Avast plc 2019 Half year results - 14 August 2019
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Disclaimer This presentation has been prepared and issued by, and is the sole responsibility of, Avast plc (“Avast” or the “Company”), being the current holding company of the Avast group (the “Group”). The information and opinions presented or contained in this presentation (including forward-looking statements) speak as of the date hereof (unless otherwise stated) and are subject to updating, revision, verification and amendment without notice and such information may change materially. This presentation includes forward-looking statements. The words "expect", "anticipate", "intends", "plan", "estimate", "aim", "forecast", "project" and similar expressions (or their negative) identify certain of these forward-looking statements. These forward-looking statements are statements regarding the Group’s intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which the Group operates. The forward-looking statements in this presentation are based on numerous assumptions regarding the Group’s present and future business strategies and the environment in which the Group will operate in the future. Forward-looking statements are not guarantees of future performance and involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the Group to be materially different from those expressed or implied by such forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond the Group's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of regulators and other factors such as the Group's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Group operates or in economic or technological trends or conditions. All forward-looking statements in this presentation are based upon information known to the Company on the date of this presentation. Accordingly, no assurance can be given that any particular expectation will be met and readers are cautioned not to place undue reliance on forward-looking statements, which speak only at their respective dates. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority), the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Nothing in this presentation shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws. This presentation does not constitute or form part of any offer or invitation to purchase any securities of any person nor any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any such securities. 2
Agenda 1 H1 Highlights & Business Overview: Ondrej Vlcek, CEO 2 H1 Financial Results & 2019 Guidance: Phil Marshall, CFO 3 Q&A 3
1 HY Highlights: Ondrej Vlcek, CEO 4
H1 Strategic Themes • Our growing penetration levels and cross-sell success powered by our platform model and global user base • Desktop remains the main distribution channel for our products, yet a greater percentage of desktop growth is driven by mobile enabled products • Our commitment to technology leadership is clear in the investments we make and product awards received • Innovation underpins long term growth and is supported by a new industry-renowned CTO and additions to our AI team • Strategic milestones reached with the release of our Avast Omni product direct to US consumers and the first carrier IoT partnership with Wind Tre in Italy • Jumpshot strategic partnership provides an immediate cash return and accelerates future growth opportunities 5
CEO Priorities • World-class customer experience: continue to evolve the customer-centric approach that underpins the success of our global platform model and our ability to cross-sell additional consumer solutions across the entire customer journey • Enthuse and drive an even greater sense of purpose and core values, actively supporting innovation and entrepreneurial culture across the company • Ensure appropriate capital allocation, enabling investment that supports our long-term growth aspirations • Deliver long term financial performance 6
