i-cable communications limitedleo.i-cable.com/ir/interim/2000/intrep.pdf · normal supply of cable...

Highlights

Consolidated Results –Continued Growth

• Turnover increased by 21% to HK$775 million.

• EBITDA increased by 57% to HK$176 million.

• Net loss improved by 68% to HK$40 million.

• “Triple Play” strategy implementation on plan.

Pay TV Service –Renewed Growth

• Subscribers grew by 14% to over 480,000. ARPU

rose by 6% to HK$254 and turnover increased by

18% to HK$744 million.

• EBITDA margin gained by 9 points to 30% and

EBITDA increased by 63% to HK$220 million to

reflect significant operating leverage.

• Net profit achieved for the first time.

• First mover advantage and market leadership

position enhanced by Euro 2000 and exclusive

multi-year carriage agreements for HBO, CINEMAX

and AXN.

• Viewership share climbed to a new high of 30%.

Internet & MultimediaServices – New Growth

• Broadband Service launched in late March. Early

mover advantage enables infrastructure rollout and

subscriber penetration to rank among the fastest in

the world.

• Broadband Service now available to 700,000

homes. It will reach 1 million by end 2000 and

over 1.7 million homes by end 2001 for over 95%

market coverage.

• Midyear target of 20,000 regular and installed

broadband subscribers achieved after June when

normal supply of cable modems resumed

worldwide.

• 163,000 dial-up subscribers accounting for close to

10% of total dial-up traffic in the market.

i-Cable Interim Report 2000Highlights

i-CABLE Communications Limited is

Hong Kong's only fully integrated

communications company that owns

and operates the territory's second

largest advanced broadband

distribution network; creates

multimedia contents; and offers

television and Internet services

concurrently.

i-CABLE's vision is to provide

"Unlimited Access to Unlimited

Content." Its goal is to become

Hong Kong's leading provider of

integrated multimedia services that

include video, data and voice.

1H99 1H00

HK$ million

Group turnover increased by 21%

Highlights

Consolidated Results –Continued Growth

• Turnover increased by 21% to HK$775 million.

• EBITDA increased by 57% to HK$176 million.

• Net loss improved by 68% to HK$40 million.

• “Triple Play” strategy implementation on plan.

Pay TV Service –Renewed Growth

• Subscribers grew by 14% to over 480,000. ARPU

rose by 6% to HK$254 and turnover increased by

18% to HK$744 million.

• EBITDA margin gained by 9 points to 30% and

EBITDA increased by 63% to HK$220 million to

reflect significant operating leverage.

• Net profit achieved for the first time.

• First mover advantage and market leadership

position enhanced by Euro 2000 and exclusive

multi-year carriage agreements for HBO, CINEMAX

and AXN.

• Viewership share climbed to a new high of 30%.

Internet & MultimediaServices – New Growth

• Broadband Service launched in late March. Early

mover advantage enables infrastructure rollout and

subscriber penetration to rank among the fastest in

the world.

• Broadband Service now available to 700,000

homes. It will reach 1 million by end 2000 and

over 1.7 million homes by end 2001 for over 95%

market coverage.

• Midyear target of 20,000 regular and installed

broadband subscribers achieved after June when

normal supply of cable modems resumed

worldwide.

• 163,000 dial-up subscribers accounting for close to

10% of total dial-up traffic in the market.

i-Cable Interim Report 2000Highlights

i-CABLE Communications Limited is

Hong Kong's only fully integrated

communications company that owns

and operates the territory's second

largest advanced broadband

distribution network; creates

multimedia contents; and offers

television and Internet services

concurrently.

i-CABLE's vision is to provide

"Unlimited Access to Unlimited

Content." Its goal is to become

Hong Kong's leading provider of

integrated multimedia services that

include video, data and voice.

1H99 1H00

HK$ million

Group turnover increased by 21%

i-Cable Interim Report 2000Group Results

The unaudited Group loss attributable to

Shareholders for the six months ended June 30,

2000 amounted to HK$40 million, an improvement

of 68% from the HK$126 million reported for the

corresponding period last year (after re-statement

due to change in accounting policy as mentioned in

Note 2 below). Loss per share was HK$0.02

compared to HK$0.08 for the previous year.

Turnover for the Group increased by 21% to HK$775

million, as compared with HK$643 million recorded

for the same period in 1999. TV related revenues

increased by 18% to HK$744 million primarily as a

result of the solid growth in subscriber base and

improved yield from subscribers achieved during the

period, while Internet and multimedia related

revenues increased by 160% to HK$31 million.

