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OFFON

HUTCHISON TELECOMMUNICATIONS HONG KONG HOLDINGS LIMITED

(215)
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Hutchison Telecommunications Hong Kong : UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2020

07/28/2020 | 06:25am EDT

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

Hutchison Telecommunications Hong Kong Holdings Limited

和記電訊香港控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 215)

UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2020

HIGHLIGHTS

Post-IFRS 16 Basis (1)

1H 2020

1H 2019

HK$ million

HK$ million

Change

Service revenue

1,664

1,782

-7%

Service EBITDA

775

778

-

Total EBITDA

778

787

-1%

Total EBIT

147

160

-8%

Profit attributable to shareholders

146

188

-22%

Earnings per share (in HK cents)

3.03

3.90

-22%

Interim dividend per share (in HK cents)

2.28

2.93

-22%

Pre-IFRS 16 Basis (1)

1H 2020

1H 2019

HK$ million

HK$ million

Change

Service revenue

1,664

1,782

-7%

Service EBITDA

556

545

+2%

Total EBITDA

559

554

+1%

Total EBIT

143

151

-5%

Profit attributable to shareholders

149

187

-20%

Note 1: Following the adoption of IFRS 16 "Leases" on 1 January 2019, the Group's statutory results for the six months ended 30 June 2019 and 30 June 2020 are on an IFRS 16 basis. The Group believes that the precedent lease accounting standard IAS 17 basis metrics, which are not intended to be a substitute for, or superior to, the reported metrics on an IFRS 16 basis ("Post-IFRS 16 basis"), better reflect management's view of the underlying operational performance. As a result, the Group has provided an alternative presentation of the Group's EBITDA, EBIT and profit attributable to shareholders prepared under IAS 17 ("Pre-IFRS 16 basis") relating to the accounting for leases for the six months ended 30 June 2019 and 30 June 2020. Unless otherwise specified, the discussion of the Group's operating results in this results announcement is on a Pre-IFRS 16 basis.

1

CHAIRMAN'S STATEMENT

The COVID-19 pandemic has posed unprecedented challenges to individuals and businesses around the world. The business climate of the mobile telecommunications market has inevitably been affected, and travel restrictions and other precautionary measures imposed to control the spread of COVID-19 have resulted in a major reduction in roaming revenue. Against this backdrop, the Group has taken a number of proactive measures to reduce the impact of the pandemic on its business. The Group's operating results for the first half of 2020 have demonstrated resilience in the face of adversity, particularly attributed to its effective cost structure.

Despite a 38% drop in roaming service revenue, the Group's local service revenue increased slightly by 1% over the same period last year. This increase was mainly driven by growing demand for corporate solution offerings, as enterprises are shifting to new modes of operations. The overall service revenue decreased by 7% to HK$1,664 million for the first half of 2020.

Service EBITDA increased by 2% as the Group's continuous cost improvement exercise further streamlined daily operations and improved operational efficiency. A healthy service EBITDA margin of 33% was recorded for the period.

On a Pre-IFRS 16 basis, the Group's total EBITDA increased by 1% to HK$559 million for the first six months of the year, while EBIT decreased by 5% to HK$143 million against the same period last year due to higher depreciation and amortisation.

On a Post-IFRS 16 basis, the Group's total EBITDA and EBIT decreased by 1% and 8% respectively against the same period last year. Profit attributable to shareholders and earnings per share were HK$146 million and 3.03 HK cents, a 22% decrease compared with HK$188 million and 3.90 HK cents respectively of the same period last year. The decrease was mainly due to lower interest income as the cash balance has significantly reduced from HK$9,555 million in the beginning of 2019 to HK$5,536 million as of 30 June 2020 subsequent to the distribution of HK$3,855 million special interim dividend and HK$471 million cash paid for the acquisition of a 24.1% interest in the Group's mobile operation in May 2019. The interest income forgone corresponded to an approximately 0.77 HK cents decrease in earnings per share. Excluding the effect of interest income reduction, profit attributable to shareholders dropped marginally by 3% against the same period last year.

As of 30 June 2020, the total number of customers in Hong Kong and Macau remained steady at approximately 3.3 million (as of 30 June 2019: approximately 3.3 million). The Group continued to focus on enhancing its customer retention programmes during the period, and achieved a stable monthly postpaid churn rate of 1.1% (1H 2019: 1.1%). Local postpaid net ARPU increased by 5% to HK$150 as a result of a higher contribution from the corporate market.

2

Dividend

The Board has declared an interim dividend of 2.28 HK cents (2019 interim dividend:

2.93 HK cents) per share for the first half of 2020, payable on Friday, 4 September 2020, to shareholders whose names appear on the Register of Members of the Company at the close of business on Wednesday, 26 August 2020, being the record date for determining shareholders' entitlement to the interim dividend. The Board expects the total full year dividend payout to be equivalent to 75% of annual profit attributable to shareholders.

Outlook

Uncertainties around the evolution of the COVID-19 pandemic will continue to persist, and the near-term business environment is expected to remain extremely challenging. Roaming business is likely to be depressed in the second half, while consumers and corporates become very cautious in their spending. Despite the turmoil and uncertainties posed by the pandemic, demands for automation and business solutions from various sectors impacted by the anti-epidemic measures have accelerated. This has translated into benefits for the Group, as more enterprises have taken up solution offerings from the Group to meet their ever-changing business demands, riding on the recently launched 5G services. The Group will continue to build on its B2B strengths, leveraging its advanced network infrastructure and its close ties with members of the CKHH Group, as well as its collaborative efforts with global partners.

