Transcript Investor Presentation

The TOM Group
Expanding Our Sporting Rights Portfolio
15th August 2002
Addition of ATP Tennis Rights to TOM’s Sports Portfolio
Media &
Entertainment
Publishing
Outdoor
SPORTS
YC Companies
Telecom
VAS
Music &
Entertainment
Online
Internet
Access
Wireless
VAS
Virtual
Network
Operator
Commercial rights
basketball, volleyball
university soccer
women’s soccer
table tennis, golf
gymnastics, bowling
Programming
Philips Sports Report
Nokia Sports Daily News
Special programming
Tennis Management Group
Rights to ATP Tennis
TV programmes (including Salem Open)
JV with China
Sports Industry
2
Part I
About The Transaction
3
About Tennis Management Group

Tennis Management Group is a leading sports marketer in the industry
Event
sponsorship
75%
• Programme syndication
• Sports event consulting
• Promotion & Advertising
25%
Tennis Management Group 2002E Revenue:
HK$46 million
• 46% of i-cable’s HK$100M
in World Cup revenues
• Recurrent annual revenue
4
Perpetual Ownership Of Asia’s Leading Sports Event

The Association of Tennis Professionals (ATP) has granted Tennis
Management Group rights to the Hong Kong ATP Open since 1990

The rights are renewed automatically every year upon payment of an
annual fee (US$25,000 p.a.) and compliance with regulations

Only one ATP right granted in Hong Kong

In discussions with ATP to alternate the tournament between Hong Kong
and Beijing
5
About the Salem Open

One out of only 3 ATP authorised tennis tournaments in Asia that entitle players to
international ranking credits (others in Shanghai and Tokyo)

One of the most profitable international tennis tournaments in Asia

Organised by Tennis Management Group once a year since 1990

Attracts 50-70 international players including 5-8 star players every year:
Michael Chang, Andre Agassi, Pete Sampras, Mark Philippoussis …
2002 Star Players
Marat Safin
World No. 2 & 2000 US Open Champion
Juan Carlos Ferrero
2002 French Open Finalist & 2000 Davis Cup Champion
Alex Corretja
1998 World Championship & 2001 Davis Cup Champion
Carlos Moya
World No. 5 & 1998 French Open Champion
Mark Philippousis
Winner of 9 ATP Singles Titles & Former US Open Finalist
Jan-Michael Gambill
Winner of 2 ATP Singles Titles
Nicolas Lapentti
Former World No. 6
Taylor Dent
ATP Title Winner in 2002
6
Strong Sponsorship Revenue from Long-Term Sponsors
Major Sponsors
Nortel Networks
Loyal sponsor base:

Average years of participation of top 5
sponsors: 6 years
Citizen Watches
Perrier
Jebsen (Blue Girl)
Circle K
Years of Participation (2002)
5-8 years
13%
Fortress
Mercedez Benz
United Airlines
13 years
55%
1-4 years
32%
Contract Term (2002)
1 year
78%
2-3 years
22%
7
Stable Tour Club Membership (TCM) Revenue
Major TCM Customers
BNP Paribas Peregrine
Loyal TCM customer base:

Average years of participation of top 5
TCM customers: 6 years
PCCW
Schindler Lift
Years of Participation (2002)
Hutchison Whampoa
Fuji Xerox
Hong Kong Jockey Club
1-4 years
36%
5+ years
64%
Bank of America
Ernst & Young
JPMorgan
Contract Term (2002)
1 year
39%
2-3 years
61%
8
Additional Revenue from Ticketing & TV Syndication
Ticketing
Stable Attendance with Growth in Recent Years
Attendance
80,000
Attendance at the
matches
60,000
Attendance at the
matches & the
Festival Area
40,000
20,000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
The Festival Area opened
to the public from 1997
TV Programme Syndication

Salem Open and other sports TV programmes are distributed to over 25 TV stations
in China (including TVB, CCTV, Guangdong TV) and worldwide (e.g. Eurosport)

Revenue from the sale of broadcasting rights / resale of commercial airtime
9
A Profitable Business
HK$'M
2001A
2002E
Revenue
41.4
46.4
Gross Profit
19.2
31.2
Gross Margin
46%
67%
Net Profit
15.0
28.0 *
Net Profit Margin
36%
60%
80% confirmed
with contracts
signed
as at Aug 15
* Profit Guarantee
Significant margin increase in 2002 over 2001

