Chief Financial Officer’s Statement Q A How did Digi perform financially compared to FY2020? In FY2021, we delivered steady financial results within guidance amidst a challenging and unprecedented operating environment.The impact of volatile macroeconomic conditions on consumer confidence and business spend were partly mitigated by relevant government support initiatives, some of which also supported our sector. Although financial results declined marginally, we saw encouraging improvements in key revenue segments and continued improvements in operational efficiency.While total service revenue declined by 1.6%, we succeeded in building a strong momentum in our Postpaid, Fibre, and Business segments.We added approximately 253,000 new Postpaid customers to reach 3.3 million subscribers. In the fourth quarter of 2021, the Postpaid segment revenue was higher than the Prepaid revenue for the first time in FY2021. Nevertheless, we made significant progress in attracting higher quality Malaysian Prepaid subscribers. We also grew our Fibre subscriber base to approximately 13,000 customers in its first full year. Our Business segment realised a 4.8% revenue growth from large enterprises seeking advanced managed solutions and SMEs seeking to digitalise their businesses.All in all, total revenue upped 3.0% to RM6,336 million, as handset sales increased to support our growing Postpaid business, offsetting the decline in service revenue. In line with the growth in our device and digital business, our costs of goods sold (COGS) of RM1,754 million was 14.0% higher. On the operating expenditure (OPEX) front, we have also recorded a modest increase of 2.5% mainly driven by 4G network coverage expansion and site upgrade works to deliver improved network experience for our customers. OPEX-to-service-revenue ratio remained healthy at 29.5%, highlighting our prudent cost management and efficient operations. Despite the prolonged movement restrictions in Malaysia, we were able to minimise bad debt risks and improve collections.These were achieved by focusing on effective customer acquisition mechanisms and digitalising payment methods.As a result, we recorded a low expected credit loss (ECL) of RM55 million as compared to RM82 million a year ago. For the full 2021 year, earnings before interest, tax, depreciation and amortisations (EBITDA) reached RM3,009 million, a decline of 2.3%.The EBITDA margin was 47.5%, down from 50.0% in 2020. However, the underlying operating 2021 EBITDA margin was similar to 2020 excluding handset sales. Our conservative balance sheet and low gearing again secured a high EBITDA to profit after tax (PAT) conversion. PAT for 2021 reached RM1,162 million, a decline of 4.8% due to flow through from EBITDA, higher depreciation charges mainly caused by our 3G network shutdown and a small increase in finance costs. Despite the minor decline, our PAT margin remains among the best in the industry. Supported by a strong balance sheet and low gearing, we were able to comfortably maintain the near 100% dividend payout ratio, distributing RM1,158 million in dividends to our shareholders. Building on the execution momentum in 2021, we entered 2022 full of confidence, with a stronger and more resilient customer base, a well-invested and modernised asset base, and a solid capital structure. 16 Digi.Com Berhad At A Glance Message To Shareholders How We Create Value Strategies To Create Value
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