Operating Results for 1Q 13/14

Transcription

1 Operating Results for 1Q 13/14 Please find following the management discussion and analysis for VGI Global Media Public Company Limited and subsidiaries ( VGI or the Company ) for the 3 months ended 30 June 2013 ( 1Q 13/14 ). Company net profit of THB million, representing growth of 91.8% YoY Total revenue growth of 31.8% YoY to THB million Total cost of services was THB million; cost-to-sales ratio decreased to 43.3 % from 53.1%. SG&A was THB million; SG&A-to-sales ratio decreased to 12.8% from 14.6% The Company s gross profit grew 58.0% YoY to THB million 1Q13/14 % of Rev. 5 1Q12/13 % of Rev. 5 4Q12/13 % of Rev. 5 (Units: THB mn) YoY % QoQ % Change Change Revenue from services % % % % % BTS - related Media % % % % % Modern Trade Media % % % % % Office Building and Other Media % % % % % Other income n/a 3.4 n/a % 13.7 n/a (1.5) (11.0%) Total revenue n/a n/a % n/a % Cost of services % % % % % Gross profit % % % % % SG&A % % % % % Selling expenses % % % % % Admin. expenses % % % % (1.6) (1.8%) EBITDA % % % % % Financial costs % % % % (0.0) (7.8%) Corporate income tax % % % % % Net Profit % % % % % 1 Includes revenue from media on BTS trains, stations, merchandising space and BRT bus. 2 Includes revenue from media on sales floor, non-sales floor, multimedia and radio media in Modern Trade outlets. 3 Includes revenue from media in office buildings, revenue from media on Chulalongkorn s University s bus system, sharing revenue from mega LED screens and Airport Rail Link. 4 Comprised of interest income, gain/loss on exchange rates, etc. 5 Calculated from revenue from services. 1Q 13/14 (3 months ended 30 June 2013) 1 / 5

2 Quarterly Performance - 1Q 13/14 1Q 13/14 compared to 1Q 12/13 (YoY) Translation Operating revenue of the Company was THB million, an increase of 30.6% YoY from THB million. The revenue growth came from (1) the increase in occupancy in BTS-related media, Modern Trade and Office Building media compared to the same period last year; and (2) obtaining rights to advertise in Chulalongkorn University s bus system. Total cost of services was THB million, cost-to-sales ratio decreased to 43.3% compared to 1Q 12/13 primarily as a result of the reduction in license fees from 50% to 5% paid to Bangkok Mass Transit System Public Company Limited ( BTSC ) in accordance with the terms in the new contract between BTSC and the Company, effective 18 May Consequently, gross profit margin increased to 56.7% from 46.9% compared to the previous year. SG&A expenses increased to THB million. However, SG&A-to-sales ratio decreased to 12.8% from 14.6% compared to the previous year, as a portion of the expenses were fixed costs, which do not increase with sales growth. 1Q 13/14 compared to 4Q 12/13 (QoQ) Revenue from services increased by 22.8% from THB million in the previous quarter. The increase was driven by (1) the revenue growth from Modern Trade media, which increased by THB 90.5 million or 30.3%; and (2) the revenue growth from BTS-related media, which increased by THB 53.2 million or 14.7%. This growth was due to increase in capacity in advertising spaces and new product bundling packages, resulting in additional advertising spaces. Moreover, the increase was in line with the advertising industry s growth. Cost of services-to-sales ratio decreased to 43.3% from 45.0% in the previous quarter, as a portion of the costs were fixed costs, which do not increase with the increase in sales. As a result, the Company s gross profit margin increased to 56.7% from 55.0% in the previous quarter. SG&A-to-operating-revenue ratio decreased to 12.8% from 14.4% in the previous quarter. Performance Analysis by Business Unit BTS-related Media Revenue in 1Q 13/14 was THB million, an increase of THB million, or 34.8% YoY, from THB million. This was mainly due to (1) increase in train s capacity as a result of the completion of BTSC s 35 single-car trains installation (extended from 153 to 188 carriages) and increase in advertising spaces in non-prime stations, which resulted in increase in revenue of THB 83.2 million; and (2) revenue growth of THB 9.5 million from the increase in rent for long-term contracts of merchandising space on the BTS station which became effective this year, coupled with the increased occupancy of small rental shops on the stations, which grew with increased ridership. 1Q 13/14 (3 months ended 30 June 2013) 2 / 5

