FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of March 2006
Commission File Number: 1-14396
ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
--------------------------------------------------
(Translation of registrant's name into English)
17/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [_]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1). __
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a
Form 6-K if submitted solely to provide an attached annual report to security
holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): __
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a
Form 6-K if submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
2
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [_] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):_________.
3
Information furnished on this form:
Press Announcement, dated March 16, 2006, by the Registrant disclosing the
Company's Final Results for the Year Ended 31 December 2005.
EXHIBIT
EXHIBIT NUMBER PAGE
-------------- ----
1.1 Press Announcement, dated March 16, 2006, by the Registrant 5
disclosing the Company's Final Results for the Year Ended
31 December 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
(Registrant)
Date: March 22, 2006 By: /s/ Peter Jackson
------------------------------
Peter Jackson
Chief Executive Officer
5
EXHIBIT 1.1
-----------
[GRAPHIC OMITTED][LOGO - AsiaSat]
ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
[CHINESE CHARACTERS OMITTED]
(INCORPORATED IN BERMUDA WITH LIMITED LIABILITY)
(STOCK CODE: 1135)
PRESS ANNOUNCEMENT
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005
The Board of Directors (the "Board") of Asia Satellite Telecommunications
Holdings Limited (the "Company") is pleased to announce the results, audited
at the date of this release, of the Company and its subsidiaries (the "Group")
for the year ended 31 December 2005, together with comparative figures for the
corresponding year in 2004 as follows:
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2005
YEAR ENDED 31 DECEMBER
----------------------
NOTE 2005 2004
---- ----
HK$'000 HK$'000
Sales 2 879,705 1,004,982
Cost of services (419,029) (420,490)
--------- ---------
GROSS PROFIT 460,676 584,492
Other gains - net 43,711 21,982
Administrative expenses (83,880) (102,477)
--------- ---------
OPERATING PROFIT 420,507 503,997
Finance costs - (1)
Share of loss of associates (3,872) (12,380)
--------- ---------
PROFIT BEFORE INCOME TAX 416,635 491,616
Income tax expense 3 (51,270) (60,536)
--------- ---------
PROFIT FOR THE YEAR 365,365 431,080
========= =========
Attributable to:
Equity holders of the Company 366,184 431,216
Minority interests (819) (136)
--------- ---------
365,365 431,080
========= =========
EARNINGS PER SHARE FOR PROFIT
ATTRIBUTABLE TO THE EQUITY HOLDERS OF
THE COMPANY DURING THE YEAR
(expressed in HK$ per share)
- basic 4 0.94 1.10
========= =========
- diluted 4 0.94 1.10
========= =========
DIVIDENDS 5 136,593 136,593
========= =========
CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2005
AS AT 31 DECEMBER
-----------------
2005 2004
---- ----
HK$'000 HK$'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 2,620,911 2,894,467
Leasehold land and land use rights 24,199 24,782
Intangible assets 1,339 -
Unbilled receivable 174,563 175,267
Interests in associates 14,294 13,397
Amount paid to tax authority 93,666 67,023
--------- ---------
2,928,972 3,174,936
--------- ---------
CURRENT ASSETS
Inventories 434 416
Trade and other receivables 118,598 137,478
Other loan receivable - 2,062
Cash and cash equivalents 1,635,526 1,234,355
--------- ---------
1,754,558 1,374,311
--------- ---------
TOTAL ASSETS 4,683,530 4,549,247
--------- ---------
EQUITY
Capital and reserves attributable to
the Company's equity holders
Share capital 39,027 39,027
Share premium 4,614 4,614
Retained earnings
- Proposed final dividend 105,372 105,372
- Others 3,955,175 3,725,584
--------- ---------
4,104,188 3,874,597
Minority interests 5,537 6,356
--------- ---------
TOTAL EQUITY 4,109,725 3,880,953
--------- ---------
LIABILITIES
NON-CURRENT LIABILITIES
Deferred income tax liabilities 192,654 205,258
Deferred revenue 87,654 111,844
--------- ---------
280,308 317,102
--------- ---------
CURRENT LIABILITIES
Construction payables 3,096 4,989
Other payables and accrued expenses 64,118 65,322
Deferred revenue 151,982 175,043
Current income tax liabilities 74,180 105,717
Dividend payable 121 121
--------- ---------
293,497 351,192
--------- ---------
TOTAL LIABILITIES 573,805 668,294
--------- ---------
TOTAL EQUITY AND LIABILITIES 4,683,530 4,549,247
========= =========
NET CURRENT ASSETS 1,461,061 1,023,119
========= =========
TOTAL ASSETS LESS CURRENT LIABILITIES 4,390,033 4,198,055
========= =========
NOTES:
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
1.1 BASIS OF PREPARATION
The consolidated financial statements of the Group have been prepared in
accordance with Hong Kong Financial Reporting Standards (HKFRSs) and have been
prepared under the historical cost convention.
