Slide 1: Harvest Today, Seed for Tomorrow
Harvest Today, Seed for Tomorrow FY19 Interim Results Presentation for Six Months Ended 28 February 2019 Presentation by Co-Owners: William Yeung, Co-Owner & Executive Vice-chairman NiQ Lai, Co-Owner & Chief Executive Officer 30 April 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 Continued to deliver strong DPS growth: - YoY 31% growth in DPS to 34 HK cents in 1H2019 - Revenue and EBITDA achieved YoY growth of 19% and 22% - EBITDA growth was mainly due to the exclusion of the amortisation of customer acquisition and retention costs, after adopting HKFRS 15
Slide 5: Strong Dividend Growth
Strong Dividend Growth DPS FY16 FY17 FY18 FY19 HK cents 1H 20 22 26 34 1H2019 31% YoY 2H 20 23 30 n/a Full Year 40 45 56 n/a FY19 interim dividend was composed of the following: • 34 HK cents DPS based on 114%# AFF payout (110% in 1H2018) for the HKBN’s existing 1,006mn shares; • 34 HK cents matchin
Slide 6: 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 180 Regulatory approval on HKBN-WTT merger +77.9% Announced HKBN- WTT merger 160 53.7% Announced NWT Launched Launched acquisition MVNO Excess OTT return 140 120 +24.2% 100 80 60 IPO 2
Slide 7: Industry Reference Points - HKT
Industry Reference Points - HKT Financials in HK$mn, unless otherwise stated HKBN Interim Results HKT Annual Results 1H2019 FY18 Reported Figures 1H2019 Reported Figures FY18 YoY % YoY% Total Revenue 2,219 +19% Total Revenue 35,187 +6% Service Revenue # 2,009 +13% Service Revenue ^ 30,026 +1% Total
Slide 8: Growth on All Fronts in 1H2019
Growth on All Fronts in 1H2019 Financials in HK$mn, unless otherwise stated Revenue EBITDA* Adjusted Free Cash Flow (AFCF) +22% +13% +28% 3,949 1,180 3,232 +19% 1,041 +22% +5% 578 # 453 +26% 2,219 723 1,868 594 626 # 299 237 FY17 FY18 1H2018 1H2019 FY17 FY18 1H2018 1H2019 1H2019 FY17 FY18 1H2018 1H2
Slide 9: Across-the-Board Revenue Growth
Across-the-Board Revenue Growth Financials in HK$mn, unless otherwise stated • Residential – driven by ARPU increment through multi-play and mobile business expansion • Enterprise – harvesting the synergy of full NWT and ICG integration +22% 3,949 292 3,232 +342% 66 1,379 +19% 2,219 1,208 +14% 1,868
Slide 10: Residential Solutions Business: Growth in Subscriptions & ARPU
Residential Solutions Business : Growth in Subscriptions & ARPU Service Revenue grew by 11% YoY to HK$1,223mn Residential Broadband Subscriptions : Residential ARPU1 +4K vs +6% 871 -1% 872 -1% Aug-18 +5% 860 864 $184 37% 36% 37% 36% $176 $173 $168 Aug-17 Aug-18 Feb-18 Feb-19 FY17 FY18 1H2018 1H2019
Slide 11: Continual Growth in Mobile Business
Continual Growth in Mobile Business • Mobile subscriptions growth momentum slowed down due to customers start to churn as renewal cycle begins • Mobile ARPU maintained while bundle ARPU slightly dropped due to promotional offers Residential Mobile Feb-18 Aug-18 Feb-19 Activated Subscriptions 222k 26
Slide 12: Enterprise Solutions Business: Solid Growth in Service Revenue
Enterprise Solutions Business: Solid Growth in Service Revenue Enterprise Service Revenue (HK$mn) Enterprise Customers (‘000) Enterprise ARPU +14% 1,379 +6% +4% -1% 1,208 +3% +16% 57 56 58 54 $1,526 $1,510 $1,508 786 679 $1,463 FY17 FY18 1H2018 1H2019 Aug-17 Aug-18 Feb-18 Feb-19 FY17 FY18 1H2018 1H2
