MNC RECORDED 29% RISE IN REVENUES
2008 - Jakarta, 1 Aug 2008

Summary

PT Media Nusantara Citra Tbk (MNC) recorded a rise in consolidated revenues of 29% to Rp1,689 billion in the six months ended 30 June 2008 (1H-2008) as compared to Rp1,308 billion for the same period last year (1H-2007). As a result, net income increased by 12% to approximately Rp214 billion compared to the same period last year.

Quarterly revenues grew by 62% in the second quarter (Q2-2008) to Rp1,045 billion as compared to Q1-2008 in the amount of Rp644 billion due to stronger advertising market. This is consistent with previous experience where the second quarter would be higher than the first quarter, which is the weakest quarter in a fiscal year.

Generally, the growth in advertising expenditure (adspend) was also due to heightened competition in some industries which requires higher advertising expenses, such as telecommunication industry.

Other than that, the consolidation of PT Cross Media International (CMI) contributed Rp116 billion to consolidated revenues. Contribution from the previous period was not reflected in the six months ended 30 June 2007 as the consolidation of CMI began in end 2007.



HALF YEAR 2008 FINANCIAL PERFORMANCE



Higher revenues expectation for the rest 2008 subsequent financial quarters

Hary Tanoesoedibjo, Group CEO of MNC, said, "We believe that stronger revenues performance should be achieved for the remaining two quarters of 2008. This is due to expected higher revenues contribution during the third quarter of 2008 amid higher television adspend during the end of school term holidays and fasting during the month of Ramadan (whole month of September) prior to the Idul Fitri celebration in October. While the fourth quarter is traditionally marked by heavy adspend for Christmas and New Year’s celebration".

The rise in non-advertisement revenues from the television segment was derived from SMS premium on free-to-air television programs namely Indonesian Idol, Kontes Dangdut Indonesia, and Idola Cilik. Stronger revenues were also contributed by other Value Added Services business in the domestic and regional markets. Another segment that contributed to non-advertisement revenues is print media circulation, content distribution, studio rental, computer graphics, and others.

The revenues contribution from print media circulation had increased from Rp23 billion per 1H-2007 to Rp38 billion per 1H-2008. This was particularly due to higher performance from Seputar Indonesia. Other significant revenues contribution from newspaper was due to the increase in its retail price from Rp2,000 to Rp3,000, which was effectively performed on 1 May 2008. The price increase was necessary in line with the rising paper prices and production costs.

Operating expenses

Operating expenses have increased by 48% from approximately Rp904 billion per 1H-2007 to approximately Rp1,340 billion per 1H-2008. Operating expenses comprised of (i)direct costs, (ii) general and administrative expenses, and (iii) depreciation and amortization expenses.

Direct costs consisted of program and broadcasting costs, printing, and others. Direct costs had increased by 51% per 1H-2008 as compared to 1H-2007, which was due to a 226% increase in printing costs corresponding to the rise in newspapers and tabloids circulations. Other than that, the consolidation of CMI had contributed Rp 107 billion to consolidated direct cost. Contribution from the previous period was not reflected in the six months ended 30 June 2007, as the consolidation of CMI was done nearing the end of 2007. The direct costs have also taken into account of broadcast license fee of Euro Cup 2008.

While general and administrative (G&A) expenses rose by 45% per 1H-2008 as compared to 1H-2007, which amongst others were due to promotion and advertising expenses associated with Euro Cup 2008. Other factors that contributed to the rise were due to higher travel and electricity expenses. In addition, G&A expenses have increased due to additional head counts arising from media expansion.

Depreciation and amortization increased by 26% per 1H-2008 to Rp69 billion as compared to 1H2007,
which was primarily due to additions of fixed assets in the form of office renovations, studio building, and transmission stations including installations.



Other income (charges) decreased by 58%
MNC posted other charges (net) in the amount of Rp49 billion per 1H-2008, a decrease of Rp69 billion as compared to Rp118 billion per 1H-2007. This was mainly due to higher interest income, lower interest payments, and gain in forex as will be explained below.

Per 1H-2008, MNC posted a rise of 89% in interest income as compared to 1H-2007. The interest income was primarily derived from the remaining cash proceeds due to the initial public shares offering (IPO) which was performed in June 2007.

MNC reduce its total debt by utilizing part of the IPO proceeds to settle Rp165 billion of RCTI bonds on 23 October 2007. Prior to that, MNC also redeemed US$25 million of Guaranteed Secured Notes on 12 June 2007. Both debt repayments resulted in the reduction of interest and financial charges from Rp130 billion per 1H-2007 to Rp111 billion per 1H-2008.

The reduction in other charges was also attributable to a stronger Rupiah currency thereby resulted in a foreign exchange gain in the amount of Rp29 billion per 1H-2008 as opposed to a loss of Rp4 billion per 1H-2007.



Consolidated net income rose by 12% but EBITDA decreased by 12% amid rising costs

MNC recorded consolidated net income of Rp214 billion per 1H-2008, a rise of 12% as compared to 1H-2007 in the amount of Rp191 billion. This is also a significant improvement if compared to the first quarter 2008 net income of Rp78 billion.



EBITDA had decreased by 9% per 1H-2008 compared to the same period last year, which was due to higher operational expenses as discussed above.

Stronger revenues performance is expected for quarters 3 and 4 stemming from better advertising market. Furthermore, increased advertising activities during Ramadan and school holidays should have a positive impact on the revenue in 2008.

Hary Tanoesoedibjo added, "We believe that expected stronger revenues performance should provide improvements to the EBITDA and net income for the full year 2008 result".