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Annual Report
2021
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Page 1 | TPG Telecom Annual Report 2021
Contents
About TPG Telecom
Chairman’s Letter
CEO’s Report
Key Risks
Sustainability at TPG Telecom
Operating and Financial Review (OFR)
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Financial Report
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
3
4
6
10
13
16
24
32
71
72
73
74
75
76
77
78
146
147
154
Lodged with the Australian Securities Exchange (‘ASX’)
under Listing Rule 4.3A.
The ASX Appendix 4E and Full-Year Financial Results of
TPG Telecom Limited and its controlled entities for the year
ended 31 December 2021.
Page 2 | TPG Telecom Annual Report 2021
About
TPG Telecom
TPG Telecom Limited, formerly
named Vodafone Hutchison Australia
Limited, was listed on the Australian
Securities Exchange on 30 June
2020. On 13 July 2020, this newly
listed company merged with TPG
Corporation Limited, formerly named
TPG Telecom, to bring together the
resources of two of Australia’s largest
telecommunications companies,
creating the leading challenger full-
service telecommunications provider.
TPG Telecom is home to some of Australia’s most-loved
brands including Vodafone, TPG, iiNet, AAPT, Internode,
Lebara and felix. We own and operate nationwide mobile
and fixed networks that are connecting Australia for
the better.
As the second largest telecommunications company
listed on the ASX, TPG Telecom has a strong challenger
spirit and a commitment to delivering the best services
and products to our customers. We are driving
competition and choice for businesses and consumers
across Australia.
Our Company
The merger brought together two highly complementary
businesses. TPG Telecom has the scale and financial
strength to compete more effectively in the market – with
greater ability to invest and drive innovation, service and
product improvements to benefit all Australians.
Our Purpose
As a full-service telecommunications company, our
nationwide mobile and fixed networks are connecting
Australia for the better. It’s why our purpose is to build
meaningful relationships and support vibrant, connected
communities.
Our Values
Our four values guide how we think and behave, what we
prioritise, and the experiences we create for our
customers and communities every day.
Stand together
Together we are unstoppable.
Own it
We step up and own what we do.
Simple’s better
We challenge ourselves to find a simpler, fresher way.
Boldly go
We are hungry, curious and brave.
Highlights
SERVICE REVENUE
EBITDA
NPAT
OPERATING FREE
CASH FLOW
$4.39b $1.73b $110m $596m
Page 3 | TPG Telecom Annual Report 2021
Chairman’s Letter
Canning Fok, Chairman
Dear Shareholders
Thank you for your continued support of and investment
in TPG Telecom Limited (TPG Telecom or Company). It
is my pleasure to present our Annual Report for 2021.
It was a great honour for me to be appointed as
Chairman in March 2021. My involvement with the
company dates back more than 20 years as Chairman of
Hutchison Telecommunications Australia, one of TPG
Telecom’s major shareholders, and later as a Director
and Chairman of Vodafone Hutchison Australia, which
was renamed TPG Telecom when the merger occurred
on 26 June 2020.
We are approaching the second anniversary, in July
2022, of the merger of Vodafone Hutchison Australia and
the original TPG. While the business of integrating the
two companies has been made more challenging by the
constraints created by the COVID pandemic, we have
made tremendous progress.
We finished 2021 in a strengthened position, significantly
advancing our key priorities, including simplifying the
business, implementing our integration activities, the
rolling out of our 5G network, and expanding our fixed
wireless broadband service offering. We also launched
our sustainability strategy and continued to receive
recognition for the quality of our products and services.
As market conditions improve post COVID and we
leverage the strong foundations of the merger and recent
investments in our network, TPG Telecom’s Board feels
very confident about the outlook for the company and
about what we can achieve as the headwinds we have
faced reduce and we achieve our potential.
TPG Telecom is committed to its customers, people and
shareholders and Directors are confident we are in a
strong position to challenge and shape the
telecommunications industry in Australia while delivering
long-term shareholder value.
2021 financial performance
The 2021 financial results reflected the challenges of the
COVID operating environment. Strong cost discipline and
other merger integration synergies offset the impact on
our results from the reduction in mobile customer
volumes due to travel restrictions and other COVID
impacts, as well as ongoing headwinds related to the
transition of fixed broadband services to the NBN.
The Company’s share price performance in the period
was below our expectations, primarily reflecting the
challenging operating conditions noted above.
Dividends
Notwithstanding the short-term challenges created by the
COVID pandemic, TPG Telecom remains in a strong
financial position, and delivered a strong cash flow
performance in the year.
This has allowed us to offer ongoing dividend increases,
paying an interim dividend in October 2021 of 8.0 cents
per share and declaring a fully franked final dividend
payable in April 2022 of 8.5 cents per share, up from 7.5
cents per share for the 2020 final dividend.
The Board is confident of continuing to reward
shareholders with dividends consistent with our policy of
paying out at least 50% of adjusted net profit after tax
(NPAT), which adds back one-off restructuring costs and
certain non-cash items (customer base intangible
amortisation, spectrum amortisation and any non-cash
tax expense) to statutory NPAT.
Page 4 | TPG Telecom Annual Report 2021
Board renewal
Conclusion and outlook
My appointment as Chairman in March followed David
Teoh’s decision to step back from the Company, having
built the original TPG into a major challenger in the
Australian telecommunications industry.
The Board is thankful to David for his contribution. We
also welcomed Jack Teoh, David’s son, as a Director this
year, as well as Antony Moffatt, TPG Telecom’s former
Company Secretary and before that, General Counsel of
the original TPG.
Looking ahead, the Board is confident TPG Telecom has
the leadership and strategy in place to deliver long-term
value for shareholders while achieving our purpose of
building meaningful relationships and supporting vibrant,
connected communities.
We have achieved a great deal despite the challenging
market and operating conditions created by COVID and
have created strong foundations for the next phase of
our growth and development as a company.
Sustainability
The Board welcomed the launch of our inaugural
Sustainability Strategy 2021, recognising the increasing
importance of sustainability practices to our customers
and shareholders.
The strategy outlines how we intend to enhance our
commitment to a responsible and sustainable business
through initiatives focused on the environment, customer
wellbeing, inclusion and belonging, and the digital
economy.
TPG Telecom formally committed to setting a science-
based target to provide a clear path to reduce carbon
emissions in line with the goals of the Paris Agreement.
We also committed to powering 100% of our Australian
operations with renewable energy by 2025, while our
felix brand is already 100% powered by renewable
electricity and certified carbon neutral.
The Company is currently working to determine its
shorter-term emissions reduction target and developing a
detailed roadmap to achieve net zero carbon emissions
by 2050.
As we enter 2022, we are in a strong financial position
and can be optimistic about the potential for improved
operating conditions at the same time as our strategy
gathers momentum and the market continues to
recognise the great value that telecommunications assets
and services provide to the economy and to society.
We expect COVID-related restrictions impacting our
mobile business to continue to lessen and we are
targeting to deliver on the next stage of simplification
and integration of the business, and to progress in key
growth areas such as fixed wireless broadband services
and services to larger business customers.
I wish to thank my fellow directors for their contributions,
and Chief Executive Officer and Managing Director, Iñaki
Berroeta, and his executive leadership team for their
commitment and passion for the business.
Above all, I would like to thank you, our shareholders, for
your support, and to recognise our TPG Telecom people
for their dedication to the Company, our customers, and
each other.
Canning Fok
Chairman
Page 5 | TPG Telecom Annual Report 2021
CEO’s Report
We are ahead of schedule in achieving our merger
synergies and we expect to deliver our 2023 target of
$125 million to $150 million a year earlier in 2022. We
are working hard to reduce operational and
organisational complexities throughout the business.
We are turning our focus to ways to drive higher
utilisation, increase sharing of infrastructure and unlock
value across our asset base. As we accelerate the
benefits of the merger and pursue these opportunities,
we have refreshed the guiding principles of our strategy
to Integrate and Simplify, Win Smart and Maximise our
Potential.
3. Maximise
our Potential
2. Win Smart
Iñaki Berroeta, CEO & Managing Director
The merger of Vodafone Hutchison Australia and
TPG Corporation established TPG Telecom Limited
(TPG Telecom, the Company) as a leading, full-service
telecommunications company with enormous market
potential.
In 2021, we made strong progress in starting to deliver
that potential while facing significant headwinds created
by the COVID pandemic and other short-term pressures.
We completed the first steps of integration to unify our
operations, while staying focused on delivering leading
customer service, looking after our people, and
strengthening our financial position.
As market headwinds begin to ease, we enter the year
ahead with confidence. The re-opening of Australian
borders will support the return of positive momentum in
Consumer mobile numbers, and we expect great
enthusiasm from customers for the products and services
we can offer.
For example, we have generated strong growth in
subscribers to our fixed wireless broadband services –
using 5G to offer an alternative to the NBN that delivers
value and choice to customers while reducing wholesale
service costs.
We are also offering more to larger customers, targeting
$1 billion of revenue in our Enterprise segment by 2025.
In our Wholesale business, the functional separation of
our retail and wholesale divisions means our
infrastructure can be deployed more effectively,
introducing more alternatives for customers.
1. Integrate
and Simplify
Time
2021 achievements
I am proud of our achievements in 2021 and our ability to
respond rapidly to market and societal changes in the
COVID operating environment.
We have navigated the pandemic with agility and
empathy and prioritised the health and safety of our
people, customers and partners throughout.
Critically, we were able to mitigate the financial impact of
challenging operating conditions by executing merger
cost synergies and through disciplined financial
management throughout the business.
Supporting our customers
TPG Telecom's ongoing ability to meet the needs of our
customers across more than 7.2 million services in
operation and be recognised for great product and
services is a source of pride for our people.
While subscriber numbers were lower in mobile because
of the constraints on international travel to and from
Australia, we grew our fixed broadband customer base as
customers embraced our fixed wireless offering.
Our family of brands also continued its industry
leadership position in customer satisfaction. We were
Page 6 | TPG Telecom Annual Report 2021
delighted by our recognition at Canstar Blue’s Telco
Awards for 2021, receiving the awards for Outstanding
Value in the Phone on a Plan and NBN Plans categories.
And we maintained an average number of
Telecommunications Industry Ombudsman complaints
well below the industry average and sustaining our
downward trend for reduced complaints overall.
While some customers have experienced increased
hardship during the pandemic, TPG Telecom has been an
active contributor to the Australian Communications and
Media Authority’s ongoing work on customer
vulnerability. Information about how we supported our
customers during the year detailed in our 2021
Sustainability Report.
Our people
Supporting the health and wellbeing of our people, we
established COVID-safe working protocols and
implemented a policy of granting extra leave to enable
our people to access vaccinations.
A key Company focus is the experience of our
employees, monitored through our Spirit Survey. In 2021,
we recorded increases both in overall employee
engagement and in our Values Alignment Index. These
were solid improvements as we continue to seek to
exceed the benchmark for high performing organisations.
More information on employee engagement and
wellbeing can be found in our Sustainability Report.
Operational highlights
We delivered $71 million of cost synergies in the year,
just ahead of our target of $70 million, as we eliminated
third-party network expenditure and reduced duplication
in the organisation, creating a strong foundation to
deliver further efficiencies in 2022.
Another great benefit of the merger has been the
opportunity to extract value from the combined Group’s
assets and avoid greater capital investment.
The strength of our existing low-band mobile spectrum
holdings ensured TPG Telecom did not have to
participate in the Federal Government’s auction of
additional 850 MHz and 900 MHz spectrum in December
2021.
Avoided spectrum investment frees up capital to
accelerate other investment in our network, specifically
the 5G upgrade, as well as the government mandated
replacement of Huawei equipment over coming years.
The collective spectrum holdings of the merged Group,
combined with the large investments we are making in
our 5G network – part of the largest global 5G network
under the Vodafone brand – mean we now have our best-
ever network.
Significantly, we converted more than 1,000 sites to 5G
across our radio access network in 2021 and, with the
introduction of our standalone 5G network and
introduction of 700 MHz spectrum, achieved 5G
coverage to 85% of the population in Australia’s top 10
cities.
In December 2021, we commenced reducing
organisational complexities across roles and
responsibilities, streamlining our Executive Leadership
Team from eleven to seven members. This change is the
first step in enabling us to further simplify our
organisational structure in 2022 to support a more
efficient and sustainable operating model.
I was excited to welcome Giovanni Chiarelli as our new
Chief Technology Officer and Grant Dempsey as our new
Group Chief Financial Officer early in 2022.
Financial highlights
Our financial performance for 2021 reflects the
challenges of the pandemic and our progress in
simplifying the business, while gaining new customers
and market share in key areas.
Consumer segment
In Consumer, revenue of $4,308 million was down 4% on
the 2020 pro forma1 result as lower mobile revenue was
offset partially by increases in the fixed broadband
business2. Earnings before interest, tax, depreciation and
amortisation (EBITDA) was down 8% on 2020 pro forma
to $1,211 million because of the revenue decline3.
The lower mobile revenue was primarily driven by the
ongoing impact of COVID on international travel and
aggressive competitor discounting of secondary brands
and in retail partner channels.
Although we have started to see a recovery over the last
two to three months, mobile customer numbers were
down over 2021 by 4% to 5.02 million.
The reduction in average revenue per user (ARPU) in
Consumer mobile since the beginning of COVID has
started to stabilise. Post-paid ARPU of $39.1 was up
marginally from $38.9 in the first half of 2021 but still
down from $40.7 in the second half of 2020. This decline
included a reduction in interconnection rates for calls
from other networks, which is largely offset in costs.
In our fixed business, we delivered strong gains in higher
margin fixed wireless services – in which we reached
1 Pro forma comparisons adjust FY20 statutory results as if the merger,
2 Pro forma adjustment adds $816 million to statutory FY20 Consumer
which occurred in June 2020, had been effective throughout the whole
of FY20.
revenue of $3,656 million.
3 Pro forma adjustment adds $247 million to statutory FY20 Consumer
EBITDA of $1,065 million.
Page 7 | TPG Telecom Annual Report 2021
80,000 subscribers – and out total customer numbers
increased to 2.22 million. However, these gains were
offset by the impact of transitioning legacy ADSL
customers to lower margin NBN services, higher NBN
wholesale costs, and the imposition of the Regional
Broadband Scheme levy on non-NBN broadband
customers.
Corporate segment
In Corporate, total revenue of $985 million was down 1%
on 2020 pro forma, as growth in on-net fibre and NBN
enterprise ethernet services were offset by the decline in
legacy copper-based services4. EBITDA in Corporate of
$492 million was up 6% due to lower operating costs5.
Group results
At the Group level, the delivery of merger cost synergies
drove operating costs lower, partially offsetting the
impacts in gross margin in Consumer noted above, while
disciplined financial management throughout the
business resulted in a strong cash flow result despite the
challenging operating conditions.
Total group revenue was $5,293 million, down 3% on
2020 pro forma6. Service revenue, which excludes device
and installation revenue, was $4,389 million, down 4% on
2020 pro forma7. EBITDA of $1,731 million was down 3%
on 2020 pro forma as reductions in operating costs,
primarily in labour, partially mitigated revenue impacts8.
Our cash flow result was robust. A smaller increase in
working capital arising from continued disciplined
financial management resulted in operating cash flow of
$1,627 million, up $64 million on 2020 pro forma9
despite the decline in EBITDA.
Investment in the business continued. Total capital
expenditure on property, plant and equipment and
intangibles was $831 million as we continued the 5G
upgrade. Spectrum investment was greatly reduced at
$91 million, compared with $204 million in 2020,
reflecting the strong spectrum holdings we already have
in place. Operating free cash flow was $596 million, while
free cash flow before dividends improved to
$410 million.
This strong result enabled us to reward shareholders with
a final dividend of 8.5 cents per share, 1.0 cent per share
higher than 2020, in addition to the 2021 interim
dividend of 8.0 cents per share. Adjusted net profit after
tax (NPAT), which backs out the impact of amortisation
of spectrum holdings and acquired intangibles, as well as
non-cash tax and restructuring costs, is the basis for
dividend calculations. Total dividends declared for 2021
were 53% of Adjusted NPAT, a strong outcome relative to
our policy of paying out at least 50%.
2022 outlook
We have entered 2022 with confidence that many of the
headwinds of the past two years are lessening – and that
our momentum in growth areas and delivering cost
savings will make a positive impact as we target the early
delivery of $125 million to $150 million of cost synergies.
In Consumer, we anticipate the impacts on mobile
subscriber numbers due to the constraints to
international travel will ease and are encouraged by a net
increase in total subscribers since November 2021.
While the competitive environment in mobile remains
robust, we are optimistic we are entering an environment
in which margins can stabilise and recover as consumer
uptake of 5G plans accelerates.
In fixed, our target is to more than double uptake of fixed
wireless services to 160,000 subscribers, enabling
consumers to access a lower cost alternative to the NBN
that avoids costly NBN wholesale fees. In addition, the
impact of transitioning legacy ADSL customers to the
NBN will be less.
In the Corporate segment, which includes our Enterprise
and Wholesale businesses, we anticipate further margin
growth in 2022. We have been delighted to announce
recent major customer wins, including NAB, Qantas,
Master Builders Victoria and Yarra Valley Water
Noting the programs in place to accelerate upgrades to
our network and technology platforms, we expect capital
expenditure for the year will be approximately
$1,000 million, with minimal further spectrum capex.
Strategic priorities
TPG Telecom’s priorities for 2022 reflect the three
guiding principles of our strategy I set out at the
beginning of this report: Integrate and Simplify, Win
Smart and Maximise our Potential. We currently have
several initiatives under each of these.
Integrate and Simplify means creating a lean company
integrating our brands, technology, infrastructure,
processes, and people as one.
The delivery of merger cost synergies will continue to be
a direct benefit of these efforts. We are putting in place
transformation initiatives across the Company – focused
on our technology architecture and our operating model
4 Pro forma adjustment adds $302 million to statutory FY20 Corporate
7 Pro forma adjustment adds $1,112 million to statutory FY20 Group
revenue of $690 million.
service revenue of $3,458 million.
5 Pro forma adjustment adds $133 million to statutory FY20 Corporate
8 Pro forma adjustment adds $398 million to statutory FY20 Group
EBITDA of $331 million.
EBITDA of $1,391 million.
6 Pro forma adjustment adds $1,118 million to statutory FY20 Group
revenue of $4,346 million.
9 Pro forma adjustment adds $375 million to statutory FY20 Group
operating cash flow of $1,188 million.
Page 8 | TPG Telecom Annual Report 2021
– to establish a base from which we can keep recurring
operating expenditure broadly flat year-on-year. This will
include rationalising IT applications.
Simplification of our brand and marketing strategy is also
critical to reducing complexity and enhancing our ability
to offer customers a greater number of value-adding
products and services, simply and seamlessly.
Win Smart means focusing our investments where a clear
infrastructure advantage, increased utilisation opportunity
or valuable adjacency exists.
Leveraging our 5G investments and Vodafone’s global 5G
leadership as Australia recovers from the impact of
COVID will be key. We intend to upgrade anther 1000-
plus sites to 5G in 2022. This should create an
environment in which mobile subscriber numbers and
ARPU recover and enable us to build on our strong
progress in converting NBN customers to fixed wireless.
There are four pillars to our strategy to grow Enterprise
revenue (about 70% of Corporate revenue today) to
$1 billion by 2025: developing an enterprise portfolio for
small business; growing enterprise connectivity through
better utilisation of our on-net broadband and NBN
services; building our capabilities in network managed
services and security; and enhancing our Internet of
Things and mobile private networks solutions offerings.
In Wholesale, completing the functional separation will
open up more opportunities to invest in our on-net fibre-
to-the-basement (FTTB), hybrid fibre coaxial (HFC) and
very high-speed digital subscriber line (VDSL) networks
to enable growth as we look to bring more retail service
providers on to the network.
Maximise our Potential means developing an efficient
and scalable business model that creates a vibrant and
dynamic competitor in the telco industry.
Key to delivering a sustained transformation of this kind
will be the delivery of enhanced, end-to-end digitisation
in both Consumer and Enterprise channels.
Strategic Priorities
In addition, we are being strategic in the way we develop
our infrastructure. We will we enhance the value and
capability of our business by investing while also
exploring opportunities to drive higher asset utilisation
through greater sharing.
The pandemic has led to an increased recognition of the
critical role telecommunications services play in our
economy and society. This has led to increased interest
in the sector from pension funds and specialist investors.
This creates opportunity for TPG Telecom to unlock
greater value for the network infrastructure we own. For
this reason, we are undertaking a review of whether we
can release value for shareholders by divesting the
passive infrastructure we own at approximately 1,250
mobile phone towers and rooftop sites to a specialist
investor that can drive higher utilisation.
Execution of our sustainability strategy is key to the
company maximising its potential. We are excited about
the commitments we have made in customer wellbeing,
environmental responsibility, inclusion and belonging,
and the digital economy.
Conclusion
This is an exciting time for our industry and TPG
Telecom. Having proven resilient to the challenges of
COVID, we are positioned to continue to simplify our
business and grow our market-share as a dynamic and
integrated market leader.
While there is still more to do to unlock the full value of
the business, we made excellent progress during 2021
and TPG Telecom is poised to accelerate its
transformation in 2022.
Inaki Berroeta
Chief Executive Officer and Managing Director
2021
achievements
2022
objectives
INTEGRATE AND SIMPLIFY
•
Realised $71m merger cost
synergies
Streamlined leadership team
•
•
• Deliver $125-150m merger
cost synergies target
Transform operating model
to remove complexity
Evolve Consumer brand and
marketing strategy
•
•
•
•
•
WIN SMART
•
Reached 80,000 fixed
wireless subscribers
Relaunched Enterprise go-to-
market strategy
MAXIMISE OUR POTENTIAL
• Delivered 1,000+ 5G sites
• Commenced strategic review
of passive towers
infrastructure
Leverage recent positive
momentum in mobile
Target at least 160,000 fixed
wireless subscribers
Execute Enterprise growth
strategy
• Deliver additional 1000+ 5G
•
•
sites
Enhance co-investment and
infrastructure sharing models
Potential monetisation of
passive towers infrastructure
• Deliver functional separation
in Wholesale
Page 9 | TPG Telecom Annual Report 2021
Key Risks
Overview
At TPG Telecom, we recognise proactive risk
management is essential for achieving our business
objectives and improving outcomes for our customers,
employees, and shareholders. We are committed to the
ongoing development of a strategic and consistent
approach to risk management underpinned by a risk
aware culture.
The Board is responsible for overseeing the effectiveness
of the risk management framework while the Executive
Leadership Team and business units have responsibility
for managing risks, including identification of risks and
developing appropriate mitigation strategies. Our
comprehensive risk management framework outlines our
risk appetite, policies and procedures, reporting and
performance and resilience activities. The enterprise risk
function supports and drives consistent application of
the risk management framework across the Group.
The material business risks which could impact strategy
execution and operational performance are provided
below. These are not in in order of priority and do not
represent all the financial and non-financial risks
monitored by the organisation.
Key Risks
Network capability and performance
Our customers rely on the availability and performance of
our mobile and fixed networks. Network congestion and
outages lead to poor customer experience and negatively
impact our reputation. The COVID pandemic has
highlighted the critical role that our sector plays and has
reinforced the importance of resilient and reliable
telecommunication services. Our networks have kept
family and friends connected, allowed businesses to
continue operating through remote working
arrangements and facilitated ecommerce through
lockdowns.
The potential of network failures caused by human error,
accidental damage, power outages, extreme weather
conditions, natural disasters including bushfires, and
physical or cyber security breaches could cause
disruption to our business resulting in financial loss,
increased customer attrition and possible legal liability.
Furthermore, our ability to operate a competitive
telecommunications business is dependent upon access
to sufficient spectrum, equipment, and network
infrastructure. If we were unable to acquire, renew or
otherwise secure sufficient spectrum, equipment or
network infrastructure at a competitive cost, our ability to
provide services to customers economically and
efficiently may limit profitability.
We have, and continue to, invest significantly in network
capability and resilience. Our network resilience is
closely and continually monitored, and we have a robust
operational incident management process in place as
well as a Crisis and Emergency response plan for
significant incidents.
Competitive industry and market disruption
We operate in a highly competitive marketplace where
strong price competition, increasing demand for data
and the high cost of network investment challenge our
ability to sustain revenue growth, and increase market
share. The telecommunications industry is particularly
susceptible to rapid change, due to technological
innovation, changing consumer trends and rapidly
evolving industry practices. Innovation and disruptive
technologies may cause market discontinuity which may
in turn adversely impact our business models where
there is a failure to transition and adapt quickly.
To mitigate this risk, we continuously review and update
our products and services as well as our operating model
to maintain innovative and competitive offerings. We are
also transforming our digital services to deliver an
improved customer experience while maintaining an
optimum cost base. Our technology experts monitor
technological developments and emerging trends and
work with global technology providers to capitalise on
these opportunities.
The COVID pandemic continues to present a risk to our
business as migration and international travel slowly
ramps up with borders reopening. International travel in
particular impacts our consumer business in terms of
population growth, unique brand proposition
(international roaming) and revenue (from international
roaming).
To mitigate the impacts from the pandemic, we are
focusing our proposition development to increase appeal
to the domestic market, and we are looking for new ways
to offset the loss of international roaming, for example
through 5G monetisation.
Page 10 | TPG Telecom Annual Report 2021
Key Risks continued
Cyber security and data protection
Legal and regulatory risk
We operate in a highly regulated industry with complex
and evolving legal requirements and are subject to a
range of regulation from consumer service delivery
through to our network security. This highly regulated
environment exposes us to the risk of changes to
regulatory policy and other government interventions
which could impact our financial performance or the
commercial viability of our operations.
We always seek to comply with all applicable legal and
regulatory obligations. Through strong legal and risk
management frameworks, we ensure appropriate
oversight of compliance risks and obligations, and
proactively monitor emerging legal and compliance
issues. Additionally, a strong culture of compliance is
established with policies, codes and ongoing training and
awareness initiatives which ensure our people are
adequately equipped to understand and manage our
compliance obligations.
Health, safety and wellbeing
The health, safety and wellbeing of our employees,
contractors and broader stakeholders is paramount.
Through our business operations, we may expose our
people to high risk working environments. To manage
this risk, we maintain an effective Health and Safety
Management system and continuously improve
processes, including standardising systems and
processes post-merger to deliver a consistent and safe
employee experience.
We are committed to providing a safe and respectful
environment for employees, contractors, and customers.
During the COVID pandemic, we have actively monitored
government health regulations and responded with safety
measures including proactive employee communications,
temporary office and retail store closures and COVID-
safety plans at all sites. In addition, we rolled out our
vaccination policy as well as a holistic employee
wellbeing program to support our employees through
this challenging period.
Cyber threats are constantly evolving, with heightened
threats from international groups with sophisticated
phishing scams and cyber-attacks, who are targeting
individuals and Australian companies. These attacks have
the potential to cause significant business interruption or
compromise customer data privacy. The COVID
pandemic has heightened the general risk of cyber
threats as opportunistic cyber criminals have quickly
adapted their methods to exploit an increase in the use
of online services. We continue to decommission legacy
systems post-merger and invest in cyber threat detection
capabilities, cyber preventative controls and defensive
strategies.
TPG Telecom manages a significant volume of sensitive
information and our customers, employees and third
parties expect the highest levels of security to protect
their personal information. The legal and regulatory
environment regarding information security is
increasingly complex and demanding and failure to
protect personal information could result in reputational
damage, regulatory scrutiny and financial loss. We always
seek to handle personal data with integrity and in
accordance with applicable laws. We take a Privacy-By-
Design approach and seek to continuously improve our
controls environment. We are committed to creating a
strong security culture and provide mandatory annual
training to ensure our people understand our obligations
and are equipped to respond to cyber and privacy events
appropriately.
Technology stability and resilience
We rely heavily on information and communications
technology for the delivery of our services, and we have
invested significantly in technology to maximise the
efficiency of operations. Issues such as service
interruptions or unavailability may arise if business critical
systems are inadequately maintained, secured, and
updated or are damaged due to accidents, deliberate
attacks or natural disasters. These disruptions could
result in impacts on our operations, reputation, customer
retention, revenue, or costs.
Our Digital transformation program is aimed at increasing
the resilience, stability, and performance of our
information technology systems and infrastructure. The
program is supported by a strong governance framework
to minimise impacts to the business and ensure we
deliver the required business outcomes. We have strong
incident management processes, including business
continuity and disaster recovery plans in place to ensure
the impact of a disruption is managed appropriately.
Page 11 | TPG Telecom Annual Report 2021
As a large corporate, we recognise our social
responsibility and the growing focus placed by our
employees, customers, shareholders, and broader
communities on the way we do business. This includes
our conduct and response to several social issues
including modern slavery, ethical advertising and sales,
digital safety, reconciliation and diversity and inclusion.
Failure to appropriately meet these expectations may
lead to reputational damage, regulatory inquiries, or
shareholder actions. We have a strong corporate
governance framework that complies with legal and
regulatory requirements. Additionally, our policies,
charters and codes are regularly reviewed to ensure our
strong conduct, culture and governance framework
meets the changing risk environment and increasing
stakeholder expectations.
In 2021, we released our Sustainability Strategy which
identifies four key areas where we are well placed to
make a meaningful difference to our stakeholders,
underpinned by a set of fundamental, responsible
business practices. The commitments within our
Sustainability Strategy can be accessed on our website
www.tpgtelecom.com.au and progress on initiatives is
reported in our Sustainability Report.
Key Risks continued
Capability and Culture
Attracting and maintaining a diverse and engaged
workforce with the right skills, capabilities and
experience is critical for our success. Failure to attract
and retain the right talent and develop a high performing
and inclusive culture could inhibit our ability to meet our
strategic objectives.
We recognise the challenges of integrating two different
businesses and have focussed on developing a strong
unified culture to attract and retain the best people.
Earlier this year we launched our new values to bring the
TPG Telecom Spirit to life. In addition, we have
introduced several initiatives including the inaugural
employee engagement survey, hybrid work model, and
leadership programs for executive and general
management. Capability and skills analysis and
succession planning is an ongoing focus.
We are committed to maintaining a diverse, inclusive, and
flexible workplace to achieve our desired culture.
Environmental and social
A range of environmental and social risks exist which
impact our business, our stakeholders and our society
and we understand the importance of managing these
risks well.
As an owner and operator of telecommunications
infrastructure we recognise climate change presents risks
to our business including damage to our infrastructure
(e.g., from increases in extreme weather events and
bushfires), financial risk (e.g., additional costs of
regulation, potential litigation and increases in energy
costs) and reputational risk (e.g., failure to meet
stakeholder expectations).
To mitigate these risks, our operations teams build
network resilience and redundancy against environmental
risks and our subject matter experts ensure our mobile
and base stations comply with international and national
safety limits. We have been working on programs to
reduce energy usage in our networks and have
contributed further to emissions reductions through felix
mobile, Australia’s first telecommunications brand to be
powered by 100 percent renewable energy. We
recognise the importance of proactively managing
climate risks and are working towards reporting against
the Task Force on Climate-related Financial Disclosures
(TCFD) framework in 2022.
Page 12 | TPG Telecom Annual Report 2021
Sustainability at TPG Telecom
TPG Telecom is committed to conducting its business in
a way that supports the needs of all stakeholders –
including our customers, our people and our
communities. We believe that acting as a responsible and
sustainable business is fundamental to the creation and
protection of long-term value.
When we developed our first Sustainability Strategy in
2021, we did so by aligning it to both our Company
purpose and our corporate strategy.
We feel that our Sustainability Strategy is critical to
delivering on our purpose to build meaningful
relationships and support vibrant, connected
communities. It outlines how we will operate our
business responsibly, and make a difference for our
customers, people and community, now and into the
future.
Our corporate strategy aims to capitalise on our
strengths and opportunities as a full-service
telecommunications company through the guiding
principles of Integrate and Simplify, Win Smart and
Maximise our Potential. Our Sustainability Strategy
complements these principles, identifying four key areas
where we believe we are well-placed to make a
meaningful difference for our stakeholders:
• Customer wellbeing
•
•
• Digital economy
Inclusion and belonging
Environmental responsibility
These are underpinned by a set of fundamental,
responsible business practices. Together, these
represent our framework for creating a responsible and
sustainable business.
The TPG Telecom Sustainability Strategy and
Sustainability Reports can be accessed on our website
www.tpgtelecom.com.au.
Customer Wellbeing
Taking care of our customers as they use our
products and services
We understand that to continue to grow we must do
business in a way that puts our customers first – taking
care of our customers as they use our products and
services. That’s why we’re focused on responding to the
diverse needs of all of our customers, as well as helping
our customers to stay safe online and protecting their
privacy and security.
We have been leaders in supporting vulnerable
customers, whether its customers in financial hardship,
domestic or family violence, or in need of special
assistance for other reasons. When the Australian
Communications and Media Authority (ACMA) released a
consultation draft Statement of Expectations for the
telecommunications industry on consumer vulnerability,
we contributed to and supported the joint industry
submission from the Communications Alliance and
provided our own response with suggestions for
improvement. Upon finalisation of the Statement of
Expectations by the ACMA, we will update our own
customer vulnerability policy and framework to meet or
exceed the industry-wide approach and will work to
continue to identify further opportunities for enhancing
our services and support for customers experiencing
vulnerability.
The security and privacy of our customers and their data
is a top priority and we recognise it is a key risk to our
business. To help combat scams and fraud, we provide
regular updates regarding fraud awareness on all our
customer-facing websites and use several tools and
processes to minimise scams and fraud. We are also in
the process of implementing standards that align to new
regulation related to customer authentication. There are
also ongoing initiatives in place to implement additional
sophisticated technological solutions that will help
prevent scams and theft using our networks.
Inclusion and belonging
Creating an inclusive business where all our
people, customers and communities belong
Maximising our potential as a business requires
committed focus on being an inclusive organisation
where we can best understand and serve our diverse
customer base, collaborate successfully and innovate in a
world of increasingly fast paced change. We strive to
create an environment of equality where everyone feels
respected and supported to be themselves at work.
In 2021 we developed and launched our Gender Action
Plan, which acts as our roadmap to improving gender
equality. Our aim is to increase female representation,
particularly in our leadership team, through commitments
focussed on the promotion of visible female role models,
building personal capability and networks, ensuring
equitable recruitment processes, and monitoring key
gender diversity metrics.
Page 13 | TPG Telecom Annual Report 2021
Sustainability at TPG Telecom continued
Additionally, we are proud to have been confirmed as a
Women in STEM Decadal Plan Champion, aligning our
gender equality journey with the Women in STEM
Decadal Plan. Developed by the Australian Academy of
Science in collaboration with the Australian Academy of
Technology and Engineering, it offers a vision on building
the strongest STEM workforce possible.
We remain resolute in our commitment to LGBTQI+
inclusion. Driving our commitment is our Connect:
LGBTQI+ Network, made up of over 350 passionate TPG
Telecom employees who work together to champion
equality and create a safe community for LGBTQI+
employees, customers and their communities.
In 2021, we launched Gender Affirmation leave which
provides four weeks’ paid leave for employees who are
on a journey to live and identify as a member of another
gender, including non-binary, other than their gender
assigned at birth. We are proud to be the first telco in
Australia and the first employer in the Philippines to
provide this benefit.
We recognise the importance of supporting better
futures for all Australians through partnering with
Aboriginal and Torres Strait Islander individuals,
communities, and organisations. This year we launched
our Reflect Reconciliation Action Plan to act as a
roadmap to support us in establishing a foundational
level of understanding and respect for our nation’s
histories and cultures across our company.
We continue to engage our people and our leaders to
build understanding of how they can demonstrate
respect and inclusive leadership, be respectful and
inclusive of our First Nations customers, and support
Aboriginal and Torres Strait Islander owned businesses
through ongoing meaningful partnerships.
Environmental responsibility
Respecting and protecting the environment as we
grow our business
As a major telecommunications services provider, our
approach to environmental management focuses on our
two most material environmental impacts – climate
change and waste.
We recognise the threat of global climate change and are
working towards aligning our business with the aims of
the Paris Agreement. This includes reducing our
emissions to help mitigate climate change, using our
technologies to help reduce emissions within our wider
society, understanding and building resilience to climate
impacts, and being transparent in our disclosure of
climate impacts, risks and opportunities.
In 2021 we formally committed to setting a science-
based greenhouse gas emissions reduction target in line
with net zero, across our Scope 1, Scope 2 and Scope 3
emissions footprint. We are in the process of mapping
out our organisational emissions footprint, which will
then enable us to develop shorter-term emissions
reduction targets, as well as a 2050 net zero target that
will be validated by the Science Based Targets initiative.
We recognise that climate change is a key risk to our
company and we have committed to adopting the
Taskforce for Climate Related Financial Disclosure
recommendations to develop and report on our climate
risk strategy and management.
