Eros Intl Custom Template

Eros International Plc
Corporate Presentation
Jefferies Global TMT Conference
May 2014
A Leading Global Indian Film Entertainment Company
Leading co-producer, acquirer and distributor of Indian language films globally

2000+ films and digital rights to an additional 700 films

230 new releases over the last 3 years

Subtitled / dubbed content in 25+ different languages

Average 3 of the top 10 releases in India each year (2010 –2012)(1)

Multi-channel global distribution in 50+ countries

Digital distribution platforms: Eros Now and HBO Asia
Strong Financial Track Record
($ in millions)
Revenue
Diversified Revenue Mix – 3Q FY2014(2)
Adj. EBITDA(3)
Channel
Geography
Digital
14.8%
$215.3
$56.3
Theatrical
47.4%
$32.9
ROW
37.2%
$66.4
FY2007
(1)
(2)
(3)
FY2013
FY2007
FY2013
TV
37.8%
US
3.7%
India
49.5%
EU
9.5%
3 of the Top 10 grossing Hindi films in 2010 (Source: BoxOfficeIndia.com); 4 of the Top 10 Hindi films in 2011 (Source: BoxOfficeIndia.com); 2 of the Top 10 Hindi films in 2012 (Source:
bollywoodhungama.com)
Quarter ended Dec 31 2013
Adjusted EBITDA is defined as EBITDA adjusted for impairments of available-for-sale financial assets, profit/loss on held for trading liabilities (including profit/loss on derivatives) and share based
payments
1
Pioneer and Innovator in Indian Film Entertainment
Began acquiring
international IP
rights for Indian
content
1977
Early adopter of
DVD distribution
1981
Established global
distribution network
outside India
1982 – 1998
First to adopt
vertically
integrated
model
1999
Launch of first
digital Bollywood
TV network(1)
2006
Launch of
Asia
channel
2007 – 2008
SVOD
First Indian media
company to list on agreement with
Comcast
AIM
Ayngaran
Tamil
acquisition
(1)
(2)
Digital distribution
channels:
2010 – 2013
Listed EIML
on the
and
Nov ’13 (2)
Eros lists on
Eros currently has a 24% stake in B4U
Eros delisted from LSE AIM market and commenced trading its ‘A’ ordinary shares on the NYSE
2
Key Investment Highlights
(1)

Global Leader in Indian Filmed Entertainment with Leading Box Office Market Share (1)