The Group is committed to being a responsible corporate citizen. It fully recognises that investors and stakeholders are placing greater importance than ever on the sustainability practices of businesses. It continues to formulate responsible policies and initiatives to address ESG matters, as part of its determination to generate sustainable value for stakeholders.

While the COVID-19 pandemic remains fluid and rapidly evolving, the Group will remain vigilant and closely monitor its development. It will continue to adopt appropriate measures to safeguard the interest of its employees and business operations, and at the same time maintain its full service commitment to its customers.

To conclude, I would like to thank the Board of Directors and all staff members for their unwavering dedication, their consummate professionalism, and their invaluable contributions to the Group throughout an incredibly challenging period.

FOK Kin Ning, Canning

Chairman

Hong Kong, 28 July 2020

3

MANAGEMENT DISCUSSION AND ANALYSIS

Financial Performance Summary - Pre-IFRS 16 basis (1)

1H 2020

1H 2019

HK$ million

HK$ million

Change

Revenue

1,982

2,515

-21%

Net customer service revenue

1,664

1,782

-7%

Local service revenue

1,443

1,424

+1%

Roaming service revenue

221

358

-38%

- Data

146

246

-41%

- Non-data

75

112

-33%

Hardware revenue

318

733

-57%

Bundled sales revenue

149

213

-30%

Standalone handset sales revenue

169

520

-68%

Net customer service margin

1,462

1,617

-10%

Net customer service margin %

88%

91%

-3% points

Standalone handset sales margin

3

9

-67%

Total margin

1,465

1,626

-10%

CACs

(258)

(371)

+30%

Less: Bundled sales revenue

149

213

-30%

───────

───────

CACs (net of hardware revenue)

(109)

(158)

+31%

Operating expenses

(830)

(949)

+13%

Operating expenses as a % of net customer service margin

57%

59%

+2% points

Share of EBITDA of a joint venture

33

35

-6%

EBITDA

559

554

+1%

Service EBITDA

556

545

+2%

Service EBITDA margin %

33%

31%

+2% points

CAPEX (excluding telecommunications licences)

(105)

(154)

+32%

EBITDA less CAPEX

454

400

+14%

Depreciation and amortisation (2)

(416)

(403)

-3%

EBIT

143

151

-5%

Service EBIT

140

142

-1%

Net interest and other finance income (2)

51

90

-43%

Profit before tax

194

241

-20%

Tax (2)

(45)

(46)

+2%

Profit attributable to non-controlling interests

-

(8)

+100%

Profit attributable to shareholders

149

187

-20%

Note 1: Following the adoption of IFRS 16 "Leases" on 1 January 2019, the Group's statutory results for the six months ended 30 June 2019 and 30 June 2020 are on an IFRS 16 basis. The Group believes that the precedent lease accounting standard IAS 17 basis metrics, which are not intended to be a substitute for, or superior to, the reported metrics on an IFRS 16 basis ("Post-IFRS 16 basis"), better reflect management's view of the underlying operational performance. As a result, the Group has provided an alternative presentation of the Group's EBITDA, EBIT and profit attributable to shareholders prepared under IAS 17 ("Pre-IFRS 16 basis") relating to the accounting for leases for the six months ended 30 June 2019 and 30 June 2020. Unless otherwise specified, the discussion of the Group's operating results in this results announcement is on a Pre-IFRS 16 basis.

Note 2: Depreciation and amortisation, net interest and other finance income and tax include the Group's share of joint venture's respective items.

4

Financial Performance Summary - Post-IFRS 16 basis (1)

1H 2020

1H 2019

HK$ million

HK$ million

Change

Revenue

1,982

2,515

-21%

Net customer service revenue

1,664

1,782

-7%

Local service revenue

1,443

1,424

+1%

Roaming service revenue

221

358

-38%

- Data

146

246

-41%

- Non-data

75

112

-33%

Hardware revenue

318

733

-57%

Bundled sales revenue

149

213

-30%

Standalone handset sales revenue

169

520

-68%

Net customer service margin

1,462

1,617

-10%

Net customer service margin %

88%

91%

-3% points

Standalone handset sales margin

3

9

-67%

Total margin

1,465

1,626

-10%

CACs

(234)

(343)

+32%

Less: Bundled sales revenue

149

213

-30%

───────

───────

CACs (net of hardware revenue)

(85)

(130)

+35%

Operating expenses

(635)

(744)

+15%

Operating expenses as a % of net customer service margin

43%

46%

+3% points

Share of EBITDA of a joint venture

33

35

-6%

EBITDA

778

787

-1%

Service EBITDA

775

778

-

Service EBITDA margin %

47%

44%

+3% points

CAPEX (excluding telecommunications licences)

(105)

(154)

+32%

EBITDA less CAPEX

673

633

+6%

Depreciation and amortisation (2)

(631)

(627)

-1%

EBIT

147

160

-8%

Service EBIT

144

151

-5%

Net interest and other finance income (2)

43

82

-48%

Profit before tax

190

242

-21%

Tax (2)

(44)

(46)

+4%

Profit attributable to non-controlling interests

-

(8)

+100%

Profit attributable to shareholders

146

188

-22%

Note 1: Following the adoption of IFRS 16 "Leases" on 1 January 2019, the Group's statutory results for the six months ended 30 June 2019 and 30 June 2020 are on an IFRS 16 basis. The Group believes that the precedent lease accounting standard IAS 17 basis metrics, which are not intended to be a substitute for, or superior to, the reported metrics on an IFRS 16 basis ("Post-IFRS 16 basis"), better reflect management's view of the underlying operational performance. As a result, the Group has provided an alternative presentation of the Group's EBITDA, EBIT and profit attributable to shareholders prepared under the IAS 17 ("Pre-IFRS 16 basis") relating to the accounting for leases for the six months ended 30 June 2019 and 30 June 2020. Unless otherwise specified, the discussion of the Group's operating results in this results announcement is on a Pre-IFRS 16 basis.

