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China Unicom (Hong Kong) LtdHutchison Telecommunications
(Australia) Limited
ABN 15 003 677 227
Level 1, 177 Pacific Highway
North Sydney, NSW 2060
(02) 9015 5088
Tel:
Fax:
(02) 9015 5034
www.hutchison.com.au
ASX Market Announcements
Australian Securities Exchange
Date: 27 March 2020
Subject: 2019 Annual Report
The 2019 Annual Report for Hutchison Telecommunications (Australia) Limited
incorporating the full year financial statements for the year ended 31 December 2019,
is attached.
Yours faithfully
Naomi Dolmatoff
Company Secretary
AUTHORISED FOR RELEASE: By order of the Board
For further information, please contact the Company Secretary by email at investors@hutchison.com.au or by
telephone on (02) 9015 5088.
2019
Annual Report
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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.
AGM Details
The Annual General Meeting
of HTAL will be held at:
177 Pacific Highway
North Sydney NSW 2060
Thursday 7 May 2020
at 10.00 am
ABN 15 003 677 227
Contents
Ownership Structure
VHA Key Operational Highlights in 2019
Financial Summary
Chairman’s Message
Board of Directors
Corporate Governance
Directors’ Report
Auditor’s Independence Declaration
Financial Report
Independent Auditor’s Report
Shareholder Information
Corporate Directory
i
ii
iii
iv
2
4
9
17
18
46
52
54
Hutchison Telecommunications (Australia) Limited Annual Report 2019 Ownership Structure
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#.
87.87%#
CK HUTCHISON
HOLDINGS LIMITED
10%
2.13%
SPARK NEW ZEALAND
TRADING LIMITED
PUBLIC SHAREHOLDERS
HUTCHISON TELECOMMUNICATIONS
(AUSTRALIA) LIMITED
VODAFONE GROUP PLC
50%#
50%#
#
Indirect ownership.
i
VHA Key Operational
Highlights in 2019
6.9%
EBITDA growth YoY
245.5%
Fixed customers
growth YoY
Postpaid
customers
remained
stable
ii
Vodafone Foundation’s app
has been downloaded by
320,000
Users globally
and launched in 5 Vodafone markets
Leading NPS
Highest NPS score every
month throughout 2019,
with a lead of 2 to 10 points
over nearest competitor
Low complaints rate
TIO complaints were less than
half the industry average
Hutchison Telecommunications (Australia) Limited Annual Report 2019 Financial Summary
VHA recorded 6.9 per cent YoY EBITDA growth
in 2019, despite uncertainty caused by the ACCC’s
decision to oppose the VHA-TPG merger and the
Huawei ban. In 2020, VHA looks forward to
implementing the merger, subject to further
approvals, following the Federal Court ruling to
allow the merger, and rolling out its 5G network.
VHA financial and operating metrics
2019
2018
YoY change
%
The items below represent the 50% share of VHA attributable to HTAL
Total revenue ($m)
Service revenue ($m)1
EBITDA ($m)2
Net EBITDA adjustment AASB 163
Net EBITDA without AASB 16
Share of net loss of VHA ($m)4
Net loss adjustment AASB 163
Net loss without AASB 16
Leading NPS
The following items represent 100% of VHA’s operating metrics
Postpaid customers (’000)
Prepaid customers (’000)
VHA customers subtotal (’000)
MVNO customers (’000)
Total network customers (’000)
Fixed Customers (‘000)
ARPU ($)5
1,761.7
1,197.1
589.4
71.0
518.4
(159.1)
24.0
(135.1)
3,416
2,018
5,434
310
5,744
114
33.35
1,813.2
1,227.0
551.1
–
551.1
(5.0)
–
(5.0)
3,454
2,209
5,663
356
6,019
33
35.05
(2.8%)
(2.4%)
6.9%
–
(5.9%)
3,082.0%
–
2,602.0%
(1.1%)
(8.6%)
(4.0%)
(12.9%)
(4.6%)
245.5%
(4.9%)
Notes:
1 Reclassification of $5.8 million content costs into net service revenue. The December 2018 figures reclassed for comparative was $8.1 million.
2 EBITDA is defined as earnings before net finance costs, tax and depreciation and amortisation.
3 AASB 16 Leases became effective for the Group on 1 January 2019. AASB 16 Leases establishes principles for the recognition and measurement of leasing
arrangements. EBITDA for the year ended 31 December 2019 has increased as adopted AASB 16 Leases are no longer accounted for as operating expenses.
Net losses for the year ended 31 December 2019 reflects the increase in EBITDA offset by depreciation expense of the right-of-use assets and interest
expense on lease liabilities relating to adopted AASB 16 Leases.
4 Reconciliation for the Share of net loss of VHA is set out on pages 31 to 33.
5 ARPU represents a rolling 12 month average net service revenue per user per month at the end of the period excluding MVNOs and including Kogan and
Lebara. Updated ARPU reflects the change in basis of calculation as a result of the reclassification of content costs into service revenue, and the exclusion
of M2M IOT revenue. The prior year comparative has also been updated based on this change.
iii
Chairman’s Message
With continued support
from CK Hutchison
Holdings Limited and its
joint shareholder
Vodafone Group Plc,
VHA achieved a steady
EBITDA result.
Hutchison Telecommunications (Australia)
Limited (“HTAL” or the “Company”)
(ASX: HTA) accounts for its investment in
Vodafone Hutchison Australia Pty Limited
(“VHA”) using the equity method of
accounting. Under this method, revenue
from VHA’s ordinary activities is not
included in HTAL’s consolidated revenues
from ordinary activities.
In 2019, VHA achieved market-leading
customer sentiment and maintained
a broadly stable underlying financial
performance. This is despite facing
significant regulatory challenges
including the Australian Competition
and Consumer Commission’s (“ACCC”)
opposition to VHA’s proposed merger
with TPG Telecom Limited (“TPG
Telecom”, ASX: TPM) and the Federal
Government’s 5G vendor restrictions.
iv
With continued support from
CK Hutchison Holdings Limited and its
joint shareholder Vodafone Group Plc,
VHA achieved a steady EBITDA result.
Key 2019 achievements and
highlights of VHA:
• Progressed 5G with selection of
Nokia as network vendor;
• Highest Net Promoter Score (NPS)
of the major Mobile Network
Operators;
• Continued to improve rate of
customer complaints to the
Telecommunications Industry
Ombudsman (“TIO”) with less than
half the industry average;
• Recognised for its customer focus
with two major industry awards;
• Reached 100,000 Vodafone NBN
fixed customers; and
• VHA continued to progress
regulatory approval of the merger
with TPG Telecom by commencing
Federal Court proceedings seeking
competition approval of the merger.
2019 financial results
In a challenging regulatory environment
and amidst continued aggressive
competition, VHA produced a steady
underlying financial performance.
VHA postpaid customer base was
steady at 3.4 million, a 1.1% YoY decrease
from 3.5 million. VHA maintained its
base with its strong mobile network,
generous data inclusions and best-in-
market $5 Roaming product.
VHA prepaid customer base was
2.0 million, an 8.6% YoY decrease
from 2.2 million, amidst very intense
competition in the segment.
VHA’s Mobile Virtual Network Operator
(MVNO) customer base was 310,000,
a 12.9% YoY decrease from 356,000.
VHA’s fixed customer base was
114,000, a YoY increase of 245.5% from
33,000. VHA launched fixed services
via the National Broadband Network
in April 2018 and has been steadily
growing its customer base.
HTAL’s share of VHA total revenue
decreased 2.8% YoY to $1,761.7 million
from $1,813.2 million, due to the change
in customer base.
VHA ARPU (Average Revenue Per User)
was $33.35, which represented a 4.9%
YoY decrease from $35.05, driven by
increased competition.
HTAL’s share of VHA’s EBITDA increased
6.9% YoY to $589.4 million from
$551.1 million. This is driven by a positive
$71.0 million impact from the IFRS16
accounting change. The underlying
decline of $38.3 million was due to a
decline in revenue partially mitigated
by continued focus on managing
costs. In a year-on-year comparison
without IFRS16, HTAL’s share of VHA
EBITDA would have been $518.4 million,
a 5.9% decrease.
HTAL’s share of VHA net loss
was $159.1 million, a YoY increase
from $5.0 million, driven by the
EBITDA result, lower commission
capitalisation, increased depreciation
and amortisation, and interest costs.
In a year-on-year comparison without
IFRS16, HTAL’s share of VHA net loss
would have been $135.1 million.
Hutchison Telecommunications (Australia) Limited Annual Report 2019 VHA-TPG Telecom merger case
heard in Federal Court
On 24 June 2019, following the ACCC’s
8 May 2019 announcement that it would
not provide competition clearance to
the proposed merger between the two
companies, VHA and TPG Telecom
filed a legal action in the Federal Court
of Australia seeking a declaration that
the merger is not prohibited under
Section 50 of the Competition and
Consumer Act 2010.
The case was heard by Justice
Middleton in Melbourne between
10 September and 1 October 2019.
On 13 February 2020, the Federal
Court ruled that the proposed merger
between VHA and TPG Telecom would
not substantially lessen competition and
should be allowed to proceed. VHA, along
with TPG Telecom, will work to complete
the merger in mid-2020, subject to the
remaining regulatory and shareholder
approvals and any appeal by the ACCC.
