ABS-CBN Corporation Sgt. Esguerra Avenue, Quezon City, Philippines

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1 ABS-CBN Corporation Sgt. Esguerra Avenue, Quezon City, Philippines 15 August 2011 Philippine Stock Exchange, Inc. Attn: Ms. Janet A. Encarnacion Head, Disclosure Department 3 rd Floor, Philippine Stock Exchange Plaza Ayala Triangle, Ayala Avenue, Makati City Subject: st Half Analyst and Business Press Briefing Gentlemen / Ladies: We are providing you the attached copies of the materials that we presented during our scheduled analyst and business press briefing for our 2011 first half financial performance. Thank you. Very truly yours, Paul Michael V. Villanueva, Jr. Compliance Officer for Corporate Governance

2 PRESS RELEASE Release Date : FOR IMMEDIATE RELEASE Reference : Paul Michael Villanueva, Head, Treasury and Compliance Officer Tel : local mike_villanuevas@abs-cbn.com ABS-CBN nets P1.7 billion for the first half of 2011 Quezon City, Philippines (August 15, 2011) The consolidated net income of ABS-CBN Corporation ( ABS-CBN or the Company ) (PSE: ABS, ABSP), the country s largest multimedia conglomerate, registered P1.7 billion for the first six months of the year. ABS-CBN delivered consolidated revenues of P13.9 billion from advertising and consumer sales, an 18% decline compared to a year ago. Less the revenues from political advocacies and advertisement from the first six months of 2010, consolidated revenues in the first half of 2011 increased by 1% year-on-year. ABS-CBN s advertising revenues reached P8.8 billion, a decline of 24% from a year ago. Minus the revenues from political advocacies and advertisement in the first half of 2010, advertising revenues increased by 4% year-on-year. Consumer sales for the first half of 2011 amounted to P5.1 billion, posting a 4% decrease or P219 million less from a year ago, mainly from ABS-CBN Global. ABS-CBN Global revenues declined by 14% year on year in peso terms due to the decline in subscribers and the appreciation of the Philippine peso against the US dollar. Meanwhile, Sky Cable continues to contribute positively with revenues increasing by 8% to P2.1 billion. This is mostly driven by the increased take up of its broadband service subscriptions which increased by 23% year-on-year Total operating and other expenses dropped by P969 million or 9% year-on-year to P10.4 billion. This was partly a result of lower cost of sales and services and general and administrative expenses (GAEX) as the company continued its effort to manage and control expenses. The decline in both expense accounts more than made up for the increase in total production costs due to the Company s drive to produce quality and innovative programs. Net income attributable to shareholders for the first half of 2011 is at P1.7 billion, aided by a gain on sale of Sky Cable Philippine Depositary Receipts (PDRs) to the Singaporean company,

3 STT Communications Ltd. Meanwhile, earnings before interest, taxes, depreciation and amortization (EBITDA) hit P4.0 billion. Capital expenditure and film and program rights acquisition for the first half of 2011 amounted to P2.1 billion, P542 million or 34% higher than the level of spending from previous year. Additional equipment was purchased to increase the company s capacity to produce additional new programs. ABS-CBN maintained its national audience share and ratings leadership with prime-time audience share averaging 42% in the first quarter of 2011, with a 12 percentage point lead over GMA s, based on the Kantar National TV Ratings figure. For the period January to June 2011, eighteen of the company s primetime shows were in the Top 20 with fifteen occupying the Top 13 slots: Emil Cruz Jr.'s Mara Clara, 100 Days To Heaven, Pablo S. Gomez's Mutya, Minsan Lang Kita Iibigin, Guns And Roses, Pilipinas Got Talent (Saturday and Sunday), Noah, Maalaala Mo Kaya..., TV Patrol (Weekday), Imortal, Rated K Handa Na Ba Kayo?, Wansapanataym, Gandang Gabi Vice and Goin Bulilit. ABS-CBN Global s overall viewer count decreased by 1% year-on-year, driven by the decline in subscriber growth in the Middle East, Europe and Japan. Double digit subscriber growth continued to be experienced in Canada, and mid-to-high single digit subscriber growth in Asia- Pacific and Australia. Sky Cable s consolidated revenues from cable TV and broadband services grew 8% year-onyear, driven by strong growth in broadband subscriptions. ABS-CBN Film Productions, Inc. released eight films in the first six months of this year. Four of them Ang Tanging Ina Mo Last Na To, Dalaw, Catch Me I m in Love and In The Name of Love topped P100 million in box office receipts, earning blockbuster status by local standards. --- About ABS-CBN Corporation ABS-CBN Corporation is the leading Philippine entertainment and information multimedia conglomerate. In the Philippines, ABS-CBN produces a wide variety of engaging world-class entertainment programs in several genres and balanced credible news programs that are aired on free-to-air TV via Channels 2 (VHF) and 23 (UHF) and a regional network of TV and radio stations nationwide. It also provides news and entertainment programming for nine channels on cable TV. The Company owns the leading film and music production and distribution outfit in the Philippines, and has interests in cable TV, Internet and mobile services, and glossy-magazine publishing. It brings its content to worldwide audiences via cable, satellite and the Internet, primarily through ABS-CBN Global s The Filipino Channel (TFC).

