和记电讯香港(00215) - 2024 - 中期财报

Financial and Business Review Financial Highlights In H1 2024, the Group's total revenue decreased by 12% to HKD 2.058 billion, but effective cost control and revenue mix optimization stabilized EBITDA at HKD 728 million, significantly narrowing loss attributable to shareholders by 37% to HKD 12 million while maintaining interim dividend at 2.28 HK cents per share Financial Highlights | Indicator | H1 2024 (HKD million) | H1 2023 (HKD million) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 2,058 | 2,328 | -12% | | Service Revenue | 1,760 | 1,793 | -2% | | Total EBITDA | 728 | 727 | – | | Total LBIT | (30) | (35) | +14% | | Loss Attributable to Shareholders | (12) | (19) | +37% | | Loss Per Share (HK cents) | (0.25) | (0.39) | +37% | | Interim Dividend Per Share (HK cents) | 2.28 | 2.28 | – | Chairman's Report Despite economic challenges, the Group's H1 2024 saw total revenue slow, but loss attributable to shareholders narrowed by 37%, driven by a 31% surge in roaming revenue and stable EBITDA, while the customer base grew 25% to 4.3 million with 5G penetration reaching 51%, and an interim dividend of 2.28 HK cents per share was declared - Loss attributable to shareholders and loss per share narrowed to HKD 12 million and 0.25 HK cents respectively, representing a 37% year-on-year improvement[7] - The Board declared an interim dividend of 2.28 HK cents per share, consistent with the prior year[8] - Roaming service revenue significantly increased by 31% year-on-year to HKD 308 million, supported by strong outbound travel performance[9] - The Group's customer base grew by 25% to approximately 4.3 million, with 5G penetration rising to 51%[9] - Looking ahead, the Group is committed to further improving financial performance to achieve its goal of full-year profitability[10] Management Discussion and Analysis This section details the Group's H1 2024 financial and operating performance, noting a 12% total revenue decrease due to lower hardware sales, but stable service revenue with a 2% decline, strong roaming growth offsetting local service revenue, stable EBITDA from cost control, and a 25% increase in total customers with 5G penetration rising to 51% Financial Performance Review The H1 2024 financial performance review shows a 12% total revenue decrease to HKD 2.058 billion, mainly due to a 44% drop in hardware revenue, yet service revenue only slightly declined by 2% with roaming revenue surging 31%, while gross profit and EBITDA remained stable, and loss attributable to shareholders narrowed by 37% to HKD 12 million Financial Indicators | Financial Indicator | H1 2024 (HKD million) | H1 2023 (HKD million) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 2,058 | 2,328 | -12% | | - Local Service Revenue | 1,452 | 1,558 | -7% | | - Roaming Service Revenue | 308 | 235 | +31% | | - Hardware and Other Product Revenue | 298 | 535 | -44% | | EBITDA | 728 | 727 | – | | LBIT | (30) | (35) | +14% | | Loss Attributable to Shareholders | (12) | (19) | +37% | - Strong roaming revenue growth of +31% was offset by a decrease in local service revenue and a significant -44% decline in hardware revenue, resulting in a 12% decrease in total revenue[12] - Loss attributable to shareholders narrowed by 37%, primarily due to reduced depreciation and amortization expenses, and increased bank interest income in a high-interest rate environment[12] Key Performance Indicators As of June 30, 2024, the Group's total customer base grew by 25% to 4.271 million, driven by a 46% surge in prepaid customers, while 5G penetration significantly increased by 13 percentage points to 51%, and postpaid total ARPU decreased by 7% to HKD 184 due to changes in customer mix and reduced hardware sales Performance Indicators | Performance Indicator | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Customers (thousand) | 4,271 | 3,407 | +25% | | - Postpaid Customers (thousand) | 1,444 | 1,467 | -2% | | - Prepaid Customers (thousand) | 2,827 | 1,940 | +46% | | Monthly Postpaid Customer Churn Rate (%) | 1.0% | 0.9% | -0.1 percentage point | | Postpaid Total ARPU (HKD) | 184 | 197 | -7% | - Total customer base significantly increased by 25%, primarily attributed to the growth in the prepaid customer segment, including SoSIM customers[14] - 5G penetration increased by 13 percentage points year-on-year to 51%, indicating continuous growth in 5G service adoption[14] Capital Expenditure and Spectrum Investment The Group maintained a prudent capital expenditure strategy in H1 2024, with capital expenditure at HKD 166 