1H 2013 RESULTS
ANALYST BRIEFING
29 August 2013
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Disclaimer
Performance Overview
Financial review
Operating highlights
Concluding remarks
3
Key Highlights 1H2013 vs. 1H2012
Continued Capex efficiency: Total capex/revenue ratio: 12.5% vs. 16.3% for 1H2012
Normalised EBIT grew by 10.7% to RM629.4mn
Revenue up by 4.8% to RM5bn, driven by Data and Internet & Multimedia growth
Normalised PATAMI up by 17.7% to RM478.5mn
Strong broadband takeup: UniFi grew by >50% vs. 1H2012
Overall good performance
4
Key Operating Indicators
Key Highlights 2Q2013
Financial Performance
• Operating revenue increased by 7.8% YoY and QoQ, to RM2.6bn
• Normalised EBIT increased by 11.9% YoY and 9.7% QoQ, to RM329.3mn; Reported EBIT increased by 10.1% YoY and 10.7% QoQ, to RM329.8mn • Normalised PATAMI grew by 9.6% YoY and 4.5% QoQ, to RM244.5mn; Reported PATAMI lower by 38.6% YoY but higher by 0.3% QoQ, to RM213.9mn
• Internet revenue up by 9.6% YoY to RM638mn driven by UniFi growth and HyppTV content; Data revenue up by 20.7% YoY to RM606mn
• UniFi customer base up 50.3% YoY to 577,000 customers; Overall broadband customer base grew by 7.1% YoY to 2.15mn
5
Performance Overview Financial review Operating highlights
Concluding remarks
6
Note: For Normalised EBIT and Normalised PATAMI refer Slides 8 and 9 •Excludes FX (Gain )/Loss
RM mn
Reported
2Q13 1Q13 % Change
QoQ 2Q12
% Change YoY
1H13 1H12 % Change
1H13 vs 1H12
Revenue 2,613.8 2,424.6 +7.8 2,425.0 +7.8 5,038.4 4,808.8 +4.8
Other Operating Income
22.5 30.7 -26.7 44.1 -49.0 53.2 70.7 -24.8
EBITDA 860.6 806.7 +6.7 797.4 +7.9 1,667.3 1,580.0 +5.5
Depn & Amort. 530.8 508.7 +4.3 497.9 +6.6 1,039.5 1,008.5 +3.1
EBIT 329.8 298.0 +10.7 299.5 +10.1 627.8 571.5 +9.9
Other Gains / (Loss) 3.0 (0.1) >+100.0 (2.4) >+100.0 2.9 (1.0) >+100.0
Net Finance Cost* 56.4 49.6 +13.7 46.9 +20.3 106.0 88.5 +19.8
FX (Gain) / Loss 34.1 18.6 -83.3 64.7 +47.3 52.7 (3.2) >-100.0
Profit Before Tax (PBT) 241.9 229.5 +5.4 185.6 +30.3 471.4 484.9 -2.8
PATAMI 213.9 213.2 +0.3 348.5 -38.6 427.1 599.1 -28.7
Normalised PATAMI 244.5 234.0 +4.5 223.0 +9.6 478.5 406.5 +17.7
Group Results 1H2013
7
Normalised EBIT
In RM mn 2Q13 1Q13 2Q12 1H13 1H12
Reported EBIT 329.8 298.0 299.5 627.8 571.5
Non Operational
Loss on Sale of Assets 0.2 0.1 0.2 0.3 0.4
FX (Gain)/Loss on International trade settlement (0.7) 2.0 (5.3) 1.3 (3.3)
Normalised EBIT 329.3 300.1 294.4 629.4 568.6
Normalised EBIT Margin 12.5% 12.2% 11.9% 12.4% 11.7%
Reported EBIT Margin 12.5% 12.1% 12.1% 12.3% 11.7%
EBIT is calculated as Total Revenue (Operating Revenue + Oth. Operating Income) less Total Cost EBIT Margin is calculated as percentage of EBIT against Total Revenue Normalised EBIT Margin is calculated as percentage of Normalised EBIT against Normalised Total Revenue (Operating Revenue + Oth. Operating Income – Loss on Sale of Assets)
8
Normalised EBIT higher by 10.7% vs. 1H2012
Normalised PATAMI
In RM mn 2Q13 1Q13 2Q12 1H13 1H12
Reported PATAMI 213.9 213.2 348.5 427.1 599.1
Non Operational
Loss on Sale of Assets 0.2 0.1 0.2 0.3 0.4
