ANNUAL REPORT04 contents letter from the chairman 2 about ASTRO 4 board of directors 6 directors’ profile 8 management 10 profile of management 12 report of the group chief executive officer 14 about our businesses 20 about our staff 38 about our community 39 corporate governance 40 audit committee report 44 internal control 46 financial information 48 directors’ report and statutory financial statements 61 list of properties held 166 additional disclosures – profit forecast variance 167 – utilisation of IPO proceeds 167 – material contracts 168 analysis of shareholdings 174 interests of substantial shareholders 176 directors’ interests 178 share price performance 179 corporate information 180 notice of annual general meeting 181 statement accompanying notice of annual general meeting 184 form of proxy • INSPIRING CREATIVITY ASTRO ALL ASIA NETWORKS plc annual report 2004 2 letter from the chairman DEAR SHAREHOLDERS, MEASAT Broadcast Network Systems. The The Malaysian economy is expected to Group recorded a profit after tax of RM12.3 continue its brisk pace and to grow by I am pleased to present the Annual Report million as revenues grew 24.2% to RM1.42 approximately 6% in the current year. This and Financial Statements of ASTRO ALL ASIA billion on the back of strong results from all will provide strong underlying support for the NETWORKS plc, or ASTRO as it will be its operating business units. Group’s businesses. referred to hereafter, for the year ended 31 January 2004. The Group’s multi-channel TV operations, Prospects for our Company remain bright. Astro, recorded its highest subscriber growth We are just beginning to realise the benefit of It has been a tremendous year of satisfying with nearly 300,000 net additions bringing our substantial investments made earlier in results. ASTRO was formed in July 2003 as a the total subscription base to 1.4 million our multimedia infrastructure and in content holding company to bring together a unique customers and some 6 million viewers. More origination and aggregation. We now have set of Malaysian and regional businesses and than one in four TV homes in Malaysia tunes critical mass and are beginning to enjoy intellectual assets across multiple medium with in to our services today. Our 5 FM terrestrial increasing economies of scale as we grow significant synergistic opportunities. Through radio operations, ERA, MY FM, hitz.fm, our businesses. Our strong momentum will the year, we restructured our companies, MIX FM and Light & Easy, maintained their allow us to extend further our market sought the necessary regulatory approvals, top rankings in their respective Malay, leadership in the key business segments and established targets and benchmarks and Chinese and English language segments, expand our valuable franchises across our underwent rigorous due diligence as we laid drawing 8.7 million listeners every week and multiple media platforms in Malaysia and the groundwork for a public listing. attracting 74% of the national/total advertising beyond, by both organic growth as well as spend on radio. We remain very encouraged prudent acquisitions. We listed on the Kuala Lumpur Stock by the continuing expansion of our newly- Exchange, now known as Bursa Malaysia, on acquired Shaw Brothers movie library, With the improvement in earnings and cash 29 October 2003, raising RM1.92 billion in the Celestial Movies channel and distribution flow and the proceeds from the IPO, the South-east Asia’s largest Initial Public Offering business by Celestial Pictures, into new Group is now well-positioned to finance last year. With 26% of our shares in public markets. future growth as well as restructure the debt hands, we now have a diversified spread of incurred in building up the foundation for the shareholders with an expanded institutional We are pleased that the Group exceeded its Company’s businesses. At the end of the shareholder base of local and foreign investors. targets and, in particular, by the robust financial year, the Group had net cash of subscriber growth in Astro. This will underpin RM509 million and outstanding debt of I am happy to report that we have kept faith our revenues for the future. The Group has RM1.23 billion. Whilst we are not in a with our shareholders and delivered the undoubtedly benefited from the strength of position yet to distribute dividends, we intend targets we set for ourselves. We achieved our the Malaysian economy and the consequent to do so as soon as our financial position maiden operating profit, the first since buoyant consumer demand despite the allows us to. The Board is committed to commercial operations commenced in uncertain economic environment at the adopting a progressive dividend policy that September 1996 under our subsidiary, beginning of the financial year. would satisfy the need for cash yield for our shareholders, and capital growth. It has been