million, representing 9% of service revenue, while continuing to rigorously review projects for efficient resource utilization, and the report also discloses the Group's spectrum resources in Hong Kong and Macau, including their expiry dates - Capital expenditure for property, plant, and equipment amounted to HKD 166 million, representing 9% of service revenue, a 2% increase year-on-year[16] - The report details the Group's spectrum resources, bandwidth, and expiry years across multiple frequency bands from 700 MHz to 3500 MHz held in Hong Kong and Macau[17] Capital, Liquidity and Risk Management Group Capital and Liquidity This section outlines the Group's treasury management, cash management, risk control, and capital position, highlighting a robust financial status with HKD 3.63 billion net cash as of June 30, 2024, increased contingent liabilities due to new spectrum guarantees, and a commitment to human resources and sustainability Treasury and Risk Management The Group manages financial risks through its central treasury department, with policies aimed at mitigating interest rate and exchange rate fluctuations, explicitly prohibiting speculative derivative transactions, and controlling foreign exchange and counterparty credit risks through monitoring and limits - The Group's treasury policy aims to mitigate the impact of interest rate and exchange rate fluctuations, with a strict policy against engaging in speculative derivative financing transactions[18] - Operating primarily in Hong Kong with transactions denominated in HKD, the Group still faces foreign currency exchange rate risks from currencies like USD and MOP, and currently does not engage in foreign currency hedging[20] Capital and Cash Position As of June 30, 2024, the Group's total equity was HKD 9.595 billion, with net cash at HKD 3.63 billion, 88% of which was in HKD; the Group has no significant asset pledges or available borrowing facilities, demonstrating its financial independence Capital and Cash Position | Indicator | June 30, 2024 (HKD million) | December 31, 2023 (HKD million) | | :--- | :--- | :--- | | Total Equity | 9,595 | 9,858 | | Net Cash | 3,630 | 3,684 | - As of June 30, 2024, the Group had no available borrowing facilities[24] Liabilities and Commitments As of June 30, 2024, the Group's contingent liabilities increased from HKD 1.227 billion to HKD 1.761 billion, primarily due to a HKD 600 million standby letter of credit issued for the 26 GHz spectrum application, while capital commitments rose from HKD 121 million to HKD 197 million - Contingent liabilities increased from HKD 1.227 billion to HKD 1.761 billion, primarily due to new and renewed performance guarantees related to spectrum, including a HKD 600 million standby letter of credit for the 26 GHz spectrum band[25] - Total capital commitments for property, plant, and equipment amounted to HKD 197 million, an increase from HKD 121 million at the end of 2023[26] Human Resources and Sustainability As of June 30, 2024, the Group employed 1,229 staff with employee costs totaling HKD 195 million, focusing on staff development and welfare; in sustainability, the Group integrates it with business strategy, establishing eight goals under four pillars: governance, sustainable business, environment, and society, to create long-term value - As of June 30, 2024, the Group employed 1,229 staff, with total employee costs amounting to HKD 195 million for the first half of the year[28] - The Group has established eight sustainability goals, categorized under four pillars: governance, sustainable business models and innovation, environment, and society[29] Equity and Corporate Governance Disclosure of Interests This section discloses the share interests of directors, chief executives, and major shareholders in the Company and its associated corporations, as per the Securities and Futures Ordinance; the primary controlling shareholder is a subsidiary of CK Hutchison Holdings Limited (CKHH), holding approximately 66.09% of shares, with Mr. Li Ka-shing and Mr. Victor T.K. Li also holding significant interests through trusts and holding companies Directors' and Chief Executive's Interests This section discloses the shareholdings of directors and chief executives in the Company and its associated corporations, such as CKHH, noting that Fok Kin-ning, Lui Po-man, Woo Chiu-man, and Koo Sing-fai hold shares in the Company, while several directors also hold shares in CKHH and Hutchison Telecommunications (Australia) Limited Directors' and Chief Executive's Interests | Director | Capacity | Nature