i - i -CABLE i -CABLE CABLE Communications Limited Limited Communications 2011 Interim Results 9 August 2011
Results Highlights � Efforts to rebuild revenue & profitability have started to pay off � TV subscriber base sustainable, making healthy contributions to recurrent revenue driven by strong content & new services � Advertising revenue remained strong, attributed mainly to a stronger economy, attractive programming across flagship platforms & more effective marketing � Increase in programming costs and lower Broadband turnover adversely affected performance & slowed the return to profitability i-CABLE Communications Limited � Net loss position has substantially improved in the first half 2
Subscription Services Television � Higher recurrent revenue created noticeable improvement in financial performance � Successful marketing & promotional campaigns maximized the leverage of prized content & strong HD service � Continue to invest in premier content to reinforce & expand market share under well-tested strategy i-CABLE Communications Limited � Strengthen & improve the attractiveness of packages to meet customers' fast-changing needs & fast-evolving electronic entertainment landscape on the Internet via both fixed & mobile platforms 3
Expanded HDTV Offerings � The best HD quality & viewing experience in town is the biggest draw card for customer acquisition together with premier content across flagship channels � Expanded the spectrum of genres on HD platform to 9 flagship HD channels: � 5 HD Sports channels � 3 HD Movie channels � 1 HD Entertainment channel i-CABLE Communications Limited 4
Expanded HDTV Offerings HD Sports (HD200 � � HD204) HD204) HD Sports (HD200 � Barclays Premier League � UEFA Champions League � German Bundesliga � Copa America � Barclays Asia Trophy � ATP Qatar Open Tennis � Asian Winter Games � The Sudirman Cup � FINA Swimming World Championships � HD Horse racing HD Olympics 2012 HD Olympics 2012 i-CABLE Communications Limited � Preparing for London Games available exclusively on i-CABLE in unprecedented coverage � Started 1-year countdown with daily footages recapping the unforgettable moments from the Beijing Olympics 5
Expanded HDTV Offerings Cine p. (HD245) Cine p. (HD245) � A brand new movie channel, with award-winning & controversial titles for a mature audience � A wide range of genres, many of which not theatrically released or first run on TV in Hong Kong � Broadcast in original uncut, unrated i-CABLE Communications Limited versions that cannot be exhibited on Free TV � No additional fee for basic pack subscribers 6
Expanded HDTV Offerings HMC 1 (HD243) HMC 1 (HD243) � Available in HD starting from 30 June 2011 � A 24-hour non-stop Hollywood movie channel featuring action adventure mega hits i-CABLE Communications Limited 7
Expanded HDTV Offerings Movie 1 (HD241) Movie 1 (HD241) � A 24-hour local movie channel with first run blockbusters Entertainment Channel (HD212) Entertainment Channel (HD212) � Features popular drama series as well as repackaged game & variety shows, music & artistes features & i-CABLE Communications Limited hottest talkshows 8
Self-Produced Programmes 9 i-CABLE Communications Limited
Self-Produced Programmes 10 i-CABLE Communications Limited
Viewership 52% 46% 42% 34% 10% i-CABLE Communications Limited 9% 4% 2% Source: CSM Media Research All Day All Time (Individual 4+) � CABLE TV viewership share bigger than all other Pay TV combined � CABLE TV viewership share continued to gain ground � at the expense of the closest rival which lost nearly 20% in the past two years 11
Subscribers Dec 2010 Jun 2011 143,000 137,000 228,000 225,000 1,101,000 1,103,000 i-CABLE Communications Limited 12
Subscription Services Broadband � Despite competition pressure, we are speeding up network investment to slow down subscriber loss & protect market share � Next generation DOCSIS 3.0 roll-out on HK Island completed; works for Kowloon & New Territory currently underway in earnest � Expansion in network capacity & improvement in service quality would help stem subscriber attrition & protect revenue through i-CABLE Communications Limited upselling to existing subscribers 13
