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30 September 2002
The Manager
Company Announcements Office
Australian Stock Exchange
10th Floor, 20 Bond Street
SYDNEY NSW 2000
Office of the Company Secretary
Level 41
242 Exhibition Street
MELBOURNE VIC 3000
AUSTRALIA
Telephone 03 9634 6400
Facsimile 03 9632 3215
ELECTRONIC LODGEMENT
Dear Sir or Madam
Telstra Corporation Limited Annual Report
In accordance with Listing Rules I enclose an announcement for release to the
market.
Yours sincerely
Douglas Gration
Company Secretary
Telstra Corporation Limited
ACN 051 775 556
ABN 33 051 775 556

Table of contents

  • Page 1
    ..., 20 Bond Street SYDNEY NSW 2000 Level 41 242 Exhibition Street MELBOURNE VIC 3000 AUSTRALIA Telephone 03 9634 6400 Facsimile 03 9632 3215 ELECTRONIC LODGEMENT Dear Sir or Madam Telstra Corporation Limited Annual Report In accordance with Listing Rules I enclose an announcement for release to the...

  • Page 2
    Annual Report 2002 New ideas, new services and new opportunities.

  • Page 3
    ... for, or buy shares in Telstra. Terms used in this report: • We, Telstra and the Telstra Group - all mean Telstra Corporation Limited, an Australian corporation, and its controlled entities as a whole; and • Telstra entity is the legal entity, Telstra Corporation Limited. Our fiscal year ends on...

  • Page 4
    ... Selected financial data ...5 Exchange rate information ...8 Risk factors ...9 Cautionary statement regarding "forward-looking statements" ...15 Information on the Company...16 History and development of the company ...16 Organisational structure ...16 Marketing and customer service ...18 Products...

  • Page 5
    Telstra Corporation Limited and controlled entities Contents SEC Item(1) Item 11 Page No. Quantitative and Qualitative Disclosures about Market Risk ...Corporate Governance and Board Practices ...Directors' report...Financial Statements ...Safety, Rehabilitation and Compensation Act 1998 (Cwth)......

  • Page 6
    ... of products and services that we can offer our customers in our traditional telephony markets as well as mobile telecommunications and emerging data and internet markets. Falling prices in most product categories, market share losses driven by the effects of regulation and increased competition in...

  • Page 7
    Telstra Corporation Limited and controlled entities Summary Overview Business strategy Our vision is to be a world-class full-service integrated telecommunications company helping Australian and Asia-Pacific customers and communities prosper through their access to innovative communication services...

  • Page 8
    ...37 Statement of Financial Position Data (at year end) Amounts in accordance with Australian GAAP: Total assets...Current interest-bearing liabilities...Non-current interest-bearing liabilities ...Shareholders' equity/net assets ...Amounts in accordance with USGAAP: Total assets...Current borrowings...

  • Page 9
    Telstra Corporation Limited and controlled entities Key Information Financial data 2002 A$ Revenue from ordinary activities (excluding interest) comprises: Sales revenue ...Revenue from sale of assets/investments ...Dividends revenue ...Miscellaneous revenue ...2002(1) Year ended 30 June 2001 2000 ...

  • Page 10
    ... subscribers ...Broadband subscribers(7) ...Total online subscribers ...FOXTEL subscribers (thousands) FOXTEL cable subscribers ...FOXTEL direct to home satellite subscribers ...Total FOXTEL subscribers...Value-added services (thousands) Mobile MessageBank® customers . . Easycall® call waiting...

  • Page 11
    ... international and data calls, based on calling party pays billing, excluding minutes used by Telstra internal mobile services. Excludes advanced access services, such as ISDN and FaxStream® services. Facsimile access product. Expressed in equivalent number of clear voice channels. Within Broadband...

  • Page 12
    ... other risks, currently believed to be immaterial, could turn out to be material. All of these could materially adversely affect our business, profits, assets, liquidity and capital resources. They should be considered in connection with any forward-looking statements in this annual report and the...

  • Page 13
    Telstra Corporation Limited and controlled entities Key Information Competition in the Australian telecommunications market could cause us to continue to lose market share and reduce our traditional telephony prices and profits from current products and services The Australian telecommunications ...

  • Page 14
    ...Corporations Act") or applicable ASX Listing Rules. We are required to incur new debt in order to undertake expansion and develop our business, and we may be unable to obtain future financing at favourable rates Because the Telstra Act requires that the Commonwealth own at least 50.1% of our shares...

  • Page 15
    ... redefine the markets in which we operate, the products and services required by our customers and the ability of companies to compete in the telecommunications industry in Australia and elsewhere in the world. These changes broaden the range, reduce the costs and expand the capacities and functions...

  • Page 16
    ...health risk associated with mobile telecommunications equipment could lead to litigation against us; adversely affect us by reducing the number or the growth rate of mobile telecommunications services or lowering usage per customer; or hinder us in installing new mobile telecommunications equipment...

  • Page 17
    ... infrastructure assets. REACH provides wholesale voice, data and internet connectivity services in the Asia-Pacific region. The financing arrangements of REACH are currently without recourse to our joint venture partner, PCCW, or to us. In the short-term, REACH is likely to use any surplus funds to...

  • Page 18
    ... and products and more difficult to manage the operations and maintenance of Telstra's existing networks and technology. This may have a negative impact on our financial position. Cautionary statement regarding "forward-looking statements" Some of the information contained in this annual report may...

  • Page 19
    ...wireless networks and associated systems within Australia. It manages all mobile voice and data retail sales and after sales support, customer service, billing, product development and pricing. Telstra Mobile is also responsible for managing the network of Telstra Shops, including dedicated business...

  • Page 20
    ...for strategic planning and investment opportunities and provides corporate policy and support functions, including finance, risk management and assurance, shared services for processing functions, credit management, treasury, investor relations, acquisitions and divestments, productivity directorate...

  • Page 21
    ... better information flow between our direct and indirect sales force. Significant focus has also been placed on education of our staff to equip them to better service the needs of the growth area of our business, data products and solutions. In particular, our account managers and communications...

  • Page 22
    ... companies' business operations through a number of specialist offices located internationally. Through our own capacity, strategic alliances and ventures, we offer global voice, data and wireless services, internet, network management and call centre solutions. Products and services We offer...

  • Page 23
    ......International telephone services ...Mobile services ...Mobile handsets...Data and internet services ...Directory services ...Customer premises equipment ...Intercarrier services ...Inbound calling products ...Solutions management ...Various controlled entities ...Other sales and services ...Sales...

  • Page 24
    ...also assisted us to meet the demands for service in a more timely way and provide our network with additional capacity for further growth in the volume of lines. Local calls We provide local call services to most residential and business customers in Australia. We generally charge for local calls on...

  • Page 25
    ... and entertainment services. We are increasingly offering our business customers a variety of wireless data applications that enhance productivity. The Australian mobiles market is highly competitive. To compete in this market, we rely on our innovative marketing plans; our network coverage and...

  • Page 26
    ... Business, BigPondâ„¢ Broadband and Internet Direct); IP Solutions including Private IP, Wideband IP and Dial IP; domestic and international frame relay; and domestic and international ATM and global private IP. dedicated network solutions including digital data services, voice grade dedicated lines...

  • Page 27
    ... networking (LAN) interworking between offices to be extended on demand to accommodate applications such as large file transfers or video conferencing. Telstra BigPondâ„¢ Direct provides larger corporate, government and wholesale customers with high quality dedicated internet access within Australia...

  • Page 28
    ... their back office administration and asset management operations. Text services Our text services consist mainly of facsimile products and services marketed under our FaxStream® brand name. Online services In March 2000, we announced the availability of our online communications hub, telstra.com...

  • Page 29
    ...'® online sites, as well as on telstra.com®, Telstra BigPond™ and a range of third party sites. As a result of the recent acquisition of BMC Media's Web Ad Sales business, Sensis® MediaSmart is now placed among Australia's top four internet media sales businesses. Customer Premises Equipment We...

  • Page 30
    ... controlled entities Information on the Company Solutions management We provide management of all or part of a business customer's IT and telecommunications services including management of each of the following managed voice services: our network based enhanced voice and data switching products...

  • Page 31
    ... Corporation Limited and controlled entities Information on the Company Wholesale manages and delivers a full range of customer processes for wholesale customers. These include product and service provisioning, ordering and activation, billing, fault reporting and end user and product transfer. Pay...

  • Page 32
    ...% ownership of the company; and TelstraClear which is the second largest full service carrier in New Zealand, providing innovative voice, data, internet, mobile, managed services and cable TV products and services to more than 11% of the New Zealand market. New Zealand is a strategically important...

  • Page 33
    ... Australia's domestic and international voice and data telephony traffic. This large, diverse network is monitored and supported through a largely centralised global operations centre, which has a fully tested recovery plan which enables network management to be transferred to an alternate location...

  • Page 34
    ...Dialling and Virtual Private Networks. New types of telephones and customer premise equipment which make these features more accessible and easy to use are continually entering the market. The PSTN also supports many operator assisted service products such as directory assistance and CallConnect. We...

  • Page 35
    ... a range of access types and value-added features. Our retail customers use ATM and frame relay data services on the SDN to build wide-area corporate data networks. Our ATM point to point connections currently range from 64kbps to 34Mbps and we expect to grow this to a full STM-1 line rate early...

  • Page 36
    ... up to 1,200 customers each. We designed the cable network to provide two way transmission for interactive services and high speed data transfer. The cable network provides pay television services and in most of the coverage areas also supports cable modems delivering broadband internet access. ADSL...

  • Page 37
    ... "always on" data access to WAP and internet information services, as well as access to corporate customers' LANs and intranets. Our second digital mobile telecommunications network in Australia is based on CDMA technology, with coverage around double the area of the GSM network. It operates in the...

  • Page 38
    ... will continue to invest in many new systems and processes in the following seven principal areas sales and marketing; customer ordering and provisioning; online access for customers; billing and credit management; service assurance; workforce management; and back office processes. We are focused...

