TPG Telecom Limited (TPM) 2010年年度報告「ASX」.pdf

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1、2010ANNUAL REPORTTPG Telecom Limited ABN 46 093 058 069 TPG Telecom Limited and its controlled entities ABN 46 093 058 069 Annual Report 31 July 2010 2 TPG Telecom Limited and its controlled entities Annual Report For the year ended 31 July 2010 Contents Page Chairmans Report 3 Directors Report(incl

2、uding corporate governance statement and remuneration report)5 Consolidated Income Statement 23 Consolidated Statement of Comprehensive Income 24 Consolidated Statement of Financial Position 25 Consolidated Statement of Changes in Equity 26 Consolidated Statement of Cash Flows 27 Index to notes to t

3、he Consolidated Financial Statements 28 Notes to the Consolidated Financial Statements 29 Directors declaration 88 Independent auditors report 89 Lead auditors independence declaration 91 ASX additional information 92 3 TPG Telecom Limited and its controlled entities Chairmans report For the year en

4、ded 31 July 2010 Our Group has had another very good year of strong growth in profitability and customer acquisition resulting in a customer base at September comprising 500,000 broadband subscribers,245,000 mobile and fixed phone subscribers and an important base of corporate government and wholesa

5、le customers.Group FY10 earnings before interest,tax,depreciation and amortisation(EBITDA)were$171.1m and net profit after tax(NPAT)was$55.7m,representing increases of 42%and 216%respectively compared to the prior year.These results,which incorporate 4.5 months post acquisition contribution from the

6、 operations of PIPE Networks(PIPE),include one-off charges for acquisition costs relating to PIPE and other due diligence fees incurred during the year totalling$5.7m.Earnings per share(EPS)for the year of 7.6 cents represent a 192%increase on the 2.6 cents per share last year.After adding back amor

7、tisation of intangibles of$44.6m and adjusting for its associated tax effect of$13.4m,adjusted NPAT is$86.9m.The Group generated free cash of$92.5m(cash from operations less interest,tax and capital expenditure),resulting in a cash EPS of 12.6 cents per share.TPG has continued to lead the broadband

8、consumer marketplace in providing high speed services of excellent value with the result today that Australian internet users are increasingly expecting unlimited broadband access.The Group added more than 100,000 net new broadband subscribers in the year,with the 2nd half representing a record 6 mo

9、nths of on-net growth of over 54,000 subscribers.This was supported strongly by TPGs broadband and home phone bundle offering with 22,000 active home phone subscribers being added since launch in April 2010 through to September 2010.Pipe Networks In March 2010 we also made a strategic acquisition in

10、 Pipe Networks which provides the Group with additional infrastructure both in Australia and internationally.Pipe currently owns over 1,500km of domestic fibre optic cable covering key strategic IT infrastructure locations and the current utilisation of this network at 32%allows for significant grow

11、th.The PPC-1 submarine fibre optic cable system has a current maximum capacity of 2.56Tbps and travels 6,900km in length to connect Sydney into Guam and provides onward reach to the USA,Japan and Asia.This significant asset is already in use by a number of our customers and importantly is providing

12、TPG with its own capacity to meet the ever-growing demand for world-wide connectivity of internet,voice and data.4 TPG Telecom Limited and its controlled entities Chairmans report(continued)For the year ended 31 July 2010 PIPEs domestic backhaul and metropolitan fibre when combined with TPGs data an

13、d voice services is presenting excellent corporate revenue and margin growth opportunities for the Group.In the period since its acquisition by the Group PIPEs domestic business has also continued to grow very strongly in its own right.Cash Flow The Groups excellent cash generation has continued wit

14、h net cash inflow from operations before interest,tax and capex during the year of$189.1m,$18.0m in excess of its EBITDA result.The capital expenditure incurred by the Group for the year of$68.2m includes the final instalment payments for the construction of the PPC-1 submarine cable to Guam.The Gro

15、up established a new$360m syndicated debt facility during the year.$354m was initially drawn down,the funds being used to finance,together with cash raised through a share placement,the acquisition of PIPE,and to pay back TPGs and PIPEs existing debt facilities totalling$98m.By 31 July$22m of the ne

16、w facility had also been repaid such that the total debt balance at year end was$332m.$28m of the debt facility remains available for drawdown,and the Group will commence making permanent repayments against the facility of$20m per quarter from October 2010.Final Dividend The directors have declared

17、a fully franked final dividend of 2.0 cents per share,payable on 17 November 2010 to shareholders on the register at 20 October 2010,bringing total FY10 dividends to 4.0 cents.For the final dividend,the directors again invite shareholders to reinvest in the Company through its DRP(Dividend Reinvestm

18、ent Plan)for which the discount will be 2.5%.David Teoh Executive Chairman 14 October 2010 5 TPG Telecom Limited and its controlled entities Directors report For the year ended 31 July 2010 The directors present their report together with the financial report of TPG Telecom Limited(the Company)and o

19、f the Group,being the Company and its controlled entities,for the financial year ended 31 July 2010 and the auditors report thereon.Contents of directors report Page 1.Directors 6 2.Company Secretary 7 3.Directors meetings 7 4.Company and subsidiary name change 7 5.Corporate governance statement 7 P

20、rinciple 1-Lay solid foundations and oversight 7 Principle 2-Structure the Board to add value 8 Principle 3-Promote ethical and responsible decision-making 9 Principle 4-Safeguarding integrity in financial reporting 10 Principle 5-Make timely and balanced disclosure 11 Principle 6-Respect the rights

21、 of shareholders 11 Principle 7-Recognise and manage risk 11 Principle 8-Remunerate fairly and responsibly 12 5.1 Remuneration report audited 12 5.1.1 Principles of compensation audited 12 5.1.2 Directors and executive officers remuneration audited 14 5.1.3 Equity instruments audited 17 5.1.3.1 Shar

22、es,options and rights over equity instruments granted as compensation audited 17 5.1.3.2 Modification of terms of equity-settled share-based payment transactions audited 18 5.1.3.3 Exercise of options granted as compensation audited 18 6.Principal activities 19 7.Operating and financial review 19 8.

23、Dividends 19 9.Events subsequent to reporting date 19 10.Likely developments 19 11.Directors interests 20 12.Share options 20 13.Indemnification and insurance of officers and auditors 20 14.Non-audit services 21 15.Lead auditors independence declaration 22 16.Rounding off 22 6 TPG Telecom Limited an

24、d its controlled entities Directors report(continued)For the year ended 31 July 2010 1.Directors Details of the directors of the Company who held office at any time during or since the end of the financial year are as follows:Name,qualifications and independence status Age Experience,special respons

25、ibilities and other directorships Current Directors David Teoh Chairman Executive Director Chief Executive Officer 55 David was the founder and Managing Director of the TPG group of companies,one of the largest privately owned internet businesses in Australia.TPG Telecom Ltd(2008-current).Robert D M

26、illner Non-Executive Director F.A.I.C.D.59 TPG Telecom Ltd(2000-current),Washington H Soul Pattinson and Company Ltd(1984-current),New Hope Corporation Ltd(1995-current),Souls Private Equity Ltd(2004-current),Brickworks Ltd(1997-current),Brickworks Investment Company Ltd(2003-current),Australian Pha

27、rmaceutical Industries Ltd(2000-current),Milton Corporation Ltd(1998-current),Choiseul Investments Ltd(1995-current).Former Chairman,resigned position in 2008.Member of Audit&Risk Committee.Denis Ledbury Independent Non-Executive Director B.Bus.A.I.C.D.60 Denis was the Managing Director of TPG Telec

28、om between 2000 and 2005,and was associated with the NBN group of companies for over 24 years(the last 14 as Chief Executive Officer).TPG Telecom Ltd(2000-current).Chairman of Audit&Risk,and Remuneration Committees.Alan J Latimer Executive Director B.Com CA G.A.I.C.D 56 Prior to becoming an Executiv

29、e Director of TPG Telecom Alan was the Chief Financial Officer of the TPG group of companies.He has also previously worked with a number of large international IT and financial companies.TPG Telecom Ltd(2008-current),Chariot Ltd(2007-2008).Member of Remuneration Committee.Joseph Pang Independent Non

30、-Executive Director FCA 57 Joseph has worked in financial roles in the UK,Canada and Hong Kong prior to starting his own Management and Financial Consulting Service in Australia.TPG Telecom Ltd(2008-current).Member of Audit&Risk,and Remuneration Committees.7 TPG Telecom Limited and its controlled en

31、tities Directors report(continued)For the year ended 31 July 2010 2.Company secretary Mr Stephen Banfield was appointed Company Secretary on 24 October 2007.Mr Banfield holds a BA(Hons)degree and is a member of the Institute of Chartered Accountants in England and Wales.3.Directors meetings The numb

32、er of directors meetings held during the financial year(including meetings of committees of directors)and the number of meetings attended by each of the directors of the Company were as follows:Director Board Meetings Audit&Risk Committee Meetings Remuneration Committee Meetings A B A B A B D Teoh 1

33、9 19-RD Millner 18 19 2 2-D Ledbury 19 19 2 2 2 2 AJ Latimer 19 19-2 2 J Pang 18 19 2 2 2 2 A Number of meetings attended.B Number of meetings held during the time the director held office during the year.4.Company and subsidiary name change During the financial year,following approval from sharehol

34、ders at the November 2009 AGM,the Company changed its name from SP Telemedia Limited to TPG Telecom Limited.Also during the year,following its acquisition by the Company,the subsidiary company formerly known as PIPE Networks Limited,changed its name to PIPE Networks Pty Ltd.5.Corporate governance st

