Perform Group plc Annual Report and Successful execution Accounts 2012 of growth strategy ABOUT US Perform is a global market leader in the commercialisation of multimedia sports content across multiple platforms. The Group licenses one of the largest portfolios of digital sports rights in the world, through contracts relating to more than 200 sports leagues, tournaments and events. The Group’s Management is focused on driving earnings growth through leveraging its content across new digital platforms, new products and across new geographies, taking advantage of favourable technology trends such as growth in digital media consumption and online video viewership. www.performgroup.co.uk OVERVIEW Financial highlights OVERVIEW OVERVIEW Revenue (£’000) Financial highlights 1 Business at a glance 4 151,607 Market overview 6 Chairman/Joint CEOs’ review 10 Year on year growth of 47% Vision and growth strategy 12 2010 67,430 Enhance digital sports rights portfolio 14 2011 103,194 Expand geographically 16 2012 151,607 Grow the audience 18 Pursue complementary strategic acquisitions 19 Launch on new digital platforms 20 Adjusted EBITDA 1 (£’000) 2013: Investment for future growth 22 BUSINESS AND FINANCIAL REVIEW REVIEW FINANCIAL AND BUSINESS 37,502 BUSINESS AND FINANCIAL REVIEW Year on year growth of 103% Content distribution 26 2010 10,345 Advertising & sponsorship (display) 28 2011 18,474 Advertising & sponsorship (video) 30 2012 37,502 Subscription 32 Technology & production 34 Financial review 36 Adjusted profit after tax 2 (£’000) 26,861 Year on year growth of 83% 2010 10,133 2011 14,692 GOVERNANCE GOVERNANCE 2012 26,861 Board of Directors 44 Profit after tax (£’000) Risks & uncertainties 46 Directors’ Report 49 Corporate Governance Statement 54 Remuneration Committee Report 60 13,497 Directors’ Responsibilities Statement 65 Year on year growth of 263% 2010 9,448 2011 3,717 2012 13,497 Adjusted basic earnings per share 3 (pence) FINANCIAL STATEMENTS FINANCIAL FINANCIAL STATEMENTS Independent auditor’s report 68 11.2p Consolidated income statement 69 Year on year growth of 78% Consolidated statement of comprehensive income 70 2010 4.5 Consolidated statement of changes in equity 71 2011 6.3 Consolidated statement of financial position 72 2012 11.2 Consolidated statement of cash flows 73 Notes to the Group financial statements 74 1 Adjusted EBITDA is before charging exceptional items (£5.3m; 2011: £5.0m; 2010: £0.7m) and Parent company independent auditor’s reports 115 share-based payments (£3.2m; 2011: £5.1m, 2010: £0.1m). 2 Adjusted profit after tax excludes exceptional items and share-based payments as above and also Parent company financial statements 116 excludes acquisition related amortisation and service charges £2.9m (2011: £0.9m, 2010: nil) and Shareholders information 122 accretion of acquisition related deferred consideration £1.9m (2011: £nil, 2010: £nil). 3 Refer to note 10 of the financial statements for an explanation of adjusted earnings per share. Perform Group plc Annual Report and Accounts 2012 1 Overview OVERVIEW OVERVIEW Business at a glance 4 Market overview 6 Chairman/Joint CEOs’ review 10 Vision and growth strategy 12 Enhance digital sports rights portfolio 14 Expand geographically 16 Grow the audience 18 Pursue complementary strategic acquisitions 19 Launch on new digital platforms 20 2013: Investment for future growth 22 OVERVIEW Business at a glance The Group is the market leader in the commercialisation of sports content across digital platforms and has developed a range of B2B and B2C products which deliver five revenue streams E D I A C O Overview M N S T S U R M O E P R The Group licenses a large portfolio S S of digital sports rights with contracts Content relating to more than 200 sports leagues, distribution tournaments and events. Utilising this rights portfolio, the Group creates a range of products, combining sports video, editorial and data content that are distributed direct to consumers and to business clients including sports bodies, rights agencies, broadcasters, Technology Advertising & & production sponsorship bookmakers and publishers. (display) Across the Group’s owned portals, video-on-demand player and managed websites, the Group reaches in excess of 150 million sports fans per month on PC’s, laptops, tablets, smartphones and connected TV’s. Advertising & Subscription sponsorship (video) C O S N N N A E F C T T S T O S P O R All business areas are delivered according to the Group’s growth strategy which is set out more fully on pages 12 to 23 Enhance digital Expand Grow audience Pursue Launch on sports rights geographically complementary new digital portfolio strategic platforms acquisitions 4 Perform Group plc Annual Report and Accounts 2012 OVERVIEW The Group owns the digital