MakeMyTrip Limited — Form 20-F Summary
Reporting period: Fiscal year ended March 31, 2019; financial statements are prepared under IFRS. This is an annual report, not a standalone quarterly filing. The filing’s unaudited fourth-quarter data covers the three months ended March 31, 2019.
Business context and key metrics
MakeMyTrip operates online travel platforms in India and internationally, principally under MakeMyTrip, goibibo and redBus. Its offerings include flights, hotels and packages, bus and rail tickets, car hire and travel-related services. The company acquired bus-technology provider Bitla in July 2018.
| Metric (USD millions, except per-share data) | FY2019 | FY2018 |
|---|---|---|
| IFRS revenue | 486.0 | 675.3 |
| Adjusted Revenue (non-IFRS) | 673.4 | 577.1 |
| Operating loss | (152.9) | (219.4) |
| Net loss | (167.9) | (220.2) |
| Adjusted operating loss (non-IFRS) | (98.8) | (154.8) |
| Adjusted net loss (non-IFRS) | (103.7) | (153.5) |
| Diluted loss per share | $1.61 | $2.18 |
| Cash used in operating activities | 78.9 | 125.5 |
At March 31, 2019, cash and cash equivalents were $178.0 million and term deposits were $134.1 million. Net current assets were $236.1 million. Loans and borrowings totaled $0.7 million; no overdraft amounts were outstanding. The company reported $38.3 million of operating lease obligations and $11.2 million of purchase obligations. It expected available liquidity and operating cash flows to cover regular working capital and capital expenditure needs for the next 12 months.
Material changes and comparability
- IFRS revenue fell 28.0%, while Adjusted Revenue rose 16.7%. The comparison is substantially affected by adoption of IFRS 15 from April 1, 2018: $358.4 million of promotions and customer incentives were recorded as reductions of FY2019 revenue, versus $77.7 million in FY2018. Comparative figures were not restated. Adjusted Revenue is a company-defined, non-IFRS measure and should not be treated as a substitute for IFRS revenue.
- Adjusted Revenue increased across air ticketing ($234.2 million, up 15.9%), hotels and packages ($351.6 million, up 12.1%), bus ticketing ($58.8 million, up 32.5%) and other revenue ($28.8 million). Hotels and packages represented 52.2% of Adjusted Revenue.
- Flight segments increased 18.4% to 39.5 million, hotel room nights increased 21.4% to 26.6 million, and bus tickets travelled increased 55.3% to 61.5 million. Gross bookings rose 18.6% to $5.45 billion.
- Adjusted Revenue margins were 7.3% for air ticketing (7.5% prior year), 23.2% for hotels and packages (22.6%), and 8.2% for bus ticketing (8.9%). Management attributed the bus margin decline partly to a larger B2B mix following the Bitla investment.
- Total marketing and sales promotion costs, including promotions presented as revenue reductions, were $553.0 million, up 4.4%; this equaled 82.1% of Adjusted Revenue. IFRS-reported marketing and sales promotion expense alone declined because of the IFRS 15 presentation change.
Fourth-quarter information
For the quarter ended March 31, 2019, IFRS revenue was $120.2 million and net loss was $40.4 million, compared with revenue of $157.8 million and net loss of $44.1 million in the prior-year quarter. Quarterly revenue comparability is affected by IFRS 15 and the filing does not provide a directly comparable restated prior-year quarter.
Cash flow, liquidity and unusual items
- Operating cash outflow improved to $78.9 million from $125.5 million. Investing activities provided $70.0 million, including term-deposit redemptions and $17.1 million received on settlement of a related-party entitlement. Financing activities used $0.3 million; the prior-year $327.9 million inflow principally reflected a $330 million share placement.
- The Indian rupee’s average value depreciated approximately 8.4% against the U.S. dollar. The company reported a $9.8 million net foreign-exchange loss and a $72.9 million foreign-currency translation loss in other comprehensive income. It had no currency hedges; a 10% U.S.-dollar appreciation against the rupee was estimated to increase FY2019 loss by $12.9 million.
- A $9.9 million impairment was recorded on the HolidayIQ equity-accounted investment. Goodwill was $936.7 million at year-end; management reported that the recoverable amount for the goibibo cash-generating unit exceeded its carrying amount by about 7.8%, making its impairment headroom worth monitoring.
- IFRS 16 adoption from April 2019 was estimated to add $22–27 million of lease liabilities and $19–24 million of right-of-use assets.
Outlook, risks and contingencies
No quantified revenue or earnings guidance is provided. Management described continued investment in hotels and packages, mobile technology, customer acquisition, corporate travel and additional services. It expected FY2020 capital expenditure of approximately $12–15 million. Management cautioned that these plans and forward-looking statements are subject to uncertainty.
- Key business risks include intense price and promotion competition, pressure on airline commissions, reliance on suppliers and third-party technology, customer-acquisition costs, and sensitivity to travel disruptions, economic conditions and foreign exchange.
- Jet Airways suspended operations in April 2019, after the reporting period, reducing available airline supply; management identified this as an industry risk.
- Substantial Indian service-tax demands and notices remain under appeal or investigation. Among the disclosed claims are approximately $91.6 million against MMT India and $103.1 million against ibibo India for specified periods, in addition to other claims. The company states that it does not recognize these claims as contingent liabilities because it believes an adverse outcome is remote; outcomes and potential interest or penalties remain uncertain.
- A pending arbitration involving former Hotel Travel Group shareholders concerns approximately $35 million. The company says it is defending the claims and has brought counterclaims; it has not recorded a reserve.
- A proceeding challenges redBus’s obligations under India’s Motor Vehicles Act. The filing also describes a Supreme Court interpretation that could affect certain employee provident-fund contributions; the company said it could not reliably estimate the amount or timing.
- An April 2019 agreement for Ctrip to acquire Naspers’ shares was subject to closing conditions, including Indian competition approval. If completed, Ctrip and a third-party investment entity were expected to hold approximately 49% and 4% of total shares, respectively, with proposed board-nomination rights for Ctrip.
KPMG issued an unqualified opinion on the IFRS financial statements and internal controls. Management’s internal-control assessment excluded Bitla during its first year of integration; Bitla represented $14.2 million of assets and $4.2 million of FY2019 revenue.
Important facts for investors to verify
- Reconcile IFRS revenue with Adjusted Revenue and assess the continuing economics and classification of customer discounts under IFRS 15.
- Track operating cash burn, cash and term-deposit availability, and whether losses and promotion spending decline relative to Adjusted Revenue.
- Review segment growth and margins, particularly air-ticket commission trends, bus-ticketing margin after Bitla, and hotels’ contribution.
- Monitor goodwill impairment assumptions and headroom for goibibo, plus integration and performance of Bitla and the subsequent Quest2Travel acquisition.
- Follow the status, potential financial exposure and subsequent developments in service-tax matters, the $35 million arbitration, the redBus regulatory case and provident-fund obligations.
- Confirm the closing and terms of the proposed Ctrip transaction and any effects on governance, control or competition approval.