OREANDA-NEWS. Central European Media Enterprises Ltd. today announced financial results for the three and six months ended June 30, 2016.

Operational and financial highlights:

  • TV advertising revenues increased nearly 4% at constant rates in the first half of 2016, which included significant growth in Romania and the Slovak Republic, as well as a return to growth in Bulgaria during the second quarter.
  • Carriage fees and subscription revenues increased 6% at constant rates in the first half of 2016 due to growth in the number of subscribers, better channel offerings, and new channel launches.
  • Overall costs charged in arriving at OIBDA decreased slightly at constant rates in the three and six months ended June 30, 2016 as a 3% increase in content costs was more than offset by savings in other costs.
  • OIBDA margin increased to 31% and 23% in the three and six months ended June 30, 2016 from 28% and 20% in the same periods in 2015.
  • Operating income for the six months ended June 30, 2016 more than doubled at constant rates due to the improvement in OIBDA as well as the impact from the non-cash charge taken in the first quarter of 2015 related to tax audits then underway in Romania, which was subsequently reversed in the third quarter of 2015.
  • Unlevered free cash flow for the six months ended June 30, 2016 increased significantly, reflecting the improvement in OIBDA and lower capital expenditures, but cash flows from operations declined because we paid more interest in cash and elected to repay US$ 20.0 million of guarantee fees previously paid in kind.
  • Interest expense in the second quarter decreased US$ 19.6 million from the first quarter of 2016 following the refinancing transaction completed in April, which resulted in a non-cash US$ 150.2 million debt extinguishment charge related primarily to the cost of warrants issued in 2014 that otherwise would have been amortized through 2017.

Michael Del Nin, Co-Chief Executive Officer, commented: "Our performance in the second quarter, marked by strong OIBDA growth and margin expansion, exceeded our expectations and contributed to a very solid first half of the year for us. Looking ahead to the rest of 2016, we remain very upbeat about our prospects for further growth and expect continued progress on our deleveraging plans."

Christoph Mainusch, Co-Chief Executive Officer, added: "Our audience share leadership in all six countries continued during the second quarter. And we sustained increased investment in the local content that is popular with our audiences, while reducing costs overall in order to maximize profitability."

In this release we refer to several non-GAAP financial measures, including OIBDA, OIBDA margin, free cash flow and unlevered free cash flow. 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, 2016
Net revenues for the three months ended June 30, 2016 were US$ 175.2 million compared to US$ 166.8 million for the three months ended June 30, 2015. Operating income for the three months ended June 30, 2016 was US$ 43.9 million compared to US$ 36.4 million for the three months ended June 30, 2015. Loss from continuing operations for the three months ended June 30, 2016 was US$ (141.2) million compared to US$ (11.7) million in 2015. Fully diluted loss from continuing operations per share for the three months ended June 30, 2016 was US$ (0.98) compared to US$ (0.11) for the three months ended June 30, 2015.

OIBDA for the three months ended June 30, 2016 was US$ 53.6 million compared to US$ 46.8 million in the same period ended June 30, 2015. OIBDA margin for the three months ended June 30, 2016 was 30.6% compared to 28.1% for the three months ended June 30, 2015.