Annual Report

Financial Highlights Turnover & Prot Attributable to Equity Holders of the Company 2011 2010 Change Turnover Profit Attributable to Equity Holders of the Company Performance 6,000 Earnings per share HK$3.55 HK$3.04 17% Dividends per share 5,000 - Interim HK$0.45 HK$0.35 29% - Final HK$1.75 HK$1.65 6% 4,000 HK$2.20 HK$2.00 10% 3,000 HK$’mil HK$’mil Turnover HK$’ million HK$’ - Hong Kong terrestrial TV 2,000 broadcasting 2,858 2,533 13% - Programme licensing and 1,000 distribution 903 785 15% - Overseas satellite pay TV operations 389 372 5% 0 2007 2008 2009 2010 2011 - Taiwan operations 834 753 11% YEAR - Channel operations 252 330 -24% - Others activities 156 110 42% - Inter-segment elimination (183 ) (208 ) -12% Earnings & Dividends Per Share 5,209 4,675 11% Earnings per Share Dividends per Share Total expenses (2,968 ) (2,686 ) 10% 4 Share of losses of associates (58 ) (98 ) -41% 3.5 Profit attributable to equity holders 1,556 1,330 17% 3 31 December 31 December 2011 2010 2.5 HK$’mil HK$’mil 2 10% 8,033 Total assets 8,843 HK$ Total liabilities 1,741 1,545 13% 1.5 Total equity 7,093 6,488 9% 1 Number of issued shares 438,000,000 438,000,000 0% 0.5 Ratios 0 Current ratio 4.2 4.1 2007 2008 2009 2010 2011 Gearing 3.1% 4.0% YEAR 2011 Turnover by Operating Segment 2011 Reportable Segment Prot* by Operating Segment % relating to 2010 are shown in brackets % relating to 2010 are shown in brackets Programme Programme licensing and Hong Kong Hong Kong licensing and distribution terrestrial terrestrial distribution 15% (14%) TV TV 26% (26%) broadcasting broadcasting Overseas satellite 54% (53%) 54% (54%) pay TV operations Overseas satellite 7% (8%) pay TV operations Other 4% (5%) Other Taiwan activities activities Channel operations Channel Taiwan 2% (<1%) 3% (2%) operations 16% (16%) operations operations 5% (7%) 2% (4%) 12% (11%) * excluding impairment loss on loan to and trade receivables from an associate Contents 2 Corporate Information 4 Report from Chairman Emeritus 6 Chairman’s Statement Review of Operations 8 Hong Kong Terrestrial TV Broadcasting 23 Digital Business Development 24 Other Hong Kong Operations 30 International Operations 34 Corporate Social Responsibility 36 Financial Review Corporate Governance 46 Directors and Senior Management 51 Report of the Directors 60 Corporate Governance Report Financial Information 76 Five-Year Financial Review 77 Independent Auditor’s Report 78 Audited Financial Statements Corporate Information CHAIRMAN EMERITUS BOARD COMMITTEES Sir Run Run SHAW, G.B.M. EXECUTIVE COMMITTEE Dr. Norman LEUNG Nai Pang, Chairman BOARD OF DIRECTORS Mona FONG EXECUTIVE DIRECTORS Mark LEE Po On Kevin LO Chung Ping Dr. Norman LEUNG Nai Pang, G.B.S., LL.D., J.P., Executive Chairman (appointed on 1 January 2012) Dr. Charles CHAN Kwok Keung (appointed on 21 March 2012) Mona FONG, Deputy Chairperson and Managing Director * CHEN Wen Chi (appointed on 21 March 2012) Mark LEE Po On, Group General Manager AUDIT COMMITTEE NON-EXECUTIVE DIRECTORS Gordon SIU Kwing Chue, Chairman Kevin LO Chung Ping Chien LEE Dr. Charles CHAN Kwok Keung (appointed on 1 April 2011) Kevin LO Chung Ping Cher WANG Hsiueh Hong (appointed on 1 April 2011) REMUNERATION COMMITTEE Jonathan Milton NELSON (appointed on 1 April 2011) Anthony LEE Hsien Pin (appointed on 3 February 2012) Chien LEE, Chairman CHEN Wen Chi (appointed on 3 February 2012) Edward CHENG Wai Sun Gordon SIU Kwing Chue INDEPENDENT NON-EXECUTIVE DIRECTORS NOMINATION COMMITTEE (established on 21 March 2012) Dr. CHOW Yei Ching, G.B.S.# Edward CHENG Wai Sun, S.B.S., J.P. Dr. CHOW Yei Ching, Chairman Chien LEE Anthony LEE Hsien Pin Gordon SIU Kwing Chue, G.B.S., J.P. Edward CHENG Wai Sun ALTERNATE DIRECTORS Dr. Allan YAP, Alternate Director to Dr. Charles Chan Kwok Keung (appointed on 10 June 2011) CHEN Xian, Alternate Director to Jonathan Milton Nelson (appointed on 10 June 2011) Harvey CHANG Hsiao Wei, Alternate Director to Cher Wang Hsiueh Hong (appointed on 3 February 2012) * Re-designated as a Non-executive Director, effective 1 April 2012 # Re-designated as an Independent Non-executive Director on 10 June 2011 2 Television Broadcasts Limited Annual Report 2011 EXECUTIVE OFFICERS SHARE REGISTRARS AND TRANSFER OFFICE SENIOR MANAGEMENT Computershare Hong Kong Investor Services Limited Mark LEE Po On, Group General Manager Rooms 1712-1716, 17th Floor CHEONG Shin Keong, General Manager – Broadcasting Hopewell Centre COMPANY SECRETARY 183 Queen’s Road East Adrian MAK Yau Kee Wan Chai, Hong Kong REGISTERED OFFICE AMERICAN DEPOSITARY RECEIPTS TVB City, 77 Chun Choi Street The Bank of New York Mellon Tseung Kwan O Industrial Estate PO Box 358516 Kowloon, Hong Kong Pittsburgh, PA 15252-8516 USA