Tips Music (TIPSMUSIC) Q4 07/08 earnings summary

Executive summary

• FY08 was a breakout year following the release of Naqaab and Race; Race was described as one of 2008’s highest-grossing films.

• Total income reached Rs. 11,649.25 lacs and PAT Rs. 1,950.40 lacs, supported by film distribution and recurring music royalties.

• Strategy centered on pre-selling film rights while retaining music rights, increasing film output, and growing artist management.

Financial highlights

• Total income was Rs. 11,649.25 lacs, up 346.63% YoY; turnover was Rs. 11,262.54 lacs versus Rs. 2,384.34 lacs.

• EBITDA was Rs. 2,436.65 lacs versus Rs. 338.43 lacs; PBT was Rs. 2,209.09 lacs versus Rs. 141.78 lacs.

• PAT rose to Rs. 1,950.40 lacs from Rs. 104.53 lacs; EPS was Rs. 12.07 basic and diluted, versus Rs. 0.70 and Rs. 0.69.

• Music royalty receipts were Rs. 1,521.17 lacs; film production and distribution receipts were Rs. 8,927.91 lacs.

Outlook and guidance

• Planned two film releases in FY09 and three to four films annually within three years; the Chairman’s message separately projected two films in FY09 and three to four annually from FY10.

• Kismat Konnection was pre-sold to UTV, excluding music rights; the next planned release was a Rajkumar Santoshi film targeted for end-FY09.

• Film strategy was to pre-sell rights, except music, to secure cash flows and reduce production risk; management expected stronger revenues and ROI following Race.

• Music library monetization, non-physical distribution, non-film albums, and artist management were identified as continuing growth drivers.