HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) 2003-02-18 ASX-SIGNAL-G HOMEX - Sydney +++++++++++++++++++++++++ APPENDIX 4B HALF YEARLY/PRELIMINARY FINAL REPORT Name of entity Hutchison Telecommunications (Australia) Limited ACN, ARBN, ABN or ARSN Half Preliminary Half/Financial Year ended yearly final ('current period') (tick) (tick) 15 003 677 227 X 31/12/2002 FOR ANNOUNCEMENT TO THE MARKET AUD000 Extracts from this report for announcement to the market (see note 1). Revenues from ordinary activities (item 1.1) down 49.8% to 236,521 (Loss) from ordinary activities after tax attributable to members (item 1.22) up 44.0% to (197,326) Profit (loss) from extraordinary items after tax attributable to members (item 2.5(d)) gain/loss of -% to - Net (loss) for the period attributable to members (item 1.11) up 44.0% to (197,326) DIVIDENDS (DISTRIBUTIONS) AMOUNT PER SECURITY FRANKED AMOUNT (cents) PER SECURITY (cents) Final dividend (Preliminary final report only - item 15.4) Interim dividend (Half yearly report only - item 15.6) - - Previous corresponding period (Preliminary final report - item 15.5; half yearly report - item 15.7) - - Record date for determining entitlements to the dividend, (in the case of a trust, distribution) (see item 15.2) N/A Brief explanation of any of the figures reported above (see Note 1) and short details of any bonus or cash issue or other item(s) of importance not previously released to the market: - MORE TO FOLLOW HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) 2003-02-18 ASX-SIGNAL-G HOMEX - Sydney +++++++++++++++++++++++++ REVIEW OF OPERATIONS In the 12 months to 31 December 2002 the Australian mobile telecommunications market experienced a subdued environment as the overall growth in penetration of mobile services continued to slow. In anticipation of these market conditions the Company continued to rationalise the operating cost structure across its businesses, delivering a substantial turnaround in its Second Generation (2G) business and achieving an EBITDA positive position in this business in the second half of the year. Cost reduction initiatives were implemented in the areas of customer acquisition, customer service and operational support whilst still maintaining or improving service levels. The operating cost base was also significantly reduced from last year as a result of the sale of the GSM resale customer base in 2001. During the period, the Company continued to enhance and promote the value proposition of the Orange Mobile consumer offering. These activities have delivered further improvement in financial performance, reflected in stronger underlying gross operating margins for the reporting period. In parallel, the Company made significant progress towards achieving readiness to launch 3G services scheduled for the first quarter of 2003, with primary focus on the end to end integration and testing of the 3G network and support systems. This has resulted in the expensing of pre-operating costs which were not a contributing factor to last year's result. The Company has continued to leverage its membership in the Hutchison Whampoa global 3G group for the acquisition and development of a compelling suite of wireless multimedia products and services. MORE TO FOLLOW HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) 2003-02-18 ASX-SIGNAL-G HOMEX - Sydney +++++++++++++++++++++++++ Key financial data as at 31 December 2002 Financial Data $ million FULL YEAR HALF YEAR HALF YEAR FULL YEAR 31 DEC 30 JUNE 31 DEC 31 DEC 2001 2002 2002 2002 Orange Mobile revenue 124.3 93.9 98.8 192.7 Paging and Messaging revenue 32.6 14.2 8.2 22.4 Total revenue from operating activities 418.6 112.8 114.5 227.3 Operating expenses 2G -518.7 -131.0 -116.3 -247.3 3G - -4.0 -80.7 -84.7 EBITDA (*) 2G -112.9 -16.2 2.1 -14.1 3G - -4.9 -79.8 -84.7 EBIT -127.6 -55.2 -120.6 -175.8 NPAT (**) -137.0 -72.7 -124.6 -197.3 (*) EBITDA includes all subscriber acquisition costs (including those subscriber acquisition costs capitalised in accordance with UIG 42) and excludes the impact of sale of the GSM business in the year to 31 December 2001. (**) NPAT attributable to Hutchison Telecommunications (Australia) Ltd after outside equity interests. AS AT CHANGE OVER 31 DEC 31 DEC PAST 2001 2002 12 MONTHS Subscriber Numbers % Orange Mobile 192,526 263,501 36.8% Paging and messaging 67,824 56,839 -16.2% Mobile resale (GSM & CDMA) 6,624 3,420 -48.3% Long Distance & Internet 23,659 - - Total subscribers 290,633 323,760 11.4% FULL YEAR HALF YEAR HALF YEAR FULL YEAR 31 DEC 30 JUNE 31 DEC 31 DEC 2001 2002 2002 2002 Key Business Indicators ARPU (i) $63 $62 $60 $61 SAC (ii) $338 $195 $183 $189 Churn (iii) 4.0% 2.3% 2.0% 2.2% Minutes usage per customer (iv) Local Zone 189 99 68 83 Mobile Zone 48 67 75 71 Weighted average tariff (v) $0.19 $0.24 $0.28 $0.26 Headcount - 2G 1,050 789 703 703 Headcount - 3G 459 558 559 559 (i) ARPU represents the monthly average revenue per Orange Mobile post paid subscriber for the period. Prior period ARPUs restated to include all customer call credits. (ii) SAC represents the average direct costs associated with acquiring each new subscriber for the period, including commissions, handset and accessory subsidies and promotional gifts, if any (before capitalisation), dealer bonuses and contract payouts, service provisioning costs plus warehousing and delivery charges. (iii) Churn represents the average monthly churn of the Orange Mobile subscriber base for the period. (iv) Minutes usage per customer represents the average monthly number of outbound minutes of usage per Orange Mobile post paid subscriber for the period. (v) Weighted average tariff represents the average tariff per minute billed on outbound calls for each Orange Mobile post paid subscriber for the period. MORE TO FOLLOW HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) 2003-02-18 ASX-SIGNAL-G HOMEX - Sydney +++++++++++++++++++++++++ OPERATING RESULTS As at 31 December 2002, the Company's total subscriber base was 323,760 of which 263,501 were Orange Mobile subscribers. The