FY 2015 RESULTS ANALYST BRIEFING - listed...

FY 2015 RESULTS

ANALYST BRIEFING

24 February 2016

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This presentation contains projections and “forward-looking statements” relating to the Company’s business and the sectors in which the

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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

2

Performance Overview

Financial Review

Operating Highlights

Concluding Remarks

3

FY2015 Highlights

4Note : Unless stated otherwise all figures shall be inclusive of P1

Excluding P1 Including P1

Revenue RM11.52bn(+3.0%)

RM11.72bn(+4.3)

Reported EBIT

Normalised EBIT

Reported PATAMI

Normalised PATAMI

RM1.53bn(+13.7%)

RM1.52bn(+6.2%)

RM891.7mn(+2.9%)

RM1.03bn(+7.6%)

RM1.26bn(-2.9%)

RM1.24bn(-10.6%)

RM700.3mn(-15.8%)

RM894.9mn(-4.9%)

Customer Satisfaction Measure of >72

Total capex/revenue 21.4%

Broadband customer base crossed 2.34mn driven by Unifi

2nd interim dividend of 12.1 sen per share or RM454.7mn

Continued growth despite challenging circumstances


Financial Review


Concluding Remarks

5

Group Results FY2015

RM mn

Reported

4Q15 3Q15% Change

QoQ4Q14

% Change YoY

FY2015 FY2014% Change

YTD vs YTD

Revenue 3,184.4 2,922.5 +9.0 3,157.3 +1.0 11,721.6 11,235.1 +4.3

Other Operating Income

32.7 29.2 +12.0 37.6 -13.0 123.7 154.3 -19.8

EBITDA 879.7 1,037.7 -15.2 960.4 -8.4 3,694.4 3,635.6 +1.6

Depn & Amort. 620.5 588.7 +5.4 631.0 -1.7 2,437.3 2,341.3 +4.1

EBIT 259.2 449.0 -42.3 329.4 -21.3 1,257.1 1,294.3 -2.9

Other Gains / (Loss) (24.7) (0.5) - >100 (1.7) - >100 (26.6) 4.8 - >100

Net Finance Cost* 41.0 42.6 -3.8 35.9 +14.2 159.0 155.0 +2.6

FX (Gain) / Loss (24.6) 153.3 - >100 43.2 - >100 184.4 47.9 - >100

Profit Before Tax(PBT)

224.6 259.0 -13.3 253.7 -11.5 911.8 1,105.5 -17.5

PATAMI 192.5 166.8 +15.4 218.3 -11.8 700.3 831.8 -15.8

Normalised PATAMI 259.7 228.2 +13.8 350.2 -25.8 894.9 941.2 -4.9

Note: Unless stated otherwise all figures shall be inclusive of P1For Normalised EBIT and Normalised PBT refer Slides 7 and 8•Excludes FX (Gain )/Loss 6

Profitability impacted by foreign exchange and higher direct cost

Normalised EBIT

In RM mn 4Q15 3Q15 4Q14 FY2015 FY2014

Reported EBIT 259.2 449.0 329.4 1,257.1 1,294.3

Non Operational

Unrealised FX (Gain)/Loss on International trade settlement

12.8 (109.8) (7.6) (95.4) (6.7)

Loss on Sale of Assets 0.2 - 0.1 0.6 0.4

Negative Goodwill on acquisition of a new subsidiary

- - - - (21.9)

MESRA Programme 77.4 - 111.2 77.4 111.2

Estimated cost and asset write-off due to flood - - 9.6 - 9.6

Normalised EBIT 349.6 339.2 442.7 1,239.7 1,386.9

Normalised EBIT Margin 10.9% 11.5% 13.9% 10.6% 12.2%

Reported EBIT Margin 8.1% 15.2% 10.3% 10.6% 11.4%

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 – Negative Goodwill on acquisition of new subsidiary)

Note : MESRA Programme: a voluntary separation programme for employees aged 55Unless stated otherwise all figures stated shall be inclusive of P1

Normalised EBIT higher by 3.1% QoQ

7

Normalised PBT

In RM mn 4Q15 3Q15 4Q14 FY2015 FY2014

Reported PBT 224.6 259.0 253.7 911.8 1,105.5

Non Operational


12.8 (109.8) (7.6) (95.4) (6.7)

Other (Gain)/Losses & Impairment* 24.9 0.5 1.8 27.2 (4.4)

Unrealised FX (Gain)/Loss on Long Term loans

(24.5) 153.3 43.2 184.5 47.9


- - - - (21.9)

MESRA Programme 77.4 - 111.2 77.4 111.2

Estimated cost and assets write-off due to flood - - 9.6 - 9.6

Normalised PBT 315.2 303.0 411.9 1,105.5 1,241.2

* Comprise of fair value (FV) changes of FVTPL (FV through P&L) investment and gain/loss on disposal for AFS (available for sale) investments.

