Telstra 2010 Annual Report Download

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Telstra Corporation Limited
ACN 051 775 556
ABN 33 051 775 556
1 October 2010
The Manager
Company Announcements Office
Australian Securities Exchange
4th Floor, 20 Bridge Street
SYDNEY NSW 2000
Office of the Company Secretary
Level 41
242 Exhibition Street
MELBOURNE VIC 3000
AUSTRALIA
General Enquiries 08 8308 1721
Facsimile 03 9632 3215
ELECTRONIC LODGEMENT
Dear Sir or Madam
Telstra Corporation Limited –2010 Annual Report
In accordance with the listing rules, I attach a copy of the 2010 Annual Report which will
be sent to shareholders shortly.
Regards
Carmel Mulhern
Company Secretary

Table of contents

  • Page 1
    ... Street MELBOURNE VIC 3000 AUSTRALIA General Enquiries 08 8308 1721 Facsimile 03 9632 3215 The Manager Company Announcements Office Australian Securities Exchange 4th Floor, 20 Bridge Street SYDNEY NSW 2000 ELECTRONIC LODGEMENT Dear Sir or Madam Telstra Corporation Limited -2010 Annual Report In...

  • Page 2

  • Page 3
    ...) or Holder Identification Number (HIN), your surname or company name and post code (you can find your SRN/HIN on your latest dividend statement) 3. Click on the Telstra Corporation Limited link 4. Select YES "I would like to become an e-shareholder" 5. Enter in your email address and select Update

  • Page 4
    More than 100m bills sent out each year 7m 300,000 calls handled each business day through our contact centres Australians use a Sensis product every week

  • Page 5
    ),1$1&,$/5(68/76 )LYH\HDU¿QDQFLDOVXPPDU\ 2010 $m 2009 $m            2008 $m   ... Sales revenue )UHHFDVKÀRZ E E E E E E )

  • Page 6
    ... of how the business has performed over the last year. You ZLOODOVR¿QGRXWDERXWVRPHRIWKHLPSRUWDQWZRUNZHGR in terms of being a good corporate citizen as well as some stories from our key business units within the company. Catherine Livingstone AO Chairman )LQDQFLDO+LJKOLJKWV 'HVSLWH...

  • Page 7
    ... and the products we offer. OUTLOOK A commitment to improve customer service and satisfaction is at the heart of our strategy as customer behaviour changes. We believe our strategy is in the best interests of shareholders as we manage the business for sustainable future growth, not just for the...

  • Page 8
    ... as weekend technician appointments and free calls to our main service and support numbers. We have also recently introduced the ability to contact us 24/7 for sales and support which is a new initiative that will make Telstra the only full-service telco to offer such a sales service. A dedicated...

  • Page 9
    ...MRLQHG7HOVWUDDVDQRQH[HFXWLYH'LUHFWRULQ1RYHPEHUDQGZDVDSSRLQWHGDV Chairman on 8 May 2009. She is the Chairman of the Nomination and NBN Committees and a member of the Audit, Remuneration and Technology Committees. 'DYLG,7KRGH 0U7KRGH\EHFDPH&KLHI([HFXWLYH2I¿FHUDQGDQ...

  • Page 10
    ... numbers, and the ability to contact us 24/7 for sales and support. These are just some of the initiatives in a long-term, cross-company program to improve our service, value and offerings to all customers. Telstra Consumer also continues to bring a range of innovative new products to the market...

  • Page 11
    ... our Exchange email service for two years - and it was a scary project. Our company relies heavily on email but we don't have a culture of storing data, VR,H[SHFWHGVLJQL¿FDQWGLVUXSWLRQVZLWKDQ\RWKHUVROXWLRQ´ Tony Ferguson initially opted for a managed Microsoft Exchange Online service to...

  • Page 12
    ...network and covering mobile email, wireless broadband and voice services. The collaboration is designed to help CCA increase revenues, reduce costs and improve workforce productivity. 9LV\,QGXVWULHVDOVRVLJQHGDPLOOLRQ\HDUFRQWUDFWWRSURYLGHDZKROHRIEXVLQHVVQHWZRUN and an enterprise...

  • Page 13
    ...1234 and Call Connect voice services and third party sites like Google Maps and Bing~ Maps. We continue to work hard to demonstrate our value to advertisers with detailed usage data, product information and testimonials from both advertisers and users. This information is presented both directly to...

  • Page 14
    ... transfers every year. The provision of these services underpins the competitive telecommunications landscape we have in Australia. ,QQRYDWLRQ Telstra Wholesale embarked on a Fibre To The Premises technology trial in Point Cook in Melbourne's western suburbs, delivering voice and broadband products...

  • Page 15
    ... support to OLPC Australia in a three year partnership, which will enable remote communities to use information and communications technology and overcome the barrier of distance. Telstra produces a comprehensive corporate citizenship report each year that is available on our website: www.telstra...

  • Page 16
    Telstra Corporation Limited and controlled entities Contents 1. Full year results and operations review June 2010...2. Corporate Governance and Board Practices ...3. Shareholder Information...4. Directors' Report ...5. Remuneration Report ...6. Financial Report... 3 32 46 48 61 77 1

  • Page 17
    Telstra Corporation Limited and controlled entities Registered trade mark of Telstra Corporation Limited ™ Trade mark of Telstra Corporation Limited †Registered trade mark of Twentieth Century Fox Film Corporation ‡ Registered trade mark of Research in Motion Ltd ) Registered trade mark of ...

  • Page 18
    ... of operations ...Statement of financial position ...Statement of cashflows ...Segment information ...Statistical data summary ...Revenue and product profitability Fixed products:...- PSTN ...- Fixed internet ...- ISDN and other fixed revenue ...Mobiles ...IP and data access ...Business services and...

  • Page 19
    Telstra Corporation Limited and controlled entities Full year results and operations review - June 2010 Summary financial information Results of operations Year ended 30 June 2010 2009 Change $m $m $m Sales revenue ...Other revenue (i) . . Total revenue ...Other income (ii) . . Total income (excl...

  • Page 20
    Telstra Corporation Limited and controlled entities Full year results and operations review - June 2010 Statement of financial position As at 30 Jun 10 30 Jun 09 Change $m $m $m Current assets Cash and cash equivalents ...Trade and other receivables ...Inventories...Derivative financial assets......

  • Page 21
    ... - sale of business ...Proceeds from finance lease principal amounts ...Loans to jointly controlled and associated entities...Interest received ...Settlement of hedges in net investments ...Distributions received from FOXTEL Partnership ...Net cash used in investing activities ...Operating cashflows...

  • Page 22
    ...PSTN products ...Fixed internet ...Mobile services revenue...Telstra Business PSTN products ...Fixed internet ...Mobile services revenue...Telstra Enterprise and Government Mobile services revenue...IP and data access ...Business services and applications ...Half-year ended 30 Jun 2010 YoY $m change...

  • Page 23
    ... year, with momentum increasing after new pricing plans were launched at the start of the second half. However, wireless broadband ARPU declined by 18.6% as the mix of plans and customers changed. Mobile data revenue now accounts for 32.4% of mobile services revenue and grew by 25.7%. In the fixed...

