Investor Relations 2018
Samsung Securities Asia NDR, November 2018 Disclaimer
This financial information in this document are consolidated earnings results based on K-IFRS.
This document is provided for the convenience of investors only, before the external audit on our 3Q 2018 financial results is completed. The audit outcomes may cause some parts of this document to change.
In addition, this document contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, “forward-looking statements” often address our expected future business and financial performance, and often contain words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks” or “will”. Our actual results to be materially different from those expressed in this document due to uncertainties. Investor Relations 2018 TABLE OF CONTENTS
I Studio Dragon at a Glance
II 3Q 2018 Earnings Release
III Growth Strategy
Appendix I Studio Dragon at a Glance
1. Highlights 2. Comprehensive Studio 3. Studio Dragon at a Glance 4. Studio Centered Industry Change 5. No.1 Studio in Korea We Create New Culture I.1 Highlights
Guardian:
< >
Revenue Operating Profit Net Profit
W286.8bn W33bn W23.8bn (CAGR(1) +40.7%) (CAGR +99.2%) (CAGR +160.8%)
Note (1) Compound annual growth rate from 2014 to 2017
5 | Investor Relations 2018 – I. Studio Dragon at a Glance We Create New Culture I.2 Comprehensive Studio
6 | Investor Relations 2018 – I. Studio Dragon at a Glance We Create New Culture I.3 Studio Dragon at a Glance
400.2
101.5 38.0 48.1 2 4 Studio Dragon
Note (1) Each companies’ audit report (consolidated basis) 7 | Investor Relations 2018 – I. Studio Dragon at a Glance We Create New Culture I.4 Studio Centered Industry Change
8 | Investor Relations 2018 – I. Studio Dragon at a Glance We Create New Culture I.5 No. 1 Studio in Korea ① Production Capability (1)
9 | Investor Relations 2018 – I. Studio Dragon at a Glance We Create New Culture I.5 No. 1 Studio in Korea ① Production Capability (2)
10 | Investor Relations 2018 – I. Studio Dragon at a Glance We Create New Culture I.5 No. 1 Studio in Korea ② Business Capability
11 | Investor Relations 2018 – I. Studio Dragon at a Glance We Create New Culture II.5 No. 1 Studio in Korea ③ Stable Profit Structure
Annual Production Trend Production Cost to Revenue Revenue to Cost of Sales
Unit: titles Unit: Wbn
Note Companies’ homepage and other sources
12 | Investor Relations 2018 – I. Studio Dragon at a Glance II 3Q 2018 Earnings Release
1. Operating Performance 2. Programing 3. Distribution 4. Cost We Create New Culture II.1 3Q 2018 Operating Performance
Summary
3Q18 Expanded market presence driven by new titles incl.
4Q18 Aim to reinforce competitive advantage, penetrate into new markets through diversifying genres and leading TV series trend Revenue Operating Profit Net Profit
Unit: Wbn Unit: Wbn Unit: Wbn
123.7 11.4 17.4% 14.0% 13.3% 12.0% 9.8% 8.6% 9.9% 7.3% 77.5 79.9 74.3 63.4 4.8% 2.8% 72.0 7.1 12.4 7.2 11.4
23.3 32.1 25.8 28.8 21.5 17.3
41.8 48.9 8.9 39.0 40.7 34.1 10.7 7.9 6.7 7.3 5.7 3.5 2.0 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Programing Distribution Others Operating Income OPM Net Income NP Margin
14 | Investor Relations 2018 – II. 3Q 2018 Earnings Release We Create New Culture II.2 3Q 2018 Operating Performance
Programming
3Q18 Revenue continuously posted solid growth of 17.1% YoY, mainly attributable to extensive anchor titles
4Q18 Increase number of big-budget titles (
Programming Revenue Production Trend Note (1)
Unit: Wbn Unit: Titles 100.0% 100.0% 48.9 87.5% 0.2 77.8% 41.8 40.7 71.4% 39.0 6.5 7.7 34.1 10.8 1.0
48.7 9 35.3 33.0 33.1 8 8 28.2 7 7
3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Captive Non-captive 진행중인 작품 % of Captive Titles Note (1) Each quarter includes all titles in progress
