Rocky Chien, Chairman May Liao, Executive VP &

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Rocky Chien, Chairman May Liao, Executive VP & Ticker: 6464 TT Rocky Chien, Chairman May Liao, Executive VP & CEO March 2016 Executive Summary Taiwan Optical Platform (top MSO) is the 4th largest Multiple System Operator (MSO) in Taiwan with ~6% market share and the 2nd largest broadband service provider within its service area. top MSO has listed on TWSE on Dec 16, 2015. We have a strong presence in central Taiwan and aim to expand our coverage. We already have licenses to expand our cable network coverage to Greater Taichung, and expand our fixed network to Taoyuan, Hsinchu, and Miaoli. We aim to become a top 3 MSO in Taiwan in the near future. We plan to accomplish this through acquisitions of grassroots independent SOs in Southern Taiwan and grow our shareholder value. We are devoted to improving our EBITDA margin by streamlining operations and potential future acquisitions. We generate stable operating cash flow and are committed to make cash dividends take up at least 50% of total dividend pay-out. 2 Company Background Industry Position & Trend Our Strength and Strategy Financial Summary 3 Products and Services Cable TV Business Telecom Business Media Business 296K cable TV subscribers 128K BB subscribers / 1,039 BTS backhaul Local news & Central Taiwan news channel The only Taiwan MSO with No. 1 in carrier-grade optical fiber 98% penetration in nationwide connected service coverage services satellite TV channels Taichung City 1 Taichung City 1 • Chia-Kuang (Taichung City) • Chia-Kuang • Ta-Tun Cable (Dali District) 5 • Ta-Tun Cable Nantou County 2 Nantou County 2 1 • Chung-Tou Cable • Chung-Tou Cable 4 (Nantou County) 2 3 Yunlin County 3 Yunlin County 3 • Chia-Lien Cable (Douliu • Chia-Lien Cable City) Changhua County 4 • TINT 5 Acquired fixed network (Type I) license for Taoyuan, Hsinchu, and Miaoli 4 Operating Matrix Overview Sales Mix by Product (1-3Q15) Subscriber Trend (000s) Other 350 90% revenue Leased-line 294 296 296 296 5% 300 80% 4% 83% Advertisement 70% 250 7% 60% 200 57% 50% Channel leasing CATV 122 40% 10% 150 125 128 subscription 112 30% 62% 100 33% 20% BB subscription 50 18% 10% 12% 0 0% 2012 2013 2014 3Q15 top CATV subscribers top BB subscribers CATV digitalization rate 5 Company Milestone • Listed on Taiwan Stock Exchange • Listed on Emerging on 12/16 Stock Board • Spun-off leisure business • Acquired West Coast and Hai Shien Cable TV 2014 2008 2012 2015 2007 • TINP (台基網) 2005 established 2003 • Set up 2004 • Acquired fixed network (Type 2002 I) license for Taichung, Changhua, Nantou, and Yunlin • CATV license expansion to • Set up Champion TV Channel Greater Taichung 2001 • Rapid growth for • Acquired fixed network (Type BB subscribers I) license for Taoyuan, • Acquired Type II Hsinchu, and Miaoli telecom license 6 top MSO Subsidiary Overview top MSO 100% 97.48% 97.06% 92.35% 100% TINT 100% 1.46% 1.71% 6.09% A-First Technology Chia-Lien Cable 100% Chia-Kuang Co. Ltd. Co. Ltd. Co. Ltd. Ta-Tun Cable Chung-Tou Cable Champion Media Co. Ltd. Co. Ltd. 100% Sin-He 7 Company Background Industry Position & Trend Our Strength and Strategy Financial Summary 8 Uniquely Positioned MSO in Taiwan Taiwan Cable TV Subscriber Market Share Independent SOs 1,091,120 Kbro (Fubon Group) 21.5% 1,071,785 top MSO’s 21.1% growth opportunities Dafeng 247,575 TFN (Taiwan Mobile) 4.9% 506,975 10.0% top 296,138 5.8% TBC (APTT) CNS (MBK) 701,106 1,164,177 13.8% 22.9% Note: As of 2015 9 CATV Digitalization – A Favorable Industry Trend Taiwan government aims to reach 100% digitalization by 2016 