SINGAPORE, Aug. 28 /Xinhua-PRNewswire-FirstCall/ -- Pacific Internet Limited (NASDAQ:PCNTF) ("PacNet" or the "Company"), the largest telco-independent Internet communications service provider by geographic reach in the Asia-Pacific, today reported Second Quarter 2007 results for the quarter ended 30 June 2007, increasing 10.0% to US$34.33 million. The Company also reported a net income of US$0.69 million during the quarter, up 3.0% compared to the same quarter in 2006.
The Company's Corporate Business is its main growth engine, contributing 82.5% of total sales in the same period. The corporate customer base is 125,000 customers, as at 30 June 2007. Revenues from outside of Singapore grew to 68.0% of PacNet's business, demonstrating PacNet's regional network's vibrancy as an international service provider.
Mr. Phey Teck-Moh, President and CEO of the Company said, "During this quarter, we rolled out more SME-targeted services such as PacNet @Office, Global Security-in-the-Cloud, Global Internet Virtual Private Network (VPN) and PacNet Vocal. All these services help our SME customers be more efficient, communicate better and to have more secure networks, among many other benefits." "Across our markets, we remained focused on understanding and meeting our customers' existing and emerging needs to bring them services that they truly value," said Mr. Phey.
Summary of Results
Table 1: Selected Financial Data Three Months Ended
30 June
2007 2006 Variance
(US$'000) (US$'000)
REVENUES: Access Services: 24,459 22,292 10%
- Broadband 14,607 13,886 5%
- Leased Line 7,427 4,920 51%
- Dial-Up 2,425 3,486 -30% IP Services: 8,145 6,761 20%
- Voice 3,352 2,940 14%
- Hosting/Hosted 2,416 1,582 53%
- Security 484 472 3%
- Roaming 259 498 -48%
- Others 1,634 1,269 29% Travel (Commission) and 1,730 2,292 -25%
Others: Total Revenues 34,334 31,345 10% Corporate Business
Revenue 28,339 23,361 21%
Consumer Business
Revenue 5,995 7,984 -25% Cost of Sales 18,486 15,682 18% Operating Expenses 15,075 14,998 1% Net Income 694 672 3% Revenues
The quarter ended 30 June 2007 generated net revenues of US$34.33 million; which increased by 9.5% compared to the three months ended 30 June 2006. Quarterly revenue surpassed S$50 million for the first time.
Of the total revenue growth of 9.5% over the same period last year, revenue growth of 7% was a result of organic growth in our country operations. The higher revenues were primarily driven by growth of Leased Line, Broadband and IP Services Revenues. Revenue growth of 5% was on account of consolidation of one of our entities in our Thailand operation namely WNS (World Net & Services Co Ltd) effective this quarter, which was earlier equity accounted for. The above-mentioned growth was offset with an impact of 2% resulting from a one-time reversal of accrued Australia Tax Office ("ATO") penalty confirmed as not required in the year 2006.
The corporate business segment, which is our key customer segment, grew revenue by 21.3% from the same quarter last year. This segment contributed approximately 82.5% of the total revenues.
Access Services: Our Access Services business remains the dominant revenue segment, contributing 71.2% of total revenues in the quarter ended 30 June 2007. Access Services revenues grew 9.7% compared to the quarter ended 30 June 2006. Broadband and Leased Line both experienced growth (5.2% and 51.0% respectively).
IP Services: This is formerly known as Value Added Services. Included in this IP-Services suite are: Voice services, Security services, Hosted services, Roaming service and other IP based services. For the quarter ended 30 June 2007 and 30 June 2006, Revenues from IP services accounted for 23.7%, and 21.6% of our total quarter revenues respectively. The IP Services business continues its growth, grew by 20.5% compared to the same quarter last year, to reach US$8.1 million. The main driver for growth in this business segment was the voice business, hosting business, and inter-country connectivity services.
Operating Costs and Expenses Total operating expenses, excluding cost of sales were US$15.1 million, reflecting a slight increase of 1% compared to the same quarter last year. The increase was due to an increase in sales and marketing expenses, mitigated by lower general and administrative expenses.
Cost of sales for the quarter increased 17.9% to US$18.49 million compared to US$15.68 million during the same quarter last year; due to higher bandwidth Internet access services in line with market demand and development.
