Avast plc 2019 Half year results - 14 August 2019
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Avast plc
2019 Half year results
14 August 2019
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
31 HY Highlights:
Ondrej Vlcek, CEO
4H1 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
5CEO 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
6H1 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 7Good 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
($)
• Continuation of growth in ARPC driven by VPN
49.24 50.38 and Utilities products
• APPC up by 2.3% driven by successful cross-sell,
2018 YE 2019 H1
achieving 1m new licenses, including c.400k on
APPC(3) Anti-Track and Driver Updater in H1’19
(x)
• KPI growth trending in line with guidance of low-
1.43
single digit for customers and mid-single digit for
1.40
ARPC/APPC
2018 YE 2019 H1
Notes:
(1) Represents number of customers as at Year End
(2) Average Revenue Per Customer in Consumer Desktop
(3) Average Products Per Customer in Consumer Desktop
9
(4) Growth figures represent 2019 H1 versus 2018 Year EndStrong Consumer Desktop Performance
Adj. Billings ($m) Adj. Revenue ($m)
14.3%(1) 10.5%(1) • Strong billings growth driven by successful cross-
selling, in particular the mobile enabled products
and continuing expansion of the customer base
• Customer growth from existing large countries
such as USA and France, plus target countries
such as Russia, Japan, Germany and Poland
340.5
308.4 307.6
281.0 • Consumer Direct Desktop revenue growth
excluding FX ahead of guidance provided at Year
End 2018 and now expected to be low double-
digit growth FY19
H1 2018 H1 2019 H1 2018 H1 2019
% of total (2) 74% 75% 72% 73%
Notes:
(1) Growth figures excluding impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
(2) Total group excluding discontinued business, excluding Managed Workplace (SMB) disposal 10The Power of The Platform Model & Massive User Base
All Paid Desktop customers
originating from our free AV
Paid Desktop Anti-Virus user base
(1)
customers originating from
our free AV user base 80%
81% (1)
Paid Desktop Non Anti-Virus
(1)
customers originating from
our free AV user base 82%
Notes:
(1) Avast brand
11Positive Platform Experience Evident in Cross-Sell Growth
52% of Total Desktop Billings Non-AV Growth% (ex FX) by Product
Non Utilities 26%
Anti-Virus VPN 36%
Driver Updater 83%
Growth(1)
Anti-Track 380%
34% Total 34%
Growth driven by Utilities and VPN products, supported by new products such as Driver Updater and Anti-Track
Notes:
(1) Growth 2019 H1 versus 2018 H1 across Avast + AVG, excluding FX
12While Best-in-Class Technical Solutions Deliver Stickiness
Paid Desktop AV 4+ Years
1 Year 2-3 Years
tenure profile
(1) (1)
22% 28% 50% (1)
Compared to H1 2018
Notes:
(1) Based on percentage of total AV customers (Avast + AVG)
13Mixed Performance in Consumer Mobile
Adj. Billings ($m) Adj. Revenue ($m)
• Double digit growth in direct to consumer due to
(7.6)%(1) (7.5)%(1) continuous improvement in conversion rates
• June first mobile Smart Home (IoT) product launched
• Decline in Mobile carrier business primarily due to
carry-over impact of 2017 Sprint account loss
• Multiple new carrier initiatives being developed but
43.3 cycles continue to lengthen, which will negatively
39.4 41.6
38.3 impact FY expectations
• Consumer Direct Mobile revenue growth excluding
FX behind guidance provided at Year End 2018 and
now expected to be mid-single digit decline FY19
H1 2018 H1 2019 H1 2018 H1 2019
% of total (2) 10% 9% 11% 9%
Notes:
(1) Growth figures excluding impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
(2) Total group excluding discontinued business, excluding Managed Workplace (SMB) disposal 14Strong Growth in Consumer Indirect
Adj. Billings ($m) (2) Adj. Revenue ($m) (2)
29.0%(1) 27.7%(1)
• Avast Browser’s continuing strong growth more than
offset the expected decline in Google distribution
• Jumpshot led growth of the segment through its
continued expansion program, delivering growth rates
in-line with historic rates
50.3 50.0 • Consumer Indirect revenue growth excluding FX ahead
39.4 39.6 of guidance provided at Year End 2018 and now
expected to be double-digit growth FY19
H1 2018 H1 2019 H1 2018 H1 2019
% of total (3) 9% 11% 10% 12%
Notes:
(1) Growth figures excluding discontinued business and excluding impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
(2) Excluding discontinued business
(3) Total group excluding discontinued business, excluding Managed Workplace (SMB) disposal
15SMB Integration Efforts Ongoing
Adj. Billings ($m) (2) Adj. Revenue ($m) (2)
(5.0)%(1)
(0.9)%(1)
• Managed Workplace (RMM) sold in Q1 to focus on
core security products
• Secure Web Gateway (SWG) full launch in March
2019, sales pipeline developing but longer sales
cycle than existing core business. Secure Internet
27.4 Gateway (SIG) scheduled for launch later in Q3
25.4 25.9
24.4
2019
• SMB revenue decline excluding FX remains in line
with the guidance provided at Year End 2018 of
mid-single digit decline FY19
H1 2018 H1 2019 H1 2018 H1 2019
% of total (3) 6% 5% 7% 6%
Notes:
(1) Growth figures excluding Managed Workplace (SMB) disposal impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
(2) Excluding Managed Workplace disposal
(3) Total group excluding discontinued business, excluding Managed Workplace (SMB) disposal
16Product Solutions Further Enhanced
