Telstra Annual Report 2012

7/28/2019 Telstra Annual Report 2012

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ITS HOW WE CONNECTTELSTRA 2012 ANNUAL REPORT


2/240

ANNUAL REPORT

Becoming an e-Shareholder

Telstra encourages shareholders to elect to receive

their communications electronically. By providing

your email address you will receive your dividend

statements, Notice of the Annual General Meeting

and Shareholder Updates (including summary

QDQFLDOLQIRUPDWLRQE\HPDLOQRWLFDWLRQ7KLVis also important if we want to communicate with

you at short notice in relation to current issues.

Please refer to the Managing my Telstra

Shareholding Online section below for

instructions on how to do this.

Please contact our share registry on

1300 88 66 77 or email

[email protected]

should you require any further information

relating to your shareholding.

Managing my Telstra Shareholding Online

1. Go to www.linkmarketservices.com.au/telstra

2. Enter your SRN/HIN (this can be found on

your latest dividend statement), your post

code, the security code displayed and readand accept the terms and conditions.

Use the following sections to help you locate

information about your Telstra holding(s):

Holdings here you can access your

transaction history, holding balance, holding

value and see the last closing share price.

Payment & Tax here you can accessyour dividend payment history, payment

instructions and your TFN. Shareholders

can update bank details here.

Communication use this section to

become an e-Shareholder. You can update

your postal address, email address and

communication elections here.

Annual Repor t

Telstras 2012 Annual Report is available to

all shareholders on our Investor Website at

www.telstra.com.au/annualreports. To receive

a hardcopy of the statutory Annual Report

(free of charge) you can call our Share Registry

on 1300 88 66 77 and request the report

be sent to you. You may also update yourcommunication election online to receive future

copies of the Annual Report. P lease refer to

the Managing my Telstra Shareholding online

section for instructions on how to do this.

Communicating With Our Shareholders

Our online Investor Centre www.telstra.com/

investor is an important tool for our shareholders

where you can access all the latest news,

information and shareholder communications

faster. If you are an e-shareholder, we

will let you know when there is somethingimportant for you to view or download.

Addit ion al Sus tain abil ity Repor tin g

Selected graphs and data presented in this report

are included in our Bigger Picture sustainability

reporting series. This series provides detailed

information and analysis for our stakeholders

on Telstras sustainability performance. We

develop our reporting with reference to industry

and sustainability standards including the United

Nations Global Compact Communication on

Progress, Global Reporting Initiative (GRI)

G3 Sustainability Reporting Guidelines and

Telecommunications Sector Supplement (pilot).

The GRI Index and Bigger Picture series can be

found online at www.telstra.com.au/sustainability.

Key Highlights i

Results ii

Chairman and CEO Message iv

Board of Directors vi

Our Business viii

Our Performance x

Improve Customer Satisfaction x

Retain and Grow Customer xiiNumbers

Simplify the Business xiv

Develop New Growth Businesses xvi

Sustainability xviii

Our Customers xx

Our People xxii

Our Communities xxiv

Our Environment xxvi

FULL ANNUAL REPORT 1


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1.6M

7MOVER

30%GROWTH IN

BUNDLEDCUSTOMERS

NBN

NEW MOBILECUSTOMERSIN AUSTRALIA

FULLY-FRANKED

DIVIDEND PERSHARE

AGREEMENTS

FINALISED

2012 KEY HIGHLIGHTS

i

SOCIAL ANDCOMMUNITYINVESTMENT

REDUCTION INCARBON EMISSIONSINTENSITY

CALLS HANDLED

OUT OF HOURS

$240M

36%

28


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FINANCIALRESULTS

FIVE YEAR SUMMARY

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2012

$m

2011

$m

2010

$m

2009

$m

2008

$m

6DOHVUHYHQXH 25,232 24,983 24,813 25,371 24,657

EBITDA(1) 10,234 10,151 10,847 10,948 10,416

EBIT(2) 5,822 5,692 6,501 6,558 6,226

3URWDIWHUWD[ 3,424 3,250 3,940 4,076 3,711

'LYLGHQGVGHFODUHGSHUVKDUHFHQWV 28 28 28 28 28

7RWDODVVHWV 39,525 37,913 39,282 39,962 37,922

*URVVGHEW 17,222 16,232 16,031 17,036 16,285

1HWGHEW 13,277 13,595 13,926 15,655 15,385

7RWDOHTXLW\ 11,689 12,292 13,008 12,681 12,245

$FFUXHGFDSLWDOH[SHQGLWXUH 3,591 3,410 3,471 4,598 4,897)UHHFDVKRZ 5,197 5,477 6,225 4,365 3,855

FREECASHFLOW

SALESREVENUE

2010

$24.8b

2012

$25.2b

2011

$25.0b

MOBILEREVENUE

PROFIT FORTHE YEAR

$3.9b

2010

$3.4b

2012

$3.3b

2011

$6.2b

2010

$5.2b

2012

$5.5b

2011

$8.7b

2012

$7.3b

2010

$7.9b

2011

ii


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2EMHFWLYH 2012 2011 2010

&XVWRPHUVDWLVIDFWLRQScore 7.2 7.3 6.9 6.8

7,2FRPSODLQWVLevel 1 Complaints per month per 10,000 SIOs

1RPRUHWKDQ 1.9 3.1

'LVDELOLW\$FWLRQ3ODQPercentage of commitments completed

66% 75%

(PSOR\HHHQJDJHPHQWSurvey score 77% 77% 75% 75%

+HDOWKDQGVDIHW\Lost Time Injury Frequency Rate (LTIFR) 1.5 1.32 1.30 2.32

*HQGHUGLYHUVLW\Women in executive management 25% 25.0% 22.7% 22.4%

9ROXQWHHULQJGXULQJ7HOVWUDWLPHNumber of days 1,500 1,375

3D\UROO*LYLQJParticipation rate 3.0% 2.7% 3.5%

6RFLDODQGFRPPXQLW\LQYHVWPHQWTotal (millions of dollars) Ongoing investment $239.8m $248.0m $262.1m

Everyone Connected (targeted programmes)People impacted (VWDEOLVKEDVHOLQH 101,500

&DUERQHPLVVLRQVTonnes of carbon dioxide equivalent (tCO2e) Minimise our impact 1,676,925 1,659,714 1,687,777

&DUERQHPLVVLRQVLQWHQVLW\tCO2e per terabyte of data 15% reduction to 1.64 1.24 1.93

HZDVWH0RELOH0XVWHUTonnes collected WRQQHVFROOHFWHG 14.3 17.3 18.9

NON-FINANCIALRESULTSKEY PERFORMANCE INDICATORS

OUR PEOPLE

OUR CUSTOMERS

OUR COMMUNITY

OUR ENVIRONMENT

iii

OUR GOAL IS TO BRINGTHE SOCIAL AND THEENVIRONMENTAL INTOTHE HEART OF THEORGANISATION IN WAYSTHAT CREATE VALUE.


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WE CONTINUE TO FOCUSON THE STRATEGICPRIORITIES OFIMPROVING CUSTOMERSATISFACTION;RETAINING ANDGROWING CUSTOMERNUMBERS; SIMPLIFYING

THE BUSINESS ANDDEVELOPING NEWGROWTH BUSINESSES.THESE PRIORITIES AREDELIVERING POSITIVERESULTS.

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CHAIRMAN AND CEOMESSAGE

iv


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SUSTAINABILITY

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next two years as we plan to invest

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WHOWE ARETELSTRA IS A COMPANYOF CONNECTIONS. EVERYDAY WE HELP MILLIONS OFAUSTRALIANS CONNECT TOTHE PEOPLE AND THINGSTHAT MATTER MOST TO THEM.

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INDUSTRYCONTEXTCONNECTIVITY IS DRIVING

AN EXPLOSION IN DEMANDON OUR NETWORKS.

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OURBUSINESS

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OUR VISION IS TO IMPROVETHE WAY PEOPLE LIVEAND WORK.

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SUSTAINABILITY IS EMBEDDEDIN OUR APPROACH TO OURCUSTOMERS, OUR PEOPLE,OUR COMMUNITIES,AND OUR ENVIRONMENT.

