Hutchison Telecommunications
(Australia) Limited
ABN 15 003 677 227
Level 7, 40 Mount Street
North Sydney, NSW 2060
(02) 99644646
Tel:
Fax:
(02) 8904 0457
www.hutchison.com.au
ASX Market Announcements
Australian Securities Exchange
Date: 23 March 2016
Subject: Annual Report 2015
The Company’s 2015 Annual Report incorporating the full year accounts for the period
ended 31 December 2015 is attached.
Yours faithfully
Louise Sexton
Company Secretary
A n n u al
2 015
R e p ort
Contents
1 Ownership Structure
2 VHA Key Operational Highlights in 2015
3 Financial Summary
4 Chairman’s Message
6 Board of Directors
8 Corporate Governance
13 Directors’ Report
20 Auditor’s Independence Declaration
21 Financial Report
50 Shareholder Information
52 Corporate Directory
AGM Details
The Annual General Meeting of
HTAL will be held at:
40 Mount Street
North Sydney NSW 2060
Friday, 29 April 2016, 10.00 am
ABN 15 003 677 227
Hutchison Telecommunications (Australia)
Limited (“HTAL”) (ASX: HTA) has a 50%
interest in Vodafone Hutchison Australia Pty
Limited (“VHA”). HTAL was listed on the ASX
in 1999 and in 2003 launched Australia’s first
3G service under the 3 brand.
In 2009, HTAL’s operations were merged
with Vodafone Australia to form VHA.
VHA offers mobile telecommunications
under the Vodafone brand in Australia.
Ownership Structure
HTAL owns 50% of VHA
(formerly named Hutchison 3G
Australia Pty Limited). Vodafone
Group Plc owns the remaining
50%. CK Hutchison Holdings
Limited## is the majority
shareholder of HTAL, with
an 87.87% stake#.
CK HUTCHISON
HOLDINGS LIMITED
87.87%#
TELECOM CORPORATION
OF NEW ZEALAND LIMITED
10%#
PUBLIC SHAREHOLDERS
2.13%
HUTCHISON TELECOMMUNICATIONS
(AUSTRALIA) LIMITED
VODAFONE GROUP PLC
50%#
50%#
#
Indirect ownership.
## Upon completion of the Merger and Spin-off proposal as mentioned in the joint announcement made by Hutchison Whampoa Limited
and Cheung Kong (Holdings) Limited on 9 January 2015, the ultimate holding company of HTAL has changed from Hutchison Whampoa
Limited to CK Hutchison Holdings Limited, a company listed on The Stock Exchange of Hong Kong Limited and incorporated in the
Cayman Islands, effective from 3 June 2015.
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015
1
VHA Key
Operational
Highlights in 2015
g VHA gained an additional 135,000
customers during 2015 to reach 5.4 million
customers, an increase of 2.5% year on year.
g VHA’s financial performance improved during
2015, with its growth trajectory continuing. HTAL’s
share of VHA’s total revenue was $1,825.8 million
for the year, an increase of 4.5% on 2014 driven by
growth in VHA customer numbers.
g Customer appetite for data continued to grow
during 2015, with usage increasing 84% from 2014.
g 2015 saw a significant shift in customer sentiment
about VHA, with satisfaction reaching five-year
highs across key metrics.
g VHA continued the rollout of 4G capability
across its network, with 4G services
now reaching 96.9% of the
Australian population.
2
Financial Summary
VHA Financial and
Operating Metrics
The items below represent the 50% share of VHA attributable to HTAL
2015
2014
YoY change
Total revenue ($m)
Gross service revenue ($m)1
Net service revenue ($m)2
EBITDA ($m)
Share of net loss of VHA ($m)3
The items below represent totals for VHA
- Postpaid customers (‘000)
- Prepaid customers (‘000)
VHA customers subtotal (‘000)
- Mobile Virtual Network Operator (“MVNO”)
customers (‘000)
Total network customers (‘000)
Gross ARPU ($)4
Net ARPU ($)5
Notes:
1,825.8
1,571.4
1,375.2
406.4
(187.5)
3,249
1,730
4,979
458
5,437
52.38
45.68
1,747.6
1,500.7
1,362.3
385.6
4.5%
4.7%
0.9%
5.4%
(301.8)
37.9%
3,140
1,714
4,854
448
5,302
50.79
46.00
3.5%
0.9%
2.6%
2.2%
2.5%
3.1%
(0.7%)
1 Gross service revenue represents total monthly amount billed to the customer excluding any handset/device charges, plus incoming mobile
termination revenue.
2 Net service revenue represents gross service revenue excluding amounts attributable to a handset/device in postpaid contract bundled plans.
The amount attributable to a handset/device is based on the price differential between a contract bundled plan and a comparable SIM-only plan
at the time of acquisition or re-sign.
3 Reconciliation for the Share of net loss of VHA is set out on page 34.
4 Gross ARPU represents a rolling 12 month average gross service revenue per user per month at the end of the period excluding MVNOs.
5 Net ARPU represents a rolling 12 month average net service revenue per user per month at the end of the period excluding MVNOs.
3
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Chairman’s Message
HTAL reports a $182.9 million loss for the
year ended 31 December 2015, compared
with a loss of $285.5 million in 2014. HTAL
accounts for its investment in VHA using the
equity method of accounting. The VHA results
(including revenue and operating costs)
are included in the “share of net losses of a
joint venture accounted for using the equity
method” in HTAL’s consolidated statement
of profit or loss and other comprehensive
income. Under this method, revenue from
VHA’s ordinary activities is not included
in HTAL’s consolidated revenues from
ordinary activities.
HTAL’s revenue from ordinary activities
represents interest income received on
loans to VHA. HTAL recorded revenue from
operating activities of $6.0 million, an increase
of $4.9 million from 2014 as a result of
increased shareholder loans provided to VHA.
VHA highlights
During 2015, competition and innovation
in the Australian telecommunications
sector continued to increase at a rapid pace.
With strong support from HTAL and its joint
shareholder Vodafone Group Plc, VHA has
built on momentum which began in the
second half of 2014 following the completion
of its three year turnaround program,
achieving continued and solid growth.
Key achievements and highlights include:
•
•
•
•
•
•
•
Growth in revenue and customer
numbers;
Lowest ratio of customer complaints
to the Telecommunications Industry
Ombudsman (“TIO”) among major mobile
telecommunications providers in the
September and December quarters;
Positive Net Promoter Score (“NPS”) for the
first time in five years;
Further network enhancements to
improve customer experience and
increase performance, coverage and
competition;
Enhanced product offerings including
product refresh and expansion of $5 per
day international roaming;
Re-entry of VHA to the Business Enterprise
market; and
Vodafone Foundation’s launch of the
DreamLab app.
VHA 2015 results
References to VHA’s financial results reflect
the 50% share of VHA attributable to HTAL.
References to customer metrics reflect the
total customer base of VHA.
VHA’s financial performance improved during
2015, with its growth trajectory continuing.
HTAL’s share of VHA’s total revenue was
$1,825.8 million for the year, an increase
of 4.5% on 2014 driven by growth in VHA
customer numbers. HTAL’s share of VHA’s
EBITDA grew 5.4% to $406.4 million from
$385.6 million. There has also been
a significant improvement in VHA’s loss
position, with a 37.9% decrease in HTAL’s
share of net loss of VHA from $301.8 million
in 2014 to $187.5 million for the year ended
31 December 2015. This is attributable to
the improvement in EBITDA and a reduction
in depreciation.
Customer base growth
VHA gained an additional 135,000 customers
during 2015 to reach 5.4 million customers, an
increase of 2.5% year on year. This increase was
driven primarily by growth in Red plans in the
postpaid segment.
A network built for streaming
As customer appetite for data continued
to grow during 2015, with usage increasing
84% from 2014, VHA launched a number of
‘worry-free’ product initiatives to increase
customer confidence in using more services.
VHA’s shared plans, which were a key driver
of growth in the Mobile Broadband segment,
allow family members to share data, call and
text inclusions across multiple devices. These
features, coupled with VHA’s strong network
and award-winning products including
$5 per day international roaming which is
now available in more than 50 countries, data
workout and automatic $10 per 1GB data
top-up to reduce ‘bill shock’, are contributing
to VHA’s improved performance. VHA also
built on its premium content offering, which
already included Spotify music and Fairfax
news services, giving customers access to
thousands of hours of movies, TV shows
and music through Stan.
More satisfied customers
2015 saw a significant shift in customer
sentiment about VHA, with satisfaction
reaching five-year highs across key metrics.
Fok Kin Ning, Canning
Chairman
I am pleased
to provide
you with the
summary of our
performance in
2015, a year that
saw continued
improvement
in Vodafone
Hutchison
Australia’s
business.
4
HTAL remains committed to its
investments in VHA, and will continue
to support VHA’s growth and profitability
in the future.
Customer complaints to the TIO about VHA
fell dramatically throughout the year, with VHA
recording the lowest ratio of complaints of
major Australian mobile telecommunications
providers in the September and December
quarters. TIO complaints about VHA
declined 66.7 per cent year on year through
an increased focus on customer service,
enhanced network and customer-focused
products. In another strong sign of a return to
brand health, VHA’s NPS, which measures how
likely customers are to recommend the service
to others, was positive for the first time since
2010 in September 2015 and rose ten points
in the twelve months to December 2015.
Building an even better network
VHA continued the rollout of 4G capability
across its network, with 4G services now
reaching 96.9 per cent of the Australian
population. The expansion was largely driven
by the commencement of the re-farming of
the 850MHz spectrum holdings to provide
4G services instead of 3G services. 2015 also
saw the continued rollout of VHA’s new core
network which offers customers an enhanced
data experience through increased agility and
flexibility. VHA began deploying Voice over
LTE, providing a number of customer benefits
including shorter call connection times. To
set-up its network for the future, thousands
of kilometres of fibre will be connected to
VHA’s network under an agreement with TPG
Telecom Limited (“TPG”). In a Mobile Virtual
Network Operator agreement, TPG’s mobile
customer base is also being migrated to the
VHA network. During 2015, VHA participated
in the Australian Government’s Mobile Black
Spots Programme, winning funding for 70
new sites to increase coverage and choice of
provider in regional and rural areas, with the
first site switched on in New South Wales in
December 2015.
Growing the Business customer
segment
2015 saw VHA’s re-entry into the Business
Enterprise market, bringing increased
competition to the business segment and
offering customers value products, local and
dedicated care, and access to VHA’s strong
network. Highlights include the opening
of four Vodafone Business Centres in three
states, offering VHA’s business plans, products,
accessories and machine-to-machine
solutions. VHA forged relationships with key
partners including the country’s peak small
business body, Council of Small Business
Australia, and a major distribution company,
Synnex. The unit has a strong focus on the
small to medium sized business segment,
and achieved solid year on year growth in
revenue and connections.
Commitment to customer care, retail
and social responsibility
In its commitment to providing local care,
VHA officially opened its multi-million dollar
state-of-the-art Customer Care Centre in the
Hobart Central Business District in March
2015. It continued to expand its retail points
of presence, opening 34 VHA branded stores
and through new partners including Kogan.
In partnership with the Garvan Institute of
Medical Research, the Vodafone Foundation
successfully launched the DreamLab app which
uses the processing power of smartphones to
help fast-track cancer research.
Dedicated teams
During 2015, VHA strengthened its expert
teams with a number of key appointments
at executive and general manager level, and
employee satisfaction and engagement
continued to grow. VHA will continue to
strategically invest in its teams during 2016.
HTAL is pleased with the achievements of
VHA’s dedicated teams, led by Chief Executive
Officer Iñaki Berroeta and the Executive
team, throughout 2015 and thanks them
for their efforts.