35、atement The Board of TPG Telecom Limited(the Company)determines the most appropriate corporate governance arrangements having regard to the best interests of the Company and its shareholders,and consistent with its responsibilities to other stakeholders.This statement outlines the Companys main corp

36、orate governance practices,which comply with the Australian Securities Exchange(“ASX”)Corporate Governance Principles and Recommendations(“ASX Recommendations”),unless otherwise stated.Principle 1 Lay solid foundations for management and oversight The Boards primary role is the protection and enhanc

37、ement of long-term shareholder value.To fulfil this role the Board is responsible for the overall corporate governance of the Group including formulating its strategic direction,setting remuneration,appointing,removing and creating succession policies for directors and senior executives,establishing

38、 and monitoring the achievement of managements goals,ensuring the integrity of risk management,internal control,legal compliance and management information systems,and approving and monitoring capital expenditure.8 TPG Telecom Limited and its controlled entities Directors report(continued)For the ye

39、ar ended 31 July 2010 5.Corporate governance statement(continued)Principle 1 Lay solid foundations for management and oversight(continued)The Board delegates to senior management responsibility for the implementation of the strategic direction of the Company.The Board Charter,which defines the funct

40、ions reserved for the Board as is required by ASX Recommendation 1.1.,can be found on the Companys website at http:/.au under Investor Relations.The performance of the executive directors is reviewed by the non-executive directors on the Board.The performance of other senior executives is reviewed b

41、y the Chief Executive Officer(ASX Recommendations 1.2 and 1.3).Principle 2 Structure the Board to add value The Board considers that the number of directors and the composition of the Board are important for the success of the Company.The Board considers that the appropriate number of directors in t

42、he current circumstances is five,with three being non-executive directors including two independent.Details of the experience and background of all directors are also set out in full on page 6 of this Annual Report.Independence of directors The Board believes that maximum value for shareholders is b

43、est served with the current Board composition.The Board currently comprises five directors,two of whom are independent.The executive directors are David Teoh and Alan Latimer.The Board is of the view that the benefit of the depth of experience and understanding that both directors have of the indust

44、ry in which the Company operates,outweighs the requirement for independent non-executive directors.Robert Millner,a non-executive director,is not independent as he is a director of a major shareholder,Washington H Soul Pattinson and Company Limited.Robert has specific historical,financial and busine

45、ss knowledge of the Company,the benefit of which in the opinion of the Board,outweighs the requirement for independence at this time.The Board is of the view that another non-executive director,Denis Ledbury,is independent,even though he was Managing Director of the Company until his retirement on 1

46、 August 2005,due to the changes in the operations and senior management of the Company that have occurred since his retirement.These changes mean that Denis is free from interests and influences that could present a potential conflict of interest.The Board believes that each director brings an indep

47、endent mind and judgement to bear on all Board decisions,notwithstanding that the Chairman and a majority of the Board are not independent(which is not in line with ASX Recommendation 2.1).All directors are able to and do review and challenge the assumptions and performance of management to ensure d

48、ecisions taken are in the best interest of the Company.9 TPG Telecom Limited and its controlled entities Directors report(continued)For the year ended 31 July 2010 5.Corporate governance statement(continued)Principle 2 Structure the Board to add value(continued)Chairman of the Board The Chairman is

49、an executive director and Chief Executive Officer of the Company.Nevertheless,the Board believes that David Teoh,in this dual role,does bring the quality and independent judgement to all relevant issues that are required of the Chairman and,as Chief Executive Officer,he consults the Board on matters

50、 that are sensitive,extraordinary or of a strategic nature.Nominations Committee The Board acts as a Nominations Committee and as such has responsibility for the selection and appointment of directors,undertaking evaluation of the Boards performance and developing and implementing a plan for identif

51、ying,assessing and enhancing directors competencies(ASX Recommendation 2.4).The process for evaluating the performance of the Board,its committees and individual directors involves the Chairman conducting individual interviews with each of the directors at which time they are able to make any commen

52、t or raise issues they have in relation to the Boards operations(ASX Recommendation 2.5).Access to Company information and independent professional advice Directors may request additional information as and when they consider it appropriate or necessary to discharge their obligation as a director of

53、 the Company.This includes access to internal senior executives or external advisors as and when appropriate.A director must consult the Chairman first before accessing external independent advice and provide a copy of the advice received to other members of the Board(ASX Recommendation 2.6).Princip

54、le 3 Promote ethical and responsible decision-making The Company is committed to maintaining the highest standards in dealing with all of its stakeholders,both internally and externally.The Company has adopted a written Code of Conduct to assist directors and staff in understanding their responsibil

55、ities to ensure the Company conducts its business in accordance with all applicable laws and regulations and in a way that enhances the Companys reputation(ASX Recommendation 3.1 and 3.3).The Code of Conduct is also reflected in internal policies and procedures which reinforce the Companys commitmen

56、t to complying with all applicable laws and regulations.A copy of the Code of Conduct can be found on the Companys website at http:/.au under Investor Relations(ASX Recommendation 3.3).Policy regarding trading in securities The Company has established a written Securities Trading Policy which identi

57、fies the principles by which the Company balances the investment interests of directors,senior executives and employees with the requirements for ensuring such trades only take place when all information relevant to making such investment decisions is fully disclosed to the market(ASX Recommendation

58、 3.2).Directors and senior executives are only permitted to deal in Company shares during a six week period following the release of the Companys half-year and annual results to the ASX,the annual general meeting or any major announcement.Notwithstanding this,the Board may in certain circumstances p

59、ermit dealings during other periods.10 TPG Telecom Limited and its controlled entities Directors report(continued)For the year ended 31 July 2010 5.Corporate governance statement(continued)Principle 3 Promote ethical and responsible decision-making(continued)The acquisition of shares or options acqu

60、ired pursuant to an employee share or option plan and the acquisition of securities through exercising rights to securities or through conversion of convertible securities is specifically excluded from this policy.This exclusion applies only to the acquisition,exercise or conversion of securities.Su

61、bsequent dealing in the underlying securities is restricted as outlined in the policy.Directors must notify the Company Secretary in writing of all transactions in accordance with the requirements of Sections 205F and 205G of the Corporations Act 2002.The Company will notify the ASX of the details o

62、f any transaction,on behalf of the directors.A copy of the Securities Trading Policy can be found on the Companys website at http:/.au under Investor Relations(ASX Recommendation 3.3).Principle 4 Safeguarding integrity in financial reporting The Board has responsibility for ensuring the integrity of

63、 the financial statements and related notes and that the financial statements provide a true and fair view of the Companys financial position.To assist the Board in fulfilling this responsibility,the Board has established an Audit&Risk Committee which has the responsibility for providing assurance t

64、hat the financial statements and related notes are complete,are in accordance with the applicable accounting standards,and provide a true and fair view.Audit&Risk Committee The Audit&Risk Committee is comprised of three non-executive directors,two of whom are independent,and is chaired by Mr Denis L

65、edbury.Details of all members of the Audit&Risk Committee during the year and their qualifications are set out on page 6 of this Annual Report(ASX Recommendation 4.1,4.2&4.4).The Board has adopted a formal charter which details the function and responsibility of the Audit&Risk Committee to ensure th

66、e integrity of the financial statements and independence of the external auditor(ASX Recommendation 4.3).A copy of the charter can be found on the Companys website at http:/.au under Investor Relations.The Audit&Risk Committees responsibilities include ensuring the integrity of the financial reporti

67、ng process,the risk management system,internal reporting and controls,management of strategic and major financial and operational risks and the external audit process,based on sound principles of accountability,transparency and responsibility.The external auditors,other directors,the Chief Executive

68、 Officer and the Chief Financial Officer are invited to Audit&Risk Committee meetings at the discretion of the Committee.The Committee meets at least twice a year.It met twice during the year and Committee members attendance record is disclosed in the table of directors meetings on page 7 of this An

69、nual Report(ASX Recommendation 4.4).Auditor selection and appointment The Audit&Risk Committee will annually review the audit process including assessment of auditor independence.Any non-audit work requires the prior approval of the Committee,which approval will only be given where it can be establi

70、shed that it will not compromise the independence of the audit.11 TPG Telecom Limited and its controlled entities Directors report(continued)For the year ended 31 July 2010 5.Corporate governance statement(continued)Principle 5 Make timely and balanced disclosure Continuous disclosure The Company be

71、lieves that shareholders and the wider business community should be informed of all material information concerning the Company in a timely and accurate manner.Accordingly,the Company has established a Continuous Disclosure Policy to ensure that the share market is properly informed of matters that

72、may have a material impact on the price at which the Companys securities are traded.This policy is designed to ensure compliance with the ASX Listing Rules Chapter 3(ASX Recommendation 5.1 and 5.2).A copy of the Continuous Disclosure Policy can be found on the Companys website at http:/.au under Inv

73、estor Relations.Principle 6 Respect the rights of shareholders The Board aims to ensure that shareholders are informed of all major developments affecting the Company.The Company posts its annual report and major announcements on its website under the investor section(http:/.au)and provides a link v

74、ia the website to the ASX website so that all ASX releases can be accessed(ASX Recommendation 6.1.).Historical information is also available to shareholders on the Companys website including prior years Annual Reports.Shareholders are encouraged to participate at general meetings,either in person or

75、 by proxy,and are specifically offered the opportunity of receiving communications via email(ASX Recommendation 6.1 and 6.2).Principle 7 Recognise and manage risk The Company has in place strategies and controls in relation to management of financial risk which include identifying and measuring fina

76、ncial risk,developing strategies to minimise the identified risks and monitoring implementation.The Chief Executive Officer and the Chief Financial Officer are required to provide assurance to the Board as to the contents of the annual financial statements including compliance with accounting standa