Earnings before interest, taxes, depreciation and

amortisation (after amortisation of programming

library but excluding network rental income and

expenses) or EBITDA increased by 57% from HK$112

million to HK$176 million. The EBITDA margin

increased from 17% to 23%.

Capital expenditures for the period under review

amounted to HK$192 million, as compared to

HK$167 million for the same period in 1999. The

increase was mainly due to expenditures incurred in

relation to the rollout of the cable modem service.

The net amount of cash and cash equivalents on

hand as of June 30, 2000 was HK$1,462 million.

Six months ended June 30: 2000 1999 restated

HK$’000 HK$’000Turnover 774,597 642,575

Operating expenses Programming costs (277,975) (259,438)Network and other operating expenses (152,519) (117,248)Selling, general and administrative expenses (168,292) (153,964)Depreciation and amortisation (227,528) (228,507)

(826,314) (759,157)(51,717) (116,582)

Network rental income — 136,323Network rental expense — (76,504)Operating loss (51,717) (56,763)Interest income 48,647 —Non-operating (expenses) / income (929) 55Finance expense (36,004) (69,520)Loss before taxation (40,003) (126,228)Taxation - credit (Note 3) — 186Loss attributable to shareholders (40,003) (126,042)

Basic and diluted loss per share (Note 4) HK$(0.02) HK$(0.08)

Interim DividendThe Board has decided that no interim dividend be paid in respect of the financial year ending December 31, 2000.

Group ResultsNotes:

(1) The Company was incorporated on May 21, 1999

and on November 1, 1999 the Company became

the holding company of the Group pursuant to a

group reorganisation. Details of the Group’s

reorganisation are set out in the Company’s

prospectus dated November 12, 1999. The

Group resulting from the reorganisation is

regarded as a continuing entity and accordingly,

the consolidated results of the Group have been

prepared on the basis that the Company was the

holding company of the Group for both periods

presented, rather than from November 1, 1999.

(2) Change in accounting policy

In prior periods, deferred expenses, including pre-

operating expenses, pre-maturity expenses and

other deferred expenses, were deferred according

to defined bases and amortised on a straight line

basis over the term or remaining term of the initial

subscription television broadcasting licence which

expires on May 31, 2005. With effect from January

1, 2000, the Group adopted an accounting policy

of recognising all such costs as an expense in the

period they are incurred in order to comply with

Interpretation 9 “Accounting for pre-operating

costs” issued by the Hong Kong Society of

Accountants. The new accounting policy has been

adopted retrospectively. In adjusting prior periods’

figures, the deficit balance of revenue reserve as at

January 1, 1999 was restated and increased by

HK$963,004,000 representing write-off to the prior

periods’ consolidated profit and loss account the

unamortised balance of deferred expenses as at

December 31, 1998.

Upon adoption of Interpretation 9 and restating the

prior periods’ results and reserves, the Group’s loss

attributable to shareholders for the six months ended

June 30, 2000 has decreased by HK$75,139,000

(1999: HK$75,139,000) as a result of no more

amortisation of deferred expenses after its write-off.

Taxation in the consolidated results represents:

Six months ended June 30: 2000 1999HK$’000 HK$’000

Hong Kong Profits Tax (3,413) (2,319)Underprovision in respect of prior periods — (4)Deferred tax credit 3,413 2,509Net taxation credit — 186

The provision for Hong Kong Profits Tax is calculated separately on the taxable profit of each entity within the

Group at 16% (1999: 16%) per annum.

(4) Basic and diluted loss per share

The calculation of basic loss per share is based on

the net loss of HK$40,003,000 (1999:

HK$126,042,000) and the weighted average of

2,014,000,000 (1999: 1,600,000,000) ordinary

shares outstanding. The 1,600,000,000 ordinary

shares outstanding as a result of the Group’s

reorganisation on November 1, 1999 are

included in the calculation of the weighted

average number of shares as if those shares were

outstanding since January 1, 1999.

The issue of potential ordinary shares in

connection with the Company’s convertible bonds

would not give rise to an increase in loss per

share and therefore had no dilutive effect on the

calculation of diluted loss per share.

