Annual Report 2023China Unicom (Hong Kong) LimitedStock Code : 762ANDCHINA UNICOM (HONG KONG) LIMITEDwww.chinaunicom.com.hk75th Floor, The Center, 99 Queen’s Road Central, Hong KongTel : (852) 2126 2018Fax : (852) 2126 2016(cid:18)(cid:44)(cid:47)(cid:69)(cid:4)(cid:3)(cid:104)(cid:69)(cid:47)(cid:18)(cid:75)(cid:68)(cid:3)(cid:904)(cid:44)(cid:75)(cid:69)(cid:39)(cid:3)(cid:60)(cid:75)(cid:69)(cid:39)(cid:905)(cid:3)(cid:62)(cid:47)(cid:68)(cid:47)(cid:100)(cid:28)(cid:24)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:4)(cid:69)(cid:69)(cid:104)(cid:4)(cid:62)(cid:3)(cid:90)(cid:28)(cid:87)(cid:75)(cid:90)(cid:100)(cid:3)(cid:1006)(cid:1004)(cid:1006)(cid:1007)E_ChinaUnicom AR23_Cover_aw.pdf 1 18/04/2024 11:31:26 CONNECTIVITY AND
COMMUNICATIONS
Providing high-speed ubiquitous basic connectivity products, cloud-network
integrated premium network services, global intelligent network services as
well as platform- and scenario-based intelligent connectivity services
Government and enterprise network:
Unicom Cloud resources
covered >230 cities
International network:
660,000 kilometers of
international
submarine cables
No. of mid-band 5G base stations:
>1.21 million
Broadband network:
maintained industry edge in
Northern China, while
foundational capabilities in
Southern China were
markedly boosted
COMPUTING AND
DIGITAL SMART
APPLICATIONS
Deeply integrating digital technologies to provide information services
such as computing, data, application, security, etc.
Unicom Cloud revenue increased by 41.6%
year-on-year, reaching RMB 51 billion
Data services revenue growth: 32%
30,000 5G industry application projects covering
71 major categories of the national economy
Cybersecurity revenue growth: 120%
MARKET
CONVERGENCE
Leveraging the advantages of “integrated capabilities and operating services”
to tap into both consumer and government-enterprise markets
Mobile subscribers increased by
10.60 million, reaching 333 million
Broadband subscribers increased by
9.79 million, reaching 113 million
Serving >1,000 medical clouds and >800 smart
city districts and counties
No. of 5G virtual private network service
customers: 8,563 (up by 125% year-on-year)
CAPABILITY
FUSION
Using digital technologies to transform and upgrade traditional
industries to empower cost reduction and efficiency enhancement
No. of patents granted reached
2,287 (up by 37% year-on-year)
Technological innovation personnel ratio: 40%
Accelerated the deployment in the nascent AI industry, and
launched the “Yuanjing” LLM system
Digital Village platform covered >250,000
administrative villages
2
Company Profile
3
Shareholding Structure
4
Performance Highlights
6
Major Events
8
Chairman’s Statement
16
Business Overview
20
Financial Overview
CONTENTS
Forward-looking statements
Certain statements contained in this report may be viewed as
“forward-looking statements”. Such forward-looking statements are
subject to known and unknown risks, uncertainties and other factors,
which may cause the actual performance, financial condition or
results of operations of the Company to be materially different from
any future performance, financial condition or results of operations
implied by such forward-looking statements. In addition, we do not
intend to update these forward-looking statements. Neither the
Company nor the directors, employees or agents of the Company
assume any liabilities in the event that any of the forward-looking
statements does not materialise or turns out to be incorrect.
088 Independent Auditor’s Report
093 Consolidated Statement of Income
094 Consolidated Statement of Comprehensive Income
095 Consolidated Statement of Financial Position
098 Consolidated Statement of Changes in Equity
099 Consolidated Statement of Cash Flows
102 Notes to the Consolidated Financial Statements
202 Financial Summary
204 Corporate Information
205 Corporate Culture
26
Recognition and Awards
28
Directors and Senior
Management
40
Corporate
Governance Report
68
Report of the Directors
86
Human Resources
Development
2
3
COMPANY
PROFILE
China Unicom (Hong Kong) Limited (the “Company”) was incorporated in Hong Kong on 8 February 2000 and was listed on
the New York Stock Exchange# and the Stock Exchange of Hong Kong Limited on 21 June 2000 and 22 June 2000
respectively. On 1 June 2001, the Company was included as a constituent stock of the Hang Seng Index. The Company
merged with China Netcom Group Corporation (Hong Kong) Limited on 15 October 2008.
China Unicom establishes branches in 31 provinces in China (including autonomous regions and municipalities) and multiple
countries and regions overseas. The Company’s telecommunication network and global customer service system covers
China and connects to the world. The Company has been one of the “Fortune Global 500” companies for consecutive years,
and ranked 267th in “Fortune Global 500” for the year 2023. It was also voted as “Asia’s Most Honored Telecom Company”
in 2023 for the eighth consecutive year by Institutional Investor.
In order to accelerate becoming a world-class technology service enterprise with global competitiveness, the Company
steadily promote the two main businesses of Connectivity and Communications (CC) and Computing and Digital Smart
Applications (CDSA). It resolutely carries out national missions and holistically builds comprehensive digital information
infrastructure with industry-leading coverage, breadth and depth, so as to build an unobstructed information channel and a
new digital base for economic and social development. With the goal of establishing “Cyber Superpower and Digital China”,
it grasps the direction of digital, network-based and intelligent transformation. Using technologically leading and highly
integrated digital services which are “comprehensive in coverage, fully online and cloudified, green and one-stop”, it helps
thousands of industries “migrate to the cloud, and use data for intelligent empowerment”. It resolutely implements
innovation-driven development, and focuses on core technologies and key applications. Through integrated innovation, it
turns itself into a technological innovation enterprise and achieves a high level of independence in digital technologies,
becoming an important part of the national strategic technological power.
The Company strives to be the “new engine” that empowers social and economic transformation, fully utilises the
advantages of Big Data and communication network technology, and promotes the development of the digital economy and
information consumption upgrade, so as to transform the drivers of economic development, enhance customers’
satisfaction and sense of reward in information and communication services, and let the whole society further enjoy the
new benefits brought by information and communication development.
Note:
#
The Company’s ADSs were delisted from the New York Stock Exchange on 18 May 2021. Please refer to the Company’s
announcement dated 23 July 2021 for details.
SHAREHOLDING
STRUCTURE
CHINA UNITED
NETWORK
COMMUNICATIONS
GROUP
COMPANY LIMITED
35.8%
64.2%
Strategic investors*, employee
restrictive incentive share**
and other public shareholders
CHINA UNITED
NETWORK
COMMUNICATIONS
LIMITED
(Issued shares: approximately
31.8 billion shares)
100%
17.9%
82.1%
China Unicom (BVI) Limited
53.5%
China Unicom
Group Corporation
(BVI) Limited
26.4%***
CHINA UNICOM
(HONG KONG)
LIMITED
(Issued shares: approximately
30.6 billion shares)
20.1%
Public
Shareholders
*
**
In 2017, approximately 10.9 billion shares of China United Network Communications Limited were acquired by the strategic investors introduced by the mixed
ownership reform through non public share issuance and transfer of existing shares. These shares were no longer restricted from sale in November 2020.
Pursuant to the phase 2 restrictive share incentive scheme in 2023, China United Network Communications Limited granted restricted shares to the core
management talents and professional talents.
*** Excluded the interest regarding the pre-emptive right owned by China Unicom Group Corporation (BVI) Limited in 225,722,791 shares of the Company.
As at 31 December 2023
Annual Report 2023China Unicom (Hong Kong) Limited 4
5
PERFORMANCE
HIGHLIGHTS
Financial Highlight (RMB billions)
2023
2022
Change YoY
Operating Revenue
Service Revenue
Of which: Connectivity and Communications business revenue1
Computing and Digital Smart Applications business revenue2
EBITDA3
Net Profit4
Basic EPS (RMB)
Dividend per share5 (RMB)
372.60
335.17
244.58
75.25
99.81
18.73
0.612
0.3366
354.94
319.35
237.25
66.66
99.17
16.74
0.547
0.274
5.0%
5.0%
3.1%
12.9%
0.6%
11.8%
11.8%
22.8%
Note 1: Connectivity and Communications business encompasses mobile connectivity, broadband connectivity, TV connectivity, leased line connectivity,
communications services as well as information services.
Note 2: Computing and Digital Smart Applications business encompasses Unicom Cloud, data centre, system integration, data services, digital smart applications as
well as cybersecurity.
Note 3: EBITDA represents profit for the year before finance costs, interest income, share of net profit of associates, share of net profit of joint ventures, other
income-net, income tax expenses, depreciation and amortisation. As the telecommunications business is a capital intensive industry, capital expenditure
and finance costs may have a significant impact on the net profit of the companies with similar operating results. Therefore, the Company believes that
EBITDA may be helpful in analysing the operating results of a telecommunications service operator like the Company. However, it is a non-GAAP financial
measure which does not have a standardised meaning and therefore may not be comparable to similar measures presented by other companies.
Note 4: Net profit represented profit attributable to equity shareholders of the Company.
Note 5: The proposed 2023 final dividend of RMB0.1336 per share is subject to approval by the shareholders at the annual general meeting. Together with the
interim dividend of RMB0.203 per share already paid, total dividend for the year is RMB0.3366 per share.
UNICOM CLOUD1
REVENUE (RMB BIL)
DATA SERVICE REVENUE
(RMB BIL)
^41.6%
2023
5.3
2022
4.0
^32%
2023
51.0
2022
36.1
2021
16.3
DIGITAL SMART
APPLICATIONS REVENUE
(RMB BIL)
2023
^17.5%
5.6
2022
4.8
CYBERSECURITY
REVENUE (RMB BIL)
2023
1.7
2022
0.8
^120%
1. Unicom Cloud revenue included revenue of cloud resources, cloud platforms, cloud services, cloud
integration, cloud interconnection, cloud security, etc., generated from integrated innovative
solutions
China Unicom (Hong Kong) LimitedAnnual Report 2023
6
7
MAJOR EVENTS
February 2023
China Unicom released NX307, the world’s first
May 2023
China Telecom, China Mobile, China Unicom, and
universal 5G RedCap commercial module, leading
China Broadnet jointly announced the official launch
with our innovation and development in the 5G
of the world’s first 5G cross-network roaming
industry.
commercial trial in Xinjiang.
April 2023
China Unicom joined hands with partners such as
China Unicom obtained HKEX’s approval for the
spin-off of SMART Connection Technology.
China Unicom assisted in the completion of the
Midea Group, Shanghai Automobile City and Huawei
nation’s first digital security operation centre in
to complete the world’s first commercial application
ultra-large cities in Guangzhou.
of 5G RedCap terminals in industrial and Internet of
Vehicles scenarios.
June 2023
By establishing the second batch of 8 industry forces
covering 7 major sectors, China Unicom explored
industry application scenarios to empower
economic and social development on all fronts and
accelerate the construction of Digital China.
August 2023
China Unicom released the “China Unicom Action
Plan for the Construction of the Central Hub of the
Integration of Smart Computing, Training and
Promotion” to build the first integrated hub node of
smart computing, training and promotion in the
western region in Ningxia, helping to build the
western digital valley and China’s computing power
capital”.
September 2023
Unicom Cloud version 7.0 continued to upgrade,
achieving a breakthrough in cloud-native single-
cluster node scale of over ten thousand, and
providing customers with secure and reliable cloud
services.
November 2023
China Unicom Smart Cloud Data Centre cum Unicom
Cloud International Station Launching Ceremony
was convened in Hong Kong , committed to
strengthening the international deployment of
computing-network resources, contributing to the
high-quality co-building of the “Belt and Road”
initiative, constructing a high-quality computing-
network hub, and enhancing ecological cooperation.
China Unicom (Hong Kong) LimitedAnnual Report 2023 8
9
OVERALL RESULTS
In 2023, the Company made efforts to promote the coordinated development of the two main businesses
to achieve effective quality enhancement and reasonable growth in scale. Operating revenue increased
steadily to RMB372.6 billion, up 5.0% year-on-year. EBITDA1 reached RMB99.8 billion. The profit
attributable to equity shareholders of the Company reached RMB18.7 billion, representing a year-on-year
increase of 11.8%, continuing double-digit growth. Return on equity (ROE) reached 5.4%, the best in recent
years.
The Company insisted on network-business coordination and precise investment. With 5G network
coverage nearing completion, the Company’s investment focus is shifting from stable CC business to
high-growth CDSA business. CAPEX was RMB73.9 billion in 2023. Network investment saw an inflection
point. The Company comprehensively enhanced its value creation ability, with its free cash flow2 growing
8.3% year-on-year to RMB28.5 billion. Its capital structure continued to improve with interest-bearing
debts decreasing by 19% to RMB46.4 billion, and its liabilities-to-assets ratio remained within a reasonable
range of 46.5%.
The Company is committed to sharing the fruits of its long-term development with shareholders while
continuing to promote good growth of revenue and profit and maintaining its sustainable development
capability. After due consideration of the Company’s robust business development, the Board declared a
final dividend of RMB0.1336 per share (pre-tax). Together with the interim dividend of RMB0.203 per
share (pre-tax) already paid, the total dividend for the year amounted to RMB0.3366 per share (pre-tax),
representing a year-on-year increase of 22.8%, which is significantly higher than the 11.8% growth of basic
earnings per share. The cash dividend reached a record high3.
CHAIRMAN’S
STATEMENT
Dear Shareholders,
2023 was a year for China Unicom to achieve significant
results in high-quality development. In the past year, the
Company steadily promoted the implementation of its
strategic system, actively coordinated the current operation
and long-term development, and focused on both scale
growth and value enhancement. It fully assumed the main
responsibilities of Cyber Superpower and Digital China
development, and focused on the two main businesses of
Connectivity and Communications (CC) and Computing and
Digital Smart Applications (CDSA). The Company achieved
steady progress in business development, rapidly
s t r e n g t h e n e d i t s f u n d a m e n t a l c a p a b i l i t i e s ,
continuously amplified its distinctive advantages
and deepened innovation and reform, laying a
more solid foundation for its long-term
development.
CHEN ZHONGYUE
Chairman and
Chief Executive Officer
China Unicom (Hong Kong) LimitedAnnual Report 2023 10
WITH EMPHASIS ON BOTH SCALE AND
QUALITY, BUSINESS DEVELOPMENT
MADE NEW ACHIEVEMENTS
China Unicom fully consolidated its foundation in
Within that, for mobile connectivity, the Company
strengthened coordination among terminals, network
and business development. Driven by 5G upgrade,
mobile subscribers demonstrated strong growth. The
market development, capability and management, and
Company continued to strengthen coordinated
took advantage of its unique edges to promote
development, striking a balance among scale, quality,
technological innovation, product innovation, model
structure and efficiency. The number of mobile
innovation and system innovation with greater
subscribers reached 333 million, with a net addition of
strength. It improved the circulation of various factors,
10.60 million in 2023. The net addition increased
and promoted high-level opening up and cooperation
significantly by 90% year-on-year. Subscriber mix
both internally and externally, unveiling a new
continued to improve, and the penetration rate of 5G
paradigm of China Unicom’s high-quality development.
package subscribers reached 78%, an increase of 12
In 2023, the Company achieved service revenue of
percentage points year-on-year. The Company actively
RMB335.2 billion, up by 5.0% year-on-year.
seized the development opportunities of universal
connectivity. The number of Internet of Things (IoT)
Stable growth in Connectivity and Communications
connections reached 490 million in 2023, of which “4G
provided the foundation for steady operations
+ 5G” high-speed connections accounted for over 90%,
T h e C o m p a n y c o n t i n u e d t o d e e p e n b u s i n e s s
injecting fresh impetus into the development of mobile
integration, market convergence and capability fusion.
connectivity.
New integration is gaining momentum. Mobile,
fixed-line broadband and leased line businesses saw
For broadband connectivity, the Company continued
steady growth in both scale and value. Innovative
to build its reputation for gigabit service. The number
value-added services for individuals and households
of fixed-line broadband subscribers reached 113
achieved rapid breakthroughs. In 2023, Connectivity
million, with a net addition of 9.79 million year-on-
a n d C o m m u n i c a t i o n s ( C C ) b u s i n e s s , w h i c h
year. The net addition hit a 10-year high. Subscriber
encompasses mobile connectivity, broadband
mix improved significantly with the integration
connectivity, TV connectivity, leased line connectivity,
penetration of broadband subscribers reaching 76%.
communications services as well as information
The penetration rate of gigabit subscribers reached
services, achieved revenue of RMB244.6 billion. It
22%, an increase of 6 percentage points year-on-year.
contributed to three quarters of the service revenue of
CC and CDSA combined. The Company’s connectivity
scale further expanded, with the total number of CC
subscribers exceeding one billion4, representing an
increase of about 140 million from the end of 2022.
China Unicom (Hong Kong) LimitedCHAIRMAN’S STATEMENT 11
For information services, the Company strived to build
achieved revenue of RMB75.2 billion. It accounted for
richer and better innovative products, and deepened
a quarter of the service revenue of CC and CDSA
the rapid growth of information services for the
combined, and contributed to more than half of the
individual and household markets, bringing brand new
Company’s incremental service revenue.
experiences of quality upgrade to customers. The
Company continued to bolster the “platform + cloud
For Unicom Cloud5, revenue reached RMB51.03 billion
network + applications” development model and
in 2023, with year-on-year growth of 41.6%.
constantly enhanced information applications.
Leveraging the differentiated edge of computing
Information services revenue exceeded RMB10 billion.
power and network integration as well as significantly
The number of paying subscribers of Personal Digital
richer computing power resources, the Company sold
and Smart Living and Unicom Smart Home reached 100
over a million cores of cloud resources, with a year-on-
million.
year growth rate of 186%. Its cloud resources covered
over 230 cities. The Company overcame critical
Robust growth of Computing and Digital
technological barriers in cloud server operating
Smart Applications added to growth momentum for
systems, databases and cloud disaster recovery, and
innovation and transformation
met customers’ need for scenario-based customisation.
The new round of technological revolution and
It built a series of benchmark cases in the fields of
industrial transformation is overwhelming, and the
government affairs, healthcare, transportation and
prosperity and vitality of the digital economy have
education, empowering quality and efficiency
opened up new and bigger room for the development
enhancement in various industries. The Company
of China Unicom. The Company actively embraced the
made new efforts in technological innovation and
strategic opportunities brought by the resonance of
ecological co-construction, further enhanced its
Chinese-style modernisation and next-generation
proprietary R&D capability, and continued to optimise
digital revolution. In 2023, Computing and Digital
the “virtualised” and “cloud native” dual-engine
Smart Applications (CDSA), which encompasses
foundation. It deployed more than 3,300 sets of self-
Unicom Cloud, data centre, system integration, data
developed operating system CULinux 2.2.
services, digital smart applications and cybersecurity,
Annual Report 2023 12
For data service, seizing policy opportunities such as
categories of the national economy, serving more than
“Digital China” construction and the “Data Factor X”
8,500 5G private network customers. The Company
Three-Year Action Plan, the Company focused on
has formed a leading edge in key sectors such as
strengthening the supply of data products and
industrial Internet, digital government, and Internet of
capabilities, empowering holistic digital transformation
vehicles, etc. Its professional and specialised
of the economy and society. Leveraging its centralised
capabilities in digital intelligence continued to
platform and cutting-edge Big Data capability, the
strengthen, with 32 self-developed application
Company’s data services accounted for over 50%
products generating revenue in excess of RMB100
market share for five consecutive years, outperforming
million. It iteratively upgraded the 5G industry private
in the industry. It always regarded the integrated
network PLUS product matrix, developed Gewu
innovation of Big Data and AI technologies as the core
Unilink, a cross-industry and cross-profession industrial
driving force. Twelve of its data management
Internet platform, and launched ten 5G RedCap
capabilities were named in the “2023 Data Governance
industry terminals. During Mobile World Congress
Industry Graph 2.0”, ranking first in terms of quantity.
(MWC) 2024, it won three Global Mobile (GLOMO)
Its data processing capacity continued to increase, and
Awards, leading the high-quality development of 5G
the daily amount of data collected doubled year-on-
digital and smart applications.
year to 1.2 PB. The Company passed the highest
DCMM5 certification with the highest score ever. It
For cybersecurity, the Company focused on network
comprehensively served the digital transformation of
security, data security, information security and other
government affairs. It built the No. 1 brand in digital
key aspects, and strengthened Big Security strategic
government and developed 15 provincial government
business deployment. Based on the “Mogong” platform,
affairs Big Data platforms, while the total number of
the Company developed a new model of “platform +
smart city service districts and counties exceeded 800.
components + services” security operating services. It
built China’s first mega-city digital security operation
For digital and smart applications, the Company
centre for a client, and implemented more than 50
accelerated the in-depth integration of the digital
benchmark projects. It promoted open cooperation in
economy and the real economy with 5G technology, in
the security ecosystem by attracting partners to join
order to provide a digital “new engine” for strategic
the “Security Hub” and build a large-scale, product-rich
emerging industries and future industries. The scale
and accessible security cloud market, supporting
development of digital and smart applications achieved
cybersecurity revenue to achieve a rapid growth of
remarkable results, with a cumulative total of 30,000
120%.
5G industry application projects covering 71 major
China Unicom (Hong Kong) LimitedCHAIRMAN’S STATEMENT 13
BUILDING A SOLID FOUNDATION FOR
S U S T A I N A B L E D E V E L O P M E N T B Y
CONSOLIDATING CAPABILITIES
Network is the foundation of the Company’s existence,
and Western Computing strategy, and actively
deployed a new computing power network with
advanced architecture, security and reliability and
excellent service. Through the “5 + 4 + 31 + X” new IDC
and innovation is the source of the Company’s
deployment, the Company strived to build green,
vibrancy. In recent years, the Company has vigorously
c e n t r a l i s e d , s e c u r e a n d r e l i a b l e c o m p u t i n g
promoted the work orientation of strengthening the
infrastructure. The Company proactively responded to
fundamentals and basics, and has made efforts to build
the transformation and upgrade of AI computing
digital information infrastructure as the foundation to
power demand, and pushed forward “1+N+X” AI
help China’s digital economy flourish. The Company
computing planning and deployment. In Eastern
actively promoted the research on critical core
regions with developed AI computing industry and
technologies and the construction of a unique
Western regions with abundant resources, it
capability system, in order to play a bigger role in
undertook tiered deployment and construction. It has
technological innovation, industrial control and
constructed over 100G high-speed transmission links
security support. It provided a solid foundation for the
among national hubs, reinforcing the optical transport
Company to forge ahead in its new journey and
foundation for computing power network. The latency
undertake new missions.
of the Company’s public IP backbone network
maintained its edge in the industry.
Network capabilities continued to strengthen with
precise investment
T h e C o m p a n y a d h e r e d t o n e w d e v e l o p m e n t
The Company accelerated the construction of digital
philosophy and pushed forward high-quality 5G
information infrastructure in order to consolidate the
development. 220,000 5G mid-band base stations
foundation of its long-term development. The
were added and the number of shared 4G base
Company had over 1.21 million 5G mid-band base
stations exceeded two million. It launched the world’s
stations and 680,000 900M base stations. Its mobile
first 5G roaming pre-commercial trial in Xinjiang
network coverage continued to strengthen. Its
province with fellow operators to further improve the
broadband network maintained its industry edge in
network resources utilisation efficiency in remote
Northern China, while its foundational capabilities in
areas. It made good progress in promoting the co-
S o u t h e r n C h i n a w e r e m a r k e d l y b o o s t e d . F o r
build, co-share and co-maintenance of transmission
government and enterprise network, it provided “hard
lines, pipes and optical cables and other infrastructure.
and soft” high-quality private network services, and
The Company took practical actions to echo the “dual
continuously expanded coverage scale and multi-cloud
carbon” policy, saving operating expenses of about
connectivity, promoting “cloudification and digital
RMB39.0 billion and annual carbon emissions of about
empowerment” for thousands of industries. The
11.50 million tonnes in 2023, and saving cumulative
Company fully implemented the national Eastern Data
capital expenditure of about RMB340.0 billion.
Annual Report 2023 14
Innovation-driven transformation made a deep and
steady stride
The Company actively forged its core capabilities,
SOCIAL RESPONSIBILITY AND CORPORATE
GOVERNANCE
The Company takes care of national interests,
continued to build a strong engine for technological
spontaneously contributes to national strategies and
innovation, focused on promoting industrial innovation
organically integrates its economic responsibility with
with technological innovation, and accelerated the
social responsibility. In the past year, the Company
development of new quality productivity. It made
demonstrated its commitment in environmental, social
greater efforts on talent cultivation, with the ratio of
and corporate governance aspects, and contributed its
technological innovation personnel reaching 40%. It
part to meet the needs of people for better
was granted 2,287 patents during the year, up by 37%
information life and the demand for digital, network-
year-on-year. The Company enhanced the efficiency of
based and intelligent transformation of various
c a p i t a l o p e r a t i o n a n d s t r e n g t h e n e d c a p i t a l
industries. The Company continued to build a solid,
cooperation. It set up joint ventures such as Nebula
reliable and secure network, enhance data and
Times Technology Co., Ltd. and China Unicom Digital
information security capabilities, and bolster its
Intelligence Medical Technology Co. Ltd to further
collaborative support system, fortifying national
improve its capability in offering professional and
cybersecurity defence. Fulfilling the “dual carbon”
specialised digital services.
strategy, the Company actively constructed large data
centres which were technologically advanced, green
The Company regards AI as an important strategic
and low-carbon, secure and reliable. The Company
field. It accelerated the deployment in this nascent
endeavoured to build an inclusive and accessible digital
industry by combining China Unicom’s advantages in
society and fully supported rural revitalization. Its
computing network infrastructure, diverse business
Digital Village platform covered the 255,000
use cases and extensive customer touch points to build
administrative villages and served more than 26
a large language model (LLM) application development
million villagers. The Company fully demonstrated its
paradigm with China Unicom’s characteristics. At the
responsibilities. During major events such as
recent MWC, the Company launched the “Yuanjing”
communications support, rescue and disaster relief,
LLM system, which offered multiple parameter
reform, etc., it performed its missions and successfully
versions according to different functional needs, so as
completed communications support tasks during
to use LLM to better empower use cases in the real
rescue and disaster relief. The Company advanced
economy. The Company comprehensively improved
quality enhancement as a listed company. It
customer service with AI + Big Data, with relevant
strengthened communication with the capital market
achievements successfully shortlisted in “Wu Wenjun
through reverse roadshows and other activities, and
Award for Science and Technology in Artificial
actively responded to shareholders’ concerns,
Intelligence”, an authoritative award in the industry.
promoting the mutual improvement of both its
intrinsic value and market value.
The Company further accelerated deployment in
satellite communications, and actively promoted the
industrialisation and systemic development of air-
ground integrated communications.
China Unicom (Hong Kong) LimitedCHAIRMAN’S STATEMENT 15
The Company continued to improve its governance
The Company will insist on making progress while
mechanism, providing solid support for sustainable and
maintaining stability, deeply implement the five
healthy development. It has received numerous
strategies to build a strong enterprise, i.e. via
recognitions, including ranking 267th in the Fortune
technology, talent, reform, digital and smart
Global 500 for the year 2023, ranking 277th in the
transformation, and brand. We will deeply implement
Forbes Global 2000, being voted as “Asia’s Most
nine key action plans in respect of CC, computing
Honored Telecom Company” by Institutional Investor
network integration, digital and smart applications,
for the eighth consecutive year, and being voted as
“Best Overall Company in China — Gold” in “Asia’s Best
internationalisation, Big Data innovation, AI
innovation, digital new infrastructure, high-quality
Managed Companies Poll 2023” organised by
services and cybersecurity, in order to accelerate
FinanceAsia.
becoming a world-class technology service enterprise
with global competitiveness.
OUTLOOK
At present, the trend of digitalisation, intelligent
Last but not least, on behalf of the Board, I would like
t r a n s f o r m a t i o n a n d g r e e n d e v e l o p m e n t i s
to express my sincere gratitude to all shareholders,
unstoppable. The new round of technological
customers and all sectors of society for their long-term
revolution and industrial transformation has
care and support to the Company, and to all
developed rapidly, giving rise to unprecedented new
e m p l o y e e s f o r t h e i r c o n t i n u e d e f f o r t s a n d
services, new models and new business formats. Under
contributions!
the new landscape, the strategic, fundamental and
leading role of the information and communication
industry has become more and more prominent. In
2024, the Company is confident in maintaining stable
growth in operating revenue and double-digit growth
in profit. CAPEX is expected to be within RMB65.0
Chen Zhongyue
billion, in which CDSA investment will be appropriately
Chairman and Chief Executive Officer
b r o u g h t f o r w a r d a n d i t s d e p l o y m e n t w i l l b e
strengthened.
Hong Kong, 19 March 2024
Note 1: EBITDA represents profit for the year before finance costs, interest income, share of net profit of associates,
share of net profit of joint ventures, other income — net, income tax expenses, depreciation and amortisation.
As the telecommunications business is a capital-intensive industry, capital expenditure and finance costs may
have a significant impact on the net profit of the companies with similar operating results. Therefore, the
Company believes that EBITDA may be helpful in analysing the operating results of a telecommunications
service operator like the Company. However, it is a non-GAAP financial measure which does not have a
standardised meaning and therefore may not be comparable to similar measures presented by other
companies.
Note 2: Free cash flow represents operating cash flow less capital expenditure. However, it is a non-GAAP financial
measure which does not have a standardised meaning and therefore may not be comparable to similar
measures presented by other companies.
Note 3: The 2023 final dividend declared will be subject to approval at the Company’s annual general meeting.
Note 4: The total number of CC subscribers as at the end of January 2024.
Note 5: Unicom Cloud revenue represents revenue generated from cloud resources, cloud platform, cloud services, cloud
integration, cloud interconnection, cloud security, etc. by integrating innovative solutions.
Annual Report 2023 16
BUSINESS
OVERVIEW
In 2023, China Unicom adhered to the principle of serving the people, focused on
the primary task of high-quality development. It continuously deepened business
integration, market convergence, and the fusion of capabilities and intelligence. The
Company’s operation remained stable with progress, and its business revenue
maintained rapid growth. The subscriber scale reached a new high in recent years,
with 333 million mobile billing subscribers in 2023, and accumulative net addition of
10.60 million. The fixed-line broadband subscriber scale reached 113 million, with
accumulative net addition of 9.79 million. China Unicom’s brand influence continued
to expand. In a brand-building capabilities benchmark against central state-owned
enterprises (CSEs), it ranked fourth among them and first in the telecommunications
industry.
China Unicom (Hong Kong) Limited 17
T h e s t a b i l i s i n g e f f e c t o f C o n n e c t i v i t y a n d
established product lines that integrated technology
Communications business became more prominent.
innovation, cloud networking, terminal devices, and
Firstly, the Company accelerated the promotion of
data, focusing on customer and market needs. In 2023,
new and existing subscribers to 5G, gigabit, and
the Company’s cloud computer officially achieved
integrated services. In terms of 5G, the Company
commercialisation, and the information application
continued to promote network-business-access
products like video ringtones, Unicom Cloud Drive, and
alignment, and accelerated the upgrade to 5G devices
smart homes generated revenues over RMB10 billion.
for network access and the migration from 3G.
Thirdly, the scale of Internet of Things (IoT) business
Regarding gigabit services, the Company adhered to
maintained steady growth, with a total of 490 million
the drivers of 1000 Mbps broadband and FTTR, aiming
IoT connections. Among them, the net addition of 5G
to enhance customer perception through high-speed
connections led the industry. The scale of Cat.1
networks, and carried out initiatives such as achieving
connections reached 130 million. The Company’s
gigabit benchmarks and enabling gigabit communities.
market share in Internet of vehicles continued to stay
For integrated services, the Company promoted
ahead in the industry. Fourthly, the Company
comprehensive integration of scale and value,
u p g r a d e d t h e 5 G “ e m p o w e r m e n t e n g i n e ” ,
improving the overall perception of communication
empowering thousands of industries with intelligence
services in households, and achieving breakthroughs in
and value. The Company developed a total of 30,000
scale and value as a whole. Secondly, the Company
commercial 5G application projects, covering 71 major
continued to enhance the provision of new digital
categories of the national economy. The customer
smart living and smart home applications, reshaping
scale continued to expand, and the cumulative number
voice services and SMS services, and creating new
of customers served by the virtual 5G industry private
experiences in communication services. The Company
networks exceeded 8,500.
Annual Report 2023 18
The development capabilities of Computing and
the world’s first 5G RedCap commercial module. The
Digital Smart Applications (CDSA) business have been
Company’s “Gewu” device management platform is
continuously strengthened. Firstly, in terms of
capable of supporting tens of millions of concurrent
computing power services, Unicom Cloud’s cloud
connections, and its advantages in scenario-based
resource pool experienced rapid growth and
object models have empowered key industry
accomplished the deployment of “one resource pool
customers in their digital transformation and upgrade,
per city”. In key areas such as government clouds and
creating benchmark projects in various sectors.
CSEs’ cloudification, the Company newly added over
Regarding artificial intelligence (AI), China Unicom
100 benchmark projects of private clouds. Secondly, in
constructed an independent and innovative AI
terms of cloud data centres, China Unicom achieved
infrastructure, developing large language models and
leading growth within the IDC industry. Thirdly, in
CDSA products for fields such as government affairs
terms of data services, the Company’s total revenue
and the economy. These efforts have comprehensively
from Big Data grew rapidly, and its market share
empowered the implementation of over 30 scenario
maintained industry leading for five consecutive years.
applications such as factories and industrial
The Company’s data services capabilities passed
manufacturing parks. Fifthly, in terms of cyber
DCMM level 5 assessment. Its integration of
information security, China Unicom relied on the
technologies such as blockchain and homomorphic
“Mogong” security operation service platform, utilising
encryption achieved cross-domain networking and
its capabilities in large-scale network situational
reduced storage by 30%. The performance of the
awareness to develop an operation service model
underlying platform has surpassed 20,000 transactions
integrating “Terminal-Network-Cloud-Data-Service”. In
per second (TPS). Fourthly, in terms of digital smart
areas such as digital government and CSEs, China
applications, regarding IoT, China Unicom launched
Unicom newly added over 50 new model cases.
China Unicom (Hong Kong) LimitedBUSINESS OVERVIEW 19
The high-quality network capability continuously
reached 98%. Secondly, the Company continuously
i m p r o v e d . F i r s t l y , C h i n a U n i c o m t o o k f u l l
promoted the coverage of gigabit optical networks,
responsibility for building Cyber Superpower and
with over 260 million broadband ports and the
Digital China, accelerating the construction of a
proportion of 10GPON ports exceeding 70%. Thirdly,
comprehensive intelligent digital infrastructure
the Company actively built a multi-level computing
characterised by high-speed ubiquitous connectivity,
power supply. By combining national Eastern Data and
integration across space and ground, cloud-network
Western Computing strategy, along with China
convergence, intelligence and agility, green and
Unicom’s “5+4+31+X” computing resource deployment,
low-carbon features, as well as security and
the Company improved its multi-level architecture.
controllability. The Company continuously promoted
China Unicom’s computing centres covered eight major
the construction of mobile premium networks,
hubs and 31 provinces, with over 400,000 data centre
broadband premium networks, and government &
cabinets. The resource deployment of a thousand
enterprise premium networks, establishing a solid
cabinets was completed in 29 provinces, and over 230
CDSA capabilities foundation. The Company focused on
cities were covered by backbone cloud pools. The
enhancing its core competitiveness, sustainable
number of MEC nodes exceeded 600. Fourthly, The
development capacity, and value creation ability,
Company continuously improved the international
driving the network quality to a new level and further
network deployment. By the end of 2023, the
building a solid network foundation for China Unicom’s
international submarine and land cable resource
high-quality development. By the end of 2023, there
capacity reached 88T, Internet international
were over 1.21 million 5G mid-band shared base
i n t e r c o n n e c t i o n c a p a c i t y 7 . 6 3 T a n d i n b o u n d
stations, 680,000 900MHz low-band base stations, and
bandwidth 5.59T. International roaming covered 643
over 2.90 million available 4G base stations. The
operators in 264 countries and regions.
coverage rate of 5G/4G in administrative villages
Annual Report 2023 20
FINANCIAL
OVERVIEW
OVERVIEW
In 2023, the Company fully implemented the new development philosophies, fully assumed the two main
responsibilities of building a Cyber Superpower and Digital China, and focused on the two main businesses of
Connectivity and Communications and Computing and Digital Smart Applications, total revenue was RMB372.60
billion in 2023, up by 5.0% year-on-year. Service revenue reached RMB335.17 billion, up by 5.0% year-on-year.
The profit attributable to equity shareholders of the Company was RMB18.73 billion, up by 11.8% year-on-year.
In 2023, the Company’s net cash flow from operating activities was RMB102.39 billion. Capital expenditure was
RMB73.87 billion. Liabilities-to-assets ratio was 46.5% as at 31 December 2023.
SERVICE REVENUE
(RMB BIL)
335.17
China Unicom (Hong Kong) Limited 21
REVENUE
In 2023, the Company’s revenue was RMB372.60 billion, up by 5.0% year-on-year, of which, service revenue was
RMB335.17 billion, up by 5.0% year-on-year due to continuous optimisation of the revenue mix.
The table below sets forth the Company’s service revenue of the two main types of business for the years of 2023
and 2022:
(RMB in billions)
2023
2022
Total
Mix
Total
Mix
amount
proportion
amount
proportion
Connectivity and Communications business
revenue
244.58
76.5%
237.25
78.1%
Computing and Digital Smart Applications
business revenue
75.25
23.5%
66.66
21.9%
Connectivity and Communications business revenue
In 2023, service revenue from Connectivity and Communications business was RMB244.58 billion, up by 3.1%
year-on-year.
Computing and Digital Smart Applications business revenue
In 2023, service revenue from Computing and Digital Smart Applications business was RMB75.25 billion, up by
12.9% year-on-year.
CONNECTIVITY AND
COMMUNICATIONS
BUSINESS REVENUE
(RMB BIL)
244.58
COMPUTING AND DIGITAL
SMART APPLICATIONS
BUSINESS REVENUE
(RMB BIL)
75.25
Annual Report 2023
22
OPERATING COSTS
In 2023, total operating costs amounted to RMB357.63 billion, up by 4.4% year-on-year.
The table below sets forth the items of the operating costs and the changes in their respective percentage of the
revenue for the years of 2023 and 2022:
(RMB in billions)
Operating costs
Include: Interconnection charges
Depreciation and amortisation
Network, operation and support expenses
Employee benefit expenses
Include: salaries under employment
contract
Costs of telecommunications products sold
Selling and marketing expenses
Cost of Computing and Digital Smart
Applications business1
General and administrative expenses2
Other operating expenses
2023
2022
As a
As a
Total
percentage
Total
percentage
amount
of revenue
amount
of revenue
357.63
11.29
84.85
60.03
62.94
41.28
36.40
35.83
40.08
5.53
20.68
96.0%
3.0%
22.8%
16.1%
16.9%
11.1%
9.8%
9.6%
10.8%
1.5%
5.6%
342.60
10.95
86.83
56.42
60.72
40.85
34.72
34.46
31.79
5.15
21.56
96.5%
3.1%
24.4%
15.9%
17.1%
11.5%
9.8%
9.7%
9.0%
1.5%
6.1%
China Unicom (Hong Kong) LimitedFINANCIAL OVERVIEW
23
Interconnection charges
The interconnection charges were RMB11.29 billion in 2023, up by 3.2% year-on-year and, as a percentage of
revenue, decreased from 3.1% in 2022 to 3.0% in 2023.
Depreciation and amortisation
Mainly benefiting from the Company’s good control of capital expenditure and network “co-build co-share” in
recent years, depreciation and amortisation charges were RMB84.85 billion in 2023, down by 2.3% year-on-year
and, as a percentage of revenue, decreased from 24.4% in 2022 to 22.8% in 2023.
Network, operation and support expenses
As the Company expanded the scale of the basic network and relevant infrastructure, network, operation and
support expenses were RMB60.03 billion in 2023, up by 6.4% year-on-year and, as a percentage of revenue,
increased from 15.9% in 2022 to 16.1% in 2023.
Employee benefit expenses
The Company ongoing effort in incentive mechanism reforms, strengthen performance-based compensation and
optimised the human resources efficiency, employee benefit expenses were RMB62.94 billion in 2023, up by 3.6%
year-on-year and, as a percentage of revenue, decreased from 17.1% in 2022 to 16.9% in 2023.
Cost of telecommunications products sold
Costs of telecommunications products sold were RMB36.40 billion and revenue from sales of telecommunications
products were RMB37.43 billion in 2023. Gross profits on sales of telecommunications products was RMB1.03
billion.
Selling and marketing expenses
The Company appropriately increased selling and marketing expenses to enhance market attractiveness, selling
and marketing expenses were RMB35.83 billion in 2023, up by 4.0% year-on-year and, as a percentage of revenue,
decreased from 9.7% in 2022 to 9.6% in 2023.
Cost of Computing and Digital Smart Applications business1
The Company seized the growth opportunities of the digital economy and continued to develop the Computing
and Digital Smart Applications business, cost of Computing and Digital Smart Applications business were
RMB40.08 billion in 2023, up by 26.1% year-on-year and, as a percentage of revenue, increased from 9.0% in 2022
to 10.8% in 2023.
General and administrative expenses2
General and administrative expenses were RMB5.53 billion in 2023, up by 7.3% year-on-year and, as a percentage
of revenue was basically the same as 1.5%.
Other operating expenses
Other operating expenses were RMB20.68 billion in 2023, down by 4.1% year-on-year and, as a percentage of
revenue, decreased from 6.1% in 2022 to 5.6% in 2023.
Annual Report 2023 24
EARNINGS
(RMB in billions)
Operating profits
Net interest income
Share of net profit of associates
Share of net profit of joint ventures
Other income-net
Profit before income tax
Income tax expenses
Profit for the year
Include: the profit attributable to equity
shareholders of the Company
2023
2022
Total
amount
Total
amount
14.97
0.12
2.52
1.80
3.53
22.95
4.02
18.92
18.73
12.34
0.66
2.15
1.59
3.85
20.59
3.75
16.84
16.74
Change
21.3%
–80.9%
17.0%
13.2%
–8.2%
11.5%
7.3%
12.4%
11.8%
Profit before income tax
In 2023, the Company benefited from continuous enhancement
in growth quality and profitability, profit before income tax was
RMB22.95 billion, up by 11.5% year-on-year.
Income tax expenses
In 2023, the Company’s income tax expenses was
RMB4.02 billion and the effective tax rate was 17.5%.
The profit attributable to equity
shareholders of the Company
In 2023, the profit attributable to equity
shareholders of the Company was RMB18.73
billion, up by 11.8% year-on-year. Basic
earnings per share was RMB0.612, up by
11.8% year-on-year.
China Unicom (Hong Kong) LimitedFINANCIAL OVERVIEW
25
EBITDA3
In 2023, the Company’s EBITDA was RMB99.81 billion, up by 0.6% year-on-year. EBITDA as a percentage of service
revenue was 29.8%, down by 1.3 percentage points year-on-year, and the decline of EBITDA as a percentage of
service revenue narrowed by 0.1 percentage point year-on-year.
CAPITAL EXPENDITURE AND CASH FLOW
In 2023, capital expenditure of the Company totaled RMB73.87 billion. Investments focus on the main
responsibilities and businesses; the scale of investment matches the business growth and cash position.
In 2023, the Company’s net cash flow from operating activities was RMB102.39 billion. Free cash flow4 was
RMB28.52 billion after the deduction of the capital expenditure.
BALANCE SHEET
The Company’s total assets increased from RMB642.66 billion as at 31 December 2022 to RMB661.05 billion as at
31 December 2023. Total liabilities increased from RMB299.13 billion as at 31 December 2022 to RMB307.15
billion as at 31 December 2023. The liabilities-to-assets ratio was 46.5% as at 31 December 2023, basically the
same as last year. The debt-to-capitalisation ratio decreased from 14.3% as at 31 December 2022 to 11.6% as at
31 December 2023. The net debt-to-capitalisation ratio was –0.3% as at 31 December 2023.
Note 1: Cost of Computing and Digital Smart Applications business excludes the cost of data centre business.
Note 2: General and administrative expenses excludes staff costs and depreciation.
Note 3: EBITDA represents profit for the year before finance costs, interest income, shares of net profit of associates,
share of net profit of joint ventures, other income-net, income tax expense, depreciation and amortisation. As
the telecommunications business is a capital intensive industry, capital expenditure and finance costs may have
a significant impact on the net profit of the companies with similar operating results. Therefore, the Company
believes that EBITDA may be helpful in analysing the operating results of a telecommunications service operator
like the Company. However, it is a non-GAAP financial measure which does not have a standardised meaning
and therefore may not be comparable to similar measures presented by other companies.
Note 4: Free cash flow represents operating cash flow less capital expenditure. However, it is a non-GAAP financial
measure which does not have a standardised meaning and therefore may not be comparable to similar
measures presented by other companies.
Note 5: Connectivity and Communications business revenue is the sum of relevant amounts in various types of service
revenue, including voice usage and monthly fees RMB21.21 billion, broadband and mobile data services
RMB154.75 billion, data and internet application services RMB14.39 billion, other value-added services
RMB29.19 billion, transmission lines usage and associated services RMB22.67 billion and other services
RMB2.37 billion.
