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
30 March 2009
Subject: Annual Report 2008
The Company’s 2008 Annual Report incorporating the full year accounts for the period
ended 31 December 2008 is attached.
Yours faithfully
Louise Sexton
Company Secretary
Continued
Growth
2008 Annual Report
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED
Contents
1
2
6
8
10
16
18
20
22
25
33
38
72
73
75
77
About Hutchison
Financial & Operational Highlights
Chairman’s Message
CEO’s Message
Review of Operations
Corporate Social Responsibility
Senior Management
Board of Directors
Corporate Governance
Directors’ Report
Financial Report
Notes to the Financial Statements
Directors’ Declaration
Independent Auditors’ Report
Shareholder Information
Corporate Directory
AGM
The Annual General Meeting of Hutchison will be held at:
The Conference Centre, Building A, 207 Pacific Highway,
St Leonards NSW 2065
Tuesday, 19 May 2009, 10am
In 2008 Hutchison continued to grow strongly.
The year saw significant growth in revenue
and customer numbers and considerable
improvements in EBITDA and EBIT.
Hutchison introduced Australia's first 3rd generation (3G) network in 2003,
called 3. 3 is focused on delivering great value voice and data as well as fast-growing
innovative services like Mobile Broadband and Mobile Email.
Today there are over 2 million customers using the 3 network for voice calls and
messaging services and a range of 3G services such as mobile internet, mobile social
networking, Mobile TV, music, news, sport, finance and weather.
ABOUT HUTCHISON Annual Report 2008
1
Financial & Operational
Highlights
In 2008 Hutchison continued to grow strongly with double-digit growth
in customer numbers, revenue and margin.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) improved by $86.0 million to
$200.0 million, and Hutchison’s net loss position improved by 42.8% to $163.1 million.
Hutchison realised a full year of benefits from its reduced debt position.
With all measures of profitability improving during the year, Hutchison was Earnings Before Interest
and Tax (EBIT) positive during the fourth quarter of 2008.
In early 2009, Hutchison and Vodafone announced a proposal to merge their telecommunications
businesses in Australia, in a 50-50 joint venture.
3
2
6
,
1
($ Millions)
8
1
3
,
1
8
5
0
,
1
06
07
08
1,200
1,000
800
600
400
200
0
0
.
0
0
2
0
.
4
1
1
2
.
0
3
06
07
08
($ Millions)
180
150
120
90
60
30
0
Total Revenue
1.623 billion
$
An increase of 23.1%
Positive EBITDA
200.0 million
$
An increase of $86.0 million
2
Hutchison Telecommunications (Australia) Limited
EBIT positive
during Q4
A 52.8% improvement
Average monthly margin
96.8 million
$
An increase of 27.4%
Net Loss
163.1 million
$
An improvement of $122.0 million
CAPEX
200.2 milion
$
Down 25.3% from 2007
06
4
.
9
5
7
-
8
.
3
0
2
07
1
.
5
8
2
-
08
1
.
3
6
1
-
($ Millions)
0
-100
-200
-300
-400
-500
-600
0
.
8
6
2
($ Millions)
2
.
0
0
2
220
200
180
160
140
120
100
06
07
08
FINANCIAL & OPERATIONAL HIGHLIGHTS
Annual Report 2008
3
Financial & Operational Highlights continued.
Double-digit customer growth & strong non-voice improvements were fuelled
by customers’ increasing appetite for mobile data.
6
3
0
,
2
8
7
5
,
1
5
4
2
,
1
06
07
08
6
2
5
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3
5
9
1
DEC
07
JUN
08
DEC
08
(’000)
1,500
1,250
1,000
750
500
250
0
(’000)
420
350
280
210
140
70
0
Total Customers
2,036,000
An increase of 29.0%
Mobile Broadband
Subscribers
526,000
An increase of 169.7%
Mobile Broadband subscribers include X-Series,
Mobile Broadband Card, USB and handset as a modem
4
Hutchison Telecommunications (Australia) Limited
Non-Voice services
growth
68.4% of customers paid
for non-voice services per month
Average margin
steady
$51.47 per customer
Non-Voice
Average Revenue
$
20.76per user
An increase of 13.4%
Average Revenue
66.54 per user
$
Underpinned by strong performance
of non-voice services
1
2
8
1
7
1
06
07
08
7
6
9
6
7
6
06
07
08
($)
20
18
16
14
12
10
8
($)
70
60
50
40
30
20
10
FINANCIAL & OPERATIONAL HIGHLIGHTS
Annual Report 2008
5
Chairman’s
Message
During the year ending 31 December 2008
the company saw substantial year on year
improvements in EBITDA, EBIT and net loss
as operations continued to grow strongly.
Key Financials
In 2008, Hutchison experienced double-digit
revenue growth to $1.6 billion, up $305 million
or 23.1% on the previous year, and an average
monthly margin increase to $96.8 million from
$76.0 million. These strong increases in revenue
and margin have resulted in an EBITDA of $200.0
million, an increase of $86.0 million on 2007.
The Company also improved its net loss
performance, recording a loss of $163.1 million,
a 42.8% improvement on the reported loss
in 2007.
The Company reached two significant milestones
in the fourth quarter. First, being EBIT positive
and second, achieving a customer base of
2 million in just over five years of full operation.
Following recapitalisation in 2007, finance costs
fell by $56.6 million to $104.6 million in 2008.
With the support of Hutchison Whampoa Limited,
the Company repaid $1.1 billion in external
funding in December 2008.
Customer growth continues
Customer growth continued to trend upwards,
with a 29% increase in customers to 2.036 million
in the year ending 31 December 2008.
Key to achieving this customer growth was
the strong sales in Mobile Broadband. Mobile
Broadband subscribers reached 526,000,
up 169.7% for the year, largely fuelled by
competitive data allowance offers and new
internet friendly devices brought to market by 3.
Total revenue
1.623 billion
$
A 23.1% increase on 2007
6
Hutchison Telecommunications (Australia) Limited
42.8% improvement
on net loss
Net loss of $163.1 million
Innovation continues
Since introducing 3G to Australia in 2003, we have
seen many changes in the way customers use
their mobile phones. Our leadership in this area
continued throughout the year and non-voice
services continued to be popular, contributing to
pleasing growth in non-voice usage and revenue.
3 continued to bring innovative products and
services to its customers. In late 2008, INQ Mobile,
a new Hutchison Whampoa company, launched its
first mobile, INQ1, exclusively to 3’s customers.
INQ1 is the world’s most advanced social
networking mobile phone and transforms the
mobile social networking experience. It was
recently awarded ‘Best Mobile Handset or Device’
by GSMA and won the award over four other
shortlisted contenders including the Nokia E71,
T-Mobile G1, RIM BlackBerry Storm and LG KS360.
Looking ahead
In 2008, we continued to see further growth in
the 3G market. As we enter the year
in a strong position as a value leader, we expect
continued growth in 2009 and further
improvements to the Company’s financial position.
Our leadership in non-voice services, particularly
mobile broadband, will continue to be a focus in
2009 as 3’s coverage is extended to 96% of the
population during the first half of 2009.
This strong and consistent performance has
enabled Hutchison to enter an agreement for a
proposed 50-50 joint venture with Vodafone
Australia. On 9 February 2009, Hutchison and
Vodafone announced their intention to merge
their telecommunications businesses (3 and
Vodafone Australia). The new company will
market its products and services using Vodafone
as the lead brand and will retain exclusive rights
to use the 3 brand in Australia.
The proposed merger is subject to shareholder,
ACCC and Foreign Investment Review
Board approval.
The transaction is expected to enhance the
Company’s adjusted earnings per share from the
first full year post completion, after synergies
and excluding the impact of intangible asset
amortisation and one-off costs.
Fok Kin-ning, Canning
Chairman
CHAIRMAN’S MESSAGE Annual Report 2008
7
CEO’s
Message
In 2008, Hutchison continued to perform very strongly with
significant increases in revenue from non-voice services and
significant improvements to our financial position.
Despite aggressive competition in the mobile
market in 2008, including high handset subsidies
and significant advertising, 3 maintained its
position as a value and innovation leader.
Pleasingly, total margin increased 27.4% to $1.2
billion in the year and Average Revenue Per User
(ARPU) was $66.54, with 31.2% of each bill
comprising of non-voice services.
Continued momentum
in customer growth
Through strong sales and maintaining an
industry-leading low post-paid churn rate, the
customer base grew by 458,000 to reach 2.036
million at 31 December 2008.
While the number of new handset customers
continued to grow, a large part of our customer
growth was fuelled by the growth of the mobile
broadband subscriber base.
Strengthening financials
in a competitive market
In 2008, revenue continued to increase strongly,
with a significant contribution from non-voice
services.
Revenue grew from $1.318 billion in 2007
to $1.623 billion in 2008, an increase of
23.1%. Non-voice revenue increased 65%
to $464.2 million.
Underpinned by strong operations, our financial
position strengthened significantly with EBITDA
improving by $86.0 million to $200.0 million,
and the net loss position improving by $122.0
million to $163.1 million.
During the year customer acquisition costs were
reduced to $236 from $263 in 2007. Capital
expenditure of $200.2 million was 25.3% lower
than 2007.
With strong customer growth, revenue and
margin, the Company was EBIT positive during
the fourth quarter of 2008.
3G services continues growth trend
Mobile Broadband subscriptions continued to
grow strongly in 2008 and was 526,000 by the
end of the year. The launch of 3 Prepaid Mobile
Broadband in November helped drive increases
towards the end of the year and our expectation
is that it will be a significant product for 3 in
2009.
8
Hutchison Telecommunications (Australia) Limited
Non-voice
services
Contributed 31.2% of ARPU
Mobile Broadband
growth
Up 169.7% on 2007
Consumer demand for non-voice services
continued to increase in 2008. Customers
generated over 199 million internet access and
Planet 3 events, and 68.4% of 3’s customers paid
for these services each month, with customers
continuing to enjoy a range of content from news,
sports and entertainment on Planet 3. Driving use
of non-voice services, 3 added a choice of selected
free content to our Cap plans in July and also
increased the breadth and depth of content with
products including Project Runway added to the
Mobile TV offering. Open internet access and social
networking services, such as Skype and Facebook
are increasingly popular.
Non-voice services accounted for 31.2% of ARPU
in 2008, driven notably by Mobile Broadband.
Award winning
3 won several prestigious awards in 2008,
highlighting our increasing focus on customer
service and value.
At the 2008 Australian Telecoms Awards, 3
received two awards - one for ‘Best Mobile
Operator’ (which we also received in 2006) and
one for ‘Best Communications Retailer’ for our 3
Stores (for the second year running).
We were also recognised for the strength of
our people and culture, receiving two Cultural
Transformation Awards from Human Synergistics
– one for our Australian business and another for
our contact centre in Mumbai, India.
In the products and services area, 3 received
Money magazine’s Best of the Best award for
‘Best Broadband Plans – Mobile’. The award was
received for our $15 / 1GB Mobile Broadband plan.
A focus on the customer
During the year we maintained an industry low
level of post-paid external churn (1.2%). An
increased focus on improving customer service
and retention added to improvements in
customer satisfaction.
3’s award-winning self-care system called ‘My3’
continued to evolve with increased customer
uptake of the service. 3’s Service Centres, which
were opened in 2007, continued to improve
turnaround times for repairs.
During the year, we became the first signatory to
the Telecommunications Consumer Protections
Code, underlining our commitment to our focus
on quality customer experiences in sales, service
and support.
Outlook
In 2009, we are well placed to continue growing
as a value player in the mobile market and as a
leader in the mobile broadband market.
Hutchison is mindful of the slowing economy, in
particular the signs of a consumer-led slowdown.
We will continue to review the areas of potential
impact. Since we provide excellent value for
money and consumers are traditionally more
sensitive to price during economic downturns,
we currently believe we are well positioned to
continue to grow.
During 2009, we will continue to enhance the 3
network including bringing 3G services to 96% of
the population through network expansion and
roaming access to parts of Telstra’s 850MHz
network.
2009 will also see a 50-50 joint venture
between Hutchison and Vodafone Australia
established (subject to shareholder, ACCC and
other regulatory approvals). The proposed
merger
will create a much larger scale business with
approximately 6 million customers, revenues
of approximately $4 billion and a market share
of 27%.
The proposed merger will also produce a
stronger mobile operator better positioned to
compete in the Australian telecommunications
market as a significant value player and invest in
new technologies to continue driving customer-
led innovation.
In summary, 2008 has seen double-digit growth
in our customer base, revenue and margin,
resulting in continued improvements in the
Company's financial position. This strong
trajectory has placed us in a very exciting
position to further improve the value of
Hutchison Telecoms via a new joint venture.
Nigel Dews
Chief Executive Officer
CEO’S MESSAGE Annual Report 2008
9
Review of
Operations
During 2008, strong sales momentum and
take up of non-voice services continued with
non-voice usage and revenue both increasing
significantly.
Non-Voice Services
Non-voice ARPU increased by 13.4% to $20.76.
This also contributed to 27.4% growth in margin.
Non-voice services contributed 31.2% of ARPU.
3G ARPU (non-voice ARPU excluding SMS)
increased by 32.6% to $10.30.
Customers who were billed for non-voice
services, excluding SMS, rose to 68.4% of the
customer base with 1,289,000 customers being
billed for Planet 3 content or mobile broadband
events in the second half of the year. This was
up from 1,084,000 in the first half of the year.
YouTube, Gmail, Google and the Google logo are trademarks of Google Inc.
10
Hutchison Telecommunications (Australia) Limited
3 Prepaid Mobile Broadband was also
introduced towards the end of 2008, offering
customers another option for fast, flexible and
affordable internet access.
Average data usage across the network
increased from 121 terabytes per month in the
first half of the year to 263 terabytes per month
in second half of the year. At the same time the
number of customers accessing data rose to
25.9% of the total customer population, up
170.7% on 2007.
Mobile Broadband
Data and mobile broadband growth was a
highlight for the Company in 2008, with 526,000
subscriptions to Mobile Broadband services
(which includes X-Series, Mobile Broadband card
& USB and handset as a modem), up 169.7% on
2007.
