DMX Technologies Group 2Q2010 Results Presentation. Riding the Digital Media Wave

Transcription

1 DMX Technologies Group 2Q2010 Results Presentation Riding the Digital Media Wave

2 Disclaimer This Presentation should be read in conjunction with the full text of the announcements released by DMX Technologies Limited ( DMX ). Shareholders are advised to read all the documents relating to the transactions that are filed with the SGX-ST when they become available. Copies of documents may be obtained, when available, from the SGX-ST website ( The directors of DMX (including any who may have delegated detailed supervision of this Presentation) have taken all reasonable care to ensure that the facts stated and all opinions expressed in this Presentation are fair and accurate and that no material facts have been omitted from this Presentation, and they jointly and severally accept responsibility accordingly. Where any information has been extracted or reproduced from published or otherwise publicly available sources (including, without limitation, in relation to or its subsidiaries) or obtained from KDDI Corporation ( KDDI ) or its subsidiaries, the sole responsibility of the directors of DMX has been to ensure through reasonable enquiries that such information is accurately and correctly extracted from such sources or, as the case may be, accurately reflected or reproduced in this Presentation. This Presentation may contain forward-looking statements regarding, among other things, the Company's outlook, business and strategy which are current as of the date they are made. These forward-looking statements are based largely on the current assumptions, expectations and projections of the directors and management of DMX about our business, and the industry and markets in which we operate. These statements are not guarantees of DMX future performance and are subject to a number of risks and uncertainties, some of which are beyond the Company's control and are difficult to predict. Future developments and actual results could differ materially from those expressed in the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the forward-looking information will prove to be accurate. DMX does not undertake to update these forward-looking statements to reflect events or circumstances which arise after publication.

3 About DMX

4 About DMX Internet network infrastructure and digital media solutions and services provider Based in Hong Kong, with network of 25 sales offices in 7 countries across Asia Extensive technology alliances with international ICT (Information and Communication Technologies) and digital media equipment manufacturers 51.68% owned by KDDI, a leading telecommunication service provider in Japan 4

5 Our Business SEGMENTATION UNIFIED VIEW Business Groups Infrastructure Enabling (Internet Related) 1 2 Business Segments Infrastructure Solutions Managed Services Integrated Solutions System Integration ICT Infrastructure 1 Digital Media 3 3 Digital Media Solutions Software Solutions 4 Digital Media (TV related) 4 Multimedia Software O&M Services 2 5 New Media Content Media Content 5 5

6 Our Business REVENUE DISTRIBUTION, FY09 9% 7% 27% 57% System Integration (ICT) Software Solutions System Integration (Media) O&M Services 6

7 System Integration Design and install the architecture that connects equipment of different makes to run as a system ICT Network (Internet Related) Server & Storage Router & switches Data Security Application Acceleration Bandwidth Management Digital Media (TV Related) Backoffice Headend Video Server Conditional Access Set-top box software 7

8 System Integration Extensive technology alliances with international ICT and media equipment manufacturers ICT Network Digital Media 8

9 Software Solutions Proprietary software that enable interactive applications on digital cable TV or IPTV (Internet Protocol TV) services Software applications include: TV middleware Content management Operation support Service fulfilment and assurance Used at: (End-user & operators site) (Operators site) (Operators site) (Operators site) 9

10 Software Solutions Vision TV allows operators to provide interactive and value-added services on cross-regional broadcasts Stay Connected: Information on Demand Enhanced TV Experience: TV on demand, VOD, EPG End User Experience: Interactivity 10

11 O&M Services Operate and maintain ICT networks for customers O&M market for Digital Media systems in China still immature Specialises in security solutions to protect and enhance ICT systems Operates 2 Security Operations Centers in Shanghai and Hong Kong to provide 24/7 protection for enterprises Both centres are ISO27001 certified Shanghai SOC 11

12 Media Content Leverage on Digital Media customer base in China and cross sell localised content Examples of media content: Mobile applications Broadcast TV content Currently an immature market; laying ground work to take advantage of opportunities in the future 12

13 Our Network Regional network of 25 sales offices across 7 countries China South Korea Japan Headquarters in Hong Kong Software development centre in Guangzhou India Hong Kong Taiwan Staff Strength : 447 Vietnam Malaysia Sales Office Headquarters R&D Center DMX Customers Singapore Indonesia 13

14 Our Customers Digital Media Customers ICT Infrastructure Customers Cable TV Operators Telecom Operators Financial Services Manufacturing Logistics & Transport Others 14

15 The KDDI Connection KDDI took a 51.68% stake in DMX in December 2009 through a cash injection of S$183.1 million The world s only major service provider providing fixed, mobile and broadcasting services simultaneously Has a large geographical footprint in Asia, Europe and Americas On-going Opportunities with KDDI: Expand customer base - joint marketing of ICT solutions and services to and with KDDI Expand business offerings one stop solution and services to global customers through leveraging on global network of KDDI Up-coming Opportunities with KDDI: Tap into KDDI s strong mobile and network convergence experience No. 2 fixed line and mobile operator in Japan No. 2 cable TV operator in Japan 15

