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.