VHA is also undertaking a restructure
of its debt facilities as a condition of
the Scheme Implementation Deed and
subject to the merger proceeding. The
refinancing is expected to complete
concurrently with the implementation
of the merger.
VHA takes the next big step in 5G
In December 2019, VHA took another
significant step in its 5G journey with
the announcement that it has partnered
with Nokia to roll out its 5G mobile
network and deliver the benefits of the
next generation of mobile networks
to its customers.
The partnership builds on years of
collaboration and enables VHA to
deliver its commercial 5G services.
VHA will switch on its first commercial
5G sites in the first half of 2020, when
it transforms an existing test network
in the Sydney suburb of Parramatta into
its first live 5G site.
VHA continues to lead
customer sentiment, lowest
complaints rate
VHA continued its track record as an
industry leader in customer service in
2019 with the highest NPS of the mobile
network operators, while its rate of
customer complaints to the TIO was
less than half the industry average.
VHA won a Canstar Blue award for
Provider of the Year for SIM Only
mobile plans and was recognised at the
ACOMM industry awards for Best Mobile
Solution for its endless data and no
lock-in contracts.
VHA’s $5 Roaming product, which
is available in more than 80 global
destinations, continues to be a key driver
of customer acquisitions and upgrades.
VHA will also continue its strategy of
striking a balance between maintaining
a sustainable business model, whilst
delivering value to Australian customers.
The Vodafone NBN customer base
more than tripled during 2019, with
customers attracted to VHA’s 4G
back up and promotional offers to
connect to the top tier NBN speed
for a market-leading price.
VHA also became the first telco to
partner with Amazon Prime to offer
customers on selected plans a twelve-
month Amazon Prime membership.
To further its digital transformation
strategy, VHA welcomed the new Chief
Information Officer and Director of
Business Enablement, Rob James in
September 2019. With responsibility
for IT, Mr James’ appointment enables
the IT team, which previously sat with
Network, to focus exclusively on IT
strategy and key projects.
To raise brand awareness among key
market segments, VHA continued its
sponsorships with Rugby Australia,
Supercars, Adelaide Strikers and the
Sydney Gay and Lesbian Mardi Gras.
Star cricketer Steve Smith and Supercars
champion Jamie Whincup continued in
the role of VHA brand ambassadors.
Vodafone Foundation expands
positive impact
In 2019, 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 2019, the Foundation’s DreamLab
app, which helps solve cancer using the
processing power of idle smartphones
while users sleep, launched in Italy
and Romania, bringing the app to
five Vodafone markets. DreamLab’s
350,000 users donated their
computing power to help complete
two more discoveries in half the time.
Vodafone Foundation also funded a
pilot program with Infoxchange, to
examine ways the AskIzzy app might
better support people experiencing
family and domestic violence.
Outlook
Intense competition in the Australian
telecommunications market is expected
to continue to impact industry revenues
and ARPUs throughout 2020. VHA will
continue its focus on reducing costs
to manage its financial performance.
On 13 February 2020 the Federal
Court ruled that the proposed merger
between VHA and TPG Telecom would
not substantially lessen competition and
should be allowed to proceed. VHA will
work towards implementation of the
proposed merger which remains subject
to an appeal, as well as shareholder and
other regulatory approvals.
The merger would create a third
fully-integrated telecommunications
company with the scale to compete
head-to-head across the whole
telecommunications market in Australia.
It would also provide investment
certainty for the future, including for
the company’s 5G rollout.
While the merger process continues,
VHA will continue to work towards
the launch of 5G mobile services in
2020 and take opportunities to deliver
increased value propositions to mobile
and fixed customers.
HTAL remains committed to its
investment in VHA and will continue
to support VHA in the future.
Additional matters
On 5 March 2020 the ACCC announced
that it would not appeal the decision of
the Federal Court and we are pleased
that definitive Australian competition
clearance for the proposed merger
between VHA and TPG has now
been obtained.
After the COVID-19 outbreak in early
2020, HTAL is paying close attention
to the development of, and the
disruption to business and economic
activities caused by the outbreak and
its potential impact on the financial
position, cash flows and operating
results. Given the dynamic nature of the
COVID-19 outbreak, it is not practicable
to provide a reasonable estimate of its
impacts on HTAL’s financial position,
cash flows and operating results at
the date of this annual report.
Fok Kin Ning, Canning
Chairman
1
Board of Directors
1.
2.
3.
4.
5.
6.
7.
8.
9.
2
1. Fok Kin Ning, Canning
(Chairman) BA, DFM, FCA (ANZ)
Fok Kin Ning, Canning, aged 68, has
been a Director since February 1999.
Mr Fok has been an executive director
and group co-managing director
of CK Hutchison Holdings Limited
(“CKHH”) since 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 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 of which Mr Fok oversees
the management. 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.
2. Barry Roberts-Thomson
(Deputy Chairman)
Barry Roberts-Thomson, aged 70 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.
3. Susan Mo Fong Chow,
also known as Woo Mo Fong, Susan
(alias Chow Woo Mo Fong, Susan)
(Director) BSc
Mrs Susan Chow (aged 66), has been a
non-executive director of CK Hutchison
Holdings Limited (“CKHH”) since
January 2017. She was an executive
director and group deputy managing
director of CKHH from June 2015 to July
2016, senior advisor of CKHH from August
2016 to December 2016, executive director
of Hutchison Whampoa Limited (“HWL”,
which was privatised by way of a scheme
of arrangement and became a wholly
owned subsidiary of CKHH since June
2015) from October 1993 to June 2015,
deputy group managing director from
January 1998 to June 2015 and director
from June 2015 to July 2016. Prior to
joining HWL, Mrs Chow was a partner
of Woo Kwan Lee & Lo, a major law firm
in Hong Kong. Mrs Chow is an alternate
director to director of CK Infrastructure
Holdings Limited since May 2006, HK
Electric Investments Manager Limited
as the trustee-manager of HK Electric
Investments, and HK Electric Investments
Limited since November 2014.
She previously served as a member of the
Listing Committee of The Stock Exchange
of Hong Kong Limited, the Joint Liaison
Committee on Taxation of the Law
Society of Hong Kong, the Committee
on Real Estate Investment Trusts of the
Securities and Futures Commission, the
Trade and Industry Advisory Board, the
Court of the Hong Kong University of
Science and Technology and the Appeal
Boards Panel (Education). Mrs Chow is a
qualified solicitor and holds a Bachelor’s
degree in Business Administration.
4. Justin Herbert Gardener
(Director) BEc, FCA, AGIA
Justin Herbert Gardener, aged 83,
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 and holds a Bachelor of
Economics Degree.
Hutchison Telecommunications (Australia) Limited Annual Report 2019 5. Lai Kai Ming, Dominic
(Director) BSc, MBA
7. Frank John Sixt
(Director) MA, LLL
9. Woo Chiu Man, Cliff
(Director) BSc
Lai Kai Ming, Dominic, aged 66,
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 2015.
Since 2000, he has been a director of
HWL which became a wholly owned
subsidiary of CKHH in 2015. Mr Lai
has been a non-executive director
since 2009 and an alternate director
to directors since 2010 of HTHKH. He
has been an alternate director to a
director of TOM Group Limited (“TOM”)
since 2016. He has been a member
of the board of commissioners of PT
Duta Intidaya Tbk since 2018. The
aforementioned companies are either
the ultimate holding company of HTAL,
or subsidiaries or associated companies
of CKHH of which Mr Lai oversees
the management. He has also been
a director of VHA since 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.
6. John Michael Scanlon
(Director)
John Michael Scanlon, aged 78, 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, aged 68, has been
a Director since January 1998 and
Alternate Director to Mr Lai since
February 2008. Mr Sixt has been an
executive director, group finance director
and deputy managing director of CKHH
since 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 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 an 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 of which Mr Sixt
oversees the management. He has also
been a director of VHA since 2001. 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.
8. Ronald Joseph Spithill OAM
(Director) BScTech
Ronald Joseph Spithill, aged 78, 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, aged 66, has been
a Director since August 2016. Mr Woo
has been an executive director and
chief executive officer of HTHKH since
2017 and was re-designated as co-
deputy chairman and a non-executive
director of HTHKH in 2018. He has
been an alternate director to a director
of VHA since 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 in 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.
3
Corporate Governance
This Corporate Governance Statement is dated
26 February 2020 and has been approved by the Board of the
Company. Information about the Company and its corporate
governance including current policies and charters are
available on the Company’s website at www.hutchison.com.au.
• satisfying itself of the effectiveness of the governance
processes in place and that an appropriate framework
exists for relevant information to be reported by
management to the Board and whenever required,
challenging management and holding it to account;
The Company and its Directors are committed to high
standards of corporate governance. In December 2019,
the Company completed a review of its corporate governance
processes and procedures having regard to the ASX Principles
and Recommendations (the “ASX Principles”) (4th edition)
and has updated its corporate governance documents to
reflect the ASX Principles (4th edition) with effect from
December 2019. This report reflects the main corporate
governance practices adopted by the Company and its
subsidiaries (collectively, the “Group”) during the 2019 financial
year (“Reporting Period”), noting where the Company does
not comply with the ASX Principles (3rd edition), and the
corporate governance processes and procedures updated
in December 2019. The first full reporting of Company’s
compliance with the ASX Principles (4th edition) will be
disclosed in its next Annual Report.
