A New Vision Is Blooming
Total Page:16
File Type:pdf, Size:1020Kb
A NEW VISION IS BLOOMING ZEE 4.0 - ANNUAL REPORT 2020-21 Zee Entertainment Enterprises Limited Transformation stems from the natural evolution of every living being. Inside each of us lies a distinctive desire to do something more than the norm, out of the ordinary. This nature of existence flows from people to businesses, leading them from old path to new, creating opportunities for themselves and for the rest of the world. Media and Entertainment landscape is not untouched by this phenomenon. From consumer FINANCIAL behaviour to consumer experiences, the industry has evolved in all shapes and forms over STATEMENTS the last few decades. Today, we are seeing a paradigm shift in the consumption and delivery 03 of entertainment. In this new realm, the alchemy of the consumer experience is one that blends content creation, delivery, and monetization in a seamless manner. This hyper- STANDALONE competitive, digitally accelerated environment demands a unique strategic vision. We at ZEE INDEX Independent Auditor’s Report 107 are preparing to step into this future with a sharper and synergised version, transforming into ZEE 4.0 - a future-ready organisation to gain competitive advantage. ZEE 4.0 is Balance Sheet 115 designed around enhanced customer centricity with levers for capitalizing on Statement of Profit and Loss 116 immense growth opportunities and driving higher profitability. COMPANY Statement of Cash Flow 117 OVERVIEW The 5G pillars - Governance, Granularity, Growth, Goodwill and Gusto, form 01 Statement of Changes in Equity 119 the cornerstone of ZEE 4.0, sharpening our abilities to capture the emerging Notes 121 opportunities across markets, to transform ZEE into South Asia’s leading Media & Key Performance Indicators 04 STATUTORY Entertainment Company. The strategic vision is woven around the 5G pillars with Message from the MD & CEO 06 02 REPORTS Last Five Years Financial Highlights 171 an aim to redefine entertainment for consumers, maximize value for shareholders, Strategy and Business Model 10 Performance Ratios - An Analysis 172 enhance opportunities for employees, deliver innovation to our partners and Management Discussion and Analysis 31 take purposeful steps for the society at large. Business Overview 12 AGM Notice 46 Board of Directors 20 CONSOLIDATED With ZEE 4.0, we are transforming our creative potential into meaningful action, Directors’ Report 58 building a strong foundation of business growth and positive societal change. Q&A with CFO 22 Independent Auditor’s Report 173 Annexures to Directors’ Report 65 Leading with People 24 Balance Sheet 179 Report on Corporate Governance 81 Awards and Milestones 27 Statement of Profit and Loss 180 Annexures to Corporate Governnance Community Outreach 28 Report 98 Statement of Cash Flow 181 Thought Leadership 29 Business Responsibility Report 100 Statement of Changes in Equity 183 Corporate Information 30 Certification of Financial Statements 106 Notes 185 Forward-looking statement In this Annual Report, we have disclosed forward-looking information to enable investors to comprehend our prospects and take investment decisions. This report and other statements - written and oral - that we periodically make contain forward looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried, wherever possible, to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward-looking statements will be realised, although we believe we have been prudent in our assumptions. The achievements of results are subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should keep this in mind. We undertake no obligation to publicly update any forward looking statement, whether as a result of new information, future events or otherwise. View Annual and Quarterly financials: https://www.zee.com/investors/investor-financials/ ANNUAL REPORT 2020-21 CORPORATE OVERVIEW STATUTORY REPORTS FINANCIAL STATEMENTS PAGE NO. :04-30 PAGE NO. :31-106 PAGE NO. :107-234 KEY PERFORMANCE INDICATORS PBT Before Exceptional Items ` Million Return on Capital Employed % Networth ` Million FY18 21,841 FY18 21.1% FY18 75,617 FY19 24,563 FY19 24.4% FY19 89,239 GROWING FY20* 22,693 FY20* 19.6% FY20 93,439 FY21* 13,852 FY21* 14.9% FY21 100,946 STEADILY During FY21, Profit before tax declined by ZEEL’s return on capital employed (ROCE) In FY21, ZEEL’s networth increased by 37.9% due to lower EBITDA. declined by 470bps YoY to 14.9% during 8%. This is primarily due to profit Revenues ` Million FY21. The decline is largely due to lower from operations. EBIT margins which declined from 24.2% 79,339 81,299 77,299 in FY20 to 21.3% in FY21. 