HT&E Limited
Annual Report 2021

Plain-text annual report

Annual Report 2021 Defining Audio HT&E Annual Report 2021 Creating Connections that Count HT&E owns Australia’s leading audio company, 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. Australia’s leaders in audio Content Committed to live & local Commercialisation & Partnerships Innovations that accelerate the business Distribution Everywhere our listeners are Broadcast Networks Digital streaming, Broadcast radio and DAB+ On-air talent Podcasting Intelligent and secure business mobile messaging software solutions for enterprises and governments worldwide An agency creating ideas that change the way people feel about brands Pioneer of the highest quality innovation and premium connected on-the-go advertising solutions Robin, Terry & Kip – KIIS 97.3 Brisbane Defining audio We are everywhere our listeners are, providing the greatest breadth and depth of audio content in Australia. 01 ARN is home to Australia’s: 91m Streaming listening hours (+12% YoY)4 5.4m Radio audience nationally (weekly)1 1.8m Digital websites reach (monthly)2 +64% Podcast downloads5 2.17m iHeartRadio registered users (lifetime)3 #1Metro Radio Network* #1Podcast Network^ Most established digital audio platform 1. GfK Radio Ratings, S8 2021, SMBAP, ARN AM/FM/DAB, Mon–Sun 5:30–12mn (cume), p10+. 2. Google Analytics: Website Page Impressions, All Devices, Australia, station websites include KIIS Network, PG Network (excluding 4KQ), Edge (not de-duped): Nov 2021). 3. Adobe Analytics, iHeartRadio Australia Registration Data, Lifetime Users, Unique Visitors, Dec 21. 4. AdsWizz Audiometrix, Total Radio Streaming, Total Listening Hours 2021 v 2020. 5. Triton, ARN Network Total, Jan–Dec 2021 vs Jan–Dec 2020. * ^ Source: GfK, S8-2021, SMBAP, 05:30–23:59, P10+, AM/FM/DAB+, Based on Share. Source: The Australian Podcast Ranker, Triton Digital, December 2021. In this report 02 Strategic Report 02 Delivering our strategy 04 Chairman’s letter 2021 06 CEO’s letter 2021 08 Operating & Financial Review 12 Review of Operations 16 Our people & culture 20 26 28 Environmental, Social & Governance (ESG) Board of Directors Senior management team 29 Directors’ Report 35 Remuneration Report 51 Financial Report 51 Auditor’s Independence Declaration 52 Consolidated Financial Statements 107 Directors’ Declaration 108 Independent Auditor’s Report 113 Shareholder Information 116 Corporate Directory 02 Delivering our strategy In 2021, HT&E delivered on its strategic focus by strengthening core Australian radio operations and investing in its digital audio growth strategy. We deliver Australia’s most complete audio offering and the business is exceptionally well positioned to take advantage of future audio opportunities and improving advertising sentiment. Our goal is to build the best broadcast radio and digital audio business in Australia, offering our audiences and advertisers a gateway to develop deeper connections in the booming world of audio. To accelerate our strategic intent, we believe media companies of the future will need to continually evolve their audience and advertiser engagement. Three pillars for growth: 1. Live and local content delivered by Australia’s best talent, and supported by brands that people know and trust. 2. Distributed across our comprehensive network of broadcast radio stations and on iHeartRadio, Australia’s most established digital audio platform. 3. Commercialised through a suite of innovative, data and technology led products and partnerships. Our strategic focus areas Our critical priorities ARN Key Performance Indicators (KPIs) Scale of audiences Radio listenership continues to grow and we are the leading metropolitan radio network in Australia. The acquisition from Grant Broadcasters of a regional radio network (ARN Regional), creates a truly national broadcast network of scale made up of 58 stations across 33 markets. The acquisition of certain radio operations and assets from Grant Broadcasters, the leading regional radio operator in Australia, creates a truly national broadcast network of scale made up of 58 stations across 33 markets. The acquisition also saw us transfer the rights to commercially represent an additional 76 regional stations, giving ARN a presence in every state and territory across the nation. Multi-platform content delivery ARN’s iHeartRadio is Australia’s most comprehensive digital audio distribution platform offering live radio, music streaming and podcasts. Consumer appetite for podcasts in particular continues to accelerate, with Australians downloading more than half a billion podcasts in 2021 – an increase of 28%. ARN remains the country’s #1 podcast publisher in 2021 – a leadership position we have now held for 21 consecutive months. Increasing digital data and targeting capabilities Growth in our first party data and investment in innovative digital trading products such as ‘ARN’s Dynamic Audio’ has led to increased digital revenues in 2021. Our technology trading stack is delivering exponential growth in programmatic trading that will accelerate further in 2022. Ease of transaction In 2021, ARN grew commercial share across our metropolitan markets thanks to consistent ratings built around our ‘Connections That Count’ market proposition. Our innovative solutions have also seen our sales teams pick up numerous awards during the year. We also launched the proprietary “ARN Audio Connections Planner” – a unique planning tool providing clients meaningful insights to maximise the effectiveness and measurability of their audio campaigns. HT&E Annual Report 202103 Audiosphere Our ambition To be Australia’s destination of choice for audio content and commercial innovation Our strategic focus areas Our critical priorities Scale of audiences Radio listenership continues to grow and we are the leading metropolitan radio network in Australia. The acquisition from Grant Broadcasters of a regional radio network (ARN Regional), creates a truly national broadcast network of scale made up of 58 stations across 33 markets. The acquisition of certain radio operations and assets from Grant Broadcasters, the leading regional radio operator in Australia, creates a truly national broadcast network of scale made up of 58 stations across 33 markets. The acquisition also saw us transfer the rights to commercially represent an additional 76 regional stations, giving ARN a presence in every state and territory across the nation. Multi-platform content delivery ARN’s iHeartRadio is Australia’s most comprehensive digital audio distribution platform offering live radio, music streaming and podcasts. Consumer appetite for podcasts in particular continues to accelerate, with Australians downloading more than half a billion podcasts in 2021 – an increase of 28%. ARN remains the country’s #1 podcast publisher in 2021 – a leadership position we have now held for 21 consecutive months. Increasing digital data and targeting capabilities Growth in our first party data and investment in innovative digital trading products such as ‘ARN’s Dynamic Audio’ has led to increased digital revenues in 2021. Our technology trading stack is delivering exponential growth in programmatic trading that will accelerate further in 2022. Ease of transaction In 2021, ARN grew commercial share across our metropolitan markets thanks to consistent ratings built around our ‘Connections That Count’ market proposition. Our innovative solutions have also seen our sales teams pick up numerous awards during the year. We also launched the proprietary “ARN Audio Connections Planner” – a unique planning tool providing clients meaningful insights to maximise the effectiveness and measurability of their audio campaigns. ARN Key Performance Indicators (KPIs) ARN FM stations1 ARN EBITDA ARN revenue #1 In SYD, MELB, BRIS, ADL for FM Stations1 Registered users (lifetime) 2.17m Up 16% YoY2 1 7 2 , 1 8 1 0 2 0 0 0 , 1 7 1 0 2 7 0 7 0 8 , 0 1 , 1 0 2 0 2 2 8 5 , 1 9 1 0 2 8 6 1 , 2 1 2 0 2 53.8 46.0* 2021 2020 195.6 171.5* 2021 2020 $53.8m ARN digital revenue 9.4 2021 6.3* 2020 $9.4m $195.6m Podcast downloads Dec 2020 to Dec 20213 +64% * Excluding disposed businesses. 1. Source: GfK Radio Ratings, S8 2021, SMBAP, M–S 5:30am–12mn, #’1 based on Share. 2. Source: Adobe Analytics, iHeartRadio Australia Registration Data, Lifetime Users, Unique Visitors, 2021 vs 2020. 3. Triton, ARN Network Total, Jan-Dec 2021 vs Jan-Dec 2020 04 Chairman’s letter 2021 I am pleased to report that 2021 has been a year of significant milestones for HT&E with the company delivering on a number of key strategic priorities placing the business in a very strong position to drive continued growth in 2022 and beyond. Net cash Net Cash $189.1m 2020 2021 $112.1m $189.1m Undrawn debt capacity Drawn $68m1 Facility $260m 1. Excludes bank guarantees. Refer to note 6.1. 2. GfK Radio Ratings, S8 2021, SMBAP, ARN AM/FM/DAB, Mon–Sun 5:30–12mn (cume), p10+. 3. Source: The Australian Podcast Ranker, Triton Digital, December 2021. Whilst the COVID-19 pandemic has dramatically impacted our way of life and disrupted business models, HT&E is navigating the period well. It has maintained its strategic focus by strengthening core Australian radio operations and investing in its digital audio growth strategy, it resolved a long running taxation dispute and removed a significant potential balance sheet liability. This together with strong capital management throughout the pandemic has meant HT&E was in a position to complete the accretive acquisition from Grant Broadcasters of a regional radio network (ARN Regional) thereby accelerating future growth to maximise shareholder value. This progress, which is a tribute to the efforts of our people, customers, management and Board, means the business is now exceptionally well positioned to take advantage of future audio opportunities and improving advertising sentiment. ARN – success continues Advertising in the radio market returned to growth in 2021 and the medium’s relevance remains strong. Over the last twelve months, ARN’s ratings and commercial success has continued, and the Company remains the best performing audio business in Australia. The business again experienced growth in total listening for the year, with ARN commercial radio now reaching 5.4 million people weekly2, and continues to hold the title of #1 podcast network3 with 4.8 million monthly listeners. Thanks to consistent ratings performance and a strong commercial offering that delivers integrated and engaging content from some of the world’s best talent across radio and podcasting, advertising revenues in our markets recovered well and we experienced stronger revenue and earnings performance compared to 2020, despite lengthy lockdowns in Sydney and Melbourne. ARN Regional creates a national network The Board has always focused on identifying the right opportunities to drive shareholder value and in November, we were delighted to announce the acquisition of 46 regional radio stations (ARN Regional) from Grant Broadcasters – the leading regional radio broadcaster in Australia – for $307.5 million. Strategically, this transaction fits very well with the growth ambitions we have for HT&E, allowing us to expand our audience base and fast-track the delivery of our digital audio content and advertising opportunities across the country. The combined businesses will create a truly national broadcast network of scale made up of 58 stations, across 33 markets, delivering innovative, digitally enabled commercial solutions. It provides the potential for significant digital audio expansion to new audiences by accelerating the rollout of ARN’s established iHeartRadio platform into regional areas. It will also enable us to provide nationally integrated commercial partnerships for clients, giving them the ability to access more than a third of Australian consumers in one transaction. As part of the transaction, Grant Broadcasters became a substantial shareholder in HT&E and we welcomed its former CEO, Alison Cameron, to the HT&E Board. Alison brings a wealth of regional and radio expertise and will provide critical continuity of knowledge as we bring these two businesses together. This accretive transaction is already seeing positive early signs as integration commences and thanks to the strength of our balance sheet we maintain the ability and flexibility to support continued investments in organic and inorganic growth initiatives. HT&E Annual Report 202105 The year ahead Looking ahead into 2022, HT&E’s business remains well placed to establish itself as the leading broadcast radio and digital audio broadcaster in Australia. The successful integration of ARN Regional is a priority. We have the benefit of a proven senior management team, world recognised broadcasters, and a national network that will expand HT&E’s audience base and fast-track digital audio content and advertising opportunities. I would like to thank our people for their dedication, particularly given the challenging conditions faced during 2021. I also wish to thank to my fellow Board members for their contribution and dedication. Our Board is a great team, having a good mix of skills and experience and it continues to be a pleasure to work together on ensuring the best for the company. Finally, thanks to you, our shareholders, for your continued support. This Board and management team remain aligned and determined to achieve the best possible returns on your investment over the long term. We look forward to your continued support. As part of establishing an appropriate capital structure post the acquisition from Grant Broadcasters, we exited our interest in oOh!media, realising a before tax gain of $31.1 million on our initial investment. The Board reinstated dividends in June 2021 with an interim dividend 3.5 cents and we have now also declared an additional final dividend of 3.9 cents, together amounting to full year total dividends of 7.4 cents. The accretive share buyback also continued through the year, with over 3.0m shares (1.1%) bought at an average price of $1.66. Soprano, an independent software business in which HT&E holds a 25% stake, continues to perform well and delivered record revenue, gross margin and earnings growth. The decision by the Soprano shareholders to terminate negotiations for the sale of the business to Link Mobility Group Holdings AS (“Link Mobility”) in September 2021 was taken in the best interests of our shareholders. While we continue to work with Macquarie Capital exploring liquidity options for HT&E’s stake, the Soprano business remains focused on business evolution. We expect growth via increasing product usage by existing customers, upselling of products and services, acquiring new customers and MNO partners, innovating on the Soprano product and re-examining immediate inorganic growth opportunities for mergers and acquisitions. ATO matter resolved In October, the Board announced it had settled a long running taxation dispute with the Australian Taxation Office for the sum of $70.7 million. This dispute related to the financial years ended 31 December 2009 to 31 December 2016, and involved $102.5 million of tax adjustments, $49 million of penalties and interest of $43 million, together totalling $194.5 million. The settlement of $70.7 million was considered a fair and reasonable outcome for the company. The dispute had already been protracted with assessments first issued in 2018 and as part of assessing the best outcome, the Board took into consideration the length of any ongoing dispute, potentially costly litigation and the overall level of ongoing uncertainty. Whilst HT&E remains satisfied that its treatment of the branch matter was consistent with relevant taxation legislation, the Board viewed the settlement arrangement reached as being in the best interests of shareholders removing potential liability on our balance sheet for a substantial amount of tax, interest and penalties, and allowing HT&E to look forward with certainty. Strong balance sheet HT&E continues to be in a strong financial position with one of the strongest balance sheets in the Australian media sector. The Group is well capitalised with $189.1 million net cash and access to undrawn debt facilities. In preparation for the completion of the ARN Regional acquisition in early January 2022, the debt facility was accessed in December 2021 drawing down $68.0 million. With the ATO tax matter now behind us and the acquisition of ARN Regional from Grant Broadcasters completed, we expect to maintain debt levels going forward equivalent to around one to one and a half times EBITDA, an appropriate level of gearing that we believe will provide sufficient flexibility for HT&E to pursue future growth opportunities as they arise. 