Hutchison Telecommunications
(Australia) Limited
ABN 15 003 677 227
A member of the
Hutchison Telecommunications Group
Building A, 207 Pacific Highway
St Leonards NSW 2065
(02) 9964 4646
Tel:
Fax:
(02) 9964 4668
www.hutchison.com.au
Companies Announcements Office
Australian Securities Exchange
Date
31 March 2008
Subject: Annual Report 2007
The Company’s 2007 Annual Report incorporating the full year accounts for the period
ended 31 December 2007 is attached.
Yours faithfully
Louise Sexton
Company Secretary
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED
Annual Report 2007
Leading in 3G
About Hutchison
24 Senior Management
83 Directors’ Declaration
2
4
8
Financial and
Operating Highlights
Chairman’s Message
10 CEO’s Message
12 Review of Operations
21 Corporate Social
Responsibility
26 Board of Directors
84 Independent Audit Report
29 Corporate Governance
86 Shareholder Information
88 Corporate Directory
32 Directors’ Report
41 Financial Report
46 Notes to the Financial
Statements
AGM
The Annual General Meeting of Hutchison will be held at:
The Conference Centre, Building A, 207 Pacific Highway,
St Leonards NSW 2065. Date: Monday 19 May 2008 Time: 10am
Leading through
Growth
2007 was a year of continued growth for
Hutchison. Growth in our number of customers.
Growth in EBITDA. Growth in revenue.
2007 was a successful year for our
non-voice business having brought a
number of innovative 3G services to
the market. X-Series, Mobile
Broadband, initiatives in mobile web,
greater choice in Mobile TV, games and
music and the latest range of handsets
has us well positioned to continue as
leaders in non-voice services.
Through increased use and penetration
of these services, we will continue to
build momentum, increase revenue
and strengthen our operating
performance.
Get set for further growth in 2008.
Annual Report 2007
1
About Hutchison
Leading through
Our Approach
Our Aspiration:
Indispensable desirability
To challenge and change forever the way
people use their mobiles and the internet,
by creating an experience that is simply
better than the one they know today.
To build a desirable brand and business
that people (customers, partners and staff)
want to be a part of.
The ultimate measure of our success
will be how many people can’t imagine
life without 3.
2
Hutchison Telecommunications (Australia) Limited
Our 3 Pillars:
Doing the
right
thing
Seeing the world through our
customer’s
eyes
Have real conversations.
Make conscious commitments –
keep your word.
Be a player.
Celebrate success.
Listen to and learn from each other.
Think of me in everything you do.
Deliver on promises to me.
Listen, understand and treat
me as an individual.
Be honest and open with me.
Look for ways to delight me.
Being3
Make everything we do simple
and relevant.
Always look for ways to make 3 better.
Be courageous and bold in our thinking.
Be a passionate advocate of 3.
Consider customers, partners and each
other as family.
ABOUT HUTCHISON Annual Report 2007
3
Financial
Highlights
Hutchison is pleased to
report a continuing strong
improvement in our
financial and operating
position in 2007.
Total Revenue
$1.3 billion
an increase of 25%
Positive EBITDA
$114 million
an increase of
$83.8 million
In 2007, with the completion of the Company’s
recapitalisation and ongoing strong operating
performance, underpinned by a 27% increase in
the customer base, Hutchison recorded a 25%
increase in revenue to $1.318 billion. Operating
margin grew by 30% to $911.9 million, with an
average monthly margin of $76 million, up from
$58.6 million.
EBITDA increased to $114 million – a 278%
improvement on 2006, and our net loss position
reduced by 62.5% to $285.1 million.
Hutchison exited the year with positive
operating cash flow, improved margin and
tight control of our operating expenses. Our EBIT
loss improved by 75% from $495 million to
$123.9 million. Growth is expected to continue,
and with ongoing improvements on our net loss
and EBITDA positions, our next goal is to exit
2008 EBIT positive.
1400
1300
1200
1100
1000
900
800
700
600
500
400
1,318
1,058
916
05
06
07
200
160
120
80
40
0
-40
-80
-120
-160
-200
05
-165.6
114.0
30.2
06
07
4
Hutchison Telecommunications (Australia) Limited
Net Loss
$474 million
improvement
to $285.1 million
Capex
$268 million
Total Margin
30% increase
to $911.9 million
05
06
07
-285.1
-547.3
-759.4
0
-100
-200
-300
-400
-500
-600
-700
-800
-900
-1000
300
270
240
210
180
150
120
90
60
30
0
268.0
Average Monthly Margin
$76 million
increase from
$58.6 million
207.1
203.8
05
06
07
FINANCIAL & OPERATING HIGHLIGHTS Annual Report 2007
5
Operating
Highlights
Total Customers
27% increase
to 1,578,000
Mobile Data and Planet 3
64% of
customers
pay for Planet 3 and
mobile data each month
Non-Voice Average Revenue
$18
per user
1600
1440
1280
1120
960
800
640
480
320
160
0
1,578
1,245
654
05
06
07
65
63
61
59
57
55
53
51
49
47
45
64
56
53
05
06
07
20
18
16
14
12
10
8
6
4
2
0
19
18
17
05
06
07
6
Hutchison Telecommunications (Australia) Limited
Average Revenue
$69
per user
69
67
67
05
06
07
70
69
68
67
66
65
64
63
62
61
60
53
52
51
50
49
48
47
46
45
44
43
Margin
$52
per user
Mobile Broadband
195,000
subscribers, a 138%
increase in six months
52
Postpaid Churn
1.1%
low and steady
49
48
05
06
07
Customers
89% post paid
of total customers
FINANCIAL & OPERATING HIGHLIGHTS Annual Report 2007
7
Chairman’s Message
Leaders in 3G
The year ending
31 December 2007
produced significant
growth for Hutchison.
I am pleased to report that the Company’s total
revenue increased by 25 % to $1.318 billion
while, despite increasing downward pressures
on margin for the industry, total margin increased
from $703.9 million to $911.9 million.
The Company reported a positive EBITDA result
of $114 million, a significant and pleasing
improvement of $83.8 million and a 278%
increase on the previous period.
The Company also reduced its loss by
$474.3 million, or 62.5% down to $285.1 million.
Successful Capital Restructure
During the first half of 2007, the Company
successfully completed its recapitalisation,
raising $2.85 billion from a rights issue of
convertible preference shares. The proceeds of
the capital raising were used to retire a large
portion of the Company’s debt, reducing the
Company’s finance cost from $264.8 million in
2006 to $161.2 million in 2007, a decrease of
$103.6 million.
The recapitalisation delivers annual interest
savings of $250 million and an overall
improvement in the net debt position. It has
also reduced exposure to the current volatility
in credit markets.
Telecom Corporation of New Zealand Limited
(TCNZ) re-affirmed its interest in the Company
during the year by moving its 19.94 %
shareholding in Hutchison 3G Australia Holdings
Pty Limited to a 10 % shareholding in the
Company. TCNZ also has an option to increase
this stake to 19.94 % of the Company during
2008 for an exercise price between $275 million
to $300 million, depending on when the option
is exercised. As part of the transaction, TCNZ’s
subsidiary AAPT has transferred its 850MHz
spectrum licences to the Company. These
licences, in combination with our existing
850MHz licences, give us a national 850MHz
spectrum footprint.
Customer growth
3’s net customer growth continues to show a
positive trend year on year. For the full year
ended 31 December 2007, the Company
recorded a 27 % increase in customer growth to
1.578 million customers. Notably, the first half
of the year saw 3 record the industry’s highest
net customer additions.
We believe attention to customer growth,
including retention, is key to achieving the
benefits of scale required to maximise the
operating margin going forward. We also
continue to invest in initiatives that change
behaviour of mobile users.
8
Hutchison Telecommunications (Australia) Limited
EBITDA
$114 million
278% improvement
Total Revenue
$1.318 billion
25% increase
3G services enter
new phase of growth
Non-voice contribution continued to strengthen
following the launch of new services in 2007
including HSDPA, X-Series and high-speed
Mobile Broadband.
As a result, the number of customers billed for
non-voice services (excluding SMS) increased to
64 % of the base (on a rolling 12-month basis).
In March, 3 launched X-Series, bringing services
previously reserved for the PC to the mobile
with generous data allowances. Soon after, the
Company completed its upgrade to High Speed
Downlink Packet Access (HSDPA) delivering
average speeds between 600kbps to 1.5Mbps.
Following this, 3 relaunched Mobile Broadband
in July. By the end of December, 195,000
subscribers had a mobile broadband USB
modem or card, an X-Series subscription or were
using their mobile phone as a modem – a 138 %
increase in six months.
Global benefits
The Company acknowledges Hutchison
Whampoa’s supportive role in providing 3 in
Australia economies of scale in procurement of
technology and handsets, cost sharing and the
combined resources that result in new systems
and innovation.
Both X-Series and the exclusive 3 Skypephone
were products launched in other 3 countries
as well. The Australian launches benefited from
the shared resources that a global company
can offer while still delivering a locally
targeted product.
Looking forward
In 2007, the Australian market has experienced
significant growth in the 3G market. With our
early leadership in 3G and our focus on one
technology, we have been well placed to benefit
from this shift from 2G, while our delivery of
innovative services has established us as leaders
in non-voice services. Increased usage and
penetration of these services, combined with
increasing customer numbers will continue to
drive margin. The Company heads into 2008
in a strong position, focussed on growth and
improving financial performance.
Fok Kin-ning, Canning
Chairman
CHAIRMAN’S MESSAGE Annual Report 2007
9
CEO’s Message
Leaders in
Innovation
Strong customer
growth, new non-
voice products and
services and significant
increases in revenue
and margin underpins
the momentum of the
business and 3’s
growing brand strength.
Strong sales
In 2007, we grew our total customer base by
333,000, an increase of 26.7% on 2006 and
bringing us to a total of 1.578 million customers
at year end.
Strong financials
Strong growth in 3’s customer base and non-
voice services saw our total revenue increase in
2007 by 24.6% to over $1.3 billion. As a result,
we grew our margin to $911.9 million, up 29.5%
on 2006. The average monthly margin increased
to $76 million, up from $58.6 million.
For the second year running, we have reported
strong growth in EBITDA, which increased by
$84 million to $114 million .
Our EBIT position has improved by nearly 75%,
from a loss of $494.6 million to $123.9 million.
Improved growth and EBITDA performance has
contributed to a significant improvement in our
net loss position to $285 million, which is a
$474 million improvement on 2006.
Monthly non-voice ARPU increased 6.3% to
$18.31 and our pure 3G non-voice ARPU –
excluding SMS - grew to $7.77, an increase
of 11.3%.
The launch of Mobile Broadband
In July, following completion of the HSDPA
network upgrade, 3 successfully relaunched high
speed, high value Mobile Broadband.
Our leadership in Mobile Broadband was a
significant contributor to 3’s non-voice growth
in late 2007 and has also contributed to rapid
growth in the customer base and margins.
By the end of December, the number of Mobile
Broadband subscriptions (which includes
accessing the internet via an X-Series
subscription or through a USB card or modem)
reached 195,000 – an increase of 138% in just
six months.
3 will continue to upgrade its network in line
with the release of attractive handsets and
devices for our customers. With the upgrade of
the network to HSDPA at 3.6 Mbps and HSUPA
complete, the next speed increase to 7.2 Mbps
will begin in 2008.
Other non-voice growth
In addition to non-voice growth through Mobile
Broadband, 3’s content services also continued
to grow.
During 2007, we delivered more popular
branded content services including Mobile TV,
sport and news. Customers experienced over
120 million content events, 5.7 million music
events and downloaded 1.65 million games.
3’s mobile TV continued to expand with new
programs including Fox Sports 24 hour news,
South Park and the ABC’s Summer Heights High.
Cricket TV continued to be popular with
customers and was once again a clear
demonstration of the value of integrating our
sponsorship of the Australian Test Cricket Team
and marketing throughout the Australian Test
Cricket season.
10
Hutchison Telecommunications (Australia) Limited
Mobile Broadband
Over 195,000
Mobile Broadband subscriptions,
up 138% in 6 months
Content Events
120 million
content events were experienced
Outlook
3 has continued to perform well as the
competitive environment for 3G customers
has intensified, with higher subsidies from
competitors than previously seen. 2007 has
proved to be a year of continued growth for
3, with significant increases in customer base,
revenue and margin. Usage of non-voice
services has continued to build. As non-voice
services continue to grow, new revenue
opportunities for 3 also grow, including mobile
advertising, with a high level of usage of 3’s
content portal Planet 3. With an aggressive and
rapidly growing mobile broadband market, and
having gained early pace, 3’s growth in Mobile
Broadband looks set to continue.
Our strong operational performance is on track
in 2008 and the Company expects to exit
the year EBIT positive.
Nigel Dews
Chief Executive Officer
Focus on customer experience
In 2007, the strong growth in customers was
coupled with a low level of churn (1.1%), which
is a result of improvements in customer
satisfaction. Our rising customer satisfaction
levels have been positively influenced by our
continued investment in customer care and
retention through customer life-cycle
management, the introduction of 3 Service
Centres, a market leading range of handsets and
the extension of 3’s award-winning self-care
product My3.
3 established its exclusive Service Centres during
the year, creating a simpler, faster and more
efficient way to repair handsets, reducing
turnaround times and improving the customer
experience.
In an increasingly style-driven market, it is
important that 3 continues to offer a wide range
of handsets with improved form, features and
functionality. In 2007, we added 20 handsets to
the range, including the exclusive 3 Skypephone,
which was launched in November.
3 extended My3 during the year to allow
customers more visibility and control over their
3 account. Now accessible from handsets and
on-line, My3 has reduced the number of
customer calls to 3Care for services such as
getting an account balance, and provides
customers with greater ability to monitor and
control their monthly spend.
CEO’S MESSAGE Annual Report 2007
11
Review of Operations
Leaders in
New Services
During 2007, in a growing 3G market with highly
subsidised offers and aggressive marketing, 3
continued to build momentum and scale.
By offering new and exciting non-voice services,
including Mobile Broadband, 3 remains well
placed to benefit from the market shift towards 3G.
12
Hutchison Telecommunications (Australia) Limited
3G Services Overview
Mobile Broadband
Planet 3
Communications
The communications services that 3
offers are:
Voice and Video
SMS and MMS
Mobile Email
Instant Messaging
3 Sync
Talk International
3 Like Home
New Value Packs, including the Explorer
Packs, were launched in 2007, providing
customers with even more reason to try
content and communications on their
mobile.
Mobile Broadband is fast, simple,
affordable mobile or wireless internet,
which customers use to get all the
benefits of the internet while they are
on the go.
Mobile Broadband includes accessing
the internet through a laptop card or
modem, a mobile or with an X-Series
subscription.
3 Mobile Broadband USB Modem
plugs into a Mac or Windows laptop,
as well as a desktop PC.
3 Mobile Broadband Card also
plugs into a Mac or Windows laptop,
as well as a desktop PC and is
compatible with both PC Express
and PCMCIA PC card slots.
3 Mobile as a Modem –
customers can also use their
3 Mobile as a modem.
Mobile Web allows customers to
access the internet directly from
their mobile phone.
X-Series gives customers the online
world on their mobile, including
Google, Skype, Windows Live
Messenger, Yahoo!7 and ebay, as
well as generous data allowances
on a range of plans.
Planet 3 is a world of entertainment and
information on 3. Using Planet 3,
customers can get organised, stay in the
know and stay in touch.
Planet 3 gives customers the latest in:
News and information
Sport
Mobile TV
Music
Games and entertainment
Communities, Chat, Instant Messaging
and Dating
Premier
My3 account information
Customers can also share photos, find a
local restaurant or gig, watch movie
trailers, and much more.
New to Planet 3 in 2007:
MySpace
Facebook
South Park
ABC TV’s Summer Heights High
24 hour Fox Sports News
True Local
REVIEW OF OPERATIONS Annual Report 2007
13
Review of Operations continued
Music
5.7 million music events
were experienced by
customers on 3 mobile
Games
1.65 million games
downloaded on 3
Non-voice services
During 2007 3 continued to deliver popular
content services on its Planet 3 portal including
Mobile TV, music, sport, news and weather. In
total, customers experienced 120 million
content events, up from 92.5 million in 2006.
64% of 3’s customers paid for at least one
content event each month, up from 56% in 2006.
3 continued to experience strong uptake of
non-voice services with non-voice ARPU rising
6.3% to $18.31, representing 26.7% of the total
monthly ARPU. 3G ARPU (non-voice ARPU
excluding SMS) increased by 11.3% to $7.77.
SMS use also remained strong throughout the
year increasing by 82% with 1.4 billion SMS sent.
14
Hutchison Telecommunications (Australia) Limited
Hutchison Telecommunications (Australia) Limited
Mobile TV, Games and Music
3’s Mobile TV continued to expand with new
programs including South Park, the ABC’s
Summer Heights High and a 24-hour Fox Sports
News channel.
Planet 3 and Mobile Web
On Planet 3, customers can now access
truelocal, a location-based directory and
popular social community websites such as
Facebook and MySpace.
Customers enjoyed live coverage from the
cricket including the 3 mobile Ashes Series early
in the year, the Australia vs Sri Lanka and the
Australia vs India Test Series in late 2007.
3 has also introduced bonus sites, new free-to-
browse web sites funded by advertisers. These
sites include drive.com.au, domain.com.au and
The Good Food Guide.
In 2007, 3 introduced ‘The Pitch’, the first mobile
TV program written and produced in house at
3. This new made-for-mobile program
showcased our favourite summer sport
exclusively for 3 customers.
During the year, customers also downloaded
1.65 million games and experienced 5.7 million
music events.
Mobile Broadband
3 relaunched its Mobile Broadband proposition
in July by combining a high value offer, a simple
device and a fast network.
Our strong offer attracted new customers and
allowed current customers to combine mobile
and Mobile Broadband services.
Mobile Broadband has become a significant
contributor to 3’s non-voice growth with
195,000 Mobile Broadband subscribers (which
includes accessing the internet through a card
or modem, a handset or with an X-Series
subscription) by 31 December 2007. This was
a 138% increase on the 82,000 subscriptions at
the end of June.
REVIEW OF OPERATIONS Annual Report 2007
15
Review of Operations continued
Having a leading range of mobile
handsets is critical for success in
today’s style-driven market.
16
Hutchison Telecommunications (Australia) Limited
Hutchison Telecommunications (Australia) Limited
REVIEW OF OPERATIONS Annual Report 2007
17
Review of Operations continued
Skype
In October, 3 launched
3 Skypephone, the next
step in the mobile
revolution.
Exclusive to 3, 3 Skypephone is the first free
VoIP service available on a mobile offering
customers free Skype-to-Skype calls anywhere
in the world, at the touch of a button.
Besides the 4,000 minutes of free Skype-to-
Skype calls and 10,000 free Skype SMS
messages each month, the 3 Skypephone can
also access our other 3G services, including
mobile TV and the internet.
Handsets
Having a leading range of mobile handsets is
critical for success in today’s style-driven market.
In 2007, 3 continued to offer a wide range of
handsets with improved form factor, features
and functionality. We introduced 20 handsets to
the range during the year including models from
Nokia, LG, Sony Ericsson and Dopod/HTC, as well
as the Palm Treo and the exclusive 3
Skypephone.
There are now 30 handset models in 3’s range.
16 are HSDPA-enabled, capable of delivering
faster download speeds while 19 handsets are
X-Series enabled.
18
Hutchison Telecommunications (Australia) Limited
3 Service Centres open in
Sydney, Melbourne,
Brisbane, Adelaide and Perth
Customer care
External churn remains low with post-paid churn
at 1.1% for the 12 months to December 2007.
Customer satisfaction levels, as measured by
both internal and external surveys, have further
improved.
To support our ongoing focus on customer care
and retention, during 2007 we opened more
Service Centres and extended our award-
winning self-care system, My3.
The Company introduced 3’s Service Centres in
response to customer demand for a simpler and
quicker way to have a handset repaired directly
by 3. The service centres currently carry out
repairs on Nokia, Sony Ericsson, Motorola and
HTC handsets and we expect to add other
models during 2008. 3’s target is to repair and
return to the customer 90% of handsets within
five working days – a notable improvement on
previous repair timeframes.
3 Service Centres are in Sydney, Melbourne,
Brisbane, Adelaide and Perth.
We extended My3 during the year to allow
customers more visibility and control over the
management of their 3 account. Customers can
access My3 from their handset or on-line,
putting customers directly in touch with their
spend information and reducing the number of
calls to 3Care.
Network
During 2007, the 3GIS joint venture (with our
partner, Telstra Corporation Limited) added a
further 110 sites to the network bringing the
total number to 2,619.
In line with the Company’s roadmap for network
development, we completed the initial upgrade
to enable HSDPA, at 3.6Mbps, in March. The roll
out of High Speed Uplink Packet Access (HSUPA)
was also completed, allowing customers an
uplink speed of 1.4Mbps.
We will continue to upgrade our network in line
with the release of attractive handsets and
devices for our customers. With the upgrade of
the network to HSDPA and HSUPA complete, the
next speed increase to 7.2Mbps will begin in
2008 to correspond with the availability of
devices able to take advantage of these speeds.
REVIEW OF OPERATIONS Annual Report 2007
19
Cricket on 3
Over 2 million
cricket events were experienced on 3
Review of Operations continued
Sponsorships
In 2007, 3 continued the successful sponsorship
of the Australian test cricket team and the
Essendon Football Club.
Thanks to our alliance with Cricket Australia, we
once again offered fans exclusive cricket action
on their 3 mobile.
During the 3 mobile Ashes series, customers
used 2 million cricket services from 3 mobile –
whether they were watching the Cricket TV
channel with live, replay and archive footage,
checking out video highlights from the day’s
play, playing cricket games on their mobile,
reading or watching the cricket news, or
downloading cricket ring tones and pictures.
During the 2007 Cricket World Cup, customers
could watch 24/7 Cricket TV, as well as choose to
view video highlights for every match, live
scores, fixtures and ladders, SMS score alerts at
the end of each match, and match previews and
reviews.
Through 3's sponsorship of Essendon Football
Club we have continued to enjoy working with
the team on and off the field with players taking
part in a series of appearances at 3 stores
around Melbourne. Players met the fans, signed
autographs, talked tactics and even offered
footy tips.
20
Hutchison Telecommunications (Australia) Limited
Corporate Social Responsibility
Leading by
Example
Our staff, our
community and our
environment are high
priorities for us.
We undertook a number of initiatives during
2007 to ensure a happy staff and a safe
workplace, and we assisted the community and
environment.
Our People
At Hutchison, exceptional people are key to the
ongoing success of our business. That’s why we
continuously strive to create a culture where our
employees feel valued, are recognised for their
contribution and are challenged to grow both
professionally and personally.
Hutchison currently employs 1,594 people
within our business. Hutchison shares with
3 UK a high technology customer contact
environment that also employs highly trained
and talented people focused on providing
customer care.
This year we brought together our two offices in
Brisbane to one central location in Toowong. The
Toowong building is a great space for the team,
who are already enjoying the new environment
and the benefits of being in the one location.
During 2007, we continued to develop our
culture and employees through programs which
identify and develop behavioural and process
improvements to enable and encourage
organisational performance.
All staff participated in our compulsory training
sessions on discrimination and harrassment and
how to keep security top of mind in our 3
Secure courses.
Leadership drives culture which drives
performance. Developing our leaders as role
models is key to our program’s success.
CORPORATE SOCIAL RESPONSIBILITY Annual Report 2007
21
Corporate Social Responsibility continued
Some of the management and staff initiatives
implemented during the year include:
Our Employees:
• New employee programs that outline the
Our Leaders:
• Leadership Development programs focused
on self awareness and leadership impact
3 culture
• Personal growth workshops
• Team development workshops
• Leadership conferences to ensure leadership
• Ongoing analysis and refinement of induction
alignment
processes
• Ongoing analysis of recruitment systems and
processes to ensure a selection assessment
for a cultural fit
• Talent management program
• Review of our rewards and recognition
programs
• Community assistance programs
We continue to measure our culture and
engagement levels regularly to ensure the
success of any Human Resource strategy.
