1q 2014 results analyst briefing...group results 1q 2014 6 rmmn reported 1q14 4q13 % change qoq 1q13...
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1Q 2014 RESULTS
ANALYST BRIEFING
28 May 2014
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 1Q 2014
4
Key Operating Indicators
Financial Performance
• Operating revenue increased by 8.1% YoY to RM2.6bn • Reported EBIT increased by 6.3% YoY to RM316.8mn; Normalised EBIT lower by 2.1% YoY to RM293.9mn • Reported PBT up by 21.8% YoY to RM279.6mn • Reported PATAMI lower by 1.2% YoY to RM210.6mn
• Internet revenue up by 12.7% YoY to RM726mn driven by UniFi and Streamyx customers growth as well as HyppTV Content. Data revenue up by 3.5% YoY to RM606mn • UniFi customer base up 22.6% YoY, close to 653,000 customers. Overall broadband customer base grew by 5.7% YoY to 2.23mn
Performance Overview Financial review Operating highlights
Concluding remarks
5
Group Results 1Q 2014
6
RMmn Reported
1Q14 4Q13 % Change QoQ 1Q13 % Change YoY
Revenue 2,620.0 2,979.8 -12.1 2,424.6 +8.1
Other Operating Income
50.2 35.8 +40.2 30.7 +63.5
EBITDA 896.7 958.0 -6.4 806.7 +11.2
Depn & Amort. 579.9 578.8 +0.2 508.7 +14.0
EBIT 316.8 379.2 -16.5 298.0 +6.3
Net Finance Cost* 40.5 60.8 -33.4 49.6 -18.3
FX (Gain) / Loss (2.9) 8.7 +>100.0 18.6 +>100.0
Profit Before Tax (PBT) 279.6 309.7 -9.7 229.5 +21.8
PATAMI 210.6 344.2 -38.8 213.2 -1.2
Normalised PATAMI 185.3 289.7 -36.0 234.0 -20.8
Note: For Normalised EBIT and Normalised PBT refer Slides 7 and 8 •Excludes FX (Gain )/Loss
Operating revenue grew by 8.1% YoY
Normalised EBIT Normalised EBIT lower by 2.1% vs. 1Q2013
In RM mn 1Q14 4Q13 1Q13
Reported EBIT 316.8 379.2 298.0
Non Operational
FX (Gain)/Loss on International Trade Settlement (1.2) 0.6 2.0
Loss on Sale of Assets 0.2 - 0.1
Negative Goodwill on acquisition of a new subsidiary (21.9) - -
Normalised EBIT 293.9 379.8 300.1
Normalised EBIT Margin 11.1% 12.6% 12.2%
Reported EBIT Margin 11.9% 12.6% 12.1%
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 – Negative Goodwill on acquisition of new subsidiary) 1Q14 results includes RM6.7mn EBITDA of a 100% owned subsidiary acquired in early Jan 2014
7
Normalised PBT
In RM mn 1Q14 4Q13 1Q13
Reported PBT 279.6 309.7 229.5
Non Operational
FX (Gain)/Loss on International Trade Settlement (1.2) 0.6 2.0
Other (Gain)/Losses* 0.7 0.7 0.2
Unrealised FX (Gain)/Loss on Long Term Loans
(2.9) 8.7 18.6
Negative Goodwill on acquisition of a new subsidiary (21.9) - -
Normalised PBT 254.3 319.7 250.3
*Comprise fair value (FV) changes of FVTPL (FV through P&L) investment, gain/loss on disposal for AFS (available for sale) investments and gain/loss on Sale of Assets
Normalised PBT higher by 1.6% vs. 1Q2013
8
9
20.7 21.7
17.5 16.8
22.5 22.4
11.0 10.4
6.0 6.8
5.6 5.7
3.3 3.0 1.3 1.4
1Q13 1Q14
Bad Debt
Marketing Expenses
Supplies & material
Maintenance Cost
Other operating cost
Manpower cost
Direct cost
Dep & Amortisation
Cost % of Revenue1
Note: The classification of cost is as per financial reporting