Computing and Digital Smart Applications business revenue consists of service revenue related to data and
internet application services RMB75.25 billion.
In addition to the above two business revenue, other business service revenue was RMB15.34 billion. Details of
the disaggregation of service revenue, please refer to Note 6 of the consolidated financial statements.
Annual Report 2023 26
27
RECOGNITION
AND AWARDS
For more information, please visit the Company’s website at www.chinaunicom.com.hk
China Unicom (Hong Kong) LimitedAnnual Report 2023 28
DIRECTORS AND
SENIOR
MANAGEMENT
China Unicom (Hong Kong) Limited 29
CHEN ZHONGYUE
Chairman and Chief Executive Officer
Aged 52, a university graduate with a master's degree in Economics, was appointed
in December 2023 as the Chairman and Chief Executive Officer of the Company. Mr.
Chen was appointed in February 2021 as an Executive Director of the Company. Mr.
Chen served as Deputy General Manager of China Telecom Zhejiang branch,
Managing Director of the Public Customers Department of China Telecom, General
M a n a g e r o f C h i n a T e l e c o m S h a n x i b r a n c h , V i c e P r e s i d e n t o f C h i n a
Telecommunications Corporation, Executive Director and Executive Vice President of
China Telecom Corporation Limited, General Manager of China United Network
Communications Group Company Limited ("Unicom Group"), the President of China
United Network Communications Limited ("A Share Company"), the President of
China United Network Communications Corporation Limited ("CUCL"), the President
of the Company. Mr. Chen is currently the Chairman of Unicom Group, A Share
Company and CUCL. Mr. Chen has extensive experience in management and the
telecommunications industry.
Annual Report 2023 30
WANG JUNZHI
Executive Director
Aged 59, a postgraduate with a master's degree in Engineering, was appointed in
December 2021 as an Executive Director of the Company. Mr. Wang served as
Deputy Director General and Director General of the Department of Labor
Protection of All-China Federation of Trade Unions ("ACFTU"), Chairman of the
National Committee of the Trade Union of the Energy and Chemistry Sector of China,
Director General of the Department of Labor and Economic Work of ACFTU,
Secretary of the Secretariat of ACFTU, a member of the 15th and 16th Executive
Committee of ACFTU as well as a member of the 16th Presidium of ACFTU. Mr.
Wang is currently a Director of Unicom Group, a Director of A Share Company as well
as a Director of CUCL. Mr. Wang has extensive experience in management.
China Unicom (Hong Kong) LimitedDIRECTORS AND SENIOR MANAGEMENT 31
LIANG BAOJUN
Senior Vice President
Aged 54, a university graduate with a master's degree in Engineering, was appointed
in February 2018 as a Senior Vice President of the Company. Mr. Liang served as
Deputy General Manager of Beijing Branch of China Telecom Corporation Limited, as
well as General Manager of Henan Branch of China Telecommunications
Corporation, General Manager of Corporate Informatisation Department, General
Manager of Government and Enterprise Customers Department of China
Telecommunications Corporation. Mr. Liang also serves as Vice General Manager
and the Chief Network Security Officer of Unicom Group, Senior Vice President of A
Share Company as well as Director and Senior Vice President of CUCL. Mr. Liang has
extensive experience in management and telecommunications industry.
Annual Report 2023 32
HE BIAO
Senior Vice President
Aged 52, a university graduate with a doctorate degree of Business Administration,
was appointed in June 2020 as a Senior Vice President of the Company. Mr. He
served as Deputy General Manager and General Manager of Guangdong Branch of
China Unicom as well as Chairman of China Unicom (Guangdong) Industrial Internet
Co., Ltd.. Mr. He also serves as a Vice General Manager of Unicom Group, a Senior
Vice President of A Share Company as well as a Director and Senior Vice President of
CUCL. Mr. He has extensive experience in management and telecommunications
industry.
China Unicom (Hong Kong) LimitedDIRECTORS AND SENIOR MANAGEMENT 33
TANG YONGBO
Senior Vice President
Aged 50, a postgraduate with a master's degree in Business Administration, was
appointed in December 2021 as a Senior Vice President of the Company. Mr. Tang
served as Deputy General Manager and General Manager of Hunan Branch of China
Unicom, General Manager of Marketing Department of Unicom Group. He was a
Deputy to the 13th National People's Congress. Mr. Tang is currently a Non-
Executive Director of China Tower Corporation Limited (listed on the Hong Kong
Stock Exchange), a Non-Executive Director of China Communications Services
Corporation Limited (listed on the Hong Kong Stock Exchange), a Non-Executive
Director of HKT Limited (HKT Trust and HKT Limited are listed on the Hong Kong
Stock Exchange) and HKT Management Limited (the trustee manager of the HKT
Trust), a Non-Executive Director and the Deputy Chairman of the Board of PCCW
Limited (listed on the Hong Kong Stock Exchange with an American Depositary
Receipts trading on OTC Markets Group Inc.), Vice General Manager of Unicom
Group, Senior Vice President of A Share Company, Director and Senior Vice President
of CUCL, as well as Director of certain member of the Group. Mr. Tang has extensive
experience in management and the telecommunications industry.
Annual Report 2023 34
LI YUZHUO
Executive Director and Chief Financial Officer
Aged 51, a postgraduate with a master's degree in Business Administration, was
appointed in February 2022 as an Executive Director and Chief Financial Officer of
the Company. Ms. Li served as Director of the Finance Department of China ENFI
Engineering Corporation Limited, Vice President of China ENFI Engineering
Corporation, Head of the Capital Department and Secretary of the Board of Directors
of China Metallurgical Group Corporation (Metallurgical Corporation of China
Limited), and Head of the Capital Operation Department of China Minmetals
Corporation. Ms. Li is currently Chief Accountant of Unicom Group, Board Secretary
and Financial Controller of A Share Company, the Director and the Chief Financial
Officer of CUCL, as well as Director of certain member of the Group. Ms. Li has
extensive experience in financial investment and capital operation.
China Unicom (Hong Kong) LimitedDIRECTORS AND SENIOR MANAGEMENT 35
CAO XINGXIN
Senior Vice President
Aged 57, a postgraduate with a master's degree in Literature, was appointed in
March 2023 as a Senior Vice President of the Company. Mr. Cao served as Deputy
Director General of the Bureau of Officials of the CPC Central Committee and State
Organs of the Organization Department of the CPC Central Committee (COD),
Bureau-level official and Deputy Director of the Office of Civil Servants
Administration of COD, Deputy Director General and Bureau-level official at level 1 of
the (Third) Bureau of Civil Servants of COD, Deputy Head (Bureau Chief level) of the
National Institute for Party Leadership of COD. Mr. Cao is currently Vice General
Manager and General Counsel of Unicom Group, Senior Vice President and General
Counsel of A Share Company as well as Director, Senior Vice President and General
Counsel of CUCL. Mr. Cao has extensive experience in management.
Annual Report 2023 36
CHEUNG WING LAM LINUS
Independent Non-Executive Director
Aged 75, was appointed in May 2004 as an Independent Non-Executive Director of
the Company. Mr. Cheung is an Independent Non-Executive Director of HKR
International Limited (listed on the Hong Kong Stock Exchange). Mr. Cheung was a
member of the University of Hong Kong Council, Chairman of the University of Hong
Kong School of Professional and Continuing Education, Chairman of Asia Television
Limited, Deputy Chairman of PCCW Limited, Independent Non-Executive Directors of
Taikang Life Insurance Company Limited and Sotheby's, as well as President of the
Chartered Institute of Marketing (Hong Kong Region). Prior to the merger of Pacific
Century Cyberworks Limited and Hong Kong Telecom Limited, Mr. Cheung was the
Chief Executive of Hong Kong Telecom Limited and an Executive Director of Cable &
Wireless plc in the United Kingdom. Mr. Cheung worked at Cathay Pacific Airways for
23 years, leaving as Deputy Managing Director. He was appointed an Official Justice
of the Peace in 1990 and a Non-official Justice of the Peace in 1992. Mr. Cheung
received a bachelor's degree in social sciences and a diploma in management studies
from the University of Hong Kong. He is also an Honorary Fellow of the University of
Hong Kong and of The Chartered Institute of Marketing in the United Kingdom.
China Unicom (Hong Kong) LimitedDIRECTORS AND SENIOR MANAGEMENT 37
WONG WAI MING
Independent Non-Executive Director
Aged 66, was appointed in January 2006 as an Independent Non-Executive Director
of the Company. Mr. Wong is Executive Vice President and Chief Financial Officer of
Lenovo Group Limited (listed on the Hong Kong Stock Exchange). Mr. Wong was
previously an investment banker with over 15 years of experience in investment
banking business in Greater China and was a member of the Listing Committee of
The Stock Exchange of Hong Kong Limited. Mr. Wong is a chartered accountant and
holds a bachelor's degree (with Honors) in management science from the Victoria
University of Manchester in the United Kingdom.
Annual Report 2023 38
CHUNG SHUI MING TIMPSON
Independent Non-Executive Director
Aged 72, was appointed in October 2008 as an Independent Non-Executive Director
of the Company. Mr. Chung is the Pro-Chancellor of the City University of Hong Kong.
Besides, Mr. Chung is an Independent Non Executive Director of The Miramar Hotel
and Investment Company, Limited, China Overseas Grand Oceans Group Limited,
China Everbright Limited, China Railway Group Limited, Orient Overseas
(International) Limited and Postal Savings Bank of China Co., Limited (all listed on the
Hong Kong Stock Exchange). From October 2004 to October 2008, Mr. Chung served
as an Independent Non-Executive Director of China Netcom Group Corporation
(Hong Kong) Limited. Formerly, he was the Chairman of China Business of Jardine
Fleming Holdings Limited and the Deputy Chief Executive Officer of BOC
International Limited. He was also the Director-General of Democratic Alliance for
the Betterment and Progress of Hong Kong, the Chairman of the Advisory
Committee on Arts Development, the Chairman of the Council of the City University
of Hong Kong, the Chairman of the Hong Kong Housing Society, a member of the
Executive Council of the Hong Kong Special Administrative Region, the Vice
Chairman of the Land Fund Advisory Committee of Hong Kong Special Administrative
Region Government, a member of the Managing Board of the Kowloon-Canton
Railway Corporation, a member of the Hong Kong Housing Authority, a member of
the Disaster Relief Fund Advisory Committee, a member of the National Committee
of the 10th to 13th Chinese People's Political Consultative Conference, an
Independent Non-Executive Director of Henderson Land Development Company
Limited, Nine Dragons Paper (Holdings) Limited, China Construction Bank
Corporation, Jinmao Hotel and Jinmao (China) Hotel Investments and Management
Limited and Glorious Sun Enterprises Limited, an Independent Director of China
Everbright Bank Company Limited and China State Construction Eng. Corp. Ltd. and
an Outside Director of China Mobile Communications Corporation and China COSCO
Shipping Corporation Limited. Mr. Chung holds a bachelor of science degree from
the University of Hong Kong and a master's degree in business administration from
the Chinese University of Hong Kong. Mr. Chung also received an honorary doctoral
degree in Social Science from the City University of Hong Kong in 2010. Mr. Chung is
a fellow member of the Hong Kong Institute of Certified Public Accountants.
China Unicom (Hong Kong) LimitedDIRECTORS AND SENIOR MANAGEMENT 39
LAW FAN CHIU FUN FANNY
Independent Non-Executive Director
Aged 71, was appointed in November 2012 as an Independent Non-Executive
Director of the Company. Mrs. Law is currently a Director of the Fan Family Trust
Fund and the Honorary Principal of Ningbo Huizhen Academy. Besides, Mrs. Law is
an Independent Non-Executive Director of Nameson Holdings Limited, Minmetals
Land Limited, China Taiping Insurance Holdings Company Limited and New World
Development Company Limited (all listed on the Hong Kong Stock Exchange). Mrs.
Law served as a Member of the Executive Council of the Government of the Hong
Kong Special Administrative Region ("HKSAR"), a Deputy of HKSAR to the National
People's Congress of the People's Republic of China, Chairman of the Board of
Directors of Hong Kong Science and Technology Parks Corporation, an Independent
Non-Executive Director of DTXS Silk Road Investment Holdings Company Limited and
CLP Holdings Limited and an External Director of China Resources (Holdings) Co.,
Limited. Prior to her retirement from the civil service in 2007, Mrs. Law was the
Commissioner of the Hong Kong Independent Commission Against Corruption.
During her 30 years as an Administrative Officer, Mrs. Law has worked in many
fields, including medical and health, economic services, housing, land and planning,
home affairs, social welfare, civil service, transport and education. Mrs. Law
graduated from the University of Hong Kong with an Honours degree in Science, and
in 2009 was named an outstanding alumnus of the Science Faculty of the University
of Hong Kong. She received a Master degree in Public Administration from Harvard
University and was named a Littauer Fellow of Harvard University. She also holds a
Master degree in Education from the Chinese University of Hong Kong and is a
Fellow of The Hong Kong Institute of Directors.
Annual Report 2023 40
CORPORATE
GOVERNANCE REPORT
The Board believes that a healthy corporate culture is the core of good corporate
governance. China Unicom persistently enhances the development of corporate
culture, and insists on strengthen and solidify, preserve and innovate, and integrate
and open, deeply implements the strategies to build a strong enterprise, i.e. via
technology, talent, reform, digital and smart transformation, and brand, in order to
accelerate becoming a world-class technology service enterprise with global
competitiveness. China Unicom plays the role of the leading contributor of digital
information operation and services and the pioneer of digital technology integration
and innovation. It nurtures an excellent corporate culture and consistently promotes
the core values of “Customer-oriented, Employee-friendly, Attentive to quality service,
Inherently innovative, Proud of endeavours, Adhering to integrity”. It also adheres to
the corporate style of “Rigorous, Pragmatic, Skillful, Meticulous, Efficient”. The
management philosophy of “Create value for customers, Dually driven by market and
innovation, One China Unicom with integrated capabilities and operating services” has
been established. The penetration and integration of China Unicom’s corporate culture
philosophy into production and operation, integrating the corporate culture into the
entire process of production, operation and management, which help enhancing and
improving the operational effectiveness and management efficiency while ensuring
the ideal corporate culture has been reflected in the company’s strategies, business
models and operating practices.
China Unicom (Hong Kong) Limited 41
The Board is committed to high standards of corporate
performing overall corporate governance duties. The
governance and recognises that good governance is vital
Company has adopted a Corporate Governance Practice
for the long-term success and sustainability of the
which sets out the key terms of reference of the Board
Company’s business. The Board will persistently
on corporate governance functions, including, amongst
enhance the corporate governance of the Company by
others, developing and reviewing the Corporate
promoting corporate culture philosophy and core values
Governance Policy and corporate governance practices
at all levels of the Company. We hope all our executives,
of the Company; reviewing and monitoring the training
management and employees would implement the
and continuous professional development of Directors
practice and integrate “integrity and self-discipline,
and senior management; reviewing and monitoring the
uphold integrity and anti-corruption” into the
Company’s policies and practices on compliance with
ideological foundation to serve as the basic code of
legal and regulatory requirements; developing,
conduct for practitioners, while complying with laws and
reviewing and monitoring the code of conduct and
regulations, operates in compliance with regulations
compliance manual applicable to employees and
and be honest and self-disciplined. And adhering to the
Directors; and reviewing the Company’s compliance
ethical concept and code of conduct of honesty,
with the Corporate Governance Code and the disclosure
trustworthiness and due diligence, and strive to
in “Corporate Governance Report”.
maximize the interests of customers, shareholders,
employees and society. The scope of the relevant basic
In 2023, the Company’s continuous efforts in corporate
code of conduct covers matters related to legislation,
governance gained wide recognition from the capital
regulation and ethics, including but not limited to
markets and the Company was accredited with a
principles of honesty and trustworthiness, conflict of
number of awards. The Company was voted as “Asia’s
interest, handling of stakeholder relations, information
Most Honored Telecom Company” for eight years in a
disclosure and confidentiality, protection of company
row in “2023 All-Asia Executive Team” ranking organised
assets, reporting and punishment. As a company
by the authoritative financial magazine, Institutional
incorporated in Hong Kong, the Company adopts the
Investor. Meanwhile, the Company was also honored
Companies Ordinance (Chapter 622 of the Laws of Hong
with “Asia’s Best Board (Telecoms)” and “Asia’s Best IR
Kong), the Securities and Futures Ordinance of Hong
Kong and other related laws and regulations as the basic
Team (Telecoms)”. The Company was voted as “Best
Overall Company in China — Gold” in “Asia’s Best
guidelines for the Company’s corporate governance. As
Managed Companies Poll 2023” organised by
a company listed in Hong Kong, the current articles of
FinanceAsia, an authoritative financial magazine. The
association are in compliance with the Rules Governing
Company was awarded “Asia’s Best CSR” by Corporate
the Listing of Securities on The Stock Exchange of Hong
Kong Limited. These rules serve as guidance for the
Governance Asia. The Company was accredited with
“Platinum Award — Excellence in Environmental, Social,
Company to improve the foundation of its corporate
and Governance” in “The Asset ESG Corporate Awards
governance, and the Company strives to comply with
2023”. The Company was awarded “ESG Leading
the relevant requirements of international and local
Enterprise” in “ESG Leading Enterprise 2023” by
corporate governance best practices. The Company has
Bloomberg Businessweek and Deloitte.
regularly published statements relating to its risk
management and internal control in accordance with
Part 2 of the Corporate Governance Code as set out in
relevant regulatory requirement to confirm its
Appendix C1 of the Rules Governing the Listing of
compliance with related risk management and
Securities on The Stock Exchange of Hong Kong Limited
corporate internal control requirements and other
(the “Hong Kong Stock Exchange”) (the “Listing Rules”)
regulatory requirements. The Board is responsible for
provides for code provisions (the “Code Provisions”) and
Annual Report 2023 42
recommended best practices with respect to (i) corporate purpose, strategy and governance, (ii) board composition
and nomination, (iii) directors’ responsibilities, delegation and board proceedings, (iv) audit, internal control and risk
management, (v) remuneration and (vi) shareholders engagement. Other than the disclosures made in the section
headed “Board of Directors” below, the Company confirms that for the year ended 31 December 2023, it complied
with all the Code Provisions.
BOARD OF DIRECTORS
To serve the best interests of the Company and its shareholders, the Board is responsible for reviewing and
approving major corporate matters, including, amongst others, business strategies and budgets, major investments,
capital market operations, as well as mergers and acquisitions. The Board is also responsible for monitoring risk
management and internal control, reviewing environmental, social and governance strategies, reviewing and
approving the announcements periodically published by the Company regarding its business results and operating
activities. There is no financial, business, family or other material/relevant relationship(s) between the Board
members.
In order to achieve a sustainable and balanced development, the Company views Board diversity as a key element for
supporting its strategic goals and maintaining sustainable development. The Board membership maintains wide
representation. Members of the Board consist of outstanding individuals from different professions. Currently, the
Board comprises seven Directors, including three executive Directors and four independent non-executive Directors.
Particulars of the Directors are set out on pages 28 to 39 of this annual report. The Company believes that the Board
currently comprises experts from diversified professions such as telecommunications, technology, banking, finance,
investment and management, and is diversified in terms of gender, age, duration of service, educational background,
professional experience, etc., which contributes to the enhanced management standard and more regulated
operation of corporate governance of the Company, and results in a more comprehensive and balanced Board
structure and decision-making process.
The below sets out the analysis of the current composition of the Board:
DESIGNATION
GENDER
3 Executive
Directors 4 Independent
Non-Executive
Directors
5 Male 2 Female
AGE GROUP
DURATION OF SERVICE
(YEAR)
2 45-54
155-64
4 >65
3 <5
4 >10
China Unicom (Hong Kong) LimitedCORPORATE GOVERNANCE REPORT 43
The roles and responsibilities of the Chairman and the
disclosed in this annual report, do not have any business
Chief Executive Officer of the Company were performed
with or financial interests in the Company, its holding
by the same individual for the year ended 31 December
company or subsidiaries, and have confirmed their
2023. The Company considers that, as all major
independence to the Company upon appointment and
decisions are made by the Board and relevant Board
annually. The Company considers that all independent
Committees after discussion, through supervision by the
non-executive Directors are currently independent. Such
Board and the independent non-executive Directors
mechanisms enable independent views and inputs are
together with effective internal control mechanism, the
available to the Board in an effective way, and the Board
Company has achieved a balance of power and
will review the implementation and effectiveness of
authority. In addition, the same individual performing
such mechanisms on an annual basis. The functions of
the roles of the Chairman and the Chief Executive
non-executive Directors include, amongst other things,
Officer can enhance the Company’s efficiency in
attending board meetings, exercising independent
decision-making and execution, effectively capturing
judgements at meetings, playing a leading role in
business opportunities.
resolving any potential conflicts of interest, serving on
committees by invitation and carefully examining
For the year ended 31 December 2023, the Company
whether the performance of the Company has reached
h a d 4 i n d e p e n d e n t n o n - e x e c u t i v e D i r e c t o r s
the planned corporate targets and objectives, and
representing over one-third of the Board with 2
monitoring and reporting on matters relating to the
independent non-executive Director possessing
performance of the Company. With respect to the
appropriate professional accounting or related financial
nomination and appointment of new directors and
management expertise as required under Rule 3.10 of
senior management members and the succession
the Listing Rules. All independent non-executive
planning for Directors, the Nomination Committee
Directors of the Company possess good knowledge and
would, after considering the Company’s need for new
experience in different areas. The Company has
directors and/or senior management members, identify
established various channels for independent non-
a wide range of candidates from within the Company
executive Directors to express their views in an open
a n d t h e h u m a n r e s o u r c e s m a r k e t a n d m a k e
and honest manner and, if necessary, in a confidential
recommendations to the Board. The Nomination
manner. The independent non-executive Directors have
Committee will consider candidates on merit against
been making positive contributions to the development
objective criteria and with due regard to the benefits of
of the Company’s strategies and policies through
diversity on the Board, including but not limited to
independent, constructive and informed advice. Apart
gender, age, cultural and educational background,
from the regular Board meeting, the Chairman meets
professional experience, skills, knowledge and duration
annually with independent non-executive Directors,
of service. After having obtained the consent from
without the presence of other Directors, which further
candidates in relation to the relevant nomination and
promotes the exchange of diversified views and
based on the Company’s actual needs, the Board would
opinions. Independent non-executive Directors have
convene a meeting, attendees of which include non-
maintained close contact with the management and
executive Directors, to consider the qualifications of the
actively express constructive opinions on matters
candidates. The Directors of the Company (including
relating to corporate governance, operation
non-executive Directors) are not appointed for a specific
management, risk prevention and the capital market at
term. However, pursuant to the Company’s articles of
board meetings. These views and opinions facilitate the
association, one-third of the directors shall retire from
Board in making their decisions in the shareholders’ best
office by rotation and shall be eligible for re-election at
interests. All independent non-executive Directors,
each annual general meeting.
except for their equity interests and remuneration
Annual Report 2023 44
Every newly appointed Director is provided with a comprehensive, formal and tailored induction on appointment,
including but not limited to the “Guidelines on Directors’ Duties” published by the Hong Kong Companies Registry
and the “Guidelines for Directors” published by the Hong Kong Institute of Directors. Directors have fiduciary
responsibilities to the Company. They must not exercise their powers for improper purposes. They must not use the
Company’s opportunities to serve their own interests. Their personal interests are not allowed to conflict with the
Company’s interests, and they must not abuse the Company’s assets. The Director would subsequently receive all
briefing and professional development necessary to ensure that he/she has proper understanding of the Company’s
operations and businesses, full understanding of his/her responsibilities under the statutes, the common law, the
Listing Rules, applicable legal and regulatory requirements, and the Company’s business and corporate governance
policies. Furthermore, formal letters of appointment setting out the key terms and conditions of the Directors’
appointment will be duly prepared.
Directors’ training is an ongoing process. The Company regularly invites various professionals to provide trainings on
the latest changes and development of the legal and regulatory requirements as well as the market and/or industrial
environment to Directors. In 2023, the Directors as at 31 December 2023 have participated in various training and
continuous professional development activities and the summary of which is as follows:
Executive Director
Chen Zhongyue (Chairman)
Wang Junzhi
Li Yuzhuo
Independent Non-Executive Director
Cheung Wing Lam Linus
Wong Wai Ming
Chung Shui Ming Timpson
Law Fan Chiu Fun Fanny
Types of training
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A:
attending relevant seminars and/or conferences and/or forums; delivering speeches at relevant seminars and/or
conferences and/or forums
B:
reading or writing relevant newspapers, journals and articles relating to general economy, general business,
telecommunications, corporate governance, business ethics or directors’ duties
China Unicom (Hong Kong) LimitedCORPORATE GOVERNANCE REPORT
45
The Company has determined remuneration policy. The
dividends, major investments, equity-related capital
proposed remuneration package of Directors of the
market operations, mergers and acquisitions, major
Company will be determined by the Remuneration
connected transactions and annual internal control
Committee, subject to approval by the Board and in
evaluation. The arrangements on delegation of powers
compliance with applicable laws, regulations and
and responsibilities to management are reviewed by the
policies, and taking into account the responsibilities of
Board periodically to ensure that they remain
such person in the Company, his experience and
appropriate to the needs of the Company.
performance as well as the prevailing market
conditions. The remuneration package for executive
The Board convenes meetings regularly and all Directors
Directors includes salary and performance-linked annual
have adequate opportunity to be present at the
bonuses. The remuneration of executive Directors is
meetings and to include matters for discussion in the
determined by reference to their respective duties and
meeting agenda. Notices of regular board meetings are
responsibilities in the Company, their respective
delivered to the Directors at least 14 days in advance of
experience, prevailing market conditions and applicable
the meetings. The Company delivers, on a best
regulatory requirements while the award of the
endeavor basis, all documents for regular board
performance-linked annual bonuses is tied to the
meetings to the Directors for review at least one week
attainment of key performance indicators or targets set
prior to the meetings (and ensures that all documents
by the Company. The remuneration of non-executive
are delivered to the Directors no less than three days
Directors is determined by reference to prevailing
prior to the regular meetings as required by the Code
market conditions and their respective responsibilities
Provisions).
and workload from serving as non-executive Directors
and members of the board committees of the Company.
The Company Secretary, being an employee of the
The Company also adopted share option scheme for the
Company, has day-to-day knowledge of the Company’s
purpose of providing long term incentives to eligible
affairs and reports to the Chairman of the Board. The
participants, including Directors (details of such share
Company Secretary keeps close contact with all
option scheme are set out in the paragraph headed
Directors and ensures that the operation of the Board
“Share Scheme of the Company” on pages 70 to 71 of
and all board committees is in compliance with the
this annual report). The remuneration for each Director
procedures as set forth in the Company’s articles of
and the remuneration of senior management by band
association and the charters of the board committees.
are disclosed on pages 144 to 146 of this annual report.
Additionally, the Company Secretary is responsible for
In addition to the remuneration, the Company has
compiling and regularly submitting draft minutes of
arranged appropriate insurance coverage in respect of
board meetings and committee meetings to the
legal action against the Directors.
Directors and committee members for their review and
comments, and final versions of minutes for their
The Board has provided clear guidelines for delegation
records, within a reasonable time after the relevant
of powers and responsibilities to management.
meetings. Each Director may obtain advice from and the
However, certain important matters must be decided
services of the Company Secretary to ensure that board
only by the Board, including, but not limited to, long-
procedures, and all applicable rules and regulations, are
term objectives and strategies, annual budget, initial
followed.
announcements on quarterly, interim and final results,
Annual Report 2023 46
Physical board meetings will be held for the selection,
annually with independent non-executive Directors,
appointment or dismissal of the Company Secretary. To
without the presence of other Directors, which further
ensure the possession of up-to-date knowledge and
promotes the exchange of diversified views and
market information to perform her duties, the Company
opinions. In order to ensure that all Directors have
Secretary attended over 15 hours of professional
appropriate knowledge of the matters discussed at the
training in 2023.
meetings, adequate, accurate, clear, complete and
reliable information regarding those matters is provided
The Directors may, upon request, obtain independent
in advance and in a timely manner, and all Directors
professional advice at the expense of the Company. In
have the right to inspect documents and information in
addition, if any substantial shareholder of the Company
relation to matters to be decided by the Board. The
or any Directors has significant conflicts of interest in a
Directors have frequently visited various branches in
matter to be resolved, the Board will convene a board
Mainland China to gain better understanding of the
meeting in respect of such matter and those Directors
Company’s daily operations. In addition, the Company
who have conflicts of interest must abstain from voting
has arranged relevant trainings for the Directors (which
and will not be counted in the quorum of the meeting.
include training sessions conducted by professional
advisers, such as lawyers and accountants, from time to
All Directors are required to devote sufficient time and
time) in order to broaden their knowledge in the
attention to the affairs of the Company. A culture of
relevant areas and to improve their understanding of
openness and debate are promoted in the Board and
the Company’s business, legal and regulatory
the Directors are encouraged to express their views and
requirements and the latest operational technologies.
concerns. The Company provides monthly operating
The Board also conducts annual evaluation of its
update to the Directors, so as to ensure the Directors
performance. Such efforts have improved the corporate
are familiar with the Company’s latest operations. In
governance of the Company.
addition, through regular board meetings and reports
from management, the Directors are able to clearly
In 2023, the Board held four board meetings and passed
understand the operations, business strategy and latest
one written resolution for, amongst other things,
development of the Company and the industry. Besides
discussion and approval of important matters such as
formal board meetings, the Chairman also meets
the 2022 annual results, the 2023 annual budget, the
China Unicom (Hong Kong) LimitedCORPORATE GOVERNANCE REPORT 47
2023 interim results, the first and the first three quarters results for 2023, sustainability report, reports on risk
management and internal control, amendment of the articles of association, and the amendment of the
remuneration committee charter, appointment of chairman and chief executive officer, appointment of senior vice
president.
Set forth below is an overview of the attendance during the year of 2023 by the Board members at various meetings:
Meetings Attended/Held During Each Director’s Tenure
Audit
Remuneration
Nomination
Board
Meeting
Committee
Committee
Committee
Shareholders
Meeting
Meeting
Meeting
Meeting
Executive Directors
Chen Zhongyue (Chairman)1
Liu Liehong2
Wang Junzhi
Li Yuzhuo
Independent Non-Executive Directors
Cheung Wing Lam Linus
Wong Wai Ming
Chung Shui Ming Timpson
Law Fan Chiu Fun Fanny
4/4
2/2
3/4
3/4
4/4
3/4
4/4
4/4
N/A
N/A
N/A
N/A
4/4
3/4
4/4
4/4
N/A
N/A
N/A
N/A
1/1
0/1
1/1
N/A
N/A
1/1
N/A
N/A
N/A
N/A
1/1
1/1
0/1
1/1
0/1
1/1
1/1
1/1
1/1
1/1
Note 1: On 2 December 2023, Mr. Chen Zhongyue was appointed as the Chairman and Chief Executive Officer of the
Company and has ceased to serve concurrently as the President of the Company.
Note 2: On 30 July 2023, Mr. Liu Liehong resigned as executive Director of the Company and ceased to serve as the
Chairman and Chief Executive Director of the Company.
Note 3: Certain Directors (including non-executive Director) did not attend the shareholders meeting and meetings of the
Board and Committees due to other business commitments or being overseas.
In 2023, the Board performed their fiduciary duties and devoted sufficient time and attention to the affairs of the
Company. The Board works effectively and performs its responsibilities efficiently with all key and appropriate issues
being discussed and approved in a timely manner.
Annual Report 2023
48
The Company has adopted the “Model Code for
Audit Committee Composition
Securities Transactions by Directors of Listed Issuers” as
Currently the Audit Committee comprised Mr. Wong
set out in Appendix C3 to the Listing Rules (the “Model
Wai Ming, Mr. Cheung Wing Lam Linus, Mr. Chung Shui
Code”) to govern securities transactions by directors.
Ming Timpson and Mrs. Law Fan Chiu Fun Fanny, all
Further to the specific enquiries made by the Company
being independent non-executive Directors of the
to the Directors, all Directors have confirmed their
Company. The Chairman of the Audit Committee is Mr.
compliance with the Model Code for the year ended 31
Wong Wai Ming. All members of the Audit Committee
December 2023.
have satisfied the “independence” requirements in
relation to an Audit Committee member under
The Directors acknowledge their responsibilities for
applicable laws, regulations and rules. The Chairman of
preparing the financial statements for the year ended 31
the Audit Committee is an accountant with expertise
December 2023, which give a true and fair view of the
a n d e x p e r i e n c e i n a c c o u n t i n g a n d f i n a n c i a l
financial position of the Company as at the statement of
management. Another member of the Audit Committee
financial position date and financial performance and
is also an accountant with extensive accounting
cash flows of the Company for the year ended the
professional experience.
statement of financial position date, are properly
prepared on the going concern basis in accordance with
Major Responsibilities
relevant statutory requirements and applicable financial
The primary responsibilities of the Audit Committee
reporting standards. A statement of the independent
include: as the key representative body, overseeing the
auditors about their reporting responsibilities related to
Company’s relationship with the independent auditor,
the financial statements is set out in the independent
considering and approving the appointment, resignation
auditor’s report on pages 88 to 92 of this annual report.
and removal of the independent auditor; pre- approval
of services and fees to be provided by the independent
COMMITTEES UNDER THE BOARD
The Company has established three committees of the
auditor based on the established pre-approval
framework; supervising the independent auditor and
Board under the Board, the Audit Committee, the
determining the potential impact of non-audit services
Remuneration Committee and the Nomination
on such auditor’s independence; reviewing quarterly
Committee. Each committee has a written charter,
and interim financial information as well as annual
which is available on the websites of the Company and
financial statements; coordinating and discussing with
The Stock Exchange of Hong Kong Limited. From time to
the independent auditor with respect to any issues
time as required by the Listing Rules, the Board also
identified and recommendations made during the
establishes independent board committee for the
audits; reviewing correspondences from t he
p u r p o s e o f a d v i s i n g a n d p r o v i d i n g v o t i n g
independent auditor to the management and responses
recommendations to independent shareholders on
of the management; discussing the risk management
connected transactions and transactions subject to
and internal control system with the management as
independent shareholders’ approval entered into by the
well as reviewing the reports on the risk management
Company and/or its subsidiaries. The committees are
and internal control procedures of the Company. The
provided with sufficient resources, including, amongst
Audit Committee set up a whistle-blowing system to
others, obtaining independent professional advice at the
receive and handle cases of complaints regarding the
expense of the Company, to perform their duties. The
Company’s financial reporting, internal control or other
committees report their decisions or recommendations
matters. The whistle-blowers can use, in confidence and
to the Board after meetings.
anonymity, to raise concerns about possible
China Unicom (Hong Kong) LimitedCORPORATE GOVERNANCE REPORT 49
improprieties in any matter related to the Company
the financial statements and ensure the Company’s
through whistle- blowing channels. Any complaints on
compliance with the relevant requirements of the
the aforementioned subject matters can be submitted
Listing Rules with respect to audit committee.
by post (No. 21 Financial Street, Xicheng District, Beijing,
100033, China) or by phone (86-(010) 88091674). The
Remuneration Committee Composition
Audit Committee is responsible to and regularly reports
Currently the Remuneration Committee comprised Mr.
its work to the Board.
Work Completed in 2023
Cheung Wing Lam Linus, Mr. Wong Wai Ming and Mr.
Chung Shui Ming Timpson, all being independent non-
executive Directors of the Company. The Chairman of
T h e A u d i t C o m m i t t e e m e e t s t h e B o a r d a n d
the Remuneration Committee is Mr. Cheung Wing Lam
management as well as independent auditor at least
Linus.
four times each year, and assists the Board in its review
of the financial statements to ensure effective risk
Major Responsibilities
management and internal control as well as efficient
The primary responsibilities of the Remuneration
audit. Besides, the Audit Committee meets the
Committee include: making recommendations to the
independent auditor at least two times each year,
Board on the policies and structure for all Directors’ and
without the presence of other Directors and
senior management’s remuneration and on the
management.
establishment of a formal and transparent procedure
for developing remuneration policy; reviewing and
The Audit Committee held four meetings in 2023 for,
approving the management’s remuneration proposals
amongst other things, discussion and approval of the
with reference to the corporate goals and objectives set
2022 annual results, the 2023 interim results, and the
by the Board; making recommendations to the Board on
first and the first three quarters results for 2023. In
the remuneration packages of individual executive
addition, the Audit Committee approved in the
Directors and senior management (including benefits in
meetings the sustainability report, the report of the
kind, pension right and compensation payments,
work of sustainability, the report on risk management,
including any compensation payable for loss or
the report on internal audit and internal control, the
termination of their office or appointment); making
report on continuing connected transaction, the
recommendations to the Board on the remuneration of
appointment, the audit fees and the audit plans of the
non-executive Directors; consulting the Chairman about
independent auditor as well as the non-audit services
the remuneration proposals for other executive
provided by the independent auditor in 2023.
Directors; considering salaries paid by comparable
companies, time commitment and responsibilities and
The Audit Committee has performed its duties
employment conditions elsewhere in the Group;
effectively, and enabled the Board to better monitor the
considering any concrete plan proposed by the
financial condition of the Company, supervise the risk
management of the Company for the grant of share
management and internal control (included but not
which has not been granted, and any plan to amend any
limited to operational, financial, compliance,
existing share scheme of the Company; reviewing and
environmental, social and governance) of the Company,
approving compensation payable to executive Directors
ensure the integrity and reliability of the financial
and senior management for any loss or termination of
statements of the Company, prevent significant errors in
office or appointment to ensure that it is consistent with
Annual Report 2023 50
c o n t r a c t u a l t e r m s ; r e v i e w i n g a n d a p p r o v i n g
recommendations on any proposed changes to the
compensation arrangements relating to dismissal or
Board to complement the corporate strategy of the
removal of Directors for misconduct to ensure that they
Company; identifying individuals suitably qualified to
are consistent with contractual terms; and ensuring that
become Board members and making recommendations
no Director or any of his/her associates is involved in
to the Board; formulating, reviewing and implementing
deciding his/her own remuneration.
the board diversity policy; assessing the independence
Work Completed in 2023
of independent non-executive Directors; making
recommendations to the Board on the appointment or
The Remuneration Committee meets at least once a
re- appointment of Directors and succession planning
year. The Remuneration Committee held one meeting in
for Directors; providing advice to the Board on
2023 for, amongst other things, discussion and approval
candidates of the senior management nominated by the
of proposal for appraisal and remuneration of senior
CEO and on changes to the senior management of the
management, the amendment of remuneration
Company.
committee charter.
Work Completed in 2023
The Remuneration Committee has performed its duties
The Nomination Committee meets at least once a year.
effectively on reviewing and approving the proposal of
The Nomination Committee held one meeting and
appraisal of senior management, as well as making
passed one written resolutions in 2023 for, amongst
recommendations to the Board with regards to the
other things, reviewing the structure, size and
remuneration packages for senior management.
composition of the Board, reviewing the board diversity
policy and its implementation, assessment of the
Nomination Committee Composition
independence of independent non-executive Directors,
Currently the Nomination Committee comprised Mr.
making recommendations to the Board on the proposed
Chung Shui Ming Timpson, Mr. Chen Zhongyue and Mrs.
re-election of Directors and the appointment of
Law Fan Chiu Fun Fanny. Except for Mr. Chen Zhongyue,
executive Directors.
who is the Chairman and CEO of the Company, Mr.
Chung Shui Ming Timpson and Mrs. Law Fan Chiu Fun
The Company has determined nomination policy. With
Fanny are independent non-executive Directors of the
respect to the nomination and appointment of new
Company. The Chairman of the Nomination Committee
directors and senior management members and the
is Mr. Chung Shui Ming Timpson.
succession planning for directors, the Nomination
Major Responsibilities
Committee would, after considering the Company’s
need for new directors and/or senior management
The primary responsibilities of the Nomination
members, identify a wide range of candidates from
Committee include: reviewing the structure, size and
within the Company and the human resources market
composition (including the skills, knowledge and
and make recommendations to the Board. The
experience) of the Board at least annually and making
Nomination Committee will consider candidates on
China Unicom (Hong Kong) LimitedCORPORATE GOVERNANCE REPORT 51
merit against objective criteria and with due regard to
and contribution that the selected candidates will bring
the benefits of diversity on the Board, including but not
to the Board. The Board and the Nomination Committee
limited to gender, age, cultural and educational
review the board diversity policy as well as its
background, professional experience, skills, knowledge
implementation and effectiveness every year to ensure
and duration of service. After having obtained the
that the board diversity policy continues to serve its
consent from candidates in relation to the relevant
purpose. Currently the Board comprises seven
nomination and based on the Company’s actual needs,
members, amongst which two members, accounting for
the Board would convene a meeting, attendees of which
29% of the whole Board, are female directors. The
include non-executive Directors, to consider the
Board considers that gender diversity is achieved in
qualifications of the candidates. Pursuant to the
respect of the Board, and targets to maintain at least the
Company’s articles of association, one-third of the
current level of female representation. In addition, the
Directors shall retire from office by rotation and be
gender proportion (Male/Female) of all employees of
eligible for re- election at each annual general meeting.
the Company is 1.62:1. The female representation in
senior management has continuously increased, from
The Company has also determined a policy concerning
11.9% in 2019 to 12.3% in 2023. The Company targets to
diversity of board members. The Company recognises
maintain at least the current level of female
and embraces the benefits of having a diverse Board,
representation in the workforce (including senior
and notes increasing diversity at Board level as an
management). The Company is not aware of any
essential element in maintaining a competitive
mitigating factors or circumstances which make
advantage. All Board appointments are made on merit
achieving gender diversity across the workforce
on a selective basis, in the context of the skills and
(including senior management) more challenging or less
experience the Board as a whole requires to be
relevant. The Company strictly implemented the
effective. In reviewing Board composition, the
relevant provisions of the Labour Contract Law, adopted
Nomination Committee will consider their professional
strict inspection and control procedures in recruitment
knowledge, skills, experience and the balance of
a n d p r o m o t i o n a n d s t r i c t l y p r o h i b i t e d a n y
diversity of perspectives which are appropriate to the
discrimination against employees in terms of age and
Company’s business model and specific needs. In
gender. The Company also ensures that the recruitment
identifying suitable candidates for appointment to the
and selection practices at all levels are appropriately
Board, the Nomination Committee will give due regard
structured so that a diverse range of candidates are
to the benefits of diversity on the Board and base on a
considered. The Company cares about female
range of diversity perspectives including but not limited
employees. It protected the rights and interests of
to gender, age, cultural and educational background,
female employees and provided targeted and
professional experience, skills, knowledge and duration
considerate services to them, to retain the female
of service. The ultimate decision will be based on merit
talents.
Annual Report 2023 52
In addition, pursuant to the Company’s articles of association, shareholder may propose other person for election as
a director at general meeting. The proposal will be considered and approved in the general meeting. With regard to
the procedure for shareholder to propose a person for election as a director, please visit the Company’s website at
https://www.chinaunicom.com.hk/en/esg/cg_report.php.
INDEPENDENT AUDITOR
Deloitte Touche Tohmatsu is the independent auditor of the Company. Apart from audit services, it also provides
other assurance and non-audit services. The audit committees supervised the independent auditor and determined
the potential impact of non-audit services on such auditor’s independence, and pre-approved the services and fees to
be provided by the independent auditor based on the established pre-approval framework. The remuneration paid/
payable to the independent auditor for provision of services in 2023 is as follows:
Items
Note
(in RMB thousands)
2023
Audit services for financial statements
Other special purpose audit and assurance services
Non-audit services
Notes:
(i)
(ii)
(iii)
44,480
10,714
15,533
(i)
Audit services for financial statements in 2023 mainly included the provision of audit service for the Company’s
consolidated financial statements, and statutory audit services for the financial statements of its subsidiaries.
(ii)
Other special purpose audit and assurance services are the audit and assurance services other than the audit
services for financial statements.
(iii)
Non-audit services included other services that can be reasonably provided by the independent auditor. In 2023,
the provisions of non-audit services mainly included tax compliance services and other advisory services.
RISK MANAGEMENT AND INTERNAL CONTROL
The Board is responsible for evaluating and determining the nature and extent of the risks it is willing to take in
achieving the Company’s strategic objectives, and ensuring that the Company establishes and maintains appropriate
and effective risk management and internal control systems (included but not limited to operational, financial,
compliance, environmental, social and governance), promotes the sustainable and healthy development of the
Company, and enhances the Company’s operation management level and risk prevention ability. The Board should
oversee management in the design, implementation and monitoring of the risk management and internal control
systems, and management should provide a confirmation to the Board on the effectiveness of these systems. The
Board acknowledges that it is its responsibility for the risk management and internal control systems and reviewing
their effectiveness.
Risk management and internal control systems have been designed to monitor and facilitate the accomplishment of
the Company’s business objectives, safeguard the Company’s assets against loss and misappropriation, ensure
maintenance of proper accounting records for the provision of reliable financial information, ensure the Company’s
compliance with applicable laws, rules and regulations. Such systems are designed to manage rather than eliminate
the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against
material misstatement or loss.
China Unicom (Hong Kong) LimitedCORPORATE GOVERNANCE REPORT
53
Organisation systems
The Company set up a group-wide risk management and internal control systems consisting of the Board, the
Internal Control and Risk Management Committee, the Integrated Management Department and each relevant
professional functional departments.
