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telstra results report

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    Telstra Corporation Limited and controlled entities Results announcement 28 August 2003 6 Summary of operating results For the year ended 30 June 2003 Telstra Corporation Limited reported a profit after tax and minorities (PAT) of $3,429 million for the year ended 30 June 2003, compared with $3,661 million for the prior year. The decrease of 6.3% was due mainly to the non cash write off of the investment in Reach Ltd of $965 million, partly offset by the sale of a number of assets and investments (inclusive of the seven commercial properties) with a profit after tax of $176 million, and a tax benefit of $201 million reflecting the accounting impact of the tax consolidation. After adjusting to allow like for like comparisons with the year ended 30 June 2002, as detailed on the normalisation schedule, underlying1 PAT increased by 6.4% to $4,365 million with earnings per share increasing to 33.9 cents. Underlying1 EBIT increased by 1.9% to $6,900 million, and underlying1EBITDA increased by 2.6% to $10,205 million. EBIT growth of 7.9% for the second half of the 2003 year, comprised revenue growth of 1.2% and expense reductions of 2.0%. Expense reductions were attributable to the decline in goods and services purchased, primarily network payments. Revenue The increase in reported sales revenue of 1.5% was mainly driven by the inclusion of TelstraClear revenue for the full twelve months. TelstraClear was acquired in December 2001 and therefore only seven months of consolidated results were included in the prior year. Reported total revenue increased by 3.9% including revenue from the sale of seven commercial properties of $570 million. Underlying1 sales revenue increased by 0.5%, benefiting from the continuing impact of rebalancing initiatives. This resulted in an increase in basic access revenue, partly offset by decreases in local call and national long distance revenues. Growth in internet and IP products, mobiles, fixed to mobiles, advertising and directories and intercarrier revenues, was offset by a decline in ISDN, inbound calling products and revenues in controlled entities, including Hong Kong CSL. Underlying1 total revenue increased by 0.3% and included a decline in other revenue attributable to government tender revenues. Revenue from various controlled entities, including Hong Kong CSL, declined sharply in the fourth quarter, with flat total revenue growth. Domestic sales revenue increased by 2.0% to $18,929 million. Expenses The increase in reported total expenses of 9.0% includes the non cash write off of the investment in Reach Ltd, cost of asset and investments sold, and Telstra Clear expenses for twelve months. Underlying1 operating expenses (before equity accounted losses, and depreciation/amortisation) declined by 2.6% largely due to a 13.1% decline in underlying1 goods and services purchased, comprising reduced network payments for services provided by Reach. This was offset by an increase in underlying1 other expenses due to higher service contracts and agreements, including the reclassification of some costs previously capitalised. Underlying1 operating expenses after equity accounted losses but before depreciation and amortisation declined by 1.8%. Underlying1 total expenses (including depreciation and amortisation but before interest and tax) declined at a lesser rate because of depreciation and amortisation growth of 4.1%.
    Telstra Corporation Limited and controlled entities Results announcement 28 August 2003 7 Reported net interest expense increased primarily due to lower interest receipts for the PCCW convertible note. Reported tax expense decreased giving an effective tax rate of 31.1%. Income tax expense includes a once off benefit of $201 million relating to our election to form a tax consolidation group from 1 July 2002, as a result of the tax consolidation legislation that became applicable during the year. Under this legislation, certain tax values of a subsidiary’s assets are reset according to set allocation rules. The once off benefit reflects the increase in the future income tax benefit arising from these reset tax values. Free cash flow3 increased by 18.9% due to reduced capital expenditure and receipt of proceeds from asset and investment sales. After removing the impact of the sale of seven commercial properties in the current year and the sale of Computershare in the prior year, free cash increased by 8.4%. Operating cashflow declined 3.2% in the second half of the 2003 year attributable to an additional $113 million, subsequent to the re-introduction of handset subsidies on selected special offerings, and higher receivables. Treasury operations Telstra financial position remains strong with current credit ratings of AA-, Aa3 and AA- from S&P, Moody’s and Fitch respectively. Dividends A fully franked dividend of 12 cents per share has been declared and is payable on 31 October 2003. This represents a full year increase of 5 cents per share or 22.7%. For enquiries on these results contact: David Moffatt Wayne Treeby Chief Financial Officer General Manager, Investor Relations Telstra Corporation Limited Telstra Corporation Limited Phone: 61 3 9634 8014 Email: [email protected]
 
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