  • Page 39
    Telstra Corporation Limited and controlled entities Information on the Company In August 2002, as a part of our comprehensive property strategy review, we sold seven office properties for A$570 million. We have entered into long term operating leases in relation to these properties. Land access ...

  • Page 40
    ... their position in another market. Access and local calls We currently face infrastructure competition in basic access and local call services in the central business districts of the major capital cities and major metropolitan areas. Our main facilities-based competitors are Optus (fixed and mobile...

  • Page 41
    ... services, competition is generally based on quality of service, price, speed and availability of local call access and associated information or transaction services. The internet service provider market in Australia is highly competitive, with approximately 700 competing service providers. Online...

  • Page 42
    .... Other pay TV operators offer limited services. Pay TV providers compete with free-to-air television operators and are prevented by law from holding exclusive broadcast rights to most major sports programmes. Competition is currently based on a number of factors including programming, brand, price...

  • Page 43
    ... of the HFC network and this will lead to a further expansion of the pay TV product offering. Advertising, Information and Directory Services We compete with a variety of domestic and international companies. We expect increasing competition in our advertising directory services business as we...

  • Page 44
    Telstra Corporation Limited and controlled entities Competition and Regulation The Communications Minister can make rules in connection with the implementation and operation of certain aspects of the regulatory regime and, at his discretion, impose or vary the conditions of a carrier licence. In ...

  • Page 45
    ...; customer information on prices, terms and conditions; billing; credit management; customer transfer; mobile number portability; unconditioned local loop service network deployment rules; integrated public number database, data provider, data user and IPND manager; emergency call services; and...

  • Page 46
    Telstra Corporation Limited and controlled entities Competition and Regulation • has a substantial degree of market power and takes advantage of that power with the effect or likely effect of substantially lessening competition in any telecommunications market, taking into account other conduct ...

  • Page 47
    ...obtain information in relation to designated telecommunications matters. Record-keeping rules The ACCC has in place new financial record-keeping rules. These accounting rules require detailed sixmonthly reporting to the ACCC of non-public cost and revenue information in relation to our wholesale and...

  • Page 48
    ...CPI. The ACCC has powers to monitor and report on our compliance with price controls. Local call charges We and other carriage service providers must offer untimed local calls to: • • residential and charity customers for all local calls; and business customers for local voice calls. We are not...

  • Page 49
    ...); local carriage services (in effect, this is local call resale); analogue cable subscription television broadcast carriage service; and the spectrum sharing service (also known as "line sharing") announced on 30 August 2002. Terms and conditions of access A carrier or carriage service provider...

  • Page 50
    ... Telstra is currently involved concern analogue Pay TV services. However, it may be that in the future some of Telstra's wholesale customers will seek an arbitrated decision from the ACCC in relation to the terms and conditions of a declared service. The ACCC has wide discretion in access disputes...

  • Page 51
    ...arbitrated terms and conditions. We have entered into a number of facilities access agreements with other carriers. The Communications Minister can determine pricing principles for access to customer cabling and equipment, network infrastructure and information relating to the operation of a network...

  • Page 52
    ... plan to the extent it relates to research and development; provide resale (for a limited time) of and/or roaming on, our analogue service to the operators of proposed new digital mobile networks on commercially negotiated or arbitrated terms and conditions; and extend an equivalent mobile service...

  • Page 53
    ... relation to terms and conditions for the provision of local number portability. These principles state that each carrier or carriage service provider should bear the costs it incurs in its own network to meet the obligation under the numbering plan to provide local number portability. Mobile number...

  • Page 54
    Telstra Corporation Limited and controlled entities Competition and Regulation Analogue network closure In compliance with a direction by the Communications Minister, aimed at encouraging greater competition, we closed down the analogue AMPS cellular mobile network in the first half of fiscal 2001....

  • Page 55
    ...our share of that cost and industry funding requirements. To date, no carrier (apart from Telstra) has registered to take part in the pilots. As provided for in the Telecommunications (CPSS) Act 1999, the Minister is currently conducting a review of the pilot arrangements. Customer service guarantee...

  • Page 56
    Telstra Corporation Limited and controlled entities Competition and Regulation • for a delayed connection or repair, A$12 for residential customers and A$20 for business customers for each working day of delay up to five working days and A$40 per working day of delay after that. However, damages...

  • Page 57
    ... issuing licences; making rules and determinations in relation to the provision of telecommunications network services by licensees, including setting interconnection charges on particular routes; requiring a licensee to comply with the terms of its license and any applicable legislation; and to...

  • Page 58
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Operating and Financial Review and Prospects The following discussion should be read in conjunction with the annual consolidated financial statements, including the notes to those financial statements,...

  • Page 59
    ...Corporation Limited and controlled entities Operating and Financial Review and Prospects In all material respects our accounting policies are applied consistently across the Telstra group of companies. To the extent that the accounting policies of entities we account for under the equity accounting...

  • Page 60
    ... direct costs associated with the development of network and business software for internal use where we regard the success of a project to be probable. Management applies judgement to assess this probability. We capitalise costs such as external direct costs of materials and services consumed...

  • Page 61
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects be shown to be working together to generate net cash flows, this assessment is performed over the group of assets, rather than individually. If our estimates of future cash flows prove to be incorrect ...

  • Page 62
    ... Staff Accounting Bulletin No. 101 (SAB 101) "Revenue Recognition in Financial Statements", the effect of which is described below in "Results of operations", "Operating revenue" and "Operating expenses". Further information regarding the changes in our accounting policies is provided in note...

  • Page 63
    ...our company and provides us with the cash flow to continue to invest and develop our business. We are improving our marketing and our customer service in this area by offering a broad range of product packages that includes traditional products packaged with new products; re-balancing our prices to...

  • Page 64
    ... bring new products to the market in our mobiles business unit; obtaining better value from our capital expenditure; rationalising our various IT and network platforms; improving network efficiency; managing total labour costs more efficiently; and consolidating our managed services businesses. We...

  • Page 65
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects • • • the ongoing results of our investments in REACH, RWC and TelstraClear; our ongoing efforts to control our costs and maintain our efficiency; and economic conditions globally and in Australia...

  • Page 66
    ... Corporation Limited and controlled entities Operating and Financial Review and Prospects In April 2002 the Communications Minister announced a series of regulatory changes which may be introduced in response to the Productivity Commission's report. Some of these changes may include accounting...

  • Page 67
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Over the three-year period our operating results were impacted by a number of one-off items which have given rise to movements in the overall net profit before income tax expense. These items include: ...

  • Page 68
    ... industry for our cost of providing this service. See "Competition and Regulation - Regulation" for more detail. As competition has intensified during the three-year period, the volume of telecommunications services purchased in Australia has increased and the range of products and services offered...

  • Page 69
    ...to-mobile ...International telephone services ...Mobile services ...Mobile handsets...Data and internet services ...Directory services ...Customer premises equipment ...Intercarrier services...Inbound calling products ...Solutions management ...Various controlled entities ...Other sales and services...

  • Page 70
    ...in "Operating expenses". For more information on the effect of this change in accounting policy see note 1.2 to our financial statements included with this annual report. Categorisation of our operating revenue We categorise revenue from products and services we sell to wholesale customers depending...

  • Page 71
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Table 3 shows information about the performance of our basic access product. Table 3 - Basic access data 2002 Year ended 30 June 2001 2000 2002/2001 2001/2000 (in millions) (% change) Basic access ...

  • Page 72
    ...call forwarding, call conferencing and our call return feature. For the most part we charge for local calls without a time limit. Our operating revenue from local calls generally varies with changing general economic conditions, the number of basic access lines in service, customer choice of product...

  • Page 73
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects reflecting this continuing re-balancing of access and call product prices. Generally call volumes fell over the three-year period reflecting customers migrating to other products, such as mobile and ...

  • Page 74
    ... 2002; loss of customers through increased competition in the local call market. Where the customer changes their provider for local call services they tend to select the same provider for long distance services; and customers using alternative products, such as fixed-to-mobile, mobile and internet...

  • Page 75
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Table 6 shows information about our fixed-to-mobile call revenue. Table 6 - Fixed-to-mobile call data 2002 Year ended 30 June 2001 2000 2002/2001 2001/2000 (in millions) (% change) Fixed-to-mobile call...

  • Page 76
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Our operating revenue from international outgoing calls is largely driven by general economic conditions, customer perceptions about the cost and value of our service, competition and promotion and ...

  • Page 77
    ... mainly by the increasing popularity of mobile telephone services in Australia and increasing usage, as well as increased use of our value-added services. Plan options allow free and discounted calls at certain times to other MobileNet® customers and to fixed line services. Voice airtime charges...

  • Page 78
    ... Operating and Financial Review and Prospects Table 8 shows information about our mobile goods and services. Table 8 - Mobile goods and services data Year ended 30 June 2002 2001 2000 2002/2001 2001/2000 (in millions except statistics) (% change) Access fees and call charges ...Value-added services...

  • Page 79
    ... Added Services (mobile data, messaging and roaming). Although volumes and SIOs increased during the three-year period, revenue growth was tempered by lower average airtime charges and a higher percentage of new customers connecting on prepaid services. Generally, prepaid customers have lower usage...

  • Page 80
    ...Note: Statistical data represents management's best estimates. (1) Estimate of total market mobile SIOs divided by total population of Australia, based on population information available from the Australian Bureau of Statistics. (2) Excludes mobile SIOs used internally. (3) Based on mobile services...

  • Page 81
    ..., except access lines and subscriber (% change) numbers in thousands) Data and internet services revenue Retail ...Domestic wholesale ...Total data and internet services revenue . . Consisting of: Integrated services (incl. ISDN) ...Data lines ...Leased lines ...International leased ...Packet...