77、rds,that they are founded on a sound system of financial risk management,and that the accounts represent a true and fair view of the Companys financial position(ASX Recommendation 7.3).The Company has established a business risk framework based on AS/NZS 4360:2004 to ensure management,control and ov

78、ersight of the major business risks of the Company.The framework takes into account various risks including operational,financial,compliance,technical,and strategic risks and provides a means of evaluation and reporting on the management of risk.As part of this process a risk management committee ha

79、s been established to ensure oversight of the Companys business risk and to report to the Audit&Risk Committee on the effectiveness of the risk management controls(ASX Recommendation 7.1,7.2&7.4).12 TPG Telecom Limited and its controlled entities Directors report(continued)For the year ended 31 July

80、 2010 5.Corporate governance statement(continued)Principle 8 Remunerate fairly and responsibly The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages and policies applicable to executives and directors.The Remuneration Committee comprises three directors,t

81、wo of whom are independent non-executive directors.The Committee meets at least twice a year and as required.It met twice during the year and Committee members attendance record is disclosed in the table of directors meetings on page 7 of this Annual Report.Non-executive directors fees may not excee

82、d$500,000 per annum,as voted upon by shareholders at the 2004 AGM.In addition,non-executive directors will not be entitled to a retirement benefit,nor are any directors entitled to participate in share or option plans except with the approval of shareholders.For further information,refer to the Remu

83、neration Report below(ASX Recommendation 8.2&8.3).5.1 Remuneration report audited 5.1.1 Principles of compensation Remuneration is referred to as compensation throughout this report.Key management personnel have authority and responsibility for planning,directing and controlling the activities of th

84、e Company and the Group,including those of directors of the Company and other executives.Key management personnel comprise the directors of the Company and executives for the Company and the Group including the five most highly remunerated Company and Group executives.Compensation levels for key man

85、agement personnel of the Group are designed to attract and retain appropriately qualified and experienced directors and executives.The Remuneration Committee considers the appropriateness of compensation packages given trends in comparative companies and the objectives of the Groups compensation str

86、ategy.The compensation structures explained below are designed to attract suitably qualified candidates,reward the achievement of strategic objectives,and achieve the broader outcome of creation of value for shareholders.The compensation structures take into account:the capability and experience of

87、the key management personnel the key management personnels ability to affect the Groups performance the Groups performance the amount of incentives within each key management persons compensation.Compensation packages include a mix of fixed and variable compensation and short-term and long-term perf

88、ormance-based incentives.In addition to their salaries,the Group may also provide non-cash benefits to its key management personnel.13 TPG Telecom Limited and its controlled entities Directors report(continued)For the year ended 31 July 2010 5.1 Remuneration report audited(continued)5.1.1 Principles

89、 of compensation(continued)Fixed compensation Fixed compensation consists of base compensation(which is calculated on a total cost basis and includes any FBT charges related to employee benefits including motor vehicles),as well as employer contributions to superannuation funds.Compensation levels a

90、re reviewed annually by the Remuneration Committee through a process that considers individual performance and overall performance of the Group.Performance-linked compensation a)Former incentive plans A former incentive plan which was terminated during 2008 included a long-term component under which

91、 shares allocated to certain employees vested at 20%per annum at the end of each of the five years following allocation,provided the employee continued to be employed by the Group.At 31 July 2010 certain key management personnel still had unvested shares under this former incentive plan,as set out b

92、elow in 5.1.3.1.b)Current incentive plans (i)Long-term On 27 February 2009,the Company announced a pool of 13.5 million share options with an exercise price of$0.18 per share,based on the 60 day Volume Weighted Average Share Price(“VWAP”)at that date of$0.16 per share.On 7 July 2009,the Board approv

93、ed the terms of a new Employee Share Option Plan under which these options would be granted to employees.On 8 July 2009,10.875 million of these share options were granted to employees(including certain key management personnel).The allocation of the options was approved by the Remuneration Committee

94、.All options granted on that date were immediately exercisable with a latest exercise date of 30 June 2010.Following approval from shareholders at the November 2009 AGM,1 million share options were granted to each of the two executive directors under the same terms as the options granted to other em

95、ployees in July 2009 described above.In July 2010,30,000 shares in the Company were granted to a new member of the key management personnel.(ii)Short-term Certain short-term cash bonuses were also paid during the year,including to certain key management personnel,to award individual performance.The

96、awards to the executive directors were determined by the Remuneration Committee,and the awards to executive officers and other staff were made at the discretion of the Executive Chairman.14 TPG Telecom Limited and its controlled entities Directors report(continued)For the year ended 31 July 2010 5.1

97、 Remuneration report audited(continued)5.1.1 Principles of compensation(continued)Link of Remuneration to Group Financial Performance In determining the short-term incentive component of executives remuneration,consideration is given to the Groups performance,including against its financial targets.

98、The Remuneration Committee believes that the current remuneration structures are effective as evidenced by the Groups strong profit growth since 2008.The table below shows the Groups Earnings per Share(EPS)for the last 5 years(excluding discontinued operations).2006 2007 2008 2009 2010 EPS(cents)0.1

99、 1.7(3.9)2.6 7.6 Other benefits Key management personnel can also receive non-cash benefits as part of the terms and conditions of their appointment.Non-cash benefits typically include motor vehicles,and the Group pays fringe benefits tax on these benefits.Service contracts On 30 August 2010 the Gro

100、up entered into a new employment contract with Mr D Teoh.The contract is not for a fixed term,but provides that the contract may be terminated by either party giving three months notice.On 17 March 2010 the Group entered into a service contract with Mr B Slattery.The contract was for an initial term

101、 expiring on 31 March 2011.Mr Slattery resigned by mutual agreement with an effective date of 30 September 2010 and no termination benefits were payable under the contract.Other than as noted above:no key management personnel employment contract has a fixed term;and no key management personnel emplo

102、yment contract has a notice period of greater than 1 month.No key management personnel employment contract contains any provision for termination benefits other than as required by law.Non-executive directors Total compensation for all non-executive directors,last voted upon by shareholders at the 2

103、004 AGM,is not to exceed$500,000 per annum.Non-executive directors do not receive performance related compensation.Directors fees cover all main board activities and membership of committees.5.1.2 Directors and executive officers remuneration The key management personnel as at 31 July 2010 were:Mr D

104、 Teoh Executive Chairman&Chief Executive Officer Mr A Latimer Executive Director,Finance&Corporate Mr W Piestrzynski Chief Operating Officer Ms M De Ville Chief Information Officer Mr S Banfield Chief Financial Officer Mr C Levy General Manager,Marketing&Consumer Sales Mr J Paine National Technical&

105、Strategy Manager Mr J Sinclair Chief Operating Officer,PIPE Networks Mr B Slattery Chief Executive Officer,PIPE Networks(resigned with effect from 30 Sept 2010)15 Short-term Post-employment Other long term$Termination benefits$Share-based payments S300A(1)(e)(i)Proportion of remuneration performance

106、 related%S300A(1)(e)(vi)Value of options as proportion of remuneration%Directors Salary&fees$STI cash bonus$(A)Non-monetary benefits$Total$Superannuation benefits$Options$(B)Shares$(B)Total$TPG Telecom Limited and its controlled entities Directors report(continued)For the year ended 31 July 2010 5.1

107、 Remuneration report audited(continued)5.1.2 Directors and executive officers remuneration(continued)Details of the nature and amount of each major element of remuneration of each director of the Group,each of the five named Group executives and relevant Group executives who receive the highest remu

108、neration and other key management personnel are set out in the table below:Executive Directors Mr D Teoh,Chairman 2010 303,940 350,000 76,604 730,544 133,423 21,678-1,427,131-2,312,776 77%62%2009 250,000-26,157 276,157 100,311 4,900-381,368-Mr AJ Latimer 2010 179,391 180,000 2,950 362,341 32,345 5,7

109、96-1,427,131-1,827,613 88%78%2009 191,891 50,000 6,262 248,153 21,770 7,592-277,515 18%-Non-executive Directors Mr D Ledbury 2010 60,000-60,000 5,400-65,400-2009 52,500-52,500 4,725-57,225-Mr RD Millner 2010 57,500-57,500 5,175-62,675-2009 50,000-50,000 4,500-54,500-Mr J Pang 2010 57,500-57,500 5,17

110、5-62,675-2009 50,000-50,000 4,500-54,500-16 TPG Telecom Limited and its controlled entities Directors report(continued)For the year ended 31 July 2010 5.1 Remuneration report audited(continued)5.1.2 Directors and executive officers remuneration(continued)Short-term Post-employment Other long term$Te

111、rmination benefits$Share-based payments S300A(1)(e)(i)Proportion of remuneration performance related%S300A(1)(e)(vi)Value of options as proportion of remuneration%Executives Salary&fees$STI cash bonus$(A)Non-monetary benefits$Total$Superannuation benefits$Options$(B)Shares$(C)Total$Mr W Piestrzynski

112、 2010 228,581 130,000 2,405 360,986 32,272 4,298-397,556 33%-2009 241,081 20,000 6,614 267,695 23,498 4,298-204,840-500,331 45%41%Ms M De Ville 2010 211,009-1,623 212,632 18,991 3,515-2,707 237,845 1%-2009 211,009-2,434 213,443 18,991 3,515-20,484 2,707 259,140 9%8%Mr S Banfield 2010 165,000 85,000

113、3,023 253,023 22,500 2,748-8,472 286,743 33%-2009 165,000-3,791 168,791 14,850 2,748-102,420 8,472 297,281 37%34%Mr C Levy 2010 165,000 85,000-250,000 22,500 2,748-7,666 282,914 33%-2009 165,000 30,000 4,125 199,125 17,550 2,748-102,420 7,666 329,509 43%31%Mr J Paine 2010 154,577 120,000 503 275,081

