Click to edit Master title style - PCCW PCCW/Investor...2013/08/06 · Click to edit Master title...
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2013 Interim Results For the six months ended June 30, 2013
August 6, 2013 - Hong Kong
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This presentation may contain “forward-looking statements” that are not
historical in nature. These forward-looking statements, which include,
without limitation, statements regarding PCCW's future results of
operations, financial condition or business prospects, are based on the
current beliefs, assumptions, expectations, estimates, and projections of the
directors and management of PCCW about the business, the industry and
the markets in which PCCW operates. These statements are not
guarantees of future performance and are subject to risks, uncertainties and
other factors, some of which are beyond PCCW's control and are difficult to
predict. Actual results could differ materially from those expressed, implied
or forecasted in these forward-looking statements for a variety of factors.
Forward-Looking Statements
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Overview
George Chan
Group Managing Director
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Solid Financial Performance
The Board has declared an interim dividend of 6.35 HK cents per share
(US$ million)
Consolidated Performance
H1’12 H1’13 % change
Revenue 1,526 1,707 + 12%
EBITDA 492 506 + 3%
Profit Attributable to Equity Holders 107 110 + 2%
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Shareholder Focused Dividend Policy
• Maintain minimum dividend
for 3 years at 2010 level
(US$143 million)
• 2013 interim dividend per
share of 6.35 HK cents,
representing an increase of
15% over the same period
last year
Interim 5.30 5.51 6.35
Final 10.60 13.55
Total 15.90 19.06
Payout Ratio 72% 83%
DPS (HK cents)
Final Dividend
Interim Dividend
(1) Based on PCCW closing price of HK$2.96 on Feb 28, 2012
(2) Based on PCCW closing price of HK$3.72 on Feb 27, 2013
Yield: 5.4% (1) 5.1% (2)
(HK cents)
2011
5.30
10.60
6.35
2012 H1’13
13.55
5.51
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Financial Review
Susanna Hui
Group Chief Financial Officer
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Growth Across All Core Businesses
453 471 505
31 21 1
H1'11 H1'12 H1'13
1,402 1,418
1,643
160 108 64
H1'11 H1'12 H1'13
(US$ million) PCPD Core Business*
* Core business includes HKT, Media and Solutions Businesses
Revenue
• Revenue grew across all core business segments • Remarkable increase in EBITDA underpinned by steady performance of HKT and impressive growth
in the Solutions business
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Core
EBITDA
Margin
32% 33% 31%
EBITDA
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Track Record of Sustainable Profitability
(US$ million)
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Profit Attributable to Equity Holders Earnings Per Share :
11.79 HK cents
(H1’12: 11.51 HK cents)
Non-controlling Interests
106 107 110
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57 75
H1'11 H1'12 H1'13
185
164
113
* PAT refers to Profit after Income Tax
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444
HKT EBITDA
492 479
464
H1’11 H1’12 H1’13
HKT Revenue
1,419
(US$ million)
1,246 1,223
+ 0% 212
215
+ 9% 341 369
+ 20%
118 145
+ 47%
- 6%
61 48
225 215
281 281
(15) (27)
Mobile
Eliminations
TSS Others
Others
International
Local Telephony
Local Data
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A Steady Performance
• AFF up 4% yoy to US$190 million • Interim distribution of 21 HK cents per SSU
• TSS delivering steady growth – TSS revenue and EBITDA increased by 14% and 2% respectively, underpinned by strong fiber upgrades and growth in international businesses
• Mobile momentum continues – mobile revenue represented 12% of total HKT revenue (12% in H1’12) and mobile EBITDA accounted for 11% of total HKT EBITDA (9% in H1’12)
Mobile
Others
TSS
H1’11 H1’12 H1’13
+ 2% 434 452
+ 29%
28 44
57
2 (9) (17) (31)
41
174
215
204
413
403
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Positioned for Next Growth Phase
152
162 167
H1'11 H1'12 H1'13
(US$ million) Media Revenue
• Media revenue up 3% underpinned by improved pay TV subscription revenues
• Encouraging BPL take-up from early monetization effort
• Subscriber base expanded to 1.204 million and ARPU increased to HK$174 from HK$172 driven by expanded
premium content offering
• Steady EBITDA and margin
• Benefits of recent initiatives such as overseas distribution and BPL to
materialize in coming periods
Media EBITDA
30 28 29
H1'11 H1'12 H1'13
19% 17% 17% EBITDA
Margin
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140 145
179
H1'11 H1'12 H1'13
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Delivering its Growth Potential
(US$ million) Solutions Revenue
• Impressive revenue growth of 24% driven by execution of projects, expanding presence in China and increase
in demand for data centre services
