SECOND
QUARTER- Net revenues increased 4% at actual rates
and 6% at constant rates to US$ 181.9 million --
Operating income increased 16% at actual rates and 17% at constant
rates to US$ 50.8 million -- OIBDA increased 14%
at actual rates and 15% at constant rates to US$ 61.2 million
-
Central European Media Enterprises Ltd. (“CME” or the “Company”)
(NASDAQ:CETV) (Prague Stock Exchange:CETV) today announced
financial results for the three and six months ended
June 30, 2017.
Operational and financial highlights:
- TV advertising markets across our six countries increased an
estimated 6% overall at constant rates in the first six months of
2017.
- Our TV advertising revenues increased 2% at actual rates and 4%
at constant rates in the first half of 2017, which reflected
significant growth of demand in Romania, as well as higher levels
of spending in the Czech Republic and Slovenia.
- Carriage fees and subscription revenues increased 20% at actual
rates and 23% at constant rates in the first half of 2017 due to
additional carriage fees generated in Slovakia and Slovenia
following our exit from DTT, as well as growth in subscribers in
other markets.
- Costs charged in arriving at OIBDA were broadly flat at actual
rates and increased 1% and 3% at constant rates in the three and
six months ended June 30, 2017 as targeted investments in
our programming line-up and higher bad debt charges were mostly
offset by savings from transmission costs.
- OIBDA increased 18% at actual rates and 20% at constant rates
in the first half of 2017, resulting in OIBDA margin expansion of
300 basis points to 26% from 23% in the same period in 2016.
- The increase in OIBDA improved operating income 22% at actual
rates and 25% at constant rates in the first half of 2017.
- Unlevered free cash flow for the six months ended
June 30, 2017 increased 14%, reflecting higher cash
collections, and net cash generated by continuing operating
activities also included lower cash payments for interest and
guarantee fees.
- On July 9, 2017, we agreed to sell our operations in Croatia
and Slovenia and plan to use proceeds of the sale, which is
expected to close by year-end, to repay our 2018 term loan. This
will significantly accelerate our plans to deleverage and reduce
our current borrowing cost by 275 basis points to 4.5%, resulting
in savings of more than US$ 30.0 million in annual interest costs
in addition to US$ 30.0 million of savings from the March repricing
transaction.
Michael Del Nin, Co-Chief Executive Officer,
commented: "The first half of the year has been marked by important
transactions and impressive financial performance, the combination
of which positions us for a significant reduction in our leverage
over the next 18 months. Following a successful sale of our
operations in Croatia and Slovenia, we will have brought forward
our deleveraging plans by a year and will be in a position to take
full advantage of the automatic reductions in our borrowing costs.
As a result, once we have achieved this, we should be able to pivot
from our intense focus on debt reduction by 2019. While this
will increase the options we have for capital allocation, our
decisions will, as always, be driven by our determination to create
shareholder value."
Christoph Mainusch, Co-Chief Executive Officer,
added: "The successful spring season contributed to prime time
audience share increasing in five countries in the first half of
2017, while operating margins improved, as additional investments
in content were mostly offset by other savings. These investments
in programming in highly competitive markets also support our
initiatives to diversify revenues, and carriage fees and
subscription revenue grew significantly in the first half of the
year. We still expect carriage fees and subscription revenue
from our four remaining operations going forward to increase double
digits this year."
In this release we refer to several non-GAAP
financial measures, including OIBDA, OIBDA margin, free cash flow,
unlevered free cash flow and constant currency percentage
movements. Please see “Non-GAAP Financial Measures” below for
additional information, including definitions and reconciliations
to US GAAP financial measures.
