United Pan-Europe Communications N.V.
Year End 2002 Results Announcement
March 31, 2003
UPC
Disclosure Regarding Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of the
U.S. federal securities laws. UPC bases forward-looking statements on its
reasonable beliefs, assumptions, and expectations regarding future events and
conditions, including its future economic performance, taking into account
information currently available to the company. Forward-looking statements
involve risks and uncertainties that could cause actual outcomes and results to
differ materially from the outcomes and results expressed or implied in such
forward-looking statements. Information concerning certain factors that could
cause actual outcomes and results to differ materially is included in the
Company's 10-K, 10-Q and other filings with the U.S. Securities and Exchange
Commission.
UPC 2
Executive Summary
Strong operating performance in 2002
o Strong fourth quarter in 2002 contributed to solid operating performance
for UPC
o Maximised Adjusted EBITDA generation through significant operational
efficiencies, building on pan-European scale economies and successful focus
on cost control
o Resetting of cost base largely completed in 2002 with substantial
improvement in Adjusted EBITDA of EUR 446m and Adjusted EBITDA after
capital expenditures of EUR 1.1 billion, over performance in 2001
Successful execution of triple play strategy
o "analogue triple play", a return to growth orientated strategy, bundling
triple play products, internet, analogue TV and NPV positive telephony,
with a measured NPV positive digital rollout
o Improvement in the efficiency of capital spend has been successful
Financial Restructuring Update
o Appeal in Dutch Court's ratification of the Akkoord. We believe the appeal
is without merit
o Delay in completion of restructuring beyond March 31, 2003
o Expect to receive extension to waiver on senior bank facility shortly
2003
o Started 2003 well. Continue to prioritise customers service, prudent
revenue growth, maintaining strategy of adding profitable subscribers and
driving continued growth in Adjusted EBITDA
UPC 3
Continued Growth
New Service Subscribers (000s)
[Arrow depicting 20%
[Bar chart depicting 1,056] increase from YE2001 [Bar chart depicting 1,265]
to YE2002]
YE2001 YE2002
ARPU per RGU(1) (in EUR per month)
[Arrow depicting 6%
[Bar chart depicting 12.70] increase from YE2001 [Bar chart depicting 13.48]
to YE2002]
YE2001 YE2002
ARPU per Basic Cable Subscriber(2) (in EUR per month)
Western Europe
[Arrow depicting 11%
[Bar chart depicting 18.35] increase from YE2001 [Bar chart depicting 20.43]
to YE2002]
YE2001 YE2002
Eastern Europe
[Arrow depicting 6%
[Bar chart depicting 8.16] increase from YE2001 [Bar chart depicting 8.69]
to YE2002]
YE2001 YE2002
(1) Total basic cable, internet, digital, DTH revenue/total RGUs
(2) Basic cable, internet, digital, telephony revenue/basic cable subscribers
UPC 4
Revenue
Revenues (EUR 000's) Q4 2002 Q4 2001 YE 2002 YE 2001 change Y-o-Y
- ---------------------------------------------------------------------------------------------------------------------
Triple Play Distribution(1) 314,527 282,989 1,220,895 1,067,244 14%
Other Continued Operations 18,315 19,107 67,423 73,051
UPC Distribution(2) 332,842 302,096 1,288,318 1,140,295 5%
Priority Telecom
Continued operations 27,206 36,006 119,150 109,096 9%
UPC Media
Continued operations 19,279 16,524 73,384 48,980 50%
Corporate IT and other 369 849 492 4,228
Intercompany eliminations(2) (29,741) (35,417) (114,980) (111,618)
UPC Consolidated 349,955 345,379 1,396,056 1,378,764 1%
UPC Continued Operations 349,955 320,058 1,366,364 1,190,981 15%
- ---------------------------------------------------------------------------------------------------------------------
(1) Includes basic cable, digital, telephony and internet revenues. Excludes
Germany
(2) Continued operations
UPC 5
Adjusted EBITDA
% change % change
Adjusted EBITDA (EUR '000s) Q4 2002 Q4 2001 Qtr on Qtr YE 2002 YE 2001 Year on Year
Triple Play Distribution (1) 101,568 55,473 83% 346,443 168,423 106%
Other 10,186 (2,414) 522% 44,614 (14,666) 404%
Total UPC Distribution 111,754 53,059 111% 391,057 153,757 154%
Priority Telecom (2) 1,625 (9,877) 116% (3,996) (89,329) 96%
UPC Media 195 (17,089) 101% (5,090) (112,671) 95%
Corporate IT and Other (29,988) (35,869) 16% (97,983) (113,543) 14%
UPC Consolidated 83,586 (9,776) 955% 283,988 (161,786) 276%
(1) Includes basic cable, digital, telephony and internet revenues. Excludes
Germany
(2) Since Priority Telecom's listing, its results are separately announced in
Dutch GAAP, and presented in US GAAP in our financial statements.
