Hutchison Telecommunications (Australia) Limited ABN 15 003 677 227 Level 1, 177 Pacific Highway North Sydney, NSW 2060 Tel: (02) 9015 5088 Fax: (02) 9015 5034 www.hutchison.com.au ASX Market Announcements Australian Securities Exchange Date: 29 March 2023 Subject: 2022 Annual Report The 2022 Annual Report for Hutchison Telecommunications (Australia) Limited incorporating the full year financial statements for the year ended 31 December 2022 is attached. Yours sincerely, Swapna Keskar Joint Company Secretary AUTHORISED FOR RELEASE: By order of the Board For further information, please contact the Company Secretary by email at htalinvestors@companymatters.com.au or by telephone on (02) 9015 5088. Annual Report 2022 Hutchison Telecommunications (Australia) Limited Contents Who we are Ownership structure Financial Summary Chairman’s Message Board of Directors Corporate Governance Statement Directors’ Report Auditor’s Independence Declaration Financial Report Independent Auditor’s Report Shareholder Information Corporate Directory i ii 1 2 4 6 12 20 21 52 58 60 AGM Details The Annual General Meeting of HTAL will be held at: 177 Pacific Highway North Sydney NSW 2060 Friday 5 May 2023 at 10.00 am Sydney time ABN 15 003 677 227 Hutchison Telecommunications (Australia) Limited (ASX: HTA) (HTAL) WHO WE ARE i Hutchison Telecommunications (Australia) Limited (“HTAL” or the “Company”) (ASX: HTA) has a 25.05% equity interest in TPG Telecom Limited (ASX: TPG) (“TPG”) (formerly Vodafone Hutchison Australia Limited (“VHA”)). This comprises 11.14% interest directly held by Hutchison 3G Australia Holdings Pty Limited (“H3GAH”, a wholly owned subsidiary of HTAL) and an attributed 13.91% interest indirectly held by H3GAH through Vodafone Hutchison (Australia) Holdings Limited (“VHAH”), a company domiciled in the United Kingdom in which H3GAH has a 50% shareholding. VHAH has a direct 27.82% interest in TPG. TPG operates a number of leading mobile and internet brands including Vodafone, TPG, iiNet, AAPT, Internode, Lebara and felix, providing consumers with a comprehensive portfolio of fixed and mobile products in the Australian telecommunications market. 2020 VHA merged with TPG Corporation Limited (formerly TPG Telecom Limited) creating the present TPG 2009 HTAL’s operations were merged with Vodafone Australia to form VHA 2003 HTAL launched Australia’s first 3G service under the 3 brand 1999 HTAL was listed on the ASX Annual Report 2022 ii OWNERSHIP STRUCTURE CK HUTCHISON HOLDINGS LIMITED 87.87%* SPARK NEW ZEALAND TRADING LIMITED HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) LIMITED 10% (ASX: HTA) VODAFONE GROUP PLC PUBLIC SHAREHOLDERS 2.13% 100% HUTCHISON 3G AUSTRALIA HOLDINGS PTY LIMITED 50% 50%* VODAFONE HUTCHISON (AUSTRALIA) HOLDINGS LIMITED 11.14% 27.82% 11.14%* TPG TELECOM LIMITED (ASX: TPG) %* INDIRECT OWNERSHIP Hutchison Telecommunications (Australia) Limited FINANCIAL SUMMARY Revenue Operating expenses 1 2021 $’000 Movement $’000 Movement % 2022 $’000 194 (1,676) (1,901) 121 73 225 60% 12% N/A Impairment loss on equity accounted investment (444,617) – (444,617) Share of net profit/(loss) of equity accounted investments, net of tax 47,721 (19,897) 67,618 340% Loss from ordinary activities after tax attributable to members (398,378) (21,677) (376,701) Net loss for the year attributable to members (398,378) (21,677) (376,701) 1,738% 1,738% Hutchison Telecommunications (Australia) Limited (“HTAL” or the “Company”) (ASX: HTA) accounts for its interests in TPG Telecom Limited (“TPG”)1 and Vodafone Hutchison (Australia) Holdings Limited (“VHAH”)2 using the equity method of accounting. Under this method, HTAL’s share of net profit/(loss) of these equity accounted investments is reported in HTAL’s consolidated statement of profit or loss and other comprehensive income. For the year ended 31 December 2022, share of net profit/(loss) of these equity accounted investments, after consolidation adjustments, increased to a profit of $47.7 million from a loss of $19.9 million for the comparative year ended 31 December 2021. This represented an increase of $67.6 million, primarily driven by an increase in TPG’s net profit resulting from one-off gain arising from the sale of its passive tower and rooftop assets. The net profit was partially offset by the higher net finance costs of VHAH. Further details are included in Note 10 to the financial statements for the year ended 31 December 2022. HTAL’s basic earnings/(loss) per share is $(2.94) for the year ended 31 December 2022 (2021: $(0.16)). 1 HTAL’s 25.05% ownership interest in TPG comprises 11.14% interest directly held by Hutchison 3G Australia Holdings Pty Limited (“H3GAH”), a wholly owned subsidiary of HTAL, and an attributed 13.91% interest indirectly held by H3GAH through VHAH, a company domiciled in the United Kingdom in which H3GAH has a 50% shareholding. VHAH has a direct 27.82% interest in TPG. 2 A company domiciled in the United Kingdom in which HTAL through H3GAH has a 50% shareholding and which H3GAH jointly controls with a subsidiary of Vodafone Group Plc. VHAH holds a direct 27.82% interest in TPG. Annual Report 2022 2 CHAIRMAN’S MESSAGE HTAL Operations and 2022 Financial Results Hutchison Telecommunications (Australia) Limited (“HTAL” or the “Company” (ASX: HTA), and together with its controlled entity, the “Group”) reports a statutory net loss of $398.4 million for the year ended 31 December 2022, compared with a net loss of $21.7 million for the comparative year ended 31 December 2021. The increase in net loss for the year 2022 is attributable to a $444.6 million non-cash impairment loss recognised to reduce the carrying amount of the Group’s 25.05%1 interests in TPG Telecom Limited (“TPG”) to its estimated recoverable amount. HTAL’s revenue represents interest income. For the year ended 31 December 2022, interest income increased to $0.2 million from $0.1 million for the comparative year ended 31 December 2021, driven by the increase in interest rates during the second half of 2022. HTAL’s other operating expenses for the year ended 31 December 2022 decreased to $1.7 million from $1.9 million for the comparative year ended 31 December 2021. This is due to decease in general expenses. The Group has determined the recoverable amount of its investments in TPG at 31 December 2022 by reference to an indicative share price, including a significant influence premium given the parcel of shareholding and significant influence held by HTAL. As a result, the Group has recognised a non-cash impairment loss of $444.6 million for the year 2022 for the amount by which the carrying amount exceeds the recoverable amount. The Group’s share of net profit/(loss) of the equity accounted investments, after consolidation adjustments, increased to a profit of $47.7 million for the year 2022, from a loss of $19.9 million for the comparative year 2021. This represented an increase of $67.6 million, primarily driven by an increase in TPG’s net profit resulting from one-off gain arising from the sale of its passive tower and rooftop assets. The net profit was partially offset by the higher net finance costs of Vodafone Hutchison (Australia) Holdings Limited (“VHAH”)2. Hutchison Telecommunications (Australia) Limited 3 HTAL’s wholly owned subsidiary Hutchison 3G Australia Holdings Pty Limited (“H3GAH”), which holds the Group’s 11.14% direct interest in TPG, received dividends of $36.2 million from TPG during the year 2022. These dividends were used to fund a $33.0 million partial repayment of a borrowing facility granted by a subsidiary of the ultimate parent entity, CK Hutchison Holdings Limited. Additionally, VHAH received and retained dividends of $90.5 million from TPG during the year 2022. TPG 2022 financial results TPG announced a total revenue of $5,415 million, EBITDA of $2,135 million, and a net profit attributable to shareholders of $513 million for the year ended 31 December 2022, compared to $5,292 million, $1,727 million and a profit of $113 million respectively for the year ended 31 December 2021. For further details and an explanation of TPG’s results for the year ended 31 December 2022, you may refer to TPG’s 2022 annual report which was lodged with the ASX on 27 February 2023. HTAL remains committed to its investment in TPG and will continue to support TPG in the future. Fok Kin Ning, Canning Chairman 1 HTAL’s 25.05% ownership interest in TPG Telecom Limited (“TPG”) comprises 11.14% interest directly held by HTAL’s wholly owned subsidiary Hutchison 3G Australia Holdings Pty Limited (“H3GAH”) and an attributed 13.91% interest indirectly held by H3GAH through Vodafone Hutchison (Australia) Holdings Limited (“VHAH”), a company domiciled in the United Kingdom in which H3GAH has a 50% shareholding. VHAH has a direct 27.82% interest in TPG. 2 A company domiciled in the United Kingdom in which HTAL through H3GAH has a 50% shareholding and which H3GAH jointly controls with a subsidiary of Vodafone Group Plc. VHAH holds a direct 27.82% interest in TPG. Annual Report 2022 4 BOARD OF DIRECTORS 1 2 3 4 1. FOK Kin Ning, Canning BA, DFM, FCA (ANZ) 3. Melissa ANASTASIOU Chairman Director Fok Kin Ning, Canning, aged 71, 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 (“Cheung Kong (Holdings)”) and Hutchison Whampoa Limited (“HWL”) since 1985 and 1984 respectively, both of which were previously listed on The Stock Exchange of Hong Kong Limited (“SEHK”) and 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 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, chairman and an executive director of HK Electric Investments Manager Limited (“HKEIML”) as the trustee-manager of HK Electric Investments (“HKEI”) and HK Electric Investments Limited (“HKEIL”) since 2013. He has also been an executive director and deputy chairman of CK Infrastructure Holdings Limited (“CKI”) since 1997. Mr Fok has also been a director and chairman of TPG Telecom Limited (“TPG”) (formerly Vodafone Hutchison Australia Limited) since 2001 and March 2021 respectively, a director of Cenovus Energy Inc. (“Cenovus Energy”) since January 2021 and deputy president commissioner of PT Indosat Tbk (“PT Indosat”) since January 2022. The aforementioned companies are either the ultimate holding company of HTAL, or subsidiaries or associated companies of CKHH of which Mr Fok has oversight as director of CKHH. He was a co-chairman from 2000 to 2020 and was a director from 2000 to March 2021 of Husky Energy Inc. (“Husky Energy”) (delisted on 5 January 2021 following its combination with Cenovus Energy). 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 73, 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. Mr Roberts-Thomson has also served as a director of TPG from 2001 until his resignation in July 2020 and he also serves as a director on HTAL’s subsidiary, Hutchison 3G Australia Holdings Pty Limited. Melissa Anastasiou, aged 51, has been a Director since March 2020. Ms Anastasiou is currently General Counsel for Spark New Zealand Limited (“Spark”) where she is responsible for oversight of the legal and compliance functions, providing Spark with strategic legal and commercial guidance, ensuring the business acts lawfully and with the utmost integrity. Ms Anastasiou joined Spark in 2009 and undertook a range of legal roles across the organisation before being appointed as Group General Counsel in 2012 and to the Spark Leadership Squad on 1 July 2018. Ms Anastasiou is the Executive Sponsor for Spark’s Wholesale business, a director on a number of Spark subsidiary boards (including Spark New Zealand Trading Limited and Spark Finance Limited (NZX Listed Issuer)) and has also played a pivotal role in leading Spark’s diversity and inclusion programme. Prior to joining Spark, Ms Anastasiou spent a number of years as a Senior Legal Counsel for UK mobile provider Telefonica O2. She also has extensive experience working for leading corporate law firms in Auckland and the UK. Ms Anastasiou has a Bachelor of Laws from Victoria University of Wellington. 4. Susan Mo Fong CHOW, also known as WOO Mo Fong, Susan BSc (alias CHOW WOO Mo Fong, Susan) Director Susan Mo Fong Chow, aged 69, has been a Director since December 2019. Mrs Chow has been a non-executive director of CKHH since 2017. She was an executive director and group deputy managing director from June 2015 to July 2016 and senior advisor from August 2016 to December 2016 of CKHH. From 1993 to 2016, she was a director of HWL. 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 a director of CKI since 2006, HKEIML as the trustee-manager of HKEI and HKEIL since 2014. She is an independent non-executive director of Hong Kong Exchanges and Clearing Limited since 2020. She previously served as a member of the Listing Committee of the SEHK, 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. Hutchison Telecommunications (Australia) Limited 5 5 6 7 8 9 5. Justin Herbert GARDENER BEc, FCA, AGIA 8. Frank John SIXT MA, LLL Director Director Justin Herbert Gardener, aged 86, 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. 