The preparation of financial statements in conformity with HKFRSs requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies.
THE ADOPTION OF NEW/REVISED HKFRSS
In 2005, the Group adopted the new/revised standards and interpretations of
HKFRS below, which are relevant to its operations. The 2004 comparatives have
been amended as required, in accordance with the relevant requirements.
HKAS 1 Presentation of Financial Statements
HKAS 2 Inventories
HKAS 7 Cash Flow Statements
HKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
HKAS 10 Events after the Balance Sheet Date
HKAS 12 Income Taxes
HKAS 14 Segment Reporting
HKAS 16 Property, Plant and Equipment
HKAS 17 Leases
HKAS 18 Revenue
HKAS 19 Employee Benefits
HKAS 21 The Effects of Changes in Foreign Exchange Rates
HKAS 23 Borrowing Costs
HKAS 24 Related Party Disclosures
HKAS 27 Consolidated and Separate Financial Statements
HKAS 28 Investments in Associates
HKAS 31 Investments in Joint Ventures
HKAS 33 Earnings per Share
HKAS 36 Impairment of Assets
HKAS 37 Provisions, Contingent Liabilities and Contingent Assets
HKAS 38 Intangible Assets
HKFRS 2 Share-based Payments
HKFRS 3 Business Combinations
The adoption of new/revised HKASs did not result in substantial changes to the
Group's existing accounting policies under HK GAAP. In summary:
- HKAS 1 has affected the presentation of minority interests, share of net
after-tax results of associates and other disclosures in the consolidated
balance sheet, consolidated income statement and consolidated statement of
changes in equity;
- HKASs 2, 8,16, 21, 28, 36 have affected certain disclosures in the
financial statements;
- HKASs 7, 10, 12, 14, 18, 19, 23, 27, 31, 33 and 37 did not have any
material impact as the Group's existing accounting policies have already
complied with the standards in all material respects; and
- HKAS 24 has affected the identification of related parties and the
disclosure of related-party transactions.
The adoption of revised HKAS 17 has resulted in a change in the accounting
policy relating to the reclassification of leasehold land and land use rights
from property, plant and equipment to operating leases. The up-front
prepayments made for the leasehold land and land use rights are expensed in
the income statement on a straight-line basis over the period of the lease. In
prior years, the leasehold land was accounted for at cost less accumulated
depreciation.
The adoption of HKFRS 2 has resulted in a change in the accounting policy for
share-based payments. Until 31 December 2004, the provision of share options to
employees did not result in an expense in the income statements. Effective on 1
January 2005, the Company expenses the cost of share options in the income
statement. As no share option was granted after 7 November 2002, no adjustment
was required in the income statement of the respective years (Note 1.15).
The adoption of HKFRS 3, HKASs 36 and 38 results in a change in the accounting
policy for goodwill. Until 31 December 2004, goodwill was:
- Amortised on a straight line basis over a period of 2 years; and
- Assessed for an indication of impairment at each balance sheet date.
In accordance with the provisions of HKFRS 3 (Note 1.7):
- The Group ceased amortisation of goodwill from 1 January 2005;
- Accumulated amortisation as at 31 December 2004 has been eliminated with a
corresponding decrease in the cost of goodwill;
- For the year ended 31 December 2005 and onwards, goodwill is tested
annually for impairment, as well as when there is indication of
impairment.
The Group has reassessed the useful lives of its intangible assets in
accordance with the provisions of HKAS 38. No adjustment resulted from this
reassessment.
All changes in the accounting policies have been made in accordance with the
transition provisions in the respective standards. All standards adopted by
the Group require retrospective application other than:
- HKAS 16 - the initial measurement of an item of property, plant and
equipment acquired in an exchange of assets transaction is accounted at
fair value prospectively only to future transactions;
- HKFRS 2 - only retrospective application for all equity instruments
granted after 7 November 2002 and not vested at 1 January 2005;
- HKFRS 3 - prospectively after the adoption date.
There was no impact on opening retained earnings at 1 January 2004 from the
adoption of HKASs 31 and 38, HKFRSs 2 and 3.
THE ADOPTION OF REVISED HKAS 17
2005 2004
HK$'000 HK$'000
DECREASE IN PROPERTY, PLANT AND EQUIPMENT (24,199) (24,782)
INCREASE IN LEASEHOLD LAND AND LAND USE RIGHTS 24,199 24,782
No early adoption of the following new Standards or Interpretations that have
been issued but are not yet effective. The adoption of such Standards or
Interpretations will not result in substantial changes to the Group's
accounting policies.
