Television

Zee Telefilms Ltd Q1 revenues up 10.8%

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NEW DELHI: Zee Telefilms Limited today reported first quarter consolidated revenues of Rs 3207 million, a 10.8 per cent growth over the corresponding period in the previous fiscal.

 

The consolidated operating profit has increased by 17.1 per cent to Rs 1055 million over the same period last year. The growth was driven by higher pay revenues, and a healthy recovery in advertising revenues from the corresponding quarter last year.



Zee Telefilms CMD Subhash Chandra said, "Zee finished the first quarter with a good performance, highlighted by 17.6 per cent growth in net profit. Our results were lead by strong performance in both subscription and advertising. The advertising revenues grew well despite the India-Pakistan cricket, which lasted right through April, dragging some advertising spends into the sports genre."



Operating profit growth was supported by efficient cost control measures. Profit before tax for the first quarter of the fiscal 2005 was Rs 1046 million, an increase of 24.4 per cent as compared to the corresponding quarter last year, while net profit at Rs 733 million was higher by 17.6 per cent. These numbers are after consolidating the financials of ETC Networks Limited and Padmalaya Telefilms Limited for the first quarter of FY2005.



The board of directors in its meeting held today, has taken on record the unaudited consolidated financial results of Zee Telefilms Limited and its subsidiaries for the quarter ended 30 June 2004, and recommended payment of dividend of Re 1 per share of Re 1 each for the year ended 31 March 2004.



As part of expansion plans, the company has said that there are some new channels for the Indian market are in the pipeline. This includes augmenting presence in the regional market under the Alpha brand (a Telugu channel has been talked about for a launch later this year). Plans are also afoot for launching a business new channel in the Hindi language (already soft-launched on the DTH platform).



The company also said that ASC Enterprises Ltd, also controlled by Chandra, will commence its full DTH services during the second quarter.



Commenting on the financials, Chandra further said, "We have maintained momentum in our subscription revenues with continued double-digit growth, buoyed by 23.0 per cent growth in domestic pay revenues."



He added, "We are also excited about our new investments supporting the DTH business. During the second quarter, benefit would begin from the launch of full service package on Dish TV, India's first DTH network, which has already grown to 130,000 subscribers. Our strong assets combined with exciting growth opportunities puts us in a good position to create long term shareholder value."



REVENUE STREAMS: Zee's revenues are generated primarily from advertising sales and subscription revenues. Other sales and services include revenues from film production and distribution, syndication and education sales. Zee's advertising revenues increased by 8.7 per cent as compared to the corresponding quarter last fiscal. This was the result of a visible recovery in advertising revenue market and strong advertising growth at Zee News due to the general elections which contributed to this performance and helped offset the 

opposing effects of advertising spend on cricket during April, the company said.



Overall subscription revenues, registered an increase of 12 per cent over the first quarter of the corresponding period last fiscal. Domestic pay revenues also continued on a growth path with 23.0 per cent increase over the corresponding period last year, despite a price freeze imposed on pay channels by sector regulator.



Other sales and services, which include the performance of Padmalaya Telefilms Limited, recorded an increase of 14.6 per cent.



EXPENDITURE: Zee's main expenses include transmission and programming cost, employee cost and administrative and selling cost. Overall, the primary reason for the 5.2 per cent increase in programming and transmission cost is due to higher programming cost compared to the corresponding period last year.



Personnel cost were higher than corresponding period last year. Other costs, including marketing and administrative costs have grown 10.9 per cent because of higher promotional and marketing costs during the quarter, the company said. As a result, total expenses were up 8 per cent.



Operating profit has grown by 17.1 per cent to Rs 1055 million, while operating profit margin was at 32.9 per cent, as compared to 31.2 per cent achieved during the corresponding quarter last year.



During the last two quarters, Zee has repaid Rs 3.5 billion from its gross debt and has raised $100 million from Foreign Currency Convertible Bonds (FCCB) at YTM of 3.5 per cent. As the company is making fresh investments in the distribution business, surplus cash reserves have come down resulting in a drop in interest income by 16.9 per cent to Rs 159 million.



Profit before tax has grown by 24.4 per cent to Rs 1046 million. With shifting of Zee TV and Zee Cinema channels to India, the income of these channels are being recorded under Zee Telefilms Limited and are subject to the marginal tax rate. As a result, effective tax rate has gone up during the quarter to 30 per cent.



Meanwhile, the company had obtained shareholders' approval to adjust investments amounting to Rs 19,207 million against securities premium account in the EGM held on 25 March, 2004. During the quarter, the company received approval from the Mumbai high court for the same.



Accordingly, this has been given effect in the accounts as on 31 March 2004. The first phase of international restructuring aimed at consolidating non-Indian operations into a single subsidiary has been completed. This measure would rationalise taxation on the international subsidiaries.



HIGHLIGHTS:

* Consolidated operating profit increased 17.1 per cent to Rs 1055 million during Q1 2004

* Advertisement revenue at Rs 1318 million up by 8.7 per cent

* Subscription revenue at Rs 1599 million up by 12 per cent

* Domestic subscription revenue at Rs 630 million signified an increase of 23 per cent

* Capital restructuring for greater efficiencies

* FCCB of $100 million at YTM of 3.5 per cent raised

* Dividend of Re 1 per share of Re 1 each for the year ended 31 March 2004.

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