(Stock Code: 0762)
the Independent Shareholders of China Unicom (Hong Kong) Limited
Page | ||||
Forward-Looking Statements | ii | |||
Definitions | 1 | |||
Letter from the Board | 5 | |||
1. Introduction | 5 | |||
2. The Share Repurchase | 6 | |||
3. Effects of the Share Repurchase on the Shareholding Structure of the Company | 10 | |||
4. Financial Effects of the Share Repurchase | 12 | |||
5. Reasons for and Benefits of the Share Repurchase | 13 | |||
6. Information on the Company | 13 | |||
7. Information on SKT | 14 | |||
8. Implications of the Share Repurchase under the Takeovers Code | 14 | |||
9. Implications of the Share Repurchase under the Repurchase Code | 15 | |||
10. EGM | 15 | |||
11. Recommendation | 15 | |||
12. Additional Information | 16 | |||
Letter from the Independent Board Committee | 17 | |||
Letter from Rothschild | 18 | |||
Appendix I — Financial Information on the Group | I-1 | |||
Appendix II — General Information | II-1 | |||
Appendix III — Form of the Share Repurchase Agreement | III-1 | |||
Notice of EGM | N-1 |
— i —
• | changes in the regulatory regime and policies for the PRC telecommunications industry, including changes in the structure or functions of the primary industry regulator, MIIT (which has assumed the regulatory functions of the former Ministry of Information Industry), or changes in the regulatory policies of MIIT, the State-owned Assets Supervision and Administration Commission, and other relevant government authorities of the PRC; | ||
• | results of the ongoing restructuring of the PRC telecommunications industry; | ||
• | changes in the PRC telecommunications industry resulting from the issuance of 3G licenses by the central government of the PRC; | ||
• | effects of tariff reduction and other policy initiatives from the relevant PRC government authorities; | ||
• | changes in telecommunications and related technologies and applications based on such technologies; | ||
• | the level of demand for telecommunications services; | ||
• | competitive forces from more liberalised markets and the Company’s ability to retain market share in the face of competition from existing telecommunications companies and potential new market entrants; | ||
• | effects of competition on the demand and price of the Company’s telecommunications services; | ||
• | the availability, terms and deployment of capital and the impact of regulatory and competitive developments on capital outlays; |
— ii —
• | effects of the Company’s restructuring and integration following the completion of the Company’s merger with China Netcom; | ||
• | effects of the Company’s proposed adjustments in the Company’s business strategies relating to the personal handyphone system, or PHS, business; | ||
• | effects of the Company’s acquisition from the Company’s parent companies of certain telecommunications business and assets, including the fixed-line business in 21 provinces in southern China, in January 2009; | ||
• | changes in the assumptions upon which the Company has prepared its projected financial information and capital expenditure plans; | ||
• | changes in the political, economic, legal and social conditions in the PRC, including the PRC Government’s policies and initiatives with respect to economic development in light of the current global economic downturn, foreign exchange policies, foreign investment activities and policies, entry by foreign companies into the PRC telecommunications market and structural changes in the PRC telecommunications industry; and | ||
• | the potential continued slowdown of economic activities inside and outside the PRC. |
— iii —
“acting in concert” | has the meaning given to it in the Takeovers Code | |
“ADSs” | American Depositary Shares which are issued by The Bank of New York Mellon and traded on the New York Stock Exchange, each representing ownership of 10 Shares | |
“Announcement” | the announcement made by the Company on 28 September 2009 in relation to the Share Repurchase | |
“Board” | the board of Directors | |
“China Netcom” | China Netcom Group Corporation (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability and which became a wholly-owned subsidiary of the Company on 15 October 2008 pursuant to the merger of the Company and China Netcom | |
“CICC” | China International Capital Corporation Hong Kong Securities Limited, the financial adviser to the Company in relation to the Share Repurchase | |
“Circular” | this circular dated 9 October 2009 | |
“Companies Ordinance” | the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) | |
“Company” | China Unicom (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability and whose Shares and ADSs are listed on the Hong Kong Stock Exchange and the New York Stock Exchange, respectively | |
“Company Securities” | Shares, ADSs, Options and any other options, derivatives, warrants or other securities convertible or exchangeable into Shares which are issued by the Company | |
“Completion” | completion of the Share Repurchase in accordance with the terms and conditions of the Share Repurchase Agreement | |
“Directors” | directors of the Company | |
“EGM” | the extraordinary general meeting of the Company, the notice of which is set out on pages N-1 and N-2 of this Circular, and any adjournment thereof |
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“Executive” | the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director | |
“Group” | the Company and its subsidiaries | |
“HIBOR” | Hong Kong Inter-bank Offered Rate | |
“HKFRS” | Hong Kong Financial Reporting Standards | |
“HK$” | Hong Kong dollars, the lawful currency of Hong Kong | |
“Hong Kong” | the Hong Kong Special Administrative Region of the PRC | |
“Hong Kong Stock Exchange” | The Stock Exchange of Hong Kong Limited | |
“IFRS” | International Financial Reporting Standards | |
“Independent Board Committee” | the independent committee of the Board, comprising Mr. Wu Jinglian, Mr. Cheung Wing Lam Linus, Mr. Wong Wai Ming, Mr. John Lawson Thornton and Mr. Timpson Chung Shui Ming, being all of the independent non-executive Directors, and Mr. Cesareo Alierta Izuel, a non-executive Director, which has been established to advise the Independent Shareholders on the Share Repurchase and the Share Repurchase Agreement | |
“Independent Shareholders” | Shareholders other than SKT, persons acting in concert with SKT and persons who are not entitled to vote at the EGM under the Repurchase Code, the Listing Rules and/or applicable laws | |
“Last Trading Day” | 25 September 2009, being the last trading day immediately before the date of the Announcement | |
“Latest Practicable Date” | 6 October 2009, being the latest practicable date prior to the printing of this Circular for the purpose of ascertaining certain information contained in this Circular | |
“Listing Rules” | the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange | |
“MIIT” | the Ministry of Industry and Information Technology of the PRC | |
“Netcom BVI” | China Netcom Group Corporation (BVI) Limited, a company incorporated in the British Virgin Islands in which Unicom Parent holds a 100% equity interest |
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“Netcom Voting Undertaking” | the irrevocable voting undertaking dated 25 September 2009 from Netcom BVI in favour of SKT pursuant to which Netcom BVI has undertaken to SKT to vote in favour of all resolutions to approve the Share Repurchase and the Share Repurchase Agreement and any related matters necessary for the Company to execute, deliver and perform its obligations under the Share Repurchase Agreement to be proposed at the EGM | |
“Options” | outstanding options to subscribe for Shares granted by the Company pursuant to the Share Option Schemes | |
“PRC” or “China” | the People’s Republic of China | |
“Repurchase Code” | the Hong Kong Code on Share Repurchases | |
“Repurchase Shares” | the 899,745,075 Shares legally and beneficially owned by SKT, representing approximately 3.79% of the issued share capital of the Company as at the Latest Practicable Date | |
“RMB” | Renminbi, the lawful currency of the PRC | |
“Rothschild” | N M Rothschild & Sons (Hong Kong) Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Share Repurchase and the Share Repurchase Agreement | |
“SFC” | the Securities and Futures Commission in Hong Kong | |
“SFO” | the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) | |
“Share Option Schemes” | (1) the Pre-Global Offering Share Option Scheme which was adopted by the Company on 1 June 2000, (2) the Share Option Scheme which was adopted by the Company on 1 June 2000 and (3) the Special Purpose Unicom Share Option Scheme which was adopted by the Company on 16 September 2008 and which became effective on 15 October 2008, in each case as amended from time to time | |
“Share Repurchase” | the purchase by the Company of the Repurchase Shares from SKT by means of an off-market share repurchase on the terms and conditions of the Share Repurchase Agreement | |
“Share Repurchase Agreement” | the agreement to be entered into between the Company and SKT in relation to the sale and purchase of the Repurchase Shares, the form of which is set out in Appendix III to this Circular |
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“Shareholders” | the shareholders of the Company | |
“Shares” | ordinary shares of HK$0.10 each in the capital of the Company | |
“SKT” | SK Telecom Co., Ltd., a company incorporated in the Republic of Korea with limited liability, whose shares are listed on the Stock Market Division of the Korea Exchange and whose American depositary shares are listed on the New York Stock Exchange | |
“SKT Offer” | the conditional irrevocable offer made by SKT to the Company dated 25 September 2009 in relation to the sale by SKT to the Company of the Repurchase Shares on the terms and conditions of the Share Repurchase Agreement | |
“Takeovers Code” | the Hong Kong Code on Takeovers and Mergers | |
“Telefónica” | Telefónica, S.A., a company incorporated in Spain | |
“Telefónica Subscription” | the proposed subscription by Telefónica of 693,912,264 new Shares at a price of HK$11.17 each (subject to adjustment) pursuant to the subscription agreement dated 6 September 2009 entered into between the Company and Telefónica, details of which are set out in the announcement made by the Company on 6 September 2009 | |
“Unicom A Share Company” | (China United Network Communications Limited), a company incorporated in the PRC with limited liability in which Unicom Parent holds a 61.05% equity interest, whose shares are listed on the Shanghai Stock Exchange | |
“Unicom BVI” | China Unicom (BVI) Limited, a company incorporated in the British Virgin Islands in which Unicom Parent holds a 17.9% equity interest and Unicom A Share Company holds a 82.1% equity interest, and the immediate controlling shareholder of the Company | |
“Unicom Concert Party Group” | Unicom BVI, Netcom BVI and the persons acting in concert with them | |
“Unicom Parent” | (China United Network Communications Group Company Limited), a state-owned enterprise established under the laws of the PRC and the ultimate parent company of the Company |
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(Stock Code: 0762)
Executive Directors: | Registered Office: | |
Chang Xiaobing(Chairman) | 75th Floor, The Center | |
Lu Yimin | 99 Queen’s Road Central | |
Zuo Xunsheng | Hong Kong | |
Tong Jilu | ||
Non-executive Directors: | ||
Cesareo Alierta Izuel | ||
Jung Man Won | ||
Independent Non-executive Directors: | ||
Wu Jinglian | ||
Cheung Wing Lam Linus | ||
Wong Wai Ming | ||
John Lawson Thornton | ||
Timpson Chung Shui Ming | ||
9 October 2009 |
1. | INTRODUCTION |
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2. | THE SHARE REPURCHASE | |
(A) | The SKT Offer |
(a) | the Executive having granted, and not having withdrawn, its approval of the Share Repurchase under Rule 2 of the Repurchase Code and all the conditions (if any) of such approval having been satisfied; |
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(b) | the approval of the Share Repurchase and the Share Repurchase Agreement by at least three-fourths of the votes cast on a poll by the Independent Shareholders in attendance in person or by proxy at the EGM in accordance with the requirements of the Repurchase Code, the Listing Rules and the Companies Ordinance; | ||
(c) | the approval of the Share Repurchase by the shareholders of Unicom A Share Company in accordance with applicable laws, regulations and listing rules; | ||
(d) | the execution of the Share Repurchase Agreement by the Company and SKT on the date of the EGM as soon as practicable following the approval of the Share Repurchase and the Share Repurchase Agreement by the Independent Shareholders at the EGM; and | ||
(e) | the delivery by Netcom BVI to SKT of the Netcom Voting Undertaking by no later than one day following the date of the SKT Offer and such voting undertaking remaining valid and enforceable and not lapse otherwise than in accordance with its terms. |
(a) | the non-satisfaction of the SKT Offer Conditions; | ||
(b) | the delivery of a written confirmation by the Company to SKT that the SKT Offer Conditions have been satisfied and the execution of the Share Repurchase Agreement by the Company and SKT; and | ||
(c) | 5:00 p.m. (Hong Kong time) on 6 November 2009. |
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(B) | The Share Repurchase Agreement |
(a) | a premium of approximately 1.1% over the closing price of HK$10.98 per Share as quoted on the Hong Kong Stock Exchange on the Latest Practicable Date; | ||
(b) | a discount of approximately 1.4% to the closing price of HK$11.26 per Share as quoted on the Hong Kong Stock Exchange on the Last Trading Day; |
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(c) | a discount of approximately 0.2% to the average closing price of HK$11.13 per Share based on the daily closing prices of the Shares as quoted on the Hong Kong Stock Exchange for the five consecutive trading days immediately prior to and including the Last Trading Day; | ||
(d) | a discount of approximately 2.1% to the average closing price of HK$11.34 per Share based on the daily closing prices of the Shares as quoted on the Hong Kong Stock Exchange for the ten consecutive trading days immediately prior to and including the Last Trading Day; | ||
(e) | a discount of approximately 0.04% to the average closing price of HK$11.11 per Share based on the daily closing prices of the Shares as quoted on the Hong Kong Stock Exchange for the 20 consecutive trading days immediately prior to and including the Last Trading Day; and | ||
(f) | a premium of approximately 1.0% over the average closing price of HK$10.99 per Share based on the daily closing prices of the Shares as quoted on the Hong Kong Stock Exchange for the 30 consecutive trading days immediately prior to and including the Last Trading Day. |
(C) | Financing the Share Repurchase | |
The Company has not made a final decision on the method of financing the consideration for the Share Repurchase but expects that such financing will be from the Company’s available cash flow, working capital facilities, short-term bank borrowings and/or other external debt financing. |
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3. | EFFECTS OF THE SHARE REPURCHASE ON THE SHAREHOLDING STRUCTURE OF THE COMPANY |
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Following Completion and | ||||||||||||||||||||||||
Following Completion and | assuming completion of the | |||||||||||||||||||||||
As at the Latest | assuming completion of the | Telefónica Subscription does | ||||||||||||||||||||||
Practicable Date | Telefónica Subscription(4) | not take place(4) | ||||||||||||||||||||||
Number | Approximate | Number | Approximate | Number | Approximate | |||||||||||||||||||
Shareholder | of Shares | % | of Shares | % | of Shares | % | ||||||||||||||||||
Unicom Concert Party Group(1) | ||||||||||||||||||||||||
Unicom BVI | 9,725,000,020 | 40.92 | 9,725,000,020 | 41.27 | 9,725,000,020 | 42.53 | ||||||||||||||||||
Netcom BVI(2) | 7,008,353,115 | 29.49 | 7,008,353,115 | 29.74 | 7,008,353,115 | 30.65 | ||||||||||||||||||
Sub-total | 16,733,353,135 | 70.41 | 16,733,353,135 | 71.01 | 16,733,353,135 | 73.18 | ||||||||||||||||||
Public Shareholders | ||||||||||||||||||||||||
Telefónica | 1,278,403,444 | 5.38 | 1,972,315,708 | 8.37 | 1,278,403,444 | 5.59 | ||||||||||||||||||
SKT | 899,745,075 | 3.79 | — | — | — | — | ||||||||||||||||||
Other public Shareholders(3) | 4,856,423,668 | 20.42 | 4,856,423,668 | 20.62 | 4,856,423,668 | 21.23 | ||||||||||||||||||
Sub-total | 7,034,572,187 | 29.59 | 6,828,739,376 | 28.99 | 6,134,827,112 | 26.82 | ||||||||||||||||||
Total | 23,767,925,322 | 100.00 | 23,562,092,511 | 100.00 | 22,868,180,247 | 100.00 | ||||||||||||||||||
Notes: | ||
(1) | Unicom BVI and Netcom BVI are persons acting in concert under the Takeovers Code in respect of their aggregate approximately 70.41% shareholding interest in the Company by virtue of a concert party agreement entered into by them on 22 September 2008 pursuant to which they have agreed to cooperate actively to obtain or consolidate control of the Company and are also presumed to be acting in concert with each other in respect of the Company pursuant to class (1) of the definition of “acting in concert” in the Takeovers Code as they are both ultimately controlled by Unicom Parent. | |
(2) | The number of Shares shown in the table (a) excludes the 225,722,791 Shares held by Netcom BVI as trustee on behalf of a PRC state-owned entity and in respect of which Netcom BVI does not control any of the voting rights relating to such Shares and (b) includes the one Share held by CNC Cayman, Limited, a wholly-owned subsidiary of Netcom BVI. | |
(3) | The number of Shares shown in the table includes the 225,722,791 Shares held by Netcom BVI as trustee referred to in footnote (2) above. | |
(4) | Completion of the Telefónica Subscription is subject to the satisfaction (or, if applicable, waiver) of certain conditions on or before 7 November 2009 (or such other date as the Company and Telefónica may agree in writing). Details of the Telefónica Subscription are set out in the announcement made by the Company on 6 September 2009. |
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4. | FINANCIAL EFFECTS OF THE SHARE REPURCHASE |
A. | Earnings per Share |
B. | Net Asset Value per Share |
C. | Gearing |
D. | Net Current Liabilities |
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5. | REASONS FOR AND BENEFITS OF THE SHARE REPURCHASE |
6. | INFORMATION ON THE COMPANY | |
A. | General Information |
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B. | Financial and Trading Prospects of the Company |
7. | INFORMATION ON SKT |
8. | IMPLICATIONS OF THE SHARE REPURCHASE UNDER THE TAKEOVERS CODE |
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9. | IMPLICATIONS OF THE SHARE REPURCHASE UNDER THE REPURCHASE CODE |
10. | EGM |
11. | RECOMMENDATION |
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12. | ADDITIONAL INFORMATION |
Yours faithfully By Order of the Board China Unicom (Hong Kong) Limited | ||
Chang Xiaobing Chairman |
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(Stock Code: 0762)
Yours faithfully Wong Wai Ming (Chairman) Wu Jinglian Cheung Wing Lam Linus John Lawson Thornton Timpson Chung Shui Ming Cesareo Alierta Izuel Independent Board Committee |
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the Independent Shareholders of
China Unicom (Hong Kong) Limited
N M Rothschild & Sons (Hong Kong) Limited | Tel: | +852 2525 5333 | ||
16th Floor, Alexandra House, 18 Chater Road, Central | Fax: | +852 2868 1728 | ||
Hong Kong SAR |
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1. | Background and rationale |
(a) | Background to the relationship between the Company and SKT |
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(b) | Reasons for and benefits of the Share Repurchase |
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(i) | Public market share trading analysis | |
The Repurchase Price of HK$11.105 per Share represents: |
(1) | a premium of approximately 1.1% over the closing price of the Shares of HK$10.98 as quoted on the Hong Kong Stock Exchange on the Latest Practicable Date; | ||
(2) | a discount of approximately 1.4% to the closing price of the Shares of HK$11.26 as quoted on the Hong Kong Stock Exchange on the Last Trading Day; | ||
(3) | a discount of approximately 0.2% to the average closing price of the Shares of HK$11.13 based on the daily closing prices of the Shares as quoted on the Hong Kong Stock Exchange for the five consecutive trading days immediately prior to and including the Last Trading Day; | ||
(4) | a discount of approximately 2.1% to the average closing price of the Shares of HK$11.34 based on the daily closing prices of the Shares as quoted on the Hong Kong Stock Exchange for the 10 consecutive trading days immediately prior to and including the Last Trading Day; and | ||
(5) | a discount of approximately 0.04% to the average closing price of the Shares of HK$11.11 based on the daily closing prices of the Shares as quoted on the Hong Kong Stock Exchange for the 20 consecutive trading days immediately prior to and including the Last Trading Day; and | ||
(6) | a premium of approximately 1.0% over the average closing price of the Shares of approximately HK$10.99 based on the daily closing prices of the Shares as quoted on the Hong Kong Stock Exchange for the 30 consecutive trading days immediately prior to and including the Last Trading Day. |
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Chart 1 | Daily closing price of the Shares on the Hong Kong Stock Exchange during the period from 26 September 2008 up to the Latest Practicable Date |
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P/B | ||||||||||||||||||||||||||||||||
FY2008 | (as at | Gross | ||||||||||||||||||||||||||||||
Exchange | Share | Market | EV/ | 30 June | FY2008 | gearing | ||||||||||||||||||||||||||
where listed | price | capitalisation | EV | EBITDA | 2009) | PER | ratio2 | |||||||||||||||||||||||||
(HK$) | (HK$m) | (HK$m) | ||||||||||||||||||||||||||||||
China Telecom | Hong Kong | 3.62 | 292,975 | 391,548 | 4.1x | 1.2x | 13.6x | 94.1 | % | |||||||||||||||||||||||
China Mobile | Hong Kong | 76.70 | 1,536,447 | 1,472,496 | 6.0x | 2.9x | 12.0x | 53.6 | % | |||||||||||||||||||||||
The Company’s Share Repurchase | 11.105 | 263,944 | 289,580 | 3.7x | 1.1x | 15.3x | 72.5 | % |
Sources: | Bloomberg and the latest published financial statements of the respective companies |
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1. | Converted from RMB into HK$ by using the exchange rate of RMB0.8815 for every HK$1. | ||
2. | Gross gearing ratio are defined as total liabilities over net asset value and are based on unaudited condensed consolidated interim report and before any effects of the repurchase. | ||
3. | Based on the closing price of the respective shares in the Comparables as at the Latest Practicable Date and earnings and book value from the latest published audited accounts of the respective companies. | ||
4. | The Company completed the acquisition of (1) the telecommunications business across the 21 provinces in Southern China and the local access telephone business and related assets in Tianjin Municipality operated by Unicom Parent and Netcom Parent and/or their respective subsidiaries and branches, (2) the backbone transmission assets in Northern China owned by Netcom Parent and/or its subsidiaries, (3) a 100% equity interest in Unicom Xingye owned by Unicom Parent, (4) a 100% equity interest in CITC owned by Unicom Parent and (5) a 100% equity interest in New Guoxin owned by Unicom Parent on 31 January 2009. The profits and losses generated from the operation of the target assets and business were assumed by the Group with effect from 1 January 2009. As such, the financials extracted from the annual report of the Company dated 31 December 2008 above may not fully reflect the Company’s current operations and structure. |
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Market | ||||||||||||||||||||||||||||||||
capitalisation1 | ||||||||||||||||||||||||||||||||
based on | ||||||||||||||||||||||||||||||||
Date | repurchase | Repurchase | Premium/discount to average share price | |||||||||||||||||||||||||||||
Company | announced | price | price | 1-day | 5-day | 10-day | 20-day | 30-day | ||||||||||||||||||||||||
(HK$ million) | (HK$) | (%) | (%) | (%) | (%) | (%) | ||||||||||||||||||||||||||
Lenovo Group Limited | 4 May 2005 | 25,132 | 2.73 | 12.4 | % | 12.1 | % | 13.0 | % | 9.3 | % | 9.0 | % | |||||||||||||||||||
Orient Overseas (International) Limited | 7 August 2003 | 5,068 | 9.80 | (4.4 | %) | (7.5 | %) | (6.8 | %) | (5.4 | %) | (6.1 | %) | |||||||||||||||||||
Simple average (Mean) | 4.0 | % | 2.3 | % | 3.1 | % | 2.0 | % | 1.5 | % | ||||||||||||||||||||||
The Company | 28 September 2009 | 263,943 | 11.105 | (1.4 | %) | (0.2 | %) | (2.1 | %) | (0.0 | %) | 1.0 | % |
1. | Market capitalisation based on repurchase price is the product of number of shares in issue before the completion of the relevant share repurchase and the repurchase price. | |
2. | Day refers to trading day. The repurchase price is compared with average closing prices over the 10, 30 and 90 days up do and including the last trading day (as disclosed in the circulars of respective companies). Year refers to calendar year. |
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3. | Unadjusted share prices sourced from Bloomberg are used in the above analysis. | |
4. | The Share Repurchase by Shun Tak Holdings Limited announced on 21 January 2009 was not included as the completion of the share repurchase contract was subject inter alia to the completion of the conditional sale and purchase agreement concerning a disposal taking place simultaneously, which set the transaction in a different context from the Share Repurchase of the Company. |
(a) | the Repurchase Price being at a discount of approximately 1.4% to the closing price of the Shares on the Last Trading Day; | ||
(b) | the Repurchase Price being within the range of the Company’s 30 day trading prices; | ||
(c) | the multiples implied by the Repurchase Price being at a discount to the EV/EBITDA multiple and P/B multiple of Comparable Companies; | ||
(d) | The Repurchase Price is at a discount to 1, 5, 10 and 20 day trading prices compared to the average premium over the respective trading prices of selected comparable off-market share repurchase transactions of companies in Hong Kong. |
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For the six months ended 30 June 2009 | ||||||||||||
Before | ||||||||||||
the Share | Upon | Increase/ | ||||||||||
Repurchase | Completion | (decrease) | ||||||||||
(a) Earnings per Share | ||||||||||||
Basic earnings per Share | RMB0.28 | RMB0.29 | 3.6 | % |
Sources: | Interim report of the Company for the six months ended 30 June 2009, the section headed “4. Financial effects of the Share Repurchase” in the “Letter from the Board” and the section headed “6. Unaudited pro forma financial information on the Group” in Appendix I to the Circular |
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As at 30 June 2009 | ||||||||||||
Before | ||||||||||||
the Share | Upon | Increase/ | ||||||||||
Repurchase | Completion | (decrease) | ||||||||||
(b) NAV per Share | ||||||||||||
NAV per Share | RMB8.66 | RMB8.61 | (0.6 | %) |
Sources: | Interim report of the Company for the six months ended 30 June 2009, the section headed “4. Financial effects of the Share Repurchase” in the “Letter from the Board” and the section headed “6. Unaudited pro forma financial information on the Group” in Appendix I to the Circular |
As at 30 June 2009 | ||||||||||||
Before | ||||||||||||
the Share | Upon | Increase/ | ||||||||||
Repurchase | Completion | (decrease) | ||||||||||
(c) Gearing | ||||||||||||
Total liability / total net asset value | 72.5 | % | 80.2 | % | 10.6 | % |
Sources: | Interim report of the Company for the six months ended 30 June 2009, the section headed “4. Financial effects of the Share Repurchase” in the “Letter from the Board” and the section headed “6. Unaudited pro forma financial information on the Group” in Appendix I to the Circular |
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As at 30 June 2009 | ||||||||||||
Before | ||||||||||||
the Share | Upon | Increase/ | ||||||||||
Repurchase | Completion | (decrease) | ||||||||||
(d) Net current liabilities | ||||||||||||
Current liabilities less current assets | RMB108,424m | RMB117,232m | 8.1 | % |
Sources: | Interim report of the Company for the six months ended 30 June 2009, the section headed “4. Financial effects of the Share Repurchase” in the “Letter from the Board” and the section headed “6. Unaudited pro forma financial information on the Group” in Appendix I to the Circular |
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25 September 2009, the SKT Offer Conditions have not been satisfied. Please refer to the paragraph headed “2. The Share Repurchase — (B) The Share Repurchase Agreement — Conditions to Completion” in the “Letter from the Board” in the Circular for details.
(a) | the Repurchase Shares were issued to SKT upon its conversion in full of the US$1 billion zero-coupon convertible bonds due 2009 subscribed by SKT at the time when it entered into a strategic alliance framework agreement with China Unicom Limited on 20 June 2006 which was mainly in relation to the CDMA technology. Following the completion of the significant strategic reorganisation in 2008, the Company has been devoted to clarifying its strategic position and facilitating the development of its WCDMA business; | ||
(b) | the Share Repurchase may potentially enhance the Company’s strategic cooperation with Telefónica, as Telefónica will become the only strategic partner/investor of the Company, creating a clearer framework for a global strategic partnership and improving the quality of partnership with Telefónica. The Company believes that this is conducive to the Company’s WCDMA business development, the convergence of fixed and mobile as well as the Company’s global development; |
— 34 —
(c) | the Repurchase Shares will be cancelled. Following Completion, the interest of the other public Shareholders in the Company’s total issued ordinary share capital will increase from approximately 20.42% to approximately 21.23% (assuming completion of the Telefónica Subscription does not take place). As such, the Independent Shareholders who wish to retain their shareholdings in the Company will benefit from the increase in their proportionate shareholding in the Company after Completion; | ||
(d) | the Share Repurchase Price of HK$11.105 per Share was determined following arm’s length commercial negotiations between the Company and SKT and represents a slight 1.4% discount to the closing price of the Shares on the Last Trading Day; | ||
(e) | the total cash consideration for the Share Repurchase amounts to HK$9,991,669,057.87 and will be satisfied from the Company’s available cash flow, working capital facilities and/or external financing.; | ||
(f) | The pro forma financial effects of the Share Repurchase on the Group for the six months ended 30 June 2009, prepared on the assumption that the Company will finance the payment of the consideration for the Share Repurchase entirely with short-term bank borrowings at an appropriate interest rate, implies: |
(a) | an enhancement in consolidated basic earnings per Share from continuing operations of approximately RMB0.01 or approximately 3.6%; | ||
(b) | a decrease in the NAV per Share of the Company by approximately 0.6%; and | ||
(c) | Whilst the Share Repurchase may lead to an increase in the Company’s gearing and net current liabilities as well as a change in the Company’s shareholding structure, these are unlikely to have materially negative implications for Independent Shareholders. The change in shareholding structure should be viewed as marginally positive to the Independent Shareholders, particularly to the “other public Shareholders”, given the cancellation of the Repurchase Shares would lead to an enhancement in the shareholding of the other public Shareholders from 20.42% to 21.23%, assuming completion of the Telefónica Subscription does not take place. Further, the Company notes that it has no plan or intention to alter its present dividend policy, |
we are of the view that the pro forma financial effects of the Share Repurchase are broadly neutral and acceptable for the Independent Shareholders. |
— 35 —
For and on behalf of
N M Rothschild & Sons (Hong Kong) Limited
Kelvin Chau | Catherine Yien | |||||
Managing Director | Director |
— 36 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-1 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(All amounts in RMB millions, except per Share data)
For the year ended | ||||
31 December 2008 | ||||
Revenue from continuing operations | 148,906 | |||
Revenue from discontinued operations | 22,330 | |||
Total revenue | 171,236 | |||
Profit from continuing operations before income tax | 8,141 | |||
Income tax expenses | (1,801 | ) | ||
Profit from continuing operations | 6,340 | |||
Profit from discontinued operations | 27,573 | |||
Profit for the year | 33,913 | |||
Attributable to: | ||||
Equity holders of the Company | 33,912 | |||
Minority interest | 1 | |||
33,913 | ||||
Proposed final dividend | 4,754 | |||
Dividend paid during the year | 6,231 | |||
Dividend per Share (RMB) | 0.20 | |||
Earnings per Share attributable to the equity holders of the Company during the year | ||||
Basic earnings per Share (RMB) | 1.43 | |||
Diluted earnings per Share (RMB) | 1.42 |
— I-2 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(All amounts in RMB millions, except per Share data)
For the year ended | ||||||||
31 December | ||||||||
2007 | 2006 | |||||||
Total revenue | 99,539 | 94,294 | ||||||
Profit before income tax | 12,955 | 6,496 | ||||||
Income tax expenses | (3,654 | ) | (2,764 | ) | ||||
Profit for the year | 9,301 | 3,732 | ||||||
Attributable to: | ||||||||
Equity holders of the Company | 9,300 | 3,732 | ||||||
Minority interest | 1 | — | ||||||
9,301 | 3,732 | |||||||
Proposed final dividend | 2,727 | 2,283 | ||||||
Dividend paid during the year | 2,285 | 1,384 | ||||||
Dividend per Share (RMB) | 0.18 | 0.11 | ||||||
Earnings per Share attributable to the equity holders of the Company during the year | ||||||||
