Dear Pravin Aggarwal, you wrote:
During the year 2010, the Company seems to have reversed the negative trend by improving the revenue and also corresponding increase in profits after tax. Considering the expected increase from new investments and expansion of existing activities, how do we expect the company's performance over the next 2-3 years?
Barring unforeseen circumstances, we are optimistic over the opportunities that will enable the company to improve its performance over the next 2- 3 years. Demand for smart phones is anticipated to be the driving force for PCS Services even as it seeks to establish a greater regional presence. ICT Services is poised to ride the info-comm technology wave as cloud computing becomes more widely adopted. With CAPEX spending in the region expected to grow, Network Engineering Services will focus on increasing its product and services portfolio as well as expanding its regional operations.
Dear Ah Huat, you wrote:
Congrats on your acquisition on S&I systems. The acquisition came at a good time when the Singapore government is encouraging SME to improve their productivity thru IT. What is your plan for S&I systems going forward?
S & I Systems Pte Ltd ("S&I") is already active in the IT space and is strong in the FSI sector with significant presence in the mid -market segments. We will increase our presence in the FSI sector, pursue opportunities in other sectors and develop our capabilities accordingly. We also plan to expand our regional presence, beginning with our business in Malaysia. We will also tap on the synergistic opportunities of our overall ICT Services group to further strengthen our solutions and value to SMEs.
Dear Ivan Goh, you wrote:
Is the company applying to be a service provider for the Next Generation National Broadband Network in Singapore? My house already has the fibre connection installed. It has been some time since the company announced its intention to do some business in this area but so far no sight no sound.
ICT Services is already a service provider to enterprises and have successfully bundled NGNBN solutions. There is no immediate plan to position this service to residential consumers due to the competitive nature of this space with the telco incumbents having the advantage with their triple/quad play capabilities. We will continue to explore ways to strengthen our solutions in light of the growing opportunities presented by the NGNBN.
Dear Yeo Khee Boon, you wrote:
What is your rational for doing share buyback with your huge retained earnings? Investor would surely prefer higher annual dividend than share buybacks that surely further reduce the liquidity of your company shares traded in the market. Dividend used to be 2.5 cents now 1.8 cents. So far your buybacks have not significantly improved your EPS or attractiveness relative to other higher yield companies traded on the exchange.
The shares purchased are currently held as treasury shares to be subsequently awarded to senior executives under the companys Long Term Incentives Plans. Historically we have paid more than 65% of our annual profits as dividends with a yield of at least 7-8%. As the volume of shares purchased is low, there is minimal impact on the EPS.
Dear Tan Hock Kim, you wrote:
I'm a bit concerned about the negative operating cash flow for 4Q10 of $8 million despite the company registering net profit of $3.2 million for the quarter. Are you having problems collecting receivables and selling inventories?
The net cash outflow in 4Q2010 is mainly attributed to a negative change in working capital from higher inventories. Increase in the sales of prepaid cards, year-end shipments and consolidation of the newly acquired S&I group had contributed to the higher inventories.
We closely manage our receivables and inventory, strictly adhering to the policies appropriately set for our different businesses.
Dear Yap Wai Meng, you wrote:
Can the company clarify the following:
1) On its dividend policy, and whether it intends to revise its dividend back to 2 cents per share as in the 2000s.
Since FY04, our Board of Directors has set a benchmark dividend policy to declare and pay annual dividends of at least 30% of our annual net profit after tax, subject to the Groups earnings, cash flow, and capital requirements. The proposed final dividend payment of 1.8 cents per share for FY2010 is more than 65% of our annual net profit after tax and exceeds the guideline. The 2 cents per share has never been a guideline or policy.
2) Its growth strategy with respect to a possible introduction of 4G network in the region in the future.
Our Network Engineering Services division has been working closely with regional telcos in supporting their roll out of 2G/3G/3.5G networks. We are certainly well-positioned to tap on the opportunities brought about by the pending introduction of 4G mobile networks. Currently, many regional telcos are conducting trials with major equipment vendors (like Nokia, Siemens Networks, Huawei etc), and are not expected to embark on any large scale deployment until at least middle of 2012. We are in close communications with the telcos and equipment vendors and are also preparing our engineering resources for the eventual rollout.
Dear Dunman Teo, you wrote:
1) I notice that the revenue of the company is largely focused on distribution of handsets and the percentage of revenue from engineering services is small. Has the company considered increasing non-distribution business so that the company is flying on two wings instead of one?
We have taken steps to diversify our business and customer base within each division as well as to grow each division. In 2009 we started a concerted effort to expand, transform and evolve our three businesses to enable us to aggressively take advantage of the new growth opportunities in the dynamic telecommunications and info-communication markets. This effort is on-going.
It should be noted that in addition to the distribution of handsets, the revenue from our PCS Services division includes income from fulfillment services, commissions from line activations and distribution of prepaid cards.
The ICT Services division has aggressively expanded its products and services portfolio particularly after the acquisition of S & I Systems Pte Ltd ("S&I") in November 2010. We anticipate cloud computing to drive demand for new services and can expect the ICT Services division to assume a greater share of Group revenue contribution.
We have also expanded the regional operations of our Network Engineering Services with offices in Malaysia and Vietnam to add to our strong presence in Indonesia. This will further diversify our revenue stream.
2) I think the shareholders had also given some constructive suggestions in last year's Q&A. Perhaps the management can also take stock and let the shareholders understand the work that management had done from these suggestions.
We welcome and thank shareholders for their suggestions, and where applicable, have followed through with them. To the suggestions made by shareholders in last years Q&A session, we had addressed them in our responses. For example, to a suggestion of adding handset accessories to our product portfolio, we responded by advising that we had obtained the master distributorship in 16 countries for Xtreme-DSP Global Pte Ltd's advanced consumer electronic products. We have and will continue to expand the range of accessories for sale in the Planet Telecoms outlets.
Dear Investors,
Thank you for all your questions and your interest in TeleChoice International Limited. We have come to the end of this On-Line Q&A session.
We have enjoyed the session and have learnt form your questions. We hope that through the Online Q&A, you have gained better insights to our Company and our operations.
Regards,
The Management Team
TeleChoice International Limited