6. LAI Kai Ming, Dominic BSc, MBA Director Lai Kai Ming, Dominic, aged 69, 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. He was finance director and chief operating officer of the A.S. Watson group, the retail arm of the CKHH group, from 1994 to 1997 and group managing director of the Harbour Plaza Hotel Management group, the former hotel business of HWL, from 1998 to 2000. Since 2000, he has been a director of HWL. Mr Lai has been a non-executive director since 2009 and an alternate director to directors since 2017 of HTHKH. He has been an alternate director to a director of TOM Group Limited (“TOM”) since 2016. He has been a commissioner 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 has oversight as director of CKHH. He was a director of Vodafone Hutchison Australia Pty Limited (“VHA”) (now known as TPG Telecom Limited) from 2016 to 2020. 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. 7. John Michael SCANLON Director John Michael Scanlon, aged 81, 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 71, 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) and HWL. He has been chairman and a non-executive director of TOM since 1999 and an executive director of CKI since 1996. He has been an alternate director to a director of HKEIML as the trustee-manager of HKEI and HKEIL since 2015, a director of TPG since 2001 and a director of Cenovus Energy since January 2021. He has also been a commissioner of PT Indosat since January 2022. The aforementioned companies are either the ultimate holding company of HTAL, or subsidiaries or associated companies of CKHH of which Mr Sixt has oversight as director of CKHH. He has almost four decades of legal, global finance and risk management experience, and possesses deep expertise in overseeing financial reporting system, risk management and internal control systems as well as sustainability issues and related risks. Mr Sixt was a director of Husky Energy (delisted on 5 January 2021 upon its combination with Cenovus Energy) from 2000 to March 2021. He holds a Master’s degree in Arts and a Bachelor’s degree in Civil Law, and is a member of the Bar and of the Law Society of the Provinces of Québec and Ontario, Canada. 9. WOO Chiu Man, Cliff BSc Director Woo Chiu Man, Cliff, aged 69, 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 also been a commissioner of PT Indosat since January 2022. He held various senior technology management positions in the telecommunications industry before joining the group of HWL in 1998. 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 was an alternate director to a director of VHA from 2016 to 2020. He possesses extensive operations experience in the telecommunications industry and has been involved in cellular technology for over 32 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. Annual Report 2022 6 CORPORATE GOVERNANCE STATEMENT This Corporate Governance Statement is dated 24 February 2023 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. The Company and its Directors are committed to high standards of corporate governance. This report reflects the main corporate governance practices adopted by the Company and its subsidiaries (collectively, the “Group”) during the 2022 financial year (“Reporting Period”), noting where the Company does not comply with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (4th edition) (“ASX Corporate Governance Recommendations”). 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; – 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; – 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. Eight of the Directors, including the Chairman, Mr Fok Kin Ning, Canning, are non-executives. One Director, Mr Frank Sixt is considered to be an executive Director as he is the person directly responsible to the Board in respect of carrying out the Chief Executive Officer function and Chief Financial Officer function pursuant to section 295A of the Corporations Act 2001 (Cth). Mr Sixt is not formally appointed to either role and accordingly, the Company does not have “senior executives”. The Board has considered the factors relevant to assessing the independence of a Director contained in the ASX Corporate Governance Recommendations, 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 service of either Mr Gardener or Mr Scanlon has compromised their independence. In light of the majority ownership by CK Hutchison Holdings Limited (“CKHH”), the Board has resolved that, at this stage, it is not in the best interests of the Company that a majority of Directors or the Chairman be independent. Hutchison Telecommunications (Australia) Limited 7 BOARD SKILLS MATRIX The Board has considered the mix of skills which are appropriate for the Board as a whole, that is currently required and that the Board would seek to maintain in its membership. 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 4 and 5 of the Annual Report. Details of the executive and non-executive Director remuneration are set out in the Remuneration Report which forms part of the Directors’ Report on pages 16 to 19. 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 2023 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 core activities being its investment in TPG Telecom Limited (“TPG”). Written agreements are in place with each of the Directors setting out their terms of appointment. 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 in which the Group conducts its business and to refresh their knowledge and skills on the roles, functions and duties of a listed company director. There were no new board appointments during the Reporting Period. 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 2021 was undertaken at the beginning of 2022 and that for the financial year ended 31 December 2022 has commenced. The objective of such evaluation is to ensure that the Board, its Committees and the Directors continue to act effectively in fulfilling the duties and responsibilities expected of them. It also includes an evaluation of whether there is a need for existing Directors to undertake professional development to maintain the skills and knowledge needed to adequately perform their roles as Directors. The Company does not employ any senior executives and accordingly, no performance evaluation was conducted in respect of senior executives. 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. Annual Report 2022 8 CORPORATE GOVERNANCE STATEMENT CONTINUED 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 Corporate Governance Recommendations. 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 5 and 13 of the Annual Report. 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. The Board, prior to approving the half year results for the period ended 30 June 2022 as well as the full year results for the year ended 31 December 2022, received a signed declaration provided in accordance with section 295A of the Corporations Act 2001 (Cth) by Mr Frank Sixt. In reviewing and approving periodic corporate reports for the Company, the Audit & Risk Committee and Board relies on a signed statement by persons responsible for preparing and verifying information contained in such reports. The appropriate persons are required to confirm that the information contained in such corporate reports have been validated with supporting documents including but not limited to confirmation of balances with financial institutions, contracts with business partners, and/or other source documents maintained by the Company. The Company has received signed verification statements for the Directors’ Report and operating review in respect of the half year and annual reports during the Reporting Period. 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 4, 5 and 13 of the Annual Report. No meetings of this Committee were required during the year ended 31 December 2022, as any matters that arose for possible consideration by this Committee were dealt with by the full Board. Hutchison Telecommunications (Australia) Limited 9 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. The governance and nomination responsibilities related to the Directors are: – to recommend to the Board criteria regarding personal qualifications for Board membership such as background, experience, technical skills, affiliations and personal characteristics; and – to consider and recommend to the Board the skills matrix required for the Board generally 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 Corporate Governance 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 Board or 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 measurable gender diversity objectives have been set having regard to the Company’s current structure, size and type of operations. The Company currently only has two employees and no senior executives. Notwithstanding, the Company will continue to consider and make future appointments to its Board, senior executives (if required) and workforce generally based on merit, skill and experience necessary. The Board currently comprises seven males (78%) and two females (22%) (2021: 78% male, 22% female). The Company has only two (male) employees who are not considered to be senior executives (2021: 100% male). Company secretaries The Company has two company secretaries, Ms Edith Shih and Ms Swapna Keskar, who are responsible to the Board for ensuring that Board processes are followed and board activities are efficiently and effectively conducted. External auditors The performance of the external auditor is reviewed annually and applications for the tender of external audit services will be requested as deemed appropriate. PricewaterhouseCoopers was appointed as the external auditor in June 2014. Annual Report 2022 10 CORPORATE GOVERNANCE STATEMENT CONTINUED An analysis of fees paid to the external auditor, including a break-down of fees for non-audit services, is provided in Note 8 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. 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. HTAL’s sole activity is its investment in TPG. The operational activities of TPG are undertaken entirely by TPG and the associated operational risks are in that entity. Two of HTAL’s Directors, Mr Canning Fok and Mr Frank Sixt are nominated to the TPG board and additionally, Mr Frank Sixt has been appointed as a member from September 2021 until 1 September 2022 and served as an observer as from 1 September 2022 of the TPG board’s audit & risk committee. TPG has its own policies and risk management framework and is required to report to ASX and its investors in its own capacity as an ASX-listed entity. These may be accessed on the ASX announcements platform under ASX ticker code “TPG”, and on its website at www.tpgtelecom.com.au. In February 2022, the HTAL Board approved the Risk Appetite Statement and Risk Management Framework for HTAL. HTAL’s Audit & Risk Committee oversees that the operations of HTAL are within the scope of its Risk Appetite Statement. The Audit & Risk Committee has undertaken a review of its risk management framework in respect of the Reporting Period and considers it continues to be sound and HTAL is operating with due regard to the risk appetite as set by the Board. Material business/operational risks faced by the Company are those associated with the Company’s investment in TPG. As set out earlier, information in respect of TPG may be accessed via TPG’s separate disclosures available on the ASX announcements platform and on the TPG website. The Company has not identified any material exposures to environmental and social risks. Due to the size and structure of the Company, an internal audit function has not been established. The Audit & Risk Committee is the responsible body for receiving risk reporting, reviewing the Company’s risk register and framework and considering the effectiveness of the Company’s governance, risk management and internal control processes, in accordance with its charter. Our values and expected behaviour 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 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. The Code of Conduct also sets out the Company’s zero-tolerance approach to bribery and corruption. HTAL aspires to operate openly, fairly, lawfully, ethically and responsibly with honesty and integrity. The Company’s Code of Conduct sets out HTAL’s values in which we strive to: – make everything we do simple and relevant; – always look for ways to make our way of doing business better; – be courageous and bold in our thinking; – think of others in everything we do; – deliver on our promises; – listen, understand and treat others as an individual; – be honest and open, have real conversations; – make conscious commitments – keep your word; – celebrate success; and – listen to and learn from each other. Whistleblower policy The Company encourages a culture of reporting actual or suspected conduct which is illegal, unacceptable or undesirable and any person who reports conduct as a whistleblower who is acting honestly, reasonably and with a genuine belief about the conduct will be supported and protected. The Company has adopted a Whistleblower Policy that outlines the protected disclosure can be reported, how the Company will investigate and deal with improper conduct, and how persons making a disclosure will be supported and protected throughout this process. Copies of the Company’s Code of Conduct and Whistleblower Policy are available on the Company’s website. The Board or the Audit & Risk Committee will be informed of any material breaches or any material incidents reported under the Code of Conduct and Whistleblower Policy. Hutchison Telecommunications (Australia) Limited 11 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. The Company does not currently prepare investor or analyst presentations, but if it were to do so, and contain new and substantive information, a copy of such presentation will be released to the ASX and also made available on the Company’s website. Shareholders are encouraged to participate in general meetings physically or through the use of one or more technologies or to appoint proxies or corporate representatives, to attend and vote at such meetings for and on their behalf if they are unable to attend in person. 