A New Era for SUNDAY Communications Limited 2003 Annual Results April 1, 2004.
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Transcript of A New Era for SUNDAY Communications Limited 2003 Annual Results April 1, 2004.
![Page 1: A New Era for SUNDAY Communications Limited 2003 Annual Results April 1, 2004.](https://reader036.fdocuments.net/reader036/viewer/2022062423/5697bfd21a28abf838cabd3f/html5/thumbnails/1.jpg)
A New Era forSUNDAY Communications Limited
2003 Annual ResultsApril 1, 2004
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Business Overview
Presenter: Bruce Hicks
Group Managing Director
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SUNDAY+
• Well managed• Profitable• SUNDAY =
• Efficiency• Quality• Creativity
• Fully financed and ready for 3G
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• Net profit of HK$27 million• 3G partnership with Huawei• Fully financed for future operations
SUNDAY – A New Era+
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• Industry professionals• Consistent vision and strategy• Strong implementation
Well Managed+
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• Achieved despite difficult environment• HK$27 million net profit• EBITDA up 47% to HK$315 million• EBITDA margin improved from 16% to 25%
Profitable – Our Focus for 2003+
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• Subscriber numbers up 9% to 660,000• Churn improved from 5.4% to 5.0%• Post paid ARPU down 6.3% to HK$201• Mobile services revenue down 6% to HK$1,150
million
Profitable – Our Focus for 2003+
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• Benefit of changes in 2002• Raised efficiency• Operating costs ex depreciation down 22% to
HK$619 million through major savings in:– Sales commission– Cell site rental– Leased lines– Salary and related
Efficiency+
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• Raised quality standards in:– Coverage– Sales and marketing– Customer care
High Quality+
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• Last 3 years 25% increase in cell sites• Coverage now among the best• Gaining public recognition
High Quality - Coverage+
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• FMCG approach• Organized teams around customer segments• More training• Employing more quality assurance monitoring
High Quality – Sales and Marketing+
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• New management system• More training• Superstar hotline and other initiatives
High Quality – Customer Care+
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• Segmentation• Innovative Services
Creativity – SUNDAY’s Response+
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• Segmenting by:– Demographics– Usage– Special Interest
• Requires organizational change• Now organised around four segments
– Youth– Ethnic– Corporate / business– Mass market
– Each segment a separate business unit
Creativity – Segmentation+
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• LBS for Business
• LBS for logistics and field services
• LBS for Mass
• Family Watch
• SARS updates
• LBS for Youth
• Interactive LBS game
• SUNDAY Wireless roaming services
• 55% growth in revenues from data services
Creativity – Innovative Services+
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• Efficiency• Quality• Creativity
2004 – Focus on Revenues+
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• Ready in 4Q 2004• Huawei partnership• Financing provided• Flexibility to roll out 3G at right time• Manage costs of roll out
2004 - Ready for 3G+
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• Build on existing progress in China:– Operations Center in Shenzhen – Partnership with Huawei– Expanding CEPA opportunities
2004+ – Beyond Hong Kong+
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• Well managed• Profitable• SUNDAY=
• Efficiency• Quality• Creativity
• Fully financed and ready for 3G
Conclusion+
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Financial Overview
Presenter: Janet FungGroup Director, Finance
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Consolidated Profit & Loss Statement+
(HK$ million except for profit per share)
2001 2002 2003
Turnover- mobile services 1,165 1,218 1,150 (68) -6%- sales of mobile phones & accessories 243 115 109 (6) -5%- others 14 9 1 (8)
Total turnover 1,422 1,342 1,260 (82) -6%
Cost of inventories sold and services provided (469) (334) (330) 4 -1%
Gross profit 953 1,008 930 (78) -8%
Other revenues 3 2 4 2 Operating expenses (854) (796) (619) 177 -22%
EBITDA 102 214 315 101 47%
Depreciation (265) (256) (233) 23 Finance costs, net of interest income (49) (56) (50) 6 Share of losses of joint venture 0 (19) (5) 14
Profit / (loss) for the year (212) (117) 27 144