1. GfK Radio Ratings, S8 2021, SMBAP, ARN AM/FM/DAB, Mon–Sun 5:30–12mn (cume), p10+. Hamish McLennan Chairman 06 CEO’s letter 2021 HT&E delivered a strong performance in 2021 despite the uncertain environment and the impact of extended lockdowns. Full year results were ahead of expectations and we made excellent progress in executing our strategy to build Australia’s best broadcast radio and digital audio company company. 2021 statutory revenue from continuing operations significantly improved on last year, up 15% to $225.0 million, with the business substantially rebounding from the impacts of COVID-19. Costs from continuing operations before interest, tax, depreciation and amortisation, and exceptional items were up 13% to $175.0 million impacted by cost of sales on improved revenues, investment in digital audio capability and one-off cost control measures impacting the prior period comparative. EBITDA from continuing operations before exceptional items was up 21% to $59.8 million, and operating cash flows before one-off government subsidies and income taxes of $34.2 million grew 51% on the prior period. The investments in our strategic priorities are delivering as we continue to build a media business offering scale of audience, multi-platform content, increasing data targeting capabilities and ease of transaction for our partners. We are creating increasingly diversified audio content, growing our total audio audience base, and launching new and innovative commercial products for our advertising partners. ARN – Defining Audio ARN’s purpose is to create moments that move you; for our audiences, clients and our people. We deliver Australia’s most complete audio offering, everywhere our audiences want to be, with the content they want to consume. We pride ourselves on being market-leaders and defining the industry and we are confident we have the brands, technology investments and talent to deliver on this for our listeners, advertisers and shareholders. ARN continued to deliver strong audience survey results across our metropolitan network throughout 2021 and has maintained the #1 network position^ for over two years. There was audience growth across all key markets, including 97.3FM Brisbane and KIIS101.1 Melbourne which were areas of focus for the business during the year. The Sydney duopoly of KIIS and WSFM continues to deliver with WSFM finishing #1FM, closely followed by KIIS at #2FM in the final survey of 2021^^. Our two powerhouse breakfast shows, The Kyle & Jackie O Show, and Jonesy & Amanda finished the year clear leaders in the Sydney market. In Melbourne, Gold 104.3FM, spearheaded by the successful Christian O’Connell Breakfast Show maintained #1FM station throughout the year, now holding that position for sixteen consecutive surveys^^. Leading podcast publisher Consumer appetite for listening to podcasts continues to accelerate, with Australians downloading more than half a billion podcasts in 2021, an increase of 28% on the previous year1. ARN remains the country’s #1 podcast publisher in 2021 after launching the iHeartRadio Podcast Network Australia at the start of 2020, a leadership position we have now held for 21 consecutive months. Of the top five podcast titles in 2021, ARN represented four, with in-excess of 4.8 million combined monthly listeners and close to 20 million downloads per month. Our strategy of representing a range of local and international podcast publishers has allowed us to build internal capability, better understand consumer podcast listening trends and scale quickly to meet growing advertiser demand, while managing investment risk and returns. With increasing advertiser demand delivering consistent monthly podcast billings to customers approaching close to $1 million, in 2022 we will launch several ARN original shows, anchored back to our highly successful audio brands. As part of this strategy, we will continue to trial innovative means, such as our Podcast to Broadcast strategy, of delivering quality content across our multiple platforms including our exclusive distribution platform – iHeartRadio. Connections That Count Our go-to-market proposition, built around ‘Connections That Count’, is well regarded and resulted in numerous awards for our sales teams across the year. We offer clients creative solutions, powered by an expert team, leveraging innovative technologies and world first commercial partnerships with the likes of TikTok, MTV and New York Times. In October, we launched Woolworths enhanced in-store radio experience in over 1000 of their stores. This innovative solution uses dynamic audio technology to tailor programming to suit different customer demographics, time of day and geographical locations. In 2021, we also launched the “ARN Audio Planner”, an internally developed, research backed, planning tool providing marketers and agencies meaningful insights that maximise the effectiveness and measurability of their audio campaigns. The ARN Audio Planner also leverages cutting edge research undertaken by our in-house neuroscientific research team. Research and data continue to play an ever-increasing role in the development of advertising solutions that create measurable actions with consumers. HT&E Annual Report 202107 2022 focus – well positioned Amazing people HT&E has good momentum as we move into 2022 and the transformative acquisition of ARN Regional from Grant Broadcasters represents a great opportunity for our listeners, clients, our people and shareholders. We will be integrating the leading metropolitan and regional radio businesses to create a truly national radio broadcast network of significant scale. The growth of digital audio will accelerate, in particular podcasting, and we will continue to invest in capability and content to retain our local leadership position. With increasing advertiser demand delivering consistent growth in digital revenues, in 2022 we will launch several ARN original shows, anchored back to our highly successful audio brands. ARN will relaunch and accelerate The Edge as a national youth brand distributed on iHeartradio, broadcast radio and DAB+, anchored in hip hop and RnB, driven by content, and reflective of an under-served genre of youth culture in commercial radio. This multi-year investment in the creation of a new national youth brand marks an important milestone for ARN as we continue to build the best broadcast and digital audio business in Australia, for all audience segments. 2021 was another challenging year for the company as we navigated lockdown restrictions, and the changing circumstances of our advertisers, whilst maintaining the broadcast of our content and dealing with the need to keep our people safe and well. It is a tribute to our entire team that we have improved our overall ratings and revenue performance with so much uncertainty in their daily lives during the year. For us, it has been important to invest in programs of work that drive culture, encourage health and wellness and enable our people through technology to ensure that they feel fully supported. We successfully rolled out a number of initiatives designed to make ARN an even better and more engaging place for top talent and I believe HT&E has emerged as a stronger, better company ready for 2022. Finally, I would like to thank our people, the Board and all shareholders for your continued support. We have strong foundations in our business and are clear about what we need to do to ensure we deliver the opportunities that are presented. I look forward to continuing to work closely with you all. Ciaran Davis CEO & Managing Director ARN Regional: Creating a national network The acquisition of ARN Regional from Grant Broadcasters is a highly synergistic transaction with a strong cultural fit with ARN. The acquisition is strategically compelling, creating a high-quality footprint across the whole of Australia. It provides access to increasingly important and growing regional audiences, enhances ARN’s ability to deliver content across multiple platforms and capitalises on the shift towards digital audio consumption. Strong national agency opportunities are expected to be created that will provide incremental revenue. It supports ease of transacting for media agencies and clients through the expansion of reach and touchpoints with potential to generate material revenue synergies which we are already starting to see the benefit of. Emotive Emotive, an independent creative company in which HT&E holds a 51% stake, significantly expanded its client base, increasing revenues and earnings. The business has an enviable client base with iconic national and international clients including Optus, Google, St Hugo, Mount Franklin, Modibodi, Providoor, wotif, GH.MUMM and the NRL. EBITDA continues to grow year-on-year and now exceeds $1.2 million. Increased client confidence and the strong reputation the business continues to build, will see that growth trajectory continue. Cody Outdoor (Hong Kong) Cody Outdoor delivered a significantly improved performance in 2021, after more than 18 months of subdued activity, caused by social unrest and the impact of COVID. Cody was unsuccessful in its bid to retain the HK Tramways contract, an asset it has operated over the past five years. While the contract represented ~30% Cody revenues, the impact on the earnings contribution was minimal. ^ Source: GfK Radio Ratings, S5-19 – S8-21, SMBAP, AM/FM, 0530–2359 Su–Sa, P10+. ^^ Source: GfK Radio Ratings, S8 2021, SMBAP, M–S 5:30am–12mn, #1 based on Share. Australian Podcast Ranker, Triton Digital – 2021 Year in Review. 1. 08 Operating and Financial review This Operating & Financial Review should be read in conjunction with the Chairman’s letter and the Chief Executive Officer’s letter. Overview Group revenue increased $29.0 million on last year, with consumer confidence and advertising spend in Australia and Hong Kong recovering from the severe economic impacts of COVID-19 experienced in 2020. Total group costs rose $20.2 million or 13% to $175.0 million, driven largely by higher cost of sales on improved revenues and one-off cost control measures impacting the prior period comparative. The statutory gain attributable to HT&E shareholders of $14.8 million represented a $57.3 million increase from last year, impacted by exceptional items in 2020 and 2021. Underlying group earnings before exceptional items, interest, tax, depreciation and amortisation (EBITDA) increased by $10.5 million to $59.8 million. 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) 2021 225.0 0.7 9.1 (175.0) 59.8 (13.1) (0.8) 45.9 (3.5) 42.4 (9.9) 32.6 (3.8) 28.8 (13.9) 14.8 26.6% 10.4 7.4 Change 15% (66%) 52% 13% 21% (17%) (27%) 41% (8%) 48% (4%) 77% 24% 87% (76%) (135%) 2020 196.1 2.1 6.0 (154.8) 49.3 (15.8) (1.0) 32.5 (3.8) 28.7 (10.3) 18.5 (3.1) 15.4 (57.9) (42.5) 25.2% 5.5 – 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 60 and in note 1.3 to the consolidated financial statements. HT&E Annual Report 202109 Financial position Group revenue increase The Group held net assets at 31 December 2021 of $495.3 million, which were up $3.1 million on prior year driven primarily by the partial divestment of HT&E’s stake in Luxury Escapes and oOh!media limited (OML), offset by the settlement of the long standing taxation dispute with the ATO. On 29 October 2021, the Company reached a binding heads of agreement to settle the taxation dispute regarding the New Zealand branch matter with the Australian Taxation Office (ATO) for the total sum of $70.7 million, which was made up of $56.6 million tax, $5.4 million penalties and $8.7 million interest. Additionally, the Company and the ATO executed a deed of settlement to settle the Loan Forgiveness matter for a total of $3.4 million, made up of $2.9 million tax, $0.3 million penalties and $0.2 million interest. This amount owing was settled in January 2022. The provision for the uncertain tax treatments recognised in previous years has been utilised. Refer to note 4.1 to the consolidated financial statements for more information. During the period, the Group also disposed of its 4.7% interest in local outdoor advertising company, oOh!media Limited (OML) for $49.2 million, representing a before tax gain of $31.1 million on our initial investment. +$29.0m $225.0m 2020 2021 $196.1m $225.0m Podcast downloads #1position Underlying drivers of performance Group revenues rose $29.0 million, with improved consumer sentiment and advertiser confidence contributing to materially higher revenues across the HT&E Group in the period. ARN’s market leading and consistent audience survey results across the network combined with our enviable #1 position in podcast downloads provided a strong platform to drive commercial revenue growth in the period^. Revenues in the prior period were significantly impacted by the economic effects of the government enforced lockdowns to contain the spread of the COVID-19 global pandemic. Group costs from continuing operations before interest, tax, depreciation and amortisation, and exceptional items were up 13% to $175.0 million, with the prior period impacted by one-off cost measures taken in response to subdued economic activity in 2020. Higher variable cost of sales on improved revenues and continued investment in digital audio capability also contributed to the increase in the current period. Segment earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations and before exceptional items were up 21% from the corresponding period. Depreciation and amortisation decreased from $16.8 million to $13.9 million, impacted by a part impairment in June 2020 of advertising concession right of use assets held by Cody Outdoor. This resulted in EBIT from continuing operations and before exceptional items of $45.9 million compared with $32.5 million in the prior period, and net profit after tax attributable to shareholders, before exceptional items (NPAT) of $28.8 million. Details on the exceptional items totalling $13.9 million (net of tax) in the current period are included in note 1.3 and note 4.1 to the consolidated financial statements. ^ Source: CRA and Triton, Australian Podcast Ranker: Dec 2021 of the participating publishers. Combines ARN/iHeartMedia with Audioboom. Patrina Jones, Christian O’Connell & Jack Post – Gold 104.3FM 10 Operating and Financial review continued Cash flow generation AUD million1 Operating cash flows and lease payments2 Tax payments and receipts3 Government subsidies Cash flow from operating activities and lease payments Investing cash flows4 Borrowings Short-term deposits Dividends paid to shareholders Share buy back 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 2021 34.2 (9.8) – 24.4 70.6 65.0 50.0 (9.7) (5.0) (3.3) 65.1 0.0 257.1 – (68.0) 189.1 2020 22.7 3.1 10.7 36.4 (15.4) 3.3 (50.0) (12.8) (2.9) (4.2) 111.0 (0.2) 65.1 50.0 (2.9) 112.1 Change $ 11.5 (12.9) (10.7) (12.0) 86.0 61.7 100.0 3.2 2.1 0.9 (45.9) 0.2 192.0 (50.0) 65.1 77.0 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. 2020 includes $3.2 million pertaining to a financing arrangement involving the Company’s former New Zealand operations was settled with the ATO. 4. 2021 includes proceeds from the disposal of OML and Luxury Escapes investments. Excluding amounts transferred (to)/from short-term deposits. 