VGi GLOBAL MEDIA PLC.

Transcription

1 MEDIA INDUSTRY AND BUSINESS IMPACT ANALYSIS 1Q 14/15 VS 1Q 15/16 THAI ADVERTISING SPENDING (THB MN) MEDIA INDUSTRY MARKET SHARE (1Q 14/15 VS 1Q 15/16) Industry TV Newspapers Radio Cinema Magazines Transit Outdoor In-Store Internet 3,068 3,130 1,410 1,352 1,303 1,030 1,053 1,228 1, , ,834 16,443-2% +4% +26% -14% +19% +9% -66% +29% 24,294-6% 25,770-10% 1Q 15/16 1Q 14/15 Out-of-Home 1Q 14/15 1Q 15/16 TV 64% 61% Newspaper 12% 13% Radio 5% 6% Cinema 4% 5% Magazines 5% 4% Transit 4% 5% Outdoor 4% 4% In-Store 2% 1% Internet 1% 1% Source: The Nielsen Company (Thailand) Limited, excludes Digital, Satellite and Cable TV. THAI ADVERTISING SPENDING VS VGI REVENUE* (THB MN) 35,000 30,000 25,000 20,000 15,000 10,000 28,755 29,263 28, , ,770 26,388 26, ,939 24, , , % 1,100.0 QoQ -6% YoY % YoY % YoY , Q 13/14 2Q 13/14 3Q 13/14 4Q 13/14 1Q 14/15 2Q 14/15 3Q 14/15 4Q 14/15 1Q 15/16 Industry AdSpend Sources: The Nielsen Company (Thailand) Limited and VGI Global Media Pcl. *Excludes Modern Trade Media Revenue VGI Revenue* Thailand s central bank has revised down the 2015 GDP growth forecast for the second time from 3.8% to 3.0%. A rebound in tourism failed to counter the slump in exports which contracted for 2 years consecutively and is also expected to continue to drop in 2015 as evident from Jan Jun 2015 exports, which declined by 4.9% YoY 1. Moreover, weakened domestic consumption, falling agricultural commodity prices (especially rice and rubber) and delayed disbursement of the government s spending budget led to slower-than-expected recovery of the Thai economy. Thai advertising expenditure was also harder hit by weakened consumption, as evident from the decrease in 6-month (Jan Jun 2015) and 3-month (Apr June 2015) advertising spending by 4.9% YoY and 5.7% YoY, respectively. 1 MD&A 1Q 15/16 (Ended 30 June 2015) 1/6

2 1Q 15/16 KEY DEVELOPMENTS BTS-RELATED MEDIA The Company signed a contract with BTSC on 6 May 2015, receiving rights to manage advertising and merchandising areas on 7 extensions (On Nut to Bearing and Krungthong Buri to Wongwian Yai) until OFFICE BUILDING AND OTHER MEDIA The Company acquired 20% of LED Advance Company Limited (LED) total issued shares, whose business is providing advertising media service in 13 key domestic airports in Thailand, including Suvarnabhumi and Don-Mueng Airport. The Company believes that this strategic investment will further expand its footprint in the Aviation media sector and create synergistic benefits with our existing media in Thai AirAsia s planes. Midas Global Media Company Limited (MIDAS) successfully completed the installation of 10 Clock Towers with digital billboard in 10 major provinces. 1Q 15/16 SNAPSHOT & ANALYSIS P&L SNAPSHOT (AS SHOWN IN FINANCIAL STATEMENT) P&L SNAPSHOT (AS IF NO MODERN TRADE MEDIA) THB (mn) 1Q 15/16 4Q 14/15 %QoQ 1Q 14/15 % YoY Operating % % revenue Cost of sales % % Gross profit % % EBITDA % % Net profit ,493.6% % THB (mn) 1Q 15/16 4Q 14/15 %QoQ 1Q 14/15 % YoY Operating % % revenue Cost of sales % % Gross profit % % EBITDA % % Net profit % % Gross profit margin 59.8% 58.7% 55.2% EBITDA margin 62.4% 12.9% 46.7% NPAT margin 43.6% 2.4% 33.8% Gross profit margin 1 Excludes provisions 67.6% 66.4% 78.1% EBITDA margin 61.5% 65.2% 69.4% NPAT margin 41.8% 42.9% 52.1% REVENUE STRUCTURE (AS SHOWN IN FINANCIAL STATEMENT) REVENUE STRUCTURE (AS IF NO MODERN TRADE) 9.1% 9.8% THB 549.1mn BTS-related Media Office Building & Other Media Modern Trade Media 10.8% THB 499.2mn BTS-related Media Office Building & Other Media 81.1% 89.2% MD&A 1Q 15/16 (Ended 30 June 2015) 2/6

