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Company A Financial Statement directly Note:
say X% Company A launched it's first mobile
lower than..
Year 0 Year 1 Year 2 +preston@talent It aims to make premium handsets m
S$ Million
Total Total Total kraft.com.sg
Income Statement -Eugene Goh
Operating revenue $ 8,537 $ 9,233 $ 9,670
Operating expenses $ (6,184) $ (6,270) $ (6,416)
EBITDA $ 2,353 $ 2,963 $ 3,255
Net interest expense $ (130) $ (143) $ (148)
Taxation $ 198 $ 201 $ 203
Depreciation & amortisation $ (743) $ (753) $ (759)
Net profit $ 1,678 $ 2,269 $ 2,550

Operating Revenue & Expenses Composition

Mobile Service $ 2,812 $ 3,375 $ 3,690
Others $ 5,725 $ 5,858 $ 5,980
Operating revenue $ 8,537 $ 9,233 $ 9,670

Operating expenses $ 6,184 $ 6,270 $ 6,416

Mobile Subscribers ('000s) 4,085 4,195 4,409

ARPU* 57 67 70
ompany A launched it's first mobile handset leasing plans at the start of Year 1
aims to make premium handsets more affordable to customers
Company B Financial Statement Note: Company B operates in the same m
Year 0 Year 1 Year 2
S$ Million
Total Total Total
Income Statement
Operating revenue $ 8,784 $ 9,033 $ 9,006
Operating expenses $ (6,153) $ (6,372) $ (6,470)
EBITDA $ 2,631 $ 2,661 $ 2,536
Net interest expense $ (158) $ (194) $ (189)
Taxation $ (356) $ (341) $ (305)
Depreciation & amortisation $ (1,416) $ (1,507) $ (1,469)
Net profit $ 2,117 $ 2,126 $ 2,042

Operating Revenue & Expenses Composition

Mobile Service $ 5,465 $ 5,641 $ 5,764
Others $ 3,371 $ 3,363 $ 3,102
Operating revenue $ 8,784 $ 9,033 $ 9,006

Operating expenses $ 6,153 $ 6,372 $ 6,470

Mobile Subscribers ('000s) 9,106 9,281 9,324

ARPU* 50 51 52
ompany B operates in the same market as Company A, and has not launched leasing plans
Guiding Sheet
What are the key steps you need to arrive at the answer?
You are trying to find the incremental impact of introducing handset leasing. To do this, you
leasing vs do not introduce leasing.
5 steps to solving this task
Step 1. Identify the metrics that are most important
Step 2. To estimate the no leasing case, you apply the industry average growth rates for the relevant metr
Step 3. To estimate the leasing case, you apply Company A growth rates
Step 4. Make logical estimates for all other figures, using historical data
Step 5. Calculate the impact of handset leasing for Company X

Step 1. Identify the metrics that are most important

1a. Net profit
1b. Operating Revenue
1c. ARPU

Step 2. To estimate the no leasing case, you apply the industry average growth rates
2a. Estimate industry average growth rates by combining the data for Company A and Company B for the
2b. Apply the industry average to forecast Company X performance if handset leasing is not introduced

Step 3. To estimate the leasing case, you apply Company A growth rates to Compan

Step 4. Make logical estimates for all other figures, using historical data
4a. Some metrics are likely to be a fixed ratio of revenue or profits
4b. For others, the best estimate is just to assume it will remain constant

Step 5. Calculate the impact of handset leasing for Company X

5a. To show the difference in Company X's key metrics with and without handset leasing, you subtract the
g Sheet
he key steps you need to arrive at the answer?
g to find the incremental impact of introducing handset leasing. To do this, you need to estimate wha
not introduce leasing.
solving this task
he metrics that are most important
mate the no leasing case, you apply the industry average growth rates for the relevant metrics for Company X
mate the leasing case, you apply Company A growth rates
gical estimates for all other figures, using historical data
e the impact of handset leasing for Company X

the metrics that are most important

Ultimately the most important number, but it is a dependant variable, and hence will need to be calculated
This is the biggest driver of net profit as most other aspects remain constant
As an additional measure of performance

timate the no leasing case, you apply the industry average growth rates for the relevant metr
ustry average growth rates by combining the data for Company A and Company B for the key metrics
dustry average to forecast Company X performance if handset leasing is not introduced

timate the leasing case, you apply Company A growth rates to Company X

logical estimates for all other figures, using historical data

cs are likely to be a fixed ratio of revenue or profits
he best estimate is just to assume it will remain constant

ulate the impact of handset leasing for Company X

difference in Company X's key metrics with and without handset leasing, you subtract the numbers in step (2) from s
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linkid=870924
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----
[Threaded
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Your version of
Excel allows
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this threaded
comment;
however, any
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will get
removed if the
file is opened
in a newer
version of
Excel allows
you to read
this threaded
comment;
however, any
edits to it
will get
removed if the
file is opened
in a newer
version of
Excel. Learn
more:
https://go.micr
osoft.com/fwlin
k/?
linkid=870924

Comment:
Same as
previous year
-
tc={B30FB46E-
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----
[Threaded
comment]

Your version of
Excel allows
you to read
this threaded
comment;
however, any
edits to it
will get
removed if the
file is opened
in a newer
version of
Excel. Learn
more:
https://go.micr
osoft.com/fwlin
k/?
linkid=870924
Comment:
Assume cost
of sales is a
percentage of
operating
revenue and use
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Difference in Company X Financial Statement with and without handset leasing
Year 0 Year 1 Year 2
S$ Million
Total Total Total
Income Statement
Operating revenue $ 2,362 $ - $ -
Operating expenses $ (1,796) $ - $ -
EBITDA $ 566 $ - $ -
Net finance expense $ (27) $ - $ -
Taxation $ (45) $ - $ -
Depreciation & amortisation $ (294) $ - $ -
Net profit $ 200 $ - $ -

Operating Revenue & Expenses Composition

Mobile Service $ 1,354 $ - $ -
Others $ 1,008 $ - $ -
Operating revenue $ 2,362 $ - $ -

Operating expenses $ 1,796 $ - $ -

Mobile Subscribers ('000s) 2,341 0 0

ARPU* 48 0 0