THE BOARD
Highest decision making body
AUDIT COMMITTEE
Supervision body
INTERNAL CONTROL AND
RISK MANAGEMENT
COMMITTEE
Highest coordination and
deliberation body at company
management level
COMMITTEES IN
RELATED PROFESSIONAL
The cross departmental body
of risk management in
professional fields
INTERNAL CONTROL AND
RISK MANAGEMENT OFFICE
Daily working
departments
PROFESSIONAL
FUNCTIONAL
DEPARTMENTS
Professional internal control
management and
execution departments
INTERNAL AUDIT
DEPARTMENT
Integrated risk
management and internal control
department and supervision and
evaluation department
INDEPENDENT
EXTERNAL AUDITOR
External Independent
Internal Control evaluation body
Branches and
Subsidiaries
INTERNAL CONTROL AND
RISK MANAGEMENT
COMMITTEE
Coordination and deliberation body
at company management level
INTERNAL CONTROL AND
RISK MANAGEMENT OFFICE
Daily working departments
COMMITTEES IN RELATED
PROFESSIONAL
With reference to the needs of CUCL and the
Company, the cross departmental bodies of risk
management in professional fields have been
established
PROFESSIONAL FUNCTIONAL
DEPARTMENTS
INTERNAL AUDIT
DEPARTMENT
Professional internal control management
and execution departments
Integrated risk management and internal control department and
supervision and evaluation department
Annual Report 2023 54
The Company has an internal audit department with 652
Using the risk evaluation as fundamental with the
staff members, with officers stationed at various
adoption of Internal Control Integrated Framework
provincial branches. The internal audit department
issued by the Committee of Sponsoring Organisations of
reports directly to the Audit Committee at least twice
the Treadway Commission (the “COSO”), the Company
annually and is independent of the Company’s daily
established and improved internal control systems
operation and accounting functions. The internal audit
based on the following five fundamental components:
department is responsible for overall risk evaluation,
special risk evaluation and internal control self-testing
1.
Control Environment: Establishes the control
etc. It has also formulated targeted risk prevention and
environment which fulfill COSO requirements to
control measures, conducted risk follow-up inspections
provide the appropriate operating environment
and has enhanced the risk awareness of the employees,
for the effective implementation of internal
all of which have played an active role in the Company’s
control
effective support and safeguard of its operation
management and business development. Furthermore,
2.
Risk Evaluation: Establishes the Policy on Risk
with an emphasis on the effectiveness of internal
Evaluation Management and evaluation
control with respect to the efficiency of operations,
m e c h a n i s m , e v a l u a t e s t h e r i s k s t o t h e
accuracy of financial information, and compliance with
achievement of its objectives across the
rules and regulations, the internal audit department
Company and identifies to the new risk due to
conducts, amongst others, internal control assessment
the changes
and internal audit on economic accountability. In
addition, the internal audit department also contributes
3.
Control Activities: Deploys appropriate policies
to strengthening the operation and management,
and control procedures over the Company’s
improving internal control systems, mitigating
business activities, identifies key control
operational risks and increasing the economic efficiency
procedures and policies of significant control
of the Company.
activities through evaluation
4.
Information and Communication: Identifies
relevant information and communication
m e t h o d s , e s t a b l i s h e s i n f o r m a t i o n a n d
communication mechanisms to aggregate and
delivers relevant information
5.
Monitoring Activities: Establishes the internal
control monitoring mechanism, implements the
monitoring procedures and adopted the before,
during and extensive monitoring principles, and
carries on the proper monitoring to the internal
control
China Unicom (Hong Kong) LimitedCORPORATE GOVERNANCE REPORT 55
Risk evaluation and management
that driven by the demand of Company’s high-quality
The Company has established and gradually improved
development in managing the Company’s news and
its comprehensive closed-loop risk management system
public opinions continuously. It actively expands media
for the purpose of “integrating management of day-to-
cooperation relations and guides positive public
day general risks and spontaneous critical risks”,
opinions and information, which enhances the
achieved the closed-loop management by risk
expectations and confidence of all parties for the
evaluation, early warning and follow-up inspections to
Company’s high-quality development in the capital
ensure the effectiveness of operation management. The
market.
Company evaluated the adequacy and appropriateness
on risk and control measures according to the new
Risk of high-quality development of computing and
business model, management requirement, change of
digital smart applications business
system, adjustment of duties and findings from internal
With the vigorous development of the digital economy,
and external inspections.
2023 Risk evaluation result
new technologies, new business forms and new models
continue to emerge, and the profound transformation
brought by the deep integration of the digital and real
The followings were the major significant risks which the
economies provides a broad space for the Company’s
Company encountered and its countermeasures in
innovation and transformation, improvement of core
2023:
competitiveness and sustainable development. The
Company attaches great importance to the R&D of
Network and cybersecurity risk
innovative products, strengthens the position of
Cybersecurity is an important component of national
enterprises as the main body of scientific and
security. Cybersecurity and informatisation complement
technological innovation, and increases the layout of
each other, in the sense that security is the premise of
strategic emerging industries. It plays the role of
development and development is the guarantee of
scientific and technological innovation, industrial control
security. The Company attaches great importance to
and security support, and lead the industrial
network and cybersecurity, strictly complies with the
transformation and upgrading through technological
requirements of national laws and regulations, and
innovation.
insists on serving the construction of Cyber Superpower
and Digital China. We take the maintenance of network
Risk of fixed asset investment
and cybersecurity as an important mission of
Characterised by large investment scale, wide expertise
responsibility, and are committed to serving as the
and long project management chain, the fixed asset
leading contributor of digital information operation and
investment of telecom operators effectively controls the
services and the pioneer of digital technology
investment direction, meets the business needs of the
integration and innovation.
market, and puts forward higher requirements for
Public opinion risk
improving construction efficiency and investment
efficacy. The Company attaches great importance to
With the rapid development of self-media in recent
fixed asset investment, deepens its implementation of
years, the internet has not only increased the speed of
the new digital infrastructure plan, insists on
information dissemination, but also made information
strengthening and solidifying. We reasonably control the
development more diversified and fragmented. Properly
investment scale for the purpose of accurate
managing public opinions is an important task for the
construction, efficient operation and improvement of
Company’s reform, development, production and
investment efficacy, thus driving the Company towards
operation. The Company conscientiously fulfills the
high-quality development.
mission and tasks of a central state-owned enterprise
Annual Report 2023 56
The scope of the 2023 overall risk evaluation covered
internal control assessment etc., so as to provide the
the whole Group, which included headquarter, 31
effective support for the development of the
provincial companies and its cities-level branch offices
sustainable growth of the Company. Internal Control
and subsidiaries. Through both the quantitative and
and Risk Management Office conducted inspections on
qualitative analysis, the Company fully considered the
effectiveness on risk management and internal control
changes in operating environment, business and
implementation in regular or irregular time interval,
policies, identified the potential risk to the Company’s
improved and enhanced risk management and internal
operation, and planned for the risk according to the
control designs continuously. Our Internal Audit
quantitative result. After reporting to each professional
Department has continued to organise our branches and
departments and the management, the significant risks
subsidiaries to conduct annual internal control self-
and the risk level of the year were finally determined.
assessment based on the actual conditions of each unit
The annual risk management instructions from the
and improve the quality of such self- assessment tasks,
management were implemented according to the Policy
so as to gradually develop a quantitative internal
on Risk Management and the Company’s risk
assessment regime governed by uniform standards.
management requirement. This included the
Through the effective rectification of issues identified
formulation of relevant risk management strategies,
during the audit, assessment of the internal control
solution and corresponding departments carried out
system and its implementation, improvements made to
interim follow-up inspection works. The negative
the system and process optimisation, a long-term
impacts arising from the risks and risk events were
mechanism for closed-loop management in internal
controlled as planned and were within an acceptable
control has been put in place. According to the internal
range. There were no significant control failings or
control self-assessment reports from the branches and
weaknesses that have been identified during the year.
subsidiaries, self- assessment reports from each
professional department, current year exceptional
Monitoring and Optimisation
issues in internal control discovered during internal
To ensure the effectiveness of risk management and
audit and the Company annual risk management report,
internal control designs, the Company carried out risk
the Group’s Internal Control and Risk Management
evaluation timely and compared the risk points,
Office at its headquarter formed the Company’s internal
formulated or enhanced corresponding internal control
control self-assessment report, which acted as
measures according to the change in business and
supporting document for the management to issue a
management. At the same time, the internal control
statement of the effectiveness of internal control. Based
manual will be updated timely through the assessment
on different disclosure requirements on Company’s
and review on applications on internal control workflow
internal control assessment report from different listing
modification submitted by professional departments,
regulatory body, the Company prepared internal control
risk evaluation reports and exceptional issues from
assessment report respectively.
China Unicom (Hong Kong) LimitedCORPORATE GOVERNANCE REPORT 57
As a telecommunications operator, the Company is
telecom and online fraud to consolidate corporate
subject to the laws and regulations, e.g., relevant
responsibility. The Company also devotes significant
provisions in the Cybersecurity Law of the People’s
resources to network security, data security and other
Republic of China, Data Security Law of the People’s
security measures to protect its systems and data and in
Republic of China, Personal Information Protection Law
response to the evolving cybersecurity laws and
of the People’s Republic of China and Anti-Telecom and
r e g u l a t i o n s . T h e C o m p a n y a l s o e m p l o y s r i s k
Online Fraud Law of the People’s Republic of China,
management and internal control systems. including,
designed to protect critical information infrastructure.
among other things, (i) continuously strengthening data
Personal privacy, information security, and data
security capabilities, such as improving data encryption,
protection are increasingly significant issues in China
protection of critical information infrastructure and
and other jurisdictions in which the Company operate.
security of supply chain of the information technology
For example, Cybersecurity Law of the People’s Republic
products and services; (ii) establishing data protection
of China published in 2016 which sets forth the general
compliance policies and guidelines, including training on
framework regulating network products, equipment and
crisis management and compliance of cybersecurity
services, as well as the operation and maintenance of
laws and regulations; (iv) self-examining potential risks
information networks, the protection of personal data,
and weakness of data system and updating private
and the supervision and administration of cybersecurity
policy; (iv) enhancing the real-time monitoring and
in China. The Data Security Law of the People’s Republic
alarm reporting system and implementing an
of China and Personal Information Protection Law of the
emergency action plan to allow the Company to act
People’s Republic of China published in 2021 further
responsively and minimise losses in the event of an
regulate data and personal information processing
emergency; and (v) continuously improving compliance
activities, and protect the legitimate rights and interests
efforts through enhanced sharing of relevant knowledge
of individuals and organisations from being infringed.
internally and externally. The Company is required to
The Anti-Telecom and Online Fraud Law of the People’s
perform a security assessment when transferring
Republic of China published in 2022 which clearly stated
personal information and important data overseas if
that telecommunications, finance, and network
such personal information and important data are
institutions are the main anti-fraud entities, and carry
collected and generated from the operation in China.
out targeted system design for various aspects of
Annual Report 2023 58
Annual review
Information Disclosure Controls and Procedural
The Board oversees the Company’s risk management
Standards
and internal control systems on an ongoing basis and
In order to further enhance the Company’s system of
the Board conducted an annual review of the risk
information disclosure, and to ensure the truthfulness,
management and internal control systems of the
accuracy, completeness and timeliness of its public
Company and its subsidiaries for the financial year
disclosures (including inside information), the Company
ended 31 December 2023, which covered all material
has adopted and implemented the Information
controls including financial, operational and compliance
Disclosure Control Policy. In an effort to standardise the
controls. After receiving the reports from the Internal
principles for information disclosures, the Company
Audit Department, as well as the confirmation from the
established the Information Disclosure Review
management to the Board on the effectiveness of these
Committee under the management and formulated the
systems, the Board is of the view that the Company’s
procedures in connection with the compilation and
risk management and internal control systems is
reporting of the Company’s financial and operational
effective and adequate. The review also ensure the
statistics and other information, as well as the
adequacy of resources, staff qualifications and
procedures in connection with the preparation and
experience, training programmes and budget of the
review of the periodic reports. Moreover, the Company
Company’s accounting, internal audit, financial
established detailed implementation rules with respect
reporting function, as well as those relating to the
to the contents and requirements of financial data
Company’s ESG performance and reporting.
verification, in particular, the upward undertakings by
the individual responsible officers at the major
departments.
China Unicom (Hong Kong) LimitedCORPORATE GOVERNANCE REPORT 59
Policy and Work of Anti-corruption
foster the establishment of a good reporting order in
China Unicom always adheres to the principles of
the form of letters and visits, and continuously improve
“rigorous tone, rigorous measures and rigorous
the standardisation level of work.
environment”, promotes the idea of “deter, disable and
discourage”, promote anti-corruption and anti-
Improving the punishment mechanism: the Company
privileged, further consolidating and expanding the
further regulated the rules and regulations for
results of anti-corruption.
disciplinary actions against suspected target of illegal
Strengthening the anti-corruption system
mechanism for handling corruption cases, and
In 2023, the Company continued to strengthen the
intensified the seriousness, standardness and timeliness
crime monitoring. It strengthened the bridging
system and mechanism. We enhanced publicity and
of disciplinary actions.
enforcement efforts to resolutely curb and prevent
corruption.
Enhancing the anti-corruption efficacy: the Company
issued the Guiding Opinions on Further Strengthening
Standardising the acceptance of letters and visits: the
and Standardising the Quality Review of Cases, clarified
Company issued the Opinions on Several Issues
the evaluation standards, and promoted the fight
Concerning the Application of the Regulations on Letters
against corruption through the application of the rule of
and Visits by China Unicom Disciplinary Inspection and
law thinking and approach.
Supervision Institutions to promote the accurate
understanding of core principles and requirements,
Strengthening anti-corruption mechanisms
Strengthen risk prevention and control: China Unicom
continued to improve the integrity risk prevention and
control system, identify integrity risk points, and
enhance preventive and control measures.
Annual Report 2023 60
Strengthening supervision and restriction: China Unicom
In 2023, China Unicom provided anti-corruption
delved into the application of an all-dimensional
education and training to a total of 2.593 million person-
supervision system and strengthened daily supervision
time and achieved 100% employee coverage in anti-
around key personnel, matters and areas. The Company
corruption education activities.
detected any signs of irregularities at the earliest to nip
the buds. It explored the use of digital means to carry
out online real-time supervision and took the initiative
POLICY ON PAYMENT OF DIVIDEND
The Company is committed to sharing the fruits of its
to prevent risks in advance.
long-term development with shareholders while
continuing to promote good growth of revenue and
Deepening warning education: China Unicom produced
profit and maintaining its sustainable development
special documentaries on warning education, reported
capability. The declaration and payment of future
and exposed corrupt cases, attended court hearings as
dividends will depend upon, among other things,
observers in relevant cases and carried out special
financial condition, business prospects, future earnings,
warning education on typical cases, so as to educate and
cash flow, liquidity level and cost of capital. The
guide cadres and employees to be law-abiding, maintain
Company believes such policy will provide the
vigilance, and uphold the bottom line.
shareholders with a stable return in the long term along
with the growth of the Company. Pursuant to the
Deepening the construction of integrity culture in the
Companies Ordinance (Chapter 622 of the Laws of Hong
new era: The Company issued China Unicom’s Core
Kong) and the Company’s articles of association, the
Concepts of Integrity Culture and Integrity Code of
Company may only pay dividends out of profits available
Conduct as a means to promote the integrity culture
for distribution.
into the teams, departments, frontline units, positions,
families and partners.
China Unicom (Hong Kong) LimitedCORPORATE GOVERNANCE REPORT 61
Taking into consideration the Company’s robust
to provide them with relevant information and data of
business development, the Board recommended the
the Company. The Company’s management would
payment of a final dividend of RMB0.1336 per share for
accurately and thoroughly respond to questions raised
the year ended 31 December 2023, together with an
by analysts, fund managers, investors and journalists.
interim dividend of RMB0.203 per share already paid
Archived webcast of the investor presentation is also
during the year, total dividend for 2023 amounted to
available on the Company’s website to ensure wide
RMB0.3366 per share.
dissemination of information and data.
CORPORATE TRANSPARENCY AND
INVESTOR RELATIONS
In addition to publishing annual reports and interim
The Company’s investor relations department is
responsible for providing information and services
r e q u e s t e d b y i n v e s t o r s , m a i n t a i n i n g t i m e l y
reports, the Company discloses major unaudited
communications with investors and fund managers,
financial information (including revenue, operating
including responding to investors’ inquiries and meeting
expenses, EBITDA, net profit) an d other key
with company-visit investors, as well as gathering
performance indicators on a quarterly basis and
m a r k e t i n f o r m a t i o n a n d p a s s i n g v i e w s f r o m
announces key operational statistics on a monthly basis
shareholders to the Directors and management to
in order to enhance the Company’s transparency and
ensure such views are properly communicated. The
improve investors’ understanding of the business
Company also arranges from time to time road shows
operations of the Company.
and actively attends investor conferences arranged by
investment banks, through which the Company’s
Upon the announcement of interim and annual results
management meets and communicates with investors
or major transactions, the Company will generally hold
to provide them with opportunities to understand more
analyst briefings, press conferences, and global
accurately the Company’s latest development and
conference with investors. During such conferences, the
performance in various aspects, including business
management of the Company would interact directly
operations and management.
with analysts, fund managers, investors and journalists
Annual Report 2023 62
In 2023, the Company participated in the following investor conferences:
Date
Conferences
January 2023
January 2023
March 2023
May 2023
June 2023
September 2023
September 2023
November 2023
Credit Suisse 9th Greater China Technology and Internet Conference
UBS Greater China Conference 2023
26th Credit Suisse Asian Investment Conference
Macquarie DELTAH China Conference 2023
UBS Future-Now APAC Conference 2023
4th Annual Jefferies Asia Forum
30th CITIC CLSA Flagship Investors’ Forum
Daiwa Investment Conference Hong Kong 2023
In addition, through announcements, press releases and the Company website (www.chinaunicom.com.hk), the
Company disseminates the latest information regarding any significant business development in a timely and
accurate manner. In the perspective of investor relations, the Company’s website not only serves as an important
channel for the Company to disseminate press releases and corporate information to investors and the capital
market, but also plays a significant role in the Company’s valuation and our compliance with regulatory requirements
for information disclosure. In 2023, the Company updated the content of its website on an ongoing basis to further
enhance the functions of website and level of transparency in information disclosure, striving for achieving
international best practices. Our website was honored with the Grand Award by an international institution, “iNova
Awards”, this year.
China Unicom (Hong Kong) LimitedCORPORATE GOVERNANCE REPORT
63
Furthermore, the Company has determined a
Shareholders’ Communication Policy which has been
SHAREHOLDERS’ RIGHTS
Annual General Meeting
uploaded on the Company’s website, so as to ensure
The Board endeavors to maintain an on-going dialogue
that the shareholders of the Company are provided with
with shareholders, and in particular, to communicate
readily, equal and timely access to balanced and
with shareholders through annual general meetings.
understandable information about the Company, to
Notices of annual general meeting are sent to
enable shareholders to exercise their rights in an
shareholders at least 21 days before the meeting. The
informed manner, and to enhance the shareholders’
Directors and representatives of the Board committees
and the investment community’s communication with
usually attend the meetings and treasure the
the Company. The Company maintains as on- going
opportunities to communicate with shareholders at such
dialogue with shareholders while gathering market
meetings. The independent auditor also attends the
information and passing views from shareholders to the
annual general meeting for the reporting to
Directors and management, through the different
shareholders every year. At general meetings, the
channels as set out in the Shareholders’ Communication
chairman of the meeting proposes individual resolutions
Policy, including but not limited to corporate
in respect of each substantially separate matter. All
communications, company’s website, general meetings
matters at the Company’s general meetings are resolved
and investor conferences. The Board reviewed the
by poll and the relevant procedures are explained at the
Company’s shareholders and investor engagement and
meeting. The Company also appoints external
communication activities conducted during the year and
scrutineers to ensure that all votes are counted and
was satisfied with the implementation and effectiveness
recorded appropriately, and publishes the poll results in
of the Shareholders’ Communication Policy.
a timely manner.
The Company’s effort in investor relations is well
recognised by the capital market, and accredited with a
number of awards. The Company was voted as “Asia’s
Best IR Team (Telecoms)” in “2023 All-Asia Executive
Team” ranking organised by Institutional Investor.
Annual Report 2023 64
The last annual general meeting of the Company was
•
to grant a general mandate to issue new shares
held on 19 May 2023, at which the following resolutions
(over 96%)
were passed and percentage of votes cast in favor of the
resolutions are set out as follows:
•
to extend the general mandate to issue new
•
to receive and consider the financial statements
shares (over 96%)
and the Reports of the Directors and of the
•
to approve the proposed amendments to the
Independent Auditor for the year ended 31
Articles of Association of the Company and the
December 2022 (over 99%)
adoption of the new Articles of Association of
the Company (over 99%)
•
to declare a final dividend for the year ended 31
December 2022 (over 99%)
The next annual general meeting will be held on 30 May
2024. Please refer to the circular, which sets out the
•
to re-elect Mr. Chen Zhongyue, Mr. Wong Wai
details, that has been dispatched together with this
Ming and Mr. Chung Shui Ming Timpson as
Annual Report.
Directors, and to authorise the Board to fix
remuneration of the Directors (over 97%)
Putting Forward Resolutions at Annual General
Meetings
•
to re-appoint auditor and authorise the Board to
Pursuant to Section 615 of the Companies Ordinance
fix their remuneration for the year ending 31
(Chapter 622 of the Laws of Hong Kong), the following
December 2023 (over 99%)
persons may put forward a resolution at the next annual
general meeting of the Company: (a) any number of
•
to grant a general mandate for share buy-back
shareholders, together holding not less than 2.5% of the
(over 99%)
total voting rights of all shareholders which have, as at
the date of the requisition, a right to vote at the next
annual general meeting, or (b) not less than 50
shareholders who have a right to vote on the resolution
at the annual general meeting to which the requests
relate.
China Unicom (Hong Kong) LimitedCORPORATE GOVERNANCE REPORT 65
The resolution must be one which may be properly
Convening Extraordinary General Meetings
moved and is intended to be moved at the next annual
Pursuant to Section 566 of the Companies Ordinance
general meeting. The requisition must be signed by the
(Chapter 622 of the Laws of Hong Kong), shareholder(s)
requisitionists and deposited at the registered office of
holding not less than 5% of the total voting rights of all
the Company at least six weeks or if later, the time at
shareholders having a right to vote at general meetings
which notice is given of the annual general meeting
of the Company as at the date of deposit of the
before the annual general meeting, the Company has a
requisition, may request the Directors of the Company
duty to give notice of such proposed resolution to all
to convene an extraordinary general meeting. The
shareholders who are entitled to receive notice of the
requisition must state the objects of the meeting and
next annual general meeting.
must be signed by the requisitionists and deposited at
the registered office of the Company.
In addition, requisitionists may require the Company to
circulate to shareholders entitled to receive notice of
If the Directors do not, within 21 days from the date of
the annual general meeting a statement of not more
deposit of the requisition, proceed duly to convene a
than 1,000 words with respect to the resolution to be
meeting to be held not more than 28 days after the
proposed. However, the Company is not required to
notice of the meeting, shareholder(s) requisitioning the
circulate any statement if the court is satisfied that this
meeting, or any of them representing more than half of
right is being abused to secure needless publicity for
their total voting rights, may themselves convene a
defamatory matters. In such event, the requisitionists
meeting to be held within three months of such date.
may be ordered to pay for the Company’s expenses for
application to the court.
Meetings convened by the requisitionists must be
convened in the same manner, as nearly as possible, as
If the requisition signed by the requisitionists does not
meetings to be convened by Directors of the Company.
require the Company to give shareholders notice of a
Any reasonable expenses incurred by the requisitionists
resolution, such requisition may be deposited at the
will be reimbursed by the Company due to the failure of
registered office of the Company not less than one week
the Directors duly to convene a meeting.
before the next annual general meeting.
Annual Report 2023 66
Putting Forward Resolutions at Extraordinary General
amendments to the articles of association of the
Meetings
Company to, among other things, allow the Company to
Shareholders may not put forward resolutions to be
hold general meetings as hybrid meetings or electronic
considered at any general meetings other than annual
meeting where shareholders may attend and participate
general meetings. However, shareholders may request
by means of electronic facilities in addition to physical
an extraordinary general meeting to consider any such
attendance. The latest version of the articles of
resolution as described in “Convening Extraordinary
association of the Company is available on both the
General Meetings” above.
websites of the Company and the Hong Kong Stock
Exchange.
Any queries relating to shareholders’ rights on putting
forward resolutions at general meetings and convening
extraordinary general meetings should be directed to
the Company Secretary of the Company. Requisitions
CONTINUOUS EVOLUTION OF
CORPORATE GOVERNANCE
The Company continuously analyses the corporate
should be deposited at the Company’s registered office
governance development of international advanced
and marked for the attention of the Company Secretary.
enterprises and the investors’ desires, review and
AMENDMENTS TO THE ARTICLES OF
ASSOCIATION
To provide flexibility to the Company in relation to the
enhance corporate governance procedures and
practices from time to time so as to meet our
shareholders’ expectations, commits to high standards
of corporate governance and recognises that good
conduct of general meetings, the Company’s
governance is vital for the long-term success and
shareholders passed a special resolution at the annual
sustainability of the Company’s business.
general meeting on 19 May 2023 approving certain
China Unicom (Hong Kong) LimitedCORPORATE GOVERNANCE REPORT 67
ENQUIRY ON THE COMPANY
Shareholders may raise any enquiry on the Company at any time through the following channels:
China Unicom (Hong Kong) Limited
Address: 75th Floor, The Center, 99 Queen’s Road Central, Hong Kong
Tel
Fax
:
:
(852) 2126 2018
(852) 2126 2016
Website
: www.chinaunicom.com.hk
Email
:
ir@chinaunicom.com.hk
These contact details are also available in the “Contact Us” section on the Company’s website (www.chinaunicom.com.hk)
designated to enable shareholders to send enquiries to the Company on a timely and effective manner.
https://www.chinaunicom.com.hk
Annual Report 2023 68
REPORT OF DIRECTORS
The board of directors (the “Board”) of China Unicom
returns. If approved by shareholders at the forthcoming
(Hong Kong) Limited (the “Company”) is pleased to
annual general meeting, the 2023 Final Dividend is
present its report together with the audited financial
expected to be paid in Hong Kong dollars on or about
statements of the Company and its subsidiaries (the
26 June 2024 to those members registered in the
“Group”) for the year ended 31 December 2023.
Company’s register of members as at 7 June 2024 (the
“Final Dividend Record Date”).
PRINCIPAL ACTIVITIES
The principal activity of the Company is investment
holding. The principal activities of Company’s
FINANCIAL INFORMATION
Please refer to the Financial Summary on pages 202 to
subsidiaries are the provision of comprehensive
203 for the summary of the operating results, assets and
telecommunications services.
liabilities of the Group for the five years ended
31 December 2023.
RESULTS AND APPROPRIATION
The results of the Group for the year ended
Please refer to the financial statements on pages 93 to
31 December 2023 are set out on pages 93 to 94 of this
201 for the operating results of the Group for the year
annual report.
ended 31 December 2023 and the respective financial
positions of the Group and the Company as at that date.
Taking into consideration the Company’s robust
business development, the Board has resolved to
recommend at the forthcoming shareholders’ general
BUSINESS REVIEW
The business review of the Group for the year ended
meeting that the payment of a final dividend of
31 December 2023 is set out in the sections headed
RMB0.1336 per ordinary share (“2023 Final Dividend”)
“Chairman’s Statement” on pages 8 to 15, “Business
for the year ended 31 December 2023, totaling
Overview” on pages 16 to 19, “Financial Overview” on
approximately RMB4,088 million. Together with the
pages 20 to 25, “Financial Statements” on pages 93 to
2023 interim dividend payment of RMB0.203 per share
201, “Human Resources Development” on pages 86 to
during 2023, the total dividend payment for 2023
87, “Corporate Governance Report” on pages 40 to 67
a m o u n t e d t o R M B 0 . 3 3 6 6 p e r s h a r e , t o t a l i n g
and “Report of the Directors” on pages 68 to 85
approximately RMB10,299 million (2022: RMB8,384
respectively of this annual report. All references herein
million). Going forward, the Company will continue to
to other sections or reports in this annual report form
strive for enhancing its profitability and shareholders’
part of this Report of the Directors.
China Unicom (Hong Kong) Limited 69
LOANS
Please refer to Notes 33, 39 and 45.1 to the
consolidated financial statements for details of the
SUBSIDIARIES, ASSOCIATES AND JOINT
VENTURES
Please refer to Notes 18, 19 and 20 to the consolidated
borrowings of the Group.
financial statements for details of the Company’s
COMMERCIAL PAPERS
Please refer to Note 40 to the consolidated financial
statements for details of the commercial papers of the
Group.
CAPITALISED INTEREST
Please refer to Note 15 to the consolidated financial
statements for details of the interest capitalised by the
Group for the year.
subsidiaries, the Group’s associates and joint ventures.
CHANGES IN SHAREHOLDERS’ EQUITY
Please refer to page 98 of this annual report for the
Consolidated Statement of Changes in Equity and page
180 for the Statement of Changes in Equity.
EMPLOYEE BENEFIT EXPENSES
Please refer to Note 8 to the consolidated financial
statements for details of the employee benefit expenses
provided to employees of the Group.
EQUITY-LINKED AGREEMENTS
Other than the share scheme as disclosed in this Report
of the Directors, as at 31 December 2023, no
PRE-EMPTIVE RIGHTS
There are no provisions for pre-emptive rights in the
equity-linked agreements were entered into by the
articles of association of the Company requiring the
Group or subsisted during the year.
Company to offer new shares to the existing
PROPERTY, PLANT AND EQUIPMENT
Please refer to Note 15 to the consolidated financial
statements for movements in the property, plant and
MAJOR CUSTOMERS AND SUPPLIERS
The Group’s sales to its five largest customers for the
equipment of the Group for the year.
year ended 31 December 2023 did not exceed 30% of
shareholders in proportion to their shareholdings.
CHARGE ON ASSETS
As at 31 December 2023, no property, plant and
The Group’s purchases from its largest supplier for the
equipment was pledged to banks as loan security
y e a r e n d e d 3 1 D e c e m b e r 2 0 2 3 r e p r e s e n t e d
the Group’s total turnover for the year.
(31 December 2022: Nil).
SHARE CAPITAL
Please refer to Note 30 to the consolidated financial
approximately 28.56% of the Group’s total purchases
for the year. The total purchases attributable to the five
largest suppliers of the Group for the year ended
31 December 2023 accounted for approximately 58.32%
statements for details of the share capital.
of the total purchases of the Group for the year.
RESERVES
Please refer to page 98 and page 180 of this annual
None of the Directors nor their respective close
associates (as defined in the Rules Governing the Listing
report for the movements in the reserves of the Group
of Securities on The Stock Exchange of Hong Kong
and the Company during the year ended 31 December
Limited (the “Listing Rules”)) nor any shareholder of the
2023 respectively. As at 31 December 2023, the
Company (which to the knowledge of the Directors
distributable reserve of the Company amounted to
owns more than 5% of the Company’s share capital) had
approximately RMB7,855 million (2022: approximately
any interests in the five largest suppliers of the Group
RMB6,474 million).
for the year ended 31 December 2023.
Annual Report 2023 70
SHARE SCHEME OF THE COMPANY
Pursuant to a resolution passed at the annual general
meeting held on 16 April 2014, the Company adopted a
new share option scheme (the “2014 Share Option
(3)
the maximum aggregate number of shares in
respect of which share options may be granted
(the “Scheme Mandate Limit”) shall be
calculated in accordance with the following
Scheme”). The purpose of the 2014 Share Option
formula:
Scheme was to recognise the contribution that certain
individuals have made to the Company, to attract and
retain the best available personnel and to promote the
success of the Company. The 2014 Share Option Scheme
where:
is valid and effective for a period of 10 years
N = A – B – C
commencing on 22 April 2014 and will expire on 22 April
“N”
is the maximum aggregate number of
2024. Following the expiry of the 2014 Share Option
Scheme, no further share option can be granted under
the 2014 Share Option Scheme, but the provisions of
the 2014 Share Option Scheme will remain in full force
shares in respect of which share options
may be granted pursuant to the 2014
Share Option Scheme;
and effect to the extent necessary to give effect to the
“A”
is the maximum aggregate number of
exercise of any share options granted prior thereto or
otherwise as may be required in accordance with the
provisions of the 2014 Share Option Scheme. Under the
2014 Share Option Scheme:
(1)
share options may be granted to employees
including all Directors;
(2)
any grant of share options to a Connected Person
(as defined in the Listing Rules) of the Company
must be approved by the independent
non-executive Directors of the Company
(excluding any independent non-executive
Director of the Company in the case such
Director is a grantee of the options) and all
grants to connected persons shall be subject to
compliance with the requirements of the Listing
Rules, including where necessary the prior
approval of the shareholders;
shares in respect of which shares options
may be granted pursuant to the 2014
Share Option Scheme and any other
share option schemes of the Company,
being 10% of the aggregate of the
number of shares in issue as at the date
of adoption of the 2014 Share Option
Scheme;
“B”
is the maximum aggregate number of
shares underlying the share options
already granted pursuant to the 2014
Share Option Scheme; and
“C”
is the maximum aggregate number of
shares underlying the options already
granted pursuant to any other share
option schemes of the Company.
China Unicom (Hong Kong) LimitedREPORT OF DIRECTORS 71
Shares in respect of share options which have
(7)
an offer shall be deemed to have been accepted
lapsed in accordance with the terms of the 2014
by the eligible participant and to have taken
Share Option Scheme and any other share
effect when the duplicate notice of grant
option schemes of the Company will not be
comprising acceptance of the offer duly signed
counted for the purpose of determining the
by the grantee together with a remittance in
maximum aggregate number of shares in respect
favour of the Company of HKD1.00 by way of
of which options may be granted pursuant to the
consideration for the grant thereof is received by
2014 Share Option Scheme;
the Company within the time period specified in
(4)
the option period commences on any day after
the offer.
the date on which such share option is offered,
No share options had been granted since adoption of
but may not exceed 10 years from the offer
the 2014 Share Option Scheme. As at 1 January 2023
date;
(5)
the subscription price shall not be less than the
higher of:
and 31 December 2023, 1,777,437,107 options were
available for grant under the Scheme Mandate Limit.
As at 31 December 2023, 1,777,437,107 shares were
available for issue under the 2014 Share Option Scheme,
(a)
the closing price of the shares on the
representing approximately 5.81% of issued share
Hong Kong Stock Exchange on the offer
capital of the Company as at the date of this annual
date in respect of the share options; and
report.
(b)
the average closing price of the shares on
the Hong Kong Stock Exchange for the
five trading days immediately preceding
the offer date;
DIRECTORS’, CHIEF EXECUTIVES’ AND
EMPLOYEES’ INTERESTS UNDER THE
SHARE SCHEME OF THE COMPANY
For the year ended 31 December 2023 and as at
31 December 2023, none of the Directors of the
(6)
the total number of shares in the Company
Company or chief executives or employees of the
issued and to be issued upon exercise of the
Company had any interests under any share scheme of
share options granted to a participant of the
the Company.
2014 Share Option Scheme (including both
exercised and outstanding share options) in any
12-month period must not exceed 1% of the
issued share capital of the Company; and
Annual Report 2023 72
DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS AND SHORT POSITIONS IN SHARES,
UNDERLYING SHARES AND DEBENTURES
As at 31 December 2023, the interests and short positions of Directors and chief executives of the Company in any
shares, underlying shares and debentures of the Company or any of its associated corporations (as defined in Part XV
of the Hong Kong Securities and Futures Ordinance (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 of Hong Kong Limited
pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in
Appendix C3 of the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange (the “Listing Rules”),
were as follows:
Long Positions in the Shares and Underlying Shares of the Company
Name of Director
Capacity
Ordinary
Percentage of
Shares Held
Issued Shares
Chung Shui Ming Timpson
Beneficial owner (Personal)
6,000
0.00%
Save as disclosed in the foregoing, as at 31 December 2023, none of the Directors or chief executives of the Company
had any interests or short positions in any shares, underlying shares, or debentures of the Company or any of its
associated corporations (as defined in Part XV of the SFO) as recorded in the register required to be kept pursuant to
Section 352 of the SFO or as otherwise notified to the Company and the Hong Kong Stock Exchange pursuant to the
Model Code.
Furthermore, save as disclosed in the foregoing, during the year ended 31 December 2023, none of the Directors or
chief executives (including their spouses and children under the age of 18) of the Company had any interests in or
was granted any right to subscribe in any shares, underlying shares, or debentures of the Company or any of its
associated corporations, or had exercised any such rights.
China Unicom (Hong Kong) LimitedREPORT OF DIRECTORS
73
MATERIAL INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS IN
SHARES AND UNDERLYING SHARES OF THE COMPANY
As at 31 December 2023, the following persons (other than disclosed under the section headed “Directors’ and Chief
Executives’ Interests and Short Positions in Shares, Underlying Shares and Debentures”) had the following interests
and short positions in the shares or underlying shares of the Company as recorded in the register required to be kept
pursuant to Section 336 of Part XV of the SFO:
Long Positions in the Shares and Underlying Shares of the Company
Ordinary Shares Held
Name of Shareholders
Directly
Indirectly
Percentage of
Issued Shares
(i) China United Network
Communications Group Company
Limited (“Unicom Group”)1,2
(ii) China United Network
Communications Limited
(“A Share Company”)1
—
—
24,683,896,309
80.67%
16,376,043,282
53.52%
(iii) China Unicom (BVI) Limited
16,376,043,282
—
53.52%
(“Unicom BVI”)1
(iv) China Unicom Group Corporation
8,082,130,236
225,722,791
27.15%
(BVI) Limited (“Unicom Group BVI”)2,3
Notes:
(1)
Unicom Group and A Share Company directly or indirectly control one-third or more of the voting rights in the
shareholders’ meetings of Unicom BVI, and in accordance with the SFO, the interests of Unicom BVI are deemed
to be, and have therefore been included in, the respective interests of Unicom Group and A Share Company.
(2)
Unicom Group BVI is a wholly-owned subsidiary of Unicom Group. In accordance with the SFO, the interests of
Unicom Group BVI are deemed to be, and have therefore been included in, the interests of Unicom Group.
(3)
Unicom Group BVI holds 8,082,130,236 shares (representing 26.41% of the total issued shares) of the Company
directly. In addition, Unicom Group BVI is also interested in 225,722,791 shares (representing 0.74% of the total
issued shares) of the Company under the SFO, in which Unicom Group BVI had a pre-emptive right.
Apart from the foregoing, as at 31 December 2023, no person had any interest or short position in the shares or
underlying shares in the Company as recorded in the register required to be kept under Section 336 of the SFO.
Please also refer to Note 30 to the consolidated financial statements for details of the share capital of the Company.
Annual Report 2023
74
REPURCHASE, SALE OR REDEMPTION OF
LISTED SHARES OF THE COMPANY
For the year ended 31 December 2023, neither the
Company nor any of its subsidiaries had repurchased,
DIRECTORS’ INTEREST IN
TRANSACTIONS, ARRANGEMENTS AND
CONTRACTS
Save for the service agreements between the Company
sold or redeemed any of the Company’s listed shares.
and the executive Directors subsisted during 2023 or as
COMPOSITION OF THE BOARD
The following is the list of Directors during the year and
up to date of this report.
Executive Directors:
at 31 December 2023, the Directors or his/her
connected entity(ies) did not have any material interest,
whether directly or indirectly, in any significant
transaction, arrangement or contract entered into by
the Company.
Chen Zhongyue (Chairman and Chief Executive Officer)
None of the Directors for re-election at the forthcoming
Liu Liehong (resigned on 30 July 2023)
annual general meeting has an unexpired service
Wang Junzhi
Li Yuzhuo
Independent Non-Executive Directors:
Cheung Wing Lam Linus
Wong Wai Ming
Chung Shui Ming Timpson
Law Fan Chiu Fun Fanny
agreement which is not determinable by the Company
within one year without payment of compensation
(other than statutory compensation).
DIRECTORS’ INTEREST IN COMPETING
BUSINESSES
Unicom Group and A Share Company are engaged in
telecommunications business and other related
businesses in China that are similar to and/or compete
Pursuant to the articles of association, Ms. Li Yuzhuo
with those of the Company. Executive directors of the
and Mr. Cheung Wing Lam Linus will retire at the
Company also hold executive positions with Unicom
forthcoming annual general meeting of the Company
Group and A Share Company. Please refer to the section
and, being eligible, offer themselves for re-election.
headed “Directors and Senior Management” on pages
28 to 39 of this annual report for further details.
Please refer to Note 8 to the consolidated financial
statements for details of the emoluments of the
Apart from the above, there are no competing interests
Directors.
INDEPENDENCE OF INDEPENDENT
NON-EXECUTIVE DIRECTORS
The Company has received from each of its independent
non-executive Directors the annual confirmation of his
of directors which are disclosable under Rule 8.10(2)(b)
of the Listing Rules at any time during the year of 2023
up to and including the date of this annual report.
DIRECTORS OF SUBSIDIARIES
The names of all directors who have served on the
independence and the Company considers that all
boards of the subsidiaries of the Company during the
independent non-executive Directors are currently
year ended 31 December 2023 and up to the date of this
independent.
report of directors are available on the Company’s
website (http://www.chinaunicom.com.hk).
China Unicom (Hong Kong) LimitedREPORT OF DIRECTORS 75
PERMITTED INDEMNITY
Pursuant to the Company’s articles of association,
subject to the applicable laws and regulations, every
Director shall be indemnified out of the assets of the
Company against all costs, charges, expenses, losses and
CONTINUING CONNECTED
TRANSACTIONS
On 28 October 2022, CUCL, a wholly-owned subsidiary
of the Company, and Unicom Group entered into a
comprehensive services agreement (the “2023–2025
liabilities which he/she may sustain or incur in the
Comprehensive Services Agreement”) while Finance
execution of his/her office or otherwise in relation
Company (“Finance Company”), a subsidiary of the
thereto. The Company has taken out insurance against
the liability and costs associated with defending any
proceedings which may be brought against directors of
the Group.
Company, and Unicom Group entered into a financial
services agreement (the “2023–2025 Financial Services
Agreement”). Pursuant to the 2023–2025 Comprehensive
Services Agreement, CUCL and Unicom Group agreed to
provide services to each other or by one to the other,
EMPLOYEE AND REMUNERATION POLICY
As at 31 December 2023, the Group had approximately
including (i) use of telecommunications resources; (ii)
property leasing; (iii) value-added telecommunications
241,735 employees, 791 employees and 365 employees
services; (iv) materials procurement services; (v)
in Mainland China, Hong Kong and other countries,
engineering design and construction and IT services; (vi)
respectively. Furthermore, the Group had approximately
a n c i l l a r y t e l e c o m m u n i c a t i o n s s e r v i c e s ; ( v i i )
9,882 temporary staff in Mainland China. For the year
ended 31 December 2023, employee benefit expenses
comprehensive support services and (viii) shared
services. Pursuant to 2023–2025 Financial Services
were approximately RMB62.94 billion (for the year
Agreement, Finance Company agreed to provide
ended 31 December 2022: RMB60.73 billion), of which
financial services to Unicom Group. The above
the salary of the contract employees was approximately
continuing connected transactions will be for a term of
RMB41.28 billion (for the year ended 31 December
three years from 1 January 2023 to 31 December 2025.
2022: RMB40.85 billion). The Group endeavors to
maintain its employees’ remuneration in line with the
Unicom Group is the ultimate controlling shareholder of
market trend and to remain competitive. Employees’
the Company and is therefore a connected person of the
remuneration is determined in accordance with the
Group’s remuneration and bonus policies based on their
Company under the Listing Rules. Details of the
continuing connected transactions under the 2023–
performance. The Group also provides comprehensive
benefit packages and career development opportunities
2025 Comprehensive Services Agreement and the
2023–2025 Financial Services Agreement are as follows:
for its employees, including retirement benefits, housing
benefits and internal and external training programmes,
(1)
Use of Telecommunications Resources
which are tailored in accordance with individual needs.