5. Excludes amounts held in short-term deposit with banking institutions. HT&E Annual Report 202111 An interim dividend was declared of 3.5 cents per share. The Group’s dividend policy, to distribute between 60% and 80% of net profit in a normal year, reflects the highly profitable and cash generative nature of the Group. A final dividend of 3.9 cents per share was declared for 2021 and is payable on 23 March 2022. The accretive on-market share buyback continued throughout much of the year, with over 3.0 million shares bought back at an average price of $1.66. The buyback has been put on-hold following the acquisition of ARN Regional and the reset of the Group’s capital structure. Cash and capital management The balance sheet remains strong with net cash of $189.1 million as at 31 December 2021. $68.0 million was drawn from existing debt facilities just prior to 31 December 2021 to fund a portion of the ARN Regional acquisition on 4 January 2022. HT&E retains debt facilities totalling approximately $260 million with good remaining tenure. With a settlement agreement reached with the ATO on the New Zealand Branch matter, and the acquisition of ARN Regional completed, the Group expects to maintain debt levels of between one and one and a half times EBITDA, considered an appropriate level of gearing, providing flexibility for HT&E to pursue future growth opportunities as they arise. Operating cash flows and lease payments increased by 51% to $34.2 million, impacted by substantially improved underlying business performance. The Ali Clarke Breakfast Show – Mix 102.3 Adelaide 12 Review of operations ARN’s ratings and commercial success continued in 2021 and the company remains the best performing audio business in Australia. ARN (Australian Radio Network) Delivering the future needs of audiences and advertising partners In 2021 our branding evolved, with the business officially farewelling the “Australian Radio Network” brand after many years, replacing it with “ARN”. Under its new name, ARN continues to power the KIIS, Pure Gold and The Edge networks with the world’s best talent who connect with Australians nationwide, while further serving up the greatest range of local and international radio, music and podcast content in digital formats via the iHeartRadio platform. Our strategic intent remains to build the best broadcast radio and digital audio business in Australia and offer audiences and advertisers a gateway to develop deeper connections in the booming world of audio, by delivering on our three pillars for growth. Three pillars for growth 1. Live and local content delivered by Australia’s best talent, and supported by brands that people know and trust. 2. Distributed across our comprehensive network of broadcast radio stations and on iHeartradio, Australia’s most established digital audio platform. 3. Commercialised through a suite of innovative, data and technology led products and partnerships. Sydney Melbourne Brisbane #1 broadcast ratings position maintained1 Strength in audience survey results across our metropolitan network continued throughout 2021, with ARN having maintained the #1 network position2 for over two years. Pleasingly, we delivered audience growth across all key markets, including 97.3FM Brisbane and KIIS101.1 Melbourne; both stations were areas of focus for the business during the year. The Sydney duopoly of KIIS and WSFM continues to deliver for ARN, with WSFM finishing #1FM, closely followed by KIIS at #2FM in the final survey of 20213. Our two powerhouse breakfast shows, The Kyle & Jackie O Show, and Jonesy & Amanda vied for top position, with both shows finishing the year clear leaders in the Sydney market. In Melbourne, Gold 104.3FM, spear headed by the successful Christian O’Connell Breakfast Show maintained #1FM station throughout the year, holding that position for sixteen consecutive surveys, with more listeners than any other Melbourne station. On KIIS 101.1, we launched a new breakfast show midway through the year, Jase & Lauren In The Morning, which continues to build well and will remain a key priority of the business in 2022. In Brisbane, the team on 97.3FM demonstrated consistent improvement throughout the year, finishing the final survey as #1 overall station, their best result since 2019, underpinned by the Robin, Terry and Bob breakfast show which also finished #1FM Breakfast. After almost 50 years working in radio, Bob Gallagher finished up with 97.3FM in 2021 and in 2022 we welcome Kip Wightman to the breakfast team3. In addition, we are excited to launch The Ali Clarke Breakfast Show in Adelaide, welcoming experienced announcers, Ali Clarke and Eddie Bannon to the Mix102.3 team, partnering with Erin Phillips. #1FM #1FM #1FM HT&E Annual Report 2021Investment in people delivering improved commercial performance Investment in our people is part of our DNA and during the year we implemented a new employee behaviours framework titled “Culture in Action” and a refreshed Employee Valued Proposition (EVP). We want to advance the right behaviours to support equity, inclusion, diversity and belonging, and create a workplace environment that enables our people to do their best work and make a difference. Our focus on recruiting and retaining the best people continued to deliver results, with ARN growing commercial share across the year. The business also achieved strong and improved performance in two key industry measures, being the bi-annual Media-i Industry Survey (Media-i) and the annual Australian Commercial Radio Awards (ACRAs). The Media-i survey provides an important perspective on key attributes of our commercial offering relative to our audio peers through sampling over 2000 media agency professionals. On the most important measure, the Net Promoter Score (NPS), ARN ranked #1, a noteworthy achievement for our entire team and testament to the investment we continue to make in people, product, and process. Our people also achieved significant industry recognition at the ACRA’s and our best ever results with 62 nominations across 39 categories, delivering 16 awards. Leadership position in podcasting maintained Consumer appetite for listening to podcasts continues to accelerate, with Australians downloading more than half a billion podcasts in 2021, an increase of 28% on the previous year4. ARN remains the #1 podcast publisher in Australia after launching the iHeartRadio Podcast Network Australia at the start of 2020, a leadership position we have now held for 20 consecutive months to the end of December 2021. Of the top 10 most listened to podcast titles, ARN represented four, with in-excess of 4.8 million combined monthly listeners and close to 20 million monthly downloads. The Kyle & Jackie O Show podcast remains the #1 radio catch-up podcast in the country with close to 17 million downloads across the whole of 20214. Our strategy of representing a range of local and international podcast publishers has allowed us to build internal capability, better understand consumer podcast listening trends and scale quickly to meet growing advertiser demand, while managing investment risk and returns. With increasing advertiser demand delivering consistent monthly podcast billings to customers approaching close to $1 million, in 2022 we will launch several ARN original shows, anchored back to our highly successful audio brands. As part of this strategy, we will continue to trial innovative means, such as our Podcast to Broadcast strategy, of delivering quality content across our multiple distribution platforms, including broadcast and on iHeartRadio, and to engage our audiences whenever and wherever they are. 13 Audio is booming and ARN is defining it Audio in Australia is booming and, as the first to deliver the most complete solutions for advertisers through ARN’s Audiosphere, we pride ourselves on being market-leaders, defining the industry. We offer our clients the best creative solutions, powered by an expert team, leveraging innovative technologies and world first commercial partnerships. For advertisers, ARN’s audio solutions seek to leverage the whole Audiosphere, providing audio entertainment, experiential connections, audio messaging, dynamic creative and campaign amplification. Our approach is focused on delivering greater returns on advertising investment for our clients, with campaigns that hit the right audience, with the right message, every time. In 2021, we launched the “ARN Audio Connections Planner”, an internally developed, research backed, planning tool providing marketers and agencies meaningful insights that maximise the effectiveness and measurability of their audio campaigns. The ARN Audio Connections Planner also leverages cutting edge research undertaken by our in-house neuroscientific research team, with research and data playing an ever-increasing role in the development of advertising solutions that create measurable actions with consumers. Further expanding the breadth of our audio services, in 2021, we teamed up with Woolworths, a key commercial partner of ARN, to introduce an enhanced in-store radio experience in over 1000 Woolworths stores. This innovative solution uses dynamic audio technology powered by Adswizz to customise programming to suit different customer demographic, time of day and geographical locations. Additional commercial partnerships are part of our path for growth, and we are currently exploring relationships with a number of significant brands. 1. Source: GfK, S8-2021, SMBAP, 05:30–23:59, P10+, AM/FM/DAB+, Based on Share. 2. Source: GfK Radio Ratings, S5-19 – S8-21, SMBAP, AM/FM, 0530–2359 Su–Sa, P10+ 3. Source: GfK Radio Ratings, S8 2021, SMBAP, M–S 5:30am–12mn, #1 based on Share. 4. Australian Podcast Ranker, Triton Digital – 2021 Year in Review. ARN Regional acquisition +46 +26 radio stations markets Cody Outdoor full year revenue increase +32.5% 14 Review of operations continued Looking forward Acquisition of ARN Regional from Grant Broadcasters In early January 2022, we completed the acquisition from Grant Broadcasters, Australia’s oldest, family owned and most successful regional radio business for $307.5 million, encompassing a portfolio of 46 radio stations, with heritage brands, across 26 markets and many high growth regions. This acquisition represents a rare opportunity to bring the leading metropolitan and regional radio businesses together to create a truly national radio broadcast network of significant scale, with a presence in every state and territory in Australia. The combined network will be made up of 58 stations, across 33 markets, delivering innovative, digitally enabled commercial solutions at the scale advertisers seek. The acquisition will unlock new growth markets and audiences, with the potential for significant digital audio expansion through an accelerated rollout of ARN’s established iHeartRadio digital audio platform into regional areas. The acquisition of ARN Regional will provide our clients the ability to access more than a third of Australian consumers and is expected to result in material revenue synergies for ARN of up to $20 million per annum within three years of completion. It also creates new opportunities for our people to develop and grow their careers through a larger, more diverse business, and for shareholders, the acquisition is immediately accretive, before synergies, and like ARN is a highly cash generative business. Relaunch of The Edge as a national youth brand In early 2022, we will relaunch and accelerate The Edge as a national youth brand distributed on iHeartRadio, broadcast and DAB+, anchored in hip hop and RnB, driven by content, and reflective of an under-served genre of youth culture in commercial radio. We will work with the Australian music industry to create a platform to support artists, labels and promoters, while building a community of passionate music fans. This multi-year investment in the creation of a new national youth brand marks an important milestone for ARN as we continue to build the best broadcast and digital audio business in Australia. Hong Kong Outdoor (Cody) Cody Outdoor experienced significantly improved trading conditions in 2021, following two years of subdued economic activity after a period of social unrest in late 2019 and the impacts of COVID-19 in 2020. Full year revenues for the business increased 32.5% to $21.9 million, back only 12.0% on 2019 performance. Cody was unsuccessful in its bid to retain the HK Tramways contract, an asset it has operated very successfully in partnership with HK Tramways over the past five years. The contract ends in May 2022 and while it contributed approx. 30% to Cody’s total revenues, the earnings contribution was minimal. Cody continues to operate a network of profitable tunnel advertising contracts, including the Eastern and Western Harbour Tunnels, Tai Lam Tunnel, Tate Cairns Tunnel and a number of smaller assets. The acquisition of ARN Regional will unlock new growth markets and audiences, with the potential for significant digital audio expansion. HT&E Annual Report 202115 Jonesy & Amanda – WSFM 101.7 Soprano has increased its investment in R&D and portfolio diversification to drive customer acquisition and retention. The Global CPAAS market fundamentals remain strong and are expected to grow from ~US$6.5 billion in 2021 to ~US$21.8 billion in 20252. Following the decision by the Soprano shareholders to terminate negotiations to complete the sale of Soprano to Link Mobility Group Holdings AS (“Link Mobility”) in September 2021, the business remains focused on increasing product usage by existing customers, upsell of products and services, acquiring new customers and MNO partners, innovating on the Soprano product and re-examining immediate inorganic growth opportunities for mergers and acquisitions. Emotive Emotive, an independent creative company in which HT&E holds a 51% stake, had a very successful 12 months significantly expanding its client base, increasing revenues and earnings. The business is navigating well in the operational challenges presented by COVID, producing large scale advertising campaigns for its clients. Emotive works with a growing number of iconic national and international clients including; Optus, audible, Google, St Hugo, Mount Franklin, Modibodi, Providoor, wotif, GH.MUMM and the NRL. Emotive offers the full breadth of creative services, including production, content distribution, strategy, creative and design. Investments Soprano Soprano, an independent software vendor in which HT&E has held a 25% stake since 2001, again delivered record revenue, gross margin and earnings growth. The Company, with established operations in Europe, North and 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. Soprano maintained its recent strong financial performance for the year ended 31 December 2021 with pro forma revenues1 growing by 22% to $119.5 million, driven by organic growth and the Silverstreet acquisition in December 2020, while pro forma underlying EBITDA1 increased 11% to $30.2 million. 2020 underlying pro forma financial information reflects Sillverstreet acquisition as if it had been acquired on 1 January 2020. 1. 2. IDC Market Analysis Perspective Report – Worldwide Communications Platform as a Service, 2021. 