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2013 Interim Results8 August 2013
i-CABLEii--CABLECABLECommunications Communications LimitedLimited
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• Over-capacity continued but price competition stabilized
• Subscriber & revenue erosion during & subsequent to the period was relatively mild
• Broadband revenue steadied despite slightly smaller customer base
• Due to prudent investment in sports rights, operating costs are expected to decline at a faster rate than revenue decline in thesecond half of 2013 which may improve margin
• Capex was one gear lower
Results Highlights
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Television
• The customer base declined partly due to the expiry of BPL rights. Thanks to a host of programming, marketing & service enhancementinitiatives, efforts to retain customers paid off with attrition rates kept well in check
• Due to prudent investment in sports rights, operating margin is expected to improve in the second half of 2013
Subscription Services
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Television
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• Lower turnover mainly attributable to a decrease in subscriptionrevenue related to BPL as well as lower advertising income
• Subscriber & revenue erosion during & subsequent to the period was relatively mild
2013
HK$M 1H 2H 1H vs 1H12
Turnover 855 901 820 - 4%
Opex before dep’n (836) (951) (827) - 1%
EBITDA 20 (50) (7) n/a
Depreciation (79) (75) (70) - 12%
Operating Loss (59) (125) (76) 29%
EBITDA Margin 2% -6% -1%
Operating Margin -7% -14% -9%
2012
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• Sports continued to feature strongly with exclusive rights to the European, Australian & Japanese leagues & tournaments
• Diversity was never overlooked, bringing viewers a wide range of prestigious international sports events spanning swimming, badminton, basketball, volley ball, darts, bowling, snooker, ice hockey, car racing, dancing, tennis, figure skating & table tennis
Programming
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SportsSports
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Programming
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• Official broadcaster of the 17th Asian Games Incheon 2014
• All media rights with extensive live & archived coverage in multiple formats across media platforms
SportsSports
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• Launched two flagship entertainment channels
�HD FAN. Entertainment Channel高清奇妙娛樂台 (Ch 12 / hd 212)
�HD CABLE Drama Channel高清奇寶劇集台 (Ch 13 / hd 213)
Programming
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EntertainmentEntertainment
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Programming
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• Introduced in-depth weeknight reports, sharing unique perspective of the most topical news & current affairs on the mainland
• Our local journalists not only provided professional coverage of news at home but also made news headlines themselves with their remarkable investigative reports often instantly & widely picked up & quoted by fellow media organisations
Programming
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NewsNews
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50%
27%
15%
7%
0%
10%
20%
30%
40%
50%
60%
HKC Now TV TVBNV bbTV
43%
15%5%
37%
Viewership
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Source: Nielsen HKTAM
CABLE TV individuals aged 4+
Jan – Jun 2013, All Day All Time
• CABLE TV viewership nearly 2X the closest follower
CABLE TVTVB Jade
(Analog+SD+HD)
Source: Nielsen HKTAM
Pay TV viewers aged 4+
Jan – Jun 2013, All Day All Time
50%
27%
15%
7%
CABLE TV Now TV* TVBNV^ bbTV
Other Terrestrial & Satellite TV
Other Pay TV
37% 43%
16%4%
Viewing Share Among Pay TV Operators
TV Share Among CABLE TV 4+ subs
* Excluded 8 TVBNV channels via Now TV platform
^ Included 8 TVBNV channels via Now TV platform
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Customers
1,074,0001,089,000
199,000201,000
120,000126,000
June 2013December 2012
Television
Broadband
Telephony
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Internet & Multimedia
• Our broadband business continued to come under pressure from both wire-line & wireless service providers
• Competition remained intense with over-capacity in the sector, the first half of 2013, however, did not see any harsh price wars
• Whilst the market has been relatively stable, the return to aggressive pricing to fight for market share remains a risk
Subscription Services
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Internet & Multimedia
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• Broadband revenue steadied despite slightly smaller customer base
2013
HK$M 1H 2H 1H vs 1H12
Turnover 169 169 171 1%
Opex before dep’n (111) (110) (112) 1%
EBITDA 58 59 58 0%
Depreciation (46) (46) (46) - 1%
Operating Profit 12 14 13 2%
EBITDA Margin 35% 35% 34%
Operating Margin 7% 8% 7%
2012
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• Released 11 titles in the first half of 2013
Sundream Motion Pictures
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Consolidated Results
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2013
HK$M 1H 2H 1H vs 1H12
Turnover 1,038 1,089 1,009 - 3%
Opex before dep’n (1,010) (1,140) (1,007) 0%
EBITDA 28 (51) 1 - 96%
Depreciation (129) (124) (118) - 8%
Operating Loss (100) (174) (117) 17%
Finance Costs & Others 2 0 (1) n/a
Loss before taxation (99) (174) (118) 20%
Taxation 2 (7) 6 221%
Net Loss (97) (181) (112) 16%
Capex 113 96 78 - 31%
2012
• Margin may improve in the second half of 2013 with our prudent investment in sports rights
• Capex was one gear lower
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Operating Expenses
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• Lower operating costs primarily due to lower sales acquisition cost & network related costs
2013
HK$M 1H 2H 1H vs 1H12
Programming 657 770 662 1%
Network 114 108 109 - 5%
Selling, CS, G&A 186 203 186 0%
Cost of Sales 52 58 51 - 2%
Sub-total 1,010 1,140 1,007 0%
Depreciation 129 124 118 - 8%
Total 1,138 1,264 1,126 - 1%
2012
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• In addition to the usual constraints of saturating markets, the business
climate looks set to be even more challenging & competitive pressure
stronger in the next few years
• 3½ years have gone by since Group affiliate Fantastic Television Limited
submitted an application for a free domestic TV programme service
licence. Whilst it remains to be seen whether the Government will live up
to its promise to open up the free TV market, the TV landscape has
already seen significant changes
• The overwhelmingly dominant TV player has become more aggressive
than ever, from acquiring premier sports rights, to poaching programming,
ideas & talents, and to setting up dedicated sports channels on its pay
platform, making full use of “due process” to steadfastly challenge the
Government’s decision to open up the free TV market
• The overall operating environment is not expected to improve in the near
term. However, operating costs are expected to decline in the second
half of 2013 due to factors such as stringent cost control, prudent
investments & the decrease in sports programming costs 17
Outlook
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i-CABLE Communications LimitedHKSE Stock Code: 1097.HK
Disclaimer
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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,
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