Surging Forward FY16 Annual Results Presentation for the year ended 31 August 2016 Presentation by Co-Owners: William Yeung, Chief Executive Officer NiQ Lai, Chief Talent & Financial Officer 9 November 2016 1 Photo of HKBN Dragon Boat Team powered by HKBNers: Kim Hue, Shan Tam, Billy Tsang, Johnson Chu, Mavis Chow, Ben Kwok, Yat Hin Chan, Jason Tam, John Zhang, Dallas Chang, Herman Hui, Marco Li, William Wong
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 correctness of the information or opinions presented or contained in these materials. It is not the intention to provide, and you may not rely on these materials as providing, a complete or comprehensive analysis of the financial or trading positions or prospects of the Company. None of the Company or any of their respective directors, officers, employees, agents, affiliates, advisers or representatives accepts any liability whatsoever in negligence or otherwise for any loss howsoever arising from any information or opinions presented or contained in these materials or otherwise arising in connection with these materials. The information presented or contained in these materials is subject to change without notice and its accuracy is not guaranteed. Statements that are not historical facts, including statements about the beliefs and expectations of the Company, are forward- looking statements. These statements are based on current plans, estimates and projections, and undue reliance should not be placed on them. Forward-looking statements speak only as of the date they are made, and the Company has no obligation to update any of them publicly in light of new information or future events. Forward-looking statements involve inherent risks, uncertainties and assumptions. The Company cautions that if these risks or uncertainties ever materialize or the assumptions prove incorrect, or if a number of important factors occur or do not occur, actual results of the Company may differ materially from those expressed or implied in any forward-looking statement. This document does not constitute, and should not be construed as constituting or forming part of, any advertisement of, or any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any shares of the Company or of any of its controlled entities or affiliates, in any jurisdiction. Neither this document, nor any part of it, shall form the basis of or may be relied upon in connection with, any contract, investment decision or commitment whatsoever, nor does it constitute a recommendation regarding the shares or securities of the Company. 2
Agenda • Business Review – William Yeung, CEO & Co-Owner • Financial Review – NiQ Lai, Chief Talent and Financial Officer & Co-Owner • Q&A 3
Business Review William Yeung CEO & Co-Owner 4
Executive Summary • Consistently delivering 3 Highs & 1 Low FY16 YoY Service Revenue HK$2.6bn 18% EBITDA HK$1.0bn 3% Residential Broadband Subscriptions 857k 14% Low Churn Rate (below 1%) 0.8% • Final dividend declared at 20 HK cents per share • Full year dividend at 40 HK cents per share 5
Strong Service Revenue Growth Financials in HK$mn, unless otherwise stated. 2,626 +18% HKBN ES business +9% (ex-NWT) grew by 2,233 +10% 2,053 20% YoY 811 +70% 1,861 476 423 +12% 371 +14% +3% 1,815 1,757 +8% 1,630 +9% 1,490 FY13 FY14 FY15 FY16 Residential Revenue Enterprise Revenue 6 All financial figures are rounded to nearest HK$ million
Residential Business: 103k net addition Service Revenue grew by 3% to HK$1,815mn Residential Broadband Subscriptions Residential ARPU 857 +14% +9% 754 692 +5% 660 183 +5% 175 -5% 173 +11% 40% 158 37% 34% 33% FY13 FY14 FY15 FY16 Aug-13 Aug-14 Aug-15 Aug-16 Residential Broadband Subscriptions ('000) Residential Broadband Subscriptions Market Share Residential ARPU 7 Note: Our market share in residential broadband services in Hong Kong is calculated by dividing the number of residential broadband subscriptions we have at a given point in time by the total number of residential broadband subscriptions recorded by the Office of the Communications Authority (OFCA) at the same point in time (Aug-YE).
Quad-play in Action! LeEco / Le Sports (EPL) Since Oct >250k subscriptions 2015 Fixed Content broadband TVB myTV SUPER Since Apr HK$24bn 1 >250k subscriptions 2016 “Quad - play” market MVNO partnership with two major Since mobile network operators Fixed Sep Mobile voice 2016 30k subscribers Compelling value paving for revenue growth Note: 1. The addressable market size of double-play, triple-play and quad-play are calculated by multiplying the estimated numbe r of addressable households (2 million) within the Group’s coverage by the service penetration rate and the estimated annualized ARPU for respective services. 8 Disclaimer: The above is not based on any independent research or analysis and shall not be relied upon in any circumstances whatsoever. All recipients of this presentation shall seek independent advice (including legal, financial, etc.) and exercise their own independent judgment based on such advice sought.
