BUSINESS REVIEW AND PROSPECTS ຽચаᜪ̈́ण୕!
RESULTS OF OPERATIONS ຽᒻ!
႕·˜ޘБགྷᑻֽᄲĂ˟˘0˟ѐٺpresented a challenging year for the global economy with ၆ 2001/02 no exception to the media industry. Sun Media Group has ߄ጼ۞˘ѐĄಫវҖຽϺᙱͽච֗ĄБ experienced severe competition in the persisting recession and གྷᑻᜈিऴĂวЍ̼͛ಫវะဥࢬ၆ࢦࢦӧ faced many difficulties and expected more ahead. However, with ᙱĂགྷ።˞ᚑඇ۞҂រĄ҃Ăะဥ̪᎕ໂ ĂซҖ˘ాҚ۞ඉரّҖજĂͽᚶᜈᒔפour continuing efforts to strive for progress and decision to initiate a ซ Ăซ˘Վૻ̼ξಞгҜĄጐგགྷᑻܜќৈᆧפ number of strategic moves, the Group managed to generate ۞ͤ͟˘જĂၟҌ˟˟ѐˬ͡ˬȈگڶې revenue growth and strengthen its market position. Despite the economic ups-and-downs, the Group achieved satisfactory results ੑ߆ѐޘĂะဥຽચܑன̪Ȉ̶நຐĄ! for the year ended 31st March, 2002. ! ຽ̰̝ᖳಱགྷរ̈́ᆶຕ۞ξಞඉٺጴᖣԧࣇ Ąะဥ˟ܜព۞ᆧפBy virtue of our solid experience in the industry and prudent ரĂะဥຽચᜈ ĂҌࡗࠎ&267 ܜᓁᒉຽᗝᆧ۞ޘmarketing approach, we continued to experience a significant ˘0˟ѐ growth. Total turnover in 2001/02 grew 156% to approximately പ။ 357-:11-111 ̮)˟˘ѐĈࡗപ။ ะဥ಼̂ԼචјώଠٺHK$246.9 million (2001: HK$96.3 million). For the year ended :7-411-111 ̮*ĄϤ ĂၟҌ˟˟ѐˬ͡ˬȈ˘ͤ͟۞ੑ߆ѐט 31st March 2002, the Group has made great improvement on cost ᑕҫᓪຫࡗࠎപ။ 7:-711-111 ̮ĂഴڌĂ۵ޘ control, resulting in 45% decrease in net loss attributable to shareholders to approximately HK$69.6 million (2001: HK$125.8 ͌྿ 56&Ğ˟˘ѐĈࡗࠎപ။!236-911-111 ˘million). Loss per ordinary share was 0.95 HK cents (2001: 2.24 ̮ğĄՏ۵఼۵ᓪຫࠎ 1/:6 പ΅Ğ˟ HK cents). ѐĈ3/35 പ΅ğĄ!
MEDIA BUSINESS ಫវຽચ!
With the ultimate goal of becoming one of the world's leading ะဥϭԠјࠎБᅳጱгҜ۞ᐹኳ̰͛̚ट quality Chinese content provider, the Group has been aggressively ֻᑕથ̝˘Ă˘ۡӅ˧̙ጻ൴णಫវຽચĂ Հ̂൴ण۩มĄפۋሕ˧ࢨ۞ξಞٺdeveloping its media business expecting to reap abundance from its ഇ୕ ࢵ࣎ٺhuge growth potential. As core revenue contributor of the Group, үࠎะဥ̝ࢋќৈֽĂಫវຽચ media business recorded a turnover of approximately HK$190.6 Ԇፋᒉྻѐޘ̚Ăᐂᒉຽᗝࡗപ။ million for its first full year of operation, with a jump of 235% as 2:1-711-111 ̮ĂྵΝѐ۞പ။ 67-:11-111 !compared with HK$56.9 million of last year, accounting for 77% of ̮Ăᘆ̿ 346&Ă֭ҫᓁᒉຽᗝ۞ 88&Ą total turnover. ޙౄ̍ຽચ! CONSTRUCTION BUSINESS ౄ̍ຽޙ࿆িऴĂҭะဥ۞ڤᔵξಞঈ ᒉຽᗝࡗപ။ 67-411-111 ̮Ğ˟פNotwithstanding the sluggish conditions prevailing in the market, we ચ̪ਕ have been able to secure a turnover of approximately HK$56.3 ˘ѐĈࡗപ။ 4:-511-111 ̮ğĄΞߏࠎ੨Ъ ˟ٺಫវຽચ൴ण۞ඉரĂะဥڦmillion from construction business (2001: HK$39.4 million). ԧࣇ However, in line with our business strategy to focus on ˟ѐ˟͡ޙຽચĂјΑԧࣇຽચ൴ media-related industry, the Group sold the construction business in णࢦ͕ะ̚дಫវຽચ̝˯Ą! February 2002, thereby successfully concentrated our single business focus on media industry. !! EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION љੵӀिăඁีăԶᖞ̈́ᝊዚ݈̝࠳Ӏ AND AMORTIZATION ("EBITDA") )ĶFCJUEBķ*! ! EBITDA amounted to a loss of approximately HK$44.0 million for ၟҌ˟˟ѐˬ͡ˬȈ˘ͤ͟ѐޘ̝ the year ended 31st March 2002 (2001 : HK$106.4 million). FCJUEB ࡗࠎᓪຫപ။ 55-111-111 ̮!)˟ Amortisation of goodwill arising from acquisition of subsidiaries and ˘ѐĈപ။ 217-511-111 ̮*!Ąಶќᔉܢᛳ̳ depreciation charge for the year was approximately HK$9.2 million ΦٙயϠ̝થ҃ү̝ᝊዚ̈́ѐ̰Զᖞ̶Ҿ (2001 : HK$6.1 million) and approximately HK$18.5 million ࡗࠎപ။ :-311-111 ̮!)˟˘ѐĈപ။ (2001 : HK$13.5 million) respectively. 7-211-111 ̮*!̈́ࡗࠎപ။ 29-611-111 ̮!)˟ ˘ѐĈപ။ 24-611-111 ̮*Ą! EMPLOYEE AND REMUNERATION POLICIES ! ဌࣶ̈́ᓟ࿌߆ඉ! At 31st March 2002, the Group employed a workforce of 294. ! ˟ѐˬ͡ˬȈ˘͟Ăώะဥဌѣ 3:5˟ٺ Total staff costs including contributions to Mandatory Provident Fund ّ̳טSchemes incurred during the year amounted to approximately Щࣶ̍Ąѐ̰̝ဌࣶјώᓁᗝ!)Β߁ૻ ˟(!̮ ࢍထֻഠ*!