Results for the Quarter Ended June 30, 2011

Size: px

Start display at page:

Download "Results for the Quarter Ended June 30, 2011"

Oscar Matthews
5 years ago
Views:

1 August 4th, 2011 Results for the Quarter Ended June 30, 2011 K-IFRS, Non-audited Seoul, Korea, August 4, 2011 SK Telecom Co., Ltd. (KSE: , NYSE: SKM) ( SK Telecom ), the leading wireless telecommunications company in Korea, today announced the results of its operations for the quarter ended June 30, This material contains forward-looking statements with respect to the financial condition, results of operations and business of SK Telecom and its subsidiaries (the Company ) and plans and objectives of the management of the Company. Statements that are not historical facts, including statements about the Company s beliefs and expectations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company to be materially different from any future results or performance expressed or implied by such forward-looking statements. The Company does not make any representation or warranty, expressed or implied, as to the accuracy or completeness of the information contained in this management presentation, and nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future. Such forward-looking statements were based on current plans, estimates and projections of the Company and the political and economic environment in which the Company will operate in the future, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events. Additional information concerning these and other risk factors are contained in the Company s latest annual report on Form 20-F and in the Company s other filings with the U.S. Securities and Exchange Commission (SEC).

2 Contents I. Financial Highlights - Consolidated 1 II. Financial Results - Consolidated Income Statement 2. Balance Sheet III. SK Telecom Operating Results.. 6 IV. Appendix Consolidated Income Statement, Balance Sheet 2. Non-consolidated Income Statement, Balance Sheet V. IR Contacts

3 I. Financial Highlights - Consolidated Summary of Income Statement Operating revenue 4,041 3, ,041 3, Operating expenses 3,381 3, ,381 3, Operating income Operating margin 16.3% 16.9% -0.6%p 16.3% 15.7% 0.6%p Net profit or loss in non-operating items Income from continuing operations before income tax (12) (39) 28 (12) 155 (166) (121) Consolidated net income (72) Net margin 11.5% 11.7% -0.2%p 11.5% 13.7% -2.2%p Majority interests (75) Minoriry interests (2) (9) 6 (2) (5) 3 EBITDA 1) 1,265 1, ,265 1, EBITDA margin 31.3% 30.6% 0.7%p 31.3% 30.7% 0.6%p 1) EBITDA = operating income + depreciation (including R&D related depreciation) Summary of Balance Sheet Total assets 22,612 23,210 (598) 22,612 22,937 (325) Total liabilities 10,007 11,302 (1,295) 10,007 10,650 (643) Total shareholders' equity 12,605 11, ,605 12, Debt/Equity ratio 41.4% 56.8% -15.4%p 41.4% 44.6% -3.3%p 1

4 II. Financial Results (Consolidated) 1. Income Statement A. Operating revenue Operating revenue* 4,041 3, ,041 3, Operating revenue (SK Telecom)* Operating revenue (Other consolidated companies)* 3,140 3, ,140 3, * After offsetting intercompany transaction Operating revenue - The YoY and QoQ increase was mainly due to increase in the operating revenue of SK Telecom by smartphone subscriber increase, and growth in PS&M's product revenue from smartphone utilization. - Revenue of SK Telecom is 3,140 billion won, 78%, and that of other consolidated companies is 901 billion won, 22% of total consolidated revenue respectively. SK Telecom operating revenue (Non-consolidated) Mobile service revenue 2,723 2, ,723 2, Interconnection revenue (6) New business & others* Total operating revenue 3,194 3, ,194 3, * Revenue from leased line business, fixed-line resale, solution/hardware sales, online shopping mall, motion film distribution business, etc. 1) Mobile service revenue - The YoY and QoQ increase was due to increase in the number of smartphone subscribers and in call traffic volume from the added number of business days. 2) Interconnection revenue - The YoY decrease was mainly due to decrease in the interconnection rate. - The QoQ increase was mainly due to increase in call traffic volume between mobile to mobile. 3) New business & others - The YoY and QoQ increase was mainly due to improvement in new businesses including broadband resale & online open market, "11 St." 2

