China Mobile Limited
60/F., The Center
99 Queen’s Road Central
Hong Kong
Tel: (852) 3121 8888
Fax: (852) 3121 8809
Website...
CONTENTS
     China Mobile Limited          2008 Annual Report


     2    Corporate Information

     3    Chairman’s Sta...
CHINA MOBILE LIMITED 2008 Annual Report




       Finanical Highlights                                                   ...
CHINA MOBILE LIMITED 2008 Annual Report




                           In 2007, the steady growth of China’s economy and t...
CHINA MOBILE LIMITED 2008 Annual Report




                                                                              ...
In 2007, the Group maintained the three driving forces of its business —
new customers, new business and new voice usage. ...
CHINA MOBILE LIMITED 2008 Annual Report




        Business Review                                                       ...
CHINA MOBILE LIMITED 2008 Annual Report




                        The Group maintained the three driving forces of its
 ...
CHINA MOBILE LIMITED 2008 Annual Report




        Financial Review                                                      ...
CHINA MOBILE LIMITED 2008 Annual Report




       Notes to the Financial Statements
        (Expressed in Renminbi)
     ...
China Mobile Annual Report
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China Mobile Annual Report

  1. 1. China Mobile Limited 60/F., The Center 99 Queen’s Road Central Hong Kong Tel: (852) 3121 8888 Fax: (852) 3121 8809 Website: www.chinamobileltd.com Annual Report 2008
  2. 2. CONTENTS China Mobile Limited 2008 Annual Report 2 Corporate Information 3 Chairman’s Statement 5 Management Discussion and Analysis 7 Corporate Governance Report 14 Audit Committee Report 16 Director’s Report 29 Independent Auditors Report 31 Consolidated Income Statement 32 Consolidated Balance Sheet 34 Consolidated Statement of Changes in Equity 35 Consolidated Cash Flow Statement 37 Notes to the Consolidated Financial Statements 72 Financial Summary 73 Properties held for Investment
  3. 3. CHINA MOBILE LIMITED 2008 Annual Report Finanical Highlights Finanical Highlights OPERATING PERFORMANCE TURNOVER BREAKDOWN TURNOVER ANALYSIS BY GEOGRAPHICAL HK$”000 SEGMENTS Unit: RMB million 350 120% The NWDSH Adjustments 300 78.7 The Company Group (Note 1) Consolidated 100% 32.1% 28.6% 33.5% 21.5 Item HK$’000 HK$’000 HK$’000 HK$’000 250 10.7 80% Investments in NWDSH and its 21.4% 200 subsidiaries (“WDSH Group”) 88 0,500 — (880,500) — 29.4% 29.1% 60% Other (liabilities)/assets net (54,020) 911,249 — 857,229 150 1.3% 230.5 270.3 260.8 Net assets 826,480 911,249 (880,500) 857,229 13.9% 40% 0.0% 0.0% 100 3% 21.5% 18.7% 10.2% Share capital 6,095 — — 6,095 20% Capital reserve — 397,683 (60,115) 337,568 1.9% 50 2.0% 9.4% 23.2% 10.5% Contributed surplus 820,385 — (820,385) — 4.5% 7.4% Statutory reserve — 11,360 — 11,360 0 0% 03/2005 03/2006 03/2007 03/2008 03/2005 03/2006 03/2007 03/2008 826,480 911,249 (880,500) 857,229 CDM Turnover Retail Turnover CDM Europe America China Hong Kong Africa Other Asia-Pacific regions OPERATING PERFORMANCE Retail Unit: RMB million The NWDSH Adjustments REVENUE PROFIT FOR THE YEAR BASIC EARNINGS PER The Company Group (Note 1) Consolidated SHARE Item HK$’000 HK$’000 HK$’000 HK$’000 HK$ (million) HK$ (million) HK$ (cent) 350 339,480 80,000 8 Investments in NWDSH and its 73,488 subsidiaries (“WDSH Group”) 88 0,500 — (880,500) — 0.070 300 291,739 70,000 7 Other (liabilities)/assets net (54,020) 911,249 — 857,229 0.056 60,000 6 250 241,210 52,773 Net assets 826,480 911,249 (880,500) 857,229 50,000 5 200 41,697 40,000 4 Share capital 6,095 — — 6,095 150 30,000 3 Capital reserve — 397,683 (60,115) 337,568 100 Contributed surplus 820,385 — (820,385) — 20,000 2 Statutory reserve — 11,360 — 11,360 50 0.098 10,000 1 826,480 911,249 (880,500) 857,229 0 0 0 2005 2006 2007 2008 2005 2006 2007 2008 2005 2006 2007 2008 4 5
  4. 4. CHINA MOBILE LIMITED 2008 Annual Report In 2007, the steady growth of China’s economy and the boom in demand for telecommunications services continued to create a prosperous environment for the Group. Leveraging our premium network, strong brand recognition, economies of scale and a refined and effective approach to management, we have made positive business progress, delivering remarkable financial results and favorable profitability. 6 7
