VGI Global Media Plc.vgi.listedcompany.com/misc/PRESN/20120903-VGI-roadShow.pdf · Plc. since 2006...

VGI Global Media Plc.

VGI Global Media Plc.

Management Roadshow Presentation August 2012

http://www.bigc.co.th/th/

https://vip.watsons.co.th/web/Home.do

Agenda

Section 1 Company Overview

Section 2 Business Overview

Section 3 Financial Performance

Section 4 A New Era of Performance

Section 5 Investment Highlights

Section 6 Offering Summary and Indicative Timetable

Appendix Other Information

Kong Chi Keung (Director)

Keeree Kanjanapas (Chairman)

VGI Board of Directors

Kavin Kanjanapas (Director and Chairman of Executive Committee) Surapong Laoha-Unya (Director)

Marut Arthakaivalvatee (Director and Chief Executive Officer)

Chan Kin Tak (Director & Chief Operating Officer)

Assoc.Prof.Jaruporn Viyanant (Independent Director and Chairman of Audit Committee)

Maneeporn Siriwatanawong (Independent Director and Audit Committee)

Mana Jantanayingyong (Independent Director and Audit Committee)

VGI Board of Directors

Section 1 : Company Overview

Over 10 years of commitment as a role of director and management. He is one of the key persons who has steered the performance of VGI during the last decade

His experience as Chief Operating Officer of Bangkok Mass Transit System Plc. since 2006 provides VGI with insights to BTS related business

Held various well-respected directorship positions in various

government-related organizations such as the Bank of Thailand, Office of the Prime Minister, the Securities and Exchange Commission, and the Stock Exchange of Thailand, etc.

More than 35 years in the advertising & media industry with experience in multinational and domestic companies. He has worked with leading multinational and domestic companies, namely, McCann-Erickson Thailand, Oglivy&Mather (Thailand), and Grammy Entertainment

Extensive experiences in the field of tax audit with the Revenue Department and Internal Auditor with the Bank of Ayudhya Plc.

Experiences in the retail business with Watsons in Thailand and Hong Kong Held various management position in international media agencies such

as Executive Director of Group M, Managing Director of Mediaedge: CIA, and management of McCann-Erickson Thailand

One of the most successful business person in Thailand with experiences in various industries. Khun Keeree is the one who introduced the first sky train network to Thailand. He brings along valuable business experiences while provides key strategic directions to VGI

More than 10 years of involvement with VGI as the Director

VGI Management

1. Marut Arthakaivalvatee 2. Chan Kin Tak

5. Suparanan Tanviruch

3. Oranuch Rujirawona

6. Penjun Tangjaruwatanachai 4. Chavin Kalayanamitr

1. Marut Arthakaivalvatee (Director & Chief Executive Officer)

More than 35 years in the advertising & media industry with experience in multinational and domestic companies. He has worked with leading multinational and domestic companies, namely, McCann-Erickson Thailand, Oglivy&Mather (Thailand), and Grammy Entertainment

3. Oranuch Rujirawona (Chief Marketing Officer)

Over 25 years of experience in the sales and marketing position in the media sector. Prior to joining VGI 13 years ago, Khun Oranuch has spent 12 years at Grammy

6. Penjun Tangjaruwatanachai (Chief of Legal)

4. Chavin Kalayanamitr (Chief Technology Officer)

Expertise in the legal field with specialization in commercial contractual agreements

Over 25 years of experiences in media technologies related business both in the USA and Thailand. Khun Chavin is with VGI for 13 years

5. Suparanan Tanviruch (Chief Financial Officer)

Over 20 years of experiences in the field of financial in various listed Companies, namely Intouch, Thaicom, ITV and Siam Kraft (SCG group)

2. Chan Kin Tak (Director & Chief Operating Officer)

Experiences in the retail business with Watsons in Thailand and Hong Kong


Shareholding Structure

VGI Current Shareholders Group Shareholding Structure

Shareholders No. of shares %

1) Bangkok Mass Transit Plc. 273,999,980 99.99

2) Mr. Keeree Kanjanapas 10 0.01

3) Mr. Surapong Laoha-Unya 10 0.01

Registered Capital: THB 400.0 mn Current Paid-up Capital: THB 274.0 mn Par value of THB 1.0 per share

Existing Shareholders (as at 30 June 2012)

Kanjanapas Family

BTSG’s Minorities

BTSC’s Minorities

49.2% 50.8%

96.4%

3.6%

100.0%

Note: BTSG = BTS Group Holdings Plc. BTSC = Bangkok Mass Transit Plc.

As at 30 June 2012

BTSC

BTSG


VGI Group Structure

VGI Global Media Plc. (“VGI”) Provide advertising media service and commercial

space in BTS, Modern Trade and office buildings

VGI Advertising Media Co., Ltd. (“VGI Ad”) Provide advertising media in Tesco Lotus Registered & Paid up capital: THB 10.0 mn

888 Media Co., Ltd. (“888 Media”) Provides advertising media in Non-Sales Floor of

Big C and advertisement media in Watsons Registered & Paid up capital: THB 20.0 mn

999 Media Co., Ltd. (“999 Media”) Provide point of purchase radio in Modern Trade Registered & Paid up capital: THB 7.50 mn

Point of View (POV) Media Group Co., Ltd. (“POV”) Provide advertising media in office buildings Registered & Paid up capital: THB 40.0 mn

