MUMBAI, October 26, 2016 /PRNewswire/ --
Adjusted
EBITDA[1] grew
37.3% year on year to INR
2.63 billion
Net
subscriber[2] base stood
at 12.52 million
Videocon d2h Limited (NASDAQ: VDTH) ("Videocon d2h" or the
"Company") announced its financial results for the quarter ended
September 30, 2016. These results
reflect the Company's change in accounting treatment of
entertainment tax effective April 1,
2016.
Highlights for the quarter ended September 30, 2016:
- Revenue from operations came in at INR 7.76 billion. This is up
20.6% year on year if the Company was to compute its revenue from
operations for Q2 FY17 under its former accounting
treatment[*].[1]
- Subscription and activation revenue came in at INR 7.11
billion. This is up 21.9% year on year if the Company was to
compute its subscription and activation revenue for Q2 FY17 under
its former accounting
treatment[*].
- Adjusted EBITDA grew 37.3% year on year to INR 2.63
billion.
- Adjusted EBITDA margin came in at 33.8%. This is up 380 basis
points year on year if the Company was to compute its revenue from
operations for Q2 FY17 under its former accounting
treatment[*].
- Gross subscribers[3] and net subscribers
increased by 0.59 million and 0.23 million subscribers,
respectively, during the quarter; Net subscribers base stood at
12.52 million.
- Free cash flow[4] came in at INR 199
million.
Key metrics Q2 FY17
Gross subscriber additions (million) 0.59
Net subscriber additions (million) 0.23
Adjusted EBITDA (INR million) 2,625
Profit after tax (INR million) 148
Commenting on the results, Executive Chairman of Videocon d2h,
Mr. Saurabh Dhoot, said "I'm pleased
to report a terrific quarter with over 37% increase in EBITDA year
on year, in spite of the previously announced increase in taxes
which impacted ARPU. Our quarterly results performance is
consistent with our five point strategy to 1) grow subscriber base,
2) enhance subscriber monetization, 3) focus on localization and
premium services, 4) lead the market in technological innovation
and 5) enhance operational efficiencies and improve margins. These
imperatives are driving our success at creating sustainable
shareholder value.
"We are excited and fully prepared to seize the significant
subscriber growth opportunity ahead of us through our leading
distribution, customer service and differentiated content offering,
supported by a strong balance sheet.
"We achieved positive profit after tax and turned free cash flow
positive during the current fiscal year, which we believe is a
great achievement."
Speaking on the business outlook, Mr. Anil Khera, CEO of
Videocon d2h said "We are extremely excited with the business
growth opportunities ahead of the company. We welcome the
regulators' initiative to review and draft a tariff order that aims
to create complete transparency in carriage and content deals and
bring in commercial parity amongst distribution platforms."
Financial Summary:
(In INR million, unless
otherwise indicated)
Q1 FY17
Financial highlights (Adjusted)(1) Q2 FY17(1)
Revenue from operations 7,633 7,762
Subscription and activation revenue 6,970 7,107
Adjusted EBITDA 2,519 2,625
Adjusted EBITDA margin (%) 33.0% 33.8%
Profit after tax (loss) 27 148
Content cost (% of revenue) 38.7% 38.7%
Adjusted EBITDA less capex 887 907
Q1 FY17
Operating highlights (Adjusted)(1) Q2 FY17(1)
Net subscribers (million) 12.29 12.52
ARPU[5] (INR) 211 209
Churn[6] per month (%) 0.49% 0.95%
(1) The Company adopted a change in the accounting
treatment of entertainment tax effective April 1, 2016. This change resulted in operating
revenue being presented net of entertainment tax, effective from
April 1, 2016. The Company's
financials and operating highlights for Q1 FY17 have been adjusted
to reflect this change. Prior to April 1,
2016, entertainment tax was accounted for under operating
expenses, thus operating revenue was presented without deduction of
entertainment tax. For more information regarding this change of
accounting treatment, see the Company's Form 6-K dated August 5, 2016. As a result, the Company's
financials and operating highlights for periods after April 1, 2016 are not comparable with its
financials and operating highlights for periods prior to
April 1, 2016 due to this change in
accounting treatment of entertainment tax effective April 1, 2016.
During the quarter ended September 30,
2016, subscription and activation revenue came in at INR
7.11 billion. Revenue from operations came in at INR 7.76 billion.