Largest Indian Content Library of Films & Music with 2,000+ Films

Unparalleled Global Distribution Network

High Growth Indian Domestic Media & Entertainment Market with Structural Upside

Portfolio Approach & Pre-Sales Strategy Diversify and Accelerate Cash Flow

New and Library Content Distributed through New Digital Platforms, Eros Now and HBO Asia
3 of the Top 10 grossing Hindi films in 2010 (Source: BoxOfficeIndia.com); 4 of the Top 10 Hindi films in 2011 (Source: BoxOfficeIndia.com); 2 of the Top 10 Hindi films in 2012 (Source:
bollywoodhungama.com) 4 out of top 10 Hindi releases in first 9 months 2014.
3
Established Brand with Leading Market Share
Average 3 of the Top 10 Releases in India Each Year (2010 –2012)(1)
U.S. (5)
Fox
Viva
4%
8%
Reliance
9%
$23.3m(2)
$25.7m(3)
Eros
43%
$14.5m(3)
Yash
Raj
17%
Leading market
share
UTV
20%
$16.5m(2)
$24.5m(3)
$20.4m(4)
U.K. (5)
Fox
RJ 3%
4%
$8.8m(2)
$19.3m(3)
$19.8m(4)
(1)
(2)
(3)
(4)
(5)
Eros
40%
Reliance
6%
Yash
Raj
19%
2010 – 2012 Box Office
Other
13%
UTV
15%
No. 1 over the
last 30 years
2012 Share(5)
3 of the Top 10 grossing Hindi films in 2010 (Source: BoxOfficeIndia.com); 4 of the Top 10 Hindi films in 2011 (Source: BoxOfficeIndia.com); 2 of the Top 10 Hindi films in 2012 (Source:
bollywoodhungama.com)
Rupees converted to USD at 45.72 using average exchange rate in 2010 (Source: BoxOfficeIndia.com)
Rupees converted to USD at 46.66 using average exchange rate in 2011 (Source: BoxOfficeIndia.com)
Rupees converted to USD at 53.43 using average exchange rate in 2012 (Source: BoxOfficeIndia.com)
Market share data based on gross box office collections (Source: Rentrak)
4
India: High Growth with Attractive Fundamentals
One of the Fastest Growing Economies(1)
Projected GDP growth CAGR (2012 – 2017E)
6.4%
6.0%
2.9%
China
India
Brazil
A Young Nation…(2)
2.4%
2.1%
US
UK
...with Attractive Market Fundamentals
Median age (years)
40
37
Growing Middle Class
36
30
27
Increasing Discretionary
Income
UK
(1)
(2)
US
China
Brazil
India
Source: Deutsche Bank Nov ‘13: Business Monitor International
Source: Deutsche Bank Nov ‘13: CIA World Factbook
5
Media & Entertainment Market Projected to Grow at 15%
‘12 – ’17
CAGR
($ in billions)
$27
$23
$13
$2
$20
$4
$17
$3
$3
$15
$3
$2
$2
$2
19.7%
$3
11.5%
$5
8.7%
$14
18.0%
$5
$5
$2
$2
$4
$4
$4
$4
$12
$6
$7
2012A
2013E
2014E
Television
(1)
$10
$8
2015E
Print
Film
2016E
2017E
Other
Source: FICCI-KPMG Report 2013; Rupees converted to USD at 62.58 “Other” includes radio, music, out of home, animation & VFX, gaming and digital advertising segments
6
Expanding Theatrical Market Should Benefit Eros
India is a Highly Underpenetrated Market…(1)
117
Theater screens per million population
…Fueling Growth in the Indian Film Industry(2)
($ in billions)
Indian film industry revenue outlook
77
$3
45
30
12
US
France
Germany
UK
India
…with Increasing Multiplexes & Ticket Prices(2)
$2
Number of films with box office revenue > 1bn Rs (~$15mm)
9
5
2
1
2009A
(1)
(2)
2010A
2011A
2012A
2012A
2017E
Source: “India Entertainment and Media Outlook 2011,” PWC
Source: FICCI-KPMG Report 2013; Rupees converted to USD at 62.58
7
Indian TV Market is Underpenetrated With Strong Potential
Current Low Television Household Penetration…(1)
As of 2011
98%
…is Expected to Fuel Growth in the Indian TV Industry(2)
($ in billions)
$14
90%
61%
$10
$6
$4
$4
$2
China
(in millions)
Brazil
2012A
Advertisement revenue
India
2017E
Subscription revenue
Willingness to Pay for Content…(2)
...is Supported by Favorable Viewing Preferences(2)
Indian Pay-TV subscriber base
Percentage of viewing time spent
182
42%
130
75+%
24%
10%
2012A
(1)
(2)
2017E
Hindi GEC +
Movies
Regional
Channels
Kids + Music
6%
News
Source: FICCI-KPMG Report 2012
Source: FICCI-KPMG Report 2013; Rupees converted to USD at 62.58
8
Eros’ International Market Opportunity
Attractive and Sizable International Market Across 50+ Countries(1)
193M
Select target
growth markets
Pakistan’s
population(2)


1.2B

India’s
population(2)


Established distribution markets
Developing + recently opened markets


Global Opportunity


(1)
(2)
Global demand for
Bollywood content
Large South Asian diaspora
Additional Monetization
Opportunities
Expanding International Markets



Dubbed content in 25+ languages
Significant demand in Europe and Southeast Asia
Arrangement with local distributors to target
theatrical, TV and DVD releases
Germany
Russia
China
Japan
Korea
Taiwan
Indonesia

Technology penetration and
proliferation of distribution
channels
Source: The Migration and Remittances Factbook 2011
Source: CIA World Factbook
9
Successful Multi-Platform Content Monetization Model
New Release Content(1)


