prime focus limited corporate presentation january 2015
TRANSCRIPT
Prime Focus Limited
Corporate Presentation
January 2015
2primefocus.com
Safe Harbor
Certain statements in this document may be forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties like regulatory changes, local political or economic developments, and many other factors that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statements.
Prime Focus will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.
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Contents
Company Overview
Global Leadership 05-07
Key Milestones 08
Worldsourcing® 09
Clients, Projects, Infrastructure 10-23
Awards and Accolades 24
Segments Overview 22-34
Industry Opportunity 35-41
Financial Performance 42-48
Outlook & Strategy 49-51
Shareholding and BOD 52-57
Annexure 58-62
Company Overview
5primefocus.com
Increasing presence across all major content markets with over 80% of revenues from outside India – we service our global clientele from our 16 locations across the globe
Bold strategic roadmap adopted a decade back transforms PFL into
World’s Largest Global Integrated Media Services player
Unique DNA
‘Creative cum tech’ combination helps PFL emerge as only player to provide full bouquet of creative and technology based media services – new businesses (VFX, 3D & PFT) already contributing 90% of revenues
Present in top M&E Markets Higher growth ahead
Acceleration via M&A to spur next phase of growth i.e. RMW & D-Neg mergers & DAX acquisition. Combined post merger revenue (look back basis) of Rs.18bn and EBITDA of Rs.3bn
PFL…The Paradigm Has Been Shifted
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VFX & 3D Conversion
Post Production
Technology
Largest Global independent Tier 1 VFX player ~30% market share in 3D conversion services Working with top studios like Marvel, Warner Bros, Universal,
Paramount, etc. Comprising 59% of FY14* revenue
Pioneered ERP solutions for M&E with CLEAR Leader in India & Strong position in North America Increasing global penetration with top broadcasters like Star
Sports, National Geographic Channel, BBC On a non linear growth path,19x revenue in FY14 over FY11,
20% share in FY14 revenues
Leading player in Indian post production market. Owns Mumbai’s largest Integrated Studio & leader in Camera
rental market Contributes 20% of revenues
All businesses on accelerated growth paths
Profitable growth in revenues..
.. Driven by increasing share of new businesses in revenues
* Financial year FY14 has been extended to 15 months & all figures are Pre merger
FY11 FY12 FY13 FY14
52%64% 69%
80%
48%36% 31%
20%
New Business(Creative Service+Technology)
Post Production
FY11 FY12 FY13 FY14 Post-merger
5.0
7.7 7.6
10.3
18.0
1.7 2.2 1.8 2.4 3.0
Revenue EBITDA
Figures are in Rs. billion & Post merger figures are of combined entity on look back basis
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Double Negative
Strong and deep relationships with major global studios for VFX business
Access to best global leadership pool in VFX - preferred global employer
Prime Focus
Catapults to Tier 1 Global VFX Player: Enters mainstream Hollywood resulting in larger contracts with better visibility
Stands taller with order book of $300mn+. Enhanced revenue opportunity for 3D & technology business through Cross selling
‘Worldsourcing’ model providing unmatched cost & time efficiency
Strengthens Bollywood business with largest integrated presence
Addition of Academy award winning Lowry Process
RMW
Strong client base in Hollywood and US broadcasting
Strengthening Bollywood & Indian broadcasting business
Cutting edge restoration & image enhancing technology from Lowry Digital
Strong synergies from recent mergers with DNEG & RMW
Prime Focus Limited has merged Double Negative, Europe’s #1 VFX provider with subsidiary Prime Focus World and nearest India based competitor – Reliance Mediaworks’ media services division with it in the month of July 2014
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With 2014 emerging as year of transformation
From domestic niche player to Global Diversified Leader...
Entry into UK market
IPO of Prime Focus Ltd on BSE
Entry into US through acquisition of Post Logic and Frantic Films
Launch of View-D and CLEAR (Media ERP Platform)
First to convert an entire film - Clash of the Titans - to 3D.
CLEAR recognized as ‘Best of IBC’
3D Conversion of Star Wars: Episode I.
