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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of March 2007
Commission File Number: 1-14396
ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
--------------------------------------------------
(Translation of registrant's name into English)
17/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [_]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1). __
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a
Form 6-K if submitted solely to provide an attached annual report to security
holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): __
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a
Form 6-K if submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
2
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [_] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):_________.
This report on Form 6-K shall be deemed to be incorporated by reference into
any Rule 13e-3 Transaction Statement on Schedule 13E-3 filed after the date
hereof by the Company that specifically incorporates this report by reference
in such Schedule.
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3
Information furnished on this form:
Announcement, dated March 5, 2007, by the Registrant regarding the Final
Results for the Year Ended 31 December 2006
EXHIBITS
EXHIBIT
NUMBER PAGE
------- ----
1.1 Announcement, dated March 5, 2007, by the 5
Registrant regarding the Final Results for the
Year Ended 31 December 2006
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
(Registrant)
Date: March 6, 2007 By: /s/ Peter Jackson
--------------------------------------------
Peter Jackson
Chief Executive Officer
5
[GRAPHIC OMITTED -- LOGO]
ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
[CHINESE CHARACTERS OMITTED]
(INCORPORATED IN BERMUDA WITH LIMITED LIABILITY)
STOCK CODE: 1135
PRESS ANNOUNCEMENT
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
The Board of Directors (the "Board") of Asia Satellite Telecommunications
Holdings Limited (the "Company") is pleased to announce the results, audited at
the date of this release, of the Company and its subsidiaries (the "Group") for
the year ended 31 December 2006, together with comparative figures for the
corresponding year in 2005 as follows:
CONSOLIDATED INCOME STATEMENT
(ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)
-------------------------------------------------------------------------------
YEAR ENDED 31 DECEMBER
------------------------
NOTE 20 06 2005
---- ----- ----
CONTINUING OPERATIONS
Sales 2 929,902 879,705
Cost of services 3 (410,640) (419,029)
-------- --------
GROSS PROFIT 519,262 460,676
Other gains - net 3 92,793 43,711
Administrative expenses 3 (94,585) (83,880)
-------- --------
OPERATING PROFIT 517,470 420,507
Finance Costs (152) -
Share of loss of associates (8,391) (3,872)
-------- --------
PROFIT BEFORE INCOME TAX 508,927 416,635
Income tax expense 4 (55,522) (51,270)
-------- --------
PROFIT FROM CONTINUING OPERATIONS AND FOR THE YEAR 453,405 365,365
======== ========
ATTRIBUTABLE TO:
- equity holders of the Company 454,009 366,184
- minority interests (604) (819)
-------- --------
453,405 365,365
======== ========
EARNINGS PER SHARE FOR PROFIT ATTRIBUTABLE TO THE EQUITY
HOLDERS OF THE COMPANY DURING THE YEAR
(expressed in HK$ per share)
- basic 5 1.16 0.94
======== ========
- diluted 5 1.16 0.94
======== ========
DIVIDENDS 6 136,593 136,593
======== ========
6
CONSOLIDATED BALANCE SHEET
(ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)
-------------------------------------------------------------------------------
AS AT 31 DECEMBER
--------------------------
2006 2005
---- ----
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 2,630,847 2,620,911
Leasehold land and land use rights 23,616 24,199
Intangible assets 1,276 1,339
Unbilled receivable 171,047 174,563
Interests in associates 10,057 14,294
Amount paid to tax authority 154,911 93,666
--------- ---------
TOTAL NON-CURRENT ASSETS 2,991,754 2,928,972
--------- ---------
CURRENT ASSETS
Inventories 354 434
Trade and other receivables 119,647 118,598
Cash and cash equivalents 1,979,457 1,635,526
--------- ---------
TOTAL CURRENT ASSETS 2,099,458 1,754,558
--------- ---------
TOTAL ASSETS 5,091,212 4,683,530
========= =========
EQUITY
Capital and reserves attributable to the Company's
equity holders
Ordinary shares 39,027 39,027
Share premium 4,614 4,614
Retained earnings
- Proposed final dividend 105,372 105,372
- Others 4,272,591 3,955,175
--------- ---------
4,421,604 4,104,188
Minority interests 4,933 5,537
--------- ---------
TOTAL EQUITY 4,426,537 4,109,725
--------- ---------
7
CONSOLIDATED BALANCE SHEET
(ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)
-------------------------------------------------------------------------------
AS AT 31 DECEMBER
--------------------------
2006 2005
---- ----
LIABILITIES
NON-CURRENT LIABILITIES
Deferred income tax liabilities 191,739 192,654
Deferred revenue 142,624 87,654
Other payables 1,770 -
--------- ---------
TOTAL NON-CURRENT LIABILITIES 336,133 280,308
--------- ---------
CURRENT LIABILITIES
Construction payables 1,736 3,096
Other payables and accrued expenses 96,495 64,118
Deferred revenue 153,101 151,982
Current income tax liabilities 77,089 74,180
Dividend payable 121 121
--------- ---------
TOTAL CURRENT LIABILITIES 328,542 293,497
--------- ---------
TOTAL LIABILITIES 664,675 573,805
--------- ---------
TOTAL EQUITY AND LIABILITIES 5,091,212 4,683,530
========= =========
NET CURRENT ASSETS 1,770,916 1,461,061
========= =========
TOTAL ASSETS LESS CURRENT LIABILITIES 4,762,670 4,390,033
========= =========
8
Notes (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED):
1. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise
stated.
1.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in
accordance with Hong Kong Financial Reporting Standards (HKFRSs) and have
been prepared under the historical cost convention.
