Telos Corporation Annual Report 2013

FY2013 Annual Report · Telos Corporation
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TELSTRA
ANNUAL
REPORT
2013

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com/investor has all the latest news and 
information available for shareholders.

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Telstra’s 2013 Annual Report is available 
to all shareholders on our Investor Website 
at www.telstra.com.au/annualreports. 

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Sustainability Reporting
Selected graphs and data presented in this report 
are included in the Bigger Picture Telstra 2013 
Sustainability Reporting Series, which is available 
online at www.telstra.com.au/sustainability/report. 
This series provides more detailed information  
and analysis for our stakeholders on Telstra’s 
sustainability performance.

Global Reporting Initiative
We develop our sustainability reporting with 
reference to industry and sustainability standards 
including the United Nations Global Compact 
Communication on Progress, and the Global 
Reporting Initiative (GRI) G3 Sustainability 
Reporting Guidelines and Telecommunications 
Sector Supplement (pilot). This ﬁnancial year we 
have applied the GRI framework to application 
level B+. The full GRI Index can be found online 
at www.telstra.com.au/sustainability/report.

®Registered trademark of Telstra Corporation Limited.

™Trademark of Telstra Corporation limited.

^ Apple and iPad are trademarks of Apple Inc., registered  
in the US and other countries.

^ Android is a trademark of Google Inc.

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

All amounts are expressing Australian Dollars ($A)  
unless otherwise stated.

Telstra Corporation Limited ABN 33 051 775 556

CONTENTS

Key Highlights  

Our Business  

Chairman and CEO Message  

Strategy and Performance  
Improving customer satisfaction 
Retaining and growing customer numbers  
Simplifying the business  
Developing new growth businesses  
Future outlook 
Managing our risks  

Full Year Results and Operations Review  

Sustainability  
Our approach  
Responsible business  
Customer experience  
Our people  
Community impact  
Environmental impact  

Board of Directors  

Senior Management Team  

Corporate Governance Statement  

Directors’ Report  
Remuneration Report  

Financial Report  

Financial Statements  

Directors’ Declaration  

Shareholder Information  

Reference Tables  

2

3

4 

6
 6
7
8(cid:3)
9
 10
11

12

20
20
22
23
24
26
28

30

32

33

42
46

69

70

197

199

201

We have changed the format of our Annual Report this year to 
provide shareholders with key information (including who we are, 
our business strategies and goals, our governance structures 
and our results for the current ﬁnancial year) in a way we hope 
shareholders will ﬁnd more helpful and easy to use. The sections 
of our Annual Report Our Business, Chairman and CEO Message, 
Strategy and Performance and Full Year Results and Operations 
Review comprise our operating and ﬁnancial review (OFR) and 
form part of the Directors’ Report. 

Telstra Annual Report 2013

1

KEY  
HIGHLIGHTS

2

Telstra Annual Report 2013

SALES  
REVENUE

NET  
PROFIT

IN  
DIVIDENDS

$25.5B
$3.9B
$3.5B 
1.3M
173K
$1.2B
$0.8B
$1.3B
40%
79%
$231M
33%

NEW DOMESTIC RETAIL 
MOBILE CUSTOMERS 

NEW RETAIL FIXED 
BROADBAND CUSTOMERS

INVESTED IN THE WIRELESS 
NETWORK (EX SPECTRUM)

INVESTED IN SPECTRUM 
LICENCE RENEWALS

COMMITTED TO  
ACQUIRE NEW MOBILE 
SPECTRUM LICENCES

ONLINE CUSTOMER 
TRANSACTIONS, UP 10 
PERCENTAGE POINTS 

EMPLOYEE ENGAGEMENT SCORE, 
FOUR PERCENTAGE POINTS ABOVE 
THE AUSTRALIAN NATIONAL NORM

TOTAL VALUE OF  
SOCIAL AND COMMUNITY 
CONTRIBUTIONS 

REDUCED CARBON  
EMISSIONS INTENSITY 

OUR 
BUSINESS

WHO WE ARE 

EVERY DAY WE HELP 
MILLIONS OF CUSTOMERS 
CONNECT TO THE PEOPLE 
AND THINGS THAT MATTER 
MOST TO THEM

Telstra is Australia’s leading 
telecommunications and information 
services company, offering a full range of 
communications services and competing 
in all telecommunications markets. In 
Australia we provide 15.1 million mobile 
services, 7.8 million ﬁxed voice services 
and 2.8 million retail ﬁxed broadband 
services. Telstra’s international 
businesses include Hong Kong mobile 
operator CSL New World, Telstra Global’s 

networks and managed services business 
and Telstra’s China-based search and 
advertising businesses.

We understand our customers want 
technology and content solutions that 
are simple and easy to use – that’s why 
we’ve built networks like Australia’s 
largest fully integrated IP network and 
Australia’s largest and most reliable 
national mobile network.

INDUSTRY CONTEXT 

OUR INDUSTRY  
IS EXPERIENCING  
RAPID CHANGE 

The way people communicate, share  
their lives and consume entertainment  
is changing. 

The digitisation of information, 
entertainment, videos and photos means 
we are increasingly accessing content 
and services previously delivered over 
one network to one device, on multiple 
devices over a range of networks. 

Technology has evolved. Devices and 
networks can adapt to their users’ 
needs, rather than the other way around. 
Improvements in mobility and the growth 
of cloud computing mean users’ content 
and services can seamlessly follow 
people wherever they go and customer 
expectations have changed accordingly. 

OUR VISION 

TO IMPROVE THE WAY 
PEOPLE LIVE AND WORK

We aim to help our customers change the 
way they live and work through improved 
and more convenient connection. The way 
people are connecting with each other, 
and with the content and services they 
use, is becoming more individualised and 
more sophisticated every day. 

Our vision is to take advantage of this 
connectivity evolution by providing our 
customers the products and services they 
want, where and when they want them in 
a simple and convenient way.

MISSION 

WE STRIVE TO SERVE  
OUR CUSTOMERS BETTER 
THAN ANYONE ELSE

Our mission is to build technology 
and content solutions that are simple 
and easy to use. We understand the 
connectivity evolution and we are working 
to stay ahead of the curve. We have to put 
the customer at the centre of everything 
that we do. 

We are building a culture based on 
customer service, collaboration and 
innovation, and leading in the market.  
We are building this new company culture 
around the most powerful person in the 
new digital economy – the customer. 

Telstra Annual Report 2013

3

CHAIRMAN AND CEO 
MESSAGE

Dear Shareholders,

We are pleased to present you with this 
review of our operations for ﬁnancial  
year 2013.

This year we made good progress on our 
journey to change our company and put the 
customer at the centre of everything we do. 

We have been able to deliver the third 
consecutive year of signiﬁcant customer 
growth as a result of our focus on 
improving customer service as well as 
continued investment in the network.

Our strategy around improving customer 
service as well as focusing on our growth 
businesses is working. We are pleased 
we have once again delivered on our 
commitments and met our guidance at 
the same time as continuing to simplify 
our business. We also conﬁrmed a  
14 cent fully franked dividend bringing 
the total dividend to 28 cents per share 
for ﬁnancial year 2013, a return of 
$3.5 billion to shareholders.

KEY OUTCOMES
We delivered revenue and proﬁt 
growth as well as adding 1.3 million 
new domestic retail mobile customers 
during ﬁnancial year 2013. The reported 
ﬁnancial results for the 12 months to  
30 June 2013 are:

(cid:154)(cid:1)

(cid:154)(cid:1)

(cid:154)(cid:1)

(cid:154)(cid:1)

(cid:1)(cid:74)(cid:101)(cid:106)(cid:87)(cid:98)(cid:1)(cid:95)(cid:100)(cid:89)(cid:101)(cid:99)(cid:91)(cid:1)(cid:95)(cid:100)(cid:89)(cid:104)(cid:91)(cid:87)(cid:105)(cid:91)(cid:90)(cid:1)(cid:88)(cid:111)(cid:1)(cid:39)(cid:36)(cid:47)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)
(cid:101)(cid:104)(cid:1)(cid:26)(cid:42)(cid:45)(cid:45)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:1)(cid:106)(cid:101)(cid:1)(cid:26)(cid:40)(cid:43)(cid:34)(cid:47)(cid:46)(cid:38)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:49)

(cid:1)(cid:59)(cid:56)(cid:63)(cid:74)(cid:58)(cid:55)(cid:1)(cid:95)(cid:100)(cid:89)(cid:104)(cid:91)(cid:87)(cid:105)(cid:91)(cid:90)(cid:1)(cid:88)(cid:111)(cid:1)(cid:41)(cid:36)(cid:47)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)(cid:101)(cid:104)(cid:1)
(cid:26)(cid:41)(cid:47)(cid:43)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:1)(cid:106)(cid:101)(cid:1)(cid:26)(cid:39)(cid:38)(cid:34)(cid:44)(cid:40)(cid:47)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:49)

(cid:1)(cid:68)(cid:91)(cid:106)(cid:1)(cid:102)(cid:104)(cid:101)(cid:210)(cid:106)(cid:1)(cid:87)(cid:92)(cid:106)(cid:91)(cid:104)(cid:1)(cid:106)(cid:87)(cid:110)(cid:1)(cid:95)(cid:100)(cid:89)(cid:104)(cid:91)(cid:87)(cid:105)(cid:91)(cid:90)(cid:1)(cid:88)(cid:111)(cid:1)
(cid:39)(cid:40)(cid:36)(cid:47)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)(cid:101)(cid:104)(cid:1)(cid:26)(cid:42)(cid:42)(cid:39)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:1)(cid:106)(cid:101)(cid:1)
(cid:26)(cid:41)(cid:34)(cid:46)(cid:44)(cid:43)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:49)

(cid:1)(cid:59)(cid:87)(cid:104)(cid:100)(cid:95)(cid:100)(cid:93)(cid:105)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:105)(cid:94)(cid:87)(cid:104)(cid:91)(cid:1)(cid:95)(cid:100)(cid:89)(cid:104)(cid:91)(cid:87)(cid:105)(cid:91)(cid:90)(cid:1)(cid:88)(cid:111)(cid:1)
(cid:39)(cid:39)(cid:36)(cid:44)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)(cid:106)(cid:101)(cid:1)(cid:41)(cid:38)(cid:36)(cid:45)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:105)(cid:34)(cid:1)(cid:88)(cid:104)(cid:95)(cid:100)(cid:93)(cid:95)(cid:100)(cid:93)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)
(cid:90)(cid:95)(cid:108)(cid:95)(cid:90)(cid:91)(cid:100)(cid:90)(cid:1)(cid:102)(cid:87)(cid:111)(cid:101)(cid:107)(cid:106)(cid:1)(cid:104)(cid:87)(cid:106)(cid:95)(cid:101)(cid:1)(cid:106)(cid:101)(cid:1)(cid:47)(cid:39)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:49)(cid:1)

(cid:154)(cid:1)

(cid:154)(cid:1)

(cid:1)(cid:57)(cid:87)(cid:102)(cid:91)(cid:110)(cid:1)(cid:106)(cid:101)(cid:1)(cid:105)(cid:87)(cid:98)(cid:91)(cid:105)(cid:1)(cid:104)(cid:87)(cid:106)(cid:95)(cid:101)(cid:1)(cid:101)(cid:92)(cid:1)(cid:39)(cid:42)(cid:36)(cid:47)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:34)(cid:1)(cid:109)(cid:95)(cid:106)(cid:94)(cid:1)
(cid:89)(cid:87)(cid:102)(cid:95)(cid:106)(cid:87)(cid:98)(cid:1)(cid:91)(cid:110)(cid:102)(cid:91)(cid:100)(cid:90)(cid:95)(cid:106)(cid:107)(cid:104)(cid:91)(cid:1)(cid:101)(cid:92)(cid:1)(cid:26)(cid:41)(cid:34)(cid:45)(cid:47)(cid:40)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:49)(cid:1)(cid:87)(cid:100)(cid:90)

(cid:1)(cid:60)(cid:104)(cid:91)(cid:91)(cid:1)(cid:89)(cid:87)(cid:105)(cid:94)(cid:211)(cid:101)(cid:109)(cid:1)(cid:90)(cid:91)(cid:89)(cid:104)(cid:91)(cid:87)(cid:105)(cid:91)(cid:90)(cid:1)(cid:88)(cid:111)(cid:1)(cid:41)(cid:36)(cid:41)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)
or $173 million to $5,024 million.

We continued to lead in mobile growth 
with total domestic retail mobile customers 
increasing to 15.1 million and mobile 
(cid:104)(cid:91)(cid:108)(cid:91)(cid:100)(cid:107)(cid:91)(cid:1)(cid:104)(cid:95)(cid:105)(cid:95)(cid:100)(cid:93)(cid:1)(cid:88)(cid:111)(cid:1)(cid:105)(cid:95)(cid:110)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)(cid:106)(cid:101)(cid:1)(cid:26)(cid:47)(cid:36)(cid:40)(cid:1)(cid:88)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:36)(cid:1)

We invested $1.2 billion in our mobile 
network during the year. This investment 
(cid:95)(cid:100)(cid:89)(cid:98)(cid:107)(cid:90)(cid:91)(cid:90)(cid:1)(cid:91)(cid:110)(cid:102)(cid:87)(cid:100)(cid:90)(cid:95)(cid:100)(cid:93)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:104)(cid:91)(cid:87)(cid:89)(cid:94)(cid:1)(cid:101)(cid:92)(cid:1)(cid:101)(cid:107)(cid:104)(cid:1)(cid:42)(cid:61)(cid:1)
(cid:100)(cid:91)(cid:106)(cid:109)(cid:101)(cid:104)(cid:97)(cid:34)(cid:1)(cid:109)(cid:94)(cid:95)(cid:89)(cid:94)(cid:1)(cid:100)(cid:101)(cid:109)(cid:1)(cid:89)(cid:101)(cid:108)(cid:91)(cid:104)(cid:105)(cid:1)(cid:44)(cid:44)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)(cid:101)(cid:92)(cid:1)
the population and is on target to reach 
85 per cent by the end of the year.

We also continued to build momentum in 
(cid:101)(cid:107)(cid:104)(cid:1)(cid:68)(cid:91)(cid:106)(cid:109)(cid:101)(cid:104)(cid:97)(cid:1)(cid:55)(cid:102)(cid:102)(cid:98)(cid:95)(cid:89)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:105)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:73)(cid:91)(cid:104)(cid:108)(cid:95)(cid:89)(cid:91)(cid:105)(cid:1)
(cid:30)(cid:68)(cid:55)(cid:73)(cid:31)(cid:1)(cid:102)(cid:101)(cid:104)(cid:106)(cid:92)(cid:101)(cid:98)(cid:95)(cid:101)(cid:36)(cid:1)(cid:68)(cid:55)(cid:73)(cid:1)(cid:104)(cid:91)(cid:108)(cid:91)(cid:100)(cid:107)(cid:91)(cid:1)(cid:95)(cid:100)(cid:89)(cid:104)(cid:91)(cid:87)(cid:105)(cid:91)(cid:90)(cid:1)
by 17.7 per cent for the year and included 
(cid:106)(cid:94)(cid:91)(cid:1)(cid:89)(cid:101)(cid:99)(cid:99)(cid:91)(cid:100)(cid:89)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:1)(cid:101)(cid:92)(cid:1)(cid:87)(cid:1)(cid:26)(cid:39)(cid:36)(cid:39)(cid:1)(cid:88)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:1)(cid:105)(cid:95)(cid:110)(cid:1)(cid:111)(cid:91)(cid:87)(cid:104)(cid:1)
(cid:89)(cid:101)(cid:100)(cid:106)(cid:104)(cid:87)(cid:89)(cid:106)(cid:1)(cid:109)(cid:95)(cid:106)(cid:94)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:58)(cid:91)(cid:102)(cid:87)(cid:104)(cid:106)(cid:99)(cid:91)(cid:100)(cid:106)(cid:1)(cid:101)(cid:92)(cid:1)(cid:58)(cid:91)(cid:92)(cid:91)(cid:100)(cid:89)(cid:91)(cid:1)
as well as international agreements with 
(cid:64)(cid:91)(cid:106)(cid:105)(cid:106)(cid:87)(cid:104)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:60)(cid:95)(cid:106)(cid:100)(cid:91)(cid:105)(cid:105)(cid:1)(cid:60)(cid:95)(cid:104)(cid:105)(cid:106)(cid:36)

IMPROVING CUSTOMER 
SATISFACTION
Telstra remains committed to improving 
customer service as our number one 
strategic priority. 

(cid:57)(cid:101)(cid:99)(cid:102)(cid:98)(cid:87)(cid:95)(cid:100)(cid:106)(cid:105)(cid:1)(cid:106)(cid:101)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:74)(cid:91)(cid:98)(cid:91)(cid:89)(cid:101)(cid:99)(cid:99)(cid:107)(cid:100)(cid:95)(cid:89)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:105)(cid:1)
(cid:63)(cid:100)(cid:90)(cid:107)(cid:105)(cid:106)(cid:104)(cid:111)(cid:1)(cid:69)(cid:99)(cid:88)(cid:107)(cid:90)(cid:105)(cid:99)(cid:87)(cid:100)(cid:1)(cid:94)(cid:87)(cid:108)(cid:91)(cid:1)(cid:92)(cid:87)(cid:98)(cid:98)(cid:91)(cid:100)(cid:1)(cid:92)(cid:101)(cid:104)(cid:1)(cid:87)(cid:1)
third consecutive year and we are 
focused on implementing key customer 
service initiatives. 

