PT Bhakti Investama, Tbk

Summary

PT Media Nusantara Citra Tbk (MNC) recorded a rise in consolidated revenues of 26% to Rp 2,780 billion for the nine months ended 30 September 2008 (9M-2008).

Growth in advertising spending (adspend) was lower than expected.

Third quarter consolidated revenues experienced 4% growth to Rp1,091 billion (please see Figure 2) as compared to Rp 1,045 billion at previous quarter.

Revenues from advertising grew by 9% while non-advertisement revenues grew by 179%. Non-advertisement based revenues are derived primarily from the sale of programs, revenues from print media circulation, SMS, studio rental, computer graphics, and talent management. Non-advertisement revenues also significanty increased by revenues consolidation of Linktone Limited.

Figure 1: Revenues

Figure 2: 2008 Quarterly revenues and growth

Operating expenses

Operating expenses have increased by 41% from approximately Rp1,600 billion per 9M-2007 to approximately Rp2,258 billion per 9M-2008. Operating expenses as a percentage of total revenues have increased from 72% per 9M-2007 to 81% per 9M-2008.

Direct costs comprised of local program and print. Local program rose by 21% from Rp1,001 billion per 9M-2007 to Rp1,215 billion per 9M-2008. While print increased by about 300% from Rp82 billion per 9M-2007 to Rp331 billion per 9M-2008 due to higher printing costs, especially raw materials.

While general and administrative (G&A) expenses rose by 31% per 9M-2008 which were due to higher advertising and promotion expenses for our television programs. We also incurred higher travel as a result of higher fuel prices.

Per 9M-2008, depreciation and amortization grew by 74% which was mostly due to additions of studio equipments and office equipments.

In addition, the consolidation of Linktone financial results also contributed to the increase in expenses for every accounts mentioned above.

Figure 3: Operating expenses

Other income (charges) decreased by 43%

Other charges (net) decreased by Rp75 billion from Rp173 billion per 9M-2007 to Rp98 billion per 9M-2008.

Interest income was lower due to lower cash balance (particularly cash from IPO proceeds that were being used according to its stated purposes) as cash was expensed to acquire fixed assets, loan repayment, and working capital. However, the decrease in interest income was also being balanced by a decrease in interest charges from Rp159 billion per 9M-2007 to Rp138 billion per 9M-2008.

Gain on foreign exchange (net) also contributed to the reduction in other charges (net) as a stronger Rupiah resulted in a gain in foreign exchange in the amount of Rp3 billion per 9M-2008 as compared to a loss of Rp22 billion per 9M-2007.

Figure 4: Other income (charges)

Consolidated net income decreased by 9%

Consolidated net income amounted to approximately Rp297 billion per 9M-2008, a 9% decrease as compared to 9M-2007 in the amount of Rp326 billion.

Figure 5: Net income & EBITDA

EBITDA had decreased by 4% per 9M-2008. EBITDA margin fell from 31% per 9M-2007 to 24% per 9M-2008. Net income margin decreased from 15% per 9M-2007 to 11% per 9M-2008. The reason for the decrease was due to lower than expected advertisement revenue growth and rising costs as discussed above.

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