Pacific Internet Reports 16th Consecutive Quarter of Net Income
Tuesday February 14, 8:03 am ET
Driven mainly by 32% Corporate Business Growth
SINGAPORE, Feb. 14 /Xinhua-PRNewswire-FirstCall/ -- Pacific Internet Limited (Nasdaq: PCNTF - News), the largest telco-independent Internet communications service provider by geographic reach in the Asia-Pacific, today reported its 16th consecutive quarter of net income for the period ended December 31, 2005.
Fourth quarter net income was US$2.6 million (or 19 cents per diluted share) while revenues were US$27.3 million. Net income for the full year was US$6.5 million (or 49 cents per diluted share) on revenues of US$102.5 million. The Group also continued its growth in the corporate business with a 32.1% year-on-year revenue growth in the fourth quarter and 15.5% for the full year.
Table I: Summary of Quarterly Financial Results
Group Financials Quarter Ended
(in US$ 000s) 4Q 2005 4Q 2004 3Q 2005
Revenues 27,349 25,605 24,943
Operating Costs & Expenses 25,678 23,265 23,605
Operating Income 1,671 2,340 1,338
Net Income 2,579 2,091 1,265
Table II: Summary of Year-to-Date Financial Results
Group Financials Full Year Ended
(in US$ 000s) December 31, 2005
Revenues 102,488 102,092
Operating Costs & Expenses 96,336 94,808
Operating Income 6,152 7,284
Net Income 6,507 6,091
Table III: Customer Base (In Nos.)
Country Operation Corporate Base
Broadband Lines Dial Up Services
Singapore 8,239 556 6,595 740
Australia 12,526 195 289 20,303
Hong Kong 12,800 200 48,175 2,625
Philippines 182 183 291 30
Malaysia 3 48 4 24
Thailand 444 491 177 128
India 0 116 80 106
Group's Customer Base ¡V Total (As at December 2005)
Grand Total 34,194 1,789 55,611 23,956
Group's Customer Base - Total (As at December 2004)
Grand Total 26,010 1,600 59,620 13,430
Y-O-Y% Growth 31.5% 11.8% -6.7% 78.4%
Country Operation Corporate Consumer
Business (Broadband & Grand
Total Dial Up) Total
Singapore 16,130 115,354 131,484
Australia 33,313 39,380 72,693
Hong Kong 63,800 21,201 85,001
Philippines 686 76,199 76,885
Malaysia 79 0 79
Thailand 1,240 8,272 9,512
India 302 760 1,062
Group's Customer Base - Total (As at December 2005)
Grand Total 115,550 261,166 376,716
Group's Customer Base - Total (As at December 2004)
Grand Total 100,660 370,160 470,820
Y-O-Y% Growth 14.8% -29.4% -20.0%
Note: Total customer base reduction of 20% was due mainly to consumer
subscriber decline. Corporate subscriber base continues to grow in
line with the Group's focus in the corporate business segment.
Revenues for the fourth quarter increased 6.8% to US$27.3 million, compared to US$25.6 million a year ago. Quarter-on-quarter, revenues grew by 9.6%. Full year revenues improved 0.4% to US$102.5 million.
This improvement was achieved on the back of the Group's continued focus on the higher-margin corporate business, stronger take-up of its value-added services (VAS), and continuing growth in the broadband segment.
The Group's corporate business revenue grew to US$69.5 million in 2005, up 15.5% from 2004. This contributed 67.8% of total annual revenues, compared to 59.0% in 2004.
In terms of products, broadband access remained the key revenue driver for the Group in 2005, accounting for 49.7% of its total revenues.
Fourth quarter broadband revenues grew by 5.0% year-on-year and 2.3% over the last quarter, to reach US$13.1 million. Full year broadband access revenue improved 5.7% to US$50.9 million. Corporate broadband access revenue grew 16.7% year-on-year, contributing 69.5% to total broadband access revenue.
VAS revenues more than doubled to US$5.9 million in the fourth quarter compared to the same quarter last year. Compared to the previous quarter, VAS revenue grew by 81.5%. The highest revenue growth for the Group in 2005 was VAS, which recorded a 38.1% growth to reach US$15.3 million for the full year. VAS revenue from the corporate business segment grew 49.8% year-on-year to constitute 90% of total VAS revenue.
