Management Discussion and Analysis

GROUP
  Financial Year ended 31 March  
  2020(1)
(S$ million)		 2019
(S$ million)		 Change
(%)		 Change in
constant
currency(2)
(%)
Operating revenue 16,542 17,372 -4.8 -2.0
EBITDA 4,541 4,692 -3.2 **
EBITDA margin 27.5% 27.0%  
Share of associates' pre-tax profits(3) 1,743 1,536 13.5 8.8
EBIT 3,704 4,006 -7.5 -8.1
(exclude share of associates' pre-tax profits(3)) 1,961 2,470 -20.6 -18.6
Net finance expense (282) (355) -20.6 -17.1
Taxation (988) (850) 16.3 15.5
Underlying net profit(4) 2,457 2,825 -13.0 -14.0
Underlying earnings per share(4)(S cents) 15.1 17.3 -13.1 -14.0
Exceptional items (post-tax) (1,382) 270 nm nm
Net profit 1,075 3,095 -65.3 -65.8
Basic earnings per share (S cents) 6.6 19.0 -65.3 -65.8
Share of associates' post-tax profits(3) 1,277 1,383 -7.7 -11.6
“Associate” refers to an associate and/or a joint venture under SFRS(I).

“**” denotes less than +/-0.05%.
“nm” denotes not meaningful.

Notes:
  • Includes the effects from adoption of Singapore Financial Reporting Standards (International) (SFRS(I)) 16, Leases, from 1 April 2019 on a prospective basis. The adoption has resulted in lower operating lease expenses and increases in depreciation charge and interest expense.
  • Assuming constant exchange rates for the Australian Dollar, United States Dollar and/or regional currencies (Indian Rupee, Indonesian Rupiah, Philippine Peso and Thai Baht) from the previous year ended 31 March 2019 (FY 2019).
  • Excludes the Group’s share of the associates’ significant one-off items which have been classified as exceptional items of the Group.
  • Underlying net profit refers to net profit before exceptional items.

The Group faced a challenging year in FY 2020 marked by structural shifts in the industry, weak economic conditions, adverse regulatory outcomes in India, and the onset of COVID-19 from February 2020. Despite these challenges, the Group remained resilient and gained customer market share in mobile and fixed services in Singapore, and maintained its enterprise market leadership in Singapore and the Asia Pacific region. The Group also strengthened its network position with ongoing investments, and won 5G spectrums in Singapore and Thailand, as well as launched 5G services in Australia and the Philippines.

In constant currency terms, operating revenue slid 2.0% on lower mobile service revenue and equipment sales across Singapore and Australia, aggravated by COVID-19. EBITDA, however, was stable from continued cost management, wage credits from the Singapore government and lower operating lease expenses under the new lease accounting standard. With a 6% depreciation in the Australian Dollar, operating revenue and EBITDA fell 4.8% and 3.2% respectively.

Including depreciation and amortisation charges which rose 16% (21% in constant currency terms) mainly from right-of-use assets, the Group’s EBIT (before associates) declined 21% and would have been down 19% in constant currency terms.

The Australia business posted lower operating revenue and earnings with its consumer business impacted by low margins from NBN resale and equipment sales although this was partly mitigated by higher NBN migration revenues. Its enterprise business was weighed down by lower legacy services and intense price competition.

The post-tax underlying profit contributions from the associates fell 7.7% on higher net loss from Airtel which was partly offset by higher profits from Telkomsel, AIS and Globe. While operating performance improved in India and Africa, Airtel’s net loss widened due to higher finance costs, foreign exchange losses and lower tax credits.

Net finance expense fell 21% despite higher interest expense on lease liabilities as the Group recorded S$148 million of income from its investment as a pre-IPO shareholder in Airtel Africa.

With the weakness in the Australia business and higher net losses at Airtel, underlying net profit declined 13%. Net exceptional loss was S$1.38 billion for the year compared to a net exceptional gain of S$270 million last year. The net exceptional loss arose mainly from the share of Airtel’s exceptional charges for regulatory costs, including the adjusted gross revenue matter and a one-time spectrum charge. Consequently, the Group recorded a net profit of S$1.08 billion, down 65% from FY 2019.

The Group has successfully diversified its earnings base through its expansion and investments in overseas markets. On a proportionate basis if the associates are consolidated line-by-line, operations outside Singapore accounted for slightly over three-quarters of both the Group’s proportionate revenue and EBITDA.

The Group’s combined mobile customer base reached 705 million, up 13 million from a year ago, mainly from Airtel.