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 statement of values,
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 management in its implementation of the
Group’s strategic objectives, instilling of the Group’s values
and performance generally;
• overseeing the integrity of the Group’s accounting and
corporate reporting systems, including the external audit,
control and accountability systems;
• satisfying itself that the Group has in place an appropriate
risk management framework (for both financial and
non-financial risks) and setting the risk appetite within
which the Board expects management to operate;
• satisfying itself that the Group’s remuneration policies are
aligned with its purpose, values, strategic objectives and
risk appetite;
• ensuring the business risks facing the Group are identified
and reviewing, ratifying and monitoring sound systems
of risk management and internal compliance and control,
codes of conduct and legal compliance;
• monitoring the performance of management against
these goals and objectives and initiating corrective action
when required;
• ensuring that there are adequate internal controls and
ethical standards of behaviour adopted and met within
the Group;
• reviewing and approving annual financial plans and
monitoring corporate performance against both
short-term and long-term financial plans;
• appointing the chief executive officer, evaluating
performance and determining the remuneration of
senior executives and ensuring that appropriate policies
and procedures are in place for recruitment, training,
occupational health & safety, environmental issue
remuneration and succession planning; and
• delegating to the chief executive officer the authority to
manage and supervise the business of the Group with
senior executives and other management, including the
making of all decisions regarding the Group’s operations
that are not specifically reserved to the Board.
Composition of the Board
The Board comprises nine 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.
4
Hutchison Telecommunications (Australia) Limited Annual Report 2019 Board skills matrix
The Board has considered the skills that are appropriate
for the Board as a whole and these include experience in:
• general business management, strategy and
entrepreneurship;
•
information and technology particularly in
telecommunications or multimedia;
• marketing, sales and distribution in highly competitive
markets;
• Government relations and policy;
•
legal, governance and compliance risk management;
• human resources and remuneration;
• accounting, finance and audit; and
• banking, treasury and capital markets.
Details of the individual Directors’ skills set, experience and
date of appointment are set out on pages 2 and 3. Details
of the non-executive Director remuneration are set out in
the Remuneration Report which forms part of the Directors’
Report on pages 12 to 15.
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 2020, 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.
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 skills set 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. Written agreements are in place with
each of the Directors setting out their terms of appointment.
In December 2019, Mrs Susan Chow was appointed as
a non-executive Director. Prior to her appointment, the
Company undertook appropriate background checks. The
Company will provide shareholders with all the relevant
information in its possession necessary for shareholders
to consider voting on Mrs Chow’s election at its 2020 AGM.
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 them to keep abreast of current trends and issues facing
the Group, including the latest changes in the commercial
(including industry-specific and innovative changes), 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 2018 was undertaken at the beginning of
2019 and that for the financial year ended 31 December 2019
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 three non-executive Directors, a
majority of whom are independent Directors 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 Principles. 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 2, 3 and 10.
5
Corporate Governance
continued
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 and make recommendations to the Board
regarding the adequacy of the Group’s processes for
managing risk and any changes that should be made
to the Group’s risk management framework or to the
risk appetite set by the Board;
• to consider new and emerging sources of risk and the risk
controls and mitigation measures that management has
put in place to deal with those risks;
• 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.
6
Governance, Nomination & Compensation
Committee
This Committee comprises three 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 senior 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
2, 3 and 10. No meetings of this Committee were required
during the year ended 31 December 2019.
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 senior executives, no process
is in place for the evaluation of the performance of senior
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 in respect of Board nomination
and remuneration matters;
• to oversee and periodically review the induction and
education, and continuing professional development
programs for Directors including whether there is a need for
existing directors to undertake professional development;
• 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 and consider any disclosure requirements.
Hutchison Telecommunications (Australia) Limited Annual Report 2019 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
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.
• to consider and recommend to the Board the skills
matrix required for the Board generally including
Director independence.
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.
Diversity
The Company recognises the corporate benefit of diversity as
that term is defined in the ASX best practice recommendations
and its Diversity Policy is available on the Company’s website.
The Company recognises the benefits of a Board that possesses
a balance of skills set, experience, expertise and diversity of
perspectives appropriate for the strategies 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, legal 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 (male) employee who is not
considered to be a senior executive (2018: 100% male).
The Board currently comprises eight males (89%) and
one female (11%) (2018: 100% male).
Company secretaries
The Company has two company secretaries, Ms Edith Shih
and Ms Naomi Dolmatoff, who are responsible to the Board
for ensuring that Board processes are followed and board
activities are efficiently and effectively conducted.
In April 2019, Ms Louise Sexton resigned as a company
secretary and Ms Dolmatoff was appointed. Biographies of
the company secretaries are included in the Directors’ Report.
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 (where
appropriate) 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.
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 reports
prepared by the internal audit and risk management function
of VHA for the VHA Audit and Risk Committee, including an
annual review of the VHA risk management framework. One
of the members of the Group’s Audit & Risk Committee is a
member of the VHA Audit and Risk Committee.
The VHA risk management framework ensures that
adequate mechanisms are in place to identify, assess and
manage strategic, financial and non-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. During the Reporting
Period, VHA undertook a review of its risk management
framework and its board considers that it remains sound.
VHA does not consider that it has a material exposure to
any economic, environmental and social sustainability risks.
7
Corporate Governance
continued
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 (Cth). 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 with values 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, officers, employees, consultants, contractors,
agents and other representatives engaged by the Company
and compliance with the values underlying the Company’s
culture forming part of the performance appraisal of senior
executives and 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:
• 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
• any other designated officer (being any person engaged
in the management of the Company, whether as an
employee or consultant) 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 designated officers are limited to the period of one month
after the release of the Company’s half year and annual results
to the ASX and from the lodgement of the Company’s annual
report with the ASX up to one month after the AGM of HTAL.
Directors, officers and employees must not engage in insider
dealing in breach of the Corporations Act 2001 (Cth) and are
prohibited from dealing in HTAL shares if in possession of price
sensitive information. Directors and senior executives are also
prohibited from engaging in short term speculative dealing.
All Directors, officers and employees within the Group have
been advised of their obligations in regard to price sensitive
information. Directors, officers and employees 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.
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
appropriately 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.
8
Hutchison Telecommunications (Australia) Limited Annual Report 2019 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 2019.
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 iv to 1. Details of the financial position of the Company are contained in page 20 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 2019 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.
Directors
The following persons were Directors of HTAL during the whole of the year ended 31 December 2019 and up to the date
of this report:
FOK Kin Ning, Canning
Barry ROBERTS-THOMSON
Susan Mo Fong CHOW, also known as WOO Mo Fong, Susan (alias CHOW WOO Mo Fong, Susan) (appointed on 9 December 2019)
Justin Herbert GARDENER
LAI Kai Ming, Dominic
John Michael SCANLON
Frank John SIXT
Ronald Joseph SPITHILL
WOO Chiu Man, Cliff
9
Directors’ Report
Further information on the Directors is set out on pages 2 and 3.
Director
Other Responsibilities
Fok Kin Ning, Canning
Non-executive Chairman,
Chairman of Governance, Nomination & Compensation Committee
Barry Roberts-Thomson
Deputy Chairman
Susan Mo Fong Chow^
–
Justin Herbert Gardener
Lai Kai Ming, Dominic
John Michael Scanlon
Frank John Sixt
Ronald Joseph Spithill
Woo Chiu Man, Cliff
Chairman of Audit & Risk Committee,
Member of Governance, Nomination & Compensation Committee
Member of Governance, Nomination & Compensation Committee
Member of Audit & Risk Committee
Member of Audit & Risk Committee
–
–
* Direct holding of 100,000 shares
** Direct holding of 4,540 shares
^ Appointed as Director with effect from 9 December 2019
Notes:
Particulars
of Directors’
Interests in
ordinary
shares
of HTAL
5,100,000*
83,918,337**
–
1,957,358
–
–
1,000,000
–
–
Fok Kin Ning, Canning, holds a relevant interest in (i) 5,711,438 ordinary shares of CK Hutchison Holdings Limited (“CKHH”), a related body corporate of HTAL;
and (ii) 1,202,380 ordinary shares of Hutchison Telecommunications Hong Kong Holdings Limited (“HTHKH”), a related body corporate of HTAL.
Susan Mo Fong Chow holds a relevant interest in (i) 129,960 ordinary shares of CKHH; and (ii) 250,000 ordinary shares of HTHKH.
Lai Kai Ming, Dominic holds a relevant interest in 34,200 ordinary shares of CKHH.
Frank John Sixt holds a relevant interest in (i) 166,800 ordinary shares of CKHH; and (ii) 255,000 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.