• Secured order increased yoy to US$670 million
• Expanded core capabilities and geographical reach via the acquisition of Vanda China and Compass Solutions
20 22
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H1'11 H1'12 H1'13
Solutions EBITDA
• Continued expansion of EBITDA margin to 16% driven by benefits of increasing
scale of business and improved
productivity
EBITDA
Margin
14% 15% 16%
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Investing Prudently for Growth
Core Opex to Revenue Ratio: 24% 23% 22%
• Opex grew by 8% in H1’13 and the opex to revenue ratio
was 22%
• Increase in opex primarily at HKT – a combined result of
the expansion in business, in
particular the International
business and inflationary
pressure on staff costs and
rental expenses
• Media & Solutions opex also increased but was mitigated
by operational efficiency
achieved at Group level
(US$ million) Core Operating Expenses
491 547
562
Media, Solutions & Others
HKT
277 264 299
64 67 61
H1'11 H1'12 H1'13
331 341 360
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Profit for the period 164 185 + 13%
Effective tax rate NA NA
Associates and JVs (6) 4
Profit before income tax 158 174
Income tax 6 11
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Financial Performance
(US$ million) H1’12 H1’13
Revenue 1,526 1,707 + 12%
Cost of sales (677) (813)
Operating expenses (357) (388)
Depreciation & Amortization (273) (291)
Gain on disposal of property, plant and equipment, net - 1
Net other gains 2 25
Non-controlling interests (57) (75)
Profit attributable to equity holders of the Company 107 110 + 2%
EBITDA 492 506 + 3%
Earnings per share (in HK cents) 11.51 11.79
Net finance costs (57) (71)
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205 249
130
36
41
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2011 2012 H1'13
13
(US$ million)
8% Core Business
Capex to Revenue Ratio:
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Demand-Driven Core Capex
290
241
Media, Solutions & Others
HKT
9% 9%
• HKT capex focused on demand driven spending for
fibre upgrades and increasing
mobile data usage
• Only light capex spending required for the Media and
Solutions businesses
• Moderate increase in Solutions capex for data center
expansion to meet demand
• Overall capex to revenue ratio continues to remain within the
below 10% guidance
153
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14 14
Sound Financial Position
(US$ million)
Net Debt (1)
Net Debt / EBITDA(2) 2.4x 2.8x 3.0x
(1) Net debt refers to the principal amount of short-term and long-term borrowings minus cash and cash equivalents and certain restricted cash
(2) Based on net debt as at period end divided by EBITDA for the 12-month period
(HKT)
2,785 (HKT)
2,879 (HKT)
2,333
2,819 3,029
2011 2012 H1'13
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500 500 500
300500
395
706
457
154
2013 2014 2015 2016 2017 2018 2022 2023
Repaid in
July 2013
15 15
Optimal Financing Structure
• Next debt repayment only due in 2015
• Ample liquidity of US$673 million for HKT, US$211 million for PCCW and US$209 million for PCPD in undrawn banking facilities post the redemption of US$500 million guaranteed
notes due in July 2013
• Proactively monitor capital markets for opportunities to lock in long term financing
• Effective interest rate was approx. 3.2% in H1’13
(US$ million)
Bank Loans
US$ Bonds
As at June 30, 2013
PCCW
Level
PCCW
Level
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Business Review
George Chan
Group Managing Director
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Media Business
10 Years of
Strong Brand, Content &
Innovations
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2007 2008 2009 2010 2011 2012 2013
Market Leader in Pay TV
now TV continues to excel with good customer up-take; total installed base reached over 1.2M. Growth to
accelerate as the new BPL season kicks off in H2’2013.
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Early BPL Monetization & Service Differentiation
Set Stage for Growth
Early monetization of BPL:
Commencing January’13, the price of premium packages
including sports has increased from $258+ to $428+
Early bird offer has brought forward momentum of new
subscribers and existing subscribers upgrade before
season kick-off
Service differentiations deliver more value to
subscribers and drive ARPU :
Enhanced BPL viewing experience via expanded capabilities
and innovations:
1. SuperHD – new standard in picture quality
2. nowPlayer – TV everywhere
3. TIMESHIFT – allows a viewer to watch a match from the beginning even if late in joining
4. nowRecord – virtual personal video recorder
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Most KIDS & EDUCATION Channels & On-demand Learning Content in Town
Exclusive
Unrivalled World-Class
SPORTS content Exclusive
A Significant Producer of
LOCAL Content
- Providing 23 self-produced channels - Producing ~1000 hours of fresh programs annually
Exclusive
Clear Leadership Across All Key Content Categories
Top-class content line-up, only on now TV!
