Executive Summary This report briefly talks about the financial performance and financial position of M1 Telecommunications with

the help of their balance sheets and income statements for past two years. Using various types of ratios, this report indicates the profitability, efficiency, liquidity, gearing and future investments of the financial statements. Evaluating the financial statements through this ratios gives a clear picture of the groups financial withstand, its strength and weakness, opportunities to improve and threats around which could positively affect the business. It helps in review the business standards with the competitors, so that necessary plans could be drafted and executed to improve the business at respective places. Reviewing ones financial report through respective ratios gives clear picture of the sources utilised, unused resources or assets, companys position in terms of the creditors, etc. Lets go through in detail description of the ratios to know about the groups performance & position.

I. Introduction
1.

Purpose of the Report

This report briefly evaluates the financial position and business performance of M1 Telecomm. The report also analyses financial ratios from the data obtained from three years annual report of the group. This report interprets the information of the companys financial situation in order to review its business performance and future investment.
2.

Company Profile 2.1. History of the Group M1 is a leading provider of mobile and fixed communications services to over 1.9 million customers in Singapore. With emphasis on quality, customer service, value and innovation, M1 aims to brighten lives by linking anyone and anything; anytime, anywhere. For mobile services, M1 offers a wide range of voice, data and valueadded services on our nationwide Global System for Mobile Communication (GSM) / 3G / High Speed Packet Access (HSPA) network. Customers subscribe to its mobile services on either a postpaid or prepaid basis through a variety of price plans. M1 was the first mobile operator in Singapore to offer High Speed Downlink Packet Access (HSDPA) in December 2006, with the launch of 'M1 Broadband' - Singapore's first true island-wide wireless broadband service, offering customers a variety of service plans at different access speeds. Today, M1's mobile network is capable of supporting downlink and uplink throughput speeds of up to 28 Mbps and 5.76 Mbps respectively. In the area of international call services, M1 offers mobile and fixedline customers International Direct Dial (IDD) services using prefixes 002 and 021, and an International Calling Card (ICC) service using prefix 1818. M1 also sells international wholesale minutes to other international service providers.

For fixed services, customers can choose from various broadband service plans with speeds ranging from 5 Mbps to 1 Gbps, including fixed voice and other value-added services. In addition, M1 offers managed and data centre services, cloud computing services and other enterprise solutions for corporate customers. M1's services are further supported by mFix, a remote technical support service for computers and smart phones. M1 is listed on the Singapore Exchange and its current major shareholders are Axiata Investments (Singapore) Limited, Keppel Telecoms Pte Ltd and SPH Multimedia Private Limited 2.2. Mission of the Group To be an efficient and totally customer-focused company, achieving the highest satisfaction for our customers, people and shareholders. To be the leader in personal communications, distinguished by innovativeness and dedication to our customers, people and shareholders. 2.3. Strategic Issues The main issues facing M1 Telecom would be trying to maintain its exceptional record of profitability and retain as much market share after the introduction of competition. M1 Telecom would have to achieve this in the midst of fast paced advancements in technology, maturing customer tastes and a turbulent business environment. Technological advancements, such as Internet telephony, also begin to affect M1 profitability. Such technological advancements not only offered customers more choices, but also matured their tastes; demanding for more sophisticated (and cheaper) services (i.e. calling rates). Being a cheaper alternative to M1 Telecoms international calling charges, Internet telephony enabled customers to bypass M1 Telecoms network infrastructure and allowed them to customize the services according to their

requirements (e.g. real-time billing charged accordingly to the level of service being used). M1Telecom would have to contend with competitors in an intense industry environment in the midst of an economically trying period, whilst facing challenges posed by fastpaced technological advancements. I. Financial Ratio Analysis: 1. Liquidity Ratios: 1.1.Current Ratio: According to below table Current and Quick Ratios were improved. This means that M1l is able to turn its current assets into cash if there is a need for the company to do so in order to meet its short term obligations (Davies & Boczko, 2005, p.166). Comparing to Star Hub, M1 is in better position in meeting its obligations faster.