(Please refer to Appendix for quarterly details & breakdown)
Revenue = Operating Revenue + Other Operating Income 1
RM mn RM mn
Total Cost / Revenue ( %)
RM2,157.3
87.9%
RM2,353.4
88.1%
% of Revenue
Higher cost in 1Q2014 to enhance customer experience
1Q 2014 vs. 1Q 2013 •Higher D&A due to impact of
higher depreciation for customer project, higher asset base •Higher Maintenance cost due to higher customer projects at TM Government •Higher Supplies & Materials cost due to higher cost of sales and customer projects
Lower capex/revenue ratio Group Capital Expenditure
10
125
77
27
24
16
9
0
50
100
150
200
1Q13 1Q14
Access Core Network Support System*
37 48
11
15 20
27
0
20
40
60
80
100
1Q13 1Q14 Access Core Network Support System*
162
125
38
39
36
36
0
50
100
150
200
250
1Q13 1Q14
Access Core Network Support System*
*Include Application, Support System & Others (building, land improvement, moveable plants, application & other assets)
HSBB Capex
Note : BAU – Business As Usual
RM mn
236
168
9.7
BAU Capex
68
2.8
Capex / Revenue ( %)
111
90
3.4
201
7.7
4.2 6.9
Total Capex
Group Cash Flow & Key Financial Ratios
11
Cash balance at RM2.8bn
31 Mar 14 31 Dec 13 31 Mar 14 31 Dec 13Return on Invested Capital 6.96% 7.68% Gross Debt to EBITDA 1.86 1.92
Return on Equity 11.45% 14.80% Net Debt/EBITDA 1.12 1.04
Return on Assets 5.90% 6.27% Gross Debt/ Equity 0.94 0.90
Current Ratio 1.17 0.99 Net Debt/ Equity 0.56 0.55
WACC 6.90% 6.67% Net Assets/Share (sen) 205.0 199.5
31 Mar 14 31 Dec 13
RM mn 1Q14 1Q13
Cash & cash equivalent at start 2,514.5 3,738.3
Cashflows from operating activities 406.4 380.6
Cashflows used-in investing activities (444.4) (555.6)
Capex 201.0 236.0
Cashflows used-in financing activities 312.7 197.7
Effect of exchange rate changes (0.3) (2.3)
Cash & cash equivalent at end 2,788.9 3,758.7
Free cash-flow (EBITDA – Capex) 695.7 570.7
31 Dec 13 31 Mar 14
3
Includes reclassification of long term debt due within the next 12 months to current liabilities (RM1.5bn)
Based on Normalised EBIT (1Q14 excludes Negative Goodwill on acquisition of a new subsidiary) Based on Normalised PATAMI (1Q14 excludes Negative Goodwill on acquisition of a new subsidiary)
1
1
2
3
1 2
Performance Overview
Financial review
Operating highlights
Concluding remarks
12
Voice 33%
Data 23%
Internet 28%
Others 16%
Voice 36%
Data 24%
Internet 27%
Others 13%
318
673
414
1Q13 4Q13 1Q14
644 709 726
1Q13 4Q13 1Q14
585 687 606
1Q13 4Q13 1Q14
878 911 874
1Q13 4Q13 1Q14
Group Total Revenue by Product
Data
RM mn
RM mn RM mn
Voice
Others*
Internet 1Q14
1Q13
RM mn RM mn
RM mn
RM2,620mn
RM2,425mn
*Others comprise other telco and non-telco services (i.e ICT-BPO, MMU tuition fees, customer projects)
YoY revenue growth driven by Internet and Others
+12.7%
+2.4%
13
-0.4%
-4.0%
+3.5%
-11.8%
+30.4%
-38.5%
Retail 76%
Global & Wholesale
15%
Others 9%
Retail 77%
Global & Wholesale
15%
Others 8%
1,854 2,207 1,983
1Q13 4Q13 1Q14
Positive YoY growth across all segments
14
Group Total Revenue by Line of Business
