Telstra 2008 Annual Report Download - page 35

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Telstra Corporation Limited and controlled entities
Full year results and operations review - June 2008
• an increase in promotion and advertising spend by $12 million. The additional spend drove print directories usage
and revenue growth;
• an increase in information technology costs due to investment in IT transformation projects this fiscal year; and
• an increase in bad and doubtful debts following a review of delinquency rates and growth in the impaired rate for
non-print products as we continue to support revenue increase.
In the year ending 30 June 2008, depreciation and amortisation also grew by 15.4% to $150 million due to increased software
capitalised associated with the company’s IT transformation and acceleration of related assets.
EBIT increased 16.1% due to the reasons above. Excluding the impact in fiscal 2007 of the $110 million write down of the Trading
Post~ mastheads, our EBIT would have increased 2.3% and total expenses would have increased 12.6%.
The increase in capex is largely related to the rebuilding of IT systems as part of the transformation strategy and the development
of a new online website.
CSL New World financial summary
Note: Amounts presented in HK$ have been prepared in accordance with A-IFRS.
Amounts presented in A$ represent amounts included in Telstra’s consolidated result including additional depreciation and amortisation arising from
consolidation fair value adjustments.
EBITDA increased by 5.2% to HK$1,830 million whilst EBIT has decreased by 46.7% mainly driven by HK$540 million accelerated
depreciation on existing networks which increased depreciation and amortisation expenses by 35.7% to HK$1,486 million. This
increase was driven by the Company’s investment in new network technologies and the corresponding decision to accelerate
depreciation on some of the older network assets. Excluding this, EBIT growth was 37.1%. Acceleration of depreciation will also
impact on fiscal 2009 results.
Total income increased by 4.7% to HK$6,395 million for the year ending 30 June 2008. This was driven predominantly by growth
in handset sales; data; international voice; and mobile virtual network operator (MVNO) revenues. This was offset by a decline in
local voice revenues which suffered from sustained tariff competition in the Hong Kong market.
Total expenses (excluding depreciation and amortisation) increased by 4.5% to HK$4,565 million mainly due to the following:
• goods and services purchased in line with the increased handset sales and higher data as well as higher programme
marketing costs. This was partially offset by lower network and related costs including site cell rentals, handset subsidies
and international disbursements; and
• other expenses increased mainly driven by promotion and advertising expenses associated with rebranding One2Free
and launching 20 newly designed stores as at 30 June 2008.
The HK$ exchange rate had an unfavourable impact on revenue of A$128 million for the year ending 30 June 2008, which was
offset by a favourable impact on expenses (including depreciation and amortisation) of A$124 million.
The increase in capital expenditure was predominantly driven by the investment in new network technologies.
CSL New World financial summary
Year ended 30 June Year ended 30 June
2008 2007 Change 2008 2007 Change
A$m A$m %HK$m HK$m %
Total income . . . . . . . . . . . . . . . . . . . . . . . . 917 1,000 (8.3%) 6,395 6,109 4.7%
Total expense (excluding depreciation & amortisation) 655 717 (8.6%) 4,565 4,369 4.5%
EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 283 (7.4%) 1,830 1,740 5.2%
Depreciation & amortisation . . . . . . . . . . . . . . 247 196 26.0% 1,486 1,095 35.7%
EBIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 87 (82.8%) 344 645 (46.7%)
CAPEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 80 60.0% 937 496 88.9%
EBITDA margin on sales revenue . . . . . . . . . . . . 28.6% 28.3% 0.3 28.6% 28.5% 0.1