Consolidated results for the three months ended
June 30, 2017 and June 30, 2016 were:
|
|
(US$ 000's,
except per share data) |
For the Three Months Ended June
30, |
(unaudited) |
|
2017 |
|
|
|
2016 |
|
|
% Actual |
|
% Lfl (1) |
Net revenues |
$ |
181,856 |
|
|
$ |
175,206 |
|
|
3.8% |
|
5.5% |
Operating income |
50,823 |
|
|
43,891 |
|
|
15.8% |
|
17.2% |
Operating margin |
27.9% |
|
|
25.1% |
|
|
2.8p.p. |
|
2.7p.p. |
OIBDA |
61,169 |
|
|
53,632 |
|
|
14.1% |
|
15.4% |
OIBDA margin |
33.6% |
|
|
30.6% |
|
|
3.0p.p. |
|
2.8 p.p. |
Net income / (loss)
attributable to CME Ltd. |
27,935 |
|
|
(141,317) |
|
|
NM(2) |
|
NM(2) |
Net income / (loss)
attributable to CME Ltd. per share - basic |
$ |
0.10 |
|
|
$ |
(0.98) |
|
|
NM(2) |
|
NM(2) |
Net income / (loss)
attributable to CME Ltd. per share - diluted |
$ |
0.07 |
|
|
$ |
(0.98) |
|
|
NM(2) |
|
NM(2) |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated results for the six months ended
June 30, 2017 and June 30, 2016 were:
|
|
(US$ 000's,
except per share data) |
For the Six Months Ended June
30, |
(unaudited) |
|
2017 |
|
|
|
2016 |
|
|
% Actual |
|
% Lfl (1) |
Net revenues |
$ |
316,858 |
|
|
$ |
304,206 |
|
|
4.2% |
|
6.6% |
Operating income |
63,091 |
|
|
51,654 |
|
|
22.1% |
|
24.5% |
Operating margin |
19.9% |
|
|
17.0% |
|
|
2.9p.p. |
|
2.9p.p. |
OIBDA |
83,305 |
|
|
70,740 |
|
|
17.8% |
|
20.1% |
OIBDA margin |
26.3% |
|
|
23.3% |
|
|
3.0p.p. |
|
3.0 p.p. |
Net income / (loss)
attributable to CME Ltd. |
16,870 |
|
|
(181,752) |
|
|
NM(2) |
|
NM(2) |
Net income / (loss)
attributable to CME Ltd. per share - basic |
$ |
0.05 |
|
|
$ |
(1.29) |
|
|
NM(2) |
|
NM(2) |
Net income / (loss)
attributable to CME Ltd. per share - diluted |
$ |
0.04 |
|
|
$ |
(1.29) |
|
|
NM(2) |
|
NM(2) |
|
|
|
|
|
|
|
|
|
|
|
|
(1) % Lfl (like-for-like) variance reflects the impact of
applying the current period average exchange rates to the prior
period revenues and costs.(2) Number is not meaningful.
Teleconference and Audio Webcast
Details
CME will host a teleconference and audio webcast
to discuss its second quarter results on Tuesday, July 25, 2017 at
9 a.m. New York time (2 p.m. London and 3 p.m. Prague time).
The audio webcast and teleconference will refer to presentation
slides which will be available on CME's website at www.cme.net
prior to the call.
To access the teleconference, U.S. and
international callers may dial +1-646-254-3370 ten minutes prior to
the start time and reference passcode 8513742. The conference call
will also be audio webcasted via www.cme.net. It can be heard on
iPads, iPhones and a range of devices supporting Android and
Windows operating systems.
A digital audio replay of the webcast will be
available for two weeks following the call at
www.cme.net.
Forward-Looking and Cautionary Statements
This press release contains forward-looking
statements. For all forward-looking statements, we claim the
protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are inherently subject to risks and
uncertainties, many of which cannot be predicted with accuracy or
are otherwise beyond our control and some of which might not even
be anticipated. Forward-looking statements reflect our
current views with respect to future events and because our
business is subject to such risks and uncertainties, actual
results, our strategic plan, our financial position, results of
operations and cash flows could differ materially from those
described in or contemplated by the forward-looking statements.
