNO business modell completed. Operating Cashflow is reflecting the potential of the MVNO segment Cashflow from investment activities 350.5 8.4 Cashflow from financing activities -297.7 20.5 357.3m received payments from the sale of freenet stock ( in the balance sheet as available for sale asset (AFS) 100m from the issue of a convertible bond and 125m for the repayment of a bond (exchangeable on freenet shs) 192.6m amortisation of loan Change in cash 109.7 56.6 Free Cashflow (2) 37.1 4.7 Clear increase from 2014 because CAPEX returns to normal level ( 3-4m p.a.) (1) Detailed cash flow (page 63, Annual Report 2013 (2) Free Cashflow Cashflow from current business activities minus Capex Page 16
Bridge EBITDA to FCF Free Cashflow Bridge 2013 in m 70,8-4,4-9,5-19,9 37,1 EBITDA Change in NWC Taxes Capex Free Cash Flow Page 17
Net Debt NET DEBT 2012 m Bank Loans (Non-Recourse) 142.6 Exchangeable bond 118.7 Financial Liabilities 67.9 Leasing Liabilities 1.1 Cash and cash equivalents -77.3 Net Debt 253.0 Adjusted Net Debt (exl. Non-Recourse) 110.4 LTM EBITDA 61.9 NET DEBT 2013 m. Bank Loans 0.0 Convertible Bond 86.2 Leasing Liabilities 1.1 Cash and Cash Equivalents -187.0 Net Debt -99.7 LTM EBITDA 70.8 4,1 1,8 Net Debt / LTM EBITDA adj. Net Debt / LTM EBITDA -1,4 Net Debt / LTM EBITDA DEBT FREE, WITHOUT LEVERAGE AND HIGH CASH LEVEL Page 18
Outlook 2014 and 2015 CONTINUATION OF THE SUCCESS STORY IN THE 12 TH YEAR Subscribers To increase the MVNO subscriber base EBITDA 2014 Increase of 6%-20% to 82-85 million EBITDA 2015 Further increase of ca. 17% to 95-100 million Dividend Long-term orientated dividend policy Dividend proposal to AGM (21 st May) 1.60/ share (prev. year: 1.30) Dividend guidance for bsuiness year 2014 + 2015: @ least 1.60 FURTHER GUIDANCE FOR PROFITABLE GRWOTH IN 2014 AND 2015 Page 19
Take Aways - KPIs - all defined targets ahead of expectations - Renewed seals for quality and transparency - Price leader in all segments - Flexibility No debt and good cash position - Increase of entire EBITDA for business year 2014 and 2015 - - Increase of dividend and commitment for a 3-year dividend guidance Page 20
Drillisch-Share SHAREHOLDER STRUCTURE PER 20 MARCH 2014 Shareholder Structure in % in shs. Free Float 80.11% 42,612,931 Treasury Shares 9.76% 5,189,015 M. Brucherseifer 3.15% 1,677,656 Fidelity FMR, Boston 5.45% 2,896,567 V. Choulidis 0.75% 400,000 P. Choulidis 0.75% 400,000 J. Weindl 0.02% 10,439 Dr. H. Lennertz 0.01% 2,407 total 100.00% 53,189,015 Index Membership Rank Market Cap Rank Turnover TecDAX 30 (Jan. 2014) 10 11 Blue Chip Indizes Germany 81 73 Source: Notifications acc 21 ff WpHG; Free Float acc. to Deutsche Boerse AG 85.59 per cent Page 21