Basic earnings per Share (RMB) | 0.71 | 0.30 | ||||||
Diluted earnings per Share (RMB) | 0.71 | 0.30 |
31 December 2006, 2007 and 2008 did not contain any qualifications.
— I-3 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
As at 31 December 2008
(All amounts in RMB millions)
As at 31 December | ||||||||||||
Note | 2008 | 2007 | ||||||||||
As restated | ||||||||||||
(Note 2.2) | ||||||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | 6 | 283,912 | 276,110 | |||||||||
Lease prepayments | 7 | 7,799 | 8,063 | |||||||||
Goodwill | 8 | 2,771 | 3,144 | |||||||||
Deferred income tax assets | 9 | 5,326 | 2,514 | |||||||||
Other assets | 10 | 8,996 | 12,081 | |||||||||
308,804 | 301,912 | |||||||||||
Current assets | ||||||||||||
Inventories and consumables | 12 | 1,171 | 2,815 | |||||||||
Accounts receivable, net | 13 | 8,587 | 11,014 | |||||||||
Prepayments and other current assets | 14 | 2,427 | 4,314 | |||||||||
Amounts due from ultimate holding company | 37.1 | 15 | — | |||||||||
Amounts due from related parties | 37.1 | 439 | 502 | |||||||||
Amounts due from domestic carriers | 37.2 | 865 | 816 | |||||||||
Proceeds receivable for the disposal of the CDMA Business | 33 | 13,140 | — | |||||||||
Short-term bank deposits | 15 | 238 | 735 | |||||||||
Cash and cash equivalents | 16 | 9,238 | 11,979 | |||||||||
36,120 | 32,175 | |||||||||||
Total assets | 344,924 | 334,087 | ||||||||||
— I-4 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
�� | ||||||||||||
As at 31 December | ||||||||||||
Note | 2008 | 2007 | ||||||||||
As restated | ||||||||||||
(Note 2.2) | ||||||||||||
EQUITY | ||||||||||||
Capital and reserves attributable to equity holders of the Company | ||||||||||||
Share capital | 17 | 2,329 | 1,437 | |||||||||
Share premium | 17 | 166,784 | 64,320 | |||||||||
Reserves | 18 | (23,183 | ) | 76,275 | ||||||||
Retained profits | ||||||||||||
— Proposed final dividend | 34 | 4,754 | 6,427 | |||||||||
— Others | 56,026 | 30,053 | ||||||||||
206,710 | 178,512 | |||||||||||
Minority interest in equity | — | 4 | ||||||||||
Total equity | 206,710 | 178,516 | ||||||||||
LIABILITIES | ||||||||||||
Non-current liabilities | ||||||||||||
Long-term bank loans | 19 | 997 | 16,086 | |||||||||
Corporate bonds | 20 | 7,000 | 2,000 | |||||||||
Deferred income tax liabilities | 9 | 16 | 17 | |||||||||
Deferred revenue | 3,383 | 5,246 | ||||||||||
Amounts due to related parties | 37.1 | — | 6,169 | |||||||||
Other obligations | 22 | 1,599 | 2,007 | |||||||||
12,995 | 31,525 | |||||||||||
Current liabilities | ||||||||||||
Payables and accrued liabilities | 23 | 65,687 | 49,312 | |||||||||
Taxes payable | 11,304 | 4,990 | ||||||||||
Amounts due to ultimate holding company | 37.1 | — | 821 | |||||||||
Amounts due to related parties | 37.1 | 2,727 | 5,656 | |||||||||
Amounts due to domestic carriers | 37.2 | 538 | 510 | |||||||||
Payables in relation to the disposal of the CDMA Business | 37.2 | 4,232 | — | |||||||||
Dividend payable | 149 | — | ||||||||||
Short-term commercial paper | 24 | 10,000 | 20,000 |
— I-5 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
As at 31 December | ||||||||||||
Note | 2008 | 2007 | ||||||||||
As restated | ||||||||||||
(Note 2.2) | ||||||||||||
Short-term bank loans | 25 | 10,780 | 11,850 | |||||||||
Current portion of long-term bank loans | 19 | 1,216 | 7,411 | |||||||||
Current portion of obligations under finance leases | — | 103 | ||||||||||
Current portion of deferred revenue | 2,200 | 3,103 | ||||||||||
Current portion of other obligations | 22 | 3,012 | 3,381 | |||||||||
Advances from customers | 13,374 | 16,909 | ||||||||||
125,219 | 124,046 | |||||||||||
Total liabilities | 138,214 | 155,571 | ||||||||||
Total equity and liabilities | 344,924 | 334,087 | ||||||||||
Net current liabilities | (89,099 | ) | (91,871 | ) | ||||||||
Total assets less current liabilities | 219,705 | 210,041 | ||||||||||
— I-6 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
As at 31 December 2008
(All amounts in RMB millions)
As at 31 December | ||||||||||||
Note | 2008 | 2007 | ||||||||||
As restated | ||||||||||||
(Note 2.2) | ||||||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Investments in subsidiaries | 11 (a) | 159,761 | 55,938 | |||||||||
Property, plant and equipment | 6 | 40 | 37 | |||||||||
Long-term loans to subsidiaries | — | 8,729 | ||||||||||
159,801 | 64,704 | |||||||||||
Current assets | ||||||||||||
Prepayments and other current assets | 14 | 7 | 12 | |||||||||
Amounts due from a subsidiary | 11 (c) | 3,293 | 2,847 | |||||||||
Dividend receivable | 5,254 | 2,249 | ||||||||||
Current portion of long-term loans to subsidiaries | 11 (b) | 6,800 | 2,247 | |||||||||
Short-term bank deposits | 15 | 122 | 636 | |||||||||
Cash and cash equivalents | 16 | 330 | 494 | |||||||||
15,806 | 8,485 | |||||||||||
Total assets | 175,607 | 73,189 | ||||||||||
EQUITY | ||||||||||||
Capital and reserve attributable to the equity holders of the Company | ||||||||||||
Share capital | 17 | 2,329 | 1,437 | |||||||||
Share premium | 17 | 166,784 | 64,320 | |||||||||
Reserves | 18 | 1,158 | 363 | |||||||||
Retained profits | ||||||||||||
— Proposed final dividend | 34 | 4,754 | 2,727 | |||||||||
— Others | 329 | 614 | ||||||||||
Total equity | 175,354 | 69,461 | ||||||||||
— I-7 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
As at 31 December | ||||||||||||
Note | 2008 | 2007 | ||||||||||
As restated | ||||||||||||
(Note 2.2) | ||||||||||||
LIABILITIES | ||||||||||||
Non-current liabilities | ||||||||||||
Long-term bank loans | 19 | — | 1,461 | |||||||||
— | 1,461 | |||||||||||
Current liabilities | ||||||||||||
Payables and accrued liabilities | 23 | 104 | 58 | |||||||||
Amounts due to subsidiaries | 11 (c) | — | 18 | |||||||||
Dividend payable | 34 | 149 | — | |||||||||
Current portion of long-term bank loans | 19 | — | 2,191 | |||||||||
253 | 2,267 | |||||||||||
Total liabilities | 253 | 3,728 | ||||||||||
Total equity and liabilities | 175,607 | 73,189 | ||||||||||
Net current assets | 15,553 | 6,218 | ||||||||||
Total assets less current liabilities | 175,354 | 70,922 | ||||||||||
— I-8 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
For the year ended 31 December 2008
(All amounts in RMB millions, except per Share data)
Year ended 31 | ||||||||||||
December | ||||||||||||
Note | 2008 | 2007 | ||||||||||
As restated | ||||||||||||
(Note 2.2) | ||||||||||||
Continuing operations | ||||||||||||
Revenue | 5, 26 | 148,906 | 150,687 | |||||||||
Interconnection charges | (12,011 | ) | (11,214 | ) | ||||||||
Depreciation and amortisation | (47,678 | ) | (47,369 | ) | ||||||||
Network, operations and support expenses | 28 | (16,577 | ) | (16,022 | ) | |||||||
Employee benefit expenses | 31 | (18,902 | ) | (17,540 | ) | |||||||
Other operating expenses | 29 | (33,582 | ) | (32,776 | ) | |||||||
Finance costs | 30 | (2,411 | ) | (3,231 | ) | |||||||
Interest income | 239 | 285 | ||||||||||
Impairment loss on property, plant and equipment | 6 | (11,837 | ) | — | ||||||||
Realised loss on changes in fair value of derivative component of the convertible bonds | 21 | — | (569 | ) | ||||||||
Other income — net | 27 | 1,994 | 4,990 | |||||||||
Profit from continuing operations before income tax | 8,141 | 27,241 | ||||||||||
Income tax expenses | 9 | (1,801 | ) | (7,083 | ) | |||||||
Profit from continuing operations | 6,340 | 20,158 | ||||||||||
Discontinued operations | ||||||||||||
Profit from discontinued operations | 33 | 1,438 | 654 | |||||||||
Gain on the disposal of discontinued operations | 33 | 26,135 | 626 | |||||||||
Profit for the year | 33,913 | 21,438 | ||||||||||
Attributable to: | ||||||||||||
Equity holders of the Company | 33,912 | 21,437 | ||||||||||
Minority interest | 1 | 1 | ||||||||||
33,913 | 21,438 | |||||||||||
— I-9 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Year ended 31 | ||||||||||||
December | ||||||||||||
Note | 2008 | 2007 | ||||||||||
As restated | ||||||||||||
(Note 2.2) | ||||||||||||
Proposed final dividend | 34 | 4,754 | 6,427 | |||||||||
Dividend paid during the year | 34 | 6,231 | 5,885 | |||||||||
Earnings per share for profit attributable to the equity holders of the Company during the year | ||||||||||||
Basic earnings per share (RMB) | 35 | 1.43 | 0.93 | |||||||||
Diluted earnings per share (RMB) | 35 | 1.42 | 0.92 | |||||||||
Earnings per share for profit from continuing operations attributable to the equity holders of the Company during the year | ||||||||||||
Basic earnings per share (RMB) | 35 | 0.27 | 0.87 | |||||||||
Diluted earnings per share (RMB) | 35 | 0.27 | 0.86 | |||||||||
Earnings per share for profit from discontinued operations attributable to the equity holders of the Company during the year | ||||||||||||
Basic earnings per share (RMB) | 35 | 1.16 | 0.06 | |||||||||
Diluted earnings per share (RMB) | 35 | 1.15 | 0.06 | |||||||||
— I-10 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
For the year ended 31 December 2008
(All amounts in RMB millions)
The Group | ||||||||||||||||||||||||||||||||||||||||
Employee | ||||||||||||||||||||||||||||||||||||||||
share-based | ||||||||||||||||||||||||||||||||||||||||
Share | Share | compensation | Revaluation | Statutory | Other | Retained | Minority | Total | ||||||||||||||||||||||||||||||||
capital | premium | reserve | reserve | reserve | reserve | profits | Total | interest | equity | |||||||||||||||||||||||||||||||
Balance at 1 January 2007 (As previously reported) | 1,344 | 53,223 | 264 | 272 | 3,019 | 453 | 21,286 | 79,861 | 3 | 79,864 | ||||||||||||||||||||||||||||||
Change of accounting policy on measurement of property, plant and equipment (Note 2.2) | — | — | — | (8 | ) | — | — | (782 | ) | (790 | ) | — | (790 | ) | ||||||||||||||||||||||||||
Adjusted for 2008 Business Combination under common control (Note 1) | — | — | 125 | 2,886 | 11,811 | 40,663 | 18,709 | 74,194 | — | 74,194 | ||||||||||||||||||||||||||||||
Balance at 1 January 2007 (As restated) | 1,344 | 53,223 | 389 | 3,150 | 14,830 | 41,116 | 39,213 | 153,265 | 3 | 153,268 | ||||||||||||||||||||||||||||||
Effect of change of statutory income tax rate on deferred tax (Note 9(a)) | — | — | — | 135 | — | (664 | ) | — | (529 | ) | — | (529 | ) | |||||||||||||||||||||||||||
Currency translation differences | — | — | — | — | — | (15 | ) | — | (15 | ) | — | (15 | ) | |||||||||||||||||||||||||||
Net income and expense recognised directly in equity | — | — | — | 135 | — | (679 | ) | — | (544 | ) | — | (544 | ) | |||||||||||||||||||||||||||
Profit for the year from continuing operations | — | — | — | — | — | — | 20,158 | 20,158 | — | 20,158 | ||||||||||||||||||||||||||||||
Profit for the year from discontinued operations | — | — | — | — | — | — | 1,279 | 1,279 | 1 | 1,280 | ||||||||||||||||||||||||||||||
Total recognised income and expense for 2007 | — | — | — | 135 | — | (679 | ) | 21,437 | 20,893 | 1 | 20,894 | |||||||||||||||||||||||||||||
Transfer to retained earnings in respect of depreciation differences on revalued assets | — | — | — | (2,103 | ) | — | (104 | ) | 2,207 | — | — | — | ||||||||||||||||||||||||||||
Transfer to retained earnings in respect of revaluation reserve relating to disposal of Guangdong and Shanghai Branches (Note 33) | — | — | — | (69 | ) | — | 20 | 49 | — | — | — |
— I-11 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||||||||||||||||||||||||||||||||||
Employee | ||||||||||||||||||||||||||||||||||||||||
share-based | ||||||||||||||||||||||||||||||||||||||||
Share | Share | compensation | Revaluation | Statutory | Other | Retained | Minority | Total | ||||||||||||||||||||||||||||||||
capital | premium | reserve | reserve | reserve | reserve | profits | Total | interest | equity | |||||||||||||||||||||||||||||||
Consideration for purchase of business and entity under common control (Note 1) | — | — | — | — | — | (1,179 | ) | — | (1,179 | ) | — | (1,179 | ) | |||||||||||||||||||||||||||
Distributions due to business combinations of entity and business under common control (Note 1) | — | — | — | — | — | (101 | ) | (48 | ) | (149 | ) | — | (149 | ) | ||||||||||||||||||||||||||
Transfer of profits to other reserve due to purchase of Guizhou Business under common control (Note 1) | — | — | — | — | — | 95 | (95 | ) | — | — | — | |||||||||||||||||||||||||||||
Capitalisation of retained profits | — | — | — | — | — | 17,295 | (17,295 | ) | — | — | — | |||||||||||||||||||||||||||||
Transfer to statutory reserve | — | — | — | — | 1,517 | — | (1,517 | ) | — | — | — | |||||||||||||||||||||||||||||
Appropriation to statutory reserve (Note 18) | — | — | — | — | 1,586 | — | (1,586 | ) | — | — | — | |||||||||||||||||||||||||||||
Employee share option scheme: | ||||||||||||||||||||||||||||||||||||||||
— Value of employee services | — | — | 216 | — | — | — | — | 216 | — | 216 | ||||||||||||||||||||||||||||||
— Issuance of shares upon exercise of options (Note 32) | 5 | 366 | (89 | ) | — | — | 250 | — | 532 | — | 532 | |||||||||||||||||||||||||||||
Conversion of convertible bonds | 88 | 10,731 | — | — | — | — | — | 10,819 | — | 10,819 | ||||||||||||||||||||||||||||||
Dividends relating to 2006 (Note 34) | — | — | — | — | — | — | (5,885 | ) | (5,885 | ) | — | (5,885 | ) | |||||||||||||||||||||||||||
Balance at 31 December 2007 (As restated) | 1,437 | 64,320 | 516 | 1,113 | 17,933 | 56,713 | 36,480 | 178,512 | 4 | 178,516 | ||||||||||||||||||||||||||||||
Balance at 1 January 2008 (As previously reported) | 1,437 | 64,320 | 363 | 302 | 3,737 | (433 | ) | 27,488 | 97,214 | 4 | 97,218 | |||||||||||||||||||||||||||||
Change of accounting policy on measurement of property, plant and equipment (Note 2.2) | — | — | — | (86 | ) | — | — | (668 | ) | (754 | ) | — | (754 | ) | ||||||||||||||||||||||||||
Adjusted for 2008 Business Combination under common control (Note 1) | — | — | 153 | 897 | 14,196 | 57,146 | 9,660 | 82,052 | — | 82,052 | ||||||||||||||||||||||||||||||
— I-12 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||||||||||||||||||||||||||||||||||
Employee | ||||||||||||||||||||||||||||||||||||||||
share-based | ||||||||||||||||||||||||||||||||||||||||
Share | Share | compensation | Revaluation | Statutory | Other | Retained | Minority | Total | ||||||||||||||||||||||||||||||||
capital | premium | reserve | reserve | reserve | reserve | profits | Total | interest | equity | |||||||||||||||||||||||||||||||
Balance at 1 January 2008 (As restated) | 1,437 | 64,320 | 516 | 1,113 | 17,933 | 56,713 | 36,480 | 178,512 | 4 | 178,516 | ||||||||||||||||||||||||||||||
Currency translation differences | — | — | — | — | — | (29 | ) | — | (29 | ) | — | (29 | ) | |||||||||||||||||||||||||||
Net income and expense recognised directly in equity | — | — | — | — | — | (29 | ) | — | (29 | ) | — | (29 | ) | |||||||||||||||||||||||||||
Profit for the year from continuing operations | — | — | — | — | — | — | 6,340 | 6,340 | — | 6,340 | ||||||||||||||||||||||||||||||
Profit for the year from discontinued operations | — | — | — | — | — | — | 27,572 | 27,572 | 1 | 27,573 | ||||||||||||||||||||||||||||||
Total recognised income and expense for 2008 | — | — | — | — | — | (29 | ) | 33,912 | 33,883 | 1 | 33,884 | |||||||||||||||||||||||||||||
Transfer to retained earnings in respect of depreciation differences on revalued assets | — | — | — | (977 | ) | — | (70 | ) | 1,047 | — | — | — | ||||||||||||||||||||||||||||
Transfer to statutory reserve | — | — | — | — | 886 | — | (886 | ) | — | — | — | |||||||||||||||||||||||||||||
Appropriation to statutory reserves (Note 18) | — | — | — | — | 3,542 | — | (3,542 | ) | — | — | — | |||||||||||||||||||||||||||||
Employee share option scheme: | ||||||||||||||||||||||||||||||||||||||||
— Value of employee services | — | — | 96 | — | — | — | — | 96 | — | 96 | ||||||||||||||||||||||||||||||
— Issuance of shares upon exercise of options (Note 32) | 3 | 252 | (72 | ) | — | — | 267 | — | 450 | — | 450 | |||||||||||||||||||||||||||||
Issuance of shares for 2008 Business Combination under common control (Note 1) | 889 | 102,212 | — | — | — | (103,101 | ) | — | — | — | — | |||||||||||||||||||||||||||||
Transfer out upon the disposal of the CDMA business | — | — | — | — | — | — | — | — | (5 | ) | (5 | ) | ||||||||||||||||||||||||||||
Dividends relating to 2007 (Note 34) | — | — | — | — | — | — | (6,231 | ) | (6,231 | ) | — | (6,231 | ) | |||||||||||||||||||||||||||
Balance at 31 December 2008 | 2,329 | 166,784 | 540 | 136 | 22,361 | (46,220 | ) | 60,780 | 206,710 | — | 206,710 | |||||||||||||||||||||||||||||
— I-13 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
For the year ended 31 December 2008
(All amounts in RMB millions)
Year ended 31 | ||||||||||||
December | ||||||||||||
Note | 2008 | 2007 | ||||||||||
As restated | ||||||||||||
(Note 2.2) | ||||||||||||
Cash flows from operating activities | ||||||||||||
Cash generated from operations of continuing operations | (a | ) | 67,204 | 76,608 | ||||||||
Interest received | 246 | 287 | ||||||||||
Interest paid | (3,011 | ) | (3,511 | ) | ||||||||
Income tax paid | (7,765 | ) | (8,128 | ) | ||||||||
Net cash inflow from operating activities of continuing operations | 56,674 | 65,256 | ||||||||||
Net cash inflow from operating activities of discontinued operations | 656 | 1,225 | ||||||||||
Net cash inflow from operating activities | 57,330 | 66,481 | ||||||||||
Cash flows from investing activities | ||||||||||||
Purchase of property, plant and equipment | (47,747 | ) | (41,798 | ) | ||||||||
Proceeds from disposal of property, plant and equipment and other assets | 252 | 145 | ||||||||||
Consideration for purchase of business and entities under common control | (5,880 | ) | (3,139 | ) | ||||||||
Decrease/(increase) in short-term bank deposits | 497 | (434 | ) | |||||||||
Purchase of other assets | (1,612 | ) | (2,415 | ) | ||||||||
Net cash outflow from investing activities of continuing operations | (54,490 | ) | (47,641 | ) | ||||||||
Net cash inflow from investing activities of discontinued operations | 29,489 | 3,078 | ||||||||||
Net cash outflow from investing activities | (25,001 | ) | (44,563 | ) | ||||||||
— I-14 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Year ended 31 | ||||||||||||
December | ||||||||||||
Note | 2008 | 2007 | ||||||||||
As restated | ||||||||||||
(Note 2.2) | ||||||||||||
Cash flows from financing activities | ||||||||||||
Proceeds from exercise of share options | 450 | 532 | ||||||||||
Proceeds from short-term commercial paper | 10,000 | 20,000 | ||||||||||
Proceeds from short-term bank loans | 50,714 | 63,837 | ||||||||||
Proceeds from long-term bank loans | 2,888 | 2,559 | ||||||||||
Proceeds from issuance of corporate bonds | 5,000 | 2,000 | ||||||||||
Proceeds from related party loans | — | 2,249 | ||||||||||
Repayment of short-term commercial paper | (20,000 | ) | (16,646 | ) | ||||||||
Repayment of short-term bank loans | (51,784 | ) | (82,965 | ) | ||||||||
Repayment of long-term bank loans | (23,832 | ) | (13,416 | ) | ||||||||
Repayment of capital element of finance lease payments | (101 | ) | (890 | ) | ||||||||
Repayment of related party loans | (2,222 | ) | — | |||||||||
Payment of prior years distribution | (101 | ) | (1,180 | ) | ||||||||
Dividends paid to equity holders | 34 | (6,082 | ) | (5,885 | ) | |||||||
Net cash outflow from financing activities of continuing operations | (35,070 | ) | (29,805 | ) | ||||||||
Net cash outflow from financing activities of discontinued operations | — | — | ||||||||||
Net cash outflow from financing activities | (35,070 | ) | (29,805 | ) | ||||||||
Net cash outflow from continuing operations | (32,886 | ) | (12,190 | ) | ||||||||
Net cash inflow from discontinued operations | 33 | 30,145 | 4,303 | |||||||||
Net decrease in cash and cash equivalents | (2,741 | ) | (7,887 | ) | ||||||||
Cash and cash equivalents, beginning of year | 11,979 | 19,866 | ||||||||||
Cash and cash equivalents, end of year | 16 | 9,238 | 11,979 | |||||||||
Analysis of the balances of cash and cash equivalents: | ||||||||||||
Cash balances | 6 | 8 | ||||||||||
Bank balances | 9,232 | 11,971 | ||||||||||
9,238 | 11,979 | |||||||||||
— I-15 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(a) | The reconciliation of profit from continuing operations before income tax to cash generated from operations of continuing operations is as follows: |
Year ended 31 | ||||||||
December | ||||||||
2008 | 2007 | |||||||
As restated | ||||||||
(Note 2.2) | ||||||||
Profit from continuing operations before income tax | 8,141 | 27,241 | ||||||
Adjustments for: | ||||||||
Depreciation and amortisation | 47,678 | 47,369 | ||||||
Interest income | (239 | ) | (285 | ) | ||||
Finance costs | 2,135 | 2,922 | ||||||
Loss on disposal of property, plant and equipment and other assets | 2 | 140 | ||||||
Gain on non-monetary assets exchange | (1,305 | ) | (386 | ) | ||||
Share-based compensation costs | 84 | 170 | ||||||
Provision for doubtful debts | 2,900 | 2,200 | ||||||
Impairment loss on property, plant and equipment | 11,837 | — | ||||||
Realised loss on changes in fair value of derivative component of the convertible bonds | — | 569 | ||||||
Changes in working capital: | ||||||||
Increase in accounts receivable | (1,683 | ) | (2,400 | ) | ||||
(Increase)/decrease in inventories | (109 | ) | 16 | |||||
Decrease in other assets | 833 | 1,619 | ||||||
Decrease/(increase) in prepayments and other current assets | 669 | (1,028 | ) | |||||
Decrease/(increase) in amounts due from related parties | 63 | (24 | ) | |||||
(Increase)/decrease in amounts due from domestic carriers | (49 | ) | 28 | |||||
(Decrease)/increase in payables and accrued liabilities | (991 | ) | 2,376 | |||||
Increase in advances from customers | 1,159 | 407 | ||||||
Decrease in deferred revenue | (2,987 | ) | (2,899 | ) | ||||
Decrease in amounts due to ultimate holding company | (735 | ) | (369 | ) | ||||
Decrease in amounts due to related parties | (995 | ) | (797 | ) | ||||
Increase/(decrease) in amounts due to domestic carriers | 796 | (261 | ) | |||||
Cash generated from operations of continuing operations | 67,204 | 76,608 | ||||||
— I-16 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(i) | Payables to equipment suppliers for construction-in-progress during 2008 increased by approximately RMB19.7 billion (2007: approximately RMB1.3 billion). | ||
(ii) | On 20 August 2007, convertible bonds of US$1 billion outstanding as 31 December 2006 were fully converted into 899,745,075 Shares. | ||
(iii) | On 15 October 2008, the Company issued 10,102,389,377 Shares at a price of HK$11.60 per Share with fair value or total price of approximately RMB103.1 billion (equivalent to approximately HK$117.2 billion) in exchange for the entire issued share capital of China Netcom Group Corporation (Hong Kong) Limited. Please refer to Note 1 and Note 17 for details. | ||
(iv) | For the years ended 31 December 2008 and 2007, the Group replaced copper cables in some fixed-line network infrastructure with optical fibers and related equipment. Some of this replacement was done through non-monetary assets exchanges with suppliers, through which optical fibers and related equipment were received in exchange for the Group’s own copper cables. The cost of the assets received was recorded at the fair value of the assets surrendered. In 2008, the net book value and fair value of copper cables surrendered were RMB805 million (2007: RMB182 million) and RMB2,110 million (2007: RMB568 million), respectively. A gain on the non-monetary assets exchange of RMB1,305 million (2007: RMB386 million) was recognised in the income statement for the year ended 31 December 2008. |
— I-17 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(All amounts in RMB millions unless otherwise stated)
— I-18 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-19 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-20 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
• | Disposal of the fixed-line telecommunications operations in Guangdong province and Shanghai municipality branches (“Guangdong and Shanghai Branches”) |
• | Purchase of assets and business of Guizhou branch of Unicom Parent |
• | Acquisition of Beijing Telecommunications Planning and Designing Institute Corporation Limited (“Beijing Telecom P&D Institute”) |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
2.1 | First-time Adoption of International Financial Reporting Standards (“IFRSs”) and Statement of Compliance |
— I-21 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
December 2008 and except for the standard described below, apply these retrospectively to determine the IFRS opening balance sheet at its date of transition, 1 January 2007, being the beginning of the earliest period for which the Group presents full comparative information in these financial statements.
2.2 | Basis of Preparation |
— I-22 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
• | reversal of the revaluation surplus or deficit and related depreciation and amortisation charges arising from the revaluation of assets (mainly property, plant and equipment) performed by independent valuers for the purpose of reporting to the relevant PRC government authorities prior to 1 January 2007; | ||
• | recognition of the revaluation surplus or deficit and related depreciation charges for the purpose of reporting the property, plant and equipment (other than buildings and telecommunications equipment of the GSM business) at revalued amounts under IFRS/HKFRS; | ||
• | recognition of goodwill associated with the acquisition of certain subsidiaries prior to 2005; | ||
• | capitalisation of the direct costs associated with the acquisition of subsidiaries prior to 2005; | ||
• | additional capitalisation of borrowing costs prior to the adoption of CAS on 1 January 2007; | ||
• | capitalisation and amortisation of upfront non-refundable revenue and the related direct incremental costs for activating cellular subscribers prior to the adoption of CAS on 1 January 2007; and | ||
• | adjustments for deferred taxation in relation to IFRS/HKFRS adjustments. |
— I-23 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
1) | Buildings are stated at historical costs less accumulated depreciation and accumulated impairment losses instead of at revalued amounts; | ||
2) | Other property, plant and equipment (other than the telecommunications equipment of GSM business) are stated at revalued amounts instead of historical costs less accumulated depreciation and accumulated impairment losses. |
— I-24 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
As at | As at | Year ended | ||||||||||||||||||
1 January | 31 December | 31 December | ||||||||||||||||||
2007 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
Continuing operations: | ||||||||||||||||||||
Change in measurement of buildings | ||||||||||||||||||||
Decrease in property, plant and equipment, net | (349 | ) | (324 | ) | (335 | ) | — | — | ||||||||||||
Decrease in deferred tax liabilities | 104 | 73 | 76 | — | — | |||||||||||||||
Decrease in revaluation reserve | 273 | 304 | 301 | — | — | |||||||||||||||
Increase in retained profits | (28 | ) | (53 | ) | (42 | ) | — | — | ||||||||||||
Decrease in depreciation and amortisation charge | — | — | — | (11 | ) | (14 | ) | |||||||||||||
Increase in deferred tax expense | — | — | — | 3 | — | |||||||||||||||
Change in measurement of other property, plant and equipment (other than the telecommunications equipment of GSM business) | ||||||||||||||||||||
Decrease in property, plant and equipment, net | (814 | ) | (504 | ) | (659 | ) | — | — | ||||||||||||
Increase in deferred tax assets | 269 | 125 | 164 | — | — | |||||||||||||||
Increase in revaluation reserve, net | (265 | ) | (135 | ) | (215 | ) | — | — | ||||||||||||
Decrease in retained profits | 810 | 514 | 710 | — | — | |||||||||||||||
Decrease in depreciation and amortisation charge | — | — | — | (155 | ) | (155 | ) | |||||||||||||
Increase in deferred tax expense | — | — | — | 39 | 128 |
— I-25 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
As at | As at | |||||||
31 December | 31 December | |||||||
2008 | 2007 | |||||||
Decrease in payables and accrued liabilities | (118 | ) | (634 | ) | ||||
Increase in deferred revenue | 118 | 634 |
Year ended | Year ended | |||||||
31 December | 31 December | |||||||
2008 | 2007 | |||||||
Continuing operations: | ||||||||
Increase/(decrease) in revenue | 264 | (55 | ) | |||||
(Increase)/ decrease in expense | (264 | ) | 55 | |||||
Discontinued operations: | ||||||||
Increase/(decrease) in revenue | 118 | (23 | ) | |||||
(Increase)/ decrease in expense | (118 | ) | 23 |
— I-26 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||||||||||||||||||
CDMA | ||||||||||||||||||||||||
Business | Changes of | |||||||||||||||||||||||
As previously | (discontinued | 2008 Business | accounting | |||||||||||||||||||||
reported | operations) | Combination | policies | Eliminations | As restated | |||||||||||||||||||
For the year ended/ as at 31 December 2007 | ||||||||||||||||||||||||
Results of continuing operations: | ||||||||||||||||||||||||
Revenue | 99,539 | (31,197 | ) | 84,005 | (78 | ) | (1,582 | ) | 150,687 | |||||||||||||||
Profit for the year | 9,301 | (656 | ) | 11,472 | 41 | — | 20,158 | |||||||||||||||||
Financial position: | ||||||||||||||||||||||||
Non-current assets | 132,588 | — | 170,078 | (754 | ) | — | 301,912 | |||||||||||||||||
Current assets | 16,834 | — | 15,508 | — | (167 | ) | 32,175 | |||||||||||||||||
Total assets | 149,422 | — | 185,586 | (754 | ) | (167 | ) | 334,087 | ||||||||||||||||
Non-current liabilities | 2,974 | — | 28,128 | 423 | — | 31,525 | ||||||||||||||||||
Current liabilities | 49,231 | — | 75,405 | (423 | ) | (167 | ) | 124,046 | ||||||||||||||||
Total liabilities | 52,205 | — | 103,533 | — | (167 | ) | 155,571 | |||||||||||||||||
Net assets | 97,217 | — | 82,053 | (754 | ) | — | 178,516 |
The Company | ||||||||||||
Change of | ||||||||||||
As previously | accounting | |||||||||||
reported | policy | As restated | ||||||||||
For the year ended/ as at 31 December 2007 | ||||||||||||
Results of continuing operations: | ||||||||||||
Profit for the year | 2,757 | 151 | 2,908 | |||||||||
Financial position: | ||||||||||||
Non-current assets | 64,203 | 501 | 64,704 | |||||||||
Current assets | 8,485 | — | 8,485 | |||||||||
Total assets | 72,688 | 501 | 73,189 | |||||||||
Non-current liabilities | 1,461 | — | 1,461 | |||||||||
Current liabilities | 2,267 | — | 2,267 | |||||||||
Total liabilities | 3,728 | — | 3,728 | |||||||||
Net assets | 68,960 | 501 | 69,461 |
— I-27 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
• | The Group’s continuous net cash inflow from operating activities; | ||
• | Unutilised banking facilities of approximately RMB92.0 billion; and | ||
• | Other available sources of financing from domestic banks and other financial institutions given the Group’s credit history. |
(a) | The following interpretation is early adopted by the Group |
• | IFRIC/HK(IFRIC) — Int 13, “Customer loyalty programmes” (effective from 1 July 2008). IFRIC/HK(IFRIC) — Int 13 clarifies that where goods or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple-element arrangement and the consideration receivable from the customer is allocated between the components of the arrangement using fair values. Comparatives for |
— I-28 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
2007 have been restated upon adoption of this new interpretation. For the financial impact of the early adoption of IFRIC/HK(IFRIC) — Int 13 on the Group’s financial statements, please refer to point (b) “Subscriber points reward program” under the section headed “Change of Accounting Policies and Estimate” of this Note. |
(b) | The following new amendment and interpretation are effective in 2008 and are relevant and are applicable to the Group’s operations |
• | IFRIC/HK(IFRIC)-Int 11, “Group and treasury share transactions” provides guidance on whether share-based transactions involving treasury shares or involving group entities (for example, options over parent’s shares) should be accounted for as equity-settled or cash-settled share-based payment transactions in the stand-alone accounts of the parent and group companies. In previous years, the Company granted certain share options to its subsidiaries’ employees and recognised the share-based compensation cost in accordance with the transitional provision of IFRS/HKFRS 2. Upon the adoption of IFRIC/HK(IFRIC)-Int 11, equity-settled share-based compensation plan in which the Company grants share options to subsidiaries’ employees are accounted for as an increase in the value of investments in the subsidiaries in the Company’s balance sheet which is eliminated on consolidation. Accordingly, the share-based compensation cost previously recognised by the Company in its unconsolidated financial statements of approximately RMB151 million for the year ended 31 December 2007 was allocated to the subsidiaries and the related business segments. The segment information for the year ended 31 December 2007 has been restated to reflect the effect of the adoption of IFRIC/HK(IFRIC)-Int 11. | ||
• | IAS/HKAS 39, “Financial instruments: Recognition and measurement”, amendment on reclassification of financial assets permits reclassification of certain financial assets out of the held-for-trading and available-for-sale categories if specified conditions are met. The related amendment to IFRS/HKFRS 7, “Financial instruments: Disclosures”, introduces disclosure requirements with respect to financial assets reclassified out of the held-for-trading and available-for-sale categories. This amendment does not have any impact on the Group’s financial statements, as the Group has not reclassified any financial assets. |
(c) | The following interpretations to published standards are mandatory for accounting periods beginning on or after 1 January 2008 but are not relevant to the Group’s operation |
• | IFRIC/HK(IFRIC)-Int 12, “Service concession arrangements”. | ||
• | IFRIC/HK(IFRIC)-Int 14, “The limit on a defined benefit asset, minimum funding requirements and their interaction”. |
(d) | Standards, amendments to standards and interpretations to existing standards have been issued but not yet effective in 2008 and have not been early adopted by the Group |
• | IFRS/HKFRS 2 (Amendment), “Share-based payment” (effective from 1 January 2009). The amended standard deals with vesting conditions and cancellations. It clarifies that vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions. As such these features would need to |
— I-29 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
be included in the grant date fair value for transactions with employees and others providing similar services, that is, these features would not impact the number of awards expected to vest or valuation thereof subsequent to grant date. All cancellations, whether by the entity or by other parties, should receive the same accounting treatment. | |||
• | IFRS/HKFRS 8, “Operating segments” (effective from 1 January 2009). The amended standard replaces IAS/HKAS 14, “Segment reporting”, and aligns segment reporting with the requirements of the US standard SFAS 131, “Disclosures about segments of an enterprise and related information”. The new standard requires a “management approach”, under which segment information is presented on the same basis as that used for internal reporting purposes. | ||
• | IFRS/HKFRS 3 (Revised) “Business combination” (effective from 1 July 2009). The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the consolidated income statement. There is a choice on an acquisition by acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed. | ||
• | IAS/HKAS 1 (Revised), “Presentation of financial statements” (effective from 1 January 2009). The revised standard will prohibit the presentation of items of income and expenses (that is, “non-owner changes in equity”) in the statement of changes in equity, requiring “non-owner changes in equity” to be presented separately from owner changes in equity. All non-owner changes in equity will be required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the consolidated income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they will be required to present a restated balance sheet as at the beginning comparative period in addition to the current requirement to present balance sheets at the end of the current period and comparative period. It is likely that both the consolidated income statement and statement of comprehensive income will be presented as performance statements. | ||
• | IAS/HKAS 23 (Revised), “Borrowing costs” (effective from 1 January 2009). The amendment requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. | ||
• | IAS/HKAS 27 (Revised) “Consolidated and separate financial statements” (effective from 1 July 2009).The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value and a gain or loss is recognised in profit or loss. |
— I-30 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
• | IASB’s annual improvement project published in May 2008/HKICPA’s improvements to HKFRS published in October 2008 |
Ø | IAS/HKAS 1 (Amendment), “Presentation of financial statements” (effective from 1 January 2009). The amendment clarifies that some rather than all financial assets and liabilities classified as held for trading in accordance with IAS/HKAS 39, “Financial instruments: Recognition and measurement” are examples of current assets and liabilities respectively. | ||
Ø | IAS/HKAS 19 (Amendment), “Employee benefits” (effective from 1 January 2009). |
— | The amendment clarifies that a plan amendment that results in a change in the extent to which benefit promises are affected by future salary increases is a curtailment, while an amendment that changes benefits attributable to past service gives rise to a negative past service cost if it results in a reduction in the present value of the defined benefit obligation. | ||
— | The definition of return on plan assets has been amended to state that plan administration costs are deducted in the calculation of return on plan assets only to the extent that such costs have been excluded from measurement of the defined benefit obligation. | ||
— | The distinction between short term and long term employee benefits will be based on whether benefits are due to be settled within or after 12 months of employee service being rendered. | ||
— | IAS/HKAS 37, “Provisions, contingent liabilities and contingent assets” requires contingent liabilities to be disclosed, not recognised. IAS/HKAS 19 has been amended to be consistent. |
Ø | IAS/HKAS 23 (Amendment), “Borrowing costs” (effective from 1 January 2009). The definition of borrowing costs has been amended so that interest expense is calculated using the effective interest method defined in IAS/HKAS 39 “Financial instruments: Recognition and measurement”. This eliminates the inconsistency of terms between IAS/HKAS 39 and IAS/HKAS 23. | ||
Ø | IAS/HKAS 27 (Amendment), “Consolidated and separate financial statements” (effective from 1 January 2009). Where an investment in a subsidiary that is accounted for under IAS/HKAS 39, “Financial instruments: recognition and measurement”, is classified as held for sale under IFRS/HKFRS 5, “Non-current assets held for sale and discontinued operations”, IAS/HKAS 39 would continue to be applied. | ||