64,342 66,857 *Note: FY20 excludes one offs in Operating cost (` 2,598 mn), Other costs (` 3,433 mn) and loss on sale of Investments (` 3,835 mn in FVTPL). FY21 excludes one offs for content syndication deal (Revenue of ` 5,512mn and operating cost of ` 4,730 mn), and Other costs (` 812 mn) Television Network Share % ZEE5 Movie Business Revenue ` Million 156 2,997 FY17 FY18 FY19 FY20 FY21 minutes 72.6 1,599 During FY21, ZEEL’s revenues declined by 4.9% YoY. On a like to like 1,241 basis (excluding revenue on account of one-time content syndication 19.7 18.4 18.0 deal of ` 5,512 mn) revenues declined by 11.7%. The outbreak of 6.1 COVID-19 severely impacted the advertising revenues in the first half of FY21 leading to a 19.9% YoY decline. Subscription revenues on the FY19 FY20 FY21 Global MAUs Global DAUs Average FY19 FY20 FY21 other hand grew modestly by 5.2% YoY, after seeing a strong growth (Million) (Million) watch time in FY20. ZEEL was the #2 non-sports entertainment television ZEE5 saw strong growth across all COVID-19 severely impacted the movie network during the year with an all-India viewership operating metrices on YoY basis. The MAU business revenue of the company as share of 18.0%. The network share declined by on the platform was at 72.6 mn at FY21 exit theatres were shut for most part of the 40bps during the year due to non-availability of fresh with an average watch time of 156 minutes year. Zee Studios produced/acquired/ EBITDA ` Million content in the first quarter and weak performance of per viewer per month. ZEE5 released 75+ distributed 8 movies during the year, 25,640 22,376 some of the channels especially in Hindi, Tamil and original shows and movies during the year some of which were released in 19,269 20,761 Marathi markets. and continued to be the biggest publisher theatres while the rest were launched 17,931 of digital original content in India. on digital/PPV platforms. Source: BARC, All India 2+ U+R Note: Revenue of the Movie business is before inter-company elimination Revenue Breakdown Revenue: ` 77,299 million Distribution of Expenses* Total Expenses: ` 53,856 million FY17 FY18 FY19 FY20 FY21* Advertising Operating revenues Costs The COVID-19 impact on revenue resulted in a 19.9% decline in 48% 61% EBITDA for the year. As a result, normalized EBITDA margin for the Subscription Other FY21 year was at 25.0%. Programming cost for the year declined by 8.2% FY21 42% revenues 24% Costs on a like to like basis as shooting of original programming was halted for few months at the beginning of the year. However, this decline was Other Sales Employee benefit not able to compensate for the 20% decline in advertising revenue. 10% and Services 15% expenses 4 5 ANNUAL REPORT 2020-21 CORPORATE OVERVIEW STATUTORY REPORTS FINANCIAL STATEMENTS PAGE NO. :04-30 PAGE NO. :31-106 PAGE NO. :107-234 Turning the ZEE 4.0 vision into reality a ‘Content First, Cluster Centric’ framework Even as we formulate our strategies for the MESSAGE FROM THE I previously shared my vision for ZEE 4.0 with will further enhance our cultural connect and future, ZEE 4.0 is incomplete without its all of you through an Open Letter, and the deep-rooted storytelling that is a mirror to People. At the end of the day, one bets on last year has been spent turning this vision our consumers’ lives across platforms. We people more than strategies. In this new into reality across all aspects of our business. are also witnessing exponential growth in phase of ZEE, driving the business with Gusto I firmly believe that growth doesn’t come the digital ecosystem, led by state of the art requires us to foster a stimulating working from a single action. It is a consequence of technology, immersive viewing experiences environment that encourages our people to and data-backed innovations. To succeed ideate, collaborate and innovate. Keeping Dear Shareholders, persistence, courage and hard work. Having MD & CEO taken a long-term view of the technological in this environment, we have integrated this in mind, we unveiled a transformed team our digital assets under one roof as we structure with strong leaders at the helm The last financial year has been a and societal changes infringing the Media & Entertainment ecosystem, we embarked on endeavor to strike the right balance between whose collective experience and expertise dynamic one for us. A year where technology, data and talent to capture these will be instrumental in achieving our set we started afresh, penning a brand the ZEE 4.0 transformative journey to unveil a new organisation design and a clear-cut growth opportunities. Similarly, becoming goals for the future.