ࡗࠎപ။ 6:-111-111ܛHK$59.0 million (2001: HK$65.2 million). The Group offers a ᎕ comprehensive remuneration and benefit package to its employees ˘ѐĈപ။ 76-311-111 ̮*Ąώะဥࠎဌ and remuneration policies are reviewed by the management ࣶ೩ֻБࢬᓟ࿌̈́ӀࢍထĂ҃გநᆸົؠഇ regularly. The Group also adopts a share option scheme to ᑭᓟ࿌߆ඉĄώะဥϺଳৼ˘ีᔉ۵ᝋࢍ motivate and retain a team of competent employees. ထĂͽ፬ᐽ̈́ॖჍᖚ̝ဌࣶĄ! ! LIQUIDITY AND FINANCIAL CONDITION ߹જྤய̈́ੑચྤ! ! ˟ѐˬ͡ˬȈ˘͟Ăώะဥ̝߹જͧ˟ٺ :At 31st March 2002, the Group's current ratio was 4.84 (2001 with currents assets of approximately HK$272.4 million தࠎ 5/95!)˟˘ѐĈ2/:8*Ă̚߹જྤ ,(1.97 (2001: HK$166.7 million) against current liabilities of யࡗࠎപ။ 383-511-111 ̮!)˟˘ѐĈപ approximately HK$56.3 million (2001: HK$84.8 million). Cash ။ 277-811-111 ̮*Ă҃߹જๅࡗࠎപ။ and cash equivalents was approximately HK$142.6 million (2001: 67-411-111 ̮!)˟˘ѐĈപ။ 95-911-111 HK$66.0 million). The Group's gearing ratio at 31st March 2002 ̮*Ąனܛ̈́னܛඈࣃีϫࡗࠎപ။ was 0.09 (2001: 0.40). The gearing ratio is calculated based on 253-711-111 ̮ ! ) ˟ ˘ ѐ Ĉ പ ။ ˬ͡ˬ˟ѐ˟ٺthe Group's total non-current liabilities and shareholders' fund of 77-111-111 ̮*Ąώะဥ approximately HK$36.6 million (2001: HK$74.8 million) and Ȉ˘̝͟ྤώᄃๅͧதࠎ 1/1:!)˟˘ HK$403.6 million (2001: HK$185.5 million) respectively. There is ѐĈ1/51*Ăѩͧத˜ॲፂώะဥ̶Ҿࡗࠎപ။ a unsecured loan from shareholders of US$4.0 million with interest 47-711-111 ̮!)˟˘ѐĈപ။ 85-911-111 bearing at London Interbank Best Offered Rate plus 1% and is ̮*̈́പ။ 514-711-111 ̮!)˟˘ѐĈപ ။ ྤڌ߹જๅᓁᗝ̈́۵ܧ̝*̮ payable on 28th September 2004. The directors do not consider 296-611-111 ᗝࠎ 5-111-111 ࡚ܛี˘ࢍზĄώะဥѣܛ the loan would be subject to material currency and interest rate िٵഠĂࣖᅙҖТຽڌ۵٪ٯrisks. There is no use of financial instruments for hedging. At the ̮̝ αѐ˝͡˟Ȉˣ͟ᐺ˟ٺbalance sheet date, the Group has contingent liabilities for ΐ2厘ࢍिĂื ࢦ̂๗Ҹ̈́Ӏצguarantees given to banks in respect of banking facilities granted to ᔘĄְᄮࠎ˯ഠ̙ົٚ Ꮙ̍Ąܛthird parties of HK$8.5 million. िࢲᐍĄώะဥϺӀϡЇң၆՞ ඕზ͟Ăώะဥಶௐˬ۰ٙᒔᅙҖഠ҃Шٺ ᅙҖүፉܲЯ҃ѣപ။ 9-611-111 ̮ٕ ๅĄ! BUSINESS REVIEW AND PROSPECTS ຽચаᜪ̈́ण୕!
BUSINESS REVIEW ຽચаᜪ!
MEDIA BUSINESS ಫវຽચ!
2001/02 was a remarkable year for Sun Media Group. We are ˟˘0˟ѐޘࠎวЍ̼͛ಫវะဥܑன кีјפๆਕޝזproud to have made many achievements. Despite having been set ி̝˘ѐĂԧࣇຏ up for about two years, Sun Media Group has successfully ಶĄጐგะဥјϲҌ̫ࡗѐॡมĂวЍ̼͛ ϲЩ۞ݡޙරгડ̏јΑ̂̚ٺestablished its brand enjoying both a top reputation and a sizeable ಫវะဥ coverage in the Greater China region. It was hailed as a "miracle" in ൕĂ֭ᛏ៍ி˾༫̈́ᇃᔮᖬᄏதĂజෛࠎಫ !the media industry. វຽ̰˘ี؈ᖹĄ ! జֳБ۞ੑޘ˘ѐȈ͡ĂԧࣇГ˟ٺ Marking our commitment and significant contribution to the media business, we have been awarded as one of the "Best 200 Small གྷᗔᄫĶοķĞGpscft!HmpcbmğෞᏴࠎБ Companies" by world renowned financial magazine "Forbes Global" ָ˟Ѻม̈ݭ̳Φ̝˘Ăᇾᄫԧࣇ၆ಫ for the second time in October 2001. We were also selected by វຽચ̝ٚᏚ̈́ᚥĄГ۰ĂԧࣇϺజ͛̚Ķֲ "Yazhou Zhoukan" as one of the "2001's Chinese Business 500". ߷ฉΏķෞᏴࠎĶ3112 ઼ᅫරથ 611ķ̝˘Ą These prestigious honors not only celebrated the Group's relentless ඈၷ̙ಏܑೳԧࣇ൴णຽચ̝િૻላ˧̈́ ຽٺјᒻĂ֭ͷૻ̼˞วЍ̼͛ಫវะဥמ efforts and success in business development, but also enhanced Sun !̝ᓏ̈́ᄮТĄפMedia Group's reputation and the recognition it enjoys in the media ̰ٙ industry. ! ࠎ၁னԧࣇјࠎ̼͛ಫវะဥ̝நຐĶͽऎሄ Ϡ߿ķĂะဥ˧ዮ८ܪिܫTo realize our mission as a media group, which is "to educate ็ᇫିֈĂᖣ through entertainment, to illuminate through information", the ͕ຽચĂ֭ᖼݭࠎྭಫវะဥĂјΑШϫᇾᔙ Group has striven to consolidate its core business and transform ซ˘̂ՎĂԓ୕ĶวЍķ۞ਕณගٙѣ̂ into a multi-media group. We are yet another step closer to achieve ̚ර۞ཏிĂࠤҌ͵ࠧՏ˘֎རĄ our goal of bringing Sun's energy to everyone in the Greater China region, and ultimately to every corner of the world.