Growth was fuelled by 3’s continued focus on
delivering high value data plans, making Mobile
Broadband more accessible and affordable to
consumers. 3’s continued expansion of the
Mobile Broadband device range and
improvements to accessing data services on
mobile phones were also contributing factors.
At the start of 2008, 3 introduced a half price
mobile broadband promotion for a limited time
and throughout the year increased data
allowances on plans, attracting more customers
and driving use of data.
REVIEW OF OPERATIONS Annual Report 2008
11
Review of Operations continued.
Planet 3 and Mobile Internet
In 2008, 3 launched a new-look Planet 3 to
make it easier for customers to access all their
favourite internet services from their mobile.
The new look Planet 3 includes four tabs:
• NEW - features all the latest news, sports
scores, gossip and more;
• FIND - displays the most popular sites
including Facebook, Hotmail and YouTube;
• MINE - provides quick and easy access to help
manage account information such as account
balances;
• FUN - to surprise and delight.
In the second half of the year, 3 refreshed its
X-Series Packs and increased data allowances on
some of these packs. In addition to increased data
allowances, 3 also provided all X-Series customers
(with compatible handsets) Skype-to-Skype
minutes to use every month. We expect VoIP
services to continue to grow.
Cap Plans and Voice Service
Having pioneered Cap plans in Australia in 2005,
3 introduced a new breed of Cap plan in 2008,
which included more talk value and a choice of
unlimited 3G content. The new Caps include up
to 25% more value in voice and text services,
over 50% more 3 to 3 calls, and for the first time
included a choice of unlimited News, Sport or
Fun content from popular brands including
Sky News, Fox Sports and Project Runway.
New Prepaid Caps were also introduced in 2008
and featured a range of new recharge options
including $29, $49, $69 and $99. The new
Prepaid Caps added value and flexibility,
allowing customers the freedom to use their
credit for what they want – talk, text or Mobile
Internet. Including Mobile Internet in Prepaid
Caps allows 3’s Prepaid Cap customers to browse
Facebook, MySpace or Google without the hassle
of extra subscriptions or additional costs.
12
Hutchison Telecommunications (Australia) Limited
Data access
increase
Customers accessing data rose
to 25.9% of the base
Non-Voice
services
68.4% of customers paid for
non-voice services each month
Customer Care
In addition to maintaining strong customer
growth, external churn remained at industry-low
levels with post-paid churn at 1.2% for the
12 months of 2008. Customer satisfaction levels,
as measured by both internal and external
surveys, have further improved.
3’s Service Centres in Sydney, Melbourne,
Brisbane, Adelaide and Perth continued to meet
our customers’ need for a simpler and quicker
way to have handsets repaired.
3 continued to deliver its award-winning self-care
system ‘My3’ during the year. Accessible from
handsets and on-line, ‘My3’ allows customers
more visibility and control over their 3 account
and continues to reduce the number of customer
calls to 3Care for account information and
other services.
Handsets
Continuing 3’s lead in innovation and recognising
the explosion of social networking, messaging
and VOIP, 3 launched the first handset from INQ
Mobile, the new manufacturer owned by
Hutchison Whampoa.
INQ1 is exclusive to 3 and for the first time fully
integrates Facebook, VoIP, email and instant
messaging, and supports the use of non-voice
services and unlimited use of Facebook at a mass
market price point. INQ1 was recently awarded a
prestigious GSMA award for ‘Best Mobile Handset
or Device’.
With over 250,000 visitors to Facebook on the
mobile by 3’s customers each week, social
networking on 3 is set to grow as the experience
improves significantly with the release of the INQ1.
In 2008, 3 continued to offer a wide range of
handsets with 30 introduced to the range
including models from Nokia, LG, Sony Ericsson,
RIM (BlackBerry), Samsung, HTC and INQ Mobile.
The majority of 3’s new handsets are HSDPA
enabled providing customers with a faster data
experience which has been key in the increased
data usage on handsets and mobile broadband
modems.
REVIEW OF OPERATIONS Annual Report 2008
13
Review of Operations continued.
Network
Throughout 2008, the 3GIS joint venture (with
our partner, Telstra Corporation Limited) added
a further 61 sites into the network bringing the
total number to 2,680.
The key network focus in 2008 was on delivering
capacity to the network and infrastructure to
support rapid customer and data growth by
infilling the existing coverage footprint.
Customers currently experience a typical
downlink speed of between 600Kbps and
3.0Mbps with a theoretical maximum in some
parts of the network of 7.2Mbps, and an uplink
speed of 1.4Mbps. Higher typical downlink
speeds will be available where capacity
expansions have been implemented. Network
speed upgrades will be in line with capacity
needs and the availability of mass market
devices to support those speeds.
During the second quarter of 2009, 3 will provide
its customers with high speed access to 3G
services in areas covering 96% of the population,
further enabling growth and expansion of the
use of 3G services.
Data usage
growth
Data usage increased from 121 terabytes per month in
the first half of the year to 263 terabytes per month
in second half of the year.
14
Hutchison Telecommunications (Australia) Limited
Planet 3 Content and
Mobile Broadband events
199 million Planet 3 Content and
Mobile Broadband events were experienced
Sponsorships
2008 saw 3 continue as a Platinum Partner of
Cricket Australia and sponsor of the Australian
Test Cricket team, as well as a sponsor of the
Essendon Football Club.
3’s sponsorship of the Australian Test Cricket
team and the Test Series has been hugely
successful. It is one of the most well recognised
sponsorships in Australia, and in 2008 it was
awarded Australia's best current sponsorship by
the Australasian Sponsorship Marketing
Association.
Following the success of 3’s cricket association,
3 extended its sponsorship of the team
until 2013. 3’s association with the McGrath
Foundation has enabled us to integrate our
community work with our cricket sponsorship.
3 ended its sponsorship of Essendon Football
Club at the end of the 2008 AFL season.
3 continued to sponsor television content,
providing opportunities for brand exposure in
core demographic areas and access to content for
streaming onto 3 mobiles. A notable example was
Project Runway, in partnership with Foxtel’s
ARENA TV.
REVIEW OF OPERATIONS Annual Report 2008
15
Corporate Social
Responsibility
Hutchison is committed to creating
and maintaining a supportive
workplace that accommodates the
needs of all its employees.
Our People
Making Hutchison a great place to work with a
strong culture has been an extremely important
part of the Company’s success. Last year, the
Company received two Cultural Transformation
Awards from Human Synergistics – one for our
Australian business and one for our contact
centre in Mumbai, India. The transformation
award is only received by three or four
organisations across Australia each year and
marks the significant progress 3 has made to
create a culture considered to be predominantly
constructive in its style – critical for having
engaged staff in our business.
Providing our 1,854 Hutchison employees with
opportunities for growth is key to being a great
place to work. During 2008 Hutchison continued
to build on the initiatives that were offered to
staff, by implementing the following programs;
Our Leaders:
• Leadership development programs – including
leadership awareness, impact and feedback
• Leadership conferences
• Ongoing analysis of recruitment systems and
processes
• Manager Induction program
• High potential leaders program
Our Other Employees:
• New employee programs to understand the
3 culture
• Personal growth workshops
• Team development workshops
• Refinement of induction processes
• Review of rewards and recognition programs
• Community assistance programs
16
Hutchison Telecommunications (Australia) Limited
1 0 0 %
7 5 %
60%
20%
Employment
1,854 people are currently employed
by Hutchison
Environment
60% of customers receive
paperless bills
A supportive workplace
At 3 we are committed to creating and
maintaining a supportive workplace environment
that accommodates the needs of employees with
family responsibilities. During the year we
revised our Paid Parental Leave Policy and set a
new benchmark for parental leave offered by
any Australian telecommunications company.
The new policy which came into effect on
1 January 2009 includes:
• 14 weeks of paid parental leave with all
14 weeks paid upfront;
• The ability to opt to take this payment at half
pay over 28 weeks.
Community
In 2008, our Spirit of 3 programme continued to
support a range of charities and not-for-profit
organisations including Cystic Fibrosis, SANE
Australia, Royal Institute for Deaf & Blind
Children, Youth Off The Streets, The Mirabel
Foundation, The Spot Youth and Youth Focus.
We continued to offer staff an employee
contribution program, where 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.
We also added the McGrath Foundation to the
Spirit of 3 program in 2008. The McGrath
Foundation was co-founded by Jane McGrath
and her cricketing husband Glenn after Jane’s
diagnosis and initial recovery from breast cancer.
The McGrath Foundation supports Breast Care
Nurses in hospitals throughout rural and regional
Australia, as well as educating women on how to
become 'breast aware’.
During the 3 mobile Test Series, with the help of
our staff volunteers in Perth, Melbourne and
Sydney, staff collected donations from the
crowds of $100,000. We also produced a limited-
edition 2009 ‘Men of Cricket’ calendar in aid of
the McGrath Foundation. Offering cricket fans a
new look at our cricketers, the calendar was sold
exclusively by 3 and a contribution of $50,000
has been made to the McGrath Foundation.
Environment
In 2008, 3 launched eBilling – the opportunity for
customers to obtain paperless bills via email.
To support eBilling and to recognise the great
contribution our customers were making to the
environment by going paperless, we established
a partnership with Greening Australia. The
partnership sees 3 donate $1,000 to Greening
Australia for every 1% of customers that sign up
for eBilling until April 2009. Over 60% of our
customers have signed up to eBilling and we
have made donations of $60,000.
We are a supporter and active participant in
MobileMuster, and since 2006 have recycled over
30 tonnes of mobile phones and accessories. 3’s
stores, 3 Service and 3’s offices all participate in
the program, with MobileMuster tubes available
at each location where old phones and
accessories can be dropped off for recycling.
Last year we took part in the MobileMuster
campaign called 'Old phones, more trees' where for
every mobile phone recycled from 2 May - 5 June,
MobileMuster planted a tree. This campaign broke
a Guinness World Record for the largest donation
of mobile phones in 24 hours being recorded on
31 May 2008 with 2,590 phones donated.
In 2008, 3 recycled over 16,000 kilograms of
mobiles and accessories.
CORPORATE SOCIAL RESPONSIBILITY
Annual Report 2008
17
Senior
Management
Nigel Dews
Chief Executive Officer
Tanya Bowes
Director, Communications
Greg Bourke
Director, Human Resources
Nigel Dews is Chief Executive
Officer and has held this position
since January 2007. Nigel joined
Hutchison in November 2003 as
Director - Sales, Marketing and
Product, and was responsible for
the sales, distribution, marketing
and 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 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
United Kingdom.
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.
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.
18
Hutchison Telecommunications (Australia) Limited
Tim Finlayson
Chief Financial Officer
Michael Young
Director, Technology
and Customer Services
Noel Hamill
Director, Sales, Marketing
and Product
Tim Finlayson joined
Hutchison in July 2003 from
PricewaterhouseCoopers (PWC)
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
Chief Financial Officer in 2006.
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 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 content services, and the
sourcing and supply of 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 2008
19
Board of
Directors
FOK Kin-ning, Canning
Chairman
BA, DFM, CA (Aus)
Barry ROBERTS-THOMSON
Deputy Chairman
CHOW WOO Mo Fong, Susan
Director
BSc
Justin Herbert GARDENER
Director
BEc, FCA
LAI Kai Ming, Dominic
Director
BSc, MBA
Kevin Steven RUSSELL
Director
BA, CA
John Michael SCANLON
Director
Frank John SIXT
Director
MA, LLL
Roderick James SNODGRASS
Director
BCA, CA
20
Hutchison Telecommunications (Australia) Limited
Frank John SIXT
Director MA, LLL
Frank John Sixt, aged 57, has been an executive
director since 1991 and group finance director
since 1998 of HWL, non-executive 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 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 42, is group
strategy director of TCNZ. Mr Snodgrass joined
TCNZ in 1998, after seven years in various
strategy, business development and commercial
roles in the oil and gas exploration and
production industry. His previous positions
within TCNZ have included general manager
group strategy and development, general
manager wired division, including TCNZ’s retail
fixed-line voice, data and internet businesses
and general manager of Xtra, TCNZ’s online
division, this following various financial,
commercial and business development roles.
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.
FOK Kin-ning, Canning
Chairman BA, DFM, CA (Aus)
Fok Kin-ning, Canning, aged 57, 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, co-chairman of Husky
Energy Inc. (“Husky”) since 2000, deputy
chairman of Cheung Kong Infrastructure
Holdings Limited (“CKIH”) since 1997, and non-
executive director of Cheung Kong (Holdings)
Limited (“CKH”) since 1985. He was previously
a director of 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.
Barry ROBERTS-THOMSON
Deputy Chairman
Barry Roberts-Thomson, aged 59, 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 55, 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, non-executive director of HTIL since 2008,
HKEH since 1996 (re-designated as executive
director since 2006) and TOM Group Limited
(“TOM”) since 1999, and director of Partner since
1998. 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.
Justin Herbert GARDENER
Director BEc, FCA
Justin H. Gardener, aged 72, has been a
director of a number of private and publicly
listed companies including Austar United
Communications Limited (appointed 1999
and retired 2008). 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 55, has been an
executive director of HWL since 2000, executive
director since 1994 and deputy chairman since
2001 of HHR. 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 42, 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 Hutchison. 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.
John Michael SCANLON
Director
John Michael Scanlon, aged 67, 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.
Annual Report 2008
21
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 (“CEO”) 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:
• Reviewing and approving the strategic
direction of Hutchison and establishing goals
both short term and long term to ensure
these strategic objectives are met and
ensuring appropriate resources are available
to meet these objectives;
• Overseeing Hutchison, including its control
and accountability systems;
• Ensuring the business risks facing Hutchison
are identified and reviewing, ratifying and
monitoring systems of risk management
and internal compliance and control, codes
of conduct and legal compliance;
• Monitoring the performance of management
against these goals and objectives and
initiating corrective action when required;
• Ensuring that there are adequate internal
controls and ethical standards of behaviour
adopted and met within Hutchison;
• Reviewing and approving annual financial
plans and monitoring corporate performance
against both short term and long term
financial plans;
• 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 CEO, 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 CEO 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
Australian Securities Exchange (“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 2001
requirements in relation to the retirement
of Directors, the current Directors have not
been appointed for a specified term. Details
of the Directors’ experience is set out on
page 21.
