Tips Music (TIPSMUSIC) Q4 06/07 earnings summary

Executive summary

• FY07 turnaround to net profit after tax of Rs 1.18 crore; turnover reached Rs 23.84 crore, with EBITDA margin reported at 14.19%.

• Strategy shifts toward higher-margin non-physical music, owned film rights, new-artist content and selective film production, with catalogue exploitation a key growth lever.

Financial highlights

• Turnover rose 24.39% to Rs 23.84 crore from Rs 19.17 crore; film production and distribution income increased 24% YoY.

• PAT increased 77.43% to Rs 1.18 crore from Rs 0.66 crore; profit before tax and prior-period items was Rs 1.42 crore versus Rs 0.79 crore.

• Royalty receipts rose to Rs 10.87 crore from Rs 5.37 crore, while physical audio sales continued to decline.

• Other income fell to Rs 1.01 crore from Rs 3.65 crore; income after prior-period, exceptional and extraordinary items was Rs 1.05 crore.

Outlook and guidance

• Planned film output: 3–4 movies annually; management also cited a target of around three movies a year starting FY08 and 3–5 films annually within five years.

• Film rights acquisitions to be assessed case by case; retain rights for own films, pre-sell most productions and focus on return on capital employed.

• Royalty receipts were expected to exceed Rs 15 crore in FY08; prior-year rights costs had been written off, supporting direct contribution to the bottom line.

• Non-film music, new artists and existing catalogue exploitation across digital, radio and physical formats remain priorities.