Outlook
In 2016, VHA’s objectives are to continue
growth and further strengthen the brand.
To do this, it will:
•
•
Continue to build and enhance its
network through new features and
new sites to increase performance,
coverage and competition, with a
focus on technology stability, resilience
and security.
Improve the customer experience
with a focus on tailored service and
digital engagement.
•
•
•
Continued focus on cost management
and profitability to reinvest in the
business.
Build capabilities for future network
investments and to enter new markets.
In a Federal election year, drive policy
reform priorities to address the
distorted market which exists in Australia,
especially in regional and rural areas, by
highlighting to decision makers the need
for change.
The Australian telecommunications market
is advanced by international standards with
three high performance 4G networks and very
high mobile and smartphone penetration
rates. It is a unique market with a strong
incumbent which benefits from an extensive
legacy network and significant government
subsidies. This has created an uneven
competitive environment which affects
mobile competition in regional and rural areas.
VHA is a pro-competition company and will
continue to advocate for a fairer regulatory
regime which encourages innovation,
competition and better customer outcomes.
VHA is expected to continue performing well
in 2016, with further growth in its customer
base. VHA notes the impact of the wholesale
price changes for mobile terminating access
services (“MTAS”). On 24 August 2015, the
Australian Competition and Consumer
Commission released its final decision to
reduce wholesale prices for MTAS, effective
1 January 2016. During 2016, VHA’s mobile
service revenue is expected to be lower due
to the lower MTAS rates, which will largely be
offset by a corresponding decrease in VHA’s
interconnection costs.
Fok Kin Ning, Canning
Chairman
5
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Board of Directors
Fok Kin Ning, Canning
Chairman BA, DFM, FCA (ANZ)
Fok Kin Ning, Canning, aged 64, has been a Director since 8 February 1999. Mr Fok has been a non-executive director
of CK Hutchison Holdings Limited (“CKHH”) since January 2015 and was re-designated as an executive director and
group co-managing director of CKHH in June 2015. He has been a director of Cheung Kong (Holdings) Limited
(“Cheung Kong”) since 1985 and became a non-executive director in 1993. The listing status of Cheung Kong on
The Stock Exchange of Hong Kong Limited was replaced by CKHH on 18 March 2015 and he was re-designated as
a director of Cheung Kong in June 2015. Mr Fok has been an executive director of Hutchison Whampoa Limited
(“HWL”) since 1984, group managing director since 1993 and was re-designated as a director in June 2015 when
HWL was privatised by way of a scheme of arrangement on 3 June 2015. He has been non-executive chairman of
Hutchison Telecommunications Hong Kong Holdings Limited (“HTHKH”) since 2009 and of Hutchison Port Holdings
Management Pte. Limited (“HPHM”) as the trustee-manager of Hutchison Port Holdings Trust (“HPH Trust”) since
2011, an executive director of Power Assets Holdings Limited (“Power Assets”) since 1985 and its chairman since
2005, chairman and an executive director of HK Electric Investments Manager Limited (“HKEIM”) as the trustee-
manager of HK Electric Investments (“HKEI”) and of HK Electric Investments Limited (“HKEIL”) since 2013, co-chairman
of Husky Energy Inc. (“Husky Energy”) since 2000, and an executive director and deputy chairman of Cheung Kong
Infrastructure Holdings Limited (“CKI”) since 1997. Mr Fok has also been a director of VHA (previously known as
Hutchison 3G Australia Pty Limited from March 2001 to June 2009) since 2001. He has been alternate director to a
director of HTHKH since 2010. The aforementioned companies are either the ultimate holding company of HTAL,
or subsidiaries or associated companies of CKHH in which Mr Fok acts as chairman, co-chairman, deputy chairman
or director for the purpose of overseeing the management of such businesses. Mr Fok was previously a director of
Hutchison Harbour Ring Limited (“HHR”, now known as China Oceanwide Holdings Limited) from 1992 to December
2014 and its chairman from 2002 to December 2014. He holds a Bachelor of Arts degree and a Diploma in Financial
Management, and is a Fellow of Chartered Accountants Australia and New Zealand.
Barry Roberts-Thomson
Deputy Chairman
Barry Roberts-Thomson, aged 66, was Managing Director of HTAL from its inception in 1989 until September
2001. In his capacity as Deputy Chairman, Mr Roberts-Thomson represents HTAL in government relations and
strategic projects and has served as a director of VHA since 2001. Mr Roberts-Thomson has been a Director since
14 February 1989.
Chow Woo Mo Fong, Susan
Director BSc
Chow Woo Mo Fong, Susan, aged 62, has been a Director since 15 February 2006 and Alternate Director to
Mr Fok, Mr Lai and Mr Sixt since 8 May 2006, 26 February 2007 and 4 May 2007 respectively. Mrs Chow has been
an executive director and group deputy managing director of CKHH since June 2015. She has been an executive
director of HWL since 1993, deputy group managing director since 1998 and was re-designated as a director in
June 2015 when HWL was privatised by way of a scheme of arrangement on 3 June 2015. Mrs Chow has been
an executive director of CKI since 1997, and a non-executive director of HTHKH since 2009. She has also been a
director of VHA since 2004. Mrs Chow has been alternate director to directors of each of CKI since 2006, of TOM
Group Limited (“TOM”) since 2012, of HKEIM as the trustee-manager of HKEI and of HKEIL since November 2014.
The aforementioned companies are either the ultimate holding company of HTAL, or subsidiaries or associated
companies of CKHH in which Mrs Chow acts as director for the purpose of overseeing the management of such
businesses. She was previously an executive director of Power Assets from 2006 to January 2014, of HHR from
2001 to December 2014, of HKEIM as the trustee-manager of HKEI and of HKEIL from 2013 to November 2014,
and alternate director to directors of Power Assets from 1993 to January 2014. She is a qualified solicitor and
holds a Bachelor’s degree in Business Administration.
Justin Herbert Gardener
Director BEc, FCA, AGIA
Justin Herbert Gardener, aged 79, has been a Director since 2 July 1999. Mr Gardener 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 is a Fellow of the Institute of Chartered Accountants and
an Associate of the Governance Institute.
6
Lai Kai Ming, Dominic
Director BSc, MBA
Lai Kai Ming, Dominic, aged 62, has been a Director since 19 May 2004 and Alternate Director to Mrs Chow and
Mr Sixt since 8 May 2006. Mr Lai has been an executive director and deputy managing director of CKHH since
June 2015. He has been an executive director of HWL since 2000 and was re-designated as a director in June 2015
when HWL was privatised by way of a scheme of arrangement on 3 June 2015. Mr Lai has been a non-executive
director of HTHKH since 2009 and alternate director to a director of HTHKH since 2010. The aforementioned
companies are either the ultimate holding company of HTAL or its subsidiaries in which Mr Lai acts as director
for the purpose of overseeing the management of such businesses. He was previously a director of HHR from 1994
to December 2014 and its deputy chairman from 2001 to December 2014, and alternate director to a director of
HHR from 2007 to December 2014. Mr Lai has over 30 years of management experience in different industries.
He holds a Bachelor of Science (Hons) degree and a Master’s degree in Business Administration.
John Michael Scanlon
Director
John Michael Scanlon, aged 74, has been a Director since 11 July 2005. Mr Scanlon 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.
Frank John Sixt
Director MA, LLL
Frank John Sixt, aged 64, has been a Director since 12 January 1998 and Alternate Director to Mrs Chow and
Mr Lai since 25 February 2008. Mr Sixt has been a non-executive director of CKHH since January 2015 and was
re-designated as an executive director, group finance director and deputy managing director of CKHH in June 2015.
He has been an executive director of Cheung Kong since 1991 and became a non-executive director in 1998. The
listing status of Cheung Kong on The Stock Exchange of Hong Kong Limited was replaced by CKHH on 18 March
2015 and he was re-designated as a director of Cheung Kong in June 2015. Mr Sixt has been an executive director
of HWL since 1991, group finance director since 1998 and was re-designated as a director in June 2015 when HWL
was privatised by way of a scheme of arrangement on 3 June 2015. He has been non-executive chairman of TOM
since 1999, an executive director of CKI since 1996, and a non-executive director of HTHKH since 2009 and of HPHM
as the trustee-manager of HPH Trust since 2011. He has been an executive director of Power Assets since 1998 and
was re-designated as a non-executive director in January 2014. Mr Sixt has also been a director of Husky Energy
since 2000 and of VHA since 2001. He has been alternate director to a director of HKEIM as the trustee-manager of
HKEI and of HKEIL since June 2015. The aforementioned companies are either the ultimate holding company of
HTAL, or subsidiaries or associated companies of CKHH in which Mr Sixt acts as chairman or director for the purpose
of overseeing the management of such businesses. Mr Sixt 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 Québec and Ontario, Canada.
Ronald Joseph Spithill OAM
Director BScTech
Ronald Joseph Spithill, aged 74, has been a Director since 16 November 2010. Mr Spithill was a director of
Telecom Corporation of New Zealand Limited from 2006 until 2011 and serves on a number of NGO Boards.
Mr Spithill has also been a director of VHA since 2010. He was previously President of Alcatel Asia Pacific
responsible for operations in 16 countries, Executive Vice President and Chief Marketing Officer of the Paris-based
Alcatel group and Vice-Chairman of Alcatel Shanghai Bell. He has been CEO and Chairman of Alcatel Australia.
He is a past President of the Telecommunications Industry Association of Australia and served with the AEEMA
Board, the Australian Business Council, the Malaysian Government Industry Advisory Panel, the New Zealand
Independent Industry Oversight Group, the NSW Government IT Advisory Board and the Australian Government
“Goldsworthy” Committee. Mr Spithill is a Fellow of the Australian Academy of Technological Sciences and
Engineering and a Distinguished Fellow of the Telecommunications Society of Australia.
7
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Corporate Governance
This Corporate Governance Statement is dated 22 February 2016 and approved by the Board of Hutchison Telecommunications (Australia)
Limited (“HTAL” or the “Company”). Information about HTAL and its corporate governance is available on the Company’s website at
www.hutchison.com.au.
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. These practices were reviewed and updated in 2014 in response to the release of the 3rd edition of the
ASX Corporate Governance Principles and Recommendations (the “ASX Principles”). This report reflects the Company’s corporate governance
practices in place from 1 January 2015, and where the Company does not comply with the ASX Principles.
The Board
Role of the Board
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 the “Group” in this report), protecting the rights and interests of shareholders and is
responsible for overall corporate governance.
The Board Charter is available on the Company’s website.
The Board’s responsibilities include:
•
•
•
reviewing and approving the strategic direction of the Group 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 the Group, including its control and accountability systems;
ensuring the business risks facing the Group 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 the Group;
•
reviewing and approving annual financial plans and monitoring corporate performance against both short-term and long-term financial plans;
•
appointing the chief executive, evaluating performance and determining the remuneration of senior executives and ensuring that
•
appropriate policies and procedures are in place for recruitment, training, remuneration and succession planning; and
delegating to the chief executive the authority to manage and supervise the business of the Group with senior managers and other
management, including the making of all decisions regarding the Group’s operations that are not specifically reserved to the Board.
•
Composition of the Board
The Board comprises eight Directors whose appointment reflects the shareholding of the Company and the need to ensure that the Company
is run in the best interest of all shareholders. All the Directors, including the Chairman, Mr Fok, are non-executives. The Board has considered
the factors relevant to assessing the independence of a Director contained in the ASX Principles, and in light of this, the Board determined that
the independent Directors are not substantial shareholders or officers of substantial shareholders, have not been employed as an executive
of the Group or its majority shareholder, nor are they associated with any significant supplier, customer or professional adviser of the Group.