Ø | IAS/HKAS 36 (Amendment), “Impairment of assets” (effective from 1 January 2009). Where fair value less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for value-in-use calculation should be made. | ||
Ø | IAS/HKAS 40 (Amendment), “Investment property” (and consequential amendments to IAS/HKAS 16) (effective from 1 January 2009). Property that is under construction or development for future use as investment property is within the scope of IAS/HKAS 40. Where the fair value model is applied, such property is, therefore, |
— I-31 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
measured at fair value. However, where fair value of investment property under construction is not reliably measurable, the property is measured at cost until the earlier of the date construction is completed and the date at which fair value becomes reliably measurable. | |||
Ø | IFRS/HKFRS 5 (Amendment), “Non-current assets held for sale and discontinued operations” (and consequential amendment to IFRS/HKFRS 1, “First-time adoption”) (effective from 1 July 2009). The amendment clarifies that all of a subsidiary’s assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control, and relevant disclosure should be made for this subsidiary if the definition of a discontinued operation is met. A consequential amendment to IFRS/ HKFRS 1 states that these amendments are applied prospectively from the date of transition to IFRS/HKFRSs. | ||
Ø | There are a number of minor amendments to IFRS/HKFRS 7, “Financial instruments: Disclosures”, IAS/HKAS 8, “Accounting policies, changes in accounting estimates and errors”, IAS/HKAS 10, “Events after the balance sheet date”, IAS/HKAS 18, “Revenue” and IAS/HKAS 34, “Interim financial reporting” which are not addressed above. |
— I-32 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-33 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
• | Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; |
— I-34 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
• | Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and | ||
• | All resulting exchange differences are recognised as a separate component of equity into other reserve. |
— I-35 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Depreciable life | Residual rate | |||||||
Buildings | 3 - 50 years | 3-5% | ||||||
Telecommunications equipment of GSM business | 5 - 15 years | 3-5% | ||||||
Telecommunications equipment of Fixed-line business | 5 - 15 years | 3-5% | ||||||
Office furniture, fixtures, motor vehicles and others | 5 - 18 years | 3-5% |
— I-36 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(i) | Capitalised direct incremental costs for activating GSM and CDMA subscribers, including costs of SIM/UIM cards and commissions which are directly associated with upfront non-refundable revenue received upon activation of cellular services, are amortised over the expected customer service periods. The expected customer service periods are estimated based on the expected stabilised churn rates of subscribers. | ||
(ii) | The direct incremental costs associated with the installation in relation to Fixed-line business are deferred and expensed to the income statement over the expected customer relationship period of 10 years except when the direct incremental costs exceed the corresponding upfront installation fees. In such cases, the excess of the direct incremental costs over the installation fees are recorded immediately as expenses in the income statement. | ||
(iii) | Customer acquisition costs |
(a) | Customer acquisition costs under contractual CDMA subscriber packages represent the cost of CDMA handsets given to contractual subscribers under special promotional packages. Such customer acquisition costs, to the extent recoverable, are amortised over the contractual period (not exceeding 2 years) during which the minimum contract revenue is expected to flow to the Group. Customer acquisition costs of contractual CDMA subscribers are included in “prepayment and other current assets” when the customer contract is within 1 year of expiry, whereas they are recorded as “other assets” when the unexpired contract period is over 1 year. | ||
(b) | When certain bifurcation conditions as mentioned in Note 2.21 (a) of Personal Handy-phone System (“PHS”) bundled service contracts are met, revenue attributable to handsets given to customers under bundled service contracts is recognised |
— I-37 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
separately in the income statement of the period the contracts are entered into. The cost of these handsets is expensed immediately to the income statement in the same period. When any one of the bifurcation conditions is not met, the costs of handsets given to customers under bundled service contracts are deferred as subscriber acquisition costs, to the extent recoverable, as they meet the definition and criteria for an asset and expensed to the income statement on a systematic basis over the customer service contract period. |
(iv) | Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives on a straight-line basis. | ||
(v) | Long-term prepaid rental for premises and leased lines are amortised using a straight-line method over the lease period. |
— I-38 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-39 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-40 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
• | For vested options, the incremental share-based compensation costs are recognised in the income statement immediately; | ||
• | For non-vested options, the incremental share-based compensation costs are recognised in the income statement over the remaining vesting period. |
— I-41 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
• | Usage fees and monthly fees are recognised when the service are rendered; | ||
• | Revenues from the provision of broadband and other Internet-related services and managed data services are recognised when the services are provided to customers; | ||
• | Revenue from telephone cards, which represents service fees received from customers for telephone services, is recognised when the related service is rendered upon actual usage of the telephone cards by customers; | ||
• | Lease income from leasing of lines and customer-end equipment are treated as operating leases with rental income recognised on a straight-line basis over the lease term; | ||
• | Value-added services revenue, which mainly represents revenue from the provision of services such as short message, cool ringtone, personalized ring, CDMA 1X wireless data services, caller number display and secretarial services to subscribers, is recognised when service is rendered; | ||
• | Standalone sales of telecommunications products, which mainly represent handsets and accessories, are recognised when title has been passed to the buyers; |
— I-42 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
• | For CDMA promotional packages where CDMA handsets are provided to subscribers for their use during a specified contract period (Note 4.2(a)), since the commercial substance of the transaction is to develop new contractual subscribers by offering handsets, the two elements of CDMA cellular services and handsets are considered as a linked transaction. Service revenues from such promotional packages are recognised based upon the actual usage of cellular services at the tariff set out in the contracts. | ||
• | Certain PHS bundled service contracts comprise the provision of PHS services and handsets to customers, under which customers either prepay a certain amount of service fee or commit to spend a minimum monthly service fee for a designated period in order to receive a free handset. When all of the following criteria are met, PHS handsets and related services are separately recognised as revenues according to their relative fair values. When any one of the following criteria is not met, total revenues from PHS bundled service contracts are recognised on a systematic basis to match the shorter of the pattern of usage of the PHS services by customers and the minimum non-cancellable contractual period. |
(i) | PHS handsets and related services have value on a stand-alone basis; | ||
(ii) | Reliable estimate for fair value of PHS handsets and related services exists; and | ||
(iii) | In arrangements that include a general right of refund for the delivered item, performance of the undelivered item is considered probable and substantially in the Group’s control. |
• | Revenue from information communications technology services are recognised when goods are delivered to the customers (which generally coincides with the time when the customers have accepted the goods and the related risks and rewards of ownership have been transferred to the customers) or when services are rendered to the customers using the percentage of completion method when the outcome of the services provided can be estimated reliably. If the outcome of the services provided cannot be estimated reliably, the treatment should be as follows: (i) if it is probable that the costs incurred for the services provided is recoverable, services revenue should be recognised only to the extent of recoverable costs incurred, and costs should be recognised as current expenses in the period in which they are incurred; (ii) if it is probable that costs incurred will not be recoverable, costs should be recognised as current expenses immediately and services revenue should not be recognised. |
— I-43 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-44 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-45 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-46 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-47 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
2008 | 2007 | |||||||
(As restated) | ||||||||
Short-term bank deposits | ||||||||
State-owned banks | 238 | 619 | ||||||
Other banks | — | 116 | ||||||
238 | 735 | |||||||
Cash and cash equivalents | ||||||||
State-owned banks | 8,672 | 11,484 | ||||||
Other banks | 566 | 495 | ||||||
9,238 | 11,979 | |||||||
— I-48 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Between | Between | |||||||||||||||
Less than | 1 and | 2 and | Over | |||||||||||||
The Group | 1 year | 2 years | 5 years | 5 years | ||||||||||||
At 31 December 2008 | ||||||||||||||||
Long-term bank loans | 1,299 | 108 | 315 | 635 | ||||||||||||
Corporate bonds | 355 | 355 | 6,064 | 2,360 | ||||||||||||
Other obligations | 510 | 394 | 1,034 | 866 | ||||||||||||
Payables and accrued liabilities | 63,605 | — | — | — | ||||||||||||
Amounts due to related parties | 2,727 | — | — | — | ||||||||||||
Amounts due to domestic carriers | 538 | — | — | — | ||||||||||||
Payables in relation to the disposal of the CDMA Business | 4,232 | — | — | — | ||||||||||||
Short-term commercial paper | 10,447 | — | — | — | ||||||||||||
Short-term bank loans | 11,013 | — | — | — | ||||||||||||
94,726 | 857 | 7,413 | 3,861 | |||||||||||||
At 31 December 2007 (As restated) | ||||||||||||||||
Long-term bank loans | 8,665 | 10,353 | 3,823 | 2,840 | ||||||||||||
Corporate bonds | 90 | 90 | 270 | 2,450 | ||||||||||||
Other obligations | 525 | 458 | 1,243 | 1,051 | ||||||||||||
Payables and accrued liabilities | 46,486 | — | — | — | ||||||||||||
Amounts due to related parties | 6,015 | 2,214 | 4,337 | — | ||||||||||||
Amounts due to domestic carriers | 510 | — | — | — | ||||||||||||
Short-term commercial paper | 20,629 | — | — | — | ||||||||||||
Short-term bank loans | 12,134 | — | — | — | ||||||||||||
95,054 | 13,115 | 9,673 | 6,341 | |||||||||||||
Between | Between | |||||||||||||||
Less than | 1 and | 2 and | Over | |||||||||||||
The Company | 1 year | 2 years | 5 years | 5 years | ||||||||||||
At 31 December 2008 Long-term bank loans | — | — | — | — | ||||||||||||
— I-49 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Between | Between | |||||||||||||||
Less than | 1 and | 2 and | Over | |||||||||||||
The Company | 1 year | 2 years | 5 years | 5 years | ||||||||||||
At 31 December 2007 Long-term bank loans | 2,353 | 74 | 1,521 | — |
• | To safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. | ||
• | To support the Group’s stability and growth. | ||
• | To provide capital for the purpose of strengthening the Group’s risk management capability. |
— I-50 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
2008 | 2007 | |||||||
(As restated) | ||||||||
Interest bearing debts: | ||||||||
— Short-term commercial paper | 10,000 | 20,000 | ||||||
— Short-term bank loans | 10,780 | 11,850 | ||||||
— Current portion of long-term bank loans | 1,216 | 7,411 | ||||||
— Long-term bank loans | 997 | 16,086 | ||||||
— Corporate bonds | 7,000 | 2,000 | ||||||
— Amounts due to related parties | — | 8,129 | ||||||
29,993 | 65,476 | |||||||
Minority interest | — | 4 | ||||||
Interest bearing debts plus minority interest | 29,993 | 65,480 | ||||||
Total equity: | ||||||||
— Capital and reserves attributable to equity holders of the Company | 206,710 | 178,512 | ||||||
— Minority interest | — | 4 | ||||||
206,710 | 178,516 | |||||||
Interest bearing debts plus total equity | 236,703 | 243,996 | ||||||
Debt-to-capitalisation ratio | 12.7 | % | 26.8 | % | ||||
— I-51 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-52 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-53 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-54 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
• | GSM business — the provision of GSM telephone and related services in all 31 provinces, municipalities and autonomous regions in Mainland China; | ||
• | Fixed-line business — the provision of fixed-line telecommunications and related services in Liaoning, Jilin, Heilongjiang, Shandong, Shanxi, Henan and Hebei provinces, Neimenggu autonomous region, Tianjin and Beijing municipalities; and the provision of domestic and international data and Internet related services and domestic and international long distance and related services in all 31 provinces, municipalities and autonomous regions in Mainland China previously separately reported by the Group. |
• | CDMA business — the provision of CDMA telephone and related services, through a leasing arrangement for CDMA network capacity from Unicom New Horizon; | ||
• | Fixed-line business — the provision of fixed-line telecommunications and related services in Guangdong and Shanghai Branches. |
— I-55 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-56 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
2008 | ||||||||||||||||||||||||||||
Continuing operations | Discontinued | |||||||||||||||||||||||||||
operations | ||||||||||||||||||||||||||||
(Up to | ||||||||||||||||||||||||||||
effective date of disposal) | ||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||
GSM | Fixed-line | Unallocated | continuing | CDMA | ||||||||||||||||||||||||
business | business | amounts | Elimination | operations | business | Total | ||||||||||||||||||||||
Service revenue | 64,704 | 82,548 | — | 147,252 | 19,077 | 166,329 | ||||||||||||||||||||||
Sales of telecommunications products | 550 | 1,104 | — | 1,654 | 3,253 | 4,907 | ||||||||||||||||||||||
Total revenue from external customers | 65,254 | 83,652 | — | 148,906 | 22,330 | 171,236 | ||||||||||||||||||||||
Intersegment revenue | 157 | 3,314 | — | (3,471 | ) | — | — | — | ||||||||||||||||||||
Total revenue | 65,411 | 86,966 | — | (3,471 | ) | 148,906 | 22,330 | 171,236 | ||||||||||||||||||||
Interconnection charges | (10,753 | ) | (4,603 | ) | — | 3,345 | (12,011 | ) | (1,692 | ) | (13,703 | ) | ||||||||||||||||
Depreciation and amortisation | (18,786 | ) | (28,892 | ) | — | (47,678 | ) | (411 | ) | (48,089 | ) | |||||||||||||||||
Network, operations and support expenses | (6,658 | ) | (10,038 | ) | — | 119 | (16,577 | ) | (7,780 | ) | (24,357 | ) | ||||||||||||||||
Employee benefit expenses | (5,137 | ) | (13,718 | ) | (47 | ) | (18,902 | ) | (1,600 | ) | (20,502 | ) | ||||||||||||||||
Other operating expenses | (15,976 | ) | (17,272 | ) | (341 | ) | 7 | (33,582 | ) | (8,966 | ) | (42,548 | ) | |||||||||||||||
Financial income/(costs) | 175 | (2,632 | ) | (668 | ) | 714 | (2,411 | ) | (6 | ) | (2,417 | ) | ||||||||||||||||
Interest income | 309 | 105 | 539 | (714 | ) | 239 | 10 | 249 | ||||||||||||||||||||
Impairment loss on property, plant and equipment | — | (11,837 | ) | — | (11,837 | ) | — | (11,837 | ) | |||||||||||||||||||
Other income — net | 110 | 1,884 | — | 1,994 | 22 | 2,016 | ||||||||||||||||||||||
Segment profit/(loss) before income tax | 8,695 | (37 | ) | (517 | ) | 8,141 | 1,907 | 10,048 | ||||||||||||||||||||
Income tax expenses | (1,801 | ) | (469 | ) | (2,270 | ) | ||||||||||||||||||||||
Gain on the disposal of the CDMA business | — | 26,135 | 26,135 | |||||||||||||||||||||||||
Profit for the year | 6,340 | 27,573 | 33,913 | |||||||||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||
Equity holders of the Company | 6,340 | 27,572 | 33,912 | |||||||||||||||||||||||||
Minority interest | — | 1 | 1 | |||||||||||||||||||||||||
6,340 | 27,573 | 33,913 | ||||||||||||||||||||||||||
Other information: | ||||||||||||||||||||||||||||
Provision for doubtful debts | (1,371 | ) | (1,529 | ) | — | — | (2,900 | ) | (383 | ) | (3,283 | ) | ||||||||||||||||
Capital expenditures for segment assets (a) | 33,852 | 26,957 | 9,676 | — | 70,485 | — | 70,485 | |||||||||||||||||||||
— I-57 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
2007 (As restated) | ||||||||||||||||||||||||||||||||||||
Continuing operations | Discontinued operations | |||||||||||||||||||||||||||||||||||
(Up to effective date of disposal) | ||||||||||||||||||||||||||||||||||||
Fixed-line | ||||||||||||||||||||||||||||||||||||
business - | ||||||||||||||||||||||||||||||||||||
Guangdong | ||||||||||||||||||||||||||||||||||||
Total | and | Total | ||||||||||||||||||||||||||||||||||
GSM | Fixed-line | Unallocated | continuing | CDMA | Shanghai | discontinued | ||||||||||||||||||||||||||||||
business | business | amounts | Elimination | operations | business | Branches | operations | Total | ||||||||||||||||||||||||||||
Service revenue | 62,547 | 87,200 | — | 149,747 | 26,309 | 615 | 26,924 | 176,671 | ||||||||||||||||||||||||||||
Sales of telecommunications products | 12 | 928 | — | 940 | 4,888 | — | 4,888 | 5,828 | ||||||||||||||||||||||||||||
Total revenue from external customers | 62,559 | 88,128 | — | 150,687 | 31,197 | 615 | 31,812 | 182,499 | ||||||||||||||||||||||||||||
Intersegment revenue | 173 | 3,724 | — | (3,897 | ) | — | — | — | — | — | ||||||||||||||||||||||||||
Total revenue | 62,732 | 91,852 | — | (3,897 | ) | 150,687 | 31,197 | 615 | 31,812 | 182,499 | ||||||||||||||||||||||||||
Interconnection charges | (10,022 | ) | (5,032 | ) | — | 3,840 | (11,214 | ) | (2,164 | ) | (151 | ) | (2,315 | ) | (13,529 | ) | ||||||||||||||||||||
Depreciation and amortisation | (19,044 | ) | (28,325 | ) | — | (47,369 | ) | (632 | ) | (141 | ) | (773 | ) | (48,142 | ) | |||||||||||||||||||||
Network, operations and support expenses | (6,256 | ) | (9,820 | ) | — | 54 | (16,022 | ) | (10,203 | ) | (91 | ) | (10,294 | ) | (26,316 | ) | ||||||||||||||||||||
Employee benefit expenses | (4,499 | ) | (12,996 | ) | (45 | ) | (17,540 | ) | (1,823 | ) | (57 | ) | (1,880 | ) | (19,420 | ) | ||||||||||||||||||||
Other operating expenses | (14,132 | ) | (18,619 | ) | (28 | ) | 3 | (32,776 | ) | (15,227 | ) | (154 | ) | (15,381 | ) | (48,157 | ) | |||||||||||||||||||
Financial income/(costs) | 134 | (3,297 | ) | (724 | ) | 656 | (3,231 | ) | (15 | ) | (26 | ) | (41 | ) | (3,272 | ) | ||||||||||||||||||||
Interest income | 107 | 136 | 698 | (656 | ) | 285 | 15 | — | 15 | 300 | ||||||||||||||||||||||||||
Realised loss on changes in fair value of derivative component of the convertible bonds | — | — | (569 | ) | (569 | ) | — | — | — | (569 | ) | |||||||||||||||||||||||||
Other income — net | 132 | 2,077 | 2,781 | 4,990 | 7 | 2 | 9 | 4,999 | ||||||||||||||||||||||||||||
Segment profit/(loss) before income tax | 9,152 | 15,976 | 2,113 | 27,241 | 1,155 | (3 | ) | 1,152 | 28,393 | |||||||||||||||||||||||||||
Income tax expenses | (7,083 | ) | (498 | ) | (7,581 | ) | ||||||||||||||||||||||||||||||
Gain on the disposal of Guangdong and Shanghai Branches | — | 626 | 626 | |||||||||||||||||||||||||||||||||
Profit for the year | 20,158 | 1,280 | 21,438 | |||||||||||||||||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||||||||||
Equity holders of the Company | 20,158 | 1,279 | 21,437 | |||||||||||||||||||||||||||||||||
Minority interest | — | 1 | 1 | |||||||||||||||||||||||||||||||||
20,158 | 1,280 | 21,438 | ||||||||||||||||||||||||||||||||||
Other information: | ||||||||||||||||||||||||||||||||||||
(Provision)/reversal for doubtful debts | (1,258 | ) | (942 | ) | — | — | (2,200 | ) | (395 | ) | 17 | (378 | ) | (2,578 | ) | |||||||||||||||||||||
Capital expenditures for segment assets (a) | 16,332 | 20,040 | 9,587 | — | 45,959 | — | 443 | 443 | 46,402 | |||||||||||||||||||||||||||
— I-58 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
31 December 2008 | ||||||||||||||||||||||||
GSM | CDMA | Fixed-line | Unallocated | |||||||||||||||||||||
business | business | business | amounts | Elimination | Total | |||||||||||||||||||
Total segment assets | 168,782 | — | 202,645 | 16,329 | (42,832 | ) | 344,924 | |||||||||||||||||
Total segment liabilities | 82,027 | — | 98,699 | 320 | (42,832 | ) | 138,214 | |||||||||||||||||
31 December 2007 (As restated) | ||||||||||||||||||||||||
GSM | CDMA | Fixed-line | Unallocated | |||||||||||||||||||||
business | business | business | Amounts | Elimination | Total | |||||||||||||||||||
Total segment assets | 112,657 | 9,885 | 210,649 | 17,234 | (16,338 | ) | 334,087 | |||||||||||||||||
Total segment liabilities | 49,118 | 9,101 | 109,891 | 3,799 | (16,338 | ) | 155,571 | |||||||||||||||||
(a) | Capital expenditures classified under “Unallocated amounts” represent capital expenditures on common facilities, which benefit all business segments. |
— I-59 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||||||||||||||||||||||
2007 (As restated) | ||||||||||||||||||||||||||||
Tele- | ||||||||||||||||||||||||||||
Tele- | communications | Office furniture, | ||||||||||||||||||||||||||
communications | equipment of | fixtures, motor | ||||||||||||||||||||||||||
equipment of | Fixed-line | vehicles and | Leasehold | Construction | ||||||||||||||||||||||||
Buildings | GSM business | business | others | improvements | -in-progress | Total | ||||||||||||||||||||||
Cost or valuation: | ||||||||||||||||||||||||||||
Beginning of year (As previously reported) | 14,804 | 134,810 | 34,002 | 9,675 | 1,388 | 13,670 | 208,349 | |||||||||||||||||||||
2008 Business combination under common control (Note 1) | 27,545 | — | 289,263 | 18,899 | 166 | 6,335 | 342,208 | |||||||||||||||||||||
Change of accounting policy on measurement of property, plant and equipment (Note 2.2) | (377 | ) | — | (3,985 | ) | — | — | — | (4,362 | ) | ||||||||||||||||||
Beginning of year (As restated) | 41,972 | 134,810 | 319,280 | 28,574 | 1,554 | 20,005 | 546,195 | |||||||||||||||||||||
Additions | 221 | 154 | 849 | 1,089 | 8 | 42,880 | 45,201 | |||||||||||||||||||||
Transfer from CIP | 2,422 | 18,793 | 17,356 | 3,777 | 437 | (42,785 | ) | — | ||||||||||||||||||||
Disposal of discontinued operations | (413 | ) | — | (7,635 | ) | (344 | ) | (137 | ) | (1,134 | ) | (9,663 | ) | |||||||||||||||
Disposals | (108 | ) | (2,097 | ) | (2,139 | ) | (678 | ) | (205 | ) | — | (5,227 | ) | |||||||||||||||
End of year (As restated) | 44,094 | 151,660 | 327,711 | 32,418 | 1,657 | 18,966 | 576,506 | |||||||||||||||||||||
Representing: | ||||||||||||||||||||||||||||
At cost | 44,094 | 151,660 | — | — | — | 18,966 | 214,720 | |||||||||||||||||||||
At valuation | — | — | 327,711 | 32,418 | 1,657 | — | 361,786 | |||||||||||||||||||||
44,094 | 151,660 | 327,711 | 32,418 | 1,657 | 18,966 | 576,506 | ||||||||||||||||||||||
— I-60 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||||||||||||||||||||||
2007 (As restated) | ||||||||||||||||||||||||||||
Tele- | ||||||||||||||||||||||||||||
Tele- | communications | Office furniture, | ||||||||||||||||||||||||||
communications | equipment of | fixtures, motor | ||||||||||||||||||||||||||
equipment of | Fixed-line | vehicles and | Leasehold | Construction | ||||||||||||||||||||||||
Buildings | GSM business | business | others | improvements | -in-progress | Total | ||||||||||||||||||||||
Accumulated depreciation and impairment: | ||||||||||||||||||||||||||||
Beginning of year (As previously reported) | (3,568 | ) | (71,725 | ) | (14,413 | ) | (5,032 | ) | (802 | ) | (14 | ) | (95,554 | ) | ||||||||||||||
2008 Business combination under common control (Note 1) | (7,081 | ) | — | (151,127 | ) | (9,446 | ) | (78 | ) | — | (167,732 | ) | ||||||||||||||||
Change of accounting policy on measurement of property, plant and equipment (Note 2.2) | 28 | — | 3,171 | — | — | — | 3,199 | |||||||||||||||||||||
Beginning of year (As restated) | (10,621 | ) | (71,725 | ) | (162,369 | ) | (14,478 | ) | (880 | ) | (14 | ) | (260,087 | ) | ||||||||||||||
Charge for the year | (1,326 | ) | (15,684 | ) | (26,001 | ) | (3,695 | ) | (292 | ) | (10 | ) | (47,008 | ) | ||||||||||||||
Impairment loss for the year | — | — | — | — | — | — | — | |||||||||||||||||||||
Disposal of discontinued operations | 60 | — | 1,867 | 137 | 74 | — | 2,138 | |||||||||||||||||||||
Disposals | 78 | 1,963 | 1,702 | 613 | 205 | — | 4,561 | |||||||||||||||||||||
End of year (As restated) | (11,809 | ) | (85,446 | ) | (184,801 | ) | (17,423 | ) | (893 | ) | (24 | ) | (300,396 | ) | ||||||||||||||
Net book value: | ||||||||||||||||||||||||||||
End of year (As restated) | 32,285 | 66,214 | 142,910 | 14,995 | 764 | 18,942 | 276,110 | |||||||||||||||||||||
Beginning of year (As restated) | 31,351 | 63,085 | 156,911 | 14,096 | 674 | 19,991 | 286,108 | |||||||||||||||||||||
— I-61 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||||||||||||||||||||||
2008 | ||||||||||||||||||||||||||||
Tele- | ||||||||||||||||||||||||||||
Tele- | communications | Office furniture, | ||||||||||||||||||||||||||
communications | equipment of | fixtures, motor | ||||||||||||||||||||||||||
equipment of | Fixed-line | vehicles and | Leasehold | Construction | ||||||||||||||||||||||||
Buildings | GSM business | business | others | improvements | -in-progress | Total | ||||||||||||||||||||||
Cost or valuation: | ||||||||||||||||||||||||||||
Beginning of year (As previously reported) | 16,361 | 151,660 | 35,481 | 10,984 | 1,612 | 14,966 | 231,064 | |||||||||||||||||||||
2008 Business combination under common control (Note 1) | 28,110 | — | 296,215 | 21,434 | 45 | 4,000 | 349,804 | |||||||||||||||||||||
Change of accounting policy on measurement of property, plant and equipment (Note 2.2) | (377 | ) | — | (3,985 | ) | — | — | — | (4,362 | ) | ||||||||||||||||||
Beginning of year (As restated) | 44,094 | 151,660 | 327,711 | 32,418 | 1,657 | 18,966 | 576,506 | |||||||||||||||||||||
Additions | 200 | 194 | 1,272 | 1,067 | 7 | 67,745 | 70,485 | |||||||||||||||||||||
Transfer from CIP | 2,039 | 17,931 | 21,797 | 3,788 | 350 | (45,905 | ) | — | ||||||||||||||||||||
Disposal of discontinued operations | (1,077 | ) | (3,469 | ) | — | (284 | ) | (6 | ) | (23 | ) | (4,859 | ) | |||||||||||||||
Disposals | (306 | ) | (3,037 | ) | (5,637 | ) | (903 | ) | (381 | ) | — | (10,264 | ) | |||||||||||||||
End of year | 44,950 | 163,279 | 345,143 | 36,086 | 1,627 | 40,783 | 631,868 | |||||||||||||||||||||
Representing: | ||||||||||||||||||||||||||||
At cost | 44,950 | 163,279 | — | — | — | 40,783 | 249,012 | |||||||||||||||||||||
At valuation | — | — | 345,143 | 36,086 | 1,627 | — | 382,856 | |||||||||||||||||||||
44,950 | 163,279 | 345,143 | 36,086 | 1,627 | 40,783 | 631,868 | ||||||||||||||||||||||
— I-62 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||||||||||||||||||||||
2008 | ||||||||||||||||||||||||||||
Tele- | ||||||||||||||||||||||||||||
Tele- | communications | Office furniture, | ||||||||||||||||||||||||||
communications | equipment of | fixtures, motor | ||||||||||||||||||||||||||
equipment of | Fixed-line | vehicles and | Leasehold | Construction | ||||||||||||||||||||||||
Buildings | GSM business | business | others | improvements | -in-progress | Total | ||||||||||||||||||||||
Accumulated depreciation and impairment: | ||||||||||||||||||||||||||||
Beginning of year (As previously reported) | (3,827 | ) | (85,446 | ) | (18,230 | ) | (6,505 | ) | (878 | ) | (14 | ) | (114,900 | ) | ||||||||||||||
2008 Business combination under common control (Note 1) | (8,024 | ) | — | (169,897 | ) | (10,918 | ) | (15 | ) | (10 | ) | (188,864 | ) | |||||||||||||||
Change of accounting policy on measurement of property, plant and equipment (Note 2.2) | 42 | — | 3,326 | — | — | — | 3,368 | |||||||||||||||||||||
Beginning of year (As restated) | (11,809 | ) | (85,446 | ) | (184,801 | ) | (17,423 | ) | (893 | ) | (24 | ) | (300,396 | ) | ||||||||||||||
Charge for the year | (1,612 | ) | (15,110 | ) | (25,589 | ) | (4,202 | ) | (269 | ) | (9 | ) | (46,791 | ) | ||||||||||||||
Impairment loss for the year | — | — | (11,825 | ) | — | — | (12 | ) | (11,837 | ) | ||||||||||||||||||
Disposal of discontinued operations | 190 | 1,546 | — | 126 | — | — | 1,862 | |||||||||||||||||||||
Disposals | 212 | 3,068 | 4,733 | 831 | 349 | 13 | 9,206 | |||||||||||||||||||||
End of year | (13,019 | ) | (95,942 | ) | (217,482 | ) | (20,668 | ) | (813 | ) | (32 | ) | (347,956 | ) | ||||||||||||||
Net book value: | ||||||||||||||||||||||||||||
End of year | 31,931 | 67,337 | 127,661 | 15,418 | 814 | 40,751 | 283,912 | |||||||||||||||||||||
Beginning of year (As restated) | 32,285 | 66,214 | 142,910 | 14,995 | 764 | 18,942 | 276,110 | |||||||||||||||||||||
— I-63 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-64 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Company | ||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||
Office | ||||||||||||||||||||
furniture, | ||||||||||||||||||||
Tele- | fixtures, motor | |||||||||||||||||||
communications | vehicles and | Construction | ||||||||||||||||||
equipment | others | in-progress | Total | Total | ||||||||||||||||
Cost: | ||||||||||||||||||||
Beginning of year | 48 | 7 | 4 | 59 | 59 | |||||||||||||||
Additions | — | — | 7 | 7 | 5 | |||||||||||||||
Transfer from CIP | 11 | — | (11 | ) | — | — | ||||||||||||||
Disposals | (3 | ) | (1 | ) | — | (4 | ) | (5 | ) | |||||||||||
End of year | 56 | 6 | — | 62 | 59 | |||||||||||||||
Accumulated depreciation: | ||||||||||||||||||||
Beginning of year | (15 | ) | (7 | ) | — | (22 | ) | (20 | ) | |||||||||||
Charge for the year | (3 | ) | — | — | (3 | ) | (4 | ) | ||||||||||||
Disposals | 2 | 1 | — | 3 | 2 | |||||||||||||||
End of year | (16 | ) | (6 | ) | — | (22 | ) | (22 | ) | |||||||||||
Net book value: | ||||||||||||||||||||
End of year | 40 | — | — | 40 | 37 | |||||||||||||||
Beginning of year | 33 | — | 4 | 37 | 39 | |||||||||||||||
The Group | ||||||||
2008 | 2007 | |||||||
(As restated) | ||||||||
Held on: | ||||||||
Leases of between 10 to 50 years | 7,734 | 7,998 | ||||||
Leases of less than 10 years | 65 | 65 | ||||||
7,799 | 8,063 | |||||||
— I-65 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||
2008 | 2007 | |||||||
Cost: | ||||||||
Beginning of year | 3,144 | 3,144 | ||||||
Disposal of the CDMA Business | (373 | ) | — | |||||
End of year | 2,771 | 3,144 | ||||||
— I-66 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||
2007 | ||||||||
2008 | (As restated) | |||||||
Provision for enterprise income tax on the estimated taxable profits for the year | ||||||||
— Hong Kong | 24 | 18 | ||||||
— Outside Hong Kong | 4,631 | 7,169 | ||||||
4,655 | 7,187 | |||||||
Deferred taxation | (2,854 | ) | (104 | ) | ||||
Income tax expense | 1,801 | 7,083 | ||||||
(a) | Pursuant to the new PRC enterprise income tax law passed by the Tenth National People’s Congress on 16 March 2007, the new enterprise income tax rates for domestic and foreign enterprises are unified at 25% and are effective from 1 January 2008 (2007: 33%). However, for entities operating in special economic zones that previously enjoyed preferential tax rates, the applicable tax rate will be increased progressively to 25% over a five-year period. | |
(b) | On 6 December 2007, the State Council issued the detailed implementation regulations of the new PRC enterprise income tax law. Pursuant to the regulations, a 5% withholding income tax will be levied on dividends declared on or after 1 January 2008 by foreign investment enterprises to their foreign shareholders in Hong Kong. Pursuant to a notice jointly issued by the Ministry of Finance and the State Administration of Taxation on 22 February 2008, where foreign investment enterprises declare dividends in 2008 and beyond out of their cumulative retained profits as at 31 December 2007, such dividends are exempt from withholding income tax. For dividends paid out of profits earned by foreign investment enterprises after 1 January 2008, the 5% withholding income tax will be applicable, unless the investor is deemed as a PRC Tax Resident Enterprise (“TRE”). Currently, the PRC tax authority has not yet announced the formal guideline on the certification procedure of PRC TRE. The Company has made an assessment based on existing laws and regulations and other factors such as sources of income, composition of the Board of Directors and the location of major assets and accounting records, and concluded that it met the definition of PRC TRE after assessment. Therefore, as at 31 December 2008, the Company’s subsidiaries in the PRC did not accrue withholding tax on |
— I-67 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||||||
Note | 2008 | 2007 | ||||||||||
(As restated) | ||||||||||||
Applicable PRC statutory tax rate | 25.0 | % | 33.0 | % | ||||||||
Non-deductible expenses | 3.0 | % | 0.7 | % | ||||||||
Realised loss on changes in fair value of derivative component of the convertible bonds | — | 0.7 | % | |||||||||
Non-taxable income | ||||||||||||
— Tax refund on reinvestment in subsidiaries | 27 | — | (4.9 | %) | ||||||||
— Upfront connection fees arising from Fixed-line business | (4.8 | %) | (2.8 | %) | ||||||||
Impact of PRC preferential tax rates and tax holiday | (0.8 | %) | (0.8 | %) | ||||||||
Effect of change of tax rate under the new PRC enterprise income tax law | (a | ) | — | 0.3 | % | |||||||
Others | (0.3 | %) | (0.2 | %) | ||||||||
Effective tax rate | 22.1 | % | 26.0 | % | ||||||||
— I-68 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||
2008 | 2007 | |||||||
(As restated) | ||||||||
Deferred tax assets: | ||||||||
— Deferred tax asset to be recovered after 12 months | 4,891 | 2,617 | ||||||
— Deferred tax asset to be recovered within 12 months | 1,605 | 1,409 | ||||||
6,496 | 4,026 | |||||||
Deferred tax liabilities: | ||||||||
— Deferred tax liabilities to be settled after 12 months | (931 | ) | (533 | ) | ||||
— Deferred tax liabilities to be settled within 12 months | (239 | ) | (979 | ) | ||||
(1,170 | ) | (1,512 | ) | |||||
Net deferred tax assets after offsetting | 5,326 | 2,514 | ||||||
Deferred tax liabilities that cannot be offset | (16 | ) | (17 | ) | ||||
— I-69 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||
2008 | 2007 | |||||||
(As restated) | ||||||||
Net deferred tax assets after offsetting: | ||||||||
— Beginning of year | 2,514 | 2,994 | ||||||
— Deferred tax credited/(charged) to the income statement | ||||||||
— Continuing operations | 2,853 | 106 | ||||||
— Discontinued operations | (35 | ) | (32 | ) | ||||
— Deferred tax charged to equity | — | (529 | ) | |||||
— Disposal of discontinued operations | (6 | ) | (25 | ) | ||||
— End of year | 5,326 | 2,514 | ||||||
The deferred tax liabilities that cannot be offset: | ||||||||
— Beginning of year | (17 | ) | (15 | ) | ||||
— Deferred tax credited/(charged) to the income statement | 1 | (2 | ) | |||||
— End of year | (16 | ) | (17 | ) | ||||
— I-70 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||||||
Note | 2008 | 2007 | ||||||||||
(As | ||||||||||||
restated) | ||||||||||||
Mainland China | ||||||||||||
Deferred tax assets: | ||||||||||||
Provision for doubtful debts | 788 | 742 | ||||||||||
Impairment loss on property, plant and equipment | 6 | 2,924 | 20 | |||||||||
Unrecognised revaluation surplus on property, plant and equipment | i | 1,991 | 2,061 | |||||||||
Revaluation deficit on property, plant and equipment | ii | 170 | 236 | |||||||||
Write-down of inventories to net realisable value | 11 | 41 | ||||||||||
Accruals of expenses not yet deductible for tax purpose | 145 | 144 | ||||||||||
Deferral and amortisation of upfront non-refundable revenue | 177 | 396 | ||||||||||
Deferred revenue on subscriber points reward programe | 43 | 177 | ||||||||||
Deferred revenue in relation to the provision of supporting services upon the disposal of the CDMA Business | 37.2(b) | 102 | — | |||||||||
Accruals of retirement benefits | 33 | 40 | ||||||||||
Others | 112 | 169 | ||||||||||
6,496 | 4,026 | |||||||||||
Deferred tax liabilities: | ||||||||||||
Capitalisation and amortisation of direct incremental costs | (124 | ) | (322 | ) | ||||||||
Capitalised interest already deducted for tax purpose | (703 | ) | (830 | ) | ||||||||
Revaluation surplus on property, plant and equipment | ii | (343 | ) | (360 | ) | |||||||
(1,170 | ) | (1,512 | ) | |||||||||
5,326 | 2,514 | |||||||||||
Outside Mainland China | ||||||||||||
Deferred tax liabilities: | ||||||||||||
Accelerated depreciation for tax purpose | (16 | ) | (17 | ) | ||||||||
— I-71 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(i) | Prior to the merger, the prepayments for the leasehold land and buildings held by China Netcom were revalued for PRC tax purposes as at 31 December 2003 and 2004. However, the resulting revaluations of the prepayments for the leasehold land and buildings were not recognised under IFRS/HKFRS. Accordingly, deferred tax assets were recorded by the Group under IFRS/HKFRS. | |
(ii) | The property, plant and equipment other than buildings and telecommunications equipment of GSM business are carried at revalued amount under IFRS/HKFRS, which are not used for PRC tax reporting purposes. As a result, the Group recorded the deferred tax assets or liabilities arising from the revaluation deficit or surplus under IFRS/HKFRS. |
The Group | ||||||||||||
Note | 2008 | 2007 | ||||||||||
(As restated) | ||||||||||||
Direct incremental costs for activating mobile subscribers | 499 | 1,301 | ||||||||||
Customer acquisition costs of contractual CDMA subscribers | 4.2 | (a) | — | 2,349 | ||||||||
Installation costs of Fixed-line services | 2,251 | 2,848 | ||||||||||
Prepaid rental for premises and leased lines | 2,121 | 1,887 | ||||||||||
Purchased software | 2,837 | 2,432 | ||||||||||
Others | 1,288 | 1,264 | ||||||||||
8,996 | 12,081 | |||||||||||
11. | INVESTMENTS IN AND LOANS/AMOUNT DUE TO/FROM SUBSIDIARIES — COMPANY | |
(a) | Investments in subsidiaries |
The Company | ||||||||
2008 | 2007 | |||||||
(As restated) | ||||||||