4 MANAGEMENT S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE FIRST HALF OF 2011 For the first six months of the year ending June 30, 2011, ABS-CBN Corporation ( ABS-CBN or the Company ) generated consolidated revenues of P13.9 billion from advertising and consumer sales, P3.0 billion or 18% lower year-on-year. Minus the revenues of P3.1 billion from political advocacies and political advertisement in first half of 2010, consolidated revenues increased by 1% year-on-year. Overall, the contribution share of both advertising revenues and consumer sales to consolidated revenues remain robust in the absence of political advocacies and political advertisement. Advertising revenues contributed 63% of total consolidated revenues while consumer sales made up the balance of 37%. Total operating and other expense in the first half of 2011 was at P10.4 billion, or a 9% decline year-on-year. Reported net income was at P1.7 billion for the first half of 2011, inclusive of the P674 million gain in sale of Sky Cable Philippine Depositary Receipts (PDRs), a 26% decline year-on-year. Removing the effects of this one-time gain in the first quarter of 2011 and P3.1 billion revenues generated from political advocacies and political advertisement in the first half of 2010, net income would have increased by 19% year-on-year. Reported EBITDA hit P4.0 billion in the first half of 2011, or a 21% decline year-on-year. Stripping the onetime gain in the first half of 2011 and equally discarding the P3.1 billion revenues generated from political advocacies and political advertisement in the first half of 2010, EBITDA would have grown by 8% year-onyear. The table below summarizes the key performance indicators for the period as discussed above. Key Performance Indicators (Amounts in million Pesos) 1H11 1H10 Variance Amount % Consolidated Revenues 13,884 16,838 (2,954) (18) Consolidated Advertising Revenues 8,760 11,496 (2,736) (24) Consolidated Consumer Sales 5,124 5,343 (218) (4) Operating and Other Expenses 10,355 11,324 (969) (9) Net Income 1,677 2,265 (588) (26) EBITDA 3,967 4,997 (1,030) (21) Consolidated Revenues For the first half ending June 30, 2011, ABS-CBN generated consolidated revenues of P13.9 billion from advertising revenues and consumer sales, P3 billion or 18% lower year-on-year. Minus the revenues of P3.1 billion from political advocacies and political advertisement in the first half of 2010, consolidated revenues would have increased by 1% year-on-year. With the absence of election-related advertising revenues in 2011, the contribution of consumer sales to total revenues is higher at 37% from 32% a year ago. 1

5 Consolidated Revenues (Amounts in million Pesos) 1H11 1H10 Variance Amount % Consolidated Advertising Revenues 8,760 11,496 (2,736) (24) Consumer Sales Sale of Services 4,908 5,125 (216) (4) Sale of Goods (2) (1) Consolidated Consumer Sales 5,124 5,343 (218) (4) Consolidated Revenues 13,884 16,838 (2,954) (18) Political Advocacies/Political Advertisements - 3,060 (3,060) (100) Consolidated Revenues Net of Political Advocacies/ Political Advertisements 13,884 13, Advertising Revenues Consolidated advertising revenues across all platforms and subsidiaries declined by 24% to P8.76 billion. Minus the revenues of P3.1 billion from political advocacies and political advertisement in the first half of 2010, however, advertising revenues increased by 4% year-on-year. ABS-CBN maintained its national audience share and ratings leadership with prime-time audience share averaging 42% in the first half of 2011, with a 12 percentage point lead over GMA s, based on the Kantar National TV Ratings figure. For the period January to June 2011, eighteen of the company s primetime shows were in the Top 20 with fifteen occupying the Top 13 slots: Emil Cruz Jr.'s Mara Clara, 100 Days To Heaven, Pablo S. Gomez's Mutya, Minsan Lang Kita Iibigin, Guns And Roses, Pilipinas Got Talent (Saturday and Sunday), Noah, Maalaala Mo Kaya..., TV Patrol, Imortal, Rated K Handa Na Ba Kayo?, Wansapanataym, Gandang Gabi Vice and Goin Bulilit. Consumer Sales Consumer sales for the first half amounted to P5.1 billion, or a 4% decline year-on-year. Consumer Sales Variance 1H11 1H10 (Amounts in million Pesos) Amount % ABS-CBN Global 2,268 2,650 (382) (14) Sky Cable 2,092 1, Other subsidiaries Consolidated Consumer Sales 5,124 5,343 (219) (4) ABS-CBN Global s revenues declined year-on-year by 14% in peso terms or 10% in US dollar terms. The stronger decline in peso terms was due to 5% or P2.30 appreciation of the Philippine peso exchange rate against the US dollar, from P45.77 in the first half of 2010 down to P43.50 in the first half this year. ABS-CBN Global s overall viewer count declined by 1% year-on-year to an estimated 2.42 million at the end of June 2011, driven by the decline in subscriber count in the Middle East, Europe and Japan. Double digit 2