H1 Financial & Operating Highlights • Half year performance in line with company guidance • Strong overall results with: • +12.5% billings growth(1) and +9.2% revenue growth(1) driven by our Consumer Desktop business • Adjusted EBITDA margin 55.4%(2) • Unlevered Free Cash Flow $230m, +20.0%, supporting further deleveraging • Adjusted Net Income $148.2m, up +13.8%, adjusted fully diluted EPS +7.2% at $0.15 per share • Desktop operating KPIs performed strongly, including customers up +1.8% to 12.41m from 12.19m at 2018 year-end, supported by continued growth from target countries • Expansion of the consumer product portfolio, including the launch of Avast Omni (IoT) • 2019 interim dividend of 4.4 cents per share (1/3 of 40% of 2018 levered Free Cash Flow) • Performance underpins a strong full year outlook, now at the upper end of guidance of high single digit revenue growth Notes: (1) Growth figures excluding discontinued business, disposal of the Managed Workplace business (SMB) and impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates (2) Including 1pt impact from IFRS 16 adoption from January 1, 2019 7
Good Growth Across All Financial KPI’s +12.5% +9.2% +20.0% Billings excluding FX(1) Revenue excluding FX(1) Unlevered Free Cash Flow +9.2% at actual rates (2) +8.3% at actual rates (2) Total UFCF $230.4m vs.$192.2m HY18 Led by consumer desktop Led by consumer desktop $236.5m $148.2m $0.15 Adj. EBITDA Adj. Net Income Adj. Diluted EPS vs. $222.1m HY18 vs. $130.2m HY18 vs. $0.14 HY18 36bps margin expansion to 55.4%(3) 245bps margin expansion to 34.7% +7.2% at actual rates +6.5% at actual rates +13.8% at actual rates Notes: (1) Growth figures excluding the impact of the discontinued business, disposal of the Managed Workplace (SMB) and impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates (2) Excluding discontinued business and the impact of the Managed Workplace disposal (SMB) 8 (3) 2019 includes the impact of IFRS16 adoption (1pt)
Continued Strength in Consumer Desktop Consumer Direct Desktop EoP customers(1) half year growth (4) ($m) 12.41 • Customer growth of 1.8% for H1, adding 223k 12.19 new customers since the end of 2018 2018 YE 2019 H1 • Continuing increase in penetration rates and ARPC(2) further customer expansion globally ($) • Continuation of growth in ARPC driven by VPN 49.24 50.38 and Utilities products • APPC up by 2.3% driven by successful cross-sell, 2018 YE 2019 H1 achieving 1m new licenses, including c.400k on APPC(3) Anti-Track and Driver Updater in H1’19 (x) • KPI growth trending in line with guidance of low- 1.43 single digit for customers and mid-single digit for 1.40 ARPC/APPC 2018 YE 2019 H1 Notes: (1) Represents number of customers as at Year End (2) Average Revenue Per Customer in Consumer Desktop (3) Average Products Per Customer in Consumer Desktop 9 (4) Growth figures represent 2019 H1 versus 2018 Year End
Strong Consumer Desktop Performance Adj. Billings ($m) Adj. Revenue ($m) 14.3%(1) 10.5%(1) • Strong billings growth driven by successful cross- selling, in particular the mobile enabled products and continuing expansion of the customer base • Customer growth from existing large countries such as USA and France, plus target countries such as Russia, Japan, Germany and Poland 340.5 308.4 307.6 281.0 • Consumer Direct Desktop revenue growth excluding FX ahead of guidance provided at Year End 2018 and now expected to be low double- digit growth FY19 H1 2018 H1 2019 H1 2018 H1 2019 % of total (2) 74% 75% 72% 73% Notes: (1) Growth figures excluding impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates (2) Total group excluding discontinued business, excluding Managed Workplace (SMB) disposal 10
The Power of The Platform Model & Massive User Base All Paid Desktop customers originating from our free AV Paid Desktop Anti-Virus user base (1) customers originating from our free AV user base 80% 81% (1) Paid Desktop Non Anti-Virus (1) customers originating from our free AV user base 82% Notes: (1) Avast brand 11
Positive Platform Experience Evident in Cross-Sell Growth 52% of Total Desktop Billings Non-AV Growth% (ex FX) by Product Non Utilities 26% Anti-Virus VPN 36% Driver Updater 83% Growth(1) Anti-Track 380% 34% Total 34% Growth driven by Utilities and VPN products, supported by new products such as Driver Updater and Anti-Track Notes: (1) Growth 2019 H1 versus 2018 H1 across Avast + AVG, excluding FX 12
While Best-in-Class Technical Solutions Deliver Stickiness Paid Desktop AV 4+ Years 1 Year 2-3 Years tenure profile (1) (1) 22% 28% 50% (1) Compared to H1 2018 Notes: (1) Based on percentage of total AV customers (Avast + AVG) 13