PFT digitizes and transforms Star TV’s content operations through CLEAR
Animation launched
Investment by SCPE
FCCB successful redemption
Investment by Macquarie
Won the largest VFX order in history of PFL – Sin City 2
Launch of PFT’s digital playout business - Starsports.com -
First high-end finishing, scanning & recording & DI systems player in India & only VFX company to operate a motion-control rig
1997-2004
2006-2007
2009
2010
2011
2012
2013
2014
Investment by AID Partner in Prime Focus World
JV to enter China market
Completed the acquisition of DAX in PFT
Raised OCDs in PFT
Merger of PFW & DNEG
Merger with RMW’s media Services Arm
Equity Infusion of Rs.2.4 bn by Reliance and Promoters
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Largest global network providing highest quality, fastest time to market and most efficient pricing
‘WorldSourcing’ model providing unmatched competitive edge
New York
Vancouver
Strong local market
INDIA Low-cost labor High-quality
talent
Beijing
4 continents 5 time zones 16 locations 24 x 7 x 365 days
TorontoPFL
DNeg
RMW
Mumbai Chennai
DNeg
Stronger front-end Unmatched Off-shoring synergies
CHINA Low-cost labor Government
support Partnerships with
Hollywood studios
UK Tax incentives Strong domestic TV
and commercials market
CANADA Tax incentives Language and
cultural similarities
Heart of Hollywood market
Los Angeles
Cape Town Johannesburg
Singapore DNeg
MumbaiChandigarhGoaDelhiKolkataBangaloreHyderabad
LondonPFW
Burbank - Lowry Digital
Digital Domain
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Creative services
Fuelling success with marquee clients across the globe
Leading Hollywood and Bollywood studios
Technology services
Leading broadcasters, studios, brands, sports and digital businesses
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Partnering award winning Hollywood studios for top grossers
The Da Vinci CodeVFX-DNEG;Over $750mn box office collections
Gravity
Exclusive 3D Conversion PartnerOver $600mn box office collections; 12 Academy Award nominations 2014
Avatar
VFX; Additional 3D Conversion Highest all time grossing movie; won 3 Academy Awards including for best VFX
The Amazing Spider-Man 2 3D Conversion PartnerOver $708 mnbox office collections
Inception
VFX-DNEG;Over $825mn box office collectionsWon Academy Award for VFX
Harry Potter and the Deathly Hallows Part 2VFX-DNEG;Over $1300mnbox office collections
The Dark Knight RisesVFX-DNEG;Over $1000mnbox office collections
Maleficent3D Conversion PartnerOver $720 mnbox office collections
Transformers: Age
of extinction
(3D Conversion)
Over $1000mn
box office collections
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Partnering award winning Hollywood studios for top grossers
Happy New YearGrossed overRs. 2 bn
Google Chrome 3D BBHFirst-of-its-kind 3D advertisement for India
Nike “Mean Streets” JWTSilver at the Asian Marketing
Effectiveness Awards
Mumbai Mirror ‘I am Mumbai’ TaprootWon Gold Lion at 2012 Cannes Lions
International Festival of Creativity
Worked on 100+ Bollywood movies in last 5 years
Bang BangGrossed overRs 1.8 bn
KickGrossed overRs. 2.3 bn
Mary KomGrossed overRs. 0.6 bn
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Global market leader in 2D to 3D conversion with ~30% share of market
Los Angeles: 65,000 sq. ft. Vancouver: 40,000 sq. ft. London: 80,000 sq. ft. Mumbai (Mainframe); 80,000 sq. ft. Chandigarh: 12,500 sq. ft. Goa: 8,000 sq. ft.
Prime Focus World
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Academy award winning Visual Effects house Europe’s largest; Amongst top 3 worldwide 1000 people (800 in London; 200 in Singapore)
Double Negative (London & Singapore)
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India’s largest integrated Studio facility
Only DI Lab with 4K facility in South Asia
MPAA, Fox Security Group (FSG) accredited facilities –
• 200,000 sq. ft. state-of-the-art Studio facility in Film City – India’s largest
• 8 Hollywood benchmarked sound stages• 90,000 sq. ft. SEZ in Navi Mumbai and
75,000 sq. ft. facility in Film City Film Processing Lab Film image enhancement
Sound stages & shooting floors
Prime Focus Studios
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Academy Award Winning Lowry Digital
Image Processing Services for Legacy content and New Releases Joint operations in US and India
Apollo 11 Moonwalk video for NASA – Image
Processing Services by Lowry Digital
‘Lowry Process’, won the Scientific and Technical Achievement Academy®
Award 2012
3D Alignment for Avatar
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12,000 sq. ft. Full service post facility specializing in the
transfer, color correction, conform and mastering of film and High Definition content.
Grading, online editorial, audio post, format conversion, duplication, encoding and quality control services.
Baselight, DaVinci, Flame, Spirit, Smoke, ProTools, DVS and Alchemist, and a Dolby-certified 7.1 audio mix studio
Convenient 'West Village' location at the heart of the fastest growing media district on the East Coast
Broadcast and Advertising Post
Prime Focus New York
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10,000 sq. ft. State-of-the-art HD post facility dedicated to
advertising industry 12 Smoke/Flame edit suites 50 seats for VFX Baselight color grading suites and Telecine
Advertising Post
Prime Focus Mumbai (Khar)
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25,000 sq. ft. In the heart of Soho: 37 Dean Street. Offers VFX, CG animation, Digital
Intermediate and Telecine services
Broadcast and Advertising Post
Prime Focus London
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Market leader in film post VFX DI – Baselight and Lustre Dolby 5.1 sound mix studio Largest production equipment rental in Asia
• Arri Alexa• Sony F65• Red digital camera
30 & 75 seat preview theaters
Film Post
Prime Focus Mumbai (Mainframe)
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Lego: Legends of Chima Season 1: 500 minutes - 10,000 fully CGI shots
Full world-class creative services High-end inspirational and concept artwork
Full character development
Design and Development of Environments
FX and Comp Development with complete VFX Supervision
300+ artists
Mumbai, London and Vancouver locations
Pipeline set up so client can be totally location independent
Prime Focus Animation
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Technology business serving clients across the content lifecycle
DAX Acquisition
After capturing the Indian market, PFT enters North America with acquisition of DAX
Content Creation