Our felix mobile brand has continued to grow, powered
by 100% renewable electricity and certified carbon
neutral by Climate Active. It has been responsible for
more than 188,000 trees planted since its launch and has
been recognised by industry awards for its work,
including receiving the ProductReview.com.au Mobile
Phone Service Providers Award and the Sustainability
award at the 2021 ACOMM awards.
We also aim to be responsible product stewards by
reducing the environmental impact of our products over
their life. That’s why we are focused on working with our
suppliers to reduce packaging waste, increasing resource
recoverability and working with industry partners on
solutions for management of e-waste.
Throughout the year, we continued our collaboration with
the MobileMuster program to reduce e-waste by
collecting unwanted mobile phones and accessories in
our retail stores for recycling. In 2022 we will work with
MobileMuster to expand the scope of items eligible for
collection to include devices such as modems, routers,
smart home technology and wearables.
Page 14 | TPG Telecom Annual Report 2021
Sustainability at TPG Telecom continued
Digital economy
Responsible business
Helping to create a vibrant digital future which
benefits everybody
A set of fundamental, responsible business
practices
A productive and innovative digital economy is important
to support continued improvements in quality of life and
living standards for everyone. We recognise that we have
a fundamental role to play in helping to create Australia’s
digital economy. This includes building and maintaining
the required networks, as well as investing in innovation
so that business and consumers can get the most from
next generation connectivity.
We have put a strong focus on accelerating the uptake of
narrowband Internet of Things (NB-IoT) and 5G-enabled
technologies by building awareness of the benefits
across existing industries and optimising use of IoT
customer devices across our own business.
Our NB-IoT network is designed to work with a wide
range of IoT device manufacturers to help in creating
efficiencies for end users like energy use, water use and
operational productivity. We intend to further explore the
potential of our networks in enabling natural resource
efficiency, emissions reductions and a transition to a
more sustainable society.
Through the TPG Telecom Foundation (formerly
Vodafone Foundation Australia), we support the use of
technology to create opportunities to improve the health,
wellbeing and education of Australian communities in
need. In 2021, the Foundation partnered with the Garvan
Institute of Medical Research and Infoxchange, through
grants and in-kind support, on projects focused on
improving the lives of Australian communities.
In 2021, we also partnered with Catalyser, a social
technology company, to launch a digital TPG Telecom
Giving platform for employees to manage their
volunteering, fundraising and micro donations. This is
intended to increase opportunities for seamless
employee engagement and better reporting, both
internally and externally to our stakeholders.
Underpinning our Sustainability Strategy is a set of
fundamental, responsible business practices that guide
how we interact with our entire value chain. Key aspects
of these practices include:
•
•
Ensuring a strong risk culture and internal
governance framework;
Enhancing our approach to managing modern
slavery and human rights risk in our suppliers and
our own operations;
• Considering the environmental impacts of our
operations and those of our suppliers and
customers;
Supporting Australian small businesses by
committing to making payments within 20 business
days; and
•
• Maintaining a safe and healthy workplace for our
employees and others.
Sustainability governance
We recognise that, for our Sustainability Strategy to be
successfully integrated throughout our business, a strong
governance approach must be in place.
Our highest level of responsibility for sustainability sits
with the TPG Telecom Board, which has oversight of
strategy, business performance and risk management,
including in relation to sustainability. The TPG Telecom
Audit and Risk Committee oversees disclosure by TPG
Telecom relating to its economic, environmental, and
social sustainability risks and how it manages those risks.
The TPG Telecom Governance, Remuneration and
Nomination Committee oversees corporate governance.
Further information, including a more detailed review of
the progress against our Sustainability Strategy and
commitments can be found in our 2021 Sustainability
Report.
Page 15 | TPG Telecom Annual Report 2021
Operating and Financial Review (OFR)
1. Introduction and business overview
TPG Telecom and its controlled entities (the Group) is a provider of telecommunications services to consumers,
business, enterprise, government and wholesale customers in Australia. The Group markets its services through
multiple well-known brands including Vodafone, TPG, iiNet, AAPT, Internode, Lebara and felix.
The Group owns significant network infrastructure throughout Australia (as well as a subsea cable connecting Australia
to Guam with onward connectivity into the US and Asia) that facilitates the provision of fixed and mobile
telecommunications services. TPG has more than 5,000 employees across Australia and the Philippines and is also
supported by outsourced service centres in India and South Africa.
The Group was established through the merger of Vodafone Hutchison Australia (VHA), which changed its name to
TPG Telecom Limited as part of the merger, and TPG Corporation (which had previously been known as TPG Telecom
Limited) in June 2020.
This operating and financial review provides commentary as to the financial performance and position of the Company
it should be read in conjunction with the CEO’s Report.
2. Composition of reported results for the year ended 31 December 2021
The year ended 31 December 2021 reflects the first year reporting a full 12 months as a Group post the merger of the
Company and TPG Corporation.
As a result of the structure and timing of the merger, the comparative balances of the Group, namely the Consolidated
Income and Cash Flow Statements for the year ended 31 December 2020, consists of 12 months of results of the
company formerly known as VHA plus a contribution of six months and four days from TPG Corporation (between the
accounting effective date and 31 December 2020).
3. Analysis of reported results for the year ended 31 December 2021
Whilst acknowledging the limitations described above of comparing the reported results of 2021 and 2020 due to the
timing and impacts of the merger, the following sections provide an overview of the reported results.
Page 16 | TPG Telecom Annual Report 2021
Operating and Financial Review continued
3.1 Consolidated Income Statement Overview
A comparison of the Group’s 2021 and 2020 consolidated income statement is affected by the fact that 2021
includes a full year contribution from TPG Corporation compared to a six month and four-day contribution from
TPG Corporation in 2020.
A condensed version of the income statement is set out below, supported by commentary that highlights some
key points.
NOTES
2021
$m
2020
$m
change
$m
Revenue
Service revenue
Handset and hardware revenue
Total revenue
Other income
Cost of telecommunication services
Cost of handsets and hardware sold
Employee benefits expense
Other operating expenses
EBITDA
Depreciation and amortisation
Operating profit
Net financing costs
Profit/(Loss) before tax
Income tax (expense)/benefit
Profit after tax
Attributable to:
Owners of the Company
Non-controlling interest
Earnings per share (cents)
4,389
904
5,293
3,458
888
4,346
931
16
947
45
15
30
(1,966)
(1,370)
(596)
(891)
(377)
(373)
(880)
(328)
(392)
(11)
(49)
19
1,731
1,391
340
(1,423)
(1,188)
(235)
308
203
105
(149)
(289)
140
159
(86)
245
(49)
820
(869)
110
734
(624)
110
-
6
741
(7)
(631)
7
64
(58)
1
2
3
4
Page 17 | TPG Telecom Annual Report 2021
Operating and Financial Review continued
1. Earnings before net financing costs, tax, depreciation and amortisation (EBITDA)
The Group’s EBITDA for the year was $1,731 million, $340 million higher than 2020. Service revenue, cost of
telecommunication services and employee benefits expense all increased substantially due to a full 12 months of
operations as a merged company compared with 2020.
Handset and hardware revenue and the associated cost of devices sold decreased slightly because of the ongoing
impact on sales volumes of international travel restrictions imposed by the federal and state government following the
COVID pandemic. Note that balances for handsets in 2020 were not significantly impacted from the merger as TPG
Corporation did not sell mobile handsets.
2. Depreciation and amortisation
Depreciation and amortisation expense increased by $235 million in 2021. The increase was a result of 12 months of
depreciation and amortisation as a merged group compared to 2020. In addition, the Group acquired additional
property, plant and equipment of $980 million, right-of-use assets of $124 million and intangible assets of $267
million, which contributed to the increase in depreciation and amortisation expense for the year.
3. Net financing costs
Net financing costs decreased by $140 million in 2021. The decrease was primarily due to:
(a) 12 months of interest on a lower borrowings balance throughout 2021 compared with 2020. The $289 million of
net financing expenses for 2020 included six months of interest incurred on the higher level of borrowings that
existed pre-merger completion; and
(b) the Group entering a three-year $500 million bilateral revolving facility in March 2021 at a reduced margin. In June
2021, the Group also signed an amendment and extension agreement, which reduced the margin of, and
extended by one year, the Group’s $4,750 million loan facility.
4. Income tax expense
The movement in the Group’s income tax expense primarily related to a $820 million accounting credit to income tax
expense recognised in the Group’s 2020 income statement. This movement arose because of the recognition of
deferred tax assets in respect of carried forward tax losses not previously recognised in the Company’s accounts, and
in respect of temporary timing differences between financial and tax accounting.
Prior to the merger, the Company had not recognised any additional deferred tax assets beyond its deferred tax
liabilities in its balance sheet because, as a loss-making entity with no certainty of generating taxable profits in future
years, the Company did not meet the accounting criteria necessary for recognition of deferred tax assets.
Following the merger, the Group has been generating, and is expected to continue generating taxable profits, and
these deferred tax assets were therefore recognised at 31 December 2020, giving rise to the one-off accounting credit
to income tax expense.
The deferred tax asset will unwind as the Company continues to utilise these tax losses and temporary timing
differences. Income tax expense for 2021 was $49 million.
Page 18 | TPG Telecom Annual Report 2021
Operating and Financial Review continued
3.2 Consolidated Balance Sheet Overview
Set out below is a condensed version of the Group’s balance sheet as at 31 December 2021, summarised in a manner
to highlight key movements.
2020
$m
change
$m
2021
$m
202
476
-
155
833
3,422
1,294
2,251
120
431
2
130
683
3,258
1,012
2,325
10,893
11,144
262
231
264
138
18,353
18,141
1,118
61
488
927
92
437
1,667
1,456
4,290
1,359
152
4,330
1,051
95
5,801
5,476
82
45
(2)
25
150
164
282
(74)
(251)
(2)
93
212
191
(31)
51
211
(40)
308
57
325
11,718
11,892
(174)
18,399
18,399
(6,681)
(6,507)
11,718
11,892
-
(174)
(174)
NOTES
1
2
3
4
5
2
Cash and cash equivalents
Trade and other receivables
Assets held for sale
Other current assets
Total current assets
Property, plant and equipment
Right-of-use assets
Spectrum licences
Other intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Trade and other payables
Lease liabilities
Other current liabilities
Total current liabilities
Borrowings
Lease liabilities
Other non-current liabilities
Total non-current liabilities
Net assets
Contributed equity
Reserves and accumulated losses
Total equity
Page 19 | TPG Telecom Annual Report 2021
Operating and Financial Review continued
1. Property, plant and equipment
Property, plant and equipment at 31 December 2021 was $3,422 million, an increase of $164 million compared to
31 December 2020, arising from net additions of network and infrastructure equipment and assets under construction
of $980 million, less transfers out of $173 million, retirements of $168 million and depreciation expense of $476
million (net of retirements).
2. Right-of-use assets and lease liabilities
Right-of-use assets and liabilities increased by $282 million and $277 million respectively. This was primarily due to:
(a) additional leases entered into during the year of $124 million, less terminations of $15 million; and
(b) the Group successfully renegotiating its network site access arrangement with Axicom. As a result of the
renegotiation, these leases were remeasured increasing right of use assets by $315 million, offset by $141 million
of depreciation expense.
Lease liabilities increased due to new leases adopted and remeasurements during the year, offset by lease payments.
3. Spectrum licences
The net book value of spectrum licences held by the Group at 31 December 2021 was $2,251 million, a decrease of
$74 million compared with 31 December 2020. During the year, the Group acquired 5G spectrum holdings in the 3.6
GHz band from Dense Air Limited for $84 million and sold its 2.6 GHz spectrum band licenses to Dense Air Networks
Australia Pty Limited for $15 million. The Group was also successful in securing holdings in the 26 GHz (millimetre
wave) band auction held by the federal government for $110 million. The Group intends to pay for the spectrum in five
equal annual instalments of $22 million, the first of which was made in June 2021.
The decrease in spectrum licences was primarily due to amortisation expense of $254 million (net of write-offs)
recognised during the year.
4. Other intangible assets
Excluding spectrum licences, other intangible assets decreased in the year by $251 million to $10,893 million, due to
software licences, contract costs and indefeasible right of use assets acquired of $147 million, reduction in goodwill
of $53 million following the finalisation of purchase price accounting associated with the 2020 merger, and
amortisation expense of $345 million (net of write-offs).
5. Trade and other payables
Trade and other payables increased by $191 million to $1,118 million due to increased capital and inventory creditors
at the end of the year.
Page 20 | TPG Telecom Annual Report 2021
Operating and Financial Review continued
3.3 Consolidated Cash Flow Statement Overview
A comparison of the Group’s 2021 and 2020 cash flow statements is affected by the following:
(a) a full year contribution in 2021 from TPG Corporation compared to a six month and four-day contribution from
TPG Corporation in 2020; and
(b) cash flows in 2020 related to the merger transaction.
A condensed version of the cash flow statement is set out below together with some commentary below the table
highlighting some key points.
Operating cash flow
Capital expenditure
Spectrum payments
Net cash acquired through the merger
Disposal of subsidiary (net of cash disposed)
Cash reclassified within assets held for sale
Transaction costs re merger
Loan repayment from Tech2
Net cash flow before financing activities
Net (repayment)/drawdown of borrowings
Lease repayments
Net finance costs paid
Pre-acquisition dividends paid to TPG Corporation shareholders
Dividends paid
Net cash flow
NOTES
1
2
3
4
5
6
7
8
2021
$m
1,627
(831)
(91)
-
-
-
-
2
707
(40)
(139)
(158)
-
(288)
82
2020
$m
1,188
(612)
(204)
99
(379)
(7)
(37)
-
48
186
(130)
(239)
(479)
-
(614)
Change
$m
439
(219)
113
(99)
379
7
37
2
659
(226)
(9)
81
479
(288)
696
Page 21 | TPG Telecom Annual Report 2021
Operating and Financial Review continued
1. Operating cash flow
Operating cash flow of $1,627 million was $439 million higher in 2021 than in 2020, reflecting the contribution of only
six months and four days from the businesses of TPG Corporation in 2020.
2. Capital expenditure (‘Capex’)
Capex comprises payments for property, plant and equipment and for intangible assets (excluding spectrum
payments). Capex for 2021 of $831 million was $219 million higher than for 2020. The increased capex primarily
represents investment in the Group’s mobile and fixed telecommunications network infrastructure and business
support systems.
3. Spectrum payments
During the year, the Group made payments totalling $91 million for the acquisition of spectrum licences, comprising
of:
(a) the $84 million payment for Dense Air Limited’s 3.6 GHz spectrum offset by $15 million receipt from Dense Air
Networks Australia Pty Limited for the sale of 2.6 GHz spectrum; and
(b) the payment of the first instalment of $22 million for the 26 GHz (millimetre wave) band spectrum acquired at
auction.
4. Net cash acquired through merger
This represents the cash held by TPG Corporation at the merger effective date of 26 June 2020.
5. Disposal of subsidiary (net of cash disposed)
During 2020, as part of the debt restructuring required to implement the agreed merger debt structure, the Company’s
pre-merger shareholders assumed $4,475 million of the Company’s debt. This was achieved by transferring the
Company’s financing subsidiary to the pre-merger shareholders, which included $4,844 million of debt and associated
cross-currency swaps. A cash payment of $379 million was made to the pre-merger shareholders to achieve the
required level of debt assumption and repay all associated borrowing costs.
6. Net finance costs paid
Net finance costs paid decreased in 2021 primarily as a result of the Group’s reduced debt post-merger, coupled with
lower average interest rates in 2021 compared with 2020.
7. Pre-acquisition dividends paid to TPG Corporation shareholders
Between the merger accounting effective date of 26 June 2020 and the merger completion date of 13 July 2020, TPG
Corporation paid a dividend of $479 million to its pre-merger shareholders to increase its debt to the level agreed to
bring into the merged Group.
8. Dividends paid
During 2021, the Company paid a fully franked final FY20 dividend of $139 million (7.5 cents per fully paid share) on
14 April 2021 and a fully franked interim FY21 dividend of $149 million (8.0 cents per fully paid share) on 13 October
2021.
Page 22 | TPG Telecom Annual Report 2021
Operating and Financial Review continued
3.4 Segments
TPG Telecom reports results in two operating segments: Consumer and Corporate.
Consumer comprises the provision of fixed and mobile services to consumer customers under the Vodafone, TPG,
iiNet, Internode, Lebara and Felix brands.
Corporate comprises the provision of fixed and mobile services and other managed services to enterprise, wholesale,
government, small business and small office/home office customers served under the TPG Telecom, Vodafone, TPG,
iiNet, Internode and AAPT brands.
The segments remained consistent for the year ended 31 December 2021.
Results by operating segment are set out below:
For the year ended 31 December 2021
Revenue from contracts with customers
Other income
Cost of provision of telecommunication services
Cost of handsets and hardware sold
Employee benefits expense
Other operating expenses
Results from segment activities
CONSUMER CORPORATE
$m
$m
UNALLOCATED
$m
TOTAL
$m
4,308
-
(1,691)
(802)
(268)
(336)
1,211
985
18
(272)
(89)
(109)
(41)
492
-
27
5,293
45
(3)
(1,966)
-
-
4
28
(891)
(377)
(373)
1,731
The 2021 financial results commentary and investor presentation available on the Company’s website at
www.tpgtelecom.com.au/investor-relations set out the segment results for 2020 and 2019 on a pro forma basis (i.e.
as if the merger had been effective since 1 January 2019) to assist users of the accounts to gain a better
understanding of the underlying performance of the segments.
3.5 Customer numbers
Group mobile subscribers
At 31 December 2021, the Group had 5.02 million mobile customers, down from 5.25 million at 31 December 2020.
Postpaid and prepaid mobile customers decreased by 105,000 and 116,000 respectively. The rate of decline was
materially slower than in 2020, but continued to be attributable to the effect of the COVID pandemic on the number of
international visitors and temporary visa holders in Australia, which have historically been an important customer
segment for the Vodafone brand. In addition, customer numbers have been impacted by aggressive competitor
discounting via secondary brands and retail channels.
Group broadband subscribers
At 31 December 2021, the Group had 2.22 million fixed broadband subscribers, up from 2.17 million at 31 December
2020. This reflected a 75,000 increase in fixed wireless subscribers, a 34,000 increase in NBN subscribers (net of
migrations to fixed wireless) and 4,000 increase in subscribers on TPG’s proprietary on-net wholesale networks.
These increases were partially offset by a 63,000 reduction in legacy ADSL customers.
Page 23 | TPG Telecom Annual Report 2021
Directors’ Report
The Directors of TPG Telecom Limited present their report, together with the Financial Report of the consolidated
entity for the financial year ended 31 December 2021 (the financial year) in compliance with the provisions of the
Corporations Act 2001.
Board of Directors
Details of Directors of the Company who held office at any time during or since the end of the financial year are set
out below:
Current
The following are the Directors who held office at 31 December 2021.
Fok Kin Ning,
Canning
Chairman
Fok Kin Ning, Canning has been a Director and Chairman of TPG Telecom since 2001 and March
2021 respectively. He has been a Director of Hutchison Telecommunications (Australia) Limited
since 1999. Mr Fok has been an Executive Director and Group Co-Managing Director of CK
Hutchison Holdings Limited since 2015. He has been a Director of Cheung Kong (Holdings) Limited
and Hutchison Whampoa Limited since 1985 and 1984 respectively, both of which became wholly-
owned subsidiaries of CK Hutchison Holdings Limited in 2015. He has been Chairman and a Non-
Executive Director of Hutchison Telecommunications Hong Kong Holdings Limited since 2009 and
Hutchison Port Holdings Management Pte. Limited as the Trustee-Manager of Hutchison Port
Holdings Trust since 2011, an Executive Director since 1985 and Chairman since 2005 of Power
Assets Holdings Limited, and Chairman and an Executive Director of HK Electric Investments
Manager Limited as the Trustee-Manager of HK Electric Investments and HK Electric Investments
Limited since 2013. He has also been an Executive Director and Deputy Chairman of CK
Infrastructure Holdings Limited since 1997, a Director of Cenovus Energy Inc. since January 2021
and Deputy President of the Board of Commissioners of PT Indosat Tbk since January 2022. He
was a Co-Chairman from 2000 to 2020 and was a Director from 2000 to March 2021 of Husky
Energy Inc. (delisted on 5 January 2021 following its combination with Cenovus Energy Inc.).
He holds a Bachelor of Arts degree and a Diploma in Financial Management, and is a Fellow of
Chartered Accountants Australia and New Zealand.
Directorships of other listed companies in the past three years:
Hutchison Telecommunications (Australia) Limited -1999 to current.
Special Responsibilities: Chairman of the Board from 26 March 2021.
Iñaki Berroeta
Chief Executive
Officer and
Managing
Director
Iñaki Berroeta is the CEO and Managing Director of TPG Telecom and was CEO of Vodafone
Hutchison Australia from 2014 to 2020. A 25-year veteran of the telecommunications industry, Mr
Berroeta previously served as CEO of both Vodafone Romania and Vodafone Malta, and held
various operational roles at Vodafone Spain, Global Star USA, AirTouch International Inc. (USA) and
Airtile Moviles (Spain).
Mr Berroeta holds a Master of Science in Telecommunications from Bilbao Superior School of
Telecommunications Engineering, Spain, and a Master of Business Administration from Henley
Management College, UK.
Mr Berroeta’s appointment to the Board commenced on 29 June 2020.
Special Responsibilities: Chief Executive Officer and Managing Director
Page 24 | TPG Telecom Annual Report 2021
Directors’ Report continued
Pierre Klotz
Non-Executive
Director
Pierre Klotz is the Vodafone Group plc (‘Vodafone’) Group Corporate Finance Director. He joined
Vodafone in July 2011 and is responsible for the Vodafone Group’s Mergers & Acquisitions and
Treasury related activities.
Diego Massidda
Non-Executive
Director
Previously, Mr Klotz held a number of senior executive positions at UBS Investment Bank and at
HSBC Investment Bank.
Mr Klotz holds a Master of Science in Business Administration from Gothenburg School of
Economics and Commercial Law.
Mr Klotz’s appointment to the Board commenced on 12 May 2020.
Special Responsibilities: Member of the Audit and Risk Committee until 1 September 2021.
Diego Massidda is CEO of Vodafone Partner Markets and Carrier Services, and a Director of
Vodafone Idea Limited and Vodafone Sales & Services Limited.
Mr Massidda joined Vodafone in 2007 as Group Director of Broadband and Online, and
subsequently he was Group Director of Video and Connected Home. From 2011 to 2016, he served
as CEO of Vodafone Hungary.
Prior to joining Vodafone, Mr Massidda was CEO of the ISP Tiscali in South Africa and France, and
of Telecom Italia wireline operations in France. He also spent 6 years with McKinsey & Company
earlier in his career.
Mr Massidda holds a degree in Civil Engineering from the Università di Cagliari, Italy, and a Master’s
in business administration from INSEAD, France.
Mr Massidda’s appointment to the Board commenced on 12 May 2020.
Special Responsibilities: Member of the Governance Remuneration and Nomination Committee.
Robert Millner
Non-Executive
Director
Robert Millner served as a Non-Executive Director of TPG Corporation from 2000 until the merger
with the Company in 2020, and was the Chairman of TPG Corporation from 2000 until 2008.
Mr Millner brings to the Board broad corporate, investment, portfolio and asset management
experience gained across diverse sectors including telecommunications, mining, manufacturing,
health, finance, energy industrial and property investment in Australia and overseas.
Mr Millner has over 30 years’ experience as a Company Director with an extensive understanding of
governance and compliance, reporting, media and investor relations.
Mr Millner holds directorships of the following listed companies: Apex Healthcare Berhad
(Malaysia), Brickworks Limited, BKI Investment Company Limited, Milton Corporation Limited, New
Hope Corporation Limited, Washington H. Soul Pattinson and Company Limited and Tuas Limited.
He was also a former director of Australian Pharmaceutical Industries Limited.
Mr Millner is a Fellow of the Australian Institute of Company Directors.
Mr Millner’s appointment to the Board commenced on 13 July 2020.
Directorship of other listed companies in the past three years
Brickworks Limited – 1997 to current, Washington H. Soul Pattinson and Co. Ltd – 1984 to current,
New Hope Corporation Ltd – 1995 to current, BKI Investment Company Ltd – 2003 to current,
Milton Corporation Limited – 1998 to current, Tuas Limited – 2020 to current,
Australian Pharmaceutical Industries Ltd – 2000 to July 2020.
Page 25 | TPG Telecom Annual Report 2021
Directors’ Report continued
Antony Moffatt
Non-Executive
Director
Dr Helen Nugent
AC
Non-Executive
Director
Antony Moffatt (Tony) is a lawyer with over 30 years’ experience, practising in corporate,
commercial and telecommunications law. After five years as a senior lawyer in an international law
firm in Singapore, Mr Moffatt became General Counsel and Company Secretary for a start-up
telecommunications business which was acquired by SP Telemedia Limited in 2005. He was then
appointed General Counsel for the company formerly named TPG Telecom Limited (ASX:TPM) in
2008 until its merger with Vodafone Hutchison Australia Pty Ltd in 2020. In August 2020, Mr
Moffatt became Company Secretary for the merged group. In addition, Mr Moffatt was Company
Secretary for a large privately owned Australian winery from 2004 to 2008 and was from time to
time a director on a variety of TPG Telecom Limited subsidiaries and Comms Alliance. Mr Moffatt
was a member of the key management personnel of TPG Telecom Limited (ASX:TPM) and played a
significant role in its development, including the many corporate and large commercial transactions
undertaken by that company. He is the Company Secretary for Tuas Limited.
Mr Moffatt holds a Bachelor of Arts and Laws from the University of New South Wales.
Mr Moffatt’s appointment to the Board commenced on 26 March 2021.
Dr Nugent is Chairman of Ausgrid and a Non-Executive Director of IAG.
She has been a company director for over 20 years, and has over 40 years’ experience in the
financial services sector. This includes having been Chairman of Veda Group, Funds SA, and Swiss
Re (Australia); and a Non-Executive Director of Macquarie Group, Director of Strategy at Westpac
Banking Corporation, and a Partner at McKinsey & Company.
She has also been Chairman of National Disability Insurance Agency and Australian Rail Track
Corporation and a Non-Executive Director of Origin Energy.
Dr Nugent has given back to the community in education and the arts, having been Chancellor of
Bond University; President of Cranbrook School; Chairman of the National Opera Review; Chairman
of the Major Performing Arts Inquiry; Chairman of the National Portrait Gallery of Australia; and
Deputy Chairman of Opera Australia.
Dr Nugent is a Companion of the Order of Australia (AC) and is a recipient of a Centenary Medal,
as well as an Honorary Doctorate in Business from the University of Queensland and an Honorary
Doctorate from Bond University.
Dr Nugent holds a Bachelor of Arts (Hons) and Doctorate of Philosophy from the University of
Queensland; and a MBA (Distinction) from the Harvard Business School.
Dr Nugent joined the board of TPG Telecom as a non-executive director in July 2020.
Directorship of other listed companies in the past three years
Insurance Australia Group (IAG) Limited – December 2016 to current
Special Responsibilities: Senior Independent Director, Chairman of the Governance Remuneration
and Nomination Committee and member of the Audit and Risk Committee
Page 26 | TPG Telecom Annual Report 2021
Directors’ Report continued
Frank Sixt
Non-Executive
Director
Frank John Sixt has been a Director of TPG Telecom Limited since 2001. He has been a Director
and an Alternate Director to a Director of Hutchison Telecommunications (Australia) Limited since
1998 and 2008 respectively. Mr Sixt has been an Executive Director, Group Finance Director and
Deputy Managing Director of CK Hutchison Holdings Limited since 2015. Since 1991, Mr Sixt has
been a Director of Cheung Kong (Holdings) Limited and Hutchison Whampoa Limited, both of
which became wholly-owned subsidiaries of CK Hutchison Holdings Limited in 2015. He has been
Chairman and a Non-Executive Director of TOM Group Limited since 1999 and an Executive
Director of CK Infrastructure Holdings Limited since 1996. He has also been an Alternate Director
to a Director of HK Electric Investments Manager Limited as the Trustee-Manager of HK Electric
Investments and HK Electric Investments Limited since 2015 and a Director of Cenovus Energy Inc.
since January 2021. He has also been a Member of the Board of Commissioners of PT Indosat Tbk
since January 2022. Mr Sixt was a Director of Husky Energy Inc. (delisted on 5 January 2021
following its combination with Cenovus Energy Inc.) from 2000 to March 2021.
He has almost four decades of legal, global finance and risk management experience, and
possesses deep expertise in overseeing financial reporting system, risk management and internal
control systems as well as sustainability issues and related risks.
Mr Sixt holds a Master’s degree in Arts and a Bachelor’s degree in Civil Law, and is a Member of
the Bar and of the Law Society of the Provinces of Québec and Ontario, Canada.
Directorship of other listed companies in the past three years
Hutchison Telecommunications (Australia) Limited - 1998 to current
Special Responsibilities: Member of the Governance Remuneration and Nomination Committee
and member of the Audit and Risk Committee from 1 September 2021.
Arlene Tansey
Non-Executive
Director
Arlene Tansey is currently a Non-Executive Director of Aristocrat Leisure Limited, WiseTech Global
Limited, Infrastructure NSW and Lend Lease Real Estate Investments Limited. She is also a Board
Member of the Australian National Maritime Museum Foundation and Council. She is a former Non-
Executive Director of Adelaide Brighton Limited and Healius Limited.
Ms Tansey is a Member of Chief Executive Women and the International Women’s Forum and a
Fellow, Board member and the NSW Division Director of the Australian Institute of Company
Directors.
She has a Juris Doctor (Law) from the University of Southern California and an MBA in finance and
international business from New York University.
Ms Tansey has worked in commercial and investment banking in Australia and the US. Her
expertise covers a variety of disciplines including corporate advisory, M&A, commercial banking,
capital management and business turnaround.
Ms Tansey’s appointment to the Board commenced on 13 July 2020.
Directorship of other listed companies in the past three years
Aristocrat Leisure Limited – July 2016 to current, WiseTech Global Limited – June 2020 to current,
Healius Limited – August 2012 to October 2020 and Adelaide Brighton Limited – April 2011 to
October 2019.
Special Responsibilities: Chairman of the Audit and Risk Committee and Member of the
Governance Remuneration and Nomination Committee
Jack Teoh
Non-Executive
Director
Mr Teoh is a businessman involved in a range of private companies, with particular experience in
finance and technology. Mr Teoh has been a director of Tuas Limited (ASX: TUA) since July 2020,
and Total Forms Pty Ltd, a private software business.
Mr Teoh holds a Bachelor of Commerce from the University of New South Wales.
Mr Teoh’s appointment to the Board commenced on 26 March 2021.
Directorship of other listed companies in the past three years
Tuas Limited - July 2020 to current
Page 27 | TPG Telecom Annual Report 2021
Directors’ Report continued
Former Directors
The following persons were Directors of the Company during the financial year until the dates specified below:
NAME
David Teoh
Shane Teoh
ROLE
Chairman of the Board
Non-Executive Director
Company Secretary
FINAL DATE
AS DIRECTOR
25 March 2021
25 March 2021
Mr Trent Czinner was appointed Company Secretary of the Company on 26 March 2021. Trent holds a Bachelor of
Law and Administration from the University of Newcastle, was admitted as a Solicitor in New South Wales in 1995 and
has a Master of Business Administration from the Australian Graduate School of Management. Trent is also a Certified
member of the Governance Institute of Australia.
Mr Antony Moffatt was Company Secretary of the Company during the financial year until 25 March 2021.
Directors’ shareholdings
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 section 205G of the Corporations Act 2001, at the date of this report is disclosed in the
Remuneration Report.
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:
BOARD MEETINGS
AUDIT AND RISK
COMMITTEE MEETINGS
GOVERNANCE REMUNERATION
AND NOMINATION
COMMITTEE MEETINGS
DIRECTOR
C Fok
I Berroeta
P Klotz
D Massidda
R Millner
A Moffatt#
H Nugent
F Sixt
A Tansey
J Teoh#
D Teoh*
S Teoh*
A
10
11
11
10
11
8
11
10
11
8
3
3
B
11
11
11
11
11
8
11
11
11
8
3
3
A
–
–
3
–
–
–
4
1
4
–
–
–
NOTE:
A: Number of meetings attended by the Director.
B: Number of meetings held to which the Director was eligible to attend as a member.
#Appointed to the Board effective 26 March 2021
*Resigned from the Board effective 25 March 2021
B
–
–
3
–
–
–
4
1
4
–
–
–
A
–
–
–
6
–
–
6
6
6
–
3
–
B
–
–
–
6
–
–
6
6
6
–
3
–
Page 28 | TPG Telecom Annual Report 2021
Directors’ Report continued
Principal activities
The principal activity of the Group is the provision of telecommunications services to consumers, business, enterprise,
government and wholesale customers in Australia. There was no significant change in the nature of this activity during
the financial year.
Significant changes in the state of affairs
In the opinion of the Directors, aside from matters disclosed in the Operating and Financial Review (‘OFR’) section of
the Annual Report and the Financial Report, there have been no significant changes to the state of affairs of the
Company during the financial year. Impacts to TPG Telecom due to the COVID pandemic are outlined in the OFR
section of the Annual Report, where applicable.
Review of operations
The OFR set out on page 16 to 23 provides details relating to the Company’s operations and results for the financial
year.
Dividends
TPG Telecom aims to pay in each year a dividend of at least 50% of the Group’s net profit after tax, adding back one-
off restructuring costs and certain non-cash items (‘Adjusted NPAT’).
On 20 August 2021, the Directors declared an interim fully franked dividend for the half year ended 30 June 2021 of 8
cents per share. The interim dividend had a record date of 15 September 2021 and was paid on 13 October 2021.
On 24 February 2022, the Directors declared a fully franked final 2021 dividend of 8.5 cents per share. The dividend
has a record date of 16 March 2022 and will be paid on 13 April 2022. This represents 27% of the Group’s Adjusted
NPAT for FY21.
Further information regarding FY21 dividends is set out in Note 23 and Note 31 of the Annual Report.
TPG Telecom does not operate a Dividend Reinvestment Plan.
Likely developments
The OFR provides details relating to the Company’s business strategies and prospects for future financial years. This
information in the OFR is provided to assist with informed decision making of shareholders.
Events subsequent to reporting date
Other than the matters described elsewhere, the Directors are not aware of any matter or circumstance that has arisen
after the reporting date that, in their opinion, has significantly affected, or may significantly affect:
(i)
the operations of the Company and of the Group in future financial years, or
(ii) the results of those operations in future financial years, or
(iii) the state of affairs of the Company and of the Group in future financial years.
Corporate Governance
The Board of Directors and management of TPG Telecom recognise the importance of, and are committed to,
achieving high corporate governance standards. Our key Corporate Governance materials including policies, code of
conduct and Board and Board Committee Charters, can be found in the Corporate Governance section of our website
within the Investor Relation section. In accordance with the 4th edition of the ASX Corporate Governance Council’s
Principles and Recommendations, the Company’s Corporate Governance Statement, as approved by the Board, is
published and available on the TPG Telecom website at https://www.tpgtelecom.com.au/investor-relations.
Page 29 | TPG Telecom Annual Report 2021
Directors’ Report continued
Environmental and other sustainability risks
TPG Telecom seeks to comply with all laws and regulations relevant to its operations.
This includes obligations under the National Greenhouse and Energy Reporting Act 2007, which requires the Company
to report its Australian greenhouse gas emissions, energy consumption and energy production on an annual basis to
the Clean Energy Regulator.
During the financial year, there have been no claims against TPG Telecom in respect of a breach of environmental
regulation.
For more information on environmental performance, including environmental regulation, see the TPG Telecom 2021
Sustainability Report, which is available online at https://www.tpgtelecom.com.au/investor-relations.
More information on TPG Telecom’s approach to Sustainability is provided in the Sustainability and Risk sections of
the Annual Report.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section
237 of the Corporations Act 2001.
Employees and Work Health and Safety (WHS)
TPG Telecom manages varied levels of inherent risk within its work health and safety management systems. These
risks are both direct and indirect in nature and are not limited to but include inappropriate behaviour to our retail
employees, mobile and fixed network deployment, employee wellbeing and associated risks within the Company’s
facilities, products and services. The Company adopts a risk-based approach to how it actively monitors and manages
its obligations and is aware that any failure to manage these risks could cause harm to its people, partners or
members of the public. Over the past two years the Company has faced new challenges in supporting its employees
and customers through the COVID pandemic and the ongoing consolidation of the Company’s safety management
systems with those of TPG Corporation. The Company will continue to evolve its approach to WHS in 2022 as it
further embeds with a consistent approach to systems, monitoring and compliance.
Indemnification and insurance of officers and directors
Indemnification
The Company has agreed to indemnify all directors of the Company, on a full indemnity basis and to the full extent
permitted by law, against all losses or liabilities (including all reasonable legal costs, charges and expenses) incurred
by the director as a director or officer of the Company or a related body corporate of the Company.
