Dialog Posts Rs. 6.1Bn Net Profit for FY 2014

Infrastructure Investments of Rs 15.2Bn in 2014

Colombo, Wednesday 18th February: Sri Lanka’s premier telecommunications service provider, Dialog Axiata PLC, announced its consolidated financial results for the year ended 31st December, 2014 including those for Dialog Axiata PLC (the "Company") and of the Dialog Axiata Group (the "Group") post-consolidation with subsidiaries Dialog Broadband Networks (Pvt) Ltd ("DBN"), and Dialog Television (Pvt) Ltd ("DTV").

The Group demonstrated strong growth in revenue across Mobile, Digital Pay Television and Fixed Line businesses to record consolidated revenue of Rs67.3Bn for the Financial Year (FY) 2014 and Rs17.3Bn for Q4 2014 respectively, representing an increase of 6% Year on Year ("YoY") and 2% Quarter on Quarter ("QoQ"). On the backdrop of strong revenue growth, Group EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) for FY 2014 was recorded at Rs20.9Bn, an increase of 5% YoY and 1% QoQ. Group EBITDA margin for FY 2014 was registered at 31.1%.

Underpinned by growth in EBITDA and lower translational forex losses than in the previous year, Group Net Profit After Tax for FY 2014 grew by 17% YoY to be recorded at Rs6.1Bn. On a QoQ comparison however, Group NPAT (Net Profit After Tax) for Q4 2014 contracted by 13% QoQ due to the recognition of non-cash translational foreign exchange losses amounting to Rs290Mn in Q4 2014 following the depreciation of the SLR relative to the USD by 1.1% QoQ.

The Group contributed Rs11.1Bn in taxes, fees and levies to the Government of Sri Lanka (GoSL) during the financial year ended 31st December 2014, inclusive of Income Tax on the basis of 2% of company revenue. Further, the Group additionally collected consumption taxes, totalling to Rs13.3Bn on behalf of the GoSL during FY 2014, comprising in the main of Telecom Levy collections amounting to Rs10.5Bn. Accordingly, remittances to the GoSL accruing from the operations of the Group totalled to Rs24.4Bn.

The consolidated financial results for the year ended 31st December 2014 excludes any and all impacts from the Interim Budget 2015. The Interim Budget was presented by the GoSL on 29th January 2015 and was passed by the Parliament of Sri Lanka on 07th February 2015. The GoSL is in the process of enacting legislation corresponding to the Budget Proposals which would bring the said proposals in to force and also provide definitive clarity with respect to applicability and implementation parameters. Accordingly, and pending legislation and clarity as at the time of announcement, the consolidated financial results as reported excludes any and all impacts from the Interim Budget.

At an entity level, Dialog Axiata PLC ("the Company") featuring the Mobile, International and Tele-Infrastructure segments of the Group portfolio continued to contribute a major share of Group Revenue (85%) and of Group EBITDA (88%). Revenue grew by 5% YoY on the back of its Mobile subscriber base of 9.5Million, to reach Rs58.0Bn for FY 2014. Underpinned by strong performance in Revenue, Company EBITDA for FY 2014 increased by 5% YoY to be recorded at Rs18.5Bn, translating to an EBITDA margin of 31.8%.

The Company NPAT for FY 2014 was recorded at Rs7.0Bn, representing an increase of 15% YoY on the backdrop of improved EBITDA and lower translational forex losses relative to previous year.

DTV, the Digital Pay Television business of the Group continued its positive growth momentum, recording a revenue growth of 30% YoY to reach Rs4.7Bn for FY 2014. DTV EBITDA was recorded at Rs863Mn for the same period, an improvement of 30% YoY driven by strong revenue growth. On the backdrop of growth in EBITDA, Net Profit for FY 2014 was recorded at Rs243Mn, compared to a Net Loss of Rs301Mn posted in FY 2013. The company’s Pay TV subscriber base grew by 36% YoY to be recorded at 452,000 as at end of December 2014.

DBN featuring the Group’s Fixed Telecommunications and Broadband Business recorded revenue of Rs6.2Bn for FY 2014, representing an increase of 6% YoY. Notwithstanding strong revenue performance, DBN EBITDA contracted by 1% YoY to reach Rs1.5Bn for FY 2014 due to the expiration of VAT credits totalling to Rs392Mn recognised in FY 2013. DBN’s Net Loss for FY 2014 was recorded at Rs941Mn relative to the Net Loss of Rs481Mn in FY 2013. Negative NPAT performance was attributed to the decline in EBITDA in combine with the increase in depreciation related to Fixed 4G LTE related investments.

Group capital expenditure for FY 2014 amounted to Rs15.2Bn. Capital expenditure was directed in the main towards investments in 2G, 3G and 4G networks, Optical Fibre Network (OFN) expansion projects and the Bay of Bengal Gateway (BBG) Sub-Marine Cable project to further strengthen the Group’s leadership in Sri Lanka’s ICT sector.

Group Free Cash Flow (FCF) was recorded at Rs4.5Bn for FY 2014 on the back of improved EBITDA and lower capital expenditure. The Group continued to exhibit a structurally robust balance sheet with the Net Debt to EBITDA ratio being recorded at 0.92x as at end of December 2014. The Group has deferred the definitive quantification of Cash Flows available for the disbursement of dividends, until such time the impact of the Interim Budget 2015 is determined with certainty.