Disclaimer and Contact This presentation contains forward-looking statements that reflect the current views of the management of Drillisch AG with respect to future events. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond the control of Drillisch AG. Drillisch AG does not undertake any obligation to publicly update or revise information provided during this presentation. Drillisch AG Wilhelm-Röntgen-Straße 1-5 D - 63477 Maintal Telefon: + 49 (0) 61 81 / 4123 Telefax: + 49 (0) 61 81 / 412183 Internet: www.drillisch.de E-Mail: ir@drillisch.de Drillisch AG Investor Relations Wilhelm-Röntgen-Straße 1-5 D - 63477 Maintal Telefon: + 49 (0) 61 81 / 412200 Telefax: + 49 (0) 61 81 / 412183 E-Mail: ir@drillisch.de Page 22
EBITDA Guidance vs. Delivery EBITDA (adjusted) Guidance 2009 2010 2011 2012 2013 2014 2015 FY Positive Development Positive Development 52m 58m 67-70m (old: 77-80m) 82-85m 95-100m Q1 41-42m 46m Q2 60-61m Upper end Q3 43m 48m 70m EBITDA (IFRS) 43.5m 49.3m 52.6m 61.9m 70.8m Growth (YoY) 7.1% 13.3% 6.7% 17.8% 14.4% ~ +16%-20% (e) ~ +17% Overdelivery Overdelivery Overdelivery Overdelivery Overdelivery Increased Vergleich mit Guidance: DRILLISCH IS DELIVERING SUSTAINABLE PROFIT INCREASE FOR THE 11 TH CONSECUTIVE YEAR WITH CONTINUOUSLY OVERDELIVERING ON INITIAL EBITDA GUIDANCE Source: Company Information, * prelim. Number 2013 Page 23
Competitional Overview - Budget Tariff Provider Tariff Basic Fee Minutes SMS Data SP * Bill after 24 months Saving CD * Drillisch All-in 200 4.95 50 50 200 MB 19.95 138.75 1 Telekom Complete Comfort XS 19.95 50 50 100 MB 29.95 508.75 370.00 24 Vodafone Smart S 9.99 50 200 200 MB 29.99 269.75 131.00 24 o2 Blue Basic 9.99 o2 + 50 200 200 MB 29.99 269.75 131.00 24 Congstar Smart S 6.99 50 50 100 MB 0.00 167.76 29.01 24 Drillisch All-in 300 6.95 100 100 300 MB 19.95 186.75 1 Lidl Mobile Smart S 7.99 300 Einheiten 300 MB 0.00 191.76 5.01 1 Aldi Talk PAKET 300 7.99 300 Einheiten 300 MB 0.00 191.76 5.01 1 Klarmobil Allnet-Starter 9.95 100 100 200 MB 9.95 248.75 62.00 24 Congstar Smart M 9.99 100 100 200 MB 0.00 239.76 53.01 24 Simyo Easy All-Net 200 7.90 200 Einheiten 200 MB 19.90 209.50 22.75 24 Fonic Smart S 9.95 400 Einheiten 200 MB 9.95 248.75 62.00 1 Blau Smart Option 9.90 200 200 200 MB 9.90 247.50 60.75 1 Fyve Kombi Paket M 9.95 100 100 200 MB 9.95 248.75 62.00 1 BASE smart 15.00 100 + Wunschflat 100 200 MB 0.00 360.00 173.25 24 Drillisch All-in 500 9.95 250 250 500 MB 19.95 258.75 1 Fonic Smart 16.95 500 Einheiten 500 MB 9.95 416.75 158.00 1 Aldi Talk PAKET 600 12.99 600 Einheiten 400 MB 0.00 311.76 53.01 1 Kaufland Surf & Talk 500 12.95 400 Einheiten 500 MB 12.95 323.75 65.00 1 Fyve Kombi Paket L 14.95 100 100 500 MB 9.95 368.75 110.00 1 Drillisch All-in 1000 plus 12.95 250 250 1 GB 19.95 330.75 1 Simyo GIGA All-Net 400 15.90 400 Einheiten 1 GB 19.90 401.50 70.75 24 Mobilcom-debitel Smart Surf 14.99 50 50 1 GB 0.00 359.76 29.01 1 Fyve Kombi Paket XXL 29.95 250 100 3 GB 9.95 728.75 398.00 1 * SP = Starting Price for Package, CD = Contract Duration Page 24