Insurance policies
The Group maintains directors’ and officers’ liability insurance for the benefit of persons defined in the policy which
include current and former directors and officers, including senior executives of the Company and directors, senior
executives and secretaries of its controlled entities to the extent permitted by the Corporations Act 2001. The terms
of the insurance contract prohibit disclosure of the premiums payable and other terms of the policies.
Page 30 | TPG Telecom Annual Report 2021
Directors’ Report continued
Auditor indemnity
The Company has agreed to reimburse its auditors, PricewaterhouseCoopers (‘PwC’), for any liability (including
reasonable legal costs) incurred by PwC with connection with any claim by a third party arising from the Company’s
breach of the audit agreement between the Company and PwC. The reimbursement obligation is subject to
restrictions contained in the Corporations Act 2001 (Cth). No payment has been made to indemnify the auditors
during or since the end of the financial year.
Non-audit services
During the financial year, PwC, the Company’s auditor, has been engaged to perform certain other non-audit services
in addition to their statutory duties. Details of the amounts paid to PwC for audit and non-audit services provided
during the year are set out in Note 30 of the financial statements.
The Board of Directors, in accordance with advice provided by the Audit and Risk Committee, is satisfied that the
provision of the non-audit services is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor did not
compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
•
•
all non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not impact the
impartiality and objectivity of the auditor, and
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants.
Auditor’s independence declaration
A copy of the auditor’s independence declaration, as required under section 307C of the Corporations Act 2001, is
set out on page 71.
Rounding of amounts
The Company is of a kind referred to in the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 dated 24 March 2016 and, in accordance with that instrument, all financial information presented in the
consolidated financial statements and Directors’ Report has been rounded to the nearest million dollars, unless
otherwise indicate.
Page 31 | TPG Telecom Annual Report 2021
Directors’ Report continued
Remuneration Report
Executive Summary
This is the second Remuneration Report of TPG Telecom Limited (“TPG Telecom”, “the Company”), following the
merger between Vodafone Hutchison Australia (VHA) and TPG Corporation on 26 June 2020. It is also the first report
since the Company transitioned to a single remuneration approach in a publicly listed environment, notwithstanding
that legacy VHA Long Term Incentive Schemes remain on foot.
This Remuneration Report sets out how the remuneration approach, proposed in last year’s report, has been
implemented in FY21 and will be applied in FY22 for both Executive KMP and Non-Executive Directors. More
specifically, the report demonstrates how the Company’s remuneration approach supports the short and longer-term
alignment of the Company’s performance for the benefit of shareholders.
The Past Year
2021 was a challenging year for our stakeholders: not just for our shareholders, but also for our customers, the
communities in which we operate, and our employees. At a time of significant market volatility, our firm focus has
been on responding to COVID-19’s evolving challenges, while integrating the two businesses, and creating a platform
for future growth.
While keeping our customers and employees safe has been a priority, we also delivered on the promised first phase of
merger synergies, and built for the future by launching our 5G Fixed Wireless and accelerating our 5G roll-out.
These are specific examples of our three higher level articulated strategic priorities, which have acted as a rallying call
for enhancing the merged company’s customer and employee experience and improving returns for shareholders.
Those priorities are to:
•
Integrate and simplify: by creating a lean company that integrates our brands, technology, infrastructure,
processes and people;
• Win smart: by focusing on growth investments with a clear infrastructure, underutilization, or adjacency
advantage; and
• Maximise our potential: by developing an efficient and scalable business model to create a vibrant and dynamic
competitor in the telco sector.
These priorities are underpinned by our strongly held values which have been developed with significant input from
our employees: Stand together; own it; simple’s better; and boldly go.
Merging and unifying two companies—both of whom have a proud and distinctive culture—will take time. But
significant progress is being made, as can be seen in staff survey results—called the Spirit of TPG—which is one of the
metrics in our Balanced Scorecard for the Short Term Incentive (STI) Plan. This is encouraging.
At the same time, our strategic commitment to creating a simplified and integrated business, designed to deliver
better outcomes for customers and shareholders resulted, in 2021, in significant changes in the Executive Team.
While a real positive for the business longer-term, changes in the Executive team composition have created complexity
for our remuneration reporting. Only two executives, one of whom is the CEO—Mr Iñaki Berroeta—were Executive
KMP for the entire year. Four Executives ceased being KMP; while three others became KMP. Two of those, namely
the Group Executives for Consumer and for Enterprise and Government were external hires, while a long-standing
senior executive served as Interim CFO until a new external CFO joined the Company on 1 February 2022.
The remuneration approach outlined in the 2020 Remuneration Report was implemented in 2021, with minimal
change.
Page 32 | TPG Telecom Annual Report 2021
Directors’ Report continued
Remuneration Report continued
Fixed remuneration continued to be defined by reference to the median of the external market for comparable roles,
taking into consideration the size and complexity of the role, skills and experience of the employee, and internal
market relativities. In late 2020, the peer group for existing and newly appointed KMP was set as ASX 11-50
companies. Given market volatility, including in the Company’s share price, in 2021, further benchmark remuneration
analysis undertaken against the ASX 21-60 peer group, confirmed the appropriateness of Executive KMP fixed
remuneration. No increases for fixed remuneration were recommended for existing KMP for 2021, although new
Executive KMP were subsequently hired.
From January 2021, a new Short Term Incentive (STI) approach, aligned to TPG Telecom’s strategic priorities, came
into operation. Subject to Group financial and risk gateways, and an individual behavioural gateway, Group and
individual metrics for Executive KMP were aligned with the Group’s strategic priorities and budget. Service Revenue,
EBITDA, and Operating Free Cash Flow (FCF), constituted half of the overall scorecard, while customer and staff
measures represented 20 percent, and individual performance measures made up the balancing 30 percent. Based on
that scorecard, and subject to Board discretion—which was not exercised—the CEO was eligible to earn up to 100
percent of base salary at target, and 150 percent at maximum. The equivalent for Other Executive KMP was 65
percent at target and 100 percent at maximum, with the exception of the Interim CFO, with 50% of base salary at
target and up to 60% of base salary at maximum.
Overall, the Group balanced scorecard was assessed as being 65.86 percent of maximum or just below at target
performance. That result occurred in the following way: Operating FCF saw outperformance; EBITDA and the TPG and
iiNet Net Promoter Score (NPS) came in between target and maximum; Service Revenue and the employee Spirit
Index came in between threshold and target, while the Vodafone NPS came in below threshold with a target that
required it to maintain and increase its leading position throughout each month of the year.
When combined with an assessment of individual KPI’s, the Board recommended an STI award for the CEO of
$1,834,361. In 2021 this will be paid 60 percent in cash ($1,100,617) and 40 percent in Deferred Share Rights (DSRs)
($733,745). Shareholder approval for the DSRs will be sought at the 2022 Annual General Meeting. If approved,
shares will be purchased on market.
STI outcomes for the Executive KMP reflect not just the Group and Individual performance, but also the length of time
they were KMP and other factors such as their resignation or provisions relating to redundancy.
A new Long Term Incentive (LTI) Plan also came into operation in 2021. Under this Scheme, the CEO is eligible for an
allocation of performance share rights valued at 100% of base remuneration at target, and 150% at maximum, with the
equivalent for Other Executive KMP being 65% at target and 100% at maximum, with the exception of the Interim CFO,
with 30% of base salary at target and up to 36% of base salary at maximum.
Performance is to be tested over three years against two equally weighted performance hurdles: Operating FCF, and
relative total shareholder return (TSR) against a nominated peer group of ASX 100 companies (excluding energy,
financial, materials and real estate companies). The number of Performance Rights issued (reflecting the value
allocated) is determined by the face value of the volume weighted average share price (VWAP) of a TPG Telecom
ordinary share over the five days following the announcement of the annual results and before the grant date. In 2021
this was from 26 February 2021 to 4 March 2021.
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Malus conditions apply and no arrangements can be entered into to limit the economic risk of the Performance Rights.
Performance Rights will generally be forfeited if the Executive leaves, except in special circumstances including
redundancy, retirement, death or total and permanent disability.
At the May 2021 AGM, shareholder approval was obtained for a grant of 408,088 Performance Rights valued at
$2,775,000 for the CEO, which are subject to the terms outlined above.
In addition, the 2019 and 2020 VHA Long Term Incentive (LTI) Plan continued to operate for former VHA executives
employed at the start of 2020. This legacy Scheme, which operates over three years, has two equally weighted
tranches: one tranche, tested annually, depends on meeting Operating FCF targets; the other tranche is service based,
requiring the Executive to still be employed by the Company at the payment date in February after the end of the third
year. Prior to the merger, the then VHA Remuneration Committee approved the performance outcomes for the
remaining 50% of the 2019 LTI Plan, as well as for the first half of 2020. The Remuneration Report provides full
disclosure of remuneration outcomes under those Plans.
Executive KMP need also to hold the value equivalent of one year’s base salary in shares or share equivalents, which
can be accumulated over five years from the date of the merger or appointment, whichever is later.
Going Forward
2022 is a critical year in TPG Telecom’s evolution to more fully realise the benefits of the merger through integration
and simplification, while maximising our assets and laying the foundations to deliver sustainable growth and improving
returns for shareholders.
To ensure momentum is built and consistency is maintained, few changes are contemplated in the Company’s 2022
remuneration structure. These envisaged changes are outlined below.
• While market volatility remains, including in TPG Telecom’s share price, remuneration will continue to be
benchmarked against both the ASX 11-50 and the ASX 21-60 peer groups. Specific analysis will be undertaken
during the year.
• Base remuneration increases of 2 percent will be made to two members of the Executive KMP, reflecting changes
in their roles, while having reference to the benchmarks outlined above.
• A limited number of STI enhancements will be made:
– The STI percent deferred into DSR’s will be increased to 45 percent in 2022, and 50 percent in 2023.
– The metrics in the balanced scorecard will be adjusted:
– Service revenue will be increased from 15% to 20%
– EBITDA will be increased from 20% to 25%
– The individual performance weighting will be reduced from 30% to 20%.
•
The Board is considering the introduction of an Environmental, Social and Governance (ESG) measure linked to
an emissions target for the STI and/or LTI plans in 2023. An ESG measure was discussed for 2022 and it was
considered premature until the scientific baseline is accepted upon which to set the emissions reduction target.
• No changes will be made in 2022 to the LTI plan.
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Remuneration Report continued
Non-Executive Directors Governance and Remuneration
Mr Canning Fok, who served as a Non-Executive Director for the full year, was appointed Chairman on 26 March 2021,
following the resignation of Mr David Teoh. Mr Antony Moffatt and Mr Jack Teoh commenced as Non-Executive
Directors on the same day and were elected by shareholders at the May Annual General Meeting. All other Non-
Executive Directors held office for the entire year, including Dr Helen Nugent AC and Ms Arlene Tansey, who are
classified as Independent Non-Executive Directors. Dr Nugent was also appointed as Senior Independent Director.
The governance responsibilities of the Non-Executive Directors have been clearly defined and are exercised in a way
that preserves their independence from management in relation to remuneration. Management and Non-Executive
Director conflicts of interest are rigorously enforced. Non-Executive Directors do not receive fees that are contingent
on performance; shares in return for their service; retirement benefits, other than statutory superannuation; or any
termination benefits.
The Chairman is eligible to receive an annual fee for his service of $450,000. In 2021, the Chairman of the Audit and
Risk Committee (ARC) and the Governance, Remuneration and Nominations Committee (GRNC), both of whom are
independent directors, respectively received fees of $50,000 and $40,000 a year for those roles; while Non-Executive
Directors (other than the Board Chairman) are eligible to receive an annual base fee of $165,000.
Following a review of Non-Executive Directors fees, the Board has determined that the Chairman and Member fees for
the GRNC should be aligned with those of the ARC. This means that in 2022, the Chairman of the GRNC will receive a
fee of $50,000 and each Member will receive a fee of $25,000.
Non-Executive Directors who personally receive board fees are required to hold the equivalent of one year of their
base Non-Executive Director fee in shares, which can be accumulated over four years from the date of the merger or
appointment, whichever is later. At any point in time, the value of a Non-Executive Director’s minimum holding will be
calculated as the higher of the purchase price or current market price. Non-Executive Directors are required to advise
the Company Secretary of the share price at the time of any purchase of shares.
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Remuneration Report continued
Contents
1. Overview........................................................................................................................................................................... 36
2. Key Management Personnel ............................................................................................................................................ 37
3. 2021 Remuneration Approach ....................................................................................................................................... 38
4. Executive Remuneration Outcomes: 2021 .................................................................................................................... 49
5. Remuneration Governance ............................................................................................................................................. 61
6. Non-Executive Director Remuneration ........................................................................................................................... 63
Appendix 1 – Executive Service Agreements ........................................................................................................ 64
Appendix 2 – Executive Statutory Remuneration ................................................................................................... 65
Appendix 3 – Non-Executive Director Statutory Remuneration .............................................................................. 67
Appendix 4 – Equity Movements ........................................................................................................................... 68
Appendix 5 – Additional Statutory Information ...................................................................................................... 69
Appendix 6 – Related Party Transactions .............................................................................................................. 70
1. Overview
This is the first full year of the operation of TPG Telecom Limited (‘TPG Telecom’, ‘the Company’) following the merger
between Vodafone Hutchison Australia (VHA) and TPG Corporation on 26 June 2020. It is also the first full year of the
operation of the new remuneration approach, which was foreshadowed in last year’s Remuneration Report.
This Report shows that the new remuneration approach supports short and longer term alignment of the Company’s
performance for the benefit of shareholders in a publicly listed environment in the following ways:
•
•
The new remuneration approach, implemented for executives from 1 January 2021, seeks to align the interests of
executives and the performance of the Company. (See Section 3)
Executive remuneration outcomes for 2021 demonstrate that alignment, while LTI outcomes for grants made prior
to the merger in 2020 reflect VHA’s legacy approach. (See Section 4)
• Non-Executive Directors have exercised effective oversight of executive remuneration. (See Section 5)
• Non-Executive Directors are remunerated in ways that support the retention of their independence and their
commitment to performance for shareholders. (See Section 6)
Each of these conclusions is outlined in the following sections of this report.
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Remuneration Report continued
2. Key Management Personnel (KMP)
KMP have authority and responsibility for planning, directing and controlling the activities of TPG Telecom, directly or
indirectly, the organisation’s operating activities, and its profit and loss. This includes Non-Executive Directors.
However, while Non-Executive Directors are classified as KMP, they are not Executives.
The full list of Executive KMP is reported as follows:
EXECUTIVE
KMP
Iñaki Berroeta
I
Ana Bordeianu
ROLE
Chief Executive Officer
Group Executive Customer Operations and Shared Services
Kieren Cooney
Group Executive Consumer
Jonathan Rutherford Group Executive Enterprise & Government
Sean Crowley
Interim Chief Financial Officer2
Elizabeth Aris
Group Executive Enterprise & Government
Stephen Banfield
Group Chief Financial Officer
Craig Levy
Daniel Lloyd
Group Executive New Business Development
Group Executive Wholesale
TERM AS KMP1
Full year
Full year
Commenced 8 March 2021
Commenced 27 July 2021
Commenced 1 November 2021
Ceased 23 March 2021
Ceased 29 October 2021
Ceased 17 December 2021
Ceased 17 December 2021
1. If an Executive did not serve as KMP for the full year, unless stated otherwise all remuneration information disclosed in this report is from the date
the Executive commenced as KMP to the date they ceased as KMP.
2. Grant Dempsey has been appointed as Group Chief Financial Officer commencing 1 February 2022.
The full list of Non-Executive Directors is reported as follows:
NON-EXECUTIVE
KMP
ROLE
Canning Fok
Non-Executive Director and Chairman
Pierre Klotz
Non-Executive Director
Diego Massidda
Non-Executive Director
Robert Millner
Non-Executive Director
TERM AS KMP
Full year
Chairman from 26 March 2021
Full year
Full year
Full year
Helen Nugent
Independent Non-Executive Director & Senior Independent Director Full year
Frank Sixt
Non-Executive Director
Arlene Tansey
Independent Non-Executive Director
Antony Moffatt
Non-Executive Director
Jack Teoh
David Teoh
Shane Teoh
Non-Executive Director
Non-Executive Director and Chairman
Non-Executive Director
Full year
Full year
Commenced 26 March 2021
Commenced 26 March 2021
Ceased 25 March 2021
Ceased 25 March 2021
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Directors’ Report continued
Remuneration Report continued
3. 2021 Remuneration Approach
The new remuneration approach, fully implemented from 1 January 2021, seeks to align the interests of executives
and the performance of the Company for the benefit of shareholders.
The new remuneration arrangements seek to align TPG Telecom’s purpose, strategic priorities, and remuneration
principles.
To build meaningful relationships and support vibrant, connected communities.
OUR PURPOSE
↓
OUR STRATEGIC PRIORITIES
Integrate and Simplify
Create a lean company integrating our
brands, technology, infrastructure,
processes and people as one.
Win Smart
Maximise Our Potential
Focus growth investments where a
clear infrastructure advantage,
underutilisation opportunity or
valuable adjacency exists.
Develop an efficient and
scalable business model,
creating a vibrant and dynamic
competitor in the telco industry.
↓
OUR VALUES
Stand together
Own it
Simple’s better
Boldly go
↓
OUR REMUNERATION PRINCIPLES
Support our
purpose
Generate superior
performance for
the benefit of
shareholders over
both the short and
longer term
Deliver great
value and
service for
customers
today and
tomorrow
Invest in fast,
reliable and
innovative
technology that
creates value for
customers and
shareholders
↓
Incentivise high
performance
while managing
risk
Promote an
organisational
culture aligned with
organisation vision
and strategy and
community
expectations
The independence of the Board from management is maintained in the design and implementation of remuneration
outcomes, while balancing the interests of executives and shareholders.
REMUNERATION GOVERNANCE
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Remuneration Report continued
3.1 The Remuneration Structure
The remuneration structure has three elements, namely Fixed Remuneration, Short Term Incentives and Long Term
Incentives, along with a minimum shareholding requirement.
Our remuneration structure overview
REMUNERATION ELEMENT
Fixed remuneration
Benchmarked to the median of the relevant ASX peer group, which is reviewed annually.
Short term incentive (STI)
Annual performance assessment of Group financial, non-financial and individual performance.
Delivered in cash and share rights (DSRs) deferred over one and two years.
Long term incentive (LTI)
Assessed over a three year period based on Group financial performance and a market
performance hurdle. Granted as share Performance Rights and subject to hurdles.
Further information on each remuneration component is described below.
3.2 Fixed Remuneration
Fixed remuneration is determined by reference to the median of the external market for comparable roles, taking into
consideration the size and complexity of the role, skills and experience of the employee, and internal market
relativities. The external market data consists of median benchmarks for similar roles in ASX peer organisations of
comparable size. In late 2020, the peer group was set for existing and newly appointed KMP as the ASX 11-50 peer
group. During the course of 2021, further analysis was undertaken of the relevant ASX peer group that resulted in
fixed remuneration also being verified against the ASX 21-60 peer group. Comparative analysis is undertaken
annually.
Fixed remuneration is comprised of base salary plus superannuation.
3.3 Short Term Incentive 2021
STI is awarded for annual Company and individual performance in line with the achievement of TPG Telecom’s
strategic priorities. In this way, it aligns the interests of KMP with that of Company performance for the benefit of
shareholders.
The key STI elements for TPG Telecom in 2021 were as follows:
ELEMENT
DESCRIPTION
Gateway
An STI allocation to Executives will only be paid after the following considerations are taken into
account:
Assessed at a group level:
•
Financial: minimum financial performance aligned with shareholder interests is achieved.
The benchmark is set at the beginning of the performance year by the Board, following input
from the GRNC, having discretion at the end of the year as to whether it is to be exercised.
• Risk: appropriate management of financial, operational and reputational risks in the
generation of returns is assessed by the Board, following input from the GRNC, at the end of
the financial year.
Assessed at an individual level:
• Behaviours: demonstrated behaviours that are aligned with the organisation’s purpose and
culture are assessed by the Board at the end of the financial year, with input from
management, subject to the management of conflicts of interest.
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ELEMENT
DESCRIPTION
STI opportunity
The CEO is eligible to earn STI equivalent of up to 100% of base salary at target and up to 150%
of base salary at maximum.
Other Executive KMP are eligible to earn the STI equivalent of up to 65% of base salary at target
and up to 100% of base salary at maximum, with the exception of the Interim CFO with 50% of
base salary at target and up to 60% of base salary at maximum.
The target STI opportunity has been set taking into account the aggregate STI and LTI
remuneration against the total target remuneration levels for the median of the relevant ASX
peer group. The maximum STI opportunity has been determined with reference to total target
remuneration levels at the 75th percentile of the relevant ASX peer group.
Funding
The size of the STI pool is determined based on the specific outcomes of the STI scorecard
measures, capped by the maximum available to an individual Executive KMP.
Performance
measures
Performance STI outcomes are assessed against a balanced scorecard developed to support the
Company’s strategic priorities. The table below outlines the type of performance measures that
were used in 2021 and their weighting at target (not at maximum).
PERFORMANCE MEASURE
Total Service Revenue
Operating Free Cash Flow (FCF)
EBITDA (unadjusted)
Customer experience
Employee outcomes
Individual performance achievement
TOTAL
SCORECARD WEIGHTING
15%
15%
20%
10%
10%
30%
100%
Additional information on the specific Company performance measures is provided in
Section 4.2.
Individual performance measures are role specific and set with reference to the organisation’s
strategic priorities as they relate to an individual’s role.
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ELEMENT
DESCRIPTION
Balanced
Scorecard
Operation
The performance measures in the balanced scorecard are reviewed at year end against three
levels of performance – threshold, target and maximum with a pro rata being applied in between
each level.
Threshold – the minimum level of performance which will result in the payment of any STI in
relation to the performance measure. No STI payment will be made with respect to the
performance measure if the threshold performance level is not achieved.
Target – represents performance which meets the target for the performance measure based on
the annual target set by the Board.
Maximum – represents performance which exceeds the target and delivers superior outcomes.
The application of the three levels of performance is shown below.
-
0 i5;
'?t.
,a E
"' ::I
... ·x
,a E
:i
,a
"'
Cl.I ~
a::
100%
Target
67%
Threshold
33%
150%
100%
50%
,,
11)
.. ;:;
Ill
~
C:
IJQ
...
11)
~
-
'cfl.
0
QI
Ill
QI
Threshold
Target
Maximum
Level of STI Performance
How
performance
is evaluated
The Board approves the details of the balanced scorecard at the start of the year.
At year end, the GRNC makes a recommendation to the Board on whether the financial or risk
gateways have been triggered.
At year end, the balanced scorecard is reviewed by the GRNC and proposed to the Board, based
on financial and other number calculations, having been reviewed by the auditors.
The GRNC makes a recommendation to the Board on the CEO’s performance against the
Group’s scorecard and individual goals agreed at the beginning of the financial year, after the
behavioural gateway has been reviewed.
The CEO makes a proposal to the GRNC for recommendation to the Board on the performance
of each individual Other Executive KMP against the Group’s scorecard and their individual goals,
after the behavioural gateway has been reviewed.
Any STI outcomes for the balanced scorecard and for the CEO or Other Executive KMP are
subject to overriding Board discretion and rigorous management of conflicts of interest.
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ELEMENT
DESCRIPTION
Instruments
STI is awarded in cash and Deferred Share Rights (DSRs). DSRs are rights over TPG Telecom
ordinary shares. DSRs are granted at no cost to the Executive KMP and no dividend is payable
on any unexercised DSRs. Shares are typically purchased on market.
A transition to a desired 50% equity deferral will occur over the next two years given that
historically neither legacy VHA nor TPG Corporation used deferred STI arrangements. The
transition is being staged to balance the retention of Executive KMP over the crucial post-merger
period with shareholder expectations over the near term for the proportion to be retained.
The table below outlines the percentage of cash and deferred equity to be allocated for STI
awards for the next two years. This applies to all Executive KMP.
YEAR
2021
2022
2023 onwards
CASH COMPONENT
DSR COMPONENT
60%
55%
50%
40%
45%
50%
Performance
period
STI is assessed over a one year period, aligned to the calendar year (and TPG Telecom’s
financial year).
Vesting period
The cash component of the STI is to be paid in February following the end of the financial year.
DSRs vest equally in two tranches. The first tranche will vest in March one year after the end of
the financial year and the second tranche will vest in March two years after the end of the
financial year. Vesting of each tranche is subject to continued employment, subject to the
cessation of employment provisions outlined below.
Number of
DSRs issued
The number of DSRs issued is calculated based on the face value of the volume weighted
average share price (VWAP) of TPG Telecom's ordinary shares over the five days following the
announcement of annual results.
For DSR’s awarded as part of STI for the FY 2020, the calculated five day VWAP for the period
26 February 2021 to 4 March 2021 inclusive was $6.80. This value was used for the DSRs issued
to the CEO in May 2021 following shareholder approval of his STI for 2020 performance.
DSR’s reflecting 2021 STI outcomes will be calculated from 25 February 2022 to 3 March 2022
inclusive.
Exercise
Exercise of DSRs is automatic on vesting and there is no exercise price.
Hedging of DSRs Executives cannot enter into any arrangements that limit the economic risk of unvested DSRs.
Malus
conditions
In cases where an Executive KMP acts fraudulently or dishonestly or is in breach of his or her
obligations to TPG Telecom, any eligibility for STI or unvested rights will lapse.
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Directors’ Report continued
Remuneration Report continued
ELEMENT
DESCRIPTION
Cessation of
employment
STI will be forfeited if an Executive KMP resigns before the payment date subject to special
circumstances outlined below.
Unvested DSRs will also be forfeited if the Executive KMP resigns before the vesting date,
subject to the special circumstances outlined below.
In special circumstances (including redundancy, retirement, death or total and permanent
disability or as otherwise agreed), the below treatment may apply:
• Cash STI may be awarded pro rata on termination. Where business performance is yet to be
determined for the period, outcomes will reflect at Target performance. Where business
performance has been determined, this will be applied to final outcomes together with an
assessment of individual performance.
• DSRs that have been allocated may be retained on cessation of employment, subject to the
existing terms and conditions of the award. This process will only apply if the Executive KMP
is employed at the date of DSRs being allocated by the Board.
Change of
control
DSRs will be subject to the existing terms and conditions of the award and the exercise of Board
discretion.
3.4 Long Term Incentive 2021
LTI supports longer-term alignment between each Executive KMP and the return experienced by TPG Telecom
shareholders both directly and indirectly through the Company’s performance. LTI considers both Company
performance and share plan performance relative to the external market. These elements have applied since the
beginning of 2021.
ELEMENT
DESCRIPTION
LTI opportunity
The target LTI opportunity has been determined by reference to the median of the ASX peer
group for comparable roles, taking into account the level of fixed, STI and LTI remuneration. The
maximum LTI opportunity has been determined with reference to total target remuneration levels
at the 75th percentile of the peer group.
The CEO is eligible to earn the LTI equivalent of up to 100% of base salary at target and up to
150% of base salary at maximum. The Board makes a recommendation to shareholders on the
CEO’s LTI allocation for approval at the Annual General Meeting.
Other Executive KMP are eligible to earn the LTI equivalent of up to 65% of base salary at target
and up to 100% of base salary at maximum. The GRNC makes a recommendation to the Board
on the LTI allocation for Other Executive KMP, with the exception of the Interim CFO with 30% of
base salary at target and up to 36% of base salary at maximum.
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ELEMENT
DESCRIPTION
Performance
measures and
vesting period
Performance under the LTI will be tested against two equally weighted measures linked to:
• Operating FCF measured as Operating cash flow less capex, finance lease repayments and
finance lease interest (within financing costs). No adjustment is made for spectrum, loan
repayments and dividends; and
Total Shareholder Return (TSR) relative to a peer group of ASX 100 listed organisations
(which excludes the Energy, Financial, Materials, and Real Estate sectors).
•
Performance under the LTI will be tested over a three year period, as outlined in the table below.
How is
performance
evaluated
PERFORMANCE MEASURE
Relative TSR
Operating FCF
WEIGHTING
50%
50%
If the performance hurdles are met, vesting may only occur at the end of the three year
performance period.
Vesting schedules for the LTI performance measures are included in the table below.
Relative TSR vesting schedule
RELATIVE TSR PERFORMANCE
Following the 3 year Performance Period %
ranking with peer group
Equal to or less than the 50th percentile
Between the 50.1 percentile and 75th percentile
VESTING
% of granted Performance Rights
that vest
0%
Straight-line pro rata vesting between
50.1% and 100%
Equal to the 75th percentile or above
100%
Operating FCF vesting schedule
OPERATING FCF PERFORMANCE
Performance period %
of 3 year cumulative target
Less than 80% of the cumulative Operating FCF
target is achieved
80% of the cumulative Operating FCF target is
achieved
VESTING
% of granted Performance Rights
that vest
0%
50%
Between 80% and 110% of the cumulative Operating
FCF target is achieved
Straight-line pro rata vesting between
50% and 100%
110% or more of the cumulative Operating FCF
target is achieved
100%
Instrument
LTI is granted in Performance Rights that entitle participants to a fully paid ordinary share in TPG
Telecom, subject to meeting the performance hurdles. Performance Rights are granted at no
cost to the participant. No dividend is payable on unexercised rights. Shares are typically
purchased on market.
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ELEMENT
DESCRIPTION
Number of
rights issued
The number of Performance Rights issued is calculated based on the face value of the VWAP of
TPG Telecom's ordinary shares over the five days following the announcement of the Company’s
annual results which, for the 2022 allocation will be from 25 February 2022. This value will also
be used for the LTIs granted to the CEO in May 2022, which will be subject to shareholder
approval at the Annual General Meeting.
Exercise
Exercise of Performance Rights is automatic on vesting and there is no exercise price.
Hedging
Executives cannot enter into any arrangements to limit the economic risk of unvested
Performance Rights.
Malus
conditions
In cases where an Executive KMP acts fraudulently or dishonestly or is in breach of his or her
obligations to TPG Telecom, any unvested rights will lapse.
Cessation of
employment
Performance Rights will generally be forfeited if an Executive KMP resigns before the vesting
date. In special circumstances (including redundancy, retirement, death or total and permanent
disability or as otherwise agreed), any unvested rights may be retained on cessation of
employment, subject to the existing terms and conditions of the award (including performance
hurdles) and Board discretion.
Change of
control
Performance Rights will be subject to the existing terms and conditions of the award and Board
discretion.
There are also LTI Plans on foot that were outstanding at the time of the merger that related to VHA. These are
described in section 4.5.
3.5 Minimum Shareholding Requirements
To further align the interests of the Executive with shareholders, a minimum shareholding requirement has been
approved by the Board for all Executive KMP.
Under the minimum shareholding requirement, Executive KMP are required to acquire and maintain, directly or
indirectly, a holding with a value equivalent of one year’s base salary. Each Executive KMP may accumulate this value
over five years from the date of the merger or appointment, whichever is later. The shareholding requirements will be
periodically reviewed. At any point in time, the value of an Executive KMP’s Minimum Holding will be calculated as the
higher of the purchase price or current market price. The minimum shareholding is calculated as the total value of
shares held by the Executive KMP and unvested Performance Rights. For the purpose of the calculation, the value of
unvested Performance Rights is discounted by 50%. The GRNC annually reviews the extent to which Executive KMP
are complying with or making progress towards complying with this requirement.
In addition, the Board has adopted a share trading policy to ensure Executives comply with, and are perceived as
complying with, insider trading laws, and their dealing in TPG Telecom shares. The policy requires Executives to only
trade within defined windows, document all shareholdings, as well as to provide the Company with written
acknowledgement of any trades. A breach of policy will be regarded seriously by the Board and may constitute a
breach of the law, and as such may lead to action being taken against the Executive, up to and including termination.
Progress towards reaching the minimum shareholding requirement for Executive KMP is monitored and reviewed on
an annual basis. Compliance with minimum shareholding requirements is subject at all times to conformance with the
share trading policy and insider trading provisions of the Corporations Act 2001.
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3.6 Total Target and Maximum Remuneration 2021
Total Target remuneration for the CEO and Other Executive KMP has been set by reference to the median of
benchmark data for comparable roles in ASX peer organisations. In late 2020, the peer group was set for existing and
newly appointed KMP as the ASX 11-50 peer group. During the course of 2021, further analysis was undertaken as to
the relevant ASX peer group that resulted in target remuneration also being verified against the ASX 21-60 peer
group. No change was required as a result of this analysis. The maximum was set at the 75th percentile of total target
remuneration for comparable roles in the ASX peer organisations.
The table below details 2021 Total Target remuneration by reward element for those Executive KMP who held that role
for all or part of 2021. This table assumes the Executive was in the role for the entire year. This was only the case for
Mr Berroeta and Ms Bordeianu.
Total Target Remuneration for Executive KMP
EXECUTIVE KMP
BASE STI TARGET
SALARY1 % OF BASE
SALARY
$
STI
TARGET
LTI TARGET
% STI % OF BASE
SALARY
LTI
TARGET
$
TOTAL TARGET
REMUNERATION3
$
$ DEFERRED
Iñaki Berroeta
1,850,000
100%
1,850,000
Ana Bordeianu
Kieren Cooney
Sean Crowley
Craig Levy
Daniel Lloyd
700,000
900,000
580,000
700,000
600,000
Jonathan Rutherford
700,000
Elizabeth Aris
Stephen Banfield
700,000
750,000
65%
65%
50%2
65%
65%
65%
65%
65%
455,000
585,000
290,000
455,000
390,000
455,000
455,000
487,500
40%
40%
40%
40%
40%
40%
40%
40%
40%
100%
1,850,000
65%
65%
455,000
585,000
30%2
174,000
65%
65%
65%
65%
65%
455,000
390,000
455,000
455,000
487,500
5,550,000
1,610,000
2,070,000
1,044,000
1,610,000
1,380,000
1,610,000
1,610,000
1,725,000
1. Statutory superannuation is not included in the calculation of incentives.
2. Represents the target STI and LTI percentages for an Executive General Manager role. While operating as Interim CFO, S Crowley remains an
Executive General Manager.
3. Excluding statutory superannuation.
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Remuneration Report continued
The table below details 2021 Total Maximum remuneration by reward element for those Executive KMP who held that
role for all or part of 2021. This table assumes the Executive was in the role for the entire year. This was only the
case for Mr Berroeta and Ms Bordeianu.
Total Maximum Remuneration for Executive KMP
EXECUTIVE KMP
STI
MAXIMUM
BASE
% STI
SALARY1 % OF BASE MAXIMUM DEFERRED
IN 2021
SALARY
STI
$
$
LTI
MAXIMUM
LTI
% OF BASE MAXIMUM
$
SALARY
Iñaki Berroeta
1,850,000
150%
2,775,000
Ana Bordeianu
Kieren Cooney
Sean Crowley
Craig Levy
Daniel Lloyd
700,000
900,000
580,000
700,000
600,000
Jonathan Rutherford
700,000
Elizabeth Aris
Stephen Banfield
700,000
750,000
100%
100%
60%2
100%
100%
100%
100%
100%
700,000
900,000
348,000
700,000
600,000
700,000
700,000
750,000
40%
40%
40%
40%
40%
40%
40%
40%
40%
150%
2,775,000
100%
700,000
100%
900,000
36%2
208,800
100%
700,000
100%
600,000
100%
700,000
100%
700,000
100%
750,000
TOTAL MAXIMUM
REMUNERATION3
$
7,400,000
2,100,000
2,700,000
1,136,800
2,100,000
1,800,000
2,100,000
2,100,000
2,250,000
1. Statutory superannuation is not included in the calculation of incentives.
2. Represents the maximum STI and LTI percentages for an Executive General Manager role. While operating as Interim CFO, S Crowley remains an
Executive General Manager.
3. Excluding statutory superannuation.
3.7 Remuneration Mix at Target for 2021
The target remuneration mix has been structured to align remuneration for the CEO and Other Executive KMP with the
short and long-term business objectives of TPG Telecom. For the CEO and Other Executive KMP, the graphs below
outline the target remuneration mix between total fixed remuneration, short term incentive cash and equity
components and long term incentive. Total Fixed Remuneration (TFR) includes base salary and statutory
superannuation.
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Remuneration Report continued
Remuneration Mix at Target
CEO
Other Executive KMP
33%
Equity
34%
Cash
13%
Equity
20%
Cash
44%
Cash
28%
Equity
11%
Equity
17%
Cash
■
TFR
■
STI Cash
■
STI Equity
■
LTI
■
TFR
■
STI Cash
■
STI Equity
■
LTI
The chart below outlines the vesting timeframes for the TPG Telecom remuneration approach over which each
remuneration element operates as at the end of 2021. This does not include legacy VHA LTI arrangements.