6 growth continued to be experienced in Canada, and mid-to-high single digit growth in Asia-Pacific and Australia. Sky Cable s consolidated revenues from cable TV and broadband services grew 8% year-on-year, driven by 24% growth in broadband revenues. Broadband service subscriptions surged 23% year-on-year, while subscriptions to Sky Cable s post-paid TV offering grew by 9%. ABS-CBN Film Productions, Inc. released eight films in the first six months of this year, one more than the same period in Four of them Ang Tanging Ina Mo Last Na To, Dalaw, Catch Me I m In Love and In The Name of Love topped P100 million in box office receipts, earning blockbuster status by local standards. Operating and Other Expenses Total operating and other expense in the first half of 2011 was at P10.4 billion, or a 9% decline year-on-year. Total Operating and Other Expenses Variance 1H11 1H10 (Amounts in million Pesos) Amount % Production Costs 4,558 3, Cost of Sales and Services 3,212 3,488 (276) (8) General and Administrative Expenses 3,234 3,822 (588) (15) Other Expenses (Income) (649) 179 (828) (460) Consolidated Total Operating and Other Expenses 10,355 11,324 (969) (9) Production Costs In the first half, total production costs rose by P723 million or 19% to P4.6 billion, due to higher programming costs, particularly of primetime and noontime programs. Cash production costs went up by P638 million or 20% year-on-year, mostly from increase from talent fee adjustments and from new programs that brought talent fees, equipment rentals and service fees, and other expenses substantially higher. Production Costs Variance 1H11 1H10 (Amounts in million Pesos) Amount % Personnel Expenses and Talent Fees 2,084 1, Facilities-Related Expenses 1, Other Program Expenses Sub-total: Cash Production Costs 3,809 3, Non-Cash Production Costs Consolidated Production Costs 4,558 3, Non-cash production costs went up by 13% to P664 million, due to higher depreciation costs. Cost of Sales and Services Cost of sales and services declined by 8% or P276 million to P3.2 billion. 3

7 ABS-CBN Global s cost of sales declined 31% in peso terms declining faster than the 14% year-on-year reduction in its sale of goods and services. Sky Cable s cost of sales meanwhile, grew by 8% year-on-year, the same increase generated by its gross revenue also at 8%. Cost of Sales and Services Variance 1H11 1H10 (Amounts in million Pesos) Amount % ABS-CBN Global 968 1,402 (434) (31) Sky Cable 1,494 1, Other Subsidiaries Consolidated Cost of Sales and Services 3,212 3,488 (276) (8) General and Administrative Expenses Total General and Administrative Expenses (GAEX) posted a 15% or P588 million year-on-year decline to P3.2 billion. General and Administrative Expenses Variance 1H11 1H10 (Amounts in million Pesos) Amount % Personnel Expenses 1,558 1,910 (352) (18) Contracted Services Facilities-Related Expenses (43) (15) Depreciation (35) (11) Provision for Doubtful Accounts (94) (49) Other Expenses (79) (11) Consolidated GAEX 3,234 3,822 (588) (15) Cash GAEX went down by P466 million to P2.8 billion, of which more than half is accounted for by personnel expenses. Net Income The company generated net income of P1,677 million for the first six months of 2011, inclusive of the P674 million gain in sale of Sky Cable PDRs, a 26% decline year-on-year. Removing the effects of this one-time gain in the first half of 2011 and P3.1 billion revenues generated from political advocacies and political advertisement in the first half of 2010, net income would have increased by 19% year-on-year. EBITDA Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first half of 2011 hit P4.0 billion, or a 21% decline year-on-year. Stripping the one-time gain in the first half of 2011 and equally shaving the P3.1 billion revenues generated from political advocacies and political advertisement in the first half of 2010, EBITDA would have grown by 8% year-on-year. 4

