GROUP REVIEW
|
Financial Year Ended 31 March |
|
| GROUP |
2015
(S$ miIlion) |
2014
(S$ miIlion) |
Change (%) |
Change in constant currency (1) (%) |
| Operating revenue |
17,223 |
16,848 |
2.2 |
4.8 |
| EBITDA |
5,091 |
5,155 |
-1.3 |
1.3 |
| EBITDA margin |
29.6% |
30.6% |
|
|
| Share of associates' pre-tax profits |
2,579 |
2,201 |
17.2 |
20.7 |
| EBITDA and share of associates' pre-tax profits |
7,670 |
7,357 |
4.3 |
7.1 |
| EBIT |
5,508 |
5,224 |
5.4 |
8.3 |
| (exclude share of associates' pre-tax profits) |
5,508 |
5,224 |
5.4 |
8.3 |
| Net finance expense |
(216) |
(181) |
19.3 |
22.8 |
| Taxation |
(1,510) |
(1,428) |
5.7 |
8.4 |
| Underlying net profit (2) |
3,779 |
3,610 |
4.7 |
7.5 |
| Underlying earnings per share (S cents) |
23.7 |
22.7 |
4.7 |
7.5 |
| Exceptional items (post-tax) |
3 |
42 |
-94.1 |
-104.5 |
| Net profit |
3,782 |
3,652 |
3.5 |
6.2 |
| Basic earnings per share (S cents) |
23.7 |
22.9 |
3.5 |
6.2 |
| Share of associates' post-tax profits |
1,763 |
1,472 |
19.7 |
23.7 |
"Associate" refers to either an associate or a joint venture as defined under Singapore Financial Reporting Standards.
Notes:
(1) Assuming constant exchange rates for the Australian Dollar and/or regional currencies (Indian Rupee, Indonesian Rupiah, Philippine Peso and Thai Baht) from the previous year ended 31 March 2014 (FY 2014).
(2) Underlying net profit refers to net profit before exceptional items.
The Group delivered a strong set of results against industry challenges and currency headwinds. Net profit grew 3.5% to S$3.78 billion and in constant currency terms would have increased 6.2% from last year.
Operating revenue grew 2.2% to S$17.22 billion, despite the Australian Dollar weakening 4% against the Singapore Dollar. In constant currency terms, revenue would have increased 4.8% with growth across all the business units. EBITDA declined 1.3% at S$5.09 billion but in constant currency terms would have increased 1.3% despite operating losses from the digital businesses.
Group Consumer recorded increases in revenue and EBITDA of 1.4% and 1.0% respectively. In constant currency terms, Group Consumer’s revenue would have grown 4.8% and EBITDA would be up 4.6%. In Singapore, despite keen competition, EBITDA rose 4.0% mainly on 6.1% increase in revenue driven by strong handset sales and growth in TV partly offset by increased cost of sales and selling expenses. In Australia, EBITDA grew 4.9% on 4.6% increase in revenue underpinned by the improved mobile performance and lower mobile customer acquisition and retention costs.
Group Enterprise’s revenue was stable and EBITDA declined 1.6%. Adjusted for the fibre rollout business which was transferred to NetLink Trust from October 2014 (1), revenue grew 2.1% while EBITDA declined 2.1%. On the same basis and in constant currency terms, revenue grew 3.3% while EBITDA declined 1.4%, reflecting a cautious business environment and intense competition. In Singapore, excluding the fibre rollout business, revenue grew 4.5% with increased contributions from cloud and managed infocomm technology (ICT) services. In Australia, Optus Business’ revenue was stable and EBITDA improved by 1.7%. In April 2015, Group Enterprise entered into a conditional agreement to acquire 98% of the share capital of Trustwave Holdings, Inc., the largest global independent managed security services provider in North America with presence in Europe and Asia Pacific.
Group Digital Life’s revenue more than doubled to S$343 million with contributions from the new digital businesses acquired, Kontera Technologies, Inc. (“Kontera”), and Adconion Media, Inc. and Adconion Pty Limited (together, “Adconion”). Negative EBITDA was S$216 million, reflecting investments in digital businesses and initiatives. From 1 April 2015, Group Digital Life sharpened its strategy to focus on three key businesses – digital marketing, regional premium video, and advanced analytics, in addition to strengthening its role as Singtel’s digital innovation engine through Innov8.
The associates’ pre-tax contributions grew strongly by 17% to S$2.58 billion, and would have increased 21% excluding the currency translation impact with earnings growth led by Airtel India, Telkomsel and Globe.
Airtel delivered higher EBITDA on strong data growth and improved margin in India. The growth was partly offset by increased losses at Africa due to weaker operating performance compounded by increased fair value losses from the sharp depreciation of African currencies against the US Dollar. Telkomsel registered double-digit growth in revenue and EBITDA, driven by robust growth in voice and data services which was partly offset by higher network costs and depreciation charges. Globe recorded higher profits with continued growth momentum in mobile data services and customer gains. AIS reported stable profit with higher service revenue and regulatory costs savings being offset by higher depreciation and amortisation charges from 3G network investments.
Depreciation and amortisation charges increased mainly due to higher amortisation charges of intangibles from digital acquisitions and spectrum investments. Consequently, the Group’s EBIT rose 5.4% to S$5.51 billion, and would have been up 8.3% in constant currency terms.
Net finance expense increased 19% on higher interest expense and lower dividend income from Southern Cross Consortium, a joint venture of the Group.
The increase in tax expense was due to higher share of associates’ taxes resulting from increased associates’ profits as well as higher withholding taxes on increased dividends from the associates.
Underlying net profit (before exceptional items) grew 4.7% to S$3.78 billion and in constant currency terms would have increased 7.5% from last year.
The Group’s net exceptional gain of S$3 million was mainly due to S$65 million of gain on dilution of its equity interest in Singapore Post partially offset by staff restructuring costs of S$30 million, share of Airtel’s one-off items of S$17 million and share of Globe’s accelerated depreciation of S$11 million.
The Group has successfully diversified its earnings base through its expansion and investments in overseas markets. Hence, the Group is exposed to currency movements. On a proportionate basis if the associates are consolidated line-by-line, operations outside Singapore accounted for 76% of the Group’s proportionate revenue and 74% of proportionate EBITDA.
Note:
(1) Singtel relinquished its role as OpenNet’s key sub-contractor in respect of the fibre rollout and maintenance, following the integration of OpenNet Pte. Ltd. by NetLink Trust effective 1 October 2014. At the Group level, Singtel equity accounted for its 100% interest in NetLink Trust, an independently managed trust.