Vesting Timeframe
JAN 2021
JAN 2022
JAN 2023
JAN 2024
Fixed
Remuneration
Performance period
(1 year)
Salary paid during the year
Short Term
Incentive
Long Term
Incentive
Performance period
(1 year)
60% paid in cash
40% deferred into share
rights (DSRs)
Performance period (3 years)
50% vests after 1 year
50% vest after 2 years
Performance Rights vest subject to performance hurdles being met
Financial Year 1
Financial Year 2
Financial Year 3
Financial Year 4
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4. Executive Remuneration Outcomes: 2021
Executive remuneration outcomes for 2021 demonstrate alignment with Company performance for the benefit of
shareholders, while LTI outcomes for grants made prior to the merger in 2020 reflect VHA’s legacy approach.
4.1 Fixed Remuneration
Fixed remuneration outcomes for 2021 reflect the principles outlined in 3.2 above, along with the period for which an
executive served as Executive KMP.
EXECUTIVE KMP
ROLE
Iñaki Berroeta
Chief Executive Officer
Ana Bordeianu
Group Executive Customer Operations and
Shared Services
TERM AS KMP
Full year
Full year
Kieren Cooney
Group Executive Consumer
Commenced 8 March 2021
Sean Crowley
Interim Chief Financial Officer
Commenced 1 November 2021
Craig Levy
Group Executive New Business Development
Ceased 17 December 2021
Daniel Lloyd
Group Executive Wholesale
Ceased 17 December 2021
Jonathan Rutherford
Group Executive Enterprise & Government
Commenced 27 July 2021
Elizabeth Aris
Group Executive Enterprise & Government
Ceased 23 March 2021
Stephen Banfield
Group Chief Financial Officer
Ceased 29 October 2021
ACTUAL FIXED
REMUNERATION
(INCLUDING
SUPERANNUATION)1,2
$
1,872,631
723,1313
759,891
100,871
694,886
598,721
314,739
162,134
639,119
1. For the relevant term as Executive KMP as per the dates detailed in the above table.
2. For executive KMP employed for part of the year, superannuation amounts have been pro-rated based on number of days employed. The pro-rata
calculation is based on statutory superannuation cap amounts for the periods of 1 January 2021 to 30 June 2021 and from 1 July 2021 to 31
December. For executive KMP employed for the full year, the annual statutory cap of $22,631 has been disclosed.
3. Includes an additional $500 superannuation payment related to TPG Telecom’s Super Bump program where all female employees with over 12
months tenure are provided an additional $500 superannuation annually.
Consideration was given to external market comparisons for similar roles in peer ASX organisations and also internal
relativities within the Executive team. As previously approved by the Board, the remuneration approach is Total Target
remuneration for Executive KMP to be set at or below the median of the ASX 11-50 peer group.
Because of changes in the organisations within the ASX 11-50 peer group benchmark due to market volatility and
movements in TPG’s share price, the Company’s market position had moved to 40 on the ASX as at October 2021. As
a result, analysis was undertaken of remuneration against the ASX 21-60 peer group.
For 2022, based on the above market benchmark analysis as well as increased size and scope of their roles, the
Board, on the recommendation of the GRNC, determined to award a 2% base salary increase for Ana Bordeianu and
Jonathan Rutherford. No increase was proposed for the CEO or any Other Executive KMP.
The effective date for the fixed remuneration recommendations will be 1 March 2022, which is consistent with the rest
of the organisation. The effective date for the purpose of calculating STI and LTI is 1 January 2022.
The Board will conduct a further review of Executive KMP remuneration during 2022, consistent with its ongoing
practice.
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Remuneration Report continued
4.2 STI Outcomes 2021
Business performance metrics reflect key drivers of shareholder returns and were set to support the Company’s
strategic priorities based on the annual budget and other strategic priorities as approved by the Board.
Prior to assessing performance on the STI measures and determining final STI award outcomes, the TPG Telecom
Board assessed that neither the Group financial or risk gateways had been triggered. This followed input from and a
rigorous review by the GRNC.
The Board, following input from the GRNC, reviewed and assessed that the CEO had met the behavioural gateway to
the STI Plan. The GRNC, following input from the CEO, reviewed and assessed that each Executive KMP had met the
behavioural gateway to the STI Plan.
MEASURE AND
WEIGHTING AT TARGET DESCRIPTION
THRESHOLD
TARGET
MAXIMUM1
Total Service Revenue
(15%)
Operating FCF
(15%)
Measures recurring revenue
generated from the provision of
telecommunication services
excluding hardware revenue
Measures Operating cash
flow less capex, finance lease
repayments and finance lease
interest (within financing
costs). No adjustment has been
made for spectrum, loan
repayments and dividends.
$4,139m
$4,589m2
$5,059m
$388m
$485m
$582m
EBITDA (unadjusted)
(20%)
Measures the profit TPG Telecom
makes after operating costs.
$1,546m
$1,718m
$1,890m
Customer NPS Vodafone
Brand Mobile
(5%)
Measures the number of months
of the year that the target ranking
has been achieved.
Lead position for
66.7% of the year
Lead position for
75% of the year
Customer NPS TPG &
iiNet Brands Fixed
(5%)
The customer measures are
tested independently of each
other.
Lead position of
Lead position of
1 & 2 for 66.7%
1 & 2 for 75%
of the year
of the year
Lead position for 100%
of year and increase
gap to competitors
Lead position of 1 & 2
for 100% of year and
increase average gap
to competitors
Employee Experience -
Values Alignment Index
(10%)
Index score based on 16 values
based statements contained
within the TPG culture survey
Individual
(30%)
Measures aligned to Strategic
Pillars
+3 from baseline
(of 72)
+5 from baseline
(of 72)
+ 7 from baseline
(of 72)
1. STI capped at 150% of target payout for maximum performance achievement.
2. The Total Service Revenue target excludes Tech2. The threshold, target and maximum for Service Revenue was adjusted to reflect the divestment of
Tech2 in December 2020, which was in the original measurement.
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The result achieved for each business performance metric was assessed and expressed as a percentage of the
performance outcome against Target.
COMMENTARY
OUTCOME AGAINST TARGET
PERFORMANCE
OUTCOME
MEASURE AND WEIGHTING
AT TARGET
(TOTAL WEIGHTING 70%)
Total Service Revenue
(15%)
Operating FCF
(15%)
EBITDA (unadjusted)
(20%)
Customer NPS Vodafone
Brand Mobile
(5%)
Customer NPS TPG & iiNet
Brands Fixed
(5%)
Employee Experience
- Values Alignment Index
(10%)
Total Service Revenue was less than
target as a result of greater than
anticipated ongoing impact of COVID.
Strong cash flow performance was
achieved through working capital
optimisation.
The EBITDA result was driven by
effective cost discipline which offset
lower performance in Total Service
Revenue.
Result was below threshold driven by a
decline in the perception of value
advantage offered by Vodafone relative
to competitors.
The TPG NPS results were steady in
2021. iiNet sustained positive growth
throughout the year, ending 2021 in 1st
position against competitors.
An improvement was recorded in the
scores for all 16 questions in the Index.
The most significant improvement
opportunity is in the area of
simplification.
$4,389m
95.64%1
$596m
122.89%
PERFORMANCE
OUTCOME
ACHIEVEMENT
Between Threshold
and Target
Greater than
Maximum
$1,731m
100.76%
Between Target and
Maximum
6 out of 12
months
50.00%
Below Threshold
11 out of 12
months
91.67%
Between Target and
Maximum
76
98.70%
Between Threshold
and Target
1. The threshold, target and maximum for Service Revenue was adjusted to reflect the divestment of Tech2 in December 2020, which was in the
original measurement.
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The performance outcome achievement for each of the 2021 Business Performance measures, is converted to a STI
Payment % based on the scale in the following table.
PERFORMANCE OUTCOME ACHIEVEMENT
STI PAYMENT % VS TARGET
Below Threshold
Threshold
Between Threshold and Target
Target
Between Target and Maximum
Greater than Maximum
0%
50%
Pro-rated 50% - 100%
100%
Pro-rated 100%-150%
150%
The STI Payment percent of each 2021 Business Performance measure and the weighted STI Payment percent is
detailed in the following table.
WEIGHTED STI WEIGHTED STI
PAYMENT % AT PAYMENT % AT PERFORMANC
TARGET (70%
MAXIMUM
TOTAL)
STI PAYMENT
E OUTCOME
(105% TOTAL) ACHIEVEMENT % VS TARGET
WEIGHTED
ACTUAL STI
PAYMENT %
ACTUAL
PAYMENT AS %
OF MAXIMUM
15.00%
22.50%
Operating FCF
15.00%
22.50%
20.00%
30.00%
Between
Threshold and
Target
Greater than
Maximum
Between Target
and Maximum
78.21%
11.73%
52.1%
150.00%
22.50%
100%
103.78%
20.76%
69.2%
5.00%
7.50%
Below Threshold
0.00%
0.00%
0%
5.00%
7.50%
10.00%
15.00%
Between Target
and Maximum
Between
Threshold and
Target
133.33%
6.67%
88.9%
75%
7.5%
50%
Total Weighted STI Payment %
69.15%
out of 70%
at Target
65.86%
1. The threshold, target and maximum for Service Revenue was adjusted to reflect the divestment of Tech2 in December 2020, which was in the
original measurement.
Page 52 | TPG Telecom Annual Report 2021
MEASURES
Total Service
Revenue1
EBITDA
(unadjusted)
Customer NPS
Vodafone Brand
Mobile
Customer NPS
TPG & iiNet
Brands Fixed
Employee
Experience -
Values
Alignment Index
Directors’ Report continued
Remuneration Report continued
For the purposes of calculating the STI outcome, the Board, following input from the GRNC, approved the Business
Performance component of the STI payment as 69.15% out of 70% at target, representing an outcome of 98.79% or
65.86% of maximum.
Assessments were also undertaken for each individual. The CEO’s performance was assessed against individual
specific goals approved by the Board, which reflected the following strategic pillars:
•
•
•
•
Financial performance;
Creating the conditions for a high performing organisation;
Creating long term value; and
Digital and IT transformation
The GRNC, following input from the CEO, reviewed and assessed each Executive KMP’s performance relative to their
individual goals. The individual component represents 30% of the total STI payment. The value of the deferred
component of the award will be subject to the share price at vesting.
Actual STI outcomes, for both Group and individual performance, were affected by other factors. Elizabeth Aris and
Stephen Banfield were not eligible for STI because they had resigned during the year. Craig Levy and Daniel Lloyd
received pro-rated cash STI payments and were not eligible for DSRs because they would not be employed by the
Company at the time the DSRs were issued in March 2022 (Craig Levy left the Company on 17 December 2021. Dan
Lloyd stepped down as KMP but remains employed until 17 February 2022). In the case of Kieren Cooney, Jonathan
Rutherford and Sean Crowley, their actual STI (both cash and DSRs) has been pro-rated to reflect the period for which
they were Executive KMP.
The table below shows the 2021 STI payment for Executives who were KMP for all or part of 2021, split into cash at
60% and deferred amounts at 40% as well as the total amount. It also reflects the Executive KMP STI given their period
of appointment.
EXECUTIVE KMP
Iñaki Berroeta
Ana Bordeianu
Kieren Cooney3
Sean Crowley4
Craig Levy
Daniel Lloyd7
Jonathan Rutherford8
Elizabeth Aris9
Stephen Banfield10
2021 STI CASH
ACTUAL1
2021 STI DEFERRED
ACTUAL2
TOTAL 2021 STI
ACTUAL
1,100,617
270,692
285,101
28,834
262,5295
223,122
117,176
-
-
733,744
180,462
190,067
19,222
-6
-6
78,118
-
-
1,834,361
451,154
475,168
48,056
262,529
223,122
195,294
-
-
1. 2021 STI Cash is paid to the Executive as a gross payment in February 2022.
2. 2021 STI Deferred is granted in March 2022 to the Executive in DSRs over TPG Telecom ordinary shares deferred over one and two years.
3. STI pro-rated based on term as KMP from 8 March 2021 to 31 December 2021.
4. STI pro-rated based on term as KMP from 1 November 2021 to 31 December 2021.
5. STI payment included as part of redundancy package. Payment based on Target STI pro-rated from 1 January 2021 to 17 December 2021.
6. Not eligible for DSRs because they were not employed at the time of issue of DSRs in March 2022.
7. STI target pro-rated based on term as KMP from 1 January 2021 to 17 December 2021.
8. STI target pro-rated based on term as KMP from 27 July 2021 to 31 December 2021.
9. No STI award was made given employment ended in June 2021 due to resignation.
10. No STI award was made given employment ended in October 2021 due to resignation.
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For Executives who were KMP as at 31 December 2021, the table below shows their potential 2022 STI at Target and
at Maximum as well as the percentage of cash and deferred equity to be potentially allocated for STI awards.
EXECUTIVE KMP
Iñaki Berroeta
Ana Bordeianu
Kieren Cooney
Sean Crowley
Jonathan Rutherford
2022 STI TARGET
$
2022 STI MAXIMUM
$
2022 STI CASH
%
2022 STI DEFERRED
%
1,850,000
2,775,000
464,100
585,000
290,000
464,100
696,150
877,500
348,000
696,150
55%
55%
55%
55%
55%
45%
45%
45%
45%
45%
The allocation of STI will reflect business performance metrics against the 2022 STI scorecard. The key elements are
outlined below and reflect key drivers of shareholder returns that have been set to support the Company’s strategic
priorities based on the annual budget and other strategic priorities as approved by the Board.
MEASURE
DESCRIPTION
WEIGHTING
Total Service Revenue
Operating FCF
EBITDA (unadjusted)
Measures recurring revenue generated from the provision of
telecommunication services excluding hardware revenue.
Measures Operating cash flow less capex, finance lease
repayments and finance lease interest (within financing costs). No
adjustment will be made for spectrum, loan repayments and dividends.
Measures the profit TPG Telecom makes after operating costs. The TPG
Telecom Board reserves the right to use its discretion to adjust for
abnormal items
Customer Experience
Customer NPS ranking relative to peers
Employee Experience
Measures alignment with TPG Telecom values based on 16 values
questions contained within the TPG culture survey
Individual performance achievement
Aligned to specific Strategic Priorities
TOTAL
20%
15%
25%
10%
10%
20%
100%
All targets are subject to Board discretion. The exercise of any discretion will be reported to shareholders.
4.3 LTI Grants 2021
Under the TPG Telecom LTI plan which became effective on 1 January 2021, the first LTI allocation was made to
Executives at the start of 2021. Each allocation of Performance Rights is granted at the start of the performance
period with performance tested over a three year period against two equally weighted performance hurdles: namely
Operating FCF, and relative shareholder return (TSR) against a nominated peer group of ASX listed companies that
excludes energy, financial, materials and real estate sectors.
The number of Performance Rights issued (reflecting the value allocated) was determined by the face value of the
volume weighted average share price (VWAP) of a TPG Telecom ordinary share over the five days following
announcement of the annual results. The VWAP for the 2021 LTI grant of Performance Rights was approved by the
Board at $6.80 per performance right. The calculation used to determine the number of Performance Rights at grant
for each Executive KMP was to divide their maximum LTI dollar package value by the Board approved VWAP share
price. In the case of the CEO, shareholder approval was sought and obtained at the May 2021 Annual General
Meeting.
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The table below details the number of Performance Rights granted under the 2021 LTI plan based on the 2021 LTI
maximums and the grant price at the time of allocation for those Executive KMP who held that role for all or part of
2021. This table assumes the Executive was in the role for the entire year. This was only the case for Mr Berroeta and
Ms Bordeianu. LTIs are subject to performance hurdles and have no value unless those hurdles are met.
EXECUTIVE KMP
Iñaki Berroeta
Ana Bordeianu
Kieren Cooney
Sean Crowley
Craig Levy
Daniel Lloyd
Jonathan Rutherford
Elizabeth Aris
Stephen Banfield
POTENTIAL MAXIMUM POTENTIAL MAXIMUM
2021 LTI
($)
2021 LTI
%
NUMBER OF 2021 LTI
SHARE PRICE AT
PERFORMANCE
ALLOCATION ($) RIGHTS ALLOCATED1
150%
100%
100%
36%
100%
100%
100%
100%
100%
2,775,000
700,000
900,0003
208,800
700,000
600,000
303,0144
700,000
750,000
6.80
6.80
6.80
6.80
6.80
6.80
6.80
-
-
408,0882
102,941
132,352
30,705
102,941
88,235
44,560
05
05
1. Refer to Section 3.4 for how LTI performance is evaluated.
2. The CEO received shareholder approval for the LTI grant at the 6 May 2021 Annual General Meeting.
3. The Board exercised discretion to grant the full Performance Rights allocation to Kieren Cooney as part of his compensation for his forfeited LTI
from his previous employer.
4. LTI figure pro-rated based on commencement of employment from 27 July 2021 to 31 December 2021.
5. LTI grant forfeited on resignation.
Malus conditions will apply to each grant and no arrangements can be entered into to limit the economic risk of the
Performance Rights. Performance Rights will generally be forfeited if the Executive leaves, except in special
circumstances including redundancy, retirement, death or total and permanent disability. This occurred in the case of
Craig Levy and Daniel Lloyd.
The table below shows the LTI Maximums for Executives who were Executive KMP as at 31 December 2021, proposed
to be granted in March 2022.
EXECUTIVE KMP
Iñaki Berroeta
Ana Bordeianu
Kieren Cooney
Sean Crowley
Jonathan Rutherford
2022 LTI
MAXIMUM %
150%
100%
100%
36%
100%
2022 LTI
MAXIMUM
2,775,000
714,000
900,000
208,800
714,000
No grant for 2022 will be made to Craig Levy, Daniel Lloyd, Elizabeth Aris and Stephen Banfield.
Shareholder approval for the LTI grant to the CEO will be sought at the 2022 Annual General Meeting.
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4.4 LTI Outcomes 2021 for the 2021 TPG Telecom LTI Allocation
Performance under the 2021 LTI will be tested over a three year period against two equally weighted measures
linked to:
PERFORMANCE MEASURE
Relative TSR
Operating FCF
WEIGHTING
50%
50%
The performance for Relative TSR will be assessed at the end of the 3 year performance period relative to a peer
group of ASX 100 listed organisations set at the commencement of the LTI Plan (which excludes the Energy, Financial,
Materials, and Real Estate sectors).
The three year target for Operating FCF is set at the commencement of the LTI Plan. The performance for the first
year of the 2021 LTI Plan against target is shown below.
MEASURE
DESCRIPTION
Operating FCF
Measures Operating cash flow less capex, finance
lease repayments and finance lease interest
(within financing costs). No adjustment has been
made for spectrum, loan repayments and dividends.
TARGET
$
PERFORMANCE OUTCOME
$
485m
596m
4.5 LTI Outcomes 2021 for 2019 and 2020 VHA LTI Allocations
The existing VHA LTI Plans that were in place for former VHA Executives were retained following the merger on 26th
June 2020. None were in existence for TPG Corporation. Two of the retained VHA LTI Plans remain on-foot, namely
50% of the 2019 LTI plan and the full 2020 LTI Plan. Prior to the merger implementation, the VHA Remuneration
Committee decided to accelerate the 2018 LTI Plan in full for the remaining period to 31 December 2020. Payment of
the 2018 LTI Plan was made to eligible Executive KMP in July 2020 and reported in the 2020 TPG Telecom
Remuneration Report.
Under the legacy VHA LTI scheme, performance is tested annually against two equally weighted independent tranches.
One tranche is subject to meeting Operating FCF performance targets and the other is service based, requiring the
Executive to still be employed by the Company at the payment date in February after the end of the third year. In
special circumstances (including redundancy, retirement, death or total and permanent disability or as otherwise
agreed), a pro rata payment may be awarded on termination. Performance of the LTI plans is assessed annually over a
three year period.
The performance periods for the VHA LTI Plans that remain outstanding are detailed below.
LTI GRANT
2019 LTI
2020 LTI
PERFORMANCE PERIOD START DATE
PERFORMANCE PERIOD END DATE
1 January 2019
1 January 2020
31 December 2021
31 December 2022
Prior to the merger implementation, the VHA Remuneration Committee approved the level of business performance in
relation to the 2019 VHA plan. The approved business performance was applied to the 2020 and 2021 performance
years of the plan. For the 1H 2020 performance year of the 2019 LTI Scheme, performance was based on the 1H 2020
VHA Operating FCF outcome. For the 2H 2020 and the 2021 performance year, the VHA Remuneration Committee,
prior to the merger, approved performance at 100% achievement of target.
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In addition to the 2019 LTI Plan, an LTI scheme was put in place at the beginning of 2020 for former VHA KMP, which
will vest (subject to performance hurdles) on 31 December 2022 to be paid in February 2023.
For the 2020 performance year of the 2020 LTI Plan, the VHA Remuneration Committee, prior to merger
implementation, determined the performance outcome for 1H 2020 at 125% of the VHA Operating FCF target. A
subsequent recommendation and decision made by the GRNC and the TPG Telecom Board was made in relation to 2H
2020 performance at 75% of the TPG Telecom Operating FCF target.
For the 2021 performance year, Operating FCF performance was approved by the TPG Telecom Board at 125% of the
TPG Telecom Operating FCF target of $485m. The final performance year will be assessed at the completion of 2022.
The table below details the performance outcome for the 2019 LTI Plan and performance to date on the 2020 LTI Plan.
LTI
GRANT
PERFORMANCE
PERIOD
START DATE
PERFORMANCE
PERIOD
END DATE
PERFORMANCE
YEAR 1
PERFORMANCE
YEAR 2
PERFORMANCE
YEAR 3
OUTCOME %
2019 LTI
1 January 2019
31 December 2021
2020 LTI
1 January 2020
31 December 2022
122.5%
99.9%3
112.5%1
125%4
100%2
111.67%
-
1. Performance for 1H 2020 of the 2020 LTI grant as approved by the VHA Remuneration Committee prior to merger at 125% of target. 2H 2020 was
approved by the TPG Telecom Board at 100% of target. The remaining 50% of the 2019 LTI year 2 tranche and 100% of the year 3 tranche are
payable in February 2022.
2. Performance Year 3 of the 2019 LTI grant was approved by the VHA Remuneration Committee prior to merger at 100% of target.
3. Performance for 1H 2020 of the 2020 LTI grant was approved by the VHA Remuneration Committee prior to merger at 125% of target. 2H 2020 was
approved by the TPG Telecom Board at 75% of target.
4. The performance target is based on the performance target set for the OFCF measure of $485m, which is the same as for the STI Operating FCF
measure.
As a result of the approved 2019 LTI plan outcome, LTI payments will be made to Executive KMP in February 2022 as
follows. The payments will be reflected in the Actual Cash remuneration for these Executive KMP in the 2022
Remuneration Report.
EXECUTIVE KMP
Iñaki Berroeta
Ana Bordeianu
Sean Crowley
Daniel Lloyd
2019 LTI
PAYMENT1
499,608
157,500
23,3972
170,2283
1. The remaining 50% of the 2019 LTI year 2 tranche and 100% of the year 3 tranche are payable in February 2022.
2. Figures pro-rated based on term as KMP from 1 November 2021 to 31 December 2021
3. Figures pro-rated based on term as KMP from 1 January 2021 to 17 December 2021
The 2020 VHA LTI plan remains outstanding and will be paid out in February 2023, subject to meeting performance
targets for Year 3 for 50% and being employment at the time of payment for the other 50%. These targets and actual
performance will be disclosed in the 2023 Remuneration Report.
Page 57 | TPG Telecom Annual Report 2021
Directors’ Report continued
Remuneration Report continued
4.6 Total Remuneration Outcomes 2021
The table below details actual remuneration allocated to Executives (both in cash and the face value of equity) for
2021 for Executive KMP who held that role for all or part of 2021. This reflects both their tenure with the Company
and/or the period for which they were Executive KMP. The 2021 LTI allocation will only have value if the specified
hurdles are met.
2021
FIXED
REMUNERATION1 RETENTION SIGN-ON3
$
$
$
2021
2021
SHORT TERM
2021
LTI GRANT ACTUAL TOTAL
INCENTIVE ALLOCATED REMUNERATION
ALLOCATED
VALUE
$
$
ACTUAL
$
TERMIN-
ATION4
$
1,872,631
370,0002
723,1315
759,891
100,871
694,886
598,721
314,739
162,134
639,119
-
-
21,726
-
-
-
-
-
-
-
969,366
-
-
-
-
-
-
-
-
-
-
1,834,361
2,775,000
451,154
700,000
475,168
900,000
48,056
34,895
525,000
262,5299
223,12211
673,151
576,986
-
-
175,000
-
195,294
303,014
-
-
-
-
6,851,992
1,874,285
3,104,425
205,548
2,155,566
1,398,829
813,047
337,134
639,119
EXECUTIVE KMP
Iñaki Berroeta
Ana Bordeianu
Kieren Cooney6
Sean Crowley7
Craig Levy8
Daniel Lloyd10
Jonathan Rutherford12
Elizabeth Aris13
Stephen Banfield14
1. For executive KMP employed for part of the year, superannuation amounts have been pro-rated based on number of days employed. The pro-rata
calculation is based on statutory superannuation cap amounts for the periods of 1 January 2021 to 30 June 2021 and from 1 July 2021 to 31
December. For executive KMP employed for the full year, the annual statutory cap of $22,631 has been disclosed.
2. Represents 4 tranches of the CEO’s contracted retention payment with the final tranche due January 2022, as per the CEO’s 2020 contract.
3. Represents the payment to Kieren Cooney to compensate for his forfeited STI and LTI as a result of his resignation from his previous employer. It
mirrors the timing and amount of his retention payments from his previous employer. Future payments will occur in September 2022 and September
2023.
4. Payment for Craig Levy relates to contractual notice period of $350,000 and contractual severance provisions of $175,000. Payment for Elizabeth
Aris relates to contractual notice period of $175,000.
5. Includes an additional $500 superannuation payment related to TPG Telecom’s Super Bump program where all female employees with over 12
months tenure are provided an additional $500 superannuation annually.
6. Fixed Remuneration and STI Actual figures pro-rated based on term as KMP from 8 March 2021.
7. Fixed Remuneration, Retention payment, STI Actual and LTI Grant Allocated figures pro-rated based on term as KMP from 1 November 2021 to 31
December 2021.
8. Fixed Remuneration, STI Actual and LTI Grant Allocated figures pro-rated based on term as KMP from 1 January 2021 to 17 December 2021.
9. STI payment made in line with redundancy package. Payment based on Target STI prorated from 1 January 2021 to 17 December 2021 as this was
approved before company performance results were determined. STI figure excludes the value of the DSR component forfeited due to not being
employed at the time of issue of DSRs.
10. There will be a payment for Dan Lloyd relating to contractual notice period of $200,000 and contractual severance of $150,000. This will be paid
after 17 February 2022. This differs from Appendix 2, Executive Statutory Remuneration, which conforms to the accounting standards.
11. STI figure excludes the value of the DSR component forfeited due to not being employed at the time of issue of DSRs in March 2022.
12. Fixed Remuneration, STI Actual and LTI Grant Allocated figures pro-rated based on term as KMP from 27 July 2021 to 31 December 2021.
13. Figures pro-rated based on term as KMP from 1 January 2021 to 23 March 2021.
14. Figures pro-rated based on term as KMP from 1 January 2021 to 29 October 2021.
Page 58 | TPG Telecom Annual Report 2021
Directors’ Report continued
Remuneration Report continued
The below table details Actual cash remuneration received by Executive KMP who held that role for all or part of 2021.
2021
FIXED
REMUNERATION1 RETENTION
$
$
SIGN-ON3 TERMINATION4
$
$
2021
SHORT TERM
INCENTIVE
2021
ACTUAL
CASH TOTAL
ACTUAL CASH REMUNERATION5
$
$
1,872,631
370,0002
723,1316
759,891
100,871
694,886
598,721
314,739
162,134
639,119
-
-
21,726
-
-
-
-
-
-
-
969,366
-
-
-
-
-
-
-
-
-
-
1,100,617
270,692
285,101
28,834
525,000
262,52910
-
-
175,000
-
223,122
117,176
-
-
3,343,248
993,823
2,014,358
151,431
1,482,415
821,843
431,915
337,134
639,119
EXECUTIVE KMP
Iñaki Berroeta
Ana Bordeianu
Kieren Cooney7
Sean Crowley8
Craig Levy9
Daniel Lloyd9,11
Jonathan Rutherford12
Elizabeth Aris13
Stephen Banfield14
1. For executive KMP employed for part of the year, superannuation amounts have been pro-rated based on number of days employed. The pro-rata
calculation is based on statutory superannuation cap amounts for the periods of 1 January 2021 to 30 June 2021 and from 1 July 2021 to 31
December. For executive KMP employed for the full year, the annual statutory cap of $22,631 has been disclosed.
2. Represents 4 tranches of the CEO’s contracted retention payment with the final tranche paid in January 2022, as per the CEO’s 2020 contract.
3. Represents the payment to Kieren Cooney to compensate for his forfeited STI and LTI as a result of his resignation from his previous employer. It
mirrors the timing and amount of his retention payments from his previous employer. Future payments will occur in September 2022 and September
2023.
4. Payment for Craig Levy relates to contractual notice period of $350,000 and contractual severance provisions of $175,000. Payment for Elizabeth
Aris relates to contractual notice period of $175,000.
5. The 2021 Actual Cash Total Remuneration does not include the 2019 Cash LTI payment as this will be paid February 2022 and disclosed in the 2022
Remuneration report
6. Includes an additional $500 superannuation payment related to TPG Telecom’s Super Bump program where all female employees with over 12
months tenure are provided an additional $500 superannuation annually.
7. Figures pro-rated based on term as KMP from 8 March 2021.
8. Figures pro-rated based on term as KMP from 1 November 2021 to 31 December 2021
9. Figures pro-rated based on term as KMP from 1 January 2021 to 17 December 2021
10. STI payment calculated in accordance with redundancy package. Payment based on Target STI prorated from 1 January 2021 to 17 December 2021
as this was approved before company performance results were determined. STI figure excludes the value of the DSR component forfeited due to
not being employed at the time of issue of DSRs in March 2022.
11. There will be a payment for Dan Lloyd relating to contractual notice period of $200,000 and contractual severance of $150,000. This will be paid
after 17 February 2022. This differs from Appendix 2, Executive Statutory Remuneration, which conforms to the accounting standards.
12. Figures pro-rated based on term as KMP from 27 July 2021 to 31 December 2021
13. Figures pro-rated based on term as KMP from 1 January 2021 to 23 March 2021
14. Figures pro-rated based on term as KMP from 1 January 2021 to 29 October 2021
Page 59 | TPG Telecom Annual Report 2021
Directors’ Report continued
Remuneration Report continued
4.7 Alignment with Shareholder interests
This section of the Remuneration Report provides an overview of the alignment of the Company’s performance for
FY21 with remuneration outcomes for Executive KMP.
The table below is a statutory reporting requirement. However only 2021 is meaningful as it is the only year that
reflects the performance of the merged Company.
FINANCIAL1
Service revenue2
EBITDA3
Operating FCF4
Dividend Paid
Share Price5
NPAT
2017
2,437
972
495
2018
2,391
1,102
564
2019
2,271
1,178
568
2020
3,295
1,391
361
N/A
7.22
734
2021
4,389
1,731
596
288
5.89
110
1. Historic performance from 2017 to 2019 relates to TPG Telecom (then VHA) and not to the merged entity. 2020 includes a full 12 months of results
for VHA and 6 months and 4 days of contribution from TPG Corporation. Service revenue and EBITDA are derived from statutory financial
statements.
2. Service revenue is customer mobile, fixed broadband, data and internet service revenue and excludes other revenue such as hardware revenue.
3. EBITDA is defined as earnings before net financing costs, tax, depreciation and amortisation.
4. Operating FCF is based on management reported figures. Operating FCF is Operating cash flow less capex, finance lease repayments and finance
lease interest (within financing costs). No adjustment has been made for spectrum, loan repayments and dividends.
5. Represents the closing share price as at 31 December.
Page 60 | TPG Telecom Annual Report 2021
Directors’ Report continued
Remuneration Report continued
5. Remuneration Governance
5.1 Governance responsibilities have been clearly defined.
The Board of Directors of TPG Telecom has oversight of TPG Telecom’s remuneration arrangements, and is
accountable for remuneration as well as related policies and processes.
The GRNC undertakes detailed work on remuneration and reports to the full Board through both formal minutes and a
verbal report provided to the Board by the Chairman of the GRNC.
The responsibilities of the Board and the GRNC, as defined in the Board and GRNC Charters, are as follows:
AREA
Executive
remuneration
APPROVED BY BOARD ON
RECOMMENDATION OF GRNC
•
•
•
•
•
Remuneration policies
Remuneration arrangements for CEO and
Executives and the Company Secretary
Performance and remuneration outcomes for the
CEO and Executives (including annual or ad-hoc
reviews)
Design and outcomes for all employee incentive
plans involving equity in the Company
Assessment of performance against STI Group
financial and risk gateways and individual
behavioural gateways
Gender outcomes to avoid gender or other bias
•
• Minimum shareholding policy
ROLE OF GRNC
In addition to making recommendations to the Board,
the GRNC undertakes the following:
•
risks involved
time demands
relevant industry and related benchmarks
Reviews remuneration policies to ensure they
reflect:
– ASX position and complexity of roles
–
–
–
Assesses performance against gateways and STI
performance against metrics
Exercises delegated discretions under employee
incentive and equity plans
•
•
• Monitors the effectiveness of employee incentive
•
and equity plans
Ensures practices and procedures comply with
legal and ASX requirements and are in line with
current market practices
Reviews remuneration reporting to ensure it
complies with legal requirements
• Monitors conformance with minimum
•
Non-Executive
Director
remuneration
•
•
Remuneration policies
Remuneration fees (subject to the aggregate
cap) as approved by shareholders
• Minimum shareholding policy
shareholding requirement
• Monitors conformance with minimum
shareholding requirement
Page 61 | TPG Telecom Annual Report 2021
Directors’ Report continued
Remuneration Report continued
5.2 The relevant Board Committee is composed of Non-Executive Directors, who operate independently
of management.
The GRNC consists of four Non-Executive Directors, two of whom, including the Committee Chairman, are
independent Non-Executive Directors. All Committee members are diligent in ensuring they have a comprehensive
understanding of the merged Company and the interaction of remuneration, risk and performance.
NON-EXECUTIVE KMP
ROLE
TERM AS KMP
Helen Nugent
Arlene Tansey
Diego Massidda
Frank Sixt
David Teoh
Independent Non-Executive Director, Senior Independent Director and GRNC Full year
Chairman
Independent Non-Executive Director and Audit & Risk Committee Chairman
Full year
Non-Executive Director
Non-Executive Director
Non-Executive Director and Chairman
Full year
Full year
To 25 March 2021
All members of the GRNC have experience in both Human Resources and risk to achieve effective governance of TPG
Telecom’s remuneration system. In addition, all members of the GRNC have extensive experience in remuneration
either through their professional background or as members of the committees of other boards, both in Australia and
overseas.
5.3 Effective remuneration governance processes are in operation.
In 2021, the GRNC met six times. Director’s attendance at the meetings is set out in the Directors’ report. Over that
period, the GRNC paid sustained attention to the design and operation of remuneration policies and practices, at the
same time as being acutely aware of the need to motivate and retain employees as the organisation structure evolved
and merger integration proceeded.
More specifically, the GRNC and the Board have strong processes in place for making remuneration decisions for
senior employees, including Executive KMP, which also involves assiduous management of conflicts of interest. These
processes are rigorously followed both by the GRNC and the Board.
The GRNC also discusses with the CEO the performance of each member of the senior management team, including
Executive KMP.
The GRNC and Board meets without the CEO in attendance to evaluate his performance.
5.4 The Board reached its own decision on benchmark information.
Benchmark data was sought from independent third party, Aon Hewitt, on peer group remuneration practices and
levels as well as on the LTI peer group. This data was considered in detail by the GRNC as input to its
recommendations and decision-making and in determining the relevant ASX peer group.
However, no recommendation, as defined by the Corporations Act 2001 (Cth), was sought from a third party.
Page 62 | TPG Telecom Annual Report 2021
Directors’ Report continued
Remuneration Report continued
6. Non-Executive Director Remuneration
Non-Executive Directors are remunerated in ways that support the retention of their independence and their
commitment to performance for shareholders.
6.1 The fees paid to Non-Executive Directors are appropriate.
The maximum aggregate fee pool available for Non-Executive Directors is $2.5 million. Non-Executive Director fees
were determined with reference to the median of the relevant ASX peer group of companies.
The table below outlines the fees (inclusive of superannuation) paid to Independent Non-Executive Directors in 2021.
ROLE
Chair
Member
BOARD
$
450,000
165,000
AUDIT AND RISK
COMMITTEE
$
GOVERNANCE, REMUNERATION AND
NOMINATION COMMITTEE
$
50,000
25,000
40,000
20,000
Following a review in late 2021, the Board approved the alignment of the Board Committee fees for the ARC and
GRNC. This reflects the role and responsibilities of the GRNC Chairman and the scope of the GRNC to cover
governance, remuneration and nominations.
