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

ABS-CBN Corporation

• Sgt. Esguerra Avenue, Quezon City, Philippines

14 May 2012 Philippine Stock Exchange, Inc. Attn: Ms. Janet A. Encarnacion Head, Disclosure Department 3rd Floor, Philippine Stock Exchange Plaza Ayala Triangle, Ayala Avenue, Makati City Securities and Exchange Commission Attn: Director Justina F. Callangan Corporate Finance Department SEC Building, EDSA, Mandaluyong City Subject: 1Q 2012 Analysts’ and Press Briefing Gentlemen / Ladies: We are providing you the materials that we are presenting in our briefing today. Thank you. Very truly yours, Paul Michael V. Villanueva Compliance Officer for Corporate Governance

MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2012 For the quarter ended March 31, 2012, ABS-CBN Corporation (“ABS-CBN” or the “Company”) generated consolidated revenues of P7.1 billion from advertising and consumer sales, P556 million or 8% higher year-

• n-year. Advertising revenues contributed 59% of total consolidated revenues while consumer sales made

up the balance of 41%. Total operating and other expense in the first quarter of 2012 was at P6.1 billion, or a 27% increase year-on- year. The company generated a net income of P306 million for the first quarter of 2012, down by 69% compared with P976 million in the same period last year. Removing the effects of the one-time gain from the sale of Sky Cable PDRs recognized in the first quarter of 2011 amounting to P674 million, net income increased by 1%. Reported EBITDA reached P1.4 billion for the first quarter of 2012, or a 35% decline year-on-year. Stripping the one-time gain in the first quarter of 2011, EBITDA was up 1% year-on-year. The table below summarizes the key performance indicators for the period as discussed above. Key Performance Indicators (Amounts in million Pesos) 1Q12 1Q11 Variance Amount % Consolidated Revenues 7,149 6,593 556 8 Consolidated Advertising Revenues 4,186 4,011 175 4 Consolidated Consumer Sales 2,963 2,582 381 15 Operating and Other Expenses 6,075 4,776 1,299 27 Net Income 306 976 (670) (69) EBITDA 1,362 2,098 (736) (35) Consolidated Revenues For the three months ended March 31, 2012, ABS-CBN generated consolidated revenues of P7.1 billion from advertising revenues and consumer sales, P556 million or 8% higher year-on-year. The contribution of consumer sales to total revenues is higher at 41% from 39% a year ago. Consolidated Revenues (Amounts in million Pesos) 1Q12 1Q11 Variance Amount % Consolidated Advertising Revenues 4,186 4,011 175 4 Consumer Sales Sale of Services 2,863 2,470 393 16 Sale of Goods 100 112 (12) (11) Consolidated Consumer Sales 2,963 2,582 381 15 Consolidated Revenues 7,149 6,593 556 8

Advertising Revenues Consolidated advertising revenues across all platforms and subsidiaries increased by 4% to P4.2 billion. ABS-CBN maintained its national audience share and ratings leadership with prime-time audience share averaging 42% in the first quarter of 2012, with a 12 percentage point lead over GMA’s, based on the Kantar National TV Ratings. For the first three months of 2012, 17 of the company’s shows were in the Top 20, with the following

• ccupying the Top 10 slots: Walang Hanggan, Ikaw ay Pag-ibig, Budoy, My Binondo Girl, Dahil sa Pag-ibig,

Eboy,Maalaala Mo Kaya…, TV Patrol (Weekday), Nasaan Ka Elisa, Wansapanataym, Junior Master Chef Pinoy Edition (Saturday) and Rated K Handa Na Ba Kayo? Consumer Sales Consumer sales for the first quarter of 2012 amounted to almost P3.0 billion, or a 15% increase year-on-

• year. The increase is largely attributable to Sky Cable’s growth in revenues which grew by 12%. The

increase in sales of other subsidiaries is partly attributable to the growth in sales of ABS-CBN Film Productions in the first quarter of 2012. Consumer Sales 1Q12 1Q11 Variance (Amounts in million Pesos) Amount % ABS-CBN Global 1,194 1,159 35 3 Sky Cable 1,152 1,031 121 12 Other subsidiaries 617 392 225 58 Consolidated Consumer Sales 2,963 2,582 381 15 Sky Cable’s consolidated revenues for the year from cable TV and broadband services grew 12% year-on- year, driven by a 9% growth in postpaid revenues and a 31% growth in broadband revenues. Broadband service subscriptions increased 20% year-on-year, while subscriptions to Sky Cable’s post-paid TV offering grew by 10%. ABS-CBN Global’s revenues increased year-on-year by 3% in peso terms or 5% in US dollar terms. The lower rate of increase in peso terms was due to a 2% or P0.91 appreciation of the Philippine peso exchange rate against the US dollar, from P43.79 in 2011 to P42.88 in 2012. ABS-CBN Global’s overall viewer count was an estimated 2.5 million at the end of March 2012, 3% more compared to the previous year. Double digit growth in subscribers continued to be experienced in Canada, and single digit growth in all other territories except Japan and Europe where subscribers declined. ABS-CBN Film Productions, Inc. released 5 films in the first three months of 2012. Three of them–Enteng ng Ina Mo, Segunda Mano and Unofficially Yours–topped P100 million in box office receipts, earning blockbuster status by local standards.