Unicom Group agrees to provide to CUCL:
The Company has adopted share option schemes, under
(a)
certain international telecommunications
which the Company may grant share options to eligible
resources (including international
employees for subscribing for the Company’s shares.
telecommunications channel gateways,
international telecommunications
s e r v i c e g a t e w a y s , i n t e r n a t i o n a l
submarine cable capacity, international
land cables and international satellite
facilities); and
Annual Report 2023 76
(b)
certain other telecommunications
relevant industry profit margins in the
facilities required by CUCL for its
corresponding period for reference. The
operations.
net usage charges due to Unicom Group
f o r t h e p r o v i s i o n o f t h e a b o v e
The usage charges of international
telecommunications resources and
telecommunications resources and other
facilities will be settled between CUCL
telecommunications facilities are based
and Unicom Group on a quarterly basis.
o n t h e a n n u a l d e p r e c i a t i o n a n d
amortisation charges of such resources
For the year ended 31 December 2023,
and telecommunications facilities
the total charges paid by CUCL to Unicom
provided that such charges would not be
Group amounted to approximately
higher than the market rates. CUCL will
RMB210 million.
b e r e s p o n s i b l e f o r t h e o n - g o i n g
maintenance of such international
(2)
Property Leasing
telecommunications resources. CUCL and
CUCL and Unicom Group agree to lease to each
Unicom Group will determine and agree
other properties and ancillary facilities owned by
which party is to provide maintenance
CUCL or Unicom Group (including their
service for the telecommunications
respective branches and subsidiaries).
facilities referred to in paragraph (b)
above. Unless otherwise agreed by CUCL
The rental charges for the leasing of each other
and Unicom Group, such maintenance
properties and ancillary facilities are based on
service charges would be borne by CUCL.
market rates. Where there is no market rate or it
If Unicom Group is responsible for
is not possible to determine the market rate, the
maintaining any telecommunications
rate will be negotiated and agreed between the
facilities referred to in paragraph (b)
two parties. Market rates refer to the rates at
above, CUCL will pay to Unicom Group
which the same or similar type of assets or
the relevant maintenance service
services are provided by Independent Third
charges which will be determined with
Parties in the ordinary course of business and
reference to market rates, or where
under normal commercial terms. Negotiated
there is no market rates will be agreed
rates refer to the rates based on the reasonable
between the parties and determined
costs plus the amount of the relevant taxes and
b a s e d o n r e a s o n a b l e c o s t s p l u s
reasonable profit margin. When determining the
r e a s o n a b l e p r o f i t m a r g i n . W h e n
pricing standard or reasonable profit margin, to
determining the pricing standard or
the extent practicable, management of the
reasonable profit margin, to the extent
Company will take into account the rates of at
p r a c t i c a b l e , m a n a g e m e n t o f t h e
least two similar and comparable transactions
Company will take into account the rates
entered into with Independent Third Parties or
of at least two similar and comparable
the relevant industry profit margin in the
t r a n s a c t i o n s e n t e r e d i n t o w i t h
corresponding period for reference. The rental
Independent Third Parties or the
charges are payable quarterly in arrears.
China Unicom (Hong Kong) LimitedREPORT OF DIRECTORS 77
For the year ended 31 December 2023, the
tenders, verification of technical specifications,
rental charges paid by CUCL to Unicom Group
installation, consulting and agency services. In
(relating to those leases of which the lease term
addition, Unicom Group will sell materials to
i s 1 2 m o n t h s o r l e s s ) a m o u n t e d t o
CUCL and resell the equipment purchased from
approximately RMB945 million, the total value of
the third parties, and will also provide storage
right-of-use assets involved in the properties
and logistics services in relation to the above
leased by CUCL (relating to those leases of which
materials procurement.
the lease term exceeds 12 months) amounted to
approximately RMB116 million, and the rental
Charges for the provision of materials
charges paid by Unicom Group to CUCL was
procurement services are calculated at the rate
negligible.
of:
(3)
Value-added Telecommunications Services
(a)
up to 3% of the contract value of those
Unicom Group (or its subsidiaries) agrees to
procurement contracts in the case of
provide the customers of CUCL with various
domestic materials procurement; and
types of value-added telecommunications
services.
(b)
up to 1% of the contract value of those
procurement contracts in the case of
CUCL will settle the revenue generated from the
imported materials procurement.
value-added telecommunications services with
t h e b r a n c h e s o f U n i c o m G r o u p ( o r i t s
The charges for the provision of materials by
subsidiaries) on the condition that such settlement
Unicom Group, and the pricing and/or charging
will be based on the average revenue for
standard of the commission for various materials
independent value-added telecommunications
procurement services, and storage and logistics
content providers who provide value-added
services relevant to the direct material
telecommunications content to CUCL in the
procurement are based on the market rates.
same region. The amount will be settled on a
Where there is no market rate or it is not
monthly basis.
possible to determine the market rate, the rate
will be negotiated and agreed between the two
For the year ended 31 December 2023, the total
parties. Market rates refer to the rates at which
amount allocated to Unicom Group in relation to
the same or similar type of assets or services is
value-added telecommunications services
provided by Independent Third Parties in the
amounted to approximately RMB73 million.
ordinary course of business and under normal
(4) Materials Procurement Services
commercial terms. Negotiated rates refer to the
rates based on the reasonable costs incurred in
Unicom Group agrees to provide comprehensive
providing the services plus the amount of the
procurement services for imported and
relevant taxes and reasonable profit margin.
domestic telecommunications materials and
When determining the pricing standard or
other domestic non-telecommunications
reasonable profit margin, to the extent
materials to CUCL. Unicom Group has also
practicable, management of the Company will
agreed to provide services on management of
take into account the rates of at least two similar
Annual Report 2023 78
and comparable transactions entered into with
p r o d u c t s o r s e r v i c e s a r e p r o v i d e d b y
Independent Third Parties or the relevant
Independent Third Parties in the ordinary course
industry profit margin in the corresponding
of business and under normal commercial terms.
period for reference. The service charges due to
When determining the pricing standard, to the
Unicom Group will be settled on a monthly
extent practicable, management of the
basis.
Company will take into account the rates of at
least two similar and comparable transactions
For the year ended 31 December 2023, the total
entered into with Independent Third Parties in
charges paid by CUCL to Unicom Group
the corresponding period for reference. In the
amounted to approximately RMB15 million.
event the recipient will determine the specific
provider of engineering design and construction
(5)
Engineering Design and Construction and IT
and IT services through tender, the provider shall
Services
be no less qualified and equipped than the
Unicom Group agrees to provide engineering
Independent Third Parties, and shall participate
design, construction and supervision services
in the tender procedure on an equal footing with
and IT services to CUCL. Engineering design
the Independent Third Parties. Under such
s e r v i c e s i n c l u d e p l a n n i n g a n d d e s i g n ,
circumstances, the pricing will be determined by
engineering inspection, telecommunications
the final rate according to the tender procedure.
electronic engineering, telecommunications
The service charges will be settled between
e q u i p m e n t e n g i n e e r i n g a n d c o r p o r a t e
CUCL and Unicom Group as and when the
telecommunications engineering. Construction
relevant services are provided.
s e r v i c e s i n c l u d e s e r v i c e s r e l a t i n g t o
t e l e c o m m u n i c a t i o n s e q u i p m e n t ,
For the year ended 31 December 2023, the total
telecommunications routing, power supplies,
charges paid by CUCL to Unicom Group
telecommunications conduit, and technical
amounted to approximately RMB696 million.
s u p p o r t s y s t e m s . I T s e r v i c e s i n c l u d e
communications technology services (including
(6)
Ancillary Telecommunications Services
construction and installation services, system
Unicom Group agrees to provide ancillary
integration services, software development,
telecommunications services to CUCL. These
product sales and agent services, operation and
services include certain telecommunications
maintenance services, and consultation
pre-sale, on-sale and after-sale services such as
services).
assembling and repairing of certain client
telecommunications equipment, sales agency
The charges for the provision of engineering
services, printing and invoice delivery services,
design and construction and IT services are
maintenance of telephone booths, customers
based on market rates. Market rates refer to the
acquisitions and servicing and other customers’
rates at which the same or similar type of
services.
China Unicom (Hong Kong) LimitedREPORT OF DIRECTORS 79
The charges payable for the provision of ancillary
services, security services, hotel and conference
telecommunications services are determined by
services, gardening services, decoration and
the market rates between the two parties.
renovation services, construction agency,
Where there is no market rate or it is not
equipment maintenance services, market
possible to determine the market rates, the rate
development, sanitary services, parking services,
will be negotiated and agreed between the two
staff trainings, storage services, advertising
parties. Market rates refer to the rates at which
services, marketing, property management
the same or similar type of assets or services are
services.
provided by Independent Third Parties under
normal commercial terms. Negotiated rates
CUCL agrees to provide comprehensive services
refer to the rates based on the reasonable costs
to Unicom Group, including sales services,
plus the amount of the relevant taxes and
technical support services, research and
reasonable profit margin. When determining the
development services, communication services
pricing standard or reasonable profit margin, to
and communications technology services
the extent practicable, management of the
(including construction and installation services,
Company will take into account the rates of at
s y s t e m i n t e g r a t i o n s e r v i c e s , s o f t w a r e
least two similar and comparable transactions
development, product sales and agent services,
entered into with Independent Third Parties or
operation and maintenance services, and
the relevant industry profit margin in the
consultation services).
corresponding period for reference. The service
charges will be settled between CUCL and
The service charges are determined by the
Unicom Group as and when the relevant services
market rates between the two parties. Where
are provided.
there is no market rate or it is not possible to
determine the market rate, the rate will be
For the year ended 31 December 2023, the total
negotiated and agreed between the two parties.
services charges paid by CUCL to Unicom Group
Market rates refer to the rates at which the
amounted to approximately RMB1,038 million.
same or similar type of assets or services are
(7)
Comprehensive Support Services
provided by Independent Third Parties under
normal commercial terms. Negotiated rates
Unicom Group and CUCL agree to provide
refer to the rates based on the reasonable costs
comprehensive support services to each other,
plus the amount of the relevant taxes and
including dining services, facilities leasing
reasonable profit margin. When determining the
services (excluding those facilities which are
pricing standard or reasonable profit margin, to
provided under the paragraph headed “Use of
the extent practicable, management of the
Telecommunications Resources” above), vehicle
Company will take into account the rates of at
services, health and medical services, labour
least two similar and comparable transactions
Annual Report 2023 80
entered into with Independent Third Parties or
For the year ended 31 December 2023, the total
the relevant industry profit margin in the
services charges paid by CUCL to Unicom Group
corresponding period for reference. The service
amounted to approximately RMB76 million, and
charges will be settled between CUCL and
the services charges paid by Unicom Group to
Unicom Group as and when the relevant services
CUCL was negligible.
are provided.
(9)
Financial Services
For the year ended 31 December 2023, the total
Finance Company agrees to provide financial
services charges paid by CUCL to Unicom Group
services to Unicom Group, including deposit
amounted to approximately RMB1,115 million,
services, lending and other credit services, and
and the total services charges paid by Unicom
other financial services. Other financial services
Group to CUCL amounted to approximately
include settlement services, entrusted loans,
RMB225 million.
(8)
Shared Services
financial and financing consultation, entrusted
investment, bond underwriting, consultation,
agency business, and other businesses approved
Unicom Group and CUCL agree to provide
by China Banking and Insurance Regulatory
shared services to each other, including, but not
Commission or its agency for Finance Company.
limited to, the following: (a) CUCL will provide
headquarter human resources services to
The key pricing policies are follows:
Unicom Group; (b) CUCL will provide business
support centre services to Unicom Group; (c)
Finance Company agrees to provide financial
CUCL will provide hosting services related to the
services to Unicom Group. The interest rate or
services referred to in paragraphs (a) and (b)
fee standard will be determined in strict
above to Unicom Group; and (d) Unicom Group
accordance with the relevant regulations of the
will provide premises to CUCL and other shared
People’s Bank of China and the China Banking
services requested by its headquarters. Unicom
and Insurance Regulatory Commission and other
Group and CUCL will share the costs related to
institutions, as follows:
the shared services proportionately in
accordance with their respective total assets
(a)
Deposit Services
value, except that the total assets value of the
The maximum and minimum deposit
overseas subsidiaries and the listed company of
interest rates will follow the provisions of
Unicom Group will be excluded from the total
the People’s Bank of China for deposits
asset value of Unicom Group, and the shared
of the same period and the same type,
costs proportion will be agreed between Unicom
and be determined with reference to the
Group and CUCL in accordance with the total
interest rate for the same period and
assets value set out in the financial statements
same type of deposit offered to Unicom
provided to each other, as adjusted in
G r o u p b y t h e m a j o r c o o p e r a t i v e
accordance with their respective total assets
commercial banks of Unicom Group and/
value on an annual basis.
or offered by Finance Company to other
c l i e n t s , a n d w i l l b e o n n o r m a l
commercial terms.
China Unicom (Hong Kong) LimitedREPORT OF DIRECTORS 81
(b)
Lending and other credit services
The service charges will be settled between
The lending and other credit services
Finance Company and Unicom Group as and
interest rates will follow the relevant
when the relevant services are provided.
provisions of the People’s Bank of China,
which will be based on Loan Prime Rate
For the financial year ended 31 December 2023, the
and be determined with reference to the
above continuing connected transactions have not
interest rate for the same period and
exceeded their respective caps.
same type of lending and other credit
services offered to the same type of
The Company has formulated and strictly implemented
corporations by the major cooperative
various systems including the Administrative Measures
commercial banks of Unicom Group and/
of Connected Transactions of China Unicom to ensure
or offered by Finance Company to its
that connected transactions are properly entered into in
other clients, and will be on normal
accordance with pricing mechanisms and the terms of
commercial terms. For the year ended
the transactions are fair and reasonable and are in the
31 December 2023, the maximum daily
interests of the Company and the Shareholders as a
lending and other credit services balance
whole.
(including accrued interests) amounted
to approximately RMB4,633 million.
The staff from the relevant business departments and
the connected persons of the Company will negotiate
(c)
Other financial services
the pricing terms of the continuing connected
The rate of financial services will be
transactions. These pricing terms will be determined in
determined according to the principles of
fairness and reasonableness, as well as
the fair market price or the standards set
accordance with the pricing policy principles set out in
the 2023–2025 Comprehensive Services Agreement and
the 2023–2025 Financial Services Agreement, which
by the state. The fees to be charged by
should be fair and reasonable and subject to the review
Finance Company for the provision of the
of the finance department.
financial services to Unicom Group will
comply with the relevant prescribed
The legal department is responsible for the review of the
rates for such services as determined by
agreement for connected transactions. The finance
the institutions, including the People’s
department takes the lead in the daily management and
Bank of China or the China Banking and
supervision of connected transactions, including liaising
Insurance Regulatory Commission, etc.
with the relevant business departments for account
Where no relevant prescribed rate is
reconciliation with connected parties, monitoring the
applicable, the fee will be determined
implementation of connected transactions together
with reference to market rates of similar
with business departments on a routine basis and
financial services charges and agreed
performing supervisory examination. The finance
between the parties. For the year ended
department regularly reports the status of the
31 December 2023, the total fees paid by
implementation of connected transactions to the Audit
Unicom Group to Finance Company
Committee. The audit department includes review on
amounted to approximately RMB1
connected transactions into the scope of annual internal
million.
control assessment and reports the results to the
management.
Annual Report 2023 82
Furthermore, the aforesaid continuing connected
(C)
were not entered into, in all material respects, in
transactions have been reviewed by independent
accordance with the relevant agreements
non-executive directors of the Company. In accordance
g o v e r n i n g t h e c o n t i n u i n g c o n n e c t e d
with paragraph 14A.55 of the Listing Rules, the
transactions; and
independent non-executive directors confirmed that the
aforesaid continuing connected transactions were
(D)
have exceeded their respective annual caps for
entered into (a) in the ordinary and usual course of
the financial year ended 31 December 2023 set
business of the Group; (b) either on normal commercial
out in the previous announcements of the
terms or better or, if there are not sufficient comparable
Company.
transactions to judge whether they are on normal
commercial terms, on terms no less favourable to the
The Company confirms that it has complied with the
Group than terms available to or from independent
requirements of Chapter 14A of the Listing Rules in
third parties; and (c) in accordance with the relevant
relation to all connected transactions and continuing
agreements governing them on terms that are fair and
connected transactions to which any Group member
reasonable and in the interests of the shareholders of
was a party during 2023. Please refer to Note 45 to the
the Company as a whole.
consolidated financial statements for a summary of the
related party transactions entered into by the members
The Company’s independent auditor was engaged to
of the Group for the year ended 31 December 2023.
report on the Group’s continuing connected
Only those connected transactions specified in note 45.1
transactions in accordance with Hong Kong Standard on
and 45.2 of the consolidated financial statements
Assurance Engagements 3000 “Assurance Engagements
constitute continuing connected transactions under
Other Than Audits or Reviews of Historical Financial
Chapter 14A of the Listing Rules, the details of which
Information” and with reference to Practice Note 740
(except for fully exempt continuing connected
“Auditor’s Letter on Continuing Connected Transactions
transactions) have been disclosed in the paragraph
under the Hong Kong Listing Rules” issued by the Hong
“Continuing Connected Transactions” in the Report of
Kong Institute of Certified Public Accountants. The
the Directors above. Other related party transactions do
independent auditor has issued an unqualified letter
not constitute connected transactions or continuing
containing his findings and conclusions in respect of the
connected transactions under Chapter 14A of the Listing
continuing connected transactions disclosed by the
Rules.
Group in pages 75 to 81 of this annual report in
accordance with paragraph14A.56 of the Listing Rules.
With the continuous expansion of operating scale and
The independent auditors’ letter has confirmed that
the continuous improvement of the centralised capital
nothing has come to their attention that cause them to
management capabilities of CUCL, a wholly-owned
believe that the continuing connected transactions:
subsidiary of the Company, and subject to the
(A)
have not been approved by the Board;
subsidiary, Finance Company, the actual amount of the
lending and other credit services between Finance
satisfaction of the daily operation of CUCL and its
(B)
were not, in all material respects, in accordance
with the pricing policies of the Group as stated in
this annual report;
China Unicom (Hong Kong) LimitedREPORT OF DIRECTORS 83
Company and Unicom Group in 2023 (RMB4,633
The principal activities of Company’s subsidiaries are the
million) was close to the cap of the transaction
provision of comprehensive telecommunications
(RMB4,650 million). In order to further satisfy the capital
services. The Company is required to comply with the
management needs of CUCL and enhance the capital
Cybersecurity Law of the People’s Republic of China,
efficiency, on 19 March 2024, the Board approved
Telecommunications Regulations of the People’s
Finance Company and Unicom Group to enter into the
Republic of China, Administrative Regulations on
Supplemental Agreement to revise the caps, being the
Telecommunications Companies with Foreign
daily lending and other credit services balance (including
Investments and other related laws and regulations. At
accrued interests) for the lending and other credit
the same time, oversea subsidiaries of the Company are
services to be provided by Finance Company to Unicom
Group under the 2023–2025 Financial Services
Agreement for each of the two years ending
also required to comply with the related laws and
regulations where their business operations are located.
31 December 2024 and 2025 to RMB7,500 million,
For the year ended 31 December 2023, the Company
respectively. Save as disclosed above, all other terms
and conditions under the 2023–2025 Financial Services
had not been involved in any material litigation,
arbitration or administrative proceedings. So far as the
Agreement remain unchanged and valid.
Company is aware of, no such litigation, arbitration or
CORPORATE GOVERNANCE REPORT
Report on the Company’s corporate governance is set
out in “Corporate Governance Report” on pages 40 to
67.
administrative proceedings were pending or threatened
as at 31 December 2023.
PUBLIC FLOAT
Based on publicly available information and so far as
Directors are aware, the Company has maintained the
MATERIAL LEGAL PROCEEDINGS
As a company incorporated in Hong Kong and listed in
specified amount of public float as required by the Hong
K o n g S t o c k E x c h a n g e d u r i n g t h e y e a r e n d e d
Hong Kong, the Company adopts the Companies
31 December 2023 and as at the date of this annual
Ordinance of Hong Kong, the Securities and Futures
report.
Ordinance of Hong Kong, Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited,
the Company’s Articles of Association and other related
DONATIONS
For the year ended 31 December 2023, the Group made
laws and regulations as the basic guidelines for the
charitable and other donations in an aggregate amount
Company’s corporate governance.
of approximately RMB1.436 million.
Annual Report 2023 84
CLOSURE OF REGISTER OF MEMBERS
For the purpose of ascertaining the shareholders’ rights to attend and vote at the Annual General Meeting (and any
adjournment thereof) on 30 May 2024, and entitlement to the 2023 Final Dividend, the register of members of the
Company will be closed for registration of transfer of shares. Details of such closures are set out below:
(1)
For ascertaining the shareholders’ rights to attend and vote at the Annual General Meeting (and any
adjournment thereof):
Latest time to lodge transfer documents for registration
4:30 p.m. of 22 May 2024
Closure of register of members
Record date
From 23 May 2024 to 30 May 2024
23 May 2024
(2)
For ascertaining the shareholders’ entitlement to the 2023 Final Dividend:
Latest time to lodge transfer documents for registration
4:30 p.m. of 6 June 2024
Closure of register of members
Final Dividend Record date
7 June 2024
7 June 2024
During the above closure periods, no transfer of shares will be registered. To be eligible to attend and vote at the
Annual General Meeting, and to qualify for the 2023 Final Dividend, all transfers, accompanied by the relevant
certificates, must be lodged with the Company’s Share Registrar, Hong Kong Registrars Limited, at Shops 1712–1716,
17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, by no later than the aforementioned
latest times.
WITHHOLDING AND PAYMENT OF ENTERPRISE INCOME TAX FOR NON-RESIDENT
ENTERPRISES IN RESPECT OF 2023 FINAL DIVIDEND
Pursuant to (i) the “Notice Regarding Matters on Determination of Tax Residence Status of Chinese- controlled
Offshore Incorporated Enterprises under Rules of Effective Management” (the “Notice”) issued by the State Taxation
Administration of the People’s Republic of China (the “STA”); (ii) the “Enterprise Income Tax Law of the People’s
Republic of China” (the “Enterprise Income Tax Law”) and the “Detailed Rules for the Implementation of the
Enterprise Income Tax Law of the People’s Republic of China” (the “Implementation Rules”); and (iii) information
obtained from the STA, the Company is required to withhold and pay enterprise income tax when it pays the 2023
Final Dividend to its non-resident enterprise shareholders. The enterprise income tax is 10% on the amount of
dividend paid to non-resident enterprise shareholders (the “Enterprise Income Tax”), and the withholding and
payment obligation lies with the Company.
As a result of the foregoing, in respect of any shareholders whose names appear on the Company’s register of
members on the Final Dividend Record Date and who are not individuals (including HKSCC Nominees Limited, other
custodians, corporate nominees and trustees such as securities companies and banks, and other entities or
organisations), the Company will distribute the 2023 Final Dividend payable to them after deducting the amount of
Enterprise Income Tax payable on such dividend. Investors who invest in the shares in the Company listed on the
Main Board of The Stock Exchange of Hong Kong Limited through the Shanghai Stock Exchange or Shenzhen Stock
Exchange (the Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect investors) are investors
who hold shares through HKSCC Nominees Limited, and in accordance with the above requirements, the Company
will pay to HKSCC Nominees Limited the amount of the 2023 Final Dividend after deducting the amount of Enterprise
Income Tax payable on such dividend.
China Unicom (Hong Kong) LimitedREPORT OF DIRECTORS 85
In respect of any shareholders whose names appear on
any claims, arising from any delay in, or inaccurate
the Company’s register of members on the Final
determination of, the status of the shareholders, or any
Dividend Record Date and who are individual
disputes over the mechanism of withholding and
shareholders, there will be no deduction of Enterprise
payment of Enterprise Income Tax.
Income Tax from the dividend that such shareholder is
entitled to.
MANAGEMENT CONTRACTS
Other than employment contracts, no contract
Shareholders who are not individual shareholders listed
concerning the management and administration of the
on the Company’s register of members and who (i) are
whole or any substantial part of the Company’s business
resident enterprises of the People’s Republic of China
was entered into or existed during 2023.
(the “PRC”) (as defined in the Enterprise Income Tax
Law), or (ii) are enterprises deemed to be resident
enterprises of the PRC in accordance with the Notice,
INDEPENDENT AUDITOR
At the close of the 2021 annual general meeting of the
and who, in each case, do not desire to have the
Company held on 13 May 2021, KPMG and KPMG
Company withhold Enterprise Income Tax from their
Huazhen LLP retired as independent auditors of the
2023 Final Dividend, should lodge with the Company’s
Company upon expiration of their term of office. The
Share Registrar, Hong Kong Registrars Limited, at Shops
1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s
Hong Kong financial reporting for the year ended
3 1 D e c e m b e r 2 0 2 1 , 3 1 D e c e m b e r 2 0 2 2 a n d
Road East, Wan Chai, Hong Kong, at or before 4:30 p.m.
31 December 2023 have been audited by Deloitte
of 6 June 2024, and present the documents from such
Touche Tohmatsu, which retire and, being eligible, offer
shareholder’s governing tax authority within the
itself for re-appointment at the 2024 annual general
territory of the PRC confirming that the Company is not
meeting. A resolution to re-appoint Deloitte Touche
required to withhold and pay Enterprise Income Tax in
Tohmatsu and to authorise the Directors to fix its
respect of the dividend that such shareholder is entitled
respective remuneration will be proposed at the 2024
to.
annual general meeting.
If anyone would like to change the identity of the
holders in the register of members, please enquire
about the relevant procedures with the nominees or
trustees. The Company will withhold for payment of the
Enterprise Income Tax for its non-resident enterprise
shareholders strictly in accordance with the relevant
laws and requirements of the relevant government
By Order of the Board
agencies and adhere strictly to the information set out in
Chen Zhongyue
the Company’s register of members on the Final
Chairman and Chief Executive Officer
Dividend Record Date. The Company assumes no
liability whatsoever in respect of and will not entertain
Hong Kong, 19 March 2024
Annual Report 2023 86
HUMAN RESOURCES
DEVELOPMENT
China Unicom adheres to the people-oriented principle
recruited more than 10,000 talents through campus
and always pays attention to the mutual growth of its
recruitment and social recruitment. The Company
employees and the Company. It focuses on the
implemented the “New Seedling Scheme” in a unified
protection of the rights and interests, comprehensive
manner. In 2023, the number of new employees from
development and vitality stimulation of the workforce.
campus recruitment remained at a high level, which
The Company took multiple measures to enhance its
were mainly assigned to innovative fields. The training
employees’ sense of achievement, happiness and
system for young employees was established to
security. In 2023, with adherence to talent as its first
accelerate their growth and development.
resource, it unswervingly implemented the strategy of
strengthening the Company with talent, strived to
China Unicom adhered to the top-level design and
promote the continuous optimisation of the talent
conducted a comprehensive analysis and planning of the
structure, providing a strong guarantee for the high-
leadership and management team in accordance with
quality development of the Company through high-
the Company’s high-quality development needs for the
quality human resources.
next five years. The Company solidified the training of
job performance capabilities, strengthened overall
By implementing the strategy of strengthening the
planning of training in various professional areas, carried
Company with talent in great depth, China Unicom
out large-scale training programs to enhance
accelerated the establishment of national strategic
professional competency, and continuously optimised
talent force for scientific and technological innovation,
the structure of management personnel qualities and
and focused on supporting the realisation of high-level
capabilities. On the basis of giving full play to the
scientific and technological self-reliance and self-
enthusiasm of management personnel of all ages, the
improvement. The Company actively integrated itself
into the general trend of “building a world-class talent
Company adopted systematic policies to continuously
enhance the identification, cultivation, and utilisation
center and innovation hub”, it cultivated and attracted
outstanding young management talents, consistently
outstanding talents on all fronts. The Company focused
enhancing the construction of the management
on key groups such as high-level scientific and
personnel echelon. China Unicom continued to improve
technological talents as well as young scientific and
the supervision system for management personnel and
technological talents, supporting the significant
optimisation of strategic talent structure, continuously
improving the quality and efficiency of talents, and
promoting the construction of a high-level scientific and
technological talent team. China Unicom insisted on
improving efficiency while controlling the overall
q u a n t i t y . T h e C o m p a n y i m p l e m e n t e d t a r g e t
management for labour efficiency. In 2023, the labour
productivity of the Company continued to improve, and
the workforce size maintained stable. In response to the
national policy for stabilising employment, the Company
China Unicom (Hong Kong) Limited 87
strengthened oversight of their performance. The
By strengthening the payroll management in full swing,
Company continuously refined the appraisal and
China Unicom adhered to the principles of equivalence
evaluation system, provided education and guidance to
between remunerations and outcomes, as well as
management personnel to firmly establish the correct
incentives and constraints, to reasonably determine the
performance perspective. It iteratively and deeply
annual payroll budget. Focusing on value creation and
promoted the term-based system and contractual
efficiency enhancement, the Company upheld the
management for management personnel. The Company
incremental revenue sharing mechanism, breaking
strengthened the performance-oriented approach and
through the rigidity of the existing system and
rationalised the distribution gap. Furthermore, the
promoting continuous improvement in the input and
Company promoted upward and downward mobility for
output of human resources. The Company invested
management personnel and continuously carried out
special resources to facilitate technological innovation
normalised exit mechanisms to stimulate the vitality of
and the creation of specialised and innovative
the management team.
capabilities. Highlighting the importance of core talents
in key positions, the Company established incentive and
Focusing on the main responsibilities of “serving the
constraint mechanisms that tailored to the unique skills
Cyber Superpower and building a Digital China”, and
and differential contributions of individual talents. China
centring around the main businesses of “Connectivity
Unicom was committed to addressing structural
and Communications, Computing and Digital Smart
contradictions in the distribution field, optimising the
Applications”, the Company prioritised the strategic
relationship of internal income distribution, and
execution training and innovation capabilities
reasonably determining the remuneration levels among
improvement for professionals and skilled talents. It also
different groups. With the implementation of diversified
devised the annual key training programs for
incentives, the Company flexibly carried out medium
management and professional personnel. Based on the
and long-term incentive programs, and continued to
characteristics of skilled positions, the Company
operate the second phase of the restricted share
established standards to assess their capabilities,
i n c e n t i v e s c h e m e f o r C h i n a U n i t e d N e t w o r k
improved curriculum systems, implemented training
Communications Limited (“the A Share Company”),
e m p o w e r m e n t , a n d c o n d u c t e d c o m p e t e n c y
thereby building a community of shared interests and
certification. This systematic implementation facilitated
risks.
independent cultivation for key capabilities. China
Unicom continued to carry out digital empowerment for
key groups, aiming to enhance their performance
capabilities and professional qualities.
ANALYSIS OF STAFF COMPOSITION
PERSONNEL BY PROFESSION
BY AGE
BY EDUCATION BACKGROUND
50.30%
Marketing
29.60%
Technical
12.10%
Administrative
& Support
8.00%
Management
64.74%
Between 30-50
years old
18.37%
Over 50 years
old
16.89%
Under 30 years
old
67.70%
Bachelor
degree
22.30%
College or
below
10.00%
Postgraduate or
above
For further details of Human Resources Development, please refer to the relevant sections of the Company’s detailed Sustainability Report
2023. Please visit the Company’s website at www.chinaunicom.com.hk.
Annual Report 2023 88
INDEP ENDENT
AUD IT OR’S RE PORT
TO THE MEMBERS OF CHINA UNICOM (HONG KONG) LIMITED
(incorporated in Hong Kong with limited liability)
OPINION
We have audited the consolidated financial statements of China Unicom (Hong Kong) Limited (the “Company”) and its subsidiaries
(collectively referred to as the “Group”) set out on pages 93 to 201, which comprise the consolidated statement of financial position as
at 31 December 2023, the consolidated statement of income, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated
financial statements, including material accounting policy information and other explanatory information.
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at
31 December 2023, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance
with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the
“HKICPA”) and have been properly prepared in compliance with the Hong Kong Companies Ordinance.
BASIS FOR OPINION
We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
section of our report. We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants
(the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
China Unicom (Hong Kong) Limited 89
Key audit matter
Revenue recognition
How our audit addressed the key audit matter
We identified revenue recognition as a key audit matter because
Our procedures in relation to revenue recognition comprising
there is an inherent industry risk around the accuracy of revenue
both control testing and substantive procedures on a sample
recorded by the IT billing systems given the complexity of the
basis, included involving our internal IT specialists to assist with:
systems and the significance of volumes of data processed by the
systems.
•
Testing the IT environment in which the billing systems
reside, including interface controls between different IT
Revenues from the provision of telecommunications services are, in
applications.
general, recognised as performance obligations are satisfied. Fees
for telecommunications packages are recognised for each service
•
Testing the key controls over the calculation of the
type in the packages. The data records are captured and the
amounts billed to customers and the capturing and
revenue transactions are recorded by the IT billing systems.
recording of the revenue transactions.
Details of the accounting policies for revenue recognition and an
•
Testing the key controls over the authorisation of the rate
analysis of revenues are disclosed in Notes 2.25 and 6, respectively,
changes and the
input of such rates to the billing
to the consolidated financial statements.
systems.
•
Testing the end-to-end reconciliations from data records
to the billing systems and to the general ledger.
•
Testing the accuracy of customer bill calculations and the
respective revenue transactions recorded.
•
Testing revenue transactions by comparing the amounts
recognised in general ledger to supporting documents,
including customer bills, contracts and billing reports.
Annual Report 2023
90
Key audit matter
How our audit addressed the key audit matter
Impairment of goodwill and long-lived assets
We identified the impairment of goodwill and long-lived assets as a
Our procedures in relation to the impairment of goodwill and
key audit matter because the impairment assessment of the cash-
long-lived assets included:
generating unit to which those assets belong requires the
management to exercise significant judgments relating to the
•
With the assistance of our internal valuation specialists,
estimation of level of revenue, amount of operating costs and
assessing the discount rate and assumptions used by the
applicable discount rate.
management in the value in use model and comparing
the discount rate used by the management to externally
Details of the accounting policies for impairment of goodwill and
derived data and our own assessments of key inputs used
long-lived assets and the related accounting estimates are disclosed
in deriving the discount rate.
in Notes 2.8, 2.13 and 4.2, respectively, to the consolidated financial
statements. Details of goodwill impairment assessment are disclosed
•
With the assistance of our internal valuation specialists,
in Note 17 to the consolidated financial statements.
comparing the key inputs to the projected cash flows,
such as the revenue growth rate and amount of operating
costs, with corresponding historical data to evaluate the
reasonableness of the management’s projections.
•
Assessing and challenging the significant judgments and
estimates used
in the management’s
impairment
assessment and evaluating the sensitivity analysis
performed by the management.
OTHER INFORMATION
The directors of the Company are responsible for the other information. The other information comprises the information included in
the annual report, but does not include the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this
regard.
China Unicom (Hong Kong) LimitedINDEPENDENT AUDITOR’S REPORT
91
RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED
FINANCIAL STATEMENTS
The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view
in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance, and for such internal control as the
directors determine is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion solely to you, as a
body, in accordance with section 405 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. Reasonable assurance is a high level of
assurance but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
•
Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the directors.
Annual Report 2023 92
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and
whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in
the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in the independent auditor’s report is Ip Kan Wah.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
19 March 2024
China Unicom (Hong Kong) LimitedINDEPENDENT AUDITOR’S REPORT 93
CONSOLIDATED STATEMENT
OF IN COM E
(All amounts in Renminbi (“RMB”) millions, except per share data)
For the year ended 31 December 2023
Year ended 31 December
Note
2023
2022
Revenue
Interconnection charges
Depreciation and amortisation
Network, operation and support expenses
Employee benefit expenses
Costs of telecommunications products sold
Other operating expenses
Finance costs
Interest income
Share of net profit of associates
Share of net profit of joint ventures
Other income — net
Profit before income tax
Income tax expenses
Profit for the year
Profit attributable to:
Equity shareholders of the Company
Non-controlling interests
Profit for the year
Earnings per share for profit attributable to equity shareholders of the
Company during the year:
Basic earnings per share (RMB)
Diluted earnings per share (RMB)
6
7
8
9
10
11
12
13
14
14
372,597
354,944
(11,294)
(84,847)
(60,026)
(62,939)
(36,403)
(102,123)
(1,981)
2,105
2,519
1,803
3,534
22,945
(4,023)
(10,947)
(86,829)
(56,425)
(60,726)
(34,720)
(92,957)
(1,095)
1,747
2,153
1,593
3,850
20,588
(3,751)
18,922
16,837
18,726
196
16,745
92
18,922
16,837
0.61
0.61
0.55
0.55
The notes on pages 102 to 201 are an integral part of these consolidated financial statements.
Annual Report 2023
94
CONSOLIDATE D STATEMENT
OF COMPREHENSIVE INC OME
For the year ended 31 December 2023
(All amounts in RMB millions)
Profit for the year
Other comprehensive income
Items that will not be reclassified to statement of income:
Changes in fair value of financial assets measured at fair value through other comprehensive
income (“FVOCI”) (non-recycling)
Tax effect on changes in fair value of financial assets measured at FVOCI (non-recycling)
Changes in fair value of financial assets measured at FVOCI, net of tax (non-recycling)
Others
Items that may be reclassified subsequently to statement of income:
Changes in fair value of financial assets measured at FVOCI, net of tax (recycling)
Share of other comprehensive income of associates
Currency translation differences
Other comprehensive income for the year, net of tax
Year ended 31 December
2023
2022
18,922
16,837
195
(4)
191
(5)
186
43
2
88
133
319
(160)
(2)
(162)
(5)
(167)
(53)
2
408
357
190
Total comprehensive income for the year
19,241
17,027
Total comprehensive income attributable to:
Equity shareholders of the Company
Non-controlling interests
Total comprehensive income for the year
19,038
203
16,940
87
19,241
17,027
The notes on pages 102 to 201 are an integral part of these consolidated financial statements.
China Unicom (Hong Kong) Limited
95
CONSOLIDATED STATEMENT
OF FIN ANC IAL POSITION
At 31 December 2023
(All amounts in RMB millions)
As at 31 December
Note
2023
2022
ASSETS
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill
Interest in associates
Interest in joint ventures
Deferred income tax assets
Contract assets
Contract costs
Financial assets measured at fair value
Other assets
Current assets
Inventories
Contract assets
Accounts receivable
Prepayments and other current assets
Amounts due from ultimate holding company
Amounts due from related parties
Amounts due from domestic carriers
Financial assets measured at fair value
Short-term bank deposits and restricted deposits
Cash and cash equivalents
Total assets
15
16
17
19
20
13
21
22
23
25
26
21
27
28
45
45
23
24
29
355,995
52,608
2,771
44,188
10,240
817
86
8,493
5,217
22,535
352,433
59,227
2,771
42,469
8,582
469
61
5,857
4,109
20,442
502,950
496,420
2,217
279
38,692
26,208
4,610
588
2,267
24,428
11,079
47,733
1,882
271
26,331
21,155
4,606
465
1,944
19,593
14,699
55,297
158,101
146,243
661,051
642,663
Annual Report 2023
96
At 31 December 2023
(All amounts in RMB millions)
EQUITY
Equity attributable to equity shareholders of the Company
Share capital
Reserves
Retained profits
— Proposed final dividend
— Others
Non-controlling interests
Total equity
LIABILITIES
Non-current liabilities
Long-term bank loans
Lease liabilities
Deferred income tax liabilities
Deferred revenue
Amounts due to ultimate holding company
Other obligations
As at 31 December
Note
2023
2022
30
31
32
33
36
13
37
45
38
254,056
(12,912)
4,088
106,242
254,056
(15,234)
3,335
99,462
351,474
341,619
2,424
1,917
353,898
343,536
1,252
30,617
600
9,212
881
939
1,528
36,429
950
7,832
300
1,218
43,501
48,257
China Unicom (Hong Kong) LimitedCONSOLIDATED STATEMENT OF FINANCIAL POSITION
97
As at 31 December
Note
2023
2022
39
40
33
36
41
45
45
38
21
681
—
354
12,640
161,279
6,275
3,547
1,033
25,924
2,959
2,493
46,179
288
331
5,025
368
12,495
154,838
5,811
2,197
1,759
18,326
2,125
2,493
44,714
388
263,652
250,870
307,153
299,127
661,051
642,663
(105,551)
(104,627)
397,399
391,793
Current liabilities
Short-term bank loans
Commercial papers
Current portion of long-term bank loans
Lease liabilities
Accounts payable and accrued liabilities
Bills payable
Taxes payable
Amounts due to ultimate holding company
Amounts due to related parties
Amounts due to domestic carriers
Current portion of other obligations
Contract liabilities
Advances from customers
Total liabilities
Total equity and liabilities
Net current liabilities
Total assets less current liabilities
The notes on pages 102 to 201 are an integral part of these consolidated financial statements.
Approved and authorised for issue by the Board of Directors on 19 March 2024 and signed on behalf of the Board by:
Chen Zhongyue
Li Yuzhuo
Chairman and Chief Executive Officer
Executive Director and Chief Financial Officer
Annual Report 2023
98
CONSOLIDATE D STATEMENT
OF CHA NGES IN EQUITY
For the year ended 31 December 2023
(All amounts in RMB millions)
Attributable to equity shareholders of the Company
Share
capital
Note
General
Investment
risk
revaluation
Statutory
Other
Retained
Non-
controlling
reserve
reserve
reserves
reserves
profits
Total
interests
Balance at 1 January 2022
254,056
987
Total comprehensive income for the year
Contribution from non-controlling interests
Share of associate’s other reserves
Appropriation to statutory reserves
Dividends relating to 2021 final
Dividends relating to 2022 interim
Capital contribution relating to
share-based payment borne by
32
32
A Share Company (as defined in Note 1)
44
Others
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(9,302)
(162)
—
—
—
—
—
—
—
32,815
(41,728)
—
—
—
1,471
—
—
—
—
357
235
38
—
—
—
55
—
95,509
16,745
—
—
(1,471)
(2,937)
(5,049)
332,337
16,940
235
38
—
(2,937)
(5,049)
—
—
55
—
1,096
87
739
—
—
—
—
—
(5)
Total
equity
333,433
17,027
974
38
—
(2,937)
(5,049)
55
(5)
Balance at 31 December 2022
254,056
987
(9,464)
34,286
(41,043)
102,797
341,619
1,917
343,536
Total comprehensive income for the year
Contribution from non-controlling interests
Appropriation to statutory reserves
Dividends relating to 2022 final
Dividends relating to 2023 interim
Capital contribution relating to
share-based payment borne by
A Share Company
Others
32
32
44
—
—
—
—
—
—
—
—
—
—
—
—
—
—
187
—
—
—
—
—
—
—
—
1,647
—
—
—
—
125
44
—
—
—
282
37
18,726
—
(1,647)
(3,335)
(6,211)
19,038
44
—
(3,335)
(6,211)
—
—
282
37
203
342
—
—
—
—
(38)
19,241
386
—
(3,335)
(6,211)
282
(1)
Balance at 31 December 2023
254,056
987
(9,277)
35,933
(40,555)
110,330
351,474
2,424
353,898
The notes on pages 102 to 201 are an integral part of these consolidated financial statements.
China Unicom (Hong Kong) Limited
99
CONSOLIDATED STATEMENT
OF C ASH FLOWS
For the year ended 31 December 2023
(All amounts in RMB millions)
Year ended 31 December
Note
2023
2022
106,022
103,365
2,105
(1,906)
(3,830)
1,747
(1,150)
(3,425)
Cash flows from operating activities
Cash generated from operations
Interest received
Interest paid
Income tax paid
Net cash inflow from operating activities
102,391
100,537
Cash flows from investing activities
Purchase of property, plant and equipment, right-of-use assets and
other assets
(a)
Proceeds from disposal of property, plant and equipment and other assets
Acquisition of financial assets measured at fair value through profit or loss
(“FVPL”)
Proceeds from disposal of financial assets measured at FVPL
Acquisition of debt securities measured at FVOCI (recycling)
Proceeds from disposal of debt securities measured at FVOCI (recycling)
Proceeds from equity securities measured at FVOCI (non-recycling)
(Increase)/decrease in other financial assets measured at amortised cost
Dividends received from financial assets measured at FVOCI (non-recycling)
Acquisition of interest in associates
Acquisition of interest in joint ventures
Proceeds from disposal of associates and joint ventures
Dividends received from associates
Dividends received from joint venture
Placement of short-term bank deposits and restricted deposits
Release of short-term bank deposits and restricted deposits
Lending by Unicom Group Finance Company Limited (“Finance Company”) to
a related party
Repayment of loans from a related party to Finance Company
(79,375)
1,388
(1,230)
1,707
(22,980)
17,397
—
(5,424)
159
(776)
(5)
400
1,246
150
(11,015)
12,815
(5,700)
5,700
(72,470)
1,710
(1,741)
1,876
(17,630)
26,864
1
700
149
(1)
—
—
998
150
(9,818)
7,300
(11,800)
17,600
Net cash outflow from investing activities
(85,543)
(56,112)
Annual Report 2023
100
For the year ended 31 December 2023
(All amounts in RMB millions)
Cash flows from financing activities
Capital contributions from non-controlling interests
Proceeds from bank loans and other obligations
Proceeds from commercial papers
Loans from related parties
Repayment of short-term bank loans
Repayment of long-term bank loans
Repayment of commercial papers
Repayment of related party loans
Repayment of promissory notes
Repayment of corporate bonds
Capital element of lease rentals paid
Payment of issuing expense for commercial papers
Dividends paid to equity shareholders of the Company
Net deposits with Finance Company
Decrease in statutory reserve deposits placed by Finance Company
Repayment of other obligations
Year ended 31 December
Note
2023
2022
386
711
—
583
(330)
(385)
(5,000)
(913)
—
—
(12,103)
—
(9,546)
949
1,542
(409)
867
330
5,000
471
(385)
(420)
(6,800)
—
(1,000)
(2,000)
(13,373)
(5)
(7,986)
621
870
—
Net cash outflow from financing activities
(24,515)
(23,810)
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Effect of changes in foreign exchange rate
(7,667)
55,297
103
20,615
34,280
402
Total cash and cash equivalents, end of year
29
47,733
55,297
Analysis of the balances of cash and cash equivalents:
Cash balances
Bank balances
—
47,733
—
55,297
47,733
55,297
(a) Major non-cash transaction: On 13 December 2022, the Board of Directors of the Company approved China United Network
Communications Corporation Limited (“CUCL”) and China Tower Corporation Limited (“Tower Company”) to sign the commercial
pricing agreement and the service agreement, which constituted a lease modification under HKFRS 16, “Leases”, the transaction
has no impact on the consolidated statement of cash flows for the year ended 31 December 2022. Details of this transaction are
set out in Note 16 and Note 45.
The notes on pages 102 to 201 are an integral part of these consolidated financial statements.
