1H 2016 RESULTS ANALYST BRIEFING · Normalised EBIT RM mn 2Q16 1Q16 2Q15 1H16 1H15 Reported EBIT...

1H 2016 RESULTS

ANALYST BRIEFING

30 August 2016

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Disclaimer

2

Performance Overview

Financial Review

Operating Highlights

Concluding Remarks

3

1H 2016 Highlights

Note: Unless stated otherwise all figures shall be inclusive of Webe

Revenue RM5.90bn(+5.1%)

Reported EBIT

Normalised EBIT

Reported PATAMI

Normalised PATAMI

RM561.0mn(+2.2%)

RM575.0mn(+4.4%)

RM461.9mn(+35.5%)

RM370.5mn(-10.0%)

Financial Performance

Operational Performance

Healthy growth in Internet and data revenue - Higher customer base, customer projects and ICT-BPO revenue

Total broadband take-up continues to grow - now at 2.37mn customers:Streamyx : 1.47mn customersUnifi : > 900,000 customers

4

Healthy performance despite challenging environment

Interim Dividend Interim dividend of 9.3 sen per share or approximately RM349.5mn


Financial Review


Concluding Remarks

5

Group Results 1H 2016

RM mn

Reported

2Q16 1Q16% Change

QoQ2Q15

% Change YoY

1H16 1H15% Change

1H16 v 1H15

Revenue 3,045.4 2,855.4 +6.7 2,840.6 +7.2 5,900.8 5,614.7 +5.1

Other Operating Income

31.6 41.4 -23.7 29.4 +7.5 73.0 61.8 +18.1

EBITDA 953.9 923.0 +3.3 929.4 +2.6 1,876.9 1,777.0 +5.6

Depn & Amort. 672.8 643.1 +4.6 623.9 +7.8 1,315.9 1,228.1 +7.1

EBIT 281.1 279.9 +0.4 305.5 -8.0 561.0 548.9 +2.2

Other Gains / (Loss) (1.1) 50.5 ->100.0 (0.8) -37.5 49.4 (1.4) +>100.0

Net Finance Cost* 57.7 47.7 +21.0 40.4 +42.8 105.4 75.4 +39.8

FX Gain /(Loss) (34.7) 104.5 ->100.0 (14.5) ->100.0 69.8 (55.7) +>100.0

Profit Before Tax(PBT)

195.9 393.2 -50.2 256.1 -23.5 589.1 428.2 +37.6

PATAMI 139.5 322.4 -56.7 212.1 -34.2 461.9 341.0 +35.5

Normalised PATAMI 167.5 203.0 -17.5 231.1 -27.5 370.5 411.8 -10.0

Note: • Unless stated otherwise all figures shall be inclusive of Webe• For Normalised EBIT and Normalised PBT refer Slides 7 and 8• *Excludes FX (Gain)/Loss

Higher EBIT YTD in line with higher revenue

6

Normalised EBIT

RM mn 2Q16 1Q16 2Q15 1H16 1H15

Reported EBIT 281.1 279.9 305.5 561.0 548.9

Non Operational

Unrealised FX (Gain)/Loss on International trade settlement

(18.1) 31.9 (0.8) 13.8 1.5

Loss on Sale of Assets - 0.2 0.2 0.2 0.4

Normalised EBIT 263.0 312.0 304.9 575.0 550.8

Normalised EBIT Margin 8.5% 10.8% 10.6% 9.6% 9.7%

Reported EBIT Margin 9.1% 9.7% 10.6% 9.4% 9.7%

EBIT is calculated as Total Revenue (Operating Revenue + Oth. Operating Income) less Operating CostEBIT Margin is calculated as percentage of EBIT against Total RevenueNormalised EBIT Margin is calculated as percentage of Normalised EBIT against Normalised Total Revenue (Operating Revenue + Oth. Operating Income – Loss on Sale of Assets)

Note: Unless stated otherwise all figures stated shall be inclusive of Webe

Normalised EBIT higher by 4.4% YTD

7

Normalised PBT

RM mn 2Q16 1Q16 2Q15 1H16 1H15

Reported PBT 195.9 393.2 256.1 589.1 428.2

Non Operational

Unrealised FX (Gain)/Loss on International trade settlement

(18.1) 31.9 (0.8) 13.8 1.5

Other (Gain)/Losses* 1.1 (50.3) 1.0 (49.2) 1.8

Unwinding of discount on put option over shares of a subsidiary

7.0 7.6 2.4 14.6 4.8

Unrealised FX (Gain)/Loss on Long Term loans 34.7 (104.5) 14.5 (69.8) 55.7

Normalised PBT 220.6 277.9 273.2 498.5 492.0

* Comprise fair value (FV) changes of FVTPL (FV through P&L) investment gain/loss on disposal for AFS (available for sale) investments, (gain)/loss on Sale of Assets and option over shares of a subsidiary