Orange Mobile subscriber base grew by 37% over the 12 months to 31 December 2002, with 70,975 additional post paid customers on the network. During the reporting period, the Company exited its Internet and Long Distance resale services. Total operating revenue for the year was $227.3 million, a decrease of 46% on the prior year result due to the sale of the GSM resale subscriber base to SingTel Optus in October 2001. The GSM resale customer base contributed $252.8 million of revenue in 2001. The Orange Mobile business contributed $192.7 million to total revenue, an increase of 55% over the prior year. Continued improvements to the Orange Mobile business and ongoing cost reduction initiatives put in place at the end of 2001 resulted in a reduced EBITDA loss in the 2G operations of $14.1 million for the reported period, compared to a $112.9 million loss for the 12 months to 31 December 2001. EBITDA for the second half of 2002 was $2.1 million compared to a loss of $16.2 million in the 6 months to 30 June 2002. In the 3G operations, pre-operating costs of $84.7 million were expensed during the 12 months to 31 December 2002 ($nil in 2001). The costs include certain salaries and wages, professional fees and overheads as well as other network deployment costs associated with the integration of the network assets acquired in the Lucent transaction. (See comments in the 3G business section) The net loss after tax for the period was $197.3 million compared to a loss of $137.0 million for the 12 months to 31 December 2001. This prior period included a net profit on sale of the GSM subscriber base of $15.3 million. ORANGE MOBILE In line with strategic change of direction initiated in late 2001, the Company continued to restructure the Orange Mobile business in 2002 to focus on reduced operating costs and increased efficiencies. Key initiatives during the period included a further rationalisation of headcount structure, closure of low productivity sales channels and consolidation of call centre operations. In addition, the Company continued to promote mobile rather than location-based usage of the Orange Mobile service, actively migrating high value Local Zone consumers to value driven mobility rate plans and churning off marginal value customers. As a result of these initiatives, Local Zone average monthly minutes of use per post paid subscriber declined from 189 minutes in 2001 to 83 minutes in 2002. Average monthly minutes of mobile calls per post paid subscriber rose from 48 minutes to 71 minutes respectively. The decline in Local Zone minutes contributed to a marginal decline in post-paid Orange mobile average revenue per user (ARPU) to $61 per month for the period compared to $63 for the prior year. However, the strategic migration of the Orange Mobile customer base towards higher value mobility services delivered improved average tariffs and network margins. The weighted average tariff per subscriber increased by 37% to $0.26 per minute in 2002, compared to $0.19 per minute in the prior year. In line with its objective of retaining quality customers, the Company continued to direct its efforts at achieving an industry low churn level, with average monthly annual churn reducing by almost half from 4.0% in the 12 months to December 2001 to 2.2% in reporting period. In the 12 months to 31 December 2002, average subscriber acquisition costs (SAC) were reduced by 44% to $189 per connection compared to $338 per connection in the prior year. This significant reduction was achieved via the minimisation of residual handset subsidies on consumer plans, further restructuring of dealer commissions and improvements in the distribution channel mix, with subscriber additions weighted towards lower cost channels. The Company continued to focus its efforts on streamlining the sales distribution channels to deliver lower cost, higher value customers. In June the Company consolidated its Melbourne sales call centre with the customer care facility in Brisbane, and closed its door-to-door sales channel. The dealer channel continued to be the largest contributor to customer growth delivering over 60% of total customer acquisitions. In 2002 the dealer channel has been strengthened with the introduction of 30 dealer-operated Open Plan Sales Centres (OPSC) in major shopping complexes in Sydney and Melbourne to an average total of 120 dealer operated points of presence. Since their opening, the OPSCs have contributed approximately 40% of the dealer channel's monthly gross additions. Following a significant restructure in 2001, the Company continued to rationalise headcount across the business. The headcount supporting the Orange products and corporate services was further reduced by 33% from 1,050 at 31 December 2001 to 703 at 31 December 2002. In 2002, the Orange CDMA networks in Sydney and Melbourne reached stable and mature performance levels and continued to deliver market-leading performance statistics for call drop rates and other measures of call quality. Call drop out rates for the reporting period performed well below 1% in both Sydney and Melbourne while call congestion continuous to remain minimal at 0.003%. OTHER PRODUCTS The Company continues to be one of the leading paging operators in Australia, with 53,900 subscribers using the network at 31 December 2002. The business remains under pressure from competing products (including the Company's own Orange Mobile offering) and delivered $18.1 million of revenues in the reporting period, compared to $26.6 million for the 12 months to 31 December 2001. This is in line with the decline in overall market demand for this mature product. The Company continued to maintain a strong market share with the Pocketwatch product, a portable financial information service, generating $4.3 million of revenue compared to $6.0 million in the previous year. As part of the strategy to focus on core businesses as a network operator, the Company exited its Long Distance and Internet resale services in May 2002. OPERATING EXPENDITURE Total operating expenditure