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ix

OURAPPROACH

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OUR PERFORMANCE

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WE WANT OUR CUSTOMERS

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ADVOCATES. TO ACHIEVE THAT,

WE HAVE TO WIN AND RETAIN

THE TRUST OF OUR CUSTOMERS ONE CUSTOMER AT A TIME.

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OUR GOAL: TO DELIVER OURCUSTOMERS A GREAT SERVICEEXPERIENCE. TO CONTINUE TOWORK HARD TO MAKE SURE THATOUR CUSTOMERS ARE AT THE

CENTRE OF EVERYTHING WE DO


13/240

xi

TELSTRA HAS RECENTLY

INTRODUCED THE NET PROMOTER

SYSTEM (NPS) WHICH IS THE

NEXT STAGE IN IMPROVING

CUSTOMER SATISFACTION.

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14/240

OUR PERFORMANCE

RETAIN AND GROWCUSTOMER NUMBERS

xii

WE ARE GRATEFUL FOR

THE MANY CUSTOMERS

WHO CHOSE TELSTRA THIS

YEAR. THE QUALITY OF OUR

NETWORKS AND SERVICE IS AKEY DIFFERENTIATOR AND IS

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IN OUR BUSINESS.

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AUSTRALIANS NOW HAVE

ACCESS TO ONE OF THE WORLDS

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15/240

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16/240

OUR PERFORMANCE

SIMPLIFY THE BUSINESS

xiv

SIMPLIFYING THE BUSINESS

IS A COMPANY-WIDE PROJECT

THAT HAS HELPED CHANGE

TELSTRAS CULTURE.

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our customers.

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OUR GOAL: SIMPLIFYTHE BUSINESS, IMPROVECUSTOMER SERVICE ANDSAVE UNNECESSARY COSTS


17/240

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18/240

OUR PERFORMANCE

DEVELOP NEWGROWTH BUSINESSES

xvi

WE ARE LOOKING TO GROW THETELSTRA BUSINESS, NOT JUSTPROTECT OUR CURRENT MARKET

SHARE.

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19/240

xvii

COCA-COLA AMATIL AND NAS

COCA-COLA AMATIL(CCA), ONE OF THEWORLDS TOP FIVECOCA-COLA BOTTLERS,IS A TRUE NASCUSTOMER.

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20/240

OUR PERFORMANCE

SUSTAINABILITY CONDUCTINGOUR BUSINESS RESPONSIBLY

xviii

FOR TELSTRA, SUSTAINABILITY

IS A BUSINESS APPROACH

THAT CREATES LONG-TERM

VALUE BY EMBRACING THE

OPPORTUNITIES AND MANAGINGTHE RISKS DERIVED FROM

ECONOMIC, ENVIRONMENTAL,

SOCIAL AND TECHNOLOGICAL

DEVELOPMENTS. SUSTAINABILITY

IS AN IMPORTANT PART OF HOW

WE WILL ACHIEVE OUR VISION

TO IMPROVE THE WAY PEOPLE

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21/240

xix

TELSTRA SUSTAINABILITY FRAMEWORK

TELSTRAS SUSTAINABILITY FRAMEWORK IS BUILT AROUND FIVE KEY PILLARS AND INDICATES

OUR BROAD GOALS AND KEY SUSTAINABILITY ISSUES.


22/240

AS AUSTRALIAS LARGEST TELCO,

WE ARE COMMITED TO KEEPING

THE CUSTOMER AT THE CENTRE

OF EVERYTHING WE DO.

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SUSTAINABILITY PUTTINGCUSTOMERS AT THE CENTRE


23/240

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OUR GOAL:TO ENSURE THAT EVERYONE INOUR COMMUNITIES ENJOYS THE BENEFITSOF COMMUNICATION TECHNOLOGIES AND THESOCIAL AND ECONOMIC BENEFITS THEY BRING


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WE ACTIVELY MINIMISE

THE ENVIRONMENTAL

IMPACTS OF OUR OPERATIONS

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CUSTOMERS TO ENHANCE

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TELSTRA GETS QANTAS PILOTSOFF THE GROUND WITH IPADS^

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UNLOCK AMAZINGNATIONAL BROADBAND NETWORK

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ON FEBRUARY 28 WE LAUNCHED

TELSTRAS POPULAR NATIONAL

BUNDLES FOR CONSUMER

CUSTOMERS ON THE NBN IN THE

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ARMIDALE AND KIAMA IN NSW,

WILLUNGA IN SA, TOWNSVILLE

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JUNE, WE WELCOMED OUR FIRSTTASMANIAN CUSTOMERS ON THE

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1

Telstra Corporation Limited and controlled entities

Contents

1. Full year results and operations review J une 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2. Corporate Governance and Board Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

3. Shareholder Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

4. Directors Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

5. Remuneration Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

6. Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71


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2

Registered trade mark of Telstra Corporation Limited

Trade mark of Telstra Corporation Limited

Trade mark of Apple Inc

FOXTEL marks are used under licence by FOXTEL Management Pty Ltd.

All amounts are expressed in Australian dollars ($A) unless otherwise stated.


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Full year results and operations review - June 2012


3

FY 2012

($m)

FY 2011

($m)

YoY

change

Sales Revenue 25,232 24,983 1.0%

Total Revenue 25,368 25,093 1.1%

Operating Expenses 15,269 15,154 0.8%

EBITDA 10,234 10,151 0.8%

Depreciation &Amortisation

4,412 4,459 -1.1%

EBIT 5,822 5,692 2.3%

1HWQDQFHFRVWV 888 1,135 -21.8%

Tax 1,510 1,307 15.5%

Attributable NPAT 3,424 3,250 5.4%

Accrued capex 3,591 3,410 5.3%

)UHHFDVKRZ 5,197 5,477 -5.1%

SUMMARY FINANCIAL RESULTS REPORTED RESULTS

RESULTS ON A GUIDANCE BASIS*

CEO MESSAGE

7HOVWUDKDVDQQRXQFHGUHVXOWVIRUVFDO\HDUKLJKOLJKWLQJJURZWKLQUHYHQXHDQGSURWVLQOLQHZLWKJXLGDQFHDVZHOODVadding 1.6 million Australian mobile customers.

7HOVWUDVVWUDWHJ\FRQWLQXHVWRGHOLYHUEHQHWVWRFXVWRPHUVDQGVKDUHKROGHUVZLWKDQLQFUHDVHGIRFXVRQFXVWRPHUservice leading to strong customer retention and acquisition in

the 12 months to 30 June 2012.

'XULQJWKH\HDU7HOVWUDLQYHVWHGQHDUO\ELOOLRQRIFDSLWDOLQFOXGLQJVLJQLFDQWLQYHVWPHQWVLQ$XVWUDOLDVODUJHVWDQGIDVWHVWQDWLRQDOPRELOHQHWZRUNH[WHQGLQJ$XVWUDOLDVODUJHVW4G LTE coverage to more than 1,000 base stations serving

more than 375,000 customers.

7HOVWUDDOVRFRQUPHGDIXOO\IUDQNHGFHQWQDOGLYLGHQGEULQJLQJWKHWRWDOGLYLGHQGWRFHQWVSHUVKDUHIRUVFDO\HDU2012, returning $3.4 billion to shareholders.

