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ANNUAL REPORT 2020
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HT&E owns one of Australia’s
leading audio companies,
ARN, providing the most
complete audio experience
for our listeners and the
most comprehensive audio
solutions for our partners.
The Group also maintains a
number of other investments,
including a 25% interest in the
secure messaging business,
Soprano and outdoor
assets in Hong Kong.
Kyle & Jackie O
KIIS 1065 Sydney
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5.3m
Radio audience
reach (weekly) *
2.6m
Digital websites
audience reach (monthly)**
1.9m
iHeartRadio registered
users (lifetime) ***
81.3m
Streaming listening hours
(+53% YoY) ****
#1
national commercial
radio network ^
124%
podcast downloads ^^
*
Source: GfK Radio Ratings, S8 2020, SMBAP, ARN AM/FM/DAB,
Mon-Sun 5:30-12mn (cume), Commercial Radio Groups AM/FM/
DAB+, Mon-Sun 5:30-12mn, Mon-Fri 5:30-9am (share %), P10+,
unless otherwise stated.
** Source: Google Analytics: Website Page Impressions, All Devices,
Australia, station websites include KIIS Network, PG Network,
Edge (not de-duped): Dec 2020).
*** Source: Adobe Analytics, iHeartRadio Australia Registration Data,
Lifetime Users Dec 20.
**** Source: AdsWizz Audiometrix, Total Radio Streaming, Total
Listening Hours 2020 v 2019.
^ Source: GfK Radio Ratings, S8 2020, SMBAP, M-S 5:30am-12mn,
cume, ARN AM/FM/DAB+, P10+.
^^ Source: Megaphone Hosting Platform, 900k+ Australian Device
Sample, December 2020 cf. January 2020.
^^^ Source: Australian Podcast Ranker.
CONTENTS
01
We are everywhere our
listeners are, providing the
greatest breadth and depth
of audio content in Australia.
ARN’s stations broadcast across
six metropolitan markets to over
five million people each week. People
engage via three core brands: The KIIS
Network, The Pure Gold Network and The
Edge. The Network also owns a 50% share
of Perth’s Nova 93.7FM and Brisbane’s
97.3FM in a joint venture with Nova
Entertainment and 50% of Canberra FM
Radio (104.7FM and Mix106.3) in a joint
venture with Southern Cross Austereo.
#1
Australian podcast
publisher since launch ^^^
#1 and #2 podcasts, and
more titles in the top 10
than any other publisher
iHeartRadio enables Australians
to get more of what they love
about radio whenever and
wherever they want. With an
expanded podcast offering,
integrated promotion across ARN’s
core radio assets and audience
growth, it provides vast commercial
partnership opportunities.
iHeartRadio is ARN’s free radio, music
streaming and podcasting platform in
the Australian market. It is the only digital
music platform that combines podcasts,
custom music and live radio, covering
1500 live radio stations across all ARN,
NZME and iHeartMedia’s US stations.
The platform also broadcasts live events,
getting fans up close and personal with
the artists they love and it has one of the
largest podcast libraries in Australia.
Pioneer of the highest quality
innovation and premium connected
on-the-go advertising solutions.
Cody Out-of-Home in Hong Kong, has a
network of over 440 outdoor advertising
panels including the major Hong Kong
tunnels and iconic tram shelters on
Hong Kong Island.
Creating ideas that change the
way people feel about brands.
An independent creative company in
which HT&E holds a 51% interest, Emotive
makes ideas that live within advertising,
entertainment and design. Part ad
agency, part production company, part
content distributor, Emotive is deliberately
(un)structured so it can respond to
client business issues or opportunities
effectively, rather than default to
‘traditional comms’ as the answer.
Intelligent and secure business
mobile messaging software
solutions for enterprises and
governments worldwide.
Soprano Design is an independent software
vendor in which HT&E holds a 25% stake.
Through the diversification of the customer
base along with a growing need for CPaaS
(Communications Platform as a Service)
solutions, we recognise a significant
market growth opportunity. Soprano has
nearly 4000 customers globally across
APAC, EMEA, LATAM and the US ranging
from large corporations to independent
companies across Government, Healthcare,
Finance, Education, Retail, Manufacturing
and Logistics.
In this report
Delivering Our Strategy
Chairman’s Report
Chief Executive Officer's Report
Response to COVID-19
Operating and Financial Review
Review of Operations
Corporate Social Responsibility
Board of Directors
Senior Management Team
Corporate Governance Statement
Directors’ Report
Remuneration Report
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04
06
08
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20
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24
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Auditor’s Independence Declaration 45
Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
47
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HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643 02 ANNUAL REPORT 2020
Our vision is to enrich
every Australian’s life
through the medium
of audio.
We aim to be Australia’s leading audio company by providing
the most complete audio experience for our listeners and
the most comprehensive audio solutions for our partners,
using data-led insights to provide the platforms, content and
interactions that deliver the entertainment and business
results that our customers want.
Our single customer view brings together a full 360 degree
audio experience which we call ARN’s Audiosphere. Across
the Audiosphere we are investing in capability and product to
ensure we achieve our ambition.
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ARN radio stations reaching
5.3 million people each week*
Digital websites
reaching 2.6 million
Australians monthly**
#1 FM for Breakfast*
#1 Total Females*
#1 Grocery Buyers*
Commercial market share
outperforming market every
quarter since Q2 2019***
Strong growth driven
by at home listening
through smartphones
and smart speakers
registered users (lifetime)
1.9m
19% YoY^
14%
digital listening of
ARN radio stations^^
225% YoY
revenue across
532 campaigns
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#1 & #2 podcasts^^^
#1 catch up radio podcast^^^
124%
podcast downloads since
the start of the year^^^^
$2.5m
revenue across
148 campaigns
(2019: $50k)
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Deliver on strategy during COVID-19
OUR STRATEGY
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*
Source: GfK Radio Ratings, S8 2020, SMBAP, M-S 5:30am-12mn, cume,
ARN AM/FM/DAB+, P10+.
* * Source: Google Analytics: Website Page Impressions, All Devices,
Australia, station websites include KIIS Network, PG Network, Edge
(not de-duped): Dec 2020).
ARN’s Audiosphere
*** Source: Commercial Radio Metro Ad Revenue 2020 Deloitte.
^
Source: Adobe Analytics, iHeartRadio Australia Registration Data, Lifetime
Users Dec 20 (vs Dec 19).
Source: Adswizz, Audiometrix, ARN Stations only, Total Listening Hours,
Dec 2020 v Jan 2020.
^^
ARN Dynamic Audio launched
^^^ Source: CRA and Triton, Australian Podcast Ranker: December 2020 of the
participating publishers.
^^^^ Source: Megaphone Hosting Platform, 900k+ Australian Device Sample,
December 2020 cf. January 2020.
Shake-Me Interactive Audio launched
#1 National Network in Surveys 1 and 2, 2020
March 2020 – highest ever month on
record:
• 1.2m Monthly Active Users (+24%)
• Over 3m hours listening to ARN stations
• Avg. 1,200 daily registrations (+34%)
• 7.6m music stream starts (+10%)
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4.5m website users in April 2020
115% growth v 2019
7m+ social followers each month in 2020
114% growth in Facebook
12% growth in Instagram
Launched Feb 2020
• #1 Podcast Network in Australia
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10x increase compared to 2019
40M+ monthly impressions
ARN Dynamic Audio is
a world first dynamic ad
product for broadcast
radio delivering the
personalisation of digital
audio at the scale of
broadcast radio, with
significant demand from
commercial partners.
11 campaigns for
brands like Coles,
Toyota and McDonald’s.
Source: IHeartMedia, March 2020
Source: Adobe & Google Analytics, March 2020
Source App stores
Source: Triton Digital’s Australian Podcast Ranker, Reporting Period 17 Feb 2020 – 15 Mar 2020
Source: ARN Stream Log, March 2020
Source: Megaphone Jan-Apr 2020, Whooshkaa Jan-Dec 2019
Source: Google Analytics, Total Month Unique Users AU, Jan-Apr 2020 vs Jan-Dec 2019
Source: Facebook, Twitter, Instagram, Jan-Apr 2020
Source: Adobe Analytics, March 2020
ARN Roam is a mobile
geo-based advertising solution
across digital audio and
display inventory. It targets
people based on their specific
location, either past or present
and has delivered impactful
results for our clients.
ARN Neuro Lab is an
in-house neuroscience
lab for evaluating and
optimising advertising
attention, engagement
and impact.
AdWave and PodWave offer
increased scale and targeting
across digital audio by
accessing the Adswizz Global
Marketplace of Premium
International Publishers.
This improves efficacy for
commercial partners.
Podsights is the
industry leader in
podcast advertising
attribution, allowing
advertisers to measure
campaign performance.
Jonesy & Amanda
101.7 WSFM Sydney
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HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
04
CHAIRMAN’S REPORT
I am pleased to present this annual
report of HT&E’s performance
in 2020 during what has been a
challenging year, like no other in
the Company’s history.
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No one could have anticipated the
global pandemic. It has had a dramatic
impact on our way of life, changed
consumer behaviour, disrupted business
models overnight, created significant
advertiser uncertainty and resulted
in widespread falls in global and local
advertising revenues.
Against this backdrop, HT&E navigated
the period well and has maintained
its strategic focus during the year,
strengthening our core Australian radio
operations, investing in our digital
audio growth strategy, and maximising
shareholder value as we exited several
non-core investments.
ARN remains the best performing
audio company in Australia – both
commercially and in ratings – delivering
advertisers integrated, unique and
engaging content from some of the world’s
best talent, across radio, music streaming
and podcasting.
ARN’s mission remains to deliver Australia’s
most complete audio offering, to be
everywhere our audiences want to be with
the content they want to consume; and we
have the brands, technology investments
and talent to deliver on this for our
listeners, advertisers and shareholders.
Financial position and capital
management
HT&E’s business is very well capitalised,
with $112.1 million net cash and access to
over $250.0 million in funding.
The Board took the decision to suspend
the dividend at the half year to preserve
capital because of the uncertain economic
outlook at that point. The Board has since
taken the decision not to declare a full year
dividend, recognising the level of inherent
economic uncertainty attributable to the
ongoing COVID-19 pandemic.
ANNUAL REPORT 2020ANNUAL REPORT 2020
CHAIRMAN’S REPORT
05
Net cash
$112.1m
HT&E’s business is
very well capitalised.
Undrawn capacity
$252.1m
HT&E’s Board will be looking
for further opportunities to
maximise shareholder value.
Average buyback price
$1.44
Accretive share buyback
recommenced. Boosting
underlying returns for investors.
We recommenced the accretive
share buyback in September
following the release of the half year
results and the improving ad market
conditions, boosting underlying returns
for investors.
HT&E acquired a 4.7% strategic interest
in local outdoor advertising company,
oOh!media, a business we know well,
for $18.1 million at the height of the
pandemic in the first half. At year end
the stake was valued at $45.9 million.
We are continuing to work with the
business founder of Soprano, a growth
business operating in the highly
attractive CPaaS (Communications
Platform as a Service) sector to
maximise value for our 25% stake.
We believe that there will be continued
consolidation in media markets and with
its deep media experience, HT&E’s Board
will be looking for further opportunities
to maximise shareholder value. Our
investment in oOh!media demonstrates
our understanding of the sector and
we will continue to focus on the right
opportunities for our business.
On behalf of the Directors, I would like to
thank shareholders for their continued
support over the past 12 months.
I would also like to thank our people for
their dedication in 2020, particularly given
the challenging conditions we faced. We
have an exceptional team who have kept
ARN at the forefront of what is a very
competitive industry.
HAMISH MCLENNAN
CHAIRMAN
Australian Tax Office dispute
We are awaiting a response
from the Australian Tax Office on
our objections to the amended
assessments received in 2018.
The Board remains confident of
HT&E’s position and are prepared
to pursue the New Zealand
Branch dispute matter fully, through
to litigation.
The final resolution of this matter
could take several years.
The year ahead
HT&E’s business remains well placed
to emerge from 2020 in a strong
position to capitalise on the exciting
growth opportunity in digital audio.
We have the benefit of a proven
senior management team, world
recognised broadcasters and a
clear focus around creating the
leading audio entertainment
business in Australia.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643 06 ANNUAL REPORT 2020
CEO’S REPORT
2020 financial result
2020 statutory revenue from
continuing operations was down
22% to $197.3 million on last year, due to
economic impacts of COVID-19. Costs from
continuing operations before interest,
tax, depreciation and amortisation, and
exceptional items were down 16% to
$156.0 million as a result of cost control
measures and lower variable cost of
sales on reduced revenues. EBITDA from
continuing operations before exceptional
items was down 35% to $49.3 million.
HT&E COVID-19 response
The Company moved early to deal with the
impacts of COVID-19, with the welfare of
our people of paramount importance.
The impact on operations from a working
from home policy was managed effectively.
From early March and throughout the
year, ARN’s technology investments
ensured radio broadcasts were
unaffected across all our metro markets,
with all our people able to work from home
efficiently. We maintained an ‘always on’
content approach, consistently delivering
what audiences have come to expect
from our brands.
HT&E implemented a range of cost control
measures, including short term salary
reductions for executive management and
the Board, reduced work hours program
for remaining people, and a freeze on
marketing, travel, entertainment and
discretionary costs.
During the height of the pandemic in
Australia, $13.0 million in one-off cost
measures were implemented in the second
quarter that helped to protect our earnings
and cash reserves while preserving the
balance sheet.
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With advertising spend significantly affected
in both Australia and Hong Kong, revenue
from continuing operations fell 29% in the
first half, with EBITDA down 49%.
HT&E was able to access Federal
Government funding for the first round
of the JobKeeper stimulus program with
a total benefit of $10.3 million excluded
from the underlying financial results.
This funding was critical in contributing
liquidity to the business and protecting
jobs in a period of significant volatility
and uncertainty in advertising markets.
With improved trading conditions, the
Company was not eligible for ongoing
financial support under the extended
JobKeeper program.
An efficiency review conducted in the
second half of 2019 set the business up
well to manage through the pandemic.
Cost management remains an ongoing
focus for the business.
Our businesses
Australian Radio Network (ARN)
Despite disruption to daily routines, ARN
experienced growth in total listening since
the start of COVID-19 and commercial
radio is now reaching over 5.3 million people
weekly from breakfast to drive across the
working week1.
Across COVID-19, with people spending
more time at home and seeking
companionship through the day, ARN
saw overall growth in listening across all
dayparts. With the easing of restrictions
across the nation, listening behaviour has
largely reverted to normal2. Increasing use of
smartphones and smart speakers continues
to drive digital listening with digital streaming
of ARN radio stations experiencing a 14%
increase in total listening across the year3.
Regardless of how their daily routine has
changed, our audience’s appetite for audio
has not – they are consuming more radio
to remain connected, are on digital to stay
engaged, and are listening to podcasts to
escape. As audiences engage for longer,
it provides even greater opportunities for
brands and due to the unique immediacy
of radio, advertisers are able to adapt their
campaigns in real-time, aligning messaging
for consumers.
ARN maintained its #1 ratings position
for the ninth consecutive survey, with
the strategy of recruiting and retaining
the best talent continuing to deliver. The
power of our talent to connect brands
and consumers and drive commercial
outcomes for clients has shone through
in 2020. The Sydney duopoly strategy
with KIIS and WSFM continues to deliver
and KIIS 1065’s Kyle & Jackie O again
dominated breakfast radio, finishing
the year where they started, at #1FM,
with WSFM’s Jonesy & Amanda following
them, averaging the year as Sydney’s
#2FM4. GOLD 104.3 in Melbourne is now
established as the clear #1FM, along
with The Christian O’Connell Breakfast
Show. 40 years after the station launched,
Perth’s 96FM rose to #1 in survey 7 off the
back of a great breakfast show and clear
music strategy5.
ARN is now the #1 podcast publisher
in Australia after launching the
iHeartRadio Podcast Network Australia
in February 2020. The network delivered
124% more podcast downloads
in December6 and five of the top
10 podcasts in the country7. Our strategy
of representing a broad spectrum of
local and international publishers as the
podcast market matures has allowed us
to build internal capability while managing
investment risk and returns.
ARN iHeartRadio’s long term licence and
partnership with iHeartMedia, Inc. are key
differentiators in the local market, providing
access for listeners to stream live broadcast
radio stations, the best of international and
local podcasts, and allows the creation of
custom Artist Radio stations, everywhere
and on any device.
We continue to invest in our digital
audio growth strategy expanding our
data capabilities, our digital customer
acquisition programme, and our content
creation to attract new audiences. Digital
revenue growth, excluding iNC and
Conversant Media, was up 122% on last
year and we expect to see continued
strong growth in 2021.
Hong Kong Outdoor (Cody)
Our outdoor business Cody has had a
challenging 18 months, with social unrest
impacting advertiser confidence in the
second half of 2019 and while protests in
Hong Kong largely abated at the start of
2020, advertising markets did not have an
opportunity to recover before the onset
of COVID-19. In-line with other markets
around the globe, advertiser demand
for outdoor advertising was significantly
impacted by reduced footfall and
commuter volumes caused by government
enacted lockdowns to contain the virus.
Investments
Soprano
Soprano, an independent software vendor
in which HT&E has held a 25% stake since
2001, had record revenue, gross margin
and earnings growth. The company, with
established operations in Europe, North &
South America, Asia and Australia, provides
CPaaS (Communications Platform as a
Service) to enterprise customers.
Strong revenue and gross profit trajectory
built over the past two to three years
were maintained across COVID-19, with
improvement in key customer metrics,
including net revenue retention, message
volumes, and failure rates.
Soprano has the potential to provide
significant value beyond current book
value and is non-core to the Company’s
strategy. We will continue to work with the
founder to explore options to maximise
value for HT&E shareholders.
Emotive
Emotive, an independent creative
company in which HT&E holds a 51%
stake, grew revenues with an expanded
service offering and new client base.
In a challenging local advertising market,
Emotive maintained good momentum
winning a number of new strategic
clients, including HelloFresh, Modibodi,
Destination NSW, St Hugo Wine,
Google and the University of Sydney,
complementing long standing partnerships
with companies such as Optus.
Thanks to our people
2020 was an incredibly challenging year as
the lockdowns imposed by Governments
across Australia tested our ability to
operate, as well as impacting on our
revenue. We asked a lot of our people who
had to sacrifice pay and work longer hours
for less, while many juggled additional
personal and family responsibilities.
Their innovation over this time is to be
commended. Unfortunately, we did have
CEO’S REPORT
07
to let some of our valued people go and
we wish them well in the future.
We are very proud of how our team
responded to the challenges presented
and that we continue to operate through
COVID-19 with great efficiency. Our
programming has not missed a beat as we
provide our audiences with much needed
relief from the health and economic crisis
and our commercial teams have grown
share by delivering first class solutions for
our clients.
The management team is extremely
grateful for the dedication and enthusiasm
of everyone who responded so positively
to the challenges the pandemic delivered
in 2020.
2021 focus
What was achieved in 2020, given the
impact of COVID-19, is a testament to
HT&E’s leadership in the Australian audio
market. In a year that has rewritten
history, Australian audiences have made
ARN and iHeartRadio podcast brands the
number one choice for audio content,
delivering consistency and certainty for our
commercial clients.
I am confident that the momentum that we
have built will continue in 2021. Our focus
is on maintaining our #1 ratings position
nationally and our dominance of audio
entertainment in Australia. We believe
that our proven strategy of retaining the
best talent, and leveraging data, targeting
and technology to grow share of the radio
and audio advertising market will deliver
increasing value for shareholders.
We anticipate further consolidation in the
media industry in 2021 and our strong
balance sheet means we have the ability
to explore the right strategic opportunities
for the business as they arise.
I would like to thank all our people for their
significant contribution to the performance
of the business in 2020.
CIARAN DAVIS
CEO & MANAGING DIRECTOR
1 Source: GfK Radio Ratings, S8 2020, SMBAP, M-S 5:30am-12mn, cume, ARN AM/FM/DAB+, P10+.
2 Source: GfK / CRA Pulse Study (May-June 2020), GfK Radio Ratings: S1 2020, S8 2020, SMBAP, M-S 5:30am-12mn, ARN, cume, P10+.
3 Source: Adswizz: ARN Stations, TLH, Dec 2020 v Jan 2020.
4 Source: GfK Radio Ratings: S1, S2, S6, S7, S8 2020 (averaged), S1, S8 2020, Sydney, M-F 5:30am-9am, Comm Radio Stns (FM), Sydney, share to all, P10+.
5 Source: GfK Radio Ratings: S7 2020 (Perth), S8 2020 (Melbourne), M-S 5:30-12mn, M-F 5:30am-9am, Comm Radio Stns (FM), share to all, P10+.
6 Source: Megaphone Hosting Platform, 900k+ Australian Device Sample, December 2020 cf. January 2020.
7 Source: CRA and Triton, Australian Podcast Ranker: December 2020 of the participating publishers.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643 08 ANNUAL REPORT 2020
RESPONSE TO
COVID–19
Despite cancellations and a fall in advertising
during the initial COVID-19 lock downs, ARN
continued to win commercial share with
increased audio consumption during this
time, reinforcing importance of trusted talent
to both listeners and advertisers.
Unlocking value for shareholders:
– Investing in ARN’s digital audio capabilities
– Strategic investment in oOh!media
providing optionality
– Soprano trading significantly improved
with positive trajectory in key metrics
Strong fundamentals and well
positioned for COVID-19 recovery
Financial performance improving
after tough Q2
Audiences more engaged with radio
and audio:
– Radio consumption increased during
COVID-19 across multiple platforms
– Radio is enhancing the rise of digital
audio formats
– Importance of trusted talent to both
listeners and advertisers reinforced
– Record iHeartRadio growth; #1 podcast
publisher in the country with
revenues building
– Q3 trading conditions improved relative
to the previous quarter, with the radio
market down 28.1%, whereby the radio
market was down 46.6% in Q2 led by an
initial three week period of cancellations
during lockdown
– Q4 trading was encouraging with total
revenues only slightly down on the
prior year with the improvement on the
prior quarter assisted by the ease in
COVID-19 restrictions in Melbourne, with
the radio market down 10.4%
– ARN winning commercial share,
performing ahead of the market
– Cost control measures taken early, with
$13.0 million in one off savings in 2020
(excluding JobKeeper $10.3 million)
– Strong balance sheet – Group net cash
$112.1 million
ARN commercial radio weekly
cumulative reach
5.3m*
The high level of client cancellations
experienced in the weeks
immediately following the national
pandemic lockdown largely abated
after the first few weeks, with radio
consumption growing and playing
an important community role as our
listeners craved engagement and a
sense of normality in the isolating
environment. Radio audiences were
more engaged than pre-COVID-19.
Our commercial teams were very
active in the market implementing a
“Combatting Corona” trade activity
plan promoting the power of audio
to advertising agencies and clients,
reminding them of ARN’s great
strengths – immediacy, trust, and cost
effectiveness with increasing digital
targeting capability.
Total Radio Market Listening
Audience Reach
Pre-COVID-19 vs Current: Time of Day**
8M
7M
6M
Breakfast
(5.30am–
9am)
Morning
(9am–
12pm)
Afternoon
(12pm–
4pm)
Drive
(4pm–
7pm)
S2–2020
S8–2020
*
* *
Source: GfK Radio Ratings, S8 2020, SMBAP, M-S 5:30am-12mn, cume, ARN AM/FM/DAB+, P10+.
Source: GfK Radio Ratings, S2 2020, S8 2020, SMBAP, Mon-Sun 5:30am – 12mn (cume), Commercial Radio Groups AM/FM/DAB+.
RESPONSE TO COVID-19
09
Our clients
Informed and innovated to meet
clients’ changing needs:
– Initiatives informing the market,
including “Combatting Corona”
audio intel packs, studies tapping
into ARN’s Backstage Insights
panel, and weekly on-air COVID-19
content updates
– Monthly digital audio updates
capturing audience movements
– Flexible cancellation and trading
terms, contributing to high client
retention levels and positive revenue
and share performance in H2
Our partners
– iHeartPodcast Network Australia
launched, providing a comprehensive
commercial offering for advertisers,
with podcasting listening up 124%
since the pandemic was declared
– Growing numbers of Australians
used podcasts to connect with
COVID-19 content like Australian
comedian Nazeem Hussain’s
Survivor’s Guide to Coronavirus
– Understanding the power of audio
to connect and entertain, ARN
proudly partnered with Muru
Music Health, an AI music tech
platform that helps ward off the
effects of brain ageing through the
power of music, and Universal Music
Australia to give the gift of music
to 5,000 aged care and retirement
village residents across the country
– Partnership with Podsights was
expanded, allowing for best-in-class
reporting and attribution capabilities
to be able to prove the effectiveness
of podcast advertising
Our financial position
Net cash (31 Dec 2020)
$112.1m
Read more on page 10
(Operating Financial Review)
Since COVID-19 began impacting our business
in March, we have responded quickly to
ensure our stakeholders are supported and
the resilience of the business is maintained.
Our response
The Company moved early to deal
with the impacts of COVID-19.
After an initial three week period of
cancellations, confidence in radio
returned as it became clear that
audiences were not switching off.
The second wave in Victoria saw
minimal cancellations.
Read more on page 06 and 10
(Chief Executive Officer’s Report and
Operating Financial Review)
Our people
Made the health and happiness
of our people a priority.
Read more on page 16
(Corporate Social Responsibility)
Our audiences and communities
Deepened engagement with our
audiences like never-before and
elevated community spirit:
– Adapted on-air content; produced
a brighter, more upbeat sound
– Adapted online content; delivered
regular COVID-related news
updates on social media
– 2,500 care packages sent to
doctors and nurses and 20 Melbourne
hospitals from GOLD104.3’s
Christian O’Connell and Coles
– 97.3FM’s state-wide Nutbush
Dance Challenge getting
Brisbane schools to join in
on a feel-good activity
– Will & Woody and Ruffie Rustic
Foods #helpinrufftimes
campaign, bringing
performances live
from Woody’s front porch
Read more on page 16
(Corporate Social Responsibility)
Jase & PJ
KIIS 1011 Melbourne
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643 10 ANNUAL REPORT 2020
OPERATING AND
FINANCIAL REVIEW
This Operating & Financial Review
should be read in conjunction with
the Chairman’s Report and the Chief
Executive Officer’s Report.
Overview
ARN performing ahead of the market across the year
Group revenue from continuing
operations decreased $55.4 million
on last year, with advertising spend
in both Australia and Hong Kong
significantly affected by the economic
impacts of COVID-19. The disposals
of non-core businesses, The Roar and
digital marketing business, iNC Digital
Media, contributed to $8.9 million of
the revenue decline.
In response to COVID-19, a range of
temporary cost control measures were
implemented from March 2020 to
protect earnings and cash reserves.
