TeleChoice registered revenue increase of 36 and PBT growth of 41 in 4Q07 compared to 3Q07 4Q07 revenue and PBT increased to $125.7M and $5.5M respectively Group gross profit margin improvement from continued focus on higher margin value-added opportunities Propose final dividend payout of 2.5 cents per share for FY07 SINGAPORE Wednesday, 27 February 2008 Main board-listed TeleChoice International Limited ( TeleChoice ), a regional provider of telecommunications solutions and services, today announced its financial results for full year 2007 ( FY07 ) and fourth quarter( 4Q07 ) ended 31 December 2007. Group Financial Snapshot In S$ M 4Q07 3Q07 +/- 4Q07 4Q06 +/- FY07 FY06 +/- Revenue 125.7 92.8 35.5 125.7 133.2-5.6 420.4 459.8-8.6 Profit before tax ( PBT ) 5.5 3.9 41.0 5.5 7.1-22.5 17.8 22.3-20.4 Net profit attributable after MI ( PATMI ) 4.9 3.0 63.3 4.9 5.6-12.4 14.2 17.2-17.6 Earnings per share (diluted) based on weighted average number of ordinary shares (in cents) 1.09 0.65-1.09 1.24-3.14 3.82 - Cash balances 25.0 23.9-25.0 28.9-25.0 28.9 - As at As at 31 Dec 07 31 Dec 06 Total equity for the Group 64.6 56.5 Net asset value per share (in cents) 14.30 12.55 Results Analysis Revenue for 4Q07 compared with 3Q07 increased by 35.5 from S$92.8 million to S$125.7 million. PBT and net profit also fared better increasing 41.0 and 63.3 respectively. Compared to the same quarter last year, Group revenue declined by 5.6, from S$133.2M in 4Q06 to S$125.7M in 4Q07. Despite the lower revenue quarter on quarter, gross profits were maintained at $12.0M with higher gross margins of 9.5 compared to 9.0 reported in 4Q06. PBT fell by 22.5 from S$7.1M in 4Q06 to S$5.5M in 4Q07 while net profit declined by 12.4 from S$5.6M to S$4.9M in 4Q07. Group revenue for FY07 declined by 8.6 from S$459.8M in FY06 to S$420.4M. Revenue increase derived from Network Engineering Services projects in Singapore and Indonesia, and from Personal Communications Solutions ( PCS ) Services Singapore operations, were offset by a revenue
decrease from PCS Services regional operations and from Telecommunications Services. The decline in regional revenue contribution from PCS Services resulted from the scale-down of its overseas operations to improve margins. Revenue from Telecommunications Services, meanwhile, continued to be impacted by the competitive environment of the Singapore IDD market. PBT declined by 20.4, from S$22.3M to S$17.8M. The lower effective tax rate in FY07 resulted in net profit decline of 17.6 to S$14.2M from S$17.2M. Despite the decline in revenue, gross profit margin, in keeping with the trend of previous quarters, increased to 9.4 in FY07 from the previous years 9.0. Mr Andrew Loh, President of TeleChoice International Limited, said, Our lower PBT compared with the same period last year is largely due to the greater than anticipated decline in Singapore IDD usage coupled with the very competitive prices offered by the various service providers. Lower mobile data usage brought about by the loss of a major customer further compounded the situation. The suite of Internet Protocol ( IP ) based products and services introduced under the SunPage brand during the course of the year, has not as yet gained enough traction to offset the trend in falling Singapore IDD and mobile data usage. We expect the situation to improve with increased market acceptance. For PCS Services, although there is a decline in revenue brought about by the scale back of our regional operations, we are encouraged by the improvement in gross profits and gross profit margins. Network Engineering Services registered significant revenue growth and has also made initial inroads into regional markets and expanded its capabilities. Thus, our strategy of focusing on higher valueadded services, increasing our customer base and market reach is producing results. We are wellpositioned for long-term growth despite immediate price pressures and challenging market conditions. Added Mr Loh, Telecommunications Services is continuing to invest in opportunities presented by IP and mobile broadband technology. It is also actively and aggressively marketing its suite of voice and data services through strategic collaborative efforts with other service providers in the region in order to provide customers a unique bundle of services. PCS Services will continue to focus on value-added services with an eye on improving margins on a sustainable basis. Likewise with Network Engineering Services which is steadily building its market base and adding niche products and services to its existing portfolio in order to be able to offer turnkey solutions which should further lift margins. The Group continues to maintain healthy cash reserves of S$25.0M as at 31 December 2007, after FY06 dividend payout of S$5.6M in 2Q07. The Group proposes to pay a final dividend of 2.5 cents per share for FY2007. This translates to a dividend yield of 10. Page 2 of 5
