Telstra 2007 Annual Report Download - page 41

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Telstra Corporation Limited and controlled entities
Full year results and operations review - June 2007
Income tax expense and franking account
Income tax expense increased by 2.6% to $1,417 million in fiscal 2007, mainly as a result of the increase in
operating profit before income tax expense compared to fiscal 2006.
The effective tax rate in fiscal 2007 is 30.2% compared with fiscal 2006 of 30.3%. This is consistent with the
Commonwealth statutory income tax rate of 30.0%. The slightly lower effective tax rate is due to the
impairment of the Trading Post mastheads offset by the non taxable profit on the sale of Australian
Administration Services. In addition, the current year tax expense includes $2 million for over provision of
tax in the prior year compared to fiscal 2006 which included $36 million for under provision of tax for the
equivalent prior year.
During fiscal 2007, we have paid a total of $1,618 million of tax instalments relating to fiscal 2006 and 2007
income tax years. Our combined exempting and franking account balance as at 30 June 2007 is $98 million,
and combined with credits that will arise from payment of our year end tax payable and credits that we may
be restricted from distributing, our franking account balance is $487 million. Franking credits of $746 million
will be used when we pay our final 2007 ordinary dividend during fiscal 2008. We believe our current
franking balance when combined with credits that will arise from tax instalments made throughout fiscal
2008, will be sufficient to cover franking arising from our final dividend.
Major subsidiaries - financial summaries
Below is a summary of the major reporting lines for our three largest subsidiaries: Sensis, CSL New World
Mobility and TelstraClear. This information is in addition to the product analysis previously provided in the
document and is intended to show these businesses as stand alone entities.
Sensis financial summary
We are a leading provider of advertising and search services through our advertising, directories and local
search business Sensis and its controlled entities. Sensis provides innovative advertising and search
solutions through print, online, voice, wireless and satellite navigation networks.
Amounts included for Sensis represent the contribut ion included in Telstra’s consolidated result.
Income tax expense
Year ended 30 June
2007 2006 Change 2007/2006
$m $m $m (% change)
Income tax expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,417 1,381 36 2.6%
Effective tax rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.2% 30.3% (0.1)
Sensis financial summary
Year ended 30 June
2007 2006 Change Change
$m $m $m %
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,974 1,827 147 8.0%
Total expenses (including depreciation and amortisation) . . . . . . . . . . . . . . . . . . . . 1,161 917 244 26.6%
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 943 1,001 (58) (5.8%)
EBIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 813 910 (97) (10.7%)
CAPEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226 100 126 126.0%
EBITDA margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.9% 54.8% (6.9)