Hutchison Telecommunications (Australia) Limited (HTA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the Hutchison Telecommunications (Australia) Limited 2024 Annual General Meeting. I would now like to hand over to the Chairman of the meeting. Please go ahead.

Thank you. Well, good morning, everyone. My name is Barry Roberts-Thomson, and I am Deputy Chairman of the Board and Chairman of this meeting. As permitted by the Corporations Act and the constitution of the company, the 2024 Annual General Meeting is being conducted as a hybrid meeting. The Board considered it prudent to hold the 2024 Annual General Meeting in this manner to ensure maximum shareholders participate in the meeting. Shareholders are able to submit direct votes or proxy votes and questions ahead of the meeting, and to attend the meeting live and ask questions in real time using an online webcast platform provided by the company's share registry, Link Market Services. I'm very pleased, therefore, to welcome all shareholders present physically at the meeting and those joining online today through the online webcast platform. Shareholders using the online platform by their personal desktops, laptops, smartphones and tablet devices will be able to listen to the meeting in real time and ask questions online during the meeting, as well as cast their votes on the resolutions as set out in the notice of the meeting. I also thank those shareholders who have lodged their voting instructions by their -- by the proxy forms in the manner as set out in the notice of the meeting. Well, with me in person are Justin Gardener, one of the Executive Director and Chairman of the Audit and Risk Community; Mr. Steven Allen, Director; Melissa Anastasiou, Non-Executive Director; Mr. John Scanlon, Non-Executive Director; and Swapna Keskar, our Joint Company Secretary. I'd also like to welcome our finance team; our legal advisers; and share registry; and Jason Hayes, from the company's auditor, PricewaterhouseCoopers, have joined the meeting in person; and Benjamin Ong to attend via the phone. I'd also like to introduce my fellow director, Mr. Cliff Woo, who is joining us via the phone from Hong Kong. The Joint Company Secretary has advised that there is a quorum present for the meeting. Therefore, I declare open the 2024 Annual General Meeting of the Shareholders. Now today, the agenda is as follows. I'll firstly present my address. We will then proceed with the formal business of the meeting and the 4 resolutions to be put to the meeting today. Ladies and gentlemen, I am pleased to provide you with an update of the 2023 performance and future plans of Hutchison Telecommunications (Australia) Limited and its controlled entity here and below referred to as the group. HTAL's principal activity remains its investment in TPG Telecom Limited. HTAL has a 25.05% equity interest in TPG. This comprises 11.14% interest directly held by HTAL's wholly-owned subsidiary, Hutchison 3G Australia Holdings Pty Limited, and an attributed 13.91% interest indirectly held by H3GAH through its 50% owned joint venture. Vodafone Hutchison (Australia) Holdings Limited, which has a direct 27.82% interest in TPG. Now the group reported a statutory net loss of $124 million for the year ended 31st September 2023 compared with a net loss of $398.4 million for the comparative year ended the 31st December 2022. This represented a $274.4 million decrease in net loss when compared to the year ended 31st of December 2022. This is because in the comparative year ended the 31st December 2022, the group recognized a one-off noncash impairment loss of $444.6 million on its 25.05% interest in TPG due to the carrying amount having exceeded the recoverable amount, which was determined by referencing indicative TPG share price plus a premium, reflecting our company's significant interest in TPG. However, in 2023, no further impairment has been recognized as the recoverable amount is judged to be in excess of the carrying amount of investments. HTAL's revenue represents interest income. For the year ended the 31st December 2023, revenue increased to $900,000 from $200,000 for the comparative year ended 31st December 2022. This was driven by the increase in interest rates as well as higher cash and cash equivalents during 2023. HTAL's operating expenses for the year ended 31st December 2023, increased to $1.8 million or $1.7 million for the comparative year ended 31st December 2022. Now for a summary of the -- from these financial results for 2023 and a comparison against the financial results for 2022, I refer shareholders to the Chairman's message in our 2023 Annual Report. For today's meeting, I note that the company's 2023 results include 123.1 million share of the net loss of the equity accounted investments in VHAH and TPG compared to a net profit in 2022. The 2023 net loss was chiefly due to the increase in the financing costs of VHAH's bank debt and at TPG to the increase in the financing costs of this bank debt and also its full year lease interest costs arising from the tower asset sale and leaseback transaction that TPG concluded in 2022. And a new tower lease agreement signed in 2023, which was partly offset by TPG's higher service revenue in 2023, but without the benefit of any one-off accounting gain from any one-off asset sales such as TPG had in 2022 upon the sale of its passives tower asset. H3GAH received dividend of $37.3 million from TPG during the year 2023. And in 2024, received further dividends of $18.6 million. Additionally, VHAH received dividends of $93.1 million from TPG during the year 2023. And in April 2024 received further dividends of $46.6 million. The Boards of HTAL and VHAH will review their respective financial positions to determine the use of these proceeds. TPG announced a total revenue of $5.533 billion earnings before interest, tax, depreciation and amortization; EBITDA of $1.875 billion; and a net profit after tax of $49 million for the year ended the 31st of December 2023, compared to $5.415 billion revenue; EBITDA of $2.135 billion and a profit of $513 million, respectively, for the year ended 31st December 2022. For further details and explanation of the TPG's results for the year ended December 2023, you may refer to TPG's 2023 Annual Report, which was lodged with the ASX on the 26th of February 2024. TPG also announced a recent signing of a regional network sharing arrangement with Optus. That will extend its service coverage to 98.4% of the Australian population over a greatly expanded geographic area. This is exciting news, and this will allow TPG to compete for more customers. Now to the outlook. As I mentioned, HTAL's financial position is directly impacted by TPG's financial position and the performance in the year ahead. HTAL remains committed to its principal activity, being its investment in TPG, and will continue to support TPG's businesses and strategies in the future. Take this opportunity to thank HTAL shareholders for their ongoing support and for joining the Annual General meeting, either in person or via the online platform. So the notice of the meeting was released and dispatched on the 28th of March 2024, and I propose to take the notice of meeting as read. Shareholders were also provided with a voting proxy form and an online platform guide providing instructions on how to ask questions and vote at this meeting through the online platform. We'll remind shareholders of this arrangement for questions and voting when we get to the formal business of the meeting. If you are attending today's meeting via the online platform and you lose connection to the meeting at any time, you can log back in to the online platform by returning to the meeting link specified in the notice of meeting and follow the prompts. You will then receive an automated e-mail with a recovery link for you to click on. Click on this link to reconnect to the meeting. Alternatively, please call our share registry, Link Market Services, for assistance. That number is printed at the bottom of the online platform guide. But before we move to the formal business of the meeting, I'll ask our Joint Company Secretary, Swapna, to explain some proceedings.

