CONFORMED COPY
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 November 25 2008
CITY TELECOM (H.K.) LIMITED
(Translation of registrants name into English)
Level 39
Tower I, Metroplaza
No. 223 Hing Fong Road
Kwai Chung
New Territories
Hong Kong
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover
Form 20-F or Form 40-F.
Form 20-F
þ
Form 40-F
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
City Telecom (H.K.) Limited (the Company) is furnishing under cover of Form 6-K the Companys
annual report and audited consolidated financial statements for the year ended August 31, 2008.
SIGNATURE
Pursuant to the requirements of section 12 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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CITY TELECOM (H.K.) LIMITED
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By:
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/s/ Lai Ni Quiaque
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Name:
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Lai Ni Quiaque
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Title:
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Executive Director, Chief Financial Officer and Company Secretary
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Dated: November 25, 2008
ANNUAL REPORT 2008
Turning Impossible Into Possible
City Telecom (H.K.) Limited
Stock Code SEHK: 1137;
NASDAQ: CTEL
_y
_____
: 1137;
,,t : CTEL
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Established in 1992, City Telecom (H.K.) Limited
(SEHK : 1137, NASDAQ : CTEL) is a fast growing and
innovative provider of residential and corporate
fixed telecommunications network and international
telecommunications services in Hong Kong. Its
wholly-owned subsidiary, Hong Kong Broadband Network
Limited, is a major fixed telecommunications network
services operator, providing broadband Internet
access up to 1Gbps, telephony, IPTV, corporate and
mobile data services with its self-built Metro
Ethernet IP network. In addition to the operations in
Hong Kong, the Group also has branch offices in
Canada and Guangzhou.
Contents
Statistical Review 02
Corporate Information 04
Major Milestones and Events 05
Major Milestones and Events in 2008 07
Supplement on Marathon Participation 08
Recognition 09
An Interview with the Chairman 10
Products at a Glance 12
Brand Management 14
Our Network 22
Managements Discussion and Analysis 26
Profile of Directors and Senior Management 32
Financial Information
Corporate Governance Report 37
Report of the Directors 45
Independent Auditors Report 55
Consolidated Income Statement 56
Balance Sheet 57
Consolidated Statement of Changes in Equity 59
Consolidated Cash Flow Statement 60
Notes to the Financial Statements 61
Five-Year Financial Summary 108
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City Telecom (H.K.) Limited
Statistical 02 Annual Report 2008
Review
Turnover
HK $ 000
Number of Registered
Broadband Subscriptions
Number of Registered
Voice-over-IP Subscriptions
Number of Registered IP-TV Subscriptions
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Statistical Review
03
City Telecom (H.K.)
Limited
Annual Report 2008
Number of Registered International
Telecommunications Subscriptions
International Telecommunications Traffic
Volume
Million Minutes
Turnover by Principal Activities
in 2008
International Telecommunications Services
Fixed Telecommunications Network Services
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City Telecom (H.K.) Limited
Corporate 04 Annual Report 2008
Information
FINANCIAL CALENDAR
_____
Legal Adviser to the Company
as to U.S. and Hong Kong Laws
Full-year Results
Jones Day
Announced on 17 November 2008 29th Floor, Edinburgh Tower
The Landmark
Annual General Meeting 15 Queens Road Central
19 December 2008 Hong Kong
Auditors
LISTING
_____
KPMG
Certified Public Accountants
City Telecom (H.K.) Limiteds shares are listed under the stock 8th Floor, Princes Building
code 1137 on The Stock Exchange of Hong Kong Limited and in 10 Chater Road
the form of American Depositary Receipts (each representing 20 Central, Hong Kong
ordinary shares of the Company) on the Nasdaq Stock Market in
U.S. under the ticker symbol CTEL.
Share Registrar
Computershare Hong Kong Investor Services Limited
Directors
46th Floor, Hopewell Centre
Mr. WONG Wai Kay, Ricky (Chairman) 183 Queens Road East, Wanchai
Mr. CHEUNG Chi Kin, Paul (Vice Chairman) Hong Kong
Mr. YEUNG Chu Kwong, William (Chief Executive Officer)
Mr. LAI Ni Quiaque
+
(Chief Financial Officer and
American Depositary Bank
Head of Staff Engagement)
The Bank of New York Mellon Corporation
Mr. CHENG Mo Chi, Moses
+
101 Barclay Street, 22nd Floor
Mr. LEE Hon Ying, John
*#+
New York, NY 10286 USA
Dr. CHAN Kin Man
*#+
Mr. PEH Jefferson Tun Lu
*#+
Principal Bankers
Non-executive Director
Citibank, N.A.
* Independent Non-executive Directors 44th Floor, Citibank Tower
# Members of the Audit Committee
Citibank Plaza
+ Members of the Remuneration Committee
3 Garden Road
Registered Office
Central, Hong Kong
Level 39, Tower 1, Metroplaza
The Hongkong and Shanghai
No. 223 Hing Fong Road
Banking Corporation Limited
Kwai Chung, New Territories, Hong Kong
HSBC Main Building
Authorised Representatives
No.1 Queens Road Central
Hong Kong
Mr. WONG Wai Kay, Ricky
Mr. CHEUNG Chi Kin, Paul
Company Secretary
Mr. LAI Ni Quiaque
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05
City Telecom (H.K.) Limited
Major Milestones
_____
Annual Report 2008
and Events
1992 MAY
City Telecom (H.K.) Limited (City Telecom) was incorporated in Hong Kong
SEPTEMBER
888 International Calling Card Service was introduced
1993 JUNE
Switching centre was established in Buffalo, New York, USA
1994 JANUARY
Launch of 003 international Guarantee Fax Service
SEPTEMBER
Launch of GlobaLink International Calling Card Service
1997 JANUARY
Launch of IDD300 Calling Service
MARCH
Set up INC (the Specialized IDD Network for Corporations) for corporate sector
AUGUST
City Telecom was listed on The Stock Exchange of Hong Kong Limited
1998 FEBRUARY
Launch of International Simple Resale (ISR) Fax Service
JUNE
Launch of CTInets Internet Access Service
NOVEMBER
The first company to receive the license of ISR voice service in Hong Kong
1999 JANUARY
Launch of IDD1666 Direct Calling Service
NOVEMBER
ADR listing on the Nasdaq National Market of USA
2000 FEBRUARY
Hong Kong Broadband Network Limited (HKBN), a subsidiary of City Telecom obtained the
Local Wireless FTNS license
MARCH
Launch of Broadband Internet services by HKBN
2001 MAY
CTI International awarded the Satellite-based Fixed Carrier license
SEPTEMBER
City Telecoms 10th Anniversary
2002 MARCH
City Telecom awarded the Cable-based External FTNS license
APRIL
HKBN officially launched local on-net VoIP telephony service
HKBN upgraded to become a wireline-based FTNS licensee
JUNE
Launch of HKBN IDD0030 service
HKBN was confirmed by Cisco Systems to have successfully established the largest Metro
Ethernet IP network in the world
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Major Milestones and Events
_____
City Telecom (H.K.) Limited
06 Annual Report 2008
2003 AUGUST
HKBN officially launched IP-TV service
2004 JULY
HKBN launched corporate data services
AUGUST
HKBN launched off-net residential VoIP service, namely, the Broadband Phone Service
NOVEMBER
HKBN announced the launch of bb100, Hong Kongs first 100Mbps residential broadband
service, and the release of its 1Gbps residential broadband service by 2Q 2005
2005 APRIL
HKBN officially launched bb1000 Fibre-to-the-Home 1Gbps residential broadband service
SEPTEMBER
HKBN conferred as the winner of Global Entrepolis@Singapore Award 2005, which was
presented by the Asian Wall Street Journal in association with the Economic Development
Board of Singapore
OCTOBER
HKBN launched 2b Broadband Phone Service, providing VoIP service to local and overseas users
via software version broadband phone
HKBN has become the first service provider in the world to achieve the Cisco Powered Network
Metro Ethernet QoS Certified status
2006 JANUARY
HKBN received Best Brand Award 2005 (Broadband Service) from PC Weekly
SEPTEMBER
City Telecom enhanced Work-Life Balance with the launch of eight employee-beneficial
measures
OCTOBER
Liu Xiang Be Ahead of Yourself marketing campaign won the Certificate of Excellence of
HKMA/TVB Awards for Marketing Excellence 2006
2007 MARCH
HKBN enhanced Digital TV Platform and launched new application bbBOX
HKBN received e-zones e-brand award 2006-07 Best Brand for Internet Service Provider
JUNE
City Telecom received recognition for its Talent Management at the Hong Kong HR Awards
2007
JULY
HKBN was awarded Integrated Support Team of the Year at the Asia Pacific Customer Service
Consortium (APCSC) Customer Relationship Excellence Awards (CRE Awards)
SEPTEMBER
HKBN launched Fibre-To-The-Home (FTTH) residential broadband services FibreHome100,
FibreHome200 and FibreHome1000
City Telecoms 15th Anniversary
HKBN launched first wave marketing campaign Squeeze
NOVEMBER
HKBN launched second wave marketing campaign Alexander Graham Bell & Kung Fu
Fighting Ants
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07
City Telecom (H.K.) Limited
Major Milestones
_____
Annual Report 2008
and Events in 2008
JANUARY
_____
JANUARY
_____
FEBRUARY
HKBN launched the free WiFi Service at public
_____
HKBN launched Dual Mode High Def inition
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HKBN awarded contract for the provision
rental housing estates
_____
Terrestrial TV Receiver and IPTV Set-Top-Box
_____
of payphone service at the Hong Kong
International Airport
MAY
_____
SEPTEMBER
_____
NOVEMBER
HKBN launched third wave marketing
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HKBN launched the National Geographic
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HKBN launched fourth wave marketing
campaign Thats Ridiculous Channels 3 rst ever Interactive Channel
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campaign 18 Commercials for the 18 Districts
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City Telecom (H.K.) Limited
Supplement on 08 Annual Report 2008
Marathon Participation
...enough to run from Hong Kong to Beijing and half way back...
RAISING THE LIMITS OF OUR TALENTS
Actively promote internal competitions that encourages teams to compete and have fun, across the full distances; and
At City Telecom, we believe in Raising the Limits of our Talents.
Offer Special Carbo Spaghetti meals in our Free Zone
Hong Kong is renowned as a work oriented city where we spend
_____
canteen to reward, recognize and support the runners.
a large part of our lives desk-bound. With Work-Life Balance and
Raising the Limits of our Talents in mind, we have proactively
supported the Standard Chartered Hong Kong Marathon for the
CTI GROUP PARTICIPATION IN STANDARD
past three years.
CHARTERED HONG KONG MARATHON
In addition to full corporate sponsorship for the entry fee, we are
_____
We have seen our participation rate increase from 64 registrations
doing the following: in 2007 to 190 in 2009, representing more than 12% of our total
Hong Kong workforce. More impressively, total distance registered
· Retain two athletic coaches to provide professional training
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has increased from 684 km in 2007 to 3,362 km in 2009, which is
every Tuesday and Thursday from 7 pm to 9 pm, starting
_____
enough to run from Hong Kong to Beijing and half way back.
eight months before the main event in February 2009;
When we started running in 2007, the full 42 km marathon was
· Encourage active support by non-runners for our runners on
_____
beyond the limits of our Talents. Today, we have 29 Talents
the day; attempting to break this limit. We hope our Talents will bring this
strengthened mentality towards achieving our company-wide
aspirations.
Full
_____
Half
Number of
_____
Marathon
_____
Marathon 10 km
_____
Total
Participants/ Talents
Distance (km) 42 21 10 Registered
_____
Total km
_____
km/Talent
2007
0 4 60 64 684 10.7
2008
3 10 155 168 1,887 11.2
2009
29 48 113 190 3,362 17.7
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09
City Telecom (H.K.) Limited
Recognition
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Annual Report 2008
1. Hi-Tech Weeklys The Best of The Best Awards 2007-08 Best 5. 1st Runner-up at HKIHRM/SCMP People Management
Brand for Internet Service Provider
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Awards 2007
2. TVB Most Popular TV Commercial Awards 2008 Most 6. APCSC Customer Relationship Excellence Awards for
Innovative & Most Popular Series Awards Integrated Support Team of the Year 2006
3. ATV The 14th Annual Most Popular TV Commercial Awards 7. e-zones e-brand award 2006-07 Best Brand for Internet
Service Provider
4. Hong Kong HR Awards 2007 Best Retention Strategy
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City Telecom (H.K.) Limited
An Interview with 10 Annual Report 2008
the Chairman
Dear Fellow Shareholders,
As Chairman of the Group, I wish to share with you
the most pressing strategic issues that we face in
the form of Questions and Answers.
ON BUSINESS DIRECTION
Q The Company has invested in a lot of effort to
enhance its brand and image. What do you think of
the progress?
A
This is a very important step for us towards
achieving our Big, Hairy & Audacious Goal (BHAG) of
becoming the largest Next Generation Network (NGN)
provider in Hong Kong by 2016. We have already been
recognized by the industry that our
Fibre-to-the-Home network in Hong Kong is one of
the most advanced networks worldwide.
We need to let the consumers and investors know
the same, even though most of them do not
understand the technical details. Most of them
are only guided by the common belief, that the
bigger Company should normally have a better
technology, which is not always correct.
According to all of the consumer surveys
conducted in the past 18 months, HKBN has been
rated as the 2nd best Internet Service Provider
in Hong Kong, and is far better than the 3rd
and the 4th ones. Our rating is very close to
the dominant player. Our aim is to be ahead of
them.
Q What particular achievement makes you feel most
satisfied?
A
Company Culture. We are an infrastructure
company. We will be in Hong Kong over the next 100
years. We will not be acquired by other big
companies. We understand that our future depends on
how we behave today.
We understand our technology edge over the
dominant player today cannot last forever. We
need to build up something which is long term
and not easy to be copied by others. This is
our Company Culture.
For details, please refer to our Vision
Statement at
http://www.ctigroup.com.hk/en/vision.html. I am
glad that, we have been making very good
progress in implementing our Vision Statement
step by step over the last year.
We have also seen significant achievements in:
Staffs job satisfaction, trust and loyalty to the Company
Consumers satisfaction in our overall services
What is the most dissatisfied item for me? Delay
in network rollout. We will increase our
resources in this area to ensure that we can
meet the target in the coming year.
Q Do you think these achievements help the company
to be on the right track of achieving BHAG?
A
Yes, absolutely. BHAG is a long term goal. Company
culture is essential for the company to last. Staff
morale is essential for providing excellent customer
services. Customers
satisfaction is essential for giving us the highest
return to our investment. Highest Return on
Investment is essential for achieving our BHAG. I am
confident that we are on the right track of
achieving the BHAG, even though the road ahead is
tough.
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An Interview with the Chairman
11
City Telecom (H.K.) Limited
Annual Report 2008
Q How has the company been affected by the adverse
economic environment?
A
We expect there will be increasing pressure on
the whole industrys Average Revenue Per User.
However, due to our uniqueness and the excellence
of our products and customer services, we believe
that we can maintain our position as the 2nd
largest broadband provider in Hong Kong residential
market and one of the highest ARPU operators.
Our senior notes are only due in 2015. So,
financing is not a problem and we are not
affected by the recent liquidity crunch. In
fact, since most of the material costs and labor
costs are expected to be lowered in the coming 2
years, this is a good time for us to further
expand our Fiber-to-the Home network in full
force.
Q How would you see the competition environment in
telecom market?
A
With the anticipated adverse economic environment
and too many operators in Hong Kong, the competition
in the telecom market will remain keen and be even
more intensified. I dont see how that can be
relaxed. However, as mentioned above, we have
something unique (Ultra high speed Internet access
and excellent customer service) which will maintain
our leading position.
Q What will be the companys future direction?
A
Our future direction is well defined in our
Vision Statement We will be the largest Next
Generation Network (NGN) provider by 2016.
Q If the public was asked to describe HKBN by
one word, what word you wish it would be?
A CHANGE
ON PERSONAL ASPECT
Q It seems that the companys management style has
changed a lot in recent years. What triggered these
changes?
A
We are an infrastructure company and we will not
be acquired by others. This Company will last
longer than the life span of me and my fellow
partners. We need to build up a system to ensure:
1. Maintaining the company culture;
2. Managing by a team of
professionals, rather than any single
individual; and
3. Dedicating authority to the front
line and motivating all levels of staff.
Q The two co-founders are stepping back from the
operations of the company. What do you think about
the pros and cons?
A
A start-up company is driven by
entrepreneurship. An enterprise is maintained by
a professional team.
This is a publicly listed company, not a family
business. We, the two co-founders, have been
running the
company for over 15 years. We now need new ideas
and new blood to spur the companys growth.
Q Hows the progress of de-centralizing authority?
To what stage is the transition at? Are there any
issues that the company is facing, and how did you
solve them?
A
The move towards de-centralizing authority has
been a huge success and up to my expectation. We
will further push down to front line customer
contact points to ensure we can build a closer
relationship with our customers.
Q What do you expect from the new management
team?
A
Dont be afraid to take risk. All big technology
companies are exposed to failure risk when they
become complacent over their past achievements and
is not willing to take risk.
I hope the new management team will prepare for
all the best and worst scenarios and have the
guts to take risks.
Wong Wai Kay, Ricky
Chairman
Hong Kong, 17th November 2008
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City Telecom (H.K.) Limited
Products at a Glance 12 Annual Report 2008
1. Lam Sin Man, Winnie
Management Trainee
2. Zhu Wei Jian, Franky
Officer General Affairs & Control
3. Lau Ka Yan, Clare
Management Trainee
4. Chan Pui Chi, Kathy
Management Trainee
BROADBAND SERVICE
With our fibre network, users can experience
25Mbps, 50Mbps, 100Mbps, 200Mbps and 1000Mbps
broadband services with symmetric upload and
download speeds.
bbMAX
provides comprehensive value-added services
to our users, including:
bbWI3FI
We have hotspots all
over Hong Kong, which allow users
to go online easily with their
electronic devices.
bbWATCH
Allow users to enjoy
dedicated splendid TV programmes
provided by HKBNs bbTV through their
personal computer.
bbDRIVE
Provide online virtual
storage up to 10GB, user-friendly
interface and limitless volume file
transfer; Users can also back-up
their important documents/files
safely with bbDrive.
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Products at a Glance
13
City Telecom (H.K.) Limited
Annual Report 2008
5. Lu Hui, Simone
Training Officer
6. Leung Lee Nam, LurLee
Management Trainee
7. Liang Zhan Peng, Brian
Customer Relations Supervisor
bbGUARD
Filter away
problematic and spam virus emails
at the server before reaching your
email in-box.
bbMAINT
Provide one stop
solution to our users in order to
help them solve their non-network
technical problems.
getFAXEASY
A service for
receipt of fax via a designated
email to your personal computer.
We will also provide user a Fax
to Email personal fax number in
order to enhance user privacy.
IP TV SERVICE
bbTV
service now delivers over 80 TV channels,
mainly in Chinese language, including 24-hour news
channel, movies, animation, Chinese opera, financial
news, international news, and entertainment as well
as interactive channels, such as stock quote,
ringtone download & interactive quiz.
TELEPHONY SERVICE
HKBN has been providing quality
HomeTel
Service to
Hong Kong people since 2002. We also provide 14
different add-valued services to our users.
2B 2ND GENERATION BROADBAND PHONE
2b 2nd Generation Broadband Phone
is a new telephone
service and its reliability is as good as
traditional fixed line telephone service. 2b enables
you to make and receive phone calls from Hong Kong
(either home telephones, office telephone or mobile
phones) through the Internet wherever you are in
Hong Kong or overseas.
IDD
Our international direct calling services,
IDD 1666 &
IDD 0030
, allow quality and instant connection to
overseas.
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City Telecom (H.K.) Limited
Brand 14 Annual Report 2008
Management
Our ultimate goal is to be the largest Next Generation Network provider in Hong Kong by 2016
BRAND MANAGEMENT
Background
Hong Kongs telecommunications market is
characterized by intense competition and smart
consumers. To succeed, we need the best product, the
best service and the best image.
From a humble beginning as an IDD service reseller
in 1992, we established Hong Kong Broadband Network
Limited in 1999 to engage in fixed
telecommunications network services.
With perseverance, we are laying the foundation
for future success.
Today, we are two years into our 10-year goal of
becoming the largest Next Generation Network
provider by 2016. We are pleased to report we are
making significant progress, having recently
overtaken the incumbent cable TV operator in terms
of the number of broadband subscribers and become
the largest alternative residential broadband
Internet Service Provider in Hong Kong.
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Brand Management
15
City Telecom (H.K.) Limited
Annual Report 2008
Lo Wai Man, Daniel
Manager Finance
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Brand Management
_____
City Telecom (H.K.) Limited
16 Annual Report 2008
STAGE 1 STAGE 2 STAGE 3 STAGE 4 STAGE 5
The Brand Evolution
Stage 1: Building Network Infrastructure
HKBN believes that having the best and most advanced
network infrastructure is the fundamental to success.
Contrary to other new entrants that typically rely on
the incumbent for unbundled resale, we built our own
Metro Ethernet network and optic fibre backbone,
thereby controlling the end-to-end process on service
provisioning and network. This autonomy allows us to
offer superior service and value to our customers.
(Picture 1: Worker excavation)
Stage 2: Service Enhancement
In 2005, we began enriching our broadband product
spectrum. Going beyond bb10, our basic 10Mbps
symmetric broadband connection, we launched bb25,
bb50, bb100, bb200 and bb1000, thus providing the
widest variety in town catering for every need of
broadband users. Another milestone is the Stability
Speed Guarantee launched in 2005 which today is
still the only service in Hong Kong offering a local
speed guarantee.
(Picture 2)
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Brand Management
17
City Telecom (H.K.) Limited
Annual Report 2008
Stage 3: Service Sublimation Care from the
Heart, Serve with Swift Actions
Customer experience comprises many small elements. Be
it product quality, sales service, installation work,
enquiry processing, etc., they are all vital
components of our brand experience. Since October
2006, we have redesigned uniforms
(Picture 3)
for our
residential sales team, and also enhanced their
skills through internal and external training
including celebrity speakers
(Picture 4 Alfred
Cheung)
. In December of the same year, a new Customer
Service Centre was opened for providing better
service to our customers
(Picture 5)
.
In 2007, we introduced the Special Duty Unit, a
customer account management system. Carrying the
meaning of Service Devoted to You, this
personalized customer care system assigns a
designated customer service executive to handle
customers individually
(Picture 6)
. Instead of
standard hotlines, our customers now enjoy personal
access to their account managers, similar to a
premium banking experience.
Stage 4: From External to InternalHappy Staff Bring
Happy Customers
While customers are our external VIPs, our staff are
internal VIPs. The prime aim of the Staff Engagement
Department (SED), which comprises Learning &
Development, Talent Management and Administration
teams, is taking care of every talents needs. We are
one of the first local companies to take initiatives
on Work-Life Balance, voluntarily introducing a
five-day work week and offering paternity leave.
Other company benefits include an Education
Partnership Programme whereby we actively co-invest
in our staff for continuous life-long learning.
We have also enhanced staff facilities by
establishing a Life-Time Learning Centre and
Free-Zone Multi-Purpose staff canteen
(Picture 7)
.
More than HK$3 million was invested to replace LCD
monitors and ergonomic chairs
(Picture 8)
for staff
at our main Trans Asia office location.
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Brand Management
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City Telecom (H.K.) Limited
18 Annual Report 2008
Lau Chi Kong, Kenneth
Assistant Manager Finance
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Brand Management
19
City Telecom (H.K.) Limited
Annual Report 2008
Stage 5: Consumer Market Education
From internal to external, from hardware to software,
the company has undergone a revolution like a
rebirth. A step further is to let the public know
what we have done. Waves of marketing campaigns
brought this target into reality.
1. First Wave: Network Differentiation
The Squeeze educates the public the kind of
broadband services they are using. It featured
characters squeezing into a thin tube
representing how the incumbent carrier is still
providing broadband Internet service through
legacy-copper telephone lines.
(Picture 9)
2. Second Wave: Consumer Education
A character representing telephone inventor
Alexander Graham Bell emphasizes that copper
telephone wire invented 100 years ago was not
designed for present day broadband connection.
This is followed by 10 Kung-Fu Fighting Ants
ganging up on a single helpless ant to
demonstrate how traditional Asymmetric Digital
Subscriber Line (ADSL) services typically offer
uplink bandwidth that is only a 10th of the
downlink capacity.
(Picture 10 &11)
3. Third Wave: Rally Public Momentum
Thats Ridiculous presents characters singing
a hugely popular 1980 canto pop rock song and
chiding the continued use old telephone lines
for broadband services, conveying the message
its time to switch to optic fibre.
(Picture 12)
4. Fourth Wave: Building Long-term Creditability
The 18 commercials for the 18 districts
demonstrate HKBN has fibre optic broadband in
every Hong Kong district, celebrating the
achievements of the brand. Each commercial, with a
scene typical of the district, shows how HKBN
fibre optic is discovered in an unusual way,
surprising the public that HKBN has all of Hong
Kongs districts covered with its fibre optic
network.
(Picture 13)
These multi-dimensional campaigns spanned a wide
range of media, including TV commercials, print
advertisements, billboards and advertising space on
various public transport, carrying home the message
optic fibre is the present and future trend for high
speed broadband service.
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Brand Management
_____
City Telecom (H.K.) Limited
20 Annual Report 2008
What have we achieved?
Spanned over years with great e3 orts, we have been rewarded with achievements in many aspects,
leading us towards our Big, Hairy & Audacious Goal.
REAPING BRAND RESULTS
Magazine Surveys
· Next Magazine, the popular local weekly
infotainment magazine, receives complaints on
all consumer products and services.
· A complaint ranking system was established in
2003 to show the top 10 companies receiving
the most consumer complaints quarterly.
· In the second quarter of 2008, HKBN is
the only major telecom operator NOT on the
list.
Commissioned Consumer Survey Results
· The survey was conducted from 19 July to 3
August 2008 by the global market research
company, Synovate.
· A total of 203 street interviews were
conducted with respondents aged 15-54 who
have access to Internet through
residential broadband.
Aged
_____
Aged
15-29 30-54
89 114
interviewees
_____
interviewees
TOTAL 203 INTERVIEWEES
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Brand Management
21
City Telecom (H.K.) Limited
Annual Report 2008
i. Non-HKBN users agree HKBN is as good if not
better than the incumbent;
1. 68% Network Speed
(December 2007 66%; May 2008 57%)
2. 61% Network Stability
(December 2007 57%; May 2008 48%)
3. 70% Customer Services
(December 2007 53%; May 2008 59%)
ii. Switching
67% of non-HKBN users agree to consider HKBN
when they switch to a new ISP (December 2007
54%; May 2008 46%)
33% DISAGREE 67% AGREE
Brand Recognition
This year, we proved our branding exercise is a
success by winning the award at ATVs 14th Annual
Most Popular TV Commercial Awards Competition, and
the Most Innovative Award and the Most Popular
Series Award at TVBs Most Popular TV Commercial
Awards Contest.
REAPING FINANCIAL RESULTS
3.3 x increase in net profit to HK$125.2 million,
driven by record high profitability in our Fixed
Telecom Network Service business.
|
City Telecom (H.K.) Limited
Our Network 22 Annual Report 2008
Self-built Next Generation Fibre Network
COVERAGE
Our broadband network currently covers 1.5 million
Hong Kong households and we will continue to expand
towards the 2.0 million target by 2010, reaching
over 90% of all homes in Hong Kong.
FIBRE3TO3THE3HOME
We are the first ISP to deploy Fibre-To-The-Home
(FTTH) in the local residential market while our
competitors still predominately use copper wires for
their last mile. Our 100% self-built IP network
(Metro-Ethernet) with cumulative investment of HK$2.6
billion, is independent from the incumbent operator,
which empowers us to offer superior service and value
to our customers. Our symmetrical bandwidth ensures
unbeatable speed for both uploading and downloading.
For example, our bb100 service takes only seven
minutes to upload or download a 4.3GB DVD film.
CAPACITY
Our Metro Ethernet has the bandwidth that should be
more than sufficient to meet the demand for next five
years. If necessary, we can further upgrade our
capacity to 64,000Gbps readily.
|
Our Network
23
City Telecom (H.K.) Limited
Annual Report 2008
Yeung Chi Ho, Henry
Senior Manager Network Development (Local Network)
|
Our Network
_____
City Telecom (H.K.) Limited
24 Annual Report 2008
Fibre-to-the-Home Connectivity
|
Our Network
25
City Telecom (H.K.) Limited
Annual Report 2008
Internet
HKBN network
operation center
Direct connect to
users premises
with territory-
wide optic fibre
network
RELIABILITY
Currently, we maintain more than 400 computers
located at various buildings, simulating user
experience to conduct 24-hour network testing. This
has ensured that we are closely monitoring our
network performance. In addition, we have bandwidth
over provision to ensure quality service during
periods of heavy traffic congestion.
APPLICATIONS
Our self-built optic fiber network offers
tremendous flexibility, allowing us to be the first
operator in Hong Kong to deliver triple-play
broadband Internet access, telephony and
fully-digitalized IP-TV in 2003, as well as other
services such as corporate and mobile data
services, all within a single network.
PARTNERSHIP
To meet the needs of our rapidly increasing
subscribers, we collaborated with international
carrier to increase our bandwidth by over 60% in
2007-2008. Also, we partner with game operators to
provide stable and high speed online game experience
to online gamers .
In terms of cost per Mbps, our services are among
the best value in the world. Our dream of empowering
the people of Hong Kong is being realized!
|
City Telecom (H.K.) Limited
Managements 26 Annual Report 2008
Discussion and Analysis
Our solid FY2008 result is strong encouragement for our long term vision that fibre is the future.
|
FINANCIAL HIGHLIGHTS
In thousands of Hong Kong dollars except for per share amounts and ratios
|
|
|
|
|
|
|
|
|
|
|
For the year ended
|
|
|
|
31 August
|
|
|
31 August
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
|
|
1,302,981
|
|
|
|
1,141,270
|
|
Earnings before interest, tax, depreciation and amortization (EBITDA
1
)
|
|
|
377,964
|
|
|
|
353,827
|
|
EBITDA margin
|
|
|
29.0
|
%
|
|
|
31.0
|
%
|
Profit attributable to shareholders
|
|
|
125,190
|
|
|
|
28,865
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
Basic (HK Cents)
|
|
|
19.7
|
|
|
|
4.7
|
|
Diluted (HK Cents)
|
|
|
19.0
|
|
|
|
4.6
|
|
Total dividend declared per share (HK cents)
2
|
|
|
6.0
|
|
|
|
8.0
|
|
Capital expenditures
|
|
|
211,684
|
|
|
|
132,250
|
|
Adjusted free cash flow
3
|
|
|
106,739
|
|
|
|
156,744
|
|
Managements Discussion and Analysis 27 City Telecom (H.K.) Limited
Annual Report 2008
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
|
As at
|
|
|
|
31 August
|
|
|
31 August
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
|
|
|
|
|
|
|
|
Cash position
4
|
|
|
421,610
|
|
|
|
547,309
|
|
Total equity attributable to equity shareholders
|
|
|
1,032,607
|
|
|
|
903,882
|
|
Shares in issue (in thousands)
|
|
|
650,622
|
|
|
|
616,503
|
|
Net assets per share (HK$)
|
|
|
1.59
|
|
|
|
1.47
|
|
Gearing ratio
|
|
|
0.25
|
|
|
|
0.45
|
|
|
|
|
1
|
|
EBITDA for any period means, without duplication, net income/(loss) for such period, plus the
following to the extent deducted in calculating such net income/(loss): net interest
expense/(income), income taxes, depreciation and amortisation expense (excluding any such non
cash charge to the extent it represents an accrual of or reserve for cash charges in any
future period or amortisation of a prepaid cash expense that was paid in a prior period not
included in the calculation).
|
|
2
|
|
For the dividend declared for the year ended 31 August 2008, a scrip or cash option is provided.
|
|
3
|
|
Adjusted free cash flow means EBITDA minus capital expenditure and net finance costs.
|
|
4
|
|
Cash position means cash at bank and in hand and long-term bank deposits, but excluding pledged bank deposits.
|
FINANCIAL REVIEW
For the year ended 31 August 2008, our consolidated turnover grew by 14.2% year-on-year to
HK$1,303.0 million, the strongest turnover growth since FY2000. This solid growth was primarily
contributed by our increase in Fixed Telecommunications Network Service business (FTNS) of 23.8% to
HK$1,011.0 million, which more than compensated for the decline in International Telecommunications
Service business (IDD) of 10.0% year-on-year to HK$292.0 million.
Our FTNS business continues to be our core focus, contributing 77.6% of our total turnover. The
FTNS business growth is sustained by across the broad increase in our broadband, voice and IPTV
subscription base and higher average revenue per user (ARPU) of our ultra-high speed broadband
Internet access service.
Our consolidated EBITDA increased by 6.8% year-on-year to HK$378.0 million, while our EBITDA margin
fell to 29.0% from 31.0% in last year. This mild margin contraction is mainly due to
higher advertising and marketing expenses as we invested in our brand development and one-off upfront customer acquisition costs, which in turn is a variable cost component of our strong growth in subscriptions during the year.
We have bought back a total principal value of approximately US$35.6 million of the 8.75% 10-year senior notes during the year, which has reduced our net finance costs by 8.2% to HK$59.5 million for the year.
For FY2008 overall, we are now harvesting the benefits of a shift in business mix towards the more sustainable FTNS services, growing recurrent subscription base, interest savings from senior notes buyback, tax benefit from recognition of deferred tax assets on tax loss in prior years and the first full year depreciation impact of a change in our assets estimated useful lives. Profits attributable to our shareholders increased by 333.2% to HK
$125.2 million with basic earnings per share reaching HK19.7 cents.
Managements Discussion and Analysis
_____
City Telecom (H.K.) Limited
28 Annual Report 2008
|
LIQUIDITY AND CAPITAL RESOURCES
As of 31 August 2008, the Group continued to be in a strong financial position for the year under
review with cash at bank and in hand of HK$421.6 million and pledged bank deposit of HK$87.3
million (31 August 2007: cash at bank and in hand of HK$532.9 million, long term bank deposit of
HK$14.4 million and pledged bank deposit of HK$87.2 million) and outstanding borrowing of HK$683.6
million (31 August 2007: HK$953.8 million). Our long term liability consisted mainly of our
outstanding 8.75% 10-year senior notes which amounted to HK$683.2 million (31 August 2007: HK$952.6
million). Our normal trading operations were well supported by HK$87.3 million banking facilities,
out of which only HK$29.9 million was utilised.