Community
3 supports a number of community programs
and initiatives that facilitate a greater
connection for our staff with charities and not-
for-profit organisations.
Spirit of 3
In 2007, 3 launched the Spirit of 3 program,
which provides the opportunity for our staff to
make a difference to key charities selected by
them. Through an employee contribution
program, staff can volunteer their time to a
charity, raise funds through employee led-
activities or make a donation direct from their
pay through workplace giving.
The Spirit of 3 charities include Cystic Fibrosis,
SANE Australia, Royal Institute for Deaf & Blind
Children, Youth Off The Streets, The Mirabel
Foundation, The Spot Youth, Youth Focus and
McGrath Foundation.
As well as employee donations and
participation, 3 assisted the community through
$10,000 donations to:
• Cystic Fibrosis
• The Royal Institute for Deaf and Blind Children
• SANE Australia
• Youth Off The Streets
22
Hutchison Telecommunications (Australia) Limited
Employment
1,594 people
currently employed by Hutchison
Spirit of 3
$72,000
in contributions to our key charities
Last Christmas, employees rallied behind the
Spirit of 3 charities through The Spirit of 3
Wishing Tree. Gift tags outlining things charities
needed for Christmas were placed on the
Wishing Tree and employees were able to select
and purchase gifts.
3’s My Charity Fund, part of the Spirit of 3
program, enables employees to raise funds for
charities and causes they are personally involved
in. During 2007, employees participated in the
Leukaemia Foundation’s Shave for a Cure, Can
Too for Cancer Research as well as several other
charity events.
During the Boxing Day Test, 3 raised money for
the McGrath Foundation – a charity which raises
funds for Breast Cancer Care nurses across
Australia. 3 donated funds for every catch made
by Adam Gilchrist (while wearing his pink
gloves!). 3 raised $32,000 in total.
Environment
3 actively participates in MobileMuster, an
Australian Mobile Telecommunications
Association program that recycles old mobile
phones and accessories. Customers can drop off
their old mobile phone and its accessories
(including batteries and chargers) to any 3 Store
or dealer or one of our 3 Service Centres. In
2007, 3 recycled over 10,000 kilograms of
mobiles and accessories.
3 encourages all employees to recycle. The
Sydney office, where there is the highest
concentration of employees, recycles paper,
cans and bottles. Today the office recycles over
two thirds of its waste. 3 is now extending the
program to all locations in a bid to recycle over
70% of waste. We also recycle our print and
toner cartridges through Planet Ark.
With a focus on reducing our impact on the
environment, customers, staff and most of our
investors will now access this year’s annual
report electronically.
CORPORATE SOCIAL RESPONSIBILITY Annual Report 2007
23
Senior Management
Our
Leadership
Nigel Dews
Chief Executive Officer
Nigel Dews was promoted to Chief
Executive Officer in January 2007.
Nigel joined Hutchison in
November 2003 as Director -
Sales, Marketing and Product, was
responsible for sales, distribution,
marketing and for the
development of mobile content,
products and services. Prior to
joining Hutchison, Nigel held
senior management positions at
Fairfax Media and before that, was
a senior consultant at McKinsey &
Company and graduate Economist
with the Reserve Bank of Australia.
Tanya Bowes
Director, Communications
and Corporate Affairs
Tanya Bowes joined Hutchison in
May 2005 and is responsible for
the Company's communications
and corporate affairs. In this role,
Tanya is focused on building upon
Hutchison's positive reputation
with its key stakeholders including
media, industry analysts, and
Hutchison's employees. Prior to
joining Hutchison Tanya headed
communications for PeopleSoft
across Japan and Asia Pacific, and
previously led communications for
companies in Australia and the UK.
Louise Sexton
General Counsel and
Company Secretary
Louise Sexton joined Hutchison in
September 1998 with extensive
experience as General Counsel and
Company Secretary in listed public
companies across a number of
high technology industries in
Australia. Louise has also worked
in the Federal Attorney-General's
Department and one of Australia's
largest law firms.
Greg Bourke
Director, Human Resources
Greg Bourke joined Hutchison in
January 1999 and is responsible
for leading Hutchison’s people
development strategies and
driving its high-performance
culture. Prior to Hutchison, Greg
was Director, Human Resources for
Digital Equipment Corporation,
where he was responsible for
major restructuring and change
programmes and, most notably led
the merger planning discussions
with Compaq, resulting in a
smooth transition to the new
company. Prior to his employment
at Digital Equipment Corporation,
Greg held HR management
positions at Mobil Oil and Trans
Australia Airlines.
24
Hutchison Telecommunications (Australia) Limited
Team
Tim Finlayson
Chief Financial Officer
Tim Finlayson joined Hutchison in
July 2003 from
PricewaterhouseCoopers where he
held a variety of senior roles in
Sydney, Singapore and Vietnam.
Immediately prior to joining
Hutchison, Tim's role was Tax
Partner and Leader of PWC's Tax
and Legal Services Practice in
Indochina. Tim was appointed CFO
in 2006.
Michael Young
Director, Technology
and Customer Services
Michael Young joined Hutchison in
May 2001 as Director of IT and
Billing and was later appointed to
the role of Chief Technical Officer
with responsibility for the
networks and IT functions of both
the Company's 2G and 3G
operations. In August 2003,
Michael's responsibilities expanded
to include customer care and 3G
product delivery. Prior to
Hutchison, Michael was Vice
President of IT, Asia Pacific at
Campbell Soup and Arnott's
Biscuits.
Noel Hamill
Director, Sales, Marketing
and Product
Noel Hamill joined Hutchison in
May 2007 and is responsible for
the company’s sales, distribution
and marketing for 3’s mobile
phone and mobile broadband
services across both consumer and
business markets. Noel is also
responsible for the development of
3’s content services, and the
sourcing and supply of 3’s
handsets. Prior to joining
Hutchison, Noel spent much of his
career with Optus in Australia,
where he held a number of
positions over the past nine years.
Noel has also worked for Cable &
Wireless in Singapore and London
as well as Hong Kong Telecom in
Hong Kong.
SENIOR MANAGEMENT Annual Report 2007
25
Board of Directors
BoardOur
Barry ROBERTS-THOMSON
(Deputy Chairman)
Barry Roberts-Thomson, aged 58, was the
Managing Director of Hutchison from its
inception in 1989 until September 2001.
In his capacity as Deputy Chairman and
Executive Director, Mr Roberts-Thomson
represents Hutchison in government relations
and strategic projects. Mr Roberts-Thomson was
appointed as a Director on 14 February 1989.
CHOW WOO Mo Fong, Susan
(Director)
BSc
Chow Woo Mo Fong, Susan, aged 54, has been
an executive director since 1993 and deputy
group managing director since 1998 of HWL,
executive director of CKIH since 1997, HHR since
2001 and HGCH (which ceased to be a public
listed company in July 2005) since 2003,
director of HTIL since 2008, HKEH since 1996
(executive director since 2006), Partner since
1998 and TOM Group Limited (“TOM”) since
1999. She is a solicitor and holds a Bachelor’s
degree in Business Administration. Mrs Chow
was appointed as a Director on 15 February
2006 and as an Alternate Director to Mr Fok,
Mr Lai and Mr Sixt on 8 May 2006, 26 February
2007 and 4 May 2007 respectively.
FOK Kin-ning, Canning (Chairman)
BA, DFM, CA (Aus)
Fok Kin-ning, Canning, aged 56, has been an
executive director since 1984 and group
managing director since 1993 of Hutchison
Whampoa Limited (“HWL”), director since 1992
and chairman since 2002 of Hutchison Harbour
Ring Limited (“HHR”), chairman of Hutchison
Telecommunications International Limited
(“HTIL”) since 2004, executive director since
1985 and chairman since 2005 of Hongkong
Electric Holdings Limited (“HKEH”), chairman of
Partner Communications Company Ltd.
(“Partner”) since 1998 and Hutchison Global
Communications Holdings Limited (“HGCH”)
(which ceased to be a public listed company in
July 2005) since 2003, co-chairman of Husky
Energy Inc. (“Husky”) since 2000, deputy
chairman of Cheung Kong Infrastructure
Holdings Limited (“CKIH”) since 1997, and
director of Cheung Kong (Holdings) Limited
(“CKH”) since 1985. He was previously a director
of Hanny Holdings Limited from 1992 to 2005
and Panva Gas Holdings Limited from 2002 to
2006. He holds a Bachelor of Arts degree and a
Diploma in Financial Management, and is a
member of the Australian Institute of Chartered
Accountants. Mr Fok was appointed as a Director
on 8 February 1999.
26
Hutchison Telecommunications (Australia) Limited
Justin Herbert GARDENER
(Director)
BEc, FCA
Justin H. Gardener, aged 71, is a director of a
number of private and publicly listed companies
including Austar United Communications Limited
(appointed 1999). From 1961, and until his
retirement in 1998, Mr Gardener held a variety
of positions with Arthur Andersen, becoming a
partner in 1972 and for the last ten years in a
management and supervisory role for Asia
Pacific. Mr Gardener was appointed as a Director
on 2 July 1999.
LAI Kai Ming, Dominic (Director)
BSc, MBA
Lai Kai Ming, Dominic, aged 54, has been an
executive director of HWL since 2000, executive
director since 1994 and deputy chairman since
2001 of HHR, director since 2000 and deputy
chairman since 2003 of HGCH (which ceased to
be a public listed company in July 2005). He was
previously a director of priceline.com
Incorporated from 2001 to 2006. He has over
25 years of management experience in different
industries. He holds a Bachelor of Science (Hons)
degree and a Master’s degree in Business
Administration. Mr Lai was appointed as a
Director on 19 May 2004 and as an Alternate
Director to Mrs Chow and Mr Sixt on
8 May 2006.
Kevin Steven RUSSELL (Director)
BA, CA
Kevin Steven Russell, aged 41, is chief executive
officer of Hutchison 3G UK Limited, a wholly-
owned subsidiary of HWL. From 2001 to January
2007, he was chief executive officer of the
Company. Previously he was chief financial
officer of Partner. Mr Russell joined HWL in 1995
and was promoted to director of finance and
operations in 1996. Prior to joining HWL, he
worked at an accountancy firm, Ernst & Whinney.
He holds a Bachelor of Arts degree and is a
member of the Institute of Chartered
Accountants of Scotland. Mr Russell was
appointed as a Director on 19 October 2007.
BOARD OF DIRECTORS Annual Report 2007
27
Board of Directors continued
John Michael SCANLON (Director)
John Michael Scanlon, aged 66, is a special
venture partner to Clarity Partners LLP, a private
equity firm. From 1965 through to 1988 his
career was with AT&T, primarily Bell Labs, rising
to group vice president of AT&T. Mr Scanlon then
went on to become president and general
manager of Motorola’s Cellular Networks and
Space Sector, founding CEO of Asia Global
Crossing, CEO of Global Crossing and chairman
and CEO of PrimeCo Cellular. Mr Scanlon was
appointed as a Director on 11 July 2005.
Frank John SIXT (Director)
MA, LLL
Frank John Sixt, aged 56, has been an executive
director since 1991 and group finance director
since 1998 of HWL, chairman of TOM since 1999
and TOM Online Inc. (which ceased to be a public
listed company in September 2007) since 2003,
executive director of CKIH since 1996, HKEH
since 1998 and HGCH (which ceased to be a
public listed company in July 2005) since 2004,
and director of CKH since 1991, HTIL since 2004,
Husky since 2000 and Partner since 1998. He
holds a Master’s degree in Arts and a Bachelor’s
degree in Civil Law, and is a member of the Bar
and of the Law Society of the Provinces of
Quebec and Ontario, Canada. Mr Sixt was
appointed as a Director on 12 January 1998 and
as an Alternate Director to Mrs Chow and Mr Lai
on 25 February 2008.
Roderick James SNODGRASS
(Director)
BCA, CA
Roderick James Snodgrass, aged 41, is group
strategy director of TCNZ. Mr Snodgrass joined
TCNZ in 1998, after seven years in various roles
in the oil and gas exploration and production
industry. His previous positions within TCNZ have
included general manager wired division,
including TCNZ's retail fixed-line voice, data and
internet businesses and general manager of
Xtra, TCNZ’s online division. He was a director of
Xtra! Ltd from 2002 to 2006 and has been a
director of Yahoo!Xtra Ltd since January 2007.
Mr Snodgrass was appointed as a Director on
15 February 2008.
28
Hutchison Telecommunications (Australia) Limited
Corporate Governance
Hutchison Telecommunications (Australia) Limited
(“HTAL” or “the Company”) and its Directors are
committed to high standards of corporate
governance. Set out below is a description of the
Company’s main corporate governance practices
which have been in place for the full year unless
otherwise stated.
Board of Directors and its
Committees
The Board has responsibility for approving the
strategy and monitoring the implementation of
the strategy and the performance of HTAL and its
subsidiaries (the group of companies is referred
to as “Hutchison” in this report), protecting the
rights and interests of shareholders and is
responsible for overall corporate governance. The
Board has adopted a list of matters reserved to
the Board which is available on the Company’s
website. The Chief Executive Officer and senior
management team are responsible for day to day
management of Hutchison and implementing the
strategies adopted by the Board.
The Board’s responsibilities include:
•
Approving and monitoring the strategic
planning process of Hutchison and
reviewing and approving the long term
goals to ensure that these strategic
objectives are met;
• Monitoring the performance of
•
•
•
•
•
management against these goals and
objectives;
Ensuring that there are adequate internal
controls and ethical standards of behaviour
adopted and met within Hutchison;
Ensuring the integrity of Hutchison’s
financial reporting;
Ensuring that the business risks facing
Hutchison are identified and that
appropriate monitoring and reporting
controls are in place to manage these risks;
Appointing the Chief Executive Officer,
evaluating performance and determining
the remuneration of senior executives and
ensuring that appropriate policies and
procedures are in place for recruitment,
training, remuneration and succession
planning; and
Delegating to the Chief Executive Officer the
authority to manage and supervise the
business of Hutchison including the making
of all decisions regarding Hutchison’s
operations that are not specifically reserved
to the Board.
Composition of the Board
The Board comprises nine Directors whose
appointment reflects the shareholdings of the
Company and the need to ensure that the
Company is run in the best interest of all
shareholders. Other than Mr Roberts-Thomson,
all the Directors, including the Chairman, Mr Fok,
are non-executives. The Board has adopted the
definition of independence contained in the ASX
best practice recommendations. In light of this
definition, the Board considers that independent
Directors are not substantial shareholders or
officers of substantial shareholders, have not
been employed as an executive of Hutchison or
its majority shareholder nor are they associated
with any significant supplier, customer or
professional adviser of Hutchison. Further, an
independent Director does not have any
significant contractual relationship with Hutchison
nor is there any business relationship which could
materially interfere with a Director’s ability to act
in the best interest of the Company.
Mr Gardener and Mr Scanlon, being the only
Directors who are not an officer of a significant
shareholder, are considered by the Board to be
independent Directors. In light of the majority
ownership by Hutchison Whampoa Limited (HWL),
the Board has resolved that, at this stage, it is not
in the best interests of the Company that a
majority of Directors or the Chairman be
independent.
Subject to the Corporations Act requirements in
relation to the retirement of Directors, the current
Directors have not been appointed for a specified
term.
Details of the Directors’ experience are set out on
pages 26 to 28.
In connection with their duties and
responsibilities, Directors and Board committees
have the right to seek independent professional
advice at the Company's expense. Prior written
notification to the Chairman is required. No
formal procedure for performance evaluation of
the Board and its members has been
implemented as the Board considers that regular
ongoing informal assessment is more
appropriate. Accordingly consideration of the
performance of the Board forms part of the
regular Board process when the Board conducts
deliberations without representatives of
management present at each Board meeting.
Committees
The Board has two committees to assist in the
implementation of its corporate governance
practices and fiduciary and financial reporting
and audit responsibilities. These are an Audit
Committee and a Governance, Nomination and
Compensation Committee.
Each of these committees has its own charter
setting out its role and responsibilities,
composition, structure, membership requirements
and the manner in which the committee is to
operate. Details of these charters are available on
the Company website.
Audit Committee
The responsibility of the Audit Committee is to
assist the Board in fulfilling its audit duties
through review and supervision of Hutchison’s
financial reporting process and internal control
system. All members of the committee are non
executive Directors and the composition of the
committee meets the requirements of the ASX
Listing Rules. The Audit Committee has
appropriate financial expertise and knowledge of
the telecommunications industry. Details of the
committee members’ qualifications, expertise,
experience and attendance at Audit Committee
meetings are set out on pages 26 to 28 and 33.
The Audit Committee considers the annual and
interim financial statements of the Company and
its subsidiaries and any other major financial
statements prior to approval by the Board, and
reviews standards of internal control and financial
reporting within Hutchison. The Audit Committee is
also responsible for overview of the relationship
between Hutchison and its external auditors,
including periodic review of performance and the
terms of appointment of the auditors. This
committee considers any matters relating to the
financial affairs of Hutchison and its subsidiaries
and any other matter referred to it by the Board.
The main responsibilities delegated to the
committee are to:
•
•
Consider and recommend to the Board the
appointment and remuneration of the
Company’s external auditors and to
determine with the external auditors the
nature and scope of the audit or review and
approve audit or review plans;
Evaluate the performance of the external
auditors, including assessment of the
auditor’s independence taking into account
factors which may impair the auditor’s
judgement in audit matters related to
Hutchison;
Annual Report 2007
29
Corporate Governance continued
•
•
•
•
•
•
Review the interim and annual accounts of
the Company before their submission to the
Board;
Ensure Hutchison’s practices and procedures
with respect to related party transactions are
adequate for compliance with the relevant
legal and stock exchange requirements;
Review the risk management practices and
oversee the implementation and
effectiveness of the risk management
system;
Review the internal audit programmes, the
adequacy of resource of the internal audit
function and the appointment and
replacement of the senior internal audit
officer;
Review with management and the external
auditors the presentation and impact of
significant risks and uncertainties associated
with the business of Hutchison and their
effects on the financial statements of
Hutchison; and
Ensure corporate compliance with
applicable legislation.
External auditors
The performance of the external auditors is
reviewed annually and applications for tender of
external audit services will be requested as
deemed appropriate. PricewaterhouseCoopers
were appointed as the external auditors in 1998.
It is PricewaterhouseCoopers policy to rotate
audit engagement partners on listed companies
every five years, and in accordance with that
policy the current audit engagement partner was
appointed in May 2007.
An analysis of fees paid to the external auditors,
including a break-down of fees for non-audit
services, is provided in note 27 to the financial
statements. The Company’s policy in relation to
awarding non-audit work to the external auditors
requires that all proposed non-audit service
assignments in excess of $100,000 will be
approved by the Audit Committee and will only
be awarded to the external auditors after
completion of a competitive tendering process
which demonstrates that the external auditors are
the preferred service provider on the basis of an
objective assessment of price, capabilities and
commitment. It is the policy of the external
auditors to provide an annual declaration of their
independence to the Audit Committee.
The external auditors are available for
questioning at the Annual General Meeting.
Governance, Nomination and
Compensation Committee
The committee comprises non-executive Directors
and is chaired by the Chairman of the Board.
Details of the committee members’ qualifications,
expertise, experience and attendance at
compensation committee meetings are set out on
pages 26 to 28 and 33.
Compensation responsibilities -
This committee is responsible for the review
of remuneration and other benefits, and
Hutchison’s policies in relation to recruitment
and retention of staff, details of which are set
out in the Directors’ Report on pages 34 to 38.
This committee also reviews and makes
recommendations to the Board on remuneration
policies and other terms of employment
applicable to the Chief Executive Officer, senior
executives and the Directors themselves. The
committee will, where relevant, obtain
independent advice from external consultants
on the appropriateness of the remuneration
policies of Hutchison.
Each member of the senior executive team signs
a formal employment contract, incorporating a
formal job description, at the time of their
appointment covering a range of matters
including their duties, rights, responsibilities and
any entitlements on termination. Executive
remuneration, including that of Executive
Directors, is reviewed annually by the committee
having regard to personal and corporate
performance, contribution to long term growth
and relevant comparative information. Executives
are also eligible to participate in the employee
share schemes. Information relating to these
schemes is set out in the Remuneration Report
and note 26 to the financial statements. Details
of the compensation philosophy and practice of
the Company are set out in the Directors’ Report.
The remuneration of Directors who are not
executives of either the Company or other
companies within the Hutchison Whampoa Group
comprises only a fixed component and is not
performance based. Directors who are executives
of either the Company or other companies within
the Hutchison Whampoa Group or of TCNZ do
not receive remuneration for their services as
Directors.
30
Hutchison Telecommunications (Australia) Limited
Governance and nomination
responsibilities -
Related to Board Performance and
Evaluation
•
To periodically assess and provide
recommendations to the Chairman of the
Board on the effectiveness of the Board of
Directors as a whole, the committees of the
Board, the contribution of individual
Directors, and assessment of Directors;
To review the Company’s investor relations
and public relations activities to ensure that
procedures are in place for the effective
monitoring of the shareholder base, receipt
of shareholder feedback and response to
shareholder concerns;
To oversee the maintenance of an induction
and education programme for new
Directors;
To ensure appropriate structures and
procedures are in place so that the Board
can function independently of
management;
To review the mandates of the Board of
Directors' committees and recommend
appropriate changes to the Board;
To receive and consider any concerns of
individual Directors relating to governance
matters; and
To review all related party transactions to
ensure they reflect market practice and are
in the best interests of Hutchison.
Related to the Board of Directors
To recommend to the Board criteria
•
regarding personal qualifications for Board
membership, such as background,
experience, technical skills, affiliations and
personal characteristics.
Related to Committees of the Board of
Directors
•
To review from time to time and
recommend to the Board the types, terms of
reference and composition of Board
committees, the nominees as chair of the
Board committees; and
To review from time to time and make
recommendations to the Board, with respect
to length of service of members on
committees, meeting procedures, quorum
and notice requirements, records and
minutes, resignations and vacancies on
committees.
•
•
•
•
•
•
•
Related party transactions
Hutchison draws great strength from its
relationship with HWL and other companies in the
HWL Group in relation to both its financial
support, management expertise, joint
procurement programmes and shared research
and development costs. During 2007 the strategic
alliance with TCNZ for the 3G business in Australia
was dissolved when TCNZ took up its
shareholding in the Company and going forward,
the Company may work with TCNZ in relation to
3G products and services. In 2004, the Company’s
subsidiary, Hutchison 3G Australia Pty Limited,
entered into a 50:50 partnership with Telstra
Corporation Limited for the joint ownership,
operation and development of the 3G radio
access network.
The Board is aware of the need to represent all
shareholders and to avoid conflicts of interest.
Where there is a conflict of interest or the
potential appearance of a conflict, affected
Directors do not participate in the decision
making process or vote on such matters. All
commercial agreements with related parties are
negotiated on arms’ length terms. Further
information about the Company’s related party
transactions is set out in note 30 to the Financial
Statements.
Business risk
The Board acknowledges its responsibility for risk
oversight and ensuring that significant business
risks are appropriately managed, whilst
acknowledging that such risks may not be wholly
eliminated. Company management is ultimately
responsible and accountable for managing risk
across the business, supported by the risk
management function, which provides
independent reports to the Audit Committee. The
risk management function ensures that adequate
mechanisms are in place to identify, assess and
manage strategic, financial, operational and
regulatory risks and that corporate performance
is reviewed across a broad range of issues. The
Audit Committee has been delegated
responsibility as the primary body for risk
oversight and for ensuring that appropriate risk
management policies, systems and resources
are in place. Details of the Company’s risk
management policy and internal compliance
and control system are available on the
Company’s website.