Library Content
Co-production: 20 year exclusive distribution
rights + perpetual copyrights
Acquisition: 5 – 20 year rights
Theatrical


TV Syndication
Digital
SVOD / VOD
2,000+ films and digital rights to an
additional 700 films
Attractive multi-platform rights
Music /
Publishing
Ancillary

In-flight
entertainment

DVDs
Radio
Hotels


Note:
(1)
Ringtones

Companies shown above are a selection of the Company’s relationships
Typical terms for new release content
10
Content Strategy Mitigates Risk and Maximizes Cash Flow
Disciplined
Greenlighting
Process
Digital
Distribution
Channels:
HBO Asia,
Eros Now
Content Bundling
Maximizes
Exploitation
Low P&A Costs
(1)
Co-Production &
Acquisitions
Portfolio
Approach by Film
Budget, Genre &
Language
Maximize Cash Flows &
Library Value
Pre-Sale Focus:
25% – 77% of
Hindi Film and
>100% of Tamil
Direct Production
Costs(1)
For major films released in fiscal 2013. Major (“high budget”) films refer to Hindi films with direct production costs in excess of $8.5 million and Tamil films with direct production costs in excess of
$7.0 million
11
Maximize Monetization Through the Release Windows




Eros generates revenues across all phases of the film release cycle
Indian theatrical and DVD release windows are short
Limited DVD market exposure
Stable sources of revenue including HBO Asia collaboration and Eros Now
Pre-Sales Window (Theatrical, TV, Music)
Digital Exploitation
DTH
Pre-Prod /
Planning /
Casting /
Scripting
Principal
Photography
PostProduction /
Completion
Theatrical
Release
(TR)
Music
Release
Satellite TV
Licensing
Eros
Library
DVD Distribution
Ancillary
18 months
before TR
Note:
Source:
12 months
before TR
6 months
before TR
3 months
before TR
TR
1 month from TR
3 months onwards
1 year onwards
Typical timeline for major films. Major (“high budget”) films refer to Hindi films with direct production costs in excess of $8.5 million and Tamil films with direct production costs in excess of
$7.0 million
Company filings
12
Strategic HBO Asia Collaboration Provides Significant Upside
154 million TV
Households(1)

4.4% 2012–2017 CAGR

Rising ARPU(1)(2)
130 million Pay TV
Subscribers(1)

7.0% 2012–2017 CAGR

$5.9 billion TV Market
$5.37 in 2012
11.6% 2012–2017 CAGR

18.0% 2012–2017 CAGR
Upside Potential for Content Monetization
Asia
Two Premium Channels

Launched two premium television
channels in February 2013
–
HBO Defined
–
HBO Hits

Available in HD and SD

Available on DTH and multiple
cable platforms
(1)
(2)
Premium Content
Premium Ad-free Window

Creates a new “first in India” movie
window

New release and library films from
Eros
Hollywood film and TV content from
HBO Asia

Release window between feature
film run and satellite syndication


Premium ad-free model also a first
in India

Content “audio-synched” into local
languages
Source: FICCI-KPMG Report 2013; projected CAGR from 2012 – 2017
Rupees converted to USD at 62.58; ARPU represents average revenue per user
13
Eros Now: “The Netflix of Bollywood” x Spotify x Hulu x iTunes
Proliferation of
Internet in India
Low Internet Penetration(1)

India (10%) vs. China (36%)
and U.S. (81%)
Growing Internet Users(2)


210 million users in 2013
23.3% 2012–2017 CAGR
Large Mobile Audience(3)


870 million subscribers in 2013
4.0% 2012–2017 CAGR
Over 500 Movies and 3,000 Music
Videos Available
On-Demand
Multiple
Channels
Ad-Supported
Multiple Internet
Connected
Devices
YouTube Channel with 1.6 billion Views
and Over 1.3 million Free Subscribers
(1)
(2)
(3)
Source: “The Internet’s Impact on India 2012,” McKinsey
Source: Telecom Regulatory Authority of India: The Indian Telecom Services Performance Indicators: 11th February, 2014
Source: Business Monitor International
14
Key Financial Highlights