(3) TaxationSummary of Unaudited Consolidated Results

The unaudited Group loss attributable to

Shareholders for the six months ended June 30,

2000 amounted to HK$40 million, an improvement

of 68% from the HK$126 million reported for the

corresponding period last year (after re-statement

due to change in accounting policy as mentioned in

Note 2 below). Loss per share was HK$0.02

compared to HK$0.08 for the previous year.

Turnover for the Group increased by 21% to HK$775

million, as compared with HK$643 million recorded

for the same period in 1999. TV related revenues

increased by 18% to HK$744 million primarily as a

result of the solid growth in subscriber base and

improved yield from subscribers achieved during the

period, while Internet and multimedia related

revenues increased by 160% to HK$31 million.

Earnings before interest, taxes, depreciation and

amortisation (after amortisation of programming

library but excluding network rental income and

expenses) or EBITDA increased by 57% from HK$112

million to HK$176 million. The EBITDA margin

increased from 17% to 23%.

Capital expenditures for the period under review

amounted to HK$192 million, as compared to

HK$167 million for the same period in 1999. The

increase was mainly due to expenditures incurred in

relation to the rollout of the cable modem service.

The net amount of cash and cash equivalents on

hand as of June 30, 2000 was HK$1,462 million.

Six months ended June 30: 2000 1999 restated

HK$’000 HK$’000Turnover 774,597 642,575

Operating expenses Programming costs (277,975) (259,438)Network and other operating expenses (152,519) (117,248)Selling, general and administrative expenses (168,292) (153,964)Depreciation and amortisation (227,528) (228,507)

(826,314) (759,157)(51,717) (116,582)

Network rental income — 136,323Network rental expense — (76,504)Operating loss (51,717) (56,763)Interest income 48,647 —Non-operating (expenses) / income (929) 55Finance expense (36,004) (69,520)Loss before taxation (40,003) (126,228)Taxation - credit (Note 3) — 186Loss attributable to shareholders (40,003) (126,042)

Basic and diluted loss per share (Note 4) HK$(0.02) HK$(0.08)

Interim DividendThe Board has decided that no interim dividend be paid in respect of the financial year ending December 31, 2000.

Group ResultsNotes:

(1) The Company was incorporated on May 21, 1999

and on November 1, 1999 the Company became

the holding company of the Group pursuant to a

group reorganisation. Details of the Group’s

reorganisation are set out in the Company’s

prospectus dated November 12, 1999. The

Group resulting from the reorganisation is

regarded as a continuing entity and accordingly,

the consolidated results of the Group have been

prepared on the basis that the Company was the

holding company of the Group for both periods

presented, rather than from November 1, 1999.

(2) Change in accounting policy

In prior periods, deferred expenses, including pre-

operating expenses, pre-maturity expenses and

other deferred expenses, were deferred according

to defined bases and amortised on a straight line

basis over the term or remaining term of the initial

subscription television broadcasting licence which

expires on May 31, 2005. With effect from January

1, 2000, the Group adopted an accounting policy

of recognising all such costs as an expense in the

period they are incurred in order to comply with

Interpretation 9 “Accounting for pre-operating

costs” issued by the Hong Kong Society of

Accountants. The new accounting policy has been

adopted retrospectively. In adjusting prior periods’

figures, the deficit balance of revenue reserve as at

January 1, 1999 was restated and increased by

HK$963,004,000 representing write-off to the prior

periods’ consolidated profit and loss account the

unamortised balance of deferred expenses as at

December 31, 1998.

Upon adoption of Interpretation 9 and restating the

prior periods’ results and reserves, the Group’s loss

attributable to shareholders for the six months ended

June 30, 2000 has decreased by HK$75,139,000

(1999: HK$75,139,000) as a result of no more

amortisation of deferred expenses after its write-off.

Taxation in the consolidated results represents:

Six months ended June 30: 2000 1999HK$’000 HK$’000

Hong Kong Profits Tax (3,413) (2,319)Underprovision in respect of prior periods — (4)Deferred tax credit 3,413 2,509Net taxation credit — 186

The provision for Hong Kong Profits Tax is calculated separately on the taxable profit of each entity within the

Group at 16% (1999: 16%) per annum.

(4) Basic and diluted loss per share

The calculation of basic loss per share is based on

the net loss of HK$40,003,000 (1999:

HK$126,042,000) and the weighted average of

2,014,000,000 (1999: 1,600,000,000) ordinary

shares outstanding. The 1,600,000,000 ordinary

shares outstanding as a result of the Group’s

reorganisation on November 1, 1999 are

included in the calculation of the weighted

average number of shares as if those shares were

outstanding since January 1, 1999.

