PCCW Reports Pre-Merger Interim Results


The directors of Pacific Century CyberWorks Limited ("the Company") are pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2000 with comparative figures for the previous year as set out in the following table. These results do not consolidate the results of our subsidiary Cable & Wireless HKT Limited ("HKT"), which are discussed separately below, and do not represent the performance of the combined group which resulted from the acquisition of HKT on 17 August 2000.

Six months ended30 June

2000 1999

Notes HK$'000 HK$'000
104,027 74,185
Cost of Sales
(42,762) (36,752)

Gross Profit
61,265 37,433
Investment income
209,896 668
Other Income, net
352,430 3,952
General and administrative expenses
(326,268) (77,788)
Finance costs
(263,451) (3,966)

Operating Profit ( Loss )
33,872 (39,701)
Share of results of jointly controlled entities
(19,299) -
Share of results of associates
(49,631) (711)

Loss from ordinary activities before taxation
(35,058) (40,412)
(3,446) (1,112)
Loss from ordinary activities after taxation
(38,504) (41,524)
Minority Interests
3,569 813
Loss for the period
(34,935) (40,711)
Loss per share - basic 2 (0.34 cents) (8.81 cents)
Loss per share - diluted
n/a n/a


  1. Taxation is calculated at 16 per cent (1999:16 per cent) on the estimated assessable profit for the period.

  2. The calculation of basic loss per share is based on the loss for the period of approximately HK$34.9 million (1999: HK$40.7 million loss) and the weighted average number of shares in issue during the period of 10,189,037,194 (1999: 461,871,006 ). The diluted loss per share is the same as the basic loss per share as all potential ordinary shares are anti-dilutive.

    The weighted average number of ordinary shares in 1999 for the purposes of calculating the basic loss per share has been retrospectively adjusted for the one-for-five share consolidation which took place in the second half of 1999.


The consolidated turnover of the Group for the six months ended 30 June 2000 was approximately HK$104 million, an increase of 40.2 per cent from the corresponding period in 1999 of approximately HK$74 million. This is due to the substantial change in the nature of the Group's business since it was acquired by the Pacific Century Group on 3 August 1999 and in particular the contribution of approximately HK$32 million from the property operations of the Company.

For the six months ended 30 June 2000, the Group reported an unaudited loss of approximately HK$34.9 million ( 1999 : HK$40.7 million ), equivalent to a basic loss per share of HK$0.34 cents (1999 : HK$ 8.81 cents ). The loss for the period is mainly due to the amortization of the arrangement fee for the loan facility for the acquisition of HKT which is discussed below.

On 28 January 2000 and 17 February 2000, the Company made two share placements of 248 million shares and 335 million shares at prices of HK$15.80 and HK$23.50, respectively. The Company raised approximately HK$11.5 billion from these share placements.

On 17 August 2000 the Group completed its acquisition of HKT. We effected the transaction by way of a Scheme of Arrangement in accordance with Section 166 of Companies Ordinance (Chapter 32 of the laws of Hong Kong). The consideration for the acquisition was settled by the issue of 8,669,938,322 new shares of the Company and cash of approximately HK$87.9 billion. As a result of the loan facility arrangement for the acquisition, an arrangement fee of approximately HK$1,159 million was incurred and the amortized portion of approximately HK$222 million was taken into account in the six-month period ended 30 June 2000.


We are seeking to become one of Asia's leading integrated technology, communications and media companies. We are in the process of combining a number of complementary businesses related to producing Internet content, delivering broadband Internet services, and forming an interactive broadband platform for offering and enabling a wide variety of consumer and enterprise services through the Internet and television. Our aim is to build on our expertise and knowledge of digital technology, communications and new media to become a leader in Internet infrastructure, content and services.

