Hong Kong March 28, 2001 - PCCW (SEHK: 0008, ADR-NYSE: PCW) today announced its first consolidated financial results since its acquisition of Cable & Wireless HKT Limited (HKT) on August 17, 2000. These consolidated results include 12 months for PCCW and 4.5 months for HKT and equity account for the results of the businesses to be injected into the IP Backbone Company and Regional Wireless Company, which formed part of the alliance established with Telstra Corporation Limited of Australia (Telstra) after the year end.
Consolidated revenues for the year ended December 31, 2000 increased to US$935 million (HK$7,291 million) from US$19 million (HK$152 million) in 1999. Consolidated EBITDA (earnings before interest, tax, amortization, depreciation, other provisions, gains or losses on investments and results from investments that are equity accounted for) for 2000 was US$191 million (HK$1,489 million).
Consolidated operating profit was US$67 million (HK$520 million) before provision for impairment losses of US$40 million (HK$312 million) and net unrealized losses on investments of US$627 million (HK$4,887 million). These provisions contributed to total consolidated losses of US$886 million (HK$6,907 million).
It is the Board's belief that the transformation of the Company this year was accomplished against the background of substantial challenges and volatility in global financial markets. The fundamental changes in market conditions have particularly impacted telecommunications, Internet and technology companies.
The Board has conducted a thorough review of the Company's investment portfolio, which has been consolidated with that of the HKT Group. Taking a prudent approach, to reflect current market conditions, the losses on investments for the year include a substantial provision for a decline in the value of certain of the Company's investment securities that the Board believes was other than temporary. In addition, unrealized losses have been recognized in respect of other investments which have been marked-to-market at the period end.
The consolidated losses also reflect net finance charges of US$302 million (HK$2,356 million). Finance charges include amortization of arrangement fees of US$115 million (HK$896 million) relating to the short-term bridge-loan financing facility raised for the HKT acquisition.
The balance of goodwill, arising upon the HKT acquisition, of US$22 billion (HK$172 billion) was written off against reserves according to Hong Kong Generally Accepted Accounting Principles (HK GAAP) applicable to the Company's consolidated financial statements for the year ended December 31, 2000.
To allow a more meaningful assessment of the underlying business performance, the Company prepared unaudited pro forma financial data, which reflects the acquisition of HKT as if it had taken place on January 1, 1999, in line with usual market practice. On this basis, unaudited pro forma revenues increased 1 percent to US$2.65 billion (HK$20.69 billion) for the 12 months to December 31, 2000. Unaudited pro forma EBITDA was US$790 million (HK$6,162 million) for the year.
In addition, the Group's existing IP Backbone business generated unaudited pro forma revenues of US$941 million (HK$7,340 million) and EBITDA of US$357 million (HK$2,785 million) for the year to December 31, 2000. The Group's Hong Kong wireless business generated unaudited pro forma revenues of US$663 million (HK$5,171 million) and EBITDA of US$152 million (HK$1,186 million).
"Our core business performance is solid, with a decreasing reliance on IDD revenues and strong demand for data and connectivity services," said PCCW Group Chief Financial Officer David Prince, who noted a challenging year for the entire communications industry. "I am confident we are well-positioned for the year ahead."
Unaudited Pro Forma Business Performance Highlights
Internet Data Centers
Business-to-Consumer Services (B2C)
Attached to this press release are Final Results Announcement for the year ended 31 December 2000 and unaudited pro forma financial data.
Live Web Broadcast
Simultaneously with the live global webcast of the results presentation, the Company announced details of six major strategy initiatives. The full presentation is available at www.pccw.com and www.netvigator.com.
Hong Kong-listed Pacific Century CyberWorks (SEHK: 0008, ADR-NYSE: PCW), the flagship of the Pacific Century Group, is one of Asia's leading integrated communications companies. From its market-leading position in Hong Kong, PCCW is focused on building shareholder value by leveraging the synergies between its core businesses. Among those businesses are: telecommunications services (PCCW-HKT); mobility and connectivity services; broadband interactive services (B2C); ventures; business-to-business services; infrastructure services; and data center/web-hosting services.
To learn more about PCCW, go to www.pccw.com