Further, an independent Director does not have any significant contractual relationship with the Group 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, or have not been, officers of a significant shareholder or have not been
employed as an executive of the Group, are considered by the Board to be independent Directors. The Board does not consider that the length
of tenure of either Mr Gardener or Mr Scanlon has compromised their independence. In light of the majority ownership by CK Hutchison
Holdings Limited (“CKHH”), 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.
The Board has considered the skills that are appropriate for the Board as a whole and these include experience in:
general business management, strategy and entrepreneurship;
information and technology particularly in telecommunications or multimedia;
•
•
• marketing, sales and distribution in highly competitive markets;
• Government relations and policy;
•
•
•
•
legal, governance and compliance risk management;
human resources and remuneration;
accounting, finance and audit; and
banking, treasury and capital markets.
Details of the Directors’ skills, experience and date of appointment are set out on pages 6 and 7. Details of the non-executive Director
remuneration are set out in the Remuneration Report which forms part of the Directors’ Report on pages 16 to 18.
8
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. An election of Directors is held at the Annual General Meeting (“AGM”) each year, and information on the Directors standing
for re-election is provided to shareholders in the Notice of Meeting for the AGM. Any Director who has been appointed during the year must
stand for election at the next AGM. Each Director must retire every three years, and if eligible, may stand for re-election. Retiring Directors are not
automatically reappointed.
Prior to the appointment of a new Director, appropriate checks will be undertaken including education, employment and character references,
and the balance of skills and experience collectively on the Board will be taken into consideration. Since 2005, each new Director has received a
letter of appointment detailing the Company’s expectations and an induction process is arranged by the Company Secretary.
Upon appointment to the Board, a Director receives a package of orientation materials on the Company and the Company provides professional
development materials to Directors and enables them to attend appropriate external seminars and information sessions to help ensure that they
are apprised of the latest changes in the commercial, legal and regulatory environment and to refresh their knowledge and skills on the roles,
functions and duties of a listed company director.
In 2015, the Company introduced a process to evaluate by questionnaire the performance of the Board as a whole and the Board Committees
together with the Directors. This evaluation was undertaken at the beginning of 2015, and will be undertaken at a similar time each year.
The evaluation for 2016 has also commenced. The objective of such evaluation is to ensure that the Board, its Committees and the Directors
continued to act effectively in fulfilling the duties and responsibilities expected of them.
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.
Board Committees
The Board has two Committees to assist in the implementation of its corporate governance practices, fiduciary and financial reporting and audit
responsibilities. These are an Audit & Risk Committee and a Governance, Nomination & 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’s website.
Audit & Risk Committee
The responsibility of the Audit & Risk Committee is to assist the Board in fulfilling its duties through review and supervision of the Group’s
financial reporting process and the Group’s system of risk management, internal control and legal compliance.
All members of this Committee are non-executive Directors and the composition of the Committee meets the requirements of the ASX
Listing Rules. It has appropriate financial expertise and knowledge of the telecommunications industry. Details of the Committee members’
qualifications, expertise, experience and attendance at Committee meetings are set out on pages 6, 7, 14 and 15.
This 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 the Group. It is also
responsible for overview of the relationship between the Group and its external auditor, including periodic review of the performance and the
terms of appointment of the auditor. Furthermore, it considers any matters relating to the financial affairs of the Group and any other matter
referred to it by the Board.
The main responsibilities delegated to this Committee are:
•
•
•
•
•
•
•
to consider and recommend to the Board the appointment and remuneration of the Company’s external auditor and to determine with
the external auditor the nature and scope of the audit or review and approve audit or review plans;
to assess the performance and independence of the external auditor, taking into account factors which may impair the auditor’s judgement
in audit matters related to the Company;
to review the interim and annual accounts of the Company before their submission to the Board;
to ensure the Group’s practices and procedures with respect to related party transactions are appropriate for compliance with the relevant
legal and securities exchange requirements;
to review the risk management practices and oversee the implementation and effectiveness of the risk management system including
overseeing appropriate governance standards for tax management and the effectiveness of the tax control and governance framework
including the monitoring of tax risk management strategies;
to review with management and the external auditor the presentation and impact of significant risks and uncertainties associated with
the business of the Group and their effects on the financial statements of the Group; and
to ensure corporate compliance with applicable legislation.
9
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Corporate Governance continued
Governance, Nomination & Compensation Committee
This Committee comprises non-executive Directors and is chaired by the Chairman of the Board. In light of the majority ownership by CKHH and
that the Company does not currently have any executives, the Board has resolved that, at this stage, it is not in the best interests of the Company
that a majority of members of this Committee be independent or that the Chair of this Committee be independent. Details of the Committee
members’ qualifications, expertise and experience are set out on pages 6, 7, 14 and 15. No meetings of this Committee were required during the
year ended 31 December 2015.
Compensation responsibilities
This Committee is responsible for the review of remuneration and other benefits, and the Group’s policies in relation to recruitment and retention of
staff. It will, where relevant, obtain independent advice from external consultants on the appropriateness of the remuneration policies of the Group.
Details of the compensation philosophy and practices of the Company, including equity based remuneration schemes, are set out in the
Remuneration Report. As the Company does not currently have any executives, no process is in place for the evaluation of the performance
of executives, although formal performance evaluation has been a part of the Company’s practices in the past.
The governance and nomination responsibilities related to Board performance and evaluation are:
•
•
•
•
•
•
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, and continuing professional development
programs for Directors;
to ensure appropriate structures and procedures are in place so that the Board can function independently of management;
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 the Group.
The governance and nomination responsibilities related to the Board of Directors are:
•
•
to recommend to the Board criteria regarding personal qualifications for Board membership such as background, experience, technical skills,
affiliations and personal characteristics; and
to consider and recommend to the Board the skills matrix required for the board generally.
The governance and nomination responsibilities related to Committees of the Board of Directors are:
•
•
to review from time to time and recommend to the Board the types, terms of reference and composition of Board Committees, and the
nominees as chair of the Board Committees; and
to review from time to time and make recommendations to the Board, with respect to the length of service of members on Board
Committees, meeting procedures, quorum and notice requirements, records and minutes, resignations and vacancies on Board Committees.
Company secretary
The Company has two company secretaries, Ms Edith Shih and Ms Louise Sexton, who are responsible to the Board for ensuring that Board
processes are followed and board activities are efficiently and effectively conducted.
External auditors
The performance of the external auditor is reviewed annually and applications for the tender of external audit services will be requested as
deemed appropriate. PricewaterhouseCoopers was appointed as the external auditor in June 2014.
An analysis of fees paid to the external auditor, including a break-down of fees for non-audit services, is provided in note 14 to the financial
statements. The Company’s policy in relation to awarding non-audit work to the external auditor requires that all proposed non-audit service
assignments in excess of $100,000 will be approved by the Audit & Risk Committee and will only be awarded to the external auditor after
completion of a competitive tendering process which demonstrates that the external auditor is the preferred service provider on the basis of
an objective assessment of price, capabilities and commitment. It is the policy of the external auditor to provide an annual declaration of their
independence to the Audit & Risk Committee.
The external auditor attends and is available for questioning at the AGM by shareholders in relation to the conduct of the audit.
10
Diversity
The Company recognises the corporate benefit of diversity as that term is defined in the ASX best practice recommendations and its Diversity
Policy is available on the Company’s website.
The Company recognises the benefits of a Board that possesses a balance of skills, experience, expertise and diversity of perspectives appropriate
to the requirements of the businesses of the Company. The Company has one female Director and cultural diversity in having Directors residing
in Hong Kong, Australia and North America.
In assessing candidates for appointment to the Board, the Governance, Nomination & Compensation Committee will have regard to the diversity
balance on the Board and the skills and experience of each candidate. The Board will give due consideration to ensuring that the diversity of the
Board increases. Since the implementation of the policy and the measurable objectives no new directors have been appointed.
No objectives have been set for achieving gender diversity among employees as currently the Company has only one employee.
Risk management
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. Details of the Company’s risk management policy and internal compliance and
control system are available on the Company’s website. Material business risks are described in the operations review in the Annual Report.
The Audit & Risk 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.
As all former operational activities of the Company are now undertaken in VHA, the associated risks are now in that entity. The Company no
longer has an internal audit function, but the Audit & Risk Committee receives and considers all VHA internal audit reports prepared by the risk
management function of VHA for the VHA Audit and Risk Committee, including an annual review of the VHA risk management framework. One
of the members of the Group’s Audit & Risk Committee is a member of the VHA Audit and Risk Committee.
The VHA risk management framework ensures that adequate mechanisms are in place to identify, assess and manage strategic, financial,
operational and regulatory risks and that VHA corporate performance is reviewed across a broad range of issues. In addition to oversight of VHA’s
risk management, other key aspects of the Group’s risk management framework are regular reports from external auditors and detailed financial
reporting reviews with its major shareholder’s finance team.
As the Company no longer has executives performing the function of chief executive officer or chief financial officer, the Board has not received
a declaration provided in accordance with section 295A of the Corporations Act 2001. However, a declaration of this nature has been provided to
the VHA Board in respect of the VHA financial statements.
Code of conduct
The need to ensure that a strong ethical culture within the Group has led 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 working life with the Group. The Corporate Code of Conduct applies to all Directors and employees and
compliance with the values underlying the Company’s culture forming part of the performance appraisal of senior employees and sales
managers. Details of this Code are available on the Company’s website.
Dealing in shares
The Company has the following share dealing policy regarding dealing in its shares (which currently only applies to Directors and Company
Secretaries as the Company does not employ any senior executives):
the Chairman discusses any proposed dealing in HTAL shares with an independent Director prior to any dealing;
•
• Directors discuss any proposed dealing in HTAL shares with the Chairman prior to any dealing; and
•
Senior executives discuss any proposed dealing in HTAL shares with the Company Secretary or the chief executive officer prior to any dealing.
Unless there are unusual circumstances, dealings 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 lodgment of the Company’s annual report with the
ASX up to one month after the AGM of HTAL.
Directors and senior executives are prohibited from dealing in HTAL shares if the Director or senior executive is in possession of price sensitive
information or would be dealing for a short-term gain. All Directors and senior executives within the Group have been advised of their
obligations in regard to price sensitive information. Directors and senior executives are also aware of their obligations not to communicate
price sensitive information to any other person who might deal in HTAL shares or communicate that information to another party.
The Company’s practices are documented in a policy, details of which are available on the Company’s website.
11
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Corporate Governance continued
Continuous disclosure and shareholder communication
The Board strongly believes that the Company’s shareholders should be fully informed of all material matters that affect the Group 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 information in addition to the reports required by legislation. Shareholders have the option to
receive communications from the Company and to communicate with the Company and the Share Registry electronically.
Shareholders are encouraged to participate in general meetings physically or to appoint proxies to attend and vote at such meetings for and
on their behalf if they are unable to attend. Notices of general meetings and the accompanying papers are provided within the prescribed
time prior to the meetings on the Company’s website and the ASX website (www.asx.com.au), by email to shareholders or by post to those
shareholders who have elected to receive a hard copy version of such communication.
The Company’s investor relations program is based upon responding to requests from shareholders and analysts for information to enable them
to gain an understanding of the Company’s business, governance, financial performance and prospects.
The Company’s existing practices on information disclosure and shareholder communications are documented in Continuous Disclosure Policy
and Shareholder Communications Policy, details of which are available on the Company’s website.
Related party transactions
The Group draws great strength from its relationship with CKHH and other companies in the CKHH Group in relation to its financial support and
management expertise. 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 17 to the financial statements.
12
Directors’ Report
The Directors are pleased to present their report on the consolidated entity (the “Group”) consisting of Hutchison Telecommunications (Australia)
Limited (“HTAL” or the “Company”) and the entities it controlled at the end of or during the year ended 31 December 2015.
