SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the Month of March 2010
Commission File Number 1-15028
China Unicom (Hong Kong) Limited
(Exact Name of Registrant as Specified in Its Charter)
75/F, The Center,
99 Queens Road Central, Hong Kong
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F.)
Form 20-F
þ
Form 40-F
o
(Indicate by check mark if the registrant is submitting the Form 6-K on paper as permitted by
Regulation S-T Rule 101(b)(1):
o
.)
(Indicate by check mark if the registrant is submitting the Form 6-K on paper as permitted by
Regulation S-T Rule 101(b)(7):
o
.)
(Indicate by check mark whether the registrant by furnishing the information contained in this
Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.)
Yes
o
No
þ
(If Yes is marked, indicate below the file number assigned to the registrant in connection
with Rule 12g3-2(b):82-
.)
EXHIBITS
FORWARD-LOOKING STATEMENTS
This Annual Results Announcement contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Such forward-looking statements may include, without limitation,
statements relating to (i) the mutual investment by the Company and Telefónica S.A. in each other
and the Companys strategic alliance with Telefónica S.A., the off-market share repurchase by the
Company from SK Telecom Co., Ltd.; (ii) the Companys plans for network expansion, including those
in connection with the build-out of third generation mobile telecommunications, or 3G, digital
cellular business and network infrastructure; (iii) the Companys competitive position, including
the Companys ability to upgrade and expand existing networks and increase network efficiency, to
improve existing services and offer new services, to develop new technological applications and to
leverage the Companys position as an integrated telecommunications operator and expand into new
businesses and markets; (iv) the Companys future business condition, including the Companys
future financial results, cash
flows, financing plans and dividends; (v) the future growth of market demand of, and opportunities
for, the Companys new and existing products and services; and (vi) future regulatory and other
developments in the PRC telecommunications industry.
The words anticipate, believe, could, estimate, intend, may, seek, will and similar
expressions, as they relate to us, are intended to identify certain of these forward-looking
statements. The Company does not intend to update any of these forward-looking statements.
The
forward-looking statements contained in this Annual Results
Announcement are, by their nature, subject to
significant risks and uncertainties. In addition, these forward-looking statements reflect the
Companys current views with respect to future events and are not a guarantee of the Companys
future performance. Actual results may differ materially from those expressed or implied in the
forward-looking statements as a result of a number of factors, including, without limitation:
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changes in the regulatory regime and policies for the PRC telecommunications industry,
including changes in the regulatory policies of the Ministry of Industry and Information
Technology, or the MIIT, the State-owned Assets Supervision and Administration Commission, and
other relevant government authorities of the PRC;
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changes in the PRC telecommunications industry resulting from the issuance of 3G licenses
by the central government of the PRC;
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effects of tariff reduction and other policy initiatives from the relevant PRC government
authorities;
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changes in telecommunications and related technologies and applications based on such
technologies;
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the level of demand for telecommunications services;
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competitive forces from more liberalized markets and the Companys ability to retain market
share in the face of competition from existing telecommunications companies and potential new
market entrants;
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effects of competition on the demand and price of the Companys telecommunications
services;
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the availability, terms and deployment of capital and the impact of regulatory and
competitive developments on capital outlays;
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effects of the Companys restructuring and integration following the completion of the
Companys merger with China Netcom Group Corporation (Hong Kong) Limited;
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effects of the Companys adjustments in its business strategies relating to the
personal handyphone system, or PHS, business;
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effects of the Companys acquisition from its parent companies of certain
telecommunications business and assets, including the fixed-line business in 21 provinces
in southern China, in January 2009;
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changes in the assumptions upon which the Company have prepared its projected financial
information and capital expenditure plans;
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changes in the political, economic, legal and social conditions in the PRC, including the
PRC Governments policies and initiatives with respect to economic development in light of the
recent 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
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the recovery from the recent global economic downturn inside and outside the PRC.
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Please also see the Risk Factors section of the Companys latest Annual Report on Form 20-F, as
filed with the Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Date: March 25, 2010
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CHINA UNICOM (HONG KONG) LIMITED
(Registrant)
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By:
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/s/ Chang Xiaobing
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Name:
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Chang Xiaobing
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Title:
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Chairman and Chief Executive Officer
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Exhibit 1
Hong Kong Exchange 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.
(incorporated in Hong Kong with limited liability)
(Stock Code: 0762)
2009 ANNUAL RESULTS ANNOUNCEMENT
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Highlights:
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Revenue
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:
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RMB153.95 billion.
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Profit for the year
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:
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RMB9.56 billion.
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Basic earnings per share
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:
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RMB0.402.
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Continuing
operations:
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In
accordance with International Financial
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Reporting Standards/Hong Kong
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Financial Reporting Standards
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On comparable basis
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Telecommunications service revenue:
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RMB149.59 billion, down by 2.1% from 2008.
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RMB149.10 billion, down by 1.2%
(a)
compared on the same basis of 2008.
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Profit for the year:
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RMB9.56 billion, up by 22.1% from 2008.
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RMB9.61 billion, down by 35.2%
(b)
compared on the same basis of 2008.
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EBITDA:
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RMB59.85 billion, up by 3.8% from 2008.
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RMB60.12 billion, down by 12.4%
(c)
compared on the same basis of 2008.
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Notes:
(a)
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Excluding deferred fixed-line upfront connection fees and
interconnection revenue between certain fixed-line business and
the discontinued operations of CDMA business.
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(b)
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Excluding deferred fixed-line upfront connection fees, gain
on the non-monetary assets exchange, the lease fee for the
telecommunications networks of 21 provinces in Southern China,
realised gain on changes in fair value of derivative financial
instrument and impairment loss on Personal Handyphone System
service related equipment.
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(c)
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Excluding deferred fixed-line upfront connection fees, the
lease fee for the telecommunications networks of 21 provinces in
Southern China, realised gain on changes in fair value of
derivative financial instrument and impairment loss on Personal
Handyphone System service related equipment.
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1
CHAIRMANS STATEMENT
In 2009, faced with the challenges brought by the global financial crisis, the intensified industry
competition and the opportunities arising from the broadband Internet and 3G businesses, the
Company fully integrated resources, actively developed the market and accelerated network
construction. The overall business development remained steady, the revenue structure was gradually
improved and the network capacity increased substantially, laying a solid foundation for the future
development of the Company.
FINANCIAL PERFORMANCE
In 2009, revenue of the Company totaled RMB153.95 billion. After excluding deferred fixed-line
upfront connection fee of RMB0.49 billion, telecommunications service revenue after adjustment
(Note 1) would be RMB149.10 billion, representing a decrease of 1.2% over last year when compared
on the same basis, of which telecommunications service revenue from mobile business was RMB69.77
billion, representing an increase of 8.6% over last year, while telecommunications service revenue
from fixed-line business after adjustment would be RMB79.06 billion, representing a decrease of
8.5% over last year when compared on the same basis. Of the revenue from the fixed-line business
after adjustment, revenue from fixed-line broadband services was RMB23.90 billion, representing an
increase of 14% over last year.
In 2009, profit of the Company was RMB9.56 billion, representing an increase of 22.1% as compared
with profit from the continuing operations of last year. Due to the decline of fixed-line voice
business and the 3G business being at the initial stage of operation, this represented a decrease
of 35.2% over last year when compared on the same basis (Note 2). Basic earnings per share was
RMB0.402.
As at 31 December 2009, total interest-bearing debts of the Company were RMB74.46 billion.
Debt-to-capitalisation ratio was 26.5%. The Companys debt-to-capitalisation structure was solid.
Based on the Companys financial position in 2009 and taking into account the development needs of
the mobile and fixed-line broadband businesses, the Board recommends the payment of a final
dividend of RMB0.16 per share for the year ended 31 December 2009.
BUSINESS PERFORMANCE
In 2009, the Company conducted full-service operation on a comprehensive basis. The mobile and
fixed-line broadband businesses continued to maintain growth while the fixed-line voice business
was still under the declining pressure; business revenue structure gradually improved; network
communications capability significantly enhanced; and international cooperation achieved positive
progress.
2
The GSM business continued to grow.
The Company continued to develop the subscriber market,
strengthened the marketing of value-added services with focus on services such as GPRS and SMS. As
at 31 December 2009, the total number of GSM subscribers reached 144.845 million, representing an
increase of 8.6% over last year. Telecommunications service revenue from the GSM business was
RMB69.000 billion, representing an increase of 7.4% over last year. Of which, revenue from the GSM
value-added services accounted for 27.3% of the revenue from GSM mobile services, representing an
increase of 2 percentage points over last year.
3G services commercially launched and saw a favourable development trend.
On 1 October 2009, the
Company officially launched 3G services in 285 cities. As at 31 December 2009, the number of cities
covered by 3G commercial services increased to 335 and the total number of 3G subscribers reached
2.742 million, of which the handset subscribers reached 83.7%. The ARPU of 3G subscribers reached
RMB141.7.
To develop 3G business, the Company adopted a unified marketing strategy nationwide for its
products, tariffs and terminals. The Company launched various innovative 3G service products to
drive consumption of data services; implemented multi-channel 3G business sale and marketing; and
provided subscribers with convenient and high-quality service experience. The Company also launched
a unified 3G e-sales service management system to provide unified e-service support for various
sales channels.
The fixed-line broadband business saw rapid growth while the fixed-line voice business still faced
declining pressure.
The Company made great efforts in facilitating fixed-line broadband upgrading
and speed enhancement, and actively developed the fixed-line broadband market. As at 31 December
2009, the total number of local telephone subscribers was 102.822 million, representing a decrease
of 6.2% over last year; the total number of fixed-line broadband subscribers reached 38.550
millions, representing an increase of 28.2% over last year. Revenue from the fixed-line broadband
business was RMB23.90 billion, representing an increase of 14.0% over last year. It accounted for
30.2% of the revenue in fixed-line telecommunications services after adjustment (Note 1),
representing an increase of 5.9 percentage points over last year.
Network capacity was significantly enhanced.
The Company made great efforts in constructing 3G
networks and rapidly formed an extensive network. As at 31 December 2009, the 3G network had
covered 335 cities nationwide with the total number of base stations reaching 107,000. The Company
also continued to expand the coverage of the GSM network and improved the quality of the network
operation. As at 31 December 2009, the number of GSM base stations increased by 36.7% over last
year. The service connection rate increased substantially while the call-drop rate decreased
significantly. Fixed-line broadband network capacity continued to increase. Inter-provincial
network transmission capacity increased more than 70% over last year. Internet outbound bandwidth
increased by 148.0% over last year. The enhancement of network capacity and the improvement of
network quality offered strong support to the Companys business development.
3
International cooperation further strengthened.
The Company emphasized the strengthening of 3G
industry chain cooperation, aiming to transform industry chain advantages of WCDMA technology into
market advantages for the 3G development. On 30 October 2009, in partnership with Apple Inc., the
Company commenced the sale of iPhones. The combination of WCDMA network and iPhone handset
significantly enhanced the influence of the Companys 3G brand. It further brought a brand new
experience to the 3G subscribers. In promoting international cooperation, the Company entered into
a strategic alliance and mutual investment agreement with Telefonica Internacional S.A.U. on 6
September 2009. The two parties agreed to deepen their cooperation in various areas.
INTERNAL INTEGRATION
In 2009, faced with a complex situation following industry restructuring, the Company further made
clear its development strategy, optimized and consolidated resources in organizational structure,
human resources, operations, network and IT systems, service system and brands, and also improved
basic management systems such as finance, risk and internal control. The Company progressively
pushed forward internal integration and laid a solid foundation for the sustainable development of
the Company.
CORPORATE SOCIAL RESPONSIBILITIES
In 2009, the Company actively performed its corporate social responsibilities and spared no efforts
in enhancing service standard and ensuring smooth communication; endeavoured to implement energy
saving and discharge reduction; and created a healthy network environment. The Company also made
great efforts to assist in the informationization of villages and actively participate in disaster
relief work, with a view to contributing to the community.
OUTLOOK
Looking forward, the Company will focus on growth and strengthen its competitiveness in order to
enhance its industry status and to achieve a leading position in its core businesses.
In 2010, the Company will firmly capture the major trend of the nations strategy of driving the
development of information technology and the upgrading of the telecommunication industry to
actively develop the market, increase operation supporting capabilities; enhance execution. The
Company will further adjust structure during development and increase vitality during innovation,
with a view to enhancing its overall competitive strength.
Stepping up efforts in market development to increase the level of business development:
To focus
on the target customers to achieve the scale development of 3G subscribers; step up efforts in
retaining GSM subscribers and increase the quality of subscriber development to achieve the steady
development of the 2G business; actively develop the information technology application market to
ensure faster growth of the broadband business; actively adopt measures such as integrated
marketing to promote fixed-line and mobile integrated products to mitigate the decline in the
fixed-line voice business, and to increase the share of the revenue contributed by the fixed-line
non-voice business to over 50%.
4
Focusing on the development of core businesses to increase the level of operational support:
To
expedite the enhancement of the sales capability of self-owned channels, social channels and
electronic channels; strengthen business and tariff management, improve the branding system and the
effective use of marketing resources to increase the level of refined marketing; establish a sound
full-process management system on innovative products; expedite the enhancement of information
technology support capability; further improve the standard of customer services.
Vigorously promoting network construction to increase the level of network support:
To fully
consider the needs of subscribers and the requirements of future development, and in accordance
with the principle of a single 2G/3G network to push forward the construction of the high-quality
3G network and the improvement of the 2G networks; increase the overall broadband access and basic
network transmission capacity based on the carrying requirements of the mobile, broadband,
integrated businesses; step up efforts in network maintenance and optimization to further improve
network quality.
Establishing sound systems and mechanisms to increase fundamental management standard:
To integrate
the use of resources, optimize the business process to improve the overall operating flow; further
enhance overall budgeting, capital and assets, risk and internal control, network information
security and other aspects of basic management so as to lay a solid foundation for the sustainable
development of the Company.
Lastly, on behalf of the Board of the Company, I would like to express my gratitude to the
shareholders, the government and the community for their support to the Company. I would like to
take this opportunity to express my heartfelt gratitude to the former director in 2009, Mr. Jung
Man Won for his outstanding contribution to the Company during his term of office, and also to the
management and all staff members of the Company for their efforts on the development of the
Company.
Chang Xiaobing
Chairman and Chief Executive Officer
Hong Kong, 24 March 2010
Note 1:
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|
In order to ensure the comparability of revenue amounts, the non-comparable factors
below which are reflected in the figures of current year and last year are therefore excluded
for additional analysis purpose:
|
|
(1)
|
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deferred fixed-line upfront connection fees of RMB0.49 billion for 2009 and
RMB0.89 billion for 2008; and
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(2)
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interconnection revenue of RMB0.99 billion between certain fixed-line
business and the discontinued operations of CDMA business for 2008.
|
Note 2:
|
|
In order to ensure the comparability of profit before tax and profit for the year, the
non-comparable factors below which are reflected in the figures of current year and last year
are therefore excluded for additional analysis purpose:
|
|
(1)
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deferred fixed-line upfront connection fees of RMB0.49 billion for 2009 and
RMB0.89 billion for 2008;
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|
(2)
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gain of RMB0.04 billion from the non-monetary assets exchange for 2009 and
RMB1.31 billion for 2008;
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5
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(3)
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the lease fee of RMB2.00 billion for the telecommunications networks of 21
provinces in Southern China for 2009;
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(4)
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realised gain of RMB1.24 billion on changes in fair value of derivative
financial instrument in 2009, and
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(5)
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impairment loss of RMB11.84 billion on PHS service related equipment in
2008.
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GROUP RESULTS
China Unicom (Hong Kong) Limited (the Company) is pleased to announce the consolidated results of
the Company and its subsidiaries (the Group) for the year ended 31 December 2009, which were
extracted from the audited financial statements of the Group as set out in the Companys 2009
Annual Report.
