1998 Annual Results : Chairman’s Statement
The Board of Directors (the "Board") of APT Satellite Holdings Limited (the "Company") herein
announces the audited results of the Company and its subsidiaries (the "Group") in respect of the financial
year ended 31st December 1998 prepared in accordance with accounting principles generally accepted in Hong Kong.
Results
Similar to most other companies in the region, our Group’s performance during the year under review had been much
affected by the Asian economic turmoil. For the year ended 31st December 1998, the Group’s turnover was HK$587,805,000
(1997 : HK$522,467,000) while profit attributable to shareholders was HK$59,217,000 (1997 : HK$129,581,000). Earnings
per share was HK14.1 cents (1997 : HK30.85 cents).
Final Dividend
The Board of Directors does not recommend the payment of any dividend in respect of the financial year 1998 (1997
: Nil).
Business Review
Market Review
1998 was perhaps one of the most difficult years for Asian businesses in the region’s recent history. Our major
business sectors have been adversely affected. Given the region’s sluggish economic environment, demand for satellite
transponder services has fallen short of our original expectation. Meanwhile, a number of new satellite launches
during 1998 had significantly pushed up transponder supply in the region. The take up of transponders had especially
slowed down. On the other hand, the cancellation or postponement of a number of satellite launches caused by the
region’s economic downturn had helped ease slightly the oversupply situation.
As a result of oversupply, leasing prices of satellite transponders were subject to downward pressure in the market.
However, we have adopted the strategy of improving its services and have merely adjusted our prices a little to
a more competitive level. Therefore, our operating margins have not been adversely affected to a significant degree.
APSTAR-I and APSTAR-IA
Since some individual customers had experienced business difficulties due to the economic turmoil and therefore
could no longer use the service of our satellite transponders, and with some other customers having shifted to
APSTAR-IIR from the original satellite leased, APSTAR-I and APSTAR-IA recorded a slight decrease in their utilisation
rates. As at 31st December 1998, approximately 70% of the capacities of the two satellites were leased out. The
weighted average utilisation rates in 1998 were 85% for APSTAR-I and 75% for APSTAR-IA.
APSTAR-IIR
Our Group’s third satellite, APSTAR-IIR, commenced commercial operation in January 1998 and was approximately 26%
leased as at 31st December 1998. Owing to the Asian financial crisis, APSTAR-IIR’s utilisation rate had not picked
up as much as we had expected. Nonetheless, with its high-quality Ku-band transponders and the broad footprint
of its C-band transponders (covering nearly 75% of the world’s population), APSTAR-IIR will enable our Group to
hold a strong market position in the long run.
Prospects
Market Outlook
While it is believed that the region’s economies have bottomed out and recovery is in sight, sluggish economic
conditions are still expected to continue for some time. As a result, the general demand for satellite transponder
service in the forthcoming year will grow only marginally. We will still face some difficulties during 1999 in
terms of signing up more customers and our transponder leasing business will experience a challenging year.
However, the supply of transponders will slow down as a number of satellite service providers have delayed or set
aside their satellite launch programmes. Further, our Group is in a high-technology and capital-intensive industry
where market entry is strenuous for newcomers. Therefore, the pressure caused by excessive supply of satellite
transponders will be abating.
Most of our businesses come from the PRC and particularly in the telecommunication and broadcasting sectors, both
of which are expected to experience steady growth benefiting from the PRC’s sound economic development in general.
Therefore, we remain optimistic about the Group’s long-term prospects.
Business Strategies
In view of the competitive situation, we aim to improve our service to customers rather than using a price-cutting
strategy. For example, in leasing transponders, we will also engage in systems design to help our customers setup
their satellite communication network. Therefore, the Group increases its competitiveness by adding more value
to our customers.
Meanwhile, we will actively explore other business opportunities. For example, other satellite related businesses
such as internet communications, VSAT and uplink station communications service present strong development potentials.
In particular, our Group has commenced its platform on VSAT business in the PRC and we expect our clientele to
grow further in this sector.
Conclusion
While the current economic condition is not encouraging and the coming financial year is expected to be difficult,
the Group will endeavour to strengthen our competitiveness by improving our service. By offering more added value
services to our customers, the Group will put itself in the stronger market position in terms of attracting new
customers as well as retaining existing ones. As the economies in Asian Pacific is recovering gradually, the Group
remains confident in the long-term future of the satellite communication business in the region. Besides, the solid
financial strength of the Group should enable us to overcome the present adverse conditions.
A Note of Appreciation
On behalf of all shareholders and the Board of Directors, I would like to thank all of our customers for their
support of the Group, and to express our sincere appreciation to the management and staff for their contribution
to the Group during the year and for their commitment for the future.
Liu Ji Yuan
Chairman
Hong Kong, 7th April 1999
| 1998 | 1997 | ||
| Notes | HK$’000 | HK$’000 | |
| Turnover | 587,805 | 522,467 | |
| ====== | ====== | ||
| Profit before taxation | 64,440 | 144,042 | |
| Taxation | 1 | -5,223 | -14,461 |
| ---------- | ---------- | ||
| Profit attributable to shareholders | 59,217 | 129,581 | |
| Retained profits at beginning of year | 203,520 | 73,939 | |
| ----------- | ---------- | ||
| Retained profits at end of year | 262,737 | 203,520 | |
| ======= | ====== | ||
| Earnings per share - Basic | 2 | 14.10¢ | 30.85 ¢ |
| ======= | ======= |
| Notes : | |||
| 1 | Taxation | ||
| 1998 | 1997 | ||
| HK$’000 | HK$’000 | ||
| Provision for taxation in respect of profits for the year : | |||
| Hong Kong | - | 17,000 | |
| Elsewhere | 116 | 278 | |
| Prior year’s overprovision | -793 | -2,037 | |
| Deferred taxation | 5,900 | -780 | |
| ---------- | ---------- | ||
| Taxation charge for the year | 5,223 | 14,461 | |
| ====== | ====== | ||
| No provision for Hong Kong taxation has been made for the year as no assessable profits were earned in or derived
from Hong Kong during the year. The prior year’s Hong Kong profits tax was provided at the rate of 16.5% on the
estimated assessable profits arising in Hong Kong for that year. Taxes on profits assessable elsewhere have been calculated at the rates of taxation prevailing in the countries in which the Group operates based on existing legislation, practices and interpretations in respect thereof. |
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| 2. | Earnings per share | ||
| The calculation of basic earnings per share is based on the profit attributable to shareholders for the year of
HK$59,217,000 (1997 : HK$129,581,000) and the 420,000,000 (1997 : 420,000,000) shares in issue during the year. Diluted earnings per share for the years ended 31st December 1998 and 1997 has not been calculated as no diluting events existed during these years. |
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