Strongest MOVIE Line-up Bringing Home-Theatre Excitement
Exclusive
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http://nowtv.now.com/channel/442http://nowtv.now.com/channel/445http://nowtv.now.com/channel/446http://nowtv.now.com/channel/447http://nowtv.now.com/channel/441C:/wiki/File:RyderCupLogo.svg
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Strategic Alliance with Mainland Partners
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Co-produced TV Drama with Top Rated Casting of
Popular HK & Mainland TV Stars, and First-class Directors
Chinese movie channel with
Huayi Brothers, We Pictures
& Edko Films
Top rated Drama Gems from Hai-run Media Group
Repackaged Star- studded variety
& talk shows
from Hunan TV
Strategic alliance with key partners to build
exclusive content asset of dramas,
movies, lifestyle and entertainment
programs to satisfy Hong Kong,
Mainland and overseas Chinese viewers
Co-production of TV drama series with
Huace Film & TV, one of the largest listed
media companies in mainland China:
now TV creativity and Huace
distribution network
Enables primetime national broadcast
in China maximizing income stream
International distribution opportunities
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Launch Markets Partners Channels/Content
Nov-12 Malaysia
Dec-12 Canada
May-13 Thailand
Jun-13 USA
Jun-13 Singapore
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Continual Expansion of International Distribution
Business expansion outside the local market continues. now TV programming also made available to pay TV viewers of StarHub in Singapore.
StarHub Limited – The largest Cable TV operator in Singapore
Digital music service MOOV also made its debut outside of Hong Kong in Guangdong, China.
The Dish Network Corporation – One of the largest satellite platforms in the U.S.
Telekom Malaysia Berhad - TM’s Hypp TV is Malaysia's leading IPTV service which
forms part of TM’s integrated telecoms portfolio
FairChild Media Group – The largest Chinese media group in Canada
Cable Thai Holding Public Co. Ltd. - The largest cable operator in Thailand
Jul-13 Guangdong
China
Southern Media
Corporation The world’s
1st overseas paid
music service in China
International
International
International
International
International
new
new
/url?sa=i&rct=j&q=now+tv&source=images&cd=&cad=rja&docid=rmnoEEX1zK_OIM&tbnid=PbtOOhHyPNZfpM:&ved=0CAUQjRw&url=http://en.wikipedia.org/wiki/File:NowTV.png&ei=w3ryUcitIYftkgXOlIG4Dg&psig=AFQjCNGCl-UE5uRGbi1cekx2CgDKBzFCBQ&ust=1374932023591246C:/url?sa=i&rct=j&q=now+tv&source=images&cd=&cad=rja&docid=rmnoEEX1zK_OIM&tbnid=PbtOOhHyPNZfpM:&ved=0CAUQjRw&url=http:/en.wikipedia.org/wiki/File:NowTV.png&ei=w3ryUcitIYftkgXOlIG4Dg&psig=AFQjCNGCl-UE5uRGbi1cekx2CgDKBzFCBQ&ust=1374932023591246C:/url?sa=i&rct=j&q=now+tv&source=images&cd=&cad=rja&docid=rmnoEEX1zK_OIM&tbnid=PbtOOhHyPNZfpM:&ved=0CAUQjRw&url=http:/en.wikipedia.org/wiki/File:NowTV.png&ei=w3ryUcitIYftkgXOlIG4Dg&psig=AFQjCNGCl-UE5uRGbi1cekx2CgDKBzFCBQ&ust=1374932023591246C:/url?sa=i&rct=j&q=now+tv&source=images&cd=&cad=rja&docid=rmnoEEX1zK_OIM&tbnid=PbtOOhHyPNZfpM:&ved=0CAUQjRw&url=http:/en.wikipedia.org/wiki/File:NowTV.png&ei=w3ryUcitIYftkgXOlIG4Dg&psig=AFQjCNGCl-UE5uRGbi1cekx2CgDKBzFCBQ&ust=1374932023591246C:/url?sa=i&rct=j&q=now+tv&source=images&cd=&cad=rja&docid=rmnoEEX1zK_OIM&tbnid=PbtOOhHyPNZfpM:&ved=0CAUQjRw&url=http:/en.wikipedia.org/wiki/File:NowTV.png&ei=w3ryUcitIYftkgXOlIG4Dg&psig=AFQjCNGCl-UE5uRGbi1cekx2CgDKBzFCBQ&ust=1374932023591246
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Over 2M app downloads allowing users to enjoy free TV content in HK!
