Slide 1: Stronger as ONE
Stronger as ONE FY19 Annual Results Presentation for 12 months ended 31 August 2019 Presentation by: NiQ Lai, Co-Owner & Chief Executive Officer William Yeung, Co-Owner & Executive Vice-chairman 24 October 2019
Slide 2: Disclaimer
Disclaimer These materials have been prepared by HKBN Ltd. (the “Company”) solely for use at this presentation and have not been independently verified. No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the fairness, accuracy, completeness or
Slide 3: Business & Financial Review
Business & Financial Review NiQ Lai Co-Owner & Chief Executive Officer 3
Slide 4: Executive Summary
Executive Summary Financial Highlights: Solid Financial Performance HKBN Group^ HKBN, Ex-WTT# Service Revenue: $4,797mn Service Revenue: $4,089mn +31% +12% EBITDA (New*): $1,709mn +45% EBITDA (New*): $1,447mn +23% EBITDA (Old*): $1,477mn +25% EBITDA (Old*): $1,247mn +6% AFF: $750mn AFF: $688mn +30%
Slide 5: Executive Summary
Executive Summary Enterprise Business^: Residential Business: Strong position post-WTT Integration Multi-play driving ARPU growth 103k $1,742* $2,324mn 878k $185 $2,473mn Enterprise Enterprise Service Revenue Broadband Residential Service Revenue Customers ARPU subscriptions ARPU +81% +15% +69% +2%
Slide 6: Consecutive Growth in Dividend
Consecutive Growth in Dividend FY19: 70 DPS (+25% YoY) FY18: 56 DPS 36 (+24% YoY) 34 FY17: 45 DPS 30 (+13% YoY) FY16: 40 DPS 26 22 23 20 20 FY16 1H FY16 2H FY17 1H FY17 2H FY18 1H FY18 2H FY19 1H FY19 2H # The dividend policy of the Company is to pay dividends in an amount of not less than 90% of th
Slide 7: FY19 Dividend Payout Summary
FY19 Dividend Payout Summary Financials in HK$mn, unless otherwise stated Due to the mid-year merger, dividend for the 473m newly issued shares (including unconverted vendor loan note) is primarily funded by surplus cash at WTT (‘m) 1H2019 2H2019 FY19 No. of shares# (‘m) 1,479 1,479 1,479 Included 4
Slide 8: HKBN's Total Returns since IPO
HKBN’s Total Returns since IPO (Rebased) HKBN (with dividends)2 Hang Seng Index3 Performance of HKBN vs. Hang Seng1 Announced JOS 200 Regulatory approval on acquisition HKBN-WTT merger Announced HKBN- WTT merger +80.6% HKBN 180 Announced NWT Launched Launched acquisition MVNO 160 OTT 69.1% Excess 14
Slide 9: Solid Growth in EBITDA & AFF
Solid Growth in EBITDA & AFF Financials in HK$mn, unless otherwise stated Revenue EBITDA* Adjusted Free Cash Flow (AFCF)# +29% +45% 5,108 +25% +30% +22% 1,709 WTT +13% 750 708 WTT 1,477 3,949 262 +28% WTT WTT 62 3,232 HKBN 1,180 230 578 4,400 1,041 HKBN HKBN (+11%) 1,447 HKBN 688 (+23%) 1,247 453 (+
Slide 10: Industry Leading Revenue Growth
Industry Leading Revenue Growth Financials in HK$mn, unless otherwise stated • Residential – driven by ARPU increment and broadband subscription growth • Enterprise – included 4 months of WTT financial performance +29% 5,108 +11% +22% 311 4,400 3,949 +7% 311 +7% 3,232 292 2,324 66 +342% 1,619 1,379
Slide 11: Enterprise Solutions: Over 5x Growth on Service Revenue in 5 Years
Enterprise Solutions: Over 5x Growth on Service Revenue in 5 Years Enterprise Service Revenue (HK$mn) +69% 2,324 +14% WTT 705 +49% +70% 1,379 1,208 HKBN +12% 1,619 811 (+17%) 423 476 FY14 FY15 FY16 FY17 FY18 FY19 Acquired Acquired Acquired Merger With FY19 consolidates 4 months of WTT results since
Slide 12: Residential Solutions: Growth in ARPU & Subscriptions
Residential Solutions: Growth in ARPU & Subscriptions Service Revenue grew by 9% YoY to HK$2,473mn Residential ARPU1 Residential Broadband Subscriptions : +5% +2% +1% 878 +5% 860 864 $185 $176 36% 36% 36% $168 FY17 FY18 FY19 Aug-18 Feb-19 Aug-19 Residential ARPU Residential Broadband Subscriptions (
Slide 13: Manageable Debt Profile
Manageable Debt Profile Net Debt to EBITDA Ratio Debt Maturity (HK$mn) • Interest margin will be uplifted in FY20 due to increase in Net Debt to EBITDA ratio in FY19 post-WTT merger Optional redemption in FY20 • Expect to deleverage to below 4x through via cheaper financing* synergy to achieve inter
