(28 March 2014 – Hong Kong) – Comba Telecom Systems Holdings Limited (“Comba Telecom” or “the Group”, Hong Kong stock code: 2342), a global leading wireless solutions provider, today announced its audited annual results for the year ended 31 December 2013.
In 2013, the Group’s revenue was HK$5,720,599,000, representing a decrease of 9.7% compared to 2012. The decline was mainly attributable to the setbacks encountered in the market resulting from the postponement of certain investment activities and certain customers were more prudent in the timing of investments prior to the granting of 4G licenses in China. Gross profit decreased by 15.5% to HK$1,365,586,000 and gross profit margin decreased to 23.9%. The decrease in gross profit margin was mainly due to increase in the cost of sales caused by inflation, increasingly fierce competition in the telecommunications industry and the unrealized sales scalability of new products and new businesses. A net loss of HK$240,722,000 was mainly due to the decrease in overall revenue and gross profit margin of the Group and the impairment of certain receivables. The Board does not recommend any final dividend.
Mr. Tony TL Fok, Chairman of Comba Telecom, said, “Under the challenging industry landscape in 2013, the Group is undergoing a product transformation and facing various challenges. By leveraging our brand equity and innovative technologies over the years, a number of large prominent projects were implemented, including the wireless solution provided for stadiums during the 2014 Sochi Winter Games in Russia and a number of stadiums for 2014 Soccer Tournament Brazil, underlining the Group’s industry-leading position. With greater global informationization accompanied by the expanded rollout of new networks aided by tailwinds generated by the granting of 4G licenses in China, Comba Telecom is set to undergo a transformation. Meanwhile, the Group continues to implement stringent cost control initiatives to optimize its operational efficiency in order to gradually improve its financial position.”
As a result of the decline in the investment of overall wireless solutions market by mobile operators, sales from 3G mobile network projects reported a revenue of HK$2,431,000,000, representing a decrease of 10.3% and accounting for 42.5% of the Group’s total revenue. Revenue from China Telecom Group increased by 58.1% to HK$734,977,000, while revenues from China Mobile Group and China Unicom Group decreased by 10.0% and 40.2%, amounting to HK$2,981,503,000 and HK$831,117,000 respectively. The Group undertook and completed a number of world-renowned wireless solutions projects in 2013 as a result of increasing brand equity through constant efforts devoted in overseas markets over the years. Revenue from international customers and core equipment manufacturers increased 8.1% to HK$1,112,795,000, accounting for 19.5% of the Group’s revenue.
Due to decrease in the market demand for Wi-Fi products and the fact that Small Cell products have yet to reach large-scale ramp-up, revenue generated from the wireless access and transmission business decreased by 16.7% to HK$421,355,000 and accounted for 7.4% of the Group’s revenue. The postponement of certain investment activities by mobile network operators and fierce market competition in the traditional wireless enhancement products substantially affected the overall performance of this business segment. Revenue generated from the wireless enhancement business decreased by 21.9% to HK$980,051,000, accounting for 17.1% of the Group’s revenue. Due to the deployment of the fourth generation of mobile communications (“4G”) mobile network and the replacement and upgrades of equipment by the mobile network operators, revenue generated from the antennas and subsystems business increased slightly by 2.6% to HK$1,865,813,000, accounting for 32.6% of the Group’s revenue. Revenue from services decreased by 10.9% to HK$2,453,380,000, accounting for 42.9% of the Group’s revenue. The decline was mainly attributable to the postponement of certain investment activities in the wireless enhancement market in the PRC.
During the year under review, R&D costs and expenses decreased significantly by 45.0% to HK$207,158,000, representing 3.6% of the revenue. The decrease in R&D costs was mainly due to the capitalization of certain R&D costs. A total of HK$108 million R&D costs was capitalized (after amortization).The Group has maintained an optimal level of investment in R&D to stay ahead of the latest technological innovation so as to take advantage of new business opportunities.
The Small Cell business progressed smoothly during 2013 with commercialization and trial runs conducted in various provinces in China. The Group also made great strides, successfully promoting Small Cells in some overseas markets. Small Cells are also a critical equipment of network deployment today as they enable mobile network operators to boost coverage and network quality. By bringing sources of signals closer to end-users, Small Cells ensure exceptional network quality where end-users are located. Furthermore, the Group developed and promoted an IP-based Onebox solution that is the first of its kind in the industry. The culmination of a great deal of hard work, commitment and innovation, the Onebox solution integrates the technologies of Small Cell, Wi-Fi and OTT TV to support multi-businesses such as mobile signals, Wi-Fi signals and digital videos and audios.
Mr. Fok added, “The granting of 4G licenses will usher in a new era for China’s telecommunications industry. The market expects vigorous traffic growth. Consequently, providing reliable access to networks and a better user experience have become the major challenges for mobile network operators without exception. It is believed that these challenges will drive greater investment in network coverage, network capacity, network enhancement and maintenance services, among other areas. The rollout of more new networks will translate into increasing market demand for advanced telecom equipment, presenting immense future business opportunities to the Group. For the global business, we will continue to provide customers with high quality products and services, and strengthen our unique position within the industry.”
Mr. Fok concluded, “Looking ahead, the Group will maintain a sharp focus on driving innovation while prioritizing and investing more prudently in growing markets. Furthermore, to pursue a sound financial position and enhance efficiency, the management will continue to reinforce corporate management and optimize resource allocation, undertaking a more proactive approach to improve its key performance indices and liquidity, all in order to generate optimal returns to our shareholders.”
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