Unlisted equity investments, at cost | 159,761 | 55,938 | ||||||
— I-72 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Place and date of | Percentage of equity | Particular of | Principal activities | |||||||||||
incorporation and | interests held | issued share | and place of | |||||||||||
Name | nature of legal entity | Direct | Indirect | capital | operation | |||||||||
China United Network Communications Corporation Limited (formerly known as China Unicom Corporation Limited) | The PRC, 21 April 2000, limited liability company | 100 | % | — | RMB 64,721,120,000 | Telecommunications operation in the PRC | ||||||||
Unicom New World (BVI) Limited | British Virgin Islands, 5 November 2003, limited company | 100 | % | — | 1,000 shares, HK$ 1 each | Investment holding in BVI | ||||||||
China Unicom International Limited | Hong Kong, 24 May 2000, limited company | 100 | % | — | 60,100,000 shares, HK$ 1 each | Telecommunications service in Hong Kong | ||||||||
China Unicom USA Corporation | The United States of America (the “USA”), 24 May 2002, corporation | — | 100 | % | US$500,000 | Telecommunications service in the USA | ||||||||
Billion Express Investments Limited | British Virgin Islands, 15 August 2007, limited company | 100 | % | — | 1 share, US$1 each | Investment holding in BVI | ||||||||
China Unicom Limited (formerly known as Central Link Investment Limited) | Hong Kong, 31 August 2007, limited company | — | 100 | % | 2 shares, HK $1 each | Dormant | ||||||||
Unicom Vsens Telecommunications Company Limited | The PRC, 19 August 2008, limited liability company | — | 100 | % | RMB 500,000,000 | Sales of handsets, telecommunication equipment and provision of technical services in the PRC | ||||||||
China Unicom Mobile Network Company Limited | The PRC, 31 December 2008, limited liability company | — | 100 | % | RMB 500,000,000 | Construction and maintenance of the network in the PRC | ||||||||
China Netcom Group Corporation (Hong Kong) Limited | Hong Kong, 22 October 1999, limited company | 100 | % | — | 6,699,197,200 shares, US$0.04 each | Investment holding in Hong Kong |
— I-73 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Place and date of | Percentage of equity | Particular of | Principal activities | |||||||||
incorporation and | interests held | issued share | and place of | |||||||||
Name | nature of legal entity | Direct | Indirect | capital | operation | |||||||
China Netcom (Group) Company Limited | The PRC, 6 August 1999, limited liability company | — | 100 | % | RMB 73,370,557,827.69 | Provision of network communications services in the PRC | ||||||
China Netcom Corporation International Limited | Bermuda, 15 October 2002, limited company | — | 100 | % | US$12,000 | Investment holding in Bermuda | ||||||
China Netcom Group System Integration Limited Corporation | The PRC, 30 April 2006, limited liability company | — | 100 | % | RMB 550,000,000 | Provision of system integration services in the PRC | ||||||
China Netcom Group Broadband Online Limited Corporation | The PRC, 29 March 2006, limited liability company | — | 100 | % | RMB 30,000,000 | Provision of internet information services and value-added telecommunications services in the PRC | ||||||
Beijing Telecommunications Planning and Designing Institute Corporation Limited | The PRC, 1 June 2007 limited liability company | — | 100 | % | RMB 264,227,115.02 | Provision of telecommunications network construction, planning and technical consulting services in the PRC |
(b) | Loans to subsidiaries |
(i) | In October 2003, the Company and CUCL signed an agreement for a long-term unsecured loan of US$700 million with terms similar to the long-term syndicated bank loan of the Company to finance the network construction of CUCL (Note 19(a)). The loan was split into 3 tranches (i) US$200 million 3-year loan; (ii) US$300 million 5-year loan and (iii) US$200 million 7-year loan and carried an interest rate of 0.4%, 0.47% and 0.55% over US dollar LIBOR per annum, respectively. During 2006, CUCL fully repaid the US$200 million 3-year loan. In September and November 2008, CUCL has repaid the US$300 million 5-year loan and US$200 million 7-year loan, respectively. | ||
(ii) | In September 2006, the Company and CUCL signed an agreement for a long-term unsecured loan of US$995 million. The loan is interest bearing at 5.67% per annum and wholly repayable in 2009. | ||
(iii) | In July 2006, the Company and Unicom Macau signed an agreement for a long-term loan facility of HK$60 million. During 2008, Unicom Macau has fully utilised the facility. The loans are unsecured, interest-free and repayable in September 2008. In November 2008, Unicom Macau has fully repaid the loan. The facility was discontinued subsequent to the repayment of the loan. |
— I-74 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
In September 2007, the Company and Unicom Macau signed another agreement for a long-term loan facility of MOP40 million. Unicom Macau did not utilise this facility and it was discontinued upon the disposal of the CDMA Business. | |||
(iv) | The carrying amounts of loans to subsidiaries approximated their fair values as at the balance sheet date. |
(c) | Amounts due to/from subsidiaries |
The Group | ||||||||
2008 | 2007 | |||||||
(As restated) | ||||||||
Handsets and other customer end products | 302 | 1,753 | ||||||
Telephone cards | 403 | 585 | ||||||
Consumables | 422 | 449 | ||||||
Others | 44 | 28 | ||||||
1,171 | 2,815 | |||||||
The Group | ||||||||
2008 | 2007 | |||||||
(As restated) | ||||||||
Accounts receivable for GSM business | 3,098 | 2,559 | ||||||
Accounts receivable for CDMA business | — | 1,637 | ||||||
Accounts receivable for Fixed-line business | 8,689 | 9,788 | ||||||
Sub-total | 11,787 | 13,984 | ||||||
Less: Provision for doubtful debts for GSM business | (1,347 | ) | (1,028 | ) | ||||
Provision for doubtful debts for CDMA business | — | (442 | ) | |||||
Provision for doubtful debts for Fixed-line business | (1,853 | ) | (1,500 | ) | ||||
8,587 | 11,014 | |||||||
— I-75 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||
2008 | 2007 | |||||||
(As restated) | ||||||||
Within one month | 6,078 | 7,295 | ||||||
More than one month to three months | 1,479 | 2,595 | ||||||
More than three months to one year | 2,792 | 2,882 | ||||||
More than one year | 1,438 | 1,212 | ||||||
11,787 | 13,984 | |||||||
The Group | ||||||||
2008 | 2007 | |||||||
(As restated) | ||||||||
More than one month to three months | 1,546 | 2,095 | ||||||
More than three months to one year | 323 | 499 | ||||||
More than one year | 170 | 132 | ||||||
2,039 | 2,726 | |||||||
— I-76 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
approximately RMB2,970 million) were impaired. The individually impaired receivables mainly relate to subscriber usage fees. The aging of these receivables is as follows:
The Group | ||||||||
2008 | 2007 | |||||||
(As restated) | ||||||||
More than three months to one year | 2,023 | 2,054 | ||||||
More than one year | 1,177 | 916 | ||||||
3,200 | 2,970 | |||||||
The Group | ||||||||
2008 | 2007 | |||||||
(As restated) | ||||||||
Balance, beginning of year | 2,970 | 4,386 | ||||||
Provision for the year: | ||||||||
— Continuing operations | 2,900 | 2,200 | ||||||
— Discontinued operations | 383 | 378 | ||||||
Written-off during the year | (2,393 | ) | (3,954 | ) | ||||
Disposal of discontinued operations | (660 | ) | (40 | ) | ||||
Balance, end of year | 3,200 | 2,970 | ||||||
— I-77 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | The Company | |||||||||||||||||||
Note | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
(As restated) | ||||||||||||||||||||
Prepaid rental | 670 | 526 | 1 | — | ||||||||||||||||
Deposits and prepayments | 800 | 915 | �� | 5 | 5 | |||||||||||||||
Advances to employees | 226 | 225 | — | — | ||||||||||||||||
Customer acquisition costs of contractual CDMA subscribers | 4.2 (a) | — | 508 | — | — | |||||||||||||||
Tax refund on reinvestment in subsidiaries | 27 | — | 1,459 | — | — | |||||||||||||||
Others | 731 | 681 | 1 | 7 | ||||||||||||||||
2,427 | 4,314 | 7 | 12 | |||||||||||||||||
The Group | The Company | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(As restated) | ||||||||||||||||
Within one year | 2,106 | 3,989 | 5 | 10 | ||||||||||||
More than one year | 321 | 325 | 2 | 2 | ||||||||||||
2,427 | 4,314 | 7 | 12 | |||||||||||||
The Group | The Company | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(As restated) | ||||||||||||||||
Bank deposits with maturity exceeding three months | 221 | 721 | 122 | 636 | ||||||||||||
Restricted bank deposits | 17 | 14 | — | — | ||||||||||||
238 | 735 | 122 | 636 | |||||||||||||
— I-78 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | The Company | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(As restated) | ||||||||||||||||
Cash at bank and in hand | 8,721 | 11,388 | 5 | 31 | ||||||||||||
Bank deposits with original maturities of three months or less | 517 | 591 | 325 | 463 | ||||||||||||
9,238 | 11,979 | 330 | 494 | |||||||||||||
The Company | ||||||||
2008 | 2007 | |||||||
HK$ millions | HK$ millions | |||||||
Authorised: | ||||||||
30,000,000,000 ordinary shares of HK$0.10 each | 3,000 | 3,000 | ||||||
Number | ||||||||||||||||||||
of Shares | Shares | Share | Share | |||||||||||||||||
Issued and fully paid: | millions | HK$ millions | capital | premium | Total | |||||||||||||||
At 1 January 2007 | 12,681 | 1,268 | 1,344 | 53,223 | 54,567 | |||||||||||||||
Employee share option scheme | ||||||||||||||||||||
— Issuance of shares upon exercise of options (Note 32) | 54 | 5 | 5 | 366 | 371 | |||||||||||||||
Conversion of convertible bonds | 900 | 90 | 88 | 10,731 | 10,819 | |||||||||||||||
At 31 December 2007 | 13,635 | 1,363 | 1,437 | 64,320 | 65,757 | |||||||||||||||
Employee share option scheme | ||||||||||||||||||||
— Issuance of shares upon exercise of options (Note 32) | 31 | 3 | 3 | 252 | 255 | |||||||||||||||
Issuance of shares in connection with 2008 Business Combination (Note a) | 10,102 | 1,010 | 889 | 102,212 | 103,101 | |||||||||||||||
At 31 December 2008 | 23,768 | 2,376 | 2,329 | 166,784 | 169,113 | |||||||||||||||
— I-79 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Note a: | Pursuant to an ordinary resolution passed at the extraordinary general meeting held on 16 September 2008, the Company issued 10,102,389,377 Shares at a price of HK$11.60 per Share with fair value or total price of approximately RMB103.1 billion on 15 October 2008 in exchange for the entire issued share capital of China Netcom. Please refer to Note 1 for details. |
— I-80 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The | ||||||||||||||||||
Interest rates and final | The Group | Company | ||||||||||||||||
maturity | 2008 | 2007 | 2008 | 2007 | ||||||||||||||
(As restated) | ||||||||||||||||||
RMB denominated bank loans | Fixed interest rates of 3.60% per annum with maturity through 2010 | |||||||||||||||||
— unsecured | — | 200 | — | — | ||||||||||||||
— | 200 | — | — | |||||||||||||||
RMB denominated bank loans | Floating interest rates ranging from 4.86% to 6.80% (2007: 2.40% to 10.08%) per annum with maturity through 2009 (2007: maturity through 2009) | |||||||||||||||||
— unsecured | 1,114 | 18,399 | — | — | ||||||||||||||
1,114 | 18,399 | — | — | |||||||||||||||
US$ denominated bank loans | Fixed interest rates ranging from Nil to 5.65% (2007: Nil to 6.15%) per annum with maturity through 2039 (2007: maturity through 2039) | |||||||||||||||||
— secured | 146 | 211 | — | — | ||||||||||||||
— unsecured | 377 | 377 | — | — | ||||||||||||||
523 | 588 | — | — | |||||||||||||||
— I-81 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The | ||||||||||||||||||
Interest rates and final | The Group | Company | ||||||||||||||||
maturity | 2008 | 2007 | 2008 | 2007 | ||||||||||||||
(As restated) | ||||||||||||||||||
US$ denominated bank loans | Floating interest rates of US$ LIBOR plus interest margin 0.35% to 0.44% for 2007 per annum with maturity through 2010 (a) | |||||||||||||||||
— unsecured | — | 3,652 | — | 3,652 | ||||||||||||||
— | 3,652 | — | 3,652 | |||||||||||||||
Japanese Yen denominated bank loans | Fixed interest rates of 2.12% (2007: 2.12%) per annum with maturity through 2014 (2007: maturity through 2014) | |||||||||||||||||
— unsecured | 234 | 234 | — | — | ||||||||||||||
234 | 234 | — | — | |||||||||||||||
Euro denominated bank loans | Fixed interest rates ranging from 0.50% to 2.50% (2007: 1.10% to 7.85%) per annum with maturity through 2034 (2007: maturity through 2034) | |||||||||||||||||
— unsecured | 342 | 415 | — | — | ||||||||||||||
342 | 415 | — | — | |||||||||||||||
— I-82 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The | ||||||||||||||||||
Interest rates and final | The Group | Company | ||||||||||||||||
maturity | 2008 | 2007 | 2008 | 2007 | ||||||||||||||
(As restated) | ||||||||||||||||||
HK$ denominated bank loans | Fixed interest rates of 3.75% for 2007 per annum with maturity through 2010 | |||||||||||||||||
— unsecured | — | 9 | — | — | ||||||||||||||
— | 9 | — | — | |||||||||||||||
Sub-total | 2,213 | 23,497 | — | 3,652 | ||||||||||||||
Less: Current portion | (1,216 | ) | (7,411 | ) | — | (2,191 | ) | |||||||||||
997 | 16,086 | — | 1,461 | |||||||||||||||
The Group | The Company | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(As restated) | ||||||||||||||||
Balances due: | ||||||||||||||||
— no later than one year | 1,216 | 7,411 | — | 2,191 | ||||||||||||
— later than one year and no later than two years | 96 | 9,671 | — | — | ||||||||||||
— later than two years and no later than five years | 287 | 3,613 | — | 1,461 | ||||||||||||
— later than five years | 614 | 2,802 | — | — | ||||||||||||
2,213 | 23,497 | — | 3,652 | |||||||||||||
Less: Portion classified as current liabilities | (1,216 | ) | (7,411 | ) | — | (2,191 | ) | |||||||||
997 | 16,086 | — | 1,461 | |||||||||||||
— I-83 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(a) | On 26 September 2003, the Company signed an agreement with 13 financial institutions for a long-term syndicated loan of US$700 million. This facility was split into 3 tranches (i) US$200 million 3-year loan; (ii) US$300 million 5-year loan; and (iii) US$200 million 7-year loan and carried an interest rate of 0.28%, 0.35% and 0.44% over US dollar LIBOR per annum for each tranche, respectively. In October 2003, the Company and CUCL entered into an agreement to re-lend such funds to CUCL with similar terms to finance the network construction of CUCL. The Company fully repaid the US$200 million 3-year loan in 2006, the US$300 million 5-year loan in September 2008 and the US$200 million 7-year loan in November 2008 after obtaining consent for repayment from the relevant lenders. | ||
(b) | The fair values of the Group’s non-current portion of long-term bank loans at 31 December 2008 and 2007 were as follows: |
The Group | ||||||||
2008 | 2007 | |||||||
(As restated) | ||||||||
Long-term bank loans | 690 | 14,547 | ||||||
The fair value is based on cash flows discounted using rates based on the market rates ranging from 4.59% to 6.56% (31 December 2007: 3.25% to 7.05%). | |||
(c) | As at 31 December 2008, bank loans of approximately RMB146 million (2007: approximately RMB163 million) were secured by corporate guarantees granted by third parties. | ||
(d) | As at 31 December 2008, there were no corporate guarantees granted by Netcom Group (2007: approximately RMB49 million). |
— I-84 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Contractual | Provision | |||||||||||
obligations in | made in | |||||||||||
relation to | relation to | |||||||||||
early | one-off cash | |||||||||||
retirement | housing | |||||||||||
benefits | subsidies | |||||||||||
Note (b) | Note (a) & (b) | Total | ||||||||||
As at 1 January 2007 | 3,137 | 3,185 | 6,322 | |||||||||
Additions during the year | — | — | — | |||||||||
Payments during the year | (605 | ) | (329 | ) | (934 | ) | ||||||
As at 31 December 2007 | 2,532 | 2,856 | 5,388 | |||||||||
Analysis of total other obligations: | ||||||||||||
— current portion | 525 | 2,856 | 3,381 | |||||||||
— non-current portion | 2,007 | — | 2,007 | |||||||||
2,532 | 2,856 | 5,388 | ||||||||||
As at 1 January 2008 | 2,532 | 2,856 | 5,388 | |||||||||
Additions during the year | — | — | — | |||||||||
Payments during the year | (423 | ) | (354 | ) | (777 | ) | ||||||
As at 31 December 2008 | 2,109 | 2,502 | 4,611 | |||||||||
Analysis of total other obligations: | ||||||||||||
— current portion | 510 | 2,502 | 3,012 | |||||||||
— non-current portion | 1,599 | — | 1,599 | |||||||||
2,109 | 2,502 | 4,611 | ||||||||||
(a) | Certain staff quarters, prior to 1998, have been sold to certain of the Group’s employees at preferential prices, subject to a number of eligibility requirements. In 1998, the State Council issued a circular which stipulated that the sale of quarters to employees at preferential prices should be terminated. In 2000, the State Council issued a further circular stating that cash subsidies should be made to certain eligible employees following the |
— I-85 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
withdrawal of the allocation of staff quarters. However, the specific timetable and procedures for the implementation of these policies were to be determined by individual provincial or municipal government based on the particular situation of the provinces or municipality. | ||
Based on the relevant detailed local government regulations promulgated, certain entities within the Group have adopted cash housing subsidy plans. In accordance with these plans, for those eligible employees who had not been allocated with quarters or who had not been allocated with quarters up to the prescribed standards before the discounted sales or quarters were terminated, the Group is required to pay them one-off cash housing subsidies based on their years of service, positions and other criteria. Based on the available information, the Group estimated the required provision for these cash housing subsidies amounting to RMB4,142 million, which was charged to the income statement in the year ended 31 December 2000 (the year in which the Council circular in respect of cash subsidies was issued). | ||
(b) | Pursuant to the reorganisation undertaken on 30 June 2004 between China Netcom, China Netcom (Holding) Company Limited and Netcom Group and the acquisition of the principal telecommunications operations, assets and liabilities in the four Northern provinces/autonomous region, namely Shanxi province, Neimenggu autonomous region, Jilin province and Heilongjiang province from Netcom Group (the “Acquisition of New Horizon”), if the actual payments required for these subsidies and early retirement benefits differ from the amount provided as at 30 June 2004 and 30 June 2005, Netcom Group will bear any additional payments required or will be paid the difference if the actual payments are lower than the amount provided. Upon the completion of Parent Merger, Unicom Parent has assumed all the rights and obligations of Netcom Group. |
The Group | The Company | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(As restated) | ||||||||||||||||
Payables to contractors and equipment suppliers | 52,389 | 32,700 | — | — | ||||||||||||
Payables to telecommunications product suppliers | 1,491 | 2,949 | — | — | ||||||||||||
Customer/contractor deposits | 2,082 | 2,826 | — | — | ||||||||||||
Repair and maintenance expense payables | 1,511 | 1,774 | — | — | ||||||||||||
Salary and welfare payables | 949 | 1,311 | — | — | ||||||||||||
Interest payable | 263 | 468 | — | 27 | ||||||||||||
Amounts due to services providers/content providers | 961 | 1,256 | — | — | ||||||||||||
Accrued expenses | 3,064 | 3,534 | — | — | ||||||||||||
Others | 2,977 | 2,494 | 104 | 31 | ||||||||||||
65,687 | 49,312 | 104 | 58 | |||||||||||||
— I-86 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | The Company | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(As restated) | ||||||||||||||||
Less than six months | 51,975 | 36,502 | 104 | 58 | ||||||||||||
Six months to one year | 7,052 | 6,754 | — | — | ||||||||||||
More than one year | 6,660 | 6,056 | — | — | ||||||||||||
65,687 | 49,312 | 104 | 58 | |||||||||||||
The Group | ||||||||||
Interest rates and final maturity | 2008 | 2007 | ||||||||
(As restated) | ||||||||||
RMB denominated bank loans | Fixed interest rates ranging from 4.54% to 6.80% (2007: 4.86% to 6.72%) per annum with maturity through 2009 (2007: maturity through 2008) | |||||||||
— unsecured | 10,780 | 11,850 | ||||||||
10,780 | 11,850 | |||||||||
— I-87 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
2008 | 2007 | |||||||
(As restated) | ||||||||
GSM business | ||||||||
— Usage and monthly fees | 40,464 | 42,077 | ||||||
— Value-added services revenue | 16,263 | 13,528 | ||||||
— Interconnection fee | 6,858 | 5,851 | ||||||
— Other service revenue | 1,119 | 1,091 | ||||||
Total GSM service revenue | 64,704 | 62,547 | ||||||
Fixed-line business | ||||||||
— Usage and monthly fees | 37,324 | 44,227 | ||||||
— Broadband services revenue | 18,114 | 14,273 | ||||||
— Interconnection fees | 7,500 | 7,911 | ||||||
— Value-added services revenue | 6,591 | 6,758 | ||||||
— Leased line income | 4,597 | 3,741 | ||||||
— Information communications technology services revenue | 3,124 | 3,986 | ||||||
— Other Internet-related services and managed data services revenue | 1,673 | 1,835 | ||||||
— Upfront installation fees | 1,181 | 1,283 | ||||||
— Upfront connection fees | 886 | 1,517 | ||||||
— Advertising and media services revenue | 697 | 380 | ||||||
— Other service revenue | 861 | 1,289 | ||||||
Total Fixed-line service revenue | 82,548 | 87,200 | ||||||
Sales of telecommunications products | 1,654 | 940 | ||||||
Total revenue from external customers | 148,906 | 150,687 | ||||||
— I-88 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Note | 2008 | 2007 | ||||||||||
(As restated) | ||||||||||||
Continuing operations: | ||||||||||||
Tax refund on reinvestment in subsidiaries | (a) | — | 4,001 | |||||||||
Gain on the non-monetary assets exchange | (b) | 1,305 | 386 | |||||||||
Others | 689 | 603 | ||||||||||
1,994 | 4,990 | |||||||||||
Note (a): | During 2007, the Company and China Netcom reinvested the undistributed profits into the subsidiaries and were granted a refund of a portion of the taxes previously paid by these subsidiaries as permitted under the tax law effective until 31 December 2007. This tax refund on reinvestment in subsidiaries was recorded as “other income”. | |
Note (b): | Please refer to Note (b)(iii) to the consolidated cash flow statement for details. |
2008 | 2007 | |||||||
(As restated) | ||||||||
Continuing operations: | ||||||||
Repair and maintenance | 5,431 | 5,466 | ||||||
Power and water charges | 5,451 | 4,952 | ||||||
Operating leases | 3,613 | 3,453 | ||||||
Consumables | 1,384 | 1,524 | ||||||
Others | 698 | 627 | ||||||
Total network, operations and support expenses | 16,577 | 16,022 | ||||||
— I-89 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
2008 | 2007 | |||||||
(As restated) | ||||||||
Continuing operations: | ||||||||
Provision for doubtful debts | 2,900 | 2,200 | ||||||
Cost of telecommunications products sold | 2,067 | 1,233 | ||||||
Cost of hardware sold in relation to information communications technology services | 2,461 | 3,491 | ||||||
Commission expenses | 10,104 | 9,784 | ||||||
Advertising and promotion expenses | 2,669 | 2,601 | ||||||
Customer installation cost | 1,961 | 2,036 | ||||||
Customer acquisition and retention cost | 2,650 | 3,068 | ||||||
Auditors’ remuneration | 107 | 123 | ||||||
Property management charge | 1,090 | 923 | ||||||
Office and administrative expenses | 2,440 | 2,728 | ||||||
Transportation expense | 1,714 | 1,492 | ||||||
Miscellaneous taxes and fees | 566 | 504 | ||||||
Others | 2,853 | 2,593 | ||||||
Total other operating expenses | 33,582 | 32,776 | ||||||
— I-90 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Note | 2008 | 2007 | ||||||||||
(As restated) | ||||||||||||
Continuing operations: | ||||||||||||
Finance costs: | ||||||||||||
— Interest on bank loans, corporate bonds and commercial paper repayable within 5 years | 2,367 | 2,992 | ||||||||||
— Interest on bank loans, repayable over 5 years | 144 | 198 | ||||||||||
— Interest expense on convertible bonds | — | 242 | ||||||||||
— Deferred consideration related to Acquisition of New Horizon | 224 | 375 | ||||||||||
— Less: Amounts capitalised in construction-in-progress | 6 | (260 | ) | (439 | ) | |||||||
Total interest expense | 2,475 | 3,368 | ||||||||||
— Exchange gain, net | (270 | ) | (457 | ) | ||||||||
— Others | 206 | 320 | ||||||||||
Total finance costs | 2,411 | 3,231 | ||||||||||
Note | 2008 | 2007 | ||||||||||
(As restated) | ||||||||||||
Continuing operations: | ||||||||||||
Employee benefit expenses: | ||||||||||||
— Salaries and wages | 15,442 | 14,087 | ||||||||||
— Contributions to defined contribution pension schemes | 2,110 | 1,854 | ||||||||||
— Contributions to supplementary defined contribution pension schemes | 51 | 56 | ||||||||||
— Contributions to housing fund | 1,049 | 913 | ||||||||||
— Monetary housing benefits | — | 27 | ||||||||||
— Other housing benefits | 166 | 433 | ||||||||||
— Share-based compensation | 32 | 84 | 170 | |||||||||
Total | 18,902 | 17,540 | ||||||||||
— I-91 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Salaries | Bonuses | Other | Contributions | |||||||||||||||||||||||||
and | paid and | benefits | to pension | |||||||||||||||||||||||||
Name of Director | Notes | Fees | allowance | payable | Note(a) | schemes | Total | |||||||||||||||||||||
(RMB’000) | (RMB’000) | (RMB’000) | (RMB’000) | (RMB’000) | (RMB’000) | |||||||||||||||||||||||
Chang Xiaobing | — | 2,135 | 939 | 198 | 23 | 3,295 | ||||||||||||||||||||||
Lu Yimin | (b) | — | 321 | 171 | — | 6 | 498 | |||||||||||||||||||||
Zuo Xunsheng | (b) | — | 321 | 171 | 9 | 6 | 507 | |||||||||||||||||||||
Tong Jilu | — | 1,512 | 803 | 127 | 23 | 2,465 | ||||||||||||||||||||||
Cesareo Alierta Izuel | (c) | 57 | — | — | — | — | 57 | |||||||||||||||||||||
Kim Shin Bae | (d) | 57 | — | — | — | — | 57 | |||||||||||||||||||||
Wu Jinglian | 365 | — | — | — | — | 365 | ||||||||||||||||||||||
Cheung Wing Lam, Linus | 347 | — | — | — | — | 347 | ||||||||||||||||||||||
Wong Wai Ming | 360 | — | — | — | — | 360 | ||||||||||||||||||||||
John Lawson Thornton | (e) | 74 | — | — | — | — | 74 | |||||||||||||||||||||
Timpson Chung Shui Ming | (e) | 74 | — | — | — | — | 74 | |||||||||||||||||||||
Shang Bing | (f) | — | 733 | — | 101 | 9 | 843 | |||||||||||||||||||||
Yang Xiaowei | (f) | — | 471 | — | 72 | 9 | 552 | |||||||||||||||||||||
Li Zhengmao | (f) | — | 471 | — | 72 | 9 | 552 | |||||||||||||||||||||
Li Gang | (g) | — | 946 | 492 | 146 | 12 | 1,596 | |||||||||||||||||||||
Zhang Junan | (g) | — | 946 | 492 | 146 | 19 | 1,603 | |||||||||||||||||||||
Miao Jianhua | (h) | — | 471 | — | — | 9 | 480 | |||||||||||||||||||||
Lu Jianguo | (i) | 225 | — | — | 146 | — | 371 | |||||||||||||||||||||
Lee Suk Hwan | (j) | 211 | — | — | — | — | 211 | |||||||||||||||||||||
Shan Weijian | (k) | 260 | — | — | — | — | 260 | |||||||||||||||||||||
Total | 2,030 | 8,327 | 3,068 | 1,017 | 125 | 14,567 | ||||||||||||||||||||||
— I-92 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Salaries | Bonuses | Other | Contributions | |||||||||||||||||||||||||
and | paid and | benefits | to pension | |||||||||||||||||||||||||
Name of Director | Notes | Fees | allowance | payable | Note(a) | schemes | Total | |||||||||||||||||||||
(RMB’000) | (RMB’000) | (RMB’000) | (RMB’000) | (RMB’000) | (RMB’000) | |||||||||||||||||||||||
Chang Xiaobing | — | 2,247 | 1,730 | 715 | 21 | 4,713 | ||||||||||||||||||||||
Shang Bing | (f) | — | 1,966 | 1,405 | 612 | 21 | 4,004 | |||||||||||||||||||||
Tong Jilu | — | 1,592 | 1,112 | 469 | 21 | 3,194 | ||||||||||||||||||||||
Yang Xiaowei | (f) | — | 1,264 | 848 | 434 | 21 | 2,567 | |||||||||||||||||||||
Li Zhengmao | (f) | — | 1,264 | 848 | 434 | 21 | 2,567 | |||||||||||||||||||||
Li Gang | (g) | — | 1,264 | 848 | 410 | 21 | 2,543 | |||||||||||||||||||||
Zhang Junan | (g) | — | 1,264 | 848 | 410 | 21 | 2,543 | |||||||||||||||||||||
Miao Jianhua | (h) | — | 595 | 402 | — | 9 | 1,006 | |||||||||||||||||||||
Lu Jianguo | (i) | 300 | — | — | 434 | — | 734 | |||||||||||||||||||||
Lee Suk Hwan | (j) | 54 | — | — | — | — | 54 | |||||||||||||||||||||
Wu Jinglian | 384 | — | — | 24 | — | 408 | ||||||||||||||||||||||
Shan Weijian | (k) | 346 | — | — | 24 | — | 370 | |||||||||||||||||||||
Cheung Wing Lam, Linus | 365 | — | — | 24 | — | 389 | ||||||||||||||||||||||
Wong Wai Ming | 375 | — | — | — | — | 375 | ||||||||||||||||||||||
Li Jianguo | (l) | — | 659 | — | 229 | 12 | 900 | |||||||||||||||||||||
Total | 1,824 | 12,115 | 8,041 | 4,219 | 168 | 26,367 | ||||||||||||||||||||||
Notes: | ||
(a) | Other benefits represent the value of share options granted to the directors of the Company under the Company’s share option schemes. | |
(b) | Mr. Lu Yimin and Mr. Zuo Xunsheng were appointed as executive directors on 15 October 2008. | |
(c) | Mr. Cesareo Alierta Izuel was appointed as a non-executive director on 15 October 2008. | |
(d) | Mr. Kim Shin Bae was appointed as a non-executive director on 15 October 2008 and resigned as a non-executive director on 22 January 2009. | |
(e) | Mr.John Lawson Thornton and Mr. Timpson Chung Shui Ming were appointed as independent non-executive directors on 15 October 2008. | |
(f) | Mr. Shang Bing, Mr. Yang Xiaowei and Mr. Li Zhengmao resigned as executive directors on 23 May 2008. | |
(g) | Mr. Li Gang and Mr. Zhang Junan resigned as executive directors on 15 October 2008. | |
(h) | Mr. Miao Jianhua was appointed as executive director on 12 July 2007 and resigned as executive director on 23 May 2008. | |
(i) | Mr. Lu Jianguo resigned as non-executive director on 15 October 2008. | |
(j) | Mr. Lee Suk Hwan was appointed as non-executive director on 23 October 2007 and resigned on 15 October 2008. |
— I-93 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(k) | Mr. Shan Weijian resigned as independent non-executive director on 15 October 2008. | |
(l) | Ms. Li Jianguo resigned as executive director on 9 July 2007. |
2008 | 2007 | |||||||
(RMB’000) | (RMB’000) | |||||||
Salaries and allowances | 3,603 | — | ||||||
Bonuses paid and payable | 1,875 | — | ||||||
Other benefits (Note 31.1(a)) | 557 | — | ||||||
Contributions to pension schemes | 66 | — | ||||||
6,101 | — | |||||||
(i) | the exercise price is equivalent to the share issue price of the Global Offering of HK$15.42 per share (excluding the brokerage fee and Hong Kong Stock Exchange transaction levy); and | ||
(ii) | the share options are vested and exercisable after 2 years from the grant date and expire 10 years from the date of grant. |
— I-94 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(i) | the nominal value of the shares; and | ||
(ii) | 80% of the average of the closing prices of shares on the SEHK on the five trading days immediately preceding the date of grant of the option on which there were dealings in the shares on the SEHK. |
(i) | share option may be granted to employees including executive directors of the Group or any of the non-executive directors; | ||
(ii) | the option period commences on a day after the date on which an option is offered but not later than 10 years from the offer date; and | ||
(iii) | minimum subscription price shall not be less than the higher of: |
• | the nominal value of the shares; | ||
• | the closing price of the shares of the stock exchange as stated in the stock exchange’s quotation sheets on the offer date in respect of the share options; and | ||
• | the average closing price of the shares on the stock exchange’s quotation sheets for the five trading days immediately preceding the offer date. |
— I-95 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-96 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(i) | The exercise price of options under this scheme is equal to (a) the exercise price of an outstanding China Netcom option held by the Eligible Participants divided by (b) the share exchange ratio 1.508. | ||
(ii) | The total number of options granted by the Company to all Eligible Participants under this scheme shall be equal to the product of (a) the share exchange ratio and (b) the number of China Netcom options outstanding as at 14 October 2008. |
— I-97 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
For the period from | ||||||||||||||||
1 January 2008 to | ||||||||||||||||
14 October 2008 | 2007 | |||||||||||||||
Average | Average | |||||||||||||||
exercise price | Number of | exercise | Number of | |||||||||||||
in HK$ | �� | share options | price in HK$ | share options | ||||||||||||
per Share | involved | per Share | involved | |||||||||||||
Balance, beginning of period/year | 10.32 | 150,844,560 | 10.21 | 176,646,900 | ||||||||||||
Granted | — | — | — | — | ||||||||||||
Forfeited/cancelled | 9.55 | (139,620 | ) | 8.40 | (2,117,440 | ) | ||||||||||
Cancelled in exchange for the Company’s options | 10.30 | (125,836,140 | ) | — | — | |||||||||||
Exercised | 10.45 | (24,868,800 | ) | 9.67 | (23,684,900 | ) | ||||||||||
Balance, end of period/year | — | — | 10.32 | 150,844,560 | ||||||||||||
Representing: | ||||||||||||||||
First Grant | — | 79,263,860 | ||||||||||||||
Second Grant | — | 71,580,700 | ||||||||||||||
Balance, end of period/year | — | 150,844,560 | ||||||||||||||
Exercisable at end of period/year | — | — | 10.59 | 45,218,610 | ||||||||||||
— I-98 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Weighted average | ||||||||||||||||
closing price per | ||||||||||||||||
share at respective | ||||||||||||||||
days immediately | ||||||||||||||||
before date of | ||||||||||||||||
Exercise | exercise | Proceeds | Number | |||||||||||||
price | of options | received | of shares | |||||||||||||
Grant | HK$ | HK$ | HK$ | involved | ||||||||||||
First Grant | 8.40 | 26.17 | 103,316,640 | 12,299,600 | ||||||||||||
Second Grant | 12.45 | 25.46 | 156,486,540 | 12,569,200 | ||||||||||||
259,803,180 | 24,868,800 | |||||||||||||||
Weighted average | ||||||||||||||||
closing price per | ||||||||||||||||
share at respective | ||||||||||||||||
days immediately | ||||||||||||||||
before date of | ||||||||||||||||
Exercise | exercise | Proceeds | Number | |||||||||||||
price | of options | received | of shares | |||||||||||||
Grant | HK$ | HK$ | HK$ | involved | ||||||||||||
First Grant | 8.40 | 22.23 | 136,343,760 | 16,231,400 | ||||||||||||
Second Grant | 12.45 | 23.92 | 92,796,075 | 7,453,500 | ||||||||||||
229,139,835 | 23,684,900 | |||||||||||||||
— I-99 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
2004 | 2005 | |||||||
Special | Special | |||||||
Purpose Share | Purpose Share | |||||||
Option | Option | |||||||
Stock price | HK$11.60 | HK$11.60 | ||||||
Exercise price | HK$5.57 | HK$8.26 | ||||||
Volatility | 55 | % | 49 | % | ||||
Dividend yield | 2 | % | 2 | % | ||||
Risk-free rate | 0.24-1.06 | % | 0.28-1.54 | % | ||||
Expected life | 0.30-1.09 years | 0.32-2.32 years | ||||||
Weighted average option value | HK $6.01 | HK $4.00 | ||||||
Number of options granted | 100,831,432 | 88,929,468 |
— I-100 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Company | ||||||||||||||||
2008 | 2007 | |||||||||||||||
Average | Average | |||||||||||||||
exercise price | Number of | exercise price | Number of | |||||||||||||
in HK$ | share options | in HK$ | share options | |||||||||||||
per Share | involved | per Share | involved | |||||||||||||
Balance, beginning of year | 7.12 | 257,279,600 | 6.95 | 314,256,000 | ||||||||||||
Granted | 6.83 | 189,760,900 | — | — | ||||||||||||
Forfeited | 6.37 | (2,720,334 | ) | 8.43 | (3,420,800 | ) | ||||||||||
Exercised | 7.62 | (31,246,000 | ) | 6.03 | (53,555,600 | ) | ||||||||||
Balance, end of year | 6.95 | 413,074,166 | 7.12 | 257,279,600 | ||||||||||||
Exercisable at end of year | 7.14 | 245,359,027 | 8.48 | 92,713,600 | ||||||||||||
— I-101 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Number of | Number of | |||||||||||||||
share | share | |||||||||||||||
options | options | |||||||||||||||
The price | outstanding | outstanding | ||||||||||||||
per Share | as at | as at | ||||||||||||||
to be paid | 31 | 31 | ||||||||||||||
Date of | Exercisable | on exercise | December | December | ||||||||||||
options grant | Vesting period | period | of options | 2008 | 2007 | |||||||||||
Share options granted under the Pre-Global Offering Share Option Scheme: | ||||||||||||||||
22 June 2000 | 22 June 2000 to 21 June 2002 | 22 June 2002 to 21 June 2010 | HK$ | 15.42 | 16,977,600 | 21,126,800 | ||||||||||
Share options granted under the Share Option Scheme: | ||||||||||||||||
30 June 2001 | 30 June 2001 | 30 June 2001 to 22 June 2010 | HK$ | 15.42 | 4,350,000 | 5,608,000 | ||||||||||
10 July 2002 (Note i) | 10 July 2002 to 10 July 2005 | 10 July 2003 to 9 July 2008 | HK$ | 6.18 | — | 3,308,000 | ||||||||||
21 May 2003 | 21 May 2003 to 21 May 2006 | 21 May 2004 to 20 May 2009 | HK$ | 4.30 | 8,956,000 | 11,092,800 | ||||||||||
20 July 2004 | 20 July 2004 to 20 July 2007 | 20 July 2005 to 19 July 2010 | HK$ | 5.92 | 41,024,000 | 50,924,000 | ||||||||||
21 December 2004 | 21 December 2004 to 21 December 2007 | 21 December 2005 to 20 December 2010 | HK$ | 6.20 | 654,000 | 654,000 | ||||||||||
15 February 2006 | 15 February 2006 to 15 February 2009 | 15 February 2008 to 14 February 2012 | HK$ | 6.35 | 151,556,000 | 164,566,000 | ||||||||||
Share options granted under the Special Purpose Share Option Scheme: | ||||||||||||||||
15 October 2008 (“2004 Special Purpose Share Options”) | 15 October 2008 to 17 May 2009 | 15 October 2008 to 16 November 2010 | HK$ | 5.57 | 100,627,098 | — | ||||||||||
15 October 2008 (“2005 Special Purpose Share Options”) | 15 October 2008 to 6 December 2010 | 15 October 2008 to 5 December 2011 | HK$ | 8.26 | 88,929,468 | — | ||||||||||
413,074,166 | 257,279,600 | |||||||||||||||
— I-102 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Note i: | As all outstanding options granted on 10 July 2002 have been exercised, therefore no options are expired under this grant. |
Weighted average | ||||||||||||||||
closing price per | ||||||||||||||||
Share at respective | ||||||||||||||||
days immediately | ||||||||||||||||
before date of | ||||||||||||||||
Exercise | exercise | Proceeds | Number | |||||||||||||
price | of options | received | of Shares | |||||||||||||
Grant | HK$ | HK$ | HK$ | involved | ||||||||||||
22 June 2000 | 15.42 | 18.73 | 63,980,664 | 4,149,200 | ||||||||||||
30 June 2001 | 15.42 | 18.38 | 18,781,560 | 1,218,000 | ||||||||||||
10 July 2002 | 6.18 | 15.88 | 20,443,440 | 3,308,000 | ||||||||||||
21 May 2003 | 4.30 | 16.90 | 8,947,440 | 2,080,800 | ||||||||||||
20 July 2004 | 5.92 | 17.81 | 58,240,960 | 9,838,000 | ||||||||||||
15 February 2006 | 6.35 | 17.62 | 67,640,200 | 10,652,000 | ||||||||||||
238,034,264 | 31,246,000 | |||||||||||||||
Weighted average | ||||||||||||||||
closing price per | ||||||||||||||||
Share at respective | ||||||||||||||||
days immediately | ||||||||||||||||