Content Transformation
Content Distribution
Broadcasters
Studios
Brands
Service Providers
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PFT’s True North – 106,000 SQFT global content operations hub in Mumbai, India
True North
CLEAR Media Cloud
Tier 3 Data Center
Global Delivery Center
Promo Prod
5.1 Dolby Sound Studios
16
Edit Suites150
5.1 DolbyQC Rooms
14
450 10 Gi LAN 2.5 Gig Internet & 1.5
Gpbs MPLS450
Finishing Rooms
15
TB of Edit Storage
2500
Trans-code on Cloud
MultiScreenPublish Auto
Quality Check
Digital Archive
PackagingQuality Check
Content Prep
Editorial
Meta Tagging
AnalyticDash-board
Workflows
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Gaining increasing global recognition
Recent awards and accolades
Best VFX for ‘White House Down’ at 24 FPS Annual International Animation Awards 2013 (Dec 2013); Best VFX for ‘Sin City: A Dame to Kill For (Dec 2014)
Prime Focus Technologies wins EMC transformers award 2013 (Nov 2013)
Prime Focus Technologies bags the Aegis Graham Bell Awards 2013 for Innovation in Cloud-based Solutions (Nov 2013)
Emmy® in the ‘Outstanding Graphic Design & Art Direction’ category for work on History Channel’s series World War II from Space (Oct 2013)
International 3D Society Award for Gravity in ‘Outstanding 2D to 3D Conversion in Theatrical Motion Picture’ category; PFW’s Stereo Conversion process receives Lumiere Technology Award
PFT has been positioned as an ‘Exemplar’ in NASSCOM’s coveted Product Excellence Matrix (PEM) report
Segments Overview
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Complete creative services provider• Global leader in 3D conversion market, market share of 30% • Catapults to tier 1( segment dominated by 4-5 players controlling 30% of market share value amounting
$750mn ) player with revenue share of 21%($ 160mn)• Entered Animation space with animated television series for a major toy manufacturer to offer high end
premium animation services
Unmatchable infrastructure• Largest work force – 3500 creative personnel including DNEG• Global, fully integrated platform across 3 continents utilizing 6 facilities leading to better margins • Over $19mn invested in technology and facilities over past 5 years
Excellent relationships with global studios like Marvel, Universal, Warner Bros., Legendary Pictures, Lucas films, Disney and Paramount
Ant-ManBatman v Superman
Terminator-
Genisys
Insurgent Exodus: Gods and Kings
Avengers:
Age of Ultron
Ongoing announced Projects-Hollywood
Prime Focus World – leading international creative services provider
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Marquee Clients Investment Rationale
Entry into top league in VFX services Move up value-chain with more complex projects &
larger ticket size PFW’s “Worldsourcing Model” to add to significant Cost
Synergies Leverage Global Tax Credits and improve project
pipeline Leverage VFX Work into View-D
About Double Negative (DNEG)z
Europe’s largest independent VFX house Amongst top 3 globally Strong and deep Hollywood relationships, collaborates
from the first stages of projects; producing ideas and concept imagery and developing pre-visualizations and VFX production plans
Portfolio includes blockbusters - Godzilla, Christopher Nolan’s Interstellar, Jupiter Ascending from Andy and Lana Wachowski, Ridley Scott’s Exodus: Gods and Kings and Brett Ratner’s Hercules, among others
DNEG’s work in ‘Inception’ won an Oscar for Visual Effects in 83rd Annual Academy
Awards
Merger with DNEG catapults PFW into Tier 1 VFX leadership globally
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Revenue > ~$150 MN Top 5 involved in > 65% of Top 25 VFX-
heavy films (2009-2012) Mostly studio backed / well funded Controls < 25-30% of market
Revenue from $50-150 MN Medium size firms Controls < 20-25% of market
Revenue < $50 MN New/emerging players/small-size firms (many <
10 employees), in-house VFX of production houses Remaining 45-55% of market
Fragmented nature of the VFX industry and high entry barriers to the Tier 1 league which controls a major chunk of business, PFW’s merger with DNeg is a smart move
In one move, DNEG-PFW becomes the leading, independent Tier 1 VFX provider
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3D Conversion
VFX
Bundling
Unified Management in 3D & VFX
Access to UK Tax Credits
Access to Canadian Tax Credits
Studio Facing Offices in Los Angeles
Access to Low Cost Production Facilities
WorldSourcing
Staff 3,500+ ~800 ~1,000 ~1,400 ~1,100 ~700 ~700 ~800 NA
Source: Company websites and management’s estimates. Note: Digital Domain and Rhythm & Hues have been removed from this list as they both have filed bankruptcy and been sold over the two years.
PFW-DNEG largest in scale with unparalleled service capabilities
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Marquee Clients Investment Rationale
Integrated facilities with strong asset base & Significant capacity addition and scale in Bollywood & Hollywood
Larger foothold and unmatched customer value proposition in fast growing Indian M&E services market
Leverage Reliance’s global relationships and investments
About RMW Film and Media Services
Part of Reliance MediaWorks - India’s leading media company with diversified production, distribution and services offerings
Tier 1 Player in Indian Bollywood market, also owns an integrated studio with ~25% capacity* of Mumbai studio market
Hollywood portfolio includes Men in Black 3, The Girl with Dragon Tattoo, The Social Network, X-Men First Class, Transformer 3, Mission Impossible, The Curious Case of Benjamin Button, Hangover 2, Terminator
RMW’s ‘Lowry Process’ won Scientific and Technical Award 2012 of the Academy of Motion
Picture Arts and Sciences.
PFL - RMW combination to enhance service offerings in both India and World
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Complete bouquet of post production services to Bollywood
360 degrees offering of integrated suite of media services
Film Studios Film Equipment Film Shooting Film chemical treatment Editing/Color Correction
VFX & AnimationAnimation2D to 3DDigital Distribution
Restoration & image enhancement
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Studios BrandsDigital SportsBroadcastingVerticals
Prime Focus Technologies – leader in Media ERP solution
Owns and operates the world’s one and only hybrid cloud enabled Media ERP platform – CLEAR• CLEAR is extremely Secure (ISO 27001 conformant) and
most Available (99.95%).• Leveraging CLEAR, PFT runs scalable and reliable cloud-
based content operations hubs for managing 24 x 7 operations.