The table below outlines the fees (inclusive of superannuation) that will be paid to Independent Non-Executive
Directors for the 2022 financial year.
ROLE
Chair
Member
BOARD
$
450,000
165,000
AUDIT AND RISK
COMMITTEE
$
GOVERNANCE, REMUNERATION AND
NOMINATION COMMITTEE
$
50,000
25,000
50,000
25,000
In making this decision, conflict of interest considerations were assiduously managed.
A Non-Executive Director nominated by a shareholder may elect to have director’s fees paid to their nominating
shareholder. For current Non-Executive Directors this includes Canning Fok, Frank Sixt, Pierre Klotz and Diego
Massidda.
6.2 Non-Executive Directors are required to hold a minimum shareholding of TPG Telecom shares.
To align the interests of the Board with that of shareholders, the Board has a minimum shareholding requirement for
Non-Executive Directors.
Under the minimum shareholding requirement, Non-Executive Directors are required to acquire and maintain, directly
or indirectly, a holding with a value equivalent to one year of base Non-Executive fees (excluding Committee fees).
Each Non-Executive Director may accumulate this value over four years from the date of the merger or appointment,
whichever is later. The shareholding requirement is reviewed annually. This requirement does not apply to any Non-
Executive Director appointed by a nominating shareholder who does not personally receive Non-Executive Director
fees from the Company. At any point in time, the value of a Non-Executive Director’s minimum holding is calculated as
the higher of the purchase price or current market price. Non-Executive Directors are required to seek approval of the
GRNC prior to advising the Company Secretary of the purchase price at the time of purchase. The GRNC annually
monitors conformance of NEDs with this policy.
In addition, the Board has adopted a share trading policy to ensure Non-Executive Directors comply with insider
trading laws and their trading of TPG Telecom shares. The policy requires Non-Executive Directors to only trade within
defined windows, document all shareholdings, as well as provide the Company with written acknowledgement of any
trades. A breach of policy is regarded seriously by the Board and may constitute a breach of the law, and as such lead
to appropriate action being taken against the Non-Executive Director.
Page 63 | TPG Telecom Annual Report 2021
Directors’ Report continued
Remuneration Report continued
Appendices
1. Executive Service Agreements
The table below sets out the main terms and conditions of the employment contracts of Executive KMP.
CEO IÑAKI BERROETA
OTHER EXECUTIVE KMP1
6 months if within the first two years from 6 months
start date, 12 months thereafter
Employee notice period
TPG Telecom notice period
Term of Agreement
Remuneration Review
12 months
Unlimited term
Annual
Restraint and non-solicitation period
12 months
Termination arrangements
Entitled to severance of 6 months’
base salary
6 months
Unlimited term
Annual
6 months
Entitled to severance of 3 months base
salary or statutory entitlement whichever
is greater
1. As Interim CFO Sean Crowley had a mutual notice period of 3 months; entitlement to severance of 3 months base salary or statutory entitlement
whichever is greater; and a 3 month restraint and non-solicitation period.
The table below sets out the CEO’s remuneration package from 1 July 2021.
CEO
BASE
SUPER-
SALARY ANNUATION1 REMUNER-ATION
$
$
$
TOTAL FIXED RETENTION
PAYMENT2
$
STI TARGET STI MAXIMUM
% OF BASE
% OF BASE
SALARY
SALARY
LTI TARGET LTI MAXIMUM
% OF BASE
% OF BASE
SALARY
SALARY
Iñaki Berroeta
1,850,000
23,568
1,873,568
555,000
Up to 100%
Up to 150%
Up to 100%
Up to 150%
1. Superannuation reflects the amount payable up to the statutory superannuation cap which came into effect from 1 July 2021.
2. The Retention payment is to be paid in 6 equal tranches on specified payment dates between 1 October 2020 and 1 January 2022, subject to
continuous employment, unless the Company terminates CEO’s employment without cause. The payment is not to be taken into account when
calculating any payment for STI, LTI, annual leave, long service leave or on termination of employment.
Page 64 | TPG Telecom Annual Report 2021
Directors’ Report continued
Remuneration Report continued
2. Executive Statutory Remuneration
Details of remuneration for Executives are set out below in accordance with statutory disclosure requirements under
the Corporations Act and the Australian Accounting Standards.
SHORT TERM BENEFITS
BENEFITS
PAYMENTS BENEFITS
POST-
EMPLOYMENT OTHER
LONG
TERM
PAYMENTS TO BE
SETTLED
Name
Year
salary 1 STI Cash2
Base Cash
Non-
monetary
benefits3
Super-
annuation4
Termination /
Retention /
Sign-on
Payments
Long STI to be
LTI to be
settled in
Service settled in Cash and
Equity6, 7
Equity5
Leave
Performance
related
remuneration
(%)
Total
I Berroeta
2021
1,850,000 1,100,617
15,335
22,631
370,0008
30,808
68,389 1,080,099
4,537,879
2020 1,663,750 1,099,1099
18,040
21,348
92,500
77,111 372,0229
1,107,980
4,451,860
A Bordeianu 2021
700,000
270,692
36,027
23,13110
2020
612,474
335,681
20,463
21,848
-
-
K Cooney
202112
737,260
285,101
12,562
22,631
969,36613
C Levy
2020
202114
-
-
-
-
-
673,151
262,529
14,747
21,735
755,94515
14,517
202016
263,889
108,333
5,587
10,847
-
D Lloyd
202117
576,986
223,122
14,747
21,735
538,23018
4,345
9,995
2020
551,176
359,265
14,927
J Rutherford 202119
303,014
117,176
17,163
2020
-
-
-
21,348
11,725
-
77,115
25,778
-
-
-
-
13,66011
62,915
374,280
1,480,705
-
-
-
-
364,875
1,355,341
66,264
123,419
2,216,603
-
-
-
-
-
-
-
92,312
1,834,936
-
393,001
305,84118
1,690,656
382,877
1,432,486
15,177
33,333
497,588
-
-
-
S Crowley
202120
96,932
28,834
2,563
3,939
21,72621
1,614
6,701
38,897
201,206
2020
327,782
169,094
-
15,925
-
7,962
E Aris
202122
157,260
2020
58,333
S Banfield
202124
620,548
-
-
-
3,235
1,264
12,688
5,424
18,571
4,874
175,00023
202025
282,738
89,583
5,587
10,847
T Czinner
2021
-
-
-
-
2020
325,011
220,734
9,340
15,925
V Hicks
2021
-
-
-
-
2020
305,819
169,698
10,969
16,425
R James
2021
-
-
-
-
2020
351,551
206,384
9,340
15,450
B McIntosh 2021
-
-
-
-
-
-
7,917
4,655
-
6,932
-
7,613
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
159,305
680,068
-
-
-
-
-
340,369
65,021
659,724
393,410
-
210,338
788,280
-
-
221,651
732,175
-
-
90,333
673,058
-
-
11,961
575,058
-
-
8,353
553,595
2020
76,915
(19,198)
1,835
4,871
496,991
1,683
K Millroy
2021
-
-
2020
59,871
(17,546)
-
-
-
-
4,452
497,490
-
975
Total
2021 5,715,151 2,288,071
129,066
150,972
2,830,267
78,511 219,446 2,048,181 13,459,666
2020 4,879,309 2,721,136
97,352
164,710
1,164,096
137,054 372,022 2,557,673 12,093,353
1. Base cash salary includes base salary and annual leave.
2. STI Cash includes actual STI amounts relating to the 2021 STI Plan performance year, and adjustments to the accruals for the 2020 STI Plan after the
final payment.
3. Non monetary benefits include car parking and novated car leases. For two KMP executives, this also included relocation and permanent residency
related expenses (inclusive of any relevant fringe benefits tax), related to health insurance, tax support, relocation costs and permanent residency
application costs.
4. For executive KMP employed for part of the year, superannuation amounts have been pro-rated based on number of days employed. The pro-rata
calculation is based on statutory superannuation cap amounts for the periods of 1 January 2021 to 30 June 2021 (pro-rated value $10,758) and from
1 July 2021 to 31 December (pro-rated $11,881). For executive KMP employed for the full year, the annual statutory cap of $22,631 has been
disclosed.
Page 65 | TPG Telecom Annual Report 2021
50%
58%
48%
52%
21%
-
19%
28%
31%
52%
33%
-
38%
48%
0%
0%
0%
23%
-
55%
-
53%
-
44%
-
(1%)
-
(2%)
34%
47%
Directors’ Report continued
Remuneration Report continued
5. For Equity settled STI, 50% of the deferred shared rights (DSRs) will vest after one year, with the remainder vesting after two years, both subject to
relevant forfeiture conditions. The fair value of the rights is determined based on the market price of the company’s shares at year-end, with an
adjustment made to take into account the vesting period and expected dividends during that period that will not be received by the KMPs.
6. LTI Cash includes the accrued or paid amounts during the year relating to the 2021 performance year for the 2020 VHA LTI Plan Award and the final
payment of the 2019 LTI Plan Award. The payments for the 2019 VHA LTI Plan Award will be reflected in the Actual Cash remuneration for these
Executive KMP in the 2022 Remuneration Report.
7. Performance share rights (PSRs) for 2021, subject to meeting hurdles, will vest on 31 March 2024. The total number of PSRs to be allocated was
calculated based on the five-day VWAP of $6.80 over the period 26 February 2021 to 4 March 2021. The fair value of these rights was determined
for the grant dates of 6 May 2021 and 24 September 2021 using: i) the Monte-Carlo model for the relative total shareholder return (TSR) hurdle and
ii) the Black-Scholes model for the Operating Free Cash Flow (FCF) hurdle.
TSR hurdle – The Monte-Carlo model which incorporates the impact of performance hurdles and the vesting scale on the value of the PSRs was
used. This pricing model takes into account factors such as the Company’s share price at the date of grant, volatility of the underlying shares, the
risk-free rate of return, expected dividend yield and the likelihood that vesting conditions will be met. The accounting valuation of rights issued is
allocated equally over the vesting period.
Operating FCF hurdle – The Black-Scholes model was used to determine the fair value of PSRs. This pricing model takes into account factors such
as the Company’s share price at the date of grant, the risk-free rate of return, expected dividend yield and time to maturity. The accounting valuation
of rights issued is allocated over the vesting period so as to take into account the expected level of vesting over the performance period.
8. The CEO’s Other Payments include four retention payments of $92,500 each with the last payment due for payment in January 2022.
9. The CEO’s 2020 STI DSR award of $372,022 has been moved out of the STI Cash and disclosed in the 2020 DSR to be settled in equity to reflect an
incorrect categorisation in the 2020 annual report.
10. Includes an additional $500 superannuation payment related to TPG Telecom’s Super Bump program where all female employees with over 12
months tenure are provided an additional $500 superannuation annually.
11. Includes a $2,000 service award payment based on tenure with the Company.
12. Represents remuneration received as KMP from 8 March 2021.
13. Represents the payment to Kieren Cooney to compensate for his forfeited STI and LTI as a result of his resignation from his previous employer. It
mirrors the timing and amount of his retention payments from his previous employer. Future payments will occur in September 2022 and September
2023.
14. Represents remuneration received as KMP until 17 December 2021.
15. Other Payments include redundancy payments related to the contractual notice period ($350,000), contractual severance provisions ($175,000) and
on-foot 2021 LTI Plan equity to be settled in 2024.
16. Represents remuneration received as KMP from 17 August 2020 to 31 December 2020.
17. Represents remuneration received as KMP until 17 December 2021.
18. Other Payments include redundancy payments to be paid in February 2022 related to the contractual notice period ($200,000), contractual
severance provisions ($150,000) and 2021 LTI Plan equity to be settled in 2024 which remains on foot but which under accounting standards needs
to be fully recognised in this statutory remuneration report. The LTI to be settled in cash and equity also includes payments to be made in February
2022 as part of the VHA legacy LTI scheme.
19. Represents remuneration received as KMP from 27 July 2021.
20. Represents remuneration received as KMP from 1 November 2021.
21. Other Payments include a retention payment of $130,000 pro-rated for the term as KMP.
22. Represents remuneration received as KMP until 23 March 2021.
23. Other Payments include a Termination payment related to the contractual notice period
24. Represents remuneration received as KMP until 29 October 2021.
25. Represents remuneration received as KMP from 17 August 2020 to 31 December 2020.
Page 66 | TPG Telecom Annual Report 2021
Directors’ Report continued
Remuneration Report continued
3. Non-Executive Director Statutory Remuneration
Details of remuneration for Non-Executive Directors are set out below in accordance with statutory disclosure
requirements under the Corporations Act and the Australian Accounting Standards.
SHORT-TERM
BENEFITS
POST-EMPLOYMENT
BENEFITS
CASH SALARY NON-MONETARY
BENEFITS
AND FEES
SUPERANNUATION
TERMINATION
BENEFITS
NAME
C Fok
P Klotz
D Massidda
R Millner
A Moffatt
YEAR
20211
2020
2021
2020
2021
2020
2021
2020
20212
2020
Dr H Nugent AC
2021
F Sixt
A Tansey
J Teoh
D Teoh
S Teoh
Total
2020
2021
2020
2021
2020
20213
2020
20214
2020
20215
2020
2021
2020
382,880
85,478
181,667
95,150
185,000
92,801
150,340
70,975
114,855
-
209,564
98,935
193,333
90,724
214,120
101,085
114,855
-
98,780
210,530
34,678
70,975
1,880,072
916,653
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,660
6,743
11,286
-
20,436
9,399
-
-
20,880
9,603
11,286
-
9,384
10,847
3,294
6,743
91,226
43,335
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL
382,880
85,478
181,667
95,150
185,000
92,801
165,000
77,718
126,141
-
230,000
108,334
193,333
90,724
235,000
110,688
126,141
-
108,164
371,538
592,915
37,972
77,718
-
1,971,298
371,538
1,331,526
1. Canning Fok was appointed as Chairman on 26 March 2021.
2. Antony Moffatt was appointed as a Non-Executive Director on 26 March 2021.
3. Jack Teoh was appointed as a Non-Executive Director on 26 March 2021.
4. David Teoh was a Non-Executive Director and Chairman for the period 1 January 2021 to 25 March 2021.
5. Shane Teoh was a Non-Executive Director for the period 1 January 2021 to 25 March 2021.
Page 67 | TPG Telecom Annual Report 2021
Directors’ Report continued
Remuneration Report continued
4. Equity Movements
The table below provides movements in equity during the financial year for Non-Executive Directors and Executives
who were KMP for all or part of 2021. The numbers in the table reflect equity holdings and movements only for the
period the Non-Executive Director or Executive was KMP.
NAME
Canning Fok
Pierre Klotz
Diego Massidda
Robert Millner
Antony Moffatt1
Dr Helen Nugent AC
Frank Sixt
Arlene Tansey
David Teoh2
Jack Teoh3
Shane Teoh4
Iñaki Berroeta
Elizabeth Aris5
Stephen Banfield6
Ana Bordeianu
Kieren Cooney7
Sean Crowley8
Craig Levy9
Daniel Lloyd10
Jonathan Rutherford11
HOLDING AT START
OF TERM AS KMP
GRANTED AS
REMUNERATION
PURCHASED /
(SOLD)
BALANCE AT END
OF TERM AS KMP
-
-
-
8,373,058
611,269
11,000
-
20,000
318,315,608
133,258
133,258
-
-
338,300
-
-
-
317,600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
200,000
-
-
-
-
-
-
116,000
-
-
-
-
8,573,058
611,269
11,000
-
20,000
318,315,608
133,258
133,258
116,000
-
(38,300)
300,000
-
-
-
-
-
-
(57,600)
260,000
-
-
-
-
1. Antony Moffatt was appointed as a Non-Executive Director on 26 March 2021.
2. David Teoh was a Non-Executive Director and Chairman for the period 1 January 2021 to 25 March 2021.
3. Jack Teoh was appointed as a Non-Executive Director on 26 March 2021.
4. Shane Teoh was a Non-Executive Director for the period 1 January 2021 to 25 March 2021.
5. Elizabeth Aris was KMP for the period 1 January 2021 to 23 March 2021.
6. Stephen Banfield was KMP for the period 1 January 2021 to 29 October 2021.
7. Kieren Cooney was appointed KMP on 8 March 2021.
8. Sean Crowley was KMP (Interim CFO) for the period 1 November 2021 to 31 January 2022.
9. Craig Levy was KMP for the period 1 January 2021 to 17 December 2021.
10. Daniel Lloyd was KMP for the period 1 January 2021 to 17 December 2021.
11. Jonathan Rutherford was appointed KMP on 27 July 2021.
Page 68 | TPG Telecom Annual Report 2021
Directors’ Report continued
Remuneration Report continued
5. Additional Statutory Information
Terms and conditions of the share-based payment arrangements
Terms and conditions of each grant of Share Rights in a current or future reporting period are as follows:
GRANT DATE
STI Deferred Share Rights
VESTING
DATE
EXPIRY DATE
FAIR VALUE PER SHARE
NUMBER OF SHARE
RIGHT AT GRANT DATE RIGHTS AT GRANT DATE
%
VESTED
6 May 2021
6 May 2021
31 March 2022
31 March 2023
31 March 2023
31 March 2024
$4.80
$4.80
27,355
27,354
50%
0%
GRANT DATE
VESTING
DATE
LTI Performance Share Rights
EXPIRY DATE
HURDLE
FAIR VALUE PER
SHARE RIGHT AT
NUMBER OF
SHARE RIGHTS
GRANT DATE AT GRANT DATE
%
VESTED
6 May 2021
6 May 2021
31 March 2024
31 March 2025 Operating FCF
31 March 2024
31 March 2025
rTSR
24 September 2021
31 March 2024
31 March 2025 Operating FCF
24 September 2021
31 March 2024
31 March 2025
rTSR
$4.80
$1.26
$6.54
$2.73
381,162
381,159
73,751
73,750
0%
0%
0%
0%
Reconciliation of shares rights and ordinary shares held by KMP
The table below shows how many share rights were granted, vested and forfeited during the year.
BALANCE AT
START OF
YEAR
(NUMBER)
GRANTED
DURING YEAR
(NUMBER)
VESTED
(NUMBER)
VESTED
(%)
FORFEITED
(NUMBER)
FORFEITED
(%)
BALANCE AT END
OF THE YEAR
(UNVESTED)
(NUMBER)
-
-
-
-
-
-
-
-
-
-
54,709
408,088
-
102,941
110,294
132,352
30,705
102,941
88,235
44,560
27,355
50%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27,354
408,088
-
102,941
110,294
100%
-
-
-
-
-
-
-
-
-
-
-
132,352
30,705
102,941
88,235
44,560
Page 69 | TPG Telecom Annual Report 2021
NAME &
YEAR
OF
GRANT
I Berroeta
2021
2021
E Aris
2021
A Bordeianu
2021
S Banfield
2021
K Cooney
2021
S Crowley
2021
C Levy
2021
D Lloyd
2021
J Rutherford
2021
Directors’ Report continued
Remuneration Report continued
6. Related Party Transactions
During 2021 the Group rented office premises from companies related to a former Director of the Company, David
Teoh. The total rent charged for the period served as KMP, from 1 January 2021 to 25 March 2021, was $396,503.
No loans were made to any KMP.
This concludes the Remuneration Report, which has been audited as required by section 308(3C) of the Corporations
Act 2001 (Cth).
This Directors’ report is made in accordance with a resolution of the Directors on 24 February 2022.
Fok Kin Ning, Canning
Iñaki Berroeta
Chairman
24 February 2022
Chief Executive Officer and Managing Director
24 February 2022
Page 70 | TPG Telecom Annual Report 2021
Auditor’s Independence Declaration
Auditor's Independence Declaration
As lead auditor for the audit ofTPG Telecom Limited for the year ended 31 December 2021, I declare
that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect ofTPG Telecom Limited and the entities it controlled during the period.
S Prakash
Partner
PricewaterhouseCoopers
Sydney
24 February 2022
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Page 71 | TPG Telecom Annual Report 2021
Financial Report
About this report
Contents
The financial report covers the group consisting of TPG
Telecom Limited and its controlled entities (the ‘Group’).
Vodafone Hutchison Australia Pty Limited (‘VHA’)
converted to a public company on 19 June 2020 and
changed its name to Vodafone Hutchison Australia
Limited. On 29 June 2020, the Company changed its
name from Vodafone Hutchison Australia Limited to TPG
Telecom Limited.
All amounts are presented in Australian dollars unless
stated otherwise.
TPG Telecom is a company limited by shares,
incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Level 1, 177 Pacific Highway North Sydney NSW 2060
A description of the nature of the Group’s operations and
its principal activities is included in the Directors’ report
on pages 24 to 70.
The financial report was authorised for issue by the
Directors on 24 February 2022. The Directors has the
power to amend and reissue the financial report.
Financial Statements
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
73
74
75
76
77
Notes to the Consolidated Financial Statements
78
Note 1. Reporting entity
78
Note 2. Basis of preparation
82
Note 3. Segment reporting
84
Note 4. Revenue from contracts with customers
86
Note 5. Other profit and loss items
88
Note 6. Income tax
93
Note 7. Earnings per share
94
Note 8. Cash and cash equivalents
97
Note 9. Trade and other receivables
99
Note 10. Inventories
100
Note 11. Derivative financial instruments
101
Note 12. Business combinations
105
Note 13. Interests in other entities
109
Note 14. Property, plant and equipment
112
Note 15. Right-of-use assets and lease liabilities
116
Note 16. Intangible assets
121
Note 17. Trade and other payables
122
Note 18. Borrowings
123
Note 19. Provisions
125
Note 20. Other liabilities
125
Note 21. Contributed equity
127
Note 22. Reserves
128
Note 23. Dividends
128
Note 24. Related party transactions
130
Note 25. Share-based Payments
133
Note 26. Commitments
134
Note 27. Parent entity financial information
136
Note 28. Deed of cross guarantee
138
Note 29. Financial risk management
Note 30. Auditor’s remuneration
144
Note 31. Events occurring after the reporting period 144
Directors’ Declaration
Independent Auditor’s Report
146
147
Page 72 | TPG Telecom Annual Report 2021
Consolidated Income Statement
for the year ended 31 December 2021
Revenue from contracts with customers
Other income
Cost of provision of telecommunication services
Cost of handsets and hardware sold
Employee benefits expense
Other operating expenses
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation expense
Results from operating activities
Finance income
Finance expenses
Net financing costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit for the year
Attributable to:
Owners of the Company
Non-controlling interests
NOTES
4
5
5
5
5
5
5
6
2021
$m
5,293
45
2020
$m
4,346
15
(1,966)
(1,370)
(891)
(377)
(373)
(880)
(328)
(392)
1,731
1,391
(1,423)
(1,188)
308
1
(150)
(149)
159
(49)
110
110
-
110
203
3
(292)
(289)
(86)
820
734
741
(7)
734
CPS
CPS
Earnings per share for profit attributable to owners of the Company
Basic and diluted earnings per share
7
6
64
The above consolidated income statement should be read in conjunction with the accompanying notes.
Page 73 | TPG Telecom Annual Report 2021
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2021
Profit for the year
Other comprehensive income
Items that may subsequently be reclassified to the income statement,
net of tax:
Net gain on cash flow hedges taken to equity
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Attributable to:
Owners of the Company
Non-controlling interests
2021
$m
110
2020
$m
734
1
1
2
2
111
736
111
-
111
743
(7)
736
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying
notes.
Page 74 | TPG Telecom Annual Report 2021
Consolidated Statement of Financial Position
as at 31 December 2021
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Assets held for sale
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Prepayments
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Provisions
Derivative financial instruments
Other current liabilities
Total current liabilities
Non-current liabilities
Contract liabilities
Borrowings
Lease liabilities
Provisions
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Equity attributable to owners of the Company
Total equity
NOTES
2021
$m
2020
$m
8
9
10
9
14
15
16
6
17
4
15
19
20
4
18
15
19
20
21
22
202
476
95
60
-
833
204
3,422
1,294
120
431
51
79
2
683
110
3,258
1,012
13,144
13,469
262
27
18,353
19,186
264
28
18,141
18,824
1,118
281
61
108
-
99
927
271
92
84
1
81
1,667
1,456
17
4,290
1,359
62
73
5,801
7,468
25
4,330
1,051
64
6
5,476
6,932
11,718
11,892
18,399
18,399
5
1
(6,686)
(6,508)
11,718
11,718
11,892
11,892
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Page 75 | TPG Telecom Annual Report 2021
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
ATTRIBUTABLE TO OWNERS OF THE COMPANY
Equity attributable
Contributed
NOTES
equity Reserves
$m
$m
Accumulated
losses
$m
to owners of Non-controlling
interest
the company
$m
$m
Total
equity
$m
Balance at
1 January 2021
Profit
for the year
Other
comprehensive
income, net of tax
Share-based
payments
Dividends paid
Balance at
31 December 2021
22
25
23
Balance at
1 January 2020
Non-controlling
interest acquired
12
Profit
for the year
Other
comprehensive
income, net of tax
Share-based
payments
Shares issued
during the year
Balance at
31 December 2020
22
25
21
18,399
-
-
-
-
18,399
1
-
1
3
-
5
(6,508)
11,892
110
110
-
-
1
3
(288)
(288)
(6,686)
11,718
-
-
-
-
-
-
11,892
110
1
3
(288)
11,718
6,047
(1)
(7,249)
(1,203)
–
(1,203)
–
–
–
-
12,352
18,399
–
–
2
-
–
1
–
741
–
-
–
–
741
2
-
7
7
(7)
734
–
-
2
-
12,352
–
12,352
(6,508)
11,892
– 11,892
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Page 76 | TPG Telecom Annual Report 2021
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Other revenue
Income taxes paid
NOTES
2021
$m
2020
$m
5,684
4,814
(4,098)
(3,641)
1,586
1,173
45
(4)
15
-
5
Net cash generated from operating activities
8(b)
1,627
1,188
12
13
13
Cash flows from investing activities
Net cash acquired as a result of merger
Payments for property, plant and equipment
Payments for spectrum licenses
Receipts on sale of spectrum licenses
Payments for intangible assets
Disposal of subsidiary (net of cash disposed)
Cash reclassified to assets held for sale
Loan repayment from Tech2
Transaction costs relating to merger
Net cash outflows from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of principal element of leases
Finance costs paid
Interest received
Dividends paid
Pre-acquisition dividends paid to TPG Corporation shareholders
12
Net cash outflows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
8
-
(606)
(106)
15
(225)
-
-
2
-
99
(411)
(132)
-
(273)
(379)
(7)
-
(37)
(920)
(1,140)
1,420
4,780
(1,460)
(4,594)
(139)
(158)
-
(288)
-
(625)
82
120
202
(130)
(241)
2
-
(479)
(662)
(614)
734
120
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Page 77 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements
Note 1. Reporting entity
TPG Telecom Limited (the ‘Company’) is a company domiciled in Australia. The address of the Company’s registered
office is Level 1, 177 Pacific Highway, North Sydney NSW 2060. The consolidated financial statements as at, and for
the year ended 31 December 2021 (referred to throughout this report as ‘2021’), 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 telecommunications services.
Note 2. Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. For the
purposes of preparing the financial statements, the Company is a for-profit entity.
The consolidated financial statements of the Group also comply with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
The consolidated financial statements are presented without the parent entity financial statements. Disclosures in
relation to the parent entity required under paragraph 295(3)(a) of the Corporations Act 2001 have been included in
Note 27.
The financial statements are prepared in accordance with the historical cost convention, except for unsold handset
and accessory receivables, derivative financial instruments and assets held for sale, which, as noted, are at fair value.
Unless otherwise stated, the accounting policies adopted are consistent with those of the previous year.
Comparative figures have been adjusted to conform to the presentation of the financial statements and notes for the
current financial year, where required, to enhance comparability.
(a) Merger with TPG Corporation Limited (formerly named TPG Telecom Limited) in 2020
The merger of the Company and TPG Corporation became effective for accounting purposes on 26 June 2020 (being
the acquisition date) and was completed on 13 July 2020.
The merger was implemented through a Scheme of Arrangement under which the Company acquired all of the shares
in TPG Corporation in return for issuing shares in the Company to TPG Corporation shareholders.
The Group’s Consolidated Income Statement for the year to 31 December 2020 includes six months and four days of
results from TPG Corporation (between the accounting effective date and 31 December 2020).
Further details of the merger accounting are set out in Note 12.
(b) Net current asset deficiency
At 31 December 2021, the Group had a deficiency of net current assets of $834 million (2020: a deficiency of $773
million). The Group is satisfied that it will be able to meet all its obligations as and when they fall due, due to its history
of generating positive operating cash flows, its current cash reserves, and available debt facilities.
Page 78 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 2. Basis of preparation continued
(c) Principles of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by
the Company (its subsidiaries). Subsidiaries are all entities over which the Company has control. The Company
controls an entity when the Company 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 to direct the activities of the entity.
The acquisition method of accounting is used to account for business combinations by the Group. Subsidiaries are
fully consolidated from the date on which control is transferred to the Company. They are deconsolidated from the
date that control ceases.
All intercompany transactions, balances and unrealised gains on transactions between companies within the Group
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the Consolidated Income
Statement, Consolidated Statement of Comprehensive Income and Consolidated Balance Sheet respectively.
(d) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s subsidiaries are measured using the currency of the
primary economic environment in which the entity operates (the ‘functional currency’). The consolidated financial
statements are presented in Australian dollars, which is the Company’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the Consolidated Income Statement except when they relate to financial instruments qualifying for
hedges as set out in Note 11.
Non-monetary assets and 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.
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.
Page 79 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 2. Basis of preparation continued
(e) Goods and Services Tax (‘GST’)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case, it is recognised as part of the cost of acquisition of the asset or
as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the
Consolidated Statement of Financial Position.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising
from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating
cash flows.
(f) Rounding of amounts
The Group is of a kind referred to in the ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of
amounts in the financial statements. Amounts in the consolidated financial statements and Directors’ report have been
rounded off in accordance with the instrument to the nearest million dollars, or in certain cases, the nearest dollar.
(g) New accounting standards and Interpretations
New and amended standards adopted by the Group
A number of new or amended standards became applicable for the current reporting period. The Group did not have
to change its accounting policies or make retrospective adjustments as a result of adopting these standards.
In April 2021, the International Accounting Standards Board released an IFRIC interpretation of IAS 38 with regard to
costs incurred in the configuration or customisation of a cloud computing arrangement. This decision does not have a
material impact on the Group’s capital and operating expenditure associated with cloud computing arrangements as at
31 December 2021.
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December
2021 reporting periods and have not been early adopted by the Group. These standards are not expected to have a
material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
Page 80 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 2. Basis of preparation continued
(h) Key accounting estimates and judgements
Summary of key accounting estimates and judgements
The preparation of financial statements requires the use of accounting estimates, which, by definition, will seldom
equal the actual results. Management also needs to exercise judgement in applying the Group’s accounting policies.
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 6
• Note 9
• Note 9
• Note 12
• Note 14
• Note 15
• Note 16
• Note 16
• Note 16
Recognition of deferred tax assets
Loss allowance on trade and other receivables
Recognition of unbilled handset and accessories revenue
Accounting for business combinations
Useful lives of property, plant and equipment
Lease terms and discount rates
Useful lives of intangible assets
Determination of the Group’s cash generating units
Impairment of intangible assets with indefinite lives
Estimates and judgements are continually evaluated. They are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the Group and that are believed to be
reasonable under the circumstances.
COVID Pandemic
During the year to 31 December 2021, the COVID pandemic persisted with significant measures to contain the virus
taken by the Australian Government and governments around the world. These measures have affected economic
activity and the telecommunications market, which have impacted the Group’s financial performance during the year.
The ongoing restrictions in movement, in particular international travel, have seen reduced inbound related
connections, visitor revenue and international roaming revenues.
A thorough consideration of COVID impacts on the business has not identified any significant impacts on the Group’s
31 December 2021 asset values, or significant risks giving rise to additional liabilities to be recognised at 31 December
2021. Management notes that the Group’s future financial performance, profitability and cash flow performance are
critical inputs to certain significant accounting judgements including recognition of deferred tax assets (Note 6),
recoverability of receivables (Note 9), impairment assessment of goodwill and intangibles with indefinite lives (Note
16), and the Company’s financial risk management (Note 29).
Management has not identified any significant changes to its accounting judgements and estimates when considering
the impacts of COVID on estimation uncertainty in preparing these accounting positions for the purposes of the full
year financial report.
Page 81 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 3. Segment reporting
The Group determines operating segments based on the information that is internally provided to the senior
management team, who are the Group’s chief operating decision makers.
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses. For all operating segments, discrete financial information is available and their operating
results are regularly reviewed by the Group’s senior management team to make decisions about resources to be
allocated to each segment and assess their performance.
In light of the ongoing integration activities between the Company and TPG Corporation, the senior management team
adopted revised reporting segments since 2020, being the Consumer and Corporate segments, to reflect how the
Group is managed.
SEGMENT
Consumer
Corporate
PRINCIPAL ACTIVITIES
Provision of telecommunications services to residential and small business customers.
Provision of telecommunications services to corporate, government and wholesale customers.
Mobile small business customers have been categorised in Corporate.
Unallocated
Unallocated includes:
Transaction costs relating to the merger in 2020
Impairment of Tech2 in 2020
•
•
• Certain head office costs.
CONSUMER
$m
CORPORATE
$m
UNALLOCATED
$m
TOTAL
$m
For the year ended 31 December 2021
Revenue from contracts with customers
Other income
Cost of provision of telecommunication services
Cost of handsets and hardware sold
Employee benefits expense
Other operating expenses
Results from segment activities
For the year ended 31 December 2020
Revenue from contracts with customers
Other income
Cost of provision of telecommunication services
Cost of handsets and hardware sold
Employee benefits expense
Other operating expenses
Results from segment activities
4,308
-
(1,691)
(802)
(268)
(336)
1,211
3,656
–
(1,195)
(803)
(258)
(305)
1,095
985
18
(272)
(89)
(109)
(41)
492
690
4
(175)
(77)
(68)
(43)
331
-
27
5,293
45
(3)
(1,966)
-
-
4
28
–
11
–
–
(2)
(44)
(35)
(891)
(377)
(373)
1,731
4,346
15
(1,370)
(880)
(328)
(392)
1,391
Page 82 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 3. Segment reporting continued
Reconciliation of segment results to the Group’s profit / (loss) before income tax is as follows:
Total segment results
Depreciation and amortisation expense
Results from operating activities
Net financing costs
Profit / (loss) before income tax
Geographic information
2021
$m
1,731
2020
$m
1,391
(1,423)
(1,188)
308
(149)
159
203
(289)
(86)
The majority of the Group’s revenues are derived from Australian based entities, and no single customer generates
revenue greater than 10% of the Group’s total revenue. A geographic analysis of the Group’s non-current assets is set
out below:
Australia
Other
‘Other’ predominantly relates to submarine cables located in international waters.
2021
$m
2020
$m
18,085
17,847
268
294
18,353
18,141
Page 83 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 4. Revenue from contracts with customers
Revenue is recognised when (or as) the Group satisfies a performance obligation by transferring a promised good or
service to a customer. Revenue is measured based on the consideration specified in a contract with a customer.
Revenue is presented net of GST, rebates and discounts.
Revenue arrangements with multiple deliverables
Goods and services may be sold separately or in bundled packages. For bundled packages, e.g. mobile devices and
monthly service fees, the Group accounts for revenue from individual goods and services. The consideration for the
bundled packages comprises cash flows from the customers (expected to be received) in relation to goods and
services delivered over the contract term. The consideration (transaction price) is allocated between separate goods
and services in a bundle based on their relative stand-alone selling prices. Where a discount is provided to the
customer for bundled packages they are recognised in proportion with the hardware and service equivalent stand-
alone prices.
Service revenue - Telecommunication services
The Group sells telecommunication services of the following nature: postpaid and prepaid mobile services, fixed data,
internet and voice services, device replacement services and content services. Telecommunication services include
monthly access charges for voice, messaging and data services, fees for connecting users of fixed line and other
mobile providers to the network and agreements entered into with other telecommunications networks. Set-up
revenue for certain products does not satisfy the definition of a performance obligation and is treated as part of the
total contract price and allocated over the identified performance obligations. Revenue from device replacement
services and content services is recognised on a net basis when the Group acts as agent. Revenue from
telecommunication services is recognised over time in the accounting period in which the services are rendered.
Revenue is measured based on the consideration specified in a contract with a customer.
Hardware revenue
Revenue from the sale of handsets, modems and accessories is recognised at a point in time when the handsets,
modems and accessories are delivered, the legal title has passed and the customer has accepted the goods.
For mobile devices sold in bundled contracts, customers are offered two options for payment – full payment at the
commencement of the contract or instalments over 12, 24 or 36 months. A handset and accessories receivable is
recognised for such instalment plans. Management have determined for instalment payments that a significant
financing component does not exist and has therefore not adjusted the transaction price for the time value of money.