for the reporting period for the Company's 2G and 3G businesses was $332.0 million compared with $518.7 million in the prior year. Operating expenditure for the 2G business in the reporting period was $247.3 million compared with $518.7 million in the prior year. For the 12 months to 31 December 2002, Orange network cost of sales (NCOS) primarily included interconnect costs and other costs associated with operating the Orange Mobile and paging networks. NCOS was reduced from $224.3 million in 2001 to $73.5 million in 2002, reflecting the sale of the GSM resale customer base and cost reduction initiatives. As a result of continued headcount rationalisation across the business, staff costs for the 2G business were reduced by 46% to $53.5 million for the 12 month period to 31 December 2002 compared to the prior year. Depreciation and amortisation increased from $42.7 million in the prior year period to $71.2 million for the reporting period mainly due to a full year depreciation being recognised in 2002 in relation to the 2001 2G capital expenditure. Operating expenditure for the 3G business was $84.7 million for the 12 months to 31 December 2002 ($nil in 2001). CAPITAL EXPENDITURE AND FUNDING Total payments on capital expenditure for the Company's 2G and 3G businesses in 2002 were $410.5 million compared with $659.9 million the prior year (including $196.1 million for the purchase of the 2.1 GHz spectrum licences). Total capital expenditure for the 2G business for the reporting period was $31.1 million, most of which was invested in the Orange network and operations to support subscriber growth. The Orange Mobile network is expected to require minimal network upgrade and expansion in 2003 and beyond. Capital expenditure on the development of the 3G operations totalled $379.4 million across site deployment, network, IT systems and product development, 3G device procurement and other development costs. As at 31 December 2002, the Company had cash on deposit of $296.2 million. Borrowings consisted of a $425.9 million medium term note issue and an inter-company loan from the immediate parent company of $196.0 million. On 12 July 2002, the Company received $600.2 million in proceeds from a rights issue of convertible notes. The notes have term of five years and carry a coupon of 5.5%. The proceeds were used to meet the Company's commitment to contribute $600.0 million of cash equity into its 80.1% owned subsidiary Hutchison 3G Australia Holdings Pty Ltd. The Company's joint venture partner, Telecom Corporation of New Zealand which holds the remaining 19.9%, contributed an additional $150.0 million of cash equity at the same time. THIRD GENERATION (3G) BUSINESS In 2002, the Company made significant inroads towards achieving readiness to launch 3G services in the first quarter of 2003. In January, Hutchison 3G Australia Pty Limited (H3GA) entered into an agreement to acquire a significant number of fully constructed network sites from Lucent Technologies Australia Pty Limited, securing over 50% of the base stations required for metropolitan coverage of its five licence areas. The acquisition is expected to provide construction and transmission equipment savings as well as reducing execution risks associated with network deployment. The acquisition also enabled H3GA to assume direct control of base station construction and sourcing of transmission equipment. Accordingly, in May, H3GA amended the Network Supply Agreement with Ericsson Australia Pty Limited (Ericsson) signed in June 2001. At the date of this announcement, the majority of the network build and optimisation for the first phase of launch covering Sydney, Melbourne and Brisbane has been completed. Network construction for the second phase of launch, covering Adelaide and Perth, scheduled for completion in the second half of 2003, has commenced. In readiness for launch of services, H3GA is currently in advanced stages of the technical integration, stabilisation and end-to-end testing of the network, platforms, operating systems and devices. During the year the Company has announced several global and local initiatives to support the launch of its 3G services. In May, the Company announced an agreement between H3GA and Vodafone Pty Limited for the provision of Australia-wide 2G and 2.5G roaming services. During the year, H3GA has entered into agreements with over 30 global GSM operators for the provisioning of international 2G and 2.5G roaming for the Company's 3G customers. In late 2002, Hutchison Whampoa has unveiled its global 3G multimedia brand 3. The brand will be adopted by H3GA and across Hutchison Whampoa's 3G operations in Austria, Denmark, Hong Kong, Ireland, Italy, Israel, Sweden and the United Kingdom. In October, Hutchison Whampoa announced an agreement with NEC Corporation (NEC) to increase its prior order of 3G video devices for Hutchison Whampoa's 3G companies worldwide from one million to two million. The agreement was accompanied by the initial supply of 3G devices to Hutchison's 3G operations in Italy and the United Kingdom for use in their friendly user trials. In line with its strategy to secure an optimal and sustainable cost structure across its businesses the Company has signed a seven-year agreement with Ericsson for the implementation of a managed services unit. As part of the agreement over 240 network and IT staff have been transferred to Ericsson to conduct the day to day management of the Orange CDMA, paging and W-CDMA (3G) networks as well as the related services platforms. The agreement is expected to delivered cost savings of $45.0 million over the life of the contract. As part of its distribution strategy, H3GA finalised a letter of intent with Strathfield Group Limited, Australia's largest independent retailer of mobile phones in February 2003. The letter of intent appoints Strathfield as H3GA's exclusive retail partner in the multi-outlet electronics category for an agreed period. OUTLOOK Against the backdrop of challenging market conditions in 2002, the Company successfully achieved its twin goals: a strong financial turnaround in the Orange business and launch readiness of 3 services by the first quarter of 2003. In 2003, the Company will continue to leverage its improved operating structure and manage the Orange business for steady and sustained profitable growth. In anticipation of the slowdown of growth in the 2G market, the Company will continue to focus on acquiring profitable customers rather than competing solely on customer numbers. The Orange Mobile value proposition of 18 cents per 30 seconds, anywhere anytime, will continue to satisfy a growing need in the market for a simple, low cost voice proposition. 