Important factors that contribute to such risks
include, but are not limited to, those factors set forth under
"Risk Factors” in our Quarterly Report on Form 10-Q for the period
ended June 30, 2017 as well as the following: the
expected timing of the closing of the sale of our operations in
Croatia and Slovenia and the application of proceeds from it; the
effect of global economic uncertainty and Eurozone instability in
our markets and the extent, timing and duration of any recovery;
levels of television advertising spending and the rate of
development of the advertising markets in the countries in which we
operate; the extent to which our liquidity constraints and debt
service obligations restrict our business; our exposure to
additional tax liabilities as well as liabilities resulting from
regulatory or legal proceedings initiated against us; our ability
to refinance our existing indebtedness; our success in continuing
our initiatives to diversify and enhance our revenue streams; our
ability to make cost-effective investments in our television
businesses, including investments in programming; our ability to
develop and acquire necessary programming and attract audiences;
and changes in the political and regulatory environments where we
operate and in the application of relevant laws and
regulations.
The foregoing review of important factors should
not be construed as exhaustive. For a more detailed description of
these uncertainties and other factors, please see the "Risk
Factors" and “Forward-looking Statements” sections in CME's
Quarterly Report on Form 10-Q for the period ended
June 30, 2017. We undertake no obligation to publicly
update or review any forward-looking statements, whether as a
result of new information, future developments or otherwise.
This press release should be read in conjunction
with our Quarterly Report on Form 10-Q for the period ended
June 30, 2017, which was filed with the Securities and
Exchange Commission on July 25, 2017.
We make available free of charge on our website
at www.cme.net our Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K and amendments to those
reports as soon as reasonably practicable after we electronically
file such material with, or furnish it to, the Securities and
Exchange Commission. Please note that we may announce material
information using SEC filings, press releases, public conference
calls, webcasts and posts to the Investors section of our website,
www.cme.net. In the future, we will continue to use these channels
to communicate important information about CME and our operations.
Information that we post on our website could be deemed material.
Therefore, we encourage investors, the media, our customers and
others interested in CME to review the information we post at
www.cme.net.
CME is a media and entertainment company
operating leading businesses in six Central and Eastern European
markets with an aggregate population of approximately 50 million
people. CME currently broadcasts 36 television channels in Bulgaria
(bTV, bTV Cinema, bTV Comedy, bTV Action, bTV Lady and Ring.bg),
Croatia (Nova TV, Doma, Nova World and MiniTV), the Czech Republic
(Nova, Nova 2, Nova Cinema, Nova Sport 1, Nova Sport 2, Nova
International, Nova Action and Nova Gold), Romania (PRO TV, PRO TV
International, Acasa, Acasa Gold, PRO Cinema, Sport.ro, MTV
Romania, PRO TV Chisinau and Acasa in Moldova), the Slovak Republic
(TV Markíza, Markíza International, Doma and Dajto), and Slovenia
(POP TV, Kanal A, Brio, Oto and Kino). CME is traded on the NASDAQ
Global Select Market and the Prague Stock Exchange under the ticker
symbol “CETV”.
|
|
CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(US$ 000's, except per share
data) |
(unaudited) |
|
|
For the Three Months Ended June
30, |
|
2017 |
|
2016 |
Net
revenues |
$ |
181,856 |
|
$ |
175,206 |
Operating
expenses: |
|
|
|
Content
costs |
76,709 |
|
77,282 |
Other
operating costs |