5 B. Operating expenses Labor cost (60) Commissions paid 1,425 1,442 (17) 1,425 1, Advertising (13) Depreciation 1) Network interconnection (17) Leased line Frequency usage fees (4) Others Operating expenses 3,381 3, ,381 3, ) Includes R&D related depreciation 1) Labor cost - The YoY increase was due to establishment of marketing and network outsourcing companies in July, '10. - The QoQ decrease was due to incentive bonus payment of SK Telecom in 1Q '11. 2) Commissions paid - The YoY decrease was mainly due to SK Telecom's marketing expense reduction resulted from the introduction of competitive handset models, such as Galaxy S2. - The QoQ increase was due to increase in commissions related to handset installment receivables, and increase in subscribers of SK Broadband. 3) Advertising cost - The YoY decrease was mainly due to World cup related promotional activities in 2Q '10 of SK Telecom. - The QoQ increase was mainly due to increase in new business and T-brand related promotional activities of SK Telecom. 4) Depreciation - The YoY and QoQ increase was mainly due to network related capital investments. 3

6 C. Non-operating items Interest income (20) (7) Interest expenses (28) (10) Net profit or loss in other non-operating items Net profit or loss in non-operating items 17 (2) (169) (12) (39) 28 (12) 155 (166) 1) Interest income / expenses - The YoY decrease in interest income was due to decrease in handset installment receivables of SK Telecom. - The YoY and QoQ decrease in interest expenses was due to decrease in average level of borrowings of SK Telecom. 2) Net profit or loss in other non-operating items - The QoQ decrease was mainly due to reflection of gain from disposition of long-term investment assets related to SK C&C(4.1%) in 1Q '11. 4

7 2. Balance Sheet Total assets 22,612 23,210 (598) 22,612 22,937 (325) Current assets 6,098 6,971 (873) 6,098 6,921 (823) Cash & marketable securities 1,785 1, ,785 2,077 (291) Non-current assets 16,514 16, ,514 16, Property & equipment 8,542 7, ,542 8, Intangible assets 3,450 3,589 (139) 3,450 3,532 (82) Investment assets 3,050 2, ,050 3,153 (103) Total liabilities 10,007 11,302 (1,295) 10,007 10,650 (643) Current liabilities 5,773 6,082 (309) 5,773 6,820 (1,047) Short-term borrowings (149) (174) Current portion of long-term debt 1) 1,316 1,734 (418) 1,316 1,589 (273) Non-current liabilities 4,234 5,220 (985) 4,234 3, Bonds payable & long-term borrowings 3,407 4,538 (1,131) 3,407 3, Total shareholders' equity 12,605 11, ,605 12, Debt/Equity ratio 2) 41.4% 56.8% -15.4%p 41.4% 44.6% -3.3%p 1) Includes current portion of long-term payables related to payment of WCDMA license fee 2) Debt/Equity ratio = interest-bearing financial debt / shareholders' equity * Interest-bearing financial debt = short-term borrowings + current portion of long-term debt + bonds payable & long-term borrowings 1) Assets - The QoQ decrease in cash & marketable securities mainly resulted from SK Telecom's cash dividend payout. - The YoY and QoQ decrease in current assets was mainly due to decrease in SK Telecom's accounts receivable which resulted from the changing of the purchasing entitiy of handset installment receivables. - The increase in property & equipment due to increased network investments and the increase in investment assets due to acquiring shares of entities including Packet One resulted in a YoY increase in non-current assets. 2) Liabilities - Current liabilities decreased YoY due to decrease in borrowings related to the changing of the handset installment receivable purchasing structure, and the QoQ decrease was mainly due to the cash dividend payout in April. - Non-current liabilites decreased YoY due to increase in current portion of long-term debt and repayment of long-term borrowings of SK Telecom, and increased QoQ mainly due to increase in long-term payables related to SK Telecom's 800Mhz spectrum reallocation. 3) Shareholders' equity - The YoY increase was mainly due to increase in retained earnings. 5