  5. 5. CHINA MOBILE LIMITED 2008 Annual Report Chairman’s Statement Dear Shareholders, In 2007, the steay growth employee benefit expense increased by 14.4% from HK$128.8 million in FY2006 to HK$147.4 million in FY2007. This increase was primarily due to increase in wages and salaries and other employment benefits as a result of recognising a full year’s operations of certain stores opened in last year and new stores openings in current year under review. Employee benefit expense as a percentage to revenue decreased by 2.2% in FY2007 primarily due to improved operating efficiency. Depreciation and amortisation expense increased by 19.8% from HK$81.4 million in FY2006 to HK$97.5 million in FY2007. This increase was primarily due to increase in depreciation and amortisation as a result of recognising a full year’s operations of certain stores opened in last year and new stores openings in current year under review. Depreciation and amortisation expense as a percentage to revenue decreased by 1.0% in FY2007 primarily due to strong performance of revenue. Operating lease rental expense increased by 14.1% from HK$234.7 million in FY2006 to HK$267.7 million in FY2007, primarily due to the effect of recognising a full year’s operations of certain stores opened in last year and new stores openings in current year under review. Operating lease rental expense as a percentage to revenue decreased by 4.0% in FY2007 mainly as a result of operating leverage of the expense. Depreciation and amortisation expense increased by 19.8% from HK$81.4 million in FY2006 to HK$97.5 million in FY2007. This increase was primarily due to increase in depreciation and amortisation as a result of recognising a full year’s operations of certain stores.. OTHER OPERATING EXPENSES Depreciation and amortisation expense increased by 19.8% from HK$81.4 million in FY2006 to HK$97.5 million in FY2007. This increase was primarily due to increase in depreciation and amortisation as a result of recognising a full year’s operations of certain stores opened in last year and new stores openings in current year under review. Depreciation and amortisation expense as a percentage to revenue decreased by 1.0% in FY2007 primarily due to strong performance of revenue. Operating Lease Rental Expense Wang Jianzhou Chairman and Chief Executive Officer Operating lease rental expense increased by 14.1% from HK$234.7 million in FY2006 to HK$267.7 million in FY2007, primarily due to the effect of recognising a full year’s operations of certain stores opened in last year and new stores openings in current year under review. 10 11
  6. 6. In 2007, the Group maintained the three driving forces of its business — new customers, new business and new voice usage. Subscriber base further expanded, voice usage volume continued to be effectively stimulated and the contribution of value-added business to revenue continued to increase. 11
  7. 7. CHINA MOBILE LIMITED 2008 Annual Report Business Review Business Review Depreciation and amortisation expense increased by 19.8% from HK$81.4 million in FY2006 to HK$97.5 OTHER OPERATING EXPENSES (continued) million in FY2007. This increase was primarily due to increase in depreciation and amortisation as a result of recognising a full year’s operations of certain stores opened in last year and new stores openings in current Depreciation and amortisation expense increased by 19.8% from HK$81.4 million in FY2006 to HK$97.5 year under review. Depreciation and amortisation expense as a percentage to revenue decreased by 1.0% in million in FY2007. This increase was primarily due to increase in depreciation and amortisation as a result of FY2007 primarily due to strong performance of revenue.Operating lease rental expense increased by 14.1% recognising a full year’s operations of certain stores opened in last year and new stores openings in current from HK$234.7 million in FY2006 to HK$267.7 million in FY2007, primarily due to the effect of recognising a full year under review. Depreciation and amortisation expense as a percentage to revenue decreased by 1.0% in year’s operations of certain stores opened in last year and new stores openings in current year under review. FY2007 primarily due to strong performance of revenue. Operating lease rental expense as a percentage to revenue decreased by 4.0% in FY2007 mainly as a result of operating leverage of the expense. Operating Lease Rental Expense OTHER OPERATING EXPENSES Operating lease rental expense increased by 14.1% from HK$234.7 million in FY2006 to HK$267.7 million in FY2007, primarily due to the effect of recognising a full year’s operations of certain stores opened in last year Other operating expenses increased by 23.8% from HK$149.8 million in FY2006 to HK$185.5 million in and new stores openings in current year under review. Operating lease rental expense as a percentage to FY2007. This increase was primarily due to a HK$13.7 million increase in water and electricity expenses revenue decreased by 4.0% in FY2007 mainly as a result of operating leverage of the expense. relating primarily to the newly opened stores and the effect