Operating and Other Expenses Total operating and other expenses in the first quarter of 2012 was at P6.1 billion, or a 27% increase year-

• n-year. Removing the effects of the one-time gain on the sale of Sky Cable PDRs which was an Other Income

item in the first quarter of 2011, operating and other expenses would have increased by only 10%. Total Operating and Other Expenses 1Q12 1Q11 Variance (Amounts in million Pesos) Amount % Production Costs 2,477 2,257 220 10 Cost of Sales and Services 1,781 1,587 194 12 General and Administrative Expenses 1,825 1,587 238 15 Other Expenses (Income) (8) (655) 647 99 Consolidated Total Operating and Other Expenses 6,075 4,776 1,299 27 Production Costs Total production costs rose by P220 million or 10% to P2.5 billion in the first quarter of 2012 compared with the same period in 2011. Cash production costs went up by P200 million or 11% year-on-year, mostly from increases from talent fee adjustments, and from new programs that brought talent fees, equipment rentals and service fees, and other expenses substantially higher. Production Costs 1Q12 1Q11 Variance (Amounts in million Pesos) Amount % Personnel Expenses and Talent Fees 1,252 1,073 179 17 Facilities-Related Expenses 559 525 34 6 Other Program Expenses 278 291 (13) (5) Sub-total: Cash Production Costs 2,089 1,889 200 11 Non-Cash Production Costs 388 368 20 5 Consolidated Production Costs 2,477 2,257 220 10 Non-cash production costs went up by 6% to P388 million, due to higher depreciation costs and amortization

• f program rights.

Cost of Sales and Services Cost of sales and services increased by 12% or P195 million to P1.8 billion. ABS-CBN Global’s cost of sales and services increased 7% due to higher marketing expenses. Sky Cable’s cost

• f sales and services also grew by 10% year-on-year although slower than its 12% growth in gross revenue.

The increase in cost of sales and services of other subsidiaries is partly attributable to the increase in costs of ABS-CBN Films. Cost of Sales and Services 1Q12 1Q11 Variance (Amounts in million Pesos) Amount % ABS-CBN Global 552 516 36 7 Sky Cable 783 709 74 10 Other Subsidiaries 446 362 84 23 Consolidated Cost of Sales and Services 1,781 1,587 194 12

General and Administrative Expenses Total General and Administrative Expenses (GAEX) posted a 15% or P238 million year-on-year increase to P1.8 billion. General and Administrative Expenses 1Q12 1Q11 Variance (Amounts in million Pesos) Amount % Personnel Expenses 956 808 148 18 Contracted Services 186 183 3 1 Facilities-Related Expenses 185 114 71 61 Depreciation and amortization 166 156 10 7 Provision for Doubtful Accounts 39 46 (7) (14) Other Expenses 293 280 13 5 Consolidated GAEX 1,825 1,587 238 15 Cash GAEX went up by 16% or P228 million to P1.7 billion, of which more than half is accounted for by personnel expenses. Net Income The company generated a net income of P306 million for the first quarter of 2012, down by 69% compared with P976 million in the same period last year. Removing the effects of the one-time gain from the sale of Sky Cable PDRs recognized in the first quarter of 2011 amounting to P674 million, net income would have been up by 1%. EBITDA Earnings before interest, taxes, depreciation and amortization (EBITDA) for the three months ended March 31, 2012 was at P1.4 billion, or a 35% decline year-on-year. Stripping the one-time gain in 2011, EBITDA increased by 1% year-on-year. Capital Expenditures Capital expenditures and program rights acquisitions for the first quarter of 2012 amounted to P1.1 billion, P190 million or 22% higher than last year’s P875 million. Balance Sheet Accounts As at March 31, 2012, total consolidated assets stood at P46.4 billion, P1.6 billion or 4% higher than total assets of P44.8 billion as at December 31, 2011. Cash and cash equivalents of P8.0 billion is P588 million or 7% lower than the December 31, 2011 balance. Consolidated trade and other receivables stood at P8.3 billion, P171 million or 2% higher than as at the end of 2011.