  • Network of the World (NOW)
    We are building the world's first truly converged TV-web service: NOW combines the capabilities of television, personal computer and World Wide Web by integrating television programming with synchronized multimedia content such as video clips, animation, graphics and text available on the Internet. The start of our NOW service roll-out began on 30 June 2000. We already derive revenue from advertising on our NOW service and our Internet portals, and expect to generate subscriptions and commissions from e-commerce transactions. In Hong Kong, HKT's interactive television service (iTV) and i-Cable Communications Limited's cable television service carry NOW television content. In addition to the English content currently offered on the service, Chinese and Japanese language programming are scheduled to be introduced in early 2001. Currently we operate studios in London and Hong Kong employing more than 400 media professionals involved in the development and production of NOW content.

  • Cyberport Project
    On 17 May 2000 the Group entered into an agreement with the Government of the Hong Kong Special Administrative Region (the Government) to design, develop, construct and market the "Cyberport". The Group has agreed with the Government that the construction costs should be fixed at a maximum of HK$15.8 billion and any cost overrun (above HK$15.8 billion) will be borne by the Group. Foundation works commenced in June 2000. The first phase of the Cyberport, which consists of building about 35,000 square meters for office and commercial uses, is targeted for completion in end 2001.

  • CyberWorks Ventures
    The Group's investment arm, CyberWorks Ventures, was established in August 1999. It has become one of the leading forces in the rapid development of Asia's New Economy platform - through strategic investment and partnerships with cutting-edge companies that are synergistic with the Company's core business units. CyberWorks Ventures' exposure to leading industry developments ensures that the Company is able to keep abreast of crucial technology and market intelligence in today's rapidly changing environment.

  • Investment in Tomen Mediacom
    On 27 July 2000, we entered into an agreement to invest US$16 million (approximately HK$124 million) in Tomen Mediacom, a Japanese company which holds equity stakes in several Japanese cable television operators. We plan to provide broadband content to Tomen Mediacom's affiliated cable operators' coverage of 400,000 households through the distribution of Japanese language NOW services.

  • Acquisition of Jaleco
    On August 10, 2000, the Group announced its acquisition of 81 per cent of Jaleco, a Japanese public company currently traded on JASDAQ.Jaleco develops video game software on multiple platforms, including freestanding video arcade machines and popular consumer consoles such as Sony PlayStation and Sega Dreamcast. This games software will add state-of-the-art games content to NOW's Internet service. Additionally, we will use Jaleco's market position and knowledge for the production of Japanese content for NOW's Internet service, the export of Japanese content to other countries and the establishment of data centre/web hosting services in Japan. The Company believes that Jaleco has the business infrastructure necessary for the Company to successfully launch its broadband Internet business in Japan. Completion of this transaction is expected by the end of this year, following which we intend to rename Jaleco as PCCW-Japan.

  • Acquisition of HKT
    Following our acquisition of HKT on 17 August 2000, we are one of Asia's largest communications companies and Hong Kong's leading provider of integrated communication services, including a full array of local and international fixed and wireless telecommunications services, Internet access, interactive multimedia services and other services, backed by a fully-digital fiber optic broadband network located in Hong Kong.

    In order to provide an informative presentation of the Group's underlying strength, we have also presented the key unaudited financial data for HKT for the six months ended 30 June 2000 as follows:

    HKT Six months ended 30 June

    2000 1999 Change

    HK$ million HK$ million %
    Total Revenues 14,138 13,959 1.3
    Local telecommunications 5,357 4,754 12.7
    Internet & IMS 631 435 45.2
    International telecommunications 5,012 5,863 (14.5)
    Mobile services 2,692 2,421 11.2
    Projects & other services 446 486 8.0)
    Operating costs
    - Cost of Sales 4,287 3,934 9.0
    - Overheads 5,655 5,689 (0.5)
    Operating profit 4,196 4,336 (3.2)
    Earnings before interest, tax, depreciation and amortization (EBITDA) 5,658 5,969 (5.2)

    HKT continues to drive growth from new services and this has resulted in a 1.3 per cent increase in turnover for the six months ended 30 June 2000 compared to a 19 per cent decline for the corresponding period in 1999. Revenues from narrowband and broadband Internet, mobile, wholesale local and international connectivity, and business-to-business services have all grown strongly in the six months ended 30 June 2000, offsetting the decline in revenues from international telephone services (IDD). HKT continues to generate very strong cashflows, with EBITDA of HK$5,658 million for the six months ended 30 June 2000.