* Others comprise revenue from VADS, Property Development, TM R&D, TMIM, UTSB and MKL
197
294 248
1Q13 4Q13 1Q14
374 478
388
1Q13 4Q13 1Q14
Global & Wholesale
1Q14 1Q13 RM2,620mn RM2,425mn
Retail
RM mn RM mn RM mn
Others*
+7.0%
-10.1%
+4.0%
-18.8%
+25.8%
-15.5%
2,364 2,337 2,317 2,296 2,262
1,474 1,463 1,453 1,442 1,423
532 577 607 635 653
1Q13 2Q13 3Q13 4Q13 1Q14
Fixed Line Residential Fixed Line Business UniFi
448 484 509 530 544
84 93 98 105 109
1Q13 2Q13 3Q13 4Q13 1Q14
UniFi Residential UniFi Business
1,292 1,291 1,290 1,292 1,292
285 285 287 288 285
532 577 607 635 653
1Q13 2Q13 3Q13 4Q13 1Q14
Streamyx Residential Streamyx Business UniFi
Net adds (in thousand)
In thousand
In thousand
+5.7%
+0.7%
Physical Highlights
Broadband Customer Growth
Fixed Line Customer Growth
4,370
2,109
Net adds (in thousand)
532
UniFi
15
*Call Usage Only ** Streamyx Net ARPU *** Blended ARPU
ARPU (RM) 1Q13 2Q13 3Q13 4Q13 1Q14
Fixed Line (DEL)* 31 32 31 33 30
Streamyx Broadband** 80 82 83 85 86
UniFi*** 178 180 183 185 188
ARPU
577
+45
+44
2,153
4,377
In thousand
+30
607 2,184
+31
4,377
2,215
+31 +28
635
4,373
+22.6%
+2.8%
-0.8%
-0.8%
2,230
+15 +18
653
4,338
Healthy broadband growth, higher take up of high speed broadband
Performance Overview
Financial review
Operating highlights
Concluding remarks
16
Key Takeaways & 2014 Business Priorities
Financial Performance
Broadband Champion
• Operating revenue grew by 8.1% YoY led by Internet, Data and Others
• Reported EBIT up by 6.3% YoY Normalised EBIT lower by 2.1% YoY • Reported PBT up by 21.8% YoY • Reported PATAMI lower by 1.2% YoY • Lower Capex/Revenue ratio at 7.7%
• Total broadband customer base grown to 2.23mn • Increasing number of customers on high speed broadband
43% of total broadband customers on 4Mbps and above
>665,000 Unifi customers to date; 43% takeup rate
17
Game Changing Year : Information and Innovation Exchange -To become Malaysia’s Broadband Champion -To develop a full suite of converged communications services PIP 3.0 initiatives -Continued Growth, Fundamental Productivity Shift, Institutional
Health Drivers
2014 Business Priorities
Appendices
19
Normalised EBITDA Normalised EBITDA higher by 8.0% vs. 1Q2013
In RM mn 1Q14 4Q13 1Q13
Reported EBITDA 896.7 958.0 806.7
Non Operational
FX (Gain)/Loss on International Trade Settlement (1.2) 0.6 2.0
Loss on Sale of Assets 0.2 - 0.1
Negative Goodwill on acquisition of a new subsidiary (21.9) - -
Normalised EBITDA 873.8 958.6 808.8
Normalised EBITDA Margin 33.0% 31.8% 32.9%
Reported EBITDA Margin 33.6% 31.8% 32.9%
Note : 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 – Negative Goodwill on acquisition of a new subsidiary) 1Q14 results includes RM6.7mn EBITDA of a 100% owned subsidiary acquired in early Jan 2014
20
Normalised PATAMI
In RM mn 1Q14 4Q13 1Q13
Reported PATAMI 210.6 344.2 213.2
Non Operational
FX (Gain)/Loss on International Trade Settlement (1.2) 0.6 2.0
Other (Gain)/Losses* 0.7 0.7 0.2
Unrealised FX (Gain)/Loss on Long Term Loans
(2.9) 8.7 18.6
Tax Incentives** - (29.5) -