6
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2009
(All amounts in Renminbi (RMB) millions)
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As at 31 December
|
|
|
|
|
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|
|
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|
|
2008
|
|
|
|
|
|
|
|
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|
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As restated
|
|
|
|
Note
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|
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2009
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(Note 3 (a))
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ASSETS
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Non-current assets
|
|
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|
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|
|
|
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|
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Property, plant and equipment
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|
|
5
|
|
|
|
351,157
|
|
|
|
285,469
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|
Lease prepayments
|
|
|
|
|
|
|
7,729
|
|
|
|
7,863
|
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Goodwill
|
|
|
|
|
|
|
2,771
|
|
|
|
2,771
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|
Deferred income tax assets
|
|
|
|
|
|
|
5,202
|
|
|
|
5,334
|
|
Available-for-sale financial assets
|
|
|
|
|
|
|
7,977
|
|
|
|
95
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|
Other assets
|
|
|
|
|
|
|
11,596
|
|
|
|
9,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
386,432
|
|
|
|
310,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Current assets
|
|
|
|
|
|
|
|
|
|
|
|
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Inventories and consumables
|
|
|
|
|
|
|
2,412
|
|
|
|
1,092
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|
Accounts receivable, net
|
|
|
7
|
|
|
|
8,825
|
|
|
|
9,341
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|
Prepayments and other current assets
|
|
|
|
|
|
|
4,252
|
|
|
|
2,715
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Amounts due from ultimate holding company
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|
|
|
|
|
|
|
|
|
|
169
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Amounts due from related parties
|
|
|
|
|
|
|
53
|
|
|
|
128
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|
Amounts due from domestic carriers
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|
|
|
|
|
|
1,134
|
|
|
|
974
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|
Proceeds receivable for disposal of the CDMA business
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|
|
17
|
|
|
|
5,121
|
|
|
|
13,140
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|
Short-term bank deposits
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|
|
|
|
|
|
996
|
|
|
|
337
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|
Cash and cash equivalents
|
|
|
|
|
|
|
7,820
|
|
|
|
10,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,613
|
|
|
|
38,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
417,045
|
|
|
|
348,752
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
EQUITY
|
|
|
|
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|
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|
|
|
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Capital and reserves attributable to equity holders of
the Company
|
|
|
|
|
|
|
|
|
|
|
|
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Share capital
|
|
|
8
|
|
|
|
2,310
|
|
|
|
2,329
|
|
Share premium
|
|
|
8
|
|
|
|
173,435
|
|
|
|
166,784
|
|
Reserves
|
|
|
9
|
|
|
|
(18,088
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)
|
|
|
(15,464
|
)
|
Retained profits
|
|
|
|
|
|
|
|
|
|
|
|
|
- Proposed final dividend
|
|
|
18
|
|
|
|
3,770
|
|
|
|
4,754
|
|
- Others
|
|
|
|
|
|
|
45,038
|
|
|
|
49,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
206,465
|
|
|
|
207,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest in equity
|
|
|
|
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
|
|
|
|
206,467
|
|
|
|
207,727
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 31 December
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
As restated
|
|
|
|
Note
|
|
|
2009
|
|
|
(Note 3 (a))
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term bank loans
|
|
|
|
|
|
|
759
|
|
|
|
997
|
|
Corporate bonds
|
|
|
10
|
|
|
|
7,000
|
|
|
|
7,000
|
|
Deferred income tax liabilities
|
|
|
|
|
|
|
245
|
|
|
|
16
|
|
Deferred revenue
|
|
|
|
|
|
|
2,562
|
|
|
|
3,398
|
|
Other obligations
|
|
|
|
|
|
|
187
|
|
|
|
1,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,753
|
|
|
|
13,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
11
|
|
|
|
104,072
|
|
|
|
67,509
|
|
Taxes payable
|
|
|
|
|
|
|
912
|
|
|
|
11,307
|
|
Amounts due to ultimate holding company
|
|
|
|
|
|
|
308
|
|
|
|
|
|
Amounts due to related parties
|
|
|
|
|
|
|
5,438
|
|
|
|
1,658
|
|
Amounts due to domestic carriers
|
|
|
|
|
|
|
1,136
|
|
|
|
956
|
|
Payables in relation to disposal of the CDMA business
|
|
|
|
|
|
|
7
|
|
|
|
4,232
|
|
Dividend payable
|
|
|
18
|
|
|
|
331
|
|
|
|
149
|
|
Short-term commercial paper
|
|
|
12
|
|
|
|
|
|
|
|
10,000
|
|
Short-term bank loans
|
|
|
13
|
|
|
|
63,909
|
|
|
|
10,780
|
|
Current portion of long-term bank loans
|
|
|
|
|
|
|
62
|
|
|
|
1,216
|
|
Current portion of deferred revenue
|
|
|
|
|
|
|
1,397
|
|
|
|
2,200
|
|
Current portion of other obligations
|
|
|
|
|
|
|
2,534
|
|
|
|
3,012
|
|
Advances from customers
|
|
|
|
|
|
|
19,719
|
|
|
|
14,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
199,825
|
|
|
|
127,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
210,578
|
|
|
|
141,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities
|
|
|
|
|
|
|
417,045
|
|
|
|
348,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current liabilities
|
|
|
|
|
|
|
(169,212
|
)
|
|
|
(89,800
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities
|
|
|
|
|
|
|
217,220
|
|
|
|
220,819
|
|
|
|
|
|
|
|
|
|
|
|
|
8
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED 31 DECEMBER 2009
(All amounts in RMB millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
As restated
|
|
|
|
Note
|
|
|
2009
|
|
|
(Note 3 (a))
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
4, 14
|
|
|
|
153,945
|
|
|
|
159,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interconnection charges
|
|
|
|
|
|
|
(12,955
|
)
|
|
|
(13,038
|
)
|
Depreciation and amortisation
|
|
|
|
|
|
|
(47,587
|
)
|
|
|
(47,961
|
)
|
Networks, operations and support expenses
|
|
|
|
|
|
|
(21,728
|
)
|
|
|
(18,736
|
)
|
Leasing fee for telecommunications networks in
Southern China
|
|
|
1
|
(b)
|
|
|
(2,000
|
)
|
|
|
|
|
Employee benefit expenses
|
|
|
|
|
|
|
(21,931
|
)
|
|
|
(20,758
|
)
|
Other operating expenses
|
|
|
|
|
|
|
(36,723
|
)
|
|
|
(37,748
|
)
|
Finance costs
|
|
|
|
|
|
|
(1,036
|
)
|
|
|
(2,423
|
)
|
Interest income
|
|
|
|
|
|
|
91
|
|
|
|
265
|
|
Impairment loss on property, plant and equipment
|
|
|
5
|
|
|
|
|
|
|
|
(11,837
|
)
|
Realised gain on changes in fair value of
derivative financial instrument
|
|
|
16
|
|
|
|
1,239
|
|
|
|
|
|
Other income net
|
|
|
15
|
|
|
|
962
|
|
|
|
2,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from continuing operations before income tax
|
|
|
|
|
|
|
12,277
|
|
|
|
9,653
|
|
Income tax expenses
|
|
|
6
|
|
|
|
(2,721
|
)
|
|
|
(1,828
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from continuing operations
|
|
|
|
|
|
|
9,556
|
|
|
|
7,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from discontinued operations
|
|
|
17
|
|
|
|
|
|
|
|
1,438
|
|
Gain on disposal of discontinued operations
|
|
|
17
|
|
|
|
|
|
|
|
26,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
|
|
|
|
|
9,556
|
|
|
|
35,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of the Company
|
|
|
|
|
|
|
9,556
|
|
|
|
35,398
|
|
Minority interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,556
|
|
|
|
35,398
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
As restated
|
|
|
|
Note
|
|
|
2009
|
|
|
(Note 3 (a))
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share for profit attributable to
equity holders of the Company during the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (RMB)
|
|
|
19
|
|
|
|
0.40
|
|
|
|
1.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (RMB)
|
|
|
19
|
|
|
|
0.40
|
|
|
|
1.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share for profit from continuing
operations attributable to equity holders of the
Company during the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (RMB)
|
|
|
19
|
|
|
|
0.40
|
|
|
|
0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (RMB)
|
|
|
19
|
|
|
|
0.40
|
|
|
|
0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share for profit from discontinued
operations attributable to equity holders of the
Company during the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (RMB)
|
|
|
19
|
|
|
|
|
|
|
|
1.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (RMB)
|
|
|
19
|
|
|
|
|
|
|
|
1.15
|
|
|
|
|
|
|
|
|
|
|
|
|
10
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2009
(All amounts in RMB millions)
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
|
9,556
|
|
|
|
35,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
Fair value losses on available-for-sale financial assets
|
|
|
(71
|
)
|
|
|
(188
|
)
|
Tax effect on fair value losses on available-for-sale financial assets
|
|
|
33
|
|
|
|
47
|
|
|
|
|
|
|
|
|
Fair value losses on available-for-sale financial assets, net of tax
|
|
|
(38
|
)
|
|
|
(141
|
)
|
Currency translation differences
|
|
|
|
|
|
|
(29
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss for the year, net of tax
|
|
|
(38
|
)
|
|
|
(170
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year
|
|
|
9,518
|
|
|
|
35,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income attributable to:
|
|
|
|
|
|
|
|
|
Equity holders of the Company
|
|
|
9,518
|
|
|
|
35,228
|
|
Minority interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,518
|
|
|
|
35,228
|
|
|
|
|
|
|
|
|
11
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2009
(All amounts in RMB millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December
|
|
|
|
|
|
|
|
|
|
|
|
2008 As
|
|
|
|
|
|
|
|
|
|
|
|
restated
|
|
|
|
Note
|
|
|
2009
|
|
|
(Note 3 (a))
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations
|
|
|
(a
|
)
|
|
|
63,990
|
|
|
|
67,794
|
|
Interest received
|
|
|
|
|
|
|
93
|
|
|
|
269
|
|
Interest paid
|
|
|
|
|
|
|
(1,681
|
)
|
|
|
(3,011
|
)
|
Income tax paid
|
|
|
|
|
|
|
(4,669
|
)
|
|
|
(7,811
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow from operating activities of
continuing operations
|
|
|
|
|
|
|
57,733
|
|
|
|
57,241
|
|
Net cash inflow from operating activities of
discontinued operations
|
|
|
17
|
|
|
|
|
|
|
|
656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow from operating activities
|
|
|
|
|
|
|
57,733
|
|
|
|
57,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
|
|
|
|
|
|
(78,130
|
)
|
|
|
(48,127
|
)
|
Proceeds from disposal of property, plant and
equipment and other assets
|
|
|
|
|
|
|
611
|
|
|
|
488
|
|
Dividends received from available-for-sale
financial assets
|
|
|
|
|
|
|
177
|
|
|
|
3
|
|
Consideration for purchase of business and
entities under common control
|
|
|
|
|
|
|
(3,896
|
)
|
|
|
(5,880
|
)
|
(Increase)/decrease in short-term bank deposits
|
|
|
|
|
|
|
(659
|
)
|
|
|
415
|
|
Purchase of other assets
|
|
|
|
|
|
|
(3,411
|
)
|
|
|
(1,641
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash outflow from investing activities of
continuing operations
|
|
|
|
|
|
|
(85,308
|
)
|
|
|
(54,742
|
)
|
Net cash (outflow)/inflow from investing
activities of discontinued operations
|
|
|
17
|
|
|
|
(5,039
|
)
|
|
|
29,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash outflow from investing activities
|
|
|
|
|
|
|
(90,347
|
)
|
|
|
(25,253
|
)
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December
|
|
|
|
|
|
|
|
|
|
|
|
2008 As
|
|
|
|
|
|
|
|
|
|
|
|
restated
|
|
|
|
Note
|
|
|
2009
|
|
|
(Note 3 (a))
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of share options
|
|
|
|
|
|
|
|
|
|
|
450
|
|
Proceeds from short-term commercial paper
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
Proceeds from short-term bank loans
|
|
|
|
|
|
|
96,204
|
|
|
|
50,714
|
|
Proceeds from long-term bank loans
|
|
|
|
|
|
|
|
|
|
|
2,888
|
|
Proceeds from issuance of corporate bonds
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
Proceeds from related party loans
|
|
|
|
|
|
|
2,114
|
|
|
|
|
|
Repayment of short-term commercial paper
|
|
|
|
|
|
|
(10,000
|
)
|
|
|
(20,000
|
)
|
Repayment of short-term bank loans
|
|
|
|
|
|
|
(43,075
|
)
|
|
|
(51,784
|
)
|
Repayment of long-term bank loans
|
|
|
|
|
|
|
(1,406
|
)
|
|
|
(23,832
|
)
|
Repayment of capital element of finance lease payments
|
|
|
|
|
|
|
|
|
|
|
(101
|
)
|
Repayment of related party loans
|
|
|
|
|
|
|
|
|
|
|
(2,222
|
)
|
Payment of prior year profit transfer
|
|
|
|
|
|
|
(266
|
)
|
|
|
(101
|
)
|
Consideration for off-market share repurchase
|
|
|
|
|
|
|
(8,802
|
)
|
|
|
|
|
Dividends paid to equity holders
|
|
|
18
|
|
|
|
(4,572
|
)
|
|
|
(6,082
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow/(outflow) from financing activities
of continuing operations
|
|
|
|
|
|
|
30,197
|
|
|
|
(35,070
|
)
|
Net cash outflow from financing activities of
discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow/(outflow) from financing activities
|
|
|
|
|
|
|
30,197
|
|
|
|
(35,070
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow/(outflow) from continuing operations
|
|
|
|
|
|
|
2,622
|
|
|
|
(32,571
|
)
|
Net cash (outflow)/inflow from discontinued operations
|
|
|
17
|
|
|
|
(5,039
|
)
|
|
|
30,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
|
|
|
|
(2,417
|
)
|
|
|
(2,426
|
)
|
Cash and cash equivalents, beginning of year
|
|
|
|
|
|
|
10,237
|
|
|
|
12,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year
|
|
|
|
|
|
|
7,820
|
|
|
|
10,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analysis of the balances of cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash balances
|
|
|
|
|
|
|
7
|
|
|
|
8
|
|
Bank balances
|
|
|
|
|
|
|
7,813
|
|
|
|
10,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,820
|
|
|
|
10,237
|
|
|
|
|
|
|
|
|
|
|
|
|
13
|
(a)
|
|
The reconciliation of profit from continuing operations
before income tax to cash generated from continuing operations is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
As restated
|
|
|
|
|
|
|
|
(Note 3 (a))
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from continuing operations before income tax
|
|
|
12,277
|
|
|
|
9,653
|
|
Adjustments for:
|
|
|
|
|
|
|
|
|
Depreciation and amortisation
|
|
|
47,587
|
|
|
|
47,961
|
|
Interest income
|
|
|
(91
|
)
|
|
|
(265
|
)
|
Finance costs
|
|
|
828
|
|
|
|
2,153
|
|
Gain on disposal of property, plant and equipment and
other assets
|
|
|
(91
|
)
|
|
|
(10
|
)
|
Gain on non-monetary assets exchange
|
|
|
(38
|
)
|
|
|
(1,305
|
)
|
Share-based compensation costs
|
|
|
27
|
|
|
|
84
|
|
Provision for doubtful debts
|
|
|
2,355
|
|
|
|
3,025
|
|
Impairment loss on property, plant and equipment
|
|
|
|
|
|
|
11,837
|
|
Realised gain on changes in fair value of derivative
financial instruments
|
|
|
(1,239
|
)
|
|
|
|
|
Dividends from available-for-sale financial assets
|
|
|
(215
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
Changes in working capital:
|
|
|
|
|
|
|
|
|
Increase in accounts receivable
|
|
|
(1,839
|
)
|
|
|
(2,044
|
)
|
Increase in inventories and consumables
|
|
|
(1,320
|
)
|
|
|
(126
|
)
|
(Increase)/decrease in other assets
|
|
|
(125
|
)
|
|
|
834
|
|
(Increase)/decrease in prepayments and other current
assets
|
|
|
(1,539
|
)
|
|
|
1,000
|
|
Decrease in amounts due from related parties
|
|
|
75
|
|
|
|
116
|
|
(Increase)/decrease in amounts due from domestic carriers
|
|
|
(160
|
)
|
|
|
267
|
|
Increase/(decrease) in accounts payable, accrued
liabilities and taxes payable
|
|
|
4,659
|
|
|
|
(2,156
|
)
|
Increase in advances from customers
|
|
|
4,805
|
|
|
|
1,653
|
|
Decrease in deferred revenue
|
|
|
(1,639
|
)
|
|
|
(2,993
|
)
|
Decrease in other obligations
|
|
|
(2,101
|
)
|
|
|
(767
|
)
|
Increase/(decrease) in amounts due to ultimate holding
company
|
|
|
413
|
|
|
|
(1,733
|
)
|
Increase/(decrease) in amounts due to related parties
|
|
|
1,942
|
|
|
|
(551
|
)
|
Increase in amounts due to domestic carriers
|
|
|
180
|
|
|
|
396
|
|
(Decrease)/increase in payables in relation to disposal
of the CDMA business
|
|
|
(761
|
)
|
|
|
768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations
|
|
|
63,990
|
|
|
|
67,794
|
|
|
|
|
|
|
|
|
14
NOTES (All amounts in RMB millions unless otherwise stated)
1.
|
|
GENERAL INFORMATION
|
|
|
|
China Unicom (Hong Kong) Limited (the Company) was incorporated as a limited liability
company in the Hong Kong Special Administrative Region (Hong Kong), the Peoples Republic of
China (the PRC) on 8 February 2000. After disposal of the CDMA mobile business to China
Telecom Corporation Limited (China Telecom) on 1 October 2008, the merger with China Netcom
Group Corporation (Hong Kong) Limited (China Netcom) on 15 October 2008 and the launch of
WCDMA mobile business on 1 October 2009, the principal activities of the Company are
investment holding and the Companys subsidiaries are principally engaged in the provision of
cellular and fixed-line voice and related value-added services, broadband and other
Internet-related services, information communications technology services, and business and
data communications services in the PRC. The GSM cellular voice, WCDMA cellular voice and
related value-added services is referred to as the Mobile business, the services
aforementioned other than the Mobile business is hereinafter collectively referred to as the
Fixed-line business. The Company and its subsidiaries are hereinafter referred to as the
Group. The address of its registered office is 75th Floor, The Center, 99 Queens Road
Central, Hong Kong.
|
|
|
|
The shares of the Company were listed on the Stock Exchange of Hong Kong Limited (SEHK) on
22 June 2000 and the American Depositary Shares (ADS) of the Company were listed on the New
York Stock Exchange on 21 June 2000.
|
|
|
|
On 15 November 2008, the Company was notified by its substantial shareholders, namely China
Unicom (BVI) Limited (Unicom BVI) and China Netcom Group Corporation (BVI) Limited (Netcom
BVI), that their respective parent companies, namely, China United Network Communications
Group Company Limited (a state-owned enterprise established in the PRC, the parent company of
Unicom BVI, hereinafter referred to as Unicom Group) and China Network Communications Group
Corporation (a state-owned enterprise established in the PRC, the parent company of Netcom
BVI, hereinafter referred to as Netcom Group), had agreed to undertake a merger (the Parent
Merger). On 6 January 2009, the Company was notified by its substantial shareholders that the
Parent Merger, through the absorption of Netcom Group by Unicom Group, had been approved by
the State-owned Assets Supervision and Administration Commission of the State Council
(SASAC) and had become effective. As a result of the Parent Merger, Unicom Group has assumed
all the rights and obligations of Netcom Group, all the assets, liabilities and business of
Netcom Group including the connected transaction agreements with the Group have vested in
Unicom Group and Unicom Group remains the ultimate holding company of the Company.
