AsiaSat Announces Interim Results
18 August 2011
Asia Satellite Telecommunications Holdings Limited announces its 2011 interim results for the six months ended 30 June 2011.
AsiaSat‟s Chairman, Sherwood P. Dodge, said, "In general buoyant Asian economies and our strong performance as the market leader during the first half of 2011 have positioned us well for the opportunities we expect to see in the second half of 2011. These positive market trends, along with our strong financial fundamentals, position us to continue to grow the Company‟s business, and we remain alert to opportunities to improve our competitive position through partnerships and acquisitions."
Chairman’s Statement
ASIAN ECONOMIC GROWTH GENERATES GREATER DEMAND
Improved financial performance
Asia Satellite Telecommunications Company Limited ("AsiaSat") is a long-established premium satellite operator with prime orbital slots, relaying high power signals across footprints that stretch from Australasia to the Middle East and Russia. This competitive edge positions the Company to capitalize on the continuing expansion of communications and video taking place across the markets we serve.
This situation held true in the first six months of 2011 which saw continued growth for AsiaSat. The generally favourable economic climate in the region stimulated growth across most of our customers which include broadcasters, content providers, telecommunications operators, broadband service providers and occasional-use clients engaged in satellite news gathering, video contribution and distribution services. The increase in demand and our Company‟s attractive service offering enabled us to improve on our financial performance as compared with the same period last year.
INTERIM RESULTS
Turnover
Turnover for the first half of 2011 was HK$802 million (2010: HK$690 million), representing an increase of 16% over the same period last year. This was primarily the result of continued growth in our core business, bolstered by significant contracts from new customers.
SpeedCast Holdings Limited ("SpeedCast"), reported first-half revenue of HK$118 million (2010: HK$95 million), an increase of 24% compared with the corresponding period in 2010 due to continued strong demand from customers in the broadband and maritime sectors.
Operating expenses
Operating expenses in the first half of 2011, excluding depreciation, totaled HK$175 million (2010: HK$166 million), representing an increase of 5% compared with the first half of 2010. This was mainly the result of incremental staff costs arising from headcount growth and was partially mitigated by savings in satellite insurance and savings in mainland China business tax.
Profit
Profit attributable to equity holders for the first half of 2011 was HK$367 million (2010: HK$305 million), an increase of 20%, achieved mainly as a result of strong revenue growth, greater interest income and careful management of costs during the period.
Cash flow
For the six months to 30 June 2011, the Group generated a net cash inflow of HK$97 million (2010: HK$618 million) after capital expenditure of HK$267 million (2010: HK$202 million) and dividends of HK$176 million (2010: HK$125 million). In the same period last year over HK$400 million was received from customers‟ deposits and a bid bond refund. As of 30 June 2011, the Group reported a cash and cash equivalents balance of HK$2,383 million (31 December 2010: HK$2,286 million) and continues to be free of debt.
Dividend
The Board has decided to declare an interim dividend of HK$0.08 per share (2010: HK$0.08 per share), which will become payable on or about 3 November 2011 to equity holders on the share register as at 7 October 2011. The share register will be closed from 3 to 7 October 2011, both days inclusive.
CORPORATE DEVELOPMENT
Executive Chairman Peter JACKSON retired on 31 July 2011, following almost two decades of service to the Company, and I am delighted to have been appointed as Chairman of the Board on 1 August 2011.
SATELLITES
Our fleet
Construction of our AsiaSat 7 satellite progressed on schedule throughout the period under review, with launch expected in the fourth quarter of this year. This new addition to the fleet has been planned to eventually replace AsiaSat 3S.
During the first half of 2011, the Company‟s satellites continued to provide uninterrupted service to our customers offering unrivalled coverage of an area containing some two-thirds of the world‟s population across more than 50 countries.
The Group‟s total number of transponders leased or sold as of 30 June 2011 was 105 (31 December 2010: 97) with an overall utilisation rate of 80% (31 December 2010: 73%). This figure includes the six Hong Kong Broadcast Satellite Service (BSS) transponders that serve our direct-to-home (DTH) joint venture.
New contracts won during the period under review amounted to a total value of HK$367 million (2010: HK$494 million), while renewed contracts were worth HK$313 million (2010: HK$266 million). New and renewed contracts combined amounted to HK$680 million (2010: HK$760 million).