Thank you, Barry. In accordance with the company's current constitution and as set out in the notice of meeting, the Chairman has to remind that voting on each of the resolutions will be conducted by a poll. The poll for each resolution is now open and will close 5 minutes after all resolutions have been put to the meeting. The results of the poll will be released to the ASX and will be available on the company's website as soon as possible after the meeting. The working eligibility of shareholders is outlined in the notice. Shareholders who are attending via the online platform and who have neither exercised the direct vote before this meeting nor appointed a proxy or attorney or representative to vote on their behalf may cast a vote during this meeting using the electronic voting card received when you registered via the online platform. Similarly, proxy holders attending online can submit their electronic voting card received when they registered via the online platform. If you have any questions about casting your vote online, please refer to the online platform guide, which can be accessed from the linked section at the bottom right-hand side of your screen or call the help number 1 (800) 990-363 also shown on your screen. Shareholders and proxy holders who are attending the meeting in person today and who have not exercised their direct vote before this meeting should have received a yellow voting card on entry to the meeting. If you did not receive a yellow voting card, please contact the representatives of Link Market Services who are located at the registration desk just outside this room. Shareholders and proxy holders holding yellow voting cards will be invited to cast their votes on all resolutions by completing the voting cards and placing them in voting boxes. Representatives of Link Market Services will circulate the voting boxes after all resolutions have been discussed and before the poll closes. Before the vote is taken for each item, the resolution to be voted on, the direct votes and proxies for each or against the item will be displayed on the screen and will be shown on the webcast for those participating online. These figures were as at the closing time for receipt of direct votes and proxies at 10 a.m. on 1st of May 2024. If a shareholder submitted a proxy and attended the meeting today and revoked their proxy or if a shareholder has cast a direct vote before the meeting that has instructed the company or the registry before the commencement of the meeting that they wish to revoke their previously submitted direct votes, these numbers would have change. As set out in the notice of meeting, the Chairman will vote all directed proxies in accordance with the directions provided by shareholders and will vote all open proxies in favor of all resolutions. This includes proxy votes held by the Chairman, which will be voted in favor of Resolution 4 on the adoption of the remuneration report, unless specifically directed otherwise. In accordance with the Corporations Act, other than in relation to proxies granted to the Chairman, all directors and their closely related parties are not eligible to vote on this resolution and will abstain from voting. Shareholders and proxy holders who are present at the venue can ask questions in the usual way. Only shareholders and proxy holders holding yellow voting cards or blue nonvoting cards will be entitled to ask questions from the floor. Visitors holding red visitor attendance cards are not entitled to speak or vote at this meeting. [Operator Instructions] You can submit questions now or at any time prior to the vote on the relevant resolution, and they will be dealt with at the appropriate time. If you have a question already prepared, please submit it now so that as many questions as possible can be answered. Questions must relate to the relevant item of business. There will be an opportunity to ask general questions towards the end of the meeting. [Operator Instructions] All questions will go through to the Chairman and myself. The Chairman will read out the question and will either answer it or pass it to the most appropriate person. We reserve the right to rule out questions not relating to the meeting or out of order. We will also not answer questions that are the same or substantially similar to questions that have already been answered. Otherwise, we will endeavor to answer as many of the questions asked as we can. For each item of business, we will address questions from the floor first to allow as much time as possible for shareholders who wish to ask questions via the online platform or via the phone who submit these firsts. Shareholders may also ask questions of the company's auditor, PricewaterhouseCoopers, in relation to the conduct of the audit, the preparation and content of the audit report, accounting policies adopted by the company and the independence of the auditor in carrying out the audit. [Operator Instructions] Please note, however, that you will only be able to listen to the proceedings of the meeting and ask questions. You will not be able to cast your vote on the resolutions over the phone, and will not be included in a quorum. If you wish to vote during the meeting, you will still need to log in to the online platform. I will now hand over the proceedings of the AGM back to the Chairman of the meeting.