  • Page 24
    Telstra Corporation Limited and controlled entities Full year results and operations review - June 2010 This year the negative EBIT contribution from this area improved by 4.9% with continued reductions in labour expenses, service contracts and other operating expenses. These savings mainly ...

  • Page 25
    Telstra Corporation Limited and controlled entities Full year results and operations review - June 2010 Statistical data summary Billable traffic data (i) 2010 m Fixed telephony Number of local calls ...National long distance minutes Fixed to mobile minutes. . International direct minutes Mobiles ...

  • Page 26
    ... the business as the revenue mix shift changes. Therefore, we have started to report estimated EBITDA margins for our major products. Product profitability - EBITDA margins Year ended 30 June 2010 2009 2008 $m $m $m PSTN ...Fixed broadband . Mobile ...IP and data access Sensis ...Telstra Group ...59...

  • Page 27
    ... Average revenue per user per month ($'s) ...Number of local calls (millions) (i) ...National long distance minutes (millions) (i) Fixed to mobile minutes (millions) ...International direct minutes (millions) (i) ... Note: statistical data represents management's best estimates. (i) Includes local...

  • Page 28
    ...year with growth limited by the maturing of the fixed broadband market, substitution to wireless products and intense competition • Fixed retail broadband SIOs increased by 11 thousand in the second half following the release of new products and bundled offers and price changes Fixed internet 2010...

  • Page 29
    ... other services, including IP voice and data alternatives. The number of ISDN SIOs increased marginally due to take up by business and enterprise and government customers of ISDN 10/20/30 primary rate services. Other fixed revenue fell by 1.6% to $1,202 million with premium calling products revenue...

  • Page 30
    Telstra Corporation Limited and controlled entities Full year results and operations review - June 2010 Mobiles • Mobile services revenue grew by 5.9% during the fiscal year with growth accelerating to 7.1% in the second half in tough market conditions • Total mobile data revenue up 21.7% or $...

  • Page 31
    ... Apple iPhone, Blackberry smartphone and HTC) Desire). 2,470 2,030 1,546 1,073 541 705 F Y05 FY 06 F Y07 FY0 8 FY 09 F Y10 Access fees and call charges Mobile data - total The rate of growth in wireless broadband (data cards) revenue increased slightly in the second half of the year with...

  • Page 32
    ... are leveraging the capabilities of our Telstra Next IP® network IP and data access 2010 $m Specialised data ...Global products ...IP access ...Wholesale internet and data...Total IP and data access revenue ...482 117 835 338 1,772 18 35 26 21 95 Year ended 30 June 2009 Change $m $m 628 130 676 308...

  • Page 33
    Telstra Corporation Limited and controlled entities Full year results and operations review - June 2010 Business services and applications 2010 $m Business services and applications revenue...936 Year ended 30 June 2009 Change $m $m 1,115 (179) Change % (16.1%) The decline in business services ...

  • Page 34
    Telstra Corporation Limited and controlled entities Full year results and operations review - June 2010 Pay TV bundling 2010 $m Pay TV bundling revenue ...Total pay TV bundling SIOs (thousands) ...Note: statistical data represents management's best estimates. 511 504 Year ended 30 June 2009 Change...

  • Page 35
    Telstra Corporation Limited and controlled entities Full year results and operations review - June 2010 Expenses Labour • Reported labour costs reduced by 10.3% due to the sale of the KAZ business, lower incentive expenses, the impact of changes in the bond rate on our long service leave ...

  • Page 36
    Telstra Corporation Limited and controlled entities Full year results and operations review - June 2010 Goods and services purchased • On a reported basis, total goods and services purchased increased by 0.9% or $47 million from the prior year • Cost of goods sold increased by $180 million or ...

  • Page 37
    Telstra Corporation Limited and controlled entities Full year results and operations review - June 2010 settlement, the renegotiation of data pack contracts with key partners, lower outbound roaming revenue as well as foreign exchange impacts. Offshore outpayments were also lower in Telstra Europe...

  • Page 38
    ... this year with the amortisation of the Trading Post® masthead (which commenced in July 2009) accounting for $67 million. In addition, investments in the software asset base in customer relationship management applications, billing systems, network operations management and product application...

  • Page 39
    ... a loss in 2010) reflects an improvement in financial markets which has resulted in a partial reversal of previously recognised gains. The net revaluation loss of $26 million in the current year is explained by the contraction in our borrowing margins (which reduces our interest rates) combined with...

  • Page 40
    ...however profitability of the business improved with reported EBITDA up 2.3% and EBITDA margins increasing by 2 percentage points to 54.0%. Performance also improved in the domestic business during the second half of the year. There were a number of changes to the Sensis group that impacted the above...

  • Page 41
    ... value adjustments. EBITDA margin differences arise mainly from monthly average rates used for conversion from HK$ to A$. Note: Statistical data represents management's best estimates. CSL New World is our Hong Kong based wireless business and operates in an intensely competitive 5 player market...

  • Page 42
    Telstra Corporation Limited and controlled entities Full year results and operations review - June 2010 Operating expenses excluding depreciation and amortisation decreased 11.2% in HK$ due to a combination of lower directly variable costs as a result of lower handset sales, lower network payments...

  • Page 43
    ... market on competitive terms Statement of financial position As at 30 Jun 10 30 Jun 09 Change $m $m $m Current assets Cash and cash equivalents . . Other current assets ...Total current assets ...Non current assets Property, plant and equipment. Intangible assets ...Other non current assets ...Total...

  • Page 44
    ... assets moved to held for sale of $169 million included in other current assets) of $724 million. The increase in cash and cash equivalents reflects the significant increase in free cashflow compared to fiscal 2009 and our general strategy to hold higher levels of cash post the global financial...

  • Page 45
    ... sales and finance leases ...Proceeds from sale of shares in controlled entities Loans to jointly controlled and associated entities. Distributions received from FOXTEL Partnership . Interest received ...Settlement of hedges in net investments ...Net cash used in investing activities ...Operating...

  • Page 46
    ... from the sale of the KAZ business for $197 million (net of cash disposed). Net cash used in financing activities This year's strong cashflow position and refinancing of long term debt issuance was used to reduce our net borrowings post the peak of the global economic crisis. During fiscal 2010, we...

  • Page 47
    ...(ASX Principles and Recommendations), and the disclosures set out in this statement reflect the current content of the Board and Board Committee Charters and company policies. On 30 June 2010, the ASX Corporate Governance Council released amendments to the ASX Principles and Recommendations (Amended...

  • Page 48
    ... corporate citizenship report each year that can be found on our website at www.telstra.com.au/cr. Shareholder Communications Telstra works hard to keep you, our shareholders, informed about the performance of your Company. Telstra is committed to: • Open, clear, accurate and timely communications...

  • Page 49
    ... of corporate governance practices and procedures as necessary to support our commitment to best practice corporate governance in Australia; Monitoring and influencing Telstra's culture, reputation and ethical standards; Driving Board succession planning; and Overseeing shareholder reporting and...