15 | Investor Relations 2018 – II. 3Q 2018 Earnings Release We Create New Culture II.3 3Q 2018 Operating Performance
Distribution
3Q18 Revenue grew 172.0% YoY, hit a record high at W63.4bn, driven by strong growth in domestic and overseas content sales of high-quality TV series
4Q18 Expand partnerships with major players including Chinese OTTs, diversify distribution regions
Distribution Revenue No. of Library Sales
Unit: Wbn Unit: Titles
※ Note (1) 0.24bn 0.24bn 0.31bn 0.29bn 0.61bn 106 102 101 104 63.4 97 7 25 12 17 16
46.2 32.1 28.8 25.8 95 89 23.3 81 81 87 22.7 16.5 13.1 15.4 17.2 10.2 10.4 9.4 12.3
3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Domestic Overseas Old Titles New Titles Note (1) Average distribution revenue per title
16 | Investor Relations 2018 – II. 3Q 2018 Earnings Release We Create New Culture II.4 3Q 2018 Operating Performance
Cost
3Q18 OPEX W102.2bn (+44.3% YoY): COGS Ratio 79.9% (-6.2%p YoY), SG&A Ratio 2.7% (-2.6%p YoY)
4Q18 Focus on implementing balanced budget for TV series and rationalizing cost
COGS and SG&A Ratio OPEX
Unit: % Unit: Wbn
89.6 86.1 85.7 3Q17 4Q17 1Q18 2Q18 3Q18 82.9 79.9 COGS 66.8 64.4 66.2 63.7 98.9
Labor Costs 2.0 2.4 1.5 1.6 1.8
Dep. & Amort. 0.1 0.1 0.1 0.1 0.1
Commissions 0.4 0.4 0.5 0.5 0.5 5.3 5.5 4.4 3.7 Marketing 0.5 0.5 0.2 0.2 0.1 2.7 Others 1.0 0.7 0.7 0.8 0.8
3Q17 4Q17 1Q18 2Q18 3Q18 OPEX 70.8 68.4 69.2 67.0 102.2 COGS Ratio SG&A Ratio
17 | Investor Relations 2018 – II. 3Q 2018 Earnings Release III Growth Strategies
1. Growth Strategies 2. Growth Strategies - Domestic/Overseas We Create New Culture II.1 Growth Strategies
Materialize co-production & partnerships with global players Build business model in new markets including China
(Unit: Wbn) 7.3% “ ”
4.0% 3.9% 4.2% 63.4 3.2% 3.6% 2.7%
36.5 32.1 28.8 26.3 25.8 23.3
1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18
19 | Investor Relations 2018 – III. Growth Strategies We Create New Culture II.2 Growth Strategies – Domestic
Domestic
Produce more TV series, enhance quality & hit ratio Establish dominant market influence
Expand No. of titles + Platforms Enhance Sales
1st. Window 2nd. Window 27+α +11.7% 2+α TV Series Market(1) 22 3
25 19 +26.3%
OTT Market(2) 20172017년 20182018년
Captive Non-Captive
Note (1) Studio Dragon estimates Note (2) KCC and Studio Dragon estimates (W616.7bn in 2017 W778.7bn in 2018)
20 | Investor Relations 2018 – III. Growth Strategies We Create New Culture II.2 Growth Strategies – Overseas
Overseas
Overseas business in Step 2 phase. Maximize distribution while focusing on build up of global competitiveness
Distribution
Overseas Domestic Overseas Domestic Domestic Overseas
21 | Investor Relations 2018 – III. Growth Strategies Investor Relations 2018 APPENDIX
1 Corporate Overview
2 Vision 1. [Domestic] Industry & Mid-to-Long Term Growth Strategy 2. [Overseas] Industry & Mid-to-Long Term Growth Strategy
3 Business Model Canvas
4 Financial Statements Summary 1. Financial Position 2. Income Statement
5 4Q 2018 Lineup We Create New Culture I.1 Corporate Overview
Group Structure Shareholder Structure
* Listed companies As of end-2017 * CJ Corp. Foreign Investors ESOP 0.43% 0.88% 39.36% Institutional Investors * CJ E&M Retail Investors 11.35% 11.68% 71.33% * Related Parties 4.32%
100% 100% 100% CJ E&M 71.33%
Share Price Trend
Nov. 24, 2017=100
11.17 12.17 1.18 2.18 3.18 4.18 5.18 6.18 7.18 8.18 9.18 10.18 Studio Dragon KOSPI KOSDAQ
23 | Investor Relations 2018 – Appendix We Create New Culture I.2 Vision
24 | Investor Relations 2018 – Appendix We Create New Culture I.2 [Domestic] Industry
25 | Investor Relations 2018 – Appendix I.2 [Domestic] Mid-to-Long Term Growth Strategy