1.2. Quick Ratio: Therefore, it can be said that M1 can change current assets into cash within short term and its liquidity situation was improved in 2009 compared to previous year. When comparing with star hub, M1 generates revenue faster from its currents assets.

2. Efficiency Ratios: 2.1. Average collection period: Average debtor settlement days actually increased from 41 in 2008 to 67 days in 2009. This means M1 was trying to increase

its period from its customers by keeping loyal customers or proposing benefit receivable payment.

2.2. Inventory Turnover: According to below graph, average inventory of M1 increased slightly from 24 times in 2008 to 34 times in 2009. This implies that M1 lacked in selling its products as average inventory during 2009. Comparing to the inventory turnover of Star hub, M1 performance is far better in turning their inventory as cash.

2.3. Average Payment Period: On the other hand, average age of creditors decreased from 93 in 2008 to 74 days in the year 2009. This means it took about three months for M1 to pay its payment (Lee 2008). Higher period than industrial average age can cause to lose its supplier channels. This reveals the potential of M1in generating its revenue by selling its inventories comparing to Star Hub.

3. Leverage Ratios: 3.1. Debt Ratio: In terms of debt ratio M1 65% of financing is from debts while Star Hub has 96% from debts which shows Star Hub purely rely on investors for generating capital.

3.2. Interest Coverage Ratio: In terms of interest coverage both the firms are sound enough to pay off their obligations, but still Star Hub has higher value than of M1. Star Hub is able to cover its interest 9 times in 2008 and10 times in 2009 while M1 is covering 7times in 2008 and2009 which is not a bad sign but still its shows the decline in revenue.

4.

Profitability Ratio: These ratios generally give stakeholders a good understanding of how well the company has utilized its resources and maximized the wealth of the owners of the business (Docstoc homepage) 4.1. Gross Margin: A high profit margin doesnt assure overall profitability. M1 has 23% of gross profit which reveals that firm has the ability to improve profits even without holding down non productive expenses. M1 is comparatively better than Star Hub as it has generated only 15%-19% of profit after expenses. Both firm show a decline in their profit margin which shows they have to concentrate in their sales revenue and manage its cost of goods.

4.2. Net Margin: The higher net profit margin means M1 generated more net profit over sales, controlling cost and expenses compared to previous year. Star Hub which shows a decline in its net profit reveals it has concentrate on its measures to control its expenses.

4.3. Return on Assets: In 2009, M1s return on total assets (ROA) rose to 43% from 37% in 2008. This increasing ROA indicated it used its total assets more effectively than previous year. Thus, this shows that M1operated better its assets and generated more return in 2010 than those in 2009. While Star hub lacks behind with a fall in their value thus resulting in use of assets in generating lower income.

4.4. Return on Equity: Return on equity (ROE) of M1 decreased from 63% in 2008 to 56% in 2009. The higher ROE shows M1 was doing well on using their shareholders equity to generate profit for shareholders. Attractive ROE at 56% indicated shareholders should be satisfied with overall management performance. Star hub generated one third of M1 equity return.

5. Investment Ratio: 5.1.Earnings Per Share: The earnings per share value has increased in 2009 to S$0.18cents from 0.17cents in 2008 Which is not a huge difference in terms of shareholders view but comparing to Star hub, M1 also provides same earnings as of Star hub.

5.2. Dividend Payout Ratio: This means that board of director made a decision paid 79% of net income to the shareholders in 2008 and 2009 because of decreased net income or extra usage of net income. Star hub has provided 99% of its income in 2008 and 130% of its income in 2009 which reveals that Star hub is stronger position in terms of investors as they will expect for profit maximisation.