Note 2: Depreciation and amortisation, net interest and other finance income and tax include the Group's share of joint venture's respective items.

5

Review of Financial Results

The Group's total revenue for the first half of 2020 decreased by 21% to HK$1,982 million (1H 2019: HK$2,515 million).

Service revenue decreased by 7% to HK$1,664 million, largely due to a 38% decline in roaming service revenue which accounted for 13% of the Group's service revenue for the period (1H 2019: 20%).

Hardware revenue of HK$318 million was 57% lower than the same period in 2019, reflecting lower spending on consumables and a fall in demand for new smartphones.

The Group continued to adhere to a strict cost discipline regime during the first six months of 2020, with the aim of creating a low-cost,high-efficiency operational environment. Key costs (Pre-IFRS 16 basis), comprising CACs, staff costs and other operating expenses, decreased by 10% to HK$1,141 million.

On a Pre-IFRS 16 basis, the Group's total EBITDA increased by 1% to HK$559 million (1H 2019: HK$554 million), while EBIT decreased by 5% to HK$143 million against the same period last year due to higher depreciation and amortisation.

Service EBITDA (Pre-IFRS 16 basis) increased by 2% to HK$556 million for the first half of 2020, benefiting from the aforementioned savings in key costs, partly offset by lower total margin. Service EBITDA margin (Pre-IFRS 16 basis) improved to 33% (1H 2019: 31%).

On a Post-IFRS 16 basis, the Group's total EBITDA and EBIT decreased by 1% and 8% respectively against the same period last year. Profit attributable to shareholders and earnings per share were HK$146 million and 3.03 HK cents, a 22% decrease compared with HK$188 million and 3.90 HK cents respectively of the same period last year. The decrease was mainly due to lower interest income as the cash balance has significantly reduced from HK$9,555 million in the beginning of 2019 to HK$5,536 million as of 30 June 2020 subsequent to the distribution of HK$3,855 million special interim dividend and HK$471 million cash paid for the acquisition of a 24.1% interest in the Group's mobile operation in May 2019. The interest income forgone corresponded to an approximately 0.77 HK cents decrease in earnings per share. Excluding the effect of interest income reduction, profit attributable to shareholders dropped marginally by 3% against the same period last year. The impact of IFRS 16 on total EBIT and profit attributable to shareholders of the Group was insignificant.

6

Key performance indicators

1H 2020

1H 2019

Change

Number of postpaid customers ('000)

1,458

1,491

-2%

Number of prepaid customers ('000)

1,851

1,837

+1%

───

───

Total customers ('000)

3,309

3,328

-1%

Postpaid customers to the total customer base (%)

44%

45%

-1% point

Postpaid customers' contribution to the net

90%

87%

+3% points

customer service revenue (%)

Monthly churn rate of postpaid customers (%)

1.1%

1.1%

-

Postpaid gross ARPU (HK$)

196

205

-4%

Postpaid net ARPU (HK$)

170

175

-3%

Postpaid net AMPU (HK$)

151

160

-6%

Local postpaid gross ARPU (HK$)

175

173

+1%

Local postpaid net ARPU (HK$)

150

143

+5%

As of 30 June 2020, the total number of customers in Hong Kong and Macau remained steady at approximately 3.3 million (as of 30 June 2019: approximately 3.3 million). The Group continued to focus on enhancing its customer retention programmes, and was able to maintain a stable monthly postpaid churn rate of 1.1% (1H 2019: 1.1%). Local postpaid net ARPU increased by 5% to HK$150 as a result of higher contribution from the corporate market.

Net interest and other finance income

Net interest and other finance income (Post-IFRS 16 basis, with share of a joint venture) amounted to HK$43 million for the first half of 2020, compared with HK$82 million for the same period last year. This was mainly due to lower interest income as net cash balance reduced from HK$9,555 million in the beginning of 2019 to HK$5,536 million as of 30 June 2020 subsequent to the distribution of HK$3,855 million special interim dividend and HK$471 million cash settlement for the acquisition of the 24.1% interest in the mobile business in May 2019.

The Group continues to maintain a healthy financial position with a net cash position of HK$5,536 million as of 30 June 2020 (31 December 2019: HK$5,416 million). The improvement in net cash position during the first six month of the year was mainly due to better working capital management.

7

Capital expenditure

Capital expenditure on property, plant and equipment, which accounted for 6% (1H 2019: 9%) of the Group's service revenue, reduced by 32% to HK$105 million. The decrease was mainly due to timing of the 5G capital expenditure and rescheduling of other projects to better align with expected future benefits. The Group continues to be disciplined in scrutinising its projects with care and prudence and ensuring that adequate resources are made available in accordance with operational and technological needs.