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 20, 21 and 26.
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;
• Assess the performance and independence
of the external auditors, taking into account
factors which may impair the auditor’s
judgement in audit matters related to
the Company;
• Review the interim and annual accounts
of the Company before their submission to
the Board;
22
Hutchison Telecommunications (Australia) Limited
• 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 20, 21 and 26.
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 27 to 31.
This committee also reviews and makes
recommendations to the Board on remuneration
policies and other terms of employment
applicable to the CEO, 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.
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. Details of the compensation
philosophy and practice of the Company are
set out in the Directors’ Report.
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 periodically 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.
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
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. The corporate code of conduct,
based upon the existing corporate values, has
been updated to assist 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.
Annual Report 2008
23
Corporate Governance continued
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 ASX and
from the lodgement of the Company’s
annual report with the ASX 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.
The Company’s existing practices on information
disclosure are documented in a policy, details of
which are available on the Company’s website.
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. 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.
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 ASX.
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.
24
Hutchison Telecommunications (Australia) Limited
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 2008.
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 17 of this report. Details of the financial position of the Company are contained in pages 34 to 71 of this report.
Significant changes in the state of affairs and matters subsequent to the end of the financial year
Significant changes in the state of affairs of the Consolidated Entity during and subsequent to the financial year were as follows:
On 9 February 2009, the Company and Vodafone announced an agreement to merge their telecommunications businesses in Australia, namely Vodafone
Australia Limited (“Vodafone Australia”) and Hutchison 3G Australia Pty Limited (“H3GA”). As a result of the transaction, H3GA will issue new ordinary shares
equalling a 50% interest of the enlarged share capital of H3GA to Vodafone and the Vodafone Australia business will merge with H3GA’s business. H3GA will
be renamed VHA Pty Limited (“VHA”). Completion of the transaction is subject to regulatory and shareholder approval and is expected to take place by
mid-2009. Following completion of the transaction, the Company and Vodafone will account for VHA as a 50/50 joint venture.
Other than the matters discussed above, there has been no other matter or circumstance which has arisen since 31 December 2008 that has significantly
affected, or may significantly affect:
• Hutchison’s operations in future financial years;
• 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 10 to 15 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 2008 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
Kevin Steven RUSSELL
John Michael SCANLON
Frank John SIXT
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 20 and 21.
Annual Report 2008
25
Directors’ Report continued
Director
Fok Kin-ning, Canning
Barry Roberts-Thomson
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
** Direct holding of 2,500 shares
Chow Woo Mo Fong, Susan
Member of Governance, Nomination and Compensation Committee
Other Responsibilities
Particulars of Directors’ Interests in shares,
convertible preference shares and options of HTAL
Ordinary Shares
Convertible Preference Shares
Non-executive Chairman,
Chairman of Governance, Nomination and Compensation Committee
5,100,000*
Deputy Chairman
83,916,297**
Member of Governance, Nomination and Compensation Committee
and Chairman of Audit Committee
—
—
Member of Audit Committee
—
902,858
—
—
—
Member of Audit Committee
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 2008, 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
Audit Committee
Meetings attended
Governance,
Nomination and
Compensation
Committee Meetings
held during the
period as member
of the Committee
Governance,
Nomination and
Compensation
Committee
Meetings attended
Fok Kin-ning, Canning
Barry Roberts-Thomson
Chow Woo Mo Fong, Susan
Lai Kai Ming, Dominic
Justin Herbert Gardener
Kevin Steven Russell
John Michael Scanlon
Frank John Sixt
Roderick James Snodgrass*
10
10
10
10
10
10
10
10
9
10
10
10
10
10
10
10
10
8
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
4
N/A
1
N/A
1
N/A
1
N/A
N/A
N/A
N/A
1
N/A
1
N/A
1
N/A
N/A
N/A
N/A
Appointed as Director on 15 February 2008
*
Retirement, election and continuation in office of Directors
Mrs Chow Woo Mo Fong, Susan is a Director retiring by rotation in accordance with the Constitution who, being eligible, offers herself for re-election.
Mr Justin Gardener is a Director retiring by rotation in accordance with the Constitution who, being eligible, offers himself for re-election.
Mr John Michael Scanlon is a Director retiring by rotation in accordance with the Constitution who, being eligible, offers himself for re-election.
26
Hutchison Telecommunications (Australia) Limited
Company secretaries
Edith SHIH BSE, MA, MA, EdM, Solicitor, FCS,
FCIS
Ms Shih has over 11 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 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 15 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. 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, support the business
objectives and reflect company performance. The
company performance is measured according
to the achievement of key financial and non-
financial measures as approved by the Board.
Key management personnel’s remuneration
packages are directly linked to these measures.
Hutchison is committed to ensuring it has
compensation arrangements that reflect
individual performance, overall contribution to
the company performance 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. These measures at the
financial level are directly related to the key
management’s contribution to meeting or
exceeding the company’s income statement
and balance sheet targets. At the non-financial
level the measure reflects the contribution to
achieving a range of key performance indicators
as well as building a high performance company
culture. These performance conditions have
been chosen to reflect an appropriate balance
between achieving financial targets and building
a business and organisation that will be
sustainable for the long term.
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, S Chow, D Lai,
K Russell, R Snodgrass and F Sixt, 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.
Key management personnel
In addition to the Directors listed on page 20
to 21, the following persons were the key
management personnel having authority and
responsibility for planning, directing and
controlling the activities of the Company:
Name
Position
Employer
N Dews
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
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 Employee 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. Each year the remuneration
committee considers the appropriate targets and
key performance indicators to link to the short
term incentive plan and the level of payout if
targets are met. This includes setting any
maximum payout under the short term incentive
plan and minimum levels of performance to
trigger payment of the short term incentive.
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.
Annual Report 2008
27
Directors’ Report continued
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
2008
Name
C Fok
B Roberts-Thomson
M Bogoievski^
S Chow
J Gardener
D Lai
K Russell
J Scanlon
F Sixt
R Snodgrass*
Total
Short-term benefits
Post–
employment
benefits
Share based
payments
Cash salary
and fees
$
Cash bonus
$
Non-monetary
benefits
$
Superannuation
$
Options
$
—
400,000
—
—
50,000
—
—
50,000
—
500,000
—
—
—
—
—
—
—
—
—
—
—
5,053
—
—
—
—
—
—
—
—
13,437
—
—
4,500
—
—
4,500
—
5,053
22,437
—
—
—
—
—
—
—
—
—
—
^ Mr Bogoievski resigned as a Director on 31 January 2008.
* Mr Snodgrass was appointed as a Director on 15 February 2008.
2007
Name
C Fok
B Roberts-Thomson
M Bogoievski*
S Chow
J Gardener
D Lai
K Russell*
J Scanlon
F Sixt
Total
Short-term benefits
Post–
employment
benefits
Share based
payments
Cash salary
and fees
$
Cash bonus
$
Non-monetary
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.
Key management personnel and other executives of the Company
2008
Short-term benefits
Post–
employment
benefits
Long-term
benefits
Share based
payments
Total
$
—
418,490
—
—
54,500
—
—
54,500
—
527,490
Total
$
—
453,805
—
—
54,500
—
—
54,500
—
562,805
Cash salary
and fees
$
Cash bonus
$
Non-monetary
benefits
$
Superannuation
$
Long service
leave
$
819,000
756,000
435,000
394,000
420,000
500,000
283,500
163,125
147,750
131,250
80,053
75,053
5,053
5,053
5,053
2,824,000
1,225,625
170,265
13,437
13,437
13,437
13,437
13,437
67,185
20,744
34,736
11,883
14,372
2,603
84,338
Options
$
124,292
40,773
32,619
24,464
32,619
Total
$
1,557,526
1,203,499
661,117
599,076
604,962
254,767
4,626,180
Hutchison Telecommunications (Australia) Limited
Name
N Dews ^
M Young ^
T Finlayson ^
G Bourke ^
N Hamill ^
Total
28
2007
Short-term benefits
Post–
employment
benefits
Long-term
benefits
Share based
payments
Name
N Dews ^
M Young ^
T Finlayson ^
G Bourke ^
L Sexton ^
N Hamill
Total
Cash salary
and fees
$
Cash bonus
$
Non-monetary
benefits
$
Superannuation
$
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
27,760
32,307
11,800
12,427
8,173
15,225
Options
$
111,498
46,589
35,024
26,969
26,969
30,909
Total
$
1,342,219
1,144,377
592,285
563,357
545,221
343,923
107,692
277,957
4,531,381
^
denotes one of the 5 highest paid executives of the Company, as required to be disclosed under Corporations Act 2001.
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 provides 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.
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) the closing price of HTAL shares on the Australian Securities Exchange on the day on which the options are granted; and
(b) the average closing price of HTAL shares for the five trading days immediately preceding the day on which the options are granted.
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 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, is 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
6,700,000
2,000,000
2,000,000
2,500,000
Granted during
the year as
remuneration
300,000
—
—
—
13,200,000
300,000
Exercised
during
the year
Expired
during
the year
—
—
—
—
—
—
—
—
—
—
Balance
at the end
of the year
7,000,000
2,000,000
2,000,000
2,500,000
Vested and
exercisable
at the end
of the year
2,233,333
833,333
666,666
666,666
13,500,000
4,399,998
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.
Annual Report 2008
29
Directors’ Report continued
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
R Snodgrass
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
83,916,297
—
—
602,858
—
—
—
1,000,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
300,000
—
—
—
—
—
5,100,000*
83,916,297**
—
—
902,858
—
—
—
1,000,000
—
*
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
210,886
112,671
—
—
—
—
—
—
—
—
50,638
—
210,886
112,671
50,638
—
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
R Snodgrass
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
—
2,400
—
—
150,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,400
—
—
150,000
—
—
—
—
—
Key management personnel of the Company
Convertible preference shares
Name
N Dews
T Finlayson
N Hamill
M Young
30
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
23,000
2,400
—
—
—
—
—
—
—
—
—
—
23,000
2,400
—
—
Hutchison Telecommunications (Australia) Limited
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
4 June 2008
Expiry date
13 June 2012
13 June 2012
3 June 2013
Issue price
of shares
$0.145
$0.200
$0.139
Value at
grant date
$0.14
$0.20
$0.14
Number
27,400,000
300,000
300,000
Options will expire five years after issue. The options issued in 2007 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
The options issued in 2008 are exercisable, subject to meeting performance hurdles, on or after 1 January 2010.
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 2008 or up to the
date of this report on the exercise of options
granted under 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
2008 and 31 December 2007.
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 2008 and 31 December 2007.
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 61
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 32.
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 98/100 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
19 February 2009
Annual Report 2008
31
Auditors’ Independence
Declaration
PricewaterhouseCoopers
ABN 52 780 433 757
Darling Park Tower 2
201 Sussex Street
GPO BOX 2650
SYDNEY NSW 1171
DX 77 Sydney
Australia
Telephone +61 2 8266 0000
Facsimile +61 2 8266 9999
www.pwc.com/au
As lead auditor for the audit of Hutchison Telecommunications (Australia) Limited for the year ended 31 December 2008, I declare that to the best of my
knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b) 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
19 February 2009
32
Hutchison Telecommunications (Australia) Limited
Financial Report
for the year ended 31 December 2008
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.
Summary of significant accounting policies
Revenue
Other income
Expenses
Income tax expense
Current assets — Cash and cash equivalents
Current assets — Trade and other receivables
Current assets — Inventories
Derivative financial instruments
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 — Other financial liabilities
Current liabilities — Provisions
Current liabilities — Other
Non-current liabilities — Borrowings
Non-current liabilities — Provisions
Contributed equity
Reserves and accumulated losses
Director and key management personnel disclosures
Remuneration of auditors
Contingencies
Commitments
Related party transactions
Subsidiaries
Deed of Cross Guarantee
Segment information
Reconciliation of (loss) / profit after income tax to net cash
(outflows) / inflows from operating activities
Non-cash investing and financing activities
Earnings per share
Share-based payments
Critical accounting estimates and judgements
Events occurring after the balance sheet date
Financial risk management
Directors' Declaration
Independent Auditor's Report
34
35
36
37
38
43
43
43
44
45
45
46
47
47
48
49
50
50
52
53
53
54
54
55
55
55
57
58
59
60
61
61
62
63
64
65
66
67
67
67
68
69
69
69
72
73
Annual Report 2008
33
Income Statements
for the year ended 31 December 2008
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 / (expenses)
Share of net profits of joint venture partnership accounted for using the equity method
Capitalisation of customer acquisition and retention costs
Depreciation and amortisation expense
Finance costs
(Loss) / profit before income tax
Income tax expense
(Loss) / profit for the year attributable to members of
Hutchison Telecommunications (Australia) Limited
Consolidated
Parent Entity
Notes
2008
$'000
2007
$'000
2008
$'000
2007
$'000
2
1,623,289
1,318,692
151,882
121,850
(306,376)
(492,305)
(387,465)
(129,546)
(56,834)
(111,167)
3,786
6,500
50,169
(258,571)
(104,582)
(163,102)
—
(260,081)
(403,679)
(338,587)
(114,509)
(52,625)
(87,307)
4,373
1,365
46,324
(237,912)
(161,160)
(285,106)
—
(709)
(6,968)
—
(3,167)
(283)
(322)
(243)
—
—
(7,637)
(2,402)
130,151
—
(1,193)
(8,635)
—
(2,006)
(523)
(5,209)
287
—
—
(5,594)
(38,897)
60,080
—
3
12
4
4
5
25
(163,102)
(285,106)
130,151
60,080
Cents
Cents
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
The above income statements should be read in conjunction with the accompanying notes.
36
36
(21.63)
(21.63)
(41.25)
(41.25)
34
Hutchison Telecommunications (Australia) Limited
Balance Sheets
as at 31 December 2008
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
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
Other financial liabilities
Provisions
Other
Total Current Liabilities
Non-Current Liabilities
Borrowings
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total Equity
The above balance sheets should be read in conjunction with the accompanying notes.
