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ii--CABLE Communications LimitedCABLE Communications Limited
2014 Final Results26 February 2015
Results Highlights
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• Weaker local consumption depressed demand, while intense competition
& product substitution increased supply
• They combined to put significant pressure on both subscription & airtime
sales revenue
• TV customer base contraction continued on weaker sales in a shrinking
market despite signs of stabilization towards the end of the year
• Broadband reported minor growth in revenue & operating margin
• It has become more necessary than ever to invest prudently in
programming & other initiatives to prepare for challenging times ahead
• Past operating losses have weakened our financial position. To sustain
this investment, we will evaluate funding options from internal resources,
external debt as well as fresh equity
Subscription Services
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TV Services
• Customer base contraction continued on weaker sales in a shrinking
market despite signs of stabilization towards the end of the year
• The contraction of high yield segment slowed down
• Challenges remained fierce as more free content, available both legally
& illegally & enabled by technology, continued to fundamentally change
viewing behavior & customer expectation
Subscription Services
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TV Services
• Our multiple HD content offers enhanced viewing experience
• We continued to devote significant investment to upgrade our HD News
Centre & broadcasting facilities to bring a new look to our customers in
the near future
• Weaker local consumption depressed demand, leading to lower
subscription & advertising income
• Lower programming & subscriber acquisition cost partly offset by
higher network related cost & cost of sales
TV Services
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2013 2014
HK$M FY 1H 2H FY % chg.
Turnover 1,546 648 618 1,266 -18%
Opex before dep’n (1,421) (577) (655) (1,232) -13%
EBITDA 125 71 (37) 34 -73%
Depreciation (139) (68) (68) (136) -3%
Operating Profit / (Loss) (14) 3 (105) (101) 609%
EBITDA Margin 8% 11% -6% 3%
Operating Margin -1% 1% -17% -8%
2014
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Programming
• Our unique local programming helped us to compete in an increasingly
crowded marketplace
• We are proud of being the most watched pay TV platform over the past
21 years
• The creativity & uniqueness of our programming is a strong asset to
uphold our leading position in the local pay TV scene
• We will continue to wisely invest in local programming
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Programming
News
• Our news team had been working full
steam to cover the political reform &
Occupy Central protests, providing up
to the minute updates of every turn of
the events while maintaining a fair &
balanced editorial stance
• Preparations are underway in earnest
to upgrade our news production &
broadcast to HD capabilities, taking
our news services to a whole new
level & boosting the sales potential of
our news programming both as
packaged & standalone products
Programming
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Sports
• We renewed UEFA Champions League through to 2018 & strengthened
our line-up with exclusive rights to the qualifiers, playoffs & friendlies of
the UEFA European Championship 2016 & 2018 FIFA World Cup
• Other sports brought to our viewers included tennis, table tennis,
swimming, badminton, basketball & volleyball as well as world class
cycling
• The region's most coveted sports
event, the 2014 Incheon Asian Games
was held in September & October,
with close to 140 hours of live
broadcast over 16 days through our
24-hour, dedicated Asian Games
channel
• We were the host Broadcaster &
Official media partner of the Hong
Kong International Track Cup &
broadcasted live the 1st & 2nd event
in January & November 2014
Programming
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Sports
Programming
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Entertainment
• Internationally sought-after channels such as Comedy Central, Sony TV
& beTV were added to our Pay TV platform to enrich our offers of
premium entertainment programming
• Also introduced was the HD version of AXN previously in SD only
• We would continue to dedicate ample resources to local & acquired
productions to keep our customers well entertained
0
100
200
300
400
500
600
700
800
900
1,000
1,100
50%
27%
15%
7%
0%
10%
20%
30%
40%
50%
60%
HKC Now TV TVBNV bbTV
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Viewership
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• As the most watched Pay TV service in Hong Kong, our movie &
entertainment platforms significantly outperformed our competitors
during the year
Source: Nielsen
All Individuals aged 4+
All Day All Time
57%
25%
17%
7%
CABLE TV Now TV* TVBNV^ bbTV
Viewing Share Among Pay TV Operators
* Excluded 8 TVBNV channels via Now TV platform in top 50 channel list only
^ Included 8 TVBNV channels via Now TV platform in top 50 channel list only
CABLE TV Now TV TVBNV bbTV
1,012
735
317
148
TV Services Watched Past 7 Days
Source: 2014 Nielsen Media Index (Jul 2013 – Jun 2014)
Weighted by population
Aged 12-64 (‘000)
51%
25%
16%
2%
FY13 FY14
• A new "i-CABLE.com" application for
mobile devices replaced its older, free-
for-all version & incorporated a previously
subscriber-only app called "CABLE TV on
Mobile”
• The new app provides both pay & free
online programming & related information
on 1 single platform under our new multi-
view strategy to bring subscribers a better
mobile viewing experience & provide
prospective customers with a rich portal
to sample our services
• This new app drew a good hit rate & also
advertising income
i-CABLE.com
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Customers
1,002,0001,036,000
186,000194,000
110,000113,000
December 2014June 2014
Television
Broadband
Telephony
Subscription Services
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Internet & MultimediaInternet & Multimedia
• Broadband reported modest growth in revenue & operating margin,
mostly from the continuous growth in our mid-range price plans
� a 200 Mbps plan to target the mid-range segment of the market
� these affordably priced, mid-range products with a strong price-
performance ratio would stand to benefit from market changes
• The Group continued to invest in service & network upgrades to enhance
& optimize network performance to bring customers better, faster & more
reliable broadband services
• The expanded network capacity & service quality will facilitate customer
retention & acquisition, as well as upselling opportunities
2013 2014
HK$M FY 1H 2H FY % chg.