|
|
|
|
The financial figures in respect of the announcement of the Groups results for the year ended
31 December 2009 have been agreed by the Groups auditor, PricewaterhouseCoopers, to the
amounts set out in the Groups audited consolidated financial statements for the year. The
work performed by PricewaterhouseCoopers in this respect did not constitute an assurance
engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review
Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute
of Certified Public Accountants (the HKICPA) and consequently no assurance has been
expressed by PricewaterhouseCoopers on the announcement.
|
|
(a)
|
|
Acquisitions of certain assets and businesses from Unicom Group and Netcom Group in 2009
|
|
|
|
On 31 January 2009, China United Network Communications Corporation Limited (CUCL, a
wholly-owned subsidiary of the Company) completed the acquisition from Unicom Group and Netcom
Group of (i) the fixed-line business, but not the underlying telecommunications networks,
across the 21 provinces in Southern China and related non-current assets and liabilities
(hereinafter referred to as the Fixed-line Business in Southern China) and the local access
telephone business and related assets in Tianjin Municipality operated by Netcom Group and
Unicom Group and/or their respective subsidiaries and branches; (ii) the backbone transmission
assets in Northern China owned by Netcom Group and/or its subsidiaries (Target Assets);
(iii) a 100% equity interest in Unicom Xingye Science and Technology Trade Company Limited
(Unicom Xingye) owned by Unicom Group; (iv) a 100% equity interest in China Information
Technology Designing & Consulting Institute Company Limited (CITDCI) owned by Unicom Group
and (v) a 100% equity interest in New Guoxin Telecom Corporation of China Unicom (New
Guoxin) owned by Unicom Group at a consideration of approximately RMB4.43 billion. The
businesses and assets described in (i), (iii), (iv) and (v) above are hereinafter collectively
referred to as the Target Business and the acquisition of the Target Business is referred to
as the 2009 Business Combination.
|
15
(b)
|
|
Lease of telecommunications networks in Southern China from Unicom New Horizon Mobile
Telecommunications Company Limited in 2009
|
|
|
|
In connection with the 2009 Business Combination, on 16 December 2008, CUCL, Unicom Group,
Netcom Group and Unicom New Horizon Mobile Telecommunications Company Limited (Unicom New
Horizon, a wholly-owned subsidiary of Unicom Group) entered into an agreement (the Network
Lease Agreement) in relation to the lease (the Lease) of the fixed-line telecommunications
networks of the 21 provinces in Southern China (Telecommunications Networks in Southern
China) by CUCL from Unicom New Horizon on an exclusive basis immediately following and subject
to the completion of the 2009 Business Combination. Under the Network Lease Agreement, CUCL
shall pay annual 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 initial term of the Lease is
two years effective from January 2009 and the Lease is renewable at the option of CUCL with at
least two months prior notice on the same terms and conditions, except for the future lease
fee which will remain subject to further negotiations between the parties, taking into account,
among others, the then prevailing market conditions in Southern China. Moreover, in connection
with the Lease, Unicom New Horizon has granted to CUCL an option to purchase the
Telecommunications Networks in Southern China and the purchase price will be referenced to the
then appraised value of the networks determined by an independent appraiser.
|
|
(c)
|
|
Merger between CUCL and China Netcom (Group) Company Limited in 2009
|
|
|
|
On 1 January 2009, as part of the Companys integration with China Netcom, the Company
completed the reorganisation of its wholly-owned subsidiaries, namely (i) CUCL and (ii) China
Netcom (Group) Company Limited (CNC China, a wholly-owned foreign enterprise established in
the PRC and a wholly-owned subsidiary of China Netcom), pursuant to which CUCL merged with,
and absorbed, CNC China. The merged company retains the name of China United Network
Communications Corporation Limited and remains a wholly-owned subsidiary of the Company. The
CNC China mentioned below represents CNC China before the merger with CUCL on 1 January 2009.
|
|
|
|
The merger between CUCL and CNC China does not have any impact on the consolidated financial
statements.
|
|
(d)
|
|
2008 disposal and business combination activities
|
|
|
|
Disposal of the Groups CDMA business to China Telecom in 2008
|
|
|
|
|
On 1 October 2008, the Company completed the disposal of the CDMA business to China
Telecom in accordance with the CDMA business framework agreement (the Framework
Agreement) and the CDMA business disposal agreement (the Disposal Agreement) entered
into among the Company, CUCL and China Telecom.
|
|
|
|
|
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)
|
|
|
|
|
On 15 October 2008, the Company completed its merger with China Netcom by way of a scheme
of arrangement of China Netcom (the Scheme) under Section 166 of the Hong Kong Companies
Ordinance. The consideration for the 2008 Business Combination was approximately HKD117.2
billion which was satisfied by the issuance of 10,102,389,377 ordinary shares of HKD0.10
each of the Company to the shareholders of China Netcom.
|
2.
|
|
Statement of Compliance
|
|
|
|
These financial statements have been prepared in accordance with all applicable International
Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board
(''IASB), which collective term includes all applicable individual International Financial
Reporting Standards, International Accounting Standards (''IASs) and Interpretations issued
by the IASB. Hong Kong Financial Reporting Standards (''HKFRSs), which collective term
includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong
Accounting Standards (''HKASs) and Interpretations issued by the Hong Kong Institute of
Certified Public Accountants (''HKICPA), are consistent with IFRSs. These financial
statements also comply with HKFRSs as well as the applicable disclosure provisions of the
Rules Governing the Listing of Securities on the SEHK and the requirements of the Hong Kong
Companies Ordinance.
|
16
3.
|
|
Basis of Preparation
|
|
|
|
The consolidated financial statements have been prepared under the historical cost convention,
modified by the revaluation of property, plant and equipment (other than buildings and
telecommunications equipment of the Mobile business), available-for-sale financial assets and
derivative financial instrument at fair value through profit or loss.
|
|
(a)
|
|
Business Combination of Entities and Business under Common Control and Purchase of
Target Assets
|
|
|
|
|
The merger between the Company and China Netcom was considered a business combination of
entities under common control as their respective ultimate holding companies, namely
Unicom Group and Netcom Group, were both under the common control of SASAC. Further, the
2008 Business Combination was carried out by reference to the Announcement on Deepening
the Reform of the Structure of the Telecommunications Sector dated 24 May 2008 jointly
issued by the Ministry of Industry and Information Technology (MIIT), the National
Development and Reform Commission (NDRC) and the Ministry of Finance of the PRC. As set
out in Note 1, Unicom Group and Netcom Group had merged on 6 January 2009 following the
merger between the Company and China Netcom.
|
|
|
|
|
The 2009 Business Combination was also considered a business combination of entities and
businesses under common control as the Target Business before and after the acquisition
was under the control of Unicom Group, the Groups ultimate holding company.
|
|
|
|
|
Under HKFRSs, the 2008 Business Combination and 2009 Business Combination were accounted
for using merger accounting in accordance with the Accounting Guideline 5 Merger
accounting for common control combinations (AG 5) issued by the HKICPA. Upon the
adoption of IFRSs by the Group in 2008, the Group adopted the accounting policy to account
for business combinations of entities and businesses under common control using the
predecessor values method, which is consistent with HKFRSs. Accordingly, the acquired
assets and liabilities are stated at predecessor values, and were included in the
consolidated financial statements from the beginning of the earliest period presented as
if the entities and businesses acquired had always been part of the Group.
|
|
|
|
|
Under IFRSs/HKFRSs, the purchase of the Target Assets in 2009 of approximately RMB0.53
billion was accounted for as an asset purchase in accordance with IAS/HKAS 16 Property,
plant and equipment in the period of purchase.
|
|
|
(b)
|
|
Summary of the restatement to 2008 comparative financial information
|
|
|
|
|
The impact of the restatement of 2008 comparative financial information in connection
with the 2009 Business Combination is summarised as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
previously
|
|
|
Business
|
|
|
|
|
|
|
|
|
|
reported
|
|
|
Combination
|
|
|
Eliminations
|
|
|
As restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended 31 December 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
148,906
|
|
|
|
14,337
|
|
|
|
(3,451
|
)
|
|
|
159,792
|
|
Profit for the year
|
|
|
6,340
|
|
|
|
1,537
|
|
|
|
(52
|
)
|
|
|
7,825
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
(c)
|
|
Discontinued Operations
|
|
|
|
|
On 2 June 2008, the Company, CUCL and China Telecom entered into the Framework Agreement
to dispose of the assets and liabilities in relation to the CDMA business and the
disposal was completed on 1 October 2008. In accordance with IFRS/HKFRS 5 Non-current
assets held for sale and discontinued operations issued by the IASB/HKICPA (IFRS/HKFRS
5), the results and cash flows of the operations of the CDMA operating segment of the
Group have been presented as discontinued operations in the consolidated statement of
income and statement of cash flows of the Group for the year ended 31 December 2008. The
difference between the consideration received and receivable and the book value of net
assets disposed of is recorded as gain on disposal of discontinued operations in the
consolidated statement of income for the year ended 31 December 2008.
|
|
|
|
|
For details, please refer to Note 17.
|
|
|
(d)
|
|
Going Concern Assumption
|
|
|
|
|
As at 31 December 2009, current liabilities of the Group exceeded current assets by
approximately RMB169.2 billion (2008: approximately RMB89.8 billion). Given the current
global economic conditions and the Groups expected capital expenditures in the
foreseeable future, management has comprehensively considered the Groups available
sources of funds as follows:
|
|
|
|
The Groups continuous net cash inflow from operating activities;
|
|
|
|
|
Revolving banking facilities of approximately RMB113.3 billion, of which
approximately RMB58.8 billion was unutilised as at 31 December 2009; and
|
|
|
|
|
Other available sources of financing from domestic banks and other
financial institutions given the Groups credit history.
|
|
|
|
In addition, the Group will continue to optimise its fund raising strategy from the short,
medium and long-term perspectives and will consider the opportunities in the current
capital market to take advantage of low interest rates by issuing medium to long-term
debts with low financing cost.
|
|
|
|
|
Based on the above considerations, the Board of Directors is of the opinion that the Group
has sufficient funds to meet its working capital requirements and debt obligations. As a
result, the consolidated financial statements of the Group for the year ended 31 December
2009 have been prepared under the going concern basis.
|
|
|
(e)
|
|
Significant Accounting Policies and Critical Accounting Estimates and Judgment
|
|
|
|
|
Except for (i) those new/revised standards and amendments to standards adopted for the
first time for the financial year beginning 1 January 2009 which are detailed in Note 2
Summary of significant accounting policies, to the consolidated financial statements as
set out in the Groups 2009 annual report; (ii) the accounting for the lease of
Telecommunications Networks in Southern China and (iii) exclusion of
|
18
|
|
|
depreciation and amortisation charges and finance costs directly attributable to the
property, plant and equipment and related non-current assets and liabilities retained by
Unicom New Horizon in the 2008 comparative financial information which has been restated
by applying merger accounting/predecessor values method in connection with 2009 Business
Combination , the basis of preparation, the significant accounting policies adopted and
critical accounting estimates and judgment made in the preparation of the annual
financial statements for the year ended 31 December 2009 are consistent with those used
in preparing the annual financial statements for the year ended 31 December 2008.
|
4.
|
|
SEGMENT INFORMATION
|
|
|
|
The Chief Operating Decision Maker (the CODM) has been indentified as the Board of Directors
(the BOD) of the Company which regularly reviews the Groups internal reporting in order to
assess performance and allocate resources; and determines the operating segments based on
these reports. The BOD considers the business from the provision of services perspective
instead of the geographic perspective. Accordingly, the Groups continuing operations comprise
two operating segments based on the various types of telecommunications services, mainly
provided to customers in Mainland China.
|
|
|
|
The major operating segments of the Group are classified as follows:
|
|
|
|
Continuing operations:
|
|
|
|
Mobile business the provision of GSM and WCDMA cellular 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, 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.
|
|
|
Discontinued operations:
|
|
|
|
|
CDMA business the provision of the CDMA telephone and related services, through a
leasing arrangement for the CDMA network capacity from Unicom New Horizon. The CDMA
business was disposed of in October 2008.
|
|
|
Starting from 2009, the CODM evaluates results of each operating segment based on revenue and
costs that are directly attributable to the operating segments. The unallocated amounts
primarily represent corporate and shared service expenses that are not directly allocated to
one of the aforementioned operating segments. The unallocated amounts also included other
statement of income items such as employee benefit expenses, interest income, income tax
expenses, finance costs and other income, which cannot be directly identified to specific
operating segments. Segment assets primarily comprise of property, plant and equipment, other
assets, inventories and receivables. Segment liabilities primarily comprise operating
liabilities. The 2008 comparative financial information has been restated to conform to current
years presentation.
|
|
|
|
Revenues between segments are carried out on terms comparable to those that prevail in arms
length transactions or at standards promulgated by relevant government authorities. Revenue
from external customers reported to the CODM is measured in a manner consistent with that in
the consolidated statement of income.
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Mobile
|
|
|
Fixed-line
|
|
|
|
|
|
|
Unallocated
|
|
|
|
|
|
|
continuing
|
|
|
|
business
|
|
|
business
|
|
|
Subtotal
|
|
|
amounts
|
|
|
Eliminations
|
|
|
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications service revenue
|
|
|
69,769
|
|
|
|
79,549
|
|
|
|
149,318
|
|
|
|
275
|
|
|
|
|
|
|
|
149,593
|
|
Information communication technology
services and other revenue
|
|
|
252
|
|
|
|
1,611
|
|
|
|
1,863
|
|
|
|
326
|
|
|
|
|
|
|
|
2,189
|
|
Sales of telecommunications products
|
|
|
1,970
|
|
|
|
193
|
|
|
|
2,163
|
|
|
|
|
|
|
|
|
|
|
|
2,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue from external customers
|
|
|
71,991
|
|
|
|
81,353
|
|
|
|
153,344
|
|
|
|
601
|
|
|
|
|
|
|
|
153,945
|
|
Intersegment revenue
|
|
|
219
|
|
|
|
4,237
|
|
|
|
4,456
|
|
|
|
1,587
|
|
|
|
(6,043
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
72,210
|
|
|
|
85,590
|
|
|
|
157,800
|
|
|
|
2,188
|
|
|
|
(6,043
|
)
|
|
|
153,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interconnection charges
|
|
|
(13,104
|
)
|
|
|
(4,292
|
)
|
|
|
(17,396
|
)
|
|
|
|
|
|
|
4,441
|
|
|
|
(12,955
|
)
|
Depreciation and amortisation
|
|
|
(17,847
|
)
|
|
|
(28,264
|
)
|
|
|
(46,111
|
)
|
|
|
(1,505
|
)
|
|
|
29
|
|
|
|
(47,587
|
)
|
Networks, operations and support
expenses
|
|
|
(2,496
|
)
|
|
|
(5,780
|
)
|
|
|
(8,276
|
)
|
|
|
(13,471
|
)
|
|
|
19
|
|
|
|
(21,728
|
)
|
Leasing fee for telecommunications
networks in Southern China
|
|
|
|
|
|
|
(2,000
|
)
|
|
|
(2,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,000
|
)
|
Employee benefit expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(22,104
|
)
|
|
|
173
|
|
|
|
(21,931
|
)
|
Other operating expenses
|
|
|
(11,671
|
)
|
|
|
(8,783
|
)
|
|
|
(20,454
|
)
|
|
|
(17,465
|
)
|
|
|
1,196
|
|
|
|
(36,723
|
)
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,214
|
)
|
|
|
178
|
|
|
|
(1,036
|
)
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
269
|
|
|
|
(178
|
)
|
|
|
91
|
|
Realised gain on changes in fair value
of derivative financial instrument
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,239
|
|
|
|
|
|
|
|
1,239
|
|
Other income net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
962
|
|
|
|
|
|
|
|
962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit/(loss) before income tax
|
|
|
27,092
|
|
|
|
36,471
|
|
|
|
63,563
|
|
|
|
(51,101
|
)
|
|
|
(185
|
)
|
|
|
12,277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,721
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,556
|
|
Minority interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for doubtful debts
|
|
|
(1,494
|
)
|
|
|
(858
|
)
|
|
|
(2,352
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
(2,355
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures for segment
assets (a)
|
|
|
56,984
|
|
|
|
46,494
|
|
|
|
103,478
|
|
|
|
8,996
|
|
|
|
|
|
|
|
112,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
(As restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(up to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
effective date
|
|
|
|
|
|
|
Continuing operations
|
|
|
of disposal)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Mobile
|
|
|
Fixed-line
|
|
|
|
|
|
|
Unallocated
|
|
|
|
|
|
|
continuing
|
|
|
CDMA
|
|
|
|
|
|
|
business
|
|
|
business
|
|
|
Subtotal
|
|
|
amounts
|
|
|
Eliminations
|
|
|
operations
|
|
|
business
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications service
revenue
|
|
|
64,240
|
|
|
|
88,254
|
|
|
|
152,494
|
|
|
|
337
|
|
|
|
|
|
|
|
152,831
|
|
|
|
18,951
|
|
|
|
171,782
|
|
Information communication
technology services and
other revenue
|
|
|
359
|
|
|
|
4,339
|
|
|
|
4,698
|
|
|
|
364
|
|
|
|
|
|
|
|
5,062
|
|
|
|
92
|
|
|
|
5,154
|
|
Sales of telecommunications
products
|
|
|
532
|
|
|
|
1,362
|
|
|
|
1,894
|
|
|
|
5
|
|
|
|
|
|
|
|
1,899
|
|
|
|
3,253
|
|
|
|
5,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue from external
customers
|
|
|
65,131
|
|
|
|
93,955
|
|
|
|
159,086
|
|
|
|
706
|
|
|
|
|
|
|
|
159,792
|
|
|
|
22,296
|
|
|
|
182,088
|
|
Intersegment revenue
|
|
|
265
|
|
|
|
3,407
|
|
|
|
3,672
|
|
|
|
1,214
|
|
|
|
(4,886
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
65,396
|
|
|
|
97,362
|
|
|
|
162,758
|
|
|
|
1,920
|
|
|
|
(4,886
|
)
|
|
|
159,792
|
|
|
|
22,296
|
|
|
|
182,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interconnection charges
|
|
|
(10,753
|
)
|
|
|
(5,776
|
)
|
|
|
(16,529
|
)
|
|
|
|
|
|
|
3,491
|
|
|
|
(13,038
|
)
|
|
|
(1,661
|
)
|
|
|
(14,699
|
)
|
Depreciation and amortisation
|
|
|
(18,551
|
)
|
|
|
(27,782
|
)
|
|
|
(46,333
|
)
|
|
|
(1,628
|
)
|
|
|
|
|
|
|
(47,961
|
)
|
|
|
(411
|
)
|
|
|
(48,372
|
)
|
Networks, operations and
support expenses
|
|
|
(2,279
|
)
|
|
|
(5,757
|
)
|
|
|
(8,036
|
)
|
|
|
(10,873
|
)
|
|
|
173
|
|
|
|
(18,736
|
)
|
|
|
(7,777
|
)
|
|
|
(26,513
|
)
|
Employee benefit expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20,967
|
)
|
|
|
209
|
|
|
|
(20,758
|
)
|
|
|
(1,600
|
)
|
|
|
(22,358
|
)
|
Other operating expenses
|
|
|
(9,054
|
)
|
|
|
(13,901
|
)
|
|
|
(22,955
|
)
|
|
|
(15,746
|
)
|
|
|
953
|
|
|
|
(37,748
|
)
|
|
|
(8,966
|
)
|
|
|
(46,714
|
)
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,137
|
)
|
|
|
714
|
|
|
|
(2,423
|
)
|
|
|
(6
|
)
|
|
|
(2,429
|
)
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
979
|
|
|
|
(714
|
)
|
|
|
265
|
|
|
|
10
|
|
|
|
275
|
|
Impairment loss on property,
plant and equipment
|
|
|
|
|
|
|
(11,837
|
)
|
|
|
(11,837
|
)
|
|
|
|
|
|
|
|
|
|
|
(11,837
|
)
|
|
|
|
|
|
|
(11,837
|
)
|
Other income net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,097
|
|
|
|
|
|
|
|
2,097
|
|
|
|
22
|
|
|
|
2,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit/(loss) before
income tax
|
|
|
24,759
|
|
|
|
32,309
|
|
|
|
57,068
|
|
|
|
(47,355
|
)
|
|
|
(60
|
)
|
|
|
9,653
|
|
|
|
1,907
|
|
|
|
11,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,828
|
)
|
|
|
(469
|
)
|
|
|
(2,297
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of the CDMA
business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,135
|
|
|
|
26,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,825
|
|
|
|
27,573
|
|
|
|
35,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,826
|
|
|
|
27,572
|
|
|
|
35,398
|
|
Minority interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,825
|
|
|
|
27,573
|
|
|
|
35,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for doubtful debts
|
|
|
(1,371
|
)
|
|
|
(1,639
|
)
|
|
|
(3,010
|
)
|
|
|
(15
|
)
|
|
|
|
|
|
|
(3,025
|
)
|
|
|
(383
|
)
|
|
|
(3,408
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures for
segment assets (a)
|
|
|
33,852
|
|
|
|
31,540
|
|
|
|
65,392
|
|
|
|
5,471
|
|
|
|
|
|
|
|
70,863
|
|
|
|
|
|
|
|
70,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items
|
|
|
|
|
|
|
Mobile
|
|
|
Fixed-line
|
|
|
|
|
|
|
Unallocated
|
|
|
|
|
|
|
|
|
|
business
|
|
|
business
|
|
|
Subtotal
|
|
|
amounts
|
|
|
Eliminations
|
|
|
Total
|
|
|
|
|
Total segment assets
|
|
|
170,577
|
|
|
|
213,172
|
|
|
|
383,749
|
|
|
|
34,470
|
|
|
|
(1,174
|
)
|
|
|
417,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment liabilities
|
|
|
74,411
|
|
|
|
51,066
|
|
|
|
125,477
|
|
|
|
85,948
|
|
|
|
(847
|
)
|
|
|
210,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
35,071
|
|
|
|
(487
|
)
|
|
|
348,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment liabilities
|
|
|
53,496
|
|
|
|
34,484
|
|
|
|
87,980
|
|
|
|
53,390
|
|
|
|
(345
|
)
|
|
|
141,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Capital expenditures under unallocated amounts represent capital expenditures on
common facilities, which benefit all operating segments.