(cid:57)(cid:107)(cid:105)(cid:106)(cid:101)(cid:99)(cid:91)(cid:104)(cid:105)(cid:1)(cid:87)(cid:104)(cid:91)(cid:1)(cid:106)(cid:91)(cid:98)(cid:98)(cid:95)(cid:100)(cid:93)(cid:1)(cid:107)(cid:105)(cid:1)(cid:109)(cid:91)(cid:1)(cid:87)(cid:104)(cid:91)(cid:1)(cid:95)(cid:99)(cid:102)(cid:104)(cid:101)(cid:108)(cid:95)(cid:100)(cid:93)(cid:34)(cid:1)
but that we have a long way to go before 
more of them become advocates.

GROWTH IN CUSTOMER NUMBERS
Telstra’s products and ongoing investment 
in the network continue to attract new 
(cid:89)(cid:107)(cid:105)(cid:106)(cid:101)(cid:99)(cid:91)(cid:104)(cid:105)(cid:36)(cid:1)(cid:63)(cid:100)(cid:1)(cid:87)(cid:90)(cid:90)(cid:95)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:106)(cid:101)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:39)(cid:36)(cid:41)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:1)
domestic retail mobile customers added 
during the year, we added:

(cid:154)(cid:1)

(cid:154)(cid:1)

(cid:154)(cid:1)

(cid:1)(cid:39)(cid:45)(cid:41)(cid:34)(cid:38)(cid:38)(cid:38)(cid:1)(cid:210)(cid:110)(cid:91)(cid:90)(cid:1)(cid:104)(cid:91)(cid:106)(cid:87)(cid:95)(cid:98)(cid:1)(cid:88)(cid:104)(cid:101)(cid:87)(cid:90)(cid:88)(cid:87)(cid:100)(cid:90)(cid:1)
(cid:89)(cid:107)(cid:105)(cid:106)(cid:101)(cid:99)(cid:91)(cid:104)(cid:105)(cid:34)(cid:1)(cid:106)(cid:101)(cid:1)(cid:87)(cid:1)(cid:106)(cid:101)(cid:106)(cid:87)(cid:98)(cid:1)(cid:101)(cid:92)(cid:1)(cid:40)(cid:36)(cid:46)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:49)

(cid:1)(cid:40)(cid:41)(cid:46)(cid:34)(cid:38)(cid:38)(cid:38)(cid:1)(cid:88)(cid:107)(cid:100)(cid:90)(cid:98)(cid:91)(cid:90)(cid:1)(cid:89)(cid:107)(cid:105)(cid:106)(cid:101)(cid:99)(cid:91)(cid:104)(cid:105)(cid:34)(cid:1)(cid:106)(cid:101)(cid:1)(cid:87)(cid:1)(cid:106)(cid:101)(cid:106)(cid:87)(cid:98)(cid:1)
(cid:101)(cid:92)(cid:1)(cid:39)(cid:36)(cid:44)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:49)(cid:1)(cid:87)(cid:100)(cid:90)

(cid:1)(cid:42)(cid:40)(cid:43)(cid:34)(cid:38)(cid:38)(cid:38)(cid:1)(cid:62)(cid:101)(cid:100)(cid:93)(cid:1)(cid:65)(cid:101)(cid:100)(cid:93)(cid:1)(cid:99)(cid:101)(cid:88)(cid:95)(cid:98)(cid:91)(cid:1)(cid:89)(cid:107)(cid:105)(cid:106)(cid:101)(cid:99)(cid:91)(cid:104)(cid:105)(cid:34)(cid:1)
(cid:106)(cid:101)(cid:1)(cid:87)(cid:1)(cid:106)(cid:101)(cid:106)(cid:87)(cid:98)(cid:1)(cid:101)(cid:92)(cid:1)(cid:41)(cid:36)(cid:47)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:36)(cid:1)

(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:201)(cid:105)(cid:1)(cid:42)(cid:61)(cid:1)(cid:100)(cid:91)(cid:106)(cid:109)(cid:101)(cid:104)(cid:97)(cid:1)(cid:88)(cid:107)(cid:95)(cid:98)(cid:90)(cid:1)(cid:87)(cid:89)(cid:89)(cid:91)(cid:98)(cid:91)(cid:104)(cid:87)(cid:106)(cid:91)(cid:90)(cid:1)
during the year, and since launch we  
have activated more than 2.8 million  
(cid:42)(cid:61)(cid:1)(cid:90)(cid:91)(cid:108)(cid:95)(cid:89)(cid:91)(cid:105)(cid:36)(cid:1)

(cid:70)(cid:73)(cid:74)(cid:68)(cid:1)(cid:89)(cid:107)(cid:105)(cid:106)(cid:101)(cid:99)(cid:91)(cid:104)(cid:105)(cid:1)(cid:90)(cid:91)(cid:89)(cid:104)(cid:91)(cid:87)(cid:105)(cid:91)(cid:90)(cid:1)(cid:88)(cid:111)(cid:1)(cid:40)(cid:46)(cid:45)(cid:34)(cid:38)(cid:38)(cid:38)(cid:1)
(cid:101)(cid:104)(cid:1)(cid:41)(cid:36)(cid:44)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)(cid:106)(cid:101)(cid:1)(cid:45)(cid:36)(cid:46)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:70)(cid:73)(cid:74)(cid:68)(cid:1)
(cid:104)(cid:91)(cid:108)(cid:91)(cid:100)(cid:107)(cid:91)(cid:1)(cid:90)(cid:91)(cid:89)(cid:98)(cid:95)(cid:100)(cid:91)(cid:90)(cid:1)(cid:88)(cid:111)(cid:1)(cid:47)(cid:36)(cid:43)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:36)(cid:1)

SIMPLIFYING THE BUSINESS
(cid:73)(cid:95)(cid:99)(cid:102)(cid:98)(cid:95)(cid:210)(cid:89)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:95)(cid:100)(cid:95)(cid:106)(cid:95)(cid:87)(cid:106)(cid:95)(cid:108)(cid:91)(cid:105)(cid:1)(cid:90)(cid:91)(cid:98)(cid:95)(cid:108)(cid:91)(cid:104)(cid:91)(cid:90)(cid:1)
$1 billion of productivity beneﬁts, which 
were reinvested into the business to 
support growth in our customer base, 
customer satisfaction initiatives and 
development of new growth businesses. 
(cid:55)(cid:95)(cid:90)(cid:91)(cid:90)(cid:1)(cid:88)(cid:111)(cid:1)(cid:89)(cid:101)(cid:105)(cid:106)(cid:1)(cid:89)(cid:101)(cid:100)(cid:106)(cid:104)(cid:101)(cid:98)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:102)(cid:104)(cid:101)(cid:90)(cid:107)(cid:89)(cid:106)(cid:95)(cid:108)(cid:95)(cid:106)(cid:111)(cid:1)
(cid:95)(cid:99)(cid:102)(cid:104)(cid:101)(cid:108)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:105)(cid:34)(cid:1)(cid:101)(cid:102)(cid:91)(cid:104)(cid:87)(cid:106)(cid:95)(cid:100)(cid:93)(cid:1)(cid:91)(cid:110)(cid:102)(cid:91)(cid:100)(cid:105)(cid:91)(cid:1)(cid:93)(cid:104)(cid:91)(cid:109)(cid:1)
by only 0.5 per cent. 

Productivity beneﬁts were delivered 
by continued process improvement, 
including supply-chain efﬁciencies, 
improving online sales and service 
capability and effective credit 
management. Productivity beneﬁts 
(cid:89)(cid:101)(cid:100)(cid:106)(cid:95)(cid:100)(cid:107)(cid:91)(cid:1)(cid:106)(cid:101)(cid:1)(cid:211)(cid:101)(cid:109)(cid:1)(cid:92)(cid:104)(cid:101)(cid:99)(cid:1)(cid:89)(cid:107)(cid:105)(cid:106)(cid:101)(cid:99)(cid:91)(cid:104)(cid:105)(cid:1)
transacting online, with more than 
(cid:101)(cid:100)(cid:91)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:1)(cid:87)(cid:89)(cid:106)(cid:95)(cid:108)(cid:91)(cid:1)(cid:107)(cid:105)(cid:91)(cid:104)(cid:105)(cid:1)(cid:101)(cid:100)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:40)(cid:42)(cid:110)(cid:45)TM 
smartphone and tablet app.

We are continuing to make it easier and 
quicker for people to interact with us, 
with 40 per cent of our customers now 
doing business with us online.

4

Telstra Annual Report 2013

CHAIRMAN AND CEO MESSAGE

BUILDING NEW GROWTH 
BUSINESSES
(cid:55)(cid:105)(cid:1)(cid:105)(cid:106)(cid:87)(cid:106)(cid:91)(cid:90)(cid:1)(cid:87)(cid:88)(cid:101)(cid:108)(cid:91)(cid:34)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:68)(cid:55)(cid:73)(cid:1)(cid:102)(cid:101)(cid:104)(cid:106)(cid:92)(cid:101)(cid:98)(cid:95)(cid:101)(cid:1)(cid:89)(cid:101)(cid:100)(cid:106)(cid:95)(cid:100)(cid:107)(cid:91)(cid:90)(cid:1)
to grow, with revenue increasing by 
(cid:39)(cid:45)(cid:36)(cid:45)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)(cid:106)(cid:101)(cid:1)(cid:26)(cid:39)(cid:34)(cid:42)(cid:46)(cid:45)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:36)(cid:1)(cid:58)(cid:101)(cid:107)(cid:88)(cid:98)(cid:91)(cid:1)(cid:90)(cid:95)(cid:93)(cid:95)(cid:106)(cid:1)
(cid:93)(cid:104)(cid:101)(cid:109)(cid:106)(cid:94)(cid:1)(cid:109)(cid:87)(cid:105)(cid:1)(cid:104)(cid:91)(cid:102)(cid:101)(cid:104)(cid:106)(cid:91)(cid:90)(cid:1)(cid:87)(cid:89)(cid:104)(cid:101)(cid:105)(cid:105)(cid:1)(cid:87)(cid:98)(cid:98)(cid:1)(cid:99)(cid:87)(cid:96)(cid:101)(cid:104)(cid:1)(cid:68)(cid:55)(cid:73)(cid:1)
product categories.

(cid:63)(cid:100)(cid:106)(cid:91)(cid:104)(cid:100)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:87)(cid:98)(cid:1)(cid:88)(cid:107)(cid:105)(cid:95)(cid:100)(cid:91)(cid:105)(cid:105)(cid:91)(cid:105)(cid:1)(cid:93)(cid:104)(cid:91)(cid:109)(cid:1)(cid:104)(cid:91)(cid:108)(cid:91)(cid:100)(cid:107)(cid:91)(cid:1) 
(cid:88)(cid:111)(cid:1)(cid:39)(cid:44)(cid:36)(cid:40)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)(cid:101)(cid:104)(cid:1)(cid:26)(cid:40)(cid:42)(cid:41)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:1)(cid:106)(cid:101)(cid:1)
(cid:26)(cid:39)(cid:34)(cid:45)(cid:41)(cid:47)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:36)(cid:1)(cid:74)(cid:94)(cid:95)(cid:105)(cid:1)(cid:102)(cid:101)(cid:104)(cid:106)(cid:92)(cid:101)(cid:98)(cid:95)(cid:101)(cid:1)(cid:89)(cid:101)(cid:99)(cid:102)(cid:104)(cid:95)(cid:105)(cid:91)(cid:105)(cid:1)
(cid:106)(cid:94)(cid:91)(cid:1)(cid:62)(cid:101)(cid:100)(cid:93)(cid:1)(cid:65)(cid:101)(cid:100)(cid:93)(cid:1)(cid:99)(cid:101)(cid:88)(cid:95)(cid:98)(cid:91)(cid:1)(cid:105)(cid:91)(cid:104)(cid:108)(cid:95)(cid:89)(cid:91)(cid:105)(cid:1)(cid:30)(cid:57)(cid:73)(cid:66)(cid:1)(cid:68)(cid:91)(cid:109)(cid:1)
(cid:77)(cid:101)(cid:104)(cid:98)(cid:90)(cid:31)(cid:1)(cid:88)(cid:107)(cid:105)(cid:95)(cid:100)(cid:91)(cid:105)(cid:105)(cid:34)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:93)(cid:98)(cid:101)(cid:88)(cid:87)(cid:98)(cid:1)
(cid:89)(cid:101)(cid:100)(cid:100)(cid:91)(cid:89)(cid:106)(cid:95)(cid:108)(cid:95)(cid:106)(cid:111)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:68)(cid:55)(cid:73)(cid:1)(cid:88)(cid:107)(cid:105)(cid:95)(cid:100)(cid:91)(cid:105)(cid:105)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)
(cid:57)(cid:94)(cid:95)(cid:100)(cid:87)(cid:1)(cid:90)(cid:95)(cid:93)(cid:95)(cid:106)(cid:87)(cid:98)(cid:1)(cid:99)(cid:91)(cid:90)(cid:95)(cid:87)(cid:1)(cid:88)(cid:107)(cid:105)(cid:95)(cid:100)(cid:91)(cid:105)(cid:105)(cid:91)(cid:105)(cid:34)(cid:1)(cid:109)(cid:94)(cid:95)(cid:89)(cid:94)(cid:1)
provide digital media services in automotive, 
(cid:63)(cid:74)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:89)(cid:101)(cid:100)(cid:105)(cid:107)(cid:99)(cid:91)(cid:104)(cid:1)(cid:91)(cid:98)(cid:91)(cid:89)(cid:106)(cid:104)(cid:101)(cid:100)(cid:95)(cid:89)(cid:105)(cid:36)

(cid:77)(cid:91)(cid:1)(cid:89)(cid:101)(cid:100)(cid:106)(cid:95)(cid:100)(cid:107)(cid:91)(cid:1)(cid:106)(cid:101)(cid:1)(cid:104)(cid:91)(cid:105)(cid:106)(cid:104)(cid:107)(cid:89)(cid:106)(cid:107)(cid:104)(cid:91)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:73)(cid:91)(cid:100)(cid:105)(cid:95)(cid:105)(cid:1)
business as it transitions from print to 
(cid:90)(cid:95)(cid:93)(cid:95)(cid:106)(cid:87)(cid:98)(cid:36)(cid:1)(cid:55)(cid:107)(cid:105)(cid:106)(cid:104)(cid:87)(cid:98)(cid:95)(cid:87)(cid:100)(cid:1)(cid:99)(cid:91)(cid:90)(cid:95)(cid:87)(cid:1)(cid:104)(cid:91)(cid:108)(cid:91)(cid:100)(cid:107)(cid:91)(cid:34)(cid:1)(cid:109)(cid:94)(cid:95)(cid:89)(cid:94)(cid:1)
(cid:95)(cid:100)(cid:89)(cid:98)(cid:107)(cid:90)(cid:91)(cid:105)(cid:1)(cid:73)(cid:91)(cid:100)(cid:105)(cid:95)(cid:105)(cid:34)(cid:1)(cid:90)(cid:91)(cid:89)(cid:98)(cid:95)(cid:100)(cid:91)(cid:90)(cid:1)(cid:88)(cid:111)(cid:1)(cid:45)(cid:36)(cid:46)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:36)(cid:1)
(cid:73)(cid:91)(cid:100)(cid:105)(cid:95)(cid:105)(cid:1)(cid:102)(cid:91)(cid:104)(cid:92)(cid:101)(cid:104)(cid:99)(cid:91)(cid:90)(cid:1)(cid:87)(cid:105)(cid:1)(cid:102)(cid:104)(cid:101)(cid:96)(cid:91)(cid:89)(cid:106)(cid:91)(cid:90)(cid:34)(cid:1)(cid:109)(cid:95)(cid:106)(cid:94)(cid:1)
digital media revenue growth of 
11.3 per cent offset by a print revenue 
(cid:90)(cid:91)(cid:89)(cid:98)(cid:95)(cid:100)(cid:91)(cid:1)(cid:101)(cid:92)(cid:1)(cid:39)(cid:47)(cid:36)(cid:47)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)(cid:104)(cid:91)(cid:105)(cid:107)(cid:98)(cid:106)(cid:95)(cid:100)(cid:93)(cid:1)(cid:95)(cid:100)(cid:1)(cid:87)(cid:100)(cid:1)
overall revenue fall of 11.4 per cent. 

We have also established two new 
business units to focus on growth 
(cid:101)(cid:102)(cid:102)(cid:101)(cid:104)(cid:106)(cid:107)(cid:100)(cid:95)(cid:106)(cid:95)(cid:91)(cid:105)(cid:34)(cid:1)(cid:91)(cid:35)(cid:62)(cid:91)(cid:87)(cid:98)(cid:106)(cid:94)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:93)(cid:98)(cid:101)(cid:88)(cid:87)(cid:98)(cid:1)
applications. 

