VGi GLOBAL MEDIA PLC MEDIA INDUSTRY AND BUSINESS IMPACT ANALYSIS IMPORTANT EVENTS IN 1Q 2017/18 MANAGEMENT DISCUSSION & ANALYSIS 1Q 2017/18 2 AUG 2017

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1 MEDIA INDUSTRY AND BUSINESS IMPACT ANALYSIS Advertising spending declined by.3% YoY to 26,85mn in Q 207/8. The TV sector with the highest market share at 66.3% fell 3.7% YoY to THB 7,359mn and Traditional media (Newspaper, Magazines and Radio) with a 3.% market share, declined by 25.5% YoY to THB 3,48mn. Nevertheless, Out-of-home media, which includes Transit, Outdoor and In-store media (collectively, OOH ) bucked the trend, increased by 2.7% YoY to THB 3,69mn. OOH media continues to benefit from the structural shift in the media industry and people s behavior to spend more time outside. Online media, which reports on a yearly basis by the Digital Advertising Association Thailand (DAAT) recorded THB 9,477mn of advertising expenditures in 206 and it is expected to grow by 24% in 207 mainly driven by the acceleration of internet access and the ubiquity of mobile phones. VGI continues to outperform the overall market posting significant revenue growth of 36.5% to THB 852mn, driven by the robust performance our OOH and Digital Services businesses. Excluding the consolidation of our Outdoor and Digital Services business, our revenue improved organically by 9.8% against a backdrop of double digit decline in overall advertising spending. Despite the slower-than-expected recovery of advertising expenditure during the first half of 207, the VGI believes that an improvement in advertising spending is in the offing for the remaining months of 207 as advertisers become more encouraged by the firmer upward trend in consumption and export growth, which has subsequently led GDP to expand by 3.3% in the first quarter of 207. The Bank of Thailand has also indicated more optimism by revising upwards their GDP growth forecast for 207 to 3.5% from 3.2% that was estimated at end of 206. IMPORTANT EVENTS IN Q 207/8 June 207 Master Ad Company Limited ( MACO ) successfully acquired 70% in Co-mass Company Limited ( COMASS ) through its wholly-owned subsidiary, Eye On Ads Company Limited. COMASS is one of the leading outdoor media company with more than 9 years experience in outdoor media advertising. Currently, COMASS has 3 static billboards and 7 digital billboards in strategic locations across 23 provinces in Thailand. COMASS Static Billboards COMASS Digital Billboards Aero Media Group Company Limited ( Aero Media ) had secured the right to manage the media on 20 planes out of 32 planes 2 of Nok Air. Currently, Aero Media has the largest one-stop shop aviation media network across 3 airports with 4 key products including 342 LEDs screens, 57 jet bridges, 7,000 trolleys and 74 planes. In addition, Aero Media has right to manage all websites of Airports of Thailand Public Company Limited (AOT). Media on planes The Bank of Thailand Nok Air Annual report The first quarter of 207/8 (ended 30 June 207)

2 Demo Power (Thailand) Company Limited successfully expanded to VGI s commercial spaces by launching demonstration services across BTS stations. Recognised additional synergy between VGI and Rabbit Group through the Station Sponsorship campaign with OPPO on 3 BTS stations (Mo Chit, Ploenchit and Saladang) Synergy between VGI and Rabbit Group As of 30 June 207, under VGI s offline payment channel, over 7.8mn Rabbit cards were issued with more than 26 brand partners and over 4,000 retail points acceptance. Under VGI s online payment channel, Rabbit LinePay has over 2.2mn users with more than 330 brand partners. July 207 On 7 July 207, Sungai Buloh Kajang ( SBK Line ) has successfully opened the second phase of operations. Altogether, SBK Line has a total distance of 5 kilometres with 3 stations. Currently, Titanium Compass Sdn Bhd ( TCSB ) has begun managing advertising at 2 stations and on 7 trains. Media in train and station of SBK Line by TCSB The first quarter of 207/8 (ended 30 June 207) 2

3 Q 207/8 SNAPSHOT & ANALYSIS CONSOLIDATED P&L SNAPSHOT THB (mn) Q 206/7 Q 207/8 YoY (%) Operating revenue % Cost of sales % Gross profit % EBITDA % Interest expenses % NPAT from operation (excl. NCI) % NPAT from financial statements (excl. NCI) % Gross profit margin 59.% 58.2% EBITDA margin 70.6% 4.3% NPAT from operation margin (excl. NCI ) 29.9% 22.5% NPAT from financial statements margin (excl. NCI) 50.3% 20.5% Note: The Company restated Q 206/7 financial performance after the consolidation of Rabbit Group under the common control basis. Included extraordinary item from gain of fair value measurement in MACO at the acquisition date of THB 207mn PERFORMANCE ANALYSIS (Q 207/8 vs Q 206/7) In Q 207/8, the VGI Group reported a consolidated operating revenue of THB 852mn, an increase of 36.5% YoY. The strong performance was mainly driven by newly acquired businesses Master Ad Public Company Limited ( MACO ) and Rabbit Group (operating Digital Services business), which together recorded double-digit revenue growth at 96.3%. Excluding the consolidation of the aforementioned, our original business (Transit, Office and Others), together with the kicked-in synergies - which resulted in innovative products between VGI and Rabbit Group organically grew 9.8%. REVENUE CONTRIBUTION REVENUE (THB MN) Total operating revenue of THB 852mn Out-of-Home media Digital Services Q 206/7 Q 207/8 YoY (%) OOH media % 60.9% 9.9% 7.8%.4% Transit & New Synergies Outdoor Office & Other Transit & New Synergies % Outdoor % Office and Other % Digital Services % Total revenue % Start consolidation in June 206 The first quarter of 207/8 (ended 30 June 207) 3

