Clear Media Agenda Agenda Highlights Highlights Review of - - PowerPoint PPT Presentation

Interim Result s 2003 Interim Result s 2003

Clear Media

• Highlights

Highlights

• Review of Financials

Review of Financials

• Review of Strategy & Execution

Review of Strategy & Execution

• Questions & Answers

Questions & Answers

Agenda Agenda

1H2003 1H2003 1H2002 1H2002 67% 67% 65% 65% Occupancy Occupancy 17,488 17,488 14,672 14,672 Panels Panels

* Time weighted * Time weighted

What is Different ? What is Different ?

154 154 193 193 A/R * A/R *

Days Days Days Days

15% 15% 7.5% 7.5% Corporate Income Tax Rate Corporate Income Tax Rate 25,071 25,071 (158,225) (158,225)

Free Cash Flow Free Cash Flow (

(‘ ‘000) 000)

Into our 6 Into our 6 th

th Consecutive Year of Growth

Consecutive Year of Growth

+21% +21% 37m 37m EBIT EBIT +1% +1% 5.42 cents 5.42 cents EPS EPS +1% +1% 27m 27m Net Profit Net Profit +21% +21% 89m 89m EBITDA EBITDA +11.3% +11.3% 218m 218m Turnover Turnover % Change % Change HK$ HK$ 1H 2003 1H 2003

Accelerate our Industry Leadership Accelerate our Industry Leadership … … Out Out-

• perform All our Competitors

perform All our Competitors

% Change % Change HK$ HK$’ ’000 000 +21% +21% 50,912 50,912 EBIT EBIT +6% +6% 39,993 39,993 Net Profit Net Profit +12% +12% 209,919 209,919 Turnover Turnover +21% +21% 99,049 99,049 EBITDA EBITDA

Bus Shelters Bus Shelters

Profit from Core Products Profit from Core Products

1H2002 1H2002 1H2003 1H2003 EBITDA Margin EBITDA Margin 44% 44% 47% 47% Net Profit Margin Net Profit Margin 20% 20% 19% 19%

Focus on Growth Driver: “

“ Revenue

Revenue ”

”

53% 53% Zhong Zhong Shan Shan 40% 40% Kunming Kunming 64% 64% Guangzhou Guangzhou 116% 116% Shenyang Shenyang 34% 34% Nanjing Nanjing 51% 51% Chengdu Chengdu 215% 215% Ha Ha’ ’erbin erbin 269% 269% Shijiazhuang Shijiazhuang 2003 YOY% 2003 YOY%

Focus on Growth Driver: “

“Occupancy

Occupancy ”

”

92% 92% 69% 69% Ha Ha’ ’erbin erbin 69% 69% 57% 57% Kunming Kunming 83% 83% 60% 60% Nanjing Nanjing 84% 84% 82% 82% Hangzhou Hangzhou 87% 87% 80% 80% Chengdu Chengdu 69% 69% 62% 62% Guangzhou Guangzhou 70% 70% 74% 74% Beijing Beijing 73% 73% 68% 68% Shanghai Shanghai 1H2003 1H2003 1H2002 1H2002

Focus on Growth Driver: “

“ Pricing

Pricing ”

”

+5% +5% +27% +27% +45% +45% Nan Chang Nan Chang % Change % Change +5% +5% Xian Xian Nanjing Nanjing +27% +27% Fuzhou Fuzhou +19% +19% Hangzhou Hangzhou +16% +16% Changsha Changsha +20% +20% Chengdu Chengdu Wuxi Wuxi 1H 2003 VS 2H 2002 1H 2003 VS 2H 2002

Potential for Price Increase Potential for Price Increase in select 1 in select 1st

st & Mid

& Mid-

• tier cities

tier cities

Focus on Growth Driver: “

“Market Share

Market Share “

“

* 3 * 3-

• Ring

Ring

100% 100% 100% 100% Xi Xi’ ’an an 90% 90% 90% 90% Nanjing Nanjing 78% 78% 78% 78% Kunming Kunming 96% 96% 95% 95% Hangzhou Hangzhou 98% 98% 96% 96% Guangzhou Guangzhou 98% 98% 98% 98% Shanghai Shanghai 74% 74% 41% 41% Beijing * Beijing * June 2003 June 2003 Dec 2002 Dec 2002

36% 36% 26% 26% 29% 29% 9% 9%

Others Others Billboards Billboards Transit Transit Street Furniture Street Furniture

Lead the Largest & Fastest Growing Outdoor Sector Lead the Largest & Fastest Growing Outdoor Sector