2003 will see the introduction of 3 services, providing a clear window of opportunity to lead the Australian market in the provision of wireless, multimedia services. DIRECTORS The following persons were directors of Hutchison Telecommunications (Australia) Limited during the whole of the year and up to the date of this report: Canning F N Fok Ting Y Chan Dennis P M Lui Justin H Gardener Barry Roberts-Thomson Holger Kluge Frank J Sixt ROUNDING OF AMOUNTS TO NEAREST THOUSAND DOLLARS The company is of a kind referred to in Class Order 98/0100 issued by the Australian Securities and Investments Commission, relating to the "rounding off" of amounts in the directors' report and financial report. Where stated, amounts in the directors' report and financial report have been rounded off to the nearest thousand dollars in accordance with that Class Order. This report is made in accordance with a resolution of the directors. D Lui DIRECTOR MORE TO FOLLOW HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) 2003-02-18 ASX-SIGNAL-G HOMEX - Sydney +++++++++++++++++++++++++ CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE CURRENT PREVIOUS PERIOD CORRESPONDING PERIOD AUD000 AUD000 1.1 Revenues from ordinary activities (see items 1.23 - 1.25) 236,521 471,563 1.2 Expenses from ordinary activities (see items 1.26 + 1.27) 404,919 597,591 1.3 Borrowing costs 44,720 11,002 1.4 Share of net profit (losses) of associates and joint venture entities (see item 16.7) - - 1.5 Profit (loss) from ordinary activities before tax (213,118) (137,030) 1.6 Income tax on ordinary activities (see note 4) - - 1.7 Profit (loss) from ordinary activities after tax (213,118) (137,030) 1.8 Profit (loss) from extraordinary items after tax (see item 2.5) - - 1.9 Net profit (loss) (213,118) (137,030) 1.10 Net profit (loss) attributable to outside equity interests 15,792 - 1.11 Net profit (loss) for the period attributable to members (197,326) (137,030) NON-OWNER TRANSACTION CHANGES IN EQUITY 1.12 Increase (decrease) in revaluation reserves - - 1.13 Net exchange differences recognised in equity - - 1.14 Other revenue, expense and initial adjustments recognised directly in equity (attach details) - - 1.15 Initial adjustments from UIG transitional provisions - 8,247 1.16 Total transactions and adjustments recognised directly in equity (items 1.12 to 1.15) - 8,247 1.17 Total changes in equity not resulting from transactions with owners as owners - - EARNINGS PER SECURITY (EPS) CURRENT PREVIOUS PERIOD CORRESPONDING PERIOD 1.18 Basic EPS (29.1) c (20.2) c 1.19 Diluted EPS (29.1) c (19.9) c NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE PROFIT (LOSS) FROM ORDINARY ACTIVITIES ATTRIBUTABLE TO MEMBERS CURRENT PREVIOUS PERIOD CORRESPONDING PERIOD 1.20 Profit (loss) from ordinary activities after tax (item 1.7) (213,118) (137,030) 1.21 Less (plus) outside equity interests 15,792 - 1.22 Profit (loss) from ordinary activities after tax attributable to members (197,326) (137,030) REVENUE AND EXPENSES FROM ORDINARY ACTIVITIES (see note 15) CURRENT PREVIOUS PERIOD CORRESPONDING PERIOD 1.23 Revenue from sales or services 227,346 418,579 1.24 Interest revenue 6,899 890 1.25 Other relevant revenue Dividend received 37 20 Proceeds from disposals of property, plant and equipment 1,736 - Proceeds from sale of GSM resale business - 51,451 Other revenue 503 623 1.26 Details of relevant expenses Cost of sales (131,025) (386,922) Staff costs (81,400) (98,470) Site Acquisition Costs (34,634) - Advertising and promotions (22,246) (31,346) Rental expenses relating to operating leases (21,007) (18,464) Consulting and professional fees (7,269) (6,726) Bad debts (5,495) (8,474) Travel and accommodation (2,179) (1,841) Other (28,500) (2,663) 1.27 Depreciation and amortisation excluding amortisation of intangibles (71,164) (42,685) (see item 2.3) CAPITALISED OUTLAYS 1.28 Interest capitalised in asset values 11,395 10,206 1.29 Outlays capitalised in intangibles 39,312 364,962 (unless arising from an acquisition of a business) CONSOLIDATED RETAINED PROFITS 1.30 Retained profits (accumulated losses) at the beginning of the financial period (258,760) (129,977) 1.31 Net profit (loss) attributable to members (item 1.11) (197,326) (137,030) 1.32 Net transfers from (to) reserves - - 1.33 Net effect of changes in accounting policies - 8,247 1.34 Dividends and other equity distributions paid or payable - - 1.35 Retained profits (accumulated losses) at end of financial period (456,086) (258,760) INTANGIBLE AND EXTRAORDINARY ITEMS Consolidated - current period Before Related Related Amount tax tax outside (after equity tax) interests attributable to members AUD000 AUD000 AUD000 AUD000 2.1 Amortisation of goodwill - - - - 2.2 Amortisation of other intangibles 33,615 - - 33,615 2.3 Total amortisation of intangibles 33,615 - - 33,615 2.4 Extraordinary items - - - - (details) 2.5 Total extraordinary items - - - - COMPARISON OF HALF YEAR PROFITS Current Previous (Preliminary final report only) year year AUD000 AUD000 3.1 Consolidated profit (loss) from ordinary activities after tax attributable to members reported for the 1st half year (item 1.22 in the half yearly report) (72,672) (91,096) 3.2 Consolidated profit (loss) from ordinary activities after tax attributable to members for the 2nd half year (124,654) (45,934) CONSOLIDATED BALANCE SHEET As shown At end of in last As in last current annual half yearly