Normalised PBT higher by 1.3% YTD

Note: Unless stated otherwise all figures stated shall be inclusive of Webe 8

Cost % of Revenue1

22.2% 21.9% 21.6% 22.0%

18.8% 19.3% 17.8% 19.1%

21.4% 20.4% 22.2% 20.9%

11.7% 11.7% 11.0% 11.7%

5.9% 6.2% 6.8% 6.0%

6.0% 6.7% 5.9% 6.4%

3.3% 4.1% 3.1% 3.7%1.0% 0.6%

1.9% 0.8%

1Q16 2Q16 1H15 1H16

Bad debt

Marketing Expenses

Supplies & materials

Maintenance

Other operating cost

Manpower

Direct cost

Dep & Amortisation

Total Cost / Revenue ( %)

1 Revenue = Operating Revenue + Other Operating Income

Note: The classification of cost is as per financial reporting

(Please refer to Appendix for breakdown)

Note : Unless stated otherwise all figures shall be inclusive of Webe

RM mn

90.6%

RM5,412.8RM5,127.6

90.3%

RM2,795.9RM2,616.9

90.9%90.3%

9

Higher direct cost in line with revenue increase

Group Capital Expenditure

159 137196

29659

363

382

422

100

120

108

220

1Q16 2Q16 1H15 1H16

Core Network Access Support System


10

Capex / Revenue ( %)

RM mn

Capex/Revenue ratio at 15.9%

45% Access32% Core Network23% Support Systems

938

686

15.9%12.2%

620

318

20.4%11.1%

Higher Capex in line with the expansion of major projects

Group Cash Flow

RM mn 1H16 1H15

Cash & cash equivalent at start 3,510.8 2,975.0

Cashflows from operating activities 933.8 833.4

Cashflows used-in investing activities (1,558.6) (1,016.8)

Capex 619.7 685.7

Cashflows from financing activities (281.7) 56.3

Effect of exchange rate changes (0.3) 0.1

Cash & cash equivalent at end 2,604.0 2,848.0

Free cash-flow (EBITDA – Capex) 1,257.2 1,091.3

30 Jun 16 31 Dec 15

Return on Invested Capital1 6.09% 6.69%

Return on Equity2 9.57% 11.66%

Return on Assets1 4.81% 5.90%

Current Ratio3 1.37 1.25

WACC 6.83% 7.36%

30 Jun 16 31 Dec 15

Gross Debt to EBITDA 1.92 1.90

Net Debt/EBITDA 1.11 1.02

Gross Debt/Equity 0.94 0.97

Net Debt/Equity 0.61 0.52

Net Assets/Share (sen) 204.7 207.0

Key Financial Ratios


1 Based on Normalised EBIT2 Based on Normalised PATAMI

Stable Cashflows with Debt Headroom

11


Financial Review


Concluding Remarks

12

831 894 905

1,661 1,799

2Q15 1Q16 2Q16 1H15 1H16

-6.3%

-3.2%

-3.5%

878 849 823

1,732 1,672

2Q15 1Q16 2Q16 1H15 1H16

30% of Group Revenue

Increase by 8.3% YTD, mainly from higher UniFi revenue due to higher customer base

Higher IPTV content revenue, in line with higher HyppTV takeup

Increase in new installations and bandwidth upgrade at Managed Accounts

Group Total Revenue by Product

Voice

Internet

28% of total Group revenue

Lower by 3.5% YTD, mainly due to decrease in usage and DEL customers at Mass Market & Managed Accounts, which offset higher bilateral revenue at Global & Wholesale


YTD

YTDRM mn

+8.3%+8.9%

+1.2%

13

519 476

603

982 1,079

2Q15 1Q16 2Q16 1H15 1H16

613 636 715

1,240 1,351

2Q15 1Q16 2Q16 1H15 1H16


Higher by 8.9% YoY, mainly contributed higher data services, IRU and Domestic Ethernet at Global & Wholesale


10% higher, mainly due to higher revenue at Managed Accounts’ customer projects and USP

Higher ICT revenue at VADS


*Others comprise other telco and non-telco services (i.e ICT-BPO, MMU tuition fees, customer projects)

YTD

YTD

RM mn

RM mn

+8.9%+16.6%

+12.3%

Group Total Revenue by Product

Data

Others*

+10.0%+16.3%

+26.8%

14

1,069 1,038 1,146

2,096 2,184

2Q15 1Q16 2Q16 1H15 1H16

1,233 1,260 1,272

2,470 2,532

2Q15 1Q16 2Q16 1H15 1H16

Group Total Revenue by Customer Clusters

Higher revenue YTD by 2.5% to RM2.53bn.

