Hutchison Telecommunications
(Australia) Limited
ABN 15 003 677 227
Level 1, 177 Pacific Highway
North Sydney, NSW 2060
Tel:
Fax:
www.hutchison.com.au
(02) 9015 5088
(02) 9015 5034
ASX Market Announcements
Australian Securities Exchange
Date: 27 March 2019
Subject: Annual Report 2018
The Company’s 2018 Annual Report incorporating the full year accounts for the period
ended 31 December 2018 is attached.
Yours faithfully
Louise Sexton
Company Secretary
2018
Annual Report
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8
Contents
Ownership Structure 1
VHA Key Operational Highlights in 2018 2
Financial Summary 3
Chairman’s Message 4
Board of Directors 8
Corporate Governance 10
Directors’ Report 14
Auditor’s Independence Declaration 21
Financial Report 22
Shareholder Information 58
Corporate Directory 60
AGM Details
The Annual General
Meeting of HTAL
will be held at:
177 Pacific Highway
North Sydney NSW 2060
Thursday 2 May 2019
at 10.00 am
ABN 15 003 677 227
Hutchison Telecommunications (Australia) Limited (“HTAL” or the “Company”)
(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
CK HUTCHISON
HOLDINGS LIMITED
HTAL owns 50% of VHA. Vodafone Group Plc
owns the remaining 50%. CK Hutchison
Holdings Limited is the majority shareholder
of HTAL, with an 87.87% stake#.
SPARK NEW ZEALAND
TRADING LIMITED
PUBLIC SHAREHOLDERS
87.87%#
10%#
2.13%
HUTCHISON TELECOMMUNICATIONS
(AUSTRALIA) LIMITED
VODAFONE GROUP PLC
50%#
50%#
# Indirect ownership.
1
VHA Key Operational
Highlights in 2018
In May 2018, VHA introduced
Australia’s first widely available
ENDLESS
MOBILE
DATA
PLANS
>6MILLION
MOBILE CUSTOMERS
With the addition of 211,000
mobile customers in 2018
360
MILLION
GIGABYTES
GROWING CUSTOMER
DATA USAGE
due to VHA’s significant network
investment in metropolitan and
regional areas, which increased
45% from 2017
FINANCIAL
PERFORMANCE
IN LINE WITH EXPECTATIONS
VHA’s 2018 financial performance
was in line with expectations, given
aggressive competition among the
major Mobile Network Operators over
recent years and capital intensity
required to maintain and evolve
mobile telecommunications networks
VHA-TPG Merger
VHA and TPG Telecom Limited (ASX:TPM)
announced a proposed merger of
equals in August 2018 to establish
Australia’s leading full-service challenger
telecommunications provider
$5ROAMING
In November 2018, VHA launched $5 Roaming to
an additional 11 destinations, making the product
AVAILABLE IN MORE THAN
80 COUNTRIES
5G SPECTRUM
ACQUIRED
VHA’s 50:50 joint venture with TPG Telecom, Mobile JV Pty Ltd, acquired substantial 5G spectrum
holdings in all available metropolitan and regional areas in the 3.6 GHz band, for $263 million
2
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 VHA Financial and Operating Metrics
2018
$’000
2017
$’000
YoY
change
%
The items below represent the 50% share of VHA
attributable to HTAL
Total revenue ($m)
1,823.4
1,729.0
5.5%
Total revenue adjustment
AASB 151
(22.3)
Total revenue without
AASB 151
1,845.7
1,729.0
6.8%
Service revenue ($m)2
1,235.1
1,224.2
0.9%
Service revenue
adjustment AASB 151
(2.7)
Service revenue without
AASB 151
1,237.8
1,224.2
1.1%
EBITDA ($m)
551.1
485.9
13.4%
Net EBITDA adjustment
AASB 151
7.6
Net EBITDA without
AASB 151
Share of net loss of VHA
($m)3
543.5
485.9
11.6%
(5.0)
(42.5)
(88.2%)
Net loss adjustment
AASB 151
(10.5)
Net Profit/(loss) without
AASB 151
5.5
(42.5)
(113.0%)
The items below represent totals for VHA
Postpaid customers (’000)
Prepaid customers (’000)4
3,454
2,209
3,388
2,082
VHA customers subtotal
(’000)
5,663
5,470
2.0%
6.1%
3.5%
MVNO customers (’000)4
356
338
5.3%
Total network customers
(’000)
6,019
5,808
3.6%
Fixed Customers (‘000)
33
–
100%
ARPU ($)5
37.45
38.23
(2.0%)
ARPU inclusive of Kogan
and Lebara ($)6
35.52
37.16
(4.4%)
Financial
Summary
VHA achieved further
growth in its customer
base during 2018, with
the addition of
211,000 customers.
Total network
customers increased
3.6% to 6.02 million.
Notes:
1 AASB 15 became effective for the Group on
1 January 2018. AASB 15 establishes principles
for reporting the nature, amount, timing and
uncertainty of revenue and cash flows arising
from an entity’s contracts with customers. The
table presents the difference between pre AASB
15 and post AASB 15 adjustment. Included in the
adjustments are changes in fair value recognition
of revenue and discounts on customer contracts,
together will change in the recognition of
subscriber costs for these contracts.
2 Reclassification $11.8 million of fixed and insurance
revenue into service revenue. The December 2017
figures reclassed for comparative was $6 million.
3 Reconciliation for the Share of net loss of VHA is
set out on page 36.
4 Reclassification of Kogan and Lebara customers
from MVNO to Prepaid. As Kogan and Lebara
customers (602k) are contracted to VHA, these
categories have been reclassified from MVNO
to Prepaid. Prior to the reclassification, the
December 2017 figures for Prepaid and MVNO
were 1,709k and 711k respectively.
5 ARPU represents a rolling 12 month average
postpaid and prepaid service revenue per user per
month at the end of the period excluding MVNOs.
This computation does not take into account the
reclassification of Kogan and Lebara from MVNO
category to Prepaid category.
6 Updated ARPU reflects the change in basis of
calculation as a result of the reclassification of
Kogan and Lebara from MVNO category to the
Prepaid category. The prior year comparative has
also been updated based on this change.
3
Chairman’s Message
I AM PLEASED TO REPORT TO YOU
ON OUR PERFORMANCE IN 2018,
BASED ON THE CONTINUED
IMPROVEMENT IN VODAFONE
HUTCHISON AUSTRALIA’S BUSINESS.
Fok Kin Ning, Canning
Chairman
HTAL reported a $4.5 million profit
for the year ended 31 December 2018,
compared with a loss of $37.6 million
in the prior year. HTAL’s share of VHA’s
net loss included in HTAL’s results
was $5.0 million for the year ended
31 December 2018 compared with a net
loss of $42.5 million in 2017.
HTAL’s revenue from ordinary activities
increased from $6.2 million in 2017
to $10.6 million for the year ended
31 December 2018. The significant
growth in revenue is primarily driven
by a full 12 months of interest income
received on loans to VHA. However,
this will be a non-recurring uplift as the
overall loan balance was reduced by a
loan repayment during December 2018.
4
Review of VHA’s results
In 2018, VHA achieved modest
financial growth in an intense
competitive environment and despite
the need for ongoing significant
investment to maintain, enhance and
evolve its networks, products and
customer service.
With strong support from CK Hutchison
Holdings Limited and Vodafone
Group Plc, VHA has again produced
a stable financial performance, while
maintaining its position as a price
leader and achieving market-leading
customer sentiment.
Key 2018 achievements and highlights:
• Reached six million mobile
customers;
• Full launch of fixed broadband
services on the National Broadband
Network;
• Continued significant investment in
network and technology, including
evolution to 5G;
•
Introduced Australia’s first widely-
available endless data plans;
• Expanded $5 Roaming to more
than 80 countries;
• Leading Net Promoter Score
(NPS) and lowest rate of
customer complaints to the
Telecommunications Industry
Ombudsman of the Mobile
Network Operators;
• Announced proposed merger
with TPG Telecom Limited (“TPG
Telecom”) to become a leading full-
service telecommunications company
in Australia and a more effective
challenger to the dominant carriers
in the market; and
• Acquired 5G spectrum through
Mobile JV Pty Ltd, its spectrum joint
venture with TPG Telecom.
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 2018 financial results
VHA’s 2018 financial performance was in
line with expectations, given aggressive
competition among the major Mobile
Network Operators over recent years
and increased capital investments
required to maintain and evolve mobile
telecommunications networks.
HTAL’s share of VHA total revenue
increased 5.5% to $1,823.4 million from
$1,729.0 million, driven by growth
in VHA’s customer base and higher
device sales. In a direct year on year
comparison, without the AASB 15
accounting change, HTAL’s share of
VHA total reported revenue would have
been $1,845.7 million, a 6.8% increase.
HTAL’s share of VHA’s EBITDA
increased 13.4% year on year to
$551.1 million from $485.9 million,
driven by revenue growth, expenditure
optimisation and non-recurring benefits
of $33.5 million. In a direct year on
year comparison, without the AASB
15 accounting change, HTAL’s share of
VHA total reported EBITDA would have
been $543.5 million, an 11.8% increase.
In a year on year comparison using
previous year calculation methodology,
VHA ARPU (Average Revenue Per
User) was $37.45, a decrease of 2.0%
YoY from $38.23 due to ongoing
competition among the major Mobile
Network Operators and increased
inclusions on VHA mobile plans. In
the first half of 2018, non-Vodafone
branded partners Kogan and Lebara
were re-classified from MVNO to Pre-
paid. With the inclusion of Kogan and
Lebara customers, VHA ARPU on this
basis was $35.52, a decrease of 4.4%
YoY from $37.16.
The loss position improved with
HTAL’s share of VHA net loss declining
88.2% to $5.0 million, driven by the
improvement in VHA’s EBITDA partially
offset by an increase in depreciation
and amortisation expenses.
VHA and TPG Telecom propose
merger of equals
VHA and TPG Telecom announced
a merger of equals transaction in
August 2018 to establish Australia’s
leading full-service challenger
telecommunications provider. The
merger is subject to regulatory
approvals, and will provide the new
merged group with increased financial
strength and scale to compete more
effectively, and drive innovation, service
and product improvements to Australian
customers. HTAL and Vodafone Group
Plc, as VHA shareholders, will each own
25.05% of the new merged group with
TPG Telecom shareholders owning the
remaining 49.9%.
VHA reaches 6 million mobile
customers, achieves leading
customer sentiment
VHA passed the 6 million mobile
customer mark in 2018, with the addition
of 211,000 customers. Total mobile
network customers increased 3.6%
to 6.02 million, driven by 6.1% growth
in prepaid customers, a 2.0% lift in
postpaid customers and a 5.3% increase
in wholesale and partner customers.
VHA also had 33,000 fixed broadband
customers following the full launch of
Vodafone nbnTM services in April 2018.
VHA continued to achieve strong
customer sentiment, recording
the leading Net Promoter Score
(NPS) among the Mobile Network
Operators throughout 2018. VHA’s NPS
performance is driven by customer
perceptions of network performance
and reliability, trustworthiness, customer
control over spend, and value for money.
VHA again recorded the lowest
rate of customer complaints to
the Telecommunications Industry
Ombudsman of the major
telecommunications companies
throughout 2018. In the December 2018
quarter, VHA’s complaints ratio was 50%
lower than the industry average and
less than half that of the major Mobile
Network Operators.
National 5G spectrum
acquisition builds on VHA’s
future network plans
In December 2018, Mobile JV Pty Ltd,
the 50:50 joint venture company of VHA
and TPG Telecom acquired substantial
spectrum holdings in all available
metropolitan and regional areas in the
3.6GHz band, for $263 million. VHA has
the right to use half of the spectrum
licences acquired by Mobile JV Pty Ltd.
This builds on VHA’s work over recent
years to prepare for 5G, with projects
including the virtualisation of its core
network, fibre transmission rollout and
detailed infrastructure planning.
Mobile JV Pty Ltd is an ongoing joint
venture and will not terminate if the
merger between VHA and TPG Telecom
does not proceed.
Expanding and enhancing the
VHA mobile network
In 2018, VHA’s total network and
technology spend was approximately
$1.3 billion, including the construction
of more than 180 new sites and
upgrade of over 850 existing sites
across Australia. This included the
construction of 22 new sites as part
of the Australian Government’s Mobile
Black Spot Program. VHA’s significant
network investment in metropolitan
and regional areas helped support
growing customer data usage, which
increased 45% from 2017 to more than
360 million gigabytes in 2018.
The VHA mobile network also
continued to be recognised for its
strong performance. In May 2018,
VHA was awarded Best Mobile
Operator at the telecommunications
industry CommsDay Edison Awards.
The OpenSignal Mobile Network
update report showed VHA’s network
performance continues to improve,
with VHA performing strongly in 4G
download speed, 4G latency and
overall download speeds. The P3 Public
Benchmark networking test recognised
improvements across all aspects of
VHA’s network performance in the
five major cities.
5
Chairman’s Message
continued
Expanding and enhancing the
VHA mobile network continued
In May 2018, VHA successfully launched
its first 4.9G site in Parramatta, in
Sydney’s western suburbs. This was the
first of five sites to be launched that will
act as trial locations to deliver a higher
quality network experience in the lead
up to the introduction of 5G.
In September 2018, VHA announced a
successful trial of its self-install mobile
coverage solution – the Vodafone
Regional Coverage Hub. The device
delivers 4G voice and data services, and
Internet of Things (IoT) connectivity, in
locations where commercial networks
are not traditionally deployed, or where
coverage is patchy or unavailable.
VHA entry into fixed
broadband
In April 2018, VHA officially launched
Vodafone nbnTM, following a soft
launch in Sydney, Melbourne,
Canberra, Newcastle and Geelong in
December 2017. In a strategic move
to complement its mobile network
and offer customers a converged
internet experience, using the National
Broadband Network (NBN), VHA
has grown the availability of its fixed
network to other major Australian cities,
expanded its fixed retail distribution
footprint and added content access and
enhanced features.
