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EXHIBIT 13.2
1934 Act Registration No.1-14696
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF SEPTEMBER 2000
CHINA MOBILE (HONG KONG) LIMITED
(Translation of registrant's name into English)
60/F THE CENTER
99 QUEEN'S ROAD CENTRAL
HONG KONG, CHINA
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
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(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 No X
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(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):82-_________.)
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EXHIBITS
Exhibit Number Page
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1.1 2000 Interim Report of China Mobile (Hong Kong) Limited (the "Company"). 4
FORWARD-LOOKING STATEMENTS
The Interim Report, dated as of September 1, 2000, of the Company,
constituting Exhibit 1.1 to this Form 6-K, contains forward-looking statements
that are, by their nature, subject to significant risks and uncertainties. Such
forward-looking statements include, without limitation, the Company's strategy
and future plans; its abilities to realize business synergies, control
operational costs, expand network capacity and increase network efficiency; its
ability to develop new technology applications and offer new services; the
effectiveness of the Company's various internal control systems and incentive
systems; the expected completion of the proposed acquisition; the Company's
ability to expand into new business and new markets; future growth of market
demand for the Company's services; and future regulatory and other developments
in the Chinese telecommunications industry.
Such forward-looking statements reflect the current views of the Company
with respect to future events. Actual results may differ materially from
information contained in the forward-looking statements as a result of a number
of factors, including, without limitation, any further restructuring of the
telecommunications industry; any changes in the regulatory policies of the
Ministry of Information Industry and other relevant government authorities; the
effects of competition on the demand and price of the Company's mobile
communications services; any changes in wireless and related technology and
applications based on such technology, which could affect the viability and
competitiveness of the Company's cellular networks and its cellular and other
services; and changes in political, economic, legal and social conditions in
China including the Chinese government's policies with respect to economic
growth, foreign exchange, foreign investment and entry by foreign companies into
China's telecommunications market. In addition, the Company's future network
expansion and other capital expenditure and development plans are dependent on
numerous factors, including the availability of adequate financing on acceptable
terms, the adequacy of currently available spectrum or the availability of
additional spectrum, the availability of transmission lines and equipment when
required on acceptable terms, and the availability of qualified management and
technical personnel.
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SIGNATURES
Pursuant to the requirements 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.
CHINA MOBILE (HONG KONG) LIMITED
Date: September 1, 2000 By: /s/ WANG XIAOCHU
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Name: Wang Xiaochu
Title: Chairman and President
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[LOGO]
CHINA MOBILE (HONG KONG) LIMITED
(Incorporated in Hong Kong with limited liability under the
Companies Ordinance)
2000 INTERIM REPORT
CHAIRMAN'S STATEMENT
In the first six months of the year 2000, China Mobile (Hong Kong) Limited
underwent rapid development including unveiling its new image. In June 2000, in
accordance with the adjustment of its parent company's shareholding structure
and after receiving approval from its shareholders, the Company changed its
corporate name from "China Telecom (Hong Kong) Limited" to the current name,
which more accurately conveys the Company's core business development direction.
During the six months, the Group's overall performance was good and met its
internal expectations. The Group made significant achievements in terms of both
organic and external growth. The subsidiaries in Guangdong, Zhejiang and Jiangsu
provinces sustained rapid development and the newly joined subsidiaries in
Fujian, Henan and Hainan provinces actively improved their management and
synergy. The Company achieved encouraging progress.
The Group's first half-year results are most impressive. The consolidated
turnover was RMB28.897 billion, representing an increase of 70.6 per cent over
the corresponding period in 1999. EBITDA was RMB16.817 billion, representing an
increase of 75.6 per cent over the corresponding period in 1999. Net profit
totaled RMB8.724 billion, representing an increase of 117.9 per cent. over the
corresponding period in 1999, and earnings per share were RMB0.64, representing
an increase of 88.2 per cent over the corresponding period in 1999. The
unaudited profit and loss account for the six months ended 30 June 2000 and the
comparisons with last year are set out in the accompanying table.
During the six months, the Group's operations were equally impressive. At the
end of June 2000, the Group's aggregate subscriber base reached 21.638 million,
including 2.496 million pre-paid card users. As of 30 June 2000 the Group's
aggregate market share in the six provinces in which the Group operates was 83.0
per cent. The subscriber base of Guangdong Mobile, Zhejiang Mobile, Jiangsu
Mobile, Fujian Mobile, Henan Mobile and Hainan Mobile were 9.167 million, 3.995
million, 3.268 million, 2.766 million, 2.158 million and 284,000, respectively.
The Group's aggregate subscriber base represents an increase of 6.017 million,
and a growth rate of 38.5 per cent., from the Group's subscriber base at the end
of 1999.
