2020/21 INTERIM REPORT 中期報告 2020/21 INTERIM REPORT 二 O 二 Unit 3110, 31/F, Standard Chartered Tower O Millennium City 1, 388 Kwun Tong Road 至二一年 Kwun Tong, Kowloon, Hong Kong 香港九龍觀塘觀塘道 388 號創紀之城 1 期 渣打銀行中心 31 樓 3110 號 中期報告 CHOICE OF LANGUAGE OR MEANS OF RECEIPT OF CORPORATE COMMUNICATIONS This interim report is now available in printed form in English and in Chinese, and on the website of the Company. If registered shareholders/noteholders, who have received or chosen to receive or are deemed to have consented to receive this interim report by electronic means, wish to receive a printed copy, or who for any reason have difficulty in receiving or gaining access to this interim report on the Company’s website, they may obtain the same free of charge by sending a request to (a) in the case of registered shareholders, the Company’s Hong Kong branch share registrar and transfer office, Computershare Hong Kong Investor Services Limited (“Computershare”), by post to 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong or by email at [email protected]; or (b) in the case of noteholders, the Company’s registrar in respect of the convertible notes, Tricor Investor Services Limited (“Tricor”), by post to Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong or by email at [email protected]. For registered shareholders/noteholders who wish to change their choice of language or means of receipt of the Company’s future corporate communications free of charge, they may at any time notify (i) in the case of registered shareholders, Computershare, by post or by email (at the address or email address mentioned above); or (ii) in the case of noteholders, Tricor, by post or by email (at the address or email address mentioned above). SUNeVision Holdings Ltd. Interim Report 2020/21 1 Contents 3 Financial Highlights 4 Chairman’s Statement 6 Management Discussion and Analysis 8 Directors’ Profile 21 Report on Review of Condensed Consolidated Financial Statements 22 Consolidated Statement of Profit or Loss 23 Consolidated Statement of Profit or Loss and Other Comprehensive Income 24 Consolidated Statement of Financial Position 25 Consolidated Statement of Changes in Equity 26 Condensed Consolidated Statement of Cash Flows 27 Notes to the Condensed Consolidated Financial Statements 45 Other Information 2 SUNeVision Holdings Ltd. Interim Report 2020/21 Financial Highlights FINANCIAL HIGHLIGHTS 1 Jul 20- 1 Jan 20- 1 Jul 19- 1 Jan 19- For the period 31 Dec 20 30 Jun 20 31 Dec 19 30 Jun 19 HK$’000 HK$’000 HK$’000 HK$’000 Continuing operations Revenue 923,154 895,224 818,620 832,227 Cost of sales (379,203) (363,093) (358,914) (363,402) Gross profit 543,951 532,131 459,706 468,825 Other income 3,699 5,936 6,337 14,020 Operating expenditure* (77,172) (76,273) (65,036) (73,242) Profit from operations 470,478 461,794 401,007 409,603 Finance costs (11,082) (15,659) (20,447) (17,577) Profit before taxation 459,396 446,135 380,560 392,026 Income tax expense (70,735) (72,624) (59,748) (63,526) Profit for the period from continuing operations 388,661 373,511 320,812 328,500 Discontinued operations Profit for the period from discontinued operations – – 88,926 125,207 Profit for the period attributable to owners of the Company 388,661 373,511 409,738 453,707 Underlying profits for the period attributable to owners of the Company** 388,661 373,511 335,486 348,707 EBITDA*** Continuing operations Data centre business 669,984 623,973 566,456 542,581 ELV system business and unallocated corporate expenses (7,974) (2,802) (1,301) (63) 662,010 621,171 565,155 542,518 * Selling, general and administrative expenses ** Excluding increase in fair value on investment properties (associated with discontinued operations) *** Earnings before interest, tax, depreciation and amortization SUNeVision Holdings Ltd. Interim Report 2020/21 3 Chairman’s Statement FINANCIAL HIGHLIGHTS (in HK$ million, unless specified) For the 6 months ended 31 December 2019 2020 % Change Continuing operations – Revenue 819 923 +13% – EBITDA 565 662 +17% Underlying profit attributable to owners of the Company1 335 389 +16% 1 Excluding the increase in fair value on investment properties (associated with discontinued operations) RESULTS SUNeVision’s data centre business is driven by the following two different sets of demand, both of which saw strong growth over During the period under review, the Group’s revenue the past six months. from continuing operations increased 13% year on year to HK$923 million, driven mainly by the continuing expansion of Firstly, the demand for “connectivity” has accelerated as the need hyperscale and cloud customers in the data centre business. for video conferencing, e-commerce, gaming and other online EBITDA from continuing operations rose 17% year on year to applications increased during COVID-19. Our MEGA-i has been a HK$662 million. Underlying profit for the