Resulting group earnings before
exceptionals, interest, tax, depreciation
and amortisation (EBITDA) from
continuing operations decreased by
$26.3 million to $49.3 million. Ignoring
the effect of AASB 16 Leases (adopted
1 January 2019), EBITDA would have been
down 45% to $32.7 million.
The statutory loss attributable to
HT&E shareholders of $42.5 million
represented a $28.3 million decrease
from last year, impacted by exceptional
items in the period of $57.9 million (net
of tax), including non-cash impairments
in ARN and Cody Outdoor of $64.3 million
($65.7 million before tax), redundancy
costs of $1.0 million ($1.5 million
before tax) part offset by government
wage subsidies (including JobKeeper
and the Hong Kong Government
Employment Support Scheme) of
$7.3 million ($10.2 million before
tax) and a $4.8 million benefit from
write-back of provisions related to a
disposed joint venture.
)
Y
o
Y
(
h
t
w
o
r
G
0%
-5%
-10%
-15%
-20%
-25%
-30%
-35%
-40%
-45%
-50%
Q1 20
Q2 20
Q3 20
Q4 20
Market Growth
ARN Revenue Growth
IMPACT OF COVID-19
The Group’s Business Continuity Plans
were enacted following the government
enforced lockdowns in March 2020, as
well as the second wave of infections
in Melbourne in August 2020, allowing
Australian Radio Network (ARN) to
broadcast unaffected and our people
to work remotely without any business
interruption. The safety of all our people is
paramount, and the Company continues to
monitor government advice closely. Refer
to page 8 for further details on the Group’s
response to COVID-19.
From a financial perspective, COVID-19
has resulted in widespread falls in global
marketing and advertising activity, with all
advertising sectors materially impacted.
The Australian radio sector recorded
a total market decline of over 25.2% in
2020 compared to 2019 (H1: –30.9%,
H2: 19.1%)1, with ARN revenues in the
first and second half declining 27.8%
and 14.8% respectively. ARN experienced
significant levels of client cancellations
and deferrals following the government
enforced lockdowns in March, with
advertisers moving quickly to preserve
capital in direct response to uncertainty
created by the worsening pandemic.
In Q3 2020, trading conditions improved
relative to the previous quarter, with
total ARN revenues down 22.5% on
the prior year comparative period. This
result was significantly ahead of the
broader metro radio market, which
was down over 28.1% for the quarter.
Q4 2020 saw further improvement in
general market conditions, with total
advertising revenues only slightly down
on the prior year, assisted by the easing
of COVID-19 restrictions in Melbourne.
In Hong Kong, the impacts of COVID-19
were felt earlier, with advertising
revenues at Hong Kong Outdoor (Cody)
affected from the start of the period.
1 Source: Commercial Radio Metro Ad Revenue
2020 Deloitte.
Temporary cost control measures taken
in response to COVID-19 amounted
to savings over the 2020 financial year
of $13.0 million, across a range of
expenditure lines, including:
– Marketing, travel, entertainment, new
employee hires and other short-term
cost control measures;
– Employee costs where staff
agreed to work on reduced hours for
five months, utilise excess annual leave
and in some instances, staff have left
the business; and
– The Board & Executive KMP took a
20% pay cut for five months and agreed
to forego all incentive payments for 2020.
The Company received the JobKeeper
government subsidy, which provided cost
relief of $10.3 million in addition to those
measures previously outlined.
The Company was not eligible for
ongoing financial support under the
extended JobKeeper program from
28 September 2020 to 28 March 2021.
Summary of financial performance
AUD million1
Revenue
Other income
Share of profits of associates
Costs
EBITDA2
Depreciation
Amortisation
EBIT3
Net interest expense
Profit before tax
Tax expense
Profit after tax
Less: non-controlling interests
NPAT attributable to HT&E shareholders
Exceptional items net of tax4
NPAT attributable to HT&E shareholders
EBITDA margin
Underlying basic EPS (cents)
Full year dividend per share (cents)
OPERATING AND FINANCIAL REVIEW
11
During the year, an impairment of
$55.9 million was recorded in relation to
ARN and $9.8 million in relation to Cody.
This was reflective of the financial under
performance of each business relative to
the original forecast during the six months
to 30 June 2020, and a downward revision
to forecast cashflows in the short to
medium term in response to uncertainty in
advertising markets created by COVID-19
(refer to note 2.1, note 2.3 and note 5.4
to the consolidated financial statements
for more information). Further, an
increase in credit risk saw an increase
in the expected credit losses in relation
to trade receivables (refer to note 3.3 to
the consolidated financial statements for
more information), which improved in the
second half.
The Group balance sheet remains very
strong with net cash of $112.1 million and
access to $252.1 million of undrawn debt
facilities at 31 December 2020.
Group financial performance
continues to improve after
tough Q2. The business
remains highly profitable
and cash generative.
$112.1m
Net cash
$21.0m
Net cash flows before financing
2020
197.3
2.1
6.0
(156.0)
49.3
(15.8)
(1.0)
32.5
(3.8)
28.7
(10.3)
18.5
(3.1)
15.4
(57.9)
(42.5)
25.0%
5.5
–
Change
(22%)
(69%)
>100%
(16%)
(35%)
(13%)
83%
(43%)
67%
(47%)
(36%)
(52%)
(29%)
(55%)
20%
(>100%)
2019
252.7
6.7
2.5
(186.2)
75.6
(18.2)
(0.6)
56.9
(2.3)
54.6
(16.1)
38.5
(4.3)
34.2
(48.4)
(14.2)
29.9%
12.0
8.6
1. Totals may not add due to rounding.
2. EBITDA from continuing operations and before exceptional items, represents the Group’s total segment result.
3. EBIT from continuing operations and before exceptional items.
4. Commentary on exceptional items is included on page 54 and in note 1.3 to the consolidated financial statements.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643 12 ANNUAL REPORT 2020
Impact of AASB 16 Leases on
financial performance
In 2019 HT&E adopted AASB 16 Leases
using the modified retrospective approach.
Operating leases were capitalised onto
HT&E’s balance sheet and recognised as
right-of-use assets and lease liabilities.
Rental payments were effectively
recharacterised as depreciation and
financing costs.
Key financial impacts of the standard in
2020 include removal of rental costs of
$16.6 million (2019: $15.7 million), mostly
replaced with depreciation $12.6 million
(2019: $14.0 million) and financing costs of
$2.3 million (2019: $2.3 million). However,
impact on net profit before tax (NPBT) is
limited at $1.7 million (2019: $0.7 million),
though future lease changes may bear a
more significant impact.
The table below summarises the impact
of AASB 16 Leases on the financial
performance of the Group for the year.
Underlying drivers of performance
Group revenues were down $55.4 million,
with advertising revenues across ARN and
Cody adversely impacted by COVID-19.
Despite the significant impact of COVID-19
on the financial performance of the
Group, ARN is well positioned as the #1
metropolitan radio network in Australia1,
with ratings successes continuing to deliver
commercial share gains and audiences
spending significantly more time listening
to streaming radio throughout the
COVID-19 lockdown period.
The disposal of The Roar and iNC Digital
Media contributed to $8.9 million of the
revenue decline, however had minimal
impact on Group earnings.
Group costs from continuing operations
before interest, tax, depreciation and
amortisation, and exceptional items were
down 16% to $156.0 million, impacted
by the previously outlined cost control
measures, lower variable cost of sales
on reduced revenues, the disposals
of The Roar and iNC Digital Media and
the simplification of management and
operational structures between HT&E
and ARN, which occurred in the second
half of 2019.
Segment earnings before interest, tax,
depreciation and amortisation (EBITDA)
from continuing operations and before
exceptional items were down 35% from
the corresponding period.
Depreciation and amortisation decreased
from $18.8 million to $16.8 million.
This resulted in EBIT from continuing
operations and before exceptional items of
$32.5 million compared with $56.9 million,
a decrease of 43%.
Resulting net profit after tax attributable
to shareholders (NPAT) from continuing
operations before exceptional items for
the period was $15.4 million.
Pre-tax exceptional items comprise of
non-recurring gains and losses arising
during the period, including previously
outlined non-cash impairments of
$65.7 million, restructuring costs of
$1.5 million, benefit of government
wage subsidies of $10.7 million, and
benefit of $4.8 million from write-back
of provisions. Further details are
included in note 1.3 to the consolidated
financial statements.
Financial position
The Group had net assets at
31 December 2020 of $492.2 million,
which was down $37.7 million on prior
year driven by non-cash impairments of
$65.7 million and impact of COVID-19
on the financial results of the business,
partly offset by equity gains on listed
investments, write-back of provisions and
the benefit of government subsidies.
During the period, the Group acquired a
4.7% interest in local outdoor advertising
company, oOh!media Limited for
$18.1 million. The Group continues to
support oOh!media as a constructive
long-term shareholder.
A matter pertaining to a financing
arrangement involving the Company’s
former New Zealand operations was
settled with the ATO for an amount of
$3.2 million. A provision of $3.0 million was
previously made for this matter.
The ATO Branch tax dispute is ongoing.
The deposit of $50.7 million provided to
the ATO in 2018, remains a non-current
asset on the balance sheet, while the
dispute processes are being completed.
Consistent with prior year, the Company
has recorded a provision in the balance
sheet for uncertain tax treatment
in relation to the Branch dispute of
$30.0 million, with the amount reflecting
probability-weighted estimate of the
possible outcomes. The estimate may not
reflect the final outcome. The non-current
asset is further reduced by $16.7 million
for the value of tax deductions on interest.
Refer to note 4.1 to the consolidated
financial statements for more information.
1 Source: GfK Radio Ratings, S8 2020, SMBAP, ARN AM/FM/DAB, Mon-Sun 5:30-12mn (cume), Commercial Radio
Groups AM/FM/DAB+, Mon-Sun 5:30-12mn, Mon-Fri 5:30-9am (share %), P10+, unless otherwise stated.
Impact of AASB 16 Leases on financial performance
AUD million1
Australian Radio Network
Hong Kong Outdoor
Investments and Corporate
EBITDA3
Depreciation and amortisation
Net interest expense
NPBT
2019 result
without adoption
of AASB 16
2020 result
without adoption
of AASB 16
2020 lease
adjustment
AASB 162
2020 as
reported
70.3
0.0
(10.4)
59.9
(4.8)
0.1
55.2
43.0
(5.4)
(4.9)
32.7
(4.2)
(1.5)
27.0
3.3
13.0
0.3
16.6
(12.6)
(2.3)
1.7
46.2
7.7
(4.6)
49.3
(16.8)
(3.8)
28.7
1. Totals may not add due to rounding.
2. The lease adjustments have resulted in an improvement in EBITDA through a reduction in rental expense.
3. EBITDA from continuing operations and before exceptional items, represents the Group’s total segment result.
OPERATING AND FINANCIAL REVIEW
13
Christian O’Connell
GOLD104.3 Melbourne
2020
28.9
(3.2)
10.7
(15.4)
21.0
3.3
(50.0)
(12.8)
(7.1)
111.0
(0.2)
65.1
50.0
(2.9)
112.1
2019
31.3
–
–
(9.6)
21.7
–
–
(22.8)
(16.4)
128.4
0.0
111.0
–
–
111.0
Change $
(2.4)
(3.2)
10.7
(5.8)
(0.7)
3.3
(50.0)
9.9
9.2
(17.4)
(0.2)
(45.9)
50.0
(2.9)
1.2
Cash flow generation
AUD million1
Operating cash flows and lease payments2
Tax matter settlement3
Government subsidies
Investing cash flows4
Net free cash flow
Borrowings
Short-term deposits
Dividends paid to shareholders
Other financing cash flows
Cash at the beginning of the year
Effect of foreign exchange of the year
Cash at end of year5
Short-term deposits
Bank loans
Net cash
1. Totals may not add due to rounding.
2. Operating cash flows, plus principal repayments on finance leases accounted for under AASB 16 Leases from 1 January 2019.
3. Refer to note 4 to the consolidated financial statements for further details on this tax matter.
4. Excluding amounts transferred to short-term deposits.
5. Excludes amounts held in short-term deposit with banking institutions.
Cash and capital management
The balance sheet remains strong
with net cash of $112.1 million as at
31 December 2020.
The Group retains debt facilities with
undrawn limits of $252.1 million, most of
which expire in 2024 and are sufficient
to cover any adverse outcome on the
ongoing disputes with the ATO.
The on-market share buyback continued
throughout the period, however at
significantly reduced levels reflective of
the Company’s prudent approach to
preserving capital in the current uncertain
advertising market.
Operating cash flows and lease
payments on a continuing basis were down
$2.4 million on last year, with a reduction
in tax instalments, tax refunds and
government subsidies offset by decline in
business performance in the period.
In the first half no interim dividend was
declared, given the uncertainty in the
operating environment and the need to
maintain a strong balance sheet. Whilst
trading conditions across the Group’s
Australian operations improved in the
second half, the Company took the
decision not to declare a full year dividend,
recognising the level of inherent economic
uncertainty attributable to the ongoing
COVID-19 pandemic.
The Group’s dividend policy, between
60% and 80% of net profit distributed
in a normal year, reflects the profitable
and highly cash generative nature of the
Group. While suspended due to economic
uncertainty from COVID-19, this will be
revisited as trading conditions normalise.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643 14 ANNUAL REPORT 2020
REVIEW OF
OPERATIONS
Australian Radio Network (ARN)
Growth in radio and audio listenership
Despite disruption to daily routines,
ARN experienced growth in total listening
across COVID-19, with ARN commercial
radio now reaching 5.3 million people
weekly from breakfast to drive.
During COVID-19, radio remained
the ultimate companion medium
demonstrated with listening increasing
across all day parts, with breakfast and
drive up 2% and 6% respectively, and
mornings and afternoons experiencing
significant growth, up 22% and 17%
respectively, as people spent more time
at home and sought companionship
through the day. With the easing of
restrictions across the nation, listening
behaviour has now reverted to normal1.
Increasing smartphone and smart
speaker penetration continues to
drive digital listening; and streaming
of ARN radio stations experienced an
increase of 14%2 in total listening across
the year.
New technologies offering exciting ways
for radio content to be consumed,
including smart speakers, saw a 60%
uplift since the start of COVID-19.
ARN is uniquely placed to continue to build
listenership given iHeartRadio is the only
listening platform to deliver live radio, music
streaming and podcasts all in the one place.
#1 ratings position maintained
ARN’s strategy of recruiting and retaining
the best talent continues to pay off,
delivering ARN its ninth consecutive
#1 ratings position. The power of our
talent to connect brands and consumers
and drive commercial outcomes for
clients has shone through in 2020.
The Sydney duopoly strategy with KIIS
and WSFM continues to deliver. KIIS
1065’s Kyle and Jackie O, who are now in
their 20th year of being on air together,
continue to dominate Sydney breakfast
radio, finishing the year where they started,
at #1FM, with WSFM’s Jonesy & Amanda
following, averaging the year at #2FM3.
GOLD104.3 in Melbourne is now
established as the clear #1FM, along with
The Christian O’Connell Breakfast Show.
Perth’s 96FM rose to #1 in survey 7 off
the back of a great breakfast show and
clear music strategy4.
Adelaide’s strength in ratings
continued across the year, and a new
breakfast show with sporting legend
Erin Phillips joining Soda on Mix102.3
delivers momentum for 2021.
Key priorities for the business in 2021 are
improving ratings performance across
97.3FM Brisbane and KIIS101.1 Melbourne
and maintaining our enviable network
ratings position.
#1 podcast publisher in Australia
ARN is now the #1 podcast publisher
in the country after launching the
iHeartRadio Podcast Network Australia
in February 2020. Driven by our careful
content strategy and a growing consumer
appetite, in December we published five
of the top 10 podcasts in the country with
podcast downloads reaching new listening
highs, increasing by 124%5 since the
beginning of the year.
Our strategy of representing a broad
spectrum of local and international publishers
as the podcast market matures has allowed
us to build internal capability while managing
investment risk and returns.
1 Source: GfK Radio Pulse, June 2020, Mon-Sun
5.30am-12mn, Commercial Radio Audience (cume
000s), People 10+, unless otherwise stated. All
comparisons are made with GfK Radio Ratings, S2 2020.
2 Source: Adswizz, Audiometrix, ARN Stations only,
Total Listening Hours, Dec 2020 v Jan 2020.
3 Source: GfK Radio Ratings: S1, S2, S6, S7, S8 2020
(averaged), S1, S8 2020, Sydney, M-F 5:30am-9am,
Comm Radio Stns (FM), Sydney, share to all, P10+.
4 Source: GfK Radio Ratings: S7 2020 (Perth), S8 2020
(Melbourne), M-S 5:30-12mn, M-F 5:30am-9am,
Comm Radio Stns (FM), share to all, P10+.
5 Source: Megaphone Hosting Platform, 900K
Australian Devices, ARN/iHR Podcast Growth, ave
weekly downloads, Jan 20-Dec 20.
6 Source: https://www.iheartmedia.com/digital.
Radio remains the ultimate
companion medium
demonstrated with listening
resilient across all day parts
during COVID-19 and listener
growth increasing year-on-year.
2%*
14%**
in total Radio
market listening YoY
in ARN digital
streaming YoY
Total Radio listener growth
Commercial Metro Radio Audience
Cumulative Reach – All Day Parts**
11,080
’
s
0
0
0
h
c
a
e
R
e
m
u
C
12,000
10,000
8,000
6,000
2016
2017
2018
2019
2020
* Source: GfK Radio Ratings, Average of
Surveys 1-8, 2016-2019, Average of Surveys
1-2 &6-8 2020; Commercial Metro Radio
(AM/FM/DAB+), SMBAP, M-S-12mn-12mn,
cume reach ‘000s, P10+.
** Source: Adswizz, Audiometrix, ARN
Stations only, Total Listening Hours,
Dec 2020 v Jan 2020.
REVIEW OF OPERATIONS
15
Soprano has recorded strong revenue
and gross profit trajectory over the past
two to three years which was maintained
across COVID-19, with improvement in
all key customer metrics, including net
revenue retention, message volumes,
and failure rates.
Innovation and product development are
key priorities of Soprano, with integrations
into third party ERP, HR and CRM systems.
The company’s growth strategy is focused
on increasing usage by existing customers,
upsell of products and services, acquiring
new customers and MNO partners,
innovating on the Soprano product and
growth through mergers and acquisitions.
Emotive
Emotive, an independent creative company
in which HT&E holds a 51% stake, grew
revenues with an enhanced service
offering and growing client base.
Emotive offers the full breadth of creative
services, including production, content
distribution, strategy, creative and design.
In a challenging local advertising market,
Emotive maintained good momentum
through the business with the growth
of a number of new strategic clients,
including HelloFresh, Modibodi,
Destination NSW, St Hugo Wine,
Google and the University of Sydney,
which complemented long standing
partnerships with clients such as Optus.
Erin Phillips & Soda
Mix102.3 Adelaide
Most complete audio offering for clients
Digital investment and partnerships
ARN is able to leverage its audio
expertise, to offer the full sphere of audio
solutions to advertisers, with what we
call the “ARN Audiosphere”, providing
consistent and immediate opportunities
for partnership and integration for brands
across on-demand radio, music, digital,
and podcasts.
We are developing innovative technology
led products, such as Dynamic Audio.
This product allows clients to deliver
personalised audio messaging based on
relevance and targeting characteristics
across broadcast radio and digital
formats. This is a world first innovation
for broadcast radio and we are proud
to have partnered with premium brands
like Coles, Toyota and Mazda in the
first few months of rollout. Further, we
continue partnering with leaders in
digital marketing technology, AdsWizz, to
provide one-to-one targeted advertising
that combines listener data with matched
client content.
The growth of v-commerce (voice
enabled transactions) fuelled by
increased smart speaker penetration
in Australian homes will present
clear opportunities for new product
developments into 2021.
iHeartRadio long term licence and
partnership a key differentiator in
the local market
Our digital platform for radio, music, and
podcasts, provides access for listeners to
stream live broadcast radio stations, allows
them to listen to the best of international
and local podcasts and create custom
Artist Radio stations, everywhere and on
any device.
HT&E has a unique long term licence
with iHeartMedia, Inc. for the iHeartRadio
platform which is the #1 streaming
broadcast radio platform in the US,
with six times the digital listening of
the next largest commercial broadcast
radio company5.
iHeartRadio is globally available on over
250 platforms and over 2,000 different
connected devices including smart
speakers, digital auto dashes, tablets,
wearables, smartphones, virtual assistants,
televisions and gaming consoles.
Importantly, we are on the US technology
roadmap, and benefit from the learnings
and expertise of over 200 developers
working for the #1 audio company in the
United States.
Investments in our core technology stack,
including onboarding Adobe Audience
Manager, continued at pace during
2020. We are now fully integrated in the
Adobe Platform which means we are
able to offer clients premium targeting
capability, combining their anonymised
data and segments with our iHeartRadio
first party data. This allows the advertiser
to measure ROI by attributing advertising
exposure data to actual sales data.
Hong Kong Outdoor (Cody)
Cody, our Hong Kong outdoor business
had a challenging 18 months, with social
unrest impacting advertiser confidence in
the second half of 2019. While protests in
Hong Kong largely abated at the start of
2020, advertising markets did not have an
opportunity to recover before the onset of
COVID-19. In-line with other markets around
the globe, advertiser demand for outdoor
advertising was significantly impacted by
reduced pedestrian footfall and commuter
volumes caused by government enacted
lockdowns to contain the virus.
Cody continues to operate a good
network of advertising contracts, including
HK Tramways, Eastern and Western
Harbour Tunnels, Tai Lam Tunnel and a
number of smaller assets.
Investments
Soprano
Soprano, an independent software vendor
in which HT&E has held a 25% stake
since 2001, delivered record revenue,
gross margin and earnings growth. The
Company, with established operations
in Europe, North & South America,
Asia and Australia, provides CPaaS
(Communications Platform as a Service) to
enterprise customers through long term
strategic partnerships with MNO’s (mobile
Network Operators) and direct to clients.
The Soprano software provides a
self-managed, enterprise grade solution
to orchestrate secure interactions
over SMS, MMS, email, Voice, RCS
(Rich Communication Services), WhatsApp
and SecureIP.
15.2m
Australian podcast
downloads monthly ^
^
Source: Triton, Australian Podcast Ranker:
November 2020.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
16
ANNUAL REPORT 2020
CORPORATE
SOCIAL
RESPONSIBILITY
Our people are our greatest asset
The success of the HT&E Group across
2020 is testament to the strength,
resilience and hard work of all of our
people. Our people are our most valuable
asset, and the way they engage with our
business and represent HT&E as part of
the broader community is something of
which we are most proud.
Over the years, we have worked hard
to develop and provide a positive
employment culture which was certainly
tested by the challenges of 2020. Our
focus on establishing an environment
where people felt connected, were
supported and given access to learning
and development proved beneficial when
operations became largely virtual. Our
culture of support quickly translated into
the virtual environment and ensured
that both individually and collectively, our
people were able to face evolving and
complex challenges.
We emphasise a workplace where diversity
and inclusion are not only accepted but
truly embraced, and celebrate this in the
content that we produce each day. We’re
committed to supporting our chosen
charities and encourage our people to give
back generously to their communities with
a volunteer day off given each year.
An unprecented year, giving back
to the community
HT&E and its group of companies
are committed to giving back to the
community that our people are a part of.
Given the extraordinary year, it was more
important than ever that we continued
the community engagement work that
we had established and that as individual
situations changed, our people were able
to either support or be supported as part
of those efforts.
Community support has been driven
through various means including:
– The supply of media inventory to
charitable and community-based initiatives
(Community Service Announcements)
– Financial and employee engagement
support for dedicated charities
– Community engagement opportunities
for employees
– The response of our stations and
shows through the content they
produce and broadcast
– Work experience programs
At Australian Radio Network (ARN),
these works fall under our Corporate
Social Responsibility (CSR) program,
ARN Goodness.
CSA delivered to the value of $10.3 million
Community Service Announcements (CSAs)
are media inventory schedules dedicated
to raising awareness to support a broad
spectrum of charitable and community
initiatives. Organisations that benefit from
this airtime use it to drive awareness and
funding for their programs, and engage
people in their efforts.
Across 2020, HT&E has been proud
to support the Starlight Children’s
Foundation, Foodbank Victoria, Australia
Zoo, Beyond Blue, Australian Red Cross,
The Salvation Army, Surf Lifesaving
Australia, Cure Cancer Australia, batyr,
Heart Kids, Sydney Children’s Hospitals
Foundation and many more.
Radio and Digital CSAs worth $10.3 million
was committed across 38,876 spots,
129 different organisations and 10 digital
campaigns (3.9 million impressions).
CSAs delivered
to the value
$10.3m
CORPORATE SOCIAL RESPONSIBILITY
17
Dedicated financial and
employee engagement
ARN is proud to partner with leading media
charity, UnLtd. Through this program we
continue to work with two charities that
are aligned to our culture and vision –
batyr and Musicians Making a Difference
(MMAD).
Our efforts for these organisations
are focused on fundraising and raising
awareness of their work amongst our
employees and the broader community.
batyr is a ‘for purpose’ preventative
mental health organisation, created and
driven by young people, for young people.
In 2020 we promoted their virtual batyr
Ball to all staff and welcomed them to
speak as part of our October Health &
Wellness month, where they ran a virtual
session sharing their observations of the
impact of COVID-19 on mental health
and provided actionable ways to support
friends and family.
MMAD is an Australian charity that exists
to change young lives through music.
In 2020, we provided support to MMAD
at the annual UnLtd Golf Day, reaching
hundreds of senior and influential media
executives, with the tournament raising
over $140,000 for the charity partners.
Give back, it’s on us
All employees are encouraged to give back,
by taking a ‘charity day’, devoting time and
skills to a charity of their choice. While the
conditions of 2020 made it more difficult
for people to contribute in the ways they
usually would, those who could, embraced
the opportunity.
“ I used my ARN Charity Day
in December and volunteered
(with my teenage daughter)
at The Salvation Army Street
Level Mission in Surry Hills. We
spent the day packing Christmas
gifts for children from less
fortunate backgrounds. It was a
great way for us to connect with
the community and give back
to those that are less fortunate
than us. It was also a really great
bonding session for my daughter
and I, and it was awesome to
see what a great eye opener it
was for her. We are so lucky at
ARN to be given this day – more
people should use it.”
Karen Harris, Sydney
558
staff completing 7,580 courses
Change Management Program
completed by 62 leaders
New CRM implementation,
training for
180
staff across 9 departments
36 senior leaders attended
Australian Institute of Management
courses to support and energise
their teams through COVID-19
Thrive: empowering through our
learning and development
As 2020 threw challenges our way, the
involvement and engagement of our staff
was paramount to stimulate productivity
and maintain mental health.
