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ABS-CBN Corporation Sgt. Esguerra Avenue, Quezon City, Philippines
15 August 2011 Philippine Stock Exchange, Inc. Attn: Ms. Janet A. Encarnacion
Head, Disclosure Department 3rd Floor, Philippine Stock Exchange Plaza Ayala Triangle, Ayala Avenue, Makati City
Subject: 2011 1st 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
PRESS RELEASE
Release Date : FOR IMMEDIATE RELEASE Reference : Paul Michael Villanueva, Head, Treasury and Compliance Officer
Tel : 415.2272 local 4322 Email : [email protected]
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,
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-on-
year, 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).
1
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 one-
time 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-on-
year.
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.
2
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 216 218 (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 13,778 106 1
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 1H11 1H10
Variance
(Amounts in million Pesos) Amount %
ABS-CBN Global 2,268 2,650 (382) (14)
Sky Cable 2,092 1,936 156 8
Other subsidiaries 764 757 7 1
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
3
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 2010. 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 1H11 1H10
Variance
(Amounts in million Pesos) Amount %
Production Costs 4,558 3,835 723 19
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 1H11 1H10
Variance
(Amounts in million Pesos) Amount %
Personnel Expenses and Talent Fees 2,084 1,804 280 15
Facilities-Related Expenses 1,038 788 250 32
Other Program Expenses 687 579 108 19
Sub-total: Cash Production Costs 3,809 3,171 638 20
Non-Cash Production Costs 749 664 85 13
Consolidated Production Costs 4,558 3,835 723 19
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.
4
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 1H11 1H10
Variance
(Amounts in million Pesos) Amount %
ABS-CBN Global 968 1,402 (434) (31)
Sky Cable 1,494 1,389 105 8
Other Subsidiaries 750 697 53 7
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 1H11 1H10
Variance
(Amounts in million Pesos) Amount %
Personnel Expenses 1,558 1,910 (352) (18)
Contracted Services 381 366 15 4
Facilities-Related Expenses 240 283 (43) (15)
Depreciation 293 328 (35) (11)
Provision for Doubtful Accounts 97 191 (94) (49)
Other Expenses 665 744 (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.
5
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, 2010.
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
2010.
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 2010.
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 2010.
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.
* * * *
First Half 2011Financial & Operating Results
The Chronicle Lounge14/F Eugenio Lopez Jr. Communications Center
Eugenio Lopez Ave., Q.C.Monday, 15 August 2011
1
Php13.9 billion1H2011 Consolidated Gross Revenue
18% year-on-year
Consolidated Gross Revenues
Advertising Revenues63%
Consumer Sales37%
2
Consolidated Advertising Revenuesin Php Millions
4% YoY without political advocacies and advertisements
3
Political Advocacies &
Advertisements
11,496 8,760
36
42
34
30
13 15
54
ABS-CBN GMA TV 5 Studio 23
National Ratings – Total Philippines
4
Total Day Audience Share Evening Primetime Audience Share
Kantar Media/TNS National Urban Philippines TV Audience Shares (1H 2011)
Kantar Media/TNS National Urban Philippines’ Top Programs (1H 2011)
Top 20 Programs
5
18 ABS-CBN programs made it to the Top 20 in 1H 2011
Consumer Salesin Php Millions
4% YoY
0
3,000
6,000
1H 2010 1H 2011
5,343 5,124
6
ABS-CBN Global
7
~ 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
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
ABS-CBN Film Productions
4 of 8 films released in
1H2011 broke past the
Php 100 million mark in gross
box office receipts
9
-3,000
0
3,000
6,000
9,000
12,000
Total Expenses Production Cost
Cost of Sales and Services
General & Administrative
Expenses
All Other Expenses
11,324
3,8353,488 3,822
179
10,355
4,558
3,212 3,234
-649
1H 2010 1H 2011
10
Operating & Other Expensesin Php Millions
9% YoY
19% YoY8% YoY 15% YoY
460% YoY
0
2,500
5,000
Production Cost Cash Non-cash
3,835
3,171
664
4,558
3,809
749
1H 2010 1H 2011
11
Production Costin Php Millions
19% YoY
20% YoY
13% YoY
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Total Cost of Sales and Services
ABS-CBN Global SkyCable Other Subs
3,488
1,402 1,389
697
3,212
968
1,494
750
1H 2010 1H 2011
12
Cost of Sales and Servicesin Php Millions
8% YoY
31% YoY
7% YoY
8% YoY
0
1,000
2,000
3,000
4,000
General & Administrative
Expenses
Cash Non-Cash
3,822
3,299
522
3,2342,833
401
1H 2010 1H 2011
13
General & Administrative Expenses in Php Millions
15% YoY
23% YoY
14% YoY
0
1,200
2,400
1H2010 1H2011
2,265
1,677
Consolidated Net Incomein Php Millions
26% YoY
14
Consolidated EBITDAin Php Millions
15
0
2,500
5,000
1H2010 1H2011
4,997
3,967 21% YoY
Capital Expenditure & Film Rightsin Php Millions
34% YoY
0
1,200
2,400
1H2010 1H2011
1,575
2,117
16
Balance Sheet AccountsEnd 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
18