8 Capital Expenditures Capital expenditures and program rights acquisitions for the first half of 2011 amounted to P2,117 million, P542 million or 34% higher year-on-year. These are all programmed expenditures to increase the company s capacity to produce additional shows. Balance Sheet Accounts As at June 30, 2011, total consolidated assets stood at P43.2 billion, P4.2 billion or 11% higher than total assets of P39.0 billion as at December 31, Cash and cash equivalents of P7.5 billion is P1.7 billion or 29% higher than the December 31, 2010 balance. Consolidated trade and other receivables stood at P9.3 billion, P2 billion or 28% higher than as at the end of Days sales outstanding of 92 days is 29 days more than the 63 days as at December 31, 2010, as trade accounts receivables amounting to P7.3 billion is P1.8 billion or 32% higher than the P5.6 billion trade accounts receivables at the end of The corresponding increase in receivables and accretion of DSO are well anticipated with the removal of discount schemes on prompt payment. Total interest-bearing loans went up by P3.0 billion or 31% to P12.6 billion compared with P9.6 billion at the end of last year. Shareholders equity stood at P19.7 billion, P2.0 billion or 11% higher than the P17.7 billion shareholders equity at the end of December The company s net debt-to-equity ratio rose slightly to 0.26x as a result of higher debt versus 0.22x at the end of last year. The company s debt ratios remain well within the limits prescribed under its loan covenants. * * * * 5

9 First Half 2011 Financial & Operating Results The Chronicle Lounge 14/F Eugenio Lopez Jr. Communications Center Eugenio Lopez Ave., Q.C. Monday, 15 August

10 Consolidated Gross Revenues Php13.9 billion 1H2011 Consolidated Gross Revenue 18% year-on-year Advertising Revenues 63% Consumer Sales 37% 2

11 Consolidated Advertising Revenues in Php Millions 11,496 8,760 Political Advocacies & Advertisements 4% YoY without political advocacies and advertisements 3

12 National Ratings Total Philippines Kantar Media/TNS National Urban Philippines TV Audience Shares (1H 2011) Total Day Audience Share Evening Primetime Audience Share ABS-CBN GMA TV 5 Studio 23 4

13 Top 20 Programs Kantar Media/TNS National Urban Philippines Top Programs (1H 2011) 18 ABS-CBN programs made it to the Top 20 in 1H

14 Consumer Sales in Php Millions 6,000 5,343 5,124 4% YoY 3, H H

15 ABS-CBN Global ~ 2.42 million viewers worldwide, down 1% YoY Decline in subscriber growth in Middle East, Europe and Japan Despite continued growth in Canada, Asia Pacific and Australia 7

16 Sky Cable Strong revenue growth, up 8% YoY 24% YoY increase in broadband revenue on the back of 23% YoY growth in subscribers 9% YoY growth in post-paid cable subscribers driven by the lower end Php 280 and Php 499 packages 8

17 ABS-CBN Film Productions 4 of 8 films released in 1H2011 broke past the Php 100 million mark in gross box office receipts 9

18 Operating & Other Expenses in Php Millions 9% YoY 12,000 11,324 10,355 9,000 6,000 3,000 3,835 19% YoY 4,558 8% YoY 15% YoY 3,488 3,822 3,212 3, % YoY ,000 Total Expenses Production Cost Cost of Sales and Services General & Administrative Expenses -649 All Other Expenses 1H H

19 Production Cost in Php Millions 5,000 3,835 19% YoY 4,558 3,171 20% YoY 3,809 2, % YoY Production Cost Cash Non-cash 1H H

20 Cost of Sales and Services in Php Millions 8% YoY 3,500 3,000 3,488 3,212 2,500 2,000 1,500 1, % YoY 8% YoY 1,402 1,389 1, % YoY Total Cost of Sales and Services ABS-CBN Global SkyCable Other Subs 1H H

21 General & Administrative Expenses in Php Millions 4,000 3,000 15% YoY 3,822 3,234 3,299 14% YoY 2,833 2,000 1,000 0 General & Administrative Expenses Cash 1H H % YoY Non-Cash 13

22 Consolidated Net Income in Php Millions 2,400 2,265 1,677 26% YoY 1, H2010 1H

23 Consolidated EBITDA in Php Millions 5,000 4,997 3,967 21% YoY 2, H2010 1H

24 Capital Expenditure & Film Rights in Php Millions 2,400 1,575 2,117 34% YoY 1, H2010 1H

25 Balance Sheet Accounts End June 30, 2011 vs. December 31, 2010 Total Assets Cash and Cash Equivalents Consolidated Trade & Other Receivables Day s Sales Outstanding Total Interest Bearing Debt Shareholders Equity Net Debt-to-Equity Ratio Php 43.2B Php7.5B Php9.3B 92 days Php12.6B Php19.7B 0.26x 11% 29% 28% 29 days 31% 11% 0.04x

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