VGI Advertising China Co., Ltd. (“VGI Ad China”) Provide advertising media through point of

purchase radio in CP Lotus China Registered & Paid up capital: USD 1.40 mn (THB

44.4 mn)

VGI Multitech International Co., Ltd. (“VGI Multitech”) Provide rental digital screens to subsidiaries

within VGI Group Registered & Paid up capital: THB 22.5 mn

Note: - Company registered in Thailand Company registered in the People Republic of China

- All subsidiaries are wholly owned by VGI


1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009/10 2010/11 2011/12

Key Milestones


1999

Granted initial “License to Manage Marketing Services Agreement” from BTSC

Exclusive license to manage the advertising spaces and merchandising areas of 23 stations and all trains for a period of 10 years

2003

Granted initial “Advertisement Display Concession Agreement” from Watsons

2010

VGI set up VGI Ad China 2005

Granted initial “Advertisement Display Concession Agreement” from Big C

2009

Granted “Advertisement Display Concession Agreement” from Carrefour

BTSC becomes major shareholder of VGI

VGI acquired POV 2012

Amended “License to Manage Marketing Services Agreement” with BTSC

2004

Granted initial “Advertisement Display Concession Agreement” from Tesco Lotus


http://www.bigc.co.th/th/

Agenda








Lifestyle Media Network

VISION “To be the Leader of innovative lifestyle

media networks and solution”

MISSION “To provide the best value with highest

impact lifestyle media networks and solution”

• The network that attract the consumers who have out going

• Time spent out of home 10 hours/day

• Time spent on public transportation more than 107.5 minutes/day

• Third destination : Hypermarket

lifestyle at the high traffic premises

Section 2 : Business Overview

470

1,640

2,603

4,272

5,708

5,928

7,224

14,558

62,238

Internet

In-Store

Mass Transit

Outdoor

Magazines

Radio

Cinema

Newspapers

TV

Unit : THB mn

Advertising Media Industry Overview

Thai media market value in 2011

TV 59.48%

Radio 5.7% Newspapers

13.91%

Magazines 5.5%

Cinema 6.9%

Outdoor 4.1%

Mass Transit 2.5% In-Store 1.6% Internet 0.5%

Calculated VGI Income and expenditure after deducting standard average discount by 40% and 45% respectively

Historical Thai Ad expenditures (THB mn)

Source : The Nielsen Company (Thailand) Limited

Thai media market share in 2011

In-Store Media

46.4%

Mass Transit Media

20.4%

CAGR Overall Media

2.9%

Dominant market share

61.0% of Mass Transit media segment

66.0% of In- Store media segment

Total market value of advertisement industry is

THB 104,641 mn

85,602 89,734 92,033

90,122 90,341 101,011

104,641

708 994 956 1,372

1,764 2,188

2,603

114 314 570 826 819 1,121

1,640

-

20,000

40,000

60,000

80,000

100,000

-

1,000

2,000

3,000

4,000

5,000

6,000

2005 2006 2007 2008 2009 2010 2011

Advertising Industry Mass Transit Media In-Store Media

THB mn THB mn


VGI commands a majority market share

Dominant Player in Mass Transit Media


• Reach ≈ 700,000 viewers/weekday, one of the highest viewer exposure in out-of-home sector • Long-term exclusive advertising and retail space rights

Advertising & Merchandising area on BTS SkyTrain Network

Digital Media

998 LCD screens in-train and on-station, airing from 6:00 - 24:00

Static Media Merchandising Spaces

6,000 sqm for 464 shops

527 kiosks in 23 stations

27,000 sqm. Advertising area

80

918

47 Train wraps

Plasma screens

In-trains LCD screens

As of 30 June 2012

> 6,000 displays inside and outside of the trains, at station and platform

Advertising Media in BTS Skytrain System

Multimedia Static

Digital Screen on platforms

Digital Screen inside the train

Train Body Wrap

In-Train Media

BTS Platforms BTS Skytrain

Conventional

Unconventional

Standee Station Display

Balustrade Staircase Side Beam Pier Head

Platform Truss Platform Balustrade Escalator Graphic

Banner Standard Above the Seat

Bulkhead Wallpaper


Dominant Player in In-Store Media

>1,600 Modern Trade

branches nationwide

Leverage on expertise accumulated from

operation in Skytrain System

3 - 5 years exclusive rights to

manage certain advertising space with

first right to renew contracts

Given our exclusive rights to manage advertising media in nation’s dominant Modern Trade Operators, VGI is able to reach broad media coverage nationwide

Digital Media

• Digital screens (22 inch to 42 inch screens) installed in high traffic areas to best create attention and impact

• 2,280 screens installed in Tesco Lotus, Big C, and Watsons

Static Media

• Various forms of static media are displayed throughout the mall, Sales Floor and Non-Sales Floor

• Examples are shelf divider, shelf pop-up, chiller ad, and entrance light box

Multimedia

POP Radio (Point of Purchase Radio)

• Exclusive rights for all branches of Tesco Lotus and Big C in Thailand and CP Lotus Shanghai in The Republic of China

• These broadcasts are aired throughout the operating hours of all branches of Tesco Lotus and Big C