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). Shareholders may elect to be sent such communication in either physical or electronic form. All substantive resolutions put to shareholders in general meeting are decided on a poll, rather than a show of hands. All resolutions put to the 2022 AGM were conducted by a poll with the results of the meeting announced to the ASX. 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 19 to the financial statements. Dealing in shares The Company has the following policy regarding dealing in its shares: – the Chairman of the Board discusses any proposed dealing in HTAL shares with an independent Director prior to any dealing; – Directors or the Chief Executive Officer discuss any proposed dealing in HTAL shares with the Chairman of the Board 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 Chairman of the Board or either of the Company Secretaries prior to any dealing. Unless there are unusual circumstances, dealings in HTAL shares by Directors and any other 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 does not have an equity-based remuneration scheme in place. The Company’s practices are documented in the Share Dealing 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. All Directors receive a copy of all material ASX announcements promptly after they have been made. Annual Report 2022 12 DIRECTORS’ REPORT The Directors present their report of Hutchison Telecommunications (Australia) Limited (“HTAL” or the “Company”, and together with its controlled entity, the “Group”) at the end of, or during, the year ended 31 December 2022. Principal activities The Group’s principal activity is the ownership of a combined 25.05%1 equity interest in TPG Telecom Limited (“TPG”). TPG operates a number of leading mobile and internet brands including Vodafone, TPG, iiNet, AAPT, Internode, Lebara and felix, providing consumers with a comprehensive portfolio of fixed and mobile products in the Australian telecommunications market. Review of operations Comments on the operations of the Group, results of those operations, the Company’s business strategies and its prospects for future years are set out on pages 2 to 3. Details of the financial position of the Company are contained in page 24 of this report. Significant changes in the state of affairs and matters subsequent to the end of the financial year (a) Update on TPG’s regional MOCN agreement with Telstra On 21 February 2022, TPG announced a regional Multi-Operator Core Network (“MOCN”) agreement with Telstra Corporation Limited (“Telstra”) (ASX: TLS) which will enable TPG to provide its subscribers with 4G and 5G coverage for data, calls and messaging from over 3,700 Telstra sites in regional and rural Australia. On 21 December 2022, the Australian Competition and Consumer Commission decided not to grant authorisation for the proposed arrangement. Consequently, TPG has submitted an application to the Australian Competition Tribunal for a review of the decision, with a tribunal decision expected in the first half of 2023. As a result, the potential financial impacts highlighted in TPG’s half-year report 2022 (impairment of fixed assets and right-of-use assets) have not been recognised in the year ended 31 December 2022 by TPG. (b) There has been no other matter or circumstance that has arisen after the reporting date that has significantly affected or may significantly affect: 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 Group 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 TPG, are subject to environmental regulations under both Commonwealth and State legislation and the requirements of the Telecommunications Act 1997. TPG’s compliance framework is designed to ensure TPG meets its obligations under current legislation. TPG is subject to the National Greenhouse and Energy Reporting Act 2007 (“NGER Act”) and is required to report information about greenhouse gas emissions, energy production, energy consumption and other information specified by the NGER Act. TPG has fulfilled its reporting requirements for its operations annually since 2010 under the NGER Act. Dividends There are no dividends/distributions declared or paid and there are no dividend/distribution reinvestment plans existing during or subsequent to the year ended 31 December 2022 to the date of this report. Directors The following persons were Directors of HTAL during the whole of the year ended 31 December 2022 and up to the date of this report, unless otherwise stated: FOK Kin Ning, Canning Barry ROBERTS-THOMSON Melissa ANASTASIOU Susan Mo Fong CHOW, also known as WOO Mo Fong, Susan (alias CHOW WOO Mo Fong, Susan) Justin Herbert GARDENER LAI Kai Ming, Dominic, also alternate to FOK Kin Ning, Canning and Frank John SIXT John Michael SCANLON Frank John SIXT, also alternate to LAI Kai Ming, Dominic WOO Chiu Man, Cliff (i) the operations of the Group in future financial years, or Further information on the Directors is set out on pages 4 and 5. (ii) the results of those operations in future financial years, or (iii) the state of affairs of the Group in future financial years. 1 HTAL’s 25.05% ownership interest in TPG comprises 11.14% interest directly held by Hutchison 3G Australia Holdings Pty Limited (“H3GAH”), a wholly owned subsidiary of HTAL, and an attributed 13.91% interest indirectly held by H3GAH through Vodafone Hutchison (Australia) Holdings Limited (“VHAH”), a company domiciled in the United Kingdom in which H3GAH has a 50% shareholding. VHAH has a direct 27.82% interest in TPG. Hutchison Telecommunications (Australia) Limited 13 Director Other Responsibilities Fok Kin Ning, Canning Non-executive Chairman, Chairman of Governance, Nomination & Compensation Committee Barry Roberts-Thomson Deputy Chairman Melissa Anastasiou Susan Mo Fong Chow – – Particulars of Directors’ Interests in ordinary shares of HTAL 5,100,000* 83,918,337** – – Justin Herbert Gardener Chairman of Audit & Risk Committee, Member of Governance, Nomination & Compensation Committee 1,957,358 Lai Kai Ming, Dominic Member of Governance, Nomination & Compensation Committee, Member of Audit & Risk Committee John Michael Scanlon Member of Audit & Risk Committee Frank John Sixt Woo Chiu Man, Cliff – – * Direct holding of 100,000 shares ** Direct holding of 4,540 share Notes: – – 1,000,000 – Mr Fok Kin Ning, Canning holds a relevant interest in (i) 6,011,438 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. Mrs Susan Mo Fong Chow holds a relevant interest in (i) 129,960 ordinary shares of CKHH; and (ii) 250,000 ordinary shares of HTHKH. Mr Lai Kai Ming, Dominic holds a relevant interest in 34,200 ordinary shares of CKHH. Mr Frank John Sixt holds a relevant interest in (i) 166,800 ordinary shares of CKHH; and (ii) 255,000 ordinary shares of HTHKH. Mr 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 2022 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 4 4 4 4 4 4 4 4 4 4 4 3 4 4 4 3 4 4 N/A N/A N/A N/A 4 4 4 N/A N/A N/A N/A N/A N/A 4 4 4 N/A N/A Nil N/A N/A N/A Nil Nil N/A N/A N/A Director Fok Kin Ning, Canning Barry Roberts-Thomson Melissa Anastasiou Susan Mo Fong Chow Justin Herbert Gardener Lai Kai Ming, Dominic John Michael Scanlon Frank John Sixt Woo Chiu Man, Cliff Governance, Nomination & Compensation Committee Meetings attended as Member of the Committee Nil N/A N/A N/A Nil Nil N/A N/A N/A No meeting of the Governance, Nomination & Compensation Committee was held during the year as any matters that arose for possible consideration by the Committee were dealt with by the full Board. Annual Report 2022 14 DIRECTORS’ REPORT CONTINUED Retirement, election and continuation in office of Directors Swapna KESKAR MCom., LLB, FGIA, FCIS, FCS, GAICD 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 retiring by rotation in accordance with the Constitution who, being eligible, offers herself for re-election. Mr Lai Kai Ming, Dominic, is a Director retiring by rotation in accordance with the Constitution who, being eligible, offers himself for re-election. Company secretaries Edith SHIH BSE, MA, MA, EdM, Solicitor, FCG(CS, CGP), HKFCG(CS, CGP)(PE) Edith Shih has been one of the Company Secretaries of the Company since 1999. She has over 40 years of experience in the legal, regulatory, corporate finance, compliance and corporate governance fields. Ms Shih is an executive director and company secretary of CKHH. She has been with the Cheung Kong (Holdings) Limited group since 1989 and with Hutchison Whampoa Limited (“HWL”) from 1991 to 2015. Both Cheung Kong (Holdings) Limited and HWL were previously listed on The Stock Exchange of Hong Kong Limited and 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. Ms Shih is a non-executive director of HTHKH, HUTCHMED (China) Limited and Hutchison Port Holdings Management Pte. Limited as the trustee-manager of Hutchison Port Holdings Trust, as well as a commissioner of PT Duta Intidaya Tbk. The aforementioned companies are either the ultimate holding company of HTAL, or subsidiaries or associated companies of CKHH of which Ms Shih has oversight as director of CKHH. Ms Shih is the past International President and current member of the Council of The Chartered Governance Institute (“CGI”) as well as a past President and current Honorary Adviser of The Hong Kong Chartered Governance Institute (“HKCGI”) and current chairperson of its Nomination Committee. She is also a member of the Hong Kong-Europe Business Council. She is a solicitor qualified in England and Wales, Hong Kong and Victoria, Australia and a Fellow of both CGI and HKCGI, holding Chartered Secretary and Chartered Governance Professional dual designations. She holds a Bachelor of Science degree, Master of Arts degrees and a Master of Education degree. Swapna Keskar has been one of the Company Secretaries of the Company since 3 December 2020. She has extensive experience in providing company secretarial, governance consulting and corporate administration services to clients, including a large number of ASX companies, across a range of different industries, including financial services, retail, resources and energy. Ms Keskar is a Graduate of the Australian Institute of Company Directors and a Fellow member of the Governance Institute of Australia, The Chartered Governance Institute and the Institute of Company Secretaries of India. Non-audit services HTAL may engage 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 Independence Standards), 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 8, Remuneration of auditors, on page 34 of the financial report. Auditor’s independence declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 (Cth) is set out on page 20. Hutchison Telecommunications (Australia) Limited 15 Corporate Governance Rounding of amounts The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Legislative Instrument 2016/191 (“ASIC Instrument”) issued by the Australian Securities and Investments Commission relating to the ‘rounding off’ of amounts in the directors’ report and financial report. Amounts in the directors’ report and financial report have been rounded off in accordance with the ASIC 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). HTAL is committed to conduct the business with the highest standards of business ethics and adhering to the legal and regulatory obligations. The Board of Directors has put in place formal guidelines representing the Board’s policy on best practice corporate governance. These guidelines outline the composition and responsibilities of the Board and Board committees, and the Company’s policies relating to, inter alia, continuous disclosure, shareholder communications, share dealing policy and corporate code of conduct. Refer to http://www.hutchison. com.au/about-hutchison/corporate-governance/ for further details. Directors’ and officers’ liability insurance During the financial year, CKHH paid a premium to insure the current and former 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. Indemnity of auditors HTAL has agreed to reimburse their auditors, PricewaterhouseCoopers, for any liability (including reasonable legal costs) incurred by PricewaterhouseCoopers in connection with any claim by a third party arising from the Company’s breach of the audit agreement between HTAL and PricewaterhouseCoopers. The reimbursement obligation is subject to restrictions contained in the Corporations Act 2001 (Cth). No payment has been made to indemnify the auditors during or since the end of the financial year. 