4 OOH media business contributed 88.6% of total revenue or THB 755mn. Revenue from OOH media rose considerably by THB 22mn, or 38.9% YoY, mainly attributed to the higher consolidated revenue from the Outdoor segment. The growth in revenue resulted generally from higher prices and synergy from Rabbit Group. Within the OOH media, Transit media revenue increased by 22.9% YoY to THB 59mn, largely as a result of price increases, especially in our static media network. Moreover, this business segment has benefited from the recognition of synergies from Rabbit Group through a Station Sponsorship campaign on selected BTS stations. Meanwhile, our Office Building and Other media segment revenue remains flat at THB 66mn. Although, during this quarter, we successfully added 4 new contracts to the office building portfolio, in line with the year-end target to acquire 0 additional building contracts. The performance of this business is expected to improve in the remaining quarters in line with the continuous increase in the number of office buildings. Our Outdoor media revenue was THB 70mn, an increase of THB 5mn, or 208.4% YoY mainly due to the full quarter consolidation this quarter of MACO ( vs one-month consolidation in Q 206/7). In the same period, MACO also benefitted from the consolidation of Multi Sign Company Limited ( Multi-Sign ), which was acquired in October 206 (Please find more details of Outdoor media segment in 2Q 207 MACO s management discussion and analysis Digital Services business contributed.4% of total revenue or THB 97mn. Revenue increased by THB 6mn or 9.3% YoY. The sizeable growth was mainly due to an increase in the revenue generated from ) project management fee, card issuing fee and sales of Rabbit cards and 2) an increase in insurance commission revenue as well as banner advertising from Rabbit Internet. Cost of Sales increased 39.% YoY from THB 256mn to THB 356mn, primarily due to the consolidation effect from the abovementioned newly acquired businesses as well as an increase of Transit media concession fee. This resulted in a slightly decrease in gross profit margin to 58.2% in Q 207/8 from 59.% in the same period last year. Selling, General and Administrative expenses ( SG&A ) also increased 37.5% from THB 86mn to THB 255mn, mainly due to the newly acquired businesses (Outdoor and Digital Services). The increase in SG&A from the Outdoor segment was namely due to the full quarter consolidation of MACO as well as the consolidation of Multi Sign. In addition, MACO recorded one-off expenses related to the COMASS transaction and to the bidding of street furniture media concessions in Myanmar. The increase in SG&A from Digital Services is mainly due to Rabbit Group s expanded headcount, which is rapidly developing and investing in its burgeoning data acquisition and analytics capabilities to uncover opportunities to enhance customers and shareholder return. Consequently, SG&A expenses as a percentage of revenue rose to 30.0% from 29.8%. The Company expects that the ratio should be maintained at no more than 30% going forward. Interest expenses increased 40.9% from THB 5mn to THB 23mn in this quarter, mainly due to the loan for financing the Rabbit Group acquisition in March 207. Despite the aforementioned increase in costs from the consolidation effect, the increase in Transit media s concession fee, higher revenue contribution from lower margins from a more diversified revenue mix, higher SG&A and interest expenses, the Company s net profit from operation increased by 2.8% YoY to THB 92mn from THB 87mn in the same period last year, as a result of the considerable increase in sales and realisation of synergy between VGI and Rabbit. Our net profit margin from operation in Q 207/8 was 22.5%. The first quarter of 207/8 (ended 30 June 207) 4

