Corporate Presentation August / September 2012 0 Disclaimer The - - PowerPoint PPT Presentation

August / September 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. A Strategic View of our Industry

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A strategic View of our Industry

A favorable macroeconomic environment in South America and structural changes in the global media and live entertainment industry are the foundations of T4F’s sustainable growth

5 out of the 10 largest GDP growths in emerging economies are in South America Global touring became essential for the world’s major artists Top live entertainment contents willing to go on tour in South America Migration of marketing budgets to sponsorships of live entertainment

Brazil Argentina Chile Peru

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A strategic View of our Industry

Wide range of quality content for tours in South America

 The region is definitely in the international route of the major artists  Strong growth in the number of tickets sold not only in Brazil, Argentina and Chile, as well as in Peru and Colombia

The live entertainment industry in South America keeps its robust growth

According to a study by Nielsen Institute, published in Feb/2012, out-of-home entertainment is the first choice of spending for 39% of Brazilians, ahead of payments of debts... A study made in Jun/2012 by PwC highlighted Brazil as one of the highest-growing markets in global entertainment and media industry in coming years. The projection indicates that spending in this sector in Brazil will register compound annual growth of 10.6% vs. global average of 5.7% p.y...South America will be the region with the greatest development in the period 2011-2016, growing 60% with investments reaching US$ 134 billion...

Migration of marketing budgets towards non-traditional media (sponsorships)

E-Marketer, a leading global media and digital marketing research company, estimates that naming rights and sponsorships should amount US$ 5 billion worldwide in 2011...

 Very favorable environment for the live entertainment industry

Research by “Jornal Valor Econômico” in Jan/2011, a Brazilian leading newspaper, reveals that the sponsorship of shows in Brazil is becoming more expensive. The master sponsorship quotas have been at the R$10 million to R$ 15 million range. ...those amounts have suffered the greatest increases in the last 5 years...

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• 1. Descrição da Companhia
• 2. Company Overview

Shareholding Structure

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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 IPO Summary

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

Shareholding Structure

5.5% 6.8% 8.4% 50.1% 49.9% 27.5% Free-Float 51.8% Gávea Investimentos FA Comércio e Participações CIE International

Shareholders Stake Direct + Indirect Fernando Luiz Alterio 31.7% CIE International 9.7% Gávea Investimentos 6.8% Shareholders’ Agreement 48.2% Free Float 51.8%

Fernando Luiz Alterio

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%

• 30 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

A Diversified Portfolio of Entertainment

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

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Copa Montana Marcas Cats Cirque Du Soleil Roger Waters Pearl Jam Madonna The Addams Family Stomp Bodies The Lion King

Leadership Position in Live Entertainment Industry

Guns N’ Roses Promoted 7 out of the 10 largest shows of the tour Coldplay Promoted the 1st and 5th largest shows of all tours Madonna 3 out of the 5 largest shows of the tour in 2008 9 Bon Jovi Promoted the 2 largest shows of the 2010 world tour U2 3 out of the 11 largest shows of 360º World Tour Pearl Jam 4 out of the 5 largest shows of the world tour in 2011

Leadership Position in Live Entertainment Industry

• More than 1,450 performances
• 12 cities visited
• More than 2.5 million tickets sold
• Quidam in Sao Paulo was Cirque du

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

• Corteo will start in Mar/2013

Cirque du Soleil

12 different contents The only player that ever promoted authentic Broadway productions in the region More than 3.5 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 Stock Car is the third largest touring car series worldwide and the largest in South America Broadcasted by TV Globo since 2001

Sports Events

2006 2007-2008 2009-2010 10 2011-2013 2013-2014

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• 2. Tese de Investimento
• 3. 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)

7.5 6.8 5.8 5.2 4.7 4.8 3.6 3.9 4.2 4.6 4.3 4.4 2006 2007 2008 2009 2010 2011

(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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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

0.6%

• 7.1%

2.0% 4.0% 4.0% 2.0%

• 4.6%
• 3.3%

1.7% 2.1% 11.4%

• 0.6%

3.9% 5.5% 4.1% 2008 2009 2010 2011 2012E

Advertising Sales Promotion Sponsorship

T4F is the only company that can offer a multi content range of platforms that is able to access all target audiences.

Teen

Live Music

Kids Adult – Male 18 – 45

Car Sports

Family Adult

Live Music Exhibitions Broadway

Laura Pausini

A Diversified Platform Providing a One-Stop- Shop Marketing Solution to our Sponsors

 T4F becomes part of the brand’s long-term marketing strategy due to the relevance and innovation of its contents

Strong Competitive Advantages

 Emerging markets’ high costs of traditional media due to monopolies, encourage companies to pursue other marketing tools  Migration from traditional media to the Below the Line marketing  Increase in sponsorship revenues

Positive Scenario for T4F

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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, General Motors, Abril, Caixa Econômica

Federal, BMW, Petrobras

• Sponsorships: Bradesco, Credicard, Mastercard, American Express, Citibank,

Cielo, Entel, Claro, Sky, AmBev, Renault, Honda, Allianz, Cosan, Vivo

Long-term agreements and solid relationships with corporate sponsors

• Agreement with Cirque du Soleil valid through 2015
• Partnership with Disney Theatrical Group to promote theatrical plays over the

next five years

• 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

• 4. Growth Strategy

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T4F’s Growth Opportunities

T4F’s cash position provides a unique competitive advantage to capture the booming industry prospects

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

Construction of Venues, 35%

• Indoor Venues in Brazil

(SP & Others)

• Outdoor Venue in SP (T4F

Arena)

• Indoor venue in Buenos Aires

Ticketing Service, 7%

• 1 in Brazil
• Start-up in Peru

Acquisition of Equipment, 5%

• Lighting
• Sound
• Stage & Others

Acquisition Opportunities, 45%

• Venues
• Festivals
• Promoters

Geographic Expansion, 8%

• Brazil
• South America

Financial Sources Strong Cash Generation IPO Proceeds Leverage Capacity

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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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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

Foro Sol – Mexico City, Mexico

Outlook for 2012

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Indoor Live Music Family Entertainment and Theater Sport Events

Recurrent verticalized revenue from shows by local and international artists in venues we operate

Dream Theater # 9 Alanis Morissette #8 Yanni #8 Joss Stone # 6 Scorpions #3 Liza Minnelli #4 G3 #5 Simple Plan #4 Snow Patrol #4 Morten Harket #5 Sara Baras #4 among many others

• Cirque du Soleil – 12 months of presentations in six cities in

Brazil, before heading to Buenos Aires and Santiago with more than 320 performances

• Disney on Ice, WWE, Sponge Bob
• The Addams Family in Brazil and Mamma Mia! in

Argentina

In-house contents with track record of recurring revenue

Outdoor Live Music

Promotion of tours of top pop/rock music artists

...a strong and diversified pipeline allow us to foresee an important growth in year 2012

 Guaranteed access to very attractive contents at the box office and sponsorships, plus many

contents under negotiation

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• 5. 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