Principal activities
During the year, the Group’s principal activity was the ownership of a 50% interest in Vodafone Hutchison Australia Pty Limited (“VHA”) which
provides telecommunications services in Australia.
Dividends
No dividend was declared or paid during the year.
Review of operations
Comments on the operations of the Group, results of those operations, the Company’s business strategies and its prospects for future years
are set out in pages 2 to 5. Details of the financial position of the Company are contained in page 23 of this report.
Significant changes in the state of affairs and matters subsequent to the end of the
financial year
There was no significant change in the state of affairs of the Group during the financial year. No other matter or circumstance has arisen since
31 December 2015 that has significantly affected, or may significantly affect:
•
•
•
the Group’s operations in future financial years;
the results of those operations in future financial years; or
the Group’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 above, 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 the Group.
Environmental regulation
The Group’s operations and business activities, through its investment in VHA, are subject to environmental regulations under both
Commonwealth and State legislation and the requirements of the Telecommunications Act 1997. The Group’s risk review and audit program
is designed to ensure that the Group meets its obligations under current legislation.
VHA’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;
reporting on carbon emissions from operations;
site contamination; and
•
•
•
• waste management.
Management systems are in place to clearly define 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 by the Group or by VHA.
13
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Directors’ Report continued
Directors
The following persons were Directors of HTAL during the whole of the year ended 31 December 2015 and up to the date of this report:
FOK Kin Ning, Canning
Barry ROBERTS-THOMSON
CHOW WOO Mo Fong, Susan
Justin Herbert GARDENER
LAI Kai Ming, Dominic
John Michael SCANLON
Frank John SIXT
Ronald Joseph SPITHILL
Further information on the Directors is set out on pages 6 and 7.
Director
Fok Kin Ning, Canning
Barry Roberts-Thomson
Chow Woo Mo Fong, Susan
Justin Herbert Gardener
Lai Kai Ming, Dominic
John Michael Scanlon
Frank John Sixt
Ronald Joseph Spithill
* Direct holding of 100,000 shares
** Direct holding of 4,540 shares
Notes:
Other Responsibilities
Non-executive Chairman,
Chairman of Governance, Nomination
& Compensation Committee
Deputy Chairman
Member of Governance, Nomination
& Compensation Committee
Chairman of Audit & Risk Committee,
Member of Governance, Nomination
& Compensation Committee
–
Member of Audit & Risk Committee
Member of Audit & Risk Committee
–
Particulars of Directors’ Interests in
ordinary shares of HTAL
5,100,000*
83,918,337**
–
1,957,358
–
–
1,000,000
–
Fok Kin Ning, Canning, holds a relevant interest in (i) 4,111,438 ordinary shares of CK Hutchison Holdings Limited (“CKHH”), a related body corporate of HTAL; (ii) 1,202,380 ordinary shares of
Hutchison Telecommunications Hong Kong Holdings Limited (“HTHKH”), a related body corporate of HTAL; and (iii) a nominal amount of USD4,000,000 in the 5.75% Notes due 2019 issued by
Hutchison Whampoa International (09/19) Limited, a related body corporate of HTAL.
Chow Woo Mo Fong, Susan holds a relevant interest in (i) 129,960 ordinary shares of CKHH; and (ii) 250,000 ordinary shares of HTHKH.
Lai Kai Ming, Dominic holds a relevant interest in 34,200 ordinary shares of CKHH.
Frank John Sixt holds a relevant interest in (i) 136,800 ordinary shares of CKHH; and (ii)17,000 American Depositary Shares (each representing 15 ordinary shares) of HTHKH.
14
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 2015 and the
number of meetings attended by each Director were:
Director
Fok Kin Ning, Canning
Barry Roberts-Thomson
Chow Woo Mo Fong, Susan
Justin Herbert Gardener
Lai Kai Ming, Dominic
John Michael Scanlon
Frank John Sixt
Ronald Joseph Spithill
Board Meetings
held during
the year
Board Meetings
attended as
Director
Audit & Risk
Committee
Meetings held
during the year
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
N/A
N/A
N/A
3
N/A
3
3
N/A
Audit & Risk
Committee
Meetings
attended as
Member of the
Committee
Governance,
Nomination &
Compensation
Committee
Meetings held
during the year
Governance,
Nomination &
Compensation
Committee
Meetings
attended as
Member of the
Committee
N/A
N/A
N/A
3
N/A
3
3
N/A
Nil
N/A
Nil
Nil
N/A
N/A
N/A
N/A
Nil
N/A
Nil
Nil
N/A
N/A
N/A
N/A
No meeting of the Governance, Nomination & Compensation Committee was held during the year as any matters that arose for possible
consideration by the Committee that were dealt with by the full Board.
Retirement, election and continuation in office of Directors
Mr Fok Kin Ning, Canning is a Director retiring by rotation in accordance with the Constitution who, being eligible, offers himself for re-election.
Mr Frank John Sixt is a Director retiring by rotation in accordance with the Constitution who, being eligible, offers himself for re-election.
Company secretaries
Edith Shih
BSE, MA, MA, EdM, Solicitor, FCIS, FCS(PE)
Ms Shih has over 18 years of experience as a company secretary in listed companies and has been a Company Secretary of the Company since
1999. She has been the head group general counsel and company secretary of CKHH since June 2015. She has also been the head group general
counsel of Hutchison Whampoa Limited (currently a subsidiary of CKHH) since 1993 and its company secretary since 1997. She is a qualified
solicitor in England and Wales, Hong Kong and Victoria, Australia; and is also a Fellow of both The Institute of Chartered Secretaries and
Administrators in the United Kingdom and The Hong Kong Institute of Chartered Secretaries.
Louise Sexton
BA, LLM, MBA (Exec), GAICD
Ms Sexton has over 20 years of experience as a company secretary in listed companies and has been a Company Secretary of the Company since
1999. Ms Sexton has practised as a solicitor since 1983 with experience in government, private practice and in-house corporate practice.
15
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Directors’ Report continued
Remuneration Report
Following the merger of Hutchison 3G Australia Pty Limited and Vodafone Australia Limited in June 2009, the Company’s employees, including
all executives, working in the VHA business ceased to be employees of the Company and became employees of VHA during 2009. VHA is not
a subsidiary of the Company and accordingly this report does not include any information relating to the employees or employment practices
of VHA. As at 31 December 2015, the Company had one employee who is not ‘key management personnel’. The Company does not have any
employees who are ‘key management personnel’.
The compensation philosophy and policies referred to remain in place notwithstanding their currently limited application.
Compensation philosophy and practice
The Governance, Nomination & Compensation Committee is responsible for making recommendations to the Board on compensation policies
and packages for all staff, including Board members. 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’s performance is measured according to
the achievement of key financial and non-financial measures as approved by the Board, and key management personnel’s remuneration packages
(other than Directors) would be directly linked to these measures. The Group has been committed to ensuring it has compensation arrangements
which would reflect individual performance, overall contribution to the Company’s performance and developments in the external market. Written
service agreements setting out remuneration and other terms of employment would be required for key management personnel.
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 while reflecting individual performance, overall contribution to the business and developments in the external market. Remuneration
packages would 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 directly relate to the key
management’s contribution to meeting or exceeding the Company’s statement of comprehensive income and statement of financial position
targets. At the non-financial level the measures would reflect the contribution to achieving a range of key performance indicators as well as
building a high performance company culture. The performance conditions are chosen to reflect an appropriate balance between achieving
financial targets and building a business and organisation to be sustainable for the long-term.
Directors’ fees
The remuneration of the non-executive and independent Directors, Mr Gardener and Mr Scanlon, comprised a fixed amount only and was not
performance based. The non-executive and non-independent Directors, Mr Fok, Mrs Chow, Mr Lai, Mr Roberts-Thomson, Mr Sixt and Mr Spithill,
did not receive any remuneration for their services as Directors.
Retirement allowances for Directors
No retirement allowances are payable to non-executive Directors.
Key management personnel
There were no key management personnel having authority and responsibility for planning, directing and controlling the activities of the
Company for the period from 1 January 2015 to 31 December 2015.
16
Details of remuneration
Details of the remuneration of each Director of HTAL including their personally-related entities, are set out in the following tables.
Directors of HTAL
2015
Name
C Fok
B Roberts-Thomson
S Chow
J Gardener
D Lai
J Scanlon
F Sixt
R Spithill
Total
2014
Name
C Fok
B Roberts-Thomson
S Chow
J Gardener
D Lai
J Scanlon
F Sixt
R Spithill
Total
Short-term benefits
Post –
employment
benefits
Share-based
payments
Cash salary
and fees
$
Cash bonus
$
Non-monetary
benefits
$
Superannuation
$
Options
$
–
–
–
50,000
–
50,000
–
–
100,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,750
–
4,750
–
–
9,500
–
–
–
–
–
–
–
–
–
Short-term benefits
Post –
employment
benefits
Share-based
payments
Cash salary
and fees
$
Cash bonus
$
Non-monetary
benefits
$
Superannuation
$
Options
$
–
–
–
50,000
–
52,313
–
–
102,313
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,688
–
2,375
–
–
7,063
–
–
–
–
–
–
–
–
–
Mr Fok, Mrs Chow, Mr Lai and Mr Sixt, as officers of CKHH, are remunerated for their duties within the CKHH Group which include their
directorships of HTAL.
Total
$
–
–
–
54,750
–
54,750
–
–
109,500
Total
$
–
–
–
54,688
54,688
–
–
109,376
17
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Directors’ Report continued
Share-based compensation
The HTAL Employee Option Plan, which was approved by the Board on 4 June 2007, provides for the issue of options to executives and
employees. No options were granted under the plan in 2015, and no options remained outstanding.
No ordinary shares were issued on the exercise of options during the year to any of the Directors or former key management personnel.
No Directors were issued options during the year or hold options over the ordinary shares of the Company. No options were vested and
unexercisable at the end of the year.
Share holdings
The number of shares in the Company held during the financial year by each Director, including their personally-related entities, are set out below.
Directors of HTAL
Ordinary shares
Name
C Fok
B Roberts-Thomson
S Chow
J Gardener
D Lai
J Scanlon
F Sixt
R Spithill
* Direct holding of 100,000 shares
** Direct holding of 4,540 shares
Balance at the start
of the year
Received during the year
on the exercise of options
Changes during
the year
Balance at the end
of the year
5,100,000*
83,918,337**
–
1,957,358
–
–
1,000,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,100,000*
83,918,337**
–
1,957,358
–
–
1,000,000
–
Shares under option
As at the date of this report there were no unissued ordinary shares of HTAL under option issued pursuant to the HTAL Employee Option Plan.
Shares issued on the exercise of options
No ordinary shares of HTAL were issued during the year ended 31 December 2015 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 of the Company, including their personally-related entities, during the years ended 31 December 2015
and 31 December 2014.
Other transactions with Directors and key management personnel
There were no other transactions with Directors for the years ended 31 December 2015 or ended 31 December 2014.
18
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 & Risk 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 & Risk 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 APES 110 Code of Ethics for Professional
Accountants, 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 14,
Remuneration of auditors, on page 38 of the financial report.
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 20.
Directors’ and officers’ liability insurance
During the financial year, CKHH paid a premium to insure the Directors and officers of the Group 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. This
does not include such liabilities that arise from conduct involving a wilful breach of duty by the officer or the proper use by the officers of their
position to gain advantage for themselves or someone else or to cause detriment to the Company.
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
The Group 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 or cent.
Auditor
PricewaterhouseCoopers continues in office in accordance with section 327B of the Corporations Act 2001.
This report is made in accordance with a resolution of the Directors.