114、 24,703 2,846-302,630 40%-2009 154,577 30,000 1,225 185,802 16,603 2,645-143,388-348,438 50%41%Mr J Sinclair(employer subsidiary 2010 67,257 50,000 2,936 120,193 10,553-53,022 183,768 56%-acquired 17 March 2010)2009-Mr B Slattery(employer subsidiary 2010 123,379 91,743 38,687 253,809 19,361 5,625-27

115、8,795 33%-acquired 17 March 2010)2009-Mr S McCullough(ceased 2010 143,014 49,695(10,748)181,961 16,934(2,328)20,192-216,759 23%-employment 11 June 2010)2009 140,770 77,932 10,748 229,450 19,682 2,328-30,726-282,186 39%11%17 TPG Telecom Limited and its controlled entities Directors report(continued)F

116、or the year ended 31 July 2010 5.1 5.1.2 Remuneration report audited(continued)Directors and executive officers remuneration(continued)Notes in relation to the table of directors and executive officers remuneration A.The short-term incentive bonuses paid during the years ended 31 July 2010 and 31 Ju

117、ly 2009 were for performance during those years and were awarded at the discretion of the Remuneration Committee for the executive directors,and at the discretion of the Executive Chairman for other executive officers.In the case of Mr S McCullough his short-term incentive bonuses represent sales co

118、mmission.B.Certain executives received share options during the year ended 31 July 2009 as part of their remuneration under the Employee Share Option Plan approved by the Board on 7 July 2009.The two executive directors received share options under the same plan following approval by shareholders at

119、 the November 2009 AGM.The fair value of the options was calculated using a Black Scholes model.All options were exerciseable immediately upon grant and as a result the expense of the options allocated in July 2009 was recognised fully in the financial results for the year ended 31 July 2009,and for

120、 the two executive directors granted options in November 2009,the related expense was recognised fully in the financial results for the year ended 31 July 2010.C.Certain executives received shares as part of their remuneration under the former incentive plans that ceased to operate in 2008.The fair

121、value of the shares was the market value of the shares purchased under the scheme for the executive.The fair value is allocated to each reporting period evenly over the period from grant date to vesting date subject to certain events which trigger vesting.Mr J Sinclair was granted shares in the Comp

122、any in July 2010 which vested immediately.5.1.3 Equity instruments 5.1.3.1 Shares,options and rights over equity instruments granted as compensation Details on options over ordinary shares in the Company that were granted as compensation to each key management person during the reporting period and

123、details on options that vested during the reporting period are as follows:Number of options granted during 2010 Grant date Fair value per option at grant date($)Exercise price per option($)Expiry date Number of options vested during 2010 Mr D Teoh 1,000,000 25 Nov 2009$1.4271$0.18 30 June 2010 1,000

124、,000 Mr AJ Latimer 1,000,000 25 Nov 2009$1.4271$0.18 30 June 2010 1,000,000 The above options were provided at no cost to the recipients.No options have been granted since 31 July 2010.18TPG Telecom Limited and its controlled entities Directors report(continued)For the year ended 31 July 2010 5.1 Re

125、muneration report audited(continued)5.1.3 Equity instruments(continued)5.1.3.1 Shares,options and rights over equity instruments granted as compensation(continued)Details on ordinary shares in the Company that were granted as compensation to each key management person during the reporting period and

126、 details on the shares that vested during the reporting period are as follows:(i)On 30 July 2010 30,000 ordinary shares in the Company were granted to Mr J Sinclair.The shares had a fair value at date of grant of$1.7674 each and all vested immediately,with the related expense being fully recognised

127、in the financial results for the year ended 31 July 2010.Aside from this there were no other shares granted to key management personnel during the years ending 31 July 2010 or 31 July 2009.(ii)The shares in the table below were granted on 13 December 2007 under former incentive plans that ceased to

128、operate in 2008.The unvested shares will continue to vest in accordance with the rules described in 5.1.1(a).Number of unvested shares as at 31 July 2009 Number of shares vested during 2010 Number of unvested shares as at 31 July 2010 Fair value per share at grant date($)Mr S Banfield 75,603 19,991

129、55,612$0.42373 Mr C Levy 68,758 18,113 50,645$0.42322 Ms M De Ville 22,445 6,280 16,165$0.43096 5.1.3.2 Modification of terms of equity-settled share-based payment transactions No terms of equity-settled share-based payment transactions(including options and rights granted as compensation to a key m

130、anagement person)have been altered or modified by the issuing entity during the reporting period or the prior period.5.1.3.3 Exercise of options granted as compensation During the reporting period,the following shares were issued on the exercise of options previously granted as compensation:Number o

131、f shares issued Executives Mr V Piestrzynski 1,000,000 Mr J Paine 700,000 Mr C Levy 500,000 Mr S Banfield 500,000 Mr S McCullough 150,000 Executive Directors Mr D Teoh 1,000,000 Mr AJ Latimer 1,000,000 All outstanding options were exercised during the year ended 31 July 2010 such that there were non

132、e outstanding as at 31 July 2010.19TPG Telecom Limited and its controlled entities Directors report(continued)For the year ended 31 July 2010 6.Principal activities During the financial year the principal activities of the Group continued to be the provision of consumer,wholesale and corporate telec

133、ommunications services.7.Operating and financial review Commentary on the Groups operating and financial performance is provided in the Chairmans Report on pages 3 to 4.8.Dividends Dividends paid or declared by the Company to members since the end of the previous financial year were:Cents per share

134、Total amount$000 Franked/unfranked Date of payment Declared and paid during the year 2009 Final 2009 ordinary 1.0 7,118 Franked 18 Nov 2009 Interim 2010 ordinary 2.0 15,220 Franked 27 May 2010 Total amount 22,338 Franked dividends declared as paid during the year were fully franked at the rate of 30

135、 per cent.Declared after end of year After the balance sheet date the directors have declared a fully franked final FY10 dividend of 2.0 cents per ordinary share,payable on 17 November 2010 to shareholders on the register at 20 October 2010.The financial effect of this dividend has not been brought

136、to account in the financial statements for the year ended 31 July 2010 and will be recognised in subsequent financial reports.9.Events subsequent to reporting date There has not arisen in the interval between the end of the financial year and the date of this report any item,transaction or event of

137、a material and unusual nature likely,in the opinion of the directors of the Company,to affect significantly the operations of the Group,the results of those operations,or the state of affairs of the Group,in future financial years.10.Likely developments Other than the matters discussed,there are no

138、material likely developments for the Group at the date of this report.20TPG Telecom Limited and its controlled entities Directors report(continued)For the year ended 31 July 2010 11.Directors interests The relevant interest of each director in the shares and options over such instruments issued by t

139、he companies within the Group and other related bodies corporate,as notified by the directors to the Australian Stock Exchange in accordance with S205G(1)of the Corporations Act 2001,at the date of this report is as follows:Shares in TPG Telecom Limited Mr D Teoh 279,109,400 Mr RD Millner 6,866,269

140、Mr D Ledbury 150,000 Mr AJ Latimer 1,174,108 Mr J Pang 85,000 12.Share options Options granted to directors and executives of the Group During the financial year,following approval from shareholders at the November 2009 AGM,the Group granted options over unissued ordinary shares in the Company to th

141、e following:Number of options granted Mr D Teoh 1,000,000 Mr AJ Latimer 1,000,000 No options have been granted since the end of the financial year.Unissued shares under options At the date of this report there are no unissued ordinary shares of the Company under option.Shares issued on exercise of o

142、ptions During or since the end of the financial year,the Company issued 8,105,000 ordinary shares as a result of the exercise of options(2009:4,670,000).The amount paid for each of these shares was$0.18.There are no amounts unpaid on the shares issued.13.Indemnification and insurance of officers and

143、 auditors Indemnification The Company has agreed to indemnify all directors and officers of the Company against all liabilities to another person(other than the Company or a related body corporate)that may arise from their position as directors of the Company and its controlled entities,except where

144、 the liability arises out of conduct involving a lack of good faith.The agreement stipulates that the Company will meet the full amount of any such liabilities,including costs and expenses.21TPG Telecom Limited and its controlled entities Directors report(continued)For the year ended 31 July 2010 13

145、.Indemnification and insurance of officers and auditors(continued)The Company has also agreed to indemnify all directors and officers of its controlled entities for all liabilities to another person(other than the company or a related body corporate)that may arise from their position,except where th

146、e liability arises out of conduct involving a lack of good faith.The agreement stipulates that the Company will meet the full amount of any such liabilities,including costs and expenses.Insurance premiums Since the end of the previous financial year,the Group has paid insurance premiums of$42,755 in

147、 respect of directors and officers liability insurance contracts,for current and former directors and officers,including senior executives of the Company and directors,senior executives and secretaries of its controlled entities.The insurance premiums relate to:costs and expenses that may be incurre

148、d by the relevant officers in defending proceedings,whether civil or criminal and whatever their outcome;and other liabilities that may arise from their position,with the exception of conduct involving a wilful breach of duty or improper use of information or position to gain a personal advantage.14

149、.Non-audit services During the year KPMG,the Companys auditor,has performed certain other services in addition to their statutory duties.The Board has considered the non-audit services provided during the year by the auditor and is satisfied that the provision of those non-audit services during the

150、year by the auditor is compatible with,and did not compromise,the auditor independence requirements of the Corporations Act 2001 for the following reasons:all non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Audit&Risk Commit