The debt maturity profiles of the Group as at 31 August 2008 and 31 August 2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
|
|
|
|
|
|
|
|
Repayable within one year
|
|
|
121
|
|
|
|
835
|
|
Repayable in the second year
|
|
|
129
|
|
|
|
121
|
|
Repayable in the third to fifth year
|
|
|
126
|
|
|
|
254
|
|
Repayable after the fifth year
|
|
|
683,242
|
|
|
|
952,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
683,618
|
|
|
|
953,803
|
|
|
|
|
|
|
|
|
As at 31 August 2008, all outstanding borrowings bear fixed interest rate and are denominated in
United States dollars or Hong Kong dollars. The Groups net debt to net asset gearing ratio for the
year is 0.25 times which is calculated as below:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
|
|
|
|
|
|
|
|
Net Debt (note)
|
|
|
262,008
|
|
|
|
406,494
|
|
Net Assets
|
|
|
1,032,607
|
|
|
|
903,882
|
|
Gearing (times)
|
|
|
0.25
|
|
|
|
0.45
|
|
|
|
|
Note:
|
|
Net debt is total long term debt and other liabilities and obligations under finance leases
less cash at bank and in hand and long term bank deposits but excluded pledged bank deposits
|
Our capital expenditure for FY2008 was HK$211.7 million, compared to last year of HK$132.3 million.
This capital expenditure level was in line with our three-year HK$850 million network expansion
plan set in FY2007 and our policy to maintain capital expenditure to below our EBITDA. During the
year, the Group generated adjusted free cash flow, which is defined as EBITDA less capital
expenditure and less net finance costs, of HK$106.7 million (2007: HK$156.7 million).
The on-going capital expenditure on our network development will be met by internally generated
cash flow and the proceeds from senior notes issued in January 2005. Our capital expenditure
outlook for FY2009 FY2010 is expected to be about HK$650 million in order to reach our continuous
network expansion target towards 2.0 million residential homes pass by 2010.
Managements Discussion and Analysis 29 City Telecom (H.K.) Limited
Annual Report 2008
|
CHARGE ON GROUP ASSETS
At 31 August 2008, the Group had pledged deposits of HK$87.3 million (31 August 2007: HK$87.2
million) for securing bank facilities of equivalent amount for issuing bank guarantees, letter of
credits, hedging arrangements, bank loan and overdraft facilities. As of 31 August 2008, the Group
has utilised HK$29.9 million (31 August 2007: HK$11.2 million) banking facilities primarily for
providing bank guarantees to suppliers and to utility vendors in lieu of payment of utility
deposits.
EXCHANGE RATES
All the Groups monetary assets and liabilities are primarily denominated in either Hong Kong
dollars or United States dollars. Given the exchange rate of the Hong Kong dollar to the United
States dollar has remained close to the current pegged rate of HKD7.80 = USD1.00 since 1983,
management does not expect significant foreign exchange gains or losses between the two currencies.
The Group is also exposed to a certain amount of foreign exchange risk based on fluctuations
between the Hong Kong dollars and the Renminbi arising from its operations in the PRC. In order to
limit this foreign currency risk exposure, the Group maintained Renminbi cash balance that
approximate three months of operating cash flows.
CONTINGENT LIABILITIES
At 31 August 2008, the Group had total contingent liabilities in respect of guarantees provided to
suppliers of HK$24.6 million (31 August 2007: HK$5.9 million) and to utility vendors in lieu of
payment of utility deposits of HK$5.3 million (31 August 2007: HK$5.3 million).
Save as disclosed above, the Group had no material contingent liabilities or off-balance-sheet
obligations.
BUSINESS REVIEW
Fixed Telecommunications Network Services (FTNS)
FTNS business continued its strong growth momentum in a competitive environment. During the year
ended 31 August 2008, FTNS segment, as the top revenue stream of the Group, recorded an increase of
23.8% growth year-on-year to HK$1,011.0 million, delivering our objective of increasing both
subscription base and ARPU.
As of 31 August 2008, our subscription base was up 17.3% year-on-year with 118,000 net
subscriptions across our broadband, voice and IPTV services to 801,000 subscriptions. The
subscription growth was mainly driven by the consumer recognition of our branding through our
Network Differentiation marketing campaign launched during the year, and also on our improving
customer service reputation.
During the year, a key milestone was overtaking the Cable TV operator to become the largest
alternative residential broadband Internet service provider in Hong Kong. This was achieved by
broadband subscription growth of 27.9% to 316,000 versus total market growth of 4.8% to 1.93
million. Furthermore, we were recognised with The Best of The Best Awards 2007-2008 Best Brand
for Internet Service Provider presented by Hi-Tech Weekly, the leading PC & Digital weekly
magazine in the Hong Kong Market. With growing demand for ultra-high bandwidth services and our
rising brand positioning, we were able to deliver subscriber growth, higher ARPU and lower churn
rate. Particularly, our new contracts and renewals for broadband Internet service reached a new
blended ARPU high of HK$191 per month in August 2008 versus HK$175 in August 2007, whilst our churn
rate fell to well below 1% per month by the end of FY2008.
Managements Discussion and Analysis
_____
City Telecom (H.K.) Limited
30 Annual Report 2008
|
The combined results mentioned above reflected the Groups success in winning market share through
its high service quality and enhanced service offerings. With the introduction of direct
Fibre-To-The-Home (FTTH) using Gigabit Passive Optical Network (GPON) technology during the year
and coupled with our Metro Ethernet foundation, we extended our service suite with FibreHome100,
FibreHome200 and FibreHome1000, widening our position as the most comprehensive range of broadband
Internet services in the territory, ranging from 25 Mbps up to 1Gbps.
On voice business, although the voice market remained competitive due to the modest growth
environment and incumbents strategic retention campaign to maintain stable market share, we
managed to have a moderate growth in our subscription base by 6.8% to 329,000 as of 31 August 2008.
On IPTV business, we had an increase in subscriptions by 21.9% to 156,000 as of 31 August 2008 as a
result of our bundling service strategy as well as our launch of dual mode High Definition
Terrestrial TV Receiver and IPTV set-top-box to all customers in Hong Kong during the year. Going
forward, we will continue to position IPTV as an ancillary service to our broadband and voice
services.
International Telecom Services (IDD)
IDD service revenue, contributed 22.4% of the Groups total revenue, showed a continuous decline as
a result of intensive competition from traditional IDD alternatives, substitution from
Voice-Over-IP (VoIP) calling options, and also from our own proactive migration of IDD customers to
FTNS 2b VoIP services. However, the decline has been moderated over the past 24 months. During the
year, our IDD traffic volume fell by 12.9% to 574 million minutes but our revenue fell at a
slightly slower pace of 10.0% to HK$292.0 million. On IDD, our strategy is to focus on cash flow
rather than market share.
PROSPECTS
Our solid FY2008 result is strong encouragement for our long term vision that fibre is the future.
We are also seeing the long term benefits of significant investment in our brand which helps to
turn our vision into shareholder returns.
Over-time, we envision that the open Internet will be the preferred source of multi-media content
for entertainment, and this will drive demand for more and more bandwidth in our daily lives.
Recent developments evidence this change. For example, for the recent Wimbledon Tennis Championship
held from 23 June to 6 July 2008, it was possible to pay US$24.99 for full live Internet access to
all games, together with a comprehensive archive of past games. This practical example shows how
simple it is to bypass traditional Pay-TV options and source content directly from the Internet. As
the largest alternative Internet service provider in Hong Kong providing unmatched mass scale ultra
high speed broadband Internet services, we expect this competitive edge will lead to steady
improvement growth and profitability outlook.
The current global financial crisis aroused by the sub-prime issue has already had a dampening
effect on consumer sentiment and business activities across the globe. Although we are not immune
from this macro economic downturn, our underlying broadband and voice services as semi-utility
services should be relatively insulated. Furthermore, our standard 24-month subscription contract
helps reduce short term variation. However, if the global economic conditions remain difficult for
a long period of time, we will actively try to minimise any resultant negative impact through
offsetting savings on operating and capital expenditures.
In short, whilst we are confident of the future, we are also fully aware of the challenges that we
face in turbulent economic times and balancing between harvesting our existing presence and
re-investing for continued growth.
Managements Discussion and Analysis 31 City Telecom (H.K.) Limited
Annual Report 2008
|
DIVIDEND
For cash management, we consider adjusted free cash flow is a better indicator of cash generation
than net profit. As such, after reviewing operating results for FY2008 and considering our
long-term development plans and recent economic downturn, the Board recommended a final dividend of
HK2 cents per ordinary share based on the percentage of adjusted free cash flow rather than on the
percentage of net profit. Together with the interim dividend of HK4 cents per ordinary share
declared and paid for 1H2008, a total dividend of HK6 cents per ordinary share is recommended by
the Board for FY2008. Nevertheless, we will review our dividend policy on a time-to-time basis.
EMPLOYEE REMUNERATION
Including the directors of the Group, as at 31 August 2008, the Group had 3,051 permanent full-time
employees versus 2,692 as of 31 August 2007. The total talent related cost was HK$471.8 million in
FY2008 versus HK$383.8 million in FY2007 which was mainly due to the increase in resources for
network expansion and for sales related talent. The Group provides remuneration package consisting
of basic salary, bonus and other benefits. Bonus payments are discretionary and dependent by
reference to both the Groups and individual performances. The Group also provides comprehensive
medical insurance coverage, competitive retirement benefits schemes, talent training programs and
share option schemes.
City Telecom (H.K.) Limited
Profile of Directors and 32 Annual Report 2008 Senior Management
EXECUTIVE DIRECTORS
Mr. WONG Wai Kay, Ricky Mr. CHEUNG Chi Kin, Paul Mr. YEUNG Chu Kwong, Mr. LAI Ni Quiaque
Chairman Vice Chairman William Chief Financial Officer, Company Secretary Chief Executive Officer &
Head of Staff Engagement
NON3EXECUTIVE DIRECTOR INDEPENDENT NON3EXECUTIVE DIRECTORS
Mr. CHENG Mo Chi, Moses Mr. LEE Hon Ying, John Dr. CHAN Kin Man Mr. PEH Jefferson Tun Lu
SENIOR MANAGEMENT
Mr. CHONG Kin Chun, John Mr. LO Sui Lun Dr. TAM Ming Chit Ms. TO Wai Bing
Director of Corporate Division Director, Chief Technology Officer Managing Director of
Infrastructure Development Business Development
|
Profile of Directors and Senior Management 33 City Telecom (H.K.) Limited
Annual Report 2008
|
EXECUTIVE DIRECTORS
Mr. WONG Wai Kay, Ricky,
aged 46, is the co-founder and Chairman of the Group. He is responsible
for our overall strategic planning and management. Mr. Wong has over 20 years experience in the
telecommunications and computer industries. He had worked at a major US-listed computer company as
a marketing representative and was responsible for marketing and distribution of computer products
in Hong Kong from 1985 to 1989. He was also a co-founder and director of a company principally
engaged in import and distribution of computer systems in Canada prior to co- founding of the
Group. Mr. Wong holds a Bachelors Degree in Science and a Master of Business Administration Degree
(Executive MBA Programme) from The Chinese University of Hong Kong. He is a first cousin of Mr.
Cheung Chi Kin, Paul, the Vice Chairman of the Group. Currently, Mr. Wong is a member of Commission
on Youth, a member of Zhejiang Committee, Chinese Peoples Political Consultative Conference, an
independent non-executive director of Bossini International Holdings Limited and a member of the
Board of Trustees, United College, The Chinese University of Hong Kong.
Mr. CHEUNG Chi Kin, Paul,
aged 51, is the co-founder and Vice Chairman of the Group. Mr. Cheung is
responsible for overall strategic planning and management of the Group. Prior to that, Mr. Cheung
was appointed as the Chief Executive Officer and was responsible for our day-to-day operations and
technological research, development and support activities. Mr. Cheung has more than 27 years
experience in the telecommunications and computer industries. He had worked in companies engaged in
application software development and computer consultancy prior to co-founding of the Group. Mr.
Cheung graduated with a Diploma of Advanced Programming and System Concepts Design from Herzing
Institute, Canada. Mr. Cheung is a first cousin of Mr. Wong Wai Kay, Ricky, the Chairman of the
Group.
Mr. YEUNG Chu Kwong, William,
aged 47, was appointed Executive Director and Chief Executive Officer
of the Group on 1 November 2008 with the responsibilities for developing corporate strategies and
overseeing the operations of the entire Group. Before that, Mr. Yeung joined the Group as Chief
Operating Officer in October 2005. He was responsible to head our Customer Engagement Department to
oversee customer relationship management. Mr. Yeung was also responsible to head Network
Development Department. Mr. Yeung has more than 17 years experience in the telecommunications
industry. Prior to joining the Group, Mr. Yeung was the Director of Customers Division in
Smartone-Vodafone, the General Manager of Personal Communications and Retail Division in Tricom
Telecom Limited, and was also an Inspector of Police in the Hong Kong Police Force. He holds a
Bachelor of Arts Degree from Hong Kong Baptist University, a Master of Business Administration
Degree from University of Strathclyde, UK and a Master of Science Degree in Electronic Commerce and
Internet Computing from The University of Hong Kong.
Mr. LAI Ni Quiaque,
aged 38, is Chief Financial Officer, Company Secretary and Head of Staff
Engagement. Mr. Lai joined the Group in May 2004. Mr. Lai has extensive experience in
telecommunications industry, research and finance, being highly rated in this field. Prior to
joining the Group, Mr. Lai was a Director and Head of Asia Telecom Research for Credit Suisse, he
was involved in global fund raisings for a wide range of Asian Telecom carries such as China
Mobile, China Telecom, China Unicom, China Netcom, SK Telecom, PCCW, Telekom Malaysia, etc. Before
that, Mr. Lai held positions with Hongkong Telecom and Kleinwort Benson Securities (Asia). Mr. Lai
holds a Bachelor of Commerce degree from the University of Western Australia, is a Fellow member of
HKICPA and CPA Australia and is a Member of the Hong Kong Institute of Directors. Mr. Lai has been
currently in the Kellogg-HKUST EMBA program with expected completion in 2009. Mr. Lai has also been
appointed as a member of the Remuneration Committee of the Company.
Profile of Directors and Senior Management
_____
City Telecom (H.K.) Limited
34 Annual Report 2008
|
NON-EXECUTIVE DIRECTOR
Mr. CHENG Mo Chi, Moses,
aged 58, was re-designated as a Non-executive Director of the Group with
effect from 30 September 2004. He was appointed as an Independent Non-executive Director of the
Group since 17 June 1997. Mr. Cheng is the senior partner of P.C. Woo & Co., a firm of solicitors
and notaries in Hong Kong, the Founder Chairman of the Hong Kong Institute of Directors of which he
is now the Honorary President and Chairman Emeritus and the Chairman of the Betting and Lotteries
Commission. Mr. Cheng was appointed as a member of the Legislative Council of Hong Kong from 1991
to 1995. Mr. Cheng currently also services as an independent non-executive director of another six
companies listed on the Main Board, namely China COSCO Holdings Company Limited, China Mobile
Limited, China Resources Enterprise, Limited, Hong Kong Exchanges and Clearing Limited, Liu Chong
Hing Investment Limited and Towngas China Company Limited. He currently also services as a
non-executive director of another four companies listed on the Main Board, namely Galaxy
Entertainment Group Limited, Guangdong Investment Limited, Kader Holdings Company Limited and Tian
An China Investments Company Limited. Mr. Cheng has also been appointed as a member of the
Remuneration Committee of the Company.
INDEPENDENT
NON-EXECUTIVE DIRECTORS
Mr. LEE Hon Ying, John,
aged 62, is the managing director of Cyber Networks Consultants Company in
Hong Kong. He was the Regional Director, Asia Pacific of Northrop Grumman Canada, Ltd. He was
previously the director of network services of Digital Equipment (HK) Limited and prior to that,
worked for Cable & Wireless HKT and Hong Kong Telecom. He is a chartered engineer and a member of
each of Institution of Engineering and Technology, the United Kingdom, and the Hong Kong
Institution of Engineers and the Hong Kong Computer Society. He received a Masters Degree in
Information System from the Hong Kong Polytechnic University in 1992. In addition, he is the
Territory Vice-president of the Society of St. Vincent de Paul of Asia and Oceania, which is an
international charity body. He is the Commission member of Catholic Diocese of Hong Kong Diocesan
for Hospital Pastoral Care. Mr. Lee has been a Director since June 1997. Mr. Lee is also the
chairman of the Audit Committee and Remuneration Committee of the Company.
Dr. CHAN Kin Man,
aged 49, is Director of Centre for Civil Society Studies and Associate Professor
of the Department of Sociology of The Chinese University of Hong Kong. He received a Bachelor of
Social Science Degree from The Chinese University of Hong Kong in 1983 and a Doctor of Philosophy
Degree from Yale University in the U.S. in 1995. Dr. Chan has been a Director since June 1997. Dr.
Chan has also been appointed as a member of the Audit Committee and Remuneration Committee of the
Company.
Mr. PEH Jefferson Tun Lu,
aged 49, is a Certified Public Accountant of the Hong Kong Institute of
Certified Public Accountants and a Certified Practicing Accountant of CPA Australia. Mr. Peh holds
a Master Degree in Business from the University of Technology, Sydney. He has over 26 years of
experience in finance, accounting and management from listed and private companies in Hong Kong and
Australia. Mr. Peh has been a Director of the Group since September 2004. Mr. Peh has also been
appointed as a member of the Audit Committee and Remuneration Committee of the Company.
Profile of Directors and Senior Management 35 City Telecom (H.K.) Limited
Annual Report 2008
|
SENIOR MANAGEMENT
Mr. CHONG Kin Chun, John
, aged 46, is the Director of the Corporate Division. He is responsible for
sales, marketing and servicing development of the Groups international telecommunications services
and fixed telecommunications network services for business and corporate customers. Mr. Chong
joined the Group in February 1996 and holds a Bachelors Degree in Arts from The University of Hong
Kong. Mr. Chong worked as a general manager overseeing product management and the sales force of a
listed telecommunications products company in Hong Kong from 1987 to 1996.
Mr. LO Sui Lun,
aged 44, is the Director of Hong Kong Broadband Network Limited (HKBN), the
wholly-owned subsidiary of the Company. He is now in charge of the Groups Infrastructure
Development and is responsible for engaging in development of the Groups infrastructure network.
Before that, Mr. Lo was in charge of regulatory, carrier business, international business, network
operation and network development for HKBN. Mr. Lo joined the Group in September 1998. Prior to
that, Mr. Lo worked for PCCW (formerly known as Hong Kong Telecom) for 9 years, gaining
experience in network planning and undersea cable investment. Mr. Lo holds a Bachelors Degree in
Sciences in Electronics from The Chinese University of Hong Kong and a Masters Degree in Business
Administration from the University of Strathclyde, U.K.
Dr. TAM Ming Chit,
aged 42, is the Chief Technology Officer of the Group. He is responsible for the
Groups network, information system development and operations including broadband networking,
IPTV, wireless applications, as well as VoIP networks. Prior to joining the Group in 2008, Dr. Tam
held various technical positions in various institutions in Hong Kong and overseas, such as
Alcatel-Lucent, Citibank and SRA. He has over 15 years of operational experience in the information
technologies and telecom industry. Dr. TAM holds a Bachelor of Science (Hons) in Computer Science
from Imperial College, University of London, U.K. and a Doctor of Philosophy in Computer Science
from the University of Pennsylvania, U.S.A.
Ms. TO Wai Bing,
aged 46, is the Managing Director of Business Development of the Group. Ms. To is
also in charge of International Business Department and Carrier Business Department. She is
responsible for the control of cost of services, carrier relations, sales of carrier business,
explore and secure business partnerships to strengthen the Groups business operations and
development. Before joining the Group, Ms. To had worked in the Hong Kong Telecom Group for 16
years after graduating from the Hong Kong Polytechnic University with a Diploma in Electronic
Engineering and subsequently a Higher Certificate in Electronic Engineering. Ms. To rejoined the
Group in May 2007 after her previous service with the Group from September 1998 to July 2006.
City Telecom (H.K.) Limited
Financial 36 Annual Report 2008
Information
We are on the right track of achieving the Big, Hairy, Audacious Goal even though the road ahead is
tough.
Financial Information
Corporate Governance Report 37
Report of the Directors 45
Independent Auditors Report 55
Consolidated Income Statement 56
Balance Sheet 57
Consolidated Statement of Changes in Equity 59
Consolidated Cash Flow Statement 60
Notes to the Financial Statements 61
Five Year Financial Summary 108
|
37 City Telecom (H.K.) Limited
Corporate Governance
_____
Annual Report 2008 Report
|
The Board of Directors (the Board) of the Company is pleased to present the Corporate Governance
Report of the Company for the year ended 31 August 2008.
COMMITMENT TO CORPORATE GOVERNANCE
The Board recognises the importance of corporate governance and have made continued efforts enhance
or management structures and internal control procedures.
The Company has applied the principles in and complied with the code provisions of the Code on
Corporate Governance Practices (the Code) set out in Appendix 14 to the Rules Governing the
Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules) throughout
the year ended 31 August 2008.
Directors Securities Transactions
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers
(the Model Code) contained in Appendix 10 to the Listing Rules as the code of conduct for
securities transactions by Directors of the Company (the Company Code).
Based on the specific enquiry made, all Directors have confirmed that they have complied with the
required standard as set out in the Company Code throughout the year, except for the following
deviation:
Model Code Provision B.8
This code provision stipulates that a director must not deal in any securities of the listed issuer
without first notifying in writing the chairman or a director designated by the board and receiving
a dated written acknowledgement. The relevant date of the dealing was 17 October 2007 on which Mr.
Lai Ni Quiaque had duly notified the chairman before the dealing but the written acknowledgement
was dated after the relevant date of the said dealing by Mr. Lai Ni Quiaque. As such, it is
regarded as a deviation of the Model Code Provision B.8, which requires the receipt of the written
acknowledgement to be dated before the dealing in securities.
THE BOARD
(i)
|
|
Responsibilities
|
|
|
|
The Board has the responsibility for the oversight of the Company, which includes establishing the
strategic direction of the Company, setting the long-term objectives of the Company, monitoring the
performance of management, protecting and maximizing the interests of the Company and its
shareholders, reviewing, considering and approving the annual budget, management results and
performance update against annual budget, together with business reports from the management. The
Board has focused on making broad policy decisions and has delegated the responsibility for the
implementation of business strategy and management of the day-today operations of the Companys
business to the management.
|
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All Directors have full and timely access to all relevant information as well as advice and
services of the Company Secretary, with a view to ensuring that Board procedures and all applicable
rules and regulations are followed. Upon making request to the Board, all Directors may obtain
independent professional advice at the Companys expense for carrying out their functions.
|
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(ii)
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Board Composition
|
|
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As at the date of the 2008 Annual Report, the Board consists of eight Directors, including four
Executive Directors, one Non-executive Director and three Independent Non-executive Directors. The
Board believes that the balance between Executive and Non-Executive Directors is reasonable and
adequate to provide sufficient checks and balances that safeguard the interests of shareholders of
the Company (the Shareholders ) and the Company.
|
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|
|
During the year and up to the date of the 2008 annual report, the following changes in the Board
composition of the Company took place:
|
|
(i)
|
|
Mr. Yeung Chu Kwong, William was appointed as an Executive Director and Chief Executive Officer
with effect from 1 November 2008.
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(ii)
|
|
Mr. Cheung Chi Kin, Paul resigned as the Chief Executive Officer and was appointed the Vice
Chairman with effect from 1 November 2008.
|
Corporate Governance Report
_____
City Telecom (H.K.) Limited
38 Annual Report 2008
|
|
|
|
Mr. Wong Wai Kay, Ricky, Chairman of the Company, is a first cousin of Mr. Cheung Chi Kin, Paul,
Vice Chairman of the Company. Save as disclosed above, there are no financial, business, family,
other material and relevant relationships among members of the Board as at the date of 2008 Annual
Report.
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(iii)
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Appointment, re-election and removal of directors
|
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|
Nominations for members to the Board result from consultations among the Chairman, Chief Executive
Officer and other Directors as the Board considers appropriate.
|
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Pursuant to the Articles of Association of the Company, any director appointed by the Board for
filling a casual vacancy or as an addition to the existing Board shall hold office only until the
next following general meeting of the Company, and shall be eligible for re-election. Every
director, including the non-executive director, is subject to retirement by rotation at least once
every three years. One-third of the directors must retire from office at each annual general
meeting and their re-election is subject to the approval of Shareholders.
|
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|
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In compliance with the provisions of the Articles of Association of the Company, Mr. Wong Wai Kay,
Ricky, Mr. Cheung Chi Kin, Paul and Mr. Yeung Chu Kwong, William shall retire by rotation at the
coming 2008 Annual General Meeting and, being eligible, will offer themselves for re-election.
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(iv)
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Chairman and Chief Executive Officer
|
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|
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|
As at the date of the 2008 Annual Report, the Chairman and the Chief Executive Officer of the
Company are Mr. Wong Wai Kay, Ricky and Mr. Yeung Chu Kwong, William respectively. The roles of the
Chairman and the Chief Executive Officer are segregated. We believe this segregation of duties
helps to provide check and balances and as well as provides for balance of power and authority.
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(v)
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Non-executive Director and Independent Non-executive Directors
|
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The term of office of all Non-executive Director and Independent Non-executive Directors has been
fixed for a specific term of one year. They are subject to retirement by rotation and re-election
at the Companys annual general meeting in accordance with the Articles and Association of the
Company.
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During the year ended 31 August 2008, the Board at all times met the requirements of the Listing
Rules relating to the appointment of at least three Independent Non-executive Directors with at
least one of them possessing appropriate professional qualifications or accounting or related
financial management expertise.
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The appointment of Independent Non-executive Directors strictly adheres to the guidelines for
assessing independence set out in Rule 3.13 of the Listing Rules. The Company has received written
confirmation of their independence from each of the Independent Non-executive Directors and
considers them to be independent of the Company and free of any relationship that could materially
interfere with the exercise of their independent judgments.
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(vi)
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Number of Meetings and Directors Attendance
|
|
|
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The Board meets from time to time, a no less than four times a year, to discuss and exchange ideas
on the affairs of the Company. During the year ended 31 August 2008, the Board held six meetings to
approve interim and final results announcement, financial reports, to recommend or declare
dividends and to discuss significant issues and general operation of the Company. Individual
attendance records of each Director at the respective Board and committee meetings are set out in
the table on page 40 of this annual report.
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(vii)
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Practices and Conduct of Meetings
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Notices of regular Board meetings together with all relevant information and reports prepared by
management are given to all Directors at least 14 days before the meetings. For other Board and
Board Committee meetings, reasonable notice is generally given. The Company Secretary is
responsible to take and keep minutes of all Board and committee meetings. Draft version of minutes
is normally circulated to the Directors for comment within a reasonable time after each meeting and
the final version of which is sent to all Directors for their records and is opened for Directors
inspection.
|
Corporate Governance Report 39 City Telecom (H.K.) Limited
Annual Report 2008
|
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(viii)
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Training for Directors
|
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In case there is any newly appointed Director, he/she will be provided with an induction course so
as to ensure that he/she has appropriate understanding of the business and operations of the
Company and that he/she is fully aware of his/her responsibilities and obligations under the
Listing Rules and the relevant regulatory requirements.
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There are also arrangements in place for providing continuing briefing and professional development
to Directors whenever necessary.
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To assist their continuous professional development, the Company Secretary recommends Directors to
attend relevant seminars and courses. The costs for such training are borne by the Company.
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In October 2008, the Group has arranged a professional training workshop the Directors and the
senior management in order to keep them abreast of the up-to-date knowledge.
|
BOARD COMMITTEES
The Board has set up two board committees, namely, Audit Committee and Remuneration Committee
(collectively the Board Committees), for overseeing particular aspects of the Companys affairs.
The Board Committees are provided with sufficient resources to discharge their duties and, upon
reasonable request, are able to seek independent professional advice in appropriate circumstances,
at the Companys expenses.
(i)
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Audit Committee
|
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The Board has established the Audit Committee in March 1999 and set out details of its overall
objectives, authority, roles and responsibilities.
|
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The Audit Committee comprises Mr. Lee Hon Ying, John, Dr. Chan Kin Man and Mr. Peh Jefferson Tun
Lu, who are Independent Non-executive Directors and one of whom possess the appropriate
professional qualifications or accounting or related financial management expertise as required
under Rule 3.10(2) of the Listing Rules. Mr. Lee Hon Ying, John is the Chairman for the Audit
Committee. The Audit Committee is provided with sufficient resources to discharge its duties.
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The major roles and functions of the Audit Committee are set out clearly in the Audit Committee
Charter are made available on the website of the Company at www.ctigroup.com.hk. The Audit
Committee is responsible for, inter alia, the appointment, compensation, retention and overseeing
the accounting and financial reporting processes of the Group and the audits of the Groups
financial statements on behalf of the Board of Directors, and reviewing and discussing the internal
audit plans and reports of the audit activities, examinations and results thereof of the Internal
Audit Department of the Company.
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|
The Audit Committee held four meetings during the year ended 31 August 2008. Executive Directors,
representative from the internal audit department of the Company and the external auditor of the
Company were invited to join the discussions at the meetings.
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|
Following is a summary of works performed by the Audit Committee during the year ended 31 August
2008:
|
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(i)
|
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Reviewed the Companys financial statements for the year ended 31 August 2007 and for the six
months ended 29 February 2008;
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(ii)
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Reviewed the internal audit progress, especially on the compliance of the Sarbanes-Oxley Act;
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(iii)
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Review the external auditors report on the review of the Companys interim financial report
for the six months ended 29 February 2008 and the Companys audited consolidated financial
statements for the year ended 31 August 2007; and
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(iv)
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Pre-approved the audit and non-audit services provided by the Companys external auditor.
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Corporate Governance Report City Telecom (H.K.) Limited
40 Annual Report 2008
|
(ii)
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Remuneration Committee
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The Board had established the Remuneration Committee in August 2001.
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The Remuneration Committee comprises six members, namely Mr. Lee Hon Ying, John, Dr. Chan Kin Man,
Mr. Peh Jefferson Tun Lu, Mr. Cheng Mo Chi, Moses, Mr. Lai Ni Quiaque and Ms. Choy Mei Yuk, Mimi.
Mr. Lee Hon Ying, John is the Chairman for the Remuneration Committee. The Remuneration Committee
is provided with sufficient resources to discharge its duties. The Remuneration Committees
objectives are as follows:
|
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(i)
|
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Establish a formal, fair and transparent procedures for developing policy and structure of all
remuneration of directors and senior management;
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(ii)
|
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Review and consider the Companys policy for remuneration of directors and senior management;
and
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(iii)
|
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Recommend the remuneration packages of non-executive directors (including independent
non-executive directors).
|
The role and authorities of the Remuneration Committee, including those set out in code provision
B.1.3 of the Code, were clearly set out in its terms of reference which are available at the
Companys website at www.ctigroup.com.hk. The Remuneration Committee is responsible to review and
determine the remuneration policy and packages of the Executive Directors and senior management.
The Remuneration Committee held two meetings during the year ended 31 August 2008. Following is a
summary of works performed by the Remuneration Committee during the year ended 31 August 2008:
|
(i)
|
|
Reviewed and approved the proposed discretionary performance bonus for the management committee
members;
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(ii)
|
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Review and approved the remuneration packages for management committee members;
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(iii)
|
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Review and approved the remuneration for the Directors.
|
ATTENDANCE RECORDS AT THE BOARD AND COMMITTEES MEETINGS
The attendance records of the individual Directors except for Mr. Yeung Chu Kwong, William, who was
appointed on 1 November 2008, at the Board, audit committee and remuneration committee meetings for
the year ended 31 August 2008 are set out in the following table:
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Meetings Attended/Held
|
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Audit
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Remuneration
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Board
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Committee
|
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Committee
|
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meeting
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|
meeting
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meeting
|
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Executive Directors:
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Mr. Wong Wai Kay, Ricky
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6/6
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N/A
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N/A
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Mr. Cheung Chi Kin, Paul
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5/6
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N/A
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N/A
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Mr. Lai Ni Quiaque
#
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6/6
|
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N/A
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2/2
|
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|
Non-Executive Director:
|
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Mr. Cheng Mo Chi, Moses
#
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6/6
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N/A
|
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2/2
|
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|
|
|
|
|
|
|
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|
|
Independent Non-Executive Directors:
|
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|
|
|
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|
|
|
|
|
Mr. Lee Hon Ying, John *
#
|
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5/6
|
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4/4
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2/2
|
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Dr. Chan Kin Man *
#
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5/6
|
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3/4
|
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1/2
|
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Mr. Peh Jefferson Tun Lu *
#
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5/6
|
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4/4
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2/2
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Director, Talent Management:
|
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Ms. Choy Mei Yuk, Mimi
#
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N/A
|
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N/A
|
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2/2
|
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*
|
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Audit Committee Member
|
|
#
|
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Remuneration Committee Member
|
Corporate Governance Report 41 City Telecom (H.K.) Limited
Annual Report 2008
|
DIRECTORS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Directors acknowledge their responsibility for the preparation and the true and fair
presentation of the financial statements of the Company and of the Group for the year ended 31
August 2008 on the going concern basis in accordance with the statutory requirements and applicable
reporting standards.
The statement of the auditor of the Company about their reporting responsibilities and opinion on
the financial statements of the Company for the year ended 31 August 2008 is set out in the
Independent Auditors Report on page 55 of this annual report.
DIRECTORS AND OFFICERS LIABILITY INSURANCE AND INDEMNITY
The Company has purchased insurance to cover the Directors and Officers liability. The insurance
policy contains the following separate insurance contracts: Directors and Officers Liability
Contract; Company Reimbursement Contract; and Legal Representation Expenses Contract. Throughout
the financial year 2008, no claim has been made against the directors and officers.
AUDITORS REMUNERATION
KPMG has been re-appointed as the independent auditor of the Company by the Shareholders at the
last annual general meeting.
For the year ended 31 August 2008, KPMG received approximately HK$3,191,000 (2007: HK$2,600,000)
for audit services and HK$Nil (2007: HK$Nil) for non-audit services.