China Unicom (Hong Kong) LimitedCONSOLIDATED STATEMENT OF CASH FLOWS
101
Year ended 31 December
2023
2022
22,945
20,588
84,847
(2,105)
1,956
1,181
6,356
(159)
(14)
(1)
(2)
(424)
(114)
(2,519)
(1,803)
282
(18,212)
(28)
(8,498)
(94)
278
(199)
(193)
(4)
(123)
(323)
12,124
515
(100)
1,465
1,464
(49)
25
6,714
834
86,829
(1,747)
1,046
1,882
6,918
(149)
(72)
—
—
(438)
(24)
(2,153)
(1,593)
55
(13,718)
147
(5,529)
(338)
(1,083)
(1,108)
(3,611)
188
(195)
63
14,866
742
266
(990)
980
83
(2,440)
4,037
(137)
The reconciliation of profit before income tax to cash generated from operations is as follows:
Profit before income tax
Adjustments for:
Depreciation and amortisation
Interest income
Finance costs
Loss on disposal of property, plant and equipment
Impairment losses under expected credit loss (“ECL”) model and write-down of inventories
Dividends from financial assets measured at FVOCI (non-recycling)
Gains on disposal of financial assets measured at FVPL
Gains on disposal of financial assets measured at FVOCI (recycling)
Dividends from financial assets at FVPL
Investment income from debt securities measured at FVOCI (recycling)
Fair value gains on financial assets measured at FVPL
Share of net profit of associates
Share of net profit of joint ventures
Expenses for restricted shares of A Share Company granted to the Group’s employees
Changes in working capital:
Increase in accounts receivable
(Increase)/decrease in contract assets
Increase in contract costs
Increase in inventories
Decrease/(increase) in restricted deposits
Increase in other assets
Increase in prepayments and other current assets
(Increase)/decrease in amounts due from ultimate holding company
Increase in amounts due from related parties
(Increase)/decrease in amounts due from domestic carriers
Increase in accounts payable and accrued liabilities
Increase in other taxes payable
(Decrease)/increase in advances from customers
Increase/(decrease) in contract liabilities
Increase in deferred revenue
(Decrease)/increase in other obligations
Increase/(decrease) in amounts due to ultimate holding company
Increase in amounts due to related parties
Increase/(decrease) in amounts due to domestic carriers
Cash generated from operations
106,022
103,365
The notes on pages 102 to 201 are an integral part of these consolidated financial statements.
Annual Report 2023
102
NOT ES TO THE CONSO LIDATED
FINANCIAL STATEMENTS
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
1.
ORGANISATION AND PRINCIPAL ACTIVITIES
China Unicom (Hong Kong) Limited (the “Company”) was incorporated as a limited liability company in the Hong Kong Special
Administrative Region (“Hong Kong”), the People’s Republic of China (the “PRC”) on 8 February 2000. The principal activity of the
Company is investment holding. The principal activities of the Company’s subsidiaries are the provision of comprehensive
telecommunications services. The Company and its subsidiaries are hereinafter referred to as the “Group”. The address of the
Company’s registered office is 75th Floor, The Center, 99 Queen’s Road Central, Hong Kong.
The shares of the Company were listed on The Stock Exchange of Hong Kong Limited (“SEHK”) on 22 June 2000.
The substantial shareholders of the Company are China Unicom (BVI) Limited (“Unicom BVI”) and China Unicom Group
Corporation (BVI) Limited (“Unicom Group BVI”). The majority of equity interests in Unicom BVI is owned by China United
Network Communications Limited (hereinafter referred to as “A Share Company”), a joint stock company incorporated in the PRC
on 31 December 2001, with its A shares listed on the Shanghai Stock Exchange on 9 October 2002.
The directors of the Company consider Unicom BVI and China United Network Communications Group Company Limited (a
state-owned enterprise established in the PRC, hereinafter referred to as “Unicom Group”) as the immediate holding company
and ultimate holding company, respectively.
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
2.1
Statement of compliance
The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards
(“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”), which collective term
includes all applicable individual HKFRSs, Hong Kong Accounting Standards (“HKASs”) and Interpretations issued by the
HKICPA. The consolidated financial statements also comply with the applicable disclosure provisions of the Rules
Governing the Listing of Securities on the SEHK (the “Listing Rules”) and the Hong Kong Companies Ordinance.
China Unicom (Hong Kong) Limited 103
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.2
Basis of preparation
The consolidated financial statements have been prepared under the historical cost basis, except for certain financial
instruments that are measured at fair values at the end of each reporting period.
The consolidated financial statements prepared by the PRC subsidiaries for PRC statutory reporting purposes are based on
Chinese Accounting Standards for Business Enterprises issued by the Ministry of Finance (the “MOF”) of the PRC, which
became effective from 1 January 2007 with certain transitional provisions. The Group also prepared consolidated financial
statements in accordance with Chinese Accounting Standards for Business Enterprises (“PRC financial statements”). There
are certain differences between the Group’s HKFRS financial statements and PRC financial statements. The principal
adjustments made to PRC financial statements to conform to HKFRSs include the following:
•
reversal of the revaluation surplus or deficit and related amortisation charges arising from the revaluation of
prepayments for the leasehold land performed by independent valuers for the purpose of reporting to relevant
PRC government authorities, and adjustment for corresponding deferred taxation;
•
•
recognition of goodwill associated with the acquisition of certain subsidiaries prior to 2005; and
recognition of the dilution gain or loss of interest in equity method investees.
(a)
Going Concern Assumption
As at 31 December 2023, current liabilities of the Group exceeded current assets by approximately RMB105.6
billion (2022: approximately RMB104.6 billion). Considering the current economic conditions and taking into
account of the Group’s expected capital expenditure in the foreseeable future, management has comprehensively
considered the Group’s available sources of funds as follows:
•
•
The Group’s continuous net cash inflows from operating activities;
Approximately RMB201.0 billion of revolving banking facilities of which approximately RMB190.1 billion was
unutilised as at 31 December 2023; and
•
Other available sources of financing from domestic banks and other financial institutions in view of the Group’s
good credit history.
In addition, the Group believes that it has the ability to raise funds from short, medium and long-term
perspectives and maintain reasonable financing costs through appropriate financing portfolio.
Based on the above considerations, the Board of Directors is of the opinion that the Group has sufficient funds to
meet its working capital commitments, expected capital expenditure and debt obligations. As a result, the
consolidated financial statements of the Group for the year ended 31 December 2023 have been prepared on a
going concern basis.
Annual Report 2023 104
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.2
Basis of preparation (Continued)
(b)
Critical Accounting Estimates and Judgment
The preparation of the consolidated financial statements in conformity with HKFRSs requires management to make
judgments, 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 judgments about 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.
Judgments made by management in the application of HKFRSs that have significant effect on the consolidated
financial statements and major sources of estimation uncertainty are discussed in Note 4.
(c)
New Accounting Standards and Amendments
The HKICPA has issued a number of new and amendments to HKFRSs that are first effective for the current
accounting period of the Group:
•
•
•
•
•
HKFRS 17 (including the October 2020 and February 2022 Amendments to HKFRS 17), “Insurance Contracts”
Amendments to HKAS 8, “Definition of Accounting Estimates”
Amendments to HKAS 12, “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”
Amendments to HKAS 12, “International Tax Reform-Pillar Two Model Rules”
Amendments to HKAS 1 and HKFRS Practice Statement 2, “Disclosure of Accounting Policies”
In addition, the Group applied the agenda decision of the International Financial Reporting Standard
Interpretations Committee of the International Accounting Standard Board (the “Committee”), including “Definition
of a Lease — Substitution Rights” (IFRS 16, “Leases”), which is relevant to the Group. Given that HKFRSs contain
wordings that are almost identical to the equivalent IFRS Standards except for minor differences, the agenda
decision of the Committee is equally applicable to the Group.
The amendments to HKAS 12, “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”
narrow the scope of the recognition exemption of deferred tax liabilities and deferred tax assets in paragraphs 15
and 24 of HKAS 12, “Income Taxes” so that it no longer applies to transactions that, on initial recognition, give rise
to equal taxable and deductible temporary differences.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 105
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.2
Basis of preparation (Continued)
(c)
New Accounting Standards and Amendments (Continued)
In accordance with the transition provision:
(i)
the Group has applied the new accounting policy retrospectively to leasing transactions that occurred on or
after 1 January 2022;
(ii)
the Group also, as at 1 January 2022, recognised a deferred tax asset (to the extent that it is probable that
taxable profit will be available against which the deductible temporary difference can be utilised) and a
deferred tax liability for all deductible and taxable temporary difference associated with right-of-use-assets
and lease liabilities.
The application of the amendments has had no material impact on the Group’s financial position and performance,
except that the Group disclosed the related deferred tax liabilities and deferred tax assets on a gross basis in
Note 13 which had no impact on the retained profits at the earliest period presented.
Except for the effect mentioned above, the application of the above new and amendments and agenda decisions
have had no material effect on the Group’s financial positions and performance for the current and prior periods
and/or on the disclosures set out in these consolidated financial statements.
(d)
Amendments to HKFRSs in issue but not yet effective:
The HKICPA has issued a number of amendments to HKFRSs which are not yet effective for the year ended
31 December 2023 and which have not been early adopted in these consolidated financial statements.
Effective for
accounting periods
beginning on
or after
•
•
•
•
•
•
Amendments to HKAS 1, “Classification of Liabilities as Current or Non-current” and
1 January 2024
related amendments to Hong Kong Interpretation 5 (2020)
Amendments to HKAS 1, “Non-current Liabilities with Covenants”
1 January 2024
Amendments to HKFRS 10 and HKAS 28, “Sale or Contribution of Assets between an
to be determined
Investor and its Associate or Joint Venture”
Amendments to HKFRS 16, “Lease Liability in a Sale and Leaseback”
Amendments to HKAS 7 and HKFRS 7, “Supplier Finance Arrangements”
Amendments to HKAS 21, “Lack of Exchangeability”
1 January 2024
1 January 2024
1 January 2025
The Group has not applied any amendments to HKFRSs that is not yet effective for the current accounting period.
The Group is assessing the impact of such amendments to standards, and will adopt the relevant amendments in
the subsequent periods as required. So far it has concluded that the adoption of them is unlikely to have a
significant impact on the consolidated financial statements.
Annual Report 2023
106
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.3
Subsidiaries and non-controlling interests
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed, or has rights to
variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. When assessing whether the Group has power, only substantive rights (held by the Group and other parties)
are considered.
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, transactions and cash flows 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.
The Group adopted the purchase method of accounting to account for business combination of entities and businesses
under common control before 2005. Under the purchase method of accounting in force at the date of the acquisition, the
cost of an acquisition was measured at the fair value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed were
measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The
excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired was
recorded as goodwill. If the cost of acquisition was less than the fair value of the Group’s share of the identifiable net
assets of the subsidiary acquired, the difference was recognised directly in the consolidated statement of income.
Under HKFRSs, business combination of entity and business under common control of the Group after 2005 was
accounted for using merger accounting in accordance with the Accounting Guideline 5 “Merger accounting for common
control combinations” (“AG 5”) issued by the HKICPA in 2005.
Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in
respect of which the Group has not agreed any additional terms with the holders of those interests which would result in
the Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial
liability. For each business combination, the Group elects to measure non-controlling interests at the non-controlling
interests’ proportionate share of the subsidiary’s net identifiable assets.
Non-controlling interests are presented in the consolidated statement of financial position within equity, separately from
equity attributable to the equity shareholders of the Company. Non-controlling interests in the results of the Group are
presented on the face of the consolidated statement of income and the consolidated statement of comprehensive income
as an allocation of the total profit or loss and total comprehensive income for the year between non-controlling interests
and the equity shareholders of the Company.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 107
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.3
Subsidiaries and non-controlling interests (Continued)
Loans from holders of non-controlling interests and other contractual obligations towards these holders are presented as
financial liabilities in the consolidated statement of financial position in accordance with Note 2.20 depending on the
nature of the liability.
Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as equity
transactions, whereby adjustments are made to the amounts of controlling and non-controlling
interests within
consolidated equity to reflect the change in relative interests, but no adjustments are made to goodwill and no gain or
loss is recognised.
When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary,
with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date
when control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a
financial asset (see Note 2.12) or, when appropriate, the cost on initial recognition of an investment in an associate or a
joint venture (see Note 2.4).
In the Company’s statement of financial position, an investment in a subsidiary is stated at cost less impairment losses,
unless the investment is classified as held for sale.
2.4
Associates, joint ventures and joint arrangement
An associate is an entity in which the Group has significant influence, but not control or joint control, over its
management, including participation in the financial and operating policy decisions.
A joint arrangement is an arrangement of which two or more parties have joint control. Joint control is the contractually
agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the
unanimous consent of the parties sharing control.
A joint venture is an arrangement whereby the Group and other parties contractually agree to share control of the
arrangement, and have rights to the net assets of the arrangement.
An investment in an associate or a joint venture is accounted for in the consolidated financial statements under the
equity method, unless it is classified as held for sale (or included in a disposal group that is classified as held for sale).
Under the equity method, the investment is initially recorded at cost. On acquisition of the investment in an associate or
a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable
assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the
investment. The cost of the investment includes purchase price, other costs directly attributable to the acquisition of the
investment, and any direct investment into the associate or joint venture that forms part of the Group’s equity
investment. Thereafter, the investment is adjusted for the post acquisition change in the Group’s share of the investee’s
net assets and any impairment loss relating to the investment. The Group’s share of the post-acquisition post-tax results
of the investees and any impairment losses are recognised in the consolidated statement of income, whereas the Group’s
share of the post-acquisition post-tax items of the investees’ other comprehensive income is recognised as other
comprehensive income in the consolidated statement of comprehensive income.
Annual Report 2023 108
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.4
Associates, joint ventures and joint arrangement (Continued)
When the Group’s share of losses exceeds its interest in the associate or the joint venture, the Group’s interest is
reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of the investee. For this purpose, the Group’s interest is the carrying
amount of the investment under the equity method together with the Group’s long-term interests that in substance form
part of the Group’s net investment in the associate or the joint venture (after applying the ECL model to such other
long-term interests where applicable).
Unrealised profits and losses resulting from transactions between the Group and its associates and joint venture are
eliminated to the extent of the Group’s interest in the investee, except where unrealised losses provide evidence of an
impairment of the asset transferred, in which case they are recognised immediately in profit or loss.
If an investment in an associate becomes an investment in a joint venture or vice versa, retained interest is not
remeasured. Instead, the investment continues to be accounted for under the equity method.
In all other cases, when the Group ceases to have significant influence over an associate or joint control over a joint
venture, it is accounted for as a disposal of the entire interest in that investee, with a resulting gain or loss being
recognised in profit or loss. Any interest retained in that former investee at the date when significant influence or joint
control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a financial
asset. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to
that associate or joint venture on the same basis as would be required if that associate or joint venture had directly
disposed of the related assets or liabilities.
A joint operation is a joint arrangement whereby the Group and other parties that have joint control of the arrangement
have rights to the assets, and obligations for the liabilities, relating to the joint arrangement.
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in
accordance with HKFRSs applicable to the particular assets, liabilities, revenues and expenses.
To better share the risks and rewards associated with the construction, operation and maintenance of the 5G network
infrastructure, the Group entered into a framework agreement with China Telecom Corporation Limited (“China Telecom”)
to build, maintain and share one nationwide 5G access network infrastructure (the “Cooperation Agreement”). In
accordance with the Cooperation Agreement, each of the Group and China Telecom is responsible for the construction
and maintenance of 5G network infrastructure in their respective designated regions, and bears the associated
construction, maintenance and operating costs. Both parties have established a joint operation mechanism and key
decisions including overall network planning, construction project commencement and completion acceptance and a
unified standard on construction and maintenance services across all regions are subject to mutual agreement by both
parties.
The Group has accounted for the arrangement as a joint operation that is not structured through a separate vehicle, and
has recognised its share of assets, liabilities, revenues and expenses in accordance with the terms of the arrangement.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 109
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.5
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker (the “CODM”). The CODM, who is responsible for allocating resources and assessing performance of the
operating segments regularly, has been identified as the executive directors of the Company that make strategic
decisions.
2.6
Foreign currency translation
(a)
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entities operate (the “functional currency”). The consolidated financial
statements are presented in RMB, which is the Company’s functional and presentation currency.
(b)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in the statement of income. Non-monetary items
carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date
when the fair value was determined. When a fair value gain or loss on a non-monetary item is recognised in profit
or loss, any exchange component of that gain or loss is also recognised in profit or loss. When a fair value gain or
loss on a non-monetary item is recognised in other comprehensive income, any exchange component of that gain
or loss is also recognised in other comprehensive income. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
(c)
Group companies
The results and financial position of all the group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
•
Assets and liabilities for each statement of financial position presented are translated at the closing rate at
the date of the statement of financial position;
•
Income and expenses for each statement presenting profit or loss and other comprehensive income are
translated at average exchange rates (unless the use of the average rate for a period is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the transactions); and
•
All resulting exchange differences are recognised in other comprehensive income and as a separate component
of equity into other reserves.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations are
recognised
in other comprehensive
income. When a foreign operation
is sold, such exchange differences
attributable to the equity shareholders of the Company are reclassified to the statement of income as part of the
gain or loss on disposal.
Annual Report 2023 110
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.7
Property, plant and equipment
(a)
Construction-in-progress
Construction-in-progress (“CIP”) mainly represents buildings, plant and equipment under construction and pending
installation, and is stated at cost less accumulated impairment losses. Costs include construction and acquisition
costs, and interest charges arising from borrowings used to finance the assets during the construction period. No
provision for depreciation is made on CIP until such time as the assets are completed and ready for its intended
use. When the asset being constructed becomes available for use, the CIP is transferred to the appropriate
category of assets.
(b)
Property, plant and equipment
Property, plant and equipment held by the Group are stated at cost less accumulated depreciation and
accumulated impairment losses, and are depreciated over their expected useful lives.
Property, plant and equipment comprise buildings, telecommunications equipment, leasehold improvements, office
furniture, fixtures, motor vehicles and other equipment. The cost of an asset, except for those acquired in
exchange for a non-monetary asset or assets, comprises its purchase price and any directly attributable costs of
bringing the asset to its working condition and location for its intended use, including costs of testing whether the
related assets is functioning properly.
If an item of property, plant and equipment is acquired in exchange for another item of non-monetary assets, the
cost of such an item of property, plant and equipment is measured at fair value unless (i) the exchange
transactions lacks commercial substance or (ii) the fair value of neither the asset received nor the asset given up is
reliably measurable. If the acquired item is not measured at fair value, its cost is measured at the carrying amount
of the asset given up.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable at the time the costs are incurred that future economic benefits associated with the item
will flow to the Group, and the cost of the item can be measured reliably. The carrying amount of the replaced
part is derecognised. All other repairs and maintenance are charged to the consolidated statement of income
during the financial period in which they are incurred.
(c)
Depreciation
Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their costs
less their residual values over their estimated useful lives, as follows:
Buildings
Telecommunications equipment
Office furniture, fixtures, motor vehicles and other equipment
Depreciable life
Residual rate
10–30 years
5–10 years
5–10 years
3%
0–3%
3%
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
111
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.7
Property, plant and equipment (Continued)
(c)
Depreciation (Continued)
Leasehold improvements are depreciated over the shorter of their estimated useful lives and the lease terms.
The assets’ residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each
date of the statement of financial position.
(d)
Gain or loss on disposal of property, plant or equipment
Gains or losses on disposal of property, plant or equipment are determined by comparing the net sales proceeds
with the carrying amounts, and are recognised in the consolidated statement of income.
2.8
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiaries at the date of acquisition. Goodwill is tested at least annually for
impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gain
or loss on the disposal of an entity includes the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to a cash-generating unit (or group of cash-generating units) for the purpose of impairment testing,
which are expected to benefit from the synergies of business combination in which the goodwill arose and represent the
lowest level at which the goodwill is monitored for internal management purposes and not larger than an operating
segment. If the recoverable amount is less than its carrying amount, the impairment loss is allocated first to reduce the
carrying amount of any goodwill and then to the other assets on a pro-rata basis based on the carrying amount of each
asset in the cash-generating unit (or group of cash-generating units).
2.9
Contract costs
Contract costs are either the incremental costs of obtaining a contract with a customer or the costs to fulfil a contract
with a customer which are not capitalised as inventory (see Note 2.15), property, plant and equipment (see Note 2.7) or
intangible assets.
Incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contract with a customer that
it would not have incurred if the contract had not been obtained, e.g. an incremental sales commission. Incremental costs
of obtaining a contract are capitalised when incurred if the costs are expected to be recovered, unless the expected
amortisation period is one year or less from the date of initial recognition of the asset, in which case the costs are
expensed when incurred. Other costs of obtaining a contract are expensed when incurred.
Annual Report 2023 112
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.9
Contract costs (Continued)
Costs to fulfil a contract are capitalised if the costs relate directly to an existing contract or to a specifically identifiable
anticipated contract, generate or enhance resources that will be used to provide goods or services in the future and are
expected to be recovered. Costs that relate directly to an existing contract or to a specifically identifiable anticipated
contract may include direct labour, direct materials, allocations of costs, costs that are explicitly chargeable to the
customer and other costs that are incurred only because the Group entered into the contract. Other costs of fulfilling a
contract, which are not capitalised as inventory, property, plant and equipment or intangible assets, are expensed as
incurred.
Capitalised contract costs are stated at cost less accumulated amortisation and impairment losses (see Note 2.13).
Amortisation of capitalised contract costs is charged to profit or loss on a systematic basis that is consistent with the
transfer to the customer of the goods or services to which the assets relate.
2.10 Contract assets and contract liabilities
A contract asset is recognised when the Group recognises revenue (see Note 2.25) before being unconditionally entitled
to the consideration under the payment terms set out in the contract. Contract assets are assessed for ECL in accordance
with the policy set out in Note 2.14 and are reclassified to receivables when the right to the consideration has become
unconditional (see Note 2.16).
A contract liability represents the Group’s obligation to transfer goods or services to a customer for which the Group has
received consideration (or an amount of consideration is due) from the customer.
The Group provides subscriber points reward program, the transaction price of providing telecommunications services and
the subscriber points reward is allocated based on their standalone selling price. The allocated portion of transaction price
for the subscriber points reward is recorded as contract liability when the rewards are granted and recognised as revenue
when the points are redeemed or expired.
For a single contract with the customer, either a net contract asset or a net contract liability is presented. For multiple
contracts, contract assets and contract liabilities of unrelated contracts are not presented on a net basis.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 113
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.11 Other assets
Other assets mainly represent (i) computer software; (ii) long-term prepaid services charges for transmission lines and
electricity cables.
(i)
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use
the specific software. These costs are amortised over their estimated useful lives on a straight-line basis.
(ii)
Long-term prepaid services charges for transmission lines and electricity cables are amortised using a straight-line
method over service period.
2.12
Financial assets and financial liabilities
The Group classifies its financial assets into two measurement categories: those measured at amortised cost and those
measured at fair value. The determination is made at initial recognition and the classification depends on the entity’s
business model for managing its financial instruments and the contractual cash flow characteristics of the instrument.
Financial assets measured at amortised cost
Financial assets are classified under this category if they satisfy both of the following conditions:
•
The assets are held within a business model whose objective is to hold assets in order to collect contractual cash
flows on the financial assets, but not for the purpose of realising fair value gains; and
•
The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding, with interest being the consideration for the time value
of money and for the credit risk associated with the principal amount outstanding during a particular period of
time.
Cash and cash equivalents, short-term bank deposits and restricted deposits, accounts receivable, certain financial assets
included in prepayments and other current assets, amounts due from ultimate holding company, amounts due from
related parties, amounts due from domestic carriers and certain other assets are classified under this category.
Financial assets under this category are carried at amortised cost using effective interest method less provision for
impairment. The effective interest method is a method of calculating the amortised cost of a financial asset and of
allocating interest income over the relevant period. Interest income is recognised in the consolidated statement of income
using the effective interest method and disclosed as interest income.
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity. Gains and losses arising from derecognition of financial assets, being the differences between the net sales
proceeds and the carrying values, are recognised in the consolidated statement of income.
Annual Report 2023 114
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.12
Financial assets and financial liabilities (Continued)
Financial assets measured at fair value
Investments and other financial assets are classified under this category if they do not meet the conditions to be
measured at amortised cost. Financial assets under this category are debt and equity investments carried at fair value.
Debt investments are classified as FVOCI (recycling), if the contractual cash flows of the investment comprise solely
payments of principal and interest and the investment is held within a business model whose objective is achieved by
both the collection of contractual cash flows and sale. Changes in fair value are recognised in other comprehensive
income, except for the recognition in profit or loss of ECLs, interest income (calculated using the effective interest
method) and foreign exchange gains and losses. When the investment is derecognised, the amount accumulated in other
comprehensive income is recycled from equity to profit or loss.
An investment in equity securities is classified as FVPL unless the equity investment is not held for trading purposes and
on initial recognition of the investment, the Group makes an irrevocable election to designate the investment at FVOCI
(non-recycling) such that subsequent changes in fair value are recognised in other comprehensive income. Such
irrevocable elections are made on an instrument-by-instrument basis at the time of initial recognition, but may only be
made if the investment meets the definition of equity from the issuer’s perspective. Where such an election is made, the
amount accumulated in other comprehensive income remains in the investment revaluation reserve (non-recycling) until
the investment is disposed of. At the time of disposal, the amount accumulated in the investment revaluation reserve
(non-recycling) is transferred to retained profits. It is not recycled through profit or loss. Fair value gains or losses of
financial assets measured at FVPL and dividends from an investment in equity securities, irrespective of whether classified
as at FVPL or FVOCI, are recognised in profit or loss as other income in accordance with the policy set out in Note 2.27.
Financial liabilities
The Group’s financial liabilities are subsequently measured at amortised cost using the effective interest method or at
FVPL.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period.
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or
have expired. The difference between the carrying amount of the financial liability derecognised and the consideration
paid and payable is recognised in profit or loss.
Offsetting a financial asset and a financial liability
A financial asset and a financial liability are offset as a net amount presented in the consolidated statement of financial
position when, and only when, the Group currently has a legally enforceable right to set off the recognised amounts; and
intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 115
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.13
Impairment of non-financial assets other than goodwill
At the end of the reporting period, the Group reviews the carrying amounts of its property, plant and equipment,
right-of-use assets, intangible assets with finite useful lives and contract costs to determine whether there is any
indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the
relevant asset is estimated in order to determine the extent of the impairment loss (if any). Intangible assets that are not
yet available for use are not subject to amortisation and are tested for impairment at each date of the statement of
financial position and whenever there is an indication that they may be impaired. For the purpose of assessing
impairment, assets are estimated individually, or when it is not possible, grouped at the smallest levels for which there
are largely independent identifiable cash inflows of those from other assets or groups of assets (the “cash-generating
unit”). Before the Group recognises an impairment loss for assets capitalised as contract costs under HKFRS 15 “Revenue
from contracts with customers” (“HKFRS 15”), the Group assesses and recognises any impairment loss on other assets
related to the relevant contracts in accordance with applicable standards. Then, impairment loss, if any, for assets
capitalised as contract costs is recognised to the extent the carrying amounts exceeds the remaining amount of
consideration that the Group expects to receive in exchange for related goods or services less the costs which relate
directly to providing those goods or services that have not been recognised as expenses. The assets capitalised as
contract costs are then included in the carrying amount of the cash-generating unit to which they belong for the purpose
of evaluating impairment of that cash-generating unit. An impairment loss is recognised for the amount by which the
asset’s (or the cash-generating unit’s) carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of (i) fair value less costs of disposal and (ii) value in use.
2.14 Credit losses from financial instruments and contract assets
The Group recognises a loss allowance for ECLs on the following items:
—
financial assets measured at amortised cost (including cash and cash equivalents, short-term bank deposits and
restricted deposits, accounts receivable, certain financial assets included in prepayments and other current assets,
amounts due from ultimate holding company, amounts due from related parties, amounts due from domestic
carriers and certain other assets);
—
—
contract assets as defined in HKFRS 15 (see Note 2.10); and
debt securities measured at FVOCI (recycling).
Financial assets measured at fair values, including financial assets measured at FVPL and financial assets measured at
FVOCI (non-recycling), are not subject to the ECL assessment.
Annual Report 2023 116
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.14 Credit losses from financial instruments and contract assets (Continued)
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all expected
cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash
flows that the Group expects to receive).
The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is
exposed to credit risk.
In measuring ECLs, the Group takes into account reasonable and supportable information that is available without undue
cost or effort. This includes information about past events, current conditions and forecasts of future economic
conditions.
ECLs are measured on either of the following bases:
—
—
twelve-month ECLs: these are losses that are expected to result from possible default events within the twelve
months after the reporting date; and
lifetime ECLs: these are losses that are expected to result from all possible default events over the expected lives
of the items to which the ECL model applies.
Loss allowances for accounts receivable and contract assets are always measured at an amount equal to lifetime ECLs.
ECLs on financial assets assessed on collective basis are estimated using a provision matrix based on the Group’s
historical credit loss experience, adjusted for factors that are specific to the debtors and an assessment of both the
current and forecast general economic conditions at the reporting date.
For all other financial instruments, the Group recognises a loss allowance equal to twelve months ECLs unless there has
been a significant increase in credit risk of the financial instrument since initial recognition, in which case the loss
allowance is measured at an amount equal to lifetime ECLs.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 117
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.14 Credit losses from financial instruments and contract assets (Continued)
Significant increases in credit risk
In assessing whether the credit risk of a financial instrument has increased significantly since initial recognition, the Group
compares the risk of default occurring on the financial instrument assessed at the reporting date with that assessed at the
date of initial recognition. The Group considers both quantitative and qualitative information that is reasonable and
supportable, including historical experience and forward-looking information that is available without undue cost or effort.
In particular, the following information is taken into account when assessing whether credit risk has increased significantly
since initial recognition:
—
—
—
—
failure to make payments of principal or interest on their contractually due dates;
an actual or expected significant deterioration in a financial instrument’s external or internal credit rating (if
available);
an actual or expected significant deterioration in the operating results of the debtor; and
existing or forecast changes in the technological, market, economic or legal environment that have a significant
adverse effect on the debtor’s ability to meet its obligation to the Group.
Depending on the nature of the financial instruments, the assessment of a significant increase in credit risk is performed
on either an individual basis or a collective basis. When the assessment is performed on a collective basis, the financial
instruments are grouped based on shared credit risk characteristics, such as past due status and credit risk ratings.
ECLs are remeasured at each reporting date to reflect changes in the financial instrument’s credit risk since initial
recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss. Except for debt
securities measured at FVOCI (recycling), the Group recognises an impairment gain or loss for all other financial
instruments with a corresponding adjustment to their carrying amount through a loss allowance account, while
corresponding adjustment of debt securities measured at FVOCI (recycling) is made to other comprehensive income
without reducing its carrying amount.
Annual Report 2023 118
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.14 Credit losses from financial instruments and contract assets (Continued)
Credit-impaired financial assets
At each reporting date, the Group assesses whether a financial asset is credit-impaired. A financial asset is credit-impaired
when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have
occurred. Evidence that a financial asset is credit-impaired includes the following observable events:
—
—
—
—
—
significant financial difficulties of the debtor;
a breach of contract, such as a default or delinquency in interest or principal payments;
the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty,
having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
it becoming probable that the borrower will enter into bankruptcy or other financial reorganisation;
the disappearance of an active market for a security because of financial difficulties of the issuer.
Write-off policy
The gross carrying amount of a financial asset or contract asset is written off (either partially or in full) to the extent that
there is no realistic prospect of recovery. Financial assets written off may still be subject to enforcement activities under
the Group’s recovery procedures, taking
into account
legal advice where appropriate. A write-off constitutes a
derecognition event. Any subsequent recoveries are recognised in the consolidated statement of income.
2.15
Inventories
Inventories, which primarily comprise handsets and accessories, are stated at the lower of cost and net realisable value.
Cost is based on the first-in-first-out method and comprises all costs of purchase and other costs incurred in bringing the
inventories to their present location and condition. Net realisable value for all the inventories is determined on the basis
of anticipated sales proceeds less estimated costs necessary to make the sale. Costs necessary to make the sale include
incremental costs directly attributable to the sale and other costs necessary to sell inventories.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 119
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.16 Accounts receivable
A receivable is recognised when the Group has an unconditional right to receive consideration. A right to receive
consideration is unconditional if only the passage of time is required before payment of that consideration is due. If
revenue has been recognised before the Group has an unconditional right to receive consideration, the amount is
presented as a contract asset (see Note 2.10).
Receivables are stated at amortised cost using the effective interest method less allowance for credit losses (see Note
2.14).
2.17 Short-term bank deposits and restricted deposits
Short-term bank deposits are cash invested in fixed-term deposits with original maturities ranging from more than three
months to one year.
Restricted deposits mainly included statutory reserve deposits with the People’s Bank of China (the “PBOC”) placed by
Finance Company and customers deposit placed by Unicompay Company Limited for e-payment services.
2.18 Cash and cash equivalents
Cash and cash equivalents presented on the consolidated statement of financial position include:
(a)
cash, which comprises of cash on hand and demand deposits, excluding bank balances that are subject to regulatory
restrictions that result in such balances no longer meeting the definition of cash; and
(b)
cash equivalents, which comprise of short-term (generally with original maturity of three months or less), highly
liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant
risk of changes in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather
than for investment or other purposes.
For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash
equivalents as defined above.
2.19 Government grants
Government grants are recognised in the consolidated statement of financial position initially when there is reasonable
assurance that they will be received and that the Group will comply with the conditions attaching to them. Grants that
compensate the Group for expenses incurred are recognised in profit or loss on a systematic basis in the same period in
which the expenses are incurred. Grants that compensate the Group for the cost of an asset are recognised as deferred
revenue which consequently are effectively recognised in profit or loss over the useful life of the asset.
Annual Report 2023 120
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.20 Borrowings
Borrowings including bank loans and commercial papers are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortised cost, any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the consolidated statement of income over the period of the
instruments using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least twelve months after the date of the statement of financial position.
2.21 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issuance of new shares are shown in equity as a deduction, net of tax, from
the proceeds.
Where any group company purchases the Company’s ordinary shares (treasury shares), the consideration paid, including
any directly attributable incremental costs (net of tax) is deducted from equity attributable to equity shareholders of the
Company and no gain or loss shall be recognised in the consolidated statement of income.
2.22 Employee benefits
(a)
Retirement benefits
The Group participates in defined contribution pension schemes. For defined contribution plans, the Group pays
contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or
voluntary basis. The Group is required to make contributions to the pension insurance plans at certain percentage
of the employees’ payroll. The contributions are recognised as employee benefit expenses when they are due.
Prepaid contributions are recognised as an asset to the extent that a reduction in the future payments is available.
For the years ended 31 December 2023 and 2022, no forfeited contributions may be used by the Group to reduce
the existing level of contributions.
(b) Medical insurance
The Group’s contributions to basic and supplementary medical insurances are expensed as incurred. The Group has
no further payment obligations once the contributions have been paid.
(c)
Housing benefits
One-off cash housing subsidies paid to PRC employees are charged to the consolidated statement of income in the
year in which it is determined that the payment of such subsidies is probable and the amounts can be reasonably
estimated.
The Group’s contributions to the housing fund, special monetary housing benefits and other housing benefits are
expensed as incurred. The Group has no further payment obligations once the contributions have been paid.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 121
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.22 Employee benefits (Continued)
(d)
Supplementary benefits
In addition to participating in local governmental defined contribution social insurance, individual subsidiaries of the
Group also provide other post retirement supplementary benefits to their employees, including supplementary
pension allowance, reimbursement of medical expenses and supplementary medical
insurance. These post
retirement supplementary benefits are accounted as defined benefit plan. For defined benefit plan, the Group’s
obligation for this benefit plan is determined using the projected unit credit method and recognised as liability,
with actuarial valuation carried out at the end of each annual reporting period.
The actuarial valuation was carried out by Willis Towers Watson (Member of China Association of Actuaries), a
qualified independent actuary. Actuarial assumptions mainly include discount rate and future mortality etc. This
defined benefit plan does not have any plan assets. The present value of the defined benefit obligation is included
in non-current other obligations and salary and welfare payables (current portion). As at 31 December 2023, the
amount of the liability was RMB117 million (2022: RMB109 million). The remeasurement of liability is recognised in
other comprehensive income, which is not allowed to reverse to profit or loss in subsequent period.
(e)
Share-based compensation costs
The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services
received in exchange for the grant of the share options is recognised as an expense. The total amount to be
expensed over the vesting period is determined by reference to the fair value of the share options granted at the
grant date excluding the impact of any non-market vesting conditions (for example, revenue and profit targets) and
is not subsequently remeasured. However, non-market vesting conditions are considered in determining the
number of options that are expected to vest. At each date of the statement of financial position, the Group revises
its estimates of the number of share options that are expected to vest. The Group recognises the impact of the
revision of original estimates, if any, in the consolidated statement of income of the period in which the revision
occurs, with a corresponding adjustment to equity.
The equity amount is recognised in other reserves until either the option is exercised (when it is included in the
amount recognised in share capital for the shares issued) or the option expires (when it is released directly to
retained profits).
(f)
Restricted A-Share Incentive Scheme
Restricted shares granted by A Share Company to the employees of the Group is treated as a capital contribution.
The fair value of the core employee services received in exchange for the grant of the restricted shares is
recognised as an expense over the vesting period, with a corresponding credit to equity. The total amount to be
expensed is determined by reference to the fair value of the granted shares measured as of the grant date less the
subscription price.
At the end of each reporting period, the Group revises its estimates of the number of restricted shares that are
expected to be vested. The impact of the revision of the original estimates, if any, is recognised in profit or loss,
with a corresponding adjustment to equity.
Annual Report 2023 122
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.23 Accounts payable
Accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Accounts payable are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
2.24 Provisions
Provisions are recognised when the Group has present legal or constructive obligations as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably
estimated. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same class of obligations may be small (if the other recognition
criteria are met).
Provisions are measured at the present value of the pre-tax amount of expenditures expected to be required to settle the
obligation that reflects current market assessments of the time value of money and the risks specific to the obligation.
The increase in the provision due to passage of time is recognised as interest expense.
2.25 Revenue recognition
Income is classified by the Group as revenue when it arises from the provision of services and the sale of goods in the
ordinary course of the Group’s business.
Revenue is recognised when a performance obligation is satisfied (i.e. when control over a product or service is
transferred to the customer) at the amount of promised consideration to which the Group is expected to be entitled,
excluding those amounts collected on behalf of third parties. Revenue excludes value added tax or other sales taxes and
is after deduction of any trade discounts.
A performance obligation represents a good or service (or a bundle of goods or services) that is distinct or a series of
distinct goods or services that are substantially the same. For contracts that contain more than one performance
obligations, the Group allocates the transaction price to each performance obligation on a relative stand-alone selling
price basis.
The stand-alone selling price of the distinct good or service underlying each performance obligation is determined at
contract inception. It represents the price at which the Group would sell a promised good or service separately to a
customer. If a stand-alone selling price is not directly observable, the Group estimates it using appropriate techniques
such that the transaction price ultimately allocated to any performance obligation reflects the amount of consideration to
which the Group expects to be entitled in exchange for transferring the promised goods or services to the customer.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 123
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.25 Revenue recognition (Continued)
Where the contract contains a financing component which provides a significant financing benefit to the customer for
more than twelve months, revenue is measured at the present value of the amount receivable, discounted using the
discount rate that would be reflected in a separate financing transaction with the customer, and interest income is
accrued separately under the effective interest method. Where the contract contains a financing component which
provides a significant financing benefit to the Group, revenue recognised under that contract includes the interest
expense accreted on the contract liability under the effective interest method. The Group takes advantage of the practical
expedient in HKFRS 15 and does not adjust the consideration for any effects of a significant financing component if the
period of financing is twelve months or less.
Control is transferred over time and revenue is recognised over time by reference to the progress towards complete
satisfaction of the relevant performance obligation if one of the following criteria is met:
•
the customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group
performs;
•
•
the Group’s performance creates or enhances an asset that the customer controls as the Group performs; or
the Group’s performance does not create an asset with an alternative use to the Group and the Group has an
enforceable right to payment for performance completed to date.
Further details of the Group’s revenue recognition policies are as follows:
•
•
Voice usage and monthly fees are recognised when the services are rendered;
Revenues from the provision of broadband and mobile data services are recognised when the services are provided
to customers;
•
Data and internet application service revenues, which mainly represent revenue from the provision of data storage
and application, information communications technology and other internet related services, are recognised during
the period of fulfillment of services obligation;
•
Other value-added services revenues, which mainly represents revenue from the provision of services such as short
message, cool ringtone, personalised ring, caller number display and secretarial services to subscribers etc., are
recognised when services are rendered;
•
Interconnection fees, which represent revenue from other domestic and foreign telecommunications operators for
the use of the Group’s telecommunications network, are recognised when services are rendered;
•
Revenue from transmission lines usage and associated services, which mainly represent income from offering
transmission lines and customer-end equipment to customers for usage and related services, are recognised upon
fulfillment of services obligation over the respective usage and service period;
Annual Report 2023 124
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.25 Revenue recognition (Continued)
•
Standalone sales of telecommunications products, which mainly represent handsets and accessories, and
telecommunications equipment, are recognised when control has been transferred to the buyers;
•
The Group offers preferential packages to customers which include bundle sale of mobile handsets and provision of
services. The total contract consideration of such preferential packages is allocated to service revenue and sales of
handsets based on their standalone selling prices. Revenue relating to the sale of handset is recognised when the
title
is passed to the customer whereas service revenue
is recognised based upon the actual usage of
telecommunications services.
In general, revenue from rendering of telecommunication services are recognised over-time during the period of
fulfillment of services obligation using output method, whereas revenue from sales of handsets and other
telecommunications equipment are treated as separate performance obligations, are recognised at a point in time.
When another party is involved in providing goods or services to a customer, the Group determines whether the nature
of its promise is a performance obligation to provide the specified goods or services itself (i.e. the Group is a principal) or
to arrange for those goods or services to be provided by the other party (i.e. the Group is an agent).
The Group is a principal if it controls the specified good or service before that good or service is transferred to a
customer.
The Group is an agent if its performance obligation is to arrange for the provision of the specified good or service by
another party. In this case, the Group does not control the specified good or service provided by another party before
that good or service is transferred to the customer. When the Group acts as an agent, it recognises revenue in the
amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified goods or
services to be provided by the other party.
2.26
Interest income
Interest income from deposits in banks or other financial institutions is recognised on a time proportion basis, using the
effective interest method. For financial assets measured at amortised cost that are not credit-impaired, the effective
interest rate is applied to the gross carrying amount of the asset. For credit impaired financial assets, the effective
interest rate is applied to the amortised cost of the asset.
2.27 Dividend income
Dividend income is recognised when the right to receive payment is established.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 125
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.28
Lease
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. Control is conveyed where the customer has both the right to direct the use of the identified asset and to
obtain substantially all of the economic benefits from that use.
(a)
As a lessee
At inception or on reassessment of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone
prices.
At the lease commencement date, the Group recognises a right-of-use asset and a lease liability, except for
short-term leases of primarily computers and office furniture that have a lease term of 12 months or less and do
not contain a purchase option and leases of low-value assets. When the Group enters into a lease in respect of a
low-value asset, the Group decides whether to capitalise the lease on a lease-by-lease basis. The lease payments
associated with those leases which are not capitalised are recognised as an expense on a systematic basis over the
lease term.
Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease payments
payable over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, using a relevant incremental borrowing rate. After initial recognition, the lease liability is
adjusted by interest accretion and lease payments. Variable lease payments that do not depend on an index or
rate are not included in the measurement of the lease liability and hence are charged to profit or loss in the
accounting period in which they are incurred.
The right-of-use asset recognised when a lease is capitalised is initially measured at cost, which comprises the
initial amount of the lease liability plus any lease payments made at or before the commencement date, and any
initial direct costs incurred. Where applicable, the cost of the right-of-use assets also includes an estimate of costs
to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located,
discounted to their present value, less any lease incentives received. The right-of-use asset is subsequently stated
at cost less accumulated depreciation and impairment losses (see Note 2.13). Right-of-use assets are subsequently
depreciated using the straight-line method from the commencement date to the earlier of the end of the useful
life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are
determined on the same basis as those of property, plant and equipment.
The lease liability is remeasured when there is a change in future lease payments arising from a change in an
index or rate, or there is a change in the Group’s estimate of the amount expected to be payable under a residual
value guarantee, or there is a change arising from the reassessment of whether the Group will be reasonably
certain to exercise a purchase, extension or termination option. When the lease liability is remeasured in this way,
a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or
loss if the carrying amount of the right-of-use asset has been reduced to zero.
Annual Report 2023 126
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.28
Lease (Continued)
(a)
As a lessee (Continued)
The lease liability is also remeasured when there is a change in the scope of a lease or the consideration for a
lease that is not originally provided for in the lease contract (“lease modification”) that is not accounted for as a
separate lease. In this case the lease liability is remeasured based on the revised lease payments and lease term
using a revised discount rate at the effective date of the modification.
The Group accounts for the remeasurement of lease liabilities by making corresponding adjustments to the
relevant right-of-use assets.
In the consolidated statement of financial position, the current portion of long-term lease liabilities is determined
as the present value of contractual payments that are due to be settled within twelve months after the reporting
period. The Group presents right-of-use assets and lease liabilities separately in the consolidated statement of
financial position.