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). Annual Report 2022 16 DIRECTORS’ REPORT CONTINUED Remuneration Report 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, Ms Melissa Anastasiou, Mrs Susan Mo Fong Chow, Mr Lai Kai Ming, Dominic and Mr Woo Chiu Man, Cliff did not receive any remuneration for their services as Directors. Mr Frank John Sixt also did not receive any remuneration for his service as an executive Director of the Company. RETIREMENT ALLOWANCES FOR DIRECTORS No retirement allowances are payable to non-executive and executive Directors. KEY MANAGEMENT PERSONNEL The Directors of HTAL are the key management personnel (“KMP”) of HTAL having the authority and responsibility for planning, directing and managing activities for the year from 1 January 2022 to 31 December 2022. 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 to HTAL. The remuneration details of these directors are available from the disclosure in their respective CKHH group annual reports. As at 31 December 2022, the Company had two employees who are 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 TPG as it is not a subsidiary of the Company. Mr Frank John Sixt is the person directly responsible to the Board in respect of carrying out the Chief Executive Officer function and Chief Financial Officer function pursuant to section 295A of the Corporations Act 2001 (Cth), however Mr Sixt is not formally appointed to either role. He was not remunerated in the year ended 31 December 2022 for this responsibility. 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. Hutchison Telecommunications (Australia) Limited 17 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 2022 Name Fok Kin Ning, Canning Barry Roberts-Thomson Melissa Anastasiou Susan Mo Fong Chow Justin Herbert Gardener Lai Kai Ming, Dominic John Michael Scanlon Frank John Sixt Woo Chiu Man, Cliff Total SHORT-TERM BENEFITS POST- EMPLOYMENT BENEFITS SHARE- BASED PAYMENTS Cash salary and fees $ Cash bonus $ Non- monetary benefits $ Super- annuation $ Options $ Total $ – – – – 50,000 – 50,000 – – 100,000 – – – – – – – – – – – – – – – – – – – – – – – – 5,125 – 5,125 – – 10,250 – – – – – – – – – – – – – – 55,125 – 55,125 – – 110,250 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 the CKHH group, are remunerated for their duties within the CKHH group which include their directorships of HTAL. 2021 Name Fok Kin Ning, Canning Barry Roberts-Thomson Melissa Anastasiou Susan Mo Fong Chow Justin Herbert Gardener Lai Kai Ming, Dominic John Michael Scanlon Frank John Sixt Woo Chiu Man, Cliff Total SHORT-TERM BENEFITS POST- EMPLOYMENT BENEFITS SHARE- BASED PAYMENTS Cash salary and fees $ Cash bonus $ Non- monetary benefits $ Super- annuation $ Options $ Total $ – – – – 50,000 – 50,000 – – 100,000 – – – – – – – – – – – – – – – – – – – – – – – – 4,875 – 4,875 – – 9,750 – – – – – – – – – – – – – – 54,875 – 54,875 – – 109,750 Annual Report 2022 18 DIRECTORS’ REPORT CONTINUED STATUTORY PERFORMANCE INDICATORS The below table shows measures of the Company’s financial performance over the last five years as required by the Corporations Act 2001 (Cth). Profit/(loss) for the year attributable to owners of HTAL ($’000) Basic earnings/(loss) per share (cents) Dividend payments ($’000) Dividend payout ratio (%) Increase/(decrease) in share price (%) Total KMP incentives as percentage of profit/(loss) for the year (%) 2022 2021 2020 2019 2018 (398,378) (21,677) 825,441 (154,870) (2.94) – N/A (50) (0.16) – N/A (17) 6.08 – N/A 21 (1.14) – N/A 9 (0.03) (0.51) 0.01 (0.1) 4,475 (0.03) – N/A 69 2.3 No dividends were paid over the last five years. The dividend payout ratio, where applicable, will be calculated based on dividends paid and profit/(loss) for the year. 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 exercisable at the end of the year. SHAREHOLDINGS The number of shares in the Company held during the financial year by each Director, including their personally-related entities, are set out below. DIRECTORS OF HTAL Name Fok Kin Ning, Canning Barry Roberts-Thomson Melissa Anastasiou Susan Mo Fong Chow 5,100,000* 83,918,337** – – Justin Herbert Gardener 1,957,358 Lai Kai Ming, Dominic John Michael Scanlon Frank John Sixt Woo Chiu Man, Cliff * Direct holding of 100,000 shares ** Direct holding of 4,540 shares – – 1,000,000 – ORDINARY SHARES Balance at the start of the year Received during the year on the exercise of options Changes during the year Balance at the end of the year – – – – – – – – – – – – – – – – – – 5,100,000* 83,918,337** – – 1,957,358 – – 1,000,000 – Hutchison Telecommunications (Australia) Limited 19 SHARES UNDER OPTION The Company has no share option scheme. No options were granted during the year ended 31 December 2022. 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 2022 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 2022 and 31 December 2021. OTHER TRANSACTIONS WITH DIRECTORS AND KEY MANAGEMENT PERSONNEL There were no other transactions with Directors for the years ended 31 December 2022 or 31 December 2021. The above Remuneration Report has been audited by PricewaterhouseCoopers. This Directors’ report is made in accordance with a resolution of the Directors, in accordance with section 298(2) of the Corporations Act 2001 (Cth). Director 27 February 2023 Director 27 February 2023 Annual Report 2022 20 AUDITOR’S INDEPENDENCE DECLARATION Hutchison Telecommunications (Australia) Limited 21 FINANCIAL REPORT for the year ended 31 December 2022 These financial statements cover the consolidated financial statements for the group consisting of Hutchison Telecommunications (Australia) Limited (“HTAL”) and its controlled entities. The financial statements are presented in Australian dollars. HTAL is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Level 1, 177 Pacific Highway, North Sydney NSW 2060 The financial statements were authorised for issue by the Directors on 27 February 2023. The Company has the power to amend and reissue the financial statements. Annual Report 2022 22 FINANCIAL REPORT for the year ended 31 December 2022 Contents Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Note 1 Summary of significant accounting policies Note 2 Revenue Note 3 Operating expenses Note 4 Impairment of investment accounted for using the equity method Note 5 Income tax Note 6 Loss per share Note 7 Director and key management personnel compensation Note 8 Remuneration of auditors Note 9 Current assets – Cash and cash equivalents Note 10 Non-current assets – Investment accounted for using the equity method Note 11 Controlled entities Note 12 Current liabilities – Payables Note 13 Current liabilities – Other financial liabilities Note 14 Contributed equity Note 15 Reserves and accumulated losses Note 16 Reconciliation of loss after income tax to net cash inflows from operating activities Note 17 Contingencies Note 18 Commitments Note 19 Related party transactions Note 20 Deed of cross guarantee Note 21 Segment reporting Note 22 Financial risk management Note 23 Events occurring after the reporting date Note 24 Parent entity disclosures Directors’ Declaration Independent Auditor’s Report Shareholder Information Corporate Directory 23 24 25 26 27 27 32 32 32 32 33 34 34 35 35 38 38 39 39 40 41 42 42 43 44 46 46 49 49 51 52 58 60 Hutchison Telecommunications (Australia) Limited CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 December 2022 23 Revenue Operating expenses Impairment loss on equity accounted investments Share of net profit/(loss) of equity accounted investments, net of tax Loss before income tax Income tax expense Loss for the year Other comprehensive income Items that will not be reclassified to profit or loss Items that may be reclassified to profit or loss Net gain on cash flow hedges taken to equity (share of equity accounted investments) Tax relating to items that may be reclassified to profit or loss Other comprehensive income for the year, net of tax Total comprehensive loss for the year attributable to members of the Company Notes 2 3 4 10 5 10 2022 $’000 194 2021 $’000 121 (1,676) (1,901) (444,617) – 47,721 (19,897) (398,378) (21,677) – – (398,378) (21,677) – – 636 – 636 150 – 150 (397,742) (21,527) Cents Cents Loss per share for loss attributable to members of the Company Basic loss per share Diluted loss per share 6 6 (2.94) (2.94) (0.16) (0.16) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. Annual Report 2022 24 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2022 ASSETS Current Assets Cash and cash equivalents Other receivables Prepayments Total Current Assets Non-current Assets Notes 2022 $’000 2021 $’000 9 5,808 3,737 117 45 – 52 5,970 3,789 Investment accounted for using the equity method 10 339,680 774,578 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 339,680 774,578 345,650 778,367 12 13 14 15 15 853 5,359 6,212 6,212 474 38,316 38,790 38,790 339,438 739,577 4,204,488 4,204,488 69,505 71,266 (3,934,555) (3,536,177) 339,438 739,577 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. Hutchison Telecommunications (Australia) Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2022 25 ATTRIBUTABLE TO MEMBERS OF THE COMPANY RESERVES Contributed equity $’000 Capital redemption reserve1 $’000 Cash flow hedging reserve1 $’000 Share- based payments reserve1 $’000 Accumulated losses2 $’000 Total equity $’000 Balance at 1 January 2021 4,204,488 54,887 (333) 15,880 (3,514,500) 760,422 Loss for the year Other comprehensive income: Net gain on cashflow hedges (share of equity accounted investments) Tax relating to components of other comprehensive income Total comprehensive income for the year Share-based payment reserve (share of equity accounted investments), net of tax – – – – – – – – – – – – (21,677) (21,677) 150 – 150 – – – – – 150 – (21,677) (21,527) – 682 – 682 Balance at 31 December 2021 4,204,488 54,887 (183) 16,562 (3,536,177) 739,577 Balance at 1 January 2022 4,204,488 54,887 (183) 16,562 (3,536,177) 739,577 Loss for the year Other comprehensive income: Net gain on cashflow hedges (share of equity accounted investments) Tax relating to components of other comprehensive income Total comprehensive income for the year Share-based payment reserve (share of equity accounted investments), net of tax Acquisition of shares (share of equity accounted investments), net of tax – – – – – – – – – – – – – – (398,378) (398,378) 636 – 636 – – – – – 1,163 (3,560) – – 636 – (398,378) (397,742) – – 1,163 (3,560) Balance at 31 December 2022 4,204,488 54,887 453 14,165 (3,934,555) 339,438 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 1 See note 15 (a) and (c). 