The total transaction price for hardware revenue paid through instalments is subject to risks around collectability,
impacts of new plans and industry trends. Accordingly, accumulated experience is used to estimate the impacts of
these risks at the time of sale using a portfolio estimate. Each year, this experience is updated which can impact the
estimate of the transaction price.
Page 84 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 4. Revenue from contracts with customers continued
(a) Major product categories
TIMING OF
REVENUE
RECOGNITION
Mobile – Postpaid Over time
Mobile – Prepaid
Over time
Fixed
Over time
Data and Internet
Over time
Other service
revenue
Handsets,
accessories and
hardware revenue
Over time
Point in time
CONSUMER
CORPORATE
TOTAL
2021
$m
1,323
439
1,708
-
27
2020
$m
1,459
444
895
-
44
811
4,308
814
3,656
2021
$m
2020
$m
238
-
141
502
11
93
985
237
-
92
247
40
74
690
2021
$m
1,561
439
1,849
502
38
2020
$m
1,696
444
987
247
84
904
5,293
888
4,346
(b) Assets and liabilities related to contracts with customers
Contracts assets (referred to as trade receivables) are amounts due from customers for goods and services performed
in the ordinary course of business. Trade receivables are recognised initially at the amount of consideration that is
unconditional less loss allowance. Refer to Note 9 for further details.
Contract costs are recognised as an asset and expensed over the expected life of a customer contract consistent with
the transfer of the goods and services to which the capitalised costs relate to the customer. Refer to Note 16 for
further details.
Contract liabilities
2021
$m
298
2020
$m
296
Contract liabilities relate to unearned revenue. Unearned revenue arises from consideration received from prepaid
services which have not been utilised, or from postpaid services which have not yet been provided. Contract liabilities
relating to prior year released during the year were $258 million (2020: $118 million).
Page 85 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 5. Other profit and loss items
(a) Other income
Grant income
Gain on sale of spectrum
Other income
Government grants
2021
$m
2020
$m
13
7
25
45
10
-
5
15
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will
be received and the Group will comply with all attached conditions. Grant income relates to government grants that
are deferred and recognised in the Consolidated Income Statement over the period necessary to match them with the
costs that they are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in liabilities as deferred
income and are credited to the Consolidated Income Statement on a straight-line basis over the expected lives of the
related assets.
Page 86 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 5. Other profit and loss items continued
Gain on sale of spectrum
On 2 August 2021, the Group’s wholly owned subsidiary, TPG Internet Pty Ltd, sold its 2.6 GHz spectrum band
licenses to Dense Air Networks Australia Pty Limited.
The 2.6 GHz spectrum band licenses were sold at a total consideration of $15 million on 9 September 2021 (gain on
sale of $7 million recognised) being the date that conditions precedent were satisfied.
(b) Employee benefits expense
Superannuation expense
Other employee benefits expense
(c) Other operating expenses
Advertising and promotion expenses
Consulting and outsourced services costs
IT and facilities expenses
Transaction costs associated with the merger
Administration and other expenses
(d) Depreciation and amortisation expense
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
(e) Net financing costs
Finance income
Interest income
Finance expenses
Amortisation of borrowing costs
Interest and finance charges for borrowings and lease liabilities
Interest income
Revenue from interest is recognised using the effective interest method.
2021
$m
2020
$m
33
344
377
110
130
36
(4)
101
373
615
141
667
23
305
328
85
115
23
36
133
392
529
152
507
1,423
1,188
(1)
(3)
9
141
149
13
279
289
Page 87 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 6. Income tax
The consolidated current tax payable or recoverable is based on taxable profit/(loss) for the year. Taxable profit
differs from profit reported in the Consolidated Income Statement because some items of income or expense are
taxable or deductible in different periods or may never be taxable or deductible. The Group’s liability for current tax is
calculated using Australian tax rates (and laws) that have been enacted or substantively enacted by the reporting date.
Tax is charged or credited to the Consolidated Income Statement, except when it relates to items charged or credited
directly to equity, in which case the tax is also recognised directly in equity.
For tax purposes, with effect from 13 July 2020, the wholly owned Australian subsidiaries acquired as part of the
merger with TPG Corporation entered the tax consolidated group, of which the Company is the head entity, in
accordance with Australian taxation law. The tax sharing agreement entered into between the entities within the tax
consolidated group provides for the determination of the allocation of the income tax liabilities between entities
should the head entity default in its tax payment obligations or if an entity should leave the tax consolidated group.
The effect of the tax sharing agreement is that the company’s liability for tax payable by the tax consolidated group is
limited to the amount payable to the head entity under the tax funding arrangement.
NOTES
2021
$m
2020
$m
(a) Income tax expense
Current tax
Current tax expense on profit for the period
Adjustments for current tax in respect of prior periods
Total current tax expense
Deferred tax
(Increase) in deferred tax assets
Increase / (decrease) in deferred tax liabilities
Adjustments for deferred tax of prior periods
Total deferred tax expense/(benefit)
Income tax expense/(benefit)
6(d)
6(d)
(b) Numerical reconciliation between tax expense and pre-tax accounting profit/(loss)
Profit/ (loss) from operations before income tax
Income tax expense/ (benefit) using the Australian tax rate of 30% (2020: 30%)
Tax effect of amounts which are (not deductible)/taxable in calculating taxable income:
Non-deductible expenses
Tax losses incurred during the year, not recognised
Initial recognition of deferred tax assets
Other
Income tax expense/(benefit)
48
1
49
(20)
22
(2)
-
49
2021
$m
159
48
-
-
-
1
49
8
-
8
(792)
(34)
(2)
(828)
(820)
2020
$m
(86)
(26)
13
-
(819)
12
(820)
Page 88 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 6. Income tax continued
c) Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Unused transferred tax losses for which no deferred tax asset has been recognised
Total tax losses for which no deferred tax asset has been recognised
Potential tax benefit at 30% (2020: 30%)
2021
$m
-
2,275
2,275
683
2020
$m
-
2,275
2,275
683
The transferred losses of $2,275 million arose from the Vodafone and ‘3’ merger in 2009 and were transferred to VHA
at that time. These transferred losses are subject to an available fraction calculation which determines the rate at
which the transferred losses can be utilised.
(d) Deferred tax assets and liabilities
Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary differences between
the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases
used in the computation of taxable profit. It is accounted for using the liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from
goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and
associates, and interests in joint ventures, except where the associated entity is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
asset realised, based on tax rates (and laws) that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to
realise the asset and settle the liability simultaneously.
Page 89 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 6. Income tax continued
Critical Estimates and Judgements: Recognition of deferred tax assets
Management judgement is required to determine the recognition of deferred tax assets, which is reviewed at the
end of each reporting period. The carrying amount of deferred tax assets is only recognised to the extent that it is
probable that sufficient taxable profit will be available in the future to utilise this benefit. This assessment requires
assumptions about the generation of future taxable profits derived from management’s estimates of future cash
flows. Judgements are also required about the application of income tax legislation. These judgements and
assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will
alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised in
the Consolidated Statement of Financial Position and the amount of tax losses and temporary differences not yet
recognised.
With regard to tax losses carried forward, the benefit of tax losses will only be obtained if the specific entity
carrying forward the tax losses derives future assessable income of an amount sufficient to enable the benefit
from the deductions for the losses to be realised, and the Company complies with the conditions for deductibility
imposed by tax legislation. At 31 December 2021, $477 million (2020: $590 million) of deferred tax assets from
tax losses have been recognised based on management’s assessment of the availability of the tax losses, and the
future rate of utilisation of tax losses based on management’s estimates of future cash flows.
Amounts unrecognised as at the reporting date could be subsequently recognised if it becomes probable that
future taxable profit will allow the Group to benefit from these unrecognised tax losses.
Deferred tax assets
The balance comprises temporary differences attributable to:
Employee benefits
Deferred revenue
Property, plant and equipment
Provisions and accruals
Lease liabilities
Tax losses
Other
Copyright
Total deferred tax assets
Set off tax liabilities pursuant to set-off provisions
Net deferred tax assets
2021
$m
2020
$m
20
13
163
58
416
477
15
45
1,207
(945)
262
19
15
134
72
336
590
21
-
1,187
(923)
264
Page 90 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 6. Income tax continued
EMPLOYEE
BENEFITS
$m
DEFERRED PLANT AND
REVENUE EQUIPMENT
$m
PROPERTY, PROVISIONS
AND
ACCRUALS
$m
$m
LEASE
LIABILITIES
$m
TAX
LOSSES
$m
OTHER
$m
COPYRIGHT TOTAL
$m
$m
19
-
1
20
15
134
-
-
(2)
13
29
163
72
(3)
(11)
58
336
590
-
-
80
(113)
416
477
21
-
(6)
15
-
1,187
48
45
(3)
(25)
45 1,207
MOVEMENTS
At 1 January
2021
(Charged)/
credited
- Addition
from business
combination
- to profit or
loss
At 31 December
2021
PROPERTY,
EMPLOYEE
DEFERRED
PLANT AND
BENEFITS REVENUE EQUIPMENT
$m
$m
$m
PROVISIONS
AND
ACCRUALS
LIABILITIES LEASE LOSSES OTHER MOVEMENTS RECOGNISED TOTAL
$m
TEMPORARY
FOREIGN DIFFERENCES
NOT
UNREALISED
EXCHANGE
TAX
$m
$m
$m
$m
$m
$m
MOVEMENTS
At 1 January
2020
(Charged)/
credited
- Addition
from business
combination
- to profit or
loss
- Reclassification
to assets held
for sale
At 31 December
2020
8
9
2
–
7
143
50
316
–
5
64
(302)
291
10
3
30
32
–
25
–
–
109
(2)
(12)
(8)
(12)
590
(4)
(64)
302
792
–
–
–
(5)
– 1,187
–
–
–
–
–
(5)
19
15
134
72
336
590
21
Page 91 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 6. Income tax continued
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Right-of-use assets
Intangible assets
Other
Set off tax liabilities pursuant to set-off provisions
Net deferred tax liabilities
2021
$m
2020
$m
374
564
7
945
298
612
13
923
(945)
(923)
-
–
MOVEMENTS
At 1 January 2021
(Charged)/credited
- to profit or loss
At 31 December 2021
MOVEMENTS
At 1 January 2020
(Charged)/credited
- Addition from business combination
- to profit or loss
At 31 December 2020
RIGHT-OF-
USE ASSETS
$m
INTANGIBLE
ASSETS
$m
OTHER
$m
TOTAL
$m
298
76
374
612
13
923
(48)
564
(6)
7
22
945
RIGHT-OF-
USE ASSETS
$m
INTANGIBLE
ASSETS
$m
OTHER
$m
298
24
(15)
298
-
637
(25)
612
2
5
6
13
TOTAL
$m
291
666
(34)
923
Page 92 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 7. Earnings per share
Basic and diluted earnings per share
Profit attributable to the owners of the Company 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
UNITS
cents
$m
31 DEC
2021
31 DEC
2020
6
110
64
741
number
1,859,341,669
1,156,505,986
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 owners of the Company by the weighted average number of ordinary
shares 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.
The weighted average number of ordinary shares for 31 December 2020 has been retrospectively adjusted for the
share consolidation on the Company’s debt restructure. Refer to Note 21 for further details.
Page 93 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 8. Cash and cash equivalents
For the purposes of presentation in the Consolidated Statement of Cash Flows, cash and cash equivalents include
cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value, and bank overdrafts that are repayable on demand and form an integral part of
the Group’s cash management.
(a) Restricted cash
At 31 December 2021, $3 million of the cash and cash equivalents balance held by the Group were subject to
restrictions and therefore not available for general use by other entities within the Group (2020: nil). These deposits
represent funds collected on behalf of a third party that has purchased various handset receivable contracts.
(b) Reconciliation of cash flows from operating activities
The presentation of cash flows from operating activities in the Consolidated Statement of Cash Flows has been
prepared based on the direct method, as it provides more relevant information for the users of the financial report.
The reconciliation of net operating cash flows has been disclosed in the below table.
Cash flows from operating activities
Profit for the year after income tax
Adjustments for:
Depreciation and amortisation expense
Net financing costs
Gain on sale of spectrum
Transaction costs relating to merger
Impairment expense
Movements in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
Decrease/(increase) in prepayments
Decrease/(increase) in deferred tax assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in contract liabilities
Increase/(decrease) in other liabilities
Increase in provisions
Net cash generated from operating activities
Page 94 | TPG Telecom Annual Report 2021
2021
$m
2020
$m
110
734
1,423
149
(7)
-
-
1,188
289
-
36
10
1,675
2,257
(139)
(44)
19
2
3
4
84
23
45
59
(3)
(845)
(290)
(17)
(20)
2
(48)
(1,069)
1,627
1,188
Notes to the Consolidated Financial Statements continued
Note 8. Cash and cash equivalents continued
(c) Non-cash investing and financing activities
Acquisition of right-of-use assets
Partial settlement of business combination through issuance of shares
(d) Net debt reconciliation
2021
$m
124
-
2020
$m
84
7,877
This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.
Cash and cash equivalents
Borrowings (non-current)
Lease liabilities (current)
Lease liabilities (non-current)
Derivative financial instruments
Cash and cash equivalents
Gross debt (fixed interest rates)
Gross debt (variable interest rates)
Derivative financial instruments
2021
$m
202
2020
$m
120
(4,290)
(4,330)
(61)
(92)
(1,359)
(1,051)
-
(1)
(5,508)
(5,354)
202
(1,420)
(4,290)
-
120
(1,143)
(4,330)
(1)
(5,508)
(5,354)
CASH AND
CASH
EQUIVALENTS
$m
LEASE
LIABILITIES
$m
BORROWINGS
$m
DERIVATIVE
FINANCIAL
INSTRUMENTS
$m
TOTAL
$m
Net debt at 1 January 2021
Cash flows
Lease acquisitions
Interest unwinding
Lease revaluations and
terminations
Foreign exchange adjustments
Proceeds from borrowings
Repayment of borrowings
120
82
-
-
-
-
-
-
(1,143)
(4,330)
(1)
(5,354)
200
(124)
(61)
(292)
-
-
-
-
-
-
-
-
(1,420)
1,460
(4,290)
-
-
-
-
1
-
-
-
282
(124)
(61)
(292)
1
(1,420)
1,460
(5,508)
Net debt at 31 December 2021
202
(1,420)
Page 95 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 8. Cash and cash equivalents continued
CASH AND
CASH
EQUIVALENTS
$m
LEASE
LIABILITIES BORROWINGS
$m
$m
Net debt at 1 January 2020
Acquired on business combination
Disposed on business combination
Cash flows
Lease acquisitions
Interest unwinding
Lease revaluations and terminations
Foreign exchange adjustments
Promissory notes received
Disposal of subsidiary (VHF)
Reclassification to assets held for sale
Proceeds from borrowings
Repayment of borrowings
Guarantee fees
734
99
-
(327)
-
-
-
-
-
(379)
(7)
-
-
-
(1,628)
(115)
557
209
(100)
(84)
16
-
-
-
2
-
-
-
Net debt at 31 December 2020
120
(1,143)
(6,998)
(2,047)
-
-
-
-
-
(97)
4,475
605
-
(4,780)
4,594
(82)
(4,330)
(e) Guarantees
Secured guarantees
Unsecured guarantees
DERIVATIVE
FINANCIAL
INSTRUMENTS
$m
129
-
-
-
-
-
-
102
-
(232)
-
-
-
-
TOTAL
$m
(7,763)
(2,063)
557
(118)
(100)
(84)
16
5
4,475
(6)
(5)
(4,780)
4,594
(82)
(1)
(5,354)
2021
$m
-
18
2020
$m
-
13
The Group has provided bankers’ guarantees to support various commercial and regulatory obligations of $18 million
(2020:$13 million).
Page 96 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 9. Trade and other receivables
Trade receivables are amounts due from customers for goods and services performed in the ordinary course of
business. Trade receivables are recognised initially at the amount of consideration that is unconditional less loss
allowance. Trade receivables are generally due for settlement within 30-60 days, except for handset and accessories
receivables which are collected over the term of the contract. The group holds the trade receivables with the objective
of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the
effective interest method. For handset and accessories receivables which have not been sold to third parties in
accordance with the Group’s arrangements, these are initially recognised at the amount expected to be recoverable
over the term of the contract, subject to collectability reviews.
Collectability of receivables is reviewed on an ongoing basis. The Group applies the AASB 9 simplified approach to
measuring expected credit losses which uses a lifetime expected loss allowance for all receivables. To measure the
expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days
past due.
The expected loss rates are based on the payment profiles of sales over relevant historical periods before year end
and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to
reflect current and forward looking information on macroeconomic and commercial factors affecting the ability of the
customers to settle the receivables.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include inactive accounts, the failure of a debtor to engage in a repayment plan
with the Group and a failure to make contractual payments for a period of greater than 90 to 120 days past due.
Impairment losses on trade receivables are presented as impairment of receivables within other operating expenses in
the Consolidated Income Statement. Subsequent recoveries of amounts previously written off are credited against the
same line item.
The Group has entered into arrangements which allows them to sell certain handset and accessories receivables to a
third party.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. On
derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the
consideration received and receivable is recognised as handset receivable expense within cost of handsets sold in the
Consolidated Income Statement.
As the relevant criteria in AASB 9 Financial Instruments were satisfied, the fair value of the current receivables sold
were derecognised from the financial statements. At 31 December 2021, $130 million of its unsold handset
receivables
(2020: $153 million) has yet to satisfy the qualifying criteria required under the risk transfer arrangement with third
parties, and are recognised as receivables by the Group.
Page 97 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 9. Trade and other receivables continued
Current
Trade receivables
Less: expected credit loss allowance
Handset and accessories receivables
Accrued revenue
Receivable from related parties
Other receivables
Non-current
Handset and accessories receivables
Other receivables
(a) Movement in provision for impairment of trade receivables
Balance at 1 January
Acquired provision from business combination
Provision for impairment recognised during the year
Change in estimate
Receivables written off during the year
Balance at 31 December
2021
$m
2020
$m
204
(20)
184
214
46
1
31
476
199
5
204
246
(37)
209
157
35
1
29
431
104
6
110
2021
$m
2020
$m
(37)
-
(15)
-
32
(20)
(11)
(29)
(18)
3
18
(37)
Critical Estimates and Judgements: Loss allowance on trade and other receivables
Management judgement is required to determine the allowance for doubtful debts for the Group’s trade
receivables. During the financial year, the loss assumptions used in determining the provision for trade and other
receivables were reviewed against, and updated to align with, actual debtor collectability using latest available
data.
This included a thorough assessment of COVID impacts on potential increases in the number of customers in
financial hardship, future plans and measures to support customers, and inherent uncertainties of the ongoing
COVID pandemic. This assessment led to no additional provision for impairment of receivables estimate, that is,
the $1 million provision recognised in 2020 continues to be reflected in the Consolidated Statement of Financial
Position.
Page 98 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 9. Trade and other receivables continued
(b) Handset and accessories receivables
Handset and accessories receivables
Estimated future adjustments to unbilled revenue
Handset receivables sale expense
2021
$m
473
(60)
413
32
2020
$m
333
(72)
261
31
Critical Estimates and Judgements: Recognition of unbilled handset and accessories
revenue
Management judgement is required to determine the potential future adjustments to handset and accessories
revenue. Handset and accessories revenue is recognised upfront, with cash collected from customers over the
instalment contract period. At the end of the reporting period, management assesses the risks associated with the
recovery of unsold handset receivables paid through instalments and potential future buy-backs of sold
receivables, and other loss risks relating to factors such as new plans, industry trends and company policies.
During the financial year, the Group has performed a detailed analysis of historical data and future expected
trends to identify any required revenue reversal to the original transaction price.
At 31 December 2021, this included an assessment of COVID impacts on the aforementioned loss risk factors.
Based on the assessment, management has decreased the provision required on handset receivables primarily
due to decreased risk for waivers and other commercial risks. No other significant impacts were identified that
resulted in a change in the recognition of variable consideration of hardware revenue during the financial year
(2020: nil).
Note 10. Inventories
Finished goods include handsets, modems, other connectivity devices and accessories and are stated at the lower of
cost and net realisable value. Cost comprises the purchase price and any expenditure that is directly attributable to
the acquisition of the inventory after deducting rebates and discounts. Net realisable value is the estimated selling
price in the ordinary course of business less the estimated costs necessary to make the sale.
Finished goods at net realisable value
2021
$m
95
2020
$m
51
Inventories expensed in the Consolidated Income Statement during the year ended 31 December 2021 amounted to
$806 million (2020: $807 million).
Page 99 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 11. Derivative financial instruments
Derivative financial instruments are utilised by the Group in the management of its foreign currency exposures. The
Group’s policy is not to utilise derivative financial instruments for trading or speculative purposes. Derivatives are
initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to
their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The
Group designates certain derivatives as:
•
•
hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges); or
hedges of a risk associated with the cash flows of recognised assets and liabilities and highly probable forecast
transactions (cash flow hedges).
At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments
and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset
changes in the cash flows of hedged items. The Group documents its risk management objective and strategy for
undertaking its hedge transactions. The fair values of derivative financial instruments designated in hedge
relationships are separately identified and disclosed. Movements in the hedging reserve are shown in Note 22. The full
fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the
hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the
hedged item is less than 12 months.
For derivatives that are unhedged, changes in fair value are recognised in the Consolidated Income Statement.
Cash flow hedges that qualify for hedge accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in the cash flow hedge reserve within equity. The gain or loss relating to the ineffective portion is
recognised immediately in the Consolidated Income Statement within other income or other operating expenses.
The Group tests cash flow hedges for effectiveness at each reporting date both retrospectively and prospectively.
Amounts taken to ‘other comprehensive income’ are:
•
•
•
transferred to the consolidated income statement when the hedged transaction affects profit or loss, such as,
when the hedged financial income or financial expense is recognised, or when a forecast transaction occurs,
transferred to the initial carrying amount of the non-financial asset or liability where the hedged item is the cost of
a non-financial asset or non-financial liability, or
transferred to the consolidated income statement immediately if the forecast transaction or firm commitment is
no longer expected to occur.
If the hedging instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued
prospectively. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or
if its designation as a hedge is revoked (due to it being ineffective), amounts previously recognised in ‘other
comprehensive income’ remain in ‘other comprehensive income’ until the forecast transaction occurs.
Current assets
Forward foreign exchange contracts
Current liabilities
Forward foreign exchange contracts
2021
$m
2020
$m
-
-
-
–
–
1
Page 100 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 11. Derivative financial instruments continued
(a) Forward foreign exchange contracts
The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to
fluctuations in foreign exchange rates.
The Group procures a portion of its hardware, network equipment and technology support services from global
suppliers. In order to protect against exchange rate movements, the Group has entered into forward exchange
contracts, in a number of currencies, primarily US Dollar, Indian Rupee, South African Rand and Philippine Peso.
These contracts are hedging highly probable forecasted purchases for the ensuing financial year. The contracts are
timed to mature when payments for purchases are scheduled to be made.
Note 12. Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity
instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary company
comprises:
•
•
•
•
•
fair values of assets transferred,
liabilities incurred to the former owners of the acquired business,
equity interest issued by the Group,
fair value of any assets or liability resulting from a contingent consideration arrangement, and
fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited
exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling
interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling
interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the:
•
•
•
consideration transferred,
amount of any non-controlling interest in the acquired entity, and
acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net
identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net
identifiable assets of the business acquired, the difference is recognised in the Consolidated Income Statement as
a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to
their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being
the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and
conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability
are subsequently remeasured to fair value with changes in fair value recognised in the Consolidated Income
Statement.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such
remeasurement are recognised in the Consolidated Income Statement.
Page 101 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 12. Business combinations continued
Merger of the Company and TPG Corporation in 2020
The merger of the Company and TPG Corporation became effective for accounting purposes on 26 June 2020 and
was completed on 13 July 2020.
The merger brought together two highly complementary businesses to create a leading integrated, full-service
telecommunications company with a comprehensive portfolio of fixed and mobile products for consumers, SMEs and
enterprises.
The merger was implemented through a Scheme of Arrangement under which the Company acquired all of the shares
in TPG Corporation in return for issuing shares in the Company to TPG Corporation shareholders.
The Scheme was approved by the Supreme Court of New South Wales on 26 June 2020 and became effective for
accounting purposes on that day, being the deemed date of effective control. The Scheme was implemented on 13
July 2020 when the agreed number of shares in the Company were issued to TPG Corporation shareholders.
TPG Corporation Limited changed its name from TPG Telecom Limited and was suspended from trading on the ASX
on 29 June 2020, and the Company changed its name to TPG Telecom Limited on 29 June 2020 and listed on the
ASX on 30 June 2020.
Between the accounting effective date (26 June 2020) and the merger completion date (13 July 2020) there were
several restructuring steps that needed to be implemented by both the Company and TPG Corporation in accordance
with the Scheme Implementation Deed.
Acquisition related costs of $36 million are included in Other Operating Expenses in the Consolidated Income
Statement for the year ended 31 December 2020.
TPG Corporation’s contribution to the Group’s results for the six months and four-day period from 26 June 2020 to 31
December 2020 was revenue of $1,237 million and net profit after tax of $219 million. If the merger had been effective
from 1 January 2020, management estimates that the Group would have revenue of $5,517 million and net profit after
tax of $283 million for the year ended 31 December 2020.
Page 102 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 12. Business combinations continued
Critical Estimates and Judgements: Business combinations
Accounting for mergers and acquisitions is inherently complex, requiring a number of judgements and estimates
to be made.
The merger of the Company and TPG Corporation became effective for accounting purposes during the year
ended 31 December 2020. The merger was effected through a Scheme of Arrangement under which the Company
acquired all of the shares in TPG Corporation.
In relation to the fair value of the Scheme consideration, the Company acquired TPG Corporation through the
issue of shares in the Company (one TPG Telecom share for every TPG Corporation share). For accounting
purposes, the acquisition date was 26 June 2020. The Company was listed on the ASX on a deferred settlement
basis on 30 June 2020 and commenced trading on an ordinary settlement basis on 14 July 2020. Management
reviewed the reliability of available information and inputs on each relevant date, in particular with regard to the
fair value hierarchy under AASB 13 and assessed that the TPG Telecom quoted share price on 30 June 2020
represented the most reliable measure of the fair value of the Scheme consideration at the acquisition date (26
June 2020).
Management judgement is required to determine the fair value of identifiable assets and liabilities acquired in
business combinations. A number of judgements have been made in relation to the identification to fair values
attributable to separately identifiable assets and liabilities acquired, including customer relationships and brands.
The determination of fair values requires the use of valuation techniques based on assumptions including future
cash flows, revenue growth, margins, customer attrition rates and weighted-average cost of capital.
The initial accounting for the acquisition of TPG Corporation was provisionally disclosed at 31 December 2020. In
accordance with AASB 3 Business Combinations, the Group had a maximum of twelve months from the date of
acquisition to finalise the purchase price accounting and allocation of fair value to goodwill and other indefinite
life intangible assets. Management completed this exercise within the first half of the year and the table below
now reflects the final fair value of the acquired assets and liabilities and the resulting value of goodwill arising from
the merger.
Page 103 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 12. Business combinations continued
Cash and cash equivalents
Trade and other receivables1
Inventories
Deferred tax liabilities2
Other assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Trade and other payables1
Contract liabilities
Borrowings
Lease liabilities
Provisions
Assets classified as held for distribution
Acquired pre-acquisition dividends payable
Net identifiable assets acquired
Less: Non-controlling interests acquired
Add: goodwill
Purchase consideration
Provisional
$m
99
124
7
(557)
25
1,491
99
3,431
(272)
(194)
Final
$m
99
123
7
(511)
25
1,491
99
3,431
(264)
(194)
(2,047)
(2,047)
(115)
(89)
2,002
512
(991)
1,523
(7)
6,155
7,671
(115)
(89)
2,055
512
(991)
1,576
(7)
6,102
7,671
Movement
$m
-
(1)
-
46
-
-
-
-
8
-
-
-
-
53
-
-
53
-
(53)
-
1. Decrease of $1 million in trade and other receivables and $8 million in trade and other payables represent adjustments to reflect the best estimate of
accruals and provisions required on acquisition date.
2. Decrease of $46 million in deferred tax liabilities relating to additional temporary differences on copyright within brand names.
Page 104 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 13. Interests in other entities
(a) Subsidiaries
Investments in subsidiaries are measured at cost in the Company’s financial statements. The following is a list of all
entities that formed part of the Group as at 31 December 2021.
EQUITY HOLDINGS
NOTES
COUNTRY OF
INCORPORATION
2021
%
2020
%
NAME OF ENTITY
Vodafone Hutchison Finance Pty Limited (‘VHF’)
Vodafone Hutchison Spectrum Pty Limited
Vodafone Hutchison Receivables Pty Limited
H3GA Properties (No. 3) Pty Limited
Vodafone Foundation Australia Pty Limited
Vodafone Australia Pty Limited
Vodafone Pty Limited
Vodafone Network Pty Limited
Mobileworld Operating Pty Ltd
Mobileworld Communications Pty Ltd
Mobile JV Pty Limited (‘Mobile JV’)
AAPT Limited
ACN 088 889 230 Pty Ltd
ACN 139 798 404 Pty Ltd
Adam Internet Holdings Pty Ltd
Adam Internet Pty Ltd
Agile Pty Ltd
Alchemyit Pty Ltd
Blue Call Pty Ltd
Cable Licence Holdings Pty Ltd
Chariot Pty Ltd
Chime Communications Pty Ltd
Connect Internet Solutions Pty Limited
Connect West Pty Ltd
3.6 GHZ Spectrum Pty Ltd (formerly Dense Air Australia Pty Limited)
4,6
Destra Communications Pty Ltd
Digiplus Contracts Pty Ltd
Digiplus Holdings Pty Ltd
Digiplus Investments Pty Ltd
Digiplus Pty Ltd
FTTB Wholesale Pty Ltd
Gizmo Corporation Pty Ltd
Hosteddesktop.com Pty Ltd
iHug Pty Ltd
iiNet (New Zealand) AKL Ltd
iiNet (OzEmail) Pty Ltd
iiNet Labs Pty Ltd
3
3,4
3,4
3,4
3,4
3,4
3,5
3,7
3,4
3,4
3,4
3,4
Page 105 | TPG Telecom Annual Report 2021
1
4
4
7
7
4
4
4
4
4
2,4
3,4
3,4
3,4
3,4
3,4
3,4
3,7
3,4
3,4
3,4
3,4
3,4
3,4
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
-
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
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
100
100
60
100
100
100
100
100
Notes to the Consolidated Financial Statements continued
Note 13. Interests in other entities continued
(a) Subsidiaries continued
NAME OF ENTITY
iiNet Limited
Internode Pty Ltd
Intrapower Pty Ltd
Intrapower Terrestrial Pty Ltd
IP Group Pty Ltd
IP Service Xchange Pty Ltd
Jiva pty ltd
Kooee Communications Pty Ltd
Kooee Mobile Pty Ltd
Kooee Pty Ltd
Mercury Connect Pty Ltd
Neighbourhood Cable Unit Trust
Netspace Online Systems Pty Ltd
Numillar IPS Pty Ltd
Orchid Cybertech Services Incorporated
Orchid Human Resources Pty Ltd
PIPE International (Australia) Pty Ltd
PIPE Networks Pty Ltd
PIPE Transmission Pty Ltd
PowerTel Limited
PPC 1 (US) Incorporated
PPC 1 Limited
Request Broadband Pty Ltd
Soul Communications Pty Ltd
Soul Contracts Pty Ltd
Soul Pattinson Telecommunications Pty Ltd
SPT Telecommunications Pty Ltd
SPTCom Pty Ltd
Telecom Enterprises Australia Pty Limited
Telecom New Zealand Australia Pty Limited
TPG (NZ) Pty Ltd
TPG Corporation Limited
TPG Energy Pty Ltd
TPG Finance Pty Limited
TPG Holdings Pty Ltd
TPG Internet Pty Ltd
TPG JV Company Pty Ltd
EQUITY
HOLDINGS
NOTES
COUNTRY OF
INCORPORATION
2021
%
2020
%
3,4
3,4
3,4
3,4
3,4
3,7
3,4
3,4
3,4
3,4
3,7
3
3,4
3,7
3
3,4
3,4
3,4
3,4
3,4
3
3
3,4
3,4
3,4
3,4
3,4
3,4
3,4
3,4
3,4
3,4
3,4
4
3,4
3,4
3,4
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
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
88.57
88.57
Philippines
99.99
99.99
Australia
Australia
Australia
Australia
Australia
USA
Bermuda
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
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
100
100
100
100
100
100
100
100
100
-
100
100
100
Page 106 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 13. Interests in other entities continued
(a) Subsidiaries continued
NAME OF ENTITY
TPG Network Pty Ltd
TransACT Broadcasting Pty Ltd
TransACT Capital Communications Pty Ltd
TransACT Communications Pty Ltd
TransACT Victoria Communications Pty Ltd
TransACT Victoria Holdings Pty Ltd
Transflicks Pty Ltd
Trusted Cloud Pty Ltd
Trusted Cloud Solutions Pty Ltd
Value Added Network Pty Ltd
Virtual Desktop Pty Ltd
VtalkVoip Pty Ltd
Westnet Pty Ltd
Tech2 Business Solutions Pty Ltd
Tech2Home Proprietary Ltd
Tech2Home Pty Ltd
Tech2Home (Communications) Pty Ltd
The Tech2 Group Pty Ltd
EQUITY
HOLDINGS
NOTES
COUNTRY OF
INCORPORATION
2021
%
2020
%
3,4
3,4
3,4
3,4
3,4
3,4
3,4
3,4
3,7
3,4
3,4
3,7
3,4
3,5
3,5
3,5
3,5
5
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
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
60
60
60
60
60
1. On 9 July 2020, the Company’s 100% ownership in VHF was transferred to Vodafone Hutchison (Australia) Holdings Limited, a UK incorporated
company jointly controlled by entities in the CK Hutchison Holdings (‘CKHH’) and Vodafone Groups. On disposal of the subsidiary, $379 million of
cash and cash equivalents held in VHF were transferred out of the Group.
2. The entity was established as a joint venture between the Company and TPG Corporation to purchase 3.6 GHz spectrum at the auction conducted in
November 2018. As part of the merger, the entity is now 100% owned by the Group and included in the consolidated results. The entity had no
material balances as at 26 June 2020 and therefore no significant impact arises from moving from the equity method of accounting to consolidation.
Refer to Note 12 for further details.
3. These companies were acquired as part of the merger between the Company and TPG Corporation on 13 July 2020. These entities previously had a
31 July year-end, which has since been changed to 31 December to align with the Group.
4. Pursuant to the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, these wholly-owned subsidiaries within the Closed Group are
relieved from the Corporations Act 2001 (Cth) requirements to prepare and lodge separate financial reports for the year ended 31 December 2020
(to the extent they apply).
5. On 1 February 2021, the Company completed the disposal of its 60% investment in Tech2. As the investment was held at fair value at 31
December 2021, there were no further accounting impacts that arose on completion.
6. On 9 September 2021, the Company completed the transaction announced on 2 August 2021 in which a wholly owned subsidiary of the
Company acquired all of the shares of 3.6GHz Spectrum Pty Ltd (formerly Dense Air Australia Pty Limited) from Dense Air Limited.
7. These companies are exempt from financial reporting requirements and do not form part of the deed of cross guarantee and are recognised
as a small proprietary company.
Page 107 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 13. Interests in other entities continued
(b) Joint ventures
Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint
ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal
structure of the joint arrangement.
Joint ventures
Interests in joint ventures are accounted for using the equity method after initially being recognised at cost in the
consolidated statement of financial position.
Equity method
Under the equity method of accounting, investments are initially recognised at cost and adjusted thereafter to
recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s
share of movements in other comprehensive income of the investee in other comprehensive income. Dividends
received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the
investment.
When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent
of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence
of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed
where necessary to ensure consistency with the policies adopted by the Group.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy
described in Note 14.
NAME OF ENTITY
3GIS Pty Limited
3GIS Properties (No 1) Pty Limited
3GIS Properties (No 2) Pty Limited
Tovadan Pty Limited
Mondjay Pty Limited
EQUITY HOLDINGS
COUNTRY OF
INCORPORATION
2021
%
2020
%
Australia
Australia
Australia
Australia
Australia
50
50
50
50
50
50
50
50
50
50
Page 108 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 14. Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment. Historical
cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for
its intended use. Borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset are included as part of the cost of that asset.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the
item can be measured reliably. All other repairs and maintenance are charged to the Consolidated Income Statement
during the financial period in which they are incurred.
Depreciation
Depreciation is provided on property, plant and equipment excluding land. Depreciation is calculated on a straight-line
basis to write off the depreciable amount of each item of property, plant and equipment over its expected useful life to
the Group. The assets’ residual values and useful lives are reviewed at each reporting date and adjusted if appropriate.