The issue of potential ordinary shares in

connection with the Company’s convertible bonds

would not give rise to an increase in loss per

share and therefore had no dilutive effect on the

calculation of diluted loss per share.

(3) TaxationSummary of Unaudited Consolidated Results

Another important step was taken during the period

under review towards achieving the Group’s “Triple

Play” strategy with the launch of a cable modem-

based Broadband Service.

Given its first or early mover advantage, years of

experience competing in this market and sound

financial position, the Group is best placed in the

more open competitive environment for Pay

Television and Internet services.

Pay Television Service –Renewed GrowthThe renewed growth momentum since the second

half of 1999 continued well into 2000, spurred on by

the economic recovery. That resulted in 67% more

subscribers being added during the 6-month period

under review compared to the same period a year

ago. The installed subscriber base exceeded

480,000 as at June 30, 2000. Average monthly yield

per subscriber rose to HK$254 and monthly churn

declined to 1.4%.

With revenue being 18% higher than a year ago,

and operating expenses rising by only 6% because of

significant operating leverage, EBITDA margin

improved from 21% to 30%. EBITDA grew by 63% to

HK$220 million and net profit was achieved for this

core business for the first time.

During the period, the Group’s Pay Television Service

continued to build market penetration and subscriber

loyalty as the No. 1 Station for News, Movies and

Sports. Viewership share in subscriber homes

climbed to a new high of 30% and advertising

revenue grew by 90 per cent over the same period

in 1999.

The conclusion of Euro 2000 was immediately

followed by the also popular World Cup 2002

i-Cable Interim Report 2000Business Review

Business Review

Another important step was taken during the period

under review towards achieving the Group’s “Triple

Play” strategy with the launch of a cable modem-

based Broadband Service.

Given its first or early mover advantage, years of

experience competing in this market and sound

financial position, the Group is best placed in the

more open competitive environment for Pay

Television and Internet services.

Pay Television Service –Renewed GrowthThe renewed growth momentum since the second

half of 1999 continued well into 2000, spurred on by

the economic recovery. That resulted in 67% more

subscribers being added during the 6-month period

under review compared to the same period a year

ago. The installed subscriber base exceeded

480,000 as at June 30, 2000. Average monthly yield

per subscriber rose to HK$254 and monthly churn

declined to 1.4%.

With revenue being 18% higher than a year ago,

and operating expenses rising by only 6% because of

significant operating leverage, EBITDA margin

improved from 21% to 30%. EBITDA grew by 63% to

HK$220 million and net profit was achieved for this

core business for the first time.

During the period, the Group’s Pay Television Service

continued to build market penetration and subscriber

loyalty as the No. 1 Station for News, Movies and

Sports. Viewership share in subscriber homes

climbed to a new high of 30% and advertising

revenue grew by 90 per cent over the same period

in 1999.

The conclusion of Euro 2000 was immediately

followed by the also popular World Cup 2002

Business Review

Qualifying Rounds. Exclusive multi-year carriage

agreements were concluded with major regional

channels HBO, CINEMAX and AXN ahead of new

competition.

Internet & MultimediaServices – New GrowthFollowing the award of a Fixed Telecommunications

Network Services (FTNS) licence in January, the

Group formally launched its cable modem-based

Broadband Service in March.

Encouraging results have already been achieved

since launch. With infrastructure being rolled out at

the average rate of 80,000 homes per month, this

service was already available to about 550,000

homes in over 2,700 buildings at the end of June,

making it not only the fastest rollout of cable modem

service in Hong Kong, but also one of the fastest in

the world as well.

Initial marketing activities target existing Pay Television

subscribers who have a higher possession rate of

personal computers and Internet accounts at home

than the general population in Hong Kong. This has

proven to be an excellent marketing strategy for a

variety of reasons with over one in ten subscriber

homes marketed adding broadband to their

subscription so far.

The midyear target of 20,000 regular installed

broadband subscribers was achieved in July when

normal supply of cable modems resumed worldwide

after June to meet demand. As at June 30, there

were 12,000 installed subscribers.

In the meantime, dial-up subscription continued to

grow to 163,000 at the end of June net of

conversions to broadband service. Together, they

represent close to 10% of total dial-up Internet traffic

volume in the market.