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 2019 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
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
4
4
N/A
4
4
4
4
4
4
3
4
N/A
4
4
3
4
4
4
N/A
N/A
N/A
3
N/A
3
3
N/A
N/A
N/A
N/A
N/A
3
N/A
3
3
N/A
N/A
Nil
N/A
N/A
Nil
Nil
N/A
N/A
N/A
N/A
Nil
N/A
N/A
Nil
Nil
N/A
N/A
N/A
N/A
Director
Fok Kin Ning, Canning
Barry Roberts-Thomson
Susan Mo Fong Chow^
Justin Herbert Gardener
Lai Kai Ming, Dominic*
John Michael Scanlon
Frank John Sixt**
Ronald Joseph Spithill
Woo Chiu Man, Cliff
^ Appointed as Director with effect from 9 December 2019
* Mr Sixt attended one Board meeting as Alternate Director for Mr Lai
** Mr Lai attended one Board meeting and one Audit & Risk Committee meeting as Alternate Director for Mr Sixt
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.
10
Directors’ Report continuedHutchison Telecommunications (Australia) Limited Annual Report 2019 Retirement, election and continuation in office of Directors
Mr Barry Roberts-Thomson is a Director retiring by rotation in accordance with the Constitution who, being eligible, offers
himself for re-election.
Mrs Susan Mo Fong Chow is a Director who was appointed as additional director in accordance with the Constitution who,
being eligible, offers herself for election.
Mr Lai Kai Ming, Dominic is a Director retiring by rotation in accordance with the Constitution who, being eligible, offers himself
for re-election.
Mr Ronald Joseph Spithill is a Director retiring by rotation in accordance with the Constitution who, being eligible, offers
himself for re-election.
Mr Woo Chiu Man, Cliff 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, FCG (CS, CGP), FCS (CS, CGP)(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 was with HWL from 1991 to 2015.
Both Cheung Kong (Holdings) Limited and HWL became wholly owned subsidiaries of CKHH in 2015. She has acted in various
capacities within the HWL Group, including head group general counsel and company secretary of HWL and director and
company secretary of HWL 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 Chartered Governance Institute (formerly known as the “Institute of Chartered
Secretaries and Administrators”) and The Hong Kong Institute of Chartered Secretaries, holding Chartered Secretary and
Chartered Governance Professional dual designations.
Naomi Dolmatoff (appointed on 15 April 2019)
BCom., AGIA, ACIS
Naomi Dolmatoff is an experienced Company Secretary and has worked with ASX listed entities in financial services,
technology, government bodies and mining and resources industries. Ms Dolmatoff holds a Bachelor of Commerce (Finance)
and a Graduate Diploma in Applied Corporate Governance. Ms Dolmatoff is also an Associate of both The Governance Institute
of Australia and The Chartered Governance Institute.
Louise Sexton (resigned on 15 April 2019)
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.
11
Remuneration Report
As at 31 December 2019, the Company had one employee who is not ‘key management personnel’. As at the date of this report,
the Company does not have any employees who are ‘key management personnel’. This report does not include any information
relating to the employees or employment practices of VHA as it is not a subsidiary of the Company.
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 Barry Roberts-Thomson, Mrs Susan Mo Fong Chow, Mr Lai Kai Ming, Dominic, Mr Frank John Sixt,
Mr Ronald Joseph Spithill, and Mr Woo Chiu Man, Cliff did not receive any remuneration for their services as Directors.
12
Directors’ Report continuedHutchison Telecommunications (Australia) Limited Annual Report 2019 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 2019 to 31 December 2019.
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. Mrs Susan Mo Fong Chow’s appointment is also in
conjunction with her directorship 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.
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
2019
Name
Fok Kin Ning, Canning
Barry Roberts-Thomson
Susan Mo Fong Chow^
Justin Herbert Gardener
Lai Kai Ming, Dominic
John Michael Scanlon
Frank John Sixt
Ronald Joseph Spithill
Woo Chiu Man, Cliff
Total
SHORT-TERM BENEFITS
Cash salary
and fees
$
Cash bonus
$
Non-monetary
benefits
$
–
–
–
50,000
–
50,000
–
–
–
100,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
POST-
EMPLOYMENT
BENEFITS
SHARE-BASED
PAYMENTS
Superannuation
$
–
–
–
4,750
–
4,750
–
–
–
9,500
Options
$
–
–
–
–
–
–
–
–
–
–
Total
$
–
–
–
54,750
–
54,750
–
–
–
109,500
^ Appointed as Director with effect from 9 December 2019
Mr Fok Kin Ning, Canning, Mrs Susan Mo Fong Chow, 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.
13
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
Cash salary
and fees
$
Cash bonus
$
Non-monetary
benefits
$
–
–
50,000
–
50,000
–
–
–
100,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
POST-
EMPLOYMENT
BENEFITS
SHARE-BASED
PAYMENTS
Superannuation
$
–
–
4,750
–
4,750
–
–
–
9,500
Options
$
–
–
–
–
–
–
–
–
–
Total
$
–
–
54,750
–
54,750
–
–
–
109,500
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.
14
Directors’ Report continuedHutchison Telecommunications (Australia) Limited Annual Report 2019 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
Susan Mo Fong Chow^
Justin Herbert Gardener
Lai Kai Ming, Dominic
John Michael Scanlon
Frank John Sixt
Ronald Joseph Spithill
Woo Chiu Man, Cliff
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
–
–
* Direct holding of 100,000 shares
** Direct holding of 4,540 shares
^ Appointed as Director with effect from 9 December 2019
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 2019 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 2019 and 31 December 2018.
Other transactions with Directors and key management personnel
There were no other transactions with Directors for the years ended 31 December 2019 or ended 31 December 2018.
15
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 (Cth). 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 (Cth) 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 36 of the financial report.
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 (Cth) is set out
on page 17.
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 (Cth) 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 (Cth).
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 (Cth).
This report is made in accordance with a resolution of the Directors.
Director
26 February 2020
Director
26 February 2020
16
Directors’ Report continuedHutchison Telecommunications (Australia) Limited Annual Report 2019 Auditor’s Independence
Declaration
17
Financial Report
For the year ended 31 December 2019
Contents
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Note 1
Summary of significant accounting policies
Note 2
Changes in accounting policies and estimates
Note 3
Revenue
Note 4
Income tax
Note 5
Current assets – Cash and cash equivalents
Note 6
Loans and receivables
Note 7
Non-current assets – Investment accounted for using the equity method
Note 8
Controlled entities
Note 9
Current liabilities – Payables
Note 10
Current liabilities – Other financial liabilities
Note 11
Contributed equity
Note 12
Reserves and accumulated losses
Note 13
Director and key management personnel compensation
Note 14
Remuneration of auditors
Note 15
Contingencies
Note 16
Commitments
Note 17
Related party transactions
Note 18
Deed of cross guarantee
Note 19
Segment reporting
Note 20 Reconciliation of profit/(loss) after income tax to net cash inflows from operating activities
Note 21
Earnings per share
Note 22
Financial risk management
Note 23
Events occurring after the reporting date
Note 24
Parent entity disclosures
Directors’ Declaration
Independent Auditor’s Report
19
20
21
22
23
23
28
30
30
30
31
31
33
33
33
34
35
36
36
36
37
37
38
40
40
41
41
43
44
45
46
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 26 February 2020. The Company has the power to
amend and reissue the financial statements.
18
Hutchison Telecommunications (Australia) Limited Annual Report 2019 Consolidated Statement
of Profit or Loss and Other
Comprehensive Income
For the year ended 31 December 2019
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 the Company
Earnings per share for profit/(loss) attributable to members of the Company
Basic earnings per share
Diluted earnings per share
Notes
3
7
4
12
12
21
21
2019
$’000
5,697
2018
$’000
10,619
(1,423)
(1,162)
(159,144)
(4,982)
(154,870)
4,475
–
–
(154,870)
4,475
(494)
(494)
212
212
(155,364)
4,687
Cents
Cents
(1.14)
(1.14)
0.03
0.03
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
19
Consolidated Statement
of Financial Position
As at 31 December 2019
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
2019
$’000
2018
$’000
5
6
6
7
9
10
11
12
12
108,057
76,193
13
18,598
434
6
184,263
19,038
–
–
–
160,765
159,638
320,403
184,263
339,441
558
372
248,790
248,790
249,348
249,348
249,162
249,162
(65,085)
90,279
4,204,488
4,204,488
70,368
70,862
(4,339,941)
(4,185,071)
(65,085)
90,279
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
20
Hutchison Telecommunications (Australia) Limited Annual Report 2019 Consolidated Statement
of Changes in Equity
For the year ended 31 December 2019
ATTRIBUTABLE TO MEMBERS OF THE COMPANY
Contributed
equity
$’000
Notes
Capital
redemption
reserve
$’000
Cash flow
hedging
reserve
$’000
Share-based
payments
reserve
$’000
Accumulated
losses
$’000
Balance at 1 January 2018
4,204,488
54,887
15,880
(4,189,546)
–
–
–
–
–
–
4,204,488
4,204,488
54,887
54,887
–
–
–
–
–
–
12
12
Total equity
$’000
85,592
4,475
4,475
–
212
4,475
4,687
–
–
–
15,880
(4,185,071)
15,880
(4,185,071)
90,279
90,279
–
–
–
(154,870)
(154,870)
–
(494)
(154,870)
(155,364)
(117)
–
212
212
95
95
–
(494)
(494)
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, net
of tax
Balance at
31 December 2018
Balance at 1 January 2019
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, net of tax
Balance at
31 December 2019
4,204,488
54,887
(399)
15,880
(4,339,941)
(65,085)
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
21
Consolidated Statement
of Cash Flows
For the year ended 31 December 2019
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 Activities1,2
Repayment of loans from VHA Joint Venture
Net cash inflows from investing activities
Cash Flows from Financing Activities
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
2019
$’000
2018
$’000
(1,236)
5,931
4,695
(982)
10,696
9,714
20
84,764
84,764
–
–
89,459
18,598
5
108,057
–
–
–
–
9,714
8,884
18,598
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
1. The cash flows in respect of the $84.8 million increase in cash and cash equivalents relates to VHA repayment of the working capital facility. Management
has used the $84.8 million to repay the credit agreement from an entity within the CKHH Group subsequent to the issue of the financial statements. Refer
to Note 23 for reference to this subsequent event.