Like its mobile offering, Vodafone nbnTM
focuses on the customer experience
with Instant Connect and 4G Back-
Up allowing customers to access the
internet via VHA’s 4G mobile network
prior to NBN installation and in the event
of a fault. These features have been well
received by customers and some of
them have been implemented by VHA’s
competitors in response.
VHA continues significant
investment in customers
VHA continues to focus heavily in
retaining existing customers and
acquiring new customers, introducing
new competitive offers and
innovative products.
DreamLab goes global
In 2018, Vodafone Foundation continued
to help improve the health and
wellbeing of Australians through its
technology-driven partnerships with the
Garvan Institute of Medical Research
and Hello Sunday Morning.
In May 2018, VHA introduced Australia’s
first widely available endless mobile
data plans. Known as Red Plus, the
plans offer customers protection
against excess data use charges
by providing between 50 and 120
gigabytes per month at the maximum
data speed available on the VHA
network, followed by endless data at
streaming speeds of 1.5Mbps.
VHA’s $5 Roaming continues to be
a key driver of postpaid customer
connections and retentions. In
November 2018, VHA launched
$5 Roaming to an additional 11
destinations, making the product
available in more than 80 countries.
$5 Roaming remains the most
competitive offering of its kind in
the Australian market.
VHA strengthens Enterprise
business
VHA continued its Enterprise strategy
in 2018, building on its award-winning
offerings for small and medium sized
business customers. VHA signed major
business customers across a variety
of industries including travel, global
logistics, and finance.
VHA extended its endless data offerings
with the introduction of Business
Advance mobile plans – Australia’s first
plans with endless data for small or
medium businesses (SMBs).
In August 2018, VHA won the Canstar
Blue award for Most Satisfied Customers
– Small Business Mobile Phone Providers
for the second year in a row.
In May 2018, the Foundation’s DreamLab
app, which helps solve cancer using the
processing power of idle smartphones
while users sleep, launched in the
UK and New Zealand. The DreamLab
community now consists of more than
300,000 users, known as ‘dreamers’. In
November 2018, the app’s first scientific
findings were released, with ‘Project
Decode’ discovering 141 new subtypes
of cancer. By donating the computing
power to process 75 million research
calculations, DreamLab users halved
the time it would have otherwise taken
to reach this discovery and provided
an important research milestone
for the program.
Outlook
With strong support from CK Hutchison
Holdings Limited and its joint
shareholder Vodafone Group Plc, VHA
is well-placed to continue achieving
steady, modest customer and financial
growth, despite ongoing aggressive
competition among the Mobile
Network Operators.
As it has done in recent years, in
2019, VHA will continue to invest in
innovative, competitive mobile and
fixed services and products which offer
value inclusions and flexible options to
Australian customers.
VHA will also continue to invest in its
mobile and fixed networks, including
the evolution to 5G.
6
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 However, VHA has publicly expressed
concerns that the Australian
Government’s notice to not permit
equipment of Chinese suppliers to be
used in 5G networks will reduce vendor
competition and increase costs for
Mobile Network Operators.
VHA also notes the challenges for all
retailers in the fixed broadband market
due to limited margins associated with
reselling the NBN services.
VHA has entered into a Scheme
Implementation Deed with TPG
Telecom to create a substantial
converged telecommunications
provider through a merger of equals.
Increased investment requires increased
scale, and the proposed merger would
create a more effective challenger to
the dominant telecommunications
players in the market. The two
companies own highly complementary
telecommunications infrastructure, with
VHA established in mobile and TPG
Telecom established in fixed.
The merger is subject to approval by
several regulatory bodies, including the
Australian Competition and Consumer
Commission (ACCC), and by TPG
Telecom shareholders. VHA and TPG
Telecom commenced an informal
merger review process with the ACCC
and it has indicated it will provide its
view on the proposed VHA-TPG Telecom
merger in May 2019.
HTAL remains committed to its
investment in VHA, and will continue
to support VHA in the future.
Fok Kin Ning, Canning
Chairman
7
Board of Directors
Fok Kin Ning, Canning (Chairman) BA, DFM, FCA (ANZ)
Fok Kin Ning, Canning, aged 67, has been a Director since 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 and Hutchison Whampoa Limited
(“HWL”) since 1985 and 1984 respectively, both of which became wholly owned subsidiaries
of CKHH in June 2015. He has been chairman and a non-executive director 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 since 1985 and chairman since 2005 of Power
Assets Holdings Limited (“Power Assets”), chairman and an executive director of HK Electric
Investments Manager Limited (“HKEIML”) 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 CK
Infrastructure Holdings Limited (“CKI”) since 1997. 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. He was previously alternate director to a director of HTHKH
from 2010 to July 2016. Mr Fok has also been a director of VHA since 2001. 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 69 has been a Director since February 1989 and 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.
Justin Herbert Gardener (Director) BEc, FCA, AGIA
Justin Herbert Gardener, aged 82, has been a Director since 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.
Lai Kai Ming, Dominic (Director) BSc, MBA
Lai Kai Ming, Dominic, aged 65, has been a Director since May 2004 and Alternate Director
to Mr Sixt since May 2006 and to Mr Fok since December 2016. Mr Lai has been an executive
director and deputy managing director of CKHH since June 2015. Since 2000, he has been a
director of HWL which became a wholly owned subsidiary of CKHH in June 2015. Mr Lai has
been a non-executive director of HTHKH since 2009 and alternate director to directors of HTHKH
since 2010. He has been alternate director to a director of TOM Group Limited (“TOM”) since
August 2016. He has been a member of the board of commissioners of PT Duta Intidaya Tbk since
May 2018. The aforementioned companies are either the ultimate holding company of HTAL, or
subsidiaries or associated companies of CKHH in which Mr Lai acts as director or commissioner
for the purpose of overseeing the management of such businesses. He has also been a director
of VHA since October 2016. He was previously Alternate Director to Mrs Chow Woo Mo Fong,
Susan, a then Director of HTAL from 2006 to July 2016. Mr Lai has over 35 years of management
experience in different industries. He holds a Bachelor of Science (Hons) degree and a Master’s
degree in Business Administration.
8
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 John Michael Scanlon (Director)
John Michael Scanlon, aged 77, has been a Director since 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 chief executive officer of Asia Global Crossing, chief executive
officer of Global Crossing and chairman and chief executive officer of PrimeCo Cellular.
Frank John Sixt (Director) MA, LLL
Frank John Sixt, aged 67, has been a Director since January 1998 and Alternate Director
to Mr Lai since 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. Since 1991, he has been a director
of Cheung Kong (Holdings) Limited and HWL, both of which became wholly owned
subsidiaries of CKHH in June 2015. He has been chairman and a non-executive director of
TOM since 1999 and an executive director of CKI since 1996. Mr Sixt has also been a director
of Husky Energy since 2000. He has been alternate director to a director of HKEIML as the
trustee-manager of HKEI and of HKEIL since 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 was previously a non-executive director of HTHKH from 2009 to
December 2016 and of HPHM as the trustee-manager of HPH Trust from 2011 to December
2016. He was previously a non-executive director (re-designated from an executive director
to a non-executive director in January 2014) of Power Assets from 1998 to December 2016.
He has also been a director of VHA since 2001. He was previously Alternate Director to
Mrs Chow Woo Mo Fong, Susan, a then Director of HTAL from 2008 to July 2016. 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 77, has been a Director since 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 chief executive
officer 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.
Woo Chiu Man, Cliff (Director) BSc
Woo Chiu Man, Cliff, aged 65, has been a Director since August 2016. Mr Woo has been
an executive director and chief executive officer of HTHKH since January 2017 and was
re-designated as co-deputy chairman and a non-executive director of HTHKH in August
2018. He has been alternate director to a director of VHA since October 2016. He held
various senior technology management positions in the telecommunications industry
before joining in 1998 the group of HWL. He was deputy managing director of Hutchison
Telecommunications (Hong Kong) Limited from 2000 to 2004. He was also an executive
director of Hutchison Telecommunications International Limited from March 2005 to
December 2005. He was seconded to VHA as chief technology officer from 2012 to 2013
and was part of the core management team. He possesses extensive operations experience
in the telecommunications industry and has been involved in cellular technology for over
30 years. Mr Woo holds a Bachelor’s degree in Electronics and a Diploma in Management
for Executive Development. He is a Chartered Engineer and also a Member of The Institution
of Engineering and Technology (UK) and The Hong Kong Institution of Engineers.
9
Corporate Governance
This Corporate Governance Statement is dated 27 February 2019
and approved by the Board of the Company. Information about the
Company 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. This report reflects the main corporate
governance practices of the Company and its subsidiaries (collectively,
the “Group”) in place from 1 January 2018, noting where the Company
does not comply with the ASX Corporate Governance Principles and
Recommendations (the “ASX Principles”).
The Board
Role of the Board
The Board has responsibility for approving strategy, monitoring the
implementation of the strategy and the performance of the Group,
protecting the rights and interests of shareholders and overseeing
the overall corporate governance within the Group.
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;
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 Kin Ning, Canning,
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 Justin Herbert Gardener and Mr John Michael 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 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.
• 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
Details of the Directors’ skill sets, experience and date of appointment
are set out on pages 8 and 9. Details of the non-executive Director
remuneration are set out in the Remuneration Report which forms
part of the Directors’ Report on pages 17 to 19.
• 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.
Subject to the Company’s Constitution requirements in relation
to the retirement of Directors, the appointment of all the current
Directors will continue until the next Annual General Meeting (“AGM”)
in 2019, and will be automatically renewed for successive 12-month
periods unless otherwise terminated. An election of Directors is held
at the 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.
10
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 Prior to the appointment of a new Director, appropriate checks
are undertaken in areas such as education, employment and
character references, and the balance of skill sets and experience
collectively on the Board will be taken into consideration. Each new
Director receives a letter of appointment detailing the Company’s
expectations having regard to their familiarity with the Company and
its investment in VHA. During 2017, the terms of appointment were
confirmed with all Directors.
Upon appointment to the Board, a new Director receives an
induction process arranged by the Company Secretary which
includes a package of orientation materials on the Company.
Thereafter, the Company provides professional development
materials to Directors and facilitates their attendance at 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.
The Company evaluates the performance of the Board as a whole,
the Board Committees and the Directors by questionnaire at the
beginning of each year. The evaluation for the financial year ended
31 December 2017 was undertaken at the beginning of 2018 and
that for the financial year ended 31 December 2018 has 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.
This Committee comprises non-executive Directors, a majority of
whom are independent Director and is chaired by an independent
Director who is not the Chairman of the Board. 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,
and their qualifications, expertise, experience and attendance at
Committee meetings are set out on pages 8, 9, 15 and 16.
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 financial statements 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.
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, and their
qualifications, expertise and experience are set out on pages 8, 9,
15, and 16. No meetings of this Committee were required during
the year ended 31 December 2018.
11
Corporate Governance continued
The Board continued
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.
Governance and nomination responsibilities
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 as a
whole, the Board Committees, 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
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 Board
Committees 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 the length of service of members on Board Committees,
meeting procedures, quorum and notice requirements, records
and minutes, resignations and vacancies on Board Committees.
•
•
12
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 skill sets, experience, expertise and diversity of
perspectives appropriate to the requirements of the businesses
of the Company. The Company supports diversity, with Directors
from various parts of the world with experience of different cultures
and possessing varied expertise, in finance and accounting, sales
and marketing, operations, and technology relevant to operating a
telecommunications company.
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.
No objectives have been set for achieving gender diversity among
employees or assessment undertaken as currently the Company
has only one employee.
Company Secretaries
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.
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 faced by the Company are those
associated with the Company’s investment in VHA.
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 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.
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.
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, the VHA Board has received such
a declaration 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 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.
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 the Continuous
Disclosure Policy and the 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.
13
Directors’ Report
The Directors are pleased to present their report on the consolidated
entity (the “Group”) consisting of HTAL and the entities it controlled
at the end of or during the year ended 31 December 2018.
Principal activities
During the year, the Group’s principal activity was the ownership
of a 50% interest in VHA which provides telecommunications
services in Australia.
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 on pages 2 to 7. Details of the financial
position of the Company are contained in page 24 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 2018 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 has 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 is subject to the National Greenhouse and Environmental
Reporting Act 2007 (“NGER”) and is required to report information
about greenhouse gas emissions, energy production, energy
consumption and other information specified by the NGER. VHA has
fulfilled its reporting requirements for its operations annually since
2009 under the NGER.
Dividends
No dividend was declared or paid during the year.
14
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 Directors
The following persons were Directors of HTAL during the whole of the year ended 31 December 2018 and up to the date of this report:
FOK Kin Ning, Canning
Barry ROBERTS-THOMSON
Justin Herbert GARDENER
LAI Kai Ming, Dominic
John Michael SCANLON
Frank John SIXT
Ronald Joseph SPITHILL
WOO Chiu Man, Cliff
Further information on the Directors is set out on pages 8 and 9.
Director
Other Responsibilities
Fok Kin Ning, Canning
Non-executive Chairman,
Chairman of Governance, Nomination & Compensation Committee
Barry Roberts-Thomson
Deputy Chairman
Justin Herbert Gardener
Chairman of Audit & Risk Committee,
Member of Governance, Nomination & Compensation Committee
Lai Kai Ming, Dominic
Member of Governance, Nomination & Compensation Committee
John Michael Scanlon
Member of Audit & Risk Committee
Frank John Sixt
Member of Audit & Risk Committee
Ronald Joseph Spithill
Woo Chiu Man, Cliff
–
–
Particulars
of Directors’
Interests in
ordinary shares
of HTAL
5,100,000*
83,918,337**
1,957,358
–
–
1,000,000
–
–
* Direct holding of 100,000 shares
** Direct holding of 4,540 shares
Notes:
Fok Kin Ning, Canning, holds a relevant interest in (i) 5,111,438 ordinary shares of CKHH, a related body corporate of HTAL; and (ii) 1,202,380 ordinary
shares of HTHKH, a related body corporate of HTAL.
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.
