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1H 2012 RESULTS
ANALYST BRIEFING
29 August 2012
This presentation is not and does not constitute an offer, invitation, solicitation or recommendation to subscribe for, or purchase, any securities
and neither this presentation nor anything contained in it shall form the basis of, or be relied on in connection with any contract or commitment or
investment decision.
This presentation has been prepared solely for use at this presentation. By your continued attendance at this presentation, you are deemed to
have agreed and confirmed to Telekom Malaysia Berhad (the “Company”) that: (a) you agree not to trade in any securities of the Company or its
respective affiliates until the public disclosure of the information contained herein; and (b) you agree to maintain absolute confidentiality
regarding the information disclosed in this presentation until the public disclosure of such information, or unless you have been otherwise
notified by the Company.
Reliance should not be placed on the information or opinions contained in this presentation or on its completeness. This presentation does not
take into consideration the investment objectives, financial situation or particular needs of any particular investor.
No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the
information, opinions and conclusions contained in this presentation. None of the Company and its affiliates and related bodies corporate, and
their respective officers, directors, employees and agents disclaim any liability (including, without limitation, any liability arising from fault or
negligence) for any loss arising from any use of this presentation or its contents or otherwise arising in connection with it.
This presentation contains projections and “forward-looking statements” relating to the Company’s business and the sectors in which the
Company operates. These forward-looking statements include statements relating to the Company’s performance. These statements reflect the
current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. It is important to note
that actual results could differ materially from those anticipated in these forward looking statements. The Company does not undertake to inform
you of any matters or information which may come to light or be brought to the Company’s attention after the date hereof.
The forecasts and other forward-looking statements set out in this presentation are based on a number of estimates and assumptions that are
subject to business, economic and competitive uncertainties and contingencies, with respect to future business decisions, which are subject to
change and in many cases outside the control of the Company. The directors and officers of the Company believe that they have prepared the
forecasts with due care and attention and consider all best estimates and assumptions when taken as a whole to be reasonable at the time of
preparing the presentation. However, the Company’s forecasts presented in this presentation may vary from actual financial results, and these
variations may be material and, accordingly, neither the Company nor its directors or officers can give any assurance that the forecast
performance in the forecasts or any forward-looking statement contained in this presentation will be achieved. Details of the forecasts and the
assumptions on which they are based are set out in the presentation.
This presentation may not be copied or otherwise reproduced without the written consent of TM.
Disclaimer
Performance Overview
Financial review
Operating highlights
Concluding remarks
3
Key Highlights 1H 2012 vs. 1H2011
4
Improved Capex efficiency :Total capex/revenue ratio: 16.3% vs. 17.1% for 1H2011
Reported EBITDA grew by 6.9% to RM1.58bnNormalised EBITDA grew by 5.3% to RM1.577bn
