Investor Presentation June 2019
Disclaimer and Forward-Looking Statements Disclaimer This presentation is not, and under no circumstances is to be construed as, an advertisement or a public offering in Canada of the securities referred to in this presentation, nor does this presentation constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein within the United States. No securities commission or similar authority in Canada has reviewed or in any way passed upon this presentation or the merits of the securities described herein and any representation to the contrary is an offence. Forward-Looking Statements This presentation may include forward-looking statements. All such statements constitute forward looking information within the meaning of securit ies law and are made pursuant to the “safe harbour ” provisions of applicable securities laws. Forward-looking statements may include, but are not limited to, statements about anticipated future events or r esults including comments with respect to the Company’s objectives and priorities for 2019 and beyond, and strategies or further actions with respect to the Company, its business operations, financial performance and condition. Forward-looking statements are statements that are predictive in nature, depend upon or refer to future events or conditions and are identified by words such as “will”, “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates” or similar expressions concerning matters that are not historical facts. Such statements are based on current expectations of the Company’s management and inherently involve numerous risks and uncertaint ies, known and unknown, including economic factors. In particular, the statements set out in the Outlook section of this press release regarding our expected Adjusted EBITDA for the year ending December 31, 2019, our expected financial performance for the remainder of 2019 and our expectations regarding the performance of our production and distribution segments for the remainder of 2019, constitute forward- looking statements. These statements are based on management’s current strategies, assumptions concerning growth and assessment of the outlook for the business. In particular, such statements assume that: (i) our production companies will continue to develop, produce and deliver successful productions in a manner consistent with past experience and on expected delivery schedules as outlined under “Outlook” in the pr ess release; (ii) the product mix of the Company’s revenues will continue to be skewed towards higher margin titles; (iii) we will continue to acquire and distribute content in a manner consistent with past experience; (iv) our operating and overhead costs will be within budget; and (v) that the companies we have acquired will meet or exceed our performance expectations. We consider the foregoing assumptions to be reasonable in the circumstances given the time period for such outlook. However, readers are cautioned that KEW’s actual results may vary from these forward -looking statements and that variation could be material. The forward-looking information contained in this news release is presented for the purpose of assisting readers in understanding the Company’s business and strategic priorities and objectives as at the periods indicated and may not be appro priate for other purposes. A number of risks, uncertainties and other factors may cause actual results to differ materially from the forward-looking statements contained in this news release, including, among other factors, those referenced in the section entitled “Risk Factors” in the Company’s annual information form for the year ended December 31, 2018, a copy of which is available on the SEDAR website at www.sedar.com under the Company’s prof ile . In particular, KEW’s results of operations fluctuate significantly quarter to quarter depending on the number and timing of content delivered or made available to various media. As in past years, KEW anticipates that its 2019 financial results will be heavily weighted in the fourth quarter and as a result, KEW may not have visibility on its ability to meet the 2019 guidance until the end of the fourth quarter of 2019. Forward-looking statements contained in this news release are not guarantees of future performance and, while forward-looking statements are based on certain assumptions that the Company considers reasonable, actual events and results could differ materially from those expressed or implied by forward-looking statements. Readers are cautioned to consider these and other factors carefully when making decisions with respect to the Company and not place undue reliance on forward-looking statements. Circumstances affecting the Company may change rapidly. Except as may be expressly required by applicable law, KEW does not undertake any obligation to update publicly or revise any such forward-looking statements, and as a result of new information, future events or otherwise. Non-IFRS Measures This news release contains references to certain measures that do not have a standardized meaning under International Financial Reporting Standards (“IFRS”) as prescribed by the International Accounting Standards Board and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing a further understanding of operations from management’s perspective. Accordingly, non -IFRS measures should not be considered in isolation nor as a substitute for analysis of financial information reported under IFRS. This news release makes reference to Gross Profit, Gross Profit Margin, Adjusted Net Income, Adjusted EBITDA, Free Cash Flow, Net debt, and Adjusted Net Debt, each of which is a non-IFRS financial measure. The Company believes these non- IFRS financial measures are frequently used by securities analysts, investors and other interested parties as measures of financial performance and it is therefore helpful to provide supplemental measures of operating performance and thus highlight trends that may not otherwise be apparent when relying solely on IFRS financial measures. The Company’s definitions of non -IFRS financial measures are as follows: • Gross Profit is revenue less cost of sales. • Gross Profit Margin is gross profit as a percentage of revenue. Adjusted Net Income is Income (Loss) before income tax recovery then includes add-back adjustments for items such as transaction costs, reorganization and exceptional costs, share-based compensation, deferred • compensation, other intangibles amortization, gain on change in fair value of financial liabilities, and (gain) loss on sale of subsidiary. Adjusted EBITDA is also provided to better analyze trends in performance and present a truer economic representation on a comparative basis. Adjusted EBITDA is Adjusted Net Income including additional add- • back adjustments for Interest Expense, net of Interest Income, Depreciation and any non-cash amortization (to the extent not added back to Adjusted Net Income). • Free Cash Flow is Adjusted EBITDA adjusted for additions to Property and Equipment, Interest and cash taxes. Adjusted Free Cash Flow is Free Cash Flow adjusted for additions to film and television rights, net of amortization. • Adjusted Net Income after tax is adjusted net income less income tax recovery. • Adjusted Net Debt is Net Debt less intra-group interim production financing and adjusted for the impact of foreign exchange • • Adjusted Earnings Per Share is Adjusted Net Income divided by weighted average number of common shares in the capital of the Company Please see the Company’s management’s discussion and analysis for the three months ended March 31, 2019 for a detailed descri ption of these measures and a reconciliation of these measures to the nearest IFRS measure. 2
Company Overview Egypt’s Unexplained Files TCB Media Rights
COMPANY OVERVIEW Introduction to KEW Media Group We are a leading content company that produces and distributes multi-genre content worldwide 13 2,200+ 14,000+ Thirteen Over 2,200 hours of Over 14,000 best-in-class content commercialized total library production companies in 2018 content hours 2 $76.2M 5 1 Two leading distribution $76.2 million 2018 Five primary offices in platforms: Kew Media Gross Profit, or Gross London, Los Angeles, Distribution and TCB Profit Margin of 34.0% New York, Sydney, Media Rights KPI due to diverse and Toronto product range 1) Gross Profit is revenue less cost of sales. 4
COMPANY OVERVIEW Our Team Officers & Directors Peter Sussman Steven Silver Chairman & Director CEO & Director • 30+ years in finance, production and • Co-founder, Blue Ice Group distribution of content • President, Barna-Alper Productions • Launched CSI franchise (CBS) Inc. prior to its sale to eOne • Co-founder, Aver Media Finance • Head of Factual Entertainment, eOne • Was Co-controlling shareholder of Alliance Atlantis and CEO of its Entertainment Group Erick Kwak Geoff Webb EVP, Business and Legal Affairs Chief Financial Officer • Executive Vice President of Legal • Joined Content Media Company and Business Affairs at CMC (CMC) in 2003 • Executive Vice President at • CFO and Company Secretary of CMC Franchise Pictures and Associate at from 2004-2017 Proskauer Rose LLP Additional Directors Julie Bristow Dave Fleck Maish Kagan Patrice Merrin Stephen Pincus John Schmidt Mark Segal Nancy Tellem 5
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