16 Our people and culture Our Culture in Action helps us focus on not just what we do, but also how we do it. We began by inviting all our people to give feedback on the current culture using the Human Synergistics Organisational Culture Inventory (OCI) and Organisational Effectiveness Inventory (OEI) tools. This showed areas of strength and opportunity, from which a plan was developed to shape our culture. So that our people were able to understand what a constructive culture looks like in practice we developed and implemented our Culture in Action (CIA) behaviours framework. The CIA helps guide and shape both individual and collective mindsets and actions and is being embedded in all we do. One outcome of a constructive culture is an inclusive workplace where a diverse range of people are treated equitably, feel like they belong and can be their best selves. Our aspiration is for the people working in and with our business to be reflective of the environments in which we operate. Our CIA supports our aspiration. For example, Be Your Best Self includes a call to “create an inclusive environment where there is a sense of community and belonging”, whilst Make a Difference is defined as “We look for every opportunity to improve and we seek out diverse perspectives to help us achieve that.” Over the course of 2021, we have invested in developing a clear strategy for building a more constructive culture to ensure ongoing business success. A constructive culture allows people to do their best work as: – They have clear accountabilities and goals, ensuring a true sense of purpose, – Their job is designed to leverage their skills and experience, – They are trusted to do good work and are given a level of autonomy in where and how it is done, – Their leader is a supportive coach who provides regular feedback, – They feel recognised and rewarded for their contributions, and – They work in a friendly and collaborative environment and have a strong sense of belonging. Culture in Action (CIA) behaviours framework Creating moments that move you Aim High We set big goals and work together to achieve them. Own It We take personal responsibility for our actions and have a solutions mindset. Make a Difference We look for every opportunity to improve and we seek out diverse perspectives to help us achieve that. Be Your Best Self We create the environment we need to thrive. HT&E Annual Report 202117 The Culture in Action helps guide and shape both individual and collective mindsets and actions and is being embedded in all we do. Monty, Yumi & Kate – KIIS Network We are proud of the fact that 52% of our employees are female, with 41% of people leadership roles being held by women. We have processes in place to review, report and manage any potential gender pay inequality. Over the next year, we will establish a clear roadmap for achieving equal gender representation in leadership roles and closing any identified gender pay gaps. Whilst gender equity is important, we are striving for more than just gender diversity. In addition to targeting 52% 41% Female employees Women in leadership 50% female representation in our newly established leadership groups, we also ensured they had diverse representation from a functional, location, and background perspective to enable diversity of thought. We know that life is busy and getting more complex for our people. Many want choice about where, when, and how they work to thrive in both work and life. We believe in the power of quality connections and know that our people want an inclusive workplace, where they can feel they belong, to go and collaborate with others. So, we are supporting people to work with their leaders to agree how they will work in a way that allows them to be their best self and thrive, whilst ensuring no negative impact on the people they need to work with or the business. That way we ensure the best outcomes are achieved for our listeners, our clients, and each other! Our EVP Make quality connections Our focus on setting big goals and achieving them has meant we attract the leading talent in audio and through out work, we make quality, immediate and fun connections with our audiences. We got here by owning our outcomes, and bringing a diversity of viewpoints to the table. Share your voice ARN isn’t a workplace, it’s a community, with a leadership group that makes a hands-on contribution to our success. We’re diverse, energetic, and passionate – and your voice counts. Shape the future of audio We’re shaping a listening future that’s richer, smarter and more powerful than ever before. We need people who want to work together to achieve big goals, bring new ideas, take ownership of outcomes, and embrace new technologies. 18 Our people and culture continued The Executive Leadership Team (ELT) and ARN SLT (circa 40 leaders), were the first cohort to complete our new leadership programme. Run over a 12-week period, the virtual workshops were supported by a broader leadership ecosystem comprised of learning bites and toolkits to provide on-the-job learning and experience. The content was designed to deepen capability across the key areas of: – Leading Self – I know and actively develop myself – Lead Others – I understand my leadership impact and can get the best out of others One of the key elements of the programme was providing these leaders with the opportunity to experience the Human Synergistics Life Styles Inventory (LSI). The Human Synergistics circumplex is part of the suite of tools and provides a way to see, measure and change the thinking and behavioural styles proven to drive performance at individual, group, and organisational levels. The LSI is designed for self-development purposes and leverages the circumplex to measures the way people see themselves and the way others see them in respect of the 12 styles. The LSI was used to help our leaders understand how their thinking aligns to our aspirational culture; their current strengths and opportunities to be more effective. With support of an accredited coach, these insights were leveraged to create an individual development goal. The remainder of our people leaders will experience this program in 2022. We will also build further signature programmes to support peoples’ growth and career paths. Deepening our people’s capability A key focus in 2021 was investing more in the capability of our people, in particular our key leaders. Our leaders are the biggest influencers of our culture, and depth of leader capability is vital to our ongoing business success. Our approach was multi-faceted. Along with formal learning, we established various ways to provide leaders with the opportunity to take on more formalised business leadership roles. This included establishing a Senior Leadership Team (SLT) and Market Leadership Teams (MLTs) aligned to ARN’s key metropolitan markets. A key focus in 2021 was investing more in the capability of our people, in particular our key leaders. Lead Self Lead Others Lead Teams Lead ARN I know & actively develop myself – I actively engage in my own development – I leverage my strengths – I understand leadership vs management – I communicate with impact I understand my leadership impact & can get the best out of others – I understand my impact on others – I coach, support and develop others – I lead through strengths – I engage in productive conversations I can build & lead effective teams – I build and lead high performing teams I know & can lead the business – I understand and align my team to our strategy – I build and maintain – I shape our culture productive relationships – I foster psychological safety to increase team performance – I plan for and lead change HT&E Annual Report 202119 The health, safety and wellbeing of our people remains a key priority The challenges of operating in a COVID-19 impacted environment continue, so we have invested in additional programmes to support people. We made sure to comply with the various government requirements to keep our people safe and support their wellbeing. Whilst we respect that vaccination is an individual choice, we strongly encouraged our people to get vaccinated to protect the health and wellbeing of themselves, their colleagues, and the community. To that end, we pledged our support to The Great Aussie Vaccine Drive and provided all employees with access to paid vaccination leave. During R U OK? Day and the following weeks, we drew attention to the impacts on our people’s mental health from the uncertainty caused by COVID-19 and lockdowns. A model for proactively managing personal wellbeing – The 5 Ways to Wellbeing, and the LifeWorks wellness app, were shared to provide tips and tools to navigate this difficult time. Our Market Leadership and ARNSocial teams across the country also ran local initiatives to drive connection and positivity. HT&E strives to proactively manage workplace health, safety, and wellbeing risks. In 2021 we updated our Workplace Heath and Safety Management System (WHSMS), which contains all the policies, procedures and tools to ensure a safe and healthy work environment. Key features of the updated WHSMS include online forms to make it easier to report hazards or incidents, improved processes for managing investigations and risks, and enhanced tools for our Workplace Health & Safety Committees so they can proactively monitor and manage risks. Pleasingly, we continued our strong safety performance, recording no serious incidents and maintaining industry low incident rates. Will & Woody – KIIS Network Drive 20 Environmental, Social & Governance (ESG) As well as understanding the importance of our people, HT&E recognises its corporate social responsibilities, including environmental, social and governance factors. The following generally applies across the group, though with a focus on ARN as our major business. Community Service Announcements 6.2m Impressions 39,000 Radio spots $7.4m Promotional value Environmental Our assessment is that as a radio and digital media company, our environmental impact is generally relatively low. We recognise however the significant importance of measuring and reducing our carbon footprint. We empower our people to take responsibility for how they act towards the environment and enable individual teams to implement their own initiatives. Some examples of how this manifests are: – Waste: across the majority of sites we introduced split recycling options for waste and removed individual desk bins to encourage usage. In addition, each office has a cardboard recycling bin service. – Energy saving: in newer sites lighting is motion activated, limiting unnecessary energy wastage. – Asset usage: all printers are ‘scan’ for use only and display the cost of the print job. This prevents over printing and drives awareness of the cost of the asset. – Responsible Journalism: responsible reporting of environmental issues and news. – Carbon footprint: We will commence measuring our carbon output in 2022, to be followed by carbon reduction initiatives. Social Social factors include the employee goals on diversity as described in the section above on Our People & Culture. Furthermore, as a media broadcaster, ARN is in a unique position to support a broad range of social issues through a variety of activities. These include the provision of goods and services for the betterment of our community, charitable contributions and education of both our team and the audiences we broadcast to. Community Service Announcements Throughout 2021, we supported 116 different community service organisations through the provision of airtime and digital inventory to promote their cause. The organisations supported were deemed important to the communities we broadcast to and ranged from medical organisations to animal welfare and community safety. They included: – The Big Issue – Pedestrian Council of Australia - National Walk Safely to School Day – Foodbank – RSPCA – Stillbirth Australia – R U OK? We delivered over 6.2 million impressions and 39,000 radio spots which equates to over $7.4m in promotional value for these organisations. HT&E Annual Report 202121 Vaccination drive 68 Media stories across July and August +350 Social posts across our network +$2.1m Total PR value The key talent-led vaccination support was picked up by the press, resulting in 68 media stories across July and August with a total PR value of $2.1 million. In addition, we produced a significant amount of content relating to the drive including: – 19 interviews involving the Prime Minister, State Premiers and Health Ministers – Engaged professionals and friends of the stations, such as Dr David Muller for commentary – Ran major on-air tactics such as KIIS1011’s ‘Cash Injection’ – an entire contest talking up the importance of getting vaccinated and linking a cash incentive to do so – Delivered over 350 social posts across our network – covering key milestones, facts and celebrating each step made closer to our target vaccination rates And of course, we delivered countless News Bulletins providing daily updates based on the Government’s health advice. Typically, we broadcast 120 news updates per week – and this year made a commitment to keep things positive for our listeners – with a special focus on community led information (such as where to receive jabs) and celebrating each step closer to ‘freedom’ together. We also engaged in a media campaign via Rock Posters across Melbourne, to support the cause. Public health initiative: vaccination drive Given the far-reaching impact of the COVID-19 pandemic along with the social and economic importance of facilitating a ‘return to normal’ for our community, we chose to overtly support the Australian Government’s public health initiative for vaccination. Since July 2021 we delivered over $4m value in unpaid vaccination support including commercial airtime, the creation of pro-vaccine content and the rallying of our influential talent to encourage participation in the initiative. Notably: – Kyle Sandilands created a rap video; ‘Get Vaxxed Baby’ (to the tune of Vanilla Ice’s Ice Ice Baby) which was endorsed by NSW Health Minister Brad Hazzard in the daily press conference and recognised by Prime Minister Scott Morrison: “Congratulations guys, I love ‘Get Vaxxed Baby’. I said it to my kids last night and they loved it too so we’ve been in touch with the Marvel people we are going to open a franchise in your name – Vaxx Man.” – The Edge talent in Sydney received both of their Astra Zeneca shots live on air – Erin Philips, of Adelaide’s Mix1023 created her own 30 second ad in one night which was then endorsed by the South Australia Premier, Steven Marshall – Sydney’s KIIS1065 newsreader Brooklyn Ross created his own social video helping combat concern in the community around AZ – Brisbane’s 97.3FM breakfast team created their own Taylor-swift inspired jingle Kyle Sandilands – ‘Get Vaxxed Baby’ 22 Environmental, Social & Governance (ESG) continued Habitat For Humanity Charity Day “We felt so fortunate to be able to participate in the renovation of temporary housing for victims of domestic violence. It was gratifying, humbling and provided a good dose of perspective amid the day to day bustle. We both went home and hugged our kids a little bit tighter that night.” Tegan Kirkby & Lauren Joyce. Organised activities Largely facilitated by our ‘Social Teams’ in each market, our people are encouraged to work together to support their chosen charities. In 2021 some of these activities included coordinated ARN teams for: – Movember – raising $1,330 – AusMusic T-Shirt Day Beyond organised charities, our people support and give back to one another. One example is that for all staff who went on parental leave between June and December 2021, ARN ‘Social’ gifted them with a six-month supply of nappies as the ‘ARN Social Baby Bonus’. Similarly when a much loved employee suffered some misfortune, the team coordinated over $5,000 worth of meals to support her through the period. On Air Activities Throughout the year, each of our stations ran campaigns that benefited the communities they serve. We use the power of our talent and radio’s unique ability to give voice to its audience, to tell the stories that need to be heard. From Kyle & Jackie O furnishing an apartment for a homeless listener who had recently secured accommodation, to Jase & Lauren funding a listener’s desperate need to visit family in Queensland, the on-air support comes in many shapes and sizes. RU OK Day KIIS1065 and KIIS1011 went silent for 10 seconds every hour and encouraged listeners to use that silence to ask each other ‘R U OK?’ Sydney Sick Kids Appeal – WSFM Throughout June, WSFM ran a campaign valued at $51,087 featuring Jonesy & Amanda, encouraging listeners to donate to the Appeal. All elements of the campaign included a call to action for listeners to donate to the Sick Kids Appeal across June. Over $3.1 million was raised through the Appeal. NSW Floods Kyle & Jackie O teamed up with LG to help the people who had lost everything as a result of severe flooding in NSW. They were able to help three families by giving away over $100k worth of LG products to help these families get back on their feet. A registry page was also set up on the KIIS 1065 website which created an avenue to connect directly with the people who needed the help. LG and the KIIS team helped over 15 families across the period. Christian O’Connell’s ‘We’ve Got Your Back’ Christian ran an on-air fundraiser to raise money for the charity Backpacks 4 Vic Kids. The team set a goal to raise $1500 for 20 backpacks full of essential items, toys, hope and love for displaced children (often removed from a dangerous home with nothing more than the clothes on their back). Listeners donated over $100k in the first 24 hours and 72 hours later the final figure raised was $274,033. Disaster reporting The ARN news network is committed each day to responsible journalism – through accuracy, independence and ethical reporting and a focus on localism. The news broadcast on ARN stations is local and has a focus on the stories that matter to communities. During times of crisis, such as the Covid-19 pandemic; ARN journalists have been a trusted source of news -providing regular, breaking updates seven days a week. During times of emergencies, and when there is an increased demand for news, we adapt accordingly and broadcast more news. An example of this is the regular news schedule for WSFM is half hourly news in breakfast from 5am and then every hour from 9am to 7pm. During the Sydney COVID related lockdown of 2021, we broadcast news every half hour across the drive daypart to ensure our listeners were informed. Charitable behaviours and donations At ARN we encourage people to participate in the charitable activities that will help them ‘be their best selves’. Both through organised activities and ‘charity days’, allowing people the time to contribute, there are many avenues for people to get involved in a way that suits them. Charity Days Salvation Army Street Level Mission – Surry Hills “I’m so grateful to ARN for allowing me to have this charity day – it changed my life and I know by me volunteering it changes the lives of others. This Christmas morning I’ll have a thought for all the children who I helped pack and give Xmas presents to this year.