:HKDYHVHHQWZR\HDUVRIVLJQLFDQWFXVWRPHUJURZWKDVRXUVWUDWHJ\FRQWLQXHVWREHDUIUXLW7KLVKDVWUDQVODWHGLQWRVWURQJQDQFLDOUHVXOWVGHVSLWHWRXJKGRPHVWLFDQGLQWHUQDWLRQDOHFRQRPLFFRQGLWLRQV&KLHI([HFXWLYH2IFHU'DYLG7KRGH\VDLGWRGD\

7KHUHVXOWVRIRXUIRFXVRQRXUFXVWRPHUVDQGVLPSOLI\LQJRXUEXVLQHVVFDQEHVHHQLQLPSURYHGFXVWRPHUIHHGEDFN

We delivered on our commitments, met guidance and

demonstrated greater resilience than other sectors in a

FKDOOHQJLQJPDUNHWHQYLURQPHQW

:HKDYHDFKLHYHGWRSDQGERWWRPOLQHJURZWKDQGH[SHFWWRGRVRDJDLQLQWKHQDQFLDO\HDU

7RWDOUHYHQXHLQFUHDVHGE\WRELOOLRQ

(%,7'$LQFUHDVHGE\WRELOOLRQ 1HW3URW$IWHU7D[LQFUHDVHGE\WRELOOLRQ

Capex to sales ratio of 14.2%

)UHHFDVKRZRIELOOLRQ

%HIRUHLPSDLUPHQWV*RYHUQPHQW1%1'HQLWLYH$JUHHPHQWUHFHLSWVDQGUHJXODWHGZKROHVDOHSULFHFKDQJHV7KHJXLGDQFHEDVLVKDVEHHQUHYLHZHGE\RXUDXGLWRUV

FY 2012 FY 2012 Guidance

Total revenue 1.3% /RZVLQJOHGLJLWJURZWK

EBITDA 2.1% /RZVLQJOHGLJLWJURZWK

Capex/sales 14.2% ~14%

)UHHFDVKRZ $5.3bn $4.5 - 5.0bn

Dividend 28cps FSVIXOO\IUDQNHG

TOTAL REVENUE GROWTH

FY09

2.7%

FY10

-2.3%

FY11

0.7%

FY12

1.1%


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4

KEY OUTCOMES AGAINST STRATEGICPRIORITIES

Customer satisfaction

7,2OHYHOFRPSODLQWVUHODWLQJWR7HOVWUDUHGXFHGE\DQGFRQVXPHUFDOOYROXPHVE\&XVWRPHUVHUYLFHLPSURYHPHQWVLQWURGXFHGRYHUWKHODVW\HDULQFOXGHDQHZFRQVXPHUELOOIRUPDWPDNLQJLWVLPSOHUDQGFOHDUHUIRUcustomers to understand charges, the introduction of an

DSSOLFDWLRQZKLFKHQDEOHVFXVWRPHUVWRDFFHVVWKHLUDFFRXQWvia an Apple iPad^DQG)DFHERRNDQGPDQ\RWKHURSHUDWLRQDOimprovements.

Growth in number of customers

7HOVWUDVSURGXFWRIIHUVDQGQHWZRUNLQYHVWPHQWVFRQWLQXHGWRDWWUDFWQHZFXVWRPHUVGXULQJWKH\HDUDGGLQJ

1.6 million domestic mobile customers, to a total of 13.8million;

UHWDLO[HGEURDGEDQGFXVWRPHUVWRDWRWDORImillion;

336,000 customers on bundled plans, to a total of 1.4million;

475,000 Hong Kong mobile customers, to a total of 3.5million.

7HOVWUDV*QHWZRUNEXLOGDFFHOHUDWHGGXULQJWKH\HDUDQGQRZFRYHUVDSSUR[LPDWHO\RI$XVWUDOLDVSRSXODWLRQCustomers have activated more than 375,000 4G devices

since launch.

Telstras domestic mobile business generated more than

one third of revenue. Telstra has added more than three

PLOOLRQQHZPRELOHFXVWRPHUVRYHUWKHSDVWWZR\HDUV0RELOHUHYHQXHJURZWKRIZDVDFKLHYHGZKLOHPDUJLQVLQFUHDVHGE\WKUHHSHUFHQWDJHSRLQWVWR

*URZWKLQUHWDLOEURDGEDQGSDUWO\RIIVHWGHFOLQHVLQZKROHVDOHUHYHQXHVZKLFKLQFOXGHGWKHLPSDFWRIUHJXODWRU\DFFHVVGHWHUPLQDWLRQV)L[HGOLQHUHYHQXHGHFOLQHZDVVWHDG\DW

6.1%.

6LPSOLFDWLRQ

Telstras business improvement programme remained on

WUDFNDQGGHOLYHUHGEHQHWVLQVFDORIELOOLRQenabling reinvestment in customer service initiatives. These

EHQHWVLQFOXGHGLPSURYHPHQWVLQODERXUSURGXFWLYLW\UHGXFHGFXVWRPHUFDOOYROXPHVDQGJURZWKLQRQOLQHFXVWRPHUinteractions.

Growth opportunities

1HWZRUN$SSOLFDWLRQDQG6HUYLFHV1$6UHYHQXHJUHZE\WRPLOOLRQZLWKVHYHUDOVLJQLFDQWFRQWUDFWVsigned providing a strong foundation for 2013. Major

FXVWRPHUVVLJQHGZLWKLQWKH1$6SRUWIROLRLQFOXGHGWKHDepartment of Human Services, Australia Post and NAB.

$FURVVWKH0HGLDSRUWIROLR)R[WHOVDFTXLVLWLRQRI$XVWDUZDVDQLPSRUWDQWPLOHVWRQH6HQVLVUHYHQXHGHFOLQHGE\DVthe move to online accelerated. Customer response to Sensis

digital offers improved in recent months across metro and non-

metro regions. Excluding Sensis and advertising, digital media

SURGXFWUHYHQXHLQFUHDVHGRYHUWKH\HDU

,QWKH7HOVWUD,QWHUQDWLRQDO*URXSZKLFKLQFRUSRUDWHV7HOVWUDVLQYHVWPHQWVLQ$VLDUHYHQXHJUHZE\GULYHQE\JURZWKLQthe Hong Kong mobile services (CSL) business and global

FRQQHFWLYLW\DQGLQWHUQDWLRQDO1$6SURGXFWV7HOVWUD*OREDO

DVWKHFRPSDQ\EHQHWHGIURPLQWHJUDWLQJDVVHWVDFTXLUHGfrom Reach.

NATIONAL BROADBAND NETWORK (NBN)

,Q0DUFK7HOVWUDQDOLVHGWKH1%1DJUHHPHQWVZLWKWKH&RPPRQZHDOWKDQG1%1&RLQFOXGLQJ$&&&DFFHSWDQFHRI7HOVWUDV6WUXFWXUDO6HSDUDWLRQ8QGHUWDNLQJDQGcommenced providing long term infrastructure access under

WKH,QIUDVWUXFWXUH6HUYLFHV$JUHHPHQW,6$7HOVWUDUHFHQWO\KDQGHGRYHUVWDJHRQHRIWKHWUDQVLWQHWZRUNGDUNEUHDQGH[FKDQJHUDFNVSDFHVWR1%1&R7KHFRPSDQ\FRQWLQXHVWRZRUNFROODERUDWLYHO\ZLWK1%1&RRQWKHEXLOGLQJRILWVDFFHVVQHWZRUN7HOVWUDKDVDOVRODXQFKHGUHWDLODQGZKROHVDOH

VHUYLFHVRYHUWKH1%1IROORZLQJVXFFHVVIXOWULDOVLQWKHHDUO\release sites.

HALF YEARLY REPORTED RESULTS

H2 2012YoY change

H1 2012YoY change

H2 2011YoY change

H1 2011YoY change

H2 2010YoY change

Sales revenue 0.8% 1.2% 1.8% -0.5% -1.9%

Total revenue 1.1% 1.1% 1.9% -0.5% -1.7%

Operating expenses 2.6% -1.0% 3.0% 10.7% -1.8%

EBITDA -1.6% 3.7% 0.7% -13.9% -1.5%

3URWIRUWKHSHULRG -4.8% 22.5% -0.5% -36.0% -4.7%


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5

CAPITAL MANAGEMENT

7HOVWUDHQGHGWKH\HDUZLWKVWURQJOLTXLGLW\DQGH[FHVVFDVKRIELOOLRQDWWKHWRSHQGRIFRPSDQ\SURMHFWLRQV7KLVSRVLWLRQVWKHFRPSDQ\ZHOODKHDGRIH[SHFWHGVSHFWUXPDFTXLVLWLRQFRPPLWPHQWVDQGELOOLRQRIGHEWUHQDQFLQJGXHLQ,QDGGLWLRQRYHUWKHQH[WWZR\HDUV7HOVWUDSODQVto invest around $500 million of excess cash into its mobile

QHWZRUNLQFOXGLQJ/7(WRPDLQWDLQDQGH[WHQGRXUQHWZRUNDGYDQWDJHDQGLQWRWKH1%1WUDQVLWQHWZRUNWREULQJIRUZDUGEHQHWVIURPWKH1%1DJUHHPHQWV

Telstra is not contemplating capital management initiatives at

this time.