2 See note 15 (b). Annual Report 2022 26 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2022 Cash Flows from Operating Activities Payments to suppliers and employees (inclusive of GST) Interest received Dividends from investment accounted for using the equity method Net cash inflows from operating activities Cash Flows from Investing Activities Net cash inflows from investing activities Cash Flows from Financing Activities Notes 2022 $’000 2021 $’000 (1,407) (2,443) 194 36,241 35,028 121 32,099 29,777 16 – – Repayment of borrowings – entity within the CKHH Group 13 (32,957) (49,697) Net cash outflows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 January Cash and cash equivalents at 31 December (32,957) (49,697) 2,071 3,737 5,808 (19,920) 23,657 3,737 9 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. Hutchison Telecommunications (Australia) Limited NOTES TO THE FINANCIAL STATEMENTS 27 (d) 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 statement of financial position. (Refer to Note 10 for further details). (iii) Associates Associates are all entities over which the Group has significant influence but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights directly or indirectly. Where the Group holds less than 20% of the voting rights of an investee, representation on the board of directors or equivalent governing body of the investee and participation in the investee’s policy making processes, including participation in decisions about dividends or other distributions, are also considered when determining whether the Group has significant influence. Investments in associates are accounted for under the equity method after initially being recognised at cost in the consolidated statement of financial position. (Refer to Note 10 for further details). Note 1 Summary of significant accounting policies (a) REPORTING ENTITY Hutchison Telecommunications (Australia) Limited (“HTAL” or the “Company”) is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange (“ASX”). A description of the nature of the operations and principal activities of the Company and its controlled entities (together the “Group”) is included in the Directors’ report on pages 12 to 19. These consolidated financial statements were authorised for issue by the Board on the 27 February 2023. The Company has the power to amend and reissue the financial statements. (b) BASIS OF PREPARATION These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001 (Cth). For the purposes of preparing the financial statements, the Company is a for-profit entity. Disclosures in relation to the parent entity financial statements required under paragraph 295(3)(a) of the Corporations Act 2001 (Cth) are included in Note 24. These financial statements have been prepared under the historical cost convention. Unless otherwise stated, the accounting policies adopted have been consistently applied to all the years presented. Comparative figures have been adjusted to conform to the presentation of these financial statements and notes for the current financial year, where required, to enhance comparability. (c) WORKING CAPITAL MANAGEMENT As at 31 December 2022, the Group has a deficiency of net current assets of $0.2 million (2021: a deficiency of $35.0 million). Included in the Group’s current liabilities is an amount of $5.4 million (2021: $38.3 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 $1,594.6 million at 31 December 2022 (2021: $1,561.7 million). 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. Annual Report 2022 28 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Note 1 Summary of significant accounting policies (continued) (d) PRINCIPLES OF CONSOLIDATION (CONTINUED) (iv) 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 and associates 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. On acquisition of the equity accounted investment, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in the consolidated statement of profit or loss and other comprehensive income in the period in which the investment is acquired. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Group continues to apply the equity method of accounting and does not remeasure the retained interest. 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 adjusted where necessary to ensure consistency with the policies adopted by the Group. When there is a decrease in the ownership percentage of an investment, this will give rise to a deemed disposal of the investment. A gain or loss on the deemed disposal should be recognised in profit or loss upon completion of the dilution/deemed disposal. The dilution gain or loss is calculated by comparing the difference between the carrying amount of interest deemed to be disposed (i.e. change in ownership %) to the fair value of the interest deemed to be received, plus amounts reclassified from other comprehensive income. (e) 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. (f) 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. (g) 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. 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 differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities 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. Hutchison Telecommunications (Australia) Limited 29 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. (i) 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 cash and are subject to an insignificant risk of changes in value. 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 subsidiary have not implemented the tax consolidation legislation. (h) IMPAIRMENT OF ASSETS Equity accounted investments are tested for impairment annually or when there is an indication that it may be impaired. The requirements to test for impairment are applied to the net investment in the equity accounted investee. Fair value adjustments and goodwill recognised on acquisitions of equity-accounted investees are not recognised separately. The guidance in AASB 128 Investments in Associates and Joint Ventures is used to determine whether it is necessary to perform an impairment test for investments in equity-accounted investees. If there is an indication of impairment, then the impairment test applied follows the principles in AASB 136 Impairment of Assets. 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. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment losses are recognised in the consolidated statement of profit or loss and other comprehensive income unless an asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through profit or loss. Non-financial assets other than goodwill that have suffered an impairment are reviewed for possible reversal of impairment at the end of each reporting period or when there is an indication that the impairment loss may no longer exist. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (j) OTHER RECEIVABLES Other receivables are initially recognised at fair value and subsequently at amortised cost, collectability is then reviewed on an ongoing basis. (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 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 2022, 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 TPG Telecom Limited (“TPG”) equity accounted investment. (l) GOODWILL Goodwill as part of equity accounted investments is initially measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the fair value of the net identifiable assets acquired and the liabilities assumed. If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree’s and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in the consolidated statement of profit or loss and other comprehensive income as a bargain purchase gain. Goodwill on acquisitions of associates/joint ventures is not recognised separately and is included in the net investments in the equity accounted investee which is tested for impairment annually or when there is an indication that it may be impaired. (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. Annual Report 2022 30 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Note 1 Summary of significant accounting policies (continued) (n) BORROWINGS Borrowings are initially recognised at fair value. Borrowings are subsequently measured at amortised cost. Transaction costs associated with the borrowings are capitalised and amortised over the term of the debt. 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 14 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/(LOSS) PER SHARE (i) Basic earnings/(loss) per share Basic earnings/(loss) per share is calculated by dividing: – the profit or loss attributable to members of the Company; and – by the weighted average number of ordinary shares outstanding during the financial year. (ii) Diluted earnings/(loss) per share Diluted earnings/(loss) per share adjusts the figures used in the determination of basic earnings/(loss) 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. 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 consolidated 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 21 for details of the Group’s operating segment, being investment in telecommunication services. (s) CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of financial statements often requires the exercise of judgements to select specific accounting methods and policies from several acceptable alternatives. Furthermore, significant estimates and judgements concerning the future may be required in applying those methods and policies in the accounts. In preparing the annual financial report, the Group has made accounting related estimates based on assumptions about current and, for some estimates, future economic and market conditions. Our accounting estimates and assumptions may change over time in response to how market conditions develop. In addition, actual results could differ significantly from those estimates and assumptions. Uncertainty about these judgements, assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected and the amount and timing of results of operations, cash flows and disclosures in future periods. (i) Impairment assessment on investments in equity accounted investments In accordance with the Group’s accounting policy, the investments in equity accounted investments are tested for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The impairment test for the Group’s equity accounted investments in TPG is carried out at 31 December 2022. Carrying value of the investment is compared with its recoverable amount for the impairment testing. The recoverable amount of the investment is determined based on its fair value less cost of disposal (‘FVLCOD’), which is higher than its value in use (‘VIU’). FVLCOD is derived using the closing share price and a block premium is considered on the basis of HTAL’s significant influence on TPG. In determining the VIU, the Group estimate the present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal. There are a number of estimates and assumptions involved in the estimation including the amount and timing of the expected cash flows from dividend, long-term dividend growth rate and discount rate. Hutchison Telecommunications (Australia) Limited The result of the impairment testing undertaken on 31 December 2022 indicated that the recoverable amount is less than the carrying amount. As a result an impairment of the investment is deemed necessary for the year (refer to Note 4 for further details). (ii) Recovery of deferred tax assets Deferred tax assets are recognised for unused tax losses and deductible temporary differences if management considers that it is probable that sufficient future taxable profits will be available to utilise those temporary differences. 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 recognised as there is no convincing evidence that sufficient future taxable profits will be available against which unused tax losses or unused tax credits can be utilised. The Group has carried forward tax losses for unused deferred tax assets that have not been recognised (refer to Note 5 for further details). (iii) TPG equity accounting When assessing whether HTAL has significant influence over TPG, management has considered HTAL’s combined 25.05% interest in TPG. Depreciation of operating assets constitutes a substantial operating cost for TPG. 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 profit/(loss) of equity accounted investments” in HTAL’s consolidated statement of profit or loss and other comprehensive income. In 2019, the Group decided to revise the useful life of some of TPG’s existing network assets from up to 20 years to between 3 and 18 years, which is consistent with the estimates adopted by TPG. In implementing the revised useful lives, management applied the change in the depreciation of the TPG existing network assets based on an assessment of individual asset lives prospectively from 1 January 2019 as required under Australian Accounting Standards. This resulted in a decrease in the share of net profit of equity accounted investment of $20.6 million (2021: an increase in the share of net loss of equity accounted investment of $25.8 million). The change has been included in the summarised financial information of TPG as disclosed in Note 10. 