15,395 |
|
17,939 |
Depreciation of property, plant and equipment |
8,293 |
|
7,627 |
Amortization of broadcast licenses and other intangibles |
2,053 |
|
2,114 |
Cost of
revenues |
102,450 |
|
104,962 |
Selling,
general and administrative expenses |
28,583 |
|
26,353 |
Operating
income |
50,823 |
|
43,891 |
Interest
expense |
(21,973) |
|
(29,545) |
Loss on
extinguishment of debt |
— |
|
(150,158) |
Non-operating income / (expense), net |
7,141 |
|
(167) |
Income / (loss)
before tax |
35,991 |
|
(135,979) |
Provision
for income taxes |
(8,193) |
|
(5,270) |
Net income /
(loss) |
27,798 |
|
(141,249) |
Net loss
/ (income) attributable to noncontrolling interests |
137 |
|
(68) |
Net income /
(loss) attributable to CME Ltd. |
$ |
27,935 |
|
$ |
(141,317) |
|
|
|
|
PER SHARE
DATA: |
|
|
|
Net loss per
share: |
|
|
|
Net
income / (loss) attributable to CME Ltd. - basic |
$ |
0.10 |
|
$ |
(0.98) |
Net
income / (loss) attributable to CME Ltd. - diluted |
0.07 |
|
(0.98) |
|
|
|
|
Weighted average common
shares used in computing per share amounts (000's): |
|
|
|
Basic |
155,738 |
|
149,083 |
Diluted |
235,952 |
|
149,083 |
|
|
|
|
|
CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(US$ 000's, except per share
data) |
(unaudited) |
|
|
For the Six Months Ended June 30, |
|
2017 |
|
2016 |
Net
revenues |
$ |
316,858 |
|
$ |
304,206 |
Operating
expenses: |
|
|
|
Content
costs |
150,111 |
|
149,260 |
Other
operating costs |
29,951 |
|
34,393 |
Depreciation of property, plant and equipment |
16,052 |
|
14,912 |
Amortization of broadcast licenses and other intangibles |
4,162 |
|
4,174 |
Cost of
revenues |
200,276 |
|
202,739 |
Selling,
general and administrative expenses |
53,491 |
|
49,813 |
Operating
income |
63,091 |
|
51,654 |
Interest
expense |
(45,728) |
|
(78,699) |
Loss on
extinguishment of debt |
— |
|
(150,158) |
Non-operating income, net |
9,466 |
|
1,249 |
Income / (loss)
before tax |
26,829 |
|
(175,954) |
Provision
for income taxes |
(10,305) |
|
(5,989) |
Net income /
(loss) |
16,524 |
|
(181,943) |
Net loss
attributable to noncontrolling interests |
346 |
|
191 |
Net income /
(loss) attributable to CME Ltd. |
$ |
16,870 |
|
$ |
(181,752) |
|
|
|
|
PER SHARE
DATA: |
|
|
|
Net loss per
share: |
|
|
|
Net
income / (loss) attributable to CME Ltd. - basic |
$ |
0.05 |
|
$ |
(1.29) |
Net
income / (loss) attributable to CME Ltd. - diluted |
$ |
0.04 |
|
$ |
(1.29) |
|
|
|
|
Weighted average common
shares used in computing per share amounts (000's): |
|
|
|
Basic |
155,269 |
|
148,080 |
Diluted |
230,872 |
|
148,080 |
|
|
|
|
|
CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(US$ 000's) |
(unaudited) |
|
|
June 30, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
Cash and
cash equivalents |
$ |
95,359 |
|
$ |
43,459 |
Other
current assets |
307,651 |
|
296,961 |
Total current
assets |
403,010 |
|
340,420 |
Property, plant and
equipment, net |
115,982 |
|
109,089 |
Goodwill and other
intangible assets, net |
1,017,878 |
|
919,765 |
Other non-current
assets |
21,516 |
|
21,443 |
Total
assets |
$ |
1,558,386 |
|
$ |
1,390,717 |
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Accounts
payable and accrued liabilities |
$ |
150,669 |
|
$ |
160,981 |
Current
portion of long-term debt and other financing arrangements
|
2,386 |
|
1,494 |
Other
current liabilities |
29,117 |
|
9,089 |
Total current
liabilities |
182,172 |
|
171,564 |
Long-term debt and
other financing arrangements |
1,087,992 |
|
1,002,028 |
Other non-current
liabilities |
87,103 |
|
68,758 |
Total
liabilities |
$ |
1,357,267 |
|
$ |
1,242,350 |
|
|
|
|
Series B Convertible
Redeemable Preferred Stock |
$ |
259,661 |
|
$ |
254,899 |
|
|
|
|
EQUITY |
|
|
|
Common
Stock |
$ |
11,583 |
|
$ |
11,476 |
Additional paid-in capital |
1,907,409 |
|
1,910,244 |
Accumulated deficit |
(1,768,666) |
|
(1,785,536) |
Accumulated other comprehensive loss |
(209,249) |
|
(243,988) |
Total CME Ltd.