The statement of the responsibilities of the independent auditor with respect to the 2008 financial
statements is set out in the Independent Auditors Report on page 55 of this annual report.
INTERNAL CONTROL
(I)
|
|
Internal Control Environment
|
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|
|
Internal control system is designed to assist the achievement of business objectives, safeguard
assets against unauthorized use or disposition, ensure maintenance of proper accounting records for
the provision of reliable financial information for internal use or for publication, and ensure the
Group is in compliance with relevant legislation and regulations. This internal control system is
designed to provide reasonable assurance against material misstatements, losses and fraud. The
Board is responsible for maintaining and reviewing the effectiveness of the Groups internal
control system which adopts a top-down risk-based approach to continuously improve the control
system in a more effective and timely manner.
|
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(II)
|
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Internal Audit Function
|
|
|
|
Internal Audit Department is established to conduct independent reviews on the Groups internal
control based on a risk-and-control approach. The audit plan is reviewed and approved by the Audit
Committee on an annual basis. According to the audit plan, Internal Audit Department reviews the
managements control regarding reliability of financial information, operations and procedures of
various departments through systematic audit procedures to ensure that the internal controls are
effective and in compliance with applicable laws and regulations. In addition, other reviews and
investigations are carried out on an ad hoc basis. During the course of audit, Internal Audit
Department has unrestricted access to all departments, assets, records and personnel of the Group.
|
|
|
|
Upon completion of audits, the key control deficiencies and corresponding recommendations are
discussed and agreed with related department heads. Implementation of recommendations will be
followed up in due course. At least twice a year, the significant audit findings and corrective
action plans are reported directly to the Chairman and Audit Committee. Copies of internal audit
reports are sent to the Chief Financial Officer and external auditors for attention.
|
Corporate Governance Report
_____
City Telecom (H.K.) Limited
42 Annual Report 2008
|
(III)
|
|
Internal Control Assessment
|
|
|
|
The Group continues to improve its comprehensive internal control and risk management regime with
reference to the COSO framework (The Committee of Sponsoring Organizations of the Treadway
Commission), namely, control environment, risk assessment, control activities, information and
communication and monitoring. These include systems for identifying, monitoring and managing risks
associated with its business activities as follows:
|
|
1.
|
|
An organizational structure with operating policies and procedures, lines of responsibility
and delegated authority has been established;
|
|
|
2.
|
|
Code of Business Conduct and Ethics, which is applicable to the Directors, management and all
other employees of the Group, is adopted to promote honest and ethical conducts;
|
|
|
3.
|
|
Corruption and Conflicts of Interest Policy is established to ensure reputation of the Group
not to be tarnished by employees dishonesty or corruption, and maintain integrity and
effectiveness of the Group as a whole;
|
|
|
4.
|
|
Members of the Board and Management Committee who have access to price-sensitive and specific
information are bound by the Model Code for Securities Transactions by Directors of Listed
Issuers;
|
|
|
5.
|
|
Remuneration Committee is established to ensure there is a fair and transparent procedures
for developing policy and structure of all remuneration of the Directors and senior
management;
|
|
|
6.
|
|
Corporate Social Responsibility Report is launched in 2008 to demonstrate the Groups active
embracement of Corporate Citizenship;
|
|
|
7.
|
|
6-month rolling budgets for all capital and operating expenditures are prepared and approved
by senior management before being adopted;
|
|
|
8.
|
|
Monthly management reports on the financial results and key operating statistics of each
business segment are reviewed by the Executive Directors. Regular meetings are held with
senior management of each business unit to review the actual performance against budget;
|
|
|
9.
|
|
A quarterly review of the Groups financial performance is performed by the Board;
|
|
|
10.
|
|
Self-Assessment Questionnaires are issued to business units for completion as a basis for
evaluating the general system control environment and risks;
|
|
|
11.
|
|
Information technology is used to build an automatic control in our computer systems;
|
|
|
12.
|
|
Whistleblower policy is established to facilitate the reporting of any improper activities
relating to fraud, questionable accounting or internal control matters;
|
|
|
13.
|
|
Internal Audit Department produces a monthly video to share with all staff about the global
best practices, knowledge on common Hong Kong Ordinance and demonstrate how such controls can
improve operational performance;
|
|
|
14.
|
|
Engagement of independent professionals and provision of appropriate trainings are used to
ensure compliance with applicable laws and regulations; and
|
|
|
15.
|
|
External consultants are engaged to provide advisory services as the Directors consider
appropriate.
|
With the assistance of Internal Auditor and other external consultants, the Directors have
conducted a review of the effectiveness of the Groups internal control system and consider that
such system is reasonably effective and adequate this year. The review covers all material controls
including financial, operational and compliance controls and risk management functions.
Corporate Governance Report 43 City Telecom (H.K.) Limited
Annual Report 2008
|
(IV)
|
|
Compliance with U.S. Sarbanes-Oxley Act 2002
|
|
|
|
As the Company is listed on the Nasdaq Stock Market in the U.S., it is bound by the provision of
the U.S. Sarbanes Oxley Act 2002 (the SOX Act), which is a legislation seeking to enhance the
transparency and accountability of the companies in the areas of corporate governance and financial
reporting. Under Section
404(a) of the SOX Act, management of the Group is required to include its
assessment of the effectiveness of the Groups internal control procedures over financial reporting
in the annual report on Form 20-F to be filed with the U.S. Securities and Exchange Commission
beginning in the fiscal year ended 31 August 2008, while no external auditors attestation report
on such assessment is required in this fiscal year according to Section 404(b) of the SOX Act.
|
|
|
|
Internal control over financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purpose
in accordance with generally accepted accounting principles (GAAP). With the assistance of
Internal Audit Department and external consultants, management of the Group organizes and conducts
a comprehensive assessment of internal control over financial reporting based on the control
criteria in COSO framework. As of the date of this annual report, management is not aware of any
instances of material weaknesses on its internal control over financial reporting.
|
|
|
|
Nevertheless, the Group has performed an annual review of the effectiveness of its disclosure
controls and procedures in 2008. Based on the review, management considers that the Groups
disclosure controls and procedures are effective in providing reasonable assurance that all
material information is promptly recorded, processed and disclosed.
|
COMPANY POLICIES
The Group has adopted a number of company policies to ensure good corporate governance practices
and high standard of business conducts and ethics of the Group, including Company Policies and
Procedures, Code of Business Conduct and Ethics and individual departmental charters. The Group
will conduct and review regularly an evaluation of the adequacy of these Company policies.
COMMUNICATION WITH SHAREHOLDERS
The Board is committed to providing clear and full information on the Group to Shareholders through
the publication of notices, announcements, circulars, interim and annual reports. The Company
maintains a websites at www.ctigroup.com.hk where the Companys announcements, circulars, notices,
financial reports, business developments, corporate governance practices and other information are
posted.
Procedures for and the rights of shareholders to demand a poll voting on resolutions at
Shareholders meetings are included in all circulars to Shareholders and will be explained during
the proceedings of Shareholders meetings. In case of poll voting being conducted, the poll results
will be posted on the websites of The Stock Exchange of Hong Kong Limited and the Company on the
business day following the Shareholders meeting.
During this year, the Board confirmed that there were no significant changes made in the Companys
Articles
of Association.
INVESTOR RELATIONS AND PUBLIC RELATIONS
The Company considers investor transparency as an important element of our corporate governance. In
the past year, we participated in numerous investor conferences and have held regular meetings with
the wide base of institutions and investors, in Hong Kong and overseas. Furthermore, we also engage
in relevant industry conferences around to world to exchange industry best practices, which helps
us to refine and improve upon our long term strategic development.
Corporate Governance Report City Telecom (H.K.) Limited
44 Annual Report 2008
|
PARTICIPATION IN INVESTOR AND INDUSTRY CONFERENCES
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Date
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Activities
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Speaker
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Position
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Venue
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2008
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NOV
|
|
DigiWorld Summit 2008
|
|
Alice Wong
|
|
Financial Controller
|
|
Montpellier, France
|
|
|
Broadband World Australia 2008
|
|
Henry Yeung
|
|
Senior Manager, Network Development (Local Network)
|
|
Sydney, Australia
|
SEP
|
|
Asian Telecom Tour by Citigroup
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|
NiQ Lai
|
|
CFO
|
|
Hong Kong
|
|
|
2008 FTTH Conference & Expo
|
|
Mike Ng
|
|
Senior Manager, Infrastructure Development
|
|
Nashville, Tennessee, USA
|
AUG
|
|
Sales & Excellence World 2008
|
|
William Yeung
|
|
COO*
|
|
Singapore
|
|
|
The CFO Reengineered
|
|
Alice Wong
|
|
Financial Controller
|
|
Kuala Lumpur, Malaysia
|
JUL
|
|
FTTH Council Asia Pacific 2008 Conference
|
|
Henry Yeung
|
|
Senior Manager, Network Development (Local Network)
|
|
Kuala Lumpur, Malaysia
|
MAY
|
|
ROTH 3rd Annual China Discovery Tour
|
|
Alice Wong
|
|
Financial Controller
|
|
Sanya, PRC
|
|
|
The Next Generation CFOs & Finance Directors' Conference
|
|
NiQ Lai
|
|
CFO
|
|
Singapore
|
|
|
Asian Telecom Tour by Merrill Lynch
|
|
NiQ Lai
|
|
CFO
|
|
Hong Kong
|
|
|
Goldman Sachs Underexplored Telcos Corporate Day
|
|
NiQ Lai
|
|
CFO
|
|
Hong Kong
|
APR
|
|
Next Generation Networks 2008
|
|
Alice Wong/ Daniel Lo
|
|
Financial Controller/ Manager, Finance
|
|
Shanghai, PRC
|
MAR
|
|
10th Annual Carriers World Asia 2008
|
|
Mike Ng
|
|
Senior Manager, Infrastructure Development
|
|
Hong Kong
|
FEB
|
|
FTTH Council Europe Conference 2008
|
|
Alice Wong
|
|
Financial Controller
|
|
Paris, France
|
|
|
ROTH 20th Annual OC Growth Stock Conference
|
|
NiQ Lai
|
|
CFO
|
|
California, USA
|
JAN
|
|
UBS Greater China Conference 2008
|
|
NiQ Lai
|
|
CFO
|
|
Shanghai, PRC
|
|
|
Fifth Annual Citi Asia Pacific Fixed Income Investor Conference
|
|
Ricky Wong
|
|
Chairman
|
|
Singapore
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEC
|
|
IPTV World Forum Asia
|
|
Ricky Wong
|
|
Chairman
|
|
Singapore
|
|
|
IMS Global Congress 2007
|
|
Daniel Lo
|
|
Manager, Finance
|
|
Amsterdam, Netherlands
|
NOV
|
|
ROTH China - Phoenix Conference
|
|
NiQ Lai
|
|
CFO
|
|
Phoenix, USA
|
|
|
HR Directors Forum 2007
|
|
Mimi Choy/ Lurlee Leung
|
|
Director, Talent Management/ Management Trainee
|
|
Guangzhou, PRC
|
|
|
2nd Annual CFO Forum
|
|
NiQ Lai
|
|
CFO
|
|
Manila, Philippines
|
|
|
Best Practice Award
|
|
Thomas Mok
|
|
Director, Learning & Development
|
|
Hong Kong
|
|
|
Asia Pacific Compensation and Benefits Forum
|
|
NiQ Lai/ Mimi Choy
|
|
CFO/
Director, Talent Management
|
|
Hong Kong
|
OCT
|
|
NGN Summit 2007
|
|
Ricky Wong
|
|
Chairman
|
|
Singapore
|
|
|
3rd Annual VoIP Conference
|
|
Mike Ng
|
|
Senior Manager,
|
|
Kuala Lumpur, Malaysia
|
|
|
India International Summit 2007 - Telecommunications
|
|
NiQ Lai
|
|
Infrastructure Development
CFO
|
|
India
|
|
|
Innovation at Work
|
|
William Yeung
|
|
COO*
|
|
Hong Kong
|
SEP
|
|
Submarine Networks World Asia 2007
|
|
S.L.Lo
|
|
Director, Infrastructure Development
|
|
Singapore
|
|
|
|
*
|
|
Mr. William Yeung was appointed as an Executive Director and Chief Executive Officer with
effect from 1 November 2008.
|
CORPORATE SOCIAL RESPONSIBILITY REPORT
In the summer of 2008, we launched our inaugural corporate social responsibility report. At the
Company, we believe in Corporate Social Investment (CSI) rather than Corporate Social
Responsibility, as we see the benefits of investing in the community in which we operate. The full
report is available for download at http://www.ctigroup.com.hk/en/csr_report.html
45
City Telecom (H.K.) Limited
Report of
_____
Annual Report 2008
the Directors
|
The Directors have pleasure in submitting their annual report together with the audited financial
statements for the year ended 31 August 2008.
PRINCIPAL ACTIVITIES AND GEOGRAPHICAL ANALYSIS OF OPERATIONS
The principal activities of City Telecom (H.K.) Limited (the Company) and its subsidiaries
(collectively referred to as the Group) are the provision of international telecommunications
services and fixed telecommunications network services to customers in Hong Kong and Canada.
An analysis of the Groups performance for the year by business and geographical segments is set
out in note 3 to the financial statements.
RESULTS AND APPROPRIATIONS
The results of the Group for the year is set out in the consolidated income statement on page 56 of
this annual report.
RESERVES
Movements in the reserves of the Group and the Company during the year are set out in note 23 to
the financial statements.
An interim dividend of HK4 cents per ordinary share with a scrip dividend option (2007: HK4 cents
per ordinary share with no scrip dividend option) and a final dividend in respect of the previous
financial year of HK4 cents per ordinary share with a scrip dividend option were paid on 23 July
2008 and 4 February 2008 respectively.
At a board meeting held on 17 November 2008, the Directors have recommended to pay a final dividend
of HK2 cents per ordinary share with a scrip dividend option offered to all shareholders excluding
shareholders with registered addresses outside Hong Kong. Subject to the approval of the
shareholders at the forthcoming Annual General Meeting, the final dividend will be distributed on
or about 25 February 2009 to shareholders whose names appear on the register of members of the
Company as at the close of business on 16 December 2008.
The
Register of Members of ordinary shares of the Company will be closed
from 17 December 2008 to
19 December 2008, both dates inclusive, during which period, no transfer of ordinary shares will be
registered. In order to qualify for the proposed final dividend, all properly completed transfer
forms accompanied by the relevant share certificates must be lodged with the Companys share
registrar not later than 4:30 p.m. on 16 December 2008.
DONATIONS
Charitable and other donations made by the Group during the year amounted to HK$295,000 (2007:
HK$43,000).
FIXED ASSETS
Details of the movements in fixed assets of the Group are set out in note 14 to the financial
statements.
SHARE CAPITAL AND SHARE OPTIONS
Details of the movements in share capital and share options of the Company are set out in note 23
to the financial statements.
DISTRIBUTABLE RESERVES
Distributable reserves of the Company as at 31 August 2008, calculated in accordance with section
79B of the Hong Kong Companies Ordinance, amounted to approximately HK$159,400,000 (2007:
HK$193,047,000).
Report of the Directors
_____
City Telecom (H.K.) Limited
46 Annual Report 2008
|
FIVE-YEAR FINANCIAL SUMMARY
A summary of the results of the assets and liabilities of the Group for the last five financial
years is set out on page 108 of this annual report.
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
During the year ended 31 August 2008, the Company has bought back a total principal value of
US$35,647,000 of the Companys 8.75% 10-year Senior Notes due 2015 which are listed on Singapore
Exchange Securities Trading Limited. Details of the buybacks are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Principal
|
|
|
Consideration
|
|
|
|
Value
|
|
|
Paid
|
|
Month
|
|
US$
|
|
|
US$
|
|
December 2007 (note (i))
|
|
|
16,850,000
|
|
|
|
17,062,269.10
|
|
January 2008 (note (ii))
|
|
|
5,000,000
|
|
|
|
4,995,312.50
|
|
February 2008 (note (ii))
|
|
|
13,797,000
|
|
|
|
13,295,126.98
|
|
|
|
|
|
|
|
|
|
|
|
35,647,000
|
|
|
|
35,352,708.58
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
(i)
|
|
total consideration paid included accrued interest
|
|
(ii)
|
|
total consideration paid included accrued interest and brokers commission
|
Save as disclosed above, during the year ended 31 August 2008, the Company has not redeemed any of
its listed securities. In addition, neither the Company nor any of its subsidiaries has purchased
or sold any of the Companys listed securities.
GROUPS BORROWINGS
The Groups borrowings as at 31 August 2008 are repayable in the following periods:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
On demand or not exceeding one year
|
|
|
121
|
|
|
|
835
|
|
More than one year but not exceeding two years
|
|
|
129
|
|
|
|
121
|
|
More than two years
|
|
|
683,368
|
|
|
|
952,847
|
|
|
|
|
|
|
|
|
|
|
|
683,618
|
|
|
|
953,803
|
|
|
|
|
|
|
|
|
Report of the Directors
47
City Telecom (H.K.) Limited
Annual Report 2008
|
DIRECTORS
The Directors during the year and up to the date of this report were:
Executive Directors
Mr. Wong Wai Kay, Ricky (Chairman)
Mr. Cheung Chi Kin, Paul (note (i)) (Vice Chairman)
Mr. Yeung Chu Kwong, William (note (ii)) (Chief Executive Officer)
Mr. Lai Ni Quiaque
*
(Chief Financial Officer)
Non-executive Director
Mr. Cheng Mo Chi, Moses
*
Independent Non-executive Directors
Mr. Lee Hon Ying, John
# *
Dr. Chan Kin Man
# *
Mr. Peh Jefferson Tun Lu
# *
#
|
|
Audit Committee members
|
|
*
|
|
Remuneration Committee members
|
Notes:
(i)
|
|
Mr. Cheung Chi Kin, Paul resigned as the Chief Executive Officer and was appointed the Vice
Chairman with effect from 1 November 2008.
|
|
(ii)
|
|
Mr. Yeung Chu Kwong, William was appointed as an Executive Director and Chief Executive
Officer with effect from 1 November 2008.
|
In accordance with Article 92 of the Companys Articles of Association, Mr. Yeung Chu Kwong,
William, shall retire from office at the forthcoming annual general meeting and, being eligible,
offer himself for re-election at the forthcoming annual general meeting.
In accordance with Articles 96 and 99 of the Companys Articles of Association, Mr. Wong Wai Kay,
Ricky and Mr. Cheung Chi Kin, Paul shall retire by rotation and, being eligible, offer themselves
for re-election at the forthcoming annual general meeting.
The Company received confirmation of independence from each of the independent non-executive
directors pursuant to Rule 3.13 of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the Listing Rules) and the Company still considers the independent
non-executive directors to be independent.
DIRECTORS SERVICE CONTRACTS
There is no unexpired service contract which is not determinable by the Company within one year
without payment of compensation (other than statutory compensation) of the directors proposed for
re-election and re-appointment at the forthcoming annual general meeting.
DIRECTORS INTERESTS IN CONTRACTS OF SIGNIFICANCE
No contract of significance in relation to the Groups business to which the Company or any of its
subsidiaries was a party and in which a Director of the Company had a material interest, whether
directly or indirectly, subsisted at the end of the year or at any time during the year.
BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT
Brief biographical details of the Directors and senior management are set out on pages 32 to 35 of
this annual report.
Report of the Directors
_____
City Telecom (H.K.) Limited
48 Annual Report 2008
|
DIRECTORS INTERESTS IN SHARES AND UNDERLYING SHARES
Directors interests or short positions in shares and in share options
At 31 August 2008, the interests or short positions of the Companys Directors, chief executives
and their associates in the shares and underlying shares of the Company and its associated
corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the SFO)),
as recorded in the register maintained by the Company required to be kept under Section 352 of the
SFO or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the Stock
Exchange) pursuant to the Model Code were as follows:
Long position in ordinary shares and underlying shares of the Company
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approximate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interests in
|
|
|
|
|
|
|
in the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
underlying
|
|
|
|
|
|
|
Companys
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares
|
|
|
|
|
|
|
issued
|
|
|
|
|
|
|
|
Interest in shares
|
|
|
|
|
|
|
Total
|
|
|
pursuant
|
|
|
|
|
|
|
share
|
|
|
|
Personal
|
|
|
Corporate
|
|
|
Family
|
|
|
interests
|
|
|
to share
|
|
|
Aggregate
|
|
|
capital
|
|
Name of Director
|
|
interests
|
|
|
interests
|
|
|
interests
|
|
|
in shares
|
|
|
options
|
|
|
interests
|
|
|
Note (1)
|
|
Mr. Wong Wai Kay, Ricky
|
|
|
366,684
|
|
|
|
331,637,811
Note (2)(i)
|
|
|
|
|
|
|
|
332,004,495
|
|
|
|
14,093,586
|
|
|
|
346,098,081
|
|
|
|
53.19
|
%
|
Mr. Cheung Chi Kin, Paul
|
|
|
11,021,389
|
|
|
|
24,324,620
Note (2)(ii)
|
|
|
|
|
|
|
|
35,346,009
|
|
|
|
14,093,586
|
|
|
|
49,439,595
|
|
|
|
7.60
|
%
|
Mr. Lai Ni Quiaque
|
|
|
|
|
|
|
|
|
|
|
10,142,446
Note (3)
|
|
|
|
10,142,446
|
|
|
|
8,029,678
|
|
|
|
18,172,124
|
|
|
|
2.79
|
%
|
Notes:
(1)
|
|
This percentage is based on 650,621,823 ordinary shares of the Company issued as at 31 August
2008.
|
|
(2)
|
|
The corporate interests of Mr. Wong Wai Kay, Ricky and Mr. Cheung Chi Kin, Paul arise through
their respective interests in the following companies:
|
|
(i)
|
|
331,637,811 shares are held by Top Group International Limited (Top Group) which is
42.12% owned by Mr. Wong Wai Kay, Ricky; the interests of Top Group in the Company is also
disclosed under the section Substantial Shareholders of this annual report.
|
|
|
(ii)
|
|
24,324,620 shares are held by Worship Limited which is 50% owned by Mr. Cheung Chi Kin,
Paul.
|
(3)
|
|
10,142,446 shares are jointly owned by Mr. Lai Ni Quiaque and his spouse.
|
Details of the Directors interests in share options granted by the Company are set out on page 50
of this annual report.
Save as disclosed above, as at 31 August 2008, none of the Directors or chief executive (including
their spouse and children under 18 years of age) of the Company had any interests or short
positions in the shares, underlying shares and derivative to ordinary shares of the Company and its
associated corporations (within the meaning of Part XV of the SFO) as recorded in the register
required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the
Stock Exchange pursuant to the Model Code.
Report of the Directors
49
City Telecom (H.K.) Limited
Annual Report 2008
|
SHARE OPTION SCHEMES
The Company operates a share option scheme (the 2002 Share Option Scheme) which was adopted by
shareholders of the Company on 23 December 2002 which the directors may, at their discretion,
invite eligible participants to take up options to subscribe for Shares subject to the terms and
conditions stipulated therein.
A summary of the 2002 Share Option Scheme operated by the Company is as follows:
(1)
|
|
Purpose
|
|
|
|
To grant share options to the eligible participants as incentives and rewards for their
contribution to the Company or its subsidiaries.
|
|
(2)
|
|
Eligible participants
|
|
|
|
Eligible participants include employees, executives or officers (including executive,
non-executive and independent non-executive directors) of the Company or any of its
subsidiaries, suppliers and professional advisers of the Group.
|
|
(3)
|
|
The total number of shares available for issue
|
|
|
|
The total number of shares which may be issued upon exercise of options to be granted under
the scheme shall not exceed 10% of the shares in issue as at the date of adoption of the 2002
Share Option Scheme on 23 December 2002 (i.e. 50,302,066 shares). Such limit was refreshed by
the shareholders in the general meeting held on 29 December 2004 and 24 December 2007
respectively so that the total number of shares which may be issued shall be 10% of the shares
in issue as at the date of the said general meeting (i.e. 61,407,340 shares and 62,704,840
shares respectively). As at the date of this annual report, the number of shares available for
issue in respect thereof is 47,413,203 shares, representing approximately 7.29% of the issued
share capital of the Company as at the date of the annual report.
|
|
|
|
The shares which may be issued upon exercise of all outstanding options to be granted and yet
to be exercised under the 2002 Share Option Scheme and any other share option scheme(s) of the
Company at any time shall not exceed 30% of the shares in issue from time to time. No options
shall be granted under any scheme(s) of the Company or any of its subsidiaries if this will
result in the 30% limit being exceeded.
|
|
(4)
|
|
The maximum entitlement of each participant under the 2002 Share Option Scheme
|
|
|
|
The total number of shares shall be issued upon exercise of the options granted under the 2002
Share Option Scheme and any other share option scheme(s) of the Company (including exercised,
cancelled and outstanding options) to each participant in any 12-month period up to and
including the date of grant shall not exceed 1% of the shares in issue as at the date of
grant.
|
|
|
|
Any further grant of options in excess of this 1% limit shall be subject to the issue of a
circular by the Company and the approval of the shareholders of the Company in general meeting
with such grantee and his associates abstaining from voting and/or other requirements
prescribed under the Listing Rules from time to time.
|
|
(5)
|
|
The period within which the shares must be taken up under an option
|
|
|
|
The period during which an option may be exercised will be determined by the board of
directors at its absolute discretion and no option may be exercised more than 10 years from
the date of grant.
|
|
(6)
|
|
The minimum period for which an option must be held before it can be exercised
|
|
|
|
The board of directors is empowered to impose, at its discretion, any minimum period that an
option must be held at the time of grant of any particular option.
|
|
(7)
|
|
The amount payable on application or acceptance of the option and the period within which
payments or calls must or may be made or loans for such purposes must be paid
|
|
|
|
Acceptance of the option must be made within 30 days after the date of offer and HK$1.00 must
be paid as a consideration for the grant of option.
|
Report of the Directors
_____
City Telecom (H.K.) Limited
50 Annual Report 2008
|
|
(8)
|
|
The basis of determining the exercise price
|
|
|
|
|
The board of directors shall determine the exercise price of each option offered but in any
event shall not be less than the highest of: (a) the official closing price of the shares of
the Company on the date of offer as quoted in the Stock Exchange quotation sheet; (b) the
average of the closing price of the shares of the Company for the 5 business days immediately
preceding the date of offer as quoted in the Stock Exchange quotation sheet; and (c) the
nominal value of the shares of the Company.
|
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(9)
|
|
The remaining life of the 2002 Share Option Scheme
|
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|
|
|
The 2002 Share Option Scheme is valid and effective from 23 December 2002, being the date of
adoption, and shall end on the tenth anniversary of such date (both days inclusive).
|
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(10)
|
|
Details of the share options granted under the 2002 Share Option Scheme as at 31 August 2008
are as follows:
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Closing price
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Adjustment
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Adjustment
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|
|
|
|
|
|
|
|
|
|
immediately
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to number
|
|
|
to number
|
|
|
|
|
|
|
Options
|
|
|
|
|
|
|
before the
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of options
|
|
|
of options
|
|
|
Options
|
|
|
cancelled/
|
|
|
|
|
|
|
date on
|
|
|
|
|
|
|
|
|
|
|
|
as at
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
for 2007
|
|
|
for 2008
|
|
|
exercised
|
|
|
lapsed
|
|
|
Balance
|
|
|
which the
|
|
|
|
|
|
|
|
Exercise
|
|
|
1 September
|
|
|
granted
|
|
|
|
|
|
|
|
|
|
|
Final
|
|
|
Interim
|
|
|
during
|
|
|
during
|
|
|
as at
|
|
|
options were
|
|
|
|
Date of
|
|
|
price
|
|
|
2007
|
|
|
during
|
|
|
Vesting
|
|
|
Exercise
|
|
|
Dividend
|
|
|
Dividend
|
|
|
the year
|
|
|
the year
|
|
|
31 August
|
|
|
granted
|
|
|
|
grant
|
|
|
HK$
|
|
|
(note i & ii)
|
|
|
the year
|
|
|
period
|
|
|
period
|
|
|
(note i)
|
|
|
(note ii)
|
|
|
(note v)
|
|
|
(note vi)
|
|
|
2008
|
|
|
HK$
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Wong Wai Kay,
Ricky
|
|
5 January 2005
|
|
|
1.5297
|
|
|
|
8,000,000
|
|
|
|
|
|
|
5 January 2005 to 31 December 2006
|
|
5 January 2005 to 20 October 2014
|
|
|
31,646
|
|
|
|
21,832
|
|
|
|
|
|
|
|
|
|
|
|
8,053,478
|
|
|
|
1.53
|
|
|
|
22 May 2006
|
|
|
0.6554
|
|
|
|
6,000,000
|
|
|
|
|
|
|
22 May 2006 to 21 May 2009
|
|
22 May 2007 to 21 May 2016
|
|
|
23,734
|
|
|
|
16,374
|
|
|
|
|
|
|
|
|
|
|
|
6,040,108
|
|
|
|
0.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Cheung Chi Kin,
Paul
|
|
5 January 2005
|
|
|
1.5297
|
|
|
|
8,000,000
|
|
|
|
|
|
|
5 January 2005 to 31 December 2006
|
|
5 January 2005 to 20 October 2014
|
|
|
31,646
|
|
|
|
21,832
|
|
|
|
|
|
|
|
|
|
|
|
8,053,478
|
|
|
|
1.53
|
|
|
|
22 May 2006
|
|
|
0.6554
|
|
|
|
6,000,000
|
|
|
|
|
|
|
22 May 2006 to 21 May 2009
|
|
22 May 2007 to 21 May 2016
|
|
|
23,734
|
|
|
|
16,374
|
|
|
|
|
|
|
|
|
|
|
|
6,040,108
|
|
|
|
0.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Lai Ni Quiaque
|
|
3 June 2004
|
|
|
1.4700
|
|
|
|
6,000,000
|
|
|
|
|
|
|
3 June 2004 to 30 April 2006
|
|
1 May 2005 to 2 June 2014
|
|
|
|
|
|
|
|
|
|
|
6,000,000
|
|
|
|
|
|
|
|
|
|
|
|
1.47
|
|
|
|
22 May 2006
|
|
|
0.6554
|
|
|
|
3,000,000
|
|
|
|
|
|
|
22 May 2006 to 21 May 2009
|
|
22 May 2007 to 21 May 2016
|
|
|
7,911
|
|
|
|
5,458
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
2,013,369
|
|
|
|
0.64
|
|
|
|
11 February 2008
|
|
|
1.8749
|
|
|
|
|
|
|
|
6,000,000
|
|
|
(note iii)
|
|
(note iii)
|
|
|
|
|
|
|
16,309
|
|
|
|
|
|
|
|
|
|
|
|
6,016,309
|
|
|
|
1.86
|
|
Report of the Directors
51
City Telecom (H.K.) Limited
Annual Report 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment
|
|
|
Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
immediately
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to number
|
|
|
to number
|
|
|
|
|
|
|
Options
|
|
|
|
|
|
|
before the
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of options
|
|
|
of options
|
|
|
Options
|
|
|
cancelled/
|
|
|
|
|
|
|
date on
|
|
|
|
|
|
|
|
|
|
|
|
as at
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
for 2007
|
|
|
for 2008
|
|
|
exercised
|
|
|
lapsed
|
|
|
Balance
|
|
|
which the
|
|
|
|
|
|
|
|
Exercise
|
|
|
1 September
|
|
|
granted
|
|
|
|
|
|
|
|
|
|
|
Final
|
|
|
Interim
|
|
|
during
|
|
|
during
|
|
|
as at
|
|
|
options were
|
|
|
|
Date of
|
|
|
price
|
|
|
2007
|
|
|
during
|
|
|
Vesting
|
|
|
Exercise
|
|
|
Dividend
|
|
|
Dividend
|
|
|
the year
|
|
|
the year
|
|
|
31 August
|
|
|
granted
|
|
|
|
grant
|
|
|
HK$
|
|
|
(note i & ii)
|
|
|
the year
|
|
|
period
|
|
|
period
|
|
|
(note i)
|
|
|
(note ii)
|
|
|
(note v)
|
|
|
(note vi)
|
|
|
2008
|
|
|
HK$
|
|
Employees under
continuous
employment contacts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees
|
|
21 October 2004
|
|
|
1.5297
|
|
|
|
8,340,000
|
|
|
|
|
|
|
21 October
2004 to 31
December
2006
|
|
1 January 2005 to 20 October 2014
|
|
|
32,397
|
|
|
|
21,002
|
|
|
|
821,344
|
|
|
|
473
|
|
|
|
7,571,582
|
|
|
|
1.53
|
|
|
|
3 October 2005
|
|
|
0.8100
|
|
|
|
1,000,000
|
|
|
|
|
|
|
3 October 2005 to 30 September 2006
|
|
1 October 2006 to 30 September 2015
|
|
|
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
0.79
|
|
|
|
22 May 2006
|
|
|
0.6554
|
|
|
|
13,940,000
|
|
|
|
|
|
|
22 May 2006 to 21 May 2009
|
|
22 May 2007 to 21 May 2016
|
|
|
45,922
|
|
|
|
27,015
|
|
|
|
5,135,805
|
|
|
|
583,162
|
|
|
|
8,293,970
|
|
|
|
0.64
|
|
|
|
3 July 2006
|
|
|
0.6773
|
|
|
|
700,000
|
|
|
|
|
|
|
3 July 2006 to 2 July 2009
|
|
3 July 2007 to 2 July 2016
|
|
|
2,769
|
|
|
|
|
|
|
|
|
|
|
|
702,769
|
|
|
|
|
|
|
|
0.68
|
|
|
|
3 August 2006
|
|
|
0.7052
|
|
|
|
70,000
|
|
|
|
|
|
|
3 August 2006 to 2 August 2009
|
|
3 August 2007 to 2 August 2016
|
|
|
277
|
|
|
|
191
|
|
|
|
30,119
|
|
|
|
|
|
|
|
40,349
|
|
|
|
0.69
|
|
|
|
22 November 2006
|
|
|
0.7251
|
|
|
|
200,000
|
|
|
|
|
|
|
22 November
2006 to 14
November
2009
|
|
15 November 2007 to 14 November 2016
|
|
|
534
|
|
|
|
368
|
|
|
|
65,000
|
|
|
|
|
|
|
|
135,902
|
|
|
|
0.75
|
|
|
|
23 May 2007
|
|
|
2.0219
|
|
|
|
100,000
|
|
|
|
|
|
|
23 May 2007 to 11 June 2010
|
|
12 June 2008 to 11 June 2017
|
|
|
396
|
|
|
|
|
|
|
|
|
|
|
|
100,396
|
|
|
|
|
|
|
|
2.03
|
|
|
|
12 December 2007
|
|
|
2.4403
|
|
|
|
|
|
|
|
1,000,000
|
|
|
12 December
2007 to 11
December
2010
|
|
12 December
2007 to 23
December
2012
|
|
|
3,956
|
|
|
|
|
|
|
|
|
|
|
|
1,003,956
|
|
|
|
|
|
|
|
2.42
|
|
|
|
6 February 2008
|
|
|
1.7652
|
|
|
|
|
|
|
|
6,000,000
|
|
|
(note iv)
|
|
(note iv)
|
|
|
|
|
|
|
16,309
|
|
|
|
|
|
|
|
|
|
|
|
6,016,309
|
|
|
|
1.99
|
|
|
|
15 February 2008
|
|
|
1.7652
|
|
|
|
|
|
|
|
4,000,000
|
|
|
(note iv)
|
|
(note iv)
|
|
|
|
|
|
|
10,873
|
|
|
|
|
|
|
|
3,008,155
|
|
|
|
1,002,718
|
|
|
|
1.79
|
|
|
|
11 March 2008
|
|
|
1.8250
|
|
|
|
|
|
|
|
300,000
|
|
|
11 March 2008 to 10 March 2011
|
|
11 March 2008 to 23 December 2012
|
|
|
|
|
|
|
816
|
|
|
|
|
|
|
|
|
|
|
|
300,816
|
|
|
|
1.80
|
|
|
|
2 May 2008
|
|
|
1.7951
|
|
|
|
|
|
|
|
1,000,000
|
|
|
(note iv)
|
|
(note iv)
|
|
|
|
|
|
|
2,718
|
|
|
|
|
|
|
|
|
|
|
|
1,002,718
|
|
|
|
1.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
61,350,000
|
|
|
|
18,300,000
|
|
|
|
|
|
|
|
|
|
|
|
204,922
|
|
|
|
177,471
|
|
|
|
14,052,268
|
|
|
|
5,398,911
|
|
|
|
60,581,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
(i)
|
|
As a result of allotment of 11,227,213 new shares to shareholders of the Company who elected to
receive the 2007 Final Dividend in shares on 4 February 2008, the exercise price of and the number
of share subject to the 51,805,000 options outstanding on 21 December 2007 (being the Record Date
for determining the entitlement of 2007 Final Dividend) were adjusted pursuant to the 2002 Share
Option Scheme with effect from 4 February 2008. The closing price per ordinary share immediately
before the date of the grant of the options was HK$1.70.
|
|
(ii)
|
|
As a result of allotment of 8,838,938 new shares to shareholders of the Company who elected to receive the 2008 Interim Dividend in shares on 23 July 2008, the exercise price of and the number of share subject to the 65,296,047 options outstanding on 6 June 2008 (being the Record Date for determining the entitlement of 2008 Interim Dividend) were adjusted pursuant to the 2002 Share Option Scheme with effect from 23 July 2008. The closing price per ordinary share immediately before the
date of the grant of the options was HK$1.79.
|
|
(iii)
|
|
The exercise of the options is subject to the performance of the Companys shares. The options shall be exercised not later than 23 December 2012.
|
|
(iv)
|
|
The exercise of the options is subject to certain conditions that must be achieved by the employee. The options shall be exercised not later than 23 December 2012.
|
|
(v)
|
|
During the year ended 31 August 2008, 14,052,268 options were exercised and the weighted
average closing price of shares of the Company immediately before the dates of exercise was HK$1.07
per ordinary share.
|
|
(vi)
|
|
During the year ended 31 August 2008, a total of 5,398,911 options were lapsed and no options cancelled.
|
Report of the Directors City Telecom (H.K.) Limited
52 Annual Report 2008
|
(11)
|
|
In determining the value of the share options granted during the year ended 31 August 2008,
the Black-Scholes option pricing model (the Black-Scholes Model) has been used except for the
share options granted on 11 February 2008 which adopts the Monte Carlo model.