Ethical standards
As the Company grows, the need to ensure that a
strong ethical culture within Hutchison has lead
to greater emphasis on the development of a
strong culture designed to ensure that all
Directors, managers and employees act with the
utmost integrity and objectivity in their dealings
with all people that they come in contact with
during their Hutchison working life. A corporate
code of conduct, based upon the existing
corporate values, assists in maintaining this
culture. This code applies to all Directors and
employees and compliance with the values
underlying the Company’s culture forms part of
the performance appraisal of senior employees
and sales managers. Details of this code are
available on the Company’s website.
Directors’ and senior executives’
dealings in HTAL shares
The Company requires that:
•
•
Directors discuss any proposed trade in
HTAL shares with the Chairman prior to
any trade;
Senior executives discuss any proposed
trade in shares with the Company Secretary
or the Chief Executive Officer prior to any
trade.
Unless there are unusual circumstances, trades in
HTAL shares by Directors and senior executives
are limited to the period of one month after the
release of the Company’s half year and annual
results to the Australian Securities Exchange and
from the lodgement of the Company’s annual
report with the Australian Securities Exchange up
to one month after the annual general meeting
of HTAL.
Directors and senior executives are prohibited
from trading in HTAL shares if the Director or
officer is in possession of price sensitive
information or would be trading for a short term
gain. All managers within Hutchison have also
been advised of their obligations in regard to
price sensitive information. Directors and senior
executives are also aware of their obligations to
ensure that they do not communicate price
sensitive information to any other person who is
likely to buy or sell HTAL shares or communicate
that information to another party.
The Company’s existing practices are documented
in a code, details of which are available on the
Company’s website.
Continuous disclosure and
shareholder communication
The Board strongly believes that the Company’s
shareholders should be fully informed of all
material matters that affect Hutchison in
accordance with its continuous disclosure
obligations. Financial reports and other significant
information are available on the Company’s
website for access by its shareholders and the
broader community. Procedures are in place to
review whether any price sensitive information
has been inadvertently disclosed in any forum,
and if so, this information is immediately
released to the market. The Company Secretary
resident in Australia has been appointed as the
person responsible for communications with the
Australian Securities Exchange.
The Company seeks to enhance its
communication with shareholders through the
introduction of new types of communication
through cost effective electronic means, and the
provision of significant information in addition to
the reports required by legislation.
The Company’s existing practices on information
disclosure are documented in a policy, details of
which are available on the Company’s website.
Annual Report 2007
31
Directors’ Report
The Directors are pleased to present their report
on the consolidated entity (“Hutchison”)
consisting of Hutchison Telecommunications
(Australia) Limited (“HTAL” or “Company”) and
the entities it controlled at the end of or during
the year ended 31 December 2007.
Principal activities
During the year, Hutchison’s principal activities
included the ownership and operation of
Australia’s first W-CDMA, third generation (3G)
mobile network (branded “3”) across the five
mainland capital cities and national capital
Canberra; and a national paging and
messaging service.
In December 2004, a controlled entity,
Hutchison 3G Australia Pty Limited, signed an
agreement with Telstra Corporation Limited for
the joint ownership and operation of its W-CDMA
radio access network. Both companies continue
to operate other network assets and retail
operations separately under different brands.
Dividends
No dividend was declared or paid during
the year.
Review of operations
Comments on the operations of Hutchison,
results of those operations, the Company’s
business strategies and its prospects for future
years are contained in pages 1 to 20 of this
report. Details of the financial position of the
Company are contained in pages 41 to 82 of
this report.
Significant changes in the state
of affairs
Significant changes in the state of affairs of the
Consolidated Entity during the financial year
were as follows:
2007
$’000
13,950
13,950
2,850,227
316,692
(7,625)
3,159,294
(a) Issue of 75,402,826 fully paid ordinary shares at $0.185 each to purchase the minority interests
from Telecom Corporation of New Zealand Ltd (“TCNZ”)
for 19.94% interest in Hutchison 3G Australia Holdings Pty Ltd
Net increase in share capital
(b) Issue of 13,572,508,580 convertible preference shares at $0.21 each pursuant to a rights issue
Issue of 1,508,056,509 convertible preference shares at $0.21 each to purchase the minority
interests from TCNZ for 19.94% interest in Hutchison 3G Australia Holdings Pty Ltd
Less: transaction costs
Net increase in convertible preference share capital
Matters subsequent to the end
of the financial year
No other matter or circumstance has arisen since
31 December 2007 that has significantly affected,
or may significantly affect:
•
•
•
Hutchison’s operations in future financial
years;
the results of those operations in future
financial years; or
Hutchison’s state of affairs in future
financial years.
Likely developments and
expected results of operations
Other than as set out in the Review of Operations
on pages 12 to 20 of this report, further
information on business strategies and the future
prospects of the Company have not been
included in this report because the Directors
believe that it would be likely to result in
unreasonable prejudice to Hutchison.
Environmental regulation
Hutchison’s operations and business activities are
subject to environmental regulations under both
Commonwealth and State legislation and the
requirements of the Telecommunications Act
1997, particularly with regard to:
•
•
•
the impact of the construction, maintenance
and operation of transmission facilities;
site contamination; and
waste management.
Hutchison has adopted an environmental policy
which includes clearly defined accountability and
responsibility for compliance with legislation and
for achieving specific environmental
management objectives. The Directors are not
aware of any material breaches of environmental
regulations.
Hutchison’s risk review and audit program is
designed to ensure that Hutchison meets its
obligations under current legislation.
Directors
The following persons were Directors of
HTAL during the whole of the year ended
31 December 2007 and up to the date of
this report:
FOK Kin-ning, Canning
Barry ROBERTS-THOMSON
CHOW WOO Mo Fong, Susan
Justin Herbert GARDENER
LAI Kai Ming, Dominic
John Michael SCANLON
Frank John SIXT
Mr Marko BOGOIEVSKI was appointed as a
Director on 19 October 2007 and resigned
on 31 January 2008.
Mr Kevin Steven RUSSELL was appointed as a
Director on 19 October 2007 and continues in
office at the date of this report.
Mr Roderick James SNODGRASS was appointed as
a Director on 15 February 2008 and continues in
office at the date of this report.
Further information on the Directors is set out on
pages 26 to 28.
32
Hutchison Telecommunications (Australia) Limited
Director
Fok Kin-ning, Canning
Barry Roberts-Thomson
Other Responsibilities
Particulars of Directors’ Interests in shares,
convertible preference shares and options of HTAL
Convertible
Preference Shares
Ordinary Shares
5,100,000*
Non-executive Chairman,
Chairman of Governance, Nomination and Compensation Committee
Deputy Chairman
83,916,297**
Chow Woo Mo Fong, Susan
Member of Governance, Nomination and Compensation Committee
Justin Herbert Gardener
Lai Kai Ming, Dominic
Kevin Steven Russell
John Michael Scanlon
Frank John Sixt
Roderick James Snodgrass
Direct holding of 100,000 shares only
*
** Direct holding of 2,500 shares only
Member of Governance, Nomination and Compensation Committee
and Chairman of Audit Committee
-
-
Member of Audit Committee
Member of Audit Committee
-
-
602,858
-
-
-
1,000,000
-
-
2,400
-
150,000
-
-
-
-
-
Note:
Fok Kin-ning, Canning, holds a relevant interest in (i) 4,310,875 ordinary shares of HWL, a related body corporate of HTAL; (ii) 5,000,000 ordinary shares of
HHR, a related body corporate of HTAL; (iii) a nominal amount of USD2,500,000 in the 6.50% Notes due 2013 issued by Hutchison Whampoa International
(03/13) Limited, a related body corporate of HTAL; (iv) a nominal amount of USD2,500,000 in the 6.25% Notes due 2014 issued by Hutchison Whampoa
International (03/33) Limited (“HWI 03/33”), a related body corporate of HTAL; (v) a nominal amount of USD2,500,000 in the 5.45% Notes due 2010 issued
by HWI 03/33; (vi) a nominal amount of USD2,000,000 in the 7.45% Notes due 2033 issued by HWI 03/33; (vii) 1,202,380 ordinary shares of HTIL, a related
body corporate of HTAL; and (viii) 225,000 American Depository Shares (each representing one ordinary share) of Partner.
Chow Woo Mo Fong, Susan holds a relevant interest in 150,000 ordinary shares of HWL and 250,000 ordinary shares of HTIL.
Lai Kai Ming, Dominic holds a relevant interest in 50,000 ordinary shares of HWL.
Frank John Sixt holds a relevant interest in (i) 50,000 ordinary shares of HWL; (ii) one ordinary share of Colonial Nominees Limited, a related body corporate
of HTAL, on behalf of Hutchison International Limited; and (iii) 17,000 American Depository Shares (each representing 15 ordinary shares) of HTIL.
Meetings of Directors
The number of meetings of HTAL’s Board of Directors and each of the Board committees held during the year ended 31 December 2007, and the number of
meetings attended by each Director were:
Board Meetings
held during the
period as director
Board Meetings
attended
Audit
Committee
Meetings held
during the period
as member of
Committee
Governance,
Nomination and
Compensation
Committee
Meetings held
Committee during the period
as member of
the Committee
Meetings
attended
Audit
Fok Kin-ning, Canning
Barry Roberts-Thomson
Marko Bogoievski*^
Chow Woo Mo Fong, Susan
Lai Kai Ming, Dominic
Justin Herbert Gardener
Kevin Steven Russell*
John Michael Scanlon
Frank John Sixt
* Appointed as Director on 19 October 2007
^ Resigned as Director on 31 January 2008
23
23
2
23
23
23
2
23
23
23
23
2
23
23
23
2
23
23
N/A
N/A
N/A
N/A
N/A
4
N/A
4
4
N/A
N/A
N/A
N/A
N/A
4
N/A
4
2
2
N/A
N/A
2
N/A
2
N/A
N/A
N/A
Governance,
Nomination and
Compensation
Committee
Meetings
attended
2
N/A
N/A
2
N/A
2
N/A
N/A
N/A
Annual Report 2007
33
Directors’ Report continued
Retirement, election and
continuation in office of
Directors
Mr Barry Roberts-Thomson is a Director retiring by
rotation in accordance with the Constitution who,
being eligible, offers himself for re-election.
Mr Lai Kai Ming, Dominic is a Director retiring by
rotation in accordance with the Constitution who,
being eligible, offers himself for re-election.
Mr Kevin Steven Russell having been appointed
since the last annual general meeting, in
accordance with the Constitution of the Company,
retires as a Director at the annual general
meeting and offers himself for re-election.
Mr Roderick James Snodgrass having been
appointed since the last annual general
meeting, in accordance with the Constitution
of the Company, retires as a Director at the
annual general meeting and offers himself for
re-election.
Company secretaries
Edith SHIH BSE, MA, MA, EdM, Solicitor,
FCS, FCIS
Ms Shih has over 10 years of experience as
company secretary in listed companies and has
been a Company Secretary of the Company
since 1999. She has been the head group
general counsel of HWL since 1993 and its
company secretary since 1997. She is also an
executive director and the company secretary of
HHR, a non-executive director and the company
secretary of Hutchison China MediTech Limited
and joint company secretary of Partner. In
addition, she is also a director and company
secretary of various HWL group companies. She
holds a Bachelor of Science degree in Education
and a Master of Arts degree from the University
of the Philippines, a Master of Arts degree and a
Master of Education degree from Columbia
University, New York. She is a qualified solicitor
in Hong Kong, England and Wales and Victoria,
Australia; and is also a Fellow of both The
Institute of Chartered Secretaries and
Administrators and The Hong Kong Institute of
Chartered Secretaries.
Louise SEXTON BA, LLM, MBA (Exec)
Ms Sexton has over 14 years' experience as
company secretary in listed companies and has
been a Company Secretary of the Company
since 1999. She is also General Counsel of the
Company. She holds a Bachelor of Arts degree
and a Master of Laws degree from the University
of Sydney and an Executive Master of Business
Administration degree from the Australian
Graduate School of Management. Ms Sexton
has practiced as a solicitor since 1983 with
experience in government, private practice and
in-house corporate practice.
Remuneration report
Compensation philosophy and
practice
The Governance, Nomination and Compensation
Committee is responsible for making
recommendations to the Board on
compensation policies and packages for all staff,
including Board members and key management
personnel of Hutchison. The Company’s
compensation policy is designed to ensure that
remuneration strategies are competitive,
innovative and support the business objectives.
Hutchison is committed to ensuring it has
compensation arrangements
that reflect individual performance, overall
contribution to the business and developments
in the external market. Remuneration and other
terms of employment for certain key
management personnel are formalised in service
agreements. Further details are included in the
Corporate Governance Statement.
Principles used to determine the
nature and amount of remuneration
The Company’s compensation policy is designed
to ensure that remuneration strategies are
competitive, innovative and support the business
objectives. The Company is committed to
ensuring it has compensation arrangements that
reflect individual performance, overall
contribution to the business and developments
in the external market. Remuneration packages
generally involve a balance between fixed and
performance based components, the latter being
assessed against objectives which include both
company and job specific financial and non-
financial measures.
Directors' fees
The remuneration of the non-executive and
independent Directors, J Gardener and J Scanlon,
comprised of a fixed amount only and was not
performance based. The non-executive and non-
independent Directors, C Fok, M Bogoievski,
S Chow, F Sixt, D Lai and K Russell, did not
receive any remuneration for their services as
Directors. The executive and non-independent
Director, B Roberts-Thomson, did not receive any
remuneration for his service as a Director.
Retirement allowances for Directors
No retirement allowances are payable to non-
executive Directors.
34
Hutchison Telecommunications (Australia) Limited
Name
N Dews
Key management personnel
In addition to the Directors listed on page 26-28,
the following persons were the key
management personnel having authority and
responsibility for planning, directing and
controlling the activities of the Company:
Position
Employer
Chief Executive Officer
T Finlayson
Chief Financial Officer
N Hamill
M Young
Director, Sales,
Marketing and Product
Director, Technology,
Infrastructure and Services
HTAL
HTAL
HTAL
HTAL
N Dews was appointed as Chief Executive Officer on 8
January 2007. N Hamill was appointed as Director, Sales,
Marketing and Product on 10 May 2007.
Key management personnel pay
The key management personnel pay and reward
framework has four components:
•
•
•
•
base pay and benefits;
short-term performance incentives;
long-term incentives through participation
in the HTAL Executive Option Plan; and
other remuneration such as
superannuation.
The combination of these comprises the key
management personnel's total remuneration.
Base pay
Base pay is structured as a total employment
cost package which may be delivered as a mix
of cash and prescribed non-financial benefits at
the key management personnel's discretion. Key
management personnel are offered a
competitive base pay that comprises the fixed
component of pay and rewards. Base pay for
key management personnel is reviewed
annually to ensure the key management
personnel's pay is competitive with the market.
A key management personnel's pay is also
reviewed on promotion. There is no guaranteed
base pay increases fixed in any key
management personnel's contract.
Benefits
Motor vehicles are provided to certain key
management personnel as part of their
salary package.
Retirement benefits
Retirement benefits are delivered under the
Retail Employees Superannuation Trust
(Acumen). This fund is a defined contribution
fund and is based on employer and employee
contributions made to the fund.
Short-term incentives
Short-term incentive components of the remuneration package are assessed against objectives which include both company and job specific financial and
non-financial measures for each key management personnel. These measures may include financial, customer service, product management, risk
management and individual measures that support key company objectives.
Each key management personnel has a target short-term incentive, the level of which is set depending on the accountabilities of the role and impact on
organisation or business unit performance. If achieved, at the discretion of the Board, short-term incentive bonuses are paid in cash in December each year.
Each year, the Governance, Nomination and Compensation Committee considers the appropriate target levels and financial and non-financial measures of
performance to link to the short-term incentives. This includes setting any maximum amount for incentives, and minimum levels of performance to trigger
payment of the incentives.
Details of remuneration
Details of the remuneration of each Director of HTAL and each of the key management personnel of the Company, including their personally-related entities,
are set out in the following tables.
Directors of HTAL
2007
Name
C Fok
B Roberts-Thomson
J Gardener
D Lai
M Bogoievski*^
S Chow
K Russell*
J Scanlon
F Sixt
Total
Short-term benefits
Non-monetary
Post –
employment
benefits
Share based
benefits
Cash salary and fees
$
Cash bonus
$
benefits Superannuation
$
$
Options
$
-
400,000
50,000
-
-
-
-
50,000
-
500,000
-
-
-
-
-
-
-
-
-
-
-
40,897
-
-
-
-
-
-
-
40,897
-
12,908
4,500
-
-
-
-
4,500
-
21,908
-
-
-
-
-
-
-
-
-
-
* Mr Bogoievski and Mr Russell were appointed as Directors on 19 October 2007
^ Mr Bogoievski resigned as a Director on 31 January 2008.
Total remuneration of Directors for the year ended 31 December 2006 is set out below.
2006
Name
C Fok
B Roberts-Thomson
J Gardener
D Lai
D Lui*
S Chow*
J Scanlon
F Sixt
Total
Short-term benefits
Post –
employment
benefits
Share based
benefits
Non-monetary
Cash bonus
$
benefits Superannuation
$
$
Options
$
-
-
-
-
-
-
-
-
-
-
41,065
-
-
-
-
-
-
41,065
-
12,413
4,500
-
-
-
4,500
-
21,413
-
-
-
-
-
-
-
-
-
Cash salary
and fees
$
-
400,000
50,000
-
-
-
50,000
-
500,000
* Mrs Chow was appointed as a Director on 15 February 2006 and Mr Lui resigned as a Director on 15 February 2006.
Total
$
-
453,805
54,500
-
-
-
-
54,500
-
562,805
Total
$
-
453,478
54,500
-
-
-
54,500
-
562,478
Annual Report 2007
35
Directors’ Report continued
Key management personnel and other executives of the Company
2007
Short-term benefits
Post -
Employment
benefits
Long-term
payments
Share-based
benefits
Cash salary
and fees
$
Cash bonus
$
Non-monetary
benefits
$
Super-
annuation
$
Long service
leave
$
780,000
720,000
377,500
368,000
375,000
200,000
330,000
270,000
150,000
138,000
117,118
83,000
80,053
62,572
5,053
5,053
5,053
5,053
2,820,500
1,088,118
162,837
12,908
12,908
12,908
12,908
12,908
9,736
74,276
Options
$
111,498
46,589
35,024
26,969
26,969
30,909
Total
$
1,342,219
1,144,376
592,285
563,357
545,221
343,923
107,692
277,958
4,531,381
^ Denotes one of the 5 highest paid executives of the Company, as required to be disclosed under Corporations Act 2001.
Total remuneration of key management personnel for the year ended 31 December 2006 is set out below.
Short-term benefits
Post-
Employment
benefits
Long-term
payments
Share-based
benefits
Cash salary
and fees
$
Cash bonus
$
Non-monetary
benefits
$
Super-
annuation
$
Long service
leave
$
831,701
497,892
338,204
239,793
502,757
685,000
190,000
180,000
82,845
190,000
2,410,347
1,327,845
57,658
5,053
5,053
5,053
5,053
77,870
12,413
12,413
12,413
12,413
12,413
62,065
Name
N Dews ^
M Young ^
T Finlayson ^
G Bourke ^
L Sexton ^
N Hamill
Total
2006
Name
K Russell
N Dews
D Dyson
T Finlayson
M Young
Total
27,760
32,307
11,800
12,427
8,173
15,225
14,061
8,909
6,484
9,246
9,726
Options
$
183,643
64,275
-
18,007
64,275
Total
$
1,784,476
778,542
542,154
367,357
784,224
48,427
330,200
4,256,754
Options are granted under the plan for no
consideration. Options granted under the plan
carry no dividend or voting rights. When
exercisable, each option is convertible into one
ordinary share.
The exercise price of options is the higher of the
following:
(a)
(b)
the closing price of the options of HTAL
shares on the Australian Securities
Exchange on the day on which the options
are granted; and
the average closing price of HTAL shares
for the five trading days immediately
preceding the day on which the options
are granted.
Options held in 2006 and prior years were
cancelled in March 2007. Options granted on 14
June 2007 will expire on 13 June 2012. The
options have an exercise price of $0.145 and the
value per option at grant date was $0.04. The
options are exercisable, subject to meeting
performance hurdles on the following dates:
•
•
•
1/3rd on or after 1 July 2008
1/3rd on or after 1 January 2009
1/3rd on or after 1 January 2010
Service agreements
Remuneration and other terms of employment
for the Chief Executive Officer, Chief Financial
Officer and the other key management
personnel are formalised in service agreements.
Each of these agreements provide for the
provision of performance related cash bonuses.
A target bonus is set for each key management
personnel and the amount paid can be lower or
higher than the target. The payment of any
bonus is at the absolute discretion of the Board.
The bonus is based on both company and
personal performance goals. The key
management personnel, when eligible, can
participate in the HTAL Employee Option Plan.
The Chief Executive Officer and the Director,
Technology and Customer Services are provided
with a non-cash benefit in the provision of a
motor vehicle and all the key management
personnel are provided with car parking. The
service agreements for all key management
personnel are for no fixed term and upon early
termination, other than for gross misconduct, N
Dews was entitled to 6 months base salary, M
Young and N Hamill 3 month base salary and T
Finlayson 1 month base salary. Remuneration is
reviewed annually by the Governance,
Nomination and Compensation Committee.
Share-based compensation
Options are granted to Directors and executives
under the HTAL Employee Option Plan which
was approved by the Board on 4 June 2007. All
permanent full-time, permanent part-time and
casual employees who have been selected by
the Board to receive an invitation or who have
been approved for participation in the plan are
eligible to participate in the plan.
36
Hutchison Telecommunications (Australia) Limited
Details of options over ordinary shares in the Company provided as remuneration to each of the key management personnel of the Company are shown
above, in the key management personnel remuneration table. When exercisable, each option is convertible into one ordinary share of HTAL. No options
vested during the year.
No ordinary shares were issued on the exercise of options during the year to any of the Directors or key management personnel.
Options holdings
The number of options over ordinary shares in the Company held during the financial year by each of the key management personnel of the Company,
including their personally-related entities, are set out below.
Key management personnel of the Company
Name
N Dews
T Finlayson
N Hamill
M Young
Balance at the
start of the year
Granted during
the year as
remuneration
Exercised
during
the year
Expired during
the year
1,050,000
250,000
-
1,050,000
6,700,000
2,000,000
2,000,000
2,500,000
2,350,000
13,200,000
-
-
-
-
-
1,050,000
250,000
-
1,050,000
2,350,000
13,200,000
Balance
at the end
of the year
6,700,000
2,000,000
2,000,000
2,500,000
Vested and
exercisable at
the end of
the year
-
-
-
-
-
No Directors were issued options during the year or hold options over the ordinary shares of the Company. No options are vested and unexercisable at the
end of the year.
No Option are vested and unexercisable at the end of the year.
Share holdings
The number of shares in the Company held during the financial year by each Director and each of the key management personnel of the Company, including
their personally-related entities, are set out below.
Directors of HTAL
Ordinary shares
Name
C Fok
B Roberts-Thomson
M Bogoievski
S Chow
J Gardener
D Lai
K Russell
J Scanlon
F Sixt
*
Direct holding of 100,000 shares only
** Direct holding of 2,500 shares only
Key management personnel of the Company
Ordinary shares
Name
N Dews
T Finlayson
N Hamill
M Young
Balance at the
start of the year
Received during
the year on the
exercise of options
Other changes
during the year
Balance at the
end of the year
5,100,000
83,961,247
-
-
102,858
-
850,000
-
1,000,000
-
-
-
-
-
-
-
-
-
-
5,100,000*
(44,950)
83,916,297**
-
-
500,000
-
(850,000)
-
-
-
-
602,858
-
-
-
1,000,000
Balance at the
start of the year
Received during
the year on the
exercise of options
Other changes
during the year
Balance at the
end of the year
70,461
112,671
-
-
-
-
-
-
140,425
-
-
-
210,886
112,671
-
-
Annual Report 2007
37
Directors’ Report continued
Convertible preference shares
The number of convertible preference shares in the Company held during the financial year by each Director and each of the key management personnel of
the Company, including their personally-related entities, are set out below.