The Group's average minutes of usage per subscriber per month ("MOU") were 320
minutes during the six months through 30 June 2000, which is lower than the
Group's average proforma combined MOU of 383 minutes for 1999. The decrease
resulted principally from the introduction of the pre-paid card service and the
rapid addition of new subscribers, most of whom were low usage subscribers. The
lower average MOU, however allowed for increased carrying capacity per network
voice channel. The Group's average monthly revenue per user was RMB261 for the
six months ended 30 June 2000.
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The Group's subscribers total minutes of usage increased substantially. In the
first six months of 2000, the Group's subscribers total minutes of usage,
including pre-paid card usage, totaled 35.45 billion minutes, compared with the
17.62 billion minutes for the same period last year, an increase of 101 per
cent. Of the total minutes of usage, Guangdong Mobile, Zhejiang Mobile, Jiangsu
Mobile, Fujian Mobile, Henan Mobile and Hainan Mobile subscribers accounted for
15.97 billion, 6.24 billion, 4.76 billion, 4.75 billion, 3.1 billion and 630
million minutes, respectively.
In the year 2000, the Group continued its efforts to develop new applications
and rollout new services. Pre-paid card services underwent rapid development in
the first six months of 2000, and as at 30 June, the Group had 2.496 million
pre-paid card users, which accounted for 11.5 per cent of the Group's total
subscriber base. Since May 2000, the Group also started offering IP long
distance telephony services to all "Quanqiutong" subscribers, which achieved a
steady growth in usage volume. The Group has been closely following developments
in new wireless data technologies. Currently, the Group offers services which
have achieved considerable scale that are based on the SMS platform, including
mobile secretary, short messaging, mobile bank and information-on-request. The
Group is also closely monitoring the development of wireless data technologies
and wireless Internet services. A research and development center that
concentrates its research and development efforts on this subject was
established. In May 2000, in accordance with specifications prescribed by the
China Mobile Communications Corporation ("CMCC"), the Company successfully
completed WAP system tests and satisfied the prescribed standards laid down by
CMCC and expanded its WAP coverage throughout its six provinces of operation to
prepare for the anticipated full commercial launch of WAP services. The Group is
also actively conducting advanced GPRS technology tests.
The Group believes that such operational achievements are largely attributable
to improvements in management mechanisms and enhanced internal controls. In
April 2000, the Company had an operational performance evaluation for the six
operating subsidiaries based on their 1999 results. The evaluation measured the
performance of the subsidiaries on the basis of criteria, including revenue
growth, profit ratio, EBITDA, subscriber growth, minutes of usage, bad debt
level and productivity. The evaluation had positive effect such as enhanced
subsidiary control, improved management control systems, exchange of management
experience, encouragement of advancement, identification of discrepancies and
better management methods. The Group implemented employee performance
assessments, and adopted an employee incentive plan that links incentive awards
under the plan to the results of evaluation and assessments. In conjunction with
these initiatives, the Group broadened its use of employee stock options.
Employee productivity improved significantly.
The Company established a subsidiary in Shenzhen for financial management and
profit assurance purposes, wireless data communications research and development
and roaming and interconnection clearing and settlement. After the acquisition
of Fujian Mobile, Henan Mobile and Hainan Mobile, the Company took measures to
maximize synergies, such as centralized leasing of transmission lines in volume,
centralized employee training, internal peer-improvement, human resource
exchange, and sharing research and development results and new business
marketing experience.
In the Year 2000, we have seen the adjustment and improvement of China's
telecommunications regulatory and market environments, with the restructuring of
the industry essentially completed.
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On 12 May 2000, CMCC obtained the entire 43 per cent. interest in China Telecom
(Hong Kong) Group Limited, our indirect controlling shareholder, that had been
previously owned by China Telecommunications Corporation ("CTC"). Thereafter,
China Telecom (Hong Kong) Group Limited changed its name to China Mobile (Hong
Kong) Group Limited and CMCC now holds a 100 per cent. interest in China Mobile
(Hong Kong) Group Limited. This reflected the separation of the two major
telecommunications groups, China Mobile and CTC. These two major groups will
operate independently in accordance with commercial principles within their
respective spheres, and the Ministry of Information Industry ("MII") will
continue its role as the industry regulator, providing macro policy guidance to
telecommunications operators including our Group, but without exerting
administrative control. MII's role as an industry regulator will be more
explicit and we believe that this will provide for more fair and orderly
competition in the mobile communications market.
In accordance with the adjustment of the parent company's shareholding
structure, effect from 11 August 2000, Mr. Li Ping resigned his posts as a
Director, Vice Chairman, Executive Vice President and Joint Company Secretary of
the Company and will undertake a new post with China Telecommunications
Corporation. I would like to take this opportunity to acknowledge the
contribution of Mr. Li with highest regards and the deepest gratitude. I am also
pleased to announce that Mr. Li Zhenqun was appointed as a Director, Vice
Chairman and Executive Vice President of the Company with effect from 11 August
2000. Mr. Li Zhenqun has had many years of management experience in the
telecommunications industry and we believe that Mr. Li's extensive experience
and valuable expertise will be of great benefit to the Company. I would like to
take this opportunity to welcome Mr. Li as a new member of the board.