Profit / (loss) per share (in cents) (7.1) (3.9) 0.9 4.8
Gross profit margin 67% 75% 74%
EBITDA % on total turnover 7% 16% 25%
Operating expenses % on mobile services revenue 73% 65% 54%
2003 vs 2002Changed by
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Turned from net loss to net profit of $27 million Improved by $144 million from 2002
27
-117
-212-300
-200
-100
0
100
2001 2002 2003
( HK$ million )
Net Profit+
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315
102
214
0
200
400
2001 2002 2003
( HK$ million )
EBITDA improved by $101 million (47%) EBITDA margin improved from 16% to 25%
EBITDA+
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6% drop in mobile services revenue - SARS and price war 5% drop in handset sales mainly - handset subsidy
243115 109
14 9 1
1,165 1,218 1,150
0
700
1400
2001 2002 2003
Mobile services Mobile phones & accessories Others
( HK$ million )
5%
Mobile
Services
- 6%
Mobile Services
Turnover+
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4% drop in mobile services gross profit Improved mobile services gross margin from 82% to 83%
948 997 954
7 9 0
2-24
-2
-200
0
200
400
600
800
1000
2001 2002 2003
( HK$ million )
Mobile services Mobile phones & accessories Others
- 4%
Mobile Services
5%
Gross Profit+
Mobile Services
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HK mobile market size – 7.2 million or 106% penetration rate SUNDAY subscribers (excluding MVNO) increased by 9%
419,000 414,000 417,000
189,000243,000
132,000
0
350,000
700,000
2001 2002 2003
Postpaid PrepaidTotal growth rate
Postpaid growth rate
Prepaid growth rate
29%
9%
1%
43%
9%
- 1%
603,000
660,000
551,000
Subscriber Numbers+
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5.0%
5.4%
8.3%
0%
6%
12%
2001 2002 2003
Churn rate dropped to 3.6% in December 2003 2003 average churn rate was 5.0%
Churn - Postpaid+
As a % of Opening Subscriber Numbers
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Average ARPU was HK$201 Data was around 7% of ARPU in December 2003
$219
$209
$201
$180
$230
2001 2002 2003
Postpaid ARPU – Net of Discounts & Incentives+
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619
796854
54%
65%
73%
0
500
1000
2001 2002 200340%
60%
80%
Operating expensesOperating expenses as % of mobile services revenue
(HK$ million)
Consistently Improving Operating Efficiency+
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Reduction of $177 million or 22%
2002 - $796 million * 2003 - $619 million
Network costs Salaries & related costs
Advertising, promotion & other selling costs Commission
Rental & related costs Others
60
(8%)61 (7%)
86 (11%)
243 (31%)
304 (38%)
42 (5%)
46 (7%)
45
(7%)
270 (44%)
152 (25%)
41 (7%)
65 (10%)
-34 (11%)
-15 (25%)
-15 (25%)
-21 (24%)
-91 (37%)
-1 (2%)
* Include $26M restructuring costs
Operating Expenses+
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510 502
224
801
173
0
500
1,000
Dec 2001 Dec 2002 Dec 2003
Hong Kong Shenzhen
Headcount – Hong Kong and Shenzhen+
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Consolidated Balance Sheet+
(HK$ million)
Prepayment for 3G licence fees 192 142 92 Fixed assets & others 1,309 1,219 1,103 Non-current assets 1,501 1,361 1,195
Current assets 435 450 537 Current liabilities (584) (590) (608)
Net current (liabilities)/assets (149) (140) (71)
1,352 1,221 1,124
Financed by:
Share capital 299 299 299 Reserves 489 372 399
Shareholders' equity 788 671 698
Long-term bank and vendor loans 557 547 425
Other long term liabilities 7 3 1
1,352 1,221 1,124
Dec-01 Dec-02 Dec-03
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Cash and Credit Facilities+
(HK$ million)
Cash and bank balance (a) 208 173 314
Revolving facilities available for drawdown 481 329 -
Total 689 502 314
Bank and vendor loans repayable in2003 238 119 - 2004 - $221 million old loans repaid in Jan 04 547 547 221 2004 - Huawei loan - - 75 2005 - Huawei loan - - 175 2006 - Huawei loan - - 250
Total (b) 785 666 721
Net debt (b) - (a) 577 493 407
Net debt to equity ratio 86% 72% 58%
Dec-02 Jun-03 Dec-03
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Consolidated Cash Flow+
(HK$ million)
Operating activities (89) 129 242
Investing activities- Payment of 3G Licence (250) - - - Purchase of fixed assets (147) (69) (73) - Other investing activities (44) (40) (54)
(441) (109) (127)
Financing- Cash drawdown of revolving facilities - 179 253 - Repayment of long term loans (43) (195) (315) - Other financing activities (6) (2) -
(49) (18) (62)
Net Cash Inflow /(Outflow) (579) 2 53
2001 2002 2003
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50 50
72
118
110
9
0
50
100
150
2001 2002 2003
( HK$ million )
Capital Expenditure 3G Licence capitalised portion
Fixed Assets Additions+
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SUNDAYfeels better!