FX (Gain)/Loss on International trade settlement (0.7) 2.0 (5.3) 1.3 (3.3)
Other (Gain)/Losses* (3.0) 0.1 2.4 (2.9) 1.0
Unrealised FX (Gain)/Loss on Long Term loans
34.1 18.6 64.7 52.7 (3.2)
Tax Incentives - - (187.5) - (187.5)
Normalised PATAMI** 244.5 234.0 223.0 478.5 406.5
9
* Comprise of fair value (FV) changes of FVTPL (FV through P&L) investment gain/loss on disposal for AFS (available for sale) investments. **Current year tax incentives: 1H13: RM108.0mil (HSBB), 1H12: RM40.0mil (last mile), RM47.8mil (HSBB)
Normalised PATAMI 17.7% higher vs. 1H2012
20.7 20.4
17.6 16.7
19.4 21.8
10.9 11.6
8.6 6.6
5.7 6.2
4.1 3.6 1.3 0.8
1H12 1H13
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
RM mn RM mn
Total Cost / Revenue ( %)
RM4,308.0
88.3%
RM4,463.8
87.7%
% of Revenue
1H 2013 vs. 1H 2012
•Higher Manpower cost due to higher salaries and staff benefits (new Collective Agreement) •Lower Direct cost due to lower international & interconnect outpayment •Lower D&A due to lower provision for write-off •Lower Maintenance cost due to lower customer projects
10
444 350
207
184
134
97
0
100
200
300
400
500
600
700
800
1H12 1H13
Access Core Network Support System*
326 247
127
149
59
50
0
90
180
270
360
450
540
1H12 1H13
Access Core Network Support System*
118 103
80
35
75
47
0
70
140
210
280
1H12 1H13 Access Core Network Support System*
Improved capex/revenue ratio Group Capital Expenditure
** Gross capex to be shared with Government equally up to RM4.8bn Note: Government coinvestment treated as deferred income, to be amortised progressively to match against the depreciation of assets
*Include Application, Support System & Others (building, land improvement, moveable plants, application & other assets)
HSBB Capex**
Note : BAU – Business As Usual
RM mn
785
512
16.3
BAU Capex
273
5.7
Capex / Revenue ( %)
446
185
3.7
631
12.5
8.9 10.6
Total Capex
11
RM mn
RM mn
30 June 13 31 Dec 12 30 June 13 31 Dec 12Return on Invested Capital 6.98% 6.67% Gross Debt to EBITDA 2.25 2.10
Return on Equity 13.93% 12.31% Net Debt/EBITDA 1.17 0.87
Return on Assets 5.66% 5.17% Gross Debt/ Equity 1.14 1.04
Current Ratio 1.18 1.03 Net Debt/ Equity 0.64 0.49
WACC 6.03% 6.10% Net Assets/Share (sen) 191.4 192.7
30 June 13
Group Cash Flow & Key Financial Ratios
31 Dec 12
RM mn 1H13 1H12
Cash & cash equivalent at start 3,738.3 4,212.6
Cashflows from operating activities 500.6 703.3
Cashflows used-in investing activities (978.6) (1,077.3)
Capex 631.0 785.0
Cashflows from financing activities 187.6 (132.2)
Effect of exchange rate changes (2.0) (1.7)
Cash & cash equivalent at end 3,445.9 3,704.7
Free cash-flow (EBITDA – Capex) 1,036.3 795.0
1
Based on Normalised PATAMI 2
1
31 Dec 12 30 June 13
2
Based on Normalised EBIT 1
12
Performance Overview
Financial review
Operating highlights
Concluding remarks
13
502 585 606 1,016
1,191
2Q12 1Q13 2Q13 1H12 1H13
582 644 638
1,145 1,282
2Q12 1Q13 2Q13 1H12 1H13
946 878 936
1,894 1,814
2Q12 1Q13 2Q13 1H12 1H13
Voice 36%
Data 24%
Internet 25%
Others 15%
Voice 39%
Data 21%
Internet 24%
Others 16%
Group Total Revenue by Product
Data
RM mn