AUDITOR PricewaterhouseCoopers STOCK CODES 22/F, Prince’s Building Ordinary Shares Central, Hong Kong The Stock Exchange of Hong Kong 00511 Reuters 0511.HK PRINCIPAL BANKERS Bloomberg 511 HK ADR Level 1 Programme TVBCY Shanghai and Commercial Bank Limited The Bank of East Asia, Limited The Hongkong and Shanghai Banking WEBSITE Corporation Limited www.tvb.com Television Broadcasts Limited Annual Report 2011 3 Report from Chairman Emeritus SIR RUN RUN SHAW, G.B.M. Chairman (up to 31 December 2011) Chairman Emeritus (from 1 January 2012) The directors of Television Broadcasts Limited (“Directors”) are pleased to present the annual report and financial statements of the Group for the year ended 31 December 2011. RESULTS AND DIVIDEND The Group had enjoyed good growth in our advertising revenue under a very strong market in Hong Kong, and a vibrant licensing and subscription business from our international operations. I am very pleased to report that the Group, once again, achieved record high turnover and net profit during the year ended 31 December 2011. The profit attributable to shareholders was HK$1,556 million (2010: HK$1,330 million), representing an increase of 17%. At the year end, our total equity stood at HK$7,093 million (2010: HK$6,488 million), and cash balance had increased to HK$3,693 million (2010: HK$2,891 million), providing us with a very strong financial position. As a result, Directors will recommend a final dividend of HK$1.75 per share at the forthcoming annual general meeting. Together with the interim dividend of HK$0.45 per share paid, this would make a total dividend of HK$2.20 per share for the full year ended 31 December 2011, and represents an increase of 10% over 2010, and a 62% payout to our current year’s profit. APPOINTMENT AND RETIREMENT I would like to extend a very warm welcome to Dr. Charles Chan, Ms. Cher Wang and Mr. Jonathan Nelson who were appointed as Directors in April 2011. They are very successful entrepreneurs in their respective businesses and the Board will benefit from their wealth of experience and diverse expertise in our strategic development. This will be my last report to the shareholders of TVB as I retired as Chairman of the Board on 31 December 2011. It has been my privilege and great pleasure to have served the Company since 1965 and I would like to thank my fellow directors, management, staff and artistes for their unfailing support to me over the past 46 years. Equally I have to thank our viewers, customers, suppliers and other stakeholders whose support has made what TVB is today. Lastly, I wish to congratulate our Deputy Chairman, Dr. Norman Leung, who has assumed the Chairmanship of the Board from 1 January 2012. Under his capable leadership, I am confident that the Company will continue to grow from strength to strength in the years to come. Sir Run Run Shaw Chairman Emeritus Hong Kong, 21 March 2012 4 Television Broadcasts Limited Annual Report 2011 Television Broadcasts Limited Annual Report 2011 5 Chairman’s Statement DR. NORMAN LEUNG NAI PANG, G.B.S., LL.D., J.P. Executive Chairman (from 1 January 2012) Television Broadcasts Limited has a long and outstanding history in the broadcasting industry in Hong Kong. I am deeply honoured and privileged to have been appointed as the Executive Chairman of the Board, a position which is charged with great responsibilities towards our employees, our shareholders, and our society at large. BOARD CHANGES On 1 January 2012, I took over the position of Chairman of the Board from Sir Run Run Shaw. Sir Run Run Shaw became a Director in July 1965. He served as the Chairman of the Executive Committee of the Board from 1966 to 2009 and as the Executive Chairman of the Board from 1980 to 2009. He retired from the Board as its Chairman on 31 December 2011. I am most grateful to Sir Run Run Shaw for his guidance and outstanding leadership of the Board during his tenure as our Chairman for over 30 years. In recognition of his 6 Television Broadcasts Limited Annual Report 2011 sterling contribution to the Company since its establishment, the Board has honoured Sir Run Run Shaw with the title of Chairman Emeritus of the Company. Mrs. Christina Lee, the widow of the founding chairman of the Company, Mr. Lee Hsiao Wo, retired as a Director on 3 February 2012. I wish to offer my heartfelt gratitude for her wise counsel and guidance to the Board over a span of 30 years. I am pleased to note that Mr. Anthony Lee, the son of Mrs. Christina Lee, and Mr. Chen Wen Chi have been appointed as Directors in February 2012. I wish to offer to them my warmest welcome and look forward to their guidance and support in the years ahead.

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