i-CABLE COMMUNICATIONS LIMITED
Stock Code: 1097
2007 Final Results Announcement
Business Adjustments Making Satisfactory Progress

Results Highlights

• The Group is successfully adjusting to the new competitive environment to establish a lower cost base to preserve its profitability despite substantial pressure on revenue.

• Investment in new businesses is also beginning to bear fruit.

• Turnover decreased by 10% to HK$2,304 million (2006: HK$2,548 million).

• Net profit after tax increased by 1% to HK$183 million (2006: HK$181 million).

• Capital expenditure decreased by 13% to HK$175 million (2006: HK$200 million).

• Final dividend per share recommended/unchanged at HK$0.05 (2006: HK$0.05).

Pay TV

• New marketing strategy accelerated subscriber growth amidst intense competition.

• Subscribers increased by 12% to 882,000 (2006: 786,000).

• Turnover decreased by 16% to HK$1,595 million (2006: HK$1,895 million).

• Operating profit decreased by 28% to HK$179 million (2006: HK$248 million).

Internet & Multimedia

• Revenue and profit preservation preferred over market share gains.

• Broadband subscribers decreased by 7% to 306,000 (2006: 328,000).

• Turnover was almost unchanged at HK$588 million (2006: HK$596 million).

• Operating profit increased by 40% to HK$180 million (2006: HK$129 million).

GROUP RESULTS

Group profit attributable to Shareholders for the year ended December 31, 2007 amounted to HK$182 million (2006: HK$182 million). Basic and diluted earnings per share were both HK$0.09 (2006: HK$0.09).

DIVIDENDS

An interim dividend in respect of the year ended December 31, 2007 of HK$0.035 (2006: HK$0.035) per share was paid on October 9, 2007, absorbing a total amount of HK$71 million (2006: HK$71 million). Directors have recommended for adoption at the Annual General Meeting to be held on May 23, 2008 the payment on May 30, 2008 to Shareholders registered on May 23, 2008 of a final dividend in respect of the year ended December 31, 2007 of HK$0.05 (2006: HK$0.05) per share, absorbing a total amount of HK$101 million (2006: HK$101 million). If this recommendation is approved, the total dividend for the year 2007 would amount to HK$0.085 (2006: HK$0.085) per share.

MANAGEMENT DISCUSSION AND ANALYSIS

A. Review of 2007 Results

The Group accelerated the growth of its Pay TV subscriber base with enhanced programming and marketing strategies but preferred revenue and profitability preservation over market share for its Internet & Multimedia business.

Consolidated turnover decreased by HK$244 million or 10% to HK$2,304 million.

Successfully establishing a lower cost base to adjust to the new competitive environment, operating costs before depreciation decreased by 8% to HK$1,759 million. Programming costs decreased by 5% to HK$950 million, network and other operating costs decreased by 7% to HK$419 million, while selling, general and administrative expenses decreased by 16% to HK$390 million.

Earnings before interest, tax, depreciation and amortisation or EBITDA decreased by 13% to HK$545 million.

Depreciation decreased by 14% to HK$367 million due to lower depreciation charges on network assets and customer premises equipment following the expiry of their depreciation cycle.

Profit from operations decreased by HK$20 million or 10% to HK$178 million.

Net profit after HK$17 million of income tax expenses for the year increased by 1% to HK$183 million.

Basic and diluted earnings per share were 9.0 cents as compared to 9.0 cents in 2006.

B. Segmental Information

Pay Television

Subscribers increased by 96,000 or 12% year-on-year to 882,000. Turnover decreased by HK$300 million to HK$1,595 million. Operating costs after depreciation decreased by 14% to HK$1,417 million primarily due to the aforementioned decrease in programming, network operating and selling costs. Operating profit decreased by 28% to HK$179 million.

Internet & Multimedia

Broadband subscribers decreased by 22,000 or 7% year-on-year to 306,000. Turnover was little changed at HK$588 million. Operating costs after depreciation decreased by 13% to HK$407 million. Operating profit reported a record high HK$180 million as compared to HK$129 million a year ago.

C. Liquidity and Financial Resources

Net cash inflow reached HK$56 million after financial investments. After dividend payment of HK$172 million, net cash balance increased to HK$642 million at December 31, 2007, as compared to HK$586 million a year ago.