Consolidated
Parent Entity
Notes
2008
$'000
2007
$'000
2008
$'000
2007
$'000
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
25
134,685
351,542
60,244
990
44,146
591,607
34,894
313,858
106,838
—
15,788
471,378
4,953
242,632
88
—
2,362
250,035
6,973
308,573
69
—
2,523
318,138
205,320
177,169
2,442,950
1,443,882
8,535
—
2,035
—
—
—
1,649,418
1,649,418
1,039,648
1,015,906
912,030
2,828
989,296
3,196
29
33,501
—
29
41,138
—
2,168,361
2,187,602
4,125,898
3,134,467
2,759,968
2,658,980
4,375,933
3,452,605
839,781
2,103
1,000,000
3,390
4,130
474,776
301,782
—
2,453
8,478
16,186
—
1,000,000
3,330
2,555
22,388
199,981
—
2,396
5,344
1,849,404
787,489
1,022,071
230,109
—
2,091
2,091
800,030
1,691
801,721
—
2,091
2,091
—
1,691
1,691
1,851,495
1,589,210
1,024,162
231,800
908,473
1,069,770
3,351,771
3,220,805
4,204,488
4,204,488
4,204,488
4,204,488
71,560
69,755
(3,367,575)
(3,204,473)
15,683
(868,400)
14,868
(998,551)
908,473
1,069,770
3,351,771
3,220,805
Annual Report 2008
35
Statements of Changes in Equity
for the year ended 31 December 2008
Balance at 1 January 2008
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 2008
Notes
25
24
25
25
Consolidated
Parent Entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
1,069,770
(1,831,399)
3,220,805
(25,239)
990
990
(163,102)
(162,112)
—
815
—
815
311
311
(285,106)
(284,795)
3,173,244
(417)
13,137
3,185,964
—
—
130,151
130,151
—
815
—
815
—
—
60,080
60,080
3,173,244
(417)
13,137
3,185,964
908,473
1,069,770
3,351,771
3,220,805
Total recognised income and expense for the year is attributable to:
Members of Hutchison Telecommunications (Australia) Limited
(162,112)
(284,795)
130,151
60,080
36
Hutchison Telecommunications (Australia) Limited
Cash Flow Statements
for the year ended 31 December 2008
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
Notes
2008
$'000
2007
$'000
1,785,441
(1,221,684)
1,352,399
(1,200,021)
563,757
152,378
9,089
309
4,182
740
(128,533)
(198,738)
Net cash inflows / (outflows) from operating activities
34
444,622
(41,438)
Cash Flows from Investing Activities
Payments for property, plant and equipment
Proceeds from sale of other non-current assets
Loans to joint venture
Loans to subsidiaries
Payments for intangible assets
(152,785)
3,372
(43,433)
—
(50,167)
(173,977)
—
(66,756)
2008
$'000
21,310
(15,350)
5,960
372
—
(6,957)
(625)
—
—
—
2007
$'000
24,658
(48,142)
(23,484)
19,319
503
(55,983)
(59,645)
—
—
—
—
(801,395)
(1,233,058)
(47,077)
—
(753)
Net cash outflows from investing activities
(243,013)
(287,810)
(801,395)
(1,233,811)
Cash Flows from Financing Activities
Proceeds from issues of shares and other equity securities
Proceeds from borrowings
Proceeds from borrowings — related parties
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 / (outflows) 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
The above cash flow statements should be read in conjunction with the accompanying notes.
24
19
22
22
22
—
—
1,000,000
(1,100,000)
—
—
—
(1,818)
(101,818)
99,791
34,894
134,685
2,842,602
266,409
—
(950,000)
(598,810)
(1,020,821)
(196,000)
(2,831)
340,549
11,301
23,593
34,894
—
—
2,842,602
266,409
1,000,000
(200,000)
—
—
—
—
—
—
(598,810)
(1,020,821)
(196,000)
—
800,000
1,293,380
(2,020)
6,973
4,953
(76)
7,049
6,973
Annual Report 2008
37
Notes to the Financial Statements
Critical accounting estimates
The preparation of financial statements in
conformity with AIFRS requires the use of certain
critical accounting estimates. It also requires the
Group 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 include
the financial statements of the Company and all
subsidiaries made up to 31 December 2008.
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.
Investments in joint ventures are accounted for
as set out in note 1(g).
(c) Foreign currency translation
(i) Functional and presentation 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) Telecommunication services
Revenue from the provision of mobile
telecommunication services with respect
to voice, video, internet access, messaging
and media services, including data services
and information provision, is recognised when
the service is rendered and, depending on the
nature of the services, is recognised either at
gross amount billed to the customer or the
amount receivable as commission for facilitating
the services. Revenue from the sales of prepaid
mobile calling cards is recognised upon
customer’s usage of the card or upon the expiry
of the service period.
(ii) 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 and rewards have passed to
the customer.
(iii) Interest income
Interest income is recognised on a time proportion
basis using the effective interest method.
(e) Income tax
The income tax expense 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.
Note 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 (“Company” or “Parent Entity”)
and the consolidated entity consisting of
Hutchison Telecommunications (Australia)
Limited and its subsidiaries (“the Consolidated
Entity” or “the Group”).
(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 2008, the Consolidated
Entity and the Company, has a deficiency
of net current assets of $1,258 million and
$772 million. The Consolidated Entity has
also experienced operating losses during the
financial year ended on 31 December 2008.
Included in the Consolidated Entity’s and
Company’s current liabilities is an amount of
$1,000 million which relates to an interest free
financing facility provided from the ultimate
parent entity, Hutchison Whampoa Limited
(“HWL”), which is repayable on demand. HWL
has confirmed its current intention to provide
sufficient financial support to enable the
Consolidated Entity and the Company to meet its
financial obligations as and when they fall due.
This undertaking is provided for a minimum
period of twelve months from 19 February 2009.
Consequently, the directors have prepared the
financial statements on a going concern basis.
Statement of compliance
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.
Historical cost convention
These financial statements have been prepared
under the historical cost convention as modified
by the revaluation of certain financial assets
and liabilities (including derivative instruments)
which are stated at fair value, as explained in the
significant accounting policies set out below.
38
Hutchison Telecommunications (Australia) Limited
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 is determined using tax rates (and
laws) that have been enacted or substantially
enacted by the reporting date and are expected
to apply when the related deferred tax asset is
realised or the deferred tax liability is settled.
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.
Deferred tax assets and liabilities are offset
when there is a legally enforceable right to
offset current tax assets and liabilities and when
the deferred tax balances relate to the same
taxation authority. Current tax assets and
liabilities are offset where the entity has a
legally enforceable right to offset and intends
either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
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.
(g) Joint ventures
A joint venture is a contractual arrangement
whereby the venturers undertake an economic
activity which is subject to joint control and over
which none of the participating parties has
unilateral control.
Jointly controlled entity
(i)
A jointly controlled entity is a joint venture
which involves the establishment of a separate
entity. The Consolidated Entity’s interest in
the joint venture entity is accounted for in the
consolidated financial statements using
the equity method of accounting. 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 assets
The proportionate interests in the assets, liabilities,
income and expenses of a jointly controlled
asset have been incorporated in the financial
statements under the appropriate headings.
(h) Impairment of assets
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).
(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, if any, are shown within
bank 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 the
balance sheet date using the first in first out
method. Costs comprise of purchase price and
expenditure that is directly attributable to the
acquisition of the handsets after deducting
rebates and discounts. Net realisable value is the
estimated selling price in the ordinary course of
business and the estimated costs necessary to
make the sale.
Annual Report 2008
39
Notes to the Financial Statements continued
(l) Derivative financial instruments and
hedging activities
Derivative financial instruments are utilised by
the Group in the management of its foreign
currency and interest rate exposures. The Group’s
policy is not to utilise derivative financial
instruments for trading or speculative purposes.
Derivatives are initially recognised at fair value
on the date a derivative contract is entered into
and are subsequently remeasured to their fair
value at each reporting date. 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; (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.
(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 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 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.
The assets’ residual values and useful lives are
reviewed at each balance sheet date and
adjusted if appropriate. 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
is available for commercial 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
40
Hutchison Telecommunications (Australia) Limited
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 the carrying amount.
These are included in the income statement.
(o) Leases
Leases of property, plant and equipment where
the Consolidated Entity has substantially
transferred 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 lease balance outstanding. The interest
element of the finance lease 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.
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 values of these
intangible assets are reviewed on a regular basis
and written down to the 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 incremental costs to the
creation of an asset within the business are
capitalised as development costs.
(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 incremental costs directly
attributable to the acquisition and retention
of customers.
(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/jointly controlled
entity at the date of acquisition. Goodwill on
acquisitions of subsidiaries/jointly controlled
entity is included in intangible assets. Goodwill
on acquisitions of associates/jointly controlled
entity 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.
The expected useful lives of the intangible
assets, other than goodwill, are as follows:
Spectrum licences and
capitalised development costs
Customer acquisition and
retention costs
12 to 15 years
2 to 3 years
13 years
Transmission rights
(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 or payable 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.
(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
and currency that match, 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
Employee 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 the 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 the 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 2008
41
Notes to the Financial Statements 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, although
employees have an option to choose other funds.
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 24
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) 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 flows.
Affected Standard(s)
AASB 3: Business Combinations
AASB 8: Operating Segments
AASB 101: Presentation of Financial Statements
AASB 123: Borrowing costs
(x) Rounding of amounts to nearest
thousand dollars
The Company is of a kind referred to in Class
Order 98/100 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 or cent.
(y) New accounting standards and UIG
interpretations
Australian Accounting Standards and
Interpretations thereof that have recently been
amended but are not yet effective have not
been adopted for the reporting period ended
31 December 2008.
Australian Accounting Standards that have
recently been amended but are not yet
effective and have not been early adopted
by the Consolidated Entity are outlined in the
table below:
Application date
of standard*
Application date for
Consolidated Entity
1 July 2009
1 January 2010
1 January 2009
1 January 2009
1 January 2009
1 January 2009
1 January 2009
1 January 2009
AASB 127: Consolidated and Separate Financial Statements
1 July 2009
1 January 2010
Amendments to Australian Accounting Standards arising from AASB 8:
Operating Segments
Amendments to Australian Accounting Standards arising from AASB 123:
Borrowing costs
1 January 2009
1 January 2009
1 January 2009
1 January 2009
AASB 101: Presentation of Financial Statements (amendments)
1 January 2009
1 January 2009
AASB 2: Share based payments
Amendments to Australian Accounting Standards arising from AASB 3: Business
Combinations and AASB 127: Consolidated and Separate Financial Statements
1 January 2009
1 January 2009
1 July 2009
1 January 2010
AASB 2008—5 and AASB 2008—6
Amendments arising from the first annual improvement projects
1 January 2009^
1 January 2009^
AASB 2008—7
AASB 2008—8
IFRIC 17
Amendments to accounting for the cost of an investment in a
subsidiary, jointly controlled entity or associate
Amendments to accounting for eligible hedged items
IFRIC 17: Distributions of non-cash assets to owners
1 January 2009
1 January 2009
1 July 2009
1 July 2009
1 January 2010
1 January 2010
*
^
Application date of the standard is for the reporting periods beginning on or after the date shown in the above table.
Except for the amendments to IFRS 5: Non-current assets held for sale and discontinued operations, effective for annual periods beginning on or 1 July 2009 which is applicable to the
Company with effect from 1 January 2010.
The effect that the adoption of AASB3 (revised) and AASB 127 (revised) will have on the results and financial position of the Group will depend on the
incidence and timing of business combinations occurring on or after 1 January 2010.
The adoption of other standards and amendments listed above in future periods is not expected to result in substantial changes to the Group’s accounting policies.
42
Hutchison Telecommunications (Australia) Limited
Reference
AASB 3 (revised)
AASB 8
AASB 101 (revised)
AASB 123 (revised)
AASB 127 (revised)
AASB 2007—3
AASB 2007—6
AASB 2007—8
AASB 2008—1
AASB 2008—3
Note 2. Revenue
From continuing operations
Services
Sale of handsets
Other revenue
Interest
Rental income
Note 3. Other income
Net foreign exchange gains / (losses)
Net gain on sale of property
Note 4.
Expenses
Loss before income tax includes the following specific expenses:
Finance costs
Interest and finance charges paid / payable
Depreciation
Buildings
Fixtures, fittings and office equipment
Computer equipment
Computer equipment under finance lease
Network equipment
Network equipment — jointly controlled asset
Assets under construction
Total depreciation
Amortisation
Spectrum licence
Capitalised development costs
Customer acquisition and retention costs
Customer acquisition costs written off
Transmission capacity
Total amortisation
Total amortisation and depreciation
Rental expense relating to operating leases
Consolidated
Parent Entity
2008
$'000
2007
$'000
1,467,924
145,478
1,171,954
143,456
1,613,402
1,315,410
9,578
309
9,887
2,542
740
3,282
1,623,289
1,318,692
2008
$'000
14,945
824
15,769
136,113
—
136,113
151,882
Consolidated
Parent Entity
2008
$'000
1,719
2,067
3,786
2007
$'000
4,373
—
4,373
2008
$'000
(243)
—
(243)
2007
$'000
15,888
842
16,730
104,617
503
105,120
121,850
2007
$'000
287
—
287
Consolidated
Parent Entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
104,582
161,160
2,402
38,897
20
5,323
40,564
1,156
22,046
19,620
42,409
33
9,215
64,341
1,664
21,799
19,895
13,386
131,138
130,333
77,485
596
36,872
9,417
3,063
127,433
258,571
75,442
596
18,665
9,813
3,063
107,579
237,912
—
—
—
—
—
—
—
—
7,637
—
—
—
—
7,637
7,637
—
—
—
—
—
—
—
—
5,594
—
—
—
—
5,594
5,594
Lease payments (included in "Other operating expenses")
35,920
37,849
6,143
10,862
Provision for (write back of) / impairment loss of
Current assets — Trade receivables (included in "Other operating expenses")
Non-current assets — Receivables (included in "Other operating expenses")
19,134
283
19,417
29,906
1,065
30,971
(205)
—
(205)
Annual Report 2008
(49)
—
(49)
43
Notes to the Financial Statements continued
Note 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% (2007: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Entertainment
Interest not deductible
Share of net profit of jointly controlled entity
Deferred tax / unrecognised tax losses
Previously unrecognised tax losses now recouped to reduce current tax expense
Previously unrecognised tax losses now recouped to reduce deferred tax expense
Income tax expense
(c) Unrecognised 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
2008
$'000
2007
$'000
2008
$'000
2007
$'000
—
—
—
—
—
—
—
—
—
—
—
—
(163,102)
(285,106)
(48,931)
(85,532)
130,151
39,045
60,080
18,024
183
37,501
(1,950)
17,725
4,528
11,247
(15,775)
—
161
27,258
—
58,113
—
—
—
—
3,489,126
3,504,219
1,046,738
1,051,266
2
—
—
(487)
38,560
(39,048)
488
—
638,260
191,478
2
—
—
—
18,026
(18,026)
—
—
766,795
230,038
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.
