ABS-CBN Corporation Sgt. Esguerra Avenue, Quezon City, Philippines - PDF document

ABS-CBN Corporation Sgt. Esguerra Avenue, Quezon City, Philippines 14 May 2012 Philippine Stock Exchange, Inc. Attn: Ms. Janet A. Encarnacion Head, Disclosure Department 3 rd Floor, Philippine Stock Exchange Plaza Ayala Triangle, Ayala Avenue, Makati City Securities and Exchange Commission Attn: Director Justina F. Callangan Corporate Finance Department SEC Building, EDSA, Mandaluyong City Subject: 1Q 2012 Analysts’ and Press Briefing Gentlemen / Ladies: We are providing you the materials that we are presenting in our briefing today. Thank you. Very truly yours, Paul Michael V. Villanueva Compliance Officer for Corporate Governance

MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS O F OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2012 For the quarter ended March 31, 2012, ABS- CBN Corporation (“ABS - CBN” or the “Company”) generate d consolidated revenues of P7.1 billion from advertising and consumer sales, P556 million or 8% higher year- on-year. Advertising revenues contributed 59% of total consolidated revenues while consumer sales made up the balance of 41%. Total operating and other expense in the first quarter of 2012 was at P6.1 billion, or a 27% increase year-on- year. The company generated a net income of P306 million for the first quarter of 2012, down by 69% compared with P976 million in the same period last year. Removing the effects of the one-time gain from the sale of Sky Cable PDRs recognized in the first quarter of 2011 amounting to P674 million, net income increased by 1%. Reported EBITDA reached P1.4 billion for the first quarter of 2012, or a 35% decline year-on-year. Stripping the one-time gain in the first quarter of 2011, EBITDA was up 1% year-on-year. The table below summarizes the key performance indicators for the period as discussed above. Variance Key Performance Indicators 1Q12 1Q11 (Amounts in million Pesos) Amount % Consolidated Revenues 7,149 6,593 556 8 Consolidated Advertising Revenues 4,186 4,011 175 4 Consolidated Consumer Sales 2,963 2,582 381 15 Operating and Other Expenses 6,075 4,776 1,299 27 Net Income 306 976 (670) (69) EBITDA 1,362 2,098 (736) (35) Consolidated Revenues For the three months ended March 31, 2012, ABS-CBN generated consolidated revenues of P7.1 billion from advertising revenues and consumer sales, P556 million or 8% higher year-on-year. The contribution of consumer sales to total revenues is higher at 41% from 39% a year ago. Variance Consolidated Revenues 1Q12 1Q11 (Amounts in million Pesos) Amount % Consolidated Advertising Revenues 4,186 4,011 175 4 Consumer Sales Sale of Services 2,863 2,470 393 16 Sale of Goods 100 112 (12) (11) Consolidated Consumer Sales 2,963 2,582 381 15 Consolidated Revenues 7,149 6,593 556 8

Advertising Revenues Consolidated advertising revenues across all platforms and subsidiaries increased by 4% to P4.2 billion. ABS-CBN maintained its national audience share and ratings leadership with prime-time audience share averaging 42% in the first quarter of 2012, with a 12 percentage point lead over GMA’s, based on the Kantar National TV Ratings. For the first three months of 2012, 17 of the company’s shows were in the Top 20, with th e following occupying the Top 10 slots: Walang Hanggan, Ikaw ay Pag-ibig, Budoy, My Binondo Girl, Dahil sa Pag-ibig, Eboy,Maalaala Mo Kaya…, TV Patrol (Weekday), Nasaan Ka Elisa, Wansapanataym, Junior Master Chef Pinoy Edition (Saturday) and Rated K Handa Na Ba Kayo? Consumer Sales Consumer sales for the first quarter of 2012 amounted to almost P3.0 billion, or a 15% increase year-on- year. The increase is largely attributable to Sky Cable’s growth in revenu es which grew by 12%. The increase in sales of other subsidiaries is partly attributable to the growth in sales of ABS-CBN Film Productions in the first quarter of 2012. Consumer Sales Variance 1Q12 1Q11 (Amounts in million Pesos) Amount % ABS-CBN Global 1,194 1,159 35 3 Sky Cable 1,152 1,031 121 12 Other subsidiaries 617 392 225 58 Consolidated Consumer Sales 2,963 2,582 381 15 Sky Cable’s consolidated re venues for the year from cable TV and broadband services grew 12% year-on- year, driven by a 9% growth in postpaid revenues and a 31% growth in broadband revenues. Broadband service subscriptions increased 20% year-on- year, while subscriptions to Sky Cable’s post-paid TV offering grew by 10%. ABS- CBN Global’s reve nues increased year-on-year by 3% in peso terms or 5% in US dollar terms. The lower rate of increase in peso terms was due to a 2% or P0.91 appreciation of the Philippine peso exchange rate against the US dollar, from P43.79 in 2011 to P42.88 in 2012. ABS- CBN Global’s ov erall viewer count was an estimated 2.5 million at the end of March 2012, 3% more compared to the previous year. Double digit growth in subscribers continued to be experienced in Canada, and single digit growth in all other territories except Japan and Europe where subscribers declined. ABS-CBN Film Productions, Inc. released 5 films in the first three months of 2012. Three of them – Enteng ng Ina Mo, Segunda Mano and Unofficially Yours – topped P100 million in box office receipts, earning blockbuster status by local standards.