  • Page 82
    ...WAN products, such as frame relay and Telstra ATM, which offer high-speed transmission for video, voice and the internet. In fiscal 2001 growth in revenue for integrated services, particularly in ISDN international calls, was due in part to the increased demand arising from the staging of the Sydney...

  • Page 83
    ...to directory services revenue. Customer Premises Equipment Our operating revenue from customer premises equipment (CPE) consists mainly of revenue from: • • rental and sale of telephones, facsimile machines and other telecommunications equipment; and installation fees for additional basic access...

  • Page 84
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Our revenues from customer premises equipment products and services declined over the three-year period due mainly to: • • the sale of our PABX business in the first half of fiscal 2002 as part of ...

  • Page 85
    ... revenue from enhanced call centre products using network voice processing, which provides access to advanced call-handling capabilities, without customers having to purchase and maintain their own networks. the fees we charge our business customers for the provision of the inbound calling numbers...

  • Page 86
    ... new Contact Centre Solutions. Solutions management Our operating revenue from our Managed Solutionsâ„¢ product is derived from managing all or part of a customer's IT or telecommunications services, including managing our network-based enhanced voice and data switching products and virtual private...

  • Page 87
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Various controlled entities' revenue Some of our controlled entities' operating revenue is included in the product categories to which they relate, including the following: • • Pacific Access (name ...

  • Page 88
    .... The revenue was recorded in other sales and services revenue and the expenses were recorded in direct cost of sales. In fiscal 2002 operator assisted services volumes fell due to customers using alternative products, such as White pages™ and Yellow Pages® online and Telstra call connect. This...

  • Page 89
    ...Sub-total other revenue ...Revenue from sale of: Property, plant and equipment ...Controlled entities ...Investments in listed securities and other corporations Patents, trademarks and licences ...Businesses ...Associates ...Joint Ventures...Total revenue from sale of assets ...Total other revenue...

  • Page 90
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Our miscellaneous revenue in fiscal 2002, excluding the superannuation write-back, increased mainly due to government subsidies we received for work under the Extended Zone Untimed Local Call tender, as...

  • Page 91
    ... of part-time and casual staff, overtime worked, full and parttime contracted staff or a measure of overseas local hires. Table 20 shows information about our labour expense. Table 20 - Labour expense Year ended 30 June 2002 2001 2000 2002/2001 2001/2000 (% change) (in millions, except staff numbers...

  • Page 92
    .... The reduction has been partly offset by: • the use of employment agency staff in preference to full-time staff in order to manage costs more closely, better utilise staff as a variable resource in peaks and troughs and to satisfy specialised needs; increased labour rates across most areas of the...

  • Page 93
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Table 21 shows our other direct cost of sales during the three-year period. Table 21 - Direct cost of sales 2002 Year ended 30 June 2001 2000 2002/2001 2001/2000 (in A$ millions) (% change) 3,133 4,063 ...

  • Page 94
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Costs of external construction increased in fiscal 2001 but declined in fiscal 2002 due to a softening in the network construction market. These costs relate to network construction activities provided ...

  • Page 95
    ...investments in Solution 6, SMS Management and Technology Limited (formerly Sausage Software), Commander Communications and other smaller investments, by A$66 million. In fiscal 2002 we wrote down a number of minor investments, totalling A$26million. As part of our negotiations with PCCW, in relation...

  • Page 96
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects increased losses from our investment in FOXTEL; increased losses from our investment in Australia-Japan Cable due to the commencement of depreciation following the completion of the network in ...

  • Page 97
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects During the three-year period the increase in depreciation and amortisation (excluding goodwill) was offset, in part, by adjustments to the service lives of some of our assets; retirement of certain ...

  • Page 98
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Our interest expense increased in fiscal 2002, mainly due to: • interest for a full year on the borrowings we incurred to invest in our Asian ventures in fiscal 2001, compared with interest on these ...

  • Page 99
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Table 26 - Equity accounted profit of REACH Year ended 30 June 2002 2001 (in A$ millions) REACH net profit after tax (AGAAP) ...Telstra 50% share ...Goodwill amortisation...Recognition of deferred ...

  • Page 100
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects RWC's 100% owned subsidiary, CSL operates in the highly competitive Hong Kong mobile market. CSL has seen its revenue decline by 10% in fiscal 2002 when compared to its full year revenue in fiscal 2001 ...

  • Page 101
    ... 2002 (in millions) A$ US$(1) Cash ...Short-term debt (2) ...Long-term debt Telecom/Telstra bonds (unsecured) Loans (unsecured) ...Finance leases ...Total long-term debt ...1,070 1,866 2,605 9,234 21 11,860 599 1,045 1,459 5,171 12 6,642 Shareholders' equity Ordinary shares (12,866,600,200 fully...

  • Page 102
    ... the new tax system. We also incurred additional interest payments relating to the funding of our investments in RWC and the PCCW convertible note in fiscal 2001. These increased cash outflows and increased payments to suppliers and employees partially offset the increased receipts from customers in...

  • Page 103
    ... global wholesale business and certain controlled entities to REACH. We received cash and shares in REACH as consideration for the sale; the sale of our shares in Computershare; and the sale and leaseback of our midrange IT equipment. • • Our proceeds on sale of capital assets and investments...

  • Page 104
    ... improved; developing new products and services to meet the changing needs of our customers; providing additional coverage and depth on our digital GSM and CDMA mobile networks; upgrading our customer access network; further developing of our broadband and online infrastructure to meet future growth...

  • Page 105
    ... of our current assets, in common with most international telecommunications companies. We believe that our negative working capital position does not create a liquidity risk because we can delay the timing of our discretionary capital expenditure should cash inflows from our diverse customer base...

  • Page 106
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Table 30 - Expenditure commitments at 30 June 2002 Total Amounts Committed Capital commitments in relation to: Software developed for internal use Other capital expenditure ...Total capital expenditure ...

  • Page 107
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects The FOXTEL minimum subscriber guarantee expenditure commitments relate to our 50% share of the FOXTEL partnership's commitment to acquire pay television programming that is subject to minimum subscriber...

  • Page 108
    ... the minimum annual fees payable to the OFTA for the forthcoming 5 years. Total expenditure commitments pursuant to the 3G licence, including the forthcoming 5 years, are represented within other commitments in note 20 to our financial statements. Other The PT Mitra Global Telekomunikasi Indonesia...

  • Page 109
    ... Corporation Limited and controlled entities Operating and Financial Review and Prospects REACH In February 2001 we formed REACH, a 50:50 joint venture with PCCW, which merged our respective international infrastructure assets. REACH provides wholesale voice, data and internet connectivity services...

  • Page 110
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Research and development Our research and development activities cover diverse areas of our business and focus on developing new competitive products for our customers. Licensed telecommunications ...

  • Page 111
    ... more information on our business segment results see note 5 to our financial statements. Table 31 - Segment summary data 2002 Year ended 30 June 2001 2000 2002/2001 2001/2000 (in A$ millions) (% change) Sales revenue from external customers Telstra Retail ...Telstra Mobile ...Telstra International...

  • Page 112
    ... Corporation Limited and controlled entities Operating and Financial Review and Prospects Telstra Retail sales revenue is made up of revenue from basic access, local calls, national long distance calls, fixed-to-mobile calls, international telephone services, data and internet services, solutions...

  • Page 113
    ... specialised product development needs; and payments to other carriers associated with increased international roaming activity. We changed our accounting policy associated with the treatment of our mobile handset subsidies in fiscal 2000 - refer "Operating expenses - Direct cost of sales." Telstra...

  • Page 114
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects Infrastructure Services Infrastructure Services is responsible for planning, design, construction and operation of our domestic fixed communication networks and associated systems to deliver technology ...

  • Page 115
    Telstra Corporation Limited and controlled entities Operating and Financial Review and Prospects • growth in other contestable products, particularly broadband and internet related products, was also achieved through more market driven pricing and offerings. Telstra Wholesale earnings before ...

  • Page 116
    ... Pty Ltd; Director, Datacraft Asia Limited, Dimension Data Holdings plc, Westfield Management Limited and Westfield America Management Limited; formerly Chief Executive Officer of McDonald's Australia Limited, Wormald International Limited, Optus Communications Limited and John Fairfax Holdings...

  • Page 117
    ... years previously he was Chief Executive and Managing Director of the Nine Network Australia Limited. Anthony J Clark - AM, FCA, FCPA, FAICD Age 63 Director since October 1996 Chartered Accountant; formerly Managing Partner KPMG NSW (1992 - 1998); Chairman, Maritime Industry Finance Company Limited...

  • Page 118
    ... 16 years as Founding Managing Director and Chief Investment Officer and subsequently Chairman of County Investment Management Limited. Mr Macek has had a long association with the finance and investment industry. Donald G McGauchie Age 52 Director since September 1998 Senior Partner, C&E McGauchie...

  • Page 119
    ..., Telstra Country Wide®, Head, Networks & Technology Group Group Managing Director, Finance & Administration and Chief Financial Officer Group Managing Director, Telstra Retail Group Managing Director, Infrastructure Services Group Managing Director, Corporate and Human Relations, Chief of Staff...

  • Page 120
    ... a board position at the Australian Mobile Telecommunications Association (AMTA). As Group Managing Director of Telstra Mobile he is responsible for the company's voice and data wireless business, the Telstra Shop chain and Telstra's extensive national network of mobile phone dealers. In July 2002...

  • Page 121
    ... board members and senior executives Remuneration strategy and relationship to company performance Telstra's senior manager remuneration strategy is designed to provide competitive total reward levels conditional upon the achievement of business improvement and personal performance accountabilities...

  • Page 122
    ... supporting business plans and corporate strategies; and rewarding performance improvement. Senior managers participate in an annual performance review process that assesses the individual's performance against set key accountabilities. Performance against these accountabilities impacts directly on...

  • Page 123
    ... benefits tax and is defined as a ratio of the Total Remuneration amount. • Short-term incentive The management incentive plan rewards senior managers for meeting or exceeding specific key business objectives, at the corporate, business unit and individual level. The incentive for fiscal 2002...

