Corporate Presentation March / April 2012 0 Disclaimer The - - PowerPoint PPT Presentation

March / April 2012

Corporate Presentation

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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,

• fficers, 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.

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• 1. Descrição da Companhia
• 1. Company Overview

IPO Summary

3 3 3

Use of Proceeds

• (i) Acquisition of companies and venues, (ii) construction of venues and (iii) geographic expansion

1: Assuming the exchange rate of US$1 = R$1.6207 as of May 12th , according to Bacen.

Bookrunners Geographic Allocation

• 60% North America; 25% Europe; 15% Brazil

Summary

• Pricing Date - April 7th 2011; Price - R$16.00 ; Offering Size - R$503 million (US$310 million1)

Shareholding Structure

5.6% 12.8% 28.1% 85.0% Fernando Luiz Alterio 15.0% 8.0% Free-Float 45.5% Gávea Investimentos FA Comércio e Participações CIE International

Shareholders Stake Direct + Indirect Fernando Luiz Alterio 31.9% CIE International 9.8% Gávea Investimentos 12.8% Shareholders’ Agreement 54.5% Free Float 45.5%

Leading company in live entertainment in South America Our Presence (Net Revenue 2011) Unique Industry Knowledge High Growth and Strong Cash Generation Diversified and Verticalized Model

Company Overview

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ONE AND ONLY INVESTMENT OPPORTUNITY IN THE ENTERTAINMENT INDUSTRY IN SOUTH AMERICA

T4F is the leading live / out-of-home entertainment promoter in South America with a diversified and verticalized business model

• 4th largest player

worldwide by Billboard

• 1.2 thousand shows

promoted in 2011

• 2.9 millions tickets sold

in 2011

• Brazil

76%

• Argentina

16%

• Chile

8%

• 29 years of experience
• Promotion of the most

successful events in Brazil, Chile and Argentina

• Pioneer in naming rights

model in 1999

• Promotion of multi-

content events

• Venues Operation
• Food & Beverage and

Merchandising

• Ticketing Services
• Net Operation Cash

Flow = 87% of EBITDA ( ∑ 05-11)

• Net Revenues CAGR

11% (07-11)

• EBITDA CAGR

21% (07-11)

• Sustainable margins

going forward

Food & Beverage, Merchandising, and Parking Ticketing Services Sponsorships and Naming Rights Suites and Hospitality Centers Box Office Private Events

Our Business

Verticalization Revenue Sources

VENUE OPERATIONS FOOD & BEVERAGE MERCHANDISING TICKETING SERVICES

Live Music Sport Events Theatrical Production Performing Arts

U2 Stock Car Mini Challenge The Phantom

• f the Opera

Blue Man Group Bodies

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Copa Montana Marcas Mamma Mia Cats Stomp Cirque Du Soleil Roger Waters Pearl Jam Madonna The Addams Family

Leadership Position in Live Entertainment Industry

Guns N’ Roses Promoted 7 out of the 10 largest shows of the tour AC/DC The largest show of the world tour in 2009 Coldplay Promoted the 1st and 5th largest shows of all tours Madonna 3 out of the 5 largest shows of the tour in 2008 6 Bon Jovi Promoted the 2 largest shows of the 2010 world tour U2 3 out of the 11 largest shows of 360º World Tour

Leadership Position in Live Entertainment Industry

• More than 1,000 performances
• 12 cities visited
• More than 2 million tickets sold
• Quidam in Sao Paulo was Cirque du

Soleil’s biggest box office and the 6th biggest international box office in 2010

• Varekai started Sep/11 in Sao Paulo

Cirque du Soleil

12 different contents The only player that ever promoted authentic Broadway productions in the region More than 3.3 million tickets sold since 1999 Les Misérables, Chicago, Beauty and the Beast, Mamma Mia, Miss Saigon, Phantom of the Opera, The Sound of Music, Cats, Sweet Charity, Cabaret, The Witches of Eastwick, The Addams Family

Theatrical Plays

12 races per season in 10 different cities Third largest touring car series worldwide Broadcasted by TV Globo since 2000

Sports Events

2006 2007-2008 2009-2010 7 2011-2013

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• 2. Investment Highlights

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Investment Case

Live Entertainment Industry Growth Attractive Macroeconomic Environment and Robust Consumption Growth

 Superior business model: higher return with lower risk  Credibility with international and domestic agents and privileged access to high quality entertainment providers

Compelling business model and Superior Management and Expertise

 Live music: Touring became essential for artists Aggressive growth in South America in terms

• f ticket sold and

average ticket price  Massive increase in disposable income and expansion of consumer base  Expenditure of entertainment is extremely correlated to consumer spending

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Positive Trends for Expenditures with Entertainment in Emerging Markets…

Expenditures with entertainment are expected to significantly increase in emerging markets

2011E-2016E GDP Growth (1)

(1) In local currency real terms. Source: IMF – World Economic Outlook.