HKFRS-Int 4 Determining whether an Arrangement contains a Lease
HKFRS 7 Financial Instruments: Disclosures
1.2 CONSOLIDATION
The consolidated financial statements include the financial statements of the
Company and all its subsidiaries made up to 31 December.
(a) SUBSIDIARIES
Subsidiaries are all entities (including special purpose entities) over which
the Group has the power to govern the financial and operating policies
generally accompanying a shareholding of more than one half of the voting
rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group
controls another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that control
ceases.
The purchase method of accounting is used to account for the acquisition of
subsidiaries. The cost of an acquisition is measured as the fair value of the
assets given, equity instruments issued and liabilities incurred or assumed at
the date of exchange, plus costs directly attributable to the acquisition.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values
at the acquisition date, irrespective of the extent of any minority interest.
The excess of the cost of acquisition over the fair value of the Group's share
of the identifiable net assets acquired is recorded as goodwill. If the cost
of acquisition is less than the fair value of the net assets of the subsidiary
acquired, the difference is recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains on transactions
between group companies are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
In the Company's balance sheet the investments in subsidiaries are stated at
cost less provision for impairment losses. The results of subsidiaries are
accounted for by the Company on the basis of dividend received and receivable.
(b) ASSOCIATES
Associates are all entities over which the Group has significant influence but
not control, generally accompanying a shareholding of between 20% and 50% of
the voting rights. Investments in associates are accounted for by the equity
method of accounting and are initially recognised at cost. The Group's
investment in associates includes goodwill (net of any accumulated impairment
loss) identified on acquisition.
The Group's share of its associates' post-acquisition profits or losses is
recognised in the income statement, and its share of post-acquisition
movements in reserves is recognised in reserves. The cumulative
post-acquisition movements are adjusted against the carrying amount of the
investment. When the Group's share of losses in an associate equals or exceeds
its interest in the associate, including any other unsecured receivables, the
Group does not recognise further losses, unless it has incurred obligations or
made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are
eliminated to the extent of the Group's interest in the associates. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of associates have
been changed where necessary to ensure consistency with the policies adopted
by the Group.
In the Company's balance sheet the investments in associated companies are
stated at cost less provision for impairment losses. The results of associated
companies are accounted for by the Company on the basis of dividend received
and receivable.
1.3 SEGMENT REPORTING
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that
are subject to risks and returns that are different from those of segments
operating in other economic environments.
1.4 FOREIGN CURRENCY TRANSLATION
(a) FUNCTIONAL AND PRESENTATION CURRENCY
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ("the functional currency"). The consolidated financial
statements are presented in HK dollars, which is the Company's functional and
presentation currency.
(b) TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income
statement.
Translation differences on non-monetary items, such as equity instruments held
at fair value through profit or loss, are reported as part of the fair value
gain or loss. Translation difference on non-monetary items, such as equities
classified as available-for-sale financial assets, are included in the fair
value reserve in equity.
(c) GROUP COMPANIES
The results and financial position of all the group entities (none of which
has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
(i) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance sheet;
(ii) income and expenses for each income statement are translated at
average exchange rates (unless this average is not a reasonable approximation
of the cumulative effect of the rates prevailing on the transaction dates, in
which case income and expenses are translated at the dates of the
transactions); and
(iii) all resulting exchange differences are recognised as a separate
component of equity.
1.5 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation
and accumulated impairment losses.
Buildings in the course of development for production, rental or
administrative purposes or for purposes not yet determined, are carried at
cost, less an identified impairment loss. Depreciation of these assets, on the
same basis as other property assets, commences when the assets are ready for
their intended use. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. All other repairs and maintenance are
expensed in the income statement during the financial year in which they are
incurred.
Depreciation of property, plant and equipment is calculated using the
straight-line method to allocate cost or revalued amounts to their residual
values over their estimated useful lives, at the following rates per annum:
Satellites:
- AsiaSat 2 8%
- AsiaSat 3S 6.25%
- AsiaSat 4 6.67%
Buildings 4%
Tracking facilities 10%-20%
Furniture, fixtures and fittings 20%-33%
Other equipment 25%-33%
Motor vehicles 25%
Plant and machinery 20%
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date.
An asset's carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount.
1.6 INTANGIBLE ASSETS - LICENCE
The licence is shown at historical cost. The licence has a definite useful
life and is carried at cost less accumulated amortisation. Amortisation is
calculated using the straight-line method to allocate the cost of the licence
over its estimated useful life (112 months).
1.7 IMPAIRMENT OF ASSETS
Assets that have an indefinite useful life are not subject to amortisation,
which are at least tested annually for impairment and are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash flows
(cash-generating units).
1.8 GOODWILL
Goodwill represents the excess of the cost of an investment over the fair
value of the Group's share of the net identifiable assets of the acquired
associates at the date of investment. Goodwill on investment of associates is
included in interests in associates. Goodwill is tested annually for
impairment and carried at cost less accumulated impairment losses. Gains and
losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment
testing.