  • Page 124
    Telstra Corporation Limited and controlled entities Directors, Management and Employees Trustee pays interest to Telstra on the loan balance and may repay capital from time to time. If options are exercised the senior executive pays the original exercise price to the Telstra Growthshare Trustee and...

  • Page 125
    ... senior executive's emoluments even though he has ceased employment with Telstra. Name and Position Remuneration Telstra Growthshare(4) Fixed Short Term Other benefits Total Annual Performance Options (3) Remuneration Incentive(2) Reward Rights (1) John Hibbard former Managing Director Global...

  • Page 126
    ... price is made. The performance hurdle for options and performance rights allocated in fiscal 2002 is that the Telstra 30 day average total shareholder return 'TSR' must exceed the 50th percentile of the 30 day average TSR performance of the companies comprising the ASX 200 Industrials ("Peer Group...

  • Page 127
    ... communications company, we continue to be one of Australia's largest employers. 2002 Full-time employees ...40,427 As at 30 June 2001 2000 44,874 50,761 1999 52,840 1998 57,234 Our full-time employees include full-time staff, fixed-term contracted staff and expatriate staff in overseas controlled...

  • Page 128
    ... employees may not be directly comparable with other telecommunications companies. The company continued to reduce full-time staff numbers during fiscal 2002 from 44,874 to 40,427. This was achieved through ongoing process improvements and a number of major corporate initiatives undertaken as part...

  • Page 129
    Telstra Corporation Limited and controlled entities Directors, Management and Employees Our staff are adopting new ways of working that have a positive impact on the environment. For instance, integrated recycling facilities for paper waste and other recyclables are now located at our major offices...

  • Page 130
    ... 6,420,393,077 12,866,600,200 573,097(1) % of class 50.1 49.9 100.0 Shares ( Directors and officers as a group (1) Refers to direct and indirect holdings. As at 6 September 2002, we are not aware of any shareholders, other than the Commonwealth, whose shares represent more than 5% of the issued...

  • Page 131
    ...in general, regulated by the Australian Corporations Act, the ASX listing rules and our constitution. Commonwealth departments and independent agencies are also responsible for the regulation of the telecommunications industry generally and us in particular under the Telstra Act, the Trade Practices...

  • Page 132
    .... To date, no directions have been issued under this power. Our board of directors must ensure that we comply with any such direction. The Communications Minister may not give such directions in relation to the amounts to be charged for work done, or services, goods or information supplied by...

  • Page 133
    ... advantage of open competition when purchasing telecommunications services. This has resulted, and may continue to result, in a reduction of business being awarded to us. Related party transactions A discussion of our related party transactions is contained in "Operating and Financial Review and...

  • Page 134
    Telstra Corporation Limited and controlled entities Listing Information Markets in which our shares are traded Listing Information We are listed, and those of our shares that are not held by the Commonwealth are quoted, on the ASX and on the New Zealand Stock Exchange (NZSE). American depositary ...

  • Page 135
    Telstra Corporation Limited and controlled entities Listing Information Table A(2) - High and low closing price for shares and ADSs - on a quarterly basis for the two most recent full financial years US$ per A$ per share ADS(1) Period High Low High Low 1 April -30 June ...7.77 6.50 23.50 18.38 1 ...

  • Page 136
    ... liability of those customers to pay termination or disconnection fees to One.Tel if they moved to a service provider other than Telstra. The proceedings were settled between the parties in December 2001, without any material adverse effect upon Telstra's business or its financial position. In 1998...

  • Page 137
    ...the election of directors and the sale or disposal of our main undertaking. As the Commonwealth holds 50.1% of our issued shares it has the power to control most decisions made by shareholders. Directors and shareholders may call a meeting The directors may call a general meeting at their discretion...

  • Page 138
    ...and the amount paid up on those shares. Currently, no special rights attach to any of our shares. Rights to profits The power to declare dividends and to fix the time for their payment is vested in the board of directors. Our directors may, before declaring or paying a dividend, set aside out of our...

  • Page 139
    ...our shares The directors may issue shares at their discretion. They must, however, act in accordance with our constitution, the Corporations Act, the Telstra Act, the listing rules of the ASX, any special rights conferred on holders of any shares and any direction from the company in general meeting...

  • Page 140
    ...the annual general meeting in each year at least one-third of our directors (other than the chief executive officer) must retire from office. The directors to retire by rotation at each annual general meeting are those who have been longest in office. In addition, our board has adopted a policy that...

  • Page 141
    Telstra Corporation Limited and controlled entities Constitution and Documents on Display Calls Our directors may only make calls on shareholders in respect of money unpaid on their shares. Our shareholders have no other liability to further capital calls. Dividend policy It is our current policy ...

  • Page 142
    ... "associate", "group", "particular type of stake", "direct control interest" and "interest" in a share are all defined in the Telstra Act and are summarised below under "Definitions". Where an acquisition of shares, or interests in shares in any company results in an "unacceptable foreign-ownership...

  • Page 143
    Telstra Corporation Limited and controlled entities Exchange Controls and Foreign Ownership • a person who holds a share in which a foreign person or an associate of a foreign person has an interest (foreign holder). The information derived from these notifications will be reflected in a ...

  • Page 144
    ... of the foreign ownership provisions in the Telstra Act. Copies of the constitution, the rules and the Telstra Act, are available for inspection through the Company Secretary, Telstra Centre, 242 Exhibition Street, Melbourne, Victoria 3000, Australia during normal working hours. Definitions "Foreign...

  • Page 145
    ... types of power over, or over the appointment of, the board of directors of such company. "Group", in relation to the foreign ownership limits, includes one person alone or a number of persons, even if they are not in any way associated with each other or acting together. A "direct control interest...

  • Page 146
    Telstra Corporation Limited and controlled entities Exchange Controls and Foreign Ownership • an entitlement to acquire a share or an interest in a share or to exercise or control the exercise of a right attached to the share. certain interests of lenders under or following enforcement of ...

  • Page 147
    ...benefit of franking credits. The application of these rules depends on the investor's own circumstances including the period for which the shares are held and the extent to which the investor, if a resident, is "at risk" in relation to their investment. Fully franked dividends (franked with franking...

  • Page 148
    ...which are "taxable Australian assets". Taxable Australian assets include a share (or interest in a share) in a public company where at any time in the preceding five years the non-resident's holding (together with the holding of associates) in the public company is 10% or more. Tax non-residents who...

  • Page 149
    ...to shares or ADSs held as capital assets for tax purposes. This section does not apply to members of special classes of holders subject to special rules, including dealers in securities; traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; tax...

  • Page 150
    ... the US dollar value of the amount realized and the holder's tax basis, determined in US dollars, in the shares or ADSs. A capital gain of a non-corporate US holder is generally taxed at a maximum rate of 20% where the property is held more than one year. The gain or loss will generally be income or...

  • Page 151
    ... such as futures, forwards and swaps that derive their value from underlying assets, indices, reference rates or a combination of these factors. We only use derivative financial instruments, in accordance with board approved policies, to hedge market risks for an underlying physical position. We are...

  • Page 152
    ...June 2002 2001 (in A$ millions) Risk Categories Interest rates ...Foreign currency rates ...Total... 388 10 398 159 11 170 The figure at 30 June 2002 reflects the position at that date which is immediately following the further acquisition of CSL on 28 June 2002 which resulted in 100% ownership of...

  • Page 153
    ...are selected based on the total portfolio values and it is therefore possible that these quarters do not represent the high or low for each particular component of interest rate and foreign exchange rate. Table 34 - VaR(1) analysis As at 30 June 2002 High Low Average (in A$ millions) Risk categories...

  • Page 154
    ...'s approval, at Telstra's cost and is provided to all directors. We have in place a share trading policy that prohibits directors and senior management (and their associates) from engaging in short-term trading of our securities. This policy also restricts the buying or selling of our securities...

  • Page 155
    ... strategic matters; governance and compliance; chief executive officer's report; financial reports; and on a rotational basis, business unit reviews. The board also liaises with senior management as required and may consult with other Telstra employees and advisers and seek additional information...

  • Page 156
    ... and controlled entities Corporate Governance and Board Practices Membership of the committee The Audit Committee consists of three or more non-executive directors as determined by the board in its business judgment. At least one member of the committee must have accounting or related financial...

  • Page 157
    ... assistance to employees on the application and interpretation of the company values and code of conduct policies through employee help lines. Business risk Telstra is committed to the management of risks throughout its operations to protect its employees, the environment, assets, markets, earnings...

  • Page 158
    ... relating to preparation of accounts and records on financial statements; services relating to fundamental aspects of Telstra's business and/or strategic planning; and valuation of assets for carrying value purposes; a policy that consultancy services exceeding A$250,000 require a tender process...

  • Page 159
    ... - Corporate Relations, the General Counsel - Finance & Administration, the Director of Finance, the Director of Legal, the General Manager - Investor Relations Unit and the Company Secretary; senior management (including the CEO, the CFO/GMD F&A, all other GMDs and their direct reports, all group...

  • Page 160
    ... of Telstra Corporation Limited and the entities it controlled at the end of or during the year ended 30 June 2002. Directors' report Principal activity Telstra's principal activity during the financial year was to provide telecommunications services for domestic and international customers. There...

  • Page 161
    Telstra Corporation Limited and controlled entities Directors' report Sales revenue increased by A$1,517 million to A$20,196 million due to the fiscal 2001 SAB101 adjustment and: • continued strong growth in mobile services (A$336 million) and fixed-to-mobile (A$132 million). Partially offsetting...

  • Page 162
    ... The carrying value of these properties was A$434 million as at 30 June 2002. This balance has been reclassified in our statement of financial position as other current assets. We have entered into operating leases totalling A$518 million in relation to these properties on normal commercial terms of...