The consolidated net assets value of the Group as at December 31, 2007 was HK$2,271 million or HK$1.1 per share. At December 31, 2007, the Group had property, plant and equipment of net book value of approximately HK$594,000 (December 31, 2006: HK$848,000) held under finance lease contract.

The Group's assets, liabilities, revenues and expenses were mainly denominated in Hong Kong dollars or U.S. dollars and the exchange rate between these two currencies has remained pegged.

Capital expenditure during the period amounted to HK$175 million as compared to HK$200 million last year. Major items included further network upgrade and expansion, investment in information systems, television production facilities and leasehold buildings.

The Group is comfortable with its present financial and liquidity position. Further capital expenditure and new business development will be funded by cash to be generated from operations and, if needed, bank borrowings or other external sources of funds. The Group also had total short-term bank credit facilities of approximately HK$32 million which remained unutilised as of December 31, 2007.

D. Contingent Liabilities

At December 31, 2007, there were contingent liabilities in respect of guarantees, indemnities and letters of awareness given by the Company on behalf of subsidiaries relating to overdraft and guarantee facilities provided by banks up to HK$199 million, of which HK$167 million had been utilised by the subsidiaries.

E. Human Resources

The Group had a total of 2,907 employees at the end of 2007 (2006: 3,016). Total gross amount of salaries and related costs incurred in the corresponding period amounted to HK$736 million (2006: HK$828 million).

With pay for performance culture linking remuneration and reward to Group performance, we nurture a team of professionals and inspired talents to work together and support our growth and development.

The Group has always strived to contribute to the local communities. Being one of the Caring Companies, we were awarded the "5 Consecutive Years Logo Award" by the Hong Kong Council of Social Service in recognition of our continuous commitment in corporate social responsibility. The Group will continue to support and encourage employees to participate in social welfare activities.

F. Operating Environment and Competition

During the year, the Group successfully adjusted to the new competitive environment to establish a lower cost base to preserve its profitability despite substantial pressure on revenue. At the same time, it held steadfastly to its development strategy, emphasising sustainable long-term overall growth, as the main competitor continued with its attempts to shake the Pay TV market by aggressive marketing and content acquisition tactics.

Our comprehensive and balanced development approach to all major content platforms contrasted with that of our competitors.

During the year under review, we further strengthened the fundamentals of our popular news and entertainment platforms, and acquired a range of premier international sports events, which will maintain the strength and lead of our programming over the immediate and medium terms.

Complemented by an expanded range of subscription plans and marketing initiatives that are designed to tap all market strata in the shifting operating topography, growth in our subscriber base accelerated, against market speculation at the beginning of the year about massive customer drain.

The much-hyped Digital Terrestrial Television service of the two free-to-air broadcasters was officially launched at the end of 2007. The jury is however still out on whether the full potential of expanded channel capacity and improved picture quality of digital and High-Definition services would have much impact on the Pay TV market in the foreseeable future.

On the Broadband front, our subscriber base and turnover consolidated as we preferred revenue and profit preservation over market share gains. Profitability for this sector took a handsome leap, attributable to service and operational enhancements as well as cost management.

G. Outlook

The Group will celebrate the 15th anniversary of service commencement in October 2008.

Our production and programming prowess, as well as operational and marketing expertise, firmly established over the past decade and a half, are hard to emulate. Their roles as the cornerstone of our subscriber loyalty are more clearly demonstrated as competition further heats up in the market.

We are committed to building for the future. On top of scaling up our local television and movie production, we have bagged the most prized sports events in the world, FIFA World Cup and Winter Olympics in 2010 and the Summer Olympics in 2012.

These investments demonstrate our confidence in the Group's continued business development and our revitalised products and services will put us in good stead to reach more new milestones as we celebrate our 15th anniversary.

CODE ON CORPORATE GOVERNANCE PRACTICES

During the financial year under review, all the code provisions set out in the Code on Corporate Governance Practices contained in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited were met by the Company, except in respect of one code provision providing for the roles of chairman and chief executive officer to be performed by different individuals. The deviation is deemed necessary as, given the nature and size of the Company's business, it is at this stage considered to be more efficient to have one single person to hold both positions. The Board of Directors believes that the balance of power and authority is adequately ensured by the operations of the Board which comprises experienced and high calibre individuals with a substantial number thereof being independent Non-executive Directors.

CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended December 31, 2007

CONSOLIDATED BALANCE SHEET
At December 31, 2007

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the year ended December 31, 2007

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the year ended December 31, 2007

NOTES TO THE FINANCIAL STATEMENTS

1. Basis of preparation
   
   The financial statements for the year ended December 31, 2007 have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards ("HKFRS") which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ("HKAS") and Interpretations issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"), accounting principles generally accepted in Hong Kong and the requirements of the Hong Kong Companies Ordinance. They also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
   
   
2. Impact of new and revised Hong Kong Financial Reporting Standards
   
   The HKICPA has issued certain new and revised HKFRSs that are first effective or available for early adoption for the current accounting period of the Group and the Company.
   
   In 2007, the Group has adopted all new HKFRSs that are first effective for accounting periods beginning on or after January 1, 2007. The adoption of these new HKFRSs did not result in substantive changes to the Group's accounting policies.
   
   The following sets out information on additional disclosures provided for the current and prior accounting periods reflected in these financial statements:
   
   The adoption of HKFRS 7, Financial instruments: Disclosures has expanded disclosure about the significance of the Group's financial instruments and the nature and extent of risks arising from those instruments.
   
   The adoption of the amendment to HKAS 1, Presentation of financial statements: Capital disclosures, has introduced additonal disclosure requirements to provide information about the level of capital and the Group's objectives, policies and processes for managing capital.
   
   
3. Turnover
   
   Turnover comprises principally subscription and related fees for Pay television and Internet services and Internet Protocol Point wholesale services. It also includes advertising income net of agency deductions, channel service and distribution fees, programme licensing income, film exhibition and distribution income, network maintenance income and other related income.
   
   
4. Segment information
   
   Substantially all of the activities of the Group are based in Hong Kong and below is an analysis of the Group's revenue and result by principal activities:
   
   

   		Segment revenue				Segment result
   		2007		2006		2007		2006
   		HK$'000		HK$'000		HK$'000		HK$'000
   Pay television		1,595,114		1,895,221		178,606		248,224
   Internet and multimedia		587,784		596,013		180,479		128,961
   						359,085		377,185
   Unallocated		150,171		74,167		(176,578)		(178,437)
   Inter-segment elimination		(29,185)		(17,806)		(4,526)		(291)
   		2,303,884		2,547,595		177,981		198,457
   Profit from operations						177,981		198,457
   Interest income						20,566		11,640
   Finance costs, net						(18)		(7)
   Impairment loss on investment						(1,600)		-
   Non-operating income/(expenses)						2,311		(322)
   Income tax expense						(16,646)		(28,649)
   Profit after taxation						182,594		181,119

   
   
   
   

   		Segment assets				Segment liabilities
   		2007		2006		2007		2006
   		HK$'000		HK$'000		HK$'000		HK$'000
   Pay television		1,160,268		1,242,902		353,595		383,812
   Internet and multimedia		509,099		631,237		129,123		132,665
   		1,669,367		1,874,139		482,718		516,477
   Unallocated assets/liabilities		1,265,630		1,148,735		181,038		244,004
   		2,934,997		3,022,874		663,756		760,481

   
   
   

   	Additions to property, plant and equipment		Additions to programming library		Depreciation		Amortisation		Impairment loss on property, plant and equipment
   	2007	2006	2007	2006	2007	2006	2007	2006	2007	2006
   	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
   Pay television	62,040	129,343	97,372	108.719	220,269	235,516	97,430	84,394	2,071	6,617
   Internet and multimedia	68,175	63,802	-	-	141,702	188,223	-	-	1,176	1,459
   Unallocated	44,662	7,070	32,843	35,244	4,551	4,382	39,555	19,646	-	3,565
   	174,877	200,215	130,215	143,963	366,522	428,121	136,985	104,040	3,247	11,641

   
   
   
   
5. Profit before taxation
   
   Profit before taxation is stated after charging / (crediting):
   
   