1.9 INVENTORIES
Inventories are stated at the lower of cost and net realisable value. Cost is
determined using the first-in, first-out (FIFO) method, comprises all costs of
purchase and other costs incurred in bringing the inventories to their present
locations and conditions. Net realisable value is the estimated selling price
in the ordinary course of business, less applicable variable selling expenses.
1.10 TRADE AND OTHER RECEIVABLES
Trade and other receivables are recognised initially at fair value less
provision for impairment. A provision for impairment of trade and other
receivables is established when there is objective evidence that the Group
will not be able to collect all amounts due according to the original terms of
receivables. The amount of the provision is recognised in the income
statement.
1.11 CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in hand, deposits held at call with
banks, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.
1.12 SHARE CAPITAL
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
1.13 BORROWINGS
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Transaction costs are incremental costs that are directly
attributable to the acquisition, issue or disposal of a financial asset or
financial liability, including fees and commissions paid to agents, advisers,
brokers and dealers, levies by regulatory agencies and securities exchanges,
and transfer taxes and duties. Borrowings are subsequently stated at amortised
cost; any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in the income statement over the period of the
borrowings using the effective interest method.
1.14 DEFERRED INCOME TAX
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. However,
if the deferred income tax arises from initial recognition of an asset or
liability in a transaction other than a business combination that at the time
of the transaction affects neither accounting nor taxable profit or loss, it
is not accounted for. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted by the balance sheet
date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable
that future taxable profit will be available against which the temporary
differences can be utilised.
Deferred income tax is provided on temporary differences arising on
investments in subsidiaries, associates and jointly controlled entities,
except where the timing of the reversal of the temporary difference is
controlled by the Group and it is probable that the temporary difference will
not reverse in the foreseeable future.
1.15 EMPLOYEE BENEFITS
(a) PENSION OBLIGATIONS
The Group participates in defined contribution plans, the Group pays
contributions to publicly or privately administered pension insurance plans on
a mandatory, contractual or voluntary basis. The pension plans are generally
funded by payments from
employees and by the relevant Group companies. The Group has no further
payment obligations once the contributions have been paid. The contributions
are recognised as employee benefit expense when they are due and are reduced
by contributions forfeited by those employees who leave the scheme prior to
vesting fully in the contributions. Prepaid contributions are recognised as an
asset to the extent that a cash refund or a reduction in the future payments
is available.
(b) SHARE-BASED COMPENSATION
The Group operates an equity-settled, share-based compensation plan. The fair
value of the employee services received in exchange for the grant of the
options is recognised as an expense. The total amount to be expensed over the
vesting period is determined by reference to the fair value of the options
granted, excluding the impact of any non-market vesting conditions (for
example, profitability and sales growth targets). Non-market vesting
conditions are included in assumptions about the number of options that are
expected to become exercisable. At each balance sheet date, the entity revises
its estimates of the number of options that are expected to become
exercisable. It recognises the impact of the revision of original estimates,
if any, in the income statement, and a corresponding adjustment to equity over
the remaining vesting period.
(c) PROFIT-SHARING AND BONUS PLANS
The expected cost of profit sharing and bonus payments are recognised as a
liability when the Group has a present legal or constructive obligation as a
result of services rendered by employees and a reliable estimate of the
obligation can be made.
Liabilities for profit sharing and bonus plans are expected to be settled
within 12 months and are measured at the amounts expected to be paid when they
are settled.
1.16 PROVISIONS
Provisions for environmental restoration, restructuring costs and legal claims
are recognised when: the Group has a present legal or constructive obligation
as a result of past events; it is more likely than not that an outflow of
resources will be required to settle the obligation; and the amount has been
reliably estimated. Restructuring provisions comprise lease termination
penalties and employee termination payments. Provisions are not recognised for
future operating losses.
Where there are a number of similar obligations, the likelihood that an
outflow will be required in settlement is determined by considering the class
of obligations as a whole. A provision is recognised even if the likelihood of
an outflow with respect to any one item included in the same class of
obligations may be small.
1.17 REVENUE RECOGNITION
Revenue from transponder utilisation is recognised on a straight-line basis
over the period of the agreements. The excess of revenue recognised on a
straight-line basis over the amount received and receivable from customers in
accordance with the contract terms is shown as unbilled receivable.
Revenue from the sale of transponder capacity under transponder purchase
agreements is recognised on a straight-line basis from the date of delivery of
the transponder capacity until the end of the estimated useful life of the
satellite.
Deposits received in advance in connection with the provision of transponder
capacity are deferred and included in other payables.