5 FINANCIAL POSITION ASSETS ASSETS BREAKDOWN 3 MARCH JUNE 207 (THB mn) % out of total (THB mn) % out of total Cash & cash equivalents and short-term investments,20 5.2% % Trade & other receivables % % Equipment net, %, % Investment in JVs, associates and other long-term investments, %, % Goodwill and excess of acquisition costs and net assets, %, % Other assets, %, % Total assets 7, % 8, % Total assets as of 30 June 207 stood at THB 8,23mn, an increase of THB 228mn or 2.9% from THB 7,985mn as of 3 March 207. Total current assets were THB 2,395mn, decreasing by 8.3% or THB 28mn, primarily due to ) a decrease in cash & cash equivalents and short-term investments of THB 36mn mainly from cash used for MACO s investment in COMASS, 2) a decrease in current portion of long-term loans to related parties of THB 8mn. However, the decrease was partially offset by 3) an increase in trade and other receivables of THB 52mn (see further details in trade and other receivable section) and 4) an increase in prepaid expenses of THB 9mn. Total non-current assets stood at THB 5,89mn, an increase of 8.3% or THB 446mn due to an increase of ) an estimated amount by which costs of the acquisition of investment in subsidiary exceed identifiable net assets of the acquiree of THB 278mn from an acquisition in COMASS by MACO and 2) equipment net of THB 68mn. Trade and other receivables were THB 85mn, an increase of THB 52mn. The increase was in-line with higher sales in Q 207/8. The Company gives days credit terms to customers. For accounts receivables of more than 20 days, the Company has a policy for allowance for doubtful accounts, which also considers the customers payment history and creditworthiness. As of 30 June 207, the allowance for doubtful accounts was THB 33mn. AGEING OF TRADE RECEIVABLES (THB mn) 3 MARCH JUNE 207 Not yet due Up to 6 months Over 6 months Total % of total receivables 93.0% 89.0% Allowance for doubtful debt % of total receivables 4.5% 4.0% LIABILITIES AND SHAREHOLDERS EQUITY LIABILITIES AND EQUITY BREAKDOWN 3 MARCH JUNE 207 (THB mn) % out of total (THB mn) % out of total Short term loans % % Trade & other payables % % Accrued expenses % % Current portion of long-term loans from financial institutions % % Other current liabilities % % Long term loan, %, % Other non-current liabilities 39.7% 55.9% Total liabilities 4,880 6.% 4, % Shareholders equity 3, % 3, % Total liabilities and equity 7, % 8, % Total liabilities were THB 4,98mn, an increase of THB 39mn or 0.8% from THB 4,880mn as of 3 March 207 mainly from increase in ) trade and other payables of THB 46mn and 2) corporate income tax payable of THB 30mn. The increase was partially offset by a decrease in 3) short term loans from financial institution of THB 45mn. Total equity was THB 3,295mn increasing by THB 90mn or 6.%, which was attributed to an increase in retained earnings from the 3-month operating performance. Return on equity for Q 207/8 was 35.4%. The first quarter of 207/8 (ended 30 June 207) 5

6 LIQUIDITY AND CASH FLOW (THB mn) 208* ** Beginning cash (3/3/207) CFO CFI CFF Ending cash (30/6/207) *After tax (THB 38mn) and interest expense (THB 20mn) **Included translation adjustment of THB 0.3mn For the three months ended 30 June 207, cash and cash equivalents was THB 625mn, a decrease of 2.7% or THB 74mn. Cash from operating activities was THB 266mn, increasing by 30.0% or THB 6mn. After deducting cash paid for corporate income tax of 38mn (3M 206/7: THB 5mn) and cash paid for interest expenses of THB 20mn (3M 206/7: THB 4mn), net cash from operating activities was THB 208mn. Net cash used in investing activities was THB 299mn. The key components are cash paid for an investment in COMASS by MACO of THB 225mn and the system upgrade for LCD in trains, LCD screens in office buildings and billboards of THB 27mn. These were offset by proceeds from sales of current investments of THB 42mn. Net cash used in financing activities was THB 83mn mainly from a repayment in short-term and long-term loans from financial institutions of THB 45mn and 3mn, respectively and dividend paid by a subsidiary to non-controlling interests of the subsidiary of THB 25mn. FINANCIAL RATIOS Profitability Ratios Q 206/7 Q 207/8 Liquidity Ratios Q 206/7 Q 207/8 Gross profit (%) 59.% 58.2% Current ratio (times) Operating EBITDA (%) 70.9% 4.4% Quick ratio 6 (times) Cash-to-net profit (%) 50.% 82.8% Account receivable turnover (times) Net profit (excl. NCI) 2 (%) 36.8% 20.0% Average collection period (days) Return on equity 3 (%) 40.3% 35.4% Payable days (days) Efficiency Ratios Leverage Ratios Return on assets 4 (%) 2.2% 8.5% Liability to Equity 7 (times).6.5 Return on fixed assets 5 (%) 75.8% 60.% Debt to equity 8 (times) Assets turnover (times) Calculated from revenue from services 2 Net Profit attributable to equity holders of the Company/ Total revenue 3 Net Profit (Annualised) / Average Total Shareholders equity (average of outstanding at end of the same period in the previous year and at end of this year) 4 Net Profit (Annualised) / Average Total Assets (average of outstanding at end of the same period in the previous year and at end of this year) 5 (Net Profit + Depreciation) / Net Average Non-current Asset (average of outstanding at end of the same period in the previous year and at end of this year) 6 (Current Assets Other Current Assets) / Average Current Liabilities (average of outstanding at end of the same period in the previous year and at end of this year) 7 Total liability/ total shareholder s equity 8 Total interest bearing debt/ total shareholders equity The first quarter of 207/8 (ended 30 June 207) 6

7 MANAGEMENT OUTLOOK We reiterate the 207/8 revenue forecast for the VGI group at THB 4,000mn driven by new synergies between VGI and Rabbit Group and a robust performance across our business segments... Chitkasem Moo-Ming (Chief Financial Officer) The first quarter of 207/8 (ended 30 June 207) 7