2. The cash flows in respect of the 2018 $115.2 million decrease in Loans and Receivables and decrease in Other financial liabilities are composed of a
$115.2 million repayment of borrowings from CKHH Group. The decrease of $115.2 million loans from VHA Joint Venture (an investing activity) were
respectively satisfied by an entity within the CKHH Group which extends the loans from the Group.
22
Hutchison Telecommunications (Australia) Limited Annual Report 2019 Notes to the Financial Statements
For the year ended 31 December 2019
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 “HTAL”) are described in the
Directors’ report. The financial statements were authorised
and issued by the Board on the 26th of February 2020.
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
(Cth), 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.
Comparative figures have been adjusted to conform to the
presentation of the financial statements and notes for
the current financial year, where required. Amendments
have been made to comparatives as appropriate to enhance
comparability.
(b) Going concern
As at 31 December 2019, the Group has a deficiency of
net current assets of $65.1 million (2018: net current assets
deficiency of $230.1 million). Included in the Group’s current
liabilities is an amount of $248.8 million (2018: $248.8 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 Group has unused financing facilities of $1,351.2 million at
31 December 2019. CKHH has confirmed its current intention
is to provide sufficient financial support to enable the Group
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.
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 Group 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 (Cth) have been included in Note 24.
Historical cost convention
These financial statements have been prepared under the
historical cost convention.
(c) Principles of consolidation
(i) Subsidiaries
A subsidiary is an entity over which the Group has control.
The Group controls an entity when the Group is exposed, or
has rights, to variable returns from its involvement with the
entity and has the ability to affect those returns through its
power over the entity.
(ii) Joint arrangements
A joint arrangement is an arrangement of which two or
more parties have joint control and over which none of the
participating parties has unilateral control.
Investments in joint arrangements are classified either as joint
operations or joint ventures, depending on the contractual
rights and obligations each investor has under the relevant
contract. Joint operations arise where the investors have
rights to the assets and obligations for the liabilities of an
arrangement. A joint operator accounts for its share of the
assets, liabilities, revenue and expenses. Joint ventures
arise where the investors have rights to the net assets
of the arrangement. Joint ventures are accounted for
under the equity method, 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.
23
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.
Note 1 Summary of significant
accounting policies continued
(c) Principles of consolidation continued
(iii) Equity method
Under the equity method of accounting, the investments
are initially recognised at cost and adjusted thereafter to
recognise the Group’s share of the post-acquisition profits or
losses of the investee in profit or loss, and the Group’s share
of movements in other comprehensive income of the investee
in other comprehensive income. Dividends received or
receivable from joint ventures are recognised as a reduction
in the carrying amount of the investment.
When the Group’s share of losses in an equity-accounted
investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, the
Group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its
associates and joint ventures are eliminated to the extent of
the Group’s interest in these entities. Unrealised losses are
also eliminated unless the transaction provides evidence of
an impairment of the asset transferred. Accounting policies
and estimates of equity accounted investees have been
changed where necessary to ensure consistency with the
policies adopted by the Group.
The carrying amount of equity accounted investment is
tested for impairment in accordance with Note 1(g).
(d) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’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.
(e) 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.
(f) 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 Group’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.
24
Notes to the Financial Statements continuedFor the year ended 31 December 2019Hutchison Telecommunications (Australia) Limited Annual Report 2019 (g) 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.
(h) 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.
(i) Other receivables
Other receivables are initially recognised at amortised cost,
collectability is then reviewed on an ongoing basis.
(j) Loan receivables at amortised cost
Loan receivables are initially recognised at amortised cost
and collectability is then reviewed on an ongoing basis.
Contractual cash flows are solely principal and interest and
the objective of the Group’s business model is achieved
by collecting contractual cash flows.
(k) 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 Group
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 2019, the Group 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.
(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.
(l) Goodwill
Goodwill as part of joint venture equity accounting 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 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.
Goodwill on acquisitions of associates/joint ventures is
included in investments accounted for using the equity
method and is tested whenever an event or periodically tested
for impairment whenever events or changes in circumstances
indicated that the carrying value may not be recoverable.
25
Note 1 Summary of significant
accounting policies continued
(m) Payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial period
and which are unpaid. The amounts are unsecured and are
usually paid or payable within 30 days of recognition.
(n) Borrowings
Borrowings are initially recognised at fair value. Borrowings
are subsequently measured at amortised cost.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
(o) Contributed equity
Ordinary shares are classified as equity. Refer to Note 11 for
further information.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
(p) Earnings per share
(i) Basic earnings per share
Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the taxation authority
is included within other receivables or payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST components
of cash flows arising from investing or financing activities
which are recoverable from, or payable to the taxation
authority, are presented as operating cash flows.
(r) 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 Group’s operating
segment, being investment in telecommunication services.
Basic earnings per share is calculated by dividing:
(s) Critical accounting estimates and
• the profit or loss attributable to members of the Company;
assumptions
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.
(q) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is
recognised as part of the cost of the acquisition of the
asset or as part of the expense.
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 Group’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 Group’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.
26
Notes to the Financial Statements continuedFor the year ended 31 December 2019Hutchison Telecommunications (Australia) Limited Annual Report 2019 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 Group’s weighted
average cost of capital. The resulting net present value is
compared to the balance of the Group’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 Group’s
investment in VHA Joint Venture as at 31 December 2019 is
appropriate and are not aware of any events or changes since
the year end which may potentially impair the carrying values
of the Group’s investment in VHA Joint Venture as at the
statement of financial position date.
(u) Parent entity financial information
The financial information for the parent entity disclosed
in Note 24 has been prepared on the same basis as the
consolidated financial statements, except investments in
subsidiaries and VHA Joint Venture entities are accounted
for at cost in the financial statements of HTAL.
(v) New accounting standards and
Interpretations
Accounting standards issued and mandatorily effective in
the current year
The Group 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 Group’s operations and mandatory for
annual periods beginning on or after 1 January 2019. These are:
(ii) Recovery of deferred tax assets
• AASB 16 Leases
• AASB 2017–7 Amendments to Australian Accounting
Standards – Long-term Interests in Associates and
Joint Ventures
• AASB 2018–1 Amendments to Australian Accounting
Standards – Annual Improvements 2015–2017 Cycle
•
Interpretation 23 Uncertainty over Income Tax Treatments.
The Group and VHA Joint Venture had to change its
accounting policies as a result of adopting AASB 16. The
Group elected to adopt the new rules retrospectively and
recognised the cumulative effect of initially applying the
new standard on 1 January 2019. This is disclosed in Note 2.
The other amendments listed above did not have any impact
on the amounts recognised in prior periods and are not
expected to significantly affect the current or future periods.
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have
been published that are not mandatory for 31 December 2019
reporting periods and have not been early adopted by the
Group. These standards are not expected to have a material
impact on the entity in the current or future reporting periods
and on foreseeable future transactions.
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 profit. Deferred tax assets have not 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) Unrecognised losses in relation to the joint venture
The Group’s investment in the VHA Joint Venture is carried to
the extent that the entity has incurred legal or constructive
obligations or made payments on behalf of the associate. Share
of the VHA Joint Venture’s losses beyond the investment will
thereby not be recognised. If the joint venture subsequently
reports profits, the entity resumes recognising its share of those
profits only after its share of the profits equals the share of
losses not recognised. Refer to Note 2(b) for further information
in relation to the joint venture accounting adjustment.
(t) Rounding of amounts to nearest
thousand dollars
The Group 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.
27
Note 2 Change in accounting policies
(i) Practical expedients applied
and estimates
(a) AASB 16 Leases
This note explains the impact of the adoption of AASB 16
Leases on the Group’s financial statements.
The Group and the VHA Joint Venture adopted AASB 16
from 1 January 2019 but has not restated comparatives for
the 2018 reporting period, as permitted under the specific
transitional provisions in the standard. The reclassifications
and the adjustments arising from the new leasing rules
are therefore recognised in the opening balance sheet on
1 January 2019. The Group did not make any adjustments
on adoption of AASB 16 as the Group did not have any
lease contracts.