151、tee to ensure they do not impact the integrity and objectivity of the auditor;and the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants,as they did not involve reviewing or auditing

152、the auditors own work,acting in a management or decision making capacity for the Company,acting as an advocate for the Company or jointly sharing risks and rewards.Details of the amounts paid to the auditor of the Company,KPMG,and its related practices for audit and non-audit services provided durin

153、g the year are set out below.In addition,amounts paid to other auditors have been disclosed:2010$2009$Audit services:Auditors of the Company:Audit and review of financial reports(KPMG Australia)387,000 405,000 387,000 405,000 Services other than statutory audit:Other regulatory audit services:Teleco

154、mmunications USO return 11,000 5,000 Bank covenant compliance certificate 7,500 7,500 Other services:Taxation advisory services 55,000-73,500 12,500 22TPG Telecom Limited and its controlled entities Directors report(continued)For the year ended 31 July 2010 15.Lead auditors independence declaration

155、The Lead auditors independence declaration is set out on page 91 and forms part of the directors report for financial year ended 31 July 2010.16.Rounding off The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order,amounts in the fina

156、ncial report and directors report have been rounded off to the nearest thousand dollars,unless otherwise stated.This report is made with a resolution of the directors:David Teoh Chairman Dated at Sydney this 14th day of October,2010.TPG Telecom Limited and its controlled entities The notes on pages

157、28 to 87 are an integral part of these consolidated financial statements.23Consolidated Income Statement For the year ended 31 July 2010 Note 2010 2009 In thousands of AUD Revenue 508,224 481,169 Telecommunications expense (258,391)(272,629)Employee benefits expense (43,257)(44,057)Other expenses 8

158、(35,522)(43,683)Earnings before interest,tax,depreciation and amortisation 171,054 120,800 (EBITDA)Depreciation of plant and equipment 20(35,443)(27,193)Amortisation of intangibles 21 (44,557)(58,342)Results from operating activities 91,054 35,265 Finance income 1,861 1,342 Finance expenses (15,076)

159、(10,284)Net financing costs 10(13,215)(8,942)Profit before income tax 77,839 26,323 Income tax expense 11 (22,113)(8,662)Profit for the year 55,726 17,661 Attributable to:Owners of the company 55,726 17,661 Profit for the year 55,726 17,661 Earnings per share:Basic earnings per share(cents)12 7.6 2.

160、6 Diluted earnings per share(cents)12 7.6 2.5 TPG Telecom Limited and its controlled entities The notes on pages 28 to 87 are an integral part of these consolidated financial statements.24 Consolidated Statement of Comprehensive Income For the year ended 31 July 2010 2010 2009 In thousands of AUD Pr

161、ofit for the period 55,726 17,661 Foreign exchange translation differences 73 207 Revaluation of investments,net of tax 110 -Other comprehensive income,net of tax 183 207 Total comprehensive income 55,909 17,868 Total comprehensive income attributable to:Owners of the company 55,909 17,868 Total com

162、prehensive income 55,909 17,868 TPG Telecom Limited and its controlled entities The notes on pages 28 to 87 are an integral part of these consolidated financial statements.25Consolidated Statement of Financial Position As at 31 July 2010 Restated*In thousands of AUD Note 2010 2009 Assets Cash and ca

163、sh equivalents 13 17,112 17,179 Trade and other receivables 14 23,302 30,282 Inventories 15 446 705 Intangible assets 21 382 7,315 Investments 17 9,890 -Current tax assets 18 116 55 Prepayments and other assets 16 5,997 6,983 Total Current Assets 57,245 62,519 Property,plant and equipment 20 312,671

164、 135,408 Intangible assets 21 588,103 330,985 Prepayments and other assets 16 1,096 993 Total Non-Current Assets 901,870 467,386 Total Assets 959,115 529,905 Liabilities Trade and other payables 22 84,903 75,997 Loans and borrowings 23 76,595 8,535 Current tax liabilities 18 29,961 9,486 Employee be

165、nefits 24 3,629 3,066 Provisions 25 2,000 936 Deferred income and other liabilities 26 33,494 25,371 Total Current Liabilities 230,582 123,391 Loans and borrowings 23 245,884 58,429 Deferred tax liabilities 19 8,978 12,688 Employee benefits 24 621 537 Provisions 25 6,117 2,193 Deferred income and ot

166、her liabilities 26 21,496 7,869 Total Non-Current Liabilities 283,096 81,716 Total Liabilities 513,678 205,107 Net Assets 445,437 324,798 Equity Share Capital 27 473,735 389,747 Reserves (51,255)(54,079)Retained earnings/(Accumulated losses)22,957 (10,870)Total Equity 445,437 324,798 *Refer Note 37

167、TPG Telecom Limited and its controlled entities The notes on pages 28 to 87 are an integral part of these consolidated financial statements.26Consolidated Statement of Changes in EquityFor the year ended 31 July 2010ForeignMinorityIn thousands of AUDcurrencyShareTreasuryinterestSharetranslationoptio

168、nshareFair valueRevaluationacquisitionTotalRetainedTotalNotecapitalreservereservereservereservereservereservereservesearningsequityBalance as at 1 August 2008384,693 (130)-(204)-915 (56,459)(55,878)(22,165)306,650 Profit for the year-17,661 17,661 Foreign currency translation differences-207 -207 -2

169、07 Total comprehensive income for the period-207 -207 17,661 17,868 Movement in share option reserve-2,227 -2,227 -2,227 Movement in treasury share reserve-(181)-(181)-(181)Transfers between reserves-(476)-(476)476 -Acquisition of minority interest-22 22 -22 Transaction costs 27(17)-(17)Dividends pa

170、id to shareholders27 5,071 -(6,842)(1,771)Total contributions by and distributions to owners5,054 -2,227 (181)-(476)22 1,592 (6,366)280 Balance as at 31 July 2009389,747 77 2,227 (385)-439 (56,437)(54,079)(10,870)324,798 Balance as at 1 August 2009389,747 77 2,227 (385)-439 (56,437)(54,079)(10,870)3

171、24,798 Profit for the year-55,726 55,726 Foreign currency translation differences-73 -73 -73 Net change in fair value of available-for-sale financial assets,net of tax10 -110 -110 -110 Total comprehensive income for the period-73 -110 -183 55,726 55,909 Movement in share option reserve-2,852 -2,852

172、-2,852 Movement in treasury share reserve-228 -228 -228 Transfers between reserves-(439)-(439)439 -Issue of ordinary shares27 68,485 -68,485 Transaction costs,net of tax27(1,486)-(1,486)Dividends paid to shareholders27 16,989 -(22,338)(5,349)Total contributions by and distributions to owners83,988 -

173、2,852 228 -(439)-2,641 (21,899)64,730 Balance as at 31 July 2010473,735 150 5,079 (157)110 -(56,437)(51,255)22,957 445,437 Attributable to owners of the Company TPG Telecom Limited and its controlled entities The notes on pages 28 to 87 are an integral part of these consolidated financial statements

174、.27Consolidated Statement of Cash Flows For the year ended 31 July 2010 In thousands of AUD Note 2010 2009 Cash flows from operating activities Cash receipts from customers 573,481 549,549 Cash paid to suppliers and employees (384,403)(396,723)Cash generated from operations 189,078 152,826 Income ta

175、xes paid (16,768)(19,104)Net cash from operating activities 172,310 133,722 Cash flows from investing activities Proceeds from sale of property,plant and equipment 32 34 Acquisition of property,plant and equipment (68,203)(23,040)Acquisition of subsidiaries,net of cash acquired 7 (371,034)-Costs inc

176、urred on acquisition of subsidiaries (2,961)-Proceeds from sale of investments 5,781 -Dividends received 207 -Security deposits paid -(348)Net cash used in investing activities (436,178)(23,354)Cash flows from financing activities Issue of shares 66,185 -Proceeds from exercise of share options 2,068

177、 229 Transaction costs related to issue of shares (2,145)(17)Transaction costs related to loans&borrowings (11,467)-Payment of network capacity and finance lease liabilities(8,268)(13,510)Proceeds from borrowings 23 354,489 -Repayment of borrowings 23 (119,989)(83,375)Interest received 1,674 773 Int

178、erest paid (13,249)(9,920)Restricted cash released -80 Dividends paid,net of Dividend Reinvestment Plan (5,349)(1,771)Net cash from/(used in)financing activities 263,949 (107,511)Net increase in cash and cash equivalents 81 2,857 Cash and cash equivalents at beginning of period 13 17,179 14,053 Effe

179、ct of exchange rate fluctuations (148)269 Cash and cash equivalents at 31 July 13 17,112 17,179 TPG Telecom Limited and its controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 28 Index to notes to the consolidated financial statements Page Page 1.Report

180、ing entity 29 20.Property,plant and equipment 61 2.Basis of preparation 29 21.Intangible assets 63 3.Significant accounting policies 30 22.Trade and other payables 65 4.Determination of fair values 44 23.Loans and borrowings 66 5.Financial risk management 45 24.Employee benefits 67 6.Segment reporti

181、ng 48 25.Provisions 69 7.Acquisitions of subsidiaries and minority interests 51 26.Deferred income and other liabilities 69 8.Expenses 53 27.Capital and reserves 70 9.Auditors remuneration 53 28.Financial instruments 72 10.Finance income and expenses 54 29.Operating leases 78 11.Income tax expense 5

182、5 30.Capital and other commitments 78 12.Earnings per share 56 31.Contingencies 78 13.Cash and cash equivalents 57 32.Consolidated entities 79 14.Trade and other receivables 57 33.Reconciliation of cash flows from operating activities 80 15.Inventories 57 34.Parent entity disclosures 81 16.Prepaymen

