Astro2005 E Cover
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ASTRO ALL ASIA NETWORKS plc ANNUAL REPORT05 INSPIRING CREATIVITY ASTRO ALL ASIA NETWORKS plc (994178-M) All Asia Broadcast Centre 2005 ANNUAL REPORT Technology Park Malaysia Lebuhraya Puchong-Sungai Besi Bukit Jalil 57000 Kuala Lumpur Malaysia Tel:+603 9543 6688 Fax : +603 9543 6888 www.astroplc.com ourBUSINESS ourBRANDS CONTENTS Letter from the Chairman 2 Key Performance Indicators 4 FY2005 Calendar Highlights 6 Board of Directors 10 Profile of Directors 12 Group Management 14 Management Team 16 Operating and Financial Review 18 Our Businesses 30 Our Staff 51 Our Community 52 Corporate Governance Statement 54 Audit Committee Report 59 Statement on Internal Control 62 Financial Information 64 Directors’ Report and Audited Statutory Financial Statements 78 Additional Disclosure – List of Properties Held 160 – Utilisation of IPO Proceeds 161 – Transactions through Media Agencies 161 – Material Contracts with Related Parties 162 – Recurrent Related Party Transactions 164 Malaysia’s Top Analysis of Shareholdings 170 Ranking Radio Interests of Major Shareholders 172 Stations Directors’ Interests 174 Share Price Performance 175 Corporate Information 176 Notice of Annual General Meeting 177 Statement Accompanying Radio Marketing Services Notice of Annual General Meeting 179 Consultancy in India Form of Proxy • ASTRO ALL ASIA NETWORKS plc Annual Report 2005 Movie Channel and Global Video Distribution Malay Film Production Subscription TV in Malaysia, Publications Brunei & Indonesia Talent Management Animation 01 LETTER FROM THE CHAIRMAN tune in to any of our eight radio stations each week. Our Celestial Movies Channel reaches over 1 million viewers in eight territories while some 4 million VCDs of movie titles from our Shaw Library have been sold to date. We have increased our content development activities and will continue to substantially grow our content assets for distribution across all media platforms. To this end, we are developing partnerships with the region’s leading media players to produce and aggregate content for distribution on our respective platforms and for global export. More recently, we have agreed to form a joint-venture with the Lippo Group to offer pay-TV multimedia services in Indonesia. We look forward to working with all our partners in growing these new businesses that will position us for a greater regional presence. DEAR SHAREHOLDERS We are pleased to be able to pursue these growth strategies from a position of substantial financial strength. I am happy to report that, after taking into account the capital funding requirements and the I am pleased to present the second Annual Report and Financial continuing healthy cash flow from our existing businesses, your Statements of ASTRO ALL ASIA NETWORKS plc, or ASTRO as it will Board has proposed a maiden tax-exempt dividend of 2.5 sen per be referred to hereinafter, for the year ended 31 January 2005. share. This represents a payout of 30% of Group after-tax profit. In keeping with our commitment to a progressive dividend policy, Our Company continues to make progress. The year saw ASTRO we envisage that the Company should be able to increase the payout strengthening its position as Malaysia’s leading multimedia and ratio to 50% in the medium term. content player with growing regional businesses, and significant intellectual assets available for global distribution. The Group’s key The Board recognises and remains committed to ensuring high business units continue to deliver satisfactory operating and financial standards of corporate governance and transparency. During the year, results. much of our work was focused on refining the corporate governance framework that was formalised in the previous year, and reviewing the As at the end of the financial year, nearly 1.6 million subscribers risk management functions and processes to ensure adequacy of the representing three out of every ten homes with a TV set in Malaysia systems and procedures that are designed to protect our growing and Brunei, subscribed to Astro, our multi-channel television service. business and revenue streams. We added two new radio stations last year and acquired a third in the current year. Some 10.4 million Malaysians or 62% of radio listeners 02 ASTRO ALL ASIA NETWORKS plc Annual Report 2005 In our continuing commitment to international best practices, we are Looking ahead, prospects for the Group remain bright. The continuing following the guidelines and recommendations of the Operating and buoyant economy, young demographic characteristics as well as Financial Review or OFR disclosure standards. As a consequence, aspirational lifestyles provide a conducive environment for our we have included greater detail of our operations and our key businesses. Our strategies are in place. We have an experienced performance drivers, as well as the operating