|
Type |
Announcement |
| Subject | TELEKOM MALAYSIA BERHAD("TM") - ECONOMIC PROFIT FOR FIRST QUARTER ENDED 31 MARCH 2006 |
Contents :
In an effort to enhance greater transparency to the public, Telekom Malaysia Berhad (“TM”) wishes to announce its Economic Profit for the 1st Quarter ended 31 March 2006 (1Q06). Quarterly announcement of TM’s economic profit/(loss) is part of the broader performance management framework that TM has in place, as prescribed under the Government Linked Company (“GLC”) Transformation programme, and is disclosed on a voluntary basis.
Economic Profit is a yardstick to measure shareholder value as it provides a more accurate picture of underlying economic performance of TM Group vis-à-vis its financial accounting reports.
TM: 1Q06 ECONOMIC PROFIT STATEMENT
 |
INDIVIDUAL PERIOD
|
CUMULATIVE PERIOD
|
||
|
Current Year Quarter
1Q06 RM’Mn |
Preceding Year Corresponding Quarter
1Q05 RM’Mn |
Current Year To Date
1Q06 RM’Mn |
Preceding Year Corresponding Period
1Q05 RM’Mn |
| Earnings before Interest & Taxes (EBIT) |
927.7
|
634.4
|
927.7
|
634.4
|
| Adjusted Tax |
259.8
|
177.6
|
259.8
|
177.6
|
| Net Operating Profit less Adjusted Taxes (NOPLAT) |
667.9
|
456.8
|
667.9
|
456.8
|
| Average Invested Capital * |
5,187.3
|
4,786.8
|
5,187.3
|
4,786.8
|
| Weighted Average Cost of Capital (WACC) |
8.53%
|
8.97%
|
8.53%
|
8.97%
|
| ECONOMIC CHARGE |
442.5
|
429.4
|
442.5
|
429.4
|
| ECONOMIC PROFIT |
225.4
|
27.4
|
225.4
|
27.4
|
* Average Invested Capital is pro-rated to correspond to the reported earnings period.
TM’s 1Q06 Economic Profit has significantly improved by 722.6% quarter-on-quarter to RM225.4 million as
compared to 1Q05 of RM27.4 million.
Net Operating Profit Less Adjusted Taxes (NOPLAT)
TM recorded a higher NOPLAT of RM667.9 million for 1Q06, a 46.2% increase from RM456.8 million
Net Operating Profit Less Adjusted Taxes (NOPLAT)
TM recorded a higher NOPLAT of RM667.9 million for 1Q06, a 46.2% increase from RM456.8 million
registered in 1Q05.
The increase in NOPLAT was achieved on the back of RM3.79 billion revenue, a growth of 10.9% from
The increase in NOPLAT was achieved on the back of RM3.79 billion revenue, a growth of 10.9% from
RM3.42 billion registered in the same quarter last year. This was mainly attributed to higher revenue from
mobile, Internet and multimedia segments. Significant increase in mobile revenue was mainly contributed
by the consolidation of PT Excelcomindo Pratama Tbk (XL), which became a subsidiary in the fourth
quarter 2005.
EBIT for 1Q06 had improved due to lower operating cost of 4.9% from 1Q05 to 1Q06 on the back of higher
EBIT for 1Q06 had improved due to lower operating cost of 4.9% from 1Q05 to 1Q06 on the back of higher
revenue. The lower operating cost was mainly attributed to the following:
-
1. Foreign exchange gain,
2. Lower bad debts due to better collection and improvement in billing systems, and
3. Lower manpower cost due to the absence of voluntary separation expenses, which was incurred
in the corresponding period last year.
The lower operating cost was achieved despite the consolidation of operating expenses of XL, which
became a subsidiary in October 2005.
Economic Charge
TM recorded a marginal increase of 3.0% in Economic Charge to RM442.5 million for 1Q06 as compared
Economic Charge
TM recorded a marginal increase of 3.0% in Economic Charge to RM442.5 million for 1Q06 as compared
to 1Q05 of RM429.4 million.
Average Invested Capital had increased by RM400.5 million due to increase in average net Property, Plant
Average Invested Capital had increased by RM400.5 million due to increase in average net Property, Plant
and Equipment (PPE) and average net working capital.
Positively, TM enjoyed a lower WACC of 8.53% in 1Q06 versus 8.97% during the corresponding period last
Positively, TM enjoyed a lower WACC of 8.53% in 1Q06 versus 8.97% during the corresponding period last
year. Improvement in WACC was primarily attributed to:
a) Utilisation of more debt; and
b) Lower cost of equity due to reduction in risk free rate (4.75% to 4.18%).
___________________________________________________________________________
Notes: Assumptions on parameters used in the Economic Profit calculations:
1) The cost of equity of the Company is calculated based on the following formula: -
Cost of Equity = (Beta*Market Risk Premium) + Risk Free Rate
2) The Beta used in the calculation is the 5-year adjusted Bloomberg Beta as follows: -
a) Utilisation of more debt; and
b) Lower cost of equity due to reduction in risk free rate (4.75% to 4.18%).
___________________________________________________________________________
Notes: Assumptions on parameters used in the Economic Profit calculations:
1) The cost of equity of the Company is calculated based on the following formula: -
Cost of Equity = (Beta*Market Risk Premium) + Risk Free Rate
2) The Beta used in the calculation is the 5-year adjusted Bloomberg Beta as follows: -
|
Beta |
| 1Q06 | 1.10 |
| 1Q05 | 1.09 |
3) The risk free rate is the rate of return of a 10-year Malaysian Government Securities (MGS) at the close of
the reporting period as follows: -
| As at: | Risk Free Rate (%) |
| 31 Mar 2006 | 4.18 |
| 31 Mar 2005 | 4.75 |
4) The market risk premium is assumed at 5.2%, which represents the market return in excess of the
return earned on risk free asset.
Announcement Info
| Company Name | TELEKOM MALAYSIA BERHAD |
| Stock Name | TM |
| Date Announced | 29 May 2006 |
| Category | General Announcement |
| Reference No | TM-060529-67A24 |