TVB 2011 annual results: turnover increased by 11%, profits up by 17%

22 March 2012 21 h 36 min Comments Off

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On 21 March 2012, TVB published its annual results for the year ended 31 december 2011.

Results highlights:
• Group’s turnover increased by 11%, from HK$4,675 million to HK$5,209 million.
• Profit attributable to equity holders increased by 17%, from HK$1,330 million to HK$1,556 million.
• Final dividend was recommended at HK$1.75 per share (2010: HK$1.65 per share), making a total dividend of HK$2.20 per share (2010: HK$2.00 per share) for the year.

Consolidated income statement 2011
2011                   2010
HK$’000           HK$’000

Turnover                        5,208,865       4,674,656
Cost of sales                       (1,807,293)        (1,722,679)
Gross profit                        3,401,572             2,951,977
Other revenues                     57,874                   30,663
Selling, distribution

and transmission costs      (530,852)           (486,344)
General and

administrative expenses    (629,780)           (477,366)
Other gains, net                      1,239                    37,565

Share of losses of:
Jointly controlled entities    (5,989)                 (3,638)
Associates                               (57,963)               (97,555)
Profit before income tax     2,096,973             1,811,521
Income tax expense             (537,438)             (479,478)
Profit for the year                 1,559,535              1,332,043
Profit attributable to:
Equity holders

of the Company                    1,555,585              1,329,891
Non-controlling interests     3,950                      2,152
Net profits                         1,559,535           1,332,043

Overview

. For the year ended 31 December 2011, the Group continued to perform well with all major areas of operations recording revenue growth. Turnover reached HK$5,209 million (2010: HK$4,675 million), which represented an increase of 11% over 2010. Cost of sales increased from HK$1,723 million to HK$1,807 million, an increase of approximately 5% over 2010.

. As a result, gross profit increased from HK$2,952 million to HK$3,402 million, an increase of approximately 15% over 2010, and gross profit percentage improved from 63% in 2010 to 65% in 2011.

. Included in the cost of sales were the cost of programmes, film rights and stocks which amounted to HK$1,188 million (2010: HK$1,161 million), an increase of approximately 2% over 2010.
Selling, distribution and transmission costs amounted to HK$531 million (2010: HK$486 million), an increase of approximately 9% over 2010. General and administrative expenses amounted to HK$630 million (2010: HK$477 million), an increase of approximately 32% over 2010, which reflected mainly the increase in the staff costs.

. The Group’s share of the losses of an associate, TVBPVH decreased from HK$98 million to HK$58 million. Effective 1 January 2011, TVB Pay Vision was able to benefit from a lower channel licence fee payable to TVB. Further to a review of the Group’s interest in TVBPVH at 31 December 2011, an additional impairment loss of HK$135 million was recognised in the financial statements for the year.

. Profit before income tax for the year amounted to HK$2,097 million (2010: HK$1,812 million), an increase of approximately 16% over 2010.

. The Group’s taxation charge amounted to HK$537 million (2010: HK$479 million), an increase of approximately 12% over 2010, which was principally due to the income tax on higher income; and a provision of HK$118 million (2010: HK$104 million) relating to the tax challenge from the IRD on profits generated in prior years by the Group’s programme licensing and distribution business carried out overseas.

. Overall, the Group’s profit attributable to equity holders for the year amounted to HK$1,556 million (2010: HK$1,330 million), an increase of approximately 17% over 2010. The earnings per share was HK$3.55 (2010: HK$3.04).

Segments results

. Revenue under Hong Kong terrestrial TV broadcasting, which comprised advertising revenue from the Group’s free TV channels (Jade, Pearl, HD Jade, J2 and iNews) continued to show substantial increase from last year in spite of the market instability caused by the Eurozone
sovereign debt crisis. The revenue of this segment grew from HK$2,533 million to HK$2,858 million, representing an increase of approximately 13% over 2010. The increase in advertising revenue was partly offset by the increase in operating costs including cost of programmes (comprised predominantly the costs of self-produced TV programmes and the amortised costs of acquired film rights) and staff costs. As a result, this segment recorded a profit of HK$1,244 million (2010: HK$1,095 million), representing an increase of approximately 14% over 2010.

. Revenue from programme licensing and distribution which comprised licensing income from distribution of our programmes through telecast, homevideo, and new media licensing, increased from HK$785 million to HK$903 million, representing an increase of approximately 15% over 2010. The significant growth in revenue was partly offset by higher operating costs. As a result, this segment recorded a profit of HK$598 million (2010: HK$536 million), representing an increase of approximately 12% over 2010.

. Revenue from overseas satellite pay TV operations which comprised revenue from our platforms in North America (USA), Australia and Europe, was HK$389 million (2010: HK$372 million), representing an increase of approximately 4% over 2010. Operating costs increased during the year for these platforms. As a result, the segment profit dropped by HK$4 million to HK$100 million (2010: HK$104 million), representing a decrease of approximately 4% over 2010.

. Revenue from Taiwan operations which comprised both subscription and advertising revenue increased from HK$753 million to HK$834 million, representing an increase of approximately 11% over 2010. With higher growth in sales revenue together with a lower increase in operating costs, this segment recorded a notable increase in profit of HK$47 million to HK$278 million (2010: HK$231 million), representing an increase of approximately 21% over 2010.

. Revenue from channel operations which comprised the supply of 11 pay TV channels to TVBPV, and revenue from TVB8 and Xing He, the Group’s satellite TV channel operations, decreased from HK$330 million to HK$252 million which was attributable to the reduction in channel supply licence fee in 2011. As a result, this segment recorded a fall in profit (before impairment loss) to HK$46 million (2010: HK$83 million), representing a decrease of approximately 45% over 2010.

. Revenue from other businesses which comprised revenue from Internet operations, magazine publishing and production of musical works, increased from HK$110 million to HK$157 million, representing an increase of approximately 43% over 2010. This segment recorded an increase in profit from HK$3 million to HK$30 million, representing an increase of approximately 819% over 2010. The sharp increase in profit was mainly contributed by higher turnover-related income generated from Internet operations.

Liquidity, financial resourcres and capital structure

The Group remained in a strong financial position as at 31 December 2011. Total equity stood at HK$7,093 million (2010: HK$6,488 million), representing an increase of approximately 9%. At 31 December 2011, the capital structure of the Company comprised 438,000,000 ordinary shares of HK$0.05 each and there has been no change in the share capital of the Company.

At 31 December 2011, the Group had bank and cash balances of HK$3,693 million (2010: HK$2,891 million), representing an increase of approximately 28% over the last year end. Out of the total bank and cash balances, 44% were in Hong Kong dollars, 41% in US dollars, 7% in Renminbi and 8% in other currencies. About 10% of the bank and cash balances (approximately HK$364 million) were maintained in overseas subsidiaries for their daily operation.
At 31 December 2011, the Group’s net current assets amounted to HK$4,297 million (2010: HK$3,532 million), representing an increase of approximately 22% over the last year end. The current ratio, expressed as the ratio of current assets to current liabilities increased to 4.2 at 31
December 2011 (2010: 4.1).

Human resources

The Group employed, excluding Directors and freelance workers but including contract artistes and staff in overseas subsidiary companies, a total of 4,251 (2010: 4,125) full-time employees at 31 December 2011.
About 27% of the Group’s manpower was employed in overseas subsidiaries, and was paid on a scale and system relevant to the respective localities and legislations.

Source: TVB (21/03/2012)

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