03-Aug-2012 Interim financial statements & Press Release 30-06-2012 - DIAL

Dialog Maintains Growth Momentum in Q2

3rd August, 2012. Colombo.
Dialog Axiata PLC announced, Friday 3rd August 2012, its consolidated financial results for the six months ended 30th June 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”). Suntel Limited was amalgamated with DBN, in accordance with the provisions of the Companies Act, No. 07 of 2007 (“Act”) with effect from 15th May 2012. Accordingly, operational performance of Suntel Ltd (which ceased to exist as an entity with effect from 15th May) has been fully subsumed and consolidated within the financial statements of DBN.

The Group demonstrated robust revenue growth across Mobile, International, Digital Pay Television, Tele-infrastructure and Fixed line businesses during the second quarter to record consolidated revenue of Rs 14.1Bn for the quarter and Rs 27.0Bn for the 1st Half of 2012,
translating to QoQ and YoY growth of 10% and 23% respectively. Group EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) for Q2 2012 was recorded at Rs 4.7Bn up 4% QoQ. Group EBITDA for the 1st Half of 2012 was recorded at Rs 9.2Bn, a significant increase of 25% relative to the corresponding period in 2011. Group EBITDA Margin for 1H 2012 remained stable on YoY basis at 34%.

Performance below EBITDA continued to be negatively impacted by the devaluation of the SLR, which depreciated by 4.6% during the course of Q2 resulting in a non-cash translational foreign exchange loss of Rs 865 Million in the quarter. Compounded by a 12.4% devaluation of the SLR in the 1st Quarter, total non-cash translational foreign exchange loss for the 1st Half of 2012 was recorded at Rs. 2.9Bn. Notwithstanding the negative impacts arising from the devaluation of the SLR, strong EBITDA performance bolstered Group NPAT to a healthy level of Rs 879Mn in Q2, reversing the negative NPAT of Rs 531Mn in the 1st Quarter. Group NPAT for the 1st Half was accordingly recorded at Rs 349Mn, an 85% decrease compared to the corresponding period in 2011. Group NPAT post normalisation for exceptional charges (consisting of the non-cash foreign exchange loss of Rs 2.9Bn, and costs related to the Suntel acquisition amounting to Rs 343Mn), is recorded at Rs 3.6Bn demonstrating a significant enhancement in normalized NPAT performance of 59% YoY.

Dialog Axiata PLC (“the Company”) featuring the Mobile, International and Tele-Infrastructure segments of the Group portfolio continued to contribute a major share (88%) of Group Revenue and (89%) of Group EBITDA. On the strength of a 7.4 million strong mobile subscriber base, Company Revenue grew by 3% QoQ to reach Rs 12.2Bn with revenue for 1H 2012 being recorded at Rs 24.0Bn, up 19% relative to the corresponding period in 2011. Notwithstanding aggressive revenue performance, Company EBITDA contracted by 3% in the 2nd Quarter relative to the previous quarter due to the expansion of the Company’s operating cost base due in the main to inflation in energy and energy driven costs.

Company EBITDA for the 1st Half of 2012 grew by 20% relative to the corresponding period in 2011 to be recorded at Rs 8.2Bn, featuring a 1H EBITDA margin of 34%.

Notwithstanding healthy performance in Revenue and EBITDA, Company NPAT (as reflected in Group Performance) was severely impacted by non-cash translational Foreign Exchange losses amounting to Rs 2.9Bn. Accordingly, NPAT for the 1st Half 2012 contracted by 83% YoY to be
recorded at Rs 451Mn. Company NPAT however improved significantly on QoQ basis to be recorded at Rs 857Mn in contrast with the Net Loss of Rs 407Mn recorded in Q1 2012.

Company NPAT for 1H, normalized for non-cash translational foreign exchange losses however, grew 36% relative to the corresponding period in 2011 to be recorded at Rs 3.7Bn.

DTV consolidated the growth momentum of previous quarters recording a revenue growth of 28% YoY and 11% QoQ respectively. DTV revenue for the 1st Half of 2012 was recorded at Rs 1.4Bn.. On the backdrop of aggressive revenue performance, DTV EBITDA was recorded at Rs 388Mn, demonstrating growth of 50% YoY and 14% QoQ. Growth in EBITDA translated to the consolidation of DTV’s positive performance trajectory in terms of bottom line profitability resulting in NPAT for 1H 2012 being recorded at Rs 109Mn relative to a Net Loss of Rs 14Mn posted in the corresponding period in 2011.

DBN, featuring the Group’s fixed telecommunications and broadband businesses witnessed a significant expansion in scale as well as in consolidated operating performance following the merger and amalgamation of Suntel Limited. DBN Revenue for 1H 2012 was recorded at Rs 2.2Bn, demonstrating growth of 90% YoY and 162% QoQ. DBN’s EBITDA remained positive for the ninth consecutive quarter with 1H 2012 EBITDA being recorded at Rs 641Mn, an increase of over 100% on YoY as well as QoQ basis. On the backdrop of strong Revenue and EBITDA, DBN demonstrated a decrease in Net Loss of 54% compared to 1H 2011, with NPAT being recorded at negative Rs 186Mn for the first half of 2012 relative to negative Rs 402Mn in 1H 2011. NPAT performance also improved significantly on QoQ basis, with Q2 NPAT being recorded at negative Rs 39Mn relative to negative Rs 147Mn in Q1 2012.

Group capital expenditure during 1H 2012 amounted to Rs 5.0Bn. Capital expenditure was directed in the main towards strategic investments in High Speed Mobile Broadband and Optical Fibre Network (OFN) expansion projects, which will further strengthen the Group’s coverage and quality leadership position through the upgrade of its high speed broadband infrastructure.

The Group continued to record positive Free Cash Flows (FCF) for the tenth consecutive quarter, with Q2 2012 FCF being recorded at Rs 1.4Bn.

In line with the generation of healthy free cash flows, Dialog Group continued to maintain a structurally robust balance sheet with the Group’s Net Debt to EBITDA ratio improving from 1.05x in Q2 2011 to 0.90x as at end of Q2 2012.