ARN continued to offer a robust
learning program, pivoting training to the
virtual space.
A healthy workplace
We are committed to a workplace that
embraces a healthy lifestyle and work life
balance and for the first time in 2020, we
dedicated an entire month to encouraging
Health & Wellness across our business.
The month comprised a calendar of
virtual events across October, including
live speaker sessions, podcasts, TED
Talks, exercise sessions and much more,
designed to empower and motivate staff
to take control of their own mental and
physical health. ARN also launched a digital
radio station on iHeartRadio, THE GET UP,
with staff curating a playlist of hits that
uplift and energise them.
A culture of belonging
Diversity and Inclusion are not just words but
woven deeply into the fabric of our culture.
A compulsory Diversity and Inclusion
learning module was created and rolled
out across ARN in the fourth quarter of
2020, complimenting our existing Diversity
and Inclusion framework.
Celebrating diversity
ARN continues to commit to Australia’s
leading LGBTQIA+ celebrations – Mardi
Gras (Sydney) and Midsumma (Melbourne).
We amplify these major cultural events,
not only through our own media channels,
but manifesting within our workplace,
ensuring our staff are represented and
provided the opportunity to participate in
the celebration.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643 18
ANNUAL REPORT 2020
Working anywhere, anytime
As the COVID-19 pandemic took hold
in March 2020 and with the health and
well-being of our people being our number
one priority, we responded by shifting the
majority of our teams to a working from
home environment.
ARN’s business continuity plans ensured
that across the network, the technology
and resources were in place to ensure
that all staff, including on air talent and
content teams, could work from home or
at other appropriate locations should it
be required. Bespoke broadcast kits with
new equipment were made available for
news teams and other announcers, and
were distributed as needed. This ensured
we were able to continue to inform and
entertain our audiences as the pandemic
continued to evolve.
The high level of service provided to our
clients and partners was not compromised
and, other than face-to-face meetings,
there was very little difference in the way
we continued to interact.
Due to the success of our working from
home program, and because of the
continued engagement and proven
productivity of our people, we have a
renewed flexibility arrangement in place.
Employees, in consultation with their
managers, can continue to work from
home one to two days each week, enabling
everyone to secure a balanced lifestyle
between the office and home, reduce
travel times and remain vigilant about bio-
security as the threat of COVID-19 remains
in the community.
Our commitment extends far beyond
our workplace, we bring our audiences
along for the journey
With 2020 delivering unprecedented, and
unforgiving challenges, our shows and
talent continued to reach out and support
the communities in which they broadcast
each day.
11
major Breakfast and
Drive shows shifted to
broadcast from remote
locations within 3 days
500+
staff shifted to
working from home
within 3 days
230%
Microsoft
Teams usage
Implemented and upskilled
all employees with interactions
tripling between February
and April, and doubling over
rest of year
GOLD104.3 Christian O’Connell’s Heroes
Gold Bushfire Relief Fundraiser
97.3FM Robin, Terry & Bob’s
Nutbush Dance Party
In light of the tragic bushfires that
swept across the nation early in 2020,
Christian O’Connell and his team had
a vision to help in any way they could.
This culminated in the creation of a
specially brewed beer – Heroes Gold –
made in partnership with Hawkers, and
whose sole purpose was to raise funds
for the Victorian Bushfire Appeal. The
campaign was an undeniable success,
tapping into the hearts of listeners,
and leveraging the strength of radio to
mobilise the community.
– 650 cases of Heroes Gold sold in its
first three days; over 1,300 slabs sold
through pre-order
– 64 x 50 litre kegs of Heroes Gold delivered
When Graceville State School wrote
in to Robin, Terry & Bob, asking if they
could play Tina Turner’s “Nutbush City
Limits” on air so their home-schooling
students and parents could virtually
unite together in a dance break during
the pandemic lockdown, our breakfast
show hosts went several steps further –
inviting Queensland’s Education Minister
Grace Grace MP, Channel 9 News, and
broader Brisbane schools and listeners to
take part, ultimately creating a movement
of positivity and fun across the state.
– Videos of students participating in The
Nutbush submitted from 35 schools
– Listeners across Brisbane Nutbushing at
home, at work, at school and on the run
– Over 5,000 pints of Heroes Gold poured
– Multiple calls from schools and parents
in 29 pubs
– Heroes Gold stocked in 73 Dan Murphy’s
and 100 BWS stores
– Pro-bono promotional support across
numerous brands, including Dayco in
the Adelaide 500
all over the city to share their excitement
with the station after the event
– Over 13,000 views of the highlights
video on 97.3FM’s Facebook page
CORPORATE SOCIAL RESPONSIBILITY
19
Mix102.3 Flinders Foundation
Wellness Centre opening
Before passing away from breast cancer
in 2016, one of Kerry Briggs’ three final
wishes was to create a cancer wellness
centre where patients and their families
could be supported through the trauma
and upheaval of diagnosis. In a huge
fundraising effort in 2019, Adelaide
breakfast host Mark Soderstrom embarked
on a multi-day marathon to break a
Guinness World Record for The Longest
Marathon on a fairground/theme park
attraction – and through the huge acts of
generosity from the people of Adelaide,
helped to make Kerry’s final wish a reality,
with the Flinders Foundation Wellness
Centre finally opening in February 2020.
KIIS 1065 Kyle & Jackie O’s Toy Drive
Kyle & Jackie O’s Toy Drive returned
in 2020 to make sure the children at
Sydney Children’s Hospital Randwick had
a magical Christmas.
With another incredibly generous
$80,000 worth of toys donated
from Toymate and with the help of
Kyle & Jackie O, we were able to surprise
hundreds of deserving children and their
families with new toys for Christmas.
The campaign kicked off with the
live on-air donation, followed by the
annual heart-warming video content
piece capturing the excitement on the
children’s faces.
WSFM’s Pure Gold Live 2020
WSFM’s Pure Gold Live concerts
took place in February at the Sydney
Coliseum Theatre.
While we have hosted many Pure Gold Live
events over the years, Jonesy & Amanda
partnered with the venue and promoter to
help support two charities in their time of
need, around the 2020 Summer Bushfires,
with the price of every ticket sold going to
WIRES Australia and BlazeAid.
$100,000 was donated at the
conclusion of the event, with each
charity receiving $50,000.
2,500
care packs, courtesy of
Coles, sent to 22 hospitals
GOLD104.3 Christian O’Connell’s
Hospital Care Package
When Melbourne nurse Ebony sought
help from The Christian O’Connell Show
to get a small supply of Powerade for her
dehydrated colleagues during the peak of
the pandemic, listeners and Melbourne
businesses quickly rallied together to
support our frontline health workers,
demonstrating the power of radio to unite
and foster community spirit.
– 2,500 care packs, courtesy of Coles,
sent to 22 hospitals
– $5,000 donated from AIA
– 10,000 bottles of Powerade and
Mt Franklin water donated from
Coca Cola Australia
– A coffee machine and fridge, donated
from E&S to two hospitals in need
– Thousands more donations from
listeners across the Victorian state
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643 20
ANNUAL REPORT 2020
BOARD OF
DIRECTORS
Ciaran Davis
CEO & Managing Director
(since 24 Aug 2016)
Ciaran Davis is responsible for the strategic
and operational direction of the business.
He has transformed a business with
large debt and a declining asset portfolio
centred on traditional publishing, into one
of the most exciting media businesses
in Australia today, with a strong balance
sheet. Prior to becoming CEO of HT&E,
Ciaran spent five years as CEO of ARN
repositioning the business to become the
number one metropolitan radio operator
in Australia. He has 20 years’ media
experience working in over 15 countries
throughout Europe and the Middle East.
Other Directorships and offices
Director of a number of HT&E subsidiaries
and joint venture companies and The
Australian Ireland Fund Ltd.
Previous directorships of other
Australian listed companies (last
three years)
Nil.
Hamish McLennan
Chairman of the Board and
Non-executive Director
(since 30 Oct 2018)
Hamish McLennan is an experienced
media and marketing executive who brings
unparalleled expertise to the Board, given
the global roles he has held and his depth
of understanding of the changing media
landscape and the demands of advertisers.
He has a proven track record as an
outstanding leader across the media and
advertising sectors.
Previous roles Hamish has held include
Executive Chairman and Chief Executive
Officer of Ten Network Holdings from 2013
to 2015, Executive Vice President for News
Corporation in Sydney and New York from
2012 and 2013 and Global Chairman and
CEO of Young & Rubicam, a division of
WPP, the world’s largest communications
services group from 2006 to 2011.
Committees
Audit & Risk
Remuneration, Nomination and
Governance
Other Directorships and offices
Director of REA Group Ltd (Chairman),
Rugby Australia Limited (Chairman),
Magellan Financial Group Limited,
Claim Central Pty Limited, Scientific
Games Corporation (US company) and
Garvan Institute of Medical Research
(Fundraising Board).
Previous directorships of other
Australian listed companies (last
three years)
iProperty Group Pty Ltd
(from 16 February 2016 to
6 February 2019) (delisted).
Belinda Rowe
BA
Non-executive Director
(since 5 Feb 2019)
Belinda Rowe has worked across the
marketing, communications and media
industry in a number of global roles (most
recently at Telefonica O2 UK a leading UK
telecommunications company with 32 million
customers leading their Brand and Marketing
Communications). Belinda was one of the
top global executives at Publicis Media,
one of the largest media communications
groups in the world. She has a strong
understanding across international
marketing, communication, media and
digital having developed a business and
digital transformation capability and
successful client practice in her global role
at ZenithOptimedia, part of Mojo – an iconic
communications group. She also created a
unique content marketing business across
32 markets within Publicis Media, advising on
digital capabilities including programmatic,
content, mobile, social and the application
of data and technology.
Belinda was a key member of the Global
Management Executive team of Publicis
Media and ZenithOptimedia, as well as
previously chairing the UK leadership
team of CEOs of all the Publicis Media
businesses. Prior to moving to the UK in
2009 she was CEO of ZenithOptimedia,
for 10 years in Australia.
Committees
Audit & Risk
Remuneration, Nomination and Governance
Other Directorships and offices
Director of Soprano Design Limited
NSW Chair Advisory Board SecondBite
Previous directorships of other
Australian listed companies (last
three years)
Nil.
BOARD OF DIRECTORS
21
Paul Connolly
BComm, FCA
Non-executive Director
(since 18 Oct 2012)
Roger Amos
FCA, FAICD
Non-executive Director
(since 30 Nov 2018)
Paul Connolly has over 30 years’ experience
advising on mergers and acquisitions,
takeovers, disposals, fundraisings and initial
public offerings. Since 1991, Paul has been
Chairman of Connolly Capital Limited, a
Dublin-based corporate finance advisory
firm focused on the telecom, media and
technology sectors. He was a Director of
Esat Telecommunications Limited, an Irish
telecommunications company, from 1997 to
2000, and then a Director of Digicel Limited
from 2000 to 2006, a Caribbean and Pacific
based telecommunications Company – he
continues to serve as a Senior Advisor to
Digicel. In addition, he was a Director of
Melita Cable PLC from 2007 to 2016 and a
Director of Independent News & Media PLC
from 2009 to 2018. From 1987 to 1991, he
held the position of Financial Controller of
Hibernia Meats Limited and prior to that, he
worked with KPMG as an accountant.
Committees
Remuneration, Nomination and
Governance (Chair)
Audit & Risk
Other Directorships and offices
Chairman of private Irish companies
Connolly Capital Ltd., Tetrarch Capital
Ltd., FrameSpace Ltd., Business & Finance
Ltd. (Irish business media group), Polaris
Principal Navigator Ltd., UNICEF Ireland
and a Director of Communicorp Group Ltd.
(Irish Commercial radio group) as well as
Chairman of Neon Century Ltd., (private
UK company)
Previous directorships of other
Australian listed companies (last
three years)
Nil.
Roger Amos is an experienced non-executive
Director with extensive finance and
management experience. He is Chairman
of Contango Asset Management Limited
and a non-executive Director of 3P Learning
Limited. He was formerly a non-executive
Director at REA Group Ltd, where he was the
Chairman of the Audit, Risk and Compliance
Committee and a member of its Human
Resources Committee.
At 3P Learning Limited, he is the Chairman of
the Audit and Risk Committee and a member
of its Nominations and Remuneration
Committee. Previously, he was a Director
of Austar United Communications Limited
and Enero Group Limited. He had a long
and distinguished career with international
accounting firm KPMG for 25 years as a
partner in the Assurance and Risk Advisory
Services Division. While with KPMG, he
led the Australian team specialising in
the information, communications and
entertainment sectors and held a number
of global roles.
Committees
Audit & Risk (Chair)
Remuneration, Nomination and Governance
Other Directorships and offices
Director of Contango Asset Management
Limited (Chairman), 3P Learning Limited
and Governor of the Cerebral Palsy Alliance
Research Foundation.
Previous directorships of other
Australian listed companies (last
three years)
Enero Group Limited (from
23 November 2010 to 18 October 2018)
and REA Group Ltd (from 4 July 2006 to
17 December 2020).
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643 22
ANNUAL REPORT 2020
SENIOR
MANAGEMENT TEAM
Ciaran Davis
CEO & Managing Director
(since 24 Aug 2016)
Refer to biography on page 20
Andrew Nye
BBus, CA
Chief Financial Officer
In August 2019, Andrew Nye was
appointed Chief Financial Officer of ARN,
with dual responsibility for both ARN and
HT&E. He joined HT&E in 2015 as General
Manager of Finance and was appointed
Chief Financial Officer of Adshel in 2017.
At HT&E, Andrew was the operational
finance lead across a period of significant
corporate activity, including the demerger
of NZME, disposal of Australian Regional
Media and acquisition of Adshel. While
at Adshel, Andrew was a member of
the executive team, responsible for
the development and execution of the
strategic and operational plans of the
company. Andrew led the finance team
through the successful sale of Adshel to
oOh!media in 2018.
Andrew is a Chartered Accountant and has
a broad range of experience accumulated
through a combination of commercial
roles and over 11 years consulting at PwC.
Andrew is a Director of a number of HT&E
subsidiaries and joint venture entities.
DIRECTORS’ REPORT AND FINANCIAL REPORT 23
DIRECTORS’ REPORT
AND FINANCIAL REPORT
Corporate
Governance Statement
Directors’ Report
Remuneration Report
Auditor’s
Independence Declaration
About The
Financial Statements
24
24
30
45
46
Consolidated Financial Statements
Consolidated Statement of
Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of
Cash Flows
Consolidated Statement of
Changes in Equity
Notes To The Consolidated
Financial Statements
1. Group performance
1.1
1.2
1.3
1.4
Revenues
Expenses
Segment information
Earnings per share
47
48
49
50
51
53
54
56
2. Operating assets and liabilities
2.1
2.2
2.3
2.4
Intangible assets
Property, plant
and equipment
Leases
Provisions
57
62
64
68
3. Capital management
3.1
3.2
3.3
3.4
3.5
3.6
3.7
Bank loans
Cash flow information
Financial risk management
Fair value measurements
Contributed equity
Share-based payments
Reserves and
accumulated losses
3.8 Dividends
4. Taxation
70
71
72
75
76
77
79
81
4.1
Income tax and deferred tax
82
5. Group structure
5.1
5.2
5.3
5.4
5.5
Controlled entities
Interests in other entities
Shares in other corporations
Investments accounted for
using the equity method
Parent entity
financial information
5.6 Deed of cross guarantee
6. Other
6.1
6.2
6.3
Contingent liabilities
Remuneration of auditors
Related parties
6.4 Other significant
accounting policies
6.5
Subsequent events
Directors’ Declaration
87
90
91
92
95
96
98
98
99
100
101
102
Independent Auditor’s Report
103
Shareholder Information
Corporate Directory
108
111
Will & Woody
KIIS Network Drive
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
The Board of HT&E endorses good corporate governance practices and oversees an organisation-wide commitment to high standards of
legislative compliance and financial and ethical behaviour.
The Directors’ overriding objective is to increase shareholder value within an appropriate framework that protects the rights and
enhances the interests of all shareholders and ensures the Company is properly managed.
The Company has considered the best practice recommendations established by the ASX Corporate Governance Council Corporate
Governance Principles and Recommendations 4th Edition, February 2019 and has complied with the ASX recommendations for the entire
reporting period (unless otherwise indicated in the Company’s Corporate Governance Statement).
A description of how the Company’s main corporate governance practices and policies, together with the policies and charters referred
to in it, is available on the Company’s website, www.htande.com.au/corporate-governance.
Your Directors present their report on the consolidated entity consisting of HT&E and the entities it controlled at the end of, or during,
the year ended 31 December 2020. Throughout this report, the consolidated entity is also referred to as the Group.
The Directors of HT&E Limited during the financial year and up to the date of this report consisted of:
Hamish McLennan (Chairman) (appointed 30 October 2018)
Roger Amos (appointed 30 November 2018)
Paul Connolly (appointed 18 October 2012)
Ciaran Davis (CEO & Managing Director) (appointed 24 August 2016)
Belinda Rowe (appointed 5 February 2019).
Details of the current Directors’ qualifications, experience and responsibilities are set out on pages 20 and 21.
Jeremy Child joined HT&E Limited in 2015 as Group Taxation Manager and took on the expanded role of Company Secretary in August
2019. He previously worked at the Royal Bank of Scotland (formerly ABN AMRO) dealing in a range of tax matters including advising on
transactions, products, governance and managing tax audits. Jeremy also consulted at tax firms such as providing R&D advice with MJ&A
and GST advice with PwC. Jeremy is a legal practitioner holding a BBus/LLB from UTS, a MSc from the Stockholm School of Economics
and is an Associate of the Governance Institute of Australia.
HT&E is a leading media and entertainment company listed on the Australian Securities Exchange which operates audio and digital
businesses in Australia as well as outdoor assets in Hong Kong.
HT&E owns Australian Radio Network (ARN), Australia’s leading metropolitan radio broadcaster and home to the national KIIS and Pure
Gold networks and youth radio network The Edge. ARN also operates music, streaming and podcasting brand iHeartRadio, along with a
content creation business Emotive.
HT&E also owns Cody Out-of-Home in Hong Kong, which has a network of over 440 outdoor advertising panels across major Hong Kong
tunnels as well as the iconic tram shelters on Hong Kong Island.
Other HT&E investments included global provider of secure mobile messaging technology Soprano Design.
Dividends paid to owners of HT&E Limited during the financial year were as follows:
DIVIDENDS
Type
Final 2019
No interim dividend for the year ended 31 December 2020
Cents
per share
AUD
million
Date of
Payment
4.6
-
12.8
23 Mar 2020
-
-
The Directors have determined that no final dividend will be payable in respect of the year ended 31 December 2020.
The Group has been affected by the economic impacts of COVID-19 in both Australia and Hong Kong.
Refer to the Chairman’s Report, Chief Executive Officer’s Report, Response to COVID-19 and Operating & Financial Review for information
on the underlying drivers of the results, financial position of the Group, its business strategies and prospects, as well as the business
impacts of COVID-19. These are set out on pages 4 to 15.
The Directors have determined that it remains appropriate to prepare the financial statements on a going concern basis taking into
consideration the financial position of the Group for the year ended 31 December 2020, future payment obligations and available
banking facilities.
In the opinion of the Directors, there were no significant changes in the state of affairs of the consolidated entity during the financial year
under review not otherwise disclosed in this Directors’ Report or the consolidated financial statements.
Events occurring after balance date are outlined in note 6.5 to the consolidated financial statements.
Overall strategic direction and prospects are discussed in the Chairman’s and Chief Executive Officer’’s reports on pages 4 to 7 and the
Operating & Financial Review on pages 10 to 15.
Further information as to likely developments in the operations of the consolidated entity and the expected results of those operations
in subsequent financial years has not been included in this Directors’ Report because, in the opinion of the Directors,
it would prejudice the interests of the consolidated entity.
The Board plays an active role in the setting and oversight of HT&E’s Risk Management Framework.
The Australian advertising industry is subject to inherent risks including, but not limited to, exposure to macroeconomic factors,
technological and social changes impacting consumer behaviours and advertiser spending, market competition and impacts of changes
in government regulations.
The process of identifying, monitoring and mitigating significant business risks under the Group’s Risk Management
Framework is outlined in further detail in the Corporate Governance Statement which is available on the Company website,
www.htande.com.au/corporate-governance.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
The Group has identified a number of key business and financial risks which may impact on HT&E’s achievement of its strategic and
financial objectives. They include, but are not limited to:
Risk
Changes in metro radio
audience share
Description
In Australia, the Group operates within the radio and digital advertising sectors. Any decline in radio
audience share could affect advertising revenue and financial results.
The Group mitigates this risk by investing in its on-air talent and audio offering, which span across radio,
music streaming, podcasting and events, in addition to the attraction and retention of experienced and
high performing executives and employees.
Loss of key on-air talent
Recruiting and retaining the best on-air talent are integral to being able to maintain and grow
audience share.
Fixed term contracts are in place, with terms reviewed and contracts renewed with sufficient regularity
to mitigate the risk of losing key on-air talent.
Changes in advertiser and/or
audience preferences
Remaining relevant to advertisers and consumers is critical to meeting the Group’s strategic objectives.
Changes in consumer preferences leading to audience fragmentation could over time, result in
revenue declines.
The Group remains focused on improving commercial revenue share through its “Defining Audio”
commercial proposition, which was further strengthened in 2020 with the launch of ARN Dynamic
Audio. The Group continues to invest in digital innovation, podcasting, streaming and data capabilities.
Further, investment in capabilities include retaining experienced media executives, hiring proven on-air
talent, participation in industry bodies, advertising and market research.
Timing of recovery from
COVID-19 pandemic and
other macroeconomic factors
The ability for the Group to execute its strategy is linked to ongoing economic stability in those markets
in which it operates. If economic conditions were to deteriorate, there could be a significant reduction in
Group revenues and earnings.
During the year, advertising spend in both Australia and Hong Kong were significantly affected by the
widespread economic impacts of COVID-19.
In response to COVID-19, the Group implemented cost control measures, including accessing
Government subsidies where eligible. The Group maintains a strong capital structure with sufficient
undrawn facilities in place and will continue to monitor performance and market developments to
reassess plans and strategies as required.
Tax matters
As previously disclosed, there are a number of open tax matters with the Australian Taxation Office, the
outcomes of which have the potential to adversely impact earnings, cash flow and the Group’s strategy.
Further details are provided in note 4 to the consolidated financial statements.
Loss of broadcasting
licence
While considered unlikely, the loss of an Australian radio broadcasting licence would have a material
impact on Group revenues and earnings.
Disruption of technology
systems, security breaches
and data privacy
The Group has long-standing controls in place to minimise the risk of legislation compliance breaches.
There are a number of technology systems that are critical to the operations of the Group and
protection of privacy of data.
The Group continues to invest in cyber security and strengthening its IT Risk Management Framework to
reduce the occurrence of outages, enable early detection of issues and mitigate operating and financial
impacts. During the year we completed training on cyber security awareness for all staff and performed
penetration testing on our key business systems and remediated any potential issues identified by
the testing.
The Directors recognise the corporate social responsibilities of the Group, including the importance of environmental matters,
occupational health and safety issues and diversity initiatives. The Directors are committed to compliance with all relevant laws and
regulations to ensure the protection of the environment, the community and the health and safety of employees. The operations of the
consolidated entity are not subject to any particular and significant environmental regulation under the laws of Australia or Hong Kong.
The Remuneration Report is set out on pages 30 to 44 and forms part of this Directors’ Report.
The number of meetings of the full Board of Directors and Board Committees held in the period each Director held office during the
financial year and the number of those meetings attended by each Director in their capacity as a member of the Board or Board
Committee were:
Hamish McLennan
Roger Amos
Paul Connolly
Ciaran Davis
Belinda Rowe
Board of Directors
Audit & Risk
Committee
Remuneration, Nomination
and Governance Committee
Held
Attended
Held
Attended
Held
Attended
16
16
16
16
16
16
16
16
16
16
6
6
6
N/A
6
6
6
6
N/A
6
3
3
3
N/A
3
3
3
3
N/A
3
Committees were formed for purposes including reviewing and approving the half-year and annual financial statements, 2019 Annual
Report and 2020 Notice of Annual General Meeting. These meetings were attended as follows (Held/Attended): Hamish McLennan (3/3),
Roger Amos (1/1) and Ciaran Davis (3/3).
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
The Remuneration Report on pages 30 to 44 contains details of shareholdings of the Directors and Executive Key Management
Personnel for the year ended 31 December 2020.
There were no unissued shares of HT&E Limited under option at 31 December 2020 and no shares issued during the financial year as a
result of the exercise of options. No options have been granted since the end of the financial year.
The parent entity’s Constitution provides for an indemnity for officers of the Company against any liability incurred by an officer of the
Company in their capacity as an officer. Under the Corporations Act 2001, this indemnity does not extend to a liability to the parent entity
or a related body corporate of the parent entity, a liability for a pecuniary penalty or compensation order under certain provisions of the
Corporations Act 2001 or a liability that is owed to someone other than the parent entity or a related body corporate of the parent entity,
which did not arise out of conduct in good faith.
An Access, Indemnity and Insurance Deed is also provided to each Director and officer who serves as a director or officer of the
Company, a subsidiary or an associated entity. The deed is consistent with the Constitution and indemnifies these persons to the extent
permitted by law for liabilities and legal costs incurred as a director of these entities (subject to some limitations).
The parent entity has paid for an insurance policy for the benefit of all persons who are or have been directors or officers of the parent
entity or any other company in the consolidated entity against liabilities incurred during any one policy period. The insured persons
include current and former directors, officers and company secretaries of the parent entity and any other company in the consolidated
entity. The insurance policy specifically prohibits the disclosure of the nature of the liability covered and the premium paid.
No person has applied to the court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the
Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of a court under section 237 of the
Corporations Act 2001.
The Group may decide to employ its auditors on assignments additional to their statutory audit duties where the auditor’s expertise and
experience with the Group is important.
For the financial year, the Company’s auditor, PricewaterhouseCoopers, received or is due to receive $399,000 for the provision of non-
audit services. Full details of the amounts paid or payable to the auditors for audit and non-audit services provided during the financial
year are set out in note 6.2 to the consolidated financial statements.
The Company auditor has provided the Directors with an Auditor’s Independence Declaration in relation to the audit, a copy of which is
provided on page 45. The auditor has also confirmed to the Directors that it has in place independence quality control systems which
support its assertions in relation to its professional and regulatory independence as auditor of the consolidated entity (including the
requirements of APES 110 Code of Ethics for Professional Accountants).
