ConsolidatedConsolidated ResultsResults (HK$M) 1H06 2H05 %chg. 1H05 %chg. Turnover 1,274 1,218 +5% 1,223 +4% Opex before dep’n (970) (865) +12% (816) +19% EBITDA 304 353 -14% 407 -25% Depreciation (218) (229) -5% (251) -13% Operating profit 86 124 -31% 156 -45% Net interest expense 4 3 +33% - Non-operating expense 1 (2) 1 Profit before taxation 91 125 -27% 157 -42% Taxation (27) 302* (2) Net profit 64 427 -85% 155 -59%
EPS (HK cents) 3.1 21.1 7.7 DPS (HK cents) 3.5 5.0 3.5 • Provision for taxation is a non-cash item* • Net deferred tax credits of $305M booked to recognize tax losses brought forward OperatingOperating ExpensesExpenses (HK$M) 1H06 2H05 %chg. 1H05 %chg. Programming 524 443 +18% 421 +24% Network & Others 214 201 +6% 197 +9% S, G&A 232 221 +5% 198 +17% Sub-total 970 865 +12% 816 +19% Depreciation 218 229 -5% 251 -13% Total 1,188 1,094 +9% 1,067 +11% • Programme investment on – FIFA World Cup – Sundream, movie & news platforms • Higher marketing & sales spending for FIFA World Cup 4 PayPay TVTV
1H06 2H05 chg. 1H05 chg. +5 Subs (000) 770 738 +32 718 2 ARPU (HK$) 209 208 +1 216 -7
• Refocused on sales of basic package in 1H06 • Sub growth & ARPU helped by FIFA World Cup
5 PayPay TVTV
(HK$M) 1H06 2H05 %chg. 1H05 %chg. Turnover 966 936 +3% 948 +2% Opex before dep’n (745) (664) +12% (622) +20% EBITDA 221 272 -19% 326 -32% Depreciation (123) (130) -5% (131) -6% Operating profit 98 142 -31% 195 -50%
• Higher programme investment • Revenue & cost mismatch of FIFA World Cup
6 InternetInternet && MultimediaMultimedia
1H06 2H05 chg. 1H05 chg. Broadband Subs (000) 321 320 +1 301 +20 ARPU (HK$) 136 134 +2 144 -8
VoIP lines (000) 146 121 +25 69 +77
• Moderate growth in a penetrated market • ARPU has stabilised and is rising
7 InternetInternet && MultimediaMultimedia
(HK$M) 1H06 2H05 %chg. 1H05 %chg. Turnover 296 279 +6% 279 +6%
Opex before dep’n (136) (134) +1% (132) +3%
EBITDA 160 145 +10% 147 +9% Depreciation (92) (98) -6% (117) -21% Operating profit 68 47 +45% 31 +121% EBITDA margin 54% 52% 53%
• Opex remained stable • Operating profit reached new record 8 CapexCapex && FinancialFinancial PositionPosition
• Capex maintained at low level of $121 million
• Current ratio improved to 1.04
• Net cash was $325 million
9
PayPay TVTV –– CompetitiveCompetitive LandscapeLandscape
NOW • In the market for 3 years • Change in de facto controlling shareholder after weeks of speculation
Galaxy • In the market for 2.5 years • Service rebranded again • Channels launched on NOW platform • Subscriber number not disclosed publicly
11 PayPay TVTV –– CompetitiveCompetitive LandscapeLandscape
49% 50% 43% 41% 1H06 TV Viewership share 40% 36% - CABLE TV Subscribers Aged 4+
30%
20% 1H05 1H06 10%10% 10% 3% 2% 1% 1% 0% TVB Jade Cable TV ATV Home TVB Pearl ATV World • Gained viewership against dominant FTA channel 12 PayPay TVTV
• Investment in programme differentiation: – FIFA World Cup – Relaunched the strongest news offering in HK : • Cable Finance & Info, Cable News, Live News & Top News channels – Strengthened Hollywood movie offering by launching HMC – Further enhancement of CEN channel underway – Enhanced children programming platform
• Self-produced programme continues to dominate viewership
13 PayPay TVTV
• Other programme enhancement:
– Boomerang
– CNN Headline News
– MTV SEA
– MTV Mandarin
– VH1 India
14 InternetInternet && MultimediaMultimedia
• Bundling continued to be main strategy
• Deepened integration of sales & marketing with pay TV operation
• Launched multi-player online game to differentiate broadband service
15 SundreamSundream MotionMotion PicturesPictures
• First film (“49 Days”《犀照》) – Exceeded all expectations – Awarded Grand Prize of the Fukuoka Asian Film Festival • 3 other films expected to be released in 2H06: – A Battle of Wit《墨攻》 • Andy Lau (劉德華), Fan Bing Bing (范冰冰), Ahn Sung Ki (安聖基) – Eye In The Sky《跟蹤》 • Simon Yam (任達華), Tony Leung (梁家輝), Kate Tsui (徐子珊) – Nothing Is Impossible《情意拳拳》 • Dayo Wong (黃子華), Cherrie Ying (應采兒), Andy On (安志杰) & Debbie Goh (吳天瑜) 16 SundreamSundream MotionMotion PicturesPictures
• Production for 3 other movies have begun or will soon begin:
– Let’s Steal Together《雙子神偷》 • Twins, Yuen Wah (元華), Sammo Hung (洪金寶), Wu Jing (吳京)
– Linger《蝴蝶飛》 • Vic Zhou (周渝民) & Li Bing Bing (李冰冰)
– Howling Arrow《響箭》 • Sammo Hung (洪金寶)
17 NewNew DevelopmentDevelopment
• First year to operate Newsline Express, the multimedia service on KCRC’s trains • Target audience of over 1.1 million daily average passengers • Passenger satisfaction rate reached 95% • More than 85% of passengers found the service attractive
18 SummarySummary
• Continued to gain subs & viewers under intense competition • 1H06 profitability distorted by FIFA World Cup • Broadband profitability follows its uptrend • Investment in differentiated programme proven to be the right strategy • Will continue to invest in innovative local content
19 i-CABLE Communications Limited
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