Telstra 2016 Annual Report Download - page 149

147
Section Title | Telstra Annual Report 2016
Notes to the financial statements (continued) Telstra Financial Report 2016
Section 6. Our investments (continued)
Telstra Corporation Limited and controlled entities | 147
6.3 Investments in joint ventures and associated entities
(continued)
6.3.4 Transactions with our joint ventures and associated entities
Table F details transactions with our joint ventures and associated
entities recorded in the income statement and statement of financial
position.
(a) Sale and purchase of goods and services
We sold and purchased goods and services, and received and paid
interest from/to our joint ventures and associated entities. These
transactions were in the ordinary course of business and on normal
commercial terms and conditions.
Details of individually significant transactions with our joint ventures
and associated entities during the financial year 2016 were as
follows:
• we purchased pay television services amounting to $752 million
(2015: $675 million) from our joint venture Foxtel. The purchases
were to enable the resale of Foxtel** services, including Pay TV
content, to our existing customers as part of our ongoing product
bundling initiatives
• we made sales to Foxtel for our broadband system services of
$109 million (2015: $117 million).
(b) Distribution from Foxtel joint venture
During the financial year 2016 we received a $37 million (2015: $125
million) distribution from our joint venture Foxtel.
(c) Loans to joint ventures and associated entities
Loans provided to joint ventures and associated entities mainly
relate to loans provided to Foxtel Management Pty Ltd of $411
million (2015: $451 million) and Reach Ltd of $7 million (2015: $7
million).
In April 2012, Telstra Corporation Limited provided a loan to Foxtel
Management Pty Ltd to fund the acquisition of shares in AUSTAR.
During the year, the loan has been amended reducing the applicable
interest rate from 12 per cent to 10.5 per cent effective 1 July 2015.
This resulted in an initial accounting adjustment of $42 million due to
change in the present value of the remaining cash flows, which was
recognised as an offset against interest income. The present value
difference will unwind over the remaining term of the loan. The loan
has a minimum term of just over 10 years and a maximum of 15
years.
The loan provided to Reach Ltd is an interest-free loan and repayable
upon the giving of 12 months’ notice by both PCCW Limited and us.
We have fully provided for the non-recoverability of the loan as we do
not consider that Reach Ltd is in a position to be able to repay the
loan amount in the medium term.
(d) Loans from joint ventures and associated entities
In the prior year, we had an outstanding loan payable amount of $34
million under a loan agreement with an associated entity, Project
Sunshine I Pty Ltd which was repaid during the year together with
capitalised interest of $2 million. We subsequently obtained a new
loan for $34 million. As at 30 June 2016, the outstanding balance was
$35 million which includes capitalised interest. The new loan has an
interest rate of 8 per cent per annum and a maturity date of 31
December 2017.
Table F Year ended/As at
Telstra Group 30 June
2016 2015
$m $m
Income
Sale of goods and services 240 231
Distribution from Foxtel Partnership 37 125
Interest income from loans to joint
ventures and associated entities 7 54
Expenses
Purchase of goods and services 830 808
Interest expense on loans from joint
ventures and associated entities 41
Total amounts receivable at 30 June
Current
Joint ventures and associated entities –
receivables 60 4
60 4
Non-current
Joint ventures and associated entities –
loans 418 459
Allowance for amounts owed by joint
ventures and associated entities (7) (7)
411 452
Movement in allowance for amounts
owed by joint ventures and associated
entities
Opening balance (7) (6)
Foreign currency exchange differences - (1)
Closing balance (7) (7)
Total amounts payable at 30 June
Current
Joint ventures and associated entities –
payables 180 77
Joint ventures and associated entities –
loans - 34
180 111
Non-current
Joint ventures and associated entities –
loans 35 -
35 -