Woo Chiu Man, Cliff holds a relevant interest in (i) 3,420 ordinary shares of CKHH; and (ii) 2,001,333 ordinary shares of HTHKH.
15
Directors’ Report continued
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 2018 and
the number of meetings attended by each Director were:
Board Meetings
held during
the year
Board Meetings
attended as
Director
Audit & Risk
Committee
Meetings held
during the year
10
10
10
10
10
10
10
10
10
10
10
10
9
10
9
10
N/A
N/A
3
N/A
3
3
N/A
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
3
N/A
2
3
N/A
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
Director
Fok Kin Ning, Canning
Barry Roberts-Thomson
Justin Herbert Gardener
Lai Kai Ming, Dominic
John Michael Scanlon
Frank John Sixt
Ronald Joseph Spithill
Woo Chiu Man, Cliff
No meeting of the Governance, Nomination & Compensation Committee was held during the year as any matters that arose for possible
consideration by the Committee 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)
Edith Shih has been a Company Secretary of the Company since 1999. Ms Shih is an executive director and company secretary of CKHH. She
has been with the Cheung Kong (Holdings) Limited group since 1989 and from 1991 to 2015 with HWL, both of which became wholly owned
subsidiaries of CKHH in June 2015. She has acted in various capacities within the HWL Group including, director, head group general counsel
and company secretary of HWL and its subsidiaries and associated companies. She has over 35 years of experience in the legal, regulatory,
corporate finance, compliance and corporate governance fields. She is a solicitor qualified in England and Wales, Hong Kong and Victoria,
Australia and a Fellow of both the Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries,
holding Chartered Secretary and Chartered Governance Professional dual designations.
Louise Sexton
BA, LLM, MBA (Exec), GAICD
Louise Sexton has almost 26 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.
16
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 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 2018, 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 Justin Herbert Gardener and Mr John Michael Scanlon, comprised
a fixed amount only and was not performance based. The non-executive and non-independent Directors, Mr Fok Kin Ning, Canning,
Mr Lai Kai Ming, Dominic, Mr Barry Roberts-Thomson, Mr Frank John Sixt, Mr Ronald Joseph Spithill and Mr Woo Chiu Man, Cliff, 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
The Directors of HTAL are the key management personnel of HTAL having the authority and responsibility for planning, directing and managing
activities for the period 1 January 2018 to 31 December 2018.
The appointment of Mr Fok Kin Ning, Canning, Mr Lai Kai Ming, Dominic, Mr Frank John Sixt and Mr Woo Chiu Man, Cliff is part of and in
conjunction with their executive duties within the CKHH group. They are not separately remunerated by the Company for their services.
The remuneration details of these directors are available from the disclosure in their respective CKHH group annual reports.
17
Directors’ Report continued
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
2018
Name
Fok Kin Ning, Canning
Barry Roberts-Thomson
Justin Herbert Gardener
Lai Kai Ming, Dominic
John Michael Scanlon
Frank John Sixt
Ronald Joseph Spithill
Woo Chiu Man, Cliff
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
–
–
–
–
–
–
–
–
–
Total
$
–
–
54,750
–
54,750
–
–
–
109,500
Mr Fok Kin Ning, Canning, Mr Lai Kai Ming, Dominic, Mr Frank John Sixt and Mr Woo Chiu Man, Cliff, as officers of CKHH group, are remunerated
for their duties within the CKHH Group which include their directorships of HTAL.
2017
Name
Fok Kin Ning, Canning
Barry Roberts-Thomson
Justin Herbert Gardener
Lai Kai Ming, Dominic
John Michael Scanlon
Frank John Sixt
Ronald Joseph Spithill
Woo Chiu Man, Cliff
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
–
–
–
–
–
–
–
–
–
Total
$
–
–
54,750
–
54,750
–
–
–
109,500
18
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 Share-based compensation
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.
Shareholdings
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
Name
Fok Kin Ning, Canning
Barry Roberts-Thomson
Justin Herbert Gardener
Lai Kai Ming, Dominic
John Michael Scanlon
Frank John Sixt
Ronald Joseph Spithill
Woo Chiu Man, Cliff
* Direct holding of 100,000 shares
** Direct holding of 4,540 shares
ORDINARY SHARES
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
–
–
Balance
at the start
of the year
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.
Shares issued on the exercise of options
No ordinary shares of HTAL were issued during the year ended 31 December 2018 or up to the date of this report on the exercise of options.
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 2018
and 31 December 2017.
Other transactions with Directors and key management personnel
There were no other transactions with Directors for the years ended 31 December 2018 or ended 31 December 2017.
19
Directors’ Report continued
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 41 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 21.
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 improper 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 of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 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 Directors’ report and financial report have been rounded off in accordance with that Instrument to the nearest thousand dollars, 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
27 February 2019
Director
27 February 2019
20
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 Auditor’s Independence Declaration
21
21
Financial Report
For the year ended 31 December 2018
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
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Summary of significant accounting policies
Changes in accounting policies
Revenue
Income tax
Current assets – Cash and cash equivalents
Loans and receivables
Non-current assets – Investment accounted for using the equity method
Controlled entities
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 profit/(loss) after income tax to net cash inflows from operating activities
Note 21
Earnings per share
Note 22
Financial risk management
Note 23
Proposed merger between joint venture investment Vodafone Hutchison Australia Pty Limited and
TPG Telecom Limited
Note 24
Events occurring after the reporting date
Note 25
Parent entity disclosures
Directors’ Declaration
Independent Auditor’s Report
23
24
25
26
27
27
32
34
34
35
35
36
38
38
38
39
40
41
41
41
42
42
44
46
46
47
48
49
50
50
51
52
These financial statements cover the consolidated financial statements for the group consisting of Hutchison Telecommunications (Australia)
Limited (“HTAL”) and its controlled entities. The financial statements are presented in Australian dollars.
HTAL is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:
Level 1, 177 Pacific Highway,
North Sydney NSW 2060
The financial statements were authorised for issue by the Directors on 27 February 2019. The Company has the power to amend and reissue
the financial statements.
22
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 31 December 2018
Revenue
Other operating expenses
Share of net losses of VHA joint venture accounted for using the equity method
Profit/(loss) before income tax
Income tax expense
Profit/(loss) for the year
Other comprehensive income (loss)
Items that may be reclassified subsequently to profit or loss:
Changes in the fair value of cash flow hedges (share of VHA joint venture)
Other comprehensive income (loss) for the year, net of tax
Total comprehensive income/(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
3
7
4
12
12
2018
$’000
10,619
(1,162)
(4,982)
4,475
–
4,475
2017
$’000
6,164
(1,222)
(42,499)
(37,557)
–
(37,557)
212
212
(207)
(207)
4,687
(37,764)
Notes
Cents
Cents
21
21
0.03
0.03
(0.28)
(0.28)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
23
Consolidated Statement of Financial Position
As at 31 December 2018
ASSETS
Current Assets
Cash and cash equivalents
Loans and receivables
Other receivables
Total Current Assets
Non-current Assets
Loans and receivables
Investment accounted for using the equity method
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
Notes
2018
$’000
2017
$’000
5
6
6
7
9
10
11
12
12
18,598
434
6
8,884
145,558
9
19,038
154,451
160,765
159,638
320,403
339,441
372
248,790
249,162
249,162
90,279
91,000
167,008
258,008
412,459
242
324,025
324,267
324,267
88,192
4,204,488
4,204,488
70,862
70,650
(4,185,071)
(4,186,946)
90,279
88,192
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
24
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 Consolidated Statement of Changes in Equity
For the year ended 31 December 2018
ATTRIBUTABLE TO MEMBERS OF HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED
Contributed
equity
$’000
Notes
Capital
Redemption
reserve
$’000
Cash flow
Hedging
reserve
$’000
Share-based
Payments
reserve
$’000
Accumulated
losses
$’000
Total equity
$’000
Balance at 1 January 2017
4,204,488
54,887
Loss for the year
Share of VHA joint venture’s
changes in the fair value of
cash flow hedges
Total comprehensive
loss for the year
Balance at
31 December 2017
Adjustment on the
adoption of AASB 15
(net of tax)
Profit for the year
Share of VHA joint venture’s
changes in the fair value of
cash flow hedges
Total comprehensive
income for the year
Balance at
31 December 2018
–
–
–
–
–
–
12
90
–
(207)
(207)
15,880
(4,149,389)
125,956
–
–
–
(37,557)
(37,557)
–
(207)
(37,557)
(37,764)
4,204,488
54,887
(117)
15,880
(4,186,946)
88,192
–
–
–
–
–
–
–
–
12
–
(117)
–
212
212
–
–
–
–
(2,600)
15,880
(4,189,546)
4,475
(2,600)
85,592
4,475
–
212
4,475
4,687
4,204,488
54,887
95
15,880
(4,185,071)
90,279
Balance at 1 January 2018
4,204,488
54,887
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
25
Consolidated Statement of Cash Flows
For the year ended 31 December 2018
Cash Flows from Operating Activities
Payments to suppliers and employees (inclusive of GST)
Interest received
Net cash inflows from operating activities
Cash Flows from Investing Activities1
Repayment of loans from VHA joint venture
Net cash inflows from investing activities
Cash Flows from Financing Activities1
Repayment of borrowings – entity within the CKHH Group
Net cash outflows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Notes
20
5
2018
$’000
(982)
10,696
9,714
–
–
–
–
9,714
8,884
18,598
2017
$’000
(1,258)
5,673
4,415
12,837
12,837
(12,837)
(12,837)
4,415
4,469
8,884
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
1 The cash flows in respect of the $75 million decrease in Loans and Receivables and decrease in Other financial liabilities are composed of a $40 million
drawdown on the working capital facility with VHA and a $115 million repayment of borrowings from CKHH Group. The net decrease of $75 million Loans to
VHA joint Venture (an investing activity) and Proceeds from borrowings within CKHH Group of $75 million (a financing activity) were respectively satisfied
by an entity within CKHH Group which extends the loans to the Group.
26
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 Notes to the Financial Statements
For the year ended 31 December 2018
Joint ventures arise where the investors have rights to the net assets
of the arrangement. Joint ventures are accounted for under the equity
method, after initially being recognised at cost in the consolidated
balance sheet.
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.
(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.
The carrying amount of equity accounted investment is tested for
impairment accordance with note 1(f).
(c) Foreign currency translation
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 HTAL’s functional and
presentation currency.
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
Securities 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 financial statements were authorised and issued by the board
on the 27th of February 2019.
Vodafone Hutchison Australia Pty Limited or “VHA” is a joint venture
in which HTAL has a 50% shareholding.
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, unless otherwise stated.
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 Order 10/654, 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 25.
Historical cost convention
These financial statements have been prepared under the historical
cost convention.
(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.
27
Notes to the Financial Statements continued
For the year ended 31 December 2018
Note 1
Summary of significant
accounting policies continued
(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.
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.
HTAL and its wholly owned Australian subsidiaries have not
implemented the tax consolidation legislation.
(f) Impairment of assets
The investment in the VHA joint venture is tested for impairment
annually and when there is an indication that it 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 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) Other receivables
Other receivables are initially recognised at amortised cost,
collectability is then reviewed on an ongoing basis.
(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 and are subsequently remeasured to fair value at
each reporting date. The accounting for subsequent changes in fair
value depends on whether the derivative is designated as a hedging
instrument. 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 risk associated with
the cash flows of recognised assets and liabilities and highly probable
forecast transactions (cash flow hedges).
At inception of the hedge relationship, the Group documents the
economic relationships between hedging instruments and hedged
items including whether changes in the cash flows of the hedging
instruments are expected to offset changes in the cash flows of
hedged items. The Group documents its risk management objective
and strategy for undertaking its hedge transactions. The fair value
of derivative financial instruments designated in hedge relationships
are separately identified and disclosed. The full fair value of a hedging
derivative is classified as a non-current asset or liability when the
remaining maturity of the hedged items is more than 12 months; it is
classified as a current asset or liability when the remaining maturity of
the hedged item is less than 12 months.
As at 31 December 2018, the Consolidated Entity has not engaged
in any hedging activities and only equity accounts for the share of
the fair value changes of the cash flow hedge from the VHA joint
venture investment.
28
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 (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.
(j) Going concern
As at 31 December 2018, the Consolidated Entity has a deficiency of
net current assets of $230 million (2017: net current assets deficiency
of $170 million). Included in the Consolidated Entity’s current liabilities
is an amount of $249 million (2017: $324 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 $1,351 million at 31 December 2018. 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.
(k) Goodwill
Goodwill is initially measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquire, and the fair value of the acquirer’s previously
held equity interest in the acquire (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 acquirer’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 impairment testing.
(l) 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.
(m) 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.
(n) 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.
(o) 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.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to consider:
– 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.
29
Notes to the Financial Statements continued
For the year ended 31 December 2018
Note 1
Summary of significant
accounting policies continued
(p) 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.
(q) Segment 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.
(r) 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. VHA uses
a weighted average cost of capital (“WACC”) methodology to compute
its discount rate, with reference to external and internal data and risk
assessment. VHA compares this WACC to external market data of a
selection of peer companies and is satisfied that the WACC for VHA is
in the range that a market participant would apply. These calculations
require the use of estimates and assumptions.
30
A discounted cash flow calculation is undertaken on the approved
business plan. A discounted cash flow calculation based on VHA
five-year financial plan was prepared. 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 VHA joint venture. HTAL’s
share of VHA value in use is in excess of the investment book value.
The Directors believe that the carrying values of the Consolidated
Entity’s investment in VHA joint venture as at 31 December 2018
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 VHA 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 if management considers that it is probable that sufficient
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 profile. Despite the
Consolidated Entity being in a net profit position, no deferred tax
assets have been recognized as there is no convincing evidence that
sufficient future taxable profit will be available against which unused
tax losses or unused tax credits can be utilised.