On adoption of AASB 16, the VHA Joint Venture recognised
lease liabilities in relation to leases which had previously been
classified as ‘operating leases’ under the principles of AASB 117
Leases. These liabilities were measured at the present value of
the remaining lease payments, discounted using the lessee’s
incremental borrowing rate as of 1 January 2019. The weighted
average lessee’s incremental borrowing rate applied to the
lease liabilities on 1 January 2019 ranged between 4.15% to
8.10% depending on the remaining lease term on adoption.
For leases previously classified as finance leases the Group
recognised the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount
of the right of use asset and the lease liability at the date
of initial application. The measurement principles of AASB
16 are only applied after that date. The VHA Joint Venture
did not remeasure any lease liabilities or right-of-use assets
associated with leases previously classified as finance leases
on the date of initial application.
In applying AASB 16 for the first time, the Group and the VHA
Joint Venture have used the following practical expedients
permitted by 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;
• 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 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
the VHA Joint Venture as a lessee, and the 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;
• 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;
• The VHA Joint Venture has elected to use hindsight where
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.
28
Notes to the Financial Statements continuedFor the year ended 31 December 2019Hutchison Telecommunications (Australia) Limited Annual Report 2019 (ii) Measurement of VHA’s lease liabilities
Operating lease commitments disclosed as at 31 December 2018
Discounted using the lessee’s incremental borrowing rate of at the date of initial application
(Less): short-term leases recognised on a straight-line basis as expense
(Less): lease offset as a result of site sharing agreement
Lease liability recognised as at 1 January 2019
Add: finance lease liabilities recognised as at 31 December 2018
Lease liability recognised as at 1 January 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
2019
$’000
1,760,478
(469,460)
(8,335)
(214,646)
1,068,037
591,600
1,659,637
153,171
1,506,466
1,659,637
(iii) Measurement of the VHA Joint Venture’s right of use assets
The associated right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any
prepaid or accrued lease payments, and onerous provisions relating to that lease recognised in the balance sheet as at
31 December 2018. On 1 January 2019, the recognised right-of-use assets relate to the following types of assets:
Network Assets
Properties
Total right-of-use assets
2019
$’000
526,528
1,013,593
1,540,121
(iv) Adjustments recognised in the VHA Joint Venture’s balance sheet on 1 January 2019
The change in accounting policy affected the following items in the balance sheet of the VHA Joint Venture on 1 January 2019:
• Property, plant and equipment – decrease by $526,528,000
• Right-of-use assets – increase by $1,540,121,000
• Other assets (Prepayments) – decrease by $39,395,000
• Trade and other receivables (Investment in sublease) – increase by $17,661,000
• Borrowings – decrease by $591,600,000
• Lease liabilities – increase by $1,659,637,000
• Other liabilities – decrease by $76,177,000
There was no impact on retained earnings of the VHA Joint Venture on 1 January 2019.
(b) VHA 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 Group decided to revise the useful life of some
of its existing network assets from up to 20 years to between 3 and 18 years, which is consistent with the estimates adopted
by the VHA Joint Venture. Along with the assessment of operating leases for AASB 16 resulting in the recognition of “right
of use” assets, this change was made having considered developments in the environment, as a result of the Government
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; and the announced proposed merger between
TPG Telecom Limited and VHA to become a full-service telecommunications company in Australia.
In implementing the revised useful lives, management has applied the change in the depreciation based on an assessment of
individual asset lives prospectively from 1 January 2019 as required under Australian Accounting Standards. This will decrease/
(increase) the share of VHA’s profit/(loss) by $202.9 million over the remaining useful lives. The change has been disclosed as
the VHA Joint Venture accounting adjustments in Note 7.
29
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% (2018: 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% (2018: 30%)
All unused tax losses were incurred by Australian entities.
2019
$’000
2018
$’000
5,697
10,585
–
5,697
34
10,619
2019
$’000
2018
$’000
–
–
(154,870)
(46,461)
47,743
1,282
12
4,475
1,343
1,495
2,838
12
(1,294)
(2,850)
–
–
164,826
174,322
–
–
(4,314)
(9,496)
160,512
48,154
164,826
49,448
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 2019 and 31 December 2018.
Note 5 Current assets – Cash and cash equivalents
2019
$’000
108,057
2018
$’000
18,598
Cash at bank
30
Notes to the Financial Statements continuedFor the year ended 31 December 2019Hutchison Telecommunications (Australia) Limited Annual Report 2019 Note 6 Loans and receivables
Total current
Total non-current
Receivable from VHA Joint Venture (Note 17)
2019
$’000
76,193
2018
$’000
434
–
160,765
76,193
161,199
Receivable from VHA Joint Venture
At 31 December 2019, the $76.2 million pertains to an unsecured working capital facility (2018: $161.2 million). The weighted
average interest on the working capital facility was charged at 3.44 % p.a. (2018: 4.0%).
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 Group’s current and non-current receivables and financial assets are denominated in the
following currencies:
Australian dollars
2019
$’000
76,193
76,193
2018
$’000
161,199
161,199
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 current with no indication of impairment. The Group does not hold any collateral as security. Refer to Note 22
for more information on the risk management policy of the Group.
Note 7 Non-current assets – Investment accounted for using the equity method
HTAL and Vodafone Group Plc each own a 50 per cent interest in a joint venture named Vodafone Hutchison Australia Pty
Limited (“VHA”), which is involved in providing telecommunication services in Australia. HTAL’s interest in VHA is held by a
controlled entity, Hutchison 3G Australia Holdings Pty Limited (“H3GAH”) and is accounted for in the consolidated financial
reports using the equity method Note 1(c)(iii).
The aggregate share of losses from VHA for the year ended 31 December 2019 is $159,144,000 (2018: $4,982,000). Information
relating to the joint venture is set out below:
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
2019
$’000
2018
$’000
159,638
167,008
–
(159,144)
(494)
(2,600)
(4,982)
212
–
159,638
31
Note 7 Non-current assets – Investment accounted for using the equity method continued
Summarised financial information of the joint venture, based on its Australian Accounting Standards financial statements and
reconciliation with the carrying amount of the investment in consolidated financial statements, are set out below:
Summarised Statement of Financial position of VHA
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net (Liabilities)
Proportion of the Group’s ownership
Share of the VHA Joint Venture’s net liabilities
Goodwill
Cumulative joint venture accounting adjustments
Cumulative unrecognised share of VHA Joint Venture loss
Carrying amount of the investment
2019
$’000
2018
$’000
1,421,176
1,350,623
7,324,591
6,828,915
(6,627,170)
(3,380,689)
(3,320,962)
(5,720,915)
(1,202,365)
(922,066)
50%
50%
(601,183)
(461,033)
165,321
165,321
202,900
455,350
232,962
–
–
159,638
The carrying value of HTAL’s investment in VHA is predicated on the ongoing financial support from both of VHA’s ultimate
shareholders. At 31 December 2019, HTAL’s share of VHA’s net current asset deficiency is $2,603.0 million (2018: net current
assets deficiency of $1,015.0 million). While HTAL is one of the shareholders of the VHA Joint Venture, HTAL does not have a
present obligation (legal or constructive) to meet VHA’s financial obligations as and when they fall due. Both of VHA’s ultimate
shareholders, CKHH and Vodafone Group Plc have each confirmed their current intention to provide sufficient 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 as at 31 December 2019 unless the merger is effective within the twelve month period.
HTAL has discontinued the recognition of its share of losses exceeding HTAL’s interest in the VHA Joint Venture in accordance
with Australian Accounting Standards.
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 (i)
Unrecognised share of VHA Joint Venture loss
Share of VHA Joint Venture’s loss
2019
$’000
2018
$’000
3,523,414
3,626,366
(3,802,725)
(3,750,809)
(279,311)
(124,443)
–
–
(279,311)
(124,443)
(988)
423
(280,299)
(124,020)
2019
$’000
2018
$’000
(139,656)
(62,222)
(252,450)
57,240
232,962
–
(159,144)
(4,982)
(i) Joint venture accounting adjustments of the comparative period primarily related to differences in the economic useful lives of property, plant and
equipment. The current period joint venture accounting adjustments reflect the revised useful life estimate during the period, as disclosed in Note 2(b).
This change in estimate has resulted in a $309.7 million decrease in VHA Joint Venture accounting adjustment.
32
Notes to the Financial Statements continuedFor the year ended 31 December 2019Hutchison Telecommunications (Australia) Limited Annual Report 2019 VHA Joint Venture’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
2019
$’000
2018
$’000
733,569
642,713
(5,339,009)
(2,050,761)
(3,286,968)
(5,544,204)
(1,021,356)
(868,690)
7,344
3,808
(444,005)
(361,802)
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(c):
Name of controlled entity
Country of Incorporation
Class of Shares
Hutchison 3G Australia Holdings Pty Limited **
Australia
Ordinary
EQUITY HOLDING*
2019
%
100
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
Trade creditors
Payables to VHA Joint Venture (Note 17)
2019
$’000
258
300
558
2018
$’000
219
153
372
Further information relating to payables to VHA Joint Venture is set out in Note 17.
Liquidity risk
A summarised analysis of the Group’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)
2019
$’000
2018
$’000
248,790
248,790
(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.
33
Note 10 Current liabilities – Other financial liabilities continued
(b) Financing arrangements
Unrestricted access was available at the statement of financial position date to the following lines of credit.