Directors of HTAL
Convertible preference shares
Name
C Fok
B Roberts-Thomson
M Bogoievski
S Chow
J Gardener
D Lai
K Russell
J Scanlon
F Sixt
Key management personnel of the Company
Convertible preference shares
Name
N Dews
T Finlayson
N Hamill
M Young
Received during
the year on
the exercise
Other changes
of options during the year
Balance at the
start of the year
Balance at the
end of the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,400
-
-
-
2,400
-
-
150,000
150,000
-
-
-
-
-
-
-
-
Received during
the year on
the exercise
Other changes
of options during the year
Balance at the
start of the year
Balance at the
end of the year
-
-
-
-
-
-
-
-
23,000
2,400
-
-
23,000
2,400
-
-
Shares under option
Unissued ordinary shares of HTAL under option issued pursuant to the HTAL Employee Option Plan at the date of this report are as follows:
Grant Date
14 June 2007
14 November 2007
Expiry date
13 June 2012
13 June 2012
Issue price
of shares
$0.145
$0.200
Number
28,920,000
300,000
No option holder has any right under the options to participate in any other share issue of HTAL or of any other entity.
Shares issued on the exercise of options
No ordinary shares of HTAL were issued during the year ended 31 December 2007 or up to the date of this report on the exercise of options granted under
the HTAL Executive Option Plan or the HTAL Employee Option Plan.
Loans to Directors and key management personnel
There were no loans made to the Directors or to the key management personnel of the Company, including their personally related entities during the years
ended 31 December 2007 and 31 December 2006.
Other transactions with Directors and key management personnel
There were no other transactions with Directors and the key management personnel for the years ended 31 December 2007 and 31 December 2006.
38
Hutchison Telecommunications (Australia) Limited
Non-audit services
HTAL may decide to employ the auditor,
PricewaterhouseCoopers, on assignments
additional to their statutory audit duties
where the auditor’s expertise and experience
with the Company are important.
The Board of Directors, in accordance with the
advice received from the Audit Committee is
satisfied that the provision of the non-audit
services is compatible with the general
standard of independence for auditors imposed
by the Corporations Act 2001. The Directors
are satisfied that the provision of non-audit
services by the auditor, did not compromise
the auditor independence requirements of
the Corporations Act 2001 for the following
reasons:
•
•
all non-audit services have been reviewed
by the Audit Committee to ensure they do
not impact the integrity and objectivity of
the auditor; and
none of the services undermine the
general principles relating to auditor
independence as set out in Professional
Statement F1, including reviewing or
auditing the auditor’s own work, acting in
a management or a decision-making
capacity for the Company, acting as
advocate for the Company or jointly
sharing economic risk and rewards.
Details of the amounts paid to
PricewaterhouseCoopers for audit and non-
audit services provided during the year are set
out in note 27, Remuneration of auditors, on
page 71 of this report.
A copy of the auditors’ independence
declaration as required under section 307C of
the Corporations Act 2001 is set out on
page 40.
Directors’ and officers’ liability
insurance
During the financial year, HWL paid a premium
to insure the Directors and officers of Hutchison
against loss or liability arising out of a claim for
a wrongful act, including any costs, charges and
expenses that may be incurred in defending
any actions, suits, proceedings or claims.
Proceedings on behalf of HTAL
No person has applied to the Court under
section 237 of the Corporations Act 2001
for leave to bring proceedings on behalf of
HTAL, or to intervene in any proceedings to
which HTAL is a party, for the purpose of taking
responsibility on behalf of HTAL for all or part
of those proceedings.
No proceedings have been brought or
intervened in on behalf of HTAL with leave
of the Court under section 237 of the
Corporations Act 2001.
Rounding of amounts to
nearest thousand dollars
Hutchison is a company of a kind referred to in
Class Order 98/0100 issued by the Australian
Securities and Investments Commission,
relating to the “rounding off” of amounts in the
Directors’ report. Where noted, amounts in the
Directors’ report and financial report have been
rounded off to the nearest thousand dollars in
accordance with that Class Order, or in certain
cases to the nearest dollar.
Auditor
PricewaterhouseCoopers continues in office
in accordance with section 327 of the
Corporations Act 2001.
This report is made in accordance with a
resolution of the Directors.
Fok Kin-ning, Canning
Chairman
Frank Sixt
Director
25 February 2008
Annual Report 2007
39
Auditors’ Independence
Declaration
PricewaterhouseCoopers
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Australia
www.pwc.com/au
Telephone +61 2 8266 0000
Facsimile +61 2 8266 9999
As lead auditor for the audit of Hutchison Telecommunications (Australia) Limited for the year ended 31 December 2007, I declare that to the best of my
knowledge and belief, there have been:
a)
b)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Hutchison Telecommunications (Australia) Limited and the entities it controlled during the period.
PricewaterhouseCoopers
RL Wilkie
Partner
Sydney
25 February 2008
Liability limited by a scheme approved under Professional Standards Legislation
40
Hutchison Telecommunications (Australia) Limited
Financial Report
for the year ended 31 December 2007
Contents
Income Statements
Balance Sheets
Statements of Changes in Equity
Cash Flow Statements
Notes to the Financial Statements
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
Summary of significant accounting policies
Revenue
Other income
Expenses
Income tax expense
Current assets – Cash and cash equivalents
Current assets – Receivables
Current assets – Inventories
Current assets – Other
Non-current assets – Receivables
Non-current assets – Investment accounted for using the equity method
Non-current assets – Other financial assets
Non-current assets – Property, plant and equipment
Non-current assets – Intangible assets
Non-current assets – Other
Current liabilities – Payables
Current liabilities – Borrowings
Current liabilities – Provisions
Derivative financial instruments
Current liabilities – Other
Non-current liabilities – Borrowings
Non-current liabilities – Provisions
Contributed equity
Reserves and accumulated losses
Minority interest
Director and key management personnel disclosures
Remuneration of auditors
Contingencies
Commitments
Related party transactions
Subsidiaries
Interest in join ventures
Segment information
Reconciliation of loss after income tax to net cash outflows from operating activities
Non-cash investing and financing activities
Earnings per share
Share-based payments
Critical accounting estimates and judgements
Revision of accounting estimates
Events occurring after the balance sheet date
Financial Risk Management
Directors’ Declaration
Independent Auditor’s Report
42
43
44
45
46
51
51
52
53
53
54
55
55
56
57
57
58
59
61
61
62
62
63
63
64
66
67
69
70
70
71
72
72
73
75
76
77
77
77
78
79
80
81
81
81
83
84
Annual Report 2007
41
Income Statements
for the year ended 31 December 2007
Revenue from continuing operations
Cost of interconnection and variable content costs
Other direct costs of provision of telecommunication services and goods
Cost of handsets sold
Employee benefits expense
Advertising and promotion expenses
Other operating expenses
Other income
Share of net profits of joint venture partnership accounted for using the equity method
CDMA network closure costs
Capitalisation of customer acquisition and retention costs
Depreciation expense
Amortisation expense
Finance costs
(Loss) / profit before income tax
Income tax expense
(Loss) / profit for the year
Net (loss) / profit attributable to minority interest
Consolidated
Parent Entity
Notes
2007
$'000
2006
$'000
2007
$'000
2
1,318,692
1,058,734
121,850
(260,081)
(403,679)
(338,587)
(114,509)
(52,625)
(87,307)
4,373
1,365
-
46,324
(130,333)
(107,579)
(161,160)
(285,106)
-
(221,016)
(334,082)
(250,100)
(111,338)
(55,277)
(77,559)
1,971
670
(307,926)
18,242
(129,818)
(87,088)
(264,836)
(759,423)
-
3
4
4
4
4
5
(1,193)
(8,635)
-
(2,006)
(523)
(5,209)
287
-
-
-
-
(5,594)
(38,897)
60,080
-
2006
$'000
91,825
(14,356)
(30,715)
(7,854)
(8,118)
(686)
(5,302)
148
-
(203,980)
17
-
(5,424)
(100,342)
(284,787)
-
(285,106)
(759,423)
60,080
(284,787)
-
-
-
-
Net (loss) / profit for the year attributable to members of Hutchison
Telecommunications (Australia) Limited
24
(285,106)
(759,423)
60,080
(284,787)
Earnings per share for loss from continuing operations attributable
to the ordinary equity holders of the company:
Basic earnings per share
Diluted earnings per share
Earnings per share for loss attributable to
the ordinary equity holders of the company:
Basic earnings per share
Diluted earnings per share
The above income statements should be read in conjunction with the accompanying notes.
Cents
Cents
(41.25)
(41.25)
(111.91)
(111.91)
(41.25)
(41.25)
(111.91)
(111.91)
36
36
36
36
42
Hutchison Telecommunications (Australia) Limited
Balance Sheets
as at 31 December 2007
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Total Current Assets
Non-Current Assets
Receivables
Investment accounted for using the equity method
Other financial assets
Property, plant and equipment
Intangible assets
Other
Total Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Payables
Borrowings
Provisions
Derivative financial instruments
Other
Total Current Liabilities
Non-Current Liabilities
Borrowings
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets / (Liabilities)
EQUITY
Contributed equity
Reserves
Accumulated losses
Parent entity interest
Minority interest
Total Equity
The above balance sheets should be read in conjunction with the accompanying notes.
Consolidated
Parent Entity
Notes
2007
$'000
2006
$'000
2007
$'000
2006
$'000
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
24
25
34,894
313,858
106,838
15,788
471,378
177,169
2,035
-
1,015,906
989,296
3,196
23,593
207,322
64,593
20,948
316,456
6,973
308,573
69
2,523
318,138
7,049
37,243
112
5,188
49,592
103,843
1,443,882
391,799
670
-
946,114
706,020
3,565
-
-
1,649,418
1,318,776
29
41,138
-
29
32,842
-
2,187,602
1,760,212
3,134,467
1,743,446
2,658,980
2,076,668
3,452,605
1,793,038
474,776
301,784
2,453
-
8,478
300,017
750,788
1,072
311
7,756
22,388
199,981
2,396
-
5,344
63,193
598,810
1,072
-
3,464
787,491
1,059,944
230,109
666,539
800,028
1,691
801,719
2,846,619
1,504
2,848,123
-
1,691
1,691
1,150,233
1,504
1,151,737
1,589,210
3,908,067
231,800
1,818,276
1,069,770
(1,831,399)
3,220,805
(25,238)
4,204,488
1,031,244
4,204,488
1,031,244
69,755
56,724
(3,204,473)
(2,919,367)
14,868
(998,551)
2,148
(1,058,630)
1,069,770
(1,831,399)
3,220,805
(25,238)
-
-
-
-
1,069,770
(1,831,399)
3,220,805
(25,238)
Annual Report 2007
43
Statements of Changes in Equity
for the year ended 31 December 2007
Balance at 1 January 2007
Changes in the fair value of cash flow hedges, net of tax
Net income recognised directly in equity
(Loss) / profit for the year
Total recognised income and expense for the year
Transactions with equity holders in their capacity as equity holders:
Contribution to equity, net of transaction costs
Employee share options - value of employee services
Share based payment - spectrum licence
Subtotal
Balance at 31 December 2007
Notes
24
23
24
24
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
(1,831,399)
(1,071,847)
(25,238)
259,367
311
311
(285,106)
(284,795)
3,173,244
(417)
13,137
3,185,964
(311)
(311)
(759,423)
(759,734)
-
182
-
182
-
-
60,080
60,080
3,173,244
(417)
13,137
3,185,964
-
-
(284,787)
(284,787)
-
182
-
182
1,069,770
(1,831,399)
3,220,805
(25,238)
Total recognised income and expense for the year is attributable to:
Members of Hutchison Telecommunications (Australia) Limited
(284,795)
(759,734)
60,080
(284,787)
Minority interest
-
-
-
-
(284,795)
(759,734)
60,080
(284,787)
The above statements of changes in equity should be read in conjunction with the accompanying notes.
44
Hutchison Telecommunications (Australia) Limited
Cash Flow Statements
for the year ended 31 December 2007
Consolidated
Parent Entity
Cash Flows from Operating Activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Rental income
Finance costs paid
Net cash outflows from operating activities
Cash Flows from Investing Activities
Payments for property, plant and equipment
Loans to joint venture
Loans to subsidiaries
Payments for intangible assets
Net cash outflows from investing activities
Cash Flows from Financing Activities
Proceeds from issues of shares and other equity securities
Proceeds from borrowings
Repayment of borrowings -medium term notes
Repayment of borrowings -bank loans
Repayment of borrowings -convertible notes
Repayment of borrowings -related parties
Repayment of borrowings -parent entity
Repayment of finance lease
Net cash inflows from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Non-cash investing and financing activities
The above cash flow statements should be read in conjunction with the accompanying notes.
34
23
21
21
35
Notes
2007
$'000
2006
$'000
1,352,399
(1,200,021)
1,142,310
(1,275,549)
152,378
(133,239)
4,182
740
(198,738)
(41,438)
(173,977)
(66,756)
-
828
520
(222,929)
(354,820)
(151,551)
(48,595)
2007
$'000
24,658
(48,142)
(23,484)
19,319
503
(55,983)
(59,645)
2006
$'000
136,374
(109,838)
26,536
7,031
226
(96,489)
(62,696)
-
-
(3,480)
-
-
(1,233,058)
(268,920)
(47,077)
(18,242)
(753)
(17)
(287,810)
(218,388)
(1,233,811)
(272,417)
2,842,602
266,409
-
(950,000)
(598,810)
(1,020,821)
(196,000)
(2,831)
340,549
11,301
23,593
34,894
-
904,412
(425,000)
-
-
-
-
(3,061)
2,842,602
266,409
-
-
(598,810)
(1,020,821)
(196,000)
-
-
754,412
(425,000)
-
-
-
-
-
476,351
1,293,380
329,412
(96,857)
120,450
23,593
(76)
7,049
6,973
(5,701)
12,750
7,049
Annual Report 2007
45
Notes to the Financial Statements
1 Summary of significant
accounting policies
The principal accounting policies adopted in the
preparation of the financial report are set out
below. These policies have been consistently
applied to all the years presented, unless
otherwise stated. The financial report includes
separate financial statements for Hutchison
Telecommunications (Australia) Limited as an
individual entity and the consolidated entity
consisting of Hutchison Telecommunications
(Australia) Limited and its subsidiaries (“the
Consolidated Entity”).
(a) Basis of preparation
This general purpose financial report has
been prepared in accordance with Australian
equivalents to International Financial Reporting
Standards (AIFRS), other authoritative
pronouncements of the Australian
Accounting Standards Board, Urgent
Issues Group Interpretations and the
Corporations Act 2001.
Going concern disclosures
As at 31 December 2007, the Consolidated
Entity, has a deficiency of net current assets of
$316 million. The Consolidated Entity has also
experienced operating losses and negative cash
flows during the financial year ending on that
date. The financial report has been prepared on
a going concern basis because the directors
believe the Company will be successful in
refinancing current borrowings. In addition, the
Consolidated Entity's ultimate parent entity,
Hutchison Whampoa Limited, has accepted the
responsibility of providing and undertake to
provide sufficient financial assistance to the
Consolidated Entity as and when it is needed to
enable the Consolidated Entity to continue its
operations and fulfill all of its financial
obligations now and in the future. The
undertaking is provided for a minimum period
of twelve months from
26 February 2008.
Compliance with International
Financial Reporting Standards (IFRS)
Australian Accounting Standards include AIFRS.
Compliance with AIFRS ensures that the
consolidated financial statements and notes of
the Consolidated Entity comply with
International Financial Reporting Standards
(IFRS). The parent entity financial statements
and notes also comply with IFRS except that it
has elected to apply the relief provided to
parent entities in respect of certain disclosure
requirements contained in AASB 132
Financial Instruments: Presentation
and Disclosure.
Historical cost convention
These financial statements have been prepared
under the historical cost convention as
modified by the revaluation of financial assets
and liabilities (including derivative instruments)
at fair value through profit or loss.
Critical accounting estimates
The preparation of financial statements in
conformity with AIFRS requires the use of
certain critical accounting estimates. It also
requires management to exercise its
judgement in the process of applying the
Consolidated Entity’s accounting policies. The
areas involving a higher degree of judgement
or complexity, or areas where assumptions and
estimates are significant to the financial
statements, are disclosed in note 38.
(b) Principles of consolidation
The consolidated financial statements
incorporate the assets and liabilities of all
entities controlled by Hutchison
Telecommunications (Australia) Limited
("Company" or "Parent Entity") as at
31 December 2007 and the results of all
subsidiaries for the year then ended. Hutchison
Telecommunications (Australia) Limited and its
subsidiaries together are referred to in this
financial report as the Consolidated Entity.
Subsidiaries are all those entities (including
special purpose entities) over which the
Consolidated Entity has the power to govern
the financial and operating policies so as to
obtain benefits from their activities, generally
accompanying a shareholding of more than
one half of the voting rights. The existence and
effect of potential voting rights that are
currently exercisable or convertible are
considered when assessing whether the
Consolidated Entity controls another entity.
Subsidiaries are fully consolidated from the
date on which control is transferred to the
Consolidated Entity. They are de-consolidated
from the date that control ceases.
The purchase method of accounting is used to
account for the acquisition of subsidiaries by
the Consolidated Entity (refer to note 1(f)).
The effects of all transactions between entities
in the Consolidated Entity are eliminated.
Accounting policies of subsidiaries have been
changed where necessary to ensure consistency
with the policies adopted by the Group.
Minority interest in the results and equity of
subsidiaries are shown separately in the
consolidated income statement and balance
sheet respectively.
46
Hutchison Telecommunications (Australia) Limited
Investments in joint ventures are accounted for
as set out in note 1(g).
(c) Foreign currency translation
Functional and presentation
(i)
currency
Items included in the financial statements of
each of the Consolidated Entity’s subsidiaries
are measured using the currency of the
primary economic environment in which the
entity operates (‘the functional currency’). The
consolidated financial statements are
presented in Australian dollars, which is
Hutchison Telecommunications (Australia)
Limited’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated
into the functional currency using the exchange
rates prevailing at the dates of the transactions.
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 income statement, except
when deferred in equity as qualifying cash flow
hedges.
(d) Revenue recognition
Revenue is measured at the fair value of the
consideration received or receivable. Amounts
disclosed as revenue are net of returns, trade
allowances and duties and taxes paid. Revenue
is recognised for the major business activities
as follows:
(i) Sale of handsets
Revenue from sale of handsets is recognised at
the date of despatch of goods, pursuant to the
signing of the customer's contract and when all
the associated risks have passed to the
customer.
(ii) Telecommunication services
Revenue from telecommunication services is
recognised when the service has been
provided.
(iii) Interest income
Interest income is recognised on a time
proportion basis using the effective interest
method.
(e) Income tax
The income tax expense or revenue for the
period is the tax payable on the current
period’s taxable income based on the income
tax rate adjusted by changes in deferred tax
assets and liabilities attributable to temporary
differences between the tax bases of assets
and liabilities and their carrying amounts in the
financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised
for temporary differences at the tax rates
expected to apply when the assets are recovered
or liabilities are settled. The relevant tax rate is
applied to the cumulative amounts of deductible
and taxable temporary differences to measure
the deferred tax asset or liability. No deferred tax
asset or liability is recognised in relation to these
temporary differences if they arose in a
transaction, other than a business combination,
that at the time of the transaction did not affect
either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only
if it is probable that future taxable amounts will
be available to utilise those temporary
differences and losses.
Deferred tax liabilities and assets are not
recognised for temporary differences between the
carrying amount and tax bases of investments in
subsidiaries where the parent entity is able to
control the timing of the reversal of the temporary
differences and it is probable that the differences
will not reverse in the foreseeable future.
Current and deferred tax balances attributable to
amounts recognised directly in equity are also
recognised directly in equity.
Hutchison Telecommunications (Australia) Limited
and its wholly owned Australian subsidiaries have
not implemented the tax consolidation
legislation.
(f) Business combinations
The purchase method of accounting is used to
account for the acquisition of subsidiaries by the
Group. The cost of an acquisition is measured as
the fair value of the assets given, equity
instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs
directly attributable to the acquisition.
Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business
combination are measured initially at their fair
values at the acquisition date, irrespective of the
extent of any minority interest. The excess of the
cost of acquisition over the fair value of the
Group‘s share of the identifiable net assets
acquired is recorded as goodwill. If the cost of
acquisition is less than the fair value of the net
assets of the subsidiary acquired, the difference is
recognised directly in the income statement.
Jointly controlled entity
(g) Joint ventures
(i)
The interest in a joint venture entity is accounted
for using the equity method. Under this method
the share of the profits or losses of the entity is
recognised in the income statement, and the
share of the movements in reserves is recognised
in reserves in the balance sheet.
Profits or losses on transactions establishing the
joint venture entity and transactions with the
joint venture are eliminated to the extent of the
Consolidated Entity's ownership interest until such
time as they are realised by the joint venture
entity on consumption or sale, unless they relate
to an unrealised loss that provides evidence of
the impairment of an asset transferred.
(ii) Jointly controlled asset
The proportionate interests in the assets,
liabilities and expenses of a jointly controlled
asset have been incorporated in the financial
statements under the appropriate headings.
Impairment of assets
(h)
Goodwill is not subject to amortisation and is
tested for impairment annually, or more
frequently if events or changes in circumstances
indicate that it might be impaired, and is carried
at cost less accumulated impairment losses.
Other assets are reviewed for impairment
whenever events or changes in circumstances
indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for
the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less
costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the
lowest levels for which there are separately
identifiable cash inflows which are largely
independent of the cash inflows from other
assets or groups of assets (cash generating units).
Non-financial assets that suffered an impairment
are reviewed for possible reversal of the
impairment at each reporting date.
(i) Cash and cash equivalents
For cash flow statement presentation purposes,
cash and cash equivalents include cash on hand,
deposits held at call with financial institutions,
other short-term, highly liquid investments with
original maturities of three months or less that
are readily convertible to known amounts of cash
and which are subject to an insignificant risk of
changes in value, and bank overdrafts. Bank
overdrafts are shown within borrowings in
current liabilities on the balance sheet.
(j) Trade receivables
Trade receivables are recognised initially at fair
value and subsequently measured at amortised
cost, less provision for doubtful debts. Trade
receivables are generally due for settlement
within 30 days.
Collectibility of trade receivables is reviewed on
an ongoing basis. Debts which are known to be
uncollectible are written off. A provision for
doubtful receivables is established when there is
objective evidence that the Consolidated Entity
will not be able to collect all amounts due
according to the original terms of receivables. The
amount of the provision is the difference
between the asset’s carrying amount and the
present value of estimated future cash flows,
discounted at the original effective interest rate.
The amount of the provision is recognised in the
income statement.
The carrying amount of the asset is reduced
through the use of an allowance account and the
amount of the loss is recognised in the income
statement within ‘other expenses’. When a trade
receivable is uncollectible, it is written off against
the allowance account for trade receivables.
Subsequent recoveries of amounts previously
written off are credited against other expense in
the income statement.
(k) Inventories
Finished goods include handsets, devices and
accessories and are stated at the lower of cost
and net realisable value. Costs have been
assigned to inventory quantities on hand at
balance date using the first in first out method.
Costs comprise purchase price only.
(l) Derivatives
Derivatives are initially recognised at fair value on
the date a derivative contract is entered into and
are subsequently remeasured to their fair value.
The method of recognising the resulting gain or
loss depends on whether the derivative is
designated as a hedging instrument, and if so, the
nature of the item being hedged. The
Consolidated Entity designates certain derivatives
as either; (1) hedges of the fair value of
recognised assets or liabilities or a firm
commitment (fair value hedge); or (2) hedges of
highly probable forecast transactions (cash flow
hedges).
