FY2023 Full-Year Financial Results Briefing

Good morning. A warm welcome to Singtel's results briefing for the full year ended 31 March 2023. I am Adrian, head of Investor Relations at Singtel. Joining us today for the call are Mr Yuen Kuan Moon, Group CEO; Mr Arthur Lang, Group CFO; Ms Kelly Bayer Rosmarin, CEO Optus; Mr Bill Chang, CEO Group Enterprise and Regional Data Centre Business; Ms Anna Yip, CEO Consumer Singapore; and Mr Ng Kuo Pin, CEO NCS.

Before we start taking questions, I would like to invite Moon to share some highlights from this set of results. Moon, please.

Good morning. Thank you for joining us. I will start with an overview of our performance for 2023 followed by updates on our strategic reset before Arthur talks about our capital management approach.

First, the key highlights. Our core business performed strongly with EBIT up 15%, underpinned by robust mobile growth on roaming recovery, price lifts, and rising 5G adoption and an increasing demand for ICT services.

Regional associates' profits before tax also grew 15% as they benefited from a mobile rebound, particularly in India, for pursuing new fixed broadband opportunities.

The global digitalisation trend continues to be a driver for our growth engines. To that end, we are positioning ourselves for the data boom by scaling our regional data centre portfolio with our entry into Thailand and Indonesia. NCS made further inroads in Australia and enterprise space which saw record sales bookings of $3.2 billion.

We also generated over $5 billion of free cash flow and capital recycled, further strengthening our balance sheet for growth.

Singtel FY23 Results Briefing Conference Call 25 May 2023 Excluding forex movements, NBN migration revenue, and Amobee, revenue increased 5% with sustained growth in mobile and ICT services. EBITDA and EBIT also grew on the same basis as the return of roaming, price uplifts and costs savings boosted margins.

Contributions from regional associates rose sharply with Airtel's continued growth as well as rationalisation of competition in other markets. Taken together, the Group delivered a 7% increase in underlying net profit or 11% in constant currency.

Net profit increased 14% on higher exceptional gains of S$172 million as Airtel disposal gains were largely matched off against an impairment of Optus’ goodwill in financial year '23.

We will be paying a total dividend of $0.149, an increase of 60% from last year, representing a 5.8% yield. This is underpinned by higher ordinary dividends of $0.099, of better business performance, and robust financial standing. This represents 80% of our underlying net profit at the high end of our dividend policy. This will be supplemented by the additional payout of $0.05 from our asset recycling initiatives which was announced in our half-year results.

We will continue to take a holistic approach to shareholder returns, with payouts funded by operating cash flow and any excess proceeds from capital recycling, after funding growth initiatives and repaying debt.

Our financial position remains robust. This the second consecutive year we have generated over $5 billion of cash, allowing us to reduce gearing and build up sizable reserves. The majority of our debt is also on fixed rates with tenures of over five years. This places us in good stead as we continue our strategic reset and investments for growth. I will now pass the time to Arthur to share on our capital management approach.

Thank you, Moon. I will now cover briefly basically how we drive total shareholder returns by looking at the metrics that we use to drive the individual businesses and how we measure the performance of them. I think on the chart on the left, for the core business, which includes the Singapore business, the Optus business in Australia, as well as our regional associates, we will continue to focus on driving profitability to support higher dividends. This will be underpinned by growing revenues, reducing costs and managing the capital intensity of the individual businesses.

For the growth engines, which right now we classify under - we put NCS as well as our data centre businesses under the growth engine category - our key focus will be to improve the IRRs, the internal rates of returns of these businesses, as well as establishing capital partnerships to support our growth and to scale up.

To ensure success, we will keep a close watch over the asset yields of these investments as well as deploy the capital efficiently.

This flows through to our ability to deliver sustainable dividends without sacrificing on growth. On the left, dividends are paid out of operating cash flows which is ringfenced together with CapEx for regular network spectrum and interest payments, and on the right, you'll see growth investments like 5G and data centres will primarily be funded using proceeds from asset recycling as per what you see on the right chart. Now, in the medium term over the next few years we expect to recycle another $6 billion in the midterm to fund these growth initiatives.

Singtel FY23 Results Briefing Conference Call 25 May 2023 Our core CapEx will be stable in fiscal year '24 as you look at our increase – as we increase 5G investments in Australia, but they are offset against the lower network investments in Singapore as we have completed the rollout here in Singapore.

We also have digital infrastructure CapEx of about $500 million for new data centres and satellites which has really been accounted for – if you look at the previous slide we have set aside capital to fund that growth, which is in the Pot 2 cash.

We have set ourselves a low double-digit ROIC target in the midterm. Much of this will be underpinned by improvements in NCS, Optus, and Trustwave. For NCS, we have to focus on growing the international and enterprise businesses and really focus in on optimising our cost to serve.