The Audit & Risk Committee has reviewed the fees provided to the auditor for non-audit services in the context of APES 110, the
requirements of the Audit & Risk Committee Charter, the Audit Firm Service Provider Policy and general corporate governance practices
adopted by the consolidated entity.
Based on the above factors, the Audit & Risk Committee has no reason to believe that there has been any compromise in the
independence of the auditor due to the provision of these non-audit services and has advised the Board accordingly.
In accordance with the advice of the Audit & Risk Committee, the Directors are therefore satisfied that the provision of non- audit
services during the financial year by the auditor is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001 and that the provision of non-audit services during the financial year did not compromise the auditor
independence requirements of the Corporations Act 2001.
A copy of the Auditor’s Independence Declaration, as required under section 307C of the Corporations Act 2001, is provided on
page 45.
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 issued by the
Australian Securities and Investments Commission, relating to the rounding off of amounts in this Directors’ Report and the financial
report. Amounts in this Directors’ Report and the financial report have been rounded off to the nearest thousand dollars, or in certain
cases to the nearest dollar, in accordance with that instrument.
This Directors’ Report is issued in accordance with a resolution of the Directors.
Hamish McLennan
Chairman
Sydney
24 February 2021
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
30 ANNUAL REPORT 2020
REMUNERATION REPORT
DEAR SHAREHOLDERS
On behalf of the Remuneration, Nomination and Governance Committee and the Board of Directors, I present HT&E’s Remuneration
Report for 2020.
Part of the role of the Remuneration, Nomination and Governance Committee is to oversee HT&E’s remuneration policies and
practices so they are consistent with and relevant to the achievement of the strategic goals of the Group. Amongst other objectives,
the Committee is tasked with reviewing, and recommending to the Board, reward outcomes and any significant changes to
remuneration arrangements for the Chief Executive Officer (CEO) & Managing Director and other Executive Key Management
Personnel (Executive KMP).
The Chairman’s and CEO & Managing Director’s reports outline the performance of the Group in 2020. HT&E’s statutory results finished
below target, with advertising revenues across the Group materially affected by the economic impacts from the COVID-19 global
pandemic. Against this challenging backdrop, the Group maintained its focus on strengthening core radio operations, delivering several
key priorities for the year, including; maintaining ARN’s #1 ratings position, the successful launch of iHeart Podcast Network Australia,
growing commercial radio revenue share to the highest levels in recent years, and a continued focus on cost management.
HT&E was able to access Federal Government funding for the first 6-month round of the JobKeeper stimulus program, with a total
benefit of $10.3 million excluded from the underlying financial results. This funding was critical in contributing liquidity to the business
and protecting jobs in a period of significant volatility and uncertainty in advertising markets.
With improved trading conditions, the Company was not eligible for ongoing financial support under the extended JobKeeper program.
A key part of HT&E’s cost management response to COVID-19 included Executive KMP and Non-executive Directors taking a 20% pay
reduction for the period from May to September and foregoing all incentive payments in respect of 2020.
The remuneration outcomes set out below reflect this.
REMUNERATION APPROACH AND CHANGES FOR 2020
Limited changes were made to Executive KMP total fixed remuneration (TFR) and Non-executive Director remuneration in 2020. The only
change made was in respect of the Chief Financial Officer who was awarded a fixed remuneration increase of 24% at the
commencement of the year, reflective of an increase in responsibility.
The structure and financial metrics of the Group’s Total Incentive Plan (TIP) in 2020 remained consistent with last year’s plan. Targets are
set annually for the following 12 months based on current year actual results and expected performance for the year ahead.
HT&E’s response to COVID-19 included Executive KMP and Non-executive Directors taking a 20% pay reduction for May to September
and foregoing all incentives. During this time Executive KMP could use accrued annual leave to offset this reduction, maintaining TFR
while generating immediate cost savings for the Group.
PERFORMANCE AND REMUNERATION OUTCOMES FOR 2020
As previously outlined, HT&E’s financial performance in 2020 was significantly impacted by the COVID-19 global pandemic, and
consequently Group performance fell short of threshold on all financial performance conditions;
• Reported EBITDA before exceptional items and discontinued operations, of $49.3 million was down 35 per cent on 2019 and down 38
per cent behind target;
• EPS on a post-tax basis, before exceptional items, of 5.5 cents was 58% per cent behind target; and
• ROIC, calculated based on earnings before interest and tax (EBIT) and before exceptional items, of 8.0 percent, compared to target of
15.2 per cent.
Executive KMP met some or all of their personal key performance indicator (KPI’s) targets, however as a part of the Group’s cost
management response to COVID-19, all Executive KMP incentives in respect of 2020 were foregone and consequently the portion of
their non-financial TIP opportunity was not awarded, representing 25% of the target TIP opportunity.
REMUNERATION REPORT (CONTINUED)
31
REMUNERATION CHANGES FOR 2021
The Board has again reviewed the appropriateness of the TIP structure for 2021. Based on external feedback, shareholder support at
the 2020 Annual General Meeting and our own assessment, we have concluded that the TIP structure remains the most effective
mechanism to incentivise HT&E’s leadership. We have also concluded that the financial metrics continue to reflect the Board’s desire to
see growth in earnings and returns.
The Board believes the TFR and TIP opportunity for 2021 continues to strongly align our management team with the interests of
shareholders.
Paul Connolly
Chair of the Remuneration,
Nomination and Governance Committee
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
32
ANNUAL REPORT 2020
REMUNERATION REPORT (CONTINUED)
OUR DETAILED REMUNERATION REPORT
This Remuneration Report for the year ended 31 December 2020 outlines key aspects of our remuneration policy and framework, and
has been audited in accordance with the Corporations Act 2001.
Our Remuneration Report contains the following sections:
A. Who this report covers
B. Executive remuneration policy and framework, and the role of the Remuneration, Nomination and Governance Committee
C. How 2020 reward was linked to performance
D. Total remuneration for Executive KMP
E. Actual remuneration for 2020
F. Contractual arrangements with Executive KMP
G. Non-executive Director arrangements
H. Share-based remuneration
I. Non-executive Director and Executive KMP shareholdings
J. Other statutory disclosures.
A. WHO THIS REPORT COVERS
This report covers Key Management Personnel (KMP), comprising Executive Key Management Personnel (Executive KMP) and Non-
executive Directors. No changes have occurred to KMP composition since 31 December 2020 up to the date of this report:
Name
Executive KMP
Ciaran Davis
Andrew Nye
Non-executive Directors
Role
Chief Executive Officer (CEO & Managing Director)
Chief Financial Officer, HT&E and Australian Radio Network (CFO) (from 14 August 2019)
Hamish McLennan
Non-executive Chairman
Roger Amos
Paul Connolly
Belinda Rowe
Non-executive Director
Non-executive Director
Non-executive Director (from 5 February 2019)
REMUNERATION REPORT (CONTINUED)
33
B. EXECUTIVE REMUNERATION POLICY AND FRAMEWORK, AND THE ROLE OF THE REMUNERATION ,
NOMINATION AND GOVERNANCE COMMITTEE
The Remuneration, Nomination and Governance Committee determines the remuneration policy and structure with the primary goal of
attracting and retaining individuals capable of managing the Group’s operations in line with shareholder expectations. The executive
packages are structured to:
• be competitive in the market;
• drive Executive KMP engagement;
• provide an appropriate balance between short and long-term performance focus;
• reward the achievement of financial and strategic objectives;
• align executive reward with Company performance; and
• create value for shareholders.
These principles were reflected in the remuneration framework for 2020, which is outlined below:
(I) TOTAL FIXED REMUNERATION (TFR)
TFR comprises base salary, retirement benefits and other remuneration related costs. The purpose of TFR is to recognise the capability
and experience of the individual, and the scope and responsibility of the role.
As noted in the 2017 Remuneration Report, in 2017 The CEO & Managing Director offered to take a 15% reduction in base salary, which
the Board accepted effective 1 January 2018. To ensure he remained incentivised to deliver outstanding results for shareholders, the
Target Award Opportunity was adjusted upwards by the amount of TFR forgone, such that total compensation (TFR and TIP) would
equate to what he could have earned in 2017 if targets had been met. This higher weighting of TIP to TFR benefits shareholders in
two ways:
• a greater proportion of the CEO & Managing Director’s total compensation is at risk and subject to performance outcomes.
If performance targets are not met, a TFR cost reduction of 15% is achieved; and
•
if performance targets are achieved, a greater proportion of total compensation will be paid in shares, deferred over three years.
This further aligns management and shareholder objectives.
The target remuneration mix for the CEO & Managing Director and CFO for 2020 is illustrated below:
The TIP award opportunity for the CFO will be increased from 50% to 100% of TFR, resulting in a target remuneration mix of 50% / 50%
for TFR and TIP in 2021.
The target remuneration mix for the CEO & Managing Director is unchanged for 2021.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
34
ANNUAL REPORT 2020
REMUNERATION REPORT (CONTINUED)
Retirement benefits
Retirement benefits are considered to be part of TFR and are delivered to Executive KMP in the form of statutory superannuation
contributions to a number of different funds. Contributions made on behalf of executives are based on a percentage of fixed salary.
Other remuneration related costs
The Company may incur other remuneration related costs in respect of certain executives that are not regarded as part of the
executive’s TFR. Typically, other payments are ancillary to the executive’s employment such as rental assistance or family travel in
circumstances where the Company requires the executive to relocate. These costs include fringe benefits tax, if applicable.
(II) TOTAL INCENTIVE PLAN (TIP) OVERVIEW
The TIP provides eligible participants with the opportunity to receive cash and equity following an assessment against specified financial
and non-financial performance conditions based on a one-year performance period. The following diagram illustrates the operation of
the TIP for 2020, and the structure for 2021 follows the same pattern.
2020
2021
2022
2023
(III) 2020 TIP: KEY TERMS
The following table outlines the key terms of the 2020 TIP.
Feature
Eligibility
Description
At the absolute discretion of the Board, the CEO & Managing Director and other Executive KMP are eligible
to participate in the TIP.
Award opportunity
For the CEO & Managing Director, target award is 135.3% of fixed remuneration, reflecting the higher
weighting of target award to fixed remuneration. The CFO’s target award opportunity for 2021 will be
increased from 50% to 100% of fixed remuneration.
Financial awards include incentive over and above the target award when results achieved are better than
target. KPI awards are capped at 100% of the target opportunity. As a result, the maximum incentive is
137.5% of the target award.
Performance period
The award is dependent on performance over a one-year performance period (the 2020 financial year).
There is no opportunity for retesting.
REMUNERATION REPORT (CONTINUED)
35
Feature
Description
Performance measures
Financial performance conditions (75%)
Non-financial performance conditions (25%)
2020 incentive
payout schedule
For the CEO & Managing Director and CFO,
performance is measured based on Group earnings
before interest, tax, depreciation and amortisation
(EBITDA) (25%), Group earnings per share (EPS)
(25%) and Group return on invested capital (ROIC)
(25%), before exceptional items, per the table below.
Performance is measured against specific metrics as
determined for each participant at the
commencement of the performance period.
These metrics include: Group measures (e.g. business
transformation or market share) and individual
measures (e.g. leadership and development).
The higher weighting of financial to non-financial metrics emphasises the importance the Board places on
HT&E’s financial performance.
EBITDA and EPS
EBITDA and EPS
performance
<95% of budget
95% of budget
>95% to <100%
of budget
Percentage of target
opportunity awarded
ROIC
ROIC performance
Percentage of target
opportunity awarded
0%
25%
Below threshold1
At threshold
0%
25%
Pro-rata between
25% and 100%
Between threshold
and budget
Pro-rata between
25% and 100%
100% of budget
100%
At budget
100%
>100% to <110%
of budget
At or above 110%
of budget
Pro-rata between
100% and 150%
Between budget
and stretch
Pro-rata between
100% and 150%
150%
At or above stretch
150%
The financial performance award schedule is designed to provide only limited awards where performance
is below budget, with upside for performance above budget, up to a maximum cap of 150%.
Similarly, the non-financial performance award schedule was designed to limit awards below target. Upside
will only be provided in exceptional circumstances at the absolute discretion of the Board.
EPS in 2020 was based on Net Profit After Tax (NPAT) attributable to owners of the parent as a percentage
of weighted average number of shares on issue. ROIC in 2020 was based on EBIT as a percentage of
adjusted total equity. Both measures were on a pre-exceptional items basis.
Form of award
Awards under the TIP are granted to participants following the assessment of performance. To the extent
that performance measures were met:
• 50% of awards were made in cash following the assessment of performance; and
• 50% of awards were granted in rights to acquire fully paid ordinary shares in the Company for nil
consideration (rights).
Subject to the satisfaction of a one-year service period, vested rights will automatically convert to fully paid
ordinary shares.
Participants will receive an additional allocation of fully paid ordinary shares at vesting equal to the
dividends paid on vested rights over the performance and service periods.
Vested shares will be subject to a further two-year holding lock.
Equity allocation
methodology
Equity is granted based on the face value of the rights.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
36
ANNUAL REPORT 2020
REMUNERATION REPORT (CONTINUED)
Feature
Clawback
Description
The Company may reduce unvested equity awards in certain circumstances such as gross misconduct,
material misstatement or fraud. The Board may also reduce unvested awards to recover amounts where
performance that led to payments being awarded is later determined to have been incorrectly measured
or not sustained.
Treatment of awards on
cessation of employment
Awards are forfeited for ‘bad’ leavers (e.g. resignation or termination for cause), while ‘good’ leavers (e.g.
cessation of employment due to redundancy, total disablement or death) receive pro-rated awards
based on the extent to which performance and service conditions are met.
Treatment of awards on
change of control
Participants receive pro-rated awards based on the extent to which performance and service conditions
are met.
(1) Threshold will be determined with reference to prior year ROIC, next 12-months expected earnings and forecast changes to capitalisation in the
budget.
(IV) OTHER REMUNERATION ARRANGEMENTS, BOARD DISCRETION, AND CLAWBACK OF REMUNERATION
Other remuneration arrangements will be entered into on an ‘as needs’ basis as determined by the Board. These may include retention
and transaction/project completion incentives.
The Board retains the ultimate discretion regarding remuneration outcomes. The Board may make or cancel (claw back) awards where it
sees fit to align with remuneration policy and /or Company strategic outcomes.
REMUNERATION REPORT (CONTINUED)
37
C. HOW 2020 REWARD WAS LINKED TO PERFORMANCE
PERFORMANCE MEASURES
The overall Company performance for 2020 is reflected in the performance measures below. 2020 and 2019 results reflect the adoption
of AASB 16 Leases in 2019. 2018 results reflect the statutory results plus Adshel’s results for the period it was owned by HT&E. Earlier
results reflect statutory results for the respective year.
Group EBITDA1
Net profit after tax before amortisation
(NPAT/NPATA)2
Weighted average number of shares outstanding3
Basic (NPAT/NPATA) EPS2 3 (cents)
ROIC4
Dividend paid to shareholders (cents per share)
Increase/(decrease) in share price (%)5
2020
$49.3m
$15.4m
2019
$75.6m
$34.2m
2018
$105.5m
$51.2m
2017
$118.4m
$54.1m
2016
$90.9m
$66.1m
279,530,868
283,605,019
307,528,973
307,696,348
200,039,379
5.5
8.0%
4.6
9%
12.1
14.0%
8.0
7%
16.6
23.9%
79.0
22%
17.6
13.4%
7.0
(34%)
33.1
9.6%
nil
(1%)
(1) Continuing operations before exceptional items. 2018 includes Adshel’s results for the period it was owned by HT&E. 2020 & 2019 includes impact of
adoption of AASB 16 Leases.
(2) Continuing and discontinued operations before exceptional items and amortisation, attributable to HT&E shareholders. Results reflect Net Profit after
Tax before Amortisation (NPATA) for 2016 and 2017 and NPAT for 2018 to 2020.
(3) Adjusted for treasury shares and share buyback in 2018 to 2020, share consolidation and bonus elements of the 2016 rights issues and placement.
(4) Based on EBIT from continuing operations before exceptional items for 2018 to 2020 and EBITA from continuing operations before exceptional items
prior 2018.
(5) 2018 closing share price increased to reflect payment of special dividend. 2016 opening share price adjusted for the impact of NZME demerger,
share consolidation, rights issues and placement.
PERFORMANCE AND IMPACT ON REMUNERATION
(I) 2020 TIP AWARD
HT&E’s continuing operations EBITDA, EPS and ROIC performance in 2020 were behind targets set at the beginning of the year, with
advertising revenues and earnings across the Group materially impacted by the economic effects of the COVID-19 global pandemic.
A component (75%) of the 2020 TIP award was dependent on Group financial performance relative to target. Performance for the 2020
financial year is outlined in the table below:
2020 TIP financial
metrics
EBITDA performance
EPS performance
ROIC performance
Group: continuing
operations
Between threshold and target;
62.3% of target achieved
Between target and maximum;
41.6% of target achieved
Between target and maximum;
52.5% of target achieved
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
38
ANNUAL REPORT 2020
REMUNERATION REPORT (CONTINUED)
The chart below shows over the last three years, Group results used for TIP assessment as a percentage of targets, and the
corresponding TIP component award outcome:
HT&E’s performance for 2020 fell short of threshold on all financial performance conditions. Executive KMP met some or all of their
personal KPI targets, with award outcomes for the CEO & Managing Director and CFO of 94% to 100%. However, as previously outlined,
part of HT&E’s cost management response to COVID-19 included Executive KMP foregoing all incentive payments in respect of 2020, and
therefore no TIP awards have been made.
The table below summarises the 2020 TIP outcomes:
Executive KMP
Ciaran Davis
Andrew Nye
TIP awarded
(cash incentive)
$
TIP awarded
(equity award)1
$
–
–
–
–
Total TIP
awarded
$
–
–
% of target
achieved
–%
–%
% of
maximum
achieved
% of
maximum
forfeited
–%
–%
100%
100%
(1) This differs from the accounting fair value of the equity award (included in section D), which is calculated in accordance with accounting standards and
expensed over two financial years, covering both the performance and service periods.
REMUNERATION REPORT (CONTINUED)
39
D. TOTAL REMUNERATION FOR EXECUTIVE KMP
Details of the Executive KMP remuneration for 2020 and 2019 are set out in the table below. The remuneration in this table has been
calculated in accordance with accounting standards and therefore differs from the information included in section E.
Short-term benefits
Post-
employment
benefits
Other
long-term
benefits
Cash salary
and fees1
$
975,907
976,489
Executive KMP
Ciaran Davis
2020
2019
Andrew Nye (from 14 August 2019)
2020
2019
Total
2020
2019
1,472,642
1,129,438
496,735
152,949
Non-
monetary
benefits2
$
Cash
incentives3
$
Super-
annuation
$
24,037
33,143
1,293
–
25,330
33,143
–
155,250
–
9,844
–
165,094
21,348
20,767
21,348
10,305
42,696
31,072
Share-based
payments
Fair value
equity
awards5
$
Total
$
135,327
497,111
1,197,108
1,717,443
5,870
5,452
525,570
178,637
Long
service
leave4
$
40,489
34,683
324
87
40,813
34,770
141,197
502,563
1,722,678
1,896,080
(1) Cash salary and fees include accrued annual leave paid out as part of salary.
(2) Non-monetary benefits typically include novated lease costs, car parking and associated fringe benefits tax.
(3) Cash incentive payments relate to cash TIP awards accrued for the relevant year and paid in the year following.
(4) Long service leave relates to amounts accrued during the year.
(5) The fair value is derived using the closing share price on the grant date.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
40 ANNUAL REPORT 2020
REMUNERATION REPORT (CONTINUED)
E. ACTUAL REMUNERATION FOR 2020
The following section sets out the value of remuneration which has been received by Executive KMP for the 2020 performance year.
For Executive KMP, the number of vesting 2019 rights was increased in accordance with the TIP Rules for dividends paid during 2020.
For administrative purposes, vested 2018 rights were allocated to Executive KMP after the dividend paid in March 2020 and as a result
36,609 additional rights were issued which have also vested. Refer to the Reconciliation of Rights table included in Section H (II).
The figures in the following table are different to those shown in the accounting table in Section D because that table includes the
apportioned accounting value for all vested TIP grants. It also includes accrued long service leave and non-monetary benefits provided in
addition to an individual’s TFR.
The TIP values represent the cash portion (50%) of the total TIP awarded for each year. Vested TIP in 2019 is the value of the 2018 TIP
grant as at 1 January 2020 which vested at the end of 2019, consistent with the 2019 Remuneration Report.
Executive KMP
Ciaran Davis
2020
2019
Andrew Nye (from 14 August 2019)
2020
2019
Total
2020
2019
TFR1
$
TIP
$
Vested TIP2
$
Total
$
1,020,000
1,020,000
–
202,105
1,222,105
155,250
1,117,844
2,293,094
518,083
163,254
–
9,844
12,412
–
530,495
173,098
1,538,083
1,183,254
–
214,517
1,752,600
165,094
1,117,844
2,466,192
(1) TFR comprises base salary, retirement benefits and other remuneration related costs.
(2) Vested TIP in 2020 includes the shares in relation to 2019 TIP that have now vested valued at the share price as at vesting date.
REMUNERATION REPORT (CONTINUED)
41
F. CONTRACTUAL ARRANGEMENTS WITH EXECUTIVE KMP
Remuneration and other terms of employment for Executive KMP are formalised in employment contracts. All Executive KMP are
employed under contracts with substantially similar terms. The key elements of these employment contracts are summarised below:
Contract duration
Notice by individual/Company
Continuing
Employment may be terminated by either party. Notice periods vary according to
contractual terms: CEO & Managing Director – 12 months and CFO – six months.
Termination of employment (for cause)
All contracts provide that employment may be terminated at any time without
notice for serious misconduct.
Termination of employment (without cause)
Where employment is terminated by the Company, payment may be made in lieu
of notice.
Redundancy
If the Company terminates the employment of an Executive KMP for reasons of
redundancy, a redundancy payment would be paid depending on the length of
their service. Benefits paid as defined by Corporations Regulations 2001 Reg
2D.2.02 cannot exceed 12 months base salary (average of past three years).
Payments for redundancy and accrued leave entitlements are not subject to
this cap.
Non-compete/restraint
Executive KMP are subject to non-compete provisions for the term of their
notice period.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
42
ANNUAL REPORT 2020
REMUNERATION REPORT (CONTINUED)
G. NON-EXECUTIVE DIRECTOR ARRANGEMENTS
APPROACH
Non-executive Directors are provided with written agreements which outline the fees for their contribution as Directors. Fees reflect the
demands which are made on, and the responsibilities of, the Directors. The Remuneration, Nomination and Governance Committee has
the responsibility for reviewing and recommending the level of remuneration for Non-executive Directors in relation to Board and
Committee duties.
Non-executive Directors are not eligible to participate in incentive programs or termination payments.
The annual fees provided to Non-executive Directors inclusive of superannuation are shown below:
Role
Board
Audit & Risk Committee
Remuneration, Nomination and Governance Committee
(1) The Board Chair does not receive Committee fees.
APPROVED FEE POOL
2020
$
Chair fee1
Member fee
2021
$
Chair fee1 Member fee
284,700
20,000
20,000
85,000
10,000
10,000
284,700
20,000
20,000
85,000
10,000
10,000
The Non-executive Director fee pool of $1,200,000 per annum was approved by shareholders at the 2015 Annual General Meeting.
There was no change to the Non-executive Director fee pool in 2020 and none is expected for 2021.
As previously outlined, part of HT&E’s cost management response to COVID-19 included Non-executive Directors taking a 20% pay
reduction for the period from May to September.
Details of the Non-executive Directors’ fees for 2020 and 2019 are set out in the table below:
Non-executive Directors
Hamish McLennan
2020
2019
Roger Amos
2020
2019
Paul Connolly
2020
2019
Belinda Rowe (from 5 February 2019)
2020
2019
Total
2020
2019
Fees
$
Superannuation
$
241,550
263,933
96,271
123,325
96,271
108,808
87,900
75,543
521,992
571,609
21,188
20,767
9,146
11,716
9,146
10,337
8,350
7,613
47,830
50,433
Total
$
262,738
284,700
105,417
135,041
105,417
119,145
96,250
83,156
569,822
622,042
REMUNERATION REPORT (CONTINUED)
43
H. SHARE-BASED REMUNERATION
(I) TERMS AND CONDITIONS OF SHARE-BASED REMUNERATION
2020 TIP Awards
Executive KMP received a grant of rights under the 2020 TIP, however these rights were not awarded following the decision by Executive
KMP’s to forgo all incentives in respect of 2020 as part of HT&E’s cost management response to COVID-19.
The table below reflects nil rights awarded and that all rights in respect of the 2020 TIP have been forfeited.
Executive KMP
Ciaran Davis
Andrew Nye
Grant
date1
Vesting
date
7 February 2020
1 January 2022
7 February 2020
1 January 2022
Number
of rights
granted
409,457
77,144
Number
of rights
awarded
–
–
Number
of rights
forfeited
409,457
77,144
Value per
right at
grant date
$
1.58
1.58
(1) The date on which the fair value of the TIP rights was calculated, being the deemed grant date of the rights for accounting purposes.
(II) RECONCILIATION OF RIGHTS
The table below shows a reconciliation of the number of rights held by each Executive KMP from the beginning to the end of the 2020
financial year:
Executive KMP
Ciaran Davis
Vested and exercisable
Unvested
Total
Andrew Nye
Vested and exercisable
Unvested
Total
Total
Vested and exercisable
Unvested
Total
Balance at
start of the
year
2018 TIP
Exercised/
vested(1)
2019 TIP
Exercised/
vested
Awarded
Dividend
uplift
Balance at
end of the
year
659,495
103,500
762,995
–
6,356
6,356
659,495
109,856
769,351
(696,104)
–
(696,104)
103,500
(103,500)
–
–
–
–
6,356
(6,356)
–
(696,104)
–
(696,104)
109,856
(109,856)
–
–
–
–
–
–
–
–
–
–
42,355(1)
109,246
–
–
42,355
109,246
353
–
353
6,709
–
6,709
42,708
115,955
–
–
42,708
115,955
(1) For administrative purposes, vested 2018 rights were allocated to Executive KMP after the March 2020 dividend payment and as a result 36,609
additional rights were issued which have also vested.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
44 ANNUAL REPORT 2020
REMUNERATION REPORT (CONTINUED)
I. NON-EXECUTIVE DIRECTOR AND EXECUTIVE KMP SHAREHOLDINGS
The number of shares in the Company held by each Non-executive Director and Executive KMP during the year including their related
parties is summarised below:
Non-executive Directors
Hamish McLennan
Roger Amos
Paul Connolly
Belinda Rowe
Executive KMP
Ciaran Davis
Andrew Nye
Balance at
start of the
year
Granted during
the year as
remuneration(1)
Other changes
during the year
Balance at
end of
the year
73,000
16,250
65,935
–
420,134
50,476
–
–
–
–
140,528
–
–
–
–
–
–
–
73,000
16,250
65,935
–
560,662
50,476
(1) 103,919 of shares for the 2017 TIP release from the two-year holding period. For administrative purposes, vested 2018 rights were allocated to
Executive KMP after the March 2020 dividend payment and as a result 36,609 additional rights were issued which have also vested.