34% 34% 23% 23% 35% 35% 7% 7%

2001 2002

天 時 天 時 地利 地利 人和 人和

Guangzhou Guangzhou

• Positive Regulatory Momentum Continues

Positive Regulatory Momentum Continues … …

• Solid Economic Rebound

Solid Economic Rebound … …

• Strong Order Book

Strong Order Book … … 90% 90%

• “

“Scalable Scalable” ” Model Delivers Results Model Delivers Results … …

• SG&A

SG&A

• 12%

12%

• @ Unit Direct Cost

@ Unit Direct Cost

• 12%

12%

• 3Q Trending 25% YOY Growth

3Q Trending 25% YOY Growth

天時 天時 地利 地利 人和 人和

2003 Growth Drivers 2003 Growth Drivers

• WTO & CEPA fuels ad spend growth

WTO & CEPA fuels ad spend growth

• Beijing Olympic multi

Beijing Olympic multi-

• year marketing launch

year marketing launch

• Positive regulatory momentum benefits Clear Media

Positive regulatory momentum benefits Clear Media

• Select earning

Select earning-

• accretive outdoor opportunities

accretive outdoor opportunities

Medium Term Prospects Medium Term Prospects

Review of Financials Review of Financials

Financial Performance Financial Performance

+21% +21% 37,393 37,393 31,040 31,040 EBIT EBIT 27,037 27,037 73,304 73,304 195,908 195,908 1H2002 1H2002 +1% +1% 27,199 27,199 Net Profit Net Profit 88,646 88,646 218,064 218,064 1H2003 1H2003 +21% +21% EBITDA EBITDA +11% +11% Revenue Revenue % Change % Change

1H2002 1H2002 1H2003 1H2003 EBITDA Margin EBITDA Margin 37% 37% 41% 41% Net Profit Margin Net Profit Margin 14% 14% 13% 13%

37,393 37,393 (7,584) (7,584) (2,703) (2,703) (3,232) (3,232) 50,912 50,912 EBIT EBIT 218,064 218,064 3,127 3,127 5,020 5,020 209,917 209,917 Revenue Revenue 27,199 27,199 (7,584) (7,584) (2,383) (2,383) (2,827) (2,827) 39,993 39,993 Net Profit Net Profit 88,646 88,646 (7,584) (7,584) (1,143) (1,143) (1,676) (1,676) 99,049 99,049 EBITDA EBITDA Total Total HQ HQ Unipole Unipole POS POS Bus Bus Shelter Shelter

Performance by All Activities Performance by All Activities

Bus Shelters 96% POS 2% Unipole 2% Bus Shelters 96.3% POS 2.3% Unipole 1.4%

1H2002 1H2002 1H2003 1H2003

Revenue By Products Revenue By Products

Beijing 18% Shanghai 17% Guangzhou 12% Shenzhen 7% Others 46% Beijing 15.0% Shanghai 13.0% Guangzhou 17.0% Shenzhen 6.0% Others 49.0%

1H2002 1H2002 1H2003 1H2003

Revenue By Location Revenue By Location

1H 2002 1H 2002 1H2003 1H2003 Telecom Telecom 23% 23% 24% 24% Beverage Beverage 18% 18% 18% 18% Consumer Product Consumer Product 15% 15% 17% 17% IT IT 3% 3% 8% 8% Pharmaceuticals Pharmaceuticals 1% 1% 7% 7% Finance Finance 2% 2% 3% 3% Entertainment Entertainment 9% 9% 3% 3% Electric Appliances Electric Appliances 1% 1% 3% 3% Food Food 3% 3% 3% 3% Tobacco Tobacco 10% 10% 2% 2%

Turnover By Industry Turnover By Industry

84 84 84 84 Total Expenses Total Expenses 17 17 21 21 SG & A SG & A 24 24 22 22 Amortisation Amortisation + Depreciation + Depreciation 43 43 41 41 Subtotal Subtotal 9 9 9 9

• Sales & Cultural Tax

Sales & Cultural Tax 6 6 5 5

• Electricity

Electricity 6 6 8 8

• Maintenance

Maintenance 22 22 19 19

• Rental

Rental Direct Costs Direct Costs 1H 2003 1H 2003 1H 2002 1H 2002 % Turnover % Turnover

Significant Cost Saving Significant Cost Saving

1H 2002 1H 2002 1H 2003 1H 2003 3 3rd

rd Party Receivables

Party Receivables 102,236 102,236 161,291 161,291 Turnover Day 193 days Turnover Day 193 days 154days 154days Due from WHA Due from WHA 98,920 98,920 46,474 46,474 % Sales from WHA % Sales from WHA 28.4% 28.4% 7.6% 7.6%