Looking to the future, I am confident of the Company's prospects for continued
growth. We will continue to pursue a development strategy that emphasizes on
both organic and external growth. To achieve further organic growth, the Group
will continue to maximize synergies, promote its brand name, control operational
costs, expand network capacity and optimize network efficiency, while at the
same time developing additional value-added services and new wireless data
services utilizing 2G to 3G telecommunication technologies. To achieve further
external growth, the Company has commenced preliminary discussions in relation
to the acquisitions of the mobile communications businesses in seven provinces,
autonomous region and directly administered municipalities of Beijing, Shanghai,
Tianjin, Hebei, Liaoning, Shandong and Guangxi in mainland China. In today's
fast evolving telecommunications environment, where services converge and
product upgrades evolve rapidly, external growth strategies assume new
significance. The Group will endeavor to develop and expand through external
growth into new businesses and into new markets, to further expand its business
horizons.
WANG XIAOCHU
Chairman
Hong Kong, 31 August 2000
TRANSFER TO AND FROM RESERVES
There were no transfers to or from the PRC statutory reserve and the general
reserve of the Group during the six months ended 30 June 2000.
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INTERIM DIVIDEND
The Board of Directors considers that because the Group is experiencing a period
of rapid growth and is undergoing negotiations in relation to the proposed
acquisition of the mobile phone operations in the seven provinces, autonomous
region and directly administered municipalities in the PRC of Beijing, Tianjin,
Shanghai, Liaoning, Hebei, Shandong and Guangxi, it is desirable that more
capital be retained for additional investments, network expansion and
acquisitions of quality assets, in order to give a better return to
shareholders. Hence, the Board of Directors has not recommended the payment of
an interim dividend for the six months ended 30 June 2000.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
During the six months ended 30 June 2000, neither the Company nor any of its
subsidiaries has purchased, sold or redeemed any of the Company's listed
securities.
UNAUDITED GROUP RESULT
For the six months ended 30 June 2000
UNAUDITED Audited
FOR THE SIX For the six
MONTHS ENDED months ended
30 JUNE 2000 30 June 1999
CONSOLIDATED consolidated
Note RMB MILLION RMB million
OPERATING REVENUE (TURNOVER) 2
Usage fees 20,143 11,012
Monthly fees 4,250 2,081
Connection fees 1,532 2,417
Other operating revenue 3 2,972 1,430
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28,897 16,940
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OPERATING EXPENSES
Leased lines 2,714 2,014
Interconnection 3,604 2,775
Depreciation 4,165 3,297
Personnel 1,476 852
Other operating expenses 4,616 1,991
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16,575 10,929
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UNAUDITED Audited
FOR THE SIX For the six
MONTHS ENDED months ended
30 JUNE 2000 30 June 1999
CONSOLIDATED consolidated
Note RMB MILLION RMB million
PROFIT FROM OPERATIONS 12,322 6,011
WRITE-DOWN AND WRITE-OFF OF TACS NETWORK EQUIPMENT
4 -- (500)
OTHER INCOME 330 270
NON-OPERATING (EXPENSES)/INCOME (12) 11
INTEREST INCOME 437 289
FINANCE COSTS (335) (107)
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PROFIT FROM ORDINARY ACTIVITIES BEFORE TAXATION 12,742 5,974
INCOME TAX 5 (4,018) (1,970)
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PROFIT FROM ORDINARY ACTIVITIES AFTER TAXATION 8,724 4,004
===============================
EARNINGS PER SHARE
BASIC 6(a) RMB64 CENTS RMB34 cents
DILUTED 6(b) RMB64 CENTS RMB34 cents
EBITDA (RMB MILLION) 7 16,817 9,578
Notes:
1. BASIS OF PRESENTATION
The unaudited consolidated results of the Group for the six months ended 30 June
2000 include the results of the Company and its subsidiaries in Guangdong,
Zhejiang, Jiangsu, Fujian, Henan and Hainan provinces for the six months ended
30 June 2000.
The audited consolidated results of the Group for the six months ended 30 June
1999 include the results of the Company and its subsidiaries in Guangdong,
Zhejiang and Jiangsu provinces for the six months ended 30 June 1999. The
audited consolidated results for the six months ended 30 June 1999 were prepared
in connection with the Company's debt and equity offering in October 1999, and
had previously been disclosed in the company's circular to shareholders dated 16
October 1999 and its announcement issued on 18 October 1999.
