ACQUISITION OF KURNIA OUTDOOR - Media Prima Berhad

ACQUISITION OFKURNIA OUTDOOR13 NOVEMBER 2009

CONTENTS2Section 1The Malaysian Outdoor IndustrySection 2About Kurnia OutdoorSection 3Proposed Transaction Structure and Value

SECTION 1:THE MALAYSIAN OUTDOOR INDUSTRY

THE INDUSTRY4Nielsen Media Research (a media index survey company) estimates that theoutdoor ADEX represents 2% of the total ADEX, or RM100 million.Media Prima’s own estimate is that the total outdoor ADEX for Malaysia is in theregion of RM300 million, or between 5% to 6% of total ADEX of RM5 billion.The key industry players and their estimated market share are:EstimatedMarket SizeMarket Player% shareBig Tree, UPD, TRC 33Kurnia 10Meru Utama 9Seni Jaya 9Others (small & fragmented) 39100Covering financial years 2005 to 2007

SECTION 2:ABOUT KURNIA OUTDOOR

BACKGROUND6Kurnia Outdoor (Kurnia) is currently the 2 nd largest outdoor advertising outfit inMalaysia after Big Tree Outdoor (Big Tree), with market share of approximately 10%of Outdoor ADEXKurnia focuses its business covering key metropolitan and market centres of KualaLumpur, Petaling Jaya, Penang and Johor Bahru. Recently, it made a foray into KotaKinabalu.Kurnia focuses on high end markets as follows:i. Concession over the Sprint Highway with “high end” traffic and outdooradvertising rights for Pusat Bandar Damansara.ii.iii.The outfit mainly develops big spectacular structures with high value perasset.Its advertising base comprise those that targets urban and high-endconsumers, with the bulk of its advertisers being telcos, financialinstitutions, lifestyles and fashion brands, electrical products, consumergoods and automotive brands.

PREVIOUS SHAREHOLDERS7APN OutdoorPaul Sapwelland Partners50% 50%• APN Outdoor is part of APNNews & Media, one of thelargest multimedia companiesin Australasia• The Group owns mediainterests in newspaperpublishing, radio, outdoor andonline in Australia, NewZealand and Indonesia.• The day-to-day running,however, is left to PaulSapwell and his partners.KURNIAOUTDOORConcessions /site licensesoperated byKurnia Outdoor SBJupiter Outdoor Network SB• Paul Sapwell and his partners,Koh Swee Han and Yew WaiSun, manage and operateKurnia.• Paul Sapwell is a renowedindustry figure in Malaysia; hewas one of the pioneers inUtusan Pearl & Dean.• Kurnia has a small set-up; itscurrent staff strength is only25 with its office in DamansaraPerdana.• Kurnia was set-up inNovember 1997 with annualturnover of RM28m, making itthe second largest outdoorcompany in Malaysia.

STRONG FINANCIAL TRACK RECORD8Kurnia is a profitable entity with stable increase in revenue and profitability. Revenue and net profits are on the upward trend since 2006. Even though revenue and profits are expected to remain on similar level as to 2008,the prime locations of its inventory together with its client base, are expected todrive future growth.The 2 year revenue and net profit trend is as follows:2007 2008Revenue (RM'000) 22,638 26,411Growth (%) 16.67Net Profit (RM'000) 4,266 6,548Growth (%) 53.49

MIXTURE OF CONCESSION-BASED AND PRIVATE SITES9Kurnia maintains a good mixture of concession-based business together with innercity free market sites and key private and state owned sites.This mixture provides a certain degree of certainty on medium to long termsecurity of good sites together with the more short term renewal of free marketsites.The major concession areas are: Sprint Highway New Pantai Expressway Besraya Highway Jelutong Highway Pusat Bandar Damansara buildingKey private and state owned sites, located along: KLIA expressway Federal Highway (especially on the Petaling Jaya stretch) Kuala Lumpur city centre