Spectrum investment

In October 2019, the Group acquired 40 MHz in the 3500 MHz band for 15 years from 2020 for a spectrum utilisation fee of HK$202 million through auction. Other than that, spectrum investment remained unchanged compared with the position as at 31 December 2019.

Summary of spectrum investment as of 30 June 2020

Spectrum band

Bandwidth

Year of expiry

Hong Kong

900 MHz

10 MHz

2026

900 MHz

16.6 MHz

2021

1800 MHz

23.2 MHz

2021

2100 MHz

29.6 MHz

2031

2300 MHz

30 MHz

2027

2600 MHz

30 MHz

2024

2600 MHz

10 MHz

2028

3300 MHz

30 MHz

2034

3500 MHz

40 MHz

2035

Macau

900 MHz

10 MHz

2023

1800 MHz

20 MHz

2023

2100 MHz

10 MHz

2023

  • After the spectrum auction and licence renewal in 2018, the licence period of the existing 16.6 MHz in the 900 MHz band was extended from November 2020 to January 2021 to align with the new spectrum assignment period. Subsequently, the Group will hold 10 MHz in the 900 MHz band and 30 MHz in the 1800 MHz band from 2021 to 2036.
  • The spectrum band was shared under 50/50 joint venture - Genius Brand Limited.

8

HUTCHISON TELECOMMUNICATIONS HONG KONG HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2020

Unaudited

Unaudited

Note

2020

2019

HK$ million

HK$ million

Revenue

4

1,982

2,515

Cost of inventories sold

(315)

(724)

Staff costs

(165)

(194)

Expensed customer acquisition and retention costs

(47)

(95)

Depreciation and amortisation

(608)

(603)

Other operating expenses

(710)

(750)

─────

─────

137

149

Interest and other finance income

6

72

109

Interest and other finance costs

6

(20)

(17)

Share of result of a joint venture

(2)

(2)

─────

─────

Profit before taxation

187

239

Taxation

7

(41)

(43)

─────

─────

Profit and total comprehensive income for the

period, net of tax

146

196

═════

═════

Attributable to:

Shareholders of the Company

146

188

Non-controlling interests

-

8

─────

─────

146

196

═════

═════

Earnings per share attributable to shareholders of

the Company (expressed in HK cents per share):

- basic

8

3.03

3.90

═════

═════

- diluted

8

3.03

3.90

═════

═════

Details of interim dividend payable to shareholders of the Company are set out in Note 9.

9

HUTCHISON TELECOMMUNICATIONS HONG KONG HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2020

Non-current assets Property, plant and equipment

Goodwill Telecommunications licences Right-of-use assets

Customer acquisition and retention costs Contract assets

Other non-current assets Deferred tax assets Investment in a joint venture

Total non-current assets

Current assets

Cash and cash equivalents

Trade receivables and other current assets Contract assets

Inventories

Total current assets

Current liabilities

Trade and other payables

Contract liabilities

Lease liabilities

Current income tax liabilities

Total current liabilities

Non-current liabilities

Lease liabilities

Other non-current liabilities

Total non-current liabilities

Net assets

Capital and reserves

Share capital

Reserves

Total equity

Unaudited

Audited

30 June

31 December

Note

2020

2019

HK$ million

HK$ million

2,250

2,326

2,155

2,155

2,310

2,238

566

435

149

142

159

173

243

227

129

169

307

336

──────

──────

8,268

8,201

-----------

-----------

10

5,536

5,416

11

698

564

226

240

69

55

──────

──────

6,529

6,275

-----------

-----------

12

1,539

1,509

175

142

342

300

3

24

──────

──────

2,059

1,975

-----------

-----------

221

129

589

409

──────

──────

810

538

-----------

-----------

11,928

11,963

══════

══════

1,205

1,205

10,723

10,758

──────

──────

11,928

11,963

══════

══════

10

HUTCHISON TELECOMMUNICATIONS HONG KONG HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2020

Unaudited

Attributable to shareholders of the Company

(Accumulated

losses)/

Share

Share

retained

Pension

Other

Non-controlling

capital

premium

earnings

reserve

reserves

Total

interests

Total equity

HK$ million

HK$ million

HK$ million

HK$ million

HK$ million

HK$ million

HK$ million

HK$ million

At 1 January 2020

1,205

11,185

(286)

148

(289)

11,963

-

11,963

-----------

-----------

-----------

-----------

-----------

-----------

-----------

-----------

Profit for the period

-

-

146

-

-

146

-

146

Dividends relating to 2019 paid in

2020 (Note 9)

-

-

(181)

-

-

(181)

-

(181)

Transfer between reserves

-

-

(25)

25

-

-

-

-

-----------

-----------

-----------

-----------

-----------

-----------

-----------

-----------

At 30 June 2020

1,205

11,185

(346)

173

(289)

11,928

-

11,928

══════

══════

══════

══════

══════

══════

══════

══════

At 1 January 2019

1,205

11,185

3,435

140

4

15,969

170

16,139

-----------

-----------

-----------

-----------

-----------

-----------

-----------

-----------

Profit for the period

-

-

188

-

-

188

8

196

Dividends relating to 2018 paid in

2019 (Note 9)

-

-

(4,009)

-

-

(4,009)

-

(4,009)

Acquisition of non-controlling

interests (i)

-

-

-

-

(293)

(293)

(178)

(471)

-----------

-----------

-----------

-----------

-----------

-----------

-----------

-----------

At 30 June 2019

1,205

11,185

(386)

140

(289)

11,855

-

11,855

══════

══════

══════

══════

══════

══════

══════

══════

  1. On 31 May 2019, the Group effectively acquired the entire 24.1% interests in each of HTCL, which indirectly held 100% interests in HTMCL, and H3GHK from NTT DOCOMO, Inc., a subsidiary of Nippon Telegraph and Telephone Corporation, at a consideration of US$60 million (approximately HK$471 million). Consequently, HTCL, HTMCL and H3GHK became wholly-owned subsidiaries of the Group. The difference of HK$293 million between the proportionate share of the carrying amount of net assets of these subsidiaries and the consideration paid for the additional interests have been debited to other reserves of the Group.