• 106,000 sq. ft. global content operations hub
Acquired Academy winning Lowry Process for Image enhancement in RMW Merger
Only player with strong IT credentials and deep understanding of M&E industry
No other provider offers an exhaustive suite of SLA based media processing services
FY13 FY14
Content under management – Video Hours
350,000 350,000
Syndication & VoD Fulfillment – Files
10 million 10 million
Episodes of TV content 100,000 100,000
Subtitling and Captioning – Video Hours
15,000 35,000
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With a robust non linear, scalable business model
Sustained growth with ~30% margins Revenue distribution FY14
FY'11 FY'12 FY'13 FY14* -
500
1,000
1,500
2,000
2,500
0%
5%
10%
15%
20%
25%
30%
35%
40%
110 336
809
2,088 37%
29% 29% 30%
Revenue (Rs mn) EBITDA Margin
Annuity72%
Project based28% India
67%
ROW33%
In the last 3 years, PFT has grown at over 19x
from a garage startup to a global operation with
~ 900 people
Annuity revenue comprises 72% of total giving
strong visibility
The biggest broadcast networks and brands run
on CLEAR
*FY14 is for 15months ending June-2014
World's First Hybrid Cloud platform for Content Operations
CIO CHOICE 2013 Honor & Recognition Title in the "Content Management" category
STAR India received two prestigious awards - the Aegis Graham Bell Award and the News Corporation's GEI Innovator Award - for its CONTENT LIVE initiative
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Marquee Clients Investment Rationale
Fuels PFT’s market penetration in the North America Upsell CLEAR & PFT Digital Content Services to
existing DAX Clients Has 2 patents & customer base of 60+ ~28,000 Production Community Users
About DAX
Provider of production workflow and media asset management applications and services to the entertainment industry
Designed to maximize efficiencies throughout the content creation lifecycle
Enables secure exchange, collaboration, approvals and distribution of work-in-progress materials - from concept development through final delivery
A Primetime Emmy was awarded to DAX for Digital Dailies®
PFT - Strategic expansion in North America with acquisition of DAX
Industry Opportunity
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58.7% BO collections of The Great Gatsby were from overseas
India’s #1 GEC channel Zee TV is available in 169 countries
Internet driven screens –
Mobiles, Tablets and Desktops
3D revives cinemas – Recent hit Gravity’s80% collectionsfrom 3D screens
Reinventingshelf livesVideo onDemand..
ExplosiveDemand for
Media services
Growingconsumption
platformsFrom 2 to 5
screens
Contentmonetization
acrossgeographies
EvolvingTechnologies –
Media ERP,Cloud
With Media Workflow and Resource Management – time saving about 60% and cost saving of 80%*
Set-top box VOD is found in 60% of US households
YouTube crossed 1bn regular visitors milestones in March 2013
*Frost & Sullivan estimates
Media services on an high growth trajectory; De-risked to recessionary pressures with services models
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Expanding E&M industry globally….
Global E&M spend Global box office ($bn)
2009 2010 2011 2012 20130
5
10
15
20
25
30
35
40
18.8 21.0 22.4 23.9 25.0
10.610.6 10.2
10.8 10.9
International US/Canada
2012 2017e0
0.5
1
1.5
2
2.5
75
80
85
90
95
100
105
110
1.6
2.2
88.6
106
Global E&M Spend ($tn)Global Filmed Entertainment Revenue ($bn)
Source: Global entertainment & media outlook (2013-2017) by PwC
29.431.6
32.634.7
35.9
Source: Theatrical Market Statistics 2013 by MPAA
2013 Top 5 International Box Office Markets ($bn)
China 3.6
Japan 2.4
UK 1.7
France 1.6
India 1.5
Source: Theatrical Market Statistics 2013 by MPAA
Global E&M spend is projected to grow at a 6.6% CAGR for next 5 years to reach $2.2tn by 2017 with filmed entertainment growing at 3.6%
Total worldwide box office for all films released increased 4% in 2013 to reach $35.9bn.
China’s box office revenues increased 27% in 2013 to become the first international market to exceed $3bn in box office revenue.
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…with growing opportunities in key segments
Growing VFX revenues ($mn)
2008 2009 2010 2011 2012 20130
0.5
1
1.5
2
2.5
0.2
1.1
2.2
1.8 1.8 1.8
2008 2009 2010 2011 2012 20130.00
0.50
1.00
1.50
2.00
2.50
1.33 1.35
1.611.77
1.962.1010% CAGR
55% CAGR
US 3D box office ($bn)
Source: Theatrical Market Statistics 2013 by MPAA Source: Frank N. Magid Associates, Inc.
New releases movieconversion opportunity in US
New releases every year 50
In 3D (2/3rd) 33
Conversion opportunity ($8mn per movie) $264mn
Legacy movie conversionopportunity in US
Library film titles with major studios 35,000
In 3D (1%) 3,50
Conversion opportunity ($5mn per movie) $1.75bn
Source: Company estimates
The recent success of Gravity has given a big push to the 3D format’s
success. 80% of Gravity's opening
weekend US box office sales came from 3D
screenings, the highest share ever for a 3D
release.