! ! BROADCASTING BUSINESS ! ᇃᇫຽચ! ! ѐˣ͡ˣ͟ฟᇫ۞˟ٺSun Satellite Television Channel, our first thematic ะဥ channel launched on 8th August, 2000, is the core ࢵ࣎ᗟᐛůĶวЍෛķࠎԧ operation of our broadcasting business section. ࣇᇃᇫຽચ̝८͕Ąጴᖣᐹኳ۞ҋ ༼Supported by self-produced programmes, a series of ᄦ༼ϫă˘րЕछಔ͗ፍ۞ݡൕ programmes that have established household brand ϫĂͽ̈́ᄃ B'F ̈́ UfdiUW ۞छᓑ names, as well as exclusive alliances with A&E and ༖ĂวЍෛϫ݈ኢдᇃӘќ TechTV, Sun Satellite Television Channel has become one ˢĂᔘߏдᖬᄏ៍ிཏ͞ࢬĂӮࠎ of the market leaders in both advertising revenue and ઼̂̚ౙ۞ဩγᐛ̚۞ᅳጱ۰̝ audience coverage among the various satellite channels ˘Ą! in the PRC. ! ะဥጾѣૻ̂ݡൕĂᘦҫಫវຽ̰ As a dominant player with strong brand in the media ᓝ֖ᅅࢦ̝гҜĂԧࣇؠົԹღՏ industry, we have grasped every opportunity to further ࣎፟ົĂซ˘Վᕖणனѣ̝ຽચ̈́ extend our presence and audience reach. In view of the ៍ிᖬᄏቑಛĄѣ֍ࡊԫ൴ण၆ԧ ி៍ܫincreasing importance of technology in our daily lives, the ࣇ۞Ϡ߿͟ৈࢦࢋĂะဥஎ Group believes audiences have been longing for quality ၆ኳ৵ࡊԫ༼ϫ۞ᅮՐϺȈ̶ই ૄޙtechnology programmes to enrich their knowledge. ̷Ăͽᖳಱࣇ۞ࡊԫۢᙊĄ ԧࣇјΑଯࢵ࣎ᗟᐛĂะٺ Building on the success of our first thematic satellite ෛॠഫέĂ֭ͽܝchannel, we re-packaged the Macau Satellite TV Travel ဥࢦາԼࢭ፫ Channel and re-launched it as our second thematic үࠎԧࣇௐ˟࣎ᗟᐛĄĶБ ѐˬ͡ϒёଯĂ̫ٺchannel. The "new" channel launched in March 2002 າķᐛ̏ !provides TechTV's flagship programmes to fulfill the ೩ֻ UfdiUW ̝ၮᚻ༼ϫĄ audiences' needs, enabling us to win a pool of new ! audiences. ! ᄃѩТॡĂ࿅ܕќᔉέ៉ߐ ऎሄ็ᇫ۵Њѣࢨ̳Φ)Ķߐऎ In the meantime, the Group, through its recent 60% ሄķ*71&ᝋৈĂะဥͽᒉྻ Kfu!UW acquisition in Satellite Entertainment Communication ᐛĄKfu!UW ᐛ˘ۡͽ೩ֻྼ Company Limited ("SEC"), also operates "Jet TV" Channel ᑚăऎሄăᑚᆐ̈́ాᜈᆐඈ༼ϫࠎ αѺ̱Ȉ༱͗۞ܕέ៉ጾѣٺwith extensive coverage of 4.6 million households in Ă Taiwan providing fabulous games show, entertainment, ᇃᔮᖬᄏதĄ! drama and programme series to audiences there. ! วЍ̼͛ಫវะဥϒёјࠎ˘࣎ৌ ચЋຽĂ֭֝ిдຽڇSun Media Group is evolving into a comprehensive ϒ۞ྭಫវ multi-media services conglomerate and quality ̰ಧؠүࠎᐹኳ༼ϫֻᑕથ۞ᅳ programming leader in the industry with an extensive ጱгҜĂᖬᄏშඛᇃᔮĂֲ࿆̈́߷ă broadcasting network, not only covering Asia, but also the Δ࡚߷̈́፫߷Ą! North America and Australia.
BUSINESS REVIEW AND PROSPECTS ຽચаᜪ̈́ण୕!
DISTRIBUTION BUSINESS ൴Җຽચ!