(iii) Joint venture accounting adjustments
Depreciation of operating assets constitutes a substantial operating
cost for the VHA 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 VHA 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 VHA joint
venture should be extended to reflect the experience of the Group’s
50% interest in VHA. Further, the Government recently issued security
guidance advising network operators that the use of 5G equipment
supplied by banned vendors from certain countries would not be
permitted due to national security concerns. This had the effect of
excluding Chinese vendors such as Huawei, who is VHA’s current
provider of Radio Access Network (RAN) equipment, from taking
part in the rollout of 5G mobile network infrastructure over national
security concerns. VHA uses Huawei in its 3G and 4G radio access
network. A RFP (request for proposal) for alternative RAN vendors
was initiated in late 2018 and a selection decision is not expected
until Q2 2019. VHA will then formulate its future RAN investment plan
optimizing and balancing its existing network assets with the costs
and benefits of upgrading to 5G.
At the reporting date, there was no substantial information or plans
that would require the VHA joint venture or the Group to revise the
useful life of its existing RAN assets.
(s) Rounding of amounts to nearest thousand dollars
The Consolidated Entity is of a kind referred in Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191
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 Instrument to the nearest
thousand dollars, or in certain cases, the nearest dollar or cent.
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 (t) Parent entity financial information
The financial information for the parent entity disclosed in note 25
has been prepared on the same basis as the consolidated financial
statements, except investments in subsidiaries and VHA joint venture
entities are accounted for at cost in the financial statements of HTAL.
(u) New accounting standards and interpretations
(i) Accounting standards issued and mandatorily
effective in the current year
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 2018. These are:
• AASB 9 Financial Instruments
• AASB 15 Revenue from Contracts with Customers
The impact of the adoption of these standards and the new
accounting policies are disclosed in note 2 below.
(ii) Other accounting standards
• The VHA joint venture has elected to apply AASB 16 based on
a portfolio of leases with similar characteristics as the VHA joint
venture reasonably expects that the effects on the financial
statements of applying AASB 16 to the portfolio would not differ
materially from applying this standard to the individual leases
within that portfolio;
• The VHA joint venture has elected to use a single discount rate
to measure lease liabilities for each identified portfolio of leases
having reasonably similar characteristics and dependent on lease
term. Further, management has assessed that discount rates
across each portfolio of leases are similar taking into consideration
feedback from surveyed financial institutions on incremental
borrowing rates available for VHA joint venture as a lessee
and nature of each lease portfolio. These discount rates range
between 4.15% to 8.10% depending on the lease term;
• The VHA joint venture has elected to rely on its assessment
of whether leases are onerous by applying the requirements
of AASB 137 Provisions, Contingent Liabilities and Contingent
assets immediately before transition rather than performing an
impairment review on adoption. These onerous provisions will be
adjusted against the right of use assets recognised on transition;
A number of minor amendments have been made to other
accounting standards, the impacts of which are not material to the
financial statements of HTAL.
• The VHA joint venture has elected to exclude the initial direct costs
from the measurement of the right of use asset at the date of
initial application;
(iii) New Accounting standards issued but not
• The VHA joint venture has elected to use hindsight where
yet adopted
Certain new accounting standards and interpretations have been
published that are not mandatory for 31 December 2018 reporting
periods and have not been early adopted by the Group. The Group’s
assessment of the impact of these new standards and interpretations
is set out below.
AASB 16 – Leases
AASB 16 Leases was issued in February 2016. The new standard
will require the majority of operating leases to be accounted for on
the consolidated statement of financial position as the distinction
between an operating and finance lease is removed. Under the new
standard, an asset (the right to use the leased item) and a financial
liability to pay rentals are recognised. The only exceptions are
short-term and low-value leases.
The standard will be effective for the Group and VHA joint venture
from 1 January 2019 and both have elected to apply the modified
retrospective approach and will not restate comparative amounts
for the year prior to first adoption. The right of use assets will be
measured at the amount of the lease liabilities calculated on adoption
plus the net impact of certain right of use asset adjustments. The
lease liabilities will be measured at the present value of the remaining
lease payments that are unpaid as at 1 January 2019.
The standard will primarily affect the accounting for the Group’s and
VHA joint venture’s operating leases, in particular those for corporate,
retail, and network sites; and will also affect the accounting for
sub-leasing arrangements. As part of the transition to AASB 16
Leases, the VHA joint venture has elected to apply the following
practical expedients permitted within the transitional guidance of
the standard:
• The VHA joint venture has elected not to apply AASB 16 to
contracts that were not previously identified as containing a lease
applying AASB 117 and Interpretation 4;
applicable when determining lease term and inclusions of options
to extend or terminate the lease; and
• On a lease by lease basis the VHA joint venture has determined
whether to apply the practical expedient in relation to not
measuring the lease liability for leases with a lease term that
will end within 12 months of the date of initial application.
As at the reporting date, the VHA joint venture has non-cancellable
operating lease commitments of $1,760 million. For these
commitments, the VHA joint venture expects to recognise based
on current assessments the following:
• Lease liabilities amounting to approximately $1,008 million
to $1,233 million
• Right of use assets amounting to approximately $950 million to
$1,175 million, after approximately $58 million of adjustments for
prepayments, onerous provisions, sub-leasing arrangements and
accrued lease payments recognised at 31 December 2018.
Overall, net assets of the VHA joint venture will be unchanged, and
net current assets will be approximately $135 million to $355 million
lower due to the presentation of a portion of the lease liability as a
current liability.
The difference between the operating lease commitments as at
31 December 2018 and the lease liabilities to be recognised on
transition as at 1 January 2019 is mostly due to the following:
• Discounting to present value the lease commitments for each
identified lease portfolio that were fully in scope of AASB 16 and
not impacted by practical expedients applied; and
• Recognition of a net lease liability obligation for leases associated
with the site sharing agreement with Optus.
Both the Group and the VHA joint venture’s activities as a lessor are
not material and hence the Group and VHA joint venture does not
expect any significant impact on the financial statements, outside of
the investments in subleases as noted above.
31
Notes to the Financial Statements continued
For the year ended 31 December 2018
Note 2 Changes in accounting policies
This note explains the impact of the adoption of AASB 9 Financial
Instruments and AASB 15 Revenue from Contracts with Customers on
the group’s financial statements and discloses the new accounting
policies that have been applied from 1 January 2018, where they are
different to those applied in prior periods.
(a) Adoption of AASB 9
This standard became effective for the Group and VHA joint venture
from 1 January 2018. This standard addresses the classification,
measurement and derecognition of financial assets and financial
liabilities, introduces new rules for hedge accounting and a new
impairment model for financial assets.
Management has reviewed its financial assets and liabilities and
the following was the impact of adoption of the new standard on
1 January 2018:
• The majority of the Group and VHA joint venture’s receivables
is currently classified as loans and receivables and measured at
amortised cost. The new guidance under AASB 9 has not resulted
in any significant change to the classification and measurement of
its financial assets as these financial assets meet the conditions for
classification at amortised cost under AASB 9.
• There has been no impact on the Group and VHA joint venture’s
accounting for financial liabilities as the new requirements only
affected the accounting for financial liabilities that are designated
at fair value through profit or loss. The derecognition rules have
been transferred from AASB 139 and have not been changed.
• The new impairment model requires the recognition of impairment
provisions based on expected credit losses (ECL) rather than only
incurred credit losses as is the case under AASB 139. It applies
to financial assets classified at amortised cost. Management
has performed an assessment of the impact of AASB 9 on the
measurement of expected credit losses on adoption. The Group
and VHA joint venture have assessed historic, current and forecast
information to estimate an expected credit loss for each class of
receivable. Based on this assessment, the impact was not material.
• AASB 9 introduces changes to hedge effectiveness and
eligibility requirements to align more closely with an entity’s
risk management framework. As a general rule, more hedge
relationships might be eligible for hedge accounting, as the
standard introduces a more principles-based approach. The
VHA joint venture’s current hedge relationships will qualify as
continuing hedges upon the adoption of AASB 9. Management
has therefore assessed there is no material impact on hedged
amounts reported with the adoption AASB 9.
• The new standard also introduces expanded disclosure
requirements and changes in presentation. Where appropriate,
these have been reflected in the Group’s and VHA joint venture’s
disclosures about its financial instruments.
(b) Adoption of AASB 15
The Group and VHA joint venture have adopted the standard
using the modified retrospective approach which means that the
cumulative impact of the adoption has been recognised in retained
earnings as at 1 January 2018 and no comparatives have been
restated. The adoption of the new standard has the following
impact on the VHA joint venture’s financial statements:
• Accounting for Handset Receivables – AASB 15 requires that the total
consideration received must be allocated to hardware and service
components based on relative stand-alone selling prices. Previous
methodology allocated revenue to the separate components by
applying a valuation method measured at fair value by reference
to comparable SIM-only plans which were offered in the market by
VHA. The new methodology results in higher amounts being allocated
to the handset, of which revenue is recognised when the goods
have been dispatched to the customer, instead of service revenue
which is recognised monthly over the contract term. Discounts
provided to customers on bundles are allocated to hardware and
services based on their stand-alone selling prices. With the adoption
of AASB 15, the impact for the VHA joint venture was an increase
of $18 million of Trade and Other Receivables for legacy customer
contracts and an increase of $13 million in other current liabilities
to reflect the impacts of accounting for the stand alone selling price,
which together result in a corresponding net $5 million decrease
in accumulated losses recognised as of 1 January 2018.
• Accounting for contract costs – Under AASB 15, incremental
costs associated with acquiring and renewing a contract that are
expected to be recovered are required to be initially recognised
as an asset and expensed over the expected life of a customer
contract consistent with the transfer of the goods and services
to which the capitalised costs relate to the customer. The carrying
values of these assets are reviewed on a regular basis and, where
material, the expected lifetime credit loss is written off against
the carrying value. Contracts costs associated with acquiring
and renewing a service contract are capitalised and amortised
over the life of the customer contract. Contracts costs associated
with the sale of handsets are capitalised and amortised upfront
in line with transfer of handsets to the customer. Under the prior
year interpretation of Urgent Issues Group (UIG)1042 ‘Subscriber
Acquisition Costs in the Telecommunications Industry’, the direct
costs of acquiring customer contracts were recognised as an
asset and amortised over the lesser of the period during which
the future economic benefits were expected to be obtained and
the period of the contract. The costs included both service and
handset components for acquiring new customers. Following the
adoption of AASB 15, transition adjustments resulted in a decrease
of $10 million of contract costs and a corresponding increase in
accumulated losses recognised as at 1 January 2018.
• Accounting for Contract Liabilities – Contract liabilities relate to
unearned revenue. Any unearned revenue from Postpaid services
provided in periods after each accounting period is deferred.
Revenue from the sale of prepaid credit is deferred until such
time as the customer uses the airtime, or the credit expires.
With the adoption of AASB 15, the balances of unearned revenue
at 31 December 2017 of $138 million are reclassified from other
current liabilities to contract liabilities as at 1 January 2018.
32
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 Accordingly, HTAL’s share in the cumulative effect of cited VHA joint venture changes made to the 1 January 2018 balance sheet for the adoption
of AASB 15 Revenue from Contracts with Customers were as follows:
Balance sheet (extract)
Non-current Assets
Investment accounted for using the equity method
Total Assets
Net Assets
Accumulated losses
Total Equity
31 Dec 2017
As originally
presented
$’000
167,008
412,459
88,192
(4,186,946)
88,192
AASB 15
$’000
1 Jan 2018
Restated
$’000
(2,600)
(2,600)
(2,600)
(2,600)
(2,600)
164,408
409,859
85,592
(4,189,546)
85,592
In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on HTAL’s statement of profit or loss and
other comprehensive income and balance sheet was as follows:
PROFIT OR LOSS
Revenue
Operating expenses
Share of net losses of VHA joint venture accounted for using the equity method
Profit/(loss) for the period
BALANCE SHEET
Current Assets
Other financial assets
Investment accounted for using the equity method
Total Non-Current Assets
Total Assets
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
For the year
ended
31 December
2018
$’000
Balances
Without the
Adoption of
AASB 15
$’000
10,619
(1,162)
(4,982)
4,475
10,619
(1,162)
5,524
14,981
As at
31 December
2018
$’000
Balances
Without the
Adoption of
AASB 15
$’000
19,038
160,765
159,638
320,403
339,441
249,162
90,279
19,038
160,765
170,144
330,909
349,947
249,162
100,785
4,204,488
4,204,488
70,862
70,862
(4,185,071)
(4,174,565)
90,279
100,785
Effect of
Change
Higher/
(Lower)
$’000
–
–
(10,506)
(10,506)
Effect of
Change
Higher/
(Lower)
$’000
–
–
(10,506)
(10,506)
(10,506)
–
(10,506)
–
–
(10,506)
(10,506)
33
Notes to the Financial Statements continued
For the year ended 31 December 2018
Note 3 Revenue
Other revenue
Interest
Other income
Note 4
Income tax
(a) Income tax expense
Deferred tax
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit/(loss) from operations before income tax expense
Tax at the Australian tax rate of 30% (2017: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Share of losses of VHA joint venture
Deferred tax on temporary 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 recouped to reduce current tax expense
Unused tax losses for which no deferred tax assets have been recognised
Potential tax benefit @ 30% (2017: 30%)
All unused tax losses were incurred by Australian entities.
2018
$’000
10,585
34
10,619
2017
$’000
6,164
–
6,164
2018
$’000
2017
$’000
–
–
4,475
1,343
1,495
2,838
12
(2,850)
–
(37,557)
(11,267)
12,750
1,483
(11)
(1,472)
–
174,322
179,229
–
(9,496)
164,826
49,448
–
(4,907)
174,322
52,297
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 no recognised deferred tax assets at 31 December 2018 and 31 December 2017.
34
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018
Note 5 Current assets – Cash and cash equivalents
Cash at bank
Note 6 Loans and receivables
Total current
Total non-current
Receivable from VHA joint venture (note 17)
2018
$’000
18,598
2018
$’000
434
160,765
161,199
2017
$’000
8,884
2017
$’000
145,558
91,000
236,558
Receivable from VHA joint venture
At 31 December 2018, the $161.2 million pertains to unsecured working capital facility (2017: $236.6 million). The weighted average interest
on the working capital facility was charged at 4.0 % p.a. (2017: 4.10%).