Services under transponder utilisation agreements are generally billed
quarterly in advance. Such amounts received in advance and amounts received
from the sale of transponder capacity under transponder purchase agreements in
excess of amounts recognised as revenue are recorded as deferred revenue.
Deferred revenue which will be recognised in the following year is classified
under current liabilities and amounts which will be recognised after one year
are classified as non-current.
Interest income is accrued on a time basis, by reference to the principal
amounts outstanding and at the interest rate applicable.
1.18 OPERATING LEASES (AS THE LESSEE)
Leases in which a significant portion of the risks and rewards of ownership
are retained by the lessor are classified as operating leases. Payments made
under operating leases (net of any incentives received from the lessor) are
expensed in the income statement on a straight-line basis over the period of
the lease.
1.19 DIVIDEND DISTRIBUTION
Dividend distribution to the Company's shareholders is recognised as a
liability in the Group's financial statements in the period in which the
dividends are approved by the Company's shareholders.
2. SALES AND SEGMENT INFORMATION
The Group's sales is analysed as follows:
2005 2004
---- ----
HK$'000 HK$'000
Income from provision of satellite transponder capacity 850,436 982,464
Sales of satellite transponder capacity 24,491 20,518
Other revenue 4,778 2,000
------- -------
879,705 1,004,982
======= =========
The Group has only one business segment, namely the operation, maintenance and
provision of satellite telecommunication systems for broadcasting and
telecommunications. The Group's primary reporting format for segment reporting
purposes under HKAS 14 "Segment Reporting" is the geographical basis. For the
purpose of classification, the country where the customer is incorporated is
deemed to be the source of sales. However, the Group's operating assets
consist primarily of its satellites which are used, or are intended for use,
for transmission to multiple geographical areas and therefore cannot be
allocated between geographical segments. Accordingly, no geographical analysis
of expenses, assets and liabilities has been presented. The following table
provides an analysis of the Group's sales by geographical markets:
2005 2004
---- ----
HK$'000 HK$'000
Hong Kong 341,698 323,133
Greater China, including Taiwan 202,730 197,936
United States of America 78,205 183,750
United Kingdom 49,401 46,073
British Virgin Islands 9,706 40,897
Others 197,965 213,193
------- ---------
879,705 1,004,982
======= =========
3. INCOME TAX EXPENSE
A significant portion of the Group's profit is treated as earned outside Hong
Kong and is not subject to Hong Kong profits tax. Hong Kong profits tax has
been provided at the rate of 17.5% (2004: 17.5%) on the estimated assessable
profit for the year.
Overseas tax, including the Foreign Enterprises Income Tax in the People's
Republic of China, is calculated at 5% to 20% of the gross revenue earned in
certain of the overseas jurisdictions.
The Group currently has a tax case in dispute with the Indian tax authorities,
the nature of which was fully described in the prior year annual report.
2005 2004
---- ----
HK$'000 HK$'000
Current income tax
- Hong Kong profits tax 45,056 49,574
- Overseas taxation 18,818 19,226
Deferred income tax (12,604) (8,264)
------ ------
51,270 60,536
====== ======
The tax on the Group's profit before tax differs from the theoretical amount
that would arise using the weighted average tax rate applicable to profits of
the consolidated companies as follows:
2005 2004
---- ----
HK$'000 HK$'000
Profit before tax 416,635 491,616
======= =======
Tax calculated at tax rate of 17.5% (2004: 17.5%) 72,911 86,033
Tax effect of income not subject to tax (84,164) (91,475)
Tax effect of expenses not deductible for tax purposes 43,027 44,585
Tax effect of tax losses of associates not recognised 678 2,167
Effect of income tax rate differential between Hong Kong
and overseas locations 18,818 19,226
------- -------
Tax expense 51,270 60,536
======= =======
4. EARNINGS PER SHARE
BASIC
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by the weighted average number of ordinary
shares in issue during the year.
2005 2004
---- ----
HK$'000 HK$'000
Profit attributable to equity holders of the Company 366,184 431,216
======= =======
Weighted average number of ordinary shares
in issue (thousands) 390,266 390,266
======= =======
Basic earnings per share (HK$ per share) 0.94 1.10
======= =======
DILUTED
Diluted earnings per share is calculated adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares. The Company has share options of dilutive potential ordinary
shares. The calculation is done to determine the number of shares that could
have been acquired at fair value (determined as the average annual market
share price of the Company's shares) based on the monetary value of the
subscription rights attached to outstanding share options. The number of
shares calculated as above is compared with the number of shares that would
have been issued assuming the exercise of the share options.