Director
22 February 2016
Director
22 February 2016
19
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Auditor’s Independence Declaration
20
Financial Report
For the year ended 31 December 2015
Contents
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Note 1
Summary of significant accounting policies
Note 2
Revenue
Note 3
Expenses
Note 4
Income tax
Note 5
Current assets – Cash and cash equivalents
Note 6
Other financial assets
Note 7
Non-current assets – Investment accounted for using the equity method
Note 8
Controlled entities
Note 9
Current liabilities – Payables
Note 10 Current liabilities – Other financial liabilities
Note 11 Contributed equity
Note 12 Reserves and accumulated losses
Note 13 Director and key management personnel compensation
Note 14 Remuneration of auditors
Note 15 Contingencies
Note 16 Commitments
Note 17 Related party transactions
Note 18 Deed of Cross Guarantee
Note 19 Segment reporting
Note 20 Reconciliation of loss after income tax to net cash inflows (outflows) from operating activities
Note 21 Earnings per share
Note 22 Financial risk management
Note 23 Events occurring after the Reporting date
Note 24 Parent entity disclosures
Directors’ Declaration
Independent Auditor’s Report
22
23
24
25
26
26
31
31
32
32
32
33
35
35
36
36
37
38
38
39
39
39
40
42
42
43
43
45
46
47
48
These financial statements cover the consolidated financial statements for the group consisting of Hutchison Telecommunications (Australia)
Limited and its controlled entities. The financial statements are presented in Australian dollars.
Hutchison Telecommunications (Australia) Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office
and principal place of business is:
Level 7, 40 Mount Street,
North Sydney NSW 2060
The financial statements were authorised for issue by the Directors on 22 February 2016. The Company has the power to amend and reissue the
financial statements.
21
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 31 December 2015
Revenue
Other operating items
Finance costs
Share of net losses of a joint venture accounted for using the equity method
Loss before income tax
Income tax expense
Loss for the year
Other comprehensive (loss) income
Items that may be reclassified subsequently to profit or loss:
Changes in the fair value of cash flow hedges (share of joint venture)
Other comprehensive (loss) income for the year, net of tax
Total comprehensive loss for the year attributable to members of Hutchison
Telecommunications (Australia) Limited
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
Notes
2
3
7
4
12
12
2015
$’000
6,028
(1,299)
(4)
(187,523)
(182,798)
(70)
2014
$’000
1,085
15,470
(9)
(301,791)
(285,245)
(266)
(182,868)
(285,511)
(825)
(825)
3,075
3,075
(183,693)
(282,436)
Notes
Cents
Cents
21
21
(1.35)
(1.35)
(2.10)
(2.10)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
22
Consolidated Statement of Financial Position
As at 31 December 2015
ASSETS
Current Assets
Cash and cash equivalents
Other financial assets
Trade receivables
Total Current Assets
Non-current Assets
Other financial assets
Investment accounted for using the equity method
Deferred tax assets
Total Non-current Assets
Total Assets
LIABILITIES
Current Liabilities
Payables
Other financial liabilities
Total Current Liabilities
Total Liabilities
Net Assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total Equity
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Notes
2015
$’000
2014
$’000
5
6
6
7
4
9
10
11
12
12
5,318
136,676
5
141,999
11,801
277,315
–
289,116
431,115
257
241,862
242,119
242,119
188,996
1,815
36,173
174
38,162
10,902
465,663
70
476,635
514,797
246
141,862
142,108
142,108
372,689
4,204,488
4,204,488
70,444
71,269
(4,085,936)
(3,903,068)
188,996
372,689
23
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Consolidated Statement of Changes in Equity
For the year ended 31 December 2015
Attributable to members of Hutchison Telecommunications (Australia) Limited
Reserves
Contributed
equity
$’000
Capital
redemption
$’000
Cash flow
hedging
$’000
Share-based
payments
$’000
Accumulated
losses
$’000
Notes
Total equity
$’000
Balance at 1 January 2014
4,204,488
54,887
(2,573)
15,880
(3,617,557)
655,125
Loss for the year
Share of joint venture’s
changes in the fair value of
cash flow hedges
Total comprehensive loss
for the year
Balance at 31 December 2014
Balance at 1 January 2015
Loss for the year
Share of joint venture’s
changes in the fair value of
cash flow hedges
Total comprehensive loss
for the year
–
–
–
–
–
–
4,204,488
4,204,488
54,887
54,887
–
–
–
–
–
–
12
12
Balance at 31 December 2015
4,204,488
54,887
–
3,075
3,075
502
502
–
(825)
(825)
(323)
–
–
–
(285,511)
(285,511)
–
3,075
(285,511)
(282,436)
15,880
(3,903,068)
15,880
(3,903,068)
372,689
372,689
–
–
–
(182,868)
(182,868)
–
(825)
(182,868)
(183,693)
15,880
(4,085,936)
188,996
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
24
Consolidated Statement of Cash Flows
For the year ended 31 December 2015
Cash Flows from Operating Activities
Payments to suppliers and employees (inclusive of GST)
Interest received
Finance costs paid
Net cash inflows (outflows) from operating activities
Cash Flows from Investing Activities
Loans to joint venture
Net cash outflows from investing activities
Cash Flows from Financing Activities
Proceeds from borrowings – entity within the CKHH Group
Net cash inflows from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Notes
20
5
2015
$’000
(1,120)
4,627
(4)
3,503
(100,000)
(100,000)
100,000
100,000
3,503
1,815
5,318
2014
$’000
(3,232)
84
(9)
(3,157)
–
–
2,000
2,000
(1,157)
2,972
1,815
25
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Notes to the Financial Statements
Note 1 Summary of significant accounting policies
Hutchison Telecommunications (Australia) Limited (the “Company” or “Parent Entity”) is a company limited by shares incorporated in Australia
whose shares are publicly traded on the Australian Stock Exchange. The nature of the operations and principal activities of the Company and its
subsidiaries (the “Group” or “Consolidated Entity” or “HTAL”) are described in the Directors’ report.
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with the Corporations Act 2001, Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board, and comply with other requirements of the law. The accounting policies
adopted are consistent with those of the previous financial year.
For financial reporting purposes the Company is considered a “for-profit” entity.
Statement of compliance
Accounting Standards include Australian equivalents to International Financial Reporting Standards (“AIFRS”). Compliance with AIFRS ensures
that the financial statements and notes of the Consolidated Entity comply with International Financial Reporting Standards (“IFRS”).
As a consequence of the financial reporting relief provided by ASIC Class Orders 10/654 and 10/655, the consolidated financial statements are
presented without the parent entity financial statements. Disclosures in relation to the parent entity required under paragraph 295(3)(a) of the
Corporations Act 2001 have been included in note 24.
Going concern disclosures
As at 31 December 2015, the Consolidated Entity has a deficiency of net current assets of $100 million (2014: net current assets deficiency of
$104 million). Included in the Consolidated Entity’s current liabilities is an amount of $242 million (2014: $142 million) which relates to an interest
free financing facility provided from a subsidiary of the ultimate parent entity, CK Hutchison Holdings Limited (“CKHH”), which is repayable
on demand. The Consolidated Entity has unused financing facilities of $1,358 million at 31 December 2015. CKHH has confirmed its current
intention is to provide sufficient financial support to enable the Consolidated Entity to meet its financial obligations as and when they fall due for
a minimum period of twelve months from the date of signing these financial statements. Consequently, the Directors have prepared the financial
statements on a going concern basis.
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.
(b) Principles of consolidation
(i) Subsidiaries
A subsidiary is an entity over which the Group has control. The Group controls an entity when the Group is exposed, or has rights, to variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
(ii) Joint arrangements
A joint arrangement is an arrangement of which two or more parties have joint control and over which none of the participating parties has
unilateral control.
Investments in joint arrangements are classified either as joint operations or joint ventures, depending on the contractual rights and obligations
each investor has under the relevant contract. Joint operations arise where the investors have rights to the assets and obligations for the liabilities
of an arrangement. A joint operator accounts for its share of the assets, liabilities, revenue and expenses. Joint ventures arise where the investors
have rights to the net assets of the arrangement. Joint ventures are accounted for under the equity method.
The results and net assets of joint ventures are incorporated in these accounts using the equity method of accounting, except when the investment
is classified as held for sale, in which case it is accounted for under AASB 5, Non-current assets held for sale and discontinued operations. The total
carrying amount of such investments is reduced to recognise any identified impairment loss in the value of individual investments.
As at 31 December 2015, HTAL has only one joint venture.
26
Note 1 Summary of significant accounting policies continued
(b) Principles of consolidation continued
(iii) Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group’s share
of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income of
the investee in other comprehensive income. Dividends received or receivable from joint ventures are recognised as a reduction in the carrying
amount of the investment.
When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term
receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in these
entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies
and estimates of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.
(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 the Company’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 statement of profit or loss and other comprehensive
income, except when deferred in equity as qualifying cash flow hedges set out in note 1(i)(ii).
(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 as described below:
Interest income
Interest income is recognised using the effective interest method.
(e) Income tax
The current tax payable or recoverable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of
profit or loss and other comprehensive income because some items of income or expense are taxable or deductible in different years or may
never be taxable or deductible. The Consolidated Entity’s liability for current tax is calculated using Australian tax rates (and laws) that have been
enacted or substantively enacted by the statement of financial position date.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax assets are recognised for deductible temporary difference 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 are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in
joint ventures, except where the associated entity is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax
rates (and laws) that have been enacted or substantively enacted by the statement of financial position date.
27
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Notes to the Financial Statements continued
Note 1 Summary of significant accounting policies continued
(e) Income tax continued
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 tax 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.
Tax is charged or credited to the statement of profit or loss and other comprehensive income, except when it relates to items charged or credited
directly to equity, in which case the tax is also recognised directly in equity.
The Company and its wholly owned Australian subsidiaries have not implemented the tax consolidation legislation.
(f) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are tested for impairment annually and when there is an indication that they
may be impaired. Other assets are tested for impairment whenever there is any indication that the carrying value of these assets may not be
recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss, if any. The recoverable amount is the higher of an asset’s fair value less costs to dispose and value in use. Such impairment loss is recognised
in the statement of profit or loss and other comprehensive income.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
(h) Trade receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less
provision for impairment. Appropriate allowance for estimated irrecoverable amounts are recognised in the statement of profit or loss and other
comprehensive income when there is objective evidence that the assets is impaired.
(i) 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 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 statement of profit or loss and
other comprehensive income, 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 statement of profit or loss and other
comprehensive income within other income or other expenses.
Amounts accumulated in equity are recycled in the statement of profit or loss and other comprehensive income 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
statement of profit or loss and other comprehensive income. 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 statement of profit or loss and other comprehensive income.
28
Note 1 Summary of significant accounting policies continued
(j) Fair value estimation
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal
market at the measurement date under current market conditions. Fair value is an exit price regardless of whether that price is directly
observable in active markets or estimated using another valuation technique.
The fair value of forward exchange contracts is determined using forward exchange market rates at the statement of financial position date.
(k) Leases
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.
(l) Goodwill
Goodwill is initially measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the fair value of the net identifiable
assets acquired and the liabilities assumed. If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets
exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s
previously held equity interest in the acquiree (if any), the excess is recognised immediately in the statement of profit or loss and other
comprehensive income as a bargain purchase gain.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates/joint ventures 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.
(m) 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.
(n) Employee benefits
(i) Wages and salaries, and leave provisions
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave when
it is probable that settlement will be required and they are capable of being measured reliably.
Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate expected to
apply at the time of settlement.
Liabilities recognised in respect of long-term employee benefits are measured as the present value of the estimated future cash outflows to be
made by the Group in respect of services provided by employees up to the reporting date.