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Indian E&M industry on higher growth trajectory
E&M revenues set to double by 2017.. .. With 1.8x growth film revenue
2009 2010 2011 2012 2013 2018e0
50
100
150
200
250
89.3 83.392.9
112.4125.3
219.8
2009 2010 2011 2012 2013 2018e0
400
800
1200
1600
2000
587 652728
820918
1786
12% CAGR 9% CAGR
14%
CAG
R
12%
CAGR
Figures in Rs Billion
Segment 2009 2010 2011 2012 2013 CAGR (2008-13) 2018e CAGR (2013-18)
Animation services 5.5 6.2 7.1 7.6 8.0 10% 11.6 8%
Animation production 3.7 3.9 4.2 4.5 4.7 6% 6.3 6%
VFX 3.1 4.5 6.2 7.7 9.3 32% 26.8 24%
Post-production 7.8 9.1 13.5 15.5 17.7 23% 38.1 17%
Total 20.1 23.7 31 35.3 39.7 19% 82.8 16%
Target segments growing higher than industry growth rate
Source: FICCI-KPMG Indian Media and Entertainment Industry Report 2014
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Digital content solutions a large market opportunity
Total Addressable market is expected to grow at CAGR of 5%
North America, the largest market while Asia and Latin America, fastest growing markets
Media ERP can save M&E Firms up to 5% of revenue
Cloud-enabled services expected to grow at 46%
2014 2015 2016 2017 201810.0
11.0
12.0
13.0
14.0
10.611.1
11.7
12.3
12.9TAM
North America; 41%
EMEA; 27%
Asia Pacific; 24%
Latin America; 8%
Source: E&Y Study – Jan 2014 Source: E&Y Study – Jan 2014
BO&E US BO&E India - 50
100 150 200 250 300 350 400 450 500
0%
5%
10%9.3%
4.5%
2014 2015 2016 2017 20180%
5%
10%
15%
20%
25%
5%8%
11%
16%
23%
Cloud Services as percent of total market
Source: E&Y Study – Jan 2014
Figures in $ Billion
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2D & 3D
$264mn p.a. new releases movieconversion opportunity in US alone
Growing China market $1.75bn library
conversion opportunity
Prime Focus• Global leader with ~30%
market share• 50+% market share of
this summer’s Hollywood blockbusters releases
RMW• Strong studio
relationships and affiliate network
• Strategic stake in Digital Domain
• State of the art facility in Navi Mumbai (SEZ)
VFX
$2.2 - 2.5 bn market 10% 5-year CAGR 7 of top 10 Hollywood
Box Office hits in 2013 were VFX driven
Double Negative• Amongst top 3 VFX
providers in world• Provider of choice for
number of top movie franchises
• Top-end talent with proven credentials
• Strong sales team, studio relationships
Prime Focus• Leading Tier 2 player• High margin
WorldSourcing model
RMW• Amongst leading players
in India• VFX studios in LA,
London and Mumbai
Cloud Tech. Sevices
Digital content solutions market to grow at 5% CAGR and reach $12.9bn in 2018 (E&Y study)
Prime Focus Pioneered CLEAR,
world’s first hybrid cloud-enabled Media ERP platform
24*7, 106,000 sq. ft. global content operations hub
Non linear growth with high margins
RMW Lowry Digital is leader in
Global Imaging services US frontend, owner of
Lowry Process State of the art facility in
Navi Mumbai (SEZ)
PFL offering unmatched, winning proposition in Media Services
Post Production
Indian post production market to grow at 17% 2013-18 CAGR to reach Rs. 38.1bn in 2018
RMW PP Services Tier 1 player in Indian film
and broadcast market MPAA/ FOX certified
Studio facilities – largest in India
Leader in camera rentals
Prime Focus Proven track record in
Bollywood Top end service provider Most profitable Indian
operations
Financial Performance
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Growing revenues Successful scale up
18% CAGR
FY11 FY12 FY13 FY14 -
1,000
2,000
3,000
4,000
5,000
-
0.50
1.00
1.50
2.00
3,500
4,200 4,300 4,500 1.44
1.84 1.77 1.84
No of employee
Avg Revenue per employee
FY11 FY12 FY13 FY14 -
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
10,000 11,000
5,030
7,720 7,622
10,342
New businesses grow at a high rate 36% Diversified revenue-mix
FY11 FY12 FY13 FY14 -
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2,594
4,960 5,292
8,236
36% CAGR
FY11 FY12 FY13 FY142% 4% 11%
20%
49%60%
59%59%
48%36% 31%
20%
PFT ViewD+VFX PP
Financial year 14 has been extended to 15 months ending June, 2014 figures are not comparable with FY13 & CAGR is calculated by annualizing the 15 months FY14 figures
Figures in Rs Million, consolidated financials
FY14(Pre Merger): Robust growth in annual revenues….