NBN 
Telstra continues to progress 
(cid:95)(cid:99)(cid:102)(cid:98)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:101)(cid:92)(cid:1)(cid:95)(cid:106)(cid:105)(cid:1)(cid:68)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:87)(cid:98)(cid:1)(cid:56)(cid:104)(cid:101)(cid:87)(cid:90)(cid:88)(cid:87)(cid:100)(cid:90)(cid:1)
(cid:68)(cid:91)(cid:106)(cid:109)(cid:101)(cid:104)(cid:97)(cid:1)(cid:55)(cid:93)(cid:104)(cid:91)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:105)(cid:1)(cid:109)(cid:95)(cid:106)(cid:94)(cid:1)(cid:68)(cid:56)(cid:68)(cid:1)(cid:57)(cid:101)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)
(cid:106)(cid:94)(cid:91)(cid:1)(cid:57)(cid:101)(cid:99)(cid:99)(cid:101)(cid:100)(cid:109)(cid:91)(cid:87)(cid:98)(cid:106)(cid:94)(cid:34)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:109)(cid:95)(cid:98)(cid:98)(cid:1)(cid:89)(cid:101)(cid:100)(cid:106)(cid:95)(cid:100)(cid:107)(cid:91)(cid:1)(cid:106)(cid:101)(cid:1)
work constructively in the best interests 
(cid:101)(cid:92)(cid:1)(cid:105)(cid:94)(cid:87)(cid:104)(cid:91)(cid:94)(cid:101)(cid:98)(cid:90)(cid:91)(cid:104)(cid:105)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:105)(cid:91)(cid:91)(cid:97)(cid:1)(cid:106)(cid:101)(cid:1)(cid:99)(cid:87)(cid:110)(cid:95)(cid:99)(cid:95)(cid:105)(cid:91)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)
value of those agreements as the project 
progresses. 

SUSTAINABILITY
We are pleased with the progress we 
have made on our sustainability agenda. 
Our aim in ﬁnancial year 2013 was to 
build performance momentum in three 

key areas – employee involvement, digital 
inclusion and environmental leadership. 

Our people contributed more than 4,200 
employee volunteer days, a 200 per cent 
(cid:95)(cid:100)(cid:89)(cid:104)(cid:91)(cid:87)(cid:105)(cid:91)(cid:1)(cid:101)(cid:100)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:102)(cid:104)(cid:91)(cid:108)(cid:95)(cid:101)(cid:107)(cid:105)(cid:1)(cid:111)(cid:91)(cid:87)(cid:104)(cid:36)(cid:1)(cid:63)(cid:100)(cid:1)(cid:58)(cid:91)(cid:89)(cid:91)(cid:99)(cid:88)(cid:91)(cid:104)(cid:1)
(cid:40)(cid:38)(cid:39)(cid:40)(cid:34)(cid:1)(cid:109)(cid:91)(cid:1)(cid:98)(cid:87)(cid:107)(cid:100)(cid:89)(cid:94)(cid:91)(cid:90)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:55)(cid:98)(cid:107)(cid:99)(cid:100)(cid:95)(cid:1)
(cid:102)(cid:104)(cid:101)(cid:93)(cid:104)(cid:87)(cid:99)(cid:1)(cid:196)(cid:1)(cid:109)(cid:94)(cid:95)(cid:89)(cid:94)(cid:1)(cid:94)(cid:87)(cid:90)(cid:1)(cid:99)(cid:101)(cid:104)(cid:91)(cid:1)(cid:106)(cid:94)(cid:87)(cid:100)(cid:1)(cid:46)(cid:34)(cid:44)(cid:38)(cid:38)(cid:1)
members by the end of ﬁnancial year 2013.

We developed a new operating model and 
(cid:105)(cid:106)(cid:104)(cid:87)(cid:106)(cid:91)(cid:93)(cid:111)(cid:1)(cid:92)(cid:101)(cid:104)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:60)(cid:101)(cid:107)(cid:100)(cid:90)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:106)(cid:101)(cid:1)
align key community investments with 
core customer digital inclusion programs. 
(cid:68)(cid:101)(cid:109)(cid:1)(cid:105)(cid:103)(cid:107)(cid:87)(cid:104)(cid:91)(cid:98)(cid:111)(cid:1)(cid:92)(cid:101)(cid:89)(cid:107)(cid:105)(cid:105)(cid:91)(cid:90)(cid:1)(cid:101)(cid:100)(cid:1)(cid:59)(cid:108)(cid:91)(cid:104)(cid:111)(cid:101)(cid:100)(cid:91)(cid:1)
(cid:57)(cid:101)(cid:100)(cid:100)(cid:91)(cid:89)(cid:106)(cid:91)(cid:90)(cid:34)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:60)(cid:101)(cid:107)(cid:100)(cid:90)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:87)(cid:100)(cid:100)(cid:101)(cid:107)(cid:100)(cid:89)(cid:91)(cid:90)(cid:1)(cid:106)(cid:109)(cid:101)(cid:1)
(cid:211)(cid:87)(cid:93)(cid:105)(cid:94)(cid:95)(cid:102)(cid:1)(cid:99)(cid:107)(cid:98)(cid:106)(cid:95)(cid:35)(cid:111)(cid:91)(cid:87)(cid:104)(cid:1)(cid:102)(cid:87)(cid:104)(cid:106)(cid:100)(cid:91)(cid:104)(cid:105)(cid:94)(cid:95)(cid:102)(cid:105)(cid:35)(cid:109)(cid:95)(cid:106)(cid:94)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)
(cid:55)(cid:98)(cid:87)(cid:100)(cid:100)(cid:87)(cid:94)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:67)(cid:87)(cid:90)(cid:91)(cid:98)(cid:95)(cid:100)(cid:91)(cid:1)(cid:60)(cid:101)(cid:107)(cid:100)(cid:90)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)
(cid:68)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:87)(cid:98)(cid:1)(cid:57)(cid:91)(cid:100)(cid:106)(cid:104)(cid:91)(cid:1)(cid:101)(cid:92)(cid:1)(cid:63)(cid:100)(cid:90)(cid:95)(cid:93)(cid:91)(cid:100)(cid:101)(cid:107)(cid:105)(cid:1)(cid:59)(cid:110)(cid:89)(cid:91)(cid:98)(cid:98)(cid:91)(cid:100)(cid:89)(cid:91)(cid:1)
(cid:106)(cid:101)(cid:1)(cid:94)(cid:91)(cid:98)(cid:102)(cid:1)(cid:99)(cid:101)(cid:104)(cid:91)(cid:1)(cid:55)(cid:107)(cid:105)(cid:106)(cid:104)(cid:87)(cid:98)(cid:95)(cid:87)(cid:100)(cid:105)(cid:1)(cid:91)(cid:100)(cid:96)(cid:101)(cid:111)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:88)(cid:91)(cid:100)(cid:91)(cid:210)(cid:106)(cid:105)(cid:1)
of being connected to new communication 
technologies. The value of the partnerships 
(cid:95)(cid:105)(cid:1)(cid:26)(cid:39)(cid:41)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:1)(cid:101)(cid:108)(cid:91)(cid:104)(cid:1)(cid:105)(cid:95)(cid:110)(cid:1)(cid:111)(cid:91)(cid:87)(cid:104)(cid:105)(cid:36)

We completed signiﬁcant research to 
inform a more proactive and strategic 
(cid:87)(cid:102)(cid:102)(cid:104)(cid:101)(cid:87)(cid:89)(cid:94)(cid:1)(cid:106)(cid:101)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:91)(cid:100)(cid:108)(cid:95)(cid:104)(cid:101)(cid:100)(cid:99)(cid:91)(cid:100)(cid:106)(cid:36)(cid:1)(cid:63)(cid:100)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:89)(cid:101)(cid:99)(cid:95)(cid:100)(cid:93)(cid:1)
year, we will focus our efforts on three key 
areas – improving the energy efﬁciency of 
our operations, reducing environmental 
impact in our supply chain and developing 
greener products and services.

We place the highest priority on the 
safety of our employees and the wider 
community.  We were very disappointed 
there were issues with our asbestos 
(cid:99)(cid:87)(cid:100)(cid:87)(cid:93)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:1)(cid:87)(cid:89)(cid:106)(cid:95)(cid:108)(cid:95)(cid:106)(cid:95)(cid:91)(cid:105)(cid:36)(cid:1)(cid:55)(cid:105)(cid:1)(cid:87)(cid:1)(cid:104)(cid:91)(cid:105)(cid:107)(cid:98)(cid:106)(cid:34)(cid:1)(cid:109)(cid:91)(cid:1)
stopped pit remediation work and 
conducted a review of our contractor 
management which identiﬁed a number 
of areas where improvements could be 
made. We recently announced 
remediation works will recommence with 
additional safeguards in place. This 
includes requiring relevant employees 
and contractors involved in this work to 
undergo additional training in the safe 

handling and removal of asbestos and 
the requirement for contractors to hold 
appropriate licences. 

(cid:73)(cid:107)(cid:105)(cid:106)(cid:87)(cid:95)(cid:100)(cid:87)(cid:88)(cid:95)(cid:98)(cid:95)(cid:106)(cid:111)(cid:1)(cid:104)(cid:91)(cid:99)(cid:87)(cid:95)(cid:100)(cid:105)(cid:1)(cid:87)(cid:1)(cid:97)(cid:91)(cid:111)(cid:1)(cid:92)(cid:101)(cid:89)(cid:107)(cid:105)(cid:1)(cid:92)(cid:101)(cid:104)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)
(cid:56)(cid:101)(cid:87)(cid:104)(cid:90)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:99)(cid:87)(cid:100)(cid:87)(cid:93)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:1)(cid:87)(cid:106)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:36)

FINANCIAL OUTLOOK 
(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:91)(cid:110)(cid:102)(cid:91)(cid:89)(cid:106)(cid:105)(cid:1)(cid:93)(cid:104)(cid:101)(cid:109)(cid:106)(cid:94)(cid:1)(cid:106)(cid:101)(cid:1)(cid:89)(cid:101)(cid:100)(cid:106)(cid:95)(cid:100)(cid:107)(cid:91)(cid:1)(cid:95)(cid:100)(cid:1)
ﬁnancial year 2014 and forecasts low 
(cid:105)(cid:95)(cid:100)(cid:93)(cid:98)(cid:91)(cid:1)(cid:90)(cid:95)(cid:93)(cid:95)(cid:106)(cid:1)(cid:106)(cid:101)(cid:106)(cid:87)(cid:98)(cid:1)(cid:95)(cid:100)(cid:89)(cid:101)(cid:99)(cid:91)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:59)(cid:56)(cid:63)(cid:74)(cid:58)(cid:55)(cid:1)
(cid:93)(cid:104)(cid:101)(cid:109)(cid:106)(cid:94)(cid:34)(cid:1)(cid:109)(cid:95)(cid:106)(cid:94)(cid:1)(cid:92)(cid:104)(cid:91)(cid:91)(cid:1)(cid:89)(cid:87)(cid:105)(cid:94)(cid:211)(cid:101)(cid:109)(cid:1)(cid:88)(cid:91)(cid:106)(cid:109)(cid:91)(cid:91)(cid:100)(cid:1)
(cid:26)(cid:42)(cid:36)(cid:44)(cid:1)(cid:88)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:26)(cid:43)(cid:36)(cid:39)(cid:1)(cid:88)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:36)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)
(cid:91)(cid:110)(cid:102)(cid:91)(cid:89)(cid:106)(cid:105)(cid:1)(cid:89)(cid:87)(cid:102)(cid:95)(cid:106)(cid:87)(cid:98)(cid:1)(cid:91)(cid:110)(cid:102)(cid:91)(cid:100)(cid:90)(cid:95)(cid:106)(cid:107)(cid:104)(cid:91)(cid:1)(cid:106)(cid:101)(cid:1)(cid:88)(cid:91)(cid:1)(cid:87)(cid:104)(cid:101)(cid:107)(cid:100)(cid:90)(cid:1)
15 per cent of sales as it continues to 
(cid:88)(cid:107)(cid:95)(cid:98)(cid:90)(cid:1)(cid:101)(cid:107)(cid:106)(cid:1)(cid:95)(cid:106)(cid:105)(cid:1)(cid:42)(cid:61)(cid:1)(cid:99)(cid:101)(cid:88)(cid:95)(cid:98)(cid:91)(cid:1)(cid:100)(cid:91)(cid:106)(cid:109)(cid:101)(cid:104)(cid:97)(cid:36)

This guidance assumes wholesale 
product price stability, no impairments to 
(cid:95)(cid:100)(cid:108)(cid:91)(cid:105)(cid:106)(cid:99)(cid:91)(cid:100)(cid:106)(cid:105)(cid:34)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:91)(cid:110)(cid:89)(cid:98)(cid:107)(cid:90)(cid:91)(cid:105)(cid:1)(cid:87)(cid:100)(cid:111)(cid:1)(cid:102)(cid:104)(cid:101)(cid:89)(cid:91)(cid:91)(cid:90)(cid:105)(cid:1)
on the sale of businesses, the cost of 
acquisitions and spectrum purchases.

(cid:55)(cid:105)(cid:1)(cid:105)(cid:106)(cid:87)(cid:106)(cid:91)(cid:90)(cid:1)(cid:87)(cid:88)(cid:101)(cid:108)(cid:91)(cid:34)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:94)(cid:87)(cid:105)(cid:1)(cid:89)(cid:101)(cid:100)(cid:210)(cid:104)(cid:99)(cid:91)(cid:90)(cid:1) 
a fully franked dividend of 14 cents per 
share bringing total dividends per share 
for ﬁnancial year 2013 to 28 cents per 
(cid:105)(cid:94)(cid:87)(cid:104)(cid:91)(cid:36)(cid:1)(cid:63)(cid:100)(cid:1)(cid:210)(cid:100)(cid:87)(cid:100)(cid:89)(cid:95)(cid:87)(cid:98)(cid:1)(cid:111)(cid:91)(cid:87)(cid:104)(cid:1)(cid:40)(cid:38)(cid:39)(cid:42)(cid:34)(cid:1)(cid:87)(cid:105)(cid:1)(cid:102)(cid:104)(cid:91)(cid:108)(cid:95)(cid:101)(cid:107)(cid:105)(cid:98)(cid:111)(cid:1)
announced, the company will return to its 
previous practice of considering dividends 
on a half yearly basis, as part of the regular 
(cid:56)(cid:101)(cid:87)(cid:104)(cid:90)(cid:1)(cid:102)(cid:104)(cid:101)(cid:89)(cid:91)(cid:105)(cid:105)(cid:36)

(cid:55)(cid:90)(cid:90)(cid:95)(cid:106)(cid:95)(cid:101)(cid:100)(cid:87)(cid:98)(cid:1)(cid:95)(cid:100)(cid:92)(cid:101)(cid:104)(cid:99)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:89)(cid:87)(cid:100)(cid:1)(cid:88)(cid:91)(cid:1)(cid:92)(cid:101)(cid:107)(cid:100)(cid:90)(cid:1)(cid:95)(cid:100)(cid:1)
(cid:60)(cid:107)(cid:106)(cid:107)(cid:104)(cid:91)(cid:1)(cid:101)(cid:107)(cid:106)(cid:98)(cid:101)(cid:101)(cid:97)(cid:1)(cid:101)(cid:100)(cid:1)(cid:102)(cid:87)(cid:93)(cid:91)(cid:1)(cid:39)(cid:38)(cid:36)

Catherine B Livingstone AO 
Chairman

David I Thodey 
Chief Executive Ofﬁcer

Telstra Annual Report 2013

5

STRATEGY AND  
PERFORMANCE
IMPROVING CUSTOMER SATISFACTION

OUR STRATEGIC PRIORITIES

Improving Customer Satisfaction

WE ARE LISTENING TO OUR 
CUSTOMERS AND PUTTING 
THEM AT THE CENTRE OF 
EVERYTHING WE DO 

Improving customer satisfaction is core 
to our strategy. Our aim is to change the 
way our customers talk about Telstra by 
building a culture of customer advocacy 
across Telstra. This is both a cultural 
and commercial imperative as we know 
that advocates buy more of our services, 
cost less to serve, and are more likely to 
recommend Telstra to family and friends. 
We have been working hard over the last 
12 months and we are seeing results. 

CUSTOMER ADVOCACY
Turning customers into advocates is 
underpinned by a signiﬁcant cultural 
change within our company. More than 
7,500 of our people leaders have been 
given the tools, training and skills needed 
to create a culture of customer advocacy 
in all areas of our business. 

We now ask our customers for their 
feedback after every interaction with 
Telstra, which provides us with rich 
information on the quality of their Telstra 
experience. We are then able to use 
these insights to improve our level of 
service and to challenge our business 
processes. To date, more than 10 million 
customer surveys have been completed, 
and we are starting to see improvement 
in customer advocacy. 

CUSTOMER SERVICE INITIATIVES
We’ve made further progress in keeping 
our customers informed about their 
mobile usage by increasing the number 
of usage alerts we send them. These 
alerts help our customers better manage 
their mobile spend and avoid ‘bill 

shock’ – a major cause of mobile related 
complaints. 

Many of our customers have expressed 
concern when they return from an 
overseas trip to ﬁnd a larger than 
expected mobile telephone bill. As a 
result, we now inform our customers by 
SMS of every 20 megabytes of data used 
when travelling overseas so they can 
manage their data usage and avoid bill 
shock when they return home. 

Telstra customers are also able to access 
4G mobile services while travelling 
in Hong Kong with the launch of 4G 
international roaming between Telstra 
and CSL New World, and we are working 
on similar agreements with operators 
in other countries with compatible 4G 
wireless broadband networks.

NETWORK INVESTMENTS
Our customers value Telstra’s superior 
mobile network and we invested 
$1.2 billion this ﬁnancial year to maintain 
our mobile network advantage. Telstra’s 
networks are supported by ongoing 
innovation and investment and, as a 
result of our investments, high speed 4G 
services on the Telstra network are now 
available to 66 per cent of the population. 
We recently announced a further network 
expansion to make 4G coverage available 
to 85 per cent of the population by the 
end of calendar year 2013.

