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Grand Millennium Sukhumvit Hotel November 14, 2014 www.gmmgrammy.com Forward-Looking Statements This presentation was made from the analysis of reliable information in order to assist investment community to better understand the company's financial status and operation. The presentation may contain forward-looking statements and comments on future events, including our expectation about GMM Grammy’s business. However, the information within this presentation has been derived from the existing factors in the present time. Therefore, the forward-looking information on this presentation may not occur in the future if the aforementioned factors or situations are changed. Investors are, however, required to use their own discretion regarding the use of information contained in this presentation for any purpose. For further information, please contact Investor Relations of GMM Grammy Public Company Limited at Tel: (662) 669-9936, (662) 669-9952, (662) 669 9729 or Email : [email protected] www.gmmgrammy.com 1 Agenda » 3Q14 Financial Highlight » Our Winning Strategy » DTV Regulatory Update » Q & A www.gmmgrammy.com 2 3Q14 Financial Highlight 3 Business Overview GMM Grammy is a leader in fully integrated media and unique entertainment platform in Thailand who can produce and deliver high quality local contents and expand into the region GMM Grammy Business comprise: Core Business Other Businesses o Music o Media (Free TV, Radio, Publishing) o Digital Terrestrial TV o Movie o One channel o Event Management o GMM channel o Home Shopping TV o Satellite TV www.gmmgrammy.com 4 9M14 Financial Performance By Type of Business (THB mm) By Type of Business (%) 11,756 11,004 9,388 2,834 24% 24% 2,961 27% 31% 2,214 2,101 7,282 6% 1,563 18% 14% 570 18% 2,233 32% 3,246 3,017 3,395 28% 31% 1,340 25% 1,853 3,587 3,575 38% 3,084 30% 28% 25% 1,855 2011 2012 2013 9M14 2011 2012 2013 9M14 Music Business Media Business (Incl. Digital TV) Satellite Business Others www.gmmgrammy.com 5 3Q14 Financial Performance 3Q14 Operating revenues grew 3.4% Y-o-Y, driven by strong performance in Movie, Home Shopping and Satellite Business Revenue Net Profit 11,756 11,004 9,388 2,666 2,178 2,437 626 -164 -322 -1,283 -792 -913 2011 2012 2013 1Q14 2Q14 3Q14 www.gmmgrammy.com 6 Financial Position Financial Position (THB mm) Financial status and ratio 15,950 2.12 13,918 12,604 11,465 6.4 6.5 1.65 8,534 8,627 5.1 7,536 4.6 6,481 0.55 0.52 0.91 3.7 3.7 4,891 3.3 3.3 3,643 3,929 4,699 3,977 3.0 2.9 3,632 2,032 2.2 2.2 1,683 0.23 1.5 1.0 (0.00) 2011 2012 2013 9M14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Assets Int. Bearing Debt Liabilities Equities Interest-bearing debt Cash on hand Net Debt : Equity • GMM Grammy’s total assets has gradually increased from THB 8,533.9 mm in 2011 to THB 15,950.2 mm at the end of 9M2014 as the Company invests in its PPE (e.g., new studio, etc.) and records the cost of Digital TV spectrum licenses which was granted on 25 April 2014. • GMM Grammy’s total liabilities has gradually increased from THB 4,891.2 mm in 2011 to THB 13,918.2 mm at the end of 9M2014 mainly from the increase in interest bearing debt and the increase in the cost of spectrum license payable of THB 4,293.0 mm. • However, GMM Grammy expects Digital TV business to generate operating profit in the near future in addition with positive return from Home Shopping business, and the rationalization of Pay-TV strategy. www.gmmgrammy.com 7 Music & Digital Performance Overall music and digital slightly improved Q-o-Q but dropped 9% Y-o-Y o Physical sales: Slower downtrend with 3Q14 performance improved 10% from last quarter with continuous release of song albums o Digital business: Further dropped 17% Q-o-Q from declining trend of RBT & song download o Showbiz: Performance resumed with 3Q14 revenue grew by 16% Q-o-Q & 3% Y-o-Y from better political situation and consumer sentiments o Music streaming: Sales doubled from last quarter from AIS campaigns to promote the services with subscribers reaching 80K o YouTube: Growing subs for GMM channel & partners reaching 14 million, Monthly revenue THB 11 MB with rising viewers through 50 channels for both music & other contents www.gmmgrammy.com 8 Media 3Q14 revenue for overall media further dropped by 32% Y-o-Y o Analog TV: Advertising dropped significantly by 39% Y-o-Y since Channel 5 transforming into public service