8 III. SK Telecom's Operating Results (Non-consolidated) Q2 '11 Q2 '10 YoY Q2 '11 Q1 '11 QoQ Subscribers ('000) 26,269 25,146 1,123 26,269 25, Net adds (42) (3) Activations 2,418 2, ,418 2, Deactivations 2,137 1, ,137 1, Monthly churn rate (%) 2.7% 2.6% 0.1%p 2.7% 2.5% 0.2%p Average subscribers ('000) 26,134 24,996 1,138 26,134 25, ARPU (KRW) Total ARPU 40,738 41,051 (313) 40,738 40, Billing ARPU 1) 33,592 34,695 (1,103) 33,592 33, ) The billing ARPU excludes sign-up fee from mobile service revenue. Other Main Items Marketing expenses* (70) % of revenue 25.6% 28.9% -3.2%p 25.6% 25.1% 0.6%p Capital expenditure % of revenue 17.5% 9.7% 7.8%p 17.5% 9.6% 7.9%p Interest-bearing debt 3,312 4,801 (1,489) 3,312 3,701 (389) Debt/Equity ratio 28.0% 44.0% -16.0%p 28.0% 32.2% -4.2%p * Marketing expense = marketing related commission + advertising expenses 6

IV. Appendix - Consolidated Statement of Income (K-IFRS) (KRW mn) Q2 '11 Q2 '10 YoY Q2 '11 Q1 '11 QoQ Operating revenue 4,040,953 3,823,587 217,366 4,040,953 3,908,861 132,092 Operating expenses

9 IV. Appendix - Consolidated Statement of Income (K-IFRS) (KRW mn) Q2 '11 Q2 '10 YoY Q2 '11 Q1 '11 QoQ Operating revenue 4,040,953 3,823, ,366 4,040,953 3,908, ,092 Operating expenses 3,381,227 3,176, ,571 3,381,227 3,294,524 86,703 Labor cost 253, ,092 57, , ,585 (60,206) Commissions paid 1,425,181 1,442,153 (16,972) 1,425,181 1,360,036 65,145 Advertising 85,277 98,485 (13,208) 85,277 55,275 30,001 Depreciation 1) 605, ,488 81, , ,079 19,661 Network interconnection 323, ,050 (16,547) 323, ,741 4,762 Leased line 66,243 63,136 3,107 66,243 65, Frequency usage fees 44,192 40,838 3,354 44,192 47,948 (3,756) Others 577, , , , ,912 30,800 Operating income 659, ,931 12, , ,338 45,389 EBITDA 1,265,466 1,171,419 94,048 1,265,466 1,200,417 65,050 EBITDA margin 31.3% 30.6% 0.7%p 31.3% 30.7% 0.6%p Net profit or loss in non-operating items (11,660) (39,170) 27,510 (11,660) 154,563 (166,223) Interest income 41,896 61,602 (19,706) 41,896 48,647 (6,750) Interest expenses 71,014 99,247 (28,233) 71,014 80,944 (9,930) Profit or loss in other non-operating items 17,457 (1,526) 18,983 17, ,861 (169,404) Income from continuing operations before tax 648, ,761 40, , ,901 (120,835) Consolidated net income 465, ,889 16, , ,268 (71,832) Majority interests 467, ,655 10, , ,534 (74,740) Minority interests (2,358) (8,766) 6,408 (2,358) (5,266) 2,908 1) Includes R&D related depreciation 7