RM mn RM mn
Voice*
Others**
Internet* 1H13
1H12
RM mn RM mn
RM mn
RM5,038mn
RM4,809mn
*2Q13 : Reclassified between voice and internet of RM30mn **Others comprise other telco and non-telco services (i.e ICT-BPO, MMU tuition fees, customer projects)
-1.1%
+6.6%
Sustained Internet and Data growth
-4.2% +9.6%
-0.9%
+12.0%
+20.7%
+3.6%
+17.2% +9.6%
+36.2%
-0.4%
14
395 318
433
754 751
2Q12 1Q13 2Q13 1H12 1H13
Retail 75%
Global & Wholesale
16%
Others 9%
Retail 75%
Global & Wholesale
17%
Others 8%
1,831 1,854 1,957 3,631 3,811
2Q12 1Q13 2Q13 1H12 1H13
195 197 244
372 441
2Q12 1Q13 2Q13 1H12 1H13
399 374 412
806 786
2Q12 1Q13 2Q13 1H12 1H13
Global & Wholesale
Group Total Revenue by Line of Business
1H13 1H12 RM5,038mn RM4,809mn
* Others comprise revenue from VADS (reclassified from retail), Property Development, TM R&D, TMIM, UTSB and MKL
Retail
RM mn RM mn RM mn
Others*
Retail (C+S+E+G): 75% Retail (C+S+E+G): 75%
+6.9%
+5.6%
Positive growth across Mass Market and Managed Accounts segment
+5.0% +3.3%
+10.2%
-2.5% +25.1%
+23.9%
+18.5%
15
2,524 2,468 2,429 2,390 2,364 2,337
1,526 1,509 1,497 1,486 1,474 1,463
316 384 427 483 532 577
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
Fixed Line Residential Fixed Line Business UniFi
1,356 1,330 1,309 1,296 1,292 1,291
302 297 292 287 285 285
316 384 427 483 532 577
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
Streamyx Residential Streamyx Business UniFi
269 325 359 406 448 484 46
58 68
77 84
93
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
UniFi Residential UniFi Business Net adds (in thousand)
In thousand
In thousand
+7.1%
+2.1%
Physical Highlights
Broadband Customer Growth
Fixed Line Customer Growth
+43
4,370
2,109 1,974
4,366
+0.4%
+0.2%
+8.5%
Net adds (in thousand)
+50.3%
532
316
UniFi
+37
2,011
+49
+68
384
4,361
2,028
427
+43
+17
4,353
Continued overall Broadband growth; Healthy takeup of Streamyx 8Mbps
2,066
+38 +56
483
4,359
16
*Call Usage Only ** Streamyx Net ARPU *** Blended ARPU
ARPU (RM) 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
Fixed Line (DEL)* 34 35 34 32 31 32
Streamyx Broadband** 79 79 80 81 80 82
UniFi*** 181 178 181 181 178 180
ARPU
577
+45 +44
2,153
4,377
In thousand
17
Attractive Product Offerings Continuous enhancement of product offerings across segments
Performance Overview
Financial review
Operating highlights
Concluding remarks
18
Key Takeaways
Financial Performance
• TM Group operating revenue up by 4.8% vs. 1H2012 • Normalised EBIT growth 10.7% to RM629.4mn • Normalised PATAMI grew by 17.7% to RM478.5mn
Broadband Champion • Total broadband customer base 2.15mn
• Unifi remains strong: 577,000 customers as at 1H2013, more than 590,000 at present
• Good takeup of high speed broadband (Streamyx 4 & 8 Mbps) in non-Unifi areas
• Total Capex / Revenue ratio improved to 12.5% • Cost /Revenue ratio improved to 87.7%
19
Shareholder Return • Interim dividend of 9.8 sen per share or
approximately RM350.6mn to be paid to shareholders
Appendices
Normalised EBITDA
In RM mn 2Q13 1Q13 2Q12 1H13 1H12
Reported EBITDA 860.6 806.7 797.4 1,667.3 1,580.0
