Dialog FY 2017 NPAT Rs10.8Bn, Contribution to GoSL Revenue Tops Rs35.7Bn, Rs27.3Bn Invested in Infrastructure

• Net Profit After Tax Rs10.8Bn
• Recommended Dividend: 35% of Earnings, 46 Cents per Share
• Direct and Indirect Contribution in Taxes, Fees and Levies to GoSL: Rs35.7Bn
• Investment in High Speed Broadband and Other Infrastructure: Rs27.3Bn

Dialog Axiata PLC announced, Friday 9th February 2018, its consolidated financial results for the year ended 31st December 2017. Financial results comprise those of Dialog Axiata PLC (the "Company") and of the Dialog Axiata Group (the "Group").

On the backdrop of strong market performance across all key business segments, the Group ended Financial Year (“FY”) 2017 on a strong note to record a consolidated revenue of Rs94.2Bn, demonstrating a growth of 9% Year-to- Date (“YTD”) while revenue growth moderated to 2% Quarter-on-Quarter (“QoQ”) to be recorded at Rs24.8Bn for Q4 2017. Downstream of revenue growth, the Group Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) grew 16% YTD to record Rs33.9Bn for FY 2017, underpinned by disciplined cost management and operational efficiencies. The Group EBITDA margin for FY 2017 was accordingly recorded at 36%. Group EBITDA declined 3% QoQ to Rs9.1Bn in Q4 2017.

The Group Net Profit After Tax (NPAT) grew 19% YTD to be recorded at Rs10.8Bn for FY 2017. The Group NPAT performance was driven by improved EBITDA and lower non-cash translational forex losses of Rs0.4Bn compared to Rs0.8Bn during FY 2016. The Sri Lanka Rupee (LKR) depreciated against the United States Dollar (USD) at a moderate 2.3% during FY 2017. The Group NPAT declined 15% QoQ in Q4 2017 to reach Rs3.2Bn due to lower EBITDA, higher depreciation and net finance cost.

Dialog Group continued to be a significant contributor to state revenues, remitting a total of Rs35.7Bn to the Government of Sri Lanka (GoSL) during the financial year ended 31st December 2017 representing an increase of 13% YTD. Total remittances included Direct Taxes and Levies (Rs9.0Bn) as well as Consumption Taxes collected on behalf of the GoSL (Rs26.7Bn).

In line with the financial performance of the Group and taking into account forward investment requirements to serve the nation's demand for Telecommunication and Digital services, the Board of Directors of Dialog Axiata PLC at its meeting held 9th February 2017, resolved to propose for consideration by the Shareholders of the Company, a cash dividend to ordinary shareholders amounting to forty six cents (Rs0.46) per share totalling to Rs3.7Bn. The said dividend, if approved by shareholders, would translate to a payout of 35% of consolidated Group NPAT for FY 2017. The dividend so proposed will be considered for approval by the shareholders at the Annual General Meeting (AGM) of the Company, the date pertaining to which would be notified in due course.

The Group capital expenditure for the year ended 31st December 2017 totalled to Rs27.3Bn (USD180.4Mn), up 18% YTD representing a Capex to Revenue ratio of 29%. Capital expenditure was directed in the main towards investments in High-Speed Broadband infrastructure to further strengthen the Group's leadership in Sri Lanka's Broadband sector. Notwithstanding the expansion of capital investments, the Group continued to exhibit a structurally strong balance sheet with the Net Debt to EBITDA ratio being maintained at 0.83x as at end December 2017.

The Q4 featured the unveiling of yet another cutting-edge technology solution with the launch of Narrowband Internet of Things (NB-IoT). The first to launch the technology in South Asia, NB-IoT is a narrowband radio technology specially designed to enable seamless connectivity amongst devices using Low Power Wide Area (LPWA) technology. The introduction of NB-IoT to market, increases the adoption of emerging IoT technology and other related devices. NB-IoT will provide a great springboard to further leverage IoT in introducing revolutionary services that will enrich Sri Lankan lives.

During the quarter, Dialog Axiata PLC also announced the launch of the Dialog Axiata Digital Innovation fund (DADIF), furthering its aspiration on creating avenues to empower aspiring entrepreneurs and promising businesses. DADIF will support companies currently established or emerging in the field of digital based services and will aim to deploy a corpus of Rs2.3Bn into high potential Sri Lankan start-ups.

At an entity level, Dialog Axiata PLC (“the Company”) continued to contribute a major share of Group Revenue (82%) and Group EBITDA (80%). On the back of its mobile customer base of over 12.7Mn subscribers, Company Revenue for FY 2017 grew by 6% YTD to reach Rs77.6Bn with revenue for Q4 2017 being recorded at Rs20.2Bn, up 1% QoQ. Underpinned by strong revenue growth and cost initiatives, Company EBITDA increased 8% YTD to be recorded at Rs27.0Bn for FY 2017, translating to an EBITDA margin of 34.8%. Company NPAT was recorded at Rs10.5Bn for FY 2017 and Rs3.1Bn for Q4 2017 respectively, representing an increase of 2% YTD and a decrease of 6% QoQ.

Dialog Television (DTV), continued to consolidate its leadership position in the Digital Pay Television space with the subscriber base growing 17% YTD to exceed 980,000 as at end December 2017. Revenue declined 1% YTD to record at Rs6.0Bn for FY 2017 while Revenue remained stable QoQ to reach Rs1.5Bn for Q4 2017. Driven by aggressive cost initiatives, DTV EBITDA grew 49% YTD to post at Rs572Mn for FY 2017. Notwithstanding positive EBITDA performance, DTV Net Loss increased 14% YTD to be recorded at Rs736Mn for FY 2017 relative to a Net Loss of Rs644Mn recorded in FY 2016.

Dialog Broadband Networks (DBN) recorded a Revenue growth of 33% YTD to be recorded at Rs12.4Bn in FY 2017 and a growth of 3% QoQ to reach Rs3.3Bn in Q4 2017. Strong top line growth was supported by Fixed Home Broadband segment powered by 4.5G LTE Technology. Underpinned by strong revenue performance, DBN EBITDA grew 74% YTD to reach Rs6.9Bn in FY 2017 albeit declining 3% QoQ to be recorded at Rs1.9Bn. On the back of healthy YTD EBITDA performance, DBN NPAT reached Rs1.8Bn in FY 2017 relative to a Net Loss of Rs385Mn in FY 2016. On a QoQ basis however, NPAT was down 12% to post at Rs562Mn for Q4 2017.

On 12th September 2017, Dialog Axiata PLC acquired 80.34% stake in Colombo Trust Finance PLC (CTF). Accordingly, CTF is fully consolidated within the financial statement of the Group. The equity stake in CTF increased to 98.87% following the mandatory offer for the remaining 19.66% of shares. Offer was concluded on 2nd November 2017.