Corporate Presentation March / April 2012 0
Disclaimer The material that follows is a presentation of general background information about T4F Entretenimento S.A (“T4F”) as of the date of the presentation. It is information in summary form and does not purport to be complete. This material contains confidential information regarding and may not be reproduced or circulated, partially or completely, without the prior written consent of the T4F. Any statements, projections, expectations, estimates and plans contained in this document that do not describe historical facts, and the factors or trends affecting financial condition, liquidity or results of operations, are forward-looking statements and involve several risks and uncertainties. Such statements are based on assumptions and analyses made by the Company based on its experience and the economic climate and on market conditions and expected future events, many of which are beyond the Company’s control. No investment decision should be based on validity, accuracy or completeness of the information or opinions contained in this presentation. Under no circumstances, neither the Company nor its subsidiaries, directors, officers, agents or employees be liable to third parties (including investors) for any investment decision based on information and statements in this presentation, or for any damages resulting therefrom, corresponding or specific. This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever. 1 1
1. Descrição da Companhia 1. Company Overview 2
IPO Summary Summary Pricing Date - April 7 th 2011; Price - R$16.00 ; Offering Size - R$503 million (US$310 million 1 ) Geographic Allocation 60% North America; 25% Europe; 15% Brazil Use of Proceeds (i) Acquisition of companies and venues, (ii) construction of venues and (iii) geographic expansion Bookrunners Shareholding Structure Stake Fernando Luiz CIE International Gávea Investimentos Direct + Indirect Shareholders Alterio 12.8% Fernando Luiz Alterio 31.9% 85.0% CIE International 9.8% FA Comércio e 15.0% Participações 8.0% Gávea Investimentos 12.8% 28.1% Free-Float Shareholders’ Agreement 54.5% 5.6% 45.5% Free Float 45.5% 1: Assuming the exchange rate of US$1 = R$1.6207 as of May 12 th , according to Bacen. 3 3 3
Company Overview T4F is the leading live / out-of-home entertainment promoter in South America with a diversified and verticalized business model Leading company High Growth and Our Presence Unique Industry Diversified and in live entertainment Strong Cash (Net Revenue 2011) Knowledge Verticalized Model in South America Generation Net Operation Cash 29 years of experience Promotion of multi- 4 th largest player Brazil 76% Flow = 87% of content events worldwide by Billboard Promotion of the most EBITDA ( ∑ 05-11) successful events in Argentina 16% Venues Operation Net Revenues CAGR 1.2 thousand shows Brazil, Chile and 11% (07-11) Argentina promoted in 2011 Food & Beverage and Chile 8% EBITDA CAGR Pioneer in naming rights Merchandising 2.9 millions tickets sold 21% (07-11) model in 1999 in 2011 Ticketing Services Sustainable margins going forward ONE AND ONLY INVESTMENT OPPORTUNITY IN THE ENTERTAINMENT INDUSTRY IN SOUTH AMERICA 4
Our Business Live Music Sport Events Theatrical Production Performing Arts Stomp The Phantom U2 Madonna Cirque Du Soleil The Addams Stock Car Marcas of the Opera Family Pearl Jam Roger Waters Copa Montana Mini Challenge Cats Blue Man Group Bodies Mamma Mia Verticalization FOOD & BEVERAGE MERCHANDISING VENUE OPERATIONS TICKETING SERVICES Revenue Sources Food & Beverage, Sponsorships and Suites and Hospitality Private Box Office Ticketing Services Merchandising, Naming Rights Centers Events and Parking 5
Leadership Position in Live Entertainment Industry U2 Madonna 3 out of the 11 largest 3 out of the 5 largest shows of 360º World Tour shows of the tour in 2008 Coldplay Bon Jovi Promoted the 1 st and 5 th Promoted the 2 largest largest shows of all tours shows of the 2010 world tour Guns N’ Roses AC/DC Promoted 7 out of the 10 The largest largest shows of the tour show of the world tour in 2009 6