Mixed Performance in Consumer Mobile Adj. Billings ($m) Adj. Revenue ($m) • Double digit growth in direct to consumer due to (7.6)%(1) (7.5)%(1) continuous improvement in conversion rates • June first mobile Smart Home (IoT) product launched • Decline in Mobile carrier business primarily due to carry-over impact of 2017 Sprint account loss • Multiple new carrier initiatives being developed but 43.3 cycles continue to lengthen, which will negatively 39.4 41.6 38.3 impact FY expectations • Consumer Direct Mobile revenue growth excluding FX behind guidance provided at Year End 2018 and now expected to be mid-single digit decline FY19 H1 2018 H1 2019 H1 2018 H1 2019 % of total (2) 10% 9% 11% 9% Notes: (1) Growth figures excluding impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates (2) Total group excluding discontinued business, excluding Managed Workplace (SMB) disposal 14
Strong Growth in Consumer Indirect Adj. Billings ($m) (2) Adj. Revenue ($m) (2) 29.0%(1) 27.7%(1) • Avast Browser’s continuing strong growth more than offset the expected decline in Google distribution • Jumpshot led growth of the segment through its continued expansion program, delivering growth rates in-line with historic rates 50.3 50.0 • Consumer Indirect revenue growth excluding FX ahead 39.4 39.6 of guidance provided at Year End 2018 and now expected to be double-digit growth FY19 H1 2018 H1 2019 H1 2018 H1 2019 % of total (3) 9% 11% 10% 12% Notes: (1) Growth figures excluding discontinued business and excluding impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates (2) Excluding discontinued business (3) Total group excluding discontinued business, excluding Managed Workplace (SMB) disposal 15
SMB Integration Efforts Ongoing Adj. Billings ($m) (2) Adj. Revenue ($m) (2) (5.0)%(1) (0.9)%(1) • Managed Workplace (RMM) sold in Q1 to focus on core security products • Secure Web Gateway (SWG) full launch in March 2019, sales pipeline developing but longer sales cycle than existing core business. Secure Internet 27.4 Gateway (SIG) scheduled for launch later in Q3 25.4 25.9 24.4 2019 • SMB revenue decline excluding FX remains in line with the guidance provided at Year End 2018 of mid-single digit decline FY19 H1 2018 H1 2019 H1 2018 H1 2019 % of total (3) 6% 5% 7% 6% Notes: (1) Growth figures excluding Managed Workplace (SMB) disposal impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates (2) Excluding Managed Workplace disposal (3) Total group excluding discontinued business, excluding Managed Workplace (SMB) disposal 16
Product Solutions Further Enhanced Product Releases in H1: • Released Avast Omni (IoT) internal and external betas (US launch July 29) • Expanded AntiTrack offering to AVG, protecting users’ privacy by eliminating data trackers and altering digital footprints • Enhanced Avast Cleanup & AVG TuneUp for PC • Launched mobile security and parental controls with 3 carriers originating from the Veon relationship • Launched our first partner (IoT) integrated router solution with Wind Tre Italy (including both security and family functionality) • Launched Avast Family Space (beta version) for Android and iOS in Canada 17
2 FY Financial Results: Phil Marshall, CFO 18
Billings and Revenue Adj. Billings ($m) Change % H1 2019 H1 2018 Change $ Change % (excluding FX) (1) Billings 459.6 430.2 29.4 6.8 10.1 Discontinued Business 5.0 9.0 (4.0) (44.2) (43.1) Disposal Managed Workplace (SMB) 0.0 4.7 (4.7) n/a n/a Billings excl. Discontinued Business and 454.6 416.5 38.1 9.2 12.5 Disposals Adj. Revenue ($m) Change % H1 2019 H1 2018 Change $ Change % (excluding FX) (1) Revenue 426.8 403.3 23.5 5.8 6.8 Discontinued Business 5.0 9.0 (4.0) (44.1) (43.1) Disposal Managed Workplace (SMB) 0.0 4.7 (4.7) n/a n/a Revenue excl. Discontinued Business and 421.7 389.6 32.2 8.3 9.2 Disposals Notes: (1) Growth figures excluding discontinued business, disposal of the Managed Workplace business (SMB) and impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates 19