Enterprise Business: Strong organic growth and NWT integration Service Revenue grew by 70% to HK$811mn 1 ES ARPU on Enterprise Customers ES ARPU August 2016 is approximately HK$1,421 3 50 2 1,234 1 +28% +22% 1,026 -2% 1,010 39 +8% 948 +22% 32 +10% 29 FY13 FY14 FY15 FY16 Aug-13 Aug-14 Aug-15 Aug-16 Enterprise ARPU Enterprise Customers ('000) Note: 1. Including 5 months of New World Telecom (NWT)’s results post completion on 31 March 2016. 9 2. Including NWT Enterprise customers. 3. Calculated by dividing the revenue generated in the relevant month from the enterprise telecom business from both HKBN and NWT businesses (excluding revenue from IDD services) by the number of enterprise customers of both HKBN and NWT in the respective month. This metric may be distorted by the impact of certain particularly large contracts we have with enterprise customers.
Financial Review NiQ Lai Chief Talent and Financial Officer & Co-Owner 10
Revenue growth driven by larger residential customer base & ES integration Financials in HK$mn, unless otherwise stated. 2,784 +19% Solid organic growth of underlying ES business 158 +10% 2,341 + +9% +45% 2,131 5 months inclusion of 109 811 NWT’s results 1,949 +39% 78 +70% (Apr-16 to Aug-16) -12% 476 89 423 +12% 371 +14% +3% 1,815 1,757 +8% 1,630 +9% 1,490 FY13 FY14 FY15 FY16 Residential Revenue Enterprise Revenue Product Revenue 11 All financial figures are rounded to nearest HK$ million
Zig-zag approach to market share and ARPU 191 183 182 175 175 173 158 155 139 135 130 103 74 67 62 60 57 34 32 27 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Net Additions of Residential Broadband Subscriptions ('000) ARPU Exit New and Renewal Contracts Broadband Bundle Blended ARPU Note: FY07 – FY09 data from City Telecom Group (CTI), FY10 – FY11 data from HKBN Offering Memorandum, FY12 – FY16 data from HKBN prospectus and announcement (FY12 Hong Kong Broadband Network Limited (Op-Co) and FY13 – FY16 HKBN Ltd. (list-co). Exit New and Renewal Contracts Broadband Bundle Blended ARPU is reported by CTI Annual Report/ HKBN OM and is of different basis to full base Residential ARPU reported for HKBN Ltd. The data provided is only for reference only. 12 Disclaimer: The above is not based on any independent research or analysis and shall not be relied upon in any circumstances whatsoever. All recipients of this presentation shall seek independent advice (including legal, financial, etc.) and exercise their own independent judgment based on such advice sought.
Changes in pricing may take 4 years to run through Delay in ARPU Impact Accumulated impact over the period Renewal Year 1 Year 2 Year 3 Year 4 customers at expiry Month 24 Month 23 Month 22 Month 21 Month 20 Month 19 Month 18 Month 17 Month 16 Month 15 Month 14 Month 13 Month 12 Month 11 Month 10 Month 9 Month 8 Next Round Month 7 Month 6 of Renewal Month 5 Month 4 Month 3 Month 2 Month 1 13
Maintaining stable EBITDA and AFF despite accelerated growth and intensified competition Financials in HK$mn, unless otherwise stated. EBITDA Adjusted Free Cash Flow 38% 40% 42% 36% 1,006 +3% 979 +16% 845 +14% 741 406 +4% 392 +26% 311 +37% 227 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 EBITDA Margin EBITDA Adjusted Free Cash Flow (AFCF) 14 All financial figures are rounded to nearest HK$ million
Prudent CAPEX investment Financials in HK$mn, unless otherwise stated. 412 380 346 324 17% 16% 16% 15% FY13 FY14 FY15 FY16 CAPEX CAPEX as % of Revenue 15 All financial figures are rounded to nearest HK$ million Note: CAPEX paid during FY16 for Adjusted Free Cash Flow Calculation is HK$393mn.
Recommend
More recommend