  • Page 50
    ... the Board's Charter. All new Directors participate in a formal induction process co-ordinated by the Company Secretary. This induction process includes briefings on the Company's financial, strategic, operational and risk management position, the Company's governance framework and key developments...

  • Page 51
    ... with senior management outside Board meetings where appropriate, and may consult with other Telstra employees and advisers and seek additional information. Details of the number of meetings held by your Board during fiscal 2010 and attendance by Board members are set out in the Directors' Report...

  • Page 52
    ... "Risk Oversight and Management" below for further information); The effectiveness and operation of Telstra's Financial Reporting Compliance Framework; The effectiveness and operation of our internal control environment; Compliance with legal and regulatory requirements and Company policies; The...

  • Page 53
    ...remuneration; The performance and remuneration of the executives who report directly to the CEO and any other members of the management team the Remuneration Committee determines should be subject to its supervision; Remuneration strategies, practices and disclosures; Employee share and option plans...

  • Page 54
    Telstra Corporation Limited and controlled entities Corporate Governance Statement share option plans and, in certain circumstances, makes offers to employees under those plans. During the 2010 fiscal year, the Remuneration Committee comprehensively addressed its responsibilities under its Charter,...

  • Page 55
    ... Values, Telstra Business Principles, Code of Conduct and other Company policies We have a number of internal operating policies and principles which promote ethical and responsible decision making and behaviour. We provide guidance to our Directors, senior management and employees on the standards...

  • Page 56
    ... Trading Telstra's share trading policy restricts the buying or selling of Telstra securities by Directors, the CEO, senior management and certain other designated employees to three "window" periods (between 24 hours and one month following the release of the annual results, the release of the half...

  • Page 57
    ... regulation, information security, operational separation, financial reporting, records management, whistleblowing, Telstra Business Principles and Company Policies and continuous disclosure. This program-based approach at a corporate level is supported by a network of senior personnel appointed...

  • Page 58
    ... objectives for achieving diversity at all levels of the Company and will report on those in its 2011 Annual Report. • • • • • • Women in management roles at Telstra* - as at 30 June 2010 Role Executive Management Middle Management Operational TOTAL By Number 65 2,120 8,437 10,622...

  • Page 59
    ..., Code of Conduct and Other Company Policies". See also the Telstra Business Principles and Code of Conduct which are available on our website. • Recommendation 3.2: Companies should establish a policy concerning trading in company securities by directors, senior executives and employees...

  • Page 60
    ...Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. Recommendation 8.1: The board should establish a remuneration committee. Recommendation 8.2: Companies...

  • Page 61
    Telstra Corporation Limited and controlled entities Shareholder Information Listing Information Markets in which our shares are traded We are listed, and all our issued shares are quoted on the Australian Securities Exchange (ASX) and the New Zealand Stock Exchange (NZX). Our securities were ...

  • Page 62
    Telstra Corporation Limited and controlled entities Shareholder Information Substantial shareholders As at 3 September 2010, other than the Future Fund Board of Guardians who holds 10.86% of shares (details of which are contained in the table below), we are not aware of any other substantial ...

  • Page 63
    ... of the Board, the directors present their report on the consolidated entity (Telstra Group) consisting of Telstra Corporation Limited and the entities it controlled at the end of, or during the year ended, 30 June 2010. Financial comparisons used in this report are of results for the year ended 30...

  • Page 64
    ... which is designed to provide managed security services to enterprise and government customers across Australia. The SOC will be fully integrated with our existing network monitoring facilities. Being the first Australian company to win a prestigious Catalyst Award, an annual international award for...

  • Page 65
    Telstra Corporation Limited and controlled entities Directors' Report with intense competition, we have seen a decline of 19,000 retail fixed broadband customers in the year. However, in the second half we benefited from a suite of new products and offers with retail fixed broadband subscribers ...

  • Page 66
    ... prepare the business for an NBN world by investing to grow new revenue streams that compensate for reductions in traditional fixed revenues. Details of directors and executives Changes to the directors of Telstra Corporation Limited during the financial year and up to the date of this report were...

  • Page 67
    ... Corporation Limited and controlled entities Directors' Report • number of Board and Committee meetings and attendance by directors at these meetings is provided on page 58; details of director and senior executive shareholdings in Telstra are shown on pages 58 to 59; and details of director...

  • Page 68
    ... Catherine B Livingstone AO Chairman 12 August 2010 • • Ernst & Young is specifically prohibited from performing any of the following services: • bookkeeping services and other services related to preparing our accounting records of financial statements; financial information system design...

  • Page 69
    ... of Group Managing Director Telstra Enterprise and Government in December 2002 and was responsible for the company's corporate, government and large business customers in Australia, TelstraClear in New Zealand and Telstra's International sales division. Before joining Telstra, Mr Thodey was Chief...

  • Page 70
    ...; business services; investor relations; corporate security and investigations, procurement, billing and business improvement. He also managed Telstra's involvement in the Federal Government's T3 sale of Telstra shares. Directorships of other listed companies - current: Director, AGL Energy Limited...

  • Page 71
    ...Mullen was Global Chief Executive Officer, DHL Express. Directorships of other listed companies - current: Director, Brambles Limited (2009 - ), MAp Airports Limited (2010 - ). Directorships of listed companies - past three years: Director, Deutsche Post World Net, Board of Management, Germany (2005...

  • Page 72
    ... report and all legal aspects of the annual general meeting and annual financial results announcements. She played a key role in the T2 and T3 floats, Telstra's first off-market share buy-back, and the introduction of the dividend reinvestment plan. Before joining Telstra, Ms Mulhern was a senior...

  • Page 73
    ... November 2009. Resigned from the Board effective 27 August 2009. Appointed as non-executive Director effective 12 August 2010. Director and senior executive shareholdings in Telstra As at 12 August 2010: Directors Number of shares held Direct interest Catherine B Livingstone David I Thodey ...John...

  • Page 74
    Telstra Corporation Limited and controlled entities Directors' Report Senior executives Number of shares held Direct interest 139,961 10,240 3,160 102,185 441,982 294,576 Indirect interest (1) Total 139,961 10,240 3,160 102,185 441,982 294,576 Bruce Akhurst . . Nerida Caesar . . Paul Geason ......

  • Page 75
    ... of the financial report of Telstra Corporation Limited for the financial year ended 30 June 2010, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. Ernst...

  • Page 76
    ... to ensure executive compensation is aligned with company performance and shareholder returns. Telstra did not meet all of its financial objectives in the 2010 fiscal year and as you will observe in the Report, this had a considerable impact on remuneration levels for our Senior Management team. The...

  • Page 77
    ...Recent KMP Position Title Chief Executive Officer Group Managing Director (GMD) - Sensis GMD - Telstra Enterprise and Government GMD - Telstra Wholesale Chief Marketing Officer GMD - Telstra Media GMD - Telstra Consumer Chief Operations Officer - Telstra Operations GMD - Telstra Business CFO and GMD...

  • Page 78
    ... on drivers across brand, product, service and price. Separate targets were set for Sensis and Wholesale to ensure a direct alignment to the relevant customer group. The customer surveys were undertaken by third party research companies and the results audited by Telstra's internal Risk Management...