Staff cost as a percentage of revenues was 26.2% for 30 June 2007, compared to 27.4% for 30 June 2006. Headcount (excluding associate operations in India) as at the end of 30 June 2007 was 999 employees, which was 11.5% higher than the same period last year. Revenue per employee for the quarter remains consistent with last year at approximately US$34,600.
General and Administrative (G&A) Expenses consist of payroll expense and staff related costs, traveling expense, professional and consultancy fees and other expenses. These expenses for the quarter decreased 16.3% to US$3.58 million. The decrease was mainly due to professional fees relating to MediaRing Takeover Offer and one-time costs relating to the relocation of our Australia technical centre to Newcastle in 2006.
Earnings For the quarter ended June 30, 2007, net income was US$ 0.69 million, a 3.2% increase compared to the same period last year. This was primarily due to the higher operating income during the quarter.
Cash Position The Group's cash position remained strong with cash and cash equivalents and fixed deposits of US$40.5 million. Cash generated by operating activities was US$2.5 million. This was offset by the outflow of US$2.0 million in investing activities, primarily for the acquisition of fixed assets. Cash inflow from financing activities amounted to US$0.3 million.
Business Highlights for Second-Quarter 2007
-- Launch of New IP Services - PacNet launched two new IP services on 30
April 2007: Global Security-in-the-Cloud offers a hosted solution to
meet enterprises' needs for cost-effective enhanced network security. Global Internet Virtual Private Network (VPN) service is a solution to
improve companies' regional connectivity as a VPN on public networks or
as a back-up network to their existing private Wide Area Networks
(WAN). -- PacNet Vocal Launches - Pacific Internet Thailand launched PacNet VOCAL
on 4 May 2007, a new enterprise-grade IP telephony solution targeted at
business customers. This subscription-based service offers worldwide
coverage with international dialing rates starting from two Baht per
minute. PacNet Vocal has been launched in India, Singapore, Hong Kong, the
Philippines and Thailand, five countries in total. In addition, PacNet Hong Kong acquired its Services-Based Operator
(SBO) licence with the regular eight-digit, prefixed "5800" Hong Kong
telephone numbers from the Office of the Telecommunications Authority
(OFTA) of Hong Kong. This will facilitate the extension of PacNet's
business-grade IP telephony solution in Hong Kong. -- Pacific Internet Singapore launches PacNet @Office - Pacific Internet
Singapore launched PacNet @Office, an all-in-one suite of business and
marketing productivity tools designed to help users do more for their
businesses on 18 June 2007. The service is comprises an eMarketing
Tool, an eCollaboration Tool, a Website Builder Template, Online
Storage, Emails On-the-Move, and a Calendar and Contact Lists. -- Takeover by Connect Holdings Limited - On May 2, 2007, Connect
announced a voluntary conditional general offer to acquire all the
issued ordinary shares in the capital of PacNet. Further, On June 7,
2007, Connect announced the revision of the Offer price from US$10.00
to US$11.00 net in cash per share without interest and stated that the
revised Offer price was final and announced an extension of the
expiration date of the Offer from June 7, 2007 to June 22, 2007. On June 25, 2007, Connect announced that the Offer had been declared
unconditional in all respects and that the initial Offer period has
successfully closed. Finally, On July 12, 2007, Connect announced the
subsequent Offer period to be successfully closed. As on July 12, 2007,
Connect owns approximately 87.59% of the issued shares of PacNet. Conference Call and Web Cast
PacNet will host a conference call to discuss the results:
US Eastern Time: 28 August 2007 @ 9.30 a.m. Singapore Time: 28 August 2007 @ 9.30 p.m.
Dial-in numbers: US: (800) 289-0533 (US Toll Free)
International: +1-913-981-5525 (International) Replay telephone nos.: US: 888-203-1112
International: +1-719-457-0820 The pass code is 4692361
The call will also be webcast "live" at: http://www.pacnet.com/investor/ About Pacific Internet Limited
Pacific Internet Limited or PacNet (NASDAQ:PCNTF) is the largest telco- independent Internet Communications Service Provider by geographic reach in the Asia Pacific region. The Company has direct presence in Singapore, Hong Kong, the Philippines, Australia, India, Thailand and Malaysia. PacNet delivers a comprehensive suite of data and voice services to both corporate business and consumer customers. For more information, visit http://www.pacnet.com/.