Days sales outstanding of 76 days is 7 days less than the 83 days as at December 31, 2011. Trade accounts receivables amounting to P6.0 billion is P466 million or 8% higher than the P5.6 billion trade accounts receivables at the end of 2011. Total interest-bearing loans was almost flat at P12.5 billion. Shareholders’ equity stood at P20.5 billion, 1% higher compared with the Shareholder’s equity at the end of 2011. The company’s net debt-to-equity ratio was higher at 0.22x compared with 0.19x at the end of 2011. The company’s debt ratios remain well within the limits prescribed under its loan covenants.

PRESS RELEASE

Release Date : FOR IMMEDIATE RELEASE Reference : Paul Michael Villanueva, Head, Treasury and Compliance Officer Tel : 415.2272 local 4322 Email : mike_villanueva@abs-cbn.com

ABS-CBN’s recurring net income up by 1% for the first quarter

Quezon City, Philippines (May 14, 2012) – The consolidated net income of ABS-CBN Corporation (“ABS-CBN” or the “Company”) (PSE: ABS, ABSP), the country’s largest multimedia conglomerate, registered P306 million for the first quarter of 2012, down by 69% compared with P976 million in the same period last year. Removing the effects of the gain from the sale

• f Sky Cable PDRs recognized in the first quarter of 2011 amounting to P674 million, net income

would have increased by 1%. ABS-CBN generated consolidated revenues of P7.1 billion from advertising and consumer sales for the first three months, an 8% increase compared to the same period last year. ABS-CBN’s advertising revenues reached P4.2 billion in the first three months of the year, an increase of 4% from a year ago. Consumer sales for the quarter amounted to almost P3.0 billion, posting a 15% increase from a year ago. Sky Cable continues to contribute positively with revenues increasing by 12% to P1.2 billion. This is mostly driven by the increased take up

• f its broadband service subscriptions which increased by 20% year-on-year. ABS-CBN Global

revenues likewise increased by 3% year on year on the back of a 3% increase in overall viewer count compared to the previous year. There was double-digit subscriber growth in Canada and single digit growth in all other territories, except Japan and Europe where subscribers declined. Total operating and other expenses increased by 10% year-on-year to P6.1 billion brought about by increases in production costs, cost of sales and services , and general and administrative expenses. As a result of the foregoing, net income attributable to shareholders for the first quarter of the year is at P306 million, 69% lower than last year’s net income of P976 million, but 1% higher than last year’s recurring income of P302 million.

Capital expenditure and film and program rights acquisition for the quarter amounted to P1.1 billion, 22% higher than the level of spending for the same period last year. ABS-CBN maintained its national audience share and ratings leadership with prime-time audience share averaging 42% in the first quarter of 2012, with a 12 percentage point lead over GMA’s, based on the Kantar National TV Ratings. For the first three months of 2012, 17 of the company’s shows were in the Top 20, with the following occupying the Top 10 slots: Walang Hanggan, Ikaw ay Pag-ibig, Budoy, My Binondo Girl, Dahil sa Pag-ibig, Eboy,Maalaala Mo Kaya…, TV Patrol (Weekday), Nasaan Ka Elisa, Wansapanataym, Junior Master Chef Pinoy Edition (Saturday) and Rated K Handa Na Ba Kayo? ABS-CBN Film Productions, Inc. released five films in the first quarter of 2012. Three of them– Enteng ng Ina Mo, Segunda Mano and Unofficially Yours–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).

First Quarter 2012 Financial & Operating Results

The Chronicle Lounge 14/F Eugenio Lopez Jr. Communications Center Eugenio Lopez Ave., Q.C. 14 May 2012

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Php7.1 billion

1Q 2012 Consolidated Gross Revenue

8% year-on-year

Consolidated Gross Revenues

Ad Revenues 59% Consumer Sales 41%

• 2

Consolidated Advertising Revenues

in Php Millions

4% YoY

1,000 2,000 3,000 4,000 5,000 1Q2011 1Q2012 4,011 4,186

3

35 42 35 30 13 12 3 3

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 (1Q 2012)