11

HUTCHISON TELECOMMUNICATIONS HONG KONG HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

Unaudited

Unaudited

Note

2020

2019

HK$ million

HK$ million

Cash flows from operating activities

Cash generated from operations

822

564

Interest and other finance costs paid

(14)

(13)

Tax paid

(22)

-

──────

──────

Net cash from operating activities

786

551

-----------

-----------

Cash flows from investing activities

Purchases of property, plant and equipment

(105)

(154)

Additions to telecommunications licences

(202)

-

Proceeds from disposals of property, plant and

equipment

-

1

Interest received

65

132

Loan to a joint venture

(28)

(26)

──────

──────

Net cash used in investing activities

(270)

(47)

-----------

-----------

Cash flows from financing activities

Principal elements of lease payments

(215)

(226)

Dividends paid to the shareholders of the Company

9

(181)

(4,009)

Acquisition of non-controlling interests

-

(471)

──────

──────

Net cash used in financing activities

(396)

(4,706)

-----------

-----------

Increase/(decrease) in cash and cash equivalents

120

(4,202)

Cash and cash equivalents at 1 January

5,416

9,555

──────

──────

Cash and cash equivalents at 30 June

5,536

5,353

══════

══════

12

NOTES

  1. General Information
    Hutchison Telecommunications Hong Kong Holdings Limited was incorporated in the Cayman Islands on 3 August 2007 as a company with limited liability. Its registered office address is P.O. Box 31119, Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205 Cayman Islands.
    The Group is engaged in mobile telecommunications business in Hong Kong and Macau. The shares of the Company are listed on the Main Board of the Stock Exchange.
    These unaudited condensed consolidated interim financial statements are presented in Hong Kong dollars, unless otherwise stated. These interim financial statements were approved for issuance by the Board on 28 July 2020.
  2. Basis of Preparation
    These interim financial statements for the six months ended 30 June 2020 have been prepared in accordance with IAS 34 "Interim financial reporting". These interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2019, which have been prepared in accordance with IFRS.
    These interim financial statements have been prepared under the historical cost convention and on a going concern basis.
    The COVID-19 pandemic has evolved rapidly during the first six months of 2020, with the number of cases reported around the world continue to increase. Travel restrictions and other precautionary measures imposed by various governments to contain the virus have adversely affected the economic activities. In response to this adversity, the Group has taken a number of proactive measures to reduce the impact of the pandemic on its business. The Group's roaming revenue has inevitably been affected to some extent during the first half of the year but the related impact to the overall operating results has been largely offset by the continuous cost improvement exercise to further streamline the daily operations. Given the extent and duration of the COVID-19 pandemic remain uncertain, the Group's estimates and assumptions may evolve as conditions change and the 2020 full year actual results could differ from those estimates. The Group will remain vigilant and closely monitor the development of the COVID-19 situation and will evaluate its impact on the Group's financial position and operating results accordingly.
  3. Significant Accounting Policies
    The accounting policies applied and methods of computation used in the preparation of these interim financial statements are consistent with those used in 2019 annual financial statements, except for the adoption of new or revised standards, amendments and interpretations which are relevant to the operations of the Group and mandatory for annual periods beginning 1 January 2020. In addition, the Group has early adopted Covid-19-Related Rent Concessions (Amendment to IFRS 16) ahead of its effective date and applied the amendment from 1 January 2020. The adoption of these new or revised standards, amendments and interpretations does not have a material impact to the Group's results of operations or financial position.

13

4 Revenue

Revenue comprises revenues from provision of mobile telecommunications and other related service as well as sales of telecommunications hardware. An analysis of revenue is as follows:

Six months ended 30 June

2020

2019

HK$ million

HK$ million

Mobile telecommunications and other related service

1,664

1,782

Telecommunications hardware

318

733

─────

─────

1,982

2,515

═════

═════

Disaggregation of revenue

The Group derives revenue from the provision of services and delivery of goods by timing of satisfaction of performance obligations as follows:

Six months ended 30 June

2020

2019

HK$ million

HK$ million

Timing of revenue recognition:

Over time

1,664

1,782

At a point in time

318

733

─────

─────

1,982

2,515

═════

═════

5 Segment Information

In a manner consistent with the way in which information is reported internally to the

Group's chief operating decision maker for the purpose of resource allocation and performance assessment, the Group has identified only one reporting segment, i.e. mobile telecommunications business.