Both models are the most generally accepted methodologies used to calculate the value of
options. The variables of the models include expected life of the options, risk-free interest
rate, expected volatility and expected dividend yield of the shares of the Company.
|
|
|
|
In determining the value of the share options granted during the year, the following variables
have been applied to the models:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 May
|
|
|
11 March
|
|
|
15 February
|
|
|
11 February
|
|
|
6 February
|
|
|
12 December
|
|
Measurement date
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
Variables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected life
|
|
5 years
|
|
|
5 years
|
|
|
3 years
|
|
|
average 4 years
|
|
|
5 years
|
|
|
5 years
|
|
Risk-free rate
|
|
|
2.88
|
%
|
|
|
2.04
|
%
|
|
|
2.16
|
%
|
|
|
2.16
|
%
|
|
|
2.16
|
%
|
|
|
3.10
|
%
|
Expected volatility
|
|
|
63.56
|
%
|
|
|
63.35
|
%
|
|
|
63.22
|
%
|
|
|
63.32
|
%
|
|
|
63.22
|
%
|
|
|
61.86
|
%
|
Expected dividend yield
|
|
|
1.97
|
%
|
|
|
1.97
|
%
|
|
|
1.97
|
%
|
|
|
1.97
|
%
|
|
|
1.97
|
%
|
|
|
1.97
|
%
|
The above variables were determined as follows:
|
(i)
|
|
The expected life is estimated to be 3 to 5 years from the date of grant (the Measurement
Date).
|
|
|
(ii)
|
|
The risk-fee rate represents the yield of the Hong Kong Exchange Fund Notes corresponding to
the expected life of the options as at the Measurement Date.
|
|
|
(iii)
|
|
The expected volatility represents the annualised standard deviation of the return on the
daily share price of the Company over the period commensurate to the expected life of the options
(taking into account the remaining contractual life of the option and the effect of the expected
early exercise of the option).
|
|
|
(iv)
|
|
The expected dividend yield is based on the historical dividend yield over the last five
years.
|
|
|
The fair value of the options granted during the year is estimated as below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 May
|
|
|
11 March
|
|
|
15 February
|
|
|
11 February
|
|
|
6 February
|
|
|
12 December
|
|
Date of grant
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
Fair value per share option
|
|
HK$
|
0.83
|
|
|
HK$
|
0.87
|
|
|
HK$
|
0.72
|
|
|
HK$
|
0.41
|
|
|
HK$
|
0.90
|
|
|
HK$
|
1.13
|
|
|
|
Effective from 1 September 2005, upon the adoption of Hong Kong Financial Reporting Standard 2
Share-based payment, the Group recognises the fair value of share options as an expense in the
income statement over the vesting period, or as an asset, if the cost qualifies for
recognition as an asset. The fair value of the share options is measured at the date of grant.
|
|
|
|
Both the Black-Scholes Model and Monte Carlo Model, applied for the determination of the
estimated value of the options granted under 2002 Share Option Scheme require input of highly
subjective assumptions, including the expected stock volatility. As the Companys share
options have characteristics significantly different from those of traded options, changes in
subjective inputs may materially affect the estimated fair value of the options granted.
|
DIRECTORS RIGHTS TO ACQUIRE SHARES OR DEBENTURES
Save as disclosed under the section Share Option Schemes in this annual report, at no time during
the year was the Company or any of its subsidiaries a party to any arrangements to enable the
directors and/or the chief executive of the Company to acquire benefits by means of the acquisition
of shares in, or debentures of, the Company or any other body corporate.
Report of the Directors
53
City Telecom (H.K.) Limited
Annual Report 2008
|
SUBSTANTIAL SHAREHOLDERS
At 31 August 2008, the interests or short positions of the persons, other than the directors or
chief executives of the Company, in the shares and underlying shares of the Company as recorded in
the register maintained by the Company required to be kept under Section 336 of the SFO were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
|
|
Interests in shares
|
|
|
interests
|
|
Name
|
|
in long positions
|
|
|
(Note)
|
|
Top Group International Limited
|
|
|
331,637,811
|
|
|
|
50.97
|
%
|
Note: This percentage is based on 650,621,823 shares of the Company issued as at 31 August 2008.
Save as disclosed above, as at 31 August 2008, the Company had not been notified of any persons
(other than directors and chief executives of the Company) having any interest or short positions
in the shares and underlying shares of the Company as recorded in the register required to be kept
under Section 336 of the SFO.
MANAGEMENT CONTRACTS
No contracts concerning the management and administration of the whole or any substantial part of
the business of the Company were entered into or existed during the year.
MAJOR CUSTOMERS AND SUPPLIERS
The aggregate percentage of turnover for the year attributable to the Groups five largest
customers is less than 30% of total turnover for the year and therefore no disclosure with regard
to major customers are made. The percentage of purchases for the year attributable to the Groups
major suppliers are as follows:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
%
|
|
|
%
|
|
Purchases
|
|
|
|
|
|
|
|
|
the largest supplier
|
|
|
30
|
|
|
|
36
|
|
five largest suppliers combined
|
|
|
63
|
|
|
|
63
|
|
None of the directors, their associates or any shareholder (which to the knowledge of the directors
own more than 5% of the Companys issued share capital) had an interest in the major suppliers
noted above.
SUFFICIENCY OF PUBLIC FLOAT
On the basis of information that is publicly available to the Company and within the knowledge of
the directors of the Company, as at the date of this annual report, the Company has maintained a
sufficient public float of more than 25 percent of the Companys issued shares as required under
the Listing Rules during the year.
CORPORATE GOVERNANCE
Corporate Governance practices adopted by the Company are set out in the Corporate Governance
Report on pages 37 to 44 of this annual report.
Report of the Directors
_____
City Telecom (H.K.) Limited
54 Annual Report 2008
|
AUDITORS
The financial statements have been audited by KPMG who shall retire, and being eligible, offer themselves for re-appointment at the forthcoming annual general meeting of the Company.
On behalf of the Board
Wong Wai Kay, Ricky
Chairman
Hong Kong, 17 November 2008
55
City Telecom (H.K.) Limited
Independent
_____
Annual Report 2008
Auditors Report
|
Independent auditors report to the shareholders of City Telecom (H.K.) Limited
(Incorporated in Hong Kong with limited liability)
We have audited the consolidated financial statements of City Telecom (H.K.) Limited (the
Company) set out on pages 56 to 107, which comprise the consolidated and Company balance sheets
as at 31 August 2008, and the consolidated income statement, the consolidated statement of changes
in equity and the consolidated cash flow statement for the year then ended, and a summary of
significant accounting policies and other explanatory notes.
DIRECTORS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The directors of the Company are responsible for the preparation and the true and fair presentation
of these financial statements in accordance with Hong Kong Financial Reporting Standards issued by
the Hong Kong Institute of Certified Public Accountants and the Hong Kong Companies Ordinance. This
responsibility includes designing, implementing and maintaining internal control relevant to the
preparation and the true and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.
AUDITORS RESPONSIBILITY
Our responsibility is to express an opinion on these financial statements based on our audit. This
report is made solely to you, as a body, in accordance with section 141 of the Hong Kong Companies
Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to
any other person for the contents of this report.
We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong
Institute of Certified Public
Accountants. Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance as to whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditors judgement, including
the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entitys preparation and true and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entitys internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
OPINION
In our opinion, the consolidated financial statements give a true and fair view of the state of
affairs of the Company and of the Group as at 31 August 2008 and of the Groups profit and cash
flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have
been properly prepared in accordance with the Hong Kong Companies Ordinance.
KPMG
Certified Public Accountants
8th Floor, Princes Building
10 Chater Road
Central, Hong Kong
17 November 2008
City Telecom (H.K.) Limited
Consolidated Income 56 Annual Report 2008 Statement
for the year ended 31 August 2008
(Expressed in Hong Kong dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
Note
|
|
|
HK$000
|
|
|
HK$000
|
|
Turnover
|
|
|
3
|
|
|
|
1,302,981
|
|
|
|
1,141,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues
|
|
|
3
|
|
|
|
24,989
|
|
|
|
25,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network costs and cost of inventories
|
|
|
4
|
|
|
|
(178,367
|
)
|
|
|
(214,591
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses
|
|
|
5
|
(a)
|
|
|
(966,094
|
)
|
|
|
(834,104
|
)
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
|
|
|
|
183,509
|
|
|
|
118,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs
|
|
|
5
|
(b)
|
|
|
(75,137
|
)
|
|
|
(87,504
|
)
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
|
|
5
|
|
|
|
108,372
|
|
|
|
30,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit/(expense)
|
|
|
6
|
|
|
|
16,818
|
|
|
|
(2,026
|
)
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to shareholders
|
|
|
7
|
|
|
|
125,190
|
|
|
|
28,865
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
|
|
8
|
|
|
|
38,614
|
|
|
|
49,295
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
9
|
|
|
HK
|
19.7 cents
|
|
|
HK
|
4.7 cents
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
|
9
|
|
|
HK
|
19.0 cents
|
|
|
HK
|
4.6 cents
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 61 to 107 form part of these financial statements.
57
City Telecom (H.K.) Limited
Balance Sheet
_____
Annual Report 2008 as at 31 August 2008 (Expressed in Hong Kong dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
|
|
|
|
The Company
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
Note
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
13
|
|
|
|
1,066
|
|
|
|
1,066
|
|
|
|
|
|
|
|
|
|
Fixed assets
|
|
|
14
|
|
|
|
1,231,399
|
|
|
|
1,237,223
|
|
|
|
87,483
|
|
|
|
100,201
|
|
Investments in subsidiaries
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
1,383,812
|
|
|
|
1,488,463
|
|
Other financial assets
|
|
|
16
|
|
|
|
|
|
|
|
39,213
|
|
|
|
|
|
|
|
39,213
|
|
Derivative financial instrument
|
|
|
17
|
|
|
|
|
|
|
|
1,039
|
|
|
|
|
|
|
|
|
|
Long term receivable and prepayment
|
|
|
|
|
|
|
5,586
|
|
|
|
6,932
|
|
|
|
|
|
|
|
|
|
Deferred expenditure
|
|
|
18
|
|
|
|
15,391
|
|
|
|
7,783
|
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
24
|
|
|
|
26,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,279,777
|
|
|
|
1,293,256
|
|
|
|
1,471,295
|
|
|
|
1,627,877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
19
|
|
|
|
140,283
|
|
|
|
170,551
|
|
|
|
11,418
|
|
|
|
12,105
|
|
Other receivables, deposits and prepayments
|
|
|
|
|
|
|
82,726
|
|
|
|
59,372
|
|
|
|
3,378
|
|
|
|
4,579
|
|
Inventories
|
|
|
20
|
|
|
|
|
|
|
|
477
|
|
|
|
|
|
|
|
477
|
|
Deferred expenditure
|
|
|
18
|
|
|
|
40,704
|
|
|
|
13,584
|
|
|
|
|
|
|
|
|
|
Other financial assets
|
|
|
16
|
|
|
|
27,997
|
|
|
|
3,779
|
|
|
|
27,997
|
|
|
|
|
|
Pledged bank deposits
|
|
|
30
|
|
|
|
87,319
|
|
|
|
87,220
|
|
|
|
87,319
|
|
|
|
87,220
|
|
Cash at bank and in hand
|
|
|
21
|
|
|
|
421,610
|
|
|
|
532,894
|
|
|
|
90,386
|
|
|
|
220,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
800,639
|
|
|
|
867,877
|
|
|
|
220,498
|
|
|
|
324,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts due to subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,830
|
|
|
|
10,830
|
|
Accounts payable
|
|
|
22
|
|
|
|
52,324
|
|
|
|
76,019
|
|
|
|
26,440
|
|
|
|
37,477
|
|
Other payables and accrued charges
|
|
|
|
|
|
|
178,114
|
|
|
|
145,267
|
|
|
|
17,831
|
|
|
|
18,694
|
|
Deposits received
|
|
|
|
|
|
|
16,264
|
|
|
|
16,188
|
|
|
|
7,943
|
|
|
|
7,876
|
|
Current portion deferred services revenue
|
|
|
|
|
|
|
110,449
|
|
|
|
64,202
|
|
|
|
11,172
|
|
|
|
11,380
|
|
Tax payable
|
|
|
|
|
|
|
2,103
|
|
|
|
1,481
|
|
|
|
356
|
|
|
|
356
|
|
Current portion obligations under finance leases
|
|
|
25
|
|
|
|
121
|
|
|
|
835
|
|
|
|
112
|
|
|
|
104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
359,375
|
|
|
|
303,992
|
|
|
|
74,684
|
|
|
|
86,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current assets
|
|
|
|
|
|
|
441,264
|
|
|
|
563,885
|
|
|
|
145,814
|
|
|
|
238,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities
|
|
|
|
|
|
|
1,721,041
|
|
|
|
1,857,141
|
|
|
|
1,617,109
|
|
|
|
1,866,072
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 61 to 107 form part of these financial statements.
Balance Sheet City Telecom (H.K.) Limited
58 Annual Report 2008 as at 31 August 2008 (Expressed in Hong Kong dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
|
|
|
|
The Company
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
Note
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
24
|
|
|
|
4,937
|
|
|
|
291
|
|
|
|
4,937
|
|
|
|
|
|
Long-term deferred services revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,500
|
|
|
|
17,890
|
|
Long-term debt and other liabilities
|
|
|
25
|
|
|
|
683,497
|
|
|
|
952,968
|
|
|
|
683,480
|
|
|
|
952,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
688,434
|
|
|
|
953,259
|
|
|
|
702,917
|
|
|
|
970,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
|
|
|
|
|
1,032,607
|
|
|
|
903,882
|
|
|
|
914,192
|
|
|
|
895,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital and reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
23
|
|
|
|
65,062
|
|
|
|
61,650
|
|
|
|
65,062
|
|
|
|
61,650
|
|
Reserves
|
|
|
23
|
|
|
|
967,545
|
|
|
|
842,232
|
|
|
|
849,130
|
|
|
|
833,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity attributable to equity shareholders
of the Company
|
|
|
|
|
|
|
1,032,607
|
|
|
|
903,882
|
|
|
|
914,192
|
|
|
|
895,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approved and authorised for issue by the board of directors on 17 November 2008.
|
|
|
Wong Wai Kay, Ricky
|
|
Cheung Chi Kin, Paul
|
Director
|
|
Director
|
The notes on pages 61 to 107 form part of these financial statements.
59
City Telecom (H.K.) Limited
Consolidated Statement
_____
Annual Report 2008 of Changes in Equity
for the year ended 31 August 2008
(Expressed in Hong Kong dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
Note
|
|
|
HK$000
|
|
|
HK$000
|
|
Total equity as at beginning of the year
|
|
|
|
|
|
|
903,882
|
|
|
|
891,654
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit recognised directly in equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange adjustments on translation of
the financial statements of subsidiaries
|
|
|
|
|
|
|
1,619
|
|
|
|
514
|
|
Net profit for the year
|
|
|
|
|
|
|
125,190
|
|
|
|
28,865
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognised profit for the year
|
|
|
|
|
|
|
126,809
|
|
|
|
29,379
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid in respect of the current year
|
|
|
|
|
|
|
(11,371
|
)
|
|
|
(24,635
|
)
|
Dividends paid in respect of the previous year
|
|
|
|
|
|
|
(5,915
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,286
|
)
|
|
|
(24,635
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Movements in equity arising from capital transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity settled share-based transactions
|
|
|
12
|
|
|
|
4,204
|
|
|
|
5,727
|
|
Shares issued upon exercise of options
|
|
|
|
|
|
|
14,998
|
|
|
|
1,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,202
|
|
|
|
7,484
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity as at the end of the year
|
|
|
|
|
|
|
1,032,607
|
|
|
|
903,882
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 61 to 107 form part of these financial statements.
City Telecom (H.K.) Limited
Consolidated Cash Flow 60 Annual Report 2008 Statement
for the year ended 31 August 2008
(Expressed in Hong Kong dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
Note
|
|
|
HK$000
|
|
|
HK$000
|
|
Net cash inflow from operations
|
|
|
26
|
(a)
|
|
|
382,813
|
|
|
|
386,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hong Kong profits tax recovered/(paid)
|
|
|
|
|
|
|
42
|
|
|
|
(263
|
)
|
Overseas tax paid
|
|
|
|
|
|
|
(4,292
|
)
|
|
|
(1,908
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow from operating activities
|
|
|
|
|
|
|
378,563
|
|
|
|
384,061
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in pledged bank deposits
|
|
|
|
|
|
|
|
|
|
|
(198
|
)
|
Decrease in term deposits
|
|
|
|
|
|
|
|
|
|
|
237,496
|
|
Interest received
|
|
|
|
|
|
|
15,596
|
|
|
|
22,671
|
|
Purchases of fixed assets
|
|
|
|
|
|
|
(189,903
|
)
|
|
|
(149,300
|
)
|
Net proceeds from maturity of investment in debt securities
|
|
|
|
|
|
|
3,900
|
|
|
|
|
|
Net proceeds from redemption of long-term bank deposit
|
|
|
|
|
|
|
15,600
|
|
|
|
|
|
Proceeds from disposal of fixed assets
|
|
|
|
|
|
|
7,057
|
|
|
|
3,384
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (outflow)/inflow from investing activities
|
|
|
|
|
|
|
(147,750
|
)
|
|
|
114,053
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow before financing activities
|
|
|
|
|
|
|
230,813
|
|
|
|
498,114
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of new shares
|
|
|
26
|
(b)
|
|
|
14,998
|
|
|
|
1,757
|
|
Repayment of capital element of finance leases
|
|
|
26
|
(b)
|
|
|
(834
|
)
|
|
|
(1,321
|
)
|
Interest element of finance leases
|
|
|
|
|
|
|
(34
|
)
|
|
|
(62
|
)
|
Interest paid on senior notes
|
|
|
|
|
|
|
(70,010
|
)
|
|
|
(85,313
|
)
|
Repurchase of senior notes
|
|
|
26
|
(b)
|
|
|
(269,399
|
)
|
|
|
|
|
Dividends paid
|
|
|
|
|
|
|
(17,271
|
)
|
|
|
(24,627
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash outflow from financing activities
|
|
|
|
|
|
|
(342,550
|
)
|
|
|
(109,566
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease)/increase in cash at bank and in hand
|
|
|
|
|
|
|
(111,737
|
)
|
|
|
388,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank and in hand at 1 September
|
|
|
|
|
|
|
532,894
|
|
|
|
144,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes
|
|
|
|
|
|
|
453
|
|
|
|
(571
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank and in hand at 31 August
|
|
|
|
|
|
|
421,610
|
|
|
|
532,894
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 61 to 107 form part of these financial statements.
61 City Telecom (H.K.) Limited Annual Report 2008
Notes to the Financial Statements
(Expressed in Hong Kong Dollars)
|
1
|
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
(a)
|
|
Statement of compliance
|
|
|
|
|
These financial statements have been prepared in accordance with all applicable 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), accounting principles generally accepted in Hong Kong
and the requirements of the Hong Kong Companies Ordinance. These financial statements
also comply with the applicable disclosure provisions of the Rules Governing the
Listing of Securities on The Stock Exchange of Hong Kong Limited (Listing Rules). A
summary of the significant accounting policies adopted by the Group is set out below.
|
|
|
|
|
The HKICPA has issued certain new and revised HKFRSs that are effective or available
for early adoption for the current accounting period of the Group and the Company.
Note 2 provides information on any changes in accounting policies resulting from
initial application of these standards to the extent that they are relevant to the
Group for the current and prior accounting periods reflected in these financial
statements.
|
|
|
(b)
|
|
Basis of preparation of the financial statements
|
|
|
|
|
The consolidated financial statements for the year ended 31 August 2008 comprise City
Telecom (H.K.) Limited (the Company) and its subsidiaries (collectively referred to
as the Group).
|
|
|
|
|
The measurement basis used in the preparation of the financial statements is the
historical cost basis except that certain financial assets are stated at their fair
values or amortised costs as explained in the accounting policies set out below (see
notes 1(j), 1(k) and 1(s)).
|
|
|
|
|
The preparation of financial statements in conformity with HKFRSs requires management
to make judgements, estimates and assumptions that affect the application of policies
and reported amounts of assets, liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form
the basis of making the judgements about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these
estimates.
|
|
|
|
|
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the estimate is revised
if the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
|
|
|
|
|
Judgements made by management in the application of HKFRSs that have significant
effect on the financial statements and estimates with a significant risk of material
adjustment in the next year are discussed in note 33.
|
|
|
(c)
|
|
Subsidiaries and controlled entities
|
|
|
|
|
Subsidiaries are entities controlled by the Group. Control exists when the Group has
the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, potential voting rights that
presently are exercisable are taken into account.
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
62 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
1
|
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
(i)
|
|
Consolidation
|
|
|
|
|
An investment in a subsidiary is consolidated into the consolidated financial
statements from the date that control commences until the date that control
ceases.
|
|
|
|
|
Intra-group balances and transactions and any unrealised profits arising from
intra-group transactions are eliminated in full in preparing the consolidated
financial statements. Unrealised losses resulting from intra-group transactions
are eliminated in the same way as unrealised gains but only to the extent that
there is no evidence of impairment.
|
|
|
|
|
In the Companys balance sheet, an investment in a subsidiary is stated at cost
less impairment losses (see note 1(i)), unless the investment is classified as
held for sale or included in a disposal group that is classified as held for
sale.
|
|
|
(ii)
|
|
Translation of foreign currencies
|
|
|
|
|
Transactions in foreign currencies are translated at exchange rates ruling at
the transaction dates. Monetary assets and liabilities expressed in foreign
currencies are translated at exchange rates ruling at the balance sheet date.
Exchange differences arising in these cases are dealt with in profit or loss.
|
|
|
|
|
For consolidation purposes, the balance sheets of subsidiaries expressed in
foreign currencies are translated at the rates of exchange ruling at the balance
sheet date whilst the income statement is translated at an average rate for the
year. Exchange differences are dealt with as a movement in reserves.
|
|
(e)
|
|
Goodwill
|
|
|
|
|
Goodwill represents the excess of the cost of a business combination or an investment
in an associate or a jointly controlled entity over the Groups interest in the net
fair value of the acquirees identifiable assets, liabilities and contingent
liabilities.
|
|
|
|
|
Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated
to cash-generating units and is tested annually for impairment (see note 1(i)). In
respect of associates or jointly controlled entities, the carrying amount of goodwill
is included in the carrying amount of the interest in the associate or jointly
controlled entity.
|
|
|
|
|
Any excess of the Groups interest in the net fair value of the acquirees
identifiable assets, liabilities and contingent liabilities over the cost of a
business combination or an investment in an associate or a jointly controlled entity
is recognised immediately in profit or loss.
|
|
|
|
|
On disposal of a cash generating unit, an associate or a jointly controlled entity
during the year, any attributable amount of goodwill is included in the calculation of
the profit or loss on disposal.
|
|
|
(f)
|
|
Investment property
|
|
|
|
|
Investment properties are land and/or buildings which are owned and held to earn
rental income and/or for capital appreciation.
|
|
|
|
|
Investment properties are stated in the balance sheet at cost less accumulated
depreciation (see note 1(g)) and impairment losses (see note 1(i)) if any. Any gain or
loss arising from the retirement or disposal of an investment property is recognised
in the income statement. Rental income from investment property is accounted for in
accordance with the accounting policy as set out in note 1(u)(vi).
|
Notes to the Financial Statements
63
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
1
|
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
(g)
|
|
Fixed assets
|
|
|
|
|
Fixed assets are stated at cost less accumulated depreciation and accumulated
impairment losses.
|
|
|
|
|
Depreciation is calculated to write off the cost of items of property, plant and
equipment, less their estimated residual value, if any, using the straight-line method
over their estimated useful lives as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Buildings situated on leasehold land are depreciated over the shorter of
the unexpired term of lease and their estimated
useful lives of 50 years
|
|
|
|
|
|
|
|
|
|
|
|
Furniture, fixtures and fittings
|
|
4 years
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications, computer and office equipment
|
|
4 years 20 years
|
|
|
|
|
|
|
|
|
|
|
|
Motor vehicles
|
|
4 years
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold improvements are depreciated over the shorter of the unexpired
term of the leases and their estimated useful
lives
|
|
|
|
Where the parts of an item of property, plant and equipment have different useful lives, the cost
of the item is allocated on a reasonable basis between the parts and each part is depreciated
separately. Both the useful life of an asset and its residual value, if any, are reviewed
annually.
|
|
|
|
|
Major costs incurred in restoring fixed assets to their normal working condition are charged to
profit or loss. Major improvements are capitalised and depreciated over their expected useful
lives to the Group.
|
|
|
|
|
The gain or loss on disposal of a fixed asset is the difference between the net sales proceeds
and the carrying amount of the relevant asset, and is recognised in profit or loss on the date
of disposal.
|
|
(h)
|
|
Assets held under leases
|
|
|
|
|
An arrangement, comprising a transaction or a series of transactions, is or contains a lease
if the Group determines that the arrangement conveys a right to use a specific asset or
assets for an agreed period of time in return for a payment or a series of payments. Such a
determination is made based on an evaluation of the substance of the arrangement and is
regardless of whether the arrangement takes the legal form of a lease.
|
|
(i)
|
|
Classification of assets leased to the Group
|
|
|
|
|
Assets that are held by the Group under leases which transfer to the Group
substantially all the risks and rewards of ownership are classified as being held
under finance leases. Leases which do not transfer substantially all the risks and
rewards of ownership to the Group are classified as operating leases.
|
|
|
|
|
Land held for own use under an operating lease for which its fair value cannot be
measured separately from the fair value of a building situated thereon at the
inception of the lease, is accounted for as being held under a finance lease, unless
the building is also clearly held under an operating lease (see note 1(h)(iii)).
|
|
|
(ii)
|
|
Finance leases
|
|
|
|
|
Where the Group acquired the use of assets under finance leases, the amounts
representing the fair value of the leased asset, or, if lower, the present value of
the minimum lease payments, of such assets are included in fixed assets with the
corresponding liabilities, net of finance charges, recorded as obligations under
finance leases. Depreciation and impairment losses are accounted for in accordance
with the accounting policy as set out in note 1(g) and note 1(i). Finance charges
implicit in the lease payments are charged to profit or loss over the period of the
leases so as to produce an approximately constant periodic rate of charge on the
remaining balance of the obligations for each accounting period.
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
64 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
1
|
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
(iii)
|
|
Operating leases
|
|
|
|
|
Leases where substantially all the risks and rewards of ownership of assets
remain with the leasing company are accounted for as operating leases. Receipts
and payments made under operating leases net of any incentives received by/from
the lessor are credited/charged to profit or loss on a straight-line basis over
the lease periods.
|
|
(i)
|
|
Impairment of investments in debt and equity securities and trade and other
receivables
|
|
|
|
|
Investments in debt and equity securities and other current and non-current
receivables that are stated at cost or amortised cost or are classified as
available-for-sale securities are reviewed at each balance sheet date to
determine whether there is objective evidence of impairment. Objective evidence
of impairment includes observable data that comes to the attention of the Group
about one or more of the following loss events:
|
|
|
|
significant financial difficulty of the debtor;
|
|
|
|
|
a breach of contract, such as a default or delinquency in interest or
principal payments;
|
|
|
|
|
it becoming probable that a debtor will enter bankruptcy or other financial
reorganisation; and
|
|
|
|
|
a significant or prolonged decline in the fair value of an investment in an
equity instrument below its cost.
|
|
|
|
If any such evidence exists, any impairment loss is determined and recognised as
follows:
|
|
|
|
For unquoted equity securities and current and
non-current receivables that are carried at cost, the impairment loss is
measured as the difference between the carrying amount of the financial
asset and the estimated future cash flows, discounted at the current market
rate of return for a similar financial asset where the effect of
discounting is material. Impairment losses for current and non-current
receivables that are carried at cost are reversed if in a subsequent period
the amount of the impairment loss decreases. Impairment losses for equity
securities are not reversed.
|
|
|
|
|
For financial assets carried at amortised cost, the
impairment loss is measured as the difference between the assets carrying
amount and the present value of estimated future cash flows, discounted at
the financial assets original effective interest rate (i.e. the effective
interest rate computed at initial recognition of these assets). This
assessment is made collectively where financial assets carried at amortised
cost share similar risk characteristics, such as similar past due status,
and have not been individually assessed as impaired. Future cash flows for
financial assets which are assessed for impairment collectively are based
on historical loss experience for assets with credit risk characteristics
similar to the collective group.
|
|
|
|
|
If in a subsequent period the amount of an impairment loss decreases and
the decrease can be linked objectively to an event occurring after the
impairment loss was recognised, the impairment loss is reversed through
profit or loss. A reversal of an impairment loss shall not result in the
assets carrying amount exceeding that would have been determined had no
impairment loss been recognised in prior years.
|
|
|
|
|
For available-for-sale securities, the cumulative loss
that has been recognised directly in equity is removed from equity and is
recognised in profit or loss. The amount of the cumulative loss that is
recognised in profit or loss is the difference between the acquisition cost
(net of any principal repayment and amortisation) and current fair value,
less any impairment loss on that asset previously recognised in profit or
loss.
|
|
|
|
|
Impairment losses recognised in profit or loss in respect of
available-for-sale equity securities are not reversed through profit or
loss. Any subsequent increase in the fair value of such assets is
recognised directly in equity.
|
Notes to the Financial Statements
65
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
1
|
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
(i)
|
|
Impairment of assets (continued)
|
|
(i)
|
|
Impairment of investments in debt and equity securities and trade and other
receivables (continued)
|
|
|
|
Impairment losses in respect of available-for-sale debt securities are
reversed if the subsequent increase in fair value can be objectively
related to an event occurring after the impairment loss was recognised.