The preparation of financial statements in conformity with HKFRSs
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgment in the process of applying
the Group's accounting policies.
NEW STANDARDS AND AMENDMENTS TO PUBLISHED STANDARDS
The following new standards, amendments to standards and interpretations
are mandatory for the financial year ended 31 December 2006:
o Amendment to IAS/HKAS 19, 'Actuarial gains and losses, group plans and
disclosures', effective for annual periods beginning on or after 1
January 2006. This amendment is not relevant for the Group;
o Amendment to IAS/HKAS 39, Amendment to `The fair value option',
effective for annual periods beginning on or after 1 January 2006.
This amendment is not relevant for the Group;
o Amendment to IAS/HKAS 21, Amendment 'Net investment in a foreign
operation', effective for annual periods beginning on or after 1
January 2006. This amendment has no impact on the Group;
o Amendment to IAS/HKAS 39, Amendment 'Cash flow hedge accounting of
forecast intragroup transactions', effective for annual periods
beginning on or after 1 January 2006. This amendment is not relevant
for the Group;
o Amendment to IAS/HKAS 39 and IFRS/HKFRS 4, Amendment 'Financial
guarantee contracts', effective for annual periods beginning on or
after 1 January 2006. This amendment is not relevant for the Group;
o IFRS/HKFRS 6, 'Exploration for and evaluation of mineral resources',
effective for annual periods beginning on or after 1 January 2006.
This standard is not relevant for the Group;
o IFRIC/HK(IFRIC)-Int 4, 'Determining whether an arrangement contains a
lease', effective for annual periods beginning on or after 1 January
2006. The Group has reviewed its contracts. Some of them are required
to be accounted for as leases in accordance with IAS/HKAS 17,
'Leases'. However, these leases are operating leases, and their
reclassification has had no impact on the expense recognised in
respect of them;
o IFRIC/HK(IFRIC)-Int 5, 'Rights to interests arising from
decommissioning, restoration and environmental rehabilitation funds',
effective for annual periods beginning on or after 1 January 2006.
This interpretation is not relevant for the Group; and
o IFRIC/HK(IFRIC)-Int 6, 'Liabilities arising from participating in a
specific market - waste electrical and electronic equipment',
effective for annual periods beginning on or after 1 December 2005.
This interpretation is not relevant for the Group.
The following new standards, amendments to standards and interpretations
have been issued but are not effective for 2006 and have not been early
adopted:
o IFRIC/HK(IFRIC)-Int 7, 'Applying the restatement approach under
IFRS/HKFRS 29', effective for annual periods beginning on or after 1
March 2006. Management does not expect this interpretation to be
relevant for the Group;
o IFRIC/HK(IFRIC)-Int 8, 'Scope of IFRS/HKFRS 2', effective for annual
periods beginning on or after 1 May 2006. Management does not expect
this interpretation to be relevant for the Group;
o IFRIC/HK(IFRIC)-Int 9, 'Reassessment of embedded derivatives',
effective for annual periods beginning on or after 1 June 2006.
Management does not expect this interpretation to be relevant for the
Group;
o IFRIC/HK(IFRIC)-Int 10, 'Interim financial reporting and impairment',
effective for annual periods beginning on or after 1 November 2006.
Management is currently assessing the impact of this interpretation on
the Group's operations;
o IFRS/HKFRS 7, 'Financial instruments: Disclosures', effective for
annual periods beginning on or after 1 January 2007. IAS/HKAS 1,
'Amendments to capital disclosures', effective for annual periods
beginning on or after 1 January 2007. Management is currently
assessing the impact of this standard on the Group's operations;
o IFRIC-Int 11-IFRS 2, 'Group and treasury share transactions',
effective for annual periods beginning on or before 1 March 2007.
Management does not expect this interpretation to be relevant for the
Group;
o IFRIC-Int 12, 'Service concession arrangements', effective for annual
periods beginning on or before 1 January 2008. Management is currently
assessing the impact of this interpretation on the Group's operations;
and
o IFRS 8, 'Operating segments', effective for annual periods beginning
on or before 1 January 2009. Management is currently assessing the
impact of this standard on the Group's operations.
1.2 Consolidation
The consolidated financial statements include the financial statements of
the Company and all its subsidiaries made up to 31 December.
(a) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over
which the Group has the power to govern the financial and operating
policies generally accompanying a shareholding of more than one half of
the voting rights. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that
control ceases.
The purchase method of accounting is used to account for the acquisition
of subsidiaries. The cost of an acquisition is measured as the fair value
of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange, plus costs directly attributable to
the acquisition. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date, irrespective of
the extent of any minority interest. The excess of the cost of
acquisition over the fair value of the Group`s share of the identifiable
net assets acquired is recorded as goodwill. If the cost of acquisition
is less than the fair value of the net assets of the subsidiary acquired,
the difference is recognised directly in the income statement.
9
1.2 Consolidation (continued)
Inter-company transactions, balances and unrealised gains on transactions
between group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of
the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted
by the Group.
In the Company's balance sheet the investments in subsidiaries are stated
at cost less provision for impairment losses. The results of subsidiaries
are accounted for by the Company on the basis of dividends received and
receivable.
(b) Associates
Associates are all entities over which the Group has significant
influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights. Investments in associates are
accounted for by the equity method of accounting and are initially
recognised at cost. The Group's investment in associates includes
goodwill (net of any accumulated impairment loss) identified on
acquisition.
