Tel 57000 Kuala Lumpur, Malaysia

Tel 57000 Kuala Lumpur, Malaysia

ASTRO ALL ASIA NETWORKS plc (994178-M) Inspiring Creativity ANNUAL REPORT FY2006 Annual Report FY www.astroplc.com ASTRO ALL ASIA NETWORKS plc (994178-M) All Asia Broadcast Centre, Technology Park Malaysia, Lebuhraya Puchong-Sungai Besi, Bukit Jalil, 57000 Kuala Lumpur, Malaysia. tel+603 9543 6688 fax+603 9543 6877 2006 annual report FY2006 Letter from the Chairman 02 Key Performance Indicators 04 Calendar Highlights 06 Accolades & Achievements 08 Board of Directors 10 Profile of Directors 12 Group Management 14 Report of the Group Chief Executive Officer 18 CONTENTS Our Businesses 28 Our Staff 49 Our Community 50 Inspiring creativity... RADIO Movie Channel and Global Video Distribution TELEVISION Malay Film Production Publications Talent Management Animation Corporate Governance Statement 52 Financial Calendar 158 Audit Committee Report 56 Corporate Information 159 Statement on Internal Control 58 Notice of Annual General Meeting 160 Directors’ Report and Statement Accompanying Audited Statutory Financial Statements 60 Notice of Third Annual General Meeting 163 Additional Disclosures 148 Form of Proxy • Analysis of Shareholdings 153 Interests of Major Shareholders 155 Directors’ Interests 157 Share Price Performance 158 LETTER FROM THE CHAIRMAN DATO’ HAJI BADRI DEAR SHAREHOLDERS HAJI MASRI I am pleased to report yet another year of Chairman growth, albeit one that is below our expectations, for ASTRO ALL ASIA NETWORKS plc or ASTRO as it will be referred to hereinafter. We continue our strategy of increasing penetration of our multimedia service, both at home and overseas, whilst further improving and investing in the content we have to offer. Our Astro pay-TV subscriber base grew to 1.94 million subscribers as at the close of our financial year on 31 January 2006. Some 11.2 million people tune in to our radio networks weekly. Celestial Pictures added a new channel offering, secured new carriage agreements in Thailand and Indonesia for its movie channels, while reaching new markets for its Shaw Library titles. As a result, our Group revenues exceeded RM2 billion for the first time. Over the past year, we have accelerated our content development activities in collaboration with leading regional niche operators in India, Indonesia and China. We have also begun to realise some of the regional growth opportunities as intimated in my letter to shareholders last year. The Astro pay-TV service has commenced service in Indonesia under a trademark licensing arrangement. Elsewhere, we are in advanced discussions with strategic partners to significantly expand our regional radio footprint, particularly in India and potentially, in China. Whilst we have been able to benefit from the positive macro environment in the past year, there are increasing signs that inflationary pressures brought on by rising oil prices and the reduction of fuel subsidies in Malaysia may have ASTRO ALL ASIA NETWORKS plc 02 an impact on consumer demand. We remain Notwithstanding the short term challenges and business in Malaysia and Brunei. She is well- optimistic, nevertheless. The aggressive 6% GDP issues, our finances remain strong. The cash placed to lead the Astro team into the future, per annum forecast and larger-than-expected surplus and recurrent cash flows from our particularly given her knowledge of the Group RM220 billion budget for the next five years – existing businesses will enable us to confidently activities, and her expertise. We will, in due under the Ninth Malaysia Plan announced in seed new businesses to generate future revenue course, appoint a new CFO as part of our March by the Malaysian Government – is likely streams and profitability while ensuring an continual process of strengthening our to encourage increased private consumption and adequate cash yield for shareholders. After taking management ranks. investment. into account the capital funding requirements, the Board has proposed a final tax-exempt At his request, Chye Kuok Khoon Ho retired from On our part, we will continue to commit dividend of 3.5 sen. Including the earlier interim the Board last July for personal reasons. My substantial resources to meet the demands of dividend, the total dividend for the year is 5 sen, fellow directors and I would like to thank him for our expanding businesses. This includes representing a payout of 42% of net income and his contributions. His insightful perspectives will enhancing our broadcast and redundancy is consistent with the Board’s commitment to a be missed. We would also like to welcome Chin capabilities at Cyberjaya, which is now largely progressive dividend policy. Kwai Yoong who joined the Board in March completed. The other is the Customer 2006. With his broad audit experience as a Relationship Management and Billing system We remain committed to our responsibility as a former partner with PricewaterhouseCoopers, (CRM), to enable us to better manage and corporate citizen. Aside from monetary Kwai