3 Cost of services-to-sales ratio decreased to 18.0% from 36.4% in the previous year as a result of the license fee reduction to BTSC in accordance with the new agreement as mentioned previously. As a result, gross profit margin for this quarter rose to 82.0% from 63.6% in the previous year. Modern Trade Media Revenue in 1Q 13/14 was THB million, an increase of THB 81.8 million, or 26.6% YoY, from THB million in previous year. This increase was primarily due to full recognition of revenue from additional contracts of sales floor areas and multimedia which were acquired in Cost-to-sales ratio decreased to 72.0% from 73.7% in the previous year as some of the costs were fixed costs, which do not increase with the increase in revenue. As a result, gross profit margin increased to 28.0% from 26.3% in the previous year. Office Buildings and Other Media Revenue in 1Q 13/14 was THB 45.6 million, increasing 28.6% YoY from THB 35.4 million. The increase was mainly due to (1) adjustment in selling strategy by bundling Office Building media with BTS-related digital media; (2) higher sales from additional office buildings; and (3) the rights to advertise in Chulalongkorn University s bus system (CU Bus). Cost-to-sales ratio increased to 28.6% from 20.6% as a result of the higher revenue shared to landlords. As a result, gross profit margin from this business segment decreased to 71.4% from 79.4% in the previous year. Balance Sheet and Cash Flow Statement Analysis Balance sheet of the Company as of 30 Jun 2013 compared to 31 Mar 2013 Assets Total assets increased by 16.0% or THB million from THB 2,579.3 million to THB 2,993.0 million. This was mainly due to increase trade accounts receivable, which grew in line with revenue growth as well as increase in cash from operating activities. Total equipment net was THB million, an increase of THB 96.1 million or 20.3% from THB million, mainly from the investment in Platform Truss LED Project. Liabilities Total liabilities increased from 31 March 2013 by THB million to THB million. This was primarily from the increase in accounts payable related party by THB 21.8 million. Accrued expenses and others increased by THB Q 13/14 (3 months ended 30 June 2013) 3 / 5

4 million, of which THB 60.9 million was tax payables. Shareholders equity increased from 31 March 2013 by THB million to THB 2,129.1 million due to operating profit. Cash Flow Statements During 1Q 13/14, the Company had cash inflows from operating activities of THB million. Total CAPEX was THB 93.1 million, mainly from the investment in Platform Truss LED Project. The Company also made long-term investment by depositing THB million at a financial institution. As of 30 June 2013, the Company had THB 1,171.6 million in cash and cash equivalents, a decrease of THB 82.2 million from THB 1,253.8 million as of 31 March Financial Ratios Financial Ratios 1Q 13/14 4Q 12/13 1Q 12/13 Profitability Ratios Gross profit 1 (%) 56.7% 55.0% 46.9% EBITDA (%) 47.9% 45.5% 36.6% EBIT (%) 45.3% 42.6% 32.8% Net profit (%) 36.2% 32.4% 24.7% Return on Equity 2 (%) 53.5% 53.2% 152.7% Weighted avg. no. of shares (mil.) Liquidity Ratios Current Ratio (times) Liquidity Ratio 3 (times) Financial Ratios 1Q 13/14 4Q 12/13 1Q 12/13 Efficiency Ratios Return on Assets 2 (%) 37.9% 37.8% 44.8% Return on Fixed Assets 2, 4 (%) 221.1% 244.0% 324.8% Asset turnover (times) Leverage Ratios Liability to Equity (times) Debt to Equity (times) Calculated from revenue from services. 2 1Q 12/13 and 4Q 12/13 are annualised by using the respective quarter s figures x4 due to a difference in concession percentage paid to BTSC (from 50% to 5%) during the last 12 months. 1Q 12/13 is annualised by using the last 12 months' figures. 3 Operating Cashflow / Average Current Liabilities 4 (Net profit + Depreciation) / Net Average Non-current Assets 1Q 13/14 (3 months ended 30 June 2013) 4 / 5

5 Management Outlook For the next 3 quarters of 13/14 fiscal year, VGI is maintaining the overall revenue target growth of 30%. For BTSrelated media, the Company has developed new digital media on stations, both to replace the media on existing locations as well as to open up new locations for the media. The Company expects to recognise revenue from these new media from 3Q 13/14 onwards, which will boost the revenue from BTS-related media by not less than 20% as targeted. For Office Building media, VGI acquired contract with another 11 buildings to manage media in those buildings. The Company is in the process of installing digital screens in the aforesaid and expects to continue to add more buildings into our portfolio to grow even larger this year, which looks promising. The target growth for the Office Building media is maintained at not less than 20%. For Modern Trade media, the growth will come from an increase in occupancy. As the media business generally grows along with the growth in macro economy, the recent announcement from the Bank of Thailand about the reduction in 2013 s target GDP from 5.1% to 4.2% may have a negative impact on the media industry. The company is cautious and conservative on the effect which may follow, and keeping a close eye on the issue. Moreover, to improve trading liquidity, the Board of Directors Meeting No. 5/2013 held on 30 July 2013 resolved to approve the decrease in par value from THB 1.00 per share to THB 0.10 per share, which will result in an increase of registered shares from 330 million shares to 3,300 million shares. However, this matter is subject to the resolution of the Extraordinary General Meeting of Shareholders No. 1/2013, which will be held on 19 September Mrs. Suparanan Tanviruch Chief Financial Officer 1Q 13/14 (3 months ended 30 June 2013) 5 / 5