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StarHub's 2HFY2022 earnings drop 98.4% y-o-y on higher expenses from impairment losses

Khairani Afifi Noordin
·2-min read

StarHub is declaring a final dividend of 2.5 cents per share.

StarHub has reported earnings of $1.3 million for its 2HFY2022 ended December, a 98.4% drop y-o-y due to higher non-operating and operating expenses.

For FY2022, the company reported a 58.3% y-o-y decline in earnings at $62.2 million.

Non-operating expenses were higher y-o-y at $60.1 million in 2HFY2022 and $57.1 million for the full year, mainly due to the recognition of impairment loss of goodwill and intangible assets of $21.6 million.

This is the result of the discontinuation of one of its unit Strateq’s business lines as well as $38.5 million impairment of network assets related to the shutdown of StarHub’s legacy infrastructure.

The expenses are partially offset by the absence of $3 million in fair value loss recognised from the financial liabilities measured at fair value associated with the contingent consideration of Strateq in 2021.

Excluding the $30.8 million in non-recurring provisions relating to its DARE+ initiatives, non-operating items and corresponding tax effects, the company’s FY2022 NPAT would have been $114.2 million, representing a 30.7% decline y-o-y.

“We have made initial investments and non-recurring provisions which, while impacting our bottomline performance in the short term, are necessary for us to accelerate growth on a leaner, smarter cloud-enabled and digitally-centric platform in the mid to long-term,” says CEO Nikhil Eapen.

“We continue to strive towards enhancing total shareholder returns by focusing on our DARE+ growth and value creation. Our goal remains unchanged — $500 million in cumulative gross profit growth and cost savings between FY2021 and FY2026, with stable-state incremental NPAT run rate of $80 million per annum from FY2026,” he adds.

Total revenue for the FY2022 stood at $2.3 billion, representing a 13.9% y-o-y growth while service revenue grew 17.2% y-o-y.

For FY2023, StarHub expects service revenue to grow between 8% and 10% y-o-y, lifted by higher contributions from entertainment, cybersecurity and regional ICT services, as well as revenue from new DARE+ initiatives.

In line with the Dec 2020 update on the delay on IT Transformation and increased investments relating to Cloud Infinity, service ebitda margin is expected to remain steady at approximately 20%. Meanwhile, capex commitment is expected to be 13% to 15% of total revenue.

The company has positive free cash flow of $222.3 million and net debt ebitda of 1.38 times as at Dec 31, 2022.

StarHub is declaring a final dividend of 2.5 cents per share. Combined with the interim dividend of 2.5 cents per share, the total dividend to be distributed for FY2022 is 5 cents per share.

The company also expects to distribute 5 cents per ordinary share for FY2023.

Shares in StarHub closed at an unchanged $1.11 on Feb 7.

 

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