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APT Satellite Release 2018 Annual Results

CHAIRMAN’S STATEMENT

The Board of Directors (the “Board”) of APT Satellite Holdings Limited (the “Company”) is pleased to announce the audited consolidated results of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2018.

RESULTS Revenue

In 2018, the Group’s revenue amounted to HK$1,237,712,000 (2017: HK$1,207,440,000), representing an increase of 2.5% amounting to HK$30,272,000 as compared to 2017.

Profit before taxation

In 2018, the Group’s profit before taxation amounted to HK$619,628,000 (2017: HK$621,792,000), representing a decrease of 0.3% amounting to HK$2,164,000 as compared to 2017.

Profit attributable to equity shareholders

In 2018, the Group’s profit attributable to equity shareholders amounted to HK$507,007,000 (2017: HK$504,557,000), representing an increase of 0.5% amounting to HK$2,450,000 as compared to 2017. Basic earnings per share and diluted earnings per share were HK54.47 cents (2017: HK54.20 cents).

*      For identification purpose only

DIVIDENDS

During the year, the Company has declared and paid an interim dividend in cash of HK4.00 cents per ordinary share. According to the policy for continuous increase of the investment return of shareholders, the Board has resolved to declare a final dividend in cash of HK11.50 cents per ordinary share for the financial year ended 31 December 2018 (2017: HK10.50 cents per ordinary share).

The final dividend is conditional upon the passing of the relevant resolution at the forthcoming annual general meeting (the “Annual General Meeting”) which will be held on Thursday, 23 May 2019. The final dividend will be paid on or about Friday, 21 June 2019 to shareholders whose names appear on the register of members at the close of business on Thursday, 6 June 2019.

BUSINESS REVIEW In-Orbit Satellites

During the year, except for APSTAR-6, the Group’s in-orbit satellites and their corresponding ground TT&C (telemetry, tracking and command) systems and earth station have been operating under normal condition and continue to provide reliable and high quality services to the Group’s customers.

The Group’s in-orbit satellites, namely, APSTAR-5C, APSTAR-6C, APSTAR-7 and APSTAR-9, have integrated to form the super wide and strong satellite service capability provided to Asia, Australia, Middle East, Africa, Europe, and the Pacific region, covering more than 75% of the world’s population.

APSTAR-5C Satellite

APSTAR-5C was successfully launched on 10 September 2018 on board of Space X Falcon 9 launch vehicle. APSTAR-5C is based on the Space System Loral FS-1300 platform, it is equipped with 28 C-band, 35 Ku-band/Ka-band transponders (including conventional and high-throughput (“HTS”) payload), providing high power transponder services to customers across the Asia-Pacific region for video broadcasting and distribution, Direct-To-Home (“DTH”) service, VSAT, maritime and broadband telecommunication services. APSTAR-5C carries seven wideband beams and one regional HTS beam. Not only can the Group taken up its existing services for APSTAR-5, it can expand to broader service areas with more powerful performance, especially its new HTS capacity for Southeast Asia, and will satisfy the growing market demand in higher quality telecommunication services.

APSTAR-5C has replaced APSTAR-5 and commenced commercial operation on 1 December, 2018. APSTAR-5 is currently operating in an inclined orbit.

APSTAR-5C is a satellite jointly built by the Group and a subsidiary of Telesat Canada, and it is also known as Telstar-18V. The Group holds approximately 57% interest in the satellite.

APSTAR-6C Satellite

APSTAR-6C was successfully launched on 4 May 2018 on board of Long March 3B/E launch vehicle. APSTAR-6C is a high-power geostationary communication satellite based on the China Academy of Space Technology DFH-4 series platform carrying 26 C-band transponders, 19 Ku-band/Ka-band transponders, which provide high power transponder services to customers across the Asia-Pacific region, for video broadcasting and distribution, VSAT, DTH, cellular backhaul, and in-flight and mobility broadband applications. APSTAR-6C has replaced APSTAR-6 and commenced commercial operation on 1 July 2018.

APSTAR-6 suffered partial power loss due to anomaly of south solar array on 27 May 2018. Since the services were taken up by APSTAR-6C satellite in a timely manner, the partial failure of APSTAR-6 did not impose real impact on the operation of the Group. For the loss caused by this failure, the Group has notified the insurer and the claim procedures are nearly completed. At present, APSTAR-6 operates in an inclined orbit.

APSTAR-7 Satellite

APSTAR-7, positioned at 76.5 degree East geostationary orbital slot, is equipped with 28 C-band transponders and 28 Ku-band transponders with footprints covering the regions in Asia Pacific region, Middle East, Africa and Europe.

APSTAR-9 Satellite

APSTAR-9 positioned at 142 degree East geostationary orbital slot, is equipped with 32 C-band transponders and 14 Ku-band transponders with footprints covering the regions in Asia, Australia, New Zealand, Pacific Islands and Hawaii.

Future Satellites

APSTAR-6D Satellite

APT Mobile SatCom Limited (“APT Mobile”), an associate which was initiated and formed by the Group in Mainland China, has been developing APSTAR-6D, a HTS satellite which is aimed to provide services for the rapid-growing satellite broadband mobility services across Asia Pacific region and the Mainland China. APSTAR-6D is scheduled to be delivered on ground at the end of 2019.

TRANSPONDER LEASE SERVICES

In 2018, the transponder market conditions in the global and Asia Pacific region was continuously downturn. The business growth for satellite broadcasting and satellite telecommunication had been weak and the market environment on oversupply of satellite transponder and the decline in the transponder lease price remained unchanged. To cope with the severe fierce market competition, the Group has actively explored new markets and new businesses and continued to enrich the service contents and varieties while providing high quality services to the customers. The Group has attained excellent performance on the increases in both revenue and profit after taxation and the utilisation rate has continued to be at relatively high level.