Financial Snapshot of Group s Performance by Activities Revenue In S$ M 4Q07 4Q06 +/- FY07 FY06 +/- PCS 102.7 113.4-9 345.2 395.5-13 Telecommunications Services 6.0 7.3-18 23.8 29.9-20 Network Engineering Services 17.0 12.5 36 51.4 34.4 49 Profit before tax In S$ M 4Q07 4Q06 +/- FY07 FY06 +/- PCS 3.7 4.2-12 11.3 11.6-3 Telecommunications Services 1.1 1.9-42 4.3 8.3-48 Network Engineering Services 0.7 1.0-30 2.2 2.4-8 PCS Services PCS contributed S$345.2M in revenue and S$11.3M in PBT (accounting for 82.1 and 63.5 of total Group revenue and PBT respectively) in FY07. The increase in Singapore PCS revenue by S$19.0M or 6 was offset by a decrease in revenue from overseas operations leading to an overall revenue decrease of S$50.3M or 13 compared with FY06. PBT margins, nevertheless, improved to 3.3 in FY07 from 2.9 in FY06. The improved margins were attributed to more profitable value-added services. PBT was, however, lower due to a one-time bad debt provision for a major overseas customer. Comparing 4Q07 with the same period last year, revenue decreased 9.0 from S$113.4M to S$102.7M but this was at a lower rate against the full year decline of 13. Telecommunications Services Telecommunications Services contributed S$23.8M in revenue and S$4.3 in PBT (accounting for 5.7 and 24.2 of total Group revenue and PBT respectively) in FY07. Comparing with FY06, revenue decreased by S$6.1M or 20 due largely to lower Singapore IDD and mobile data usage, partially offset by contributions from the Malaysian operations. The lower revenue mainly resulted in a 48 or S$4.0M decline in PBT. PBT margin fell to 18.1 in FY07 from 27.8 in FY06 mainly from loss of higher margin mobile data usage, start up losses in the Malaysian operations and development cost for new services. In comparison with 4Q06, revenue decreased 18 to S$6.0M from S$7.3M. Network Engineering Services Network Engineering Services contributed S$51.4M in revenue and S$2.2M in PBT (accounting for 12.2 and 12.3 of total Group revenue and PBT respectively) in FY07. Projects in Singapore and Indonesia contributed to revenue increase of S$17.0M or 49 compared with the same period last year. PBT decreased by S$0.2M or 8 due to higher operating expenses partially associated with increased business development activities, and which were partially offset by the increased revenue. Page 3 of 5
PBT margins thus fell from 7.0 to 4.3. There was a 36 increase in revenue from S$12.5M in 4Q06 to S$17.0M in 4Q07. Outlook & Proposed Dividend for FY07 Barring unforeseen circumstances (including from the current global economic uncertainties), the business outlook for the Group is expected to remain cautiously positive. Overall, the Group expects to maintain its operating performance for FY08. As announced in its 1Q07 results announcement dated 4 May 2007, the Group proposes to pay a final dividend of 2.5 cents per share for FY07. PCS Services For PCS Services, focus will remain on seeking higher margin opportunities such as the provision of value-added services including integrated fulfilment and retail management in Singapore and the region. In line with this strategy, TeleChoice had signed a new agreement with StarHub Ltd to provide integrated fulfilment and management services. TeleChoice has also entered into a joint venture with Fortune Telecoms Holdings Limited for the provision of logistics and fulfilment services for Nokiabranded handsets throughout the People s Republic of China. The Group expects this investment to contribute to its FY08 performance from 2Q08. Planet Telecoms, a subsidiary of TeleChoice and a leading mobile handset retailer in Singapore, opened its first StarHub platinum shop in IMM building, adding to the number of concept stores it operates for Nokia and Sony Ericsson. It hopes to further augment