period report report AUD000 AUD000 AUD000 CURRENT ASSETS 4.1 Cash 296,156 103,690 15,572 4.2 Receivables 50,347 73,957 46,615 4.3 Investments - - - 4.4 Inventories 3,842 7,763 2,158 4.5 Tax assets - - - 4.6 Other Prepayments & other 11,680 11,246 12,481 4.7 Total current assets 362,025 196,656 76,826 NON-CURRENT ASSETS 4.8 Receivables 5,818 5,483 5,980 4.9 Investments (equity accounted) - - - 4.10 Other investments - - - 4.11 Inventories - - - 4.12 Exploration and evaluation expenditure capitalised (see para.71 of AASB 1022) - - - 4.13 Development properties (mining entities) - - - 4.14 Other property, plant and equipment (net) 885,146 341,899 432,355 4.15 Intangibles (net) 1,015,160 1,166,974 1,211,598 4.16 Tax assets - - - 4.17 Other Prepayments 46,876 48,021 48,592 4.18 Total non-current assets 1,953,000 1,562,377 1,698,525 4.19 TOTAL ASSETS 2,315,025 1,759,033 1,775,351 CURRENT LIABILITIES 4.20 Payables 130,572 106,063 97,607 4.21 Interest bearing liabilities - 196,000 295,707 4.22 Tax liabilities - - - 4.23 Provisions exc tax liabilities 4,187 5,900 5,061 4.24 Other - Deposits 4 15 13 - Unearned income 1,117 2,430 1,320 4.25 Total current liabilities 135,880 310,408 399,708 NON-CURRENT LIABILITIES 4.26 Payables - - - 4.27 Interest bearing liabilities 1,222,079 429,216 429,100 4.28 Tax liabilities - - - 4.29 Provisions exc tax liabilities 1,336 561 1,355 4.30 Other (provide details if material) - - - 4.31 Total non-current liabilities 1,223,415 429,777 430,455 4.32 TOTAL LIABILITIES 1,359,295 740,185 830,163 4.33 NET ASSETS 955,730 1,018,848 945,188 EQUITY 4.34 Capital/contributed equity 1,031,244 1,031,244 1,031,244 4.35 Reserves 54,887 54,887 54,887 4.36 Retained profits (accumulated losses) (456,086) (258,760) (331,432) 4.37 Equity attributable to members of the parent entity 630,045 827,371 754,699 4.38 Outside equity interests in controlled entities 325,685 191,477 190,489 4.39 Total equity 955,730 1,018,848 945,188 4.40 Preference capital included as part of 4.37 - - - NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION EXPLORATION AND EVALUATION EXPENDITURE CAPITALISED (To be completed only by entities with mining interests if amounts are material. Include all expenditure incurred.) Current Previous period corresponding period AUD000 AUD000 5.1 Opening balance - - 5.2 Expenditure incurred during current period - - 5.3 Expenditure written off during current period - - 5.4 Acquisitions, disposals, revaluation increments, etc. - - 5.5 Expenditure transferred to Development Properties - - 5.6 Closing balance as shown in the consolidated balance sheet (item 4.12) - - DEVELOPMENT PROPERTIES (To be completed only by entities with mining interests if amounts are material) Current Previous period corresponding period AUD000 AUD000 6.1 Opening balance - - 6.2 Expenditure incurred during current period - - 6.3 Expenditure transferred from exploration and evaluation - - 6.4 Expenditure written off during current period - - 6.5 Acquisitions, disposals, revaluation increments, etc. - - 6.6 Expenditure transferred to mine properties - - 6.7 Closing balance as shown in the consolidated balance sheet (item 4.13) - - CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Current Previous period corresponding period AUD000 AUD000 CASH FLOWS RELATED TO OPERATING ACTIVITIES 7.1 Receipts from customers 305,037 400,643 7.2 Payments to suppliers and employees (380,671) (497,947) 7.3 Dividends received from associates - - 7.4 Other dividends received 37 20 7.5 Interest and other items of similar nature received 6,899 890 7.6 Interest and other costs of finance paid (40,889) (11,002) 7.7 Income taxes paid - - 7.8 Other (provide details if material) - - 7.9 Net operating cash flows (109,587) (107,396) CASH FLOWS RELATED TO INVESTING ACTIVITIES 7.10 Payment for purchases of property, plant and equipment (410,547) (329,765) 7.11 Proceeds from sale of property, plant and equipment 1,736 1,161 7.12 Payment for purchases of equity investments - - 7.13 Proceeds from sale of equity investments - - 7.14 Loans to other entities - - 7.15 Loans repaid by other entities - - 7.16 Other (provide details if material) - - Payments for intangibles (39,312) (364,962) Proceeds from sale of GSM business - 51,451 Payment for transmission services - (51,451) 7.17 Net investing cash flows (448,123) (693,566) CASH FLOWS RELATED TO FINANCING ACTIVITIES 7.18 Proceeds from issues of securities (shares, options, etc.) 750,176 250,000 7.19 Proceeds from borrowings - 621,580 7.20 Repayment of borrowings - - 7.21 Dividends paid - - 7.22 Other (provide details if material) - - 7.23 Net Financing Cash Flows 750,176 871,580 7.24 NET INCREASE (DECREASE) IN CASH HELD 192,466 70,618 7.25 Cash at beginning of period 103,690 33,072 (see Reconciliation of cash) 7.26 Exchange rate adjustments to item 7.25 - - 7.27 Cash at end of period (see Reconciliation of cash) 296,156 103,690 NON-CASH FINANCING AND INVESTING ACTIVITIES Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows are as follows. If an amount is quantified, show comparative amount. Nil RECONCILIATION OF CASH Reconciliation of cash at the end of Current Previous the period (as shown in the consolidated period corresponding statement of cash flows) to the related period items in the accounts is as follows. AUD000 AUD000 8.1 Cash on hand and at bank 39,256 23,690 8.2 Deposits at call - - 8.3 Bank overdraft - - 8.4 Other (provide details) - - Short term deposits 18,400 40,000 Commercial paper 238,500 40,000 8.5 Total cash at end of period (item 7.27) 296,156 103,690 OTHER NOTES TO THE CONDENSED FINANCIAL STATEMENTS RATIOS Current Previous period corresponding period PROFIT BEFORE TAX / REVENUE 9.1 Consolidated profit (loss) from ordinary activities before tax (item 1.5) as a percentage of revenue (item 1.1) (90) % (29) % PROFIT AFTER TAX / EQUITY INTERESTS 9.2 Consolidated net profit (loss) from ordinary activities after tax attributable to members (item 1.11) as a percentage of equity (similarly attributable) at the end of the period (item 4.37) (31.3) % (16.5) % EARNINGS