MUMBAI: Satellite operator Asiasat has announces its 2003 annual results. Profit amounted to HK$424 million. In 2002 the figure was HK$555 million. This represents a significant reduction of 24 per cent from the previous year.
Turnover for the year was HK$896 million. In 2002 the figure stood at HK$951 million representing a decline of six per cent. The company atrbuted the performance to slow growth in new demand, business contraction of some customers, and continuing price pressure on new leases and renewals.
The company added that the restrictions on travel resulting from the continued existence of Sars affected its ability to market and serve new and existing customers throughout the Asian region. At the peak of Sars almost all marketing activities came to a halt..The regional transponder market remained sluggish, lagging behind the early signs of economic improvement in some Asian markets.
While the results were disappointing the company maintained that they were in line with its earlier indications. The above mentioned decline in profit was attributable mainly to the anticipated increase in depreciation on the new AsiaSat 4 and increased in-orbit insurance costs. All this went hand in hand with the decrease in turnover and an additional provision of deferred tax for both current and prior years. This arose as a result of the increase in the Hong Kong tax rate from 16 per cent to 17.5 per cent on 1 April 2003.
Asiasat admitted that its strategy to achieve organic growth, and growth through acquisition and partnership was held back by the poor economic climate and the failure of identified targets to meet the investment criteria. On a more positive note the company continued to benefit from strong cash flow from its operations. It generated a net cash inflow of HK$253 million (2002: HK$270 million) after paying capital expenditure of HK$162 million (2002: HK$440 million) and dividends of HK$203 million (2002: HK$78 million). At the end of 2003, the Group had a cash balance of HK$659 million (2002: HK$406 million).
The launch and commissioning of Asiasat 4 is incurring additional costs for the group at a time when markets have remained soft. The short-term impact is negative. However for the longer term, the addition of Asiasat 4, which has a life expectancy of over 15 years places the group as a strong provider in the market with the significant growth potential states a company release.
Looking to this year the company has reiterated the fact that its business was long-term in nature, and that the positive factors that drive demand remain in place. They are television distribution and increasingly in more developed markets, High Definition Television, and telecommunications networks that need connectivity over wide geographic coverage, at a fixed cost. This was where satellites succeed and terrestrial services cannot compete particularly in large and physically scattered regions like the Asia Pacific. On the flip side the company does not see material signs of improvement among regional operators, nor new entrants to the market that would enable the group to deliver stronger results this year as compared with last year.