Impact of tax rate changes - (35.0) -
Negative Goodwill on acquisition of a new subsidiary (21.9) - -
Normalised PATAMI** 185.3 289.7 234.0
*Comprise fair value (FV) changes of FVTPL (FV through P&L) investment, gain/loss on disposal for AFS (available for sale) investments and gain/loss on Sale of Assets
**Current year tax incentives: 1Q14: Nil, 1Q13: RM53.6mil (HSBB)
Normalised PATAMI was lower due to expiry of HSBB related tax incentives
Cost % of Revenue
21
1Q14 4Q13 1Q13
Comments (1Q14 vs 1Q13)
Operating Revenue (RM mil) 2,620.0 2,979.8 2,424.6 -
Other Operating Income (RM mil)
50.2 35.8 30.7 -
Direct Costs % 16.8 17.1 17.5 Higher absolute cost due to content cost and USP cost RM mil. 447.8 516.9 430.0
Manpower % 22.4 20.4 22.5 Higher absolute cost due to annual increments
RM mil. 599.4 614.4 551.3
Supplies & Materials % 5.7 7.0 5.6 Higher due to cost of sales and customer projects RM mil. 152.3 211.9 136.7
Bad & Doubtful Debts % 1.4 0.9 1.3 Higher due to impairment of trade receivables
RM mil. 36.4 27.2 31.4
Marketing Expenses % 3.0 4.2 3.3 Lower charges and commission
RM mil. 78.8 125.7 80.9
Maintenance Cost % 6.8 8.4 6.0 Higher maintenance cost due to customer projects at TM Government RM mil. 181.1 254.8 147.1
Other Operating Costs % 10.4 10.2 11.0 Higher absolute cost due to international services and professional fees RM mil. 277.7 306.7 271.2
Depreciation & Amortisation % 21.7 19.2 20.7 Higher due to impact of customer project and higher asset base RM mil. 579.9 578.8 508.7
Total (RM mil) 2,353.4 2,636.4 2,157.3 -
Total (%) 88.1 87.4 87.9 -
7,136.7
162.6
8,076.7
4,865.0
1,151.0
1,999.5
51.4
9.8
15,376.0
5,722.2
1,847.7
440.9
2,514.9
918.7
5,770.5
3,172.8
1,590.2
1,007.5
(48.3)
14,572.0
852.3
15,376.0
Group Balance Sheet
22
As at 31 Dec 2013
7,333.9
170.8
8,522.5
5,288.2
1,190.4
1,980.5
51.1
12.3
16,027.2
6,582.1
2,463.7
451.8
2,799.2
867.4
5,628.0
2,920.5
1,592.7
1,114.8
954.1
14,217.5
855.6
16,027.2
Shareholders’ Funds
Non-Controlling Interests
Deferred & Long Term Liabilities
Long Term Borrowings
Deferred Tax
Deferred Income
Derivative financial liabilities
Other payables
Current Assets
Trade Receivables
Other Receivables
Cash & Bank Balances
Others
Current Liabilities
Trade and Other Payables
Short Term Borrowings
Others
Net Current (Liabilities)/Assets*
Property Plant & Equipment
Other Non-Current Assets
RM Million As at 31 Mar 2014
*Due to reclassification of long term debt due within the next 12 months to current liability (RM1.5bn)
727 754 726
383 390 392
643 706 725
112 373
149
1Q13 4Q13 1Q14
Others
Internet
Data
Voice
RETAIL
23 Note: Total revenue is after inter-co elimination. Revenue of product is before inter-co elimination
RM mn -10.1%
+7.0%
Revenue by Product
2,207 1,983
1,854
154 155 150
247 340
265
19
29
26
1Q13 4Q13 1Q14
Others
Data
Voice
Others : Include internet
Revenue by Product
RM mn -18.8%
+4.0%
478
388 374
GLOBAL & WHOLESALE
THANK YOU Any 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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