  • Page 163
    ... under AGAAP. Refer to note 19 of the financial statements for an explanation of the option and employee share plans and the accounting treatment applied to each plan. Telstra's options and employee share plans are different from other companies in that the Telstra Corporation Act (1991) prohibits...

  • Page 164
    Telstra Corporation Limited and controlled entities Directors' report trustee. Telstra expenses immediately the funding of the purchase of shares to underpin the allocation of performance rights and restricted shares. The purchase of shares to underpin options is accounted for as a receivable in ...

  • Page 165
    ...amounts The Telstra Entity is a company of the kind referred to in the Australian Securities and Investments Commission class order 98/100, dated 10 July 1998 and issued pursuant to section 341(1) of the Corporations Act. As a result, amounts in this report and the accompanying financial report have...

  • Page 166
    Telstra Corporation Limited and controlled entities Directors' report Directors' meetings Each director attended the following meetings and board committees during the year as a member of the board or relevant committee: Board Audit a b 11 10 11 6 10 11 10 5 5 11 5 11 6 5 10 a 2 4 2 2 2 2 2 2 4 b 2...

  • Page 167
    Telstra Corporation Limited and controlled entities (This page has been left blank intentionally) 164

  • Page 168
    ... 20 Note 21 Note 22 Note 23 Note 24 Note 25 Note 26 Note 27 Note 28 Note 29 Note 30 Summary of accounting policies ...Revenue ...Profit from ordinary activities ...Income tax expense ...Segment information ...Earnings per share ...Dividends...Cash assets...Receivables ...Inventories ...Investments...

  • Page 169
    Telstra Corporation Limited and controlled entities Statement of Financial Performance for the year ended 30 June 2002 Telstra Group Year ended 30 June 2002 2001 US$m $m Telstra Entity Year ended 30 June 2002 2001 $m $m Note Ordinary activities Revenue Sales revenue...2,3 Other revenue (excluding ...

  • Page 170
    Telstra Corporation Limited and controlled entities Statement of Financial Position as at 30 June 2002 Telstra Group As at 30 June 2002 2002 $m US$m Telstra Entity As at 30 June 2002 2001 $m $m Note Current assets Cash assets ...Receivables ...Inventories ...Other assets...Total current assets ......

  • Page 171
    ... controlled entities Statement of Cash Flows for the year ended 30 June 2002 Telstra Group Year ended 30 June 2002 2001 US$m $m Telstra Entity Year ended 30 June 2002 2001 $m $m Note Cash flows from operating activities Receipts from trade and other receivables (inclusive of goods and services tax...

  • Page 172
    ... ...3 (Profit)/loss on sale of controlled entities...3 (Profit) on sale of joint venture and associated entities ...3 (Profit)/loss on sale of listed securities and other corporations ...3 (Profit) on sale of business ...3 Borrowing costs included in the cost of constructed assets ...3 Share of...

  • Page 173
    ... cost of constructed assets. We acquired plant and equipment with a fair value of $9 million using finance leases during fiscal 2002 (2001: $14 million; 2000: $23 million). As these acquisitions did not involve cash, they are not reported in the statement of cash flows. Our finance lease liability...

  • Page 174
    ... 28 June 2002, which gave up our rights to appoint a majority of the directors to the board of Keycorp. As a result, we no longer have the capacity to control the company and have deconsolidated its statement of financial position as at that date (refer to note 23 and 24 for further details). Refer...

  • Page 175
    ... Telstra Corporation Limited and a number of controlled entities as listed below: Global wholesale divisions • Global Connect (part thereof) • Global Wholesale - Australian Point of Presence (PoP) • Telstra Inc. (part thereof) Controlled entities • Telstra Global Networks Limited • Telstra...

  • Page 176
    ... Cash ...Issue of shares (excluding associated costs) . $m Assets and liabilities acquired by major class Cash ...Receivables ...Inventories ...Property, plant and equipment . Identifiable intangible assets ...Other assets ...Payables...Provisions ...Fair value of net assets acquired . Telstra share...

  • Page 177
    ... entities Statement of Cash Flows (continued) for the year ended 30 June 2002 Cash flow notes (continued) (i) Other acquisitions of businesses (continued) (j) Other disposals of businesses In fiscal 2000, the cash, other assets and liabilities disposed of related to the sale of Telstra New Zealand...

  • Page 178
    Telstra Corporation Limited and controlled entities Statement of Changes in Shareholders' Equity for the year ended 30 June 2002 Telstra Group Reserves Foreign Contributed Asset currency equity revaluation translation (i) (ii) (iii) $m $m $m Balance at 30 June 1999...- change in outside equity ...

  • Page 179
    ...venture entity - transfer of foreign currency translation reserve on sale of controlled entities . - dividends (Note 7) ...Balance at 30 June 2002...Balance at 30 June 2002 US$m ...6,433 32 (25) 4 Consolidation Fair Value $m - Retained profits $m 6,795 Outside equity interests $m 483 Total $m 13...

  • Page 180
    Telstra Corporation Limited and controlled entities Statement of Changes in Shareholders' Equity (continued) for the year ended 30 June 2002 Telstra Entity Reserves Asset Contributed revaluation Retained equity (i) (ii) profits $m $m $m Balance at 30 June 1999...- net profit...- reduction in value ...

  • Page 181
    ... Summary of accounting policies In this financial report, we, us, our, Telstra and the Telstra Group - all mean Telstra Corporation Limited, an Australian corporation and its controlled entities as a whole. Telstra Entity is the legal entity, Telstra Corporation Limited. Our financial or fiscal year...

  • Page 182
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) 1. Summary of accounting policies (continued) 1.2 Change in accounting policies (continued) The major revenue and associated expense items impacted were: • basic access installation and connection fees...

  • Page 183
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 1. Summary of accounting policies (continued) 1.3 Recently issued accounting standards to be applied in Australia in future periods (continued) AASB 1020: "Income taxes" is applicable for financial ...

  • Page 184
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 1. Summary of accounting policies (continued) 1.4 Principles of consolidation (continued) Our consolidated retained profits include controlled entities' retained profits/accumulated losses from the ...

  • Page 185
    ...Corporation Limited and controlled entities Notes to the Financial Statements (continued) 1. Summary of accounting policies (continued) 1.6 Cash and cash equivalents (note 8) Cash includes cash at bank and on hand, bank deposits, bills of exchange and commercial paper with an original maturity date...

  • Page 186
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) T 1. Summary of accounting policies (continued) 1.10 Investments (note 11) (continued) (b) Equity method of accounting Our investments in joint venture entities and associated entities are accounted ...

  • Page 187
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 1. Summary of accounting policies (continued) 1.10 Investments (note 11) (continued) (e) Associated entities Where we hold an interest in the equity of an entity and are able to apply significant ...

  • Page 188
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 1. Summary of accounting policies (continued) 1.12 Property, plant and equipment (note 12) (continued) (b) Revaluation (continued) As part of the application of AASB 1041, we have also elected to: ...

  • Page 189
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) s 1. Summary of accounting policies (continued) 1.13 Leased plant and equipment (note 12) (continued) Where we acquire non current assets by using a finance lease, the present value of future minimum ...

  • Page 190
    ...Corporation Limited and controlled entities Notes to the Financial Statements (continued) 1. Summary of accounting policies (continued) 1.15 Other assets (note 14) (continued) (c) Deferred expenditure (continued) We amortise deferred expenditure over the average period in which the related benefits...

  • Page 191
    ... financial statements, dividends and distributions received from joint venture entities and associated entities are recorded as a reduction of the balance in the investment account and not as dividend revenue of the Telstra Group. (g) Revenue from the sale of non current assets Revenue from the sale...

  • Page 192
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 1. Summary of accounting policies (continued) 1.19 Revenue (note 2) (continued) Other revenue (continued) (i) Share of net profits/(losses) of associates and joint venture entities We record our share ...

  • Page 193
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 1. Summary of accounting policies (continued) 1.21 Earnings per share (note 6) Basic earnings per share Basic earnings per share (EPS) is determined by dividing net profit after income tax attributable...

  • Page 194
    ... and Investments Commission (ASIC) Class Order 98/100, dated 10 July 1998 and issued under section 341(1) of the Corporations Act 2001. For risks not covered by insurance, any losses are charged to the statement of financial performance in the year in which the loss is reported. The Telstra Entity...

  • Page 195
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 1. Summary of accounting policies (continued) 1.28 Comparative figures Where necessary, we adjust comparative figures to align with changes in presentation in the current year. The presentation of our ...

  • Page 196
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Note Telstra Group Year ended 30 June 2002 2001 $m $m 2000 $m Telstra Entity Year ended 30 June 2002 2001 $m $m 2. Revenue Our revenue from ordinary operating activities (including specific items)...

  • Page 197
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Note Telstra Group Year ended 30 June 2002 2001 $m $m 2000 $m Telstra Entity Year ended 30 June 2002 2001 $m $m 3. Profit from ordinary activities (a) Our profit before income tax expense (...

  • Page 198
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Telstra Group Year ended 30 June 2002 2001 $m $m 2000 $m Telstra Entity Year ended 30 June 2002 2001 $m $m 3. Profit from ordinary activities (continued) (a) Our profit before income tax expense (...

  • Page 199
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Telstra Group Year ended 30 June 2002 2001 $m $m 2000 $m Telstra Entity Year ended 30 June 2002 2001 $m $m 3. Profit from ordinary activities (continued) (b) Auditors' fees The Australian statutory...

  • Page 200
    ......Direct cost of sales - revenue recognition accounting policy change (i) ...- expenses in performing obligations under JORN contract (v) ...Other expenses - book value of our global wholesale business and controlled entities sold to Reach Ltd (ii) ...- deferral of unrealised profit arising on sale...

  • Page 201
    ... of financial performance: Reach Ltd Year ended 30 June 2001 $m Other revenue Sale of global wholesale business and controlled entities to Reach Ltd...Other expenses Book value of businesses and controlled entities sold to Reach Ltd and associated costs ...Deferral of unrealised profit before tax...