(d) Unrecognised deferred tax assets and liabilities
i) Deferred tax asset
There are potential temporary differences attributable to:
Provisions
Business related costs
Utilisation of tax losses
Set-off of deferred tax liability pursuant to set-off provisions
Net deferred tax (liability) / asset
ii) Deferred tax liability
There are potential temporary differences attributable to:
Property, plant and equipment and intangible assets
Interest in jointly controlled entity
Utilisation of tax losses
Set-off of deferred tax asset pursuant to set-off provisions
Net deferred tax (liability) / asset
44
Hutchison Telecommunications (Australia) Limited
Consolidated
Parent Entity
31,102
491
31,593
231,387
(262,980)
—
(256,288)
(6,692)
(262,980)
231,387
31,593
—
20,615
736
21,351
247,161
(268,512)
—
(263,770)
(4,742)
(268,512)
247,161
21,351
—
6,109
491
6,600
(6,600)
—
—
—
—
—
6,351
736
7,087
(7,087)
—
—
—
—
—
(6,600)
6,600
—
(7,087)
7,087
—
Note 6.
Current assets — Cash and cash equivalents
Cash at bank and in hand
Short term deposits
Consolidated
Parent Entity
2008
$'000
84,685
50,000
134,685
2007
$'000
19,394
15,500
34,894
2008
$'000
4,953
—
4,953
2007
$'000
6,973
—
6,973
Restrictions on cash at bank
At 31 December 2008 cash at bank includes collateral for bank guarantees $5,287,000 (2007: $4,322,000) (note 28).
Short term deposits
At 31 December 2008 there are short term deposits $50,000,000 (2007: $15,500,000). The weighted average interest rate was 6.94% p.a. in 2008 (2007: 6.47%).
Note 7.
Current assets — Trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Other receivables
Receivable from subsidiaries (note 30)
Consolidated
Parent Entity
2008
$'000
376,595
(25,817)
350,778
764
—
2007
$'000
337,624
(24,040)
313,584
274
—
351,542
313,858
2008
$'000
4,307
(1,896)
2,411
223,903
16,318
242,632
2007
$'000
6,822
(1,999)
4,823
87,141
216,609
308,573
Receivable from subsidiaries
Further information relating to receivable from subsidiaries is set out in note 30.
(a) Aging of impaired trade receivables and trade receivables which are past due but not impaired
As at 31 December 2008 current trade receivables of the Consolidated Entity and Parent Entity with a nominal value of $25,817,000 (2007: $24,040,000)
and $1,896,000 (2007: $1,999,000) respectively were impaired. The amount of the provision for the Consolidated Entity and Parent Entity was $25,817,000
(2007: $24,040,000) and $1,896,000 (2007: $1,999,000) respectively. 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
Parent Entity
2008
$'000
17,073
8,744
25,817
2007
$'000
15,689
8,351
24,040
2008
$'000
76
1,820
1,896
2007
$'000
136
1,863
1,999
As of 31 December 2008, current trade receivables of the Consolidated Entity and Parent Entity of $41,682,000 (2007: $41,594,000) and $39,000 (2007:
$73,000) respectively 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
Consolidated
Parent Entity
2008
$'000
30,890
10,792
41,682
2007
$'000
25,351
16,243
41,594
2008
$'000
39
—
39
2007
$'000
73
—
73
Annual Report 2008
45
Notes to the Financial Statements continued
Note 7.
Current assets — Trade and other receivables continued
(b) Movements in the provision for impairment of current trade receivables were as follows:
At 1 January
Provision for impairment / (write back) recognised during the year
Receivables written off during the year as uncollectible
Consolidated
Parent Entity
2008
$'000
24,040
19,134
(17,357)
25,817
2007
$'000
20,753
30,971
(27,684)
24,040
2008
$'000
1,999
(205)
102
1,896
2007
$'000
1,586
(49)
462
1,999
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) 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.
(d) Foreign exchange and interest rate risk
Refer to note 11 for an analysis of the Consolidated Entity's and Parent Entity's current receivables denominated in various currencies.
Refer to note 40 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 40.
(e) Fair value and credit risk
Due to the short-term nature of these receivables, their carrying values are recognised initially at fair value and subsequently measured at amortised cost.
This approximates to the fair value.
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 generally hold any collateral as security. Refer to note 40 for more information on the risk management policy of the Consolidated Entity.
Note 8.
Current assets — Inventories
Finished goods
Consolidated
Parent Entity
2008
$'000
2007
$'000
60,244
106,838
2008
$'000
88
2007
$'000
69
Inventory expense
Inventories recognised as expense under 'cost of handsets sold' in the income statement during the year ended 31 December 2008 amounted to
$387,785,000 (2007: $338,916,000). There was $320,000 (2007: $329,000) 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.
46
Hutchison Telecommunications (Australia) Limited
Note 9. Derivative financial instruments
Consolidated
Parent Entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
Current assets
Forward foreign exchange contracts — cash flow hedges (note (a))
990
—
—
—
(a) Forward foreign exchange contracts — cash flow hedges
The balance represents the unrealised gains on forward foreign exchange contracts to sell Australian Dollars to buy US Dollars at 31 December 2008.
During the year, the Consolidated Entity paid Hutchison 3 Global Services Pvt. Ltd, which is a call centre in India owned by HWL, 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 the service provided by the call centre in India.
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
Notional principal amount
Sell Australian dollars
2008
$'000
13,644
2007
$'000
—
Average exchange rate
2008
2007
0.773
—
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 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 2008 a gain of $1,400,000 (2007: a loss of $158,000) 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 forward
foreign exchange contract with unrealised gains. The maximum exposure to credit risk at the reporting date is the carrying amount of these forward foreign
exchange contracts in the consolidated balance sheet.
Note 10. Current assets — Other
Prepayments
Other
Consolidated
Parent Entity
2008
$'000
43,981
165
44,146
2007
$'000
15,721
67
15,788
2008
$'000
2,199
163
2,362
2007
$'000
2,459
64
2,523
Annual Report 2008
47
Notes to the Financial Statements continued
Note 11. Non-current assets — Receivables
Trade receivables
Less: Provision for impairment of receivables
Other receivables
Receivable from subsidiaries (note 30)
Consolidated
Parent Entity
2008
$'000
35,609
(3,503)
32,106
173,214
—
2007
$'000
32,202
(3,220)
28,982
148,187
2008
$'000
—
—
—
—
2007
$'000
—
—
—
—
—
2,442,950
1,443,882
205,320
177,169
2,442,950
1,443,882
Other receivables
Included in other receivables is a loan to a jointly controlled entity. For further information refer to note 30.
Receivable from subsidiaries
Weighted average interest on the receivable from subsidiaries is charged at a rate of Bank Bills Swap Yield (BBSY) plus 2.21% p.a.
Further information relating to receivable from subsidiaries is set out in note 30.
(a) Movements in the provision for impairment of non-current trade receivables
As at 31 December 2008 non-current trade receivables of the Consolidated Entity with a nominal value of $3,503,000 (2007: $3,220,000) were impaired. The
amount of the provision was $3,503,000 (2007: $3,220,000).
At 1 January
Provision for impairment recognised during the year
Consolidated
Parent Entity
2008
$'000
3,220
283
3,503
2007
$'000
2,155
1,065
3,220
2008
$'000
—
—
—
2007
$'000
—
—
—
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 non-current 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.
(b) Fair values
The carrying values of non-current receivables at amortised cost approximated to fair value, based on cash flows discounted using 7% (2007: 7%).
(c) Foreign currency and interest rate risk
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
British pounds
US dollars
Current receivables
Non-current receivables
Consolidated
Parent entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
532,561
474,074
2,685,552
1,752,417
7
24,294
556,862
351,542
205,320
556,862
7
16,946
491,027
313,858
177,169
491,027
—
30
—
38
2,685,582
1,752,455
242,632
2,442,950
308,573
1,443,882
2,685,582
1,752,455
For an analysis of the sensitivity of trade and other receivables to foreign exchange and interest rate risk refer to note 40.
(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 40 for more information on the risk management policy of the Consolidated Entity.
48
Hutchison Telecommunications (Australia) Limited
Note 12. Non-current assets — Investment accounted for using the equity method
Interest in a jointly controlled entity
Consolidated
Parent Entity
2008
$'000
8,535
2007
$'000
2,035
2008
$'000
—
2007
$'000
—
Shares in jointly controlled entity
Under the joint venture agreement described below each party has contributed $1 to the share capital of the entity.
(a) Jointly controlled entity
In December 2004 a controlled entity, Hutchison 3G Australia Pty Limited established a 50% interest in a joint venture with Telstra OnAir Holdings Pty Limited
named 3GIS Partnership ("3GIS"). 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.
Information relating to the jointly controlled entity is set-out below.
Share of the jointly controlled entity’s assets and liabilities
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Share of the jointly controlled entity's revenue, expenses and results
Revenues
Expenses
Profit for the year
Share of the jointly controlled entity's commitments
Lease commitments
Capital commitments
Contingent liabilities relating to the jointly controlled entity
Consolidated
Parent Entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
45,794
141,322
187,116
(10,997)
(167,584)
(178,581)
8,535
80,303
(73,803)
6,500
45,692
117,127
162,819
(14,287)
(146,497)
(160,784)
2,035
72,364
(70,999)
1,365
121,063
144,012
—
—
121,063
144,012
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(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 14)
Less: Accumulated depreciation
Capital commitments
Consolidated
Parent Entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
356,249
(79,668)
276,581
—
356,249
(60,048)
296,201
—
—
—
—
—
—
—
—
—
Annual Report 2008
49
Notes to the Financial Statements continued
Note 13. Non-current assets — Other financial assets
Non-traded investments
Shares in subsidiaries (note 31)
Note 14. Non-current assets — Property, plant and equipment
Consolidated
Parent Entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
—
—
1,649,418
1,649,418
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 12)
Assets under construction
Work in progress
Less: accumulated depreciation
Total work in progress
Total property, plant and equipment
Reconciliation of land and buildings
Carrying amount at beginning of year
Additions
Disposals
Depreciation (note 4)
Carrying amount at end of year
50
Hutchison Telecommunications (Australia) Limited
2008
$’000
30
—
30
2007
$'000
1,610
(275)
1,335
116,358
(108,955)
7,403
113,757
(103,632)
10,125
467,173
449,896
(374,396)
(333,833)
92,777
16,742
(10,146)
6,596
99,373
701,617
(340,754)
360,863
356,249
(79,668)
276,581
384,446
(89,048)
295,398
116,063
16,742
(8,990)
7,752
123,815
679,394
(317,286)
362,108
356,249
(60,048)
296,201
267,048
(44,726)
222,322
1,039,648
1,015,906
1,335
—
(1,285)
(20)
30
1,368
—
—
(33)
1,335
2008
$'000
29
—
29
68,628
(68,628)
—
74,923
(74,923)
—
—
—
—
—
2007
$'000
29
—
29
68,628
(68,628)
—
74,923
(74,923)
—
—
—
—
—
230,128
(230,128)
230,128
(230,128)
—
—
—
—
—
—
—
—
2,434
(2,434)
2,434
(2,434)
—
29
29
—
—
—
29
—
29
29
—
—
—
29
Note 14. Non-current assets — Property, plant and equipment continued
Consolidated
Parent Entity
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)
Carrying amount at end of year
2008
$’000
10,125
2,601
—
(5,323)
7,403
116,063
17,278
—
(40,564)
92,777
7,752
—
—
(1,156)
6,596
362,108
20,801
—
(22,046)
360,863
2007
$'000
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
Reconciliation of network equipment — jointly controlled asset
Carrying amount at beginning of year
296,201
315,852
Additions
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
—
—
(19,620)
276,581
222,322
156,164
(40,679)
(42,409)
295,398
244
—
(19,895)
296,201
179,559
200,125
(143,976)
(13,386)
222,322
2008
$'000
2007
$'000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Annual Report 2008
51
Notes to the Financial Statements continued
Note 15. Non-current assets — Intangible assets
Consolidated
Parent Entity
2008
$’000
953,067
(443,272)
509,795
66,052
(61,097)
4,955
159,023
(118,926)
40,097
38,794
(12,252)
26,542
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
—
330,641
912,030
587,280
—
—
(77,485)
509,795
—
330,641
989,296
648,832
13,890
—
(75,442)
587,280
5,551
6,147
—
—
(596)
4,955
36,219
50,167
(9,417)
(36,872)
40,097
—
—
(596)
5,551
18,373
46,324
(9,813)
(18,665)
36,219
2008
$'000
57,534
(24,033)
33,501
61,843
(61,843)
—
49,793
(49,793)
—
—
—
—
—
—
—
2007
$'000
57,534
(16,396)
41,138
61,843
(61,843)
—
49,793
(49,793)
—
—
—
—
—
—
—
33,501
41,138
41,138
—
—
(7,637)
33,501
32,842
13,890
—
(5,594)
41,138
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
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
52
Hutchison Telecommunications (Australia) Limited
Note 15. Non-current assets — Intangible assets continued
Consolidated
Parent Entity
2008
$’000
2007
$'000
2008
$'000
2007
$'000
Reconciliation of transmission capacity
Carrying amount at beginning of year
Additions
Disposals
Amortisation (note 4)
Carrying amount at end of year
Reconciliation of goodwill
Carrying amount at beginning of year
Additions
Disposals
29,605
32,668
—
—
(3,063)
26,542
330,641
—
—
—
—
(3,063)
29,605
—
330,641
—
Carrying amount at end of year
330,641
330,641
—
—
—
—
—
—
—
—
—
Goodwill
The goodwill arises from HTAL's acquisition of a further 19.94% interest in H3GAH on 10 October 2007. Refer to note 24 (b)(ii) for further details.