environment in this management team that is very focused on execution. With our Annual Report. We already provide supplementary financial financial strength, market leadership and operational expertise, we are information in accordance with the International Financial Reporting confident of building the new income streams that will secure long Standards. A Code of Business Ethics has also been articulated to term growth in profitability and cash flow for our Company, while we govern all activities conducted by employees as well as their continue to drive growth in our existing businesses. relationship with suppliers and other business partners. I would like to state our appreciation to all the stakeholders who have We remain active and committed to the communities in which our been instrumental, in one way or other, in helping us achieve our businesses operate in. We are well-positioned to use our media goals: our content and technology partners who have confirmed their assets and have successfully raised public awareness for the needy support for our expansion plans; our colleagues in the media and other community projects among our subscribers and listeners industry; and the various Malaysian Government ministries, regulatory tuning in to our media platforms. bodies and organisations for their counsel and support. In particular, I specially note our appreciation to the Ministry of Energy, Water and As in previous years, we have generously provided airtime to support Communications, the Ministry of Information, the Ministry of Finance, the arts and creative sciences and other worthy causes, particularly the Malaysian Communications and Multimedia Commission, the for community welfare, sports and education. This was further Securities Commission and Bursa Securities. complemented by some RM2.8 million in financial support and a further RM700,000 raised from the public. I would also like to thank our shareholders, many of whom turned up at our maiden AGM in July last year. Lastly, I would like to pay Our reality TV series to help families with challenging needs, Family special tribute to the people behind our success: our staff for their Penyayang and Misi Suara Hati, proved that we could match hard work and commitment to building long term value for our entertaining programmes with charity. Again, when the killer Tsunami Company. waves hit the region in December last year, we broke the news, provided continuous coverage and rallied public support through live events, televised concerts, radio and online charity drives. Our staff were also encouraged to lend their personal support which the Company matched Ringgit-for-Ringgit. Dato’ Haji Badri Haji Masri Chairman 26 May 2005 03 KEY PERFORMANCE INDICATORS TV HOUSEHOLD PENETRATION FY2003* FY2004 FY2005 (%) 30.4 TELEVISION 26.5 Subscribers Residential Subscribers (’000) 984.3 1,283.0 1,565.8 21.0 Gross Additions (’000) 265.9 387.2 408.9 17.1 Net Additions (’000) 206.6 298.7 282.7 12.2 TV HH penetration (%) 21.0 26.5 30.4 2nd Box Subscription (’000) 29.2 47.8 61.0 7.0 4.5 2nd Box Penetration (%) 3.0 3.7 3.9 Churn (%)1 6.9 7.9 9.0 2 1999 2000 2001 2002 2003 2004 2005 ARPU (RM) 83 81 80 SAC Per Box (RM) 1,060.8 904.4 789.0 Programming Cost Per Subscriber (RM) 39.8 28.1 26.8 Programming Cost as % of Revenue 38.6 30.3 30.1 TV REVENUE & EBITDA Advertising Expenditure (RM million) Astro Share of TV Adex (%) 12.2 12.2 11.3 Astro Adex as % of Total Revenue (%) 8.0 7.2 6.9 407.7 394.9 377.0 351.0 347.0 333.0 Financial Summary 304.1 Revenue 1,034.5 1,265.6 1,530.6 281.5 31.9% 3 19.8% SAC 292.8 371.9 336.9 28.8% 15.9% EBITDA (83.0) 248.1 401.1 24.4% 22.6% 20.9% EBITDA Margin (%) n.m. 19.6 26.2 19.1% 120.1 117.4 85.5 Free Cash Flow (208.9) 111.6 263.6 78.1 72.5 63.6 63.6 48.4 2004 2005 Return on Capital Employed (%)4 n.m. 33.0 30.0 Q1FY04 Q2FY04 Q3FY04 Q4FY04 Q1FY05 Q2FY05 Q3FY05 Q4FY05 RADIO Revenue EBITDA EBITDA Listeners Margin (%) Total Listeners (million)5 8.4 8.7 9.0 Total Listener Share (%) 43.9 44.5 47.5 TV SAC & PROGRAMMING COST (RM million) Advertising Expenditure Radio Industry Share (%) 4.4 4.4 3.8 6 107.4 106.2 AMP Share of Radio Adex (%) 66.7 73.5 74.1 98.8 93.3 83.7 Total Fill Rates (%) 63.2 57.7 61.1 75.7 72.4 71.2 Financial Summary Revenue 88.7 108.0 124.3 33.6% 32.0% 31.2% 29.9% 29.3% 29.0% 28.7% 27.6% EBITDA 32.0 46.9 56.4 2004 2005 EBITDA Margin (%) 36.1 43.4 45.4 Free Cash Flow 35.8 37.7 47.0 Return on Capital Employed (%) 42.4 38.3 28.1 Q1FY04 Q2FY04 Q3FY04 Q4FY04 Q1FY05 Q2FY05 Q3FY05 Q4FY05 SAC Programming Cost (% of Revenue) LIBRARY LICENSING AND DISTRIBUTION Shaw Titles Re-mastered 80 125 160 RADIO REVENUE & EBITDA Shaw Titles Released for Distribution 35 128 116 (RM million) Celestial Movies Channel Distribution (Territories) 0 4 7 34.3 32.0 31.9 30.8 Financial Summary 28.6 27.3 26.4 50.9% 50.5% Revenue 8.3 36.3 47.6 49.0% 43.5% 21.0 EBITDA (41.3) (52.7) (66.3) 36.6% 53.8% 32.0% EBITDA Margin (%) n.m.