|
5.
|
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
After the completion of the merger with China Netcom (Note 1) in 2008, management reconsidered
the Groups strategy regarding the Personal Handyphone System (PHS) services business at the
end of 2008 and expected to gradually phase out this operation over the subsequent 3 years.
Accordingly, it was expected that the economic performance of PHS services business would
deteriorate significantly. The test for impairment was conducted for the PHS services related
equipment, after considering the expected significant decline in revenue and profitability in
2009 and onwards. The impaired PHS services related equipment was written down to their
recoverable values, which was determined based on their estimated value in use. Estimated
value in use was determined based on the present value of estimated future net cash flows
expected to arise from the continuing use of the PHS services related equipment. In estimating
the future net cash flows, the Group has made key assumptions and estimates on the appropriate
discount rate of 15%, the period covered by the cash flow forecast of 3 years, the future loss
of customers at an annual rate of decline ranging from 60% to 80%, and the decrease in average
revenue per subscriber at an annual rate of decline of 15%.
|
|
|
|
These assumptions and estimates are made after considering the historical trends, the
prevailing market trends, expected remaining life of the PHS services business and the
physical conditions of the PHS services related equipment. Based on the above, the Group
recognised an impairment loss on PHS services related equipment of approximately RMB11,837
million for the year ended 31 December 2008.
|
|
|
|
As at 31 December 2009, management updated the impairment analysis for the PHS services
related equipment and concluded there was no need for additional recognition or reversal of
the impairment loss on PHS services related equipment.
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
2009
|
|
|
(As restated)
|
|
|
|
|
|
|
|
|
|
|
Provision for enterprise income tax on
the estimated taxable profits for the
year
|
|
|
|
|
|
|
|
|
- Hong Kong
|
|
|
45
|
|
|
|
24
|
|
- Outside Hong Kong
|
|
|
2,282
|
|
|
|
4,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,327
|
|
|
|
4,685
|
|
Deferred taxation
|
|
|
394
|
|
|
|
(2,857
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
2,721
|
|
|
|
1,828
|
|
|
|
|
|
|
|
|
|
|
Hong Kong profits tax has been provided at the rate of 16.5% (2008: 16.5%) on the estimated
assessable profit for the year. Taxation on profits from outside Hong Kong has been calculated
on the estimated assessable profit for the year at the rates of taxation prevailing in the
countries in which the Group operates, the Companys subsidiaries mainly operated in the PRC
and the applicable standard enterprise income tax rate is 25% (2008: 25%).
|
|
|
|
Pursuant to the PRC enterprise income tax law, a 10% withholding income tax is levied on
dividends declared on or after 1 January 2008 by foreign investment enterprises to their
foreign enterprise shareholders unless the enterprise investor is deemed as a PRC Tax Resident
Enterprise (TRE). On 22 April 2009, the PRC State Administration of Taxation issued a notice
regarding the determination of PRC TRE status and provided implementation guidance in
withholding income tax for non-TRE enterprise shareholders. The Company performed an
assessment and concluded that it meets the definition of PRC TRE. Therefore, as at 31 December
2008 and 2009, the Companys subsidiaries in the PRC did not accrue for withholding tax on
dividends distributed to the Company and there has been no deferred tax liability accrued in
the Groups consolidated financial statements for the undistributed income of the Companys
subsidiaries in the PRC.
|
|
|
|
For the Companys non-TRE enterprise shareholders, the Company would distribute dividends
after deducting the amount of enterprise income tax payable by these non-TRE enterprise
shareholders thereon and reclassify the related dividend payable to withholding tax payable
upon the declaration of such dividends. The requirement to withhold tax does not apply to the
Companys shareholders appearing as individuals in its share register.
|
|
7.
|
|
ACCOUNTS RECEIVABLE, NET
|
|
|
|
The aging analysis of accounts receivable is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
2009
|
|
|
(As restated)
|
|
|
|
|
|
|
|
|
|
|
Within one month
|
|
|
6,384
|
|
|
|
6,750
|
|
More than one month to three months
|
|
|
1,235
|
|
|
|
1,560
|
|
More than three months to one year
|
|
|
2,936
|
|
|
|
2,944
|
|
More than one year
|
|
|
2,340
|
|
|
|
1,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,895
|
|
|
|
12,803
|
|
Less: Provision for doubtful debts
|
|
|
(4,070
|
)
|
|
|
(3,462
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,825
|
|
|
|
9,341
|
|
|
|
|
|
|
|
|
23
The normal credit period granted by the Group is on average between 30 days to 90 days from the
date of billing.
There is no significant concentration of credit risk with respect to customer receivables, as the
Group has a large number of customers.
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
HKD millions
|
|
|
HKD millions
|
|
Authorised:
|
|
|
|
|
|
|
|
|
30,000,000,000 ordinary shares, par value of HKD0.10 each
|
|
|
3,000
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares, par
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
value of HKD0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
shares
|
|
|
each
|
|
|
|
|
|
|
|
|
|
|
Issued and fully paid:
|
|
millions
|
|
|
HKD millions
|
|
|
Share capital
|
|
|
Share premium
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2008
|
|
|
13,635
|
|
|
|
1,363
|
|
|
|
1,437
|
|
|
|
64,320
|
|
|
|
65,757
|
|
Issuance of shares
upon exercise of
options
|
|
|
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
|
|
Issuance of shares
for mutual investment
by the Company and
Telefónica (Note b)
|
|
|
694
|
|
|
|
69
|
|
|
|
60
|
|
|
|
6,651
|
|
|
|
6,711
|
|
Off-market share
repurchase (Note c)
|
|
|
(900
|
)
|
|
|
(90
|
)
|
|
|
(79
|
)
|
|
|
|
|
|
|
(79
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2009
|
|
|
23,562
|
|
|
|
2,355
|
|
|
|
2,310
|
|
|
|
173,435
|
|
|
|
175,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 ordinary shares of HKD0.10
each at a price of HKD11.60 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.
|
|
Note b:
|
|
On 21 October 2009, the Company issued 693,912,264 ordinary shares of HKD0.10
each at a price of HKD11.17 per share in exchange for 40,730,735 Telefónica S. A.
(Telefónica) treasury shares at a price of Euro17.24 each. Please refer to Note 16 for
details.
|
|
Note c:
|
|
Pursuant to a special resolution passed at the extraordinary general meeting
held on 3 November 2009, the Company repurchased 899,745,075 shares, being all the shares
owned by SK Telecom Co., Ltd, by way of an off-market share repurchase. The total
consideration of HKD9,991,669,058, being HKD11.105 for each share, was satisfied in cash
upon completion. The total consideration of HKD9,991,669,058 (equivalent to
RMB8,801,661,273) was charged to retained profit. The repurchased shares were cancelled
subsequently.
|
|
|
|
In addition, pursuant to Section 49H of the Hong Kong Companies Ordinance, an amount
equivalent to the par value of the shares cancelled of HKD89,974,508 (equivalent to
RMB79,258,544) was transferred from share capital to the capital redemption reserve.
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
|
|
|
|
|
|
|
Available-
|
|
|
|
|
|
|
|
|
|
|
|
|
share-based
|
|
|
|
|
|
|
for-sale
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation
|
|
|
Revaluation
|
|
|
fair value
|
|
|
Statutory
|
|
|
Other
|
|
|
|
|
|
|
reserve
|
|
|
reserve
|
|
|
reserve
|
|
|
reserves
|
|
|
Reserve
|
|
|
Total
|
|
|
Balance
at 1 January 2008 (As previously reported)
|
|
|
516
|
|
|
|
1,113
|
|
|
|
|
|
|
|
17,933
|
|
|
|
56,713
|
|
|
|
76,275
|
|
Adjusted for 2009 Business
Combination under common control
(Note 1)
|
|
|
|
|
|
|
32
|
|
|
|
185
|
|
|
|
832
|
|
|
|
4,957
|
|
|
|
6,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2008 (As
restated)
|
|
|
516
|
|
|
|
1,145
|
|
|
|
185
|
|
|
|
18,765
|
|
|
|
61,670
|
|
|
|
82,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the year
|
|
|
|
|
|
|
|
|
|
|
(141
|
)
|
|
|
|
|
|
|
(29
|
)
|
|
|
(170
|
)
|
Effect of 2009 Business Combination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(201
|
)
|
|
|
2,062
|
|
|
|
1,861
|
|
Transfer to retained profits in
respect of depreciation on revalued
assets
|
|
|
|
|
|
|
(984
|
)
|
|
|
|
|
|
|
|
|
|
|
(70
|
)
|
|
|
(1,054
|
)
|
Transfer to statutory reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
886
|
|
|
|
|
|
|
|
886
|
|
Appropriation to statutory reserve
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,542
|
|
|
|
|
|
|
|
3,542
|
|
Equity-settled share option schemes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Value of employee services
|
|
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96
|
|
- Issuance of shares upon exercise of
options
|
|
|
(72
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
267
|
|
|
|
195
|
|
Issuance of shares for 2008 Business
Combination (Note 1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(103,101
|
)
|
|
|
(103,101
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2008 (As
restated)
|
|
|
540
|
|
|
|
161
|
|
|
|
44
|
|
|
|
22,992
|
|
|
|
(39,201
|
)
|
|
|
(15,464
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
|
|
|
|
|
|
|
Available-
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
share-based
|
|
|
|
|
|
|
for-sale
|
|
|
|
|
|
|
|
|
|
|
|
|
redemption
|
|
|
compensation
|
|
|
Revaluation
|
|
|
fair value
|
|
|
Statutory
|
|
|
Other
|
|
|
|
|
|
|
reserve
|
|
|
reserve
|
|
|
reserve
|
|
|
reserve
|
|
|
reserves
|
|
|
Reserve
|
|
|
Total
|
|
|
Balance at 1
January 2009 (As
previously
reported)
|
|
|
|
|
|
|
540
|
|
|
|
136
|
|
|
|
|
|
|
|
22,361
|
|
|
|
(46,220
|
)
|
|
|
(23,183
|
)
|
Adjusted for 2009
Business
Combination under
common control
(Note 1)
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
44
|
|
|
|
631
|
|
|
|
7,019
|
|
|
|
7,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1
January 2009 (As
restated)
|
|
|
|
|
|
|
540
|
|
|
|
161
|
|
|
|
44
|
|
|
|
22,992
|
|
|
|
(39,201
|
)
|
|
|
(15,464
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive
loss for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(38
|
)
|
|
|
|
|
|
|
|
|
|
|
(38
|
)
|
Consideration for
2009 Business
Combination under
common control
(Note 1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,896
|
)
|
|
|
(3,896
|
)
|
Transfer to
retained profits in
respect of
depreciation on
revalued assets
|
|
|
|
|
|
|
|
|
|
|
(55
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(55
|
)
|
Transfer to
statutory reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
490
|
|
|
|
|
|
|
|
490
|
|
Appropriation to
statutory reserve
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
769
|
|
|
|
|
|
|
|
769
|
|
Equity-settled
share option
schemes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Value of
employee services
|
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
Off-market share
repurchase (Note 8)
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
31 December 2009
|
|
|
79
|
|
|
|
567
|
|
|
|
106
|
|
|
|
6
|
|
|
|
24,251
|
|
|
|
(43,097
|
)
|
|
|
(18,088
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On 8 June 2007, the Group issued RMB2 billion 10-year corporate bonds, bearing interest
at 4.5% per annum. The corporate bonds are secured by a corporate guarantee granted by
Bank of China Limited.
|
|
|
|
|
On 3 September 2008, the Group issued another RMB5 billion 5-year corporate bonds,
bearing interest at 5.29% per annum. The corporate bonds are secured by a corporate
guarantee granted by State Grid Corporation of China.
|
26
11.
|
|
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
The aging analysis of payables and accrued liabilities is as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
(As restated)
|
|
|
|
|
|
|
|
|
|
|
Less than six months
|
|
|
90,983
|
|
|
|
56,238
|
|
Six months to one year
|
|
|
4,031
|
|
|
|
4,232
|
|
More than one year
|
|
|
9,058
|
|
|
|
7,039
|
|
|
|
|
|
|
|
|
|
|
|
|
104,072
|
|
|
|
67,509
|
|
|
|
|
|
|
|
|
12.
|
|
SHORT-TERM COMMERCIAL PAPER
|
|
|
|
CNC China issued RMB10 billion unsecured commercial paper with repayment periods of 365 days
on 6 October 2008 in the PRC capital market. The effective interest rate is 4.47% per annum.
The net cash proceeds raised in the PRC capital market were RMB10 billion. The commercial
paper were fully repaid on 8 October 2009.
|
|
13.
|
|
SHORT-TERM BANK LOANS
|
|
|
|
|
|
|
|
|
|
|
|
Interest rates and final maturity
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
RMB denominated bank loans
|
|
Fixed interest rates ranging
from 3.50% to 4.37% (2008: 4.54%
to 6.80%) per annum with
maturity through 2010 (2008: maturity through 2009)
|
|
|
|
|
|
|
- unsecured
|
|
|
|
|
55,104
|
|
|
10,780
|
|
|
|
|
|
|
|
|
|
HKD denominated bank loans
|
|
Floating interest rates of HKD
HIBOR plus interest margin 0.42%
for 2009 per annum with maturity
through 2010
|
|
|
|
|
|
|
- unsecured
|
|
|
|
|
8,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
63,909
|
|
|
10,780
|
|
|
|
|
|
|
|
|
|
27
The tariffs for the services provided by the Group are subject to regulations by various government
authorities, including the NDRC, the MIIT and the provincial price regulatory authorities.