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2. TURNOVER
Turnover primarily represents usage fees, monthly fees and connection fees for
the use of the Group's cellular telecommunications networks, net of the People's
Republic of China ("PRC") business tax and government surcharges. Business tax
and government surcharges are charged at approximately 3.3 per cent of the
corresponding revenue.
3. OTHER OPERATING REVENUE
Other operating revenue mainly represents telephone number selection fees,
charges for value-added services, interconnection revenue and roaming-in fees.
Roaming-in fees are received from China Mobile Communications Corporation
("China Mobile") in respect of calls made by non-subscribers using the Group's
cellular telecommunications networks.
4. WRITE-DOWN AND WRITE-OFF OF TACS NETWORK EQUIPMENT
UNAUDITED Audited
FOR THE SIX For the six
MONTHS ENDED months ended
30 JUNE 2000 30 June 1999
CONSOLIDATED consolidated
RMB MILLION RMB million
Write-down of TACS network equipment (a) -- 471
Write-off of TACS network equipment (b) -- 29
-------------------------------
-- 500
===============================
TACS represents Total Assess Communication System, a European standard for
analog mobile telephone transmissions in the 800 and 900 MHz frequency bands.
(a) The Group has reviewed the carrying value of all TACS network and related
equipment at 30 June 1999. Based on the estimated recoverable value of these
assets, a write-down of RMB471,000,000 has been made during the six months ended
30 June 1999.
(b) This represents the write-off of certain TACS network equipment which have
been removed from service.
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5. INCOME TAX
UNAUDITED Audited
FOR THE SIX For the six
MONTHS ENDED months ended
30 JUNE 2000 30 June 1999
CONSOLIDATED consolidated
RMB MILLION RMB million
Provision for Hong Kong profits tax for the period -- --
Over-provision in respect of Hong Kong profits tax for prior
period -- (1)
-------------------------------
-- (1)
-------------------------------
Over-provision in respect of PRC income tax for prior period (23) (13)
Provision for PRC income tax on the estimated taxable profits
for the period 3,673 2,145
-------------------------------
3,650 2,132
-------------------------------
Deferred tax liabilities/(assets) 368 (161)
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4,018 1,970
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(i) No provision has been made for Hong Kong profits tax as there was no
estimated assessable profits for the six months ended 30 June 2000.
(ii) Pursuant to the income tax rules and regulations of the PRC, the
Group's subsidiaries in the PRC are subject to the statutory income tax rate of
33 per cent for the six months ended 30 June 2000, except Hainan Mobile
Communication Company Limited ("Hainan Mobile") and certain branches of
Guangdong Mobile Communication Company Limited which are subject to a tax rate
of 15 per cent. According to notices from the PRC Ministry of Finance,
connection fees and certain surcharges, which were previously not subject to
income tax, are subject to an income tax rate of 33 per cent with effect from 1
January 2000 for Fujian Mobile Communication Company Limited and 27 January 2000
for Henan Mobile Communication Company Limited and 15 per cent with effect from
19 January 2000 for Hainan Mobile.
6. EARNINGS PER SHARE
(a) Basic earnings per share
The calculation of basic earnings per share for the six months ended 30 June
2000 is based on the profit attributable to shareholders of RMB8,724,000,000
(1999: RMB4,004,000,000) and the weighted average number of 13,706,310,428
shares (1999: 11,782,884,685 shares) in issue during the six months ended 30
June 2000.
(b) Diluted earnings per share
The calculation of diluted earnings per share for the six months ended 30 June
2000 is based on the profit attributable to shareholders of RMB8,724,000,000
(1999: RMB4,004,000,000) and the weighted average number of 13,716,377,376
shares (1999: 11,785,447,499 shares) after adjusting for the effects of all
dilutive potential ordinary shares. All dilutive potential ordinary shares arise
from the share options granted under the share option scheme which, if converted
to ordinary shares, would decrease profit attributable to shareholders per
share.
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(c) Reconciliations
30 JUNE 2000 30 June 1999
NUMBER OF SHARES Number of shares
Weighted average number of ordinary shares used in calculating
basic earnings per share 13,706,310,428 11,782,884,685
Deemed issue of ordinary shares for no consideration 10,066,948 2,562,814
-----------------------------------
Weighted average number of ordinary shares used in calculating
diluted earnings per share 13,716,377,376 11,785,447,499
===================================
7. EBITDA
EBITDA represents earnings before interest income, interest expense, income
taxes, depreciation and amortisation, non-operating income/expenses and
write-down and write-off of fixed assets. While EBITDA is commonly used in the
telecommunications industry worldwide as an indicator of operating performance,
leverage and liquidity, it is not presented as a measure of operating
performance in accordance with generally accepted accounting principles and
should not be considered as representing net cash flows from operating
activities.
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