J. OTHER STATUTORY DISCLOSURES
(I) LOANS GIVEN TO NON-EXECUTIVE DIRECTORS AND EXECUTIVE KMP
There are no loans from the Company to the Non-executive Directors or Executive KMP.
(II) TRANSACTIONS WITH RELATED PARTIES
$18,750 director fees received from Soprano Design Pty Limited by Belinda Rowe for services performed.
(III) SECURITIES TRADING POLICY AND GUIDELINES
The Company’s Securities Trading Policy and Guidelines is outlined in the Corporate Governance Statement, which can be found on the
Company website. Under the policy, restricted persons, which include Executive KMP, are not permitted to hedge any options, rights or
similar instruments prior to them becoming vested or otherwise tradable under the applicable plan.
(IV) V
20 AGM
The Company received more than 97% of ‘yes’ votes on its Remuneration Report for the 2019 financial year, and more than 98% of ‘yes’
votes to the granting of deferred rights to the CEO & Managing Director. No major remuneration related concerns were raised which
required the Company’s attention during the 2020 financial year.
(V) EXTERNAL REMUNERATION CONSULTANTS
During 2020, HT&E did not receive advice from any external remuneration consultants.
All advice from remuneration consultants is carefully considered by the Remuneration, Nomination and Governance Committee.
As lead auditor for the audit of HT&E Limited for the year ended 31 December 2020, I declare that to the best of my knowledge
and belief, there have been:
(a)
(b)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of HT&E Limited and the entities it controlled during the period.
Louise King
Partner
PricewaterhouseCoopers
Sydney
24 February 2021
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
The financial statements are for the consolidated entity consisting of HT&E Limited (Company) and its controlled entities (collectively the
Group). The Company is a for profit company limited by ordinary shares, incorporated and domiciled in Australia. The ordinary shares
are publicly traded on the Australian Securities Exchange.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 24 February 2021. The Directors
have the power to amend and reissue the financial statements.
This general purpose financial report has been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board (AASB) and International Financial Reporting Standards issued
by the International Accounting Standards Board (IASB).
All new and amended Australian Accounting Standards and Interpretations issued by the AASB that are relevant to the Group and
effective for the current reporting period have been adopted. Refer to note 6.4 for further details.
The financial report is presented in Australian dollars which is the Company’s functional and presentation currency.
It has been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities and
certain classes of property, plant and equipment.
The Company presents reclassified comparative information, where required, for consistency with the current year’s presentation.
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, issued by the
Australian Securities and Investments Commission, relating to the rounding off of amounts in the financial report. Amounts in the
financial report have been rounded off in accordance with that Instrument to the nearest thousand dollars, or in certain cases, the
nearest dollar.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal
the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of the assets and liabilities within the next and subsequent years can be found in the following notes:
Note 2.1 Intangible assets;
Note 2.3 Leases;
Note 4.1 Income tax and deferred tax; and
Note 5.4 Investments accounted for using the equity method.
The Directors and Management have assessed the impact of COVID-19 on the Group for year ending 31 December 2020, with focus on
valuation of assets, recognition and measurement of liabilities and sources of estimation uncertainty. Further detail of this assessment is
provided in the following notes to the financial statements:
Accounting for government subsidies and grants
Intangible assets
Leases
Receivables
Investments accounted for using the equity method
Note 1.1
Note 2.1
Note 2.3
Note 3.3(B)
Note 5.4
Revenue
Other revenue and income
Total revenue and other income
Expenses before impairment, finance costs,
depreciation and amortisation
Impairment of intangible assets
Impairment of right-of-use assets
Associate impairment and joint venture related closure costs
Finance costs
Depreciation and amortisation
Share of profits of associates and joint ventures accounted
for using the equity method
(Loss)/profit before income tax
Income tax expense
Loss for the year
Other comprehensive income
Items that may be reclassified to profit or loss
Net exchange difference on translation of foreign operations
Reclassification of foreign currency translation reserve to profit and loss
Share of associate’s other comprehensive income
Item that will not be reclassified to profit or loss
Changes in the fair value of equity investments recorded at fair value through
other comprehensive income
Revaluation of freehold land and buildings
Other comprehensive income, net of tax
Total comprehensive income
Loss for the year is attributable to:
Owners of the parent entity
Non-controlling interests
Loss for the year
Total comprehensive income is attributable to:
Owners of the parent entity
Non-controlling interests
Note
1.1
1.1
1.2
2.1
2.3
5.4, 1.3
1.2
1.2
5.4
4.1
3.7
3.7
3.7
5.3
3.7
2020
$’000
197,270
13,512
210,782
(153,100)
(54,178)
(7,093)
(4,394)
(4,519)
(16,817)
5,998
(23,321)
(15,778)
(39,099)
1,373
(22)
504
19,473
42
21,370
(17,729)
(42,501)
3,402
(39,099)
(21,131)
3,402
(17,729)
2019
$’000
252,691
9,678
262,369
(205,906)
–
–
(5,423)
(4,760)
(18,778)
2,527
30,029
(39,879)
(9,850)
(56)
–
–
–
1,575
1,519
(8,331)
(14,195)
4,345
(9,850)
(12,676)
4,345
(8,331)
Earnings per share
Basic/diluted earnings per share
Cents
Cents
1.4
(15.2)
(5.0)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Current assets
Cash and cash equivalents
Short-term deposits
Receivables
Tax assets
Other current assets
Total current assets
Non-current assets
Shares in other corporations
Investments accounted for using the equity method
Property, plant and equipment
Intangible assets
Right-of-use assets
Deposit of tax in dispute, net of provision
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Payables
Contract liabilities
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Bank loans
Lease liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total parent entity interest
Non-controlling interests
Total equity
Note
3.2
3.2
3.3(B)
4.1
5.3
5.4
2.2
2.1
2.3
4.1
1.1
2.3
2.4
3.1
2.3
2.4
4.1
3.5
3.7
3.7
2020
$’000
65,080
50,000
43,919
1,553
3,475
2019
$’000
110,972
–
45,700
3,339
3,990
164,027
164,001
46,583
51,320
19,080
373,912
31,172
3,930
4,354
530,351
694,378
21,506
4,378
14,346
4,973
45,203
2,934
29,272
4,768
119,958
156,932
202,135
492,243
37,346
17,314
22,132
427,397
51,003
20,670
5,456
581,318
745,319
24,092
5,552
14,315
12,817
56,776
–
44,816
5,184
108,638
158,638
215,414
529,905
1,480,752
(23,203)
(1,001,357)
456,192
36,051
492,243
1,483,685
(43,743)
(946,536)
493,406
36,499
529,905
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Government subsidies and grants
Dividends received
Interest received
Interest paid
Income taxes refunded/(paid)
Tax matter settlement
Net cash inflows from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for software
Investment in joint venture
Increase in investment in shares in other corporations
Payments for short-term deposits
Loans from/(to) joint ventures
Net loans repaid by other entities
Dividends received from associate
Net cash outflows from investing activities
Cash flows from financing activities
Proceeds from borrowings
Payments for borrowing costs
Principal elements of lease payments
Payments for treasury shares
Dividends paid to shareholders
Payments for share buyback
Net payments to non-controlling interests
Net cash outflows from financing activities
Change in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate changes
Cash and cash equivalents at end of the year
Note
4.1
3.2
2.2
2.1
5.3
5.4
3.1
2.3
3.7
3.8
3.5
3.2
2020
$’000
218,025
(177,889)
10,728
188
934
(4,266)
6,257
(3,200)
50,777
(1,633)
(483)
–
(18,073)
(50,000)
2,811
726
1,250
(65,402)
3,265
(33)
(14,341)
(331)
(12,840)
(2,933)
(3,850)
(31,063)
(45,688)
110,972
(204)
65,080
2019
$’000
285,908
(221,173)
–
3,836
2,069
(3,632)
(22,174)
–
44,834
(7,793)
(187)
(500)
–
–
(1,788)
667
–
(9,601)
–
(262)
(13,495)
(2,537)
(22,776)
(8,870)
(4,710)
(52,650)
(17,417)
128,355
34
110,972
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Balance at 1 January 2019
Change in accounting policy
– lease accounting
Restated total equity at
beginning of the period
Loss for the period
Other comprehensive income
Share-based payments
Share buy-back
Dividends paid to shareholders
Transfers within equity
Treasury shares vested to employees
Acquisition of treasury shares
Transactions with non-controlling interests
Balance at 1 January 2020
Loss for the period
Other comprehensive income
Share-based payments
Share buy-back
Dividends paid to shareholders
Transfers within equity
Treasury shares vested to employees
Acquisition of treasury shares
Transactions with non-controlling interests
Contributed
equity
$’000
Reserves
$’000
Accumulated
losses
$’000
Note
Non-
controlling
interests
$’000
Total
$’000
Total
equity
$’000
1,492,555
(43,809)
(905,894)
542,852
36,864
579,716
–
–
(3,587)
(3,587)
–
(3,587)
1,492,555
(43,809)
(909,481)
539,265
36,864
576,129
–
(14,195)
(14,195)
4,345
(9,850)
3.7
3.5
3.8
3.7
3.7
3.7
–
–
–
(8,870)
–
–
–
–
–
3.7
3.5
3.8
3.7
3.7
3.7
–
–
–
(2,933)
–
–
–
–
–
1,519
523
–
–
84
477
(2,537)
–
21,370
(1,771)
–
–
(520)
1,792
(331)
–
–
–
–
1,519
523
(8,870)
(22,776)
(22,776)
–
477
(2,537)
(84)
–
–
–
–
–
–
21,370
(1,771)
(2,933)
(12,840)
(12,840)
520
–
–
–
–
1,792
(331)
–
–
–
–
–
–
–
1,519
523
(8,870)
(22,776)
–
477
(2,537)
(4,710)
–
–
–
–
–
–
–
21,370
(1,771)
(2,933)
(12,840)
–
1,792
(331)
Balance at 31 December 2019
1,483,685
(43,743)
(946,536)
493,406
36,499
529,905
–
(4,710)
1,483,685
(43,743)
(946,536)
493,406
36,499
529,905
–
(42,501)
(42,501)
3,402
(39,099)
Balance at 31 December 2020
1,480,752
(23,203)
(1,001,357)
456,192
36,051
492,243
The Group initially applied AASB 16 Leases at 1 January 2019. Under the modified retrospective transition method chosen comparative
information was not restated
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
–
(3,850)
(3,850)
Revenue and other income
Broadcast revenue
Advertising revenue
Services revenue
Other revenue
Revenue
Gain on financial assets held at fair value through profit or loss
Dividend income
Government subsidies and grants
Other
Other income
Interest income
Total other revenue and income
Total revenue and other income
Note
1.3
2020
$’000
160,603
30,575
5,983
109
2019
$’000
202,034
43,738
6,861
58
197,270
252,691
726
188
10,728
1,145
12,787
725
13,512
210,782
2,037
4,360
–
787
7,184
2,494
9,678
262,369
Revenue recognised in the year ended 31 December 2020 that was included in the contract liabilities balance as at 1 January 2020 is
$5.6 million (2019: $10.8 million).
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
The key revenue streams and policies are detailed below:
Under AASB 15 Revenue from Contracts with Customers, revenue is recognised when a customer obtains control of the goods or
services. Determining the timing of the transfer of control requires judgement. The Group recognises revenue when control of the
services or goods passes to the customer.
Revenue is recognised gross of rebates and agency commissions. Payment terms vary between 30 and 45 days from the invoice
issue date.
Type of
product/service
Broadcast revenue
Segment
Nature and timing of satisfaction of performance obligations
Australian
Radio Network
Revenue is recognised when each advertisement is aired per the contract terms.
Advertising revenue All
Services revenue
HK Outdoor
Other revenue
All
Revenue is recognised over time, on a prorated basis when the advertisement is
displayed or published.
Includes production and installation revenue. Production and installation revenue,
where it is a distinct service, is recognised by reference to stage of completion of the
service.
Includes sponsorships, royalties and cleaning and maintenance revenue. Revenue is
recognised when the service occurs.
The Group applies the practical expedient under AASB 15 Revenue from Contracts with Customers to expense contract acquisition
costs as they are incurred, as the expected costs have an amortisation period of less than 12 months.
Contract assets relate primarily to the Group’s rights to consideration for work completed but not billed at each reporting date.
Contract assets are transferred to receivables when the rights become unconditional. This usually occurs when the Group issues
an invoice to a customer.
Contract liabilities primarily relate to consideration received in advance from customers, for which the performance obligation is
yet to be satisfied.
Subsidies from relevant governments compensates the Group for employee benefits expense incurred and is recognised in profit
or loss on a systematic basis in the period in which the expense is recognised.
During the period, Australian domiciled entities within the Group were eligible for the JobKeeper subsidy from the Australian
government. This has been recorded within Other Income.
Employee benefits expense
Production and distribution expense
Selling and marketing expense
Rental and occupancy expense
Professional fees
Repairs and maintenance costs
Travel and entertainment costs
Redundancies and associated costs
Loss on disposal of investment in joint venture
Loss on sale of business
Onerous contract provision adjustment
Joint venture closure costs remeasurement
Other expenses
Total expenses before impairment, finance costs,
depreciation and amortisation
Interest – lease liabilities
Interest and finance charges
Borrowing costs amortisation
Total finance costs
Depreciation – right-of-use assets
Depreciation – other assets
Amortisation
Total depreciation and amortisation
Note
1.3
5.4
1.3
1.3, 2.4
1.3
2.3
2.3
2.2
2.1
2020
$’000
91,945
14,967
28,806
6,142
4,715
1,981
1,104
1,458
–
350
(4,799)
(350)
6,781
2019
$’000
98,928
21,083
39,253
10,047
6,825
1,782
2,894
4,802
13,355
1,508
–
–
5,429
153,100
205,906
2,275
1,714
530
4,519
12,629
3,152
1,036
16,817
2,343
1,741
676
4,760
14,021
4,190
567
18,778
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
The Group has identified its operating segments based on the internal reports reviewed by the Board of Directors and the senior
management team in assessing performance and determining the allocation of resources. There are three reportable segments as follows:
Reportable segment
Principal activities
Australian Radio Network
Metropolitan radio networks, on-demand radio, streaming and podcasting (Australia)
HK Outdoor
Digital Investments
Billboard, transit and other outdoor advertising (Hong Kong)
Includes controlling interests in Emotive Pty Limited (creative agency) and equity accounted
investments in Soprano Design Pty Limited (software vendor for secure messaging services)
The Directors and senior management team assess the performance of the operating segments based on a measure of earnings before
interest, tax, depreciation and amortisation (EBITDA) from continuing operations which excludes the effects of exceptional items such as
gains or losses on disposals of businesses and restructuring related costs.
HT&E Events Pty Limited and Unbnd Group Pty Ltd are included in the Digital Investments segment in 2019. The Group’s investment in
Unbnd Group Pty Ltd was disposed of on 19 September 2019, while HT&E Events Pty Limited was wound down in 2019.
During the period the Group’s 50% interest in Nova Entertainment (Perth) Pty Ltd became an associate (refer to note 5.4). The Group’s
share of profits in Nova Entertainment (Perth) Pty Ltd is recorded in the Australian Radio Network segment.
The segment information provided to the Directors and senior management team for the year ended 31 December 2020 is as follows:
2020
$’000
Australian
Radio Network
HK
Outdoor
Digital
Investments
Corporate
Group
elimination
Total
Revenue from external customers
175,264
16,487
Share of profits of associate & joint ventures
Segment result
Segment assets
Segment liabilities
2,737
46,234
484,309
45,394
–
7,662
21,771
26,842
Reconciliation of segment result to loss before income tax
5,648
3,261
3,783
25,782
2,715
–
–
(8,343)
162,516
127,184
Segment result
Depreciation and amortisationA
Net finance costs
Government subsidies and grants B
Impairment of intangible assets C
Impairment of right-of-use assets D
Associate impairment E
Redundancies and associated costs F
Loss on sale of business G
Onerous contract provision adjustment H
Joint venture closure costs remeasurement I
Reclassification of foreign currency translation reserve to profit and loss on closure of foreign operations
Loss before income tax
(129)
197,270
–
–
–
–
5,998
49,336
694,378
202,135
49,336
(16,817)
(3,794)
10,728
(54,178)
(7,093)
(4,394)
(1,458)
(350)
4,799
350
(450)
(23,321)
Explanation of statutory adjustments
(A) Consists of depreciation of $15.8 million and amortisation of $1.0 million (refer to note 1.2).
(B)
Refers to the Australian Government JobKeeper subsidy and Hong Kong Government Employment Support Scheme subsidy received by the Group
during the period. Refer to note 1.1 for more information.
Impairment of HK Outdoor ($2.7 million) and Australian Radio Network ($51.5 million) goodwill. Refer to note 2.1 for more information.
Impairment of HK Outdoor right-of-use assets relating to Advertising Concession Agreements. Refer to note 2.3 for more information.
Impairment of the Group's investment in Nova Entertainment (Perth) Pty Ltd. Refer to note 5.4 for more information.
Restructuring costs associated with the Australian Radio Network resulting from a review of the Company’s operating model and senior management needs.
(C)
(D)
(E)
(F)
(G) Costs not deemed recoverable in relation to the disposal of The Roar Sports Media Pty Ltd, which was effective 31 January 2020.
(H) Adjustment of the provision for financial guarantee costs related to Unbnd Group Pty Ltd, a joint venture which was disposed on 19 September 2019.
(I)
Remeasurement of final closure costs in relation to HT&E Events Pty Limited, which was wound down in 2019 following the decision to close Gfinity
Esports Australia.
2019
$’000
Australian
Radio
Network
HK
Outdoor
Digital
Investments
Corporate
Group
elimination
Revenue from external customers
223,297
24,817
Share of profits of associate & joint ventures
–
Segment result
Segment assets
Segment liabilities
73,338
547,143
42,018
–
12,407
45,972
38,898
Reconciliation of segment result to profit before income tax
4,577
2,527
–
–
2,704
(12,812)
21,001
131,203
6,564
127,934
Segment result
Depreciation and amortisationA
Net finance costs
Joint venture impairment and related closure costsB
Loss on disposal of investment in joint ventureC
Loss on disposal of businessD
Redundancies and associated costsE
Dividend incomeF
Profit before income tax
Total
252,691
2,527
–
–
–
75,637
–
–
745,319
215,414
75,637
(18,778)
(2,266)
(5,423)
(13,355)
(1,508)
(4,802)
524
30,029
Explanation of statutory adjustments
(A) Consists of depreciation of $18.2 million and amortisation of $0.6 million. Refer to note 1.2.
(B)
Relates to impairment of the joint venture interest in HT&E Events Pty Limited ($685,000), write-down of loan to HT&E Events Pty Limited ($4,200,000) and
costs relating to the funding of the business until the end of the year ($538,000), following the decision to close Gfinity Esports Australia in June 2019.
Loss on disposal of investment in Unbnd Group Pty Ltd. Refer to note 5.4.
Loss on disposal of assets attributable to The Roar Sports Media Pty Ltd, effective 31 January 2020.
Restructuring costs associated with the Australian Radio Network and Corporate segments resulting from a review of the Company’s operating model
and senior management needs following the sale of Adshel in 2018.
(C)
(D)
(E)
(F) Dividend income received from Digital Radio Broadcasting Sydney Pty Ltd, an entity the Group has an interest in.
The Group is domiciled in Australia and operates predominantly in Australia and Hong Kong. Revenue from external customers in
Australia is $180.8 million (2019: $227.9 million) and in Asia is $16.5 million (2019: $24.8 million). Segment revenues are allocated based
on the country in which the customer is located.
The total of non-current assets located in Australia is $514.7 million (2019: $545.2 million) and in Hong Kong is $15.7 million
(2019: $36.1 million). Segment assets are allocated to countries based on where the assets are located.
Segment revenues and expenses comprise amounts that are directly attributable to a segment and the relevant portion that can
be allocated on a reasonable basis. Corporate overheads, including centralised finance, legal and administrative costs, are not
allocated against operating segments but rather are included above as unallocated amounts.
Segment revenues and results exclude transfers between segments. Such transfers are priced on an arm’s length basis and are
eliminated on consolidation.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
(a) Reconciliation of earnings used in calculating earnings per share (EPS)
Loss attributable to owners of the parent entity
Loss attributable to owners of the parent entity used in calculating basic/diluted EPS
2020
$’000
(42,501)
(42,501)
2019
$’000
(14,195)
(14,195)
Number
Number
(b) Weighted average number of shares
Weighted average number of shares used as the denominator in calculating basic EPS
279,590,599
284,497,535
Weighted average number of treasury shares
Adjusted for calculation of diluted EPS:
Unvested/unexercised rights
(59,730)
(892,515)
115,955
1,264,796
Weighted average number of shares used as the denominator in calculating diluted EPS
279,646,824
284,869,816
While rights have been issued to Executive Key Management Personnel (Executive KMP) under the 2019 Total Incentive Plan (TIP), there
is no certainty these rights will vest, and if they do, it is the Company’s current intention to satisfy any rights by acquiring shares on-
market, consistent with recent practice.
Basic earnings per share is determined by dividing:
the net profit or loss attributable to owners of the Company; by
the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the financial year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into account:
the after-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.
2019
$’000
Cost
Goodwill
Software
Radio
licences
Brands
Total
55,100
3,564
375,284
1,945
435,893
Accumulated amortisation and impairment
–
(2,547)
(4,011)
(1,938)
(8,496)
Net book amount
Movements
Opening net book amount
Additions
Transfers and other adjustments
Amortisation
Sale of business (i)
Foreign exchange differences
Closing net book amount
55,100
1,017
371,273
7
427,397
55,081
1,361
371,614
1,529
429,585
–
–
–
–
19
187
(390)
(34)
(108)
1
–
–
(341)
–
–
55,100
1,017
371,273
–
–
(192)
(1,330)
–
7
187
(390)
(567)
(1,438)
20
427,397
(i)
Relates to the disposal of intangible assets of The Roar Sports Media Pty Ltd.
2020
$’000
Cost
Accumulated amortisation and impairment
Net book amount
Movements
Opening net book amount
Additions
Disposals
Transfers and other adjustments
Amortisation
Impairment charge
Foreign exchange differences
Closing net book amount
Goodwill
Software
55,140
(54,650)
490
5,687
(3,305)
2,382
Radio
licences
375,284
(4,244)
371,040
55,100
1,017
371,273
–
–
–
–
(54,178)
(432)
490
483
–
1,685
(803)
–
–
–
–
–
(233)
–
–
2,382
371,040
Brands
Total
–
–
–
7
–
(7)
–
–
–
–
–
436,111
(62,199)
373,912
427,397
483
(7)
1,685
(1,036)
(54,178)
(432)
373,912
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Summary of goodwill and other intangible assets
Asset
Goodwill
Software
Radio licences (commercial)
Radio licence (digital)
Brands – other
Useful life
Indefinite
3-5 years
Indefinite
20 years
Indefinite
Amortisation
method
Acquired or
Internally generated
No amortisation
Straight-line basis
No amortisation
Straight-line basis
No amortisation
Acquired
Internally generated
and acquired
Acquired
Acquired
Acquired
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets
of the acquired business at the date of acquisition. Goodwill is not amortised but rather is subject to impairment testing as
described below.
Costs incurred in developing systems and acquiring software and licences are capitalised to software. Costs capitalised include
materials, services, payroll and payroll related costs of employees involved in development. Amortisation is calculated on a
straight-line basis over the useful life of the asset.
Commercial radio licences are accounted for as identifiable assets and are brought to account at cost. The Directors believe the
licences have indefinite lives and accordingly, no amortisation has been provided against the carrying amount. The commercial
radio licences held by the Group are renewable every five years under the provisions of the Broadcasting Services Act 1992. The
Directors understand that the revocation of a radio licence has never occurred in Australia and have no reason to believe the
licences will not be renewed from time to time for the maximum period allowable under the Act and without imposition of any
conditions. As a result, the radio licences have been assessed to have indefinite useful lives.
The digital radio licence is accounted for as an identifiable asset and is brought to account at cost. The licence is amortised over
the term of the contract on a straight-line basis.
Brands are accounted for as identifiable assets and are brought to account at cost. The Directors have considered the
geographic location, legal, technical and other commercial factors likely to impact the assets’ useful lives and consider that
they have indefinite lives. Accordingly, no amortisation has been provided against the carrying amount for brands outside of
Conversant Media.
Name of CGU
Australian Radio Network
HK Outdoor
Emotive
Total goodwill and other non-amortising intangible assets
2020
Other non-
amortising
intangible
assets
$’000
367,451
–
–
367,451
2019
Other non-
amortising
intangible
assets
$’000
367,451
–
–
367,451
2019
Goodwill
$’000
51,494
3,116
490
55,100
2020
Goodwill
$’000
–
–
490
490
A comprehensive impairment review was conducted at 31 December 2020. The recoverable amount of the Australian Radio Network
CGU which includes indefinite life intangible assets was reviewed.
The recoverable amounts of the Australian Radio Network CGU was estimated based on value in use calculations, using management
budgets and forecasts for a 5 year period, after adjusting for central overheads.
Due to the economic impacts associated with COVID-19, comprehensive impairment tests were conducted at 30 June 2020. The
recoverable amount of each cash generating unit (CGU) that included goodwill or indefinite life intangible assets at 30 June 2020
was reviewed.
In the Australian Radio Network CGU, goodwill was fully impaired ($51,494,000) at 30 June 2020. In the HK Outdoor CGU, remaining
goodwill was fully impaired ($2,684,000) and right-of-use assets related to advertising concession agreements were part impaired
($7,093,000) (refer to note 2.3).
The impairments recorded in Australian Radio Network and HK Outdoor CGU’s are the result of the financial underperformance of
each business relative to the original forecast during the six months ended 30 June 2020, and a downward revision to forecast future
cashflows in the short to medium term in response to uncertainty in advertising markets created by COVID-19.
The key assumptions for the impairment review as at 31 December 2020, used to calculate the recoverable amount are
presented overleaf.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Year 1 cash flows
Years 2, 3, 4 and 5
cash flows
Based on Board approved annual budget.