(b)
As a lessor
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an
operating lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards
incidental to the ownership of an underlying assets to the lessee. If this is not the case, the lease is classified as an
operating lease.
When a contract contains lease and non-lease components, the Group allocates the consideration in the contract
to each component on a relative stand-alone selling price basis. The rental income from operating leases is
recognised in profit or loss in equal instalments over the periods covered by the lease term, except where an
alternative basis is more representative of the pattern of benefits to be derived from the use of the leased asset.
Lease incentives granted are recognised in profit or loss as an integral part of the aggregate net lease payments
receivable. Variable lease payments that do not depend on an index or a rate are recognised as income in the
accounting period in which they are earned.
When the Group is an intermediate lessor, the sub-leases are classified as a finance lease or as an operating lease
with reference to the right-of-use asset arising from the head lease. If the head lease is a short-term lease to
which the Group applies the exemption described in Note 2.28(a), then the Group classifies the sub-lease as an
operating lease.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 127
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.29 Borrowing costs
Borrowing costs are expensed as incurred, except for interest 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, in which case
they are capitalised as part of the cost of that asset. Capitalisation of borrowing costs commences when expenditures for
the asset and borrowing costs are being incurred and the activities to prepare the asset for its intended use are in
progress. Borrowing costs are capitalised up to the date when substantially all the activities necessary to prepare the
project is completed and ready for its intended use.
To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the amount of
borrowing costs eligible for capitalisation is determined at the actual borrowing costs incurred on that borrowing during
the period less any investment income on the temporary investment of those borrowings.
To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, the amount of
borrowing costs eligible for capitalisation is determined by applying a capitalisation rate to the expenditures on that asset.
The capitalisation rate is the weighted average of the borrowing costs applicable to the borrowings of the Group that are
outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset.
The amount of borrowing costs capitalised during a period does not exceed the amount of borrowing cost incurred during
that period. Other borrowing costs are recognised as expenses when incurred.
2.30 Taxation
(a)
Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantially enacted at the
date of the statement of financial position in the jurisdictions where the Company and its subsidiaries operate and
generate taxable income. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation and establishes provisions where
appropriate on the basis of the amount expected to be paid to the tax authorities.
(b)
Deferred income tax
Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the
differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax
bases. Deferred tax assets also arise from unused tax losses and unused tax credits.
Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is
probable that future taxable profits will be available against which the asset can be utilised, are recognised. Future
taxable profits that may support the recognition of deferred tax assets arising from deductible temporary
differences include those that will arise from the reversal of existing taxable temporary differences, provided those
differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either
in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax
loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when
determining whether existing taxable temporary differences support the recognition of deferred tax assets arising
from unused tax losses and credits, that is, those differences are taken into account if they relate to the same
taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the
tax loss or credit can be utilised.
Annual Report 2023 128
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.30 Taxation (Continued)
(b)
Deferred income tax (Continued)
The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising
from goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither
accounting nor taxable profit (provided they are not part of a business combination) and at the time of the
transaction does not give rise to equal taxable and deductible temporary differences, and temporary differences
relating to investments in subsidiaries to the extent that, in the case of taxable differences, the Group controls the
timing of the reversal and it is probable that the differences will not reverse in the foreseeable future, or in the
case of deductible differences, unless it is probable that they will reverse in the future.
The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit
to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits
will be available.
Deferred 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 they relate to income taxes levied to the same taxable entity by the same
taxation authority.
For the purposes of measuring deferred tax for leasing transactions in which the Group recognises the right-of-use
assets and the related lease liabilities, the Group first determines whether the tax deductions are attributable to
the right-of-use assets or the lease liabilities. For leasing transactions in which the tax deductions are attributable
to the lease liabilities, the Group applies HKAS 12 requirements to the lease liabilities, and the related assets
separately. The Group recognises a deferred tax asset related to lease liabilities to the extent that it is probable
that taxable profit will be available against which the deductible temporary difference can be utilised and a
deferred tax liability for all taxable temporary differences.
Current and deferred income tax are recognised in profit or loss, except when they relate to items that are
recognised in other comprehensive income or directly in equity, in which case, the current and deferred income
tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or
deferred tax arises from the initial accounting for a business combination, the tax effect is included in the
accounting for the business combination.
2.31 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the period in which the dividends are
approved by the Company’s shareholders.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 129
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.32 Research and development expenditure
Expenditure on research activities
is recognised as an expense
in the period
in which
it
is
incurred. An
internally-generated intangible asset arising from development activities (or from the development phase of an internal
project) is recognised if, and only if, all of the following have been demonstrated:
•
•
•
•
•
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell
the intangible asset; and
•
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally-generated intangible asset is the sum of the expenditure incurred from the
date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible
asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.
For the year ended 31 December 2023, research and development expenditure recognised as expense in the consolidated
statement of income was RMB8,099 million (2022: RMB6,836 million).
2.33 Earnings per Share
Basic earnings per share is computed by dividing the profit attributable to equity shareholders of the Company by the
weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share is computed by dividing the profit attributable to equity shareholders of the Company by the
weighted average number of ordinary shares outstanding during the year, after adjusting for the effects of the dilutive
potential ordinary shares.
Annual Report 2023 130
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
2.
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
2.34 Related parties
(a)
A person, or a close member of that person’s family, is related to the Group if that person:
(i)
has control or joint control over the Group;
(ii)
has significant influence over the Group; or
(iii)
is a member of the key management personnel of the Group or the Group’s parent.
(b)
An entity is related to the Group if any of the following conditions applies:
(i)
The entity and the Group are members of the same group (which means that each parent, subsidiary and
fellow subsidiary is related to the others);
(ii)
One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member
of a group of which the other entity is a member);
(iii)
Both entities are joint ventures of the same third party;
(iv)
One entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v)
The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity
related to the Group;
(vi)
The entity is controlled or jointly controlled by a person identified in (a); or
(vii)
A person identified in (a)(i) has significant influence over the entity or is a member of the key management
personnel of the entity (or of a parent of the entity).
Close members of the family of a person are those family members who may be expected to influence, or be influenced
by, that person in their dealings with the entity.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 131
3.
FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS
3.1
Financial risk factors
The Group’s operating activities expose it to a variety of financial risks: market risk (including foreign currency risk, price
risk, cash flow and fair value interest rate risk), credit risk and liquidity risk. The Group’s overall risk management
program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
Group’s financial performance.
Financial risk management is carried out by the Group’s headquarter, following the overall direction determined by the
executive directors of the Company. The Group’s headquarter identifies and evaluates financial risks in close co-operation
with the Group’s operating units.
(a) Market risk
(i)
Foreign exchange risk
The Group’s major operational activities are carried out in Mainland China and a majority of the
transactions are denominated in RMB. The Group is exposed to foreign exchange risk arising from various
currency exposures, primarily with respect to United States dollars (“US dollars”), Hong Kong dollars (“HK
dollars” or “HKD”) and European dollars (“Euro”). Exchange risk mainly exists with respect to the financial
assets and financial liabilities denominated in foreign currencies including balances with international
carriers, cash and cash equivalents.
The Group’s headquarter is responsible for monitoring the amount of monetary assets and liabilities
denominated in foreign currencies. From time to time, the Group may consider entering into forward
exchange contracts or currency swap contracts to mitigate the foreign exchange risk. During the years of
2023 and 2022, the Group had not entered into any forward exchange contracts or currency swap
contracts.
The following table details the Group’s exposure at the end of the reporting period 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 and have been translated to RMB at the applicable rates quoted by the PBOC as
at 31 December 2023 and 2022.
Annual Report 2023 132
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
3.
FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
3.1
Financial risk factors (Continued)
(a) Market risk (Continued)
(i)
Foreign exchange risk (Continued)
Original
currency
millions
2023
Exchange
rate
RMB
equivalent
millions
Original
currency
millions
2022
Exchange
rate
RMB
equivalent
millions
55
698
22
199
—
28
—
—
79
2
856
4
33
5
0.91
7.08
7.86
0.05
9.04
5.38
4.85
0.91
7.08
7.86
0.05
9.04
5.38
4.85
50
4,945
176
10
2
149
1
5,333
—
560
16
43
36
177
24
856
38
692
19
19
—
28
—
—
112
2
1,396
2
26
7
0.89
6.96
7.42
0.05
8.39
5.18
4.71
0.89
6.96
7.42
0.05
8.39
5.18
4.71
34
4,818
139
1
—
147
2
5,141
—
780
15
73
17
135
33
1,053
227
7.86
1,783
217
7.42
1,613
61
7.08
433
—
6.96
—
8,405
7,807
Cash and cash equivalents:
— denominated in HK dollars
— denominated in US dollars
— denominated in Euro
— denominated in Japanese Yen (“JPY”)
— denominated in Great Britain Pound (“GBP”)
— denominated in Singapore dollars (“SGD”)
— denominated in Australian dollars (“AUD”)
Sub-total
Accounts receivable:
— denominated in HK dollars
— denominated in US dollars
— denominated in Euro
— denominated in JPY
— denominated in GBP
— denominated in SGD
— denominated in AUD
Sub-total
Financial assets measured at FVOCI:
— denominated in Euro
Capital bonds measured at amortised cost:
— denominated in US dollars
Total
Borrowings:
— denominated in US dollars
— denominated in Euro
22
1
7.08
7.86
Sub-total
Accounts payable:
— denominated in HK dollars
— denominated in US dollars
— denominated in Euro
— denominated in JPY
— denominated in GBP
— denominated in SGD
Sub-total
Total
1,084
97
6
—
—
—
0.91
7.08
7.86
0.05
9.04
5.38
153
10
163
982
687
47
—
—
—
1,716
1,879
25
1
6.96
7.42
400
61
1
—
1
6
0.89
6.96
7.42
0.05
8.39
5.18
171
11
182
357
425
7
—
8
31
828
1,010
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
133
3.
FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
3.1
Financial risk factors (Continued)
(a) Market risk (Continued)
(i)
Foreign exchange risk (Continued)
The Group did not have and does not believe it will have any difficulties in exchanging its foreign currency
cash into RMB at the exchange rates quoted by the PBOC.
As at 31 December 2023, if RMB had strengthened/weakened by 10% against foreign currencies, primarily
with respect to US dollars, HK dollars, Euro, JPY, GBP, SGD and AUD, while all other variables are held
constant, the profit after tax would increase/decrease approximately RMB356 million (2022: approximately
RMB389 million) for monetary assets and
liabilities denominated
in foreign currencies, and other
comprehensive
income would
increase/decrease approximately RMB178 million (2022: approximately
RMB161 million) for financial assets measured at FVOCI (non-recycling) denominated in foreign currency.
(ii) Price risk
The Group is exposed to equity securities price risk because investments held by the Group are classified in
the consolidated statement of financial position as financial assets measured at FVOCI (non-recycling) or
FVPL.
The financial assets measured at FVOCI (non-recycling) comprise primarily equity securities of Telefónica S.A.
(“Telefónica”). As at 31 December 2023, if the share price of Telefónica had increased/decreased by 10%,
while the exchange rate of RMB against Euro is held constant, other comprehensive income would
increase/decrease approximately RMB178 million (2022: approximately RMB161 million). The
listed
investments measured at FVPL comprise primarily equity securities of certain PRC listed companies. As at
31 December 2023, if the price of the respective listed equity securities had increased/decreased by 10%,
profit after tax would increase/decrease approximately RMB8 million (2022: approximately RMB7 million).
(iii) Cash flow and fair value interest rate risk
The Group’s interest-bearing assets are mainly represented by bank deposits, debt securities measured at
FVOCI (recycling), financial assets held under resale agreements and
investments
in capital bonds.
Management does not expect the changes in market deposit interest rates will have significant impact on
the financial statements as the deposits are all short-term in nature and the interest involved will not be
significant.
Annual Report 2023 134
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
3.
FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
3.1
Financial risk factors (Continued)
(a) Market risk (Continued)
(iii) Cash flow and fair value interest rate risk (Continued)
The Group’s
interest rate risk mainly arises from
interest-bearing borrowings
including bank
loans,
commercial papers, related party loans and lease liabilities. Borrowings issued at floating rates expose the
Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value
interest rate risk upon renewal. The Group determines the amount of its fixed rate or floating rate
borrowings depending on the prevailing market conditions. During the years of 2023 and 2022, the Group’s
borrowings were mainly at fixed rates and were mainly denominated in RMB.
Increases in interest rates will increase the cost of new borrowings and the interest expense with respect to
the Group’s outstanding floating rate borrowings, and therefore could have a material adverse effect on the
Group’s financial performance. Management continuously monitors the interest rate position of the Group
and makes decisions with reference to the latest market conditions. From time to time, the Group may
enter into interest rate swap agreements to mitigate its exposure to interest rate risks in connection with
the floating rate borrowings, although the Group did not consider it was necessary to do so in the years of
2023 and 2022.
As at 31 December 2023, the Group had approximately RMB9,044 million (2022: approximately RMB12,598
million) of long-term and short-term borrowings in floating rates and approximately RMB45,127 million
(2022: approximately RMB51,562 million) of long-term borrowings and lease liabilities in fixed rates.
For the year ended 31 December 2023, if interest rates on the floating rate borrowings had increased/
decreased 50 basic points while all other variables are held constant, profit after tax would decrease/
increase approximately RMB34 million (2022: approximately RMB47 million).
(b)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial
loss to the Group. Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents and
short-term bank deposits with banks, as well as credit exposures to major corporate customers, individual
subscribers and general corporate customers, related parties and other telecommunications operators.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 135
3.
FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
3.1
Financial risk factors (Continued)
(b)
Credit risk (Continued)
To limit exposure to credit risk relating to cash and cash equivalents and short-term bank deposits, the Group
primarily places cash and cash equivalents and short-term bank deposits only with large state-owned financial
institutions in the PRC and other banks with acceptable credit ratings. Therefore, the Group expects that there is
no significant credit risk and does not expect that there will be any significant losses from non-performance by
these counterparties.
In addition, the Group has no significant concentrations of credit risk with respect to individual subscribers and
corporate customers. The Group has policies to limit the credit exposure on receivables for services and sales of
mobile handsets. The Group assesses the credit quality of all its customers and sets credit limits on them by taking
into account their financial position, the availability of guarantee from third parties, their credit history and other
factors such as current market conditions. The normal credit period granted by the Group to individual subscribers
and general corporate customers is 30 days from the date of billing unless they meet certain specified credit
assessment criteria. For major corporate customers, the credit period granted by the Group is based on the service
contract terms, normally not exceeding 1 year. The utilisation of credit limits and settlement pattern of customers
are regularly monitored by the Group. In respect of other receivables, individual credit evaluations are performed
on all counterparties requiring credit over a certain amount. These evaluations focus on the counterparties’ past
history of making payments when due and current ability to pay, and take into account information specific to the
counterparties as well as the economic environment in which the counterparties operates.
Credit risk relating to amounts due from related parties and other telecommunications operators is not considered
to be significant as these companies are reputable and their receivables are settled on a regular basis.
Annual Report 2023 136
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
3.
FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
3.1
Financial risk factors (Continued)
(c)
Liquidity risk
Prudent liquidity risk management includes maintaining sufficient cash and availability of funds including the raising
of bank loans and issuance of commercial papers. Due to the dynamic nature of the underlying business, the
Group’s headquarter maintains flexibility in funding through having adequate amount of cash and cash equivalents
and utilising different sources of financing when necessary.
The following tables show the undiscounted cash flows of the financial liabilities and lease liabilities (including
interest expense) categorised by time from the end of the period under review to the contractual maturity date.
To the extent that interest flows are floating rate, the undiscounted amount is derived based on management’s
best estimates at the end of the reporting period:
At 31 December 2023
Long-term bank loans
Lease liabilities
Other obligations
Short-term bank loans
Accounts payable and accrued liabilities
Bills payable
Amounts due to ultimate holding company
Amounts due to related parties
Amounts due to domestic carriers
At 31 December 2022
Long-term bank loans
Lease liabilities
Other obligations
Short-term bank loans
Commercial papers
Accounts payable and accrued liabilities
Bills payable
Amounts due to ultimate holding company
Amounts due to related parties
Amounts due to domestic carriers
Between
Between
Less than
1 and
2 and
Over
Carrying
1 year
2 years
5 years
5 years
amounts
374
302
657
12,901
11,273
20,988
2,497
686
161,279
6,275
1,046
25,924
2,959
218
—
—
—
313
—
—
616
—
—
—
601
—
—
497
1,822
101
—
—
—
—
—
—
1,606
43,257
3,432
681
161,279
6,275
1,914
25,924
2,959
213,941
12,106
22,862
2,420
247,327
388
370
719
12,750
11,055
28,272
692
1,313
2,497
334
5,083
154,838
5,811
1,759
18,326
2,125
256
—
—
—
—
—
—
—
872
—
—
—
—
326
—
—
92
—
—
—
—
—
—
—
1,896
48,924
3,711
331
5,025
154,838
5,811
2,059
18,326
2,125
203,911
11,681
30,189
2,097
243,046
Regarding the Group’s use of the going concern basis for the preparation of its financial statements, please refer
to Note 2.2(a) for details.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
137
3.
FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
3.2
Capital risk management
The Group’s objectives when managing capital are:
•
To safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and
benefits for other stakeholders.
To support the Group’s stability and growth.
To provide capital for the purpose of strengthening the Group’s risk management capability.
•
•
In order to maintain or adjust the capital structure, the Group reviews and manages its capital structure actively and
regularly to ensure optimal capital structure and shareholder returns, taking into account the future capital requirements
of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital
expenditures and projected strategic investment opportunities.
The Group monitors capital on the basis of the debt-to-capitalisation ratio. This ratio is calculated as interest-bearing
debts over interest-bearing debts plus total equity. Interest-bearing debts represent commercial papers, short-term bank
loans, long-term bank loans, lease liabilities, amounts due to ultimate holding company and amounts due to related
parties, as shown in the consolidated statement of financial position. The interest-bearing debts do not include balance of
deposits received by Finance Company of RMB7,746 million, as at 31 December 2023 (2022: RMB6,779 million).
Annual Report 2023 138
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
3.
FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
3.2
Capital risk management (Continued)
The Group’s debt-to-capitalisation ratios are as follows:
Interest-bearing debts:
— Short-term bank loans
— Long-term bank loans
— Commercial papers
— Lease liabilities (non-current portion)
— Amounts due to related parties
— Amounts due to ultimate holding company
— Current portion of long-term bank loans
— Lease liabilities (current portion)
Total equity
31 December
31 December
2023
2022
681
1,252
—
30,617
—
881
354
331
1,528
5,025
36,429
742
471
368
12,640
12,495
46,425
353,898
57,389
343,536
Interest-bearing debts plus total equity
400,323
400,925
Debt-to-capitalisation ratio
11.6%
14.3%
3.3
Fair value estimation
Financial assets of the Group mainly include cash and cash equivalents, short-term bank deposits and restricted deposits,
accounts receivable, the financial assets included in prepayments and other current assets, amounts due from ultimate
holding company, related parties and domestic carriers, financial assets measured at fair value and certain other assets.
Financial liabilities of the Group mainly include the financial liabilities included in accounts payable and accrued liabilities,
bills payable, short-term bank loans, commercial papers, long-term bank loans, other obligations and amounts due to
ultimate holding company, related parties and domestic carriers.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
139
3.
FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
3.3
Fair value estimation (Continued)
(a)
Financial assets measured at fair value
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have
been defined as follows:
•
Level 1 valuation: unadjusted quoted prices in active markets for identical assets or liabilities at the
measurement date.
•
Level 2 valuation: observable inputs which fail to meet Level 1, and not using significant unobservable inputs
for which market data are not available.
•
Level 3 valuation: fair value measured using significant unobservable inputs.
The following table presents the Group’s assets that are measured at fair value as at 31 December 2023:
Level 1
Level 2
Level 3
Total
Recurring fair value measurement:
Equity securities measured at FVOCI (non-recycling)
Financial assets measured at FVPL
Debt securities measured at FVOCI (recycling)
Total
1,929
2,443
23,837
28,209
—
53
—
53
113
1,270
—
2,042
3,766
23,837
1,383
29,645
The following table presents the Group’s assets that are measured at fair value as at 31 December 2022:
Level 1
Level 2
Level 3
Total
Recurring fair value measurement:
Equity securities measured at FVOCI (non-recycling)
Financial assets measured at FVPL
Debt securities measured at FVOCI (recycling)
Total
1,733
2,805
17,770
22,308
—
40
—
40
114
1,240
—
1,847
4,085
17,770
1,354
23,702
Annual Report 2023
140
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
3.
FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
3.3
Fair value estimation (Continued)
(a)
Financial assets measured at fair value (Continued)
The fair value of financial instruments traded in active markets is based on quoted market prices at the date of the
statement of financial position. A market is regarded as active if quoted prices are readily and regularly available
from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent
actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for
financial assets held by the Group is the current bid price. These instruments are included in level 1 and comprise
primarily equity securities of Telefónica, debt securities issued by banks which are classified as financial assets
measured at FVOCI and certain equity investments, investments in monetary funds that are classified as financial
assets measured at FVPL.
During the years ended 31 December 2023 and 2022, there were no transfer between Level 1 and Level 2, or
transfer into or out of Level 3. The Group’s policy is to recognise transfers between levels of fair value hierarchy as
at the end of the reporting period in which they occur.
(b)
Fair value of financial instruments carried at other than fair value
As at 31 December 2023 and 2022, the carrying amounts, fair values and the level of fair values of the Group’s
long-term financial assets and liabilities carried at amortised cost are disclosed below:
Carrying
amounts
Fair value
as at
as at
Carrying
amounts
Fair value
as at
as at
31 December
31 December
Fair value measurements
31 December
31 December
2023
2023
as at 31 December 2023 categorised into
2022
2022
Level 1
Level 2
Level 3
Capital bonds
Non-current portion of long-term bank loans
Non-current portion of amounts due to ultimate
433
1,252
433
1,318
holding company
881
837
—
—
—
433
1,318
837
—
—
—
—
1,528
—
1,571
300
291
The fair values of the non-current portion of long-term bank loans and non-current portion of amounts due to
ultimate holding company are based on the expected cash flows of principal and interests payment discounted at
market rates ranging from 0.57% to 4.20% (2022: 0.57% to 4.35%) per annum. The fair values of capital bonds is
based on the expected cash flows of principal and interests discounted at market rate of 5.35% per annum.
Besides, the carrying amounts of the Group’s other financial assets and liabilities carried at amortised cost
approximated their fair values as at 31 December 2023 and 2022 due to the nature or short maturity of those
instruments.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
141
4.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates may not be equal to the
related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below.
4.1
Depreciation on property, plant and equipment
Depreciation on the Group’s property, plant and equipment is calculated using the straight-line method to allocate cost up
to residual values over the estimated useful lives of the assets. The Group reviews the useful lives and residual values
periodically to ensure that the method and rates of depreciation are consistent with the expected pattern of realisation of
economic benefits from property, plant and equipment. The Group estimates the useful lives and residual values of
property, plant and equipment based on historical experience, taking into account anticipated technological changes. If
there are significant changes from previously estimated useful lives and residual values, the amount of depreciation
expenses may change.
4.2
Impairment of goodwill and long-lived assets
The Group tests whether long-lived assets, including property, plant and equipment and right-of-use assets, have suffered
from any impairment, in accordance with the accounting policy stated in Note 2.13. For goodwill, the impairment testing
is performed annually at the end of each reporting period, in accordance with the accounting policy stated in Note 2.8.
The recoverable amount of the cash-generating unit at the lowest level to which those assets belong has been
determined based on a value in use calculation. Management estimates value in use based on estimated discounted
pre-tax future cash flows of the cash generating unit. If there is any significant change in management’s assumptions,
including discount rate, the revenue growth rate or amount of operating costs in the future cash flow projection, the
estimated recoverable amount of the cash-generating unit and the Group’s results would be significantly affected. Such
impairment losses are recognised in the consolidated statement of income. Accordingly, there will be an impact to the
future results if there is a significant change in the recoverable amount of the cash-generating unit. Management uses all
readily available information in determining an amount that is a reasonable approximation of recoverable amount.
No significant impairment loss on goodwill or long-lived assets was recognised for the years ended 31 December 2023
and 2022.
4.3
Allowance for ECLs
For collective assessment, management estimates ECL allowance on accounts receivable and contract assets using a
provision matrix based on the Group’s historical credit loss experience, and adjusted for factors that are specific to the
debtors and an assessment of both the current and forecast general economic conditions at the reporting date. The
Group monitored and reviewed the assumptions relating to ECL regularly. For the Group’s detailed assessment of credit
risk, please refer to Note 3.1(b).
Annual Report 2023 142
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
5.
SEGMENT INFORMATION
The executive directors of the Company have been identified as the CODM. Operating segments are identified on the basis of
internal reports that the CODM reviews regularly in allocating resources to segments and in assessing their performances.
The CODM makes resources allocation decisions based on internal management functions and assesses the Group’s business
performance as one integrated business instead of by separate business lines or geographical regions. Accordingly, the Group has
only one operating segment and therefore, no segment information is presented.
The Group primarily operates in Mainland China and accordingly, no geographic information is presented. No revenue from a
single customer accounted for 10 percent or more of the Group’s revenue in all periods presented.
6.
REVENUE
Revenue from telecommunications services are subject to value-added tax (“VAT”) at VAT rates applicable to various
telecommunications services. The VAT rates for basic telecommunications services and value-added telecommunications services
are 9% and 6%, respectively, while VAT rate for sales of telecommunications products is 13%. Basic telecommunications services
include business activities for the provision of voice services, and transmission lines usage and associated services etc.
Value-added telecommunications services include business activities for the provision of short message service and multimedia
message service, broadband and mobile data services, and data and internet application services etc. VAT is excluded from the
revenue.
Disaggregation of revenue by major services and products:
Voice usage and monthly fees
Broadband and mobile data services
Data and internet application services
Other value-added services
Interconnection fees
Transmission lines usage and associated services
Other services
Total service revenue
Sales of telecommunications products
Total
Include: Revenue from contracts with customers within the scope of HKFRS 15
Revenue from other sources
2023
2022
21,207
154,748
89,645
29,190
12,878
22,666
4,836
335,170
37,427
21,303
155,918
77,780
26,170
12,947
20,448
4,782
319,348
35,596
372,597
354,944
371,324
1,273
353,835
1,109
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
143
6.
REVENUE (Continued)
The Group’s revenue is primarily generated from the provision of voice usage, broadband and mobile data services, data and
internet application services, other value-added services, interconnection services, transmission lines usage and associated
services and sale of telecommunication products. The Group bills the majority of its customers based on a fixed rate and service
volume each month, and then has a right to consideration from the customers. Transaction prices that were allocated to
unsatisfied performance obligations as of the end of the reporting period are expected to be recognised within one to five years
when services are rendered. The Group has applied the practical expedient in paragraph 121 of HKFRS 15 and therefore the
information about remaining performance obligations is not disclosed for contracts that have an original expected duration of
one year or less and for those performance obligations which are satisfied as invoiced.
7.
NETWORK, OPERATION AND SUPPORT EXPENSES
Note
2023
2022
Repairs and maintenance
Power and water charges
Charges for use of network, premises, equipment and facilities
Charges for use of tower assets
Others
(i), (iii)
(ii), (iii)
11,872
14,295
20,306
11,208
2,345
12,216
15,088
15,816
11,070
2,235
60,026
56,425
(i)
During the years ended 31 December 2023 and 2022, charges for use of network, premises, equipment and facilities mainly
included the non-lease components charges and charges relating to short-term leases, leases of low-value assets and
variable lease payments which are recorded in profit or loss as incurred.
(ii)
During the years ended 31 December 2023 and 2022, charges for use of tower assets included the non-lease components
charges (maintenance service, certain ancillary facilities usage and other related support services charges) and variable
lease payments which are recorded in profit or loss as incurred. For related party transactions with Tower Company, see
Note 45.3.
(iii)
Expense relating to short-term leases, leases of low-value assets and variable lease payments not included in the
measurement of lease liabilities:
Expense relating to short-term leases and leases of low value assets
Variable lease payments not included in the measurement of lease liabilities*
2023
2,100
8,097
2022
1,771
7,243
*
During the years ended 31 December 2023 and 2022, variable lease payments not included in the measurement of lease
liabilities mainly included charges for use of tower assets and network, premises, equipment and facilities, which are
measured based on revenue or usage and recorded in profit or loss when the event or condition that triggers those
payments occurred.
Annual Report 2023
144
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
8.
EMPLOYEE BENEFIT EXPENSES
Salaries and wages
Contributions to defined contribution pension schemes
Contributions to medical insurance
Contributions to housing fund
Other housing benefits
Share-based compensation
Note
2023
2022
45,522
9,067
3,594
4,460
14
282
44,813
8,423
3,239
4,174
22
55
62,939
60,726
44
8.1
Directors’ emoluments
The remuneration of each director for the year of 2023 is set out below:
Name of director
Note
(RMB’000)
(RMB’000)
(RMB’000)
(RMB’000)
(RMB’000)
Salaries and
Bonuses paid
to pension
Contributions
Fees
allowance
and payable
schemes
Total
(a)
(b)
Chen Zhongyue
Liu Liehong
Wang Junzhi
Li Yuzhuo
Cheung Wing Lam Linus
Wong Wai Ming
Chung Shui Ming Timpson
Law Fan Chiu Fun Fanny
—
—
—
—
433
442
451
415
568
468
511
444
—
—
—
—
360
210
324
324
—
—
—
—
1,741
1,991
1,218
153
87
153
153
—
—
—
—
546
1,081
765
988
921
433
442
451
415
5,496
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
145
8.
EMPLOYEE BENEFIT EXPENSES (Continued)
8.1
Directors’ emoluments (Continued)
The remuneration of each director for the year of 2022 is set out below:
Name of director
Note
(RMB’000)
(RMB’000)
(RMB’000)
(RMB’000)
(RMB’000)
Salaries and
Bonuses paid
to pension
Contributions
Fees
allowance
and payable*
schemes
Total
Liu Liehong
Chen Zhongyue
Wang Junzhi
Li Yuzhuo
Mai Yanzhou
Cheung Wing Lam Linus
Wong Wai Ming
Chung Shui Ming Timpson
Law Fan Chiu Fun Fanny
(c)
(d)
—
—
—
—
—
414
423
431
397
364
591
240
176
425
—
—
—
—
352
352
316
264
132
—
—
—
—
140
140
140
118
55
—
—
—
—
856
1,083
696
558
612
414
423
431
397
1,665
1,796
1,416
593
5,470
*
In addition, according to the “Notice on the Compensation Information Disclosure of the Central Government Controlled
Enterprises” (Guozifenpei [2016] No.339) (translated from 《關於做好中央企業負責人薪酬信息披露工作的通知》 (國資分
配[2016]339號)), certain directors were also entitled to deferred bonuses in relation to the years of 2019 to 2021. The
deferred bonuses paid to Mr. Liu Liehong, Mr. Chen Zhongyue, Mr. Wang Junzhi and Mr. Mai Yanzhou were RMB74,000,
RMB203,500, RMB16,600 and RMB586,000 respectively.
Notes:
(a)
Mr. Chen Zhongyue was appointed as chairman and chief executive officer on 2 December 2023.
(b)
Mr. Liu Liehong resigned as executive director, chairman and chief executive officer on 30 July 2023.
(c)
Ms. Li Yuzhuo was appointed as executive director and chief financial officer on 28 February 2022.
(d)
Mr. Mai Yanzhou was appointed as executive director on 28 February 2022 and resigned as executive director on 30 May
2022.
During the years of 2023 and 2022, no share options were granted to the directors.
No directors waived the right to receive emoluments during the years ended 31 December 2023 and 2022.
During the years of 2023 and 2022, the Company did not incur any payment to any director for loss of office or as an
inducement to any director to join the Company.
Annual Report 2023
146
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
8.
EMPLOYEE BENEFIT EXPENSES (Continued)
8.2
Senior management’s emoluments
Of the eight (2022: seven) senior management of the Company for the year ended 31 December 2023, four (2022: four)
of them are directors of the Company and their remuneration has been disclosed in Note 8.1. For the remuneration of
the remaining four (2022: three) senior management all fall within the band from RMBNil to RMB1,000,000 (2022: two fall
within the band from RMBNil to RMB1,000,000 and one falls within the band from RMB1,000,001 to RMB1,500,000).
8.3
Five highest paid individuals
Of the five highest paid individuals for the year ended 31 December 2023, five of them are staffs and four fall within the
band from RMB2,500,001 to RMB3,000,000, one falls within the band from RMB4,000,001 to RMB4,500,000 (2022: five of
them are staffs and one falls within the band from RMB2,000,001 to RMB2,500,000, two fall within the band from
RMB2,500,001 to RMB3,000,000, one falls within the band from RMB3,000,001 to RMB3,500,000, and one falls within the
band from RMB4,000,001 to RMB4,500,000).
The aggregate of the emoluments in respect of the five (2022: five) highest paid individuals are as follows:
Salaries and allowances
Bonuses paid and payable
Contributions to pension schemes
2023
2022
(RMB’000)
(RMB’000)
3,929
8,659
1,996
1,579
12,334
993
14,584
14,906
During the years of 2023 and 2022, the Group did not incur any payment to the above five highest paid individuals for
loss of office or as an inducement to these individuals to join or upon joining the Group.
9.
COSTS OF TELECOMMUNICATIONS PRODUCTS SOLD
Handsets and other telecommunication products
Others
2023
2022
36,009
394
34,152
568
36,403
34,720
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
147
10. OTHER OPERATING EXPENSES
Note
2023
2022
Impairment losses under ECL, net of reversal
Write-down of inventories
Commission and other service expenses
Advertising and promotion expenses
Internet access terminal maintenance expenses
Customer retention costs
Auditors’ remuneration:
— Audit of the financial statements
— Other special audit and assurance services
— Non-audit services
Property management fee
Office and administrative expenses
Transportation expense
Miscellaneous taxes and fees
Service technical support expenses
Repairs and maintenance expenses
Loss on disposal of property, plant and equipment
15
Others
6,141
215
25,680
2,130
2,551
3,340
44
11
16
2,791
1,940
752
1,539
47,076
519
1,181
6,197
6,552
366
24,537
2,717
2,267
3,370
42
6
4
2,704
1,285
786
1,395
39,374
628
1,882
5,042
11. FINANCE COSTS
102,123
92,957
Note
2023
2022
Finance costs:
— Interest on corporate bonds, promissory notes and
commercial papers
— Interest on lease liabilities
— Interest on related party loans
— Interest on bank loans and others
— Less: Amounts capitalised in CIP
15
Total interest expense
— Net exchange gain
— Others
59
1,717
134
87
(16)
111
802
93
82
(28)
1,981
1,060
(55)
55
(15)
50
1,981
1,095
Annual Report 2023
148
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
12. OTHER INCOME — NET
Dividend from financial assets measured at FVOCI (non-recycling)
Government grants
Additional deduction for VAT
Investment income from debt securities measured at FVOCI (recycling)
Fair value gains on financial assets measured at FVPL
Gains on disposal of financial assets measured at FVPL
Others
2023
159
995
1,912
424
114
14
(84)
2022
149
872
2,325
438
24
72
(30)
3,534
3,850
13. TAXATION
Hong Kong profits tax has been provided at the rate of 16.5% (2022: 16.5%) on the estimated assessable profits for the year.
Taxation on profits outside Hong Kong has been calculated on the estimated assessable profits for the year at the rates of
taxation prevailing in the jurisdictions in which the Group operates. The Company’s subsidiaries operate mainly in the PRC and
the applicable statutory enterprise income tax rate is 25% (2022: 25%). Taxation for certain subsidiaries in the PRC was
calculated at a preferential tax rate of 15% (2022: 15%).
Provision for income tax on the estimated taxable profits for the year
— Hong Kong
— Mainland China and other jurisdictions
Over provision in respect of prior years
Deferred taxation
Income tax expenses
2023
2022
77
4,630
(8)
36
3,422
(58)
4,699
3,400
(676)
351
4,023
3,751
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
149
13. TAXATION (Continued)
Reconciliation between actual income tax expense and accounting profit at PRC statutory tax rate:
Note
2023
2022
Profit before income tax
22,945
20,588
Expected income tax expense at PRC statutory tax rate of 25%
5,736
5,147
Impact of different tax rates outside Mainland China
Tax effect of preferential tax rate
Additional deduction for qualified research and development costs
Tax effect of non-deductible expenses
Tax effect of non-taxable income from share of net profit of joint ventures
Tax effect of non-taxable income from share of net profit of associates
Over provision in respect of prior years
(i)
(i)
Tax effect of unused tax losses not recognised, net of utilisation
(ii)
(51)
(150)
(921)
461
(451)
(565)
(8)
(28)
(40)
(155)
(662)
329
(398)
(473)
(58)
61
Actual tax expense
4,023
3,751
(i)
According to the PRC enterprise income tax law and its relevant regulations, entities that are qualified as high and new
technology enterprise under the tax law are entitled to a preferential income tax rate of 15% (2022: 15%). Certain
subsidiaries of the Group obtained the approval of high and new technology enterprise and were entitled to a
preferential income tax rate of 15% (2022: 15%), and certain research and development costs of the Group’s PRC
subsidiaries are qualified for 100% (2022: 75% for the first three quarters and 100% for the fourth quarter) additional
deduction for tax purpose.
(ii)
As at 31 December 2023, the Group did not recognise deferred tax assets in respect of tax losses amounting to
approximately RMB334 million (2022: approximately RMB446 million), since it is not probable that future taxable profits
will be available against which the deferred tax asset can be utilised. The tax losses can be carried forward for five to ten
years from the year incurred and hence will be expired by the year of 2024 to 2033.
As at 31 December 2023, the Group did not recognise deferred tax assets in respect of fair value changes on financial assets
measured at FVOCI (non-recycling) amounting to approximately RMB9,682 million (2022: approximately RMB9,852 million), since
it is not probable that the related tax benefit will be realised.
Annual Report 2023
150
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
13. TAXATION (Continued)
The movement of the net deferred tax assets/(liabilities) is as follows:
Net deferred tax assets after offsetting:
— Beginning of year
— Deferred tax credited to the consolidated statement of income
— Deferred tax (charged)/credited to other comprehensive income
— Deferred tax credited to reserves
— End of year
Net deferred tax liabilities after offsetting:
— Beginning of year
— Deferred tax credited/(charged) to the consolidated statement of income
— Deferred tax (charged)/credited to other comprehensive income
— End of year
2023
2022
469
315
(7)
40
817
(950)
361
(11)
(600)
271
189
9
—
469
(417)
(540)
7
(950)
The components of the deferred tax assets/(liabilities) recognised in the consolidated statement of financial position and the
movements during the year are as follows:
Unrecognised
revaluation surplus
on prepayments for
the leasehold land
Accruals of
Unrealised
Accelerated
expenses not
profit from the
depreciation of
Deferred tax arising from
allowance
PRC regulation
tax losses
for tax purpose
Tower Company
and equipment
assets
liabilities
Others
Total
Credit loss
determined under
Unused
yet deductible
transactions with
property, plant
Right-of-use
Lease
(Note (i))
(Note (ii))
At 1 January 2022
Credited/(charged) to the consolidated
statement of income
Credited to other comprehensive income
At 31 December 2022
Credited/(charged) to the consolidated
statement of income
Charged to other comprehensive income
Credited to reserves
2,623
1,168
—
3,791
952
—
—
1,209
(47)
—
1,162
(48)
—
—
At 31 December 2023
4,743
1,114
34
(25)
—
9
2
—
—
11
4,743
1,127
—
5,870
635
—
—
250
(65)
—
(12,868)
(4,664)
5,067
3,460
(146)
(3,603)
—
(7,134)
—
7,115
—
1,113
16
(351)
16
185
(16,471)
(11,798)
12,182
4,589
(481)
(65)
—
—
(1,833)
1,583
(1,382)
—
—
—
—
—
—
832
(18)
40
676
(18)
40
6,505
120
(18,304)
(10,215)
10,800
5,443
217
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
151
13. TAXATION (Continued)
(i)
The prepayments for the leasehold land were revalued for PRC tax purposes as at 31 December 2003 and 2004. However,
the resulting revaluations of the prepayments for the leasehold land were not recognised under HKFRSs. Accordingly,
deferred tax assets were recorded by the Group under HKFRSs.
(ii)
According to “Announcement on Enterprise Income Tax Policy for Those Enterprise Involved in the Accelerated Depreciation
of Property, Plant and Equipment” (Caishui [2014] No.75) issued by the MOF and the State Administration Taxation
(“SAT”) of the PRC, starting from 2014, the Group’s property, plant and equipment that comply with this tax policy are
allowed to be depreciated under the accelerated depreciation method, or fully deducted for tax purpose in the year of
purchase. Temporary differences arise from the different useful lives under tax basis and accounting basis have been
recorded as deferred tax liabilities.
14. EARNINGS PER SHARE
Basic earnings per share for the years ended 31 December 2023 and 2022 were computed by dividing the profit attributable to
equity shareholders of the Company by the weighted average number of ordinary shares outstanding during the years.
Diluted earnings per share for the years ended 31 December 2023 and 2022 were computed by dividing the profit attributable to
equity shareholders of the Company by the weighted average number of ordinary shares outstanding during the years, after
adjusting for the effects of the dilutive potential ordinary shares. There were no dilutive potential ordinary shares for the years
ended 31 December 2023 and 2022.
The following table sets forth the computation of basic and diluted earnings per share:
2023
2022
Numerator (in RMB millions):
Profit attributable to equity shareholders of the Company used in
computing basic/diluted earnings per share
18,726
16,745
Denominator (in millions):
Number of ordinary shares outstanding used in computing basic/diluted
earnings per share
30,598
30,598
Basic/Diluted earnings per share (in RMB)
0.61
0.55
Annual Report 2023
152
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
15. PROPERTY, PLANT AND EQUIPMENT
The movements of property, plant and equipment for the years ended 31 December 2023 and 2022 are as follows:
2023
Office furniture,
Tele-
fixtures, motor
communications
vehicles and
Leasehold
Buildings
equipment
other equipment
improvements
CIP
Total
Cost:
Beginning of year
Additions
Transfer from CIP
Transfer to other assets
Disposals
79,284
239
1,925
—
(465)
827,720
384
59,810
—
(45,995)
19,655
353
886
—
(945)
3,093
151
330
—
(362)
48,580
72,489
(62,951)
(7,738)
(3)
978,332
73,616
—
(7,738)
(47,770)
End of year
80,983
841,919
19,949
3,212
50,377
996,440
Accumulated depreciation and impairment:
Beginning of year
Charge for the year
Disposals
End of year
Net book value:
End of year
(43,973)
(2,650)
433
(564,878)
(55,818)
43,878
(14,597)
(1,301)
903
(2,351)
(355)
361
(100)
—
3
(625,899)
(60,124)
45,578
(46,190)
(576,818)
(14,995)
(2,345)
(97)
(640,445)
Beginning of year
35,311
262,842
34,793
265,101
4,954
5,058
867
742
50,280
355,995
48,480
352,433
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
153
15. PROPERTY, PLANT AND EQUIPMENT (Continued)
2022
Office furniture,
Tele-
fixtures, motor
communications
vehicles and
Leasehold
Buildings
equipment
other equipment
improvements
CIP
Total
Cost:
Beginning of year
Additions
Transfer from CIP
Transfer to other assets
Disposals
78,179
23
1,573
—
(491)
831,045
553
56,007
—
(59,885)
19,825
455
1,323
—
(1,948)
3,336
66
257
—
(566)
43,411
72,329
(59,160)
(7,959)
(41)
975,796
73,426
—
(7,959)
(62,931)
End of year
79,284
827,720
19,655
3,093
48,580
978,332
Accumulated depreciation and impairment:
Beginning of year
Charge for the year
Disposals
(41,674)
(2,707)
408
(561,526)
(60,279)
56,927
(15,008)
(1,299)
1,710
(2,418)
(302)
369
(139)
(2)
41
(620,765)
(64,589)
59,455
End of year
(43,973)
(564,878)
(14,597)
(2,351)
(100)
(625,899)
Net book value:
End of year
35,311
262,842
Beginning of year
36,505
269,519
5,058
4,817
742
918
48,480
352,433
43,272
355,031
For the year ended 31 December 2023, interest expense of approximately RMB16 million (2022: approximately RMB28 million)
was capitalised in CIP. The capitalised borrowing rate represented the cost of capital for raising the related borrowings and
varied from 1.45% to 2.80% for the year ended 31 December 2023 (2022: 2.29% to 2.71%).
Mainly as a result of the Group’s ongoing modification of its telecommunications network and following subscribers’ voluntarily
cross network migration progress, the Group disposed certain property, plant and equipment with carrying amounts of
RMB2,192 million (2022: RMB3,476 million) for consideration of RMB1,011 million (2022: RMB1,594 million) for the year ended
31 December 2023, resulting in a net loss of approximately RMB1,181 million for the year ended 31 December 2023 (2022:
approximately RMB1,882 million).
In 2022, the Group adjusted the residual value of certain optical cable assets from 3% to 0% due to the increasing removal costs
and decreasing recycling value. The change was accounted for as a change in accounting estimate in accordance with HKAS 8,
“Accounting Policies, Changes in Accounting Estimates and Errors” effect from 1 December 2022 using the prospective
application method. The depreciation and amortisation for the year ended 31 December 2022 increased by approximately
RMB2,350 million as a result of the aforesaid changes in accounting estimates.
