Dialog FY 2019 NPAT Rs10.8Bn, Contribution to GoSL Tax Revenue Tops Rs33.3Bn, Rs28.6Bn Invested in Infrastructure

• YTD Revenue and EBITDA Growth 7%, PAT Out Pace Revenue and EBITDA at 44%
• Recommended Dividend: 40% of Earnings, 53 Cents per Share
• Direct Taxes, Fees and Levies to GoSL: Rs11Bn (Indirect on behalf of GoSL Rs22Bn)
• Continuing Capex Investments in High Speed Broadband and Other Infrastructure: Rs28.6Bn
• Operating Free Cash Flow Tops Rs12.3Bn YTD

Dialog Axiata PLC announced its consolidated financial results for the year ended 31st December 2019. Financial results included those of Dialog Axiata PLC (the “Company”) and of the Dialog Axiata Group (the “Group”).

The Group concluded the Financial Year (“FY”) on a strong note, continuing its growth momentum across all business segments viz. Mobile, Fixed Line, Digital Pay Television, International and Tele-infrastructure businesses to record a consolidated revenue of Rs116.8Bn, demonstrating strong growth of 7% Year-to- Date (“YTD”). The Group revenue resumed growth trajectory on a Quarter-on-Quarter (“QoQ”) basis to record at Rs29.7Bn up 2% and 4% Year-on-Year (“YoY”) for Q4 2019. On the back of Revenue performance Group Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) grew 7% YTD to reach Rs46.7Bn for FY 2019, albeit declining 2% on QoQ basis to reach Rs11.7Bn for Q4 2019. On a Year-on-Year (“YoY”) basis EBITDA grew 1%. The adoption of SLFRS 16, ‘Leases’ with effect from 1 January 2019, translated to an EBITDA upliftment of Rs2.6Bn which is a 2.2pp increase in the EBITDA Margin reaching to 40.0% for FY 2019.

During the quarter the Government of Sri Lanka (“GoSL”) introduced a relief package in the form of eliminating and amending many types of taxes. Consumers of telecommunications services benefited from the lowering of Value Added Tax (“VAT”) and Telecommunication Levy (“TL”) along with the removal of Nation Building Tax (“NBT”). Accordingly, the indirect tax on Voice services has been revised down to 22.60% whilst on Data services the tax has been revised down to 10.20%. These changes were made effective from 1st December 2019.

The Group Net Profit After Tax (“NPAT”) demonstrated a growth of 44% YTD to record at Rs10.8Bn for FY 2019 underpinned by strong EBITDA performance and stable currency. On a QoQ and YoY basis NPAT increased 65% and >+100% to record at Rs2.4Bn, mainly due to the favorable forex impact.

In line with the financial performance of the Group and taking into account the 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 on 13th February 2020, resolved to propose for consideration by the Shareholders of the Company, a cash dividend to ordinary shareholders amounting to 53 cents (Rs0.53) per share totalling to Rs4.3Bn. The said dividend, if approved by shareholders, would translate to a payout of 40% of consolidated Group NPAT for FY 2019 resulting in a Dividend Yield of 4.3% and a Total Shareholder Return (“TSR”) of 26.1%. 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.

Dialog Group continued to be a significant contributor to state revenues, remitting a total of Rs33.3Bn to the GoSL during the financial year ended 31st December 2019. Total remittances included Direct Taxes and Levies amounting to Rs11.0Bn and Rs22.3Bn in Consumption Taxes collected on behalf of the GoSL.

The Group capital expenditure for the year ended 31st December 2019 totalled to Rs28.6Bn, down 6% YTD resulting in a Capex to Revenue ratio of 24%. Capital expenditure was directed towards transforming Dialog into a digital telco, by digitising all spheres of the organisation, and investments in High-Speed Broadband infrastructure to further strengthen the Group's leadership in Sri Lanka's Broadband sector. Accordingly, the Group recorded Operating Free Cash Flow (“OFCF”) of Rs12.3Bn for FY 2019. Group Net Debt to EBITDA ratio remained healthy at 0.86 times as at end of 2019.

During the quarter Dialog won the coveted ‘Industrial IoT Initiative of the Year’ award for its affordable and purpose-built IoT solutions for industries in emerging markets, at the 7th annual Global Telecoms Awards (GLOTEL Awards) held in London. These affordable and purpose-built solutions comprised of a range of industrial IoT applications, enabled by the i-Moni IoT Gateway for smart infrastructure monitoring and automation, state-of-the-art utility IoT applications enabled by smart communication modules for smart metering, and network monitoring devices for low voltage power distribution networks. The solutions were developed end-to-end in Sri Lanka by Dialog together with the Dialog - University of Moratuwa Mobile Communications Research Laboratory, and industry partners Axiata Digital Labs (ADL) and Lanka Electricity Company (LECO).

At an entity level, Dialog Axiata PLC (the “Company”) continued to contribute a major share of Group Revenue (71%) and Group EBITDA (76%). Company revenue declined 2% YTD to record at Rs82.6Bn for FY 2019 mainly due to the transfer of international wholesale business from Company to its fully owned subsidiary Dialog Broadband Networks (“DBN”). On a QoQ basis revenue remined flat albeit declining 4% on a YoY basis to record at Rs20.5Bn for Q4 2019. The Company EBITDA was recorded at Rs35.5Bn for FY 2019 representing an increase of 17% YTD and it reached Rs8.8Bn for Q4 2019 down 3% QoQ and up 53% YoY. The adoption of SLFRS 16 had a positive impact on FY 2019 EBITDA performance of the Company resulting in an upliftment of Rs2.4Bn for the year.

Downstream of EBITDA performance, the Company NPAT was recorded at Rs11.6Bn for FY 2019 up 165% YTD. NPAT reached Rs3.0Bn for Q4 2019 up 62% QoQ and >+100% YoY.

Dialog Television (“DTV”), continued to consolidate its leadership position in the Digital Pay Television space with a subscriber growth of 25% YoY for the year ended 31st December 2019. Underpinned by strong subscriber growth, DTV revenue grew by 17% YTD to be recorded at Rs8.8Bn for FY 2019 while revenue reached Rs2.2Bn for Q4 2019 up 18% YoY. On the back of strong cost management focus, DTV EBITDA recorded a growth of 31% YTD to reach Rs2.4Bn for FY 2019. Accordingly, DTV Net Loss declined to Rs541Mn for FY 2019 relative to a Net Loss of Rs915Mn recorded in FY 2018.

Dialog Broadband Networks (“DBN”) featuring the Group’s Fixed Telecommunications, Broadband and International Businesses recorded revenue of Rs28.1Bn for FY 2019 up 64% YTD, mainly due to the increase in wholesale business revenue, while on a QoQ and YoY basis revenue grew 4% and 36% respectively to reach Rs7.5Bn for Q4 2019. DBN EBITDA recorded a decline of 23% YTD to reach Rs9.2Bn resulting from the one-off gain of Rs3.7Bn recognized in Q4 2018. The normalised EBITDA for DBN recorded a growth of 11% YTD for the year ended 31st December 2019. However, NPAT declined to Rs411Mn for FY 2019 from Rs1.3Bn (normalized for one-off gain) recorded in FY 2018.

More details are available at the following links:
CSE direct weblink: https://www.cse.lk/home/company-info/DIAL.N0000/financial