Revenue from continuing operations is presented net of business tax and government surcharges.
Relevant business tax and government surcharges amounted to approximately RMB4,487 million for the
year ended 31 December 2009 (2008: approximately RMB4,598 million).
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
(As restated)
|
|
Continuing operations:
|
|
|
|
|
|
|
|
|
Mobile telecommunications service revenue
|
|
|
69,769
|
|
|
|
64,240
|
|
Fixed-line telecommunications service revenue
|
|
|
79,549
|
|
|
|
88,254
|
|
Unallocated telecommunications service revenue
|
|
|
275
|
|
|
|
337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total telecommunications service revenue
|
|
|
149,593
|
|
|
|
152,831
|
|
Information communication technology services and other revenue
|
|
|
2,189
|
|
|
|
5,062
|
|
Sales of telecommunications products
|
|
|
2,163
|
|
|
|
1,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153,945
|
|
|
|
159,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
(As restated)
|
|
Continuing operations:
|
|
|
|
|
|
|
|
|
Dividend income from available-for-sale financial assets
|
|
|
215
|
|
|
|
3
|
|
Gain on the non-monetary assets exchange
|
|
|
38
|
|
|
|
1,305
|
|
Others
|
|
|
709
|
|
|
|
789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
962
|
|
|
|
2,097
|
|
|
|
|
|
|
|
|
16.
|
|
MUTUAL INVESTMENT OF US$1 BILLION BY THE COMPANY AND TELEFÓNICA IN EACH OTHER
|
|
|
|
On 6 September 2009, the Company announced that in order to strengthen the cooperation between
the Company and Telefónica, the parties entered into a subscription agreement (Subscription
Agreement), pursuant to which each party conditionally agreed to invest an equivalent of USD1
billion in each other through an acquisition of each others shares. On 21 October 2009
(Completion Date), the Company and Telefónica completed the mutual investment of the
equivalent of USD1 billion in each other, which was implemented by way of the subscription by
Telefónica for 693,912,264 new shares of the Company at a price of HKD11.17 each, satisfied by
the contribution by Telefónica of 40,730,735 Telefónica treasury shares at a price of Euro17.24
each to the Company.
|
|
|
|
At the inception of the subscription agreement on 6 September 2009, the Companys agreement to
undertake the above mutual investment with Telefónica is treated as a derivative financial
instrument in accordance with IAS/HKAS 39 Financial instrument: Recognition and measurement as
it represents a forward contract for the purchase of shares by the Company and Telefónica in
each other at predetermined fixed prices and is denominated in a foreign currency. The
derivative financial instrument would be remeasured at fair value at each balance sheet date
with all subsequent changes in fair value being charged or credited to the statement of income
in the period when the change occurs until the completion of the mutual investment by the
Company and Telefónica in each other. Upon settlement of the derivative financial instrument on
completion of the mutual investment by the
|
28
|
|
Company and Telefónica in each other at the
Completion Date, 21 October 2009, the derivative financial instrument was
derecognised and an available-for-sale financial asset, representing the investment in the
Telefónica shares, was recognised correspondingly at the then fair value of the Telefónica
shares.
|
|
|
|
As at the Completion Date, 21 October 2009, the fair value of the Telefónica shares was
determined to be approximately RMB7,952 million and the changes in fair value of the derivative
financial instrument during the period from 6 September 2009 to 21 October 2009 resulted in a
fair value gain of approximately RMB1,239 million, which has been recorded as Realised gain on
changes in fair value of derivative financial instrument in the consolidated statement of
income for the year ended 31 December 2009.
|
|
|
|
As at 31 December 2009, the related available-for-sale financial asset amounted to approximately
RMB7,789 million. For the period from 21 October 2009 to 31 December 2009, loss on changes in
fair value of available-for-sale financial asset amounted to approximately RMB163 million. The
loss, net of tax impact of approximately RMB41 million, was recorded in the consolidated
statement of comprehensive income.
|
|
17
|
|
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. The gain on disposal, net of
corresponding income tax of approximately RMB9.0 billion, amounted to approximately RMB26.1
billion.
|
|
|
|
The net assets of the CDMA business as at the effective date of the disposal of the CDMA
business were as listed below:
|
|
|
|
|
|
|
|
|
|
Net assets disposed of:
|
|
Note
|
|
|
As at 1 October 2008
|
|
|
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
|
)
|
Accounts payable and accrued liabilities
|
|
|
|
|
|
|
(1,144
|
)
|
Advances from customers
|
|
|
|
|
|
|
(4,428
|
)
|
Minority interest
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,948
|
|
|
Fair value of future service agreed in the Disposal Agreement
|
|
|
|
|
|
|
517
|
|
Transaction cost and taxation
|
|
|
|
|
|
|
184
|
|
|
Income tax expense arising from the disposal of the CDMA business
|
|
|
|
|
|
|
9,016
|
|
Gain on disposal of the CDMA business recognised in the statement of
income
|
|
|
|
|
|
|
26,135
|
|
|
|
|
|
|
|
|
|
|
Cash consideration on disposal of the CDMA business
|
|
|
|
|
|
|
43,800
|
|
Less: Cash consideration receivable from disposal of the CDMA business
|
|
|
|
|
|
|
(13,140
|
)
|
Cash and cash equivalents transferred
|
|
|
|
|
|
|
(1,148
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow
|
|
|
|
|
|
|
29,512
|
|
|
|
|
|
|
|
|
|
Note (a):
|
|
The balance represents cash and cash equivalent of approximately RMB1,148 million
transferred and RMB3,464 million to be transferred to China Telecom in accordance with the
Disposal Agreement.
|
29
|
|
The results and cash flows of the CDMA business for the year ended 31 December 2008 are
presented as discontinued operations as follows:
|
|
|
|
|
|
|
|
Discontinued
|
|
|
|
operations of the
|
|
|
|
CDMA business
|
|
|
|
For the period from
|
|
|
|
1 January 2008 to
|
|
|
|
30 September 2008
|
|
|
|
(As restated)
|
|
|
Revenue
|
|
|
22,296
|
|
Expenses
|
|
|
(20,389
|
)
|
|
|
|
|
|
|
|
|
|
Profit from discontinued operations before income tax
|
|
|
1,907
|
|
Income tax expenses
|
|
|
(469
|
)
|
|
|
|
|
|
|
|
|
|
Profit for the period from discontinued operations
|
|
|
1,438
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of discontinued operations before income tax
|
|
|
35,151
|
|
Income tax expenses
|
|
|
(9,016
|
)
|
|
|
|
|
|
|
|
|
|
Gain on disposal of discontinued operations after income tax
|
|
|
26,135
|
|
|
|
|
|
|
|
|
|
|
Profit for the period from discontinued operations
|
|
|
27,573
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
|
|
|
|
operations of the
|
|
|
|
CDMA business
|
|
|
|
For the period from
|
|
|
|
1 January 2008 to
|
|
|
|
30 September 2008
|
|
|
Net cash inflow from operating activities
|
|
|
656
|
|
|
|
|
|
|
|
|
|
|
Net cash outflow from investing activities
|
|
|
(23
|
)
|
Cash inflow from disposal of discontinued operations
|
|
|
29,512
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow from investing activities
|
|
|
29,489
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow from discontinued operations
|
|
|
30,145
|
|
|
|
|
|
|
|
The net cash outflow of approximately RMB5,039 million for discontinued operations for the year
ended 31 December 2009 represents the income tax paid of approximately RMB9,190 million on the
gain on the disposal of the CDMA business in 2008 and related professional service fees paid of
approximately RMB139 million, offset by proceeds received of approximately RMB4,290 million from
the disposal of the CDMA business.
|
30
18.
|
|
DIVIDENDS
|
|
|
|
At the annual general meeting held on 26 May 2009, the shareholders of the Company approved the
payment of a final dividend of RMB0.20 per ordinary share for the year ended 31 December 2008
totaling approximately RMB4,754 million which has been reflected as a reduction of retained
profits for the year ended 31 December 2009. As at 31 December 2009, such dividends have been
paid by the Company, except for dividends payable of approximately RMB307 million and RMB24
million due to Unicom BVI and Netcom BVI, respectively.
|
|
|
|
At a meeting held on 24 March 2010, the Board of Directors of the Company proposed the payment
of a final dividend of RMB0.16 per ordinary share to the shareholders for the year ended 31
December 2009 totaling approximately RMB3,770 million. This proposed dividend has not been
reflected as a dividend payable in the financial statements as at 31 December 2009, but will be
reflected as an appropriation of retained profits in the financial statements for the year
ending 31 December 2010.
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
Proposed final dividend:
|
|
|
|
|
|
|
|
|
RMB0.16 (2008: RMB0.20) per ordinary share by the Company
|
|
|
3,770
|
|
|
|
4,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend paid:
|
|
|
|
|
|
|
|
|
By the Company
|
|
|
4,754
|
|
|
|
2,732
|
|
By China Netcom (Note a)
|
|
|
|
|
|
|
3,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,754
|
|
|
|
6,231
|
|
|
|
|
|
|
|
|
Note a:
|
|
Since the 2008 Business Combination is accounted for as a business combination of
entities under common control, accordingly, dividend paid include the dividends paid by
China Netcom as if it had always been part of the Group.
|
19.
|
|
EARNINGS PER SHARE
|
|
|
|
Basic earnings per share for the years ended 31 December 2009 and 2008 were computed by dividing
the profit attributable to equity holders by the weighted average number of ordinary shares
outstanding during the years, as adjusted by the number of ordinary shares in issue had the
merger with China Netcom been completed on 1 January 2008.
|
|
|
|
Diluted earnings per share for the years ended 31 December 2009 and 2008 were computed by
dividing the profit attributable to equity holders by the weighted average number of ordinary
shares outstanding during the years, as adjusted by the number of ordinary shares in issue had
the merger with China Netcom been completed on 1 January 2008, after adjusting for the effects
of the dilutive potential ordinary shares. All potential ordinary shares arose from (i) share
options granted under the amended Pre-Global Offering Share Option Scheme; (ii) share options
granted under the amended Share Option Scheme and (iii) share options granted under the amended
Special Purpose Share Option Scheme.
|
|
|
|
The potential ordinary shares which are not dilutive mainly arose from share options with
exercise price of HKD15.42 granted under the amended Pre-Global Offering Share Option Scheme and
amended Share Option Scheme and are excluded from the weighted average number of ordinary shares
for the purpose of computation of diluted earnings per share.
|
31
|
|
The following table sets forth the computation of basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
(As restated)
|
|
Numerator (in RMB millions):
|
|
|
|
|
|
|
|
|
Profit attributable to equity holders of the Company
|
|
|
|
|
|
|
|
|
- Continuing operations
|
|
|
9,556
|
|
|
|
7,825
|
|
- Discontinued operations
|
|
|
|
|
|
|
27,573
|
|
|
|
|
|
|
|
|
|
|
|
|
9,556
|
|
|
|
35,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator (in millions):
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares
outstanding used in computing basic earnings per
share
|
|
|
23,767
|
|
|
|
23,751
|
|
Dilutive equivalent shares arising from share options
|
|
|
128
|
|
|
|
190
|
|
|
|
|
|
|
|
|
|
Shares used in computing diluted earnings per share
|
|
|
23,895
|
|
|
|
23,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (in RMB)
|
|
|
|
|
|
|
|
|
- Continuing operations
|
|
|
0.40
|
|
|
|
0.33
|
|
- Discontinued operations
|
|
|
|
|
|
|
1.16
|
|
|
|
|
|
|
|
|
|
|
|
|
0.40
|
|
|
|
1.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (in RMB)
|
|
|
|
|
|
|
|
|
- Continuing operations
|
|
|
0.40
|
|
|
|
0.33
|
|
- Discontinued operations
|
|
|
|
|
|
|
1.15
|
|
|
|
|
|
|
|
|
|
|
|
|
0.40
|
|
|
|
1.48
|
|
|
|
|
|
|
|
|
32
20.
|
|
RELATED PARTY TRANSACTIONS
|
|
|
|
The following is a summary of significant recurring transactions carried out by the Group with
Unicom Group, Netcom Group and their subsidiaries. In the directors opinion, these transactions
were carried out in the ordinary course of business.
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
(As restated)
|
|
Transactions with Unicom Group, Netcom Group and their subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations:
|
|
|
|
|
|
|
|
|
Leasing fee of Telecommunications Networks in Southern China
|
|
|
2,000
|
|
|
|
|
|
Charges for mobile subscriber value-added service
|
|
|
122
|
|
|
|
153
|
|
Rental charges for premises, equipment and facilities
|
|
|
820
|
|
|
|
678
|
|
Charges for the international gateway services
|
|
|
5
|
|
|
|
7
|
|
Agency fee incurred for procurement of telecommunications equipment
|
|
|
12
|
|
|
|
21
|
|
Charge for engineering and information technology-related services
|
|
|
2,786
|
|
|
|
2,603
|
|
Common corporate services income
|
|
|
3
|
|
|
|
140
|
|
Charges for common corporate services
|
|
|
266
|
|
|
|
563
|
|
Rental income from properties
|
|
|
1
|
|
|
|
10
|
|
Purchases of materials
|
|
|
375
|
|
|
|
516
|
|
Charges for ancillary telecommunications support services
|
|
|
689
|
|
|
|
558
|
|
Charges for support services
|
|
|
273
|
|
|
|
461
|
|
Charges for lease of telecommunications facilities
|
|
|
148
|
|
|
|
306
|
|
Income from information communication technologies services
|
|
|
70
|
|
|
|
118
|
|
Income for engineering design and technical services
|
|
|
15
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
Charges for mobile subscriber value-added services
|
|
|
|
|
|
|
46
|
|
CDMA network capacity lease rental charges
|
|
|
|
|
|
|
6,009
|
|
Constructed capacity related cost of the CDMA network
|
|
|
|
|
|
|
234
|
|
|
|
Under HKFRSs and IFRSs, the 2009 Business Combination has been accounted for using merger
accounting/predecessor values method. Accordingly, the transactions between the Target Business
(See Note 1) and the Group were eliminated and not disclosed as related party transactions in
the consolidated financial statements.
|
|
21.
|
|
CONTINGENT LIABILITIES
|
|
|
|
As aforementioned in Note 14, the tariffs for the services provided by the Group are subject to
regulations by various government authorities. In 2008, the NDRC investigated the compliance
with tariffs regulations of several branches of CUCL and CNC China. Based on the managements
assessment and preliminary discussions with MIIT and NDRC, management considered that the Group
complied with the regulations issued by the relevant government authorities, and the likelihood
of a cash outflow as a result of the investigation is remote. Accordingly, no provisions were
recorded as at 31 December 2009 and 2008.
|
33
22.
|
|
EVENTS AFTER BALANCE SHEET DATE
|
|
(a)
|
|
Proposed dividend
|
|
|
|
After the balance sheet date, the Board of Directors proposed a final dividend for 2009. For
details, please refer to Note 18.
|
|
(b)
|
|
Issue of commercial paper
|
|
|
|
On 23 March 2010, CUCL announced that it will launch the issue of the first tranche of
commercial paper for the year 2010 of an amount of RMB15 billion on 30 March 2010.
|
|
23.
|
|
COMPARATIVE FIGURES
|
|
|
|
As stated in Note 3(a), the 2008 comparative figures have been restated to reflect the effects
of the 2009 Business Combination between entities and businesses under common control, which
is accounted for using merger accounting/predecessor values method. In addition, upon the
adoption of IFRS/HKFRS 8 Operating Segment in 2009, the 2008 comparative financial
information of segment information has been restated to conform to the current years
presentation. For details, please refer to Note 4.
|
BUSINESS OVERVIEW
In 2009, the Company continued various business integrations, deployed a full range of
telecommunications services, focused on 3G infrastructure construction and operation, significantly
upgraded broadband bandwidths. Overall, the Companys various businesses continued to develop
steadily.
Mobile Business
GSM Business
In 2009, the Company continued to develop different businesses in a coordinated manner. In
particular, the Company enhanced the product integration of its fixed-line and mobile businesses to
capture new subscribers while retaining existing subscribers. Overall, the GSM business maintained
a steady growth. As at 31 December 2009, the total number of GSM subscribers reached 144.845
million, representing a net increase of 11.48 million, up by 8.6% from 2008. In 2009, the total GSM
voice usage reached 423.05 billion minutes, up by 12.3% from 2008; the average minutes of use (MOU)
was 252.0 minutes, up by 2.3% from 2008; the average revenue per user (ARPU) was RMB41.2, down by
2.4% from 2008.
In 2009, the Company continued to develop value-added services (VAS) and mobile data businesses,
improved the penetration of the Cool Ringtone and GPRS services and sustained a rapid growth of
GSM VAS business. As at 31 December 2009, the total number of Cool Ringtone subscribers was 49.22
million, representing a net increase of 5.093 million, and the penetration rate grew from 33.1% as
at the end of 2008 to 34.0%; the total number of GPRS subscribers was 44.789 million, representing
a net increase of 13.565 million, up by 43.4%, and the penetration rate grew from 23.4% as at the
end of 2008 to 30.9%.