before date of | ||||||||||||||||
Exercise | exercise | Proceeds | Number | |||||||||||||
price | of options | received | of Shares | |||||||||||||
Grant | HK$ | HK$ | HK$ | involved | ||||||||||||
22 June 2000 | 15.42 | 17.56 | 34,657,992 | 2,247,600 | ||||||||||||
30 June 2001 | 15.42 | 17.62 | 8,450,160 | 548,000 | ||||||||||||
10 July 2002 | 6.18 | 12.96 | 49,793,496 | 8,057,200 | ||||||||||||
21 May 2003 | 4.30 | 12.95 | 60,057,240 | 13,966,800 | ||||||||||||
20 July 2004 | 5.92 | 13.77 | 170,117,120 | 28,736,000 | ||||||||||||
323,076,008 | 53,555,600 | |||||||||||||||
— I-103 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
33. | DISPOSAL GROUP AND DISCONTINUED OPERATIONS | |
Discontinued operations | ||
On 2 June 2008 and on 27 July 2008, the Company, CUCL and China Telecom entered into the Framework Agreement and the Disposal Agreement, respectively, to sell the CDMA business to China Telecom. The disposal was completed on 1 October 2008 (Note 1). The gain on disposal, net of corresponding income tax of approximately RMB9.0 billion, amounted to approximately RMB26.1 billion. |
— I-104 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
As at | ||||||||
1 October | ||||||||
Note | 2008 | |||||||
Net assets disposed of: | ||||||||
Cash and cash equivalents | (a | ) | 4,612 | |||||
Property, plant and equipment | 2,997 | |||||||
Goodwill | 373 | |||||||
Deferred tax assets | 6 | |||||||
Other assets | 3,958 | |||||||
Inventories | 525 | |||||||
Accounts receivable, net | 690 | |||||||
Prepayments and other current assets | 808 | |||||||
Deferred revenue | (444 | ) | ||||||
Payable and accrued liabilities | (1,144 | ) | ||||||
Advances from customers | (4,428 | ) | ||||||
Minority interest | (5 | ) | ||||||
7,948 | ||||||||
Fair value of future service agreed in Disposal Agreement | 37.2 | (b) | 517 | |||||
Transaction cost and taxations | 184 | |||||||
Income tax expense arising from the disposal of the CDMA business | 9,016 | |||||||
Gain on the disposal of the CDMA business recognised in income statement | 26,135 | |||||||
Cash consideration on the disposal of the CDMA business | 43,800 | |||||||
Less: Cash consideration receivable from disposal of the CDMA business | (13,140 | ) | ||||||
Cash and cash equivalents included in disposed CDMA business | (1,148 | ) | ||||||
Net cash inflow | 29,512 | |||||||
Note (a): | The balance included the cash payable of approximately RMB3,464 million upon the final agreement of the values of assets and liabilities transferred to China Telecom in accordance with the Disposal Agreement. |
— I-105 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
As at | ||||
28 February | ||||
2007 | ||||
Net assets disposed of: | ||||
Cash and cash equivalents | 23 | |||
Accounts receivable and other current assets | 416 | |||
Property, plant and equipment and other non-current assets | 7,630 | |||
Current portion of deferred revenue | (183 | ) | ||
Accounts payable | (2,046 | ) | ||
Long-term bank loans | (3,000 | ) | ||
Other liabilities | (267 | ) | ||
2,573 | ||||
Income tax expense arising from the disposal of Guangdong and Shanghai Branches | 301 | |||
Gain on the disposal of Guangdong and Shanghai Branches recognised in income statement | 626 | |||
Cash consideration on the disposal of Guangdong and Shanghai Branches | 3,500 | |||
Less: cash and cash equivalents included in disposed Guangdong and Shanghai Branches | (23 | ) | ||
Net cash inflow | 3,477 | |||
— I-106 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Fixed-line business- | ||||||||||||||||||||||||
Guangdong and | ||||||||||||||||||||||||
CDMA Business | Shanghai Branches | Total | ||||||||||||||||||||||
For the | For the | |||||||||||||||||||||||
period from | period from | |||||||||||||||||||||||
1 January | For the | For the | 1 January | For the | For the | |||||||||||||||||||
2008 to | year ended | year ended | 2007 to | year ended | year ended | |||||||||||||||||||
30 September | 31 December | 31 December | 28 February | 31 December | 31 December | |||||||||||||||||||
2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |||||||||||||||||||
Revenue | 22,330 | 31,197 | — | 615 | 22,330 | 31,812 | ||||||||||||||||||
Expenses | (20,423 | ) | (30,042 | ) | — | (618 | ) | (20,423 | ) | (30,660 | ) | |||||||||||||
Profit/(loss) before income tax from discontinued operations | 1,907 | 1,155 | — | (3 | ) | 1,907 | 1,152 | |||||||||||||||||
Income tax expenses | (469 | ) | (499 | ) | — | 1 | (469 | ) | (498 | ) | ||||||||||||||
Profit/(loss) for the period of discontinued operations | 1,438 | 656 | — | (2 | ) | 1,438 | 654 | |||||||||||||||||
Gain on disposal of discontinued operations before tax | 35,151 | — | — | 927 | 35,151 | 927 | ||||||||||||||||||
Income tax expenses | (9,016 | ) | — | — | (301 | ) | (9,016 | ) | (301 | ) | ||||||||||||||
Gain on disposal of discontinued operations after tax | 26,135 | — | — | 626 | 26,135 | 626 | ||||||||||||||||||
Profit for the period/year from discontinued operations | 27,573 | 656 | — | 624 | 27,573 | 1,280 | ||||||||||||||||||
Net cash inflow from operating activities | 656 | 837 | — | 388 | 656 | 1,225 | ||||||||||||||||||
Net cash outflow from investing activities | (23 | ) | (25 | ) | — | (374 | ) | (23 | ) | (399 | ) | |||||||||||||
Cash inflow from disposal of discontinued operations | 29,512 | — | — | 3,477 | 29,512 | 3,477 | ||||||||||||||||||
Net cash inflow/(outflow) from investing activities | 29,489 | (25 | ) | — | 3,103 | 29,489 | 3,078 | |||||||||||||||||
Net cash inflow from financing activities | — | — | — | — | — | — | ||||||||||||||||||
Net cash inflow from discontinued operations | 30,145 | 812 | — | 3,491 | 30,145 | 4,303 | ||||||||||||||||||
— I-107 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
2008 | 2007 | |||||||
(As restated) | ||||||||
Proposed final dividend: | ||||||||
RMB0.20 (2007: RMB0.20) per Share by the Company | 4,754 | 2,727 | ||||||
HK$ nil (2007: HK$0.592) per ordinary share by China Netcom (Note a) | — | 3,700 | ||||||
4,754 | 6,427 | |||||||
Dividend paid: | ||||||||
By the Company | 2,732 | 2,285 | ||||||
By China Netcom (Note a) | 3,499 | 3,600 | ||||||
6,231 | 5,885 | |||||||
Note a: | Since the 2008 Business Combination is accounted for as a business combination of entities under common control, accordingly, the proposed final dividend and dividend paid are restated to include China Netcom as if it had always been part of the Group. |
— I-108 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
2008 | 2007 | |||||||
(As restated) | ||||||||
Numerator (in RMB millions): | ||||||||
Profit attributable to the equity holders of the Company | ||||||||
— Continuing operations | 6,340 | 20,158 | ||||||
— Discontinued operations | 27,572 | 1,279 | ||||||
33,912 | 21,437 | |||||||
Denominator (in millions): | ||||||||
Weighted average number of Shares outstanding and shares used in computing basic earnings per Share | 23,751 | 23,075 | ||||||
Dilutive equivalent Shares arising from share options | 190 | 246 | ||||||
Shares used in computing diluted earnings per Share | 23,941 | 23,321 | ||||||
Basic earnings per Share (in RMB) | ||||||||
— Continuing operations | 0.27 | 0.87 | ||||||
— Discontinued operations | 1.16 | 0.06 | ||||||
1.43 | 0.93 | |||||||
Diluted earnings per Share (in RMB) | ||||||||
— Continuing operations | 0.27 | 0.86 | ||||||
— Discontinued operations | 1.15 | 0.06 | ||||||
1.42 | 0.92 | |||||||
— I-109 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||||||||||||||||||
2008 | 2007 (As restated) | |||||||||||||||||||||||
Original | RMB | Original | RMB | |||||||||||||||||||||
currency | Exchange | equivalent | currency | Exchange | equivalent | |||||||||||||||||||
millions | rate | millions | millions | rate | millions | |||||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||||||
— denominated in HK dollars | 223 | 0.88 | 197 | 552 | 0.94 | 518 | ||||||||||||||||||
— denominated in US dollars | 134 | 6.83 | 914 | 65 | 7.30 | 471 | ||||||||||||||||||
— denominated in EURO | 4 | 9.66 | 43 | 3 | 10.67 | 28 | ||||||||||||||||||
— denominated in Japanese Yen | 50 | 0.08 | 4 | 247 | 0.06 | 16 | ||||||||||||||||||
— denominated in GBP | 2 | 9.88 | 20 | — | 14.58 | 4 | ||||||||||||||||||
Sub-total | 1,178 | 1,037 | ||||||||||||||||||||||
Short-term bank deposits: | ||||||||||||||||||||||||
— denominated in HK dollars | — | 0.88 | — | 71 | 0.94 | 67 | ||||||||||||||||||
— denominated in US dollars | 20 | 6.83 | 137 | 78 | 7.30 | 569 | ||||||||||||||||||
Sub-total | 137 | 636 | ||||||||||||||||||||||
Total | 1,315 | 1,673 | ||||||||||||||||||||||
— I-110 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Company | ||||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||
Original | RMB | Original | RMB | |||||||||||||||||||||
currency | Exchange | equivalent | currency | Exchange | equivalent | |||||||||||||||||||
millions | rate | millions | millions | rate | millions | |||||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||||||
— denominated in HK dollars | 72 | 0.88 | 63 | 355 | 0.94 | 332 | ||||||||||||||||||
— denominated in US dollars | 39 | 6.83 | 267 | 22 | 7.30 | 162 | ||||||||||||||||||
Sub-total | 330 | 494 | ||||||||||||||||||||||
Short-term bank deposits: | ||||||||||||||||||||||||
— denominated in HK dollars | — | 0.88 | — | 71 | 0.94 | 67 | ||||||||||||||||||
— denominated in US dollars | 18 | 6.83 | 122 | 78 | 7.30 | 569 | ||||||||||||||||||
Sub-total | 122 | 636 | ||||||||||||||||||||||
Total | 452 | 1,130 | ||||||||||||||||||||||
— I-111 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-112 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Note | 2008 | 2007 | ||||||||||
�� | (As | |||||||||||
restated) | ||||||||||||
Transactions with Unicom Parent, Netcom Group and their subsidiaries: | ||||||||||||
Continuing operations: | ||||||||||||
Interconnection revenues | (ii), (iv) | 808 | 723 | |||||||||
Interconnection charges | (iii), (iv) | 768 | 742 | |||||||||
Rental income for premises and facilities | (i), (v) | 18 | 19 | |||||||||
Revenue for leasing of transmission line capacity | (i), (vi) | 36 | 7 | |||||||||
Charges for leasing of transmission line capacity | (i), (vii) | 80 | 23 | |||||||||
Charge for operator-based subscriber value-added services | (i), (viii) | 297 | 259 | |||||||||
Charge for customer services | (i), (ix) | 713 | 683 | |||||||||
Agency fee incurred for subscriber development services | (i), (x) | 150 | 92 | |||||||||
Charges for cellular subscriber value-added service | (i), (xi) | 153 | 37 | |||||||||
Rental charges for premises, equipment and facilities | (i), (xii) | 35 | 31 | |||||||||
Charges for the international gateway services | (i), (xiii) | 7 | 15 | |||||||||
Purchase of telecom cards | (i), (xiv) | 549 | 618 | |||||||||
Agency fee incurred for procurement of telecommunications equipment | (i), (xv) | 20 | 18 | |||||||||
Charge for engineering design and technical service | (i), (xvi) | 287 | 117 | |||||||||
Charge for engineering and information technology-related services | (xvii) | 2,603 | 1,946 | |||||||||
Common corporate services income | (xviii) | 140 | 121 | |||||||||
Charges for common corporate services | (xviii) | 563 | 477 | |||||||||
Rental income from properties | (xix) | 10 | 1 | |||||||||
Rental charges for premises | (xix) | 642 | 636 | |||||||||
Property sub-lease rental charges | (xix) | 1 | 11 | |||||||||
Purchases of materials | (xx) | 512 | 668 | |||||||||
Charges for ancillary telecommunications support services | (xxi) | 558 | 448 | |||||||||
Charges for support services | (xxii) | 461 | 536 | |||||||||
Charges for lease of telecommunications facility | (xxiii) | 306 | 309 | |||||||||
Income from information communication technologies services | (xxiv) | 151 | 130 | |||||||||
Discontinued operations: | ||||||||||||
Interconnection revenue | (ii), (iv) | 17 | 26 | |||||||||
Interconnection charges | (iii), (iv) | 13 | 17 | |||||||||
Charges for leasing of transmission line capacity | (i), (vii) | 3 | — | |||||||||
Charge for operator-based subscriber value-added services | (i), (viii) | 89 | 119 | |||||||||
Charge for customer services | (i), (ix) | 111 | 178 | |||||||||
Agency fee incurred for subscriber development services | (i), (x) | 24 | 23 | |||||||||
CDMA network capacity lease rental | (xxv) | 6,009 | 8,382 | |||||||||
Constructed capacity related cost of CDMA network | (xxvi) | 234 | 215 | |||||||||
Charges for cellular subscriber value-added service | (i), (xi) | 46 | 17 | |||||||||
Purchase of telecom cards | (i), (xiv) | 40 | 79 | |||||||||
Charge for engineering design and technical service | (i), (xvi) | 3 | 1 |
— I-113 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(i) | On 26 October 2006, CUCL entered into a new agreement “2006 Comprehensive Services Agreement” to continue to carry out related party transactions. The new agreement was approved by the independent shareholders of the Company on 1 December 2006, and became effective from 1 January 2007. Upon completion of the acquisition of Guizhou Business in 2007, the 2006 Comprehensive Services Agreement was amended where necessary so that the service area of CUCL was extended to include Guizhou province. In addition, the rights and obligations of Guizhou branch of Unicom Parent under the framework agreement entered into with Guizhou branch of Unicom Huasheng for the procurement of CDMA mobile handsets on 19 December 2006 were assigned to and assumed by CUCL. | |
Pursuant to the ordinary resolution passed at the extraordinary general meeting held on 16 September 2008, the independent shareholders of the Company approved the 2006 Comprehensive Services Agreement be amended with effect from 15 October 2008 to include CNC China as a party (the “Second 2006 Comprehensive Services Agreement”). | ||
Also, the independent shareholders of the Company approved the following agreements: | ||
— Framework Agreement for Engineering and Information Technology Services dated 12 August 2008 | ||
— Engineering and Information Technology Services Agreement 2008-2010 | ||
— Domestic Interconnection Settlement Agreement 2008-2010 | ||
— International Long Distance Voice Services Settlement Agreement 2008-2010 | ||
— Framework Agreement for Interconnection Settlement dated 12 August 2008 | ||
(ii) | Interconnection revenues represent the amounts received or receivable from Unicom Parent and Netcom Group for calls from their networks to the Group’s networks. | |
(iii) | Interconnection charges are for calls made from the Group’s networks to Unicom Parent and Netcom Group’ networks. | |
(iv) | Pursuant to the Framework Agreement for Interconnection Settlement dated 12 August 2008 entered between CUCL and Netcom Group, CUCL and Netcom Group agreed to interconnect the network of Netcom Group on the one hand and that of CUCL on the other and settle charges in respect of domestic long distance voice services within their respective service regions and international long distance voice services. Interconnection settlement between Unicom Parent and Netcom Group’ networks and the Group’s network are based on standards established from time to time by the MIIT. | |
(v) | Pursuant to 2006 Comprehensive Services Agreement and the Second 2006 Comprehensive Services Agreement, the Group agreed to provide premises to Unicom New Guoxin Telecommunications Corporation Limited (“Unicom New Guoxin”). The rental amount is based on the lower of depreciation costs and market price for similar premises in that locality. | |
(vi) | Pursuant to the agreement entered between the branches of CUCL and 21 Provinces in Southern China of Netcom Group, revenue for leasing of transmission line capacity is based on market rates. | |
(vii) | Pursuant to Framework Agreement for Telecommunications Facilities Leasing dated 12 August 2008 entered between CUCL and Netcom Group, the charges payable by CUCL are based on the annual depreciation charges of such transmission line capacity (not higher than market rates). | |
(viii) | Pursuant to 2006 Comprehensive Services Agreement and the Second 2006 Comprehensive Services Agreement, the Group shall retain 40% of the actually received revenue generated from the value-added services provided by New Guoxin to the Group’s subscribers and allocate 60% of such revenue to New Guoxin. The settlement should be made among branches of the Group and New Guoxin respectively. |
— I-114 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(ix) | Pursuant to 2006 Comprehensive Services Agreement and the Second 2006 Comprehensive Services Agreement, New Guoxin provides business inquiries, tariff inquiries, account maintenance, complaints handling, and customer interview and subscriber retention services to the Group’s customers. The service fee payable by the Group shall be calculated on the basis of the customer service costs plus a profit margin, which shall not exceed 10%. The customer service costs were determined by the actual cost per operator seat and the number of effective operator seats. In addition, Guangdong has been added as one of the economically developed metropolises in determining the cost per operator seat. | |
(x) | Pursuant to 2006 Comprehensive Services Agreement and the Second 2006 Comprehensive Services Agreement, New Guoxin provides subscriber development services to the Group through telephone or other channels by utilising its own network, equipment and operators. The agency fee chargeable to the Group does not exceed the average of agency fees chargeable by any independent third party agent in the same region. | |
(xi) | Pursuant to 2006 Comprehensive Services Agreement and the Second 2006 Comprehensive Services Agreement, UNISK (Beijing) Information Technology Corporation Limited (“UNISK”) and Unicom NewSpace Corporation Limited (“Unicom NewSpace”) agreed to provide the cellular subscribers of CUCL with various types of value-added services through its cellular communication network and data platform. The Group retains a portion of the revenue generated from the value-added services provided to the Group’s subscribers (and actually received by the Group) and allocates a portion of such fees to UNISK and Unicom NewSpace for settlement, on the condition that such proportion allocated to UNISK and Unicom NewSpace does not exceed the average proportion allocated to independent value-added telecommunications content providers who provide value-added telecommunications content to the Group in the same region. The percentage of revenue to be allocated to UNISK and Unicom NewSpace by the Group varies depending on the types of value-added service provided to the Group. | |
(xii) | Pursuant to 2006 Comprehensive Services Agreement and the Second 2006 Comprehensive Services Agreement, CUCL and Unicom Parent agreed to mutually lease premises, equipment and facilities from each other. Rentals are based on the lower of depreciation costs and market rates. | |
(xiii) | Pursuant to 2006 Comprehensive Services Agreement and the Second 2006 Comprehensive Services Agreement, charges for international gateway services represent the amounts paid or payable to Unicom Parent for international gateway services provided for the Group’s international long distance networks. The charge for this service is based on the cost of operation and maintenance of the international gateway facilities incurred by Unicom Parent, including depreciation, together with a margin of 10% over cost. | |
(xiv) | Pursuant to 2006 Comprehensive Services Agreement and the Second 2006 Comprehensive Services Agreement, the Group agreed to purchase telephone cards from Unicom Parent (to be imported by Unicom Xingye Science and Technology Trade Company Limited (“Unicom Xingye”) at cost plus a margin to be agreed from time to time, but not to exceed 20%, and subject to appropriate volume discounts. Prices and volumes are subject to review by the parties on an annual basis. | |
(xv) | Pursuant to 2006 Comprehensive Services Agreement and the Second 2006 Comprehensive Services Agreement, Unicom Import and Export Company Limited (“Unicom I/E Co”) agreed to provide equipment procurement services to the Group. Unicom I/E Co. charges the Group 0.55% (for contracts up to an amount of US$30 million (inclusive)) and 0.35% (for contracts with an amount of more than US$30 million) of the value of imported equipment, and 0.25% (for contracts up to an amount of RMB200 million (inclusive)) and 0.15% (for contracts with an amount of more than RMB200 million) of the value of domestic equipment for such services. | |
(xvi) | Pursuant to 2006 Comprehensive Services Agreement and the Second 2006 Comprehensive Services Agreement, China Information Technology Deigning & Consulting Institute (“CITDCI”) agreed to provide engineering design and technical services to the Group based on its demands and requirements. The service fee standards for the engineering design and technical services are determined based on standards promulgated by the relevant government authorities. In addition, such prices should not be higher than those adopted by an independent third party providing similar services in the same industry. |
— I-115 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(xvii) | Pursuant to Framework Agreement for Engineering and Information Technology Services dated 12 August 2008 entered between CUCL and Netcom Group and Engineering and Information Technology Services Agreement 2008-2010 entered between CNC China and Netcom Group, the charges payable by CUCL and CNC China for the above services are determined with reference to market rates and are settled when the relevant services are provided. | |
(xviii) | Pursuant to Master Sharing Agreement 2008-2010 entered between CNC China and Netcom Group, expenses associated with common corporate services is allocated between CNC China and Netcom Group based on total assets as appropriate. | |
(xix) | Pursuant to Property Leasing Agreement 2008-2010 entered between CNC China and Netcom Group and the Framework Agreement for Property Leasing dated 12 August 2008 entered between CUCL and Netcom Group, the charges payable by CNC China and CUCL are based on market rates or the depreciation charges and taxes (only not higher than the market rates) in respect of each property. The charges are subject to review every year. | |
(xx) | Pursuant to Materials Procurement Agreement 2008-2010 entered between CNC China and Netcom Group, the charges payable by CNC China to Netcom Group are based on market rates or cost-plus basis. | |
(xxi) | Pursuant to Ancillary Telecommunications Services Agreement 2008-2010 entered between CNC China and Netcom Group, and the Framework Agreement for Ancillary Telecommunications Services dated 12 August 2008 entered between CUCL and Netcom Group, Netcom Group agreed to provide services including certain telecommunications pre-sale, on-sale and after-saleservices, certain sales agency services, the printing and delivery of invoice services, the maintenance of certain air-conditioning, fire alarm equipment and telephone booths and other customer services. The charges are based on market rates and settled as and when the relevant services are provided. | |
(xxii) | Pursuant to Support Services Agreement 2008-2010 entered between CNC China and Netcom Group and the Framework Agreement for Support Services dated 12 August 2008 entered between CUCL and Netcom Group, Netcom Group agreed to provide services including equipment leasing services, motor vehicles services, safety and security services, conference services, basic construction agency services, equipment maintenance services, employee training services, advertising services, printing services and other support services. The charges are based on market rates and settled as and when the relevant services are provided. | |
(xxiii) | Pursuant to Telecommunications Facilities Leasing Agreement 2008-2010 entered between CNC China and Netcom Group and the Framework Agreement for Telecommunications Facilities Leasing dated 12 August 2008 entered between CUCL and Netcom Group, CNC China agreed to lease the international telecommunications facilities and inter-provincial transmission optic fibers from Netcom Group. The lease payment is based on the depreciation charge of the leased assets. | |
(xxiv) | Pursuant to Information and Communications Technology Agreement 2008-2010 entered between System Integration Corporation and Netcom Group, System Integration Corporation, agreed to provide information communications technology services to Netcom Group and also to subcontract services ancillary to the provision of information communications technology services, namely, the system installation and configuration services, to the subsidiaries and branches of Netcom Group in Netcom Group’s southern service region in the PRC. The charges payable by Netcom Group are based on market value. | |
(xxv) | On 26 October 2006, CUCL entered into the new agreement “2006 CDMA Lease Agreement” with Unicom Parent and Unicom New Horizon to continue to carry out related party transactions. The new agreement was approved by the independent shareholders of the Company on 1 December 2006, and became effective from 1 January 2007. As disclosed in the announcement dated 28 July 2008, the Company, CUCL and China Telecom agreed on the CDMA Business disposal and the Company agreed to waive the CDMA network purchase option and terminate the 2006 CDMA Lease Agreement, in each case with effect from the completion of the CDMA Business disposal. During the Company’s extraordinary general meeting of |
— I-116 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
shareholders held on 16 September 2008, the Company’s independent shareholders approved the waiver of the CDMA network purchase option and the termination of the 2006 CDMA Lease Agreement. Upon the completion of the CDMA Business disposal on 1 October 2008, the 2006 CDMA Lease Agreement was terminated. | ||
(xxvi) | Pursuant to 2006 CDMA Lease Agreement, the constructed capacity related costs in connection with the CDMA network capacity used by the Group, including the rentals for the exchange centers and the base stations, water and electricity charges, heating charges and fuel charges for the relevant equipment etc., as well as the maintenance costs of a non-capital nature, are charged to the Group. The proportion of the constructed capacity related costs to be borne by the Group is calculated on a monthly basis by reference to the actual number of cumulative CDMA subscribers of the Group at the end of the month prior to the occurrence of the costs divided by 90%, as a percentage of the total capacity available on the CDMA network. | |
(xxvii) | Unicom Parent is the registered proprietor of the “Unicom” trademark in English and the trademark bearing the “Unicom” logo, which are registered at the PRC State Trademark Bureau. Pursuant to an exclusive PRC trademark licence agreement between Unicom Parent and the Group, the Group are granted the right to use these trademarks on a royalty free and renewal basis. |
The Group | ||||||||
2008 | 2007 | |||||||
Within one year | ||||||||
In the second year | — | 1,960 | ||||||
In the third year | — | 1,960 | ||||||
Total | — | 1,960 | ||||||
— | 5,880 | |||||||
— I-117 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||||||
Note | 2008 | 2007 | ||||||||||
(As restated) | ||||||||||||
Interconnection revenue | (i) | 11,816 | 11,000 | |||||||||
Interconnection charges | (i) | 10,819 | 10,367 | |||||||||
Leased line revenue | (ii) | 500 | 539 | |||||||||
Leased line charges | (ii) | 269 | 350 |
(i) | The interconnection revenue and charges mainly represent the amounts due from or to domestic carriers for telephone calls made between the Group’s networks and the network of domestic carriers. The interconnection settlements are calculated in accordance with interconnection agreements reached between the branches of the Group and domestic carriers on a provincial basis. The terms of these agreements are set in accordance with the standard settlement arrangement stipulated by the MIIT. | |
(ii) | Leased line charges are paid or payable to domestic carriers by the Group for the provision of transmission lines. At the same time, the Group leases transmission lines to domestic carriers in return for leased line rental income. The charges are calculated at a fixed charge per line, depending on the number of lines being used by the Group and domestic carriers. |
— I-118 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Proceeds receivable | 13,140 | |||
Advances from customers received on behalf of China Telecom | (768 | ) | ||
Cash payable upon the final agreement of the values of assets and liabilities transferred to China Telecom in accordance with the Disposal Agreement | (3,464 | ) |
The Group | ||||||||
2008 | 2007 | |||||||
(As restated) | ||||||||
Amounts due from domestic carriers | ||||||||
— Receivables for interconnection revenue and leased line revenue | 914 | 894 | ||||||
— Less: Provision for doubtful debts | (49 | ) | (78 | ) | ||||
865 | 816 | |||||||
Amounts due to domestic carriers | ||||||||
— Payables for interconnection charges and leased lines charges | 538 | 510 | ||||||
— I-119 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||
2008 | 2007 | |||||||
(As restated) | ||||||||
Finance income/costs, include: | ||||||||
— Interest income | 238 | 278 | ||||||
— Interest expense | 2,008 | 2,250 | ||||||
Short-term bank loans received | 50,614 | 63,125 | ||||||
Short-term commercial paper received | 10,000 | 20,000 | ||||||
Long-term bank loans received | 2,888 | 2,559 | ||||||
Issuance of corporate bonds | 5,000 | 2,000 | ||||||
Short-term bank loans repaid | 51,184 | 81,685 | ||||||
Short-term commercial paper repaid | 20,000 | 10,000 | ||||||
Long-term bank loans repaid | 20,524 | 9,583 |
The Group | ||||||||
2007 | 2008 | |||||||
(As restated) | ||||||||
Current assets | ||||||||
Short-term bank deposits | 238 | 619 | ||||||
Cash and cash equivalents | 8,672 | 11,484 | ||||||
Non-current liabilities | ||||||||
Long-term bank loans | 997 | 14,625 | ||||||
Corporate bonds | 7,000 | 2,000 | ||||||
Current liabilities | ||||||||
Short-term commercial paper | 10,000 | 20,000 | ||||||
Current portion of long-term bank loans | 1,216 | 7,411 | ||||||
— I-120 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||||||||||
2007 | ||||||||||||||||
2008 | (As restated) | |||||||||||||||
Land and | ||||||||||||||||
buildings | Equipment | Total | Total | |||||||||||||
Authorised and contracted for | 1,162 | 4,914 | 6,076 | 3,802 | ||||||||||||
Authorised but not contracted for | 846 | 6,092 | 6,938 | 2,508 | ||||||||||||
Total | 2,008 | 11,006 | 13,014 | 6,310 | ||||||||||||
The Company | ||||||||
2008 | 2007 | |||||||
Authorised and contracted for | — | — | ||||||
Authorised but not contracted for | — | 19 | ||||||
— | 19 | |||||||
— I-121 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
The Group | ||||||||||||||||
2008 | 2007 | |||||||||||||||
(As restated) | ||||||||||||||||
Land and | ||||||||||||||||
buildings | Equipment | Total | Total | |||||||||||||
Leases expiring: | ||||||||||||||||
— no later than one year | 1,438 | 390 | 1,828 | 9,096 | ||||||||||||
— later than one year and no later than five years | 3,876 | 695 | 4,571 | 3,287 | ||||||||||||
— later than five years | 1,764 | 193 | 1,957 | 2,031 | ||||||||||||
Total | 7,078 | 1,278 | 8,356 | 14,414 | ||||||||||||
The Company | ||||||||
2008 | 2007 | |||||||
Office premise lease expiring: | ||||||||
— no later than one year | 4 | 10 | ||||||
— later than one year and no later than five years | — | 4 | ||||||
Total | 4 | 14 | ||||||
— I-122 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(a) | Acquisitions of certain assets and business from Unicom Parent and Netcom Group |
(b) | Leasing of telecommunications network in Southern China from Unicom New Horizon |
(c) | Granting of the license to operate 3G digital cellular business with WCDMA technology |
(d) | Proposed dividend |
— I-123 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-124 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
3. | UNAUDITED CONSOLIDATED FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2009 |
As at 30 June 2009
(All amounts in RMB millions)
Unaudited | ||||||||||||
30 June | 31 December | |||||||||||
Note | 2009 | 2008 | ||||||||||
(As restated) | ||||||||||||
(Note 2) | ||||||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | 5 | 300,054 | 285,469 | |||||||||
Lease prepayments | 7,660 | 7,863 | ||||||||||
Goodwill | 2,771 | 2,771 | ||||||||||
Deferred income tax assets | 6 | 5,859 | 5,334 | |||||||||
Available-for-sale financial assets | 181 | 95 | ||||||||||
Other assets | 7 | 9,948 | 9,087 | |||||||||
326,473 | 310,619 | |||||||||||
Current assets | ||||||||||||
Inventories and consumables | 8 | 1,127 | 1,092 | |||||||||
Accounts receivable, net | 9 | 9,914 | 9,341 | |||||||||
Prepayments and other current assets | 10 | 2,622 | 2,715 | |||||||||
Amounts due from ultimate holding company | 27.1 | (c) | — | 169 | ||||||||
Amounts due from related parties | 27.1 | (c) | 93 | 128 | ||||||||
Amounts due from domestic carriers | 27.2 | (b) | 1,341 | 974 | ||||||||
Proceeds receivable for the disposal of the CDMA business | 27.2 | (c) | 5,437 | 13,140 | ||||||||
Short-term bank deposits | 196 | 337 | ||||||||||
Cash and cash equivalents | 7,725 | 10,237 | ||||||||||
28,455 | 38,133 | |||||||||||
Total assets | 354,928 | 348,752 | ||||||||||
EQUITY | ||||||||||||
Capital and reserves attributable to equity holders of the Company | ||||||||||||
Share capital | 11 | 2,329 | 2,329 | |||||||||
Share premium | 11 | 166,784 | 166,784 | |||||||||
Reserves | (18,999 | ) | (15,464 | ) | ||||||||
Retained profits | ||||||||||||
— Proposed 2008 final dividend | 25 | — | 4,754 | |||||||||
— Others | 55,619 | 49,322 | ||||||||||
205,733 | 207,725 | |||||||||||
Minority interest in equity | 2 | 2 | ||||||||||
Total equity | 205,735 | 207,727 | ||||||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||
30 June | 31 December | |||||||||||
Note | 2009 | 2008 | ||||||||||
(As restated) | ||||||||||||
(Note 2) | ||||||||||||
LIABILITIES | ||||||||||||
Non-current liabilities | ||||||||||||
Long-term bank loans | 12 | 939 | 997 | |||||||||
Corporate bonds | 13 | 7,000 | 7,000 | |||||||||
Deferred income tax liabilities | 6 | 18 | 16 | |||||||||
Deferred revenue | 3,043 | 3,398 | ||||||||||
Other obligations | 1,314 | 1,681 | ||||||||||
12,314 | 13,092 | |||||||||||
Current liabilities | ||||||||||||
Payables and accrued liabilities | 14 | 76,869 | 67,509 | |||||||||
Taxes payable | 11,285 | 11,307 | ||||||||||
Amounts due to ultimate holding company | 27.1 | (c) | 2 | — | ||||||||
Amounts due to related parties | 27.1 | (c) | 3,215 | 1,658 | ||||||||
Amounts due to domestic carriers | 27.2 | (b) | 1,230 | 956 | ||||||||
Payables in relation to the disposal of the CDMA business | 27.2 | (c) | 182 | 4,232 | ||||||||
Dividend payable | 25 | 1,027 | 149 | |||||||||
Short-term commercial paper | 15 | 10,000 | 10,000 | |||||||||
Short-term bank loans | 16 | 11,780 | 10,780 | |||||||||
Current portion of long-term bank loans | 12 | 603 | 1,216 | |||||||||
Current portion of deferred revenue | 1,629 | 2,200 | ||||||||||
Current portion of other obligations | 3,017 | 3,012 | ||||||||||
Advances from customers | 16,040 | 14,914 | ||||||||||
136,879 | 127,933 | |||||||||||
Total liabilities | 149,193 | 141,025 | ||||||||||
Total equity and liabilities | 354,928 | 348,752 | ||||||||||
Net current liabilities | (108,424 | ) | (89,800 | ) | ||||||||
Total assets less current liabilities | 218,049 | 220,819 | ||||||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
For the six months ended 30 June 2009
(All amounts in RMB millions, except per Share data)
Unaudited | ||||||||||||
Six months ended 30 June | ||||||||||||
Note | 2009 | 2008 | ||||||||||
(As restated) | ||||||||||||
(Note 2) | ||||||||||||
Continuing operations | ||||||||||||
Revenue | 17 | 76,319 | 81,459 | |||||||||
Interconnection charges | (6,240 | ) | (6,393 | ) | ||||||||
Depreciation and amortisation | (23,358 | ) | (23,989 | ) | ||||||||
Networks, operations and support expenses | 18 | (10,106 | ) | (8,633 | ) | |||||||
Employee benefit expenses | 19 | (10,546 | ) | (9,928 | ) | |||||||
Other operating expenses | 20 | (16,551 | ) | (17,611 | ) | |||||||
Finance costs | 21 | (363 | ) | (1,192 | ) | |||||||
Interest income | 51 | 116 | ||||||||||
Other income — net | 22 | 331 | 809 | |||||||||
9,537 | 14,638 | |||||||||||
Leasing fee for telecommunications networks in Southern China | 1(b), 2 | (907 | ) | — | ||||||||
Profit from continuing operations before income tax | 8,630 | 14,638 | ||||||||||
Income tax expenses | 6 | (2,014 | ) | (3,202 | ) | |||||||
Profit from continuing operations | 6,616 | 11,436 | ||||||||||
Discontinued operations | ||||||||||||
Profit from discontinued operations | 24 | — | 655 | |||||||||
Profit for the period | 6,616 | 12,091 | ||||||||||
Attributable to: | ||||||||||||
Equity holders of the Company | 6,616 | 12,090 | ||||||||||
Minority interest | — | 1 | ||||||||||
6,616 | 12,091 | |||||||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||
Six months ended 30 June | ||||||||||||
Note | 2009 | 2008 | ||||||||||
(As restated) | ||||||||||||
(Note 2) | ||||||||||||
Earnings per share for profit attributable to equity holders of the Company during the period | ||||||||||||
Basic earnings per share (RMB) | 26 | 0.28 | 0.51 | |||||||||
Diluted earnings per share (RMB) | 26 | 0.28 | 0.51 | |||||||||
Earnings per share for profit from continuing operations attributable to equity holders of the Company during the period | ||||||||||||
Basic earnings per share (RMB) | 26 | 0.28 | 0.48 | |||||||||
Diluted earnings per share (RMB) | 26 | 0.28 | 0.48 | |||||||||
Earnings per share for profit from discontinued operations attributable to equity holders of the Company during the period | ||||||||||||
Basic earnings per share (RMB) | 26 | — | 0.03 | |||||||||
Diluted earnings per share (RMB) | 26 | — | 0.03 | |||||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
For the six months ended 30 June 2009
(All amounts in RMB millions)
Unaudited | ||||||||
Six months ended 30 June | ||||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
(Note 2) | ||||||||
Profit for the period | 6,616 | 12,091 | ||||||
Other comprehensive income | ||||||||
Currency translation differences | 6 | (19 | ) | |||||
Fair value gains/(losses) on available-for-sale financial assets, net of tax | 79 | (100 | ) | |||||
Other comprehensive income for the period, net of tax | 85 | (119 | ) | |||||
Total comprehensive income for the period | 6,701 | 11,972 | ||||||
Total comprehensive income attributable to: | ||||||||
Equity holders of the Company | 6,701 | 11,971 | ||||||
Minority interest | — | 1 | ||||||
6,701 | 11,972 | |||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
For the six months ended 30 June 2009
(All amounts in RMB millions)
Unaudited | ||||||||||||||||||||||||||||||||||||||||
Attributable to equity holders of the Company | ||||||||||||||||||||||||||||||||||||||||
Employee | ||||||||||||||||||||||||||||||||||||||||
share-based | ||||||||||||||||||||||||||||||||||||||||