of recognising a full year’s operations of certain stores in current year, a HK$6.4 million increase in promotion, advertising and related expenses. Other OTHER OPERATING EXPENSES operating expenses as a percentage to revenue decreased by 1.1% in FY2007 Depreciation and amortisation expense increased by 19.8% from HK$81.4 million in FY2006 to HK$97.5 million in FY2007. This increase was Other operating expenses increased by 23.8% from HK$149.8 million in FY2006 to HK$185.5 million in FY2007. primarily due to increase in depreciation and amortisation as a result of recognising a full year’s operations This increase was primarily due to a HK$13.7 million increase in water and electricity expenses relating of certain stores opened in last year and new stores openings in current year under review. Depreciation primarily to the newly opened stores and the effect of recognising a full year’s operations of certain stores and amortisation expense as a percentage to revenue decreased by 1.0% in FY2007 primarily due to strong in current year, a HK$6.4 million increase in promotion, advertising and related expenses. Other operating REVENUE PROFIT FOR THE YEAR BASIC EARNINGS PER SHARE HK$ (million) HK$ (million) HK$ (cent) 350 339,480 80,000 8 73,488 0.070 300 291,739 70,000 7 0.056 60,000 6 250 241,210 52,773 50,000 5 200 41,697 40,000 4 150 30,000 3 100 20,000 2 50 0.098 10,000 1 0 0 0 2005 2006 2007 2008 2005 2006 2007 2008 2005 2006 2007 2008 12 13
  8. 8. CHINA MOBILE LIMITED 2008 Annual Report The Group maintained the three driving forces of its business — new customers, new business and new voice usage. Subscriber base further expanded, voice usage volume continued to be effectively stimulated and the contribution of value-added business. 14 15
  9. 9. CHINA MOBILE LIMITED 2008 Annual Report Financial Review Financial Review Depreciation and amortisation expense increased by 19.8% from HK$81.4 million in FY2006 to HK$97.5 OTHER OPERATING EXPENSES (continued) million in FY2007. This increase was primarily due to increase in depreciation and amortisation as a result of recognising a full year’s operations of certain stores opened in last year and new stores openings in current Depreciation and amortisation expense increased by 19.8% from HK$81.4 million in FY2006 to HK$97.5 year under review. Depreciation and amortisation expense as a percentage to revenue decreased by 1.0% in million in FY2007. This increase was primarily due to increase in depreciation and amortisation as a result of FY2007 primarily due to strong performance of revenue.Operating lease rental expense increased by 14.1% recognising a full year’s operations of certain stores opened in last year and new stores openings in current from HK$234.7 million in FY2006 to HK$267.7 million in FY2007, primarily due to the effect of recognising a full year under review. Depreciation and amortisation expense as a percentage to revenue decreased by 1.0% in year’s operations of certain stores opened in last year and new stores openings in current year under review. FY2007 primarily due to strong performance of revenue. Operating lease rental expense as a percentage to revenue decreased by 4.0% in FY2007 mainly as a result of operating leverage of the expense. Operating Lease Rental Expense Operating lease rental expense increased by 14.1% from HK$234.7 million in FY2006 to HK$267.7 million in 1 GENERAL INFORMATION AND GROUP REORGANISATION (continued) FY2007, primarily due to the effect of recognising a full year’s operations of certain stores opened in last year and new stores openings in current year under review. Operating lease rental expense as a percentage to 1.2 Group reorganisation (continued) revenue decreased by 4.0% in FY2007 mainly as a result of operating leverage of the expense. The consolidated balance sheet as at 30 June 2007: OTHER OPERATING EXPENSES The NWDSH Adjustments Other operating expenses increased by 23.8% from HK$149.8 million in FY2006 to HK$185.5 million in FY2007. The Company Group (Note 1) Consolidated This increase was primarily due to a HK$13.7 million increase in water and electricity expenses relating HK$’000 HK$’000 HK$’000 HK$’000 primarily to the newly opened stores and the effect of recognising a full year’s operations of certain stores in current year, a HK$6.4 million increase in promotion, advertising and related expenses. Other operating Investments in NWDSH and its subsidiaries (“WDSH Group”) 88 0,500 — (880,500) — Other (liabilities)/assets net (54,020) 911,249 — 857,229 Net assets 826,480 911,249 (880,500) 857,229 Share capital 6,095 — — 6,095 REVENUE PROFIT FOR THE YEAR BASIC EARNINGS PER Capital reserve — 397,683 (60,115) 337,568 SHARE HK$ (million) HK$ (million) HK$ (cent) Contributed