The Group's share of its associates' post-acquisition profits or losses
is recognised in the income statement, and its share of post-acquisition
movements in reserves is recognised in reserves. The cumulative
post-acquisition movements are adjusted against the carrying amount of
the investment. When the Group's share of losses in an associate equals
or exceeds its interest in the associate, including any other unsecured
receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are
eliminated to the extent of the Group's interest in the associates.
Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies
of associates have been changed where necessary to ensure consistency
with the policies adopted by the Group.
In the Company's balance sheet the investments in associated companies
are stated at cost less provision for impairment losses. The results of
associated companies are accounted for by the Company on the basis of
dividends received and receivable.
1.3 Segment reporting
A business segment is a group of assets and operations engaged in
providing products or services that are subject to risks and returns that
are different from those of other business segments. A geographical
segment is engaged in providing products or services within a particular
economic environment that are subject to risks and returns that are
different from those of segments operating in other economic
environments.
1.4 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's
entities are measured using the currency of the primary economic
environment in which the entity operates (`the functional currency'). The
consolidated financial statements are presented in Hong Kong dollars,
which is the Company's functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are
recognised in the income statement.
Translation differences on non-monetary items, such as equity instruments
held at fair value through profit or loss, are reported as part of the
fair value gain or loss. Translation difference on non-monetary items,
such as equities classified as available-for-sale financial assets, are
included in the fair value reserve in equity.
(c) Group companies
The results and financial position of all the group entities (none of
which has the currency of a hyperinflationary economy) that have a
functional currency different from the presentation currency are
translated into the presentation currency as follows:
(i) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance sheet;
(ii) income and expenses for each income statement are translated at
average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the dates of the transactions); and
(iii) all resulting exchange differences are recognised as a separate
component of equity.
1.5 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and accumulated impairment losses.
Buildings in the course of development for production, rental or
administrative purposes or for purposes not yet determined, are carried
at cost, less any identified impairment loss. Depreciation of these
assets, on the same basis as other property assets, commences when the
assets are ready for their intended use. Historical cost includes
expenditure that is directly attributable to the acquisition of the
items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. All other
repairs and maintenance are expensed in the income statement during the
financial year in which they are incurred.
Depreciation of property, plant and equipment is calculated using the
straight-line method to allocate cost or revalued amounts to their
residual values over their estimated useful lives, at the following rates
per annum:
10
1.5 Property, plant and equipment (continued)
Satellites:
- AsiaSat 2 8%
- AsiaSat 3S 6.25%
- AsiaSat 4 6.67%
Buildings 4%
Tracking facilities 10%-20%
Furniture, fixtures and fittings 20%-33%
Other equipment 25%-33%
Motor vehicles 25%
Plant and machinery 20%
The assets' residual values and useful lives are reviewed, and adjusted
if appropriate, at each balance sheet date.
An asset's carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with
carrying amounts. These are included in the income statement. When
revalued assets are sold, the amounts included in other reserves are
transferred to retained earnings.
1.6 Intangible assets - Licences
The licences are shown at historical cost. One licence has a finite
useful life and is carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line method to allocate the
cost of the licence over its estimated useful life (112 months). The
other licence does not have a finite useful life.
1.7 Impairment of assets
Assets that have an indefinite useful life are not subject to
amortisation, are tested at least annually for impairment and are
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Assets that are
subject to amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset's fair value less costs to sell and
value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable
cash flows (cash-generating units). Non-financial assets other than
goodwill that have suffered an impairment are reviewed for possible
reversal of the impairment at each reporting date.
1.8 Goodwill
Goodwill represents the excess of the cost of an investment over the fair
value of the Group's share of the net identifiable assets of the acquired
associates at the date of investment. Goodwill on investment of
associates is included in interests in associates. Goodwill is tested
annually for impairment and carried at cost less accumulated impairment
losses. Gains and losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of
impairment testing.
1.9 Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is determined using the first-in, first-out (FIFO) method and
comprises all costs of purchase and other costs incurred in bringing the
inventories to their present locations and conditions. Net realisable
value is the estimated selling price in the ordinary course of business,
less applicable variable selling expenses.
1.10 Trade and other receivables
Trade and other receivables are recognised initially at fair value less
provision for impairment. A provision for impairment of trade and other
receivables is established when there is objective evidence that the
Group will not be able to collect all amounts due according to the
original terms of receivables. Significant financial difficulties of the
debtor, probability that the debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in payments (more than 180
days overdue) are considered indicators that the trade receivable is
impaired. The amount of the provision is recognised in the income
statement within administrative expenses.
1.11 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call
with banks, other short-term highly liquid investments with original
maturities of three months or less, and bank overdrafts. Bank overdrafts
are shown within borrowings in current liabilities on the balance sheet.
11
1.12 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the
proceeds.
1.13 Borrowings
Borrowings are recognised initially at fair value, net of transaction
costs incurred. Transaction costs are incremental costs that are directly
attributable to the acquisition, issue or disposal of a financial asset
or financial liability, including fees and commissions paid to agents,
advisers, brokers and dealers, levies by regulatory agencies and
securities exchanges, and transfer taxes and duties. Borrowings are
subsequently stated at amortised cost; any difference between the
proceeds (net of transaction costs) and the redemption value is
recognised in the income statement over the period of the borrowings
using the effective interest method.
1.14 Deferred income tax
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial
statements. However, if the deferred income tax arises from initial
recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss, it is not accounted for. Deferred
income tax is determined using tax rates (and laws) that have been
enacted or substantially enacted by the balance sheet date and are
expected to apply when the related deferred income tax asset is realised
or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is
probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on
investments in subsidiaries, associates and jointly controlled entities,
except where the timing of the reversal of the temporary difference is
controlled by the Group and it is probable that the temporary difference
will not reverse in the foreseeable future.