Reversals of impairment losses in such circumstances are recognised in
profit or loss.
|
|
|
|
Impairment losses are written off against the corresponding assets directly,
except for impairment losses recognised in respect of trade debtors, whose
recovery is considered doubtful but not remote. In this case, the impairment
losses for doubtful debts are recorded using an allowance account. When the
Group is satisfied that recovery is remote, the amount considered irrecoverable
is written off against trade debtors and any amounts held in the allowance
account relating to that debt are reversed. Subsequent recoveries of amounts
previously charged to the allowance account are reversed against the allowance
account. Other changes in the allowance account and subsequent recoveries of
amounts previously written off directly are recognised in profit or loss.
|
|
|
(ii)
|
|
Impairment of other assets
|
|
|
|
|
Internal and external sources of information are reviewed at each balance sheet
date to identify indications that the following assets may be impaired or,
except in the case of goodwill, an impairment loss previously recognised no
longer exists or may have decreased:
|
|
|
|
fixed assets;
|
|
|
|
|
investment property;
|
|
|
|
|
investments in subsidiaries; and
|
|
|
|
|
goodwill.
|
|
|
|
If any such indication exists, the assets recoverable amount is estimated. In
addition, for goodwill, the recoverable amount is estimated annually whether or
not there is any indication of impairment.
|
|
|
|
Calculation of recoverable amount
|
|
|
|
|
The recoverable amount of an asset is the greater of its net selling price
and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of time value of money and the risks specific to the
asset. Where an asset does not generate cash inflows largely independent of
those from other assets, the recoverable amount is determined for the smallest
group of assets that generates cash inflows independently (i.e. a
cash-generating unit).
|
|
|
|
|
Recognition of impairment losses
|
|
|
|
|
An impairment loss is recognised in profit or loss whenever the carrying
amount of an asset, or the cash-generating unit to which it belongs, exceeds its
recoverable amount. Impairment losses recognised in respect of cash-generating
units are allocated first to reduce the carrying amount of any goodwill
allocated to the cash-generating unit (or group of units) and then, to reduce
the carrying amount of the other assets in the unit (or group of units) on a pro
rata basis, except that the carrying value of an asset will not be reduced below
its individual fair value less costs to sell, or value in use, if determinable.
|
|
|
|
|
Reversals of impairment losses
|
|
|
|
|
In respect of assets other than goodwill, an impairment loss is reversed if
there has been a favourable change in the estimates used to determine the
recoverable amount. An impairment loss in respect of goodwill is not reversed.
|
|
|
|
|
A reversal of an impairment loss is limited to the assets carrying amount
that would have been determined had no impairment loss been recognised in prior
years. Reversals of impairment losses are credited to profit or loss in the year
in which the reversals are recognised.
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
66 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
1
|
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
(j)
|
|
Other financial assets
|
|
|
|
|
The Groups and the Companys policies for investments in debt and equity securities,
other than investments in subsidiaries are as follows:
|
|
|
|
|
Financial assets at fair value through profit or loss comprise of financial assets
held for trading and those designated as at fair value through profit or loss at
inception. Such financial assets are initially stated at fair value and are classified
as current assets, if they are expected to be realised within 12 months. At each
balance sheet date the fair value is remeasured, with any resultant gain or loss being
recognised in profit or loss. The net gain or loss recognised in profit or loss does
not include any interest earned on these investments. Interest income is recognised in
accordance with the policies set out in note 1(u)(v).
|
|
|
|
|
Held-to-maturity securities are dated debt securities that the Group or the Company
has the positive ability and intention to hold to maturity. Such securities are
initially recognised in the balance sheet at fair value plus transaction costs.
Subsequently, they are stated in the balance sheet at amortised cost less impairment
losses (see note 1(i)(i)).
|
|
|
|
|
Any other financial assets that are not classified as held for trading, financial
assets at fair value through profit or loss or, held-to-maturity securities, are
classified as available-for-sale securities. Available-for-sale securities are
initially recognised at fair value plus transaction costs. At each balance sheet date
the fair value is remeasured, with any resultant gain or loss recognised directly in
equity, except for impairment losses (see note 1(i)(i)) and, in the case of monetary
items such as debt securities, foreign exchange gains and losses, which are recognised
directly in profit or loss. Where these investments are interest-bearing, interest
calculated using the effective interest method is recognised in profit or loss. When
these investments are derecognised, the cumulative gain or loss previously recognised
directly in equity is recognised in profit or loss.
|
|
|
|
|
Investments are recognised on the date the Company commits to purchase the
investments. Investments are derecognised when:
|
|
(i)
|
|
the contractual rights to the cash flows from the investment securities expire; or
|
|
|
(ii)
|
|
the Company transfers the contractual rights to receive the cash flows of the
investment securities.
|
|
(k)
|
|
Derivative financial instruments
|
|
|
|
|
Derivative financial instruments that are not designated as hedges are recognised
initially at fair value. At each balance sheet date the fair value is remeasured. The
gain or loss on remeasurement to fair value is charged immediately to profit or loss.
|
|
|
(l)
|
|
Deferred expenditure
|
|
|
|
|
Deferred expenditure represents customer acquisition costs incurred for successful
acquisition or origination of a service subscription agreement with a customer. Such
costs are deferred and amortised on a straight-line basis over the period of the
underlying service subscription agreements.
|
|
|
(m)
|
|
Accounts receivables
|
|
|
|
|
Trade and other receivables are initially recognised at fair value and thereafter
stated at amortised cost less allowance for impairment of doubtful debts (see note
1(i)(i)), except where the receivables are interest-free loans made to related parties
without any fixed repayment terms or the effect of discounting would be immaterial. In
such cases, the receivables are stated at cost less impairment of
doubtful debts
(see
note 1(i)(i)).
|
Notes to the Financial Statements
67
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
1
|
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
(n)
|
|
Inventories
|
|
|
|
|
Inventories are carried at the lower of cost and net realisable value.
|
|
|
|
|
Cost is determined using the first in, first out method (FIFO) and comprises all
costs of purchase.
|
|
|
|
|
Net realisable value is the estimated selling price in the ordinary course of business
less the estimated costs of completion and the estimated costs necessary to make the
sale.
|
|
|
|
|
When inventories are sold, the carrying amount of the inventories is recognised in the
income statement as cost of inventories sold in the period in which the related
revenue is recognised. The amount of any write-down of inventories to net realisable
value and all losses of inventories are recognised as an expense in the period the
write-down or loss occurs. The amount of any reversal of any write-down of
inventories, arising from an increase in net realisable value, is recognised as a
reduction of cost of inventories sold in the period in which the reversal occurs.
|
|
|
|
|
As of 31 August 2008, there was no write-down or provision made against inventories
due to change in net realisable value.
|
|
|
(o)
|
|
Cash, bank balances and pledged bank deposits
|
|
|
|
|
Cash and bank balances consist of cash on hand, cash in bank accounts and
interest-bearing savings accounts. Cash that is restricted for use or pledged as
security is disclosed separately on the face of the balance sheet, and is not included
in the cash and bank balances total in the consolidated statements of cash flows. The
pledged bank deposits represent cash maintained at a bank as
security for bank facility and bank guarantees issued by the bank to third party
suppliers and utility vendors (see note 30).
|
|
|
(p)
|
|
Financial guarantees issued, provisions and contingent liabilities
|
|
(i)
|
|
Financial guarantees issued
|
|
|
|
|
Financial guarantees are contracts that require the issuer (i.e. the guarantor)
to make specified payments to reimburse the beneficiary of the guarantee (the
holder) for a loss the holder incurs because a specified debtor fails to make
payment when due in accordance with the terms of a debt instrument.
|
|
|
|
|
Where the Group issues a financial guarantee, the fair value of the guarantee
(being the transaction price, unless the fair value can otherwise be reliably
estimated) is initially recognised as deferred income within trade and other
payables. Where consideration is received or receivable for the issuance of the
guarantee, the consideration is recognised in accordance with the Groups
policies applicable to that category of asset. Where no such consideration is
received or receivable, an immediate expense is recognised in profit or loss on
initial recognition of any deferred income.
|
|
|
|
|
The amount of the guarantee initially recognised as deferred income is amortised
in profit or loss over the term of the guarantee as income from financial
guarantees issued. In addition, provisions are recognised in accordance with
note 1(p)(ii) if and when (i) it becomes probable that the holder of the
guarantee will call upon the Group under the guarantee, and (ii) the amount of
that claim on the Group is expected to exceed the amount currently carried in
trade and other payables in respect of that guarantee i.e. the amount initially
recognised, less accumulated amortisation.
|
|
|
(ii)
|
|
Other provisions and contingent liabilities
|
|
|
|
|
Provisions are recognised for other liabilities of uncertain timing or amount
when the Group or the Company has a legal or constructive obligation arising as
a result of a past event, it is probable that an outflow of economic benefits
will be required to settle the obligation and a reliable estimate can be made.
Where the time value of money is material, provisions are stated at the present
value of the expenditure expected to settle the obligation.
|
|
|
|
|
Where it is not probable that an outflow of economic benefits will be required,
or the amount cannot be estimated reliably, the obligation is disclosed as a
contingent liability, unless the probability of outflow of economic benefits is
remote. Possible obligations, whose existence will only be confirmed by the
occurrence or non-occurrence of one or more future events are also disclosed as
contingent liabilities unless the probability of outflow of economic benefits is
remote.
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
68 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
1
|
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
(i)
|
|
Employee leave entitlements
|
|
|
|
|
Employee entitlements to annual leave and long service leave are recognised when
they accrue to employees. A provision is made for the estimated liability for
annual leave and long-service leave as a result of services rendered by
employees up to the balance sheet date.
|
|
|
|
|
Employee entitlements to sick leave and maternity or paternity leave are not
recognised until the time of leave.
|
|
|
(ii)
|
|
Profit sharing and bonus plans
|
|
|
|
|
Provisions for profit sharing and bonus plans are recognised when the Group has
a present legal or constructive obligation as a result of services rendered by
employees and a reliable estimate of the obligation can be made.
|
|
|
(iii)
|
|
Retirement benefit costs
|
|
|
|
|
The Group contributes to defined contribution retirement schemes which are
available to certain employees. Contributions to the schemes by the Group are
calculated as a percentage of employees basic salaries and charged to profit or
loss. The Groups contributions are reduced by contributions forfeited by those
employees who leave the scheme prior to vesting fully in the contributions.
|
|
|
|
|
The assets of the scheme are held in an independently administered fund that is
separated from the Groups assets.
|
|
|
(iv)
|
|
Share-based payments
|
|
|
|
|
The fair value of share options granted to employees is recognised as an
employee cost with a corresponding increase in capital reserve within equity.
The fair value is measured at grant date using the Black-Scholes option pricing
model or Monte Carlo model, taking into account the terms and conditions upon
which the options were granted. Where the employees have to meet vesting
conditions before becoming unconditionally entitled to the share options, the
total estimated fair value of the share options is spread over the vesting
period, taking into account the probability that the options will vest.
|
|
|
|
|
During the vesting period, the number of share options that is expected to vest
is reviewed. Any adjustment to the cumulative fair value recognised in prior
years is charged/credited to profit or loss, unless the original employee
expenses qualify for recognition as an asset, with a corresponding adjustment to
the capital reserve. On vesting date, the amount recognised as an expense is
adjusted to reflect the actual number of share options that vest (with a
corresponding adjustment to the capital reserve) except where forfeiture is only
due to not achieving vesting conditions that relate to the market price of the
Companys shares. The amount related to share options expense is recorded in the
capital reserve until either the option is exercised or the option expires.
|
|
(r)
|
|
Deferred taxation
|
|
|
|
|
Deferred taxation is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. Taxation rates enacted or substantively enacted
at the balance sheet date are used to measure deferred tax assets and liabilities.
|
|
|
|
|
Deferred tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be
utilised.
|
|
|
|
|
Deferred taxation is provided on temporary differences arising on investments in
subsidiaries except where the timing of the reversal of the temporary difference can
be controlled and it is probable that the temporary difference will not be reversed in
the foreseeable future.
|
Notes to the Financial Statements
69
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
1
|
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
(s)
|
|
Senior notes
|
|
|
|
|
Long-term debt, representing senior notes, is recognised initially at fair value less
its incidental costs of issuance. Subsequent to initial recognition, the senior notes
are stated at amortised cost with any difference between cost and redemption value
being recognised in profit or loss over the period of borrowings using the effective
interest method.
|
|
|
(t)
|
|
Trade and other payables
|
|
|
|
|
Trade and other payables are initially recognised at fair value. Except for financial
guarantee liabilities measured in accordance with note 1 (p), trade and other payables
are subsequently stated at amortised cost unless the effect of discounting would be
immaterial, in which case they are stated at cost.
|
|
|
(u)
|
|
Revenue recognition
|
|
(i)
|
|
Revenue for the provision of international telecommunications and fixed
telecommunications network services is recognised, when an arrangement exists, service
is rendered, the fee is fixed or determinable, and collectibility is probable.
|
|
|
(ii)
|
|
Tariff-free period granted to subscribers of fixed telecommunications network
services are recognised in profit or loss rateably over the term of the service
subscription agreement. Unbilled revenue represents revenue recognised in accordance
with the requirement in note 1(u) (i) that has not been billed to the subscriber.
|
|
|
(iii)
|
|
Amount received in advance for the provision of fixed telecommunications network
services is deferred and included under deferred services income, and subsequently
recognised as revenue on a straight-line basis over the related service period.
|
|
|
(iv)
|
|
Revenue from the sales of products is recognised upon the transfer of risks and
rewards of ownership, which generally coincides with the time when the goods are
delivered to customers and title has passed.
|
|
|
(v)
|
|
Interest income is recognised as it accrues using the effective interest method.
|
|
|
(vi)
|
|
Rental income receivable under operating leases is recognised in profit or loss
in equal instalments over the periods covered by the lease term. Lease incentives
granted are recognised in profit or loss as an integral part of the aggregate net
lease payments receivable.
|
|
(v)
|
|
Borrowing costs
|
|
|
|
|
Borrowing costs that are directly attributable to the acquisition, construction or
production of an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale are capitalised as part of the cost of that asset.
|
|
|
|
|
All other borrowing costs are charged to profit or loss in the year in which they are
incurred.
|
|
|
(w)
|
|
Segment reporting
|
|
|
|
|
In accordance with the Groups internal financial reporting, the Group has determined
that the primary reporting format is business segment and secondary reporting format
is geographical segment.
|
|
|
|
|
Segment assets consist primarily of goodwill, fixed assets, receivables and cash.
Segment liabilities comprise operating liabilities and exclude items such as taxation
and certain corporate borrowings. Capital expenditure comprises additions to fixed
assets.
|
|
|
|
|
In respect of geographical segment reporting, sales are reported based on the country
in which the customer is located. Total assets and capital expenditure are reported
based on where the assets are located.
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
70 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
1
|
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
(x)
|
|
Accounting for barter transactions
|
|
|
|
|
When goods or services are exchanged for goods or services which are of a similar
nature and value, the exchange is not regarded as a revenue generating transaction.
|
|
|
|
|
When goods are sold or services are rendered in exchange for dissimilar goods or
services, the exchange is regarded as a transaction which generates revenue. The
revenue is measured at the fair value of the goods or services rendered, adjusted by
the amount of any cash or cash equivalents transferred. When the fair value of the
goods or services received cannot be measured reliably, the revenue is measured at the
fair value of the goods or services given up, adjusted by the amount of any cash or
cash equivalents transferred.
|
|
|
(y)
|
|
Related parties
|
|
|
|
|
For the purposes of these financial statements, a party is considered to be related to
the Group if:
|
|
(i)
|
|
the party has the ability, directly or indirectly through one or more
intermediaries, to control the Group or exercise significant influence over the Group
in making financial and operating policy decisions, or has joint control over the
Group;
|
|
|
(ii)
|
|
the Group and the party are subject to common control;
|
|
|
(iii)
|
|
the party is an associate of the Group or a joint venture in which the Group is
a venturer;
|
|
|
(iv)
|
|
the party is a member of key management personnel of the Group or the Groups
parent, or a close family member of such an individual, or is an entity under the
control, joint control or significant influence of such individuals;
|
|
|
(v)
|
|
the party is a close family member of a party referred to in (i) or is an entity
under the control, joint control or significant influence of such individuals; or
|
|
|
(vi)
|
|
the party is a post-employment benefit plan which is for the benefit of employees
of the Group or of any entity that is a related party of the Group.
|
|
|
|
Close family members of an individual are those family members who may be expected to
influence, or be influenced by, that individual in their dealings with the entity.
|
2
|
|
CHANGES IN ACCOUNTING POLICIES
|
|
|
|
The HKICPA has issued a number of new and revised HKFRSs and Interpretations that are
effective or available for early adoption for the current accounting period of the Group and
the Company.
|
|
|
|
There have been no significant changes to the accounting policies applied in these financial
statements for the years presented as a result of adoption of these new standards. However,
as a result of the adoption of HKFRS 7,
Financial instruments: Disclosures
and the amendment
to HKAS 1,
Presentation of financial statements: Capital disclosures
, there have been some
additional disclosures provided as follows:
|
|
|
|
As a result of the adoption of HKFRS 7 and as compared with the information previously
required to be disclosed by HKAS 32,
Financial instruments: Disclosure and presentation
, the
financial statements include expanded disclosure about the significance of the Groups
financial instruments and the nature and extent of risks arising from those instruments.
These disclosures are provided throughout these financial statements, in particular in note
27.
|
|
|
|
The amendment to HKAS 1 introduces additional disclosure requirements to provide information
about the level of capital and the Group and the Companys objectives, policies and processes
for managing capital. These new disclosures are set out in note 23(d).
|
|
|
|
Both HKFRS 7 and the amendment to HKAS 1 do not have any material impact on the
classification, recognition and measurement of the amounts recognised in the financial
instruments.
|
|
|
|
The Group has not applied any new standard or interpretation that is not yet effective for
the current accounting period (see note 34).
|
Notes to the Financial Statements
71
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
3
|
|
TURNOVER, OTHER REVENUES AND SEGMENT INFORMATION
|
|
|
|
The Group is principally engaged in the provision of international telecommunications
services and fixed telecommunications network services to customers in Hong Kong and Canada.
Revenues recognised during the year are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Turnover
|
|
|
|
|
|
|
|
|
International telecommunications services
|
|
|
291,943
|
|
|
|
324,470
|
|
Fixed telecommunications network services (note 3(c))
|
|
|
1,011,038
|
|
|
|
816,800
|
|
|
|
|
|
|
|
|
|
|
|
1,302,981
|
|
|
|
1,141,270
|
|
|
|
|
|
|
|
|
Other revenues
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
15,596
|
|
|
|
22,671
|
|
Other income
|
|
|
9,393
|
|
|
|
3,149
|
|
|
|
|
|
|
|
|
|
|
|
24,989
|
|
|
|
25,820
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
1,327,970
|
|
|
|
1,167,090
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Primary reporting format business segments
|
|
|
|
|
The Group is organised on a worldwide basis into two business segments:
|
|
|
|
|
|
|
|
|
|
|
|
International telecommunications
|
:
|
provision of international long distance calls services
|
|
|
|
|
|
|
|
|
|
|
|
Fixed telecommunications network
|
:
|
provision of dial up and broadband Internet access services,
local voice-over-IP services and IP-TV services
|
|
|
The Groups inter-segment transactions mainly consist of provision of leased lines services.
These transactions were entered into on similar terms as those contracted with third parties.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
International
|
|
|
Fixed
|
|
|
|
|
|
|
|
|
|
tele-
|
|
|
tele-
|
|
|
|
|
|
|
|
|
|
communications
|
|
|
communications
|
|
|
|
|
|
|
|
|
|
services
|
|
|
network services
|
|
|
Elimination
|
|
|
Group
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Turnover
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales
|
|
|
291,943
|
|
|
|
1,011,038
|
|
|
|
|
|
|
|
1,302,981
|
|
Inter-segment sales
|
|
|
5,692
|
|
|
|
22,680
|
|
|
|
(28,372
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
297,635
|
|
|
|
1,033,718
|
|
|
|
(28,372
|
)
|
|
|
1,302,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment results
|
|
|
81,980
|
|
|
|
101,529
|
|
|
|
|
|
|
|
183,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(75,137
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108,372
|
|
Income tax benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
72 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
3
|
|
TURNOVER, OTHER REVENUES AND SEGMENT INFORMATION (CONTINUED)
|
|
(a)
|
|
Primary reporting format business segments (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
International
|
|
|
Fixed
|
|
|
|
|
|
|
|
|
|
tele-
|
|
|
tele-
|
|
|
|
|
|
|
|
|
|
communications
|
|
|
communications
|
|
|
|
|
|
|
|
|
|
services
|
|
|
network services
|
|
|
Elimination
|
|
|
Group
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK000
|
|
Turnover
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales
|
|
|
324,470
|
|
|
|
816,800
|
|
|
|
|
|
|
|
1,141,270
|
|
Inter-segment sales
|
|
|
5,699
|
|
|
|
27,633
|
|
|
|
(33,332
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
330,169
|
|
|
|
844,433
|
|
|
|
(33,332
|
)
|
|
|
1,141,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment results
|
|
|
68,705
|
|
|
|
49,690
|
|
|
|
|
|
|
|
118,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(87,504
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,891
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,026
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
International
|
|
|
Fixed
|
|
|
|
|
|
|
tele-
|
|
|
tele-
|
|
|
|
|
|
|
communications
|
|
|
communications
|
|
|
|
|
|
|
services
|
|
|
network services
|
|
|
Group
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Segment assets
|
|
|
426,781
|
|
|
|
1,627,300
|
|
|
|
2,054,081
|
|
Unallocated assets
|
|
|
|
|
|
|
|
|
|
|
26,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
|
|
|
|
2,080,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities
|
|
|
80,756
|
|
|
|
276,771
|
|
|
|
357,527
|
|
Unallocated liabilities
|
|
|
|
|
|
|
|
|
|
|
690,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
|
|
|
|
1,047,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure incurred during the year
|
|
|
4,293
|
|
|
|
207,391
|
|
|
|
211,684
|
|
Depreciation for the year
|
|
|
19,587
|
|
|
|
190,464
|
|
|
|
210,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
International
|
|
|
Fixed
|
|
|
|
|
|
|
tele-
|
|
|
tele-
|
|
|
|
|
|
|
communications
|
|
|
communications
|
|
|
|
|
|
|
services
|
|
|
network services
|
|
|
Group
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Segment assets
|
|
|
541,502
|
|
|
|
1,619,631
|
|
|
|
2,161,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities
|
|
|
101,148
|
|
|
|
201,738
|
|
|
|
302,886
|
|
Unallocated liabilities
|
|
|
|
|
|
|
|
|
|
|
954,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
|
|
|
|
1,257,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure incurred during the year
|
|
|
4,060
|
|
|
|
128,190
|
|
|
|
132,250
|
|
Depreciation for the year
|
|
|
21,707
|
|
|
|
236,396
|
|
|
|
258,103
|
|
Notes to the Financial Statements
73
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
3
|
|
TURNOVER, OTHER REVENUES AND SEGMENT INFORMATION (CONTINUED)
|
|
(b)
|
|
Secondary reporting format geographical segments
|
|
|
|
|
The Groups two business segments are managed on a worldwide basis in two main
geographical areas:
|
|
|
|
|
|
|
|
|
|
Hong Kong
|
|
:
|
|
international telecommunications and fixed telecommunications
network services
|
|
|
|
|
|
|
|
|
|
Canada
|
|
:
|
|
international telecommunications and fixed telecommunications
network services
|
In disclosing information on the basis of geographical segments, turnover and segment results are
disclosed based on the geographical location of customers. Total assets and capital expenditure
are disclosed based on the geographical location of the assets.
There were no sales between the geographical segments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
Segment
|
|
|
Total
|
|
|
Capital
|
|
|
|
Turnover
|
|
|
results
|
|
|
assets
|
|
|
expenditure
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Hong Kong
|
|
|
1,281,069
|
|
|
|
182,345
|
|
|
|
2,040,496
|
|
|
|
211,482
|
|
Canada
|
|
|
21,912
|
|
|
|
1,164
|
|
|
|
13,585
|
|
|
|
202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,302,981
|
|
|
|
|
|
|
|
2,054,081
|
|
|
|
211,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
|
|
|
|
183,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated assets
|
|
|
|
|
|
|
|
|
|
|
26,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
|
|
|
|
2,080,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
Segment
|
|
|
Total
|
|
|
Capital
|
|
|
|
Turnover
|
|
|
results
|
|
|
assets
|
|
|
expenditure
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Hong Kong
|
|
|
1,120,538
|
|
|
|
118,260
|
|
|
|
2,149,728
|
|
|
|
132,031
|
|
Canada
|
|
|
20,732
|
|
|
|
135
|
|
|
|
11,405
|
|
|
|
219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,141,270
|
|
|
|
|
|
|
|
2,161,133
|
|
|
|
132,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
|
|
|
|
118,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
Hong Kong Broadband Network Limited (HKBN), a wholly-owned subsidiary of the Group, as a FTNS
licensee, provides interconnection services to enable delivery of telecommunications service to
customers of different operators. Since the FTNS license was granted by the Telecommunication
Authority (TA) and interconnection services have been provided, HKBN has been billing mobile
operators for the interconnection services provided to them and recognising revenue (mobile
interconnection charges) based on managements best estimate of the amounts it expected to
collect. In prior years, majority of the mobile operators, however, rejected HKBNs demand for
payment. As a result of non-payment by certain mobile operators, in 2004, the Group asked TA to
make a determination (the 2004 Determination) on the level of mobile interconnection charges
payable by one of the mobile operators to HKBN; and the effective date of the determined mobile
interconnection charges.
|
|
|
|
|
In March 2006, TA issued a preliminary analysis (the 2006 PA) on the 2004 Determination
with respect to the rates of mobile interconnection charges payable by the mobile operator
under dispute. However, as of 31 August 2006, the final level of mobile interconnection
charges was still subject to the 2004 Determination to be issued by TA.
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
74 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
3
|
|
TURNOVER, OTHER REVENUES AND SEGMENT INFORMATION (CONTINUED)
|
|
(c)
|
|
(continued)
|
|
|
|
|
In March 2007, TA issued a revised preliminary analysis (the 2007 PA) which
superseded the 2006 PA. The 2007 PA set out the rates of mobile interconnection
charges, which are different from those rates stated in the 2006 PA.
|
|
|
|
|
In June 2007, TA issued the 2004 determination which set out the rates of mobile
interconnection charge payable by the mobile operator under dispute for
interconnection services provided by HKBN for the period from 1 April 2002 to 31
August 2004, which superseded the rates stated in both the 2006 PA and 2007 PA issued
by TA previously.
|
|
|
|
|
For the year ended 31 August 2007, the Group recognised revenue related to mobile
interconnection charges of HK$40,877,000 based on the 2004 Determination which
included charges for the year ended 31 August 2007 and additional charges for the
years ended 31 August 2005 and 2006 previously measured based on the 2006 PA. The
Group has also written back bad debt provision for mobile interconnection charges
receivables of HK$9,404,000 to the income statement based on the amount it expected to
collect for billings outstanding through that date.
|
|
|
|
|
During the year ended 31 August 2008, HKBN entered into contractual agreements with
additional mobile operators which agreed to pay mobile interconnection charges based
on the 2004 Determination for period from 1 April 2002 to 31 August 2004 and for the
subsequent period at an interim rate stated in the agreements which will be adjusted
based on further determination to be issued by TA.
|
|
|
|
|
In February 2008, HKBN requested TA to make a new determination with four mobile
operators (the 2008 Determination) on the rate of mobile interconnection charge and
interest thereon. In September 2008, TA indicated that it accepted HKBNs request for
determination, which covers the mobile interconnection charges payable by the mobile
operators under the determination, for the period from 1 April 2002 to 26 April 2009
(for those mobile operators who have not reached the relevant contractual agreements
with HKBN) or for the period from 1 September 2004 to 26 April 2009 (for those mobile
operators who have reached the relevant contractual agreements with HKBN), and the
interest rate therefor.
|
|
|
|
|
For the year ended 31 August 2008, the Group recognised revenue related to mobile
interconnection charges of HK$29,568,000 representing the amount of mobile
interconnection charges management expects to collect.
|
4
|
|
NETWORK COSTS AND COST OF INVENTORIES
|
|
|
|
Network costs and cost of inventories mainly include interconnection charges paid to local
and overseas carriers, leased line rentals, program fees, production costs for the IP-TV
service and costs of inventories sold, and do not include depreciation charge which is
included in other operating expenses.
|
|
|
|
The Group estimates the Universal Services Contributions (USC) payable to PCCW-HKT to fund
the costs of network development in remote areas in Hong Kong and includes such estimated
costs as part of the network costs. TA periodically reviews the actual costs of the network
development and revises the amounts owed to PCCW-HKT or to be refunded by PCCW-HKT to the USC
contributing parties.
|
|
|
|
On 28 December 2007, TA issued a statement (TA Statement) on the USC and confirmed the
actual contribution level for the period from 1 January 2005 to 30 June 2007. Based on the TA
Statement, an amount of HK$7,617,000 was recorded as a reduction against the network costs of
the Group for the year ended 31 August 2008.
|
|
|
|
The actual contribution level for the period subsequent to 30 June 2007 has not yet been
confirmed by TA.
|
Notes to the Financial Statements
75
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
5
|
|
PROFIT BEFORE TAXATION
|
|
|
|
Profit before taxation is arrived at after charging/(crediting) the following:
|
|
(a)
|
|
Other operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Advertising and marketing expenses (note (i))
|
|
|
307,743
|
|
|
|
203,673
|
|
Amortisation of deferred expenditure (note 18)
|
|
|
33,777
|
|
|
|
15,580
|
|
Auditors remuneration
|
|
|
3,687
|
|
|
|
2,933
|
|
Depreciation of owned fixed assets
|
|
|
209,464
|
|
|
|
257,052
|
|
Depreciation of fixed assets held under finance lease
|
|
|
587
|
|
|
|
1,051
|
|
Operating lease charges in respect of land and buildings
|
|
|
13,296
|
|
|
|
13,879
|
|
Operating lease charges in respect of equipment
|
|
|
50
|
|
|
|
32
|
|
Provision for doubtful debts (note (ii))
|
|
|
14,293
|
|
|
|
6,569
|
|
Loss on disposal of fixed assets
|
|
|
1,431
|
|
|
|
1,714
|
|
Staff costs (note 5(c))
|
|
|
247,460
|
|
|
|
221,102
|
|
Others
|
|
|
134,306
|
|
|
|
110,519
|
|
|
|
|
|
|
|
|
|
|
|
966,094
|
|
|
|
834,104
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
(i)
|
|
Included in the advertising and marketing expenses is expense in respect of equity settled
share-based transaction of HK$90,000 (2007: HK$361,000).
|
|
(ii)
|
|
The amount for the year ended 31 August 2007 included write-back of provision for mobile
interconnection charges receivables of HK$9,404,000 (note 3(c)).
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Interest element of finance leases
|
|
|
34
|
|
|
|
62
|
|
Interest on 10-year senior notes
|
|
|
70,010
|
|
|
|
85,313
|
|
Amortisation of incidental issuance costs
|
|
|
1,665
|
|
|
|
2,129
|
|
Other borrowing cost
|
|
|
3,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,137
|
|
|
|
87,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Wages and salaries
|
|
|
226,097
|
|
|
|
201,057
|
|
Unutilised annual leave
|
|
|
2,642
|
|
|
|
213
|
|
Equity settled share-based transaction
|
|
|
4,114
|
|
|
|
5,366
|
|
Retirement benefit costs defined contribution plans (note 10)
|
|
|
29,738
|
|
|
|
23,933
|
|
Less: staff costs capitalised as fixed assets
|
|
|
(15,131
|
)
|
|
|
(9,467
|
)
|
|
|
|
|
|
|
|
|
|
|
247,460
|
|
|
|
221,102
|
|
|
|
|
|
|
|
|
Staff costs include directors emoluments and research and development cost of HK$9,593,000
(2007: HK$4,977,000) but exclude staff costs of HK$14,482,000 (2007: HK$14,478,000) recorded in
network costs and HK$194,724,000 (2007: HK$138,728,000) recorded in advertising and marketing
expenses.
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
76 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
5
|
|
PROFIT BEFORE TAXATION (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Net exchange (gain)/loss
|
|
|
(1,923
|
)
|
|
|
114
|
|
Realised and unrealised gain on other financial assets
|
|
|
(3,284
|
)
|
|
|
(1,887
|
)
|
Realised and unrealised loss on derivative financial instruments
|
|
|
1,039
|
|
|
|
806
|
|
Realised and unrealised gain on long-term bank deposit
|
|
|
(1,185
|
)
|
|
|
(739
|
)
|
Gain on extinguishment of 10-year senior notes (note 25(a))
|
|
|
(2,582
|
)
|
|
|
|
|
Cost of inventories (note 20(b))
|
|
|
477
|
|
|
|
331
|
|
6
|
|
INCOME TAX BENEFIT/(EXPENSE)
|
|
|
|
Hong Kong profits tax has been provided at the rate of 16.5% (2007: 17.5%) on the estimated
assessable profit for the year. Taxation on overseas profits has been calculated on the
estimated assessable profit for the year at the income tax rates prevailing in the overseas
countries in which the Group operates.
|
|
|
|
The amount of tax benefit / (expense) in the consolidated income statement represents:
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Current taxation:
|
|
|
|
|
|
|
|
|
Hong Kong profits tax
|
|
|
(391
|
)
|
|
|
(121
|
)
|
Overseas taxation
|
|
|
(1,929
|
)
|
|
|
(1,964
|
)
|
Under-provision of overseas taxation in prior years
|
|
|
(2,552
|
)
|
|
|
|
|
Deferred taxation relating to the origination and reversal of temporary differences
|
|
|
21,690
|
|
|
|
59
|
|
|
|
|
|
|
|
|
Income tax benefit/(expense)
|
|
|
16,818
|
|
|
|
(2,026
|
)
|
|
|
|
|
|
|
|
The taxation on the Groups profit before taxation differs from the theoretical amount that would
arise using the taxation rate of the home country of the Company as follows:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Profit before taxation
|
|
|
108,372
|
|
|
|
30,891
|
|
|
|
|
|
|
|
|
Notional tax on profit before taxation, calculated at the prevailing tax rates
applicable to profit in the countries concerned
|
|
|
(18,927
|
)
|
|
|
(6,412
|
)
|
Effect of income not subject to taxation
|
|
|
3,878
|
|
|
|
4,219
|
|
Effect of expenses not deductible for taxation purposes
|
|
|
(6,353
|
)
|
|
|
(772
|
)
|
Recognition of prior year unrecognised tax losses (note 24)
|
|
|
26,335
|
|
|
|
|
|
Under-provision in prior years
|
|
|
(2,552
|
)
|
|
|
|
|
Effect of utilisation of prior year unrecognised tax losses
|
|
|
12,013
|
|
|
|
6,678
|
|
Effect of share based payment
|
|
|
2,324
|
|
|
|
(1,125
|
)
|
Effect of tax losses not recognised
|
|
|
(74
|
)
|
|
|
(4,539
|
)
|
Others
|
|
|
174
|
|
|
|
(75
|
)
|
|
|
|
|
|
|
|
Income tax benefit/(expense)
|
|
|
16,818
|
|
|
|
(2,026
|
)
|
|
|
|
|
|
|
|
Notes to the Financial Statements
77
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
7
|
|
PROFIT ATTRIBUTABLE TO SHAREHOLDERS
|
|
|
|
The profit attributable to shareholders is dealt with in the financial statements of the
Company to the extent of HK$17,037,000 (2007: loss of HK$12,945,000).
|
|
8
|
|
DIVIDENDS
|
|
(a)
|
|
Dividends payable to equity shareholders of the Company attributable to the year
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Interim dividend declared and paid of HK4 cents per ordinary share
(2007: HK4 cents per ordinary share)
|
|
|
25,602
|
|
|
|
24,635
|
|
Final dividend proposed after the balance sheet date, of HK2 cents
per ordinary share (2007: HK4 cents per ordinary share)
|
|
|
13,012
|
|
|
|
24,660
|
|
|
|
|
|
|
|
|
|
|
|
38,614
|
|
|
|
49,295
|
|
|
|
|
|
|
|
|
|
|
|
During the year ended 31 August 2008, a scrip dividend option was offered to all shareholders
with registered addresses in Hong Kong that were entitled to the interim dividend in respect
of the six-month period ended 29 February 2008. 8,838,938 shares were issued during the year
ended 31 August 2008 to shareholders who had elected to receive all or part of their
entitlement to dividends in form of scrip.
|
|
|
|
|
The final dividend proposed after the balance sheet date has not been recognised as a
liability at the balance sheet date.
|
|
|
(b)
|
|
Dividends attributable to the previous financial year, approved and paid during the year:
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Final dividend in respect of the financial year ended 31 August 2007,
approved and paid of HK4 cents per ordinary share (2007: Nil)
|
|
|
25,082
|
|
|
|
|
|
During the year ended 31 August 2008, a scrip dividend option was offered to all shareholders
with registered addresses in Hong Kong that were entitled to the final dividend in respect of the
financial year ended 31 August 2007. 11,227,213 shares were issued during the year ended 31
August 2008 to the shareholders who had elected to received all or part of their entitlement to
dividends in the form of scrip.
