Hutchison Telecommunications Aus : Preliminary Final Report

Hutchison Telecommunications (Australia) Limited

ABN 15 003 677 227

Level 1, 177 Pacific Highway North Sydney, NSW 2060

Tel: [phone] Fax: [phone]www.hutchison.com.au

ASX Market Announcements

Australian Securities Exchange

Date: 27 February 2019

Subject: Preliminary Final 2018 Annual Results

Please find attached the Company's results for the year to 31 December 2018 in the form of Appendix 4E, together with the audit report referred to in the Appendix 4E.

The Annual General Meeting of the Company will be held at 10 am on 2 May 2019.

Yours faithfully

Louise Sexton Company Secretary

Preliminary Final Report

Hutchison Telecommunications (Australia) Limited

Appendix 4E

Preliminary final report

for the year ended 31 December 2018

Hutchison Telecommunications (Australia) Limited

ABN 15 003 677 227

ASX Appendix 4E

Preliminary final report

31 December 2018

Contents

Results for announcement to the market ........................................................................................................... 3

Review of HTAL's results ............................................................................................................................ 4

VHA Performance ......................................................................................................................................... 5

Outlook ........................................................................................................................................................... 7

VHA financial and operating metrics .............................................................................................................. 8

Consolidated statement of profit or loss and other comprehensive income ............................................ 9

Consolidated statement of financial position .............................................................................................. 10

Consolidated statement of changes in equity ............................................................................................. 11

Consolidated statement of cash flows ......................................................................................................... 12

Notes to the consolidated financial statements .......................................................................................... 13

Note 1 - Summary of significant Accounting policies ........................................................................... 13

Note 2 - Changes in Accounting policies ............................................................................................... 23

Note 3 - Earnings per share ..................................................................................................................... 26

Note 4 - Operating segment ..................................................................................................................... 27

Supplementary Appendix 4E information .................................................................................................... 28

Lodged with the ASX under Listing Rule 4.3A.

These preliminary financial statements do not include all the notes of the type normally included in an annual financial report. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 31 December 2018 and any public announcements made by Hutchison Telecommunications (Australia) Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

Hutchison Telecommunications (Australia) Limited Year ended 31 December 2018

Results for announcement to the market

Hutchison Telecommunications (Australia) Limited ("HTAL") reports a $4.5 million profit for the year ended 31 December 2018, compared with a loss of $37.6 million in the prior year. HTAL's share of Vodafone Hutchison Australia Pty Limited's ("VHA") net loss included in HTAL's results for the year was $5.0 million for the year ended 31 December 2018 compared with a net loss of $42.5 million in 2017.

HTAL's revenue from ordinary activities represents interest income received on loans to VHA and increased from $6.2 million in 2017 to $10.6 million for the year ended 31 December 2018. The significant growth in revenue is primarily driven by a full 12 months of interest on the June 2017 drawdown of $200 million and an additional March 2018 drawdown of $40 million. However, this will be a non-recurring uplift as the overall loan balance has been reduced with a loan repayment of $115 million during December 2018.

Dec 18 $'000

Dec 17 $'000

Movement $'000

Movement %

Profit / (loss) from ordinary activities after tax attributable to members

4,475

(37,557)

42,032

111.9%

Dividends / distributions

Amount per securityFranked amount per security

Final dividend

Nil

Nil

Interim dividend

Nil

NilRecord date for determining entitlements to the dividend

n/a

Review of HTAL's results

HTAL accounts for its investment in VHA using the equity method of accounting. Under this method, revenue from VHA's ordinary activities is not included in HTAL's consolidated revenues from ordinary activities.

In 2018, VHA achieved modest financial growth in an intense competitive environment and despite the need for ongoing significant investment to maintain, enhance and evolve its networks, products and customer service.

With strong support from CK Hutchison Holdings Limited and its joint shareholder Vodafone Group Plc, VHA has again produced a stable financial performance, while maintaining its position as a price leader and achieving market-leading customer sentiment.

Key 2018 achievements and highlights:

•  Reached six million mobile customers;

•  Full launch of fixed broadband services on the National Broadband Network;

•  Continued significant investment in network and technology, including evolution to 5G;

•  Introduced Australia's first widely-available endless data plans;

•  Expanded $5 Roaming to more than 80 countries;

•  Leading Net Promoter Score (NPS) and lowest rate of customer complaints to the Telecommunications Industry Ombudsman of the Mobile Network Operators;

•  Announced proposed merger with TPG Telecom Ltd ("TPG Telecom") to become a leading full-service telecommunications company in Australia and a more effective challenger to the dominant carriers in the market; and

•  Acquired 5G spectrum through Mobile JV Pty Ltd, its spectrum joint venture with TPG Telecom.

2018 financial results

VHA's 2018 financial performance was in line with expectations, given aggressive competition among the major Mobile Network Operators over recent years and increased capital investments required to maintain and evolve mobile telecommunications networks.

HTAL's share of VHA total revenue increased 5.5% to $1,823.4 million from $1,729.0 million, driven by growth in VHA's customer base and higher device sales. In a direct year on year comparison, without the AASB 15 accounting change, HTAL's share of VHA total reported revenue would have been $1,845.7 million, a 6.8% increase.

HTAL's share of VHA's EBITDA increased 13.4% YoY to $551.1 million from $485.9 million, driven by revenue growth, expenditure optimisation and non-recurring benefits of $33.5 million. In a direct year on year comparison, without the AASB 15 accounting change, HTAL's share of VHA total reported EBITDA would have been $543.5 million, an 11.8% increase.

In a year on year comparison using previous year calculation methodology, VHA ARPU (Average Revenue Per User) was $37.45, a decrease of 2.0% YoY from $38.23 due to ongoing competition among the major Mobile Network Operators and increased inclusions on VHA mobile plans. In the first half of 2018, non-Vodafone branded partners Kogan and Lebara were re-classified from MVNO to Pre-paid. With the inclusion of Kogan and Lebara customers, VHA ARPU on this basis was $35.52, a decrease of 4.4% YoY from $37.16.

The loss position improved with HTAL's share of VHA net loss declining 88.2% to $5.0 million, driven by the improvement in VHA's EBITDA partially offset by an increase in depreciation and amortisation expense.