̝ˠјᒻ֖Ξ͔ᙋפѐ̰ٺThe excellent performance in programme distribution was the best ะဥ൴Җຽચ ༼proof of our dedication and persistence in producing high quality ԧࣇ၆ᄦүͽĶวЍķࠎݡൕ۞ኳ৵ᗟ programmes under the "Sun TV" brand. ϫ̝ሤྕ̈́ેĄ! ! Our acclaimed programme, "Yang Lan One on One" has been ֳЩ̝Ķᚡణኘᐂķ̏൴ҖҌ઼̚˟Ȉ syndicated to 28 local TV stations of various provinces and cities ˣ࣎࠷ξ৺ෛέĂ҃ࢵ˟Ѻ̱Ȉะ B'F ༼ϫ nationwide, and our first 260 episodes of A&E programmes have Ϻ̏൴ҖҌ઼̰̣Ȉα࣎ෛέĄ! also been syndicated to 54 stations nationwide. ! к̙࣎Т༼ϫĂΒ߁ĶѺѐķඈ၈າ !Syndication of various programmes including new programmes like ༼ϫϺ̏൴ҖҌؠෛέĄ "Immortal Marriage" has been provided to designated local stations. ! ࿅˘Ѻ࣎ෛέ઼̰ٺፋវֽᄲĂะဥјΑ ϲņݡൕॡ߱ŇĂј˞˘࣎៍ிᖬᄏޙAs a whole, the Group has established "branded block" on over 100 ᐛ local channels in the PRC, forming a syndication network with த࿈˘ᆆкෛछल͗۞൴ҖშඛĄ audience coverage of more than 100 million TV households.
TELEVISION PROGRAMME PRODUCTION ෛ༼ϫᄦү!
! To better enhance our production efficiency and overall cost ࠎ˞೩༼ϫᄦүड़த̈́ፋវјώड़ৈĂะဥ effectiveness, we have shifted most production work to Shanghai ҋΝѐα̂͡ొЊ۞ᄦү̍үᖼொҌΔִ̈́ and Beijing and maximizing the use of production facilities there ঔ۞ᄦү͕̚ซҖĂ֭·̶гྻϡ઼̰۞ᄦ˯ since April last year, complemented by the excellent packaging үਕ˧ᄃࢶപ̝։рΒ྅ਕ˧ซҖԆ࡚੨Ъć capacities in the Hong Kong office. This move enables us to ឰԧࣇΞՀ֝ిгॲፂ៍ி۞ಈрүአፋĄ become even more responsive to change in viewers' tastes. !! Launching new programmes is one of the initiatives under our д݈ഀࢨ۞ಫវξಞ̚ĂԧࣇΩ˘ีࢦࢋඉ business strategy to fuel growth in this highly lucrative market in the ரߏଯՀк౹ຍ۞༼ϫĂࠎϏֽຽચ൴ण જ˧ĄԧࣇјΑଯк̙࣎Тᙷݭ۞ܜfuture. As expected, we have successfully launched a number of ֽᆧ high quality programmes of a wide variety of unique themes, such ኳ৵ࣘᗟপ۞༼ϫĂтĶѺѐķăĶᕇ ķăĶৌ၁۞߇ְķ̈́ĶҘొวЍķඈĄګas "Immortal Marriage", "The Yellow River", "The Truth" and "West's ᑝเ Sun". Among all, the long awaited for "star" programme "Yang Lan д܉܉າ༼ϫ̚Ă༱ிഇޞ̝Ķᚡణኘᐂķ One on One", which attracted overwhelming response from both ᒔ៍ி̈́ຽ̰ˠ̀۞˯ָ˾༫Ăᜈјࠎξ !audiences and industry players, remains as the market focus. "Yang ಞ൏ᕇĂϺࠎะဥֽΞ៍࠳ӀĄ Lan One on One" gained great interest among advertising sponsors ! and created promising profit for the Group for the financial year of ะဥጾѣ˘Բ̖රፖ໕۞ຽˠՄăᖳಱ۞ྤ ̈́Ԇච۞შඛĂ࿅ҋᄦ༼ϫăγҿ༼ϫᄦ .2001/02 ү̈́༼ϫ൴ҖЪࡗ)̚Β߁ Dbqjubm!Diboofm ϲጾѣ̣༱̈ॡ༼ϫͯऱĄޙSupported by our talented professionals, abundant resources and ٙგநొЊ*Ă̏ well-developed network, we have built a 50,000 hours programme ᘀ̂༼ϫऱਕซ˘Վᖳಱԧࣇ۞༼ϫᙷ̈́ ϫ̰टֻᑕຽ̝ᅳጱгҜĄะဥ༼ٺlibrary through self-production, out-sourcing and programme ዮԧࣇ ̈˼ϲ̣༱̣ޙdistribution contracts (including those programmes managed by ֭˧д˟ˬѐ݈ਕ྿Ҍ !Capital Channel). This vast programme library has further ॡ۞༼ϫऱ̝ϫᇾĄ broadened our programme variety and consolidating our leading ! position in the content supply business. We aim to achieve the target of 55,000 hours by 2003.
MULTI-MEDIA BUSINESS ྭಫវຽચ! !
аᜪഇ̰Ăԧࣇღ೪ྭಫវயٺ During the reporting year, we had been able to capture ሕ˧Ąᖣ˯ঔܜhigh growth potential of multi-media products. With ݡξಞ̝ᆧ the support of Shanghai New Culture Television and າ̼͛ᇃᇫෛᄦүѣࢨ̳Φ၆ Radio Making Company Limited ("SNC"), the Group วЍ̼͛ಫវะဥ۞͚೯Ăֹะ ዚშ̶۞ھঔጾѣ˘࣎ᇃ˯ٺenjoys an extensive distribution network for the delivery ဥ ˣώĶᚡణ˞ۍof Sun TV audio-visual products in Shanghai. In ඛĂΐ˯ࣣ addition, the publishing of 8 titles of "Yang Lan One on ኘᐂķෛဦ३րЕĂᓁዚณ྿ ܜȈ༱ΊĂซ˘Վ೩ќˢᆧז One" as TV Book Series attained a sales volume of !ᅳጱгҜĄ઼̝̰ٺcopies, further enhance our revenue growth ̈́ૻ̼ 100,000 and strengthen our dominant position in the PRC. ! ҋѩีᒉྻ̝ќˢᆧΐҌࡗപֽ The revenue from these areas of operations has ။ 22-111-111 ̮̝ᒉຽᗝĂ֭೩ increased to HK$11.0 million and is also serving as an ֻ˞Ω˘࣎ࢦࢋറତᛈՀᇃᔮ alternative channel for us to reach even wider ۞៍ிཏĄ audiences. BUSINESS REVIEW AND PROSPECTS ຽચаᜪ̈́ण୕!