(ii) Retirement benefits
Retirement benefits are delivered under the Retail Employees Superannuation Trust, although employees have an option to choose other funds.
This fund is a defined contribution fund and is based on employer and employee contributions made to the fund.
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them
to the contributions.
(o) Contributed equity
Ordinary shares are classified as equity. Refer to note 11 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.
(p) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
•
•
the profit attributable to ordinary equity holders of the Consolidated Entity; and
by the weighted average number of ordinary shares outstanding during the financial year.
29
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Notes to the Financial Statements continued
Note 1 Summary of significant accounting policies continued
(p) Earnings per share continued
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
•
•
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and
the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive
potential ordinary shares.
(q) 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 within other receivables or payables in the statement of financial position.
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.
(r) Segments reporting
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses,
whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated
to the segment and assess its performance and for which discrete financial information is available.
Operating segments have been identified based on the information provided to the chief operating decision maker. Operating segments
that meet the quantitative criteria as prescribed by AASB 8 Operating Segments are reported separately. Refer to note 19 for details of the
Consolidated Entity’s operating segment, being investment in telecommunication services.
(s) Critical accounting estimates and assumptions
The preparation of financial statements often requires the use of judgements to select specific accounting methods and policies from several
acceptable alternatives. Furthermore, significant estimates and assumptions concerning the future may be required in selecting and applying
those methods and policies in the accounts. The Group bases its estimates and judgements on historical experience and various other
assumptions that it believes are reasonable under the circumstances. Actual results may differ from these estimates and judgements under
different assumptions or conditions.
(i) Impairment of investments in controlled entities and joint venture
In accordance with the Consolidated Entity’s accounting policy, the investments in controlled entities and the joint venture are periodically
tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable
amount of the Company’s investment in controlled entities, and the recoverable amount of the Consolidated Entity’s investment in its joint
venture are determined as the higher of the fair value less cost of disposal or value in use methodology. The underlying calculation is based on
the approved business plan for VHA. These calculations require the use of estimates and assumptions.
A discounted cash flow calculation is undertaken on the approved business plan. A terminal value is calculated on the cash flows. The cash flows
are then discounted using a suitable discount rate consistent with recent internal assessments of the Consolidated Entity’s weighted average cost of
capital. The resulting net present value is compared to the balance of the Consolidated Entity’s equity accounted for investment in a joint venture.
The Directors believe that the carrying values of the Consolidated Entity’s investment in joint venture as at 31 December 2015 is appropriate
and are not aware of any events or changes since the year end which may potentially impair the carrying values of the Consolidated Entity’s
investment in joint venture as at the statement of financial position date.
(ii) Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits
will be available to utilise those temporary differences. Significant management judgement is required to determine the amount of deferred tax
assets that can be recognised, based upon the likely timing and level of taxable profits generated in the foreseeable future together with future
tax planning strategies.
(iii) Joint venture accounting adjustments
Depreciation of operating assets constitutes a substantial operating cost for the joint venture. The cost of fixed assets is charged as a depreciation
expense over the estimated useful lives of the respective assets using the straight-line method and this is reflected in the “share of net losses of
a joint venture accounted for using the equity method” in HTAL’s consolidated statement of profit or loss and other comprehensive income. The
Directors are of the view that the estimated useful lives of network assets within the joint venture should be extended to reflect the experience
of the group. Accordingly, adjustments to the useful lives of assets have been made when the Group’s 50% interest in joint venture VHA is
incorporated into the Group’s consolidated financial statements. This is to reflect the use of the Group’s fixed assets useful lives.
30
Note 1 Summary of significant accounting policies continued
(t) Rounding of amounts to nearest thousand dollars
The Consolidated Entity 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 statements. Amounts in the financial statements have been rounded off in
accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar or cent.
(u) Parent entity financial information
The financial information for the parent entity disclosed in note 24 has been prepared on the same basis as the consolidated financial statements,
except investments in subsidiaries and joint venture entities are accounted for at cost in the financial statements of HTAL.
(v) New accounting standards and interpretations
The Consolidated Entity has adopted all of the new and revised effective / applicable standards, amendments and interpretations issued by
the Australian Accounting Standards Board (“AASB”) that are relevant to the Consolidated Entity’s operations and mandatory for annual periods
beginning on or after 1 January 2015.
The Consolidated Entity has applied the following standards and amendments for first time in their annual reporting period commencing
1 January 2015:
Reference
AASB 2014-1
(Part A)
AASB 2014-1
(Part C)
Standard(s)
Amendments to Australian Accounting Standards – Annual Improvements 2010-2012 and 2011-2013 Cycles
Amendments to Australian Accounting Standards – Materiality
The adoption of these accounting standards and interpretations did not have any significant impact on the financial performance or position of
the Consolidated Entity.
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2015 reporting periods and have
not been early adopted by the Group. The Group is still assessing the impact of these new standards and interpretations on the financial statements.
Note 2 Revenue
Other revenue
Interest
Note 3 Expenses
Loss before income tax includes the following specific expenses:
Finance costs
Interest and finance charges
2015
$’000
2014
$’000
6,028
1,085
2015
$’000
2014
$’000
4
9
31
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Notes to the Financial Statements continued
Note 4
Income tax
(a) Income tax expense
Deferred tax
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from operations before income tax expense
Tax at the Australian tax rate of 30% (2014: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Share of losses of a joint venture
Deferred tax on timing difference not recognised
Previously unrecognised tax losses now recouped to reduce current tax expense
Income tax expense
(c) Unrecognised tax losses
Opening balance
Tax losses utilised during completion of income tax return
Tax losses identified during completion of income tax return
Tax losses recouped to reduce current tax expense
Unused tax losses for which no deferred tax assets have been recognised
Potential tax benefit @ 30%
All unused tax losses were incurred by Australian entities.
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) Recognised deferred tax assets
There are temporary differences attributable to:
Provisions
Net deferred tax asset
Note 5 Current assets – Cash and cash equivalents
Cash at bank and in hand
Note 6 Other financial assets
Receivable from a joint venture (note 17)
Total current
Total non-current
32
2015
$’000
2014
$’000
70
266
(182,798)
(54,839)
(285,245)
(85,574)
56,256
1,417
63
(1,410)
70
90,537
4,963
–
(4,697)
266
188,565
204,103
(67)
–
(4,701)
183,797
55,139
–
120
(15,658)
188,565
56,569
–
–
2015
$’000
5,318
2015
$’000
148,477
136,676
11,801
70
70
2014
$’000
1,815
2014
$’000
47,075
36,173
10,902
Note 6 Other financial assets continued
Receivable from a joint venture
Weighted average interest on the current receivable from a joint venture of $136.7 million (2014: $36.2 million) is charged at a rate of 4.58% p.a.
(2014: 5.16% p.a.) during the year. The interest on the non-current receivable from a joint venture of $11.8 million (2014: $10.9 million) is charged
at a fixed rate of 8% p.a. (2014: 8% p.a.).
Further information relating to receivable from a joint venture is set out in note 17.
(a) Fair value
The carrying values of the current and non-current receivables are at cost and approximate to their fair value.
(b) Foreign currency and interest rate risk
The carrying amounts of the Consolidated Entity’s current and non-current receivables and financial assets are denominated in the following
currencies:
Australian dollars
2015
$’000
148,477
148,477
2014
$’000
47,075
47,075
For an analysis of the sensitivity of other financial assets to foreign exchange and interest rate risk refer to note 22.
(c) 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 22 for more information on the risk management policy of the Consolidated Entity.
Note 7 Non-current assets – Investment accounted for using the equity method
Interest in a joint venture
2015
$’000
2014
$’000
277,315
465,663
The Consolidated Entity has a 50% interest in VHA, which is resident in Australia and the principal activity of which is providing
telecommunications services.
The Consolidated Entity’s interest in VHA is accounted for using the equity method in the consolidated financial statements. Summarised
financial information of the joint venture, based on its Australian Accounting Standards financial statements and a reconciliation to the carrying
amount of the investment in the consolidated financial statements are set out below:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net Assets
Proportion of the Consolidated Entity’s ownership
Share of the joint venture’s net assets
Goodwill
Joint venture accounting adjustments
Carrying amount of the investment
2015
$’000
1,071,542
7,112,468
2014
$’000
952,901
6,835,789
(3,302,339)
(1,316,939)
(5,255,325)
(6,413,587)
(373,654)
50%
(186,827)
165,321
298,821
277,315
58,164
50%
29,082
165,321
271,260
465,663
33
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015
Notes to the Financial Statements continued
Note 7 Non-current assets – Investment accounted for using the equity method continued
The carrying value of HTAL’s investment in VHA is predicated on the ongoing financial support from both of VHA’s shareholders. At 31 December 2015,
HTAL’s share of VHA’s net current assets deficiency is $1,115.4 million (2014: net current assets deficiency of $182.0 million). Both of VHA’s ultimate
shareholders, CKHH and Vodafone Group Plc have confirmed their current intention to jointly provide financial support to enable VHA to meet its
financial obligations as and when they fall due for a minimum period of twelve months from the date of signing the VHA financial statements.
Summarised statement of profit or loss and other comprehensive income of VHA
Revenues
Expenses
Loss before income tax
Income tax expense
Loss for the year
Other comprehensive loss
Changes in the fair value of cash flow hedges, net of tax
Total comprehensive loss
50% share of VHA’s loss for the year
Joint venture accounting adjustments
Share of joint venture’s loss
VHA’s financial statements include the following specific items:
Cash and cash equivalents
Current financial liabilities
Non-current financial liabilities
Depreciation and amortisation^
Interest income
Finance costs
Reconciliation of interest in a joint venture
Investment brought forward
Loss for the year
Share of change in fair value of cash flow hedges, net of tax
Interest in a joint venture at 31 December
VHA’s commitments
Operating leases
Other commitments
Capital commitments
VHA’s contingent liabilities
2015
$’000
2014
$’000
3,651,553
3,495,108
(4,081,721)
(4,150,893)
(430,168)
(655,785)
–
–
(430,168)
(655,785)
(1,650)
(431,818)
(215,084)
27,561
6,151
(649,634)
(327,892)
26,101
(187,523)
(301,791)
291,608
2,194,060
5,137,296
827,880
3,120
418,243
465,663
(187,523)
(825)
277,315
109,889
160,497
6,275,051
1,034,401
5,274
397,891
764,379
(301,791)
3,075
465,663
1,053,111
1,151,003
476,257
271,802
67,265
533,762
201,460
53,020
^ Depreciation and amortisation under HTAL accounting policies are $772.8 million for year ended 31 December 2015 (2014: $982.2 million). The differences are primarily related to differences in
the estimated economic useful lives of property, plant and equipment.
34
Note 7 Non-current assets – Investment accounted for using the equity method continued
The consolidated financial statements incorporates the assets, liabilities and results of the following joint venture in accordance with the
accounting policy described in note 1(b):
Name of Entity
Vodafone Hutchison Australia Pty Limited **
Country of
Incorporation
Class of Shares
(formerly Hutchison 3G Australia Pty Limited)
Australia
Ordinary
* The proportion of ownership interest is equal to the proportion of voting power held.
** The ownership of this joint venture is through Hutchison 3G Australia Holdings Pty Limited.
Equity Holding*
2015
%
50
Note 8 Controlled entities
The consolidated financial statements incorporates the assets, liabilities and results of the following controlled entities and joint venture in
accordance with the accounting policy described in note 1(b):
Name of Controlled Entity
Lindian Pty Limited
Hutchison 3G Australia Holdings Pty Limited **
Country of
Incorporation
Australia
Australia
Class of Shares
Ordinary
Ordinary
Equity Holding*
2015
%
100
100
2014
%
50
2014
%
100
100
* The proportion of ownership interest is equal to the proportion of voting power held.