Fourth quarter leased line revenues were US$3.6 million, a 14.6% growth year-on-year, and an improvement of 8.9% when compared to the previous quarter. Leased line revenue increased by 4.5% to US$13.2 million for the full year.
Operating Costs and Expenses
Gross margin for 2005 dropped from 55.1% to 52.9% primarily due to lower average revenue per user (ARPU) arising from competitive pricing pressure, and the lower-margin voice revenue from T3 Communications in Australia. The Group will continue to enhance operational efficiencies as part of its cost management measures.
Cost of sales for the year was US$48.3 million, a 5.3% increase over the previous year. However, total operating expenses (excluding cost of sales) were contained at US$48.1 million, reflecting a decrease of 1.8% year-on-year. Sales and marketing expenses, which comprised largely of advertising and promotion expenses, were lower by 11.2% at US$2.9 million. Other general and administrative expenses were reduced by 1.3% to US$9.2 million for the year. Allowance for doubtful accounts receivable for the year was lowered by 1.2% to US$0.9 million.
Strong cash position
The Group's cash position remained strong with cash and bank balances of US$35.8 million. Cash generated by operating activities for 2005 was US$10.5 million, of which US$9.6 million was used in investing activities, primarily for the acquisition of fixed assets and intangible assets. Another US$53,000 was generated from financing activities. Net cash surplus as at December 31,2005, was US$1.0 million.
"Despite pricing pressures and intense industry competition, the Group has consistently delivered revenue and net income growth in the past 16 quarters. We have maintained a strong cash position, which gives us the financial flexibility to capitalize on opportunities in today's fast-changing world of technology convergence. In 2006, we will identify and make strategic investments in acquisitions, partnerships, new disruptive technologies and people to increase market share and extend our footprint in the region," said Mr. Bien Kiat Tan, Chairman, Pacific Internet.
Fourth Quarter Investment & Strategic Alliances:
-- Entered the China market through a joint venture with China-based
Internet services provider, Zhong Ren Telecom. The joint venture will
broaden the Group's geographical coverage and tap the market potential
in China by offering connectivity solutions to China-based and
multinational enterprises operating in the region;
-- Acquired T3 Communications, a voice-focused communications company in
Australia. This will provide the Group with added capabilities to
strengthen its voice business and add value to its SMB business in
-- Established partnership with Skype, a pioneer in global Internet
communications, in Singapore to offer co-branded low-cost voice
services. This is part of the Group's plans to offer more value-added
services centered on applications and content. There are options for
the Group to explore similar partnership in other countries.
-- Launched one of Hong Kong's first integrated business connectivity and
security solutions through a strategic partnership with Cisco Systems.
"Through these and other growth initiatives in 2005, we're laying the groundwork to seize opportunities offered by IP convergence and other technological developments this year. There are some opportunities in expanding our geographic coverage and in exciting spaces created by disruptive technologies. We will be moving into these areas quickly. I am completing the review of the operations and plan to identify spaces together with the management, to steer the company to a stronger growth path," said Mr. Teck Moh Phey, President and Chief Executive Officer, Pacific Internet.
Conference Call and Web Cast
The Management will host a conference call to discuss the results:
US Eastern Time: February 14, 2006 @ 8.30 a.m.
Singapore Time: February 14, 2006 @ 9.30 p.m.
Dial-in numbers: US: 800-289-0494 (toll-free)
Replay telephone nos. are: US & Canada 888-203-1112 (toll-free)
(The pass code for the "live" call and the replay is 1148790.)
The call will also be webcast "live" at: www.pacnet.com/investor/
Detailed financial statements together with management's discussion and analysis are available on the Investor Relations website at www.pacnet.com/investor/ .
The financial statement amounts in this report are in conformity with US GAAP. For convenience, the company's functional currency, the Singapore dollar, has been translated into US dollar amounts at the exchange rate of S$1.6628 to US$1.00. (Conversion rate as at December