MARKET REVIEW
As mentioned, continued improvement in the economies of the Asia-Pacific region gave rise to more investment and expansion among the various business segments we serve which, in turn, afforded AsiaSat the opportunity to grow with both new and existing customers. Several broad trends in our industry are worth noting:
Development of DTH satellite offerings and Internet Protocol Television (IPTV) platforms throughout Asia have had the effect of driving demand for more content and the requirement for more satellite capacity. India is now the largest DTH market in Asia, with more than 30 million viewers receiving TV programming directly by satellite dishes at home. As of July 2011, India was reported to have some 600 TV channels to choose from, with another 300 in the pipeline, creating incremental business opportunities for satellite operators such as AsiaSat.
The need for more content is also being driven by a gradual loosening of regulation, which is creating new DTH and pay-TV business opportunities.
Content providers are also seeking to satisfy a growing appetite for high-definition TV (HDTV), while simultaneously meeting continued strong demand for standard definition (SD) programming. The increasing production of three-dimensional (3D) programming, coupled with a greater availability of 3D TV sets, is also likely to increase demand in our industry over the medium term.
AsiaSat is also helping telecommunications operators serve the new data-hungry smartphone and tablet market by delivering content to mobile operators for onward distribution. Meanwhile our wholly owned subsidiary SpeedCast (see "Subsidiaries" below) continues to provide bandwidth via very small aperture terminals (VSAT) in areas not adequately addressed by terrestrial infrastructure.
EARTH STATION EXPANSION
Expansion of Tai Po Earth Station in Hong Kong
The first six months of 2011 saw the commencement of a project to expand AsiaSat‟s earth station at Tai Po in Hong Kong. Planned for completion in early 2012, this project will include infrastructure for the installation of new antennae. This will enable the facility to offer a greater range of services to our customers in the broadcast and telecommunications industries.
The expanded Tai Po facility will also open up new streams of revenue through a variety of value-added services including the co-location of equipment, satellite signal uplinking, facilities for disaster recovery and playout capability for TV service providers.
BUSINESS DEVELOPMENT
Subsidiaries
SpeedCast
SpeedCast is a wholly-owned AsiaSat subsidiary and is a leader in the provision of reliable and efficient network services to organisations mainly in the maritime, mobile communications, banking and oil & gas industries. SpeedCast offers two-way services and broadband backbone access via 10 VSAT platforms in Asia and other regions around the world.
SpeedCast performed well during the period under review, generating turnover of HK$118 million (2010: HK$95 million). This represented an increase of 24% compared with the first half of last year. Net profit was HK$9 million (2010: HK$8 million).
Joint Venture
DISH-HD Asia Satellite
DISH-HD Asia Satellite, a joint venture between AsiaSat and EchoStar Corporation, continued to deliver DTH satellite services in HD and enhanced SD to viewers in Taiwan and other regional markets. Launched in June 2010, this joint venture company again incurred a loss of which AsiaSat‟s share was approximately HK$57 million (2010: HK$27 million). The joint venture has underperformed and new measures have been taken to improve its performance. We continue to monitor its progress closely while considering all options.
OUTLOOK
In general buoyant Asian economies and our strong performance as the market leader during the first half of 2011 have positioned us well for the opportunities we expect to see in the second half of 2011. These positive market trends, along with our strong financial fundamentals, position us to continue to grow the Company‟s business, and we remain alert to opportunities to improve our competitive position through partnerships and acquisitions.
ACKNOWLEDGEMENTS
Peter JACKSON was the Chief Executive Officer of the Company during most of its existence. He deserves great credit for the successful development of the Company‟s business throughout this time. I would like to take this opportunity to thank Mr. JACKSON for his years of dedicated service to the Board and the Company.
Dr. Ya Hui CHIU, after over 20 years of service, retired from his position as Vice President, Technical Operations, on 31 July 2011. Former Vice President, Engineering Roger TONG took on an expanded role on 1 August 2011 to become Vice President, Engineering and Operations. On behalf of the Board, I would like to thank Dr. CHIU for his invaluable service and congratulate Roger TONG on his appointment as Vice President, Engineering and Operations. I am also pleased to welcome Philip BALAAM, who joined the Company as Vice President, Business Development in April 2011.
In first half of 2011, AsiaSat achieved excellent results and continued to maintain a market leadership position. I would like to acknowledge the dedication and commitment of the management team and staff and the guidance of the Board of Directors which together have made this possible. I would also like to express our sincere appreciation to our customers, suppliers and equity holders for their support.
Sherwood P. DODGE
Chairman