  • Page 202
    ... issued capital. Revenue received from this sale was approximately $386 million. On 26 June 2001, Telstra CB.com.Limited sold the remaining balance of 26.6 million shares at $6 per share resulting in revenue of $160 million. The profit on the sale of this investment was $245 million before tax, as...

  • Page 203
    ... the tax effect of: Effect of lower rates of tax on overseas income ...Research and development concessions ...Share of net losses of associates and joint venture entities ...Profit on sale of property, plant and equipment ...Non deductible depreciation and amortisation ...Reduction in the value of...

  • Page 204
    ...the benefit of the tax losses. Our future income tax benefit (recorded on the statement of financial position) contains the following tax losses carried forward: Telstra Group As at 30 June 2002 2001 $m $m Future income tax benefit balance ...Amount of future income tax benefit related to tax losses...

  • Page 205
    ... Mobile), and those customers included in Telstra CountryWide. This business unit: • manages our information, connection and payphone services as well as our print and online directories business; • sells and provides customer services for a comprehensive range of products, services and customer...

  • Page 206
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) 5. Segment information (continued) Telstra Group Telstra Retail (a) $m Year ended 30 June 2002 Sales revenue from external customers Other revenue from external customers Total revenue from external customers...

  • Page 207
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 5. Segment information (continued) Telstra Group Telstra Retail (a) (b) $m Year ended 30 June 2001 Sales revenue from external customers Other revenue from external customers Total revenue from ...

  • Page 208
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) 5. Segment information (continued) Telstra Group Telstra Retail $m Year ended 30 June 2000 Sales revenue from external customers Other revenue from external customers Total revenue from external customers...

  • Page 209
    ... ...Net profit ...Information about our products and services Sales revenue from Basic access (i) ...Local calls ...National long distance ...Fixed to mobile...International telephone services...Mobile goods and services (i) ...Data and internet services ...Directory services (i)...Customer premise...

  • Page 210
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 6.Earnings per share Telstra Group Year ended 30 June 2002 2001 ¢ ¢ Basic and diluted earnings per share (cents) (a) 28.5 $m The following reflects the earnings and share information used in ...

  • Page 211
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Note Telstra Group Year ended 30 June 2002 2001 $m $m 2000 $m Telstra Entity Year ended 30 June 2002 2001 $m $m 7. Dividends Ordinary shares Interim dividend paid ...Final ordinary dividend ...

  • Page 212
    ...Limited and controlled entities Notes to the Financial Statements (continued) 7. Dividends (continued) Telstra Group Year ended 30 June 2002 2001 $m $m The combined amount of exempting and franking credits available to us for the next fiscal year are: Combined exempting and franking account balance...

  • Page 213
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Telstra Group As at 30 June 2002 2001 $m $m Telstra Entity As at 30 June 2002 2001 $m $m 8. Cash assets Cash at bank and on hand ...Bank deposits, bills of exchange and commercial paper (a) ...311 ...

  • Page 214
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Note Telstra Group As at 30 June 2002 2001 $m $m Telstra Entity As at 30 June 2002 2001 $m $m 9. Receivables Current Trade debtors (a)...Provision for doubtful debts ...2,663 (221) 2,442 1,153 388 ...

  • Page 215
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 9. Receivables (continued) (c) Share loans to employees represent amounts receivable from employees under all employee share plans. Refer to note 19 for details regarding the share plans. The carrying ...

  • Page 216
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) Note Telstra Group As at 30 June 2002 2001 $m $m Telstra Entity As at 30 June 2002 2001 $m $m 11. Investments Investments - accounted for using the equity method (1.10) Carrying value of investments...

  • Page 217
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) 11. Investments (continued) Listed securities and investments in other corporations are shown as follows: Name of investment Principal activities Ownership interest As at 30 June 2002 2001 % % Telstra Group...

  • Page 218
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) 12. Property, plant and equipment Telstra Group (a) Land & site imp'mnt Note 30 June 2002 Carrying amount at cost (1.12) Balance at 30 June 2001...- additions...- disposals ...- acquisitions of businesses...

  • Page 219
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 12. Property, plant and equipment (continued) Telstra Group (a) Land & site imp'mnt Note 30 June 2001 Carrying amount at cost (1.12) Balance at 30 June 2000...- additions...- disposals ...- ...

  • Page 220
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 12. Property, plant and equipment (continued) Telstra Entity (a) Land & site imp'mnt Note 30 June 2002 Carrying amount at cost (1.12) Balance at 30 June 2001. - additions...- disposals ...- other ......

  • Page 221
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 12. Property, plant and equipment (continued) Telstra Entity (a) Land & site imp'mnt Note 30 June 2001 Carrying amount at cost (1.12) Balance at 30 June 2000...- additions...- disposals ...- ...

  • Page 222
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 12. Property, plant and equipment (continued) Communication assets Communication assets include certain network land and buildings which are essential to the operation of communication assets. Current ...

  • Page 223
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Telstra Group As at 30 June 2002 2001 $m $m Telstra Entity As at 30 June 2002 2001 $m $m 13. Intangible assets Goodwill (1.14(a)) ...Accumulated amortisation ...2,219 (156) 2,063 697 (87) 610 247 (...

  • Page 224
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Telstra Group As at 30 June 2002 2001 $m $m Telstra Entity As at 30 June 2002 2001 $m $m 14. Other assets Current Net deferred mobile phone handset subsidies (1.15(b)) . Deferred expenditure (1.15...

  • Page 225
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Note Telstra Group As at 30 June 2002 2001 $m $m Telstra Entity As at 30 June 2002 2001 $m $m 15. Payables Current Trade creditors (a) ...Accrued expenses ...Accrued capital expenditure ...Accrued ...

  • Page 226
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Note Telstra Group As at 30 June 2002 2001 $m $m Telstra Entity As at 30 June 2002 2001 $m $m 16. Interest-bearing liabilities Current Short term debt Bank overdrafts (a) ...Loan from joint venture...

  • Page 227
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 16. Interest-bearing liabilities (continued) Our long term debt is repayable over the next five years ending 30 June and after as follows: Telstra Group 2006 $m 2,109 2003 $m Long term debt payable ...

  • Page 228
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 16. Interest-bearing liabilities (continued) (d) Bank loans Our non-Australian controlled entities have the following bank loans: A$ amount Interest rates As at Year ended 30 June 30 June 2002 2001 ...

  • Page 229
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 16. Interest-bearing liabilities (continued) (e) Telstra bonds During fiscal 2002, $39 million of Telstra bonds matured. Telstra bonds have been issued to both retail and wholesale investors and have ...

  • Page 230
    ...fair values We determine net fair values of fixed rate loans and bonds issued using current risk adjusted market rates. The carrying amounts of bank overdrafts, bills of exchange and commercial paper, loans from joint venture entities and associated entities, bank loans and finance lease liabilities...

  • Page 231
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 16. Interest-bearing liabilities (continued) (i) Financing arrangements Telstra Group As at 30 June 2002 2001 $m $m Our financing arrangements We have access to the following lines of credit: Credit ...

  • Page 232
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Note Telstra Group As at 30 June 2002 2001 $m $m Telstra Entity As at 30 June 2002 2001 $m $m 17. Provisions Current Dividends payable...Employee entitlements (a) ...Workers' compensation (1.18(b))...

  • Page 233
    ... for options, restricted shares and performance rights For allocations made during fiscal 2002, the applicable performance hurdle is based on comparing Telstra's total shareholder return (TSR) with the TSRs of the companies in the S&P/ASX 200 (Industrial) Index (peer group) within the performance...

  • Page 234
    ... controlled entities Notes to the Financial Statements (continued) 19.Employee share plans (continued) (b) Telstra Growthshare Trust (continued) (i) Telstra Growthshare (continued) Performance hurdle for options, restricted shares and performance rights (continued) The companies in the peer group...

  • Page 235
    ...Corporation Limited and controlled entities Notes to the Financial Statements (continued) 19.Employee share plans (continued) (b) Telstra Growthshare Trust (continued) (i) Telstra Growthshare (continued) Performance Rights An executive is not entitled to Telstra shares before the performance rights...

  • Page 236
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 19. Employee share plans (continued) (c) Share plan information The table below provides information about our TESOP 99 and TESOP 97 share plans: Date used to determine number of eligible employees ......

  • Page 237
    ... controlled entities Notes to the Financial Statements (continued) 19. Employee share plans (continued) (c) Share plan information (continued) We provide the following information about Telstra Growthshare: September 1999 offer of options and restricted shares: Growthshare 2000 options (v) Number...

  • Page 238
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 19. Employee share plans (continued) (c) Share plan information (continued) September 2001 offer of options and performance rights: Growthshare 2002 options (v) Number of executives who were allocated ...

  • Page 239
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 19. Employee share plans (continued) (c) Share plan information (continued) (v) Options, restricted shares and performance rights are subject to a performance hurdle. If this hurdle is not achieved ...

  • Page 240
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 19. Employee share plans (continued) (c) Share plan information (continued) September 2001 allocation of directshares and ownshares: DirectShare Equity Plan Number of eligible participants ...Number of...

  • Page 241
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 19. Employee share plans (continued) (c) Share plan information (continued) Shareholdings by non-executive directors as at 30 June 2002 as allocated under the directshare equity plan. These ...

  • Page 242
    ... information about all of our share plans: All employee share plans As at 30 June 2002 All employee share plans As at 30 June 2001 Market price of Telstra shares ...Employee shares loan balance (total including current and non current excluding Growthshare option loans - note 9) ...Loan to Telstra...

  • Page 243
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 19. Employee share plans (continued) (c) Share plan information (continued) (i) Prior year comparatives have been restated to include executives who have ceased employment but have retained partial ...

  • Page 244
    ...a majority of directors to the board of this company and, thus, are no longer in a position of control (refer to note 24 for further details). During the year, Keycorp operated an employee share ownership plan and employee share option incentive plan independent of the Telstra Entity plans, TESOP 99...