shareholders' deficit |
(58,923) |
|
(107,804) |
Noncontrolling interests |
381 |
|
1,272 |
Total
deficit |
(58,542) |
|
(106,532) |
Total
liabilities and equity |
$ |
1,558,386 |
|
$ |
1,390,717 |
|
|
CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(US$ 000's) |
(unaudited) |
|
|
For the Six Months Ended June 30, |
|
2017 |
|
2016 |
Net cash generated from
continuing operating activities |
$ |
56,770 |
|
$ |
17,549 |
Net cash used in
continuing investing activities |
(14,581) |
|
(11,255) |
Net cash provided by /
(used in) continuing financing activities |
1,897 |
|
(23,970) |
Net cash provided by
discontinued operations |
1,045 |
|
705 |
Impact of exchange rate
fluctuations on cash and cash equivalents |
6,769 |
|
1,734 |
Net increase /
(decrease) in cash and cash equivalents |
$ |
51,900 |
|
$ |
(15,237) |
|
|
|
|
Supplemental
disclosure of cash flow information: |
|
|
|
Cash paid for interest
(including mandatory cash-pay guarantee fees) |
$ |
21,173 |
|
$ |
35,712 |
Cash paid for guarantee
fees that may be paid in kind |
7,078 |
|
20,000 |
Cash paid for income
taxes, net of refunds |
$ |
7,512 |
|
$ |
172 |
|
|
|
|
Supplemental
disclosure of non-cash financing activities: |
|
|
|
Interest and related
guarantee fees paid in kind |
$ |
15,606 |
|
$ |
22,257 |
Accretion on Series B
Convertible Redeemable Preferred Stock |
$ |
4,762 |
|
$ |
8,950 |
|
|
|
|
|
|
Segment Data
We manage our business on a geographical basis,
with six reporting segments: Bulgaria, Croatia, the Czech Republic,
Romania, the Slovak Republic and Slovenia. These segments reflect
how CME Ltd.’s operating performance is evaluated by our chief
operating decision makers, who we have identified as our co-Chief
Executive Officers, how operations are managed by segment managers,
and the structure of our internal financial reporting.
We evaluate our consolidated results and the
performance of our segments based on net revenues and OIBDA.
Stock-based compensation and certain other items are not allocated
to our segments for purposes of evaluating their performance and
therefore are not included in their respective OIBDA. Intersegment
revenues and profits have been eliminated in consolidation.
Below are tables showing our net revenues and
OIBDA by segment for the three and six months ended
June 30, 2017 and June 30, 2016:
|
|
(US$
000's) |
For the Three Months Ended June
30, |
(unaudited) |
2017 |
|
2016 |
|
% Actual |
|
% Lfl (1) |
Net
revenues |
|
|
|
|
|
|
|
Bulgaria |
$ |
20,774 |
|
$ |
20,455 |
|
1.6% |
|
3.5% |
Croatia |
16,521 |
|
16,559 |
|
(0.2)% |
|
0.7% |
Czech Republic |
53,371 |
|
50,919 |
|
4.8% |
|
5.0% |
Romania |
48,570 |
|
48,929 |
|
(0.7)% |
|
2.3% |
Slovak Republic |
24,624 |
|
22,540 |
|
9.2% |
|
11.3% |
Slovenia |
18,453 |
|
16,116 |
|
14.5% |
|
16.7% |
Intersegment revenues
|
(457) |
|
(312) |
|
NM (2) |
|
NM (2) |
Total net
revenues |
$ |
181,856 |
|
$ |
175,206 |
|
3.8% |
|
5.5% |
|
|
(US$
000's) |
For the Six Months Ended June 30, |
(unaudited) |
2017 |
|
2016 |
|
% Actual |
|
% Lfl (1) |
Net
revenues |
|
|
|
|
|
|
|
Bulgaria |
$ |
36,079 |
|
$ |
36,314 |
|
(0.6)% |
|
1.8% |
Croatia |
27,589 |
|
28,204 |
|
(2.2)% |
|
(1.0)% |
Czech Republic |
92,845 |
|
89,527 |
|
3.7% |
|
5.2% |
Romania |
87,514 |
|
81,299 |
|
7.6% |
|
11.3% |
Slovak Republic |
42,964 |
|
41,602 |
|
3.3% |
|
5.9% |
Slovenia |
30,670 |
|
27,769 |
|
10.4% |
|
13.2% |
Intersegment revenues
|
(803) |
|
(509) |
|
NM (2) |
|
NM (2) |
Total net
revenues |
$ |
316,858 |
|
$ |
304,206 |
|
4.2% |
|
6.6% |
|
(1) % Lfl (like-for-like) variance reflects the impact of
applying the current period average exchange rates to the prior
period revenues and costs.(2) Number is not meaningful.