of Interest | Number of Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Fok Kin-ning | Interest in Controlled Corporation | Company Interest | 1,202,380 | 0.0249% | | Lui Po-man | Beneficial Owner | Personal Interest | 9,100,000 | 0.1888% | | Woo Chiu-man | Beneficial Owner | Personal Interest | 2,001,333 | 0.0415% | | Koo Sing-fai | Spouse's Interest | Family Interest | 20,000 | 0.0004% | Major Shareholders' Interests CK Hutchison Holdings Limited (CKHH), through its wholly-owned subsidiaries like Hutchison Telecommunications Investment Holdings Limited (HTIHL), collectively holds approximately 66.09% of the Company's shares, making it the primary controlling shareholder, while Mr. Li Ka-shing and Mr. Victor T.K. Li are deemed to hold approximately 8.38% and 8.44% share interests, respectively, through trusts, foundations, and controlled corporations - CK Hutchison Holdings Limited (CKHH), through a series of wholly-owned subsidiaries such as Hutchison Telecommunications Investment Holdings Limited, collectively holds 3,184,982,840 shares in the Company, representing approximately 66.09% of the total share capital[39][41] - Mr. Li Ka-shing and Mr. Victor T.K. Li are deemed to hold approximately 8.38% and 8.44% of the Company's share interests, respectively, through discretionary trusts, the Li Ka Shing Foundation, and controlled corporations[40][42][43] Corporate Governance The Company is committed to maintaining high standards of corporate governance to protect the interests of shareholders and stakeholders, having complied with all applicable code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules during the reporting period, with all directors confirming adherence to the Company's equally stringent internal securities dealing code - The Company complied with all applicable code provisions of the Corporate Governance Code throughout the six months ended June 30, 2024[48] - All directors confirmed compliance with the Hutchison Telecom Hong Kong Securities Code, which has terms no less exacting than the Model Code set out in the Listing Rules, during the reporting period[48] Changes in Directors' Information This section discloses changes in directors' information since the date of the 2023 Annual Report, as required by the Listing Rules, primarily concerning changes in committee appointments for directors such as Edith Shih, Dennis Chan, Jenny Chow, Frank John Sixt, and Alfred Yip, within the Company and other listed companies like CKHH and Hutchison China MediTech - Several directors experienced changes in their appointments to various Company committees (Audit, Nomination, Remuneration, Sustainability) following the Annual General Meeting on May 9, 2024[50] - Ms. Edith Shih was appointed as a member of the Remuneration Committee of Hutchison China MediTech Limited; Ms. Jenny Chow was appointed as a member of the Remuneration Committee of CK Hutchison Holdings Limited[50] Condensed Consolidated Interim Financial Statements Review Report PricewaterhouseCoopers, the Company's auditor, reviewed the Group's condensed consolidated interim financial statements for the six months ended June 30, 2024, in accordance with International Standard on Review Engagements 2410, concluding that nothing came to their attention causing them to believe the financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 'Interim Financial Reporting' - The auditor, PricewaterhouseCoopers, issued a review conclusion on the interim financial statements, finding no material issues[53] Condensed Consolidated Statement of Profit or Loss For the six months ended June 30, 2024, the Group recorded revenue of HKD 2.058 billion, a 12% year-on-year decrease; however, profit before tax was HKD 19 million, a 137.5% increase year-on-year, due to effective cost control and increased finance income, with the final loss for the period narrowing by 37% to HKD 12 million from HKD 19 million in the prior year Condensed Consolidated Statement of Profit or Loss | Item (HKD million) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Revenue | 2,058 | 2,328 | | Profit Before Tax | 19 | 8 | | Loss for the Period | (12) | (19) | | Basic and Diluted Loss Per Share (HK cents) | (0.25) | (0.39) | Condensed Consolidated Statement of Financial Position As of June 30, 2024, the Group's total assets were HKD 14.228 billion, total liabilities HKD 4.633 billion, and net assets HKD 9.595 billion; non-current assets primarily included telecommunications licenses, goodwill, and property, plant, and equipment, while current assets included HKD 3.63 