The Board of Directors (the "Board") of APT Satellite Holdings Limited (the "Company") herein
announces the unaudited interim results of the Company and its subsidiaries (the "Group") for the six
months ended 30th June, 1998 prepared in accordance with accounting principles generally accepted in Hong Kong.
For the six months ended 30th June, 1998, the Group’s turnover and consolidated net profit attributable to shareholders
amounted to HK$295,376,000 and HK$34,869,000 respectively, representing an increase of 17.6% and a decrease of
38.2% over the corresponding period in 1997. Earnings per share declined by 38.1% to HK8.3 cents.
FINANCIAL SUMMARY
| |
|
For the six months ended 30th June, |
| |
Notes |
1998
(Unaudited)
HK$’000
|
1997
(Unaudited)
HK$’000
|
| |
|
|
|
| Turnover |
|
295,376
|
251,090
|
| |
|
=========
|
=========
|
| Profit before taxation |
|
36,137
|
65,340
|
| Taxation |
1 |
-1,268
|
-8,926
|
| |
|
__________
|
__________
|
| Net profit attributable to shareholders |
|
34,869
|
56,414
|
| |
|
=========
|
=========
|
| Earnings per share |
2 |
8.3 cents
|
13.4 cents
|
| |
|
=========
|
=========
|
Notes :
| 1 |
|
For the six months ended 30th June, |
| |
|
1998
HK$’000
|
1997
HK$’000
|
| |
Provisions for taxation in respect
of profit for the period: |
|
|
| |
Hong Kong |
-
|
9,500
|
| |
Elsewhere |
68
|
6
|
| |
Deferred taxation |
1,200
|
-580
|
| |
|
__________
|
__________
|
| |
Taxation charge for the period |
1,268
|
8,926
|
| |
|
=========
|
=========
|
No provision for Hong Kong taxation has been made as no assessable profits were earned in or derived from Hong
Kong during the period. Prior period’s Hong Kong profits tax has been provided at the rate of 16.5% on the estimated
assessable profits arising in Hong Kong. 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.
2. The calculation of earnings per share is based on the net profit attributable to shareholders of HK$34,869,000
(1997 : HK$56,414,000) and 420,000,000 shares in issue during the period.
INTERIM DIVIDEND
In line with the Group’s future business development, the Board has decided not to declare an interim dividend
for the six months ended 30th June, 1998 (1997 : Nil).
BUSINESS REVIEW
Market Situation in Supply and Demand
During the second half of last year and the first half of the current year, as the financial turmoil in Asia cast
a shadow over the economies in the region, the demand for satellite transponders had fallen short of our expectation,
resulting in a temporary surplus in the supply of satellite transponders over the period. This exerted pressure
on the Group’s results for the first half of the year.
APSTAR-I and APSTAR-IA
Since individual customers had experienced difficulties under the present business environment and could no longer
use the service of our satellite transponders, and some other customers shifted to APSTAR-IIR from the original
transponders leased, APSTAR-I and APSTAR-IA recorded a slight decrease in utilization rate. As at 30th June, 1998,
85% of the capacities of the two satellites were leased out. Although the utilization rate of these two satellites
has declined, it shows that the impact of the regional financial turmoil and unfavourable business environment
on the two satellites is minimal as the leasing contracts are concluded on a long-term basis and denominated in
US dollars.
APSTAR-IIR
APSTAR-IIR, our Group’s third satellite, commenced commercial operation in January this year and was approximately
25% leased as of 30th June, 1998. In light of unfavourable factors such as the Asian financial turmoil and adverse
economic environment, the utilization rate of APSTAR-IIR is lower than expected.
In addition, APSTAR-IIR signifies the expansion of the Group’s scope of satellite service from C-band to Ku-band
and the area of service from the Asia-Pacific region to more than one hundred countries in Asia, Europe, Africa
and Australia, covering 75% of the world population. Such expansion will play a strategic role in the Group’s long
term business development.
The Group believes that the extensive coverage of APSTAR-IIR will bring forth enormous market potential. With the
recovery of the region’s economy, leasing of the satellite will gradually improve and will make substantial contribution
to the Group’s profit.
PROSPECTS
Market Outlook
The turbulence in the Asian financial markets is not over yet and it is anticipated that the sluggish market conditions
will continue for some time. As the market for satellite transponders has become saturated for the moment and lease
rate has been subject to downward adjustment pressure, the second half of the year will still be a difficult period
for the Group. However, we believe that the oversupply of satellite transponders is only temporary. In view of
the depressed economic climate in the Asian region and the difficulty in raising capital, a number of satellite
service providers have delayed or set aside their satellite launch programmes, and it will be even more difficult
for newcomers to enter into this high technology and capital intensive industry and compete with existing players.
Therefore, it is expected that the pressure caused by excessive supply of satellite transponders will be significantly
eased sooner or later.
Besides, it is expected that the telecommunication and broadcasting business in the PRC and Asia-Pacific region
will continue to grow steadily, thereby fuelling the demand for satellite transponders. This will certainly benefit
the Group’s primary business in telecommunication and broadcasting.
Strategies
In view of the severe business environment, the Group will be committed to a policy of prudent financial management
and operates on a solid foundation, striving to overcome the adverse conditions by such measures as cost saving,
exploring more markets and developing new satellite communication business. As a matter of fact, the Group does
not have any satellite transponder business in countries such as Indonesia and South Korea which have suffered
the most in the financial turmoil. Besides, over 50% of the Group’s market is in the People’s Republic of China
(the "PRC") which continues to experience a sound economic growth. The Group will continue to benefit
from the rapid development of the PRC and of the telecommunication and broadcasting business there.
Apart from the strengthening of the satellite transponder leasing business, the Group will gradually develop other
businesses related to satellite communications, such as satellite up-link station communication service, VSAT business
and direct satellite broadcasting business.
Conclusion
With the various competitive edges enjoyed by the Group, particularly our strong financial structure, quality satellite
transponder service and leading market position, the Group is confident that we will be able to overcome the present
adverse conditions and capitalise on the potential of the satellite communication market in the Asia-Pacific region,
especially the PRC in the future, bringing the Group to a new peak in its business development.
PURCHASE, SALE OR REDEMPTION OF SHARES
Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s shares during
six months ended 30th June, 1998.
THE YEAR 2000 PROBLEM
The Group is fully aware of the Year 2000 Problem (the "Problem") and is concerned about the possibility
of the Problem affecting the computer-based systems of the Group. The professional staff concerned have conducted
a comprehensive investigation and analysis (the "Investigation") of the areas which may possibly be affected
by the Problem by adopting the definition of Year 2000 Conformity Requirements - "PD2000-1:1998" issued
by the British Standards Institution. The Investigation covered three main areas : (a) Satellites; (b) Satellite
Control Centre and (c) Office Automation.
Following the Investigation, the Group considers that the Problem will not have any impact on the APSTAR System
and the Satellite Control Centre as all the important operation parameters of APSTAR-I, APSTAR-IA, APSTAR-IIR and
the Satellite Control Centre are not related to or based on calendar years. Besides, there is no important or critical
data processing of computer files in any department or operation function of the Group which is related to or based
on calendar years. Other minor or discrete application software which may be affected by the Problem will be either
rectified by our staff or the vendors concerned no later than September 1999. The Problem will therefore have no
material effect on the Group’s daily operations. The Group will from time to time monitor closely any possible
impact arising from the Problem over the forthcoming period.
APPRECIATION
On behalf of the Board, I would like to express our sincere appreciation to our staff for their contribution.
Hong Kong, 23rd September, 1998.