We have also broadened the scope of our 
4G network by adding a second wireless 
frequency, 900MHz, to better cater for 
increasing mobile use in regional areas. 
The lower frequency improves signal 
range and depth, making it ideal for use 
in areas where improved range or signal 
reliability is required. 

An important decision for the company 
this year was to commit $1.3 billion to 
acquire mobile spectrum licences in 

the 700MHz and 2.5GHz bands. The 
2.5GHz spectrum will become available 
from 1 October 2014 and the 700MHz 
spectrum on 1 January 2015, and be paid 
for in September 2014. This represents 
a major investment in the future of 
telecommunications in Australia and 
means we can continue to deliver a 
superior mobile experience for our 
customers. The spectrum will be used 
to support the extraordinary growth in 
demand for mobile content and data.

Our ADSL ﬁxed broadband network is now 
available to over 9 million households 
and businesses and approximately 92 
per cent of the population. We recently 
completed an upgrade of over 1,800 sites 
providing ADSL 2+ broadband coverage 
to another 400,000 premises. 

‘THANKS’ TM
Telstra launched the ‘Thanks’ loyalty 
program during the year to thank our 
customers for choosing Telstra, and 
reward our people for being a part of 
Telstra. Our aim is to deliver an exciting 
loyalty program which focuses on offering 
things that are valued highly by our 
customers and employees. The nation-
wide program shows our customers we 
appreciate them and our employees that 
their work is valued and respected. 

Research told us customers love going 
to the movies, and enjoy attending live 
music and sporting events. Our loyalty 
program is designed to offer those 
experiences in a new and exciting way. 
‘Thanks’ offers customers and employees 
a range of money can’t buy experiences, 
such as red carpet premieres and behind 
the scenes access to great events. 
Exclusive access to music concerts and 
sporting events are also included in the 
program. These opportunities will be 
another way Telstra can say ‘Thanks’.

6

Telstra Annual Report 2013

STRATEGY AND PERFORMANCE

STRATEGY AND  
PERFORMANCE
RETAINING AND GROWING CUSTOMER NUMBERS

OUR STRATEGIC PRIORITIES

Retaining and Growing Customer Numbers

WE WANT TO BE THE 
TELECOMMUNICATIONS 
PROVIDER OF CHOICE 

We have continued to see good 
momentum in the business as our 
customers respond positively to the 
initiatives we have put in place over the 
past year, including new competitive 
mobile and ﬁxed bundle plans. 

In the wholesale space we launched a 
3G prepaid mobile offering allowing our 
customers to market and custom brand 
their own prepaid mobile and wireless 
broadband offerings using Telstra’s 3G 
service across parts of our mobile network. 

RETAIL PRODUCT CUSTOMER GROWTH IN FY13

MOBILES
DOMESTIC

FIXED
BROADBAND 

HK MOBILES
(CSL)

CLOUD

9%
7%
12%
68%

FIXED
We regularly ask our customers what new 
features and options they would most 
value on their ﬁxed plans. Our customers 
told us that included entertainment and 
mobility were important, so this year we 
introduced a new range of Entertainer 
bundles. In addition to high speed 
broadband, unlimited local and STD calls, 
and mobile phone beneﬁts, a selection of 
the new bundles now include 11 popular 
Foxtel on T-Box® channels and 500 
megabytes of mobile broadband data. We 
grew the number of our ﬁxed broadband 
customers taking a bundle by 238,000 
this year to 1.6 million, or 59 per cent of 
our ﬁxed broadband base. 

Across our Telstra Business and 
Enterprise and Government segments, 
we have increased cloud customer 
numbers by 68 per cent. These customers 
are beneﬁtting from Telstra’s world-class 
Next IPTM network which provides 
superior reach, speed and coverage. 
Network performance is monitored and 
maintained from dedicated centres by 
an Australia-wide team of technicians, 
allowing our customers to place greater 
reliance on network applications and do 
business in more places. 

MOBILES
Our mobiles business continues to 
provide growth for the company with 1.3 
million domestic retail mobile customers 
added in the past year. Since refreshing 
our mobile plans in 2010, we have added 
over 4.5 million mobile customers in 
Australia. Our leadership in mobiles is 
based on the breadth and quality of our 
network coverage. We have Australia’s 
largest and most reliable mobile network, 
covering more than 99.3 per cent of the 
population, 2.3 million square kilometres 
of landmass and more than 1 million 
square kilometres out to sea. 

Growth on our 4G network continues and 
since launch in September 2011, we have 
sold 2.8 million 4G devices. This includes 
1.9 million handsets, 200,000 tablets, 
400,000 dongles and 300,000 Wi-Fi 
hotspots. We continue to expand our device 
range and we now offer 27 4G devices.  
This includes a 4G dongle and Wi-Fi device, 
Australia’s ﬁrst 4G device combining a 
USB dongle and Wi-Fi hotspot technology, 
providing an ultra-fast internet connection 
that up to ﬁve Wi-Fi enabled devices can 
share simultaneously.

We continue to refresh our mobile offerings 
and during the year we announced our 
new No Lock In plans that come with great 
value inclusions and do not require a  
long-term contract or commitment. 
Customer beneﬁts include better budget 
control, the option of using existing mobile 
phones and not having to purchase a new 
one, and the freedom that comes from not 
being tied to a long term contract. 

Telstra Annual Report 2013

7

STRATEGY AND  
PERFORMANCE
SIMPLIFYING THE BUSINESS

OUR STRATEGIC PRIORITIES

Simplifying the Business

THE SIMPLIFICATION 
OF OUR BUSINESS 
CONTINUES TO DELIVER 
BENEFITS FOR OUR 
CUSTOMERS, EMPLOYEES 
AND SHAREHOLDERS

Simplifying the business remains a 
critical part of our strategy. This year 
simpliﬁcation initiatives delivered 
$1 billion of productivity beneﬁts. These 
productivity beneﬁts are reinvested 
into the business to support growth in 
our customer base, customer service 
initiatives and the development of new 
growth businesses.

We have introduced a range of initiatives 
and improved feedback channels 
between our frontline staff and senior 
management during the year that helped 
us improve processes, reduce complexity 
and improve customer service. 

We broadened the skill sets of our 
contact centre consultants enabling 
them to handle calls in more situations 
without having to transfer to a technical 
expert. Over 3,000 agents have been 
upskilled, resulting in more effective and 
efﬁcient customer interactions. 

We simpliﬁed billing by applying new 
rates for the full billing period when 
customers change plans. Previously, 
we split the bill between old and 
new plans, which was hard for our 
customers to understand. We believe 
this change will result in fewer calls 
to contact centres, fewer complaints 
to the Telecommunications Industry 
Ombudsman and importantly a better 
customer experience.

We introduced a 14 Day Customer Card 
which allows our customers to contact 
the same technician who visited their 
premises, should they need to. More 
than 100,000 cards were provided to 
our customers during the year. Our 
technicians’ performance is no longer 
only judged on how well they ﬁxed a fault 
but also on how satisﬁed the customer 
was with their visit.

8

Telstra Annual Report 2013

We are also seeing productivity beneﬁts 
as more customers transact with us 
on-line. We now have more than one 
million active users on our 24x7TM app 
which is available on the Apple iPhoneˆ, 
Androidˆ, Apple iPadˆ and on Facebook. 
The 24x7TM app enables our customers 
to monitor their call and data usage, top 
up their prepaid account and view their 
bills. In upcoming releases of the 24x7TM 
app we are planning to release additional 
functionality allowing customers to 
purchase new services from us. We will 
start with simple add-ons such as data 
packs, and progress to more complex 
transactions. Since launch in April 
2012, over 2.5 million customers have 
downloaded the app. We are putting the 
information our customers want, and the 
opportunity to contact us more readily, 
at their ﬁngertips.

$1 BILLION OF 
PRODUCTIVITY BENEFITS 
RE-INVESTED INTO THE 
BUSINESS 

STRATEGY AND PERFORMANCE

STRATEGY AND  
PERFORMANCE
DEVELOPING NEW GROWTH BUSINESSES 

OUR STRATEGIC PRIORITIES

Developing New Growth Businesses

DEVELOPING NEW 
BUSINESSES IS 
IMPORTANT TO OUR 
LONG-TERM GROWTH 

In addition to driving growth in our core 
business, we must also develop new 
businesses to ensure long term growth. 
Our current strategy includes three 
key growth opportunities - Network 
Applications and Services (NAS), 
International and Media. We also have 
a corporate venture capital group, 
Telstra Ventures that invests in high 
growth technology companies that are 
strategically important to Telstra.

Telstra has also established two new 
business units to focus on growth 
opportunities in e-Health and global 
applications.

NETWORK APPLICATIONS  
AND SERVICES 
NAS is a strategic growth opportunity for 
Telstra domestically and internationally 
with our products and services 
underpinned by our core Next IP® 
network. We continue to see strong 
growth as we invest in this important 
part of our business. In April 2013 we 
signed a six year, $1.1 billion contract 
with the Department of Defence for the 
provision of services including uniﬁed 
communications, video conferencing as 
well as tablet and smartphone usage. 
The agreement is the largest customer 
contract in Telstra’s history and will 
support military operations at home and 
abroad. 350 new positions will be created 
to help serve the contract, including 
recruiting some of the nation’s leading IT, 
network and security experts.

INTERNATIONAL
Growth into Asia is another of our key 
strategic ambitions. Our international 
business encompasses three lines of 
business – CSL New World, Telstra 
China and Telstra Global. CSL New World 
is one of Hong Kong’s leading mobile 
operators, which continues to increase 
market share in an intensely competitive 
market. Our Chinese businesses provide 
digital media services in the IT, consumer 
electronics and automotive segments 
in which our Autohome business has 
delivered signiﬁcant growth during the 
year. Telstra Global provides managed 
network services, international data and 
voice, and satellite and also manages our 
submarine cable networks and assets. 
During the year we signed a business 
communications contract with Jetstar 
and the deal is Telstra’s largest global 
contract to date. We continue to expand 
our capabilities in Asia including the 
opening of our Singapore data centre.  
We have also continued to grow outside 
the Asia region. 

MEDIA
We had a successful re-launch of our 
AFL and NRL mobile apps ahead of the 
2013 seasons for both sports. These apps 
enable our customers to view the games 
live on a smartphone or tablet. These 
have been very successful in the market 
and to date we have had over 1.5 million 
AFL app downloads and 800,000 NRL 
app downloads. The apps are available to 
customers across all mobile providers. 

Telstra’s media assets also include our 
50 per cent stake in the Foxtel business. 
The key focus for Foxtel continues to be 
the growth of its customer base which 
grew by 3.4 per cent to 2.5 million. 

The Sensis directories business continues 
to be challenged by the increased 
competition from online and mobile 
search directories and migration from 
traditional print products. We completed 
the acquisition of online directory 
business TrueLocal during the year. 
A core part of Sensis’ digital strategy 
is to seek investment opportunities 
that accelerate digital growth, and add 
value for our customers. TrueLocal is 
a business that meets those criteria 
with thousands of information rich 
business listings and more than 200,000 
user reviews that generate millions of 
searches each month. This acquisition 
presents additional growth opportunities 
for our customers because their content 
can now be found by an even greater 
number of consumers.

TELSTRA VENTURES
Telstra Ventures’ investment strategy 
focuses on high growth opportunities 
that offer technology and solutions which 
leverage Telstra’s assets and enable 
Telstra to offer new products and services 
to its customers. Based in Australia and 
Silicon Valley, Telstra Ventures works 
closely with quality entrepreneurs to 
build signiﬁcant companies. Since it was 
established in 2011, Telstra Ventures has 
invested in eight companies, and during 
ﬁnancial year 2013 acquired stakes in 
Kony Solutions Inc, HealthEngine, Whispir 
and IP Health.

Telstra Annual Report 2013

9

STRATEGY AND  
PERFORMANCE
FUTURE OUTLOOK 

10

Telstra Annual Report 2013

Like other strong Australian companies 
we have aspirations to grow into the Asia 
region. For Telstra this means leveraging 
our core network capabilities in Asia and 
building our NAS business in the region. 
We also need to do this as we support the 
growth of our enterprise customers in the 
region and will base additional resources 
and employees in the region.

While we have a number of important 
assets in our media portfolio, we are 
facing challenges at Sensis. Sensis is 
a changing business and is challenged 
by the transition from its previous print 
based business model to the new digital 
model. It is a completely new business 
model that requires greater agility and 
efﬁciency to compete. As the business 
continues to change, we will continue to 
review all aspects of its operations, to 
make sure we have the right resources 
in the right areas, so we can meet our 
customers’ needs. 

Additional information on our future 
outlook can be found in the Chairman  
and CEO Message on page 4.

Our strategy will continue to evolve as we 
work hard to improve customer service 
and simplify and grow the business.

While we are starting to see promising 
results from our focus on improving 
customer satisfaction, there is a great 
deal more to be done. In the year ahead, 
we will continue to focus on our journey 
towards building a culture of customer 
advocacy, implement further customer 
service initiatives and continue to invest 
in our networks to deliver a differentiated 
and quality customer service experience 
for all of our customers.

We will continue to use our network 
leadership, product innovation and 
capabilities to retain and grow our 
customer base. Our device range will 
expand and in the coming months we will 
be launching shared data plans which will 
enable our customers to pool wireless 
data allowances across multiple devices 
on a single bill. 

As the NBN rolls out to more communities 
around Australia, we will be focused on 
bringing customers the beneﬁts of Telstra 
services on the NBN. Having local teams 
working in communities across Australia 
is a competitive advantage and where 
we do not have a local presence, we have 
introduced mobile stores on wheels to 
help inform and connect our customers. 

We will continue to simplify the business 
to reduce our cost base. This will 
involve further process and systems 
improvements, empowering our people 
to make positive change across the 
business. We will continue to invest in 
our online service capabilities to provide 
customers with a simple and intuitive way 
to do business with us online. 

STRATEGY AND  
PERFORMANCE
MANAGING OUR RISKS 

STRATEGY AND PERFORMANCE

Identifying and managing risks which may 
affect the success of our strategy and ﬁnancial 
prospects for future years is an essential part 
of our governance framework. In addition to 
the risks discussed earlier in our OFR, a 
summary of our key strategic risks and our 
approach to managing them is outlined below. 

SUMMARY OF STRATEGIC RISKS

Changes to industry structure  
and competition 
Changes to our industry structure and 
competitive landscape, including the 
introduction of the NBN, see us operating in 
an increasingly competitive environment. 
This competition comes from existing 
competitors as well as new competitors  
with lower cost bases, and agile, innovative 
business models. If we don’t adapt to 
changes in the industry and competitive 
landscape we may lose market share and 
revenue. Our strategy to deal with our 
changing industry and competitive landscape 
is to retain and grow our customer base 
through driving customer advocacy, and 
identifying and executing new growth 
strategies. We also need to be innovative to 
keep ahead of our competitors and be able 
to respond to customer expectations by 
delivering new and superior services, 
applications and products to our customers. 
To address this we are working to develop 
and deliver new and innovative technologies 
and products to meet changing consumer 
needs; and improving our service offerings  
to align with customer expectations about 
pricing, scalability, privacy, security, 
performance and support.

Adapting our operating model
We recognise that we need to adapt our 
operating model to align with structural 
changes in the market place and reduce our 
cost base in order to remain competitive. To 
meet this challenge we are implementing a 
number of process improvement initiatives 
to simplify our internal structure, processes 
and systems. Information in relation to the 
challenges we are facing with respect to 

Sensis’ changing business model can be 
found in the Future outlook on page 10.  
We also need to ensure we have effective 
processes to attract talent and further 
develop the capabilities that we believe 
will be important to our future 
performance, so that we are able to 
maintain momentum and execute on our 
plans, and adapt to the changing nature  
of our industry and our business. 

OUR RISK  
MANAGEMENT APPROACH
Our risk management approach facilitates 
the ongoing assessment, monitoring and 
reporting of risks which can impede our 
progress in delivering our strategic priorities. 
This year, we reﬁned and clariﬁed our approach 
to managing risks through our ‘Three Lines 
of Defence’ model, which facilitates clear 
separation of accountabilities between:

Business disruption 
Our ability to compete, sustain business 
operations and deliver customer service 
may be impeded by a signiﬁcant business 
disruption. This can occur due to adverse 
weather events, a critical process failure,  
or disruption in our supplier base or supply 
chain, and may result in a loss of revenue, 
customer dissatisfaction, compensation 
claims and failure to meet regulatory 
obligations. To manage these risks we 
monitor network performance, execute  
our business continuity programs, and 
coordinate incident response when 
incidents occur. We also have programs in 
place to manage surety of supply including 
risk assessments of critical suppliers, and 
proactively manage vendors to protect our 
supply chain. 

Regulation 
We operate in highly regulated industries 
and changes in government policy and 
regulation can result in increases to the 
scope of our obligations and compliance 
costs. Decisions on the prices of regulated 
services can also affect the prices we 
charge our customers and result in a loss 
of revenue. To manage this risk, we 
continue to proactively engage and 
maintain constructive relationships with 
the government, regulators, interest 
groups and industry to seek appropriately 
balanced policy outcomes. Additional 
information in relation to NBN and a 
potential change in government policy can 
be found in the Chairman and CEO 
Message on page 4.

First line:  
‘Front-line’ management and staff in 
business operations – who are responsible 
for the day to day management of risks.

Second line:  
The Chief Risk Ofﬁce (managed by the Chief 
Risk Ofﬁcer) – who provide the ‘front-line’ 
with frameworks, policies, methodologies, 
tools and assistance to embed risk 
management in the business. 

