Zee Entertainment Enterprises (ZEEL) Q4 02/03 earnings summary

Executive summary

• FY2003 consolidated operating revenue rose 12.2% to Rs. 12,079 million; operating profit increased 23.5% to Rs. 3,756.6 million, with subscription growth and cost control supporting margins.

• Consolidated net profit before exceptional items grew 33.5% to Rs. 2,598.6 million; after exceptional and prior-period items, net profit was Rs. 2,105.1 million.

• The revenue mix shifted toward subscriptions: they reached 40.1% of operating revenue, up from 29.2%; advertising fell to 51.9% from 61.1%.

Financial highlights

• Consolidated operating revenue increased 12.2% YoY to Rs. 12,079.2 million; total income, including other income, was Rs. 12,864.5 million.

• Advertising revenue declined 4.8% to Rs. 6,265.3 million; subscription revenue grew 54.5% to Rs. 4,848.9 million.

• Domestic subscription revenue rose 81.4% to Rs. 1,552 million; international revenue grew 41.9%, and markets outside India contributed 25.2% of revenue.

• Consolidated profit before tax and exceptional items rose 23.7% to Rs. 3,477.8 million; profit after tax before exceptional items increased 33.5% to Rs. 2,598.6 million.

• After exceptional items of Rs. 354.1 million and prior-period items, consolidated net profit was Rs. 2,105.1 million, up from Rs. 1,778.5 million.

Outlook and guidance

• CAS rollout in four metros was postponed from July 14 to September 2003, with phased implementation planned; DTH services were expected to begin in Q3 FY2004.

• CAS and DTH were expected to improve addressability and pay revenues; DTH could provide direct access to viewers and higher subscription revenue per viewer.

• Debt refinancing and reduction plans were expected to lower finance charges during FY2004.

• The outlook cited a domestic economic uptrend and market revival as potential supports, while maintaining a long-term focus on sustainable shareholder value.