Note 16. Non-current assets — Other
Prepayments
Note 17. Current liabilities — Payables
Trade creditors
Other creditors
Payables to related entity (note 30)
Consolidated
Parent Entity
2008
$’000
2,828
2007
$'000
3,196
2008
$'000
—
Consolidated
Parent Entity
2008
$’000
196,996
89,833
552,952
839,781
2007
$'000
182,458
113,584
178,734
474,776
2008
$'000
1,713
14,473
—
16,186
Payables to related entity
Further information relating to payables to related entity is set out in note 30.
(a) Foreign currency and interest rate risk
The carrying amounts of the Consolidated Entity’s and Parent Entity’s trade and other payables are predominantly denominated in Australian Dollars:
Consolidated
Parent entity
Australian Dollars
Euro
British Pounds
Hong Kong Dollars
US Dollars
2008
$’000
835,546
2,088
6
—
2,141
839,781
2007
$'000
465,556
705
—
3
8,512
474,776
Refer to note 40 for an analysis of the Consolidated Entity’s exposure to foreign currency risk in relation to trade payables.
A summarised analysis of the sensitivity of trade payables to foreign exchange and interest rate risk can be found in note 40.
2008
$'000
16,186
—
—
—
—
—
—
—
—
—
—
—
—
—
2007
$'000
—
2007
$'000
2,368
20,020
—
22,388
2007
$'000
22,121
267
—
—
—
16,186
22,388
Annual Report 2008
53
Notes to the Financial Statements continued
Note 18. Current liabilities — Borrowings
Secured
Obligations under finance leases
Unsecured
Bank loans at amortised cost
Consolidated
Parent Entity
2008
$’000
2007
$'000
2008
$'000
2,103
1,818
—
2,103
299,964
301,782
—
—
—
2007
$'000
—
199,981
199,981
(a) Obligations under finance leases
Obligations under finance leases 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 22).
(b) Bank loans
$300,000,000 of bank loans were fully repaid during the year.
(c) Risk exposures
Details of the Consolidated Entity’s exposure to interest rate changes and the contractual repricing dates in respect of the current and non-current borrowings are
set out in note 22.
(d) Interest rate risk exposures
Details of the Consolidated Entity's exposure to interest rate changes on borrowings are set out in note 40.
(e) Fair value disclosures
Details of the fair value of borrowings of the Consolidated Entity are set out in note 40.
Note 19. Current liabilities — Other financial liabilities
Consolidated
Parent Entity
2008
$’000
2007
$'000
2008
$'000
Loan from a related entity (note 30)
1,000,000
—
1,000,000
Loan from a related entity
Further information relating to loan from a related entity is set out in note 30.
The loan from a related entity is an interest free financing facility and is repayable on demand.
a) Financing arrangements
2007
$'000
—
Unrestricted access was available at balance date to the following lines of credit:
Other financial liabilities
Total facilities
Used at balance date
Unused at balance date
Consolidated
Parent Entity
2008
$’000
2007
$'000
2008
$'000
2007
$'000
1,100,000
(1,000,000)
100,000
—
—
—
1,100,000
(1,000,000)
100,000
—
—
—
54
Hutchison Telecommunications (Australia) Limited
Note 20. Current liabilities — Provisions
Employee benefits
Consolidated
Parent Entity
2008
$’000
3,390
2007
$'000
2,453
2008
$'000
3,330
2007
$'000
2,396
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.
(a) Movement in provisions
Movements in provision for employee benefits are as follows:
At 1 January
Amounts utilised during the year
Note 21. Current liabilities — Other
Unearned income
Loans from subsidiaries (note 30)
Consolidated
Parent Entity
2008
$’000
2,453
937
3,390
2007
$'000
1,072
1,381
2,453
2008
$'000
2,396
934
3,330
Consolidated
Parent Entity
2008
$’000
4,130
—
4,130
2007
$'000
8,478
—
8,478
2008
$'000
201
2,354
2,555
2007
$'000
1,072
1,324
2,396
2007
$'000
371
4,973
5,344
Loans from subsidiaries and related entity
No interest is charged on the loans from subsidiaries and related entities. For further information refer to note 30.
Note 22. Non-current liabilities — Borrowings
Secured
Obligations under finance leases
Unsecured
Bank loans at amortised cost
Consolidated
Parent Entity
2008
$’000
—
—
—
2007
$'000
2,103
797,927
800,030
2008
$'000
2007
$'000
—
—
—
—
—
—
(a) Obligations under finance leases
Obligations under finance leases 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 $6,596,000 (2007: $7,752,000) (note 14) representing leased computer equipment.
(b) Bank loans
$800,000,000 of the bank loans have been fully repaid during the year.
Annual Report 2008
55
Notes to the Financial Statements continued
Note 22. Non-current liabilities — Borrowings continued
(c) Fair value
The carrying amounts and fair values of non-current borrowings of the Consolidated Entity at balance date are:
Secured
Obligations under finance leases
Unsecured
Bank loans
2008
Carrying
amount
$'000
Fair value
$'000
2007
Carrying
amount
$'000
Fair value
$'000
—
—
—
—
—
—
2,103
2,103
797,927
800,030
797,927
800,030
(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.
(d) 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
2008
$’000
—
—
—
—
—
—
—
—
2007
$'000
199,981
99,983
797,927
—
1,097,891
299,964
797,927
1,097,891
2008
$'000
—
—
—
—
—
—
—
—
The carrying amounts of the Consolidated Entity’s borrowings are denominated in the following currencies:
Australian dollar
Consolidated
Parent entity
2008
$’000
2007
$'000
—
1,097,891
2008
$'000
—
For an analysis of the sensitivity of borrowings to interest rate risk and foreign exchange risk refer to note 40.
2007
$'000
199,981
—
—
—
199,981
199,981
—
199,981
2007
$'000
199,981
56
Hutchison Telecommunications (Australia) Limited
Note 22. Non-current liabilities — Borrowings continued
(e) 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
2008
$’000
2007
$'000
2008
$'000
2007
$'000
—
—
—
1,100,000
(1,100,000)
—
—
—
—
200,000
(200,000)
—
(f) 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.
In 2007 exposures arise predominantly from liabilities bearing variable interest rates as the Consolidated Entity held fixed rate liabilities to maturity.
In 2008 exposures arise from lease liabilities as all the bank loans were fully repaid during the year.
2008
Fixed interest rate
Bank loans (notes 18 and 22)
Obligations under finance leases (notes 18 and 22)
Weighted average interest rate
2007
Bank loans (notes 18 and 22)
Obligations under finance leases (notes 18 and 22)
Weighted average interest rate
Floating
interest rate
$'000
—
—
—
—
Floating
interest rate
$'000
1,097,891
—
1,097,891
9.10%
1 year
or less
$'000
—
2,103
2,103
6.99%
1 year
or less
$'000
—
1,818
1,818
6.99%
Over 1 to
2 years
$'000
Over 2 to
3 years
$'000
Over 3 to
4 years
$'000
Over 4 to
5 years
$'000
Over
5 years
$'000
—
—
—
—
—
—
—
—
—
—
—
—
Fixed interest rate
—
—
—
—
—
—
—
—
Over 1 to
2 years
$'000
Over 2 to
3 years
$'000
Over 3 to
4 years
$'000
Over 4 to
5 years
$'000
Over
5 years
$'000
—
2,103
2,103
6.99%
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total
$'000
—
2,103
2,103
6.99%
Total
$'000
1,097,891
3,921
1,101,812
7.70%
Note 23. Non-Current Liabilities — Provisions
Employee benefits
Consolidated
Parent Entity
2008
$’000
2,091
2007
$'000
1,691
2008
$'000
2,091
2007
$'000
1,691
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.
Annual Report 2008
57
Notes to the Financial Statements continued
Note 24. Contributed equity
(a) Share capital
2008
Shares
2007
Shares
2008
$'000
2007
$'000
Ordinary shares (fully paid)
754,028,255
754,028,255
1,045,194
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 ("CPS")
Convertible preference shares
Total contributed equity
2008
Shares
2007
Shares
2008
$'000
2007
$'000
15,080,565,089
15,080,565,089
3,159,294
3,159,294
15,834,593,344
15,834,593,344
4,204,488
4,204,488
(i) On 8 June 2007, Hutchison Telecommunications (Australia) Limited (HTAL) raised A$2.85 billion by way of a pro-rata rights issue of CPS to existing shareholders.
The CPS:
(a) were issued at 21 cents;
(b) have no voting rights except in limited circumstances;
(c) 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
(ii) upon a takeover offer being made for HTAL; or
(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) rank ahead of ordinary shares in the event of a winding up, but are subordinated to secured debt; and
(f) are entitled to a non-cumulative 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. TCNZ has elected not to exercise its option in HTAL under the Sale and Subscription Agreement executed on 10 October 2007.
(c) Movement in ordinary shares:
Date
Detail
Number of shares
Issue price
$'000
01 January 2007
19 October 2007
31 December 2007
01 January 2008
31 December 2008
Opening balance
Ordinary share issue (note(ii))
Closing balance
Opening balance
Closing balance
0.185
678,625,429
75,402,826
754,028,255
754,028,255
754,028,255
(d) Movement in convertible preference shares:
Date
Detail
Number of shares
Issue price
01 January 2007
08 June 2007
19 October 2007
31 December 2007
01 January 2008
Opening balance
Convertible preference share issue (note(i))
Convertible preference share issue (note(ii))
Less: transaction costs arising on share issue
Closing balance
Opening balance
Closing balance
0.21
0.21
—
13,572,508,580
1,508,056,509
15,080,565,089
15,080,565,089
15,080,565,089
15,080,565,089
31 December 2008
58
Hutchison Telecommunications (Australia) Limited
1,031,244
13,950
1,045,194
1,045,194
1,045,194
$'000
—
2,850,227
316,692
3,166,919
(7,625)
3,159,294
3,159,294
3,159,294
Note 24. Contributed equity continued
(e) Options
Information relating to the HTAL Employee 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.
(f) 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 2008 and 31 December 2007 were as follows:
Total payables, borrowings and other financial liabilities
Less: cash and cash equivalents (note 6)
Net debt
Total equity
Total capital
Gearing ratio
Consolidated
Parent entity
2008
$'000
1,841,884
(134,685)
1,707,199
908,473
2,615,672
2007
$'000
1,576,588
(34,894)
1,541,694
1,069,770
2,611,464
2008
$'000
1,016,186
(4,953)
1,011,233
3,351,771
4,363,004
65%
59%
23%
2007
$'000
222,369
(6,973)
215,396
3,220,805
3,436,201
6%
The increase in the gearing ratio during 2008 resulted primarily from the increase in loans from related entity during the year.
Note 25. 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 movements
Balance at 31 December
Share-based payments reserve
Balance at 1 January
Option expense
Spectrum licence
Balance at 31 December
2008
$'000
54,887
990
15,683
71,560
—
990
990
14,868
815
—
15,683
2007
$'000
54,887
—
14,868
69,755
(311)
311
—
2,148
(417)
13,137
14,868
2008
$'000
—
—
15,683
15,683
—
—
—
14,868
815
—
15,683
2007
$'000
—
—
14,868
14,868
—
—
—
2,148
(417)
13,137
14,868
Annual Report 2008
59
Notes to the Financial Statements continued
Note 25. Reserves and accumulated losses continued
Consolidated
Parent Entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
(b) Accumulated losses
Accumulated losses at 1 January
(3,204,473)
(2,919,367)
Net loss attributable to the members of Hutchison Telecommunications (Australia) Limited
(163,102)
(285,106)
Accumulated losses at 31 December
(3,367,575)
(3,204,473)
(998,551)
130,151
(868,400)
(1,058,631)
60,080
(998,551)
(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) the grant date fair value of options issued to employees but not exercised; and
(b) the fair value of the 850 MHz spectrum licence assigned from TCNZ. The fair value was determined by reference to the fair value of the option granted
to TCNZ. Refer to note 24 (b)(ii) for further details on the option.
Note 26. Director and key management personnel disclosures
(a) Key management personnel compensation
Short term employee benefits
Post employment benefits
Long term benefits
Share based payments
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
3,673,087
3,063,231
53,748
69,966
230,303
48,460
87,092
224,019
4,027,104
3,422,802
—
—
—
—
—
—
—
—
—
—
Detailed remuneration disclosures are provided on pages 27 to 31 of the Remuneration report in the Directors’ Report.
(b) 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 2008 and 31 December 2007.
(c) 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 2008 and
31 December 2007.
60
Hutchison Telecommunications (Australia) Limited
Note 27. Remuneration of auditors
During the year fees paid to the auditor of the Parent Entity, its related practices
and non-related audit firms for the following services:
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
Consolidated
Parent Entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
381
341
151
110
9
12
512
159
108
267
110
65
11
527
262
152
414
—
9
12
172
67
67
134
111
—
65
11
187
127
152
279
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.
It is the Consolidated Entity's policy to seek competitive tenders for all major consulting projects.
Note 28. Contingencies
Details and estimates of maximum amounts of contingent liabilities as at 31 December 2008 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
2008
$'000
5,287
32,053
37,340
2007
$'000
4,322
29,699
34,021
2008
$'000
3,350
32,053
35,403
2007
$'000
3,350
29,699
33,049
The secured 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 other material contingent liabilities existing at the reporting date.