Share | Share | compensation | Revaluation | Statutory | Other | Retained | Minority | Total | ||||||||||||||||||||||||||||||||
capital | premium | reserve | reserve | reserves | reserve | profits | Total | interest | equity | |||||||||||||||||||||||||||||||
Balance at 1 January 2008 (As previously reported) | 1,437 | 64,320 | 516 | 1,113 | 17,933 | 56,713 | 36,480 | 178,512 | 4 | 178,516 | ||||||||||||||||||||||||||||||
Adjusted for 2009 Business Combination under common control (Note 1) | — | — | — | 21 | 832 | 5,142 | (6,336 | ) | (341 | ) | 3 | (338 | ) | |||||||||||||||||||||||||||
Balance at 1 January 2008 (As restated) | 1,437 | 64,320 | 516 | 1,134 | 18,765 | 61,855 | 30,144 | 178,171 | 7 | 178,178 | ||||||||||||||||||||||||||||||
Total comprehensive income for the period | — | — | — | — | — | 894 | 11,077 | 11,971 | 1 | 11,972 | ||||||||||||||||||||||||||||||
Transfer to retained profits in respect of depreciation on revalued assets | — | — | — | (1,056 | ) | — | (34 | ) | 1,090 | — | — | — | ||||||||||||||||||||||||||||
Transfer to statutory reserves | — | — | — | — | 505 | — | (505 | ) | — | — | — | |||||||||||||||||||||||||||||
Equity-settled share option schemes: | ||||||||||||||||||||||||||||||||||||||||
— Value of employee services | — | — | 50 | — | — | — | — | 50 | — | 50 | ||||||||||||||||||||||||||||||
— Issuance of shares upon exercise of options (Note 23) | 3 | 233 | (70 | ) | — | — | 267 | — | 433 | — | 433 | |||||||||||||||||||||||||||||
Dividends relating to 2007 (Note 25) | — | — | — | — | — | — | (6,231 | ) | (6,231 | ) | — | (6,231 | ) | |||||||||||||||||||||||||||
Balance at 30 June 2008 (As restated) | 1,440 | 64,553 | 496 | 78 | 19,270 | 62,982 | 35,575 | 184,394 | 8 | 184,402 | ||||||||||||||||||||||||||||||
Balance at 1 January 2009 (As previously reported) | 2,329 | 166,784 | 540 | 136 | 22,361 | (46,220 | ) | 60,780 | 206,710 | — | 206,710 | |||||||||||||||||||||||||||||
Adjusted for 2009 Business Combination under common control (Note 1) | — | — | — | 25 | 631 | 7,063 | (6,704 | ) | 1,015 | 2 | 1,017 | |||||||||||||||||||||||||||||
Balance at 1 January 2009 (As restated) | 2,329 | 166,784 | 540 | 161 | 22,992 | (39,157 | ) | 54,076 | 207,725 | 2 | 207,727 | |||||||||||||||||||||||||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||||||||||||||||||||||||||||||
Attributable to equity holders of the Company | ||||||||||||||||||||||||||||||||||||||||
Employee | ||||||||||||||||||||||||||||||||||||||||
share-based | ||||||||||||||||||||||||||||||||||||||||
Share | Share | compensation | Revaluation | Statutory | Other | Retained | Minority | Total | ||||||||||||||||||||||||||||||||
capital | premium | reserve | reserve | reserves | reserve | profits | Total | interest | equity | |||||||||||||||||||||||||||||||
Total comprehensive income for the period | — | — | — | — | — | 85 | 6,616 | 6,701 | — | 6,701 | ||||||||||||||||||||||||||||||
Transfer of profit of entities under common control to ultimate holding company in relation to 2009 Business Combination | — | — | — | — | — | — | (64 | ) | (64 | ) | — | (64 | ) | |||||||||||||||||||||||||||
Consideration for 2009 Business Combination under common control (Note 1) | — | — | — | — | — | (3,896 | ) | — | (3,896 | ) | — | (3,896 | ) | |||||||||||||||||||||||||||
Transfer to retained profits in respect of depreciation on revalued assets | — | — | — | (28 | ) | — | — | 28 | — | — | — | |||||||||||||||||||||||||||||
Transfer to statutory reserves | — | — | — | — | 283 | — | (283 | ) | — | — | — | |||||||||||||||||||||||||||||
Equity-settled share option schemes: | ||||||||||||||||||||||||||||||||||||||||
— Value of employee services | — | — | 21 | — | — | — | — | 21 | — | 21 | ||||||||||||||||||||||||||||||
Dividends relating to 2008 (Note 25) | — | — | — | — | — | — | (4,754 | ) | (4,754 | ) | — | (4,754 | ) | |||||||||||||||||||||||||||
Balance at 30 June 2009 | 2,329 | 166,784 | 561 | 133 | 23,275 | (42,968 | ) | 55,619 | 205,733 | 2 | 205,735 | |||||||||||||||||||||||||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
For the six months ended 30 June 2009
(All amounts in RMB millions)
Unaudited | ||||||||||||
Six months ended 30 June | ||||||||||||
Note | 2009 | 2008 | ||||||||||
(As restated) | ||||||||||||
(Note 2) | ||||||||||||
Cash flows from operating activities | ||||||||||||
Continuing operations | 31,417 | 31,070 | ||||||||||
Discontinued operations | 24 | — | 1,149 | |||||||||
Net cash inflow from operating activities | 31,417 | 32,219 | ||||||||||
Cash flows from investing activities | ||||||||||||
Continuing operations | (35,766 | ) | (18,864 | ) | ||||||||
Discontinued operations | 24 | 4,239 | (23 | ) | ||||||||
Net cash outflow from investing activities | (31,527 | ) | (18,887 | ) | ||||||||
Cash flows from financing activities | ||||||||||||
Continuing operations | (2,402 | ) | (11,322 | ) | ||||||||
Discontinued operations | 24 | — | — | |||||||||
Net cash outflow from financing activities | (2,402 | ) | (11,322 | ) | ||||||||
(Decrease)/increase in cash and cash equivalents | (2,512 | ) | 2,010 | |||||||||
Cash and cash equivalents at beginning of period | 10,237 | 12,663 | ||||||||||
Less: Cash and cash equivalents included in the disposal group in relation to the disposal of CDMA business | — | (2,567 | ) | |||||||||
Cash and cash equivalents at end of period | 7,725 | 12,106 | ||||||||||
Analysis of the balances of cash and cash equivalents: | ||||||||||||
Cash balance | 9 | 8 | ||||||||||
Bank balances | 7,716 | 12,098 | ||||||||||
7,725 | 12,106 | |||||||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(a) | Acquisitions of certain assets and businesses from Unicom Parent and Netcom Group in 2009 |
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(b) | Lease of telecommunications networks in Southern China from Unicom New Horizon Mobile Telecommunications Company Limited in 2009 |
(c) | Merger between CUCL and China Netcom (Group) Company Limited in 2009 |
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(d) | 2008 disposal and business combination activities |
• | Disposal of the Group’s CDMA business to China Telecom in 2008 |
• | Merger between the Company and China Netcom by way of a scheme of arrangement of China Netcom in 2008 (hereinafter referred to as the “2008 Business Combination”) |
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
2008 | ||||||||||||||||||||
As | Change of | and 2009 | ||||||||||||||||||
previously | accounting | Business | ||||||||||||||||||
reported | policies | Combination | Eliminations | As restated | ||||||||||||||||
For the six months ended 30 June 2008 | ||||||||||||||||||||
Results of continuing operations: | ||||||||||||||||||||
Revenue | 35,135 | 111 | 48,552 | (2,339 | ) | 81,459 | ||||||||||||||
Profit for the period | 3,765 | 67 | 7,621 | (17 | ) | 11,436 |
As | 2009 | |||||||||||||||
previously | Business | |||||||||||||||
reported | Combination | Eliminations | As restated | |||||||||||||
As at 31 December 2008 | ||||||||||||||||
Financial position: | ||||||||||||||||
Non-current assets | 308,804 | 1,959 | (144 | ) | 310,619 | |||||||||||
Current assets | 36,120 | 3,450 | (1,437 | ) | 38,133 | |||||||||||
Total assets | 344,924 | 5,409 | (1,581 | ) | 348,752 | |||||||||||
Non-current liabilities | 12,995 | 97 | — | 13,092 | ||||||||||||
Current liabilities | 125,219 | 4,062 | (1,348 | ) | 127,933 | |||||||||||
Total liabilities | 138,214 | 4,159 | (1,348 | ) | 141,025 | |||||||||||
Net assets | 206,710 | 1,250 | (233 | ) | 207,727 |
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
• | The Group’s continuous net cash inflow from operating activities; | ||
• | Unutilised banking facilities of approximately RMB88.8 billion; and | ||
• | Other available sources of financing from domestic banks and other financial institutions given the Group’s credit history. |
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
• | IAS/HKAS 1 (Revised), “Presentation of financial statements”. The revised standard prohibits the presentation of items of income and expenses (that is, “non-owner changes in equity”) in the statement of changes in equity, requiring “non-owner changes in equity” to be presented separately from owner changes in equity. All non-owner changes in equity will be required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the consolidated income statement and statement of comprehensive income). | ||
The Group has elected to present two statements: a consolidated income statement and a consolidated statement of comprehensive income. The unaudited condensed consolidated interim financial information has been restated and prepared under the revised disclosure requirement. | |||
• | IFRS/HKFRS 8, “Operating segments”. The standard replaces IAS/HKAS 14, “Segment reporting”. The new standard requires a “Management approach”, under which segment information is presented on the same basis as that used for internal reporting purpose. | ||
The adoption of IFRS/HKFRS 8 and the completion of 2009 Business Combination have not resulted in changes in the number of reportable segments presented and operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (“CODM”). The CODM has been identified as the Board of Directors. Starting from 2009, the CODM evaluates results of each operating segment based on revenue and costs that are directly attributable to the operating segment, and other income statement items such as employee benefit expenses, interest income, income tax expenses, finance costs and other income, which cannot be allocated to specific operating segments, are presented as unallocated amounts. The 2008 comparative financial information has been restated to conform to current period’s presentation. Please refer to Note 4 for details. | |||
• | Amendment to IFRS/HKFRS 7, “Financial instruments: disclosures”. The amendment increases the disclosure requirements about fair value measurement and amends the disclosure about liquidity risk. The amendment introduces a three-level hierarchy for fair value measurement disclosures about financial instruments and requires some specific quantitative disclosures for those instruments classified in the lowest level in the hierarchy. In addition, the amendment clarifies and enhances the existing requirements for the disclosure of liquidity risk primarily requiring a separate liquidity risk analysis for derivative and non-derivative financial liabilities. It also requires a maturity analysis for financial assets where the information is needed to understand the nature and context of liquidity risk. The Group will make additional relevant disclosures in its consolidated financial statements for the year ending 31 December 2009. |
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
• | Mobile business — the provision of the GSM cellular and related services in all 31 provinces, municipalities and autonomous regions in Mainland China; | ||
• | Fixed-line business — the provision of the fixed-line telecommunications and related services, domestic and international data and Internet related services, and domestic and international long distance and related services in all 31 provinces, municipalities and autonomous regions in Mainland China. |
• | CDMA business — the provision of the CDMA cellular and related services, through a leasing arrangement for the CDMA network capacity from Unicom New Horizon. |
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||||||||||||||
Six months ended 30 June 2009 | ||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||
Reconciling Items | ||||||||||||||||||||||||
Total | ||||||||||||||||||||||||
Mobile | Fixed-line | Unallocated | continuing | |||||||||||||||||||||
business | business | Subtotal | amounts | Eliminations | operations | |||||||||||||||||||
Telecommunications service revenue | 34,194 | 40,192 | 74,386 | 127 | — | 74,513 | ||||||||||||||||||
Information communication technology services and other revenue | 141 | 776 | 917 | 229 | — | 1,146 | ||||||||||||||||||
Sales of telecommunications products | 544 | 116 | 660 | — | — | 660 | ||||||||||||||||||
Total revenue from external customers | 34,879 | 41,084 | 75,963 | 356 | — | 76,319 | ||||||||||||||||||
Intersegment revenue | 106 | 2,108 | 2,214 | 663 | (2,877 | ) | — | |||||||||||||||||
Total revenue | 34,985 | 43,192 | 78,177 | 1,019 | (2,877 | ) | 76,319 | |||||||||||||||||
Interconnection charges | (6,335 | ) | (2,110 | ) | (8,445 | ) | — | 2,205 | (6,240 | ) | ||||||||||||||
Depreciation and amortisation | (8,722 | ) | (13,977 | ) | (22,699 | ) | (673 | ) | 14 | (23,358 | ) | |||||||||||||
Networks, operations and support expenses | (1,189 | ) | (2,589 | ) | (3,778 | ) | (6,336 | ) | 8 | (10,106 | ) | |||||||||||||
Employee benefit expenses | — | — | — | (10,649 | ) | 103 | (10,546 | ) | ||||||||||||||||
Other operating expenses | (5,139 | ) | (4,499 | ) | (9,638 | ) | (7,418 | ) | 505 | (16,551 | ) | |||||||||||||
Finance costs | — | — | — | (557 | ) | 194 | (363 | ) | ||||||||||||||||
Interest income | — | — | — | 245 | (194 | ) | 51 | |||||||||||||||||
Other income — net | — | — | — | 331 | — | 331 | ||||||||||||||||||
13,600 | 20,017 | 33,617 | (24,038 | ) | (42 | ) | 9,537 | |||||||||||||||||
Leasing fee for telecommunications networks in Southern China | — | (907 | ) | (907 | ) | — | — | (907 | ) | |||||||||||||||
Segment profit/(loss) before income tax | 13,600 | 19,110 | 32,710 | (24,038 | ) | (42 | ) | 8,630 | ||||||||||||||||
Income tax expenses | (2,014 | ) | ||||||||||||||||||||||
Profit for the period | 6,616 | |||||||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||
Equity holders of the Company | 6,616 | |||||||||||||||||||||||
Minority interest | — | |||||||||||||||||||||||
6,616 | ||||||||||||||||||||||||
Other information: | ||||||||||||||||||||||||
Provision for doubtful debts | 684 | 598 | 1,282 | — | — | 1,282 | ||||||||||||||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||||||||||||||||||||||
Six months ended 30 June 2008 (As restated) | ||||||||||||||||||||||||||||||||
Discontinued | ||||||||||||||||||||||||||||||||
Continuing operations | operations | |||||||||||||||||||||||||||||||
Reconciling Items | ||||||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||
Mobile | Fixed-line | Unallocated | continuing | CDMA | ||||||||||||||||||||||||||||
business | business | Subtotal | amounts | Eliminations | operations | business | Total | |||||||||||||||||||||||||
Telecommunications service revenue | 32,350 | 45,330 | 77,680 | 170 | — | 77,850 | 12,926 | 90,776 | ||||||||||||||||||||||||
Information communication technology services and other revenue | 134 | 2,467 | 2,601 | 297 | — | 2,898 | 66 | 2,964 | ||||||||||||||||||||||||
Sales of telecommunications products | 15 | 696 | 711 | — | — | 711 | 2,423 | 3,134 | ||||||||||||||||||||||||
Total revenue from external customers | 32,499 | 48,493 | 80,992 | 467 | — | 81,459 | 15,415 | 96,874 | ||||||||||||||||||||||||
Intersegment revenue | 129 | 1,700 | 1,829 | 520 | (2,349 | ) | — | — | — | |||||||||||||||||||||||
Total revenue | 32,628 | 50,193 | 82,821 | 987 | (2,349 | ) | 81,459 | 15,415 | 96,874 | |||||||||||||||||||||||
Interconnection charges | (5,365 | ) | (2,833 | ) | (8,198 | ) | — | 1,805 | (6,393 | ) | (1,119 | ) | (7,512 | ) | ||||||||||||||||||
Depreciation and amortisation | (9,356 | ) | (13,802 | ) | (23,158 | ) | (831 | ) | — | (23,989 | ) | (289 | ) | (24,278 | ) | |||||||||||||||||
Networks, operations and support expenses | (1,191 | ) | (2,460 | ) | (3,651 | ) | (5,003 | ) | 21 | (8,633 | ) | (5,057 | ) | (13,690 | ) | |||||||||||||||||
Employee benefit expenses | — | — | — | (9,984 | ) | 56 | (9,928 | ) | (1,131 | ) | (11,059 | ) | ||||||||||||||||||||
Other operating expenses | (4,351 | ) | (6,802 | ) | (11,153 | ) | (6,918 | ) | 460 | (17,611 | ) | (6,950 | ) | (24,561 | ) | |||||||||||||||||
Finance costs | — | — | — | (1,476 | ) | 284 | (1,192 | ) | (3 | ) | (1,195 | ) | ||||||||||||||||||||
Interest income | — | — | — | 400 | (284 | ) | 116 | 7 | 123 | |||||||||||||||||||||||
Other income — net | — | — | — | 809 | — | 809 | 9 | 818 | ||||||||||||||||||||||||
Segment profit/(loss) before income tax | 12,365 | 24,296 | 36,661 | (22,016 | ) | (7 | ) | 14,638 | 882 | 15,520 | ||||||||||||||||||||||
Income tax expenses | (3,202 | ) | (227 | ) | (3,429 | ) | ||||||||||||||||||||||||||
Profit for the period | 11,436 | 655 | 12,091 | |||||||||||||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||||||
Equity holders of the Company | 11,436 | 654 | 12,090 | |||||||||||||||||||||||||||||
Minority interest | — | 1 | 1 | |||||||||||||||||||||||||||||
11,436 | 655 | 12,091 | ||||||||||||||||||||||||||||||
Other information: | ||||||||||||||||||||||||||||||||
Provision for doubtful debts | 686 | 712 | 1,398 | — | — | 1,398 | 214 | 1,612 | ||||||||||||||||||||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||||||||||||||
30 June 2009 | ||||||||||||||||||||||||
Reconciling Items | ||||||||||||||||||||||||
Mobile | Fixed-line | Unallocated | ||||||||||||||||||||||
business | business | Subtotal | amounts | Eliminations | Total | |||||||||||||||||||
Total segment assets | 148,965 | 181,871 | 330,836 | 68,089 | (43,997 | ) | 354,928 | |||||||||||||||||
Total segment liabilities | 60,263 | 36,228 | 96,491 | 96,515 | (43,813 | ) | 149,193 | |||||||||||||||||
Unaudited | ||||||||||||||||||||||||
31 December 2008 | ||||||||||||||||||||||||
(As restated) | ||||||||||||||||||||||||
Reconciling Items | ||||||||||||||||||||||||
Mobile | Fixed-line | Unallocated | ||||||||||||||||||||||
business | business | Subtotal | amounts | Eliminations | Total | |||||||||||||||||||
Total segment assets | 130,041 | 184,127 | 314,168 | 77,799 | (43,215 | ) | 348,752 | |||||||||||||||||
Total segment liabilities | 53,496 | 34,484 | 87,980 | 96,118 | (43,073 | ) | 141,025 | |||||||||||||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||||||||||||||||||
Six months ended 30 June 2009 | ||||||||||||||||||||||||||||
Tele- | Tele- | Office | ||||||||||||||||||||||||||
communications | communications | furniture, | ||||||||||||||||||||||||||
equipment of | equipment of | fixtures, | Construction- | |||||||||||||||||||||||||
Mobile | Fixed-line | motor vehicles | Leasehold | in-progress | ||||||||||||||||||||||||
Buildings | business | business | and others | improvements | (“CIP”) | Total | ||||||||||||||||||||||
Cost or valuation: | ||||||||||||||||||||||||||||
Beginning of period (As previously reported) | 44,950 | 163,279 | 345,143 | 36,086 | 1,627 | 40,783 | 631,868 | |||||||||||||||||||||
2009 Business Combination under common control (Note 1) | 738 | — | — | 2,108 | 31 | 88 | 2,965 | |||||||||||||||||||||
Beginning of period (As restated) | 45,688 | 163,279 | 345,143 | 38,194 | 1,658 | 40,871 | 634,833 | |||||||||||||||||||||
Additions | 272 | 65 | 695 | 20 | 142 | 36,055 | 37,249 | |||||||||||||||||||||
Transfer from CIP | 1,306 | 10,165 | 7,118 | 961 | 47 | (19,597 | ) | — | ||||||||||||||||||||
Disposals | (122 | ) | (172 | ) | (267 | ) | (127 | ) | (91 | ) | — | (779 | ) | |||||||||||||||
End of period | 47,144 | 173,337 | 352,689 | 39,048 | 1,756 | 57,329 | 671,303 | |||||||||||||||||||||
Representing: | ||||||||||||||||||||||||||||
At cost | 47,144 | 173,337 | — | — | — | 57,329 | 277,810 | |||||||||||||||||||||
At valuation | — | — | 352,689 | 39,048 | 1,756 | — | 393,493 | |||||||||||||||||||||
47,144 | 173,337 | 352,689 | 39,048 | 1,756 | 57,329 | 671,303 | ||||||||||||||||||||||
Accumulated depreciation and impairment: | ||||||||||||||||||||||||||||
Beginning of period (As previously reported) | (13,019 | ) | (95,942 | ) | (217,482 | ) | (20,668 | ) | (813 | ) | (32 | ) | (347,956 | ) | ||||||||||||||
2009 Business Combination under common control (Note 1) | (66 | ) | — | — | (1,322 | ) | (9 | ) | (11 | ) | (1,408 | ) | ||||||||||||||||
Beginning of period (As restated) | (13,085 | ) | (95,942 | ) | (217,482 | ) | (21,990 | ) | (822 | ) | (43 | ) | (349,364 | ) | ||||||||||||||
Charge for the period | (957 | ) | (6,001 | ) | (13,920 | ) | (1,530 | ) | (213 | ) | — | (22,621 | ) | |||||||||||||||
Disposals | 118 | 149 | 259 | 120 | 84 | — | 730 | |||||||||||||||||||||
Impairment transfer out | — | — | — | — | — | 6 | 6 | |||||||||||||||||||||
End of period | (13,924 | ) | (101,794 | ) | (231,143 | ) | (23,400 | ) | (951 | ) | (37 | ) | (371,249 | ) | ||||||||||||||
Net book value: | ||||||||||||||||||||||||||||
End of period | 33,220 | 71,543 | 121,546 | 15,648 | 805 | 57,292 | 300,054 | |||||||||||||||||||||
Beginning of period (As restated) | 32,603 | 67,337 | 127,661 | 16,204 | 836 | 40,828 | 285,469 | |||||||||||||||||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||||||||||||||||||
Six months ended 30 June 2008 (As restated) | ||||||||||||||||||||||||||||
Tele- | Tele- | Office | ||||||||||||||||||||||||||
communications | communications | furniture, | ||||||||||||||||||||||||||
equipment of | equipment of | fixtures, | Construction- | |||||||||||||||||||||||||
Mobile | Fixed-line | moto rvehicles | Leasehold | in-progress | ||||||||||||||||||||||||
Buildings | business | business | and others | improvements | (“CIP”) | Total | ||||||||||||||||||||||
Cost or valuation: | ||||||||||||||||||||||||||||
Beginning of period (As previously reported) | 44,094 | 151,660 | 327,711 | 32,418 | 1,657 | 18,966 | 576,506 | |||||||||||||||||||||
2009 Business Combination under common control (Note 1) | 394 | — | — | 7,895 | 23 | 471 | 8,783 | |||||||||||||||||||||
Beginning of period (As restated) | 44,488 | 151,660 | 327,711 | 40,313 | 1,680 | 19,437 | 585,289 | |||||||||||||||||||||
Additions | 57 | 34 | 528 | 743 | 4 | 10,877 | 12,243 | |||||||||||||||||||||
Transfer from CIP | 1,283 | 1,035 | 8,840 | 1,268 | 135 | (12,561 | ) | — | ||||||||||||||||||||
Assets classified as held for sale in relation to the disposal of the CDMA business | (1,105 | ) | (4,247 | ) | — | (70 | ) | (20 | ) | (30 | ) | (5,472 | ) | |||||||||||||||
Disposals | (203 | ) | (128 | ) | (1,711 | ) | (4,323 | ) | (98 | ) | — | (6,463 | ) | |||||||||||||||
End of period (As restated) | 44,520 | 148,354 | 335,368 | 37,931 | 1,701 | 17,723 | 585,597 | |||||||||||||||||||||
Representing: | ||||||||||||||||||||||||||||
At cost | 44,520 | 148,354 | — | — | — | 17,723 | 210,597 | |||||||||||||||||||||
At valuation | — | — | 335,368 | 37,931 | 1,701 | — | 375,000 | |||||||||||||||||||||
44,520 | 148,354 | 335,368 | 37,931 | 1,701 | 17,723 | 585,597 | ||||||||||||||||||||||
Accumulated depreciation and impairment: | ||||||||||||||||||||||||||||
Beginning of period (As previously reported) | (11,809 | ) | (85,446 | ) | (184,801 | ) | (17,423 | ) | (893 | ) | (24 | ) | (300,396 | ) | ||||||||||||||
2009 Business Combination under common control (Note 1) | (100 | ) | — | — | (7,001 | ) | (5 | ) | — | (7,106 | ) | |||||||||||||||||
Beginning of period (As restated) | (11,909 | ) | (85,446 | ) | (184,801 | ) | (24,424 | ) | (898 | ) | (24 | ) | (307,502 | ) | ||||||||||||||
Charge for the period | (752 | ) | (6,723 | ) | (13,993 | ) | (2,138 | ) | (149 | ) | — | (23,755 | ) | |||||||||||||||
Assets classified as held for sale in relation to the disposal of the CDMA business | 171 | 2,623 | — | 22 | 8 | — | 2,824 | |||||||||||||||||||||
Disposals | 111 | 92 | 1,398 | 4,252 | 96 | — | 5,949 | |||||||||||||||||||||
End of period (As restated) | (12,379 | ) | (89,454 | ) | (197,396 | ) | (22,288 | ) | (943 | ) | (24 | ) | (322,484 | ) | ||||||||||||||
Net book value: | ||||||||||||||||||||||||||||
End of period (As restated) | 32,141 | 58,900 | 137,972 | 15,643 | 758 | 17,699 | 263,113 | |||||||||||||||||||||
Beginning of period (As restated) | 32,579 | 66,214 | 142,910 | 15,889 | 782 | 19,413 | 277,787 | |||||||||||||||||||||
— I-146 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||
Six months ended 30 June | ||||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Provision for enterprise income tax on the estimated taxable profits for the period | ||||||||
— Hong Kong | 7 | 13 | ||||||
— Outside Hong Kong | 2,537 | 3,630 | ||||||
2,544 | 3,643 | |||||||
Deferred taxation | (530 | ) | (441 | ) | ||||
Income tax expenses | 2,014 | 3,202 | ||||||
— I-147 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||
Note | Six months ended 30 June | |||||||||||
2009 | 2008 | |||||||||||
(As restated) | ||||||||||||
Applicable PRC statutory tax rate | 25.0 | % | 25.0 | % | ||||||||
Non-deductible expenses | 0.3 | % | 1.0 | % | ||||||||
Tax effect of 2009 Business Combination | (a) | — | (1.9 | %) | ||||||||
Non-taxable income | ||||||||||||
— Upfront connection fees arising from Fixed-line business | (1.6 | %) | (2.1 | %) | ||||||||
Impact of PRC preferential tax rates and tax holiday | (0.5 | %) | (0.2 | %) | ||||||||
Others | 0.1 | % | 0.1 | % | ||||||||
Effective tax rate | 23.3 | % | 21.9 | % | ||||||||
(a): | The income tax of Fixed-line Business in Southern China, local access telephone business in Tianjin Municipality and New Guoxin was reported on a consolidated basis with Netcom Group and Unicom Parent prior to the 2009 Business Combination and no separate tax returns were prepared. No income tax expenses were therefore recognised for the Fixed-line Business in Southern China, local access telephone business in Tianjin Municipality and New Guoxin in 2008 or prior years in accounting for the Fixed-line Business in Southern China, local access telephone business in Tianjin Municipality and New Guoxin by using merger accounting/predecessor values method. |
— I-148 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||
Six months ended | ||||||||
30 June | ||||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Net deferred tax assets after offsetting deferred tax liabilities: | ||||||||
Beginning of period | 5,334 | 2,275 | ||||||
Deferred tax credited/(charged) to the income statement | ||||||||
— Continuing operations | 532 | 434 | ||||||
— Discontinued operations | — | (72 | ) | |||||
Deferred tax charged to equity | (7 | ) | — | |||||
Assets classified as held for sale for CDMA business | — | (198 | ) | |||||
End of period | 5,859 | 2,439 | ||||||
The deferred tax liabilities that cannot be offset: | ||||||||
Beginning of period | (16 | ) | (55 | ) | ||||
Deferred tax (charged)/credited to the income statement | (2 | ) | 7 | |||||
Deferred tax credited to equity | — | 32 | ||||||
End of period | (18 | ) | (16 | ) | ||||
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Direct incremental costs for activating mobile subscribers | 473 | 499 | ||||||
Installation costs of Fixed-line business | 1,978 | 2,251 | ||||||
Prepaid rental for premises and leased lines | 2,970 | 2,121 | ||||||
Purchased software | 2,928 | 2,877 | ||||||
Others | 1,599 | 1,339 | ||||||
9,948 | 9,087 | |||||||
— I-149 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Handsets and other customer end products | 445 | 302 | ||||||
Telephone cards | 229 | 317 | ||||||
Consumables | 347 | 429 | ||||||
Others | 106 | 44 | ||||||
1,127 | 1,092 | |||||||
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Accounts receivable for Mobile business | 3,736 | 3,211 | ||||||
Accounts receivable for Fixed-line business | 10,943 | 9,592 | ||||||
14,679 | 12,803 | |||||||
Less: Provision for doubtful debts for Mobile business | (2,127 | ) | (1,425 | ) | ||||
Provision for doubtful debts for Fixed-line business | (2,638 | ) | (2,037 | ) | ||||
9,914 | 9,341 | |||||||
— I-150 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Within one month | 6,425 | 6,750 | ||||||
More than one month to three months | 1,763 | 1,492 | ||||||
More than three months to one year | 3,643 | 3,012 | ||||||
More than one year | 2,848 | 1,549 | ||||||
14,679 | 12,803 | |||||||
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Prepaid rental | 787 | 738 | ||||||
Deposits and prepayments | 1,080 | 857 | ||||||
Advances to employees | 369 | 241 | ||||||
Others | 386 | 879 | ||||||
2,622 | 2,715 | |||||||
— I-151 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Within one year | 2,182 | 2,384 | ||||||
More than one year | 440 | 331 | ||||||
2,622 | 2,715 | |||||||
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
HK$ millions | HK$ millions | |||||||
Authorised: | ||||||||
30,000,000,000 ordinary shares, par value of HK$0.10 each | 3,000 | 3,000 | ||||||
— I-152 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Ordinary | ||||||||||||||||||||
shares, par | ||||||||||||||||||||
Number of | value of | |||||||||||||||||||
shares | HK$0.10 each | Share | Share | |||||||||||||||||
millions | millions HK$ | capital | premium | Total | ||||||||||||||||
Issued and fully paid: | ||||||||||||||||||||
At 1 January 2008 | 13,634 | 1,363 | 1,437 | 64,320 | 65,757 | |||||||||||||||
Equity-settled share option schemes | ||||||||||||||||||||
— Issuance of shares upon exercise of options (Note 23) | 28 | 3 | 3 | 233 | 236 | |||||||||||||||
At 30 June 2008 | 13,662 | 1,366 | 1,440 | 64,553 | 65,993 | |||||||||||||||
At 1 January 2009 | 23,768 | 2,377 | 2,329 | 166,784 | 169,113 | |||||||||||||||
Equity-settled share option schemes | ||||||||||||||||||||
— Issuance of shares upon exercise of options (Note 23) | — | — | — | — | — | |||||||||||||||
At 30 June 2009 | 23,768 | 2,377 | 2,329 | 166,784 | 169,113 | |||||||||||||||
— I-153 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||
31 | ||||||||||
30 June | December | |||||||||
Interest rates and final maturity | 2009 | 2008 | ||||||||
RMB denominated bank loans | Floating interest rates ranging from 4.86% to 5.18% (31 December 2008: 4.86% to 6.80%) per annum with maturity through 2009 (31 December 2008: maturity through 2009) | |||||||||
— unsecured | 500 | 1,114 | ||||||||
500 | 1,114 | |||||||||
US$ denominated bank loans | Fixed interest rates ranging from 0% to 5.65% (31 December 2008: 0% to 5.65%) per annum with maturity through 2039 (31 December 2008: maturity through 2039) | |||||||||
— secured | 142 | 146 | ||||||||
— unsecured | 369 | 377 | ||||||||
511 | 523 | |||||||||
Japanese Yen denominated bank loans | Floating interest rates of YEN LIBOR plus interest margin 3.50% per annum with maturity through 2014 | |||||||||
— unsecured | 199 | — | ||||||||
199 | — | |||||||||
Japanese Yen denominated bank loans | Fixed interest rates of 2.12% per annum with maturity through 2014 | |||||||||
— unsecured | — | 234 | ||||||||
— | 234 | |||||||||
Euro denominated bank loans | Fixed interest rates ranging from 1.10% to 2.50% (31 December 2008: 0.50% to 2.50%) per annum with maturity through 2034 (31 December 2008: maturity through 2034) | |||||||||
— unsecured | 332 | 342 | ||||||||
332 | 342 | |||||||||
Sub-total | 1,542 | 2,213 | ||||||||
Less: Current portion | (603 | ) | (1,216) | |||||||
939 | 997 | |||||||||
— I-154 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
Balances due: | ||||||||
— no later than one year | 603 | 1,216 | ||||||
— later than one year and no later than two years | 97 | 96 | ||||||
— later than two years and no later than five years | 296 | 287 | ||||||
— later than five years | 546 | 614 | ||||||
1,542 | 2,213 | |||||||
Less: Portion classified as current liabilities | (603 | ) | (1,216 | ) | ||||
939 | 997 | |||||||
(a) | The fair values of the Group’s non-current portion of long-term bank loans at 30 June 2009 and 31 December 2008 were as follows: |
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
Long-term bank loans | 649 | 690 | ||||||
The fair value is based on cash flows discounted using rates per annum based on the market rates ranging from 4.86% to 5.18% (31 December 2008: 4.59% to 6.56%). | |||
(b) | As at 30 June 2009, bank loans of approximately RMB141 million (31 December 2008: approximately RMB146 million) were secured by corporate guarantees granted by third parties. |
— I-155 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Payables to contractors and equipment suppliers | 58,804 | 52,800 | ||||||
Payables to telecommunications product suppliers | 1,993 | 1,685 | ||||||
Customer/contractor deposits | 2,379 | 2,261 | ||||||
Repair and maintenance expense payables | 2,059 | 1,650 | ||||||
Salary and welfare payables | 1,900 | 1,129 | ||||||
Commission expenses payables | 1,780 | 1,406 | ||||||
Interest payables | 585 | 263 | ||||||
Amounts due to service providers/content providers | 951 | 984 | ||||||
Accrued expenses | 2,885 | 1,892 | ||||||
Others | 3,533 | 3,439 | ||||||
76,869 | 67,509 | |||||||
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Less than six months | 58,677 | 53,380 | ||||||
Six months to one year | 8,383 | 7,090 | ||||||
More than one year | 9,809 | 7,039 | ||||||
76,869 | 67,509 | |||||||
— I-156 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||
30 June | 31 December | |||||||||
Interest rates and final maturity | 2009 | 2008 | ||||||||
RMB denominated bank loans | Fixed interest rates ranging from 2.00% to 4.37% (31 December 2008: 4.54% to 6.80%) per annum with maturity through 2009 (31 December 2008: maturity through 2009) | |||||||||
— unsecured | 11,780 | 10,780 | ||||||||
11,780 | 10,780 | |||||||||
— I-157 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||
Six months ended | ||||||||
30 June | ||||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Continuing operations: | ||||||||
Mobile business | ||||||||
— Usage and monthly fees | 21,008 | 20,852 | ||||||
— Value-added services revenue | 9,155 | 7,845 | ||||||
— Interconnection revenue | 3,892 | 3,320 | ||||||
— Other service revenue | 139 | 333 | ||||||
Total mobile telecommunications service revenue | 34,194 | 32,350 | ||||||
Fixed-line business | ||||||||
— Usage and monthly fees | 17,653 | 21,611 | ||||||
— Broadband services revenue | 11,726 | �� | 10,630 | |||||
— Interconnection revenue | 2,869 | 3,638 | ||||||
— Value-added services revenue | 2,722 | 3,630 | ||||||
— Leased line income | 2,847 | 2,717 | ||||||
— Other Internet-related services and managed data services revenue | 1,153 | 1,205 | ||||||
— Upfront connection fees | 283 | 505 | ||||||
— Other service revenue | 939 | 1,394 | ||||||
Total fixed-line telecommunications service revenue | 40,192 | 45,330 | ||||||
Unallocated telecommunications service revenue | 127 | 170 | ||||||
Total telecommunications service revenue | 74,513 | 77,850 | ||||||
Information communication technology services and other revenue | 1,146 | 2,898 | ||||||
Sales of telecommunications products | 660 | 711 | ||||||
Total revenue from external customers | 76,319 | 81,459 | ||||||
— I-158 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||
Six months ended | ||||||||||||
Note | 30 June | |||||||||||
2009 | 2008 | |||||||||||
(As restated) | ||||||||||||
Continuing operations: | ||||||||||||
Repair and maintenance | 3,213 | 2,859 | ||||||||||
Power and water charges | 3,464 | 2,678 | ||||||||||
Operating leases | (a) | 2,303 | 2,149 | |||||||||
Consumables | 646 | 609 | ||||||||||
Others | 480 | 338 | ||||||||||
Total networks, operations and support expenses | 10,106 | 8,633 | ||||||||||
(a): | The operating lease expenses represent the rental charges for premises, equipment and facilities. |
Unaudited | ||||||||||||
Six months ended | ||||||||||||
Note | 30 June | |||||||||||
2009 | 2008 | |||||||||||
(As restated) | ||||||||||||
Continuing operations: | ||||||||||||
Salaries and wages | 8,578 | 8,070 | ||||||||||
Contributions to defined contribution pension schemes | 1,256 | 1,110 | ||||||||||
Contributions to housing fund | 632 | 552 | ||||||||||
Other housing benefits | 59 | 156 | ||||||||||
Share-based compensation cost | 23 | 21 | 40 | |||||||||
Total employee benefit expenses | 10,546 | 9,928 | ||||||||||
— I-159 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||
Six months ended 30 June | ||||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Continuing operations: | ||||||||
Provision for doubtful debts | 1,282 | 1,398 | ||||||
Cost of telecommunications products sold | 817 | 919 | ||||||
Cost in relation to information communication technology services | 401 | 1,763 | ||||||
Commission expenses | 5,929 | 5,602 | ||||||
Advertising and promotion expenses | 1,436 | 1,224 | ||||||
Customer installation cost | 1,182 | 1,051 | ||||||
Customer acquisition and retention cost | 876 | 934 | ||||||
Property management charge | 688 | 527 | ||||||
Office and administrative expenses | 1,232 | 1,262 | ||||||
Transportation expense | 783 | 802 | ||||||
Miscellaneous taxes and fees | 311 | 296 | ||||||
Others | 1,614 | 1,833 | ||||||
Total other operating expenses | 16,551 | 17,611 | ||||||
— I-160 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||
Note | Six months ended 30 June | |||||||||||
2009 | 2008 | |||||||||||
(As restated) | ||||||||||||
Continuing operations: | ||||||||||||
Finance costs: | ||||||||||||
— Interest on bank loans repayable within 5 years | 267 | 1,016 | ||||||||||
— Interest on corporate bonds and commercial paper repayable within 5 years | 353 | 343 | ||||||||||
— Interest on bank loans repayable over 5 years | 3 | 8 | ||||||||||
— Interest on corporate bonds repayable over 5 years | 45 | 45 | ||||||||||
— Interest on deferred consideration | (a) | — | 148 | |||||||||
— Less: Amounts capitalised in construction-in-progress | (397 | ) | (158 | ) | ||||||||
Total interest expense | 271 | 1,402 | ||||||||||
— Exchange gain, net | (12 | ) | (300 | ) | ||||||||
— Others | 104 | 90 | ||||||||||
Total finance costs | 363 | 1,192 | ||||||||||
(a): | In 2005, China Netcom acquired the principal telecommunications operations, assets and liabilities in the four Northern provinces/autonomous region, namely Shanxi Province, Neimenggu Autonomous Region, Jilin Province and Heilongjiang Province from Netcom Group (the “Acquisition of Netcom New Horizon”). The consideration for the Acquisition of Netcom New Horizon was RMB12,800 million which consisted of an initial cash payment of RMB3,000 million and deferred payments of RMB9,800 million. The deferred payments were settled in half-yearly installments over five years. The interest charged on the deferred payments was calculated at 5.265% per annum. In 2008, the Group fully repaid the amount. |
— I-161 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||||||
Six months ended 30 June | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Average | Average | |||||||||||||||
exercise price | Number of | exercise price | Number of | |||||||||||||
in HK$ | share options | in HK$ | share options | |||||||||||||
per Share | involved | per Share | involved | |||||||||||||
Balance, beginning of period | 6.95 | 413,074,166 | 7.12 | 257,279,600 | ||||||||||||
Granted | — | — | — | — | ||||||||||||
Forfeited | — | — | 6.32 | (2,070,000 | ) | |||||||||||
Exercised | — | — | 7.80 | (28,012,000 | ) | |||||||||||
Balance, end of period | 6.95 | 413,074,166 | 7.04 | 227,197,600 | ||||||||||||
— I-162 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Number | Number | |||||||||||||
of share | of share | |||||||||||||
options | options | |||||||||||||
outstanding | outstanding | |||||||||||||
as at | as at | |||||||||||||
30 June | 31 December | |||||||||||||
Date of options grant | Vesting period | Exercisable period | Exercise price | 2009 | 2008 | |||||||||
Share options granted under the Pre-Global Offering Share Option Scheme: | ||||||||||||||