31 TPG management have made changes to the prior period comparative amounts in the annual report 2022 due to a voluntary amendment to the accounting policy for government grants (please refer to Note 2(l) in TPG’s annual financial report 2022 for more information). The impact of TPG’s changes will result in a decrease in HTAL’s share of net loss of equity accounted investments, net of tax for the year ended 31 December 2021 by $0.8 million and an increase in HTAL’s share of net assets of equity accounted investments as at 31 December 2021 and 31 December 2022 by $0.5 million. The Directors of HTAL have assessed that the impact on the results is deemed to be immaterial, and therefore no changes have been made to HTAL’s prior period comparatives in HTAL’s annual financial report 2022. (t) ROUNDING OF AMOUNTS The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Legislative Instrument 2016/191 (“ASIC Instrument”) 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 ASIC Instrument to the nearest thousand dollars, or in certain cases unless otherwise indicated, the nearest dollar or cent. (u) PARENT ENTITY FINANCIAL INFORMATION The financial information for the parent entity disclosed in Note 24 has been prepared on the same basis as the consolidated financial statements, except investments in subsidiaries and investments in associates, which 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 that are relevant to the Group’s operations and mandatory for annual periods beginning on or after 1 January 2022. The Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards. Adoption of these standards has not had a material impact for the year ended 31 December 2022. New standards and interpretations not yet adopted Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2022 reporting period and have not been early adopted by the Group. The adoption of these standards in future periods is not expected to have a material impact on the Group’s financial statements. Annual Report 2022 32 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Note 2 Revenue Other revenue Interest Note 3 Operating expenses Consultancy fee Accounting and tax support services fees to a related party (Note 19) Auditors’ remuneration (Note 8) Directors’ emoluments (Note 7) Employee benefits Others 2022 $’000 2021 $’000 194 121 2022 $’000 2021 $’000 529 441 283 110 224 89 1,676 558 479 240 110 248 266 1,901 Note 4 Impairment of investment accounted for using the equity method HTAL accounts for its interests3 in TPG and Vodafone Hutchison (Australia) Holdings Limited (“VHAH”) using the equity method of accounting. In accordance with the Group’s accounting policy, the investments in these equity accounted investments are tested for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. There was a further decline in the share price of TPG in the second half of 2022 from $5.97 at 30 June 2022 to $4.89 at 31 December 2022. The price decline is an indicator and plays a key role in establishing the fair value less costs of disposal “FVLCOD” of HTAL’s equity-accounted investment in TPG. The investment in TPG accounted for using the equity method was written down to its recoverable amount of $339.7 million, which was determined by reference to the FVLCOD of TPG shares as it was higher than its value in use. The main valuation inputs used in arriving at the FVLCOD were the closing price of TPG shares at 31 December 2022 (level 1 input of the fair value hierarchy). A block premium (level 3 input of the fair value hierarchy) on the basis of HTAL’s significant influence on TPG is included with reference to specific, comparable and current transactions within the investee’s industry. As a result an impairment of the investment of $444.6 million for the amount by which the carrying amount exceeds the recoverable amount was recognised for the current year. Note 5 Income tax (a) INCOME TAX EXPENSE Deferred tax 2022 $’000 2021 $’000 – – 3 HTAL’s 25.05% ownership interest in TPG comprises 11.14% interest directly held by Hutchison 3G Australia Holdings Pty Limited (“H3GAH”), a wholly owned subsidiary of HTAL, and an attributed 13.91% interest indirectly held by H3GAH through VHAH, a company domiciled in the United Kingdom in which H3GAH has a 50% shareholding. VHAH has a direct 27.82% interest in TPG. Hutchison Telecommunications (Australia) Limited 33 2022 $’000 2021 $’000 (398,378) (21,677) (119,513) (6,503) 133,384 (14,316) (445) 27 (7) 425 – – 5,969 (534) 46 – 488 – (b) NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE TO PRIMA FACIE TAX PAYABLE Loss from operations before income tax expense Tax at the Australian tax rate of 30% (2021: 30%) Tax effect of amounts which are not deductible or taxable/(non-assessable or deductible) in calculating taxable income: Impairment loss on equity accounted investments Share of net (profit)/loss of equity accounted investments Deferred tax on temporary difference not recognised Adjustments for current tax of prior periods Additional tax losses not recognised in the current period Income tax expense All unused tax losses were incurred by Australian entities. This benefit for tax losses will only be obtained if the specific entity carrying forward the tax losses derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised, and the company complies with the conditions for deductibility imposed by tax legislation. (c) UNRECOGNISED TAX LOSSES Opening balance Adjustments for current tax of prior periods Additional tax losses generated Unused tax losses for which no deferred tax assets have been recognised Potential tax benefit @ 30% (2021: 30%) 2022 $’000 2021 $’000 162,437 160,811 (23) 1,416 – 1,626 163,830 162,437 49,149 48,731 (d) RECOGNISED DEFERRED TAX ASSETS There are no recognised deferred tax assets or liabilities at 31 December 2022 and 31 December 2021. Note 6 Loss per share (a) BASIC LOSS PER SHARE Loss attributable to members of the Company (b) DILUTED LOSS PER SHARE Loss attributable to members of the Company CONSOLIDATED 2022 Cents 2021 Cents (2.94) (0.16) (2.94) (0.16) Annual Report 2022 34 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Note 6 Loss per share (continued) CONSOLIDATED 2022 $’000 2021 $’000 (c) EARNINGS USED IN CALCULATING LOSS PER SHARE Basic loss per share Loss attributable to members of the Company used in calculating basic loss per share (398,378) (21,677) Diluted loss per share Loss attributable to members of the Company used in calculating diluted loss per share (398,378) (21,677) CONSOLIDATED 2022 Number 2021 Number (d) WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR Weighted average number of ordinary shares used as the denominator in calculating basic loss 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 loss per share 13,572,508,577 13,572,508,577 There were no options and no other potential ordinary shares outstanding at 31 December 2022 (2021: nil) and accordingly there was no impact on the diluted loss per share calculation for the years ended 31 December 2022 and 31 December 2021. Note 7 Director and key management personnel compensation (a) DIRECTOR AND KEY MANAGEMENT PERSONNEL COMPENSATION Short term benefits (included in Operating expenses – see Note 3) 2022 $ 2021 $ 110,250 109,750 (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 2022 and 31 December 2021. There were no transactions with the Directors of the Company for the years ended 31 December 2022 and 31 December 2021. Note 8 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 2022 $ 2021 $ 283,200 228,000 283,200 228,000 – 12,000 283,200 240,000 Hutchison Telecommunications (Australia) Limited 35 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 9 Current assets – Cash and cash equivalents Cash at bank 2022 $’000 5,808 2021 $’000 3,737 Note 10 Non-current assets – Investment accounted for using the equity method Equity accounted investments 2022 $’000 2021 $’000 339,680 774,578 The Group held a combined 25.05% interest in TPG at 31 December 2022 (2021: 25.05%). This comprises a 11.14% interest directly held by H3GAH, a wholly owned subsidiary of HTAL, and an attributed 13.91% interest indirectly held by H3GAH through VHAH, a joint venture company domiciled in the United Kingdom in which H3GAH has a 50% shareholding. VHAH has a direct 27.82% interest in TPG. Further information in respect of TPG and VHAH, which are associated and joint venture companies of the Group at 31 December 2022, are set out below: Name of entities Associate: Principal activity OWNERSHIP INTEREST Country of operation 2022 % 2021 % TPG Telecom Limited Telecommunications Services Australia 11.14% 11.14% Joint venture: Vodafone Hutchison (Australia) Holdings Limited Financing and investing activities United Kingdom 50.00% 50.00% Set out below are the movements in the carrying value of these investments: At 1 January Share of profit/(loss) of equity accounted investments, net of tax Share of TPG’s net gain on cash flow hedges taken to equity, net of tax Share of TPG’s share-based payment reserve, net of tax Share of TPG’s acquisition of shares, net of tax Share of dividend received from equity accounted investment4 Impairment of equity accounted investment At 31 December 2022 $’000 2021 $’000 774,578 825,742 47,721 (19,897) 636 1,163 (3,560) 150 682 – (36,241) (32,099) (444,617) – 339,680 774,578 Further details of the carrying amount of these equity accounted investments are included in the section below under “Summarised statement of financial position”. The market value of the Group’s combined 25.05% interests in TPG based on the quoted closing share price of TPG at 31 December 2022 was $2,277.6 million (2021: $2,743.4 million). This amount is before the Group’s 50% share of VHAH’s net debt of $4,553.9 million (2021: $4,524.0 million). 4 HTAL’s dividend income received from TPG for the 11.14% interest directly held by H3GAH is recognised as a reduction in the carrying amount of the investment. Annual Report 2022 36 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Note 10 Non-current assets – Investment accounted for using the equity method (continued) SUMMARISED FINANCIAL INFORMATION Summarised Statement of Profit or Loss and Other Comprehensive Income Summarised financial information with respect to the profit or loss and other comprehensive income of the Group’s equity accounted investments and reconciliation of the summarised financial information to the Group’s share of profit/(loss) of equity accounted investments, net of tax, are set out below. The amounts included in the summarised financial information have been adjusted to reflect adjustments made by HTAL in applying the equity method of accounting. The adjustments principally relate to a fixed asset depreciation overlay carried out in 2019 to align the Group’s useful life of some of TPG’s existing network assets from up to 20 years to between 3 and 18 years, to be consistent with the estimates adopted by TPG. Please refer to Note 1(s)(iii) Critical accounting estimates and judgements in the consolidated financial statements for the year ended 31 December 2022 for further background. Gross amount of the following items of the equity accounted investments: Revenues Other income Expenses 2022 2021 VHAH $’000 TPG $’000 VHAH $’000 TPG5 $’000 – – 5,415,000 438,000 – – 5,293,000 45,000 (233) (3,718,000) (719) (3,607,000) Share of profits from investment in TPG, net of tax 119,828 – 2,023 – Depreciation and amortisation Net finance costs Profit/(loss) before income tax Income tax expense Profit/(loss) for the year Other comprehensive income Total comprehensive profit/(loss) Reconciliation to the Group’s share of profit/(loss) of the equity accounted investments: Group interest: Group’s share of the following items: Profit/(loss) for the year Group’s share of profit/(loss) of equity accounted investments – (1,471,271) – (1,525,725) (120,118) (187,000) (42,718) (149,000) (523) 476,729 (41,414) 56,275 – (46,000) – (49,000) (523) 430,729 (41,414) 707 184 2,000 166 432,729 (41,248) 7,275 597 7,872 50% 11.14% 50% 11.14% (262) (262) 47,983 47,983 (20,707) (20,707) 810 810 HTAL’s share of profit/loss of these equity accounted investments of $47.7 million profit for the year ended 31 December 2022 (2021: $19.9 million loss) represents the combined total of: (i) the Group’s 50% share of net loss of VHAH of $0.3 million (2021: $20.7 million net loss), and (ii) the Group’s 11.14% direct share of net profit of TPG of $48.0 million (2021: $0.8 million). 