Well, thank you, Swapna. I will now move to the formal business of the meeting and the consideration of reports. We'll move first to the receipt and consideration of the financial report of the company for the year ended 31st December 2023 and the reports of the directors and auditors. Now no vote is required on this item of business. And a copy of the 2023 Annual Report has been made available on the company's website on the 28th of March 2024, and was sent to those shareholders who requested a copy. I will take the 2023 Annual Report as received and read. I will address any questions regarding the 2023 Annual Report at the end of the meeting. So move on to the resolutions. Resolution 1 is the reelection of Mr. Steven Paul Allen as a director. The first resolution of the meeting is the reelection of Steven Paul Allen as a director of the company. Steven's biography is set out in the notice of the meeting, and I know that each of the other directors supports Steven's reelection. I'll now address any questions regarding Steven's reelection as a director. Are there any questions from the floor? If there are no questions from the floor, I will now address any online or telephone questions relating to this resolution.

No.

Thank you. It appears there are no questions. I now put to the meeting Resolution 1. The direct votes and proxies received for this resolution are on the screen. Please record your vote on the yellow voting card that you are holding. If you wish to vote on Resolution 1 online using your electronic voting card and you have not already voted, please vote now. [Voting]

Thank you. Okay. Resolution 2 is the reelection of Mr. Justin Herbert Gardener as a Director. The second resolution of the meeting is the reelection of Justin Herbert Gardener as a Director of the company. Justin's biography is set out in the notice of the meeting. I note that each of the other directors supports Justin's reelection. I'll now address any questions regarding Justin's reelection as a director. Are there any questions from the floor? With no further questions from the floor, I now address any online or telephone questions relating to this resolution.

No.