6. Media Information:

In most instances that responsibility falls squarely on the shoulders of supposedly independent auditors. However, with intense competition for large audit clients, and given the potential fee generation from such long-term engagements, these accountants must face difficult ethical questions if they want to both do the right thing and continue to maintain their lucrative client relationships. Misleading financial statements can take many forms. The errors or omissions may be relatively minor or they may be significant. The problem, however, is that because of the multiple interests of those who rely on financial statements, even minor errors or omissions can prove disastrous. Investors rely heavily on the objectivity and integrity of those who prepare financial statements. When that fiduciary bond is broken, and the reliability of financial statements is called into question, any confidence that may have been invested in the reporting system is destroyed.

7. Advantages of ratio analysis:

There are various advantages of financial statements analysis. The major benefit is that the investors get enough idea to decide about the investments of their funds in the specific company. Secondly, regulatory authorities like International Accounting Standards Board can ensure whether the company is following accounting standards or not. Thirdly, financial statements analysis can help the government agencies to analyze the taxation due to the company. Moreover, company can analyze its own performance over the period of time through financial statements analysis.
7.1.Limitations of ratio analysis:

Trend analysis of ratios provides better insight into a companys performance. However, it is important to be sure that the assumptions applied in calculating the ratios are constant throughout. Some ratios include items from the Income Statement and Balance Sheet, such as Return on Assets, Inventory turnover and Receivable turnover. While the income statement reports performance over a specified period of time, the balance sheet provides a static measurement at a single point in time. This point must be considered while interpreting the results of ratio calculations. Year-end values in the Balance Sheet may not be representative. Values of certain items in the Balance Sheet may increase or decrease at the end of the accounting period due to seasonal factors, such as accounts receivables and inventories. These changes may distort the value of ratios. In these cases, it is more appropriate to use average values during the given period of time. Comparisons of ratios with different industries would be meaningless. For example, comparing leverage ratios of stable utility companies with cyclical mining companies would be useless. Similarly, the comparison of a cyclical company's profitability with a relatively stable company would fail to give an accurate long-term measurement of profitability.

Using historical financial data without understanding the fundamental changes in a company's business strategy would predict very little about its future prospects. For example, the historical ratios of a company that has undergone a merger or had a substantial change in its technology or market position would tell very little about the prospects for this company. Lastly, ratios are subject to the limitations of accounting methods. Any significant change in a ratio may also be due to changes in a companys accounting techniques. As long as the accounting techniques remain more or less the same over time, meaningful inferences can be drawn by examining trends in financial ratios. Experience suggests that financial analysis works only if you are aware of accounting biases and makes adjustments for them. Conclusion: Based internal financial analysis, it can be concluded that M1 Corporation has kept a rapid developing speed ever since the difficult time of global economy as the financial ratios reflects. The ratio figures show exactly how well M1 is in respect of its financial position and performance. Actually, the healthy situation the company stands promises itself to be more and more profitable and competitive in Singapore telecom industry and also owns a strong attraction to potential investors. In a word, the financial position and performance are presented positive, which surely guarantees a bright future and strong financial standing has well contributed to the growth of M1. M1 keep communications industry leadership; continue to devote to provide quality service to our customers in good financial capacity. M1will continue to expand the market. In addition, the company will further strengthen its business. Finally, unpredictable, in changing and competitive environment, M1 will use its financial strength and continue to focus on long-term growth. M1 will be focused on growing the group further and they remain committed to build up three key business thrusts of Sustaining Growth, Empowering Lives and Nurturing Communities.

Meanwhile, they will also to focus on what they do best. M1 income declined by a large-scale personnel cost which is a great burden, especially in the circumstance of economic recession. Therefore, effective system of M1 must establish the connection between the employees incentive and group performance. Rather than fixed number of salary such as employee performance or bonuses etc.M1s solvency is the best, in this analysis of financial leverage ratio, it is found that the company is very high after the debt, solvency is also very high. Although higher debt increased interest rate volatility risk and cash flow, but provides a team and financial flexibility to seek better business opportunities.