3 1Q 15/16 PERFORMANCE ANALYSIS The Company reported revenue from services of THB 549.1mn, decreasing 28.0% YoY from THB 762.2mn in the previous year as a result of the discontinuation of Modern Trade Media business. Costs and SG&A decreased 31.8% YoY to THB 311.9mn, in line with the decrease in Modern Trade Media revenue. In order to enable analysis of underlying performance on a comparable basis to previous quarters, the following section analyses the Company s earnings excluding the Modern Trade Media business. Revenue from services increased 4.9% YoY from THB 475.8mn to THB 499.2mn supported by 1) an increase of 2.5% in BTSrelated revenue from the higher occupancy rate of media on station and merchandising spaces and 2) an increase of 30% in Office Building Media revenue driven by an increase in the number of office buildings from 75 buildings to 103 buildings. Cost of sales rose by 55.4% YoY to THB 161.8mn due to higher depreciation cost of the new digital media (Platform Truss LED, Platform Screen Door and E-Poster) installed across the BTS SkyTrain network as well as in additional office buildings. Moreover, the increased cost of sales was also tied to the additional expenses of the 7 new BTS extensions stations, which the Company secured the contract for on 6 May 2015, and new digital media which the Company recently acquired this year. As cost of sales at a higher rate than revenue growth, this led to a reduction in net profit margin, which fell to to 41.8% in 1Q 15/16 (versus 52.1% in 1Q 14/15) SEGMENTAL PERFORMANCE BTS-RELATED MEDIA Revenue increased by 2.5% YoY, from THB 434.2mn in 1Q 14/15 to THB 445.2mn in 1Q 15/16 despite the economic slowdown. The key growth drivers were the increase in occupancy of static and digital media on station as well as merchandising space on station. Gross profit margin decreased to 72.4% from 79.1% in the previous year as a result of 1) higher depreciation expense from new digital media on station (Platform Truss LEDs, Platform Screen Door and E-Poster); 2) increase of maintenance cost for equipment; and 3) increase in concession fee from 7 new BTS extension stations. GROSS PROFIT CONTRIBUTION* GROSS PROFIT (THB MN) GROSS PROFIT MARGIN % 95.5% % 1Q 15/16 1Q 14/15 * exclude Modern Trade Media OFFICE BUILDING AND OTHER MEDIA Revenue from Office Building and Other Media was THB 54.0mn, increasing 30.0% YoY from THB 41.5mn in the previous year. Key growth driver came from the increase in additional office buildings (from 75 buildings to 103 buildings) as well as package price increase, which became effective since October 2014, to match the increasing in number of viewers. Gross profit margin of Office Building Media decreased from 73.6% in the previous year to 61.9% in this quarter mainly due to higher depreciation cost of new digital screens in additional office buildings acquired recently. Gross profit margin of Other Media dropped from 16.7% to % in this quarter mainly due to higher concession cost from new Mega LEDs in Victory Monument area which recently added this year. MD&A 1Q 15/16 (Ended 30 June 2015) 3/6

4 GROSS PROFIT CONTRIBUTION* GROSS PROFIT (THB MN) GROSS PROFIT MARGIN 4.5% 1Q 15/ % 1Q 15/ % 1Q 14/ Q 14/ % 16.7% Office Building Media Other Media * exclude Modern Trade Media FINANCIAL POSITION ASSETS Total assets as of 30 June 2015 was THB 3,547.7mn, which increased from THB 3,286.5mn as of 31 March The increase was mainly attributable to cash and cash equivalents, short-term investments and investment in associates (see assets breakdown). Cash and cash equivalents and short-term investments increased to THB 629.1mn from THB 493.6mn. The increase in cash was mainly attributable to the cash from operations (see liquidity and cash flow section). Account receivables-net decreased to THB 507.8mn, in line with the lower sales in 1Q 15/16. The Company gives days credit terms to customers and has a policy to setup an allowance for doubtful accounts for receivables of more than 120 days. In addition, the Company also considers the customers historical payment and creditability to setup such allowance. As of 30 June 2015, the allowance for doubtful accounts was maintained at THB 9.7mn, which was the same amount as at the end of the previous quarter, accounting for 1.9% of total account receivables. AGEING OF TRADE RECEIVABLES (THB MN) 31-Mar Jun-15 Not yet due Up to 6 months Over 6 months Total % of total receivables 99.6% 98.8% Allowance for doubtful debt % of total receivables 1.9% 1.9% Total equipment net slightly decreased to THB 1,257.9mn from THB 1,262.4mn at end of the previous year due to depreciation associated with the existing assets coupled with the minimal amount of investment in assets during this quarter. ASSETS BREAKDOWN 31-Mar Jun-15 (THB mn) % out of total (THB mn) % out of total Cash & cash equivalents and short-term investment % % Trade & other receivables % % Equipment - net 1, % 1, % Investment in JV and associates % % Other assets % % Total assets 3, % 3, % MD&A 1Q 15/16 (Ended 30 June 2015) 4/6