Presenter

Presentation Notes

Increase reach of modern trade (10 mn ppl) - -> will put this in roadshow

Advertising Media in Modern Trade

Digital Media Static Media

Food Court Cashier Counter

Health and Beauty Food and Beverage Digital Screen in Watsons

Multimedia

Point Of Purchase Radio: POP Radio

• Exclusive rights to provide POP Radio services for all branches of Tesco Lotus and Big C

POP Media on Sales Floor Area

Shelf Divider Aisle Arch Shelf Frame

Top Gon Chiller Ad Shelf Pop-up

Non-Sales Floor

Entrance Lightbox Trivision Entrance Sensormatic Arch Set


Dominant Player in Office Building

• 452 digital screens installed in elevators of the office building

• These screens aired advertisements from 07:00-19:00 Monday to Friday

Abdulrahim 15 Ocean Tower II 12

Bangkok City Tower 12 Pacific Place 8

Bangna Tower 9 RS Tower 12

Chan Issara I 3 Sathorn Nakorn 10

Chan Issara II 9 Sathorn Thani 10

CP Tower 1 7 Serm-Mit Tower 14

CP Tower 2 6 Shinawatra Tower I 5

CP Tower 3 5 Shinawatra Tower II 5

ESV Tower 4 Shinawatra Tower III 16

Exchange Tower 13 Sindhorn 16

Gypsum Metropolitan 4 Sinothai 6

Harinthorn 7 Software Park 7

Interchange 14 Sorachai 7

Ital Thai 15 Srijulasup 6

JC Kevin 4 S.P. Tower 6

JP Morgan (Bubhajit) 4 Thai Summit 14

K Tower (CMIC Tower) 10 Thanapoom 12

KPN Building 7 Thaiwah 5

Lake Ratchada 14 Tisco 9

Lao Peng Nguan 6 True Tower 1 12

Liberty Square 5 True Tower 2 3

Lumpini Tower 10 TST Tower 5

Maleenont 10 UBC 2 8

Manorom 1 U-Chu-Liang 16

Mercury 8 United Center 17

Ocean Tower I 9

Building Name & Number of Screens

Exclusive rights to manage advertising spaces in a total of 51 office buildings around Bangkok


Broader Reach of Targeted Audiences

Office Building

BTS Sky Train

Tesco Lotus Big C

Watsons


Capture all audience segment nationwide

White collar workers (age 24-45)

CBD Mid to high income

Working people and younger generation (age 15-35)

CBD Middle Income

Women, housewives and family Nationwide Middle to low income

Demographic Geographic Income Level

Source : The Nielsen Company (Thailand) Limited

Business Strategy & Key Success Factors

Business Strategy Key Success Factors

To maintain the dominant position in lifestyle media To put the right advertisement in the right location

• Continuously expand into advertising spaces to be media contact points with ever-changing lifestyle

• Effectively manage the advertising media to best suit the needs of advertisers

• Unique combination of media locations and types • Opportunity to access broad viewer base

• Effective Customers Relationship Management (CRM) system

• Customer-centric approach of servicing

• Increase competitiveness through innovative technology and creativity

• Selecting potential advertisement locations to effectively reach the targeted viewers

• VGI’s media network franchise enables the advertisers to select a customize or broad base location landscape

• Creative and interesting advertisements

• VGI works hand in hand with advertising agencies to create creative media and place it in the right location to response to changing lifestyles of targeted viewers

Business strategy driving growth and maintaining leadership position

90.9% Average sales growth in Modern Trade (2009 – 2011)

13.3% Average sales growth in BTS system (2009 – 2011)


66.0% Market share in In-Store media segment

61.0% Market share in Mass Transit media segment

Modern trade

BTS

Agenda








Revenue and Net Profit

Q1 Revenue and Net Profit (THB mn) Annual Revenue and Net Profit (THB mn)

Section 3 : Financial Performance

42.0% Revenue Growth

61.5% Net Profit Growth

24.2%

72.5%

FY 2010/11 FY 2011/12

36.3% Revenue Growth

99.0% Net Profit Growth

1Q 2012/13

Strong growth of revenue and net profit since inception

(Unit: THB mn) (Unit: THB mn)

47.1%

60.9%

57.0%

66.2%

47.0%

33.6%

37.6%

27.7%

5.9%

5.5%

5.4%

6.2%

1Q2012/13

1Q2011/12

FY 2011/12

FY 2010/11

307.6

292.2

1,143.2

934.4

307.3

161.1

754.1

390.9

38.8

26.1

107.5

86.7

1Q2012/13

1Q2011/12

FY2011/12

FY2010/11

Revenue Breakdown

Revenue Contribution by Business Unit (%)

BTS Modern Trade Office Building and Others


Revenue Comparison by Business Unit (THB mn)

Revenue Growth BTS Modern Trade Office Building and Others*

FY 2011/12 22.3% 92.9% 24.0%

1Q 2012/13 5.3% 90.7% 48.4%

Note: * Includes other income

Gross Profit and EBITDA

Annual Gross Profit and EBITDA (THB mn) Q1 Gross Profit and EBITDA (THB mn)


37.9% Gross Profit Growth 33.3%

FY 2010/11 FY 2011/12 1Q 2012/13 New License Fee

49.4% EBITDA Growth 40.0%

370.8494.5

681.8

251.3 351.9526.0

33.3%35.3% 34.5%

22.1%24.9% 26.2%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0100200300400500600700800900