FINANCIAL OUTLOOK

7HOVWUDH[SHFWVJURZWKWRFRQWLQXHLQVFDO\HDUDQG

IRUHFDVWVORZVLQJOHGLJLWWRWDOLQFRPHDQG(%,7'$JURZWKZLWKIUHHFDVKRZEHWZHHQDQGELOOLRQ7HOVWUDexpects capital expenditure to be around 15% of sales over

WKHQH[WWZR\HDUV

*XLGDQFHDVVXPHVZKROHVDOHSURGXFWSULFHVWDELOLW\QRLPSDLUPHQWVWRLQYHVWPHQWVDQGH[FOXGHVDQ\SURFHHGVRQthe sale of businesses and the cost of spectrum purchases.

The foreign exchange impairment on TelstraClear expected on

completion is also excluded.

2XUVWUDWHJ\LVZRUNLQJDQGZHFRQWLQXHWRIRFXVRQRXUSULRULWLHVRILPSURYLQJFXVWRPHUVDWLVIDFWLRQSURWDEO\LQFUHDVLQJWKHQXPEHURIFXVWRPHUVVLPSOLI\LQJWKHEXVLQHVV

DQGQGLQJQHZJURZWKRSSRUWXQLWLHV0U7KRGH\VDLG$VDQQRXQFHGLQ2FWREHULWLVWKHFRPSDQ\VLQWHQWLRQWRPDLQWDLQDFHQWIXOO\IUDQNHGGLYLGHQGIRUVFDO7KLVis subject to the Boards normal approval process for dividend

declaration and there being no unexpected material events.

REPORTED RESULTS,QVFDO\HDUVDOHVUHYHQXHLQFUHDVHGE\RUPLOOLRQWRPLOOLRQDQGWRWDOUHYHQXHLQFUHDVHGE\or $275 million to $25,368 million.

Operating Expenses (before depreciation and amortisation)

LQFUHDVHGE\RUPLOOLRQWRPLOOLRQDVWKHFRPSDQ\FRQWLQXHVWRGHOLYHULPSURYHGSURGXFWLYLW\

/DERXUH[SHQVHLQFUHDVHGE\WRPLOOLRQ/DERXUDQGODERXUVXEVWLWXWLRQH[SHQVHLQFUHDVHGE\WRPLOOLRQ$QLQFUHDVHLQVDODU\DQGDVVRFLDWHGFRVWVODUJHO\a result of the impact of a movement in the government

ERQGUDWHRQHPSOR\HHSURYLVLRQVDQGLQFUHDVHGVKRUWWHUPLQFHQWLYHFRVWVZDVRIIVHWE\ORZHUUHGXQGDQFLHVDQGODERXUsubstitution expense. Excluding the impact of the bond rate

movement, labour and labour substitution expense decreased

E\

'LUHFWO\YDULDEOHFRVWV'9&VRUJRRGVDQGVHUYLFHVSXUFKDVHGGHFUHDVHGE\WRPLOOLRQWKHUVW\HDURQ\HDUGHFOLQHLQYH\HDUV

2WKHUH[SHQVHVGHFUHDVHGE\RUPLOOLRQWRPLOOLRQZLWKDUHGXFWLRQLQVHUYLFHFRQWUDFWVDVZHFRQWLQXHWRVLPSOLI\WKHEXVLQHVV

Earnings before interest, tax, depreciation and amortisation

(%,7'$LQFUHDVHGE\WRPLOOLRQZLWK(%,7'$PDUJLQVDWDW(DUQLQJVEHIRUHLQWHUHVWDQGWD[(%,7LQFUHDVHGE\WRPLOOLRQ

1HWQDQFHFRVWVGHFUHDVHGE\WRPLOOLRQGULYHQE\DUHGXFWLRQLQWKHOHYHORIDYHUDJHQHWGHEWIURPDFWLYHPDQDJHPHQWRIWKHFRPSDQ\VGHEWSRUWIROLRDQGIDLUYDOXHadjustments.

5HSRUWHGSURWDIWHUWD[DQGQRQFRQWUROOLQJLQWHUHVWV

LQFUHDVHGE\WRPLOOLRQ%DVLFHDUQLQJVSHUVKDUH(36LQFUHDVHGE\IURPFHQWVWRFHQWV

)UHHFDVKRZRIPLOOLRQZDVJHQHUDWHGLQWKH\HDU$FFUXHGFDSLWDOH[SHQGLWXUHZDVPLOOLRQRURIsales.

2Q$XJXVWWKH'LUHFWRUVRI7HOVWUDUHVROYHGWRSD\DIXOO\IUDQNHGQDOGLYLGHQGRIFHQWVSHUVKDUH6KDUHVZLOOtrade excluding entitlement to the dividend on 20 August 2012

ZLWKSD\PHQWRQ6HSWHPEHU

PRODUCT PERFORMANCE

Measure Fiscal 2013 Guidance

Total income ORZVLQJOHGLJLWJURZWK

EBITDA ORZVLQJOHGLJLWJURZWK

Capex/sales Around 15%

)UHHFDVKRZ $4.75-$5.25 billion

Dividend FIXOO\IUDQNHG

FY 2013 GUIDANCE SUMMARY*

**XLGDQFHDVVXPHVZKROHVDOHSURGXFWSULFHVWDELOLW\QRLPSDLUPHQWVWRLQYHVWPHQWVDQGH[FOXGHVDQ\SURFHHGVRQWKHVDOHRIEXVLQHVVHVDQGWKHcost of spectrum purchases. The foreign exchange impairment on TelstraClearexpected on completion is also excluded.

KEY PRODUCT REVENUE

FY 2012($m)

FY 2011($m)

YoYchange

Fixed 7,488 7,972 -6.1%

Mobile 8,668 7,989 8.5%

Data and IP 3,122 3,147 -0.8%

NAS 1,263 1,143 10.5%

International 1,496 1,398 7.0%

Digital Media 2,377 2,629 -9.6%


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6

FIXED

5HYHQXHIURPRXU[HGSRUWIROLRGHFUHDVHGE\WRPLOOLRQZLWKJURZWKLQ[HGEURDGEDQGSDUWO\RIIVHWWLQJWKHcontinued PSTN revenue decline.

)L[HGUHWDLOEURDGEDQGUHYHQXHLQFOXGLQJKDUGZDUHJUHZE\WRPLOOLRQLQWKH\HDUDVLJQLFDQWLPSURYHPHQWIURPWKHJURZWKLQVFDO7RWDO[HGEURDGEDQGUHYHQXHLQFOXGLQJZKROHVDOHLQFUHDVHGE\WRmillion.

2XU[HGEURDGEDQGSRUWIROLRFRQWLQXHVWRJURZDVDUHVXOWRIWKHSRSXODULW\RIRXUFRPSHWLWLYHDQGEURDGUDQJHRIEXQGOHGRIIHUVZKLFKLQFOXGHD[HGEURDGEDQGDQG3671VHUYLFH)L[HGUHWDLOEURDGEDQGFXVWRPHUVJUHZE\GXULQJWKH\HDUDQGWKHUHDUHQRZPLOOLRQFXVWRPHUVRQDEXQGOHGSODQDQLQFUHDVHRIRQWKHSULRU\HDU

)L[HGUHWDLOEURDGEDQG$538LQFUHDVHGE\WR

a strong result given the intense competitive landscape, andDWXUQDURXQGIURPODVWVFDO\HDUZKHUH$538GHFOLQHGE\$538LQWKHVHFRQGKDOIDOVRJUHZE\RQWKHSULRU\HDU

:KROHVDOHEURDGEDQGUHYHQXHIHOOE\RUPLOOLRQWRPLOOLRQPDLQO\DVDUHVXOWRIZKROHVDOHEURDGEDQGOLQHVZKLFKZHUHORVWGXULQJWKH\HDUDVZKROHVDOHFXVWRPHUVFRQWLQXHWREXLOGWKHLURZQLQIUDVWUXFWXUHDQGmigrate their services to Telstras Unconditioned Local Loop

(ULL) product.

3671UHYHQXHGHFOLQHGE\WRPLOOLRQDVDUHVXOWRIORZHUFDOOUHYHQXHDQGDFRQWLQXHGGHFUHDVHLQEDVLFDFFHVVOLQHV3671LVQRZOHVVWKDQRIRXUVDOHV

revenue.