1.15 Employee benefits
(a) Pension obligations
The Group participates in defined contribution plans, the Group pays
contributions to publicly or privately administered pension insurance
plans on a mandatory, contractual or voluntary basis. The pension plans
are generally funded by payments from employees and by the relevant Group
companies. The Group has no further payment obligations once the
contributions have been paid. The contributions are recognised as
employee benefit expense when they are due and are reduced by
contributions forfeited by those employees who leave the scheme prior to
vesting fully in the contributions. Prepaid contributions are recognised
as an asset to the extent that a cash refund or a reduction in the future
payments is available.
(b) Share-based compensation
The Group operates an equity-settled, share-based compensation plan. The
fair value of the employee services received in exchange for the grant of
the options is recognised as an expense. The total amount to be expensed
over the vesting period is determined by reference to the fair value of
the options granted, excluding the impact of any non-market vesting
conditions (for example, profitability and sales growth targets).
Non-market vesting conditions are included in assumptions about the
number of options that are expected to become exercisable. At each
balance sheet date, the Company revises its estimates of the number of
options that are expected to become exercisable. It recognises the impact
of the revision of original estimates, if any, in the income statement,
and a corresponding adjustment to equity over the remaining vesting
period.
(c) Profit-sharing and bonus plans
The expected cost of profit sharing and bonus payments are recognised as
a liability when the Group has a present legal or constructive obligation
as a result of services rendered by employees and a reliable estimate of
the obligation can be made.
Liabilities for profit sharing and bonus plans are expected to be settled
within 12 months and are measured at the amounts expected to be paid when
they are settled.
1.16 Provisions
Provisions for environmental restoration, asset retirement obligations,
restructuring costs and legal claims are recognised when: the Group has a
present legal or constructive obligation as a result of past events; it
is more likely than not that an outflow of resources will be required to
settle the obligation; and the amount has been reliably estimated.
Restructuring provisions comprise lease termination penalties and
employee termination payments. Provisions are not recognised for future
operating losses.
Where there are a number of similar obligations, the likelihood that an
outflow will be required in settlement is determined by considering the
class of obligations as a whole. A provision is recognised even if the
likelihood of an outflow with respect to any one item included in the
same class of obligations may be small.
12
1.17 Revenue recognition
Revenue from transponder utilisation is recognised on a straight-line
basis over the period of the agreements. The excess of revenue recognised
on a straight-line basis over the amount received and receivable from
customers in accordance with the contract terms is shown as unbilled
receivable.
Revenue from the sale of transponder capacity under transponder purchase
agreements is recognised on a straight-line basis from the date of
delivery of the transponder capacity until the end of the estimated
useful life of the satellite.
Deposits received in advance in connection with the provision of
transponder capacity are deferred and included in other payables.
Services under transponder utilisation agreements are generally billed
quarterly in advance. Such amounts received in advance and amounts
received from the sale of transponder capacity under transponder purchase
agreements in excess of amounts recognised as revenue are recorded as
deferred revenue. Deferred revenue which will be recognised in the
following year is classified under current liabilities and amounts which
will be recognised after one year are classified as non-current.
Interest income is accrued on a time basis, by reference to the principal
amounts outstanding and at the interest rate applicable.
1.18 Operating leases (as the lessee)
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating leases.
Payments made under operating leases (net of any incentives received from
the lessor) are expensed in the income statement on a straight-line basis
over the period of the lease.
1.19 Dividend distribution
Dividend distribution to the Company's equity holders is recognised as a
liability in the financial statements in the period in which the
dividends are approved by the Company's equity holders.
2. Sales and segment information
The Group's sales is analysed as follows:
2006 2005
Income from provision of satellite transponder capacity
- recurring 850,425 850,436
- non-recurring 49,911 -
Sales of satellite transponder capacity 24,491 24,491
Other revenue 5,075 4,778
---------- ----------
929,902 879,705
========== ==========
The Group has only one business segment, namely the operation,
maintenance and provision of satellite telecommunication systems for
broadcasting and telecommunications. The Group's primary reporting format
for segment reporting purposes under HKAS 14 "Segment Reporting" is the
geographical basis. For the purpose of classification, the country where
the customer is incorporated is deemed to be the source of sales.
However, the Group's operating assets consist primarily of its satellites
which are used, or are intended for use, for transmission to multiple
geographical areas and therefore cannot be allocated between geographical
segments. Accordingly, no geographical analysis of expenses, assets and
liabilities has been presented.
The following table provides an analysis of the Group's sales by
geographical markets:
2006 2005
Hong Kong 341,567 341,698
Greater China, including Taiwan 194,831 202,730
United States of America 79,813 78,205
United Kingdom 53,211 49,401
Australia 37,317 27,927
Others 223,163 179,744
--------- ----------
929,902 879,705
========= ==========
13
3. Operating profit
2006 2005
Interest income 92,710 43,606
Gain on disposal of property, plant and equipment other than transponders 70 99
Others 13 6
-------- ----------
92,793 43,711
======== ==========
Salary and other benefits, including directors' remuneration 82,930 60,748
Pension costs - defined contribution plans 4,625 4,344
-------- ----------
Total staff costs 87,555 65,092
======== ==========
Auditors' remuneration 1,775 769
Bad debts written off 11,997 2,987
(Write back)/provision for impairment of receivables made (8,468) 7,700
Depreciation, amortisation and impairment expenses 297,758 295,278
Operating leases
- premises 4,383 5,872
- leasehold land & land use rights 583 583
Net exchange loss 404 547
======== ==========
4. Income tax expense
A significant portion of the Group's profit is treated as earned outside
Hong Kong and is not subject to Hong Kong profits tax. Hong Kong profits
tax has been provided at the rate of 17.5% (2005: 17.5%) on the estimated
assessable profit for the year.