10 IV. Appendix - Consolidated Balance Sheet (K-IFRS) (KRW mn) Q2 '11 Q2 '10 YoY Q2 '11 Q1 '11 QoQ Total assets 22,612,315 23,210,035 (597,719) 22,612,315 22,937,219 (324,904) Current assets 6,098,155 6,971,484 (873,329) 6,098,155 6,921,200 (823,045) Cash and marketable securities 1) 1,785,067 1,610, ,164 1,785,067 2,076,556 (291,489) Accounts receivable 3,794,094 4,513,541 (719,447) 3,794,094 4,032,991 (238,897) Short-term loans 101, ,186 (278) 101, ,375 (8,466) Inventories 170, ,231 36, , ,924 15,395 Other current assets 246, ,622 (363,855) 246, ,355 (299,588) Non-current assets 16,514,160 16,238, ,609 16,514,160 16,016, ,141 Property & equipment 8,541,536 7,630, ,685 8,541,536 8,030, ,020 Intangible assets 3,450,246 3,589,272 (139,026) 3,450,246 3,532,063 (81,817) Investment assets 3,049,926 2,886, ,196 3,049,926 3,152,844 (102,918) Other non-current assets 1,472,452 2,131,697 (659,245) 1,472,452 1,300, ,857 Total liabilities 10,007,201 11,301,937 (1,294,737) 10,007,201 10,650,202 (643,001) Current liabilities 5,772,938 6,082,178 (309,241) 5,772,938 6,819,594 (1,046,656) Short-term borrowings 506, ,984 (149,454) 506, ,955 (174,425) Accounts payable 1,297,973 1,250,309 47,664 1,297,973 1,772,063 (474,090) Current portion of long-term debt 1,316,454 1,734,473 (418,019) 1,316,454 1,589,443 (272,989) Other current liabilities 2,651,981 2,441, ,568 2,651,981 2,777,133 (125,152) Non-current liabilities 4,234,263 5,219,759 (985,496) 4,234,263 3,830, ,655 Bonds payable & long-term borrowings 3,406,575 4,537,890 (1,131,315) 3,406,575 3,230, ,436 Long-term payables - other 234,782 54, , ,782 37, ,383 Post-employment benefit obligation 96,529 71,768 24,761 96,529 83,047 13,481 Other non-current liabilities 496, ,249 (58,871) 496, ,023 16,355 Total shareholders' equity 12,605,115 11,908, ,017 12,605,115 12,287, ,097 Capital stock 44,639 44,639-44,639 44,639 - Capital surplus 2,925,005 2,922,960 2,045 2,925,005 2,925,390 (385) Retained earnings 11,126,255 9,789,519 1,336,736 11,126,255 10,662, ,479 Capital adjustments (2,997,915) (2,757,386) (240,529) (2,997,915) (2,997,892) (23) Other comprehensive income/loss 2) 442, ,480 (351,542) 442, ,238 (139,301) Minoriry interests 1,064,193 1,113,885 (49,692) 1,064,193 1,069,865 (5,672) 1) Cash & marketable securities: includes cash & cash equivalent, marketable securities & short-term financial instruments 2) Other comprehensive income/loss: includes gains or losses on valuation of investment securities and derivatives 8

11 IV. Appendix - Non-consolidated Statement of Income (K-IFRS) (KRW mn) Q2 '11 Q2 '10 YoY Q2 '11 Q1 '11 QoQ Operating revenue 3,193,893 3,078, ,525 3,193,893 3,132,148 61,745 Operating expenses 2,562,855 2,433, ,749 2,562,855 2,534,168 28,688 Labor cost 114, ,296 (3,917) 114, ,458 (68,079) Commissions paid 1,278,371 1,228,572 49,799 1,278,371 1,234,919 43,452 Marketing commissions 759, ,758 (49,481) 759, ,971 9,305 Other commissions 519, ,815 99, , ,948 34,146 Advertising 59,336 79,570 (20,234) 59,336 35,388 23,948 Depreciation 1) 467, ,164 83, , ,180 19,390 Network interconnection 249, ,777 (18,496) 249, ,494 6,786 Leased line 52,576 45,528 7,048 52,576 50,430 2,146 Frequency usage fees 43,695 40,285 3,410 43,695 47,423 (3,728) Others 297, ,916 28, , ,876 4,772 Operating income 631, ,262 (14,223) 631, ,980 33,058 EBITDA 1,098,609 1,029,425 69,184 1,098,609 1,046,161 52,448 EBITDA margin 34.4% 33.4% 1.0%p 34.4% 33.4% 1.0%p Net profit or loss in non-operating items 18,248 (25,972) 44,220 18, ,058 (172,810) Interest income 35,306 54,901 (19,595) 35,306 43,015 (7,709) Interest expenses 44,827 69,085 (24,258) 44,827 55,083 (10,257) Net profit or loss in other non-operating items 27,769 (11,788) 39,557 27, ,126 (175,357) Income from continuing operations before tax 649, ,290 29, , ,038 (139,752) Net income 474, ,885 12, , ,672 (86,285) 1) Includes R&D related depreciation 9

