AsiaSat announces its 2012 interim results for the six months ended 30 June 2012.
23 August 2012
Asia Satellite Telecommunications Holdings Limited announces its 2012 interim results for the six months ended 30 June 2012.
Operational Highlights:
The addition of AsiaSat 7 satellite opens up opportunities for near-term business growth before it replaces AsiaSat 3S in 2014
New satellites AsiaSat 6 and AsiaSat 8 under construction, will bring additional capacity for core business growth
Expansion of Tai Po Earth Station enhances capability to provide a wider range of value added services to customers AsiaSat’s Chairman, Ju Wei Min, said, “During the first half of the year, the Asia-Pacific region was largely able to weather the economic storms currently being felt in Europe and the United States. In the second half of 2012, there is the possibility that we may begin seeing signs of slower growth, especially given the nature of our industry which tends to lag economic trends, both negative and positive.”
“Nevertheless, we remain confident in our ability to deliver sustainable growth based on our reputation for providing highly reliable satellite services and technical excellence as well as our commitment to serving our customers in a professional and responsive manner.”
ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)
Stock Code: 1135
Announcement of Unaudited Results for the Six Months Ended 30 June 2012
Chairman’s Statement
STEADY PERFORMANCE DESPITE GLOBAL ECONOMIC UNCERTAINTY
Strong first half results
Asia Satellite Telecommunications Company Limited (“AsiaSat”) has been providing premium satellite services since 1990 to more than two-thirds of the world’s population stretching across the Asia region from Australasia to the Middle East and Russia.
With our reputation as a pioneer in satellite communications, AsiaSat continues to be a trusted partner of leading broadcasting and telecommunications enterprises and governments around the world.
During the review period, AsiaSat achieved new business which helped compensate for the loss of the revenue contribution from the now retired satellite (AsiaSat 2) during the same period in 2011
INTERIM RESULTS
Turnover
Turnover for the first half of 2012 was HK$1,095 million (2011: HK$802 million), representing an increase of 37% over the same period last year. This increase was primarily the result of a one-off revenue contribution from customers of HK$296 million (2011: Nil) resulting from the enactment of the Finance Act in India in 2012, which imposes tax on the Group for certain Indian sourced revenues. By excluding this one-off item, the turnover was similar to that of the same period in 2011. Our subsidiary, SpeedCast Holdings Limited (“SpeedCast”), reported first-half revenue of HK$124 million (2011: HK$118 million), an increase of 5% compared with the corresponding period in 2011 due to steady growth from customers in the broadband and maritime sectors.
Operating expenses
Operating expenses in the first half of 2012, excluding depreciation, totalled HK$182 million (2011: HK$175 million), representing an increase of 4% compared with the first half of 2011. This was mainly the result of the increase in professional fees associated with the privatisation exercise.
Profit
Profit attributable to equity holders for the first half of 2012 was HK$395 million (2011: HK$367 million), an increase of 8% over the same period last year. In the first half of 2011, the Group shared a loss of HK$57 million by DISH-HD Asia Satellite, the jointly controlled entity, which was disposed of in December 2011 and the transaction was completed in June 2012. The Group had no such expense in the current period under review. However, profit was affected by tax provisions made for Indian tax reflecting the impact of the adoption of the new Finance Act in India, which was enacted with retrospect effect in May 2012. There was consequently an adverse effect on our profit, as the Company had to record a provision against potential Indian income tax for Indian sourced revenues for services rendered in the past.
Cash flow
For the six months to 30 June 2012, the Group generated a net cash inflow of HK$74 million (2011: HK$97 million) after capital expenditure of HK$664 million (2011: HK$267 million) and no payment of dividends (2011: HK$176 million). As of 30 June 2012, the Group reported a cash and cash equivalents balance of HK$2,340 million (31 December 2011: HK$2,266 million). The Group continues to be free of debt.
Dividend
The Board has decided to declare an interim dividend of HK$0.12 per share (2011: HK$0.08 per share), which will become payable on or about 2 November 2012 to equity holders on the share register as at 9 October 2012. The share register will be closed from 3 to 9 October 2012.
CORPORATE DEVELOPMENT
Board and senior management
During the period under review, there was no change in the composition of the Board of Directors or the senior management of the Company.
Failure of the privatisation proposal
On 18 July 2012, the proposal by Asia Satellite Management Stock Ownership Trust (“MSOT”) and AsiaSat MSOT (“PTC”) Limited (acting in its capacity as trustee of MSOT) and Asia Satellite Telecommunications Holdings Limited was not approved by those independent shareholders. Although we believe that privatisation would have been advantageous to the Company, the failure of the proposal will not carry any negative repercussions on our business. It also reflects the continuing confidence of shareholders in the Company’s future growth prospects.
SATELLITES
Our fleet
AsiaSat currently owns four in-orbit satellites - AsiaSat 3S, AsiaSat 4, AsiaSat 5 and AsiaSat 7 - that provide access to information and communication channels for billions of people across the Asia-Pacific region. AsiaSat 2 was retired from service after the reporting date.
Following its launch in November last year, AsiaSat 7 completed in-orbit testing in January 2012. In the near term we are looking at opportunities to temporarily use this new satellite to develop new markets before it eventually replaces AsiaSat 3S in 2014.
Currently under construction, AsiaSat 6 and AsiaSat 8 are scheduled for launch in the first half of 2014 and will bring additional capacity to our fleet once in operation.