Opportunities for Cable Operators Taiwan CATV Digitalization Rate TV channels will increase to 1,000 89.8% from 100+ 78.9% Value-added services 45.6% 21.0% Transfer those who illegally obtain cable connection into new 2012 2013 2014 2015 subscribers 10 Company Background Industry Position & Trend Our Strength and Strategy Financial Summary 11 Core Competence No. 4 MSO in Taiwan Healthy Financial Structure Economies • 296K cable TV subscribers Stable • Stable profitability and cash of scale and and 128K BB subscribers in cash flow flow central Taiwan scope Best Strategic Position No. 1 in carrier-grade optical fiber services • The only MSO with connected Geographic Technology service coverage, covering 23% advantage leadership • No.1 in density, stability, and of Taiwan performance • Expansion into urban area • Average clients per node: 80 from rural area • BTS services: 1,039 • 100M - 1G FTTH (last mile) 12 Growth Strategy Continue to Expand Coverage Growth through M&A • CATV expansion to Greater • Target to acquire small local Taichung players • Fixed network expansion to Taoyuan, Hsinchu, and Miaoli From Cable to Carrier Content Production • FTTH services to all • Aim for to be the top • 3G & 4G BTS backhaul leasing channel brand in network TV • Education and enterprise lease line for young generation • An IoT player 13 IoT Opportunities Create a Smart Home services platform FTTH BB Smart Home 14 Company Background Industry Position & Trend Our Strength and Strategy Financial Summary 15 Three-Year Financial Highlights EBITDA and EBITDA Margin Operating Cash Flow and FCF NT$ mn NT$ mn 2,000 64.0% 1,400 1,317 1,317 1,714 60.0% 1,200 1,600 1,502 1,370 997 1,000 946 56.0% 835 1,200 1,144 800 753 50.2% 52.0% 621 48.7% 600 800 47.3% 471 48.0% 42.1% 400 400 44.0% 200 0 40.0% 0 2012 2013 2014 1-3Q15 2012 2013 2014 1-3Q15 EBITDA EBITDA margin% Operating cash flow Free cash flow Note: EBITDA = Pre-tax profits + Net interest expenses + Depreciation and amortization 16 Three-Year Income Statement YoY (%) NT$ million 2012 2013 2014 1-3Q15 2013 2014 1-3Q15 Revenue 3,627 3,253 3,083 2,279 (10.3) (5.2) (0.8) Gross Profit 1,986 1,769 1,776 1,266 (11.0) 0.4 (6.1) Operating Expenses 756 592 605 407 (21.7) 2.1 (1.9) Operating Profit 1,230 1,177 1,171 859 (4.4) (0.5) (7.9) EBITDA 1,714 1,370 1,502 1,144 (20.1) 9.6 (2.8) Non Operating Income/(Loss) 2 (135) (21) 6 Income before Tax 1,233 1,042 1,150 865 (15.5) 10.4 (5.1) Tax Expenses 210 177 207 154 Net Income to Parent 956 848 941 710 (11.3) 11.0 (5.3) EPS (NT$) 12.62 8.42 8.51 6.37 (33.3) 1.1 (5.2) Key Financial Ratios (%) Gross Margin 54.8 54.4 57.6 55.5 Operating Margin 33.9 36.2 38.0 37.7 EBITDA Margin 47.3 42.1 48.7 50.2 Effective Tax Rate 17.0 17.0 18.0 17.8 Net Margin 26.4 26.1 30.5 31.1 17 Three-Year Balance Sheet YoY (%) NT$ million 2012 2013 2014 3Q15 2013 2014 3Q15 TOTAL ASSETS 8,611 8,725 9,250 9,169 1.3 6.0 8.8 Cash 535 1,036 2,495 2,088 93.8 140.9 40.3 NR & AR 126 168 165 184 34.0 (1.8) 8.4 Inventories 78 30 28 20 (61.0) (8.4) (45.4) Fixed Assets 1,194 1,558 1,619 1,565 30.5 3.9 2.6 TOTAL LIABILITIES 5,145 3,578 3,663 3,616 (30.4) 2.4 19.4 Total Bank Loans 3,680 1,984 2,042 2,221 (46.1) 2.9 45.2 NP & AP 282 362 352 281 28.4 (2.7) (31.2) TOTAL EQUITY 3,466 5,146 5,587 5,553 48.5 8.6 2.8 18 2012-2014 Dividend Payout ( NT$ million ) 2012 2013 2014 Net income 956 848 941 Cash dividend 402 691 781 Dividend p/s (NT$) 6.22 7.00 Cash yield (%) 2.6% 4.4% 5.0% Payout ratio (%) 42% 82% 83% Note: Yield is based on top MSO's closing share price on August 31, 2015; the day before ex-dividend day. 19 Q&A .
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