14

6

Interest and Other Finance Income, Net

Six months ended 30 June

2020

2019

HK$ million

HK$ million

Interest and other finance income:

Bank interest income

63

99

Interest income from a joint venture

9

10

─────

─────

72

109

---------

---------

Interest and other finance costs:

Notional non-cash interest accretion (i)

(14)

(12)

Guarantee and other finance fees

(6)

(5)

─────

─────

(20)

(17)

---------

---------

Interest and other finance income, net

52

92

═════

═════

  1. Notional non-cash interest accretion represents the notional adjustments to accrete the carrying amount of certain obligations recognised in the condensed consolidated statement of financial position such as lease liabilities, licence fees liabilities and asset retirement obligations to the present value of the estimated future cash flows expected to be required for their settlement in the future.

7

Taxation

Six months ended 30 June

2020

2019

Current

Deferred

Current

Deferred

taxation

taxation

Total

taxation

taxation

Total

HK$ million

HK$ million

HK$ million

HK$ million

HK$ million

HK$ million

Hong Kong

1

40

41

11

32

43

════

════

════

════

════

════

Hong Kong profits tax has been provided at the rate of 16.5% (30 June 2019: 16.5%) on the estimated assessable profits less available tax losses. Taxation outside Hong Kong has been provided at the applicable current rates of taxation ruling in the relevant countries on the estimated assessable profits less available tax losses.

15

  1. Earnings per Share
    The calculation of basic earnings per share is based on profit attributable to shareholders of the Company of approximately HK$146 million (30 June 2019: HK$188 million) and on the weighted average number of 4,819,096,208 (30 June 2019: 4,818,969,136) ordinary shares in issue during the period.
    The diluted earnings per share for the six months ended 30 June 2020 is the same as basic earnings per share as there is no potential dilutive shares during the period.
    The diluted earnings per share for the six months ended 30 June 2019 was calculated by adjusting the weighted average number of 4,818,969,136 ordinary shares in issue with the weighted average number of 87,081 ordinary shares deemed to be issued assuming the exercise of the share options.
  2. Dividend

Six months ended 30 June

2020

2019

Interim dividend (HK$ million)

110

141

════

════

Interim dividend per share (HK cents)

2.28

2.93

════

════

In addition, final dividend in respect

of year 2019 of 3.75 HK

cents per share

(30 June 2019: 3.20 HK cents per share) totalling HK$181 million (30 June 2019:

HK$154 million) was approved and paid during the six months ended 30 June 2020.

Special interim dividend in respect of year 2018 of 80.00 HK cents per share totalling

HK$3,855 million was paid during the six months ended 30 June 2019.

10

Cash and Cash Equivalents

30 June

31 December

2020

2019

HK$ million

HK$ million

Cash at banks and in hand

90

117

Short-term bank deposits

5,446

5,299

───────

───────

5,536

5,416

═══════

═══════

The carrying values of cash and cash equivalents approximate their fair values.

16

11

Trade Receivables and Other Current Assets

30 June

31 December

2020

2019

HK$ million

HK$ million

Trade receivables

310

303

Less: Loss allowance provision

(54)

(42)

─────

─────

Trade receivables, net of provision (a)

256

261

Other receivables

97

101

Prepayments and deposits

345

202

─────

─────

698

564

═════

═════

The carrying values of trade receivables, other receivables and deposits approximate their fair values. The Group has established credit policies for customers. The average credit period granted for trade receivables ranges from 14 to 45 days, or a longer period for corporate or carrier customers based on individual commercial terms. There is no concentration of credit risk with respect to trade receivables as the Group has a large number of customers.

(a) Trade receivables, net of provision

30 June

31 December

2020

2019

HK$ million

HK$ million

The ageing analysis of trade receivables, by invoice

date, net of loss allowance provision is as follows:

0 - 30 days

133

146

31 - 60 days

30

43

61 - 90 days

13

14

Over 90 days

80

58

─────

─────

256

261

═════

═════

17

12

Trade and Other Payables

30 June

31 December

2020

2019

HK$ million

HK$ million

Trade payables (a)

303

325

Other payables and accruals

1,059

1,009

Receipts in advance

89

102

Current portion of licence fees liabilities

88

73

─────

─────

1,539

1,509

═════

═════

The carrying values of trade and other payables approximate their fair values.

(a) Trade payables

30 June

31 December

2020

2019

HK$ million

HK$ million

The ageing analysis of trade payables is as follows:

0 - 30 days

155

180

31 - 60 days

61

20

61 - 90 days

3

13

Over 90 days

84

112

─────

─────

303

325

═════

═════

18

GROUP CAPITAL RESOURCES AND LIQUIDITY

Treasury Management

The Group's treasury function sets financial risk management policies in accordance with policies and procedures that are approved by the Executive Director, and which are also subject to periodic review by the Group's internal audit function. The Group's treasury policies are designed to mitigate the impact of fluctuations in interest rates and exchange rates on the Group's overall financial position and to minimise the Group's financial risks. The Group's treasury function operates as a centralised service for managing financial risks, including interest rate and foreign exchange risks, and for providing cost-efficient funding to the Group and its companies. It manages the majority of the Group's funding needs, interest rate, foreign currency and credit risk exposures. The Group uses interest rate and foreign currency swaps and forward contracts as appropriate for risk management purposes only, for hedging transactions and for managing the Group's assets and liabilities' exposure to interest rate and foreign exchange rate fluctuations. It is the Group's policy not to enter into derivative transactions for speculative purposes. It is also the Group's policy not to invest liquidity in financial products, including hedge funds or similar vehicles.

Cash management and funding

The Group operates a central cash management system for all of its subsidiaries. In general, financing is mainly derived from operating income to meet funding requirements of the operating subsidiaries of the Group. The Group regularly and closely monitors its overall cash position and determines when external source of finance is needed.