a busy year for your Board with much work accomplished in a short period. Specifically, we have formalised our corporate governance framework and established the process to ensure the independence and objectivity of the internal and external audit functions, details of which are provided in separate statements in this annual report. ASTRO ALL ASIA NETWORKS plc annual report 2004 3 These measures are necessary if we are to retain shareholders’ confidence in the way the Company is run and managed, and to inspire confidence in its future prospects. We are indeed fortunate that the Company grew up in a culture of corporate governance. To be sure, our work is far from over and we will be continuing our efforts in this area and, in particular, in benchmarking ourselves with best practices in the UK and Malaysia. I would like to thank my fellow directors for their tireless efforts in this regard. I should also thank all our customers for their strong endorsement of our services. The Group, in turn, is deeply committed to supporting efforts that uplift the lives of our customers and the surrounding communities. We actively promote and support worthy causes in education, the arts and other social programmes, not only through monetary contributions, but also through activities and events organised by our various business units and involving participation by our staff members. Given all the challenges we faced, it is fitting that I record here our deep appreciation to the various Malaysian Government ministries, regulatory bodies and organisations which have, in their unstinting manner, facilitated and supported us, through our formative years to our public listing last year. In particular, the Ministry of Energy, Water and Communications, the Ministry of Information and the Ministry of Finance, the Malaysian Communications and Multimedia Commission, the Securities Commission and Bursa Malaysia for their encouragement and guidance. I must also thank our pioneering shareholders, Khazanah Nasional Bhd and Usaha Tegas Sdn Bhd, our partners and colleagues in the media business and other stakeholders who have contributed in one way or other to our achievements to date. It now remains for me to thank our staff for their hard work and dedication in making all these achievements possible. Their continuing support and ability in rolling out the best DATO’ HAJI BADRI HAJI MASRI products and services for our customers and partners will ensure our success for years to come. 18 May 2004 about ASTRO milestones FINANCIAL HIGHLIGHTS (RM million unless stated) 2004• Announces first year of profitability FY02 FY03 FY04 • Launches iFEEL entertainment magazine CONSOLIDATED • Commences broadcast of Sinar FM Revenue 867.9 1,142.7 1,418.8 Multi-channel TV 781.4 1,034.5 1,265.6 Radio 71.8 88.7 108.0 2003• Undertakes SE Asia’s biggest IPO Celestial 3.4 8.3 36.3 • Acquires Celestial Pictures and Philippines Animation Studio Inc Others/inter-segment eliminations 11.3 11.2 8.9 • Establishes MAESTRO 1 EBITDA (21.7) (40.5) 244.1 • Launches 7 new TV channels Profit After Tax (306.8) 276.4 12.3 • Astro signs up 1 millionth subscriber Multi-channel TV (269.8) 281.8 36.9 • Provides airtime management for India Radio 21.6 31.5 47.2 FM radio stations Celestial (11.0) (44.5) (59.5) Others/inter-segment eliminations (47.6) 7.6 (12.3) • Launches V Mag leisure and lifestyle Consolidated Free Cash Flow2 (12.9) 212.7 (3.6) 2002 magazine Total Assets 1,142.6 1,782.1 3,357.7 • Astro expands service offering with Shareholders’ Equity (1,461.4) (1,185.0) 1,394.6 5 new TV channels Number of Subscribers Residential Subscribers (’000) 777.7 984.3 1,283.0 2001• First telecast of Astro News Total Subscriptions (’000) 854.4 1,069.9 1,392.7 • Astro launches 3 new themed music channels Number of Listeners (’000) 6,738.0 8,376.0 8,740.0 2000• Kristal-Astro begins transmission in Brunei • Astro reaches 500,000 subscriber mark FY2004 Revenue Breakdown Subscribers and Listeners MC-TV Radio 1,400 1,200 2.6% • Begins production of first Malay feature 7.6% 1999 0.6% film 1,050 900 • Launches Astro Digital Multimedia System • Astro launches 5 new themed music 700 600 channels 89.2% 350 300 • Astro reaches 150,000 subscriber mark 0 0 1998 ’000FY02 FY03 FY04 ’000 TV Radio Content Others MC-TV Radio 1997• Radio commences operations with 5 FM stations 1. Earnings before interest, taxation, depreciation and amortisation represents profit from ordinary activities before net finance costs, taxation, impairment and depreciation of property, plant and equipment, • Achieves Multimedia Super Corridor status amortisation of intangible assets such as software (but excluding amortisation of film library and programme rights which are expensed as part of cost of sales) and gain from investments in associates. 2. Free cash flow represents the net cash flows arising from operating and investing activities of the Group.