Operating and Other Expenses Total operating and other expenses in the first quarter of 2012 was at P6.1 billion, or a 27% increase year- on-year. Removing the effects of the one-time gain on the sale of Sky Cable PDRs which was an Other Income item in the first quarter of 2011, operating and other expenses would have increased by only 10%. Total Operating and Other Expenses Variance 1Q12 1Q11 (Amounts in million Pesos) Amount % Production Costs 2,477 2,257 220 10 Cost of Sales and Services 1,781 1,587 194 12 General and Administrative Expenses 1,825 1,587 238 15 Other Expenses (Income) (8) (655) 647 99 Consolidated Total Operating and Other Expenses 6,075 4,776 1,299 27 Production Costs Total production costs rose by P220 million or 10% to P2.5 billion in the first quarter of 2012 compared with the same period in 2011. Cash production costs went up by P200 million or 11% year-on-year, mostly from increases from talent fee adjustments, and from new programs that brought talent fees, equipment rentals and service fees, and other expenses substantially higher. Production Costs Variance 1Q12 1Q11 (Amounts in million Pesos) Amount % Personnel Expenses and Talent Fees 1,252 1,073 179 17 Facilities-Related Expenses 559 525 34 6 Other Program Expenses 278 291 (13) (5) Sub-total: Cash Production Costs 2,089 1,889 200 11 Non-Cash Production Costs 388 368 20 5 Consolidated Production Costs 2,477 2,257 220 10 Non-cash production costs went up by 6% to P388 million, due to higher depreciation costs and amortization of program rights. Cost of Sales and Services Cost of sales and services increased by 12% or P195 million to P1.8 billion. ABS-CBN Gl obal’s cost of sales and services increased 7% due to higher marketing expenses . Sky Cable’s cos t of sales and services also grew by 10% year-on-year although slower than its 12% growth in gross revenue. The increase in cost of sales and services of other subsidiaries is partly attributable to the increase in costs of ABS-CBN Films. Cost of Sales and Services Variance 1Q12 1Q11 (Amounts in million Pesos) Amount % ABS-CBN Global 552 516 36 7 Sky Cable 783 709 74 10 Other Subsidiaries 446 362 84 23 Consolidated Cost of Sales and Services 1,781 1,587 194 12

General and Administrative Expenses Total General and Administrative Expenses (GAEX) posted a 15% or P238 million year-on-year increase to P1.8 billion. General and Administrative Expenses Variance 1Q12 1Q11 (Amounts in million Pesos) Amount % Personnel Expenses 956 808 148 18 Contracted Services 186 183 3 1 Facilities-Related Expenses 185 114 71 61 Depreciation and amortization 166 156 10 7 Provision for Doubtful Accounts 39 46 (7) (14) Other Expenses 293 280 13 5 Consolidated GAEX 1,825 1,587 238 15 Cash GAEX went up by 16% or P228 million to P1.7 billion, of which more than half is accounted for by personnel expenses. Net Income The company generated a net income of P306 million for the first quarter of 2012, down by 69% compared with P976 million in the same period last year. Removing the effects of the one-time gain from the sale of Sky Cable PDRs recognized in the first quarter of 2011 amounting to P674 million, net income would have been up by 1%. EBITDA Earnings before interest, taxes, depreciation and amortization (EBITDA) for the three months ended March 31, 2012 was at P1.4 billion, or a 35% decline year-on-year. Stripping the one-time gain in 2011, EBITDA increased by 1% year-on-year. Capital Expenditures Capital expenditures and program rights acquisitions for the first quarter of 2012 amounted to P1.1 billion, P190 million or 22% higher than last year’s P875 million. Balance Sheet Accounts As at March 31, 2012, total consolidated assets stood at P46.4 billion, P1.6 billion or 4% higher than total assets of P44.8 billion as at December 31, 2011. Cash and cash equivalents of P8.0 billion is P588 million or 7% lower than the December 31, 2011 balance. Consolidated trade and other receivables stood at P8.3 billion, P171 million or 2% higher than as at the end of 2011.