Increase in sponsor and TCM customer base

Joint promotions and barter deals with the media reduced A&P expenses by 40%

Reduced player appearance fees – without compromising the number of star players

Re-negotiations with contractors cut event expenses by 34%
10
Highlights of the Transaction
Investment

TOM to acquire a 60% equity interest in Tennis Management Group for HK$101M

All-equity transaction: 18.29M TOM shares issued at $5.51 per share
Warranty

Consideration shares are pledged until the end of 2006 against any possible shortfall of
profits and in the unlikely event that the ATP rights are cancelled
Profit Guarantee


Failing achievement of 2002
guarantee, valuation will be
adjusted accordingly
Any shortfall of cumulative
2003 – 2005 guarantee will
be compensated by dividends
of the vendor
Profit After Tax Guarantee
HK$’M
40
Minimum
10% CAGR
guaranteed
30
20
28.0
30.8
33.9
37.3
10
0
2002
2003
2004
2005
11
Valuation Analysis
Tennis Management Group is the most efficient
company …
US$'M
2001 A
Revenue
International Speedway
Revenue / staff
(US$'000)
Net profit
Profit margin
529
587
88
17%
Sportsworld Media Group
52
156
13
24%
CSS Stellar
33
163
2
7%
Sports Resource Group
14
194
(1)
-7%
5.3
592
Tennis Management Group
1.9
36%
… with the most attractive valuation
P/E
International Speedway
23.6
Sportsworld Media Group
12.7
CSS Stellar
22.0
Sports Resource Group
14.2
Tennis Management Group*
6.0
* Based on 2002 profit guarantee
12
Part II
TOM’s Sports & Entertainment Division
13
Divisional Management
Tennis Management Group
Corporate – Sports & Entertainment Team
COO
Michelle Leung
Lincoln Venancio
Founder & Managing Director
Finance Director
Quincy Tang
• Former Olympic team tennis coach
GM - BD
Michael Ng
• 16 years of experience in organising
500+ sports events, including tennis,
golf, basketball, table tennis,
volleyball, etc., in Greater China,
Japan, Korea, Southeast Asia, the US,
Brazil, Spain …
GM – Corp Dev
Anthony Tse
PRC Operation Center
Anna Pang
Senior Advisor
Tan Zhi
General Manager
• 10 years of experience in organising
and marketing 200+ sports events;
and in sports TV production and
programme syndication
Tennis Mgt Group
Lincoln Venancio /
Anna Pang
YC Companies
Ben Li /
Sarah Fung
Hong Xiang
Zhang Bao Cheng
14
Growth Of YC Companies Under TOM’s Management
YC Companies Revenue Trend
HK$’M 100
• Grew advertiser base by
10% since acquisition
• Developed new cosponsorship packages to
monetise existing rights
90
80
70
TOM
acquires YC
60
50
40
30
20
10
0
2000 Q4
2001 Q1
Rights
Portfolio
Volleyball
University Soccer
Table Tennis
Bowling
Major
Cross Media
Events
Philips InterUniversity
Football Game
2001 Q2
2001 Q3
Gymnastics
KCRC Chinese
Gymnastic Gold
Medallists Show
2001 Q4
2002 Q1
2002 Q2
2002 Q3
Tennis
Golf
Women’s Soccer
Basketball
World Cup
Q1 is historically the weakest quarter due to advertising seasonality
15
Higher Margins for the Sports Division
Net Profit Margin Analysis
70%
60%
60%
50%
36%
40%
30%
13%
20%
9%
10%
15%
7%
7%
0%
YC Companies
Tennis
Management
Group
2001A
Combined
YC Companies
Tennis
Management
Group
Combined
Avg of Int'l
Sports Marketing
Co's
2002E
International sports marketing companies include World Wrestling Entertainment, International Speedway, Sportsworld Media Group,
CSS Stellar, Sports Resource Group, Sport Entertainment Media and Proactive Sports Group
16
Synergies With TOM
Sports & Entertainment
Division
YC Companies
China Sports
Industry JV
Tennis Management
Group
• Sports consultancy
• Athlete representation
Hong Xiang
Audio Video
Production & distribution of
sports programming
• Launch an alternate ATP Open in Beijing
• Cross-leverage client base
• Expand sports TV programme syndication
business – new programmes and new
distribution channels
17