Revenue forecasts are prepared based on management’s current assessment for each CGU, with
consideration given to internal information and relevant external industry data and analysis. In general:
market growth in the Australian Radio Network CGU is forecast across the cash flow period. The
revenue forecast assumes the Australian radio market will return to historical 2019 levels within the
forecast period, and the Australian Radio Network CGU will gain some additional market share or
reclaim lost market share through continued investment in content, marketing and operations;
market growth in the HK Outdoor CGU is forecast across the cash flow period. The revenue forecast
assumes the HK Outdoor CGU will return to historical 2019 levels within the forecast period. Future
yield growth in the existing asset base is also assumed; andi
expenses are forecast on a detailed basis, based on their nature. Variable costs are forecast to move in
line with revenue movements. Personnel costs are forecast to move in line with headcount and
adjusted for expected inflation. Other costs are forecast based on management expectations,
considering existing contractual arrangements.
Terminal value cash flows
Cash flows are extrapolated at growth rates not exceeding the long-term average growth rate for the
industry in which the CGU operates.
i
All indefinite life intangible assets were fully impaired at 30 June 2020 for HK Outdoor CGU, and therefore no further impairment
assessment is required. Refer to note 2.3 for impairment assessment on HK Outdoor right-of-use assets.
The discount rates (per annum) used reflect specific risks relating to the relevant segments and the countries in which they operate.
Name of CGU
Australian Radio Network
HK Outdoor
Dec 2020
Post-tax
discount
rate
10.0%
11.2%
Dec 2020
Pre-tax
discount
rate
13.3%
12.7%
Dec 2020
Long-term
growth rate
2.0%
2.0%
Dec 2019
Post-tax
discount
rate
10.0%
10.0%
Dec 2019
Pre-tax
discount
rate
13.6%
12.4%
Dec 2019
Long-term
growth rate
2.0%
2.0%
No additional impairment was recognised for these CGUs in the 6 months to 31 December 2020.
The Group tests whether goodwill and other non-amortising intangible assets have suffered any impairment, in accordance with
the accounting policy stated below. The recoverable amounts of cash generating units have been determined based on the higher
of fair value less costs to sell, or value in use, calculations. These calculations require the use of assumptions. Refer below for
details of these assumptions and the potential impact of changes to these assumptions.
Value in use calculations are highly sensitive to changes in certain key assumptions. With limited market-based data sources against
which to benchmark key economic indicators on a forward-looking basis management has exercised judgement when determining the
duration, severity and impact of the macroeconomic scenarios used by the Group. For the Australian Radio Network CGU, the carrying
value is supported by value in use calculations.
The below illustrates how a reasonable possible change in estimate and assumptions can impact headroom. The headroom for the
Australian Radio Network CGU would change by the following based on changes made in isolation to the key assumptions below:
In $’000s
Name of CGU
Discount Rate change
-0.5%
+0.5%
Australian Radio Network
(31,496)
35,705
Long-term growth
rate change
+0.5%
26,279
-0.5%
(23,198)
Terminal EBITDA
forecast change
+1%
4,311
-1%
(4,311)
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment and whenever there is an indication that they may be impaired. Assets that are subject to amortisation are tested for
impairment whenever changes in circumstances indicate that the asset’s carrying amount may exceed its recoverable amount.
An impairment charge is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell, and value in use. For the purpose 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 (CGUs). Non-financial assets other than goodwill that
suffer an impairment are reviewed for possible reversal of the impairment at each reporting date.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Buildings
Plant and
equipment
2019
$’000
Cost or fair value
Accumulated depreciation and impairment
Capital works in progress
Net book amount
Movements
Opening net book amount
Additions
Depreciation
Transfers and other adjustments
Disposal
Revaluation of freehold land and buildings
Foreign exchange differences
Closing net book amount
2020
$’000
Cost or fair value
Accumulated depreciation and impairment
Capital works in progress
Net book amount
Movements
Opening net book amount
Additions
Depreciation
Transfers and other adjustments
Disposal
Revaluation of freehold land and buildings
Foreign exchange differences
Closing net book amount
Freehold
land
2,391
–
–
2,391
1,083
–
–
–
–
1,308
–
2,391
Freehold
land
2,391
–
–
2,391
2,391
–
–
–
–
–
–
2,391
The Group had capital commitments of $158,000 as at 31 December 2020 (2019: $nil).
986
(49)
–
937
588
–
(105)
73
–
381
–
937
Buildings
1,046
(93)
–
953
937
–
(44)
–
–
60
–
953
72,746
(59,014)
5,072
18,804
14,979
7,793
(4,085)
319
(204)
–
2
18,804
Plant and
equipment
75,732
(61,840)
1,844
15,736
18,804
1,881
(3,108)
(1,685)
(148)
–
(8)
Total
76,123
(59,063)
5,072
22,132
16,650
7,793
(4,190)
392
(204)
1,689
2
22,132
Total
79,169
(61,933)
1,844
19,080
22,132
1,881
(3,152)
(1,685)
(148)
60
(8)
15,736
19,080
Land and buildings are shown at fair value, based on periodic valuations by external independent valuers, less subsequent
depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying
amount of the asset and the net amount is restated to the revalued amount of the asset. Increases in the carrying amounts
arising on revaluation of land and buildings are credited to asset revaluation reserve in equity. To the extent that the increase
reverses a decrease previously recognised in the income statement, the increase is first recognised in the income statement.
Decreases that reverse previous increases of the same asset are first charged against asset revaluation reserve directly in equity
to the extent of the remaining reserve attributable to the asset; all other decreases are charged to the income statement.
Plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable
to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial
period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or
revalued amounts, net of their residual values, over their estimated useful lives, as follows:
buildings: 20 years;
plant and equipment: 3-25 years; and
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each balance date. Gains and losses on
disposals are determined by comparing proceeds with carrying amount and are included in the income statement.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount. Assets that are subject to depreciation (amortisation) are tested for impairment whenever
changes in circumstances indicate that the asset’s carrying amount may exceed its recoverable amount. An impairment charge is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Assets that suffer an
impairment are reviewed for possible reversal of the impairment at each reporting date.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
As a lessee, the Group leases several assets including property, advertising spaces, motor vehicles and other equipment. The average
lease term is 2.9 years (2019: 4.0 years)
Property
Advertising concession agreements
Motor vehicle and other
Total right-of-use assets
Current
Non-current
Total lease liabilities
2020
$’000
19,843
11,023
306
31,172
14,346
29,272
43,618
2019
$’000
23,788
26,632
583
51,003
14,315
44,816
59,131
During the period, HK Outdoor Advertising concession agreement right-of-use assets were impaired by $7.1 million. Refer to section
below for further information.
Additions to the right-of-use assets during the 2020 financial year were $0.6 million (2019: $15.9 million).
Whenever changes in circumstances indicate that the right-of-use asset carrying amount may exceed its recoverable amount, the
Group applies judgement when testing whether right-of-use assets have suffered any impairment. An impairment charge is
recognised for the amount by which the right-of-use asset’s carrying amount exceeds its recoverable amount. Right-of-use assets
that suffer an impairment are reviewed for possible reversal of the impairment at each reporting date.
Lease liabilities by relevant maturity groupings(i):
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
2020
$’000
15,148
19,923
19,085
54,156
2019
$’000
16,247
33,997
20,422
70,666
(i) Maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed are the
contractual undiscounted cash flows.
The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within the
Group’s treasury function.
The statement of profit or loss shows the following amounts relating to leases:
Property
Advertising concession agreements
Motor vehicle and other
Depreciation charge of right-of-use assets
Interest expense on lease liabilities
Rental and occupancy expense relating to short-term leases
Rental and occupancy expense relating to variable lease payments not included in the
measurement of the lease liability
The total cash outflow for leases, inclusive of principal and interest was $16.6 million (2019: $15.8 million).
2020
$’000
3,803
8,522
304
12,629
2,275
1,405
300
2019
$’000
3,678
10,020
323
14,021
2,343
2,387
2,367
As at 30 June 2020, there were indications that the carrying amount of HK Outdoor Advertising Concession Agreements may exceed their
recoverable amount, so an impairment test was performed. As a result of the testing performed, an impairment charge of $7.1 million
was recognised for the 6 months ending 30 June 2020.
An impairment test was performed as at 31 December 2020, which determined no change in the impairment calculated at 30 June 2020.
The recoverable amount of the right-of-use assets were based on the discounted cash flow analysis over the contractual period for right-
of-use assets, which takes into account the financial performance of specific advertising concession agreements as 31 December 2020.
Following the impairment in the period, the recoverable amount for the HK Outdoor right-of-use assets is in surplus of the carrying value.
A reversal of impairment would not be appropriate as factors that give rise to the impairment as at 30 June 2020 continue to impact
trading conditions. A 10% deterioration to cashflows across each year of the forecast period would result in a further impairment of
approximately $0.2 million to the tram shelter contracts and no further impairment of the roadside contracts.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
The Group leases various properties, advertising spaces, motor vehicles and other equipment. Rental contracts are typically made
for fixed periods of 1 to 15 years, but may be in excess of 20 years and include extension options.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease
and non-lease components based on their relative stand-alone prices.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased
assets may not be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present
value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date;
amounts expected to be payable by the Group under residual value guarantees;
the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease liability excludes non-lease components including variable lease amounts which are not linked to a rate or index. These
components are expensed as incurred.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included
in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease
liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is
generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual
lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar
economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group:
where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect
changes in financing conditions since third-party financing was received;
uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group, which
does not have recent third-party financing; and
makes adjustments specific to the lease, e.g. term, country, currency and security.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date, less any lease incentives received;
any initial direct costs; and
restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.
If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s
useful life. While the Group revalues its land and buildings that are presented within property, plant and equipment, it has
chosen not to do so for the right-of-use buildings held by the Group.
Extension and termination options are included in a number of property leases across the Group. These are used to maximise
operational flexibility in terms of managing the assets used in the Group’s operations. The majority of extension and termination
options held are exercisable only by the Group and not by the respective lessor.
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise
an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only
included in the lease term if the lease is reasonably certain to be extended (or not terminated).
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a
straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value
assets comprise IT equipment and small items of office furniture.
Rental outgoings are treated as non-lease components and are recognised as expense in profit or loss. Other property expenses
which do not transfer substantially all of the asset's economic benefits to the Group are recognised on a straight-line basis as
expense in profit or loss.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Current
Employee benefits
Onerous contracts
Provision for uncertain tax treatment
Other
Total current provisions
Non-current
Employee benefits
Other
Total non-current provisions
2020
$’000
4,433
–
–
540
4,973
1,072
3,696
4,768
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
2020
Carrying amount at beginning of the year
Additional amounts recognised
Amounts used
Reversal
Foreign exchange differences
Carrying amount at end of the year
Onerous
contracts
$’000
Provision for
uncertain tax
treatment
$’000
4,897
–
(98)
(4,799)
–
–
3,000
–
(3,000)
–
–
–
Other
$’000
3,993
649
(386)
–
(20)
4,236
2019
$’000
4,920
4,897
3,000
–
12,817
1,191
3,993
5,184
Total
$’000
11,890
649
(3,484)
(4,799)
(20)
4,236
The onerous contracts provision refers to financial guarantee costs related to Unbnd Group Pty Ltd, a joint venture which was sold on 19
September 2019. The financial guarantee remained undrawn upon expiry on 30 October 2020 which resulted in a $4.8 million
adjustment to loss on disposal of investment in joint venture (refer to note 1.3).
The provision for uncertain tax treatment is in relation to a legacy financing arrangement (refer to note 4.1).
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to
the passage of time is recognised as interest expense.
Liabilities for wages and salaries, including non-monetary benefits, annual leave, and long service leave, in respect of employees’
services up to the reporting date expected to be settled wholly within 12 months from the reporting date are measured at the
amounts expected to be paid when settled.
Liabilities for annual leave and long service leave not expected to be settled wholly within 12 months after the end of the
reporting date are measured as the present value of expected future payments to be made. Consideration is given to expected
future wage and salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the reporting date on corporate bonds rates with terms to maturity and currency that match, as
closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes in
actuarial assumptions are recognised in profit or loss.
The obligations are presented as current liabilities in the consolidated balance sheet if the entity does not have an unconditional
right to defer settlement for 12 months after the reporting period, regardless of when the actual settlement is expected to occur.
The onerous contracts provision represents contract where the expected economic benefit is lower than the cost for which the
Group is currently committed under the terms of the contract. The minimal net obligation under the contract is provided for.
The provision is calculated as the net of the estimated committed cost discounted to present value.
Where there is uncertainty over income tax treatments, the Group applies AASB Interpretation 23 Uncertainty over Income Tax
Treatments to determine how to recognise and measure deferred and current income tax assets and liabilities (refer to note 4.1).
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Non-current bank loans
Bank loans – unsecured
Total non-current bank loans(i)
Net debt (i)
Non-current bank loans
Cash and cash equivalents
Short-term deposits
Net cash
Note
3.2
3.2
2020
$’000
2,934
2,934
2,934
(65,080)
(50,000)
2019
$’000
–
–
–
(110,972)
–
(112,146)
(110,972)
(i)
The drawn bank loan is denominated in Hong Kong dollars. The majority of the unsecured debt facility expires in January 2024.
The Group is focused on safeguarding its ability to continue as a going concern, so that it can provide returns for shareholders and
benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain an optimal capital structure, the Group may:
adjust dividends paid to shareholders;
return capital to shareholders;
issue new shares; or
sell assets to reduce debt.
Entities in the Group have access to:
Loan facilities (i)
Unsecured bank loan facilities
Amount of facility utilised (ii)
Amount of available facility
Overdraft facilities
Unsecured bank overdraft facilities
Amount of credit utilised
Amount of available credit
(i)
(ii)
Pertaining to the revolving cash advance facility.
Relating to bank loan and guarantees drawn.
2020
$’000
258,384
(6,260)
252,124
1,500
–
1,500
2019
$’000
259,146
(9,150)
249,996
1,500
–
1,500
Interest bearing liabilities are initially recognised at fair value less attributable transaction costs and subsequently measured at
amortised cost. Any difference between cost and redemption value is recognised in the income statement over the period of the
borrowing on an effective interest basis.
Costs incurred in connection with the arrangement of borrowings are deferred and amortised over the period of the borrowing.
These are shown as an asset in the balance sheet.
Cash at end of the year, as shown in the statement of cash flows, comprises:
Cash at bank and on hand
The below reconciliation relates to both continued and discontinued operations.
Reconciliation of (loss)/profit for the year to net cash inflows/(outflows) from operating activities:
Loss for the year
Depreciation and amortisation
Borrowing costs amortisation
Share of profits of associate and joint ventures
Interest income from associate and joint venture
Other non-cash items
Impairment of intangible assets
Impairment of right-of-use assets
Joint venture impairment and related closure costs
Loss on disposal of investment in joint venture
Loss on disposal of business
Share-based payments expense
Gains on financial assets held at fair value through profit or loss
Net loss on sale of non-current assets
Provisions for uncertain tax treatments
Tax matter settlement
Changes in assets and liabilities net of effect of acquisitions and changes
in accounting policy:
Trade and other receivables
Prepayments
Change in current tax /deferred tax liabilities
Trade and other payables and provision for employee benefits
Net cash inflows from operating activities
2020
$’000
2019
$’000
65,080
110,972
(39,099)
16,817
530
(5,998)
–
327
54,178
7,093
4,394
–
–
176
(726)
22
–
(3,200)
1,028
715
22,036
(7,516)
50,777
(9,850)
18,778
676
(2,527)
(71)
(224)
–
–
5,423
13,355
1,508
1,000
(2,037)
4
33,000
–
8,488
(2,693)
(15,295)
(4,701)
44,834
For the purposes of presentation on the statement of cash flows, cash and cash equivalents include cash on hand and deposits
held at call with financial institutions, net of bank overdrafts, with maturities 90 days or less.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
The Group’s activities expose it to a variety of financial risks: market risk (including interest rate risk and foreign exchange risk), credit risk
and liquidity risk.
The Group’s overall financial risk management program focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the financial performance of the Group. The Group will use derivative financial instruments such as interest
rate swaps to hedge certain risk exposures. The Group uses different methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest rate and foreign exchange risk and ageing analysis for credit risk.
Financial risk management is carried out by the Group Treasury function under policies approved by the Board of Directors. The policies
provide principles for overall risk management, as well as covering specific areas, such as interest rate risk, foreign exchange risk, credit
risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
Since 31 December 2019, COVID-19 has negatively affected world economies and financial markets and contributed to a decline in
revenues across many industries, including media. Credit risk has increased while market risk has not changed materially from the prior
period. Liquidity risk continues to be monitored through rolling forecasts of the Group’s expected cash flows and managed through
maintenance of sufficient cash and committed credit facilities, which remain largely undrawn at the end of the reporting period.
As at 31 December 2020, the Group had $2.9 million of long-term borrowings outstanding, $65.1 million of cash and cash equivalents
and $50 million in short-term deposits. The Group is exposed to interest rates risk through its cash and cash equivalents and short-term
deposits balance. A change of +/- 1% per annum with all other variables being constant would impact equity and net profit by $0.8
million. The parent entity has no significant exposure to a change in interest rates.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities that are denominated in a
currency that is not the entity’s functional currency. Individual transactions are assessed, and forward exchange contracts are used to
hedge the risk where deemed appropriate.
While the Group has assets and liabilities in multiple currencies, individual entities in the Group do not have a significant foreign
exchange exposure to receivables or payables in currencies that are not their functional currency.
Price risk refers to the risk of a decline in the value of a security or a portfolio. While the Group does have equity investments in listed
securities (refer to note 3.4), the Group is not exposed to significant price risk.
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations. Group credit risk principally arises from customer receivables, cash and cash equivalents, short-term deposits with banks
and financial institutions and financial guarantees (refer to note 6.1 for details).
For banks and financial institutions, the creditworthiness is assessed prior to entering into arrangements and approved by the Board.
For customer receivables, the maximum exposure to credit risk at the reporting date is the higher of the carrying value and fair value of
each receivable. Risk control involves the assessment of the credit quality, taking into account financial position, past experience and
other factors. The utilisation of credit limits is regularly monitored.
Where appropriate, the Group undertakes all of its transactions in foreign exchange contracts with financial institutions.
The Group applies the AASB 9 Financial Instruments simplified approach to measuring expected credit losses (ECL) which uses a lifetime
expected loss allowance for all trade receivables and contract assets.
The economic impacts of COVID-19 have contributed to an increase in credit risk among customers and as such the expected credit loss
provision matrix has been adjusted in the period to reflect the increased risk of impairment.
To measure the ECL, trade receivables and contract assets have been grouped based on shared credit risk characteristics. The contract
assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types
of contracts. The Group has therefore concluded that the ECL rates for trade receivables are a reasonable approximation of the loss
rates for the contract assets.
The carrying amount of receivables as at reporting date was as follows:
Note
Trade receivables
Loss allowance
Other receivables
Total receivables
The loss allowance determined for trade receivables as at 31 December 2019 and 2020 is as follows:
Opening loss allowance as at 1 January
Expected credit losses recognised in profit or loss
Receivables written off as uncollectible
Closing loss allowance
The aging of trade receivables that were not impaired at the end of the reporting date was as follows:
Current
Past due less than 1 month
Past due 1 to 3 months
Past due 3 to 6 months
Past due over 6 months
Trade receivables
2020
$’000
41,239
(585)
40,654
3,265
43,919
2020
$’000
550
130
(95)
585
2020
$’000
37,419
2,863
370
187
400
2019
$’000
44,155
(550)
43,605
2,095
45,700
2019
$’000
529
96
(75)
550
2019
$’000
41,181
1,471
814
456
233
41,239
44,155
Trade receivables are generally settled within 30 to 45 days and therefore classified as current. Trade receivables are recognised
initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are
recognised at fair value. Due to their short-term nature, the carrying value represents fair value. The Group holds the trade
receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised
cost using the effective interest method.
Details about the group’s impairment policies and the calculation of the loss allowance are provided in note 3.3(B).
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
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 ability to close out market positions. Due to the dynamic nature of the underlying
business, Group Treasury aims at maintaining flexibility in funding by keeping committed credit lines available. Management monitors
rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flows.
The Group analyses financial liabilities, including interest to maturity, into relevant maturity groupings based on the remaining period at
the reporting date to the contractual maturity date. Financial liabilities include trade and other payables and lease liabilities.
The contractual undiscounted cash flows attributed to trade and other payables amounted to $21,506,000 (2019: $24,092,000) which
are all due within one year. This excludes any non-current amounts that do not meet the definition of a financial liability under Australian
Accounting Standards.
The relevant maturity groupings for lease liabilities are detailed in note 2.3. Details of credit standby arrangements and loan facilities are
included in note 3.1.
The Group measures and recognises the following assets and liabilities at fair value on a recurring basis:
financial assets at fair value through profit or loss;
financial assets at fair value through other comprehensive income; and
land and buildings.
AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level of the following fair value measurement
hierarchy:
level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or
indirectly; and
level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following table presents the Group’s financial assets and financial liabilities measured and recognised at fair value at
31 December 2019 and 2020:
Note
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
5.3
2.2
2.2
–
–
–
–
–
–
–
–
–
–
37,346
37,346
37,346
37,346
2,391
937
3,328
2,391
937
3,328
Total
$’000
Note
Level 1
$’000
Level 2
$’000
Level 3
$’000
5.3
5.3
2.2
2.2
–
45,895
45,895
–
–
–
–
–
–
–
–
–
688
688
–
688
45,895
46,583
2,391
953
3,344
2,391
953
3,344
2019
Recurring fair value measurements
Financial assets
Financial assets at fair value through profit or loss
Shares in other corporations
Total financial assets
Non-financial assets
Freehold land and buildings
Freehold land
Buildings
Total non-financial assets
2020
Recurring fair value measurements
Financial assets
Financial assets at fair value through profit or loss
Shares in other corporations
Financial assets at fair value through other comprehensive
income
Shares in other corporations
Total financial assets
Non-financial assets
Freehold land and buildings
Freehold land
Buildings
Total non-financial assets
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
The Group also has a number of assets and liabilities which are not measured at fair value, but for which fair values are disclosed in
the notes.
The carrying amounts of trade receivables and payables are assumed to approximate their fair values due to their short-term nature.
The fair value of bank loans approximates the carrying amount.
During the period, the Group purchased shares in oOh!media Limited (OML), which are held at fair value through other comprehensive
income. As OML is listed on the Australian Stock Exchange (ASX), the fair value is determined by reference to the quoted price. Refer to
note 5.3 for more information.
The level 3 inputs used by the Group are derived and evaluated as follows.
The fair value of lease liabilities disclosed in note 2.3 is estimated by discounting the minimum lease payments at the Group’s
incremental borrowing rate. For the period ended 31 December 2020, the borrowing rates were determined to be between 3.4% and
5.2% per annum, depending on the type of lease.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for
shares in other corporations that are measured through profit and loss, which are valued using discount rates, forecast cash flows,
EBITDA multiples estimated by management based on comparable transactions and industry data. Refer to note 5.3 for more
information on the fair value measurement of shares in other corporations.
The Group obtains independent valuations at least every three to five years for its freehold land and buildings (classified as property,
plant and equipment in note 2.2), less subsequent depreciation for buildings. This is considered sufficient regularity to ensure that the
carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period. All
resulting fair value estimates for properties are included in level 3.
During the year, a fair value gain of $0.7 million (2019: $2.0 million) was recorded in other income for shares in other corporations. There
were no other material level 3 fair value movements during the year.
Issued and paid up share capital
Balance at beginning of the year
Share buy-back(i)
Balance at end of the year
2020
$’000
2019
$’000
1,480,752
1,483,685
2020
Number shares
2019
Number shares
2020
$’000
2019
$’000
280,229,160
285,598,399
1,483,685
1,492,555
(2,032,893)
(5,369,239)
(2,933)
(8,870)
278,196,267
280,229,160
1,480,752
1,483,685
(i) During 2020, the Company purchased and cancelled on-market 2.0 million shares (2019: 5.4 million). The shares were acquired at an average price of
$1.44 per share (2019: $1.65).
Ordinary shares entitle the holder to participate in dividends and the 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, attorney or corporate representative is
entitled to one vote, and upon a poll each share is entitled to one vote.
Ordinary shares are classified as equity. 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.
As at 1 January
Awarded
Exercised
Other changes
Balance at end of the year
2020
Number of rights
1,391,931
–
2019
Number of rights
1,446,914
189,099
(1,348,187) (327,400)
72,211
115,955
83,318
1,391,931
Share rights outstanding at the end of the year have the following vesting date and weighted average fair value:
Incentive plan
2018 TIP1, 2
2019 TIP3
Balance at end of the year
Vesting date
1–Jan–20
1-Jan-21
Weighted
average fair
value
$1.84
$1.60
Weighted average remaining contractual life of rights outstanding at end of period
Rights
2020
–
115,955
115,955
2020
0.0 year
2019
1,190,966
200,965
1,391,931
2019
0.1 year
(1) The date on which the fair value of the 2018 TIP rights were calculated, is the deemed grant date of the rights for accounting purposes. An actual
grant of rights was not made to the CEO & Managing Director until after shareholder approval had been received at the Annual General Meeting, and
for all other Executive KMP on 13 February 2019. The 2018 TIP required that participants receive an additional allocation of shares at vesting equal to
the dividends paid on vested rights over the performance and service period. 437,780 additional rights were issued to satisfy this requirement in
respect of 2018.
(2) The 2018 TIP requires that participants receive an additional allocation of shares at vesting equal to the dividends paid on vested rights over the
performance and service period. 83,318 additional rights were issued to satisfy this requirement in respect of 2019. This is disclosed in other changes
in the 2019 reconciliation above.
(3) The date on which the fair value of the 2019 TIP rights were calculated, is the deemed grant date of the rights for accounting purposes. An actual
grant of rights was not made to the CEO & Managing Director until after shareholder approval had been received at the Annual General Meeting, and
for all other Executive KMP on 7 February 2020. The 2019 TIP required that participants receive an additional allocation of shares at vesting equal to
the dividends paid on vested rights over the performance and service period. 6,099 additional rights were issued to satisfy this requirement in respect
of 2019. This is disclosed in other changes in the 2020 reconciliation above.
Share-based payments expense related to the above tables for the year was $176,000 (2019: $1,000,000).
Further information of the rights granted to Executive KMP is contained in the Remuneration Report found on pages 30 to 44 of the
Annual Report.
The TIP, encompassing the 2020 financial year, has not been awarded.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Share-based compensation benefits are provided to employees via share-based payments as part of a Total Incentive Plan (TIP).
The fair value of rights granted under the TIP is recognised as an employee benefits expense with a corresponding increase in
equity. The fair value is measured at grant date and recognised over the period during which the employee becomes
unconditionally entitled to the rights.
The fair value is derived using the closing share price on the grant date.