  • Page 245
    ...developed for internal use under a 10 year contract with IBM Global Services Australia Limited (IBMGSA) (Refer Note 20(d)(ii) for other commitments relating to IBMGSA). (b) Operating lease commitments Future lease payments for non-cancellable operating leases not recorded in the financial statements...

  • Page 246
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 20. Expenditure commitments (continued) Description of our operating leases We have operating leases for the following major services: • rental of land and buildings; • rental of motor vehicles, ...

  • Page 247
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 20. Expenditure commitments (continued) Interest rates for our finance leases are: • US dollar communication assets between 4.25% and 5.06%; and • computer mainframe, computer processing equipment ...

  • Page 248
    ... of switched voice, international transmission and global internet access services to meet certain percentages of our annual capacity requirement ("committed services"). The committed services may also include the services for the carriage of calls or data between places outside of Australia. 245

  • Page 249
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 21. Contingent liabilities and contingent assets We have no significant contingent assets as at 30 June 2002. The details and maximum amounts (where reasonable estimates can be made) are set out below ...

  • Page 250
    ... Limited or Sky Cable fail to meet any of their obligations, the Telstra Entity and Telstra Media would be contingently liable to the extent of those failures. Refer note 20 for details of minimum subscriber guarantee commitments. ASIC deed of cross guarantee A list of the companies that are part...

  • Page 251
    ... service was transferred to Telstra Super, and a transfer of assets was payable from the CSS to Telstra Super (deferred transfer values). The benefits received by members of each defined benefit scheme take into account factors such as the employee's length of service, final average salary, employer...

  • Page 252
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 22. Superannuation commitments (continued) Financial position The financial position of the defined benefit divisions of Telstra Super, and our Notional Fund in the CSS, HK CSL Scheme and the former ...

  • Page 253
    ... June 2002 2001 % % Name of entity Parent entity Telstra Corporation Limited (1) (14) ...Controlled entities Telecommunications Equipment Finance Pty Ltd (5) * ...Telstra Finance Limited (1) (4) ...Telstra Corporate Services Pty Ltd * ...Transport Communications Australia Pty Ltd * ...Telstra ESOP...

  • Page 254
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) 23. Investments in controlled entities (continued) Name of entity Country of incorporation Telstra Entity's recorded amount of investment (a) As at 30 June 2002 2001 $m $m 29 14 29 898 29 29 898 % of equity...

  • Page 255
    ... Services (Thailand) Limited (10) (11) . • NDC Global Services Pty Ltd * ...Total investment in controlled entities (at cost) ...Provision for reduction in value... United States Australia Australia Australia Australia Hong Kong Canada Canada Canada New Zealand New Zealand New Zealand New Zealand...

  • Page 256
    ... and the deed of cross guarantee, the companies listed above, except for Telstra Finance Limited: • form a closed group and extended closed group as defined in the class order; • do not have to prepare and lodge audited financial reports under the Corporations Act 2001. This does not apply to...

  • Page 257
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 23. Investments in controlled entities (continued) Closed Group Statement of Financial Position Closed Group As at 30 June 2002 2001 $m $m Current assets Cash assets ...Receivables ...Inventories ......

  • Page 258
    ...closed group (1) (a) ...Total available for distribution ...Dividends provided for or paid ...Retained profits at the end of the financial year available to the closed group (1) (a) The consolidated assets and liabilities of the closed group includes closed group members'equity accounted investments...

  • Page 259
    ...Australia (Saudi) Company Limited. We can exercise control over the board of directors of this entity in perpetuity, and therefore we have consolidated the financial results, position and cash flows into our financial report. Trusts which are not consolidated (7) We own 100% of the equity of Telstra...

  • Page 260
    ... Communications (Australia) Pty Ltd. • On 30 November 2001, On Australia Pty Ltd sold its business to Telstra Corporation Limited. From this date the company is dormant. • On 30 June 2002, Telstra Global Limited sold its investment in Telstra Inc. to Telstra Holdings Pty Ltd. Dividends received...

  • Page 261
    ... ...wholesale customers DataOne Corporation Pte Ltd Internet hosting (incorporated in Singapore) (a) (1) company Dynegy Connect LP (incorporated Intellectual property in USA) (a) (9) ...and software Stellar Call Centres Call centre services and Pty Ltd (2) ...solutions TelstraClear Limited (formerly...

  • Page 262
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 24. Investments in joint venture entities and associated entities (continued) Our investments in associated entities are listed below: Name of associated entity Principal activities Ownership interest ...

  • Page 263
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 24. Investments in joint venture entities and associated entities (continued) Share of joint venture entities and associated entities net losses/ (profits) Year ended 30 June 2002 2001 $m $m Our net ...

  • Page 264
    ... Customer Services Pty Ltd ...FOXTEL Management Pty Ltd ...FOXTEL Cable Television Pty Ltd (3) ...Investment 2000 Pty Ltd (8) ...DataOne Corporation Pte Ltd ...TNAS Limited (7) ...(ii) Associated entities Telstra Super Pty Ltd (4) ...Keytec Nominees Pty Ltd (10) ...IBM Global Services Australia...

  • Page 265
    ... Telstra Super Pty Ltd. Equity accounted investments previously consolidated (5) We signed a deed poll effective 28 June 2002, whereby we have given up our rights to appoint a majority of the directors to the board of Keycorp Limited (Keycorp). Accordingly, we no longer have the capacity to control...

  • Page 266
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 24. Investments in joint venture entities and associated entities (continued) Joint venture entities and associated entities notes (continued) Change of company names (12) The following investments ...

  • Page 267
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 24. Investments in joint venture entities and associated entities (continued) Joint venture and equity accounting information The movements in the consolidated equity accounted amount of our joint ...

  • Page 268
    ... of our share of all joint venture entities' assets, liabilities and profit and loss items (including equity accounted investments that have been suspended): Joint venture entities Telstra Group Year ended/As at 30 June 2002 2001 $m $m Current assets ...Non current assets...Total assets ...Current...

  • Page 269
    ...) 24. Investments in joint venture entities and associated entities (continued) Included in the consolidated financial report of the Telstra Group are: Joint venture entities Telstra Group As at 30 June 2002 2001 $m $m Amount of our recorded retained losses balance relating to equity accounting our...

  • Page 270
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Telstra Group Year ended 30 June 2002 2001 $m $m Telstra Entity Year ended 30 June 2002 2001 $m $m 25. Directors' remuneration - salaries and other benefits Total income and benefits of all directors ...

  • Page 271
    ... Group Year ended 30 June 2002 2001 $m $m Telstra Entity Year ended 30 June 2002 2001 $m $m 26. Executives' remuneration - salaries and other benefits An executive officer is a person who is a member of our senior management team and is involved in our strategic direction and operational management...

  • Page 272
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) Telstra Group Year ended 30 June 2002 2001 Telstra Entity Year ended 30 June 2002 2001 26. Executives' remuneration - salaries and other benefits (continued) $420,000 - $429,999 (d) ...$430,000 - $439...

  • Page 273
    ...the allocation dates of the shares and options. In fiscal 2002, Telstra updated the terms and conditions of the equity based long term incentive plan. As such, selected senior executives are invited to participate in Telstra Growthshare and can receive an allocation of performance rights, options or...

  • Page 274
    ..., the financial reports do not disclose transactions relating to the purchase and sale of goods and services from or to the Commonwealth, its Departments of State, trading and other agencies. Directors of the Telstra Entity The names of each person who held office as a director of the Telstra Entity...

  • Page 275
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Related entity transactions (continued) Directors of the Telstra Entity interests in shares of the Telstra Entity As at 30 June 2002 and 2001, the directors, family members and their related ...

  • Page 276
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Related entity transactions (continued) Loans to directors of controlled entities (continued) There were six directors who repaid their TESOP 97 loan in full during the year they were K Bradshaw, P...

  • Page 277
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Related entity transactions (continued) Wholly owned group and other related entity disclosures (continued) (i) Included in the profit before income tax of the Telstra Entity was a specific charge ...

  • Page 278
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Related entity transactions (continued) Wholly owned group and other related entity disclosures (continued) During fiscal 2002, 2001 and 2000 the Telstra Entity had the following transactions ...

  • Page 279
    .... The carrying value of these properties was $434 million as at 30 June 2002. This balance has been reclassified in our statement of financial position as other current assets. We have entered into operating leases totalling $518 million in relation to these properties on normal commercial terms of...

  • Page 280
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) 29. Additional financial instruments disclosures Derivative financial instruments Objectives and significant terms and conditions We use derivative financial instruments to manage financial risks associated...

  • Page 281
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 29. Additional financial instruments disclosures (continued) Foreign currency risk (continued) We enter into, and hedge transactions in the following significant foreign currencies United States ...

  • Page 282
    ... parties to the contract. They are not a true reflection of the credit risk and are therefore not recorded in the statement of financial position. The maturity dates, net notional principal amounts, net fair value and carrying amounts of our outstanding interest rate swaps at balance date are shown...

  • Page 283
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 29. Additional financial instruments disclosures (continued) Cross currency swaps The maturity profile, net principal amounts, net fair values and carrying amounts of our outstanding cross currency ...

  • Page 284
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 29. Additional financial instruments disclosures (continued) Forward foreign currency contracts The settlement dates, net Australian dollar amounts receivable/ (payable) and contractual forward ...

  • Page 285
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 29. Additional financial instruments disclosures (continued) Interest rate swaps, cross currency swaps and forward foreign currency contracts - fair value For interest rate swaps, cross currency swaps ...

  • Page 286
    ... rate % Financial assets Cash assets ...(a) Trade debtors and accrued revenue . . Bank deposits, bills of exchange and commercial paper > 90 days . . (a) Share loan to employees...Other receivables ...(a) Loans to joint ventures and associated entities...(a) PCCW convertible note ...(a) Investments...