3671EDVLFDFFHVVOLQHVGHFOLQHGGXULQJWKH\HDUVOLJKWO\KLJKHUWKDQWKHOLQHGHFOLQHLQVFDO\HDU

7KHGHFOLQHLQEDVLFDFFHVVUHYHQXHZDVFRQVLVWHQWZLWKSULRUperiods. Calling revenue deteriorated further as customer

XVDJHSDWWHUQVFRQWLQXHWRFKDQJHGULYHQE\VXEVWLWXWLRQWRPRELOHYRLFHPRELOHGDWDDQG[HGGDWDDOWHUQDWLYHV&DOOUHYHQXHKDVDOVREHHQLPSDFWHGE\WKHLQFUHDVHGWDNHXSRIEXQGOHGSODQVZKHUHFXVWRPHUVKDYHFDOOVLQFOXGHGDVSDUWRItheir plan.

PSTN EBITDA margins increased one percentage point to

DQG[HGEURDGEDQGPDUJLQVLQFUHDVHGVL[SHUFHQWDJHpoints to 37%.

7KHLPSDFWRIWKH1%1RQRXU[HGEXVLQHVVLQWKLVVFDO\HDU

ZDVQRWVLJQLFDQW

MOBILE

:HUHFRUGHGRQHRIRXUEHVWHYHU\HDUVLQPRELOHZLWKmillion domestic mobile customers added. The breadth and

TXDOLW\RIVHUYLFHFXVWRPHUVHQMR\ZKHQXVLQJRXU1H[W*QHWZRUNUHPDLQVDQLPSRUWDQWFRPSHWLWLYHDGYDQWDJHIRUXV7RWDOPRELOHUHYHQXHJUHZE\WRPLOOLRQ

2YHUWKHSDVWWZR\HDUVZHKDYHDFTXLUHGRYHUWKUHHPLOOLRQPRELOHFXVWRPHUVE\SURYLGLQJEHWWHUYDOXHSODQVLPSURYLQJour customer service, focusing our brand and product

PDUNHWLQJDQGFRQWLQXLQJWRLQYHVWLQQHWZRUNVXSHULRULW\/DVW\HDUZHEHFDPHWKHUVWRSHUDWRULQ$XVWUDOLDWRRIIHUultra-fast 4G LTE devices (smartphones, tablets and mobile

broadband). Since launching 4G services in September,

ZHKDYHVROGRYHU*GHYLFHVLQFOXGLQJKDQGVHWVZLWKFRYHUDJHQRZLQUHJLRQDODUHDVPDMRUcities and airports.

:HQRZKDYHPLOOLRQPRELOHFXVWRPHUVLQFOXGLQJmillion postpaid handheld and 3.1 million mobile broadband

FXVWRPHUV,QVFDO\HDURIRXUSRVWSDLGKDQGVHWVDOHVZHUHVPDUWSKRQHV

3RVWSDLGKDQGKHOGUHYHQXHRIPLOOLRQJUHZE\&XVWRPHUQXPEHUJURZWKLQWKLVFDWHJRU\ZDVDVWURQJZKLOH$538VGHFOLQHGLQWKH\HDUODUJHO\GXHWKHLPSDFW

RI0RELOH5HSD\PHQW2SWLRQ052DFFRXQWLQJ([FOXGLQJthe impact of MRO, postpaid handheld ARPUs increased

PDUJLQDOO\RYHUWKH\HDU

FIXED BROADBAND REVENUE GROWTH

FY09

10.5%

FY10

1.8%

FY11

-2.9%

FY12

2.9%

MOBILE

GROWTH

FIXE

D

FY12 PRODUCT SALES REVENUE BREAKDOWN

12%

Other 4%PSTN

FixedBroadband

Mobile

IP &

Data

NAS

Media

OtherFixed

International19%

6%

8%

3%

34%

5%

9%


37/240



7

0RVWSRVWSDLGFXVWRPHUVDUHQRZWDNLQJXS052SODQV$VDUHVXOWKDUGZDUHUHYHQXHJURZWKUHPDLQVVWURQJDW7KHJURZWKLQ052SODQVGULYHVVLJQLFDQWQRQFDVKDPRUWLVDWLRQRIFXVWRPHUGHEWZKLFKLVUHSRUWHGDVQHJDWLYHVHUYLFHUHYHQXH7KLVUHYHQXHZDVPLOOLRQLQVFDO\HDU)


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8

7RWDOZRUNIRUFHQXPEHUVGHFUHDVHGE\LQWKH\HDU5HGXFWLRQVZHUHGULYHQE\WKHUHVWUXFWXULQJRIRXU&KLQDEXVLQHVVHVFRQWLQXLQJSURGXFWLYLW\LQLWLDWLYHVLQ6HQVLVDQGthe rationalisation of our contact centre activities. These

UHGXFWLRQVZHUHSDUWLDOO\RIIVHWE\LQFUHDVHVLQRXUZRUNIRUFHWRVXSSRUWRXUJURZWKLQ1$6DQG1%1UHODWHGDFWLYLWLHV

GOODS AND SERVICES PURCHASED

*RRGVDQGVHUYLFHVSXUFKDVHGKDYHUHGXFHGE\RUPLOOLRQLQVFDO

2XUFRVWRIJRRGVVROGZKLFKLQFOXGHVPRELOHKDQGVHWVZLUHOHVVGHYLFHVDQG[HGGLJLWDOSURGXFWVGHFUHDVHGE\RUPLOOLRQ7KLVZDVGULYHQE\DVPDOOGHFOLQHLQWRWDOPRELOHDFWLYLW\3OHDVLQJO\WKLVKDVFRLQFLGHGZLWKFRQWLQXHG

KLJKOHYHOVRIPRELOHFXVWRPHUJURZWKDQGORZFKXUQ

1HWZRUNSD\PHQWVZHUHVXEVWDQWLDOO\DW\HDURQ\HDUGULYHQE\JURZWKLQRXUGRPHVWLFFDUULHUQHWZRUNRXWSD\PHQWV+LJKHURIIQHWYROXPHVZHUHSDUWLDOO\RIIVHWE\DUHGXFHGPRELOHWHUPLQDWLQJDFFHVV07$UDWHZKLFKGURSSHGIURPQLQHFHQWVWRVL[FHQWVSHUPLQXWHLQ-DQXDU\3D\PHQWVWRRYHUVHDVFDUULHUVLQFUHDVHGGXHWRJURZWKLQRXWERXQGPRELOHURDPLQJWUDIFDQGUHYHQXH([WHUQDOQHWZRUNSD\PHQWVWR5HDFKGHFUHDVHGGXHWRWKHFKDQJHLQIXQGLQJPRGHOIROORZLQJWKHDFTXLVLWLRQRIQHWZRUNDVVHWVIURP5HDFKin March 2011.

OTHER EXPENSES

7RWDORWKHUH[SHQVHVGHFUHDVHGE\RUPLOOLRQSULPDULO\GULYHQE\WKHORZHUODERXUVXEVWLWXWLRQFRVWVdiscussed above and other service contracts and agreements.

7KHVHUHGXFWLRQVZHUHSDUWLDOO\RIIVHWE\LQFUHDVHGLPSDLUPHQWcharges and general and administration expenses.