PER SECURITY (EPS) Current Previous period corresponding period 10 Details of basic and diluted EPS reported seperately in accordance with paragraph 9 and 18 of AASB 1027: Earnings per Share are as follows. Net loss: $197,326,000 Weighted average number of shares: 678,625,429 NTA BACKING Current Previous (see note 7) period corresponding period 11.1 Net tangible asset backing per ordinary security (9) c (22) c MORE TO FOLLOW HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) 2003-02-18 ASX-SIGNAL-G HOMEX - Sydney +++++++++++++++++++++++++ DISCONTINUING OPERATIONS (Entities must report a description of any significant activities or events relating to discontinuing operations in accordance with paragraph 7.5(g) of AASB 1029: Interim Financial Reporting, or, the details of discontinuing operations they have disclosed in their accounts in accordance with AASB 1042: Discontinuing Operations (see note 17) Current Previous period corresponding period AUD000 AUD000 12.1 Discontinuing Operations N/A CONTROL GAINED OVER ENTITIES HAVING MATERIAL EFFECT 13.1 Name of entity (or group of entities) - 13.2 Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) since the date in the current period on which control was acquired $ - 13.3 Date from which such profit has been calculated N/A 13.4 Profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the whole of the previous corresponding period $ - LOSS OF CONTROL OF ENTITIES HAVING MATERIAL EFFECT 14.1 Name of entity (or group of entities) N/A 14.2 Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the current period to the date of loss of control $ - 14.3 Date to which the profit (loss) in item 14.2 has been calculated - 14.4 Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) while controlled during the whole of the previous corresponding period $ - 14.5 Contribution to consolidated profit (loss) from ordinary activities and extraordinary items from sale of interest leading to loss of control $ - DIVIDENDS (in the case of a trust, distributions) 15.1 Date the dividend (distribution) is payable N/A 15.2 Record date to determine entitlements to the dividend (distribution) (ie, on the basis of proper instruments of transfer received by 5.00pm if securities are not CHESS approved, or security holding balances established by 5.00pm or such later time permitted by SCH Business Rules if securities are CHESS approved) - 15.3 If it is a final dividend, has it been declared (Preliminary final report only) - AMOUNT PER SECURITY Amount per Franked Amount Amount per security per security at security of -% tax foreign (see note 4) source dividend (Preliminary final report only) 15.4 Final dividend: Current year - c - c - c 15.5 Previous year - c - c - c (Half yearly and preliminary final reports) 15.6 Interim dividend: Current year - c - c - c 15.7 Previous year - c - c - c TOTAL DIVIDEND (DISTRIBUTION) PER SECURITY (INTERIM PLUS FINAL) (Preliminary final report only) Current Previous year year 15.8 Ordinary securities - c - c 15.9 Preference securities - c - c HALF YEARLY REPORT - INTERIM DIVIDEND (DISTRIBUTION) ON ALL SECURITIES OR PRELIMINARY FINAL REPORT - FINAL DIVIDEND (DISTRIBUTION) ON ALL SECURITIES Current Previous period corresponding AUD000 period AUD000 15.10 Ordinary securities - - 15.11 Preference securities N/A N/A 15.12 Other equity instruments N/A N/A 15.13 Total - - The dividend or distribution plans shown below are in operation. N/A The last date(s) for receipt of election notices for the dividend or distribution plans N/A Any other disclosures in relation to dividends (distributions) (For half year reports, provide details in accordance with paragraph 7.5(d) if AASB 1029 Interim Financial Reporting) N/A DETAILS OF AGGREGATE SHARE OF PROFITS (LOSSES) OF ASSOCIATES AND JOINT VENTURE ENTITIES Current Previous period corresponding AUD000 period AUD000 Groups share of associates and joint venture entities: 16.1 Profit (loss) from ordinary activities before tax N/A N/A 16.2 Income tax on ordinary activities N/A N/A 16.3 Profit (loss) from ordinary activities after tax N/A N/A 16.4 Extraordinary items net of tax N/A N/A 16.5 Net profit (loss) N/A N/A 16.6 Adjustments N/A N/A 16.7 Share of net profit (loss) of associates and joint venture entities N/A N/A MATERIAL INTERESTS IN ENTITIES WHICH ARE NOT CONTROLLED ENTITIES The economic entity has an interest (that is material to it) in the following entities. If the interest was acquired or disposed of during either the current or previous corresponding period, indicate date of acquisition ("from xx/xx/xx") or disposal ("to xx/xx/xx"). Name of entity Percentage of ownership Contribution to net interest held at end profit (loss) of period or date of (item 1.9) disposal 17.1 Equity accounted Current Previous Current Previous associates and period corresponding period corresponding joint venture entities period AUD000 period AUD000 N/A N/A N/A N/A N/A 17.2 Total N/A N/A N/A N/A 17.3 Other material interests N/A N/A N/A N/A N/A 17.4 Total N/A N/A N/A N/A ISSUED AND QUOTED SECURITIES AT END OF CURRENT PERIOD Description includes rate of interest and any redemption or conversion rights together with prices and dates. Amount Issue Paid-up price per per security security (see (see Category of Total Number note 14) note 14) securities Number quoted (cents) (cents) 18.1 Preference securities (description) - - - - 18.2 Changes during current period (a) Increases through issues - - - - (b) Decreases through returns of capital, buybacks, redemptions - - - - 18.3 Ordinary securities 67,625,429 678,625,429 - - 18.4 Changes during current period (a) Increases through issues - - - - (b) Decreases through returns of capital, buybacks - - - - 18.5 Convertible debt securities (description and conversion factor) 5-year term, may be 909,358,150 909,358,150 (66) (66) converted to ordinary share on a one for one basis. Cash coupon payment of 5.5% per annum, payable semi- annually until earlier of conversion or maturity date. 18.6 Changes during current period 909,358,150 909,358,150 66 66 (a) Increases through issues (b) Decreases through securities matured, converted - - - - 18.7 Options (description Exercise Expiry and conversion factor) price date (cents) - - - - 18.8 Issued during current period - - - - 18.9 Exercised during current period - - - - 18.10 Expired during current period 149,750 - 184 15/08/2002 735,000 - 184 15/08/2004 100,000 - 278 30/08/2005 50,000 - 300 12/11/2005 105,000 - 250 23/01/2006 18.11 Debentures (description) 18.12 Changes during current period (a) Increases through issues - - - - (b) Decreases through securities matured, converted - - - - 18.13 Unsecured notes 6.5% $10,000 denomination notes issued 05/12/2001 maturing 15/11/2006 42,500 Nil 18.14 Changes during current period No changes (a) Increases through issues - - - - (b) Decreases through securities matured, converted - - - - SEGMENT REPORTING (Information on the business and geographical segments of the entity must be reported for the current period in accordance with AASB 1005: Segment Reporting and for half year reports, AASB 1029: Interim Financial Reporting. Because entities employ different structures a pro forma cannot be provided. Segment information in the layout employed in the entity's accounts should be reported separately and attached to this report.) Refer schedule. COMMENTS BY DIRECTORS (Comments on the following matters are required by ASX or, in relation to the half yearly report, by AASB 1029: Interim Financial Reporting. The comments do not take the place of the directors' report and statement (as required by the Corporations Act) and may be incorporated into the directors' report and statement. For both half yearly and preliminary final reports, if there are no comments in a section, state NIL. If there is insufficient space to comment, attach notes to this report. BASIS OF FINANCIAL REPORT PREPARATION 19.1 If this report is a half yearly report, it is a general purpose financial report prepared in accordance with the listing rules and AASB 1029:Interim Financial Reporting. It should be read in conjunction with the last annual report and any announcements to the market made by the entity during the period. The financial statements in this report are "condensed financial statements" as defined in AASB 1029:Interim Financial Reporting. This report does not include all the notes of the type normally included in an annual financial report. [Delete if preliminary final report.] 19.2 Material factors affecting the revenues and expenses of the economic entity for the current period. In a half year report, provide explanatory comments about any seasonal or irregular factors affecting operations Refer to commentary 19.3 A description of each event since the end of the current period which has had a material effect and which is not already reported elsewhere in the Appendix or in attachments, with financial effect quantified (if possible) - 19.4 Franking credits available (amount): $ - Prospects for paying fully or partly franked dividends for at least the next year - 19.5 Unless disclosed below, the accounting policies, estimation methods and measurement bases used in this report are the same as those used in the last annual report. Any changes in accounting policies, estimation methods and measurement bases since the last annual report are disclosed as follows. - 19.6 Revisions in estimates of amounts in previous interim periods. For half yearly reports the nature and amount of revisions in estimates of amounts reported in previous annual reports if those revisions have a material effect in this half year. - 19.7 Changes in contingent liabilities or assets. For half yearly reports, changes in contingent liabilities or contingent assets since the last annual report. As at 31 December 2002, the consolidated entity had contingent liabilities of $48,849,000 representing guarantees on leases and loans. ADDITIONAL DISCLOSURE FOR TRUSTS 20.1 Number of units held by the management company or responsible entity or their related parties. N/A 20.2 A statement of the fees and commissions payable to the management company or responsible entity. N/A Identify: initial service charges N/A management fees - other fees - ANNUAL MEETING (Preliminary final report only) The annual meeting will be held as follows: Place Conference Centre, Ground Floow Building A, 207 Pacific Highway St Leonards NSW 2065 Date Thursday 08/05/2003 Time 2.30 pm Approximate date the annual report will be available 07/04/2003 COMPLIANCE STATEMENT 1 This report has been prepared in accordance with AASB standards, other AASB authoritative pronouncements and Urgent Issues Group Consensus Views or other standards acceptable to ASX (see note 12). Identify other standards used - 2 This report, and the accounts upon which the report is based (if separate), use the same accounting policies. 3 This report does give a true and fair view of the matters disclosed (see note 2). 4 This report is based on accounts to which one of the following applies. (Tick one) x The accounts The accounts have been have been subject audited. to review. The accounts The accounts are in the process have not yet been of being audited audited or reviewed. or subject to review. 5 If the audit report or review by the auditor is not attached, details of any qualifications are attached/will follow immediately they are available. (Half yearly report only - the audit report or review by the auditor must be attached to this report if the report is to satisfy the requirements of the Corporations Law.) 6 The entity has a formally constituted audit committee. D Lui (DIRECTOR) 18/02/2002 MORE TO FOLLOW HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) 2003-02-18 ASX-SIGNAL-G HOMEX - Sydney +++++++++++++++++++++++++ SEGMENT REPORTING BUSINESS SEGMENTS The Consolidated Entity operated entirely within the telecommunications industry with the following product and service types: ORANGE Orange products including mobile, paging and information services. For 2001, other includes the GSM resale customer base which was sold to SingTel Optus. 