1,0001,1001,2001,3001,4001,500

FY 2009/10 FY 2010/11 FY 2011/12

Gross Profit EBITDA Gross Profit Margin EBITDA Margin

44.5% Gross Profit Growth 79.2%

25.0% EBITDA Growth 66.2%

(Gross Profit Margin old license fee rate: Gross Profit of THB 245.8 mn )

(EBITDA Margin old license fee rate: EBITDA of 178.9 mn)

1Q 2012/13 Old License Fee

64.2%

74.3%

72.3%

78.1%

26.5%

18.9%

19.7%

12.9%

9.2%

6.8%

8.0%

9.0%

1Q2012/13

1Q2011/12

FY2011/12

FY2010/11

195.7

126.4

492.8

386.0

80.9

32.1

134.4

63.9

28.2

11.6

54.6

44.7

1Q2012/13

1Q2011/12

FY2011/12

FY2010/11

Gross Profit Breakdown

Gross Profit by Business Unit (%)


Gross Profit by Business Unit (THB mn)

Growth (%) BTS Modern Trade Office Building and Others*

FY 2011/12 27.7% 110.4% 22.2%

1Q 2012/13 54.9% 152.0% 142.7%

Note: * Includes other income

BTS Modern Trade Office Building and Others

273.4

274.0

253.2

278.1

471.7

Balance Sheet Composition

Liabilities and Equity Breakdown

Cash

Accounts Receivable

Equipment

Goodwill

Others

Asset Breakdown

31 March 2012

Accounts Payable

Accrued Expenses

Other Liabilities

Capital

RE and Other SE

(Unit: THB mn) (Unit: THB mn)

1,313.9

30 June 2012

1,550.4

31 March 2012 30 June 2012


1,313.9

1,550.4

Key Financial Ratios

Liquidity and Leverage Ratios

Key financial ratios FY 2010/11 FY 2011/12 1Q 2012/13

Liquidity ratios

Collection Period (days) 78.4 77.0 83.2

Days Payable (days) 161.1 123.2 122.1

Cash Cycle (days) (82.7) (46.2) (38.9)

Leverage ratios

Interest Bearing Debts to Equity (times) 0.1 0.0 0.0

Profitability

Key financial ratios FY 2010/11 FY 2011/12 1Q 2012/13

Gross margin 35.3% 34.5% 46.9%

EBITDA margin 24.9% 26.2% 36.4%

EBIT margin 18.7% 21.6% 32.8%

Net Profit Margin 12.2% 13.9% 24.5%

Return on Assets 13.4% 21.3% 44.7%

Return on Equity 39.8% 78.8% 152.2%

1Q 2012/13 key growth factors are:

Growth in BTS Revenue

Growth in Modern Trade Revenue

Working Capital Management

New License Fee Rate

Cash cycle is negative

VGI has no interest bearing debts


Agenda








Agreements with BTSC

“License to Manage Marketing Services Agreement” between VGI & BTSC

Key Terms Previous New (Dated 18 May 2012)

A. Rights

1) Original rights: 23 stations & all BTS trains Advertising spaces in-train & on station Exterior Train Area Merchandising Area

2) Additional areas*

3) First right to renew contract as well as to manage the extended BTS stations

Exclusive rights

Non-exclusive rights

Only first right to renew contract

Unchanged

Exclusive Rights

First right to renew contract as well as to manage the electric train mass transit and/or any type of vehicles and/or any projects that BTSC is granted the rights under reasonable conditions

B. Effective Period Ending 17 May 2012 18 May 2012 – 4 December 2029

C. License Fees 50% of total revenues/year 5% - 20% of total revenues/year (an incremental increase of 5% every 5 years)

E. Platform Screen Doors Project None VGI will joint invest in the Platform Screen Doors with BTSC and has the rights to manage the advertising space on the Platform Screen Doors

Section 4: New Era of Performance

Note: * Additional areas are areas other than Advertising Space, Merchandising Area and Exterior Train Area that BTSC may approve as suitable for use for Advertising Space or as a Merchandising Area

Pro Forma Financial Performance


Concession Payment to BTSC

(Unit: THB mn)

Net Profit and Net Profit Margin

(Unit: THB mn) Net Profit Margin

16.76%

24.46%

17.51%

30.97%

Note: * Actual concession (5% concession rate since 18 May 2012)

Platform Screen Doors

First phase of investment of THB 600 mn, expected to start in October 2012

• The preliminary estimated investment cost of Platform Screen Door Project (first phase) would be THB 600 mn for the first phase of 6 - 9 Stations* within Yr 2013

• Preliminary estimated expenses related to this project (not include

depreciation expense) are approximately 2% – 3% of total investment costs

• Depreciation expenses of the installed Platform Screen Door will be recorded in accordance with the remaining years of the License to Manage Marketing Services Agreement between VGI and BTSC

Note: * - Prioritize first 6 stations include: Siam, Asoke, Sala Daeng, Victory Monument, On Nut, and Phaya thai

- Remaining 3 stations include: Chit Lom, Phrom Phong, and Chong Nonsi


Agenda








1) Unique and Broad Coverage Media Network

Distinctive Media Network

Highly Effective Media Network

Ability to reach well-classified target viewers

High-impact media that fuels viewers’ attentions

Captive media in BTS Sky Train System and Office Buildings (No remote control)

Point of Sales Media in Modern Trades o Final advertising touch point with shoppers just before making decision o Effective in persuading customers in making impulse purchase