5 The comparatives are derived from TPG’s annual financial report 2021. Hutchison Telecommunications (Australia) Limited 37 TPG management have made changes to the prior period comparative amounts in TPG’s annual report 2022 due to a voluntary amendment to the accounting policy for government grants (please refer to Note 2(l) in TPG’s annual financial report 2022 for more information). The impact of TPG’s changes will result in a decrease in HTAL’s share of net loss of equity accounted investments, net of tax for the year ended 31 December 2021 by $0.8 million. The Directors of HTAL have assessed that the impact on the results is deemed to be immaterial, and therefore no changes have been made to HTAL’s prior period comparatives in HTAL’s annual financial report 2022. Summarised statement of financial position Summarised financial information with respect to the statement of financial position of the Group’s equity accounted investments and reconciliation of the summarised financial information to the Group’s carrying amount of these investments, are set out below. The amounts included in the summarised financial information have been adjusted to reflect adjustments made by HTAL in applying the equity method of accounting. Gross amount of the following items of the equity accounted investments: Current assets Non-current assets Current liabilities Non-current liabilities Net (liabilities)/assets Reconciliation to the carrying amount of the Group’s investment accounted for using the equity method 2022 2021 VHAH $’000 TPG $’000 VHAH $’000 TPG6 $’000 604,243 1,033,000 361,456 833,000 3,399,681 18,653,727 3,372,270 18,757,684 (5,158,107) (1,732,000) (7,331) (1,667,000) – (5,734,000) (4,878,173) (5,801,000) (1,154,183) 12,220,727 (1,151,778) 12,122,684 Group interest 50% 11.14% 50% 11.14% Group’s share of net (liabilities)/assets (577,092) 1,361,389 (575,889) 1,350,467 Group’s provision for impairment (246,891) (197,726) – – Carrying amount (823,983) 1,163,663 (575,889) 1,350,467 The carrying amount of these equity accounted investments of $339.7 million at 31 December 2022 (2021: $774.6 million) represents the combined total of: (i) the Group’s 50% share of net liabilities of VHAH of $577.1 million (2021: $575.9 million), and (ii) the Group’s 11.14% direct share of net assets of TPG of $1,361.4 million (2021: $1,350.5 million), and (iii) provision for impairment totalling $444.6 million (31 December 2021: $nil) (see Note 4). TPG management have made changes to the prior period comparative amounts in TPG’s annual report 2022 due to a voluntary amendment to the accounting policy for government grants (please refer to Note 2(l) in TPG’s annual financial report 2022 for more information). The impact of TPG’s changes will result in an increase in HTAL’s share of net assets of equity accounted investments at 31 December 2021 and 31 December 2022 by $0.5 million. The Directors of HTAL have assessed that the impact on the Group’s net assets is deemed to be immaterial, and therefore no changes have been made to HTAL’s prior period comparatives in HTAL’s annual financial report 2022. 6 The comparatives are derived from TPG’s annual financial report 2021. Annual Report 2022 38 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Note 10 Non-current assets – Investment accounted for using the equity method (continued) SUMMARISED FINANCIAL INFORMATION (CONTINUED) Summarised statement of financial position (continued) The summarised statement of financial position includes the following items: Cash and cash equivalents Current financial liabilities Non-current financial liabilities 2022 2021 VHAH $’000 TPG $’000 VHAH $’000 TPG $’000 355,688 114,000 361,456 202,000 (5,158,107) (93,000) (7,331) (61,000) – (5,562,000) (4,878,173) (5,649,000) On 20 November 2020, VHAH entered into a US$3.5 billion Syndicated Facility Agreement (“SFA”) with a syndicate of lenders. The facility bears interest at 3 month US Libor + 1.00% and it will mature in 2023. An upfront fee of US$10.5 million was charged by the syndicate of lenders. The SFA is guaranteed by the VHAH ultimate parent entities, CKHH and Vodafone Group Plc (“VGP”). CKHH and VGP have also entered into a Counter Indemnity Agreement with VHAH but no guarantee fee is charged to VHAH. In order to protect against exchange rate movements, VHAH entered into cross currency interest rate swaps to coincide with the maturity of the loan. The swaps in place cover 100% of the outstanding loan balance and have a fixed exchange rate and effectively swap US dollar debt for Australian dollar debt. The swaps were entered into with related parties associated with the VHAH joint venture partners. VHAH’s effective rate of interest is based on the Australian 3-month BBR plus a margin. The cross-currency swaps are settled in full on the same date as the interest payment is made to the facility agent. VHAH utilised the funds from the SFA to repay the outstanding principal of the existing US$3.5 billion Syndicated Facility Agreement owed by Vodafone Hutchison Finance Pty Limited, its 100% owned subsidiary, which matured on 20 November 2020. HTAL’s investment in VHAH is predicated on the ongoing financial support from both of VHAH’s ultimate shareholders. The SFA is fully guaranteed by VHAH’s ultimate parent entities. Note 11 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(d) and Note 24(c): Name of controlled entity Country of Incorporation Hutchison 3G Australia Holdings Pty Limited8 Australia Class of Shares Ordinary Note 12 Current liabilities – Payables Trade payables Payables to related parties (Note 19) Further information relating to payables to related parties is set out in Note 19. Liquidity risk A summarised analysis of the Group’s sensitivity of payables to liquidity risk is set out in Note 22. EQUITY HOLDING7 2022 % 100 2022 $’000 374 479 853 2021 % 100 2021 $’000 355 119 474 7 The proportion of ownership interest is equal to the proportion of voting power held. 8 This entity has been granted relief from the necessity to prepare financial reports in accordance with instrument 2016/785 issued by the Australian Securities and Investments Commission. Hutchison Telecommunications (Australia) Limited 39 Note 13 Current liabilities – Other financial liabilities Loan from an entity within the CKHH Group (Note 19) 2022 $’000 5,359 2021 $’000 38,316 (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 19. The $1.6 billion facilities from an entity within the CKHH Group is an interest free financing facility and is repayable on demand. Total unused financing facilities at 31 December 2022 is $1,594.6 million (31 December 2021: $1,561.7 million). (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 14 Contributed equity 2022 $’000 2021 $’000 1,600,000 1,600,000 (5,359) (38,316) 1,594,641 1,561,684 Share capital Ordinary shares (fully paid) 13,572,508,577 13,572,508,577 4,204,488 4,204,488 2022 Shares 2021 Shares 2022 $’000 2021 $’000 (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 2022 and 31 December 2021. (c) OPTIONS There are no options outstanding as at the statement of financial position date. Annual Report 2022 40 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Note 14 Contributed equity (continued) (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. 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 less net debt. The gearing ratios at 31 December 2022 and 31 December 2021 were as follows: Gearing ratio Note 15 Reserves and accumulated losses (a) RESERVES Capital redemption reserve Cash flow hedging reserve Share-based payments reserve Movements: Capital redemption reserve There has been no movement in the capital redemption reserve during the year (2021: nil). Cash flow hedging reserve Balance at 1 January Hedging movement Balance at 31 December Share-based payments reserve Balance at 1 January Share-based payments Acquisition of shares Balance at 31 December 9 N/A for 2022 as the Group is at net cash position at 31 December 2022 (see Note 16). 2022 % N/A9 2021 % 5 2022 $’000 2021 $’000 54,887 54,887 453 14,165 69,505 (183) 16,562 71,266 2022 $’000 2021 $’000 (183) 636 453 (333) 150 (183) 2022 $’000 2021 $’000 16,562 1,163 (3,560) 14,165 15,880 682 – 16,562 Hutchison Telecommunications (Australia) Limited 41 2022 $’000 2021 $’000 (3,536,177) (3,514,500) (398,378) (21,677) (3,934,555) (3,536,177) (b) ACCUMULATED LOSSES Accumulated losses at 1 January Loss attributable to members of the Company Accumulated losses at 31 December (c) NATURE AND PURPOSE OF RESERVES Capital redemption reserve The capital redemption reserve relates to the surplus arising on initial consolidation of a 19.9% stake in Hutchison 3G Australia Holdings Pty Limited (“H3GAH”). Cash flow hedging reserve The hedging reserve is used to record gains and losses on a hedging instrument in TPG equity accounted investment cash flow hedge that are recognised directly in equity, as described in Note 1(k). 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; (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; and (iii) recognise HTAL’s share of TPG equity accounted investment’s the grant date fair value of options issued to its employees but not exercised. Note 16 Reconciliation of loss after income tax to net cash inflows from operating activities Loss after income tax Share of (profit)/loss of equity accounted investments (Note 10) Impairment loss on equity accounted investments (Note 4) Dividends from associate Change in operating assets and liabilities Increase in other assets Increase/(decrease) in payables Net cash inflows from operating activities Net cash/(debt) reconciliation Cash and cash equivalents Borrowings Net cash/(debt) 2022 $’000 2021 $’000 (398,378) (21,677) (47,721) 19,897 444,617 – 36,241 32,099 (110) 379 (25) (517) 35,028 29,777 5,808 3,737 (5,359) (38,316) 449 (34,579) Annual Report 2022 42 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Note 16 Reconciliation of loss after income tax to net cash inflows from operating activities (continued) Net debt as at 1 January 2022 Cash flows Net cash as at 31 December 2022 Note 17 Contingencies Borrowings due within 1 year $’000 Total $’000 (38,316) (34,579) 32,957 35,028 (5,359) 449 Cash $’000 3,737 2,071 5,808 There were no contingencies for HTAL or its controlled entities at 31 December 2022 and 31 December 2021. The Directors are not aware of any other material contingent liabilities existing at the reporting date. At 31 December 2022 and 31 December 2021, HTAL’s share of guarantees incurred jointly with other investors of TPG are as follows: Guarantees Secured guarantees Unsecured guarantees Total guarantees Note 18 Commitments 2022 VHAH $’000 – – – TPG $’000 – 6,263 6,263 2021 VHAH $’000 – – – TPG $’000 – 4,509 4,509 There were no commitments contracted by HTAL or its controlled entities not recognised as liabilities or payables at 31 December 2022 and 31 December 2021. At 31 December 2022 and 31 December 2021, there is no commitment existing in respect of the joint venture VHAH contracted but not provided for in the financial statements. Hutchison Telecommunications (Australia) Limited 43 Note 19 Related party transactions (a) PARENT ENTITIES The holding company and parent entity is Hutchison Telecommunications (Amsterdam) B.V. which, at 31 December 2022, 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; Melissa ANASTASIOU; Susan Mo Fong CHOW; Justin Herbert GARDENER; LAI Kai Ming, Dominic; John Michael SCANLON; Frank John SIXT and WOO Chiu Man, Cliff. (c) KEY MANAGEMENT PERSONNEL COMPENSATION Disclosures relating to key management personnel compensation are set out in Note 7. (d) TRANSACTIONS WITH RELATED PARTIES During the year, the following transactions occurred with related parties: Loans from related parties Repayments to an entity within the CKHH Group (32,956,620) (49,696,962) Operating expenses Paid to TPG equity accounted investment (440,516) (478,509) (e) OUTSTANDING BALANCES The following balances are outstanding at 31 December 2022 and 31 December 2021 in relation to transactions with related parties: 2022 $ 2021 $ Payables TPG equity accounted investment (Note 12) Current liabilities – Other financial liabilities Entity within the CKHH Group (Note 13) 2022 $ 2021 $ (479,254) (119,627) (5,359,401) (38,315,620) 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. On 20 November 2020, VHAH entered into the SFA with a syndicate of lenders. The SFA is guaranteed by VHAH’s ultimate parent entities, CKHH and VGP. CKHH and VGP have also entered into a Counter Indemnity Agreement with VHAH but no guarantee fee is charged to VHAH. (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. Annual Report 2022 44 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Note 20 Deed of cross guarantee The Company and 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 2022 in comparison to 31 December 2021. (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 25.05% of TPG (11.14% directly and 13.91% indirectly through its 50% investment in the VHAH joint venture). 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 2022 and 31 December 2021. Statement of profit or loss and other comprehensive income Revenue Impairment of TPG investment held within the Closed Group Other operating expenses Loss before income tax Income tax expense Loss for the year Movements in consolidated accumulated losses Accumulated losses at 1 January Loss for the year (i) Accumulated losses at 31 December 2022 $’000 2021 $’000 36,435 32,220 (294,826) (187,868) (1,676) (1,901) (260,067) (157,549) – – (260,067) (157,549) (3,003,574) (2,846,025) (260,067) (157,549) (3,263,641) (3,003,574) (i) During the financial year, the Closed Group recognised an impairment of $294.8 million (2021: impairment of $187.9 million) on H3GAH’s investment in TPG as a result of a decrease in its recoverable value due to decrease in TPG share price. The recoverable value has been determined as the investment’s fair value less costs of disposal. Hutchison Telecommunications (Australia) Limited 45 (b) STATEMENT OF FINANCIAL POSITION Set out below is a statement of financial position as at 31 December 2022 and 31 December 2021 of the Closed Group consisting of H3GAH and HTAL. ASSETS Current Assets Cash and cash equivalents Prepayments Other receivables Total Current Assets Non-current Assets 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 2022 $’000 2021 $’000 5,808 3,737 117 45 52 – 5,970 3,789 1,011,856 1,306,682 1,011,856 1,306,682 1,017,826 1,310,471 853 5,359 6,212 6,212 474 38,316 38,790 38,790 1,011,614 1,271,681 4,204,488 4,204,488 70,767 70,767 (3,263,641) (3,003,574) 1,011,614 1,271,681 Annual Report 2022 46 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Note 21 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 2022, the Group continued to invest in an operator within the telecommunications industry. The chief operating decision maker of the Group continues to receive 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. 