Assets are depreciated from the date they are brought into commercial service, or in respect of internally constructed
assets from the time the asset is completed and is available for commercial use. The cost of internally constructed
assets includes the cost of materials, direct labour, and 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 expected useful lives are as follows:
Buildings
Leasehold improvements
40 years
4 to 8 years
Network equipment and infrastructure
3 to 25 years
The depreciable amount of improvements to or on leasehold properties and leased plant and equipment is amortised
over the unexpired period of the lease or the estimated useful life of the improvement to the Group, whichever is the
shorter.
Depreciation rates and methods are reviewed at least annually and adjusted on a prospective basis as required by
accounting standards.
Page 109 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 14. Property, plant and equipment continued
Critical Estimates and Judgements: Useful lives of property, plant and equipment
Management judgement is required to determine the estimated useful lives of property, plant and equipment for
the basis of the depreciation period over which economic benefit will be derived from the asset. The Group
reviews the useful lives at the end of each reporting period, based on management’s expected life of each asset
class, including expected use of specific assets and other relevant factors such as any expected changes in
technology.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost
of disposal and value in use.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in
the Consolidated Income Statement.
Impairment of assets
Non-financial assets other than goodwill are tested for impairment at each reporting date or whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. This includes intangible assets in
the course of construction. For the purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which are largely independent of the cash inflows from other
assets or groups of assets (cash-generating units). An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment at the end of each reporting period or when there is
an indication that the impairment loss may no longer exist. An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
Page 110 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 14. Property, plant and equipment continued
LAND AND
BUILDINGS
$m
LEASEHOLD
IMPROVEMENTS
$m
NETWORK
EQUIPMENT AND ASSETS UNDER
INFRASTRUCTURE CONSTRUCTION TOTAL
$m
$m
$m
Cost
Balance at 1 January 2021
Additions
Transfers
Write-off
Balance at 31 December 2021
Accumulated depreciation
Balance at 1 January 2021
Depreciation
Write-off
Balance at 31 December 2021
At 31 December 2021
Cost
Accumulated depreciation
Net book amount
43
-
-
-
43
(1)
(3)
-
(4)
43
(4)
39
111
5
-
-
116
(85)
(14)
-
(99)
116
(99)
17
6,037
1001
444
(168)1
6,413
(3,259)
(569)
140
(3,688)
6,413
(3,688)
2,725
416
6,607
875
980
(617)
(173)2
-
(168)
674
7,246
(4) (3,349)
(29)
(615)
-
140
(33) (3,824)
674
7,246
(33) (3,824)
641
3,422
1. The write-off and additions include $24 million of network equipment for 3G and 4G Huawei equipment that were accounted for as asset swaps.
2. The transfer balance of $173 million was transferred as additions to intangibles for $132 million and $41 million to right of use asset for leases.
Cost
Balance at 1 January 2020
Additions from business combination
Additions
Transfers
Write-off
Balance at 31 December 2020
Accumulated depreciation
Balance at 1 January 2020
Depreciation
Write-off
Balance at 31 December 2020
At 31 December 2020
Cost
Accumulated depreciation
Net book amount
-
43
-
-
-
43
-
(1)
-
(1)
43
(1)
42
102
3
-
8
(2)
111
(72)
(15)
2
(85)
111
(85)
26
4,609
1,407
85
214
(278)
6,037
(3,011)
(514)
266
(3,259)
6,037
(3,259)
2,778
241
4,952
38
1,491
484
569
(347)
(125)
-
(280)
416
6,607
(4) (3,087)
-
-
(530)
268
(4) (3,349)
416
6,607
(4) (3,349)
412
3,258
Page 111 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 15. Right-of-use assets and lease liabilities
At the inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.
The Group has leases for various network sites, offices, retail stores and data centres. Rental contracts may contain
both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-
lease components based on their relative stand-alone prices.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The
lease agreements do not impose any covenants other than the security interests in the leased assets that are held by
the lessor. Leased assets may not be used as security for borrowing purposes.
Critical Estimates and Judgements: Determining lease term
Management judgement is required to determine the lease term for leases that include additional optional
extension periods beyond the initial non-cancellable period. As a lessee, extension periods are included in the
lease term in determining the lease liability if the Group is reasonably certain that the extension option will be
exercised. An assessment of the likelihood of exercising renewal options, based on relevant facts and
circumstances, such as historical lease durations, costs and business disruption required to replace the leased
asset or relocate the site, the existence of termination penalties and the Group’s future plans, is performed on
initial recognition of the lease. The lease term is reassessed if an option is actually exercised (or not exercised) or
the Group becomes obliged to exercise (or not exercise) it. The assessment if reasonable certainty is only revised
if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is
within the control of the Group.
For the Group’s network lease portfolio, renewal options are generally included in the lease term, as it is
reasonably certain, based on the type and use of the underlying asset, that the lease will be extended. The length
of the initial lease term is also considered, as the likelihood of exercising an option diminishes the longer the non-
cancellable period.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of
12 months or less. Low-value assets comprise IT equipment and typically have an underlying value of less than
$10,000.
Page 112 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 15. Right-of-use assets and lease liabilities continued
Initial measurement
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is
available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
•
•
•
•
•
fixed payments (including in-substance fixed payments), less any lease incentives receivable,
variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date,
amounts expected to be payable by the Group under residual value guarantees,
the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability.
Right-of-use assets are measured at cost comprising the following:
•
•
•
•
the amount of the initial measurement of lease liability,
any lease payments made at or before the commencement date less any lease incentives received,
any initial direct costs, and
restoration costs.
Critical Estimates and Judgements: Determining incremental borrowing rate
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used.
Management judgement is required to determine the incremental borrowing rate used to measure the Group’s
network and commercial leases. Management is of the view that interest rates implicit in the Group’s leases are
not readily determinable.
The incremental borrowing rate represents the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment
with similar terms, security and conditions. To determine the incremental borrowing rate, the Group where
possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect
changes in financing conditions since third party financing was received and makes adjustments specific to the
lease, e.g. term of lease.
Page 113 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 15. Right-of-use assets and lease liabilities continued
Subsequent measurement
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not
included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate
take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over
the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each
period.
Right-of-use assets are generally depreciated over the lease term on a straight- line basis. If the Group is reasonably
certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost
of disposal and value in use.
Subleases
The Group has entered into lease agreements as an intermediate lessor for various retail stores and offices. When the
Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The
sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s net
investment in the leases. The net investment in each sublease is determined by discounting the rental payments
expected to be received from the sublessee over the term of the sublease. The interest income associated with the
discounting of the rental payments is recognised over the term of the sublease.
Site Sharing Agreements
The Group has entered into a Site Sharing Agreement for various network sites. The purpose of this agreement is to
share the costs relating to telecommunication equipment on certain network sites. Under this Agreement, access to
network sites is granted to the other party in return for an access fee, which is settled on a net basis each quarter.
The Group considers the core purpose of the Agreement is for the convenience of each party rather than to generate
lease income. The Group accounts for the subleases arising from the exchange of access fees on a net basis, as the
exchanged right-of-use assets are similar in nature, the timing of cash flows between the parties mirrors the timing of
receipts/payments under the head lease agreements, and the amount of cash flows is not expected to be materially
different between the exchanged right-of-use assets. The Group is in a net payment position under the Agreement,
and as a result the Group recognises a right-of-use asset and lease liability for the net payment portion in accordance
with AASB 16.
Impairment of assets
Refer to Note 14 for the Group’s non-financial asset impairment policy.
Page 114 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 15. Right-of-use assets and lease liabilities continued
Right-of-use assets
Commercial properties
Network properties
Lease liabilities
Current
Non-current
2021
$m
194
1,100
1,294
61
1,359
1,420
2020
$m
165
847
1,012
92
1,051
1,143
(a) Additions to the right-of-use assets during the 2021 financial year were $124 million (2020: $84 million) and
includes transfers from assets under construction of $41 million.
The increase in right-of-use assets and lease liabilities during the year included lease remeasurements arising from
the renegotiation of its network site access arrangement with Axicom. Under the terms of the agreement, the
lease term of existing network sites was extended for a period of 19 years.
(b) The merger between the Company and TPG Corporation became effective for accounting purposes on 26 June
2020 and $99 million of right-of-use assets and $115 million of lease liabilities were acquired on this date as a
result of the merger. On the accounting acquisition date, the Group derecognised $473 million of right-of-use
assets and $564 million of lease liabilities relating to the Company’s access to dark fibre links, of which TPG
Corporation was the counterparty.
The Consolidated Income Statement shows the following amounts relating to leases:
Depreciation of right-of-use assets
Commercial properties
Network properties
Interest on lease liabilities
Interest expense (included in finance expenses)
Expense relating to short-term leases (included in other operating expenses)
Expense relating to leases of low-value assets not shown above as short-term leases
(included in other operating expenses)
The total cash outflow for leases in 2021 was $200 million (2020: $207 million).
34
107
141
61
11
-
44
107
151
84
13
1
Page 115 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 16. Intangible assets
Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the
acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
non- controlling interest in the acquiree, and the fair value of the acquirer’s previously held equity interest in the
acquiree (if any) over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities
assumed. If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds
the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value
of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in the
Consolidated Income Statement as a bargain purchase gain.
Goodwill is classified as an indefinite life intangible asset. Goodwill is not subject to amortisation and is tested
annually for impairment, or more frequently, if events or changes in circumstances indicate that it might be impaired.
Goodwill is allocated to cash generating units for the purpose of impairment testing.
Brand names
On acquisition of a subsidiary, brands of the acquired subsidiary are valued and brought to account as intangible
assets. The value is calculated using the relief from royalty method. Brand names are classified as either finite or
indefinite life intangible assets depending on the Group’s assessment of the expected pattern of economic benefits
that they will generate for the Group.
Amortisation is charged to the Consolidated Income Statement on a straight line basis over the estimated useful lives
for the finite life brand names. Indefinite life brand names are not subject to amortisation and are tested annually for
impairment, or more frequently, if events or changes in circumstances indicate that it might be impaired. Indefinite life
brand names are allocated to cash generating units for the purpose of impairment testing.
Computer software
Computer software comprises computer software purchased from third parties as well as the cost of internally
developed software. Computer software licences are capitalised on the basis of the costs incurred to acquire and
bring into use the specific software. Costs that are directly associated with the production of identifiable and unique
software products controlled by the Group and are probable of producing future economic benefits are recognised as
intangible assets. Direct costs include software development employee costs and directly attributable overheads.
Software integral to a related item of hardware equipment is accounted for as property, plant and equipment.
Costs associated with maintaining computer software programs are recognised as an expense when they are incurred.
Internally developed software is recognised only if all of the following conditions are met:
•
•
•
an asset is created that can be separately identified;
it is probable that the asset created will generate future economic benefits; and
the development cost of the asset can be measured reliably.
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.
Amortisation is charged to the Consolidated Income Statement on a straight line basis over the estimated useful lives
from the date the software is available for use.
The carrying values of these intangible assets are reviewed on a regular basis and written down to the recoverable
amount where this is less than the carrying value.
Page 116 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 16. Intangible assets continued
Spectrum licences
Costs associated with acquiring spectrum licences are capitalised. The amortisation of the spectrum licences
commences upon the later of the readiness of the network and the spectrum licences being allocated. The spectrum
licences are amortised on a straight line basis over the periods of their expected benefit. The carrying values of these
intangible assets are reviewed on a regular basis and written down to the recoverable amount where this is less than
the carrying value.
Contract costs
Under AASB 15 Revenue from Contracts with Customers, incremental costs associated with acquiring and renewing a
contract that are expected to be recovered are required to be initially recognised as an asset and expensed over the
expected life of a customer contract consistent with the transfer to the customer of the goods and services to which
the capitalised costs relate. The carrying values of these assets are reviewed on a regular basis. Contracts costs
associated with acquiring and renewing a service contract are capitalised and amortised over the life of the contract.
Contract costs associated with the sale of handsets are capitalised and amortised upfront in line with transfer of
handsets to the customer.
Connection costs, being costs of fulfilling orders, are capitalised and amortised over the life of the contract.
Acquired customer bases
On acquisition of a subsidiary, customer contracts and relationships of the acquired subsidiary are valued based on
their expected future economic benefits (using discounted cash flow projections) and brought to account as
intangible assets. The acquired customer bases are amortised to the Consolidated Income Statement on a straight line
basis in line with the expected economic benefits to be derived.
Indefeasible rights of use of capacity (‘IRUs’)
Indefeasible rights of use (‘IRUs’) of acquired network capacity are brought to account as intangible assets at the
present value of the future cash flows payable for the right. IRUs of acquired subsidiaries are accounted for at their fair
value as at the date of acquisition. Amortisation is charged to the Consolidated Income Statement on a straight-line
basis over the estimated useful lives of the IRU contracts.
Amortisation
The expected useful lives of the intangible assets, other than goodwill and indefinite life brand names, are as follows:
Definite life brand name
Spectrum licences
Computer software
Contract costs
Customer bases
Indefeasible rights of use (IRUs)
1 to 5 years
11 to 20 years
3 to 7 years
1 to 3 years
8 to 15 years
4 to 22 years
Critical Estimates and Judgements: Useful lives of intangible assets
Management judgement is required to determine the estimated useful lives of intangible assets for the basis of the
amortisation period over which economic benefit will be derived from the asset. The Group reviews the useful
lives at the end of each reporting period, based on management’s expected life of each asset class, including
expected use of specific assets and other relevant factors such as any expected changes in technology.
Page 117 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 16. Intangible assets continued
Cost
Balance at
1 January 2021
Additions from business
combination
Additions
Transfers
Write-off/Disposal
Balance at
31 December 2021
Accumulated amortisation
Balance at
1 January 2021
Amortisation
Write-off/Disposal
Balance at
31 December 2021
At 31 December 2021
Cost
Accumulated amortisation
Net book amount
Cost
Balance at
1 January 2020
Additions from
business combination
Additions relating
to joint venture
Additions
Transfers
Write-off
Balance at
31 December 2020
Accumulated amortisation
Balance at
1 January 2020
Amortisation
Write-off
Balance at
31 December 2020
At 31 December 2020
Cost
Accumulated amortisation
Net book amount
BRAND
NAMES
$m
SPECTRUM
LICENCES
$m
COMPUTER
SOFTWARE
$m
CONTRACT
COSTS
$m
CUSTOMER
BASES
$m
IRUS GOODWILL
$m
$m
TOTAL
$m
425
2,945
852
105
1,689
201
8,568 14,785
-
-
-
-
-
195
-
(15)
-
6
131
(1)
-
66
-
(56)
-
-
-
-
-
-
1
-
(53)
-
-
-
(53)
267
132
(72)
425
3,125
988
115
1,689
202
8,515 15,059
(1)
-
-
(1)
(620)
(261)
7
(543)
(161)
1
(60)
(65)
60
(82)
(160)
-
(10)
(20)
-
(874)
(703)
(65)
(242)
(30)
-
-
-
-
(1,316)
(667)
68
(1,915)
425
(1)
3,125
(874)
424
2,251
2
1,594
423
1,094
-
-
-
-
257
-
-
-
988
(703)
285
906
26
-
3
125
(208)
115
(65)
1,689
(242)
202
(30)
8,515 15,059
(1,915)
-
50
1,447
172
8,515 13,144
107
-
-
2,413
5,022
11
1,689
188
6,155
9,586
-
63
-
(76)
-
-
-
-
-
13
-
-
-
-
-
-
257
79
125
(284)
425
2,945
852
105
1,689
201
8,568 14,785
(1)
-
-
(1)
(433)
(187)
-
(590)
(161)
208
(620)
(543)
425
(1)
424
2,945
(620)
2,325
852
(543)
309
(69)
(67)
76
(60)
105
(60)
45
-
(82)
-
-
(10)
-
(82)
(10)
-
-
-
-
(1,093)
(507)
284
(1,316)
1,689
(82)
1,607
201
(10)
191
8,568
-
14,785
(1,316)
8,568
13,469
Page 118 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 16. Intangible assets continued
(a) On 15 July 2021, the Group, through its wholly owned subsidiary, Mobile JV Pty Limited, was successful in securing holdings in all available licence
areas in the 26 GHz (millimetre wave) band auction for $110 million. The licence was issued to the Group on 29 June 2021 and commences from
15 July 2021 for a period of 15 years. The Group will pay for the spectrum in five equal annual instalments of $22 million, with the first payment
made in June 2021. At 31 December 2021, the Group has recorded the remaining liability of $88 million in other liabilities.
(b) On 2 August 2021, the Group entered into a Share Sale Agreement to acquire 5G spectrum holdings in the 3.6 GHz band from Dense Air Limited.
The transaction involved a wholly owned subsidiary, Mobile JV Pty Ltd, acquiring all the shares of Dense Air Australia Pty Limited, which holds the
3.6 GHz spectrum licenses acquired at auction in 2018 from Dense Air Limited.
The transaction, under the accounting standards, was an asset acquisition as Dense Air Australia Pty Limited did not have the inputs, processes
and outputs necessary to take the form of a business.
The shares under the Share Sale Agreement were transferred at a total purchase price of $84 million. The date that conditions precedent were
satisfied was 9 September 2021 and is considered the date of ownership for accounting purposes.
Furthermore, the Group’s wholly owned subsidiary, TPG Internet Pty Ltd, sold its 2.6 GHz spectrum band licenses to Dense Air Networks Australia
Pty Limited.
The 2.6 GHz spectrum band licenses were sold at a total consideration of $15 million on 9 September 2021 (gain on sale of $7 million recognised)
being the date that conditions precedent were satisfied.
Impairment of assets (definite useful live intangibles)
Refer to Note 14 for the Group’s non-financial asset impairment policy.
Impairment testing for intangible assets with indefinite useful lives
Indefinite life intangible assets, such as goodwill and brand names, are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows known as cash generating units (‘CGUs’).
Critical Estimates and Judgements: Determining the Group’s cash generating units
Management judgement is required in determining the Group’s CGUs. Management is of the view that the Group’s
telecommunications network is integrated in nature, and no single component of the network individually
generates cash flows from delivering products and services. For the purposes of goodwill allocation and
impairment testing, management is of the view that the manner in which operations are monitored by
management best reflects the Group’s CGUs.
During the financial year, there have been no changes to the manner in which the Group’s operations are
monitored. The Group has identified the Consumer and Corporate Groups to be the lowest level at which goodwill
is monitored for internal management purposes.
Consumer Group
Corporate Group
2021
2020
BRAND NAMES
$m
GOODWILL
$m
TOTAL BRAND NAMES
$m
$m
GOODWILL
$m
326
98
424
6,386
2,129
8,515
6,712
2,227
8,939
326
98
424
6,449
2,119
8,568
TOTAL
$m
6,775
2,217
8,992
A CGU is impaired when the recoverable amount of the CGU is lower than the carrying amount of the CGU. The
recoverable amount is the higher of an asset’s value-in-use and fair value less cost of disposal.
The Group uses the value-in-use method in order to assess the recoverable amount of the CGUs to which the
indefinite life intangible assets have been allocated. If the recoverable amount of the CGU is less than its carrying
amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU and
then to the other assets of the CGU pro rata on the basis of the carrying amount of each asset in the CGU.
An impairment loss recognised for goodwill is not reversed in a subsequent period.
Page 119 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 16. Intangible assets continued
Critical Estimates and Judgements: Impairment of goodwill
Goodwill is not subject to amortisation and is assessed for impairment at least on an annual basis, or whenever an
indication of potential impairment arises. During the financial year, management identified the impacts arising from
the COVID pandemic as an indicator of potential impairment.
Management judgement is required to determine the recoverable amounts of the Group's CGUs, which have been
determined using a value-in-use calculation. The following key assumptions have been used in determining the
recoverable amount of the CGUs with allocated goodwill:
• Cash flow projections - cash flow projections are based on five-year board approved forecasts. These include
EBITDA related assumptions (such as expected customer subscriber growth rates, average revenue per user,
product and pricing mix changes, direct costs to deliver telecommunication services, forecast employee
headcount and wage inflation, marketing costs and other overheads), capital expenditure and spectrum.
These assumptions are determined based both on an extrapolation of historical performance and future
company plans. The customer growth rate and average revenue per user assumptions also rely on separate
assumptions about the timing of the eventual relaxation of current international travel restrictions.
• Discount rate - a pre-tax discount rate has been used to discount the projected cash flows of the CGUs and is
based on the Group's weighted average cost of capital adjusted to reflect an estimate of specific risks
assumed in the cash flow projections.
Terminal value growth rate – a long term growth rate is applied to extrapolate a CGU’s cash flows beyond the
five-year forecast period. This growth rate is based on expected long-term performance in the market.
•
31 DECEMBER 2021
31 DECEMBER 2020
Consumer
Corporate
Consumer
Corporate
Discount rate (pre-tax)
Discount rate (post-tax)
Terminal growth rate
8.90%
7.20%
2.5%
9.21%
7.60%
2.5%
9.27%
7.63%
2.5%
9.14%
7.63%
2.5%
Sensitivity analysis on all of the key assumptions employed in the value-in-use calculations has been performed.
From this, management has concluded that a reasonable possible change in the post-tax discount rate, terminal
growth rate or the compound annual growth rate (CAGR) of EBITDA could cause the carrying amount of the
consumer CGU to exceed the recoverable amount.
Included in the table below is a sensitivity analysis of the recoverable amounts of the CGUs and, where applicable,
the impairment charge considering reasonable possible change scenarios relating to key assumptions at
31 December 2021.
CONSUMER
CORPORATE
Post-tax
Terminal
discount rate growth rate
EBITDA
CAGR
Post-tax
Terminal
discount rate growth rate
EBITDA
CAGR
+0.5%
-0.5%
-1%
+0.5%
-0.5%
-1%
(1,261)
(1,077)
(348)
(496)
(424)
(129)
(785)
(600)
128
386
458
754
Change in recoverable amount
($m)
Headroom/(Impairment)
($m)
Due to the interrelated nature of the assumptions, movements in any one variable can have an indirect impact on
others and individual variables rarely change in isolation. Additionally, management can be expected to respond to
movements, to mitigate downsides and take advantage of upsides, as circumstances allow. Consequently, it is
impracticable to estimate the indirect impact that a change in one assumption has on other variables and, hence,
to estimate the likelihood, or extent, of impairments, or reversals of impairments, under different sets of
assumptions in subsequent reporting periods.
Page 120 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 17. Trade and other payables
Trade creditors and accruals
Employee benefits related payables
Other creditors
Payables to related parties
Trade creditors
2021
$m
1,045
44
24
5
2020
$m
848
45
10
24
1,118
927
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial
period and which are unpaid. The amounts are unsecured and are usually paid or payable within 7 to 180 days of
recognition. The carrying amounts of trade and other payables are considered to be the same as their fair values, due
to their short- term nature.
Employee benefits – Wages and salaries
Liabilities for wages and salaries, including non-monetary benefits, that are expected to be settled wholly within 12
months after the end of the reporting period in which the employees render the related service are recognised in
other creditors in respect of employees’ services up to the reporting date and are measured at the amounts expected
to be paid when the liabilities are settled. Liabilities for sick leave are recognised when the leave is taken and
measured at the rates paid or payable.
Employee benefits – Superannuation
The Group pays contributions to defined contribution superannuation plans on a mandatory, contractual or voluntary
basis. The Group has no further payment obligations once the contributions have been paid. The contributions are
recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the
extent that a cash refund or a reduction in the future payments is available.
Employee benefits - STI
A liability for employee benefits in the form of a STI plan is recognised in other creditors when there is no realistic
alternative but to settle the liability and at least one of the following conditions is met:
•
•
•
there are formal terms in the plan for determining the amount of the benefit;
the amounts to be paid are determined before the time of completion of the financial statements; or
past practice gives clear evidence of the amount of the obligation.
Liabilities for STI plans are expected to be settled within 12 months and are measured at the amounts expected to be
paid when they are settled.
The Group accrues for long-term incentives based on a number of eligible employees and expected hurdle rates
being met.
Employee benefits - Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or
when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination
benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits;
and (b) when the entity recognises costs for a restructuring that is within the scope of AASB 137 and involves the
payment of termination benefits.
Page 121 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 18. Borrowings
Borrowings are initially recognised at fair value net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds and the redemption amount is recognised in the
Consolidated Income Statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities, which are not incremental costs relating to the drawdown of the
facilities, are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility
will be drawn down, otherwise recognised as prepayments and amortised on a straight-line basis over the term of the
facility.
Current
Bank loans (unsecured)
Non-current
Bank loans (unsecured)
2021
$m
2020
$m
-
-
-
-
4,290
4,290
4,330
4,330
Refinancing activities during the year
In March 2021, the Group refinanced $500 million of its existing $5,250 million loan facility. Loan establishment fees of
$2 million arising from the refinancing have been capitalised in prepayments and will be amortised over the new loan
period. Existing loan establishment fees of $1 million relating to the original facility (now reduced to a $4,750 million
facility) were expensed immediately upon the refinancing during the period.
In June 2021, the Group entered into an agreement to reduce the margin of, and extend by one year, its $4,750
million loan facility. Loan establishment fees of $5 million relating to the amendment and extension of the loan facility
have been capitalised in prepayments and will be amortised over the revised loan period. Existing loan establishment
fees of $19 million unamortised at the date of the amendment relating to the original facility will be amortised over the
revised loan period.
Available facilities
At 31 December 2021, the Group has total loan facilities of $5,250 million and a committed overdraft facility of $35
million (2020: $35 million). Total amount of undrawn borrowing facilities as at 31 December 2021 was $995 million
(2020: $955 million).
The Group’s bank loan facilities contain undertakings to comply with financial covenants. These require that the Group
operates within certain financial ratios. The financial covenants that the Group is subject to are Leverage and Interest
Coverage. Additionally, the Group is required to ensure that that the Total Assets and EBITDA of the guarantors meet
minimum threshold amounts of Total Assets and consolidated EBITDA of the Group.
There were no breaches of financial covenants during the year ended 31 December 2021.
The fair value of the loans approximate their carrying amounts since the interest payable on those borrowings is either
close to current market rates or the borrowings are of a short-term nature.
Page 122 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 19. Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably
estimated. Provisions are not recognised for future operating losses. Provisions are measured at the present value of
management’s best estimate of the expenditure required to settle the present obligation at the reporting date.
The discount rate used to determine the present value reflects current market assessments of the time value of money
and the risks specific to the liability.
Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as a provision. An onerous contract
is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations
under the contract exceed the economic benefits expected to be received under it.
Make good provisions
A provision has been made for the present value of anticipated future costs of restoration of leased premises.
The provision includes future cost estimates associated with removing any leasehold improvements. The costs have
been capitalised as part of the cost of leasehold improvements and are amortised over the shorter of the term of the
lease or the useful life of the assets.
Decommissioning costs
The Group records a provision for decommissioning costs on its network. Decommissioning costs are provided at the
present value of expected costs to settle the obligation using estimated cash flows and are recognised as part of the
cost of that particular asset. The estimated future costs of decommissioning are reviewed annually and adjusted as
appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the
cost of the asset.
Annual leave employee benefit obligations
Liabilities for annual leave that are expected to be settled wholly within 12 months after the end of the reporting
period in which the employees render the related service are recognised in provision for employee benefits in respect
of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the
liabilities are settled.
Page 123 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 19. Provisions continued
Long service leave and other long-term employee benefit obligations
The Group has liabilities for long service leave that are not expected to be settled wholly within 12 months after the
end of the period in which the employees render the related service. The liability for long service leave is recognised
in the provision for employee benefits and measured as the present value of expected future payments to be made in
respect of services provided by employees up to the reporting date. Consideration is given to expected future wage
and salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the reporting date on national corporate bonds with terms to maturity and currency
that match, as closely as possible, the estimated future cash outflows. The obligations are presented as current
liabilities in the consolidated statement of financial position if the entity does not have an unconditional right to defer
settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected
to occur.
Current
Employee benefits
Decommissioning and make good
Other provisions
Non-current
Employee benefits
Decommissioning and make good
2021
$m
2020
$m
55
27
26
108
8
54
62
51
19
14
84
11
53
64
Movement in provisions (excluding employee benefits)
Balance at 1 January 2021
Additional amounts recognised during the year
Amounts used during the year
Balance at 31 December 2021
DECOMMISSIONING
OTHER
AND MAKE GOOD PROVISIONS
$m
$m
TOTAL
$m
72
16
(7)
81
14
34
(22)
26
86
50
(29)
107
Page 124 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 20. Other liabilities
Current
Government grants
Other payables
Non-current
Other payables
2021
$m
2020
$m
27
72
99
21
60
81
73
6
Note 21. Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds. Equity instruments issued by the Company are
classified according to the substance of the contractual arrangements entered into and the definitions of an equity
instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all
of its liabilities. Interest and dividends are classified as expenses or as distributions of profit consistent with the
classification of related debt or equity instruments in the Consolidated Statement of Financial Position.
Ordinary shares entitle the holder to participate in dividends and proceeds on winding up of the company in
proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary
shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to
one vote. Ordinary shares have no par value and the Consolidated Entity does not have a limited amount of authorised
capital. All shares rank equally with regard to the Company’s residual assets.
Ordinary shares (fully paid)
Balance at 1 January
2021
SHARES
2020
SHARES
2021
$m
2020
$m
1,859,341,669
1,100,096,986
18,399
6,047
Share consolidation on debt restructure
-
(685,911,834)
-
-
1,859,341,669
414,185,152
18,399
6,047
Shares issued on the Company’s debt restructure
Shares issued on acquisition of TPG Corporation
-
-
517,345,024
927,811,493
-
-
4,475
7,877
Balance at 31 December
1,859,341,669
1,859,341,669
18,399
18,399
Page 125 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 21. Contributed equity continued
Basic and diluted earnings per share
Profit attributable to the owners of the Company 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
UNITS
cents
$m
31 DEC
2021
6
110
31 DEC
2020
64
741
number
1,859,341,669
1,156,505,986
Share consolidation and shares issued on the Company’s debt restructure in 2020
On 9 July 2020, the Company performed a share consolidation and issued shares to the Company’s pre-merger
shareholders, entities in the CKHH and Vodafone Group, so that these shareholders’ ownership in the Company
represented 50.1% of the Company’s total issued shares on merger completion on 13 July 2020.
The value of the shares issued was $4,475 million, which equated to the Company’s debt transferred out of the Group
and assumed by the Company’s pre-merger shareholders.
Shares issued on acquisition of TPG Corporation in 2020
On 13 July 2020, notwithstanding an effective date of 26 June 2020 for accounting purposes, the Company legally
acquired TPG Corporation through the issuance of shares. One share in the Company was issued to TPG
Corporation’s pre-merger shareholders for every one share held in TPG Corporation. The shares issued to TPG
Corporation’s pre-merger shareholders represent 49.9% of the Company’s total issued shares on merger completion.
The value of the shares issued was $7,877 million. Refer to Note 12 for further details.
Page 126 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 22. Reserves
Cash flow hedge reserve
The cash flow hedge reserve comprises the effective portion of the cumulative net change in the fair value of hedging
instruments used in cash flow hedges, pending subsequent recognition in the income statement as the hedged cash
flows or items affecting profit or loss.
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.
Common control reserve
The common control reserve comprises differences arising from transfers of assets and liabilities in exchange of
equity interests among entities with shareholders that had jointly controlled the Company during the year.
Cash flow hedge reserve
Foreign currency translation reserve
Common control reserve
Share-based payments reserve
Movement in reserves
Balance at 1 January
Change in value of cash flow hedge reserve
Change in value foreign currency translation reserve
Change in value of common control reserve
Recognition of share-based payments reserve
Balance at 31 December
2021
$m
-
(1)
3
3
5
1
1
-
-
3
5
2020
$m
(1)
(1)
3
-
1
(1)
-
(1)
3
-
1
Page 127 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 23. Dividends
During the year ended 31 December 2021, the following dividends were paid:
•
•
fully franked final FY20 dividend of $139 million (7.5 cents per fully paid share) was paid on 14 April 2021
(2020: nil);
fully franked interim FY21 dividend of $149 million (8.0 cents per fully paid share) was paid on 13 October 2021
(2020:nil).
Subsequent to year end, on 24 February 2022, the Board of directors have declared a fully franked final FY21 dividend
of 8.5 cents per share. As the final dividend was not declared or resolved to be paid by the Board as at 31 December
2021, the dividend has not been provided for in the Consolidated Statement of Financial Position. The final FY21
dividend has a record date of 16 March 2022 will be paid on 13 April 2022.
All dividends declared or paid during the year were fully franked at the tax rate of 30%.
Dividend franking account
30 per cent franking credits available to shareholders of the Company
for subsequent financial years
2021
$m
417
2020
$m
540
The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:
•
•
franking credits that will arise from the payment of the current tax liabilities; and
franking credits transferred in on business combinations.
Note 24. Related party transactions
(a) Parent entities
TPG Telecom Limited is the ultimate parent entity of the Group (since 26 June 2020).
For the year ended 31 December 2020, the Group was jointly controlled by the following immediate parent entities
until 26 June 2020 (for accounting purposes).
NAME OF ENTITY
RELATIONSHIP WITH THE COMPANY
COUNTRY OF INCORPORATION
%
Hutchison 3G Australia
Holdings Pty Limited
Immediate Australian jointly controlling
parent entity
Hutchison Telecommunications
(Australia) Ltd
Ultimate Australian jointly controlling
parent entity
Australia
Australia
Vodafone Oceania Limited
Immediate jointly controlling parent entity
United Kingdom
50.00
50.00
50.00
The Group was jointly controlled by the following ultimate parent entities until 26 June 2020 (for accounting
purposes).
NAME OF ENTITY
RELATIONSHIP WITH THE COMPANY
COUNTRY OF INCORPORATION
%
CK Hutchison Holdings Ltd
Ultimate jointly controlling parent entity
Cayman Islands
Vodafone Group Plc
Ultimate jointly controlling parent entity
United Kingdom
43.93
50.00
Page 128 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 24. Related party transactions continued
(b) Interests in other entities
Interests in other entities are set out in Note 13.
(c) Key management personnel
The aggregate compensation made to directors and other members of the key management personnel of the Group is
set out below:
2021
$’000
11,373
242
79
1,469
2,268
2020
$’000
8,784
208
137
1,366
2,930
15,431
13,425
2021
$’000
2020
$’000
26,124
44,931
2,810
3,390
1,679
1,111
3,204
13,633
50,106
3,052
1,849
3,657
2,446
1,393
-
280,407
1,723
-
-
855
82,026
1,909
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
(d) Transactions with related parties
Purchases of goods and services
Purchases of equipment
Service fee paid/payable
Roaming fee paid/payable
IOT fee paid/payable
Provision of services
Service fee received/receivable
Roaming income received/receivable
IOT income received/receivable
Other transactions
Pre-acquisition dividends paid
Office rental
Guarantee fee paid/payable
Interest expense paid/payable
All transactions were made on normal commercial terms and conditions and at market rates.
Page 129 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 24. Related party transactions continued
(e) Outstanding balances arising from sales/purchases of goods and services
The following balances are outstanding at the end of the reporting period in relation to transactions with related
parties:
Current receivables
Hutchison Telecommunications (Australia) Limited (joint parent entity until 26 June 2020)
Other related parties
Current payables
Other related parties
(f) Derivative transactions with related parties
Swaps entered with related entities of CK Hutchison Holdings Limited
Net interest revenue
Swaps entered with related entities of Vodafone Group Plc
Net interest revenue
Note 25. Share-based payments
2021
$’000
2020
$’000
147
200
347
920
489
1,409
5,045
5,045
23,755
23,755
2021
$’000
2020
$’000
-
-
10,089
10,097
Share-based compensation benefits are provided to executives and eligible employees via the short-term incentive
(STI) and long-term incentive (LTI) schemes.
The fair value of shares granted to employees for nil consideration is recognised as an expense over the relevant
service period, being the year to which the STI and LTI relates and the vesting period of the shares. The fair value is
measured at the grant date of the shares and is recognised in equity in the share-based payment reserve. The number
of shares expected to vest is estimated based on non-market vesting conditions (i.e. achievement of performance
conditions that are based on the Group’s operations and total share return for LTI). The estimates are revised at the
end of each reporting period and adjustments are recognised in profit or loss and the share-based payment reserve.
Where shares are forfeited due to a failure by the employee to satisfy the service conditions, any expenses previously
recognised in relation to such shares are reversed effective from the date of the forfeiture.
The Group has in place Deferred Share Rights and Performance Rights plans as detailed in the Remuneration Report in
the 2021 Annual Report.
Shares required to meet the Deferred Share Rights and Performance Rights obligation will be acquired by an
employee share trust on market and are held as treasury shares until such time as they become vested. No shares
were acquired on market during the period while the trust was being established, however, shares will be acquired in
the next period.