(c) Other financial liabilities
Total facilities from an entity within the CKHH Group
Used at the statement of financial position date
Unused at the statement of financial position date
Note 11 Contributed equity
Share capital
Ordinary shares (fully paid)
2019
$’000
2018
$’000
1,600,000
1,600,000
(248,790)
(248,790)
1,351,210
1,351,210
2019
Shares
2018
Shares
2019
$’000
2018
$’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 2019 and 31 December 2018.
(c) Options
There are no options outstanding as at the statement of financial position date.
(d) Capital risk management
The Group’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 Group 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 Group actively and regularly reviews and manages
its capital structure to ensure capital and shareholder returns, taking into consideration the future capital requirements of the
Group and capital efficiency, projected operating cash flows and projected capital expenditures.
The Group 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 2019 and 31 December 2018 were as follows:
Gearing ratio
2019
186%
2018
72%
34
Notes to the Financial Statements continuedFor the year ended 31 December 2019Hutchison Telecommunications (Australia) Limited Annual Report 2019 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
Balance at 31 December
Share-based payments reserve
There has been no movement in the share-based payments reserve during the year.
(b) Accumulated losses
Accumulated losses at 1 January
Adjustment on the adoption of AASB 15 (net of tax)
Profit/(loss) attributable to members of the Company
Accumulated losses at 31 December
(c) Nature and purpose of reserves
Capital reserve
2019
$’000
2018
$’000
54,887
54,887
(399)
15,880
70,368
95
15,880
70,862
95
(494)
(399)
(117)
212
95
2019
$’000
2018
$’000
(4,185,071)
(4,186,946)
–
(2,600)
(154,870)
4,475
(4,339,941)
(4,185,071)
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(k)(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.
35
Note 13 Director and key management personnel compensation
(a) Director and key management personnel compensation
Short term employee benefits
2019
$
2018
$
109,500
109,500
(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 2019 and 31 December 2018. There were no other transactions with the Directors of the Company for the years
ended 31 December 2019 and 31 December 2018.
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 (Cth)
Total remuneration for assurance services
Non-Assurance services
Tax services
Total auditors remuneration
2019
$
2018
$
161,670
161,670
105,350
105,350
12,000
–
173,670
105,350
It is the Group’s policy to employ the auditors on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Group are important. These assignments are principally tax, compliance and advice. It is the
Group’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 2019 and 31 December 2018. The Directors are
not aware of any other material contingent liabilities existing at the reporting date.
Contingencies for the VHA Joint Venture are disclosed below:
Guarantees
Secured guarantees
Unsecured guarantees
Total contingencies
2019
$’000
2018
$’000
37,197
14,648
51,845
46,195
18,935
65,130
VHA’s contingent liabilities consist of $14.6 million (2018: $18.9 million) unsecured guarantees and $37.2 million (2018: $46.2 million)
secured guarantees. To support the issuance of the guarantees, VHA has placed $18.6 million deposit with the issuing bank.
36
Notes to the Financial Statements continuedFor the year ended 31 December 2019Hutchison Telecommunications (Australia) Limited Annual Report 2019
Note 16 Commitments
There were no commitments contracted by HTAL or its controlled entities not recognised as liabilities or payables at
31 December 2019 and 31 December 2018.
Commitments for the VHA Joint Venture are disclosed below:
VHA’s commitments
Operating leases
Right-of-use assets (2018: Finance lease)
Other commitments
Capital commitments
2019
$’000
2018
$’000
–
1,760,478
22,143
180,248
378,426
18,478
127,666
492,451
VHA’s operating leases pertain to various networks 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, network support services and sponsorships
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.
Note 17 Related party transactions
(a) Parent entities
The holding company and parent entity is Hutchison Telecommunications (Amsterdam) B.V. which, at 31 December 2019, owns
approximately 88% of the issued ordinary shares of the Company. The ultimate parent entity is CK Hutchison Holdings Limited
(incorporated in Cayman Islands).
(b) Directors
The names of persons who were Directors of the Company at any time during the financial year are as follows:
FOK Kin Ning, Canning; Barry ROBERTS-THOMSON; Susan Mo Fong CHOW; 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.
(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
2019
$
2018
$
– (40,000,000)
84,764,621
115,235,379
– 40,000,000
–
(115,235,379)
5,399,924
10,368,503
(485,000)
(485,000)
37
Note 17 Related party transactions continued
(e) Outstanding balances
The following balances are outstanding at the statement of financial position date in relation to transactions with related parties:
Current financial assets
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)
2019
$
2018
$
76,193,205
434,429
–
160,764,621
(299,635)
(152,952)
(248,789,571) (248,789,571)
No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been
recognised in respect of bad or doubtful debts due from related parties.
(f) Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates, except interest on some loans
between the parties that are interest free. All these loans have been disclosed.
Note 18 Deed of cross guarantee
The Company and Hutchison 3G Australia Holdings Pty Ltd (“H3GAH”) are parties to a deed of cross guarantee, under
which each company guarantees the debt of the others. There have been no changes to the deed of cross guarantee as at
31 December 2019 in comparison to 31 December 2018.
(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’. H3GAH is a holding
company with no material operations and owns 50% of VHA.
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 2019 and 31 December 2018.
2019
$’000
2018
$’000
5,697
(1,423)
4,274
–
4,274
10,619
(1,162)
9,457
–
9,457
(4,067,299)
(4,076,756)
4,274
9,457
(4,063,025)
(4,067,299)
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
38
Notes to the Financial Statements continuedFor the year ended 31 December 2019Hutchison Telecommunications (Australia) Limited Annual Report 2019
(b) Statement of financial position
Set out below is a statement of financial position as at 31 December 2019 and 31 December 2018 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
2019
$’000
2018
$’000
108,057
76,193
13
18,598
434
6
184,263
19,038
–
277,315
277,315
461,578
160,765
277,315
438,080
457,118
558
372
248,790
248,790
249,348
249,348
249,162
249,162
212,230
207,956
4,204,488
4,204,488
70,767
70,767
(4,063,025)
(4,067,299)
212,230
207,956
39
Note 19 Segment reporting
The Group has identified its operating segment based on the internal reports that are reviewed and used by the Group in
assessing performance and in determining the allocation of resources.
In 2019, the Group continued to invest in an operator within the telecommunications industry.
The chief operating decision maker of the Group receives information to manage its operations and investment based on one
operating segment, an investor in an operator of telecommunication services. As such, the Group believes it is appropriate that
there is one operating segment, investment in telecommunication services.
Key financial information used by the chief operating decision maker of the Group when evaluating the investment in
telecommunication services operating segment includes:
HTAL’s share of the following items of VHA*
Total Revenue
Net loss*
* after VHA Joint Venture accounting adjustments.
2019
$’000
2018
$’000
1,761,707
1,813,183
(159,144)
(4,982)
Further information reviewed by the chief operating decision maker with regards to the performance of the Group’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
Profit/(loss) after income tax
2019
$’000
(154,870)
Share of losses of VHA Joint Venture partnership accounted for using equity method (see Note 7)
159,144
Change in operating assets and liabilities
Increase in other financial assets
Decrease in payables
Net cash inflows from operating activities
Net debt reconciliation
Cash and cash equivalents
Borrowings
Net debt
Net debt as at 1 January 2019
Cash flows
2018
$’000
4,475
4,982
127
130
9,714
234
187
4,695
108,057
18,598
(248,790)
(248,790)
(140,733)
(230,192)
Borrowings
due
within 1 year
$’000
Borrowings
due
after 1 year
$’000
Total
$’000
–
–
(248,790)
(230,192)
–
89,459
Cash
$’000
18,598
89,459
Other loans (non-cash) from shareholder
–
(248,790)
248,790
–
Net debt as at 31 December 2019
108,057
(248,790)
–
(140,733)
40
Notes to the Financial Statements continuedFor the year ended 31 December 2019Hutchison Telecommunications (Australia) Limited Annual Report 2019
Note 21 Earnings per share
(a) Basic earnings per share
Profit/(loss) attributable to members of the Company
(b) Diluted earnings per share
Profit/(loss) attributable to members of the Company
(c) Earnings used in calculating earnings per share
Basic earnings per share
CONSOLIDATED
2019
Cents
2018
Cents
(1.14)
0.03
(1.14)
0.03
Profit/(loss) attributable to members of the Company used in calculating basic earnings per share
(154,870)
4,475
Diluted earnings per share
Profit/(loss) attributable to members of the Company used in calculating diluted earnings per share
(154,870)
4,475
CONSOLIDATED
2019
Number
2018
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 (2018: nil) options outstanding at 31 December 2019 that are anti-dilutive and accordingly there was no impact
on the earnings per share calculation for the year ended 31 December 2019.
Note 22 Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (interest rate risk), credit risk and liquidity risk. The
Group’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 Group. It is the Group’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 exposures.
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 Group’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.
41
Note 22 Financial risk management continued
(a) Market risk continued
(i) Interest rate risk
The Group’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 1% change on the Australian market rate on the loans and receivables will result in an immaterial
$1.8 million change in interest revenue based on 31 December 2019 balances. 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 Group does not carry any material balances
in foreign currency.