183、ts and other assets 57 35.Related parties 82 17.Investments 58 36.Subsequent events 86 18.Current tax assets and liabilities 58 37.Revision to accounts 86 19.Deferred tax assets and liabilities 59 38.Deed of cross guarantee 86 TPG Telecom Limited and its controlled entities Notes to the consolidated

184、 financial statements For the year ended 31 July 2010 291.Reporting entity TPG Telecom Limited(the Company)is a company domiciled in Australia.The address of the Companys registered office is 65 Waterloo Road,North Ryde,NSW 2113.The consolidated financial report as at,and for the year ended 31 July

185、2010 comprises the Company and its subsidiaries(together referred to as the Group).2.Basis of preparation(a)Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards(AASBs)(including Australian Interp

186、retations)adopted by the Australian Accounting Standards Board(AASB)and the Corporations Act 2001.The financial report complies with International Financial Reporting Standards(IFRSs)and interpretations adopted by the International Accounting Standards Board(IASB).The financial statements were appro

187、ved by the Board of Directors on 14 October 2010.(b)Basis of measurement The consolidated financial statements have been prepared on the historical cost basis with the exception of assets and liabilities acquired through business combinations being measured at fair value.The methods used to measure

188、fair values are discussed further at note 4.Notwithstanding the fact that the classifications within the 31 July 2010 consolidated balance sheet show a net current liability position,the accounts have been prepared on a going concern basis as there are reasonable grounds to believe that the Group wi

189、ll be able to pay its debts as and when they become due and payable based on its Board approved cashflow projections,and also the undrawn debt facility available to it(refer note 23).(c)Functional and presentation currency These consolidated financial statements are presented in Australian dollars,w

190、hich is the functional currency of the majority of the Group.The Group is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order,all financial information presented in Australian dollars has been rounded to the nearest thousand unless otherwise st

191、ated.(d)Use of estimates and judgements The preparation of financial statements requires management to make judgements,estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,liabilities,income and expenses.Actual results may differ from these

192、estimates.Estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.In particular,information about significant areas of estimation uncertainty and critical

193、judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes:note 7 business combinations note 19 utilisation of tax losses note 21 measurement of the recoverable amounts of cash-generating

194、units containing goodwill note 28 valuation of financial instruments.TPG Telecom Limited and its controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 30 2.Basis of preparation(continued)(e)Changes in accounting policies Starting as of 1 August 2009,the G

195、roup has changed its accounting policies in the following areas:Accounting for business combinations Accounting for acquisitions of non-controlling interests Accounting for borrowing costs Determination and presentation of operating segments Presentation of financial statements.3.Significant account

196、ing policies The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements and have been applied consistently by the Group.Certain comparative amounts have been reclassified to conform with the current year presentation.(a)Ba

197、sis of consolidation(i)Business combinations Change in accounting policy The Group has adopted revised AASB 3 Business Combinations(2008)and amended AASB 127 Consolidated and Separate Financial Statements(2008)for business combinations occurring in the financial year starting 1 August 2009.All busin

198、ess combinations occurring on or after 1 August 2009 are accounted for by applying the acquisition method.The change in accounting policy is applied prospectively and had no material impact on earnings per share.The Group has applied the acquisition method for the business combination disclosed in n

199、ote 7.For every business combination,the Group identifies the acquirer,which is the combining entity that obtains control of the other combining entities or businesses.Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.In ass

200、essing control,the Group takes into consideration potential voting rights that currently are exercisable.The acquisition date is the date on which control is transferred to the acquirer.Judgement is applied in determining the acquisition date and determining whether control is transferred from one p

201、arty to another.Measuring goodwill The Group measures goodwill as the fair value of the consideration transferred including the recognised amount of any non-controlling interest in the acquiree,less the net recognised amount(generally fair value)of the identifiable assets acquired and liabilities as

202、sumed,all measured as of the acquisition date.Consideration transferred includes the fair values of the assets transferred,liabilities incurred by the Group to the previous owners of the acquiree,and equity interests issued by the Group.Consideration transferred also includes the fair value of any c

203、ontingent consideration and share-based payment awards of the acquiree that are replaced mandatorily in the business combination(see below).TPG Telecom Limited and its controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 31 3.Significant accounting polic

204、ies(continued)(a)Basis of consolidation(continued)(i)Business combinations(continued)Share-based payment awards When share-based payment awards exchanged(replacement awards)for awards held by the acquirees employees(acquirees awards)relate to past services,then a part of the market-based measure of

205、the awards replaced is included in the consideration transferred.If they require future services,then the difference between the amount included in consideration transferred and the market-based measure of the replacement awards is treated as post-combination compensation cost.Contingent liabilities

206、 A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event,and its fair value can be measured reliably.Non-controlling interest The Group measures any non-controlling interest at its proportionate

207、 interest in the identifiable net assets of the acquiree.Transaction costs Transaction costs that the Group incurs in connection with a business combination,such as legal fees,due diligence fees,and other professional and consulting fees,are expensed as incurred (ii)Accounting for acquisitions of no

208、n-controlling interests The Group has adopted AASB 3 Business Combinations(2008)and AASB 127 Consolidated and Separate Financial Statements(2008)for acquisitions of non-controlling interests occurring in the financial year starting 1 August 2009.Under the new accounting policy,acquisitions of non-co

209、ntrolling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result of such transactions.Previously,an equity reserve was recognised arising on the acquisition of a non-controlling interest in a subsidiary;

210、and that represented the difference between the cost of the additional investment over the carrying amount of the interest in the net assets acquired at the date of exchange.The change in accounting policy was applied prospectively and had no material impact on earnings per share.(iii)Subsidiaries S

211、ubsidiaries are entities controlled by the Group.Control exists when the Group has the power,directly or indirectly,to govern the financial and operating policies of an entity so as to obtain benefits from its activities.In assessing control,potential voting rights that presently are exercisable or

212、convertible are taken into account.The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.The accounting policies of subsidiaries have been changed when necessary to align them with the po

213、licies adopted by the Group.(iv)Transactions eliminated on consolidation Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.TPG Telecom Limited and its controlled enti

214、ties Notes to the consolidated financial statements For the year ended 31 July 2010 32 3.Significant accounting policies(continued)(b)Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.Monetary assets and

215、 liabilities denominated in foreign currencies at the balance sheet date are translated to Australian dollars at the foreign exchange rate ruling at that date.Foreign exchange differences arising on translation are recognised in the income statement.Non-monetary assets and liabilities that are measu

216、red 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

217、 dates the fair value was determined.(c)Property,plant and equipment(i)Owned assets Items of property,plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment losses(see accounting policy(h).The cost of self-constructed assets includes the cost of materials,

218、direct labour,the initial estimate,where relevant,of the costs of dismantling and removing the items and restoring the site on which they are located,and an appropriate proportion of production overheads.Where parts of an item of property,plant and equipment have different useful lives,they are acco

219、unted for as separate items of property,plant and equipment.(ii)Leased assets Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases.(iii)Subsequent costs The Group recognises in the carrying amount of an item of property,plan

220、t and equipment the cost of replacing part of such an item when that cost is incurred,if it is probable that the future economic benefits embodied within the item will flow to the Group and the cost of the item can be measured reliably.All other costs are recognised in the income statement as an exp

221、ense as incurred.(iv)Depreciation Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property,plant and equipment.The estimated useful lives in the current and comparative periods are as follows:Plant and equipment Leas

222、ehold improvements Leased assets Buildings Domestic fibre optic cable International fibre optic cable 2.5-20 years 8 years 5-10 years 40 years 20 years 25 years The residual value,the useful life and the depreciation method applied to an asset are reassessed at least annually.TPG Telecom Limited and

223、 its controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 33 3.Significant accounting policies(continued)(d)Intangible assets(i)Goodwill Change in accounting policy As from 1 August 2009,the Group has adopted the revised AASB 3 Business Combinations(2008

224、)and the amended AASB 127 Consolidated and Separate Financial Statements(2008).Revised AASB 3 and amended AASB 127 have been applied prospectively to business combinations with an acquisition date on or after 1 August 2009.The change in accounting policy had no material impact on earnings per share.

225、For details on the initial recognition and measurement of goodwill related to business combinations that occurred during the financial year ended 31 July 2010,see note 7.Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired.