Further information relating to receivable from VHA 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
2018
$’000
161,199
161,199
2017
$’000
236,558
236,558
For an analysis of the sensitivity of other financial assets to 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 receivable
is non-current with no indication of impairment. 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.
35
Notes to the Financial Statements continued
For the year ended 31 December 2018
Note 7 Non-current assets – Investment accounted for using the equity method
Interest in VHA joint venture
2018
$’000
2017
$’000
159,638
167,008
As at 31 December 2018 and 31 December 2017, HTAL has only one joint venture, VHA. 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 VHA 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:
(a) Summarised Statement of Financial position of VHA
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net Assets/(Liabilities)
Proportion of the Consolidated Entity’s ownership
Share of the VHA joint venture’s net assets
Goodwill
VHA joint venture accounting adjustments
Carrying amount of the investment
2018
$’000
2017
$’000
1,372,576
1,124,321
6,816,640
7,391,341
(3,387,483)
(1,777,061)
(5,723,800)
(7,531,448)
(922,067)
(792,847)
50%
50%
(461,034)
(396,424)
165,321
455,351
159,638
165,321
398,111
167,008
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 2018, HTAL’s share of VHA’s net current assets deficiency is $1,007.5 million (2017: net current assets deficiency of
$326.4 million). The increase is mainly driven by reclassification of VHA’s $1.7 billion Syndicated Bifurcated Facility from non-current liabilities
to current liabilities as the facility term ends in September 2019. 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.
36
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 (b) 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
VHA joint venture accounting adjustments
Share of VHA 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
2018
$’000
2017
$’000
3,646,890
3,457,931
(3,771,333)
(3,635,775)
(124,443)
(177,844)
–
–
(124,443)
(177,844)
423
(413)
(124,020)
(178,257)
(62,222)
57,240
(4,982)
(88,922)
46,423
(42,499)
642,713
356,210
(2,050,761)
(500,232)
(5,544,204)
(7,423,075)
(868,690)
(797,107)
3,808
4,186
(361,802)
(356,723)
^
Depreciation and amortisation under HTAL accounting estimates are $754.2 million for year ended 31 December 2018 (2017: $704.3 million).
The differences are primarily related to differences in the estimated economic useful lives of property, plant and equipment.
(c) Reconciliation of interest in VHA joint venture
Investment brought forward
Adjustment on the adoption of AASB 15 (net of tax)
Loss for the year
Share of change in fair value of cash flow hedges, net of tax
Interest in VHA joint venture at 31 December
2018
$’000
2017
$’000
167,008
209,714
(2,600)
(4,982)
212
–
(42,499)
(207)
159,638
167,008
The consolidated financial statements incorporate the assets, liabilities and results of the following VHA joint venture in accordance with the
accounting policy described in note 1(b).
37
Notes to the Financial Statements continued
For the year ended 31 December 2018
Note 8 Controlled entities
The consolidated financial statements incorporate the assets, liabilities and results of the following controlled entities in accordance with the
accounting policy described in note 1(b):
Name of controlled entity
Hutchison 3G Australia Holdings Pty Limited**
EQUITY HOLDING *
Country of
Incorporation
Class of
Shares
Australia
Ordinary
2018
%
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 instrument 2016/914 issued by the Australian
Securities and Investments Commission.
Note 9 Current liabilities – Payables
Other creditors
Payables to VHA joint venture (note 17)
Further information relating to payables to VHA joint venture is set out in note 17.
The carrying amounts of the Consolidated Entity’s other payables are denominated in Australian Dollars:
Australian Dollars
2018
$’000
219
153
372
2018
$’000
372
372
2017
%
100
2017
$’000
168
74
242
2017
$’000
242
242
(a) Liquidity risk
A summarised analysis of the Consolidated Entity’s sensitivity of payables to liquidity rate risk can be found in note 22.
Note 10 Current liabilities – Other financial liabilities
Loan from an entity within the CKHH Group (note 17)
2018
$’000
2017
$’000
248,790
324,025
(a) 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.
(b) 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
2018
$’000
2017
$’000
1,600,000
1,600,000
(248,790)
(324,025)
1,351,210
1,275,975
38
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018
Note 11 Contributed equity
Share capital
Ordinary shares (fully paid)
2018
Shares
2017
Shares
2018
$’000
2017
$’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 2018 and 31 December 2017.
(c) Options
There are no options outstanding as at the statement of financial position date.
(d) Capital risk management
The Consolidated Entity’s primary objectives when managing capital are to safeguard its ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders, by pricing loans receivables commensurately with the level of risk.
The Consolidated Entity defines capital as total equity attributable to shareholders of the Group, comprising issued share capital and reserves,
as shown in the consolidated statement of financial position. The Consolidated Entity actively and regularly reviews and manages its capital
structure to ensure capital and shareholder returns, taking into consideration the future capital requirements of the Consolidated Entity and
capital efficiency, projected operating cash flows and projected capital expenditures.
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 2018 and 31 December 2017 were as follows:
Gearing ratio
2018
72%
2017
78%
39
Notes to the Financial Statements continued
For the year ended 31 December 2018
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
Adjustment on the adoption of AASB 15 (net of tax)
Accumulated losses at 1 January
2018
$’000
54,887
95
15,880
70,862
(117)
212
95
2018
$’000
(2,600)
2017
$’000
54,887
(117)
15,880
70,650
90
(207)
(117)
2017
$’000
–
(4,186,946)
(4,149,389)
Profit/(loss) attributable to the members of Hutchison Telecommunications (Australia) Limited
4,475
(37,557)
Accumulated losses at 31 December
(4,185,071)
(4,186,946)
(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 VHA 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:
(i) recognise the grant date fair value of options issued to employees but not exercised; and
(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.
40
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018
Note 13 Director and key management personnel compensation
(a) Director and key management personnel compensation
Short term employee benefits
2018
$
2017
$
109,500
109,500
Other key management personnel (excluding Directors) were transferred to VHA on merger in 2009.
(b) Loans to key management personnel and other transactions with key management personnel
There were no loans made to Directors of the Company, including their personally-related entities, during the years ended 31 December 2018
and 31 December 2017. There were no other transactions with the Directors of the Company for the years ended 31 December 2018 and
31 December 2017.
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
2018
$
2017
$
105,350
105,350
105,350
103,500
103,500
103,500
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.
Note 15 Contingencies
There were no contingencies for HTAL or its controlled entities at 31 December 2018 and 31 December 2017. The Directors are not aware of
any other material contingent liabilities existing at the reporting date.
Contingencies for VHA joint venture are disclosed below:
Guarantees
Secured guarantees
Unsecured guarantees
Total contingencies
2018
$’000
46,195
18,935
65,130
2017
$’000
92,181
22,611
114,792
VHA’s contingent liabilities consist of $46.2 million (2017: $92.2 million) secured guarantees. In order the to support the issuance of the
guarantees, VHA has placed $23.1 million deposit with the issuing bank.
41
Notes to the Financial Statements continued
For the year ended 31 December 2018
Note 16 Commitments
There were no commitments contracted by HTAL or its controlled entities not recognised as liabilities, payable at 31 December 2018 and
31 December 2017.
Commitments for the VHA joint venture are disclosed below:
VHA’s commitments
Operating leases
Other commitments
Capital commitments
2018
$’000
2017
$’000
1,760,478
1,553,654
127,666
360,801
265,316
508,572
VHA’s operating leases pertain to various sites, offices, retail shops and warehouses under non-cancellable operating leases expiring within one
to forty years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
VHA’s other commitments generally pertain to payment of information technology and network support services under contracts in existence
at the reporting date but not recognised as liabilities.
VHA’s capital commitments pertain to the acquisition of plant and equipment contracted for at the reporting date but not recognised as
liabilities or payables.
Commitments in respect of Mobile JV Pty Ltd
Mobile JV Pty Ltd is a 50% spectrum joint venture between VHA and TPG Telecom Limited (“TPG Telecom”). It was a successful bidder in the
recent auction for the 3.6GHz spectrum in December 2018. Mobile JV Pty Ltd will pay $263.3 million in March 2020 for the lots it acquired in
this auction. VHA is responsible for funding one half of the purchase price, being $131.65 million, at the time of payment. This amount is not
included table above.
Note 17 Related party transactions
(a) Parent entities
The holding company and parent entity is Hutchison Telecommunications (Amsterdam) B.V. which, at 31 December 2018, owns approximately
88% of the issued ordinary shares of Hutchison Telecommunications (Australia) Limited. 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; Justin Herbert GARDENER; LAI Kai Ming, Dominic; John Michael SCANLON; Frank John SIXT, Ronald Joseph SPITHILL
and WOO Chiu Man, Cliff.
(c) Key management personnel compensation
Disclosures relating to key management personnel compensation are set out in note 13.
42
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 (d) Transactions with related parties
During the year, the following transactions occurred with related parties:
Loans to related parties
Advanced to VHA joint venture
Repayments from VHA joint venture
Loans from related parties
Advanced from an entity within the CKHH Group
Repayments to an entity within the CKHH Group
Interest revenue
VHA joint venture
Operating expenses
VHA joint venture
2018
$’000
2017
$’000
(40,000)
(200,000)
115,235
12,837
40,000
(115,235)
200,000
(12,837)
10,369
6,073
(485)
(485)
Advances to VHA joint venture represent funds advanced under the terms of an agreement with the VHA joint venture. The funds advanced
from an entity within the CKHH Group are on an interest free basis under the agreement.
(e) Transactions of VHA joint venture with related parties within the CKHH Group
During the year, the following transactions occurred with related parties:
Purchases of goods and services
Service fee paid/payable to other related parties
Roaming fee paid/payable to other related parties
Provision of services
Service fee received/receivable from other related parties
Roaming income received/receivable from other related parties
Other transactions
Guarantee fee paid/payable
Interest expenses paid/payable
2018
$’000
(2,486)
(403)
1,020
1,091
2017
$’000
(2,756)
(379)
1,040
1,734
(72,079)
(10,369)
(74,919)
(6,073)
(f) Outstanding balances
The following balances are outstanding at the statement of financial position date in relation to transactions with related parties:
Current financial assets
VHA joint venture (note 6)
Non-current financial assets
VHA joint venture (note 6)
Payables
VHA joint venture (note 9)
Current liabilities – Other financial liabilities
Entity within the CKHH Group (note 10)
2018
$’000
2017
$’000
434
145,558
160,765
91,000
(153)
(74)
(248,790)
(324,025)
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.
43
Notes to the Financial Statements continued
For the year ended 31 December 2018
Note 17 Related party transactions continued
(g) Outstanding balances of VHA joint venture with related parties within the CKHH Group
The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:
Current receivable
Hutchison Telecommunications (Australia) Limited
Current payable
Swap payments to entities within jointly controlled parents’ group
Interest payable to entities within jointly controlled parents’ group
Non-current payable
Accrued guarantee fee payable to entities within jointly controlled parents’ group
Interest payable to entities within jointly controlled parents’ group
Swaps entered with CKHH Group
Current assets
Current liabilities
Non-current assets
Net interest revenue/(expenses)
2018
$’000
153
(964)
(191)
2017
$’000
74
–
(832)
(1,674)
(384,123)
–
(4,674)
14,671
–
41,142
22,792
–
(551)
372,880
(11,625)
(h) 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. All these loans have been disclosed.
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 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 Instrument 2016/785 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. There has been no changes to
the Deeds of cross guarantee as at 31 December 2018 in comparison to 31 December 2017.
(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’.
44
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018
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 2018 and 31 December 2017.
Statement of profit or loss and other comprehensive income
Revenue
Other operating expenses
Income before income tax
Income tax expense
Income for the year
Share of movements in consolidated accumulated losses
Accumulated losses at the beginning of the financial year
Income for the year
Accumulated losses at the end of the financial year
2018
$’000
10,619
(1,162)
9,457
–
9,457
2017
$’000
6,164
(1,222)
4,942
–
4,942
(4,076,756)
(4,081,698)
9,457
4,942
(4,067,299)
(4,076,756)
(b) Statement of financial position
Set out below is a statement of financial position as at 31 December 2018 and 31 December 2017 of the Closed Group consisting of
H3GAH and HTAL.
ASSETS
Current Assets
Cash and cash equivalents
Loans and receivable
Other receivables
Total Current Assets
Non-current Assets
Loans and receivable
Other financial 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
2018
$’000
2017
$’000
18,598
434
6
8,884
145,558
9
19,038
154,451
160,765
277,315
438,080
457,118
372
248,790
249,162
249,162
207,956
91,000
277,315
368,315
522,766
242
324,025
324,267
324,267
198,499
4,204,488
4,204,488
70,767
70,767
(4,067,299)
(4,076,756)
207,956
198,499
45
Notes to the Financial Statements continued
For the year ended 31 December 2018
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 2018, 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 telecommunications services. As such, the Consolidated Entity believes it is appropriate that
there is one operating segment, investment in telecommunications services.
Key financial information used by the chief operating decision maker of the Consolidated Entity when evaluating the investment in
telecommunications services operating segment includes:
HTAL’s share of the following items of VHA*
Total Revenue
Net loss
* After VHA joint venture accounting adjustments.
2018
$’000
2017
$’000
1,823,445
1,728,966
(4,982)
(42,499)
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.