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Profit attributable to shareholders
|
|
|
125,190
|
|
|
|
28,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
Number
|
|
|
Number
|
|
|
|
of shares
|
|
|
of shares
|
|
Weighted average number of ordinary shares
|
|
000
|
|
|
000
|
|
Issued ordinary shares at the beginning of the year
|
|
|
616,503
|
|
|
|
614,175
|
|
Effect of scrip dividend issued
|
|
|
7,353
|
|
|
|
|
|
Effect of share options exercised
|
|
|
10,159
|
|
|
|
665
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares at the end of the year (basic)
|
|
|
634,015
|
|
|
|
614,840
|
|
Incremental shares from assumed exercise of share options
|
|
|
23,982
|
|
|
|
16,479
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares at the end of the year (diluted)
|
|
|
657,997
|
|
|
|
631,319
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
HK19.7 cents
|
|
|
HK4.7 cents
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
HK19.0 cents
|
|
|
HK4.6 cents
|
|
|
|
|
|
|
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
78 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
10
|
|
RETIREMENT BENEFIT COSTS
|
|
|
|
The Group contributes to an Occupational Retirement Scheme (the ORSO Scheme), a defined
contribution retirement scheme, which is available to some of its employees in Hong Kong.
Under the ORSO Scheme, the employees are required to contribute 5% of their monthly salaries,
while the Groups contributions are calculated at 10% and 5% of the monthly salaries of
senior management staff and all other staff respectively. The employees are entitled to 100%
of the employers contributions after 10 years of completed service, or at a reduced scale
after completion of 3 to 9 years service. Contributions to the ORSO Scheme are reduced by
contributions forfeited by those employees who leave the ORSO Scheme prior to vesting fully
in the Groups contributions.
|
|
|
|
A mandatory provident fund scheme (the MPF Scheme) has been established under the Hong Kong
Mandatory Provident Fund Scheme Ordinance in December 2000. The then existing employees of
the Group in Hong Kong could elect to join the MPF Scheme, while all new employees joining
the Group in Hong Kong from then onwards are required to join the MPF Scheme. Both the Group
and the employees are required to contribute 5% of each individuals relevant income with a
maximum amount of HK$1,000 per month as a mandatory contribution. Employers mandatory
contributions are 100% vested in the employees as soon as they are paid to the MPF Scheme.
Senior employees may also elect to join a Mutual Voluntary Plan (the Mutual Plan) in which
both the Group and the employee, on top of the MPF Scheme mandatory contributions, make a
voluntary contribution to the extent of contributions that would have been made under the
ORSO Scheme.
|
|
|
|
Pursuant to the relevant regulations in the Peoples Republic of China (the PRC), the Group
contributes to the defined contribution retirement scheme organised by the local social
security bureau for each employee of the subsidiary in the PRC at a rate of 20% of a standard
salary base as determined by the local social security bureau. The Group has no other
obligation to make payments in respect of retirement benefits of these employees.
|
|
|
|
The retirement schemes for staff of the Group in other countries follow the local statutory
requirements of the respective countries.
|
|
|
|
The aggregate employers contributions, net of forfeited contributions, which have been dealt
with in the consolidated income statement during the year are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Gross contributions
|
|
|
29,738
|
|
|
|
24,545
|
|
Less: forfeited contributions utilised to offset the Groups contributions during the year
|
|
|
|
|
|
|
(612
|
)
|
|
|
|
|
|
|
|
Net contributions charged to the income statement (note 5(c))
|
|
|
29,738
|
|
|
|
23,933
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2008, there was no forfeited contribution available to offset future
contributions by the Group to the ORSO Scheme (2007: Nil).
|
|
11
|
|
DIRECTORS AND SENIOR MANAGEMENTS EMOLUMENTS
|
|
(a)
|
|
Directors remuneration
|
|
|
|
|
The remuneration of each director for the year ended 31 August 2008 is set out below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discretionary
|
|
|
Share-based
|
|
|
to defined
|
|
|
|
|
|
|
Fee
|
|
|
Salary
|
|
|
bonuses
|
|
|
payment
|
|
|
contribution
|
|
|
Total
|
|
Name of Director
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Wong Wai Kay, Ricky
|
|
|
|
|
|
|
6,482
|
|
|
|
1,054
|
|
|
|
558
|
|
|
|
648
|
|
|
|
8,742
|
|
Cheung Chi Kin, Paul
|
|
|
|
|
|
|
6,482
|
|
|
|
1,054
|
|
|
|
558
|
|
|
|
648
|
|
|
|
8,742
|
|
Lai Ni Quiaque
|
|
|
|
|
|
|
2,250
|
|
|
|
225
|
|
|
|
809
|
|
|
|
225
|
|
|
|
3,509
|
|
Cheng Mo Chi, Moses
|
|
|
152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
152
|
|
Lee Hon Ying, John
|
|
|
168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168
|
|
Chan Kin Man
|
|
|
158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158
|
|
Peh Jefferson Tun Lu
|
|
|
158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
636
|
|
|
|
15,214
|
|
|
|
2,333
|
|
|
|
1,925
|
|
|
|
1,521
|
|
|
|
21,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
79
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
11
|
|
DIRECTORS AND SENIOR MANAGEMENTS EMOLUMENTS (CONTINUED)
|
|
(a)
|
|
Directors remuneration (continued)
|
|
|
|
|
The remuneration of each director for the year ended 31 August 2007 is set out below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discretionary
|
|
|
Share-based
|
|
|
to defined
|
|
|
|
|
|
|
Fee
|
|
|
Salary
|
|
|
bonuses
|
|
|
payment
|
|
|
contribution
|
|
|
Total
|
|
Name of Director
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Wong Wai Kay, Ricky
|
|
|
|
|
|
|
6,051
|
|
|
|
488
|
|
|
|
1,293
|
|
|
|
605
|
|
|
|
8,437
|
|
Cheung Chi Kin, Paul
|
|
|
|
|
|
|
6,051
|
|
|
|
488
|
|
|
|
1,293
|
|
|
|
605
|
|
|
|
8,437
|
|
Lai Ni Quiaque
|
|
|
|
|
|
|
1,687
|
|
|
|
203
|
|
|
|
482
|
|
|
|
169
|
|
|
|
2,541
|
|
Cheng Mo Chi, Moses
|
|
|
145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145
|
|
Lee Hon Ying, John
|
|
|
160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160
|
|
Chan Kin Man
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150
|
|
Peh Jefferson Tun Lu
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
605
|
|
|
|
13,789
|
|
|
|
1,179
|
|
|
|
3,068
|
|
|
|
1,379
|
|
|
|
20,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No director waived any emoluments in respect of the years ended 31 August 2007 and 2008.
|
|
|
|
|
The above emoluments include the fair value of share options granted to certain directors
under the Companys share option scheme as estimated at the date of grant. The details are
disclosed in note 12.
|
|
|
(b)
|
|
Five highest paid individuals
|
|
|
|
|
The five individuals whose emoluments were the highest in the Group for the year include
three (2007: three) directors whose emoluments are reflected in the analysis presented above.
The emoluments payable to the remaining two (2007: two) individuals during the year are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Basic salaries, other allowances and benefits in kind
|
|
|
8,512
|
|
|
|
6,792
|
|
Discretionary bonuses
|
|
|
1,137
|
|
|
|
1,131
|
|
Share-based payments
|
|
|
1,316
|
|
|
|
885
|
|
Retirement benefit costs defined contribution plans
|
|
|
589
|
|
|
|
547
|
|
|
|
|
|
|
|
|
|
|
|
11,554
|
|
|
|
9,355
|
|
|
|
|
|
|
|
|
The emoluments fell within the following band:
|
|
|
|
|
|
|
|
|
|
|
Number of individual
|
|
|
|
2008
|
|
|
2007
|
|
HK$2,500,001 HK$3,000,000
|
|
|
1
|
|
|
|
1
|
|
HK$6,500,001 HK$7,000,000
|
|
|
|
|
|
|
1
|
|
HK$9,000,001 HK$10,000,000
|
|
|
1
|
|
|
|
|
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
80 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
12
|
|
EQUITY SETTLED SHARE-BASED TRANSACTIONS
|
|
|
|
The Company operates a share option scheme (the 2002 Share Option Scheme) which was adopted
by shareholders of the Company on 23 December 2002 whereby the directors may, at their
discretion, invite eligible participants to receive options to subscribe for shares subject
to the terms and conditions stipulated therein.
|
|
(a)
|
|
The terms and conditions of the options that existed during the years are as follows,
whereby all options are settled by physical delivery of shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Vesting
|
|
|
Exercisable
|
|
|
|
option
|
|
|
conditions
|
|
|
Period
|
|
2002 Share Option Scheme
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options granted to directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 3 June 2004
|
|
|
6,000,000
|
|
|
Condition 1
|
|
On or prior to 2 June 2014
|
- 5 January 2005
|
|
|
16,106,956
|
|
|
Condition 1
|
|
On or prior to 20 October 2014
|
- 22 May 2006
|
|
|
15,093,585
|
|
|
Condition 1
|
|
On or prior to 21 May 2016
|
- 11 February 2008
|
|
|
6,016,309
|
|
|
Condition 2
|
|
On or prior to 23 December 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options granted to employees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 21 October 2004
|
|
|
8,393,399
|
|
|
Condition 1
|
|
On or prior to 20 October 2014
|
- 3 October 2005
|
|
|
1,000,000
|
|
|
Condition 1
|
|
On or prior to 30 September 2015
|
- 22 May 2006
|
|
|
14,012,937
|
|
|
Condition 1
|
|
On or prior to 21 May 2016
|
- 3 July 2006
|
|
|
702,769
|
|
|
Condition 1
|
|
On or prior to 2 July 2016
|
- 3 August 2006
|
|
|
70,468
|
|
|
Condition 1
|
|
On or prior to 2 August 2016
|
- 22 November 2006
|
|
|
200,902
|
|
|
Condition 1
|
|
On or prior to 14 November 2016
|
- 23 May 2007
|
|
|
100,396
|
|
|
Condition 1
|
|
On or prior to 11 June 2017
|
- 12 December 2007
|
|
|
1,003,956
|
|
|
Condition 1
|
|
On or prior to 23 December 2012
|
- 6 February 2008
|
|
|
6,016,309
|
|
|
Condition 3
|
|
On or prior to 23 December 2012
|
- 15 February 2008
|
|
|
4,010,873
|
|
|
Condition 3
|
|
On or prior to 23 December 2012
|
- 11 March 2008
|
|
|
300,816
|
|
|
Condition 1
|
|
On or prior to 23 December 2012
|
- 2 May 2008
|
|
|
1,002,718
|
|
|
Condition 3
|
|
On or prior to 23 December 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Total share options
|
|
|
80,032,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The vesting conditions of the respective share option grant are as follows:
Condition 1
Options granted will be vested in one year or evenly vested over a period of two to three
years. Options are awarded without performance conditions and are exercisable provided the
participants have remained employed by the end of respective vesting periods.
Condition 2
Vesting of the options is conditional upon the performance of the Companys shares over the
period from the close of trading in Hong Kong on 22 November 2007 to 21 November 2010. Options
granted will be evenly vested immediately and over a period of three years from the date of
fulfilment of the performance condition.
Condition 3
Vesting of the options is conditional upon the performance of the participants. Options granted
will be vested over a period of three to four years from the date of fulfilment of the
performance condition.
Notes to the Financial Statements
81
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
12
|
|
EQUITY SETTLED SHARE-BASED TRANSACTIONS (CONTINUED)
|
|
(b)
|
|
The number and weighted average exercise prices of share options are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
Weighted
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
average
|
|
|
|
|
|
|
average
|
|
|
|
|
|
|
exercise
|
|
|
|
|
|
|
exercise
|
|
|
|
|
|
|
price
|
|
|
Number of
|
|
|
price
|
|
|
Number of
|
|
|
|
HK$
|
|
|
options
|
|
|
HK$
|
|
|
options
|
|
2002 Share Option Scheme
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at the beginning of the year
|
|
|
1.09
|
|
|
|
61,350,000
|
|
|
|
1.08
|
|
|
|
65,760,000
|
|
Adjustment to number of options
for 2007 Final Dividend (note (i))
|
|
|
1.10
|
|
|
|
204,922
|
|
|
|
|
|
|
|
|
|
Adjustment to number of options
for 2008 Interim Dividend (note (ii))
|
|
|
1.28
|
|
|
|
177,471
|
|
|
|
|
|
|
|
|
|
Granted during the year
|
|
|
1.84
|
|
|
|
18,300,000
|
|
|
|
1.16
|
|
|
|
300,000
|
|
Exercised during the year
|
|
|
1.07
|
|
|
|
(14,052,268
|
)
|
|
|
0.82
|
|
|
|
(1,910,000
|
)
|
Lapsed during the year
|
|
|
1.63
|
|
|
|
(5,398,911
|
)
|
|
|
0.91
|
|
|
|
(2,800,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at the end of the year
|
|
|
1.27
|
|
|
|
60,581,214
|
|
|
|
1.09
|
|
|
|
61,350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at the end of the year
|
|
|
1.22
|
|
|
|
36,463,198
|
|
|
|
1.31
|
|
|
|
40,460,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The options outstanding at 31 August 2008 had a weighted exercise price of HK$1.27 (2007:
HK$1.09) and a weighted average remaining contractual life of 7 years (2007: 8 years).
Notes:
|
(i)
|
|
As a result of allotment of 11,227,213 new shares to shareholders who elected to receive the
2007 Final Dividend in shares on 4 February 2008, the exercise price of and the number of share
subject to the 51,805,000 share options outstanding on 21 December 2007 (being the Record Date
for determining the entitlement of 2007 Final Dividend) were adjusted pursuant to the 2002 Share
Option Scheme with effect from 4 February 2008. The closing price per ordinary share immediately
before the date of the grant of the Options was HK$1.70.
|
|
|
(ii)
|
|
As a result of allotment of 8,838,938 new shares to shareholders who elected to receive the
2008 Interim Dividend in shares on 23 July 2008, the exercise price of and the number of share
subject to the 65,296,047 share options outstanding on 6 June 2008 (being the Record Date for
determining the entitlement of 2008 Interim Dividend) were adjusted pursuant to the 2002 Share
Option Scheme with effect from 23 July 2008. The closing price per ordinary share immediately
before the date of the grant of the Options was HK$1.79.
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
82 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
12
|
|
EQUITY SETTLED SHARE-BASED TRANSACTIONS (CONTINUED)
|
|
(c)
|
|
Fair value of share options and assumptions
|
|
|
|
|
In determining the value of the share options granted, the Black-Scholes Model has
been used except for the option granted on 11 February 2008 which has adopted the
Monte Carlo Model. Both models are one of the most generally accepted methodologies
used to calculate the value of options. The variables of the models include expected
life of the options, risk-free interest rate, expected volatility and expected
dividend of the shares of the Company.
|
|
|
|
|
In determining the value of the share options granted during the year, the following
variables have been applied to the models:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 May
|
|
|
11 March
|
|
|
15 February
|
|
|
11 February
|
|
|
6 February
|
|
|
12 December
|
|
Measurement date
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
Variables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected life
|
|
5 years
|
|
|
5 years
|
|
|
3 years
|
|
|
average 4 years
|
|
|
5 years
|
|
|
5 years
|
|
Risk-free rate
|
|
|
2.88
|
%
|
|
|
2.04
|
%
|
|
|
2.16
|
%
|
|
|
2.16
|
%
|
|
|
2.16
|
%
|
|
|
3.10
|
%
|
Expected volatility
|
|
|
63.56
|
%
|
|
|
63.35
|
%
|
|
|
63.22
|
%
|
|
|
63.32
|
%
|
|
|
63.22
|
%
|
|
|
61.86
|
%
|
Expected dividend yield
|
|
|
1.97
|
%
|
|
|
1.97
|
%
|
|
|
1.97
|
%
|
|
|
1.97
|
%
|
|
|
1.97
|
%
|
|
|
1.97
|
%
|
The above variables were determined as follows:
|
(i)
|
|
The expected life is estimated to be 3 to 5 years from the date of grant (the Measurement
Date).
|
|
|
(ii)
|
|
The risk-free rate represents the yield of the Hong Kong Exchange Fund Notes corresponding
to the expected life of the options as at the Measurement Date.
|
|
|
(iii)
|
|
The expected volatility represents the annualised standard deviation of the return on
the daily share price of the Company over the period commensurate to the expected life of
the options (taking into account the remaining contractual life of the option and the
effect of the expected early exercise of the option).
|
|
|
(iv)
|
|
The expected dividend yield is based on the historical dividend yield over the last five
years.
|
The fair value of the options granted during the year is estimated as below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 May
|
|
|
11 March
|
|
|
15 February
|
|
|
11 February
|
|
|
6 February
|
|
|
12 December
|
|
Date of grant
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
Fair value per share option
|
|
HK$0.83
|
|
HK$0.87
|
|
HK$0.72
|
|
HK$0.41
|
|
HK$0.90
|
|
HK$1.13
|
Both models require input of highly subjective assumptions, including the expected stock
volatility. Since the Companys share options have characteristics significantly different from
those of traded options, changes in subjective inputs may materially affect the estimated fair
value of the options granted.
Notes to the Financial Statements
83
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
|
|
|
|
|
|
|
The Group
|
|
|
|
HK$000
|
|
Cost and carrying amount:
|
|
|
|
|
|
|
|
|
|
At 31 August 2008/2007
|
|
|
1,066
|
|
|
|
Impairment tests for cash-generating units containing goodwill
|
|
|
|
Goodwill is allocated to the Groups cash-generating units (CGU) identified according to country of
operation and business segment as follows:
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Fixed telecommunications network service segment
|
|
|
1,066
|
|
|
|
1,066
|
|
|
|
The recoverable amount of the CGU is determined based on value-in-use calculations. These
calculations use cash flow projections based on financial budgets approved by management covering a
five-year period. Cash flows for the five-year period are estimated based on growth rates between
1% to 14% and a pre-tax discount rate of 14%. Cash flows beyond the five year period are assumed to
remain constant. The estimated growth rates used are comparable to the growth rate for the
industry.
|
|
|
|
The key assumption used in the value-in-use calculation is the annual growth of the turnover of the
fixed telecommunications network services and it is determined based on the past performance and
managements expectation for market development. The discount rate used is pre-tax and reflects
specific risks relating to the fixed telecommunication services segment.
|
|
|
|
The carrying amount of the unit approximates to its recoverable amount. Any adverse change in the
key assumption could reduce the recoverable amount below carrying amount.
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
84 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecom-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
munications,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold
|
|
|
|
|
|
|
Furniture,
|
|
|
computer
|
|
|
|
|
|
|
|
|
|
Investment
|
|
|
land and
|
|
|
Leasehold
|
|
|
fixtures
|
|
|
and office
|
|
|
Motor
|
|
|
|
|
|
|
property
|
|
|
buildings
|
|
|
improvements
|
|
|
and fittings
|
|
|
equipment
|
|
|
vehicles
|
|
|
Total
|
|
|
|
HK$000
|
|
HK$000
|
|
HK$000
|
|
HK$000
|
|
HK$000
|
|
HK$000
|
|
HK$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 September 2007
|
|
|
5,197
|
|
|
|
79,598
|
|
|
|
80,638
|
|
|
|
17,419
|
|
|
|
2,475,775
|
|
|
|
6,818
|
|
|
|
2,665,445
|
|
Additions
|
|
|
|
|
|
|
4,646
|
|
|
|
2,469
|
|
|
|
2,189
|
|
|
|
196,230
|
|
|
|
6,150
|
|
|
|
211,684
|
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(478
|
)
|
|
|
(30,564
|
)
|
|
|
(344
|
)
|
|
|
(31,386
|
)
|
Exchange adjustments
|
|
|
|
|
|
|
|
|
|
|
1,470
|
|
|
|
445
|
|
|
|
2,840
|
|
|
|
|
|
|
|
4,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2008
|
|
|
5,197
|
|
|
|
84,244
|
|
|
|
84,577
|
|
|
|
19,575
|
|
|
|
2,644,281
|
|
|
|
12,624
|
|
|
|
2,850,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
depreciation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 September 2007
|
|
|
2,101
|
|
|
|
9,123
|
|
|
|
50,309
|
|
|
|
13,952
|
|
|
|
1,346,854
|
|
|
|
5,883
|
|
|
|
1,428,222
|
|
Charge for the year
|
|
|
104
|
|
|
|
1,604
|
|
|
|
9,626
|
|
|
|
1,617
|
|
|
|
196,198
|
|
|
|
902
|
|
|
|
210,051
|
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(286
|
)
|
|
|
(22,390
|
)
|
|
|
(222
|
)
|
|
|
(22,898
|
)
|
Exchange adjustments
|
|
|
|
|
|
|
|
|
|
|
1,334
|
|
|
|
313
|
|
|
|
2,077
|
|
|
|
|
|
|
|
3,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2008
|
|
|
2,205
|
|
|
|
10,727
|
|
|
|
61,269
|
|
|
|
15,596
|
|
|
|
1,522,739
|
|
|
|
6,563
|
|
|
|
1,619,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2008
|
|
|
2,992
|
|
|
|
73,517
|
|
|
|
23,308
|
|
|
|
3,979
|
|
|
|
1,121,542
|
|
|
|
6,061
|
|
|
|
1,231,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 September 2006
|
|
|
5,197
|
|
|
|
79,598
|
|
|
|
78,241
|
|
|
|
17,770
|
|
|
|
2,352,253
|
|
|
|
6,956
|
|
|
|
2,540,015
|
|
Additions
|
|
|
|
|
|
|
|
|
|
|
1,627
|
|
|
|
496
|
|
|
|
129,950
|
|
|
|
177
|
|
|
|
132,250
|
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
(1,100
|
)
|
|
|
(8,988
|
)
|
|
|
(315
|
)
|
|
|
(10,406
|
)
|
Exchange adjustments
|
|
|
|
|
|
|
|
|
|
|
773
|
|
|
|
253
|
|
|
|
2,560
|
|
|
|
|
|
|
|
3,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2007
|
|
|
5,197
|
|
|
|
79,598
|
|
|
|
80,638
|
|
|
|
17,419
|
|
|
|
2,475,775
|
|
|
|
6,818
|
|
|
|
2,665,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
depreciation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 September 2006
|
|
|
1,997
|
|
|
|
7,531
|
|
|
|
40,428
|
|
|
|
12,447
|
|
|
|
1,104,864
|
|
|
|
5,514
|
|
|
|
1,172,781
|
|
Charge for the year
|
|
|
104
|
|
|
|
1,592
|
|
|
|
9,269
|
|
|
|
2,028
|
|
|
|
244,581
|
|
|
|
529
|
|
|
|
258,103
|
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(683
|
)
|
|
|
(4,465
|
)
|
|
|
(160
|
)
|
|
|
(5,308
|
)
|
Exchange adjustments
|
|
|
|
|
|
|
|
|
|
|
612
|
|
|
|
160
|
|
|
|
1,874
|
|
|
|
|
|
|
|
2,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2007
|
|
|
2,101
|
|
|
|
9,123
|
|
|
|
50,309
|
|
|
|
13,952
|
|
|
|
1,346,854
|
|
|
|
5,883
|
|
|
|
1,428,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2007
|
|
|
3,096
|
|
|
|
70,475
|
|
|
|
30,329
|
|
|
|
3,467
|
|
|
|
1,128,921
|
|
|
|
935
|
|
|
|
1,237,223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
85
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
14
|
|
FIXED ASSETS (CONTINUED)
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecom-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
munications,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture,
|
|
|
computer
|
|
|
|
|
|
|
|
|
|
Investment
|
|
|
Leasehold
|
|
|
fixtures
|
|
|
and office
|
|
|
Motor
|
|
|
|
|
|
|
property
|
|
|
improvements
|
|
|
and fittings
|
|
|
equipment
|
|
|
vehicles
|
|
|
Total
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 September 2007
|
|
|
5,197
|
|
|
|
8,332
|
|
|
|
7,046
|
|
|
|
312,158
|
|
|
|
3,665
|
|
|
|
336,398
|
|
Additions
|
|
|
|
|
|
|
|
|
|
|
2,177
|
|
|
|
229
|
|
|
|
1,236
|
|
|
|
3,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2008
|
|
|
5,197
|
|
|
|
8,332
|
|
|
|
9,223
|
|
|
|
312,387
|
|
|
|
4,901
|
|
|
|
340,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
depreciation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 September 2007
|
|
|
2,101
|
|
|
|
6,199
|
|
|
|
6,802
|
|
|
|
217,704
|
|
|
|
3,391
|
|
|
|
236,197
|
|
Charge for the year
|
|
|
104
|
|
|
|
726
|
|
|
|
346
|
|
|
|
14,978
|
|
|
|
206
|
|
|
|
16,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2008
|
|
|
2,205
|
|
|
|
6,925
|
|
|
|
7,148
|
|
|
|
232,682
|
|
|
|
3,597
|
|
|
|
252,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2008
|
|
|
2,992
|
|
|
|
1,407
|
|
|
|
2,075
|
|
|
|
79,705
|
|
|
|
1,304
|
|
|
|
87,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 September 2006
|
|
|
5,197
|
|
|
|
7,957
|
|
|
|
7,151
|
|
|
|
312,435
|
|
|
|
3,665
|
|
|
|
336,405
|
|
Additions
|
|
|
|
|
|
|
375
|
|
|
|
72
|
|
|
|
1,908
|
|
|
|
|
|
|
|
2,355
|
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
(177
|
)
|
|
|
(2,185
|
)
|
|
|
|
|
|
|
(2,362
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2007
|
|
|
5,197
|
|
|
|
8,332
|
|
|
|
7,046
|
|
|
|
312,158
|
|
|
|
3,665
|
|
|
|
336,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
depreciation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 September 2006
|
|
|
1,997
|
|
|
|
5,506
|
|
|
|
6,828
|
|
|
|
203,669
|
|
|
|
3,391
|
|
|
|
221,391
|
|
Charge for the year
|
|
|
104
|
|
|
|
693
|
|
|
|
151
|
|
|
|
16,219
|
|
|
|
|
|
|
|
17,167
|
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
(177
|
)
|
|
|
(2,184
|
)
|
|
|
|
|
|
|
(2,361
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2007
|
|
|
2,101
|
|
|
|
6,199
|
|
|
|
6,802
|
|
|
|
217,704
|
|
|
|
3,391
|
|
|
|
236,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2007
|
|
|
3,096
|
|
|
|
2,133
|
|
|
|
244
|
|
|
|
94,454
|
|
|
|
274
|
|
|
|
100,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
86 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
14
|
|
FIXED ASSETS (CONTINUED)
|
|
(a)
|
|
The Groups total future aggregate lease income receivable under non-cancellable
operating lease are receivable as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Leases in respect of investment
property which are receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within 1 year
|
|
|
258
|
|
|
|
228
|
|
|
|
258
|
|
|
|
228
|
|
After 1 year but within 5 years
|
|
|
258
|
|
|
|
|
|
|
|
258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
516
|
|
|
|
228
|
|
|
|
516
|
|
|
|
228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leases in respect of
telecommunications
facilities and computer equipment
which
are receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within 1 year
|
|
|
979
|
|
|
|
1,065
|
|
|
|
|
|
|
|
|
|
After 1 year but within 5 years
|
|
|
292
|
|
|
|
214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,271
|
|
|
|
1,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,787
|
|
|
|
1,507
|
|
|
|
516
|
|
|
|
228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
The net book value of interests in leasehold land and buildings and investment property
situated in Hong Kong are analysed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Leases of between 10
to 50 years
|
|
|
76,509
|
|
|
|
73,571
|
|
|
|
2,992
|
|
|
|
3,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Leasehold land and
building carried at
cost
|
|
|
73,517
|
|
|
|
70,475
|
|
|
|
|
|
|
|
|
|
Investment property
arrived at cost
less impairment loss
|
|
|
2,992
|
|
|
|
3,096
|
|
|
|
2,992
|
|
|
|
3,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,509
|
|
|
|
73,571
|
|
|
|
2,992
|
|
|
|
3,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
In addition to the leasehold land and buildings classified as being held under a finance lease,
the Group leases telecommunications, computer and office equipment under finance leases expiring
from one to five years. At the end of the lease term the Group has the option to purchase the
equipment at a price deemed to be a bargain purchase option. None of the leases included contingent
rental.
|
|
|
|
|
At 31 August 2008, the net book value of telecommunications, computer and office equipment
under finance lease held by the Group amounted to HK$1,411,000 (2007: HK$1,998,000).
|
Notes to the Financial Statements
87
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
15
|
|
INVESTMENTS IN SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Unlisted investments, at cost (note (a))
|
|
|
51,791
|
|
|
|
51,791
|
|
Amounts due from subsidiaries (note (b))
|
|
|
1,342,205
|
|
|
|
1,446,420
|
|
|
|
|
|
|
|
|
|
|
|
1,393,996
|
|
|
|
1,498,211
|
|
Less: Impairment loss
|
|
|
(10,184
|
)
|
|
|
(9,748
|
)
|
|
|
|
|
|
|
|
|
|
|
1,383,812
|
|
|
|
1,488,463
|
|
|
|
|
|
|
|
|
|
(a)
|
|
The following is a list of the principal subsidiaries which principally affected the results,
assets or liabilities of the Group at 31 August 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
Particulars
|
|
|
|
|
Place of
|
|
activities and place
|
|
of issued
|
|
Percentage of
|
Name
|
|
incorporation
|
|
of operations
|
|
share capital
|
|
interest held
|
Attitude Holdings Limited
|
|
British Virgin Islands
|
|
Inactive
|
|
Ordinary
US$1
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
Automedia Holdings Limited
|
|
British Virgin Islands
|
|
Investment holding
in Hong Kong
|
|
Ordinary
US$1
|
|
|
|
* 100
|
|
|
|
|
|
|
|
|
|
|
|
City Telecom (B.C.) Inc. #
|
|
Canada
|
|
Provision of international
telecommunications
and dial-up Internet
access services in
Canada
|
|
Common
Canadian
dollar (CAD)
501,000
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
City Telecom (Canada) Inc. #
|
|
Canada
|
|
Leasing and maintenance
of switching equipment
and provision of
operational services
in Canada
|
|
Common
CAD100
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
City Telecom Inc. #
|
|
Canada
|
|
Provision of international
telecommunications
and dial-up Internet
access services
in Canada
|
|
Common
CAD1,000
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
City Telecom International Limited
|
|
British Virgin Islands
|
|
Investment holding
in Hong Kong
|
|
Ordinary
US$5,294
|
|
|
|
* 100
|
|
|
|
|
|
|
|
|
|
|
|
Credibility Holdings Limited
|
|
British Virgin Islands
|
|
Investment holding
in Hong Kong
|
|
Ordinary
US$1
|
|
|
|
* 100
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
88 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
15
|
|
INVESTMENTS IN SUBSIDIARIES (CONTINUED)
|
|
|
|
Notes: (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
Particulars
|
|
|
|
|
Place of
|
|
activities and place
|
|
of issued
|
|
Percentage of
|
Name
|
|
incorporation
|
|
of operations
|
|
share capital
|
|
interest held
|
CTI Guangzhou Customer
Services Company Limited
(translated from the registered
name in Chinese) #
|
|
PRC
|
|
Provision of administrative
support services
in the PRC
|
|
Paid in capital of
HK$8,000,000
|
|
|
|
* 100
|
|
|
|
|
|
|
|
|
|
|
|
CTI Marketing Company Limited
|
|
Hong Kong
|
|
Provision of media marketing
services in Hong Kong
|
|
Ordinary HK$10,000
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
Golden Trinity Holdings Limited
|
|
British Virgin Islands
|
|
Investment holding
in Hong Kong
|
|
Ordinary US$1
|
|
|
|
* 100
|
|
|
|
|
|
|
|
|
|
|
|
Hong Kong Broadband
Network Limited
|
|
Hong Kong
|
|
Provision of international
telecommunications
and fixed
telecommunications
network services in
Hong Kong
|
|
Ordinary HK$383,049
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
IDD1600 Company Limited
|
|
Hong Kong
|
|
Provision of international
telecommunications
services in Hong Kong
|
|
Ordinary HK$2
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
SGBN Singapore Broadband
Network Pte. Limited
|
|
Singapore
|
|
Inactive
|
|
Ordinary
Singapore
dollar 1
|
|
|
|
* 100
|
|
|
|
*
|
|
Shares held directly by the Company.
|
|
#
|
|
Subsidiaries not audited by KPMG.
|
|
(b)
|
|
Except for a loan to a subsidiary of HK$753,860,000 (2007: HK$753,860,000) which bears fixed
interest of 9% per annum, all the amounts due from subsidiaries are unsecured, interest-free and
have no fixed terms of repayment.
|
Notes to the Financial Statements
89
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
16
|
|
OTHER FINANCIAL ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Debt securities, at fair value and unlisted outside
Hong Kong (note (i))
|
|
|
27,997
|
|
|
|
28,577
|
|
|
|
27,997
|
|
|
|
24,798
|
|
Long-term bank deposit, at amortised cost (note (ii))
|
|
|
|
|
|
|
14,415
|
|
|
|
|
|
|
|
14,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,997
|
|
|
|
42,992
|
|
|
|
27,997
|
|
|
|
39,213
|
|
Current portion
|
|
|
(27,997
|
)
|
|
|
(3,779
|
)
|
|
|
(27,997
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at the end of the year
|
|
|
|
|
|
|
39,213
|
|
|
|
|
|
|
|
39,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
(i)
|
|
Included in the balance as at 31 August 2007 was a debt security with principal amount of
US$500,000 (equivalent to HK$3,900,000). During the year ended 31 August 2008, the debt
security matured.
|
|
(ii)
|
|
The balance as at 31 August 2007 was a ten-year US$2 million (equivalent to
HK$15,600,000) deposit placed with a bank in which the Group receives a floating rate deposit
interest. During the year ended 31 August 2008, the Group early redeemed the deposit and
recognised a gain of HK$1,185,000 in the consolidated income statement.
|
17
|
|
DERIVATIVE FINANCIAL INSTRUMENT
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Interest rate swap, at fair value through profit or loss
|
|
|
|
|
|
|
1,039
|
|
|
|
|
Note:
|
|
The balance as at 31 August 2007 was an interest rate swap contract with notional
principal amount of HK$46,666,667. During the year ended 31 August 2008, the Group early
terminated the interest rate swap contract and recognised a loss of HK$1,039,000 in the
consolidated income statement.