period attributable major connectivity hub in Asia for many years, with virtually every to owners of the Company increased 16% year on year to significant player in the digital industry included among its tenants. HK$389 million. The recent uptake in demand for connectivity due to the pandemic BUSINESS REVIEW has further strengthened this business. COVID-19’s impact on society and businesses has not shown Secondly, the demand from enterprises and cloud/hyperscale players any signs of abating over the past six months. We continued to has increased. As businesses require increasingly more capacity to see sustained acceleration of digitisation and the adoption of house their growing data needs, they need to procure more data technologies that enabled remote productivity and engagement, centre space directly and/or move to cloud. Cloud adoption has including video-conferencing, e-learning, e-commerce, solutions for certainly started to take off in Hong Kong, similar to other parts remote work, gaming, etc. This has enabled a substantial growth of the world. During the last six months, we saw a particularly in data traffic, which in turn has resulted in unlocking demand for strong demand from the cloud players. We now provide services higher quality data centres, especially because many online tasks for the majority of the leading global and Asian cloud players. Our are now mission critical. These trends are expected to play into customers like the fact that we provide superior infrastructure, as SUNeVision’s strengths as SUNeVision focuses on servicing top- both MEGA Two and MEGA Plus are designed to meet the demand tier cloud and enterprise customers who are highly demanding in for high power density and to provide resilience against any power quality. The Group expects these trends to continue beyond the disruption. They also like the fact that we provide first-rate service in pandemic and drive growth for data centres services. ensuring there is no disruption. We pride ourselves on having built strong working relationships with the leading cloud players, and we The pandemic brought with it operational challenges as well. There expect to grow with them as cloud adoption ramps up further in its is a strong need for us to ensure “business as usual” for ourselves next phase. and for our customers even as strict social distancing was in place. As a result, we took a number of measures to minimize the risk of operational disruption, and to protect the health and safety of our employees and customers. We are happy to report that the network connectivity across our data centre campus has remained fully operational during this critical time. 4 SUNeVision Holdings Ltd. Interim Report 2020/21 Chairman’s Statement SUNeVision believes that the growth of the data centre industry SUNeVision has strong confidence in Hong Kong, and is expanding in Hong Kong is beneficial to every participant. We are committed its space and power capacity to meet the growing demand for data to providing the best infrastructure and services to our customers. centre services. Our MEGA-i, which is already a major connectivity At the same time, we also strongly believe in “fair” competition. hub in Asia, has just completed a project that increased its power In April 2020, SUNeVision lodged an appeal against the judgment capacity by 40% (in the data centre industry, operators are paid on the judicial review case regarding alleged breach of the lease by power capacity, not physical space). In 2022, we will see two restrictions by data centre operators within Tseung Kwan O new data centres being completed, namely Tsuen Wan TWTL 428 Industrial Estate (TKOIE) in subletting and sharing occupation of and Phase 1 of Tseung Kwan O TKOTL 131. In particular, the heavily subsidised land. SUNeVision would like to stress that some TKOTL 131 data centre will be a state-of-the-art data centre with TKOIE data centre operators had been operating in a way that superior infrastructure and ultra-high power capacity. The addition allegedly involves subletting or permitting third parties to occupy of these two new data centres will increase the physical footprint the leased premises. This is particularly problematic because the of SUNeVision by 100%, from 1.4 million square feet to 2.8 million premium paid by data centre operators within TKOIE is substantially square feet in gross floor area (“GFA”). This pipeline will provide below market price. Take for instance, the land premium charged our customers the room to grow and invest, and it also enables by the Hong Kong Science and Technology Parks Corporation us to grow with them. In terms of power capacity, the new data (HKSTPC) in 2019 was at HK$600 to HK$700 per square foot centres will help increase our total power capacity by 200%, from range, which was significantly lower than public tendered market around 70MW to over 200MW.