SATELLITE TV BROADCASTING AND UPLINK SERVICES, SATELLITE-BASED TELECOMMUNICATION SERVICES AND DATA CENTRE SERVICES

With the Non-domestic Television Programme Service Licence, the Unified Carrier Licence and the satellite earth station facilities and data centre facilities, the Group will continue to expand the scope of services and provide customers with satellite TV broadcasting and uplink services, satellite telecommunication services and data centre services.

SATELLITE PROJECT CONSULTING SERVICES

The Group has rich experiences in satellite procurement and project management, which enable the Group to provide the satellite technical and project management consulting services to other satellite operators. Apart from the satellite project management service provided to APT Mobile, the Group has entered into a satellite project management and consultancy service agreement with a satellite operator in Asia Pacific Region during the year. In pursuance with the agreement, the Group will provide to the customer professional consultancy services in respect of the satellite construction, launching, and in-orbit test.

BUSINESS PROSPECTS

Looking into 2019, the global and Asia Pacific Region satellite transponder market is continuing under the condition of oversupply and fierce competition. The Group’s satellites, APSTAR-5C, APSTAR-6C, APSTAR-7 and APSTAR-9, as the premium satellite resources, will continue to face the fierce competition pressure in the transponder leasing business. Therefore, the Group will try its best effort to maintain the stable growth of the current business and further strengthen the marketing effort for exploring new businesses and new markets, so as to support the sustainable and stable development of the Group.

FINANCIAL REVIEW

As at 31 December 2018, the Group’s financial position remains very strong. The table below sets out the financial performance for the years ended 31 December 2018 and 31 December 2017:

Financial Highlights

 

            2018                2017

 

 

HK$’000           HK$’000

Changes

Revenue

1,237,712         1,207,440

+2.5%

Gross profit

      736,102           740,361

-0.6%

Profit before taxation

      619,628           621,792

-0.3%

Profit attributable to equity shareholders

      507,007           504,557

+0.5%

Basic earnings per share (HK cents)

           54.47               54.20

+0.5%

EBITDA (note 1)

1,032,428         1,018,976

+1.3%

EBITDA Margin (%)

        83.4%             84.4%

At 31 December

            2018                2017

-1.0 percentage points

 

HK$’000           HK$’000

Changes

Total cash and bank balance

      686,848           967,117

-29.0%

Total assets

7,154,466         7,325,765

-2.3%

Total liabilities

1,506,979         2,025,085

-25.6%

Net assets per share (HK$)

             6.07                 5.69

+6.7%

Gearing ratio (%)

        21.1%             27.6%

-6.5 percentage points

Liquidity ratio

2.26 times       3.55 times

-1.29 times

Note 1: EBITDA is defined as profit from operations before other net income, valuation (loss)/ gain on investment properties, impairment loss in respect of property, plant and equipment, loss on disposal of property, plant and equipment, depreciation and amortisation.

Revenue

 

2018

2017

 

Income from provision of satellite transponder

HK$’000

HK$’000

Changes

capacity

Income from provision of satellite-based

1,196,170

1,172,439

+2.0%

broadcasting and telecommunications services

15,399

25,711

-40.1%

Other satellite-related service income

26,143

9,290

+181.4%

Total

1,237,712

1,207,440

+2.5%

For the year ended 31 December 2018, the Group’s revenue amounted to HK$1,237,712,000 (2017: HK$1,207,440,000), representing 2.5% increase as compared with 2017. The growth in revenue was mainly due to the service income from provision of technical support and project management services to an associate. The profit attributable to shareholders increased by 0.5% to HK$507,007,000.

Other net income

 

2018

2017

 

Interest income on bank deposits and other

HK$’000

HK$’000

Changes

interest income

26,410

12,143

+117.5%

Foreign currencies exchange (loss)/gain

Rental income in respect of properties less

(9,361)

3,427

-373.2%

direct outgoing expenses

1,457

1,325

+10.0%

Insurance compensation

Income incidental to construction of 

128,700

N/A

a communication satellite

15,555

N/A

Other service income

2,505

1,189

+110.7%

Other income

495

596

-16.9%

Total

165,761

18,680

+787.4%

Total other net income for the year ended 31 December 2018 increased to HK$165,761,000. The increase was mainly because during the year the Group has recognised an insurance compensation of US$16,500,000 (equivalent to

HK$128,700,000) for an impaired satellite under its insurance policy, actual amount of compensation subject to confirmation with insurers. The estimated insurance compensation was recognised in other receivables.

Finance costs

Finance costs HK$10,562,000 was recognised for the year ended 31 December 2018 (2017: Nil). The increase was primarily due to the finance costs for payments in respect of APSTAR-5C and APSTAR-6C after commercial operation were no longer capitalised.

Fair value changes on financial instrument measured at fair value through profit or loss

Based on the market price as at 31 December 2018, the balance of 141,651,429 ordinary shares of CNC Holdings Limited was remeasured at a fair value of HK$9,207,000, with fair value gain of HK$1,841,000 recognised in profit or loss. The details of financial assets measured at fair value through profit or loss of the Group are set out in note 15 of this announcement.

Income tax

Income tax expenses for the year ended 31 December 2018 decreased to HK$112,621,000, as compared to HK$117,235,000 in 2017. The decrease was mainly due to the decrease in provision for deferred taxation for the current year. The details of income tax of the Group are set out in note 8 of this announcement.

EBITDA

As a result of the increase in revenue, EBITDA for the year ended 31 December 2018 increased to HK$1,032,428,000, with the margin decreased from 84.4% to 83.4%.

 

Australasia Satellite Forum 2019

 

The Westin Hotel, Sydney, Australia

21 & 22 May 2019