Overseas tax, including the Foreign Enterprises Income Tax in the
People's Republic of China, is calculated at 5% to 20% of the gross
revenue earned in certain of the overseas jurisdictions.
The Group currently has a tax case in dispute with the Indian tax
authorities. Details of this are set out in note 7.
2006 2005
Current income tax
- Hong Kong profits tax 38,856 45,056
- Overseas taxation 17,581 18,818
Deferred income tax reversal (915) (12,604)
-------- ---------
55,522 51,270
======== =========
The tax on the Group's profit before tax differs from the theoretical
amount that would arise using the weighted average tax rate applicable to
profits of the consolidated companies as follows:
2006 2005
Profit before tax 508,927 416,635
========= ==========
Tax calculated at tax rate of 17.5% (2005: 17.5%) 89,062 72,911
Tax effect of income not subject to tax (96,999) (84,164)
Tax effect of expenses not deductible for tax purposes 45,440 43,027
Tax effect of tax losses of associates not recognised 438 678
Effect of income tax rate differential between Hong Kong and overseas
locations 17,581 18,818
--------- ----------
Tax expense 55,522 51,270
========= ==========
The effective tax rate of the Group was 10.9% (2005: 12.3%).
5. Earnings per share
BASIC
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Company by the weighted average
number of ordinary shares in issue during the year. 2005 2004 2006 2005
Profit attributable to equity holders of the Company 454,009 366,184
========= ==========
Weighted average number of ordinary shares in issue (thousands) 390,266 390,266
========= ==========
Basic earnings per share (HK$ per share) 1.16 0.94
========= ==========
14
5. Earnings per share (continued)
DILUTED
Diluted earnings per share is calculated adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all
dilutive potential ordinary shares. The Company has share options of
dilutive potential ordinary shares. The calculation is done to determine
the number of shares that could have been acquired at fair value
(determined as the average annual market share price of the Company's
shares) based on the monetary value of the subscription rights attached
to outstanding share options. The number of shares calculated as above is
compared with the number of shares that would have been issued assuming
the exercise of the share options.
2006 2005
Profit used to determine diluted earnings per share 454,009 366,184
========= ==========
Weighted average number of ordinary shares in issue (thousands) 390,266 390,266
Adjustments for - share options (thousands) - 26
--------- ----------
Weighted average number of ordinary shares for diluted earnings per share
(thousands) 390,266 390,292
========= ==========
Diluted earnings per share (HK$ per share) 1.16 0.94
========= ==========
6. Dividends
The dividends paid during the years ended 2006 and 2005 were $136,593
(HK$0.35 per share) and $136,593 (HK$0.35 per share) respectively. A
dividend in respect of 2006 of HK$0.27 per share, amounting to a total
dividend of $105,372 is to be proposed at the Annual General Meeting on
18 May 2007. These financial statements do not reflect this dividend
payable. 2006 2005
Interim dividend paid of HK$0.08 (2005: HK$0.08) per ordinary share 31,221 31,221
Proposed final dividend of HK$0.27 (2005: HK$0.27) per ordinary share 105,372 105,372
--------- ---------
136,593 136,593
========= =========
7. Contingencies
Under Indian tax regulations, the Group may be subject to Indian income
tax on revenues received by the Group in respect of income from provision
of satellite transponder capacity to the Group's customers for purposes
of those customers carrying on business in India or earning income from
any source in India.
The Indian tax authorities have assessed the Group for income tax as
follows:
Assessment year Amount HK$ Amount INR
(approximate) (approximate)
1997-98 20 million 115 million
1998-99 23 million 141 million
1999-00 22 million 127 million
2000-01 14 million 84 million
2001-02 29 million 171 million
2002-03 38 million 210 million
2003-04 50 million 316 million
2004-05 58 million 330 million
-------------- ---------------
Total 254 million 1,494 million
============== ===============
The Group has filed appeals for each of the assessment years 1997-98 to
2004-05.
No assessment has yet been made for the 2005-06 or 2006-07 assessment
years.
The Income Tax Appellate Tribunal (the "Tribunal") in an earlier appeal
filed against the original assessment for the assessment year 1997-98
held that the Group is liable for Indian income tax under certain
circumstances. The Group does not believe that it is liable for the
Indian income tax as held by the Tribunal and has filed an appeal against
the Tribunal's decision. The tax authorities have also filed an appeal
against the Tribunal's decision. Both the appeals have been admitted by
the High Court.
In order to obtain a stay of recovery proceedings, the Group has made
payments as follows and has recorded these payments as an asset on the
assumption that the amounts are recoverable:
15
7. Contingencies (continued)
Assessment year Amount HK$ Amount INR
(approximate) (approximate)
1997-98 13 million 78 million
1998-99 14 million 88 million
1999-00 11 million 62 million
2000-01 9 million 50 million
2001-02 20 million 119 million
2002-03 27 million 148 million
2003-04 39 million 226 million
2004-05 22 million 125 million
-------------- --------------
Total 155 million 896 million
============== ==============
In addition, based on the general principles set forth by the Tribunal,
the amount of income taxable in India depends on the payments made by the
Group's customers to the Group for the purpose of those customers
carrying on business in India or earning income from any source in India.