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Operating margins maintained in double-digits
EBITDA & EBITDA margin PAT & PAT margin
FY11 FY12 FY13 FY14 -
500
1,000
1,500
2,000
2,500
0%
10%
20%
30%
40%
1,671
2,359
1,821
2,363
33%31%
24% 23%
EBITDA EBITDA Margin
FY11 FY12 FY13 FY14
(400)
(200)
-
200
400
600
800
1,000
1,200
-5%
0%
5%
10%
15%
20%
761
993
(203)
243
15%
13%
-3%
2%
PAT PAT Margin
Financial year 14 has been extended to 15 months ending June, 2014 figures are not comparable with FY13
Figures in Rs Million, consolidated financials
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Segment-wise revenues
Segment-wise EBITDA Segment-wise EBITDA Margins
ViewD+VFX PFT PP
4,483
809
2,330
6,148
2,088 2,106
FY13 FY14*
ViewD+VFX PFT PP
797
230
793
1,249
634 481
FY13 FY14**
FY13 FY14
18%20%
28%30%
34%
23%
ViewD+VFX PFT PP
*FY14 is for 15months ending June-2014, figures are not comparable with FY13**For ViewD+VFX FY’14,Segmental EBITDA includes backend business ,historical quarterly figures are not comparableBulk of PP EBITDA Corresponding to India Business continues to maintain 30%+ margins
Figures in Rs Million; Consolidated financials
FY14 Segmental Analysis: Strong traction in new businesses
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Q1FY15: Transition to Integrated Tier I M&E Services Co
Net Revenues EBITDA, Margin
Profit Before Tax Profit After Tax
3,502
1,961
654 / 33.4% Margin
144 / 4.1% Margin
(681)
296 213
(220)
Qtr endingSep 13
Qtr endingSep 14
Qtr endingSep 14
Qtr endingSep 13
Qtr endingSep 14
Qtr endingSep 13
Qtr endingSep 14
Qtr endingSep 13
Figures in Rs Million; Consolidated financials
Note: Q1FY15 marked completion of PFW- Double Negative merger, hence YoY financials are not comparable
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Segment-wise revenues
Segment-wise EBITDA
Figures in Rs Million; Consolidated financials
ViewD+VFX PFT PP
1,152
398 411
2,684
468 350
Qtr Sep 13 Qtr Sep 14
ViewD+VFX PFT PP
361
151 143 111 100
57
Qtr Sep 13 Qtr Sep 14
Note: Q1FY15 marked completion of PFW- Double Negative merger, hence YoY financials are not comparable
Q1FY’15 Segmental Analysis: Creative services contributing 77% of revenue
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Debt profile
Consolidated debt of $152mn (Rs 9,339 mn) in Sept 2014 compared to $137 mn (Rs 8,216 mn) in June 2014 *
Company has paid off high cost $11 mn debt in India on closure of the backend sale to PFW
Increase due to addition of Double Negative debt in PFW and part disbursement of EXIM facilities in PFT
Increase in accreted interest on NCD’s is adequately offset with regular repayment of other term bank debt
Shares released, partly by SCB and Yes Bank, expected to bring down pledge further in coming quarter
Geographical break-up of debt ($mn) Debt Composition ($mn)
$1 = Rs 61.48
Consolidated debt - $ 152 mn (Rs 9,339 mn)
India $ Linked; 9.57
Overseas debt; 72.62
India INR debt; 69.71
Working Capi-tal, 29%
NCD; 26%
Financial Leases; 5%
Property Loans; 11%
Term Loans; 7%
PFT OCD; 5%
DNEG Leases; 7%
DNEG O/D facility; 7%
Tax Discounting Facility; 3%
Outlook & Strategy
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Present
Global leader in stereo 3D conversion (30% share)
One of top 3 global VFX players Tier 1 Player in growing Indian M&E
market Established PFT business,
witnessing high growth and improving profitability
Invested in facilities and workforces Secured successful rounds of
funding from PE investors – SCPE, AID ,Macquarie and Reliance ADAG
Strategic Direction
Strengthen leadership in VFX & 3D by growing presence in all our existing markets – synergies from mergers to provide thrust to growth in revenue and margins
PFT to be rolled out in the US at accelerated pace through DAX
Ramp up in new markets like China Cost consolidation & effective
utilisation of resources Reduction in debt through
improving cash flows and low capex
Future
Sustain clear leadership across all M&E Services markets
To be house of choice for VFX & 3D Services for Tier 1 Studios
Establish CLEAR as the de-facto ERP of the M&E industry globally
Leverage on the robust Worldsourcing® model to increase returns
Higher Margins & Optimum level of Debt & Cash Flows
Strategic plan for next phase of growth
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Immense Integration benefits – huge upside potential
Well-planned roadmap targeting profitability and cash flows
Phase 1
Prime Focus to take lead in cutting costs by closing its London VFX operations and pruning operations at Vancouver and elimination of duplicated overheads – savings of $8-10+mn
Double Negative to expand in Vancouver increasing revenues at lower cost (through labour tax credits)
Increase revenue pipeline of PP services and low-hanging cost synergies
Phase 2
Leverage strength of WorldSourcing model with enhanced execution from tax advantaged and lower cost centres
Bundled offering of VFX & 3D conversion services
Increase profitability of Indian post production and visual effects business with consolidation
Cross-sell CLEAR into Lowry Digital’s global broadcasting clientele and vice versa
Phase 3
Partner of choice for M&E services across Hollywood, Bollywood & other major markets like China
Global scalability of PFT’s enhanced Cloud based Media ERP platform for content production, broadcast and exhibition segments
Optimize capacity utilization and maximize delivery from tax advantaged & low-cost facilities
Current EBITDA Margin up by 1.5 to 2 %
EBITDA Margin up by 2– 4%
EBITDA Margin up by 4-5%
First 12 months 18-24 months 24-36 months
Shareholding and BOD
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PFL Shareholding Pattern Evolution
As on 30th Sep 2014Outstanding shares – 185 mn
Fully dilutedOutstanding shares* – 299 mn
Promoters33.5%
RMW30.2%
SCPE12.2%
Public, Institutions24.0%
*Indicative Shareholding is post Preferential Allotment but Pre Open offer
Promoters; 41.6%
SCPE; 19.7%
DII; 1.2%
FII/FVCI; 4.7%
Corporate Bod-ies; 15.2%
Public & Others; 18.0%
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PFW - DNEG & PFL- RMW Transaction Highlights
Enterprise Valuation of ~£55 mn ~60% paid upfront Plus assumed Debt
(leases + WC) ~40% long term in Cash, Equity and
Equity Options in PFW
Acquisition of RMW Film & Media services assets in a slump sale
Rs 3,500mn Equity + Assumed Debt 200,000 sq.ft. state-of-the-art Studio facility in
Film City 90,000 sqft SEZ in Navi Mumbai and 75,000 sqft
facility in Film City 30% stake in Digital Domain 100% ownership of Lowry Digital
Promoters to invest Rs.1.2bn at Rs.52 / - per share
Reliance to invest Rs.1.2 bn at Rs.52/- per share + business with
Equity Valuation of Rs.350cr.30.2%*33.5%*
100%
Shareholding100% Prime Focus **
**On a fully diluted basis, accounting for the conversion of MacQuarie & AID instruments, as well as the equity units towards DNeg transactions, PFL will continue to own ~ 80% of PFW
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With marquee long term PE investors
November 2012 Standard Chartered Private Equity subscribed to 36,549,990 equity shares of PFL on a
preferential basis for an aggregate amount of $35mn The company also issued Rupee-denominated Non-Convertible Debentures (NCDs) on a
private placement basis, equivalent of $35mn to the PE firm
March 2013 AID Partners Capital Limited, a private equity firm focused on buyout opportunities and
expansion capital primarily in media and entertainment sector invested $10mn in Prime Focus World NV (PFW), valuing it at $250mn.