Foreign currency exposure

The Group runs telecommunications operations principally in Hong Kong, with transactions denominated in Hong Kong dollars. The Group is exposed to other currency movements, primarily in terms of certain trade receivables or payables and bank deposits denominated in United States dollars, Macau Patacas, Renminbi, Euros and British pounds.

Credit exposure

The Group's holdings of surplus funds with financial institutions expose the Group to credit risk of counterparties. The Group controls its credit risk to non-performance by its counterparties through monitoring their share price movements and credit ratings as well as setting approved counterparty credit limits that are regularly reviewed.

19

Capital and Net Cash

As at 30 June 2020, the Group recorded share capital of HK$1,205 million and total equity of HK$11,928 million.

As at 30 June 2020, the net cash of the Group was HK$5,536 million (31 December 2019: HK$5,416 million), 99% of which was denominated in Hong Kong dollars with remaining in various other currencies.

Charges on Group Assets

As at 30 June 2020 and 31 December 2019, except for all of the shares of a joint venture owned by the Group which were pledged as security in favour of the joint venture partner under a cross share pledge arrangement, no material asset of the Group was under any charge.

Borrowing Facilities Available

The Group has no committed borrowing facilities as at 30 June 2020 and 31 December 2019.

Contingent Liabilities

As at 30 June 2020, the Group provided performance, financial and other guarantees of HK$278 million (31 December 2019: HK$106 million).

Commitments

As at 30 June 2020, the Group had total capital commitments of property, plant and equipment of HK$456 million (31 December 2019: HK$271 million) and telecommunications licences of HK$2,040 million (31 December 2019: HK$2,242 million).

A subsidiary of the Group acquired various blocks of spectrum bands for the provision of telecommunications services in Hong Kong, certain of which over various assignment years/periods up to year 2021. The variable licence fees for these spectrum bands were charged on 5% of the network revenue or the Appropriate Fee (as defined in the Unified Carrier Licence), whichever is greater. The net present value of the Appropriate Fee has already been recorded as licence fee liabilities.

20

Corporate Strategy

The strategy of the Group is to deliver sustainable returns with solid financial fundamentals, so as to enhance long-term total return for shareholders. Please refer to the Chairman's Statement, and Management Discussion and Analysis for discussions and analyses of the performance of the Group and the basis on which the Group generates or preserves value over the longer term and the strategy for delivering the objectives of the Group.

Past Performance and Forward-looking Statements

The performance and the results of operations of the Group contained in this announcement are historical in nature, and past performance is no guarantee for the future results of the Group. Any forward-looking statements and opinions contained in this announcement are based on current plans, estimates and projections, and therefore involve risks and uncertainties. Actual results may differ materially from expectations presented in such forward-looking statements and opinions. The Group, the Directors, employees and agents of the Group assume (a) no obligation to correct or update the forward-looking statements or opinions contained in this announcement; and (b) no liability in the event that any of the forward-looking statements or opinions do not materialise.

Human Resources

As at 30 June 2020, the Group employed 979 (31 December 2019: 986) staff members

(full-time and part-time) and on average 963 (1H 2019: 1,197) staff members during the six months ended 30 June 2020. Staff costs during the six months ended 30 June 2020, including directors' emoluments, totalled HK$165 million (1H 2019: HK$194 million).

The Group fully recognises the importance of high-quality human resources in sustaining market leadership. Salary and benefits are kept at competitive levels, while individual performance is rewarded within the general framework of the salary, bonus and incentive system of the Group, which is reviewed annually. Employees are provided with a wide range of benefits that include medical coverage, provident funds and retirement plans, and long-service awards. The Group stresses the importance of staff development and provides training programmes on an ongoing basis. Employees are also encouraged to play an active role in community care activities.

Environmental, Social and Governance Responsibility

The Group is committed to the long-term sustainability of its businesses and the communities in which it conducts business, and attaches great importance on reducing energy consumption of its cellular network. In addition to environmental sustainability, the Group is also involved in a number of digital inclusion initiatives to help bridge the digital divide of the underprivileged. The Group is also continually improving its business practices and employee training in such best practices. It has adopted a proactive approach to ESG responsibility and has established a working group chaired by a Director and comprising representatives from key departments of the Company to spearhead the ESG initiatives and activities of the Group and to enhance the Group's ESG efforts.

21

Review of Interim Financial Statements

The interim financial statements of the Group for the six months ended 30 June 2020 have been reviewed by the auditor of the Company, PricewaterhouseCoopers, in accordance with International Standard on Review Engagements 2410 - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the International Auditing and Assurance Standards Board. The independent review report of the auditor will be included in the Interim Report to shareholders. The interim financial statements of the Group for the six months ended 30 June 2020 has also been reviewed by the Audit Committee of the Company.

Record Date for Interim Dividend

The record date for the purpose of determining shareholders' entitlement to the interim dividend is Wednesday, 26 August 2020. In order to qualify for the interim dividend payable on Friday, 4 September 2020, all transfers, accompanied by the relevant share certificates, must be lodged with the Hong Kong Share Registrar of the Company (Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong) for registration no later than 4:30 pm on Wednesday, 26 August 2020.

Purchase, Sale or Redemption of Listed Securities

During the six months ended 30 June 2020, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the listed securities of the Company.