Ridership ≈ 700,000 persons/weekday

Modern Trades reach nationwide

1,191 branches

202 branches

Note: Hypermarket store format of Tesco Lotus and Big C are 290 branches and 127 branches respectively

Section 5: Investment Highlights

Exclusive CBD Media Network in Office Buildings and BTS Sky Train System, the core of mass transit systems in Bangkok and Vicinity

BTS & Office

Building

Modern Trade

Exclusive Nationwide Media Network as the dominant partner with world’s leading Modern Trades, i.e. Tesco Lotus, Big C and Watsons, commanding majority of market shares in Thailand

Right Place, Right Timing, and Right Targeted Viewers 231 branches

>35 mn shoppers/month at Tesco Lotus

51 Office Buildings in Bangkok

Presenter

Presentation Notes

Investment Highlight 1: Products 1.1 สินค้าของบริษัท unique สื่อโฆษณาเพียงสื่อเดียวในระบบรถไฟฟ้า BTS ซึ่งเป็นระบบขนส่งมวลชนหลักในเขต CBD มีผู้ใช้บริการประมาณ 700,000 เที่ยวคน ต่อวัน ได้รับสิทธิโฆษณาในอาคารสำนักงานชั้นนำใจกลางกทม. จำนวน 51 ตึก สามารถครอบคลุมผู้ชมสือทั่วประเทศจากการเป็นคู่ค้าที่สำคัญกับ Modern Trade Partners เช่น Tesco Lotus, Big C, และ Watsons ซึ่งยึดครอง Market share หลักของประเทศไทย 1.2 สื่อโฆษณาของบริษัทมีประสิทธิภาพสูง ผู้ชมสื่อโฆษณาของบริษัทสามารถ segment ได้อย่างชัดเจน เช่น BTS เป็น middle to high income และครอบคลุมทุก segment ทั้งในแง่ demographic, geographic และ income level ลูกค้าเหล่านี้มี high purchasing power เป็นสื่อที่มี high impact เนื่องจากสื่อโฆษณาจะ repeat บ่อยครั้ง ซึ่งเป็นการเน้นย้ำสินค้า เป็น captive media เนื่องจากเป็นสื่อเดียวในรถไฟฟ้าและในลิฟต์โดยสาร โดยผู้ชมไม่สามารถกด remote control เปลี่ยนช่องได้ เป็นสื่อโฆษณา ณ จุดขายสินค้า เป็นการย้ำเตือนครั้งสุดท้ายก่อนผู้บริโภคจะตัดสินใจเลือกซื้อสินค้า (มีประสิทธิภาพในการโน้มน้าวผู้บริภคให้ตัดสินใจซื้อสินค้าเฉียบพลัน) ตามเหตุผลที่ได้กล่าวมาข้างต้น จะเห็นได้ว่าเครือข่ายสื่อโฆษณาของบริษัท เป็นสื่อที่อยู่ถูกสถานที่ ถูกเวลา ถูกกลุ่มเป้าหมาย และเข้าถึงผู้บริโภคฐานกว้าง ครอบคลุมทุกเพศ ทุกวัย ทั่วประเทศ

2) Robust Business Model

Successful Business Strategies

Synergized Media Network

Enhance VGI’s bargaining power with customers through product bundling

Agency-Driven Sales & Marketing

Strategies

Emphasize in dealing with major advertising agencies, who have portfolio of advertisers, in order to better utilize airtime reduce revenue fluctuation

Business growth requires considerably low investment

BTS: requires only initial investment of LCD screen and advertising platform

Modern Trade: Key investments in advertisement are made by customers

Return on fixed assets

≈ 322% in 1Q 2012/13

Operations does not require working capital

Accounts Payable Days >

Accounts Receivable Days

Thus, currently, no reliance on bank loans

Cash cycle of ≈ (39) days in 1Q 2012/13

Highly Creative & Adaptive

Organization

Recognizing, Creating and Adapting to changes of viewers’ lifestyle:

Initiated with media in BTS Sky Train System Modern Trade Office Buildings


Operating growth requires low upfront investment

Value Added & Innovative Media

Not only selling media, but also tailor-made services best suited to each client without compromising VGI’s image

BTS: Exclusive and long-term contractual agreement (≈ 17 years remaining) of the only Mass Transit Network in CBD Modern Trade: Managing large-scale media network in Modern Trade nationwide, comprising media in >1,600 branches, >6,000

billboards and >3,200 digital screens, requires skills and workforce (VGI has >300 staffs throughout Thailand to manage these media network)