Growth led by Mass Market due to higher UniFi revenue.

Positive revenue growth driven by major LOBs, mainly at TM Government and VADS.

Healthy revenues mainly contributed by ICT and customer projects.

Mass Market Managed Accounts

YTD YTD

RM mn RM mn

+3.2%

+2.5%

+7.3%

+4.2%

+1.0%

+10.4%

Note : Unless stated otherwise all figures shall be inclusive of Webe 15

410 429 493

803

922

2Q15 1Q16 2Q16 1H15 1H16

129 128 134

246 263

2Q15 1Q16 2Q16 1H15 1H16

Note: Unless stated otherwise all figures shall be inclusive of Webe

Higher YTD revenue by 14.9%, mainlycontributed by increase in IRU sales andhigher Domestic Ethernet revenue.

Higher YTD growth by 6.6%, mainly dueto additional revenue from propertydevelopment (share of higher GDV).

Global & Wholesale Others*

Group Total Revenue by Customer Clusters

*Others include revenue from Property Development, TM R&D, UTSB & MKL

YTD YTD

RM mn RM mn

+20.2%

+14.9%

+4.2%

+6.6%

+14.7%

+4.2%

16

3029 29

28 29

ARPU

1,506 1,501 1,501 1,487 1,465

782 793 839 877 900

2Q15 3Q15 4Q15 1Q16 2Q16

3,461 3,426 3,403 3,364 3,319

782 793 839 877 900

2Q15 3Q15 4Q15 1Q16 2Q16DEL UniFi

-0.6%

*call usage only

+3.4%

Physical Highlights

Broadband

190

+0.1%

86

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usa

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RP

U (

RM

)

UniFi ARPU (Blended) Streamyx Net ARPU

UniFi continues to drive growth, with over 900,000 customers

Total broadband customers at 2.37mn

Unifi ARPU at RM194 and StreamyxARPU stable at RM89

87

192

89

190

2,288 2,294 2,340 2,364

89

192

Higher take up on new plans drive stronger UniFi ARPU.

2,365

89

194

17

4,243 4,219 4,242 4,241 4,219

-0.5%

Cu

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In t

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usa

nd

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RM

)

ARPU steady at RM29

Fixed Line


Financial Review


Concluding Remarks

18

19

Latest Updates

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Key Takeaways


Operating revenue grew by 5.1% YTD, driven by Internet

Reported EBIT higher by 2.2% YTD to RM561mn Normalised EBIT higher by 4.4% YoY at RM575mn

Reported PATAMI higher by 35.5% YTD at RM461.9mn Normalised PATAMI lower by 10% YTD at RM370.5mn

Capex/revenue ratio at 15.9%

Broadband champion: Total broadband customers 2.37mn to date 60% customers on packages 4Mbps and above Stable ARPU

Interim dividend of 9.3 sen per share or approximately RM349.5mn

Appendices

21

Normalised EBITDA

RM mn 2Q16 1Q16 2Q15 1H2016 1H2015

Reported EBITDA 953.9 923.0 929.4 1,876.9 1,777.0

Non Operational

Unrealised FX (Gain)/Loss on International trade Settlement

(18.1) 31.9 (0.8) 13.8 1.5

Loss on Sale of Assets - 0.2 0.2 0.2 0.4

Normalised EBITDA 935.8 955.1 928.8 1,890.9 1,778.9

Normalised EBITDA Margin 30.4% 33.0% 32.4% 31.7% 31.3%

Reported EBITDA Margin 31.0% 31.9% 32.4% 31.4% 31.3%

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 RevenueNormalised EBITDA Margin is calculated as percentage of Normalised EBITDA against Normalised Total Revenue (Operating Revenue + Oth. Operating Income – Loss on Sale of Assets)

Note: Unless stated otherwise all figures stated shall be inclusive of Webe

Normalised EBITDA higher by 6.3% YTD

22

Normalised PATAMI

RM mn 2Q16 1Q16 2Q15 1H2016 1H2015

Reported PATAMI 139.5 322.4 212.1 461.9 341.0

Non Operational

Unrealised FX (Gain)/Loss on International trade Settlement (net of tax)

(14.8) 27.8 1.1 13.0 8.5

Other (Gain)/Losses* 1.1 (50.3) 1.0 (49.2) 1.8

Unwinding of discount on put option over shares of a subsidiary

7.0 7.6 2.4 14.6 4.8

Unrealised FX (Gain)/Loss on Long Term loans 34.7 (104.5) 14.5 (69.8) 55.7

Normalised PATAMI 167.5 203.0 231.1 370.5 411.8

* Comprise of fair value (FV) changes of FVTPL (FV through P&L) investment gain/loss on disposal for AFS (available for sale) investments, (gain)/loss Sale of Assets and option over shares of a subsidiary