226、Goodwill is stated at cost less any accumulated impairment losses.Goodwill is allocated to cash-generating units and tested annually for impairment(see accounting policy(h).(ii)Capitalised subscriber costs Capitalised subscriber costs comprising dealer connection commissions,fulfilment costs and sim

227、-cards are recognised as an asset and amortised using the straight line method from the date of initial recognition over the period during which the future economic benefits are expected to be obtained,being the contract period.(iii)Acquired customer base On acquisition of a subsidiary,customers of

228、the acquired subsidiary are valued and brought to account as intangible assets.The value given to the customers is the expected future economic benefit expected to be derived from these customers.(iv)Development costs Operating costs incurred in developing or acquiring income producing assets are re

229、cognised as an asset and amortised using the straight line method from the date of initial recognition over the period during which the future economic benefits are expected to be obtained,being the contract period.(v)Trademark On acquisition of a subsidiary,trademarks of the acquired subsidiary are

230、 valued and brought to account as intangible assets.The valuation of a trademark is calculated using the Relief from Royalty Method.(vi)Internally-generated software On acquisition of a subsidiary,internally developed software and systems are valued and brought to account as intangible assets.The so

231、ftware is valued at its depreciated replacement cost.(vii)Indefeasible right of use of capacity Indefeasible rights of use of acquired capacity are brought to account as intangible assets at cost,being the present value of the future cashflows payable for the right.TPG Telecom Limited and its contro

232、lled entities Notes to the consolidated financial statements For the year ended 31 July 2010 34 3.Significant accounting policies(continued)(d)Intangible assets(continued)(viii)Other intangible assets Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisa

233、tion(see below)and impairment losses(see accounting policy(h).Expenditure on internally generated goodwill and brands is recognised in the income statement as an expense as incurred.(ix)Subsequent expenditure Subsequent expenditure on capitalised intangible assets is capitalised only when it increas

234、es the future economic benefits embodied in the specific asset to which it relates.All other expenditure is expensed as incurred.(x)Amortisation Amortisation is charged to the income statement on a straight-line basis,unless stated otherwise,over the estimated useful lives of intangible assets unles

235、s such lives are indefinite.Goodwill and intangible assets with an indefinite useful life are systematically tested for impairment at each balance sheet date.Other intangible assets are amortised from the date they are available for use.The estimated useful lives in the current and comparative perio

236、ds are as follows:Goodwill Trademark Indefeasible right of use(IRU)of capacity Acquired customer bases Internally-generated software Capitalised subscriber costs Development costs indefinite life indefinite life over the life of the IRU amortised on a reducing balance basis in line with the expected

237、 economic benefits to be derived from the acquired customer base 5 years 2 years 2-20 years TPG Telecom Limited and its controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 353.Significant accounting policies(continued)(e)Trade and other receivables Trad

238、e and other receivables are stated at their amortised cost less impairment losses(see accounting policy(h).(f)Inventories Inventories are stated at the lower of cost and net realisable value.Net realisable value is the estimated selling price in the ordinary course of business,less the estimated cos

239、ts of completion and selling expenses.(g)Cash and cash equivalents Cash and cash equivalents comprise cash balances,short term bills and call deposits.Bank overdrafts that are repayable on demand and form an integral part of the Groups cash management are included as a component of cash and cash equ

240、ivalents for the purpose of the statement of cash flows.(h)Impairment A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired.A financial asset is considered to be impaired if objective evidence indicates that one or more events h

241、ave had a negative effect on the estimated future cash flows of that asset.The carrying amounts of the Groups non-financial assets,other than inventories and deferred tax assets,are reviewed at each reporting date to determine whether there is any indication of impairment.If any such indication exis

242、ts,the assets recoverable amount is estimated.An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.Impairment losses are recognised in the income statement,unless an asset has previously been revalued,in which case the i

243、mpairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through profit or loss.Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating unit

244、s(group of units)and then to reduce the carrying amount of the other assets in the unit(group of units)on a pro rata basis.TPG Telecom Limited and its controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 363.Significant accounting policies(continued)(h)I

245、mpairment(continued)(i)Calculation of recoverable amount Impairment of receivables is not recognised until objective evidence is available that a loss event has occurred.Significant receivables are individually assessed for impairment.Impairment testing of significant receivables that are not assess

246、ed as impaired individually is performed by placing them into portfolios of significant receivables with similar risk profiles and undertaking a collective assessment of impairment.Non-significant receivables are not individually assessed.Instead,impairment testing is performed by placing non-signif

247、icant receivables in portfolios of similar risk profiles,based on objective evidence from historical experience adjusted for any effects of conditions existing at each balance sheet date.The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use.In

248、assessing value in use,the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.For an asset that does not generate largely independent cash inflows,the recovera

249、ble amount is determined for the cash-generating unit to which the asset belongs.(ii)Reversals of impairment Impairment losses,other than in respect of goodwill,are reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimate used to d

250、etermine the recoverable amount.An impairment loss in respect of goodwill is not reversed.An impairment loss in respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss wa

251、s recognised.An impairment loss is reversed only to the extent that the assets 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.TPG Telecom Limited and its controlled entities Notes to th

252、e consolidated financial statements For the year ended 31 July 2010 373.Significant accounting policies(continued)(h)Impairment(continued)(iii)Derecognition of financial assets and liabilities A financial asset(or,where applicable,a part of a financial asset or part of a group of similar financial a

253、ssets)is derecognised when:?the rights to receive cash flows from the asset have expired?the Group retains the right to receive cash flows from the asset,but has assumed an obligation to pay them in full without material delay to a third party;or?the Group has transferred its rights to receive cash

254、flows from the asset and either(a)has transferred substantially all the risks and rewards of the asset,or(b)has neither transferred nor retained substantially all the risks and rewards of the asset,but has transferred control of the asset.A financial liability is derecognised when the obligation und

255、er the liability is discharged,cancelled or expired.When an existing financial liability is replaced by another from the same lender on substantially different terms,or the terms of an existing liability are substantially modified,such an exchange or modification is treated as a derecognition of the

256、 original liability and the recognition of a new liability.The difference in the respective carrying amounts is recognised in profit and loss.(i)Share capital Transaction costs Transaction costs of an equity transaction are accounted for as a deduction from equity,net of any related income tax benef

257、it.(j)Interest-bearing borrowings Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs.Subsequent to initial recognition,interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised i

258、n the income statement over the period of the borrowings on an effective interest basis.TPG Telecom Limited and its controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 383.Significant accounting policies(continued)(k)Employee benefits (i)Long-term servi

259、ce benefits The Groups net obligation in respect of long-term service is the amount of future benefit that employees have earned in return for their service in the current and prior periods.The obligation is calculated using expected future increases in wage and salary rates including related on-cos

260、ts and expected settlement dates,and is discounted using the rates attached to the Commonwealth Government bonds at the balance sheet date which have maturity dates approximating to the terms of the Groups obligations.(ii)Wages,salaries,annual leave and non-monetary benefits Liabilities for employee

261、 benefits for wages,salaries and annual leave that are expected to be settled within 12 months of the reporting date represent present obligations resulting from employees services provided to reporting date and are calculated at undiscounted amounts based on remuneration wage and salary rates that

262、the Group expects to pay as at reporting date including related on-costs,such as workers compensation insurance and payroll tax.Non-accumulating non-monetary benefits,such as medical care,housing,cars and free or subsidised goods and services,are expensed based on the net marginal cost to the Group

263、as the benefits are taken by the employees.(iii)Employee share option plan The fair value of share options granted to employees,classed as equity settled share based payments,is recognised as an employee expense,together with a corresponding increase in equity,over the vesting period of the options.

264、Their fair value is calculated using the Black Scholes methodology.(iv)Employee share scheme The Group has in place an Employee Share Scheme that provides for selected employees to receive ordinary shares in the Company.Under this scheme funds are transferred to a trust which acts as an agent and pu

265、rchases shares for the benefit of the selected employees.A treasury share reserve is recognised for the funds transferred to the scheme.An employee expense is recognised over the period during which the employees become unconditionally entitled to the shares with a corresponding decrease in the trea

266、sury share reserve.(v)Superannuation The Company and other controlled entities contribute to several defined contribution superannuation plans.Contributions are recognised as an expense in the income statement on an accruals basis.(l)Borrowing costs Borrowing costs directly attributable to the acqui

267、sition,construction or production of qualifying assets are capitalised as part of the cost of the asset.Borrowing costs relating to loans and borrowings are capitalised and amortised over the term of the loan.All other borrowing costs are expensed in the period they occur.TPG Telecom Limited and its

268、 controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 39 3.Significant accounting policies(continued)(m)Provisions A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event,an

269、d it is probable that an outflow of economic benefits will be required to settle the obligation.Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and,where appropriate,the risks specific to th

270、e liability.(n)Trade and other payables Trade and other payables are stated at their amortised cost.Trade payables are non-interest bearing and are normally settled on 30-60 day terms.(o)Revenue(i)Goods sold and services rendered Revenues are recognised at fair value of the consideration received ne

271、t of the amount of goods and services tax(GST).(ii)Sale of goods Revenue from the sale of goods is recognised(net of returns,discounts and allowances)when control of the goods passes to the customer.Revenue from the sale of equipment and handsets is recognised in the income statement(net of rebates,

272、returns,discounts and other allowances)when the significant risks and rewards of ownership have been transferred to the customer,which is ordinarily when the equipment and handset is delivered to the customer.Where the sale is settled through instalments,interest revenue is recognised over the contr

273、act term,using the effective interest method.(iii)Rendering of services Revenue from rendering services is recognised in proportion to the stage of completion of the contract and is only brought to account when it is considered probable that the revenue will be received.Revenue from the provision of

274、 telecommunication services includes access to the mobile network,telephone calls,connection and retention commission and other services.Connection and retention commissions are recognised on a straight-line basis over the specified contract period.These are received at the time of connection or ret

275、ention of a customer.These are deferred and amortised over the contract term.Airtime and access fee revenues are recognised when the fee in respect of the services is earned.(iv)Unearned revenue Unearned revenue represents customer access fees invoiced that are not earned at the reporting date.Acces

276、s fees are normally invoiced to customers one month in advance.This is taken to revenue in the month to which the access fees relate.(v)Sale of Indefeasible right of use of capacity(IRU sales)The appropriate revenue recognition treatment for an IRU sale is determined on a contract by contract basis.