June 2013 Macquarie Capital, the principal investing arm of the Macquarie Group, further infused $38mn
into PFW, valuing it at an Enterprise Value of $300mn
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Board of Directors
A veteran in the Indian Film & Television industry, he commenced his career as an Associate Director and Controller of Production before venturing into producing films. He set up India’s first digital audio studio and then, ventured into the business of providing services for the production of TV programs & ad films by hiring out video equipment's.
Mr. Naresh Malhotra Chairman Emeritus and
Whole-Time Director
Mr. Jaisingh is the India and Financial Services Sector specialist for SCPE. He has wide experience in investment banking and commercial banking roles. He is an MBA from the IIM, Bangalore.
Mr. Nainesh Jaisingh Non-Executive Director
A Chartered Accountant and a Cost Accountant, he has extensive experience in the fields of Internal, Statutory and Management audits, corporate laws, taxation laws, financial consultancy, and Costing and Management Information services.
Mr. Kodi Raghavan Srinivasan Independent &
Non-Executive Director
A successful businessman, Mr. Chadha is an MBA in finance from Cardiff University, England and Wales.
Mr. Rivkaran Chadha Independent &
Non-Executive Director
Mr. Aiyar has been a practicing Advocate at the Bombay High Court for the past 30 years. He has expert knowledge in Civil Law, Company Law and industrial arbitration matters.
Mr. Padmanabha Gopal Aiyar Independent &
Non-Executive Director
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Key Management
As the global leader of Prime Focus, Mr. Malhotra is responsible for all decision-making with respect to business, people and technology. Born into a family of three generations of working Bollywood professionals, Mr. Malhotra has been immersed in the movie business his entire life. Starting in the late 1990s, he helped build Prime Focus from a one-room editing suite to become one of the world’s foremost providers of creative and technology services for the entertainment industry.
Mr. Namit MalhotraExecutive Chairman
&Group CEO
Mr. Ramakrishnan has over 18 years of rich experience in the IT industry. He has specific experience in deployment of technology within the Media & Entertainment sector. Prior to Prime Focus, Ramki was the CEO of Subex Technologies. Prior to joining Subex, he was head of worldwide sales and marketing at Tata Elxsi, Product R&D Services. Ramki also set up the operations of Tata Elxsi in the US and grew it into a multi-million dollar region. He is an MBA degree from S.P Jain Institute of Management & Research.
Mr. Ramakrishnan Sankaranarayanan
Managing Director, PFL&
Founder & CEO,PFT
Mr. Rathee brings with him over 15 years of experience across Corporate Finance, TMT (Telecom, Media and Technology) Investment Banking, Capital Markets and M&A. He has proven cross-functional expertise across US, Europe and Asia. Before joining Prime Focus, he was Head - Corporate Finance and M&A at Suzlon Energy, Principal - TMT Investment Banking at Bank of America Merrill Lynch and Executive Director - TMT Investment Banking at ABN AMRO. Vikas holds an MBA in Finance from the R.H. Smith School of Business, University of Maryland.
Mr. Vikas RatheeChief Financial Officer
Mr. Nishant Fadia Chief Operating Officer
Mr. Fadia has experience of over 14 years in Finance structuring, cost control, business strategy, identifying new expansion opportunities, acquisitions, fund raising etc. In addition to being a Chartered Accountant from the Institute of Chartered Accountants of India (ICAI), he has also completed his CPA degree from the American Institute of Certified Public Accountants AICPA in the United States.