Third line:  
Group Internal Audit – who provide 
independent and objective assurance on the 
effectiveness of our governance, risk 
management and internal control processes.

A critical component of our ‘second line’ of 
defence is our risk management framework 
which aligns with ISO 31000 Risk 
Management – Principles and Guidelines, 
the global standard for risk management. 
The framework is also supported by our 
Telstra Group Code of Conduct and Business 
Principles, and our risk management policy. 
The policy sets out our objectives, principles 
and accountabilities for risk management at 
all levels of our business. It also provides a 
deﬁnition of material business risks which 
we deﬁne as any type of risk that could have 
a material impact on the Telstra Group. 
Material business risks are regularly 
reported to the Board along with their 
controls and treatments. 

We remain committed to continuous 
improvement in our approach to managing 
risks and ensuring that we maintain a strong, 
integrated risk and compliance culture. 

Telstra Annual Report 2013

11

FULL YEAR RESULTS  
AND OPERATIONS REVIEW 

SUMMARY FINANCIAL RESULTS

RESULTS ON A GUIDANCE BASIS* 

FY13
 $m 

FY12
 $m 

Change
%

FY13

FY13 guidance

Sales revenue

Total income

25,502 

25,232 

25,980 

25,503 

Operating expenses

15,350 

15,269 

EBITDA

10,629 

10,234 

1.1

1.9

0.5

3.9

Total income

3.3% Low single digit growth

EBITDA

4.8% Low single digit growth

Capex/sales

14.9%

Around 15%

(cid:60)(cid:104)(cid:91)(cid:91)(cid:1)(cid:89)(cid:87)(cid:105)(cid:94)(cid:211)(cid:101)(cid:109)

$5.2 billion

$4.75-$5.25 billion

Depreciation  
and amortisation

4,238 

4,412 

(3.9)

Dividend

28c fully franked

28c fully franked

EBIT

6,391 

5,822 

Net ﬁnance costs

909 

888 

Tax

1,617 

1,510 

Net proﬁt after tax

3,865 

3,424 

Attributable net proﬁt

3,813

3,405

Accrued capex(1)

3,792 

3,591 

(cid:60)(cid:104)(cid:91)(cid:91)(cid:1)(cid:89)(cid:87)(cid:105)(cid:94)(cid:211)(cid:101)(cid:109)

5,024 

5,197 

Earnings per share 
(cents)

Dividend payout ratio (%)

30.7

91

27.5

102

9.8

2.4

7.1

12.9

12.0

5.6

(3.3)

11.6

n/m

(1)   Accrued capital expenditure is deﬁned as additions to property, 

equipment and intangible assets, including capital lease additions, 
measured on an accrued basis.

GUIDANCE VERSUS REPORTED RESULTS*

FY13

FY13

FY13

FY12

Reported 
results 
$m

Adjustments 

$m

Guidance 
basis 
$m

Guidance 
basis 
$m

25,980

(164)

25,816

25,001

10,629

127

10,756

10,264

5,024

152

5,176

n/m

Total 
income

EBITDA

Free 
(cid:89)(cid:87)(cid:105)(cid:94)(cid:211)(cid:101)(cid:109)

*Adjusted for TelstraClear trading results and sale and spectrum payments. 

Please refer to the guidance versus reported results reconciliation on  
page 203. This reconciliation forms part of the Full Year Results and 
Operations Review, and has been reviewed by our auditors.

REPORTED RESULTS
In ﬁnancial year 2013 sales revenue 
increased by 1.1 per cent or $270 million 
to $25,502 million and total income 
increased by 1.9 per cent or $477 million 
to $25,980 million. 

Operating expenses (before depreciation 
and amortisation) increased by 
0.5 per cent or $81 million to 
$15,350 million.

Labour expenses decreased by 3.3 per 
cent to $4,803 million driven by lower 
labour substitution and other labour 
expenses. Excluding TelstraClear from 
both periods, labour expenses declined 
by 2.0 per cent.

With our growing customer base and 
increased handset sales, directly variable 
costs (DVCs) or goods and services 
purchased increased by 3.4 per cent 

to $6,389 million. Network payments 
expense continued to decline.

extent by net borrowing costs decreasing 
from lower market interest rates. 

Other expenses increased by 0.8 per cent 
to $4,158 million driven by an increase 
in service contract expense to support 
operational initiatives, and the loss 
recognised on the sale of TelstraClear. 
This was offset by an overall decrease  
in impairment expenses. 

Earnings before interest, tax, 
depreciation and amortisation 
(EBITDA) increased by 3.9 per cent 
to $10,629 million. EBITDA margins 
increased by 1.1 percentage points to 
41.7 per cent. Earnings before interest 
and tax (EBIT) increased by 9.8 per cent  
to $6,391 million. 

Net ﬁnance costs increased by 
2.4 per cent to $909 million as a result 
of revaluation impacts offset to a large 

Reported proﬁt after tax increased by 
12.9 per cent to $3,865 million. Basic 
earnings per share (EPS) increased 
by 11.6 per cent from 27.5 cents to 
30.7 cents.

(cid:60)(cid:104)(cid:91)(cid:91)(cid:1)(cid:89)(cid:87)(cid:105)(cid:94)(cid:211)(cid:101)(cid:109)(cid:1)(cid:101)(cid:92)(cid:1)(cid:26)(cid:43)(cid:34)(cid:38)(cid:40)(cid:42)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:1)(cid:109)(cid:87)(cid:105)(cid:1)
generated in the year. Accrued capital 
expenditure was $3,792 million or 
14.9 per cent of sales.

On 8 August 2013, the Directors of Telstra 
resolved to pay a fully franked ﬁnal 
dividend of 14 cents per share bringing 
the total dividend to 28 cents per share 
for the 2013 ﬁnancial year. Shares 
will trade excluding entitlement to the 
dividend on 19 August 2013 with payment 
on 20 September 2013.

12

Telstra Annual Report 2013

 
 
PRODUCT SALES REVENUE BREAKDOWN

WTH

O
R
G

International businesses 7%

Media 9%

NAS 6%

Data & IP 12%

FULL YEAR RESULTS AND OPERATIONS REVIEW

Other 2%

F

I

X

E

D

Fixed voice 17%

Fixed broadband 8%

Other ﬁxed 3%

Mobile 36%

KEY PRODUCT REVENUE

Fixed

Mobile

Data & IP

NAS

International 
businesses

Media

FY13
 $m 

7,303 

9,200 

3,041 

1,487 

FY12
 $m

7,508 

8,680 

3,108 

1,263 

1,739 

1,496 

2,191 

2,377 

Change
%

(2.7)

6.0

(2.2)

17.7

16.2

(7.8)

E

M O B I L

TOTAL FIXED BROADBAND  
REVENUE GROWTH

5.0%

3.1%

FY11

(2.4%)

FY12

FY13

bundled customers compared to  
1.4 million customers at the end of FY12. 
In addition to this growth, retail ﬁxed 
broadband average revenue per user 
(ARPU) increased by 1.6 per cent to $54.52.

PSTN EBITDA margins increased to 
63 per cent while ﬁxed broadband 
increased by four percentage points to 42 
per cent compared to ﬁnancial year 2012.

PRODUCT PERFORMANCE

Fixed 
Telstra’s ﬁxed portfolio comprises 
ﬁxed voice (PSTN and NBN voice), ﬁxed 
broadband and other ﬁxed revenue which 
primarily includes intercarrier services, 
payphones, customer premises equipment 
and infrastructure access revenue from 
the NBN agreements. Our key priorities 
in the ﬁxed portfolio are to grow our ﬁxed 
broadband business, manage the decline 
in our PSTN business and successfully 
transition customers to the NBN. 

There was a continuation of trends in 
our PSTN and ﬁxed broadband business 
this ﬁnancial year. PSTN revenue fell by 
9.5 per cent to $4,358 million, however 
we saw strong growth in retail ﬁxed 
broadband with revenue increasing 
by 9.3 per cent to $1,757 million, the 

strongest growth in four years. Total 
ﬁxed broadband revenue increased by 
5.0 per cent to $2,087 million. The growth 
in ﬁxed broadband and $71 million of 
infrastructure access revenue from the 
NBN agreements slowed the rate of 
decline in the ﬁxed revenue portfolio, 
which declined by 2.7 per cent to 
$7,303 million.

Our PSTN business continued to decline 
with the loss of 287,000 customers. Retail 
customer numbers declined by 346,000 and 
wholesale services increased by 59,000. 
There are now 7.8 million PSTN customers.

Retail ﬁxed broadband growth in 
customer numbers remained strong 
with 173,000 customers added during 
the year. Customer base growth has 
been driven by our range of competitive 
bundled offers. There are now 1.6 million 

Telstra Annual Report 2013

13

FULL YEAR RESULTS  
AND OPERATIONS REVIEW 

RETAIL MOBILE CUSTOMER ADDS (‘000s)

NAS REVENUE GROWTH

1,668

1,592

1,257

17.7%

10.6%

10.5%

FY11

FY12

FY13

FY11

FY12

FY13

Mobile 
Mobile revenue grew by 6.0 per cent or 
$520 million to $9,200 million with 1.3 
million domestic retail mobile customers 
added during the year, taking our total 
mobile customer base to 15.1 million. 
Customers are using more data on our 
wireless network; their experience being 
enhanced by our continued investments 
in the network, product development and 
customer service.

To continue to provide our customers 
with a superior network experience 
we invested $1.2 billion in our mobile 
network during the year. This investment 
included broadening the reach of our 
4G network which now covers 66 per 
cent of the population. As a result of our 
extended coverage and device range, to 
date we have sold 2.8 million 4G devices 
with 27 per cent of our postpaid handheld 
customers now on 4G. 

Postpaid handheld revenue growth 
accelerated in the second half, growing 
by 5.4 per cent compared to 0.3 per cent 
growth in the ﬁrst half. For the full year, 
postpaid handheld revenue grew by 
2.8 per cent to $4,804 million with the 
addition of 423,000 customers. Excluding 
the impact of Mobile Repayment Options 
(MRO), ARPU increased by 2.7 per cent 
in the second half to $65.39. For the full 
year, ARPU excluding MRO was down 
0.1 per cent to $65.33.

Growth was also strong in the mobile 
broadband category with the addition  
of 452,000 customers. Revenue grew  
by 17.5 per cent or $178 million to 
$1,196 million. Much of this growth was 
driven by the popularity of tablets. As the 
ARPU on tablet devices is lower, mobile 
broadband ARPU declined by 4.7 per cent 
to $29.80. We have now sold 900,000 
tablet devices including over 200,000  
4G enabled tablet devices. 

Prepaid handheld revenue grew by 
11.2 per cent to $727 million driven by 
the ongoing popularity of our Prepaid 
Cap Encore plans, which contributed 
approximately 66 per cent of prepaid 
activations during the year. This led to 
an increase in prepaid handheld ARPU 
of 6.3 per cent to $17.94. Prepaid unique 
handheld users also increased by 8.3 per 
cent to 2.2 million. 

The popularity of smartphones and 
tablets contributed to mobile hardware 
revenue growth of 11.9 per cent  
to $1,497 million while mobiles 
interconnection revenue decreased 
marginally by $1 million to $768 million.

Churn continues to be well managed. 
The annualised postpaid handheld 
deactivation rate improved by 
1.4 percentage points to 10.8 per cent.

Effective cost management and 
increased operating scale has improved 

the proﬁtability of the mobile portfolio. 
EBITDA margins increased by  
2 percentage points to 38 per cent. 

Data and IP
Data and IP revenue declined  
by 2.2 per cent or $67 million to  
$3,041 million. IP Access revenue grew 
by 5.9 per cent to $1,118 million, however 
this was not enough to offset the decline 
in legacy data products. Customer 
growth was strong with IP MAN services 
increasing by 3,588 to 30,597. Data and 
IP EBITDA margins were 65 per cent, up 
1 percentage point from the prior year.

Network Applications  
and Services (NAS)
There was continued double digit growth 
across all major NAS product categories 
as we start to see the revenue beneﬁts of 
long-term contracts won in the previous 
year. The NAS portfolio grew revenue by 
17.7 per cent to $1,487 million. Revenue 
growth in our uniﬁed communications 
portfolio was also 17.7 per cent. Uniﬁed 
communications is an integrated 
hardware and software offering that 
combines enterprise communications 
onto a single platform. Revenue from 
cloud services, which includes providing 
storage and computing capacity and 
software as a service to our customers, 
grew by 33.0 per cent during the year. 

14

Telstra Annual Report 2013

PRODUCT PROFITABILITY
EBITDA MARGINS*

Mobile

Fixed broadband

PSTN

Data & IP

Sensis

Telstra Group

FY13 

FY12 

H2 13

H1 13

H2 12

38%

42%

63%

65%

44%

42%

36%

38%

60%

64%

50%

41%

39%

43%

63%

65%

55%

44%

37%

41%

62%

65%

23%

40%

38%

40%

60%

65%

61%

43%

(cid:32)(cid:74)(cid:94)(cid:91)(cid:1)(cid:90)(cid:87)(cid:106)(cid:87)(cid:1)(cid:95)(cid:100)(cid:1)(cid:106)(cid:94)(cid:95)(cid:105)(cid:1)(cid:106)(cid:87)(cid:88)(cid:98)(cid:91)(cid:1)(cid:95)(cid:100)(cid:89)(cid:98)(cid:107)(cid:90)(cid:91)(cid:105)(cid:1)(cid:99)(cid:95)(cid:100)(cid:101)(cid:104)(cid:1)(cid:87)(cid:90)(cid:96)(cid:107)(cid:105)(cid:106)(cid:99)(cid:91)(cid:100)(cid:106)(cid:105)(cid:1)(cid:106)(cid:101)(cid:1)(cid:94)(cid:95)(cid:105)(cid:106)(cid:101)(cid:104)(cid:95)(cid:89)(cid:1)(cid:100)(cid:107)(cid:99)(cid:88)(cid:91)(cid:104)(cid:105)(cid:1)(cid:106)(cid:101)(cid:1)(cid:104)(cid:91)(cid:211)(cid:91)(cid:89)(cid:106)(cid:1)(cid:89)(cid:94)(cid:87)(cid:100)(cid:93)(cid:91)(cid:105)(cid:1)(cid:95)(cid:100)(cid:1)(cid:102)(cid:104)(cid:101)(cid:90)(cid:107)(cid:89)(cid:106)(cid:1)(cid:94)(cid:95)(cid:91)(cid:104)(cid:87)(cid:104)(cid:89)(cid:94)(cid:111)

International Businesses
Our International businesses grew 
revenue by 16.2 per cent or $243 million 
to $1,739 million. This portfolio 
comprises the Hong Kong mobile services 
(CSL New World) business, the Telstra 
Global business and our China digital 
media businesses providing services in 
automotive, IT and consumer electronics. 

Sensis’ digital portfolio growth continued 
to accelerate year on year with revenue 
increasing by 11.3 per cent to  
$415 million (prior year growth was  
4.5 per cent). Print revenue declined by 
19.9 per cent to $778 million comprising 
a decline of 11.4 per cent in White Pages® 
and 25.6 per cent in Yellow Pages® print 
revenue. 

TV revenue, which includes Premium Pay 
TV and IPTV, remained stable at $666 
million. The decline in the number of 
customers on the premium service was 
offset by growth in IPTV, namely T-Box® 
sales and Foxtel on T-Box® offerings. 
Cable revenue, which represents income 
from the supply of HFC cable services to 
Foxtel, increased by 1.7 per cent to  
$120 million due to higher advertising 
revenue under the revenue sharing 
agreement with Foxtel. 

CSL New World revenue grew by  
17.6 per cent to $1,011 million with 
425,000 new customers added during 
the year. In Hong Kong dollar terms CSL 
New World revenue grew by 16.9 per cent 
to HK$8,052 million and EBITDA grew by 
14.9 per cent to HK$2,057 million. Global 
Connectivity and NAS revenue grew by 
11.4 per cent to $566 million, and in our 
China portfolio, revenue from Autohome 
increased by 73.8 per cent. Autohome has 
established a strong digital marketing 
position in the Chinese automotive 
market, which is growing rapidly. 

Media
Media product portfolio revenue declined 
by 7.8 per cent or $186 million to $2,191 
million. This portfolio includes our 
domestic media services and the Sensis 
domestic directories business.

Total revenue for Sensis and advertising 
declined by 11.7 per cent to $1,336 
million as traditional print customers 
continue to migrate to digital offerings. 

FULL YEAR RESULTS AND OPERATIONS REVIEW

Telstra Annual Report 2013

15

FULL YEAR RESULTS  
AND OPERATIONS REVIEW 

SEGMENT INCOME

SEGMENT EBITDA CONTRIBUTION

Total external income

FY13
 $m 

FY12
 $m 

Change
%

10,656 

10,313 

4,714 

4,665 

4,346 

4,289 

2,115 

2,091 

3.3

1.1

1.3

1.1

Telstra Consumer

Telstra Business

Telstra Enterprise and 
Government

Telstra Wholesale

156 

74 

110.8

Telstra Operations

Telstra Consumer

Telstra Business

Telstra Enterprise  
and Government

Telstra Wholesale

Telstra Operations

Telstra Media Group (i)

1,615 

1,741 

Telstra International Group (i)

1,883 

1,667 

(7.2)

13.0

Telstra Media Group

Telstra International Group

Other 

495 

663 

(25.3)

Other 

FY13
 $m 

5,577

3,631

FY12
 $m 

Change
%

5,444

3,566

2.4

1.8

3,400

3,433

(1.0)

1,942

1,933

(3,711)

(3,744)

683

385

806

280

(1,278)

(1,484)

0.5

0.9

(15.3)

37.5

13.9

3.9

Total Telstra segments

25,980 

25,503 

1.9

Total Telstra segments

10,629

10,234

(i)   Telstra International Group and Telstra Media Group do not align to 

the revenue statement for International businesses and Media due to 
differences in our internal management reporting which eliminates 
certain items in the Other segment.

