UTV Software Communications (UTV) held a conference call to discuss the third quarter results and future prospects of the Company. Mr Ronnie Screwvala, Chairman and CEO addressed the call.
Highlights of the call
- For the quarter ended December 2008, UTV reported 30% growth in operating revenues at Rs 160.20 crore with OPM down 1290bps at 6.6%. Other Income was up 142% at Rs 2.05 crore, interest income was Rs 19.59 crore and depreciation charge was up 141% at Rs 1.87 crore and tax provision was down 67% at Rs 0.36 crore. The PAT after minority interest of Rs 0.52 crore was up 66% at Rs 29.38 crore.
- For FY09, the management expects revenues of Rs 650-660 crore.
- The other operating income of Rs 2.53 crore included in operating income pertains to forex gain from revenues of “The Happening” and from the gaming segment.
- The interest income (net) of Rs 19.59 crore includes treasury income from funds received from Disney.
- The sustainable OPM is expected to be 8-10%.
- The effective tax rate would be 15% for FY09.
Movies Segment
- For the quarter ended December 31, 2008, Movies segment reported operating revenues of Rs 32.15 crore down 64% with PBIT margin at 66.9% against 26.1% in the corresponding quarter previous year. For 9MFY09, the revenues were up 26% at Rs 188.70 crore with PBIT margins of 28.8% down 60bps.
- For Q4FY09, the Company has 3 releases: “Dev D”, “Delhi 6” and a comedy movie. There could be one depending on the environment.
- 2 blockbuster movies were shifted from Q4FY09 to Q1FY10. For FY10, the company has plans to release about 12-15 movies.
- The revenue flow for movies is generally theatrical rights, which also have higher advertising expenditure. Post that there are the home video rights and satellite rights.
- The 3 movies released in Hollywood i.e. “Namesake”, “The Happening” and ‘I Think I Love My Wife” in 2008. The cash flows from these would be received in FY10 of close to Rs 50-75 crore over Q2, Q3 and Q4FY10.
- For FY09, the management expects growth of 30-35% in revenues.
- Capital employed for the segment was Rs 824.82 crore. For next year, the company would require about Rs 125-150 crore.
- FY10 could see release of one animation movie “Ali Baba & 40 Thieves”.
- “Fashion” had net box office collection of Rs 30-31 crore with cost of production of Rs 18 crore. Of the box office collection 50% would go to distributors also deduct the print & publicity. The company would then do the music sales, DVD rights, satellite rights etc. “Oye Lucky” had collections of Rs 8-9 crore with cost of Rs 6 crore.
Television segment
- For the quarter ended December 31, 2008, Television segment reported operating revenues of Rs 35.63 crore up 37% with PBIT margin at 5.5% against 20.5% in the corresponding quarter previous year. For 9MFY09, the revenues were up 40% at Rs 101.25 crore with PBIT margins of 4.4% down 1740bps.
- The growth was on account of higher airtime sales and 2 new shows one each on Zee and Colors.
- The management expects the segment to grow at 30% for FY09.
- The management is targeting to improve the margins to 8-10% and would shed shows, which are not profitable.
Broadcasting Segment
- For the quarter ended December 31, 2008, the segment reported operating revenues of Rs 29.99 crore with loss at PBIT level at Rs 11.31 crore. For 9MFY09, the revenues were at Rs 54.76 crore with loss at PBIT at Rs 20.02 crore.
- The Company has 4 offerings: Bindass, Bindass Movies, World Movies and UTV Movies. All channels are pay.
- Carriage fees are down 40%.
- For January 2009 – March 2010, the Company has done an outlay of Rs 100 crore. The Capital Employed is Rs 313.49 crore.
- The segment would be loss making in FY10.
Gaming segment
- For the quarter ended December 31, 2008, the segment reported operating revenues of Rs 34.60 crore up 25% with PBIT margin at 3.5% against loss of Rs 1.49 crore in the corresponding quarter previous year. For 9MFY09, the revenues were up 139% at Rs 70.70 crore with PBIT loss of Rs 4.81 crore against profit of Rs 2.23 crore in the corresponding period previous year.
- Indiagames has grown 50% on y-o-y basis and 20% on q-o-q basis. It has about 11000 subscribers.
- The Company had acquired True games in US (west coast). It is developing 3 IPs. Their business model is mainly focused on creation of its own gaming platform in US and Turkey and syndication of its content to online platforms to the rest of the world.
- True Games has entered into a game development agreement with Possibility Space to develop another high end MMORPG, to be released in FY2010. First game is expected to release during first quarter of FY10.
New Media
- For the quarter ended December 31, 2008, the segment reported operating revenues of Rs 5.46 with PBIT of Rs 0.41 crore. For 9MFY09, the revenues were at Rs 14.34 crore with PBIT loss of Rs 2.68 crore.
- For FY09, the revenues are expected to be Rs 20 crore.
- The segment would not require any funding except Rs 10 crore in FY10. The capital employed is Rs 34.92 crore.
- In this segment, the Company plans to acquire digital rights of movies, catalogue rights i.e. use the entertainment business for its Internet play.
- The management expects the segment to break even in FY10.