The leveraging of the Group’s market position in

television content for broadband application is

underway. A news website – www.i-cablenews.com

– has been launched as the world’s first Cantonese

24-hour video online news channel with a video

news on demand service as well. Similarly, a sports

website – www.i-cablesports.com – will also be

launched shortly.

Network Infrastructure –Built for More GrowthThe Group continued its fibre trunk conversion

programme during the period under review and

rolled out its Broadband Service at a rapid speed at

the same time. At the end of June, more than 60

per cent of the homes (over 1.1 million) in Hong

Kong were already connected to the Group’s HFC

(hybrid fibre coaxial) network. The conversion

programme is expected to be substantially completed

by the end of 2001 when only 2% of total homes

passed in Hong Kong will not be covered by this

two-way broadband infrastructure.

Qualifying Rounds. Exclusive multi-year carriage

agreements were concluded with major regional

channels HBO, CINEMAX and AXN ahead of new

competition.

Internet & MultimediaServices – New GrowthFollowing the award of a Fixed Telecommunications

Network Services (FTNS) licence in January, the

Group formally launched its cable modem-based

Broadband Service in March.

Encouraging results have already been achieved

since launch. With infrastructure being rolled out at

the average rate of 80,000 homes per month, this

service was already available to about 550,000

homes in over 2,700 buildings at the end of June,

making it not only the fastest rollout of cable modem

service in Hong Kong, but also one of the fastest in

the world as well.

Initial marketing activities target existing Pay Television

subscribers who have a higher possession rate of

personal computers and Internet accounts at home

than the general population in Hong Kong. This has

proven to be an excellent marketing strategy for a

variety of reasons with over one in ten subscriber

homes marketed adding broadband to their

subscription so far.

The midyear target of 20,000 regular installed

broadband subscribers was achieved in July when

normal supply of cable modems resumed worldwide

after June to meet demand. As at June 30, there

were 12,000 installed subscribers.

In the meantime, dial-up subscription continued to

grow to 163,000 at the end of June net of

conversions to broadband service. Together, they

represent close to 10% of total dial-up Internet traffic

volume in the market.

The leveraging of the Group’s market position in

television content for broadband application is

underway. A news website – www.i-cablenews.com

– has been launched as the world’s first Cantonese

24-hour video online news channel with a video

news on demand service as well. Similarly, a sports

website – www.i-cablesports.com – will also be

launched shortly.

Network Infrastructure –Built for More GrowthThe Group continued its fibre trunk conversion

programme during the period under review and

rolled out its Broadband Service at a rapid speed at

the same time. At the end of June, more than 60

per cent of the homes (over 1.1 million) in Hong

Kong were already connected to the Group’s HFC

(hybrid fibre coaxial) network. The conversion

programme is expected to be substantially completed

by the end of 2001 when only 2% of total homes

passed in Hong Kong will not be covered by this

two-way broadband infrastructure.

Service to rapidly catch up with the former monopoly

and to leave the new operators behind.

The Group has adopted the well proven and most

competitive cable modem technology and delivers

the service over reliable wireline transmission

network. The Group is confident that with the rapid

roll-out and take up rate of its broadband service, it

will become a major player in the Hong Kong

broadband service market.

Other Opportunities

The Group is actively seeking new opportunities for

new revenue streams. Good progress has been

made to develop an IP telephony service with a field

test scheduled for the last quarter of this year. The

Group is also investigating the opportunity for third-

general mobile services when the Government invite

application for licences.

Preparation for the business to business portal site the

Group invested to develop for the Greater China

Region together with six other Hong Kong and

China conglomerates and Commerce One of the US

has been completed. The site - Asia2B - was officially

launched in late July.

Continued growth is expected as the Group

continues to exploit its first or early mover advantage

to succeed in competition. Investments made in past

years will prove to be valuable and insightful with

new revenues generated based on incremental

investments. That will position the Group well and

differentiate it from its competitors.

Compliance with Code of Best PracticeNone of the Directors of the Company is aware of any information which would reasonably indicate that the

Company was not in compliance with the Code of Best Practice, as set out in Appendix 14 of the Rules

Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, at any time during the six

months ended June 30, 2000.