34
3G Business
On 1 October 2009, the Company started operating 3G business on a commercial basis. The Company
currently aims to gain a leading position in the 3G network, service and business in China, with a
set of strategies, including unifying the brands, services, tariffs, packaging, handset policies,
and customer care. In addition, the Company introduced M/T content billing model and automatic
tariff package upgrade for 3G data card subscribers. As at 31 December 2009, the Company provided
3G services in 335 cities across China. Targeting subscribers who demand for mobile Internet
services, the Company promoted 3G services such as mobile Internet, mobile music, mobile TV, video
handsets, mobile newspapers, and 3G data cards. In partnership with Apple Inc., the Company
commenced the sale of iPhones to support the development of 3G high-end users. Furthermore, the
Company built a nationwide unified e-sales service system to support the development of its 3G
business. As at the end of 2009, the Companys 3G subscribers in China reached 2.742 million, of
which, 3G data card subscribers reached 0.448 million. In 2009, the total 3G voice usage reached
3.06 billion minutes, and ARPU was RMB141.7.
Fixed-line Business
Fixed-line Broadband and Data Communication Businesses
In 2009, the Company expedited the development of broadband upgrade and content applications,
implemented differentiated selling and marketing strategies. The Company also pushed forward the
development of Home Gateway, increased the proportion of high-speed bandwidth subscribers, and
maintained a rapid growth of the fixed-line broadband business. As at 31 December 2009, the total
number of fixed-line broadband subscribers was 38.55 million subscribers, representing a net
increase of 8.469 million, up by 28.2% from the end of 2008, of which, subscribers with
2M-and-above bandwidth accounted for 83.2% of all fixed-line broadband subscribers, representing an
increase of 21.3 percentage points from the end of 2008. The total number of subscribers of
broadband content and applications reached 8.157 million, accounting for 21.2% of all fixed-line
broadband subscribers. ARPU of fixed-line broadband was RMB57.2, down by 10.0% from 2008.
Traditional Fixed-line Business
In 2009, the Company utilized its full-service advantage, actively developed fixed-line voice VAS
products, and endeavored to mitigate the contraction of its traditional fixed-line business through
bundling service products and promoting voice packages. As at 31 December 2009, the total number of
local access subscribers decreased by 6.748 million to 102.822 million, down by 6.2% from the end
of 2008. The total number of subscribers of personalized ring was 26.631 million, down by 11.5%
from the end of 2008; the penetration rate of Caller ID service was 71.4%, declined by 1.2
percentage points; the total number of subscribers of phone navigation was 0.799 million, up by
72.9% from the end of 2008. In 2009, the total local voice usage (excluding Internet dial-up usage)
was 185.54 billion pulses, down by 8.9% from 2008; MOU was 145.4 minutes, down by 1.1% year over
year; ARPU was RMB31.4, down by 11.2% from 2008.
Network Capacity
In 2009, the Company continued to strengthen its mobile and broadband network capacity. As at 31
December 2009, the Companys WCDMA network coverage extended to 335 cities across China, with a
total number of 107,000 base stations, and 56,000 sets of indoor coverage systems.
35
The Company continued to expand its GSM network coverage, to improve the operation quality of its
networks. As at 31 December 2009, the GSM network switching capacity increased by 56.7% from 2008,
and the number of GSM base stations increased by 36.7% from the end of 2008. The call-completion
rate of GSM networks increased from 94.2% at the beginning of 2009 to 96.2%. The call-drop rate
decreased from 0.52% at the beginning of 2009 to 0.41%.
As the Company continued to implement the broadband upgrade project, it has significantly improved
the fixed-line broadband network capacity. As at 31 December 2009, the total number of IP access
ports increased by 38.3% from the end of 2008, of which, the number of access ports with an access
speed of 2M and above accounts for 96.8%, representing an increase of 32.8 percentage points from
64% at the end of 2008; international Internet outbound bandwidth increased by 148%;
interconnection bandwidth with China Telecom increased by 49.3%; and backbone trunk bandwidth
increased by 69.0% from the end of 2008.
In addition, the Company continued to promote network integration and launched the pre-commercial
trial operation of GPON, 40GWDM; optimized and upgraded the transmission networks, improved the
capacity and security of the IP networks; enhanced international network sharing and communication
capacity. The Company added 35 outbound direct routes; international Internet outbound bandwidth
reached 310Gb/s; submarine cable capacity reached 1,110G and international cross-continental cable
capacity reached 1,882G.
Sales and Marketing
Branding
In 2009, the Company implemented the strategy to consolidate various brands, and established and
launched a single unified brand WO for its full range of telecommunications services. As the
Company promoted the 3G business, it also improved the brand recognition of WO. In 2009, the
Company also established a total of 303 3G flagship stores, which contributed to enhance the
customers experience and the Companys corporate image.
Sales and Marketing Channels
In 2009, the Company continued to integrate and optimize its distribution channels for its full
range of telecommunications services, developed its self-owned distribution channels and improved
the sales capability of those channels. As a result, the percentage of new subscribers developed
from self-owned channels increased from 19.2% at the beginning of the year to 28.0%. In addition,
the Company reduced the hierarchy for the management of independent channels for more effective
control. The Company also continued to promote the unified e-sales distribution system, which has
been expanded nationwide. The innovative e-sales channels divert the pressure from the traditional
sales channels, and improve the Companys service quality.
Customer Service
In 2009, the Company continued to push forward the integration of customer service centers and
established a nationwide and unified customer care system for its full-range telecommunication
businesses. The Company also unified the customer service and distribution standards across the
country, consolidated the customer service hotlines and began providing the subscribers one-stop
shop customer service for the full range of telecommunications services.
36
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
I. OVERVIEW
2009 was the first year that the Company has a full year operation after its reorganisation. The
Company accelerated the development of 3G network construction, actively developed full-service
operation, effectively deepened enterprise integration, and achieved an overall stable development
of business. In 2009, the Groups revenue reached RMB153.95 billion, profit for the year was
RMB9.56 billion and basic earnings per share was RMB0.402. Excluding the effects of the deferred
fixed-line upfront connection fees, revenue for the year would be RMB153.46 billion, of which,
telecommunications service revenue would be RMB149.10 billion, down by 1.2% compared with last year
(Note 2). Excluding the effects of non-comparable factors including deferred fixed-line upfront
connection fees, gain from the non-monetary assets exchange, realised gain on changes in fair value
of derivative financial instrument, lease fee for the telecommunications networks of 21 provinces
in Southern China (the adjustment to exclude the above items is referred to herein below as the
Adjustment or Adjusted), profit for the year after the Adjustment (Note 3) would be RMB9.61
billion, down by 35.2% compared with last year. Adjusted EBITDA (Note 4) would be RMB60.12 billion,
down by 12.4% compared with last year.
In 2009, the liabilities-to-assets ratio (Note 5) increased from 40.4% as at 31 December 2008 to
50.5% as at 31 December 2009. Net cash flows from operating activities was RMB57.73 billion.
Capital expenditure increased to RMB112.47 billion as a result of significant increase in
expenditures on 3G network construction. Free cash flow (representing net cash flows from operating
activities minus capital expenditures) was RMB-54.74 billion.
II. REVENUE
In 2009, faced with various challenges, including global financial crisis, intenisifed
telecommunications market competition, further downward adjustments in tariffs and decline of
traditional fixed-line business, the Company maintained stable income by proactively developing
full-service operation with a focus on mobile and broadband business development. Excluding the
effect of RMB0.49 billion deferred fixed-line upfront connection fees, revenue for the year would
be RMB153.46 billion, of which, telecommunications service revenue accounted for RMB149.10 billion,
down by 1.2% compared with last year.
37
The table below sets forth the changes in the composition of telecommunications service revenue and
the percentage of total telecommunications service revenue constituted by each of the Groups
operating segments for the years of 2008 and 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As restated)
|
|
|
|
2009
|
|
|
(Note 1)
|
|
|
|
|
|
|
|
As a
|
|
|
|
|
|
|
As a percentage of
|
|
|
|
|
|
|
|
percentage of
|
|
|
|
|
|
|
telecommuni-
|
|
|
|
|
|
|
|
telecommuni-
|
|
|
|
|
|
|
cations
|
|
|
|
Total
|
|
|
cations service
|
|
|
Total
|
|
|
service
|
|
(RMB in millions)
|
|
amount
|
|
|
revenue
|
|
|
amount
|
|
|
revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications service revenue (Note 2)
|
|
|
149,104
|
|
|
|
100.0
|
%
|
|
|
150,954
|
|
|
|
100.0
|
%
|
Include: Mobile business
|
|
|
69,769
|
|
|
|
46.8
|
%
|
|
|
64,240
|
|
|
|
42.6
|
%
|
Fixed-line business
|
|
|
79,059
|
|
|
|
53.0
|
%
|
|
|
86,376
|
|
|
|
57.2
|
%
|
Include: Broadband service
|
|
|
23,898
|
|
|
|
16.0
|
%
|
|
|
20,962
|
|
|
|
13.9
|
%
|
|
1.
|
|
Mobile Business
|
|
|
|
In 2009, the Company continued to maintain a steady growth in mobile business. Revenue from
mobile business was RMB72.21 billion, of which, telecommunications service revenue accounted
for RMB69.77 billion, up by 8.6% compared with last year. The number of mobile subscribers
reached 147.587 million as at the end of 2009 with a net addition of 14.222 million
subscribers from the end of 2008, including a net addition of 2.742 million 3G subscribers.
Monthly average revenue per user (ARPU) of GSM business decreased from RMB42.3 in 2008 to
RMB41.2 in 2009. ARPU of 3G business was RMB141.7.
|
|
|
|
In 2009, the Company proactively improved value-added services and promoted mobile data
business, and continued to improve the penetration of SMS, GPRS and Cool Ringtone services.
Value-added services revenue from mobile business amounted to RMB19.07 billion, up by 17.3%
compared with last year and as a percentage of the telecommunications service revenue,
increased from 25.3% in 2008 to 27.3% in 2009.
|
|
2.
|
|
Fixed-line Business
|
|
|
|
In 2009, the Company proactively adjusted its fixed-line business structure, further developed
fixed-line broadband business and innovative business. The Company also endeavored to mitigate
the declining trend of the traditional fixed-line voice business. Excluding the effect of
deferred fixed-line upfront connection fees, revenue from the fixed-line business would reach
RMB85.10 billion in 2009, of which, telecommunications service revenue would be RMB79.06
billion, down by 8.5% compared with last year.
|
|
|
|
As a result of downward adjustments of tariffs between fixed-line interconnection and the
decline of Personal Handyphone System (PHS) business, the Companys revenue from local
telephone business continued to decrease and the Company continued to experience a significant
loss of local telephone subscribers, despite of the Companys effort in mitigating the
declining trend of the traditional fixed-line business by taking advantage of full-service
operation and offering bundle services and voice packages. The net reduction of local
|
38
|
|
telephone subscribers for the year was 6.748 million and the aggregate number of local
telephone subscribers was 102.822 million at the end of 2009. ARPU of the local telephone
business decreased from RMB35.4 in 2008 to RMB31.4 in 2009. Revenue from local telephone
business was RMB40.69 billion, down by 16.3% compared with last year.
|
|
|
|
The Companys fixed-line broadband business continued to maintain a rapid growth. With the
Companys effort on increasing broadband access speed, enriching the application content,
adopting diversified selling strategies, speeding up subscribers development and stabilizing
subscribers APRU, net addition of broadband subscribers was 8.469 million in 2009 and the
aggregate number of subscribers reached 38.550 million at the end of 2009. ARPU of broadband
business decreased from RMB63.6 in 2008 to RMB57.2 in 2009. Service revenue from broadband
business reached RMB23.90 billion, up by 14.0% compared with last year and as a percentage of
the telecommunications service revenue from fixed-line business, increased from 24.3% in 2008
to 30.2% in 2009.
|
39
III. COSTS AND EXPENSES AND OTHERS
In 2009, total costs and expenses and others (including finance costs, interest income, other
income-net, realised gain on changes in fair value of derivative financial instrument) amounted to
RMB141.67 billion.
The table below sets forth the items of costs and expenses and others and their respective
percentage of the corresponding telecommunications service revenue after the Adjustment for the
years of 2008 and 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
(As restated)
|
|
|
|
2009
|
|
|
(Note 1)
|
|
|
|
|
|
|
|
As a percentage
|
|
|
|
|
|
|
As a percentage of
|
|
|
|
|
|
|
|
of telecommuni-
|
|
|
|
|
|
|
telecommuni-
|
|
|
|
|
|
|
|
cations service
|
|
|
|
|
|
|
cations service
|
|
|
|
|
|
|
|
revenue after
|
|
|
Total
|
|
|
revenue after
|
|
(RMB in millions)
|
|
Total amount
|
|
|
the Adjustment
|
|
|
amount
|
|
|
the Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
141,668
|
|
|
|
95.0
|
%
|
|
|
150,139
|
|
|
|
98.8
|
%
|
Include: Interconnection charges
|
|
|
12,955
|
|
|
|
8.7
|
%
|
|
|
13,038
|
|
|
|
8.6
|
%
|
Depreciation and amortisation
|
|
|
47,587
|
|
|
|
31.9
|
%
|
|
|
47,961
|
|
|
|
31.6
|
%
|
Networks, operations and support expenses
|
|
|
21,728
|
|
|
|
14.6
|
%
|
|
|
18,736
|
|
|
|
12.3
|
%
|
Leasing fee for telecommunications networks
in Southern China
|
|
|
2,000
|
|
|
|
1.3
|
%
|
|
|
|
|
|
|
|
|
Employee benefit expenses
|
|
|
21,931
|
|
|
|
14.7
|
%
|
|
|
20,758
|
|
|
|
13.7
|
%
|
Selling and marketing expenses
|
|
|
21,020
|
|
|
|
14.1
|
%
|
|
|
19,614
|
|
|
|
12.9
|
%
|
Cost in relation to information
communication technology services
|
|
|
839
|
|
|
|
0.6
|
%
|
|
|
3,010
|
|
|
|
2.0
|
%
|
General, administrative and other expenses
|
|
|
12,175
|
|
|
|
8.2
|
%
|
|
|
12,968
|
|
|
|
8.5
|
%
|
Cost of telecommunications products sold
|
|
|
2,689
|
|
|
|
1.8
|
%
|
|
|
2,156
|
|
|
|
1.4
|
%
|
Finance costs, net of interest income
|
|
|
945
|
|
|
|
0.6
|
%
|
|
|
2,158
|
|
|
|
1.4
|
%
|
Impairment loss on property, plant and
equipment
|
|
|
|
|
|
|
|
|
|
|
11,837
|
|
|
|
7.8
|
%
|
Realised gain on changes in fair
value of derivative financial
instrument
|
|
|
-1,239
|
|
|
|
-0.8
|
%
|
|
|
|
|
|
|
|
|
Other income-net
|
|
|
-962
|
|
|
|
-0.7
|
%
|
|
|
-2,097
|
|
|
|
-1.4
|
%
|
40
1.
|
|
Interconnection charges
|
|
|
|
The interconnection charges amounted to RMB12.96 billion in 2009, down by 0.6% compared with
last year and as a percentage of telecommunications service revenue after the Adjustment,
would be increased from 8.6% in 2008 to 8.7% in 2009.
|
|
2.
|
|
Depreciation and amortisation
|
|
|
|
In the fourth quarter of 2009, depreciation and amortization charges of 3G network assets
increased by RMB0.65 billion. As a result of the provision of the impairment loss on the PHS
service related equipment in 2008 and partly due to the full depreciation of certain property,
plant and equipment, depreciation and amortisation charges of 2009 amounted to RMB47.59
billion, down by 0.8% compared with last year, and as a percentage of telecommunications
service revenue after the Adjustment, would be up from 31.6% in 2008 to 31.9% in 2009.
|
|
3.
|
|
Networks, operations and support expenses
|
|
|
|
Due to various factors including the launch of 3G services, the expansion of GSM networks
facilities and base stations and the increases in utilities charges and repair and maintenance
expenses, the Company incurred networks, operations and support expenses of RMB21.73 billion
in 2009, up by 16.0% compared with last year. Networks, operations and support expenses as a
percentage of telecommunications service revenue after the Adjustment would be 14.6%, up by
2.3 percentage points compared with last year. As a result of network resources sharing and
utilization of synergies, the lease fee for telecommunications networks was RMB1.19 billion,
down by 22.6% from 2008.
|
|
4.
|
|
Leasing fee for telecommunications networks in Southern China
|
|
|
|
The Company completed an acquisition of business of 21 provinces in Southern China in January
2009. As the telecommunications networks of 21 provinces in Southern China are owned by Unicom
New Horizon, the Company operated those networks through an operating lease from Unicom Group
from January 2009. As a result, the Company incurred lease fee of RMB2.00 billion for those
telecommunications networks in 2009.
|
|
5.
|
|
Employee benefit expenses
|
|
|
|
Due to various factors, such as increased employee insurance premium expenses and housing fund
resulting from regulation and improved social average wages in China, employee benefit
expenses in 2009 amounted to RMB21.93 billion, up by 5.7% compared with last year and as a
percentage of telecommunications service revenue after the Adjustment would be 14.7%, up by
1.0 percentage point from 2008.
|
|
6.
|
|
Selling and marketing expenses
|
|
|
|
Since the commercial launch of 3G business from 1 October 2009, the Company engaged in active
advertising campaign and marketing promotion, which resulted in a total selling and marketing
expenses for the fourth quarter of 2009 of RMB1.17 billion. In 2009, selling and marketing
expenses reached RMB21.02 billion, up by 7.2% compared with last year and as a percentage of
telecommunications service revenue after the Adjustment would be 14.1%, up by 1.2 percentage
points from last year.
|
41
7.
|
|
Cost in relation to information communication technology services
|
|
|
|
The Company adjusted the development strategy in relation to information communication
technology business by focusing on the provision of technology services and reducing in
hardware sales. As a result, cost in relation to information communication technology in 2009
was RMB0.84 billion, down by 72.1% from last year. Correspondingly, revenue from information
communication technology services in 2009 was RMB1.04 billion, down by 71.9% from last year.
|
|
8.
|
|
General, administrative and other expenses
|
|
|
|
As the Company effectively utilized the synergy and closely monitored the growth of general
and administrative expenses, general, administrative and other expenses was RMB12.18 billion
in 2009, down by 6.1% compared with last year, and as a percentage of telecommunications
service revenue after the Adjustment would be 8.2%, down by 0.3 percentage points from last
year.
|
|
9.
|
|
Cost of telecommunications products sold
|
|
|
|
As affected by the increases in the number of mobile handsets sold and handsets subsidies
after the commercial launch of 3G business, the cost of telecommunications products sold
amounted to RMB2.69 billion, up by 24.7% compared with last year. Correspondingly, revenue
from sale of telecommunications products in 2009 amounted to RMB2.16 billion, up by 13.9%
compared with last year.
|
|
10.
|
|
Finance costs, net of interest income
|
|
|
|
The Company further improved its debts structure through enhancing the centralisation of fund
management and fund operation and actively obtained low-cost fund raising sources. As a result
of such efforts and the reduction of base lending rate and the increase in the amount of
capitalized interest related to the construction undertaken by the Company in 2009, the
Companys finance costs, net of interest income decreased from RMB2.16 billion in 2008 to
RMB0.94 billion in 2009, down by 56.2%.
|
|
11.
|
|
Impairment loss on property, plant and equipment
|
|
|
|
After the completion of the merger with China Netcom, management considered the Groups
strategy regarding the PHS services business at the end of 2008 and expected to have an
economic impact from gradually phasing out this operation over the subsequent 3 years. The
test for impairment was therefore conducted for the PHS services related equipment.