UTILISATION AND NEW CONTRACTS
The total number of transponders leased or sold as of 30 June 2012 decreased to 102 from 108 as at 31 December 2011, primarily due to the early termination of a contract with a customer. Correspondingly, the overall utilisation rate for the period as of 30 June 2012 was 78%, compared with 82% as at 31 December 2011.
New contracts won during the period under review amounted to a total value of HK$91 million (2011: HK$367 million), while renewed contracts were worth HK$1,397 million (2011: HK$313 million), which were mainly from a renewal with a major customer during the period. Combined new and renewed contracts amounted to HK$1,488 million (2011: HK$680 million).
MARKET REVIEW
While the United States and Europe struggled under adverse economic conditions, continued investment by operators in Asia Pacific fuelled demand for direct-to-home (“DTH”) services and telecommunications applications such as data distribution and private networks. Demand for these services, together with trends towards localised content and video formats with higher picture resolution such as HDTV and 3DTV, created requirements for new capacity, which AsiaSat as the pioneer in Asian satellite services is well positioned to serve.
AsiaSat 7, a new addition to the AsiaSat fleet, allows us to explore near-term business growth opportunities before replacing AsiaSat 3S in 2014.
AsiaSat 6 and AsiaSat 8 are wholly new satellites that offer scope for expansion once they come on stream. AsiaSat 6 will have 28 high-powered C-band transponders while AsiaSat 8 will have 24 Ku-band transponders and a Ka-band beam. The two SS/L 1300 satellites will offer exceptional power and additional beam coverage for services across Asia, the Middle East and Australasia.
For AsiaSat 6, we have signed a unique arrangement with Thaicom Public Company Limited (“Thaicom”) that enables us to share certain frequencies in the 120oE orbital slot and develop a market at this location.
AsiaSat 8, which will be co-located with AsiaSat 5, will provide additional Ku-band capacity for services including DTH television, private networks and data distribution.
Launch contracts
During the review period, AsiaSat signed agreements with two companies for the launch of AsiaSat’s future satellites - AsiaSat 6, AsiaSat 8 and the yet to be contracted AsiaSat 9.
On 8 February 2012, an agreement was signed with Space Exploration Technologies (“SpaceX”) to launch two AsiaSat communications satellites using SpaceX’s Falcon 9 rocket from its launch complex at Cape Canaveral Air Force Station in Florida, USA.
On 22 June 2012, AsiaSat also signed a contract with International Launch Services (“ILS”) that can be used as the launch service for any of our three upcoming satellites.
TAI PO EARTH STATION EXPANSION
Expansion of the Tai Po Earth Station in Hong Kong
During the first half of 2012, we completed the expansion of the Tai Po Earth Station in Hong Kong. Besides supporting the Telemetry, Tracking and Control (TT&C) activities of AsiaSat's satellite fleet, it also provides value added services such as C-band and Ku-band traffic uplink, shared hub services, MCPC (Multiple Channels per Carrier) distribution platforms, equipment hosting and backup services to customers.
The Earth Station expansion allows us to remain competitive in an industry that increasingly demands such value added services and complements our existing core business of transponder capacity leasing.
BUSINESS DEVELOPMENT
SpeedCast
SpeedCast is a wholly-owned AsiaSat subsidiary and provider of network services to organisations mainly in the maritime, mobile communications, banking, oil and gas industries. During the period, SpeedCast generated turnover of HK$124 million (2011: HK$118 million), an increase of 5% compared with the first half of last year. Net profit was HK$10 million (2011: HK$9 million).
At the end of the review period, we were engaged in discussions for disposing of the Company’s interest in this business. Since SpeedCast is not one of our core businesses, we believe that it would be in a better position to achieve its full potential under different ownership. As of 30 June 2012, no terms for disposal had been finalised and such possible disposal may or may not materialise.
DISH-HD Asia Satellite
As described in our 2011 annual report, AsiaSat had agreed to dispose of its stake in DISH-HD Asia Satellite, a joint venture between AsiaSat and EchoStar Corporation for the provision of DTH services. In June 2012, the Office of the Communications Authority approved the disposal arrangement. However, AsiaSat continues to provide satellite capacity and support services for DISH-HD Asia Satellite’s ongoing operations.
INDIAN FINANCE ACT
In our 2011 annual report, we mentioned a new Finance Bill that had been proposed in India and which could have unfavourable consequences for the Group’s current tax proceedings in the Indian Courts. This bill was passed by the Indian Parliament in May of this year.
Under the Indian Income Tax Act (as amended by the Finance Act), revenues received from the provision of satellite transponder capacity in India or income earned from any source in India will be charged tax in India. The portion of revenue earned by the Group that would be deemed to be Indian sourced is yet to be decided by the Indian Courts and is therefore still uncertain.
OUTLOOK
During the first half of the year, the Asia-Pacific region was largely able to weather the economic storms currently being felt in Europe and the United States. In the second half of 2012, there is the possibility that we may begin seeing signs of slower growth, especially given the nature of our industry which tends to lag economic trends, both negative and positive.
Nevertheless, we remain confident in our ability to deliver sustainable growth based on our reputation for providing highly reliable satellite services and technical excellence as well as our commitment to serving our customers in a professional and responsive manner.
ACKNOWLEDGMENTS
In a global environment of economic uncertainty, AsiaSat managed to achieve revenue and profit growth during the first half of 2012. This would not have been possible without the contributions of our management team and staff or the guidance of the Board of Directors. To all of you, I extend my heartfelt appreciation. I would also like to take this opportunity to thank our customers, suppliers and equity holders for their continuing support of and confidence in our Company.
JU Wei Min
Chairman
23 August 2012