   				2007		2006
   				HK$'000		HK$'000
   	Depreciation
   		- assets held for use under operating leases		29,915		39,492
   		- other assets		336,607		388,629
   				366,522		428,121
   	Amortisation of programming library*			132,600		101,117
   	Amortisation of other intangible assets**			4,385		2,923
   	Staff costs			692,467		769,770
   	Contributions to defined contribution retirement plans			28,985		30,541
   	Cost of inventories used			8,753		12,999
   	Dividend income from investment in equity securities			(1,365)		(1,872)
   	Auditors' remuneration			5,404		3,137
   	Non-operating (income)/expenses
   	Net (gain)/loss on disposal of property, plant and equipment			(2,311)		322

   
   * Amortisation of programming library is included within programming costs in the consolidated results of the Group.
   **Amortisation of other intangible assets is under network and other operating expenses in the consolidated results of the Group.
   
   
   
6. Income tax
   The provision for Hong Kong Profits Tax is calculated at 17.5% of the estimated assessable profits for the year (2006: 17.5%). Taxation for the overseas subsidiaries is charged at the appropriate current rate of taxation ruling in the relevant countries. The income tax charge for the year ended December 31 represents:
   
   

   	2007		2006
   	HK$'000		HK$'000
   Current provision for Hong Kong Profits Tax	-		75
   Current provision for overseas tax	490		222
   Net deferred tax expense	16,156		28,352
   Income tax expense	16,646		28,649

   
   
   
   
7. Earnings per share
   
   The calculation of basic earnings per share is based on the profit attributable to equity shareholders of the Company of HK$182 million (2006: HK$182 million) and the weighted average number of ordinary shares outstanding during the year of 2,018,965,236 (2006: 2,019,234,400).
   
   The calculation of diluted earnings per share is based on the profit attributable to equity shareholders of the Company of HK$182 million (2006: HK$182 million) and the weighted average number of ordinary shares of 2,018,965,236 (2006: 2,019,234,400) after adjusting for the effects of all dilutive potential ordinary shares.
   
   
8. Accounts receivable from trade debtors
   
   An ageing analysis of accounts receivable from trade debtors (net of impairment losses for bad and doubtful accounts) is set out as follows:
   
   

   	2007		2006
   	HK$'000		HK$'000
   0 to 30 days	19,131		24,819
   31 to 60 days	23,763		24,428
   61 to 90 days	17,255		16,869
   Over 90 days	21,698		19,469
   	81,847		85,585

   
   The Group has a defined credit policy. The general credit terms allowed range from 0 to 90 days.
   
   
   
9. Amounts due to trade creditors

   An ageing analysis of amounts due to trade creditors is set out as follows:

	2007		2006
	HK$'000		HK$'000
0 to 30 days	2,603		3,806
31 to 60 days	6,844		3,916
61 to 90 days	3,895		6,537
Over 90 days	21,698		28,416
	35,040		42,675






10. Review of Financial statements
    
    The financial results for the year ended December 31, 2007 have been reviewed with no disagreement by the Audit Committee of the Group. This preliminary results announcement has also been agreed with the Group's Auditors.
    
    
    
    

PURCHASE, SALE OR REDEMPTION OF SHARES

During the year, the Company repurchased on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") a total of 4,108,000 ordinary shares at an aggregate price of HK$6,509,254.

Save as disclosed above, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any listed securities of the Company during the year under review.

BOOK CLOSURE

The Register of Members of the Company will be closed from Friday, May 16, 2008 to Friday, May 23, 2008, both days inclusive, for the purpose of determining shareholders' entitlements to the proposed final dividend. In order to qualify for the final dividend, all transfers, accompanied by the relevant share certificates, must be lodged with the Company's Registrars, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen's Road East, Wanchai, Hong Kong, not later than 4.30 p.m. on Thursday, May 15, 2008.

By Order of the Board
Wilson W. S. Chan
Company Secretary

Hong Kong, March 10, 2008

As at the date of this announcement, the Board of Directors of the Company comprises Mr. Stephen T. H. Ng, Mr. William J. H. Kwan and Mr. Peter S. O. Mak, together with four independent non-executive Directors, namely, Dr. Dennis T. L. Sun, Sir Gordon Y. S. Wu, Mr. Patrick Y. W. Wu and Mr. Anthony K. K. Yeung.