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now subscribers enjoy TV everywhere service with enriched content and features:
42 live streaming channels and services
Over 3,000 hours of on-demand videos
Launched now FREE TV app with 3 free channels
Increased viewer base and propensity
of viewing
Promotional platform for content sampling
to up-sell free viewers to pay TV subscribers
Embracing New Media Technologies
Embracing new media technology for revenue and subscriber growth:
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Solutions Business
24
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140 145
179
H1'11 H1'12 H1'13
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Delivering its Growth Potential
(US$ million) Solutions Revenue
• Impressive revenue growth of 24% driven by execution of projects, expanding presence in China and increase
in demand for data centre services
• Secured order increased yoy to US$670 million
• Expanded core capabilities and geographical reach via the acquisition of Vanda China and Compass Solutions
20 22
28
H1'11 H1'12 H1'13
Solutions EBITDA
• Continued expansion of EBITDA margin to 16% driven by benefits of increasing
scale of business and improved
productivity
EBITDA
Margin
14% 15% 16%
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Diversified Customer Base
Technology, Media
& Communications
Public Sector
Transport &
Hospitality
Retail
Manufacturing
Secured Order increased by 4% yoy to US$670m
Banking and
Finance
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http://www.amway.com/en/default.aspxhttp://www.swire.com/
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Contribution from Cloud Computing to Secured Order
2012 1H Secured Order
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Cloud Computing
Services 9.6%
2013 1H Secured Order
Healthy Transition from Project-Based Systems Integration to Cloud Computing
Solidifies Recurring Nature of Secured Order
Cloud Computing
Services 2.8%
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Key Growth Drivers
• Migrated the HKSAR Government’s entire financial system to a private cloud
providing a centralized database and removing the need for hardware monitoring,
software maintenance, first line support and future upgrades. Currently serving
10,000 users and easily scalable.
• Major public transportation company in Hong Kong using our cloud platform to
provide real time emergency notification. During a service disruption, the cloud
platform can cater to an upsurge in demand allowing passengers to access real
time information and make alternative arrangements to reach their destinations.
Organizations moving away from owning infrastructure and software license:
PCCW Solutions Has the Scale and Expertise to Play a
Leading Role in Cloud Computing
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Cloud Computing
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Connect China to
the World • ICT managed services to support Bank of Shanghai’s expansion in Hong Kong
• Data center services to Tencent for expansion outside PRC
Digital Economy
• Virtual Reality System and 3D Theatre Systems for heritage sites and cultural venues in both Hong Kong and China to enhance visitors’ digital experience
• Self-developed RFID-enabled Smart Shelf won 2013 Retail Innovation Award
• “Build to Demand” strategy; improves speed to market and return on investment
• 75,000 sq. ft. GFA completed earlier this year
• Confirmed to convert 166,000 sq. ft. GFA of an existing building to data center with completion expected between Q4 2013 – Q3 2014
• Further secured another 36,000 sq. ft. GFA to cater for increasing pipeline
Data Centre
Hosting
Increasing demand for premium data center hosting services
Providing reliable IT service to serve PRC companies’ international expansion
Digital technology to enhance customer experience and to reach
more customers
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Key Growth Drivers
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Inorganic Growth Yielding Synergies
• Acquisition Date: Nov 2012
• Expert software company serving city
commercial banks and finance companies
in China
• With enhanced capabilities the combined
team is in a better position to serve top
ranking banks in China
• Acquisition Date: May 2013
• 200+ SAP expertise and 300+ customer base in
retail and manufacturing sectors
• Combining PCCW Solutions’ resources and
Compass’ expertise, we became the 1st company
in Hong Kong to be recognized as SAP official
provider of Cloud and Hosting Services
• Combined team successfully won contract from a
major Hong Kong government department
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Vanda China Compass Solutions
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Solid Financial Performance
(US$ million)
Consolidated Performance
H1’12 H1’13 % change
Revenue 1,526 1,707 + 12%
EBITDA 492 506 + 3%
Profit Attributable to Equity Holders 107 110 + 2%