Billings Growth Acceleration From Desktop & Indirect Growth % +14.3% (7.6)% +29.0% (0.9)% +12.5% excluding FX (1) $38.1m $32.1m $10.9m $(1.0)m $(3.9)m Consumer Direct Consumer Direct Consumer Indirect SMB Group (ex.Managed Workplace (ex.Discontinued Business Desktop Mobile (ex.Discontinued Business) Disposal) and Disposals) Segment 75% 9% 11% 5% 100% % of total (2) Notes: (1) Growth figures excluding discontinued business, disposal of the Managed Workplace business (SMB) and impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates (2) Total group excluding discontinued business and Managed Workplace disposal, numbers rounded to the nearest whole number 20
Revenue Growth Underpinned by Core Strength in Desktop Growth % +10.5% (7.5)% +27.7% (5.0)% +9.2% excluding FX (1) $32.2m $26.6m $10.4m $(1.5)m $(3.3)m Consumer Direct Consumer Direct Consumer Indirect SMB Group (ex.Managed Workplace (ex.Discontinued Business Desktop Mobile (ex.Discontinued Business) Disposal) and Disposals) Segment 73% 9% 12% 6% 100% % of total (2) Notes: (1) Growth figures excluding discontinued business, disposal of the Managed Workplace business (SMB) and impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates (2) Total group excluding discontinued business and Managed Workplace disposal, numbers rounded to the nearest whole number 21
Increasing Deferred Revenue Balance Supporting Future Growth Adj. Deferred Revenue ($m) 471 • Subscription billings paid upfront and recognised 10.2% > 1 year equally over the length of the subscription period. 428 54 12% Deferred revenue represents the balance still to be 49 recognised as revenue in future periods • Growing deferred revenue balance (up +10.2%) supporting attractive future revenue growth • Good future revenue visibility through $417m of 417 ≤1 year deferred revenue to be recognised within the next 379 88% 12 months H1 2018 H1 2019 Notes: Adjusted deferred revenue represents the balance of deferred revenue excluding the effects of the fair value revaluation of the acquiree’s pre-acquisition deferred revenues and the impact of gross-up adjustment 22
Consistent Revenue Performance Adj. Quarterly Revenue Performance ($m) (2) 9.1%(1) 9.3%(1) 209.1 212.7 192.7 196.9 Q1 2018 Q1 2019 Q2 2018 Q2 2019 % H1 Total 51% 50% 49% 50% Notes: (1) Growth figures excluding discontinued business, excluding Managed Workplace (SMB) disposal and excluding impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates (2) Excluding discontinued business and Managed Workplace disposal 23
Best in Class Margin Performance Adj. EBITDA ($m) H1 Segments 2019 Margin % 2018 Margin % Margin variance Consumer (excl. Discontinued Business) 288 72.7% 270 74.4% (176)bps SMB 12 46.6% 13 42.0% 469bps Discontinued Business 5 100.0% 9 100.0% 0bps Overhead (68) n/a (70) n/a n/a Group 237 55.4% 222 55.1% 36bps • Consumer margin, while remaining strong, slightly lower due to carry-over of H2’18 and continued H1’19 investments • SMB focus remains on pricing & efficiencies, offsetting volume softness • Margin rate benefitting from IFRS16 adoption (101bps), otherwise slight decline in first half of the year per company guidance. Outlook for FY Group EBITDA margin remains broadly flat ex-IFRS16 adoption 24
High Margin Remains Adj. EBITDA ($m) H1 EBITDA Margin % Comment H1 2018 Actual 222 55.1% Revenue growth 33 322bps Strong revenue growth led by desktop and indirect Discontinued Business (4) (40)bps Decline as expected Negative FX impact on revenue outweighed by positive FX impact 2 102bps impact on costs Carry over impact of medium-term strategic investments Investment / Other (20) (450)bps across the business H1 2019 Actual pre IFRS16 233 54.4% Standard applied from January 1, impact in line with IFRS16 4 101bps previous guidance H1 2019 Actual 237 55.4% 25
Strong Cash Flow Generation ($m) H1 2019 H1 2018 Adj. EBITDA 237 222 A• Capex heavily H2 weighted, now see FY c.3% of revenue Adj. EBITDA to Adj. Cash EBITDA(1) 32 24 B• Decrease in cash tax driven by Adj. Cash EBITDA 268 246 CZK tax payment timing in H1 A Capex (3) (5) 2018 versus H1 2019 B Cash Tax(2) (25) (49) C• H1 2018 WC positively impacted by IPO payables paid C Change in Working Capital(3) (10) (0) only in H2 2018 Unlevered Free Cash Flow 230 192 D• Lower interest resulting from Cash Conversion(4) 86% 78% $500m loan repayment since IPO (including $200m primary) D Cash Interest and Lease Repayments (30) (38) and a further 25bps margin Levered Free Cash Flow 200 154 step down in H1 2019 Notes: (1) Change in deferred revenue and deferred COGS as well as reversal of COGS deferral adjustments. (2) Cash tax excludes $(49.4)m Dutch exit tax treated as an exceptional item. (3) Change in working capital excludes change in deferred revenue and deferred COGS as these are already included in Adj.Cash EBITDA 26 (4) Cash Conversion defined as Unlevered Free Cash Flow / Adj. Cash EBITDA