2005 2004
---- ----
HK$'000 HK$'000
Profit used to determine diluted earnings per share 366,184 431,216
======= =======
Weighted average number of ordinary shares
in issue (thousands) 390,266 390,266
Adjustments for - share options (thousands) 26 -
------- -------
Weighted average number of ordinary shares
for diluted earnings per share (thousands) 390,292 390,266
======= =======
Diluted earnings per share (HK$ per share) 0.94 1.10
======= =======
5. DIVIDENDS
The dividends paid during the years ended 2005 and 2004 were HK$136,593,000
(HK$0.35 per share) and HK$124,885,000 (HK$0.32 per share) respectively. A
dividend in respect of 2005 of HK$0.27 per share, amounting to a total
dividend of HK$105,372,000 is to be proposed at the Annual General Meeting on
19 May 2006. These financial statements do not reflect this dividend payable.
2005 2004
---- ----
HK$'000 HK$'000
Interim dividend paid of HK$0.08 (2004: HK$0.08)
per ordinary share 31,221 31,221
Proposed final dividend of HK$0.27 (2004: HK$0.27)
per ordinary share 105,372 105,372
------- -------
136,593 136,593
======= =======
6. PURCHASE, SALE OR REDEMPTION OF OWN SECURITIES
During the year, neither the Company nor any of its subsidiaries purchased,
sold or redeemed any of the Company's listed securities.
7. CORPORATE GOVERNANCE
Throughout the year of 2005, the Group has applied the principles and has
complied with the Code on Corporate Governance Practices ("Model Code") as set
out in Appendix 14 to the Rules Governing the Listing of Securities ("Listing
Rules") on The Stock Exchange of Hong Kong Limited (the "Exchange") with
certain deviations as outlined below.
The Remuneration Committee is composed of three members, of whom one is
Independent Non-executive Director ("INED(s)") and the other two are
Non-executive Directors ("NED(s)"). The Committee is chaired by the INED.
Having committee members representing the majority shareholders adds value as
the representative of CITIC Group ("CITIC") brings in the knowledge of local
market pay practices (China in general and Hong Kong more specifically),
whereas the SES GLOBAL S.A. ("SES GLOBAL") representative adds the satellite
industry specific dimension. It is logical to have a small Remuneration
Committee as it allows open, frank and very focused discussions. In order not
to lose the input from the main shareholder representatives, compliance would
require the Committee size of at least 5 members which would mean
participation of all the independent Board members and involve close to half
of all the NEDs.
The Group has adopted procedures governing directors' securities transactions
in compliance with the Model Code as set out in Appendix 10 of the Listing
Rules.
8. AUDIT COMMITTEE
The Audit Committee consists of five members, three of whom are Independent
Non-executive Directors who satisfy independent, financial literacy and
experience requirements, whilst the other two members are Non-executive
Directors and have only observer status with no voting rights. The Committee
is chaired by an Independent Non-executive Director, who possesses appropriate
professional qualifications and experience in financial matters.
The Committee has reviewed the accounting principles and practices adopted by
the Group and the consolidated financial statements for the year ended 31
December 2005 in conjunction with the Company's external auditors.
9. CHARGES ON ASSETS
The Group did not have any charges on assets as at 31 December 2005 and 31
December 2004.
10. PUBLICATION OF DETAILED RESULTS, ANNOUNCEMENT ON THE EXCHANGE'S WEBSITE
A detailed results announcement containing all the information required by
paragraphs 45 of Appendix 16 of the Exchange Listing Rules will be published
on the Exchange's website in due course.
11. MISCELLANEOUS
The Directors are not aware of any material changes from the information
published in the annual report for the year ended 31 December 2005, other than
disclosed in this announcement.
12. CLOSURE OF REGISTER OF MEMBERS
The Register of equity holders of the Company will be closed from 12 to 19 May
2006 (both days inclusive). In order to qualify for the final dividend, all
transfers, accompanied by the relevant share certificates, must be lodged with
the Company's Hong Kong Branch Share Registrars, Computershare Hong Kong
Investor Services Limited at 46th Floor, Hopewell Centre, 183 Queen's Road
East, Hong Kong for registration not later than 4:00 p.m. on 11 May 2006. The
final dividend will be paid on or about 23 May 2006.
CHAIRMAN'S STATEMENT
A SOLID PERFORMANCE IN TOUGH CONDITIONS
In line with our guidance, given at the time of interim results, 2005 proved
to be a difficult year.
In what generally has been a period of economic strengthening in Asian
markets, it is disappointing that the satellite sector remains static. This is
because the satellite industry typically lags other sectors in responding to
fluctuations in the economy. Additionally, in Asia, the industry is hindered
by the fact that there is still significant over capacity and pricing pressure
in the market.
Despite these conditions, we have reported a creditable result for the year
under review and an increase of 18% in overall utilisation.