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 the equity accounted investments* Total Revenue Net Profit/(Loss)* 2022 $’000 2021 $’000 1,356,458 1,325,897 47,721 (19,897) Further information reviewed by the chief operating decision maker with regards to the performance of the Group’s equity accounted investments is disclosed in Note 10. * after equity accounted investment accounting adjustments. 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 overseas the overall risk management including 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. Hutchison Telecommunications (Australia) Limited 47 (i) Interest rate risk The Group’s main interest rate risk arises from cash balances and other financial assets. At 31 December 2022, there are no material loans receivable from equity accounted investments and entities within the CKHH Group. As such, a 1% change on the Australian market rate on the loans and receivables will result in an immaterial change in interest revenue based on 31 December 2022 balances (2021: immaterial change). (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. 31/12/2022 Financial assets Cash and cash equivalents Total increase/(decrease) 31/12/2021 Financial assets Cash and cash equivalents Total increase/(decrease) (b) CREDIT RISK INTEREST RATE RISK -1% +1% Carrying amount $’000 Post-tax loss $’000 Other equity $’000 Post-tax loss $’000 Other equity $’000 5,808 5,808 (58) (58) – – 58 58 – – INTEREST RATE RISK -1% +1% Carrying amount $’000 Post-tax loss $’000 Other equity $’000 Post-tax loss $’000 Other equity $’000 3,737 3,737 (37) (37) – – 37 37 – – 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. Annual Report 2022 48 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Note 22 Financial risk management (continued) (c) LIQUIDITY RISK Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the support from related parties. The 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 $5.4 million (2021: $38.3 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. 31/12/2022 Cash and cash equivalents Payables Other financial liabilities Total 31/12/2021 Cash and cash equivalents Payables Other financial liabilities Total Weighted average interest rate 0.15% – – Weighted average interest rate 0.03% – – Less than 1 year $’000 5,808 (853) (5,359) (404) Less than 1 year $’000 3,737 (474) (38,316) (35,053) Between 1 and 2 years $’000 Between 2 and 5 years $’000 Over 5 years $’000 – – – – – – – – – – – – Between 1 and 2 years $’000 Between 2 and 5 years $’000 Over 5 years $’000 – – – – – – – – – – – – Total $’000 5,808 (853) (5,359) (404) Total $’000 3,737 (474) (38,316) (35,053) Hutchison Telecommunications (Australia) Limited 49 Note 23 Events occurring after the reporting date (a) Update on TPG’s regional MOCN agreement with Telstra On 21 February 2022, TPG announced a regional Multi-Operator Core Network (“MOCN”) agreement with Telstra Corporation Limited (“Telstra”) (ASX: TLS) which will enable TPG to provide its subscribers with 4G and 5G coverage for data, calls and messaging from over 3,700 Telstra sites in regional and rural Australia. On 21 December 2022, the Australian Competition and Consumer Commission decided not to grant authorisation for the proposed arrangement. Consequently, TPG has submitted an application to the Australian Competition Tribunal for a review of the decision, with a tribunal decision expected in the first half of 2023. As a result, the potential financial impacts highlighted in TPG’s half-year report 2022 (impairment of fixed assets and right-of-use assets) have not been recognised in the year ended 31 December 2022 by TPG. (b) 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. Note 24 Parent entity disclosures (a) SUMMARY FINANCIAL INFORMATION Financial position ASSETS Current Assets Non-current Assets Total Assets LIABILITIES Current Liabilities10 Total Liabilities Net Assets EQUITY Contributed equity Reserves Accumulated losses Total Equity Financial performance Loss for the year(i) Total comprehensive loss for the year 2022 $’000 2021 $’000 5,970 3,789 339,680 1,080,200 345,650 1,083,989 74,553 74,553 70,888 70,888 271,097 1,013,101 4,204,488 4,204,488 15,880 15,880 (3,949,271) (3,207,267) 271,097 1,013,101 (742,004) (742,004) (1,779) (1,779) (i) Loss for the year includes an impairment expense of $740.5 million impairment expense (2021: no impairment) of HTAL’s investment in H3GAH. 10 As at 31 December 2022, current liabilities include $5.4 million (2021: $38.3 million) which relates to an interest free financing facility provided from a subsidiary of CKHH, and an interest free advance repayable by HTAL to H3GAH of $68.3 million (2021: $32.1 million). Annual Report 2022 50 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Note 24 Parent entity disclosures (continued) (b) COMMITMENTS AND CONTINGENCIES There were no commitments contracted for by HTAL but not recognised as liabilities or payable at 31 December 2022 and 31 December 2021. The Directors of the Parent Entity are not aware of any other material contingent liabilities existing at the reporting date. As at 31 December 2022, the Parent Entity has a deficiency of net current assets of $68.6 million (2021: deficiency of net current assets of $67.1 million). Included in the Parent Entity’s current liabilities is an amount of $5.4 million (2021: $38.3 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 $1,594.6 million at 31 December 2022 (2021: $1,561.7 million). 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 Accumulated impairment Carrying amount 2022 $’000 2021 $’000 3,664,655 3,664,655 (3,324,975) (2,584,455) 339,680 1,080,200 Hutchison Telecommunications (Australia) Limited DIRECTORS’ DECLARATION 51 In the Directors’ opinion: (a) the financial statements and notes set out on pages 21 to 50 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 2022 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 20 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 20. 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 Mr Frank John Sixt, being the person responsible to the Board for performing the Chief Executive Officer function and Chief Financial Officer function of Hutchison Telecommunications (Australia) Limited required by section 295A of the Corporations Act 2001 (Cth). This declaration is made in accordance with a resolution of the Directors. Director 27 February 2023 Director 27 February 2023 Annual Report 2022 52 INDEPENDENT AUDITOR’S REPORT Hutchison Telecommunications (Australia) Limited 53 Annual Report 2022 54 INDEPENDENT AUDITOR’S REPORT CONTINUED Hutchison Telecommunications (Australia) Limited 55 Annual Report 2022 56 INDEPENDENT AUDITOR’S REPORT CONTINUED Hutchison Telecommunications (Australia) Limited 57 Annual Report 2022 58 SHAREHOLDER INFORMATION The shareholder information set out below was applicable as at 27 February 2023. Substantial shareholders Substantial shareholders in the Company (as disclosed to the ASX) are: Shareholder CK Hutchison Holdings Limited and its subsidiaries1 Shareholding 12,009,393,175 Li Ka-Shing Unity Trustee Company Limited as trustee for The Li Ka-Shing Unity Trust2 12,009,393,175 Vodafone Group Plc and subsidiaries3 Spark New Zealand Trading Limited and Spark New Zealand Limited 12,009,393,175 1,357,250,858 % Issued Capital 88.48 88.48 88.48 10.00 Notes: 1 2 3 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. For further details, see form 603 lodged with the ASX on 5 June 2015. Substantial shareholding arises solely because Li Ka-Shing Unity Trustee Company Limited as trustee for The Li Ka-Shing Unity Trust has interests 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. For further details, see form 603 lodged with the ASX on 11 June 2015. 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. None of Vodafone Group Plc or any of its subsidiaries holds any shares in the Company. Previously, Vodafone Group Plc’s relevant interests arose 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 (name changed to Vodafone Hutchison Australia Limited and then to TPG Telecom Limited) (the “VHA Shareholders Agreement”). The acquisition of the relevant interests was approved by shareholders in April 2009. The VHA Shareholders Agreement was terminated in June 2020. At or about the time of termination of the VHA Shareholders Agreement, Vodafone Group Plc, CK Hutchison Holdings Limited, the Company and other parties entered into a Shareholders Agreement in relation to Vodafone Hutchison (Australia) Holdings Limited (the “New Shareholders Agreement”). As a result of certain provisions in the New Shareholders Agreement, Vodafone Group Plc and its subsidiaries have a relevant interest in shares in the Company in which CK Hutchison Holdings Limited and its subsidiaries have a relevant interest. Distribution of equity securities Range 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 50,000 50,001 – 100,000 100,001 – and over Total Number of Shareholders % Issued Capital 1,335 2,163 755 754 136 215 0.01 0.04 0.04 0.12 0.08 99.71 5,358 100.00 There were 3,964 holders of less than a marketable parcel of ordinary shares at a share price of $0.056 on 27 February 2023. Hutchison Telecommunications (Australia) Limited Twenty largest shareholders The names of the 20 largest holders of quoted ordinary shares as at 27 February 2023 are as follows: Shareholder Hutchison Telecommunications (Amsterdam) B.V. Spark New Zealand Trading Limited Leanrose Pty Ltd Mr Dimitrios Piliouras & Mrs Konstantina PiliourasHSBC Custody Nominees (Australia) Limited Mr Dimitrios Piliouras Boscaini Investments Pty Ltd Mr Kenneth Kin Kau Heung & Mr Rene Conrad Heung Mr Ting Hua Kho Citicorp Nominees Pty Limited J P Morgan Nominees Australia Pty Limited Arjee Pty Ltd Nasmin Super Pty Ltd Mr Hung Fong Chong Atayf Family Office Pty Ltd Mrs Yu Jie Zhi Mrs Yim Fong Leung Mr Ian Keith Flint Mr Arthur Katropoulos & Mrs Despina Katropoulos Leith Investments No 1 Pty Ltd Shareholding 11,925,479,378 1,357,250,858 83,913,797 21,155,352 12,002,610 5,191,645 5,000,000 4,830,000 4,800,000 4,546,940 4,137,000 4,033,575 3,239,147 2,816,000 2,710,000 2,300,000 2,255,000 2,200,000 2,000,000 2,000,000 Mr Justin Herbert Gardener & Mrs Anne Louise Gardener 1,957,358 59 % Issued Capital Rank 87.87 10.00 0.62 0.15 0.09 0.04 0.04 0.04 0.04 0.03 0.03 0.03 0.02 0.02 0.02 0.02 0.02 0.02 0.01 0.01 0.01 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 19 20 Voting rights (Ordinary Shares) On a show of hands, every member present, in person or by proxy, attorney or representative, has one vote. On a poll, every member has one vote for each share. 13,453,818,660 99.13 On-market buy-back There is currently no on-market buy-back. Annual Report 2022 60 CORPORATE DIRECTORY DIRECTORS FOK Kin Ning, Canning Barry ROBERTS-THOMSON Melissa ANASTASIOU SHARE REGISTRY Link Market Services Limited Level 12, 680 George Street Sydney NSW 2000 Tel: 1800 629 116 or +61 1800 629 116 (international) Susan Mo Fong CHOW, also known as WOO Mo Fong, Susan (alias CHOW WOO Mo Fong, Susan) www.linkmarketservices.com.au Justin Herbert GARDENER AUDITOR LAI Kai Ming, Dominic (also alternate to FOK Kin Ning, Canning and Frank John SIXT) John Michael SCANLON PricewaterhouseCoopers One International Towers Sydney, Watermans Quay Barangaroo NSW 2000 Frank John SIXT (also alternate to LAI Kai Ming, Dominic) SECURITIES EXCHANGE LISTING WOO Chiu Man, Cliff HTAL shares are listed on the Australian Securities Exchange (ASX) COMPANY SECRETARIES ASX Code: HTA Edith SHIH Swapna KESKAR INVESTOR RELATIONS Tel: +61 2 9015 5088 Email: htalinvestors@companymatters.com.au www.hutchison.com.au REGISTERED OFFICE Level 1, 177 Pacific Highway North Sydney NSW 2060 Tel: +61 2 9015 5088 www.hutchison.com.au NOTICE OF ANNUAL GENERAL MEETING The Annual General Meeting of HTAL will be held at: 177 Pacific Highway North Sydney NSW 2060 Date: 5 May 2023 Time: 10.00 am Sydney time Hutchison Telecommunications (Australia) Limited www.hutchison.com.au www.hutchison.com.au