“ Karen Harris, Strategy Manager. $100k worth of LG products given to families effected by NSW floods Kyle & Jackie O supporting NSW flood victims HT&E Annual Report 202123 Partnerships ARN is a long time partner of UnLtd; a social purpose organisation connecting the media, marketing and creative industries with charities helping children and young people at risk. Through this partnership our people can learn about the work of relevant charities and contribute their time and expertise through a series of events across the year. In 2021 ARN; – Engaged 52 participants in 11 events across all metro markets – Sponsored five activations across 3 x golf days and 2 x soccer tournaments – Supported Sam Harris’ (Melbourne Sales Director and Market Lead) appointment to the Melbourne Board of UnLtd – Made a ~$55,000 contribution to Unltd along with $191,123 value in media airtime – Played a critical role in raising $284,000 across the cricket, 3 Peaks (hiking) and golf events As part of the UnLtd Partnership ARN specifically supports Musicians Making A Difference (MMAD), an Australian charity that transforms young lives through music. In 2021, we embraced October 15th to help deliver the organisation their most successful MMAD Day to date. MMAD Day is a national awareness day that aims to reach young people through the power of music. The theme for 2021 was #thissongisforyou and asked everyone to dedicate a song and positive message on social media along with the hashtag. ARN representatives at UnLtd Sailing Event Charitable behaviours and donations $284k Raised across the cricket, 3 Peaks (hiking) and golf events $1,330 Raised for Movember $230k Campaign to support MMAD Day We created a campaign valued at $230,000 that spanned consumer and trade audiences to support the cause. It included: – A bespoke iHeartRadio MMAD Pop Up Station that utilised several key artists, including Joel Corry to deliver short testimonials and IDs to run on the station – iHeartRadio eDM sent to 820,000 people, delivering 46,600 clicks – Talent alignment with Yumi Stynes who delivered on air liners, 30 second promos and social content – FM Radio support to deliver the MMAD message at scale – Trade Marketing support across trade publications MediaWeek, AdNews, Radio Today and The Music Network, ARN social platforms and eDMs – Team and client engagement through an exclusive virtual performance by Chang Po-Ching – A $5,000 donation to MMAD As a result of the campaign MMAD experienced 13,000 interactions on the ‘Get Help’ website page on MMAD Day alone and a total campaign reach of 13.1 million people worldwide. 24 Environmental, Social & Governance (ESG) continued Governance The Company’s long-term success requires strong governance, across both corporate and media areas of operation. Corporate Governance The documents that provide detail on the Company’s corporate governance are available at htande.com.au/corporate-governance/. The corporate governance principles are set out in the Corporate Governance Statement and the Code of Conduct. Charters exist to guide the Board, the Audit & Risk Committee and the Remuneration, Nomination & Governance Committee. The Company also has detailed policies regarding Market Disclosure, Risk Management, Securities Trading, Whistleblowers, Fraud, Diversity and Modern Slavery. ARN understands the significance of the news, current affairs and emergency information that it broadcasts to its audiences and the critical role of news information in contributing to civic life, political engagement and an effective democracy. The company is committed to the delivery of a trusted news service that can be relied upon as a timely and credible source of information. At peak times, bulletins are compiled and broadcast half hourly by its radio stations in order to bring the most up to date news to its audiences. News content is provided by HT&E across a variety of settings including breaking news of national and international significance across its national footprint, delivering critical emergency information targeted to a particular State or geographical region or providing a daily information service that contributes to sense of connection and participation for local communities in relation to the activities and events in their local area. The company understands the importance of trust and accountability, and its journalists are dedicated to providing news without political agenda or commercial influence. Media Governance ARN takes its obligations as a provider of news content to its audiences and the Australian community, very seriously. We operate under strict editorial controls to ensure fair representation and accuracy of information. The company has an experienced compliance function, with expertise in regulatory and pre-publication review including defamation, content regulation, privacy and anti-surveillance, advertising restrictions and consumer protection legislation. News and current affairs content is carefully monitored to prevent the dissemination of misinformation to audiences. ARN is committed to ethical journalism – news content produced by our journalists is subject to both the MEAA Code of Ethics and the Commercial Radio Code of Practice requiring high standards of integrity, honesty, independence and impartiality. Digital content is carefully moderated by online content producers, and vetted to ensure published material meets ARN’s online news policies and legislative requirements that govern news content. ARN is a participant in the ACMA’s co-regulatory complaints handling framework which ensures accountability to prevailing community standards. The company expects its journalists and digital content producers to act with a high degree of integrity and professionalism in its news gathering and production activities. HT&E Annual Report 202125 Radio’s unique mix of music, personalities, talk and information create an unrivaled connection with audiences that we unequivocally protect. practices, protect the interests of its clients, and to enable informed choices about the services being provided by ARN. These terms of trade promote the proper and accountable treatment of intellectual property and functioning of ARN’s media services to its clients. All of ARN’s terms of trade are published on its websites and readily accessible. Its Standard Advertising Terms and conditions are communicated to its clients at the time of booking or can be made available on request. ARN takes its brand protection very seriously and is committed to the protection and integrity of its intellectual property to ensure its brands remain strong and resonate with audio consumers. Its portfolio of influential brands resonate with the Australian public through its highly recognisable talent and identifiers in the form of registered trade marks, logos, business and domain names that appear on its platforms and properties and identify the KIIS, Gold and iHeartRadio networks as leading audio brands in their respective markets. Listeners of all ages and demographics associate the ARN brands with best in class content, unforgettable moments with the familiar voices of ARN’s unrivalled stable of talent, and a sense of connection to community that can overcome distance and geography. Piracy, copyright and trade mark infringements are continually monitored by ARN as part of its brand protection program. The company believes that strong intellectual property protection is essential for it to be able to deliver on its strategic objectives and to continue to resonate with its audiences. Approach to intellectual property protection HT&E has a highly developed intellectual property protection program designed to ensure compliance with laws and following industry best practice. Each day, ARN delivers content to its audiences across multiple platforms. Radio’s inimitable ability to move its audiences, to generate emotion and to create lasting impact requires a unique mix of music, personalities, talk and information to produce a sense of connection beyond geographical boundaries. ARN relies on intellectual property to continually create best in class content requires a constant focus on intellectual property governance that safeguards its copyright and other intellectual property interests, as well as that of its partners, suppliers and consumers in order to keep pace with a rapidly changing intellectual property economy. A framework of intellectual property rights management is required to produce ARN’s radio shows, podcasts and website content. All licences, consents, clearances and permissions that may be required in separate copyrights in underlying musical, literary or dramatic works or subsisting in audio/ visual recordings is obtained prior to publication by ARN. The company ensures that its obligations in relation to moral rights, performers consents’ and crediting sources are carefully observed at all times and that its content does not violate any applicable laws, impersonate any person or infringe the intellectual property rights of any third party. ARN is committed to providing clear processes, performance protocols and policy transparency for all of its clients and partners and operates at all times subject to its published terms of trade. These terms of trade include its Standard Advertising Terms and Conditions, Terms of Use and Privacy Statement, which are designed to provide transparency regarding intellectual property ownership, avoid unfair trade Jase & Lauren – KIIS 101.1 Melbourne 26 Board of Directors 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 (Chairman), 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). Ciaran Davis CEO & Managing Director (since 24 Aug 2016) Belinda Rowe BA Non-executive Director (since 5 Feb 2019) 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. Belinda Rowe has extensive experience across the marketing, communications, digital and media sectors. She held leadership roles in global companies such as Telefonica O2 UK, a significant UK telecommunications company as head of their Brand and Marketing Communications. She was one of the top global executives at Publicis Media, one of the largest media communications groups in the world. She led a business and digital transformation capability along with a successful client practice in her global role at Zenith. She also created a unique content marketing business across 32 markets with Publicis Media, advising on digital capabilities such as digital content marketing including social and the application of data and technology for dynamic creative solutions. Prior to moving to the UK in 2009 she was CEO of ZenithOptimedia (now Zenith) and Executive Director at Mojo, for 10 years in Australia. Committees Audit & Risk, Remuneration, Nomination and Governance Other Directorships and offices Director of Soprano Design Limited, Non-Executive Director of Sydney Swans Limited, Non-Executive Director of Temple & Webster Group Ltd, Non-Executive Director 3P Learning, NSW Chair Advisory Board SecondBite. Previous directorships of other Australian listed companies (last three years) Nil. HT&E Annual Report 202127 Paul Connolly BComm, FCA Non-executive Director (since 18 Oct 2012) Roger Amos FCA, FAICD Non-executive Director (since 30 Nov 2018) Alison Cameron B Ec Non-executive Director (since 5 January 2022) 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 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 was formerly 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 was the Chairman of the Audit and Risk Committee and a member of its Nominations and Remuneration Committee. Roger was also previously a Director of Austar United Communications Limited and Enero Group Limited as well as Governor on the Cerebral Palsy Alliance Research Foundation. 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 Nil Previous directorships of other Australian listed companies (last three years) Enero Group Limited (from 23 November 2010 to 18 October 2018), REA Group Ltd (from 4 July 2006 to 17 December 2020), Contango Asset Management Limited (from 7 June 2007 to 31 January 2022) and 3P Learning Limited (from 2 June 2014 to 28 May 2021). Alison is an experienced media executive with a 34 year career spanning finance, sales and management in commercial radio. For the last 28 years, Alison has worked for her family’s business, privately owned Grant Broadcasters Pty Ltd and was part of multiple acquisitions over the last 15 years, culminating in the ownership of 48 commercial radio stations in regional Australia. She has a deep understanding of media and regional communities. Alison’s most recent role was CEO of Grant Broadcasters and was responsible for the negotiation of the sale of 46 regional stations to ARN. Alison is also a Director of the government’s National Film and Sound Archive, and Chair of their Finance Committee and a member of the Audit and Risk Committee. Alison was also Director of Grant Broadcasters Pty Ltd from 18 February 2004 to 4 January 2022. Committees Nil. Other Directorships and offices Director of National Film and Sound Archive since May 2020. Director of private companies Craigieburn Resort Pty Ltd, Golden Labrador Pty Ltd, G-Agri Pty Ltd and Gordie Pty Ltd. Previous directorships of other Australian listed companies (last three years) Nil. 28 Senior management team Ciaran Davis CEO & Managing Director (since 24 Aug 2016) Andrew Nye BBus, CA Chief Financial Officer (since 14 August 2019) Jeremy Child B.Bus LLB M.Sc Company Secretary (since 14 August 2019) Refer to biography on page 26. 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. 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. HT&E Annual Report 2021Directors’ Report and Financial Report 29 30 Corporate Governance Statement 30 Directors’ Report 35 Remuneration Report 51 Auditor’s Independence Declaration 52 About The Financial Statements 52 Consolidated Financial Statements 53 Consolidated Statement of Comprehensive Income 54 Consolidated Balance Sheet 55 Consolidated Statement of Cash Flows 56 Consolidated Statement of Changes in Equity Notes To The Consolidated Financial Statements 1. Group performance 57 1.1 Revenues 59 1.2 Expenses 60 1.3 Segment information 62 1.4 Earnings per share 2. Operating assets and liabilities 3. Capital management 76 3.1 Bank loans 78 3.2 Cash flow information 79 3.3 Financial risk management 82 3.4 Fair value measurements 83 3.5 Contributed equity 84 3.6 Share-based payments 85 3.7 Reserves and accumulated losses 87 3.8 Dividends 4. Taxation 88 4.1 Income tax and deferred tax 5. Group structure 93 5.1 Controlled entities 95 5.2 Interests in other entities 96 5.3 Shares in other corporations 97 5.4 Investments accounted for using the equity method 100 5.5 Parent entity financial information 101 5.6 Deed of cross guarantee 63 2.1 Intangible assets 6. Other 68 2.2 Property, plant and equipment 70 2.3 Leases 74 2.4 Provisions 103 6.1 Soprano Sale 103 6.2 Contingent liabilities 103 6.3 Remuneration of auditors 104 6.4 Related parties 105 6.5 Other significant accounting policies 106 6.6 Subsequent events 107 Directors’ Declaration 108 Independent Auditor’s Report 113 Shareholder Information 116 Corporate Directory 30 HT&E Annual Report 2021 Directors’ Report Corporate Governance Statement 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. Directors’ Report 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 2021. Throughout this report, the consolidated entity is also referred to as the Group. 1. Directors 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) Alison Cameron (appointed 5 January 2022) Details of the current Directors’ qualifications, experience and responsibilities are set out on pages 26 and 27. 2. Company Secretary The Company Secretary of HT&E Limited is Jeremy Child (appointed 14 August 2019) Details of the current Company Secretary’s qualifications, experience and responsibilities are set out on page 28. 3. Principal Activities 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. In 2022, ARN will also operate regional radio and digital operations, having acquired from Grant Broadcasters a regional radio network (ARN Regional) in an acquisition that was completed on 4 January 2022 (refer note 6.6 for more details). ARN also operates under a long term licence agreement, music, streaming and podcasting distribution platform 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. 31 Directors’ Report (Continued) 4. Dividends Dividends paid to owners of HT&E Limited during the financial year were as follows: Dividends Type Interim 2021 Cents per share 3.5 AUD million Date of Payment 9.7 15 Sept 2021 Since the end of the financial year, the Directors have declared the payment of a fully franked final dividend of 3.9 cents per ordinary share in respect of the year ended 31 December 2021. This dividend is payable on 23 March 2022. 5. Consolidated Result and Review of Operations Information on the operations and financial position of the Group and its business strategies and prospects is set out in the Chairman’s letter, Chief Executive Officer’s letter and Operating & Financial Review on pages 4 to 15. 6. Significant Changes in the State of Affairs 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. 7. Matters Subsequent to the End of The Financial Year Events occurring after balance date are outlined in note 6.6 to the consolidated financial statements. 8. Likely Developments and Expected Results of Operations Overall strategic direction and prospects are discussed in the Chairman’s and Chief Executive Officer’s letters on pages 4 to 7 and the Operating & Financial Review on pages 8 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. 9. Risk Management 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. 32 HT&E Annual Report 2021 Directors’ Report (Continued) 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 Description Changes in radio audience share 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 total audio offering, which span across radio, music streaming and podcasting, 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 is 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 audiences is critical to meeting the Group’s strategic objectives. Changes in audience 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 through Connections that Count” commercial proposition. The Group’s relevance to agencies and advertisers has been further enhanced with the recent acquisition of 46 radio stations across 26 regional markets. The Group continues to invest in digital audio innovation, podcasting, music 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. In 2020, advertising spend in both Australia and Hong Kong were significantly affected by the widespread economic impacts of COVID-19. Advertising spend has improved in 2021 and the Group maintains a sound capital structure with sufficient undrawn financing facilities in place and will continue to monitor performance and market developments to reassess plans and strategies as required. Tax matters A number of tax matters as previously disclosed, have been settled through binding agreements with the Australian Taxation Office in 2021. Further details are provided in note 4.1 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. The Group has long-standing controls in place to minimise the risk of legislation compliance breaches. Disruption of technology systems, security breaches and data privacy 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, training on cyber security awareness was completed for all staff. 33 Directors’ Report (Continued) 10. Corporate Social Responsibility 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. 11. Remuneration Report The Remuneration Report is set out on pages 35 to 50 and forms part of this Directors’ Report. 12. Directors’ Meetings 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 5 5 5 N/A 5 5 5 5 N/A 5 4 4 4 N/A 4 4 4 4 N/A 4 Committees were formed for purposes including reviewing and approving the half-year and annual financial statements, 2020 Annual Report and 2021 Notice of Annual General Meeting. These meetings were attended as follows (Held/Attended): Hamish McLennan (3/3), Roger Amos (1/1), Belinda Rowe (1/1) and Ciaran Davis (4/4). 13. Directors’ Interests The Remuneration Report on pages 35 to 50 contains details of shareholdings of the Directors and Executive Key Management Personnel for the year ended 31 December 2021. 14. Shares Under Option There were no unissued shares of HT&E Limited under option at 31 December 2021 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. 15. Indemnification of Directors and Officers 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). 34 HT&E Annual Report 2021 Directors’ Report (Continued) 16. Insurance of Directors and Officers 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. 17. Proceedings on Behalf of the Company 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. 18. Non-Audit Services 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 $455,307 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 6.3 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 51. 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. 19. Auditor’s Independence Declaration A copy of the Auditor’s Independence Declaration, as required under section 307C of the Corporations Act 2001, is provided on page 51. 20. Rounding of Amounts to Nearest Thousand Dollars 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 23 February 2022 Remuneration Report 35 Dear Shareholders On behalf of the Remuneration, Nomination and Governance Committee and the Board of Directors, I am pleased to present HT&E’s Remuneration Report for 2021. The Chairman’s and CEO & Managing Director’s reports outline the strong performance of the Group in 2021. HT&E’s financial performance finished substantially ahead of target, with advertising revenues remaining strong despite some ongoing impacts from the COVID-19 global pandemic. The Group again maintained its focus on its core radio operations, maintaining ARN’s enviable #1 metro audience ratings position and growing commercial share. In addition, the Group undertook strategic investment in developing its people and culture and expanding its digital audio capability. The successful resolution of the New Zealand Branch Tax Matter, combined with strong returns from the disposal of certain investments, and an ongoing focus on cost management, enabled the Group to be in a position to acquire ARN Regional from Grant Broadcasters, a highly strategic investment that we believe positions ARN well for strong growth over the coming years, and will deliver substantial EPS accretion for HT&E shareholders. The remuneration outcomes set out below reflect these achievements. Remuneration Approach and Changes For 2021 Limited changes were made to Executive KMP total fixed remuneration (TFR) and Non-executive Director remuneration in 2021. The Chief Executive Officer and Non-executive Directors maintained the 15% fixed remuneration reduction which became effective in 2018 in response to the reduced size of the HT&E Group, a consequence of the successful divesture of the Group’s legacy print operations and disposal of Adshel. The structure and financial metrics of the Group’s Total Incentive Plan (TIP) in 2021 remained consistent with the 2020 plan. The single change made to Executive KMP remuneration was in respect of the Chief Financial Officer who was awarded an increase of the TIP Target award; this was increased from 50% to 100% of Total Fixed Remuneration. Performance and Remuneration Outcomes For 2021 As previously outlined, HT&E’s financial performance in 2021 was strong, despite some on-going impacts from the COVID-19 global pandemic. Group performance exceeded all financial performance thresholds; • • • Executive KMP also met some or all key performance indicator (KPIs) targets. Reported EBITDA before exceptional items and discontinued operations, of $59.8 million was up 21% verses 2020 and 15% ahead of target; EPS on a post-tax basis, before exceptional items, of 10.4 cents was 26.8% ahead of target; and ROIC, calculated based on earnings before interest and tax (EBIT) and before exceptional items, of 13.9%, compared to target of 11.3%. 36 HT&E Annual Report 2021 Remuneration report (Continued) Remuneration Changes for 2022 A review of KMP remuneration was undertaken, with the support of Mercer Consulting Australia. This review involved benchmarking the Executive KMP Remuneration framework and outcomes against a peer group of similar companies. The review confirmed that the Executive KMP Remuneration framework is market competitive, acts as a reward and retention tool, and strongly aligns executives with the interests of shareholders. In light of the acquisition of ARN Regional from Grant Broadcasters, which will significantly increase the revenues, EBITDA, cost base and complexity of the Group, and the critical role of KMP in managing the integration, the following changes have been made for 2022; • • • the CEO & Managing Director’s TFR reinstated to $1.2 million (equal to 2017 TFR), and the target TIP opportunity reduced from 137.5% to 115%; the CFO’s TFR increased to $575,000, with the TIP threshold remaining unchanged at 100%; and Non-executive Director Board Member fees increased to $135,000 per annum (inclusive of superannuation). The Board believes the Group’s total remuneration and incentive plan continues to strongly align our management team with the interests of shareholders. Paul Connolly Chair of the Remuneration, Nomination and Governance Committee 37 Remuneration Report (Continued) Our Detailed Remuneration Report This Remuneration Report for the year ended 31 December 2021 outlines key aspects of our remuneration 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. Remuneration governance and framework C. How 2021 reward was linked to performance D. Total remuneration for Executive KMP E. Actual remuneration for 2021 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. Name Executive KMP Ciaran Davis Andrew Nye Non-executive Directors Role Chief Executive Officer (CEO & Managing Director) Chief Financial Officer (CFO) Hamish McLennan Non-executive Chairman Roger Amos Paul Connolly Belinda Rowe Non-executive Director Non-executive Director Non-executive Director Alison Cameron was appointed a non-executive director on 5 January 2022 following the successful completion of the acquisition of ARN Regional from Grant Broadcasters. No other changes have occurred to the composition of KMP since 31 December 2021 up to the date of this report. 38 HT&E Annual Report 2021 Remuneration report (Continued) B. Remuneration Governance and Framework Remuneration Governance 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 KMP. In 2021 a review of KMP remuneration was undertaken, with the support of Mercer Consulting Australia. The review involved determining an appropriate peer group of companies to benchmark our remuneration framework against, reviewing our TIP against key competitor STI and LTI plans, reviewing both Non-Executive Director fee structures and Executive KMP remuneration (TFR and TIP) against the peer group of companies, and developing recommendations for adjustments based on market competitiveness and business performance. Remuneration Framework We believe that building and maintaining a primarily constructive culture enables business success, drives internal engagement, and allows us to attract and retain the best people. Our remuneration framework has a key role to play and is structured in alignment with the following principles: Market competitive through alignment against a peer group of companies of a similar size and complexity Rewards the creation of shareholder value through the sustainable delivery of short and long-term business outcomes A holistic “total reward” offering across financial and non- financial elements that balances reward with retention A focus on stretch goal achievement, leveraging financial and non-financial KPIs to balance the “what” with the “how” HT&E aims to reward Executive KMPs with a level and mix of remuneration appropriate to their position, responsibilities and performance within the Group and aligned with market practice. Executive KMP remuneration is comprised of two main elements, Total Fixed Remuneration (TFR) and Total Incentive Plan (TIP). The TIP is a simple and effective plan that encompasses both long and short-term reward. HT&E aims to position total remuneration for KMP Executives principally within a competitive range of a peer group. This includes Australian listed companies with characteristics most like HT&E when compared against a set of financial and qualitative metrics. Total reward opportunity is intended to provide the opportunity to earn median to top quartile reward for outstanding performance against set stretch targets. 39 Remuneration Report (Continued) The Executive KMP remuneration framework is summarised below. Element Delivery Structure Fixed Total Fixed Remuneration (TFR) Cash and Superannuation Contributions Variable ‘At risk’ and linked to performance Total Incentive Plan (TIP) Financial performance of the company and individual performance over the year Cash 50% Delivered at the end of the financial year Equity 50% Delivered in rights to acquire ordinary shares in the company at nil consideration, subject to a further 1-year service period and 2-year holding lock – Base pay aligned to market, role scope and complexity, and skills, knowledge, and experience of the individual – Superannuation aligned to SGC – KPIs set at the start of the financial year – 75% financial KPIs (weighted equally between ROIC, EBITDA, and EPS) – 25% non-financial KPIs (delivery of strategic business initiatives/priorities) – Retention element through long-term focus of KPIs, target setting process and structure of delivery of equity – The higher weighting of financial to non-financial metrics emphasises the importance the Board places on HT&E’s financial performance The TIP provides Executive KMPs with the opportunity to receive cash and equity following an assessment against specified financial and non- financial performance KPIs based on a one-year performance period. The following diagram illustrates the operation of the TIP. - 25% non-financial performance KPI measures - 75% financial performance KPI measures Year 1 Year 2 Year 3 Year 4 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. 40 HT&E Annual Report 2021 Remuneration report (Continued) Performance Measures Financial Key Performance Indicators (KPIs) make up 75% of the target TIP with performance 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. EBITDA and EPS EBITDA and EPS performance <95% of budget 95% of budget >95% to <100% of budget 100% of budget >100% to <110% of budget At or above 110% of budget Percentage of target opportunity awarded 0% 25% Pro-rata between 25% and 100% 100% Pro-rata between 100% and 150% 150% ROIC ROIC performance Below threshold1 At threshold Between threshold and budget At budget Between budget and stretch At or above stretch Percentage of target opportunity awarded 0% 25% Pro-rata between 25% and 100% 100% Pro-rata between 100% and 150% 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%. EPS in 2021 was derived from Net Profit After Tax (NPAT) attributable to owners of the parent as a percentage of weighted average number of shares on issue. ROIC in 2021 was derived from EBIT as a percentage of adjusted total equity. Both measures were on a pre-exceptional items basis. (1) Threshold will be determined with reference to prior year ROIC, next 12-months expected earnings and forecast changes to capitalisation in the budget. 41 Remuneration Report (Continued) Non-financial KPIs make up 25% of the target TIP and are aligned to key strategic priorities for the Group. For 2021, the Executive KMPs were accountable for delivering the following outcomes to achieve their non-financial KPIs: Strategic Priority Leadership of ARN people and culture transformation Strategic brand development Digital business development Balance sheet, cost and capital management Outcomes Delivered • • • • • • • • • • • Strong shifts in the culture as measured through employee retention and Net Promoter Score (eNPS) improvements Improvement in leadership capability through the establishment of key structures and investment in development programmes Continued improvements in gender diversity, particularly female representation in leadership roles Expansion of podcasting development and production capability Strategic review and development of ARN master brands Implementation of technology stack to drive digital revenues Recruitment of highly experienced Chief Innovation & Technology Officer to lead this, scheduled to commence in H1 2022 Improvements in cyber security capability and data management Successful resolution of the New Zealand Branch Tax Matter with the ATO Acquisition of ARN Regional from Grant Broadcasters, completed 4 January 2022 In-sourcing of key processes and investment in systems to gain efficiencies KMP Remuneration Mix The remuneration mix between fixed and variable pay incentivises executives to focus on the Group’s short and long-term performance, with a portion of remuneration at risk. In reviewing remuneration for Executive KMP, the Board has remained cognisant of shareholder feedback and of the remuneration mix for similar companies. For 2021, the TIP award opportunity for the CFO was increased from 50% to 100% of TFR, resulting in a target remuneration mix of 50%/50% for TFR and TIP. The target remuneration mix for the CEO & Managing Director was unchanged. On 1 January 2018, the CEO & Managing Director took a 15% reduction in fixed remuneration, with the TIP payout threshold being adjusted from 100% to 137.5%, due to changes in the structure of the business. In alignment with the integration of ARN Regional (the acquisition from Grant Broadcasters), the remuneration of the CEO & Managing Director has been benchmarked externally and realigned in recognition of the increased scope of the role as a result. Effective 1 January 2022, TFR was increased to $1.2 million (equal to 2017 TFR), and the TIP threshold reduced from 137.5% to 115%. Similarly, the remuneration of the CFO has been benchmarked externally and realigned in recognition of the increased scope. Effective 1 January 2022, TFR was increased to $575,000. The TIP threshold remains at 100%. 42 HT&E Annual Report 2021 Remuneration report (Continued) As a result of these changes, the target remuneration mix for 2022 has shifted as follows: To further reinforce the alignment of Executive KMPs to shareholder interests, 50% of the TIP is delivered as rights to acquire ordinary shares, with a 1-year service period and further 2-year holding lock. This serves as a strong retention driver, as well as providing further incentive for effective long-term decision-making. The following diagram shows the mix of cash (short-term reward) and equity (long-term reward) delivered at target across total remuneration for Executive KMPs. CEO CFO 0% 20% 40% 60% 80% 100% 120% TFR (cash) TIP (cash) TIP (equity) Other plan features Feature Dividends Equity allocation methodology Clawback Description At the discretion of the Board participants will receive an additional allocation of fully paid ordinary shares or a cash payment at vesting equal to the dividends paid on vested rights over the performance and service periods. Equity is granted based on the face value of the rights calculated at the commencement of the performance period. 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. 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. 43 Remuneration Report (Continued) C. How 2021 Reward was Linked to Performance Performance Measures The overall Company performance for 2021 is reflected in the performance measures below. Results for 2019 onwards reflect the adoption of AASB 16 Leases in 2019. 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 2021 $59.8m 2020 $49.3m 2019 $75.6m 2018 2017 $105.5m $118.4m $28.8m $15.4m $34.2m $51.2m $54.1m 276,605,346 279,530,868 283,605,019 307,528,973 307,696,348 10.4 13.9% 3.5 14% 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%) (1) Continuing operations before exceptional items. 2018 includes Adshel’s results for the period it was owned by HT&E. 2021, 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 2017 and NPAT for 2018 to 2021. (3) Adjusted for treasury shares and share buyback in 2018 to 2021. (4) Based on EBIT from continuing operations before exceptional items for 2018 to 2021 and EBITA from continuing operations before exceptional items for 2017. (5) 2018 closing share price increased to reflect payment of special dividend. Performance and Impact on Remuneration 2021 TIP Award HT&E’s continuing operations EBITDA, EPS and ROIC performance in 2021 were ahead of targets set at the beginning of the year, with advertising revenues remaining strong despite some ongoing impacts from the COVID-19 global pandemic. A component (75%) of the 2021 TIP award was dependent on Group financial performance relative to target. Performance for the 2021 financial year is outlined in the table below: 2021 TIP financial metrics EBITDA performance EPS performance ROIC performance Group: continuing operations Between target and maximum; 115.0% of target achieved Between target and maximum; 126.8% of target achieved Between target and maximum; 123.3% of target achieved 44 HT&E Annual Report 2021 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 2021 surpassed the stretch target on all financial performance conditions resulting in the maximum award for financial metrics. Executive KMP met some or all of their personal KPI targets, with award outcomes for the CEO & Managing Director of 75% and CFO of 100%. The financial performance conditions in 2019 & 2020 were not met and no awards were made for the financial components of the TIP. The table below summarises the 2021 TIP outcomes: Executive KMP Ciaran Davis Andrew Nye TIP awarded (cash incentive) $ TIP awarded 1 (equity award) $ Total TIP awarded $ % of target achieved % of maximum achieved % of maximum forfeited 905,625 357,500 905,625 357,500 1,811,250 715,000 131.3% 137.5% 95% 100% 5% 0% (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. 45 Remuneration Report (Continued) D. Total Remuneration for Executive KMP Details of the Executive KMP remuneration for 2021 and comparatives 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 Executive KMP Ciaran Davis 2021 2020 2019 Cash salary and fees1 $ 979,934 975,907 976,489 Andrew Nye (from 14 August 2019) 2021 2020 2019 Total 2021 2020 2019 498,306 496,735 152,949 1,478,240 1,472,642 1,129,438 Non- monetary benefits2 $ Cash incentives3 $ Super- annuation $ 19,159 24,037 33,143 787 1,293 – 19,946 25,330 33,143 905,625 – 155,250 357,500 – 9,844 1,263,125 – 165,094 22,631 21,348 20,767 22,631 21,348 10,305 45,262 42,696 31,072 Long service leave4 $ 24,212 40,489 34,683 939 324 87 25,151 40,813 34,770 (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. Fair value equity awards5 $ 513,867 135,327 497,111 Total $ 2,465,428 1,197,108 1,717,443 202,851 1,083,014 5,870 5,452 525,570 178,637 716,718 141,197 502,563 3,548,442 1,722,678 1,896,080 46 HT&E Annual Report 2021 Remuneration report (Continued) E. Actual Remuneration for 2021 The following section sets out the value of remuneration which has been received by Executive KMP for the 2021 performance year. 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 2020 is the value of the TIP that was granted in 2019 and vested at the end of 2020 based on the share price at 31 December 2020, consistent with the 2020 Remuneration Report. Executive KMP Ciaran Davis 2021 2020 2019 Andrew Nye (from 14 August 2019) 2021 2020 2019 Total 2021 2020 2019 (1) TFR comprises base salary, retirement benefits and other remuneration related costs. (2) Vested TIP in 2021 is nil given no shares awarded in relation to 2020 TIP. 1,020,937 1,020,000 1,020,000 520,937 518,083 163,254 TFR1 $ TIP $ Vested TIP2 $ Total $ 905,625 – 1,926,562 – 202,105 1,222,105 155,250 1,117,844 2,293,094 357,500 – 9,844 – 12,412 – – 878,437 530,495 173,098 2,804,999 1,541,874 1,263,125 1,538,083 1,183,254 – 214,517 1,752,600 165,094 1,117,844 2,466,192 47 Remuneration Report (Continued) 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 Termination of employment (for cause) Termination of employment (without cause) Redundancy Non-compete/restraint Continuing Employment may be terminated by either party. Notice periods vary according to contractual terms: CEO & Managing Director – 12 months and CFO – six months. All contracts provide that employment may be terminated at any time without notice for serious misconduct. Where employment is terminated by the Company, payment may be made in lieu of notice. 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. Executive KMP are subject to non-compete provisions for the term of their notice period. G. Non-Executive Director Arrangements 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. In 2021, non-executive Directors maintained the 15% fixed remuneration reduction which became effective in 2018 in response to the reduced size of the HT&E Group, a consequence of the successful divesture of the Group’s legacy print operations. 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. 2021 $ 2022 $ Chair fee1 284,700 20,000 Member fee 85,000 10,000 Chair fee1 284,700 20,000 Member fee 135,000 10,000 20,000 10,000 20,000 10,000 48 HT&E Annual Report 2021 Remuneration report (Continued) Approved Fee Pool 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 2021 and none is expected for 2022. Details of the Non-executive Directors’ fees for 2021 and 2020 are set out in the table below: Non-executive Directors Hamish McLennan 2021 2020 Roger Amos 2021 2020 Paul Connolly 2021 2020 Belinda Rowe 2021 2020 Total 2021 2020 Fees $ Superannuation $ Total $ 263,006 241,550 105,023 96,271 105,023 96,271 95,890 87,900 568,942 521,992 22,631 21,188 10,240 9,146 10,240 9,146 9,349 8,350 52,460 47,830 285,637 262,738 115,263 105,417 115,263 105,417 105,239 96,250 621,402 569,822 49 Remuneration Report (Continued) H. Share-Based Remuneration Terms and Conditions of Share-Based Remuneration 2021 TIP Awards Executive KMP received a grant of rights under the 2021 TIP during 2021. Based on HT&E’s performance, rights have been awarded at the end of 2021 to satisfy TIP outcomes. Rights will vest at the end of the one-year service period. The table below shows the number and value of 2021 rights that were awarded and remain unvested at the end of 2021. Executive KMP Grant date1 Vesting Date Ciaran Davis 16 February 2021 31 December 2022 Andrew Nye 16 February 2021 31 December 2022 Number of rights granted 533,006 200,843 Number of rights awarded 508,779 200,843 Number of rights forfeited 24,227 – Value per right at grant date $ Maximum value to be recognised in future years $ 2.02 2.02 513,867 202,851 (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. 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 2021 financial year. At the Board's discretion, the participants may receive an additional allocation of fully paid ordinary shares equal to the value of dividends that were payable on the underlying shares, whilst holding unvested and/or vested rights. Where dividends have been declared, these additional fully paid ordinary shares are included in the rights table below as ‘Dividend uplift’, to reflect the full number of shares the participants may be entitled to at the conclusion of the vesting period. Executive KMP Ciaran Davis Balance at start of the year 2019 TIP Exercised/ vested1 2020 TIP Exercised/ vested Awarded Dividend uplift Balance at end of the year Vested and exercisable 109,246 (109,246) Unvested Total Andrew Nye Vested and exercisable Unvested Total Total – – 109,246 (109,246) 6,709 – 6,709 (6,709) – (6,709) Vested and exercisable 115,955 (115,955) Unvested Total – – 115,955 (115,955) – – – – – – – – – – 508,779 508,779 – 200,843 200,843 – 709,622 709,622 – 15,342 15,342 – 6,057 6,057 – 21,399 21,399 – 524,121 524,121 – 206,900 206,900 – 731,021 731,021 (1) Held in trust until the end of the 2-year holding lock which is 31 Dec 2022 for the 2019 TIP. 50 HT&E Annual Report 2021 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 TIP shares released1 Other changes during the year Balance at end of the year 73,000 16,250 65,935 – 560,662 50,476 – – – – 659,495 – – – – – – – 73,000 16,250 65,935 – 1,220,157 50,476 (1) 659,495 of shares for the 2018 TIP released from the two-year holding lock. The two-year holding lock for the 115,955 of shares for the 2019 TIP exercised in section H(ii) ends on 31 December 2022 and will be added to the KMPs’ shareholding at that time. J. Other Statutory Disclosures Loans Given to Non-Executive Directors and Executive KMP There are no loans from the Company to the Non-executive Directors or Executive KMP. Transactions with Related Parties $75,172 director fees received from Soprano Design Pty Limited by Belinda Rowe for services performed. 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. Voting and Comments Made at the Company’s 2021 AGM The Company received more than 99% of ‘yes’ votes on its Remuneration Report for the 2020 financial year. No major remuneration related concerns were raised which required the Company’s attention during the 2021 financial year. External Remuneration Consultants Mercer Consulting Australia (Mercer) was engaged by HT&E to benchmark the Board and Executive KMP Remuneration framework and report on their findings. Mercer was paid $110,000 for these services. The scope included; • • • • Establishing a relevant peer group of companies to benchmark against Reviewing the existing HT&E Executive KMP remuneration framework and packages against the benchmark Assessing the Executive KMP TIP framework Reviewing Non-Executive Director fees against the benchmark Mercer has confirmed that any remuneration recommendations have been made free from undue influence by members of the Group’s KMP. The following arrangements were made to ensure that the remuneration recommendations were made free from undue influence; • Mercer was engaged directly by the Group Chief People Officer (not an Executive KMP) on behalf of the Remuneration Nomination and Governance Committee • • • The Remuneration Nomination and Governance Committee reviewed the scope of work prior to commencement The reports containing findings and recommendations were provided by Mercer directly to the Group Chief People Officer The findings and recommendations were presented by the Group Chief People Officer directly to the Remuneration, Nomination and Governance Committee Consequently, the Board is satisfied that the recommendations were made free from undue influence from any members of Executive KMP. Auditor’s Independence Declaration As lead auditor for the audit of HT&E Limited for the year ended 31 December 2021, I declare that to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) 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 23 February 2022 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. 52 Consolidated Financial Statements About the Financial Statements • • • • • Consolidated Statement of Comprehensive Income For the year ended 31 December 2021 Note 53 2020 $’000 2021 $’000 225,036 18,965 244,001 (184,313) – – 2,019 (12,743) (13,871) 9,786 44,879 (26,232) 18,647 (438) – (298) 2,322 – 1,586 20,233 14,830 3,817 18,647 16,416 3,817 20,233 Cents Cents 5.4 54 Consolidated Balance Sheet As at 31 December 2021 2020 $’000 Note 2021 $’000 257,068 – 51,351 – 1,896 310,315 4,196 52,561 18,778 372,613 23,424 – 1,683 473,255 783,570 41,461 4,966 9,956 20,511 6,720 83,614 67,250 21,664 4,097 111,603 204,614 288,228 495,342 1,475,706 (42,676) (974,339) 458,691 36,651 495,342 Consolidated Statement of Cash Flows For the year ended 31 December 2021 55 Note 2021 $’000 2020 $’000 238,387 (187,162) – – 422 (3,205) (9,794) – 38,648 (3,297) (14) 32 63,628 – 50,000 – 3,667 6,599 120,615 65,003 (80) (14,278) (10) (9,675) (5,046) (3,216) 32,698 191,961 65,080 27 257,068 56 Consolidated Statement of Changes in Equity For the year ended 31 December 2021 Contributed equity $’000 Reserves $’000 Accumulated losses $’000 Note Non- controlling interests $’000 Total $’000 493,406 (42,501) 21,370 (1,771) (2,933) (12,840) – 1,792 (331) – 456,192 456,192 14,830 1,586 633 (5,046) (9,675) – 181 (10) 458,691 Total equity $’000 529,905 (39,099) 21,370 (1,771) (2,933) (12,840) – 1,792 (331) (3,850) 492,243 492,243 18,647 1,586 633 (5,046) (9,675) – 181 (10) (3,217) 495,342 57 2020 $’000 Notes to the Consolidated Financial Statements 1. Group Performance Note 2021 $’000 182,989 32,666 8,963 418 225,036 17,931 – – 699 18,630 335 18,954 244,001 58 Notes to the Consolidated Financial Statements Type of product/service Segment Nature and timing of satisfaction of performance obligations • • •  59 2020 $’000 Notes to the Consolidated Financial Statements Note 2021 $’000 106,014 13,060 34,011 7,396 3,443 3,524 1,624 5,734 1,958 428 – – – – 7,121 184,313 1,540 1,756 8,912 535 12,743 9,945 3,171 755 13,871 60 Notes to the Consolidated Financial Statements Reportable segment Principal activities 2021 $’000 Australian Radio Network HK Outdoor Investments Corporate Group elimination Total 225,036 9,089 59,815 783,570 288,228 59,815 (13,871) (12,408) (428) (1,958) (5,734) 2,716 17,931 (1,184) 44,879 Notes to the Consolidated Financial Statements 2020 $’000 Australian Radio Network HK Outdoor Investments Corporate Group elimination 61 Total 196,061 5,998 49,336 693,263 201,020 49,336 (16,817) (3,794) 10,728 (54,178) (7,093) (4,394) (1,458) (350) 4,799 350 (450) (23,321) 62 Notes to the Consolidated Financial Statements 2020 $’000 2021 $’000 14,830 14,830 Number Number 276,605,346 – 348,259 276,953,605 • • • • Notes to the Consolidated Financial Statements 63 2. Operating Assets and Liabilities 2020 $’000 Goodwill Software Radio licences Brands Total 490 2,382 371,040 – 373,912 490 2,382 371,040 – 373,912 2021 $’000 Goodwill Software Radio licences Brands Total 379,528 (6,915) 490 1,316 370,807 – 372,613 373,912 14 – (558) (755) – – 490 1,316 370,807 – 372,613 64 Notes to the Consolidated Financial Statements Asset Useful life Amortisation method Acquired or Internally generated . Notes to the Consolidated Financial Statements 65 Name of CGU 2020 Other non- amortising intangible assets $’000 2020 Goodwill $’000 2021 Other non- amortising intangible assets $’000 367,451 – 367,451 2021 Goodwill $’000 – 490 490 66 Notes to the Consolidated Financial Statements • • Name of CGU(i) Dec 2021 Post-tax discount rate 9.0% Dec 2021 Pre-tax discount rate 12.2% Dec 2021 Long-term growth rate 1.5% Dec 2020 Post-tax discount rate Dec 2020 Pre-tax discount rate Dec 2020 Long-term growth rate Notes to the Consolidated Financial Statements 67 • • • 68 Notes to the Consolidated Financial Statements 2020 $’000 Freehold land Buildings Plant and equipment 2,391 953 15,736 Total 79,169 (61,933) 1,844 19,080 22,132 1,881 (3,152) (1,685) (148) 60 (8) 2,391 953 15,736 19,080 2021 $’000 Freehold land Buildings Plant and equipment 2,391 909 15,478 Total 80,429 (64,697) 3,046 18,778 19,080 3,297 (3,171) (367) (66) – 5 2,391 909 15,478 18,778 Notes to the Consolidated Financial Statements 69 • • 70 Notes to the Consolidated Financial Statements 2020 $’000 2021 $’000 16,138 7,147 139 23,424 9,956 21,664 31,620 Notes to the Consolidated Financial Statements 71 2020 $’000 2021 $’000 3,439 6,201 305 9,945 1,540 2,332 465 72 Notes to the Consolidated Financial Statements • • • • • • • • Notes to the Consolidated Financial Statements 73 • • • • 74 Notes to the Consolidated Financial Statements 2021 $’000 6,270 450 6,720 1,212 2,885 4,097 Other $’000 2021 Provision for uncertain tax treatment $’000 – 3,335 2020 $’000 Total $’000 4,236 3,641 (3,609) (945) 12 3,335 Notes to the Consolidated Financial Statements 75 76 Notes to the Consolidated Financial Statements 3. Capital Management 2020 $’000 Note 2021 $’000 68,000 68,000 2,511 (1,761) 750 67,250 67,250 750 (257,068) – (189,068) • • • • Notes to the Consolidated Financial Statements Entities in the Group have access to: 77 2020 $’000 2021 $’000 258,826 (71,648) 187,178 1,500 – 1,500 78 Notes to the Consolidated Financial Statements 2020 $’000 2021 $’000 257,068 18,647 13,871 535 (9,786) 641 – – (2,019) 814 (17,931) (1) – (5,635) 1,953 16,437 21,122 38,648 Notes to the Consolidated Financial Statements 79 80 Notes to the Consolidated Financial Statements Note 2020 $’000 2020 $’000 2020 $’000 2021 $’000 48,835 (269) 48,566 2,785 51,351 2021 $’000 585 (236) (80) 269 2021 $’000 44,942 3,193 451 95 154 48,835 Notes to the Consolidated Financial Statements 81 2020 2021 Less than one year $’000 Between one and two years $’000 Between two and five years $’000 Over five years $’000 Note – Less than one year $’000 Between one and two years $’000 Between two and five years $’000 Over five years $’000 Note 82 Notes to the Consolidated Financial Statements • • • • • • 2020 2021 Note Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000 Note Level 1 $’000 Level 2 $’000 Level 3 $’000 688 45,895 46,583 2,391 953 3,344 Total $’000 4,196 4,196 2,391 909 3,300 Notes to the Consolidated Financial Statements 83 2020 $’000 2020 $’000 2021 $’000 1,475,706 2021 $’000 1,480,752 (5,046) 1,475,706 2021 Number shares 2020 Number shares 278,196,267 (3,041,367) 275,154,900 84 Notes to the Consolidated Financial Statements Incentive plan Vesting date Weighted average fair value 2021 Number of rights 115,955 765,802 (115,955) 23,094 788,896 Rights 2021 – 788,896 788,896 2021 1.0 years 2020 Number of rights 2020 2020 Notes to the Consolidated Financial Statements 85 2020 $’000 2021 $’000 2,403 1,074 8,696 – (53,283) (1,566) (42,676) 2,403 – 2,403 1,810 – (438) (298) 1,074 8,131 814 (68) (181) – 8,696 19,473 2,322 (21,795) – (53,283) (53,283) (1,737) (10) – 181 86 Notes to the Consolidated Financial Statements 2020 $’000 2021 $’000 (1,001,357) 14,830 21,863 (9,675) (974,339) Notes to the Consolidated Financial Statements 87 2020 $’000 2021 $’000 – – 9,675 9,675 9,675 14,729 12,133 88 Notes to the Consolidated Financial Statements 4. Taxation 2020 $’000 2021 $’000 6,962 29,455 (8,103) (2,082) 26,232 44,879 13,464 (243) 371 1,720 – – (4,326) (297) (2,936) (2,082) 29,455 (9,341) 447 26,232 Notes to the Consolidated Financial Statements 89 90 Notes to the Consolidated Financial Statements • • • • • Notes to the Consolidated Financial Statements 2020 2021 Balance 1 Jan 20 $’000 Recognised in profit or loss $’000 Recognised in equity $’000 Other movements $’000 Offset $’000 – – – – – – – – – – – Balance 1 Jan 21 $’000 Recognised in profit or loss $’000 Recognised in equity $’000 Other movements $’000 Offset $’000 91 Balance 31 Dec 20 $’000 1,588 150 2,258 (110,234) (50) (5,465) 7,213 (7,054) (8,344) (20) (119,958) Balance 31 Dec 21 $’000 2,161 79 2,296 – (110,234) 1,421 (4,603) 6,297 (7,796) (1,052) (172) (111,603) 92 Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements 93 5. Group Structure Name of entity Country of incorporation/ establishment Equity holding 2021 % 2020 % 100 100 100 100 100 100 100 100 100 100 100 100 100 50 100 50 100 50 100 100 100 100 100 100 100 51 100 100 100 100 100 100 100 100 100 94 Notes to the Consolidated Financial Statements Name of entity Country of incorporation/ establishment 2020 % Equity holding 2021 % 100 100 50 100 100 100 50 100 100 100 100 100 100 100 Notes to the Consolidated Financial Statements 95 Name of entity Place of business and country of incorporation Ownership interest held by the Group Ownership interest held by non- controlling interests 2021 2020 2021 2020 Principal activities Brisbane FM Radio Pty Ltd 2020 $’000 2021 $’000 10,864 1,031 9,833 67,318 47 67,271 77,104 38,552 22,742 6,855 – 6,855 3,428 1,342 5,835 – (5,667) 168 96 Notes to the Consolidated Financial Statements Note 2021 $’000 4,196 2020 $’000 Notes to the Consolidated Financial Statements 97 2020 $’000 Note 2021 $’000 52,561 52,561 9,786 Name of entity Place of business/ country of incorporation Ownership interest 2021 25% 50% Nature of relationship Measurement method 2020 2021 $’000 51,320 9,786 (298) (6,599) – 2,019 (3,667) 52,561 Consolidated carrying values 2020 $’000 2021 $’000 19,551 33,010 2020 $’000 98 Notes to the Consolidated Financial Statements – • • • Dec 2021 Post-tax discount rate 9.0% Dec 2021 Pre-tax discount rate 12.4% Dec 2021 Long-term growth rate 1.5% Dec 2020 Post-tax discount rate Dec 2020 Pre-tax discount rate Dec 2020 Long-term growth rate In $’000s +1.5% -1.5% +0.5% -0.5% +10% -10% Discount Rate change Long-term growth rate change Terminal EBITDA forecast change Notes to the Consolidated Financial Statements 99 100 Notes to the Consolidated Financial Statements 2021 $’000 2020 $’000 290 1,044,108 41,792 830,002 214,106 1,475,706 8,697 22,543 (9,675) 12,868 – 12,868 (1,068,586) (214,579) (1,283,165) 214,106 (214,579) (214,579) Notes to the Consolidated Financial Statements 101 2020 $’000 2021 $’000 165,072 26,562 (138,286) (5,157) – (11,743) (5,762) 9,786 40,472 (23,136) 17,336 (1,118,571) 17,336 (9,675) 21,863 (1,089,047) 102 Notes to the Consolidated Financial Statements 2020 $’000 2021 $’000 252,704 – 157,883 – 650 411,237 185,202 52,561 16,939 15,375 296,019 – 322 566,418 977,655 177,568 773 2,463 20,463 6,178 207,445 67,294 18,526 3,748 111,753 201,321 408,766 568,889 1,475,706 182,230 (1,089,047) 568,889 568,889  103 Notes to the Consolidated Financial Statements 6. Other 2020 $ 2021 $ 821,492 79,671 42,448 9,505 953,116 392,802 41,200 – 21,305 455,307 104 Notes to the Consolidated Financial Statements 2021 $ 2020 $ Type of transaction Class of other related party 2021 $ 2020 $ Notes to the Consolidated Financial Statements 105 • • • 106 Notes to the Consolidated Financial Statements • • • IFRS Interpretations Committee Agenda Decision Configuration Costs in a Cloud Computing Arrangement ARN Regional 2021 $ Directors' Declaration 107 Independent auditor’s report To the members of HT&E Limited Report on the audit of the financial report Our opinion 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 2021 and of its financial performance for the year then ended (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. What we have audited The Group financial report comprises: ● ● ● ● ● ● the consolidated balance sheet as at 31 December 2021 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. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & 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. PricewaterhouseCoopers, ABN 52 780 433 757 One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000, 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. Our audit approach An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. 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. Materiality ● For the purpose of our audit we used overall Group materiality of $2,200,000, which represents approximately 5% of the Group’s profit before tax. ● 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 the benchmark against which the performance of the Group is most commonly measured. ● We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly acceptable thresholds. 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 as to 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 face-to-face meetings, phone calls, and written instructions where appropriate Key audit matters 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. Key audit matter How our audit addressed the key audit matter Impairment of intangible assets (Refer to note 2.1) $367m We performed the following procedures, amongst others: The Group has $367m of non-amortising intangibles assets as at 31 December 2021, which relate to the Australia Radio licences within the Australian Radio Network (ARN) cash generating unit (CGU). These are required by Australian Accounting Standards to be tested annually for impairment at the CGU level. In order to assess the recoverability of these assets, the Group prepared a financial model as at 31 December 2021 to determine if the carrying value was supported by forecasted future cash flows, discounted to present value (“the model”). The assessment of impairment was a key audit matter due to the quantum of the balance as well as the judgements and assumptions applied in estimating the forecasted cash flows, growth rates and discount rates. ● considered whether the impairment model used to estimate the recoverable amount of the assets was consistent with the requirements of the Australian Accounting Standards ● ● ● ● ● ● compared forecast cash flows used in the model to Board approved budgets assessed the Group’s historical ability to forecast future cash flows for the business by comparing budgeted amounts to reported actual results for the past five years assessed if the discount rate assumption was appropriate by comparing it to market data, comparable companies and industry research, with the assistance of our valuation specialists assessed the appropriateness of the key assumptions within the model compared to observable market information where available, and considered management’s ability to carry out courses of action tested the mathematical accuracy on a sample basis of the model’s calculations considered the Group’s sensitivity analysis on the key assumptions used in the model to assess Key audit matter How our audit addressed the key audit matter under which assumptions an impairment would occur and whether this was reasonably possible ● evaluated the adequacy of the disclosures made in note 2.1, including those regarding the method of measurement, the key assumptions, and the reasonable possible change thereof, in light of the requirements of Australian Accounting Standards. Other information 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 2021, 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. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a 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. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that 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. Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 35 to 50 of the directors’ report for the year ended 31 December 2021. In our opinion, the remuneration report of HT&E Limited for the year ended 31 December 2021 complies with section 300A of the Corporations Act 2001. Responsibilities 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 23 February 2022 Shareholder information 1. Shares Name Name 113 Number of shares Number of shares % of total shares 298,418,479 96.1% 114 Shareholder information Holding Number of shareholders % of total shareholders Number of shares % of total shares 5,380 100.00 311,089,791 100.00 • • 2. Unquoted Securities 3. Directors’ Interests Director 4. Other Information Number of shares Number of options Shareholder information 115 116 Corporate Directory 2022 Annual General Meeting Notice is given that the 2022 Annual General Meeting (AGM) of HT&E Limited will be held on Thursday 5 May 2022 commencing at 9:00am. Depending on the prevailing COVID-19 situation, the Company reserves the right 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. HT&E LIMITED ABN 95 008 637 643 Directors Hamish McLennan (Chairman) Ciaran Davis (CEO & Managing Director) Roger Amos Paul Connolly Belinda Rowe Alison Cameron (from 5 January 2022) 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 Auditors PricewaterhouseCoopers One International Towers Sydney Watermans Quay BARANGAROO NSW 2000 Principal bankers Bank of Queensland Commonwealth Bank of Australia HSBC National Australia Bank Westpac Banking Corporation htande.com.au HT&E Annual Report 2021

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