|
|
(US$
000's) |
For the Three Months Ended June
30, |
(unaudited) |
2017 |
|
2016 |
|
% Act |
|
% Lfl (1) |
OIBDA |
|
|
|
|
|
|
|
Bulgaria |
$ |
3,079 |
|
$ |
5,954 |
|
(48.3)% |
|
(47.5)% |
Croatia |
5,171 |
|
4,501 |
|
14.9% |
|
15.5% |
Czech Republic |
25,553 |
|
23,099 |
|
10.6% |
|
10.1% |
Romania |
22,268 |
|
22,962 |
|
(3.0)% |
|
(0.3)% |
Slovak Republic |
7,522 |
|
3,158 |
|
138.2% |
|
140.9% |
Slovenia |
4,386 |
|
1,624 |
|
170.1% |
|
164.2% |
Elimination |
39 |
|
(62) |
|
NM (2) |
|
NM (2) |
Total Operating
Segments
|
68,018 |
|
61,236 |
|
11.1% |
|
12.3% |
Central |
(6,849) |
|
(7,604) |
|
9.9% |
|
9.0% |
Total
OIBDA |
$ |
61,169 |
|
$ |
53,632 |
|
14.1% |
|
15.4% |
|
|
|
|
(US$
000's) |
For the Six Months Ended June 30, |
(unaudited) |
2017 |
|
2016 |
|
% Act |
|
% Lfl (1) |
OIBDA |
|
|
|
|
|
|
|
Bulgaria |
$ |
4,436 |
|
$ |
7,023 |
|
(36.8)% |
|
(35.7)% |
Croatia |
6,257 |
|
5,902 |
|
6.0% |
|
6.9% |
Czech Republic |
36,512 |
|
33,173 |
|
10.1% |
|
10.9% |
Romania |
36,954 |
|
32,424 |
|
14.0% |
|
17.7% |
Slovak Republic |
8,395 |
|
5,551 |
|
51.2% |
|
54.7% |
Slovenia |
4,389 |
|
916 |
|
NM
(2) |
|
NM
(2) |
Elimination |
41 |
|
(68) |
|
NM (2) |
|
NM (2) |
Total Operating
Segments
|
96,984 |
|
84,921 |
|
14.2% |
|
16.4% |
Central |
(13,679) |
|
(14,181) |
|
3.5% |
|
2.0% |
Total
OIBDA |
$ |
83,305 |
|
$ |
70,740 |
|
17.8% |
|
20.1% |
|
|
|
|
|
|
|
|
|
|
(1) % Lfl (like-for-like) variance reflects the impact of
applying the current period average exchange rates to the prior
period revenues and costs.(2) Number is not meaningful.
Non-GAAP Financial Measures
In this release we refer to several non-GAAP
financial measures, including OIBDA, OIBDA margin, free cash flow
and unlevered free cash flow. We believe that each of these metrics
is useful to investors for the reasons outlined below. Non-GAAP
financial measures may not be comparable to similar measures
reported by other companies. Non-GAAP financial measures
should be evaluated in conjunction with, and are not a substitute
for, US GAAP financial measures.