Page 130 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 25. Share-based payments continued
Performance Rights - LTI
Under the LTI scheme, the CEO and executives are granted a LTI amount in the form of rights to shares of the
Company. The rights are granted in the first year, and subject to the achievement of the LTI scheme performance
conditions, will vest after three years from the grant date. They automatically convert into one ordinary share each on
vesting at an exercise price of nil. The executives do not receive any dividends and are not entitled to vote in relation
to the Performance Rights during the vesting period. If any executive ceases to be employed by the Group within this
period, the rights will be forfeited, except in special circumstances (including redundancy, retirement, death or total
and permanent disability or as otherwise agreed by the Board).
The number of rights granted or outstanding during the year ended 31 December 2021 are set out below.
At 1 January
Granted during the year – LTI 2021-2023
Granted during the year – STI 2020
Vested during the year
Forfeited during the year – LTI 2021-2023
At 31 December
All awards granted during the year have a $0 exercise price
31 DECEMBER
2021
31 DECEMBER
2020
NUMBER OF RIGHTS NUMBER OF RIGHTS
-
1,270,701
54,709
-
(110,294)
1,215,116
-
-
-
-
-
-
The number of rights to be granted is determined based on the value of the LTI amount or the achieved STI divided by
the weighted average price at which the Company’s shares are traded over the five days following announcement of
the annual results.
GRANT DATE
PLAN
EXPIRY DATE
HURDLE
6-May-21
6-May-21
LTI 2021-2023
31-Mar-25
LTI 2021-2023
31-Mar-25
24-Sep-21
LTI 2021-2023
31-Mar-25
24-Sep-21
LTI 2021-2023
31-Mar-25
OFCF
TSR
OFCF
TSR
FAIR VALUE PER
PERFORMANCE SHARE
RIGHT AT GRANT DATE
SHARE VESTING
DATE
PRICE
$4.80
$5.24 31-Mar-24
$1.26
$5.24 31-Mar-24
$6.54
$6.91 31-Mar-24
$2.73
$6.91 31-Mar-24
Weighted average remaining contractual life of all performance share rights outstanding at end of period is 2.25 years.
At 31 December 2021, an estimate of how many rights is likely to vest based on the continuous employment and
financial performance conditions has been updated. Grant dates were also revised in this update. 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 expensed in the year was $2,817,000 (31 December 2020: nil).
Page 131 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 25. Share-based payments continued
The accounting valuation represents the independent valuation of each tranche of Performance Share Rights at their
respective grant dates. The valuations have been performed using Total Shareholder Return (‘TSR’) and Operating
Free Cash Flow (‘OFCF’). Performance Share Rights with a market vesting condition (for example, TSR) incorporates
the likelihood that the vesting condition will be met. The accounting valuation of Performance Share Rights with a non-
market vesting condition (for example, OFCF) does not take into account the likelihood that the vesting condition will
be met.
TSR hurdle – The Monte-Carlo model which incorporates the impact of performance hurdles and the vesting scale on
the value of the PSRs was used. This pricing model takes into account factors such as the Company’s share price at
the date of grant, volatility of the underlying shares, the risk-free rate of return, expected dividend yield and the
likelihood that vesting conditions will be met. The accounting valuation of rights issued is allocated equally over the
vesting period.
Operating FCF hurdle – The Black-Scholes model was used to determine the fair value of PSRs. This pricing model
takes into account factors such as the Company’s share price at the date of grant, the risk-free rate of return,
expected dividend yield and time to maturity. The accounting valuation of rights issued is allocated over the vesting
period so as to take into account the expected level of vesting over the performance period.
The model inputs for performance share rights granted during the year ended 31 December 2021 included:
GRANT DATE
Share price as at Grant Date
Share price at Performance Start Date (30-day VWAP)
Risk-free rate
Dividend yield
Effective life
Exercise price
TPG volatility
6-MAY-21
24-SEP-21
$5.24
$7.49
0.23%
3.33%
2.65
Nil
30%
$6.91
$7.49
0.10%
2.43%
2.27
Nil
30%
The expected price volatility is based on the historic volatility (based on the remaining life of the performance share
rights), adjusted for any expected changes to future volatility due to publicly available information.
Deferred Share Rights – STI
A 2021 STI scheme has been established for executives and eligible employees. Under the newly established STI
scheme, executives and eligible employees receive 60% of the annual STI achieved in cash, and 40% in the form of
rights to shares of the Company. To date, allocation of Deferred Share Rights has only occurred for the CEO in
relation to the 2020 performance year as approved by the shareholders at the AGM on 6 May 2021. The rights are
granted in the following year, with 50% of the Deferred Share Rights vesting after one year from the grant date, and
the remaining 50% of the Deferred Share Rights vesting after two years from the grant date. They automatically
convert into one ordinary share each on vesting at an exercise price of nil. The executives and eligible employees do
not receive any dividends and are not entitled to vote in relation to the Deferred Share Rights during the vesting
period. If any executive or eligible employee ceases to be employed by the Group within this period, the rights will be
forfeited, except in special circumstances (including redundancy, retirement, death or total and permanent disability or
as otherwise agreed by the Board).
Page 132 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 25. Share-based payments continued
The fair value of the Deferred Share Rights at grant date for the 2021 STI plan was estimated at $5.43 by taking the
market price of the company’s shares less the present value of expected dividends that will not be received by the
executives on their rights during the vesting period. The fair value of the Deferred Share Rights at grant date for the
2020 STI plan was $4.80.
GRANT DATE
PLAN
VESTING DATE EXPIRY DATE
6-May-21
6-May-21
STI 2020
31-Mar-22
STI 2020
31-Mar-23
31-Mar-23
31-Mar-24
FAIR VALUE PER SHARE
NUMBER OF SHARE
RIGHT AT GRANT DATE RIGHTS AT GRANT DATE
$4.80
$4.80
27,355
27,354
Weighted average remaining contractual life of all performance share rights outstanding at end of period is 0.75 years.
The fair value of the Deferred Share Rights at grant date was estimated as in the above table by taking the market
price of the company’s shares on that date less the present value of expected dividends that will not be received by
the executives on their rights during the two-year vesting period.
Note 26. Commitments
(a) Capital commitments
Commitments for the acquisition of property, plant and equipment contracted for at the reporting date but not
recognised as liabilities:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
(b) Other commitments
2021
$m
313
6
4
323
2020
$m
346
20
-
366
Commitments for payment of information technology, network support services, and sponsorships under contracts in
existence at the reporting date but not recognised as liabilities:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
2021
$m
121
63
34
218
2020
$m
108
96
72
276
Page 133 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 27. Parent entity financial information
Investments in subsidiaries by the Company are accounted for at cost. The financial information for the Company has
been prepared on the same basis as the consolidated financial statements.
The parent entity financial information for the year ended 31 December 2021 has been prepared on the basis that the
transactions and balances of the Group are all recorded in the Parent Entity of the Group, being TPG Telecom Limited.
TPG Telecom Limited and its wholly-owned subsidiary Australian controlled entities have implemented the tax
consolidation legislation.
The head entity, TPG Telecom Limited, and the controlled entities in the tax consolidated group account for their own
current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group
continues to be a stand-alone taxpayer in its own right.
In addition to its own current and deferred tax amounts, TPG Telecom Limited also recognises the current tax
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate
TPG Telecom Limited for any current tax payable assumed and are compensated by TPG Telecom Limited for any
current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred
to TPG Telecom Limited under the tax consolidation legislation. The funding amounts are determined by reference to
the amounts recognised in the wholly-owned entities' financial statements.
(a) Summary financial information
Financial position
Assets
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Cash flow hedge reserve
Pre-merger accumulated losses
Post-merger retained earnings
Total equity
Financial performance
Profit for the year
Total comprehensive profit for the year
Page 134 | TPG Telecom Annual Report 2021
2021
$m
2020
$m
2,178
16,465
18,643
1,416
4,542
5,958
3,301
17,253
20,554
2,798
5,348
8,146
12,685
12,408
18,399
18,399
3
(7,389)
1,672
2
(7,389)
1,396
12,685
12,408
564
565
1,187
1,183
Notes to the Consolidated Financial Statements continued
Note 27. Parent entity financial information continued
(b) Guarantees entered into by the parent entity
Unsecured
(c) Capital commitments
2021
$m
10
10
2020
$m
6
6
Commitments for the acquisition of property, plant and equipment contracted for at the reporting date but not
recognised as liabilities:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
(d) Other commitments
2021
$m
313
6
4
323
2020
$m
272
20
-
292
Commitments for payment of information technology, network support services, and sponsorships under contracts in
existence at the reporting date but not recognised as liabilities:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
2021
$m
121
63
34
218
2020
$m
103
88
67
258
Page 135 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 28. Deed of cross guarantee
The parties to the deed of cross guarantee are those as disclosed in Note 13. Each entity that is a party to the deed of
cross guarantee has guaranteed the debts of the other parties. By entering into the deed, each of the wholly-owned
entities that would otherwise be subject to the requirement to prepare a financial report and director’s report have
been relieved from that requirement under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
Set out below is the summarised consolidated statement of profit or loss and other comprehensive income for the
entities that are parties to the deed of cross guarantee.
Revenue from contracts with customers
Other income
Cost of provision of telecommunication services
Cost of handsets and hardware sold
Employee benefits expense
Other operating expenses
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation expense
Results from operating activities
Finance income
Finance expenses
Net financing costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit for the year
Items that may subsequently be reclassified to the income statement, net of tax:
Foreign exchange translation differences
Net gain on cash flow hedges taken to equity
Items that will not subsequently be reclassified to the income statement, net of tax:
Net change in fair value of assets measured through other comprehensive income
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
2021
$m
5,274
45
2020
$m
4,322
15
(1,963)
(1,351)
(891)
(360)
(370)
(881)
(299)
(402)
1,735
1,404
(1,417)
(1,183)
318
1
(150)
(149)
169
(49)
221
3
(292)
(289)
(68)
821
120
753
-
1
-
1
-
3
-
3
121
756
Page 136 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 28. Deed of cross guarantee continued
Set out below is the consolidated statement of financial position for the deed of cross guarantee.
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Prepayments
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Prepayments
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Lease liabilities
Provisions
Derivative financial instruments
Other current liabilities
Total current liabilities
Non-current liabilities
Contract liabilities
Borrowings
Lease liabilities
Provisions
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
Page 137 | TPG Telecom Annual Report 2021
2021
$m
2020
$m
200
461
95
-
58
814
203
3,311
1,294
117
614
51
-
74
856
109
3,195
1,012
13,075
13,359
262
27
18,172
18,986
264
28
17,967
18,823
909
281
-
61
108
-
99
924
271
-
92
82
1
80
1,458
1,450
17
4,290
1,359
62
73
5,801
7,259
25
4,330
1,051
64
6
5,476
6,926
11,727
11,897
18,399
18,399
5
2
(6,677)
(6,504)
11,727
11,897
Notes to the Consolidated Financial Statements continued
Note 29. Financial risk management
The Group’s activities are exposed to a variety of financial risks which include market risk (including interest rate risk
and foreign currency risk), credit risk and liquidity risk. The Group’s overall risk management seeks to minimise the
potential adverse effects of these risks on the financial performance of the Group.
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.
(a) 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.
(i)
Interest rate risk
The Group has cash balances placed with reputable banks and financial institutions which generate interest income
for the Group. The Group manages its interest rate risks on its interest income by placing the cash balances on
varying maturities and interest rate terms. Based on the closing cash balance, an increase in interest rates of 50 basis
points on the unhedged position (mostly cash and cash equivalents) will generate a profit of $1.0 million to the profit
or loss, a similar decrease in interest rates will generate a $1.0 million loss to the profit or loss.
The Group’s borrowings include bank borrowings and leases. The borrowings expose the Group to interest rate risk.
As at 31 December 2021, approximately 25% (2020: 21%) of the Group’s borrowings were at fixed rates of interest
(0% of borrowings were at fixed rates, when excluding leases under AASB 16). As at 31 December 2021, assuming
that the market interest rate is 50 basis points higher or lower and with no change in other variables, the annualised
interest expense on borrowings would be higher or lower by $21.5 million (2020: $21.7 million).
As at the end of the reporting period, the Group had the following variable rate borrowings and interest rate swap
contracts outstanding:
2021
2020
WEIGHTED
AVERAGE
INTEREST RATE
%
PERCENTAGE
OF TOTAL
LOANS
%
BALANCE
$m
WEIGHTED
AVERAGE
INTEREST RATE BALANCE
$m
%
PERCENTAGE
OF TOTAL
LOANS
%
1.43
4,290
-
4,290
100
100
2.08
4,330
-
4,330
100
100
Bank overdrafts
and bank loans
Net exposure to
interest rate risk
Page 138 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 29. Financial risk management continued
(ii) Foreign currency risk
The Group is exposed to currency risk on revenues, expenses, receivables and payables that are denominated in a
currency other than its functional currency, the Australian dollar (AUD). The Group is mainly exposed to the United
States Dollar (USD), Philippine Peso (PHP), South African Rand (ZAR), Indian Rupee (INR), with minor exposures to
other currencies. The following table details the Group’s sensitivity to movements in the Australian dollar against
relevant foreign currencies. The percentages disclosed below represent changes in spot foreign exchange rates (i.e.
forward exchange points and discount factors have been kept constant). The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a given
percentage change in foreign exchange rates. A positive number indicates a before-tax increase in profit and equity
and a negative number indicates a before-tax decrease in profit and equity.
USD impact
10%
(10%)
INR impacts
10%
(10%)
PHP impacts
10%
(10%)
PROFIT/(LOSS)1
EQUITY2
2021
$m
2020
$m
2021
$m
2020
$m
1
(1)
(1)
1
-
-
-
-
-
-
-
-
(2)
3
(2)
3
(1)
1
(2)
3
(2)
3
-
-
1. Profit/(loss): this is mainly as a result of the changes in the value of forward foreign exchange contracts not designated in a hedge relationship,
foreign currency investments, receivables and payables.
2. Equity: this is as a result of the changes in the value of forward foreign exchange contracts designated as cash flow hedges.
Amounts recognised in the Consolidated Income Statement and Consolidated Statement of Comprehensive Income
During the year, the following foreign exchange related amounts were recognised in consolidated income statement
and consolidated statement of comprehensive income:
Profit or loss
Net loss on foreign currency derivatives
Exchange gain on foreign currency borrowings
Other foreign exchange (loss)/gain
Other comprehensive income
Movement in reserves
(iii) Equity price risk
2021
$m
2020
$m
-
-
(1)
(1)
(97)
97
1
1
1
(1)
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.
Page 139 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 29. Financial risk management continued
(b) Credit risk
Credit risk is managed on an entity basis. Credit risk arises from cash and cash equivalents, deposits with banks and
financial institutions, as well as credit exposures to related parties. The Group has adopted a policy of only dealing
with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults.
(i)
Impairment of financial assets (trade receivables)
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all receivables. To measure the expected credit losses, trade receivables have been
grouped based on shared credit risk characteristics and the days past due.
At 31 December 2021
Expected loss rate
Gross trade receivables
Loss allowance
At 31 December 2020
Expected loss rate
Gross trade receivables
Loss allowance
%
$m
$m
%
$m
$m
1-30
DAYS
PAST DUE
31 TO 60
DAYS
PAST DUE
61 TO 90 MORE THAN
91 DAYS
PAST DUE
DAYS
PAST DUE
TOTAL
CURRENT
5.8
151
9
9.5
169
16
9.0
38
3
6.7
45
3
23.0
37.9
6
1
2
1
25.0
25.0
8
2
4
1
79.3
7
6
75.0
20
15
204
20
246
37
The table above covers the expected credit loss rate of trade receivables and other debtors. Collectability of
receivables are reviewed on an ongoing basis. The Group applies the AASB 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss allowance for all receivables. To measure the expected
credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due.
Geographically, the Group is subject to a concentration of credit risk as predominantly all of its revenue is generated
in Australia.
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Prudent
liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the support from related parties.
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity
profiles of financial assets and liabilities. Treasury aims at maintaining flexibility in funding by keeping committed
credit lines available with a variety of counterparties. Surplus funds are generally only invested in instruments that are
tradeable in highly liquid markets.
Page 140 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 29. Financial risk management continued
Contractual maturities of financial liabilities
The contractual maturities of the Group’s financial liabilities were as follows:
FINANCIAL
LIABILITIES
At 31 December 2021
Trade and other
payables
Borrowings
Lease liabilities
At 31 December 2020
Trade and other
payables
Borrowings
Lease liabilities
LESS THAN
6-12 BETWEEN BETWEEN
6 MONTHS MONTHS 1-2 YEARS 2-5 YEARS
$m
$m
$m
$m
TOTAL CARRYING
OVER CONTRACTUAL AMOUNT OF
CASH FLOWS LIABILITIES
$m
5 YEARS
$m
$m
1,118
34
87
-
39
83
1,239
122
927
58
88
1,073
–
49
86
135
-
75
162
237
–
104
165
269
-
4,383
427
4,810
–
4,465
429
4,894
-
-
1,280
1,280
–
-
904
904
1,118
4,531
2,039
7,688
927
4,676
1,672
7,275
1,118
4,290
1,420
6,828
927
4,330
1,143
6,400
(d) Fair value measurement
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction in the principal market at the measurement date under current market conditions. Fair value is an exit price
regardless of whether that price is directly observable or estimated using another valuation technique.
Specific valuation techniques used to value financial instruments include:
•
•
•
the use of quoted market prices or dealer quotes for similar instruments;
the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance
sheet date; and
the fair value of the remaining financial instruments is determined using discounted cash flow analysis.
The following table summarises information on how the fair values of financial assets and financial liabilities measured
at fair value are determined.
DESCRIPTION
UNOBSERVABLE INPUTS
Forward foreign exchange
contracts
Discounted cash flow. Future cash flows are estimated based on forward exchange rates
(from observable forward exchange rates at the end of the reporting period) and contract
forward rates, discounted by the observable yield curves of the respective currency.
Handset and accessories
receivables
Discounted cash flow. Future cash flows are estimated based on implicit interest rate on
handset receivable sale arrangements to external parties.
Page 141 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 29. Financial risk management continued
(e) Fair value hierarchy
To provide an indication about the reliability of the inputs used in determining fair value, the Group classifies its
financial instruments into the three levels prescribed under the accounting standards.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivative, and trading
and available-for-sale securities) is based on quoted (unadjusted) market prices at the end of the reporting
period. The quoted market price used for financial assets held by the Group is the current bid price. These
instruments are included in Level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques. These valuation techniques maximise the use of
observable market data where it is available and rely as little as possible on entity specific estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in
Level 3. This is the case for unlisted equity securities.
The following table presents the Group’s financial assets and financial liabilities measured and recognised at fair value
at 31 December 2021 and 31 December 2020 on a recurring basis:
At 31 December 2021
Financial assets
Handset and accessories receivables
Financial liabilities
Forward foreign exchange contracts
At 31 December 2020
Financial assets
Handset and accessories receivables
Financial liabilities
Forward foreign exchange contracts
LEVEL 1
$m
LEVEL 2
$m
LEVEL 3
$m
TOTAL
$m
-
-
-
-
-
-
-
130
130
-
-
153
153
1
-
1
Page 142 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 29. Financial risk management continued
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the
reporting period. There were no transfers between levels during the period.
The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 31
December 2021 (2020: nil).
Valuation techniques used to determine fair values
The fair value of foreign cross currency swap contract derivatives is determined using Bloomberg valuations at the
balance sheet date.
Foreign currency forward contracts are measured based on observable spot exchange rates, the yield curves of the
respective currencies as well as the currency basis spreads between the respective currencies.
The fair value of handset receivables is determined using the implicit interest rate on handset receivable sale
arrangements to external parties at the balance date.
(f) 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 the 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 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 to the Group’s capital management during the year.
The Group’s net debt to equity ratio at the reporting date was as follows:
Cash and cash equivalents
Borrowings (current)
Borrowings (non-current)
Lease liabilities (current)
Lease liabilities (non-current)
Derivative financial instruments
Net debt
Total equity
Net debt to equity ratio at 31 December
2021
$m
202
-
2020
$m
120
–
(4,290)
(4,330)
(61)
(92)
(1,359)
(1,051)
-
(1)
(5,508)
(5,354)
11,718
11,892
0.47
0.45
Page 143 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 30. Auditor’s remuneration
The Group’s external auditor is PricewaterhouseCoopers (PwC). In addition to the audit and review of the Group’s
financial reports, PwC provides other services throughout the year. This note shows the total fees to external auditors
split between audit, audit related and non-audit services.
Audit and other assurance services
Audit and review of financial statements*
Other statutory assurance services
Other assurance services
2021
$’000
2020
$’000
2,138
2,228
17
56
25
128
2,211
2,381
*The comparative has been updated for additional prior period audit fee expensed during the current period.
Note 31. Events occurring after the reporting period
Other than the below mentioned matters, there have been no other matter or circumstance that has arisen after the
reporting date that has significantly affected, or may significantly affect:
(i)
the operations of the Company and of the Group in future financial years, or
(ii) the results of those operations in future financial years, or
(iii) the state of affairs of the Company and of the Group in future financial years.
COVID Pandemic
Since the reporting date, the COVID pandemic continues to persist and containment policies by the Australian
Government and governments around the world remain in force to prevent the spread of COVID. The level of
restrictions and measures to limit movement into and out of Australia, and also domestically, is ongoing, and
continues to impact inbound related connections, visitor revenue and international roaming revenues. While there is
prevailing uncertainty of the extent and duration of the COVID pandemic, it is reasonably likely that the pandemic will
continue to have an impact on the Group’s operations and results in future periods.
Tower sale
The strategic review of the Towers portfolio announced on 20 August 2021 is nearing completion as TPG continues to
assess market conditions, potential bidder appetite and the relative strategic benefits of retaining or divesting the
assets. While the benefits of retaining and divesting are still being assessed, TPG anticipates any potential sale
process from the strategic review would occur and complete during FY22.
Page 144 | TPG Telecom Annual Report 2021
Notes to the Consolidated Financial Statements continued
Note 31. Events occurring after the reporting period continued
Announcement of regional MOCN agreement with Telstra
On 21 February 2022 TPG announced a regional Multi-Operator Core Network (MOCN) agreement with Telstra (ASX:
TLS) which will provide TPG Telecom group’s subscribers with 4G and 5G coverage for data, calls and messaging
from over 3,700 Telstra sites in regional and rural Australia.
The network sharing agreement will significantly expand TPG Telecom’s mobile network footprint through an increase
in regional sites.
Under the terms of the arrangements:
•
•
TPG Telecom will have access to over 3,700 Telstra 4G and 5G mobile sites in regional Australia, with
customer traffic to continue to be managed through TPG Telecom’s core network.
TPG Telecom will provide Telstra with access to some of its existing 4G and 5G spectrum to use in the
regional network.
The MOCN is expected to be available to TPG customers by the end of the year.
TPG Telecom will continue to operate its own 3G, 4G and 5G networks to cover metropolitan areas. After the regional
MOCN is operational, TPG Telecom will decommission its remaining regional mobile sites, reducing environmental
impact, energy consumption, operating costs and future capex. The decommissioning is expected to take up to two
years to complete from operational implementation.
Subject to finalisation of the ACCC approval, TPG Telecom will recognise one-off, non-cash accounting impacts in its
2022 financial results arising from the decommissioning of sites as follows: the recognition of onerous lease related
charges of up to $150 million, and a write-down to the value of network infrastructure assets of up to $75 million. In
addition, site decommissioning costs are expected to be up to $50 million.
Dividends declared
The Board of directors have declared a fully franked final FY21 dividend of 8.5 cents per share on 24 February 2022.
As the final dividend was not declared or resolved to be paid by the Board of directors as at 31 December 2021, the
dividend has not been provided for in the Consolidated Statement of Financial Position. The dividend has a record
date of 16 March 2022 and will be paid on 13 April 2022. All dividends declared or paid were fully franked at the tax
rate of 30%. 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 $68 million (2020: nil).
Page 145 | TPG Telecom Annual Report 2021
Directors’ Declaration
In the Directors’ opinion:
(a) the financial statements and notes are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulation 2001 and other mandatory professional
reporting requirements, and
(ii) giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its performance for
the financial year ended on that date, 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, and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed
group identified in Note 13 will be able to meet any obligations or liabilities to which they are, or may become,
subject by virtue of the deed of cross guarantee described in Notes 13 and 28.
Note 2 confirms that the financial statements also comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and the Chief Financial Officer as
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Fok Kin Ning, Canning
Chairman
24 February 2022
Iñaki Berroeta
Chief Executive Officer and Managing Director
24 February 2022
Page 146 | TPG Telecom Annual Report 2021
Independent Auditor’s Report
Independent auditor's report
To the members ofTPG Telecom Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report ofTPG Telecom Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001,
including:
(a) giving a true and fair view of the Group's financial position as at 31 December 2021 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
•
the consolidated statement of financial position as at 31 December 2021
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated income statement for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors' declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Audito,·'s responsibilities for the audit of the financial
,·eport section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporntions Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board's APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61282669999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Page 147 | TPG Telecom Annual Report 2021
Independent Auditor’s Report continued
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
Materiality
Audit scope
For the purpose of our audit we used overall
Group materiality of $43m, which represents
approximately 2.5% of the Group's earnings
before interest, tax, depreciation and
amortisation (EBITDA).
We applied this threshold, together with
qualitative considerations, to determine the scope
of our audit and the nature, timing and extent of
our audit procedures and to evaluate the effect of
misstatements on the financial report as a whole.
We chose Group earnings before interest, tax,
depreciation and amortisation because, in our
view, it is the benchmark against which the
performance of the Group is most commonly
measured.
We utilised a 2.5% threshold based on our
professional judgement, noting it is within the
range of commonly acceptable thresholds.
Our audit focused on where the Group made
subjective judgements; for example, significant
accounting estimates involving assumptions and
inherently uncertain future events.
The Group operates across two operating
segments, being Consumer and Corporate, with
its head office functions based in Sydney,
Australia.
We tailored the scope of our audit to ensure that
we performed enough work to be able to give an
opinion on the financial report as a whole, taking
into account the management structure of the
Group, its accounting processes and controls and
its industry in which it operates.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
Page 148 | TPG Telecom Annual Report 2021
Independent Auditor’s Report continued
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Committee.
Key audit matter
How our audit addressed the key audit matter
Revenue from contracts with customers
(Refer to note 4) $5,293m
Revenue from contracts with customers was a key
audit matter given the:
magnitude of the balance
•
•
number of different revenue streams and
types of variable consideration given the
diversity of products and services
complexity of the contractual arrangements
in telecommunication services
We have also focussed on revenue recognition as the
Group uses complex manual calculations, dependent
on information from multiple billing systems, to
determine the timing of revenue recognition and the
value of contract liabilities for the relevant financial
period for each revenue stream.
We assessed the Group's accounting policy in light of
the requirements of Australian Accounting Standards
and developed an understanding of the key terms of
the arrangements with customers and performance
obligations.
Our procedures included, amongst others:
•
testing on a sample basis whether revenue
had been recorded at the correct amount and
in the correct period, in accordance with the
Group's revenue recognition policy. This
included assessing whether:
o
o
o
o
evidence of an underlying
arrangement with the customer
existed
appropriate performance
obligations and consideration had
been identified
amounts allocated to the
pe1formance obligations were made
with reference to their standalone
selling prices, where relevant
the timing of revenue recognition
had been appropriately considered
for each revenue stream in
accordance with its performance
obligations
We assessed the adequacy of the Group's disclosures
of revenue from contracts with customers in
accordance with Australian Accounting Standards.
Page 149 | TPG Telecom Annual Report 2021
Independent Auditor’s Report continued
Key audit matter
How our audit addressed the key audit matter
Carrying value of goodwill and indefinite
intangible assets
(Refer to note 16) $8,939m
life
The Group recognises assets for goodwill and
indefinite life intangible assets (brand names), which
are allocated to a cash generating unit (CGU). The
Group has two cash generating units for goodwill
which are Corporate and Consumer. Under Australian
Accounting Standards, the Group is required to assess
the canying value of goodwill and indefinite lived
intangible assets annually for impairment,
irrespective of whether there are indicators of
impairment.
Determination as to whether or not there is an
impairment relating to an asset in a CGU involves
significant judgment about the future cash flows and
plans for these assets and CG Us.
Forecasting of future cash flows requires estimation of
EBITDA, terminal growth rate, and discount rates.
The Group, in accordance with accounting standards,
has prepared a value-in-use model (VIU) for
impairment purposes. Given the sensitivity of the VIU
model to reasonable possible changes in key
assumptions, there is a risk that there could be
material impairment to goodwill and indefinite life
intangible assets.
The carrying value of goodwill and other indefinite life
intangible assets was a key audit matter given their
financial significance to the consolidated statement of
financial position and the judgement applied by the
Group in completing and concluding on the
impairment assessment.
We performed the following procedures, amongst
others:
•
•
•
developed an understanding of the key
controls associated with the identification of
impairment indicators and the preparation
of the discounted cash flow models used to
assess the recoverable amount of the Group's
CG Us (the VIU model)
evaluated the Group's methodologies and
their documented basis for significant
assumptions utilised in the value in use
(VIU) model
evaluated the Group's assessment of whether
there were any indicators of asset
impairment, by inspecting relevant indust1y
and broker reports and assessing the Group's
internal reporting and the long-range plan
tested the mathematical accuracy of the VIU
model's calculations
assessed whether the allocation of the
Group's goodwill and intangible assets into
CGUs, which are the smallest identifiable
groups of assets that can generate largely
independent cash inflows, was consistent
with our knowledge of the Group's
operations and internal Group reporting
assessed whether the CG Us included assets,
liabilities and cash flows directly attributable
to each CGU and a reasonable allocation of
corporate assets and overheads
considered if the VIU model used to estimate
the recoverable amount of the assets is
consistent with the requirements of
Australian Accounting Standards
compared the significant assumptions used
in the VIU model to historical results,
economic and industry forecasts
Page 150 | TPG Telecom Annual Report 2021
Independent Auditor’s Report continued
Key audit matter
How our audit addressed the key audit matter
•
•
•
•
compared the forecast cash flows used in the
VIU model to the most up-to-date budgets
and business plans formally approved by the
Board
evaluated the Group's historical ability to
forecast future cash flows by
o
o
comparing budgets with reported
actual results for the past year, and
actual cash flows for the previous
three years to forecast cash flows
and
evaluating the support available
from the Group for significant
differences in actual and forecast
cash flows
assessed the terminal value growth rates by
comparing to external information sources
with the assistance of PwC valuation experts
with the assistance of PwC valuation experts
we assessed whether the discount rate
appropriately reflected the risks of the CG Us
by comparing the discount rate assumptions
to market data, comparable companies and
industry research
assessed whether cash flows for periods
beyond those covered by formal plans
assumed a steady or declining growth rate
for cash flows
assessed the Group's consideration of
reasonable possible changes in significant
assumptions that would cause an
impairment
compared market capitalisation of the Group
to the Group's net assets
Assessed the reasonableness of the Group's
disclosures of impairment of goodwill and indefinite
life intangible assets in accordance with Australian
Accounting Standards.
Page 151 | TPG Telecom Annual Report 2021
Independent Auditor’s Report continued
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 31 December 2021, but does not include
the financial report and our auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor's report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities
for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content1o2/c3/an_2o2o.pdf.
our auditor's report.
This description forms part of
Page 152 | TPG Telecom Annual Report 2021
Independent Auditor’s Report continued
pwc
Report on the remuneration
report
Our opinion on the remuneration
report
We have audited the remuneration report included in pages 32 to 70 of the directors' report for the
year ended 31 December 2021.
In our opinion, the remuneration report ofTPG Telecom Limited for the year ended 31 December 2021
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
S Prakash
Partner
Sydney
24 February 2022
Page 153 | TPG Telecom Annual Report 2021
ASX Additional Information
for the year ended 31 December 2021
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 8 February 2022. As at that date, there were
1,859,341,669 ordinary shares held by 23,343 shareholders.
Substantial shareholders
The number of shares in which the substantial shareholders and their associates have disclosed a Relevant Interest
pursuant to the Corporations Act 2001 Section 671B are listed below.
NAME OF SHAREHOLDER
CK Hutchison Holdings Limited and its subsidiaries1
Vodafone Group Plc and its subsidiaries1
Vodafone Hutchison (Australia) Holdings Pty Ltd1
Li Ka-Shing Unity Trustee Company Limited as trustee of
The Li Ka-Shing Unity Trust2
David Teoh and Vicky Teoh and their associates
Washington H Soul Pattinson and Company Limited
Brickworks Limited3
NUMBER OF ORDINARY SHARES IN
WHICH A RELEVANT INTEREST IS HELD*
% OF ISSUED
CAPITAL
1,186,182,662
1,186,182,662
1,186,182,662
63.80%
63.80%
63.80%
931,530,176
50.10%
264,121,325
234,396,121
234,396,121
14.21%
12.61%
12.61%
* Relevant Interest as defined in the Corporations Act 2001 Sections 608 and 609, and provided in the above-referenced notices.
1. Substantial holding for each of these substantial holders includes 13.70% from a deemed relevant interest in shares of David Teoh and Vicky Teoh
and their associates which are the subject of a Voluntary Escrow Deed. None of the substantial holders have any control over that 13.70%.
Substantial holding also includes 25.05% from a deemed relevant interest arising from a shareholders agreement dated 24 June 2020. For further
details, see Form 604s lodged with the ASX on 15 July 2020.
2. Substantial holding arises from its interests in CK Hutchison Holdings Limited. The interests disclosed for this substantial holder are in respect of the
same shares identified as being interests of CK Hutchison Holdings Limited. For further details see Form 604 lodged with the ASX on 15 July 2020.
3. Brickworks Limited’s substantial holding in the company arises by virtue of its holding a 39.4% interest in Washington H Soul Pattinson and Company
Limited. For further details see Form 604 lodged with the ASX on 17 July 2020.
Number of restricted securities subject to voluntary escrow
NUMBER OF RESTRICTED SECURITIES SUBJECT TO VOLUNTARY ESCROW
DATE ESCROW PERIOD ENDS
1,186,182,662 ordinary shares
12 July 2022
Distribution of equity security holders
An analysis of the number of shareholders by size of holding as at 8 February 2022 is set out below:
NUMBER OF SHARES HELD
NUMBER OF HOLDERS
UNITS
% UNITS
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
12,632
7,741
1,570
1,281
119
5,105,499
18,905,879
11,498,466
30,988,687
1,792,843,138
23,343
1,859,341,669
0.27
1.02
0.62
1.67
96.42
100.00
The number of shareholders holding less than a marketable parcel of ordinary shares is 1,519.
Unquoted equity securities
As at 8 February 2022, the number of unquoted equity securities is:
Performance Rights
Deferred Share Rights
1,160,407
54,709
13 holders
1 holder
Page 154 | TPG Telecom Annual Report 2021
ASX additional information continued
Twenty largest shareholders (as at 8 February 2022)
NAME OF SHAREHOLDER
VODAFONE HUTCHISON (AUSTRALIA) HOLDINGS LIMITED
WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED
HUTCHISON 3G AUSTRALIA HOLDINGS PTY LIMITED
VODAFONE OCEANIA LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
TSH HOLDINGS PTY LTD
VICTORIA HOLDINGS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
VICTORIA HOLDINGS NO 3 PTY LTD
VICTORIA HOLDINGS NO 1 PTY LTD
VICTORIA HOLDINGS NO 2 PTY LTD
BNP PARIBAS NOMS PTY LTD
J S MILLNER HOLDINGS PTY LIMITED
TSH HOLDINGS NO 1 PTY LTD
TSH HOLDINGS NO 2 PTY LTD
FARJOY PTY LTD
BKI INVESTMENT COMPANY LIMITED
Voting rights (ordinary shares)
NUMBER OF ORDINARY
SHARES HELD
% OF CAPITAL
HELD
517,345,024
207,596,121
207,092,576
207,092,576
132,615,978
110,778,498
109,154,913
71,769,789
57,366,756
27,079,950
18,124,761
12,625,118
9,468,839
9,468,839
9,246,110
7,120,199
6,312,559
6,312,559
6,254,236
5,511,066
27.82
11.17
11.14
11.14
7.13
5.96
5.87
3.86
3.09
1.46
0.97
0.68
0.51
0.51
0.50
0.38
0.34
0.34
0.34
0.30
1,738,336,467
93.29
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 TPG.
Other information
TPG Telecom Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.
Principal Registered Office
Share Registry
Level 1, 177 Pacific Highway
North Sydney NSW 2060
Telephone: 133121
Email: investor.relations@tpgtelecom.com.au
Website: www.tpgtelecom.com.au
Computershare Investor Services Pty Ltd
Level 3, 60 Carrington Street
Sydney NSW 2000
Telephone:
(within Australia) 1300 850 505
(international) +61 3 9415 4000
www.investorcentre.com/au
Page 155 | TPG Telecom Annual Report 2021
A large font version of this annual report will be published on TPG Telecom’s website and made available to
shareholders on request
Confidential