Service contracts and agreements (excluding labour

VXEVWLWXWLRQGHFUHDVHGE\RUPLOOLRQGULYHQE\UHYLHZVDQGUHQHJRWLDWLRQRIFRQWUDFWVZLWKH[WHUQDOVXSSOLHUV

,PSDLUPHQWDQGGLPLQXWLRQH[SHQVHVLQFUHDVHGE\RUPLOOLRQGULYHQE\DQLQFUHDVHLQJRRGZLOOLPSDLUPHQWFKDUJHV7KLVQDQFLDO\HDULQFOXGHGDQLPSDLUPHQWRIPLOOLRQDJDLQVWJRRGZLOOUHODWLQJWRRXULQYHVWPHQWLQ7HOVWUD&OHDU7KLVLPSDLUPHQWLVDVVRFLDWHGZLWKWKHSODQQHGVDOHRI7HOVWUD&OHDUWR9RGDIRQH1HZ=HDODQG7KHUHZDVDOVRan impairment in the LMobile Group of $56 million announced

LQ)HEUXDU\

EXPENSE PERFORMANCELABOUR

Total labour and labour substitution expenses increased

E\RUPLOOLRQLQWKH\HDUZLWKLQFUHDVHGVDODU\DQGDVVRFLDWHGFRVWVEHLQJRIIVHWE\DGHFUHDVHLQODERXUVXEVWLWXWLRQDQGUHGXQGDQF\H[SHQVH:LWKWRWDOUHYHQXHJURZWKLQWKH\HDURIWKLVUHVXOWVKRZVWKDWZHDUHFRQWLQXLQJWRLPSURYHXQGHUO\LQJSURGXFWLYLW\LQWKHEXVLQHVV

/DERXUH[SHQVHVLQFUHDVHGE\WRPLOOLRQLQWKH\HDU

:LWKLQWKLVFDWHJRU\VDODU\DQGDVVRFLDWHGFRVWVLQFUHDVHG

E\RUPLOOLRQ7KLVLQFOXGHGPLOOLRQIURPERQGUDWHPRYHPHQWVLPSDFWLQJRXUORQJVHUYLFHOHDYHDQGZRUNHUVcompensation provisions. Short term incentive provisions

also increased due to a better performance against targets.

$GGLWLRQDOFRVWVZHUHLQFXUUHGWRVXSSRUWH[SDQVLRQLQRXU1$6EXVLQHVVDVZHOODVWKHLPSDFWVIURPDFTXLVLWLRQVRI5HDFK0DUFKDQGL9LVLRQ$SULO

5HGXQGDQF\H[SHQVHVGHFUHDVHGE\RUPLOOLRQWRPLOOLRQDIWHUVLJQLFDQWUHVWUXFWXULQJLQWKHSULRU\HDU

/DERXUVXEVWLWXWLRQFRVWVGHFUHDVHGE\RUPLOOLRQWRPLOOLRQGULYHQPDLQO\E\VHUYLFHFRQWUDFWVZKLFKGHFUHDVHGGXHWRDQRYHUDOOUHGXFWLRQLQRXUGRPHVWLFinbound call volumes. IT professional services costs also

GHFUHDVHGIROORZLQJDUHYLHZDQGUHQHJRWLDWLRQZLWKRXUexternal suppliers.

OPERATING EXPENSES

FY 2012

($m)

FY 2011

($m)

YoY

change

Labour 4,061 3,924 3.5%

Goods and servicespurchased

6,179 6,183 -0.1%

Other expenses 5,029 5,047 -0.4%

Total operatingexpenses

15,269 15,154 0.8%


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9

2IIVHWWLQJWKLVZDVDQLPSURYHPHQWLQEDGDQGGRXEWIXOGHEWVH[SHQVHZKLFKGHFOLQHGE\RUPLOOLRQGXHWRORZHUlevels of consumer debt defaults and an improved remediation

of long outstanding debt. General and administrationH[SHQVHVLQFUHDVHGE\RUPLOOLRQGULYHQPDLQO\E\LQFUHDVHGSRZHUFRVWV

FINANCE COSTS

1HWQDQFHFRVWVGHFUHDVHGE\RUPLOOLRQIURPthe prior corresponding period.

7KHGHFUHDVHLQQHWLQWHUHVWRQERUURZLQJVRIPLOOLRQLVdue to a reduction in the volume of average net debt and a

reduction in the average interest cost (from 7.22% to 7.01%).

7KHUHGXFWLRQLQUDWHDURVHSULQFLSDOO\IURPDUHGXFWLRQLQPDUNHWEDVHUDWHVLQWKH\HDUUHVXOWLQJLQORZHUFRVWVRQWKHRDWLQJUDWHGHEWFRPSRQHQWRIRXUGHEWSRUWIROLR7KLVZDV

SDUWLDOO\RIIVHWE\DQLQFUHDVHLQUHQDQFLQJPDUJLQVRQWHUPGHEWLVVXHGGXULQJWKH\HDU

7KHGHFUHDVHLQRWKHUQDQFHFRVWVRIPLOOLRQLQFOXGHVPLOOLRQUHODWLQJWRGHEWUHYDOXDWLRQLPSDFWVWRJHWKHUZLWKa decrease of $24 million relating to capitalised interest.

FINANCIAL POSITION

CAPITAL EXPENDITURE AND CASH FLOW

$FFUXHGFDSLWDOH[SHQGLWXUHLQFUHDVHGE\WRPLOOLRQIRUWKHIXOO\HDU7KHLQFUHDVHZDVSUHGRPLQDQWO\GULYHQE\LQYHVWPHQWVLQRXUPRELOHQHWZRUNDQGH[SDQVLRQRIRXU$'6/EURDGEDQGQHWZRUNLPSURYHPHQWVLQRXUPRELOHand online self-serve channels, and order management for

complex products. We have also increased our investment

in initiatives to prepare us for the transition to NBN including

remediation activities.

)UHHFDVKRZIRUWKH\HDURIPLOOLRQLQFOXGHV1%1cash receipts of $300 million (net of tax) relating to the

Information Campaign and Migration Deed and $100 million

UHODWHGWRWKH5HWUDLQLQJ'HHG7KHGHFOLQHLQIUHHFDVKRZRIIURPVFDO\HDUZDVGULYHQE\DQLPSURYHPHQWLQFDVKJHQHUDWHGIURPRSHUDWLRQVEHLQJPRUHWKDQRIIVHWE\DQincrease in our cash used in investing activities. The increase

LQLQYHVWLQJDFWLYLWLHVLVDWWULEXWDEOHWRORZHUQHWSURFHHGVfrom the sale of investments after the sale of Soufun in the

SULRU\HDUDQGDORDQPDGHWKLVVFDO\HDUWR)R[WHOIRUWKHacquisition of Austar and higher cash capital expenditure.

DEBT POSITION

2XUJURVVGHEWSRVLWLRQDW-XQHZDVPLOOLRQan increase of $990 million from 30 J une 2011. The increase

LVPDLQO\GXHWRDQHWQDQFLQJLQFUHDVHRIPLOOLRQDVZHSUHSDUHIRUWKHVLJQLFDQWERUURZLQJUHTXLUHGRYHUWKHQH[W\HDU7KHQHWQDQFLQJFDVKLQRZRIPLOOLRQPDLQO\FRPSULVHVPLOOLRQGHEWLVVXDQFHIRUUHQDQFLQJSXUSRVHVSDUWO\RIIVHWE\PLOOLRQRXWRZIRUORQJWHUP

debt maturities.1HWGHEWDW-XQHZDVPLOOLRQZKLFKUHHFWVa decrease of $318 million from 30 J une 2011. The net debt

GHFUHDVHUHHFWVWKHLQFUHDVHLQJURVVGHEWRIPLOOLRQRIIVHWE\WKHQHWLQFUHDVHLQFDVKDQGFDVKHTXLYDOHQWV

of $1,308 million. Our net debt gearing ratio (net debt to

FDSLWDOLVDWLRQLQFUHDVHGVOLJKWO\IURPDVDW-XQHWRDVDW-XQHDQGLVZLWKLQRXUWDUJHW

range for net debt gearing ratio.