  • Page 79
    ...vested. 3.4.1.2 Relative Total Shareholder Return (RTSR) RTSR measures the performance of an ordinary Telstra share (including the value of any cash dividends and other shareholder benefits paid during the period) relative to the other companies in the RTSR comparator group over the plan period. 64

  • Page 80
    ... five years of first appointment to Senior Executive level). 3.7 Restrictions and Governance Telstra implemented a policy effective from 1 October 2008 that prohibits its Directors, Senior Executives and other designated people from using Telstra shares as collateral in any financial transaction...

  • Page 81
    Telstra Corporation Limited and controlled entities Remuneration Report with this policy restriction on an annual basis, this enables the Company to monitor and enforce the policy. 5.1 Financial Performance Details of the Group's performance, share price, and dividends over the past five years are ...

  • Page 82
    ... GMD Enterprise and Government, GMD Consumer, GMD Telstra Business and GMD Telstra Networks & Services) Component Fixed Remuneration Short Term Incentive Long Term Incentive Total Fiscal 2010 35.7% 28.6% 35.7% 100.0% Fiscal 2009 35.7% 28.6% 35.7% 100.0% Total Shareholder Return Return On Investment...

  • Page 83
    ...the Telstra Board NBN (National Broadband Network) Committee that were over and above their regular Committee obligations. Fees for services rendered in relation to the NBN Committee are paid out of the funds of the Company and not the Directors' Fee Pool. There has not been an increase in the level...

  • Page 84
    ...616 670,159 3,699,215 6,027,616 50,406 ($) ($) Year Salary and Fees (1) ($) Termination Accrued Short Term Accounting Benefits Long Service Incentive Value of Leave Shares (6) Other Equity (at risk) (7) (8 Remuneration Report David Thodey 2010 1,961,748 3,192,601 3,504,033 1,925,188 3,572...

  • Page 85
    ... - Telstra Media, qualifies as a KMP for the period 1 July 2009 to 28 March 2010, up to the appointment of Kate McKenzie as Chief Marketing Officer. As a result, the table above only includes remuneration during his period of service as a KMP. David Moffatt, former GMD - Telstra Consumer, qualifies...

  • Page 86
    Telstra Corporation Limited and controlled entities Remuneration Report 7.2 Non-executive Director Remuneration Short Term Employee Benefits Postemployment Benefits Superannuation ($) 14,461 23,745 14,461 13,745 13,732 14,724 33,797 37,856 100,000 14,461 13,745 18,684 ...

  • Page 87
    Telstra Corporation Limited and controlled entities Remuneration Report 7.3 STI Payments (cash and shares) Name Year Maximum Potential STI ($) (1) 3,200,000 2,097,145 2,099,200 2,099,200 1,280,000 159,217 780,000 228,279 270,411 718,452 759,542 ...

  • Page 88
    Telstra Corporation Limited and controlled entities Remuneration Report 7.4 Summary of LTI Plans as at 30 June 2010 As at 30 June 2010 the vesting status of all LTI equity plans is as follows: Plan Type of Instrument Granted Performance Period Result Future Financial Years in which Grants Vest No ...

  • Page 89
    ... the relevant KMP received no value from those equity instruments that lapsed. Total Remuneration is the sum of short term employee benefits, post employment benefits, termination benefits, other long term benefits and equity settled share based payments as detailed in table 7.1 of this Report. 74

  • Page 90
    Telstra Corporation Limited and controlled entities Remuneration Report 7.6 Number of equity instruments granted and vested during fiscal 2010 Name Granted or Vested during the period Granted Vested Granted Vested Granted Vested Granted Vested Granted Vested Granted Vested Granted Vested Granted ...

  • Page 91
    Telstra Corporation Limited and controlled entities Remuneration Report 7.7 Value of options, performance rights and restricted shares granted, exercised and lapsed/forfeited in fiscal 2010 Name David Thodey Bruce Akhurst Nerida Caesar Paul Geason Glenice Maclellan Kate McKenzie Justin Milne David ...

  • Page 92
    ... ...Post employment benefits ...Investments in controlled entities ...Investments in jointly controlled and associated entities ...Employee share plans ...Key management personnel compensation ...Related party disclosures ...Parent entity information ...Events after balance date ... Page Number 78...

  • Page 93
    Telstra Corporation Limited and controlled entities Income Statement for the year ended 30 June 2010 Telstra Group Year ended 30 June 2010 2009 $m $m Note Income Revenue (excluding finance income) ...6 Other income ...6 Expenses Labour ...Goods and services purchased ...Other expenses ...7 Share ...

  • Page 94
    ...expenses ...Changes in fair value transferred to goods and services purchased Changes in fair value transferred to finance costs ...Changes in fair value transferred to property, plant and equipment Income tax on movements in the cashflow hedging reserve... Telstra Group Year ended 30 June 2010 2009...

  • Page 95
    Telstra Corporation Limited and controlled entities Statement of Financial Position as at 30 June 2010 Telstra Group As at 30 June 2010 2009 $m $m Note Current assets Cash and cash equivalents ...Trade and other receivables...Inventories ...Derivative financial assets ...Current tax receivables......

  • Page 96
    ... Corporation Limited and controlled entities Statement of Cash Flows for the year ended 30 June 2010 Telstra Group Year ended 30 June 2010 2009 $m $m Note Cash flows from operating activities Receipts from customers (inclusive of goods and services tax (GST)) Payments to suppliers and to employees...

  • Page 97
    Telstra Corporation Limited and controlled entities Statement of Changes in Equity for the year ended 30 June 2010 Telstra Group Reserves Foreign currency translation (i) $m (598) 214 214 (384) (98) (98) (482) Share capital $m Balance at 1 July 2008 ...Profit for the year ...Other comprehensive ...

  • Page 98
    ... Telstra Group for the year ended 30 June 2010 was authorised for issue in accordance with a resolution of the Telstra Board of Directors on 12 August 2010. The principal accounting policies used in preparing the financial report of the Telstra Group are set out in note 2 to our financial statements...

  • Page 99
    ...Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate". These new accounting standards do not have any material impact on our financial results. 2.2 Principles of consolidation The consolidated financial report includes the assets and liabilities of the Telstra Entity and its...

  • Page 100
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 2. Summary of accounting policies (continued) Bank deposits are recorded at amounts to be received. Bills of exchange and promissory notes are classified as ' available-for-sale' financial assets and...

  • Page 101
    ... in other corporations are classified as ' available-for-sale' financial assets and are measured at fair value at each reporting date. Fair values are calculated on the following basis: • for listed securities traded in an organised financial market, we use the current quoted market bid price at...

  • Page 102
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 2. Summary of accounting policies (continued) We apply management judgement to establish our CGUs. We have determined that assets which form part of our ubiquitous telecommunications network work ...

  • Page 103
    ...follows: Telstra Group As at 30 June 2010 Property, plant and equipment Buildings Buildings ...Fitouts ...Leasehold improvements ...Communication assets Network land and buildings ...Network support infrastructure ...Access fixed ...Access mobile ...Content/IP products - core ...Core network - data...