** This entity 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.
Note 9 Current liabilities – Payables
Other creditors
Payables to joint venture (note 17)
2015
$’000
208
49
257
Payables to a joint venture
Further information relating to payables to a joint venture is set out in note 17.
Foreign currency and interest rate risk
The carrying amounts of the Consolidated Entity’s trade and other payables are predominantly denominated in Australian Dollars:
Australian Dollars
2015
$’000
257
257
Refer to note 22 for an analysis of the Consolidated Entity’s exposure to foreign currency risk in relation to trade and other payables.
A summarised analysis of the sensitivity of trade payables to foreign exchange and interest rate risk can be found in note 22.
2014
$’000
234
12
246
2014
$’000
246
246
35
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Notes to the Financial Statements continued
Note 10 Current liabilities – Other financial liabilities
Loan from an entity within the CKHH Group (note 17)
2015
$’000
2014
$’000
241,862
141,862
Loan from an entity within the CKHH Group
Further information relating to the loan from an entity within the CKHH Group is set out in note 17. The loan from an entity within the CKHH
Group is an interest free financing facility and is repayable on demand.
Financing arrangements
Unrestricted access was available at the statement of financial position date to the following lines of credit:
Other financial liabilities
Total facilities from an entity within the CKHH Group
Used at the statement of financial position date
Unused at the statement of financial position date
Note 11 Contributed equity
Share capital
Ordinary shares (fully paid)
2015
$’000
2014
$’000
1,600,000
(241,862)
1,358,138
1,600,000
(141,862)
1,458,138
2015
Shares
2014
Shares
2015
$’000
2014
$’000
13,572,508,577
13,572,508,577
4,204,488
4,204,488
(a) 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) Movement in ordinary shares
There has been no movement in the number of shares issued during the years ended 31 December 2015 and 31 December 2014.
(c) Options
There are no options outstanding as at the statement of financial position date.
36
Note 11 Contributed equity continued
(d) Capital risk management
The Consolidated Entity’s objectives when managing capital is to safeguard its ability to continue as a going concern as discussed in note 1(a).
Management also maintain an optimal capital structure to reduce the cost of capital.
The Consolidated Entity monitors 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 less cash and cash equivalents. Total capital is calculated as ‘Total equity’ as shown in the statement of financial
position plus net debt.
The gearing ratios at 31 December 2015 and 31 December 2014 were as follows:
Total payables, borrowings and other financial liabilities
Less: cash and cash equivalents (note 5)
Net debt
Total equity
Total capital
Gearing ratio
Note 12 Reserves and accumulated losses
(a) Reserves
Capital reserve
Share of hedging reserve – cash flow hedges
Share-based payments reserve
Movements:
Capital reserve
There has been no movement in the capital reserve during the year.
Share of hedging reserve – cash flow hedges
Balance at 1 January
Hedging movement, net of tax
Balance at 31 December
Share-based payments reserve
There has been no movement in the share-based payments reserve during the year.
(b) Accumulated losses
Accumulated losses at 1 January
Loss attributable to the members of the Company
Accumulated losses at 31 December
2015
$’000
242,119
(5,318)
236,801
188,996
425,797
56%
2015
$’000
54,887
(323)
15,880
70,444
2014
$’000
142,108
(1,815)
140,293
372,689
512,982
27%
2014
$’000
54,887
502
15,880
71,269
502
(825)
(323)
(2,573)
3,075
502
(3,903,068)
(3,617,557)
(182,868)
(285,511)
(4,085,936)
(3,903,068)
37
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Notes to the Financial Statements continued
Note 12 Reserves and accumulated losses continued
(c) Nature and purpose of reserves
Capital reserve
The capital reserve relates to the surplus arising on initial consolidation of a 19.9% stake in Hutchison 3G Australia Holdings Pty Limited.
Hedging reserve - cash flow hedges
The hedging reserve is used to record gains and losses on a hedging instrument in a joint venture cash flow hedge that are recognised directly
in equity, as described in note 1(i)(ii).
Amounts are recognised in the statement of profit or loss and other comprehensive income when the associated hedged transaction affects
profit or loss.
Share-based payments reserve
The share-based payments reserve is used to:
recognise the grant date fair value of options issued to employees but not exercised; and
(i)
(ii) recognise the fair value of the 850 MHz spectrum licence assigned from Telecom New Zealand (“TCNZ”). The fair value was determined
by reference to the fair value of the option granted to TCNZ in exchange for the spectrum licence.
Note 13 Director and key management personnel compensation
(a) Director and key management personnel compensation
Short-term employee benefits
Other key management personnel (excluding Directors) were transferred to VHA on merger.
2015
$’000
2014
$’000
109,500
109,376
(b) Loans to key management personnel
There were no loans made to Directors of the Company, including their personally related entities, during the years ended 31 December 2015
and 31 December 2014.
(c) Other transactions with key management personnel
There were no other transactions with the Directors of the Company for the years ended 31 December 2015 and 31 December 2014.
Note 14 Remuneration of auditors
PricewaterhouseCoopers Australia
Assurance services
Audit services
Audit and review of financial reports and other audit work under the Corporations Act 2001
Total remuneration for assurance services
Total auditors remuneration
2015
$’000
2014
$’000
95,665
95,665
95,665
90,250
90,250
90,250
It is the Consolidated Entity’s policy to employ the auditors on assignments additional to their statutory audit duties where the auditor’s expertise
and experience with the Consolidated Entity are important. These assignments are principally tax, compliance and advice. It is the Consolidated
Entity’s policy to seek competitive tenders for all major consulting projects.
38
Note 15 Contingencies
Details and estimates of maximum amounts of contingent liabilities as at 31 December 2015 are as follows:
2015
$’000
2014
$’000
Guarantees
Unsecured guarantees in respect of leases held by a joint venture
28
934
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.
Note 16 Commitments
There were no commitments contracted for but not recognised as liabilities, payable at 31 December 2015 and 31 December 2014, except for as
disclosed in note 7.
Note 17 Related party transactions
(a) Parent entities
The holding company and parent entity is Hutchison Telecommunications (Amsterdam) B.V. which, at 31 December 2015, owns approximately
88% of the issued ordinary shares of the Company. The ultimate parent entity is CK Hutchison Holdings Limited (incorporated in Cayman Islands).
(b) Directors
The names of persons who were Directors of the Company at any time during the financial year are as follows: FOK Kin Ning, Canning; Barry
ROBERTS-THOMSON; CHOW WOO Mo Fong, Susan; Justin Herbert GARDENER; LAI Kai Ming, Dominic; John Michael SCANLON; Frank John SIXT
and Ronald Joseph SPITHILL.
(c) Key management personnel compensation
Disclosures relating to key management personnel compensation are set out in note 13.
(d) Transactions with related parties
During the year, the following transactions occurred with related parties:
Loans to related parties
Advanced to joint venture
Loans from related parties
Advanced from an entity within the CKHH Group
Interest revenue
Joint venture
Operating expenses
Joint venture
Write off of payable
Joint venture
2015
$’000
2014
$’000
100,000
36,000
100,000
38,000
5,948
1,001
578
578
–
15,921
Advances to the joint venture represent funds advanced under the terms of an agreement with the joint venture. The funds advanced from an
entity within the CKHH Group are on an interest free basis under the agreement.
39
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015
Notes to the Financial Statements continued
Note 17 Related party transactions continued
(e) Outstanding balances
The following balances are outstanding at the statement of financial position date in relation to transactions with related parties:
Current financial assets
Joint venture (note 6)
Non-current financial assets
Joint venture (note 6)
Payables
Joint venture (note 9)
Current liabilities – Other financial liabilities
Entity within the CKHH Group (note 10)
2015
$’000
2014
$’000
136,676
36,173
11,801
10,902
49
12
241,862
141,862
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, except interest on some loans between the parties
that are interest free.
Note 18 Deed of Cross Guarantee
During the year ended 31 December 2007, the Company, Hutchison 3G Australia Holdings Pty Limited (“H3GAH”) and Hutchison 3G Australia Pty
Limited (“H3GA”) entered into a Deed of Cross Guarantee under which each company guarantees the debts of the others. By entering into the
Deed of Cross Guarantee, 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.
On 10 June 2009, the Company announced that the merger of its subsidiary H3GA with Vodafone Australia Limited had completed. H3GA has
been renamed VHA. As a result the parties to the Deed of Cross Guarantee are now the Company and H3GAH.
(a) Closed Group consolidated statement of profit or loss and other comprehensive income and a summary
of movements in the Closed Group consolidated retained earnings
HTAL and H3GAH represented a ‘Closed Group’ for the purposes of the Class Order. As there are no other parties to the Deed of Cross Guarantee
that are controlled by HTAL, H3GAH also represents the ‘Extended Closed Group’.
Set out below is the Closed Group consolidated statement of profit or loss and other comprehensive income and a summary of movements in
the Closed Group consolidated accumulated losses for the years ended 31 December 2015 and 31 December 2014.
Statement of profit or loss and other comprehensive income
Revenue
Other operating expenses
Impairment loss in investment held within the Closed Group
Finance costs
Loss before income tax
Income tax expense
Loss for the year
Share of movements in consolidated accumulated losses
Accumulated losses at the beginning of the financial year
Loss for the year
Accumulated losses at the end of the financial year
40
2015
$’000
6,028
(1,299)
2014
$’000
1,085
15,470
(188,348)
(298,716)
(4)
(9)
(183,623)
(282,170)
(70)
(266)
(183,693)
(282,436)
(3,902,566)
(3,620,130)
(183,693)
(282,436)
(4,086,259)
(3,902,566)
Note 18 Deed of Cross Guarantee continued
(b) Statement of financial position
Set out below is a statement of financial position as at 31 December 2015 of the Closed Group consisting of H3GAH and HTAL.
ASSETS
Current Assets
Cash and cash equivalents
Other financial assets
Trade receivables
Total Current Assets
Non-current Assets
Other financial assets
Deferred tax assets
Total Non-current Assets
Total Assets
LIABILITIES
Current Liabilities
Payables
Other financial liabilities
Total Current Liabilities
Total Liabilities
Net Assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total Equity
2015
$’000
2014
$’000
5,318
136,676
5
141,999
1,815
36,173
174
38,162
289,116
476,565
–
289,116
431,115
257
241,862
242,119
242,119
188,996
70
476,635
514,797
246
141,862
142,108
142,108
372,689
4,204,488
4,204,488
70,767
70,767
(4,086,259)
(3,902,566)
188,996
372,689
41
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Notes to the Financial Statements continued
Note 19 Segment reporting
The Consolidated Entity has identified its operating segment based on the internal reports that are reviewed and used by the executive
management team (the chief operating decision makers) in assessing performance and in determining the allocation of resources.
In 2015, the Consolidated Entity continued to invest in an operator within the telecommunications industry.
The chief operating decision maker of the Consolidated Entity receives information to manage its operations and investment based on one
operating segment, an investor in an operator of telecommunication services. As such, the Consolidated Entity believes it is appropriate that
there is one operating segment, investment in telecommunication services.
Key financial information used by the chief operating decision maker of the Consolidated Entity when evaluating the investment in
telecommunication services operating segment includes:
HTAL’s share of the following items of VHA*
Total Revenue
Net Losses
2015
$m
1,826
188
2014
$m
1,748
302
Further information reviewed by the chief operating decision maker with regards to the performance of the Consolidated Entity’s investment in
VHA is disclosed in note 7.
