Tips Music (TIPSMUSIC) Q4 04/05 earnings summary

Executive summary

• FY ended 31 Mar 2005 consolidated loss widened to Rs. 814.1 lacs from Rs. 106.5 lacs; total income fell to Rs. 3,869.2 lacs from Rs. 4,604.9 lacs.

• Standalone income rose to Rs. 3,358.3 lacs from Rs. 3,078.5 lacs, but the result swung to a pre-tax loss of Rs. 632.1 lacs from profit of Rs. 158.1 lacs.

Financial highlights

• Standalone net sales were Rs. 2,807.8 lacs, including Rs. 1,011 lacs of film distribution income; other income was Rs. 550.5 lacs.

• Consolidated film production income was Rs. 282.2 lacs and artist management receipts were Rs. 40.3 lacs; total income was Rs. 3,869.2 lacs.

• Adjusted for the Rs. 333.1 lacs write-off of the overseas subsidiary investment and Rs. 208.5 lacs film-distribution segment loss, music acquisition costs and falling physical sales also weighed on standalone results.

• No dividend was recommended in view of accumulated losses.

Outlook and guidance

• Management targeted a turnaround through cost discipline, low-budget film selection, professional artist management, catalogue conversion to VCD/DVD and digital income from ringtones and downloads.

• Royalty-based music-rights deals were being pursued to reduce exposure to track performance; releases secured were expected over the next 12–24 months.

• No film release was expected in the current year in the chairman’s outlook; at least 2–3 releases were anticipated from the following fiscal year.

• The Indian entertainment market was projected to grow 18% annually to over Rs. 45,000 crore by 2009, with television and film expected to lead.