Annual Report 2023
154
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
16. RIGHT-OF-USE ASSETS
Cost:
Beginning of year
Additions
Disposals
End of year
Accumulated depreciation and impairment:
Beginning of year
Charge for the year
Disposals
End of year
Net book value:
End of year
2023
Tele-
communications
Buildings
equipment
Land use rights
Others
Total
18,442
4,355
(3,596)
78,558
3,571
(6,718)
13,998
106
(74)
1,892
579
(183)
112,890
8,611
(10,571)
19,201
75,411
14,030
2,288
110,930
(9,773)
(4,012)
3,497
(37,751)
(8,244)
4,803
(5,305)
(285)
32
(834)
(577)
127
(53,663)
(13,118)
8,459
(10,288)
(41,192)
(5,558)
(1,284)
(58,322)
Beginning of year
8,669
40,807
8,913
34,219
8,472
8,693
1,004
52,608
1,058
59,227
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
155
2022
Tele-
communications
Buildings
equipment
Land use rights
Others
Total
15,840
4,876
(2,274)
44,930
34,478
(850)
13,971
248
(221)
1,337
643
(88)
76,078
40,245
(3,433)
18,442
78,558
13,998
1,892
112,890
(8,104)
(3,806)
2,137
(29,691)
(8,788)
728
(5,037)
(300)
32
(380)
(542)
88
(43,212)
(13,436)
2,985
(9,773)
(37,751)
(5,305)
(834)
(53,663)
16. RIGHT-OF-USE ASSETS (Continued)
Cost:
Beginning of year
Additions
Disposals
End of year
Accumulated depreciation and impairment:
Beginning of year
Charge for the year
Disposals
End of year
Net book value:
End of year
Beginning of year
7,736
15,239
8,669
40,807
8,693
8,934
1,058
59,227
957
32,866
Details of total cash outflow for leases and the maturity analysis of lease liabilities are set out in Note 36.
On 13 December 2022, the Board of Directors of the Company approved CUCL and Tower Company to sign the commercial
pricing agreement and the service agreement, which constituted a lease modification under HKFRS 16, “Leases”. In accordance
with HKFRS 16, the lease liabilities are remeasured based on the lease term of the modified lease by discounting the revised
lease payments using revised discount rates at the effective date of the modification. Details of this transaction are set out in
Note 45.
Annual Report 2023
156
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
17. GOODWILL
Goodwill arising from the acquisitions of Unicom New Century Telecommunications Co., Ltd. and Unicom New World
Telecommunications Co., Ltd. by the Group in 2002 and 2003, respectively, represented the excess of the purchase consideration
over the Group’s share of the fair values of the separately identifiable net assets acquired prior to the adoption of AG 5 in
2005.
Goodwill is allocated to the Group’s cash-generating unit (the “CGU”). The recoverable amount of the CGU with goodwill is
determined based on value in use calculations. These calculations use pre-tax cash flow projections for 5 years based on
financial budgets approved by management, and extrapolated using a steady 1% growth rate (2022: 1%), and the applicable
discount rate of 11% (2022: 11%). Management determined expected growth rate and operating results based on past
performance and its expectations in relation to market developments. The discount rate used is pre-tax and reflects specific risks
relating to the CGU. Based on management’s assessment results, there was no impairment of goodwill as at 31 December 2023
and 2022, any reasonably possible change in the assumptions used in the calculation of recoverable amount would not result in
impairment losses.
18.
INVESTMENTS IN SUBSIDIARIES
As at 31 December 2023, the details of the Company’s subsidiaries are as follows:
Name
CUCL
Place and date of incorporation/
establishment and nature of
Percentage of equity
interests held
Particular of issued share capital/
Principal activities and
legal entity
Direct
Indirect
paid up capital
place of operation
The PRC, 21 April 2000,
limited liability company
100%
— RMB213,044,797,828
Telecommunications operation
in the PRC
China Unicom Global Limited
Hong Kong, 29 May 2015,
100%
— HKD2,625,097,491
Investment holding
limited company
China Unicom (Hong Kong)
Hong Kong, 24 May 2000,
Operations Limited
limited company
China Unicom (Americas)
USA, 24 May 2002,
Operations Limited
limited company
China Unicom (Europe)
The United Kingdom,
Operations Limited
8 November 2006,
limited company
—
—
—
100%
HKD1,510,100,000
Telecommunications service in
Hong Kong
100%
5,000 shares,
Telecommunications service in the USA
USD100 each
100%
4,861,000 shares,
Telecommunications operation in the
GBP1 each
United Kingdom
China Unicom (Japan)
Japan, 25 January 2007,
—
100%
1,000 shares,
Telecommunications operation in Japan
Operations Corporation
limited company
JPY366,000 each
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
157
18.
INVESTMENTS IN SUBSIDIARIES (Continued)
Place and date of incorporation/
establishment and nature of
Percentage of equity
interests held
Particular of issued share capital/
Principal activities and
Name
legal entity
Direct
Indirect
paid up capital
place of operation
China Unicom (Singapore)
Singapore, 5 August 2009,
Operations Pte Limited
limited company
China Unicom (South Africa)
South Africa, 19 November 2012,
Operations (Pty) Limited
limited liability company
China Unicom (MYA) Operations
The Republic of the Union of
Company Limited
Myanmar (“Myanmar”),
7 June 2013,
limited liability company
China Unicom (Australia)
Australia, 27 May 2014,
Operations Pty Limited
limited liability company
China Unicom (Russia)
Russia, 28 December 2016,
Operations Limited Liability
limited liability company
Company
China Unicom (Brazil)
Brazil, 23 June 2016,
Telecommunications Limited
limited liability company
China Unicom (Brazil) Holdings
Brazil, 27 October 2017,
Ltda.
limited liability company
China Unicom Operations
Thailand, 20 November 2017,
(Thailand) Limited
limited liability company
China Unicom Operations
Malaysia, 10 November 2017,
(Malaysia) Sdn. Bhd.
limited liability company
China Unicom Operations Korea
Korea, 24 November 2017,
Co., Ltd
limited liability company
—
—
—
—
—
—
—
—
—
—
100%
80,000,000 shares,
Telecommunications operation in
RMB1 each
Singapore
100%
200 shares in total:
Telecommunications operation in South
100 shares, ZAR 1 each
Africa
100 shares, ZAR 512,063.34 each
100%
2,150,000 shares,
Communications technology training in
USD1 each
Myanmar
100%
17,685,920 shares,
Telecommunications operation in
AUD 1 each
Australia
100%
RUB127,453,000
Telecommunications service in Russia
100%
R$35,595,387
Telecommunications service in Brazil
100%
R$34,605,225
Investment holding
100%
1,040,000 shares,
Telecommunications service in Thailand
Baht100 each
100%
3,200,000 shares,
Telecommunications service in Malaysia
MYR1 each
100%
60,000 shares,
Telecommunications service in Korea
KRW5,000 each
Annual Report 2023
158
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
18.
INVESTMENTS IN SUBSIDIARIES (Continued)
Place and date of incorporation/
establishment and nature of
Percentage of equity
interests held
Particular of issued share capital/
Principal activities and
Name
legal entity
Direct
Indirect
paid up capital
place of operation
China Unicom (Vietnam)
Vietnam, 19 April 2018,
Operations Company Limited
limited liability company
China Unicom (Cambodia)
Cambodia, 11 May 2018,
Operations Co. Ltd
limited liability company
PT China Unicom Indonesia
Indonesia, 25 October 2019,
Operations
limited liability company
China Unicom (Philippines)
Philippines, 6 November 2019,
Operations Inc
limited liability company
China Unicom (Mexico)
Mexico, 29 October 2021,
Operations Limited
limited liability company
Unicom Vsens
Telecommunications
Company Limited
The PRC, 19 August 2008,
limited liability company
China Unicom Digital
The PRC, 30 April 2006,
Technology Co,.Ltd
limited liability company
China Unicom Online
The PRC, 29 March 2006,
Information Technology
limited liability company
Company Limited
—
—
—
—
—
—
—
—
100%
VND2,276,000,000
Telecommunications service in Vietnam
100%
560,000 shares,
Telecommunications service in
Riels4,000 each
Cambodia
100%
20,000,000,001 shares,
Telecommunications service in Indonesia
Rp1 each
100%
103,012 shares,
Telecommunications service in
Php100 each
Philippines
100%
Peso88,000,000
Telecommunications service in Mexico
100%
RMB610,526,532
Sales of handsets, telecommunications
equipment and provision of customer
services in the PRC
100%
RMB8,993,177,616
Provision of information communications
technology services in the PRC
100%
RMB400,000,000
Provision of internet and value-added
telecommunications services in the
PRC
Beijing Telecom Planning and
The PRC, 25 April 1996,
—
100%
RMB264,227,115
Provision of consultancy, survey, design
Designing Institute Company
limited liability company
Limited
and contract services relating to
information projects and construction
projects in the telecommunications
industry in the PRC
China Information Technology
The PRC, 11 November 1991,
—
75%
RMB573,333,335
Provision of consultancy, survey, design
Designing & Consulting
limited liability company
Institute Company Limited
and engineering procurement
construction services relating to
information projects and construction
projects in the telecommunications
industry in the PRC
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
159
18.
INVESTMENTS IN SUBSIDIARIES (Continued)
Place and date of incorporation/
establishment and nature of
Percentage of equity
interests held
Particular of issued share capital/
Principal activities and
Name
legal entity
Direct
Indirect
paid up capital
place of operation
China Unicom Information
The PRC, 17 September 1998,
Navigation Company Limited
limited liability company
Huaxia P&T Project Consultation
The PRC, 5 March 1998,
and Management Company
limited liability company
Limited
Zhengzhou Kaicheng Industrial
The PRC, 21 December 2005,
Company Limited
limited liability company
Unicompay Company Limited
The PRC, 11 April 2011,
limited liability company
Beijing Wo Digital Media
The PRC, 21 July 2006,
Advertising Co., Ltd
limited liability company
—
—
—
—
—
100%
RMB6,825,087,800
Provision of telecommunications
customer services in the PRC
100%
RMB50,100,000
Provision of project consultation,
monitoring and project bidding
agency in the PRC
100%
RMB2,200,000
Provision of property services in the PRC
100%
RMB250,000,000
Provision of e-payment services in the
PRC
100%
RMB20,000,000
Provision of advertising design,
production, agency and publication in
the PRC
Guangdong Unicom
The PRC, 28 May 2013,
—
100%
RMB30,000,000
Provision of technical Provision of
Communication Construction
limited liability company
Co., Ltd
China Unicom Intelligence
The PRC, 15 August 2007,
—
100%
RMB150,000,000
telecommunications network
construction, maintenance and
technical services in the PRC
Provision of technical development and
internet technology services in the
PRC
Security Technology
Corporation Limited
limited liability company
Unicom Cloud Data Company
The PRC, 4 June 2013,
Limited
limited liability company
Unicom Innovation Investment
The PRC, 29 April 2014,
Company Limited
limited liability company
Xiaowo Technology Co. Ltd
The PRC, 24 October 2014,
limited liability company
—
—
—
100%
RMB4,000,000,000
Provision of technology development,
transfer and consulting service in the
PRC
100%
RMB4,840,000,000
Venture capital investment business in
the PRC
100%
RMB200,000,000
Provision of internet and value-added
telecommunications business in the
PRC
Annual Report 2023
160
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
18.
INVESTMENTS IN SUBSIDIARIES (Continued)
Place and date of incorporation/
establishment and nature of
Percentage of equity
interests held
Particular of issued share capital/
Principal activities and
Name
legal entity
Direct
Indirect
paid up capital
place of operation
China Unicom Smart Connection
The PRC, 7 August 2015,
Technology Company Limited
limited liability company
Unicom Intelligent Network
The PRC, 26 September 2018,
Ruixing Technology (Beijing)
limited liability company
Co., Ltd.
Finance Company
The PRC, 17 June 2016,
limited liability company
Unicom United Investment
The PRC, 28 January 2016,
(Beijing) Co., Ltd.
limited liability company
Lianchuangqianxian (Guizhou)
The PRC, 8 October 2016,
Technology Service Co., Ltd.
limited liability company
China Unicom Emerging (Beijing)
The PRC, 1 February 2016,
Investment Centre (Limited
limited partnership
Partnership)
Unicom Big Data Co., Ltd.
The PRC, 24 August 2017,
limited liability company
Liantong Travel Service (Beijing)
The PRC, 30 September 2017,
Company Limited
limited liability company
China Unicom (Guangdong)
The PRC, 5 January 2017,
Industrial Internet Company
limited liability company
Limited
—
—
—
—
—
—
—
—
—
68.88%
RMB246,796,148
Auto informatisation in the PRC
80%
RMB10,000,000
Provision of technology promotion
service of intelligent transportation
system’s products in the PRC
91%
RMB3,000,000,000
Provision of financial services in the PRC
100%
RMB200,000
Venture capital investment business in
the PRC
60%
RMB1,000,000
Venture capital investment business in
the PRC
99%
RMB68,074,936
Venture capital investment business in
the PRC
100%
RMB500,000,000
Provision of data processing in the PRC
100%
RMB100,000,000
Provision of tourism and information
services in the PRC
100%
RMB150,000,000
Provision of information system
integration business in the PRC
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
161
18.
INVESTMENTS IN SUBSIDIARIES (Continued)
Place and date of incorporation/
establishment and nature of
Percentage of equity
interests held
Particular of issued share capital/
Principal activities and
Name
legal entity
Direct
Indirect
paid up capital
place of operation
China Unicom (Zhejiang)
The PRC, 20 June 2017,
—
100%
RMB61,000,000
Industry Internet Company
limited liability company
Limited
China Unicom (ShanDong)
The PRC, 3 March 2017,
—
100%
RMB100,000,000
Provision of information system
integration business in the PRC
Provision of information system
integration business in the PRC
Industrial Internet Company
limited liability company
Limited
China Unicom (Fujian) Industrial
The PRC, 23 February 2018,
Internet Company Limited
limited liability company
China Unicom (Shanxi) Industrial
The PRC, 21 March 2018,
Internet Company Limited
limited liability company
China Unicom Xiongan Industrial
The PRC, 25 April 2018, limited
Internet Company Limited
liability company
China Unicom (Sichuan)
The PRC, 29 March 2018,
Industrial Internet Company
limited liability company
Limited
—
—
—
—
100%
RMB50,000,000
Provision of information system
integration business in the PRC
100%
RMB100,000,000
Provision of information system
integration business in the PRC
100%
RMB724,342,600
Provision of information system
integration business in the PRC
100%
RMB100,000,000
Provision of information system
integration business in the PRC
China Unicom (Liaoning)
The PRC, 28 March 2018,
—
100%
RMB100,000,000
Industrial Internet Company
limited liability company
Limited
China Unicom (Jiangsu)
The PRC, 9 May 2018,
—
100%
RMB26,200,000
Industrial Internet Company
limited liability company
Limited
Provision of information system
integration business in the PRC
Provision of information system
integration business in the PRC
Annual Report 2023
162
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
18.
INVESTMENTS IN SUBSIDIARIES (Continued)
Place and date of incorporation/
establishment and nature of
Percentage of equity
interests held
Particular of issued share capital/
Principal activities and
Name
legal entity
Direct
Indirect
paid up capital
place of operation
China Unicom (Shanghai)
The PRC, 13 March 2018,
—
100%
RMB70,000,000
Industrial Internet Company
limited liability company
Limited
China Unicom (Heilongjiang)
The PRC, 14 March 2018,
—
100%
RMB100,000,000
Provision of information system
integration business in the PRC
Provision of information system
integration business in the PRC
Industrial Internet Company
limited liability company
Limited
Henan Industrial Interconnection
The PRC, 30 May 2019,
& Technology Co, Ltd
limited liability company
China Unicom Video Technology
The PRC, 17 January 2018,
Co., Ltd.
limited liability company
—
—
40%
RMB90,000,000
Provision of information system
integration business in the PRC
100%
RMB100,000,000
Provision of technology research and
development of TV and mobile video,
consultation disposal, promotion and
value-added telecommunications
services
China Unicom Internet of Things
The PRC, 16 March 2018,
—
100%
RMB261,516,702
Provision of internet of things
Corporation Limited
limited liability company
China Unicom High-tech Big
The PRC, 29 March 2018,
—
51%
RMB10,000,000
Data Artificial Intelligence
limited liability company
Technology (Chengdu) Co.,
Ltd.
China Unicom iRead Science and
The PRC, 28 April 2018,
—
100%
RMB51,000,000
Culture Co., Ltd.
limited liability company
China Unicom WO Music &
The PRC, 8 May 2018,
—
100%
RMB100,000,000
Culture Co., Ltd.
limited liability company
technology, consultation and service
in the PRC
Provision of Big Data Service, cloud
computation and infrastructure
service in the PRC
Provision of internet and value-added
telecommunications business in the
PRC
Provision of internet information
technology services in the PRC
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
163
18.
INVESTMENTS IN SUBSIDIARIES (Continued)
Place and date of incorporation/
establishment and nature of
Percentage of equity
interests held
Particular of issued share capital/
Principal activities and
Name
legal entity
Direct
Indirect
paid up capital
place of operation
China Unicom Leasing Co., Ltd.
The PRC, 11 April 2018,
25%
75%
RMB2,500,000,000
Provision of financing leasing business in
limited liability company
the PRC
Yunjing Culture And Tourism
The PRC, 27 February 2019,
Technology Co., LTD
limited liability company
Yundun Intelligent Security
The PRC, 11 November 2019,
Technology Co., Ltd
limited liability company
Wobaifu Information Technology
The PRC, 17 April 2020,
(Tianjin) Co., LTD
limited liability company
Changchun FAW
The PRC, 27 September 2002,
Communications Technology
limited liability company
Co., Ltd.
Yichun Digital Economy Industry
The PRC, 14 December 2020,
Operation Co., Ltd
limited liability company
—
—
—
—
—
80%
RMB25,000,000
Provision of tourism and big data
business, data analysis, processing
and application services in the PRC
51%
RMB100,000,000
Provision of software development;
technology promotion and
development in the PRC
100%
RMB10,000,000
Provision of software and information
technology service in the PRC
51%
RMB86,458,636
Telecommunications business in the PRC
51%
RMB22,650,000
Provision of telecommunication,
television broadcasting and satellite
transmission services in the PRC
Lianchuang Weilai (Wuhan)
The PRC, 29 July 2020,
—
61.64%
RMB1,460,000,000
Provision of investment business in the
Intelligent Manufacturing
limited liability company
PRC
Industry Investment
Partnership (Limited
Partnership)
Hebei Sign Technology Co., Ltd.
The PRC, 22 October 2021,
limited liability company
China Unicom Spirit Realm Video
The PRC, 9 July 2021,
(Jiangxi) Technology
Company Limited
limited liability company
—
—
70%
RMB10,000,000
Provision of other technology promotion
service in the PRC
100%
RMB3,000,000
Provision of internet and
telecommunication value added
business in the PRC
Annual Report 2023
164
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
18.
INVESTMENTS IN SUBSIDIARIES (Continued)
Place and date of incorporation/
establishment and nature of
Percentage of equity
interests held
Particular of issued share capital/
Principal activities and
Name
legal entity
Direct
Indirect
paid up capital
place of operation
China Unicom Innovation
The PRC, 6 June 2014,
Investment Company
limited liability company
(Shanghai), Ltd
China Unicom Western
The PRC, 6 September 2021,
Innovation Institute
limited liability company
China Unicom Zhiyu (Shanghai)
The PRC, 5 June 2018,
Information Service and
limited liability company
Technology Co., Ltd
Lian Kuan (Wuhan) Investment
The PRC, 24 July 2020,
Center (Limited Partnership)
limited liability company
Lingang Data Intelligence
The PRC, December 29 2021
Technology (Shanghai)
limited liability company
Co., Ltd.
—
—
—
—
—
70%
RMB40,000,000
Provision of pioneer investment business
in the PRC
100%
RMB50,000,000
Provision of information technology
consultation services
70%
RMB1,000,000
Provision of business incubator
management in the PRC
87.47%
RMB8,715,000
Provision of investment business in the
PRC
100%
RMB1,000,000,000
Provision of internet data and security
services; cloud computing services in
the PRC
China Unicom Intelligence
The PRC, 30 May 2022,
—
100%
RMB600,000,000
Provision of internet data services, 5G
Technology Industrial
limited liability company
Co., Ltd
China Unicom (Beijing) Industrial
The PRC, 21 November 2022,
Internet Co., Ltd
limited liability company
China Unicom (Jilin) Industrial
The PRC, 8 August 2022,
Internet Company Limited
limited liability company
China Unicom (Anhui) Industry
The PRC, 13 July 2022,
Internet Company Limited
limited liability company
Unicom (Jiangxi) Industrial
The PRC, 16 November 2022,
Internet Co., Ltd
limited liability company
Communications technology services
and AI industry application services in
the PRC
—
—
—
—
100%
RMB50,000,000
Provision of information and system
integration business in the PRC
100%
RMB50,000,000
Provision of information and system
integration business in the PRC
100%
RMB50,000,000
Provision of information and system
integration business in the PRC
100%
RMB50,000,000
Provision of information and system
integration business in the PRC
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
165
18.
INVESTMENTS IN SUBSIDIARIES (Continued)
Place and date of incorporation/
establishment and nature of
Percentage of equity
interests held
Particular of issued share capital/
Principal activities and
Name
legal entity
Direct
Indirect
paid up capital
place of operation
China Unicom (Hubei) Industrial
The PRC, 26 September 2022,
Internet Company Limited
limited liability company
China Unicom (Henan) Industrial
The PRC, 22 August 2022,
Internet Company Limited
limited liability company
China Unicom (Hunan) Industrial
The PRC, 13 September 2022,
Internet Company Limited
limited liability company
China Unicom (Hainan)
The PRC, 19 July 2022,
Industrial Internet Company
limited liability company
Limited
Yunjin Intelligence Technology
The PRC, 6 June 2022,
Corporation Limited
limited liability company
Chongqing Digital intelligence
The PRC, 8 August 2022,
Integration Innovation
limited liability company
Technology Co., LTD
—
—
—
—
—
—
100%
RMB50,000,000
Provision of information and system
integration business in the PRC
100%
RMB50,000,000
Provision of information and system
integration business in the PRC
100%
RMB50,000,000
Provision of information and system
integration business in the PRC
100%
RMB50,000,000
Provision of information and system
integration business in the PRC
45%
RMB42,500,000
Provision of internet data services and
technology development in the PRC
70%
RMB100,000,000
Provision of technology development
and application, integrated
innovation and operation in the PRC
Unicom (Langfang) Cloud Data
The PRC, 31 October 2022,
—
100%
RMB5,000,000
Provision of type 1 value-added
Company Limited
limited liability company
telecommunications services and
internet technology services etc in
the PRC
Unicom (Zhejiang) Cloud Data
The PRC, 25 May 2022,
—
100%
RMB40,000,000
Provision of big data services and
Company Limited
limited liability company
information technology services in the
PRC
China Unicom (Tianjin) Industrial
The PRC, 12 September 2023,
Internet Company Limited
limited liability company
China Unicom (Inner Mongolia)
The PRC, 21 September 2023,
Industrial Internet Company
limited liability company
Limited
—
—
100%
RMB50,000,000
Provision of information and system
integration business in the PRC
100%
RMB50,000,000
Provision of information and system
integration business in the PRC
Annual Report 2023
166
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
18.
INVESTMENTS IN SUBSIDIARIES (Continued)
Place and date of incorporation/
establishment and nature of
Percentage of equity
interests held
Particular of issued share capital/
Principal activities and
Name
legal entity
Direct
Indirect
paid up capital
place of operation
China Unicom (Guangxi)
The PRC, 13 November 2023,
—
100%
RMB50,000,000
Industrial Internet Company
limited liability company
Limited
China Unicom (Chongqing)
The PRC, 12 September 2023,
—
100%
RMB50,000,000
Industrial Internet Company
limited liability company
Limited
China Unicom (Guizhou)
The PRC, 23 October 2023,
—
100%
RMB50,000,000
Industrial Internet Company
limited liability company
Limited
China Unicom (Shaanxi)
The PRC, 19 September 2023,
—
100%
RMB50,000,000
Industrial Internet Company
limited liability company
Limited
Provision of information and system
integration business in the PRC
Provision of information and system
integration business in the PRC
Provision of information and system
integration business in the PRC
Provision of information and system
integration business in the PRC
China Unicom (Gansu) Industrial
The PRC, 22 September 2023,
Internet Company Limited
limited liability company
China Unicom (Ningxia)
The PRC, 3 November 2023,
Industrial Internet Company
limited liability company
Limited
—
—
100%
RMB50,000,000
Provision of information and system
integration business in the PRC
100%
RMB50,000,000
Provision of information and system
integration business in the PRC
China Unicom (Xinjiang)
The PRC, 8 November 2023,
—
100%
RMB50,000,000
Industrial Internet Company
limited liability company
Limited
Provision of information and system
integration business in the PRC
China Unicom Digital
The PRC, 10 December 2023,
—
46.63%
RMB125,093,498
Provision of technology service,
Intelligence Medical
Technology Co., LTD
limited liability company
development, consultation,
communication, transfer and
promotion in the PRC
Nebula Times Technology
The PRC, 26 April 2023,
—
48%
RMB135,000,000
Provision of internet connection and
Co.,Ltd.
limited liability company
relevant services in the PRC
For subsidiaries which the Group’s ownership is less than 50%, the Group has a majority of the voting rights to direct the
relevant activities of these subsidiaries pursuant to articles of association.
None of the subsidiaries had issued any debt securities during the year ended 31 December 2023 (2022: none except for CUCL,
which has issued commercial papers, in which the Group has no interest). Details of the issued debt securities are disclosed in
Note 40.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
167
2023
2022
44,188
42,469
19.
INTEREST IN ASSOCIATES
Share of net assets
The following list contains the particulars of a material associate as at 31 December 2023:
Place of
Proportion of
Form of business
incorporation and
ownership interest
Name
structure
business
held by a subsidiary
Paid up capital
Principal activities
Tower Company
Incorporated
The PRC
20.65%
RMB176,008,471,024
Construction, maintenance and
operation of communications
towers in the PRC (Note 45.3)
The above associate is accounted for using the equity method in the consolidated financial statements.
Summarised financial information of the material associate, adjusted for any differences in accounting policies, and reconciled to
the carrying amount in the consolidated financial statements, are disclosed below:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Revenue
Profit for the year
Total comprehensive income for the year
Reconciled to the Group’s interest in the associate:
Net assets of the associate
The Group’s effective interest
Adjustment for the remaining balance of the deferred gain from the transactions with
Tower Company
Tower Company
2023
2022
78,083
247,924
(63,934)
(64,379)
(197,694)
94,009
9,750
9,756
49,706
255,854
(65,158)
(46,811)
(193,591)
92,170
8,787
8,787
197,694
20.65%
193,591
20.65%
40,824
39,977
(479)
(740)
Carrying amount in the consolidated financial statements
40,345
39,237
Annual Report 2023
168
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
19.
INTEREST IN ASSOCIATES (Continued)
The fair values of the interests in Tower Company is based on quoted market prices (level 1: quoted price (unadjusted) in active
markets) at the financial position date without any deduction for transaction costs and disclosed as follows:
As at 31 December 2023
As at 31 December 2022
Carrying
amount
Fair value
Carrying
amount
Fair value
Interest in listed associate
— Tower Company
40,345
27,009
39,237
27,273
Aggregate information of associates that are not individually material:
The Group’s share of profit
The Group’s share of other comprehensive income
The Group’s share of total comprehensive income
2023
2022
115
—
115
(5)
2
(3)
Aggregate carrying amount of the Group’s interest in these associates
3,843
3,232
20.
INTEREST IN JOINT VENTURES
Share of net assets
2023
2022
10,240
8,582
The following list contains the particulars of a material joint venture, which is an unlisted corporate entity and has no available
quoted market price as at 31 December 2023:
Name
structure
and business
held by a subsidiary
Paid up capital
Principal activities
Form of business
Place of incorporation
ownership interest
Proportion of
Merchants Union Consumer Finance
Incorporated
The PRC
50% RMB10,000,000,000
Consumer finance consulting in the
Company Limited (“MUCFC”)
PRC
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
169
20.
INTEREST IN JOINT VENTURES (Continued)
Summarised financial information of the material joint venture, adjusted for any differences in accounting policies, and
reconciled to the carrying amount in the consolidated financial statements, are disclosed below:
Assets
Liabilities
Equity
Revenue
Profit for the year
Total comprehensive income for the year
Included in above income:
Interest income
Interest expense
Income tax expense
Reconciled to the Group’s interests in the joint venture:
Net assets of the joint venture
The Group’s effective interest
MUCFC
2023
2022
176,421
(156,054)
(20,367)
164,346
(147,279)
(17,067)
19,602
3,600
3,600
24,943
(4,408)
(533)
20,367
50%
17,501
3,329
3,329
22,079
(4,175)
(500)
17,067
50%
Carrying amount in the consolidated financial statements
10,184
8,533
Aggregate information of joint ventures that are not individually material:
The Group’s share of profit
The Group’s share of other comprehensive income
The Group’s share of total comprehensive income
Aggregate carrying amount of the Group’s interest in these joint ventures
2023
2022
3
—
3
56
(70)
—
(70)
49
Annual Report 2023
170
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
21. CONTRACT ASSETS AND CONTRACT LIABILITIES
(a)
Contract assets
Contract assets from bundle sales of mobile handsets and provision of service,
net of allowance
Others
Sub-total
Less: Current portion
2023
2022
201
164
365
(279)
86
263
69
332
(271)
61
The Group offers preferential packages to the customers which include the bundle sales of mobile handsets and provision
of service. The total contract consideration of such preferential packages is allocated to service revenue and sales of
handsets based on their standalone selling prices. The revenue relating to the sale of the handsets is recognised when the
customers obtain the control of the handsets and the consideration allocated to the sales of mobile handsets is gradually
received during the contract period when the customers pay the monthly package fee.
(b)
Contract liabilities
Advances received from customers for future services
Others
Note
(i)
2023
2022
44,913
1,266
43,437
1,277
46,179
44,714
(i)
Contract liabilities primarily relate to the considerations received from customers before the Group satisfying
performance obligations. It would be recognised as revenue upon the rendering of services. Almost all of the
contract liability balance as at 31 December 2022 was recognised as revenue for the year ended 31 December
2023.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
171
22. CONTRACT COSTS
Direct incremental costs of broadband and internet protocol television
(“IPTV”) service
Sales commissions
Note
2023
2022
(i)
(ii)
8,368
125
8,493
5,557
300
5,857
(i)
Direct incremental costs for activating broadband and IPTV subscribers mainly include the costs of installing broadband and
IPTV terminals at customer’s homes for the provision of broadband and IPTV services, and are amortised over the
expected service period. The amount of capitalised direct incremental costs for activating broadband and IPTV subscribers
recognised in profit or loss during the year was RMB5,855 million (2022: RMB3,659 million). There was no significant
impairment in relation to the capitalised costs as at 31 December 2023 (2022: Nil).
(ii)
Sales commissions are paid to agents whose selling activities resulted in new customers entering into contracts with the
Group. The amount of capitalised sales commissions recognised in profit or loss during the year was RMB175 million
(2022: RMB450 million). There was no significant impairment in relation to capitalised costs as at 31 December 2023
(2022: Nil).
23. FINANCIAL ASSETS MEASURED AT FAIR VALUE
Non-current portion:
Equity securities measured at FVOCI (non-recycling)
Financial assets measured at FVPL
Debt securities measured at FVOCI (recycling)
Current portion:
Financial assets measured at FVPL
Debt securities measured at FVOCI (recycling)
Note
2023
2022
(i)
(ii)
(iii)
(ii)
(iii)
2,042
1,158
2,017
5,217
1,847
1,130
1,132
4,109
2,608
21,820
2,955
16,638
24,428
19,593
29,645
23,702
Annual Report 2023
172
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
23. FINANCIAL ASSETS MEASURED AT FAIR VALUE (Continued)
(i)
Equity securities measured at FVOCI (non-recycling)
Listed in the PRC
Listed outside the PRC
Unlisted
Note
42
2023
146
1,783
113
2,042
2022
120
1,613
114
1,847
(ii)
Financial assets measured at FVPL represent certain equity investments, investments in monetary funds and wealth
management products.
(iii)
Debt securities measured at FVOCI (recycling) represent certain debt investments issued by banks and the investments are
held within a business model whose objective is achieved by both the collection of contractual cash flows and sale.
24. SHORT-TERM BANK DEPOSITS AND RESTRICTED DEPOSITS
Short-term bank deposits
Restricted deposits
25. OTHER ASSETS
Intangible assets
Prepaid services charges for transmission lines and electricity cables and
other services
VAT recoverable
Capital bonds
Others
2023
8,102
2,977
2022
9,921
4,778
11,079
14,699
Note
2023
2022
(i)
(ii)
18,265
16,469
1,601
405
433
1,831
2,049
186
—
1,738
22,535
20,442
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
173
25. OTHER ASSETS (Continued)
Intangible assets
(i)
Cost:
At 1 January 2022
Additions
Transfer from CIP
Disposals
Computer
software
32,965
393
4,109
(1,920)
Others
Total
3,795
158
3,475
(263)
36,760
551
7,584
(2,183)
At 31 December 2022
35,547
7,165
42,712
Additions
Transfer from CIP
Disposals
65
2,998
(2,716)
176
4,399
(302)
241
7,397
(3,018)
At 31 December 2023
35,894
11,438
47,332
Accumulated amortisation and impairment:
At 1 January 2022
Amortisation charge for the year
Disposals
(20,977)
(3,631)
1,886
(2,416)
(1,335)
230
(23,393)
(4,966)
2,116
At 31 December 2022
(22,722)
(3,521)
(26,243)
Amortisation charge for the year
Disposals
(3,753)
2,432
(1,754)
251
(5,507)
2,683
At 31 December 2023
(24,043)
(5,024)
(29,067)
Net book value:
At 31 December 2023
11,851
6,414
18,265
At 31 December 2022
12,825
3,644
16,469
(ii)
VAT recoverable includes input VAT and prepaid VAT which is expected to be deducted beyond one year. VAT recoverable
which is expected to be deducted within one year are included in “prepayments and other current assets”. See Note
28(i).
Annual Report 2023
174
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
26.
INVENTORIES
Handsets and other telecommunication products
Others
27. ACCOUNTS RECEIVABLE
Accounts receivable
Less: Credit loss allowance
2023
1,386
831
2,217
2022
1,450
432
1,882
2023
2022
57,349
(18,657)
40,769
(14,438)
38,692
26,331
The gross carrying amount of accounts receivable from contracts with customers amounted to RMB57,234 million as at
31 December 2023 (2022: RMB40,670 million).
The aging analysis of accounts receivable, based on the billing date and net of credit loss allowance, is as follows:
Within one month
More than one month but not more than three months
More than three months but not more than one year
More than one year
2023
2022
12,429
7,524
15,024
3,715
10,609
5,135
9,070
1,517
38,692
26,331
The normal credit period granted by the Group to individual subscribers and general corporate customers is thirty days from the
date of billing unless they meet certain specified credit assessment criteria. For major corporate customers, the credit period
granted by the Group is based on the service contract terms, normally not exceeding one year.
There is no significant concentration of credit risk with respect to customers receivables, as the Group has a large number of
customers.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
175
27. ACCOUNTS RECEIVABLE (Continued)
The Group measures loss allowances for accounts receivable at an amount equal to lifetime ECLs, which is calculated using a
provision matrix for those assessed on collective basis. As the Group’s historical credit loss experience indicate that there are
different loss patterns for different customer types, the loss allowance based on past due status is distinguished between the
Group’s different customer types.
The following table provides information about the Group’s exposure to credit risk and ECLs for accounts receivable as at
31 December 2023:
For individual subscribers and general corporate customers
Current (not past due)
1–90 days past due
91–180 days past due
More than 180 days past due
For major corporate customers
Current (not past due)
Within 1 year past due
1–2 years past due
2–3 years past due
More than 3 years past due
Expected
Gross carrying
Loss
loss rate
amount
allowance
7%
42%
90%
100%
2,691
1,229
742
2,587
(189)
(518)
(667)
(2,587)
7,249
(3,961)
Expected
Gross carrying
Loss
loss rate
amount
allowance
2%
17%
58%
89%
100%
10,346
26,171
8,111
2,409
3,063
(226)
(4,572)
(4,685)
(2,150)
(3,063)
50,100
(14,696)
Annual Report 2023
176
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
27. ACCOUNTS RECEIVABLE (Continued)
The following table provides information about the Group’s exposure to credit risk and ECLs for accounts receivable as at
31 December 2022:
For individual subscribers and general corporate customers
Current (not past due)
1–90 days past due
91–180 days past due
More than 180 days past due
For major corporate customers
Current (not past due)
Within 1 year past due
1–2 years past due
2–3 years past due
More than 3 years past due
Expected
Gross carrying
Loss
loss rate
amount
allowance
7%
41%
90%
100%
3,018
1,406
729
2,333
(211)
(583)
(656)
(2,333)
7,486
(3,783)
Expected
Gross carrying
Loss
loss rate
amount
allowance
3%
21%
65%
100%
100%
8,108
16,666
4,347
1,674
2,488
(221)
(3,436)
(2,836)
(1,674)
(2,488)
33,283
(10,655)
Expected loss rates are based on actual loss experience over past years. These rates are adjusted to reflect differences between
economic conditions during the period over which the historic data has been collected, current conditions and the Group’s view
of economic conditions over the expected lives of the receivables.
The movement in the credit loss allowance in respect of accounts receivable during the year, is as follows:
Balance, beginning of year
Allowance for the year
Written-off during the year
Balance, end of year
2023
2022
14,438
5,826
(1,607)
10,170
5,519
(1,251)
18,657
14,438
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
177
27. ACCOUNTS RECEIVABLE (Continued)
The creation and release of credit loss allowance for receivables have been recognised in the consolidated statement of income.
Amounts charged to the allowance account are generally written-off when there is reliable evidence to indicate no expectation
of recovering the receivable.
The maximum exposure to credit risk as of the date of the statement of financial position is the carrying value of accounts
receivable mentioned above.
28. PREPAYMENTS AND OTHER CURRENT ASSETS
The nature of prepayments and other current assets are as follows:
Prepaid services charges for transmission lines and electricity cables and
other services
Prepaid power and water charges
Deposits and prepayments
VAT recoverable
Prepaid enterprise income tax
Financial assets held under resale agreements
Others
Note
2023
2022
(i)
(ii)
3,247
638
3,615
10,111
35
5,005
3,557
3,962
778
4,628
8,285
70
—
3,432
26,208
21,155
(i)
VAT recoverable includes the input VAT and prepaid VAT that is expected to be deducted within one year.
(ii)
Financial assets held under resale agreements are transactions where Finance Company acquires financial assets which will
be resold at a predetermined price at a future date under resale agreements.
Prepayments and other current assets are expected to be recovered or recognised as expenses within one year.
As at 31 December 2023 and 2022, there was no significant impairment for the prepayments and other current assets.
29. CASH AND CASH EQUIVALENTS AND OTHER CASH FLOW INFORMATION
(a)
Cash and cash equivalents
Cash at bank and in hand
2023
2022
47,733
55,297
Cash and cash equivalents refer to all cash on hand and demand deposits, short-term highly liquid investments that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Cash and cash equivalents include demand deposits and short term deposits with original maturity of three months for
the purpose of meeting the Group’s short term cash commitments, which carry interest at market rates ranging from
0.01% to 1.50% (2022: 0.01% to 1.50%).
Annual Report 2023
178
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
29. CASH AND CASH EQUIVALENTS AND OTHER CASH FLOW INFORMATION (Continued)
(b)
Reconciliation of liabilities arising from financing activities
The table below details changes in the Group’s liabilities from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are liabilities for which cash flows were, or future cash flows will be,
classified in the Group’s consolidated statement of cash flow as cash flows from financing activities.
Short-term
Long-term
Commercial
Lease
Other
bank loans
bank loans
papers
liabilities
borrowings
Total
(Note 39)
(Note 33)
(Note 40)
(Note 36)
At 1 January 2023
331
1,896
5,025
48,924
8,847
65,023
Changes from financing cash flows:
Proceeds from bank loans and other obligations
Loans from related parties
Repayment of short-term bank loans
Repayment of commercial papers
Repayment of other obligations
Repayment of long-term bank loans
Repayment of related party loans
Capital element of lease rentals paid
Net deposits with Finance Company
Total changes from financing cash flows
Exchange adjustments
Other changes:
Increase in lease liabilities from entering into
new leases/lease modifications
during the year
Decrease due to termination of lease contracts
Others
Total other changes
680
—
(330)
—
—
—
—
—
—
350
—
—
—
—
—
31
—
—
—
—
(385)
—
—
—
—
—
—
(5,000)
—
—
—
—
—
—
—
—
—
—
—
—
(12,103)
—
—
583
—
—
(409)
—
(913)
—
949
711
583
(330)
(5,000)
(409)
(385)
(913)
(12,103)
949
(354)
(5,000)
(12,103)
210
(16,897)
—
—
—
—
—
—
—
64
64
—
—
(25)
8,505
(2,069)
—
(25)
6,436
—
—
176
176
8,505
(2,069)
215
6,651
At 31 December 2023
681
1,606
—
43,257
9,233
54,777
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
179
29. CASH AND CASH EQUIVALENTS AND OTHER CASH FLOW INFORMATION (Continued)
(b)
Reconciliation of liabilities arising from financing activities (Continued)
Short-term
Long-term
Commercial
Promissory
Corporate
Lease
Other
bank loans
bank loans
papers
notes
bonds
liabilities
borrowings
Total
(Note 39)
(Note 33)
(Note 40)
(Note 34)
(Note 35)
(Note 36)
At 1 January 2022
385
2,207
6,875
1,004
2,039
22,559
7,755
42,824
Changes from financing cash flows:
Proceeds from short-term bank loans
Proceeds from commercial papers
Loans from a related party
Repayment of short-term bank loans
Repayment of commercial papers
Repayment of promissory notes
Repayment of corporate bonds
Repayment of long-term bank loans
Payment of issuing expense for commercial
papers
Capital element of lease rentals paid
Net deposits with Finance Company
330
—
—
(385)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(420)
—
—
—
—
5,000
—
—
(6,800)
—
—
—
(5)
—
—
—
—
—
—
—
(1,000)
—
—
—
—
—
—
—
—
—
—
—
(2,000)
—
—
—
—
—
—
—
—
—
—
—
—
—
(13,373)
—
—
—
471
—
—
—
—
—
—
—
621
330
5,000
471
(385)
(6,800)
(1,000)
(2,000)
(420)
(5)
(13,373)
621
Total changes from financing cash flows
(55)
(420)
(1,805)
(1,000)
(2,000)
(13,373)
1,092
(17,561)
Exchange adjustments
—
—
—
—
—
—
—
—
Other changes:
Increase in lease liabilities from entering into
new leases/lease modifications during
the year
Decrease due to termination of lease
contracts
Others
Total other changes
—
—
1
1
—
—
109
109
—
—
(45)
(45)
At 31 December 2022
331
1,896
5,025
—
—
(4)
(4)
—
—
—
(39)
39,997
(259)
—
(39)
39,738
—
—
—
—
39,997
(259)
22
39,760
—
48,924
8,847
65,023
Annual Report 2023
180
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
30. SHARE CAPITAL
Issued and fully paid:
Number of
shares
millions
Share
capital
At 1 January 2022, at 31 December 2022 and at 31 December 2023
30,598
254,056
31. RESERVES
(a) Movement in components of equity
The Company
Investment
Share
revaluation
Other
Retained
capital
reserve
reserve
profits
Balance at 1 January 2022
254,056
Total comprehensive income for the year
Dividends relating to 2021 final
Dividends relating to 2022 interim
—
—
—
(9,372)
(173)
—
—
572
—
—
—
14,168
9,265
(2,937)
(5,049)
Total
equity
259,424
9,092
(2,937)
(5,049)
Balance at 31 December 2022
254,056
(9,545)
572
15,447
260,530
Total comprehensive income for the year
Dividends relating to 2022 final
Dividends relating to 2023 interim
—
—
—
170
—
—
—
—
—
10,757
(3,335)
(6,211)
10,927
(3,335)
(6,211)
Balance at 31 December 2023
254,056
(9,375)
572
16,658
261,911
(b)
Nature and purpose
(i)
Statutory reserves
CUCL is registered as a foreign investment enterprise in the PRC. In accordance with the Articles of Association, it
is required to provide for statutory reserves, which are appropriated from profit after tax but before dividend
distribution.
CUCL is required to allocate at least 10% of its profit after tax determined under the PRC Company Law to the
statutory reserve fund until the cumulative amounts reach 50% of the registered capital. The statutory reserve can
only be used, upon approval obtained from the relevant authority, to offset accumulated losses or increase capital.
Accordingly, CUCL appropriated approximately RMB1,647 million (2022: approximately RMB1,471 million) to the
statutory reserve fund for the year ended 31 December 2023.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
181
31. RESERVES (Continued)
(b)
Nature and purpose (Continued)
(i)
Statutory reserves (Continued)
Appropriation to the staff bonus and welfare fund is made at the discretion of the Board of Directors. The staff
bonus and welfare fund can only be used for special bonuses or the collective welfare of the employees and
cannot be distributed as cash dividends. Under HKFRSs, the appropriations to the staff bonus and welfare fund are
charged to the consolidated statement of income as expenses incurred since any assets acquired through this fund
belong to the employees. For the years ended 31 December 2023 and 2022, no appropriation to staff bonus and
welfare fund has been made by CUCL.