Kantar Media/TNS National Urban Philippines’ Top Programs

Top 20 Programs

5

17 of ABS-CBN Programs are in the Top 20

Rank Channel Title Rtg% 1 ABS-CBN WALANG HANGGAN 31.5 2 ABS-CBN IKAW AY PAG-IBIG 29.4 3 ABS-CBN BUDOY 28.3 4 ABS-CBN MY BINONDO GIRL 28.2 5 ABS-CBN DAHIL SA PAG-IBIG 27.8 6 ABS-CBN EBOY 27.6 7 ABS-CBN MAALAALA MO KAYA... 27.1 8 ABS-CBN TV PATROL (WEEKDAY) 25.9 9 ABS-CBN NASAAN KA, ELISA? 24.4 ABS-CBN WANSAPANATAYM 21.9 ABS-CBN JUNIOR MASTER CHEF PINOY EDITION (SATURDAY) 21.9 ABS-CBN RATED K HANDA NA BA KAYO? 21.9 11 GMA AMAYA 21.8 12 GMA KAPUSO MOVIE NIGHT 21.5 13 ABS-CBN SARAH G LIVE 21.4 14 GMA EAT... BULAGA! 20.7 15 GMA MUNTING HEREDERA 20.4 16 GMA KAPUSO MO, JESSICA SOHO 20.0 GMA 24 ORAS (WEEKDAY) 19.1 ABS-CBN JUNIOR MASTER CHEF PINOY EDITION (SUNDAY) 19.1 ABS-CBN KAPAMILYA DEAL OR NO DEAL 19.0 GMA PEPITO MANALOTO REALITY SITCOM 19.0 19 ABS-CBN MARIA LA DEL BARRIO 18.8 20 ABS-CBN GOIN' BULILIT 18.6 1ST QUARTER 2012 17 18 10

Consumer Sales

in Php Millions

15% YoY

1,000 2,000 3,000 4,000

1Q2011 1Q2012

2,582 2,963

6

Consumer Sales

7

500 1,000 1,500 2,000 2,500 3,000 3,500 Total Consumer Sales ABS-CBN Global SkyCable Other Subs 2,582 1,159 1,031 392 2,963 1,194 1,152 617

1Q2011 1Q2012

in Php Millions

15% YoY 3% YoY 12% YoY 58% YoY

ABS-CBN Global

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~ 2.5 million viewers worldwide, 3% more than in 1Q 2011

• Continued growth in Canada, Asia Pacific,Australia,

Middle East and North America

• Decline in subscriber count in Europe and Japan

Sky Cable

Strong revenue growth, up 12% YoY

• 31% YoY increase in broadband revenue on the

back of 20% YoY growth in subscriptions

• 10% YoY growth in post-paid cable

subscriptions driven by the lower end Php 280 and Php 499 packages

9

ABS-CBN Film Productions

3 of 5 films released in 1Q 2012 broke past the Php 100 million mark in gross box office receipts

10

• Enteng ng Ina Mo
• Segunda Mano
• Unofficially Yours

• 1,000

1,000 2,000 3,000 4,000 5,000 6,000 7,000 TOTAL Prod Cost COSS GAEX Others 5,525 2,257 1,587 1,587 94 6,075 2,477 1,782 1,825

• 9

1Q2011 1Q2012

11

Operating & Other Expenses

in Php Millions

10% YoY 10% YoY 12% YoY 15% YoY 109% YoY

* * *Without the one-time gain on sale of Sky

Cable PDRs

500 1,000 1,500 2,000 2,500 3,000 Production Cost Cash Non-cash 2,257 1,889 368 2,477 2,089 388

1Q2011 1Q2012

12

Production Cost

in Php Millions

10% YoY 11% YoY 5% YoY

500 1,000 1,500 2,000 Total Cost of Sales and Services ABS-CBN Global SkyCable Other Subs 1,587 516 709 362 1,782 552 783 446

1Q2011 1Q2012

13

Cost of Sales and Services

in Php Millions

12% YoY 7% YoY 23% YoY 10% YoY

500 1,000 1,500 2,000 General & Administrative Expenses Cash Non-Cash 1,587 1,431 156 1,825 1,659 166

1Q2011 1Q2012

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General & Administrative Expenses

in Php Millions

15% YoY 7% YoY 16% YoY

Consolidated Net Income

in Php Millions

69% YoY

15

200 400 600 800 1,000 1Q2011 1Q2012 302 306 674

Gain from sale

• f Sky Cable

PDRs

976

Reported Income

1% YoY Recurring Income

Consolidated EBITDA

in Php Millions

35% YoY

16

500 1,000 1,500 2,000 2,500 1Q2011 1Q2012 1,349 1,362 749

Gain from sale

• f Sky Cable

PDRs

2,098

Reported EBITDA

1% YoY

Recurring EBITDA

Capital Expenditure & Film Rights

in Php Millions 500 1,000 1,500 2,000 1Q2011 1Q2012

875 1,065

17

22% YoY

Balance Sheet Accounts

End March 31, 2012 vs. December 31, 2011

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 46.4B Php8.0B Php8.3B 76 days Php12.5B Php20.5B 0.22x 4% 7% 2% 7 days unchanged 1% 0.03x

Significant Event

On May 11, 2012 , Asset Purchase Agreements were signed by Sky Cable Corporation (SKY) with:

– Destiny Cable Inc. (DCI) – Solid Broadband Corporation (SBC) – Uni-Cable TV, Inc. (UNI)

which would entail the sale of cable TV and broadband internet assets and subscribers of DCI, SBC and UNI to SKY.

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