3 Development of a third generation (3G) mobile network and business which is expected to be launched in the first quarter of 2003. GEOGRAPHICAL SEGMENTS The Consolidated Entity operates entirely within Australia. PRIMARY REPORTING - BUSINESS SEGMENTS Orange 3 Consolidated 2002 $'000 $'000 $'000 REVENUE Sales to customers 227,346 - 227,346 Other revenue 3,692 5,483 9,175 Total segment revenue 231,038 5,483 236,521 RESULT Segment result (133,764) (79,354) (213,118) Loss from ordinary activities before income tax (133,764) (79,354) (213,118) Income tax - - - Net loss (133,764) (79,354) (213,118) Consolidated total assets 607,607 1,707,418 2,315,025 Consolidated total liabilities 461,300 897,995 1,359,295 Acquisition of property, plant and equipment and intangible assets 47,958 428,105 476,063 Depreciation 61,208 - 61,208 Non-cash expenses other than depreciation 35,747 - 35,747 Inventory write-down 3,464 - 3,464 Net cash outflow from operating activities (5,613) (103,974) (109,587) MORE TO FOLLOW HUTCHISON TELECOMMUNICATIONS (AUSTRALIA) 2003-02-18 ASX-SIGNAL-G HOMEX - Sydney +++++++++++++++++++++++++ HUTCHISON DELIVERS ORANGE POSITIVE EBITDA AND READIES 3 FOR LAUNCH Hutchison Telecommunications (Australia) Limited (ASX: HTA) (Hutchison) today announced its full year results for 2002. Chief Executive Kevin Russell said the results reflected a challenging year in which Hutchison met its two primary targets: solid growth in Orange to achieve positive EBITDA; and, with 3, to position for launch and establish an edge over competitors in the provision of new wireless multimedia services. "What we have done represents a dramatic turnaround in Orange and a major achievement in 3," Mr Russell said. "We will now push ahead towards profitability in Orange and exploiting a significant window of opportunity with 3," he said. Key points for Hutchison in 2002 included: * 2G EBITDA loss of $14.1 million, a dramatic improvement on the 2001 loss of $112.9m, including a second half EBITDA positive result of $2.1m * Total operating revenue of $227.3m * Orange mobile business contributed $192.7m to total revenue, an increase of 55% over the previous year * 37% growth in Orange Mobile subscriber base, adding 70,975 post-paid customers to reach a total of 263,501 * Capital expenditure within budget in 3 and dramatically reduced in Orange * Pre-operating costs for 3 of $84.7m contributed to a net loss of $197.3m Mr Russell said it was a credit to the dedicated work of the 3 team in Australia and global development teams operating in three continents that 3 services were close to launch well ahead of competitors. Hutchison Australia's 3 team was on course, within budget and continuing to track closely behind its sister organisations in Italy and the UK, he said. "Our plan remains to fast follow the launches in these markets. Service trials are well underway in the UK and Italy and we will start our own here by the end of February," he said. A campaign to recruit up to 600 staff for 3 retail stores in Sydney, Melbourne and Brisbane was under way, as part of a well-developed product distribution plan, Mr Russell said. Other details of the go-to-market strategy, including services and pricing, would be revealed close to launch, he said. In the 3 business, key initiatives in 2002 included the acquisition of network assets from Lucent Technologies Australia Pty Limited (Lucent), the completion of network construction for launch in Sydney, Melbourne and Brisbane and a seven-year agreement with Ericsson Australia Pty Limited for the implementation of a network and IT managed services unit. In readiness for launch of services, 3 is currently in advanced stages of the technical integration, stabilisation and end-to-end testing of the network, platforms, operating systems and devices. This and other work has resulted in pre-operating costs of $84.7 million, which were expensed during the 12 months to 31 December 2002, contributing to a net loss of $197.3m. The costs include certain salaries and wages, professional fees and overheads as well as other network deployment costs associated with the integration of the network assets acquired in the Lucent transaction. The turnaround in Orange was delivered through customer and revenue growth in Orange Mobile and ongoing rationalisation of operating costs across the Company's businesses. Profitability in Orange was also enhanced by dramatically reduced capital expenditure, down from $254.2m in 2001 to $31.1m last year. Mr Russell said the Orange results reflected Hutchison's continuing commitment to tight cost control and a strategy pitched toward solid profitable growth, rather than irrational pursuit of customer numbers. "The breakthrough to positive EBITDA in just over two years is a strong performance by any international benchmark, but it is even more impressive when you take into account the size of the turnaround in 2002," he said. "It is a record of solid growth in EBITDA in the past 18 months which positions us to move confidently toward free cash flow. We estimate that by the time of next year's report, we will fully cover our 2G interest costs. At that point, Orange would be self-funding." Mr Russell said it was a credit to the commitment of Hutchison's people that cost reduction initiatives were implemented in the areas of customer acquisition, customer service and operational support without any deterioration in service levels. "In fact in some areas, such as the time taken to resolve customer issues, we improved performance," he said. Key drivers of the improved financial performance in Orange included: * Maintaining relative stable post-paid average revenue per user of $61 compared to $63 in the previous year. * Reducing average subscriber acquisition costs by 44% to $189 per connection in the reporting period, compared to $338 per connection in the previous year. * Reducing customer churn to 2.2% in the reporting period, compared to 4.0% in the previous year. Inquiries: Karen Mazor INVESTOR RELATIONS MANAGER Tel: (02) 9964 4885 kmazor@hutchison.com.au