We evaluate our consolidated results and the
performance of our segments based on net revenues and OIBDA. We
believe OIBDA is useful to investors because it provides a
meaningful representation of our performance, as it excludes
certain items that do not impact either our cash flows or the
operating results of our operations. OIBDA and unlevered free
cash flow are also used as components in determining management
bonuses.
OIBDA includes amortization and impairment of
program rights and is calculated as operating income / loss before
depreciation, amortization of intangible assets and impairments of
assets and certain unusual or infrequent items that are not
considered by our co-Chief Executive Officers when evaluating our
performance. Stock-based compensation and certain other items are
not allocated to our segments for purposes of evaluating their
performance and therefore are not included in their respective
OIBDA. Our key performance measure of the efficiency of our
consolidated operations and our segments is OIBDA margin. We define
OIBDA margin as the ratio of OIBDA to net revenues.
Following a refinancing transaction in March
2017, the amount of interest and related Guarantee Fees on our
outstanding indebtedness that must be paid in cash has increased.
In addition to this obligation to pay more interest and related
Guarantee Fees in cash, we expect to use cash generated by the
business to pay certain Guarantee Fees that are payable in kind.
These cash payments are all reflected in free cash flow;
accordingly we believe unlevered free cash flow, defined as free
cash flow before cash payments for interest and Guarantee Fees,
best illustrates the cash generated by our operations when
comparing periods. We define free cash flow as net cash generated
from continuing operating activities less purchases of property,
plant and equipment, net of disposals of property, plant and
equipment and excluding the cash impact of certain unusual or
infrequent items that are not included in costs charged in arriving
at OIBDA because they are not considered by our co-Chief Executive
Officers when evaluating performance.
For additional information regarding our
business segments, see Item 1, Note 18, "Segment Data" in
our Form 10-Q.
While our reporting currency is the dollar, our
consolidated revenues and costs are divided across a range of
European currencies and CME Ltd.’s function currency is the Euro.
Given the significant movement of the currencies in the markets in
which we operate against the dollar, we believe that it is useful
to provide percentage movements based on actual percentage
movements (“% Act”), which includes the effect of foreign exchange,
as well as like-for-like percentage movements (“% Lfl”). The
like-for-like percentage movement references reflect the impact of
applying the current period average exchange rates to the prior
period revenues and costs. Since the difference between
like-for-like and actual percentage movements is solely the impact
of movements in foreign exchange rates, our discussion in this
release includes constant currency percentage movements in order to
highlight those factors influencing operational
performance. The incremental impact of foreign exchange rates
is presented in the tables accompanying such analysis.
|
(US$
000's) |
For the Three Months Ended June
30, |
|
For the Six Months Ended June 30, |
(unaudited) |
2017 |
|
2016 |
|
2017 |
|
2016 |
Operating
income |
$ |
50,823 |
|
$ |
43,891 |
|
63,091 |
|
51,654 |
Depreciation of
property, plant and equipment
|
8,293 |
|
7,627 |
|
16,052 |
|
14,912 |
Amortization of
intangible assets |
2,053 |
|
2,114 |
|
4,162 |
|
4,174 |
Total
OIBDA |
$ |
61,169 |
|
$ |
53,632 |
|
$ |
83,305 |
|
$ |
70,740 |
|
(US$
000's) |
For the Six Months Ended June 30, |
(unaudited) |
2017 |
|
2016 |
Net cash
generated from continuing operating activities |
$ |
56,770 |
|
$ |
17,549 |
Capital expenditures,
net of proceeds from disposals |
(14,581) |
|
(11,255) |
Free cash
flow |
42,189 |
|
6,294 |
Cash paid for interest
(including mandatory cash-pay guarantee fees)
|
21,173 |
|
35,712 |
Cash paid for guarantee
fees that may be paid in kind |
7,078 |
|
20,000 |
Unlevered free
cash flow |
$ |
70,440 |
|
$ |
62,006 |
|
|
|
|
|
|
For additional information, please visit www.cme.net or contact:
Mark Kobal
Head of Investor Relations
Central European Media Enterprises
+420 242 465 576
mark.kobal@cme.net
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