Turnover 348 180 184 365 5%
Opex before dep’n (223) (107) (102) (209) - 6%
EBITDA 125 73 83 156 25%
Depreciation (92) (45) (44) (89) - 3%
Operating Profit 33 29 39 67 102%
EBITDA Margin 36% 41% 45% 43%
Operating Margin 10% 16% 21% 19%
2014
Internet & Multimedia
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• Minor growth in revenue & operating margin, mostly from upselling
subscribers to mid-range price plans
• EBITDA improved by 25% compared to 2013
Consolidated Results
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2013 2014
HK$M FY 1H 2H FY % chg.
Turnover 1,932 843 823 1,666 - 14%
Opex before dep’n (1,782) (747) (831) (1,578) - 11%
EBITDA 149 95 (7) 88 - 41%
Depreciation (237) (113) (113) (227) - 5%
Operating Loss (88) (18) (121) (139) 58%
Finance costs & others (2) (0) (0) (1) - 76%
Loss before taxation (90) (18) (121) (139) 55%
Taxation (3) (5) 5 (0) - 93%
Net Loss (93) (23) (116) (139) 50%
Capex 149 81 107 188 26%
2014
• Weaker local consumption, intense competition & product substitution
put significant pressure on both subscription & airtime sales revenue
• Escalating cost, especially programming rights fee continued to erode
our margin
• Decrease in premium sports programming costs were offset by other
rights fee
• Continued to streamline productivity efficiency on each level
Operating Expenses
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2013 2014
HK$M FY FY % chg.
Programming 1,088 925 - 15%
Network 220 221 0%
Selling, CS, G&A 372 334 - 10%
Cost of Sales 103 99 - 5%
Sub-total 1,782 1,578 - 11%
Depreciation 237 227 - 5%
Total 2,020 1,804 - 11%
• Sundream Motion Pictures has
developed into a full-fledged film
business & continued to bring the
best either by acquisition or
production
• Award winning titles: -
� Big Eyes “大眼睛奇緣大眼睛奇緣大眼睛奇緣大眼睛奇緣”- 3 Golden Globe Award nominations & won the “Best Actress” Award
� St. Vincent “ 聖瘟神正傳聖瘟神正傳聖瘟神正傳聖瘟神正傳 ” - 2 Golden Globe Award nominations
� SELMA “馬丁馬丁馬丁馬丁‧‧‧‧路德路德路德路德‧‧‧‧金金金金::::夢想之夢想之夢想之夢想之路路路路” – 2 Oscars & 4 Golden Globe Award nominations, both won the “Best Original Song”
Sundream Motion Pictures
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Fantastic TV
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• It has been over one year since the Government's in-principle approval
to grant Fantastic Television Limited a free TV licence
• Despite using our best efforts to negotiate with the Communications
Authority (“CA”) over the draft licence, there is still inertia in the CA’s
response on a regulatory regime greatly favouring the incumbents in
many ways
• A pro-competition playing field is a pre-requisite for a healthy free TV
industry to prosper with new licensees. We will bear this in mind when
negotiating the free TV licence
Outlook
• Faced with fierce competition, retooling for our business is the most
critical mission
• The Group endeavours to take its service to a different level to attain
customer satisfaction & strengthen its marketing to drive revenue
• Our sales, marketing & customer service teams have been working on
new initiatives, including pricing strategy, customer segmentation &
service image to enhance brand & product attributes
• Enhancement of network infrastructure & the introduction of a new
conditional access system is our other focus. The network upgrades will
uplift our broadband services to cover a bigger number of homes. The
introduction of the new conditional access system will enrich our
customer viewing experience
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i-CABLE Communications LimitedHKSE 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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