According to the PRC tax approval document issued by the MOF and the SAT of the PRC, the upfront connection
fees were not subject to the PRC enterprise income tax and an amount equal to the upfront connection fees
recognised in the retained profits shall be transferred from retained profits to the statutory reserve. As at
31 December 2011, an accumulated appropriation of approximately RMB12,289 million was made to the statutory
reserve and no more upfront connection fees are recognised afterwards.
(ii)
General risk reserve
CUCL and Unicom Group established the Finance Company to provide certain financial services. Pursuant to
“Requirements on Impairment Allowance for Financial Institutions” (Caijin [2012] No. 20) issued by the MOF which
is effective on 1 July 2012 (the “Document”), the Finance Company establishes a general risk reserve within the
shareholders’ equity, through appropriation of retained profits, to address unidentified potential losses relating to
risk assets. The general risk reserve balance should not be less than 1.5% of the ending balance of risk assets, as
defined in the Document.
(iii)
Investment revaluation reserve
The investment revaluation reserve represents the changes in fair value of financial assets measured at FVOCI
(non-recycling), net of tax, until the financial assets are derecognised.
(iv)
Other reserves
Other reserve mainly represents the difference between the consideration and the net assets value for business
combination of entities and businesses under common control, the effect of CUCL’s capitalisation of retained
profits, and capital contribution relating to share-based payment borne by A Share Company.
Annual Report 2023 182
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
32. DIVIDENDS
At the annual general meeting held on 12 May 2022, the shareholders of the Company approved the payment of a final
dividend of RMB0.096 per ordinary share for the year ended 31 December 2021, totaling approximately RMB2,937 million which
has been reflected as a reduction of retained profits for the year ended 31 December 2022.
At the annual general meeting held on 19 May 2023, the shareholders of the Company approved the payment of a final
dividend of RMB0.109 per ordinary share for the year ended 31 December 2022, totaling approximately RMB3,335 million which
has been reflected as a reduction of retained profits for the year ended 31 December 2023.
At a meeting held on 9 August 2023, the Board of Directors of the Company declared the payment of 2023 interim dividend of
RMB0.203 per ordinary share to the shareholders totalling approximately RMB6,211 million. At a meeting held on 19 March
2024, the Board of Directors of the Company proposed the payment of a final dividend of RMB0.1336 per ordinary share to the
shareholders for the year ended 31 December 2023 totaling approximately RMB4,088 million. The proposed dividend has not
been reflected as a dividend payable in the consolidated financial statements as at 31 December 2023, but will be reflected in
the consolidated financial statements for the year ending 31 December 2024.
Declared and paid interim dividend:
RMB0.203 (2022: RMB0.165) per ordinary share by the Company
Proposed final dividend:
RMB0.1336 (2022: RMB0.109) per ordinary share by the Company
2023
2022
6,211
4,088
10,299
5,049
3,335
8,384
Pursuant to the PRC enterprise income tax law, a 10% withholding income tax is levied on dividends declared on or after
1 January 2008 by foreign investment enterprises to their foreign enterprise shareholders unless the enterprise investor is
deemed as a PRC Tax Resident Enterprise (“TRE”). On 11 November 2010, the Company obtained an approval from the State
Taxation Administration of the PRC, pursuant to which the Company qualifies as a PRC TRE from 1 January 2008. Therefore, as
at 31 December 2023, the Company’s subsidiaries in the PRC did not accrue for withholding tax on dividends distributed to the
Company and there has been no deferred tax liability accrued in the Group’s consolidated financial statements for the
undistributed profits of the Company’s subsidiaries in the PRC.
For the Company’s non-PRC TRE shareholders (including HKSCC Nominees Limited), the Company would distribute dividends after
deducting the amount of enterprise income tax payable by these non-PRC TRE shareholders thereon and reclassify the related
dividend payable to withholding tax payable upon the declaration of such dividends. The requirement to withhold tax does not
apply to the Company’s shareholders appearing as individuals in its share register.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
183
33.
LONG-TERM BANK LOANS
Interest rates and final maturity
2023
2022
RMB denominated
Fixed interest rates ranging from 1.08% to 2.40%
bank loans
(2022: 1.08% to 1.20%) per annum with maturity
through 2036 (2022: maturity through 2036)
1,443
1,714
US dollars denominated
Fixed interest rate is Nil (2022: Nil to 1.55%)
bank loans
per annum with maturity through 2039
(2022: maturity through 2039)
153
171
Euro denominated
Fixed interest rates ranging from 1.10% to 1.50%
bank loans
(2022: 1.10% to 2.50%) per annum with maturity
through 2034 (2022: maturity through 2034)
10
11
Sub-total
Less: Current portion
1,606
(354)
1,896
(368)
1,252
1,528
As at 31 December 2023, long-term bank loans of approximately RMB33 million (2022: approximately RMB42 million) were
guaranteed by third parties.
The repayment schedule of the long-term bank loans is as follows:
Balances due:
— No later than one year
— More than one year and no later than two years
— More than two years and no later than five years
— More than five years
Less: Portion classified as current liabilities
2023
2022
354
287
628
337
1,606
(354)
368
354
691
483
1,896
(368)
1,252
1,528
Annual Report 2023
184
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
34. PROMISSORY NOTES
On 18 November 2019, CUCL issued tranche one of 2019 promissory notes in an amount of RMB1 billion, with a maturity period
of 3 years from the date of issue and which carries interest at 3.39% per annum, and was fully repaid in November 2022.
35. CORPORATE BONDS
On 19 June 2019, CUCL issued RMB2 billion 3-year corporate bonds, bearing interest at 3.67% per annum, and was fully repaid
in June 2022.
36.
LEASE LIABILITIES
At 31 December 2023 and 2022, the lease liabilities were repayable as follows:
2023
2022
Present value
Total
Present value
Total
of the
minimum
of the
minimum
minimum lease
lease
minimum lease
lease
payments
payments
payments
payments
Within 1 year
12,640
12,901
12,495
12,750
After 1 year but within 2 years
After 2 years but within 5 years
After 5 years
10,635
18,740
1,242
11,273
20,988
1,822
10,437
25,026
966
11,055
28,272
1,313
30,617
34,083
36,429
40,640
Total lease liabilities
43,257
46,984
48,924
53,390
Less: total future interest expenses
Present value of lease liabilities
(3,727)
43,257
(4,466)
48,924
The total cash outflow for leases incurred by the Group for the year ended 31 December 2023 was RMB23,622 million (2022:
RMB23,048 million).
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
37. DEFERRED REVENUE
Deferred revenue mainly represents the unamortised portion of government grants.
Balance at beginning of the year
Additions for the year
— government grants
— others
Sub-total
Reductions for the year
— recognition of government grants in profit or loss
— others
Sub-total
Balance at end of the year
38. OTHER OBLIGATIONS
One-off cash housing subsidies
Others
Sub-total
Less: Current portion
Note
(a)
(b)
185
2023
2022
7,832
6,951
1,715
1,395
3,110
(1,042)
(688)
1,278
1,170
2,448
(925)
(642)
(1,730)
(1,567)
9,212
7,832
2023
2,493
939
3,432
2022
2,493
1,218
3,711
(2,493)
(2,493)
939
1,218
Annual Report 2023
186
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
38. OTHER OBLIGATIONS (Continued)
(a)
One-off cash housing subsidies
Certain staff quarters, prior to 1998, were sold to certain of the Group’s employees at preferential prices, subject to a
number of eligibility requirements. In 1998, the State Council issued a circular which stipulated that the sale of quarters
to employees at preferential prices should be terminated. In 2000, the State Council issued a further circular stating that
cash subsidies should be made to certain eligible employees following the withdrawal of the allocation of staff quarters.
However, the specific timetable and procedures for the implementation of these policies were to be determined by
individual provincial or municipal governments based on the particular situation of the provinces or municipality.
Based on the relevant detailed local government regulations promulgated, certain entities within the Group adopted cash
housing subsidy plans. In accordance with these plans, for those eligible employees who had not been allocated with
quarters or who had not been allocated with quarters up to the prescribed standards before the discounted sales of
quarters were terminated, the Group determined to pay them one-off cash housing subsidies based on their years of
service, positions and other criteria. Based on the available information, the Group estimated the required provision for
these cash housing subsidies amounted to RMB4,142 million, which was charged to the consolidated statement of income
for the year ended 31 December 2000 (the year in which the State Council circular in respect of cash subsidies was
issued).
In January 2009, through the absorption of China Netcom (Group) Company Limited (“CNC China”) by CUCL and the
absorption of China Network Communications Group Corporation (“Netcom Group”) by Unicom Group, the rights and
obligations formerly undertaken by CNC China and Netcom Group were taken over by CUCL and Unicom Group
separately. As at 31 December 2023, the Group’s unpaid one-off cash housing subsidies amounted to approximately
RMB2,493 million (31 December 2022: RMB2,493 million). If the actual payments required for these one-off housing
subsidies differ from the amount provided, Unicom Group will bear any additional payments required. If the actual
payments are lower than the amount provided, the difference will be paid to Unicom Group.
(b)
Others mainly include the balance of contributions from other investors of a subsidiary established by the Group (limited
life entities) which were classified as financial liabilities by the Group.
39. SHORT-TERM BANK LOANS
Interest rates and final maturity
2023
2022
RMB denominated
Fixed interest rates ranging from 1.45%–1.65%
bank loans
(2022: 1.65%–2.00%) per annum with maturity through
2024 (2022: maturity through 2023)
681
331
As at 31 December 2023 and 2022, all short-term bank loans were unsecured.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
187
40. COMMERCIAL PAPERS
On 23 June 2021, CUCL issued tranche one of 2021 super short term commercial papers in an amount of RMB2 billion, with a
maturity period of 270 days from the date of issue and which carries interest at 2.80% per annum, and was fully repaid in
March 2022.
On 27 July 2021, CUCL issued tranche two of 2021 super short term commercial papers in an amount of RMB3 billion, with a
maturity period of 180 days from the date of issue and which carries interest at 2.23% per annum, and was fully repaid in
January 2022.
On 27 July 2021, CUCL issued tranche three of 2021 super short term commercial papers in an amount of RMB1.8 billion, with a
maturity period of 180 days from the date of issue and which carries interest at 2.23% per annum, and was fully repaid in
January 2022.
On 2 September 2022, CUCL issued tranche one of 2022 short term commercial papers in an amount of RMB5 billion, with a
maturity period of 365 days from the date of issue and which carries interest at 1.73% per annum, and was fully repaid in
September 2023.
41. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Payables to contractors and equipment suppliers
Payables to telecommunications products suppliers
Customer/contractor deposits
Repair and maintenance expense payables
Salary and welfare payables
Amounts due to technical support services and other service providers/content providers
VAT received from customer in advance
Accrued expenses
Others
2023
2022
94,259
1,887
5,012
9,320
8,917
9,499
2,380
19,101
10,904
85,475
3,966
4,975
6,808
12,379
8,402
2,311
20,177
10,345
161,279
154,838
The aging analysis of accounts payable and accrued liabilities based on the billing date is as follows:
Less than six months
Six months to one year
More than one year
2023
2022
137,565
7,803
15,911
131,253
8,018
15,567
161,279
154,838
Annual Report 2023
188
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
42. MUTUAL INVESTMENT OF THE COMPANY AND TELEFÓNICA IN EACH OTHER
On 6 September 2009, the Company announced that in order to strengthen the cooperation between the Company and
Telefónica, the parties entered into a strategic alliance agreement and a subscription agreement, pursuant to which each party
conditionally agreed to invest an equivalent of US dollars 1 billion in each other through an acquisition of each other’s shares.
On 23 January 2011, the Company entered into an agreement to enhance the strategic alliance with Telefónica that: (a)
Telefónica would purchase ordinary shares of the Company for a consideration of US dollars 500 million through acquisition from
third parties; and (b) the Company would acquire from Telefónica 21,827,499 ordinary shares of Telefónica held in treasury
(“Telefónica Treasury Shares”) for an aggregate purchase price of Euro374,559,882.84. On 25 January 2011, the Company
completed the purchase of Telefónica Treasury Shares in accordance with the strategic agreement. During 2011, Telefónica
completed its investment of US dollars 500 million in the Company.
On 14 May 2012, Telefónica declared a dividend. The Company chose to implement it by means of a scrip dividend and
received 1,646,269 ordinary shares of approximately RMB146 million.
As at 31 December 2023, the related financial assets measured at FVOCI amounted to approximately RMB1,783 million
(31 December 2022: approximately RMB1,613 million). For the year ended 31 December 2023, the increase in fair value of the
financial assets measured at FVOCI was approximately RMB170 million (2022: decrease of approximately RMB173 million), has
been recorded in the consolidated statement of comprehensive income.
43. EQUITY-SETTLED SHARE OPTION SCHEMES
On 16 April 2014, the Company adopted a new share option scheme (the “2014 Share Option Scheme”). The 2014 Share Option
Scheme is valid and effective for a period of 10 years commencing on 22 April 2014 and will expire on 22 April 2024. Under the
2014 Share Option Scheme, the share options may be granted to employees including all directors; any grant of share options to
a Connected Person (as defined in the Listing Rules) of the Company must be approved by the independent non-executive
directors of the Company (excluding any independent non-executive director of the Company in the case such director is a
grantee of the options) and all grants to connected persons shall be subject to compliance with the requirements of the Listing
Rules, including where necessary the prior approval of the shareholders. As at 31 December 2023, 1,777,437,107 options were
available for issue under the 2014 Share Option Scheme. Pursuant to the 2014 Share Option Scheme, the consideration payable
by a participant for the grant of share options will be HK dollars 1.00. The exercise price payable by a participant upon the
exercise of an option will be determined by the Board of Directors at their discretion at the date of grant, except that such price
may not be set below a minimum price which is the higher of:
(i)
The closing price of the shares on the SEHK on the offer date in respect of the share options; and
(ii)
The average closing price of the shares on the SEHK for the five trading days immediately preceding the offer date.
The option period commences on any day after the date on which such share option is offered, but may not exceed 10 years
from the offer date. No share options had been granted since adoption of the 2014 Share Option Scheme.
No options are outstanding as at 31 December 2023 and 2022.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 189
44. RESTRICTED A-SHARE INCENTIVE SCHEME
The Phase I Restricted A-Share Incentive Scheme
Pursuant to the share incentive scheme (Phase I) of A Share Company (the “Phase I Restricted A-Share Incentive Scheme”), not
more than 848 million restricted shares of A Share Company (the “Phase I Restricted Shares”) were approved for granting to the
core employees of the Group, the first batch granted Phase I Restricted Shares of 793,861,000 and second batch granted Phase I
Restricted Shares of 13,156,000 were subscribed by the participants, including certain core employees of the Company’s
subsidiaries on 21 March 2018 and 1 February 2019 (the “Grant Dates”), respectively, with a subscription price of RMB3.79 per
share. The fair value of the Phase I Restricted Shares granted under the respective Grant Dates is RMB2.34 and RMB1.57 per
share, respectively, as determined based on the difference between the market price of A Share Company of RMB6.13 per share
and RMB5.36 per share at the respective Grant Dates, and the subscription price of RMB3.79 per share.
The Phase I Restricted Shares are subject to various lock-up periods (the “Lock-Up Period I”) of approximately 2 years, 3 years
and 4 years, respectively, immediately from the Grant Dates. During the Lock-Up Period I, these shares are not transferrable, nor
subject to any guarantee or indemnity. The Phase I Restricted Shares shall be unlocked (or repurchased and cancelled by A Share
Company) separately in three tranches in proportion of 40%, 30% and 30% of the total number of the Phase I Restricted Shares
granted upon the expiry of each of the Lock-Up Period I.
Subject to fulfilment of all service and performance conditions under the Phase I Restricted A-Share Incentive Scheme which
include the achievement of certain revenue and profit targets of A Share Company, the participants’ individual performance
appraisal, etc. (collectively referred to as “vesting conditions”), the restriction over the Phase I Restricted Shares will be removed
after the expiry of the corresponding Lock-Up Period I for each tranche and the participants will be fully entitled to these
incentive shares. If the vesting conditions are not fulfilled and hence the Phase I Restricted Shares cannot be unlocked, A Share
Company shall repurchase the Phase I Restricted Shares based on the respective subscription price from the participants.
Pursuant to the Phase I Restricted A-Share Incentive Scheme, the third Lock-Up Period I of approximately 4 years for the second
batch have expired during the current year. With the fulfilment of the vesting conditions, the Phase I Restricted Shares of
3,240,375 (2022: 206,767,725) in aggregate were approved for unlocking after the Lock-Up Period I by the Board of Directors of
A Share Company.
During the year ended 31 December 2023, the Phase I Restricted Shares of 443,925 (2022: 25,296,975) were forfeited.
The Phase II Restricted A-Share Incentive Scheme
Pursuant to the share incentive scheme (Phase II) of A Share Company (the “Phase II Restricted A-Share Incentive Scheme”),
approximately 838 million restricted shares of A Share Company (the “Phase II Restricted Shares”) were approved for granting to
the core employees of the Group, the granted Phase II Restricted Shares of 838,340,000 were subscribed by the participants,
including certain core employees of the Company’s subsidiaries on 1 November 2022 (the “Grant Date”), with a subscription
price of RMB2.48 per share. The fair value of the Phase II Restricted Shares granted under the Grant Date is RMB0.93 per share,
as determined based on the difference between the market price of A Share Company of RMB3.41 per share at the Grant Date,
and the subscription price of RMB2.48 per share.
Annual Report 2023 190
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
44. RESTRICTED A-SHARE INCENTIVE SCHEME (Continued)
The Phase II Restricted A-Share Incentive Scheme (Continued)
The Phase II Restricted Shares are subject to various lock-up periods (the “Lock-Up Period II”) of approximately 2 years, 3 years
and 4 years, respectively, immediately from the Grant Date. During the Lock-Up Period II, these shares are not transferrable, nor
subject to any guarantee or indemnity. The Phase II Restricted Shares shall be unlocked (or repurchased and cancelled by A
Share Company) separately in three tranches in proportion of 40%, 30% and 30% of the total number of the Phase II Restricted
Shares granted upon the expiry of each of the Lock-Up Period II.
Subject to fulfilment of all service and performance conditions under the Phase II Restricted A-Share Incentive Scheme which
include the achievement of certain revenue and profit targets of A Share Company, the participants’ individual performance
appraisal, etc., the restriction over the Phase II Restricted Shares will be removed after the expiry of the corresponding Lock-Up
Period II for each tranche and the participants will be fully entitled to these incentive shares. If the vesting conditions are not
fulfilled and hence the Phase II Restricted Shares cannot be unlocked, A Share Company shall repurchase the Phase II Restricted
Shares based on the lower of the subscription price from the participants and the market price at the time of repurchase.
For the year ended 31 December 2023, the Group recognised share-based payment expenses and other reserves of RMB282
million under the Phase I and Phase II Restricted A-Share Incentive Schemes (2022: RMB55 million).
45. MATERIAL RELATED PARTY TRANSACTIONS
Unicom Group is a state-owned enterprise directly controlled by the PRC government. The PRC government is the Company’s
ultimate controlling party. Neither Unicom Group nor the PRC government publishes financial statements available for public use.
The PRC government controls a significant portion of the productive assets and entities in the PRC. The Group provides
telecommunications services as part of its retail transactions, thus, is likely to have extensive transactions with the employees of
other state-owned enterprises, including their key management personnel and their close family members. These transactions
are carried out on commercial terms that are consistently applied to all customers.
Management considers certain state-owned enterprises have material transactions with the Group in its ordinary course of
business, which include but not limited to 1) rendering and receiving telecommunications services, including interconnection
revenue/charges; 2) sharing certain telecommunications network infrastructure; 3) purchasing of goods, including use of public
utilities; and 4) placing of bank deposits and borrowing money. The Group’s telecommunications network depends, in large part,
on interconnection with the network and on transmission lines service provided by other domestic carriers. These transactions
are mainly carried out on terms comparable to those conducted with third parties or standards promulgated by relevant
government authorities and have been reflected in the financial statements. Amounts due from domestic carriers are all derived
from contracts with customers.
Management believes that meaningful information relating to related party transactions has been disclosed below.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 191
45. MATERIAL RELATED PARTY TRANSACTIONS (Continued)
45.1 Connected transactions with Unicom Group and its subsidiaries other than the Group (“Unicom Group and its
subsidiaries”)
(a)
Recurring transactions
The following is a summary of significant recurring transactions carried out by the Group with Unicom Group and
its subsidiaries. In the directors’ opinion, these transactions were carried out in the ordinary course of business.
The following transactions with Unicom Group and its subsidiaries constitute continuing connected transactions
under the Listing Rules. The Company has complied with the relevant disclosure requirements under Chapter 14A
of the Listing Rules. Further details of these continuing connected transactions are disclosed under the paragraph
“Continuing Connected Transactions” in the Report of Directors.
Note
2023
2022
Transactions with Unicom Group and its subsidiaries:
Charges for value-added telecommunications services
(i), (ii)
Rental charges for short-term property leasing and
related services
Charges for use of telecommunications resources and
related services
Charges for engineering design and construction and
IT services
Charges for shared services
Charges for materials procurement services
Charges for ancillary telecommunications services
Charges for comprehensive support services
Income from comprehensive support services
Lending by Finance Company to Unicom Group and its
subsidiaries
Repayment of loans lending by Finance Company to
Unicom Group and its subsidiaries
Fee and interest income from lending services
Income from other financial services
Net deposits with Finance Company
Interest expenses on the deposits in Finance Company
Interest expenses on unsecured entrusted loans
Lending from Unicom Group and its subsidiaries
Repayment of loans lending from Unicom Group and its
subsidiaries
(i), (iii)
(i), (iv)
(i), (v)
(i), (vi)
(i), (vii)
(i), (viii)
(i), (ix)
(i), (ix)
(i), (xi)
(i), (xi)
(i), (xi)
(i), (xi)
(i), (xi)
(i), (xi)
(xii)
(xii)
(xii)
12
945
209
175
76
3
150
836
194
5,700
5,700
126
1
912
105
43
583
913
25
1,052
231
184
79
16
10
626
98
11,800
17,600
322
1
631
73
32
471
—
Annual Report 2023
192
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
45. MATERIAL RELATED PARTY TRANSACTIONS (Continued)
45.1 Connected transactions with Unicom Group and its subsidiaries other than the Group (“Unicom Group and its subsidiaries”)
(Continued)
(a)
Recurring transactions (Continued)
(i)
On 21 October 2019, CUCL and Unicom Group entered into the “2020–2022 Comprehensive Services
Agreement” to renew certain continuing connected transactions. “2020–2022 Comprehensive Services
Agreement” has a term of three years commencing on 1 January 2020 and expired on 31 December 2022.
On 28 October 2022, CUCL and Unicom Group entered into the “2023–2025 Comprehensive Services
Agreement”, and Finance Company and Unicom Group entered into the “2023–2025 Financial Services
Agreement”. Pursuant to the “2023–2025 Comprehensive Services Agreement”, CUCL and Unicom Group
agreed to provide services to each other or by one to the other, including (i) use of telecommunications
resources; (ii) property leasing; (iii) value-added telecommunications services; (iv) materials procurement
services; (v) engineering design and construction and IT services; (vi) ancillary telecommunications services;
(vii) comprehensive support services and (viii) shared services. Pursuant to the “2023–2025 Financial
Services Agreement”, Finance Company agreed to provide financial services to Unicom Group.
(ii)
UNISK (Beijing) Information Technology Corporation Limited (“UNISK”) agreed to provide the mobile
subscribers of CUCL with various types of value-added services through its cellular communications network
and data platform. The Group retains a portion of the revenue generated from the value-added services
provided to the Group’s subscribers (and actually received by the Group) and allocates a portion of such
fees to UNISK for settlement, on the condition that such proportion allocated to UNISK does not exceed the
average proportion allocated to independent value-added telecommunications content providers who
provide value-added telecommunications content to the Group in the same region. The percentage of
revenue to be allocated to UNISK by the Group varies depending on the types of value-added service
provided to the Group.
(iii)
CUCL and Unicom Group agreed to mutually lease properties and ancillary facilities from each other. Rentals
are based on the lower of the market rates and the depreciation costs and taxes. In addition to the above
amount, the Group recognised a total addition of right-of-use asset of RMB116 million resulting from the
properties leased (lease term exceeds 12 months) in 2023.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 193
45. MATERIAL RELATED PARTY TRANSACTIONS (Continued)
45.1 Connected transactions with Unicom Group and its subsidiaries other than the Group (“Unicom Group and its
subsidiaries”) (Continued)
(a)
Recurring transactions (Continued)
(iv)
CUCL was agreed to use certain
international telecommunications resources (including
international
telecommunications channel gateways, international telecommunications service gateways, international
submarine cable capacity, international land cables and international satellite facilities) and certain other
telecommunications facilities of Unicom Group for its operations. The charges for the use of international
telecommunications resources and other telecommunications facilities are based on the annual depreciation
and amortisation charges of such resources and facilities provided that such charges would not be higher
than market rates. For maintenance service to the telecommunications facilities aforementioned, unless
otherwise agreed by CUCL and Unicom Group, such maintenance service charges would be borne by CUCL
and determined with reference to market rates or a cost-plus basis if there are no market rates.
(v)
Unicom Group agreed to provide engineering design, construction and supervision services and IT services to
CUCL. The charges payable by CUCL for the above services are determined with reference to the market
price and are settled when the relevant services are provided.
(vi)
Unicom Group and CUCL agreed to provide shared services to each other and would share the costs related
to the shared services proportionately in accordance with their respective total assets value with certain
adjustments. For the years ended 31 December 2023 and 2022, the services charges paid by Unicom Group
to CUCL was negligible.
(vii) Unicom Group agreed to provide comprehensive procurement services for
imported and domestic
telecommunications materials and other domestic non-telecommunications materials to CUCL. Unicom
Group has also agreed to provide services on management of tenders, verification of technical
specifications, installation, consulting and agency services. In addition, Unicom Group will sell materials to
CUCL and resell the equipment purchased from the third parties, and will also provide storage and logistics
services in relation to the above materials procurement. The charges payable by CUCL to Unicom Group are
based on contract values, market rates, government guidance price or cost-plus basis where applicable.
(viii) Unicom Group agreed to provide ancillary telecommunications services to CUCL. These services include certain
telecommunications pre-sale, on-sale and after-sale services such as assembling and repairing of certain
telecommunications equipment, sales agency services, printing and invoice delivery services, maintenance of
telephone booths, customers acquisitions and servicing and other customers’ service. The charges are based
on market rates, government guidance price or cost-plus basis and are settled as and when the relevant
services are provided.
Annual Report 2023 194
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
45. MATERIAL RELATED PARTY TRANSACTIONS (Continued)
45.1 Connected transactions with Unicom Group and its subsidiaries other than the Group (“Unicom Group and its
subsidiaries”) (Continued)
(a)
Recurring transactions (Continued)
(ix)
Unicom Group and CUCL agreed to provide comprehensive support services to each other, including dining
services, facilities leasing services, vehicle services, health and medical services, labour services, security
services, hotel and conference services, gardening services, decoration and renovation services, construction
agency, equipment maintenance services, market development, sanitary services, parking services, staff
trainings, storage services, advertising services, marketing, property management services.
CUCL agreed to provide comprehensive services to Unicom Group, including sales services, technical support
services, research and development services, communication services and communications technology
services (including construction and installation services, system integration services, software development,
product sales and agent services, operation and maintenance services, and consultation services).
The charges are based on market rates, government guidance price or cost-plus basis and are settled as and
when the relevant services are provided.
(x)
Unicom Group is the registered proprietor of the “Unicom” trademark in English and the trademark bearing
the “Unicom” logo, which are registered at the PRC State Trademark Bureau. Pursuant to an exclusive PRC
trademark licence agreement between Unicom Group and the Group, the Group has been granted the right
to use these trademarks on a royalty free and renewal basis.
(xi)
Finance Company has agreed to provide financial services to Unicom Group and its subsidiaries, including
deposit services, lending and other credit services, and other financial services.
For the deposit services from Finance Company to Unicom Group and its subsidiaries, the maximum and
minimum deposit interest rates will follow the provisions of the PBOC for deposits of the same period and
the same type, and be determined with reference to the interest rate for the same period and same type of
deposit offered to Unicom Group by the major cooperative commercial banks of Unicom Group and/or
offered by Finance Company to other client, and will be on normal commercial terms.
For the lending services from Finance Company to Unicom Group and its subsidiaries, the interest rate will
follow the relevant provisions of the PBOC, which will be based on Loan Prime Rate and be determined with
reference to the interest rate for the same period and same type of lending and other credit services
offered to the same type of corporations by the major cooperative commercial bank of Unicom Group and/
or offered by Finance Company to its other clients, and will be on normal commercial terms.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 195
45. MATERIAL RELATED PARTY TRANSACTIONS (continued)
45.1 Connected transactions with Unicom Group and its subsidiaries other than the Group (“Unicom Group and its
subsidiaries”) (continued)
(a)
Recurring transactions (Continued)
(xii)
These transactions are related to the unsecured entrusted loans and related interest expenses from Unicom
Group and its subsidiaries (see note 45.1 (c)). These transactions are conducted on normal commercial
terms or better and are fully exempted from compliance with the reporting, announcement, independent
shareholders’ approval and/or annual review requirements under Rules 14A.90 of the Listing Rules.
(b)
Amounts due from Unicom Group and its subsidiaries
Amount due from Unicom Group as at 31 December 2023 included loans from Finance Company to Unicom Group
of RMB4,600 million in total with respective floating interest rate of Loan Prime Rate (“LPR”) published by the
National Interbank Funding Center (“NIFC”) (2022: RMB4,600 million in total with respective floating interest rate of
LPR published by the NIFC).
(c)
Amounts due to Unicom Group and its subsidiaries
Amount due to Unicom Group and its subsidiaries as at 31 December 2023 included a balance of deposits received
by Finance Company from Unicom Group and its subsidiaries of RMB7,650 million (31 December 2022: RMB6,721
million) with interest rates ranging from 0.42% to 2.75% per annum for saving and deposits of different terms.
Amount due to Unicom Group and its subsidiaries as at 31 December 2023 included unsecured entrusted loans
from Unicom Group of RMB706 million (31 December 2022: RMB300 million) with a maturity period of 3 years and
interest rate at 2.25% per annum and unsecured entrusted loans from Unicom Group of RMB175 million
(31 December 2022: RMB171 million, which was fully repaid in 2023) with a maturity period of 2 years and
interest rate at 2.25% per annum. Unsecured entrusted loan from A Share Company of RMB742 million as at
31 December 2022 with a maturity period of 5 years and interest rate at 4.28% per annum was fully repaid in
2023.
Annual Report 2023 196
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
45. MATERIAL RELATED PARTY TRANSACTIONS (Continued)
45.2 Transactions with associates and joint ventures of Unicom Group and its subsidiaries
The Group has entered into transactions with associates and joint ventures of Unicom Group and its subsidiaries based on
terms comparable to terms of transactions entered with other entities. In the directors’ opinion, these transactions were
carried out in the ordinary course of business.
The following transactions with associates and joint ventures of Unicom Group and its subsidiaries constitute continuing
connected transactions under the Listing Rules, unless otherwise stated. The Company has complied with the relevant
disclosure requirements under Chapter 14A of the Listing Rules. Further details of these continuing connected
transactions are disclosed under the paragraph “Continuing Connected Transactions” in the Report of Directors.
Transactions with associates and joint ventures of Unicom Group and its
subsidiaries:
Charges for value-added telecommunications services
Rental charges for short-term property leasing and related services
Charges for use of telecommunications resources and related services
Charges for engineering design and construction and IT services
Charges for materials procurement services
Charges for ancillary telecommunications services
Charges for comprehensive support services
Income from comprehensive support services
2023
2022
61
—
1
521
12
888
279
31
105
4
3
2,250
121
3,016
1,012
23
In addition to the above amounts, the Group has also entered into related party transactions with associates of Unicom
Group which do not meet the definition of connected person and connected transactions under Chapter 14A of the Listing
Rules in 2023. These transactions include: charges for value-added telecommunications services amounting to RMB180
million, charges for engineering design and construction and IT services amounting to RMB2,568 million, charges for
ancillary telecommunications services amounting to RMB2,322 million and charges for comprehensive support services
amounting to RMB1,036 million.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
197
45. MATERIAL RELATED PARTY TRANSACTIONS (Continued)
45.3 Material transactions with associates and joint ventures of the Group
The following is a summary of material transactions entered into by the Group with the associates and joint ventures of
the Group. In the directors’ opinion, these transactions were carried out in the ordinary course of business.
Transactions with associates and joint ventures of the Group:
Revenue from engineering design and construction services
Related costs for use of tower assets
Additions of right-of-use assets
Revenue from value-added telecommunications services
Charges for value-added telecommunications services
Charges for materials procurement services
Net deposits with Finance Company
Interest expenses on the deposits in Finance Company
Notes
2023
2022
(i)
(ii)
(ii)
431
20,078
3,254
523
657
12
35
1
271
19,278
33,773
292
503
18
(10)
1
(i)
Engineering design and construction services
The Group provided engineering design and construction services to Tower Company.
(ii)
Lease of the tower assets and other related services
On 8 July 2016, CUCL and Tower Company entered into a framework agreement to confirm the pricing and related
arrangements in relation to the usage of certain telecommunications towers and related assets (the “Agreement”).
The Agreement finalised terms including assets categories, pricing basis for usage charges, and relevant service
period etc. Provincial service agreements and detailed lease confirmation for specified towers have been signed
subsequently.
On 31 January 2018, after further arm’s length negotiations and discussions, CUCL and Tower Company agreed on
certain supplementary provisions based on the Agreement dated 8 July 2016, which mainly relate to a reduction in
cost-plus margin of Tower Company which forms the benchmark for pricing and an increase in co-tenancy discount
rates offered to the Group regarding towers under co-sharing arrangements. The new terms applicable to the
leased tower portfolio as confirmed by both parties are effective from 1 January 2018 for a period of five years.
On 13 December 2022, the Board of Directors of the Company approved CUCL and Tower Company to sign the
commercial pricing agreement and the service agreement, and the material terms of the commercial pricing
agreement and the service agreement have been agreed and finalised, in which CUCL leases assets and receives
services provided by Tower Company, including tower products, indoor distribution system products, transmission
products and service products. The agreements further reduced the products pricing and increased the co-tenancy
discount rates offered to the Group. The term of each of the commercial pricing agreement and the service
agreement is five years, effective from 1 January 2023 to 31 December 2027.
Annual Report 2023
198
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
45. MATERIAL RELATED PARTY TRANSACTIONS (Continued)
45.3 Material transactions with associates and joint ventures of the Group (Continued)
(ii)
Lease of the tower assets and other related services (Continued)
Based on HKFRS 16, the Group recognised additions of right-of-use assets in 2023 amounting to RMB3,254 million
(2022:RMB33,773 million). Related costs for use of tower assets include the depreciation of right-of-use assets of
RMB7,470 million (2022: RMB7,840 million), interest expense of RMB1,273 million (2022: RMB368 million), and
variable lease payments and other related service charges of RMB11,335 million (2022: RMB11,070 million) in the
consolidated statement of income for the year ended 31 December 2023.
The outstanding balances with the associates and joint ventures of the Group are summarised as follows:
Amounts due from related parties
Amounts due to related parties
(iii)
Amounts due to Tower Company
31 December
31 December
Note
2023
(iii)
272
14,307
2022
221
8,826
The related accounts payable and bills payable balance (exclude lease liabilities) to Tower Company included in the
balance of amounts due to related parties as at 31 December 2023 was RMB13,794 million (31 December 2022:
RMB8,522 million). Except as mentioned in Note 45.3(ii), amounts due from/to Tower Company are unsecured,
interest-free, repayable on demand/on contract terms with Tower Company as described above.
46. CONTINGENCIES AND COMMITMENTS
46.1 Capital commitments
As at 31 December 2023 and 2022, the Group had capital commitments, mainly in relation to the construction of
telecommunications network, as follows:
2023
2022
Land and
Land and
buildings
Equipment
Total
buildings
Equipment
Total
Authorised and contracted for
Authorised but not contracted for
3,467
7,109
38,508
28,320
41,975
35,429
3,405
7,119
30,193
36,327
33,598
43,446
10,576
66,828
77,404
10,524
66,520
77,044
46.2 Contingent liabilities
As at 31 December 2023, the Group had no material contingent liabilities and no material financial guarantees issued.
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
199
As at 31 December
2023
2022
2
237,426
—
10
1,783
2
237,426
12,230
28
1,613
239,221
251,299
157
9,624
234
12,347
371
22,733
156
8,774
27
—
321
9,278
261,954
260,577
254,056
(8,803)
4,088
12,570
254,056
(8,973)
3,335
12,112
261,911
260,530
47. COMPANY-LEVEL STATEMENT OF FINANCIAL POSITION
ASSETS
Non-current assets
Equipment
Investments in subsidiaries
Loan to a subsidiary
Right-of-use assets
Financial assets measured at fair value
Current assets
Amounts due from subsidiaries
Dividend receivable
Prepayments and other current assets
Loan to a subsidiary
Cash and cash equivalents
Total assets
EQUITY
Share capital
Reserves
Retained profits
— Proposed final dividend
— Others
Total equity
Annual Report 2023
200
For the year ended 31 December 2023
(All amounts in RMB millions unless otherwise stated)
47. COMPANY-LEVEL STATEMENT OF FINANCIAL POSITION (Continued)
LIABILITIES
Non-current liabilities
Lease liabilities
Other non-current liabilities
Current liabilities
Lease liabilities
Accounts payable and accrued liabilities
Other current liabilities
Total liabilities
Total equity and liabilities
Net current assets
As at 31 December
2023
2022
—
4
4
9
19
11
39
43
18
4
22
9
16
—
25
47
261,954
260,577
22,694
9,253
Total assets less current liabilities
261,915
260,552
The Company’s statement of financial position was approved and authorised for issue by the Board of Directors on 19 March
2024 and signed on behalf of the Board of Directors by:
Chen Zhongyue
Li Yuzhuo
Chairman and Chief Executive Officer
Executive Director and Chief Financial Officer
China Unicom (Hong Kong) LimitedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
201
48. NON-ADJUSTING EVENT AFTER THE REPORTING PERIOD
Proposed final dividend
After the date of the statement of financial position, the Board of Directors proposed a final dividend for the year of 2023. For
details, please refer to Note 32.
49. APPROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements were approved by the Board of Directors on 19 March 2024.
Annual Report 2023 202
FINANCIAL
SUMMARY
For the five-year ended 31 December 2023
(All amounts in RMB millions, except per share data)
Selected financial summary for 2019 to 2023, including selected consolidated statement of income data and consolidated statement of
financial position data for 2019, 2020, 2021, 2022 and 2023 were prepared in accordance with HKFRSs.
RESULTS
Selected Statement of Income Data
2023
2022
2021
2020
2019
Revenue
372,597
354,944
327,854
303,838
290,515
Interconnection charges
Depreciation and amortisation
Network, operation and support expenses
Employee benefit expenses
Costs of telecommunications products
sold
Other operating expenses
Finance costs
Interest income
Share of net profit of associates
Share of net profit of joint ventures
Other income — net
Profit before income tax
Income tax expenses
(11,294)
(84,847)
(60,026)
(62,939)
(36,403)
(102,123)
(1,981)
2,105
2,519
1,803
3,534
22,945
(4,023)
(10,947)
(86,829)
(56,425)
(60,726)
(34,720)
(92,957)
(1,095)
1,747
2,153
1,593
3,850
20,588
(3,751)
(11,557)
(85,652)
(53,087)
(58,944)
(30,683)
(77,263)
(1,385)
1,215
1,862
1,448
4,119
17,927
(3,420)
(10,574)
(83,017)
(46,286)
(55,740)
(26,862)
(70,237)
(1,747)
1,366
1,588
787
2,911
16,027
(3,450)
(11,513)
(83,080)
(43,236)
(50,516)
(26,412)
(64,480)
(2,123)
1,272
1,359
646
1,735
14,167
(2,795)
Profit for the year
18,922
16,837
14,507
12,577
11,372
Profit attributable to:
Equity shareholders of the Company
Non-controlling interests
18,726
196
16,745
92
14,368
139
12,493
84
11,330
42
Profit for the year
18,922
16,837
14,507
12,577
11,372
Earnings per share for profit attributable
to equity shareholders
of the Company:
Basic earnings per share (RMB)
Diluted earnings per share (RMB)
0.61
0.61
0.55
0.55
0.47
0.47
0.41
0.41
0.37
0.37
China Unicom (Hong Kong) Limited
203
RESULTS (Continued)
Selected Statement of Financial Position Data
2023
2022
2021
2020
2019
Property, plant and equipment
Right-of-use assets
Financial assets measured at fair value
Cash and cash equivalents
Other current asset
Other non-current asset
355,995
52,608
29,645
47,733
85,940
89,130
352,433
355,031
364,187
367,401
59,227
23,702
55,297
71,353
80,651
32,866
32,726
34,280
62,937
73,236
37,960
27,682
23,085
61,362
66,340
43,073
4,093
34,945
48,448
64,539
Total assets
661,051
642,663
591,076
580,616
562,499
Short-term bank loans
Commercial papers
Long-term bank loans
Lease liabilities
Other current liabilities
Other non-current liabilities
681
—
1,606
43,257
249,977
11,632
331
5,025
1,896
48,924
232,651
10,300
385
6,875
2,207
22,559
216,409
9,208
740
7,000
2,900
27,961
202,367
12,128
5,564
8,995
3,306
32,325
179,404
12,150
Total liabilities
307,153
299,127
257,643
253,096
241,744
Total equity
353,898
343,536
333,433
327,520
320,755
Annual Report 2023
204
COR PORATE
INFO R MATION
BOARD OF DIRECTORS (As At 19 March 2024)
Executive Directors
REGISTERED OFFICE
75th Floor,
Chen Zhongyue Executive Director, Chairman and Chief Executive Officer
The Center, 99 Queen’s Road Central,
Wang Junzhi Executive Director
Li Yuzhuo Executive Director and Chief Financial Officer
Hong Kong
Tel: (852) 2126 2018
Independent Non-Executive Directors
Cheung Wing Lam Linus
Wong Wai Ming
Chung Shui Ming Timpson
Law Fan Chiu Fun Fanny
Audit Committee
Wong Wai Ming (Chairman)
Cheung Wing Lam Linus
Chung Shui Ming Timpson
Law Fan Chiu Fun Fanny
Remuneration Committee
Cheung Wing Lam Linus (Chairman)
Wong Wai Ming
Chung Shui Ming Timpson
Nomination Committee
Chung Shui Ming Timpson (Chairman)
Chen Zhongyue
Law Fan Chiu Fun Fanny
COMPANY SECRETARY
Chan Ngar Wai
AUDITOR
Deloitte Touche Tohmatsu
Registered Public Interest Entity Auditors
LEGAL ADVISORS
Freshfields Bruckhaus Deringer
MAJOR SUBSIDIARY
China United Network Communications Corporation Limited
No. 21 Financial Street,
Xicheng District, Beijing 100033, P.R.C.
SHARE REGISTRAR
Hong Kong Registrars Limited
Shops 1712–1716,
17th Floor, Hopewell Centre
183 Queen’s Road East,
Wanchai, Hong Kong
Tel: (852) 2862 8555
Fax: (852) 2865 0990
Website: www.computershare.com/hk/contact
PUBLICATIONS
Financial reports, announcements, press releases and other investor
information on the Company are available to access electronically via
the Company’s website.
STOCK CODE
Hong Kong Stock Exchange: 762
COMPANY WEBSITE
www.chinaunicom.com.hk
China Unicom (Hong Kong) Limited CORPORATE
CULTURE
OUR VISION
A world-class technology service enterprise with global competitiveness
OUR MISSION
The leading contributor of digital information operation and services
The pioneer of digital technology integration and innovation
OUR CORE VALUES
Customer-oriented
Employee-friendly
Attentive to quality service
Inherently innovative
Proud of endeavours
Adhering to integrity
CORPORATE STYLE
Rigorous, Pragmatic, Skillful, Meticulous, Efficient
OPERATION AND MANAGEMENT PHILOSOPHIES
Create value for customers
Driven by both market and innovation
One China Unicom with integrated capabilities and operating services
Annual Report 2023China Unicom (Hong Kong) LimitedStock Code : 762ANDCHINA UNICOM (HONG KONG) LIMITEDwww.chinaunicom.com.hk75th Floor, The Center, 99 Queen’s Road Central, Hong KongTel : (852) 2126 2018Fax : (852) 2126 2016(cid:18)(cid:44)(cid:47)(cid:69)(cid:4)(cid:3)(cid:104)(cid:69)(cid:47)(cid:18)(cid:75)(cid:68)(cid:3)(cid:904)(cid:44)(cid:75)(cid:69)(cid:39)(cid:3)(cid:60)(cid:75)(cid:69)(cid:39)(cid:905)(cid:3)(cid:62)(cid:47)(cid:68)(cid:47)(cid:100)(cid:28)(cid:24)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:4)(cid:69)(cid:69)(cid:104)(cid:4)(cid:62)(cid:3)(cid:90)(cid:28)(cid:87)(cid:75)(cid:90)(cid:100)(cid:3)(cid:1006)(cid:1004)(cid:1006)(cid:1007)E_ChinaUnicom AR23_Cover_aw.pdf 1 18/04/2024 11:31:26