Dialog Axiata net profit down 15% to Rs. 5.18 b in 2015

Impacted by a disappointing second half largely over external factors, Dialog Axiata Group has ended 2015 with net profit declining by 15% to Rs. 5.18  billion in spite of a 10% growth in revenue to Rs. 74  billion. 

Fourth quarter net profit was down by 58% to Rs. 621 million, on top of a similar decline in the third quarter. 

The Group operating profit amounted to Rs. 9.5 billion, up from Rs. 8 billion in 2014. Pre-tax profit was Rs. 6.7 billion, down from Rs. 7.3 billion. It suffered a foreign exchange loss to the value of Rs2.2 billion leading to negative growth in profits  

In its statement on provisional financial results, Dialog said the Group continued its strong growth momentum across Mobile, Digital Pay Television, Tele-infrastructure and Fixed Line businesses to record consolidated revenue of Rs. 73.9 billion for the Financial Year 2015 and Rs. 20.0 billion for Q4 2015 respectively, demonstrating a significant growth of 10% Year on Year and 6% Quarter on Quarter. 



Robust revenue growth combined with operational efficiencies derived through cost management initiatives resulted in Group EBITDA for FY 2015 growing by 14% YoY to reach Rs. 23.8 billion. The Group EBITDA margin for FY 2015 was accordingly recorded at 32.2%. On a QoQ basis however, Group EBITDA declined by 11% to be recorded at Rs. 5.6 billion for Q4 2015.

Notwithstanding robust growth in all operational performance metrics, the Group was significantly impacted by non-cash, translational foreign exchange losses to the value of Rs. 2.2 billion during the year, accruing from the depreciation of the LKR relative to the USD by 9.2% YoY. Group NPAT was posted at Rs. 5.2 billion for FY 2015 and Rs. 620 million for Q4 2015, exhibiting a contraction of 15% YoY and 9% QoQ. Group NPAT post normalisation for the non-cash translational foreign exchange losses was recorded at Rs. 7.4 billion for FY 2015, representing an increase of 18% YoY.

The Group remitted a total of Rs. 27.6 billion to the Government of Sri Lanka (GoSL) in the form of taxes and levies during the financial year ended 31st December 2015. Total remittances included direct taxes and levies as well as consumption taxes collected on behalf of the GoSL. Direct taxes, fees and levies contributed by the Group totalled Rs. 12.7 billion inclusive of income tax. The Group additionally collected consumption taxes, totalling Rs. 14.9 billion on behalf of the GoSL for FY 2015, comprising in the main of Telecom Levy collections amounting to Rs. 11.7 billion.

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 (84%) and Group EBITDA (85%). On the back of its Mobile customer base of over 10.8 million subscribers, Company revenue for FY 2015 grew by 9% YoY to be recorded at Rs. 62.9 billion. Underpinned by strong revenue growth and positive outcomes from cost management initiatives, Company EBITDA recorded a growth of 10% YoY to reach Rs. 20.3 billion for FY 2015, translating to an EBITDA margin of 32.3%.

Notwithstanding healthy performance in Revenue and EBITDA, Company NPAT was impacted by non-cash translational foreign exchange losses accruing from the 9.2% YoY depreciation of the LKR amounting to Rs. . 2.0 billion, as alluded to earlier in the context of Group performance. Accordingly Company NPAT contracted by 17% YoY to be recorded at Rs. 5.7 billion for FY 2015. On normalising for the exceptional foreign exchange losses, Company NPAT was recorded at Rs. 7.8 billion for FY 2015, representing an increase of 9% YoY.

Dialog Television (DTV), the Digital Pay Television business of the Group continued its positive growth momentum, recording a revenue growth of 23% YoY to reach Rs. 5.8 billion for FY 2015. DTV’s Pay TV customer base was recorded at 650,000 subscriptions as at the end of December 2015. DTV engaged in an aggressive service and product enhancement program during 2015 featuring the expansion of channel genres and the launch of new prepaid product offerings. Cost expansion arising from aggressive customer acquisition alongside service and product expansion activities, resulted in a medium term contraction in DTV’s EBITDA by 30% on a YoY basis. DTV EBITDA for FY 2015 was recorded at Rs. 609 million. The contraction of DTV EBITDA translated to an equivalent negative impact on NPAT leading to a Net Loss of Rs. 314 million for FY 2015 compared to a Net Profit of Rs. 243 million posted in FY 2014.

Dialog Broadband Networks (D B N) featuring the Group’s Fixed Telecommunications and Broadband Business recorded revenue of Rs. 7.3 billion for FY 2015, representing an increase of 19% YoY. Robust revenue growth and operating cost efficiencies combined to deliver an 88% YoY increase in DBN EBITDA which was recorded at Rs. 2.9 billion for FY 2015. Accordingly, the Net Loss for FY 2015 recorded at Rs. 133 million signalled a significant improvement in bottom line profitability relative to the Net Loss of Rs. 941 million recorded in FY 2014.

Group capital expenditure for FY 2015 was recorded at Rs. 19.6 billion. Capital expenditure was directed in the main towards investments in high speed broadband infrastructure alongside the extension of the Group’s Optical Fibre Network, and investments associated with the final phase of the Bay of Bengal Gateway (BBG) Sub-Marine Cable project. Capital investments during 2015 will further strengthen the Group’s leadership in Sri Lanka’s ICT Infrastructure sector.

Notwithstanding the expansion of capital investments, the Group continued to exhibit a structurally robust balance sheet with the Net Debt to EBITDA ratio being maintained at a healthy 0.78x as at end of December 2015.

In line with the financial 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 two cents (Rs. 0.32) per share totaling to Rs. 2.6 billion. The said dividend, if approved by shareholders would translate to a payout of 50% of consolidated Group Net Profit for the FY 2015. 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.