Normalised PATAMI lower by 10.0% YTD

23Note: Unless stated otherwise all figures stated shall be inclusive of Webe

Cost % of Revenue

2Q16 1Q16 2Q15 1H16 1H15Comments

(1H2016 vs. 1H2015)

Operating Revenue (RM mil) 3,045.4 2,855.4 2,840.6 5,900.8 5,614.7 -

Other Operating Income(RM mil)

31.6 41.4 29.4 73.0 61.8 -

Direct Costs % 19.3 18.8 17.7 19.1 17.8 Increase in International Outbound at TM Global and higher cost of outsourcing at VADSRM mil. 594.3 544.5 507.5 1,138.8 1,009.8

Manpower % 20.4 21.4 21.8 20.9 22.2-

RM mil. 627.4 620.4 624.7 1,247.8 1,257.8

Supplies & Materials % 6.7 6.0 5.8 6.4 5.9 Increase in material cost and other materialsmainly at VADS and TM GovernmentRM mil. 207.6 174.9 167.8 382.5 334.9

Bad & Doubtful Debts % 0.6 1.0 1.8 0.8 1.9-

RM mil. 19.0 30.1 51.0 49.1 108.3

Marketing Expenses % 4.1 3.3 3.1 3.7 3.1 Higher A&P at Webe from LTE event launches and events management RM mil. 124.8 95.9 89.0 220.7 178.1

Maintenance Cost % 6.2 5.9 6.4 6.0 6.8-

RM mil. 190.6 169.9 183.8 360.5 386.7

Other Operating Costs % 11.7 11.7 11.0 11.7 11.0 Increase in rental of buildings & premises fordata centreRM mil. 359.4 338.1 316.8 697.5 623.9

Depreciation & Amortisation %

21.9 22.2 21.7 22.0 21.6 Increase at Webe due to accelerated depreciation of Webe’s WIMAX sites

RM mil. 672.8 643.1 623.9 1,315.9 1,228.1

Total (RM mil) 2,795.9 2,616.9 2,564.5 5,412.8 5,127.6

Total (%) 90.9 90.3 89.4 90.6 90.3

Note : Unless stated otherwise all figures shall be inclusive of Webe24

Group Balance Sheet

Note : Unless stated otherwise all figures shall be inclusive of Webe25

RM millionAs at

30 Jun 2016As at

31 Dec 2015

Shareholders’ Funds 7,694.1 7,780.6

Non-Controlling Interests 237.4 258.1

Deferred & Long Term Liabilities 10,753.2 10,551.8

Long Term Borrowings 7,266.2 7,175.4

Derivative financial instruments 274.5 321.9

Deferred tax liabilities 1,486.9 1,367.6

Deferred income 1,707.4 1,661.7

Trade and other payables 18.2 25.2

18,684.7 18,590.5

Current Assets 6,459.2 7,297.5

Trade Receivables 2,398.4 2,353.1

Other Receivables 635.4 594.0

Cash & Bank Balances 2,604.6 3,511.6

Others 820.8 838.8

Current Liabilities 4,726.7 5,822.6

Trade and Other Payables 3,286.8 4,367.0

Short Term Borrowings 430.2 408.3

Others 1,009.7 1,047.3

Net Current Assets/(Liabilities) 1,732.5 1,474.9

Property Plant & Equipment 15,019.6 15,186.9

Other Non-Current Assets 1,932.6 1,928.7

18,684.7 18,590.5

721 686 6821,435 1,368389 397 401

794 799830 894 906

1,659 1,800

478 419 558

885 977

2Q15 1Q16 2Q16 1H15 1H16Voice Data Internet Others*

2,4182,297

4,566 4,716

Mass Market & Managed Accounts

Revenue by Product by Customer Clusters


+5.1%+3.3%

+5.3%

Note: Total revenue is after inter-co elimination. Revenue by product is before inter-co elimination *Others comprise other telco and non-telco services (i.e: ICT-BPO, MMU tuition fees, customer projects)

RM mn

163 168 150304 318

282 299 370

560669

31 31 34

6265

2Q15 1Q16 2Q16 1H15 1H16Voice Data Others*

493410 429

922803

+20.2%+14.9%

+14.7%

Global & Wholesale

2,302

THANK

YOU

Investor Relations

Level 11 (South Wing), Menara TM

Jalan Pantai Baharu

50672 Kuala Lumpur

Malaysia

Tel: (603) 2240 4848/ 7366 / 7388

[email protected]

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1H 2016 RESULTS ANALYST BRIEFING · Normalised EBIT RM mn 2Q16 1Q16 2Q15 1H16 1H15 Reported EBIT...

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