Subscription Model Facilitates Continued De-leveraging Net Debt ($m)(1) Adj. EBITDA Leverage(1,2) (9)% (0.1)x • Gross debt including lease liabilities $1.24Bn & Net debt $1.10Bn • USD debt tranche ($448m) fully hedged at 2.75% for 3 month USD LIBOR • $84m dividend and $49m Dutch IP tax 1,210 2.5x 1,105 2.4x payment made in H1 2019 • Net debt leverage per banking covenant 2.4x (versus 2.5x at Dec-18(3) and 3.0x at Jun-18(3)) Dec-18 Jun-19 Dec-18 Jun-19 Notes: (1) Net debt as of 31 Dec 2018 was restated for comparative purposes for opening balances of IFRS 16 adjustment $(71.7)m of lease liabilities. Balance of lease liabilities as of 30 Jun 2019 is $(68.6)m (2) Leverage calculated as x Adj. LTM EBITDA (3) Leverage per banking covenant as of 31 Dec 2018 and 30 Jun 2018 didn’t include impact of IFRS16. 27
2019 Guidance Full Year Guidance 2019 current guidance (1) 2019 prior guidance (1) Adj. Revenue Growth Upper End of High-single digit increase High-single digit increase Desktop Adj. Revenue Growth Low-double digit increase High-single digit increase • EoP Customers Low-single digit increase Low-single digit increase • APPC (Average Product Per Customer) Mid-single digit increase Mid-single digit increase • ARPC (Average Revenue Per Customer) Mid-single digit increase Mid-single digit increase Mobile Adj. Revenue Growth Mid-single digit decline Broadly flat Indirect Adj. Revenue Growth Double digit increase High-single digit increase SMB Adj. Revenue Growth Mid-single digit decline Mid-single digit decline Adj. EBITDA margin % Broadly flat (ex IFRS16) Broadly flat (ex IFRS16) c.40% levered free cash-flow c.40% levered free cash-flow Dividend Distribution Interim payable in October(2) Interim payable in Q3(2) Notes: (1) Growth figures excluding discontinued business, impact of FX, and the recent disposal of the Managed Workplace business (2) Interim dividend = 1/3 of previous year levered free cash flow 28
Summary • 2019 H1 performance in line with company guidance • Key initiatives continuing to progress well reflected in adding 223,000 new desktop customers in 2019 H1 • The strength of our platform model evident in the further expansion of average products per customer from 1.40 to 1.43 • Investment on technology and product development remains a priority, further launches expected in H2 • Strategic milestone reached with launch of Omni (Smart Home IoT) & first integrated carrier launch • Highly cash generative business model supporting further deleveraging in 2019 H1 • Record deferred revenue balance with $471m underpinning revised 2019 revenue guidance • Outlook for 2019 remains positive with revenue moved to upper end of high single digit revenue growth(1) Notes: (1) Growth figures excluding discontinued business, disposal of the Managed Workplace business (SMB) and impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates 29
Appendix
Jumpshot Strategic Partnership(1) Unlocking Value Company overview Rationale Deal summary High growth digital consumer Ascential’s detailed digital sales Creation of Strategic Partnership analytics business with revenue performance data complements between Avast plc (majority owner largely from subscriptions our broad consumer digital of Jumpshot) and Ascential plc engagement information Unique and rare information Initial 35% investment ($61m) in source of de-identified online A market leading information the company moving to 51% consumer behavior data, across source for in-depth consumer based on certain financial criteria more than 180 countries, engagement that will enhance Opportunity for new joint products processing over 5 billion records a product development to be developed over 24 months day Unlock shareholder value now and Long term partnership, leveraging Based in San Francisco, Czech in the future with accelerated Ascential’s global distribution Republic, New York and London growth/scale footprint and complementary data- sets Notes: 1) Closing is currently expected on or around 31 August 2019. The closing is conditional on receipt of approval from German antitrust authorities, the entry by Avast, Jumpshot and Ascential into a shareholders' agreement relating to Jumpshot , and the entry by Jumpshot and Ascential into a data license agreement. 31
