Dialog Records Rs 6.0Bn Net Profit for FY 2012

Dialog Axiata PLC announced, Monday 18th February 2013, its consolidated financial results for the year ended 2012. Financial results included those of 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 a strong revenue growth across Mobile, International, Digital Pay Television, Tele-infrastructure and Fixed Line businesses to record consolidated revenue of Rs 56.3Bn for FY 2012, translating to YoY growth of 24%. Group Revenue for Q4 2012 was recorded at Rs 15.0Bn, reflecting growth of 4% QoQ.

Group EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) for the FY 2012 was recorded at Rs 18.6Bn, a significant increase of 13% relative to the corresponding period in 2011. Group EBITDA Margin for FY 2012 declined marginally by 3 percentage points on a YoY basis to 33%. Group EBITDA contracted by 11% QoQ due to escalation in marketing and promotion activities and one-off costs related to modernisation of the company’s expansive service centre network to deliver the very best in efficient customer care across all provinces of the country.

Non-Operational performance below EBITDA for FY 2012 is characterised by non-cash translational foreign exchange losses amounting to Rs 2.2Bn, and a one-off write back of the company’s deferred tax provision of positive Rs 2.3Bn. Non-cash foreign exchange losses accrued due to the devaluation of the SLR by 11.8% YTD and the write back of deferred tax was effected subsequent to the company opting for 2% revenue tax with effect from 2013 following the expiry of the company’s tax holiday. Underpinned by the positive EBITDA growth trajectory, Group NPAT recorded a strong growth of 23% YoY to be recorded at Rs 6.0Bn in FY 2012. Group NPAT for the 4th Quarter however exhibited an 80% reduction relative to the previous quarter due to the contraction of EBITDA due to exceptional charges in the 4th Quarter, and an impairment charge of Rs 931Mn related to legacy network elements being subject to modernization and upgrade to match latest technology standards.

Group NPAT post normalisation for exceptional gains/charges (consisting of the non-cash foreign exchange loss of Rs 2.2Bn, deferred taxation reversal of Rs 2.3Bn and costs related to the Suntel acquisition amounting to Rs 343Mn), is recorded at Rs 6.3Bn for the FY 2012 demonstrating a significant growth in normalized NPAT performance of 29% YoY.

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 (87%) of Group Revenue and (87%) of Group EBITDA. Company Revenue grew 4% QoQ to reach Rs 13.1Bn with revenue for FY 2012 being recorded at Rs 49.8Bn, up 19% relative to FY 2011. During the course of 2012 the Company grew its mobile subscriber base to 7.82Mn recording a 9% subscriber growth YoY.

On the backdrop of strong YoY performance in Revenue, Company EBITDA for FY 2012 grew by 6% YoY to record at Rs 16.1Bn, featuring an EBITDA margin of 32%. Notwithstanding aggressive revenue performance, Company EBITDA contracted by 15% in the 4th Quarter relative to the previous quarter due to the registering of one-off cost items and spend escalations as detailed above within the analysis of Group performance QoQ.

On the backdrop of strong YoY EBITDA performance, Company NPAT grew by 6% YoY to be recorded at Rs 6.2Bn inclusive of the impact of the deferred tax reversal of positive Rs 2.3Bn and non-cash forex translational loss of negative Rs 2.2Bn. Company NPAT normalized for the exceptional items was recorded at Rs 6.4Bn for FY 2012 an increase of 10% relative to FY 2011. During the 4th Quarter, Dialog Axiata PLC made a decisive foray in to the space of Digital Commerce through the acquisition of 26% in newly formed company Digital Commerce Lanka (Pvt) Ltd which going forward would bring together the e-commerce properties of market leading Daily Deals site Anything.lk with those of the Dialog Group. Dialog Television continued its growth momentum recording YoY revenue growth of 27% to reach Rs 3.0Bn for FY 2012. DTV EBITDA was recorded at Rs 636Mn for FY 2012, an improvement of 11% YoY on the back of strong revenue growth. NPAT however decreased by 57% YoY to be recorded at Rs 11Mn for FY 2012 due to the recording of an exceptional impairment charge arising from the ongoing upgrade of the company’s digital satellite broadcasting network from MPEG2 to MPEG4 and High Definition (HD) technologies. The transition to a full MPEG4 configuration will enable DTV to increase the return on investment on Satellite Transponder resources going forward in tandem with enhancing the quality of service to consumers. DTV’s Pay Tv Subscriber base increased by 23% YoY to be recorded at 264,000 as at the end of FY 2012.

The 4th Quarter saw the revolutionisation of the pay television market in Sri Lanka with the introduction of Sri Lanka’s first ever Prepaid Television Service by Dialog TV. DTV’s prepaid service will bring best in class Pay Television content within reach of a wide spectrum of Sri Lankan households. The revolutionary Pay-As-You-Watch TV service from Dialog enables subscribers to select channels genres or individual channels and pay for them on a per-day basis.

Dialog Broadband Networks registered FY 2012 Revenues of Rs 5.0Bn (up 125% YoY) driven in the main by the acquisition, merger and operational consolidation of Suntel Ltd. On the back of strong revenue and synergies achieved through the amalgamation, YoY EBITDA improved very significantly by 169% to be recorded at Rs 1.8Bn. Accordingly DBN registered an 87% decrease in Net Loss YoY, with NPAT for FY 2012 being recorded at negative Rs 120Mn relative to negative Rs 945Mn in FY 2011. Dialog Broadband Networks secured the distinction of launching the country’s first 4G LTE service for Home and Enterprise Customers in Q4 2012.

Group Capital expenditure for FY 2012 amounted to Rs 17.4Bn. Capital expenditure was directed in the main towards High Speed Mobile Broadband and Optical Fibre Network (OFN) expansion projects and towards providing unparalleled data speeds and connectivity, further consolidating the Company’s coverage and quality leadership position.

Group Free Cash Flow (FCF) was recorded at Rs 1.1Bn for the FY 2012 on the back of strong EBITDA performance and notwithstanding the escalation of investments in High Speed Broadband Infrastructure and growth capacity to cater for enhanced demand for the multiple ICT services offered by the Dialog Group. The Group’s Net debt to EBITDA increased marginally to 0.82x as at end of 2012 from 0.74x as at end of 2011.

In line with the performance of the Group and taking in to account forward investment requirements to serve the nation’s demand for Mobile, Fixed, Broadband and Digital Television services, the Board of Directors of Dialog Axiata PLC, resolved to propose for consideration by the Shareholders of the Company, a cash dividend to ordinary shareholders amounting to thirty three cents (Rs 0.33) per share totaling to Rs 2.7Bn demonstrating an increase of 32% in dividend per share compared to FY 2011. The said dividend, if approved by shareholders would translate to a payout of 45% of consolidated Group Profits after Preference Dividend for the FY 2012. 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.