ADVERTISING REVENUE ᇃӘќৈ! ! Advertising revenues always play a key role in our turnover ᇃӘќৈ˘ۡдะဥᒉຽᗝ̚ፉ༊ࢦࢋ֎ҒĄ ˘ĂᐌะဥјΑଯޘ˘Ɲ˟ѐ˟ٺ contribution. In 2001/02, with the launch of a number of highly successful new programmes and our comprehensive րЕ၈າ༼ϫĂΐ˯౹າ۞Ķ˘৭ёĂБ͞Ҝķ ચĂะဥ̝ᇃӘќৈᐂࡗപ။ڇ͗މone-stop-shop" advertising packages, the Group's advertising ᇃӘ" revenue recorded a remarkable result of approximately HK$137.7 248-811-111 ̮ ̝ ந ຐ ј ᒻ Ă ྵ Ν ѐ ᆧ ܜ !million, a 198% growth over the previous year, accounting for 72% 2:9&Ăҫะဥಫវຽચ۞ᒉຽᗝࡗ྿ 83&Ą of the Group's turnover in the media business. ! ќᔉ̈́ඉரᓑ༖! ACQUISITIONS AND STRATEGIC ALLIANCES ! ะဥ˘Шෛќᔉ̈́ᄃΞෳ۞ူҡᓑ༖ߏᕖ̂ԧ Ąڱѣड़̝͞ܜThe Group has always regarded acquisitions and the formation of ࣇξಞҫѣத̈́ΐిຽચᆧ ҒዋЪ۞ќᔉ̈́ᓑ༖ߏԧࣇѐ̰۞൴ۏstrategic alliances with valuable partners to be the most effective ЯѩĂ јᒻϺߏពϯԧࣇמ۞פways to extend our market share and fuel our business growth. It णࢦᕇĄ҃ะဥ !Ąځhas, therefore, been our focus during the year and the encouraging Ӆ˧ָ̝ᙋ results we achieved are the best proof of our dedicated efforts. ! Capital Channel Limited Capital Channel Limited ("Capital Channel") ("Capital Channel") With the acquisition of the entire interests in Capital Channel, Sun ጴᖣќᔉ Dbqjubm!Diboofm Бొ̏൴Җ۵ώĂ ࿈α༱̣˼̈ॡ༼ϫפMedia Group obtained the rights and access to over 45,000 hours วЍ̼͛ಫវะဥ *of programmes (including those programmes from MTV Asia, )̚Β߁ NUW!Btjb-!Gbtijpo!UW ඈ̝༼ϫ Fashion TV etc). More importantly, this successful move other than ̝ጾѣٕΞͽֹϡᝋĄࢦࢋ۞ߏѨјΑќ further strengthened our programme library base, also opened up ᔉ Dbqjubm!DiboofmĂ̙ಏΐૻ˞ԧࣇ۞༼ϫ more growth opportunities for our media content supply business. ऱૄᖂĂᔘਕࠎะဥ۞ಫវ̰टֻᑕຽચֽ !፟ົĄ۞ܜՀкᆧ SINA.com ! We reached yet another milestone when NASDAQ-listed SINA.com, າშ! the largest Chinese media website in the world, became the single ะဥಧ˭Ω˘࣎ࢦࢋຽચૄϮ˜ߏБ̂̚ OBTEBR ˯ξ۞າშјࠎวЍ͛ ٺlargest shareholder of Sun Media Group. Our new shareholder ͛შ৭ࣘ ଂะဥڌĄԧࣇ۞າ۵ڌacquired a 27.3% stake of Sun Media Group from our Chairperson, ̼ಫវะဥ۞̂۵ Ms. Yang Lan. Boasting 120 million page view per day and यᚡ̃̀͘̚ќᔉٙጾѣ̝วЍ̼͛ಫ ˘reputed as one of the top 10 IT brands in the PRC, this new partner វะဥ 38/4&۵ᝋĄາူҡͽ͟ᕱᜓத྿ ҃˘has presented sparkling synergies with our business. Furthermore, ᆆ˟˼༱ࢱѨ̈́јࠎ઼̚Ȉ̂ JU ݡൕ̝ Тםຽ̰Ă֭ͷᄃԧࣇ̝ಫវຽચֽٺthe combined entity of SINA.com and Sun Media Group has been ೳЩ generating higher value for investors and will bring in more ड़ৈĄГ۰Ăາშ̈́วЍ̼͛ಫវะဥ۰ promising returns. ᓑЪֽĂؠਕࠎԸྤ۰౹ౄՀ̝ᆊࣃĂ !Հ࡚р۞݈ഀĄֽ
!Bureau for External Cultural Relations of the Ministry of ̚රˠϔВ઼̼͛ొ၆γᓑඛొ Culture of the PRC ("Ministry of Culture of the PRC") )Ķ઼̼͛̚ొķ*! ะဥ۞ֹĂͽᐹኳ۞͛̚༼ϫ็ᇫ̚ٺૄޙ As our mission is to spread the Chinese culture and to influence the ਕᄃ઼̚ضၷޝworld with quality Chinese programmes, we are proud to have ઼̼͛̈́ᖤ͵ࠧЧгĂԧࣇ formed an alliance with the Ministry of Culture of the PRC. The ̼͛ొјᓑ༖Ąѩᓑ༖᎕ໂШঔγරˠଯᇃ alliance has been actively promoting quality TV programmes among য়઼ᐹս۞ෛ༼ϫĂឰࣇѣՀк፟ົஎˢ !