Revenue up by 9.7% to RM4.8bn, with positive growth across all products
Reported PATAMI up by 106.2% to RM599.1mnNormalised PATAMI up by 57.8% to RM406.4 mn
Broadband customers now >2mn, with Unifi takeup >30% of premises passed
Good set of results
Key Operating Indicators
Key Highlights 2Q 2012
Financial Performance
5
2Q12 vs1Q12
• Operating revenue increased by 1.7% QoQ and 8.6% YoY to RM2.425bn
• EBITDA grew by 1.9% QoQ and 6.8% YoY to RM797mn; Normalised EBITDA increased by 1% QoQ and 3.2% YoY to RM792.3mn
• PATAMI grew by 39.1% QoQ and 174% YoY to RM348.5mn; Normalised PATAMI grew by 21.6% QoQ and 64.9% YoY to RM223.0mn
• Internet revenue grew 3.4% QoQ and 19.2% YoY to RM582mn
• UniFi customer base up 21.6% QoQ and 252% YoY to 384,024 customers
• Total broadband customers >2mn, up 1.9 % QoQ and 9.9% YoY
2Q12 vs2Q11
Positive overall improvements QoQ and YoY
Performance Overview
Financial review
Operating highlights
Concluding remarks
6
Note: EBITDA Margin is calculated as percentage of EBITDA against Revenue + Other Operating IncomeFor Normalised EBITDA and Normalised PATAMI refer Slides 8 and 9
•Excludes FX (Gain )/Loss
RMmn
ReportedComments
(1H12 vs. 1H11)2Q12 1Q12
% Change QoQ
2Q11% Change
YoY1H12 1H11
% Change1H12 vs
1H11
Revenue 2,425.0 2,383.8 +1.7 2,233.6 +8.6 4,808.8 4,381.8 +9.7Positive growth by all key products
Other Operating Income
44.1 26.6 +65.8 34.8 +26.7 70.7 56.1 +26.0 Higher due to disposal of assets
EBITDA 797.4 782.6 +1.9 746.9 +6.8 1,580.0 1,477.8 +6.9 -
EBITDA margin 32.3% 32.5% -0.2pp 32.9% -0.6pp 32.4% 33.3% -0.9pp -
Normalised EBITDA 792.3 784.7 +1.0 768.1 +3.2 1,577.0 1,497.0 +5.3 -
Normalised EBITDA Margin
32.1% 32.6% -0.5pp 33.9% -1.8pp 32.3% 33.7% -1.4pp -
Depn & Amort. 497.9 510.6 -2.5 511.4 -2.6 1,008.5 1,011.4 -0.3Lower due to revision of useful life of certain assets net of higher asset write-off
Other Gains / (Loss) (2.4) 1.4 -271.4 2.0 -220.0 (1.0) 2.7 -137.0 -
Net Finance Cost* 46.9 41.6 +12.7 41.0 +14.4 88.5 83.7 +5.7Higher interest payment in line with higher borrowings
FX (Gain) / Loss 64.7 (67.9) -195.3 (11.1) -682.9 (3.2) (49.5) -93.5Due to strengthening of USD against RM by 3.6%
Profit Before Tax (PBT)
185.6 299.3 -38.0 207.1 -10.4 484.9 434.4 +11.6 -
Normalised PBT 247.6 232.1 +6.7 215.1 +15.1 479.7 401.4 +19.5
PATAMI 348.5 250.6 +39.1 127.2 +174.0 599.1 290.5 +106.2Higher due to higher revenue and recognition of deferred tax income
Normalised PATAMI 223.0 183.4 +21.6 135.2 +64.9 406.4 257.5 +57.8 -
Group Results 1H2012
7
Normalised EBITDA
In RM mn 2Q12 1Q12 2Q11 1H12 1H11
Reported EBITDA 797.4 782.6 746.9 1,580.0 1,477.8
Non Operational
Loss on Sale of Assets 0.2 0.1 0.4 0.3 0.8
FX (Gain)/Loss on International trade settlement
(5.3) 2.0 20.8 (3.3) 18.4
Normalised EBITDA 792.3 784.7 768.1 1,577.0 1,497.0
Normalised EBITDA Margin 32.1% 32.6% 33.9% 32.3% 33.7%
Reported EBITDA Margin 32.3% 32.5% 32.9% 32.4% 33.3%
EBITDA is calculated as Total Revenue (Operating Revenue + Oth. Operating Income) less Operating Cost (Exc. Depreciation, Amortisation & Impairment).EBITDA Margin is calculated as percentage of EBITDA against Total Revenue
8
In RM mn 2Q12 1Q12 2Q11 1H12 1H11
Reported PATAMI 348.5 250.6 127.2 599.1 290.5
Non Operational
Loss on Sale of Assets 0.2 0.1 0.4 0.3 0.8
FX (Gain)/Loss on International trade settlement
(5.3) 2.0 20.8 (3.3) 18.4
Other (Gain)/Losses** 2.4 (1.4) (2.0) 1.0 (2.7)
Unrealised FX (Gain)/Loss on Long Term loans 64.7 (67.9) (11.2) (3.2) (49.5)
Tax Incentives (187.5) - - (187.5) -
Normalised PATAMI* 223.0 183.4 135.2 406.4 257.5
Normalised PATAMI
9
* Inclusive in 1H2012 is RM87.8mn for current year tax incentive**Comprise fair value (FV) changes of FVTPL (FV through P&L) investment and gain/loss on disposal for AFS (available for
sale) investments.