channel under Digital TV platform with lower rating and advertising revenue o Radio: Revenue improved 31% Q-o-Q but decreased 13% Y-o-Y in line with the industry trend o Publishing: Downward trend still continued with lower revenue 24% Y-o-Y Digital Terrestrial TV 3Q14 Revenue slowly ramp-up at THB 33 million o Majority of TV advertisement approx. THB 70 billion remains on analog platform, with only THB 4-5 billion estimated for DTT in 2014 o Subsidized coupon faced delay distribution from 3Q14 to 4Q13 o Lack of official rating system o GMM planned strategy to match investment with revenue stream - Channel ONEHD launched the 1st phase with no killer contents i.e. Drama, Primetime program - GMM Channel launched Hormone II prior to official launch of the first phase starting in Oct www.gmmgrammy.com 9 Movies 3Q14 revenue amounted to THB 199 million, increased by 290% Y-o-Y o The new release “The Swimmers” generated box office totaling THB 71 million o Media tie-in strategy and sponsorship of Hormone II greatly contributed to the performance of this segment Home Shopping Strong growth continued in 3Q14, revenue increased 74% Y-o-Y o Growing subscribers up to 378 K, rising from 320K last quarter o Variety of products increasing up to 300 items o Average daily sales THB 3.8 million beating True Select o Launch “Internet Mall Project” for online shopping www.gmmgrammy.com 10 Our Winning Strategy 11 Our Winning Strategy Dual DTV Channels Revitalizing to Capture Market Music Business Leading Position in Digital TV Industry 2 3 Divesting Loss Monetizing our Making Pay TV Content Library 1 4 www.gmmgrammy.com 12 1 • Pay TV will be run under CTH following the share swap deal • GMM Grammy will record 10% investment in CTH as long-term investment on its financial statements Note: CTH is the leader of Pay TV business provider in Thailand which provides variety of entertainment and sport channels such as Premier League www.gmmgrammy.com 13 1 Cost of Sales and Services as Percentage of Total Revenue • GMM Grammy’s cost of sales and services are increasing from Total COGS as Increase from new businesses, namely STB, GMM Grammy’s cost of existing business 57.5% in 2011 to 89.3% in 1H2014. satellite free-to-air channels, O shopping slightly decrease during 2012 – 1H2014 percentage of revenue 89.3% • The increasing mainly comes from the increasing of Pay TV COGS as a percentage Pay TV cost from 4.3% in 2011, to 28.4% of total 70.8% percentage of revenue revenue during 2012 – 1H2014. 68.6% 28.4% 57.5% 4.3% 8.1% GMM Grammy’s cost of • However, cost of sales and services of GMM Grammy’s existing Business as existing business slightly decreased during 2012 – 1H2014 to percentage of revenue 60% of total revenue. 57.5% 64.3% 62.7% 60.8% (unit: THB mm) 2011 2012 2013 1H 2014 Total Revenue 9,388.0 11,756.5 11,003.7 4,615.3 Total COGS 5,396.7 8,062.5 7,786.8 4,119.2 2011 2012 2013 1H 2014 - Pay TV COGS - 502.0 888.2 1,310.9 COGS of existing business Pay TV COGS of existing business 5,396.7 7,560.5 6,898.6 2,808.3 Administration Cost • GMM Grammy’s administration cost has increased during 2011 – 2013 with growth rate of 14.2% and 12.3%, respectively. 3,216.0 2,863.0 220.3 • However, by excluding Pay TV and Extraordinary Items , administration cost growth 2,508.0 149.7 221.0 rate during the same period are lowered to 8.2% and 2.3%, respectively. Note that the growth during 2011 – 2012 comes from the introducing of new businesses as 1,616.8 103.4 mentioned. THB mm) THB ( 113.0 2,508.0 2,713.3 2,774.7 (unit: THB mm) 2011 2012 2013 1H 2014 Total Admin. Cost 2,508.0 2,863.0 3,216.0 1,616.8 1,400.4 Growth 14.2% 12.3% 0.5% - Pay TV Admin. Cost - 149.7 220.3 103.4 1 2011 2012 2013 1H 2014 - Extraordinary Items - - 221.0 113.0 Admin. Cost (excl. Pay TV and 2,508.0 2,713.3 2,774.7 1,400.4 1 Extra item) Admin. Cost (excl. Pay TV and Extra item) Extraordinary items Pay TV Admin. Cost Growth 8.2% 2.3% 0.9% 1 Extraordinary Items includes write-off of obsolete assets , one time special bonus, depreciation from investment, and cost of Digital TV license bidding www.gmmgrammy.com 14 2 New music business compensate the loss of income from physical sales and mobile download with minimal cost 3,587 3,575 3,084 3,022 600 634 673 170 172 76 502 732 474 997 995 815 1,111 666 MuangThai 570 451 GMM Live House 1,406 1240 1017 815 2011 2012 2013 2014e Physical sales Mobile & Digital Download Showbiz Others New business (i.e.