Normalised PBT higher by 4.0% QoQ

8


21.5 21.7 20.0 19.3 20.6 20.6

17.9 17.718.2 19.1 16.5 18.3

22.6 21.821.3 21.8

21.021.8

10.9 11.0

6.511.6

11.010.0

7.2 6.4

6.0

6.67.4 6.6

6.05.8

8.1

9.46.9 7.4

3.23.1

2.8

4.1

3.2 3.3

2.01.8

1.9

2.0 1.4

1Q15 2Q15 3Q15 4Q15 FY2014 FY2015

Bad debt

Marketing expenses

Supplies & material

Maintenance cost

Other operating cost

Manpower cost

Direct cost

Dep & Amortisation

Cost % of Revenue1

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 P1

89.4%

RM10,588.2RM10,095.1

9

88.6%

RM2,564.5RM2,563.1

89.4%91.3% 84.8%

RM2,502.7

91.9%

RM2,957.9

QoQ: Higher opex due to Direct Cost, Manpower, Supplies & Materials and OOC

139244 247

558694

1188

81

115 113

475

662

784

38

69 107

320

480

533

1Q15 2Q15 3Q15 4Q15 FY2014 FY2015

Access Core Network Support System

Group Capital Expenditure

Note : Unless stated otherwise all figures shall be inclusive of P1 10

Capex / Revenue ( %)

15.1% 16.0%15.2%

16.3% 21.4%

RM mn

2,506

1,836

467428

258

FY2015: 21.4% of revenue at RM2.5bn

48% Access 31% Core Network 21% Support Systems

42.5%

1,353

Higher Capex to Expand HSBB and SUBB coverage

Group Cash Flow

RM mn FY2015 FY2014

Cash & cash equivalent at start 2,975.0 2,514.5

Cashflows from operating activities 2,942.0 3,014.1

Cashflows used-in investing activities (2,549.9) (2,162.0)

Capex 2,505.5 1,836.0

Cashflows from financing activities 142.5 (391.3)

Effect of exchange rate changes 1.2 (0.3)

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

Free cash-flow (EBITDA – Capex) 1,188.9 1,799.6

31 Dec 15 31 Dec 14

Return on Invested Capital1 6.69% 7.72%

Return on Equity2 11.66% 12.80%

Return on Assets1 5.90% 6.34%

Current Ratio3 1.25 1.33

WACC 7.36% 7.54%

31 Dec 15 31 Dec 14

Gross Debt to EBITDA 1.90 1.77

Net Debt/EBITDA 1.02 1.02

Gross Debt/Equity 0.97 0.85

Net Debt/Equity 0.52 0.46

Net Assets/Share (sen) 209.2 203.6

Key Financial Ratios


1 Based on Normalised EBIT2 Based on Normalised PATAMI

Stable Cashflows with Debt Headroom

11


Financial Review


Concluding Remarks

12

828 845 862

2,995

3,367

4Q14 3Q15 4Q15 FY2014 FY2015

889 895 880

3,469 3,507

4Q14 3Q15 4Q15 FY2014 FY2015

27% of Group Revenue

Higher by 2.0% mainly from higher Unifi customer base

Contribution from upselling

13

Group Total Revenue by Product

Voice

Internet


Lower by 1.7%, due to lower bilateral revenue at Global & Wholesale

Lower revenue at Mass Market & Managed Accounts due to lower usage and lower DEL customers

-1.0%

-1.7%

+4.1%

+2.0%


+1.1%

+12.4%

RM mn

RM mn

Internet, Data & Others – key QoQ revenue Drivers, Data & Internet for FY2015

QoQ

670

495

701

2,165 2,178

4Q14 3Q15 4Q15 FY2014 FY2015

771688

741

2,606 2,670

4Q14 3Q15 4Q15 FY2014 FY2015

14

Group Total Revenue by Product

Data

Others*


Higher by 7.7%, mainly due to higher data services, IRU and Domestic Ethernet at Global & Wholesale


41.6% higher, mainly due to higher ICT & BPO and USP amortisation

+7.7%

-3.9%

+4.6%

+41.6%


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

+2.5%

+0.6%

RM mn

RM mn

QoQ

4Q14 3Q15 4Q15 FY2014 FY20154Q14 3Q15 4Q15 FY2014 FY2015

Group Total Revenue by Lines of Business

Mass Market

+3.4%

Higher by 6.2% due to higher internet revenue at Consumer due to upselling and higher customer base

RM mn


+3.3%

Managed Accounts

-0.7%

8.6% higher, mainly due to higher contribution from TM Government and ICT-BPO revenue at VADS