Accordingly, the Group recognised an impairment loss on PHS services related equipment of
approximately RMB11.837 billion for the year ended 31 December 2008.
|
|
|
|
As at 31 December 2009, management updated the impairment analysis for the PHS services
related equipment and concluded there was no need for additional recognition or reversal of
the impairment loss on PHS services related equipment.
|
42
12.
|
|
Other income-net
|
|
|
|
In 2009, other income, net was RMB0.96 billion, down by 54.1% compared with last year, of
which, gain on non-monetary assets exchanged was RMB0.04 billion, down by RMB1.27 billion
compared with last year.
|
|
13.
|
|
Realised gain on changes in fair value of derivative financial instrument
|
|
|
|
In order to strengthen the cooperation between the Company and Telefónica S.A. (Telefónica),
the parties entered into a subscription agreement on 6 September 2009, pursuant to which each
party conditionally agreed to invest an equivalent of USD1 billion in each other through an
acquisition of each others shares. On 21 October 2009 (completion date) the Company and
Telefónica completed the mutual investment. At the inception of the subscription agreement on
6 September 2009, the Companys agreement to undertake the above mutual investment with
Telefónica is treated as a derivative financial instrument in accordance with IAS/HKAS 39
Financial instrument: Recognition and measurement as it represents a forward contract for
the purchase of shares by the Company and Telefónica in each other at predetermined fixed
prices and is denominated in a foreign currency. The derivative financial instrument was
derecognised upon completion. The changes in the fair value of the derivative financial
instrument during the period from 6 September 2009 to 21 October 2009 resulted in a fair value
gain of approximately RMB1.239 billion, which has been recorded in the consolidated statement
of income for the year ended 31 December 2009.
|
IV. EARNINGS
1.
|
|
Profit before income tax
|
|
|
|
In 2009, the Companys profit before income tax was RMB12.28 billion, up by 27.2% compared
with last year, mainly due to the Companys provision for impairment loss on PHS service
related equipment in 2008. Profit from continuing operations before income tax after the
Adjustment (Note 3) would be RMB12.51 billion, down by 35.2% compared with last year. Such
decresase is mainly caused by the decline of fixed-line voice business and initial development
of 3G business, in respect of which the related revenue is not sufficient to cover the
increased costs and expenses, including depreciation and amortization charges, networks,
operations and support expenses and selling and marketing expenses.
|
|
2.
|
|
Income tax
|
|
|
|
The Companys income tax was RMB2.72 billion and the effective tax rate in 2009 was 22.2%.
Effective tax rate after the Adjustment (Note 3) would be 23.2%.
|
|
3.
|
|
Profit for the year
|
|
|
|
In 2009, the Companys profit from continuing operations reached RMB9.56 billion, up by 22.1%
compared with last year. Basic earnings per share was RMB0.402. Profit from continuing
operations after the Adjustment (Note 3) would be RMB9.61 billion, down by 35.2% compared on
the same basis with last year.
|
43
V. ADJUSTED EBITDA
The Companys adjusted EBITDA from continuing operations would be RMB60.12 billion in 2009, down by
12.4% compared with last year. Adjusted EBITDA margin from continuing operations (adjusted EBITDA
as a percentage of the total revenue excluding deferred fixed-line upfront connection fees) would
be 39.2%, down by 4.0 percentage compared with last year.
VI. CAPITAL EXPENDITURE AND CASH FLOWS
Capital expenditure of the Company totaled RMB112.47 billion in 2009, which mainly consisted of
investments in the GSM, 3G, broadband and data, transmission and IT network infrastructure. In
2009, capital expenditure attributable to 3G cellular business was RMB36.40 billion. Capital
expenditure attributable to GSM cellular business was RMB20.58 billion. Capital expenditure
attributable to broadband and data business was RMB18.80 billion. Capital expenditure attributable
to infrastructure and transmission network was RMB25.01 billion. Capital expenditure attributable
to IT system was RMB6.74 billion.
In 2009, the Companys net cash inflow from operating activities was RMB57.73 billion while capital
expenditure was RMB112.47 billion which was resulted from a significant increase in capital
expenditure attributable to 3G network construction. Free cash flow was RMB-54.74 billion.
The table below sets forth the major items of capital expenditure in 2009 and the planned capital
expenditure in 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2010
|
RMB (in billions)
|
|
Total amount
|
|
|
As
percentage
|
|
Total amount
|
|
|
As
percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
112.47
|
|
|
|
100.0
|
%
|
|
|
73.50
|
|
|
|
100.0
|
%
|
Include: 3G cellular business
|
|
|
36.40
|
|
|
|
32.4
|
%
|
|
|
23.00
|
|
|
|
31.3
|
%
|
GSM cellular business
|
|
|
20.58
|
|
|
|
18.3
|
%
|
|
|
8.00
|
|
|
|
10.9
|
%
|
Fixed-line telephone business
|
|
|
0.60
|
|
|
|
0.5
|
%
|
|
|
0.60
|
|
|
|
0.8
|
%
|
Broadband and data business
|
|
|
18.80
|
|
|
|
16.7
|
%
|
|
|
15.30
|
|
|
|
20.8
|
%
|
Innovation and value-added platform
|
|
|
2.08
|
|
|
|
1.8
|
%
|
|
|
2.70
|
|
|
|
3.7
|
%
|
IT system
|
|
|
6.74
|
|
|
|
6.0
|
%
|
|
|
4.30
|
|
|
|
5.9
|
%
|
Infrastructure and transmission
network
|
|
|
25.01
|
|
|
|
22.2
|
%
|
|
|
17.40
|
|
|
|
23.7
|
%
|
Others
|
|
|
2.26
|
|
|
|
2.0
|
%
|
|
|
2.20
|
|
|
|
3.0
|
%
|
The Companys planned capital expenditure for 2010 is estimated to be approximately RMB73.5
billion. Capital expenditure for expansion of 3G network coverage is estimated to be approximately
RMB23.0 billion. Capital expenditure for the GSM cellular business is estimated to be approximately
RMB8.0 billion. Capital expenditure for broadband and data business is estimated to be
approximately RMB15.3 billion. Capital expenditure for infrastructure and transmission network is
estimated to be approximately RMB17.4 billion. Capital expenditure for IT system is estimated to be
approximately RMB4.3 billlion. Capital expenditure for innovation and value-added platform is
estimated to be approximately RMB2.7 billion.
44
VII. BALANCE SHEET
As a result of increase in capital expenditure on construction of 3G network, the Companys total
assets increased from RMB348.75 billion as at 31 December 2008 to RMB417.05 billion as at 31
December 2009. Total liabilities increased from RMB141.03 billion as at 31 December 2008 to
RMB210.58 billion as at 31 December 2009. The liabilities-to-assets ratio increased from 40.4% as
at 31 December 2008 to 50.5% as at 31 December 2009. The debt-to-capitalisation ratio (Note 6)
increased from 12.6% as at 31 December 2008 to 26.5% as at 31 December 2009.
As at 31 December 2009, the Group had net current liabilities (i.e. current assets minus current
liabilities) of RMB169.21 billion, representing an increase of RMB79.41 billion, compared with
RMB89.80 billion as at 31 December 2008. This increase is mainly caused by increase in short-term
borrowings and accounts payable. Taking into consideration of the Companys stable net cash inflows
from its operating activities and its good credit record, the Company believes that it should have
sufficient funds to meet its needs for working capital.
Note 1:
|
|
The Company completed an acquisition of fixed-line business
across the 21 provinces in Southern China, and the three
subsidiaries in January 2009, which was accounted for in
accordance with Accounting Guideline 5 Merger accounting for
common control combinations (AG 5) issued by the Hong Kong
Institute of Certified Public Accountants (HKICPA) in
November 2005 by applying merger accounting. Under the IFRS,
the accounting policy to account for business combination of
entities and businesses under common control using the
predecessor values method which is consistent with HKFRS. The
acquired assets and liabilities are stated at historical
cost, and are included in the consolidated financial
statements from the beginning of the earliest period
presented as if the entities and businesses acquired had
always been a part of the Group.
|
|
Note 2:
|
|
In order to ensure the comparability of revenue amounts, the
non-comparable factors below which are reflected in the
figures of current year and last year are therefore excluded
for additional analysis purpose:
|
|
(1)
|
|
deferred fixed-line upfront connection fees of RMB0.49 billion for 2009 and
RMB0.89 billion for 2008; and
|
|
|
(2)
|
|
interconnection revenue of RMB0.99 billion between certain fixed-line
business and the discontinued operations of CDMA business for 2008.
|
Note 3:
|
|
In order to ensure the comparability of profit before tax and profit for the year, the
non-comparable factors below which are reflected in the figures of current year and last year
are therefore excluded for additional analysis purpose:
|
|
(1)
|
|
deferred fixed-line upfront connection fees of RMB0.49 billion for 2009 and
RMB0.89 billion for 2008;
|
|
|
(2)
|
|
gain of RMB0.04 billion from the non-monetary assets exchange for 2009 and
RMB1.31 billion for 2008;
|
|
|
(3)
|
|
the lease fee of RMB2.00 billion for the telecommunications networks of 21
provinces in Southern China for 2009 (The Company completed the acquisition of
fixed-line business across the 21 provinces in Southern China, backbone assets in
Northern China and the three subsidiaries in January 2009. The underlying network
assets of 21 provinces in Southern China are owned by Unicom New Horizon after the
acquisition, and have been operated by the Company under operating lease from Unicom
New Horizon since 2009. Since the comparative figures of 2008 include all fixed-line
business revenue and operating costs of the telecommunications network of Southern
China, but not the depreciation and amortization of the underlying network assets,
finance costs attributable to construction of the network and the lease fee for the
telecommunications networks of 21 provinces in Southern China, the figures for 2009
therefore exclude this lease fee.);
|
45
|
(4)
|
|
realised gain of RMB1.24 billion on changes in fair value of derivative
financial instrument in 2009; and
|
|
|
(5)
|
|
impairment loss of RMB11.84 billion on PHS service related equipment in
2008.
|
Note 4:
|
|
EBITDA represents profit for the year before interest income, finance costs, other
income-net, income tax, depreciation and amortisation. As the telecommunications business is a
capital intensive industry, capital expenditures and finance costs may have a significant
impact on the net profit of the companies with similar operating results. Therefore, the
Company believes that EBITDA may be helpful in analyzing the operating results of a
telecommunications service operator like our Group.
|
|
|
|
Adjusted EBITDA represents EBITDA excluding non-comparable factors such as deferred
fixed-line upfront connection fees, lease fee for the telecommunications networks of 21
provinces in Southern China, realised gain on changes in fair value of derivative
financial instrument and impairment loss on PHS service related equipment in 2008. From
the perspective of cash flow and continuing operation, the above non-comparable factors
are not considered as the Companys operating performance, the Company therefore believes
that adjusted EBITDA excluding the above non-comparable factors could not only provide
more meaningful supplemental information to management and investors, but also facilitate
them to evaluate the Companys performance and liquidity.
|
|
|
|
Although EBITDA and adjusted EBITDA have been widely applied in the global
telecommunications industry as indicators to reflect operating performance, financial
capability and liquidity, they should be considered in addition to, and are not
substitute for or superior to, the measure of financial performance prepared under
generally accepted accounting principles (GAAP) as they do not have any standardised
meaning under GAAP. In addition, they may not be comparable to similar indicators
provided by other companies.
|
|
Note 5:
|
|
Liabilities-to-assets ratio represents total liabilities over total assets.
|
|
Note 6:
|
|
Debt-to-capitalisation ratio represents interest bearing debts plus minority interest over interest bearing debts plus
total equity.
|
EMPLOYEE AND REMUNERATION POLICY
As at 31 December 2009, the Group had approximately 216,600, 190 and 40 employees in Mainland
China, Hong Kong and other countries, respectively. Furthermore, the Group had approximately
105,000 temporary employees in Mainland China. For the year ended 31 December 2009, employee
benefit expenses were approximately RMB21.931 billion (for the year ended 31 December 2008:
RMB20.758 billion). The Group endeavors to maintain its employees remuneration in line with the
market trend and to remain competitive. Employees remuneration is determined in accordance with
the Groups remuneration and bonus policies based on their performance. The Group also provides
comprehensive benefit packages and career development opportunities for its employees, including
retirement benefits, housing benefits and internal and external training programmes, tailored in
accordance with individual needs.
The Company has adopted share option schemes, under which the Company may grant share options to
eligible employees for subscribing to the Companys shares.
46
CORPORATE GOVERNANCE
The Company is committed to maintaining high standards of corporate governance. The Company
complied with the code provisions in the Code of Corporate Governance Practices (the Code
Provision) as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the Listing Rules) for the year ended 31 December 2009, except for
the following:
(a)
|
|
Under Code Provision A.2.1, the roles and responsibilities of the chairman and the chief
executive officer should be separate and should not be performed by the same individual. The
Board understands that the principle of Code Provision A.2.1 is to clearly separate the
management of the Board from the daily management of the Company so as to ensure balance of
power and authority.
|
|
|
|
Mr. Chang Xiaobing has served as Chairman and the Chief Executive
Officer (the CEO) of the Company since December 2004. Mr. Lu Yimin
has served as the Companys President since 13 February 2009. Mr.
Chang Xiaobing is responsible for chairing the Board and for all
material affairs, including development, business strategy, operation
and management of the Company. Mr. Lu Yimin is responsible for the
daily operation and management of the Company.
|
|
|
|
The Board believes that at the present stage, Mr. Chang Xiaobing and
Mr. Lu Yimin have achieved the aforesaid principle of separation of
responsibilities. These arrangements also facilitate the formulation
and implementation of the Companys strategies in a more effective
manner so as to support the effective development of the Companys
business.
|
|
(b)
|
|
Under Code Provision A.4.1, non-executive directors shall be appointed for a specific term,
subject to re-election. The Companys non-executive directors are not appointed for a specific
term but are subject to retirement by rotation at general meetings and re-election by
shareholders pursuant to the Companys articles of association.
|
AUDIT COMMITTEE
The audit committee, together with management, has reviewed the accounting principles and practices
adopted by the Company as well as the internal control of the Company, and discussed financial
reporting matters, including a review of the audited consolidated financial statements for the
financial year ended 31 December 2009.
The audit committee comprises Mr. Wong Wai Ming, Mr. Wu Jinglian, Mr. Cheung Wing Lam Linus, Mr.
John Lawson Thornton and Mr. Timpson Chung Shui Ming, all being independent non-executive directors
of the Company. The Chairman of the Audit Committee is Mr. Wong Wai Ming.
REMUNERATION COMMITTEE
The major responsibilities of the remuneration committee include: considering and approving the
remuneration policies proposed by management, remuneration packages of directors and senior
management as well as the Companys share option schemes.
47
The remuneration committee comprises Mr. Wu Jinglian, Mr. Cheung Wing Lam Linus, Mr. Wong Wai Ming,
Mr. John Lawson Thornton and Mr. Timpson Chung Shui Ming, all being independent non-executive
directors of the Company. The Chairman of the remuneration committee is Mr. Wu Jinglian.
MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF THE COMPANY
The Company has established the Code for Dealing of Securities by Directors in accordance with the
Model Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix 10 of
the Listing Rules. The Company had made specific enquiries to directors as to their respective
compliance with the relevant code for securities transactions in 2009, and all of the directors
have confirmed such compliance.
CHARGE ON ASSETS
As at 31 December 2009, the Group did not pledge any property, plant and equipment to banks as loan
security (2008: Nil).
REPURCHASE, SALE OR REDEMPTION OF LISTED SHARES OF THE COMPANY
On 21 October 2009, the Company and Telefónica S.A. (Telefónica) completed the mutual investment
in the amount of the equivalent of US$1 billion in each other, which was implemented by way of the
subscription by Telefónica of 693,912,264 new ordinary shares in the capital of the Company
(Shares) at a price of HK$11.17 each and the contribution by Telefónica of 40,730,735 treasury
shares in the capital of Telefónica at a price of EUR17.24 each to the Company. Please refer to the
subsection headed Increase in Shareholding Interest in the Company by Telefónica and Investment by
the Company in Telefónica; Strategic Alliance between the Company and Telefónica below for
details.