22.8 20.7
17.217.6
20.719.4
12.110.9
5.68.6
6.2 5.7
3.8 4.11.0 1.3
1H11 1H12
Bad Debt
Marketing Expenses
Supplies & material
Maintenance Cost
Other operating cost
Manpower cost
Direct cost
Dep & Amortisation
Revenue = Operating Revenue + Other Operating Income
Cost % of Revenue1
Note: The classification of cost is as per financial reporting
(Please refer to Appendix for quarterly details & breakdown)
Cost/revenue ratio continues to improve
1
10
RM mnRM mn
Total Cost / Revenue ( %)
RM3,971.5
89.5%
RM4,308.0
88.3%
% of Revenue
1H2012 vs. 1H2011
•Higher Direct cost due to higher international outpayment, USP and content cost
•Higher Maintenance cost due to customer projects, new maintenance contracts at ITNT and one-off provision for backdated claim of a maintenance contract
•Higher Marketing Expenses due to higher A&P activities and commissions for Unifi
246326
176127
2059
0
100
200
300
400
500
600
1H11 1H12
Access Core Network Support System*
149118
98
80
60
75
0
50
100
150
200
250
300
350
1H11 1H12Access Core Network Support System*
Group Capital Expenditure
** Gross capex to be shared with Government equally up to RM4.8bnNote: Government coinvestment treated as deferred income, to be amortisedprogressively to match against the depreciation of assets
*Include Application, Support System & Others (building, land improvement, moveable plants,application & other assets)
Improved Capex/Revenue % ratio showing increased efficiency
11
Total Capex
HSBB Capex**
Note : BAU – Business As Usual
RM mn
749
442
17.1
BAU Capex
307
7.0
Capex / Revenue ( %)
512
273
5.7
785
16.3
10.610.1
395444
274 207
80 134
0
100
200
300
400
500
600
700
800
900
1H11 1H12
Access Core Network Support System*
30 June 12 31 Dec 11 30 June 12 31 Dec 11Return on Invested Capital 6.46% 5.80% Gross Debt to EBITDA 2.07 1.93
Return on Equity 10.69% 8.09% Net Debt/EBITDA 0.82 0.69
Return on Assets 5.14% 4.47% Gross Debt/ Equity 0.86 0.86
Current Ratio 1.90 1.62 Net Debt/ Equity 0.38 0.29
WACC 6.15% 6.33% Net Assets/Share (sen) 216.0 209.0
30 June 12
Group Cash Flow & Key Financial Ratios
31 Dec 11*
RM mn 1H12 1H11
Cash & cash equivalent at start 4,212.6 3,488.0
Cashflows from operating activities 703.3 936.7
Cashflows used-in investing activities (1,077.3) (683.9)
Capex 785.0 749.0
Cashflows from financing activities (132.2) (1,077.5)
Effect of exchange rate changes (1.7) 1.8
Cash & cash equivalent at end 3,704.7 2,656.9
Free cash-flow (EBITDA – Capex) 795.0 728.8
Cumulative HSBB grant received from Government as at 1H2012: RM2.26bn
Strong Balance Sheet to support futurebusiness requirements
1
Based on Normalised PATAMI2
1
12
31 Dec 11*30 June 12
* Restated due to adoption of MFRS
2
Based on Normalised EBIT1
Performance Overview
Financial review
Operating highlights
Concluding remarks
13
304 359 395609
754
2Q11 1Q12 2Q12 1H11 1H12
496 514 502962
1,016
2Q11 1Q12 2Q12 1H11 1H12
488 563 582941
1,145
2Q11 1Q12 2Q12 1H11 1H12
946 948 9461,870 1,894
2Q11 1Q12 2Q12 1H11 1H12
Voice39%
Data21%
Internet24%
Others16%
Group Total Revenue by Product
14
Data
RM mn
RM mn RM mn
Voice
Others*
Internet1H12
1H11
RM mnRM mn
RM mn
RM4,809mn
RM4,382mn
+1.3%
Positive growth across all products vs. 1H2011, Internet grew >21%.