Looking ahead, we take comfort from the fact that demand continues to improve
in many key markets, and much of the capacity scheduled for launch in the near
future is either replacing existing satellites or dedicated to specific
government supported domestic initiatives. Furthermore, while we are seeing
the introduction of new applications that will enhance the use of satellite
capacity, we are not seeing new challenges by another medium or new technology
in the satellite application areas that we serve. On the contrary, our
customers remain loyal to satellite communications and indicate a continuing
demand to meet their future growth.
As we move forward, we believe that satellites will continue to provide a
unique communication platform that is particularly valuable in the rapidly
growing and fragmented Asian region. Despite the downturn over the past few
years, we firmly believe that there is a long and bright future for our
industry and, in anticipation of this growing future demand, I am pleased to
report that we have initiated the process of ordering a replacement satellite
for AsiaSat 2.
As a market leader in Asia, we remain totally committed to providing the best
satellite services to our customers and continue to seek complementary growth
opportunities. It is of note that the Company remains debt free and has
sufficient capital to fund the new satellite without the need to borrow. I was
also delighted to report at the time of the Interim Results that AsiaSat had
been selected "Best Asian Satellite Carrier" in the 2005 Telecom Asia Awards
by a panel of experts backed by financial analysis from the Yankee Group. I
congratulate management and staff on this achievement.
FINANCIAL RESULTS
The presentation of the financial results, specifically the comparison between
the 2004 and 2005 figures, continues to be distorted by the inclusion of a
one-time receipt in 2004 for early termination of a transponder utilisation
agreement. This is the last report in which the comparative figures will be
distorted by this one-time lump sum receipt.
TURNOVER
Turnover for the year ended 31 December 2005 amounted to HK$880 million (2004:
HK$1,005 million), some HK$125 million below that of the prior year. Excluding
the one-time contribution of HK$107 million on the contract termination,
turnover was down by HK$18 million from the previous year.
PROFIT
The profit attributable to shareholders for 2005 was HK$366 million (2004:
HK$431 million), a decrease of 15%. The decrease was again distorted by the
one-time receipt as reported above.
CASH FLOW
In 2005, the Group generated a net cash inflow of HK$401 million (2004: HK$575
million) after paying capital expenditure of HK$24 million (2004: HK$48
million) and dividends of HK$137 million (2004: HK$125 million). At the end of
2005, the Group's cash balance increased to HK$1,636 million (2004: HK$1,234
million).
OPERATING EXPENSES
Operating expenses were reduced to HK$208 million (2004: HK$235 million). The
decrease was mainly attributable to a decrease in performance bonus, satellite
insurance and provision for impairment of receivables.
DEPRECIATION
Depreciation expense increased to HK$295 million (2004: HK$287 million), 2.8%
above the prior year. This was mainly attributable to the increase in
depreciation of the additional satellite tracking facilities and the Skywave
TV Direct-to-Home (DTH) platform.
DIVIDEND
At the forthcoming Annual General Meeting, to be held on 19 May 2006, your
Directors will recommend a final dividend of HK$0.27 per share (2004: HK$0.27
per share). This, together with the interim dividend of HK$0.08 per share
(2004: HK$0.08 per share), gives a total of HK$0.35 per share (2004: HK$0.35
per share), the same as in the prior year.
BUSINESS REVIEW
NEW SATELLITE
To ensure that we are well placed to continue to provide the very best in
satellite services to our customers in the years ahead, we need to plan well
into the future despite the current market conditions.
We have, therefore, initiated the process of procuring AsiaSat 5, a new
satellite that will replace AsiaSat 2 at the orbital location of 100.5 degrees
East. The launch is scheduled for 2008, and more details are covered in the
Operations Review.
IN-ORBIT SATELLITES
Throughout 2005, the Group's three in-orbit satellites, AsiaSat 2, AsiaSat 3S
and AsiaSat 4, continued to deliver excellent service to our customers. As
reported above, at year end, we had increased the number of transponders
leased and sold, including the 4 BSS transponders leased to Skywave TV for its
DTH services, by more than 18%. Our new earth station in Tai Po, Hong Kong,
combined with back up from our Stanley station, continued to provide the
highest level of service for our customers.
SPEEDCAST
SpeedCast Holdings Limited ("SpeedCast"), an associate in which the Company
holds 47%, again improved its performance and moved into profit for the first
time since its formation in 1999. I am delighted to report that during the
year the company achieved a 66% increase in turnover to HK$83 million (2004:
HK$50 million) and moved from its HK$11 million loss in 2004 to a small profit
in 2005. The company's core business is the provision of two-way and backbone
broadband access. At 31 December 2005, SpeedCast had cash on hand of HK$5
million after repaying the balance of the loan of HK$5 million to AsiaSat and
the Group's carrying investment in the company, including goodwill, was
approximately HK$0.4 million.
During the year, AsiaSat generated HK$32 million (2004: HK$19 million) by
leasing transponder capacity to SpeedCast.