Differences may occur as a result of this
UPC 6
Capital Expenditure
Capex Analysis (EUR m)
[Arrow depicting 81% decrease from 2000 to 2003E]
[Bar chart depicting 1,770] [Bar chart depicting 900] [Bar chart depicting 270] [Bar chart depicting 329]
YE2000 YE2001 YE2002 YE2003E
Capex drivers
o Reduced upgrade and new build activity
o Tail-end of IT system development
o Declining CPE costs
UPC 7
Adjusted EBITDA after Capital Expenditure - Evolution
Adjusted EBITDA after Capex (EUR '000s) Q4 2002 Q4 2001 YE 2002 YE 2001
- ----------------------------------------------------------------------------------------------------------
UPC Consolidated Adjusted EBITDA 83,586 (9,776) 283,988 (161,786)
Less: Capital Expenditure (79,582) (243,672) (270,833) (897,222)
Adjusted EBITDA after Capex 4,004 (253,448) 13,155 (1,059,008)
- ----------------------------------------------------------------------------------------------------------
UPC 8
Summary Capital Structure
Pro forma for
EUR millions YE 2002 recapitalisation(1)
- ----------------------------------------------------------------------
UPC Distribution bank facility 3,140 3,040
Other bank group debt(2) 60 60
Bank group - swap obligation(3) 53 53
Sub Total Bank Group 3,253 3,153
Polish debt(4) 380 380
Priority debt 11 11
DIC loan(1) 54 0
Belmarken notes 894 0
UPC NV bonds 4,149 0
Convertible preference shares 1,665 0
Total debt and preference shares 10,406 3,544
Less cash 273 273
Net debt 10,133 3,271
- -----------------------------------------------------------------------
(1) Sale of Cable Brabant in February 2003 resulted in cancellation of DIC loan
from First International Bank of Israel (FiBI)
(2) Other Debt (less Priority debt and PCI Notes)
(3) Short term debt (less Reece Note in Poland)
(4) Includes Reece Note end PCI Notes. UPC and holders of UPC Polska Notes are
engaged in discussions about a restructuring of UPC Polska's indebtedness
UPC 9
Outlook 2003
Forecast Guidance Q1 2003
o Tightening of customer disconnect policy in the Netherlands leads to
reduction in subscribers, expected to be completed by the end of Q2 2003.
Although subscriber growth strong in all other respects, because of this no
significant overall increase in Group RGUs expected during Q1 2003
o For Q1 2003, UPC expects:
o Revenue growth (Q4 2002 to Q1 2003) of between 2% - 4%
o Adjusted EBITDA growth (Q4 2002 to Q1 2003) of between 20% - 25%
o Capital expenditures of EUR 75m - EUR 80m
Forecast Guidance Full year 2003
o Consistent with recent SEC filing, for the full year 2003, UPC expects:
o Revenue growth of 12%
o Adjusted EBITDA of EUR 525m
o Capital expenditures of EUR 329m
o UPC expects to be Free Cashflow breakeven after interest expense by
the end of the fourth quarter 2003
o On March 24, 2003 UPC Polska deposited funds to pay the PCI Notes plus
accrued interest at maturity (November 2003). UPC and holders of UPC Polska
Notes are engaged in discussion about a restructuring of UPC Polska
indebtedness
o Financial targets may be impacted by resolution of court case relating to
certain minimum programme guarantees. This could negatively impact Adjusted
EBITDA by approx. EUR 25m annually from 2003 to 2005
UPC 10
2003 Adjusted EBITDA Evolution
Sub total Annualised % of 2003
EUR millions millions impact Guidance
- ----------------------------------------------------------------------------------------------------------------------
UPC Group Consolidated Q4 02 Annualised Adjusted EBITDA 337 64%
Increase in Priority Adjusted EBITDA from Q4 level of EUR 2 million
to full year of EUR 20 million 12 2%
Increase in UPC Media Adjusted EBITDA from Q4 breakeven to full
year of EUR 20 million 20 4%
UPC Distribution pricing effect 49 9%
Impact of RGU growth of which: 52
Q4 2002 100,000 net adds, annualised impact 11 2%
2003 430,000 net adds 41 8%
Additional Cost Savings 54 10%
Projected 2003 Adjusted EBITDA 525
- ----------------------------------------------------------------------------------------------------------------------
UPC 11