SEGMENT PERFORMANCE 
We report our segment information on the 
same basis as our internal management 
reporting structure at reporting date. 
Commentary on the performance of our 
business segments follows.

Telstra Consumer 
Telstra Consumer income grew by 
3.3 per cent to $10,656 million and 
EBITDA increased by 2.4 per cent to 
$5,577 million. Fixed broadband revenue 
continued to grow at double digit rates, 
increasing by 10.4 per cent to $1,441 
million. The popularity of our bundled 
plans contributed to this growth. In 
mobiles, refreshed postpaid offers and an 
expanded 4G handset and tablet range 
contributed to an increase in mobile 
revenue of 9.4 per cent to $5,763 million. 
353,000 postpaid mobile handheld 
customers were added during the year. 

Telstra Business
Telstra Business returned to growth 
for the full year with income increasing 
by 1.1 per cent to $4,714 million. This 
included income growth of 2.5 per cent 
in the second half. Trends in the ﬁxed 
line business continued with revenue 
declining by 5.5 per cent to $1,444 million 
however there was strong double-digit 
growth in NAS and IP access and data. 
NAS revenue grew by 26.4 per cent to 
$278 million and IP access and data 
revenue grew by 13.2 per cent to $219 
million. Mobile services revenue (including 

interconnection) grew by 2.4 per cent 
to $2,213 million with 59,000 postpaid 
mobile handheld customers added in the 
year. Fixed broadband revenue increased 
by 7.9 per cent to $326 million with very 
solid customer growth of 40,000. EBITDA 
increased by 1.8 per cent to $3,631 million. 

External expenses increased by 8.9 per 
cent resulting in an EBITDA increase of 
0.5 per cent to $1,942 million. The increase 
in expenses was largely due to doubtful 
debt provision, customer compensation 
costs relating to the Warrnambool exchange 
ﬁre and higher service contract costs.

Telstra Enterprise and Government
Telstra Enterprise and Government income 
grew by 1.3 per cent to $4,346 million. 
IP access and data revenue grew by  
1.5 per cent to $1,136 million. NAS revenue 
grew by 14.7 per cent to $1,169 million 
as we start to see the revenue beneﬁts of 
long-term contracts won in the previous 
year. Mobile services revenue (including 
interconnection) declined by 1.5 per cent 
to $973 million driven by ARPU declines 
outweighing customer growth. EBITDA 
decreased by 1.0 per cent to $3,400 million 
due primarily to product mix changes 
including growth from lower margin NAS 
business.

Telstra Wholesale
Income generated from our Wholesale 
business increased by 1.1 per cent to 
$2,115 million, the ﬁrst year on year 
increase in seven years. This was largely 
driven by NBN Infrastructure revenue 
which was offset in part by the impact of 
lower ﬁxed usage and mobile roaming. 
Continued carrier migration from Line 
Spectrum Sharing (LSS) to ULL services 
resulted in LSS services declining by 
65,000 while ULL services grew by 162,000. 

Telstra Operations
Telstra Operations is primarily a service 
delivery centre supporting the revenue 
generating activities of our other 
segments. The EBITDA contribution 
improved 0.9 per cent on the prior year with 
signiﬁcant reductions in labour expense 
partially offset by higher accommodation 
costs (particularly light and power). This 
result was achieved after increased 
investment in our strategic growth area  
of NAS.

Telstra Media Group
The Telstra Media Group (TMG) includes 
the Sensis domestic directories business of 
Yellow Pages® and White Pages® print and 
digital, Whereis® location and navigation 
services and TrueLocal; the Foxtel reseller 
products including premium Pay TV, Foxtel 
on T-Box® and Foxtel on Mobile; the supply 
of HFC cable services to Foxtel; and Digital 
Content Services including AFL, NRL, and 
the MOG music service. 

The decline in EBITDA of 15.3 per cent was 
largely due to the decline in Sensis EBITDA. 
Further commentary on the performance 
of products in the TMG is provided in the 
Media products section on page 15. 

16

Telstra Annual Report 2013

 
 
FULL YEAR RESULTS AND OPERATIONS REVIEW

OPERATING EXPENSES

Labour

Goods and services purchased

Other expenses

FY13
 $m 

4,803

6,389 

4,158 

FY12
 $m 

4,967 

6,179

4,123 

Total operating expenses

15,350 

15,269 

Change
%

(3.3)

3.4

0.8

0.5

Telstra International Group
Telstra International Group (TIG) 
segment income grew by 13.0 per cent to 
$1,883 million and EBITDA contribution 
grew by 37.5 per cent to $385 million. 
Further commentary on the performance 
of the components in the TIG segment is 
provided in the International businesses 
section on page 15. 

Other
Our Other category consists primarily of 
our corporate centre functions where we 
recognise payments received under NBN 
agreements, impairments, adjustments 
to our employee provisions for bond rate 
movements and short term incentives, and 
redundancy expenses for the parent entity. 
The results of our New Zealand subsidiary 
TelstraClear, which was sold in October 
2012, is also included in the Other category.

EXPENSE PERFORMANCE

Labour 
Total labour expenses decreased by  
3.3 per cent or $164 million to 
$4,803 million during the year. 

Labour substitution costs decreased by 
15.7 per cent or $142 million to $764 million 
resulting largely from a change in strategic 
direction to resourcing project work from 
specialist external suppliers or our own 
skilled internal workforce. This resulted 
in an increase in both our salary and 
associated costs and our service contracts 
and agreements expense. 

Other labour expenses decreased by  
11.9 per cent or $47 million to 
$347 million as we continue to streamline 
our contractor and agency activities. 
This was offset by higher than planned 
overtime required to rectify service faults 
associated with inclement weather 
across the eastern states.

Our salary and associated costs decreased 
slightly by 0.1 per cent or $2 million to 
$3,503 million. This included a $136 million 
reduction due to favourable bond rate 
movements impacting our long service and 
workers compensation provisions, and a 
reduction in our stafﬁng levels resulting 
from our sale of TelstraClear during the 
current year. Offsetting this was the impact 
of salary and wage increases including the 
new Enterprise Agreement implemented 
during the ﬁrst half of this year.

Redundancy expenses increased by  
16.7 per cent or $27 million to $189 million 
as we continue with our restructuring 
and rationalisation activities aimed at 
simplifying the business.

Our total workforce numbers decreased 
from the prior year by 2,251 to 37,721. 
The decrease was driven by our sale 
of TelstraClear, which reduced our 
workforce by around 1,300. There were 
also reductions due to the consolidation 
of several support functions and 
continued restructuring of our call 
centres and shops, aimed at improving 
our business productivity.

Goods and services purchased
Goods and services purchased increased 
by 3.4 per cent or $210 million to 
$6,389 million. An increase in cost of goods 
sold and commissions paid was offset by a 
decrease in network payments.

Cost of goods sold (which includes mobile 
handsets, tablets, dongles, ﬁxed and 
digital products) increased by 13.7 per cent 
or $350 million to $2,901 million. This 
was led by increased handset volumes 
to support the recontracting of a growing 
mobile customer base, and higher average 
cost of handsets due to the popularity of 
smartphones in both our domestic and 
international markets. An increase in 
hardware sales to support the growth in 
our NAS business also led to an increase  
in cost of goods sold. 

Other cost of goods sold increased by  
8.3 per cent or $140 million to 
$1,820 million following an increase in 
mobile sales through our dealers and 
licensees and ﬁxed product sales to our 
business customers which have both 
resulted in higher commissions expense. 

Network payments decreased by 14.4 per 
cent or $280 million to $1,668 million. This 
reduction was largely the result of lower 
payments to overseas carriers resulting 
from a renegotiation of rates, as well as 
reduced expenditure on the 3GIS network 
following the termination of our agreement 
with Vodafone Hutchison Australia and 
subsequent closure of the network in the 

Telstra Annual Report 2013

17

FULL YEAR RESULTS  
AND OPERATIONS REVIEW 

SUMMARY STATEMENT OF CASH FLOWS 

Net cash provided by  
operating activities 

Net cash used in  
investing activities

Free cashﬂow

Net cash used in  
ﬁnancing activities

Net increase in cash  
and cash equivalents

FY13
$m

FY12 
$m

Change 
$m

Change
%

8,359

9,276

(917)

(9.9)

(3,335)

(4,079)

744

(18.2)

5,024

5,197

(173)

(6,526)

(3,906)

(2,620)

(3.3)

67.1

(1,502)

1,291

(2,793)

(216.3)

ﬁrst half of this ﬁnancial year. Savings from 
the reduction in the mobile terminating 
access (MTA) rate (9.0 cents to 6.0 cents 
per minute in January 2012, and then from 
6.0 cents to 4.8 cents per minute in January 
2013) were partially offset by an increase in 
the volume of SMS/MMS trafﬁc. There was 
also a reduction in network payments as a 
result of the sale of TelstraClear.

Other expenses
Total other expenses increased 
marginally by 0.8 per cent or  
$35 million to $4,158 million. This 
increase was driven by service contracts 
and agreements and our recognition of a 
loss on the sale of TelstraClear during the 
ﬁrst half of this year. This was offset by a 
decrease in impairment expenses.

Service contracts and agreements 
increased by 12.4 per cent or $153 million 
to $1,382 million with the utilisation of 
additional external expertise to support 
current programs including our initiatives 
to drive greater customer advocacy, 
operational efﬁciency and ongoing site 
recovery and maintenance. Expenses 
were also incurred in relation to our 
commitments under the NBN and AFL 
rights agreements. 

Other operating expenses increased by 
5.0 per cent or $118 million to $2,468 million 
mainly due to the completion of our sale 
of TelstraClear on 31 October 2012 which 
resulted in a loss on sale of $127 million. 

Impairment and diminution expenses 
decreased by 43.4 per cent or $236 million 
to $308 million. Bad and doubtful debts 
expense declined by 28.7 per cent or 
$85 million to $211 million due to lower 
levels of consumer debt defaults, improved 
remediation of long outstanding debt and 
tighter assessment of customers at time 
of connection. The prior period included 
impairments in both TelstraClear and the 
LMobile Group.

Excluding TelstraClear related expenditure 
and sale adjustments from both periods, 
other expenses increased by 1.7 per cent.

Finance costs
Net ﬁnance costs increased by 2.4 per cent 
or $21 million to $909 million.

Net borrowing costs decreased by 
$139 million due to a reduction in the net 
average interest cost (from 7.0 per cent 
to 6.4 per cent) and a reduction in the 
average volume of our net interest bearing 
liabilities. The rate reduction arises 
principally from a reduction in market base 
rates during the year, resulting in lower 
(cid:89)(cid:101)(cid:105)(cid:106)(cid:105)(cid:1)(cid:101)(cid:100)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:211)(cid:101)(cid:87)(cid:106)(cid:95)(cid:100)(cid:93)(cid:1)(cid:104)(cid:87)(cid:106)(cid:91)(cid:1)(cid:90)(cid:91)(cid:88)(cid:106)(cid:1)(cid:89)(cid:101)(cid:99)(cid:102)(cid:101)(cid:100)(cid:91)(cid:100)(cid:106)(cid:1)
of our debt portfolio. 

Other net ﬁnance costs increased by 
$160 million largely due to revaluation 
impacts relating to our fair value  
hedges and on transactions not in, or 
de-designated from, hedge relationships. 
This was predominantly due to movements 
in base market interest rates and 

borrowing margins, as well as net present 
value calculations as borrowings move 
closer to maturity. 

FINANCIAL POSITION

Capital expenditure and cash ﬂow
Our operating capital expenditure 
increased by 5.6 per cent to $3,792 million 
in line with our 15 per cent capex to sales 
guidance. This investment has enabled 
us to meet ongoing customer demand, 
support the accelerated rollout of mobile 
4G LTE and meet ongoing delivery of NBN 
commitments.

(cid:60)(cid:104)(cid:91)(cid:91)(cid:1)(cid:89)(cid:87)(cid:105)(cid:94)(cid:211)(cid:101)(cid:109)(cid:1)(cid:93)(cid:91)(cid:100)(cid:91)(cid:104)(cid:87)(cid:106)(cid:91)(cid:90)(cid:1)(cid:92)(cid:104)(cid:101)(cid:99)(cid:1)(cid:101)(cid:102)(cid:91)(cid:104)(cid:87)(cid:106)(cid:95)(cid:100)(cid:93)(cid:1)
and investing activities was $5,024 million, 
representing a decline of 3.3 per cent. 
This included increased working capital to 
support business growth, cash proceeds 
from the sale of TelstraClear of $669 
million and spectrum licence payments of 
$821 million. Excluding the cash proceeds 
from sale of TelstraClear and spectrum 
licence payments, on a full year basis,  
(cid:92)(cid:104)(cid:91)(cid:91)(cid:1)(cid:89)(cid:87)(cid:105)(cid:94)(cid:211)(cid:101)(cid:109)(cid:1)(cid:90)(cid:91)(cid:89)(cid:98)(cid:95)(cid:100)(cid:91)(cid:90)(cid:1)(cid:88)(cid:111)(cid:1)(cid:38)(cid:36)(cid:42)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:36)(cid:1)

Debt position
Our gross debt position at 30 June 2013 
was $15,628 million, a decrease of 
$1,594 million from 30 June 2012.  
This included the early repayment in June 
2013 of a US$600 million (A$630 million) 
bank loan due to mature in August 2013. 

(cid:74)(cid:94)(cid:91)(cid:1)(cid:90)(cid:91)(cid:89)(cid:104)(cid:91)(cid:87)(cid:105)(cid:91)(cid:1)(cid:104)(cid:91)(cid:211)(cid:91)(cid:89)(cid:106)(cid:105)(cid:1)(cid:100)(cid:91)(cid:106)(cid:1)(cid:88)(cid:101)(cid:104)(cid:104)(cid:101)(cid:109)(cid:95)(cid:100)(cid:93)(cid:1)
repayments of $2,065 million partly 

18

Telstra Annual Report 2013

FULL YEAR RESULTS AND OPERATIONS REVIEW

FINANCIAL SETTINGS 

SUMMARY STATEMENT OF FINANCIAL POSITION 

FY13 
Actual

1.2x

Debt 
servicing(i)

Gearing (ii)

50.5%

FY13 
Target 
Zone

1.5 – 
1.9x 

50% to 
70%

Current assets

Non current assets

Total assets

Current liabilities

FY13
$m

FY12
$m

Change
$m

Change
%

7,903

9,950

(2,047)

(20.6)

30,624

29,575

1,049

38,527

39,525

(998)

3.5

(2.5)

7,522

10,684

(3,162)

(29.6)

Interest 
cover(iii)

12.4x

>7x

Non current liabilities

18,130

17,152

978

(i)   Debt servicing ratio equals net debt to EBITDA

(ii)   Gearing ratio equals net debt to net debt plus 

total equity

(iii) Interest cover equals EBITDA to net interest

Total liabilities

Net assets

Equity

25,652

27,836

(2,184)

12,875

11,689

12,875

11,689

1,186

1,186

5.7

(7.8)

10.1

10.1

offset by non-cash revaluation impacts 
of $234 million and ﬁnance lease 
additions of $237 million. During the year 
we made repayments of $4,139 million 
comprising long term debt maturities of 
$3,600 million, net short term borrowing 
repayments of $442 million and ﬁnance 
lease repayments of $97 million. The 
maturities were principally funded by new 
debt issuances of $2,074 million together 
with utilisation of liquidity built up during 
prior ﬁnancial years. Debt raising during 
the year was undertaken both in the 
offshore and domestic markets including 
$1,268 million from a Euro bond and a 
domestic bond of $743 million. 

Net debt was $13,149 million, a decrease 
of $128 million from the prior year. This 
(cid:99)(cid:101)(cid:108)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:1)(cid:104)(cid:91)(cid:211)(cid:91)(cid:89)(cid:106)(cid:105)(cid:1)(cid:87)(cid:1)(cid:90)(cid:91)(cid:89)(cid:104)(cid:91)(cid:87)(cid:105)(cid:91)(cid:1)(cid:95)(cid:100)(cid:1)(cid:93)(cid:104)(cid:101)(cid:105)(cid:105)(cid:1)
debt of $1,594 million offset by a net 
reduction in cash and cash equivalents of 
$1,466 million. Extra liquidity was built up 
in ﬁnancial year 2012 ahead of signiﬁcant 
debt repayments and anticipated 
spectrum commitments in ﬁnancial year 
2013. Payment for acquisition of mobile 
spectrum licences in the 700MHz and 
2.5GHz bands was originally expected to 
be made during the year but is now to be 
paid for in September 2014.

Our net debt gearing ratio (net debt to 
capitalisation) at 30 June 2013 of 50.5 per 
cent was lower than the gearing ratio at 30 
June 2012 of 53.2 per cent and is within 
our target range for net debt gearing.

Statement of Financial Position
Our balance sheet remains in a strong 
position with net assets of $12,875 million. 

which reduced taxable income. Trade and 
other payables increased primarily as a 
result of higher capital and labour accruals. 