STATEMENT OF FINANCIAL POSITION

2XUEDODQFHVKHHWUHPDLQVVWURQJZLWKQHWDVVHWVRIPLOOLRQ'XULQJWKHSHULRGZHKDYHUHQDQFHGVHYHUDOERUURZLQJVLQYDULRXVGHEWPDUNHWVLQFOXGLQJWZR(XURpublic bond issues totalling A$2,250 million (1,750 million)

ZLWKPDWXULW\GDWHVLQDQGD6ZLVV)UDQFERUURZLQJRIA$252 million (CHF 225 million) maturing in 2018. Some pre-

IXQGLQJRIRXUVFDO\HDUERUURZLQJUHTXLUHPHQWVZDVXQGHUWDNHQLQWKHVHFRQGKDOIRIWKH\HDULQWKHRUGHURI$PLOOLRQ7KHGHFLVLRQWRSUHIXQGZDVPDGHZLWKUHJDUGWRWKHKLJKQDQFLQJGHPDQGVLQVFDO\HDUDQGWKHSUHYDOLQJ

PDUNHWFRQGLWLRQV&XUUHQWDVVHWVLQFUHDVHGE\PLOOLRQ&DVKDQGFDVKHTXLYDOHQWVLQFUHDVHGGXHWRWKHSUHIXQGLQJRIUHQDQFLQJUHTXLUHPHQWVDQGFDVKJHQHUDWHGE\WKHEXVLQHVV&XVWRPHUacquisition has also resulted in an increase to trade and

RWKHUUHFHLYDEOHV$VVHWVFODVVLHGDV+HOGIRU6DOHUHODWHWRWKHFDUU\LQJYDOXHRI7HOVWUD&OHDUDVVHWVDIWHUWKHVDOHRIWKLVHQWLW\ZDVDQQRXQFHGVXEVHTXHQWWREDODQFHGDWH&XUUHQWWD[UHFHLYDEOHVLQFUHDVHGE\PLOOLRQDVSULRU\HDUWD[DPPHQGPHQWVZHUHUHFODVVLHGIURPQRQFXUUHQWWD[receivables.

1RQFXUUHQWDVVHWVGHFUHDVHGE\PLOOLRQ3URSHUW\SODQWand equipment and intangible assets declined as ongoing

depreciation and retirements exceed the level of additions.

7KLVZDVSDUWO\RIIVHWE\LQFUHDVHGWUDGHDQGRWKHUUHFHLYDEOHVas a result of a shareholder loan to Foxtel and higher mobile

DQG[HGUHSD\PHQWRSWLRQGHEWDVVRFLDWHGZLWKLQFUHDVHGVDOHVDFWLYLW\'HULYDWLYHQDQFLDODVVHWVLQFUHDVHGPDLQO\GXHWRQHWIRUHLJQFXUUHQF\DQGRWKHUYDOXDWLRQLPSDFWVDULVLQJfrom measuring to fair value.

&XUUHQWOLDELOLWLHVLQFUHDVHGE\PLOOLRQODUJHO\DUHVXOWRIDQLQFUHDVHLQERUURZLQJVRIPLOOLRQ5HYHQXHUHFHLYHGLQDGYDQFHLQFUHDVHGE\PLOOLRQLQFOXGLQJUHFHLSWRI1%1UHODWHGSD\PHQWVIRUWUDQVLWQHWZRUNLQIUDVWUXFWXUHZRUNVDQGstaff retraining.

1RQFXUUHQWOLDELOLWLHVLQFUHDVHGE\PLOOLRQGXHWRKLJKHUGHQHGEHQHWSHQVLRQOLDELOLWLHVDVDUHVXOWRIERQGUDWHPRYHPHQWVDQGORZHUWKDQH[SHFWHGUHWXUQVKLJKHUGHULYDWLYHQDQFLDOOLDELOLWLHVDQGDQLQFUHDVHLQUHYHQXHUHFHLYHGLQDGYDQFHGXHWRWKHUHFHLSWRI1%1SD\PHQWV

7KLVZDVSDUWO\RIIVHWE\DGHFUHDVHLQGHIHUUHGWD[OLDELOLWLHVDVVRFLDWHGZLWKWLPLQJGLIIHUHQFHVRQGHSUHFLDWLRQ

FINANCIAL SETTINGS

Actual Target range

Debt Servicing 1.3x 1.5x to 1.9x

Gearing 53.2% 50% to 70%

Interest cover 10.3x >7x


40/240



10

We report our segment information on the same basis as our

LQWHUQDOPDQDJHPHQWUHSRUWLQJVWUXFWXUHZKLFKUHHFWVKRZRXUFRPSDQ\LVRUJDQLVHGDQGPDQDJHG7KHSHUIRUPDQFHRIHDFKVHJPHQWLVPHDVXUHGEDVHGRQLWVXQGHUO\LQJ(%,7'$FRQWULEXWLRQWRWKH7HOVWUD*URXS8QGHUO\LQJ(%,7'$contribution excludes the effects of inter-segment balances

DQGWUDQVDFWLRQVZLWKWKHH[FHSWLRQRIQHWZRUNUHYHQXHVDQGFRVWVDVVRFLDWHGZLWKWKHDVVHWVDFTXLUHGIURPWKH5HDFKEXVLQHVV,QDGGLWLRQFHUWDLQLWHPVDUHUHFRUGHGZLWKLQour Corporate areas, rather than being allocated to each

VHJPHQW6HJPHQWFRPSDUDWLYHVDUHUHVWDWHGWRUHHFWDQ\

RUJDQLVDWLRQDOFKDQJHVZKLFKKDYHRFFXUUHGVLQFHWKHSULRUreporting period.

Further details about the performance of our business

VHJPHQWVIROORZ

TELSTRA CONSUMER AND COUNTRY WIDE

7HOVWUD&RQVXPHUDQG&RXQWU\:LGHLVUHVSRQVLEOHIRUproviding a full range of telecommunication products and

services to consumer customers in metropolitan, regional,

rural and remote areas of Australia.

7HOVWUD&RQVXPHUDQG&RXQWU\:LGHKDVEHQHWHGIURPRXUVWUDWHJLFLQYHVWPHQWWRUHWDLQDQGJURZFXVWRPHUQXPEHUV

&XVWRPHUQXPEHUVLQFUHDVHGE\DFURVVWKH[HGDQGPRELOLW\SRUWIROLRVLQVFDO\HDUDQGFXVWRPHUVDWLVIDFWLRQKDVLQFUHDVHGE\

SEGMENT PERFORMANCE

7KLVFXVWRPHUQXPEHUJURZWKKDVVWLPXODWHGUHYHQXHJURZWKZLWKLQFRPHLQFUHDVLQJE\WRPLOOLRQ0RELOHVHUYLFHUHYHQXHJUHZE\ZLWKJURZWKLQWKHPRELOHcustomer base of 12.8%, or 1.017 million. The success of our

EXQGOLQJVWUDWHJ\KDVFRQWULEXWHGWRJURZWKLQ[HGEURDGEDQGDQG3D\795HYHQXHLQ[HGEURDGEDQGLQFUHDVHGE\DQG3D\79UHYHQXHJUHZE\:HDOVRVDZDQLQFUHDVHLQ[HGEURDGEDQG$538ZKLFKLQFUHDVHGE\WR,QVFDO\HDUODERXUDQGODERXUVXEVWLWXWLRQFRVWVUHGXFHGE\DQG(%,7'$FRQWULEXWLRQLQFUHDVHGE\WRPLOOLRQDVZHUHDOLVHGEHQHWVIURPODVW\HDUV

VWUDWHJLFLQYHVWPHQWVLQSURGXFWLYLW\DQGVLPSOLFDWLRQ

TELSTRA BUSINESS

Telstra Business is a business partner and one-stop shop

providing communications solutions to small and medium

HQWHUSULVHV,QFRPHIRUWKHIXOO\HDUZDVPLOOLRQDGHFOLQHRI(%,7'$FRQWULEXWLRQGHFOLQHGE\WR$3,523 million. The rate of EBITDA decline has improved

VLJQLFDQWO\IURPWKHGHFOLQHUHSRUWHGDW'HFHPEHUWKURXJKUHGXFHGH[SHQGLWXUHLQWKHVHFRQGKDOIRIWKH\HDU3671UHYHQXHGHFOLQHGE\DVDUHVXOWRIFXVWRPHUGLVFRQQHFWLRQVDQGORZHUXVDJH0RELOHVHUYLFHVUHYHQXHLQFUHDVHGE\7KHPRELOHFXVWRPHUEDVHLQFUHDVHGE\

RYHUWKH\HDUPRUHWKDQRIIVHWWLQJ$538GHFOLQHV1HWZRUN$SSOLFDWLRQVDQG6HUYLFHVUHYHQXHDOVRJUHZVWURQJO\LQFUHDVLQJE\WRPLOOLRQ([SHQVHVGHFUHDVHGE\