Annual Report 2008
61
Notes to the Financial Statements continued
Note 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 12 (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
2008
$'000
2007
$'000
2008
$'000
2007
$'000
49,929
22,925
—
72,854
53,010
32,355
—
85,365
—
—
—
—
—
—
—
28,072
69,818
9,997
107,887
23,220
37,158
11,420
71,798
965
218
—
1,183
—
—
—
—
—
2,950
774
—
3,724
107,887
71,798
1,183
3,724
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.
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 18)
Non-current (note 22)
Consolidated
Parent Entity
2008
$'000
2,156
—
2,156
(53)
2,103
2,103
—
2,103
2007
$'000
2,042
2,156
4,198
(277)
3,921
1,818
2,103
3,921
2008
$'000
2007
$'000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
The weighted average interest rate implicit in the leases is 6.99% (2007: 6.99%).
The Consolidated Entity leases various computer equipment with a carrying value of $6,596,000 (2007: $7,752,000) (note 14) 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.
62
Hutchison Telecommunications (Australia) Limited
Note 30. Related party transactions
(a) Parent entities
The holding company and Australian parent entity is Hutchison Communications (Australia) Pty Limited which at 31 December 2008 owns 52% (2007: 52%)
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 24 for further details. The ultimate parent entity is Hutchison Whampoa Limited (incorporated in Hong Kong) which at
31 December 2008 beneficially owns 100% (2007: 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; Marko BOGOIEVSKI; Justin H. GARDENER; LAI Kai Ming, Dominic; Kevin Steven RUSSELL; John Michael SCANLON; Frank John SIXT and
Roderick James SNODGRASS. Mr Roderick James SNODGRASS was appointed as a Director on 15 February 2008 and continues in office at the date of this report.
Mr Marko BOGOIEVSKI resigned as a Director on 31 January 2008.
(c) Key management personnel compensation
Disclosures relating to key management personnel compensation are set out in the Directors' Report.
(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 advanced from:
Related entity
Subsidiaries
Loans repayments to:
Parent entity
Related entity
Interest revenue
Subsidiaries
Interest expense
Ultimate parent entity
Ultimate Australian parent entity
Related entity
Other transactions
Consolidated
Parent Entity
2008
$'000
—
5,296
—
—
2007
$'000
—
4,480
—
—
142,968
58,646
386,376
50,950
2008
$'000
53
—
2007
$'000
196
—
137,362
123,155
—
—
—
258
—
—
—
—
1,000,000
1,235,035
1,552,952
178,734
—
196,000
754,412
1,000,000
201,222
—
2,619
1,977
—
196,000
754,412
—
135,748
103,780
—
—
—
—
19,715
—
—
27,940
20,657
—
568
—
—
—
3,726
20,657
—
—
Advances to jointly controlled entity
26,739
55,768
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 24 for further details.
Annual Report 2008
63
Notes to the Financial Statements continued
Note 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 11)
Jointly controlled entity (note 11)
Payables
Related entity (note 17)
Current liabilities — Other financial liabilities
Related entity (note 19)
Current borrowings
Subsidiaries (note 21)
Consolidated
Parent Entity
2008
$'000
2007
$'000
2008
$'000
2007
$'000
—
—
—
—
16,318
216,609
2,442,950
1,443,882
166,999
140,260
552,952
178,734
1,000,000
—
—
—
—
—
1,000,000
—
—
—
2,354
4,973
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.
Note 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 *
2008
%
100
100
100
100
100
100
100
100
100
100
100
2007
%
100
100
100
100
100
100
100
100
100
100
100
*
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.
64
Hutchison Telecommunications (Australia) Limited
Note 32. Deed of Cross Guarantee
Hutchison Telecommunications (Australia) Limited, Hutchison 3G Australia Holdings Pty Limited and Hutchison 3G Australia Pty Limited are parties to a Deed
of Cross Guarantee under which each company guarantees the debts of the others. By entering into the Deed, the wholly-owned entities have been relieved
from the requirement to prepare a financial report and directors' report under Class Order 98/1418 (as amended) issued by the Australian Securities and
Investments Commission. The Deed was entered into during the year ended 31 December 2007.
(a) Consolidated income statement and a summary of movements in consolidated retained losses
Hutchison 3G Australia Holdings Pty Limited and Hutchison 3G Australia Pty Limited represent a 'Closed Group' for the purposes of the Class Order, and as there are no
other parties to the Deed of Cross Guarantee that are controlled by Hutchison Telecommunications (Australia) Limited, they also represent the 'Extended Closed Group'.
Set out below is a consolidated income statement and a summary of movements in consolidated retained losses for the year ended 31 December 2008 of
the Closed Group.
Income statement
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
Capitalisation of customer acquisition and retention costs
Depreciation and amortisation expense
Finance costs
Loss before income tax
Income tax expense
Loss for the year
Summary of movements in consolidated retained losses
Retained losses at the beginning of the financial year
Loss for the year
Retained losses at the end of the financial year
2008
$'000
2007
$'000
1,607,212
1,335,687
(305,723)
(485,845)
(386,957)
(126,379)
(56,551)
(105,816)
1,961
6,500
50,169
(249,369)
(250,689)
(301,487)
—
(259,343)
(395,653)
(337,977)
(112,503)
(52,101)
(82,100)
4,087
1,365
46,323
(230,739)
(247,812)
(330,766)
—
(301,487)
(330,766)
(2,536,048)
(2,205,282)
(301,487)
(330,766)
(2,837,535)
(2,536,048)
Annual Report 2008
65
Notes to the Financial Statements continued
Note 32. Deed of Cross Guarantee continued
(b) Balance sheet
Set out below is a consolidated balance sheet as at 31 December 2008 of the Closed Group consisting of Hutchison 3G Australia Holdings Pty Limited and
Hutchison 3G Australia Pty Limited.
2008
$'000
129,731
349,097
60,156
990
41,864
581,838
205,320
8,535
2007
$'000
27,922
308,979
106,768
—
13,344
457,013
177,169
2,035
1,041,994
1,015,750
545,691
2,828
614,970
3,196
1,804,368
1,813,120
2,386,206
2,270,133
1,045,184
2,167,380
2,103
20,317
101,803
24,774
1,067,604
2,293,957
1,442,951
1,000,000
2,442,951
800,028
—
800,028
3,510,555
3,093,985
(1,124,349)
(823,852)
1,712,196
1,712,196
990
—
(2,837,535)
(2,536,048)
(1,124,349)
(823,852)
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Other
Total Current Assets
Non-Current Assets
Receivables
Investment accounted for using the equity method
Property, plant and equipment
Intangible assets
Other
Total Non-Current Assets
Total Assets
Current Liabilities
Payables
Borrowings
Other
Total Current Liabilities
Non-Current Liabilities
Borrowings
Other
Total Non-Current Liabilities
Total Liabilities
Net Assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total Equity
Note 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.
66
Hutchison Telecommunications (Australia) Limited
Note 34. Reconciliation of (loss) / profit after income tax to net cash (outflows) / inflows from operating activities
Consolidated
Parent Entity
(Loss) / profit after income tax
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
Net gain on sale of property
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
(Increase) / decrease in other assets
Increase / (decrease) in payables
Increase / (decrease) in other current liabilities
Increase in employee entitlements
Net cash (outflows) / inflows from operating activities
Note 35. Non-cash investing and financing activities
Acquisition of plant & equipment by means of finance lease
2008
$’000
(163,102)
81,144
131,138
36,872
9,417
815
2,109
(2,067)
(6,500)
2,060
(24,462)
46,594
(27,990)
361,605
(4,345)
1,334
444,622
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
(41,438)
2008
$'000
130,151
7,637
—
—
—
815
19
—
—
(102)
(134,249)
(19)
161
(6,202)
(170)
1,334
(625)
Consolidated
Parent Entity
2008
$’000
—
2007
$'000
3,148
2008
$'000
—
2007
$'000
60,080
5,594
—
—
—
(417)
160
—
—
413
(88,791)
43
2,665
(40,807)
(96)
1,511
(59,645)
2007
$'000
—
In addition, on 19 October 2007, Hutchison Telecommunications (Australia) Limited ("HTAL") acquired a further 19.94% interest in H3GAH in exchange for issuing 75,402,826
number of shares and 1,508,056,509 number of CPS to HCAPL. Under the same transaction, HTAL also acquired the 850 MHz spectrum licence from TCNZ. Refer to 24 (b)(ii) for
further details.
Note 36 Earnings per share
Consolidated
(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) Earnings used in calculating earnings per share
Basic earnings per share
Loss from continuing operations
Loss attributable to the ordinary equity holders of the Consolidated Entity used in calculating basic earnings per share
Diluted earnings per share
Loss attributable to the ordinary equity holders of the Consolidated Entity used in calculating diluted earnings per share
(d) Weighted average number of shares used as the denominator
2008
Cents
(21.63)
(21.63)
(21.63)
(21.63)
Consolidated
2008
$'000
2007
Cents
(41.25)
(41.25)
(41.25)
(41.25)
2007
$'000
(163,102)
(163,102)
(285,106)
(285,106)
(163,102)
(285,106)
Consolidated
2008
Number
2007
Number
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
754,028,255
691,192,567
Weighted average number of ordinary shares and potential ordinary shares used as the denominator in
calculating diluted earnings per share
754,028,255
691,192,567
Convertible preference shares (note 24), option granted to TCNZ (note 24) and options granted to employees and Directors (note 37) 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.
Annual Report 2008
67
Notes to the Financial Statements continued
Note 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) the closing price of HTAL shares on the Australian Securities Exchange on the day on which the options are granted; and
(b) 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 —
2008
Grant date
14—Jun—07
14—Nov—07
21—May—08
4—Jun—08
Expiry
date
13—Jun—12
13—Nov—12
20—May—13
3—Jun—13
Exercise
price
$0.145
$0.200
$0.165
$0.139
Balance at
the start
of the year
28,920,000
300,000
—
—
Issued
during
the year
—
—
200,000
300,000
29,220,000
500,000
$0.146
$0.149
Exercised
during
the year
Forfeited
during
the year
Balance
at the end
of the year
Exercisable
at the end
of the year
—
—
—
—
—
—
1,520,000
—
—
—
27,400,000
300,000
200,000
300,000
9,183,301
—
—
—
1,520,000
28,200,000
9,183,301
$0.145
$0.146
$0.145
Total
Weighted average exercise price
Consolidated and Parent Entity —
2007
Total
Weighted average exercise price
Grant date
23—Jul—04
30—Jul—04
10—Dec—04
23—Dec—04
3—Jun—05
1—Jul—05
5—Aug—05
31—Mar—06
13—Apr—06
14—Jun—07
14—Nov—07
Expiry
date
Exercise
price
31—Dec—10
31—Dec—10
31—Dec—10
31—Dec—10
31—Dec—10
31—Dec—10
31—Dec—10
31—Dec—10
31—Dec—10
13—Jun—12
13—Nov—12
$0.455
$0.460
$0.360
$0.345
$0.270
$0.270
$0.270
$0.255
$0.250
$0.145
$0.200
Balance at
the start
of the year
10,450,000
50,000
450,000
150,000
50,000
200,000
200,000
3,965,000
150,000
—
—
Issued
during
the year
—
—
—
—
—
—
—
—
—
29,320,000
300,000
15,665,000
29,620,000
$0.393
$0.146
Expired/lapsed
/forfeited
during
the year
Exercised
during
the year
Balance
at the end
of the year
Exercisable
at the end
of the year
—
—
—
—
—
—
—
—
—
—
—
—
—
10,450,000
50,000
450,000
150,000
50,000
200,000
200,000
3,965,000
150,000
400,000
—
—
—
—
—
—
—
—
—
—
28,920,000
300,000
16,065,000
29,220,000
$0.387
$0.146
—
—
—
—
—
—
—
—
—
—
—
—
—
The number of options that were forfeited during the year were 1,520,000 (2007: 400,000). The weighted average remaining contractual life of share options
outstanding at the end of the period was 3.5 years (2007: 4.5 years).
Fair value of options granted
The assessed fair value at grant date of options granted during the year ended 31 December 2008 was 4 cents (2007: 4 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 31December 2008 not
already outlined above include:
(a) weighted average share price at grant date: 14.9 cents (2007: 14.6 cents).
(b) weighted average of expected price volatility of the company's shares: 34% (2007: 33% ).
(c) expected dividend yield: 0% (2007: 0%).
(d) weighted average risk-free interest rate: 6.41% (2007: 6.39%).
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 Employee Option Plan
68
Hutchison Telecommunications (Australia) Limited
Consolidated
Parent Entity
2008
$'000
815
2007
$'000
—
2008
$'000
—
2007
$'000
—
Note 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. Actual results may
differ from these estimates and judgements
under different assumptions and conditions.
(a) Critical accounting estimates
and assumptions
Impairment of long-lived assets
In accordance with the Consolidated Entity’s
accounting policy stated in note 1(h) assets have
been tested for impairment. The Consolidated
Entity operate as one cash generating unit.The
recoverable amount of the Consolidated Entity’s
cash generating unit has been determined based
on value in use calculations. 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. 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 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 2013 of 2.5%;
• Pre tax discount rate applied to the cash flow
projections of 10.6%; and
• Terminal value at the end of the modelled
period based on a multiple of 12.7 times
free cash flow beyond 2013.
The growth rate is a conservative estimate of
forecast long-term industry growth. The discount
rate reflects the market determined risk adjusted
discount rate adjusted for specific risks relating
to the Consolidated Entity and the industry in
which it operates. The terminal value represents
the growth rate applied to extrapolated cash
flows beyond the 5 year 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 proceeds
consistent with an external assessment from the
sale of the 2G spectrum licence.
The recoverable amount of the Parent Entity’s
investment in controlled entities (refer note 13)
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 judgements made in applying the
Consolidated Entity’s accounting policies that
have a significant effect on the amounts
recognised in the financial report.
