Good Morning and Thank You Very Much for Joining Our Third Quarter Earnings Presentation

Conference Call Transcript 3Q19 Earning Release T4F (SHOW3 BZ) November 7, 2019 Good morning and thank you very much for joining our third quarter earnings presentation. I will begin with the operational performance, which you can see on slide 4 of the presentation. This quarter, we promoted 130 events, an increase of 7% compared to the same period of last year, due to a higher number of performances of the Broadway show The Phantom of the Opera, which was presented through the whole quarter this year, while it premiered only in August last year. In live music, the reduction of 29% in the number of shows and of 49% in the number of tickets sold is due mainly to the fact that after the end of the partnership with Bizarro in January, we are no longer promoting indoor Latin shows in Chile, which took place in venues with higher capacities than the average of our indoor concerts. In addition, in 3Q18, we had promoted the Villa Mix festival in Sao Paulo, while in 3Q19 we did not promote any outdoor shows. In Family and Theater, despite the increase in the number of shows, the number of tickets sold decreased 41% due to the lower sales for The Phantom of the Opera, which has been playing since August 2018 and was sold out during the third quarter of last year. On slide 5, you can see our event pipeline. In outdoor live music, we will promote: In November, the Popload Festival in Sao Paulo with artists like Patti Smith, Tove Lo and Beirut; In April, the 8th edition of Lollapalooza Brazil Festival, which has more than 130 thousand tickets already sold; and In July, two concerts of Taylor Swift at Allianz Parque, one of them already sold out. In indoor music, we have already booked more than 60 shows for the fourth quarter, including important local and international artists like Dido, Maria Bethânia, Caetano Veloso and Jorge & Mateus. In Family Events and Theater, we will continue presenting the original Broadway musical The Phantom of the Opera at Teatro Renault in Sao Paulo until December. And, in Sports Events, we will promote the final series of the car racing championships Stock Car and Stock Light. Now, André will talk about our financial results. SPEECH ANDRÉ – INGLÊS Good morning! Moving on to slide 6, I will comment on our financial performance this quarter. Net revenue totaled R$55 million in 3Q19, a reduction of 50% from the third quarter of 2018. In the segment of event promotion, net revenue decreased 75% reflecting the reduction in live music activity and the reduction in tickets sold in theater. In ticketing, F&B and venues operations, net revenue decreased 7%. While in 3Q18 we had sales open for 18 outdoor shows (3 days of Lollapalooza Brazil, 10 shows of Roger Waters, 2 shows of the Solid Rock festival, 2 shows of the Summer Break festival and 1 day of the Villa Mix festival), in 3Q19 we had sales open for only 4 outdoor shows (3 days of Lollapalooza Brazil of 2020 and 1 day of Popload Festival). In sponsorship, net revenue reached R$20.7 million, in line with 3Q18. On the next slide, gross profit amounted to R$15.4 million in the third quarter, a decrease of 52% year-on-year, due mainly to the 75% reduction in net revenue of event promotion. SG&A increased 18% year-on-year, reaching R$16.8 million, which reflects the Company’s administrative restructuring. Total expenses amounted to R$22.8 million, affected by the write-off of remaining liabilities in our balance sheet of R$1.8 million related to the termination of the agreement with Bizarro in Chile, and by the adjustment by inflation and legal costs of the contingency of the lawsuit in Argentina provisioned in the first quarter this year. Excluding these effects, total expenses would have reached R$18.0 million in 3Q19 versus R$14.4 million in 3Q18 and R$51.5 million in the accumulated nine months versus R$46.0 million in the same period last year. As a result, EBITDA was negative in R$1.3 million and Adjusted EBITDA was positive in R$1.6 million, excluding the non-recurring effect of the legal costs and hyperinflation adjustment on the provision of the lawsuit in Argentina On slide 8, I will comment on the financial result and net income. Net financial result in the third quarter was negative in R$6.2 million due mainly to: (i) accounting adjustment of hyperinflation in Argentina with net negative effect of R$1.5 million; (ii) interest related to the third issue of debentures in the amount of R$2.4 million; and (iii) negative monetary variation of R$5.2 million due to the adjustment by interest and hyperinflation of the contingency provision in Argentina. Excluding the effects of hyperinflation and of the provision of interest related to the lawsuit in Argentina, financial result would have been positive in R$500 thousand in 3Q19 versus negative result of R$600 thousand in 3Q18. As a consequence, we ended the quarter with net negative result of R$13.2 million. Excluding the non-recurring effects and the hyperinflation adjustment in Argentina, net result would be negative in R$1.8 million versus net income of R$14.8 million in 3Q18. On the last slide, I will talk about the Company’s cash position. Regarding cash flow: We generated R$6.4 million in operating cash as a result of anticipated receipt of sponsorship and low cash consumption, given that we did not promote outdoor events in the period In investments, we spent R$495 thousand in maintenance capex; And, in the financing flow, we spent R$3.5 million on the payment of lease liabilities related to the long-term rental contracts of our venues, partially offset by the positive cash flow of R$2.1 million from related parties So, we concluded the quarter with cash position of R$236 million, total indebtedness of R$160.7 million and, as a consequence, a net cash of R$75.3 million, 7% higher than in the second quarter. Before passing the floor back to Fernando, I would like to comment on two subsequent events to our statements that will impact our results in the next quarter. The first event refers to the contingency of lawsuit in Argentina, whose provisioned amount in the third quarter amounts to R$39.1 million. On October 11, we entered into an Operating Agreement in which T4F Entretenimento, as the majority shareholder and holder of the shares issued by T4F Inversiones S.A. in Argentina, must pay to the creditors a total amount of R$29.6 million. With this, there will be a reversal of approximately R$9.5 million in the fourth quarter related to the discount obtained for the payment of this lawsuit. Secondly, in accordance with the notice to the market release on October 18, we concluded the negotiations with Unimed regarding the new naming rights contract of our venue in Sao Paulo. Therefore, from now on Credicard Hall is renamed UnimedHall. According the accounting practices historically adopted for our naming rights agreements, the appropriation will be linear throughout the term of the agreement, except for a higher concentration in the first quarter of the contract in face of the costs related to the venue’s modifications. Thank you very much! Fernando will conclude our presentation. SPEECH FA INGLÊS - CONCLUSÃO As we have been talking about since our second quarter earnings release, 2019 has been negatively affected by a low flow of international artists to the region and by a still weak macroeconomic environment that has impacted ticket sales for our recurring content, mainly indoor concerts and theater. This year we also had the impact of non-recurring effects such as the decision of the appellate court of a lawsuit in Argentina and the end of the agreement with Bizarro in Chile, not to mention the impacts of the new accounting rules on hyperinflation in Argentina. So, we believe that the best way to analyze the Company’s results this year is excluding the non-recurring events, which do not effectively reflect our operating performance. Then, based on the outdoor shows booked for the next year and the sales performance we have seen in the last quarter, we revised our guidance for breakeven on Adjusted EBITDA, excluding non-recurring effects that should lead to negative accounting EBITDA. For 2020, we see a greater flow of international artists to the region. We have already opened sales in the fourth quarter for 2 shows of Taylor Swift in July 2020 and we are in advanced negotiations with other outdoor tours scheduled for the next year. In addition, we are focused on generating revenue and recurring results through festivals, consolidation of the ticketing business, and other entertainment projects that we plan to announce in the coming months. Thank you for your attention! The IR team is available to answer any questions. .

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