RM mn+0.1%

15

+6.2% +8.6%

1,2251,1541,185

4,586 4,736

1,191 1,088 1,182

4,353 4,358

Higher revenue across all customer segments

QoQ

204 174 216

520

757

4Q14 3Q15 4Q15 FY2014 FY2015

4Q14 3Q15 4Q15 FY2014 FY2015

Group Total Revenue by Lines of Business

Global & Wholesale

Others*

-2.8%

+6.0%

10.7% higher mainly due to IRU revenue

24.6% higher due to higher education fees at UTSB and higher grant amortisation

RM mn

RM mn

* Others comprise revenue from Property Development, TM R&D, UTSB, MKL & P1


+5.4%

+45.6%

16

+10.7%

+24.6%

561507577

1,7761,871

QoQ

3,685 3,648 3,567 3,527 3,497 3,461 3,426 3,402

653 673 700 729 757 782 793 839

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Fixed Line UniFi

1,577 1,578 1,513 1,502 1,509 1,506 1,501 1,501

653 673 700 729 757 782 793 839

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15Streamyx UniFi

Physical Highlights

Broadband

188 187 189192 190

+2.0%

86 85 8190 89

Cu

sto

me

rs (

In t

ho

usa

nd

)A

RP

U (

RM

)

UniFi ARPU (Blended) Streamyx Net ARPU

Fixed Line

Fixed Line (DEL) ARPU

30 31 3031 31

-0.3%

+0.5%

Cu

sto

me

rs (

In t

ho

usa

nd

)A

RP

U (

RM

)

Higher Fixed Line customers due to Unifi

ARPU stable at RM29

Unifi continues to drive growth, with 839,000 customers (46,000 net adds QoQ)

Total broadband customers at 2.34mn

Steady Unifi and Streamyx ARPU

17

86

190

30

87

192

2,230 2,251 2,213 2,231 2,266 2,288 2,294

+4.9%

29

4,318 4,321 4,267 4,256 4,254 4,243 4,219

2,340

4,242

89

190

29

Broadband takeup remains strong, higher % HSBB customers YoY. ARPU levels are steady


Financial Review


Concluding Remarks

18

Key Takeaways


Continued growth despite challenging environment and heavy investments for future.

TR*M Index score of >72 points Global telco average of 69

Total Broadband customer base at over 2.34mn Driven by Unifi upselling (to Unifi Advance) More customers in HSBB bucket

12.1 sen per share or RM454.71mn 2nd interim dividend Total payout RM804.2mn, in line with commitment

Financial Performance

Broadband Champion

Shareholder Value

Customer-centricity

2016 Outlook and Business Priorities

The Year of Convergence – entry into mobility space

Aggressive rollout of major projects: HSBB2, SUBB

Focus on new platforms for growth

Operationally: focus on innovation, productivity enhancement, digitalization.

20

2016 Headline KPI

2016 2018

Revenue Growth

EBIT Growth

Customer Satisfaction Measure

1 Using TRiM index measuring end to end customer experience at all touch points. TRiM (Measuring, Managing and Monitoring) is astandardized indicator system. It analyzes, measures and portrays stakeholder relationships on the basis of standardized indicators.The TRI*M Index is an indicator of the status quo of a particular relationship. The index is made up of four points of view on thestakeholder relationship, e.g. for customer loyalty: overall rating, recommendation, repeat purchasing of product/services, and acompany's competitive advantage. The information is based on surveys/interviews on a sample customer base.”

*Note: Headline KPI are for TM Group excluding P1

21

3.5-4%

Maintain 2015 RM level 3-5%

7272

3-3.5%

Appendices

22

Normalised EBITDA

In RM mn 4Q15 3Q15 4Q14 FY2015 FY2014

Reported EBITDA 879.7 1,037.7 960.4 3,694.4 3,635.6

Non Operational


12.8 (109.8) (7.6) (95.4) (6.7)

Loss on Sale of Assets 0.2 - 0.1 0.6 0.4


- - - - (21.9)

MESRA Programme 77.4 - 111.2 77.4 111.2

Estimated cost and asset write-off due to flood - - 6.4 - 6.4

Normalised EBITDA 970.1 927.9 1,070.5 3,677.0 3,725.0

Normalised EBITDA Margin 30.2% 31.4% 33.5% 31.0% 32.8%

Reported EBITDA Margin 27.3% 35.2% 4Q14 31.2% 31.9%

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 – Negative Goodwill on acquisition of a new subsidiary )

23


Normalised EBITDA higher by 4.5% QoQ

Normalised PATAMI

In RM mn 4Q15 3Q15 4Q14 FY2015 FY2014

Reported PATAMI 192.5 166.8 218.3 700.3 831.8

Non Operational


8.0 (92.4) (7.6) (75.9) (6.7)

Other (Gain)/Losses & Impairment* 24.9 0.5 1.8 27.2 (4.4)