Directors’ Interests in SharesAt June 30, 2000, Directors of the Company had the following beneficial interests in the securities of the

Company and its associated corporations (within the meaning of the Securities (Disclosure of Interests)

Ordinance (the "SDI Ordinance")) :-

No. of Ordinary Shares Nature of InterestThe Company

Mr. Stephen T.H. Ng 750,000 Personal interestMr. John T. Hung 20,000 Personal interest

The Wharf (Holdings) Limited

Mr. Gonzaga W.J. Li 686,549 Personal interestMr. Stephen T.H. Ng 230,057 Personal interest

Harbour Centre Development Limited

Mr. F.K. Hu 50,000 Corporate interest

Outlook - Continued GrowthPay Television Service

In July, the Hong Kong Government decided in

principle to award five new Pay Television Service

licences. The new operators are expected to launch

their services within the next year. One of the new

licensees, a subsidiary of the dominant terrestrial

television broadcaster in Hong Kong, is barred from

starting service for 18 months from licence award

and restrictive “firewall” conditions will be written

into its licence to separate its operations from the

parent company.

The Group is confident that its leading position in the

provision of Pay Television Service in Hong Kong will

be maintained as it has enjoyed significant first mover

advantage with a loyal and solid customer base.

Competition is not alien to the Group. The Group

will continue to enhance its proprietary channels and

programmes as well as its local content in order to

move ahead of its competitors.

Internet & Multimedia Services

Broadband services are taking the Hong Kong market

by storm. The combined market penetration in the

residential sector for all operators will probably

exceed 10% by the end of this year.

Insightful investment in the physical infrastructure in

past years has given the Group a tremendous cost

and speed advantage in launching its Broadband

i-Cable Interim Report 2000

Hong Kong IslandCauseway BayJardines Lockout Sai Ying PunTai HangShau Kei WanCentralMid LevelsQuarry BayWanchaiSai Wan Ho Happy ValleyNorth PointSheung WanBraemar Hill

KowloonChoi HungDiamond HillKwun TongNgau Chi WanTai Kok TsuiYau TongKowloon CityLok FuWang Tau HomChoi WanHo Man Tin Lam TinNgau Tau KokTze Wan ShanBeacon HillKowloon TongShek Kip MeiChuk YuenKowloon Bay

MongkokSau Mau PingYau Ma TeiCheung Sha WanLai Chi KokTung TauYau Yat Tsuen

New TerritoriesMa On Shan Tai Wai Tuen MunTsing Lung TauTsuen WanTing Kau

Sham TsengTin Shui WaiTseung Kwan OTsing YiSiu Lek YuenTung Chung

Cable broadband service now in most parts of Hong Kong

Service to rapidly catch up with the former monopoly

and to leave the new operators behind.

The Group has adopted the well proven and most

competitive cable modem technology and delivers

the service over reliable wireline transmission

network. The Group is confident that with the rapid

roll-out and take up rate of its broadband service, it

will become a major player in the Hong Kong

broadband service market.

Other Opportunities

The Group is actively seeking new opportunities for

new revenue streams. Good progress has been

made to develop an IP telephony service with a field

test scheduled for the last quarter of this year. The

Group is also investigating the opportunity for third-

general mobile services when the Government invite

application for licences.

Preparation for the business to business portal site the

Group invested to develop for the Greater China

Region together with six other Hong Kong and

China conglomerates and Commerce One of the US

has been completed. The site - Asia2B - was officially

launched in late July.

Continued growth is expected as the Group

continues to exploit its first or early mover advantage

to succeed in competition. Investments made in past

years will prove to be valuable and insightful with

new revenues generated based on incremental

investments. That will position the Group well and

differentiate it from its competitors.

Compliance with Code of Best PracticeNone of the Directors of the Company is aware of any information which would reasonably indicate that the

Company was not in compliance with the Code of Best Practice, as set out in Appendix 14 of the Rules

Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, at any time during the six

months ended June 30, 2000.

Directors’ Interests in SharesAt June 30, 2000, Directors of the Company had the following beneficial interests in the securities of the

Company and its associated corporations (within the meaning of the Securities (Disclosure of Interests)

Ordinance (the "SDI Ordinance")) :-

No. of Ordinary Shares Nature of InterestThe Company

Mr. Stephen T.H. Ng 750,000 Personal interestMr. John T. Hung 20,000 Personal interest

The Wharf (Holdings) Limited

Mr. Gonzaga W.J. Li 686,549 Personal interestMr. Stephen T.H. Ng 230,057 Personal interest

Harbour Centre Development Limited

Mr. F.K. Hu 50,000 Corporate interest

Outlook - Continued GrowthPay Television Service

In July, the Hong Kong Government decided in

principle to award five new Pay Television Service

licences. The new operators are expected to launch

their services within the next year. One of the new

licensees, a subsidiary of the dominant terrestrial

television broadcaster in Hong Kong, is barred from

starting service for 18 months from licence award

and restrictive “firewall” conditions will be written

into its licence to separate its operations from the

parent company.