Leadership Position in Live Entertainment Industry - More than 1,000 performances 2006 - 12 cities visited - More than 2 million tickets sold Cirque du 2007-2008 - Quidam in Sao Paulo was Cirque du Soleil Soleil’s biggest box office and the 6 th 2009-2010 biggest international box office in 2010 2011-2013 - Varekai started Sep/11 in Sao Paulo Les Misérables, Chicago, 12 different contents Beauty and the Beast, Mamma Mia, Miss Saigon, The only player that ever promoted Theatrical authentic Broadway productions in the Phantom of the Opera, Plays region The Sound of Music, Cats, Sweet Charity, Cabaret, More than 3.3 million tickets sold since The Witches of Eastwick, 1999 The Addams Family 12 races per season in 10 different cities Sports Third largest touring car series worldwide Events Broadcasted by TV Globo since 2000 7
2. Investment Highlights 8
Investment Case Attractive Compelling business Macroeconomic model and Superior Live Entertainment Environment and Robust Management and Industry Growth Consumption Growth Expertise Massive increase in Live music: Superior business model: disposable income and higher return with lower risk Touring became expansion of consumer essential for artists base Credibility with international and domestic agents and Aggressive growth in Expenditure of privileged access to high South America in terms entertainment is extremely quality entertainment of ticket sold and correlated to consumer providers average ticket price spending 9
Positive Trends for Expenditures with Entertainment in Emerging Markets… Expenditure with Entertainment as a % of the Disposable 2011E-2016E GDP Growth (1) Income vs GDP per Capita 12.0% China 56.6% R 2 = 0.66 Expenditure with entertaiment as a % of disposable income R 2 (ex Argentina) = 0.81 UK India 47.0% Japan Indonesia 38.9% 10.0% 33.3% Peru Spain Malaysia 28.0% USA Argentina Chile 24.7% New Zeland 8.0% Colombia 24.5% France Singapore 22.6% Portugal Greece 22.6% Argentina Italy 6.0% 22.0% Croatia Brazil Israel Russia 21.5% 19.0% Mexico 17.9% Australia 4.0% 5 out of the 10 Brazil Sweden 16.3% largest growths 15.0% United States Mexico in GDP are in 15.0% New Zealand Chile 2.0% China 13.7% South America Croatia India Colombia 12.5% United Kingdom Venezuela 12.0% Canada Peru 0.0% 12.0% Venezuela 0 10,000 20,000 30,000 40,000 50,000 9.9% France 9.5% GDP per capita in 2009 (US$ '000) Japan (1) In local currency real terms. Source: Euromonitor. Source: IMF – World Economic Outlook. Expenditures with entertainment are expected to significantly increase in emerging markets 10
Boom of the Live Entertainment Industry Live music has significantly increased importance in the music industry, with touring becoming essential for artists, while recorded music revenues have been shrinking Total Recorded Music Revenues vs. Total Revenues with Top Music Acts – Sales Breakdown Tickets Sold in North America (US$ billion) (US$ million) U2 12% 88% 137 7.8 7.5 6.8 Bruce 5% 95% 105 5.8 Springsteen 5.2 4.7 Album sales Britney Tour Gross 6% 94% 90 Spears Total 4.6 4.3 4.2 3.9 3.6 AC/ DC 6% 94% 86 3.1 Jonas 9% 91% 79 Brothers 2005 2006 2007 2008 2009 2010 Source: Pollstar / IFPI Source: Live Nation (2009) 11
Superior Business Model • 18% EBITDA margin High Verticalization Diversification Margins • 31% ROIC Ability to generate Multi-content platform revenues from multiple = reduced risk and • 26% ROE sources in each event Returns Note: FY2011 figures. • No revenue concentration in specific content Low Risk • Increased control over the entertainment value chain Asset Light Strong Cash Flow • 87% of EBITDA in the Strong Cash Maintenance capex = 1% Low capex and negative period 2005-2011 was of net revenues; PP&E working capital Conversion converted to cash represent <5% of total (sponsorships + tickets assets sold in advance) 12
Strong Cash Flow Generation Typical Cash Cycle Of A Large Live Music Event 50% of sponsorship (Cash inflows/ outflows) 50% of sponsorship Taxes 100% of box-office Promotion costs 50% of artist fee & media expenses Profit - 6M - 7M - 5M - 4M - 3M - 2M - 1M + 1M Concerts Note: “M” indicates months. 13
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