The Consolidated Entity documents at the
inception of the hedging transaction the
relationship between hedging instruments and
hedged items, as well as its risk management
objective and strategy for undertaking various
hedge transactions. The Consolidated Entity also
documents its assessment, both at hedge
inception and on an ongoing basis, of whether
the derivatives that are used in hedging
transactions have been and will continue to be
highly effective in offsetting changes in fair
values or cash flows of hedged items.
Annual Report 2007
47
Notes continued
(i) Fair value hedge
Changes in the fair value of derivatives that are
designated and qualify as fair value hedges are
recorded in the income statement, together with
any changes in the fair value of the hedged asset
or liability that are attributable to the hedged risk.
(ii) Cash flow hedge
The effective portion of changes in the fair value
of derivatives that are designated and qualify as
cash flow hedges is recognised in equity in the
hedging reserve. The gain or loss relating to the
ineffective portion is recognised immediately in
the income statement within other income or
other expense.
Amounts accumulated in equity are recycled in
the income statement in the periods when the
hedged item will affect profit or loss (for instance
when the forecast sale that is hedged takes
place). However, when the forecast transaction
that is hedged results in the recognition of a non-
financial asset (for example, inventory) or a non-
financial liability, the gains and losses previously
deferred in equity are transferred from equity
and included in the measurement of the initial
cost or carrying amount of the asset or liability.
When a hedging instrument expires or is sold or
terminated, or when a hedge no longer meets
the criteria for hedge accounting, any cumulative
gain or loss existing in equity at that time
remains in equity and is recognised when the
forecast transaction is ultimately recognised in
the income statement. When a forecast
transaction is no longer expected to occur, the
cumulative gain or loss that was reported in
equity is immediately transferred to the income
statement.
(m) Fair value estimation
The fair value of financial assets and financial
liabilities must be estimated for recognition and
measurement or for disclosure purposes.
The fair value of forward exchange contracts is
determined using forward exchange market rates
at the balance sheet date.
The nominal value less estimated credit
adjustments of trade receivables and payables
are assumed to approximate their fair values. The
fair value of financial liabilities for disclosure
purposes is estimated by discounting the future
contractual cash flows at the current market
interest rate that is available to the Consolidated
Entity for similar financial instruments.
(n) Property, plant and equipment
Property, plant and equipment is stated at
historical cost less depreciation. Historical cost
includes expenditure that is directly attributable
to the acquisition of the items.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with the
item will flow to the Consolidated Entity and the
cost of the item can be measured reliably. All
other repairs and maintenance are charged to the
income statement during the financial period in
which they are incurred.
Depreciation on other assets is calculated on a
straight-line basis to write off the depreciable
amount of each item of property, plant and
equipment over its expected useful life to the
Consolidated Entity. Assets are depreciated from
the date they are brought into commercial
service, or in respect of internally constructed
assets from the time the asset is completed and
held ready for use. The expected useful lives are
as follows:
Buildings
Computer equipment
Furniture, fittings and
office equipment
Network equipment
40 years
4 to 10 years
4 to 7 years
3 to 40 years
The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at each
balance sheet date.
During the year the Consolidated Entity revised
the useful lives of network equipment and
computer equipment. Refer to note 39 for further
details.
The depreciable amount of improvements to or
on leasehold properties is amortised over the
unexpired period of the lease or the estimated
useful life of the improvement to the
Consolidated Entity, whichever is the shorter.
Leasehold improvements held at the reporting
date are being amortised over 4 - 20 years.
An asset’s carrying amount is written down
immediately to its recoverable amount if the
asset’s carrying amount is greater than its
estimated recoverable amount (note 1(h)).
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in the income statement.
(o) Leases
Leases of property, plant and equipment where
the Consolidated Entity has substantially all the
risks and rewards of ownership are classified as
finance leases. Finance leases are capitalised at
the lease’s inception at the lower of the fair value
of the leased property and the present value of
the minimum lease payments. The corresponding
rental obligations, net of finance charges, are
included in other long-term payables. Each lease
payment is allocated between the liability and
finance charges so as to achieve a constant rate
on the finance balance outstanding. The interest
element of the finance cost is charged to the
income statement over the lease period so as to
produce a constant periodic rate of interest on
the remaining balance of the liability for each
period. The property, plant and equipment
acquired under finance leases is depreciated over
the shorter of the asset’s useful life and the lease
term. Leased assets held at reporting date are
being amortised over four years.
Leases in which a significant portion of the risks
and rewards of ownership are retained by the
lessor are classified as operating leases.
Payments made under operating leases (net of
any incentives received from the lessor) are
charged to the income statement on a straight-
line basis over the period of the lease.
Lease income from operating leases is recognised
in income on a straight-line basis over the
lease term.
(p) Intangible assets
(i) Spectrum licences and capitalised
development costs
Costs associated with acquiring spectrum licences
are capitalised. The amortisation of capitalised
development costs and the spectrum licences
commenced upon the commercial readiness of
the network. The spectrum licences and
development costs are amortised on a straight-
line basis over the periods of their expected
benefit. The carrying value of this intangible asset
is reviewed by the Directors on a regular basis
and written down to recoverable amount
where this is less than the carrying value
(refer note 1(h)).
All costs directly attributable to the construction
of the network assets are capitalised as work in
progress. All other costs directly attributable to
the creation of an asset within the business are
capitalised as development costs.
48
Hutchison Telecommunications (Australia) Limited
(ii) Customer acquisition and retention
costs
The direct costs of establishing and renewing
customer contracts, other than handset subsidies
which are expensed when incurred, are
recognised as an asset. The direct costs are
amortised as other direct costs of provision of
telecommunication services and goods over the
lesser of the period during which the future
economic benefits are expected to be obtained
and the period of the contract. The direct costs
include commissions paid for obtaining customer
contracts and other directly attributable costs.
(iii) Transmission rights
The Consolidated Entity’s right to use transmission
capacity is measured at cost and amortised on a
straight line basis over the term of the
transmission lease.
(iv) Goodwill
Goodwill represents the excess of the cost of an
acquisition over the fair value of the Consolidated
Entity’s share of the net identifiable assets of the
acquired subsidiary/associate at the date of
acquisition. Goodwill on acquisitions of
subsidiaries is included in intangible assets.
Goodwill on acquisitions of associates is included
in investments in associates. Goodwill is not
amortised. Instead, goodwill is tested for
impairment annually, or more frequently if
events or changes in circumstances indicate that
it might be impaired, and is carried at cost less
accumulated impairment losses. Gains and losses
on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for
the purpose of impairment testing.
(q) Payables
These amounts represent liabilities for goods and
services provided to the Consolidated Entity prior
to the end of the financial period and which are
unpaid. The amounts are unsecured and are
usually paid within 30 days of recognition.
Interest bearing liabilities
(r)
Fixed rate loans are initially recognised at fair
value, net of transaction costs incurred. Floating
rate loans are initially recognised at cost, net of
transaction costs incurred. Fixed and floating rate
loans are subsequently measured at amortised
cost. Any difference between the proceeds (net
of transaction costs) and the redemption amount
is recognised in the income statement over the
period of the liability using the effective interest
method.
Convertible notes are included as a liability and
measured at amortised cost using the effective
interest method. The liability is included in
interest bearing liabilities until conversion or
maturity of the notes. Interest is accrued based
upon the effective interest rate and included in
other creditors until paid semi-annually.
(s) Borrowing costs
Borrowing costs incurred for the construction of
any qualifying asset are capitalised during the
period of time that is required to complete and
prepare the asset for its intended use or sale.
Other borrowing costs are expensed. Borrowing
costs include:
-
-
-
-
-
interest on bank overdrafts and short-term
and long-term borrowings;
amortisation of discounts or premiums
relating to borrowings;
amortisation of ancillary costs incurred in
connection with the arrangement of
borrowings;
finance lease charges; and
certain exchange differences arising from
foreign currency borrowings.
(t) Provisions
Provision for decommissioning costs
A provision has been recognised for costs
expected to be incurred on the expiration of the
site leases and resulting decommissioning costs
under the terms of lease obligations. The amount
of the provision is the estimated cash flow
expected to be required to fulfil the lease
obligations discounted back to net present value.
(u) Employee benefits
(i) Wages and salaries, and annual
leave
Liabilities for wages and salaries, including non-
monetary benefits, and annual leave expected to
be settled within 12 months of the reporting date
are recognised in other creditors in respect of
employees' services up to the reporting date and
are measured at the amounts expected to be paid
when the liabilities are settled. Liabilities for non-
accumulating sick leave are recognised when the
leave is taken and measured at the rates paid or
payable.
(ii) Long service leave
The liability for long service leave expected to be
settled within 12 months of the reporting date is
recognised in the provision for employee benefits
and is measured in accordance with (i) above. The
liability for long service leave expected to be
settled more than 12 months from the reporting
date is recognised in the provision for employee
benefits and measured as the present value of
expected future payments to be made in respect
of services provided by employees up to the
reporting date. Consideration is given to expected
future wage and salary levels, experience of
employee departures and periods of service.
Expected future payments are discounted using
market yields at the reporting date on national
government bonds with terms to maturity, as
closely as possible, the estimated future cash
outflows.
(iii) Bonus plan
A liability for employee benefits in the form of a
bonus plan is recognised in other creditors when
there is no realistic alternative but to settle the
liability and at least one of the following
conditions is met:
-
-
-
there are formal terms in the plan for
determining the amount of the benefit;
the amounts to be paid are determined
before the time of completion of the
financial report; or
past practice gives clear evidence of the
amount of the obligation.
Liabilities for bonus plans are expected to be
settled within 12 months and are measured at
the amounts expected to be paid when they are
settled.
(iv) Share-based payments
Share-based compensation benefits are provided
to employees via the Hutchison
Telecommunications (Australia) Limited Executive
Option Plan. Information relating to the Option
Plan is set out in note 37.
Share options granted before 7 November
2002 and/or vested before 1 January 2005
No expense is recognised in respect of these
options. The shares are recognised when the
options are exercised and the proceeds received
allocated to share capital.
Share options granted after 7 November 2002
and vested after 1 January 2005
The fair value of options granted under the
Hutchison Telecommunications (Australia) Limited
Executive Option Plan is recognised as an
employee benefit expense with a corresponding
increase in equity. The fair value is measured at
grant date and recognised over the period during
which the employees become unconditionally
entitled to the options.
The fair value at grant date is independently
determined using a Black-Scholes option pricing
model that takes into account the exercise price,
the term of the option, the vesting and
performance criteria, the impact of dilution, the
non-tradeable nature of the option, the share
price at grant date and expected price volatility of
the underlying share, the expected dividend yield
and the risk-free interest rate for the term of the
option.
Annual Report 2007
49
Notes continued
The fair value of the options granted excludes
the impact of any non-market vesting conditions
(for example, profitability and sales growth
targets). Non-market vesting conditions are
included in assumptions about the number of
options that are expected to become
exercisable. At each balance sheet date, the
entity revises its estimate of the number of
options that are expected to become
exercisable. The employee benefit expense
recognised each period takes into account the
most recent estimate.
Upon the exercise of options, the balance of the
share-based payments reserve relating to those
options is transferred to share capital.
The market value of shares issued to employees
for no cash consideration under the employee
share scheme is recognised as an employee
benefits expense with a corresponding increase
in equity when the employees become entitled
to the shares.
(v) Retirement benefits
Retirement benefits are delivered under the
Retail Employees Superannuation Trust
(Acumen), although employees have an option
to choose other funds. This fund is a defined
contribution fund and is based on employer and
employee contributions made to the fund.
Contributions are recognised as an expense as
they become payable.
(v) Contributed equity
Ordinary shares and convertible preference
shares are classified as equity. Refer to note 23
for further information.
Incremental costs directly attributable to the
issue of new shares or options are shown in
equity as a deduction, net of tax, from the
proceeds.
(w) Earnings per share
(i) Basic earnings per share
Basic earnings per share is determined by
dividing the net loss after income tax
attributable to members of the Company,
excluding any costs of servicing equity other
than the ordinary shares, by the weighted
average number of ordinary shares outstanding
during the financial year, adjusted for bonus
elements in ordinary shares issued during
the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figure
used in the determination of basic earnings per
share to take into account the after income tax
effect of interest and other financing costs
associated with dilutive potential ordinary
AASB-I 11 from 1 January 2008, but it is not
expected to have any impact on the
Consolidated Entity 's financial statements.
(ii) AASB-I 12 Service Concession
Arrangements, AASB 2007-2 Amendments
to Australian Accounting Standards
arising from AASB Interpretation 12,
revised UIG 4 Determining whether an
Arrangement contains a Lease and
revised UIG 129 Service Concession
Arrangements: Disclosures
AASB-I 12, AASB 2007-2, UIG 4 and the revised
UIG 129 are all effective for annual reporting
periods commencing on or after 1 January
2008. AASB-I 12 provides guidance on the
accounting by operators for public-to-private
service concession arrangements under which
private sector entities participate in the
development, financing, operation and
maintenance of infrastructure for the provision
of public services, such as transport, water and
energy facilities. UIG 4 has been amended to
exclude public-to-private service concession
arrangements from its scope and UIG 129 was
revised to require some additional disclosures.
The Consolidated Entity will apply AASB-I 12 and
the related amended standards and
interpretations from 1 January 2008. Application
of AASB-I 12 will not have any impact on the
Consolidated Entity’s financial statements.
(iii) AASB 8 Operating Segments and
AASB 2007-3 Amendments to Australian
Accounting Standards arising from
AASB 8
AASB 8 and AASB 2007-3 are effective for
annual reporting periods commencing on or
after 1 January 2009. AASB 8 will result in a
significant change in the approach to segment
reporting, as it requires adoption of a
"management approach" to reporting on the
financial performance. The information being
reported will be based on what the key
decision-makers use internally for evaluating
segment performance and deciding how to
allocate resources to operating segments. The
Consolidated Entity has not yet decided when to
adopt AASB 8. Application of AASB 8 may result
in different segments, segment results and
different type of information being reported in
the segment note of the financial report.
However, it will not affect any of the amounts
recognised in the financial statements.
shares and the weighted average number of
shares assumed to have been issued for no
consideration in relation to dilutive potential
ordinary shares.
(x) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised
net of the amount of associated GST, unless the
GST incurred is not recoverable from the taxation
authority. In this case it is recognised as part of
the cost of the acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of
the amount of GST receivable or payable. The
net amount of GST recoverable from, or payable
to, the taxation authority is included with other
receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The
GST components of cash flows arising from
investing or financing activities which are
recoverable from, or payable to the taxation
authority, are presented as operating cash flow.
(y) Rounding of amounts to nearest
thousand dollars
The Company is of a kind referred to in Class
Order 98/0100 issued by the Australian
Securities and Investments Commission, relating
to the “rounding off” of amounts in the
Directors’ report and financial report. Amounts in
the financial report have been rounded off
in accordance with that Class Order to the
nearest thousand dollars, or in certain cases,
the nearest dollar.
(z) New accounting standards and
UIG interpretations
Certain new accounting standards and
interpretations have been published that are not
mandatory for 31 December 2007 reporting
periods. The Consolidated Entity’s and the Parent
Entity’s assessment of the impact of these new
standards and interpretations is set out below.
(i) AASB-I 11 AASB 2 - Group and
Treasury Share Transactions and AASB
2007-1 Amendments to Australian
Accounting Standards arising from AASB
Interpretation 11
AASB-I 11 and AASB 2007-1 are effective for
annual reporting periods commencing on or
after 1 March 2007. AASB-I 11 addresses
whether certain types of share-based payment
transactions should be accounted for as equity-
settled or as cash settled transactions and
specifies the accounting in a subsidiary’s
financial statements for share-based payment
arrangements involving equity instruments of
the parent. The Consolidated Entity will apply
50
Hutchison Telecommunications (Australia) Limited
(iv) Revised AASB 123 Borrowing Costs
and AASB 2007-6 Amendments to
Australian Accounting Standards arising
from AASB 123 [AASB 1, AASB 101, AASB
107, AASB 111, AASB 116 & AASB 138 and
Interpretations 1 & 12]
The revised AASB 123 is applicable to annual
reporting periods commencing on or after
1 January 2009. It has removed the option to
expense all borrowing costs and - when adopted
- will require the capitalisation of all borrowing
costs directly attributable to the acquisition,
construction or production of a qualifying asset.
There will be no impact on the financial report
of the Consolidated Entity, as the Consolidated
Entity does already capitalise borrowing costs
relating to qualifying assets.
(v) AASB-I 13 Customer Loyalty
Programmes
AASB-I 13 is applicable to annual reporting
periods commencing on or after 1 July 2008.
It provides guidance on the accounting for
customer loyalty programmes and requires
that the fair value of the consideration
received/receivable in respect of a sale
2. Revenue
transaction is allocated between the award
credits and the other components of the sale.
The Consolidated Entity does not operate any
customer loyalty programmes. AASB-I 13 will
therefore have no impact on the Consolidated
Entity 's financial statements. The Consolidated
Entity will apply AASB-I 13 from 1 January 2008.
(vi) AASB-I 14 The Limit on a Defined
Benefit Asset, Minimum Funding
Requirements and their Interaction
AASB-I 14 will be effective for annual reporting
periods commencing 1 January 2008. It provides
guidance on the maximum amount that may be
recognised as an asset in relation to a defined
benefit plan and the impact of minimum
funding requirements on such an asset. None of
the Consolidated Entity 's defined benefit plans
are subject to minimum funding requirements
and none of them is in a surplus position. The
Consolidated Entity will apply AASB-I 14 from
1 January 2008, but it is not expected to have
any impact on the Consolidated Entity 's
financial statements.
(vii) Revised AASB 101 Presentation of
Financial Statements and AASB 2007-8
Amendments to Australian Accounting
Standards arising from AASB 101
The revised AASB 101 that was issued in
September 2007 is applicable for annual
reporting periods beginning on or after 1
January 2009. It requires the presentation of a
statement of comprehensive income and makes
changes to the statement of changes in equity
but will not affect any of the amounts
recognised in the financial statements. If an
entity has made a prior period adjustment or a
reclassification of items in the financial
statements, it will need to disclose a third
balance sheet (statement of financial position),
this one being as at the beginning of the
comparative period.
From continuing operations
Services
Sale of handsets
Other revenue
Interest
Rental income
3. Other income
Net foreign exchange gains
Consolidated
Parent Entity
2007
$'000
2006
$'000
1,171,954
143,456
924,898
130,831
1,315,410
1,055,729
2,542
740
3,282
2,485
520
3,005
1,318,692
1,058,734
2007
$'000
15,888
842
16,730
104,617
503
105,120
121,850
2006
$'000
78,333
4,462
82,795
8,804
226
9,030
91,825
Consolidated
Parent Entity
2007
$'000
4,373
2006
$'000
1,971
2007
$'000
287
2006
$'000
148
Annual Report 2007
51
Notes continued
4. Expenses
(Loss) / profit before income tax includes the following specific expenses:
Finance costs
Interest and finance charges paid / payable
Finance costs expensed
Depreciation*
Buildings
Computer equipment
Computer equipment under finance lease
Fixtures, fittings and office equipment
Network equipment
Network equipment - jointly controlled assets
Assets under construction
Total depreciation
Amortisation
Capitalised development costs
Spectrum licence
Transmission capacity
Customer acquisition and retention costs
Customer acquisition costs written off
Total amortisation
Total amortisation and depreciation
Rental expense relating to operating leases
Lease payments
Total rental expense relating to operating leases
Defined contribution superannuation expense
Impairment losses / (write back) – financial assets
Trade receivables
CDMA network closure costs
CDMA customer upgrade costs
Site decommissioning costs
Depreciation and amortisation expense
Total CDMA network closure costs
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
161,160
161,160
264,836
264,836
38,897
38,897
100,342
100,342
33
64,341
1,664
9,215
21,799
19,895
13,386
33
56,238
2,321
6,853
23,989
20,091
20,293
130,333
129,818
596
75,442
3,063
18,665
9,813
107,579
237,912
37,849
37,849
7,720
596
75,034
3,063
8,395
-
87,088
216,906
37,536
37,536
6,596
-
-
-
-
-
-
-
-
-
5,594
-
-
-
5,594
5,594
10,862
10,862
168
-
-
-
-
-
-
-
-
-
5,185
239
-
-
5,424
5,424
14,192
14,192
426
30,971
19,942
(49)
(3,606)
-
-
-
-
106,660
28,000
173,266
307,926
-
-
-
-
-
28,000
175,980
203,980
* During the year the Consolidated Entity revised the useful lives of network equipment and computer equipment. Refer to note 39 for further details.
52
Hutchison Telecommunications (Australia) Limited
5.
Income tax expense
(a) Income tax expense
Current tax
Deferred tax
Income tax expense
(b) Numerical reconciliation of income tax expense
to prima facie tax payable
(Loss)/profit from operations before income tax expense
Tax at the Australian tax rate of 30% (2006: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Entertainment
Interest not deductible
Unrecognised tax losses
Under (over) provision in prior years
Prior year tax losses not recognised now recouped
Income tax expense
(c) Tax losses
Unused tax losses for which no deferred tax assets has been recognised
Potential tax benefit @ 30%
All unused tax losses were incurred by Australian entities
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
-
-
-
-
-
-
-
-
-
-
-
-
(285,106)
(85,532)
161
27,258
58,113
-
-
-
(759,423)
(227,827)
159
26,938
200,730
-
-
-
60,080
18,024
(284,787)
(85,436)
2
-
-
18,026
(18,026)
-
7
13,872
71,557
-
-
-
3,550,540
3,528,933
1,065,162
1,058,680
763,015
228,904
750,685
225,206
This benefit for tax losses will only be obtained if the specific entity carrying forward the tax losses derives future assessable income of a nature and of an
amount sufficient to enable the benefit from the deductions for the losses to be realised, and the company complies with the conditions for deductibility
imposed by tax legislation.
6. Current assets - Cash and cash equivalents
Cash at bank and in hand
Short term deposits
Consolidated
Parent Entity
2007
$'000
19,394
15,500
34,894
2006
$'000
23,593
-
23,593
2007
$'000
6,973
-
6,973
2006
$'000
7,049
-
7,049
Restrictions on cash at bank
At 31 December 2007 cash at bank includes collateral for bank guarantees $4,322,000 (2006: $4,722,000) (note 28).
Short term deposits
At 31 December 2007 there are short term deposits $15,500,000 (2006: nil). The weighted average interest rate was 6.47% p.a. in 2007.
Liquidity risk
Liquidity risk is managed through maintaining sufficient cash and available committed credit facilities (note 21).
Annual Report 2007
53
Notes continued
7. Current assets - Receivables
Trade receivables
Less: Provision for impairment of receivables
Other receivables
Receivable from subsidiary
Consolidated
Parent Entity
2007
$'000
337,624
(24,040)
313,584
274
-
2006
$'000
226,160
(20,753)
205,407
1,915
-
313,858
207,322
2007
$'000
6,822
(1,999)
4,823
87,141
216,609
308,573
2006
$'000
3,373
(1,586)
1,787
1,799
33,657
37,243
Receivable from subsidiary
Weighted average interest on the receivable from subsidiary is charged at a rate of Bank Bills Swap Yield (BBSY) plus 2.15% p.a. (2006: BBSY plus 2.20% p.a.).
For further information refer to note 30.
(a) Credit risk
The Consolidated Entity has no significant concentrations of credit risk. The Consolidated Entity has policies in place to ensure that sales of products and
services are made to customers with an appropriate credit history.
(b) Impaired trade receivables
As at 31 December 2007 current trade receivables of the Consolidated Entity with a nominal value of $24,040,000 (2006: $20,753,000) were impaired. The
amount of the provision was $24,040,000 (2006: $20,753,000). The individually impaired receivables mainly relate to retail customers which are provided
for based on historical impairment averages.