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Balance as at the beginning of the year
|
|
|
21,367
|
|
|
|
12,445
|
|
Additions during the year
|
|
|
68,505
|
|
|
|
24,502
|
|
Less: Amortisation charge for the year (note 5(a))
|
|
|
(33,777
|
)
|
|
|
(15,580
|
)
|
|
|
|
|
|
|
|
|
|
|
56,095
|
|
|
|
21,367
|
|
Current portion
|
|
|
(40,704
|
)
|
|
|
(13,584
|
)
|
|
|
|
|
|
|
|
Balance as at the end of the year
|
|
|
15,391
|
|
|
|
7,783
|
|
|
|
|
|
|
|
|
|
|
Deferred expenditure represents costs incurred to acquire subscribers of the services offered by
the Group, which is treated as customer acquisition costs and are amortised over the period of the
underlying service subscription agreements.
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
90 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Accounts receivable
|
|
|
152,227
|
|
|
|
192,943
|
|
|
|
12,396
|
|
|
|
13,026
|
|
Less: Allowance for doubtful debts
|
|
|
(11,944
|
)
|
|
|
(22,392
|
)
|
|
|
(978
|
)
|
|
|
(921
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140,283
|
|
|
|
170,551
|
|
|
|
11,418
|
|
|
|
12,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Aging analysis
|
|
|
|
|
The aging analysis of accounts receivable is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Current 30 days
|
|
|
45,462
|
|
|
|
50,282
|
|
|
|
4,233
|
|
|
|
4,756
|
|
31 60 days
|
|
|
17,507
|
|
|
|
15,619
|
|
|
|
4,783
|
|
|
|
5,279
|
|
61 90 days
|
|
|
7,249
|
|
|
|
8,876
|
|
|
|
886
|
|
|
|
607
|
|
Over 90 days
|
|
|
82,009
|
|
|
|
118,166
|
|
|
|
2,494
|
|
|
|
2,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
152,227
|
|
|
|
192,943
|
|
|
|
12,396
|
|
|
|
13,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The majority of the Groups accounts receivable are due within 30 days from the date of
billings. Subscribers with receivable that are more than 3 months overdue are requested to
settle all outstanding balance before further credit is granted.
|
|
|
(b)
|
|
Impairment of accounts receivable
|
|
|
|
|
Impairment losses in respect of accounts receivable are recorded using an allowance account
unless the Group is satisfied that recovery of the amount is remote, in which case the
impairment loss is written off against accounts receivable directly (see note 1(i)(i)).
|
|
|
|
|
The movement in the allowance for doubtful debts during the year, including both specific and
collective loss components is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Balance as at the beginning of the year
|
|
|
22,392
|
|
|
|
55,745
|
|
|
|
921
|
|
|
|
1,058
|
|
Impairment loss recognised
|
|
|
14,293
|
|
|
|
6,569
|
|
|
|
954
|
|
|
|
796
|
|
Uncollectible amounts written off
|
|
|
(24,741
|
)
|
|
|
(39,922
|
)
|
|
|
(897
|
)
|
|
|
(933
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at the end of the year
|
|
|
11,944
|
|
|
|
22,392
|
|
|
|
978
|
|
|
|
921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The allowance for doubtful debts as at 1 September 2006 includes provision for mobile
interconnection charges receivable of HK$20,809,000. Following TAs 2004 Determination issued in
June 2007 (note 3(c)), the Group has written back HK$9,404,000 of the allowance for mobile
interconnection charges to the consolidated income statement and written off the remaining
balance of allowance of HK$11,405,000 against the accounts receivable relating to mobile
interconnection charges.
|
Notes to the Financial Statements
91
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
19
|
|
ACCOUNTS RECEIVABLE (CONTINUED)
|
|
(c)
|
|
Accounts receivable that are not impaired
|
|
|
|
|
The aging analysis of accounts receivable that are neither individually nor
collectively considered to be impaired are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Neither past due nor impaired
|
|
|
45,462
|
|
|
|
50,282
|
|
|
|
4,233
|
|
|
|
4,756
|
|
0 30 days past due
|
|
|
17,507
|
|
|
|
15,619
|
|
|
|
4,783
|
|
|
|
5,279
|
|
31 60 days past due
|
|
|
7,249
|
|
|
|
8,876
|
|
|
|
886
|
|
|
|
607
|
|
Over 60 days past due
|
|
|
70,065
|
|
|
|
95,774
|
|
|
|
1,516
|
|
|
|
1,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140,283
|
|
|
|
170,551
|
|
|
|
11,418
|
|
|
|
12,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables that were neither past due nor impaired relate to a wide range of
customers for whom there was no recent history of default.
|
|
|
|
|
The amount over 60 days past due for the Group included receivable relating to mobile
interconnection charges of HK$64,407,000 as at 31 August 2008 (31 August 2007:
HK$92,383,000) (note 3(c)).
|
|
|
|
|
Other accounts receivable that were past due but not impaired relate to a number of
independent customers that have a good track record with the Group. Based on past
experience, management believes that no impairment allowance is necessary in respect
of these balances as there has not been a significant change in credit quality and the
balances are still considered fully recoverable. The Group does not hold collateral
over these balances.
|
|
(a)
|
|
Inventories in the balance sheet comprise:
|
|
|
|
|
|
|
|
|
|
|
|
The Group and
|
|
|
|
the Company
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Finished goods
|
|
|
|
|
|
|
477
|
|
|
|
|
|
|
|
|
|
(b)
|
|
The amount of inventories recognised as an expense is analysed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Cost of inventories
|
|
|
477
|
|
|
|
331
|
|
|
|
477
|
|
|
|
330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
|
|
CASH AT BANK AND IN HAND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Time deposits with banks and other financial
institutions
|
|
|
264,943
|
|
|
|
482,730
|
|
|
|
62,854
|
|
|
|
203,494
|
|
Cash at bank and in hand
|
|
|
156,667
|
|
|
|
50,164
|
|
|
|
27,532
|
|
|
|
17,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank and in hand in the balance sheet
|
|
|
421,610
|
|
|
|
532,894
|
|
|
|
90,386
|
|
|
|
220,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
92 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
22
|
|
ACCOUNTS PAYABLE
|
|
|
|
The aging analysis of the accounts payable was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Current 30 days
|
|
|
18,802
|
|
|
|
18,025
|
|
|
|
4,952
|
|
|
|
5,770
|
|
31 60 days
|
|
|
4,025
|
|
|
|
11,097
|
|
|
|
2,072
|
|
|
|
2,073
|
|
61 90 days
|
|
|
8,334
|
|
|
|
3,655
|
|
|
|
7,992
|
|
|
|
3,013
|
|
Over 90 days
|
|
|
21,163
|
|
|
|
43,242
|
|
|
|
11,424
|
|
|
|
26,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,324
|
|
|
|
76,019
|
|
|
|
26,440
|
|
|
|
37,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
|
|
|
Share
|
|
|
Capital
|
|
|
Retained
|
|
|
Exchange
|
|
|
|
|
|
|
capital
|
|
|
premium
|
|
|
reserve
|
|
|
profits
|
|
|
reserve
|
|
|
Total
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
At 1 September 2007
|
|
|
61,650
|
|
|
|
622,433
|
|
|
|
18,109
|
|
|
|
200,519
|
|
|
|
1,171
|
|
|
|
903,882
|
|
Profit attributable
to shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,190
|
|
|
|
|
|
|
|
125,190
|
|
Dividend paid in
respect of previous
year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,915
|
)
|
|
|
|
|
|
|
(5,915
|
)
|
Shares issued in
respect of
scrip dividend of
previous year
|
|
|
1,123
|
|
|
|
18,044
|
|
|
|
|
|
|
|
(19,167
|
)
|
|
|
|
|
|
|
|
|
Dividend paid in
respect of current
year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,371
|
)
|
|
|
|
|
|
|
(11,371
|
)
|
Shares issued in
respect of
scrip dividend of
current year
|
|
|
884
|
|
|
|
13,347
|
|
|
|
|
|
|
|
(14,231
|
)
|
|
|
|
|
|
|
|
|
Shares issued upon
exercise of
share option
|
|
|
1,405
|
|
|
|
16,893
|
|
|
|
(3,300
|
)
|
|
|
|
|
|
|
|
|
|
|
14,998
|
|
Equity settled
share-based
transactions
|
|
|
|
|
|
|
|
|
|
|
4,204
|
|
|
|
|
|
|
|
|
|
|
|
4,204
|
|
Exchange
adjustments on
translation of
the financial
statements of
subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,619
|
|
|
|
1,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2008
|
|
|
65,062
|
|
|
|
670,717
|
|
|
|
19,013
|
|
|
|
275,025
|
|
|
|
2,790
|
|
|
|
1,032,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 September 2006
|
|
|
61,417
|
|
|
|
620,298
|
|
|
|
12,993
|
|
|
|
196,289
|
|
|
|
657
|
|
|
|
891,654
|
|
Profit attributable
to shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,865
|
|
|
|
|
|
|
|
28,865
|
|
Dividend paid in
respect of current
year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24,635
|
)
|
|
|
|
|
|
|
(24,635
|
)
|
Shares issued upon
exercise of
share option
|
|
|
233
|
|
|
|
2,135
|
|
|
|
(611
|
)
|
|
|
|
|
|
|
|
|
|
|
1,757
|
|
Equity settled
share-based
transactions
|
|
|
|
|
|
|
|
|
|
|
5,727
|
|
|
|
|
|
|
|
|
|
|
|
5,727
|
|
Exchange
adjustments on
translation of
the financial
statements of
subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
514
|
|
|
|
514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2007
|
|
|
61,650
|
|
|
|
622,433
|
|
|
|
18,109
|
|
|
|
200,519
|
|
|
|
1,171
|
|
|
|
903,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
93
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
23
|
|
CAPITAL AND RESERVES (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
|
|
|
Share
|
|
|
Capital
|
|
|
Retained
|
|
|
|
|
|
|
capital
|
|
|
premium
|
|
|
reserve
|
|
|
profits
|
|
|
Total
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
At 1 September 2007
|
|
|
61,650
|
|
|
|
622,433
|
|
|
|
18,109
|
|
|
|
193,047
|
|
|
|
895,239
|
|
Profit attributable
to shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,037
|
|
|
|
17,037
|
|
Dividend paid in
respect of previous
year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,915
|
)
|
|
|
(5,915
|
)
|
Shares issued in
respect of scrip
dividend of
previous year
|
|
|
1,123
|
|
|
|
18,044
|
|
|
|
|
|
|
|
(19,167
|
)
|
|
|
|
|
Dividend paid in
respect of current
year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,371
|
)
|
|
|
(11,371
|
)
|
Shares issued in
respect of scrip
dividend of
current year
|
|
|
884
|
|
|
|
13,347
|
|
|
|
|
|
|
|
(14,231
|
)
|
|
|
|
|
Shares issued upon
exercise of share
option
|
|
|
1,405
|
|
|
|
16,893
|
|
|
|
(3,300
|
)
|
|
|
|
|
|
|
14,998
|
|
Equity settled
share-based
transactions
|
|
|
|
|
|
|
|
|
|
|
4,204
|
|
|
|
|
|
|
|
4,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2008
|
|
|
65,062
|
|
|
|
670,717
|
|
|
|
19,013
|
|
|
|
159,400
|
|
|
|
914,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 September 2006
|
|
|
61,417
|
|
|
|
620,298
|
|
|
|
12,993
|
|
|
|
230,627
|
|
|
|
925,335
|
|
Loss attributable
to shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,945
|
)
|
|
|
(12,945
|
)
|
Dividend paid in
respect of current
year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24,635
|
)
|
|
|
(24,635
|
)
|
Shares issued upon
exercise of share
option
|
|
|
233
|
|
|
|
2,135
|
|
|
|
(611
|
)
|
|
|
|
|
|
|
1,757
|
|
Equity settled
share-based
transactions
|
|
|
|
|
|
|
|
|
|
|
5,727
|
|
|
|
|
|
|
|
5,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2007
|
|
|
61,650
|
|
|
|
622,433
|
|
|
|
18,109
|
|
|
|
193,047
|
|
|
|
895,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nature and purpose of reserves
|
|
(i)
|
|
Share premium
|
|
|
|
|
The application of the share premium account is governed by Sections 48B of the Hong Kong
Companies Ordinance.
|
|
|
(ii)
|
|
Capital reserve
|
|
|
|
|
The capital reserve which comprises the fair value of the actual or estimated number of
unexercised share options granted to employees of the Group was recognised in accordance
with the accounting policy adopted for share based payment in note 1(q).
|
|
|
(iii)
|
|
PRC statutory reserve
|
|
|
|
|
In accordance with Accounting Regulations for Business Enterprises, foreign investment
enterprises in the PRC are required to transfer at least 10% of their profit after
taxation, as determined under accounting principles generally accepted in the PRC (PRC
GAAP) to the
general reserve until the balance of the general reserve is equal to 50% of their
registered capital.
|
|
|
|
|
For the year ended 31 August 2008, CTI Guangzhou Customer Services Company Limited
(CTIGZ), a wholly-owned subsidiary of the Group, made appropriation to the statutory
reserve of RMB324,000 (2007: RMB379,000). The accumulated balance of the statutory
reserve maintained at the CTIGZ as at 31 August 2008 was RMB905,000 (2007: RMB581,000).
The statutory reserve can be used to reduce previous years losses and to increase the
capital of the subsidiary.
|
|
|
(iv)
|
|
Exchange reserve
|
|
|
|
|
The exchange reserve comprises all foreign exchange differences arising from the
translation of the financial statements of foreign operations. The reserve is dealt with in
accordance with the accounting policies set out in note 1(d)(ii).
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
94 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
23
|
|
CAPITAL AND RESERVES (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
No. of
|
|
|
Amount
|
|
|
No. of
|
|
|
Amount
|
|
|
|
shares
|
|
|
HK$000
|
|
|
shares
|
|
|
HK$000
|
|
Authorised:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares of
HK$0.10 each
|
|
|
2,000,000,000
|
|
|
|
200,000
|
|
|
|
2,000,000,000
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued and fully
paid:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares of
HK$0.10 each
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the beginning of
the year
|
|
|
616,503,404
|
|
|
|
61,650
|
|
|
|
614,175,404
|
|
|
|
61,417
|
|
Shares issued in
respect of scrip
dividend of the
previous year (note
(i))
|
|
|
11,227,213
|
|
|
|
1,123
|
|
|
|
|
|
|
|
|
|
Shares issued in
respect of scrip
dividend of the
current year (note
(ii))
|
|
|
8,838,938
|
|
|
|
884
|
|
|
|
|
|
|
|
|
|
Shares issued upon
exercise of
share options (note
(iii))
|
|
|
14,052,268
|
|
|
|
1,405
|
|
|
|
2,328,000
|
|
|
|
233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the
year
|
|
|
650,621,823
|
|
|
|
65,062
|
|
|
|
616,503,404
|
|
|
|
61,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The holders of ordinary shares are entitled to receive dividends as declared from time to time
and are entitled to one vote per ordinary share at meetings of the Company. All ordinary shares
rank equally with regard to the Companys residual assets.
|
|
|
|
Notes:
|
|
(i)
|
|
On 4 February 2008, the Company issued and allotted 11,227,213 ordinary shares to
shareholders who elected to receive, the 2007 final dividend in shares pursuant to the scrip
dividend scheme announced by the Company on 4 January 2008. These shares rank pari passu with
the existing shares of the Company in all respects.
|
|
(ii)
|
|
On 23 July 2008, the Company issued and allotted 8,838,938 ordinary shares to shareholder,
who elected to receive the 2008 interim dividend in shares pursuant to the scrip dividend scheme
announced by the Company on 19 June 2008. These shares rank pari passu with the existing shares
of the Company in all respects.
|
|
(iii)
|
|
During the year ended 31 August 2008, 14,052,268 ordinary shares (2007: 2,328,000 ordinary
shares) were issued at a weighted average price of HK$1.07 per ordinary share (2007: HK$0.75 per
ordinary share), to share option holders who had exercised their options. These shares so issued
rank pari passu with the existing ordinary shares in issue.
|
Notes to the Financial Statements
95
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
23
|
|
CAPITAL AND RESERVES (CONTINUED)
|
|
(c)
|
|
Share capital (continued)
Notes: (continued)
|
|
(iv)
|
|
The movement of outstanding share options during the year was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to
|
|
|
Adjustment to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
number of
|
|
|
number of
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
share options
|
|
|
|
|
|
|
options for
|
|
|
options for
|
|
|
|
|
|
|
|
|
|
|
share options
|
|
|
|
|
|
|
|
|
|
|
|
outstanding at
|
|
|
|
|
|
|
2007 final
|
|
|
2008 interim
|
|
|
|
|
|
|
|
|
|
|
outstanding
|
|
|
|
Exercise price
|
|
|
1 September
|
|
|
|
|
|
|
dividend
|
|
|
dividend
|
|
|
|
|
|
|
Lapsed/
|
|
|
at 31 August
|
|
Date of grant
|
|
per share
|
|
|
2007
|
|
|
Granted
|
|
|
(note (i))
|
|
|
(note (ii))
|
|
|
Exercised
|
|
|
Cancelled
|
|
|
2008
|
|
3 June 2004
|
|
HK$
|
|
|
1.4700
|
|
|
|
6,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000,000
|
|
|
|
|
|
|
|
|
|
21 October 2004
|
|
HK$
|
|
|
1.5297
|
|
|
|
8,340,000
|
|
|
|
|
|
|
|
32,397
|
|
|
|
21,002
|
|
|
|
821,344
|
|
|
|
473
|
|
|
|
7,571,582
|
|
5 January 2005
|
|
HK$
|
|
|
1.5297
|
|
|
|
16,000,000
|
|
|
|
|
|
|
|
63,292
|
|
|
|
43,664
|
|
|
|
|
|
|
|
|
|
|
|
16,106,956
|
|
3 October 2005
|
|
HK$
|
|
|
0.8100
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
22 May 2006
|
|
HK$
|
|
|
0.6554
|
|
|
|
28,940,000
|
|
|
|
|
|
|
|
101,301
|
|
|
|
65,221
|
|
|
|
6,135,805
|
|
|
|
583,162
|
|
|
|
22,387,555
|
|
3 July 2006
|
|
HK$
|
|
|
0.6773
|
|
|
|
700,000
|
|
|
|
|
|
|
|
2,769
|
|
|
|
|
|
|
|
|
|
|
|
702,769
|
|
|
|
|
|
3 August 2006
|
|
HK$
|
|
|
0.7052
|
|
|
|
70,000
|
|
|
|
|
|
|
|
277
|
|
|
|
191
|
|
|
|
30,119
|
|
|
|
|
|
|
|
40,349
|
|
22 November 2006
|
|
HK$
|
|
|
0.7251
|
|
|
|
200,000
|
|
|
|
|
|
|
|
534
|
|
|
|
368
|
|
|
|
65,000
|
|
|
|
|
|
|
|
135,902
|
|
23 May 2007
|
|
HK$
|
|
|
2.0219
|
|
|
|
100,000
|
|
|
|
|
|
|
|
396
|
|
|
|
|
|
|
|
|
|
|
|
100,396
|
|
|
|
|
|
12 December 2007
|
|
HK$
|
|
|
2.4403
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
3,956
|
|
|
|
|
|
|
|
|
|
|
|
1,003,956
|
|
|
|
|
|
6 February 2008
|
|
HK$
|
|
|
1.7652
|
|
|
|
|
|
|
|
6,000,000
|
|
|
|
|
|
|
|
16,309
|
|
|
|
|
|
|
|
|
|
|
|
6,016,309
|
|
11 February 2008
|
|
HK$
|
|
|
1.8749
|
|
|
|
|
|
|
|
6,000,000
|
|
|
|
|
|
|
|
16,309
|
|
|
|
|
|
|
|
|
|
|
|
6,016,309
|
|
15 February 2008
|
|
HK$
|
|
|
1.7652
|
|
|
|
|
|
|
|
4,000,000
|
|
|
|
|
|
|
|
10,873
|
|
|
|
|
|
|
|
3,008,155
|
|
|
|
1,002,718
|
|
11 March 2008
|
|
HK$
|
|
|
1.8250
|
|
|
|
|
|
|
|
300,000
|
|
|
|
|
|
|
|
816
|
|
|
|
|
|
|
|
|
|
|
|
300,816
|
|
2 May 2008
|
|
HK$
|
|
|
1.7951
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
2,718
|
|
|
|
|
|
|
|
|
|
|
|
1,002,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,350,000
|
|
|
|
18,300,000
|
|
|
|
204,922
|
|
|
|
177,471
|
|
|
|
14,052,268
|
|
|
|
5,398,911
|
|
|
|
60,581,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the year ended 31 August 2008, options were granted under the 2002 Share Option
Scheme to eligible participants for the subscription of 18,300,000 shares of the
Company at a weighted average exercise price of HK$1.84 each.
|
|
|
|
|
Each option entitles the holder to subscribe for one share of HK$0.10 each in the
Company at a predetermined exercise price.
|
|
(d)
|
|
Capital management
|
|
|
|
|
The Groups primary objectives when managing capital are to maintain a reasonable capital
structure and safeguard the Groups ability to continue as a going concern, in order to
provide returns for shareholders.
|
|
|
|
|
The Group manages the amount of capital in proportion to risk, and makes adjustments to its
capital structure through the amount of dividend payment to shareholders, issuance of scrip
and new shares, and managing its debt portfolio in conjunction with cash flow requirements,
taking into account its future financial obligations and commitments.
|
|
|
|
|
The Group monitors its capital structure by reviewing its net debt to net asset gearing
ratio. For this purpose, the Group defines net debt as total loans less cash at bank and in
hand and long-term bank deposits.
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
96 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
23
|
|
CAPITAL AND RESERVES (CONTINUED)
|
|
(d)
|
|
Capital management (continued)
|
|
|
|
|
The net debt to net asset gearing ratio as at 31 August 2008 and 2007 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Unsecured
|
|
|
|
|
|
|
|
|
8.75% senior notes due 2015
|
|
|
683,242
|
|
|
|
952,593
|
|
Obligations under finance lease
|
|
|
376
|
|
|
|
1,210
|
|
|
|
|
|
|
|
|
Total loans
|
|
|
683,618
|
|
|
|
953,803
|
|
Less: Cash at bank and in hand
|
|
|
(421,610
|
)
|
|
|
(532,894
|
)
|
Less: Long-term bank deposit
|
|
|
|
|
|
|
(14,415
|
)
|
|
|
|
|
|
|
|
Net debt
|
|
|
262,008
|
|
|
|
406,494
|
|
Net asset
|
|
|
1,032,607
|
|
|
|
903,882
|
|
|
|
|
|
|
|
|
Net debt to net asset gearing ratio
|
|
|
0.25
|
|
|
|
0.45
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in net debt to net asset gearing ratio is mainly due to the repurchase of
the 8.75% senior notes (note 25(a)).
|
|
|
|
|
During the year, the Group has complied with the externally imposed capital
requirement related to the 8.75% senior notes.
|
24
|
|
DEFERRED TAXATION
|
|
|
|
Deferred taxation is calculated in full on temporary differences under the liability method
using the taxation rates prevailing in respective countries in which the Group operates.
Deferred tax assets are recognised to the extent it is probable that future taxable profits
will be generated against which the temporary differences can be utilised.
|
|
|
|
The components of deferred tax assets/ (liabilities) recognised in the consolidated balance
sheet and the movements are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
As at the beginning
of the year
|
|
|
(291
|
)
|
|
|
(353
|
)
|
|
|
|
|
|
|
|
|
Exchange differences
|
|
|
(1
|
)
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Deferred taxation
(charged)/credited to
income statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
relating to the
origination and
reversal of
temporary differences
|
|
|
(4,645
|
)
|
|
|
59
|
|
|
|
(4,937
|
)
|
|
|
|
|
relating to the
recognition of
unrecognised
tax losses in prior
years
|
|
|
26,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at the end of the
year
|
|
|
21,398
|
|
|
|
(291
|
)
|
|
|
(4,937
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management projects future taxable income by considering all available information, including tax
planning strategies, historical taxable incomes, and the expiration period of the unused tax losses
carry forwards of each of the Company and its subsidiaries. During the year ended 31 August 2008,
taking into consideration of the current results of operations, management assessed that it is
probable that sufficient future taxable profits will be generated to utilise the unused tax losses
of HK$159,606,000 which resulted in the recognition of deferred tax assets of HK$26,335,000.
|
|
|
|
As at 31 August 2008, the Group has not recognised deferred tax assets in respect of unused tax
losses of HK$9,518,000 (2007:
HK$268,004,000) because it is not probable that future taxable profits can be generated to utilise
the tax losses. All tax losses are subject to agreement with local tax authorises.
|
Notes to the Financial Statements
97
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
24
|
|
DEFERRED TAXATION (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
After 5 years
|
|
|
3,810
|
|
|
|
4,313
|
|
From 2 to 5 years
|
|
|
|
|
|
|
1,132
|
|
No expiry date
|
|
|
5,708
|
|
|
|
262,559
|
|
|
|
|
|
|
|
|
|
|
|
9,518
|
|
|
|
268,004
|
|
|
|
|
|
|
|
|
|
|
The movement in deferred tax assets and liabilities (prior to offsetting of balances within the
same taxation jurisdiction) during the year is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
|
Accelerated
|
|
|
|
depreciation allowances
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the beginning of the year
|
|
|
(134,910
|
)
|
|
|
(154,678
|
)
|
Credited to consolidated income statement
|
|
|
8,463
|
|
|
|
19,772
|
|
Exchange differences
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
At the end of the year
|
|
|
(126,447
|
)
|
|
|
(134,910
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
|
Share based payment
|
|
|
Tax losses
|
|
|
Total
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the beginning of
the year
|
|
|
|
|
|
|
123
|
|
|
|
134,619
|
|
|
|
154,202
|
|
|
|
134,619
|
|
|
|
154,325
|
|
Credited/(charged) to
consolidated income
statement
|
|
|
|
|
|
|
(123
|
)
|
|
|
13,227
|
|
|
|
(19,590
|
)
|
|
|
13,227
|
|
|
|
(19,713
|
)
|
Exchange differences
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
7
|
|
|
|
(1
|
)
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the year
|
|
|
|
|
|
|
|
|
|
|
147,845
|
|
|
|
134,619
|
|
|
|
147,845
|
|
|
|
134,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company
|
|
|
|
Accelerated
|
|
|
|
depreciation allowances
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
At the beginning of the year
|
|
|
(11,072
|
)
|
|
|
(13,293
|
)
|
Credited to the income statement
|
|
|
2,327
|
|
|
|
2,221
|
|
|
|
|
|
|
|
|
At the end of the year
|
|
|
(8,745
|
)
|
|
|
(11,072
|
)
|
|
|
|
|
|
|
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
98 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
24
|
|
DEFERRED TAXATION (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
Tax losses
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the beginning of the year
|
|
|
11,072
|
|
|
|
13,293
|
|
Charged to the income statement
|
|
|
(7,264
|
)
|
|
|
(2,221
|
)
|
|
|
|
|
|
|
|
At the end of the year
|
|
|
3,808
|
|
|
|
11,072
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to
set off current tax assets against current tax liabilities and when the deferred income taxes
relate to the same legal entity and same fiscal authority. The following amounts, determined after
appropriate offsetting, are shown in the balance sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Deferred tax asset
|
|
|
26,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
(4,937
|
)
|
|
|
(291
|
)
|
|
|
(4,937
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,398
|
|
|
|
(291
|
)
|
|
|
(4,937
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
|
|
LONG-TERM DEBT AND OTHER LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
8.75% senior notes due 2015 (note (a))
|
|
|
683,242
|
|
|
|
952,593
|
|
|
|
683,242
|
|
|
|
952,593
|
|
Obligation under finance lease (note (b))
|
|
|
376
|
|
|
|
1,210
|
|
|
|
350
|
|
|
|
454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
683,618
|
|
|
|
953,803
|
|
|
|
683,592
|
|
|
|
953,047
|
|
Current portion of
obligation under finance lease
|
|
|
(121
|
)
|
|
|
(835
|
)
|
|
|
(112
|
)
|
|
|
(104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
683,497
|
|
|
|
952,968
|
|
|
|
683,480
|
|
|
|
952,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2008, the Groups and the Companys long-term debt and other liabilities were
repayable as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt and other liabilities, repayable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.75% senior notes due 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
after the fifth year
|
|
|
683,242
|
|
|
|
952,593
|
|
|
|
683,242
|
|
|
|
952,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations under finance lease
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within 1 year
|
|
|
121
|
|
|
|
835
|
|
|
|
112
|
|
|
|
104
|
|
After 1 year but within 2 years
|
|
|
129
|
|
|
|
121
|
|
|
|
120
|
|
|
|
112
|
|
After 2 years but within 5 years
|
|
|
126
|
|
|
|
254
|
|
|
|
118
|
|
|
|
238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
376
|
|
|
|
1,210
|
|
|
|
350
|
|
|
|
454
|
|
Less: Current portion of obligations under finance lease
|
|
|
(121
|
)
|
|
|
(835
|
)
|
|
|
(112
|
)
|
|
|
(104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
255
|
|
|
|
375
|
|
|
|
238
|
|
|
|
350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
683,497
|
|
|
|
952,968
|
|
|
|
683,480
|
|
|
|
952,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
99
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
25
|
|
LONG-TERM DEBT AND OTHER LIABILITIES (CONTINUED)
|
|
(a)
|
|
On 20 January 2005, the Company issued unsecured 10-year senior fixed rates notes (the
10-year senior notes) with a principle amount of US$125 million at an issue price equal to
100 per cent of the principal amount. The 10-year senior notes mature on 1 February 2015 and
bear interest at the fixed rate of 8.75% per annum payable semi-annually on 1 February and 1
August of each year, commencing 1 August 2005.
|
|
|
|
|
The 10-year senior notes are unconditionally and irrevocably guaranteed on a joint and
several basis by the Companys subsidiaries (other than CTI Guangzhou Customer
Services Company Limited) as subsidiary guarantors.
|
|
|
|
|
During the year ended 31 August 2008, the Group repurchased a portion of the 10-year
senior notes with a cumulative principal value of US$35,647,000 in the open market.