৪Ą۞ځ͛͞ڌoverseas Chinese, giving them more opportunities to appreciate the ˞ྋ essence of oriental culture. ! Gold Television Media Holdings Inc. Gold Television Media Holdings Inc. ("GTM") ("GTM") םWe reached a HK$31.2 million deal with GTM for the sale of ԧࣇϺᄃHUN྿јᓁࣃപ။42-311-111̮̝ non-exclusive usage of 1,000 titles out of our content library and ᛉĂШ HUN วЍ̼͛ಫវะဥ༼ϫऱ̰ छֹϡᝋĂ̈́೩ֻᄦү̚ܧour excess production studio time with granted broadcast airtime ̚˘˼इ༼ϫ̝ and revenue-sharing on TV home shopping for a period of 3 years. ֹ͕ϡᝋᄃᐛ̝ᇃᇫॡมĂͽ̶ֳෛछ ຽચ̝ќˢĂࠎഇˬѐĄีᄃ HUNۏᔉا These arrangements with GTM not only allow us to maximize ᛉ̙ҭΞͽឰԧࣇႽณ೩ะဥ༼ϫ̈́ᇃם۞ utilization of our programmes and airtime, but also provide us with yet another channel to reach overseas media players. ᇫॡม۞ֹϡณĂ҃ͷϺࠎԧࣇ೩ֻ˞Ω˘࣎ റତᛈঔγຽ̰ˠ̀Ą! TechTV International ("TechTV") ! Adding to our competencies in providing thematic programmes in TechTV International ("TechTV") history, culture and biography, we joined hands with TechTV, one of ࠎ˞ΐૻԧࣇ೩ֻᗟ༼ϫ̝ਕ˧Ă̙ГΪԊ ඈ༼ϫĂԧࣇᄃ࡚็ۏ።Ϋă̼͛̈́ˠٺthe leading American television channels, to distribute or syndicate ࢨ ̚ ٺfor a period of 3 years quality technology programmes in the PRC, ઼Щෛᐛ̝˘۞ UfdiUW ᛸ͘ЪүĂ ༼൴Җ̈́ᇫਖ਼ኳ৵ࡊԫܝHong Kong and Macau. ઼ăࢶപ̈́፫ ϫĂࠎഇˬѐĄ! TechTV is a fast growing US cable network, which produces and ! ᄦүܝdistributes original technology-oriented content to more than 70 UfdiUW ࠎ൴ण֝ి۞઼࡚ѣቢშඛĂ countries worldwide. Our partnership with TechTV not only ͽࡊԫࠎᗟ۞༼ϫĂ֭൴ҖҌ͵ࠧ˛Ȉк࣎ speeded up our pace in setting up a new technology channel, but ઼छĄߏѨะဥᄃ UfdiUW ̝ЪүĂ̙ҭѣӄะ also enriched our content library to cater for different viewers' needs. ဥΐԣޙϲາࡊԫᐛ̝ՎЂĂ҃ͷϺᖳಱ˞ ٺRiding on the popularity and well-known quality of TechTV's flagship ԧࣇ۞༼ϫऱĂͽᑕ;̙Т៍ி۞ᅮࢋĄૄ ிᝌ៍צprogrammes, we firmly believe our audience pool will continually UfdiUW ̝ၮᚻ༼ϫჷЩঔγĂ֭ͷᇃ ؠਕᕖᔮԧࣇ۞៍ிཏ̈́ᆧޢ͟ܫĂะဥஎܓ .expand and so will our advertising revenue ΐᇃӘќˢĄ!
BUSINESS REVIEW AND PROSPECTS ຽચаᜪ̈́ण୕!
! CONSTRUCTION BUSINESS ޙౄ̍ຽચ! ! ޙ˟ѐ˟͡ĂԧࣇјΑனѣ̝˟ٺ In February 2002, we disposed of our construction business ("Leung Kee Construction Group Limited"), demonstrating our determination ຽચ)ӈ։ޙะဥѣࢨ̳Φ*!Ăᇾᄫԧࣇ !to fully transform into a "multi-media group". ϭԠᖼݭࠎкಫវะဥ̝ՙ͕Ą ! Having completed the disposal of the construction business, we ԆјޙຽચޢĂะဥᐂࡗപ။ recorded a profit at book value of approximately HK$4.8 million. 5-911-111 ̮̝ኮࢬӀማĄߏѨޙຽચ The disposal of our construction business has not only enabled us to ਕ΄ะဥΞͽะ̚ྤ൴ण८͕ಫវຽચĄ! concentrate our resources to develop our core media business. ! ! ! PROSPECTS ण୕! ! Targeting to be a premier multi-media group in the Asian media วЍ̼͛ಫវะဥϭԠјࠎֲ߷ᇃᇫຽ̰ᐹ ะဥ࿅Ν̈́ٺindustry, we are never complacent with our past and existing ս۞ྭಫវะဥĂԧࣇଂ̙႕֖ achievements. 2002 is a year of opportunity for Sun Media னд۞јಶĄ˟˟ѐߏวЍ̼͛ಫវะဥ ፟ົ۞˘ѐĄวЍ̼͛ಫវะဥүࠎפۋGroup. As a major broadcasting enterprise with business ᎕ໂ spanning the Greater China Region, Asia-Pacific and North ˘छࢋ۞ᇃᇫЋຽĂຽચྭ̂̚රгડă ༼America, and a quality programme library, we will continue to ֲ͉ડ̈́Δ࡚߷Ă֭ጾѣ˘࣎ᐹኳ҃ᖳಱ۞ Ъዋ۞ຽચඉפؠ̈́ଳטformulate and implement applicable strategies to achieve our goal ϫऱĂԧࣇົᚶᜈ and realize our mission. ரĂͽ྿ԧࣇ۞ϫᇾ̈́၁னԧࣇ۞நຐĄ ! ૻ̂ݡൕड़ᑕĂԧ۞઼̰ٺRiding on the strong brand recognition of "Sun TV" in the PRC, we ጴᖣĶวЍ̼͛ķ are actively exploring new potential including possible acquisitions ࣇ᎕ໂವԱЪዋ̈́ሕኳ۞ีϫĂΒ߁ќᔉᐹ Ą҃ԧܜof quality media companies to accelerate the Group's growth. ኳ۞ಫវЋຽĂͽΐిะဥ۞ຽચᆧ Topping our list of priorities is the need to create additional ࣇࢵࢋ҂ᇋ۞୧І༊ߏਕૉ੨Ъะဥк̮̼ !