The ageing of these receivables is as follows:
1-3 months
Over 3 months
Consolidated
2007
$'000
15,689
8,351
24,040
2006
$'000
13,142
7,611
20,753
As of 31 December 2007, current trade receivables of $41,594,000 (2006: $36,193,000) were past due but not impaired. These relate to a number of
independent customers for whom there is no recent history of payment default. The ageing analysis of these trade receivables is as follows:
1-3 months
Over 3 months
Movements in the provision for impairment of current trade receivables are as follows:
At 1 January
Provision for impairment recognised during the year
Receivables written off during the year as uncollectible
54
Hutchison Telecommunications (Australia) Limited
Consolidated
2006
$'000
13,156
23,037
36,193
Consolidated
2006
$'000
19,991
19,942
(19,180)
20,753
2007
$'000
25,351
16,243
41,594
2007
$'000
20,753
30,971
(27,684)
24,040
7. Current assets - Receivables continued
The creation and release of the provision for impaired receivables has been included in ‘other operating expenses’ in the income statement. Amounts charged
to the allowance account are generally written off when there is no expectation of recovering additional cash.
The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on the credit history of these other classes, it
is expected that these amounts will be received when due.
(c) Foreign exchange and interest rate risk
Refer to note 41 for an analysis of the Consolidated Entity’s exposure to foreign currency risk in relation to trade and other receivables.
A summarised analysis of the sensitivity of trade and other receivables to foreign exchange and interest rate risk can be found in note 41.
(d) Fair value and credit risk
Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivables mentioned above. The Consolidated Entity does not
generally hold any collateral as security. Refer to note 41 for more information on the risk management policy of the Consolidated Entity.
8. Current assets - Inventories
Finished goods at net realisable value
Consolidated
Parent Entity
2007
$'000
2006
$'000
106,838
64,593
2007
$'000
69
2006
$'000
112
Inventory expense
Inventories recognised as expense during the year ended 31 December 2007 amounted to $338,916,000 (2006: $326,568,000).
There was $329,000 (2006: $1,305,000) related to write-down or provision for write-down of inventory.
The expense has been included in 'other direct costs of provision of telecommunication services and goods' in the income statement.
9. Current assets - Other
Prepayments
Other
Consolidated
Parent Entity
2007
$'000
15,721
67
15,788
2006
$'000
20,881
67
20,948
2007
$'000
2,459
64
2,523
2006
$'000
5,124
64
5,188
Annual Report 2007
55
Notes continued
10. Non-current assets - Receivables
Consolidated
Parent Entity
Trade receivables
Less: Provision for impairment of receivables
Other receivables
Receivable from subsidiaries
2007
$'000
32,202
(3,220)
28,982
148,187
-
2006
$'000
19,612
(2,155)
17,457
86,386
-
1,443,882
177,169
103,843
1,443,882
2007
$'000
2006
$'000
-
-
-
-
-
-
-
-
391,799
391,799
Other receivables
Included in other debtors is a loan to a jointly controlled entity. For further information refer to note 30.
Receivable from subsidiaries
Further information relating to loans to related parties is set out in note 30.
Impaired receivables
(a)
As at 31 December 2007 non-current trade receivables of the Consolidated Entity with a nominal value of $3,220,000 (2006: $2,155,000) were impaired.
The amount of the provision was $3,220,000 (2006: $2,155,000).
(b) Fair values
The carrying values of non-current receivables at amortised cost approximated to fair value, based on cash flows discounted using 7% (2006 - 7%).
Foreign currency and interest rate risk
(c)
The carrying amounts of the Consolidated Entity’s and Parent Entity’s current and non-current receivables are denominated in the following currencies:
Australian dollars
Great britain pound
US dollar
Current receivables
Non-current receivables
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
474,074
308,361
223,986
429,013
7
16,946
491,027
313,858
177,169
491,027
6
2,798
311,165
207,322
103,843
311,165
-
38
224,024
308,573
1,443,882
1,752,455
-
29
429,042
37,243
391,799
429,042
For an analysis of the sensitivity of trade and other receivables to foreign exchange and interest rate risk refer to note 41.
(d) Credit risk
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Consolidated Entity does
not hold any collateral as security. Refer to note 41 for more information on the risk management policy of the Consolidated Entity.
56
Hutchison Telecommunications (Australia) Limited
11. Non-current assets - Investment accounted for using the equity method
Consolidated
Parent Entity
Interest in jointly controlled entity (note 32)
2007
$'000
2,035
2006
$'000
670
2007
$'000
-
2006
$'000
-
Shares in jointly controlled entity
Under the joint venture agreement described in note 32 each party has contributed $1 to the share capital of the entity.
12. Non-current assets - Other financial assets
Non-traded investments
Shares in controlled entities (note 31)
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
-
-
1,649,418
1,318,776
Annual Report 2007
57
Notes continued
13. Non-current assets - Property, plant and equipment
Consolidated
Parent Entity
Land and buildings
At cost
Less: accumulated depreciation
Total land and buildings
Fixtures, fittings and office equipment
At cost
Less: accumulated depreciation
Total fixtures, fittings and office equipment
Computer equipment
At cost
Less: accumulated depreciation
Total computer equipment
Computer equipment under finance lease
Less: accumulated amortisation
Total computer equipment under finance lease
Total computer equipment
Network equipment
At cost
Less: accumulated depreciation
Total network equipment
Network equipment - jointly controlled asset
At net book value
Less: accumulated depreciation
Total network equipment - jointly controlled asset (note 32)
Assets under construction
Work in progress
Less: accumulated depreciation
Total work in progress
2007
$'000
1,610
(275)
1,335
113,757
(103,632)
10,125
449,896
(333,833)
116,063
16,742
(8,990)
7,752
2006
$'000
1,610
(242)
1,368
108,627
(94,417)
14,210
408,520
(269,492)
139,028
13,594
(7,326)
6,268
123,815
145,296
679,394
(317,286)
362,108
356,249
(60,048)
296,201
267,048
(44,726)
222,322
585,316
(295,487)
289,829
356,005
(40,153)
315,852
210,899
(31,340)
179,559
Total property, plant and equipment
1,015,906
946,114
2007
$'000
2006
$'000
29
-
29
68,628
(68,628)
-
74,923
(74,923)
-
-
-
-
-
29
-
29
68,628
(68,628)
-
74,923
(74,923)
-
-
-
-
-
230,128
(230,128)
230,128
(230,128)
-
-
-
-
2,434
(2,434)
-
29
-
-
-
-
2,434
(2,434)
-
29
58
Hutchison Telecommunications (Australia) Limited
13. Non-current assets - Property, plant and equipment continued
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
Reconciliation of land and buildings
Carrying amount at beginning of year
Additions
Disposals
Depreciation (note 4)
Carrying amount at end of year
Reconciliation of fixtures, fittings and office equipment
Carrying amount at beginning of year
Additions
Disposals
Depreciation (note 4)
Carrying amount at end of year
Reconciliation of computer equipment
Carrying amount at beginning of year
Additions
Disposals
Depreciation (note 4)
Carrying amount at end of year
Reconciliation of computer equipment under finance lease
Carrying amount at beginning of year
Additions
Disposals
Depreciation (note 4)
Carrying amount at end of year
Reconciliation of network equipment
Carrying amount at beginning of year
Additions
Disposals
Depreciation (note 4)
Transfer to joint venture operation
Carrying amount at end of year
Reconciliation of network equipment - jointly controlled asset
Carrying amount at beginning of year
Additions
Transfer in from network equipment
Disposals
Depreciation (note 4)
Carrying amount at end of year
Reconciliation of assets under construction
Carrying amount at beginning of year
Additions
Transfers out
Depreciation (note 4)
Carrying amount at end of year
1,368
1,401
-
-
(33)
1,335
14,210
5,130
-
(9,215)
10,125
139,028
41,376
-
(64,341)
116,063
6,268
3,148
-
(1,664)
7,752
289,829
94,078
-
(21,799)
-
362,108
315,852
244
-
-
(19,895)
296,201
179,559
200,125
(143,976)
(13,386)
222,322
-
-
(33)
1,368
57,432
4,139
-
(47,361)
14,210
162,771
40,410
-
(64,153)
139,028
8,589
-
-
(2,321)
6,268
350,569
45,699
(869)
(104,701)
(869)
289,829
335,074
-
869
-
(20,091)
315,852
140,112
152,385
(90,211)
(22,727)
179,559
29
-
-
-
29
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Annual Report 2007
29
-
-
-
29
40,504
4
-
(40,508)
-
6,880
1,035
-
(7,915)
-
-
-
-
-
-
80,631
81
-
(80,712)
-
-
-
-
-
-
-
-
72
3,501
(1,139)
(2,434)
-
59
Notes continued
14. Non-current assets - Intangible assets
Consolidated
Parent Entity
Spectrum licences at cost
Less: accumulated amortisation
Capitalised development costs
Less: accumulated amortisation
Customer acquisition and retention costs
Less: accumulated amortisation
Transmission capacity at cost
Less: accumulated amortisation
Goodwill
Less: Provision for impairment
Reconciliation of spectrum licences
Carrying amount at beginning of year
Additions
Disposals
Amortisation (note 4)
Carrying amount at end of year
Reconciliation of capitalised development costs
Carrying amount at beginning of year
Additions
Disposals
Amortisation (note 4)
Carrying amount at end of year
Reconciliation of customer acquisition and retention costs
Carrying amount at beginning of year
Additions
Write off
Amortisation (note 4)
Carrying amount at end of year
Reconciliation of transmission capacity
Carrying amount at beginning of year
Additions
Disposals
Amortisation (note 4)
Transfer to subsidiary
Carrying amount at end of year
60
Hutchison Telecommunications (Australia) Limited
2007
$'000
953,067
(365,787)
587,280
66,052
(60,501)
5,551
118,273
(82,054)
36,219
38,794
(9,189)
29,605
330,641
-
330,641
989,296
648,832
13,890
-
(75,442)
587,280
2006
$'000
939,177
(290,345)
648,832
66,052
(59,905)
6,147
81,762
(63,389)
18,373
38,794
(6,126)
32,668
-
-
-
2007
$'000
57,534
(16,396)
41,138
61,843
(61,843)
-
49,793
(49,793)
-
-
-
-
-
-
-
2006
$'000
43,644
(10,802)
32,842
61,843
(61,843)
-
49,793
(49,793)
-
-
-
-
-
-
-
706,020
41,138
32,842
723,866
-
-
(75,034)
648,832
32,842
13,890
-
(5,594)
41,138
6,147
39,396
-
-
(596)
5,551
18,373
46,324
(9,813)
(18,665)
36,219
-
-
(33,249)
6,147
17,570
18,242
-
(17,439)
18,373
32,668
35,731
-
-
(3,063)
-
29,605
-
-
(3,063)
-
32,668
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
38,027
-
-
(5,185)
32,842
35,367
-
-
(35,367)
-
9,027
17
-
(9,044)
-
5,568
-
-
(239)
(5,329)
-
14. Non-current assets - Intangible assets continued
Reconciliation of goodwill
Carrying amount at beginning of year
Additions
Disposals
Carrying amount at end of year
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
-
330,641
-
330,641
-
-
-
-
-
-
-
-
-
-
-
-
Goodwill
On 19 October 2007, Telecom Corporation of New Zealand Limited (TCNZ) rolled up its 19.94% investment in Hutchison 3G Australia Holdings Pty Ltd
("H3GAH") to a 10% stake in Hutchison Telecommunications (Australia) Limited ("HTAL"). The goodwill arises from HTAL's 19.94% acquisition of H3GAH on that
date.
Under the same transaction, TCNZ assigned its 850 MHz spectrum licence to HTAL in return for an option to increase its 10% investment in HTAL by a further
9.94% at any time before 31 December 2008.
15. Non-current assets - Other
Prepayments
16. Current liabilities - Payables
Trade creditors
Other creditors
Loans from related entity (note 30)
Consolidated
Parent Entity
2007
$'000
3,196
2006
$'000
3,565
2007
$'000
-
2006
$'000
-
Consolidated
Parent Entity
2007
$'000
182,458
113,584
178,734
474,776
2006
$'000
152,472
147,545
-
300,017
2007
$'000
2,368
20,020
-
22,388
2006
$'000
5,428
57,765
-
63,193
(a) Foreign currency risk
The carrying amounts of the Consolidated Entity’s and Parent Entity’s trade and other payables are denominated in the following currencies:
Australian Dollars
Euro
Hong Kong Dollars
US Dollar
Consolidated
Parent Entity
2007
$'000
2006
$'000
465,556
269,243
705
3
8,512
474,776
990
174
29,610
300,017
2007
$'000
22,121
267
-
-
2006
$'000
62,926
267
-
-
22,388
63,193
(b) Interest rate risk exposures
Details of the Consolidated Entity's exposure to interest rate changes on borrowings are set out in note 41.
Annual Report 2007
61
Notes continued
17. Current liabilities - Borrowings
Secured
Lease liabilities
Unsecured
Bank loans
Convertible notes
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
1,820
2,017
-
299,964
-
301,784
149,961
598,810
750,788
199,981
-
199,981
-
-
598,810
598,810
(a) Lease liabilities
Lease liabilities are secured as the rights to the leased assets recognised in the financial statements revert to the lessor in the event of default (refer note 21).
(b) Bank loans
$99,983,000 of bank loans has a repayment date of 28 December 2008. The effective cost of funding is calculated on BBSY plus 2.13% p.a.
(2006: BBSY plus 2.13% p.a.)
$199,981,000 of bank loans has a repayment date of 14 February 2008. The effective cost of funding is calculated on BBSY plus 2.15% p.a.
(2006: BBSY plus 2.15% p.a.)
(c) Convertible notes
On 15 July 2002, 909,358,150 convertible notes were issued for a term of 5 years and provided a cash coupon payment of 5.5% per annum, payable semi-
annually until the earlier of conversion or maturity date. The issue price of each convertible note was $0.66.
The convertible notes may be converted into ordinary shares of the company at the option of the holder (in certain circumstances) on a one for one basis.
The convertible notes are measured at amortised cost. On 15 July 2007, the convertible notes matured and were repaid. Refer to note 1(r) for further details.
(d) Risk exposures
Details of the Consolidated Entity’s exposure to interest rate risks arising from current and non-current borrowings are set out in note 21.
(e) Interest rate risk exposures
Details of the Consolidated Entity's exposure to interest rate changes on borrowings are set out in note 41.
(f) Fair value disclosures
Details of the fair value of borrowings of the Consolidated Entity are set out in note 41.
18. Current liabilities - Provisions
Employee benefits
Consolidated
Parent Entity
2007
$'000
2,453
2006
$'000
1,072
2007
$'000
2,396
2006
$'000
1,072
Hutchison Telecommunication (Australia) Limited employs all staff and charges Hutchison 3G Australia Pty Limited all associated employment costs that
Hutchison 3G Australia Pty Limited incurs at cost.
62
Hutchison Telecommunications (Australia) Limited
19. Derivative financial instruments
Forward foreign exchange contracts - cash flow hedges
Consolidated
Parent Entity
2007
$'000
-
2006
$'000
311
2007
$'000
-
2006
$'000
-
(a) Instruments used by the Consolidated Entity
The Consolidated Entity is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuation in exchange
rates. As at 31 December 2007, these forward exchange contracts were closed out.
Forward exchange contracts - cash flow hedges
During the year, the Consolidated Entity purchased some handsets from its supplier on invoices denominated in US dollars. In order to protect against
exchange rate movements, the Consolidated Entity entered into forward exchange contracts to purchase US dollars.
These contracts are hedging highly probable forecasted purchases for the ensuing financial year. The contracts are timed to mature to coincide with the
payment for handsets.
The cash flows are expected to occur at various dates within six months from the balance sheet date. At balance sheet date, the details of outstanding
contracts are:
Buy USD
Maturity : 0 - 6 months
Sell Australian dollars
Average exchange rate
2007
$'000
2006
$'000
-
30,091
2007
$'000
-
2006
$'000
0.7808
Amounts disclosed above represent currency sold, measured at the contracted rate.
The portion of the gain or loss on the hedging instruments that is determined to be in an effective hedge is recognised directly in equity. When the cash
flows occur, the Consolidated Entity adjusts the initial measurement of the component recognised in the balance sheet by the related amount deferred
in equity.
During the year ended 31 December 2007 a loss of $158,000 (2006 - a loss of $701,000) was transferred to other income in the income statement.
(b) Credit risk exposures
Credit risk arises from the potential failure of counterparties to meet their obligations under the respective contracts at maturity. This arises on derivative
financial instruments with unrealised gains. At reporting date there was no amount receivable or payable (Australian dollar equivalents) for the Consolidated
Entity from forward foreign exchange contracts.
20. Current liabilities - Other
Customer deposits
Unearned income
Loans from subsidiaries (note 30)
Loans from subsidiaries
No interest is charged on the loans from subsidiaries. For further information refer to note 30.
Consolidated
Parent Entity
2007
$'000
-
8,478
-
8,478
2006
$'000
1
7,755
-
7,756
2007
$'000
-
371
4,973
5,344
2006
$'000
1
467
2,996
3,464
Annual Report 2007
63
Notes continued
21. Non-current liabilities - Borrowings
Secured
Lease liabilities
Unsecured
Bank loans
Loans from parent entity (note 30)
Loans from related entity (note 30)
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2,101
1,587
797,927
1,894,620
-
-
797,927
800,028
196,000
754,412
2,845,032
2,846,619
-
-
-
-
-
-
2006
$'000
-
199,821
196,000
754,412
1,150,233
1,150,233
(a) Lease liabilities
Leased liabilities are secured against the underlying assets which revert to the lessor in case of default. The carrying value of the assets pledged as security is
$7,752,000 representing leased computer equipment.
(b) Bank loans
$698,133,000 of the bank loans has a repayment date of 17 August 2009. The effective cost of funding is calculated on BBSY plus 2.22% p.a. (2006: BBSY
plus 2.22% p.a.) $99,794,000 of bank loans has a repayment date of 9 December 2010. The effective cost of funding is calculated on BBSY plus 2.17% p.a.
(2006: BBSY plus 2.17% p.a.) The bank loans are wholly guaranteed for principal and interest by the ultimate parent entity, Hutchison Whampoa Limited.
(c) Loans from related entity
Interest on loans from related entity was calculated at a rate of BBSY plus 2.40% p.a. and were fully repaid during the year. (2006:$754,412,000 with BBSY
plus 2.40% p.a.)
(d) Fair value
The carrying amounts and fair values of non-current borrowings of the Consolidated Entity at balance date are:
Secured
Lease liabilities
Unsecured
Bank loans
Loans from parent entity (note 30)
Loans from related entity (note 30)
2007
2006
Carrying
amount
$'000
Fair value
$'000
Carrying
amount
$'000
Fair value
$'000
2,101
2,101
1,587
1,587
797,927
797,927
1,894,620
1,894,620
-
-
797,927
800,028
-
-
797,927
800,028
196,000
754,412
196,000
754,412
2,845,032
2,845,032
2,846,619
2,846,619
(i) On-balance sheet
The fair value of current borrowings equals their carrying amount, as the impact of discounting is not material. The fair value of non-current borrowings
equals their carrying amount because a floating interest rate applies to these loans.
(ii) Contingent liabilities
The Parent Entity and certain controlled entities have potential financial liabilities which may arise from certain contingencies disclosed in note 28. As
explained in the note, no material losses are anticipated in respect of any of those contingencies.
64
Hutchison Telecommunications (Australia) Limited
21. Non-current liabilities - Borrowings continued
(e) Risk exposures
The exposure of the Consolidated Entity’s and Parent Entity’s borrowings to interest rate changes and the contractual repricing dates at the balance dates are
as follows:
6 months or less
6 - 12 months
1 - 5 years
Over 5 years
Current borrowings
Non-current borrowings
Consolidated
Parent Entity
2007
$'000
200,751
101,033
800,028
-
2006
$'000
945,974
814
2,650,619
-
1,101,812
3,597,407
301,784
800,028
750,788
2,846,619
2007
$'000
2006
$'000
199,981
794,810
-
-
-
199,981
199,981
-
-
954,233
-
1,749,043
598,810
1,150,233
1,101,812
3,597,407
199,981
1,749,043
The carrying amounts of the Consolidated Entity’s borrowings are denominated in the following currencies:
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
Australian dollar
1,101,812
3,597,407
199,981
1,749,043
For an analysis of the sensitivity of borrowings to interest rate risk and foreign exchange risk refer to note 41.
(f) Financing arrangements
Unrestricted access was available at balance date to the following lines of credit:
Bank loan facilities
Total facilities
Used at balance date
Unused at balance date
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
1,100,000
(1,100,000)
2,050,000
(2,050,000)
-
-
200,000
(200,000)
-
200,000
(200,000)
-
Annual Report 2007
65
Notes continued
21. Non-current liabilities - Borrowings continued
(g) Risk exposures
The following table sets out the Consolidated Entity's exposure to interest rate risk, including the contractual repricing dates and the effective weighted
average interest rate by maturity periods.
Exposures arise predominantly from liabilities bearing variable interest rates as the Consolidated Entity intends to hold fixed rate liabilities to maturity.
2007
Fixed interest rate
Bank loans (notes 17 and 21)
Lease liabilities (notes 17 and 21)
Weighted average interest rate
2006
Bank loans (notes 17 and 21)
Convertible notes (note 21)
Other loans (note 21)
Lease liabilities (notes 17 and 21)
Floating
interest rate
$'000
1 year
or less
$'000
Over 1
to 2 years
$'000
Over 2 to
3 years
$'000
Over 3 to
4 years to
$'000
Over 4
5 years
$'000
Over
5 years
$'000
1,097,891
-
1,097,891
9.10%
-
1,820
1,820
6.99%
-
2,101
2,101
6.99%
-
-
-
-
-
-
-
-
Fixed interest rate
-
-
-
-
-
-
-
-
Floating
interest rate
$'000
1 year
or less
$'000
Over 1
to 2 years
$'000
Over 2 to
3 years
$'000
Over 3 to
4 years to
$'000
Over 4
5 years
$'000
Over
5 years
$'000
2,044,581
-
-
598,810
196,000
-
-
2,017
2,240,581
600,827
-
-
-
840
840
-
-
-
747
747
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$'000
1,097,891
3,921
1,101,812
Total
$'000
2,044,581
598,810
196,000
3,604
2,842,995
Weighted average interest rate
8.64%
5.50%
6.44%
6.44%
22. Non-Current Liabilities - Provisions
Employee benefits
Consolidated
Parent Entity
2007
$'000
1,691
2006
$'000
1,504
2007
$'000
1,691
2006
$'000
1,504
Hutchison Telecommunication (Australia) Limited employs all staff and charges Hutchison 3G Australia Pty Limited all associated employment costs that
Hutchison 3G Australia Pty Limited incurs at cost.
66
Hutchison Telecommunications (Australia) Limited
23. Contributed equity
(a) Share capital
Movement in ordinary shares:
Date
01 January 2007
19 October 2007
31 December 2007
Detail
Number
of shares
Issue price
$
Opening balance
Ordinary share issue (note(ii))
678,625,429
75,402,826
0.185
Balance
754,028,255
$'000
1,031,244
13,950
1,045,194
Share capital
Ordinary shares entitle the holder to participate in dividends and proceeds on winding up of the company in proportion to the number of and amounts paid
on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled
to one vote.
(b) Convertible preference shares
Movement in convertible preference shares:
Date
01 January 2007
08 June 2007
19 October 2007
31 December 2007
Total contributed equity
Detail
Number
of shares
Issue price
$
Opening balance
-
Convertible preference share issue (note(i))
13,572,508,580
Convertible preference share issue (note(ii))
1,508,056,509
0.21
0.21
Less: transaction costs arising on share issue
15,080,565,089
Balance
15,080,565,089
15,834,593,344
$'000
-
2,850,227
316,692
3,166,919
(7,625)
3,159,294
4,204,488
(i) On 8 June 2007, Hutchison Telecommunications (Australia) Limited (HTAL) raised $2.85 billion by way of a pro-rata rights issue of Convertible
Preference Shares (CPS) to existing shareholders.