Non Operational
Loss on Sale of Assets 0.2 0.1 0.2 0.3 0.4
FX (Gain)/Loss on International trade settlement (0.7) 2.0 (5.3) 1.3 (3.3)
Normalised EBITDA 860.1 808.8 792.3 1,668.9 1,577.1
Normalised EBITDA Margin 32.6% 32.9% 32.1% 32.8% 32.3%
Reported EBITDA Margin 32.6% 32.9% 32.3% 32.7% 32.4%
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 Normalised EBITDA Margin is calculated as percentage of Normalised EBITDA against Normalised Total Revenue (Operating Revenue + Oth. Operating Income – Loss on Sale of Assets)
Normalised EBITDA higher by 5.8% vs. 1H2012
21
2Q13 1Q13 2Q12 1H13 1H12
Comments (1H2013 vs. 1H2012)
Operating Revenue (RM mil) 2,613.8 2,424.6 2,425.0 5,038.4 4,808.8 -
Other Operating Income (RM mil)
22.5 30.7 44.1 53.2 70.7 -
Direct Costs % 15.9 17.5 16.9 16.7 17.6 Lower international and interconnect outpayment RM mil. 417.9 430.0 418.1 847.9 857.0
Manpower % 21.2 22.5 19.6 21.8 19.4 Higher salaries and staff benefits
RM mil. 558.1 551.3 483.4 1,109.3 949.0
Supplies & Materials % 6.7 5.6 5.2 6.2 5.7 Higher materials cost for ICT projects, equipment, cable cost RM mil. 176.7 136.7 129.1 313.4 276.8
Bad & Doubtful Debts % 0.4 1.3 0.5 0.8 1.3 -
RM mil. 9.7 31.4 11.6 41.1 64.7
Marketing Expenses % 3.9 3.3 4.3 3.6 4.1 Lower A&P and dealers’ commission
RM mil. 103.0 80.9 106.1 183.9 200.5
Maintenance Cost % 7.2 6.0 9.6 6.6 8.6 Lower maintenance due to lower customer projects, ie at TM Govt RM mil. 189.0 147.1 236.5 336.1 417.5
Other Operating Costs % 12.2 11.0 11.6 11.6 10.9 Higher due to cost of disposal of Ijok land and international services at ITNT. RM mil. 321.3 271.2 286.9 592.6 534.0
Depreciation & Amortisation % 20.1 20.7 20.2 20.4 20.7 Higher absolute cost due to higher asset base but lower as percentage of revenue RM mil. 530.8 508.7 497.9 1,039.5 1,008.5
Total (RM mil) 2,306.5 2,157.3 2,169.6 4,463.8 4,308.0 -
Total (%) 87.5 87.9 87.9 87.7 88.3 -
Cost % of Revenue
22
6,894.8
165.2
8,513.7
5,130.2
1,202.6
2,129.4
51.5
15,573.7
6,808.8
1,740.9
466.1
3,738.7
863.1
6,622.2
3,545.5
2,010.2
1,066.5
186.6
14,637.6
749.5
15,573.7
As at 31 Dec 2012
6,848.7
152.4
9,188.2
5,830.0
1,195.5
2,087.5
75.2
16,189.3
7,188.0
2,377.8
461.9
3,446.3
902.0
6,079.5
2,782.2
2,008.9
1,288.4
1,108.5
14,286.1
794.7
16,189.3
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 Million As at 30 June 2013
Group Balance Sheet
23
770 727 774 1,528 1,501
307 383 388 625 771
577 643 636
1,135 1,279
188 112 167
359 279
2Q12 1Q13 2Q13 1H12 1H13
Others
Internet
Data
Voice
RETAIL
Note: Total revenue is after inter-co elimination. Revenue of product is before inter-co elimination
RM mn +5.6%
+6.9%
1,957 1,854 1,831
Revenue by Product
3,811 3,631
+5.0%
24
181 154 163 375
317
249 247 266
485 513 28
19 32
49 51
2Q12 1Q13 2Q13 1H12 1H13
Others
Data
Voice
Others : Includes internet
Revenue by Product
399 374
412
806 786
RM mn
+10.2%
+3.3% -2.5%
GLOBAL & WHOLESALE
THANK YOU Any queries please email to : [email protected]
•Investor Relations • Level 11 (South Wing) •Menara TM •JlnPantaiBharu •50672 Kuala Lumpur, Malaysia • Tel (603) 2240 4848/ 7366 / 7388