  • Page 287
    ... assets Cash assets ...Trade debtors and accrued revenue . Bank deposits, bills of exchange and commercial paper > 90 days...Share loan to employees...Other receivables ...Loans to associated entity...PCCW convertible note ...Investments ...Total financial assets as at 30 June 2001 ...Telstra Group...

  • Page 288
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 29. Additional financial instruments disclosures (continued) Credit risk We receive collateral (mainly in the form of secured financial assets) on all money market deposits except those deposited with ...

  • Page 289
    ...Mobile phone subsidies ...Income tax (expense)/benefit ...Employee compensation expense ...Redundancy and restructuring provision - fiscal 2000 reversal . . Derivative financial instruments and hedging activities ...PCCW convertible note ...Sale of Global Wholesale Business to Reach Limited...Equity...

  • Page 290
    ......- investments in associated entities ...- investments in listed entities and other corporations ...- patents, trademarks and licences ...- business ...USGAAP reversal of gain on sale of Global Wholesale Business . USGAAP net profit on sale of non current assets ...Derivative financial instruments...

  • Page 291
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 30. United States generally accepted accounting principles disclosures (continued) Reconciliations to financial reports prepared using USGAAP (continued) Telstra Group Year ended 30 June 2002 2001 US$m...

  • Page 292
    ...' equity per statement of financial position ...Cumulative adjustments required to agree with USGAAP Property, plant and equipment...Listed investments (available-for-sale securities)...Dividend payable ...Minority interests ...Retirement benefits ...Software assets ...Mobile phone subsidies...

  • Page 293
    ...) Telstra Group As at 30 June 2002 2001 US$m $m Note Statement of financial position measured and classified per USGAAP (continued) Current liabilities Payables...Borrowings - short term debt ...Borrowings - long term debt due within one year Income tax payable ...Provisions ...Revenue received...

  • Page 294
    ...movements in shareholders' equity that are not related to contributions from owners or payments to owners. Telstra Group Year ended 30 June 2002 2001 $m $m General reserve ...Foreign currency translation reserve (after tax) ...Derivative financial instruments (after tax) ...Unrealised (loss)/gain on...

  • Page 295
    ... Telstra's accounting policy when discounted future cash flows are less than the recorded amount of the asset. Under AGAAP, in note 3, we recorded a $Nil impairment during fiscal 2002 (2001: $31 million impairment loss; 2000: $Nil). In fiscal 2001, this related to Infrastructure Services & Wholesale...

  • Page 296
    ... and equipment (continued) Profits/(losses) on the sale of assets Under AGAAP, proceeds on sale of non current assets are recorded as revenue from ordinary activities - other revenue, and the net book value of assets sold is recorded as other operating expenses, with the net impact representing the...

  • Page 297
    ... Notes to the reconciliations to financial reports prepared using USGAAP (continued) Available-for-sale securities The following is a summary of our available-for-sale debt and equity securities: 30(b) Investments (continued) Telstra Group As at 30 June 2002 Note Accrued interest $m Amortised cost...

  • Page 298
    ...the projected unit credit method. This method includes current service cost, interest cost, return on plan assets and amortisation of transition assets. Aggregated unrecorded gains and losses of the plans exceeding 10% of the greater of the aggregated projected benefit obligation or the market value...

  • Page 299
    ...long-term rate of return on assets ...Reconciliation of change in benefit obligation Projected benefit obligation at beginning of year Service cost ...Interest cost...Member contributions ...Benefit payments ...Curtailments loss / (gain) (i) ...Actuarial loss/(gain)...Projected benefit obligation at...

  • Page 300
    ... tax ...Fair value of plan assets at end of year (i) ...Reconciliation of funded status of plan Projected benefit obligation...Plan assets at fair value ...Funded status ...Unrecognised net transition asset (ii) ...Unrecognised net actuarial loss/(gain) (ii) Prepaid pension asset ...Telstra Group...

  • Page 301
    ... 2002 (2001: $25 million; 2000: $81 million). 30(l) Income tax Under AGAAP, timing differences are recorded in the statement of financial position as deferred tax assets and liabilities using the liability method of tax effect accounting. Future income tax benefits relating to tax losses and timing...

  • Page 302
    ...) Notes to the reconciliations to financial reports prepared using USGAAP (continued) 30(l) Income tax (continued) 2002 $m Future income tax benefit (deferred tax assets) Property, plant and equipment...Foreign exchange translation, hedge and other finance costs. . Employee entitlements ...Revenue...

  • Page 303
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 30. United States generally accepted accounting principles disclosures (continued) Notes to the reconciliations to financial reports prepared using USGAAP (continued) For fiscal 2002 and 2001, only the...

  • Page 304
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 30. United States generally accepted accounting principles disclosures (continued) Notes to the reconciliations to financial reports prepared using USGAAP (continued) At 30 June 2002, the weighted ...

  • Page 305
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 30. United States generally accepted accounting principles disclosures (continued) Notes to the reconciliations to financial reports prepared using USGAAP (continued) Telstra Group As at 30 June 2002 ...

  • Page 306
    ...) Notes to the reconciliations to financial reports prepared using USGAAP (continued) We are not able to identify specific forward foreign exchange contracts with specific capital expenditure contracts to meet the designation criteria in SFAS 133. As a result, changes in fair value of the forward...

  • Page 307
    ...of the change in fair value of the option (2001:$63 million). The newly issued note is also classified as an available-for-sale security and is disclosed in note 30(b). 30(q) Equity accounting adjustment for Reach Limited USGAAP adjustments made on the sale of the Global Wholesale Business to Reach...

  • Page 308
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 30. United States generally accepted accounting principles disclosures (continued) Notes to the reconciliations to financial reports prepared using USGAAP (continued) 30(s) Fair Value and General ...

  • Page 309
    ... the financial position, results of operations or cash flows of the Company, other than the reclassification of assets held for sale as described in note 30(a). Accounting for Costs Associated with Exit or Disposal Activities In July 2002, the FASB issued Statement of Financial Accounting Standards...

  • Page 310
    ...that Telstra Corporation Limited will be able to pay its debts as and when they become due and payable in Australia; and (c) at the date of this declaration there are reasonable grounds to believe that the members of the extended closed group identified in note 23(1) to the full financial statements...

  • Page 311
    ... Telstra Group's financial position as at 30 June 2002 and of their performance for the year ended on that date; and (ii) complying with Accounting Standards and the Corporations Regulations 2001; and (b) other mandatory professional reporting requirements in Australia. Further, in my opinion, note...

  • Page 312
    ...consolidated financial statements. As discussed in note 1 to the consolidated financial statements, in 2001 Telstra Corporation Limited and its subsidiaries changed their accounting for service activation and certain installation fee revenues. Ernst & Young Date: 28 August 2002 Melbourne, Australia...

  • Page 313
    ... private sector. Safety, Rehabilitation and Compensation Act 1998 (Cwth) In fiscal 2002 Telstra conducted a comprehensive review of its workers' compensation and rehabilitation functions. As a result there have been significant changes to the workers' compensation claims management processes, plus...

  • Page 314
    ... the Telstra business units so that a high standard of safety is achieved by all; further enhancement of our contractor management processes to ensure that contractors, their employees and sub-contractors can carry out their work safely; and development of health and safety information for Telstra...

  • Page 315
    ... opportunity for communities to interact better; replacing paper-based and resource-intensive ways of transferring information; and improving the dissemination of information and ideas locally and globally. We are committed to using and developing telecommunications to improve resource efficiency...

  • Page 316
    ... Australian Mobile Telecommunications Association, enabling customers to return discarded mobile phones, accessories and batteries to all retail outlets, avoiding disposal to landfill; the BookMuncher® Directory Recycling Initiative, managed by our subsidiary, Sensis®, which is currently achieving...

  • Page 317
    ... activities; conduct audits covering high environmental risk aspects; consult with Government and the community; and identify cost reduction opportunities. Internal reporting and corporate governance In accordance with TEMS, relevant business units report against environmental performance criteria...

  • Page 318
    ... from our website telstra.com. The categories of documents that we produce and/or retain relate to the provision of telephone lines to homes and businesses, the provision of local, long distance and international telephone calls and provision of mobile, data, internet and online services. There are...

  • Page 319
    Telstra Corporation Limited and controlled entities Freedom of Information These categories include customer services and products; network planning, installation and performance; tenders and agreements; financial management; employee records; and administrative records. Freedom of information ...

  • Page 320
    ... Transfer Mode): a high bandwidth, low delay technology for transmitting voice, data and video signals Bandwidth: the capacity of a communication link Broadband network: a network to support pay television and online services CDMA (Code Division Multiple Access): a mobile telephone system...

  • Page 321
    ...the Commonwealth of Australia GSM (Global System for Mobile Communications): a mobile telephone system based on digital transmission. GPRS (General Packet Radio Service): a service that will allow compatible mobile phones and mobile data devices to access internet and other data networks on a packet...

  • Page 322
    ...: wave division multiplexing WHO: World Health Organisation Wireless Local Loops: low power, multi-directional radio systems to supply access to customers xDSL: term used to describe various forms of digital subscriber line technologies that can provide very high speed service using existing copper...

  • Page 323
    Telstra Corporation Limited and controlled entities Total Year Financial Summary Total Year Financial Summary 2002 A$m Sales revenue ...Total revenue (including interest)...EBITDA(1) ...EBIT(2) ...Profit before income tax expense Net profit after minorities ...20,196 20,928 9,483 6,216 5,446 3,661...

  • Page 324
    ... share trading starts Record date for final dividend Final dividend paid Annual General Meeting Note: Timing of events may be subject to change Contact details Telstra Corporation Limited Incorporated in the Australian Capital Territory Telstra is listed on Stock Exchanges in Australia, New Zealand...

  • Page 325
    The power of one. ® © Telstra Corporation Limited (ABN 33 051 775 556) 2002. ™ Trade mark of Telstra Corporation Limited. ® Registered trade mark of Telstra Corporation Limited.