Note 39. Events occurring after
the balance sheet date
On 9 February 2009, the Company and
Vodafone announced an agreement to
merge their telecommunications businesses in
Australia, namely Vodafone Australia Limited
(“Vodafone Australia”) and Hutchison 3G
Australia Pty Limited (“H3GA”). As a result of the
transaction, H3GA will issue new ordinary shares
equalling a 50% interest of the enlarged share
capital of H3GA to Vodafone and the Vodafone
Australia business will merge with H3GA's
business. H3GA will be renamed VHA Pty
Limited (“VHA”). Completion of the transaction is
subject to regulatory and shareholder’s approval
and is expected to take place by mid-2009.
Following completion of the transaction, the
Company and Vodafone will account for VHA as
a 50/50 joint venture.
Other than the matters discussed above, there
has been no other matter or circumstance that
has arisen subsequent to balance date that has
significantly affected, or may significantly affect:
(i)
the operations of the Company and
Consolidated Entity's in future financial
years, or
(ii) the results of those operations in future
financial years, or
(iii) the state of affairs of the Company and
Consolidated Entity's in future financial years.
Note 40. Financial risk
management
The Consolidated Entity's activities expose it to
a variety of financial risks: market risk (including
currency risk and 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 cautiously uses
derivatives, principally forward foreign exchange
contracts as appropriate for risk management
purposes only, for hedging transactions and for
managing the Group's assets and liabilities. It is
the Consolidated Entity's policy not to enter into
derivative transactions for speculative purposes.
it is also the Group's policy not to invest liquidity
in financial products, including hedge funds or
similar vehicles, with significant underlying
leverage or derivative exposure.
Risk management is carried out by a central
treasury department under policies approved
by the Board of Directors. Treasury operates as
a centralised service for managing financial risks,
including interest rate and foreign exchange risks.
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
For the presentation of market risks (including
interest rate risk, exchange rate risk and market
price risk), AASB 7 "Financial instruments:
disclosures" requires disclosure of a sensitivity
analysis for each type of market risks that show
the effects of a hypothetical change in the
relevant market risk variable to which the Group
is exposed at the balance sheet date on profit or
loss and total equity.
The effect that is disclosed in the following
sections assumes that (a) a hypothetical change
of the relevant risk variable had occurred at the
balance sheet date and had been applied to
the relevant risk variable in existence on that
date; and (b) the sensitivity analysis for each
type of market risks does not reflect inter-
dependencies between risk variables, e.g. the
interest rate sensitivity analysis does not take into
account of the impact of changes in interest rates
would have on the relative strengthening and
weakening of the currency with other currencies.
Annual Report 2008
69
Notes to the Financial Statements continued
Note 40. Financial risk management continued
The preparation and presentation of the sensitivity analysis on market risk is solely for compliance with AASB 7 disclosure requirements in respect of
financial instruments. The sensitivity analysis measures changes in the fair value and/ or cash flows of the Group's financial instruments from hypothetical
instantaneous changes in one risk variable (e.g. functional currency rate or interest rate), the amount so generated from the sensitivity analysis are
what-if forward-looking estimates. The sensitivity analyses are for illustration purposes only and it should be noted that in practice market rates rarely change
in isolation. Actual results in the future may differ materially from the sensitivity analyses due to developments in the global markets which may cause
fluctuations in market rates (e.g. exchange or interest rate) to vary and therefore it is important to note that the hypothetical amounts so generated
do not represent a projection of likely future events and profits or losses.
(i) Foreign exchange risk
The Consolidated Entity purchases handsets from its suppliers on invoices denominated in US dollars and also pays Hutchison 3 Global Services Pvt. Ltd, which is
a call centre in India owned by HWL, 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 monitored 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 2008, 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 $2,185,000 lower/$2,185,000 higher (2007: $903,000 lower/$903,000 higher), mainly as a result of higher foreign
exchange losses/gains on translation of US dollar denominated trade receivables against lower foreign exchange gains/ losses on translation of US Dollar
denominated trade payables. Loss is more sensitive to movements in the Australian dollar/US dollar exchange rates in 2008 than 2007 because of the higher
amount of foreign currency denominated accounts receivable. Equity would have been $2,615,000 lower/$341,000 higher (2007: nil lower/nil higher) as a
consequence of foreign currency hedging that have taken place in 2008 but not in 2007.
Interest rate risk
(ii)
The Consolidated Entity's main interest rate risk arises from cash balances. All long-term borrowings have been fully repaid during the year.
(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%
Loss
$'000
1,347
—
—
—
—
—
1,347
Other
equity
$'000
—
—
—
—
—
—
—
Loss
$'000
—
2,609
—
(424)
—
—
Other
equity
$'000
Loss
$'000
Other
equity
$'000
—
—
2,615
—
—
—
—
(2,609)
—
424
—
—
—
—
(341)
—
—
—
2,185
2,615
(2,185)
(341)
—
—
—
—
—
—
—
Carrying
amount
$'000
Loss
$'000
Other
equity
$'000
31—Dec—08
Financial assets
Cash and cash equivalents
Trade receivables
Derivative financial instruments
Financial liabilities
Trade payables
Borrowings
Other financial liabilities
134,685
376,595
990
(196,996)
(2,103)
(1,000,000)
(1,347)
—
—
—
—
—
Total increase/(decrease)
(686,829)
(1,347)
70
Hutchison Telecommunications (Australia) Limited
Note 40.
Financial risk management continued
Interest rate risk
Foreign exchange risk
—1%
—10%
—10%
+10%
Carrying
amount
$'000
34,894
337,624
(182,458)
(1,101,812)
(911,752)
Loss
$'000
(349)
—
—
10,979
10,630
Other
equity
$'000
—
—
—
—
—
Loss
$'000
349
—
—
(10,979)
(10,630)
Other
equity
$'000
—
—
—
—
—
Loss
$'000
—
1,825
(922)
—
903
Other
equity
$'000
—
—
—
—
—
Loss
$'000
—
(1,825)
922
—
(903)
Other
equity
$'000
—
—
—
—
—
31—Dec—07
Financial assets
Cash and cash equivalents
Trade 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 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. 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 2008
Payables
Bank loans
Other financial liabilities
Finance lease liabilities
Total ($'000)
At 31 December 2007
Payables
Bank loans
Finance lease liabilities
Total ($'000)
Effective
interest rate
—
—
—
6.99%
Effective
interest rate
—
9.10%
6.99%
Less than
1 year
$'000
839,781
—
1,000,000
2,156
1,841,937
Less than
1 year
$'000
474,776
299,964
2,042
776,782
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
—
698,133
2,156
700,289
—
99,794
—
99,794
—
—
—
—
Total
$'000
839,781
—
1,000,000
2,156
1,841,937
Total
$'000
474,776
1,097,891
4,198
1,576,865
Annual Report 2008
71
Directors’ Declaration
In the Directors' opinion:
(a) the financial statements and notes set out on pages 34 to 71 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the Company’s and Consolidated Entity’s financial position as at 31 December 2008 and of their performance for the
financial year ended on that date; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified in note 31 will be able
to meet any obligations or liabilities to which they are, or may become, subject by virtue of the Deed of Cross Guarantee described in note 31.
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
19 February 2009
72
Hutchison Telecommunications (Australia) Limited
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
Telephone +61 2 8266 0000
Facsimile +61 2 8266 9999
www.pwc.com/au
Report on the financial report
We have audited the accompanying financial report of Hutchison Telecommunications (Australia) Limited (the company), which comprises the balance sheet
as at 31 December 2008, 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.
Directors’ responsibility for the financial 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 controls 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 financial report, comprising the financial statements and notes, complies with International
Financial Reporting Standards.
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.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend
on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial 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 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.
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.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s opinion
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 2008 and of their performance for the
year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Annual Report 2008
73
PricewaterhouseCoopers
ABN 52 780 433 757
Darling Park Tower 2
201 Sussex Street
GPO BOX 2650
SYDNEY NSW 1171
DX 77 Sydney
Australia
Telephone +61 2 8266 0000
Facsimile +61 2 8266 9999
www.pwc.com/au
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 27 to 31 of the directors’ report for the year ended 31 December 2008. The directors of the
company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001.
Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the Remuneration Report of Hutchison Telecommunications (Australia) Limited for the year ended 31 December 2008, complies with section
300A of the Corporations Act 2001.
PricewaterhouseCoopers
RL Wilkie
Partner
Sydney
19 February 2009
74
Hutchison Telecommunications (Australia) Limited
Shareholder Information
The shareholder information set out below was applicable as at 16 March 2009.
Substantial shareholders
Substantial shareholders in the Company are:
Shareholding
Percentage
Twenty largest shareholders
There were 5,042 holders of less than a marketable parcel of ordinary
shares. The names of the 20 largest holders of quoted ordinary shares as at
16 March 2009 are as follows:
Hutchison Communications
(Australia) Pty Limited #
Vodafone Group Plc *
Leanrose Pty Limited
Telecom 3G (Australia) Limited and
Telecom Corporation of New Zealand Limited
476,267,155
476,267,155
83,913,797
75,402,826
63.16%
63.16%
11.13%
10.00%
Shareholder
Hutchison Communications
(Australia) Pty Limited
Leanrose Pty Limited
% Issued
Shareholding
Capital Rank
392,353,358
52.03
83,913,797
11.13
Notes:
#
*
Substantial shareholding includes relevant interest arising from an equitable
mortgage of shares between Leanrose Pty Limited and Hutchison Communications
(Australia) Pty Limited.
Vodafone Group Plc has a substantial shareholding in the Company by virtue of an
agreement under which Hutchison Whampoa Limited has given certain commitments
to Vodafone Group Plc with respect to the holding of shares in the Company by
Hutchison Communications (Australia) Pty Limited. As a result of such commitments,
Vodafone has (but for the operation of section 609(7) of the Corporations Act 2001)
a relevant interest in the shares in which Hutchison Communications (Australia)
Pty Limited has a relevant interest. This agreement was entered into as part of the
proposal announced on 9 February 2009 to combine the Australian
telecommunications operations of the Company and Vodafone. The proposal is subject
to certain conditions, including shareholder approval which will be sought at an
Extraordinary General Meeting of the Company to be held on 2 April 2009. However,
so far as the Company is aware, Vodafone does not have any direct or indirect holding
of shares in the Company.
Distribution of equity securities
Range
1 - 1000
1,001 - 5,000
5,001 – 10,000
10,001 – 100,000
100,001 - OVER
Total
1,606
3,204
1,239
1,815
273
8,137
4
28
11
35
9
87
0
0
0
11
47
58
Ordinary
Shares
Convertible
Preference
Shares
Options
Jason Boua Hong Lo
Telecom 3G (Australia) Limited
75,402,826
10.00
Citicorp Nominees Pty Limited
12,282,692
1.63
J P Morgan Nominees Australia
6,894,512
HSBC Custody Nominees (Australia) Limited
5,633,551
HSBC Custody Nominees
(Australia) Limited – GSI ECSA
National Nominees Limited
Arjee Pty Limited
4,000,000
3,526,122
3,231,624
Yet Kwong Chiang & Ho Yuk Lin Chiang
2,700,138
George Thomson
Song Song Zhang
Yim Fong Leung
Hung Fong Chong
Yee Man Tang
Man Fai Lin
Bin Liu
2,536,094
2,076,000
1,849,000
1,400,000
1,310,000
1,250,000
1,078,888
1,000,000
Dimitrios Piliouras & Konstantina Piliouras
1,000,000
Frank John Sixt
1,000,000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
18
18
.91
.75
.53
.47
.43
.36
.34
.28
.25
.19
.17
.17
.14
.13
.13
.13
Annual Report 2008
75
Shareholder Information continued
Twenty largest convertible preference shareholders
The names of the 20 largest holders quoted convertible notes as at 16 March 2009
are as follows:
Convertible Preference
Shareholder
Convertible Preference
Shareholding
Rank
Hutchison Communications (Australia) Pty Limited
13,568,383,554
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
1
2
3
4
5
6
7
8
9
10
10
11
12
13
13
14
14
15
15
15
Telecom 3G (Australia) Limited
Share Direct Nominees Pty
Kew Chai Chong & Yook Yan Chang
Bond Street Custodians Limited
Custodial Services Limited
Prabha Chandra & Shubha Chandra
Real-Time Images Pty Ltd
Justin Herbert Gardener & Anne Louise Gardener
Patrick Lik-Tung Lui & Eva Man-Ching Law
National Nominees Limited
Myron Leibowitz
Veredi Pty Ltd
Saul Benedict Freedman & Alexandra Francesca Sharland
Kevin J Finegan Pty Ltd
Melpa Company Pty Ltd
Patville Pty Ltd
Kok Liang Chen
Michael John Crandon & Pauline Mary Crandon
Alex Hoang Huynh
Unquoted Equity Securities
Options issued under the Employee Option Plan
Number of Options on issue
28,000,000
Number of holders
58
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 terms and
conditions of issue of the convertible preference shares.
(c) Options
No voting rights
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Hutchison Telecommunications (Australia) Limited
Contents
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About Hutchison
Financial Highlights
Operational Highlights
Chairman’s Message
CEO’s Message
Review of Operations
Corporate Social Responsibility
Senior Management
Board of Directors
Corporate Governance
Directors’ Report
Financial Report
Notes to the Financial Statements
Directors’ Declaration
Independent Auditors’ Report
Shareholder Information
Corporate Directory
AGM
The Annual General Meeting of Hutchison will be held at:
The Conference Centre, Building A, 207 Pacific Highway,
St Leonards NSW 2065
Tuesday, 19 May 2009,10am
Corporate Directory
Directors
Fok Kin-ning, Canning
Barry Roberts-Thomson
Chow Woo Mo Fong, Susan
Justin Herbert Gardener
Lai Kai Ming, Dominic
Kevin Steven Russell
John Michael Scanlon
Frank John Sixt
Roderick James Snodgrass
Company Secretaries
Edith Shih
Louise Sexton
Investor Relations
Tel: (02) 9964 5157
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
(02) 8280 7111
www.linkmarketservices.com.au
Auditor
PricewaterhouseCoopers
Chartered Accountants
201 Sussex Street
Sydney NSW 2000
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: Tuesday, 19 May 2009
Time: 10.00am
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Annual Report 2008
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HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED
www.hutchison.com.au