  • Page 104
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 2. Summary of accounting policies (continued) Intangible assets that are considered to have a finite life are amortised on a straight line basis over the period of expected benefit. Intangible assets...

  • Page 105
    ... Statements (continued) 2. Summary of accounting policies (continued) We apply management judgement in estimating the following key assumptions used in the calculation of our long service leave provision at reporting date: • weighted average projected increases in salaries; and • discount rate...

  • Page 106
    ... in share capital. Refer to note 2.21 for further details regarding our accounting for employee share plans. 2.17 Revenue recognition Our categories of sales revenue are recorded after deducting sales returns, trade allowances, discounts, sales incentives, duties and taxes. (a) Rendering of services...

  • Page 107
    ... when the asset is realised or the liability is settled. Both our current tax and deferred tax are calculated using tax rates that have been enacted or substantively enacted at reporting date. Our current and deferred tax is recognised as an expense in the income statement, except when it relates to...

  • Page 108
    ... ordinary shareholders after tax by the weighted average number of ordinary shares outstanding during the period (adjusted for the effects of the instruments in the Telstra Growthshare Trust and the Telstra Employee Share Ownership Plans). 2.20 Post-employment benefits (a) Defined contribution plans...

  • Page 109
    ... annual reporting period. Refer to note 24 for details on the key estimates used in the calculation of our defined benefit liabilities and assets. 2.21 Employee share plans We own 100% of the equity of Telstra ESOP Trustee Pty Ltd, the corporate trustee for the Telstra Employee Share Ownership Plan...

  • Page 110
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 2. Summary of accounting policies (continued) Where a cash flow hedge qualifies for hedge accounting, the effective portion of gains or losses on remeasuring the fair value of the hedging instrument ...

  • Page 111
    ...the net result primarily reflects the impact of movements in interest rates and the discounting impact of future cash flows on the derivatives. Any gains or losses on remeasuring to fair value forward exchange contracts that are not in a designated hedging relationship are recognised directly in the...

  • Page 112
    ... Notes to the Financial Statements (continued) 2. Summary of accounting policies (continued) 2.23 Recently issued accounting standards to be applied in future reporting periods (continued) (d) Other In addition to the above recently issued accounting standards that are applicable in future years...

  • Page 113
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 3. Earnings per share Telstra Group Year ended 30 June 2010 2009 cents cents Basic earnings per share ...Diluted earnings per share ...31.4 31.3 $m 32.9 32.9 $m 4,073 Earnings used in the calculation...

  • Page 114
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 4. Dividends Telstra Entity Year ended 30 June 2010 2009 $m $m Dividends paid Previous year final dividend paid ...Interim dividend paid ...Total dividends paid ...Dividends paid per ordinary share ...

  • Page 115
    ...management reporting. The Telstra Group is organised into the following operating segments for internal management reporting purposes: Telstra Consumer (TC) is responsible for providing the full range of telecommunication products, services and solutions (across Mobiles, Fixed and Wireless Broadband...

  • Page 116
    ...of our investment in the FOXTEL partnerships; • the development of new business opportunities between Telstra and FOXTEL; and • the hybrid fibre coaxial (HFC) cable network. Other International Unit is responsible for the provision of global communication solutions to multi-national corporations...

  • Page 117
    ...: Telstra Group Year ended 30 June 2010 2009 Note $m $m EBIT contribution for reportable segments ...All other...Total all segments ...Amounts excluded from underlying results: - distribution from FOXTEL Partnership (a)...- impairment in value of goodwill (c) ...- impairment in value of investments...

  • Page 118
    ... our segment non current assets excludes derivative assets, defined benefit assets and deferred tax assets. Note Information about our products and services PSTN products ...Fixed internet ...ISDN products ...Other fixed revenue ...Mobiles ...IP and data access ...Business services and applications...

  • Page 119
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 6. Income Telstra Group Year ended 30 June 2010 2009 $m $m Note Sales revenue Rendering of services ...Sale of goods ...Rent of network facilities and access Construction contracts ...Advertising and...

  • Page 120
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 7. Expenses Telstra Group Year ended 30 June 2010 2009 $m $m Note Labour Included in our labour expenses are the following: Employee redundancy ...Share based payments ...27 Defined benefit plan ...

  • Page 121
    ...) We use our cross currency and interest rate swaps as fair value hedges to convert our foreign currency borrowings into Australian dollar floating rate borrowings. In the current year, we have seen our borrowing margins contract reflecting an improvement in financial markets, resulting in a partial...

  • Page 122
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) 8. Remuneration of auditors Telstra Group Year ended 30 June 2010 2009 $m $m Audit fees Ernst & Young has charged the following amounts for auditing and reviewing the financial reports ...Other services...

  • Page 123
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 9. Income taxes Telstra Group As at 30 June 2010 2009 $m $m Major components of income tax expense Current tax expense ...Deferred tax resulting from the origination and reversal of temporary ...

  • Page 124
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 9. Income taxes (continued) Telstra Group As at 30 June 2010 2009 $m $m Deferred tax assets not recognised Income tax losses ...Capital tax losses ...Deductible temporary differences ...(d) ... 62 160...

  • Page 125
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 10. Trade and other receivables Telstra Group As at 30 June 2010 2009 $m $m Note Current Trade receivables (a) ...Allowance for doubtful debts (a) ... 3,182 (231) 2,951 65 895 16 54 1,030 3,981 80 ...

  • Page 126
    ...Corporation Limited and controlled entities Notes to the Financial Statements (continued) 10. Trade and other receivables (continued) Our policy requires customers to pay us in accordance with agreed payment terms. Depending on the customer segment, our settlement terms are generally 14 to 30 days...

  • Page 127
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) . 11. Inventories Telstra Group As at 30 June 2010 2009 $m $m Current Finished goods recorded at cost...Finished goods recorded at net realisable value ...Total finished goods ...Raw materials and ...

  • Page 128
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 12. Non current assets held for sale On 1 December 2009, the shareholders of SouFun decided to commence a process to prepare SouFun for an offer of the shares in that company to the public. At that ...

  • Page 129
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 13. Property, plant and equipment Telstra Group As at 30 June 2010 2009 $m $m Land and site improvements At cost ...Buildings (including leasehold improvements) At cost ...Accumulated depreciation/...

  • Page 130
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 13. Property, plant and equipment (continued) Telstra Group CommOther Total unication plant, property, Land and Commassets equipment plant site unication under and and improve- Buildings assets ...

  • Page 131
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 14. Intangible assets Telstra Group As at 30 June 2010 2009 $m $m Goodwill ...Internally generated intangible assets Software assets developed for internal use (a) ...Accumulated amortisation ......

  • Page 132
    .... - disposals ...- disposals through sale of a controlled entity - amounts written off ...- impairment losses (e) ...- amortisation expense...- net foreign currency exchange differences . - transfer to non current assets held for sale - other ...Written down value at 30 June 2010 2,017 228 (127) 228...

  • Page 133
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 14. Intangible assets (continued) (a) As at 30 June 2010, we had software assets under development amounting to $392 million (2009: $1,419 million). As these assets were not installed and ready for ...