France USA Japan Argentina Chile Croatia Peru Israel Portugal Colombia Brazil China India Mexico Greece New Zeland Spain Italy Venezuela UK R2 = 0.66 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 10,000 20,000 30,000 40,000 50,000 GDP per capita in 2009 (US$ '000) Expenditure with entertaiment as a % of disposable income R2 (ex Argentina) = 0.81

Source: Euromonitor.

Expenditure with Entertainment as a % of the Disposable Income vs GDP per Capita

56.6% 47.0% 38.9% 33.3% 28.0% 24.7% 24.5% 22.6% 22.6% 22.0% 21.5% 19.0% 17.9% 16.3% 15.0% 15.0% 13.7% 12.5% 12.0% 12.0% 9.9% 9.5%

5 out of the 10 largest growths in GDP are in South America

China India Indonesia Peru Malaysia Chile Colombia Singapore Argentina Brazil Russia Mexico Australia Sweden United States New Zealand Croatia United Kingdom Canada Venezuela France Japan

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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

Source: Pollstar / IFPI

(US$ billion)

7.8 7.5 6.8 5.8 5.2 4.7 3.1 3.6 3.9 4.2 4.6 4.3 2005 2006 2007 2008 2009 2010

(US$ million)

Total Recorded Music Revenues vs. Total Revenues with Tickets Sold in North America

12% 5% 6% 6% 9% 88% 95% 94% 94% 91% 137 105 90 86 79 U2 Bruce Springsteen Britney Spears AC/ DC Jonas Brothers Album sales Tour Gross Total

Top Music Acts – Sales Breakdown

Source: Live Nation (2009)

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Superior Business Model

High Margins and Returns

• 18% EBITDA margin
• 31% ROIC
• 26% ROE
• No revenue concentration

in specific content

• Increased control over the

entertainment value chain

Verticalization

Ability to generate revenues from multiple sources in each event

Low Risk

Diversification

Multi-content platform = reduced risk

Asset Light

Maintenance capex = 1%

• f net revenues; PP&E

represent <5% of total assets

Strong Cash Flow

Low capex and negative working capital (sponsorships + tickets sold in advance)

Strong Cash Conversion

• 87% of EBITDA in the

period 2005-2011 was converted to cash

Note: FY2011 figures.

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Strong Cash Flow Generation

Typical Cash Cycle Of A Large Live Music Event

• 7M
• 5M
• 4M
• 3M
• 2M
• 1M

Concerts + 1M

50% of sponsorship 100% of box-office 50% of sponsorship Taxes Promotion costs Profit (Cash inflows/ outflows) Note: “M” indicates months. 50% of artist fee & media expenses

• 6M

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Solid Sponsorship Revenues Flow

• Migration of marketing budgets from traditional media

to below-the-line advertising (sponsorship is the largest category within)

• Content sponsorship, priority benefit, naming rights

sold in our 5 venues

• Over 100 active clients, including major corporations
• T4F’s

contents attract strong media interest, generating a significant amount of spontaneous media (about R$500 million per year)

• Sponsorship corresponded to 23% of T4F’s Net

Revenue in 2011

Naming Rights Largest Corporate Sponsors

Source: IEG.

North American Annual Growth in Advertisement, Sales Promotion and Sponsorship

3.0% 0.6%

• 7.1%

2.0% 3.9% 3.7% 2.0%

• 4.6%
• 3.3%

0.0% 11.5% 11.4%

• 0.6%

3.9% 5.9% 2007 2008 2009 2010 2011E

Advertsing Sales Promotion Sponsorship

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High Barriers of Entry

Potential Competitors

• Controls 5 of the most important venues in South America

Exclusive long-term access to premium venues

• Possibility to capture economies of scale on the acquisition of content, by
• perating in four countries

The only totally integrated business model

• Naming Rights: Citibank, Credicard, Abril and Caixa Econômica Federal
• Sponsorships: Bradesco, Credicard, Mastercard, American Express, Citibank,

Quilmes, General Motors and Pepsi

Long-term agreements and solid relationships with corporate sponsors

• Agreement with Cirque du Soleil valid through 2013
• Exclusivity and non-compete agreement with Live Nation valid through August

2015

Guaranteed access to premium content

• Family Entertainment: Disney, Andrew Lloyd Weber, Cameron Mackintosh and

the Blue Man Group

• Sports: Stock Car, Brazilian TCC, Fórmula Montana and Mini Challenge
• Music Concerts: CAA, William Morris, ITB – International Talent Booking, The

Agency Group, among others

Privileged access to high- quality entertainment providers

• T4F is the most credible producer and promoter in South America, both in

execution capability and financial strength

Credibility

• Various business lines: Latin Music, Anglo Music, Performing Arts, Venues and

Ticketing

• 3. Growth Strategy

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T4F is the natural consolidator of the South American live entertainment industry

