Mm2 Asia Ltd

MEDIA AND CONTENT FOR ASIA ANNUAL REPORT 2017 This annual report has been prepared by the Company and its contents have been reviewed by the Company’s sponsor, Hong Leong Finance Limited (the “Sponsor”) for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (the “SGX-ST”). The Sponsor has not independently verified the contents of this annual report. This annual report has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this annual report, including the correctness of any of the statements or opinions made or reports contained in this annual report. The contact person for the Sponsor is Mr Tang Yeng Yuen, Vice President, Head of Corporate Finance, Hong Leong Finance Limited, at 16 Raffles Quay, #01-05 Hong Leong Building, Singapore 048581, Telephone (65) 6415 9886. CONTENTS 01 02 Corporate Profile Financial Highlights 04 06 Our Business A Year in Review 07 08 Corporate Milestones Operating Financial Review 12 13 Executive Chairman & Group Structure CEO’s Statement 14 16 Board of Directors Our Team 18 20 Order Book Corporate Governance Report 41 132 Financial Report Statistics of Shareholdings 134 139 Notice of Annual General Proxy Form Meeting CORPORATE PROFILE mm2 Asia Ltd. (“mm2 Asia”, the “Company”, or collectively with its subsidiaries, the “Group”) is Asia’s leading media and content company. Founded in 2008 and headquartered in Singapore, the Group has representative offices in Malaysia, Hong Kong, Taiwan, China and the United States of America (“US”) through our Group companies and strategic working partnerships. Listed on the Catalist Board of the Singapore Exchange Securities Trading Limited (“SGX-ST”) (SGX Stock Code 1B0), mm2 Asia has since expanded its businesses through multiple acquisitions. The Group’s primary business activities are: 1. Content Production, Distribution and Sponsorship 2. Post-production 3. Cinema Operation 4. Event Production and Concert Promotion For more information, please visit http://www.mm2asia.com. CHINA TAIWAN HONG KONG MALAYSIA UNITED STATES OF AMERICA SINGAPORE mm2 Asia Ltd. | Annual Report 2017 1 FINANCIAL HIGHLIGHTS REVENUE (SGD million) 95.7 CAGR: 76.3% 38.3 24.3 16.1 9.9 FY2013 FY2014 FY2015 FY2016 FY2017 GROSS PROFIT (SGD million) NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS (SGD million) 45.3 18.8 CAGR: 127.2% 18.4 CAGR: 120.2% 8.2 9.6 5.1 5.1 2.7 1.7 0.8 FY2013 FY2014 FY2015 FY2016 FY2017 FY2013 FY2014 FY2015 FY2016 FY2017 2 mm2 Asia Ltd. | Annual Report 2017 REVENUE BREAKDOWN BY BUSINESS SEGMENTS (S$’000) 22,962 12,597 3,515 4,881 3,617 24,287 29,840 56,612 FY2015 FY2016 FY2017 Core Business Cinema Operation Post - Production Events / Concerts REVENUE BREAKDOWN BY GEOGRAPHICAL LOCATIONS 5.6% 0.1% 1.2% 41.0% 2.5% 14.9% 19.6% 6.2% 4.4% 13.7% 3.0% 6.4% 72.0% 19.2% 58.4% 5.8% 26.0% FY2015 FY2016 FY2017 Singapore Hong Kong Taiwan Malaysia China Others mm2 Asia Ltd. | Annual Report 2017 3 OUR BUSINESS CONTENT PRODUCTION, DISTRIBUTION AND SPONSORSHIP The Group’s core business lies in film, TV and online content production, distribution and sponsorship. As a producer, mm2 Asia provides services across the entire content value chain, allowing us to derive revenue from all relevant stages of the filmmaking process – from inception to exhibition. Production Income The Group derives production income from producer and consultancy fees, producer’s bonuses, government subsidies, script development, exploitation of copyrights, pre-production, principal photography and other contributions. Distribution Income Distribution income is derived through the distribution of content produced by the Group or third parties across various platforms – cinemas, Pay TV, Free TV, online, DVD, airlines and others. For films mm2 Asia has a stake in, we are entitled to a percentage of net receipts from the films distributed across these platforms. The Group also receives commissions from script licensing and other post-release licensing agreements such as adaptation and sequel rights. Sponsorship Income The Group derives sponsorship income through offering advertisers content and platform solutions to promote their products and services. POST-PRODUCTION The Group also offers post production services through Vividthree Productions Pte Ltd (“Vividthree Productions”), a leading multi-award winning 3D animation, visual effects (“VFX”), computer generated imagery (“CGI”) and post production studio in Singapore. Vividthree Productions caters to commercial, film and television content and has a global clientele of renowned directors and broadcasters across commercial, corporate and government sectors. 