The Group is confident that its leading position in the

provision of Pay Television Service in Hong Kong will

be maintained as it has enjoyed significant first mover

advantage with a loyal and solid customer base.

Competition is not alien to the Group. The Group

will continue to enhance its proprietary channels and

programmes as well as its local content in order to

move ahead of its competitors.

Internet & Multimedia Services

Broadband services are taking the Hong Kong market

by storm. The combined market penetration in the

residential sector for all operators will probably

exceed 10% by the end of this year.

Insightful investment in the physical infrastructure in

past years has given the Group a tremendous cost

and speed advantage in launching its Broadband

Hong Kong IslandCauseway BayJardines Lockout Sai Ying PunTai HangShau Kei WanCentralMid LevelsQuarry BayWanchaiSai Wan Ho Happy ValleyNorth PointSheung WanBraemar Hill

KowloonChoi HungDiamond HillKwun TongNgau Chi WanTai Kok TsuiYau TongKowloon CityLok FuWang Tau HomChoi WanHo Man Tin Lam TinNgau Tau KokTze Wan ShanBeacon HillKowloon TongShek Kip MeiChuk YuenKowloon Bay

MongkokSau Mau PingYau Ma TeiCheung Sha WanLai Chi KokTung TauYau Yat Tsuen

New TerritoriesMa On Shan Tai Wai Tuen MunTsing Lung TauTsuen WanTing Kau

Sham TsengTin Shui WaiTseung Kwan OTsing YiSiu Lek YuenTung Chung

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Note: The 50,000 shares regarding ‘Corporate

Interest’ in which Mr. F.K. Hu was taken to be

interested as stated above was the interest held by a

corporation in general meetings of which Mr. Hu was

either entitled to exercise (or was taken under the SDI

Ordinance to be able to exercise) or control the

exercise of one-third or more of the voting power.

As at June 30, 2000, Mr. Stephen T.H. Ng had

personal interests in options to subscribe for

1,500,000 ordinary shares of the Company granted

under the Company’s Share Option Scheme on

February 8, 2000 at a total consideration of HK$10.

The option rights are exercisable during the period

from April 1, 2001 to December 31, 2009 at a

subscribtion price of HK$10.49 per share.

Save as disclosed above:

(i) there were no interests held as at June 30, 2000

by any Directors and Chief Executive of the

Company in securities of the Company and its

associated corporations (within the meaning of

the SDI Ordinance), and

(ii) during the financial period, there existed no rights

to subscribe for equity or debt securities of the

Company which held by any Directors or Chief

Executive of the Company or any of their spouses

or children under 18 years of age nor had there

been any exercises of any such rights by any of

as recorded in the register kept by the Company

under section 29 of the SDI Ordinance.

SubstantialShareholders'Interests

Given below are the names of all parties which were,

directly or indirectly, interested in 10 per cent or more

of the nominal value of the share capital of the

Company and the respective relevant numbers of

shares in which they were, and/or were deemed to

be, interested as at June 30, 2000 as recorded in the

register kept by the Company under section 16(1) of

the SDI Ordinance:-

No. ofNames Ordinary Shares

(i) Wharf Communications Investments Limited 1,600,000,000

(ii) The Wharf (Holdings) Limited 1,600,034,575(iii) WF Investment Partners Limited 1,602,672,774(iv) Wheelock and Company Limited 1,603,095,200(v) Bermuda Trust (Guernsey) Limited 1,603,095,200

Note: For the avoidance of doubts and double

counting, it should be noted that duplication occurs

in respect of all of the above-stated shareholdings to

the extent that the shareholdings stated against party

(i) above are entirely duplicated or included in the

shareholdings stated against party (ii) above, with the

same duplication of the shareholdings in respect of

(ii) in (iii), (iii) in (iv) and (iv) in (v); all of the above

named parties were deemed to be interested in the

relevant shareholdings under the SDI Ordinance as at

June 30, 2000.

Purchase, Sale orRedemption ofShares

Neither the Company nor any of its subsidiaries has

purchased, sold or redeemed any of the Company’s

listed securities during the period under review.

By Order of the Board

Wilson W.S. Chan

Secretary

Hong Kong, August 28, 2000