The CPS:
(a) were issued at 21 cents;
(b)
(c)
have no voting rights except in limited circumstances;
are convertible (at the option of the holder) into 0.85 ordinary shares for each CPS either:
(i)
after expiry of the two year non-conversion period during a conversion window of 10 business days commencing on the first day of each
calendar quarter; or
upon a takeover offer being made for HTAL; or
(ii)
(iii) upon a change of control of HTAL; or
(iv)
following an announcement by HTAL of a major disposal of its assets may be converted by HTAL into 0.85 ordinary shares in certain
circumstances
(d) will convert into 0.85 ordinary shares for each CPS five years after their date of issue;
(e)
(f)
rank ahead of ordinary shares in the event of a winding up, but are subordinated to secured debt; and
are entitled to a non-cummulative preferential dividend equal to 5% per annum of the issue price, subject to the directors determining in their
discretion; that a dividend is payable under rule 5.1 of the Constitution of HTAL.
(ii) On 19 October 2007, TCNZ rolled up its 19.94% investment in Hutchison 3G Australia Holdings Pty Ltd to a 10% stake in HTAL. Pursuant to a Sale and
Subscription Agreement executed on 10 October 2007 between HTAL, HCAPL, TCNZ and Telecom 3G (Australia) Limited, HTAL issued 75,402,826
ordinary shares and 1,508,056,509 convertible preference shares to Hutchison Communications (Australia) Pty Limited (HCAPL). Under the same
agreement, HTAL granted an option to TCNZ to increase its 10% investment in HTAL to a further 9.94% at any time before 31 December 2008. In
consideration for this option, TCNZ assigned its 850 MHz spectrum licence to HTAL.
Annual Report 2007
67
Notes continued
23. Contributed equity continued
(c) Options
Information relating to the HTAL Executive Option plan, including details of options issued, exercised and lapsed during the financial year and options
outstanding at the end of the financial year are set out in note 37.
(d) Capital risk management
The Consolidated Entity’s and the Parent Entity’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they
can maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Consolidated Entity may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Consolidated Entity and the Parent Entity monitor capital on the basis of the gearing ratio. This ratio is calculated as
net debt divided by total capital. Net debt is calculated as total borrowings (including ‘borrowings’ and ‘trade and other payables’ as shown in the balance
sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the balance sheet (including minority interest) plus net debt.
The gearing ratios at 31 December 2007 and 31 December 2006 were as follows:
Total payables and borrowings
Less: cash and cash equivalents (note 6)
Net debt
Total equity
Total capital
Gearing ratio
Consolidated
Parent Entity
2007
$'000
1,576,588
(34,894)
1,541,694
1,069,770
2,611,464
2006
$'000
3,897,424
(23,593)
3,873,831
(1,831,399)
2,042,432
2007
$'000
222,369
(6,973)
215,396
3,220,805
3,436,201
2006
$'000
1,812,236
(7,049)
1,805,187
(25,238)
1,779,950
59%
190%
6%
101%
The decrease in the gearing ratio during 2007 resulted primarily from the issue of Convertible Preference Shares during the year.
68
Hutchison Telecommunications (Australia) Limited
24. Reserves and accumulated losses
Consolidated
Parent Entity
(a) Reserves
Capital reserve
Hedging reserve - cash flow hedges
Share-based payments reserve
Movements:
Capital reserve
There has been no movement in the capital reserve during the year.
Hedging reserve - cash flow hedges
Balance at 1 January
Hedging movement
Balance at 31 December
Share-based payments reserve
Balance at 1 January
Option expense
Spectrum licence
Balance at 31 December
(b) Accumulated losses
Accumulated losses at 1 January
2007
$'000
54,887
-
14,868
69,755
(311)
311
-
2,148
(417)
13,137
14,868
2006
$'000
54,887
(311)
2,148
56,724
-
(311)
(311)
1,966
182
-
2,148
2007
$'000
-
-
14,868
14,868
-
-
-
2,148
(417)
13,137
14,868
(2,919,367)
(2,159,944)
(1,058,630)
Net (loss) / profit attributable to the members of Hutchison Telecommunications (Australia) Limited
(285,106)
(759,423)
60,079
2006
$'000
-
-
2,148
2,148
-
-
-
1,966
182
-
2,148
(773,843)
(284,787)
Accumulated losses at 31 December
(3,204,473)
(2,919,367)
(998,551)
(1,058,630)
(c) Nature and purpose of reserves
Capital reserve
The capital reserve relates to the surplus arising on initial consolidation of 19.9% stake in Hutchison 3G Australia Holdings Pty Limited. It is not distributable
until realised.
Hedging reserve - cash flow hedges
The hedging reserve is used to record gains and losses on a hedging instrument in a cash flow hedge that are recognised directly in equity, as described in
note 1(l)(ii). Amounts are recognised in profit and loss when the associated hedged transaction affects profit and loss.
Share-based payments reserve
The share-based payments reserve is used to recognise
(a)
(b)
the fair value of share options issued but not expensed ; and
the fair value of the 850 MHz spectrum licence assigned from TCNZ as consideration for the option to increase TCNZ's equity interest in HTAL from 10%
to 19.94% exercisable any time before 31 December 2008. The fair value was determined by reference to the far value of the option granted to TCNZ.
Refer to note 23 (b)(ii) for further details on the option.
Annual Report 2007
69
Notes continued
25. Minority interest
Interest in:
Share capital in subsidiary
Accumulated losses
Consolidated
2007
$'000
2006
$'000
-
-
-
341,477
(341,477)
-
26. Director and key management personnel disclosures
(a) Directors
The following persons were Directors of Hutchison Telecommunications (Australia) Limited during the financial year:
(i)
Chairman - Non-executive Director
C Fok
(ii) Deputy Chairman - Executive Director
B Roberts-Thomson
(iii) Non-executive Directors
S Chow
J Gardener
D Lai
J Scanlon
F Sixt
M Bogoievski (appointed on 19 October 2007 and resigned on 31 January 2008)
K Russell (from 19 October 2007)
(b) Key management personnel
The following persons were the key management personnel having authority and responsibility for planning, directing and controlling the activities of the Company, directly or
indirectly, during the year ended 31 December 2007:
Name
N Dews
T Finlayson
N Hamill
M Young
Position
Employer
Chief Executive Officer
Chief Financial Officer
Director, Sales, Marketing and Product (from 10 May 2007)
Director, Technology, Infrastructure and Services
HTAL
HTAL
HTAL
HTAL
The following persons were the key management personnel having authority and responsibility for planning, directing and controlling the activities of the Company, directly or
indirectly, during the year ended 31 December 2006:
Name
K Russell
N Dews
D Dyson
T Finlayson
M Young
Position
Employer
Chief Executive Officer
Director, Sales, Marketing and Product
Chief Financial Officer (until 2 October 2006)
Chief Financial Officer (from 2 October 2006)
Director, Technology, Infrastructure and Services
HTAL
HTAL
HTAL
HTAL
HTAL
70
Hutchison Telecommunications (Australia) Limited
(c) Key management personnel compensation
Short term employee benefits
Post employment benefits
Long term benefits
Share based payments
Consolidated
Parent Entity
2007
$
2006
$
2007
$
2006
$
3,063,231
3,816,062
48,460
87,092
224,019
62,065
48,427
330,200
3,422,802
4,256,754
-
-
-
-
-
-
-
-
-
-
The Company has taken advantage of the relief provided by ASIC Class Order 06/50 and has transferred the detailed remuneration disclosures to the Directors' report.
The relevant information can be found on pages 34 to 38 of the Remuneration report in the Directors' report.
(d) Loans to key management personnel
There were no loans made to Directors or key management personnel of the Company, including their personally related entities during the years ended 31 December 2007 and
31 December 2006.
(e) Other transactions with key management personnel
There were no other transactions with the Directors or key management personnel of the Company for the years ended 31 December 2007 and 31 December 2006.
27. Remuneration of auditors
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
During the year the following services were paid to the auditor of the Parent Entity,
its related practices and non-related audit firms:
Assurance services
1.
Audit services
Fees paid to PricewaterhouseCoopers Australian firm:
Audit and review of financial reports and other audit work under
the Corporations Act 2001
2. Other assurance services
Fees paid to PricewaterhouseCoopers Australian firm:
IT audit
Accounting services
Other assurance services
Total remuneration for assurance services
Taxation services
Fees paid to PricewaterhouseCoopers Australian firm:
Tax compliance services, including review of company tax returns
Tax advice on recapitalisation
341
323
111
240
110
65
11
526
262
152
414
120
-
-
443
104
-
104
-
65
11
186
127
152
279
20
-
-
260
23
23
-
Advisory services
Fees paid to related practices of PricewaterhouseCoopers Australian firms
-
-
-
It is the Consolidated Entity's policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties where
PricewaterhouseCoopers’ expertise and experience with the Consolidated Entity are important. These assignments are principally tax advice and due diligence
reporting on acquisitions, or where PricewaterhouseCoopers is awarded assignments on a competitive basis. It is the Consolidated Entity's policy to seek
competitive tenders for all major consulting projects.
Annual Report 2007
71
Notes continued
28. Contingencies
Details and estimates of maximum amounts of contingent liabilities as at 31 December 2007 are as follows:
Guarantees
Secured guarantees in respect of leases and loans of controlled entities.
Unsecured guarantees in respect of leases of controlled entities.
Consolidated
Parent Entity
2007
$'000
4,322
29,699
34,021
2006
$'000
4,722
30,635
35,357
2007
$'000
3,350
29,699
33,049
2006
$'000
3,350
30,635
33,985
The guarantees in respect of leases and loans of controlled entities are secured by cash collateral over the term of the leases.
No material losses are anticipated in respect of any of the above contingent liabilities.
The Directors are not aware of any further contingent liabilities existing at reporting date.
29. Commitments
Capital Commitments
Commitments for the acquisition of plant and equipment
contracted for at the reporting date but not recognised
as liabilities, payable:
Not later than 1 year
Later than 1 year but not later than 5 years
Later than 5 years
The above commitments include capital expenditure commitments
relating to the 3GIS joint venture operation (note 32 (b))
Lease Commitments
Commitments in relation to leases contracted for at the
reporting date but not recognised as liabilities, payable:
Operating leases
Not later than 1 year
Later than 1 year but not later than 5 years
Later than 5 years
Representing:
Non-cancellable operating leases
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
76,010
32,355
-
65,911
59,092
-
108,365
125,003
-
718
-
-
-
-
-
-
-
-
-
-
23,220
37,158
11,420
71,798
27,991
41,543
1,785
71,319
2,950
774
-
3,724
7,300
6,600
-
13,900
71,798
71,319
3,724
13,900
The Consolidated Entity leases various sites, offices, retail shops and warehouses under non-cancellable operating leases expiring within one to eighteen years. The leases have
varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
72
Hutchison Telecommunications (Australia) Limited
29. Commitments continued
Finance leases
Commitments in relation to finance leases are payable as follows:
Not later than 1 year
Later than 1 year but not later than 5 years
Minimum lease payments
Less: Future finance charges
Recognised as a liability
Representing lease liabilities:
Current (note 17)
Non-current (note 21)
Consolidated
Parent Entity
2007
$'000
2,042
2,156
4,198
(277)
3,921
1,820
2,101
3,921
2006
$'000
2,192
1,697
3,889
(285)
3,604
2,017
1,587
3,604
2007
$'000
2006
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The weighted average interest rate implicit in the leases is 6.99% (2006: 6.44%).
The Consolidated Entity leases various computer equipment with a carrying value of $7,752,000 (2006: $6,268,000) under finance leases which expire within
one to four years. Under the terms of the leases, the Consolidated Entity has the option to acquire the leased assets for an agreed amount or an agreed fair
value as detailed in the lease agreement.
30. Related party transactions
(a) Parent entities
The holding company and Australian parent entity is Hutchison Communications (Australia) Pty Limited which at 31 December 2007 owns 52% (2006 : 58%)
of the issued ordinary shares of Hutchison Telecommunications (Australia) Limited. Hutchison Communications (Australia) Pty Limited currently holds
13,568,383,554 (90%) of the convertible preference shares (CPS) issued on 8 June 2007 which will convert into 0.85 ordinary shares for each CPS five years
after their date of issue. Refer to note 23 for further details. The ultimate parent entity is Hutchison Whampoa Limited (incorporated in Hong Kong) which at
31 December 2007 beneficially owns 100% (2006 - 100%) of the issued shares of Hutchison Communications (Australia) Pty Limited.
(b) Directors
The names of persons who were Directors of the Company at any time during the financial year are as follows: FOK Kin-ning, Canning; Barry ROBERTS-
THOMSON; CHOW Woo Mo Fong, Susan; Justin H. GARDENER; LAI Kai Ming, Dominic; John Michael SCANLON and Frank John SIXT. Mr Marko BOGOIEVSKI
and Mr Kevin Steven RUSSELL were appointed as Directors on 19 October 2007. Mr Marko BOGOIEVSKI resigned as a Director on 31 January 2008.
Mr Roderick James SNODGRASS was appointed as a Director on 15 February 2008.
(c) Key management personnel compensation
Disclosures relating to key management personnel compensation are set out in the Directors' Report.
Annual Report 2007
73
Notes continued
30. Related party transactions continued
(d) Transactions with related parties
During the year, the following transactions occurred with related parties:
Sales of goods and services
Sale of interconnection services to subsidiary
Sale of telecommunications related goods and services to joint venture
Recharge of staff costs
Purchases of goods
Purchase of interconnection services from subsidiary
Purchase of goods and services from commonly controlled entities
Purchase of telecommunications related goods and services from joint venture
Loans to related parties
Loans advanced to:
Subsidiaries
Loans from related parties
Loans advanced from:
Related entity
Loans repayments to:
Parent entity
Related entity
Interest revenue
Subsidiaries
Interest expense
Ultimate parent entity
Ultimate Australian parent entity
Related entity
Superannuation contributions
Consolidated
Parent Entity
2007
$'000
-
4,480
-
-
2006
$'000
-
5,696
-
-
386,376
50,950
388,642
38,929
2007
$'000
196
-
2006
$'000
2,351
-
123,155
123,682
258
-
-
4,962
-
-
-
-
1,235,035
264,099
178,734
754,412
1,977
754,412
196,000
754,412
-
27,940
20,657
-
-
-
-
42,774
49,376
16,398
196,000
754,412
-
-
103,780
8,804
3,726
20,657
-
168
-
10,469
49,376
3,170
426
-
Contributions to superannuation funds on behalf of employees
7,720
6,596
Other transactions
Advances to jointly controlled entity
55,768
48,595
Advances to jointly controlled entity's represents funds advanced under the terms of the agreement with the jointly controlled entity.
The funds advanced under the agreement are interest free and to be offset by charges from the jointly controlled entity.
On 19 October 2007, Hutchison Telecommunications (Australia) Limited issued 75,402,826 ordinary shares and 1,508,056,509 convertible preference shares
to Hutchison Communications (Australia) Pty Limited (HCAPL). Refer to note 23 for further details.
74
Hutchison Telecommunications (Australia) Limited
30. Related party transactions continued
(e) Outstanding balances
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables
Subsidiaries (note 7)
Non-current receivables
Subsidiaries (note 10)
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
-
-
-
-
216,609
33,657
1,443,882
391,799
Jointly controlled entity (note 10)
140,260
84,492
Payables
Commonly controlled entity (note16)
178,734
Current borrowings
Subsidiaries (note 20)
Non-current borrowings
Ultimate Australian parent entity (note 21)
Related entity (note 21)
-
-
-
-
-
-
-
4,973
2,996
-
-
196,000
754,412
-
-
196,000
754,412
No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been recognised in respect of bad or doubtful
debts due from related parties.
(f) Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
31. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy
described in note 1(b):
Name of Entity
Bell Organisation Pty Limited
Bell Paging Pty Limited
Bell Communications Pty Limited
Lindian Pty Limited
Erlington Pty Limited
Hutchison Telephone Pty Limited
HTAL Facilities Pty Limited
Hutchison 3G Australia Holdings Pty Limited **
Hutchison 3G Australia Pty Limited
H3GA Facilities Pty Limited
H3GA Properties (No. 3) Pty Limited
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Class of
Shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity Holding *
2007
%
100
100
100
100
100
100
100
100
100
100
100
2006
%
100
100
100
100
100
100
100
80
80
80
80
*
The proportion of ownership interest is equal to the proportion of voting power held.
** This subsidiary has been granted relief from the necessity to prepare financial reports in accordance with Class Order (98/1418) issued by the Australian Securities and
Investments Commission.
Annual Report 2007
75
Notes continued
32. Interest in joint ventures
(a) Jointly Controlled Entity
In December 2004 a controlled entity, Hutchison 3G Australia Pty Limited, established a 50% interest in a new partnership, 3GIS Partnership ('3GIS'), with
Telstra OnAir Holdings Pty Limited. 3GIS's principal activity is the operation and construction of 3G radio access network infrastructure. The interest in 3GIS is
accounted for in the consolidated financial statements using the equity method and is carried at cost.
Information relating to the jointly controlled entity is set-out below.
Consolidated
Parent Entity
Carrying amount of investment in the entity
Share of entity’s assets and liabilities
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Share of entity's revenue, expenses and results
Revenues
Expenses
Profit before income tax
Share of entity's commitments
Lease commitments
Capital commitments
Contingent liabilities relating to the jointly controlled entity
2007
$'000
-
45,692
117,127
162,819
(14,287)
(146,498)
(160,784)
2,035
72,364
(70,999)
1,365
2006
$'000
-
41,974
76,896
118,870
(28,817)
(89,383)
(118,200)
670
53,954
(53,284)
670
144,012
150,569
-
-
144,012
150,569
-
-
2007
$'000
2006
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(b) Jointly Controlled Asset
Under the same joint venture agreement described above, the ownership of the 50% of the existing 3G radio access network infrastructure remains with a
controlled entity, Hutchison 3G Australia Pty Limited. On this basis the network assets are proportionally consolidated in accordance with the accounting
policy described in note 1 (g)(ii) under the following classifications:
Non-current assets
Plant and equipment - at net book value (note 13)
Less: Accumulated depreciation
Capital commitments
Consolidated
Parent Entity
2007
$'000
2006
$'000
2007
$'000
2006
$'000
356,249
(60,048)
296,201
-
356,005
(40,153)
315,852
718
-
-
-
-
-
-
-
-
76
Hutchison Telecommunications (Australia) Limited
33. Segment Information
Business Segment
The Consolidated Entity operated entirely within the telecommunications industry and is treated as one business segment.
Geographical Segment
The Consolidated Entity operated entirely within Australia.
34. Reconciliation of (loss) / profit after income tax to net cash outflows from operating activities
Parent Entity
Consolidated
(Loss) / profit for the year
Amortisation
Depreciation
Amortisation - subscriber acquisition and retention costs
Customer acquisition costs written off
Non-cash employee benefits expense - share-based payments
Fair value adjustment on liabilities
Share of net profits of joint venture partnership accounted for using equity method
Change in operating assets and liabilities
Increase / (decrease) in provision for doubtful debts
(Increase) / decrease in receivables
(Increase) / decrease in inventories
Decrease in other assets
Increase / (decrease) in payables
Increase / (decrease) in other current liabilities
Increase in employee entitlements
2007
$'000
(285,106)
79,101
130,333
18,665
9,813
(417)
3,310
(1,365)
4,352
(117,458)
(42,245)
5,529
151,759
723
1,568
2006
$'000
(759,423)
120,390
261,387
8,395
-
182
4,818
(670)
1,065
(38,544)
4,357
1,264
42,584
(1,033)
408
Net cash outflows from operating activities
(41,438)
(354,820)
35. Non-cash investing and financing activities
2007
$'000
60,080
5,594
-
-
-
(417)
160
-
413
(88,791)
43
2,665
(40,807)
(96)
1,511
(59,645)
2006
$'000
(284,787)
49,835
131,569
-
-
182
2,940
-
(5,014)
34,874
178
3,772
5,120
(1,773)
408
(62,696)
Acquisition of plant & equipment by means of finance lease
Consolidated
Parent Entity
2007
$'000
3,148
2006
$'000
-
2007
$'000
-
2006
$'000
-
Goodwill
On 19 October 2007, Hutchison Telecommunications (Australia) Limited ("HTAL") acquired 19.94% of H3GA in exchange for issuing 75,402,826 number of
shares and 1,508,056,509 number of CPS to HCAPL. Refer to note 23(b)(ii) for further details.
Spectrum licence
Under the same transaction, HTAL also acquired the 850 MHz spectrum licence from TCNZ in consideration for granting an option to TCNZ to increase its 10%
interest in HTAL to a further 9.94% at any time before 31 December 2008.
Annual Report 2007
77
Notes continued
36. Earnings per share
(a) Basic earnings per share
Loss from continuing operations attributable to the ordinary equity holders of the Consolidated Entity
Loss attributable to the ordinary equity holders of the Consolidated Entity
(b) Diluted earnings per share
Loss from continuing operations attributable to the ordinary equity holders of the Consolidated Entity
Loss attributable to the ordinary equity holders of the Consolidated Entity
(c) Reconciliation of earnings used
in calculating earnings per share
Basic earnings per share
Loss from continuing operations
Loss from continuing operations attributable to minority interests
Loss attributable to the ordinary equity holders of the Consolidated Entity used in calculating basic earnings per share
Diluted earnings per share
Consolidated
2007
Cents
(41.25)
(41.25)
(41.25)
(41.25)
2006
Cents
(111.91)
(111.91)
(111.91)
(111.91)
Consolidated
2007
$'000
2006
$'000
(285,106)
(759,423)
-
-
(285,106)
(759,423)
Loss attributable to the ordinary equity holders of the Consolidated Entity used in calculating diluted earnings per share
(285,106)
(759,423)
Consolidated
2007
Number
2006
Number
(d) Weighted average number of shares used
as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
691,192,567
678,625,429
Weighted average number of ordinary shares and potential ordinary shares
used as the denominator in calculating diluted earnings per share
691,192,567
678,625,429
(e) Information concerning the classification of securities
(i) Options
Options granted to employees and Directors under the HTAL Executive Option Plan are considered to be potential ordinary shares but have not been included
in the determination of the diluted earnings per share since they are not dilutive.
The options have not been included in the determination of the basic earnings per share. Further details relating to the options are disclosed in note 37.
ii) Convertible Notes
Convertible notes are considered to be potential ordinary shares but have not been included in the determination of the diluted earnings per share since they
are not dilutive. The convertible notes have not been included in the determination of the basic earnings per share. Further details relating to convertible
notes are disclosed in note 17.
(iii) Convertible Preference Shares
Convertible preference shares are considered to be potential ordinary shares but have not been included in the determination of the diluted earnings per
share since they are not dilutive. The convertible preference shares have not been included in the determination of the basic earnings per share. Further
details relating to convertible preference shares are disclosed in note 23.
78
Hutchison Telecommunications (Australia) Limited
37. Share-based payments
Option Plans
The HTAL Executive Option Plan was established by the Board on 3 July 1999 and terminated on 27 March 2007. All permanent full-time, permanent part-
time and casual employees who were selected by the Board to receive an invitation or who were approved for participation in the plan were eligible to
participate in the plan.
The HTAL Employee Option Plan was established by the Board on 4 June 2007. All permanent full-time, permanent part-time and casual employees who
have been selected by the Board to receive an invitation or who have been approved for participation in the plan are eligible to participate in the plan.
When exercisable, each option is convertible into one ordinary share. The exercise price of options is the higher of the following:
(a)
(b)
the closing price of HTAL shares on the Australian Securities Exchange on the day on which the options are granted; and
the average closing price of HTAL shares for the five trading days immediately preceding the day on which the options are granted.
Set out below are summaries of options granted under each plan.