As such information is proprietary in nature and has not been provided by
the Group's customers, the Group cannot reasonably estimate the taxable
income and therefore also cannot estimate the amount of income tax to
which the Group may be assessed. Furthermore, as stated above, the Group
has filed an appeal against the Tribunal's decision. The appeal has been
admitted by the High Court and is pending before the Court. Accordingly,
no provision has been recognised for Indian income tax in the Group's
financial statements.
8. Purchase, sale or redemption of own securities
During the year, neither the Company nor any of its subsidiaries
purchased, sold or redeemed any of the Company's listed securities.
9. Corporate Governance
Throughout 2006, the Group applied the principles and complied with the
Code on Corporate Governance Practices ("CG Code") as set out in Appendix
14 to the Rules Governing the Listing of Securities ("Listing Rules") on
The Stock Exchange of Hong Kong Limited (the "Exchange") with certain
deviations as outlined below.
The CG Code provides that a majority of the members of the Remuneration
Committee should be independent non-executive directors ("INEDs").
However, the Remuneration Committee is composed of three members, of whom
one is an INED and the other two are Non-executive Directors ("NEDs").
The Committee is chaired by the INED. Having committee members
representing the majority shareholders adds value as the representative
of CITIC Group ("CITIC") brings in the knowledge of local market pay
practices (China in general and Hong Kong more specifically), whereas the
SES S.A. ("SES") (formerly SES GLOBAL S.A.) representative adds the
satellite industry specific dimension. It is logical to have a small
Remuneration Committee as it allows open, frank and very focused
discussions. Strict compliance with the CG Code would have the Committee
consist of at least 5 members, implying that all the INEDs and close to
half of the NEDs would have to participate the Committee so as to
maintain the balance of input from the main shareholders' representative.
The Group has adopted procedures governing Directors' securities
transactions in compliance with the Model Code as set out in Appendix 10
of the Listing Rules.
10. Audit Committee
The Audit Committee consists of five members, three of whom are
Independent Non-executive Directors who satisfy independent, financial
literacy and experience requirements, whilst the other two members are
Non-executive Directors and have only observer status with no voting
rights. The Committee is chaired by an Independent Non-executive
Director, who possesses appropriate professional qualifications and
experience in financial matters.
The Committee has reviewed the accounting principles and practices
adopted by the Group and the consolidated financial statements for the
year ended 31 December 2006 in conjunction with the Company's external
auditors.
11. Charges on Assets
The Group did not have any charges on assets as at 31 December 2006 and
31 December 2005.
12. Publication of detailed results, announcement on the exchange's website
A detailed results announcement containing all the information required
by paragraphs 45 of Appendix 16 of the Exchange Listing Rules will be
published on the Exchange's website in due course.
13. Miscellaneous
The Directors are not aware of any material changes from the information
published in the annual report for the year ended 31 December 2006, other
than disclosed in this announcement.
16
14. Closure of register of members
The Register of equity holders of the Company will be closed from 11 to
18 May 2007 (both days inclusive). In order to qualify for the final
dividend, all transfers, accompanied by the relevant share certificates,
must be lodged with the Company's Hong Kong Branch Share Registrars,
Computershare Hong Kong Investor Services Limited at Shops 1712-1716,
17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong for
registration not later than 4:30 p.m. on 10 May 2007. The final dividend
will be paid on or about 22 May 2007.
17
CHAIRMAN'S STATEMENT
STABLE YEAR ENHANCED BY ONE-TIME RECEIPTS
A stable year benefited from one-time receipts, and this combination enabled
AsiaSat to report an increase in profit for 2006. As we indicated at the time
of the interim report, the underlying results from the Company's core business
remained largely in line with the previous year.
Asia is experiencing positive economic expansion generally, yet there remains a
lack of significant growth in the satellite sector. While the satellite market
typically lags behind other industries as economies pick up, this situation is
exacerbated by overcapacity and price cutting at the lower end of the
transponder market.
Nevertheless, we maintain our leadership and are reporting a growing roster of
prime customers, a 6% increase in overall utilisation, and signs that
utilisation rates are firming.
PRIVATISATION
As announced on 13 February 2007, the Board received a request from Modernday
Limited (the "Offeror"), a company jointly owned by CITIC Group and General
Electric Capital Corporation, to put forward the Share Proposal to the Scheme
Shareholders for a proposed privatisation of the Company by way of a scheme of
arrangement under Section 99 of the Companies Act of Bermuda. The Board has
reviewed the Share Proposal and has agreed to put it forward to the Scheme
Shareholders. Details of the joint announcement are available at the Company's
website, http://www.asiasat.com. The Scheme Document containing further details
of the Proposals and the Scheme, the expected timetable, the recommendations of
the Independent Board Committee in respect of the Proposals, the letter of
advice from the independent financial adviser to the Independent Board
Committee, an explanatory statement as required under the Companies Act, and
notices of the Court Meeting and the Special General Meeting will be despatched
to the shareholders in due course. By the time you receive this annual report,
you may have already received the Scheme Document.
FINANCIAL RESULTS
The presentation of the financial results, specifically the comparison between
the 2005 and 2006 figures, are again distorted by the inclusion of one-time
receipts in 2006 for early termination of contracts.
TURNOVER
Turnover for the year ended 31 December 2006 amounted to HK$930 million (2005:
HK$880 million), HK$50 million above the prior year. Excluding the one-time
receipts of HK$50 million on the contract termination, turnover remained
unchanged.