(iii) Summarised sensitivity analysis
The following table summarises the sensitivity of the Group’s financial assets to interest rate risk.
31/12/2019
Financial assets
Cash and cash equivalents
Loans and receivable
Total increase (decrease)
31/12/2018
Financial assets
Cash and cash equivalents
Loans and receivable
Total increase (decrease)
INTEREST RATE RISK
-1%
+1%
Post-tax loss
$’000
Other equity
$’000
Post-tax loss
$’000
Other equity
$’000
(1,081)
(762)
(1,843)
–
–
–
1,081
762
1,843
–
–
–
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
–
–
–
Carrying
amount
$’000
108,057
76,193
184,250
Carrying
amount
$’000
18,598
161,199
179,797
(a) 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 VHA Joint Venture. The recoverability of the loan and receivable
is supported by a letter of support from CK Hutchison Holdings Limited and Vodafone Group Plc.
(i) Impairment of financial assets
All of the entity’s debt investment is measured at amortised cost and is considered to have low credit risk, and the loss allowance
recognised during the period was therefore limited to 12 months’ expected losses. Debt investment is considered to be low credit
risk as the debt investment is held solely by VHA which has never defaulted on any payments of principal and/or interest.
42
Notes to the Financial Statements continuedFor the year ended 31 December 2019Hutchison Telecommunications (Australia) Limited Annual Report 2019 (b) 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 Group 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 Group’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. Other financial
liabilities include an amount of $248.8 million relating to an interest free loan from a subsidiary in the CKHH group. CKHH has
confirmed its current intention to provide sufficient financial support to enable the Parent entity to meet is financial obligations
as and when they fall due. This undertaking is provided for a minimum of 12 months from signing these financial statements.
31/12/2019
Cash and cash equivalents
Loans and receivables
Payables
Other financial liabilities
Total ($’000)
31/12/2018
Cash and cash equivalents
Loans and receivables
Payables
Other financial liabilities
Total ($’000)
Weighted
average
interest rate
1.1%
3.4%
–
–
Less than
1 year
$’000
108,057
76,193
(558)
(248,790)
(65,098)
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
Over
5 years
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Weighted
average
interest rate
Less than
1 year
$’000
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
Over
5 years
$’000
1.1%
4.0%
–
–
18,598
434
(372)
(248,790)
–
160,765
–
–
(230,130)
160,765
–
–
–
–
–
–
–
–
–
–
Total
$’000
108,057
76,193
(558)
(248,790)
(65,098)
Total
$’000
18,598
161,199
(372)
(248,790)
(69,365)
Note 23 Events occurring after the reporting date
Proposed merger between joint venture investment VHA and TPG Telecom Limited (“TPG Telecom”)
On 13 February 2020 the Federal Court ruled that the proposed merger between VHA and TPG Telecom would not
substantially lessen competition and should be allowed to proceed. VHA, along with TPG Telecom, will work to complete
the merger in mid-2020, subject to the remaining regulatory and shareholder approvals and any appeal by the Australia
Competition and Consumer Commission. This announcement does not significantly impact the financial performance for
the year ended and financial position of VHA and HTAL as at 31 December 2019.
The working capital facility with VHA and the credit agreement with an entity within the CKHH Group have been extended
to February 2021 under similar terms and conditions in February 2020. HTAL also made a repayment of $84.8 million on the
aforementioned credit agreement in February 2020.
There has been no other matter or circumstance that has arisen after the reporting date that has significantly affected or
may significantly affect:
(i) the operations of the Group in future financial years, or
(ii) the results of those operations in future financial years, or
(iii) the state of affairs of the Group in future financial years.
43
Note 24 Parent entity disclosures
(a) Summary financial information
Financial position
ASSETS
Current Assets
Non-current Assets
Total Assets
LIABILITIES
Current Liabilities
Total Liabilities
Net Assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total Equity
Financial performance
Profit for the year
Total comprehensive Profit for the year
2019
$’000
2018
$’000
184,263
277,315
461,578
179,802
277,315
457,117
249,348
249,348
249,161
249,161
212,230
207,956
4,204,488
4,204,488
15,880
15,880
(4,008,138)
(4,012,412)
212,230
207,956
4,274
4,274
9,457
9,457
(b) Commitments and Contingencies
There were no commitments contracted for by HTAL but not recognised as liabilities or payable at 31 December 2019 and
31 December 2018.
The Directors of the Parent Entity are not aware of any other material contingent liabilities existing at the reporting date.
As at 31 December 2019, the Parent Entity has a deficiency of net current assets of $65.1 million (2018: deficiency of net current
assets of $69.4 million). Included in the Parent Entity’s current liabilities is an amount of $248.8 million (2018: $248.8 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 $1,351.2 million at 31 December 2019. 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
2019
$’000
2018
$’000
3,664,655
3,664,655
3,387,340
3,387,340
277,315
277,315
44
Notes to the Financial Statements continuedFor the year ended 31 December 2019Hutchison Telecommunications (Australia) Limited Annual Report 2019 Directors’ Declaration
In the Directors’ opinion:
(a) the financial statements and notes set out on pages 18 to 44 are in accordance with the Corporations Act 2001 (Cth),
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 2019 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 (Cth).
This declaration is made in accordance with a resolution of the Directors.
Director
26 February 2020
Director
26 February 2020
45
Independent
Auditor’s Report
46
Hutchison Telecommunications (Australia) Limited Annual Report 2019 47
Independent
Auditor’s Report
continued
pwc
Key audit matter
How our audit addressed the key audit matter
Estimate of useful life of network assets of VHA
(Refer to note 2 (b))
Depreciation of network assets constitutes a substantial
operating cost for the VHA joint venture. The assets are
depreciated over their estimated useful lives ( 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.
Effective 1 January 2019, the Group re-assessed it's
estimates of the useful life of its existing network assets
from up to 20 years to between 3 and 18 years, which is
consistent with the estimates adopted by VHA in line
with industry developments.
The HTAL Directors' estimate of the useful lives of
network assets was a key audit matter as it required the
Directors to make a collective assessment on the likely
future use of the network assets and the potential impact
of anticipated future technological changes on existing
assets. The estimation is impacted by company-specific
factors along with broader industry considerations.
We performed the following audit procedures, amongst
others:
• We assessed the new estimates of useful lives of
between 3 to 18 years for the impacted network
assets at VHA including:
o
o
o
discussions with the VHA technology
strategy department,
obtaining an understanding of the impacts
of regulatory developments on network
assets as described in note 2(b) of the
financial statements.
considering the nature of the
telecommunications industry where there
are varying practices with regards to useful
lives adopted by operators. We compared
the estimate of useful lives against other
telecommunication operators in Australia
and overseas and noted that the Group's
estimate was within the range we observed
as commonly adopted in the industry.
• We tested the accuracy of the calculation for the
useful life adjustment by understanding
management's calculation methodology and testing
whether the logic was in accordance with Australian
Accounting Standards. We also recalculated the
depreciation for a sample of individual fixed assets.
• We enquired with management and the Directors of
HTAL about their assessment of the impact of
anticipated technology, industry or regulatory
developments on the assets and their useful lives.
• We evaluated the adequacy of disclosures made by
the Group in notes 2(b) of the financial report in
view of the requirements of Australian Accounting
Standards.
48
Hutchison Telecommunications (Australia) Limited Annual Report 2019 49
Independent
Auditor’s Report
continued
50
Hutchison Telecommunications (Australia) Limited Annual Report 2019 pwc
Report on the remuneration report
Our opinion on the remuneration report
5
Corporations Act 2001.
Responsibilities
the Corporations Act 2001.
We have audited the remuneration report included in pages 12 to 1
ended 31 December 2019.
of the directors' report for the year
In our opinion, the remuneration report of Hutchison Telecommunications (Australia) Limited for the
year ended 31 December 2019 complies with section 300A of the
The directors of the Company are responsible for the preparation and presentation of the remuneration
report in accordance with section 300A of
an opinion on the remuneration report, based on our audit conducted in accordance with Australian
Auditing Standards.
Our responsibility is to express
Rosalie Wilkie
Partner
Sydney
26 February 2020
51
Shareholder Information
The shareholder information set out below was applicable as at 26 February 2020.
Substantial shareholders
Substantial shareholders in the Company (as disclosed to the ASX) 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
Notes:
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
# Substantial shareholding includes relevant interest arising from an equitable mortgage of shares from Leanrose Pty Limited of approximately 0.62% of
the issued capital of the Company.
## 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 – and over
Total
There were 3,076 holders of less than a marketable parcel of ordinary shares.
Number of
Shareholders
% Issued
Capital
1,367
2,334
862
1,051
248
5,862
0.01
0.05
0.05
0.25
99.64
100.00
52
Hutchison Telecommunications (Australia) Limited Annual Report 2019 Twenty largest shareholders
The names of the 20 largest holders of quoted ordinary shares as at 26 February 2020 are as follows:
Shareholder
Hutchison Telecommunications (Amsterdam) B.V.
Spark New Zealand Trading Limited
Leanrose Pty Ltd
Shareholding
11,925,479,378
1,357,250,858
83,913,797
Mr Dimitrios Piliouras & Mrs Konstantina Piliouras
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