High Barrier to Entry

Interest Bearing Debt/Equity of

≈ 0 time in 1Q 2012/13

Presenter

Presentation Notes

Investment Highlight 2: Business Model 2.1 Successful Business Strategies เป็นองค์กรที่ adaptive to change เช่น ตอนแรกเริ่มธุรกิจสื่อโฆษณาในระบบรถไฟฟ้าบีทีเอสตั้งแต่รถไฟฟ้าเปิดให้บริการ จนภายหลังเมื่อ ผู้บริภคเปลี่ยนพฤติกรรมการจับจ่ายใช้สอยที่ห้างค้าปลีกสมัยใหม่ บริษัทก็เข้ามาทำการโฆษณาใน พท. ดังกล่าว บริษัทไม่เพียงแต่ขายสื่อโฆษณา แต่ยังพิจารณาช่องทางการฆาณา รวมถึงรูปแบบการโฆษณาที่เหมาะสมกับลูกค้าแต่ละราย เพื่อให้การโฆษณาดังกล่าวเกิดประสิทธิภาพสูงสุด นอกจากนี้ บริษัทยังทำการขายพ่วงสื่อโฆษณาที่มี เพื่อเป็นการบริหารสื่อโฆษณาให้เกิดประโยชน์สูงสุด เช่นพ่วงการขายสื่อโฆษณาในอาคารสำนักงานไว้กับสื่อโฆษณาในระบบรถไฟฟ้าบีทีเอส และยังทำงานร่วมกับลูกค้า Agency อย่างใกล้ชิด ในการหาทำเลสื่อโฆษณาที่เหมาะสมสำหรับสินค้าแต่ละประเภท ทั้งนี้การ deal กับลูกค้า Agency ซึ่งมีลูกค้าในนมือหลายเจ้า ช่วยลดความผันผวนของรายได้ได้ เนื่องจาก หากลูกค้ารายใดยกเลิกการโฆษณา Agency จะบริหารหาลูกค้าอื่นมาแทน 2.2 การโฆษณาของบริษัทใช้เงินลงทุนที่ค่อนข้างต่ำ โดยจะเห็นได้ว่าอุปกรณ์ ในโมเดิร์นเทรด โดยส่วนใหญ่ลูกค้าเป็นผู้ลงทุน และสำหรับ BTS ก็มีการลงทุนแค่เพืยงจอ LCD และแผ่นป้าย ในตอยเริ่มแรกเท่านั้น 2.3 เนื่องจากบริษัทได้รับ credit term จากเจ้าหนี้การค้าที้สูงกว่า ระยะเวลาที่บริษัทเรียกเก็บเงินจากลูกค้าดังนั้น บริษัทจึงมี operations ที่มี cash flow เป็นบวกและไม่พึ่งพาการกู้ยืมเงินจากสถาบันการเงิน 2.4 บริษัทมี high barrier to entry จากการที่บริษัทได้รับสัมปทานระยะยาวในการโฆษณาในระบบรถไฟฟ้าบีทีเอส สำหรับสื่อโฆษณาใน Modern Trade นั้น ถึงแม้สัญญาที่ได้จะเป็นสัญญาระยะกลาง แต่เป็นการยากที่จะบริหารสื่อโฆษณา ซึ่งกระจายทั่วประเทศ มีสาขากว่า 1600 สาขา มีแผ่นป้ายโฆษณาและจอดิจิตอลเกือบ 10000 ป้าย จำเป็นต้องใช้คนไม่ต่ำกว่า 300 คนทั่วประเทศในการติดตั้ง ดูแลรักษาสื่อดังกล่าว ดังนั้นจึงมี barrier to entry ค่อนข้างสูง

114 307

570

826 819

1,121

1,640

2005 2006 2007 2008 2009 2010 2011

3) Visible Concrete Growth With Exciting Upside Potential


Proven & Secured Source of Revenues

Avg. BTS workdays ridership (‘000 passengers)

• Continuous growth in revenues stream due to increasing ridership in BTS Sky Train System

• 17 years remaining of exclusive rights on BTS Sky Train System with first right to extend

BTS Modern Trade

No. of Hypermarket branches

Note: * No. of Carrefour’s branches are included. Source: TISCO Research

Advertisement spending in Modern Trade (THB mn)

Source: AC Nielsen Company (Thailand)

• Significant increase in advertisement spending in Modern Trade with CAGR of 46.36% (2005 – 2011)

• Exclusive rights in Modern Trade for 3 – 5 years with first right to extend

Source: BTS

227

290320

361397

438413 430 441 447

516

584

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H 2012

2005 2006 2007 2008 2009 2010 2011Tesco Lotus 53 56 65 79 84 90 99Big C* 68 73 80 96 106 105 107

0

20

40

60

80

100

120

Presenter

Presentation Notes

มีรายได้ที่มั่คง BTS เนื่องจากบริษัทได้รับสิทธิจาก BTSC เป็นจำนวน 17 ปี ดังนั้นจึงมีรายได้ที่แน่นอนจากการให้บริการสื่อโฆษณาในระบบรถไฟฟ้าบีทีเอส นอกจากนี้ ในอดีตที่ผ่านมา รายได้จากการให้บริการสื่อโฆษณาในระบบรถไฟฟ้าบีทีเอส เพิ่มขึ้นอย่างต่อเนื่องจากจำนวนผู้ใช้บริการรถไฟฟ้าบีทีเอสเพิ่มขึ้นอย่างต่อเนื่อง Modern Trade บริษัทได้รับสิทธิโฆษณาใน Modern Trade เป็นระยะเวลาประมาณ 3-5 ปี โดยมี First Right to extend แต่ทั้งนี้ เนื่องจากบริษัทมีผลการดำเนินงานที่ดีและสามารถชำระ concession fees ให้ผู้ประกอบการโมเดิร์นเทรดได้ดีและต่อเนื่องมาโดยตลอด บริษัทจึงคาดว่าบริษัทจะสามารถต่ออายุสัญญาเมื่อสัญญาสิ้นสุดลง และจากในอดีต บริษัทก็ได้ต่อสัญญาที่หมดอายุลงมาโดยตลอด นอกจากนี้เนื่องจากสัญญาให้สิทธิที่บริษัทได้รับส่วนใหญ่จะครอบคลุมทุกสาขาที่มีอยู่ในปัจจุบันและที่จะเปิดใหม่ในอนาคต ในอดีตที่ผ่านมาการขยายสาขาของห้างค้าปลีกจึงเกื้อหนุนต่อการเพิ่มขึ้นของรายได้