PROFIT
The profit attributable to equity holders for 2006 was HK$454 million (2005:
HK$366 million), an increase of HK$88 million or 24%, of which HK$45 million
was attributable to the one-time receipts and balance coming from interest
income.
CASH FLOW
In 2006, the Group generated a net cash inflow of HK$344 million (2005: HK$401
million) after paying capital expenditure of HK$307 million (2005: HK$24
million) and dividends of HK$137 million (2005: HK$137 million). At the end of
2006, the Group's cash balance increased to HK$1,979 million (2005: HK$1,636
million).
18
OPERATING EXPENSES
Operating expenses were contained at HK$207 million (2005: HK$208 million).
Expense increases in some areas were offset by savings in others.
DEPRECIATION
Depreciation expense increased to HK$298 million (2005: HK$295 million), 1%
above the prior year. This was mainly attributable to the increase in
depreciation of miscellaneous assets.
DIVIDEND
At the forthcoming Annual General Meeting, to be held on 18 May 2007, your
Directors will recommend a final dividend of HK$0.27 per share (2005: HK$0.27
per share). This, together with the interim dividend of HK$0.08 per share
(2005: HK$0.08 per share), gives a total of HK$0.35 per share (2005: HK$0.35
per share), the same as in the prior year.
BUSINESS REVIEW
NEW SATELLITE
The Company is progressing on schedule with the construction of our new
satellite, AsiaSat 5, which is to replace AsiaSat 2 at the orbital location of
100.5 degrees East. However, we have been advised of a delay in the launch
vehicle availability.
If there were no changes to be made to the current launch programme, other than
the date, the construction would continue on time and the launch would be moved
from the second half of 2008 into 2009. This would present no operational or
customer issues as AsiaSat 2 is not planned to be retired until 2010. However,
this delayed schedule would not provide sufficient time before the anticipated
retirement of AsiaSat 2 to rebuild and re-launch a new satellite in the event
of an unsuccessful first launch. AsiaSat management is currently considering a
number of options to ensure continuity to service in the event of a launch
failure.
IN-ORBIT SATELLITES
Throughout 2006, the Group's three in-orbit satellites, AsiaSat 2, AsiaSat 3S
and AsiaSat 4, continued to perform well delivering excellent service to our
customers. At year end, as reported above, we had increased the number of
transponders leased and sold, including the 4 Broadcast Satellite Service
("BSS") transponders leased to Skywave TV for its Direct to Home ("DTH")
services, by 6%. This reflects customers' appreciation of the service levels
provided by AsiaSat through our own earth station in Tai Po, Hong Kong,
combined with back up from our leased Stanley station.
SPEEDCAST
SpeedCast Holdings Limited ("SpeedCast"), an associate in which the Company
holds 47%, again improved its overall performance. The company's core business
is the provision of two-way and backbone broadband access. I am pleased to
report that during the year SpeedCast increased its turnover by 35% to HK$112
million (2005: HK$83 million) and moved from making a small contribution in
2005 to a profit of HK$5 million in 2006. Although SpeedCast operates at a low
margin, the company contributed revenue of HK$46 million (2005: HK$32 million)
to AsiaSat in 2006. At 31 December 2006, SpeedCast had cash on hand of HK$8
million (2005: HK$5 million). The Group's carrying investment in the company,
including goodwill, was below HK$ 0.5 million.
SKYWAVE
Skywave TV Company Limited ("Skywave"), an 80%-owned subsidiary of AsiaSat,
established a low cost regional DTH service for Hong Kong, Macau, Taiwan and
Southern China at the beginning of 2005. Currently the company offers 37
19
programmes branded under Family Favourites, Premium Movies and Premium Sports.
As the company operates in a highly restrictive and regulated environment, its
business remained static and is expected to do so until the market opens up for
free competition. For the year 2006, Skywave incurred a loss of HK$4 million
(2005: HK$4 million), of which the Group's share was about HK$3 million.
BEIJING ASIA
Our joint venture in Mainland China, Beijing Asia Sky Telecommunications
Technology Company Limited ("Beijing Asia"), in which AsiaSat holds a 49%
interest, provides VSAT (very small aperture terminal) services in China. The
company achieved high growth as turnover reached HK$9 million (2005: HK$3
million), an increase of 200%. The company's loss increased to HK$17 million
(2005: HK$8 million). At the end of the year, AsiaSat's investment in Beijing
Asia amounted to HK$10 million (2005: HK$14 million).
The Group is committed to provide transponder capacity to Beijing Asia in the
form of a loan of up to HK$12 million over a few years, of which 88% has been
utilised. The Group's maximum exposure to Beijing Asia is approximately HK$25
million, of which HK$13 million is in the form of a cash contribution.
COMPLIANCE
In addition to the listing on The Stock Exchange of Hong Kong Limited, the
Company is also listed on the New York Stock Exchange, Inc. ("NYSE"). As a
foreign private issuer on the NYSE, it needs to comply with the requirements of
Section 404 of the Sarbanes-Oxley Act 2002.
Section 404 states that the internal control report requirement applies to
companies filing annual reports with the SEC (The U.S. Securities and Exchange
Commission) under either Section 13(a) or 15(d) of the Securities Exchange Act
of 1934. Compliance for foreign issuers is delayed until their fiscal years
ended on or after 15 July 2005. Section 404 requires foreign private issuers to
evaluate and disclose their conclusions regarding the effectiveness of their
internal control over financial reporting and disclosure controls and
procedures.
Section 404 also requires the Company's independent auditors to attest to and
report on management's assessment of the Company's internal controls over
financial reporting.
