3GScottishUser
31st March 2005, 06:14 PM
From The Hong Kong Standard (01/04/2005):
Asset sales offset losses from high-cost gamble
For the second year running, Hutchison Whampoa, Li Ka-shing's flagship company, posted a net profit thanks solely to asset sales, as losses on its massive investment in third-generation phone networks continued to mount.
Li insisted, however, that the worst is over.
"I am sure 3G will report breakeven at an Ebitda [earnings before interest, tax, depreciation and amortization] level by the end of the year,'' Li said. "If everything goes smoothly, it may [become] cashflow positive'' this year.
Whether 3G will ultimately provide the sort of outsize returns on investment that the company has promised remains an open question.
One-time gains of HK$19.2 billion from asset sales helped propel net profits 38 percent higher to HK$16.1 billion last year, as after-tax losses on 3G widened to HK$25.3 billion.
Reported profits also got a boost from new accounting rules that require firms to value investment properties on their books at current market value, rather than historical cost. That change added another HK$5.3 billion to Hutchison's bottom line.
At the operating level, or loss before interest and tax, the company's 3G business continued to bleed, losing HK$37.5 billion, almost double 2003's HK$19.7 billion.
Part of that increase reflected an accounting change that forced the company to write off over one year, instead of three, expenses from its prepaid phones. That change resulted in a charge of HK$9.59 billion.
All told, it has now invested 18.2 billion euros (HK$183.72 billion) in its 3G business, which operates in Britain, Italy, Australia, Hong Kong, Sweden, Austria, Denmark and Israel.
Despite the continuing losses, Li said Hutchison is proceeding with plans to sell a stake in its Italian 3G business, one of its two largest, through an initial share offering in the second half.
The company has yet to decide where to sell shares in the unit, in which Hutchison has more than a 90 percent stake, with both the Milan and London bourses being leading candidates.
``If we list on the Milan stock exchange, we need to offer at least 25percent of the business in an IPO,'' group finance director Frank Sixt said.
Analysts value Hutchison's Italian 3G unit at between seven billion to nine billion euros.
The company will consider selling shares in its other big 3G market, the UK, next year, Li said, and it will consider seeking a listing for its Norwegian unit as well.
Hutchison currently has 8.08 million 3G subscribers in seven markets, though Italy and Britain account for 81percent of the total.
Li said the 3G business got off to a ``good start'' this year, adding a net 1.7 million subscribers in the first quarter, or 20,000 a day worldwide.
Full Article here: http://www.thestandard.com.hk/stdn/std/Front_Page/GD01Aa01.html
Asset sales offset losses from high-cost gamble
For the second year running, Hutchison Whampoa, Li Ka-shing's flagship company, posted a net profit thanks solely to asset sales, as losses on its massive investment in third-generation phone networks continued to mount.
Li insisted, however, that the worst is over.
"I am sure 3G will report breakeven at an Ebitda [earnings before interest, tax, depreciation and amortization] level by the end of the year,'' Li said. "If everything goes smoothly, it may [become] cashflow positive'' this year.
Whether 3G will ultimately provide the sort of outsize returns on investment that the company has promised remains an open question.
One-time gains of HK$19.2 billion from asset sales helped propel net profits 38 percent higher to HK$16.1 billion last year, as after-tax losses on 3G widened to HK$25.3 billion.
Reported profits also got a boost from new accounting rules that require firms to value investment properties on their books at current market value, rather than historical cost. That change added another HK$5.3 billion to Hutchison's bottom line.
At the operating level, or loss before interest and tax, the company's 3G business continued to bleed, losing HK$37.5 billion, almost double 2003's HK$19.7 billion.
Part of that increase reflected an accounting change that forced the company to write off over one year, instead of three, expenses from its prepaid phones. That change resulted in a charge of HK$9.59 billion.
All told, it has now invested 18.2 billion euros (HK$183.72 billion) in its 3G business, which operates in Britain, Italy, Australia, Hong Kong, Sweden, Austria, Denmark and Israel.
Despite the continuing losses, Li said Hutchison is proceeding with plans to sell a stake in its Italian 3G business, one of its two largest, through an initial share offering in the second half.
The company has yet to decide where to sell shares in the unit, in which Hutchison has more than a 90 percent stake, with both the Milan and London bourses being leading candidates.
``If we list on the Milan stock exchange, we need to offer at least 25percent of the business in an IPO,'' group finance director Frank Sixt said.
Analysts value Hutchison's Italian 3G unit at between seven billion to nine billion euros.
The company will consider selling shares in its other big 3G market, the UK, next year, Li said, and it will consider seeking a listing for its Norwegian unit as well.
Hutchison currently has 8.08 million 3G subscribers in seven markets, though Italy and Britain account for 81percent of the total.
Li said the 3G business got off to a ``good start'' this year, adding a net 1.7 million subscribers in the first quarter, or 20,000 a day worldwide.
Full Article here: http://www.thestandard.com.hk/stdn/std/Front_Page/GD01Aa01.html