Caution Concerning Forward-Looking Statements Included in this report are various forward-looking statements which are made pursuant to the safe harbor provisions of the "Private Securities Litigation Reform Act of 1995," some of these may be identified by the use of words such as "seek," "expect," "anticipate," "estimate," "believe," "intend, " "project," "plan," "strategy," "forecast" and similar expressions or future or conditional verbs such as "will," "would," "should," "could," "may" and "might." The Group has made forward-looking statements with respect to the following, among others: -- Projected capital expenditures, expansion plans and liquidity;
-- Development and growth of additional revenue sources;
-- Development and maintenance of profitable pricing programs; and
-- Outcome of potential litigation.
These statements are forward-looking which reflect the Group's current expectations and assumptions in light of currently available information. They are subject to a number of risks and uncertainties, including but not limited to, (1) continued decline in economic conditions; (2) increasing maturity of the market for Internet access and fluctuations in the use of the Internet that may adversely impact the Group's subscriber growth rates and revenues; (3) changes in technology and the Internet marketplace; (4) the Group's continued ability to develop and win acceptance of its products and services, which are offered in highly competitive markets, more particularly, changes in the assumptions of the effectiveness of business strategies or initiatives carried out or to be carried out by the Group; (5) the success of its business partnerships and alliances; (6) exchange rates, particularly between the Singapore dollar, the US dollar and other currencies in which the Group makes significant sales or in which its assets and liabilities are denominated; (7) deterioration of the financial position of debtors; (8) changes in estimates of network service costs accruals due to delayed or late billing by telecommunication companies; (9) changes in economic environment, churn rate of subscribers or assessment of future operations resulting in an impairment in goodwill and other intangible assets; (10) changes in assumptions of the effectiveness of strategies related to legal proceedings generally and more particularly changes in assumptions of costs of maintaining such proceedings; (11) changes in assumptions of the effectiveness of tax planning strategies generally and more particularly (i) changes in operations that may affect the assumptions relating to deferred tax assets; and (ii) changes in factors affecting the interpretation of certain withholding tax laws which may significantly impact the Group's cash resources; (12) obtaining the requisite funding support and the challenge of keeping expense growth at manageable levels while increasing revenues; (13) changes in the economic, regulatory and political environment in the countries where the Group operates, or may in the future operate, including but not limited to (i) changes in tax, telecommunications, licensing and other relevant laws and regulations; (ii) changes in political stability; and (14) the outcome of contingencies. In addition to the foregoing factors, a description of certain other risks and uncertainties which could cause actual results to differ materially can be found in the section captioned "Risk Factors" in our latest Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission. In light of the many risks and uncertainties surrounding the Group and the Internet marketplace, actual results could differ materially from those discussed in this report. Given these concerns, undue reliance should not be placed on these statements. The Group assumes no obligation to update any such statements.
Responsibility Statement The Directors of PacNet have taken all reasonable care to ensure that the facts stated and opinions express in this press release are fair and accurate, and that no material facts have been omitted and they jointly and severally accept responsibility accordingly. Where any information has been extracted from published or otherwise publicly available sources, the sole responsibility of the Directors of PacNet has been to ensure through reasonably enquiries that such information is accurately and correctly extracted from such sources or, as the case may be, accurately reflected or reproduced in this press release.