SEGMENT REVENUE SEGMENT EBITDA CONTRIBUTIONFY 2012

($m)FY 2011

($m)YoY

change

Telstra Consumer and&RXQWU\:LGH

10,267 9,915 3.6%

Telstra Business 4,676 4,720 -0.9%

Telstra Enterprise andGovernment

4,325 4,142 4.4%

Telstra Wholesale 2,101 2,194 -4.2%

Telstra Media Group 1,741 1,978 -12.0%

Telstra InternationalGroup

1,643 1,336 23.0%

TelstraClear 502 514 -2.3%

Telstra Operations 73 113 -35.4%

Other 79 231 -65.8%

Total Telstra segments 25,407 25,143 1.0%

Other items excludedfrom segment results

96 161 -40.4%

Total Telstra Group

(reported)

25,503 25,304 0.8%

FY 2012($m)

FY 2011($m)

YoYchange

Telstra Consumer and&RXQWU\:LGH

5,467 5,075 7.7%

Telstra Business 3,523 3,554 -0.9%

Telstra Enterprise andGovernment

3,453 3,331 3.7%

Telstra Wholesale 1,933 2,031 -4.8%

Telstra Media Group 764 999 -23.5%

Telstra InternationalGroup

312 230 35.7%

TelstraClear 99 84 17.9%

Telstra Operations -3,679 -3,744 -1.7%

Other -1,544 -1,506 2.5%

Total Telstra segments 10,328 10,054 2.7%

Other items excludedfrom segment results

-94 97 -196.9%

Total Telstra Group

(reported)10,234 10,151 0.8%


41/240



11

TELSTRA ENTERPRISE AND GOVERNMENT

Telstra Enterprise and Government (TE&G) is a leading

SURYLGHURIQHWZRUNEDVHGVROXWLRQVDQGVHUYLFHVWRHQWHUSULVHDQGJRYHUQPHQWRUJDQLVDWLRQVLQ$XVWUDOLDDQG1HZ=HDODQG,QFRPHLQWKLVVHJPHQWJUHZE\WRPLOOLRQZKLOHXQGHUO\LQJ(%,7'$FRQWULEXWLRQLQFUHDVHGE\WRmillion. TE&G has delivered another strong mobile services

UHYHQXHUHVXOWZLWKJURZWKDFFHOHUDWLQJWRDQGWKHPRELOHFXVWRPHUEDVHLQFUHDVLQJE\RYHUWKH\HDU,3DFFHVVDQGGDWDVHUYLFHVUHYHQXHJUHZE\1HWZRUN$SSOLFDWLRQDQG6HUYLFHVUHYHQXHJURZWKRIZDVGULYHQE\VWURQJPDQDJHGGDWDQHWZRUNVUHYHQXHLQFOXGLQJWKHFRQWULEXWLRQIURPRXUL9LVLRQDFTXLVLWLRQDQGSURMHFWDFWLYLW\([SHQVHVJUHZE\GXHWRLQFUHDVHGFXVWRPHUacquisition and NAS costs.

TELSTRA WHOLESALETelstra Wholesale is responsible for the provision of

telecommunication products and services delivered over

7HOVWUDQHWZRUNVDQGDVVRFLDWHGVXSSRUWV\VWHPVWRQRQTelstra branded carriers, carriage service providers and

internet service providers.

Income generated from our Wholesale business declined

E\WRPLOOLRQ'HFOLQLQJ[HGXVDJHDQGDGYHUVHUHJXODWRU\SULFLQJGHWHUPLQDWLRQVIRUDQXPEHURISURGXFWVDOOFRQWULEXWHGWRWKLVUHVXOW7KHVHVLJQLFDQWSULFHimpacts compounded the ongoing loss of resale revenue,

DVFXVWRPHUVPLJUDWHGWRORZHU$5388QFRQGLWLRQHG/RFDO

/RRS8//VHUYLFHVZLWK8//VHUYLFHVJURZLQJE\FXVWRPHUV6SHFWUXP6KDULQJ/66VHUYLFHVGHFOLQHGE\30,000 as carriers migrated to ULL services. Wholesale Line

5HQWDOUHYHQXHGHFOLQHGE\GULYHQE\DUHGXFWLRQRIZKROHVDOH3671VHUYLFHVDFRQWLQXHGGHFOLQHLQXVDJHDQGUHJXODWRU\SULFHFKDQJHV:KROHVDOH[HGEURDGEDQGUHYHQXHIHOOE\OHGE\DUHGXFWLRQRI102,000 Wholesale DSL lines. External expenses increased

E\GULYHQE\KLJKHUODERXUFRVWVSDUWLFXODUO\WKRVHDVVRFLDWHGZLWK1%1UHDGLQHVV$VDUHVXOWXQGHUO\LQJ(%,7'$FRQWULEXWLRQIHOOE\WRPLOOLRQ

TELSTRA OPERATIONS

7HOVWUD2SHUDWLRQVLVSULPDULO\DFRVWFHQWUHVXSSRUWLQJWKHrevenue generating activities of our other segments. The

XQGHUO\LQJ(%,7'$FRQWULEXWLRQRILPSURYHGRQWKHSULRU\HDUZLWKVLJQLFDQWUHGXFWLRQVLQWRWDOVHUYLFHFRQWUDFWDQGDJUHHPHQWH[SHQVHV7KLVUHVXOWZDVDFKLHYHGDIWHULQFUHDVHGLQYHVWPHQWLQRXUVWUDWHJLFJURZWKDUHDRI1HWZRUN$SSOLFDWLRQand Services.

TELSTRA MEDIA GROUP

$VDQQRXQFHGDWWKHKDOI\HDUWKH7HOVWUD0HGLD*URXS70*ZDVHVWDEOLVKHGWRGULYHJURZWKIURPRXUPHGLDDVVHWVand manage the transition to digital at our Sensis directories

business. This group is responsible for the management and

JURZWKRIWKHGRPHVWLFGLUHFWRULHVDQGDGYHUWLVLQJEXVLQHVVand includes the management of leading information brands

LQFOXGLQJ


42/240


12


(i) Other revenue primarily consists of distributions received from FOXTEL and rental income.(ii) Other income includes gains and losses on asset and investment sales, USO levy receipts, subsidies and other miscellaneous items.

(iii) Basic and diluted earnings per share are impacted by the effect of shares held in trust for employee share plans and instruments held under executive remunerationplans.

Results of operations

Year ended 30 June

2012 2011 Change Change$m $m $m %

Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,232 24,983 249 1.0

Other revenue (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 110 26 23.6

Total revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,368 25,093 275 1.1

Other income (ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 211 (76) (36.0)Total income (excl. finance income) . . . . . . . . . . . . . . . . . . . . . . . . . 25,503 25,304 199 0.8

Labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,061 3,924 137 3.5

Goods and services purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,179 6,183 (4) (0.1)

Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,029 5,047 (18) (0.4)

Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,269 15,154 115 0.8

Share of net profit from jointly controlled and associated entities . . . . . . . . . . . 0 (1) 1 100.0Earnings before interest, income tax expense, depreciation and amortisation

(EBITDA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,234 10,151 83 0.8

Depreciation and amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,412 4,459 (47) (1.1)

Earnings before interest and income tax expense (EBIT) . . . . . . . . . . . . . 5,822 5,692 130 2.3

Net finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 888 1,135 (247) (21.8)

Profit before in come tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . 4,934 4,557 377 8.3

Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,510 1,307 203 15.5

Profit for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,424 3,250 174 5.4

At tr ibutab le to:

Equity holders of the Telstra Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,405 3,231 174 5.4

Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 19 0 0.03,424 3,250 174 5.4

Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.6% 28.7% 1.9 ppEBITDA margin on sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.6% 40.6% 0.0 pp

EBIT margin on sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1% 22.8% 0.3 pp

cents cents

Change

cents

Change%

Basic earnings per share (iii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.5 26.1 1.4 5.4%

Diluted earnings per share (iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.4 26.1 1.3 5.0%

Dividends per ordinary share:

Interim dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0 14.0Final dividend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0 14.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.0 28.0


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Statement of financial posi tion

As at 30 June2012 2011 Change Change

$m $m $m %

Current assetsCash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,945 2,630 1,315 50.0

Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,346 4,137 209 5.1

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 283 (23) (8.1)

Derivative financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 83 (51) (61.4)

Current tax receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363 4 359 n/m

Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 275 (25) (9.1)

Assets classified as held for sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . 754 41 713 n/m

Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,950 7,453 2,497 33.5

Non current assets

Trade and other rece

Documents

Telstra Annual Report 2012