Non current liabilities increased by  
5.7 per cent to $18,130 million mainly 
due to debt issuances during the year 
and fair value revaluation impacts on our 
borrowings. Derivative liabilities decreased 
due to foreign currency and other valuation 
impacts. Deﬁned beneﬁt pension liabilities 
decreased as a result of an actuarial gain 
for Telstra Super due to increased return on 
assets, a higher discount rate and reduced 
projected salary increases. Our net deferred 
tax liability increased as a result of the 
reduction of the deﬁned beneﬁt pension 
(cid:98)(cid:95)(cid:87)(cid:88)(cid:95)(cid:98)(cid:95)(cid:106)(cid:111)(cid:34)(cid:1)(cid:109)(cid:94)(cid:95)(cid:89)(cid:94)(cid:1)(cid:104)(cid:91)(cid:211)(cid:91)(cid:89)(cid:106)(cid:105)(cid:1)(cid:87)(cid:1)(cid:90)(cid:91)(cid:89)(cid:104)(cid:91)(cid:87)(cid:105)(cid:91)(cid:1)(cid:95)(cid:100)(cid:1)(cid:92)(cid:107)(cid:106)(cid:107)(cid:104)(cid:91)(cid:1)
tax beneﬁts from anticipated deductible 
superannuation payments.

Current assets decreased by 20.6 per 
cent to $7,903 million. Cash and cash 
equivalents decreased mainly due to net 
borrowing repayments. Increased customer 
acquisition activity has impacted trade and 
other receivables and has also contributed 
to us holding increased inventory levels 
to support sales and network expansion. 
Tax receivables decreased due to tax 
amendment refunds and assets classiﬁed 
as held for sale decreased due to the sale of 
TelstraClear.

Non current assets increased by 3.5 per 
cent to $30,624 million. Property, plant 
and equipment declined as ongoing 
depreciation and retirements exceed the 
level of additions. This was partly offset 
by an increase in intangible assets largely 
associated with the renewal of spectrum 
licences, and an increase in derivative 
assets mainly due to net foreign currency 
and other valuation impacts arising from 
measuring to fair value.

Current liabilities decreased by 
29.6 per cent to $7,522 million. The 
(cid:104)(cid:91)(cid:90)(cid:107)(cid:89)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:95)(cid:100)(cid:1)(cid:89)(cid:107)(cid:104)(cid:104)(cid:91)(cid:100)(cid:106)(cid:1)(cid:88)(cid:101)(cid:104)(cid:104)(cid:101)(cid:109)(cid:95)(cid:100)(cid:93)(cid:105)(cid:1)(cid:104)(cid:91)(cid:211)(cid:91)(cid:89)(cid:106)(cid:105)(cid:1)
the repayment of borrowing maturities in 
the year. Derivative liabilities decreased 
due to net foreign currency and other 
valuation impacts and current tax payables 
decreased mainly due to timing differences 

Telstra Annual Report 2013

19

SUSTAINABILITY
OUR APPROACH

OUR GOAL IS TO  
EMBED SOCIAL AND 
ENVIRONMENTAL 
CONSIDERATIONS INTO 
THE HEART OF OUR 
BUSINESS IN WAYS  
THAT CREATE VALUE

20

Telstra Annual Report 2013

OUR COMMITMENT
Telstra’s commitment is to manage our 
business well and to deliver an overall 
positive impact for our customers, 
employees, shareholders, the wider 
community and the natural environment.

Our primary corporate responsibilities 
are to:
(cid:154)(cid:1) (cid:105)(cid:91)(cid:104)(cid:108)(cid:91)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:100)(cid:91)(cid:91)(cid:90)(cid:105)(cid:1)(cid:101)(cid:92)(cid:1)(cid:101)(cid:107)(cid:104)(cid:1)(cid:89)(cid:107)(cid:105)(cid:106)(cid:101)(cid:99)(cid:91)(cid:104)(cid:105)
(cid:154)(cid:1) (cid:1)(cid:95)(cid:100)(cid:89)(cid:104)(cid:91)(cid:87)(cid:105)(cid:91)(cid:1)(cid:105)(cid:94)(cid:87)(cid:104)(cid:91)(cid:94)(cid:101)(cid:98)(cid:90)(cid:91)(cid:104)(cid:1)(cid:108)(cid:87)(cid:98)(cid:107)(cid:91)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:102)(cid:104)(cid:101)(cid:106)(cid:91)(cid:89)(cid:106)(cid:1)

shareholder interests

(cid:154)(cid:1) (cid:99)(cid:87)(cid:97)(cid:91)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:87)(cid:1)(cid:93)(cid:104)(cid:91)(cid:87)(cid:106)(cid:1)(cid:102)(cid:98)(cid:87)(cid:89)(cid:91)(cid:1)(cid:106)(cid:101)(cid:1)(cid:109)(cid:101)(cid:104)(cid:97)
(cid:154)(cid:1) (cid:1)(cid:102)(cid:104)(cid:101)(cid:108)(cid:95)(cid:90)(cid:91)(cid:1)(cid:93)(cid:101)(cid:101)(cid:90)(cid:1)(cid:105)(cid:106)(cid:91)(cid:109)(cid:87)(cid:104)(cid:90)(cid:105)(cid:94)(cid:95)(cid:102)(cid:1)(cid:101)(cid:92)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)

environment

(cid:154)(cid:1) (cid:1)(cid:89)(cid:101)(cid:100)(cid:106)(cid:104)(cid:95)(cid:88)(cid:107)(cid:106)(cid:91)(cid:1)(cid:104)(cid:91)(cid:105)(cid:101)(cid:107)(cid:104)(cid:89)(cid:91)(cid:105)(cid:1)(cid:35)(cid:1)(cid:102)(cid:91)(cid:101)(cid:102)(cid:98)(cid:91)(cid:34)(cid:1)

technology, products and services, and 
funds to support the communities in 
which we operate

(cid:154)(cid:1) (cid:1)(cid:87)(cid:90)(cid:108)(cid:87)(cid:100)(cid:89)(cid:91)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:100)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:87)(cid:98)(cid:1)(cid:95)(cid:100)(cid:106)(cid:91)(cid:104)(cid:91)(cid:105)(cid:106)(cid:1)(cid:88)(cid:111)(cid:1)
strengthening the capability of 
the nation’s telecommunications 
infrastructure, and thereby providing a 
strong foundation for economic growth, 
productivity improvement, sustainable 
prosperity and global competitive 
advantage.

KEY ISSUES
We undertake a formal and consultative 
approach to ensure that we identify and 
respond to key sustainability issues 
and opportunities that are important to 
both our business and our stakeholders. 
Increasingly, we seek to identify the 
ways in which we can use our core 
telecommunications capabilities, assets, 
expertise, workforce and national 
presence to make a genuine contribution 
to the communities in which we operate. 
To do this, we work with our customers 
and suppliers, engage our employees and 
develop partnerships with government 
and non-proﬁt organisations.

GOVERNANCE
Governance of Telstra’s sustainability 
strategy and performance is provided by 
the Telstra Sustainability Council, which 
is chaired by the CEO and comprises 
Telstra’s Executive Leadership Team. 
Reports on sustainability progress 
are also regularly provided to the CEO 
and the Telstra Board. Telstra’s Chief 
Sustainability Ofﬁcer provides strategic 
leadership for sustainability and is 
responsible for the implementation  
of our approach and programs.

SUSTAINABILITY

Environmental leadership
We need to be more proactive and strategic 
in our approach to the environment. We’re 
doing this by identifying and minimising 
the material environmental impacts of our 
operations, working with our suppliers to 
reduce the impacts of the products and 
services they provide to us, and considering 
the environment when we develop our 
own products and services. We are also 
examining the environmental impacts and 
beneﬁts of information and communication 
technologies.

SUSTAINABILITY FRAMEWORK

SUSTAINABILITY  
FRAMEWORK AND PRIORITIES
As Australia’s largest telecommunications 
company with a presence across the 
country, we’re in a unique position to make 
a difference to the lives of all Australians. 
This increasingly dynamic challenge is a 
source of innovation for our business.

Our sustainability framework identiﬁes 
the issues that are of interest to our core 
stakeholder groups. In the context of our 
framework, we aim to develop innovative 
business offerings, reduce ecological 
impacts and build a reputation that 
(cid:104)(cid:91)(cid:211)(cid:91)(cid:89)(cid:106)(cid:105)(cid:1)(cid:109)(cid:94)(cid:101)(cid:1)(cid:109)(cid:91)(cid:1)(cid:87)(cid:104)(cid:91)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:109)(cid:94)(cid:87)(cid:106)(cid:1)(cid:109)(cid:91)(cid:1)(cid:105)(cid:106)(cid:87)(cid:100)(cid:90)(cid:1)(cid:92)(cid:101)(cid:104)(cid:1)
as a company. Our challenge is to bring 
alignment and focus to our sustainability 
activities and build performance 
momentum.

Our three strategic sustainability priorities 
(cid:104)(cid:91)(cid:211)(cid:91)(cid:89)(cid:106)(cid:1)(cid:106)(cid:94)(cid:95)(cid:105)(cid:1)(cid:87)(cid:99)(cid:88)(cid:95)(cid:106)(cid:95)(cid:101)(cid:100)(cid:48)

 Employee involvement
 We aim to make Telstra a great place 
to work, enhance our reputation and 
strengthen the communities in which 
we operate by providing opportunities 
for our people to get involved with local 
communities through volunteering, 
community campaigns and workplace 
giving.

Everyone Connected
We believe that the more connected people 
are, the more opportunities they have. We 
want everyone to enjoy the beneﬁts that 
new communication technologies can 
bring - regardless of age, income, ability or 
location. Our Everyone Connected programs 
focus on making our products and services 
more accessible, enhancing digital 
literacy and cyber safety, and supporting 
technological innovation for social good.

Telstra Annual Report 2013

21

SUSTAINABILITY
RESPONSIBLE BUSINESS

WE’RE COMMITTED 
TO EXCELLENCE IN 
CORPORATE GOVERNANCE, 
TRANSPARENCY AND 
ACCOUNTABILITY

22

Telstra Annual Report 2013

SUPPORTED WORKFORCE
Telstra partners with local non-
proﬁt groups to create employment 
opportunities for people with disability 
or who are disadvantaged. We work with 
14 community groups across Australia, 
as part of the Supported Workforce 
Program, to clean and maintain Telstra 
exchanges. We now have more than 300 
people working in the program around the 
country, which represents a 67 per cent 
increase over the past year. In December 
2012, the program received a Disability 
Services Australia award for improving 
employment opportunities.

UNITED NATIONS  
GLOBAL COMPACT
In December 2011, Telstra became a 
signatory to the United Nations Global 
Compact, signalling our commitment 
to responsible business practice in 
all our markets. We are committed to 
aligning our operations and strategies 
with ten universally accepted principles 
in the areas of human rights, labour, 
environment and anti-corruption. Our 
commitment to these principles is 
(cid:104)(cid:91)(cid:211)(cid:91)(cid:89)(cid:106)(cid:91)(cid:90)(cid:1)(cid:95)(cid:100)(cid:1)(cid:101)(cid:107)(cid:104)(cid:1)(cid:105)(cid:107)(cid:105)(cid:106)(cid:87)(cid:95)(cid:100)(cid:87)(cid:88)(cid:95)(cid:98)(cid:95)(cid:106)(cid:111)(cid:1)(cid:104)(cid:91)(cid:102)(cid:101)(cid:104)(cid:106)(cid:95)(cid:100)(cid:93)(cid:36)(cid:1)
As a member of the Global Compact 
Network Australia, we participated in 
leadership groups for environment, 
business and human rights, and anti-
corruption this year.

SUPPLY CHAIN
This year we purchased around $6 billion 
in goods and services from close to 8,000 
suppliers, placing us in a strong position 
(cid:106)(cid:101)(cid:1)(cid:95)(cid:100)(cid:211)(cid:107)(cid:91)(cid:100)(cid:89)(cid:91)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:91)(cid:100)(cid:108)(cid:95)(cid:104)(cid:101)(cid:100)(cid:99)(cid:91)(cid:100)(cid:106)(cid:87)(cid:98)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:105)(cid:101)(cid:89)(cid:95)(cid:87)(cid:98)(cid:1)
standards of our suppliers.

In January 2013, we introduced a Supplier 
Code of Conduct which describes the 
standards required to conduct business 
with Telstra and ensures that social 
and environmental considerations are 
included when choosing suppliers. 
Reﬁnement of the code will be a focus  
in the coming year.

In 2010, we made a commitment to 
increase the diversity of our supply 
chain by becoming a member of Supply 
Nation, which links organisations with 
Indigenous business suppliers. This year, 
we updated our tendering process with 
a requirement to consider organisations 
certiﬁed by Supply Nation. This has led 
to an increase in expenditure with Supply 
Nation suppliers.

SUSTAINABILITY
CUSTOMER EXPERIENCE

SUSTAINABILITY

WE WANT TO ENSURE THAT 
ALL AUSTRALIANS ENJOY 
THE EVERYDAY BENEFITS 
OF BEING CONNECTED TO 
MODERN COMMUNICATION 
TECHNOLOGIES

PRIVACY PROTECTION
Protecting our customers’ privacy is a 
core priority, and a key factor in driving 
customer advocacy and trust. Although 
there have been fewer incidents overall 
this year, we know we need to do better. 
Of particular concern was an incident in 
May 2013, where some of our customers’ 
details were accidentally made available 
online. Having customer information 
revealed in such a way is completely 
unacceptable, under any circumstances. 
As soon as possible after we were made 
aware of this, we ensured that access 
to the information was removed and we 
quickly notiﬁed affected customers. We 
also informed the Ofﬁce of the Australian 
Information Commissioner and have 
reviewed the incident and are introducing 
measures to protect against similar 
incidents occurring again.

ONLINE SAFETY AND SECURITY
We launched a new opt-in tool to 
protect families online, Smart Controls®, 
designed to complement regular parental 
involvement in kids’ use of mobile phones 
by encouraging safe and responsible 
behaviour. This is in addition to our 
existing product Telstra Safe Social®, a 
new social networking protection tool 
available to BigPond Security customers. 
We also launched a range of cyber 
safety brochures and delivered 32 cyber 
safety seminars to more than 11,000 
parents and high school students around 
Australia.

CUSTOMERS EXPERIENCING 
DISADVANTAGE
We celebrated the 10th anniversary of 
our Access for Everyone program, which 
assists people on a low income or facing 
ﬁnancial hardship to stay connected. 
Since 2002, we’ve provided beneﬁts to 
the value of $2.2 billion. This year, we 
introduced a new targeted phone and 
broadband bundle plan speciﬁcally for 
people on a low income, and launched a 
new program providing $1 million worth 
of pre-paid mobile phone recharge cards 
for customers in crisis to stay in touch. 
We also revised our Financial Hardship 
Policy to cover events including sudden 
illness or loss of employment that may 
impact customers’ ability to pay their 
bills. 

CUSTOMERS WITH DISABILITY
This year, we completed the 
implementation of our ﬁfth Disability 
Action Plan (2010-2012). An independent 
review found that 94 per cent of the 
actions were completed or ongoing. 
The Plan recognised the beneﬁts that 
modern information and communications 
technologies bring to people with 
disability, and incorporated actions 
to provide a better experience for our 
customers with disability and their 
carers.

REMOTE INDIGENOUS 
COMMUNITIES
We announced a $5.76 million joint 
investment with the Northern Territory 
(NT) Government to deliver mobile 
coverage to eight remote communities 
and ﬁxed broadband services to six 
remote communities in the NT by the end 
of 2013. This will reach more than 8,000 
people. 

Telstra Annual Report 2013

23

SUSTAINABILITY
OUR PEOPLE 

TELSTRA IS ONE OF THE 
LARGEST EMPLOYERS IN 
AUSTRALIA, WITH A TOTAL 
WORKFORCE OF MORE  
THAN 37,000 PEOPLE

EMPLOYEE ENGAGEMENT
In April 2013, we conducted an employee 
engagement survey, with an 84 per cent 
response rate. We achieved an engagement 
score of 79 per cent, a two percentage 
point increase on the previous year, putting 
us four percentage points above the 
Australian National Norm.

HEALTH, SAFETY AND WELLBEING
Telstra Corporation's lost time injury 
frequency rate (LTIFR) was 1.36 this 
year, slightly higher than the previous 
year. While we continue to implement 
management programs across Telstra to 
reduce the severity of workplace injuries 
or illness, a steadily ageing workforce and 
increased ﬁeld work with the NBN have 
impacted our performance.  

Over the past year we have focused 
on vehicle safety and musculoskeletal 
injuries as they make up the majority of 
our reported health and safety incidents.

We place the highest priority on safety 
and were disappointed to identify gaps in 
our contractor management in relation 
to training on, and compliance with, our 
asbestos management processes. We are 
working with Comcare on responding to 
these issues and improving our oversight of 
contractor activity. We introduced a range of 
measures to improve compliance with our 
safety policies, including the requirement 
for all employees and contractors who work 
on the network to undertake additional 
training and the creation of new roles to 
supervise and inspect this type of work.

EMPLOYEE ENGAGEMENT

LOST TIME INJURY 
FREQUENCY RATE (LTIFR)1 

75%

77%

79%

1.30

1.32

1.36

FY11

FY12

FY13

FY11

FY12

FY13

Notes: 

1.   LTIFR is the reported number of accepted workers’ 
compensation claims for work-related injury or 
disease that incur lost time for each million 
hours worked. This data relates to Telstra 
Corporation Limited only and does not include 
subsidiary companies, such as Sensis.