Тड़ᑕĄםsynergies among our various business streams. ۞ຽચ൴णĂ֭Ξֽᗝγ۞ ! Driven by our goal of providing a unique Chinese cultural product ۷ࠎБරˠ೩ֻኳ৵͛̚༼ϫֹ̝Ă ˟ѐͽപ။ 56-111-111 ̮ќᔉ˟ٺfor Chinese all around the world, we acquired 60% of the entire ԧࣇ issued share capital of SEC at a total consideration of HK$45.0 έ៉ߐऎሄ 71&ᝋৈĂ࿅රˠߐშඛĂ million in 2002, successfully boosting our global exposure to reach ĶKfu!UWķፋ୧༼ϫᐛརгĂјΑᕖण ăΔ࡚፫߷۞රthe Chinese communities in Singapore, North America and ะဥ۞ᖬᄏቑಛᅈҌາΐ ѐ̰ؼҩҌֽҘֲă̫ٺAustralia via the broadcasting of "Jet TV" through Chinese satellite ˠгડĂ֭ࢍ ٺᄼඈгĄГ۰ĂĶKfu!UWķޠnetworks. It is expected to extend further to Malaysia, Thailand, ઼ăОκăහ Indonesia and the Philippines within 2002. In addition, via AT&T broadband cable TV network, "Jet TV" also succeeded in gaining its ˟˟ѐјΑˢშBU'U!Cspbecboeѣቢෛ first foothold in the U.S. in 2002 with Sun TV programmes. With შĂதАχฟ઼࡚ξಞĂᇃᇫĶวЍෛķ༼ έ៉̈́Бරˠгડ̝ᘦઉૄᖂĂٺsolid foundations in both Taiwan and the global Chinese ϫĄጴᖣ community, SEC is famed of its games, drama, entertainment and έ៉ߐऎሄ˘ۡͽྼᑚăऎሄăᑚᆐ̈́ాᜈ programme series with extensive coverage of 4.6 million TV ᆐඈ༼ϫࠎĂᒔ៍ிрෞĄனॡĂέ៉ αѺ̱Ȉ༱ܕזhouseholds in Taiwan, creating significant profits over the years. ߐऎሄдέ៉۞ᖬᄏத̏྿ !ෛछल͗Ă֭ͷాѐᒔΞ៍࠳ӀĄ Apart from the Jet TV channel, SEC also operates another channel ! ٺwhich is named "Knowledge Channel" and acts as the sole ੵ˞ĶKfu!UWķᐛγĂέ៉ߐऎሄϫ݈ advertising agent for "Hollywood Movie Channel" in Taiwan. έ៉ϺགྷᒉᐛĂ̶ҾࠎĶາۢķᐛ̈́ छநЩĶрᇆķᐛ̝ᇃӘዚĄ In line with our "Central Kitchen" strategy, we acquired 100% of the ! entire interest in Beijing Jingwen Record Co., Ltd, a market leader in ࠎ੨Ъԧࣇ۞ĺ̚δᇀٗĻඉரĂะဥќᔉ̚ the PRC's audio and visual products distribution, thereby effected ઼ы۞ࢰည̶ዚЋຽΔִִ͛ભͯѣࢨ̳Φ ዚҖຽĂ̶֭̈́ۍexpansion into the publication and distribution industry with a 211&!۵ᝋĂຽચᕖणҌ ۞̮ ˠϔ။ 28-111-111פࢵѐᒔޢќᔉٺguaranteed profit of RMB 17.0 million for the first year. We target Ξ ϏֽȈ˟࣎͡൴Җٺto distribute over 1,000 categories of audio-visual products in the ӀማܲᙋĄԧࣇ۞ϫᇾߏ ˠϔ။ٺnext 12 months. This will generate a guaranteed sales turnover of ࿅˘˼ᇆࢰயݡĂଂֽ̙҃͌ not less than RMB 180.0 million, consequently doubling the Group's 291-111-111 ̮۞ዚᗝĂֹะဥϏֽੑ߆ѐ turnover for the next financial year. ޘ̝ዚᗝᆧܜ࿈ࢺĄ!
BUSINESS REVIEW AND PROSPECTS ຽચаᜪ̈́ण୕!
! ၆ኳ৵ିֈ༼ϫ۞ᘀ̂ᅮՐĂԧ઼̰פۋTo capture the huge demand for quality educational products in the ࠎ ᛳ̳ΦΔִִ͛кಫវିֈѣࢨܢ˭PRC, we have established strategic alliance with the People's ࣇ࿅ၮ ޙĞĶˠϔିֈķğۤۍEducation Publishing House ("People's Education") through our ̳Φϒёᄃˠϔିֈ subsidiary Jingwen Multi-Media Education Company Limited. The ϲ˞ඉரّᓑ༖Ąม̳ΦົღЪүĂ к̮̼ຽפtwo companies will work closely together to open up new business ᓑ͘ฟ٤ૄᖂିֈາᅳાĂ֭ͷଳ ൴ҖາயݡĂּт੫၆̈́̚ۍhorizons in fundamental education through initiatives including ચඉரĂΒ߁ publishing and distributing new products, such as children ઼۰۞ආᗔᄫࡻᄬିጯᗔᄫඈĄѨᄃ ϲ˘࣎ޙmagazines targeting the PRC's readers and magazines aiming at ˠϔିֈ۞ЪүΞΐૻะဥ၁˧Ă ֽ̂۞аڌhelping readers to learn English. This alliance with People's ᘦઉ҃ૻ̂۞̶ዚറĂࠎ۵ Education will add to our ability to build a stable and strong ಡĄ! distribution channel, bringing the highest returns to shareholders. ! ะဥϺ̏ࢎϲຍШ३ĂШπАϠ̶Ҿќᔉ We also entered into a letter of intent for a 50% acquisition in Asian Btjbo!Vojpo ̈́ΔִΔ̂රᆆᇆෛ̼͛ѣࢨయ Δ̂රٺUnion and Beida Huayi from Mr. Dong Ping. The move will allow Ї̳ΦĞĶΔ̂රᆆķğ61&!