MAJOR KURNIA SITES10

MAJOR KURNIA SITES11

MAJOR KURNIA SITES12

PROPOSED TRANSACTION STRUCTURE14• To initially acquire 80% of Kurnia from APN and Paul Sapwell/ Partners for totalpurchase price of RM33 million based on a multiple of 6.25 times and earnings of RM6.6million.• Thereafter, to acquire the balance 20% in Kurnia from Paul Sapwell & Partners over thenext 3 years under the following terms:• Fixed: RM9.076 million• Variable: depending on meeting certain performance targets for FYE2009 to 2011,payment of up to RM4.291 million• The total purchase price for Kurnia is as follows:Vendor% of SaleSharesPurchase considerationPurchasePrice(RM '000) *Variable(RM'000)Total(RM'000)Initital on 13 November 2009:APN 50% 20,625 - 20,625Paul Sapw ell & Partners 30% 12,375 - 12,37580% 33,000 - 33,000Blendedmultiple of upto 7.03 timesSubsequent:Paul Sapw ell & Partners 20% 9,076 4,291 13,367Grand total 100% 42,076 4,291 46,367

VALUATION ANALYSIS15P urchase co nsideratio n 46.367Equity stake on offer 100%Enterprise value 46.367EB IT D A (R M 'm)20082009 (E)2010 (E)P A T (R M 'm)20082009 (E)2010 (E)EV / EB IT D A (times)20082009 (E)2010 (E)P ER (times)20082009 (E)2010 (E)R M millio nP urchase price9.569.0010.066.606.007.004.855.154.617.037.736.62• At Enterprise Value (EV) of RM46.37million, Kurnia yields EV/EBITDA and PERmultiple of 4.85 times and 7.03 timesrespectively.• The EV/EBITDA and PER multiples aresignificantly lower than those of Big Treein 2007 of 6.5 and 10.7.• Globally, and prior to the depressedeconomic climate, outdoor companiestrade between 9.0 to 12.0 times PERmultiple.• Based on an estimated net profit ofRM7.0m in 2010, the PER multiple wouldfall to 6.62 times.• Media Prima, currently, is trading at PERof 10.91 times.• Given the Number 2 position occupied byKurnia, and the potential upside from theacquisition, Media Prima believes that thevaluation accorded to Kurnia is fair.

IMPACT OF EARNINGS16• The pro-forma financial impact of the acquisition of Kurnia to Media Prima, based on theaudited accounts of Media Prima for FYE2008:RM 'm MPB KurniaMPB PostAcquisitionsPATAMI ** 117.00 7.00 124.00No of shares (m) 853.81 - 853.81** FYE2008 earnings exclude lossesfrom TV5, which was divested on 3November 2009EPS (Sen) 13.70 14.52The acquisition is expected to be earnings accretive to Media Prima, with the acquisitionforecasted to increase net profit by RM7.0 million in 2010EPS is expected to grow by 6% based on Media Prima FYE2008 net profit.The impact on earnings, however, does not take into account the goodwill and intangibleassets that Media Prima potentially have to recognised from the acquisition. The effect ofthe amortisation of the intangible assets on the earnings will be determined upon receiptof information on Kurnia’s future revenue stream arising from, among others, mid to longterm contracts and concessions.

BENEFITS TO MEDIA PRIMA AND ITS OUTDOOR GROUP17With the acquisition of Kurnia, the Group will strengthen its holdings and control in excess of40% of Malaysia’s Outdoor ADEX.Kurnia complements Media Prima/Big Tree:-a. Kurnia focus on high-end clients whereas Big Tree’s existing targets are mainly themass advertisers.b. Kurnia’s sites are in premium areas and market centres whereas Big Tree’s sites arepredominantly concession based and outside market centres. Kurnia has strongpresence in Kota Kinabalu/Sabah, a market in which Big Tree does not have apresenceyet.The revenue from Kurnia will make the Group’s combined revenue from its Outdoor Divisionto exceed RM120 million with annual earnings exceeding RM25 million. This furtherconsolidates the Group’s position as Malaysia’s leading outdoor advertising outfit.The stable earnings of Kurnia comes from a good mixture of concession-based and freemarket sites, with a clientele that targets high-end and urban brands across market centres.Kurnia comes with a competent Management team which has committed to continue tomanage Kurnia’s business. This re-enforces the Group’s talent pool.

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