sunday communications limited
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SUNDAY Communications Limited. 2003 Interim Results Announcement 10 September. Good News. Interim Results. 10 September, 2003. Business Overview. Presenter Bruce Hicks Group Managing Director. SUNDAY Overview. Net profit of HK$13 million Successful launch of segmentation initiatives - PowerPoint PPT PresentationTRANSCRIPT
SUNDAY Communications Limited
2003 Interim Results Announcement
10 September
Interim Results10 September, 2003
Good News
Presenter
Bruce Hicks Group Managing Director
Business Overview
SUNDAY Overview
Net profit of HK$13 million
Successful launch of segmentation initiatives
Further debt reduction
SUNDAY Profitability
HK$13 million net profit
EBITDA up 57% to HK$160 million
Difficult environment
Profitability - Revenues
Revenues stable, with mobile services revenue down 2% to HK$582 million
Subscriber numbers rose to 650,000
Profitability – Efficiency
Benefit of changes in 2002, including China operation
Raised efficiency
Operating costs (ex depreciation) down 19% or HK$74 million
Profitability - Quality
Customers demand quality
Raised quality standards in:
•Coverage
•Pre-sales service
•Customer care
SUNDAY competes on quality
The New Marketplace
Market maturity / saturation
Little growth in numbers
Value comes from creativity and segmentation
SUNDAY and Creativity Integrated approach
Leader in location-based data services:
• Family Watch
•SARS updates
Responding creatively to price pressure:
•Unlimited GPRS
•Rollover airtime
•All-Star Pack
SUNDAY and Segmentation Requires organisational
change Segmenting by :
•Demographics•Geography•Usage
Two services launched in Q2:• U Decide youth plan• Pinoy service
3G will accelerate this trend
Prospects – 2H Improving macro environment
Drive profitability through:
•Efficiency and quality
•Creative data services
•Market segmentation
Examine China opportunities
Prospects – 3G Critical to survival in changing
mobile world SUNDAY has:
• Strategy • License
Now planning systems for:• Network• IT • Service delivery
In positive discussions on: • Technology• Financing
Conclusion
SUNDAY is:
Profitable
Competitive
Poised for growth
Presenter
Janet Fung Group Director, Finance
Financial Overview
(HK$ million except for profit/(loss) per share) 2002 1H 2002 2H 2003 1HYoY HoH
2002 1H 2002 2HTurnover
- mobile services 594 624 582 -2% -7%- sales of mobile phones & accessories 63 52 65 3% 25%- others 7 2 1
664 678 648 -2% -4%Cost of inventories sold and services provided (170) (164) (171) -1% -4%
Gross profit 494 514 477 -3% -7%
Other revenues 1 1 1 Operating expenses (392) (378) (318) 19% 16%
EBITDA before restructuring costs 103 137 160 55% 17%
Restructuring costs (1) (25) 0
EBITDA after restructuring costs 102 112 160 57% 43%
Depreciation (130) (126) (117)Finance costs, net of interest income (27) (29) (26)Share of loss of a joint venture (11) (8) (4)
Profit / (loss) for the period (66) (51) 13
Profit / (loss) per share (in cents) (2.2) (1.7) 0.4
Gross profit margin 74% 76% 74%EBITDA % on total turnover 15% 17% 25%Operating expenses % on mobile services revenue 66% 61% 55%
Improved by % vs
Consolidated Profit & Loss StatementHalf Year Ended 30 June 2003
Net Profit Turned from net loss to net profit of $13 million
Improved by $79 million YoY, and $64 million HoH
Achieving net profit on a month-to-month basis despite the outbreak of SARS and price war
13
(51)(66)-80
-40
0
40
2002 1H 2002 2H 2003 1H
( HK$ million )
EBITDA After Restructuring Costs Improved by $58 million (57%) YoY & $48 million (43%) HoH
160
102112
0
100
200
2002 1H 2002 2H 2003 1H
( HK$ million )
594624
582
7 2 152
6563
0
200
400
600
800
2002 1H 2002 2H 2003 1H
( HK$ million )
Mobile services Mobile phones & accessories Others
-7%
Mobile Services
5%
Mobile