sports media rights to over 200 OVERVIEW Content distribution leagues, tournaments and events and utilises this rights More in Business Review page 26 portfolio to deliver a range of B2B products covering live video, sports data, sports news and editorial, and sports statistics. These products are sold to online bookmakers, broadcasters, mobile operators and other business clients around the world. £93m YOY revenue growth of 43% (2011: £65 million) Advertising & sponsorship The Group generates display advertising and sponsorship revenues through the sale of display advertisements on the (display) Group’s own branded websites and mobile services including More in Business Review page 28 Goal, the world’s largest football website, Spox, Mackolik, Sahadan BUSINESS AND FINANCIAL REVIEW FINANCIAL AND BUSINESS and Soccerway. In 2012, the Group had an average of 43 million monthly unique users across these sites. The Group also acts as an advertising sales agent for a network of third-party sports £18m websites including the Premier League’s oecial website. YOY revenue growth of 164% (2011: £7 million) Advertising & sponsorship The Group generates video advertising and sponsorship revenues (video) through the sale of pre-roll video advertisements on its video-on- demand broadcast platform the ePlayer. The ePlayer is embedded More in Business Review page 30 on the websites of over 1,000 leading publishers and sports portals in 24 territories. In 2012, 4.5 billion videos were streamed and 1.8 billion pre-roll adverts sold with content including National Football League, Major League Baseball and National Basketball Association (all US), Serie A (Italy) and La Liga (Spain). £13m GOVERNANCE YOY revenue growth of 95% (2011: £7 million) Subscription The Group generates subscription revenues from consumers More in Business Review page 32 paying monthly or annual fees to watch internet delivered live video and video-on-demand sports content via Livesport.tv and a range of third-party subscription products on behalf of football clubs, sports bodies and broadcasters. £12m YOY revenue growth of 29% (2011: £10 million) FINANCIAL STATEMENTS FINANCIAL Technology & production The Group generates technology and production revenues More in Business Review page 34 from a range of clients by: designing, building and managing websites and mobile products on behalf of sports rights holders; ingesting, encoding and streaming live and on demand content on behalf of sports rights holders and broadcasters £15m and by filming and editing sports matches for rights holders. YOY revenue decline of 2% (2011: £15 million) Perform Group plc Annual Report and Accounts 2012 5 OVERVIEW Market overview Perform’s digital business model is uniquely positioned to exploit global growth trends Increased digital media consumption Increased broadband penetration leading to increased digital Internet subscriber growth (2012-16 CAGR %) media consumption and internet powered business models. 50 40 Internet penetration today exceeds 2 billion people globally, representing approximately 32.7% of the world’s population 30 with c.45% of the world’s internet users under the age of 25 (Source: ITU). There are now 5.9 billion mobile subscriptions 20 globally (87% of the world’s population), increasing from 5.4 billion in 2010. The ITU estimates that there are almost 1.2 billion 10 mobile broadband subscriptions with mobile subscriptions Mobile Internet Fixed broadband outnumbering fixed broadband subscriptions two to one. 0 Latin Asia EMEA North In addition, there were estimated to be over 1.2 billion people America Pacific America around the world using social networking websites at least Source: IDC (Dec 2012) once per month. Fixed broadband penetration (%) With technological advances, consumers are able to access 90 high speed internet relatively inexpensively across the globe. 80 Fibre network roll outs and the extension of broadband 70 infrastructure into underserved areas is driving broadband 60 subscriptions and fuelling broadband spending. In the mobile 50 market, the enormous popularity of smart devices is driving internet penetration. Carriers are rolling out third generation 40 and fourth generation wireless networks to provide faster 30 20 Latin America speeds and to accommodate surging data traec. APAC 10 EMEA 0 N. America 2011 2012 2007 2008 2009 2010 2013 2014 2015 2016 Source: IDC (Dec 2012) Global mobile internet subscribers (millions) 2500 2000 1500 1000 500 0 2011 2007 2008 2009 2010 2012 2013 2014 2015 2016 Source: IDC (Dec 2012) PERFORM • Platform agnostic approach • Multi-platform rights portfolio • Internet powered business model 6 Perform Group plc Annual Report and Accounts 2012 OVERVIEW Proliferation of smart connected devices Social media usage