4 mm2 Asia Ltd. | Annual Report 2017 CINEMA OPERATION EVENT PRODUCTION AND CONCERT PROMOTION mmCineplexes, the Group’s cinema brand, is currently In August 2016, the Group successfully completed the present in five locations in Malaysia – Johor Bahru, acquisition of a majority stake in UnUsUaL Limited(1) Kuala Lumpur, Bertam, Prai and Langkawi. The Group (“UnUsUaL”), a leading player in the live entertainment currently operates 43 screens with over 6,500 seats. arena. UnUsUaL produces and promotes large-scale events and concerts for renowned international artistes, offering comprehensive creative and technical solutions for events and concerts in Singapore and the region. (1) UnUsUaL Limited was listed on the SGX Catalist Board on 10 April 2017 and was formerly known as UnUsUaL Pte. Ltd. mm2 Asia Ltd. | Annual Report 2017 5 A YEAR IN REVIEW OPERATIONS REVIEW FY2017 saw mm2 Asia’s growth in three areas: 1. Event and Concert Business – New Source of Income In November 2016, the Group signed a binding term The acquisition of a majority stake in UnUsUaL has sheet with Lotus Fivestar Cinemas (M) Sdn Bhd to opened up a new revenue stream for the Group. The acquire cinema businesses and assets in 13 locations in entrance into the live entertainment business has Malaysia. Upon completion, this strategic acquisition will equipped the group with live production capabilities as significantly strengthen the Group’s cinema business. well as wider resources and networks for our expansion as an entertainment group. 3. Growth in North Asia Maintaining our focus on North Asia, revenue from North 2. Expansion of Cinema Business Asia contributed to 32% of the Group’s total revenue, up Building up the Group’s cinema operations, we completed from 22% in FY2016. We also embarked on new projects the acquisition of cinema businesses and assets from Mega in these markets. Cinemas Management Sdn Bhd (“Mega Cinemas”) in July 2016. (1) Excluding private shows and events sold to third parties 16 CONCERTS produced from 1 January 2016 to 31 March 2017(1) 48.8% of Core Business revenue contribution from North Asia 6 mm2 Asia Ltd. | Annual Report 2017 CORPORATE MILESTONES DATE DESCRIPTION December 2014 Listed on the SGX Catalist Board April 2015 Completion of 51% stake acquisition in Vividthree Productions June 2015 Issuance of S$2.875 million Convertible Bonds to Phillip Asia Pacific Opportunity Fund Ltd. Issuance of S$2.6 million with S$1.3 million greenshoe option Exchangeable Convertible Bonds July 2015 to 3VS1 Asia Growth Fund 2 Ltd. Completion of acquisition of 2 cinemas’ businesses and assets from Cathay Cineplexes Sdn November 2015 Bhd Placement of S$5 million to three investors December 2015 Completion of 70% stake acquisition in mm2View Pte Ltd (“mm2view”) February 2016 Completion of Share Split of 1 ordinary share to 2 ordinary shares Placement Agreement with StarHub Ltd (“StarHub”) to acquire 9% stake in mm2 Asia for S$18 March 2016 million July 2016 Completion of acquisition of 3 cinemas’ businesses and assets from Mega Cinemas Completion of 51% stake acquisition in UnUsUaL Pte. Ltd.(1) August 2016 Recognised on Forbes as Asia’s 200 Best under a Billion October 2016 Completion of Share Split of 1 ordinary share to 2 ordinary shares Incorporation of subsidiary mm2 Entertainment USA, Inc in California, United States of America November 2016 Binding term sheet with Lotus Fivestar Cinemas to aquire cinema businesses and assets in 13 locations in Malaysia Incorporation of subsidiary 满满哆文化传媒（上海）有限公司 mm2 International Pte Ltd in Shanghai, February 2017 China Announced that The Voice, Talpa Global B.V.’s flagship format, will be co-produced by mm2 March 2017 Entertainment Pte. Ltd., StarHub and Astro Malaysia Holdings Berhad for Singapore and Malaysia (1) UnUsUaL Pte Ltd. is now known as UnUsUaL Limited. mm2 Asia Ltd. | Annual Report 2017 7 OPERATING FINANCIAL REVIEW REVENUE The disposal of an available-for-sale financial asset contributed a net gain of S$25,000 in FY2017 whereas the The Group’s revenue increased by S$57.4 million or disposal of property, plant and equipment resulted in a 150%, from S$38.3 million in FY2016, to S$95.7 million net loss of S$1,000 in FY2017, compared to a net gain of in FY2017. The increase was mainly due to additional S$19,000 in FY2016. revenue generated from a newly acquired subsidiary corporation during the year, which recorded an increase OTHER INCOME of event production and concert promotion revenue of S$23.0 million, and additional revenue generated from The Group’s other income increased by S$121,000 in the cinema business which recorded an increase of S$7.7 FY2017, which was mainly contributed by the increase in million. On top of that, the Group’s core business revenue government grants of S$58,000 and also the increase in increased by S$26.8 million or 90%, from S$29.8 million in miscellaneous income amounting to S$45,000. FY2016, to S$56.6 million in FY2017. Other than that, net interest income of the Group COST OF SALES increased by S$18,000 in FY2017 mainly due to the fixed deposit pledged to the banks by the Group’s Cost of sales increased by S$30.5 million or 153%, from cinema business and bank deposits of a newly acquired S$20.0 million in FY2016, to S$50.5 million in FY2017.

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