The total consideration paid was approximately US$35,352,000. The gain on
extinguishment of the 10-year senior notes was US$332,000 (equivalent to HK$2,582,000)
which has been recorded in other revenues of the consolidated income statement.
|
|
|
|
|
As at 31 August 2008, the remaining principal amount of the 10-year senior notes
remaining in issued after the repurchase was US$89,353,000 (equivalent to
HK$697,847,000). The amortised cost of the 10-year senior notes was US$87,483,000
(equivalent to HK$683,242,000) as at 31 August 2008.
|
|
|
|
|
The effective interest rate of the 10-year senior notes for the year ended 31 August
2008 is 9.2% (2007: 9.2%) per annum.
|
|
|
(b)
|
|
At 31 August 2008, the Group had obligations under finance leases repayable as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
|
2008
|
|
|
2007
|
|
|
|
Present
|
|
|
Interest
|
|
|
|
|
|
|
Present
|
|
|
Interest
|
|
|
|
|
|
|
value of
|
|
|
expense
|
|
|
Total
|
|
|
value of
|
|
|
expense
|
|
|
Total
|
|
|
|
the minimum
|
|
|
relating to
|
|
|
minimum
|
|
|
the minimum
|
|
|
relating to
|
|
|
minimum
|
|
|
|
lease
|
|
|
future
|
|
|
lease
|
|
|
lease
|
|
|
future
|
|
|
lease
|
|
|
|
payments
|
|
|
periods
|
|
|
payments
|
|
|
payments
|
|
|
periods
|
|
|
payments
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Within 1 year
|
|
|
121
|
|
|
|
21
|
|
|
|
142
|
|
|
|
835
|
|
|
|
34
|
|
|
|
869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 1 year but within 2 years
|
|
|
129
|
|
|
|
13
|
|
|
|
142
|
|
|
|
121
|
|
|
|
21
|
|
|
|
142
|
|
After 2 years but within 5 years
|
|
|
126
|
|
|
|
4
|
|
|
|
130
|
|
|
|
254
|
|
|
|
18
|
|
|
|
272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
255
|
|
|
|
17
|
|
|
|
272
|
|
|
|
375
|
|
|
|
39
|
|
|
|
414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
376
|
|
|
|
38
|
|
|
|
414
|
|
|
|
1,210
|
|
|
|
73
|
|
|
|
1,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 August 2008, the Company had obligations under finance leases repayable as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
|
Present
|
|
|
Interest
|
|
|
|
|
|
|
Present
|
|
|
Interest
|
|
|
|
|
|
|
value of
|
|
|
expense
|
|
|
Total
|
|
|
value of
|
|
|
expense
|
|
|
Total
|
|
|
|
the minimum
|
|
|
relating to
|
|
|
minimum
|
|
|
the minimum
|
|
|
relating to
|
|
|
minimum
|
|
|
|
lease
|
|
|
future
|
|
|
lease
|
|
|
lease
|
|
|
future
|
|
|
lease
|
|
|
|
payments
|
|
|
periods
|
|
|
payments
|
|
|
payments
|
|
|
periods
|
|
|
payments
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Within 1 year
|
|
|
112
|
|
|
|
20
|
|
|
|
132
|
|
|
|
104
|
|
|
|
27
|
|
|
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 1 year but within 2 years
|
|
|
120
|
|
|
|
12
|
|
|
|
132
|
|
|
|
112
|
|
|
|
20
|
|
|
|
132
|
|
After 2 years but
within 5 years
|
|
|
118
|
|
|
|
4
|
|
|
|
122
|
|
|
|
238
|
|
|
|
16
|
|
|
|
254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
238
|
|
|
|
16
|
|
|
|
254
|
|
|
|
350
|
|
|
|
36
|
|
|
|
386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350
|
|
|
|
36
|
|
|
|
386
|
|
|
|
454
|
|
|
|
63
|
|
|
|
517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
100 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
26
|
|
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
|
|
(a)
|
|
Reconciliation of profit before taxation to net cash inflow from operations
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Profit before taxation
|
|
|
108,372
|
|
|
|
30,891
|
|
Depreciation of owned fixed assets
|
|
|
209,464
|
|
|
|
257,052
|
|
Depreciation of fixed assets held under finance lease
|
|
|
587
|
|
|
|
1,051
|
|
Amortisation of deferred expenditure
|
|
|
33,777
|
|
|
|
15,580
|
|
Interest income
|
|
|
(15,596
|
)
|
|
|
(22,671
|
)
|
Interest element of finance lease
|
|
|
34
|
|
|
|
62
|
|
Loss on disposal of fixed assets
|
|
|
1,431
|
|
|
|
1,714
|
|
Realised and unrealised gain on other financial assets
|
|
|
(3,284
|
)
|
|
|
(1,887
|
)
|
Realised and unrealised gain on long term deposit
|
|
|
(1,185
|
)
|
|
|
(739
|
)
|
Equity settled share-based transactions
|
|
|
4,204
|
|
|
|
5,727
|
|
Realised and unrealised loss on derivative financial instrument
|
|
|
1,039
|
|
|
|
806
|
|
Gain on extinguishment of 10-year senior notes
|
|
|
(2,582
|
)
|
|
|
|
|
Interest, amortisation and exchange difference on 10-year senior notes
|
|
|
72,640
|
|
|
|
89,879
|
|
|
|
|
|
|
|
|
Net cash inflow before working capital changes
|
|
|
408,901
|
|
|
|
377,465
|
|
Decrease in long-term receivable and prepayment
|
|
|
1,346
|
|
|
|
5,600
|
|
Decrease/(increase) in accounts receivable, other receivables, deposits and prepayments
|
|
|
6,914
|
|
|
|
(11,742
|
)
|
Decrease in inventories
|
|
|
477
|
|
|
|
379
|
|
Increase in deferred expenditure
|
|
|
(68,505
|
)
|
|
|
(24,502
|
)
|
(Decrease)/increase in accounts payable, other payables, accrued charges and
deposits received
|
|
|
(12,567
|
)
|
|
|
8,573
|
|
Increase in deferred services revenue
|
|
|
46,247
|
|
|
|
30,459
|
|
|
|
|
|
|
|
|
Net cash inflow from operations
|
|
|
382,813
|
|
|
|
386,232
|
|
|
|
|
|
|
|
|
|
(b)
|
|
Analysis of changes in financing during the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
|
|
|
|
|
|
|
(including share
|
|
|
Obligations
|
|
|
|
|
|
|
premium and
|
|
|
under
|
|
|
|
|
|
|
capital reserve)
|
|
|
finance lease
|
|
|
Senior notes
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Balance at 1 September 2006
|
|
|
694,708
|
|
|
|
2,373
|
|
|
|
948,027
|
|
Issue of new shares
|
|
|
1,757
|
|
|
|
|
|
|
|
|
|
Acquisition of fixed assets
|
|
|
|
|
|
|
158
|
|
|
|
|
|
Repayment of capital element of finance lease
|
|
|
|
|
|
|
(1,321
|
)
|
|
|
|
|
Amortisation of incidental issuance costs
|
|
|
|
|
|
|
|
|
|
|
2,129
|
|
Equity settled share-based transactions
|
|
|
5,727
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes
|
|
|
|
|
|
|
|
|
|
|
2,437
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 August 2007
|
|
|
702,192
|
|
|
|
1,210
|
|
|
|
952,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 September 2007
|
|
|
702,192
|
|
|
|
1,210
|
|
|
|
952,593
|
|
Issue of new shares
|
|
|
14,998
|
|
|
|
|
|
|
|
|
|
Share issued in respect of scrip dividend
|
|
|
33,398
|
|
|
|
|
|
|
|
|
|
Repayment of capital element of finance lease
|
|
|
|
|
|
|
(834
|
)
|
|
|
|
|
Repurchase of 10-year senior notes
|
|
|
|
|
|
|
|
|
|
|
(269,399
|
)
|
Gain on extinguishment of 10-year senior notes
|
|
|
|
|
|
|
|
|
|
|
(2,582
|
)
|
Amortisation of incidental issuance costs
|
|
|
|
|
|
|
|
|
|
|
1,665
|
|
Equity settled share-based transactions
|
|
|
4,204
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes
|
|
|
|
|
|
|
|
|
|
|
965
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 August 2008
|
|
|
754,792
|
|
|
|
376
|
|
|
|
683,242
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
101
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
27
|
|
FINANCIAL INSTRUMENTS
|
|
|
|
Exposure to credit, liquidity, interest rate and currency risks arises in the normal course
of the Groups business. These risks are limited by the Groups financial management policies
and practices described below.
|
|
(a)
|
|
Credit risk
|
|
|
|
|
The Groups credit risk is primarily attributable to trade and other receivables, and
debt investments. Management has a credit policy in place and the exposure to the
credit risk is monitored on an ongoing basis.
|
|
|
|
|
In respect of trade and other receivables, credit evaluations are performed on all
customers requiring credit over a certain amount. These evaluations focus on the
customers past history of making payments when due and current ability to pay, and
take into account information specific to the customer as well as pertaining to the
economic environment in which the customer locates. These receivables are due within
30 days from the date of billing. Subscribers with receivables that are more than 3
months overdue are requested to settle all outstanding balances before any further
credit is granted. The Group generally does not obtain collateral from customers.
|
|
|
|
|
The Groups exposure to credit risk is influenced mainly by individual characteristics
of each customer. The default risk of the country in which customer locates also has
an influence on credit risk but to a lesser extent. Concentrations of credit risk with
respect to accounts receivable are limited due to the Groups customer base being
large and unrelated. As such, management does not expect any significant losses of
accounts receivable that have not been provided for by way of allowances as disclosed
in note 19.
|
|
|
|
|
The maximum exposure to credit risk is represented by the carrying amount of each
financial asset after deducting any impairment allowance, in the balance sheet. Except
for the financial guarantee given by the Group as disclosed in note 28, the Group does
not provide any other guarantees which expose the Group to credit risk. The maximum
exposure to credit risk in respect of these financial guarantees at the balance sheet
date is disclosed in note 28.
|
|
|
|
|
Further quantitative disclosures in respect of the Groups exposure to credit risk
arising from accounts receivable are set out in note 19.
|
|
|
(b)
|
|
Liquidity risk
|
|
|
|
|
The Company has a cash management policy, which includes the short term investment of
cash surpluses and the raising of loans and other borrowings to cover expected cash
demands. The Companys policy is to regularly monitor current and expected liquidity
requirements and its compliance with lending covenants, to ensure that it maintains
sufficient cash and readily realisable marketable securities and adequate amount of
|
|
|
|
|
committed credit facilities from major financial institutions to meet its liquidity
requirements in the short and long term. Due to the dynamic nature of the underlying
business, the Company aims to maintain flexibility in funding by maintaining committed
credit lines available.
|
|
|
|
|
The following table details the remaining contractual maturities at the balance sheet
date of the Groups and the Companys financial liabilities, which are based on
undiscounted cash flows (including interest) and the earliest date the Group and the
Company are required to pay.
|
|
|
|
|
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
More than
|
|
|
More than
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
More than
|
|
|
More than
|
|
|
|
|
|
|
|
|
|
|
contractual
|
|
|
Within
|
|
|
1 year but
|
|
|
2 years but
|
|
|
|
|
|
|
|
|
|
|
contractual
|
|
|
Within
|
|
|
1 year but
|
|
|
2 years but
|
|
|
|
|
|
|
Carrying
|
|
|
undiscounted
|
|
|
1 year or
|
|
|
less than
|
|
|
less than
|
|
|
More than
|
|
|
Carrying
|
|
|
undiscounted
|
|
|
1 year or
|
|
|
less than
|
|
|
less than
|
|
|
More than
|
|
|
|
amount
|
|
|
cash flow
|
|
|
on demand
|
|
|
2 years
|
|
|
5 years
|
|
|
5 years
|
|
|
amount
|
|
|
cash flow
|
|
|
on demand
|
|
|
2 years
|
|
|
5 years
|
|
|
5 years
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
52,324
|
|
|
|
52,324
|
|
|
|
52,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,019
|
|
|
|
76,019
|
|
|
|
76,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other payables and
accrued charges
|
|
|
178,114
|
|
|
|
178,114
|
|
|
|
178,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,267
|
|
|
|
145,267
|
|
|
|
145,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits received
|
|
|
16,264
|
|
|
|
16,264
|
|
|
|
16,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,188
|
|
|
|
16,188
|
|
|
|
16,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations under
finance leases
|
|
|
121
|
|
|
|
142
|
|
|
|
142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
835
|
|
|
|
869
|
|
|
|
869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax payable
|
|
|
2,103
|
|
|
|
2,103
|
|
|
|
2,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,481
|
|
|
|
1,481
|
|
|
|
1,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-year senior rate
|
|
|
683,242
|
|
|
|
1,093,852
|
|
|
|
61,012
|
|
|
|
61,012
|
|
|
|
183,036
|
|
|
|
788,792
|
|
|
|
952,593
|
|
|
|
1,614,184
|
|
|
|
85,278
|
|
|
|
85,278
|
|
|
|
255,834
|
|
|
|
1,187,794
|
|
Obligation under
finance leases
|
|
|
255
|
|
|
|
272
|
|
|
|
|
|
|
|
142
|
|
|
|
130
|
|
|
|
|
|
|
|
375
|
|
|
|
414
|
|
|
|
|
|
|
|
142
|
|
|
|
272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
932,423
|
|
|
|
1,343,071
|
|
|
|
309,959
|
|
|
|
61,154
|
|
|
|
183,166
|
|
|
|
788,792
|
|
|
|
1,192,758
|
|
|
|
1,854,422
|
|
|
|
325,102
|
|
|
|
85,420
|
|
|
|
256,106
|
|
|
|
1,187,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
102 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
27
|
|
FINANCIAL INSTRUMENTS (CONTINUED)
|
|
(b)
|
|
Liquidity risk (continued)
|
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
More than
|
|
|
More than
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
More than
|
|
|
More than
|
|
|
|
|
|
|
|
|
|
|
contractual
|
|
|
Within
|
|
|
1 year but
|
|
|
2 years but
|
|
|
|
|
|
|
|
|
|
|
contractual
|
|
|
Within
|
|
|
1 year but
|
|
|
2 years but
|
|
|
|
|
|
|
Carrying
|
|
|
undiscounted
|
|
|
1 year or
|
|
|
less than
|
|
|
less than
|
|
|
More than
|
|
|
Carrying
|
|
|
undiscounted
|
|
|
1 year or
|
|
|
less than
|
|
|
less than
|
|
|
More than
|
|
|
|
amount
|
|
|
cash flow
|
|
|
on demand
|
|
|
2 years
|
|
|
5 years
|
|
|
5 years
|
|
|
amount
|
|
|
cash flow
|
|
|
on demand
|
|
|
2 years
|
|
|
5 years
|
|
|
5 years
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount due to
subsidiaries
|
|
|
10,830
|
|
|
|
10,830
|
|
|
|
10,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,830
|
|
|
|
10,830
|
|
|
|
10,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
26,440
|
|
|
|
26,440
|
|
|
|
26,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,477
|
|
|
|
37,477
|
|
|
|
37,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other payables and
accrued charges
|
|
|
17,831
|
|
|
|
17,831
|
|
|
|
17,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,694
|
|
|
|
18,694
|
|
|
|
18,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits received
|
|
|
7,943
|
|
|
|
7,943
|
|
|
|
7,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,876
|
|
|
|
7,876
|
|
|
|
7,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations under
finance leases
|
|
|
112
|
|
|
|
132
|
|
|
|
132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104
|
|
|
|
131
|
|
|
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax payable
|
|
|
356
|
|
|
|
356
|
|
|
|
356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
356
|
|
|
|
356
|
|
|
|
356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-year senior rate
|
|
|
683,242
|
|
|
|
1,093,852
|
|
|
|
61,012
|
|
|
|
61,012
|
|
|
|
183,036
|
|
|
|
788,792
|
|
|
|
952,593
|
|
|
|
1,614,184
|
|
|
|
85,278
|
|
|
|
85,278
|
|
|
|
255,834
|
|
|
|
1,187,794
|
|
Obligation under
finance leases
|
|
|
238
|
|
|
|
254
|
|
|
|
|
|
|
|
132
|
|
|
|
122
|
|
|
|
|
|
|
|
350
|
|
|
|
386
|
|
|
|
|
|
|
|
132
|
|
|
|
254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
746,992
|
|
|
|
1,157,638
|
|
|
|
124,544
|
|
|
|
61,144
|
|
|
|
183,158
|
|
|
|
788,792
|
|
|
|
1,028,280
|
|
|
|
1,689,934
|
|
|
|
160,642
|
|
|
|
85,410
|
|
|
|
256,088
|
|
|
|
1,187,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
Interest rate risk
|
|
|
|
|
The Groups interest-rate risk arises mainly from its 8.75% 10-year senior notes which bear
interest at the fixed rate of 8.75% per annum. Borrowings issued at fixed rates expose the
Group to fair value interest-rate risk.
|
|
(i)
|
|
Interest rate profile
|
|
|
|
|
The following table details the interest rate profile of the Groups and the Companys
net borrowings at the balance sheet date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
Effective
|
|
|
|
|
|
|
Effective
|
|
|
|
|
|
|
Effective
|
|
|
|
|
|
|
Effective
|
|
|
|
|
|
|
interest
|
|
|
|
|
|
|
interest
|
|
|
|
|
|
|
interest
|
|
|
|
|
|
|
interest
|
|
|
|
|
|
|
rate
|
|
|
|
|
|
|
rate
|
|
|
|
|
|
|
rate
|
|
|
|
|
|
|
rate
|
|
|
|
|
|
|
%
|
|
|
HK$000
|
|
|
%
|
|
|
HK$000
|
|
|
%
|
|
|
HK$000
|
|
|
%
|
|
|
HK$000
|
|
Fixed rate
borrowings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-year senior notes
|
|
|
9.2
|
|
|
|
683,242
|
|
|
|
9.2
|
|
|
|
952,593
|
|
|
|
9.2
|
|
|
|
683,242
|
|
|
|
9.2
|
|
|
|
952,593
|
|
Obligations under
finance lease
|
|
|
6.8
|
|
|
|
376
|
|
|
|
6.8
|
|
|
|
1,210
|
|
|
|
6.8
|
|
|
|
350
|
|
|
|
6.8
|
|
|
|
454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
683,618
|
|
|
|
|
|
|
|
953,803
|
|
|
|
|
|
|
|
683,592
|
|
|
|
|
|
|
|
953,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
103
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
27
|
|
FINANCIAL INSTRUMENTS (CONTINUED)
|
|
(c)
|
|
Interest rate risk (continued)
|
|
(ii)
|
|
Sensitivity analysis
|
|
|
|
|
Management determines that the Groups exposure of interest rate risk was not
significant and hence no sensitivity analysis is prepared.
|
|
(d)
|
|
Foreign currency risk
|
|
|
|
|
All the Groups monetary assets and liabilities are primarily denominated in either
Hong Kong dollars or United States dollars. Given the exchange rate of the Hong Kong
dollar to the U.S. dollar has remained close to the current pegged rate of HKD7.80 =
USD1.00 since 1983, management does not expect significant foreign exchange gains or
losses between the two currencies.
|
|
|
|
|
The Group is also exposed to a certain amount of foreign exchange risk based on
fluctuations between the Hong Kong dollars and the Renminbi arising from its
operations in the PRC. In order to limit this foreign currency risk exposure, the
Group maintained Renminbi cash balance that approximate three months of operating
cash flows.
|
|
(i)
|
|
Exposure to currency risk
|
|
|
|
|
The following table details the Groups and the Companys exposure at the
balance sheet date to currency risk arising from recognised assets or
liabilities denominated in a currency other than the functional currency of the
entity to which they relate.
|
|
|
|
|
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
United
|
|
|
|
|
|
|
|
|
|
|
United
|
|
|
|
|
|
|
|
|
|
States
|
|
|
Japanese
|
|
|
Canadian
|
|
|
States
|
|
|
Japanese
|
|
|
Canadian
|
|
|
|
Dollars
|
|
|
Yen
|
|
|
Dollars
|
|
|
Dollars
|
|
|
Yen
|
|
|
Dollars
|
|
|
|
000
|
|
|
000
|
|
|
000
|
|
|
000
|
|
|
000
|
|
|
000
|
|
Cash at bank and in
hand and pledged
bank deposits
|
|
|
22,330
|
|
|
|
1,099
|
|
|
|
176
|
|
|
|
21,172
|
|
|
|
2,218
|
|
|
|
111
|
|
Accounts payable
|
|
|
(2,500
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,781
|
)
|
|
|
|
|
|
|
|
|
Other payables and
accrued charges
|
|
|
(3,390
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,563
|
)
|
|
|
|
|
|
|
|
|
10-year senior notes
|
|
|
(87,483
|
)
|
|
|
|
|
|
|
|
|
|
|
(122,127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overall net exposure
|
|
|
(71,043
|
)
|
|
|
1,099
|
|
|
|
176
|
|
|
|
(107,299
|
)
|
|
|
2,218
|
|
|
|
111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
United
|
|
|
|
|
|
|
|
|
|
|
United
|
|
|
|
|
|
|
|
|
|
|
States
|
|
|
|
|
|
|
Japanese
|
|
|
States
|
|
|
|
|
|
|
Japanese
|
|
|
|
Dollars
|
|
|
Renminbi
|
|
|
Yen
|
|
|
Dollars
|
|
|
Renminbi
|
|
|
Yen
|
|
|
|
000
|
|
|
000
|
|
|
000
|
|
|
000
|
|
|
000
|
|
|
000
|
|
Amounts due from
subsidiaries
|
|
|
7
|
|
|
|
100,195
|
|
|
|
|
|
|
|
7
|
|
|
|
40,872
|
|
|
|
|
|
Cash at bank and in
hand and pledged
bank deposits
|
|
|
21,387
|
|
|
|
|
|
|
|
1,099
|
|
|
|
21,172
|
|
|
|
|
|
|
|
2,218
|
|
Amount due to
a subsidiary
|
|
|
(90
|
)
|
|
|
|
|
|
|
|
|
|
|
(90
|
)
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
(2,010
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,317
|
)
|
|
|
|
|
|
|
|
|
Other payables and
accrued charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
10-year senior notes
|
|
|
(87,483
|
)
|
|
|
|
|
|
|
|
|
|
|
(122,127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overall net exposure
|
|
|
(68,189
|
)
|
|
|
100,195
|
|
|
|
1,099
|
|
|
|
(105,376
|
)
|
|
|
40,872
|
|
|
|
2,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
104 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
27
|
|
FINANCIAL INSTRUMENTS (CONTINUED)
|
|
(d)
|
|
Foreign currency risk (continued)
|
|
(ii)
|
|
Sensitivity analysis
|
|
|
|
|
The Companys foreign currency risk is mainly concentrated on the fluctuation of
the Renminbi against the Hong Kong dollar. It is assumed that the pegged rate
between the Hong Kong dollar and the United States dollar would be materially
unaffected by any changes in movement in value of the United States dollar
against other currencies. The following table details the Companys sensitivity
to a 10% increase or decrease in the Hong Kong dollar against the Renminbi. The
sensitivity analysis includes only outstanding foreign currency denominated
monetary items and adjusts their translation at the year end for a 10% change in
foreign currency rates. A positive number indicates an increase in profit for
the year where the Renminbi strengthens against the Hong Kong dollar. For a 10%
weakening of the Renminbi against the Hong Kong dollar, there would be an equal
and opposite impact on the profit and the balance below would be negative.
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Renminbi
|
|
|
11,469
|
|
|
|
4,231
|
|
|
(e)
|
|
Fair values
|
|
|
|
|
Except for the following instruments, all financial instruments are carried at amounts not
materially different from their fair values as at 31 August 2008 and 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
Carrying
|
|
|
|
|
|
|
Carrying
|
|
|
|
|
|
|
amount
|
|
|
Fair value
|
|
|
amount
|
|
|
Fair value
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
The Group and the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term bank deposit
|
|
|
|
|
|
|
|
|
|
|
14,415
|
|
|
|
14,277
|
|
8.75% senior notes
|
|
|
683,242
|
|
|
|
672,236
|
|
|
|
952,593
|
|
|
|
970,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f)
|
|
Estimation of fair values
|
|
|
|
|
Fair value of financial instruments is estimated as follows:
|
|
(i)
|
|
The fair value of financial instruments traded in active markets is based on quoted
market prices at the balance sheet date. The fair value of the 8.75% senior notes is
determined based on quoted market price. The fair value of the long-term bank deposits are
determined based on the issuers quoted price.
|
|
|
(ii)
|
|
The fair value of financial instruments that are not traded in an active market (for
example, over-the-counter derivatives) is determined by using valuation techniques. The Group
uses a variety of methods and makes assumptions that are based on market conditions existing
at each balance sheet date.
|
|
|
(iii)
|
|
Trade receivables less impairment provision and account payables are assumed to
approximate their fair values.
|
Notes to the Financial Statements
105
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
28
|
|
CONTINGENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Bank guarantees
provided to suppliers
(notes 30(i) and (ii))
|
|
|
24,671
|
|
|
|
5,903
|
|
|
|
24,568
|
|
|
|
5,800
|
|
Bank guarantee in
lieu of payment of
utility deposits
(note 30(iii))
|
|
|
5,272
|
|
|
|
5,272
|
|
|
|
|
|
|
|
|
|
Corporate guarantee
provided to a
subsidiary for
shared banking
facility (note)
|
|
|
|
|
|
|
|
|
|
|
52,694
|
|
|
|
70,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,943
|
|
|
|
11,175
|
|
|
|
77,262
|
|
|
|
76,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
Corporate guarantee provided to a subsidiary represented the maximum amount of
contingent liabilities of the Company had the shared banking facility of HK$52,694,000 as at
31 August 2008 (2007: HK$70,200,000) been fully drawn. As at 31 August 2008, HK$29,943,000
(2007: HK$11,175,000) of the HK$87,319,000 (2007: HK$80,200,000) total banking facility (note
30(i)) was utilised by the Company and the subsidiary.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Purchase of telecommunications,
computer and office equipment
contracted but not provided for
|
|
|
143,888
|
|
|
|
54,165
|
|
|
|
22
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
Commitments under operating leases
|
|
|
|
|
At 31 August 2008 and 2007 the Group and the Company has future aggregate minimum lease
payments under non-cancellable operating leases as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
The Company
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Leases in respect of land and
buildings which are payable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within 1 year
|
|
|
16,472
|
|
|
|
12,562
|
|
|
|
|
|
|
|
|
|
After 1 year but within 5 years
|
|
|
11,645
|
|
|
|
2,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,117
|
|
|
|
15,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leases in respect of
telecommunications facilities and
computer equipment
which are payable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within 1 year
|
|
|
38,623
|
|
|
|
31,004
|
|
|
|
1,128
|
|
|
|
723
|
|
After 1 year but within 5 years
|
|
|
12,876
|
|
|
|
21,166
|
|
|
|
|
|
|
|
37
|
|
After 5 years
|
|
|
7,384
|
|
|
|
16,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,883
|
|
|
|
68,554
|
|
|
|
1,128
|
|
|
|
760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,000
|
|
|
|
83,600
|
|
|
|
1,128
|
|
|
|
760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
_____
City Telecom (H.K.) Limited
106 Annual Report 2008
(Expressed in Hong Kong Dollars)
|
29
|
|
COMMITMENTS (CONTINUED)
|
|
(c)
|
|
Program fee commitments
|
The Group entered into several long-term agreements with program content providers for
program rights for use of certain program contents in the Groups IP-TV services.
Minimum amounts of program fees to be paid by the Group are analysed as follows:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Program fee in respect of program rights which are payable:
|
|
|
|
|
|
|
|
|
Within 1 year
|
|
|
6,583
|
|
|
|
10,345
|
|
After 1 year but within 5 years
|
|
|
279
|
|
|
|
3,636
|
|
|
|
|
|
|
|
|
|
|
|
6,862
|
|
|
|
13,981
|
|
|
|
|
|
|
|
|
As at 31 August 2008, the Group has pledged bank deposits of US$9,900,000 (equivalent to
HK$77,319,000) and HK$10,000,000 as security for the following significant banking
facilities:
|
(i)
|
|
bank facility of US$9,900,000 (equivalent to HK$77,319,000) granted by a bank for
issuance of bank guarantees to third party suppliers, letters of credit, short-term loan,
overdraft, foreign exchange and interest rate hedging arrangements. As of 31 August 2008,
bank guarantees of HK$20,371,000 were issued against this bank facility (31 August 2007:
HK$1,603,000);
|
|
|
(ii)
|
|
bank guarantees of HK$4,300,000 (2007: HK$4,300,000) issued by the bank to third party
suppliers of the Company and one of its subsidiaries for payment of certain products and
services procured by the Group from these third party suppliers; and
|
|
|
(iii)
|
|
bank guarantees of HK$5,272,000 (2007: HK$5,272,000) issued by the bank to certain
utility vendors of the Group in lieu of payment of utility deposits.
|
As at 31 August 2007, the Group had pledged bank deposits of US$9,900,000 (equivalent of
HK$77,220,000) and HK$10,000,000 as security of the above significant banking facilities.
31
|
|
MATERIAL RELATED PARTY TRANSACTIONS
|
In addition to the transactions and balances disclosed elsewhere in these financial
statements, the Group entered into the following material related party transactions.
Key management personnel remuneration
Remuneration for key management personnel, including amounts paid to the Companys directors
as disclosed in note 11(a) and certain of the highest paid employees as disclosed in note
11(b), is as follows:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
HK$000
|
|
|
HK$000
|
|
Short-term employee benefits
|
|
|
28,850
|
|
|
|
26,791
|
|
Post-employment benefits
|
|
|
2,425
|
|
|
|
2,197
|
|
Equity compensation benefits
|
|
|
3,664
|
|
|
|
4,388
|
|
|
|
|
|
|
|
|
|
|
|
34,939
|
|
|
|
33,376
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
107
City Telecom (H.K.) Limited
Annual Report 2008
(Expressed in Hong Kong Dollars)
|
32
|
|
COMPARATIVE FIGURE
|
|
|
|
Certain comparative figures have been reclassified to conform with the current years
presentation.
|
|
33
|
|
ACCOUNTING ESTIMATES AND JUDGEMENTS
|
|
|
|
Key sources of estimation uncertainty
|
|
|
|
Notes 12 and 27 contain information about the assumptions and risk factors relating to fair
value of share options and financial instruments. Other key sources of estimation uncertainty
are as follows:
|
|
|
|
Impairment loss for doubtful accounts
|
|
|
|
The Group maintains impairment loss for doubtful accounts based upon evaluation of the
recoverability of the accounts receivable and other receivables which takes into account the
historical write-off experience and recovery rates. If the financial condition of the
customers were to deteriorate, additional impairment may be required.
|
|
|
|
Depreciation
|
|
|
|
Depreciation is calculated to write off the cost of items of property, plant and equipment,
less their estimated residual value, if any, using the straight-line method over their
estimated useful lives. The Group reviews the estimated useful lives of the assets annually
in order to determine the amount of depreciation expense to be recorded during any reporting
period. The useful lives are based on the Groups historical experience with similar assets
and takes into account anticipated technological changes. The depreciation expense for future
periods is adjusted if there are significant changes from previous estimates.
|
|
|
|
Deferred tax
|
|
|
|
At 31 August 2008, the Group has recognised a deferred tax asset in relation to tax loss
carry forward as set out in note 24. The realisability of the deferred tax asset mainly
depends on whether it is probable that future taxable profits will be available against which
the asset can be utilised. In assessing the need to reduce a deferred tax asset, management
consider all available evidence, including projected future taxable income, tax planning
strategies, historical taxable income, and the expiration period of the loss carry forwards.
In cases where the actual future taxable profits are less than expected, a reversal of
deferred tax asset may arise, which will be recognised in the income statement for the period
in which such a reversal takes place.
|
34
|
|
POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE
FOR THE YEAR ENDED 31 AUGUST 2008
|
|
|
|
Up to the date of issue of these financial statements, the HKICPA has issued a number of
amendments, new standards and interpretations which are not yet effective for the year ended
31 August 2008 and which have not been adopted in these financial statements.
|
|
|
|
The Group is in the process of making an assessment of what the impact of these amendments,
new standards and new interpretations is expected to be in the period of initial application.
So far it has concluded that the adoption of the following developments is unlikely to have
significant impact on the Groups results of operations and financial position.
|
|
|
|
|
|
|
|
|
|
Effective for
|
|
|
|
|
accounting periods
|
|
|
|
|
beginning on or after
|
HK(IFRIC) Interpretation 13
|
|
Customer loyalty programmes
|
|
1 July 2008
|
|
|
|
|
|
HKAS 1 (Revised)
|
|
Presentation of financial statements
|
|
1 January 2009
|
|
|
|
|
|
HKAS 23 (Revised)
|
|
Borrowing costs
|
|
1 January 2009
|
|
|
|
|
|
HKFRS 8
|
|
Operating segments
|
|
1 January 2009
|
City Telecom (H.K.) Limited
Five-Year 108 Annual Report 2008
Financial Summary
(Expressed in Hong Kong dollars)
|
RESULTS, ASSETS AND LIABILITIES
The following table summarises the consolidated results, assets and liabilities of the Group for
the five years ended 31 August 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
|
HK$000
|
|
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
|
|
1,302,981
|
|
|
|
1,141,270
|
|
|
|
1,159,579
|
|
|
|
1,137,356
|
|
|
|
1,169,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before taxation
|
|
|
108,372
|
|
|
|
30,891
|
|
|
|
(99,485
|
)
|
|
|
(220,042
|
)
|
|
|
51,506
|
|
Income tax benefit/(expense)
|
|
|
16,818
|
|
|
|
(2,026
|
)
|
|
|
7,244
|
|
|
|
6,725
|
|
|
|
(2,043
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) attributable
to shareholders
|
|
|
125,190
|
|
|
|
28,865
|
|
|
|
(92,241
|
)
|
|
|
(213,317
|
)
|
|
|
49,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
1,066
|
|
|
|
1,066
|
|
|
|
1,066
|
|
|
|
1,066
|
|
|
|
2,131
|
|
Fixed assets
|
|
|
1,231,399
|
|
|
|
1,237,223
|
|
|
|
1,367,234
|
|
|
|
1,336,543
|
|
|
|
1,158,875
|
|
Other financial assets
|
|
|
|
|
|
|
39,213
|
|
|
|
40,274
|
|
|
|
41,441
|
|
|
|
41,204
|
|
Derivative financial
instruments
|
|
|
|
|
|
|
1,039
|
|
|
|
1,845
|
|
|
|
|
|
|
|
|
|
Long term receivable and
prepayment
|
|
|
5,586
|
|
|
|
6,932
|
|
|
|
12,532
|
|
|
|
13,099
|
|
|
|
6,206
|
|
Deferred tax asset
|
|
|
26,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
229
|
|
Deferred expenditure
|
|
|
56,095
|
|
|
|
21,367
|
|
|
|
12,445
|
|
|
|
21,131
|
|
|
|
21,563
|
|
Current assets
|
|
|
759,935
|
|
|
|
854,293
|
|
|
|
688,819
|
|
|
|
884,327
|
|
|
|
453,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
2,080,416
|
|
|
|
2,161,133
|
|
|
|
2,124,215
|
|
|
|
2,297,607
|
|
|
|
1,683,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
359,375
|
|
|
|
303,992
|
|
|
|
283,105
|
|
|
|
369,146
|
|
|
|
398,011
|
|
Non-current liabilities
|
|
|
688,434
|
|
|
|
953,259
|
|
|
|
949,456
|
|
|
|
957,828
|
|
|
|
109,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,047,809
|
|
|
|
1,257,251
|
|
|
|
1,232,561
|
|
|
|
1,326,974
|
|
|
|
507,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
|
1,032,607
|
|
|
|
903,882
|
|
|
|
891,654
|
|
|
|
970,633
|
|
|
|
1,175,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Concept, design and printing: iOne Financial Press Limited. Website: www.ione.com.hk
#Ýväo#»#ì#Fìq#àãSó#üLÀö#i -Ô#Fwww.ione.com.hk
|
City Telecom (H.K.) Limited
Level 39, Metroplaza Tower 1
No. 223 Hing Fong Road
Kwai Chung, N.T., Hong Kong
www. ctigroup.com.hk
|
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