277、Where an IRU contract is deemed to satisfy all the criteria of containing a finance lease,then the sale will be treated as a disposal of a specific asset resulting in revenue and profit recognition at the time the asset is derecognised and a finance lease receivable recognised.Alternatively,where an

278、 IRU contract is deemed not to contain a finance lease the contract is treated as a provision of a service and the revenue is recognised over the period of the contract.TPG Telecom Limited and its controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 40 3

279、.Significant accounting policies(continued)(p)Expenses(i)Operating lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease.Lease incentives received are recognised in the income statement as an integral part of th

280、e total lease expense and spread over the lease term.(ii)Finance lease payments Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability.The finance charge is allocated to each period during the lease term so as to produce a constant periodic r

281、ate of interest on the remaining balance of the liability.(iii)Finance income and expenses Net financing costs comprise interest payable on borrowings calculated using the effective interest method and interest receivable on funds invested.Borrowing costs are expensed as incurred and included in net

282、 financing costs.Interest income is recognised in the income statement as it accrues,using the effective interest method.The interest expense component of finance lease payments is recognised in the income statement using the effective interest method.(q)Income tax Income tax on the profit or loss f

283、or the year comprises current and deferred tax.Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity,in which case it is recognised in equity.Deferred tax is provided using the balance sheet liability method,providing for tempora

284、ry differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.The following temporary differences are not provided for:initial recognition of goodwill,the initial recognition of assets or liabilities that affect neit

285、her accounting nor taxable profit,and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and

286、liabilities,using tax rates enacted or substantively enacted at the reporting date.Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets,and they relate to income taxes levies by the same tax authority on the same taxable

287、entity,or on different tax entities,but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available

288、against which the asset can be utilised.Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.TPG Telecom Limited and its controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 413.Signifi

289、cant accounting policies(continued)(q)Income tax(continued)Tax consolidation The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group with effect from 1 August 2006 and have therefore been taxed as a single entity from that date.The head entity within the ta

290、x-consolidated group is TPG Telecom Limited.TPG Holdings Pty Ltd and its wholly owned Australian resident entities joined the Companys tax consolidated group from 7 April 2008(the date of acquisition of TPG)and Chariot Pty Ltd joined from 14 August 2008.Following its acquisition by the Group,the Pip

291、e Networks tax-consolidated group has joined the TPG Telecom tax-consolidated group from 31 March 2010.Current tax expense/income,deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial

292、statements of the members of the tax-consolidated group using the separate taxpayer within group approach by reference to the carrying amounts of assets and liabilities in the separate financial statements of each entity and the tax values applying under tax consolidation.Any current tax liabilities

293、(or assets)and deferred tax assets arising from unused tax losses of the subsidiaries are assumed by the head entity in the tax-consolidated group and are recognised as amounts payable(receivable)to(from)other entities in the tax-consolidated group in conjunction with any tax funding arrangement amo

294、unts(refer below).Any difference between these amounts is recognised by the Company as an equity contribution or distribution.The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable that future taxable profits of the t

295、ax-consolidated group will be available against which the asset can be utilised.Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments of the probability of recoverability is recognised by the head entity only.Nature of tax funding

296、arrangements and tax sharing arrangements The head entity,in conjunction with other members of the tax-consolidated group,has entered into a tax funding arrangement which sets out the funding obligations of members of the tax-consolidated group in respect of tax amounts.The tax funding arrangements

297、require payments to/from the head entity equal to the current tax liability(asset)assumed by the head entity and any tax-loss deferred tax asset assumed by the head entity,resulting in the head entity recognising an inter-entity receivable(payable)equal in amount to the tax liability(asset)assumed.T

298、he inter-entity receivables(payables)are at call.Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the timing of the head entitys obligation to make payments for tax liabilities to the relevant tax authorities.The head entity,in conjunction

299、with other members of the tax-consolidated group,has also entered into a tax sharing agreement.The tax sharing agreement provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations.No amounts have been

300、recognised in the financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote.TPG Telecom Limited and its controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 42 3.Significant accountin

301、g policies(continued)(r)Segment reporting As of 1 August 2009 the Group determines and presents operating segments based on the information that internally is provided to the CEO,who is the Groups chief operating decision maker.This change in accounting policy is due to the adoption of AASB 8 Operat

302、ing Segments.Previously operating segments were determined and presented in accordance with AASB 114 Segment Reporting.The new accounting policy in respect of segment operating disclosures is presented as follows.Comparative segment information has been re-presented in conformity with the transition

303、al requirements of such standard.Since the change in accounting policy only impacts presentation and disclosure aspects,there is no impact on earnings per share.An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses,inc

304、luding revenues and expenses that relate to transactions with any of the Groups other components.All operating segments operating results are regularly reviewed by the Groups CEO to make decisions about resources to be allocated to each segment and assess its performance,and for which discrete finan

305、cial information is available.Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.Unallocated items comprise mainly interest on the Groups core debt,amortisation of intangibles arising from busines

306、s combinations and other corporate expenses.(s)Goods and services tax Revenue,expenses and assets are recognised net of the amount of goods and services tax(GST),except where the amount of GST incurred is not recoverable from the taxation authority.In these circumstances,the GST is recognised as par

307、t of the cost of acquisition of the asset or as part of the expense.Receivables and payables are stated with the amount of GST included.The net amount of GST recoverable from,or payable to,the ATO is included as a current asset or liability in the balance sheet.Cash flows are included in the stateme

308、nt 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.(t)Earnings per share The Group presents basic and diluted earnings per share(EPS)data for its or

309、dinary shares.Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders of

310、 the Company and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares,which comprise share options.TPG Telecom Limited and its controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 43 3.Signi

311、ficant accounting policies(continued)(u)New standards and interpretations not yet adopted The following standards,amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application.They are available for early adoption at 31 Jul

312、y 2010,but have not been applied in preparing this financial report:AASB 9 Financial Instruments includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the project to replace AASB 139 Financial Instruments:Recognition and Measurem

313、ent.AASB 9 will become mandatory for the Groups 31 July 2014 financial statements.Retrospective application is generally required,although there are exceptions,particularly if the entity adopts the standard for the year ended 31 July 2012 or earlier.The Group has not yet determined the potential eff

314、ect of the standard.AASB 124 Related Party Disclosures(revised December 2009)simplifies and clarifies the intended meaning of the definition of a related party and provides a partial exemption from the disclosure requirements for government-related entities.The amendments,which will become mandatory

315、 for the Groups 31 July 2012 financial statements,are not expected to have any impact on the financial statements.AASB 2009-5 Further amendments to Australian Accounting Standards arising from the Annual Improvements Process affect various AASBs resulting in minor changes for presentation,disclosure

316、,recognition and measurement purposes.The amendments,which become mandatory for the Groups 31 July 2011 financial statements,are not expected to have a significant impact on the financial statements.AASB 2009-8 Amendments to Australian Accounting Standards-Group Cash-settled Share-based Payment Tran

317、sactions resolves diversity in practice regarding the attribution of cash-settled share-based payments between different entities within a group.As a result of the amendments AI 8 Scope of AASB 2 and AI 11 AASB 2-Group and Treasury Share Transactions will be withdrawn from the application date.The a

318、mendments,which become mandatory for the Groups 31 July 2011 financial statements,are not expected to have a significant impact on the financial statements.AASB 2009-10 Amendments to Australian Accounting Standards-Classification of Rights Issue AASB 132(October 2010)clarify that rights,options or w

319、arrants to acquire a fixed number of an entitys own equity instruments for a fixed amount in any currency are equity instruments if the entity offers the rights,options or warrants pro-rata to all existing owners of the same class of its own non-derivative equity instruments.The amendments,which wil

320、l become mandatory for the Groups 31 July 2011 financial statements,are not expected to have any impact on the financial statements.IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments addresses the accounting by an entity when the terms of a financial liability are renegotiated and

321、result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability.IFRIC 19 will become mandatory for the Groups 31 July 2011 financial statements,with retrospective application required.The amendments are not expected to have a significa

322、nt impact on the financial statements.TPG Telecom Limited and its controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 44 4.Determination of fair values A number of the Groups accounting policies and disclosures require the determination of fair value,fo

323、r both financial and non-financial assets and liabilities.Fair values have been determined for measurement and/or disclosure purposes based on the following methods.When applicable,further information about the assumptions made in determining fair values is disclosed in the notes specific to that as

324、set or liability.Property,plant and equipment The fair value of property,plant and equipment recognised as a result of a business combination is based on market values.The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a will

325、ing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably,prudently and without compulsion.The market value of items of plant,equipment,fixtures and fittings is based on the quoted market prices for similar items.Intangible a

326、ssets The fair value of patents and trademarks acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trademark being owned.The fair value of other intangible assets is based on the discounted cash flows expected t

327、o be derived from the use and eventual sale of the assets.Inventories The fair value of inventories acquired in a business combination is determined based on its estimated selling price in the ordinary course of business less the estimated costs of completion and sale,and a reasonable profit margin

328、based on the effort required to complete and sell the inventories.Trade and other receivables The fair value of trade and other receivables is estimated as the present value of future cash flows,discounted at the market rate of interest at the reporting date.Non-derivative financial assets-Investmen

329、ts Investments in equity securities are classified as available-for-sale financial assets.Subsequent to initial recognition,they are measured at fair value and changes therein,other than impairment losses,are recognised in other comprehensive income and presented within equity in the fair value rese

330、rve.When an investment is derecognised,the cumulative gain or loss in equity is transferred to profit or loss.Non-derivative financial liabilities Fair value,which is determined for disclosure purposes,is calculated based on the present value of future principal and interest cash flows,discounted at

331、 the market rate of interest at the reporting date.For finance leases,the market rate of interest is determined by reference to similar lease agreements.TPG Telecom Limited and its controlled entities Notes to the consolidated financial statements For the year ended 31 July 2010 45 5.Financial risk

332、management Overview The Group has exposure to the following risks from its use of financial instruments:credit risk liquidity risk market risk.This note presents information about the Groups exposure to each of the above risks,its objectives,policies and processes for measuring and managing risk,and

333、 the management of capital.Further quantitative disclosures are included throughout this financial report(including note 28).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 ris