3) Visible Concrete Growth With Exciting Upside Potential (Con’t)


Source: Office of Transport and Traffic Policy and Planning

1. Increase Price • Lower advertising rate comparable to other players • More eyeballs in BTS, more room to increase price

424 494 576 671 782

911 1,061 1,124 1,190 1,261 1,335 1,414 1,470 1,529 1,590 1,653 1,719 1,808 1,901

1,999

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Excited Upside Potential

Estimated BTS’s Ridership Growth (‘000 passengers / day)

2. Increase Occupancy of advertisement spaces (“same space growth”)

• Ample headroom to increase occupancy rate, particularly in Modern Trade • Anticipated increasing traffics for BTS’s non-prime stations, e.g. Thonglor,

Phra Khanong and Ratchathewi

3. Increase New Advertising Spaces (“new space growth”)

• BTS new fleet of 35 carriages by end of FY 2012 (+25% advertisement space from trains) and 20 carriages by end of 2013 as well as additional fleet of carriages in the future

• Automatic rights for advertisement spaces in new branches from Modern Trade partners

• Increase advertisement network in Office Buildings around Bangkok

4. Continue to capture the ever-changing

lifestyles (“New Opportunity”) • A successful market pioneer in mass transit and modern trade media • VGI will continue its efforts to seize future opportunity to expand the media

coverage along with the dynamic changes in people lifestyles such as online social network

BTS’s current fleet x35 105

x12 48

No. of Carriages No. of Trains

Additional fleet

+35

Total carriages

188

153

By end of FY 2012

By end of 2013

x5 +20 208

Presenter

Presentation Notes

Growth: การเพิ่มราคา: เนื่องจากจำนวนผู้ใช้บริการรถไฟฟ้าเพิ่มขึ้นอย่างต่อเนื่องและคาดว่าจะสูงขึ้นเรื่อยๆในอนาคต ตามการสำรวจของ สนข. ดังที่ได้แสดงไว้ เนื่องจากเส้นทางเดินรถไฟฟ้าของบริษัทผ่านศูนย์กลางธุรกิจของ กทม. (CBD) ทำให้ระบบรถไฟฟ้าได้รับประโยชน์จากระบบขนส่งมวลชนรูปแบบอื่น เช่น BRT และ Airport link เป็นต้น อันเป็นเหตุให้จำนวนผู้ชมสื่อโฆษณาเพิ่มขึ้น และสามารถขึ้นราคาได้ การเพิ่ม occupancy สำหรับพื้นที่ที่มีอยู่: พื้นที่ที่เพิ่มขึ้นจากการแปลี่ยนแปลงสถานีรองเป็นสถานีหลัก การเพิ่มขึ้นของขบวนรถไฟฟ้าจำนวน 35 ตู้ในปี 2012 และ 20 ตู้ในปี 2013 จำนวนสาขาของ โมเดิร์นเทรดที่มากขึ้น การพัฒนาผลิตภัณณฑ์ในอนาคต โดยมุ่งเน้นธุรกิจที่จะสร้าง synergies ให้กับธุรกิจของบริษัทในปัจจุบัน

4) Professionally-run Corporate Enhanced by Corporate Governance


1. Outstanding team of professional management

• VGI is managed by team of highly experienced professionals with strong international and domestic working experience background

• The commitment and efforts of the management team resulted into continuous growth and market dominance

• Committed to attracts and retain qualified management & personnel

2. Emphasizing on corporate governance

• VGI pays serious attention on striving and maintaining for good corporate governance

• Audit Committee members are hands-on in setting up corporate governance policies as well as monitoring internal control system

• VGI benefits from leveraging the experienced and expertise of the Chairman of the Audit Committee who has held various positions in highly respected organizations

Selected experiences of the Audit Committee Members that will enhance the corporate governance of VGI

Director, Financial Institutions Policy Committee (Bank of Thailand)

Member of the Audit Committee, Office of the Prime Minister

Expert Director of Accounting, the Securities and Exchange Commission

Director & Chairman of the Audit Committee, The Stock Exchange of Thailand

Internal Auditor, Bank of Ayudhya Plc.

Tax Auditor Officer, The Revenue Department

Selected relevant experiences of directors and management team in media, advertising & retail businesses

Presenter

Presentation Notes

ผู้บริหารของบริษัทมีประสบการณ์ทั้งในอุตสาหรรมโฆษณาและอุตสาหกรรมที่เกี่ยวข้อง เช่น Olgilvy GMM Grammy, Mccann and ITV ซึ่งจะเสริมสร้างการดำเนินธุรกิของบริษัท อีกทั้งการดำเนินธุรกิจ Professional run ของบริษัทเป็นสาเหตุสำคัญในการ attracts และ retain ผู้ลงสื่อโฆษณา นอกจากนี้บริษัทยังมุ่งเน้น corporate governance เพื่อให้นักลงทุนเกิดความเชื่อมั่น


Transforming Key Strengths into Peerless Financial Results


“High Growth”

“High Margin”

“High Return on Assets & Equity”