    HKT's Internet customer base grew 75 per cent year-on-year to reach 601,000 at 30 June 2000, including some 123,000 residential and business broadband customers. New broadband customers continue to be connected at a rate of more than 15,000 per month. HKT's business-to-business services unit has delivered on several major e-infrastructure and solutions contracts during the year. These include developing the multi-workstation and order matching system for the Automated Matching System 3 (AMS-3) of The Stock Exchange of Hong Kong Limited, developing the iIPO system for Hong Kong Exchanges and Clearing Limited and hosting this at its Powerb@se data centres in Hong Kong, as well as delivering e-banking solutions for several major banks in Hong Kong.

    Local fixed line connections improved by 2 per cent year-on-year and HKT's wholesale data, leased line and broadband services delivered strong growth. The mobile services business unit produced a strong performance supported by the introduction of market-leading wireless data applications and high-speed services. Average revenues per contract customer increased by 4 per cent year-on-year for the six months to 30 June 2000, in one of the most competitive mobile markets in the world.Growth of broadband Internet and increasing corporate demand for high bandwidth services continues to drive international leased circuit and Internet connectivity sales, with total capacity sold increasing 118 per cent year-on-year to 3,457 Mbps at 30 June 2000. While retail IDD prices have fallen significantly, HKT's share of this market has stabilized and gross margins for IDD have been sustained year-on-year through achieving substantial reductions in its wholesale international connectivity costs. Revenues from retail IDD services represented less than 11 per cent of HKT's total turnover for the six months to 30 June 2000.

  • Strategic Alliance with Telstra
    We are in the process of forming a strategic alliance with Telstra Corporation Limited ("Telstra"), Australia's leading communications carrier and Internet services provider with the most highly accessed family of Internet portals and sites in Australia. As announced on 24 August 2000, the proposed alliance contemplates the development of (1) a global carrier of data, voice and Internet services focused on the Asia-Pacific region, (2) a regional wireless company operating as an Asia-Pacific provider of wireless voice and data services, (3) an internet data centre company focused on core hosting services for enterprise customers, application service providers and Internet companies, (4) opportunities to co-venture in respect of business services in the Asia-Pacific region, and (5) the issue of a subordinated convertible bond by the Company to Telstra. The alliance also paves the way for Australian distribution of NOW's Internet service, to be accessed initially via a hyperlink to the NOW portal on and for the delivery of NOW's Internet service via Telstra's hybrid fibre coaxial cables asymmetric digital subscriber lines and satellite high-speed Internet services. Discussion on definitive agreements is in an advanced stage.


In order to implement our business strategy, we have organized the Company into three operating sectors which operate through eight business units. The three operating sectors are Telecommunications Services; Global Communications Services, which includes Mobility Services and Connectivity Services; and Net Enterprises, which includes Broadband Business to Consumer Services, Business to Business Services, Data Centre/Web Hosting Services and CyberWorks Ventures. The eighth business unit is Infrastructure Services, which engages in real estate development and services all sectors and units by operating and managing our real estate assets. Our business units provide a steady source of revenue and position us for future revenue growth.

We have formed a Strategic Integration Office in order to oversee the integration of the Company's businesses with those of HKT and to achieve synergies and drive value creation opportunities across all business units. This strategic initiative is expected to help accelerate the development and launch of new products and services and enhance our plans for partnering with other leading companies.


The board of directors does not recommend the payment of an interim dividend for the six-month period ended 30 June 2000 (1999: Nil).


During the six-month period ended 30 June 2000, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's shares.


Throughout the six-month period ended 30 June 2000, the Company has complied with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited save that the non-executive directors are not appointed for a specific term of office.

By Order of the Board

Chu Mee Lai, Helen
Company Secretary
28 September 2000