۵ᝋĄϤ ᖟᐷķඈ߹ҖᇆĂќۻus to further broaden our business scope to cover movie production ᆆഅણᄃᄦүĶ as Beida Huayi is experienced in the production of popular movies ᔉѣӄะဥᕖणຽચቑᘞҌᇆᄦү͞ࢬĄΩ such as "Crouching Tiger, Hidden Dragon". Beida Huayi also owns γĂΔ̂රᆆϺ̶ҾጾѣЩ઼̰ဩಈᆐᄦ and 26% equity interests in the well-known sitcom production ү̳ΦĶΔִࡻͩᇆෛᘹఙѣࢨయЇ̳Φķ̝ 60% company "ΔִࡻͩᇆෛᘹఙѣࢨయЇ̳Φ" and a film distribution 71&۵ᝋ̈́ᇆ൴Җ̳ΦĶΔִ༰ݱˬᓑᇆෛ !company "Δִ༰ݱˬᓑᇆෛ൴Җѣࢨ̳Φ" respectively in the ൴Җѣࢨ̳Φķ̝ 37&۵ᝋĄ PRC. ! ֱќᔉ̈́ඉரّᓑ༖̙ҭᇾᄫวЍ̼͛ಫ These acquisitions and strategic alliances not only represent the វะဥ̏јΑଂಏ˘ෛಫវᖼݭࠎৌϒྭಫ success of our transformation from a single TV media into a វĂ֭ͷᕖणԧࣇ۞ќˢֽĂଂಏ˘ᇃӘќ multi-media group in the industry, but also the expansion of our ˢሀё൴णࠎࣘटᇃӘă३ᚱ̈́ᇆࢰயݡඈк income sources from primarily TV advertising to a combination of ќˢሀёĄಏಏдᇃӘќˢ̚Ă࿅ะဥќ ̚ܧadvertising, fee-based publications and audio-visual products. ᔉέ៉ߐऎሄϺΞࠎԧࣇֽՀкֽҋ !Even within the advertising revenue, the acquisition of SEC will also ઼ξಞ۞ᇃӘќˢĄ allow the Group to generate more advertising revenue from ! non-PRC markets. дЋຽგந͞ࢬĂԧࣇᔛኛ˞̙͌ຽ̰̖ΐ ˢะဥĂј८͕გநᆸĂΒ߁߱ϖૄАϠă ؟On the corporate front, our strengths are renewed as we welcome ౘፍᑾАϠăౘ႔̮АϠăࡱᓜАϠ̈́Ղ on board a number of key management personnel including Mr. ೳАϠĄፋ࣎გநဥฤؠაႽٙਕĂ೩̿ะ ຽ̰۞ຽԛٺDuan Yongji, Mr. Chen Xiaotao, Mr. Chen Han Yuan, Mr. Mao ဥ۞༼ϫኳ৵ăᒉྻड़த̈́ !Daolin and Mr. John Li. The whole management team is ෪ćֱӮజෛࠎะဥ۞ࢦࢋྤயĄ committed to further enhancing the Group's programme quality, operational efficiencies and its professional image in the industry, which the Group sees as its most important assets. !! In furtherance, reflecting our successful transformation into a Г۰Ăࠎ˞ͅߍԧࣇ̏јΑᖼݭࠎৌϒྭಫវ ˟ѐ̣̏͡ЩჍϤĶว˟ٺmulti-media group, the Group has changed its name from "Sun ЋຽĂะဥ Television Cybernetworks Holdings Limited" to "Sun Media Group Ѝ̼͛შඛෛଠ۵ѣࢨ̳ΦķԼࠎĶวЍ͛ ٺHoldings Limited" in May 2002. The new name highlights our ̼ಫវะဥѣࢨ̳ΦķĄາЩჍϒрࡎពะဥ !positioning in the market. ξಞ̚۞ؠҜĄ ! Looking ahead, with renewed strengths, we are well geared to ण୕ϏֽĂጴᖣ̙ᕝ൴ण۞ᐹ๕Ăԧࣇ̏౯ Ω˘າล߱Ąԧࣇ۞ܜତຽચԣిᆧܓembark on another phase of fast growth. We will continue to ಶჰ ᒉຽᗝ̈́࠳Ӏ۞ᆧפۋБࢬඉரĂפadopt a top and bottom line growth strategy with diversification into ᚶᜈଳ ĂซҖк̮̼ຽચ൴ण̈́ฟ٤າќˢֽĂܜ new businesses and exploration of new revenue sources as our major focuses. Advancement in operational efficiencies will also ֭ͷ˧೩̿ᒉྻड़தĄГ۰Ăԧࣇ̪ົ᎕ໂ ќᔉีϫĂซ˘Վଯજᆧ̈́׀be of paramount importance. In addition, we will actively seek to ವՐሕኳ۞Ъ Ąԧࣇጾѣᐹኳ۞༼ϫ̈́ᇃᔮ۞ᖬᄏቑಛĂܜ further stimulate growth through mergers and acquisitions. Armed ϏֽᇴѐٺวЍ̼͛ಫវะဥ͕ܫwith top quality programmes with extensive coverage, we are გநᆸ·႕ !Ξ៍۞аಡĄפconfident that Sun Media Group will reap promising returns in the ؠਕᒔ coming years. ! ! APPRECIATION ᔁ! ! We would like to take this opportunity to extend our heartfelt ޢĂώˠᖣѩ፟ົШგநᆸ̈́ЧҜࣶ̍ࠎώ appreciation to our management team and staff for their dedicated ะဥٙү۞ᚥ̈́Ӆ˧ͽਾ͕ຏᔁĄώˠϺ ၆ۡ˘ڌefforts and significant contributions to the Group. We would also ᖰְܑົຏᔁЧຽચူҡ̈́Ч۵ !Ą͕ܫlike to express our gratitude to our business partners and ะဥ۞͚̈́ shareholders for their continued support in the past and for the ! coming years. ! ! ! ! ! !By order of the Board ְٚົ ! Wu Zheng, Bruno ะဥҖ߆ᓁ! !فGroup Chief Executive Officer ӓ ! Hong Kong, 22nd July 2002 ࢶപĂ˟˟ѐ˛͡˟Ȉ˟͟!