On a like to like basis, using the Company's former accounting
treatment of entertainment tax which it applied prior to
April 1, 2016, revenue from
operations for Q2 FY17 would have been INR 8.32 billion, which is
up 20.6% year on year and subscription and activation revenue for
Q2 FY17 would have been INR 7.67 billion, which is up 21.9% year on
year.
Adjusted EBITDA grew 37.3% year on year to INR 2.63 billion.
Adjusted EBITDA margin came in at 33.8% during the quarter. On a
like to like basis, using the Company's former accounting treatment
of entertainment tax which it applied prior to April 1, 2016, EBITDA margin for Q2 FY17 would
have been 31.5%, which is up 380 basis points year on year.
Content cost came in at 38.7% of revenue. On a like to like
basis, using the Company's former accounting treatment of
entertainment tax which it applied prior to April 1, 2016, content cost as percentage of
revenue during Q2 FY17 would have been 36.1%, which has improved
200 basis points year on year.
The Company reported profit after tax of INR 148 million during
the quarter. This compares to a net loss of INR 246 million during
the second quarter of fiscal 2016.
The Company added 0.59 million gross subscribers and 0.23
million net subscribers during the second quarter of fiscal 2017.
Net subscribers totaled 12.52 million as of September 30, 2016. Churn came in at 0.95% per
month for the quarter as compared to 1.19% during the same quarter
last year.
ARPU came in at INR 209. Effective April
1, 2016, ARPU is calculated by dividing revenue from
operations by the average of the Company's net subscribers for the
period. Prior to April 1, 2016, ARPU
was calculated by dividing the Company's subscription and
activation revenue by the average of its net subscribers for the
period. Subscription and activation charges were considered on a
gross basis without netting off the recharge margins or discounts
provided to the distributors. The Company revised its calculation
of ARPU in order to simplify its ARPU calculation in accordance
with feedback received from certain of its investors. On a like to
like basis, using the Company's former definition of ARPU which it
applied prior to April 1, 2016, ARPU
would have been INR 216. The expected increase in indirect taxes
due to implementation of Krishi Kalyan cess (agri-welfare tax)
starting June 1, 2016 impacted ARPU
during the quarter.
Subscriber acquisition costs in the form of hardware subsidies
were INR 1,869 per subscriber.
The Company had term loans of INR 19.12 billion and total cash
and short term investments of INR 3.76 billion as of September 30, 2016.
Conference Call: Dial-in Details
The results conference call time and details are provided
below.
Call #1 Call #2
Date October 27, 2016 October 27, 2016
Time 11:00 am India time 6:30 pm India time
1:30pm HK time 9:00pm HK time
6:30am UK time 2:00pm UK time
1:30am NYC time 9:00am NYC time
Dial in details
India +91 22 6746 8376 / +91 22 3960 0752 +91 22 6746 8376 / +91 22 3960 0752
Hong Kong 800 964 448 / +852 3018 6877 800 964 448 / +852 3018 6877
Singapore 800 101 2045 / +65 3157 5746 800 101 2045 / +65 3157 5746
USA 1866 746 2133 / +1 323 386 8721 1866 746 2133 / +1 323 386 8721
UK 0808 101 1573 / +44 20347 85524 0808 101 1573 / +44 20347 85524
Pin code Not required Not required
Playback details
India +91 22 3065 2322 / +91 22 6181 3322 +91 22 3065 2322 / +91 22 6181 3322
USA 1 855 4360 715 / 1 863 9490 105 1 855 4360 715 / 1 863 9490 105
Playback ID 76076 03597
***********************************************************************************************
Forward looking statements
This earnings release may contain forward-looking statements, as
defined in the safe harbor provisions of the US Private Securities
Litigation Reform Act of 1995. In addition to statements which are
forward-looking by reason of context, the words "may", "will",
"should", "expects", "plans", "intends", "anticipates", "believes",
"estimates", "predicts", "potential", or "continue" and similar
expressions identify forward-looking statements. We caution you
that reliance on any forward-looking statement involves risks and
uncertainties that might cause actual results to differ materially
from those expressed or implied by such statements. These and other
factors are more fully discussed in the Videocon d2h's registration
statement on Form F-4 filed with the SEC and available at
http://www.sec.gov. All information provided in this earnings
release is as of the date hereof, unless the context otherwise
requires. Other than as required by law, Videocon d2h does not
undertake to update any forward-looking statements or other
information in this earnings release.