Strong Track Record of Revenue and EBITDA Growth

Multi-Channel Distribution Diversifies Sources of Revenue

Investment in Content Drives Growth Strategy

Conservative Balance Sheet
15
Strong Revenue Growth Accelerated by Film Mix
($ in millions)
Major Films
$215
$206
$40


6 in FY2013
5 in FY2014(2)
$172
$51
$157
$46
$113
$163
$165
$29
$150
$31
$47
$47
$74
$64
$37
$65
$28
$61
$66
$64
$33
$53
$24
$91
$21
$52
$46
$50
$57
FY'08
FY'09
FY'10
FY'11
$101
Digital & Ancillary
Television
Theatrical
$95
$78
$21
FY'07
FY'12
FY'13
Dec.
‘12
2012
Dec.
‘13
2013
9 months ended
Major Films
1
2
2
3
3
5
6
6
3
Total Films(1)
28
63
91
111
77
77
77
66
41
Note:
(1)
(2)
Total films includes regional films and films with overseas rights
Scheduled / anticipated for release
16
Investment in Film Content
Investment in Film Content
Key Cost Components
($ in millions)
$187

Primary cost drivers
–
Content amortization costs
–
Administrative costs historically(1) 12% – 15%
of revenue
$149
$138

$130
Content spend of $180m projected for FY2014
Amortization Policy
$82

Stepped amortization over a 10-year period for new
content
–
Significant portion of content costs amortized in the first
year; remainder amortized equally over 9 years
– Majority of content costs amortized in the quarter of
theatrical release and the subsequent quarter
–
Slate amortization impacted by film release timing
(July – December skew due to Indian holidays)
FY'09
FY'10
FY'11
FY'12
FY'13

Content acquired post theatrical amortized equally over 10
years or remaining life
Note: FYE March 31
(1)
Includes years FY2007 – FY2013
17
Solid Track Record of Profitability
($ in millions)
($ in millions)
Adjusted EBITDA(1)
Net Income(2)
9 months
ended
9 months
ended
$67
$67
$48
$60
$54
$54
$56
$48
$40
$47
$41
$42
$44
$34
$29
$33
FY'07 FY'08 FY'09 FY'10 FY'11 FY'12 FY'13
% margin
(1)
(2)
49.6% 30.9% 34.2% 35.7% 36.1% 32.4% 30.3%
Dec.
'12
Dec.
'13
29.0% 39.0%
FY'07 FY'08 FY'09 FY'10 FY'11 FY'12 FY'13
44.0% 25.2% 26.1% 28.3% 28.9% 21.1% 15.6%
$31
$27
Dec.
'12
Dec.
'13
18.8% 15.5%
Adjusted EBITDA is defined as EBITDA adjusted for impairments of available-for-sale financial assets, profit/loss on held for trading liabilities (including profit/loss on derivatives) and share based
payments
Company filings
18
Conservative Balance Sheet
($ in millions)
Actual 12/31/13
Cash
$141
Debt
$262
Net Debt
$121
Adj. EBITDA(1)
(1)
Source:

Strong liquidity

$167.5m unsecured RCF maturing in 2017

No significant long-term debt maturities until 2016
$67
Adjusted EBITDA is defined as EBITDA adjusted for impairments of available-for-sale financial assets, profit/loss on held for trading liabilities (including profit/loss on derivatives) and share
based payments
Company filings
19
Key Investment Highlights
(1)

Global Leader in Indian Filmed Entertainment with Leading Box Office Market Share (1)

Largest Indian Content Library of Films & Music with 2,000+ Films

Unparalleled Global Distribution Network

High Growth Indian Domestic Media & Entertainment Market with Structural Upside

Portfolio Approach & Pre-Sales Strategy Diversify and Accelerate Cash Flow

New and Library Content Distributed through New Digital Platforms, Eros Now and HBO Asia
3 of the Top 10 grossing Hindi films in 2010 (Source: BoxOfficeIndia.com); 4 of the Top 10 Hindi films in 2011 (Source: BoxOfficeIndia.com); 2 of the Top 10 Hindi films in 2012 (Source:
bollywoodhungama.com) 4 out of top 10 Bollywood releases is first nine months 2014.
20