billion in cash and bank balances, indicating a robust financial position Condensed Consolidated Statement of Financial Position | Item (HKD million) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Non-current Assets | 9,389 | 9,715 | | Total Current Assets | 4,839 | 4,845 | | Total Current Liabilities | 2,102 | 2,163 | | Total Non-current Liabilities | 2,531 | 2,539 | | Net Assets / Total Equity | 9,595 | 9,858 | Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2024, the Group generated HKD 529 million in net cash from operating activities, while net cash outflow from investing activities was HKD 1.146 billion, primarily for short-term bank deposits and property, plant, and equipment, and net cash outflow from financing activities was HKD 449 million, mainly for lease payments and dividends, resulting in cash and cash equivalents of HKD 844 million at period-end Condensed Consolidated Statement of Cash Flows | Item (HKD million) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 529 | 613 | | Net Cash Used in Investing Activities | (1,146) | (2,431) | | Net Cash Used in Financing Activities | (449) | (455) | | Decrease in Cash and Cash Equivalents | (1,066) | (2,273) | | Cash and Cash Equivalents at End of Period | 844 | 814 | Notes to the Condensed Consolidated Interim Financial Statements The notes to the financial statements provide detailed explanations of financial statement items, including that revenue primarily derives from mobile telecommunications services and is recognized over time, the Group has only one reportable segment, an interim dividend of 2.28 HK cents per share was declared with the 2023 final dividend already paid, and contingent liabilities increased to HKD 1.761 billion due to spectrum guarantees - Revenue primarily comprises mobile telecommunications and other related services (HKD 1.760 billion) and telecommunications hardware and other products (HKD 298 million); service revenue is recognized over time, while hardware sales are recognized at a point in time[66][67] - The Board declared an interim dividend of 2.28 HK cents per share, totaling HKD 110 million; the 2023 final dividend of 5.21 HK cents per share, totaling HKD 251 million, was paid during the reporting period[73] - The Group's total contingent liabilities amounted to HKD 1.761 billion, primarily comprising performance and financial guarantees provided to the Communications Authority, with new guarantees added due to the successful allocation of the 26 GHz spectrum band[86][87] Supplementary Financial Information This section provides a reconciliation of EBITDA and (LBIT)/EBIT data from the condensed consolidated statement of profit or loss and management discussion and analysis, with data disaggregated into 'Company and Subsidiaries' and 'Joint Ventures' to clearly show the composition of each indicator H1 2024 (HKD million) | H1 2024 (HKD million) | Company and Subsidiaries | Joint Ventures | Total | | :--- | :--- | :--- | :--- | | EBITDA | 700 | 28 | 728 | | Depreciation and Amortization | (737) | (21) | (758) | | (LBIT) / EBIT | (37) | 7 | (30) | Other Information Company Information This section lists the Company's Board of Directors, members of various committees (Audit, Nomination, Remuneration, Sustainability), along with basic company information such as the company secretary and auditor (PricewaterhouseCoopers) - The Company's Chairman and Non-executive Director is Fok Kin-ning, and the Chief Executive Officer is Koo Sing-fai[3] - The Company's auditor is PricewaterhouseCoopers[3] Glossary This section provides clear definitions for specific financial and business terms used in the report, such as EBITDA, LBIT, ARPU (Average Revenue Per User), and AMPU (Average Monthly Profit Per User), to help readers accurately understand the report content - Detailed definitions are provided for key terms used in the report, including EBITDA, (LBIT)/EBIT, Postpaid Total ARPU, and Postpaid Net ARPU[93][94] Shareholder Information This section provides practical shareholder-related information, including the Company's listing venue (Hong Kong Stock Exchange), stock code (215), important financial dates such as the interim dividend record and payment dates, registered office, head office address, share registrar contact details, investor relations contact information, and the Company's website - The Company's stock code is 215, and it is listed on the Main Board of The Stock Exchange of Hong Kong Limited[95] - The 2024 interim dividend will be paid on September 6, 2024, with the record date set for August 28, 2024[95]