Key Financial Assumptions Full Year Guidance 2019 current guidance 2019 prior guidance (1) Depreciation & Amortisation c. 2% of Adj. Revenue c. 2% of Adj. Revenue Capital Expenditure c. 3% of Adj. Revenue c. 2-3% of Adj. Revenue Finance Cost and Lease Repayments (2) $65m P&L / $55m CF $70m P&L / $63m CF Effective Tax Rate 20% 20% Cash Tax P&L tax less $10m P&L tax + $10m Net Working Capital (3) $15m outflow $15m outflow Number of shares • Basic weighted average number of shares 970m 954m • Number of shares used in computing dilutive EPS 1,015m 1,013m Exceptional Items • Dutch exit tax $0m P&L / $49m CF $0m P&L / $49m CF • Debt fees $0m P&L / $0m CF $0m P&L / $0m CF • Acquisition, integration and business transactions costs $5m P&L / $5m CF $0m P&L / $0m CF • Share-based expense $19m P&L $16m P&L • Amortisation of acquired intangibles $87m P&L $87m P&L Notes: (1) Original guidance excluded the impact of IFRS 16: $8.5m lease repayments, $2.3m interest expense (2) (3) Finance costs include interest costs and amortization of arrangement fees. Excludes change in deferred revenue and deferred COGS; includes only change in accounts receivable and accounts payable 32
Implementation of IFRS 16 Leases Impact of the initial recognition as of 1 January 2019 ($m) 1 January 2019 Right-of-use assets 69.7 Prepayments / Accrued leased payments 2.0 Lease liabilities (71.7) Adjusted EBITDA leverage per banking covenant 0.1x Impact on the consolidated P&L in H1 2019 ($m) IAS 17 Adjustment IFRS 16 Operating costs / Adjusted EBITDA (4.3) 4.3 - Depreciation - (3.8) (3.8) Interest expense - (1.2) (1.2) Net profit before tax (4.3) (0.7) (5.0) On 13 January 2016, IASB issued a new standard that sets out the principles for the recognition, measurement, presentation and disclosure of leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has low value. The standard applies to annual reporting periods beginning on or after 1 January 2019. The Group applied the standard as of 1 January 2019 using the modified retrospective approach and did not restate comparative amounts for the year prior to first adoption Notes: IFRS 16 initial recognition impact calculated based on exchange rates declared by Czech National Bank on 31 December 2018. 33
Exceptional Items Exceptional items, share-based compensation and amortization of acquisition intangibles ($m) H1 2019 H1 2018 Share-based compensation(1) (12) (4) Amortization of acquisition intangibles (49) (65) Acquisition and restructuring costs (2) (4) IPO costs(2) - (19) Exceptional operating costs (2) (23) Net gain on disposal of business operation 18 - Unrealized FX gain/loss on EUR tranche of bank loan 4 17 Tax impact of IP transfer (3) 94 Tax impact of adjusting items(3) 9 24 Exceptional finance and tax income/(expense) 10 135 Notes: (1) H1 2019 includes $(1.5)m employer’s cost on share based payments exercise (2) Costs as per income statement excluded additional $4.0m IPO expenditures recorded directly to equity. Additional $4.1m IPO costs were recognized in the income statement in 2017 (3) Consists of tax impact of disposal of business operation, tax impact of FX gain/loss on intercompany loans and other adjusting items 34
Foreign Exchange Rates Trend (X-rates to US Dollar) H1 2019 Currency YoY % average AUD 0.71 (8.1)% BRL 0.26 (11.4)% CAD 0.75 (4.6)% CZK 0.04 (7.3)% EUR 1.13 (6.5)% GBP 1.30 (5.7)% 35
Adjusted Profit and Loss ($m) H1 2019 H1 2018 Revenue 426.8 403.3 Cost of revenues (54.2) (52.8) Adjusted Gross profit 372.6 350.5 Gross profit % 87.3% 86.9% Operating costs (136.0) (128.4) EBITDA 236.5 222.1 EBITDA % 55.4% 55.1% D&A (10.8) (7.7) Operating profit 225.7 214.4 Finance costs (39.8) (51.7) PBT 186.0 162.7 Income tax (37.7) (32.5) Net Income 148.2 130.2 Net Income % 34.7% 32.3% 36
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