Tips Music (TIPSMUSIC) Q4 02/03 earnings summary

Executive summary

• FY03 net sales fell to Rs 493.21 million from Rs 816.20 million; loss before tax widened to Rs 344.06 million, reflecting lower volumes and significant inventory, receivable and expense adjustments.

• Strategy shifted toward quality-controlled content and a broader film business spanning production, distribution, exhibition and artist management; Tips Films became a wholly owned subsidiary in FY04.

Financial highlights

• Net sales were Rs 493.21 million, down from Rs 816.20 million; other income increased to Rs 66.59 million from Rs 34.09 million.

• Reported loss before tax was Rs 344.06 million versus Rs 214.73 million; loss after tax was Rs 295.51 million versus Rs 214.73 million.

• Consolidated net sales were Rs 572.42 million versus Rs 925.49 million; consolidated loss after tax was Rs 306.26 million versus Rs 192.93 million.

• Adjusted EPS before prior-period, exceptional and extraordinary items was (Rs 24.60), versus (Rs 17.87); EPS after those items was (Rs 16.33), versus (Rs 31.67).

Outlook and guidance

• FY04 plan: release around eight film titles; focus on content quality, fair acquisition costs, improved distribution and demand-based sales.

• First two quarters of FY04 returned to profit after successive quarters of losses; management expected the trend to continue through the year.

• Management expected the diversified model to strengthen the business over the next 12–24 months; publishing-rights royalties were viewed as a potential major revenue stream.