*Others comprise other telco and non-telco services (i.e ICT-BPO, MMU tuition fees, customer projects)
+21.7%
+23.8%+5.6%+1.2%
-2.3%
0.0%
-0.2%
+19.2%
+3.4%
+29.9%
+10.0%
Voice43%
Data22%
Internet21%
Others14%
Consumer27%
SME20%
Enterprise11%
Government17%
Global9%
Wholesale8%
Others8%
Consumer27%
SME21%
Enterprise12%
Government15%
Global9%
Wholesale9%
Others7%
600 655 671 1,191 1,326467 463 485
907 948286 267 277
544 544327 415 397
655 812
2Q11 1Q12 2Q12 1H11 1H12
Consumer SME Enterprise Government
174 177 195333
372
2Q11 1Q12 2Q12 1H11 1H12
192 225 212374
437
2Q11 1Q12 2Q12 1H11 1H12
188 182 187
378 370
2Q11 1Q12 2Q12 1H11 1H12
Group Total Revenue by Line of Business
1H12
1H11
RM4,809mn
RM4,382mn
* Others comprise revenue from VADS (reclassified from retail), Property Development, TM R&D, TMIM, UTSB and MKL
Retail Wholesale
RM mn
RM mnRM mn
RM mn
3,297 3,630
1,831
Global Others*
+10.1%
+9.0%
1,8001,680
+1.7%-2.1%
-0.5%
+2.7%
+16.8%
+10.4%
-5.8%+11.7%
+12.1%
+10.2%
Global, Govt & Consumer showed highest growth in 1H2012
15
Retail (C+S+E+G): 75%
Retail (C+S+E+G): 75%
2,710 2,692 2,633 2,566 2,524 2,468
1,607 1,596 1,568 1,546 1,526 1,509
64 109 164 237 316 384
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
Fixed Line Residential Fixed Line Business UniFi
55,156 93,107 139,896 201,842 269,309 325,5578,38515,912
24,47934,659
46,43658,467
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
UniFi Residential UniFi Business
1,417 1,425 1,393 1,374 1,356 1,330
291 296 314 312 302 29764 109 164 237 316 384
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
Streamyx Residential Streamyx Business UniFiNet adds (in thousand)
In thousand
In thousand
+9.9%
+1.9%
Physical Highlights
Broadband Customer Growth
Fixed Line Customer Growth
*Call Usage Only ** Streamyx Net ARPU *** Blended ARPU
16
Broadband customer base breaches 2mn mark,ARPUs continue to be stable
1,772
4,381ARPU (RM) 1Q11 1H11 FY11 1Q12 1H12
Fixed Line (DEL)* 33 34 34 33 34
Streamyx Broadband** 77 77 78 79 79
UniFi*** 188 186 184 182 181
1,830
+58
4,397
1,871
+41
4,365 4,349
+52
1,923 1,974
+51
4,366
-0.8%
0.0%
63,541
+21.6%
Net adds (in thousand)
109,019
+45
+252.2%
164,375236,501
315,745
UniFi
ARPU
+37
2,011
+55+72 +79 +68
384,024
4,361
Performance Overview
Financial review
Operating highlights
Concluding remarks
17
Key Takeaways
Financial Performance• TM Group operating revenue up by 9.7% vs. 1H2011• Normalised EBITDA improved by 5.3% to RM1.577bn• Normalised PATAMI grew by 57.8% to RM406.4mn
Broadband Champion
• Total broadband customer base crossed 2mn
• Unifi remains strong: 384,024 customers as at1H2012, and more than 420,000 at present
• 1.259mn premises passed
• Total Capex / Revenue ratio improved to 16.3%
Shareholder Return• Interim dividend of 9.8sen per share or
approximately RM350.6mn to be paid toshareholders
All-round positive set of solid results
18
Appendices
2Q12 1Q12 2Q11 1H12 1H11 1H2012 vs. 1H2011
Operating Revenue (RM mil) 2,425.0 2,383.8 2,233.6 4,808.8 4,381.8 -
Other Operating Income(RM mil)
44.1 26.6 34.8 70.7 56.1 -
Direct Costs % 16.9 18.2 17.3 17.6 17.2 Higher international outpayment, USP payment and content costRM mil. 418.1 438.9 393.2 857.0 763.4
Manpower % 19.6 19.3 20.3 19.4 20.7 Higher staff benefits but lower as a % of revenue due to faster revenue growthRM mil. 483.4 465.6 460.3 949.0 919.3
Supplies & Materials % 5.2 6.1 7.2 5.7 6.2 Higher CAC from increased Unifi customers but lower as a % of revenue due to faster revenue growthRM mil. 129.1 147.7 164.2 276.8 273.6