Services
Turnover slight drop in mobile services revenue due to the outbreak of SARS and price war Increase in handset sales for new MMS phones
Gross Profit Slight drop in mobile services gross profit Stable mobile services gross margin at 82%
485512
480
7 2 00 -32
-100
0
100
200
300
400
500
600
2002 1H 2002 2H 2003 1H
( HK$ million )
Mobile services Mobile phones & accessories Others
-6%
Mobile Services
6%
Mobile
Services
Hong Kong Mobile Market
4,237 4,208 4,241
1,506 1,6141,202
388625
505
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Jun 2002 Dec 2002 Jun 2003
( in thousands )
Prepaid-inactivatedPrepaid-activatedPostpaid
25% 7%
-1% 1%
4%6%
Excluding prepaid-inactivated, 5,855k, penetration rate reached 87% in June 2003
5,827
6,219 6,480
Total growth ratePrepaid-activated growth ratePostpaid growth rate
Subscriber Numbers Total subscribers including MVNO - 662,000
420,000 414,000 414,000
189,000236,000
150,000
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Jun 2002 Dec 2002 Jun 2003
Postpaid Prepaid
26%25%
6%8%
603,000
650,000
570,000
-1%0%
Total growth rate
Postpaid growth ratePrepaid growth rate
Gross Churn – PostpaidAs a % of Opening Subscriber Numbers
7.9%
8.7%
6.5%
4.4%5.5%
0%
3%
6%
9%
12%
Jun 2001 Dec 2001 Jun 2002 Dec 2002 Jun 2003
Postpaid ARPU - Net Of Discounts & Incentives
200
211
208
217
220
150
200
250
Jun 2001 Dec 2001 Jun 2002 Dec 2002 Jun 2003
(HK$)
Data was around 5% of ARPU in 1H 2003
Consistently Improving Operating Efficiency
392 * 378 *
318
55%
61%
66%
0
250
500
2002 1H 2002 2H 2003 1H
(HK$ million)
50%
60%
70%
Operating expenses
Operating expenses as % of mobile services revenue
* Excludes one-off restructuring cost
Operating Expenses
2003 1H- $318 million
Network costs Salaries & related costs
Adv ertising, promotion & other selling costs Rental & related costs
Others
2002 1H - $392 million
Reduction of $74 million (19%) YoY, $60 million (16%) HoH
26 (8%)
23 (7%)
142 (45%)
73 (23%)
54 (17%)
29 (7%)
31 (8%)
66 (17%)
118 (30%)
148 (38%)
YoY increase / (reduction)
-5-16%
-6-21%
-6 -4%
-45-38%
-12-18%
Headcount - Hong Kong and Shenzhen
801737
510 519
239
173 201
791
0
200
400
600
800
1,000
Jun 2001 Dec 2001 Jun 2002 Dec 2002 Jun 2003
Hong Kong Shenzhen
791 801
976
720683
(HK$ million) Jun 2002 Dec 2002 Jun 2003
Prepayment for 3G licence fees 167 142 117 Fixed assets & others 1,260 1,219 1,153 Non-current assets 1,427 1,361 1,270
Current assets 507 450 383 Current liabilities (597) (590) (605)
Net current liabilities (90) (140) (222)
1,337 1,221 1,048
Financed by:
Share capital 299 299 299 Reserves 422 372 385
Shareholders' equity 721 671 684
Long-term bank and vendor loans 612 547 362
Other long term liabilities 4 3 2
1,337 1,221 1,048
Consolidated Balance Sheet
Cash and Credit Facilities
(HK$ million) Jun 2002 Dec 2002
Cash and bank balance (a) 231 208 173
Revolving facilities available for drawdown 637 481 329
Total 868 689 502
Bank and vendor loans repayable in
2002 98 - - 2003 238 238 119 2004 492 547 547
(b) 828 785 666
Net debt (b) - (a) 597 577 493
Net debt to equity ratio 83% 86% 72%
Jun 2003
Consolidated Cash Flow Half Year Ended 30 June 2003
(HK$ million)2002 1H 2002 2H 2003 1H
Operating activities (after finance costs) 73 56 130
Investing activities (51) (58) (44)
Financing activities- Cash drawdown 125 54 - - Repayment of long term loans (98) (97) (119) - Other financing activities (2) - -
25 (43) (119)
Net Cash Inflow /(Outflow) 47 (45) (33)
Changes in restricted cash deposits (1) (22) 2
Non-cash direct loan drawdown for capex 49 - -
Total cash and non-cash loan drawdown 174 54 -
Fixed Assets Additions
25 25 25
30
64
54
0
25
50
75
2002 1H 2002 2H 2003 1H
( HK$ million )
Capital Expenditure 3G Licence capitalised portion
SUNDAY Communications Limited
2003 Interim Results Announcement
10 September