  • Page 134
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 15. Trade and other payables Telstra Group As at 30 June 2010 2009 $m $m Note Current Trade creditors (a) ...Accrued expenses ...Accrued capital expenditure . . Accrued interest ...Deferred ...

  • Page 135
    ...employees. Non current employee benefits for long service leave are measured at their present value. The following assumptions were adopted in measuring this amount: Telstra Group As at 30 June 2010 2009 Weighted average projected increase in salaries, wages and associated on-costs ...Discount rates...

  • Page 136
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 16. Provisions (continued) (b) Movement in provisions, other than employee benefits Telstra Group Year ended 30 June 2010 2009 $m $m Workers' compensation (i) Opening balance ...- additional ...

  • Page 137
    ... may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. During 2010, we paid dividends of $3,474 million (2009: $3,474 million). Refer to note 4 for further details. Agreement with lenders During the current and prior years there were no defaults...

  • Page 138
    ...United States dollar ...British pound sterling New Zealand dollar Hong Kong dollar ...Japanese yen ...Swiss francs ...249 7,064 1,697 352 610 286 613 49 10,920 517 8,022 1,777 408 585 202 638 12,149 (ii) Telstra bonds and domestic loans Telstra bonds currently on issue relate to wholesale investors...

  • Page 139
    ... as at balance date. The average yield on average net debt during the year was 6.42% (2009: 7.14%) for the Telstra Group. The reduction in the average yield is principally due to lower short term market base interest rates in the current year compared to the prior year which resulted in lower costs...

  • Page 140
    ...Financial instruments included in net debt Cash at bank and on hand ...Available for sale - at fair value Bank deposits, bills of exchange and promissory notes (i) In designated hedge relationships - at fair value Net cross currency swap liability - hedging instrument . Net interest rate swap asset...

  • Page 141
    ... to market rates applicable as at 30 June. Fair Value Hierarchy We use various methods in estimating the fair value of our financial instruments. The methods comprise: • Level 1: the fair value is calculated using quoted prices (unadjusted) in active markets for identical assets or liabilities...

  • Page 142
    ... promissory notes are used principally to support working capital and short term liquidity, as well as hedging certain offshore investments. We repaid the following long term debt funding during the year: • $500 million domestic bond which matured in March 2010; • $782 million 5 year Euro bond...

  • Page 143
    ...exchange risk associated with our offshore investments and some cash balances/finance leases held in foreign currencies by our foreign controlled entities. These foreign currency amounts are reported in Australian dollars based on the applicable exchange rate as at 30 June. Various Fixed Fixed Fixed...

  • Page 144
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) 17. Capital management and financial instruments (continued) (d) Derivative financial instruments (continued) Table I Telstra Group As at 30 June 2010 Cross currency Interest rate swaps Forward contracts...

  • Page 145
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 18. Financial risk management Financial risk management We undertake transactions in a range of financial instruments including: cash assets; receivables; payables; deposits; bills of exchange and ...

  • Page 146
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 18. Financial risk management (continued) (a) Risk and mitigation (continued) (i) Interest rate risk (continued) The weighted average interest rates on our fixed and floating rate financial ...

  • Page 147
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 18. Financial risk management (continued) (a) Risk and mitigation (continued) (ii) Sensitivity analysis - interest rate risk The sensitivity analysis included in this section is based on the interest ...

  • Page 148
    ... to an increase in the market base interest rate as at 30 June valuation date. (iii) Total borrowings in cash flow hedges as at 30 June 2010 increased compared to 30 June 2009 due to a Euro bond issue during the year which is in a designated cash flow hedge. This is the main factor which resulted in...

  • Page 149
    ... over the last five years, the Australian dollar exchange rate against the Euro has traded in the range 0.4755 to 0.7178 (2009: 0.4755 to 0.6461). Foreign currency risk exposure from recognised assets and liabilities arises primarily from our long term borrowings denominated in foreign currencies...

  • Page 150
    ...dates and a new Euro bond issue entered into during the year which is in a designated cash flow hedge. (iv) The sensitivity does not significantly differ from the prior year. The impact on the foreign currency translation reserve relates to the translation of the net assets of our foreign controlled...

  • Page 151
    ... in our statement of financial position, comprising cash and cash equivalents, trade and other receivables, availablefor-sale financial assets, finance lease receivables and derivative instruments. To help manage this risk: • we have a policy for performing credit risk assessments on new and...

  • Page 152
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 18. Financial risk management (continued) (a) Risks and mitigation (continued) Liquidity risk Liquidity risk includes the risk that, as a result of our operational liquidity requirements: • we will ...

  • Page 153
    138 18. Financial risk management (continued) (a) Risks and mitigation (continued) Liquidity risk (continued) Telstra Group As at 30 June 2010 Contractual maturity (nominal cash flows) Less than one year 1 to 2 years Total $m (335) (23) (635) (334) (10,915) (1,106) 484 11 794 10,409 680 1,025 (4,...

  • Page 154
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 18. Financial risk management (continued) (a) Risks and mitigation (continued) Liquidity risk (continued) Financing arrangements Table F Telstra Group As at 30 June 2010 2009 $m $m We have access ...

  • Page 155
    ...hedge foreign currency risk arising from spot rate changes. The hedged items comprise highly probable forecast payments for operating and capital items primarily denominated in United States dollars. Refer to note 17 Table I and Table J for the value of our derivatives designated as cash flow hedges...

  • Page 156
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 18. Financial risk management (continued) (b) Hedging strategies (continued) Cash flow hedges (continued) Nominal cash outflows Telstra Group As at 30 June 2010 2009 $m $m Highly probable forecast ...

  • Page 157
    142 18. Financial risk management (continued) (c) Hedge relationships (continued) Telstra Group - 30 June 2010 Table H Face value Telstra Corporation Limited and controlled entities Pre hedge underlying exposure Native currency $m (Pay)/ receive float Pay fixed Native currency $m $m $m $m ...

  • Page 158
    18. Financial risk management (continued) (c) Hedge relationships (continued) Telstra Group - 30 June 2009 Table I Face value Pre hedge underlying exposure Native currency (Pay)/ receive float Pay fixed Australian dollar $m $m $m Derivative hedging instruments - cross currency and interest rate...

  • Page 159
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 18. Financial risk management (continued) (c) Hedge Relationships (continued) Table J describes each of our hedge relationships, where forward foreign currency exchange contracts are used as the ...

  • Page 160
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 18. Financial risk management (continued) (c) Hedge Relationships (continued) Table K describes our hedge relationships where offshore loans and promissory notes are used as the hedging instruments. ...

  • Page 161
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 19. Share capital Telstra Group As at 30 June 2010 2009 $m $m Contributed equity ...Share loan to employees ...Shares held by employee share plans (i) ...Net services received under employee share ...

  • Page 162
    ... cash provided by operating activities Profit for the year ...Add/(subtract) the following transactions Depreciation and amortisation ...Finance income ...Finance costs ...Distribution from FOXTEL Partnership ...Share based payments ...Defined benefit plan expense ...Net gain on disposal of property...

  • Page 163
    ...'s leading mobile advertising business. They provide SMS, MMS and WAP advertising services to small and medium enterprises as well as large companies in mainland China. The effect of the acquisition is detailed below: Dotad Media Holdings Limited 2010 2010 $m $m Consideration for acquisition Cash...