In addition, on 25 September 2009, the Company received a conditional irrevocable offer from SK
Telecom Co., Ltd. (SKT) for the sale by SKT to the Company of 899,745,075 ordinary shares of the
Company, at a price of HK$11.105 each, by way of an off-market share repurchase by the Company. The
Share Repurchase (as defined below) was approved by shareholders of the Company at the
extraordinary general meeting held on 3 November 2009 and was completed on 5 November 2009. Please
refer to the subsection headed Off-Market Share Repurchase below for details.
The repurchased 899,745,075 shares were subsequently cancelled by the Company and the issued share
capital of the Company was reduced by the par value thereof. The total consideration of
approximately HKD9,992 million (equivalent to approximately RMB8,802 million) were charged to the
retained profit account.
Save as disclosed above, neither the Company nor any of its subsidiaries repurchased, sold or
redeemed any of the Companys listed shares for the year ended 31 December 2009.
48
INCREASE IN SHAREHOLDING INTEREST IN THE COMPANY BY TELEFÓNICA AND INVESTMENT BY THE COMPANY IN
TELEFÓNICA; STRATEGIC ALLIANCE BETWEEN THE COMPANY AND TELEFÓNICA
On 6 September 2009, the Company announced that in order to strengthen the cooperation between the
Company and Telefónica, the parties entered into a subscription agreement, pursuant to which each
party conditionally agreed to invest an equivalent of US$1 billion in the other party through an
acquisition of shares in the other party. The parties also entered into a strategic alliance
agreement pursuant to which the parties agreed to establish a strategic alliance in order to
strengthen the business of each other by cooperation based on the network, business model and
experience of each other.
On 21 October 2009, the Company and Telefónica completed the mutual investment of the equivalent of
US$1 billion in each other, which was implemented by way of the subscription by Telefónica of
693,912,264 new ordinary shares in the capital of the Company at a price of HK$11.17 each and the
contribution by Telefónica of 40,730,735 treasury shares in the capital of Telefónica at a price of
EUR17.24 each to the Company. As at 21 October 2009, following the completion of the mutual
investment, the Company had a shareholding interest of approximately 0.87% in the issued share
capital of Telefónica and Telefónicas indirect shareholding interest in the Company increased from
approximately 5.38% to approximately 8.06% in the issued share capital of the Company.
Please refer to the Companys announcements dated 6 September 2009 and 21 October 2009 for details.
OFF-MARKET SHARE REPURCHASE
On 25 September 2009, the Company received a conditional irrevocable offer (the SKT Offer) from
SKT for the sale by SKT to the Company of 899,745,075 shares (the Repurchase Shares, comprising
all the shares of the Company owned by SKT), by way of an off-market share repurchase by the
Company (the Share Repurchase). The consideration for the Share Repurchase was
HK$9,991,669,057.87, being HK$11.105 for each Repurchase Share, and was payable in cash. The Share
Repurchase was approved by shareholders of the Company at the extraordinary general meeting held on
3 November 2009 and was completed on 5 November 2009.
Please refer to the Companys announcements dated 28 September 2009, 3 November 2009 and 5 November
2009, respectively, and circular dated 9 October 2009 for details.
ACQUISITIONS OF CERTAIN ASSETS AND BUSINESSES FROM UNICOM GROUP AND NETCOM GROUP IN 2009 AND LEASE
OF TELECOMMUNICATIONS NETWORKS BY CUCL FROM UNICOM NEW HORIZON
On 31 January 2009, China United Network Communications Corporation Limited (CUCL, a wholly-owned
subsidiary of the Company) completed the acquisition from Unicom Group and China Network
Communications Group Corporation (Netcom Group) of (i) the fixed-line business, but not the
underlying telecommunications networks, across the 21 provinces in Southern China and related
non-current assets and liabilities (hereinafter referred to as the Fixed-line Business in Southern
China) and the local access telephone business and related assets in Tianjin Municipality operated
by Netcom Group and Unicom Group and/or their respective subsidiaries and branches; (ii) the
backbone transmission assets in Northern China owned by Netcom Group
49
and/or its subsidiaries (Target Assets); (iii) a 100% equity interest in Unicom Xingye Science
and Technology Trade Company Limited (Unicom Xingye) owned by Unicom Group; (iv) a 100% equity
interest in China Information Technology Designing & Consulting Institute Company Limited
(CITDCI) owned by Unicom Group and (v) a 100% equity interest in New Guoxin Telecom Corporation
of China Unicom (New Guoxin) owned by Unicom Group at a consideration of approximately RMB4.43
billion. The businesses and assets described in (i), (iii), (iv) and (v) above are hereinafter
collectively referred to as the Target Business and the acquisition of the Target Business is
referred to as the 2009 Business Combination.
In connection with the 2009 Business Combination, on 16 December 2008, CUCL, Unicom Group, Netcom
Group and Unicom New Horizon Mobile Telecommunications Company Limited (Unicom New Horizon, a
wholly-owned subsidiary of Unicom Group) entered into a network lease agreement (the Network Lease
Agreement) in relation to the lease (the Lease) of the telecommunications networks of the 21
provinces in Southern China (Telecommunications Networks in Southern China) by CUCL from Unicom
New Horizon on an exclusive basis immediately following and subject to the completion of the 2009
Business Combination. Under the Network Lease Agreement, CUCL shall pay annual 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 initial term of the Lease is two years effective from January 2009
and the Lease is renewable at the option of CUCL with at least two months prior notice on the same
terms and conditions, except for the future lease fee which will remain subject to further
negotiations between the parties, taking into account, among others, the then prevailing market
conditions in Southern China. Moreover, in connection with the Lease, Unicom New Horizon has
granted CUCL an option to purchase the Telecommunications Networks in Southern China and the
purchase price will be referenced to the then appraised value of such networks determined by an
independent appraiser.
iPHONE
On 28 August 2009, the Company and Apple Inc. reached a three-year agreement for the Company to
sell iPhone in China. The Company launched iPhone and the related services on 30 October 2009.
FINAL DIVIDEND
The Board of Directors proposed to pay a final dividend of RMB0.16 per share (the 2009 Final
Dividend), with an aggregate value of approximately RMB3.77 billion, to the shareholders. If
approved by shareholders at the coming annual general meeting, the final dividend is expected to be
paid in Hong Kong dollars on or about 11 June 2010 to those members registered in the Companys
register of members as at 12 May 2010.
ANNUAL GENERAL MEETING
The annual general meeting of the Company will be held on 12 May 2010. Notice of the annual general
meeting will be published on the Companys website at www.chinaunicom.com.hk and the website of the
Hong Kong Stock Exchange at www.hkexnews.hk and will be sent to shareholders in due course.
50
CLOSURE OF REGISTER OF MEMBERS
The register of members of the Company will be closed from 10 May 2010 to 12 May 2010 (both days
inclusive), during which period no transfer of shares of the Company will be registered. In order
to qualify for (i) attendance and voting at the Annual General Meeting to be held on Wednesday, 12
May 2010 (or any adjournment thereof) and (ii) the proposed 2009 Final Dividend, all transfers,
accompanied by the relevant certificates, must be lodged with the Companys Share Registrar, Hong
Kong Registrars Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queens Road East,
Hong Kong by no later than 4:30 p.m. of 7 May 2010. The 2009 Final Dividend is expected to be paid
in Hong Kong dollars on or about 11 June 2010 to those members registered in the Companys register
of members as at 12 May 2010 (the Record Date).
WITHHOLDING AND PAYMENT OF ENTERPRISE INCOME TAX FOR NON-RESIDENT ENTERPRISES IN RESPECT OF 2009
FINAL DIVIDEND
Pursuant to (i) the Notice Regarding Matters on Determination of Tax Residence Status of
Chinese-controlled Offshore Incorporated Enterprises under Rules of Effective Management (the
Notice) issued by the State Administration of Taxation of the Peoples Republic of China (the
SAT) on 27 April 2009 which became effective on 1 January 2008; (ii) the Enterprise Income Tax
Law of the Peoples Republic of China (the Enterprise Income Tax Law) and the Detailed Rules
for the Implementation of the Enterprise Income Tax Law of the Peoples Republic of China (the
Implementation Rules), both becoming effective on 1 January 2008; and (iii) information obtained
from the SAT, the Company is required to withhold and pay enterprise income tax when it pays the
2009 Final Dividend to its non-resident enterprise shareholders. The enterprise income tax is 10%
on the amount of dividend paid to non-resident enterprise shareholders (the Enterprise Income
Tax), and the withholding and payment obligation lies with the Company.
As a result of the foregoing, in respect of any shareholders whose names appear on the Companys
register of members on the Record Date and who are not individuals (including HKSCC Nominees
Limited, other custodians, corporate nominees and trustees such as securities companies and banks,
and other entities or organisations), the Company will distribute the 2009 Final Dividend payable
to them after deducting the amount of Enterprise Income Tax payable on such dividend.
In respect of any shareholders whose names appear on the Companys register of members on the
Record Date and who are individual shareholders, there will be no deduction of Enterprise Income
Tax from the dividend payable.
Shareholders who are not individual shareholders listed on the Companys register of members and
who (i) are resident enterprises of the Peoples Republic of China (the PRC) (as defined in the
Enterprise Income Tax Law), or (ii) are enterprises deemed to be resident enterprises of the PRC in
accordance with the Notice, and who, in each case, do not desire to have the Company withhold
Enterprise Income Tax from their 2009 Final Dividend, should lodge with the Companys Share
Registrar, Hong Kong Registrars Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183
Queens Road East, Hong Kong at or before 4:30 p.m. of 7 May 2010, and present the documents from
such shareholders governing tax authority in the PRC confirming that the Company is not required
to withhold and pay Enterprise Income Tax in respect of the dividend that such shareholder is
entitled to.
51
If anyone would like to change the identity of the holders in the register of members, please
enquire about the relevant procedures with the nominees or trustees. The Company will withhold for
payment of the enterprise income tax for its non-resident enterprise shareholders strictly in
accordance with the relevant laws and requirements of the relevant government agencies and adhere
strictly to the information set out in the Companys register of members on the Record Date. The
Company assumes no liability whatsoever in respect of and will not process any claims, arising from
any delay in, or inaccurate determination of, the status of the shareholders, or any disputes over
the mechanism of withholding.
PUBLICATION OF RESULTS ANNOUNCEMENT AND ANNUAL REPORT
The 2009 annual results announcement is published on the Companys website at
www.chinaunicom.com.hk and the website of the Hong Kong Stock Exchange at www.hkexnews.hk. The 2009
annual report will be available on the websites of The Stock Exchange of Hong Kong Limited and the
Company and will be despatched to all shareholders in due course.
The 2009 annual financial information set out above does not constitute the Groups statutory
financial statements for the financial year ended 31 December 2009. Instead, it has been derived
from the Groups audited consolidated financial statements for the financial year ended 31 December
2009, which will be included in the Companys 2009 annual report.
FORWARD-LOOKING STATEMENT
Certain statements contained in this announcement may be viewed as forward-looking statements
within the meaning of Section 27A of the U.S. Securities Act of 1933 (as amended) and Section 21E
of the U.S. Securities Exchange Act of 1934 (as amended). Such forward-looking statements are
subject to known and unknown risks, uncertainties and other factors, which may cause the actual
performance, financial condition or results of operations of the Company to be materially different
from any future performance, financial condition or results of operations implied by such
forward-looking statements. These risks, uncertainties and other factors include: the uncertainties
in the development of telecommunication industry and technology in the PRC; future growth of the
market demand for telecommunication services; changes in the competitive environment, regulatory
environment and the PRC governments regulatory and/or industry policy, the effects of tariff
reduction initiatives; the availability, terms and deployment of capital; changes in assumptions
upon which the Company has prepared its projected financial information and capital expenditure
plans; the effect of the Companys proposed adjustment in its business strategies relating to the
PHS business; changes in political, economic, legal and social conditions in the PRC; the recovery
from the previous economic slowdown at home and abroad, and other factors that will affect the
execution of our business plans and strategies as well as our business condition and financial
results.
|
|
|
|
|
|
|
|
|
By order of the Board
China Unicom (Hong Kong) Limited
Chu Ka Yee
Company Secretary
|
Hong Kong, 24 March 2010
52
As at the date of this announcement, the board of directors of the Company comprises:
|
|
|
Executive directors:
|
|
Chang Xiaobing, Lu Yimin, Zuo Xunsheng and Tong Jilu
|
Non-executive director:
|
|
Cesareo Alierta Izuel
|
Independent non-executive directors:
|
|
Wu Jinglian, Cheung Wing Lam Linus, Wong Wai Ming, John Lawson Thornton and Timpson Chung Shui Ming
|
53
Exhibit 2
Hong Kong Exchange 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.
(Incorporated in Hong Kong with limited liability)
(Stock Code: 0762)
CLOSURE OF REGISTER OF MEMBERS
AND
WITHHOLDING AND PAYMENT OF ENTERPRISE INCOME TAX
FOR NON-RESIDENT ENTERPRISES IN RESPECT OF
2009 FINAL DIVIDEND
China Unicom (Hong Kong) Limited (the Company) refers to the 2009 annual results
announcement made by the Company on 24 March 2010 (the 2009 Annual Results Announcement). This
announcement also constitutes a notice pursuant to section 99 of the Companies Ordinance (Chapter
32 of Laws of Hong Kong).
The board of directors of the Company (the Board) proposed to pay a final dividend of RMB0.16 per
share (pre-tax) for the year ended 31 December 2009 (the 2009 Final Dividend). The 2009 Final
Dividend is subject to shareholders approval at the annual general meeting of the Company to be
held on 12 May 2010.
CLOSURE OF REGISTER OF MEMBERS
The register of members of the Company will be closed from 10 May 2010 to 12 May 2010 (both days
inclusive), during which period no transfer of shares of the Company will be registered. In order
to qualify for (i) attendance and voting at the Annual General Meeting to be held on Wednesday, 12
May 2010 (or any adjournment thereof) and (ii) the proposed 2009 Final Dividend, all transfers,
accompanied by the relevant certificates, must be lodged with the Companys Share Registrar, Hong
Kong Registrars Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queens Road East,
Hong Kong by no later than 4:30 p.m. of 7 May 2010. The 2009 Final Dividend is expected to be paid
in Hong Kong dollars on or about 11 June 2010 to those members registered in the Companys register
of members as at 12 May 2010 (the Record Date).
1
WITHHOLDING OF ENTERPRISE INCOME TAX
Pursuant to (i) the Notice Regarding Matters on Determination of Tax Residence Status of
Chinese-controlled Offshore Incorporated Enterprises under Rules of Effective Management (the
Notice) issued by the State Administration of Taxation of the Peoples Republic of China (the
SAT) on 27 April 2009 which became effective on 1 January 2008; (ii) the Enterprise Income Tax
Law of the Peoples Republic of China (the Enterprise Income Tax Law) and the Detailed Rules
for the Implementation of the Enterprise Income Tax Law of the Peoples Republic of China (the
Implementation Rules), both becoming effective on 1 January 2008; and (iii) information obtained
from the SAT, the Company is required to withhold and pay enterprise income tax when it pays the
2009 Final Dividend to its non-resident enterprise shareholders. The enterprise income tax is 10%
on the amount of dividend paid to non-resident enterprise shareholders (the Enterprise Income
Tax), and the withholding and payment obligation lies with the Company.
As a result of the foregoing, in respect of any shareholders whose names appear on the Companys
register of members on the Record Date and who are not individuals (including HKSCC Nominees
Limited, other custodians, corporate nominees and trustees such as securities companies and banks,
and other entities or organisations), the Company will distribute the 2009 Final Dividend payable
to them after deducting the amount of Enterprise Income Tax payable on such dividend.
In respect of any shareholders whose names appear on the Companys register of members on the
Record Date and who are individual shareholders, there will be no deduction of Enterprise Income
Tax from the dividend payable.
Shareholders who are not individual shareholders listed on the Companys register of members and
who (i) are resident enterprises of the Peoples Republic of China (the PRC) (as defined in the
Enterprise Income Tax Law), or (ii) are enterprises deemed to be resident enterprises of the PRC in
accordance with the Notice, and who, in each case, do not desire to have the Company withhold
Enterprise Income Tax from their 2009 Final Dividend, should lodge with the Companys Share
Registrar, Hong Kong Registrars Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183
Queens Road East, Hong Kong at or before 4:30 p.m. of 7 May 2010, and present the documents from
such shareholders governing tax authority in the PRC confirming that the Company is not required
to withhold and pay Enterprise Income Tax in respect of the dividend that such shareholder is
entitled to.
2
IMPORTANT NOTICE
Investors should read this announcement carefully. If any investor would like to change the
identity of the holders in the register of members, please enquire about the relevant procedures
with the nominees or trustees. The Company will withhold for payment of the enterprise income tax
for its non-resident enterprise shareholders strictly in accordance with the relevant laws and
requirements of the relevant government agencies and adhere strictly to the information set out in
the Companys register of members on the Record Date. The Company assumes no liability whatsoever
in respect of and will not process any claims, arising from any delay in, or inaccurate
determination of, the status of the shareholders, or any disputes over the mechanism of
withholding.
By Order of the Board
CHINA UNICOM (HONG KONG) LIMITED
Chu Ka Yee
Company Secretary
Hong Kong, 24 March 2010
As at the date of this announcement, the Board comprises:
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Executive Directors:
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Chang Xiaobing, Lu Yimin, Zuo Xunsheng and Tong
Jilu
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Non-executive Director:
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Cesareo Alierta Izuel
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Independent Non-executive Directors:
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Wu Jinglian, Cheung Wing Lam Linus, Wong Wai
Ming,
John Lawson Thornton and Timpson Chung Shui Ming
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3
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