Slide 14: "Best of Breed" Management Diversity
“Best of Breed” Management Diversity Table: Profile of HKBN’s top 64 executives (top 1.4% of the Company) i.e. Associate Directors and above. Company of Origin Total % of Team HKBN More than 5 years with HKBN 29 45% 5 years or less with HKBN 7 11% WTT 16 25% NWT 5 8% Y5Zone 3 5% ICG 4 6% Total 64 10
Slide 15: Broad-based Co-Ownership with skin in the game
Broad-based Co-Ownership with skin in the game 15
Slide 16: Business Outlook
Business Outlook William Yeung Co-Owner & Executive Vice-chairman 16
Slide 17: On Track for "Invest and Harvest" Roadmap
On Track for “Invest and Harvest” Roadmap Co-Ownership III+ KPI period for cumulative HK$2.53 to HK$3.03 AFF^ DPS HK$0.40 DPS HK$0.45 DPS HK$0.56 DPS HK$0.70 FY16 Actual FY17 Actual FY18 Actual FY19 Actual FY20 FY21 Broadband + Fixed Invest Harvest Harvest Harvest Harvest Harvest Voice • Content Ove
Slide 18: 1-HKBN – The Completed Puzzle
1-HKBN – The Completed Puzzle ▪ The proposed acquisition is AFF accretive to HKBN ▪ Post JOS completion, we look forward to welcoming Mark Lunt – Group Managing Director, Eric Or – Managing Director, JOS Greater China and Stanley Vertical expansion Chiu – JOS Group Financial Controller as Co-Owners
Slide 19: WTT Synergy on Track
WTT Synergy on Track ✓ 20 senior WTT Talents have indicated interests to convert their completion bonus into CO3+ ✓ Realigned incentive with pain/GAIN Over HK$300m total synergies by FY21 19
Slide 20: Set Sail on our 1-HKBN Journey
Set Sail on our 1-HKBN Journey All-Talent Townhall Meeting on 20 May 2019 20
Slide 21: Appendix
Appendix 21
Slide 22: Operational Highlights – Enterprise Solutions
Operational Highlights – Enterprise Solutions YoY FY18 FY19 Changes Commercial building coverage (‘000) 2.4 7.2 >100% Subscriptions ('000) - Broadband 57 116 >100% - Voice 140 454 >100% Market share - Broadband 19.2% 36.5% +17.3pp - Voice 7.7% 25.3% +17.6pp Enterprise customers ('000) 57 103 +81% Br
Slide 23: Operational Highlights – Residential Solutions
Operational Highlights – Residential Solutions YoY FY18 FY19 Changes Residential homes passed ('000) 2,297 2,360 +3% Subscriptions ('000) - Broadband 860 878 +2% - Voice 500 500 -0% Market share - Broadband 36.1% 35.8% -0.3pp - Voice 21.8% 21.9% +0.1pp Residential customers ('000) 1,017 1,019 +0% Br
Slide 24: Consolidated Income Statement
Consolidated Income Statement (HK$ million, unless otherwise stated) FY18 FY19 YoY Changes Residential Revenue 2,278 2,473 +9% Enterprise Revenue 1,379 2,324 +69% Product Revenue 292 311 +7% Turnover 3,949 5,108 +29% Other net income 22 30 +36% Network costs and cost of services (974) (1,552) +59% C
Slide 25: Consolidated Balance Sheet (Summary)
Consolidated Balance Sheet (Summary) At 31 August 2018 At 28 February (HK$ million, unless otherwise stated) At 31 August 2019 (Restated) 2019 Non-current assets 5,622 6,427 18,635 Current assets 954 1,065 1,747 Current liabilities 908 966 1,745 Total assets less current liabilities 5,668 6,526 18,6
Slide 26: Reconciliation of EBITDA and Adjusted Free Cash Flow
Reconciliation of EBITDA and Adjusted Free Cash Flow (HK$ million, unless otherwise stated) FY18 FY19 YoY Changes Profit/ (loss) for the year 397 215 -46% Finance costs 117 259 >100% Interest income (2) (4) >100% Income tax 92 94 +3% Depreciation 425 535 +26% Amortisation of intangible assets 130 28
Slide 27: Impact of New Accounting Standard
Impact of New Accounting Standard The impact of the initial application of HKFRS 15 is summarized as follows: Presented by Presented by FY19 (HK$mn) old accounting new accounting Impact Remarks standard standard HKAS 18 HKFRS 15 Revenue 5,108 5,108 No impact Under HKAS 18, customer acquisition and r
Slide 28: HKBN & WTT Key Financial Indicators
HKBN & WTT Key Financial Indicators YoY YoY (HK$ million, unless FY18 FY19 FY19* FY19 Changes Changes otherwise stated) (Reported) (HKBN) (WTT) (Reported) (HKBN) (Reported) Residential Revenue 2,278 2,470 3 2,473 +8% +9% Enterprise Revenue 1,379 1,619 705 2,324 +17% +69% Product Revenue 292 311 - 31