Telstra 2009 Annual Report Download - page 48

33
Telstra Corporation Limited and controlled entities
Full year results and operations review - June 2009
Net cash provided by operating activities
Our primary source of liquidity is cash generated from our
operations (receipts less payments). Fiscal 2009 saw operating
cash grow by 1.7% to $8,998 million largely due to an increase
of $634 million in cash profit before interest and tax, offset by
larger negative cash movements in working capital balances
compared with the prior year including:
• $260 million of cash contributions paid to the Telstra
Superannuation Scheme;
• a 3.2% reduction in trade and other payables; and
• a decrease in revenue received in advance largely due to
the Sensis Group.
The increase in income taxes paid was a result of higher
instalment payments made during the year from an increased
instalment rate, offset by tax refunds received from the ATO for
the 2008 income tax return. Fiscal 2008 included significant
credits and refunds received from the ATO for instalment
variations and prior year amended assessments.
Net cash used in investing activities
During fiscal 2009, capital expenditure (before investments)
declined by 10.0% to $4,794 million. The $533 million reduction
was a result of our transformation program passing its
spending peak in fiscal 2007 with several major projects/
programs completed in the prior year. The capital
requirements during fiscal 2009 were not to the same level.
Capital expenditure is discussed in further detail on page 31.
Payments for intangible assets during the year largely relate
to software assets including new billing system applications as
part of the transformation release roll out and customer
relationship management applications.
Our payments for shares in controlled entities amounted to
$240 million, primarily associated with the acquisition of a 67%
controlling interest in two of China's leading mobile content
and online music businesses, China M and Sharp Point, for a net
cash outlay of $169 million. A further $71 million (including
acquisition costs) was paid in relation to contractual
obligations associated with the acquisitions of Norstar Media
and Autohome/PCPop as certain pre-determined revenue and
EBITDA targets were met. The acquisition of a 55% interest was
undertaken in the prior year which drove the majority of the
fiscal 2008 investment expenditure.
The cash proceeds from asset sales and finance leases of $276
million were primarily due to the KAZ sale which resulted in
cash proceeds of $197 million. Proceeds from finance lease
principal amounts and the sale of some intangibles, property,
plant and equipment amounted to $55 million and $24 million
respectively. The combined cash flow was $144 million higher
than in fiscal 2008 which included the sale of Telstra eBusiness
of $48 million.
The increase in the cash outflow of $108 million from the
settlement of hedges in net investments was attributable to
the maturity of financial instruments used to hedge our foreign
currency risk associated with investments in foreign
operations. Fiscal 2009 reflected a loss of $35 million driven by
the depreciation of the Australian dollar.
The $100 million in distributions received during fiscal 2009
relate to two partnership distributions from FOXTEL.
Free cash flow
Our free cash continued to grow in strength and has increased
by 13.2% to $4,365 million. The increase was driven by higher
sales revenue generated by our operating activities in addition
to a reduction in our capital asset payments within our
investing activities.
Net cash used in financing activities
The 4.4% increase in net cash used in financing activities to
$3,933 million was due to:
• $265 million reduction in the cash proceeds from
movements in borrowings (including finance leases) as
requirements to support our transformation initiatives
were not as significant in comparison with fiscal 2008.
New borrowings for fiscal 2009 were mainly executed to
support our working capital requirements in light of the
current economic conditions. The borrowings included
$1.3 billion 3 year domestic syndicated loans, $438
million offshore syndicated loans and a $320 million 5
year Swiss Franc bond; and
• higher dividends paid by our offshore entities, CSLNW
and SouFun group, to their minority shareholders during
fiscal 2009; offset by
• a movement in purchase of shares for employee share
plans. In the prior fiscal year, $129 million of cash was
used to purchase 27.5 million Telstra shares on market in
order to support the long term incentive plan. We did not
undertake such a purchase this fiscal year, contributing
to a reduction of cash used in financing activities.