Telstra 2003 Annual Report Download - page 58

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P.56
notes to the concise financial statements continued
4. Items requiring specific disclosure
Telstra Group
As at 30 June
2003 2002
$m $m
The following items form part of the ordinary operations of our business and
whose disclosure is relevant in explaining the financial performance of the group.
Our net profit has been calculated after charging/(crediting) specific revenue
and expense items from our ordinary activities as follows:
Specific revenue items:
Other revenue (excluding interest revenue)
– proceeds on sale of properties (i) 570 –
570 –
Specific expense items:
Other expenses
– book value on sale of properties (i) (439) –
(439) –
Item included in share of net losses of associates and joint venture entities
– write off of the carrying value of our investment in REACH Ltd (ii) (965)
(965)
Net specific items (834) –
Income tax expense attributable to those items requiring specific disclosure (41) –
Effect of reset tax values on entering tax consolidation (iii) 201
Net specific items after income tax expense (674) –
(i) Sale of office properties
On 1 August 2002, we sold a portfolio of seven office properties for $570 million. The carrying value of these properties was $439 million at the
time of sale. We entered into operating leases totalling $518 million in relation to these properties on normal commercial terms of between five
and twelve years, most of which commenced on 19 August 2002. The profit on the sale of these properties was $131 million before tax.
(ii) Write off of investment in REACH Ltd (REACH)
We have written off the carrying amount of the investment in our 50% owned joint venture, REACH. The write off occurred due to the depressed
conditions in the global market for international data and internet capacity resulting in high levels of excess capacity, intense price competition
and lower than expected revenues. This has resulted in a reduction of our investments accounted for using the equity method in our statement
of financial position and an increase to our share of net losses of associates and joint venture entities in the statement of financial performance,
amounting to $965 million.
(iii)Effect of reset tax values on entering tax consolidation
During fiscal 2003, legislation was enacted which enables the Telstra Entity and its Australian resident wholly owned entities to be treated as a single
entity for income tax purposes. The Telstra Entity has elected to form a tax consolidated group from 1 July 2002. The income tax expense benefited
from the tax consolidation legislation by a once-off benefit of $201 million, resulting from the net increase in the tax value of tax depreciable assets.