“High Cash Flows from Operations ”

Currently, no reliance on bank loans

Financial flexibility for future business expansion

1,137.23

1,412.01

2,004.82

99.90172.37

278.45

2001 2002 2003 2004 2005 2006 2007 2008 2009/10 2010/11 2011/12

Revenue Net Profit

36.3% Revenue Growth 42.0% FY 2011/12 1Q 2012/13

99.0% Net Profit Growth 61.5%

44.7% Return on Assets 21.3% FY 2011/12 1Q 2012/13

152.2% Return on Equity 78.8%

46.9% Gross Profit Margin 34.5% FY 2011/12 1Q 2012/13

36.4% EBITDA Margin 26.2%

24.5% Net Profit Margin 13.9%

Presenter

Presentation Notes

เป็นผลให้ High Growth High Margin High Return on asset and equity High Cash Flows from operation

Agenda








Offering Structure: Pre- and Post- IPO

BTSC

BTSG

VGI IPO

(New shares offered by VGI & Existing shares offered by BTSC)

Details of IPO:

Total of 88 million shares, comprising of 62 million existing shares and 26 million new shares

Kanjanapas Family BTSG’s Minorities Pre-Emptive Rights

BTSC’s Minorities

49.1% 50.9%

96.4% 3.5%

0.1%

100.0%

BTSC

BTSG

VGI

Kanjanapas Family BTSG’s Minorities

BTSC’s Minorities

49.1% 50.9%

96.4% 3.5%

0.1% 70.7%

Public Kanjanapas

Family

25.2% 4.1%

Post-IPO Pre-IPO

Section 6 : Offering Summary and Indicative Timetable

1 2

Preliminary IPO Allocation

BTSC

VGI

IPO 88 million shares

26 million new shares

62 million existing shares

Public

Pre-emptive*

62 million shares

Institutional investors

Retail investors

Patronage

Shareholders of BTSG

Shareholders of BTSC

Kanjanapas Family

BTSG’s Minorities

Remark: * Allocate according to shareholding percentage in BTSC

BTSC’s Minorities

26 million shares

0.9 million shares

25.1 million shares


Potential Subsequent Steps

BTSC

BTSG

VGI

Kanjanapas Family BTSG’s Minorities

BTSC’s Minorities

49.1% 50.9%

96.4% 3.5%

0.1% 51.0%

Public Kanjanapas Family

25.2% 4.1%

19.7%

BTSC may sell 59 million shares of VGI, equivalent to 19.7% of enlarged shares after IPO of VGI to BTSG

Subsequently, BTSG will still hold directly and indirectly 70.7% in VGI

BTSC may sell 19.67% shares of VGI to BTSG 3


Indicative Timetable

Date Key Activities

21 August Analysts’ meeting

29 August Analysts submit draft research reports for TISCO’s review

31 August Issuance of research report

4 September – 2 October Research blackout period

19 September – 25 September Pre-emptive subscription period

28 September – 2 October Public Subscription Period

9 October Indicative first trading day


August 2012

M T W T F S S

1 2 3 4 5

6 7 8 9 10 11 12

13 14 15 16 17 18 19

20 21 22 23 24 25 26

27 28 29 30 31

September 2012

M T W T F S S

1 2

3 4 5 6 7 8 9

10 11 12 13 14 15 16

17 18 19 20 21 22 23

24 25 26 27 28 29 30

October 2012

M T W T F S S

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

Agenda








Agreements with Modern Trade Partners

“Advertisement Display Concession Agreements” with Modern Trade Partners License fees mainly base on percentage of revenue sharing & minimum guarantee

Average terms of 3 – 5 years

Modern Trades Contractual Parties

Types of Media VGI Group Operator

1) Tesco Lotus* VGI Ad Ek-Chai Distribution System Sales Floor, Non-sales Floor, LCD & Radio media

2) Big C VGI Big C Supercenter Sales Floor, Non-sales Floor, LCD & Radio media

3) Big C (previously “Carrefour”)

888 Media

VGI

CenCar

CenCar

Non-sales Floor media

Sales Floor, LCD & Radio media

4) Watsons 888 Media Central Watson Digital media

5) CP Lotus (People Republic of China)

VGI Ad China Shanghai Lotus Supermarket Store

Radio media

Note: * All contracts have first right to renew for another 2 – 5 Years

Appendix: Other Information

Summary of Advertising Media in Modern Trades

Types of Media Tesco Lotus Big C

Watsons Total Large Medium Small Large Medium Small

1) Static Media

# of branches VGI received rights

# of branches of Modern Trade (31/03/12)

# of branches VGI has already installed

All

104

104

All

186

186

250

901

250

All

112

112

All

15

15

All

75

50

-

231

-

1,624

717

2) POP Radio




All

104

104

All

186

186

All

901

901

All

112

112

All

15

15

All

75

75

-

231

-

1,624

1,393

3) Multimedia




31

104

31

-

186

-

-

901

-

All

112

15

All

15

-

All

75

-

All

231

228

1,624

274

Remark: All means existing and upcoming branches of Modern Trades

As of 30 June 2012, the number of branches VGI received rights to manage commercial spaces and the number of branches VGI has already installed advertising media are as follow.

Appendix: Other Information

VGI Global Media Plc.vgi.listedcompany.com/misc/PRESN/20120903-VGI-roadShow.pdf · Plc. since 2006...

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