Annexure
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Historical financials – Profit and Loss
Particulars FY11 FY12 FY13 FY14
Revenues 5,030 7,719 7,622 10,342
Payments to and provision for employees 1,105 1,692 3,084 4,598
Technician fees 942 1,936 766 817
SG&A, other expenses 1311 1877 2,019 2,945
Total Expenses 3,359 5,505 5,869 8,360
Forex Gain(loss) 145 68 381
EBITDA 1,671 2,359 1,821 2,363
Depreciation 546 711 999 1,332
EBIT 1,125 1,648 822 1,031
Other Income 150 57 107 79
Finance Costs 263 348 418 687
Profit before tax and Exceptional Items 1,012 1,357 510 424
Exceptional Items/ Prior period items 70 29 1,077 174
Profit before tax 942 1,328 (567) 250
Tax 60 300 (398) 71
Profit after tax before minority interest 882 1,028 (168) 179
Minorities Interest and others 121 35 35 (64)
Reported PAT 761 993 (203) 243
Figures in Rs Million, consolidated financials
Financial year 14 has been extended to 15 months ending June, 2014 figures are not comparable with FY13
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Segmental break-up of revenue
Figures in Rs Million, consolidated financials
Business segments FY11 FY12 FY13 FY14
PFT 110 336 809 2,088
PFW (3D+VFX) 2,484 4,624 4,483 6,148
Post Production 2,436 2,760 2,330 2,106
Total revenues 5,030 7,720 7,622 10,342
% share in total revenues FY11 FY12 FY13 FY14PFT 2% 4% 11% 20%
PFW (3D+VFX) 49% 60% 59% 59%
Post Production 48% 36% 31% 20%
Geographic segments FY11 FY12 FY13 FY14
Sales domestic 858 1,032 1,257 2,068
Sales export 3,670 6,687 6,364 8,273
Total revenues 4,528 7,719 7,622 10,342
% share in total revenues FY11 FY12 FY13 FY14
Sales domestic 19% 13% 16% 20%
Sales export 81% 87% 84% 80%
Financial year 14 has been extended to 15 months ending June, 2014 figures are not comparable with FY13
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Balance Sheet
Figures in Rs Million, consolidated financials
Financial year 14 has been extended to 15 months ending June, 2014
Particulars FY11 FY12 FY13 FY14Shareholder's Equity 3,645 4,967 5,544 7,375
Total Debt 4,138 2,732 6,301 7,475Minority Interest 416 451 641 1,613Other Long Term Liabilities - 43 177 606Provisions 3 8 14 14Trade Payables 573 1,474 610 1249Deferred Tax 131 119Other Current Liabilities 948 3,333 1,750 2,258
Total Liabilities and Owner's Equity 9,722 13,009 15,167 20,709Net block 6,628 8,504 8,617 10,922Capital Work in Progress 40 21 206 41Intangible assets under development 34 35 63 157
Investments 1 1 1 1Deferred Tax Assets (189) (268) 601 1129Long-term Loans and Advances 309 362 802 939Other Non-current Assets 120 220 169 1
Inventory 3 6 4 0Trade Receivables 1,694 2,936 2,549 3,853Cash and cash equivalents 179 314 491 225Other Current Assets 57 451 1,032 1,706Short term Loans and Advances 846 427 631 1,731
Total Assets 9,722 13,009 15,167 20,709
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ParticularsQtr ending
Sep14Qtr ending
Sep 13Qtr ending
June 14% Chg
YoY% Chg QOQ
15M FY'14
Net sales / income from operations 3,502 1,961 1,995 79% 76% 10,345
Total Expenditure 3,390 1,510 1,851 125% 83% 8,360Personnel Cost (including technician fees) 2,391 957 1,315 150% 82% 5,414
Other Expenditure 999 552 536 81% 86% 2,945
Foreign exchange gain/(loss) 32 204 89 -84% -63% 381
EBITDA 144 654 233 -78% -38% 2,366
Depreciation & amortization 466 284 294 64% 58% 1,332
EBIT -322 370 -62 NA NA 1,034
Interest & Finance charges 158 111 175 43% -9% 687
Other income 142 41 12 249% NA 76
Exceptional Items- Expenditure/ (Income) 343 4 88 NA NA 174
PBT -681 296 -312 NA NA 250
Tax Expense -357 55 -161 NA NA 71
Minority Interest -105 27 -63 NA NA -64
PAT -220 213 -88 NA NA 243
Key Ratios Qtr ending
Sep14Qtr ending
Sep 13Qtr ending
June 1415M
FY'14EBITDA Margin 4.1% 33.4% 11.7% 22.9%
Net Margin -6.3% 10.9% -4.4% 2.3%
Total Expenditure/ Revenues 96.8% 77.0% 92.8% 80.8%Personnel Cost/ Total Operating Income 68.3% 48.8% 65.9% 52.3%Other Expenditure/ Total Operating Income 28.5% 28.2% 26.8% 28.5%• Qtr ending Sep 14 includes Financials of Double negative which was acquired by Prime Focus in last
quarter Hence figures are not comparable with last year figures.
Figures in Rs Million, consolidated financials
Q1FY’15 Profit & Loss Statement
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Contact information
Alok GuptaPrime Focus Limited Phone: +912261785573 / +91 8879360082Email: [email protected]
Investor contacts
Nisha Kakran/ Seema ShuklaFour-S Services Pvt LtdPhone: : +91 22 42153659/+91 9810408474 Email: [email protected]/[email protected]
© 2015 Prime Focus Limited. All Rights Reserved.
About Prime Focus Limited Prime Focus Limited (PFL), the world’s largest media services powerhouse employs over 5,500 professionals in 16 cities across 4 continents and 7 time zones. We provide end-to-end creative and technology services including visual effects, stereo 3D conversion, animation, post-production, Digital Intermediate (DI), equipment rental, hybrid cloud-enabled Media ERP technology and cloud media services to Studios, Broadcast, Advertising and Media industries.
Prime Focus is behind path breaking technologies like CLEAR™ (Hybrid Cloud technology enabled Media ERP platform), Primetime Emmy® award-winning DAX Digital Dailies® and View-D™ (stereoscopic 2D to 3D conversion). Leveraging our Global Digital Pipeline and pioneering delivery model WorldSourcing® we partner content creators at every stage of the process ensuring creative enablement, work flow efficiencies and cost optimization.
The first quarter of 2014 has seen a spate of M&As: Prime Focus Technologies acquired DAX, a leading provider of cloud-based production workflow and media asset management applications; Prime Focus World merged with Double Negative, one of the world’s foremost providers of visual effects; and Reliance MediaWorks merged their global film and media services business with Prime Focus Limited.
Listed on the BSE and NSE of India, Prime Focus has operations in Bangalore, Beijing, Cape Town, Chandigarh, Delhi, Goa, Hyderabad, Johannesburg, Kolkata, London, Los Angeles, Mumbai, New York, Singapore, Toronto and Vancouver.
For more detailswww.primefocusltd.comwww.primefocusworld.comwww.primefocustechnologies.comwww.primefocusgroup.com