its retail operations and is exploring suitable opportunities with its principals. Furthermore, the Group anticipates increased demand for higher-value, feature-rich smart phones, which augurs well for its PCS services. Telecommunications Services The Group will seek opportunities arising from the convergence of voice and data service here and from regional markets. It will continue to offer new services based on Internet Protocol ( IP ) and mobile broadband technologies. It recently launched a new, first-of-its kind international Short Messaging System service, i.sms, which is the first in its suite of unique mobile social networking applications which will be bundled with its voice and data services. Selected products and services will be rolled out in other countries in the region and the Group will continue to ramp up its Malaysian operations. Network Engineering Services The outlook for Network Engineering Services remains positive. The Group will benefit as regional telecommunication operators continue to roll out and enhance their networks. The order book is healthy and barring any unexpected reduction in expenditure by telecommunication operators, the Page 4 of 5
sales pipeline should remain strong. The past year saw Network Engineering Services reaching out into new regional markets as well as enhancing some of their product and service offerings. Moving along the same direction, the Group will continue to diversify its product and service offerings, increase its customer base and make further imprints into the regional markets with the aim of ensuring a more stable and regular recurring revenue stream. Mr Loh concluded, It is a rapidly evolving business and technological environment that TeleChoice operates in. We nonetheless remain confident that the initiatives taken by the Group will position us for sustainable revenue and profit growth in this industry. > ends This release may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from other companies and venues for the sale/distribution of goods and services, shifts in customer demands, customers and partners, changes in operating expenses, including employee wages, benefits and training, and governmental and public policy changes. You are cautioned not to place undue reliance on these forward looking statements, which are based on current view of management on future events. About TeleChoice International Limited (Regn No. 199802072R) Incorporated in Singapore on 28 April 1998 and listed on the Main-Board of the Singapore Exchange Securities Trading Limited ( SGX-ST ) on 25 June 2004, TeleChoice International Limited ( TeleChoice") is a regional diversified provider and enabler of innovative communications. TeleChoice is a subsidiary of Singapore Technologies Telemedia Pte Ltd, a leading infocommunications company with operations in Asia-Pacific, the Americas and Europe. DBS Bank Ltd was the manager, underwriter and placement agent for TeleChoice's initial public offering on the SGX-ST in June 2004. TeleChoice offers a comprehensive suite of services and solutions for the telecommunications industry: Personal Communications Services: distribution, retail and fulfillment services relating to mobile handsets, accessories and other telecommunications equipment. Telecommunications Services: value-added Voice, Video and Data services, such as SunPage idd, SunPage Budget MobileCall, SunPage Budget Roaming, SunPage Budget CallHome, SunPage Internet Call, SunPage Callback with Fast Dial, International SunPage Message Service, PushMail, Location Tracking and Mobile Data Network Services. Network Engineering Services: network planning, project and resource management, network implementation and optimisation, managed outsourcing services. Headquartered in Singapore, TeleChoice has operations around the Asia-Pacific region, including Indonesia, Malaysia and Thailand. TeleChoice s major customers and principals include StarHub Ltd and PT Indosat Tbk; and Motorola, Nokia, Sony Ericsson and HuaWei respectively. For more information, please visit our website at www.telechoice.com.sg For media/investor enquiries, please contact: Lim Siew Yin, 29 Communications Tel: +65 9858 4673, Fax : +65 6728 6029, Email: siewyin@29communications.com.sg Angelina Pereira, 29 Communications Tel: +65 9191 4756, Fax : +65 6728 6029, Email: angiep@29communications.com.sg Page 5 of 5