Note 20 Reconciliation of profit/(loss) after income tax to net cash inflows from
operating activities
2018
$’000
4,475
4,982
127
130
9,714
2018
$’000
18,598
(248,790)
(230,192)
2017
$’000
(37,557)
42,499
(492)
(35)
4,415
2017
$’000
8,884
(324,025)
(315,141)
Total
$’000
Borrowings due
within 1 year
$’000
Borrowings due
after 1 year
$’000
–
–
–
–
(324,025)
(315,141)
–
75,235
9,714
75,235
(248,790)
(230,192)
Profit/(loss) after income tax
Share of losses of VHA joint venture partnership accounted for using equity method (see note 7)
Change in operating assets and liabilities
Increase/(decrease) in other financial assets
Decrease/(increase) in payables
Net cash inflows from operating activities
Net debt reconciliation
Cash and cash equivalents
Borrowings
Net debt
Net debt as at 1 January 2018
Cash flows
Other loans (non-cash) from shareholder
Net debt as at 31 December 2018
46
Cash
$’000
8,884
9,714
–
18,598
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018
Note 21 Earnings per share
(a) Basic earnings per share
CONSOLIDATED
2018
Cents
2017
Cents
Profit/(loss) attributable to the ordinary equity holders of the Consolidated Entity
0.03
(0.28)
(b) Diluted earnings per share
Profit/(loss) attributable to the ordinary equity holders of the Consolidated Entity
0.03
(0.28)
(c) Earnings used in calculating earnings per share
Basic earnings per share
Profit/(loss) attributable to the ordinary equity holders of the Consolidated Entity
used in calculating basic earnings per share
Diluted earnings per share
Profit/(loss) attributable to the ordinary equity holders of the Consolidated Entity used in calculating
diluted earnings per share
CONSOLIDATED
2018
$’000
2017
$’000
4,475
(37,557)
4,475
(37,557)
CONSOLIDATED
2018
Number
2017
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 (2017: nil) options outstanding at 31 December 2018 that are anti-dilutive and accordingly there was no impact on the earnings
per share calculation for the year ended 31 December 2018.
47
Notes to the Financial Statements continued
For the year ended 31 December 2018
Note 22 Financial risk management
The Consolidated Entity’s activities expose it to a variety of financial risks: market risk (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 the management of HTAL under policies approved by the Board of Directors. Management 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 interest rate risk, credit risk, use of derivative financial
instruments and non-derivative financial instruments, and investment of excess liquidity.
(a) Market risk
For the presentation of market risks (including interest rate risk, exchange rate risk and market price risk), AASB 7 Financial instruments:
disclosures requires disclosure of a sensitivity analysis for each type of market 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.
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. 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. 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 rate risk
The Consolidated Entity’s main interest rate risk arises from cash balances and other financial assets. Management has assessed there is
minimal material interest rate risk on both the other loans receivables from VHA and the loan from an entity within the CKHH Group. This is
because a 25 basis points change in the Australian market rate on the loans and receivables will result in an immaterial $27k change in interest
revenue based on 31 December 2018. There is no interest rate risk in relation to the loan from an entity within the CKHH Group as it is an
interest free financing facility.
(ii) Foreign currency exchange risk
Management has assessed there is minimal foreign currency exchange risk as the Consolidated Entity does not carry any material balances in
foreign currency.
(iii) Summarised sensitivity analysis
The following table summarises the sensitivity of the Consolidated Entity’s financial assets to interest rate risk.
INTEREST RATE RISK
-1%
+1%
Post-tax loss
$’000
Other equity
$’000
Post-tax loss
$’000
Other equity
$’000
(186)
(1,612)
(1,798)
–
–
–
186
1,612
1,798
–
–
–
INTEREST RATE RISK
-1%
+1%
Post-tax loss
$’000
Other equity
$’000
Post-tax loss
$’000
Other equity
$’000
(89)
(2,366)
(2,455)
–
–
–
89
2,366
2,455
–
–
–
Carrying
amount
$’000
18,598
161,199
179,797
Carrying
amount
$’000
8,884
236,557
245,441
31/12/2018
Financial assets
Cash and cash equivalents
Loans and receivable
Total increase (decrease)
31/12/2017
Financial assets
Cash and cash equivalents
Loans and receivable
Total increase (decrease)
48
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 (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 from loans and receivables from the joint venture VHA. The recoverability of the loan and receivable is supported by
a letter of support from CK Hutchison Holdings Limited and Vodafone Group Plc.
(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. The Group maintains 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.
31/12/2018
Cash and cash equivalents
Loans and receivables
Payables
Other financial liabilities
Total
31/12/2017
Cash and cash equivalents
Loans and receivables
Payables
Other financial liabilities
Total
Weighted
average
interest
rate
1.1%
4.0%
–
–
Weighted
average
interest
rate
1.8%
6.7%
–
–
Less than
1 year
$’000
18,598
434
(372)
(248,790)
(230,130)
Less than
1 year
$’000
8,884
145,558
(242)
(324,025)
(169,825)
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
Over
5 years
$’000
–
160,765
–
–
160,765
–
–
–
–
–
–
–
–
–
–
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
Over
5 years
$’000
–
91,000
–
–
91,000
–
–
–
–
–
–
–
–
–
–
Total
$’000
18,598
161,199
(372)
(248,790)
(69,365)
Total
$’000
8,884
236,558
(242)
(324,025)
(78,825)
Note 23 Proposed merger between joint venture investment VHA and TPG Telecom
On 30 August 2018, HTAL’s joint venture investment VHA entered into a Scheme Implementation Deed with TPG Telecom under which the
companies have agreed a proposed merger of equals to establish a fully integrated telecommunications operator in Australia.
The merger will be implemented via a TPG Telecom Scheme of Arrangement, with the new merged group listed on the Australian Securities
Exchange (“ASX”) and renamed ‘TPG Telecom Limited’ in conjunction with the implementation of the scheme.
The implementation of the Scheme remains subject to approval by the Federal Court and TPG Telecom shareholders as well as other regulatory
approval processes. On the 13th December 2018, the Australian Competition and Consumer Commission (“ACCC”) released a Statement
of Issues detailing the concerns it had with the proposed merger and the impact on competition in Australia’s mobile market. VHA
management are currently working with the ACCC to respond to its concerns. At present, the ACCC is due to provide its decision on 11 April
2019. If the required regulatory clearances are obtained the merger is currently expected to complete in 2019.
VHA is also undertaking a restructure of its debt facilities as a condition of the Scheme Implementation Deed. VHA has obtained commitments
from a syndicate of banks. The refinancing is expected to complete concurrently with the implementation of the merger.
Following completion of the merger, VHA shareholders will own 50.1% of the equity of the merged group, with TPG Telecom shareholders owning
the remaining 49.9%. At the completion of the merger, HTAL shareholders will own 25.05% of the equity of the merged group (2018: 50%).
Further details about the planned merger are set out in the market announcements made on 30 August 2018.
49
Notes to the Financial Statements continued
For the year ended 31 December 2018
Note 24 Events occurring after the reporting date
There has been no other matter or circumstances that has arisen after the reporting date that has significantly affected or may significantly affect:
(i) The operations of the Company and Consolidated Entity in future financial years, or
(ii) The results of those operations in future financial years, or
(iii) The state of affairs of the Company and Consolidated Entity in future financial years.
Note 25 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
Profit/(Loss) for the year
Total comprehensive Profit/(Loss) for the year
2018
$’000
2017
$’000
179,802
277,314
457,116
249,162
249,162
207,954
154,451
368,315
522,766
324,267
324,267
198,499
4,204,488
4,204,488
15,880
15,880
(4,012,412)
(4,021,869)
207,956
198,499
9,457
9,457
4,942
4,942
(b) Commitments and Contingencies
There were no commitments contracted for by HTAL but not recognised as liabilities, payable at 31 December 2018 and 31 December 2017.
The Directors of the Parent Entity are not aware of any other material contingent liabilities existing at the reporting date.
As at 31 December 2018, the Parent Entity has a deficiency of net current assets of $69 million (2017: deficiency of net current assets of
$170 million). Included in the Parent Entity’s current liabilities is an amount of $249 million (2016: $324 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 $1,351 million at 31 December 2018. 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.
(c) HTAL’s investment in H3GAH
Investment in H3GAH
Investment at cost
Prior year Impairment recognised to date
Value of investment
50
2018
$’000
2017
$’000
3,664,655
3,664,655
3,387,340
3,387,340
277,315
277,315
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018
Directors’ Declaration
In the Directors’ opinion:
(a) the financial statements and notes set out on pages 23 to 50 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 2018 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
27 February 2019
Director
27 February 2019
51
Independent Auditor’s Report
Independent auditor’s report
To the members of Hutchison Telecommunications (Australia) Limited
Our opinion
Report on the audit of the financial report
Independent auditor’s report
To the members of Hutchison Telecommunications (Australia) Limited
Report on the audit of the financial report
Independent auditor’s report
Independent auditor’s report
Our opinion
To the members of Hutchison Telecommunications (Australia) Limited
To the members of Hutchison Telecommunications (Australia) Limited
In our opinion:
Report on the audit of the financial report
Report on the audit of the financial report
The accompanying financial report of Hutchison Telecommunications (Australia) Limited (the
Company) and its controlled entities (together the Group) is in accordance with the Corporations Act
Our opinion
Our opinion
2001, including:
In our opinion:
In our opinion:
(a)
The accompanying financial report of Hutchison Telecommunications (Australia) Limited (the
The accompanying financial report of Hutchison Telecommunications (Australia) Limited (the
Company) and its controlled entities (together the Group) is in accordance with the Corporations Act
Company) and its controlled entities (together the Group) is in accordance with the Corporations Act
(b)
2001, including:
2001, including:
giving a true and fair view of the Group's financial position as at 31 December 2017 and of its
What we have audited
(a)
(a)
financial performance for the year then ended
The Group financial report comprises:
The accompanying financial report of Hutchison Telecommunications (Australia) Limited (the
Company) and its controlled entities (together the Group) is in accordance with the Corporations Act
2001, including:
giving a true and fair view of the Group's financial position as at 31 December 2017 and of its
financial performance for the year then ended
giving a true and fair view of the Group's financial position as at 31 December 2017 and of its
giving a true and fair view of the Group's financial position as at 31 December 2017 and of its
financial performance for the year then ended
financial performance for the year then ended
complying with Australian Accounting Standards and the Corporations Regulations 2001.
In our opinion:
(a)
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
the directors’ declaration.
the consolidated statement of cash flows for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of financial position as at 31 December 2017
complying with Australian Accounting Standards and the Corporations Regulations 2001.
the consolidated statement of financial position as at 31 December 2017
complying with Australian Accounting Standards and the Corporations Regulations 2001.
the notes to the financial statements, which include a summary of significant accounting
policies
(b)
(b)
What we have audited
What we have audited
What we have audited
The Group financial report comprises:
The Group financial report comprises:
The Group financial report comprises:
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the consolidated statement of profit or loss and other comprehensive income for the year then
the consolidated statement of financial position as at 31 December 2017
the consolidated statement of financial position as at 31 December 2017
ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of changes in equity for the year then ended
the notes to the financial statements, which include a summary of significant accounting
policies
the consolidated statement of cash flows for the year then ended
the consolidated statement of cash flows for the year then ended
the directors’ declaration.
the consolidated statement of profit or loss and other comprehensive income for the year then
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
ended
Basis for opinion
the notes to the financial statements, which include a summary of significant accounting
the notes to the financial statements, which include a summary of significant accounting
policies
policies
the directors’ declaration.
the directors’ declaration.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
Basis for opinion
Basis for opinion
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
our opinion.
those standards are further described in the Auditor’s responsibilities for the audit of the financial
those standards are further described in the Auditor’s responsibilities for the audit of the financial
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
report section of our report.
report section of our report.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
our opinion.
our opinion.
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
Independence
Independence
in accordance with the Code.
We are independent of the Group in accordance with the auditor independence requirements of the
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Our audit approach
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
An audit is designed to provide reasonable assurance about whether the financial report is free from
in accordance with the Code.
in accordance with the Code.
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
Our audit approach
Our audit approach
users taken on the basis of the financial report.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
An audit is designed to provide reasonable assurance about whether the financial report is free from
An audit is designed to provide reasonable assurance about whether the financial report is free from
PricewaterhouseCoopers, ABN 52 780 433 757
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
One International Towers Sydney, Watermans Quay, Barangaroo, GPO Box 2650, Sydney, NSW 2001
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
users taken on the basis of the financial report.
users taken on the basis of the financial report.
Liability limited by a scheme approved under Professional Standards Legislation.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO Box 2650, Sydney, NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
PricewaterhouseCoopers, ABN 52 780 433 757
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO Box 2650, Sydney, NSW 2001
One International Towers Sydney, Watermans Quay, Barangaroo, GPO Box 2650, Sydney, NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
52
52
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018
Independent auditor’s report
To the members of Hutchison Telecommunications (Australia) Limited
Report on the audit of the financial report
Our opinion
In our opinion:
2001, including:
The accompanying financial report of Hutchison Telecommunications (Australia) Limited (the
Company) and its controlled entities (together the Group) is in accordance with the Corporations Act
(a)
giving a true and fair view of the Group's financial position as at 31 December 2017 and of its
financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
the consolidated statement of financial position as at 31 December 2017
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the financial statements, which include a summary of significant accounting
policies
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
Independent auditor’s report
structure of the Group, its accounting processes and controls and the industry in which it operates.
Our audit approach
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
To the members of Hutchison Telecommunications (Australia) Limited
opinion on the financial report as a whole, taking into account the geographic and management
An audit is designed to provide reasonable assurance about whether the financial report is free from
structure of the Group, its accounting processes and controls and the industry in which it operates.
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
Report on the audit of the financial report
Our opinion
In our opinion:
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO Box 2650, Sydney, NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
The accompanying financial report of Hutchison Telecommunications (Australia) Limited (the
Company) and its controlled entities (together the Group) is in accordance with the Corporations Act
2001, including:
(a)
(b)
Materiality
giving a true and fair view of the Group's financial position as at 31 December 2017 and of its
financial performance for the year then ended
complying with Australian Accounting Standards and the Corporations Regulations 2001.
For the purpose of our audit we used overall Group materiality of $7.8 million, which represents
Materiality
approximately 5% of the Group’s loss before tax (based on an average of the current year and preceding four
years).
For the purpose of our audit we used overall Group materiality of $7.8 million, which represents
We applied this threshold, together with qualitative considerations, to determine the scope of our audit and
approximately 5% of the Group’s loss before tax (based on an average of the current year and preceding four
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
years).
financial report as a whole.
the consolidated statement of financial position as at 31 December 2017
What we have audited
The Group financial report comprises:
the consolidated statement of changes in equity for the year then ended
We applied this threshold, together with qualitative considerations, to determine the scope of our audit and
We chose Group loss before tax because, in our view, it is a benchmark against which the performance of the
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
Group is most commonly measured. Due to fluctuations in profit and loss from year to year, we chose a five
financial report as a whole.
year average.
