tipslogoTips Industries Ltd (TIPS) has recorded a net loss of Rs. 2.49 million for the quarter, compared to a profit of Rs. 7.46 million in Q3. Revenues rose to Rs. 99.61 million as did expenses, which rose by 51% to Rs. 88.8 million from the previous quarter.

Cost of production and distribution of films (nil last quarter) dropped drastically to Rs. 1.24 million from Rs. 498.5 million in Q4 last year. Copyrights and in-house music costs also dropped by 10% to Rs. 4 million compared to Rs. 40.8 million in Q4 08; it was Rs. 17 million last quarter.

Depreciation expenses stood stable over the quarters at Rs. 2.38 million, while raw material costs dropped by 52% to Rs. 4.34 million. Employee costs also fell to Rs. 6.52 million.

Basic EPS touched down at -Rs. 0.14 compared to Rs. 6.49 in the corresponding quarter last year. The board had proposed a 11% dividend at Rs. 1.1 per share for the fiscal 2008-09.

Details: Tips Q4 & YoY Financials (PDF)

BuyBack

The company’s board has approved the buy-back of fully paid equity shares from the open market. The shares were priced at Rs 10 each for a maximum amount of Rs 198 million, amounting to approximately 25% of the existing paid up equity share capital plus free reserves of Tips. Their buyback price will not exceed Rs 75 per equity share.

Artist Management Division? Segment Results

atifaslamStrangely, the company no longer include its Artist Management Division, saying only that the company operates in two segments: audio and film. The Artist Management Division had been profitable at Rs. 2.73 million over revenues of Rs. 7.41 million in FY 08, but are not included in the books. The company, in its 2008 annual report, had said its future steps included undertaking Artist Management activities on a higher and professional scale, so what changed to make the segment disappear? The division has managed events for artists such as Atif Aslam, Apache Indian and UK Bhangra singer Suman.

Audio sales accounted for Rs. 105.7 million and profit before tax from this business held the company up with Rs. 31.68 million on sales. Capital owned by the business, which is calculated by deducting liabilities from assets, has risen to Rs. 352.6 million.

Film distribution and production incurred losses of Rs. 3.77 million and revenues fell in the red with -Rs. 0.22 million during the quarter. The segment’s capital assets were still the maximum contributor to the total capital of Rs. 822.6 at Rs. 467.7 million while other unallocable capital assets stood at Rs. 2.34 million.

YoY Results, Reduced Expenses, Foreign Exchange

Net sales for the company fell by 43% to Rs. 647.2 million this year, as did its net profits, which dropped by 41% to Rs. 114.5 million. Basic EPS has almost halved to Rs.6.62 from Rs. 12.07 recorded last year.

Total expenditure for the year fell by 46% to Rs. 506.6 million compared to last fiscal. Production and distribution of film related expenses were one third that incurred last fiscal at Rs. 204.6 million and copyrights and in-house music costs were also lower at Rs. 55.1 million compared to Rs. 69.5 million in FY 08. Though consumption of raw materials has reduced from Rs. 41.6 million in 2008 to Rs. 33.8 million in fiscal 09, employee costs and ad expenses rose by approximately 43% each. Cost of production of films was Rs. 204.6 million.

As Tips opted for loans in foreign currencies for funding film production, it had considered foreign exchange losses amounting to Rs. 19.38 million as cost of production while compiling the financial results for the nine month period ending December 2008. With the accounting policy being reviewed, the company has charged the total losses to its P&L account, along with the Rs. 24.4 million in losses due to foreign exchange for the year.

Related:

— Tips Q3 Financials (PDF)