surplus 820,385 — (820,385) — 350 Statutory reserve — 11,360 — 11,360 339,480 80,000 8 73,488 Retained earnings — 484,526 — 484,526 0.070 300 291,739 70,000 7 Exchange reserve — 17,680 — 17,680 0.056 60,000 6 250 241,210 52,773 826,480 911,249 (880,500) 857,229 50,000 5 200 41,697 40,000 4 Note: 150 30,000 3 (1) The above adjustments represent: (i) the elimination of investment cost of the Company in its subsidiaries against the 100 contributed surplus which is reclassified into the component of reserves of the NWDSH Group on consolidation; and (ii) the 20,000 2 reduction of capital reserve by the nominal value of share capital issued by the Company to acquire the subsidiaries comprising 50 0.098 the Group amounting to HK$6,095,000. 10,000 1 0 0 0 2005 2006 2007 2008 2005 2006 2007 2008 2005 2006 2007 2008 16 17
  10. 10. CHINA MOBILE LIMITED 2008 Annual Report Notes to the Financial Statements (Expressed in Renminbi) Notes to the Financial Statements 1 GENERAL INFORMATION AND GROUP REORGANISATION 1 GENERAL INFORMATION AND GROUP REORGANISATION (continued) 1.1 Group reorganisation 1.2 Group reorganisation (continued) ABC123 (Hong Kong) Company Limited (the “Company”) was incorporated in the Cayman Islands on 25 January The consolidated balance sheet as at 30 June 2007: 2007 as an exempted company with limited liability under the Companies Law, (Cap. 22) of the Cayman Islands. The address of its registered office is Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand The NWDSH Adjustments Cayman KY1-1111, Cayman Islands. The Company Group (Note 1) Consolidated HK$’000 HK$’000 HK$’000 HK$’000 The Company and its subsidiaries (together, the “Group”) are engaged in department store operations in Mainland China. The Company’s shares were listed on the Main Board of The Stock Investments in NWDSH and its Exchange of Hong Kong Limited (the “Stock Exchange”) on 12 July 2007 (Note 30). subsidiaries (“WDSH Group”) 88 0,500 — (880,500) — Other (liabilities)/assets net (54,020) 911,249 — 857,229 These consolidated financial statements are presented in thousands of units of Hong Kong dollars (“HK$’000”), unless otherwise stated. These consolidated financial statements have been approved Net assets 826,480 911,249 (880,500) 857,229 for issue by the Board of Directors on 10 October 2007. Share capital 6,095 — — 6,095 1.2 Group reorganisation Capital reserve — 397,683 (60,115) 337,568 Contributed surplus 820,385 — (820,385) — In the preparation for the initial public offering of the shares of the Company on the Stock Exchange, Statutory reserve — 11,360 — 11,360 the Group underwent a group reorganisation (the “Reorganisation”). The Company acquired the Retained earnings — 484,526 — 484,526 entire issued share capital of New World Department Stores (Holdings) Limited (“NWDSH”) through Exchange reserve — 17,680 — 17,680 a share swap pursuant to an agreement dated 7 June 2007 and became the holding company of the companies comprising the Group. As part of the Reorganisation, as at 1 January 2007, the Group 826,480 911,249 (880,500) 857,229 disposed of two subsidiaries, namely Ningbo New World Trendy Department Store Co., Ltd. and Yunnan New World Department Store Co., Ltd. to Solar Leader Limited, a related company of the Note: Group, at a consideration of RMB2. (1) The above adjustments represent: (i) the elimination of investment cost of the Company in its subsidiaries against the contributed surplus which is reclassified into the component of reserves of the NWDSH Group on consolidation; and (ii) the These consolidated financial statements have been prepared using the principles of merger reduction of capital reserve by the nominal value of share capital issued by the Company to acquire the subsidiaries comprising the Group amounting to HK$6,095,000. accounting, as prescribed in Hong Kong Accounting Guideline 5 “Merger Accounting for Common Control Combinations” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and presented the results of the Group as if the structure of the Group resulting from the Reorganisation had been in existence throughout the year. Comparative figures for the year ended 30 June 2006 have been prepared on the same basis. The following is a reconciliation of the effect arising from the common control combination on the consolidated balance sheet. The following is a reconciliation of the effect arising from the common control combination on the consolidated balance sheet The following is a reconciliation of the effect arising from the common control combination on the consolidated balance sheet. The following is a reconciliation of the effect arising from the common control combination on the 18 19
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