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
We chose Group loss before tax because, in our view, it is a benchmark against which the performance of the
We utilized a 5% threshold based on our professional judgment, noting it is within the range of commonly
Group is most commonly measured. Due to fluctuations in profit and loss from year to year, we chose a five
acceptable thresholds.
year average.
the notes to the financial statements, which include a summary of significant accounting
policies
Audit Scope
We utilized a 5% threshold based on our professional judgment, noting it is within the range of commonly
the directors’ declaration.
acceptable thresholds.
Our audit focused on where the Company’s Directors made subjective judgements; for example, significant
Audit Scope
accounting estimates involving assumptions and inherently uncertain future events.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
Basis for opinion
The Group’s business activities are predominantly conducted through its 50% joint venture investment in
Our audit focused on where the Company’s Directors made subjective judgements; for example, significant
Vodafone Hutchison Australia Pty Limited (VHA), a telecommunications service provider operating in
accounting estimates involving assumptions and inherently uncertain future events.
Australia. The Group’s share of the results of VHA are included in the Group’s financial report as described in
The Group’s business activities are predominantly conducted through its 50% joint venture investment in
Note 1(b).
Vodafone Hutchison Australia Pty Limited (VHA), a telecommunications service provider operating in
Australia. The Group’s share of the results of VHA are included in the Group’s financial report as described in
remaining balances of the Group in order to obtain sufficient appropriate audit evidence as a basis for our
Note 1(b).
opinion on the Group financial report as a whole.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We focussed our audit on the financial information of VHA as well as conducting procedures over the
We focussed our audit on the financial information of VHA as well as conducting procedures over the
Key audit matters
remaining balances of the Group in order to obtain sufficient appropriate audit evidence as a basis for our
opinion on the Group financial report as a whole.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
Key audit matters are those matters that, in our professional judgement, were of most significance in
Key audit matters
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
Key audit matters are those matters that, in our professional judgement, were of most significance in
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
our audit of the financial report for the current period. The key audit matters were addressed in the
particular audit procedure is made in that context. We communicated the key audit matters to the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
Audit and Risk Committee.
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Committee.
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
Our audit approach
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO Box 2650, Sydney, NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
53
53
Independent Auditor’s Report continued
Independent auditor’s report
To the members of Hutchison Telecommunications (Australia) Limited
Key audit matter
How our audit addressed the key audit matter
Estimate of useful life of network assets of
VHA
We tested the accuracy of the calculation for the
adjustment to useful lives by a re-performance of
depreciation calculations on a sample basis.
(a)
(b)
In our opinion:
Our opinion
the consolidated statement of cash flows for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of financial position as at 31 December 2017
What we have audited
The Group financial report comprises:
complying with Australian Accounting Standards and the Corporations Regulations 2001.
How our audit addressed the key audit matter
We discussed the adjustments with management and
the Directors, who explained that the rationale for
We tested the accuracy of the calculation for the
making the adjustments was to reflect a longer useful
adjustment to useful lives by a re-performance of
The accompanying financial report of Hutchison Telecommunications (Australia) Limited (the
life of these assets, consistent with the experience of
Company) and its controlled entities (together the Group) is in accordance with the Corporations Act
depreciation calculations on a sample basis.
the Group and Hutchison Whampoa Limited as the
2001, including:
controlling entity and their assessment of the impact of
We discussed the adjustments with management and
anticipated technology developments.
the Directors, who explained that the rationale for
making the adjustments was to reflect a longer useful
We evaluated the assessment of the useful life of
life of these assets, consistent with the experience of
network assets. In particular, we:
the Group and Hutchison Whampoa Limited as the
controlling entity and their assessment of the impact of
anticipated technology developments.
Report on the audit of the financial report
Depreciation of network assets constitutes a
Key audit matter
substantial operating cost for the joint venture. The
cost of those assets is charged as a depreciation
Estimate of useful life of network assets of
expense over the estimated useful lives of the
VHA
respective assets (using the straight-line method) and
this is reflected in the “share of net losses of a joint
Depreciation of network assets constitutes a
venture accounted for using the equity method” in the
substantial operating cost for the joint venture. The
Group’s consolidated statement of profit or loss and
giving a true and fair view of the Group's financial position as at 31 December 2017 and of its
cost of those assets is charged as a depreciation
other comprehensive income. The Directors have
financial performance for the year then ended
expense over the estimated useful lives of the
formed a judgement that the useful lives of certain
respective assets (using the straight-line method) and
network assets are different (usually longer) to the
this is reflected in the “share of net losses of a joint
useful lives used to calculate depreciation charges by
venture accounted for using the equity method” in the
VHA. Accordingly, adjustments to the useful lives of
Group’s consolidated statement of profit or loss and
assets are made when the Group’s 50% interest in the
other comprehensive income. The Directors have
joint venture VHA is incorporated into the Group’s
formed a judgement that the useful lives of certain
consolidated financial report each year. This is to
network assets are different (usually longer) to the
reflect the application of the Group’s network assets
useful lives used to calculate depreciation charges by
useful lives accounting policy being up to 20 years for
VHA. Accordingly, adjustments to the useful lives of
certain categories as described in Note 1(r) (iii) of the
assets are made when the Group’s 50% interest in the
financial statements.
joint venture VHA is incorporated into the Group’s
consolidated financial report each year. This is to
The Directors’ estimate of the useful lives of network
reflect the application of the Group’s network assets
assets was a key audit matter as it requires the
useful lives accounting policy being up to 20 years for
Directors’ to exercise significant judgement to make a
certain categories as described in Note 1(r) (iii) of the
collective assessment on the likely future use of the
financial statements.
network assets based on historical experience with
similar assets and the potential impact of anticipated
The Directors’ estimate of the useful lives of network
technological changes on existing assets. The
assets was a key audit matter as it requires the
estimation is impacted by company-specific factors
Directors’ to exercise significant judgement to make a
along with broader industry considerations which
collective assessment on the likely future use of the
results in useful lives of identical types of assets
network assets based on historical experience with
differing from company to company.
similar assets and the potential impact of anticipated
technological changes on existing assets. The
estimation is impacted by company-specific factors
along with broader industry considerations which
results in useful lives of identical types of assets
differing from company to company.
considered the Group’s view of the impact of
technological developments on existing
assets. We noted that the introduction of new
generation communication standards such as
4G/LTE did not necessarily result in a
complete obsolescence of the existing 3G
considered the Group’s view of the impact of
network assets as they remain integral to
technological developments on existing
ensuring the operational effectiveness of the
assets. We noted that the introduction of new
telecommunications network and that this
generation communication standards such as
was likely to occur again with the introduction
4G/LTE did not necessarily result in a
of new generation technology.
complete obsolescence of the existing 3G
network assets as they remain integral to
considered the nature of the
ensuring the operational effectiveness of the
telecommunications industry where there are
telecommunications network and that this
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
varying practices with regards to useful lives
was likely to occur again with the introduction
those standards are further described in the Auditor’s responsibilities for the audit of the financial
of new generation technology.
adopted by operators. We compared the
report section of our report.
estimate of useful lives against other
telecommunication operators in Australia and
considered the nature of the
overseas, and the Australian Taxation Office
telecommunications industry where there are
which suggested useful lives of between 8 – 25
varying practices with regards to useful lives
years. We noted that the Group’s estimate of
adopted by operators. We compared the
useful life of these assets is within this range.
estimate of useful lives against other
telecommunication operators in Australia and
overseas, and the Australian Taxation Office
which suggested useful lives of between 8 – 25
years. We noted that the Group’s estimate of
useful life of these assets is within this range.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the financial statements, which include a summary of significant accounting
policies
We evaluated the assessment of the useful life of
network assets. In particular, we:
the directors’ declaration.
Basis for opinion
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO Box 2650, Sydney, NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
54
54
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018
Key audit matter
How our audit addressed the key audit matter
Estimate of useful life of network assets of
We tested the accuracy of the calculation for the
VHA
Depreciation of network assets constitutes a
substantial operating cost for the joint venture. The
cost of those 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 the
Group’s consolidated statement of profit or loss and
other comprehensive income. The Directors have
formed a judgement that the useful lives of certain
network assets are different (usually longer) to the
useful lives used to calculate depreciation charges by
VHA. Accordingly, adjustments to the useful lives of
assets are made when the Group’s 50% interest in the
joint venture VHA is incorporated into the Group’s
consolidated financial report each year. This is to
reflect the application of the Group’s network assets
useful lives accounting policy being up to 20 years for
certain categories as described in Note 1(r) (iii) of the
financial statements.
adjustment to useful lives by a re-performance of
depreciation calculations on a sample basis.
We discussed the adjustments with management and
the Directors, who explained that the rationale for
making the adjustments was to reflect a longer useful
life of these assets, consistent with the experience of
the Group and Hutchison Whampoa Limited as the
controlling entity and their assessment of the impact of
anticipated technology developments.
We evaluated the assessment of the useful life of
network assets. In particular, we:
considered the Group’s view of the impact of
technological developments on existing
assets. We noted that the introduction of new
generation communication standards such as
4G/LTE did not necessarily result in a
complete obsolescence of the existing 3G
network assets as they remain integral to
ensuring the operational effectiveness of the
telecommunications network and that this
was likely to occur again with the introduction
of new generation technology.
(a)
(b)
Our opinion
What we have audited
The Group financial report comprises:
complying with Australian Accounting Standards and the Corporations Regulations 2001.
giving a true and fair view of the Group's financial position as at 31 December 2017 and of its
financial performance for the year then ended
Independent auditor’s report
To the members of Hutchison Telecommunications (Australia) Limited
The accompanying financial report of Hutchison Telecommunications (Australia) Limited (the
Company) and its controlled entities (together the Group) is in accordance with the Corporations Act
2001, including:
considered the nature of the
telecommunications industry where there are
How our audit addressed the key audit matter
varying practices with regards to useful lives
adopted by operators. We compared the
We tested the accuracy of the calculation for the
estimate of useful lives against other
adjustment to useful lives by a re-performance of
telecommunication operators in Australia and
depreciation calculations on a sample basis.
overseas, and the Australian Taxation Office
How our audit addressed the key audit matter
which suggested useful lives of between 8 – 25
years. We noted that the Group’s estimate of
We discussed the adjustments with management and
We tested the accuracy of the calculation for the
useful life of these assets is within this range.
the Directors, who explained that the rationale for
adjustment to useful lives by a re-performance of
making the adjustments was to reflect a longer useful
depreciation calculations on a sample basis.
life of these assets, consistent with the experience of
the Group and Hutchison Whampoa Limited as the
We discussed the adjustments with management and
controlling entity and their assessment of the impact of
the Directors, who explained that the rationale for
anticipated technology developments.
making the adjustments was to reflect a longer useful
life of these assets, consistent with the experience of
We evaluated the assessment of the useful life of
the Group and Hutchison Whampoa Limited as the
network assets. In particular, we:
controlling entity and their assessment of the impact of
anticipated technology developments.
The Directors’ estimate of the useful lives of network
assets was a key audit matter as it requires the
Directors’ to exercise significant judgement to make a
collective assessment on the likely future use of the
network assets based on historical experience with
similar assets and the potential impact of anticipated
technological changes on existing assets. The
Key audit matter
estimation is impacted by company-specific factors
along with broader industry considerations which
Estimate of useful life of network assets of
results in useful lives of identical types of assets
VHA
Report on the audit of the financial report
differing from company to company.
Key audit matter
Depreciation of network assets constitutes a
substantial operating cost for the joint venture. The
Estimate of useful life of network assets of
cost of those assets is charged as a depreciation
In our opinion:
VHA
expense over the estimated useful lives of the
respective assets (using the straight-line method) and
Depreciation of network assets constitutes a
this is reflected in the “share of net losses of a joint
substantial operating cost for the joint venture. The
venture accounted for using the equity method” in the
cost of those assets is charged as a depreciation
Group’s consolidated statement of profit or loss and
expense over the estimated useful lives of the
other comprehensive income. The Directors have
respective assets (using the straight-line method) and
formed a judgement that the useful lives of certain
this is reflected in the “share of net losses of a joint
network assets are different (usually longer) to the
venture accounted for using the equity method” in the
useful lives used to calculate depreciation charges by
Group’s consolidated statement of profit or loss and
VHA. Accordingly, adjustments to the useful lives of
other comprehensive income. The Directors have
assets are made when the Group’s 50% interest in the
formed a judgement that the useful lives of certain
joint venture VHA is incorporated into the Group’s
network assets are different (usually longer) to the
consolidated financial report each year. This is to
useful lives used to calculate depreciation charges by
reflect the application of the Group’s network assets
VHA. Accordingly, adjustments to the useful lives of
useful lives accounting policy being up to 20 years for
assets are made when the Group’s 50% interest in the
certain categories as described in Note 1(r) (iii) of the
joint venture VHA is incorporated into the Group’s
financial statements.
consolidated financial report each year. This is to
reflect the application of the Group’s network assets
The Directors’ estimate of the useful lives of network
useful lives accounting policy being up to 20 years for
assets was a key audit matter as it requires the
certain categories as described in Note 1(r) (iii) of the
the directors’ declaration.