Newsline Express � A strong brand taking advantage of MTR's extensive rail network & CABLE TV's leading news offering � A massive platform reaching 1.6 million passengers each day on board trains of MTR East Rail, West Rail & Ma On Shan Lines* i-CABLE Communications Limited * Synovate AsiaBUS 14
Sundream Motion Pictures � Firmly established itself as a discerning production & distribution company � Released 3 titles theatrically in the first half of 2011, with 9 titles in the pipeline � The King � s Speech ( ����� ) � A major box office & critical success both locally & around i-CABLE Communications Limited the world � My Ex-wife � s Wedding ( ����� ) � Scream 4 ( ���� 4) 15
Television 2010 2011 HK$M 1H 2H 1H vs 1H10 Turnover 725 836 874 20% Opex before dep � n (748) (876) (822) 10% EBITDA (23) (40) 51 N/A Depreciation (79) (80) (74) - 6% Operating Profit/(Loss) (102) (120) (22) - 78% EBITDA Margin -3% -5% 6% Operating Margin -14% -14% -3% i-CABLE Communications Limited � Higher recurrent revenue mainly attributable to increase in higher yield subscriptions � Advertising revenue remained strong, attributed mainly to a strong economy, attractive programming across platforms & more effective marketing 16
Internet & Multimedia 2010 2011 HK$M 1H 2H 1H vs 1H10 Turnover 231 201 167 - 28% Opex before dep � n (133) (116) (98) - 26% EBITDA 98 86 70 - 29% Depreciation (44) (44) (39) - 10% Operating Profit 55 42 30 - 44% EBITDA Margin 43% 43% 42% Operating Margin 24% 21% 18% i-CABLE Communications Limited � Price wars lowered turnover & subscribers � Speed up DOCSIS 3.0 rollout to protect subscriber base with service & infrastructure improvements 17
Consolidated Results 2010 2011 HK$M 1H 2H 1H vs 1H10 Turnover 962 1,040 1,051 9% Opex before dep � n (944) (1,053) (983) 4% EBITDA 18 (13) 68 275% Depreciation (126) (127) (117) - 8% Operating Profit/(Loss) (108) (140) (49) - 55% Share of profit less losses of associates (39) (2) - N/A Net interest income & others 1 (2) (2) N/A Loss before taxation (146) (144) (51) - 65% Taxation 1 23 (4) N/A i-CABLE Communications Limited Net Profit/(Loss) (145) (121) (55) - 62% � Net loss position substantially improved & back to positive EBITDA � Broadband competition & high programming costs slowed the return to profitability 18
Operating Expenses 2010 2011 HK$M 1H 2H 1H vs 1H10 Programming 546 728 637 17% Network 119 115 113 - 5% Selling, CS, G&A 250 185 189 - 24% Cost of Sales 29 26 45 53% Sub-total 944 1,053 983 4% Depreciation 126 127 117 - 8% Total 1,070 1,180 1,100 3% i-CABLE Communications Limited � Premier programming costs remained high but attracting high yield subscribers with upselling opportunities 19
Outlook � Investing in & for the future is the Group's long-standing & well-proven strategy. It includes service offerings, customer service as well as infrastructure to enrich customers' experience & satisfaction � Competitive pressure is not expected to ease, we are cautiously optimistic that the renewed growth momentum is solid & will be reflected in financial performance in due course � The free TV landscape is about to undergo revolutionary change with the Government considering three applications for new licences. The imminent introduction of many channels in Hong Kong looks set to pose challenges to both free & pay TV operators, the full implications of which remain to be seen i-CABLE Communications Limited � The Group awaits the award of a Free TV licence to Fantastic Television to enable the Group to tap new revenue, leveraging on its content & infrastructure advantage � Handheld devices are a new agent for drastic change. This development presents both opportunities & threats and the Group is keen to unlock & exploit any possible potential for new market share & business growth 20
i-CABLE Communications Limited HKSE Stock Code: 1097.HK Disclaimer All information and data are provided for information purposes only. All opinions included herein constitute i-CABLE � s judgement as of the date hereof and are subject to change without notice. i-CABLE and its subsidiaries and affiliates hereby disclaim (i) all express, implied, and statutory warranties of any kind to user and/or any third party including warranties as to accuracy, timeliness, completeness, or fitness for any particular purpose; and (ii) any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the information and data contained herein.
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