Product Releases in H1:
• Released Avast Omni (IoT) internal and external betas (US launch July 29)
• Expanded AntiTrack offering to AVG, protecting users’ privacy by eliminating data trackers and altering digital footprints
• Enhanced Avast Cleanup & AVG TuneUp for PC
• Launched mobile security and parental controls with 3 carriers originating from the Veon relationship
• Launched our first partner (IoT) integrated router solution with Wind Tre Italy (including both security and family functionality)
• Launched Avast Family Space (beta version) for Android and iOS in Canada
172 FY Financial Results:
Phil Marshall, CFO
18Billings and Revenue
Adj. Billings ($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
19Billings 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 20Revenue 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
$(3.3)m
Consumer Direct Consumer Direct Consumer Indirect SMB Group
(ex.Managed Workplace (ex.Discontinued Business
Desktop Mobile (ex.Discontinued Business)
Disposal) and Disposals)
Segment
73% 9% 12% 6% 100%
% of total (2)
Notes:
(1) Growth figures excluding discontinued business, disposal of the Managed Workplace business (SMB) and impact of FX. FX impact calculated by restating 2019 actuals to 2018 FX rates
(2) Total group excluding discontinued business and Managed Workplace disposal, numbers rounded to the nearest whole number 21Increasing Deferred Revenue Balance Supporting Future Growth
Adj. Deferred Revenue ($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 $417m of
417 ≤1 year
deferred revenue to be recognised within the next
379 88%
12 months
H1 2018 H1 2019
Notes:
Adjusted deferred revenue represents the balance of deferred revenue excluding the effects of the fair value revaluation of the acquiree’s pre-acquisition deferred revenues and the impact of gross-up adjustment
22Consistent Revenue Performance
Adj. Quarterly Revenue Performance ($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 23Best in Class Margin Performance
Adj. EBITDA ($m)
H1
Segments 2019 Margin % 2018 Margin % Margin variance
Consumer (excl. Discontinued Business) 288 72.7% 270 74.4% (176)bps
SMB 12 46.6% 13 42.0% 469bps
Discontinued Business 5 100.0% 9 100.0% 0bps
Overhead (68) n/a (70) n/a n/a
Group 237 55.4% 222 55.1% 36bps
• Consumer margin, while remaining strong, slightly lower due to carry-over of H2’18 and continued H1’19 investments
• SMB focus remains on pricing & efficiencies, offsetting volume softness
• Margin rate benefitting from IFRS16 adoption (101bps), otherwise slight decline in first half of the year per company guidance.
Outlook for FY Group EBITDA margin remains broadly flat ex-IFRS16 adoption
24High Margin Remains
Adj. EBITDA ($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%
25Strong 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 $(49.4)m Dutch exit tax treated as an exceptional item.
(3) Change in working capital excludes change in deferred revenue and deferred COGS as these are already included in Adj.Cash EBITDA 26
(4) Cash Conversion defined as Unlevered Free Cash Flow / Adj. Cash EBITDASubscription Model Facilitates Continued De-leveraging
Net Debt ($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.
272019 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
28Summary
• 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
29Appendix
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. 31Key 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, $2.3m interest expense
(2)
(3)
Finance costs include interest costs and amortization of arrangement fees.
Excludes change in deferred revenue and deferred COGS; includes only change in accounts receivable and accounts payable
32Implementation of IFRS 16 Leases
Impact of the initial recognition as of 1 January 2019 ($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 ($m)
IAS 17 Adjustment IFRS 16
Operating costs / Adjusted EBITDA (4.3) 4.3 -
Depreciation - (3.8) (3.8)
Interest expense - (1.2) (1.2)
Net profit before tax (4.3) (0.7) (5.0)
On 13 January 2016, IASB issued a new standard that sets out the principles for the recognition, measurement,
presentation and disclosure of leases. The standard provides a single lessee accounting model, requiring lessees to
recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has low
value. The standard applies to annual reporting periods beginning on or after 1 January 2019. The Group applied the
standard as of 1 January 2019 using the modified retrospective approach and did not restate comparative amounts for the
year prior to first adoption
Notes:
IFRS 16 initial recognition impact calculated based on exchange rates declared by Czech National Bank on 31 December 2018.
33Exceptional Items
Exceptional items, share-based compensation and amortization of acquisition intangibles ($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 $4.1m IPO costs were recognized in the income statement in 2017
(3) Consists of tax impact of disposal of business operation, tax impact of FX gain/loss on intercompany loans and other adjusting items
34Foreign Exchange Rates Trend (X-rates to US Dollar)
H1 2019
Currency YoY %
average
AUD 0.71 (8.1)%
BRL 0.26 (11.4)%
CAD 0.75 (4.6)%
CZK 0.04 (7.3)%
EUR 1.13 (6.5)%
GBP 1.30 (5.7)%
35Adjusted Profit and Loss
($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%
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