5 LIABILITIES AND SHAREHOLDERS EQUITY Total liabilities were THB 1,478.8mn, a slight increase of THB 21.4mn or 1.5%, from THB 1,457.4mn in the previous year due to an increase in trade & other payables offset with the decrease in provisions and other current liabilities. Total equity increased by THB 239.8mn to THB 2,068.8mn. This was attributable to an increase in retained earnings from the 3 months operating performance. Return on equity 1 for 1Q 15/16 was 42.1%, down from 52.6% in the previous year. This is attributable to 1) the increase in retained earnings from operating profits and 2) the capital increase in the past 12 months from warrants conversion (VGI-W1) and stock dividend payments at the ratio of 1:1. LIABILITIES AND EQUITY BREAKDOWN 31-Mar Jun-15 (THB mn) % out of total (THB mn) % out of total Short term loan % % Trade & other payables % % Accrued expenses % % Other current liabilities % % Non-current liabilities % % Total liabilities 1, % 1, % Shareholders equity 1, % 2, % Total labilities and equity 3, % 3, % LIQUIDITY AND CASH FLOW (THB MN) Beginning* (31/3/15) CFO Investment in other businesses CapEx Interest / Dividend income & Others CFF Ending* (30/6/15) * including Cash, Cash equivalence and short-term investment Cash and cash equivalents as of 30 June 2015 stood at THB 267.8mn and net short-term investments stood at THB 345.8mn, totaling THB 613.3mn, representing an increase of THB 84.9mn from THB 528.7mn at end of the previous year. During 1Q 15/16, the Company had cash inflows from operating activities of THB 264.8mn. Total cash flow paid for investing activities was THB 184.4mn, of which THB 100.0mn was the investment in 20% of total shares in LED Advance and THB 14.2mn was CapEx used for media maintenance. 1 calculated from the last 12 months of net profit and average shareholders equity (average between the outstanding at end of the same period in the previous year and at end of this period) MD&A 1Q 15/16 (Ended 30 June 2015) 5/6

6 FINANCIAL RATIOS Profitability Ratios 1Q 14/15 1Q 15/16 Liquidity Ratios 1Q 14/15 1Q 15/16 Gross profit 1 (%) 55.2% 59.8% Current ratio (X) Operating EBITDA (%) 46.7% 62.4% Quick ratio 3 (X) Cash-to-net profit (%) 37.8% 87.2% Account receivable turnover (X) Net profit (%) 33.8% 43.6% Average collection period (days) Return on equity (%) 52.6% 42.1% Payable days (days) Efficiency Ratios Leverage Ratios Return on assets (%) 35.5% 24.4% Liability to Equity (times) Return of fixed assets 2 (%) 164.4% 91.8% Debt to equity (times) Asset turnover (times) Calculated from revenue from services 2 (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 quarter) 3 (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 quarter) MANAGEMENT OUTLOOK Negative factors which affected Thailand s economy in the past 6 months combined with the Bank of Thailand s revision of the 2015 GDP growth forecast from 3.8% to 3.0% has led the Company to foresee that the Thai Media Industry will be impacted from the sluggish economy in the second half of this year. As a result, the Company revised down the target revenue contraction for 2015/16 from 12% to 26% from the previous year. However, the Company s total operating revenue will grow 10% from the previous year if excluding the impact from the discontinuation of Modern Trade Media (effective since May 2015). The Company s financial position remains strong, with business operations only in the high-margin media segments, and debt-to-equity ratio remains low at 0.3 times. Moreover, VGI s business is highly related to the expansion of the rail mass transit network, which is one of the Thai government s prioritised projects. The management is confident that the Company has high potential to grow and has the ability to handle the business in various situations.. Suparanan Tanviruch (Chief Financial Officer) MD&A 1Q 15/16 (Ended 30 June 2015) 6/6