12 IV. Appendix - Non-consolidated Balance Sheet (K-IFRS) (KRW mn) Q2 '11 Q2 '10 YoY Q2 '11 Q1 '11 QoQ Total assets 19,030,266 19,686,241 (655,975) 19,030,266 19,567,287 (537,021) Current assets 4,509,549 5,573,637 (1,064,088) 4,509,549 5,419,524 (909,975) Cash and marketable securities 1) 1,242, , ,480 1,242,936 1,478,832 (235,896) Accounts receivable 3,036,015 4,017,325 (981,310) 3,036,015 3,440,024 (404,009) Short-term loans 92,530 90,633 1,897 92,530 97,717 (5,187) Inventories 14,274 15,324 (1,050) 14,274 13, Other current assets 123, ,899 (400,105) 123, ,075 (265,281) Non-current assets 14,520,716 14,112, ,112 14,520,716 14,147, ,953 Property & equipment 6,024,825 5,003,927 1,020,899 6,024,825 5,468, ,819 Intangible assets 2,596,870 2,645,685 (48,816) 2,596,870 2,668,147 (71,278) Investment assets 5,261,425 5,085, ,131 5,261,425 5,353,474 (92,049) Other non-current assets 637,596 1,377,698 (740,102) 637, ,136 (20,539) - - Total liabilities 7,191,575 8,775,961 (1,584,387) 7,191,575 8,073,570 (881,996) Current liabilities 3,830,117 4,357,129 (527,012) 3,830,117 4,630,040 (799,922) Short-term borrowings Accounts payable 1,195,162 1,321,792 (126,631) 1,195,162 1,887,179 (692,017) Current portion of long-term debt 709,003 1,200,093 (491,090) 709, ,164 (113,161) Other current liabilities 1,925,953 1,835,244 90,709 1,925,953 1,920,696 5,256 Non-current liabilities 3,361,457 4,418,832 (1,057,375) 3,361,457 3,443,531 (82,074) Bonds payable & long-term borrowings 2,620,069 3,767,314 (1,147,246) 2,620,069 2,896,251 (276,182) Long-term payables 230,606 50, , ,606 33, ,350 Post-employment benefit obligation 36,898 32,585 4,313 36,898 31,373 5,525 Other non-current liabilities 473, ,811 (94,927) 473, ,650 (8,766) - - Total shareholders' equity 11,838,691 10,910, ,411 11,838,691 11,493, ,974 Capital stock 44,639 44,639-44,639 44,639 - Capital surplus 2,920,900 2,920,900-2,920,900 2,920,900 - Retained earnings 11,256,596 9,826,504 1,430,092 11,256,596 10,783, ,845 Capital adjustments (2,945,544) (2,739,237) (206,307) (2,945,544) (2,945,544) - Other comprehensive income/loss 2) 562, ,473 (295,374) 562, ,970 (127,871) 1) Cash & marketable securities: includes cash & cash equivalent, marketable securities & short-term financial instruments 2) Other comprehensive income/loss: includes gains or losses on valuation of investment securities and derivatives 10

13 V. IR Contacts IR 담당자전화번호 주소 Ho Sook Hwang 02) Won Tuh Chung 02) Sang Yun Lee 02) Jun Kim 02) Hyunyoung Jung 02)

Results for the Year Ended December 31, January 28 th, 2014

Results for the Year Ended December 31, 2013 January 28 th, 2014 0 Disclaimer This material contains forward-looking statements with respect to the financial condition, results of operations and business