Unrealised FX (Gain)/Loss on Long Term loans

(24.5) 153.3 43.2 184.5 47.9

Impact of tax rate changes - - 3.9 - 3.9


- - - - (21.9)

MESRA Programme (Net of tax) 58.8 - 83.4 58.8 83.4

Estimated cost and assets write-off due to flood (Net of tax)

- - 7.2 - 7.2

Normalised PATAMI** 259.7 228.2 350.2 894.9 941.2

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

24


Normalised PATAMI higher by 13.8% QoQ

Cost % of Revenue

4Q15 3Q15 4Q14 FY2015 FY2014Comments

(4Q2015 vs. 3Q2015)

Operating Revenue (RM mil) 3,184.4 2,922.5 3,157.3 11,721.6 11,235.1 -

Other Operating Income(RM mil)

32.7 29.2 37.6 123.7 154.3 -

Direct Costs % 19.1 18.2 17.2 18.3 16.5 International outbound, USP provisionRM mil. 615.1 537.7 548.6 2,162.6 1,883.7

Manpower % 21.8 21.3 19.3 21.8 21.0 Skim MESRA and higher staff benefitsRM mil. 700.7 629.0 615.1 2,587.5 2,393.2

Supplies & Materials % 9.4 8.1 8.0 7.4 6.9 Higher materials cost at Managed AccountsRM mil. 301.1 239.1 255.7 875.1 782.0

Bad & Doubtful Debts % 0.0 1.9 3.3 1.4 2.0

-RM mil. 1.2 56.2 104.8 165.6 228.9

Marketing Expenses % 4.1 2.8 3.1 3.3 3.2-

RM mil. 133.1 83.2 98.6 394.5 361.6

Maintenance Cost % 6.6 6.0 8.0 6.6 7.4 Higher at TM Govt for MERS999 expansionRM mil. 213.5 177.9 256.8 778.1 846.2

Other Operating Costs % 11.6 6.5 11.1 10.0 11.0 Impact of forex gain forinternational trade settlementsRM mil. 372.7 190.9 354.9 1,187.5 1,258.2

Depreciation & Amortisation % 19.3 20.0 19.8 20.6 20.6 Consolidation of P1 plus accelerated depreciation of WiMaxequipmentRM mil. 620.5 588.7 631.0 2,437.3 2,341.3

Total (RM mil) 2,957.9 2,502.7 2,865.5 10,588.2 10,095.1

Total (%) 91.9 84.8 89.7 89.4 88.6


7,780.6

258.1

10,551.8

7,175.4

1,367.6

1,661.7

321.9

25.2

18,590.5

7,297.5

2,353.1

594.0

3,511.6

838.8

5,822.6

4,367.0

408.3

1,047.3

1,474.9

15,186.9

1,928.7

18,590.5

7,571.1

388.8

9,806.1

6,251.4

1,258.0

1,823.1

337.8

135.8

17,766.0

6,481.2

2,237.2

588.1

2,985.8

670.1

4,857.2

3,605.2

197.0

1,055.0

1,624.0

14,785.1

1,356.9

17,766.0

Group Balance Sheet

Shareholders’ Funds

Non-Controlling Interests

Deferred & Long Term Liabilities

Long Term Borrowings

Deferred Tax

Deferred Income

Derivative financial instruments

Trade and other payables

Current Assets

Trade Receivables

Other Receivables

Cash & Bank Balances

Others

Current Liabilities

Trade and Other Payables

Short Term Borrowings

Others

Net Current Assets/(Liabilities)

Property Plant & Equipment

Other Non-Current Assets

RM MillionAs at 31 Dec 2014At as 31 Dec 2015


26

172 200 190 608 694435 352 405

1,271 1,31746 27 35

133 124

4Q14 3Q15 4Q15 FY2014 FY2015Voice Data Others*

561577 5071,776 1,871

716 699 6942,889 2,824409 400 399

1,565 1,594766 796 814

2,937 3,160615 467 650

1,980 1,991

4Q14 3Q15 4Q15 FY2014 FY2015

Voice Data Internet Others*

2,4072,376 2,242

8,939 9,094

Note: Total revenue is after inter-co elimination. Revenue of product is before inter-co elimination

Mass Market & Managed Accounts

Revenue by Product

+1.3%RM mn

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

+7.4%

27

+1.7%

Global & Wholesale

RM mn

Revenue by Product

Note: Total revenue is after inter-co elimination. Revenue of product is before inter-co elimination

-2.8%+5.4%

+10.7%

THANK YOU

Investor RelationsLevel 11 (South Wing), Menara TMJalan Pantai Baharu50672 Kuala LumpurMalaysiaTel: (603) 2240 4848/ 7366 / [email protected]

FY 2015 RESULTS ANALYST BRIEFING - listed...

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