Bad & Doubtful Debts % 0.5 2.2 0.5 1.3 1.0 Higher due to higher provisions from Global and WholesaleRM mil. 11.6 53.2 10.3 64.7 46.2
Marketing Expenses % 4.3 3.9 3.2 4.1 3.8 Higher A&P activities for product promotions and commissions for Unifi
RM mil. 106.1 94.4 72.4 200.5 169.1
Maintenance Cost % 9.6 7.5 6.2 8.6 5.6 Higher due to customer projects and new maintenance contracts at ITNTRM mil. 236.5 181.0 141.4 417.5 250.5
Other Operating Costs % 11.6 10.2 12.3 10.9 12.1 Lower due to lower outsourcing and license feesRM mil. 286.9 247.0 279.7 534.0 538.0
Depreciation & Amortisation % 20.2 21.2 22.5 20.7 22.8 Lower due to revision of useful life of certain assets and asset write-offRM mil. 497.9 510.6 511.4 1,008.5 1,011.4
Total (RM mil) 2,169.6 2,138.4 2,032.9 4,308.0 3,971.5 -
Total (%) 87.9 88.7 89.6 88.3 89.5 -
Cost % of Revenue
20
7,477.5
162.9
10,053.9
6,402.7
1,559.6
2,072.7
18.9
17,694.3
7,405.8
1,854.8
468.4
4,213.0
869.6
4,558.0
3,923.9
7.7
626.4
2,847.8
14,121.7
724.8
17,694.3
7,726.2
151.9
10,212.1
6,651.2
1,380.8
2,164.8
15.3
18,090.2
7,364.0
2,143.6
516.2
3,705.1
999.1
3,884.2
3,248.3
7.7
628.2
3,479.8
13,878.2
732.2
18,090.2
Shareholders’ Funds
Non-Controlling Interests
Deferred & Long Term Liabilities
Long Term Borrowings
Deferred Tax
Deferred Income
Derivative financial liabilities
Current Assets
Trade Receivables
Other Receivables
Cash & Bank Balances
Others
Current Liabilities
Trade and Other Payables
Short Term Borrowings
Others
Net Current Assets
Property Plant & Equipment
Other Non-Current Assets
RM MillionAs at 30 June 2012 As at 31 Dec 2011*
Group Balance Sheet
21
* Restated due to adoption of MFRS
785 758 770
298 318 307
485 558 577
124171 188
0
500
1000
1500
2000
2Q11 1Q12 2Q12
Others
Internet
Data
Voice
Consumer36%
SME28%
Enterprise16%
Government20%
Consumer37%
SME26%
Enterprise15%
Government22%
Revenue by Business Unit
RM mn
+1.7%
1,680
1H12
+9.0%
RETAIL
Revenue by Product
1H11
Note: Total revenue is after inter-co elimination. Revenue of product is before inter-co elimination
RM mn
RM mn
RM3,631mn
RM3,297mn
22
1,800 1,831
RM mn +10.1%
3,297
3,631
1,554 1,528
568 625
9331,135
262359
0
1,000
2,000
3,000
4,000
1H11 1H12
Others
Internet
Data
Voice
116 102
291 298
40 41
0
200
400
600
1H11 1H12
Others
Data
Voice
61 50 52
142 145 152
18 1922
0
50
100
150
200
250
2Q11 1Q12 2Q12
Others
Data
Voice
MC : Malaysian CarriersASP/ISP : Application/Internet Service Provider
Others : Include internet
WHOLESALE
1H12
1H11
Note: Total revenue is after inter-co elimination. Revenue of product is before inter-co elimination 23
Revenue by ProductRevenue by Customer Segment
187 182187
RM mn
+2.7%
0.0%
RM mn -2.1%
378 370
MC84%
ASP16%
MC83%
ASP17%
209273
178
1884
8
0
100
200
300
400
500
1H11 1H12
Others
Data
Voice
107143 129
92
92 952
3 6
0
50
100
150
200
250
2Q11 1Q12 2Q12
Others
Data
Voice
America14%
Europe & AFME15%
Oceania & North Asia
27%
South Asia32%
Others12%
America7%
Europe & AFME19%
Oceania & North Asia
25%
South Asia38%
Others12%
1H12
1H11
Others : Include internet
GLOBAL
Note: Total revenue is after inter-co elimination. Revenue of product is before inter-co elimination 24
Revenue by RegionRevenue by Product
192
212225
RM mn
-5.8%
+10.4%
RM mn+16.8%
374
437
THANK YOUAny queries please email to : investor@tm.com.my
•Investor Relations• Level 11 (South Wing)•Menara TM •JlnPantaiBharu •50672 Kuala Lumpur, Malaysia • Tel (603) 2240 4848/ 7366 / 7388
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