SKYWAVE
Skywave TV Limited ("Skywave"), an 80%-owned subsidiary of AsiaSat, made good
progress with the setting up of a low cost regional DTH service for Hong Kong,
Macau, Taiwan and Southern China.
Having launched its operations at the beginning of 2005, by year end the
company was offering 36 programmes branded under Family Favourites, Premium
Movies and Premium Sports.
For the year 2005, Skywave incurred a loss of approximately HK$4 million, of
which the Group's share was about HK$3 million.
BEIJING ASIA
Our joint venture in Mainland China, Beijing Asia Sky Telecommunications
Technology Company Limited ("Beijing Asia"), in which AsiaSat holds a 49%
interest, provides VSAT (very small aperture terminal) services in China. The
company commenced business in October 2004 and in the year under review
incurred a loss of approximately HK$8 million, of which the Group's share was
HK$4 million. At the end of the year, AsiaSat's investment in Beijing Asia
amounted to HK$14 million.
The Group has a commitment to continue providing transponder capacity to
Beijing Asia in the form of a loan of up to HK$12 million over the next few
years, of which half has been utilised. The Group's maximum exposure to
Beijing Asia will be approximately HK$25 million of which HK$13 million is in
the form of a cash contribution.
OUTLOOK
Signs of economic improvement in Asia continue, but there is an oversupply of
transponder capacity in certain markets in the region and this is restricting
significant positive growth for our industry. Without immediate changes in
some countries' regulatory environments or the rapid introduction of some of
the pending new applications in Asia, we believe that the situation is
unlikely to change significantly in the short term.
Certain lease rates are beginning to firm up, however, and there are some
promising developments in the areas of High Definition Television (HDTV),
Video to Mobile, and DTH services that are, to some degree, being stimulated
by the opportunities surrounding the 2008 Beijing Olympics. We are also seeing
the gradual liberalisation of the regulatory environment in some markets and
the expansion of communications in others, including India and Pakistan. These
early indicators are encouraging and bode well for the future.
Looking ahead, we continue to believe that AsiaSat's future will be built on
the unique advantages that satellites offer over terrestrial services
especially to television distribution services and private telecommunications
networks. This is particularly relevant in the widely fragmented and
developing regions of Asia. We also have a strong, high calibre client base,
world-class facilities, including an operational back-up facility and quality
customer services. The Company is financially stable and well positioned for
the future.
DIRECTORS AND STAFF
As announced in November 2005, Ms. Cynthia DICKINS was appointed as a
Non-executive Director of the Company. I wish to welcome her to the Board.
Finally, I want to convey my thanks to Management and Staff for their
dedication and loyalty, and for upholding AsiaSat's world-class operating
standards and reputation during these less than optimal times. It is for this
professionalism that our Company is respected the world over and why, when the
market does turn positive, we shall benefit from our position as a market
leader in the Asia-Pacific region.
ROMAIN BAUSCH
CHAIRMAN
Hong Kong, 16 March 2006
AS AT THE DATE OF THIS ANNOUNCEMENT, THE BOARD COMPRISES 13 DIRECTORS. THE
EXECUTIVE DIRECTORS ARE MR. PETER JACKSON AND MR. WILLIAM WADE. THE
NON-EXECUTIVE DIRECTORS ARE MR. ROMAIN BAUSCH (CHAIRMAN), MR. MI ZENG XIN
(DEPUTY CHAIRMAN), MR. ROBERT BEDNAREK, MS. CYNTHIA DICKINS, MR. DING YU
CHENG, MR. KO FAI WONG, MR. JU WEI MIN AND MR. MARK RIGOLLE. THE INDEPENDENT
NON-EXECUTIVE DIRECTORS ARE PROFESSOR EDWARD CHEN, MR. R. DONALD FULLERTON AND
MR. ROBERT SZE.
DISCLAIMER
STATEMENTS IN THIS ANNOUNCEMENT RELATING TO MATTERS THAT ARE NOT HISTORICAL
FACTS ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE U.S. PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THESE FORWARD-LOOKING STATEMENTS
INVOLVE RISKS, UNCERTAINTIES AND OTHER FACTORS, WHICH MAY CAUSE THE ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT
FROM THOSE EXPRESSED OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS. THESE
FACTORS INCLUDE (1) RISKS ASSOCIATED WITH TECHNOLOGY INCLUDING DELAYED
LAUNCHES, LAUNCH FAILURES AND IN-ORBIT FAILURES, (2) REGULATORY RISKS, (3)
LITIGATION AND MARKET RISKS AND OTHER FACTORS, WHICH ARE DESCRIBED IN FURTHER
DETAIL IN THE COMPANY'S 2004 ANNUAL REPORT ON FORM 20-F ON FILE WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION.