TPG Telecom Limited
and its controlled entities
ABN 46 093 058 069
Annual Report
Year ended 31 July 2015
TPG Telecom Limited and its controlled entities
Annual report
For the year ended 31 July 2015
2
Contents
Chairman’s letter
Directors’ report
Lead auditor’s independence declaration
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ declaration
Independent auditor’s report
ASX additional information
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TPG Telecom Limited and its controlled entities
Chairman’s letter
For the year ended 31 July 2015
Dear Shareholders
On behalf of the Board of Directors, I am pleased to present to you the TPG Telecom Limited Annual
Report for the financial year ended 31 July 2015 (“FY15”).
Financial Performance
FY15 was another busy and successful year for the Group. We continued to achieve strong organic
growth across the business while completing the integration of AAPT, further expanding our network
infrastructure, and successfully negotiating the acquisition of the iiNet Group.
A detailed review of the Group’s operating and financial performance for the year is provided in the
Operating and Financial Review section of the Directors’ Report starting on page 7 of this Annual Report,
and set out below are some of the key financial highlights from the year.
Revenue ($m)
EBITDA ($m)
NPAT ($m)
EPS (cents/share)
Dividends (cents/share)
FY15
1270.6
484.5
224.1
28.2
11.5
FY14
970.9
363.7
171.7
21.6
9.25
Movement
+31%
+33%
+31%
+31%
+24%
These increases in revenue, profits, and returns for shareholders represent the seventh consecutive year
of strong growth by the Group.
iiNet Acquisition
Shortly after the FY15 year-end, we were delighted to complete the acquisition of the iiNet Group.
The TPG and iiNet businesses are highly complementary in terms of geographic presence and market
segments. iiNet has built a very strong, recognisable brand with an excellent reputation for premium
levels of customer service which we will be focussed on preserving. The combined businesses now
provide broadband services to over 1.8 million subscribers.
I would like to welcome as TPG shareholders those iiNet shareholders who elected to receive TPG
shares as consideration for their iiNet shares. I believe that the acquisition will be highly beneficial for
TPG shareholders into the future.
Agreements with Vodafone Hutchison Australia
Also following the year-end, the Group entered into two significant agreements with Vodafone Hutchison
Australia (VHA), a major dark fibre transmission network expansion and the migration of TPG’s mobile
customer base to the Vodafone network. Further explanation of these agreements is included in note 8
4
TPG Telecom Limited and its controlled entities
Chairman’s letter
For the year ended 31 July 2015
to the Directors’ Report within this Annual Report.
The dark fibre agreement represents an exciting opportunity to apply our proven capability in delivering
dark fibre services to Vodafone utilising our own fibre infrastructure across the country.
The mobile agreement will mean that TPG mobile customers will be able to experience Vodafone’s world
class network which the Group is working with Vodafone to further enhance through the dark fibre
agreement.
Conclusion
The Group’s achievements are made possible by the dedication of our hard-working employees. I would
like to thank them all again for their efforts this year and look forward to their ongoing contribution to the
Group’s success in FY16 and beyond.
On behalf of the Board, I also thank all our shareholders for their continued support of the Company.
Yours faithfully
David Teoh
Chairman
5
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
The directors present their report together with the financial report of the Group, being TPG Telecom
Limited (‘the Company’) and its controlled entities, for the financial year ended 31 July 2015, and the
auditor’s report thereon.
Contents of directors’ report
Page
1. Board of Directors
2. Company secretary
3. Directors’ meetings
4. Operating and financial review
5. Remuneration report - audited
6. Principal activities
7. Dividends
8. Events subsequent to reporting date
9. Likely developments
10. Directors’ interests
11. Share options and rights
12. Indemnification and insurance of officers and auditors
13. Non-audit services
14. Rounding off
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7
7
7
21
29
29
29
31
31
32
32
33
33
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
1. Board of Directors
Details of directors of the Company who held office at any time during or since the end of the previous
year are set out below:
6
CURRENT
David Teoh
Executive Chairman
Chief Executive Officer
Denis Ledbury
Non-Executive Director
B.Bus, A.I.C.D.
Independent
Robert Millner
Non-Executive Director
F.A.I.C.D.
Joseph Pang
Non-Executive Director
FCA
Independent
Shane Teoh
Non-Executive Director
B.Com, LLB
RETIRED
Alan Latimer
Executive Director
B.Com, CA, G.A.I.C.D
David is the founder and Chief Executive Officer of the TPG group of companies. He has
served as Executive Chairman of the Company since 2008.
Special Responsibilities: Chairman of the Board
Denis has served as a Director of the Company since 2000 and was the Managing Director of
the Company between 2000 and 2005. Denis was also associated with the NBN television
group of companies for over 24 years, the last 14 of which as Chief Executive Officer.
Special Responsibilities: Chairman of the Remuneration and Audit & Risk Committee
Robert has served as a Non-Executive Director of the Company since 2000 and was the
Chairman until 2008.
Robert has over 30 years experience as a Company Director and is currently a Director of the
following ASX listed companies: Washington H. Soul Pattinson and Company Limited; Milton
Corporation Limited; New Hope Corporation Limited; Brickworks Limited; Australian
Pharmaceutical Industries Limited.
During the past three years Robert has also served as a Director of the following ASX listed
companies: Souls Private Equity Limited; Exco Resources Limited
Special Responsibilities: Member of the Remuneration and Audit & Risk Committee
Joseph has served as a Non-Executive Director of the Company since 2008. Joseph worked
in financial roles in the UK, Canada and Hong Kong prior to starting his own management and
financial consulting service in Australia.
Special Responsibilities: Member of the Remuneration and Audit & Risk Committee
Shane has served as a Non-Executive Director of the Company since 2012.
Shane holds a Bachelor of Commerce and a Bachelor of Laws from the University of New
South Wales. He is managing director of Total Forms Pty Ltd, a leading developer of
accounting and taxation software in Australia.
Retired from the Board and the Company effective 31 October 2014
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TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
2. Company secretary
Mr Stephen Banfield was appointed Company Secretary on 24 October 2007. Stephen holds a BA (Hons)
degree and is a member of the Institute of Chartered Accountants in England and Wales.
3. Directors’ meetings
The number of Board and committee meetings held during the financial year and the number of meetings
attended by each of the directors as a member of the Board or relevant committee were as follows:
Director
Board Meetings
Audit & Risk
Committee Meetings
Remuneration
Committee Meetings
D Teoh
D Ledbury
R Millner
J Pang
S Teoh
A Latimer
A
18
18
17
17
18
4
B
18
18
18
18
18
4
A
-
2
2
2
-
-
B
-
2
2
2
-
-
A
-
2
2
2
-
-
B
-
2
2
2
-
-
A: Number of meetings attended.
B: Number of meetings held while a member.
4. Operating and financial review
4.1 Operating result overview
The Group again achieved record financial results for the year ended 31 July 2015 (“FY15”), highlights of
which are as follows:
- Earnings before interest, tax, depreciation and amortisation (“EBITDA”) for the year increased by 33%
to $484.5m.
- Net Profit After Tax (“NPAT”) for the year was $224.1m, an increase over FY14 of 31%.
- Earnings per share (“EPS”) increased by 31% to 28.2 cents per share.
- Pre-tax operating cashflow increased by 24% to $492.8m.
- Dividends per share paid or declared in respect of FY15 increased by 24% to 11.5 cents (fully
franked).
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
4. Operating and financial review (continued)
4.1 Operating result overview (continued)
These results represent the seventh consecutive year of strong growth for the Group.
8
Consumer business
The Consumer Division’s EBITDA for FY15 was $239.7m compared to $205.7m for FY14. The FY15
result contains no material irregular items (the FY14 result was last year reported as including $3.3m of
non-recurring benefits) therefore the Consumer Division’s underlying EBITDA growth for FY15 relative to
FY14 is $37.3m or 18.5%. This was driven by ongoing organic broadband subscriber growth as well as
an increase in EBITDA contribution per broadband subscriber.
The Group’s consumer broadband subscriber base grew by 73k in the year compared to 77k growth
achieved in the prior year. However, this growth excludes FTTB subscribers who now acquire FTTB
services through wholesale customers of the Group. The composition of the FY15 Consumer Division net
subscriber growth was 31k ADSL and 42k NBN.
As at 31 July 2015 the Group had 821k broadband subscribers and 320k mobile subscribers.
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TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
4. Operating and financial review (continued)
4.1 Operating result overview (continued)
Corporate business
The Group’s Corporate Division achieved EBITDA of $242.3m for the year compared to $159.1m for
FY14 representing growth of $83.3m or 52.4%.
A large component of this EBITDA growth was derived directly from the acquisition of AAPT which
contributed a full 12 months to the Group’s FY15 results compared to only 5 months in FY14. If AAPT
had have been owned by the Group for the whole of FY14, the extra 7 months would have contributed an
additional $40.8m EBITDA (based on AAPT’s pre-acquisition annualised EBITDA run-rate of ~$70m1).
This implies that $42.5m of the $83.2m EBITDA growth achieved by the Corporate Division in FY15 is
attributable to organic revenue growth and EBITDA margin expansion post acquisition of AAPT.
Cashflow
The Group delivered another strong cashflow result in FY15, with $492.8m cash generated from
operations (pre-tax) and free cashflow after tax, capex and interest for the year of $213.8m.
This free cash was deployed to pay for equity investments of $115.6m (investments in Covata and
Amcom as disclosed during the period), to make debt repayments of $21m, as well as to pay increased
dividends to shareholders of $81.4m.
Acquisition of iiNet
On 7 September 2015 the Group completed its acquisition of the iiNet Group. The acquisition was
implemented through a scheme of arrangement under which the Group acquired all of the share capital in
iiNet Limited that it did not already own. The consideration transferred to iiNet shareholders comprised
cash consideration of $1,156.8m and share consideration comprising 23,212,554 TPG Telecom Limited
shares with an acquisition date fair value of $211.2m (determined by reference to TPG’s volume weighted
average share price on the date of change of control).
In addition, immediately prior to completion, iiNet shareholders were paid a discretionary special dividend
amounting to $106.7m (net of $7.0m which was paid to the Group) which was funded through a loan to
iiNet by the Group.
In order to fund the acquisition the Group entered into revised debt facility agreements with a syndicate of
banks in August 2015. The facilities, which total $1,960m, were used to fund the cash consideration, the
discretionary special dividend and to refinance the Group’s and iiNet’s existing bank debt.
As the change in control occurred subsequent to 31 July 2015, there has been no contribution from iiNet
to the Group’s FY15 results.
_________________________________________________
1 Unaudited – refer to page 4 of the 9/12/13 TPG investor briefing lodged with ASX
10
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
4. Operating and financial review (continued)
4.1 Operating result overview (continued)
Dividends
In light of the Group’s strong FY15 cashflow and earnings growth, the Board of Directors has declared an
increased final FY15 dividend of 6.0 cents per share (fully franked) payable on 17 November 2015 to
shareholders on the register at 13 October 2015, bringing total FY15 dividends to 11.5 cents per share
(fully franked), an increase of 24% over FY14.
4.2 Customer growth
Consumer Division
During FY15 the Consumer Division achieved further organic growth of its broadband subscriber base
with a net increase of 73k subscribers. The composition of this growth changed quite significantly in
FY15 with NBN services accounting for 42k of the growth having only been launched in the final quarter
of FY14.
During FY15 the Group also launched its ‘fibre to the building’ (FTTB) plans. The customers subscribing
to FTTB plans are not, however, reflected in the above chart because, as a result of a change in
government legislation during the year which restricted the Group’s ability to retail FTTB services to its
Consumer Division customer base, all FTTB subscribers now acquire their FTTB services through
wholesale customers of the Group. The revenue for FTTB services will therefore be reflected in the
Corporate Division’s results going forward.
11
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
4. Operating and financial review (continued)
4.2 Customer growth (Continued)
Although mobile services represent less than 4% of the Group’s overall EBITDA, the Group was
disappointed to experience a decline in its mobile subscriber base of 42k (12%) during the year. This
was largely attributable to an increase in the wholesale cost to the Group which necessitated an increase
in the retail price charged to consumers. Unlike its broadband services, the Group’s mobile services are
not delivered on owned infrastructure and the Group is therefore dependent on available wholesale
offerings in order to have competitive plans to grow its mobile business.
Subsequent to the year-end the Group has entered into an agreement to migrate its TPG mobile
customer base to the Vodafone network (refer note 8 to the Directors’ Report).
As at 31 July 2015 the Consumer Division had 821k broadband subscribers and 320k mobile subscribers.
Corporate Division
The Group’s Corporate Division achieved revenues of $643m in FY15, up by $235m from the prior year
largely due to the acquisition of AAPT. The split of annualised revenues at the end of the year by
customer and product category is set out below (prior year figures in brackets).
* in the chart above the prior year comparative for the wholesale / business split has been slightly re-stated following the
reclassification of certain AAPT customers.
12
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
4. Operating and financial review (continued)
4.3 Network infrastructure update
During the year the Group continued to invest substantially in the expansion of its infrastructure
particularly in the extension of its fibre network footprint and connection of further on-net buildings.
Thousands of on-net fibre buildings, many with diverse fibre entry;
The Group’s network now includes:
Over 17,000km of metro and inter-capital fibre network;
Australia’s largest dedicated dark fibre network;
More than 400 national network points of presence;
Over 400 DSLAM enabled exchanges, offering Mid-Band Ethernet and ADSL services;
One of Australia’s largest and most sophisticated voice networks;
PPC-1, our 7,000km submarine cable connecting Sydney to Guam, and onward to the US and Asia;
International services delivered in New Zealand, Singapore, Hong Kong, Japan and the US;
Significant cloud computing and storage footprint distributed across six locations nationally; and
One of Australia’s largest Internet exchanges.
Further dark fibre network expansion
Subsequent to the year-end, under an Agreement signed with Vodafone Hutchison Australia on 29
September 2015 (refer note 8 to the Directors’ Report) the Group will extend its current fibre infrastructure
by constructing about 4,000km of new fibre to Vodafone cell sites across the country.
Construction of the dark fibre network will start immediately with deployment to the majority of the existing
Vodafone network to be completed during 2018.
It is estimated that the Group will incur incremental capital expenditure of $300-400m over the rollout
period, the majority of which will be incurred over the next 3 years.
TPG will provide the dark fibre services for 15 years from the date each site is delivered, with contracted
revenue over the term exceeding $900m.
International network expansion
The Group also made the following two announcements during the year regarding further investment in
its international network capacity:
Southern Cross capacity agreement
A Group entity entered a new IRU capacity use agreement with Southern Cross to increase, by
approximately 5 times, the amount of capacity it currently has on the Southern Cross cable. The capital
13
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
4. Operating and financial review (continued)
4.3 Network infrastructure update (continued)
commitment payable for this new capacity will be US$53m with payments spread over 6 years starting
when the additional capacity becomes available in December 2015.
SEA-US capacity agreement
In March 2015 a Group entity entered agreements with RAM Telecom International, Inc (“RTI”) to acquire
the right to use wavelengths on the SEA-US submarine cable between Guam and California. The SEA-
US Cable is being constructed by NEC Corporation for a consortium of telecommunications companies,
including RTI. The construction of the cables is expected to be completed in 2017.
The terms of the agreement are confidential but the Group anticipates that its capital commitment for the
project will be between US$19m and US$25m spread over the next two financial years.
TPG’s PPC-1 cable system between Sydney and Guam has been an extremely valuable asset for the
Group. With SEA-US, the reach of the Group’s directly controlled network will be extended into the main
hub of Internet content in the US.
All of the infrastructure investment described above will provide an important foundation for the continued
growth of the Group’s customer base and profits into the future.
14
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
4. Operating and financial review (continued)
4.4 Financial results review
There follows below a review of the key elements of the FY15 results:
Revenue
Consumer
Corporate
Total revenue
Telco costs
Consumer
Corporate
Total telco costs
Employment costs
Consumer
Corporate
Total employment costs
Other expenses
Consumer
Corporate
Unallocated
Total other expenses
Other income
EBITDA
Depreciation
Amortisation
Operating profit
Net financing costs
Profit before tax
Income tax
Profit after tax
Earnings per share (cents)
FY15
$m
% of
revenue
628.1
642.5
1,270.6
(308.4)
(272.1)
(580.5)
(39.9)
(99.2)
(139.1)
(40.1)
(28.9)
(1.3)
(70.3)
3.8
484.5
(102.4)
(43.3)
338.8
(19.8)
319.0
(94.9)
224.1
28.2
49%
51%
49%
42%
6%
15%
6%
4%
-
-
38%
8%
3%
31%
2%
25%
-
18%
% of
revenue
58%
42%
52%
39%
6%
17%
6%
4%
-
-
37%
7%
4%
26%
1%
25%
-
18%
FY14
$m
563.2
407.7
970.9
(293.2)
(161.0)
(454.2)
(33.1)
(70.5)
(103.6)
(31.2)
(17.1)
(3.7)
(52.0)
2.6
363.7
(72.6)
(35.3)
255.8
(9.0)
246.8
(75.1)
171.7
21.6
15
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
4. Operating and financial review (continued)
4.4 Financial results review (continued)
Revenue
a) Consumer
services that are less expensive for our
customers but more profitable for the Group.
This helps drive profit growth in the Corporate
Division.
Consumer Division revenue increased by
$64.9m (12%) to $628.1m in FY15.
Telco costs
This increase was driven by a combination of
increased broadband subscriber numbers and
increased ARPU (average revenue per user).
Subscribers on the Group’s broadband and
home phone plans increased over the year by
73k (10%) to 821k (including 591k subscribers
with a home phone service).
Monthly ARPU for broadband customers
increased in the year from $50.1 to $51.1 due to
an increase in the proportion of the customer
base that a) has a plan that bundles broadband
and home phone line rental, and b) has an NBN
service (NBN services have a higher ARPU
than DSL services).
Broadband customers who also bundle home
phone service generated an average of $7 per
month in voice revenue, which was in line with
last year.
Note that ARPU is calculated using GST
exclusive recurring charges only and it excludes
one-off charges such as installation fees and
equipment sales.
b) Corporate
Corporate revenue increased by $234.8m (58%)
to $642.5m in FY15.
$230.7m of this growth is due to the additional 7
months contribution from AAPT in FY15 based
on an extrapolation of AAPT’s revenue for the 5
month post acquisition period in FY14.
Although the organic revenue growth balance of
$4.1m appears relatively low, this is due to the
fact that expensive, lower margin off-net
customer revenues are being replaced by on-net
Telco costs comprise all of the direct operating
costs incurred to deliver the Group’s
telecommunications services to customers,
including amounts paid to other carriers, and the
non-staff costs of operating and maintaining the
Group’s own network.
a) Consumer
Consumer Division telco costs decreased as a
proportion of Consumer Division revenue in
FY15 from 52% to 49% due primarily to network
backhaul cost savings achieved in the year.
b) Corporate
Corporate Division telco costs increased as a
proportion of Corporate Division revenue in
FY15 from 39% to 42%.
This increase is entirely attributable to the
acquisition of AAPT whose equivalent costs
represented 52% of its revenue prior to
acquisition compared to 31% for the TPG
standalone corporate business. The main
reason for AAPT’s costs being higher as a
proportion of revenue than in the TPG
standalone corporate business is that AAPT’s
product mix includes a significantly higher
proportion of wholesale and low margin resale
business.
Employment costs
Consumer Division employment costs grew in
absolute terms in the year by $6.8m and
increased from 5.9% to 6.4% of revenue. The
increase was driven by increased headcount as
well as the decline in the value of the Australian
16
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
4. Operating and financial review (continued)
4.4 Financial results review (continued)
dollar relative to the Philippine peso which
caused an increase in the Australian dollar
equivalent cost of the Group’s Manila based
staff.
Corporate Division employment costs increased
in FY15 due to the acquisition of AAPT. Based
on an extrapolation of AAPT’s employment costs
for the 5 month post acquisition period in FY14,
the additional 7 months contribution to the FY15
results should have increased the Corporate
Division’s employment costs by $46.5m. The
fact that they actually only increased by $28.7m
reflects synergies achieved from the integration
of the AAPT business.
The Group’s total headcount at 31 July 2015
was 3,110, a 282 increase in the year.
Other expenses
Other expenses include all of the overheads
incurred by the Group in running the business,
as well as marketing costs.
The Consumer Division’s other expenses
increased by $8.9m in FY15 driven mainly by
marketing expenditure and Manila operating
costs.
The Corporate Division’s other expenses
increased by $11.8m in FY15 driven mainly by
the acquisition of AAPT.
Other income
Other income, which increased from $2.6m to
$3.8m in FY15, comprises dividend income from
the Group’s ASX listed investments.
EBITDA
Overall, Group EBITDA grew by $120.8m (33%)
to $484.5m in FY15. Based on AAPT’s pre-
acquisition EBITDA run-rate of $70m, the
additional 7 months contribution from AAPT in
FY15 would have generated $40.8m of EBITDA.
This means that the Group’s organic EBITDA
growth for the year is $80m. This has been
achieved through strong continued broadband
subscriber growth and margin expansion in the
Consumer Division in addition to revenue
growth, margin expansion and the realisation of
synergies from the AAPT acquisition in the
Corporate Division.
Depreciation
The Group’s depreciation expense increased by
$29.8m in FY15. Based on an extrapolation of
AAPT’s depreciation expense for the 5 month
post acquisition period in FY14, the extra 7
months ownership of AAPT in FY15 should have
increased depreciation by $30.1m.
The fact that the overall increase in depreciation
for the Group is slightly lower reflects the impact
of assets becoming fully depreciated offsetting
the depreciation increase arising from new
capital expenditure in FY15.
Amortisation
The Group’s FY15 amortisation expense
increased by $8.1m to $43.3m. This included
$31.5m of amortisation of acquired customer
bases which arises from the Group’s previous
acquisitions and is a “non-cash” expense. The
increase in the year is due to the additional 7
months ownership of AAPT.
Net financing costs
Net financing costs increased by $10.6m as a
result of the Group’s increased bank debt that
arose mainly from the Group’s debt financed
acquisition of AAPT last year.
17
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
4. Operating and financial review (continued)
4.4 Financial results review (continued)
Income tax
Utilisation of cash
The Group’s effective income tax rate was
29.7% in FY15, down from 30.5% in FY14. The
decrease is due mainly to the non tax deductible
expenditure related to the acquisition of AAPT
incurred in FY14.
Earnings per share (EPS)
No new shares in the Company were issued in
the year so the Group’s EPS for FY15 increased
by 31%, the same percentage increase as the
increase in net profit, to 28.2 cents per share.
Free cashflow
Operating cashflow
Tax
Interest
Capital expenditure*
FY15
$m
492.8
(110.9)
(14.3)
(153.8)
FY14
$m
396.7
(96.1)
(7.4)
(69.7)
Free cashflow
213.8
223.5
Free cashflow
Utilisation:
Investments
AAPT acquisition
Debt repayment/(drawdown)
Dividends paid
Other
FY15
$m
FY14
$m
213.8
223.5
115.6
-
21.0
81.4
(4.1)
-
465.8
(308.0)
67.5
0.5
Decrease in cash
(0.1)
(2.3)
213.8
223.5
Investments
The Group paid $115.6m in the year to increase
its strategic investments in both Covata Limited
(in which the Group held an interest of
approximately 15% at 31 July 2015) and in
Amcom Limited. In July 2015 the Group’s
Amcom shares were replaced with shares in
Vocus Limited as a result of Vocus’s acquisition
of Amcom. As at 31 July 2015, the Group’s
interest in Vocus was approximately 10.7%.
* includes payments for property, plant and equipment plus
intangible assets.
Debt repayment/drawdown
The Group’s strong earnings result is reflected in
the strong operating cashflow generated in the
year. Operating cashflow of $492.8m in FY15
exceeded EBITDA by $8.3m. After tax, interest
and capital expenditure, the Group generated
free cashflow of $213.8m.
Capital expenditure
Capital expenditure for FY15 of $153.8m is
$84.1m higher than in the prior year. This
increase is driven by an additional 7 months of
AAPT capex, a $13.5m one-off purchase of
spectrum, and expansion of the Group’s fibre
network predominantly to connect corporate
customers and for the Group’s ‘fibre to the
building’ (FTTB) project.
The Group made net repayments of $21m
against its bank debt during FY15, leaving an
outstanding bank debt balance of $329m as at
31 July 2015.
Dividends paid
Dividends paid in the year comprise the final
FY14 dividend of 4.75 cents per share (“cps”)
and the interim FY15 dividend of 5.50 cps.
Subsequent to the year-end, the Board of
directors has declared a 6.0 cps final dividend
for FY15 taking the total dividends paid or
declared in respect of FY15 to 11.5 cps, a 24%
increase over FY14.
18
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
4. Operating and financial review (continued)
4.4 Financial results review (continued)
Balance sheet
Below is a condensed version of the Group’s
balance sheet as at the end of FY15,
summarised in a manner to highlight a few key
points. Please refer to the full financial
statements contained in this annual report for a
comprehensive balance sheet.
Cash (1)
Investments (2)
Other current assets
Total current assets (3)
FY15
$m
23.7
151.6
78.6
253.9
FY14
$m
23.8
99.2
78.9
201.9
Property, plant & equipment (4)
Intangible assets (5)
Investments (2)
Other non-current assets
Total non-current assets
592.8
685.6
115.6
5.9
1,399.9
553.8
712.4
7.3
14.2
1,287.7
Deferred income (3)
Other current liabilities
Total current liabilities (3)
62.7
195.4
258.1
61.3
176.9
238.2
Loans and borrowings (1)
327.7
346.8
Other non-current liabilities
64.8
72.2
Total non-current liabilities
392.5
419.0
Net assets
1,003.2
832.4
Balance sheet notes
1. Net debt
Loans and borrowings of $327.7m are shown in
the balance sheet net of prepaid borrowing
costs. Gross bank borrowings at 31 July 2015
were $329.0m. Taking into account the $23.7m
cash balance the Group had net debt at the end
of FY15 of $305.3m.
Investments
2.
Current investments represent the Group’s
investment in Vocus Limited shares. Non-
current investments represent the Group’s
ownership of shares in iiNet Limited and Covata
Limited.
During the year the Group reclassified its
investment in iiNet shares from current to non-
current assets, invested $113.0m in Amcom
(now Vocus) shares and invested an additional
$2.6m in Covata shares.
In addition, these equity investments
appreciated in value during the year by $45.1m
in aggregate, the benefit of which is reflected
directly in equity in the Group’s results (rather
than through the income statement) as the
shares are not held for trading purposes.
3. Net current liabilities
Total current liabilities of $258.1m exceeded
total current assets of $253.9m as at 31 July
2015 by $4.2m. This net current liability position
is not uncommon in the telecommunications
industry for two principal reasons. First, cash
generated from trading is commonly used to
repay non-current debt and to invest in non-
current asset network infrastructure. Second, a
significant item within current liabilities is
deferred income which is a non-cash item.
Deferred income represents cash paid in
advance by customers which is not recognised
in income until the service has been delivered.
Excluding this item, the Group had net current
assets of $58.5m as at 31 July 2015.
4. Property, plant & equipment (“PPE”)
The Group’s PPE balance is $39.0m higher at
31 July 15 than at 31 July 14 as a result of
capital expenditure exceeding the $102.4m
depreciation expense for the year.
Intangible assets
5.
The $26.8m decrease in the Group’s intangible
assets balance in the year is due to the
intangible amortisation expense of $43.3m
partially offset by the investment made in the
year for acquiring spectrum and international
submarine cable capacity.
19
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
4. Operating and financial review (continued)
4.5 Business outlook
Prospects for FY16
In FY16 the Group will continue to focus its efforts on growing its consumer and corporate customer
bases profitably by delivering market leading telecommunications services. In order to enhance its
prospects for future growth the Group will also continue to invest in expanding its network infrastructure.
Following the acquisition of iiNet, there will also be significant focus on maintaining iiNet’s reputation for
premium customer service whilst maximising the benefits of the acquisition through simplifying product
offerings and systems and integrating the business into the Group’s operations.
The directors anticipate continued organic growth for the Group in FY16. However, as only a few weeks
have elapsed since the completion of the acquisition of iiNet it is not yet possible to forecast with sufficient
certainty the likely financial results for the combined group for the year ahead and, therefore, no specific
guidance has been provided for FY16 as at the date of this report.
Principal business risks
Like other businesses, the Group is exposed to a number of risks which may affect future financial
performance. The material business risks identified by the Group and how they are addressed are set
out below.
1. Competitive environment
Increased competition or consolidation in the industry could impact the Group’s financial performance by
affecting its ability to grow its customer base and/or its ability to make money from its service offerings.
The Group attempts to mitigate this risk by continually reviewing its customer offerings, their pricing
relative to the market and customer needs. This is combined with constant reviews of the Group’s cost
structures with the objective of optimising costs to ensure the Group is best placed to continue providing
value leading services.
2. Business interruption
A significant disruption of the Group’s business through network or systems failure could cause financial
loss for the Group and increased customer churn. The Group maintains business interruption insurance
and continually invests in its network and systems to improve their resilience and performance.
3. Regulatory environment
Changes in regulation can significantly impact the Group’s business. In addition, failure to comply with
regulatory requirements could create financial loss for the Group.
The Group attempts to mitigate this risk through close monitoring of regulatory developments, engaging
where necessary with the relevant regulatory bodies, and monitoring its own compliance with existing
regulations.
20
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2014
4. Operating and financial review (continued)
4.5 Business outlook (continued)
4. Data security
Failures or breaches of data protection and systems security can cause reputational damage, regulatory
impositions and financial loss. Australian Privacy Principles (APPs) now govern privacy and data
protection throughout Australia and significantly enhance privacy and data protection regulation.
The Group has policies regarding information security and risk protection measures in place to ensure
adherence to APPs and to provide safeguards to company and customer information. These measures
include restricted access to company premises and areas housing equipment, restricted access to
systems and network devices, strict change control measures, anti-virus software and firewall protection
at various network points.
Environmental and other sustainability risks
The environmental and sustainability risks that attach to the Group’s business are relatively benign. The
Group operates in the telecommunications industry which, whilst a consumer of electrical power, is
generally considered to provide net reductions to adverse environmental impacts. This is achieved by the
increasing technological capabilities that can be relied on by consumers and businesses so as to achieve
significantly reduced travel and paper consumption. The Group aims to reduce its impact on the
environment by employing power saving measures, such as switching off electrical equipment when it is
not being used, and by minimising the amount of travel undertaken by employees.
The Company recognises the importance of having a skilled and experienced workforce. Most of the
Group’s employees work in office and high technology environments where industrial risks are minimal.
Management employs appropriate measures to minimise employee and social risks by providing a safe
and comfortable working environment, providing suitable training, complying with gender equality
requirements and by ensuring appropriate remuneration structures are in place.
The Company’s Code of Conduct provides that the Company will treat all employees and potential
employees according to their skills, qualifications, competencies and potential, and will not discriminate
on the basis of race, religion, gender, sexual preference, age, marital status or disability.
During the year, the Group has made donations to provide charitable relief to human suffering, including
in relation to the earthquakes in Nepal.
21
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
5. Remuneration report - audited
This remuneration report sets out the remuneration structures of the directors of the Company and of
other key management personnel of the Group, as well as explaining the principles underpinning those
remuneration structures.
For the purpose of this report, key management personnel are defined as those individuals who have
authority and responsibility for planning, directing and controlling the activities of the Group. Key
management personnel include the directors of the Company and key Group executives including the five
most highly remunerated.
5.1 Remuneration principles
Remuneration levels for key management personnel of the Group are designed to attract and retain
appropriately qualified and experienced directors and executives. The Remuneration Committee
considers the suitability of remuneration packages relative to trends in comparable companies and to the
objectives of the Group’s remuneration strategy.
The remuneration structures explained below are designed to attract suitably qualified candidates, to
reward the achievement of strategic objectives and to achieve the broader outcome of creation of value
for shareholders by:
a) providing competitive remuneration packages to attract and retain high calibre executives;
b) ensuring that a significant proportion of executives’ remuneration is performance-linked; and
c) setting performance hurdles for the achievement of performance-linked incentives at a sufficiently
demanding level as to ensure value creation for shareholders.
5.2 Remuneration structure
Remuneration packages include a mix of fixed and performance-linked remuneration.
(i) Fixed remuneration
Fixed remuneration consists of base salary, employer contributions to superannuation funds, and non-
monetary benefits which typically only comprise annual leave entitlements but may also include such
benefits as the provision of a motor vehicle. The Group pays fringe-benefits tax on such non-monetary
benefits where applicable.
Fixed remuneration levels are reviewed annually through a process that considers individual
performance, overall performance of the Group, and remuneration levels for similar roles in comparable
companies. The fixed remuneration of executive directors is determined by the Remuneration
Committee. The fixed remuneration of other key management personnel is determined by the Executive
Chairman in conjunction with the Remuneration Committee. Fixed remuneration reviews for other staff
are determined by the Executive Chairman.
22
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
5. Remuneration report – audited (continued)
5.2 Remuneration structure (continued)
(ii)
Performance-linked remuneration
Performance-linked remuneration comprises both long-term and short-term incentives as set out below:
a) Long-term incentives
The Group’s current long-term incentive structure is in the form of a performance rights plan. Under the
rules of the performance rights plan, participants may be granted rights to fully paid ordinary shares in the
Company for no consideration, subject to certain performance conditions.
The plan was introduced in FY12 and there have been four lots of rights granted to-date, one lot being
granted in each of FY12, FY13, FY14 and FY15.
All rights granted to-date have the same key terms which are as follows:
One third of the performance rights granted will vest following the release of the Group’s audited
financial statements for each of the three financial years ending after the date of grant, subject to the
satisfaction of performance conditions.
At each vesting date:
o 30% of the performance rights that are due to vest on that date will vest if the rights holder has
been continuously employed by the Group up until and including the relevant vesting date; and
o 70% of the performance rights that are due to vest on that date will vest if the rights holder has
been continuously employed by the Group up until and including the relevant vesting date and the
Group has met its financial objectives for the financial year immediately preceding the relevant
vesting date.
Any performance rights which do not vest, automatically lapse.
The financial objectives that form part of the vesting conditions described above are determined annually
by the Remuneration Committee.
Details of the performance rights that have been granted to key management personnel during the year
ended 31 July 2015 and in prior years are set out in table 5.4(i) below.
b) Short-term incentives
Short-term incentive cash bonuses may be paid by the Group, including to key management personnel,
depending on the Group’s performance and to reward individual performance. Bonuses awarded to the
executive directors are determined by the Remuneration Committee. Bonuses awarded to other key
management personnel are determined by the Executive Chairman in conjunction with the Remuneration
Committee. Bonuses awarded to other staff are made at the discretion of the Executive Chairman.
Details of the short-term incentives paid to key management personnel during the current reporting period
are set out at table 5.3 below.
23
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
5. Remuneration report – audited (continued)
5.2 Remuneration structure (continued)
Link to Group financial performance
In determining the short-term incentive component of key management personnel remuneration,
consideration is given to the Group’s performance, including against its financial targets.
The Group had another year of strong growth in FY15 with EBITDA and NPAT up by 33% and 31%
respectively, generating a 31% increase in EPS, whilst declared dividends for the FY15 year are up by
24%
These FY15 results represent the seventh consecutive year of strong growth. The Group’s five year
record is set out in the following table.
Revenue ($m)
EBITDA ($m)
NPAT ($m)
EPS (cents)
DPS (cents)
2011
2012
2013
2014
2015
575
234
78
10.1
4.5
663
261
91
11.5
5.5
725
293
149
18.8
7.5
971
364
172
21.6
9.25
1,271
485
224
28.2
11.5
The Remuneration Committee believes that the current remuneration structures described in this report
have been effective in motivating and rewarding the achievement of these strong results.
(iii) Service contracts
No key management personnel employment contract has a fixed term, nor do any contain any provision
for termination benefits other than as required by law.
No key management personnel employment contract has a notice period of greater than five weeks,
except for the Group’s employment contracts with Mr D Teoh and Mr M Rafferty, both of which provide
that the contract may be terminated by either party giving three months’ notice.
(iv) Non-executive director fees
The aggregate remuneration of non-executive directors was last voted upon by shareholders at the 2004
AGM, when an aggregate limit of $500,000 per annum was approved. Actual non-executive director
remuneration for the year ended 31 July 2015 was $399,675 (2014: $390,705). Non-executive directors
do not receive performance-linked remuneration nor are they entitled to any retirement benefit other than
statutory superannuation payments. Directors’ fees cover all main board activities and membership of
committees.
24
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
5.
Remuneration report – audited (continued)
5.3
Directors’ and executive officers’ remuneration
The key management personnel of the Company and of the Group during the year were as follows:
Mr D Teoh
Mr A Latimer
Mr D Ledbury
Mr R Millner
Mr J Pang
Mr S Teoh
Mr S Banfield
Mr J Paine
Mr C Levy
Mr W Springer
Ms M De Ville
Mr T Moffatt
Mr M Rafferty
Executive Chairman & Chief Executive Officer
Executive Director, Finance & Corporate Services (retired 31 October 2014)
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Financial Officer & Company Secretary
National Technical & Strategy Manager
Chief Operating Officer
General Manager, Corporate Products & Pricing
Chief Information Officer
General Counsel
General Manager Sales, Enterprise & Wholesale
25
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
5.
Remuneration report – audited (continued)
5.3
Directors’ and executive officers’ remuneration (continued)
Details of the nature and amount of each major element of remuneration of each director of the Company and of other key management personnel of the
Group are set out in the tables below:
Short-term
Post-
employment
Salary &
fees
$‘000
(note A)
STI cash
bonus
$‘000
(note B)
Non-
monetary
benefits
$‘000
Total
$‘000
Superannuation
benefits
$‘000
Other long
term
$‘000
Share-based
payments
$‘000
Total
$‘000
(note C)
Proportion of
remuneration
performance
related
%
Share-based
payments as
proportion of
remuneration
%
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
1,480
952
246
322
979
900
500
660
570
134
(80)
22
100
98
90
88
90
88
85
83
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,029
1,986
666
1,004
100
98
90
88
90
88
85
83
40
26
9
29
10
9
9
8
9
8
8
8
248
50
(62)
22
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,317
2,062
613
1,055
110
107
99
96
99
96
93
91
30%
44%
82%
63%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Directors
Executive Directors
Mr D Teoh, Chairman
Mr A Latimer *
Non-Executive Directors
Mr D Ledbury
Mr R Millner
Mr J Pang
Mr S Teoh
*Mr A Latimer retired from the Company on 31 October 2014.
26
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
5.
Remuneration report – audited (continued)
5.3
Directors’ and executive officers’ remuneration (continued)
Short-term
Post-employment
Share-based
payments
Executives
Salary & fees
$’000
(note A)
STI cash
bonus
$’000
(note B)
Non-
monetary
benefits
$‘000
Total
$‘000
Superannuation
benefits
$‘000
(note C)
Other long
term
$‘000
(note D)
Performance
rights
$‘000
Total
$‘000
Proportion of
remuneration
performance
related
%
Share-based
payments as
proportion of
remuneration %
Mr S Banfield
Mr J Paine 1
Mr C Levy
Mr W Springer
Ms M De Ville
Mr T Moffatt
Mr M Rafferty 2
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
275
249
208
206
315
289
248
237
237
212
248
232
317
139
240
175
-
80
260
200
110
90
85
35
210
100
300
149
10
14
(7)
(1)
16
4
3
11
16
(5)
2
2
20
(8)
525
438
201
285
591
493
361
338
338
242
460
334
637
280
19
21
19
18
19
27
23
21
20
20
19
21
19
8
9
17
3
9
3
13
2
19
10
4
6
10
5
2
172
136
69
125
235
187
121
131
83
32
167
131
94
-
725
612
292
437
848
720
507
509
451
298
652
496
755
290
57%
51%
24%
47%
58%
54%
46%
43%
37%
23%
58%
47%
52%
51%
24%
22%
24%
29%
28%
26%
24%
26%
18%
11%
26%
26%
12%
-
1 Mr J Paine has been on personal leave for an extended period during FY15.
2 Mr M Rafferty has been recognised within key management personnel from 28 February 2014, the date on which his employer (AAPT) was acquired by the Group.
27
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
5.
Remuneration report – audited (continued)
5.3
Directors’ and executive officers’ remuneration (continued)
Notes in relation to the table of directors’ and executive officers’ remuneration
A. The short-term incentive bonuses paid during the years ended 31 July 2015 and 31 July 2014 were for
performance during those years.
B. The amounts disclosed under ‘Non-monetary benefits’ reflect exclusively the movement in the annual leave
balance of each individual in the period, with the exception of Mr D Teoh whose amount also includes the
provision of other fringe benefits (principally a motor vehicle).
C. The amounts disclosed under ‘Other long-term’ reflect the movement in the long-service leave balance of each
individual in the period.
D. The share-based payments disclosed under ‘Performance Rights’ reflect the fair value of each right
multiplied by the number of rights granted to each individual, amortised pro-rata over the vesting period of
each right. The fair value of each right is calculated at date of grant by subtracting the expected dividend
payments per share during the vesting period from the share price at date of grant. The number of rights
granted to each key management person is disclosed in 5.4(i) below. The rules of the performance rights
plan are explained in 5.2(ii)(a) above.
5.4
Share-based payments
(i) Performance rights granted as remuneration
Details of performance rights that were granted to key management personnel during the financial year ended
31 July 2015 are set out below. All rights had a grant date of 16 December 2014, were provided at no cost to
the recipients and have an exercise price of $nil.
FY15 Performance
rights grant
Number of
rights granted
during FY15
Number of
rights forfeited
during FY15
Number of
rights vested
during FY15
Number of
rights held as
at 31 July 2015
Fair value per
right at grant
date ($)
Mr S Banfield
Mr C Levy
Mr W Springer
Ms M De Ville
Mr T Moffatt
Mr M Rafferty
36,000
48,000
18,000
24,000
36,000
36,000
-
-
-
-
-
-
-
-
-
-
-
-
36,000
48,000
18,000
24,000
36,000
36,000
5.9433
5.9433
5.9433
5.9433
5.9433
5.9433
There has been no vesting or granting of any rights since the year-end.
28
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
5.
Remuneration report – audited (continued)
5.4
Share-based payments (continued)
Details of performance rights that were granted to key management personnel during previous financial years
and that remained outstanding at the start of FY15 are set out below. All rights in the table below were provided
at no cost to the recipients and have an exercise price of $nil. The rights were granted on 22 November 2013
(FY14 grant), 24 December 2012 (FY13 grant) and 9 March 2012 (FY12 grant).
FY14 Performance
rights grant
Number of
rights held as
at 31 July 2014
Number of
rights forfeited
during FY15
Number of
rights vested
during FY15
Number of
rights held as
at 31 July 2015
Fair value per
right at grant
date ($)
Mr S Banfield
Mr J Paine
Mr C Levy
Mr W Springer
Ms M De Ville
Mr T Moffatt
36,000
30,000
51,000
33,000
9,000
33,000
-
-
-
-
-
-
12,000
10,000
17,000
11,000
3,000
11,000
24,000
20,000
34,000
22,000
6,000
22,000
3.9567
3.9567
3.9567
3.9567
3.9567
3.9567
FY13 Performance
rights grant
Number of
rights held as
at 31 July 2014
Number of
rights forfeited
during FY15
Number of
rights vested
during FY15
Number of
rights held as
at 31 July 2015
Fair value per
right at grant
date ($)
Mr S Banfield
Mr J Paine
Mr C Levy
Mr W Springer
Ms M De Ville
Mr T Moffatt
40,000
40,000
54,000
40,000
12,000
40,000
-
-
-
-
-
-
20,000
20,000
27,000
20,000
6,000
20,000
20,000
20,000
27,000
20,000
6,000
20,000
2.3267
2.3267
2.3267
2.3267
2.3267
2.3267
FY12 Performance
rights grant
Number of
rights held as
at 31 July 2014
Number of
rights forfeited
during FY15
Number of
rights vested
during FY15
Number of
rights held as
at 31 July 2015
Fair value per
right at grant
date ($)
Mr S Banfield
Mr J Paine
Mr C Levy
Mr W Springer
Mr T Moffatt
25,000
25,000
33,334
25,000
25,000
-
-
-
-
-
25,000
25,000
33,334
25,000
25,000
-
-
-
-
-
1.4733
1.4733
1.4733
1.4733
1.4733
(ii) Modification of terms of share-based payment transactions
No terms of share-based payment transactions have been altered or modified by the issuing entity during the
reporting period or the prior period.
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
29
6. Principal activities
During the financial year the principal activities of the Group continued to be the provision of consumer,
wholesale and corporate telecommunications services.
7. Dividends
Dividends paid or declared by the Company since the end of the previous financial year were as follows:
Cents per share
Total amount
$m
Date of payment
Final 2014 ordinary
Interim 2015 ordinary
Total amount
4.75
5.50
37.7
43.7
81.4
18 Nov 2014
19 May 2015
Dividends declared and paid during the year were fully franked at the rate of 30 per cent.
After the balance sheet date the directors have declared a fully franked final FY15 dividend of 6.0 cents per
ordinary share, payable on 17 November 2015 to shareholders on the register at 13 October 2015.
The financial effect of this dividend has not been brought to account in the financial statements for the year
ended 31 July 2015 and will be recognised in subsequent financial reports.
8. Events subsequent to reporting date
Acquisition of iiNet
Subsequent to the end of the financial year the Group completed its acquisition of iiNet Limited.
The acquisition combines two businesses that are highly complementary for a number of reasons, including
their respective market positioning and geographic presence, and should deliver scale benefits for the
combined group.
The acquisition was implemented through a scheme of arrangement under which the Group acquired the
93.75% of share capital in iiNet Limited that it did not already own.
The scheme was approved by the Federal court on 21 August 2015, became effective on the date of change
of control, which was 24 August 2015, and was completed when the consideration was transferred to iiNet
shareholders on 7 September 2015.
30
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
8. Events subsequent to reporting date (continued)
The consideration transferred to iiNet shareholders comprised:
Cash consideration: $1,156.8m; and
Share consideration: 23,212,554 TPG Telecom Limited shares with an acquisition date fair value of
$211.2m. This valuation was determined by reference to TPG’s volume weighted average share price
on 24 August 2015.
In addition, immediately prior to completion, iiNet shareholders were paid a discretionary special dividend
amounting to $106.7m (net of $7.0m which was paid to the Group) which was funded through a loan to iiNet
by the Group.
In order to fund the acquisition the Group entered into revised debt facility agreements with a syndicate of
banks in August 2015. The facilities, which total $1,960m, were used to fund the cash consideration, the
discretionary special dividend and to refinance the Group’s and iiNet’s existing bank debt.
The Group is not in a position to present information related to the acquisition date fair values of assets
acquired and liabilities assumed along with any goodwill that may arise from the acquisition of iiNet Limited
due to the proximity of the acquisition date of 24 August 2015 to the date of release of these financial
statements.
Agreements with Vodafone Hutchison Australia
On 29 September 2015 the Group entered into two new major agreements with Vodafone Hutchison Australia
Pty Limited (VHA): a major dark fibre transmission network expansion and an MVNO (Mobile Virtual Network
Operator) Agreement.
Dark Fibre Agreement
Under the Dark Fibre Agreement, TPG will provide dark fibre and network services to more than 3,000
Vodafone Australia sites over a 15 year term.
In order to provide the services, TPG will extend its current fibre infrastructure by constructing about 4,000km
of new fibre to Vodafone cell sites across the country.
This agreement extends the existing relationship between the two companies, TPG having already delivered
900km of fibre for VHA sites between FY11 and FY13.
Construction of the dark fibre network will start immediately with deployment to the majority of the existing
Vodafone network to be completed during 2018.
It is estimated that the Group will incur incremental capital expenditure of $300-400m over the rollout period,
the majority of which will be incurred over the next 3 years.
TPG will provide the dark fibre services for 15 years from the date each site is delivered, with contracted
revenue over the term exceeding $900m.
31
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
8. Events subsequent to reporting date (continued)
MVNO (Mobile Virtual Network Operator) Agreement
Under the MVNO Agreement the Group will migrate its TPG mobile customer base to the Vodafone network.
The agreement will mean TPG mobile customers will be able to experience Vodafone’s world-class network
which the Group is working to further enhance through the Dark Fibre Agreement.
Other
Other than the above, there has not arisen in the interval between the end of the financial year and the date
of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the
directors of the Company, to affect significantly the operations of the Group, the results of those operations,
or the state of affairs of the Group in future financial years.
9. Likely developments
There are no material likely developments for the Group to disclose outside of normal business operations at
the date of this report.
10. Directors’ interests
The relevant interest of each director in the shares and options over such instruments issued by the companies
within the Group and other related bodies corporate, as notified by the directors to the Australian Stock
Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows:
Shares in
TPG Telecom Limited
291,625,603
75,000
7,434,175
88,812
116,723
Mr D Teoh
Mr D Ledbury
Mr R Millner
Mr J Pang
Mr S Teoh
32
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
11. Share options and rights
Rights granted to directors and executives of the Group
During the financial year, the Group granted rights over ordinary shares in the Company to the following five
most highly remunerated officers of the Group as part of their remuneration:
Mr S Banfield
Mr C Levy
Mr W Springer
Mr T Moffatt
Mr M Rafferty
Number of rights
granted
36,000
48,000
18,000
36,000
36,000
All rights were granted during the financial year. No rights or options have been granted since the end of the
financial year.
Options
At the date of this report there are no unissued ordinary shares of the Company under option.
The Company issued no ordinary shares as a result of the exercise of options (nor were any options available
to be exercised) either during or subsequent to the year ended 31 July 2015 (2014: Nil).
12. Indemnification and insurance of officers and directors
Indemnification
The Company has agreed to indemnify all directors and officers of the Company against all liabilities to another
person (other than the Company or a related body corporate) that may arise from their position as a director or
as an officer of the Company and its controlled entities, except where the liability arises out of conduct involving
a lack of good faith. The agreement stipulates that the Company will meet the full amount of any such liabilities,
including costs and expenses.
Insurance premiums
Since the end of the previous financial year the Group has paid insurance premiums of $131,125 (2014:
$51,077) in respect of directors’ and officers’ liability insurance for current and former directors and officers,
including senior executives of the Company and directors, senior executives and secretaries of its controlled
entities. The insurance premiums relate to:
costs and expenses that may be incurred by the relevant officers in defending proceedings, whether civil or
criminal and whatever their outcome; and
other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of
duty or improper use of information or position to gain a personal advantage.
33
TPG Telecom Limited and its controlled entities
Directors’ report
For the year ended 31 July 2015
13. Non-audit services
During the year KPMG, the Company’s auditor, has performed certain other services in addition to their
statutory duties.
The Board has considered the non-audit services provided during the year by the auditor and is satisfied that
the provision of those non-audit services during the year by the auditor is compatible with, and did not
compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:
all non-audit services were subject to the corporate governance procedures adopted by the Company and
have been reviewed by the Audit & Risk Committee to ensure they do not impact the integrity and objectivity
of the auditor; and
the non-audit services provided do not undermine the general principles relating to auditor independence
as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or
auditing the auditor’s own work, acting in a management or decision making capacity for the Company,
acting as an advocate for the Company or jointly sharing risks and rewards.
Details of the amounts paid to KPMG and its related practices for audit and non-audit services provided during
the year are set out in note 30 to the financial statements.
14. Rounding off
The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and, in accordance with
that Class Order, amounts in the consolidated financial statements and directors’ report have been rounded off
to the nearest hundred thousand dollars, unless otherwise stated.
This report is made with a resolution of the directors.
David Teoh
Chairman
Dated at Sydney this 16th day of October, 2015
34
Lead Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001
To: the directors of TPG Telecom Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year
ended 31 July 2015 there have been:
no contraventions of the auditor independence requirements as set out in the Corporations
Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
(i)
(ii)
KPMG
Anthony Travers
Partner
Sydney
16 October 2015
TPG Telecom Limited and its controlled entities
Consolidated income statement
For the year ended 31 July 2015
35
Revenue
Other income
Telecommunications expense
Employee benefits expense
Other expenses
Earnings before interest, tax, depreciation and amortisation
(EBITDA)
Depreciation of plant and equipment
Amortisation of intangibles
Results from operating activities
Finance income
Finance expenses
Net financing costs
Profit before income tax
Income tax expense
Profit for the year attributable to owners of the company
Earnings per share:
Basic and diluted earnings per share (cents)
Note
2015
$m
2014
$m
4
5
1,270.6
3.8
970.9
2.6
(580.5)
(139.1)
(70.3)
(454.2)
(103.6)
(52.0)
484.5
363.7
11
12
(102.4)
(43.3)
(72.6)
(35.3)
338.8
255.8
1.1
(20.9)
(19.8)
1.8
(10.8)
(9.0)
319.0
246.8
(94.9)
(75.1)
224.1
171.7
28.2
21.6
6
7
8
The notes on pages 40 to 86 are an integral part of these consolidated financial statements.
36
TPG Telecom Limited and its controlled entities
Consolidated statement of comprehensive income
For the year ended 31 July 2015
Note
2015
$m
2014
$m
Profit for the year
224.1
171.7
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences
Net change in fair value of available-for-sale financial assets, net of tax
10
0.3
31.6
-
12.6
Other comprehensive income, net of tax
31.9
12.6
Total comprehensive income attributable to owners of the company
256.0
184.3
The notes on pages 40 to 86 are an integral part of these consolidated financial statements.
TPG Telecom Limited and its controlled entities
Consolidated statement of financial position
As at 31 July 2015
Note
31 July 2015
$m
31 July 2014
$m
37
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Investments
Prepayments and other assets
Total Current Assets
Trade and other receivables
Investments
Property, plant and equipment
Intangible assets
Prepayments and other assets
Total Non-Current Assets
Total Assets
Liabilities
Trade and other payables
Loans and borrowings
Current tax liabilities
Employee benefits
Provisions
Accrued interest
Deferred income and other liabilities
Total Current Liabilities
Loans and borrowings
Deferred tax liabilities
Employee benefits
Provisions
Deferred income and other liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Retained earnings
Total Equity
9
10
9
10
11
12
13
14
7
15
16
17
14
15
16
18
23.7
63.8
5.8
151.6
9.0
253.9
-
115.6
592.8
685.6
5.9
1,399.9
23.8
65.9
2.7
99.2
10.3
201.9
7.7
7.3
553.8
712.4
6.5
1,287.7
1,653.8
1,489.6
153.8
0.1
12.3
14.4
10.5
4.3
62.7
258.1
327.7
17.1
2.0
21.4
24.3
392.5
134.8
0.2
17.1
13.1
11.5
0.2
61.3
238.2
346.8
18.1
2.2
23.1
28.8
419.0
650.6
657.2
1,003.2
832.4
516.9
76.5
409.8
1,003.2
516.9
48.4
267.1
832.4
The notes on pages 40 to 86 are an integral part of these consolidated financial statements.
TPG Telecom Limited and its controlled entities
Consolidated statement of changes in equity
For the year ended 31 July 2015
38
The notes on pages 40 to 86 are an integral part of these consolidated financial statements.
ForeignShare-currencybasedSharetranslationpaymentsFair valueTotalRetainedTotalNotecapitalreservereservereservereservesearningsequity$m$m$m$m$m$m$mBalance as at 1 August 2013516.9 0.1 0.7 35.3 36.1 162.9 715.9 Profit for the year- - - - - 171.7 171.7 Net change in fair value of available-for-sale financial assets, net of tax10- - - 12.6 12.6 - 12.6 Total comprehensive income for the period- - - 12.6 12.6 171.7 184.3 Share-based payment transactions- - (0.3) - (0.3) - (0.3) Dividends paid to shareholders19 - - - - - (67.5) (67.5) Total contributions by and distributions to owners- - (0.3) - (0.3) (67.5) (67.8) Balance as at 31 July 2014516.9 0.1 0.4 47.9 48.4 267.1 832.4 Balance as at 1 August 2014516.9 0.1 0.4 47.9 48.4 267.1 832.4 Profit for the year- - - - - 224.1 224.1 Foreign currency translation differences- 0.3 - - 0.3 - 0.3 Net change in fair value of available-for-sale financial assets, net of tax10- - - 31.6 31.6 - 31.6 Total comprehensive income for the period- 0.3 - 31.6 31.9 224.1 256.0 Share-based payment transactions- - (3.8) - (3.8) - (3.8) Dividends paid to shareholders19 - - - - - (81.4) (81.4) Total contributions by and distributions to owners- - (3.8) - (3.8) (81.4) (85.2) Balance as at 31 July 2015516.9 0.4 (3.4) 79.5 76.5 409.8 1,003.2 Attributable to owners of the Company
TPG Telecom Limited and its controlled entities
Consolidated statement of cash flows
For the year ended 31 July 2015
39
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired
Costs incurred on acquisition of subsidiaries
Acquisition of property, plant and equipment
Acquisition of intangibles
Acquisition of investments
Dividends received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Transaction costs related to loans & borrowings
Payment of finance lease liabilities
Interest paid
Interest received
Dividends paid
Net cash (used in)/from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations
Note
27
25
10
5
2015
$m
1,403.3
(910.5)
492.8
(110.9)
381.9
-
-
(135.4)
(18.4)
(115.6)
3.8
(265.6)
14
14
175.0
(196.0)
-
(0.2)
(14.9)
0.6
19 (81.4)
(116.9)
2014
$m
1,090.0
(693.3)
396.7
(96.1)
300.6
(462.7)
(3.1)
(68.9)
(0.8)
-
2.6
(532.9)
472.0
(164.0)
(2.4)
(0.2)
(8.4)
1.0
(67.5)
230.5
(0.6)
(1.8)
23.8
0.5
26.1
(0.5)
Cash and cash equivalents at end of the year
23.7
23.8
The notes on pages 40 to 86 are an integral part of these consolidated financial statements.
40
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
Index to notes to the consolidated financial statements
Page
Page
Note 1
Reporting entity
Note 2
Basis of preparation
Note 3
Segment reporting
Note 4
Revenue
Note 5
Other income
Note 6
Finance income and expenses
Note 7
Taxes
Note 8
Earnings per share
Note 9
Trade and other receivables
Note 10
Investments
Note 11
Property, plant and equipment
Note 12
Intangible assets
Note 13
Trade and other payables
Note 14
Loans and borrowings
Note 15
Employee benefits
Note 16
Provisions
41
41
42
43
45
45
46
48
49
49
50
52
55
55
57
59
Note 17 Accrued interest
Note 18 Capital and reserves
Note 19 Dividends
Note 20
Financial instruments and
risk management
Note 21 Operating leases
Note 22 Capital and other commitments
Note 23 Consolidated entities
Note 24 Deed of cross guarantee
Note 25 Acquisition of subsidiary
Note 26 Parent entity disclosures
Note 27 Reconciliation of cash flows from
operating activities
Note 28 Related parties
Note 29 Subsequent events
Note 30 Auditors’ remuneration
Note 31 Significant accounting policies
60
60
61
62
69
69
70
71
74
75
76
77
80
81
82
41
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
1.
Reporting entity
TPG Telecom Limited (the ‘Company’) is a company domiciled in Australia. The address of the
Company’s registered office is 65 Waterloo Road, Macquarie Park, NSW 2113. The consolidated
financial statements as at, and for the year ended 31 July 2015, comprise the accounts of the Company
and its subsidiaries (together referred to as the ‘Group’). The Group is a for-profit entity and is primarily
involved in the provision of consumer, wholesale, government and corporate telecommunications
services.
2.
a.
Basis of preparation
Statement of compliance
The consolidated financial statements are general purpose financial statements which have been
prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian
Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial
statements comply with International Financial Reporting Standards (IFRSs) adopted by the
International Accounting Standards Board (IASB).
The consolidated financial statements were approved by the Board of Directors on 16 October 2015.
b.
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis with the
exception of assets and liabilities acquired through business combinations and financial instruments
which are measured at fair value. The methods used to measure fair values are discussed further at
note 31(k).
Notwithstanding the fact that the classifications within the 31 July 2015 consolidated statement of
financial position show a net current liability position, the accounts have been prepared on a going
concern basis as there are reasonable grounds to believe that the Group will be able to pay its debts as
and when they become due and payable based on its Board approved cashflow projections.
c.
Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the functional
currency of the majority of the subsidiaries of the Group.
The Group is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and, in accordance
with that Class Order, all financial information presented in Australian dollars has been rounded to the
nearest hundred thousand dollars unless otherwise stated.
42
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
2.
Basis of preparation (continued)
d.
Use of estimates and judgements
Preparation of the consolidated financial statements in conformity with IFRSs requires management to
make judgements, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised prospectively.
In particular, information about significant areas of estimation uncertainties and critical judgements in
applying accounting policies that have the most significant effect on the amounts recognised in the
financial statements is provided in the following notes:
Note 4 – revenue recognition for network capacity sales;
Note 12(v) – impairment testing for cash-generating units containing goodwill;
Note 20 – valuation of financial instruments;
Note 25 – acquisition of subsidiary.
3.
Segment reporting
The Group determines and presents operating segments based on the information that is internally
provided to the Executive Chairman, who is the Group’s chief operating decision maker.
An operating segment is a component of the Group that engages in business activities from which it
may earn revenues and incur expenses, including revenues and expenses that relate to transactions
with any of the Group’s other components. All operating segments’ operating results are regularly
reviewed by the Group’s Executive Chairman to make decisions about resources to be allocated to
each segment and assess its performance, and for which discrete financial information is available.
The Group recognises two operating segments, being its Consumer and Corporate segments.
Following the acquisition of AAPT on 28 February 2014, the Group reported AAPT as a separate
operating segment in its FY14 Annual report. However, following the integration of AAPT’s operations
during the current reporting period, AAPT’s results are now recognised within the Corporate segment in
this note.
The Group’s Consumer segment provides retail telecommunications services to residential and small
business customers. The Group’s Corporate segment provides telecommunications services to
corporate, government, and wholesale customers.
In the following table, expenses in the ‘Unallocated’ column comprise professional fees incurred in
relation to business combinations plus other corporate costs.
43
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
3.
Segment reporting (continued)
Consumer
Corporate
Unallocated
Consolidated
results
2015
$m
2014
$m
2015
$m
2014
$m
2015
$m
2014
$m
2015
$m
2014
$m
Revenue
Other income
628.1
-
563.2
-
642.5
-
407.7
-
-
-
3.8 2.6
1,270.6
3.8
970.9
2.6
Telecommunications expense
Employee benefits expense
Other expenses
Results from segment activities
(308.4)
(39.9)
(40.1)
239.7
(293.2)
(33.1)
(31.2)
205.7
(272.1) (161.0)
(70.5)
(17.1)
159.1
(99.2)
(28.9)
242.3
-
-
(1.3)
2.5
- (580.5)
- (139.1)
(70.3)
484.5
(3.7)
(1.1)
(454.2)
(103.6)
(52.0)
363.7
Depreciation of plant and equipment
Amortisation of intangibles
Results from operating activities
Net financing costs
Profit before income tax
Income tax expense
Profit for the year
Geographic Information
(102.4)
(72.6)
(43.3) (35.3)
338.8 255.8
(19.8) (9.0)
319.0 246.8
(94.9)
224.1
(75.1)
171.7
All of the Group’s revenues are derived from Australian based entities, except for $10.8million (2014: $10.5
million) derived from overseas customers.
All of the Group’s non-current assets are located in Australia, except for assets amounting to $115.9 million
(2014: $118.4 million) that are located either overseas or in international waters.
4.
Revenue
Revenue comprises the following:
Rendering of services
Sale of goods
Network capacity sales, recognised as:
-
-
operating leases
finance leases
Restated1
2014
$m
2015
$m
1,159.7
9.1
868.6
10.7
101.2
0.6
89.3
2.3
1,270.6
970.9
44
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
4.
Revenue (continued)
1 $33.5m of revenue previously classified under “Rendering of services” in the prior year
figures has been reclassified as Operating lease revenue in the re-stated prior year
comparatives above. This reclassification does not change the overall revenue figure and
has been done simply to more accurately reflect the split of products that have the
characteristics of an operating lease.
(i)
Rendering of services
Revenue from the rendering of telecommunications services includes the provision of data, internet,
voice, telehousing and other services to consumers and corporate customers. It is recognised on a
straight-line basis over the period the service is provided. Usage revenue for voice services is
recognised at completion of the call.
Where revenue for services is invoiced to customers in advance, the amount that is unearned at a
reporting date is recognised in the statement of financial position as deferred income, and its
recognition in the income statement is deferred until the period to which the invoiced amount relates.
Installation and set-up fee revenue is recognised on a straight line basis over the period of the contract
to which it relates.
(ii)
Sale of goods
Revenue from the sale of goods represents sales of customer equipment to consumer and corporate
customers. It is recognised (net of rebates, returns, discounts and other allowances) when the
significant risks and rewards of ownership have been transferred to the customer, which is ordinarily
when the equipment is delivered to the customer.
Where the sale is settled through instalments, interest revenue is recognised over the contract term,
using the effective interest method.
(iii)
Network capacity sales
Where a sale of network capacity relates to a specific separable asset, the sale is accounted for as a
lease and the Group is considered to be the lessor in the arrangement.
Where a sale which has been identified as a lease also contains some or all the following
characteristics, it is accounted for as a finance lease:
the purchaser’s right of use is exclusive and irrevocable;
the terms of the contract are for the major part of the asset’s useful economic life;
the attributable costs or carrying value can be measured reliably; and
no significant risks are retained by the Group.
45
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
4.
Revenue (continued)
Finance lease sales are accounted for by recognising in revenue the net gain on disposal of the specific
asset at the time the asset is de-recognised.
Lease sales that do not satisfy the above criteria are accounted for as operating leases, with revenue
recognised over the period of the contract on a straight-line basis.
Where a sale of network capacity is deemed not to relate to a specific separable asset, the sale is
accounted for as the rendering of a service and accounted for as described in (i) above.
(iv)
Revenue arrangements with multiple deliverables
Where two or more revenue-generating activities or deliverables are sold under a single arrangement,
each deliverable considered to be a separate unit of accounting is accounted for separately. When the
deliverables in a multiple deliverable arrangement are not considered to be separate units of
accounting, the arrangement is accounted for as a single unit.
The consideration from the revenue arrangement is allocated to its separate units based on the relative
selling prices of each unit. If no third party evidence exists for the selling price, then the item is
measured based on the best estimate of the selling price of that unit. The revenue allocated to each unit
is then recognised in accordance with the revenue recognition policies described above.
5.
Other income
Dividend income
6.
Finance income and expenses
Interest income
Interest expense
Unwinding of discount on provisions
Borrowing costs
Net financing costs
2015
$m
3.8
3.8
2015
$m
1.1
(14.0)
(0.6)
(6.3)
(19.8)
2014
$m
2.6
2.6
2014
$m
1.8
(8.2)
(0.2)
(2.4)
(9.0)
Net financing costs comprise interest payable on borrowings and finance leases, borrowing costs
expensed during the year relating to loans and borrowings, unwinding of discount on provisions and
interest receivable on funds invested.
46
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
7.
Taxes
Income tax expense
Current tax expense
Current year
Adjustments for prior years
Deferred tax expense
Origination and reversal of temporary differences
Adjustments for prior years
2015
$m
107.7
-
107.7
(12.6)
(0.2)
(12.8)
2014
$m
79.1
(0.2)
78.9
(3.6)
(0.2)
(3.8)
Income tax expense
94.9
75.1
Numerical reconciliation between tax expense and pre-tax accounting profit
Profit before tax
Income tax expense at the rate of 30%
Non deductible and non assessable items
Over provided in prior year
Income tax expense
Current tax liabilities
2015
$m
319.0
95.7
(0.7)
(0.1)
2014
$m
246.8
74.0
1.2
(0.1)
94.9
75.1
The current tax liability for the Group of $12.3m (2014: $17.1m) represents the remaining amount of
income tax payable in respect of the year ended 31 July 2015.
47
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
7. Taxes (continued)
Deferred tax assets and liabilities
Movement in temporary differences during the year
Deferred tax liabilities
Investments
Property, plant and
equipment
Intangible assets
Other items
Deferred tax assets
Receivables
Inventories
Provisions
Employee benefits
Unearned revenue
Equity raising costs
Tax loss carry-forwards
Balance
31 July 2013
$m
Recognised
in profit or
loss
$m
Recognised
in equity
$m
Acquired in
business
combination
$m
Balance
31 July
2014
$m
Recognised
in profit or
loss
$m
Recognised
in equity
$m
Acquired in
business
combination
$m
Balance
31 July
2015
$m
15.1
9.4
12.1
(0.5)
36.1
-
(0.2)
(7.0)
(1.7)
(10.5)
(0.4)
(0.9)
(20.7)
-
0.5
(6.8)
(0.8)
(7.1)
(0.4)
0.2
2.0
0.4
(0.3)
0.1
0.7
2.7
5.4
-
-
-
5.4
-
-
-
-
-
-
-
-
-
20.5
-
-
13.0
1.7
14.7
-
(0.3)
(9.4)
(3.3)
-
-
-
(13.0)
9.9
18.3
0.4
49.1
(0.4)
(0.3)
(14.4)
(4.6)
(10.8)
(0.3)
(0.2)
(31.0)
(0.3)
(9.5)
(1.0)
(10.8)
(1.5)
(0.1)
(0.6)
(0.3)
0.1
0.1
0.2
(2.1)
13.4
-
-
-
13.4
-
-
-
-
-
-
-
-
-
-
-
-
-
(1.5)
-
-
-
-
-
-
(1.5)
33.9
9.6
8.8
(0.6)
51.7
(3.4)
(0.4)
(15.0)
(4.9)
(10.7)
(0.2)
-
(34.6)
Net deferred tax liabilities
15.4
(4.4)
5.4
1.7
18.1
(12.9)
13.4
(1.5)
17.1
The company has not recognised deferred tax assets on unutilised capital losses of $18.4m
48
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
7. Taxes (continued)
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is
recognised in the income statement except to the extent that it relates to a business combination, or
items recognised directly in equity, in which case it is recognised in equity or in other comprehensive
income.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The following temporary differences are not provided for: initial recognition
of goodwill, the initial recognition of assets or liabilities that is not a business combination and that
affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to
the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of
the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the
reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to
offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority
on the same taxable entity.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
Tax consolidation
The Company and its wholly-owned Australian resident entities formed a tax-consolidated group with
effect from 1 August 2006 and have therefore been taxed as a single entity from that date. The head
entity within the tax-consolidated group is TPG Telecom Limited.
8.
Earnings per share
Basic and diluted earnings per share
2015
Cents
28.2
2015
$m
2014
Cents
21.6
2014
$m
Profit attributable to ordinary shareholders used in calculating basic and
diluted earnings per share
Weighted average number of ordinary shares used as the denominator
in calculating basic and diluted earnings per share
224.1
171.7
793,808,141
793,808,141
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS
is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined
by adjusting the weighted average number of ordinary shares outstanding, for the effects of all dilutive
potential ordinary shares.
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
9.
Trade and other receivables
Current
Trade receivables
Accrued income and other receivables
Less: Provision for impairment losses
Non-Current
Accrued income and other receivables
49
2015
$m
62.0
18.9
(17.1)
63.8
Restated1
2014
$m
66.41
15.3
(15.8)
65.9
-
7.7
1 The prior year comparative figure for trade receivables has been restated down by $19.7m with
offsetting adjustments made to current deferred income ($17.9m) and trade and other payables ($1.8m)
to remove an inappropriate grossing up of those numbers in the prior year consolidated statement of
financial position. There was no impact to the prior year consolidated income statement nor to the
opening prior year statement of financial position balances.
The Group’s exposure to credit and currency risk and impairment losses related to trade and other
receivables is disclosed in note 20.
10.
Investments
Available-for-sale financial assets
Current
Carrying amount at 1 August
Less: reclassified as non-current1
Acquisitions
Change in fair value
Carrying amount at 31 July
Non-Current
Carrying amount at 1 August
Add: reclassified from current1
Acquisitions
Change in fair value
Carrying amount at 31 July
2015
$m
99.2
(77.7)
113.0
17.1
151.6
7.3
77.7
2.6
28.0
115.6
2014
$m
81.2
-
-
18.0
99.2
7.3
-
-
-
7.3
The Group’s only financial instruments which are measured at fair value are available-for-sale financial
assets. The current and non-current available-for-sale financial assets, being ASX listed securities, are
valued at quoted market prices and categorised as Level 1 under the fair value hierarchy of AASB 7.
Refer note 20(ii) for accounting policy on recognition and measurement.
1As at 31 July 2015 the Group has reclassified its investment in iiNet from current to non-current.
50
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
10. Investments (continued)
Sensitivity analysis – equity price risk
A two percent increase in the share price of ASX listed equity investments as at the reporting date would have
increased equity by $3.7m after tax. An equal change in the opposite direction would have decreased equity by
$3.7m after tax.
11. Property, plant and equipment
Note
Network
infrastructure
$m
Land &
Buildings
$m
Leasehold
improvements
$m
Total
$m
Cost
Balance at 1 August 2013
Acquisitions through business combinations
Additions
Disposals
Effect of movements in exchange rates
Balance at 31 July 2014
25
Balance at 1 August 2014
Acquisitions through business combinations
Additions
Disposals
Effect of movements in exchange rates
Balance at 31 July 2015
Depreciation and impairment losses
Balance at 1 August 2013
Depreciation charge for the year
Disposals
Effect of movements in exchange rates
Balance at 31 July 2014
Balance at 1 August 2014
Depreciation charge for the year
Disposals
Effect of movements in exchange rates
Balance at 31 July 2015
Carrying amounts
At 31 July 2014
At 31 July 2015
576.8
238.8
64.8
(0.1)
(0.1)
880.2
3.3
3.0
- 2.1
0.1
1.6
-
-
-
4.9
-
5.2
583.0
240.9
66.5
(0.1)
(0.1)
890.3
880.2
-
135.4
-
0.7
1,016.3
4.9
-
4.6
-
0.2
9.7
5.2
-
0.8
-
0.5
6.5
890.3
-
140.8
-
1.4
1,032.5
261.1
71.9
-
(0.2)
332.8
0.5
0.1
-
-
0.6
2.3
0.6
-
-
2.9
263.9
72.6
-
(0.2)
336.3
332.8
101.2
-
0.6
434.6
0.6
0.1
-
0.1
0.8
2.9
1.1
-
0.3
4.3
336.3
102.4
-
1.0
439.7
547.2
581.7
4.3
8.9
2.4
2.2
553.8
592.8
51
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
11. Property, plant and equipment (continued)
Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses (see note 31(g)). Cost includes expenditure that is directly attributable to the acquisition of
the asset. The cost of self-constructed assets includes the cost of materials, direct labour, the initial estimate,
where relevant, of the costs of dismantling and removing the items and restoring the site on which they are
located.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items of property, plant and equipment.
The gains and losses on disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net
within other expenses in profit or loss.
(i)
Subsequent costs
Subsequent costs are added to existing assets if it is probable that future economic benefits will flow to
the Group.
(ii)
Depreciation
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives
of each part of an item of property, plant and equipment.
The estimated useful lives used in both the current and comparative periods are as follows:
Network infrastructure
Buildings
Leasehold improvements
3 - 25 years
40 years
8 years
The residual value, the useful life and the depreciation method applied to an asset are reassessed at
least annually.
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
12.
Intangible assets
52
Non-Amortising
Amortising
Total
Note
Goodwill
$m
Trademarks
$m
Acquired
customer
bases
$m
Indefeasible
rights of use
of capacity
$m
Software
$m
Licences
$m
$m
391.5
-
20.1
-
204.7
-
62.6
0.6
1.0
0.2
2.7
-
682.6
0.8
25
157.6
549.1
-
20.1
43.2
247.9
37.3
100.5
6.5
7.7
549.1
-
(3.0)
546.1
20.1
-
-
20.1
25
247.9
-
-
247.9
100.5
5.9
-
106.4
7.7
0.1
-
7.8
-
2.7
2.7
13.5
-
16.2
244.6
928.0
928.0
19.5
(3.0)
944.5
Cost
Balance 1 August 2013
Additions
Acquisitions through
business combinations
Balance 31 July 2014
Balance 1 August 2014
Additions
Acquisitions through
business combinations
Balance 31 July 2015
Amortisation and Impairment
Balance 1 August 2013
Amortisation for the year
Balance 31 July 2014
Balance 1 August 2014
Amortisation for the year
Balance 31 July 2015
Carrying amounts
At 31 July 2014
-
-
-
-
-
-
160.1
27.5
187.6
19.5
6.1
25.6
0.7
1.4
2.1
-
0.3
0.3
180.3
35.3
215.6
-
-
-
-
-
-
187.6
31.5
219.1
25.6
8.3
33.9
2.1
2.4
4.5
0.3
1.1
1.4
215.6
43.3
258.9
549.1
20.1
60.3
74.9
5.6
2.4
712.4
At 31 July 2015
546.1
20.1
28.8
72.5
3.3
14.8
685.6
Amortising intangibles are removed from cost in the analysis in the year after they become fully amortised.
53
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
12. Intangible assets (continued)
(i)
Goodwill
Goodwill arising on acquisition of subsidiaries is measured at cost less accumulated impairment losses.
For the measurement of goodwill at initial recognition, see note 31(a)(i).
(ii)
Other intangible assets
Other intangible assets that are acquired by the Group and have finite useful lives are stated at cost
less accumulated amortisation and any accumulated impairment losses.
The various categories of other intangible assets in the Group’s accounts are as follows:
-
Trademarks
On acquisition of a subsidiary, trademarks of the acquired subsidiary are valued and brought to account
as intangible assets. The valuation of a trademark is calculated using the Relief from Royalty Method.
-
Acquired customer bases
On acquisition of a subsidiary, customer contracts and relationships of the acquired subsidiary are
valued at the expected future economic benefits (based on discounted cashflow projections) and
brought to account as intangible assets.
-
Indefeasible rights of use of capacity
Indefeasible rights of use (IRUs) of acquired network capacity are brought to account as intangible
assets at the present value of the future cashflows payable for the right. IRUs of acquired subsidiaries
are accounted for at their fair value as at the date of acquisition.
-
Software
On acquisition of a subsidiary, internally developed software and systems are valued and brought to
account as intangible assets. The software is valued at its amortised replacement cost.
-
Licences
Licences include acquired distribution rights for third party products. Licences are recognised as
intangible assets at cost and are amortised using the straight line method over the term of the licence.
(iii)
Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future
economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed
as incurred.
54
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
12. Intangible assets (continued)
(iv)
Amortisation
Amortisation is charged to the income statement on a straight-line basis, unless otherwise stated, over
the estimated useful lives of intangible assets unless such lives are indefinite. Goodwill and intangible
assets with an indefinite useful life are systematically tested for impairment at each balance sheet date.
Other intangible assets are amortised from the date they are available for use.
The estimated useful lives used in both the current and comparative periods are as follows:
Goodwill
Trademarks
Acquired customer bases
Indefeasible rights of use (IRU) of capacity
Software
Licences
Indefinite life
Indefinite life
-
-
- Amortised on a reducing balance basis in line
with the expected economic benefits to be
derived
- Amortised over the life of the IRU
-
- Amortised over the term of the licence
2-20 years
(v)
Impairment tests for cash generating units containing goodwill
For the purpose of impairment testing, goodwill is allocated to the Group’s cash generating units
(CGUs). CGUs are determined according to the lowest level of groups of assets that generate largely
independent cashflows. As at 31 July 2014, the Group had three separate CGUs, being the Consumer,
Corporate and AAPT CGUs. Following the integration of AAPT operations within the Corporate
segment during FY15, it is no longer possible to separately identify AAPT cashflows from other
Corporate cashflows. Hence, as at 31 July 2015, the Group has only two separate CGUs, being the
Consumer and Corporate CGUs.
Indefinite life intangible assets comprise goodwill and trademarks and are allocated to the CGUs as set
out in the table below. Goodwill is allocated to the CGU that is expected to benefit from the synergies
of the acquisition.
2015
2014
Goodwill Trademarks
Total
Goodwill Trademarks
Total
$m
387
159
546
$m
20
-
20
$m
407
159
566
$m
387
162
549
$m
20
-
20
$m
407
162
569
Consumer
Corporate
Total
Determining whether goodwill is impaired involves estimating the value-in-use of the CGUs to which the
goodwill has been allocated.
Value-in-use is determined by discounting the projected future cashflows generated from the continuing
use of the assets in the relevant CGU.
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
12. Intangible assets (continued)
55
The cashflow projections utilised for this purpose comprise projections for a five year period plus a
terminal value. The projections are prepared by senior management using conservative assumptions
which include a long-term growth rate of 2% per annum based on the long-term industry growth rate
(2014: 2%), including for the terminal phase beyond year 5.
A pre-tax discount rate of 12.5% (2014: 13.5%) has been used in discounting the projected cashflows of
each CGU, which is based on the Group’s WACC adjusted to reflect an estimate of specific risks
assumed in the cashflow projections.
Sensitivity analysis on all key assumptions employed in the value-in-use calculations has been
performed. From this it was concluded that no reasonable possible movement in any of the key
assumptions would give rise to any impairment in either of the CGUs.
13.
Trade and other payables
Trade creditors
Other creditors and accruals
2015
$m
76.3
77.5
Restated1
2014
$m
62.6
72.1
153.8
134.8
Trade payables are non-interest bearing and are normally settled on 30-60 day terms.
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in
note 20(iii).
1Refer note 9 for explanation
14.
Loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and
borrowings. For more information about the Group’s exposure to interest rate and foreign currency risk,
see note 20.
Current
Finance lease liabilities
Non-Current
Gross secured bank loans
Less: Unamortised borrowing costs
Finance lease liabilities
2015
$m
2014
$m
0.1
0.2
329.0
(1.3)
327.7
-
327.7
350.0
(3.3)
346.7
0.1
346.8
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
14. Loans and borrowings (continued)
56
As at 31 July 2015 the Group had a debt facility of $490m. Subsequent to the year end the Group
entered into a revised debt facility agreement with a syndicate of banks for the purpose of financing the
acquisition of iiNet (Refer note 29).
During the year ended 31 July 2015, the Group made net repayments against the facility of $21m,
comprising draw-downs of $175m and repayments of $196m leaving a closing debt balance of $329m
as at 31 July 2015.
The outstanding loan balance as at year end is shown in the statement of financial position net of
unamortised borrowing costs of $1.3m (2014: $3.3m).
The interest rate payable under the debt facility is based on BBSY rates plus a margin determined
quarterly according to gearing ratio.
As at 31 July 2015, the debt facility was secured by a fixed and floating charge over all of the assets of
the Group, with the exception of the assets of the following subsidiaries:
Chariot Pty Ltd
Kooee Pty Ltd
Digiplus Contracts Pty Ltd
Blue Call Pty Ltd
Orchid Cybertech Services Inc (Philippines)
Orchid Human Resources Pty Ltd
TPG (NZ) Pty Ltd
IntraPower Pty Ltd
IP Service Xchange Pty Ltd
Trusted Cloud Pty Ltd
Trusted Cloud Solutions Pty Ltd
Alchemyit Pty Ltd
IP Group Pty Ltd
Mercury Connect Pty Ltd
VtalkVoip Pty Ltd
Intrapower Terrestrial Pty Ltd
Hosteddesktop.com Pty Ltd
Virtual Desktop Pty Ltd
Destra Communications Pty Ltd
Telecom New Zealand Australia Pty Ltd
AAPT Limited
Connect Internet Solutions Pty Limited
PowerTel Limited
Request Broadband Pty Ltd
Telecom Enterprises Australia Pty Limited
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
57
15.
Employee benefits
Current
Liability for annual leave
Liability for long service leave
Non-Current
Liability for long service leave
(i)
Current employee benefits
2015
$m
8.2
6.2
14.4
2014
$m
7.4
5.7
13.1
2.0
2.2
Liabilities for employee benefits that are expected to be settled within 12 months of the reporting date
represent present obligations resulting from employees’ services provided up to the reporting date, and
are calculated at undiscounted amounts based on remuneration wage and salary rates that the Group
expects to pay as at reporting date including related on-costs such as workers compensation insurance
and payroll tax.
(ii)
Non-Current employee benefits
The Group’s obligation in respect of long-term service is the amount of future benefit that employees
have earned in return for their service in the current and prior periods. The obligation is calculated
using expected future increases in wage and salary rates including related on-costs and expected
settlement dates, and is discounted using the rates attached to corporate bonds at the balance sheet
date which have maturity dates approximating to the terms of the Group’s obligations.
(iii)
Performance rights plan
The Group has in place a performance rights plan that provides for selected employees to be granted
rights to fully paid ordinary shares in the Company for no consideration, subject to certain performance
conditions. Under this scheme funds are transferred to a trust which acts as an agent and purchases
shares for the benefit of the selected employees. A share-based payments reserve is recognised for
the funds transferred to the scheme. An employee expense is recognised over the period during which
the employees become unconditionally entitled to the shares with a corresponding decrease in the
share-based payments reserve. The employee expense is based on the fair value at date of grant of
the rights. The fair value is calculated by subtracting the expected dividend payments per share during
the vesting period from the share price at date of grant.
The plan was introduced in FY12 and there have been four lots of rights granted to-date, one lot being
granted in each of FY12, FY13, FY14 and FY15.
All rights issued to-date have the same key terms which are as follows:
58
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
15. Employee benefits (continued)
One third of the performance rights granted will vest following the release of the Group’s audited
financial statements for each of the three financial years ending after the date of grant, subject to
the satisfaction of performance conditions.
At each vesting date:
o 30% of the performance rights that are due to vest on that date will vest if the rights holder has
been continuously employed by the Group up until and including the relevant vesting date; and
o 70% of the performance rights that are due to vest on that date will vest if the rights holder has
been continuously employed by the Group up until and including the relevant vesting date and
the Group has met its financial objectives for the financial year immediately preceding the
relevant vesting date.
Any performance rights which do not vest, automatically lapse.
The number of rights granted or outstanding during the year ended 31 July 2015 are set out below:
Balance as at 1 August 2014
Granted during the year
Forfeited during the year
Vested during the year
Balance as at 31 July 2015
Number of
Rights
1,092,734
481,500
(12,600)
(616,634)
945,000
The fair value of the rights at date of grant was calculated by subtracting the expected dividend
payments per share during the vesting period from the share price at date of grant. The weighted
average fair value and share price as at each date of grant are as follows:
Date of grant
9 March 2012
24 December 2012
22 November 2013
18 December 2013
16 December 2014
Weighted average
fair value
$1.4733
$2.3267
$3.9567
$4.5767
$5.9433
Share price
$1.56
$2.48
$4.15
$4.77
$6.20
At the year-end an estimate of how many rights are likely to vest based on the continuous employment
and financial performance conditions has been updated. The fair value of the number of rights
expected to vest has been expensed in proportion to how far through the vesting period the rights are at
that date. The amount consequently expensed in the year was $2.1m (2014: $1.5m).
Under the above share-based payment scheme, funds are transferred by the Company to a trust which
acts as an agent and purchases shares for the benefit of the selected employees. A share-based
payments reserve is recognised for the funds transferred to the trust. An employee expense is
recognised over the vesting period of the rights with a corresponding decrease in the share-based
payments reserve
59
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
15. Employee benefits (continued)
(iv)
Superannuation
The Group contributes to several defined contribution superannuation plans. Contributions are
recognised as an expense in the income statement on an accruals basis.
The Group contributed $8.2m to defined contribution superannuation plans during the current year
(2014: $5.7m).
16.
Provisions
Balance as at 1 August 2014
Provisions made during the
year
Provisions used during the year
Unwind of discount
Balance as at 31 July 2015
Current
Non-current
Make good
costs
$m
Lease
increment
$m
Onerous
leases
$m
Other
$m
Total
$m
18.3
1.4
11.9
3.0
34.6
0.6
(0.2)
0.6
19.3
2.6
16.7
-
(0.3)
-
1.1
-
1.1
1.8
(5.7)
-
8.0
4.5
3.5
0.5
-
-
3.5
3.5
-
2.9
(6.2)
0.6
31.9
10.5
21.4
A provision is recognised in the statement of financial position when the Group has a present legal or
constructive obligation as a result of a past event and it is probable that an outflow of economic benefits
will be required to settle the obligation. Provisions are determined by discounting the expected future
cashflows at a pre-tax rate that reflects current market assessments of the time value of money and,
where appropriate, the risks specific to the liability. The unwinding of the discount is recognised as a
finance expense.
Make good costs
The make good costs provision relates to the Group’s estimated costs to make good leased premises.
The provision is based on the estimated cost per leased site using historical costs for sites made good
previously.
Lease increment
Where the Group has contracted lease agreements that contain incremental lease payments over the
term of the lease, a provision is recognised for the increased lease payments so that lease expenditure
is recognised on a straight line basis over the lease term.
Onerous leases
Where the Group has contractual obligations with costs exceeding the expected economic benefits
owing from the arrangement, a provision is immediately recognised for the excess cost component.
60
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
17.
Accrued interest
Current
Interest on existing facility
Accrued expense relating to new committed facilities1
1 Payable on completion of iiNet acquisition (Refer note 29).
18.
Capital and reserves
Share capital
2015
$m
0.6
3.7
4.3
2014
$m
0.2
-
0.2
Ordinary shares
$m
2015
2014
2015
2014
Balance as at 1 August
Ordinary shares issued during the year
Balance as at 31 July
793,808,141 793,808,141
-
793,808,141 793,808,141
-
516.9
-
516.9
516.9
-
516.9
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
shares and share options are recognised as a deduction from equity, net of any tax effects.
The Company does not have authorised capital or par value in respect of its issued shares. The holders
of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one
vote per share at meetings of the Company. All shares rank equally with regard to the Company’s
residual assets.
Subsequent to the year-end, the Company issued 23,212,554 ordinary shares pursuant to the
acquisition of iiNet Limited (Refer note 29).
Foreign currency translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the
financial statements of foreign operations where their functional currency is different to the presentation
currency of the reporting entity.
Share-based payments reserve
The share-based payments reserve represents the value of shares held by a share-based remuneration
plan that the Company is required to include in the consolidated financial statements. No gain or loss is
recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity
instruments. At 31 July 2015 the number of Company shares held by the Group was 403,008 (2014:
16).
Fair value reserve
The fair value reserve comprises the cumulative net change in the fair value of available-for-sale
financial assets until the investments are derecognised or impaired.
61
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
19.
Dividends
Dividends recognised in the current year were as follows:
2015
Interim 2015 ordinary
Final 2014 ordinary
Total amount
2014
Interim 2014 ordinary
Final 2013 ordinary
Total amount
Cents
per share
Total
Amount
$m
Date of
payment
5.50
4.75
43.7 19 May 2015
37.7 18 Nov 2014
81.4
4.50
4.00
35.7 20 May 2014
31.8 19 Nov 2013
67.5
All dividends declared or paid during the year were fully franked at the tax rate of 30%.
The directors have declared a fully franked final FY15 dividend of 6 cents per share. As the final
dividend was not declared or resolved to be paid by the Board of directors as at 31 July 2015, the
dividend has not been provided for in the consolidated statement of financial position. The dividend has
a record date of 13 October 2015 and will be paid on 17 November 2015.
The Dividend Reinvestment Plan (DRP) is currently suspended until further notice.
Dividend franking account
30 per cent franking credits available to shareholders of the
Company for subsequent financial years
2015
$m
2014
$m
322.9
233.0
The above available amounts are based on the balance of the dividend franking account at year-end
adjusted for:
(a)
(b)
franking credits that will arise from the payment of the current tax liabilities;
franking debits that will arise from the payment of dividends recognised as a liability at the year-
end; and
franking credits transferred in on business combinations.
(c)
The ability to utilise the franking credits is dependent upon the ability of the Company to pay dividends.
The impact on the dividend franking account of dividends proposed after the balance sheet date but not
yet recognised as a liability is to reduce it by $20.4m (2014: $16.2m).
62
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
20.
Financial instruments and risk management
The Group classifies non-derivative financial assets into the following categories: loans and
receivables, and available-for-sale financial assets.
The Group classifies non-derivative financial liabilities into the other financial liabilities category.
(i)
Non-derivative financial assets and financial liabilities – recognition and derecognition
The Group initially recognises loans and receivables and debt securities issued on the date when they
are originated. All other financial assets and financial liabilities are initially recognised on the trade date.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual cash flows in a transaction in which
substantially all the risks and rewards of ownership of the financial asset are transferred and it does not
retain control over the transferred asset.
The Group derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expire.
Financial assets and financial liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Group has a legal right to offset the amounts and intends
either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
(ii)
Non-derivative financial assets - measurement
Loans and receivables
These assets are initially recognised at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, they are measured at amortised cost using the effective interest
method. The loans and receivables category comprises trade and other receivables.
Available-for-sale financial assets
These assets are initially recognised at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, they are measured at fair value and changes therein, other than
impairment losses, are recognised in other comprehensive income and accumulated in the fair value
reserve. When these assets are derecognised, the gain or loss in equity is transferred to profit or loss.
The available-for-sale financial assets category comprises equity securities.
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
20. Financial instruments and risk management (continued)
(iii)
Non-derivative financial liabilities - measurement
63
Non-derivative financial liabilities are initially recognised at fair value less any directly attributable
transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost
using the effective interest method. The non-derivative financial liabilities category comprises loans and
borrowings, and trade and other payables.
Risk management
The Group has exposure to the following risks from its use of financial instruments:
credit risk
liquidity risk
market risk
This note presents information about the Group’s exposure to each of the above risks, its objectives,
policies and processes for measuring and managing risk, and the management of capital. Further
quantitative disclosures are included throughout this financial report.
The Board of directors has overall responsibility for the establishment and oversight of the risk
management framework.
Risk management policies are established to identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management
policies and systems are reviewed regularly to reflect changes in market conditions and in the Group’s
activities. The Group aims to develop a disciplined and constructive control environment in which all
employees understand their roles and obligations.
The Group’s Audit & Risk Committee oversees how management monitors compliance with the Group’s
risk management policies and procedures and reviews the adequacy of the risk management framework in
relation to the risks faced by the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations, and arises principally from the Group’s receivables from
customers.
The Group’s exposure to credit risk is influenced by the individual characteristics of each customer, the
industry and the geographical region in which the customers operate.
The Group minimises concentration of credit risk by undertaking transactions with a large number of
customers. By industry, the Group is not subject to a concentration of credit risk as its customers
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
20. Financial instruments and risk management (continued)
operate in a wide range of industries.
64
The Group has established a credit policy for its corporate customers under which each new customer
is analysed individually for creditworthiness before the Group’s standard payment and delivery terms
and conditions are offered. The review includes obtaining external ratings, when available, and in some
cases bank references.
Credit limits may be established for each customer. These limits are reviewed regularly. Customers that
fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a prepayment
basis or on other specific terms considered by management to be satisfactory.
In monitoring customer credit risk, customers are grouped according to their credit characteristics,
including whether they are an individual or legal entity, whether they are a wholesale or retail customer,
geographic location, industry, ageing profile, and existence of previous financial difficulties.
The Group has established a provision for impairment that represents management’s estimate of
incurred losses in respect of trade and other receivables.
The carrying amount of the Group’s financial assets represents the maximum credit exposure from
those assets. The Group’s maximum exposure to credit risk at the reporting date was as follows:
Trade and other receivables
Cash and cash equivalents
Note
9
2015
$m
62.0
23.7
85.7
2014
$m
66.4
23.8
90.2
The Group’s maximum exposure to credit risk for trade receivables at the reporting date by customer
type was as follows:
Type of customer
Wholesale
Corporate
Retail
Note
9
2015
$m
35.0
17.2
9.8
62.0
2014
$m
33.6
23.0
9.8
66.4
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
20. Financial instruments and risk management (continued)
65
The Group’s maximum exposure to credit risk for trade receivables at the reporting date by
geographical region was as follows:
Geographical region
Australia
Other
Note
9
2015
$m
2014
$m
61.1
0.9
62.0
65.4
1.0
66.4
Geographically, the Group is subject to a concentration of credit risk as predominantly all of its revenue
is generated in Australia.
The ageing of the Group’s trade receivables at the reporting date was as follows:
Ageing of customer
Not past due
Past due 0-30 days
Past due 31-60 days
Past due 61-90 days
Past due 91-120 days
Past due 121 days
Gross trade receivables
Less: Provision for impairment losses
Net receivables
Note
9
9
2015
$m
30.3
22.2
4.0
1.0
0.8
3.7
62.0
(17.1)
44.9
2014
$m
31.5
21.7
5.0
1.8
1.6
4.8
66.4
(15.8)
50.6
The provision for impairment losses of the Group at 31 July 2015 of $17.1m (2014: $15.8m) represents
the risk of non-collection of outstanding debts that are past due and believed to be at risk of non-
collection. The provision is used to record impairment losses unless the Group is satisfied that no
recovery of the amount owing is possible. At this point the amount is considered irrecoverable and is
written off against the financial asset directly. The movement in the provision for impairment losses
during the year ended 31 July 2015 is as follows:
Balance at 1 August
Acquired through business combination
Impairment loss recognised/(written back)
Balance at 31 July
Note
25
9
2015
$m
15.8
-
1.3
17.1
2014
$m
6.3
9.8
(0.3)
15.8
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
20. Financial instruments and risk management (continued)
Liquidity risk
66
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages the cashflow projections of subsidiaries to optimise its return on cash. The Group
ensures that it has sufficient cash on demand to meet expected operational expenses including the
servicing of financial obligations.
In addition to its cash reserves, the Group had a debt facility of $490.0m available to it during the year
(of which $329.0m was utilised as at 31 July 2015) (refer note 14).
The following are the contractual maturities of financial liabilities, including estimated interest payments
and excluding the impact of netting agreements:
31 July 2015
Note
Carrying
amount
Contractual
cashflows
6 months
or less
6-12
months
$m
$m
$m
$m
1-2
years
$m
2-5 years
More than
5 years
$m
$m
Secured bank loans
Finance lease
liabilities
Trade and other
payables
14
(329.0)
(0.1)
(347.6)
(0.1)
(5.9)
(0.1)
(5.9)
-
(335.8)
-
13
(153.8)
(153.8)
(153.8)
-
-
(482.9)
(501.5)
(159.8)
(5.9)
(335.8)
-
-
-
-
-
-
-
-
31 July 2014
Note
Carrying
amount
$m
Contractual
cashflows
$m
6 months
or less
$m
6-12
months
$m
1-2
years
$m
2-5 years
$m
More than
5 years
$m
Secured bank loans
Finance lease
liabilities
Trade and other
payables
14
(350.0)
(0.3)
(387.5)
(0.3)
(7.3)
(0.1)
(7.3)
(0.1)
(14.5)
(0.1)
(358.5)
-
13
(134.8)
(134.8)
(134.8)
-
-
-
-
(485.1)
(522.6)
(142.2)
(7.4)
(14.6)
(358.5)
-
-
-
67
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
20. Financial instruments and risk management (continued)
It is not expected that the cashflows included in the maturity analysis above could occur significantly
earlier, or at significantly different amounts.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates,
will affect the Group’s income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within acceptable parameters,
while optimising return.
a) Currency risk
The Group is exposed to currency risk on revenues, expenses, receivables and borrowings that are
denominated in a currency other than its functional currency, the Australian dollar (AUD). These other
currencies include primarily the United States dollar (USD), the New Zealand dollar (NZD), Philippine
peso (PHP) and the Hong Kong dollar (HKD).
The Group to-date has not hedged its exposure to these non-functional currencies as the exposure is
not considered to be a significant risk to the Group.
b) Interest rate risk
At the reporting date the Group’s interest-bearing financial instruments were as follows:
Fixed rate instruments
Financial liabilities
Variable rate instruments
Financial assets
Financial liabilities
Note
14
14
2015
$m
(0.1)
2014
$m
(0.3)
23.7
(329.0)
23.8
(350.0)
(305.3)
(326.2)
The Group does from time-to-time hedge its exposure to the impact of changes in interest rates on its
core borrowings. As at 31 July 2015 the amount of borrowings that were hedged was $nil (2014: $nil).
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit
or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
20. Financial instruments and risk management (continued)
Cashflow sensitivity analysis for variable rate instruments
68
A change of 100 basis points in interest rates would cause a movement in the Group’s annualised
interest expense, based on the balance of its variable rate instruments as at 31 July 2015, of $3.1m
(2014: $3.3m) (assumes that all other variables, in particular foreign currency rates, remain constant).
Fair values versus carrying amounts
As at 31 July 2015, the fair values of the Group’s financial assets and liabilities approximate their
carrying amounts shown in the statement of financial position.
Interest rates used for determining fair value
The interest rates used to discount estimated cashflows, where applicable, are based on the rates
implicit in the transaction. In the case of Loans and borrowings, interest rate is based on BBSY rates
plus a margin determined quarterly according to gearing ratio.
c) Equity price risk
The Group is exposed to equity price risk because of its investments in available-for-sale equity
securities. Material investments are managed on an individual basis with the goal of maximising
returns.
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. The Board monitors return on capital,
which the Group defines as profit from operating activities divided by total shareholders’ equity. The
Board of directors also determines the level of dividends to be paid to shareholders.
The Board seeks to maintain a balance between the higher returns that might be possible with higher
levels of borrowings, and the advantages and security afforded by a sound capital position.
From time to time the Group may purchase its own shares on market for the purpose of issuing shares
under employee share plans. The Group does not currently have a defined share buy-back plan.
There were no changes in the Group’s approach to capital management during the year.
69
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
20. Financial instruments and risk management (continued)
The Group’s net debt to equity ratio at the reporting date was as follows:
Total loans and borrowings
Less: cash and cash equivalents
Net debt
2015
$m
329.0
(23.7)
305.3
2014
$m
350.0
(23.8)
326.2
Total equity
1,003.2
832.4
Net debt to equity ratio at 31 July
0.3
0.4
21.
Operating leases
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
More than five years
2015
$m
31.4
83.5
28.5
143.4
2014
$m
35.6
88.8
35.2
159.6
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the
term of the lease. Lease incentives received are recognised as an integral part of the total lease
expense, over the term of the lease.
22.
Capital and other commitments
Capital expenditure commitments contracted but not
provided for in the financial statements
2015
$m
2014
$m
162.1
34.5
Capital commitments at 31 July 2015 include the following:
$27m in respect of the balance of the purchase price payable for a property acquired during the
current reporting period, payable in October 2015.
US$73m* in respect of IRU agreements for international capacity entered into during the current
reporting period.
*translated into AUD at the prevailing spot rate at 31 July 2015 of $0.72.
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
23.
Consolidated entities
The following is a list of all entities that formed part of the Group as at 31 July 2015:
70
Name of Entity
Parent entity
TPG Telecom Limited
Subsidiaries
TPG Holdings Pty Ltd
TPG Internet Pty Ltd
Value Added Network Pty Ltd
TPG Network Pty Ltd
TPG Research Pty Ltd
TPG Broadband Pty Ltd
TPG (NZ) Pty Ltd
Orchid Cybertech Services Incorporated
Orchid Human Resources Pty Ltd
Chariot Pty Ltd
Soul Pattinson Telecommunications Pty Ltd
SPT Telecommunications Pty Ltd
SPTCom Pty Ltd
Kooee Communications Pty Ltd
Kooee Pty Ltd
Kooee Mobile Pty Ltd
Soul Communications Pty Ltd
Soul Contracts Pty Ltd
Digiplus Investments Pty Ltd
Digiplus Holdings Pty Ltd
Digiplus Pty Ltd
Digiplus Contracts Pty Ltd
Blue Call Pty Ltd
PIPE Networks Pty Ltd
PIPE Transmission Pty Ltd
PIPE International (Australia) Pty Ltd
PPC 1 Limited
PPC 1 (US) Incorporated
ACN 139 798 404 Pty Ltd
IntraPower Pty Ltd
IP Service Xchange Pty Ltd
Trusted Cloud Pty Ltd
Ownership interest
as at 31 July
Country of
incorporation
2015
%
2014
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Philippines
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Bermuda
USA
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
99.99
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
99.99
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
23. Consolidated entities (continued)
71
Name of Entity
Subsidiaries (continued)
Trusted Cloud Solutions Pty Ltd
Alchemyit Pty Ltd
IP Group Pty Ltd
Mercury Connect Pty Ltd
VtalkVoip Pty Ltd
Intrapower Terrestrial Pty Ltd
Hosteddesktop.com Pty Ltd
Virtual Desktop Pty Ltd
Destra Communications Pty Ltd
Numillar IPS Pty Ltd
Telecom New Zealand Australia Pty Ltd
AAPT Limited
Connect Internet Solutions Pty Limited
PowerTel Limited
Request Broadband Pty Ltd
Telecom Enterprises Australia Pty Limited
24.
Deed of cross guarantee
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest
as at 31 July
2015
%
100
100
100
100
100
100
100
100
100
88.57
100
100
100
100
100
100
2014
%
100
100
100
100
100
100
100
100
100
88.57
100
100
100
100
100
100
Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, the wholly-owned
subsidiaries as mentioned below are relieved from the Corporations Act 2001 requirements for
preparation, audit, and lodgement of financial reports and directors’ reports.
It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of
Cross Guarantee. The effect of the Deed is that the Company guarantees to each creditor payment in
full of any debt in the event of winding up of any of the subsidiaries under certain provisions of the
Corporations Act 2001. If a winding up occurs under other provisions of the Act, the Company will only
be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have
also given similar guarantees in the event that the Company is wound up.
The Deed of Cross Guarantee was entered into on 25 June 2008. All the subsidiaries listed in Note 23
above are subject to the Deed except for the following:
Orchid Cybertech Services Incorporated
PPC 1 Limited
PPC 1 (US) Incorporated
Trusted Cloud Solutions Pty Ltd
Alchemyit Pty Ltd
Mercury Connect Pty Ltd
VtalkVoip Pty Ltd
Hosteddesktop.com Pty Ltd
Destra Communications Pty Ltd
Numillar IPS Pty Ltd
72
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
24. Deed of cross guarantee (continued)
A consolidated statement of comprehensive income and consolidated statement of financial position,
comprising the Company and controlled entities which are a party to the Deed, after eliminating all
transactions between parties to the Deed of Cross Guarantee, at 31 July 2015 is set out as follows:
Statement of comprehensive income and retained profits
Revenue
Other income
Telecommunications expense
Employee benefits expense
Other expenses
Earnings before interest, tax, depreciation and amortisation
(EBITDA)
Depreciation of plant and equipment
Amortisation of intangibles
Results from operating activities
Finance income
Finance expenses
Net financing costs
Profit before income tax
Income tax expense
2015
$m
2014
$m
1,266.4
3.8
945.4
2.6
(599.8)
(117.2)
(65.5)
(449.0)
(87.1)
(49.1)
487.7
362.8
(97.1)
(40.8)
(67.5)
(32.7)
349.8
262.6
1.2
(20.9)
(19.7)
1.8
(10.8)
(9.0)
330.1
253.6
(94.7)
(75.0)
Profit for the year attributable to owners of the company
235.4
178.6
Other comprehensive income, net of tax
Total comprehensive income for the year
Retained earnings at beginning of year
Profit for the year
Dividends recognised during the year
Retained earnings at end of year
31.9
12.6
267.3
191.2
278.7
235.4
(81.4)
432.7
167.6
178.6
(67.5)
278.7
73
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
24. Deed of cross guarantee (continued)
Statement of financial position
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Investments
Prepayments and other assets
Total Current Assets
Trade and other receivables
Investments
Loans to subsidiaries
Property, plant and equipment
Intangible assets
Prepayments and other assets
Total Non-Current Assets
31 July 2015
$m
31 July 2014
$m
21.4
63.7
5.8
151.6
7.7
250.2
22.2
65.5
2.7
99.2
8.4
198.0
-
115.6
135.4
500.3
662.2
5.3
1418.8
7.7
7.3
107.8
461.4
686.4
6.1
1,276.7
Total Assets
1669.0
1,474.7
Liabilities
Trade and other payables
Loans and borrowings
Current tax liabilities
Employee benefits
Provisions
Accrued interest
Deferred income and other liabilities
Total Current Liabilities
Loans and borrowings
Deferred tax liabilities
Employee benefits
Provisions
Deferred income and other liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Retained earnings
Total Equity
149.5
0.1
12.3
14.4
7.5
4.3
62.7
250.8
327.7
17.1
2.0
21.4
24.3
392.5
131.6
0.2
17.0
13.1
8.5
0.2
59.0
229.6
346.8
18.1
2.2
23.1
10.9
401.1
643.3
630.7
1,025.7
844.0
516.9
76.1
432.7
1,025.7
516.9
48.4
278.7
844.0
74
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
25.
Acquisition of subsidiary
On 28 February 2014 the Group acquired 100% of Telecom New Zealand Australia Pty Ltd and its subsidiaries
which include AAPT (“AAPT”) for $463.5m. The FY14 Annual Report contains further details of this acquisition.
The provisional fair values of identifiable assets and liabilities of AAPT reported as at 31 July 2014 have been
finalised in the current reporting period and are set out in the table below.
Identifiable assets acquired and liabilities assumed
Provisional
31 July 2014
$m
Trade and other receivables
Provision for doubtful debts
Inventories
Prepayments and other assets
Property, plant and equipment
Customer base
IRU assets
Intangible assets
Trade and other payables
Employee benefits and provisions
Provisions
Deferred income
Deferred tax liabilities (net)
Net identifiable assets acquired
Consideration transferred
Cash paid
Less: Cash acquired
Total consideration, net of cash acquired
Goodwill on acquisition
44.4
(9.8)
3.3
17.4
240.9
43.2
37.3
6.5
(36.5)
(12.5)
(26.9)
(0.5)
(1.7)
305.1
463.5
(0.8)
462.7
Adjustments
Final
$m
-
-
-
-
-
-
-
-
-
-
1.5
-
1.5
3.0
-
-
-
$m
44.4
(9.8)
3.3
17.4
240.9
43.2
37.3
6.5
(36.5)
(12.5)
(25.4)
(0.5)
(0.2)
308.1
463.5
(0.8)
462.7
Consideration transferred, net of cash acquired
Less: Net identifiable assets acquired, net of cash acquired
Goodwill on acquisition
462.7
(305.1)
157.6
-
(3.0)
(3.0)
462.7
(308.1)
154.6
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
26.
Parent entity disclosures
75
Result of the parent entity
Profit/(Loss) for the period
Comprising:
Dividend from subsidiaries
Finance expenses
Costs relating to mergers and acquisitions
Income tax benefit
Other
Total profit/(loss) for the period
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity
Share capital
Reserves
Retained earnings
Total Equity
Company
2015
$m
Restated1
2014
$m
216.4
56.5
232.0
(20.3)
(0.8)
6.0
(0.5)
216.4
1.2
1,413.7
16.4
751.5
516.9
3.6
141.7
662.2
68.0
(10.6)
(3.2)
2.7
(0.4)
56.5
1.3
1,316.7
17.8
792.7
516.9
0.4
6.7
524.0
1 The prior year comparative figure has been restated to include a dividend receivable from a subsidiary
(TPG Internet Pty Ltd) on 31 October 2013 for $68m that was not included in the prior period. This has
resulted in a $68m increase to profit for the period, dividends from subsidiaries, total assets and
retained earnings for the parent entity. This restatement has no impact on the Group’s consolidated
income statement or the consolidated statement of financial position.
Parent entity guarantees
The parent entity has entered into a Deed of Cross Guarantee with the effect that the Company
guarantees debts in respect of certain subsidiaries.
Further details of the Deed of Cross Guarantee and the subsidiaries subject to the deed, are disclosed
in note 24.
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
27.
Reconciliation of cashflows from operating activities
76
Note
2015
$m
2014
$m
Cash flows from operating activities
Profit for the year after income tax
Adjustments for:
Dividend income
Depreciation of plant and equipment
Amortisation and impairment of intangibles
Bad and doubtful debts
Amortisation of borrowing costs
Performance rights plan expense
Unrealised foreign exchange loss
Interest income
Interest expense
Costs relating to mergers and acquisitions
Income tax expense
Operating profit before changes in working capital
and provisions
5
11
12
6
6
6
7
Changes in:
-
Trade and other receivables
-
Inventories
- Other assets
-
- Other liabilities
- Employee benefits
- Provisions
Trade and other payables
Income taxes paid
224.1
171.7
(3.8)
102.4
43.3
1.3
6.3
2.1
(1.8)
(1.1)
14.6
-
94.9
(2.6)
72.6
35.3
1.9
2.4
1.5
0.3
(1.8)
8.4
3.1
75.1
482.3
367.9
10.5
(3.1)
5.2
4.4
(3.1)
1.1
(4.5)
492.8
(110.9)
16.8
0.7
7.0
4.1
5.0
(2.8)
(2.0)
396.7
(96.1)
Net cash from operating activities
381.9
300.6
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
28.
Related parties
The following were key management personnel of the Group during the reporting period and, unless
otherwise indicated, were key management personnel for the entire period:
77
Retired 31 October 2014
Executive directors
Mr David Teoh
Executive Chairman & Chief Executive Officer
Mr Alan Latimer
Executive Director, Finance & Corporate Services
Non-executive directors
Mr Denis Ledbury
Mr Robert Millner
Mr Joseph Pang
Mr Shane Teoh
Executives
Mr Stephen Banfield
Chief Financial Officer and Company Secretary
Mr John Paine
National Technical and Strategy Manager
Mr Craig Levy
Chief Operating Officer
Mr Wayne Springer
General Manager, Corporate Products & Pricing
Ms Mandie De Ville
Chief Information Officer
Mr Tony Moffatt
General Counsel
Mr Mark Rafferty
General Manager Sales, Enterprise & Wholesale
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
28. Related parties (continued)
Key management personnel remuneration
The key management personnel remuneration included in employee benefits is as follows:
78
Short-term employee benefits
Post-employment benefits
Other long term benefits
Share-based benefits
2015
$m
7.2
0.2
0.2
0.9
8.5
2014
$m
5.8
0.2
0.1
0.7
6.8
Individual directors’ and executives’ remuneration disclosures
Information regarding individual directors’ and executives’ remuneration is provided in the
Remuneration Report section of the Directors’ report on pages 21 to 28.
During the year the Group rented office premises from companies related to a director of the Company,
Mr D Teoh. The total rent charged for the financial year 2015 was $0.8m (2014: $0.2m).
Apart from the details disclosed in this note, no director has entered into a material contract with the
Company or the Group since the end of the previous financial year and there were no material
contracts involving directors’ interests existing at year-end.
Loans to key management personnel and their related parties
There were no loans in existence between the Group and any key management personnel or their
related parties at any time during or since the financial year.
Other key management personnel transactions with the Company or its controlled entities
From time to time, key management personnel of the Company or its controlled entities, or their related
entities, may purchase goods or services from the Group. These purchases are on the same terms and
conditions as those entered into by other Group employees or customers and are trivial or domestic in
nature.
79
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
28. Related parties (continued)
Movement in shares
The movement during the reporting period in the number of ordinary shares in the Company held
directly, indirectly or beneficially by each key management person, including by their related parties, is
as follows:
Held at
Purchases
Granted as
Disposals
1 August
2014
remuneration
Held at
31 July
2015
291,625,603
100,000
7,374,175
88,812
90,251
-
-
60,000
-
-
-
-
-
-
-
-
-
-
-
-
291,625,603
100,000
7,434,175
88,812
90,251
200,000
3,913,717
493,666
174,902
137,402
575,571
-
-
-
-
-
-
-
-
57,000
55,000
77,334
56,000
9,000
56,000
-
(20,000)
-
(300,000)
-
-
-
-
Held at
Purchases
Granted as
Disposals
remuneration
237,000
3,968,717
271,000
230,902
146,402
631,571
-
Held at
31 July
2014
1 August
2013
291,625,603
500,000
100,000
7,374,175
88,812
90,251
200,000
3,868,717
599,783
129,902
131,402
552,571
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(300,000)
-
-
-
-
291,625,603
200,000
100,000
7,374,175
88,812
90,251
45,000
45,000
60,333
45,000
6,000
45,000
-
(45,000)
-
(166,450)
-
-
(22,000)
-
200,000
3,913,717
493,666
174,902
137,402
575,571
-
Directors
D Teoh
D Ledbury
R Millner
J Pang
S Teoh
Executives
S Banfield
J Paine
C Levy
W Springer
M De Ville
T Moffatt
M Rafferty
Directors
Mr D Teoh
Mr A Latimer
Mr D Ledbury
Mr R Millner
Mr J Pang
Mr S Teoh
Executives
Mr S Banfield
Mr J Paine
Mr C Levy
Mr W Springer
Ms M De Ville
Mr T Moffatt
M Rafferty
Identity of related parties
The Group has no related party relationships other than with its key management personnel.
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
29. Subsequent events
Acquisition of iiNet
80
Subsequent to the end of the financial year the Group completed its acquisition of iiNet Limited.
The acquisition combines two businesses that are highly complementary for a number of reasons,
including their respective market positioning and geographic presence, and should deliver scale benefits
for the combined group.
The acquisition was implemented through a scheme of arrangement under which the Group acquired the
93.75% of share capital in iiNet Limited that it did not already own.
The scheme was approved by the Federal court on 21 August 2015, became effective on the date of
change of control, which was 24 August 2015, and was completed when the consideration was
transferred to iiNet shareholders on 7 September 2015.
The consideration transferred to iiNet shareholders comprised:
Cash consideration: $1,156.8m; and
Share consideration: 23,212,554 TPG Telecom Limited shares with an acquisition date fair value of
$211.2m. This valuation was determined by reference to TPG’s volume weighted average share
price on 24 August 2015.
In addition, immediately prior to completion, iiNet shareholders were paid a discretionary special
dividend amounting to $106.7m (net of $7.0m which was paid to the Group) which was funded through a
loan to iiNet by the Group.
In order to fund the acquisition the Group entered into revised debt facility agreements with a syndicate
of banks in August 2015. The facilities, which total $1,960m, were used to fund the cash consideration,
the discretionary special dividend and to refinance the Group’s and iiNet’s existing bank debt.
The Group is not in a position to present information related to the acquisition date fair values of assets
acquired and liabilities assumed along with any goodwill that may arise from the acquisition of iiNet
Limited due to the proximity of the acquisition date of 24 August 2015 to the date of release of these
financial statements.
Agreements with Vodafone Hutchison Australia
On 29 September 2015 the Group entered into two new major agreements with Vodafone Hutchison
Australia Pty Limited (VHA): a major dark fibre transmission network expansion and an MVNO (Mobile
Virtual Network Operator) Agreement.
Dark Fibre Agreement
Under the Dark Fibre Agreement, TPG will provide dark fibre and network services to more than 3,000
Vodafone Australia sites over a 15 year term.
81
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
29. Subsequent events (continued)
In order to provide the services, TPG will extend its current fibre infrastructure by constructing about
4,000km of new fibre to Vodafone cell sites across the country.
This agreement extends the existing relationship between the two companies, TPG having already
delivered 900km of fibre for VHA sites between FY11 and FY13.
Construction of the dark fibre network will start immediately with deployment to the majority of the
existing Vodafone network to be completed during 2018.
It is estimated that the Group will incur incremental capital expenditure of $300-400m over the rollout
period, the majority of which will be incurred over the next 3 years.
TPG will provide the dark fibre services for 15 years from the date each site is delivered, with contracted
revenue over the term exceeding $900m.
MVNO (Mobile Virtual Network Operator) Agreement
Under the MVNO Agreement the Group will migrate its TPG mobile customer base to the Vodafone
network.
The agreement will mean TPG mobile customers will be able to experience Vodafone’s world-class
network which the Group is working to further enhance through the Dark Fibre Agreement.
Other
Other than the above, there has not arisen in the interval between the end of the financial year and the
date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of
the directors of the Company, to affect significantly the operations of the Group, the results of those
operations, or the state of affairs of the Group in future financial years.
30. Auditors’ remuneration
Audit and review services
Auditors of the Company – KPMG Australia
- Audit and review of financial statements
- Other regulatory audit services
Other services
Auditors of the Company – KPMG Australia
-
Taxation and other services
2015
$’000
2014
$’000
667
8
675
124
799
799
32
831
28
859
82
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
31. Significant accounting policies
The accounting policies as set out below have been applied consistently to all periods presented in these
consolidated financial statements and have been applied consistently across the Group. In the current
financial year, there are no new or revised Standards/ Interpretations issued by the Australian Accounting
Standards Board (AASB) that are effective for the current reporting period and that are relevant to the
Group.
a. Basis of consolidation
(i) Business combinations
The Group accounts for business combinations using the acquisition method when control is transferred to
the Group (refer (ii) below). The consideration transferred in the acquisition is generally measured at fair
value, as are the identifiable net assets acquired. Valuation techniques adopted for measuring assets
acquired are explained at (k) below. Goodwill is measured as the excess of consideration transferred as
compared to the value of identifiable net assets acquired. Transaction costs are expensed as incurred,
except if related to the issue of debt or equity securities.
Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent
consideration is classified as equity, then it is not remeasured and settlement is accounted for within
equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in
profit or loss.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries are included in the consolidated
financial statements from the date on which control commences until the date on which control ceases.
The accounting policies of subsidiaries have been changed when necessary to align them with the policies
adopted by the Group. Such changes have been made with effect from the date of acquisition.
(iii) Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-
group transactions are eliminated in preparing the consolidated financial statements.
b. Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are
translated to Australian dollars at the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the income statement. Non-monetary assets and
83
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
31. Significant accounting policies (continued)
liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates
ruling at the dates the fair value was determined.
c.
Foreign operations
The assets and liabilities of foreign operations are translated to Australian dollars at exchange rates at
the reporting date. The income and expenses of foreign operations are translated to Australian dollars
at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and presented in the
foreign currency translation reserve in equity.
d.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three
months or less and includes bank overdrafts that are repayable on demand and form an integral part of
the Group’s cash management.
e.
(i)
Leases
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether such an arrangement is or contains a
lease. A specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use
of that specified asset. An arrangement conveys the right to use the asset if the arrangement conveys
to the Group the right to control the use of the underlying asset.
(ii)
Leased assets
Leases in the terms of which the Group assumes substantially all the risks and rewards of ownership
are classified as finance leases. Other leases are operating leases and are not recognised in the
Group’s statement of financial position.
(iii)
Lease payments
Minimum lease payments made under finance leases are apportioned between the finance expense
and the reduction of the outstanding liability. The finance expense is allocated to each period during
the lease term so as to produce a constant periodic rate of interest on the remaining balance of the
liability.
At inception or upon reassessment of the arrangement, the Group separates payments and other
consideration required by such an arrangement into those for the lease and those for other elements on
the basis of their relative fair values.
84
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
31. Significant accounting policies (continued)
f.
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the
estimated selling price in the ordinary course of business, less estimated selling expenses.
g.
Impairment
Any financial asset that is not classified as an ‘at fair value through profit or loss’ asset, is assessed at
each reporting date to determine whether there is any objective evidence that it is impaired. A financial
asset is considered to be impaired if objective evidence indicates that one or more events have had a
negative effect on the estimated future cashflows of that asset.
At each reporting date, the Group reviews the carrying amounts of its non-financial assets, other than
inventories and deferred tax assets, to determine whether there is any indication of impairment. If any
such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets
that have indefinite useful lives or that are not yet available for use are tested annually for impairment.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit
exceeds its recoverable amount. Impairment losses are recognised in the income statement unless an
asset has previously been revalued, in which case the impairment loss is recognised as a reversal to
the extent of that previous revaluation with any excess recognised through profit or loss.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying
amount of the other assets in the units on a pro rata basis.
(i)
Calculation of recoverable amount
Impairment of receivables is not recognised until objective evidence is available that a loss event has
occurred. Significant receivables are individually assessed for impairment. Non-significant receivables
are not individually assessed. Instead, impairment testing is performed by placing non-significant
receivables in portfolios of similar risk profiles, based on objective evidence from historical experience
adjusted for any effects of conditions existing at each balance sheet date.
The recoverable amount of other assets is the greater of their fair value less costs to sell and value in
use. In assessing value in use, the estimated future cashflows are discounted to their present value
using a discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. For an asset that does not generate largely independent cash inflows, the
recoverable amount is determined for the cash-generating unit to which the asset belongs.
85
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
31. Significant accounting policies (continued)
(ii)
Reversals of impairment
Impairment losses, other than in respect of goodwill, are reversed when there is an indication that the
impairment loss may no longer exist and there has been a change in the estimate used to determine
the recoverable amount. An impairment loss in respect of goodwill cannot be reversed.
An impairment loss in respect of a receivable carried at amortised cost is reversed if the subsequent
increase in recoverable amount can be related objectively to an event occurring after the impairment
loss was recognised.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised.
h.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets
are capitalised as part of the cost of the asset. Borrowing costs relating to loans and borrowings are
capitalised and amortised over the term of the loan. All other borrowing costs are expensed in the
period they occur.
i.
Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST),
except where the amount of GST incurred is not recoverable from the taxation authority. In these
circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the
expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST
recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of
financial position.
Cashflows are included in the statement of cash flows on a gross basis. The GST components of
cashflows arising from investing and financing activities which are recoverable from, or payable to, the
ATO are classified as operating cashflows.
j.
New standards and interpretations not yet adopted
In the current reporting period, there are no new or revised Standards and Interpretations issued by the
Australian Accounting Standards Board (AASB) that are effective for the current reporting period and
are relevant to the Group.
TPG Telecom Limited and its controlled entities
Notes to the consolidated financial statements
For the year ended 31 July 2015
31. Significant accounting policies (continued)
k.
Determination of fair values
86
A number of the Group’s accounting policies and disclosures require the determination of fair value for
both financial and non-financial assets and liabilities. Fair values have been determined for
measurement and/or disclosure purposes based on the following methods. When applicable, further
information about the assumptions made in determining fair values is disclosed in the notes specific to
that asset or liability.
Material assets acquired through business combinations
Asset
acquired
Property,
plant and
equipment
Intangible
assets
Valuation technique
Fair values are based on quoted market prices for similar items when available, and
depreciated replacement cost when appropriate. Depreciated replacement cost
reflects adjustments for physical deterioration as well as functional and economic
obsolescence.
The fair value of trademarks is based on the discounted estimated royalty payments
that have been avoided as a result of the trademark being owned. The fair value of
other intangible assets is based on the discounted cashflows expected to be derived
from the use of the assets.
Inventories
Fair value is determined based on estimated selling price in the ordinary course of
business less the estimated costs of sale.
Trade and other receivables
The fair value of trade and other receivables is estimated as the present value of future cashflows,
discounted at the market rate of interest at the reporting date.
Equity and debt securities
The fair value of equity and debt securities is determined by reference to their quoted closing bid price
at the reporting date, or if unquoted, by using valuation techniques including market multiples and
discounted cashflow analysis.
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of
future principal and interest cashflows, discounted at the market rate of interest at the reporting date.
For finance leases, the market rate of interest is determined by reference to similar lease agreements.
TPG Telecom Limited and its controlled entities
Directors’ declaration
For the year ended 31 July 2015
87
1.
In the opinion of the directors of TPG Telecom Limited (‘the Company’):
(a)
the consolidated financial statements and notes that are set out on pages 35 to 86 and the Remuneration
report in section 5 of the Directors’ report, set out on pages 21 to 28, are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 31 July 2015 and of its performance for
the financial year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
2. There are reasonable grounds to believe that the Company and the group entities identified in note 24 will
be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the
Deed of Cross Guarantee between the Company and those group entities pursuant to ASIC Class Order
98/1418.
3. The directors have been given the declarations required by Section 295A of the Corporations Act 2001
from the chief executive officer and chief financial officer for the financial year ended 31 July 2015.
4. The directors draw attention to note 2(a) to the consolidated financial statements, which includes a
statement of compliance with International Financial Reporting Standards.
Dated at Sydney this 16th day of October, 2015.
Signed in accordance with a resolution of the directors.
David Teoh
Chairman
88
Independent auditor’s report to the members of TPG Telecom Limited
Report on the financial report
We have audited the accompanying financial report of the Group comprising TPG Telecom Limited (the
Company) and its controlled entities, which comprises the consolidated statement of financial position as at
31 July 2015, and consolidated income statement and consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on
that date, notes 1 to 31 comprising a summary of significant accounting policies and other explanatory
information and the directors’ declaration of the Group comprising the Company and the entities it controlled at
the year’s end or from time to time during the financial year.
Directors’ responsibility 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 is free from
material misstatement whether due to fraud or error. In note 2(a), the directors also state, in accordance with
Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements
of the Group comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant
ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable
assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that
gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in
accordance with the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is
consistent with our understanding of the Group’s financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
89
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a) the financial report of the Group is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 31 July 2015 and of its performance for
the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b) the financial report also complies with International Financial Reporting Standards as disclosed in note
2(a).
Report on the remuneration report
We have audited the Remuneration Report included in pages 21 to 28 of the directors’ report for the year
ended 31 July 2015. 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 auditing
standards.
Auditor’s opinion
In our opinion, the remuneration report of TPG Telecom Limited for the year ended 31 July 2015, complies
with Section 300A of the Corporations Act 2001.
KPMG
Anthony Travers
Partner
Sydney
16 October 2015
90
TPG Telecom Limited and its controlled entities
ASX additional information
For the year ended 31 July 2015
Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed
elsewhere in this report is set out below. The shareholding information is current as at 30 September 2015.
Substantial shareholders
The number of shares held by substantial shareholders and their associates are set out below:
Name of shareholder
Number of
ordinary shares
held
% of
capital held
David Teoh and Vicky Teoh
Washington H Soul Pattinson and Company Limited
291,625,603
213,400,684
35.69
26.12
Distribution of equity security holders
An analysis of the number of shareholders by size of holding is set out below:
Number of
holders
Number of shares held
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
5,623
4,623
1,168
1,203
125
12,742
The number of shareholders holding less than a marketable parcel of ordinary shares is 419.
Voting rights (ordinary shares)
On a show of hands every member present at a meeting in person or by proxy shall have one vote, and upon a
poll each share shall have one vote.
Stock exchange
TPG Telecom Limited is listed on the Australian Stock Exchange. The home exchange is Sydney, and the ASX
code is TPM.
Other information
TPG Telecom Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.
TPG Telecom Limited and its controlled entities
91
ASX additional information
For the year ended 31 July 2015
Twenty largest shareholders (as at 30 September 2015)
Name of shareholder
WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED
TSH HOLDINGS PTY LTD
VICTORIA HOLDINGS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
DAVID TEOH
NATIONAL NOMINEES LIMITED
VICKY TEOH
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
WIN CORPORATION PTY LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
(BKCUST A/C)
BNP PARIBAS NOMS PTY LTD (DRP)
J S MILLNER HOLDINGS PTY LIMITED
FARJOY PTY LTD
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
BKI INVESTMENT COMPANY LIMITED
MR JOHN ERIC PAINE
MILTON CORPORATION LIMITED
CITICORP NOMINEES PTY LIMITED (COLONIAL FIRST STATE INV A/C)
TOTAL PERIPHERALS PTY LTD (SUPER FUND A/C)
Number of
ordinary
shares held
% of
capital held
213,400,684
101,645,893
100,840,608
54,255,191
43,562,525
43,346,322
43,217,403
40,637,413
18,547,885
12,327,935
9,195,353
6,941,094
6,201,207
6,010,000
4,676,692
4,420,000
3,843,717
3,731,553
2,963,544
2,359,175
26.12
12.44
12.34
6.64
5.33
5.31
5.29
4.97
2.27
1.51
1.13
0.85
0.76
0.74
0.57
0.54
0.47
0.46
0.36
0.29
722,124,194
88.39
Principal Registered Office
63-65 Waterloo Road
Macquarie Park NSW 2113
Telephone: 02 9850 0800
Share Registry
Computershare Investor Services Pty Ltd
Level 4, 60 Carrington Street
Sydney NSW 2000
Telephone:
(within Australia) 1300 850 505
(international) +61 3 9415 4000
www.investorcentre.com/au