Despite a further extension in the compliance timeline for accelerated filers
in regards to their independent auditors attesting to and reporting on
management's assessment of internal controls over financial reporting, the
Company has requested the independent auditors to conduct an attestation in
2006 as originally planned, and provide a report to be filed with the SEC.
OUTLOOK
Economic improvement in Asia continues and demand for transponders is picking
up very slowly. However, new satellite supply has been added to an already
over-supplied market, and this is keeping rates under pressure at the bottom
end and holding back growth in the premium sector, which is disappointing.
Nevertheless, it is encouraging that AsiaSat's blue chip customers are
committed to our premium services and reliability, and that an increasing
number of customers are signing contracts with AsiaSat.
In addition, there are positive trends in the Asian telecommunications and
video markets. They include a general increase in demand for video, which is
being stimulated by the growth of IPTV (Internet Protocol Television), HDTV
20
(High Definition Television), Video to Mobile, and DTH services. To some
extent, this is being driven by a focus on the approaching 2008 Beijing
Olympics.
We are also seeing the gradual liberalisation of the regulatory environment in
some markets and these early indicators bode well for the future. Even with
these positive indications, the industry needs to see more dramatic changes in
some countries' regulatory environments and the faster introduction of some of
these new services before we will experience a satellite market that emulates
that of Europe or the United States.
The recent submarine earthquake in the Pacific region highlighted the
vulnerability of cable networks and, in many cases, the lack of preparedness
and alternative methods of distribution anticipated in the business continuity
plans of major users. In the aftermath of the quake, satellites played a key
role in the rapid restoration of communications in the region, and it is likely
that lessons learned will place AsiaSat well for the future.
We also see increasing demand in India and, while there are Indian satellites
that are benefiting from this, growth is likely to outstrip supply in due
course and AsiaSat is well positioned to benefit from this potential demand.
There is also increasing demand for backbone delivery for mobile telephone
networks in rural areas as governments and service providers seek to bring
communications to the most remote areas.
Globally, the satellite market is seeing consolidation and we anticipate that
this will continue and help to reduce excess capacity and bolster rates over
time.
Looking ahead, the unique advantages that satellites offer over terrestrial
services, especially to television distribution services and private
telecommunications networks, will drive future growth for AsiaSat. The Company
is financially robust, managed to the highest of world-class standards, and is
well positioned for the future. However, progress is very slow and it is for
this reason that the Company's share price has under-performed the market and
why the proposal to privatise the Company has been presented.
DIRECTORS AND STAFF
Mr. R Donald Fullerton resigned in May 2006 as an Independent Non-executive
Director, chairman of the Remuneration Committee and member of the Audit
Committee after serving the Company for 10 years. On behalf of the Company, I
would like to thank him for his valuable contribution.
Mr. James Watkins was appointed in June 2006 as an Independent Non-executive
Director, chairman of the Remuneration Committee and member of the Audit
Committee to fill the vacancy. I would like to welcome him to the Board.
Mr. Robert Bednarek resigned in October 2006 as a Non-executive Director and
chairman of the Business Development Committee after serving the Company for
more than four years. He will be devoting his time to a new position and on
behalf of the Company, I would like to thank him for his valuable contribution.
Mr. Romain Bausch stepped down as Chairman of the Board on 1 January 2007 after
serving two years in that role and assumed the role as Deputy Chairman in
accordance with the biennial rotation arrangement. I would like to thank him
for his leadership and wise guidance in steering the Company through the recent
difficult times.
21
Mr. Denis Lau our General Manager Finance and Company Secretary retired on 31
December 2006 after 18.5 years of service with AsiaSat, I wish him well in his
well earned retirement. Mr. Lau was replaced by Ms. Sue Yeung. I welcome Ms.
Yeung to AsiaSat.
Finally, I want to convey my thanks to Management and Staff for their
dedication and loyalty, and for upholding AsiaSat's world-class operating
standards and reputation during these less than optimal years. It is for this
professionalism that our Company is respected the world over.
MI ZENG XIN
CHAIRMAN
Hong Kong, 5 March 2007
As at the date of this announcement, the Board comprises 12 directors. The
Executive Directors are Mr. Peter JACKSON and Mr. William WADE. The
Non-executive Directors are Mr. MI Zeng Xin (Chairman), Mr. Romain BAUSCH
(Deputy Chairman), Ms. Cynthia DICKINS, Mr. DING Yu Cheng, Mr. KO Fai Wong, Mr.
JU Wei Min and Mr. Mark RIGOLLE. The Independent Non-executive Directors are
Professor Edward CHEN, Mr. Robert SZE and Mr. James WATKINS.
Please also refer to the published version of this announcement in The
Standard.
DISCLAIMER
STATEMENTS IN THIS ANNOUNCEMENT RELATING TO MATTERS THAT ARE NOT HISTORICAL
FACTS ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE U.S. PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THESE FORWARD-LOOKING STATEMENTS
INVOLVE RISKS, UNCERTAINTIES AND OTHER FACTORS, WHICH MAY CAUSE THE ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT
FROM THOSE EXPRESSED OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS. THESE
FACTORS INCLUDE (1) RISKS ASSOCIATED WITH TECHNOLOGY INCLUDING DELAYED
LAUNCHES, LAUNCH FAILURES AND IN-ORBIT FAILURES, (2) REGULATORY RISKS, (3)
LITIGATION AND MARKET RISKS AND OTHER FACTORS, WHICH ARE DESCRIBED IN FURTHER
DETAIL IN THE COMPANY'S 2005 ANNUAL REPORT ON FORM 20-F ON FILE WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION.