MARKHAM, ON, Feb. 28 /CNW/ - The third quarter of fiscal year 2000 for
T S Telecom was marked with a number of impressive accomplishments. It was a
quarter which saw a tremendous increase in net earnings from operations,
primarily as a result of substantial gross margin gains made by the Company.
At the same time, the Company successfully completed a share listing of its
subsidiary, T S Telecom Technologies Limited ("TST Technologies"), on the
Growth Enterprise Market ("GEM") operated by the Stock Exchange in Hong Kong,
thereby significantly increasing the Company's market valuation.
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Financial Highlights
For the three For the mine
months ended months ended
December 31, December 31,
1999 1998 1999 1998
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(in thousands of dollars, $ $ $ $
except earnings per share)
Gross revenues 5,829 5,120 13,476 18,955
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Net income/(loss) before tax 12,879 (205) 14,417 2,163
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Net income/(loss) 11,626 (178) 13,073 2,018
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Earnings per share
- Basic 0.58 (0.01) 0.65 0.10
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- Fully diluted 0.54 (0.01) 0.61 0.09
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Net cash inflow from operations 24 428 1,915 1,906
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>>
Gross revenue for the three months ended December 31, 1999 was $5.8
million as compared to $5.1 million for the same period in fiscal 1999,
thereby showing clear signs of a sustained recovery of business from the
restructuring of PRC telecommunications industry last year. Net earnings
before tax for the three months was $12.9 million, which included a one time
dilution gain of $10.2 million arising from the listing of TST Technologies.
Excluding the dilution gain, net income before tax from operations was $2.6
million for the third quarter, an increase of $2.8 million from the loss of
$0.2 million realized in the third quarter of fiscal 1999. After tax earnings
for the third quarter of fiscal 2000 was $3.2 million, which includes a $0.5
million income tax recovery but excludes the dilution gain of $10.2 million
and minority interest of $1.8 million.
Year to date gross revenue was $13.5 million, which represents a
reduction of 29% from $19.0 million realized a year earlier. The decline is
largely related to the poor performance in the first quarter of fiscal 2000 in
which revenues dropped 65%. Income before tax for the nine months was $4.2
million, before the dilution gain of $10.2 million, as compared to $2.2
million for the same period a year earlier. Including the dilution gain and
minority interest, after tax net income for th first nine months of fiscal
2000 increased to $13.1 million or $0.65 per share, from $2.0 million or $0.10
per share for the same period last year. The increase in net earnings is
largely due to the dilution gain, the bringing in-house of product
manufacturing and vertical integration and re-engineering of our business
processes.
Operating cash flow for the third quarter was $24,000, as compared to
$428,000 for the corresponding period last year. Cash flow from operations for
the nine months was $1.9 million, as compared to $1.9 million from the
previous year. Cash outflow from investing activities for the nine months was
$606,000, primarily for the purchase of capital assets and the Company's 45%
investment in an equity joint venture, D & T Engineering Co Ltd., in Harbin to
assemble gas turbine generators for China's telecommunications industry.
Cash inflow from financing activities for the nine months was $20.6
million resulting primarily from the initial public offering of TST
Technologies and to a lesser extent from the exercise of stock options in the
common shares of the Company. At December 31, 1999 the Company has cash and
cash equivalents of $22.9 million to fund future growth and acquisitions.
T S Telecom's share of the nine months earnings of its 30% equity joint
venture, Shanghai Hua Cheng Telecommunications Equipment & Co. Ltd. ("SHC")
was $92,000, as compared to $483,000 for the same period last year due
primarily to its weak first quarter earnings.
As at December 31, 1999, T S Telecom had approximately $910,000 of
undelivered contracts on its order book, as compared to $687,000 at the end of
the second quarter. These orders are delivered in the fourth quarter.
Company Update
The development of POWERCOM for mobile base stations is nearing the
commercialization stage, with an expected launch in March 2000. We are
confident that this product will surpass the functionality and technology
being currently deployed in mobile base stations in terms of mode and scope of
monitoring, reliability and maintenance convenience.
We are nearing completion of our Fibersmart system field trials at
Beijing Telecom and Shanghai Telephone Office. Sales contracts are expected to
be signed shortly after the conclusion of the field trials in June 2000.
On the development front, the Company is working closely with the
Broadband Access Offices of the Shanghai Telephone Office and Beijing Telecom
to develop product strategies and standards for broadband applications. We
expect that the demand for broadband requirements will create significant
opportunities for T S Telecom.
Moreover, the formation of D & T Engineering Co Ltd., Harbin, "the first
and only" local venue to assemble gas turbine generators for China's
telecommunications industry, has reached the final stage. The product is in
demand and is well integrated vertically with our monitoring systems. We
expect to conclude sales contracts on gas turbine generators in June 2000 with
production scheduled by the end of July 2000.
A new PRC headquarters is being established in Shenzhen in order to
facilitate the expansion and rapid growth of the business. The new
headquarters will be completed by the end of February 2000. The Company is
also conducting feasibility studies on the establishment of new sales offices
in Wuhan, Changchun and Jinan to capture the market potential in these
regions.
Finally, negotiations for potential business partnerships are currently
in progress with parties from Indonesia, Malaysia, South Korea, Singapore and
other Asian countries. We believe that significant business opportunities for
T S Telecom in these regional economies, which are recovering strongly from
the "asian flu" suffered in the last few years.
The Canadian Vancouver Exchange has neither approved nor disapproved the
Information contained herein.
%SEDAR: 00003917E
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For further information: Randy Hung, Chief Financial Officer, T S Telcom
Ltd., (905) 470-2282 |