Q2 FY17 financial
results are available on the SEC web
site and company web site
http://www.ir.videocond2h.com
--------------------------------------------------
[*] The Company adopted a
change in the accounting treatment of entertainment tax effective
April 1, 2016. This change resulted
in operating revenue being presented net of entertainment tax,
effective from April 1, 2016. Prior
to April 1, 2016, entertainment tax
was accounted for under operating expenses, thus operating revenue
was presented without deduction of entertainment tax. For
more information regarding this change of accounting treatment, see
the Company's Form 6-K dated August 5,
2016. As a result, the Company's financials and operating
highlights for periods after April 1,
2016 are not comparable with its financials and operating
highlights for periods prior to April 1,
2016 due to this change in accounting treatment of
entertainment tax effective April 1,
2016. Using the Company's former accounting treatment of
entertainment tax which the Company applied prior to April 1, 2016, revenue from operations would have
been INR 8.32 billion, subscription and activation revenue would
have been INR 7.67 billion and EBITDA margin would have been 31.5%
for Q2 FY17, respectively.
[1] The Company calculates EBITDA by
calculating profit or loss after tax as increased by income tax
expense, net finance costs, depreciation, amortization and
impairment and reduced by other income. Adjusted EBITDA is EBITDA
adjusted for the recognition of fair value of the Employee Stock
Option Plan 2014 recognized as an expense over the vesting period
which amounted to INR 21.01 million for the first and second
quarters of fiscal year 2017, respectively. Adjusted EBITDA
presented in this earnings release is a supplemental measure of
performance and liquidity that is not required by or represented in
accordance with the IFRS. Furthermore, Adjusted EBITDA is not a
measure of financial performance or liquidity under IFRS and should
not be considered as an alternative to profit after tax, operating
income or other income or any other performance measures derived in
accordance with the IFRS or as an alternative to cash flow from
operating activities or as a measure of liquidity. In addition,
Adjusted EBITDA is not a standardized term, hence direct comparison
between companies using the same term may not be possible. Other
companies may calculate Adjusted EBITDA differently from the
Company, limiting their usefulness as comparative measures. The
Company believes that Adjusted EBITDA helps identify underlying
trends in the Company's business that could otherwise be distorted
by the effect of the expenses that are excluded when calculating
Adjusted EBITDA. The Company believes that Adjusted EBITDA enhances
the overall understanding of its past performance and future
prospects and allows for greater visibility with respect to key
metrics used by its management in its financial and operational
decision-making.
[2] Net subscriber means subscribers authorized
to receive DTH broadcasting services on account of payment of
subscription charges or any entry offer at the time of initial
connection, as well as subscribers who are temporarily disconnected
due to non-payment of subscription charges for a period not
exceeding 120 days.
[3] Gross subscribers means total registered
subscribers.
[4] The Company calculates free cash flow as
Adjusted EBITDA less capital expenditure and net interest expense,
as increased by other income. Free cash flow is not an IFRS measure
and should not be construed as an alternative to any IFRS measure
such as cash flow from operating activities. Free cash flow should
not be considered in isolation and is not a measure of the
Company's financial performance or liquidity under IFRS and should
not be considered as an alternative to cash flow from operating,
investing or financing activities or any other measure of its
liquidity derived in accordance with IFRS. Free cash flow does not
necessarily indicate whether cash flow will be sufficient or
available for cash requirements and may not be indicative of the
Company's results of operations. Free cash flow as defined herein
may not be comparable to other similarly titled measures used by
other companies.
[5] For Q1 FY17 and Q2 FY17, Average Revenue
Per User ("ARPU") is calculated by dividing revenue from operations
by the average of the Company's net subscribers for the period. For
Q2 FY16, ARPU was calculated by dividing the Company's subscription
and activation revenue by the average of its net subscribers for
the periods. Subscription and activation charges were considered on
a gross basis without netting off the recharge margins or discounts
provided to the distributors. As a result, ARPU for periods after
April 1, 2016 are not comparable with
ARPU for periods prior to April 1,
2016 due to this change in the Company's definition of ARPU
effective April 1, 2016.
[6] Churn has been calculated as the number of
subscribers who have not made payment for at least 120 days and is
the difference between the number of gross subscribers and the
number of net subscribers.
SOURCE Videocon d2h