- Tables to follow - Pacific Internet Limited Unaudited Consolidated Balance Sheets as of June 30, 2007
With Comparative Amounts from December 31, 2006
Dec 31, 2006 Jun 30, 2007 Jun 30, 2007
S$'000 S$'000 US$'000
Restated Cash and cash equivalents 57,821 59,030 38,582
Fixed deposit with financial
institution 2,412 2,881 1,883
Accounts receivable - net 38,333 34,016 22,232
Other receivables 7,330 8,265 5,402
Inventories 503 446 292
Total current assets 106,399 104,638 68,391 Investments 39 32 21
Fixed assets - net 19,007 19,339 12,640
Goodwill and intangible assets - net 36,671 39,160 25,595
Other non-current assets 3,923 2,544 1,662
Total non-current assets 59,640 61,075 39,918 TOTAL ASSETS 166,039 165,713 108,309
Bank borrowings 20 18 12
Accounts payable 16,279 15,672 10,243
Other payables 38,051 32,477 21,227
Current portion of capital lease
obligations 196 137 90
Total current liabilities 54,546 48,304 31,572 Capital lease obligations, less
current portion 102 44 29
Other non-current and deferred
liabilities 2,035 1,878 1,227
Total non-current liabilities 2,137 1,922 1,256 Minority interest 588 686 448 Shareholders' equity
Ordinary shares 114,143 114,628 74,920
Additional paid-in capital 16,093 16,137 10,547
Accumulated deficit and other
comprehensive income (21,468) (15,964) (10,434)
Total shareholders' equity 108,768 114,801 75,033 TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 166,039 165,713 108,309 Pacific Internet Limited Unaudited Consolidated Statement of Operations
(In Singapore Dollars)
Quarter Ended Year To Date Jun 30,
Jun 30, 2006 Jun 30, 2007 2006 2007
S$'000 S$'000 S$'000 S$'000
Restated Restated
Revenues
Dial up access 5,334 3,710 11,058 7,599
Broadband access 21,245 22,349 42,339 44,012
Leased line access 7,527 11,363 14,493 21,071
Regional connectivity
IP services/Value added
services 10,345 12,462 20,216 23,773
Commission revenues 2,777 1,773 4,595 3,937
Other revenues 730 873 1,676 1,688
Total net revenues 47,958 52,530 94,377 102,080 Cost of sales 23,993 28,283 47,024 54,464
Gross profit 23,965 24,247 47,353 47,616 Other operating costs and
expenses
Staff costs 13,129 13,771 26,627 27,529
Sales & marketing 954 1,520 2,137 2,475
Other general &
administrative 6,546 5,477 10,678 10,482
Depreciation &
amortization 2,111 2,191 4,082 4,243
Allowance for doubtful
accounts receivable 207 105 444 164
Total other operating
costs and expenses 22,947 23,064 43,968 44,893 Operating income 1,018 1,183 3,385 2,723 Other income (expenses)
Net interest income 440 347 905 828
Net (loss) gain on
foreign currency (210) (97) (436) 224
Loss on disposal of
fixed assets (20) (25) (16) (20)
Gain on settlement of
ARO liability -- -- -- --
Equity in gain of
unconsolidated
affiliates 103 99 463 437
Others 232 (30) 351 567
Total other income 545 294 1,267 2,036 Income before income taxes
and minority interest 1,563 1,477 4,652 4,759
Provision for income taxes (488) (386) (1,113) (1,043)
1,075 1,091 3,539 3,716
Minority interest of
consolidated subsidiaries (48) (31) (76) (78)
Income before
extraordinary item 1,027 1,060 3,463 3,638
Cumulative effect adj -
net of tax -- -- -- --
Extraordinary item -- -- 20 --
Net income 1,027 1,060 3,483 3,638 Net income from continuing
operations per share -
basic $0.08 $0.08 $0.26 $0.26 Net income per share -
basic $0.08 $0.08 $0.26 $0.26 Net income from continuing
operations per share -
diluted(1) $0.07 $0.07 $0.25 $0.26 Net income per share -
diluted (1) $0.07 $0.07 $0.25 $0.26 Weighted average number of
shares outstanding -
basic 13,528,812 13,835,170 13,490,113 13,832,085 Weighted average number of
shares outstanding -
diluted (1) 14,028,528 14,209,495 13,952,811 14,224,907
(1) Includes all outstanding options under the Company's Share Option
Plans to the extent the outstanding options are dilutive.