22 June 2000 | 22 June 2000 to 21 June 2002 | 22 June 2002 to 21 June 2010 | HK$ 15.42 | 16,977,600 | 16,977,600 | |||||||||
Share options granted under the Share Option Scheme: | ||||||||||||||
30 June 2001 | 30 June 2001 | 30 June 2001 to 22 June 2010 | HK$ 15.42 | 4,350,000 | 4,350,000 | |||||||||
21 May 2003 (Note i) | 21 May 2003 to 21 May 2006 | 21 May 2004 to 20 May 2010 | HK$ 4.30 | 8,956,000 | 8,956,000 | |||||||||
20 July 2004 | 20 July 2004 to 20 July 2007 | 20 July 2005 to 19 July 2010 | HK$ 5.92 | 41,024,000 | 41,024,000 | |||||||||
21 December 2004 | 21 December 2004 to 21 December 2007 | 21 December 2005 to 20 December 2010 | HK$ 6.20 | 654,000 | 654,000 | |||||||||
15 February 2006 | 15 February 2006 to 15 February 2009 | 15 February 2008 to 14 February 2012 | HK$ 6.35 | 151,556,000 | 151,556,000 | |||||||||
Share options granted under the Special Purpose Share Option Scheme: | ||||||||||||||
15 October 2008 (“2004 Special Purpose Share Options”) | 15 October 2008 to 17 May 2009 | 15 October 2008 to 16 November 2010 | HK$ 5.57 | 100,627,098 | 100,627,098 | |||||||||
15 October 2008 (“2005 Special Purpose Share Options”) | 15 October 2008 to 6 December 2010 | 15 October 2008 to 5 December 2011 | HK$ 8.26 | 88,929,468 | 88,929,468 | |||||||||
413,074,166 | 413,074,166 | |||||||||||||
— I-163 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Note i: | The original expiration date for these options was 20 May 2009. As these options were not exercisable due to a “Mandatory Moratorium” as set forth in the Share Option Scheme, they were extended to 20 May 2010 pursuant to amendment of the Share Option Scheme approved by the shareholders of the Company on 26 May 2009. The modifications did not have any significant impact on the unaudited condensed consolidated interim financial information for the six months ended 30 June 2009. |
Weighted average | ||||||||||||||||
closing price per | ||||||||||||||||
Share at respective | ||||||||||||||||
days immediately | ||||||||||||||||
Exercise | before date of | Proceeds | Number | |||||||||||||
price | exercise of options | received | of Shares | |||||||||||||
Grant date | HK$ | HK$ | HK$ | involved | ||||||||||||
22 June 2000 | 15.42 | 18.73 | 63,980,664 | 4,149,200 | ||||||||||||
30 June 2001 | 15.42 | 18.38 | 18,781,560 | 1,218,000 | ||||||||||||
10 July 2002 | 6.18 | 17.78 | 7,786,800 | 1,260,000 | ||||||||||||
21 May 2003 | 4.30 | 18.08 | 7,691,840 | 1,788,800 | ||||||||||||
20 July 2004 | 5.92 | 18.10 | 55,671,680 | 9,404,000 | ||||||||||||
15 February 2006 | 6.35 | 17.74 | 64,719,200 | 10,192,000 | ||||||||||||
218,631,744 | 28,012,000 | |||||||||||||||
24. | DISPOSAL GROUP AND DISCONTINUED OPERATIONS | |
Discontinued operations: | ||
On 2 June 2008 and 27 July 2008, the Company, CUCL and China Telecom entered into the Framework Agreement and the Disposal Agreement, respectively, to sell the CDMA business to China Telecom. The disposal was completed on 1 October 2008. |
— I-164 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||
Six months | ||||
ended 30 June | ||||
2008 | ||||
(As restated) | ||||
Revenue | 15,415 | |||
Expenses | (14,533 | ) | ||
Profit before income tax from discontinued operations | 882 | |||
Income tax expenses | (227 | ) | ||
Profit for the period from discontinued operations | 655 | |||
Net cash inflow from operating activities | 1,149 | |||
Net cash outflow from investing activities | (23 | ) | ||
Net cash inflow from financing activities | — | |||
Net cash inflow from discontinued operations | 1,126 | |||
Unaudited | ||||||||
Six months ended 30 June | ||||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Dividend paid: | ||||||||
By the Company | 4,754 | 2,732 | ||||||
By China Netcom (Note a) | — | 3,499 | ||||||
4,754 | 6,231 | |||||||
— I-165 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Note a: | Since the merger between the Company and China Netcom in 2008 was accounted for as a business combination of entities under common control, accordingly, the dividend paid was restated to include China Netcom as if it had always been part of the Group. |
— I-166 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||
Six months ended 30 June | ||||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Numerator (in RMB millions): | ||||||||
Profit attributable to equity holders of the Company | ||||||||
— Continuing operations | 6,616 | 11,436 | ||||||
— Discontinued operations | — | 654 | ||||||
6,616 | 12,090 | |||||||
Denominator (in millions): | ||||||||
Weighted average number of ordinary shares outstanding used in computing basic earnings per share | 23,768 | 23,735 | ||||||
Dilutive equivalent shares arising from share options | 94 | 250 | ||||||
Shares used in computing diluted earnings per share | 23,862 | 23,985 | ||||||
Basic earnings per share (in RMB) | ||||||||
— Continuing operations | 0.28 | 0.48 | ||||||
— Discontinued operations | — | 0.03 | ||||||
0.28 | 0.51 | |||||||
Diluted earnings per share (in RMB) | ||||||||
— Continuing operations | 0.28 | 0.48 | ||||||
— Discontinued operations | — | 0.03 | ||||||
0.28 | 0.51 | |||||||
— I-167 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-168 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(a) | Significant recurring transactions |
Unaudited | ||||||||
Six months ended 30 June | ||||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Transactions with Unicom Parent, Netcom Group and their subsidiaries: | ||||||||
Continuing operations: | ||||||||
Leasing fee of Telecommunications Networks in Southern China | 907 | — | ||||||
Charges for cellular subscriber value-added services | 78 | 58 | ||||||
Rental charges for premises, equipment and facilities | 402 | 330 | ||||||
Charges for the international gateway services | 3 | 4 | ||||||
Agency fee incurred for procurement of telecommunications equipment | 6 | 9 | ||||||
Charge for engineering and information technology-related services | 494 | 916 | ||||||
Common corporate services income | — | 62 | ||||||
Charges for common corporate services | 132 | 206 | ||||||
Rental income from properties | — | 1 | ||||||
Purchases of materials | 125 | 228 | ||||||
Charges for ancillary telecommunications support services | 312 | 274 | ||||||
Charges for support services | 123 | 222 | ||||||
Charges for lease of telecommunications facilities | 74 | 164 | ||||||
Income from information communication technologies services | 42 | 68 | ||||||
Income from engineering design and technical services | 4 | 27 | ||||||
Discontinued operations: | ||||||||
Charges for cellular subscriber value-added service | — | 40 | ||||||
CDMA network capacity lease rental charges | — | 4,095 | ||||||
Constructed capacity related cost of the CDMA network | — | 160 |
— I-169 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(i) | On 26 October 2006, CUCL entered into a new agreement “2006 Comprehensive Services Agreement” to continue to carry out related party transactions. The new agreement was approved by the independent shareholders of the Company on 1 December 2006, and become effective from 1 January 2007. | ||
Pursuant to the ordinary resolution passed at the extraordinary general meeting held on 16 September 2008, the independent shareholders of the Company approved the 2006 Comprehensive Services Agreement be amended with effect from 15 October 2008 to include CNC China as a party. | |||
Also, the independent shareholders of the Company approved the following agreements: |
— | Framework Agreement for Engineering and Information Technology Services dated 12 August 2008 | ||
— | Engineering and Information Technology Services Agreement 2008-2010 | ||
— | Domestic Interconnection Settlement Agreement 2008-2010 | ||
— | International Long Distance Voice Services Settlement Agreement 2008-2010 | ||
— | Framework Agreement for Interconnection Settlement dated 12 August 2008 |
Under HKFRS and IFRS, the 2009 Business Combination has been accounted for using merger accounting/predecessor values method. Accordingly, the transactions between the Target Business and the Group were eliminated and not disclosed as related party transactions in the unaudited condensed consolidated interim financial information. | |||
(ii) | On 16 December 2008, CUCL, Unicom Parent, Netcom Group and Unicom New Horizon entered into the Network Lease Agreement in relation to the Lease of the Telecommunications Networks in Southern China by CUCL from Unicom New Horizon on an exclusive basis immediately following the completion of the 2009 Business Combination. Under the Network Lease Agreement, CUCL shall pay leasing fees of RMB2.0 billion and RMB2.2 billion for the two financial years ending 31 December 2009 and 31 December 2010, respectively. The Lease became effective in January 2009. For details, please refer toNote 1. |
(b) | Other significant transaction |
(c) | Amounts due from and to related parties/Unicom Parent, Netcom Group and their subsidiaries |
— I-170 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(a) | Significant recurring transactions with domestic carriers |
Unaudited | ||||||||
Six months ended 30 June | ||||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Interconnection revenue | 5,934 | 5,577 | ||||||
Interconnection charges | 5,726 | 5,401 | ||||||
Leased line revenue | 204 | 276 | ||||||
Leased line charges | 58 | 127 | ||||||
Engineering design and technical service revenue | 180 | 109 |
(b) | Amounts due from and to domestic carriers |
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Amounts due from domestic carriers | ||||||||
— Receivables for interconnection revenue, leased line revenue and engineering design and technical service revenue | 1,403 | 1,033 | ||||||
— Less: Provision for doubtful debts | (62 | ) | (59 | ) | ||||
1,341 | 974 | |||||||
Amounts due to domestic carriers | ||||||||
— Payables for interconnection charges and leased line charges | (1,230 | ) | (956 | ) | ||||
— I-171 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(c) | Disposal of the Group’s CDMA business to China Telecom |
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
Payables | ||||||||
— Advances from customers received on behalf of China Telecom | (182 | ) | (768 | ) | ||||
— Cash to be transferred upon the final agreement of the values of assets and liabilities transferred to China Telecom in accordance with the Disposal Agreement | — | (3,464 | ) | |||||
(182 | ) | (4,232 | ) | |||||
Proceeds receivable | 5,437 | 13,140 | ||||||
(a) | Transactions with other major state-owned financial institutions in the PRC |
Unaudited | ||||||||
Six months ended 30 June | ||||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Finance income/costs, include: | ||||||||
— Interest income | 50 | 119 | ||||||
— Interest expense | 270 | 1,769 | ||||||
Short-term bank loans received | 17,730 | 36,402 | ||||||
Long-term bank loans received | — | 2,390 | ||||||
Short-term bank loans repaid | 16,730 | 17,514 | ||||||
Short-term commercial paper repaid | — | 20,000 | ||||||
Long-term bank loans repaid | 668 | 6,332 |
— I-172 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
(b) | Amounts due from and to other major state-owned financial institutions in the PRC |
Unaudited | ||||||||
30 June | 31 December | |||||||
2009 | 2008 | |||||||
(As restated) | ||||||||
Current assets | ||||||||
Short-term bank deposits | 172 | 337 | ||||||
Cash and cash equivalents | 7,463 | 9,671 | ||||||
Non-current liabilities | ||||||||
Long-term bank loans | 787 | 842 | ||||||
Corporate bonds | 7,000 | 7,000 | ||||||
Current liabilities | ||||||||
Short-term bank loans | 11,780 | 10,780 | ||||||
Short-term commercial paper | 10,000 | 10,000 | ||||||
Current portion of long-term bank loans | 595 | 1,208 |
— I-173 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||
Six months ended 30 June | ||||||||
2009 | 2008 | |||||||
(RMB’000) | (RMB’000) | |||||||
Non-executive directors: | ||||||||
Fees | 1,145 | 963 | ||||||
Other benefits (a) | — | 106 | ||||||
1,145 | 1,069 | |||||||
Executive directors: | ||||||||
Fees | — | — | ||||||
Other emoluments | ||||||||
— Salaries and allowances | 4,188 | 5,126 | ||||||
— Bonuses paid and payable | 1,644 | 3,593 | ||||||
— Other benefits (a) | 46 | 920 | ||||||
— Contributions to pension schemes | 51 | 87 | ||||||
5,929 | 9,726 | |||||||
7,074 | 10,795 | |||||||
(a) | Other benefits represent the share-based compensation cost recognised during the relevant periods for the share options granted to the Directors under the Company’s share option schemes. |
— I-174 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||||||
31 December | ||||||||||||||||
2008 | ||||||||||||||||
30 June 2009 | (As restated) | |||||||||||||||
Land and | ||||||||||||||||
buildings | Equipment | Total | Total | |||||||||||||
Authorised and contracted for | 525 | 8,255 | 8,780 | 6,149 | ||||||||||||
Authorised but not contracted for | 576 | 10,399 | 10,975 | 6,938 | ||||||||||||
Total | 1,101 | 18,654 | 19,755 | 13,087 | ||||||||||||
— I-175 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Unaudited | ||||||||||||||||||||
31 December | ||||||||||||||||||||
2008 | ||||||||||||||||||||
30 June 2009 | (As restated) | |||||||||||||||||||
Lease of tele- | ||||||||||||||||||||
Land and | communications | |||||||||||||||||||
buildings | Equipment | networks (a) | Total | Total | ||||||||||||||||
Leases expiring: | ||||||||||||||||||||
— no later than one year | 1,293 | 977 | 2,193 | 4,463 | 1,851 | |||||||||||||||
— later than one year and no later than five years | 2,951 | 1,415 | 1,100 | 5,466 | 4,657 | |||||||||||||||
— later than five years | 1,265 | 145 | — | 1,410 | 1,957 | |||||||||||||||
Total | 5,509 | 2,537 | 3,293 | 11,339 | 8,465 | |||||||||||||||
(a) | The lease commitments in relation to telecommunications networks related to the lease arrangement of the Telecommunications Networks in Southern China between CUCL and Unicom New Horizon and was estimated based on the annual leasing fees pursuant to the Network Lease Agreement. Please refer to Note 1(b) for details. |
— I-176 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-177 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Interest rates and final maturity | RMB million | |||||
Short-term bank loans | ||||||
— RMB denominated bank loans | Fixed interest rates ranging from 2.00% to 4.37% per annum with maturity through 30 July 2010 | 22,730 | ||||
Short-term commercial paper | Interest rate 4.47% per annum with maturity through 6 October 2009 | 10,000 | ||||
Amounts due to Netcom BVI | Interest rate of six-month HIBOR plus 0.8% per annum with maturity through 16 June 2010 | 1,410 | ||||
Current portion of long-term bank loans | 603 | |||||
34,743 | ||||||
— I-178 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
Interest rates and final maturity | RMB million | |||||
Long-term bank loans | ||||||
— RMB denominated | Floating interest rates ranging from 4.86% to 5.18% per annum with maturity through 31 December 2009 | 500 | ||||
— US$ denominated | Fixed interest rates ranging from 0% to 5.65% per annum with maturity through 30 September 2039 | 511 | ||||
— Japanese Yen denominated | Floating interest rates of YEN LIBOR plus interest margin 3.50% per annum with maturity through 7 January 2014 | 199 | ||||
— Euro denominated | Fixed interest rates ranging from 1.10% to 2.50% per annum with maturity through 15 February 2034 | 332 | ||||
Less: Current portion | (603 | ) | ||||
Corporate bonds | ||||||
— RMB denominated | Interest rates ranging from 4.50% to 5.29% per annum with maturity through 7 June 2017 | 7,000 | ||||
7,939 | ||||||
— I-179 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
— I-180 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
As at 30 June 2009
After the | ||||||||||||||||
Pro forma | Share | |||||||||||||||
The Group | adjustment | Note | Repurchase | |||||||||||||
Note 1 | ||||||||||||||||
ASSETS | ||||||||||||||||
Non-current assets | ||||||||||||||||
Property, plant and equipment | 300,054 | 300,054 | ||||||||||||||
Lease prepayments | 7,660 | 7,660 | ||||||||||||||
Goodwill | 2,771 | 2,771 | ||||||||||||||
Deferred income tax assets | 5,859 | 5,859 | ||||||||||||||
Available-for-sale financial assets | 181 | 181 | ||||||||||||||
Other assets | 9,948 | 9,948 | ||||||||||||||
326,473 | 326,473 | |||||||||||||||
Current assets | ||||||||||||||||
Inventories and consumables | 1,127 | 1,127 | ||||||||||||||
Accounts receivable, net | 9,914 | 9,914 | ||||||||||||||
Prepayments and other current assets | 2,622 | 2,622 | ||||||||||||||
Amounts due from related parties | 93 | 93 | ||||||||||||||
Amounts due from domestic carriers | 1,341 | 1,341 | ||||||||||||||
Proceeds receivable for the disposal of the CDMA business | 5,437 | 5,437 | ||||||||||||||
Short-term bank deposits | 196 | 196 | ||||||||||||||
8,808 | ||||||||||||||||
Cash and cash equivalents | 7,725 | (8,808 | ) | 2 | 7,725 | |||||||||||
28,455 | 28,455 | |||||||||||||||
Total assets | 354,928 | 354,928 | ||||||||||||||
EQUITY | ||||||||||||||||
Capital and reserves attributable to equity holders of the Company | ||||||||||||||||
Share capital | 2,329 | (88 | ) | 2 | 2,241 | |||||||||||
Share premium | 166,784 | (8,720 | ) | 2 | 158,064 | |||||||||||
Reserves | (18,999 | ) | (18,999 | ) | ||||||||||||
Retained profits | 55,619 | 55,619 | ||||||||||||||
205,733 | 196,925 | |||||||||||||||
Minority interest in equity | 2 | 2 | ||||||||||||||
Total equity | 205,735 | 196,927 | ||||||||||||||
— I-181 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
After the | ||||||||||||||||
Pro forma | Share | |||||||||||||||
The Group | adjustment | Note | Repurchase | |||||||||||||
Note 1 | ||||||||||||||||
LIABILITIES | ||||||||||||||||
Non-current liabilities | ||||||||||||||||
Long-term bank loans | 939 | 939 | ||||||||||||||
Corporate bonds | 7,000 | 7,000 | ||||||||||||||
Deferred income tax liabilities | 18 | 18 | ||||||||||||||
Deferred revenue | 3,043 | 3,043 | ||||||||||||||
Other obligations | 1,314 | 1,314 | ||||||||||||||
12,314 | 12,314 | |||||||||||||||
Current liabilities | ||||||||||||||||
Payables and accrued liabilities | 76,869 | 76,869 | ||||||||||||||
Taxes payable | 11,285 | 11,285 | ||||||||||||||
Amounts due to ultimate holding company | 2 | 2 | ||||||||||||||
Amounts due to related parties | 3,215 | 3,215 | ||||||||||||||
Amounts due to domestic carriers | 1,230 | 1,230 | ||||||||||||||
Payables in relation to the disposal of the CDMA business | 182 | 182 | ||||||||||||||
Dividend payable | 1,027 | 1,027 | ||||||||||||||
Short-term commercial paper | 10,000 | 10,000 | ||||||||||||||
Short-term bank loans | 11,780 | 8,808 | 2 | 20,588 | ||||||||||||
Current portion of long-term bank loans | 603 | 603 | ||||||||||||||
Current portion of deferred revenue | 1,629 | 1,629 | ||||||||||||||
Current portion of other obligations | 3,017 | 3,017 | ||||||||||||||
Advances from customers | 16,040 | 16,040 | ||||||||||||||
136,879 | 145,687 | |||||||||||||||
Total liabilities | 149,193 | 158,001 | ||||||||||||||
Total equity and liabilities | 354,928 | 354,928 | ||||||||||||||
Net current liabilities | (108,424 | ) | (117,232 | ) | ||||||||||||
Total assets less current liabilities | 218,049 | 209,241 | ||||||||||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
1. | The unaudited condensed consolidated balance sheet of the Group as at 30 June 2009 has been extracted from the unaudited condensed consolidated interim financial information of the Group for the six months ended 30 June 2009 set out in this Appendix I. | |
2. | The adjustment represents the effects of the Share Repurchase assuming it had taken place on 30 June 2009. The consideration for the Share Repurchase is HK$9,992 million (equivalent to RMB8,808 million) and it is assumed that the Company had financed the Share Repurchase entirely by short-term bank borrowings and that the proceeds from bank borrowings were received and used to settle the Share Repurchase. The total number of Shares repurchased of 899,745,075 was cancelled on 30 June 2009. | |
3. | No adjustment has been made to reflect any results of or other transactions entered by the Group subsequent to 30 June 2009. | |
4. | For the purpose of this unaudited pro forma condensed consolidated balance sheet, the translation of Hong Kong dollars into Renminbi was made at the rate of HK$1.00 to RMB0.8815. |
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
For the six months ended 30 June 2009
(All amounts in RMB millions unless otherwise stated)
After | ||||||||||||||||
The Group | Pro forma | the Share | ||||||||||||||
Note 1 | adjustment | Note | Repurchase | |||||||||||||
Revenues | 76,319 | 76,319 | ||||||||||||||
Interconnection charges | (6,240 | ) | (6,240 | ) | ||||||||||||
Depreciation and amortisation | (23,358 | ) | (23,358 | ) | ||||||||||||
Networks, operations and support expenses | (10,106 | ) | (10,106 | ) | ||||||||||||
Employee benefit expenses | (10,546 | ) | (10,546 | ) | ||||||||||||
Other operating expenses | (16,551 | ) | (16,551 | ) | ||||||||||||
Finance costs | (363 | ) | (127 | ) | 2 | (490 | ) | |||||||||
Interest income | 51 | 51 | ||||||||||||||
Other income — net | 331 | 331 | ||||||||||||||
9,537 | 9,410 | |||||||||||||||
Leasing fee for telecommunications networks in Southern China | (907 | ) | (907 | ) | ||||||||||||
Profit before income tax | 8,630 | 8,503 | ||||||||||||||
Income tax expenses | (2,014 | ) | 32 | 2 | (1,982 | ) | ||||||||||
Profit for the period | 6,616 | 6,521 | ||||||||||||||
Attributable to: | ||||||||||||||||
Equity holders of the Company | 6,616 | 6,521 | ||||||||||||||
Minority interest | — | — | ||||||||||||||
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
For the six months ended 30 June 2009
(All amounts in RMB millions unless otherwise stated)
After | ||||||||||||||||
The Group | Pro forma | the Share | ||||||||||||||
Note 1 | adjustment | Note | Repurchase | |||||||||||||
Earnings per Share for profit attributable to equity holders of the Company during the period | ||||||||||||||||
Numerator (in RMB millions): | ||||||||||||||||
Profit for the period attributable to equity holders of the Company | 6,616 | 6,521 | ||||||||||||||
Denominator (in millions): | ||||||||||||||||
Weighted average number of Shares outstanding used in computing basic earnings per Share | 23,768 | (900 | ) | 3 | 22,868 | |||||||||||
Dilutive equivalent Shares arising from Options | 94 | 94 | ||||||||||||||
Shares used in computing diluted earnings per Share | 23,862 | 22,962 | ||||||||||||||
Basic earnings per Share (RMB) | 0.28 | 0.29 | ||||||||||||||
Diluted earnings per Share (RMB) | 0.28 | 0.28 |
Notes to the unaudited pro forma condensed consolidated income statement: | ||
1. | The unaudited condensed consolidated income statement of the Group for the six months ended 30 June 2009 has been extracted from the unaudited condensed consolidated interim financial information of the Group for the six months ended 30 June 2009 set out in this Appendix I. | |
2. | The adjustment represents interest expenses and the related income tax impact in relation to the short-term bank borrowings used to finance the payment of the consideration for the Share Repurchase, assuming the Share Repurchase had taken place and the short-term bank borrowings had been borrowed on 1 January 2009. The short-term bank borrowings are repayable within 1 year and bear interest at a rate of 1.2% over HIBOR per annum. Since interest expense is calculated and accrued on quarterly basis, HIBOR used to calculate interest expense for the first quarter of 2009 is 3.05% (rate as of 1 January 2009) and HIBOR used to calculate interest expense for the second quarter of 2009 is 2.72% (rate as of 1 April 2009). Normal commercial loan term for the six months ended 30 June 2009 ranges from 0.7% to 1% over HIBOR per annum, due to emergency of obtaining of the loan, the Company assumes a higher interest rate will be required by bank which is 1.2% over HIBOR per annum. | |
3. | The adjustment represents 899,745,075 Shares repurchased assuming the Share Repurchase had taken place on 1 January 2009. Assuming the Share Repurchase had taken place on 1 January 2009, the weighted average number of Shares used in computing the unaudited pro forma basic earnings per Share would have been 22,868,180,247. | |
4. | No adjustment has been made to reflect any results of or other transactions entered by the Group subsequent to 30 June 2009. | |
5. | For the purpose of this unaudited pro forma condensed consolidated income statement, the translation of Hong Kong dollars into Renminbi was made at the rate of HK$1.00 to RMB0.8815. |
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
For the six months ended 30 June 2009
(All amounts in RMB millions unless otherwise stated)
After | ||||||||||||||||
The Group | Pro forma | the Share | ||||||||||||||
Note 1 | adjustment | Note | Repurchase | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Continuing operations | 31,417 | (127 | ) | 3 | 31,290 | |||||||||||
Discontinued operations | — | — | ||||||||||||||
Net cash inflows from operating activities | 31,417 | 31,290 | ||||||||||||||
Cash flows from investing activities | ||||||||||||||||
Continuing operations | (35,766 | ) | (35,766 | ) | ||||||||||||
Discontinued operations | 4,239 | 4,239 | ||||||||||||||
Net cash outflows from investing activities | (31,527 | ) | (31,527 | ) | ||||||||||||
Cash flows from financing activities | ||||||||||||||||
8,808 | 2 | |||||||||||||||
(8,808 | ) | 2 | ||||||||||||||
Continuing operations | (2,402 | ) | 180 | 4 | (2,222 | ) | ||||||||||
Discontinued operations | — | — | ||||||||||||||
Net cash outflows from financing activities | (2,402 | ) | (2,222 | ) | ||||||||||||
Decrease in cash and cash equivalents | (2,512 | ) | (2,459 | ) | ||||||||||||
Notes to the unaudited pro forma condensed consolidated cash flow statement: | ||
1. | The unaudited condensed consolidated cash flow statement of the Group for the six months ended 30 June 2009 has been extracted from the unaudited condensed consolidated interim financial information of the Group for the six months ended 30 June 2009 set out in this Appendix I. | |
2. | The adjustment represents the receipt of the proceeds of short-term bank borrowings, which were then used to settle the consideration for the Share Repurchase on 1 January 2009. | |
3. | The adjustment represents the interest payment in relation to the short-term bank borrowings used to finance the payment of the consideration for the Share Repurchase, assuming the Share Repurchase had taken place on 1 January 2009. The short-term bank borrowings are repayable within 1 year and bear an interest at a rate of 1.2% over HIBOR per annum. Since income tax for the six months period ended 30 June 2009 has not been paid till the end of the period, no adjustment is raised to reflect related income tax impact of the interest payment. | |
4. | The adjustment represents the reduction of the 2008 dividend paid during the six months ended 30 June 2009, assuming the cancellation of 899,745,075 repurchased Shares was completed on 1 January 2009. |
— I-186 —
APPENDIX | FINANCIAL INFORMATION ON THE GROUP |
5. | No adjustment has been made to reflect any results of or other transactions entered by the Group subsequent to 30 June 2009. | |
6. | For the purpose of this unaudited pro forma condensed consolidated cash flow statement, the translation of Hong Kong dollars into Renminbi was made at the rate of HK$1.00 to RMB0.8815. |
— I-187 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
PricewaterhouseCoopers 22/F, Prince’s Building Central, Hong Kong |
— I–188 —
APPENDIX I | FINANCIAL INFORMATION ON THE GROUP |
a) | the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated; | |
b) | such basis is consistent with the accounting policies of the Group; and | |
c) | the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to Rule 4.29(1) of the Listing Rules. |
— I–189 —
APPENDIX II | GENERAL INFORMATION |
1. | RESPONSIBILITY STATEMENT |
2. | SHARE CAPITAL |
(a) | As at the Latest Practicable Date, the authorised and issued share capital of the Company were as follows: |
HK$ | ||||
Authorised Share Capital: | ||||
30,000,000,000 Shares | 3,000,000,000.00 | |||
Issued and Fully Paid-up Share Capital: | ||||
23,767,925,322 Shares | 2,376,792,532.20 | |||
(b) | All the Shares rankpari passuin all respects as regards rights to capital, dividends and voting. | ||
(c) | Details of the Shares which were issued by the Company during the two year period immediately preceding 28 September 2009, being the date of the Announcement, are as follows: |
(i) | Issue of Shares pursuant to the merger of the Company and China Netcom which became effective on 15 October 2008 | ||
The Company issued an aggregate of 10,102,389,377 Shares to the shareholders of China Netcom on 15 October 2008 as consideration for the cancellation of all of their shares in China Netcom pursuant to the terms of the scheme of arrangement of China Netcom, which became effective on 15 October 2008. |
— II-1 —
APPENDIX II | GENERAL INFORMATION |
(ii) | Issue of Shares pursuant to the exercise of Options |
Number of Shares | Aggregate | |||||||||||
Issued Upon | Exercise | Proceeds | ||||||||||
Exercise of | Price of | Received by | ||||||||||
Date | Options | Options | the Company | |||||||||
HK$ | HK$ | |||||||||||
28 September 2007 | 120,000 | 4.300 | 516,000.00 | |||||||||
28 September 2007 | 532,000 | 5.920 | 3,149,440.00 | |||||||||
28 September 2007 | 10,000 | 6.180 | 61,800.00 | |||||||||
2 October 2007 | 32,000 | 4.300 | 137,600.00 | |||||||||
2 October 2007 | 366,000 | 5.920 | 2,166,720.00 | |||||||||
2 October 2007 | 20,000 | 15.420 | 308,400.00 | |||||||||
3 October 2007 | 178,000 | 4.300 | 765,400.00 | |||||||||
3 October 2007 | 654,000 | 5.920 | 3,871,680.00 | |||||||||
3 October 2007 | 216,000 | 15.420 | 3,330,720.00 | |||||||||
4 October 2007 | 82,000 | 5.920 | 485,440.00 | |||||||||
5 October 2007 | 20,000 | 5.920 | 118,400.00 | |||||||||
8 October 2007 | 14,000 | 4.300 | 60,200.00 | |||||||||
8 October 2007 | 142,000 | 5.920 | 840,640.00 | |||||||||
8 October 2007 | 10,000 | 6.180 | 61,800.00 | |||||||||
9 October 2007 | 6,000 | 4.300 | 25,800.00 | |||||||||
9 October 2007 | 2,000 | 5.920 | 11,840.00 | |||||||||
10 October 2007 | 24,000 | 4.300 | 103,200.00 | |||||||||
10 October 2007 | 148,000 | 5.920 | 876,160.00 | |||||||||
11 October 2007 | 70,000 | 5.920 | 414,400.00 | |||||||||
12 October 2007 | 56,000 | 5.920 | 331,520.00 | |||||||||
15 October 2007 | 34,000 | 4.300 | 146,200.00 | |||||||||
15 October 2007 | 50,000 | 5.920 | 296,000.00 | |||||||||
16 October 2007 | 34,000 | 4.300 | 146,200.00 | |||||||||
16 October 2007 | 76,000 | 5.920 | 449,920.00 | |||||||||
16 October 2007 | 16,000 | 6.180 | 98,880.00 | |||||||||
16 October 2007 | 20,000 | 15.420 | 308,400.00 | |||||||||
17 October 2007 | 14,000 | 4.300 | 60,200.00 | |||||||||
17 October 2007 | 36,000 | 5.920 | 213,120.00 | |||||||||
18 October 2007 | 28,000 | 4.300 | 120,400.00 | |||||||||
18 October 2007 | 96,000 | 5.920 | 568,320.00 | |||||||||
22 October 2007 | 6,000 | 4.300 | 25,800.00 | |||||||||
23 October 2007 | 4,000 | 4.300 | 17,200.00 | |||||||||
23 October 2007 | 20,000 | 5.920 | 118,400.00 | |||||||||
24 October 2007 | 10,000 | 4.300 | 43,000.00 | |||||||||
24 October 2007 | 86,000 | 5.920 | 509,120.00 | |||||||||
24 October 2007 | 10,000 | 6.180 | 61,800.00 | |||||||||
25 October 2007 | 24,000 | 4.300 | 103,200.00 | |||||||||
25 October 2007 | 66,000 | 5.920 | 390,720.00 | |||||||||
25 October 2007 | 20,000 | 6.180 | 123,600.00 | |||||||||
26 October 2007 | 72,000 | 4.300 | 309,600.00 | |||||||||
26 October 2007 | 250,000 | 5.920 | 1,480,000.00 |
— II-2 —
APPENDIX II | GENERAL INFORMATION |
Number of Shares | Aggregate | |||||||||||
Issued Upon | Exercise | Proceeds | ||||||||||
Exercise of | Price of | Received by | ||||||||||
Date | Options | Options | the Company | |||||||||
HK$ | HK$ | |||||||||||
29 October 2007 | 354,000 | 4.300 | 1,522,200.00 | |||||||||
29 October 2007 | 928,000 | 5.920 | 5,493,760.00 | |||||||||
29 October 2007 | 174,000 | 6.180 | 1,075,320.00 | |||||||||
29 October 2007 | 650,000 | 15.420 | 10,023,000.00 | |||||||||
30 October 2007 | 254,000 | 4.300 | 1,092,200.00 | |||||||||
30 October 2007 | 946,000 | 5.920 | 5,600,320.00 | |||||||||
30 October 2007 | 186,000 | 6.180 | 1,149,480.00 | |||||||||
30 October 2007 | 1,001,600 | 15.420 | 15,444,672.00 | |||||||||
31 October 2007 | 48,000 | 4.300 | 206,400.00 | |||||||||
31 October 2007 | 74,000 | 5.920 | 438,080.00 | |||||||||
31 October 2007 | 12,000 | 15.420 | 185,040.00 | |||||||||
1 November 2007 | 20,000 | 4.300 | 86,000.00 | |||||||||
1 November 2007 | 146,000 | 5.920 | 864,320.00 | |||||||||
2 November 2007 | 52,000 | 5.920 | 307,840.00 | |||||||||
5 November 2007 | 34,000 | 4.300 | 146,200.00 | |||||||||
5 November 2007 | 4,000 | 5.920 | 23,680.00 | |||||||||
6 November 2007 | 20,000 | 4.300 | 86,000.00 | |||||||||
6 November 2007 | 24,000 | 5.920 | 142,080.00 | |||||||||
7 November 2007 | 28,000 | 5.920 | 165,760.00 | |||||||||
7 November 2007 | 20,000 | 6.180 | 123,600.00 | |||||||||
9 November 2007 | 10,000 | 5.920 | 59,200.00 | |||||||||
12 November 2007 | 8,000 | 4.300 | 34,400.00 | |||||||||
12 November 2007 | 2,000 | 5.920 | 11,840.00 | |||||||||
14 November 2007 | 4,000 | 4.300 | 17,200.00 | |||||||||
14 November 2007 | 10,000 | 5.920 | 59,200.00 | |||||||||
16 November 2007 | 12,000 | 4.300 | 51,600.00 | |||||||||
16 November 2007 | 20,000 | 5.920 | 118,400.00 | |||||||||
19 November 2007 | 4,000 | 4.300 | 17,200.00 | |||||||||
19 November 2007 | 106,000 | 5.920 | 627,520.00 | |||||||||
20 November 2007 | 102,000 | 5.920 | 603,840.00 | |||||||||
22 November 2007 | 10,000 | 5.920 | 59,200.00 | |||||||||
26 November 2007 | 40,000 | 5.920 | 236,800.00 | |||||||||
28 November 2007 | 32,000 | 5.920 | 189,440.00 | |||||||||
29 November 2007 | 38,000 | 4.300 | 163,400.00 | |||||||||
29 November 2007 | 70,000 | 5.920 | 414,400.00 | |||||||||
30 November 2007 | 20,000 | 4.300 | 86,000.00 | |||||||||
30 November 2007 | 168,000 | 5.920 | 994,560.00 | |||||||||
30 November 2007 | 310,000 | 15.420 | 4,780,200.00 | |||||||||
3 December 2007 | 4,000 | 4.300 | 17,200.00 | |||||||||
3 December 2007 | 92,000 | 5.920 | 544,640.00 | |||||||||
3 December 2007 | 30,000 | 6.180 | 185,400.00 | |||||||||
4 December 2007 | 30,000 | 5.920 | 177,600.00 | |||||||||
5 December 2007 | 4,000 | 5.920 | 23,680.00 |
— II-3 —
APPENDIX II | GENERAL INFORMATION |
Number of Shares | Aggregate | |||||||||||
Issued Upon | Exercise | Proceeds | ||||||||||
Exercise of | Price of | Received by | ||||||||||
Date | Options | Options | the Company | |||||||||
HK$ | HK$ | |||||||||||
7 December 2007 | 32,000 | 5.920 | 189,440.00 | |||||||||
10 December 2007 | 16,000 | 5.920 | 94,720.00 | |||||||||
12 December 2007 | 8,000 | 4.300 | 34,400.00 | |||||||||
14 December 2007 | 2,000 | 5.920 | 11,840.00 | |||||||||
17 December 2007 | 2,000 | 4.300 | 8,600.00 | |||||||||
18 December 2007 | 12,000 | 5.920 | 71,040.00 | |||||||||
19 December 2007 | 2,000 | 4.300 | 8,600.00 | |||||||||
19 December 2007 | 14,000 | 5.920 | 82,880.00 | |||||||||
20 December 2007 | 4,000 | 4.300 | 17,200.00 | |||||||||
20 December 2007 | 20,000 | 5.920 | 118,400.00 | |||||||||
20 December 2007 | 86,000 | 6.180 | 531,480.00 | |||||||||
21 December 2007 | 22,000 | 4.300 | 94,600.00 | |||||||||
21 December 2007 | 126,000 | 5.920 | 745,920.00 | |||||||||
21 December 2007 | 170,000 | 6.180 | 1,050,600.00 | |||||||||
24 December 2007 | 128,000 | 4.300 | 550,400.00 | |||||||||
24 December 2007 | 110,000 | 5.920 | 651,200.00 | |||||||||
24 December 2007 | 12,000 | 6.180 | 74,160.00 | |||||||||
24 December 2007 | 10,000 | 15.420 | 154,200.00 | |||||||||
27 December 2007 | 298,000 | 4.300 | 1,281,400.00 | |||||||||
27 December 2007 | 380,000 | 5.920 | 2,249,600.00 | |||||||||
27 December 2007 | 228,000 | 6.180 | 1,409,040.00 | |||||||||
27 December 2007 | 304,000 | 15.420 | 4,687,680.00 | |||||||||
28 December 2007 | 90,000 | 4.300 | 387,000.00 | |||||||||
28 December 2007 | 248,000 | 5.920 | 1,468,160.00 | |||||||||
28 December 2007 | 206,000 | 6.180 | 1,273,080.00 | |||||||||
28 December 2007 | 30,000 | 15.420 | 462,600.00 | |||||||||
31 December 2007 | 128,000 | 4.300 | 550,400.00 | |||||||||
31 December 2007 | 94,000 | 5.920 | 556,480.00 | |||||||||
31 December 2007 | 274,000 | 6.180 | 1,693,320.00 | |||||||||
31 December 2007 | 222,000 | 15.420 | 3,423,240.00 | |||||||||
2 January 2008 | 54,000 | 5.920 | 319,680.00 | |||||||||
3 January 2008 | 20,000 | 4.300 | 86,000.00 | |||||||||
4 January 2008 | 26,000 | 4.300 | 111,800.00 | |||||||||
4 January 2008 | 26,000 | 5.920 | 153,920.00 | |||||||||
8 January 2008 | 8,000 | 5.920 | 47,360.00 | |||||||||
10 January 2008 | 22,000 | 5.920 | 130,240.00 | |||||||||
11 January 2008 | 58,000 | 4.300 | 249,400.00 | |||||||||
11 January 2008 | 642,000 | 5.920 | 3,800,640.00 | |||||||||
11 January 2008 | 98,000 | 6.180 | 605,640.00 | |||||||||
11 January 2008 | 334,000 | 15.420 | 5,150,280.00 | |||||||||
14 January 2008 | 12,800 | 4.300 | 55,040.00 | |||||||||
14 January 2008 | 108,000 | 5.920 | 639,360.00 | |||||||||
15 January 2008 | 240,000 | 5.920 | 1,420,800.00 |
— II-4 —
APPENDIX II | GENERAL INFORMATION |
Number of Shares | Aggregate | |||||||||||
Issued Upon | Exercise | Proceeds | ||||||||||
Exercise of | Price of | Received by | ||||||||||
Date | Options | Options | the Company | |||||||||
HK$ | HK$ | |||||||||||
15 January 2008 | 12,000 | 6.180 | 74,160.00 | |||||||||
15 January 2008 | 16,000 | 15.420 | 246,720.00 | |||||||||
16 January 2008 | 20,000 | 5.920 | 118,400.00 | |||||||||
17 January 2008 | 2,000 | 4.300 | 8,600.00 | |||||||||
17 January 2008 | 38,000 | 5.920 | 224,960.00 | |||||||||
17 January 2008 | 8,000 | 6.180 | 49,440.00 | |||||||||
18 January 2008 | 20,000 | 4.300 | 86,000.00 | |||||||||
18 January 2008 | 136,000 | 5.920 | 805,120.00 | |||||||||
18 January 2008 | 76,000 | 6.180 | 469,680.00 | |||||||||
18 January 2008 | 160,000 | 15.420 | 2,467,200.00 | |||||||||
21 January 2008 | 54,000 | 5.920 | 319,680.00 | |||||||||
22 January 2008 | 68,000 | 5.920 | 402,560.00 | |||||||||
23 January 2008 | 6,000 | 4.300 | 25,800.00 | |||||||||
24 January 2008 | 2,000 | 4.300 | 8,600.00 | |||||||||
24 January 2008 | 54,000 | 5.920 | 319,680.00 | |||||||||
24 January 2008 | 2,000 | 6.180 | 12,360.00 | |||||||||
25 January 2008 | 26,000 | 4.300 | 111,800.00 | |||||||||
25 January 2008 | 100,000 | 5.920 | 592,000.00 | |||||||||
25 January 2008 | 6,000 | 6.180 | 37,080.00 | |||||||||
25 January 2008 | 50,000 | 15.420 | 771,000.00 | |||||||||
28 January 2008 | 10,000 | 5.920 | 59,200.00 | |||||||||
29 January 2008 | 10,000 | 4.300 | 43,000.00 | |||||||||
29 January 2008 | 2,000 | 5.920 | 11,840.00 | |||||||||
29 January 2008 | 4,000 | 6.180 | 24,720.00 | |||||||||
30 January 2008 | 50,000 | 4.300 | 215,000.00 | |||||||||
30 January 2008 | 496,000 | 5.920 | 2,936,320.00 | |||||||||
30 January 2008 | 24,000 | 6.180 | 148,320.00 | |||||||||
30 January 2008 | 204,000 | 15.420 | 3,145,680.00 | |||||||||
31 January 2008 | 252,000 | 5.920 | 1,491,840.00 | |||||||||
