Dialogue rises 16% in Q1, forex pushes NPAT to negative 15.8 billion rupees
• Q1 22 revenue and EBITDA recorded annual growth of 16% and 8% respectively. Normalized NPAT Rs.4.3Bn • Total taxes paid to GoSL Rs5.9Bn, of which Rs2.1Bn in direct taxes and Rs3.8Bn in indirect taxes • Capex investments of Rs7.5Bn during the quarter; OFCF reached Rs6.2 billion for the first quarter of 2022
Dialog Axiata PLC announced, on Friday May 13, 2022, its consolidated financial results for the quarter ended March 31, 2022. The financial results include those of Dialog Axiata PLC (the “Company”) and of the Dialog Axiata group (the “Group”) ). Sri Lanka is plunged into an economic and political crisis resulting from the impacts of COVID-19, major tax cuts and large sovereign debt repayments which are collectively depleting the country’s limited foreign exchange reserves. As a result, the Sri Lankan Rupee (“LKR”) depreciated by 46% against the USD during the first quarter of 2022.
Despite the difficult environment, all business segments, namely mobile telephony, fixed telephony, digital pay television, international and tele-infrastructure activities contributed positively to record a consolidated turnover of Rs38, 3 billion for the first quarter of 2022, showing strong growth of 16% per year. over the year (“YoY”) and 3% over a quarter (“QoQ”). Supported by revenue growth, the group’s earnings before interest, tax, depreciation and amortization (“EBITDA”) rose 8% year-on-year, but fell 4% quarter-on-quarter to Rs 14.7 billion in the first quarter of 2022. Lower EBITDA Q1 network and direct costs due to escalating dollar-denominated expenses and higher energy costs due to power outages.
The group’s net profit after tax (“NPAT”) was negative for the first quarter of 2022 at 15.8 billion rupees, impacted by the sharp depreciation of the LKR against the United States dollar (“USD”) of 46% for the first quarter of 2022 against a depreciation of 7.1. % for the first quarter of 2021 and a stable movement in the fourth quarter of 2021. The foreign exchange loss of 20.2 billion rupees recorded by Dialog Group was due to the outstanding debt securities denominated in USD and the liabilities of foreign suppliers. The USD debt obligation for the Group stood at USD 145 million at the end of the first quarter of 2022. Normalized for the said foreign exchange loss, the group’s NPAT was recorded at Rs4.3 billion for the first quarter of 2022, down 4% year-on-year and 11% quarter-on-quarter.
Public Dialog Group continued to be a significant contributor to state revenue, disbursing a total of Rs 5.9 billion to the Government of Sri Lanka (“GoSL”) during the first quarter of 2022. Total shipments of The fund comprised direct taxes and levies amounting to Rs 2.1 billion as well as Rs 3.8 billion in consumption taxes collected on behalf of GoSL.
The group remains committed to providing seamless and consistent connectivity to all Sri Lankans during these unprecedented times and has therefore spent Rs 7.5 billion in capital expenditures for the quarter ended March 31, 2022 resulting in a Capex to Revenue ratio of 20% for the first quarter of 2022. Capital expenditures were directed towards investments in broadband broadband infrastructure to further expand Dialog’s leadership in the broadband sector in Sri Lanka. The Group recorded an operating free cash flow (“OFCF”) of 6.2 billion rupees for the first quarter of 2022.
The Group’s balance sheet remained low, despite further borrowing in USD during the quarter, to record a net debt to EBITDA ratio of 0.49x at the end of the first quarter of 2022. The return on invested capital (“ROIC”) is remained at healthy levels to record at 16.5% for the first quarter of 2022, although down 0.6pp yoy and 1.4pp qq including its execution partner Sarvodaya and its accountability partner PwC Sri Lanka to launch the
“Manudam Mehewara” relief initiative. Emergency relief will be provided to over 200,000 affected families in the 25 districts and this relief effort will continue for 60-90 days, until a sustainable benefit transfer system is established in the country through to an effective economic recovery plan At entity level, Dialog Axiata PLC (the “Company”) continued to contribute a significant share of group revenue (63%) and group EBITDA ( 68%). The company recorded 10% year-over-year revenue growth to reach
24.0 billion rupees for the first quarter of 2022 amid an increased contribution from data revenues. On a QoQ basis, revenue grew by 3%. EBITDA for the first quarter of 2022 was recorded at 10.1 billion rupees, which represents a moderate growth of 1% year-on-year due to higher costs in sales and marketing, network and personnel. On a quarterly basis, EBITDA grew by 4%. The depreciation of the LKR against the USD impacted the NPAT company resulting in a loss of 15.2 billion rupees, the foreign exchange loss amounting to 18.3 billion rupees for the first quarter of 2022. Normalized for the same, the company NPAT was recorded at 3.1 billion rupees for the first quarter of 2022, down 21% YoY, but up 16% QoQ.