Pacific Internet Limited Unaudited Consolidated Statement of Operations
(In US Dollars)
Quarter Ended Year to Date Jun 30
Jun 30, 2006Jun 30, 2007 2006 2007
US$'000 US$'000 US$'000 US$'000
Restated Restated
Revenues
Dial up access 3,486 2,425 7,227 4,967
Broadband access 13,886 14,607 27,673 28,766
Leased line access 4,920 7,427 9,473 13,772
IP services/Value added
services 6,761 8,145 13,213 15,538
Commission revenues 1,815 1,159 3,003 2,573
Other revenues 477 571 1,095 1,103
Total net revenues 31,345 34,334 61,684 66,719 Cost of sales 15,682 18,486 30,735 35,597
Gross profit 15,663 15,848 30,949 31,122 Other operating costs and
expenses
Staff costs 8,581 9,001 17,403 17,993
Sales & marketing 624 993 1,397 1,618
Other general &
administrative 4,278 3,580 6,979 6,851
Depreciation &
amortization 1,380 1,432 2,668 2,773
Allowance for doubtful
accounts receivable 135 69 290 107
Total other operating
costs and expenses 14,998 15,075 28,737 29,342 Operating income 665 773 2,212 1,780 Other income (expenses)
Net interest income 288 227 592 541
Net (loss) gain on foreign
currency (137) (63) (285) 146
Loss on disposal of fixed
assets (13) (16) (10) (13)
Equity in gain of
unconsolidated affiliates 67 65 303 286
Others 152 (20) 229 371
Total other income 357 193 829 1,331 Income before income taxes
and minority interest 1,022 966 3,041 3,111
Provision for income taxes (319) (252) (727) (682)
703 714 2,314 2,429
Minority interest of
consolidated subsidiaries (31) (20) (50) (51)
Income before
extraordinary item 672 694 2,264 2,378
Extraordinary item -- -- 13 --
Net income 672 694 2,277 2,378 Net income from continuing
operations per share -
basic $0.05 $0.05 $0.17 $0.17 Net income per share -
basic $0.05 $0.05 $0.17 $0.17 Net income from continuing
operations per share -
diluted(1) $0.05 $0.05 $0.16 $0.17 Net income per share -
diluted (1) $0.05 $0.05 $0.16 $0.17 Weighted average number of
shares outstanding -
basic 13,528,812 13,835,170 13,490,113 13,832,085 Weighted average number of
shares outstanding -
diluted (1) 14,028,528 14,209,495 13,952,811 14,224,907
(1) Includes all outstanding options under the Company's Share Option
Plans to the extent the outstanding options are dilutive.
(2) For convenience, Singapore dollar amounts have been translated into
U.S dollar amounts at the exchange rate as of Jun 30, 2007, which was
S$1.5300 to US$1.00.
Pacific Internet Limited Unaudited Consolidated Statement of Cash Flows for Period Ended June 30,
2007
With Comparative Amounts from June 30, 2006
Period Ended Jun 30,
2006 2007 2007
S$'000 S$'000 US$'000
Restated
OPERATING ACTIVITIES
Net income for the period 3,483 3,638 2,378
Items not involving cash and other
adjustments to reconcile net
income to cash from operating
activities:
Equity in gain of unconsolidated
subsidiaries and affiliated (463) (437) (286)
Depreciation and amortization 4,082 4,243 2,773
Loss on disposal of fixed assets 16 20 13
Gain on disposal of intangible
assets (108) -- --
Fixed assets written off 12 4 3
Allowance for doubtful accounts
receivable 444 99 65
Bad Debts written off 205 65 42
Minority interest 76 78 51
Deferred income tax (benefit)
provision (238) 318 208
Amortization of deferred
compensation 1,297 44 29
Extraordinary item (20) -- --
Changes in non-cash working capital
items:
Accounts receivable (747) 5,079 3,320
Prepaid expenses and other assets 579 163 107
Inventories (249) 81 53
Accounts payable 2,725 (3,645) (2,382)
Other payables / receivables (6,988) (5,891) (3,850)
Cash provided by operating
activities 4,106 3,859 2,524 INVESTING ACTIVITIES
Acquisition of fixed assets (5,028) (2,864) (1,872)
Acquisition of intangible assets -- (177) (116)
Proceeds from sale of fixed assets 35 6 4
Proceeds from sale of intangible
assets 210 -- --
Fixed deposit with maturity more
than 90 days (570) (469) (307)
Additional interest acquired in a
subsidiary (972) (111) (73)
Sale of quoted investment - 8 5
Cash used in investing activities (6,325) (3,607) (2,359) FINANCING ACTIVITIES
Bank repayments (2,466) -- --
Capital lease obligations (178) (117) (76)
Proceeds from issuance of ordinary
shares 1,468 485 317
Additional capital injection from
minority interest -- 20 13
Cash (used in)/provided by financing
activities (1,176) 388 254 (Decrease)/Increase in cash and cash
equivalents (3,395) 640 419 Cash and cash equivalents at
beginning of period 58,518 57,821 37,792 Effect of exchange rate changes on
cash and cash equivalents (234) 569 371 Cash and cash equivalents at end of
period 54,889 59,030 38,582 Media / Investors / Analysts / Contact
Bernard Ho
Group Corporate Communications
Mobile: +65-9782-3393
Email: / DATASOURCE: Pacific Internet Limited CONTACT: Bernard Ho of PacNet for Media Contact, +65-9782-3393, Web site: http://www.pacnet.com/ http://www.pacnet.com/investor
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