* after joint venture accounting adjustments
Note 20 Reconciliation of loss after income tax to net cash inflows (outflows) from
operating activities
Loss after income tax
Share of losses of joint venture partnership accounted for using equity method
Change in operating assets and liabilities
Increase in other financial assets
Decrease in deferred tax assets
Increase in other assets
Increase (decrease) in payables
Net cash inflows (outflows) from operating activities
Notes
7
4
2015
$’000
(182,868)
187,523
(1,233)
70
–
11
3,503
2014
$’000
(285,511)
301,791
(1,001)
266
(174)
(18,528)
(3,157)
In 2014, the Company drew down $38 million from its existing loan facility with a related party with $36 million advanced to the joint venture.
The $36 million funding was transferred directly to the joint venture from the related party without impacting the Company’s cash flows.
42
Note 21 Earnings per share
(a) Basic earnings per share
2015
Cents
2014
Cents
Loss attributable to the ordinary equity holders of the Consolidated Entity
(1.35)
(2.10)
(b) Diluted earnings per share
Loss attributable to the ordinary equity holders of the Consolidated Entity
(1.35)
(2.10)
Consolidated
2015
$’000
2014
$’000
(c) Earnings used in calculating earnings per share
Basic earnings per share
Loss attributable to the ordinary equity holders of the Consolidated Entity used in calculating
basic earnings per share
(182,868)
(285,511)
Diluted earnings per share
Loss attributable to the ordinary equity holders of the Consolidated Entity used in calculating
diluted earnings per share
(182,868)
(285,511)
Consolidated
2015
Number
2014
Number
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
13,572,508,577
13,572,508,577
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
in calculating diluted earnings per share
13,572,508,577
13,572,508,577
There were no (2014: nil) options outstanding at 31 December 2015 that are anti-dilutive and accordingly there was no impact on the earnings
per share calculation for the year ended 31 December 2015.
Note 22 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. 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 within CKHH on behalf of HTAL 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.
43
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015
Notes to the Financial Statements continued
Note 22 Financial risk management continued
(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 risk that show the effects of a hypothetical change in the relevant
market risk variable to which the Group is exposed at the reporting 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
reporting 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
risk 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.
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) Interest risk
The Consolidated Entity’s main interest rate risk arises from cash balances and other financial assets.
(ii) 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%
Post-tax loss
$’000
Other equity
$’000
Post-tax loss
$’000
Other equity
$’000
Post-tax loss
$’000
Other equity
$’000
Post-tax loss
$’000
Other equity
$’000
Carrying
amount
$’000
5,318
(53)
148,477
(1,367)
153,795
(1,420)
–
–
–
53
1,367
1,420
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Interest rate risk
Foreign exchange risk
-1%
+1%
-10%
+10%
Post-tax loss
$’000
Other equity
$’000
Post-tax loss
$’000
Other equity
$’000
Post-tax loss
$’000
Other equity
$’000
Post-tax loss
$’000
Other equity
$’000
Carrying
amount
$’000
1,815
(18)
47,075
(362)
48,890
(380)
–
–
–
18
362
380
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
31/12/2015
Financial assets
Cash and cash
equivalents
Other financial
assets
Total increase
(decrease)
31/12/2014
Financial assets
Cash and cash
equivalents
Other financial
assets
Total increase
(decrease)
44
Note 22 Financial risk management continued
(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 related parties. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted.
Credit risk further arises in relation to financial guarantees given to certain parties (see note 15 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. 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 assets and 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.
31/12/2015
Cash and cash equivalents
Other financial assets
Payables
Other financial liabilities
Total
31/12/2014
Cash and cash equivalents
Other financial assets
Payables
Other financial liabilities
Total
Weighted
average
interest rate
2.3%
4.8%
–
–
Less than
1 year
$’000
5,318
136,676
(257)
(241,862)
(100,125)
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
Over 5 years
$’000
–
–
–
–
–
–
–
–
–
–
–
11,801
–
–
11,801
Weighted
average
interest rate
Less than
1 year
$’000
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
Over 5 years
$’000
2.2%
5.8%
–
–
1,815
36,173
(246)
(141,862)
(104,120)
–
–
–
–
–
–
–
–
–
–
–
10,902
–
–
10,902
Total
$’000
5,318
148,477
(257)
(241,862)
(88,324)
Total
$’000
1,815
47,075
(246)
(141,862)
(93,218)
Note 23 Events occurring after the Reporting date
There has been no other matter or circumstance that has arisen subsequent to the reporting date that has significantly affected, or may
significantly affect:
(i)
the operations of the Company in future financial years, or
(ii) the results of those operations in future financial years, or
(iii) the state of affairs of the Company in future financial years.
45
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Notes to the Financial Statements continued
Note 24 Parent entity disclosures
(a) Summary financial information
Financial position
ASSETS
Current Assets
Non-current Assets
Total Assets
LIABILITIES
Current Liabilities
Total Liabilities
Net Assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total Equity
Financial performance
Loss for the year
Total comprehensive loss for the year
(b) Guarantees entered into by the parent entity
2015
$’000
2014
$’000
141,999
289,116
431,115
242,119
242,119
188,996
38,162
476,635
514,797
142,108
142,108
372,689
4,204,488
4,204,488
15,880
15,880
(4,031,372)
(3,847,679)
188,996
372,689
(183,693)
(183,693)
(282,434)
(282,434)
2015
$’000
2014
$’000
Guarantees
Unsecured guarantees in respect of leases held by the joint venture
28
934
(c) Commitments
Operating leases
There were no commitments contracted for but not recognised as liabilities, payable at 31 December 2015 and 31 December 2014.
The Directors of the parent entity are not aware of any other material contingent liabilities existing at the reporting date.
As at 31 December 2015, the Parent Entity has a deficiency of net current assets of $100 million (2014: deficiency of net current assets of
$104 million). Included in the Parent Entity’s current liabilities is an amount of $242 million (2014: $142 million) which relates to an interest free
financing facility provided from a subsidiary of the ultimate parent entity, CKHH, which is repayable on demand. The Parent Entity has unused
financing facilities of $1,358 million at 31 December 2015. CKHH has confirmed its current intention to provide sufficient financial support to
enable the Parent Entity to meet its financial obligations as and when they fall due. This undertaking is provided for a minimum period of
twelve months from the date of signing these financial statements. Consequently, the Directors have prepared the financial statements on a
going concern basis.
(d) Impairment in HTAL’s investment in H3GAH
Impairment loss
Investment in H3GAH
HTAL has written down this investment to its recoverable amount in its separate parent entity financial statements.
2015
$’000
2014
$’000
188,348
298,716
46
Directors’ Declaration
In the Directors’ opinion:
(a) the financial statements and notes set out on pages 22 to 46 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 Consolidated Entity’s financial position as at 31 December 2015 and of its performance for the financial
year ended on that date; and
(b) there are reasonable grounds to believe that Hutchison Telecommunications (Australia) Limited will be able to pay its debts as and when
they become due and payable; and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified
in note 18 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 18.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by International
Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer of Vodafone Hutchison Australia Pty
Limited required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Director
22 February 2016
Director
22 February 2016
47
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015
Independent Auditor’s Report
48
49
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Shareholder Information
The shareholder information set out below was applicable as at 22 February 2016.
Substantial shareholders
Substantial shareholders in the Company are:
Shareholder
CK Hutchison Holdings Limited and its subsidiaries#
Li Ka-Shing Unity Trustee Company Limited as trustee for The Li Ka-Shing Unity Trust##
Vodafone Group Plc and subsidiaries*
Telecom 3G (Australia) Limited and Telecom Corporation of New Zealand Limited
Notes:
Shareholding
% Issued Capital
12,009,393,175
12,009,393,175
12,009,393,175
1,357,250,858
88.48
88.48
88.48
10.00
#
Substantial shareholding includes relevant interest arising from an equitable mortgage of shares from Leanrose Pty Limited.
## Substantial shareholding arises solely because Li Ka-Shing Unity Trustee Company Limited as trustee for The Li Ka-Shing Unity Trust is the registered holder of 25.96% of the shares in
CK Hutchison Holdings Limited and therefore has a relevant interest in the same shares in the Company in which CK Hutchison Holdings Limited has a relevant interest. Li Ka-Shing Unity
Trustee Company Limited as trustee for The Li Ka-Shing Unity Trust or otherwise does not hold any shares in the Company.
*
Substantial shareholding arises solely as a result of the relevant interests which Vodafone Group Plc and its subsidiaries have in shares in the Company in which CK Hutchison Holdings
Limited and its subsidiaries have a relevant interest. Vodafone Group Plc’s relevant interests arise under a Shareholders Agreement between Vodafone Group Plc, Hutchison Whampoa Limited
(currently a subsidiary of CK Hutchison Holdings Limited) and other parties in relation to Vodafone Hutchison Australia Pty Limited. The acquisitions of such relevant interests were approved
by shareholders on 2 April 2009. None of Vodafone Group Plc or any of its subsidiaries holds any shares in the Company.
Distribution of equity securities
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – OVER
Total
There were 4,179 holders of less than a marketable parcel of ordinary shares.
Number of shareholders
1,424
2,456
897
1,189
262
6,228
50
Twenty largest shareholders
The names of the 20 largest holders of quoted ordinary shares as at 22 February 2016 are as follows:
Shareholder
Shareholding
% Issued Capital
Rank
Hutchison Telecommunications (Amsterdam) B. V.
Telecom 3G (Australia) Limited
Leanrose Pty Limited
JP Morgan Nominees Australia
HSBC Custody Nominees (Australia) Limited
Dimitrios Piliouras & Konstantina Piliouras
George Thomson
Kenneth Kin Kau Heung & Rene Conrad Heung
Citicorp Nominees Pty Limited
Arjee Pty Ltd
Yet Kwong Chiang & Ho Yuk Lin Chiang
George Thomson (Thomson Superfund A/C)
William Charles Wheelahan
Yim Fong Leung
Justin Herbert Gardener & Anne Louise Gardener
Yi Wei Sun
Bin Lui
Ping Ping Lu
Kurt Ruegg & Ursula Ruegg
Rene H Investments Pty Limited
11,925,479,378
1,357,250,858
83,913,797
10,163,199
8,941,016
8,500,000
7,032,251
4,830,000
4,052,766
4,033,575
2,700,138
2,494,146
2,438,049
2,255,000
1,957,358
1,900,000
1,880,000
1,620,000
1,500,000
1,470,000
87.87
10.00
0.62
0.07
0.07
0.06
0.05
0.04
0.03
0.03
0.02
0.02
0.02
0.02
0.01
0.01
0.01
0.01
0.01
0.01
Voting rights
The voting rights attaching to each class of equity securities are:
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.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
51
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2015 Corporate Directory
Directors
Fok Kin Ning, Canning
Barry Roberts-Thomson
Chow Woo Mo Fong, Susan
Justin Herbert Gardener
Lai Kai Ming, Dominic
John Michael Scanlon
Frank John Sixt
Ronald Joseph Spithill
Company Secretaries
Edith Shih
Louise Sexton
Investor Relations
Tel: 133 121
Email: investors@hutchison.com.au
www.hutchison.com.au
Registered Office
Level 7, 40 Mount Street
North Sydney NSW 2060
Tel: 133 121
www.hutchison.com.au
Share Registry
Link Market Services
Level 12, 680 George Street
Sydney NSW 2000
Tel: (02) 8280 7111
www.linkmarketservices.com.au
Auditor
PricewaterhouseCoopers
Darling Park Tower 2
201 Sussex Street
GPO Box 2650
Sydney NSW 1171
Securities Exchange Listing
HTAL shares are listed on the Australian Securities Exchange (ASX)
ASX Code: HTA
Notice of Annual General Meeting
The Annual General Meeting of HTAL will be held at:
40 Mount Street
North Sydney NSW 2060
Date: 29 April 2016
Time: 10.00 am
52
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