Yoong will provide invaluable support for respond to our growing subscriber base. contributions totalling more than RM550,000, we the various initiatives being undertaken by the continue to use our platforms to inspire and Board committees. The Board now comprises six The CRM, has to date, failed to deliver to nurture aspiring young talent as well as provide directors, three of whom are independent. expectations and consequently, has compromised generous airtime to support other worthy causes our customer care servicing levels. I am aware such as the arts, community welfare, sports and Finally, I would like to convey my thanks and that many of our shareholders are also Astro education. A new key initiative was the appreciation to all our staff, customers, business customers, some of whom may have had been RM2 million annual endowment for the Astro partners, our media colleagues and shareholders inconvenienced, in one way or another, over the scholarship that would see deserving students, as well as the various Malaysian government last year due to our CRM. The Board would like from among families of our subscribers, pursue ministries for their support and patience through to assure all our shareholders and customers their dreams of further education at leading what has been a relatively difficult year for us. that it is a matter of utmost concern to both the institutions locally and abroad, in the creative Your continuing confidence in the Board and Board and management. Management has been arts and sciences courses. management of the company, and your belief in tasked to vigorously seek a comprehensive our future, is not misplaced. remedy as soon as practicable. We hope to inspire some of the returning scholars as well as groom many of our talented Disappointingly, we have not been able to acquire employees to eventually take up senior the additional satellite transponder capacity, due management positions to drive our growing to the delayed launch of the Measat-3 satellite. operations in Malaysia, and across the region. This looks more likely to happen in the latter part Succession planning is, clearly, of great interest Dato’ Haji Badri Haji Masri of this year, or early in the next, after which we to the Board. In this respect, we are proud to Chairman will be able to offer a much-enhanced service for have been able to name Rohana Rozhan as CEO our Astro customers in Malaysia and Brunei. for the Group’s flagship direct-to-home broadcast 8 May 2006 03 Annual Report FY2006 KEY PERFORMANCE INDICATORS FY2003* FY2004** FY2005** FY2006 TV HOUSEHOLD PENETRATION (%) TELEVISION Subscribers 33.9 Residential Subscribers (’000) 984.3 1,283.0 1,565.8 1,784.2 30.4 Gross Additions (’000) 265.9 387.2 408.9 444.8 26.5 Net Additions (’000) 206.6 298.7 282.7 218.4 21.0 TV HH Penetration (%) 21.0 26.5 30.4 33.9 17.1 2nd Box Subscription (’000) 29.2 47.8 61.0 80.2 12.2 2nd Box Penetration (%)1 3.0 3.7 3.9 4.5 7.0 4.5 MAT Churn (%)2 6.9 7.9 9.0 13.4 ARPU (RM)3 83 81 80 79 1999 2000 2001 2002 2003 2004 2005 2006 SAC Per Box (RM) 1,060.8 904.4 789.0 790.1 Programming Cost Per Sub (RM) 39.8 28.1 26.8 25.5 Programming Cost as % of Revenue 38.6 30.3 30.1 29.3 TV REVENUE & EBITDA (RM Million) 2005 2006 Advertising Expenditure Astro Share of TV Adex (%) 12.2 12.2 11.3 11.9 110.9 Astro Adex as % of 95.6 112.3 70.4 115.8 118.7 Total Revenue (%) 8.0 7.2 6.9 6.4 84.3 468.6 448.8 444.0 425.6 407.7 394.9 76.6 Financial Summary 377.0 31.5% 351.0 Revenue 1,034.5 1,265.6 1,530.6 1,787.0 26.4% 28.4% 24.0% 23.7% 4 21.3% SAC 292.8 371.9 336.9 384.3 19.4% 15.9% EBITDA (83.0) 246.7 395.4 389.2 EBITDA Margin (%) n.m. 19.5 25.8 21.8 Free Cash Flow (208.9) 111.6 263.6 453.5 Q1FY05 Q2FY05 Q3FY05 Q4FY05 Q1FY06 Q2FY06 Q3FY06 Q4FY06 Return on Capital Employed (%)5 n.m. 32.8 29.6 69.1 Revenue EBITDA EBITDA Margin (%) RADIO Listeners TV SAC & PROGRAMMING COST Total Listeners (million)6 8.4 8.7 9.0 11.2 2005 2006 Total Listener Share (%) 43.9 44.5 47.5 60.5 Advertising Expenditure 107.0 106.2 100.3 Radio Industry Share (%) 4.4 4.4 3.8 4.0 84.5 83.7 92.5 7 75.7 AMP Share of Radio Adex (%) 66.7 73.5 74.1 79.1 71.2 Total Fill Rates (%) 63.2 57.7 61.1 43.7 33.6% 31.1% 29.9% 28.9% 29.0% 29.1% Financial Summary 28.3% 27.6% Revenue 88.7 108.0 124.3 143.3 EBITDA 32.0 46.6 55.0 60.4 Q1FY05 Q2FY05 Q3FY05 Q4FY05 Q1FY06 Q2FY06 Q3FY06 Q4FY06 EBITDA Margin (%) 36.1 43.1 44.2 42.1 SAC (RM Million) Programming Cost (% of Revenue) Free Cash Flow 35.8 37.7 47.0 64.9 Return on Capital Employed (%) 42.4 38.0 27.4 17.9 RADIO REVENUE & EBITDA (RM Million) LIBRARY LICENSING AND 2005 2006 DISTRIBUTION 21.5 Shaw Titles Re-mastered 80 125 160 120 16.5 16.5 Shaw Titles Released for Distribution 35 128 116 128 13.2 13.1 Celestial Movies Channel Distribution 9.2 9.7 39.1 38.0 36.2 (Territories) 0 4 7 9 34.3 31.9 15.7 30.8 56.6% 30.0 27.3 49.3% 48.2% Financial Summary 42.7% 42.2% 36.5% 35.5% Revenue 8.3 36.3 47.6 60.1 30.7% EBITDA (41.3) (52.8) (67.0) (72.5) EBITDA Margin (%) n.m.

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