Consolidated and Parent Entity –
2007
Grant date
Expiry
date
Exercise
price
Balance at
the start of
the year
Issued
during
the year
Exercised
during
the year
Expired /
lapsed /
cancelled
during
Exercisable
Balance
at the end
at the end
the year of the year of the year
23-Jul-04
31-Dec-10
$0.455
10,450,000
- 10,450,000
30-Jul-04
31-Dec-10
10-Dec-04
31-Dec-10
23-Dec-04
31-Dec-10
3-Jun-05
31-Dec-10
1-Jul-05
31-Dec-10
5-Aug-05
31-Dec-10
31-Mar-06
31-Dec-10
13-Apr-06
31-Dec-10
14-Jun-07
13-Jun-12
14-Nov-07
13-Nov-12
$0.460
$0.360
$0.345
$0.270
$0.270
$0.270
$0.255
$0.250
$0.145
$0.200
50,000
450,000
150,000
50,000
200,000
200,000
3,965,000
150,000
50,000
450,000
150,000
50,000
200,000
200,000
3,965,000
150,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 29,320,000
-
300,000
400,000
28,920,000
-
300,000
Total
Weighted average exercise price
15,665,000
29,620,000
- 16,065,000
29,220,000
$0.393
$0.146
$0.000
$0.387
$0.146
Consolidated and Parent Entity –
2006
Grant date
Expiry
date
Exercise
price
Balance at
the start of
the year
Issued
during
the year
Exercised
during
the year
Expired /
lapsed /
cancelled
during
Exercisable
Balance
at the end
at the end
the year of the year of the year
18-Aug-01
17-Aug-06
$0.540
70,000
23-Jul-04
31-Dec-10
$0.455
13,840,000
30-Jul-04
31-Dec-10
20-Aug-04
31-Dec-10
10-Dec-04
31-Dec-10
23-Dec-04
31-Dec-10
3-Jun-05
31-Dec-10
1-Jul-05
31-Dec-10
5-Aug-05
31-Dec-10
31-Mar-06
31-Dec-10
13-Apr-06
31-Dec-10
$0.460
$0.405
$0.360
$0.345
$0.270
$0.270
$0.270
$0.255
$0.250
Total
50,000
100,000
450,000
150,000
50,000
200,000
200,000
-
-
4,815,000
150,000
15,110,000
4,965,000
-
-
-
-
-
-
-
-
-
-
-
-
70,000
-
3,390,000
10,450,000
-
50,000
100,000
-
-
-
-
-
-
450,000
150,000
50,000
200,000
200,000
850,000
3,965,000
-
150,000
4,410,000
15,665,000
-
-
-
-
-
-
-
-
-
-
-
-
Weighted average exercise price
$0.446
$0.255
$0.000
$0.417
$0.393
No options were forfeited during the year (2006: nil). The weighted average remaining contractual life of share options outstanding at the end of the period
was 4.5 years (2006: 4.0 years)
Annual Report 2007
79
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Notes continued
37. Share-based payments continued
Fair value of options granted
The assessed fair value at grant date of options granted during the year ended 31 December 2007 was 4 cents (2006: 10 cents).
Refer to note 1(u)(iv) for how the fair value of options were determined. The additional model inputs for options granted during the year ended 31
December 2007 not already outlined above include:
(a) weighted average share price at grant date: 14.6 cents (2006: 25 cents).
(b) weighted average of expected price volatility of the company's shares: 33% (2006: 35% ).
(c) expected dividend yield: 0% (2006: 0%)
(d) weighted average risk-free interest rate: 6.39% (2006: 5.4%).
The expected price volatility is based on the historical 12 month period prior to grant date.
Employee Share Purchase Plan
The employee share purchase plan allows for HTAL's shares to be purchased on-market for employees. All Australian resident permanent employees and
casual employees who have been employed by the company for more than one year are eligible to participate in the plan. Employees may elect not to
participate in the plan.
Under the plan, up to $1,000 of HTAL shares are purchased for each participating employee with the company contributing up to $250 of the cost of the
purchase, and brokerage and stamp duty costs.
Shares purchased under the plan may not be sold until the earlier of 3 years after purchase or cessation of employment with the company.
Expenses arising under share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employment costs were as follows:
Options issued under HTAL Executive Option Plan
38. Critical accounting
estimates and judgements
Estimates and judgements 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.
(a) Critical accounting estimates and
assumptions
Impairment of assets
In accordance with the Consolidated Entity’s
accounting policy stated in note 1(h) assets have
been tested for impairment. The recoverable
amount of the Consolidated Entity’s cash
generating unit has been determined based on
value in use calculations. Refer to note 1(h) for
details on the Consolidated Entity's cash
generating unit. These calculations require the
use of estimates and assumptions.
The value in use calculation is based on cash flow
projections over a 10 year period which is the
estimated average useful life of the assets under
review. These calculations use cash flow
projections based on financial budgets approved
by the Board covering a five year period. Cash
flows beyond the five year period are
Consolidated
Parent Entity
2007
$'000
-
2006
$'000
182
2007
$'000
-
2006
$'000
182
extrapolated using the estimated growth rates
stated below.
The key assumptions used for the value in use
calculations are as follows:
-
-
-
Weighted average growth rate used to
extrapolate cash flows beyond 2012 of 0%;
Pre tax discount rate applied to the cash
flow projections of 9.25%; and
Terminal value at the end of the modelled
period based on a multiple of EBITDA less
costs to sell.
The growth rate is a conservative estimate of
forecast long-term industry growth. The discount
rate reflects the debt:equity ratio and the risks
relating to the Consolidated Entity in the industry
in which it operates. The terminal value is an
approximation of the estimated fair value less
costs to sell at the end of the forecast period.
Management determined other budget and
forecast information such as subscriber numbers
and margins based on past performance and its
expectations of the future.
Management performed sensitivities on the key
assumptions outlined above and noted no
impairment of assets under any reasonable
scenario considered.
The recoverable amount of the Parent Entity's
cash generating unit, being the 2G spectrum
licence, is assessed at fair value less costs to sell.
This is based on the estimated value of estimated
proceeds from the sale of the 2G spectrum
licence.
The recoverable amount of the Parent Entity’s
investment in controlled entities (refer note 12)
has been determined based on value in use
calculations. The cash flows underlying the value
in use calculations are mainly derived from the
3G business. The key assumptions used for the
value in use calculation are consistent with those
outlined above for the Consolidated Entity’s cash
generating unit.
Corporate assets have been allocated on a
reasonable and consistent basis to the cash
generating unit to which the corporate asset
belongs.
(b) Critical judgements in applying
the Consolidated Entity’s
accounting policies
There are no judgments made in applying the
Consolidated Entity’s accounting policies that
have a significant effect on the amounts
recognised in the financial report.
80
Hutchison Telecommunications (Australia) Limited
39. Revision of accounting
estimates
Revision of useful lives of plant and
equipment
During the year the estimated total useful lives to
a subsidiary of certain items of network
equipment and computer equipment were
revised. The net effect of the changes in the
current financial year was a decrease in
depreciation expense of the Consolidated Entity
of $13,963,000.
Assuming the assets are held until the end of
their estimated useful lives, depreciation of the
Consolidated Entity in future years in relation to
these assets will be decreased by the following
amounts:
Year ending 31 Dec
2008
2009
$'000
10,871
7,779
40. Events occurring after the
balance sheet date
No matter or circumstance has arisen subsequent
to balance date that has significantly affected, or
may significantly affect:
(i)
(ii)
(iii)
the operations of the Company and
Consolidated Entity's in future financial
years, or
the results of those operations in future
financial years, or
the state of affairs of the Company and
Consolidated Entity's in future financial
years.
41. Financial risk management
The Consolidated Entity's activities expose it to a
variety of financial risks: market risk (including
currency risk, fair value interest rate risk, cash
flow interest rate risk), credit risk and liquidity
risk. The Consolidated Entity's overall risk
management program focuses on the
unpredictability of financial markets and seeks to
minimise potential adverse effects on the
financial performance of the Consolidated Entity.
The Consolidated Entity uses derivative financial
instruments such as foreign exchange contracts to
hedge some risk exposures. The Consolidated
Entity uses different methods to measure
different types of risk to which it is exposed.
These methods include sensitivity analysis in the
case of interest rate, foreign exchange and other
price risks and ageing analysis for credit risk.
Risk management is carried out by a central
treasury department under policies approved by
the Board of Directors. Treasury identifies,
evaluates and hedges financial risks in close co-
operation with the Consolidated Entity’s
operating units. The Board provides written
principles for overall risk management, as well as
policies covering specific areas, such as foreign
exchange risk, interest rate risk, credit risk, use of
derivative financial instruments and non-
derivative financial instruments, and investment
of excess liquidity.
(a) Market risk
(i) Foreign exchange risk
The Consolidated Entity purchases handsets from
its suppliers on invoices denominated in US
dollars. In order to protect against exchange rate
movements, the Consolidated Entity enters into
foreign exchange contracts to purchase US
dollars.
Foreign exchange risk arises from future
commercial transactions and recognised assets
and liabilities that are denominated in a currency
that is not the entity’s functional currency. The
risk is measured using sensitivity analysis and
cash flow forecasting.
Management has set up a policy requiring
operating units to manage their foreign exchange
risk against their functional currency. Operating
units review individual requirements with the
central treasury department to hedge their
foreign exchange risk exposure arising from
future commercial transactions and recognised
assets and liabilities using forward contracts
transacted with financial institutions.
For reporting purposes, the entity designates
contracts as fair value hedges or cash flow
hedges, as appropriate. External foreign exchange
contracts are designated as hedges of foreign
exchange risk on specific assets, liabilities or
future transactions on a gross basis.
At 31 December 2007, had the Australian Dollar
weakened/strengthened by 10% against all other
currencies with all other variables held constant,
post-tax loss for the year would have been
$903,000 lower/$903,000 higher (2006:
$250,000 lower/$229,000 higher), mainly as
a result of foreign exchange losses/gains on
translation of US dollar denominated trade
payables. Loss is more sensitive to movements
in the Australian dollar/US dollar exchange rates
in 2007 than 2006 because of the increased
amount of foreign currency denominated
accounts receivable, which is partly off-set by
foreign currency hedging. Equity would have
been $903,000 lower/$903,000 higher (2006:
$250,000 lower/$229,000 higher) had the
Australian dollar weakened/strengthened by 10%
against all other currencies, arising mainly from
translation of US dollar denominated trade
payables. Equity is more sensitive to movements
in the Australian dollar in 2007 than 2006
because of the decrease in forward foreign
exchange contracts.
(ii) Cash flow and fair value interest
rate risk
The Consolidated Entity's main interest rate risk
arises from long-term borrowings. Borrowings
issued at variable rates expose the Consolidated
Entity to cash flow interest rate risk. Borrowings
issued at fixed rates expose the Consolidated
Entity to fair value interest rate risk.
The Consolidated Entity analyses its interest rate
exposure on a dynamic basis. Various scenarios
are simulated taking into consideration
refinancing, renewal of existing positions,
alternative financing and hedging. Based on
these scenarios, the Consolidated Entity calculates
the impact on profit and loss of a defined interest
rate shift. For each simulation, the same interest
rate shift is used for all currencies. The scenarios
are run only for liabilities that represent the
major interest-bearing positions. Based on the
simulations performed, the impact on profit or
loss of a 10 basis-point shift would be a
maximum increase of $1,097,900 ($2006:
$2,240,600) or decrease of $1,097,900 (2006:
$2,240,600) respectively. The simulation is
done on a yearly basis to verify that the
maximum loss potential is within the limit given
by the management.
At 31 December 2007, if interest rates had
changed by -/+1% from the year-end rates of
9.1% with all other variables held constant, post-
tax loss for the year would have been
$10,630,000 lower/higher (2006: $22,170,000
lower/higher), mainly as a result of lower interest
income from cash and cash equivalents. Equity
would have been $10,630,000 lower/higher
mainly as a result of an increase/decrease in the
fair value of the cash flow hedges of borrowings.
Annual Report 2007
81
Notes continued
41. Financial risk management continued
(a) Market risk continued
(iii) Summarised sensitivity analysis
The following table summarises the sensitivity of the Consolidated Entity’s financial assets and financial liabilities to interest rate risk, foreign exchange risk
and other price risk.
Interest rate risk
Foreign exchange risk
-1%
+1%
-10%
+10%
Carrying amount
$'000
Loss
$'000
Equity
$'000
Loss
$'000
Equity
$'000
Loss
$'000
Equity
$'000
Loss
$'000
Equity
$'000
34,894
337,624
(182,458)
(1,101,812)
(911,752)
(349)
(349)
349
349
1,825
1,825
(1,825)
(1,825)
(922)
(922)
922
922
10,979
10,630
10,979
10,630
(10,979)
(10,979)
(10,630)
(10,630)
903
903
(903)
(903)
31 December 2007
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade payables
Borrowings
Total increase / (decrease)
(b) Credit risk
Credit risk is managed on an entity basis. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit
exposures to wholesale and retail customers, including outstanding receivables and committed transactions. For banks and financial institutions, only
independently rated parties with a minimum rating of ‘A’ are accepted. If wholesale customers are independently rated, these ratings are used. Otherwise, if
there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other
factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Credit Department following a credit risk
assessment. The utilisation of credit limits by wholesale customers is regularly monitored by line management. The entity uses automated payment facilities
such as direct deposit of customers bank account or credit card to settle amounts due by retail customers, mitigating credit risk.
Credit risk further arises in relation to financial guarantees given to certain parties (see note 28 for details). Such guarantees are only provided in exceptional
circumstances and are subject to board approval.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of
committed credit facilities and the support from related parties.
The Consolidated Entity manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial
assets and liabilities. Due to the dynamic nature of the underlying businesses, Treasury aims at maintaining flexibility in funding by keeping committed credit
lines available with a variety of counterparties. Surplus funds are generally only invested in instruments that are tradeable in highly liquid markets.
The table below analyses the Consolidated Entity’s financial liabilities relevant maturity groupings based on the remaining period at the reporting date to the
contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their
carrying balances, as the impact of discounting is not significant.
At 31 December 2007
Bank loans
Finance lease liabilities
Less than
1 year
$'000
Between
1 and 2 years
$'000
Between
2 and 5 years
$'000
299,964
1,820
698,133
2,101
99,794
-
Over
5 years
$'000
-
-
82
Hutchison Telecommunications (Australia) Limited
Directors' Declaration
In the Directors' opinion:
(a)
the financial statements and notes set out on pages 42 to 82 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
giving a true and fair view of the Company’s and Consolidated Entity’s financial position as at 31 December 2007 and of their performance
for the financial year ended on that date; and
(b)
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and
the audited remuneration disclosures set out on pages 34 to 38 of the Directors’ report comply with Accounting Standards AASB 124 Related Party
Disclosures and the Conjunction Regulation 2001.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
FOK Kin-ning, Canning
Chairman
Frank Sixt
Director
25 February 2008
Annual Report 2007
83
Independent Auditor’s
Report
to the members of Hutchison Telecommunications (Australia) Limited
PricewaterhouseCoopers
ABN 52 780 433 757
Darling Park Tower 2
201 Sussex Street
GPO BOX 2650
SYDNEY NSW 1171
DX 77 Sydney
Australia
www.pwc.com/au
Telephone +61 2 8266 0000
Facsimile +61 2 8266 9999
Report on the financial report and the AASB 124 remuneration disclosures contained in the
directors’ report
We have audited the accompanying financial report of Hutchison Telecommunications (Australia) Limited (the company), which comprises the balance sheet
as at 31 December 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary
of significant accounting policies, other explanatory notes and the directors’ declaration for both Hutchison Telecommunications (Australia) Limited and
the Hutchison Telecommunications (Australia) Limited Group (the consolidated entity). The consolidated entity comprises the company and the entities it
controlled at the year's end or from time to time during the financial year.
We have also audited the remuneration disclosures contained in the directors’ report under the heading “remuneration report” in pages 34 to 38 of the
directors’ report and not in the financial report.
Directors’ responsibility for the financial report and the AASB 124 remuneration disclosures contained in the
directors' report.
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting
Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining
internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or
error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian
equivalents to International Financial Reporting Standards ensures that the consolidated financial report, comprising the financial statements and notes,
complies with International Financial Reporting Standards.
The directors of the company are also responsible for the remuneration disclosures contained in the directors’ report.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing
Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the
audit to obtain reasonable assurance whether the financial report is free from material misstatement. Our responsibility is to also express an opinion on the
remuneration disclosures contained in the directors’ report based on our audit.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report and the remuneration disclosures
contained in the directors’ report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement
of the financial report and the remuneration disclosures contained in the directors’ report, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report and the remuneration disclosures
contained in the directors’ report 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report and the remuneration
disclosures contained in the directors’ report.
Our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with the
financial report.
For further explanation of an audit, visit our website http://www.pwc.com/au/financialstatementaudit.
Our audit did not involve an analysis of the prudence of business decisions made by directors or management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Liability limited by a scheme approved under Professional Standards Legislation
84
Hutchison Telecommunications (Australia) Limited
Matters relating to the electronic presentation of the audited financial report
This auditor’s report relates to the financial report and remuneration disclosures of Hutchison Telecommunications (Australia) Limited for the year ended 31
December 2007 included on Hutchison Telecommunications (Australia) Limited web site. The company’s directors are responsible for the integrity of the
Hutchison Telecommunications (Australia) Limited web site. We have not been engaged to report on the integrity of this web site. The auditor’s report refers
only to the statements and remuneration disclosures named above. It does not provide an opinion on any other information which may have been
hyperlinked to/from these statements or the remuneration disclosures. If users of this report are concerned with the inherent risks arising from electronic
data communications they are advised to refer to the hard copy of the audited financial report and remuneration disclosures to confirm the information
included in the audited financial report and remuneration disclosures presented on this web site.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s opinion on the financial report
In our opinion:
(a)
the financial report of Hutchison Telecommunications (Australia) Limited is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the company’s and consolidated entity’s financial position as at 31 December 2007 and of their performance for the
year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
and
(ii)
(b)
the financial report complies with International Financial Reporting Standards as disclosed in Note 1.
Auditor’s opinion on the AASB 124 remuneration disclosures contained in the directors’ report
In our opinion, the remuneration disclosures that are contained in pages 34 to 38 of the directors’ report comply with section 300A of the
Corporations Act 2001.
PricewaterhouseCoopers
RL Wilkie
Partner
Sydney
25 February 2008
Liability limited by a scheme approved under Professional Standards Legislation
Annual Report 2007
85
Shareholder Information
The shareholder information set out below was applicable as at 14 March 2008
Twenty largest shareholders
There were 4,276 holders of less than a marketable parcel of ordinary
shares. The names of the 20 largest holders of quoted ordinary shares as at
14 March 2008 are as follows:
Shareholder
% Issued
Shareholding Capital
Rank
Hutchison Communications (Australia) Pty Limited 392,353,358
Leanrose Pty Limited
Telecom 3G (Australia) Limited
HSBC Custody Nominees
(Australia) Limited – GSCO ECSA
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia
HSBC Custody Nominees
(Australia) Limited – GSI ECSA
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
Yet Kwong Chiang & Ho Yuk Lin Chiang
Arjee Pty Ltd
George Thomson
Wei Wei Wai
Song Song Zhang
Yim Fong Leung
Jason Boua Hong Lo
ANZ Nominees Limited
Yee Man Tang
Hung Fong Chong
David Lau
83,913,797
75,402,826
16,650,640
52.03
11.13
10.00
2.21
13,958,300
1.85
7,373,837
4,000,000
3,719,369
3,525,122
3,500,000
2,077,936
2,052,772
2,000,000
1,651,861
1,640,000
1,400,000
1,360,000
1,250,000
1,201,000
1,100,000
.98
.53
.49
.47
.46
.28
.27
.27
.22
.22
.19
.18
.17
.16
.15
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2
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4
5
6
7
8
9
10
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12
13
14
15
16
17
18
19
20
Substantial shareholders
Substantial shareholders in the Company are:
Hutchison Communications
(Australia) Pty Limited#
Leanrose Pty Limited
Telecom 3G (Australia) Limited &
Shareholding
Percentage
476,267,155
83,913,797
63.16%
11.13%
Telecom Corporation of New Zealand Limited
75,402,826
10.0%
Notes:
#
Substantial shareholding includes relevant interest arising from an equitable mortgage
of shares between Leanrose Pty Limited and Hutchison Communications (Australia) Pty
Limited.
Distribution of equity securities
Range
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-OVER
Total
Ordinary
Shares
Convertible
Preference
Shares
Options
1,658
3,395
1,319
1,575
252
8,199
4
28
11
35
9
87
Nil
Nil
Nil
16
50
66
86
Hutchison Telecommunications (Australia) Limited
Twenty largest convertible preference
shareholders
The names of the 20 largest holders of quoted convertible notes as at 14
March 2008 are as follows:
Convertible Preference
Shareholder
Convertible Preference
Shareholding
Rank
Voting rights
The voting rights attaching to each class of equity securities are:
(a) Ordinary shares
On a show of hands, every member present, in person or by proxy,
attorney or representative, has one vote.
On a poll every member has one vote for each share.
(b)
Convertible preference shares
Only in the limited circumstances specified in the Company’s
Constitution and the terms and conditions of issue of the convertible
preference shares, on a show of hands, every holder of convertible
preference shares present, in person or by proxy, attorney or
representative, has one vote and on a poll every holder of convertible
preference shares has one vote in respect of each ordinary share as if
immediately before the meeting the convertible preference shares had
converted into the number of ordinary shares provided for in the terms
and conditions of issue of the convertible preference shares.
(c)
Options
No voting rights
Hutchison Communications (Australia) Pty Limited
13,568,383,554
Telecom 3G (Australia) Limited
Share Direct Nominees Pty
Kew Chai Chong & Yook Yan Chang
Perpetual Custodians Limited
Custodials Services Limited
Prabha Chandra & Shubha Chandra
James Neville Brown & Rosemarie Anne Brown
Justin Herbert Gardener & Anne Louise Gardener
Patrick Lik-Tung Lui & Eva Man-Ching Law
National Nominees Limited
Myron Leibowitz
Veredi Pty Ltd
Saul BenedictFreedman & Alexandra Francesca
Kevin J Finegan Pty Ltd
Melpa Company Pty Ltd
Patville Pty Ltd
Kok Liang Chen
Michael John Crandon & Pauline Mary Crandon
Alex Hoang Huynh
1,508,056,509
1,400,000
300,000
250,000
210,000
200,000
160,000
150,000
100,000
100,000
80,000
70,000
60,000
60,000
57,160
57,160
50,000
50,000
50,000
Unquoted Equity Securities
Options issued under the Employee Option Plan
Number of Options on issue
Number of holders
29,120,00
66
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15
Annual Report 2007
87
Securities Exchange Listing
Hutchison shares are listed on the Australian
Securities Exchange Limited ASX Code: HTA
Notice of Annual
General Meeting
The Annual General Meeting of
Hutchison will be held at:
The Conference Centre
Building A, 207 Pacific Highway
St Leonards NSW 2065
Date: Monday 19 May 2008
Time: 10.00am
Corporate Directory
Directors
Fok Kin-ning, Canning
Barry Roberts-Thomson
Chow Woo Mo Fong, Susan
Justin Herbert Gardener
Lai Kai Ming, Dominic
Kevin Russell
John Michael Scanlon
Frank John Sixt
Rod Snodgrass
Company Secretaries
Edith Shih
Louise Sexton
Investor Relations
(02) 9964 4831
Tel:
Fax:
(02) 9964 4649
Email: investors@hutchison.com.au
Web: www.hutchison.com.au
Registered Office
Building A, 207 Pacific Highway
St Leonards NSW 2065
Tel: (02) 9964 4646
Fax: (02) 9964 4668
Share Registry
Link Market Services
Level 12, 680 George Street
Sydney NSW 2000
Tel: (02) 8280 7111
www.linkmarketservices.com.au
Auditor
PricewaterhouseCoopers
Chartered Accountants
201 Sussex Street
Sydney NSW 2000
88
Hutchison Telecommunications (Australia) Limited
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HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED
www.hutchison.com.au
It’s good
to be