The fair value of the rights granted is adjusted to reflect any market vesting condition but excludes the impact of non-market
vesting conditions. Non-market vesting conditions are included in assumptions about the number of rights that are expected to
become exercisable. At each reporting date, the Group revises its estimate of the number of rights that are expected to become
exercisable.
The employee benefits expense recognised each period takes into account the most recent estimate. The impact of the revision
to the original estimates, is recognised in profit or loss with a corresponding adjustment to equity.
2020
$’000
2,403
1,810
8,131
19,473
(53,283)
(1,737)
(23,203)
2,361
42
2,403
(45)
(22)
1,373
504
1,810
10,422
176
(520)
(1,792)
(155)
8,131
19,473
19,473
(53,283)
(53,283)
(3,198)
(331)
–
1,792
(1,737)
2019
$’000
2,361
(45)
10,422
–
(53,283)
(3,198)
(43,743)
786
1,575
2,361
11
–
(56)
–
(45)
9,829
1,000
70
(477)
–
10,422
–
–
(53,283)
(53,283)
(1,152)
(2,537)
14
477
(3,198)
Reserves
Asset revaluation reserve
Foreign currency translation reserve
Share-based payments reserve
Investment revaluation reserve
Transactions with non-controlling interests reserve
Treasury shares reserve
Total reserves
Asset revaluation reserve
Balance at beginning of the year
Revaluation of freehold land and buildings
Balance at end of the year
Foreign currency translation reserve
Balance at beginning of the year
Reclassification of foreign currency translation reserve to profit or loss
Net exchange difference on translation of foreign operations
Share of associates foreign exchange reserve
Balance at end of the year
Share-based payments reserve
Balance at beginning of the year
Share-based payments expense
Transfers within equity
Treasury shares vested to employees
Other
Balance at end of the year
Investment revaluation reserve
Fair value adjustment on financial assets
Balance at end of the year
Transactions with non-controlling interests reserve
Balance at beginning of the year
Balance at end of the year
Treasury shares reserve
Balance at beginning of the year
Aquisition of treasury shares
Transfers within equity
Treasury shares vested to employees
Balance at end of the year
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
The asset revaluation reserve is used to record increments and decrements on the revaluation of non-current assets, as described in
note 2.2. The balance standing to the credit of the reserve may be used to satisfy the distribution of bonus shares to shareholders and is
only available for the payment of cash dividends in limited circumstances as permitted by law. In the event of the sale of an asset, the
revaluation surplus is transferred to accumulated losses.
Exchange differences arising on translation of any foreign controlled entities are recognised in other comprehensive income and the
foreign currency translation reserve as described in note 6.4.
The share-based payments reserve is used to recognise the fair value of performance rights issued but not yet vested as described in
note 3.6.
The investment revaluation reserve is used to recognise the fair value of shares in other entities that are measured at fair value through
profit and loss. Refer to note 5.3 for more information.
The transactions with non-controlling interest reserve is used to record the differences described in note 5.2 which may arise as a result
of transactions with non-controlling interests that do not result in a loss of control.
APN News & Media Employee Share Trust (Trust), a controlled entity, was established in 2017. The Trust purchased 261,401 (2019:
1,432,933) additional shares in the Company during the year. The number of shares which were issued to employees during the year was
925,558 (2019: 209,520). The total shareholding in the Company as at 31 December 2020 was 1,064,547 shares at an average price of
$1.63 (2019: 1,728,704 shares at $1.85). This shareholding is disclosed as treasury shares and deducted from equity.
Performance rights that relate to the 2017 and 2018 TIP have vested and converted into shares; however, they have not been issued and
remain in the Trust. Treasury shares for the 2019 TIP have been purchased; however, they have not vested yet and therefore remain in
the Trust.
The treasury shares reserve is used to recognise the value of shares purchased by the Trust.
Balance at beginning of the year
Change in accounting policy – lease accounting (i)
Restated total at beginning of the financial year
Loss attributable to owners of the parent entity
Transfer from reserves
Dividends paid to shareholders
Balance at end of the year
2020
$’000
(946,536)
–
(946,536)
(42,501)
520
(12,840)
2019
$’000
(905,894)
(3,587)
(909,481)
(14,195)
(84)
(22,776)
(1,001,357)
(946,536)
(i)
The Group initially applied AASB 16 Leases at 1 January 2019. Under the modified retrospective transition method chosen comparative information
was not restated
Final dividend for the year ended 31 December 2019 of 4.6 cents per share, fully franked, paid on
23 March 2020 (2018: 4.0 cents)
Paid in cash
The Directors have determined that no interim dividend will be payable (2019: 4.0 cents)
Paid in cash
Total dividends
2020
$’000
12,840
12,840
–
–
12,840
2019
$’000
11,424
11,424
11,352
11,352
22,776
Franking credits available for subsequent financial years at the 30% corporate tax rate after
allowing for tax payable in respect of the current year’s profit and tax refunds
10,072
21,449
Dividends not recognised at year end
The Directors have determined that no final dividend will be payable (2019: 4.6 cents)
–
12,891
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Current tax expense
Provisions for uncertain tax treatments
Deferred tax benefit/(expense)
Adjustment for current tax of prior periods
Income tax expense
Income tax expense differs from the prima facie tax as follows:
Profit before income tax expense
Prima facie income tax at 30%
Difference in international tax treatments and rates
Provisions for uncertain tax treatments
Non-deductible impairment of intangible assets
Non-deductible right-of-use assets impairment
Unrecognised tax losses/(tax losses realised)
Share of profits of associates
Adjustment for current tax of prior periods
Other
Income tax expense
2020
$’000
13,744
–
(2,957)
4,991
15,778
2019
$’000
9,482
33,000
502
(3,105)
39,879
(23,321)
30,029
(6,996)
429
–
16,253
2,128
524
(1,799)
4,991
248
15,778
9,009
109
33,000
–
–
133
(758)
(3,105)
1,491
39,879
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is
required in determining the provision for income taxes. There are certain transactions and calculations undertaken during the
ordinary course of business for which the ultimate tax determination is uncertain. The Group estimates its tax liabilities based on
the Group’s understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which
such determination is made.
On 22 January 2018 and 1 May 2018, the Australian Taxation Office (ATO) issued amended income tax assessments in relation to the
previously disclosed New Zealand branch matter (involving the licensing of New Zealand mastheads by a New Zealand branch of an
Australian HT&E Group entity). The New Zealand branch was closed as part of the demerger of NZME Limited on 29 June 2016.
The amended assessments are for the financial years ended 31 December 2009 to 31 December 2015 inclusive and HT&E has been
advised the ATO intends to expand its position to the year ended 31 December 2016.
On 2 August 2018, the ATO determined its position on the application of penalties and interest. The ATO is seeking to apply penalties at
the rate of 50% to the years 2009 to 2015.
HT&E has lodged objections with the ATO in 2018 regarding the assessments for the years ended 31 December 2009 to
31 December 2016 inclusive, and objections to the penalties and interest assessments. The ATO is yet to reach a decision on these
objections.
In summary, the ATO’s position in relation to this matter involves $102.5 million of tax adjustments, plus $49 million of penalties, plus
interest which has accrued to 31 December 2020 (and continues to accrue).
While these dispute processes are being completed, HT&E has deposited 50% of the tax in dispute with the ATO, in line with the 50:50
payment arrangement agreed with the ATO. The deposit, totalling $50.7 million, was paid in two instalments in 2018.
Interest consists of $27.5 million applied with the amended assessments and a further $28.3 million interest accrued to
31 December 2020, together totalling $55.8 million. Interest is deductible and claimed as the tax returns are submitted, with
$10.6 million of interest expected to be deducted when the 31 December 2020 income tax return is submitted.
If the ATO is wholly successful in the dispute, the ATO should remit 50% of the interest from the date of the tax deposited in 2018. This
remission of interest together with the tax deduction would reduce the net interest cost to approximately $29.1 million. If HT&E is wholly
successful, the ATO should remit all of the interest accrued. At completion of the dispute, any remitted interest already deducted would
be treated as assessable income and taxed in that future year.
The Company continues to consult with its advisers. The Company remains satisfied that its treatment of the New Zealand branch matter
is consistent with relevant taxation legislation and will if necessary, contest the matter through litigation proceedings. The potential
outcomes include resolution through litigation or settlement, which may involve no payment, or payment of either a portion or the entire
amount at risk.
The ATO is also auditing other matters within the Group covering the financial years ended 31 December 2010 to 31 December 2013
inclusive.
One matter involved a financing arrangement related to the Company’s former New Zealand operations. This matter was settled with
the ATO in November 2020 for an amount of $3.2 million. A provision of $3.0 million was previously made in 2019 for this matter.
A second matter involved a loan forgiveness that occurred in 2012. The ATO has issued an Initial Position Paper, indicating that it would
apply the market value substitution rules to the loan forgiveness, with the tax adjustment being $5.8 million. Interest would also apply on
any tax assessed. The ATO may also seek to impose penalties in respect of the taxes in dispute. HT&E disagrees with the position taken
and is satisfied its treatment is consistent with relevant taxation legislation.
As at the date of this report, while there is no certainty, no further adjustments or disputes are anticipated to be raised by the ATO as a
result of any matters under review in this audit.
AASB Interpretation 23 Uncertainty over Income Tax Treatments applies for annual reporting periods beginning from 1 January 2019 and
clarifies the application of the recognition and measurement criteria where there is uncertainty over income tax treatments.
In respect of the New Zealand branch matter, given the range of possible outcomes and in light of recent correspondence and
discussions with the ATO and consultation with the Company’s advisers, AASB Interpretation 23 has been applied using the sum of the
probability-weighted amounts to predict the resolution of the uncertainty. A provision of $30.0 million has been recorded in respect of
the New Zealand branch matter against the Deposit of Tax in Dispute, in line with the requirements of AASB Interpretation 23. This figure
is unchanged from 31 December 2019 and is an estimate involving judgement of the probability-weighted amounts and may not reflect
the final outcome.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
A $3.9 million non-current asset consists of the $50.7 million deposit of tax in dispute, reduced by the $30 million provision and further
reduced by $16.7 million for the value of tax deductions on interest to 31 December 2020. If HT&E is wholly successful, the $30 million
provision and tax deductions on interest would reverse.
In respect of the loan forgiveness matter, no tax provision has been recorded under AASB Interpretation 23.
Based on the tax return submitted for the year ended 31 December 2019, the Company has capital losses of $80.6 million (pre-tax).
Assuming various rules are met, these capital losses should be available to shelter future capital gains. No deferred tax asset is recorded
for these capital losses as they may only be utilised in the event of capital gains and cannot be applied against revenue income.
AASB Interpretation 23 Uncertainty over Income Tax Treatments explains how to recognise and measure deferred and current
income tax assets and liabilities where there is uncertainty over a tax treatment. In particular, it discusses:
how to determine the appropriate unit of account, and that each uncertain tax treatment should be considered separately or
together as a group, depending on which approach better predicts the resolution of the uncertainty;
that the entity should assume a tax authority will examine the uncertain tax treatments and have full knowledge of all related
information, ie that detection risk should be ignored;
that the entity should reflect the effect of the uncertainty in its income tax accounting when it is not probable that the tax
authorities will accept the treatment;
that the impact of the uncertainty should be measured using either the most likely amount or the expected value method,
depending on which method best predicts the resolution of the uncertainty; and
that the judgements and estimates made must be reassessed whenever circumstances have changed or there is new
information that affects the judgements.
While there are no new disclosure requirements, the Group used the guidance of this Interpretation to provide information about
judgements and estimates made in relation to its existing tax in dispute matters.
2019
Employee benefits
Doubtful debts
Accruals/restructuring
Intangible assets
Depreciation
Right-of-use assets
Lease liabilities
Shares in other corporations
Other
2020
Employee benefits
Doubtful debts
Accruals/restructuring
Intangible assets
Depreciation
Right-of-use assets
Lease liabilities
Investments accounted for using the equity method
Shares in other corporations
Other
Balance
1 Jan 19
$’000
Recognised in
profit or loss
$’000
Recognised
in equity
$’000
Other
movements
$’000
1,834
159
2,534
(110,686)
74
–
–
(6,414)
2,525
(109,974)
(29)
6
909
1,921
92
1,262
(567)
(1,916)
(1,176)
502
–
–
–
–
–
(4,582)
5,529
–
(113)
834
–
–
–
–
–
(3,025)
3,025
–
–
–
Balance
1 Jan 20
$’000
Recognised in
profit or loss
$’000
Recognised
in equity
$’000
Other
movements
$’000
1,805
165
3,443
(108,765)
166
(6,345)
7,987
–
(8,330)
1,236
(108,638)
(217)
(15)
(1,185)
(1,469)
(216)
880
(774)
1,276
–
(1,237)
(2,957)
–
–
–
–
–
–
–
–
(8,344)
(19)
(8,363)
–
–
–
–
–
–
–
(8,330)
8,330
–
–
Balance
31 Dec 19
$’000
1,805
165
3,443
(108,765)
166
(6,345)
7,987
(8,330)
1,236
(108,638)
Balance
31 Dec 20
$’000
1,588
150
2,258
(110,234)
(50)
(5,465)
7,213
(7,054)
(8,344)
(20)
(119,958)
The Group has not recognised deferred tax assets of $5.6 million (2019: $4.1 million) in respect of HK Outdoor tax losses
carried forward.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
The income tax expense for the year is the tax payable on the current year’s taxable income based on the applicable income tax
rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between
the tax bases of assets and liabilities and their carrying amounts in the financial statements and also adjusted for unused tax
losses utilised in the year.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Group’s subsidiaries and associates operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the
tax authorities.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those enacted tax rates applicable to each jurisdiction. The relevant tax rates are
applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability.
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 assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences
and it is probable that the differences will not reverse in the foreseeable future. Temporary differences in relation to indefinite life
intangible assets are determined with reference to their respective capital gains tax bases in respect of assets for which capital
gains tax will apply.
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.
Current and deferred tax balances attributable to amounts recognised in other comprehensive income are also recognised in
other comprehensive income.
The Company and its wholly-owned Australian controlled entities are part of a tax-consolidated group under Australian taxation
law. HT&E Limited is the head entity in the tax-consolidated group. Entities within the tax-consolidated group have entered into a
tax funding arrangement and a tax sharing agreement with the head entity. Under the terms of the tax funding arrangement,
HT&E Limited and each of the other entities in the tax-consolidated group have agreed to pay (or receive) a tax equivalent
payment to (or from) the head entity, based on the current tax liability or current tax asset of the entity. Each entity in the tax-
consolidated group measures its current and deferred taxes as if it continued to be a separate taxable entity in its own right.
Judgement is required in relation to the recognition of carried forward tax losses as deferred tax assets. The Group assesses
whether there will be sufficient future taxable profits to utilise the losses based on a range of factors, including forecast earnings
and whether the unused tax losses resulted from identified causes which are unlikely to recur.
The consolidated financial statements incorporate the assets, liabilities and results of the following controlled entities in accordance with
the accounting policy described in note 6.4.
Equity holding
Country of incorporation/
establishment
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Australia
Australia
2020
%
100
–
–
100
100
100
100
100
100
100
100
100
100
–
–
–
100
–
100
50
100
50
100
–
100
–
100
–
–
–
–
–
100
100
100
2019
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
Name of entity
5AD Broadcasting Company Pty Ltd1
Actraint No. 116 Pty. Limited1,3
Airplay Media Services Pty. Limited1,3
APN News & Media Employee Share Trust
ARN Adelaide Pty Ltd1
ARN Brisbane Pty Ltd1,2
ARN Broadcasting Pty Ltd1
ARN Communications Pty Ltd1,2
ARN Limited Partnership
ARN New Zealand Pty. Limited1,2
ARN Overseas Pty. Limited1,2
ARN Perth Pty Limited1
ARN South Australia Pty Limited1
ARN Superannuation Pty Ltd1,3
ARNSAT Pty Limited1,3
Australian Outdoor Pty Limited1,2,3
Australian Radio Network Pty Limited1,2
Australian Radio Network Sales Pty Ltd1,3
Biffin Pty. Limited1,2
Black Mountain Broadcasters Pty. Limited
Blue Mountains Broadcasters Pty Limited1
Brisbane FM Radio Pty Ltd
Buspak Advertising (Hong Kong) Limited
C.R. Phillips Investments Pty Ltd1,3
Capital City Broadcasters Pty. Limited1
Cardcorp (Manufacturing) Pty. Limited3
Catalogue Central Pty Limited1
Central Coast Broadcasting Pty.1,3
Citysites Outdoor Advertising (Albert) Pty. Ltd.1,3
Citysites Outdoor Advertising (S. Aust.) Pty. Ltd.1,3
Citysites Outdoor Advertising (W Aust) Pty Ltd1,3
Citysites Outdoor Advertising Pty. Ltd.1,3
Cody Outdoor International (HK) Limited
Commonwealth Broadcasting Corporation Pty Ltd1,2
Conversant Media Pty Ltd1
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Name of entity
Covette Investments Pty Limited1,2
Double T Radio Pty Ltd1
Emotive Pty Limited
Evitome Pty Limited1
Farm Fantastic Pty Limited3
Gergdaam Capital Pty Limited1,2
Gulgong Pty. Limited1,2
Haswell Pty. Limited1,2
HT&E Braeside Pty Ltd3
HT&E Broadcasting (Regionals) Pty. 1,2
HT&E Broadcasting Investments Pty Ltd1,3
HT&E Business Magazines Pty Ltd1,3
HT&E Digital Pty Ltd 1
HT&E Finance Pty Limited1,2
HT&E International Pty Ltd1,2
HT&E Milperra Pty Ltd3
HT&E Online (Australia) Pty Ltd1
HT&E Operations Ltd1,2
iNC Network Australia Pty Ltd1,3
KAFM Broadcasters Proprietary Limited1,3
Level 3 Investments Pty Limited1
Level 4 Investments Pty Limited1,3
Lunchbox Investments Pty Ltd3
Media Tek Pty. Limited1,2,3
Melbourne F.M. Facilities Pty. Limited
Nathco Holdings Pty. Ltd.1,2,3
Perth Sign Company Pty Ltd1,3
Phillips Finance Pty Ltd1,3
Phillips Neon Pty Ltd1,3
Provincial Investments Pty. Ltd.1,3
Radio 96FM Perth Pty Limited1
RadioWise Pty Ltd1,3
Regmax Pty Limited1,3
Shelter Advertising Pty Ltd1,3
Southern State Broadcasters Pty. Limited1
Speedlink Services Pty Ltd1
Street Furniture (NSW) Pty Ltd1,3
SunCoastal F.M. Radio Pty. Ltd.1,3
Sydney FM Facilities Pty Ltd
The Internet Amusements Group Pty Limited1
The Level 3 Partnership
The Roar Sports Media Pty Ltd1
Tibbar Broadcasting Pty Limited1
Universal Radio Pty. Ltd.1,3
Urban Design Furniture Pty. Ltd.1,3
Country of incorporation/
establishment
Equity holding
2020
%
2019
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
51
100
–
100
100
100
–
100
–
–
100
100
100
–
100
100
–
–
100
–
–
–
50
–
–
–
–
–
100
–
–
–
100
100
–
–
50
100
100
100
100
–
–
100
100
51
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
Name of entity
Wesgo1,2
West Sydney Radio Pty Ltd1,3
Westat Research Pty Ltd1,3
Wilson & Horton Australia Pty Ltd1
Wilson & Horton Finance Pty Ltd1,2
Country of incorporation/
establishment
Australia
Australia
Australia
Australia
Australia
Equity holding
2020
%
100
–
–
100
100
2019
%
100
100
100
100
100
(1) These companies are parties to a deed of cross guarantee dated 28 April 2017 under which each company guarantees the debts of the others (Deed
of Cross Guarantee). These companies represent a Closed Group for the purposes of ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
and there are no other members of the Extended Closed Group.
(2) These wholly-owned entities have been relieved from the requirement to prepare a financial report and Directors’ report under ASIC Corporations
(Wholly-owned Companies) Instrument 2016/785.
(3) This company was deregistered during the year.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Set out below are the Group’s principal subsidiaries with material non-controlling interests. Unless otherwise stated, the subsidiaries as
listed below have share capital consisting solely of ordinary shares, which are held directly by the Group, and the proportion of
ownership interests held equals to the voting rights held by the Group.
Name of entity
Brisbane FM
Radio Pty Ltd
Place of
business and country
of incorporation
Ownership interest
held by the Group
2020
2019
Ownership interest held by
non-controlling interests
2020
2019
Principal activities
Australia
50%
50%
50%
50%
Commercial radio
Set out below is summarised financial information for each subsidiary that has non-controlling interests that are material to the Group.
The amounts disclosed for each subsidiary are before inter-company eliminations.
Brisbane FM Radio
Pty Ltd
Summarised balance sheet
Current assets
Current liabilities
Current net assets
Non-current assets
Non-current liabilities
Non-current net assets
Net assets
Accumulated non-controlling interests
Summarised statement of comprehensive income
Revenue
Profit for the period
Other comprehensive income
Total comprehensive income
Total comprehensive income allocated to non-controlling interests
Dividends paid to non-controlling interests
Summarised statement of cash flows
Net inflows from operating activities
Net outflows from investing activities
Net outflows from financing activities
Net (decrease)/increase in cash and cash equivalents
2020
$’000
10,493
2,287
8,206
67,474
46
67,428
75,634
37,817
20,465
6,235
–
6,235
3,118
–
8,867
(14)
(8,837)
16
2019
$’000
4,687
2,706
1,981
67,464
44
67,420
69,401
34,700
25,316
8,390
–
8,390
4,195
4,100
8,434
(27)
(8,930)
(523)
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement,
statement of comprehensive income, balance sheet and statement of changes in equity respectively.
The effects of all transactions with non-controlling interests are recorded in equity if there is no change in control. Where there is
a loss of control, any remaining interest in the entity is remeasured to fair value and a gain or loss is recognised in the income
statement. Any losses are allocated to the non-controlling interests in subsidiaries even if the accumulated losses should exceed
the non-controlling interests in the individual subsidiary’s equity.
Shares in other corporations
Note
3.4
2020
$’000
46,583
2019
$’000
37,346
The Group purchased shares in oOh!media Limited (OML) and designated the investment as fair value through other comprehensive
income. The shares are not held for sale. The investment in OML was revalued to $45.9 million as at 31 December 2020, with a
$19.5 million fair value gain net of tax, recognised in other comprehensive income. Refer to note 3.4 for more information on
determining the fair value.
The Group’s historical investment in Nova 93.7 became an associate on 1 March 2020. Refer to note 5.4 for further details.
The remaining level 3 investments are not material to the Group.
Financial assets are initially measured at fair value, plus transaction costs. This excludes those financial assets classified as at fair
value through profit or loss which are initially measured at fair value. Subsequent measurement of financial assets is at fair value
or amortised cost where certain criteria are met.
The Group’s loans and receivables (refer to note 3.3(B)) meet the requirements for measurement at amortised cost based on the
purpose for which the assets and liabilities are held and the contractual terms.
Details about the group’s impairment policies and the calculation of the loss allowance are provided in note 3.3(B).
The Group’s investments in equity instruments are measured at fair value, determined in the manner described in note 3.4. At
initial recognition, the Group can make an irrevocable election (on an instrument-by-instrument basis) to recognise gains and
losses on equity instruments not held for trading, in other comprehensive income. Otherwise, all gains and losses are recognised
in profit or loss.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Shares in associate and joint ventures
Total investments accounted for using the equity method
Share of profits of associate and joint ventures
Note
1.3
2020
$’000
51,320
51,320
5,998
2019
$’000
17,314
17,314
2,527
(1) Share of profits from joint ventures, included HT&E Events Pty Limited and Unbnd Group Pty Ltd, which were disposed in late 2019. The current year
result includes Nova Entertainment (Perth) Pty Ltd, from 1 March 2020.
Set out below are the associate and joint ventures of the Group as at 31 December 2020. The entities listed below have share capital
consisting solely of ordinary shares, which are held directly by the Group. The country of incorporation is also their principal place of
business, and the proportion of ownership interest is the same as the proportion of voting rights held.
Name of entity
Soprano Design Pty Limited
Nova Entertainment (Perth) Pty Ltd
Place of
business/
country of
incorporation
Australia
Australia
Ownership
interest
2020
25%
50%
2019
Nature of
relationship
25% Associate1
50% Associate2
Measurement
method
Consolidated
carrying values
2019
2020
$’000
$’000
Equity method
19,829
17,314
Equity method
31,491
–
(1) Soprano Design Pty Limited specialises in the development and provision of world leading mobile messaging and wireless application infrastructure.
The interest in this business was acquired in 2001.
(2) On 1 March 2020, Nova Entertainment (Perth) Pty Ltd, an FM radio station in Perth, became an associate of the Group. The Group’s interest in the
entity was previously classified as an equity investment within Shares in Other Corporations
Below is a reconciliation of investments accounted for using the equity method:
Carrying amount at the beginning of the financial year
Share of profit
Share of reserves
Dividend paid
Reclassification of associate from financial asset
Disposal
Impairment
Other
Total investments accounted for using the equity method
2020
$’000
17,314
5,998
504
(1,250)
35,959
–
(4,394)
(2,811)
51,320
2019
$’000
18,829
2,527
–
–
–
(4,320)
–
278
17,314
The Group holds a 50% interest in Nova Entertainment (Perth) Pty Ltd (Nova 93.7FM), which was established in 2002. This investment in
Nova 93.7FM has historically been held as a financial asset with fair value remeasurements through profit or loss (refer to note 5.3).
During the period, management revisited the judgements and assumptions related to Nova 93.7FM and concluded that there had been
a change in circumstances such that the Group now had significant influence over Nova 93.7FM and that the entity was an associate,
effective from 1 March 2020. The Group’s current level of oversight and interest in Nova 93.7FM, subsequent to recent structural and
organisational changes, has contributed to the change in circumstances.
Initial recognition of an associate is at cost. As an accounting policy, the Group has elected to use fair value as the deemed cost at 1
March 2020, the date Nova 93.7FM became an associate. The fair value, or deemed cost, of the associate at 1 March 2020 was
$35,959,000. This amount was reclassed out of Shares in Other Corporations.
For the period ending June 2020, there were indications that the carrying amount of the Group’s investment in Nova 93.7FM may exceed
its recoverable amount, so an impairment test was performed. As a result of the testing performed, an impairment charge of $4,394,000
was recognised in the period. Management have performed an impairment test as at 31 December 2020, which has indicated no further
impairment loss should be recognised.
The recoverable amount of Nova 93.7FM was estimated based on a value in use calculation, using management budgets and forecasts
for a 5 year period.
