ABC
COMMUNICATIONS (HOLDINGS) LIMITED
(Incorporated in Bermuda with limited liability)
Announcement of Audited Results for the Financial Year Ended 31st March, 1997
Group Results Announcement
The Directors of ABC Communications (Holdings) (Holdings) Limited are pleased to announce that the Company achieved a consolidated profit of HK$207.952 million for the year ended 31st March, 1997. Earnings per share amounted to 52 cents. The audited consolidated results of the Group are presented below:
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| Notes:- |
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| 1. | Operating
Profit Operating profit for 1996 has been adjusted by approximately HK$2.6 million to conform to the accounting treatment for operating profit for 1997 as a result of the termination of Business Co-operation projects in Vietnam.
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| 2. | Exceptional
Items
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| 1997 HK$ |
1996 HK$ |
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| Gain
on deemed disposal of investment in an associated company upon its initial
public offering of shares
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148,141,784
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---
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| Provision
for diminution in value of an associated company
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(13,871,920)
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---
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| Write-off
of fixed assets due to fire accident
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(4,798,080)
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---
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| Gain
on disposal of long term listed investments
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---
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5,784,971
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|
|
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129,471,784
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5,784,971
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In October 1996, the group's associated company SmarTone Telecommunications Holdings Limited ("SmarTone") issued 84 million ordinary shares upon its initial public offering and was listed on the Stock Exchange of Hong Kong Limited. As a result, the group's equity interest in SmarTone was reduced from 15% to 12.4% and an exceptional gain of HK$148,141,784 was realised.
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| 3. | Taxation Hong Kong profits tax has been provided at the rate of 16.5% (1996 : 16.5%) on the estimated assessable profit for the year. Taxation on overseas profits has been calculated on the estimated assessable profit for the year at the rates of taxation prevailing in the countries in which the Group operates.
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| 1997 HK$ |
1996 HK$ |
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| COMPANY
AND SUBSIDIARIES Hong Kong profits tax
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3,682,171
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7,031,785
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| Overseas
taxation Deferred taxation |
124,775 (718,859) 3,088,087 |
62,467 (627,598) 6,466,654 |
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| ASSOCIATED
COMPANIES Hong Kong profits tax Overseas taxation Deferred taxation TOTAL |
10,197,844 269,824 (14,000,000) (3,532,332) --------------- (444,245) |
937,637 (239,961) 14,000,000 14,697,676 --------------- 21,164,330
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| 4. | Earnings
per Share The earnings per share is calculated based on the profit attributable to shareholders of HK$207,951,924 (1996 : HK$92,584,940) and on 400,000,000 shares (1996 : 400,000,000 shares) in issue during the year.
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No pre-emptive rights exist under Bermuda law in relation to issues of new shares by the Company.
The robust growth of the cellular market continued unabated throughout the year under review while the paging market recorded a moderate contraction of 3% in the same period. Due to measures initiated much earlier in anticipation of this structural change in the marketplace, our Group managed to maintain a modest profit from our local operation in spite of the intense competition within the paging industry. After deducting a slight loss for our Internet service, and making provisions for write-offs for our Vietnam business unit, our local business reported a pre-tax profit of HK$11 million for the fiscal year.
The bulk of our earnings for the year was derived from SmarTone Telecommunications Holdings Limited which accounted for a pre-tax profit of slightly over HK$60 million for the nine-month period from 1 April to 31 December, 1996. Our share of SmarTone's profit from 1 January, 1997 to 31st March, 1997 will be fully reflected in our accounts for the fiscal year 1997/98. Meanwhile, as a result of SmarTone's public listing during the year and the subsequent dilution of our effective holdings from 15% to 12.4%, an exceptional gain is deemed to have been made and reflected accordingly in the accounts.
Towards the end of the fiscal year, the Group launched a new product, QuickSilver, which represented years of research and development to tap a growing niche market in the mobile information industry. Making use of a unique proprietary high-speed transmission format and a custom-built pocket-receiver, the Group now provides customers with updates on stocks, currencies, commodities and financial news very much faster than other wireless receivers. The product has been exceptionally well-received since launch and we would expect a positive contribution from QuickSilver to our earnings for the current financial year of 1997/98.
South East Asia
During the year, EasyCall Philippines, in which we had a 20.6% share equity, maintained its market leadership in the Philippine paging market and contributed a net profit of HK$3.8 million to our Group earnings. Subsequent to the year-end, in view of the increasing maturity of the Philippine paging market and the poor liquidity of EasyCall's shares, our Group entered into an agreement for a swap of our shares in EasyCall for shares in Matrix Telecommunications Limited, the controlling shareholder of EasyCall. Our sale price of approximately 12.8 pesos per share represented a premium of 60% over EasyCall's last quoted price before the transaction. However, consequent upon our disposal of these shares, a paper loss was incurred by the Group and appropriate provisions have been made in the accounts for the year. Our total investment in Matrix has meanwhile been raised from under 9.4% to approximately 11.5%.
Vietnam
The paging market in Vietnam continued to show steady growth. However, due to uncertainties in the regulatory environment, we have had little progress in the conversion of our trial licences in Ho Chi Minh City and Hanoi into formal Business Co-operation Agreements. To resolve this outstanding licensing issue, we have agreed with the Telecommunications Authorities of Hanoi and Ho Chi Minh City respectively for the termination of these trial projects. Under the terms of our trial licences, the Authorities concerned would repurchase the equipment installed and remit our share of the revenues generated during the trial period. Negotiations are currently in progress for a full settlement of these issues as well as for a Consultancy Agreement for the continued support of these paging projects by our Group in future. For the sake of prudence, appropriate provisions for write-offs have been made in our accounts for the year.
Taiwan
During the year, our Group responded to invitations for tenders by the Telecommunications Authority of Taiwan and participated in bids for paging and cellular licences. Our paging consortium, Express Link Limited was awarded a licence for the Northern Region. The cellular consortium, Far Eastone Telecommunications Company Limited, won a province-wide PCS licence as well as a Northern GSM licence. Both services are expected to be launched this summer. Although these investments are not likely to contribute to our earnings in the near future, we are confident that the Taiwan market will ultimately present immense potential.
Prospects
Over the last few years,
we have aggressively pursued diversification to reduce our earnings reliance
on our local paging operation. In the meantime, we have maintained extreme prudence
in our financial planning. Our investments to date have mostly been funded by
internal resources and the Group has remained practically debt-free throughout
the year. As the global telecommunications markets continue to further open
up, new opportunities will emerge. We believe the Group will be well-placed
to exploit such opportunities when they arise.
On behalf of the Board
George Ho
Chairman
Hong Kong 23rd June, 1997