Accounts Receivable on Track Accounts Receivable on Track

1H2002 1H2002 1H2003 1H2003 Cash flow from operating activities Cash flow from operating activities Cash generated from operations Cash generated from operations 11,839 11,839 45,475 45,475 Interest paid Interest paid (4,703) (4,703) (3,750) (3,750) Income tax paid Income tax paid (4,445) (4,445) (4,182) (4,182) Net cash from operating activities Net cash from operating activities 2,691 2,691 37,543 37,543 Cash outflows from investing activities Cash outflows from investing activities ( 221,714) ( 221,714) (56,574) (56,574) Cash outflows from financing activities Cash outflows from financing activities (265,897) (265,897) (11,275) (11,275) Net cash & cash equivalents Net cash & cash equivalents at the beginning of period at the beginning of period 809,411 809,411 267,158 267,158 at the end of period at the end of period 324,491 324,491 236,852 236,852

Substantial Improved Cash Flow Substantial Improved Cash Flow

1 1st

st Time Positive Free Cash Flow

Time Positive Free Cash Flow

25,071 25,071 (158,225) (158,225) Free Cash Flow Free Cash Flow (6,122) (6,122) (2,708) (2,708)

• Tax

Tax 1,439 1,439 (230,260) (230,260) 73,304 73,304 1H2002 1H2002 (1,194) (1,194)

• Net Interest

Net Interest Income/ (Expenses) Income/ (Expenses) (56,259) (56,259) 88,646 88,646 1H2003 1H2003

• CAPEX

CAPEX EBITDA EBITDA

FY2002 FY2002 1H2003 1H2003 Cash & cash equivalents Cash & cash equivalents 267,158 267,158 236,852 236,852 Total assets Total assets 1,525,052 1,525,052 1,569,806 1,569,806 Total debts (net of pledged deposit) Total debts (net of pledged deposit) 17,435 17,435 9,423 9,423 Total shareholders Total shareholders’ ’ equity equity 1,209,750 1,209,750 1,236,883 1,236,883

Strong Balance Sheet Strong Balance Sheet

Review of S trategy & Review of S trategy & Execution Execution

• Continuing 2,000 units of media resources expansion per

Continuing 2,000 units of media resources expansion per year year

• Developing Taxi stands advertising in Shanghai

Developing Taxi stands advertising in Shanghai

• Monitoring acquisition opportunities

Monitoring acquisition opportunities

• Acquisition of bus shelters further increases market

Acquisition of bus shelters further increases market shares to 74% in Central Beijing shares to 74% in Central Beijing

• Improving quality of network by developing key locations

Improving quality of network by developing key locations

• Extending contract period to enhance return to shareholders

Extending contract period to enhance return to shareholders

• Remaining contract life extended to 8.9 years

Remaining contract life extended to 8.9 years

Securing Supply Securing Supply …

… E

nsuring Healthy Growth E nsuring Healthy Growth

• 4A Sales Center enhance professional services

4A Sales Center enhance professional services

• Sales Centers strengthen customers support

Sales Centers strengthen customers support

• New Flexible Pricing System offers visibility

New Flexible Pricing System offers visibility

• Develop & Improve Sales

Develop & Improve Sales Organisation Organisation

Improving Sales & After Sales Services Improving Sales & After Sales Services …

…

to Facilitate Demand to Facilitate Demand

• Sales rebounds

Sales rebounds

• 90% of 03 sales target already booked

90% of 03 sales target already booked … …

• Continue & streamline operations to improve

Continue & streamline operations to improve efficiencies efficiencies

Looking into 2 Looking into 2nd

nd Half

Half …

…

12.8% 12.8% 10.0% 10.0% 16.4% 16.4%

• 10.9%

10.9% 3.7% 3.7% 4.8% 4.8% 4.6% 4.6% 6.7% 6.7%

ROE ROE

Local Media Local Media Global Peers Global Peers

1.9 1.9

• 3.9

3.9 14.4 14.4

Lamar Lamar

5.9 5.9

• Phoenix

Phoenix

1.7 1.7 0.8 0.8 26.0 26.0 0.6 0.6 9.8 9.8

Clear Clear Clear Media Media Media

5.2 5.2 19.9 19.9 13.4 13.4 8.2 8.2 14.8 14.8

Est Est EV/EBITDA EV/EBITDA

1.3 1.3 1.3 1.3 0.7 0.7 3.3 3.3 1.4 1.4

Est Est EV/EBITDA/G EV/EBITDA/G

2.4 2.4 3.5 3.5 4.1 4.1 1.9 1.9 1.8 1.8

Price/ Book Price/ Book

1.6 1.6 1.7 1.7 2.5 2.5 4.3 4.3

• Est.PEG

Est.PEG

19.0 19.0 35.0 35.0 24.9 24.9 32.4 32.4 34.3 34.3

• Est. PE
• Est. PE

i i-

• cable

cable SCMP SCMP TVB TVB JC JC Decaux Decaux Clear Clear Channel Channel

Valuation Compares Favorably w/ Market Peers Valuation Compares Favorably w/ Market Peers

* Based on closing prices on 25 August 03, and Bloomberg IBES es * Based on closing prices on 25 August 03, and Bloomberg IBES estimates timates

Thank you! Thank you!