Slide 13: Manageable Debt Profile
Manageable Debt Profile • Maintaining stable debt profile Net Debt to EBITDA (x) 4.4 3.4 3.4 3.4 @ 3.0 FY16 FY17 FY18 1H2019 Post WTT ** Amount Maturity Interest Rate (HK$mn) Debt - fixed portion # 2,635 May 2020 2.26% + Margin Debt - floating portion 1,265 May 2023 HIBOR + Margin New Debt - floatin
Slide 14: We are an Elite Sport Team, Not a Family
We are an Elite Sport Team, Not a Family Family Elite Sport Team • Unconditional love for all • Conditional love based on performance • Reward loyalty over • High performance criterion – top performance performers receive outsized rewards whilst bottom 5% are asked to leave every year 14
Slide 15: 2019 “Co-Owners of the Future” Summer Innovator Programme
2019 “Co-Owners of the Future” Summer Innovator Programme Received over 1,500 applications around the world (including Germany, France, UK, US, Canada, Russia, Japan, > 1,500 application Korea, India, etc..) Shortlist 300 for interview 300 shortlisted Intend to offer 15 slots, i.e. 1% acceptance rat
Slide 16: Co-Ownership is our LUCA
Co-Ownership is our LUCA Number of Co-Ownership Grading Total Co-Owners (1) Take-up CXO Executives 7 7 100% Associate Directors/Directors 37 33 89% Managers 123 78 63% Supervisors 604 222 37% Total Supervisors and up 771 340 44% Other Talents 2,269 Not Eligible Not Eligible Total Talents (2) 3,040 3
Slide 17: Business Outlook
Business Outlook William Yeung Co-Owner & Executive Vice-chairman 17
Slide 18: On Track for “Invest and Harvest” Roadmap
On Track for “Invest and Harvest” Roadmap Co-Ownership III+ Co-Ownership III KPI period for cumulative HK$2.1 to Timing+ DPS HK$0.40 DPS HK$0.45 HK$2.4 AFF^# Target+ Rewards+ FY16 Actual FY17 Actual FY18 Actual FY19 FY20 FY21 Broadband + Fixed Harvest Seed Invest Harvest Harvest Harvest Voice Seed H
Slide 19: Well Positioned to Grow !
Well Positioned to Grow ! (HK$bn unless otherwise stated) HKT1 + Service revenue 29.42 6.0 3.93 2.1 Latest twelve Feb 2019 (H) Dec 2018 Feb 2019 Jun 2018 months Jun 2018 (W) Fixed Fixed Services offered Integrated Fixed + Mobile resale + Mobile resale EBITDA 12.5 2.1 1.3 0.8 Market cap 93.0 N/A 14.5
Slide 20: WTT Merger – Integrate to Grow
WTT Merger – Integrate to Grow Ready to Harvest Synergy benefits ! Revenue* Products Cost* Capex# Penetration Price For details of the WTT merger synergy, please refer to the “Investor Presentation on HKBN/WTT combination” which was published on our website in August 2018 (https://reg.hkbn.net/WwwCM
Slide 21: Well Positioned to Grow !
Well Positioned to Grow ! TVB Partnership – Expanding from Residential to Enterprise Market A BIG WIN-WIN for Customers & HKBN/TVB Partnership Event/Production Advertising Airtime 21
Slide 22: Separately… HKBN is #2 in Residential and WTT is #2 in Enterprise
#2 + #2 = #1 Separately… HKBN is #2 in Residential and WTT is #2 in Enterprise … Together we Aspire to be #1
Slide 23: Kudos to our Elite Athletes
Kudos to our Elite Athletes HK Talent Meeting GZ Talent Meeting 18 March 2019 20 March 2019 23