Competitional Overview Flat Tariff Provider Tariff Basic Fee Minutes SMS Data SP * Bill after 24 months Saving CD * Kleine Datenpakete Mittlere Datenpakete Große Datenpakete Drillisch Flat XS 500 14.95 Flat 0.09 500 MB 19.95 378.75 1 Telekom Special Allnet 29.95 Flat Flat 200 MB 29.95 748.75 370.00 24 Vodafone Smart M 19.99 300 Flat 300 MB 29.99 509.75 131.00 24 o2 Blue Select 17.99 o2 + 100 Flat 300 MB 29.99 461.75 83.00 24 1&1 All-Net-Flat Basic 19.99 Flat 0,099 500 MB 29.90 509.66 130.91 1 mobilcom-debitel Comfort Allnet 19.99 Flat 0,19 500 MB 0.00 479.76 101.01 24 Tele 2 Allnet Flat Internet 17.45 Flat 0,09 500 MB 0.00 418.80 40.05 24 Fonic All-Net Flat 19.95 Flat 0,09 500 MB 9.95 488.75 110.00 1 Klarmobil Allnet-Spar-Flat 19.85 Flat 0,09 500 MB 19.95 496.35 117.60 24 Blau Allnet-Flat Option 19.90 Flat 0,09 500 MB 19.90 497.50 118.75 1 Simyo All-Net Flat 19.90 Flat 0,09 500 MB 19.90 497.50 118.75 24 Simfinty Flat 19.90 Flat 0,09 500 MB 19.90 497.50 118.75 24 Otelo Allnet-Flat M 24.99 Flat 0,09 500 MB 0.00 599.76 221.01 24 Drillisch Flat XS 500S 16.95 Flat Flat 500 MB 19.95 426.75 1 Yourfone Allnet Flat 19.90 Flat Flat 500 MB 19.90 497.50 70.75 24 Congstar Allnet Flat M 24.99 Flat Flat 500 MB 0.00 599.76 173.01 24 Klarmobil Allnet-Spar-Flat 24.85 Flat Flat 500 MB 19.95 616.35 189.60 24 Otelo Allnet-Flat L 29.99 Flat Flat 500 MB 0.00 719.76 293.01 24 BASE all-in 30.00 Flat Flat 500 MB 0.00 720.00 293.25 24 mobilcom-debitel Telekom real Allnet 34.99 Flat Flat 500 MB 0.00 839.76 413.01 24 * SP = Starting Price for Package, CD = Contract Duration Seite 25
Competitional Overview Flat Tariff Provider Tariff Basic Fee Minutes SMS Data SP * Bill after 24 months Saving CD * Drillisch Flat XM 1000 19.95 Flat Flat 1 GB 19.95 498.75 1 Simyo GIGA All-Net Flat 24.90 Flat Flat 1 GB 19.90 617.50 118.75 24 Congstar Allnet Flat L 29.99 Flat Flat 1 GB 0.00 719.76 221.01 24 1&1 All-Net-Flat Plus 29.99 Flat Flat 1 GB 29.90 749.66 250.91 1 Otelo Allnet-Flat XL 34.99 Flat Flat 1 GB 0.00 839.76 341.01 24 mobilcom-debitel Vodafone Real Allnet 34.99 Flat Flat 1 GB 0.00 839.76 341.01 24 Drillisch Flat XM 2000 24.95 Flat Flat 2 GB 19.95 618.75 1 1&1 All-Net-Flat Pro 39.99 Flat Flat 2 GB 29.90 989.66 370.91 1 Simyo Giga-All-Net Flat 27.90 Flat Flat 2GB 1.00 670.60 51.58 24 BASE all-in plus 40.00 Flat Flat 2 GB 0.00 960.00 341.25 24 * SP = Starting Price for Package, CD = Contract Duration Page 26