Directors’ to exercise significant judgement to make a
financial statements.
collective assessment on the likely future use of the
network assets based on historical experience with
The Directors’ estimate of the useful lives of network
similar assets and the potential impact of anticipated
assets was a key audit matter as it requires the
technological changes on existing assets. The
Directors’ to exercise significant judgement to make a
estimation is impacted by company-specific factors
collective assessment on the likely future use of the
along with broader industry considerations which
network assets based on historical experience with
results in useful lives of identical types of assets
similar assets and the potential impact of anticipated
differing from company to company.
technological changes on existing assets. The
estimation is impacted by company-specific factors
along with broader industry considerations which
results in useful lives of identical types of assets
differing from company to company.
the notes to the financial statements, which include a summary of significant accounting
policies
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
considered the Group’s view of the impact of
technological developments on existing
We evaluated the assessment of the useful life of
assets. We noted that the introduction of new
network assets. In particular, we:
generation communication standards such as
4G/LTE did not necessarily result in a
considered the Group’s view of the impact of
complete obsolescence of the existing 3G
technological developments on existing
network assets as they remain integral to
assets. We noted that the introduction of new
ensuring the operational effectiveness of the
generation communication standards such as
telecommunications network and that this
4G/LTE did not necessarily result in a
was likely to occur again with the introduction
complete obsolescence of the existing 3G
of new generation technology.
network assets as they remain integral to
ensuring the operational effectiveness of the
telecommunications network and that this
considered the nature of the
was likely to occur again with the introduction
telecommunications industry where there are
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
of new generation technology.
varying practices with regards to useful lives
those standards are further described in the Auditor’s responsibilities for the audit of the financial
adopted by operators. We compared the
report section of our report.
estimate of useful lives against other
considered the nature of the
telecommunication operators in Australia and
telecommunications industry where there are
overseas, and the Australian Taxation Office
varying practices with regards to useful lives
which suggested useful lives of between 8 – 25
adopted by operators. We compared the
years. We noted that the Group’s estimate of
estimate of useful lives against other
useful life of these assets is within this range.
telecommunication operators in Australia and
overseas, and the Australian Taxation Office
which suggested useful lives of between 8 – 25
years. We noted that the Group’s estimate of
useful life of these assets is within this range.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
the consolidated statement of financial position as at 31 December 2017
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
Basis for opinion
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO Box 2650, Sydney, NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
55
55
Independent Auditor’s Report continued
Independent auditor’s report
To the members of Hutchison Telecommunications (Australia) Limited
Key audit matter
How our audit addressed the key audit matter
Estimate of useful life of network assets of
VHA
We tested the accuracy of the calculation for the
adjustment to useful lives by a re-performance of
depreciation calculations on a sample basis.
(a)
(b)
In our opinion:
Our opinion
the directors’ declaration.
the consolidated statement of cash flows for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of financial position as at 31 December 2017
We evaluated the assessment of the useful life of
network assets. In particular, we:
What we have audited
The Group financial report comprises:
complying with Australian Accounting Standards and the Corporations Regulations 2001.
the notes to the financial statements, which include a summary of significant accounting
policies
giving a true and fair view of the Group's financial position as at 31 December 2017 and of its
financial performance for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
The accompanying financial report of Hutchison Telecommunications (Australia) Limited (the
Company) and its controlled entities (together the Group) is in accordance with the Corporations Act
2001, including:
We discussed the adjustments with management and
the Directors, who explained that the rationale for
making the adjustments was to reflect a longer useful
life of these assets, consistent with the experience of
the Group and Hutchison Whampoa Limited as the
controlling entity and their assessment of the impact of
anticipated technology developments.
Report on the audit of the financial report
Depreciation of network assets constitutes a
substantial operating cost for the joint venture. The
cost of those 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 the
Group’s consolidated statement of profit or loss and
other comprehensive income. The Directors have
formed a judgement that the useful lives of certain
network assets are different (usually longer) to the
useful lives used to calculate depreciation charges by
VHA. Accordingly, adjustments to the useful lives of
considered the Group’s view of the impact of
assets are made when the Group’s 50% interest in the
Other information
technological developments on existing
Other information
joint venture VHA is incorporated into the Group’s
assets. We noted that the introduction of new
The directors are responsible for the other information. The other information comprises the
consolidated financial report each year. This is to
Other information
The directors are responsible for the other information. The other information comprises the
generation communication standards such as
information included in the Group’s annual report for the year ended 31 December 2017, including the
reflect the application of the Group’s network assets
information included in the Group’s annual report for the year ended 31 December 2017, including the
4G/LTE did not necessarily result in a
The directors are responsible for the other information. The other information comprises the
Ownership Structure, VHA Key Operational Highlights 2017, Financial Summary, Chairman’s
useful lives accounting policy being up to 20 years for
Ownership Structure, VHA Key Operational Highlights 2017, Financial Summary, Chairman’s
complete obsolescence of the existing 3G
information included in the Group’s annual report for the year ended 31 December 2017, including the
message, Board of Directors, Corporate Governance, Director’s Report, Shareholder Information and
certain categories as described in Note 1(r) (iii) of the
network assets as they remain integral to
message, Board of Directors, Corporate Governance, Director’s Report, Shareholder Information and
Ownership Structure, VHA Key Operational Highlights 2017, Financial Summary, Chairman’s
Corporate Directory, but does not include the financial report and our auditor’s report thereon.
financial statements.
ensuring the operational effectiveness of the
Corporate Directory, but does not include the financial report and our auditor’s report thereon.
message, Board of Directors, Corporate Governance, Director’s Report, Shareholder Information and
Our opinion on the financial report does not cover the other information and accordingly we do not
telecommunications network and that this
Corporate Directory, but does not include the financial report and our auditor’s report thereon.
The Directors’ estimate of the useful lives of network
Our opinion on the financial report does not cover the other information and accordingly we do not
was likely to occur again with the introduction
express any form of assurance conclusion thereon.
assets was a key audit matter as it requires the
express any form of assurance conclusion thereon.
of new generation technology.
Our opinion on the financial report does not cover the other information and accordingly we do not
Directors’ to exercise significant judgement to make a
In connection with our audit of the financial report, our responsibility is to read the other information
express any form of assurance conclusion thereon.
collective assessment on the likely future use of the
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
network assets based on historical experience with
Basis for opinion
identified above and, in doing so, consider whether the other information is materially inconsistent
considered the nature of the
In connection with our audit of the financial report, our responsibility is to read the other information
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
similar assets and the potential impact of anticipated
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
telecommunications industry where there are
identified above and, in doing so, consider whether the other information is materially inconsistent
misstated.
technological changes on existing assets. The
varying practices with regards to useful lives
misstated.
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
estimation is impacted by company-specific factors
If, based on the work we have performed, we conclude that there is a material misstatement of this
adopted by operators. We compared the
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
along with broader industry considerations which
other information, we are required to report that fact. We have nothing to report in this regard.
estimate of useful lives against other
results in useful lives of identical types of assets
other information, we are required to report that fact. We have nothing to report in this regard.
If, based on the work we have performed, we conclude that there is a material misstatement of this
telecommunication operators in Australia and
differing from company to company.
overseas, and the Australian Taxation Office
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
which suggested useful lives of between 8 – 25
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
years. We noted that the Group’s estimate of
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
useful life of these assets is within this range.
true and fair view in accordance with Australian Accounting Standards and Corporations Act 2001
true and fair view in accordance with Australian Accounting Standards and Corporations Act 2001
The directors of the Company are responsible for the preparation of the financial report that gives a
and for such internal control as the directors determine is necessary to enable the preparation of the
and for such internal control as the directors determine is necessary to enable the preparation of the
true and fair view in accordance with Australian Accounting Standards and Corporations Act 2001
financial report that gives a true and fair view and is free from material misstatement, whether due to
financial report that gives a true and fair view and is free from material misstatement, whether due to
and for such internal control as the directors determine is necessary to enable the preparation of the
fraud or error.
fraud or error.
financial report that gives a true and fair view and is free from material misstatement, whether due to
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
operations, or have no realistic alternative but to do so.
operations, or have no realistic alternative but to do so.
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
audit conducted in accordance with the Australian Auditing Standards will always detect a material
audit conducted in accordance with the Australian Auditing Standards will always detect a material
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
audit conducted in accordance with the Australian Auditing Standards will always detect a material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
if, individually or in the aggregate, they could reasonably be expected to influence the economic
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
decisions of users taken on the basis of the financial report.
decisions of users taken on the basis of the financial report.
if, individually or in the aggregate, they could reasonably be expected to influence the economic
A further description of our responsibilities for the audit of the financial report is located at the
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
Auditing and Assurance Standards Board website at:
A further description of our responsibilities for the audit of the financial report is located at the
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
Auditing and Assurance Standards Board website at:
auditor's report.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO Box 2650, Sydney, NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Our audit approach
56
56
auditor's report.
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Report on the remuneration report
Report on the remuneration report
Our opinion on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 17 to 19 of the directors’ report for the
Our opinion on the remuneration report
We have audited the remuneration report included in pages 17 to 19 of the directors’ report for the
year ended 31 December 2017.
year ended 31 December 2017.
year ended 31 December 2017.
We have audited the remuneration report included in pages 17 to 19 of the directors’ report for the
In our opinion, the remuneration report of Hutchison Telecommunications (Australia) Limited for the
In our opinion, the remuneration report of Hutchison Telecommunications (Australia) Limited for the
year ended 31 December 2017 complies with section 300A of the Corporations Act 2001.
year ended 31 December 2017 complies with section 300A of the Corporations Act 2001.
In our opinion, the remuneration report of Hutchison Telecommunications (Australia) Limited for the
year ended 31 December 2017 complies with section 300A of the Corporations Act 2001.
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018
Other information
Other information
The directors are responsible for the other information. The other information comprises the
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 31 December 2017, including the
information included in the Group’s annual report for the year ended 31 December 2017, including the
Ownership Structure, VHA Key Operational Highlights 2017, Financial Summary, Chairman’s
Ownership Structure, VHA Key Operational Highlights 2017, Financial Summary, Chairman’s
message, Board of Directors, Corporate Governance, Director’s Report, Shareholder Information and
message, Board of Directors, Corporate Governance, Director’s Report, Shareholder Information and
Corporate Directory, but does not include the financial report and our auditor’s report thereon.
Corporate Directory, but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and Corporations Act 2001
true and fair view in accordance with Australian Accounting Standards and Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
operations, or have no realistic alternative but to do so.
Our opinion
Report on the audit of the financial report
Independent auditor’s report
To the members of Hutchison Telecommunications (Australia) Limited
Auditor’s responsibilities for the audit of the financial report
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor's report.
auditor's report.
Report on the remuneration report
Report on the remuneration report
The accompanying financial report of Hutchison Telecommunications (Australia) Limited (the
Company) and its controlled entities (together the Group) is in accordance with the Corporations Act
2001, including:
giving a true and fair view of the Group's financial position as at 31 December 2017 and of its
financial performance for the year then ended
complying with Australian Accounting Standards and the Corporations Regulations 2001.
In our opinion:
(a)
(b)
What we have audited
The Group financial report comprises:
the consolidated statement of financial position as at 31 December 2017
Our opinion on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 17 to 19 of the directors’ report for the
We have audited the remuneration report included in pages 17 to 19 of the directors’ report for the
year ended 31 December 2017.
year ended 31 December 2017.
In our opinion, the remuneration report of Hutchison Telecommunications (Australia) Limited for the
In our opinion, the remuneration report of Hutchison Telecommunications (Australia) Limited for the
year ended 31 December 2017 complies with section 300A of the Corporations Act 2001.
year ended 31 December 2017 complies with section 300A of the Corporations Act 2001.
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
Responsibilities
the notes to the financial statements, which include a summary of significant accounting
policies
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the remuneration report, based on our audit conducted in
accordance with Australian Auditing Standards.
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
PricewaterhouseCoopers
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
Rosalie Wilkie
in accordance with the Code.
Partner
Sydney
26 February 2018
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO Box 2650, Sydney, NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
57
57
Shareholder Information
The shareholder information set out below was applicable as at 27 February 2019.
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*
Spark New Zealand Trading Limited and Spark New Zealand Limited
Shareholding
12,009,393,175
12,009,393,175
12,009,393,175
1,357,250,858
% Issued
Capital
88.48
88.48
88.48
10.00
Notes:
# 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 26.02% 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 3,176 holders of less than a marketable parcel of ordinary shares.
Number of
Shareholders
1,382
2,378
868
1,099
248
5,975
58
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 Twenty largest shareholders
The names of the 20 largest holders of quoted ordinary shares as at 27 February 2019 are as follows:
Shareholder
Hutchison Telecommunications (Amsterdam) B.V.
Spark New Zealand Trading Limited
Leanrose Pty Limited
HSBC Custody Nominees (Australia) Limited
Dimitrios Piliouras & Konstantina Piliouras
Citicorp Nominees Pty Limited
Kenneth Kin Kau Heung & Rene Conrad Heung
J P Morgan Nominees Australia Pty Limited
Arjee Pty Ltd
Dimitrios Pillouras
George Thomson
Hung Fong Chong
Yim Fong Leung
George Thomson
Yu Jie Zhi
Justin Herbert Gardener & Anne Louise Gardener
Yi Wei Sun
Bin Lui
Yet Kwong Chiang & Ho Yuk Lin Chiang
Ping Ping Lu
Shareholding
11,925,479,378
1,357,250,858
83,913,797
15,044,967
13,400,000
5,289,720
4,830,000
4,170,483
4,033,575
4,000,000
3,354,440
2,596,000
2,255,000
2,064,735
2,000,000
1,957,358
1,900,000
1,880,000
1,870,965
1,620,000
% Issued
Capital
87.87
10.00
0.62
0.11
0.10
0.04
0.04
0.03
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.
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
59
Auditor
PricewaterhouseCoopers
One International Towers Sydney
Watermans Quay
Barangaroo NSW 2000
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:
177 Pacific Highway
North Sydney NSW 2060
Date: 2 May 2019
Time: 10.00 am
Corporate Directory
Directors
Fok Kin Ning, Canning
Barry Roberts-Thomson
Justin Herbert Gardener
Lai Kai Ming, Dominic
John Michael Scanlon
Frank John Sixt
Ronald Joseph Spithill
Woo Chiu Man, Cliff
Company Secretaries
Edith Shih
Louise Sexton
Investor Relations
Tel: 133 121
Email: investors@hutchison.com.au
www.hutchison.com.au
Registered Office
Level 1, 177 Pacific Highway
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
60
HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED ANNUAL REPORT 2018 www.hutchison.com.au
www.hutchison.com.au
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