The cash flow assumptions are based on:
revenue forecasts, which consider internal information and relevant external industry data and analysis which include:
market growth across the cash flow period. The revenue forecast assumes the Australian Radio market will return to historical
2019 within the forecast period, and Nova 93.7FM will maintain market share or reclaim lost market share through continued
investment in content, marketing and operations.
expense forecasts, which are prepared on a detailed basis based on their nature. Variable costs are forecast to move in line with
revenue movements. Personnel costs are forecast to move in line with headcount and adjusted for expected inflation. Other costs
are forecast based on management expectations, considering existing contractual arrangements.
growth rates for cash flows beyond 5 years, which are extrapolated at rates not exceeding the long-term average growth rate for
the industry in which Nova 93.7FM operates.
At 31 December 2020 the carrying value of the Group’s investment in Nova 93.7FM equalled its value in use calculation. The
impairment calculation is therefore sensitive to changes in certain key assumptions, with any negative change giving rise to a further
impairment charge.
The below illustrates how a reasonable possible change in estimate and assumptions can impact headroom. The headroom for the
Group’s investment in Nova 97.3FM would change by the following based on changes made in isolation to the key assumptions below:
In $’000s
Nova 97.3FM
Discount Rate
change
+0.5%
(2,036)
-0.5%
2,308
Long-term growth
rate change
+0.5%
1,714
-0.5%
(1,513)
Terminal EBITDA
forecast change
-1%
+1%
264
(264)
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
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.
Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting, after
initially being recognised at cost. The Group’s investment in associates includes goodwill (net of any accumulated impairment loss)
identified on acquisition.
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share of post-
acquisition movements in other comprehensive income of the associate, is recognised in other comprehensive income. The
cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends received from
associates are recognised in the consolidated financial statements as a reduction in the carrying amount of the investment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured
receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the
associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in
the associates.
Under AASB 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures
depending on the contractual rights and obligations each investor has, rather than the legal structure of the joint arrangement.
The Group recognises its direct right to, and its share of, jointly held assets, liabilities, revenues and expenses of joint operations.
The interest in a joint venture is accounted for using the equity method after initially being recognised at cost. Under the equity
method, the Group’s share of the profits or losses of the joint venture is recognised in the income statement, and the share of
post-acquisition other comprehensive income is recognised in other comprehensive income.
When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint venture (which includes any long-
term interests that, in substance, form part of the Group’s net investment in the joint venture), the Group does not recognise
further losses, unless it has incurred obligations or made payments on behalf of the joint venture.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in
the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred.
The individual financial statements for the parent entity show the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Total equity
Contributed equity
Reserves
Share-based payments reserve
Retained earnings
Opening profit reserve
Dividends paid to shareholders
Closing profit reserve
Brought forward loss reserve
Loss for the year
Closing loss reserve
Total equity
(Loss)/profit for the year
Total comprehensive income
Refer to note 6.1 for details.
2020
$’000
2019
$’000
3,848
3,614
1,392,925
1,414,651
–
930,612
462,313
3,006
795,907
618,744
1,480,752
1,483,685
27,604
10,423
35,434
(12,891)
22,543
(910,798)
(157,788)
(1,068,586)
462,313
(157,788)
(157,788)
58,252
(22,818)
35,434
(720,499)
(190,299)
(910,798)
618,744
(190,299)
(190,299)
The parent entity did not have any other contingent liabilities or any contractual commitments as at 31 December 2020 or
31 December 2019.
The financial information for the parent entity, HT&E Limited, has been prepared on the same basis as the consolidated financial
statements, except for:
Investments in subsidiaries are accounted for at cost less impairment losses in the financial statements of the parent entity.
Dividends received from subsidiaries are recognised in the parent entity’s income statement when its right to receive the dividend
is established.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Companies in the Closed Group are party to a deed of cross guarantee dated 28 April 2017 under which each guarantees the debts of
the others. These companies represent a Closed Group for the purposes of ASIC Corporations (Wholly-owned Companies) Instrument
2016/785. The companies party to Deed of Cross Guarantee are detailed at note 6.1.
Set out below is the consolidated income statement and summary of movements in consolidated retained earnings for the year ended
31 December 2020 for the Closed Group:
Revenue
Other revenue and income
Expenses from operations before impairment, finance costs, depreciation and amortisation
Impairment of Group company investments
Goodwill and associate impairment
Finance costs
Depreciation and amortisation
Share of profits of associate and joint ventures
Profit/(loss) before income tax
Income tax expense
Loss attributable to owners of the parent entity
Accumulated losses
Balance at beginning of the year
Change in accounting policy – lease accounting
Restated total at beginning of the financial year
Loss attributable to owners of the parent entity
Dividends paid to shareholders
Transfers between reserves
Balance at end of the year
2020
$’000
2019
$’000
146,898
188,274
30,562
36,562
(128,975)
(172,388)
(19,237)
(55,888)
(3,069)
(6,256)
5,998
(29,967)
(14,226)
(44,193)
(5,423)
–
(10,464)
(6,824)
2,527
32,264
(38,755)
(6,491)
(1,062,058)
(1,030,485)
–
(2,222)
(1,062,058)
(1,032,707)
(44,193)
(12,840)
520
(6,491)
(22,776)
(84)
(1,118,571)
(1,062,058)
Set out below is the consolidated balance sheet as at 31 December 2020 for the Closed Group:
Current assets
Cash and cash equivalents
Short-term deposits
Receivables
Tax assets
Other current assets
Total current assets
Non-current assets
Other financial assets
Investments accounted for using the equity method
Property, plant and equipment
Right-of-use assets
Intangible assets
Deposit of tax in dispute, net of provision
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Payables
Contract liabilities
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total parent entity interest
Total equity
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
2020
$’000
61,023
50,000
142,084
3,575
2,554
2019
$’000
107,218
–
139,056
3,300
2,389
259,236
251,963
227,599
51,320
17,158
18,152
297,181
3,930
1,762
617,102
876,338
237,681
17,314
20,125
20,901
347,640
20,670
2,616
666,947
918,910
158,511
161,793
1,389
3,164
4,454
167,518
20,795
4,456
120,123
145,374
312,892
563,446
1,144
2,648
12,315
177,900
23,579
4,850
108,752
137,181
315,081
603,829
1,480,752
201,265
1,483,685
182,202
(1,118,571)
(1,062,058)
563,446
563,446
603,829
603,829
The parent entity and all wholly-owned controlled entities have provided guarantees in respect of banking facilities. As at 31 December
2020, the facilities had been drawn to the extent of $6.3 million (2019: $9.1 million), of which $3.3 million of the balance pertains to bank
guarantees.
During the year, the Company provided a financial guarantee in relation to Unbnd Group Pty Ltd (Unbnd), a joint venture which was
disposed on 19 September 2019. The financial guarantee remained undrawn upon expiry on 30 October 2020 leaving the Group with
$nil exposure as at 31 December 2020 (2019: $4,897,000). The amount was previously presented on the balance sheet as a provision
(refer to note 2.4).
The Group did not have any other contingent liabilities and contractual commitments as at 31 December 2020 or 31 December 2019.
Claims for damages are made against the Group from time to time in the ordinary course of business. The Directors are not aware of any
claim that is expected to result in material costs or damages.
During the year, the following fees were paid or payable for services provided by the auditor of the Group, its related practices,
non-related audit firms and other professional advisory and consulting firms:
Remuneration for audit or review of the financial reports
PricewaterhouseCoopers – Australian firm
PricewaterhouseCoopers – overseas firm
Remuneration for other assurance services
PricewaterhouseCoopers – Australian firm
PricewaterhouseCoopers – overseas firm
Total audit and other assurance services
Remuneration for other services
PricewaterhouseCoopers – Australian firm
Tax services
Consulting and advice
Compliance
Other services
PricewaterhouseCoopers – overseas firm
Tax services
Compliance
Total non-audit services
2020
$’000
803
86
42
8
939
237
139
–
23
399
2019
$’000
998
83
42
8
1,131
382
165
2
29
578
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
2020
$
2019
$
2,019,964
3,332,309
90,526
40,813
–
141,197
2,292,500
172,655
63,287
2,237,201
834,522
6,639,974
Detailed remuneration disclosures are provided in the Remuneration Report.
The aggregate amounts recognised in respect to the following types of transactions and each class of related party involved were
as follows;
Type of transaction
Director fee with associate
Director fee with associate
Class of other related party
Key management personnel (i)
Key management personnel (ii)
2020
$
400,000
18,750
2019
$
–
–
(i) Directors fees received from Soprano Design Pty Limited by HT&E for services performed by Ciaran Davis and Jeff Howard
(ii) Directors fee received from Soprano Design Pty Limited by Belinda Rowe for services performed
There was $nil payable to related parties as at 31 December 2020 (2019: $nil).
There was $7.4 million in loans owing to related parties as at 31 December 2020. This relates to Nova Entertainment (Perth) Pty Ltd,
which became an associate on 1 March 2020. The Group had loans amounting to $3.8 million with Nova Entertainment (Perth) Pty Ltd as
at 31 December 2019.
There was $nil commitment to related parties as at 31 December 2020 (2019: $nil).
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
The consolidated financial statements incorporate the assets and liabilities of HT&E Limited and its subsidiaries. Subsidiaries are all
entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has the rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the
entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the
date that control ceases.
Inter-entity transactions, balances and unrealised gains on transactions between Group entities are eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement
of comprehensive income, balance sheet and statement of changes in equity respectively.
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (functional currency). The consolidated financial statements are presented in Australian dollars,
which is HT&E Limited’s functional and presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-
end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when
they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net
investment in a foreign operation.
The results and financial position of all the Group entities that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
assets and liabilities are translated at the closing rate at the date of the balance sheet;
income and expenses are translated at average exchange rates for the year; and
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and
other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign
operation is sold or a partial disposal occurs, a proportionate share of such exchange differences is recognised in the income statement
as part of the gain or loss on disposal.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate.
Trade payables, including accruals not yet billed, are recognised when the Group becomes obliged to make future payments as a result
of a purchase of assets or services. Trade payables are carried at amortised cost which is the fair value of the consideration to be paid in
the future for goods and services received. Trade payables are unsecured and are generally settled within 30 to 45 days.
A payable is raised for the amount of any dividend declared, determined or publicly recommended by the Directors before or at the end
of the financial year but not distributed at balance date.
A liability for short-term incentives is recognised in provisions when there is an expectation of settlement and at least one of the
following conditions is met:
there are contracted terms in the relevant plan for determining the amount of the benefit;
the amounts to be paid are determined before the time of completion of the financial report; or
past practice gives clear evidence of the amount of the obligation.
Liabilities for short-term incentives are expected to be settled within 12 months and are measured at the amounts expected to be paid
when they are settled.
The Group has applied AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework for the first
time for the reporting period commencing 1 January 2020. The Group has assessed that there is no material impact on the Group in the
current period or prior periods.
There are no standards and interpretations that are not yet effective and that are expected to have a material impact on the Group in
the current or future reporting periods and on foreseeable future transactions.
The Directors are not aware of any matter or circumstance that has arisen since the end of the financial year that has significantly
affected or may significantly affect the Group’s operations, the results of those operations or the Group’s state of affairs in future
financial years.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
In the Directors’ opinion:
(a)
the financial statements and notes set out on pages 46 to 101 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
giving a true and fair view of the consolidated entity’s financial position as at 31 December 2020 and of its performance for
the financial year ended on that date; and
(b)
(c)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable;
and
at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified
in note 5.1 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 5.6.
Page 46 of the Annual Report confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
This declaration is made in accordance with a resolution of the Directors, after receiving the declarations required to be made by the
Chief Executive and Chief Financial Officer in accordance with section 295A of the Corporations Act 2001.
Hamish McLennan
Chairman
Sydney
24 February 2021
To the members of HT&E Limited
In our opinion:
The accompanying financial report of HT&E Limited (the Company) and its controlled entities (together the Group) is in accordance with
the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 31 December 2020 and of its financial performance for the year
then ended
complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b)
The Group financial report comprises:
the consolidated balance sheet as at 31 December 2020
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information
the directors’ declaration.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of the financial report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the
ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our
other ethical responsibilities in accordance with the Code.
An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a
whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the
industry in which it operates.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Materiality
For the purpose of our audit we used overall Group materiality of $2,120,000, which represents approximately 5% of the Group’s
profit before tax adjusted for impairment of intangible assets, investments and right of use assets.
We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing
and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole.
We chose Group profit before tax because in our view, it is an important financial statement metric used in assessing the
performance of the Group. We adjusted this benchmark for impairment of intangible assets, investments and right of use assets
to reflect the normal underlying performance of the Group.
We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly acceptable profit
related thresholds for listed companies.
Audit Scope
Our audit focused on where the Group made subjective judgements; for example, significant accounting estimates involving
assumptions and inherently uncertain future events.
The Group audit was aligned with the structure of the Group.
The nature, timing and extent of audit work required on each component of the Group was determined by the component's risk
characteristics and financial significance to the Group and consideration whether sufficient evidence had been obtained for our
opinion on the financial report as a whole. The audit work involved:
-
-
-
-
an audit of the Australian Radio Network financial information
specific risk focused audit procedures over Cody Outdoor International (HK) Limited financial information
specific risk focused analytical procedures at the Group level
further audit procedures at a Group level, including over the consolidation of the Group's reporting units and the
preparation of the financial report.
For the work performed by other auditors (“component auditors”) of Cody Outdoor International (HK), Soprano Design Limited,
Nova Entertainment (Perth) Pty Limited and Group Financial Services shared service centre operating under our instructions, we
determined the level of involvement we needed to have in the audit work at those locations to be satisfied that sufficient audit
evidence had been obtained. We communicated regularly with these component audit teams during the year through meetings
and written instructions where appropriate.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for
the current period. The key audit matters were addressed in the context of our audit of the financial report as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the Audit and Risk Committee.
How our audit addressed the key audit matter
Our audit procedures included:
developed an understanding of and assessed the design of
the key controls associated with the New Zealand branch tax
matter and estimate of the provision recognised
examining correspondence between the Group and the ATO
examining correspondence between the Group and its
external advisors and considering their independence and
technical competence
together with PwC tax experts, considering the conclusions
reached by the Group’s external advisors. This included
interviewing the advisors and comparing their conclusions to
supporting evidence
agreeing the Group’s potential tax exposure for the 31
December 2009 to 31 December 2016 tax years to the
amounts in the amended assessments issued by the ATO for
the respective tax years
recomputing the Group’s potential tax exposure for the 31
December 2016 tax year to the Agreement for Licence of
Trademarks between Wilson & Horton Finance Pty Limited –
New Zealand Branch and APN New Zealand Limited
assessing the sum of the probability-weighted amounts for
the range of possible outcomes determined by the Group to
estimate the resolution of the uncertain tax matter
assessing the reasonableness of the Group’s disclosure of
the matter in the financial statements in light of the
requirements of Australian Accounting Standards.
Key audit matter
Taxation of New Zealand branch royalty income
(Refer to note 4)
In 2018, the Australian Tax Office (ATO) issued amended
assessments with adjustments and determined a position on the
application of penalties and interest relating to the licensing of
New Zealand mastheads by a New Zealand branch of one of the
Group’s Australian entities. The ATO has challenged the Group’s
treatment of the royalty income received by the New Zealand
branch in respect of the mastheads as being non-assessable,
non-exempt income for Australian tax purposes. In summary, the
ATO’s position in relation to this matter involves $102.5m of tax
adjustments plus $49.0m of penalties plus interest which has
accrued to 31 December 2020 (and continues to accrue). In that
regard a deposit of $50.7m was paid to the ATO in 2018.
Interest consists of $27.5 million applied with the amended
assessments and a further $28.3 million interest accrued to 31
December 2020, together totalling $55.8 million. If the ATO is
wholly successful in the dispute, the ATO should remit 50% of the
interest from the date of the tax deposited in 2018. This
remission of interest together with the tax deduction would
reduce the net interest cost to approximately $29.1 million.
The Group continues to consult with its advisers and is satisfied
that its treatment is consistent with relevant tax legislation, that
penalties should not apply and disagrees with the rate of
penalties imposed.
The Group has lodged objections with the ATO regarding the
amended tax assessments and regarding the assessments of
penalties and interest. The Group will if necessary, contest the
matter through litigation proceedings.
Given the range of possible outcomes and in light of recent
correspondence and discussions with the ATO and consultation
with the Company’s advisers, AASB Interpretation 23 has been
applied using the sum of the probability-weighted amounts to
predict the resolution of the uncertainty. A provision of $30.0
million was recorded in respect of the New Zealand branch
matter in the prior year against the Deposit of Tax in Dispute, in
line with the requirements of AASB Interpretation 23. A $3.9
million deposit of tax in dispute, net of provision disclosed on the
consolidated balance sheet consists of the $50.7 million deposit
of tax in dispute, reduced by the $30 million provision and
further reduced by the $16.7 million for the value of tax
deductions on interest to 31 December 2020.
Key audit matter
How our audit addressed the key audit matter
We considered this a key audit matter because of the significant
judgement required by the Group in estimating the future
outcome of the taxation authority’s assessment (which may
include a court), the associated legal processes, and in estimating
the provision and appropriate disclosure of the matter in the
financial report.
Impairment of intangible assets
(Refer to note 2.1)
Due to the economic impacts associated with COVID-19 during
the year, comprehensive impairment assessments were
conducted by the Group at 30 June 2020. As a result, the Group
impaired goodwill of $51.5 million and $2.7 million for the
Australian Radio Network (ARN) cash generating unit (CGU) and
HK Outdoor CGU respectively. The impairments recorded in
Australian Radio Network and HK Outdoor CGU’s are the result of
the financial underperformance of each business relative to the
original forecast during the six months ended 30 June 2020, and
a downward revision to forecast future cashflows in the short to
medium term in response to uncertainty in advertising markets
created by COVID-19.
At 31 December 2020, the Group performed an impairment
assessment over the ARN CGU by:
calculating the ‘Value in Use’ for the CGU, using a discounted
cash flow model (the model)
comparing the resulting ‘Value in Use’ to the CGU’s carrying
value to determine the need for any impairment.
We considered this a key audit matter, because:
A significant impairment charge was recorded during the year
the $367.5m non amortising intangible assets as at 31
December 2020 are material
significant judgement is required by the Group in performing
the impairment assessment, particularly in estimating:
forecasted future results of the business
o
long term growth rates
o
revenue forecasts
o
discount rates applied to future cash flow forecasts in
o
determining whether there are any impairment charges.
We performed the following procedures, amongst others, for the
impairment assessments performed by the Group during the
year:
developed an understanding of and assessed the design of
the key controls associated with the identification of
impairment indicators and the preparation of the discounted
cash flow models used to assess the recoverable amount of
the Group’s CGUs
evaluated key factors used in the Group’s approach to assess
impairment including the methodology applied and the
Group’s identification of CGUs
agreed forecast cash flows used in the impairment
assessments to Board approved budgets
evaluated the Group’s historical ability to forecast future cash
flows by comparing budgeted amounts to reported actual
results for the past year
tested whether the discount rate reflected the risks of the
CGU by comparing the discount rate to other comparable
companies
compared the growth rates for revenue forecasts and long-
term growth rates used in the CGU’s cash flow forecasts to
independent industry forecasts and historical growth rates
compared the market capitalisation of the Group in
comparison to the carrying value of its net assets and
adjusted equity value
tested the mathematical accuracy of the impairment
assessment
evaluated the reasonableness of the disclosures made in
note 2.1, including those regarding the method of
measurement, the estimation uncertainty and range of
potential outcomes, in light of the requirements of Australian
Accounting Standards.
The directors are responsible for the other information. The other information comprises the information included in the annual report
for the year ended 31 December 2020, but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to
be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in
this regard.
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with
Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board
website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our auditor's report.
We have audited the remuneration report included in pages 30 to 44 of the directors’ report for the year ended 31 December 2020.
In our opinion, the remuneration report of HT&E Limited for the year ended 31 December 2020 complies with section 300A of the
Corporations Act 2001.
The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with
section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit
conducted in accordance with Australian Auditing Standards.
PricewaterhouseCoopers
Louise King
Partner
Sydney
24 February 2021
The following information is extracted from substantial shareholder notices received by the Company as at 17 February 2021:
Name
Allan Gray Australia Pty Ltd and its related bodies corporate
News Pty Limited and its related bodies corporate
Perpetual Limited and its related bodies corporate
Spheria Asset Management Pty Ltd
Commonwealth Bank of Australia and its related bodies corporate
Carol Australia Holdings Pty Limited and its related bodies corporate
The following information is extracted from the share register as at 17 February 2021:
Name
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
News Pty Limited
J P Morgan Nominees Australia Pty Limited
National Nominees Limited
BNP Paribas Nominees Pty Ltd
BNP Paribas Noms Pty Ltd
Citicorp Nominees Pty Limited – Colonial First State Inv a/c
Pacific Custodians Pty Limited - HT1 Plans Ctrl a/c
Pacific Custodians Pty Limited - APN Emp Share Tst a/c
BNP Paribas Nominees Pty Ltd IOOF INSMT Mgmt Ltd DRP
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd DRP
EGREMNI Pty Ltd
Mr Vincent Crowley
Montorio Superannuation Nominees Pty Ltd
S M & R W Brown Pty Ltd
Buttonwood Nominees Pty Ltd
Warrill Nominees Pty Ltd
Bellino Pty Ltd
Yvette Lamont
Total
Number
of shares
60,488,597
41,823,884
37,115,083
28,235,310
17,439,039
15,741,965
% of
total shares
34.8%
24.8%
14.8%
11.7%
5.2%
1.2%
1.2%
0.6%
0.4%
0.4%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
Number
of shares
96,778,442
69,040,731
41,303,132
32,404,568
14,494,715
3,451,203
3,300,308
1,727,000
1,240,940
960,628
350,000
327,400
212,255
185,305
174,203
165,140
157,386
153,104
150,000
140,889
266,717,349
95.9%
Holding
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Number of
shareholders
% of total
shareholders
3,996
948
221
212
26
5,403
73.96
17.55
4.09
3.92
0.48
100.00
Number
of shares
1,011,048
2,196,421
1,612,717
5,900,008
267,476,073
278,196,267
% of
total shares
0.36
0.79
0.58
2.12
96.15
100.00
There were 2,380 holders of less than a marketable parcel.
The voting rights are governed by rule 16 of the Constitution. In summary, shareholders are entitled to vote in person or by proxy,
attorney or corporate representative at any meeting of shareholders of the Company on:
a show of hands – one vote per shareholder; and
a poll – one vote per share.
There were no performance rights on issue at 31 December 2020 (2019: 200,965)
The relevant interest of each Director in the securities of the parent entity as at 17 February 2021 was:
Director
H McLennan
R Amos
P Connolly
C Davis
B Rowe
Number
of shares
Number
of options
73,000
16,250
65,935
560,662
–
–
–
–
–
–
HT&E shares are listed on the ASX (code HT1).
Shareholders or investors with any enquiries concerning their shareholding, shareholder details, dividend information, or administrative
matters, should direct their enquiries to the Share Registry. Contact details for the Share Registry appear on the Corporate Directory
page in this Annual Report 2020.
Dividends to shareholders may be paid direct to any bank, building society or credit union account in Australia. Shareholders who wish to
receive dividends by electronic transfer should advise the Share Registry.
The Company is obliged to deduct tax from unfranked or partially franked dividend payments to shareholders resident in Australia who
have not supplied their TFN to the Share Registry. To avoid this deduction, you should advise the Share Registry of your TFN.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643
Shareholders are encouraged to register their email address to receive dividend advices, notification of availability of annual
reports, notices of meeting, access to online voting and other shareholder communications. To register, shareholders should go
to www.linkmarketservices.com.au, log in to their shareholding through the Investor Centre and select the “All communication by
email” option.
Other services available to shareholders at this website include: viewing details of their shareholdings, updating address details, updating
bank details and obtaining a variety of registry forms.
Shareholders who have multiple issuer-sponsored holdings and wish to consolidate their separate shareholdings into one account
should advise the Share Registry in writing.
Shareholders who are issuer sponsored should notify the Share Registry in writing of any change in either their name or registered
address. If a change of name has occurred, it will be necessary to supply a certified copy of the relevant deed poll or marriage certificate.
Shareholders sponsored by a broker (CHESS) should advise their broker of the amended details.
The Directors determined to suspend the DRP effective from 15 February 2018.
Shareholders may elect to participate in any future DRP for all or part of their shareholding. Shareholders wishing to participate in any
future DRP should contact the Share Registry. Terms and conditions of the DRP, the DRP Guide and forms to apply for, vary or cancel
participation in the DRP are also available on the Company’s website, www.htande.com.au.
The Annual Report is the most comprehensive publication with information for investors. Copies of the 2020 Annual Report may be
obtained by contacting the Share Registry or on the Company’s website, www.htande.com.au. Other financial and relevant information,
including press releases on financial results and Chairman’s addresses, are available from the corporate office in Sydney, or at the
Company’s website, www.htande.com.au.
CORPORATE DIRECTORY
111
Notice is given that the 2021
Annual General Meeting
(AGM) of HT&E Limited will be
held on Thursday 6 May 2021
commencing at 9:00am.
Given COVID-19, the
Company has determined
not to allow Shareholders
to physically attend the
AGM. Prior to the AGM,
the Company will publish
a virtual meeting guide
on the ASX and the
Company’s website at
https://investorcentre.
htande.com.au outlining how
Shareholders will be able to
participate via the internet.
CORPORATE
DIRECTORY
HT&E LIMITED
ABN 95 008 637 643
Directors
Auditors
PricewaterhouseCoopers
One International Towers Sydney
Hamish McLennan (Chairman)
Watermans Quay
Ciaran Davis (CEO & Managing Director)
BARANGAROO NSW 2000
Principal Bankers
Bank of Queensland
Commonwealth Bank of Australia
HSBC
National Australia Bank
Westpac Banking Corporation
Roger Amos
Paul Connolly
Belinda Rowe
Company Secretary
Jeremy Child
Registered Office
3 Byfield St, Macquarie Park
SYDNEY NSW 2113
Telephone: +61 2 8899 9900
Share Registry
Link Market Services Limited
Level 12, 680 George Street
SYDNEY NSW 2000
Locked Bag A14
SYDNEY SOUTH NSW 1235
Telephone: +61 1300 553 550
Fax: +61 2 9287 0303
Email: registrars@linkmarketservices.com.au
Website: www.linkmarketservices.com.au
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Monza Recycled contains 99% recycled fibre
and is FSC® Mix Certified, which ensures that
all virgin pulp is derived from well-managed
forests and controlled sources. Monza Recycled
is manufactured by an ISO 14001 certified mill.
HT&E LIMITED AND CONTROLLED ENTITIES ABN 95 008 637 643