  • Page 164
    ...Holdings Limited acquired 100% of two businesses being Beauty Sunshine Investments Limited (ChinaM) and Sharp Point Group Limited (Sharp Point). ChinaM is a leading supplier of consumer mobile content and Sharp Point provides technical services for China Mobile's rapidly growing central mobile music...

  • Page 165
    ... Group Year ended 30 June 2010 2009 $m $m Acquisition of property, plant & equipment by means of finance leases ... On 30 April 2009, our controlled entity Telstra Service Solutions Holdings sold its 100% shareholding in KAZ Group Pty Limited and KAZ Technology Services Pty Limited for a total...

  • Page 166
    ... contracting party regarding future possibilities. (e) On 23 February 2010, our controlled entity Telstra Robin Holdings Limited acquired 67% of the issued capital of Dotad Media Holdings Limited (Dotad) for a total consideration of $105 million. Refer to note 20 for further details. (f) The Telstra...

  • Page 167
    ... the market determined, risk adjusted discount rate which was adjusted for specific risks relating to the CGU. The cash flows have been extrapolated over the weighted average remaining service life of our ubiquitous network of 8.69 years. A significant level of uncertainty still currently exists...

  • Page 168
    ... subleases with total minimum lease payments of $19 million (2009: $19 million) for the Telstra Group. Our property operating leases generally contain escalation clauses, which are fixed increases generally between 3% and 5%, or increases subject to the consumer price index or market rate. We do...

  • Page 169
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 22. Expenditure commitments (continued) Telstra Group As at 30 June 2010 2009 $m $m Note (c) Finance lease commitments Within 1 year ...Within 1 to 5 years...After 5 years ...Total minimum lease ...

  • Page 170
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 23. Contingent liabilities and contingent assets We have no significant contingent assets as at 30 June 2010. The details and maximum amounts (where reasonable estimates can be made) are set out below...

  • Page 171
    ... using the projected unit credit method. This method determines each year of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to calculate the final obligation. Details of the defined benefit plans we participate in are set out below. Telstra...

  • Page 172
    ... in fair value of defined benefit plan assets Telstra Group As at 30 June 2010 2009 $m $m Fair value of defined benefit plan assets at beginning of year . Expected return on plan assets ...Employer contributions ...Contributions tax ...Member contributions ...Notional transfer of funds for defined...

  • Page 173
    ... return on plan assets ...Member contributions ...Curtailment loss ...Plan expenses after tax ...Notional transfer of funds for defined contribution benefits ...Adjustment for contributions tax ...in the income statement ... Telstra Group Year ended 30 June 2010 2009 $m $m Employer contributions...

  • Page 174
    ... details. (f) Principal actuarial assumptions We used the following major assumptions to determine our defined benefit plan expense for the year ended 30 June: Telstra Super Year ended 30 June 2010 2009 % % Discount rate ...Expected rate of return on plan assets (i) ...Expected rate of increase...

  • Page 175
    ... and controlled entities Notes to the Financial Statements (continued) 24. Post employment benefits (continued) (f) Principal actuarial assumptions (continued) For Telstra Super we have used the 10-year Australian government bond rate as it has the closest term from the Australian bond market to...

  • Page 176
    ... Multimedia Pty Limited (a) ...Telstra International Limited (a)...Telstra Pay TV Pty Ltd (a)...Hypermax Holdings Pty Ltd (b) ...Chief Entertainment Pty Ltd ...Telstra 3G Spectrum Holdings Pty Ltd ...Telstra OnAir Holdings Pty Ltd...Converged Networks Pty Ltd (b) ...Telstra Business Systems Pty Ltd...

  • Page 177
    ...Limited (c) ...• Reach Data Services India Private Limited (c) . • Beijing Australia Telecommunications Technical Consulting Services Company Limited (c) ...• Telstra Holdings (Bermuda) No. 2 Limited ...• CSL New World Mobility Limited ...• New World PCS Holdings Limited ...• CSL Limited...

  • Page 178
    ... India Private Limited (b) Telstra Services Solutions Holdings Limited (a) ...Sensis Pty Ltd (a) ...• Just Listed Pty Limited (b) ...• Location Navigation Pty Ltd ...• CitySearch Australia Pty Ltd ...• Trading Post (Australia) Holdings Pty Ltd ...• Trading Post Group Pty Limited ...• The...

  • Page 179
    ... Holdings Pty Ltd; Network Design and Construction Limited; Telstra Services Solutions Holdings Limited; Sensis Pty Ltd; Sensis Holdings Pty Ltd; Telstra Pay TV Pty Ltd; Telstra Business Systems Pty Ltd; NDC Global Services Pty Limited; and NDC Global Holdings Pty Limited. Australia China Australia...

  • Page 180
    ... as follows. This excludes Telstra Finance Limited. All significant transactions between members of the closed group have been eliminated. Closed group statement of financial position Closed group As at 30 June 2010 2009 $m $m Current assets Cash and cash equivalents ...Trade and other receivables...

  • Page 181
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) 25. Investments in controlled entities (continued) (a) ASIC deed of cross guarantee financial information (continued) Closed group income statement and retained profits reconciliation Closed group Year...

  • Page 182
    ...value added services. Octave Investments Holdings Limited has the decision-making powers to control these entities. Octave Investments Holdings Limited is one of our controlled entities and therefore we have consolidated the financial results, position and cash flows of these entities into our group...

  • Page 183
    ...Non-current assets held for sale The carrying value of the assets and liabilities of SouFun Holdings Limited and its controlled entities have been classified as held for sale at 30 June 2010. Refer to note 12 for further details. (i) Name changes The following entities changed their names subsequent...

  • Page 184
    ... entities are listed below: Telstra Group's carrying Name of Entity Principal activities Ownership interest As at 30 June 2010 2009 % % Jointly controlled entities FOXTEL Partnership (h) FOXTEL Television Partnership (h) Customer Services Pty Limited (h) FOXTEL Management Pty Ltd (h) FOXTEL Cable...

  • Page 185
    ...December; Bridge Mobile Pte Ltd - 31 March; Australia-Japan Cable Holdings Limited - 31 December; and Beijing Huaxin Target Information Co Ltd - 31 December. Financial reports prepared as at 30 June are used for equity accounting purposes. Our ownership interest in jointly controlled and associated...

  • Page 186
    ... 50% share of these commitments relate to property leases. These leases are for periods of between 5 and 30 years and are based on future property payments under agreements entered into between the 3GIS Partnership and various other parties. Under the Telstra Network Access Contract dated 6 December...

  • Page 187
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 26. Investments in jointly controlled and associated entities (continued) (g) Other disclosures for jointly controlled and associated entities (continued) Summarised presentation of all of our jointly...

  • Page 188
    ... reductions in the equity accounted carrying amount, is shown below: Telstra Group Year ended 30 June Period Cumulative Period 2010 2010 2009 $m $m $m Jointly controlled entities FOXTEL (*) ...Reach Ltd ...Associated entities Australia-Japan Cable Holdings Limited ... Cumulative 2009 $m (12) 6 152...