Compliance with the Corporate Governance Code

The Company strives to attain and maintain high standards of corporate governance best suited to the needs and interests of the Group as it believes that an effective corporate governance framework is fundamental to promoting and safeguarding interests of shareholders and other stakeholders and enhancing shareholder value.

The Company has complied throughout the six months ended 30 June 2020 with all code provisions of the Corporate Governance Code contained in Appendix 14 of the Listing Rules, other than that set out below.

The Board established the Nomination Committee chaired by the Chairman of the Board, with all Directors as members. An ad hoc sub-committee, chaired by the Chairman comprising members in compliance with the code provision requirements under the Listing Rules for a nomination committee, will be established as and when required to facilitate the Nomination Committee in the selection and nomination process. The Board is of the view that the ultimate responsibilities for the selection, nomination and appointment of Directors rest with the Board as a whole and it is in the best interests of the Company that the Board collectively reviews and determines the structure, size and composition of the Board as well as the succession plan for Directors, as and when appropriate.

22

Compliance with the Model Code for Securities Transactions by Directors

The Board has adopted its own HTHKH Securities Code regulating Directors' dealings in securities (Group and otherwise) on terms no less exacting than the required standard of the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Listing Rules. In response to specific enquiries made, all Directors confirmed that they have complied with HTHKH Securities Code in their securities transactions throughout the six months ended 30 June 2020.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions have the following meanings:

"Board"

the Board of Directors

"CACs"

expensed customer acquisition and retention costs plus the related

staff costs, rental and other expenses

"CKHH"

CK Hutchison Holdings Limited, a company incorporated in the

Cayman Islands with limited liability, whose shares are listed on the

Main Board of the Stock Exchange (Stock Code: 1)

"CKHH Group"

CKHH and its subsidiaries

"Company" or "HTHKH"

Hutchison Telecommunications Hong Kong Holdings Limited,

a company incorporated in the Cayman Islands with limited liability,

whose shares are listed on the Main Board of the Stock Exchange

(Stock Code: 215)

"COVID-19"

coronavirus disease 2019

"Director(s)"

director(s) of the Company

"EBIT"

earnings before interest and other finance income, interest and other

finance costs, taxation, adjusted to include the Group's proportionate

share of joint venture's EBIT

"EBITDA"

earnings before interest and other finance income, interest and other

finance costs, taxation, depreciation and amortisation, adjusted to

include the Group's proportionate share of joint venture's EBITDA

"ESG"

environmental, social and governance

"Group"

the Company and its subsidiaries

"H3GHK"

Hutchison 3G HK Holdings Limited

"HK$"

Hong Kong dollars, the lawful currency of Hong Kong

"HK" or "Hong Kong"

the Hong Kong Special Administrative Region of the People's

Republic of China

"HTCL"

Hutchison Telephone Company Limited

23

DEFINITIONS (continued)

"HTHKH Securities Code"

Model Code for Securities Transactions by Directors

"HTMCL"

Hutchison Telephone (Macau) Company Limited

"IAS"

International Accounting Standards

"IFRS"

International Financial Reporting Standards

"interim financial statements"

unaudited condensed consolidated interim financial statements

"Listing Rules"

the Rules Governing the Listing of Securities on the Stock Exchange

"net customer service

net customer service revenue less direct variable costs (including

margin"

interconnection charges and roaming costs)

"Postpaid gross ARPU"

monthly average spending per postpaid user including a customer's

contribution to mobile devices in a bundled plan

"Postpaid net AMPU"

average net margin per postpaid user; postpaid net AMPU equals

postpaid net ARPU less direct variable costs (including

interconnection charges and roaming costs)

"Postpaid net ARPU"

monthly average spending per postpaid user excluding revenue

related to handset under the non-subsidised handset business

model

"service EBITDA / EBIT"

EBITDA / EBIT excluding standalone handset sales margin

"Stock Exchange"

The Stock Exchange of Hong Kong Limited

As at the date of this announcement, the Directors are:

Chairman and Non-executive Director:

Non-executive Directors:

Mr FOK Kin Ning, Canning

Mr LAI Kai Ming, Dominic

(also Alternate to Mr FOK Kin Ning, Canning

Co-Deputy Chairmen and Non-executive

and Ms Edith SHIH)

Directors:

Ms Edith SHIH

Mr LUI Dennis Pok Man

Mr MA Lai Chee, Gerald

Mr WOO Chiu Man, Cliff

(Alternate to Mr LAI Kai Ming, Dominic)

Executive Director:

Independent Non-executive Directors:

Mr KOO Sing Fai

Mr IP Yuk Keung

Dr LAN Hong Tsung, David

Dr WONG Yick Ming, Rosanna

24

Disclaimer

Hutchison Telecommunications Hong Kong Holdings Ltd. published this content on 28 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2020 10:25:04 UTC


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Sales 2021 5 110 M 657 M 657 M
Net income 2021 226 M 29,1 M 29,1 M
Net cash 2021 4 012 M 515 M 515 M
P/E ratio 2021 27,9x
Yield 2021 22,3%
Capitalization 5 879 M 755 M 755 M
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Nbr of Employees 991
Free-Float 25,3%
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Last Close Price 1,22 HKD
Average target price 1,63 HKD
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Managers and Directors
Sing Fai Koo Chief Executive Officer & Executive Director
Wai Sin Cheng Chief Financial Officer
Kin Ning Fok Chairman
Yiu Man Chung Chief Technology Officer
Yuen Chun Tan Chief Operating Officer