Thank you. There appears no further questions. I now put to the meeting Resolution 2, the direct votes and proxies received for this resolution are on the screen. Please record your vote on the yellow voting card that you are holding. If you wish to vote on Resolution 2 online using your electronic voting card and you have not already voted, please vote now. [Voting]

Thank you. The Resolution #3 is the reelection of Mr. John Michael Scanlon as a Director. Resolution 3 relates to the election of John Michael Scanlon as a Director of the company. John's biography is set out in the notice of meeting. And I note that each of the other directors support John's reelection. I'll now address any questions regarding John's reelection as a director. Are there any questions from the floor? No questions from the floor. I'll now address any online or telephone questions? Thank you. It appears there are no further questions. I now put to meeting Resolution 3, the direct votes and proxies received for this resolution are on the screen. Please record your vote on the yellow voting card that you are holding. If you wish to vote on Resolution 3 online using your electronic voting card and you have not already voted, please vote now. Thank you. [Voting]

Resolution 4 is the adoption of the remuneration report. Now Resolution 4 relates to the adoption of the remuneration report, which is set out on Pages 16 to 19 of the 2023 Annual Report. Now the vote on this resolution is advisory only and is not binding. However, any discussion on this resolution and the outcome of the nonbinding vote will be taken into consideration by the Board. I remind you that as the company has no executives, this report only applies to the company's approach to the remuneration of the directors. I'll now address any questions regarding the adoption of the remuneration report for the financial year ended the 31st of December 2023. Any questions from the floor?

None.

I'll now address any online or telephone questions relating to this resolution?

Nothing.

If there are no questions. I now put to the meeting Resolution 4. The direct votes and proxies received for this resolution are on the screen. Please record your vote on the yellow voting card that you're holding. If you wish to vote on Resolution 4 online using your electronic voting card if you have not already voted, please vote now. [Voting]

So ladies and gentlemen, all the resolutions have been put to the meeting, and that concludes the voting on the resolutions of the meeting and the formal part of the meeting. The poll room remain open for a further 5 minutes. All shareholders attending the meeting online who have not already voted, such shareholders may lodge their online votes during that time. And shareholders will see a countdown time on the screen, which will tell them when the 5 minutes are over. After these 5 minutes are over, the poll will close. Shareholders will not be able to submit their vote after the countdown closes. For those voting shareholders and proxy holders present in person at the meeting ask that you please hand your yellow voting card to the Link Market Services staff who'll come around with ballot boxes to collect all voting cards. [Voting]

All right. Thank you for that. Right. The results of this meeting will be announced to the ASX as soon as the votes have been counted and verified. So that completes the full business of the meeting, and I'll now address some questions we have received from shareholders present either in person or online. But before that, as I said, I'll address some questions we have received from shareholders.

We have received questions as to whether the company will be paying dividends to shareholders. The Board has no current intention to pay any dividend. Instead, it is the Board's intention to apply any surplus cash to meet our share of any contributions to VHAH or the interest payments and any prepayments of VHAH's bank loan. In respect to the VHAH's debt repayment, the VHAH debt will mature in November 2026. The company will work with our fellow VHAH shareholders, Vodafone Group, on a repayment and/or refinancing plan as we approach the maturity date. We showed a slide earlier in the meeting regarding the group's shareholding in TPG. Were you able to put that up? A question has been raised regarding the company chart showed earlier. Our interest is split so that H3GAH holds 11.14% independency of the Vodafone Group. That allows us free to deal with this block of TPG shares as we wish and the Vodafone Hutchison (Australia) Holdings, which is effectively a finance vehicle that hold shares at TPG and use to facilitate its raising of debt and to provide with dividend incomes to service its bank debt. In regards to the share price, there's a question raised. Will that remains affected by general market conditions, the TPG share price and limited liquidity? So I'm happy to take any questions from the floor. Are there any questions from the floor? How about online? Is there a question online?

No. Not online.

No? Well, thank you, everyone. That concludes the meeting for today. Thank you for your participation. You may now disconnect if your online. I believe that we have answered all the questions. Before I close the meeting, are there any final questions that shareholders have? If there are any further queries, I encourage you to send them to our investor e-mail address, which is available on the company's website. So ladies and gentlemen, that concludes the business of the meeting. Thank you for your attendance and your continued support.

That does conclude the meeting for today. Thank you for participating. You may now disconnect.