Secure Creators
Hwa and Culture Dam KPJ Depot Pictures
26 | Investor Relations 2018 – Appendix We Create New Culture I.2 [Overseas] Industry
Source Press reports Source KCC (Korea Communication Commissions)
27 | Investor Relations 2018 – Appendix I.2 [Overseas] Mid-to-Long Term Growth Strategy
Increase co-production
Derive synergies
Pursue M&A and JV
28 | Investor Relations 2018 – Appendix We Create New Culture I.3 Business Model Canvas
29 | Investor Relations 2018 – Appendix 4 Financial Statements – Financial Position
(Unit: Wbn) 3Q17 2Q18 3Q18 % QoQ % YoY Total Assets 270.1 476.0 491.2 3.2 81.9 Current Assets 97.4 289.1 256.9 (11.2) 163.8 Cash and Cash Equivalents 21.3 185.2 162.8 (12.1) 664.6 Others 76.1 103.9 94.0 (9.5) 23.6 Non-Current Assets 172.7 186.9 234.3 25.4 35.6 Tangible Assets 1.0 1.1 1.1 0.4 3.2 Intangible Assets 128.5 138.4 171.9 24.2 33.8 Others 43.2 47.4 61.3 29.3 41.8 Total Liabilities 111.6 90.5 91.0 0.5 (18.5) Current Liabilities 110.8 89.7 84.7 (5.6) (23.5) Non-Current Liabilities 0.8 0.8 6.3 724.7 650.6 Shareholders’ Equity 158.5 385.5 400.2 3.8 152.5 Equity Capital 125.7 333.6 333.6 0.0 165.3 Retained Earnings 30.2 48.8 66.1 35.6 119.0 Other Components of Equity 2.6 3.1 0.5 (84.8) (81.5)
Key Financial Ratios Current Ratio (%) 87.9 322.2 303.3 (18.9)%p 215.4%p
Net Debt (Net Cash) to Equity (%) 9.5 (48.1) (40.7) 7.4%p (50.2)%p Cash Ratio (%) 19.2 206.4 192.3 (14.1)%p 173.1%p
Note (1) K-IFRS consolidated basis (2) Current Ratio = Current Assets / Current Liabilities, Net Debt (Net Cash) to Equity = Net Debt (Net Cash) / Shareholders’ Equity, Cash Ratio = Cash and Cash Equivalents / Current Liabilities
30 | Investor Relations 2018 – Appendix 4 Financial Statements - Income Statement
(Unit: Wbn) 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 % QoQ % YoY 2016 2017
Sales Revenue 62.0 77.5 72.0 79.9 74.3 123.7 66.5 59.7 195.5 286.8
Programming 24.1 41.8 39.0 40.7 34.1 48.9 43.6 17.1 87.8 131.2
Distribution 26.3 23.3 25.8 32.1 28.8 63.4 119.8 172.0 75.4 111.9
Others 11.6 12.4 7.2 7.1 11.4 11.4 0.4 (7.8) 32.3 43.7
OPEX 53.1 70.8 68.4 69.2 67.0 102.2 52.7 44.3 174.3 253.8
Cost of Goods Sold 49.9 66.8 64.4 66.2 63.7 98.9 55.4 48.2 168.4 239.7
SG&A 3.2 4.0 4.0 3.0 3.3 3.3 0.9 (18.5) 5.9 14.1
Operating Profit 8.9 6.7 3.5 10.7 7.3 21.5 193.3 223.0 21.2 33.0
Margin (%) 14.3 8.6 4.8 13.3 9.9 17.4 7.5%p 8.8%p 10.8 11.5
Non-operating Profit 0.1 (0.3) (1.8) 0.2 3.7 0.6 (84.7) TTB (5.9) (2.7)
Non-operating Income 0.7 0.2 0.4 1.1 3.5 0.9 (74.2) 398.8 1.5 1.4
Non-operating Expenses 0.6 0.5 2.2 0.9 (0.2) 0.3 TTB (31.4) 7.3 4.1
Pre-tax Profit 9.0 6.4 1.7 10.9 11.0 22.1 99.6 246.8 15.3 30.3
Income Taxes 6.2 0.7 (0.3) 3.0 2.1 4.8 117.6 576.7 2.4 6.4
Net Profit 2.8 5.7 2.0 7.9 8.9 17.3 95.2 206.3 13.0 23.8
Margin (%) 4.5 7.3 2.8 9.8 12.0 14.0 2.1%p 6.7%p 6.6 8.3
Note (1) K-IFRS consolidated basis (2) Pre spin-off (Jan. 1, 2016~Apr. 30, 2016) and company’s 1st year annual audit report (May 1, 2016~Dec. 31, 2016) as added for the yearly figure (3) TTR (Turn To Red), TTB (Turn To Black), CR (Continue Red), n/a (not avilable)
31 | Investor Relations 2018 – Appendix We Create New Culture 5 4Q 2018 Line up
Distributor ∙ tvN ∙ tvN ∙ tvN ∙ OCN Date (#. of episodes) ∙ Oct. 3~Nov. 22 (16) ∙ Oct. 6~Nov. 25 (16) ∙ Nov. 5~Dec. 25 (16) ∙ Sept. 29~Nov. 11 (14) Writer / Director ∙ Song Hye-Jin / Yoo Je-Won ∙ Jung Sung-Hee / Ji Young-Soo ∙ Yoo Kyoung-Sun / Kim Yoon-Cheol ∙ Shin Jae-Hyung / Go Jae-Hyun Main Cast ∙ Seo In-Guk, Jung So-Min ∙ Kim Hee-Sun, Kim Hye-Sook ∙ Moon Chae-Won, Yoon Hyun-Min ∙ Song Seung-Heon, Jung Soo-Jung
32 | Investor Relations 2018 – Appendix Thank You
Studio Dragon Investor Relations | [email protected] | www.studiodragon.net