Financial Sources

IPO Proceeds Strong Cash Generation Leverage Capacity

Total potential amount of approximately R$ 600mm

Acquisition Opportunities, 45% Acquisition of Equipment, 5% Ticketing Service, 7% Construction of Venues, 35% Geographic Expansion, 8%

T4F’s Growth Opportunities

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T4F Outdoor Venue in São Paulo

T4F outdoor venue is expected to be a reference among renowned entertainment venues

Project overview

• Designed to fill a gap in high-level entertainment venues

in the São Paulo metropolitan area

• Naming rights revenues reaching up to R$ 9 million a

year

• Flexible in terms of capacity: events from 15,000 to

60,000 people

• Capex should reach R$110 million with expected IRR of

33%

• Control of the agenda and integrated model translate

into a strong barrier of entry

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Geographic Expansion

80% of T4F’s revenues in Brazil come from SP and RJ which represent only 17% of Brazil’s GDP

Main Cities in Brazil

Indicates cities in which T4F is currenlty present. Cities to which T4F plans to expand operations.

Brazil Sao Paulo Rio de Janeiro Belo Horizonte Brasília Recife Belém Campinas Curitiba Salvador Fortaleza

680 presentations/year and 1.5 mm tickets sold/year in SP and RJ

Porto Alegre Natal Manaus

Main Cities in South America

Uruguay Chile Paraguay French Guiana Suriname Guiana Venezuela Colombia Ecuador Peru Bolivia Buenos Aires Santiago Lima Caracas Bogota

300 presentations/year and 1.0 mm tickets sold/year in BA and Santiago

Argentina Cordoba Mendoza

Still a relevant growth opportunity outside Brazil, representing 40% of South America’s GDP

New / retrofitted venues to explore

Potential of 400 presentations/year and 840 thousand tickets sold/year in other cities Potential of 200 presentations/year and 700 thousand tickets sold in other cities

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Selected Acquisition Targets

Venues

Fragmented market presents several consolidation opportunities and T4F has already screened selected acquisition targets which are complementary and synergic.

Festivals

Promotional Marketing: below the line and event companies provides strong synergies with production (team and equipments), food & beverage and venues operations

• 11 companies out of 92, aggregate sales of

R$770 mm in 2009

Marketing Promoters

+ 4 sport events companies acting in: car racing, beach volley, beach soccer, tennis and basketball + 8 companies operating in specific niches, such as: classic music, regional music and dance + 7 venues identified in 5 different states of Brazil

• Average capacity: from 5,000 to 16,000 people

+ 7 festivals in 5 different cities in Brazil

• Complementary in calendar (summer)
• Well-established brands, mostly in NE region
• Exposure to middle class

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• 4. Operational and Financial Highlights

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Solid Operational Performance

Net Revenues (R$ mm) and Gross Margin (%) EBITDA (R$ mm) and EBITDA Margin (%) Net Income (R$ mm) and Net Margin (%) Operational Cash Flow vs. EBITDA

Note: Summary of 2009 impacts

• Global crisis impact of R$16.8 mm
• Postponement impact of R$4.7 mm
• H1N1 flu impact of R$21.6 mm

87%

5.3 58.1 110.3 210.7 256.8 351.9 462.0 36.4 105.6 188.7 214.5 246.5 347.7 402.5 2005 2006 2007 2008 2009 2010 2011

EBITDA - Accumulated Cash Generation - Accumulated

596.6 434.6 569.2 609.8 26.7% 24.4% 29.2% 30.6% 2008 2009 2010 2011 100.4 46.1 95.1 110.1 16.8% 10.6% 16.7% 18.0% 2008 2009 2010 2011 46.9 6.0 40.3 61.1 7.9% 1.4% 7.1% 10.0% 2008 2009 2010 2011

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Historical Financial Information (cont’d)

.

ROIC, ROE and indebtness metrics

Net Debt and Net Debt / EBITDA ROE (2) Net Debt Breakdown (2011)

(%) (R$ million) (%) (R$ million)

(1)ROIC calculated as NOPAT / (Net PP&E + current assets non cash) (2)ROE calculated as Net Income/ Average Shareholders’ Equity.

ROIC (1)

41.9 93.8 263.3

Short Term Debt Long Term Debt Cash and Equivalents Net Debt

(127.6)

92 29 (128)

2.0x 0.3x 2009 2010 2011 (1.2x) 38.3% 25.0% 42.0% 30.7% 2008 2009 2010 2011 46.0% 4.8% 31.7% 25.9% 2008 2009 2010 2011

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Why Invest in T4F?

Unique access to high-quality content One and only investment opportunity in the entertainment industry in South America, with longstanding track-record and leadership Verticalization and diversification, resulting in high margins and low risk Asset light model, resulting in high returns and dividend payout capacity Multi-country operations, creating significant economies of scale and barriers of entry Strong conversion of EBITDA into cash flow