31 January 2008 | 16,000 | 6.180 | 98,880.00 | |||||||||
31 January 2008 | 24,000 | 15.420 | 370,080.00 | |||||||||
1 February 2008 | 78,000 | 4.300 | 335,400.00 | |||||||||
1 February 2008 | 838,000 | 5.920 | 4,960,960.00 | |||||||||
1 February 2008 | 72,000 | 6.180 | 444,960.00 | |||||||||
1 February 2008 | 80,400 | 15.420 | 1,239,768.00 | |||||||||
4 February 2008 | 224,000 | 4.300 | 963,200.00 | |||||||||
4 February 2008 | 1,250,000 | 5.920 | 7,400,000.00 | |||||||||
4 February 2008 | 154,000 | 6.180 | 951,720.00 | |||||||||
4 February 2008 | 1,150,000 | 15.420 | 17,733,000.00 | |||||||||
5 February 2008 | 94,000 | 4.300 | 404,200.00 | |||||||||
5 February 2008 | 494,000 | 5.920 | 2,924,480.00 | |||||||||
5 February 2008 | 30,000 | 6.180 | 185,400.00 | |||||||||
5 February 2008 | 500,400 | 15.420 | 7,716,168.00 |
— II-5 —
APPENDIX II | GENERAL INFORMATION |
Number of Shares | Aggregate | |||||||||||
Issued Upon | Exercise | Proceeds | ||||||||||
Exercise of | Price of | Received by | ||||||||||
Date | Options | Options | the Company | |||||||||
HK$ | HK$ | |||||||||||
11 February 2008 | 8,000 | 5.920 | 47,360.00 | |||||||||
14 February 2008 | 34,000 | 5.920 | 201,280.00 | |||||||||
14 February 2008 | 30,000 | 15.420 | 462,600.00 | |||||||||
15 February 2008 | 116,000 | 4.300 | 498,800.00 | |||||||||
15 February 2008 | 512,000 | 5.920 | 3,031,040.00 | |||||||||
15 February 2008 | 36,000 | 6.180 | 222,480.00 | |||||||||
15 February 2008 | 1,044,000 | 6.350 | 6,629,400.00 | |||||||||
15 February 2008 | 440,000 | 15.420 | 6,784,800.00 | |||||||||
18 February 2008 | 248,000 | 4.300 | 1,066,400.00 | |||||||||
18 February 2008 | 980,000 | 5.920 | 5,801,600.00 | |||||||||
18 February 2008 | 180,000 | 6.180 | 1,112,400.00 | |||||||||
18 February 2008 | 1,498,000 | 6.350 | 9,512,300.00 | |||||||||
18 February 2008 | 1,480,400 | 15.420 | 22,827,768.00 | |||||||||
19 February 2008 | 62,000 | 4.300 | 266,600.00 | |||||||||
19 February 2008 | 260,000 | 5.920 | 1,539,200.00 | |||||||||
19 February 2008 | 40,000 | 6.180 | 247,200.00 | |||||||||
19 February 2008 | 528,000 | 6.350 | 3,352,800.00 | |||||||||
19 February 2008 | 114,000 | 15.420 | 1,757,880.00 | |||||||||
20 February 2008 | 58,000 | 4.300 | 249,400.00 | |||||||||
20 February 2008 | 58,000 | 5.920 | 343,360.00 | |||||||||
20 February 2008 | 304,000 | 6.350 | 1,930,400.00 | |||||||||
20 February 2008 | 8,000 | 15.420 | 123,360.00 | |||||||||
21 February 2008 | 50,000 | 4.300 | 215,000.00 | |||||||||
21 February 2008 | 142,000 | 5.920 | 840,640.00 | |||||||||
21 February 2008 | 150,000 | 6.350 | 952,500.00 | |||||||||
21 February 2008 | 110,000 | 15.420 | 1,696,200.00 | |||||||||
22 February 2008 | 42,000 | 4.300 | 180,600.00 | |||||||||
22 February 2008 | 140,000 | 5.920 | 828,800.00 | |||||||||
22 February 2008 | 4,000 | 6.180 | 24,720.00 | |||||||||
22 February 2008 | 250,000 | 6.350 | 1,587,500.00 | |||||||||
22 February 2008 | 6,000 | 15.420 | 92,520.00 | |||||||||
25 February 2008 | 10,000 | 4.300 | 43,000.00 | |||||||||
25 February 2008 | 136,000 | 5.920 | 805,120.00 | |||||||||
25 February 2008 | 152,000 | 6.350 | 965,200.00 | |||||||||
25 February 2008 | 12,000 | 15.420 | 185,040.00 | |||||||||
26 February 2008 | 2,000 | 4.300 | 8,600.00 | |||||||||
26 February 2008 | 80,000 | 5.920 | 473,600.00 | |||||||||
26 February 2008 | 116,000 | 6.350 | 736,600.00 | |||||||||
26 February 2008 | 6,000 | 15.420 | 92,520.00 | |||||||||
27 February 2008 | 22,000 | 4.300 | 94,600.00 | |||||||||
27 February 2008 | 62,000 | 5.920 | 367,040.00 | |||||||||
27 February 2008 | 222,000 | 6.350 | 1,409,700.00 | |||||||||
27 February 2008 | 126,000 | 15.420 | 1,942,920.00 |
— II-6 —
APPENDIX II | GENERAL INFORMATION |
Number of Shares | Aggregate | |||||||||||
Issued Upon | Exercise | Proceeds | ||||||||||
Exercise of | Price of | Received by | ||||||||||
Date | Options | Options | the Company | |||||||||
HK$ | HK$ | |||||||||||
28 February 2008 | 20,000 | 5.920 | 118,400.00 | |||||||||
28 February 2008 | 198,000 | 6.350 | 1,257,300.00 | |||||||||
28 February 2008 | 30,000 | 15.420 | 462,600.00 | |||||||||
29 February 2008 | 46,000 | 5.920 | 272,320.00 | |||||||||
29 February 2008 | 14,000 | 6.350 | 88,900.00 | |||||||||
3 March 2008 | 16,000 | 5.920 | 94,720.00 | |||||||||
3 March 2008 | 32,000 | 6.350 | 203,200.00 | |||||||||
4 March 2008 | 28,000 | 4.300 | 120,400.00 | |||||||||
4 March 2008 | 10,000 | 5.920 | 59,200.00 | |||||||||
4 March 2008 | 10,000 | 6.350 | 63,500.00 | |||||||||
5 March 2008 | 8,000 | 5.920 | 47,360.00 | |||||||||
5 March 2008 | 40,000 | 6.350 | 254,000.00 | |||||||||
6 March 2008 | 4,000 | 4.300 | 17,200.00 | |||||||||
6 March 2008 | 16,000 | 6.350 | 101,600.00 | |||||||||
7 March 2008 | 40,000 | 5.920 | 236,800.00 | |||||||||
7 March 2008 | 108,000 | 6.350 | 685,800.00 | |||||||||
10 March 2008 | 12,000 | 4.300 | 51,600.00 | |||||||||
10 March 2008 | 24,000 | 5.920 | 142,080.00 | |||||||||
10 March 2008 | 94,000 | 6.350 | 596,900.00 | |||||||||
11 March 2008 | 36,000 | 5.920 | 213,120.00 | |||||||||
11 March 2008 | 66,000 | 6.350 | 419,100.00 | |||||||||
12 March 2008 | 42,000 | 4.300 | 180,600.00 | |||||||||
12 March 2008 | 22,000 | 5.920 | 130,240.00 | |||||||||
12 March 2008 | 100,000 | 6.350 | 635,000.00 | |||||||||
12 March 2008 | 2,000 | 15.420 | 30,840.00 | |||||||||
13 March 2008 | 20,000 | 5.920 | 118,400.00 | |||||||||
13 March 2008 | 92,000 | 6.350 | 584,200.00 | |||||||||
14 March 2008 | 26,000 | 4.300 | 111,800.00 | |||||||||
14 March 2008 | 28,000 | 5.920 | 165,760.00 | |||||||||
14 March 2008 | 102,000 | 6.350 | 647,700.00 | |||||||||
14 March 2008 | 8,000 | 15.420 | 123,360.00 | |||||||||
17 March 2008 | 6,000 | 5.920 | 35,520.00 | |||||||||
17 March 2008 | 32,000 | 6.350 | 203,200.00 | |||||||||
18 March 2008 | 6,000 | 4.300 | 25,800.00 | |||||||||
18 March 2008 | 50,000 | 5.920 | 296,000.00 | |||||||||
18 March 2008 | 6,000 | 6.180 | 37,080.00 | |||||||||
18 March 2008 | 104,000 | 6.350 | 660,400.00 | |||||||||
19 March 2008 | 18,000 | 6.350 | 114,300.00 | |||||||||
20 March 2008 | 8,000 | 4.300 | 34,400.00 | |||||||||
20 March 2008 | 12,000 | 5.920 | 71,040.00 | |||||||||
25 March 2008 | 12,000 | 4.300 | 51,600.00 | |||||||||
25 March 2008 | 86,000 | 5.920 | 509,120.00 | |||||||||
25 March 2008 | 110,000 | 6.350 | 698,500.00 |
— II-7 —
APPENDIX II | GENERAL INFORMATION |
Number of Shares | Aggregate | |||||||||||
Issued Upon | Exercise | Proceeds | ||||||||||
Exercise of | Price of | Received by | ||||||||||
Date | Options | Options | the Company | |||||||||
HK$ | HK$ | |||||||||||
26 March 2008 | 2,000 | 4.300 | 8,600.00 | |||||||||
26 March 2008 | 26,000 | 5.920 | 153,920.00 | |||||||||
26 March 2008 | 104,000 | 6.350 | 660,400.00 | |||||||||
27 March 2008 | 2,000 | 4.300 | 8,600.00 | |||||||||
27 March 2008 | 2,000 | 5.920 | 11,840.00 | |||||||||
27 March 2008 | 18,000 | 6.350 | 114,300.00 | |||||||||
28 March 2008 | 32,000 | 5.920 | 189,440.00 | |||||||||
28 March 2008 | 184,000 | 6.350 | 1,168,400.00 | |||||||||
31 March 2008 | 2,000 | 5.920 | 11,840.00 | |||||||||
1 April 2008 | 8,000 | 5.920 | 47,360.00 | |||||||||
1 April 2008 | 44,000 | 6.350 | 279,400.00 | |||||||||
2 April 2008 | 2,000 | 4.300 | 8,600.00 | |||||||||
2 April 2008 | 16,000 | 5.920 | 94,720.00 | |||||||||
2 April 2008 | 22,000 | 6.350 | 139,700.00 | |||||||||
3 April 2008 | 22,000 | 4.300 | 94,600.00 | |||||||||
3 April 2008 | 6,000 | 5.920 | 35,520.00 | |||||||||
3 April 2008 | 16,000 | 6.350 | 101,600.00 | |||||||||
7 April 2008 | 4,000 | 4.300 | 17,200.00 | |||||||||
7 April 2008 | 42,000 | 5.920 | 248,640.00 | |||||||||
7 April 2008 | 128,000 | 6.350 | 812,800.00 | |||||||||
8 April 2008 | 2,000 | 4.300 | 8,600.00 | |||||||||
8 April 2008 | 102,000 | 6.350 | 647,700.00 | |||||||||
9 April 2008 | 4,000 | 4.300 | 17,200.00 | |||||||||
9 April 2008 | 8,000 | 5.920 | 47,360.00 | |||||||||
9 April 2008 | 26,000 | 6.350 | 165,100.00 | |||||||||
10 April 2008 | 2,000 | 5.920 | 11,840.00 | |||||||||
10 April 2008 | 12,000 | 6.350 | 76,200.00 | |||||||||
14 April 2008 | 80,000 | 6.350 | 508,000.00 | |||||||||
15 April 2008 | 28,000 | 5.920 | 165,760.00 | |||||||||
15 April 2008 | 16,000 | 6.350 | 101,600.00 | |||||||||
16 April 2008 | 2,000 | 5.920 | 11,840.00 | |||||||||
16 April 2008 | 8,000 | 6.180 | 49,440.00 | |||||||||
16 April 2008 | 80,000 | 6.350 | 508,000.00 | |||||||||
17 April 2008 | 10,000 | 5.920 | 59,200.00 | |||||||||
17 April 2008 | 106,000 | 6.350 | 673,100.00 | |||||||||
18 April 2008 | 10,000 | 4.300 | 43,000.00 | |||||||||
18 April 2008 | 40,000 | 6.180 | 247,200.00 | |||||||||
18 April 2008 | 18,000 | 6.350 | 114,300.00 | |||||||||
21 April 2008 | 4,000 | 5.920 | 23,680.00 | |||||||||
21 April 2008 | 56,000 | 6.350 | 355,600.00 | |||||||||
22 April 2008 | 2,000 | 4.300 | 8,600.00 | |||||||||
22 April 2008 | 66,000 | 6.350 | 419,100.00 | |||||||||
23 April 2008 | 50,000 | 5.920 | 296,000.00 |
— II-8 —
APPENDIX II | GENERAL INFORMATION |
Number of Shares | Aggregate | |||||||||||
Issued Upon | Exercise | Proceeds | ||||||||||
Exercise of | Price of | Received by | ||||||||||
Date | Options | Options | the Company | |||||||||
HK$ | HK$ | |||||||||||
23 April 2008 | 54,000 | 6.350 | 342,900.00 | |||||||||
24 April 2008 | 14,000 | 4.300 | 60,200.00 | |||||||||
24 April 2008 | 42,000 | 5.920 | 248,640.00 | |||||||||
24 April 2008 | 66,000 | 6.350 | 419,100.00 | |||||||||
25 April 2008 | 10,000 | 5.920 | 59,200.00 | |||||||||
25 April 2008 | 30,000 | 6.350 | 190,500.00 | |||||||||
28 April 2008 | 18,000 | 6.350 | 114,300.00 | |||||||||
29 April 2008 | 4,000 | 4.300 | 17,200.00 | |||||||||
29 April 2008 | 82,000 | 5.920 | 485,440.00 | |||||||||
29 April 2008 | 202,000 | 6.350 | 1,282,700.00 | |||||||||
30 April 2008 | 10,000 | 4.300 | 43,000.00 | |||||||||
30 April 2008 | 28,000 | 5.920 | 165,760.00 | |||||||||
30 April 2008 | 10,000 | 6.180 | 61,800.00 | |||||||||
30 April 2008 | 150,000 | 6.350 | 952,500.00 | |||||||||
2 May 2008 | 42,000 | 5.920 | 248,640.00 | |||||||||
2 May 2008 | 58,000 | 6.350 | 368,300.00 | |||||||||
5 May 2008 | 12,000 | 4.300 | 51,600.00 | |||||||||
5 May 2008 | 92,000 | 5.920 | 544,640.00 | |||||||||
5 May 2008 | 30,000 | 6.180 | 185,400.00 | |||||||||
5 May 2008 | 376,000 | 6.350 | 2,387,600.00 | |||||||||
5 May 2008 | 40,000 | 15.420 | 616,800.00 | |||||||||
6 May 2008 | 10,000 | 5.920 | 59,200.00 | |||||||||
6 May 2008 | 34,000 | 6.350 | 215,900.00 | |||||||||
7 May 2008 | 60,000 | 5.920 | 355,200.00 | |||||||||
7 May 2008 | 2,000 | 6.350 | 12,700.00 | |||||||||
8 May 2008 | 10,000 | 4.300 | 43,000.00 | |||||||||
8 May 2008 | 22,000 | 5.920 | 130,240.00 | |||||||||
8 May 2008 | 34,000 | 6.350 | 215,900.00 | |||||||||
9 May 2008 | 68,000 | 5.920 | 402,560.00 | |||||||||
9 May 2008 | 10,000 | 6.180 | 61,800.00 | |||||||||
9 May 2008 | 90,000 | 6.350 | 571,500.00 | |||||||||
9 May 2008 | 24,000 | 15.420 | 370,080.00 | |||||||||
13 May 2008 | 34,000 | 5.920 | 201,280.00 | |||||||||
13 May 2008 | 20,000 | 6.180 | 123,600.00 | |||||||||
13 May 2008 | 48,000 | 6.350 | 304,800.00 | |||||||||
19 May 2008 | 12,000 | 5.920 | 71,040.00 | |||||||||
19 May 2008 | 42,000 | 6.350 | 266,700.00 | |||||||||
20 May 2008 | 20,000 | 6.350 | 127,000.00 | |||||||||
21 May 2008 | 38,000 | 4.300 | 163,400.00 | |||||||||
21 May 2008 | 20,000 | 5.920 | 118,400.00 | |||||||||
21 May 2008 | 120,000 | 6.180 | 741,600.00 | |||||||||
21 May 2008 | 24,000 | 6.350 | 152,400.00 | |||||||||
22 May 2008 | 32,000 | 5.920 | 189,440.00 |
— II-9 —
APPENDIX II | GENERAL INFORMATION |
Number of Shares | Aggregate | |||||||||||
Issued Upon | Exercise | Proceeds | ||||||||||
Exercise of | Price of | Received by | ||||||||||
Date | Options | Options | the Company | |||||||||
HK$ | HK$ | |||||||||||
23 May 2008 | 264,000 | 4.300 | 1,135,200.00 | |||||||||
23 May 2008 | 782,000 | 5.920 | 4,629,440.00 | |||||||||
23 May 2008 | 254,000 | 6.180 | 1,569,720.00 | |||||||||
23 May 2008 | 2,332,000 | 6.350 | 14,808,200.00 | |||||||||
23 May 2008 | 412,000 | 15.420 | 6,353,040.00 | |||||||||
3 June 2008 | 10,000 | 4.300 | 43,000.00 | |||||||||
3 June 2008 | 82,000 | 5.920 | 485,440.00 | |||||||||
3 June 2008 | 134,000 | 6.350 | 850,900.00 | |||||||||
3 July 2008 | 136,000 | 6.180 | 840,480.00 | |||||||||
4 July 2008 | 1,200,000 | 6.180 | 7,416,000.00 | |||||||||
7 July 2008 | 398,000 | 6.180 | 2,459,640.00 | |||||||||
8 July 2008 | 142,000 | 5.920 | 840,640.00 | |||||||||
8 July 2008 | 208,000 | 6.180 | 1,285,440.00 | |||||||||
8 July 2008 | 460,000 | 6.350 | 2,921,000.00 | |||||||||
9 July 2008 | 106,000 | 6.180 | 655,080.00 | |||||||||
16 December 2008 | 290,000 | 4.300 | 1,247,000.00 | |||||||||
17 December 2008 | 2,000 | 4.300 | 8,600.00 | |||||||||
17 December 2008 | 292,000 | 5.920 | 1,728,640.00 |
(d) | No Shares have been repurchased by the Company during the 12 months period immediately preceding the date of this Circular. | ||
(e) | No Shares have been issued or repurchased by the Company since 31 December 2008, being the end of the last financial year of the Company, up to the Latest Practicable Date. |
— II-10 —
APPENDIX II | GENERAL INFORMATION |
(f) | There has been no reorganisation of the capital of the Company during the two financial years preceding 28 September 2009, being the date of the Announcement. | ||
(g) | As at the Latest Practicable Date, there were 96,312,683 ADSs outstanding. Each ADS represents 10 Shares. | ||
(h) | As at the Latest Practicable Date, there were 413,074,166 Options outstanding. If all of such Options are exercised, a total of 413,074,166 Shares will be issued. These Options were issued pursuant to the Share Option Schemes. |
(i) | on 30 June 2001, of which 4,350,000 Options were outstanding as at the Latest Practicable Date, have an exercise price of HK$15.42 and may be exercised from 30 June 2001 to 22 June 2010; | ||
(ii) | on 21 May 2003, of which 8,956,000 Options were outstanding as at the Latest Practicable Date, have an exercise price of HK$4.30 and may be exercised in stages from 21 May 2004 to 20 May 2010;(2) | ||
(iii) | on 20 July 2004, of which 41,024,000 Options were outstanding as at the Latest Practicable Date, have an exercise price of HK$5.92 and may be exercised in stages from 20 July 2005 to 19 July 2010; | ||
(iv) | on 21 December 2004, of which 654,000 Options were outstanding as at the Latest Practicable Date, have an exercise price of HK$6.20 and may be exercised in stages from 21 December 2005 to 20 December 2010; and | ||
(v) | on 15 February 2006, of which 151,556,000 Options were outstanding as at the Latest Practicable Date, have an exercise price of HK$6.35 and may be exercised in stages from 15 February 2008 to 14 February 2012. |
(1) | The exercise periods of approximately 25,000,000 Options granted pursuant to the Pre-Global Offering Share Option Scheme and the Share Option Scheme were extended by one year by the Board pursuant to amendments to each of the Pre-Global Offering Share Option Scheme and the Share Option Scheme as approved by the Shareholders on 26 May 2009. | ||
(2) | The original expiry date for these Options was 20 May 2009, which was extended to 20 May 2010 by the Board pursuant to amendments to the Share Option Scheme as approved by the Shareholders on 26 May 2009. |
— II-11 —
APPENDIX II | GENERAL INFORMATION |
(i) | of which 100,627,098 Options which were outstanding as at the Latest Practicable Date, have an exercise price of HK$5.57 and may be exercised in stages from 15 October 2008 to 16 November 2010; and | ||
(ii) | of which 88,929,468 Options which were outstanding as at the Latest Practicable Date, have an exercise price of HK$8.26 and may be exercised in stages from 15 October 2008 to 5 December 2011; |
(i) | Other than the Shares, the ADSs and the Options, there are no other Company Securities. |
(a) | Details of the frequency and amount of dividends that have been paid out by the Company to the Shareholders (including SKT) during the two year period immediately preceding the date of this Circular are as follows: |
(i) | the Company paid a final dividend of RMB0.20 per Share on 12 June 2008 in respect of the year ended 31 December 2007; and | ||
(ii) | the Company paid a final dividend of RMB0.20 per Share on 18 June 2009 in respect of the year ended 31 December 2008. |
(b) | The Company’s ability to pay dividends to the Shareholders depends on a number of factors, including the financial position of the Group, investment opportunities available to the Group and general market conditions. The Company will strike a balance between preserving cash for the Group for its operational and investment requirements and distributing dividends to the Shareholders. The Company has no plan or intention to alter its present dividend policy. |
— II-12 —
APPENDIX II | GENERAL INFORMATION |
Closing Price per Share | ||||
Date | (HK$) | |||
31 March 2009 | 8.28 | |||
30 April 2009 | 8.87 | |||
31 May 2009 | 9.50 | (1) | ||
30 June 2009 | 10.26 | |||
31 July 2009 | 11.18 | |||
31 August 2009 | 10.90 | |||
25 September 2009 (Last Trading Day) | 11.26 | |||
30 September 2009 | 10.98 | |||
6 October 2009 (Latest Practicable Date) | 10.98 |
(1) | This is the closing price from 29 May 2009, which was the last trading day in May 2009. |
— II-13 —
APPENDIX II | GENERAL INFORMATION |
(a) | As at Latest Practicable Date, the following Directors and chief executive of the Company had, or were deemed to have, interests or short positions in the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were deemed or taken to have under such provisions of the SFO), or which are required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Hong Kong Stock Exchange: |
(i) | Interests in Shares |
Number of | % of Total | |||||||||
Name of Director | Capacity and Nature | Shares held | Issued Shares | |||||||
Cheung Wing Lam Linus | Beneficial owner (Personal) | 400,000 | 0.002 | % | ||||||
Timpson Chung Shui Ming | Beneficial owner (Personal) | 6,000 | 0.000 | % | ||||||
Total | 406,000 | 0.002 | % | |||||||
— II-14 —
APPENDIX II | GENERAL INFORMATION |
(ii) | Interests in Options |
Number of | % of Total | |||||||||||||||
Capacity | Date of Grant of | Exercise | Outstanding | Issued | ||||||||||||
Name of Director | and Nature | Options | Price | Options(1)(2) | Shares | |||||||||||
Chang Xiaobing | Beneficial owner | 21 December 2004 | HK$ 6.20 | 526,000 | ||||||||||||
(Personal) | 15 February 2006 | HK$ 6.35 | 746,000 | |||||||||||||
1,272,000 | 0.005 | % | ||||||||||||||
Zuo Xunsheng | Beneficial owner | 15 October 2008 | HK$ 5.57 | 686,894 | 0.003 | % | ||||||||||
(Personal) | ||||||||||||||||
Tong Jilu | Beneficial owner | 30 June 2001 | HK$ 15.42 | 292,000 | ||||||||||||
(Personal) | 20 July 2004 | HK$ 5.92 | 92,000 | |||||||||||||
15 February 2006 | HK$ 6.35 | 460,000 | ||||||||||||||
Beneficial owner | 20 July 2004 | HK$ 5.92 | 32,000 | |||||||||||||
(Spouse) | 15 February 2006 | HK$ 6.35 | 40,000 | |||||||||||||
916,000 | 0.004 | % | ||||||||||||||
Wu Jinglian | Beneficial owner | 21 May 2003 | HK$ 4.30 | 292,000 | ||||||||||||
(Personal) | 20 July 2004 | HK$ 5.92 | 292,000 | |||||||||||||
584,000 | 0.002 | % | ||||||||||||||
Total | 3,458,894 | 0.015 | % | |||||||||||||
(1) | Each Option gives the holder the right to subscribe for one Share. | |
(2) | Particulars of the Options are as follows: |
Date of Grant | Exercise Period | |
Options granted pursuant to the Share Option Scheme | ||
30 June 2001 | 30 June 2001 to 22 June 2010 | |
21 May 2003 | 21 May 2004 to 20 May 2010 (in respect of 40% of the Options granted) | |
21 May 2005 to 20 May 2010 (in respect of 30% of the Options granted) | ||
21 May 2006 to 20 May 2010 (in respect of the remaining 30% of the Options granted) | ||
(The original expiry date for these Options was 20 May 2009, which was extended to 20 May 2010 by the Board pursuant to amendments to the Share Option Scheme as approved by the Shareholders on 26 May 2009) |
— II-15 —
APPENDIX II | GENERAL INFORMATION |
Date of Grant | Exercise Period | |
20 July 2004 | 20 July 2005 to 19 July 2010 (in respect of 40% of the Options granted) | |
20 July 2006 to 19 July 2010 (in respect of 30% of the Options granted) | ||
20 July 2007 to 19 July 2010 (in respect of the remaining 30% of the Options granted) | ||
21 December 2004 | 21 December 2005 to 20 December 2010 (in respect of 40% of the Options granted) | |
21 December 2006 to 20 December 2010 (in respect of 30% of the Options granted) | ||
21 December 2007 to 20 December 2010 (in respect of the remaining 30% of the Options granted) | ||
15 February 2006 | 15 February 2008 to 14 February 2012 (in respect of 50% of the Options granted) | |
15 February 2009 to 14 February 2012 (in respect of the remaining 50% of the Options granted) | ||
Options granted pursuant to the Special Purpose Unicom Share Option Scheme | ||
15 October 2008 | 15 October 2008 to 16 November 2010 (for Mr. Zuo Xunsheng, in respect of 445,614 Options) | |
17 May 2009 to 16 November 2010 (for Mr. Zuo Xunsheng, in respect of 241,280 Options) |
(b) | As at the Latest Practicable Date, Mr. Tong Jilu’s spouse, Ms. Gao Lingyun, held 72,000 Options, as referred to in paragraph 5(a)(ii) of this Appendix II. | ||
(c) | As at the Latest Practicable Date: |
(i) | save as disclosed in paragraph 5(a) of this Appendix II, none of the Directors was interested in any Company Securities or had borrowed or lent any Company Securities; and | ||
(ii) | save as disclosed in paragraph 5(b) of this Appendix II, none of the persons acting in concert with the Directors was interested in any Company Securities or had borrowed or lent any Company Securities. |
(a) | During the Relevant Period, Mr. Cheung Wing Lam Linus had dealt for value in the Shares, details of which are as follows: |
Price | ||||||||||
Type of | per Share | |||||||||
Date | Transaction | Number of Shares | (HK$) | |||||||
10 September 2009 | Purchase | 100,000 | 11.160 | |||||||
Purchase | 100,000 | 11.060 | ||||||||
16 September 2009 | Purchase | 100,000 | 11.560 | |||||||
Purchase | 100,000 | 11.500 | ||||||||
Total | 400,000 | |||||||||
— II-16 —
APPENDIX II | GENERAL INFORMATION |
(b) | During the Relevant Period, save as disclosed in paragraph 6(a) of this Appendix II, none of the Directors, the persons acting in concert with the Directors, Unicom BVI or Netcom BVI had dealt for value in any of the Company Securities. |
Name | Qualification | |
China International Capital | A corporation licensed under the SFO to carry on Type 1 | |
Corporation Hong Kong | (dealing in securities), Type 4 (advising on securities) and | |
Securities Limited | Type 6 (advising on corporate finance) regulated activities | |
N M Rothschild & Sons | A corporation licensed under the SFO to carry on Type 1 | |
(Hong Kong) Limited | (dealing in securities), Type 4 (advising on securities) and | |
Type 6 (advising on corporate finance) regulated activities | ||
PricewaterhouseCoopers | Certified Public Accountants |
(a) | CICC has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of references to its name in the form and context in which they respectively appear. | ||
(b) | Each of Rothschild and PricewaterhouseCoopers has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of the text of its letter or report (as the case may be) and references to its name in the form and context in which they respectively appear. |
(a) | The principal members of the Company’s concert group are (1) Unicom BVI, (2) Netcom BVI, (3) Unicom A Share Company and (4) Unicom Parent. | ||
(b) | The registered address of Unicom BVI is at Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, the British Virgin Islands. | ||
(c) | The registered address of Netcom BVI is at P.O. Box 3140, Wickhams Cay 1, Road Town, Tortola, the British Virgin Islands. | ||
(d) | The registered address of Unicom A Share Company is at 29/F, Lian Tong Tower, 1033 Chang Ning Road, Shanghai 200050, the PRC. |
— II-17 —
APPENDIX II | GENERAL INFORMATION |
(e) | The registered address of Unicom Parent is at Room 615, 6/F, Office Tower 3, Henderson Center, No. 18, Jianguomen Nei Ave., Dongcheng District, Beijing 100005, the PRC. | ||
(f) | CICC is the financial adviser to the Company and its address is at 29th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong. |
(a) | the SKT Offer; | ||
(b) | the form of the Share Repurchase Agreement; | ||
(c) | the Netcom Voting Undertaking; | ||
(d) | the Memorandum and Articles of Association of the Company; | ||
(e) | the annual reports of the Company for the three years ended 31 December 2006, 2007 and 2008; | ||
(f) | the interim report of the Company for the six months ended 30 June 2009; | ||
(g) | the letter from the Board; | ||
(h) | the letter from the Independent Board Committee; | ||
(i) | the letter from Rothschild; | ||
(j) | the unaudited pro forma financial information on the Group, the text of which is set out in paragraph 6 of Appendix I to this Circular; | ||
(k) | the accountant’s report on the unaudited pro forma financial information on the Group from PricewaterhouseCoopers, the text of which is set out in paragraph 7 of Appendix I to this Circular; | ||
(l) | the written consents referred to in paragraph 9 of this Appendix II; and | ||
(m) | this Circular. |
— II-18 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
— III-1 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
CLAUSE | PAGE | |||
1. DEFINITIONS AND INTERPRETATION | 1 | |||
2. SALE AND PURCHASE | 3 | |||
3. CONSIDERATION | 4 | |||
4. CONDITIONS TO COMPLETION | 4 | |||
5. COMPLETION | 4 | |||
6. UNICOM WARRANTIES | 6 | |||
7. SKT WARRANTIES | 7 | |||
8. ANNOUNCEMENTS AND CONFIDENTIALITY | 8 | |||
9. ENTIRE AGREEMENT | 9 | |||
10. GENERAL | 9 | |||
11. COSTS AND STAMP DUTY | 10 | |||
12. NOTICES | 11 | |||
13. GOVERNING LAW AND JURISDICTION | 11 |
— III-2 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
THIS AGREEMENTis made on 2009 |
(1) | CHINA UNICOM (HONG KONG) LIMITED, a company incorporated in Hong Kong with limited liability, whose registered address is at 75th Floor, The Center, 99 Queen’s Road Central, Hong Kong (Unicom); and | |
(2) | SK TELECOM CO., LTD., a company incorporated in the Republic of Korea with limited liability, whose registered office is at SK T-Tower, 11, Euljiro 2-ga, Jung-gu, Seoul, 100-999, Korea (SKT). |
— III-3 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
— III-4 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
(a) | headings do not affect the interpretation of this Agreement; the singular shall include the plural andvice versa; and references to one gender include all genders; | |
(b) | any phrase introduced by the termincluding,include,in particularor any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms; | |
(c) | any express reference to an enactment (which includes any legislation in any jurisdiction) shall include references to that enactment as amended, consolidated or re-enacted by or under any other enactment before or after the date of this Agreement (except to the extent that it increases or alters the liability of any party under this Agreement); | |
(d) | any reference to aPartyshall include a reference to that Party’s successors and permitted assigns; | |
(e) | any reference to apersonshall include, without limitation, any individual, firm, company, corporation or other body corporate, joint venture, association or partnership; | |
(f) | any reference to asubsidiaryshall have the same meaning in this Agreement as defined in the Companies Ordinance; and | |
(g) | any reference to aClauseis a reference to a clause of this Agreement. |
— III-5 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
(a) | the Executive having granted, and not having withdrawn, its approval of the Share Repurchase under Rule 2 of the Repurchase Code and all the conditions (if any) of such approval having been satisfied; | |
(b) | the approval of the Share Repurchase and this Agreement by at least three-fourths of the votes cast on a poll by the Independent Shareholders in attendance in person or by proxy at the EGM in accordance with the requirements of the Repurchase Code, the Listing Rules and the Companies Ordinance; and | |
(c) | the approval of the Share Repurchase by the shareholders of Unicom A Share Company in accordance with applicable laws, regulations and listing rules. |
(a) | deliver or procure to be delivered to Unicom: |
(i) | a copy (certified as a true copy by a director or the company secretary of SKT) of the resolutions of the board of directors of SKT authorising the execution of, and performance by, SKT of its obligations under the Transaction Documents to which it is a party; | ||
(ii) | a certificate signed by a director of SKT confirming that all the SKT Warranties are true and accurate and not misleading as at the date of this Agreement and as at the Completion Date; |
— III-6 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
(iii) | the instrument(s) of transfer and sold note(s) in respect of the Repurchase Shares duly executed by SKT in favour of Unicom; and | ||
(iv) | the share certificate(s) in respect of the Repurchase Shares issued in the name of SKT; and |
(b) | procure its nominee on Unicom Board, Mr. Man Won Jung, to resign as a director of Unicom with effect from the Completion Date and to deliver an acknowledgement to Unicom that he does not have any claims whatsoever against Unicom for compensation for loss of office (whether contractual, statutory or otherwise), unfair dismissal, redundancy or otherwise, he has no disagreement with the Unicom Board and he is not aware of any matters in respect of his resignation that needs to be brought to the attention of the shareholders of Unicom. |
(a) | deliver or procure to be delivered to SKT: |
(i) | a copy (certified as a true copy by a director or the company secretary of Unicom) of the resolutions of the Unicom Board authorising the execution of, and performance by, Unicom of its obligations under the Transaction Documents to which it is a party; and | ||
(ii) | a certificate signed by a director of Unicom confirming that all the Unicom Warranties are true and accurate and not misleading as at the date of this Agreement and as at the Completion Date; and |
(b) | give irrevocable payment instructions to its bank to pay the Consideration (less the SFC Fee and the Initial Stamp Duty Amount) in immediately available funds by electronic funds transfer in HK$ to a bank account designated by SKT in writing at least three Business Days prior to the Completion Date and shall deliver or procure to be delivered to SKT a copy of such irrevocable payment instructions. |
(a) | to elect to terminate this Agreement (other than the Surviving Provisions) without liability on the part of the terminating party, except in respect of any rights and liabilities which have accrued prior to termination or under any of the Surviving Provisions; |
— III-7 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
(b) | to effect Completion so far as practicable having regard to the defaults which have occurred; or | |
(c) | to fix a new date for Completion (not being more than five Business Days after the agreed date for Completion), in which case the foregoing provisions of thisClause 5shall apply to Completion as so deferred. |
(a) | Unicom has the corporate power and authority to execute, deliver and perform its obligations under, and consummate the transactions contemplated by, each of the Transaction Documents to which it is a party; | |
(b) | the execution, delivery and performance of the Transaction Documents to which Unicom is a party, and the consummation of the transactions contemplated thereby, have been duly authorised by the Unicom Board and no other corporate or shareholder action on the part of Unicom is necessary to authorise the execution, delivery and performance of the Transaction Documents to which Unicom is a party; | |
(c) | this Agreement has been duly executed and delivered by Unicom and Unicom’s obligations under each of the Transaction Documents to which it is a party constitutes, or when the relevant document is executed will constitute, valid, legal and binding obligations of Unicom enforceable in accordance with their respective terms; |
— III-8 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
(d) | the execution, delivery and performance by Unicom of each of the Transaction Documents to which it is a party, and the consummation of the transactions contemplated thereby, (i) will not breach any provision of its constitutional documents, (ii) will not contravene, conflict with or result in a breach of any law, rule or regulation applicable to it or (iii) will not result in a breach of any material agreement or arrangement to which it is a party or by which it is otherwise bound; | |
(e) | all necessary approvals or consents from third parties required by Unicom for the consummation of the transactions contemplated by each of the Transaction Documents to which it is a party have been or will be obtained prior to Completion; and | |
(f) | Unicom has sufficient distributable profits as required by Section 49B and the other relevant provisions of the Companies Ordinance to effect the Share Repurchase. |
(a) | SKT is the sole legal and beneficial owner of, and has good and valid title to, the Repurchase Shares, free and clear of any Encumbrances; | |
(b) | SKT has the corporate power and authority to execute, deliver and perform its obligations under, and consummate the transactions contemplated by, each of the Transaction Documents to which it is a party; | |
(c) | the execution, delivery and performance of the Transaction Documents to which SKT is a party, and the consummation of the transactions contemplated thereby, have been duly authorised by the directors of SKT and no other corporate or shareholder action on the part of SKT is necessary to authorise the execution, delivery and performance of the Transaction Documents to which SKT is a party; | |
(d) | this Agreement has been duly executed and delivered by SKT and SKT’s obligations under each of the Transaction Documents to which it is a party constitutes, or when the relevant document is executed will constitute, valid, legal and binding obligations of SKT enforceable in accordance with their respective terms; |
— III-9 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
(e) | the execution, delivery and performance by SKT of each of the Transaction Documents to which it is a party, and the consummation of the transactions contemplated thereby, (i) will not breach any provision of its constitutional documents, (ii) will not contravene, conflict with or result in a breach of any law, rule or regulation applicable to it or (iii) will not result in a breach of any material agreement or arrangement to which it is a party or by which it is otherwise bound; and | |
(f) | all necessary approvals or consents from third parties required by SKT for the consummation of the transactions contemplated by each of the Transaction Documents to which it is a party have been or will be obtained prior to Completion. |
— III-10 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
— III-11 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
— III-12 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
Unicom | ||
Address: | 75th Floor, The Center | |
99 Queen’s Road Central | ||
Hong Kong | ||
Fax: | +852 2121 3232 | |
Attention: | Karry Chu | |
SKT | ||
Address: | SK T-Tower | |
11, Euljiro 2-ga, Jung-gu | ||
Seoul, 100-999 | ||
Korea | ||
Fax: | +82 2 6100 7928 | |
Attention: | Sangwoo Kim |
— III-13 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
— III-14 —
APPENDIX III | FORM OF THE SHARE REPURCHASE AGREEMENT |
SIGNEDby | ) | |||
For and on behalf of | ) | |||
CHINA UNICOM (HONG KONG) LIMITED | ) | |||
SIGNEDby | ) | |||
For and on behalf of | ) | |||
SK TELECOM CO., LTD. | ) |
— III-15 —
(Stock Code: 0762)
(a) | the terms of the draft agreement (the “Share Repurchase Agreement”, a copy of which has been produced to this Meeting marked “A” and signed by the Chairman of this Meeting for identification purposes) proposed to be entered into between the Company and SK Telecom Co., Ltd. (“SKT”) pursuant to which SKT will sell, and the Company will purchase, 899,745,075 fully paid-up shares of HK$0.10 each in the capital of the Company (the “Repurchase Shares”) on the terms set out in the Share Repurchase Agreement for a total consideration of HK$9,991,669,057.87, being HK$11.105 for each Repurchase Share, to be satisfied on completion in cash (the “Share Repurchase”), be and are hereby approved; | |
(b) | any Director be and is hereby authorised to execute the Share Repurchase Agreement on behalf of the Company; and | |
(c) | the Directors, acting together, individually or by committee, be and are hereby authorised to execute all such documents and/or do all such acts on behalf of the Company as they may consider necessary, desirable or expedient to give effect to the Share Repurchase and the Share Repurchase Agreement.” |
By Order of the Board | ||
China Unicom (Hong Kong) Limited | ||
Chang Xiaobing Chairman |
— N-1 —
1. | A shareholder of the Company (“Shareholder”) entitled to attend and vote at the Meeting is entitled to appoint one or more proxies to attend and vote instead of him/her/it. A proxy need not be a Shareholder. |
2. | In order to be valid, a form of proxy, together with any power of attorney (if any), or other authority under which it is signed (if any), or a notarially certified copy thereof, shall be deposited at the Company’s registered office at 75th Floor, The Center, 99 Queen’s Road Central, Hong Kong,not less than 48 hours before the time appointed for holding the Meeting. Delivery of the form of proxy shall not preclude a Shareholder from attending and voting in person at the Meeting or at any adjourned meeting and, in such event, the form of proxy delivered by such Shareholder shall be deemed to be revoked. |
3. | As required by the Hong Kong Code on Share Repurchases, SKT and the persons acting in concert with it who are Shareholders will abstain from voting on the above resolution. |
4. | The register of the Shareholders will be closed from 30 October 2009 to 3 November 2009 (both days inclusive), during which dates no transfer of Shares will be effected. In order to qualify for voting at the Meeting, all transfers, accompanied by the relevant certificates must be lodged with the Company’s Share Registrar, Hong Kong Registrars Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong by not later than 4:30 p.m. on 29 October 2009. |
5. | The votes to be taken at the Meeting will be taken by poll, the results of which will be announced after the Meeting. The Chairman of the Meeting will exercise his power under Article 69 of the Articles of Association of the Company to demand that voting on the above resolution be conducted by way of poll at the Meeting. |
6. | As required by the Hong Kong Code on Share Repurchases, a copy of the Share Repurchase Agreement will be made available for inspection at the Meeting. As required by the Companies Ordinance, a copy of the Share Repurchase Agreement and other information are set out in the circular to the Shareholders dated 9 October 2009. |
— N-2 —