  • Page 189
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Employee share plans The Company has a number of employee share plans that are available for directors, executives and employees. These include those conducted through the: • Telstra Growthshare...

  • Page 190
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Employee share plans (continued) Telstra Growthshare Trust (continued) (b) Long term incentive (LTI) plans (continued) (i) Outstanding equity based instruments Allocations have been made over a number...

  • Page 191
    ... network; • information technology transformation options (ITT options) based on completion of certain elements in Telstra's transformation program and the rationalisation of the number of business support systems (BSS) and operational support systems (OSS) used by companies in the Telstra Group...

  • Page 192
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Employee share plans (continued) Telstra Growthshare Trust (continued) (b) Long term incentive (LTI) plans (continued) (ii) Description of equity instruments (continued) Executive LTI performance ...

  • Page 193
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Employee share plans (continued) Telstra Growthshare Trust (continued) (b) Long term incentive (LTI) plans (continued) (iii) Performance hurdles (continued) The Board has the discretion to amend ...

  • Page 194
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Employee share plans (continued) Telstra Growthshare Trust (continued) (b) Long term incentive (LTI) plans (continued) (iii) Performance hurdles (continued) Total Shareholder Return (TSR), Revenue...

  • Page 195
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Employee share plans (continued) Telstra Growthshare Trust (continued) (b) Long term incentive (LTI) plans (continued) (iv) Summary of movements and other information Number of equity instruments...

  • Page 196
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Employee share plans (continued) Telstra Growthshare Trust (continued) (b) Long term incentive (LTI) plans (continued) (iv) Summary of movements and other information (continued) Number of equity...

  • Page 197
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Employee share plans (continued) (b) Long term incentive (LTI) plans (continued) (iv) Summary of movements and other information (continued) Options (*) Weighted average fair value (**) $0.74 $0....

  • Page 198
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Employee share plans (continued) Telstra Growthshare Trust (continued) (b) Long term incentive (LTI) plans (continued) (v) Fair value of equity instruments granted The fair value of LTI ...

  • Page 199
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Employee share plans (continued) Telstra Growthshare Trust (continued) (c) Telstra Directshare and Ownshare (i) Nature of Telstra Directshare and Ownshare Telstra Directshare As a result of the changes...

  • Page 200
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Employee share plans (continued) Telstra Growthshare Trust (continued) (c) Telstra Directshare and Ownshare (continued) (iii) Summary of movements The table below provides information about our ...

  • Page 201
    ... Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Employee share plans (continued) TESOP99 and TESOP97 As part of the Commonwealth's sale of its shareholding in fiscal 2000 and fiscal 1998 we offered eligible employees the opportunity to buy ordinary...

  • Page 202
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 27. Employee share plans (continued) TESOP99 and TESOP97 (continued) The Telstra ESOP Trustee continues to hold the loan shares where the employee has ceased employment and elected not to repay the ...

  • Page 203
    ... Our key management personnel (KMP) have authority and responsibility for planning, directing and controlling the activities of the Telstra Group. Our KMP consist of: • the non-executive Directors of the Telstra Entity; and • certain executives in the Chief Executive Officer's (CEO's) senior...

  • Page 204
    ...) 28. Key management personnel compensation (continued) KMP aggregate compensation During fiscal 2010 and fiscal 2009, the aggregate compensation provided to our KMP was: Telstra Group As at 30 June 2010 2009 (*) $ $ Short term employee benefits Post employment benefits . . Other long term benefits...

  • Page 205
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 28. Key management personnel compensation (continued) KMP interests in shares of Telstra Entity During fiscal 2010, our KMP and their related entities held share capital of the Telstra Entity directly...

  • Page 206
    ...560,912 Total shareholdings include shares held by our KMP and their related entities. Unless related to our employee share plans, shares acquired or disposed by our KMP during fiscal 2009 were on an arm's length basis at market price. (a) For those non-executive Directors and senior executives who...

  • Page 207
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 28. Key management personnel compensation (continued) KMP interests in rights, options and restricted shares of Telstra Entity The following details the balances and changes in instruments issued for ...

  • Page 208
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 28. Key management personnel compensation (continued) KMP interests in rights, options and restricted shares of Telstra Entity (continued) Instrument type Senior Executive Incentive shares rights (d)...

  • Page 209
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 28. Key management personnel compensation (continued) KMP interests in rights, options and restricted shares of Telstra Entity (continued) The following details the balances and changes in instruments...

  • Page 210
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 28. Key management personnel compensation (continued) KMP interests in rights, options and restricted shares of Telstra Entity (continued) Instrument type Senior Executive Incentive shares rights (d)...

  • Page 211
    ... due in the next financial year upon final settlement of the current tax payable for the tax consolidated group. Refer to note 9 for further details. (e) The Telstra Entity operates a current account with some of its Australian controlled entities, being an internal group bank account used to settle...

  • Page 212
    ...: Telstra Group Year ended/As at 30 June 2010 2009 $m $m Income from jointly controlled and associated entities: Sale of goods and services (a) ...Distribution from FOXTEL Partnership (b) ...Expenses to jointly controlled and associated entities: Purchase of goods and services (a) ...Total amounts...

  • Page 213
    ...Corporation Limited. These bonds had a cost of $5 million (2009: $6 million) and a market value of $5 million (2009: $6 million) at 30 June 2010. All purchases and sales of Telstra shares and bonds by Telstra Super are determined by the trustee and/or its investment managers on behalf of the members...

  • Page 214
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 30. Parent entity information Telstra Entity As at 30 June 2010 2009 $m $m Statement of Financial Position Total current assets ...Total non current assets (a) ...Total assets ...Total current ...

  • Page 215
    Telstra Corporation Limited and controlled entities Notes to the Financial Statements (continued) 30. Parent entity information (continued) Contingent liabilities and guarantees (continued) Indemnities, performance guarantees and financial support (continued) • Indemnities to financial ...

  • Page 216
    ...in future years: • our operations; • the results of those operations; or • the state of our affairs; other than: Final Dividend On 12 August 2010, the directors of Telstra Corporation Limited resolved to pay a fully franked final dividend of 14 cents per ordinary share. The record date for the...

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    ... Standards applicable in Australia, International Financial Reporting Standards and Interpretations, and Corporations Regulations; (ii) give a true and fair view of the financial position as at 30 June 2010 and performance, as represented by the results of the operations and cash flows, for the year...

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    ... with International Financial Reporting Standards as issued by the International Accounting Standards Board. Report on the Remuneration Report We have audited the Remuneration Report included in pages 61 to 76 of the directors' report for the year ended 30 June 2010. The directors of the company are...

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    Telstra Corporation Limited and controlled entities (This page has been left blank intentionally) 204

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    ...\ Telstra is listed on Stock Exchanges in Australia DQGLQ1HZ=HDODQG :HOOLQJWRQ Website Telstra's investor relations home page: www.telstra.com.au/abouttelstra/investor ,QGLFDWLYH)LQDQFLDO&DOHQGDU $QQXDO*HQHUDO0HHWLQJ 0HOERXUQH +DOI

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