16 Riding on the Digital Media Revolution

17 Digital Media in China Policy driven growth PRC Government mandated all cable operators to switch from analog to digital content delivery by 2015 Network Convergence Policy :- integrate telecom, internet, broadcast services FY10 to FY12 FY13 to FY15 Pilot trial in 12 cities, estimated investment US$5 billion National roll-out, investment capped at US$43 billion Benefits of Digital Media (Win-win-win) More channels, HD, 3D broadcast efficient use of bandwidth Availability of interactive services Enhance revenue protection and increase revenue streams 17

18 DMX Edge In The Digital Media Age 18

19 2 Stages of Growth for Digital Media High capex stage (FY10-FY15) Building up of digital media infrastructure Mature industry stage (FY15-Onwards) Widespread adoption of digital media 19

20 High Capex Stage (FY10-FY15) Cable operators to spend about US$10 billion from FY10-FY15 to migrate from analog to digital; DMX addressable market is worth US$2.5 billion Costs an estimated US$ to digitise each subscriber DMX Addressable market Hardware & Software US$20-30 Set Top Box US$30-40 Capital equipment US$

21 Digital Cable TV Penetration in China Digital TV Households in China to surpass 165 Million by 2015 Source: CASBAA Asia Pacific PayTV & Broadband Markets To add more than 100 million subscribers by 2015 To add more than 100 million subscribers by 2015 Per million Subscribers

22 Going Forward 5 Year Growth Outlook Growth Strategies

23 5 Year Growth Outlook 50% of revenue from Digital Media 50% of revenue from ICT Infrastructure 23 Expected Expected CAGR CAGR of of 20% 20% over over next next 5 5 years years

24 Digital Media Group Ride on DMX s market leading position for Digital Media Solutions 165 million Digital CATV household by 2015 in China under CATV digitisation policy 26 million IPTV and CATV household in 12 pilot cities (FY10-FY12) under Network convergence policy 200+million IPTV and CATV household under Network convergence policy Demand for the Group s Multimedia Software and Services to increase with growing convergence of telecom, internet and broadcast Enable Telecom operators to synchronise mobile service with broadband Enable cable operators to integrate internet services to their broadcast offer 24

25 ICT Infrastructure Focus on growing Managed Services Segment which provides: Recurring revenue base Higher margins than traditional ICT solutions Tie-up with major customers to offer B-to-C security services Core Infrastructure Solutions Segment to serve as entry point for the marketing of the Group s other segments Capitalise on partnership with KDDI Joint marketing of system integration and security solutions and services to and with KDDI Provide one stop solution and services to global customers through leveraging on global network of KDDI 25

26 Financial Highlights

27 Revenue Trend US$ million 21.4% 27

28 Diversifying Beyond ICT Integration 2Q10 2Q09 28

29 China Driving Growth 2Q10 2Q09 29

30 Gross Profit & Margin Trend US$ million 30

31 Net Profit & Margin Trend US$ million 31

32 Financial Highlights US$ 000 2Q10 2Q09 YoY Change 1Q10 QoQ Change Revenue 58,636 48, % 47, % Gross Profit 14,068 10, % 11, % Gross Margin 24.0% 22.3% % - Net profit att. to shareholders 2,853 1, % 1, % Net Margin 4.9% 3.2% - 2.6% - EPS* (US cents) (16.7%) % * The weighted average number of ordinary shares in issue for 2Q2010: 1,141,681,255 & YTD Jun 2010: 1,140,514,323 (2Q2009 & YTD Jun 2009 are also 531,410,184).0 32

33 Cash for Future Opportunities US$ June Dec 2009 % Change Total Assets 371, , % Total Debt 10,429 13, % Net Cash 111, , % Total Equity 332, , % Gross Gearing 3.1% 4.3% - Net Gearing Nil Nil - 33

34 Selected Ratios US$ June Dec 2009 Turnover Ratio (days) Inventory Turnover Receivables Turnover Payables Turnover Cash Conversion Cycle Return (%) Return on Equity (%) 1.27% 2.87% Return on Assets (%) 1.14% 2.56% Liquidity Ratio (%) Net Gearing (%) Nil Nil Current Ratio (%) 869% 855% 34

35 Recognition of Trade Receivables 1. Delivery 2. Installation 3. Completion 4. Acceptance 1. Delivery - Invoice and recognises 95% revenue on delivery of equipment; 5% captured under deferred income until acceptance. Receives 10%-20% of receivables upon delivery 2. Installation Receives approximately 50-70% of receivables 3. Completion Receives 10%-15% 4. Acceptance Receives 10%-15% 35

36 Cashflow Management 1. Delivery 2. Installation 3. Completion 4. Acceptance Cumulative Cost Curve Margins Cumulative Cash Curve 36

37 Aging of Trade Receivables 37

38 Question & Answer Session Thank you for your time.

39 Contact Information DMX Technologies Group Ltd For more information and media enquiries, please contact: Mr Kelvin Choi Group Marketing Director Tel: (852) Financial PR Pte Ltd Investor Relations Consultants Kathy Zhang Adrian Seah Tel: (65)