24

Telstra Annual Report 2013

SUSTAINABILITY

(cid:72)(cid:59)(cid:70)(cid:72)(cid:59)(cid:73)(cid:59)(cid:68)(cid:74)(cid:55)(cid:74)(cid:63)(cid:69)(cid:68)(cid:1)(cid:69)(cid:60)(cid:1)(cid:77)(cid:69)(cid:67)(cid:59)(cid:68)(cid:1)(cid:63)(cid:68)(cid:1)(cid:74)(cid:59)(cid:66)(cid:73)(cid:74)(cid:72)(cid:55)(cid:1) 
(cid:55)(cid:73)(cid:1)(cid:55)(cid:74)(cid:1)(cid:41)(cid:38)(cid:1)(cid:64)(cid:75)(cid:68)(cid:59)(cid:1)(cid:40)(cid:38)(cid:39)(cid:41)

Role

(cid:56)(cid:101)(cid:87)(cid:104)(cid:90)1

(cid:59)(cid:110)(cid:91)(cid:89)(cid:107)(cid:106)(cid:95)(cid:108)(cid:91)(cid:1)(cid:99)(cid:87)(cid:100)(cid:87)(cid:93)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:32)2

(cid:57)(cid:59)(cid:69)

(cid:57)(cid:59)(cid:69)(cid:35)(cid:39)(cid:1)(cid:30)(cid:56)(cid:87)(cid:100)(cid:90)(cid:1)(cid:55)(cid:31)

(cid:57)(cid:59)(cid:69)(cid:35)(cid:40)(cid:1)(cid:30)(cid:56)(cid:87)(cid:100)(cid:90)(cid:1)(cid:56)(cid:31)

(cid:57)(cid:59)(cid:69)(cid:35)(cid:41)(cid:1)(cid:30)(cid:56)(cid:87)(cid:100)(cid:90)(cid:1)(cid:57)(cid:31)

(cid:67)(cid:95)(cid:90)(cid:90)(cid:98)(cid:91)(cid:1)(cid:99)(cid:87)(cid:100)(cid:87)(cid:93)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:32)3

(cid:69)(cid:102)(cid:91)(cid:104)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:87)(cid:98)(cid:32)4

Telstra Total*

Telstra Group Total**

Number

Percentage

3

66

0

5

10

51

2,453

7,620

10,139

11,374

37.5%

 25.4%

0%

31.3%

(cid:39)(cid:44)(cid:36)(cid:42)(cid:27)

28.0%

27.0%

(cid:41)(cid:39)(cid:36)(cid:47)(cid:27)

30.5%

30.9%

(cid:32)(cid:63)(cid:100)(cid:89)(cid:98)(cid:107)(cid:90)(cid:91)(cid:105)(cid:1)(cid:92)(cid:107)(cid:98)(cid:98)(cid:1)(cid:106)(cid:95)(cid:99)(cid:91)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:102)(cid:87)(cid:104)(cid:106)(cid:1)(cid:106)(cid:95)(cid:99)(cid:91)(cid:1)(cid:105)(cid:106)(cid:87)(cid:92)(cid:92)(cid:1)(cid:95)(cid:100)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:57)(cid:101)(cid:104)(cid:102)(cid:101)(cid:104)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:66)(cid:95)(cid:99)(cid:95)(cid:106)(cid:91)(cid:90)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:95)(cid:106)(cid:105)(cid:1)(cid:109)(cid:94)(cid:101)(cid:98)(cid:98)(cid:111)(cid:1)(cid:101)(cid:109)(cid:100)(cid:91)(cid:90)(cid:1)(cid:105)(cid:107)(cid:88)(cid:105)(cid:95)(cid:90)(cid:95)(cid:87)(cid:104)(cid:95)(cid:91)(cid:105)(cid:34)(cid:1)
(cid:91)(cid:110)(cid:89)(cid:98)(cid:107)(cid:90)(cid:95)(cid:100)(cid:93)(cid:1)(cid:89)(cid:87)(cid:105)(cid:107)(cid:87)(cid:98)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:87)(cid:93)(cid:91)(cid:100)(cid:89)(cid:111)(cid:1)(cid:105)(cid:106)(cid:87)(cid:92)(cid:92)(cid:36)(cid:1)(cid:63)(cid:106)(cid:1)(cid:90)(cid:101)(cid:91)(cid:105)(cid:1)(cid:100)(cid:101)(cid:106)(cid:1)(cid:95)(cid:100)(cid:89)(cid:98)(cid:107)(cid:90)(cid:91)(cid:1)(cid:105)(cid:106)(cid:87)(cid:92)(cid:92)(cid:1)(cid:95)(cid:100)(cid:1)(cid:87)(cid:100)(cid:111)(cid:1)(cid:101)(cid:106)(cid:94)(cid:91)(cid:104)(cid:1)(cid:89)(cid:101)(cid:100)(cid:106)(cid:104)(cid:101)(cid:98)(cid:98)(cid:91)(cid:90)(cid:1)(cid:91)(cid:100)(cid:106)(cid:95)(cid:106)(cid:95)(cid:91)(cid:105)(cid:1)(cid:109)(cid:95)(cid:106)(cid:94)(cid:95)(cid:100)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)
(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:61)(cid:104)(cid:101)(cid:107)(cid:102)(cid:36)(cid:1)

(cid:32)(cid:32)(cid:63)(cid:100)(cid:89)(cid:98)(cid:107)(cid:90)(cid:91)(cid:105)(cid:1)(cid:92)(cid:107)(cid:98)(cid:98)(cid:1)(cid:106)(cid:95)(cid:99)(cid:91)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:102)(cid:87)(cid:104)(cid:106)(cid:1)(cid:106)(cid:95)(cid:99)(cid:91)(cid:1)(cid:105)(cid:106)(cid:87)(cid:92)(cid:92)(cid:1)(cid:95)(cid:100)(cid:1)(cid:89)(cid:101)(cid:100)(cid:106)(cid:104)(cid:101)(cid:98)(cid:98)(cid:91)(cid:90)(cid:1)(cid:91)(cid:100)(cid:106)(cid:95)(cid:106)(cid:95)(cid:91)(cid:105)(cid:1)(cid:109)(cid:95)(cid:106)(cid:94)(cid:95)(cid:100)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:61)(cid:104)(cid:101)(cid:107)(cid:102)(cid:34)(cid:1)(cid:91)(cid:110)(cid:89)(cid:98)(cid:107)(cid:90)(cid:95)(cid:100)(cid:93)(cid:1)(cid:89)(cid:87)(cid:105)(cid:107)(cid:87)(cid:98)(cid:1)
and agency staff.

(cid:60)(cid:101)(cid:104)(cid:1)(cid:87)(cid:1)(cid:98)(cid:95)(cid:105)(cid:106)(cid:1)(cid:101)(cid:92)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:91)(cid:100)(cid:106)(cid:95)(cid:106)(cid:95)(cid:91)(cid:105)(cid:1)(cid:95)(cid:100)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:61)(cid:104)(cid:101)(cid:107)(cid:102)(cid:34)(cid:1)(cid:102)(cid:98)(cid:91)(cid:87)(cid:105)(cid:91)(cid:1)(cid:104)(cid:91)(cid:92)(cid:91)(cid:104)(cid:1)(cid:106)(cid:101)(cid:1)(cid:68)(cid:101)(cid:106)(cid:91)(cid:1)(cid:40)(cid:43)(cid:1)(cid:106)(cid:101)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:60)(cid:95)(cid:100)(cid:87)(cid:100)(cid:89)(cid:95)(cid:87)(cid:98)(cid:1)(cid:73)(cid:106)(cid:87)(cid:106)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:105)(cid:36)(cid:1)

(cid:68)(cid:101)(cid:106)(cid:91)(cid:105)(cid:48)(cid:1)

(cid:39)(cid:36)(cid:1) (cid:68)(cid:107)(cid:99)(cid:88)(cid:91)(cid:104)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:102)(cid:91)(cid:104)(cid:89)(cid:91)(cid:100)(cid:106)(cid:87)(cid:93)(cid:91)(cid:1)(cid:104)(cid:91)(cid:98)(cid:87)(cid:106)(cid:91)(cid:1)(cid:106)(cid:101)(cid:1)(cid:100)(cid:101)(cid:100)(cid:35)(cid:91)(cid:110)(cid:91)(cid:89)(cid:107)(cid:106)(cid:95)(cid:108)(cid:91)(cid:1)(cid:58)(cid:95)(cid:104)(cid:91)(cid:89)(cid:106)(cid:101)(cid:104)(cid:105)(cid:36)

(cid:40)(cid:36)(cid:1) (cid:1)(cid:59)(cid:110)(cid:91)(cid:89)(cid:107)(cid:106)(cid:95)(cid:108)(cid:91)(cid:1)(cid:99)(cid:87)(cid:100)(cid:87)(cid:93)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:1)(cid:89)(cid:101)(cid:99)(cid:102)(cid:104)(cid:95)(cid:105)(cid:91)(cid:105)(cid:1)(cid:102)(cid:91)(cid:104)(cid:105)(cid:101)(cid:100)(cid:105)(cid:1)(cid:94)(cid:101)(cid:98)(cid:90)(cid:95)(cid:100)(cid:93)(cid:1)(cid:104)(cid:101)(cid:98)(cid:91)(cid:105)(cid:1)(cid:109)(cid:95)(cid:106)(cid:94)(cid:95)(cid:100)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:90)(cid:91)(cid:105)(cid:95)(cid:93)(cid:100)(cid:87)(cid:106)(cid:91)(cid:90)(cid:1)(cid:87)(cid:105)(cid:1)(cid:56)(cid:87)(cid:100)(cid:90)(cid:1)(cid:55)(cid:34)(cid:1)(cid:56)(cid:1)(cid:101)(cid:104)(cid:1)(cid:57)(cid:34)(cid:1)

or equivalent. 

(cid:41)(cid:36)(cid:1) (cid:1)(cid:67)(cid:95)(cid:90)(cid:90)(cid:98)(cid:91)(cid:1)(cid:99)(cid:87)(cid:100)(cid:87)(cid:93)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:1)(cid:89)(cid:101)(cid:99)(cid:102)(cid:104)(cid:95)(cid:105)(cid:91)(cid:105)(cid:1)(cid:102)(cid:91)(cid:104)(cid:105)(cid:101)(cid:100)(cid:105)(cid:1)(cid:94)(cid:101)(cid:98)(cid:90)(cid:95)(cid:100)(cid:93)(cid:1)(cid:104)(cid:101)(cid:98)(cid:91)(cid:105)(cid:1)(cid:109)(cid:95)(cid:106)(cid:94)(cid:95)(cid:100)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:90)(cid:91)(cid:105)(cid:95)(cid:93)(cid:100)(cid:87)(cid:106)(cid:91)(cid:90)(cid:1)(cid:87)(cid:105)(cid:1)(cid:56)(cid:87)(cid:100)(cid:90)(cid:1)(cid:39)(cid:1)(cid:101)(cid:104)(cid:1)(cid:40)(cid:34)(cid:1)(cid:101)(cid:104)(cid:1)

equivalent.

(cid:42)(cid:36)(cid:1) (cid:69)(cid:102)(cid:91)(cid:104)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:87)(cid:98)(cid:1)(cid:89)(cid:101)(cid:99)(cid:102)(cid:104)(cid:95)(cid:105)(cid:91)(cid:105)(cid:1)(cid:102)(cid:91)(cid:104)(cid:105)(cid:101)(cid:100)(cid:105)(cid:1)(cid:94)(cid:101)(cid:98)(cid:90)(cid:95)(cid:100)(cid:93)(cid:1)(cid:104)(cid:101)(cid:98)(cid:91)(cid:105)(cid:1)(cid:109)(cid:95)(cid:106)(cid:94)(cid:95)(cid:100)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:90)(cid:91)(cid:105)(cid:95)(cid:93)(cid:100)(cid:87)(cid:106)(cid:91)(cid:90)(cid:1)(cid:87)(cid:105)(cid:1)(cid:56)(cid:87)(cid:100)(cid:90)(cid:105)(cid:1)(cid:41)(cid:1)(cid:101)(cid:104)(cid:1)(cid:42)(cid:34)(cid:1)(cid:101)(cid:104)(cid:1)(cid:91)(cid:103)(cid:107)(cid:95)(cid:108)(cid:87)(cid:98)(cid:91)(cid:100)(cid:106)(cid:36)

GENDER EQUALITY
(cid:60)(cid:91)(cid:99)(cid:87)(cid:98)(cid:91)(cid:1)(cid:93)(cid:91)(cid:100)(cid:90)(cid:91)(cid:104)(cid:1)(cid:104)(cid:91)(cid:102)(cid:104)(cid:91)(cid:105)(cid:91)(cid:100)(cid:106)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:87)(cid:99)(cid:101)(cid:100)(cid:93)(cid:1)
(cid:100)(cid:101)(cid:100)(cid:35)(cid:91)(cid:110)(cid:91)(cid:89)(cid:107)(cid:106)(cid:95)(cid:108)(cid:91)(cid:1)(cid:58)(cid:95)(cid:104)(cid:91)(cid:89)(cid:106)(cid:101)(cid:104)(cid:105)(cid:1)(cid:101)(cid:100)(cid:1)(cid:101)(cid:107)(cid:104)(cid:1)(cid:56)(cid:101)(cid:87)(cid:104)(cid:90)(cid:1)(cid:109)(cid:87)(cid:105)(cid:1)
37.5 per cent at 30 June 2013. This year, 
(cid:109)(cid:91)(cid:1)(cid:91)(cid:110)(cid:89)(cid:91)(cid:91)(cid:90)(cid:91)(cid:90)(cid:1)(cid:101)(cid:107)(cid:104)(cid:1)(cid:101)(cid:88)(cid:96)(cid:91)(cid:89)(cid:106)(cid:95)(cid:108)(cid:91)(cid:1)(cid:92)(cid:101)(cid:104)(cid:1)(cid:40)(cid:43)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)
(cid:104)(cid:91)(cid:102)(cid:104)(cid:91)(cid:105)(cid:91)(cid:100)(cid:106)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:101)(cid:92)(cid:1)(cid:109)(cid:101)(cid:99)(cid:91)(cid:100)(cid:1)(cid:95)(cid:100)(cid:1)(cid:59)(cid:110)(cid:91)(cid:89)(cid:107)(cid:106)(cid:95)(cid:108)(cid:91)(cid:1)
(cid:99)(cid:87)(cid:100)(cid:87)(cid:93)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:34)(cid:1)(cid:109)(cid:95)(cid:106)(cid:94)(cid:1)(cid:47)(cid:1)(cid:100)(cid:91)(cid:109)(cid:1)(cid:109)(cid:101)(cid:99)(cid:91)(cid:100)(cid:1)(cid:96)(cid:101)(cid:95)(cid:100)(cid:95)(cid:100)(cid:93)(cid:1)
(cid:106)(cid:94)(cid:95)(cid:105)(cid:1)(cid:93)(cid:104)(cid:101)(cid:107)(cid:102)(cid:1)(cid:90)(cid:107)(cid:104)(cid:95)(cid:100)(cid:93)(cid:1)(cid:60)(cid:79)(cid:39)(cid:41)(cid:36)(cid:1)(cid:77)(cid:91)(cid:1)(cid:87)(cid:98)(cid:105)(cid:101)(cid:1)(cid:105)(cid:87)(cid:109)(cid:1)(cid:102)(cid:101)(cid:105)(cid:95)(cid:106)(cid:95)(cid:108)(cid:91)(cid:1)
promotion rates for women in Telstra 
overall, and a rise in the engagement 
level of women compared to last year. 
Overall female representation across 
(cid:106)(cid:94)(cid:91)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:61)(cid:104)(cid:101)(cid:107)(cid:102)(cid:1)(cid:104)(cid:91)(cid:99)(cid:87)(cid:95)(cid:100)(cid:91)(cid:90)(cid:1)(cid:211)(cid:87)(cid:106)(cid:1)(cid:106)(cid:94)(cid:95)(cid:105)(cid:1)(cid:111)(cid:91)(cid:87)(cid:104)(cid:1)
(cid:87)(cid:106)(cid:1)(cid:41)(cid:38)(cid:36)(cid:47)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:34)(cid:1)(cid:104)(cid:91)(cid:211)(cid:91)(cid:89)(cid:106)(cid:95)(cid:100)(cid:93)(cid:1)(cid:87)(cid:1)(cid:89)(cid:94)(cid:87)(cid:98)(cid:98)(cid:91)(cid:100)(cid:93)(cid:91)(cid:1)
around over-representation of women 
among departures from Telstra, which 
we will proactively address in the coming 
year. Women accounted for 40 per cent of 
this year’s graduate intake. 

We have made good progress in 
addressing the gender pay equity gap 
and continue to focus on a range of 
initiatives including gender pay audits, 
closely monitoring female new starter 
(cid:102)(cid:87)(cid:89)(cid:97)(cid:87)(cid:93)(cid:91)(cid:105)(cid:34)(cid:1)(cid:102)(cid:104)(cid:101)(cid:99)(cid:101)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:104)(cid:87)(cid:106)(cid:91)(cid:105)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:211)(cid:91)(cid:110)(cid:95)(cid:88)(cid:98)(cid:91)(cid:1)
working across Telstra. We will start to 
(cid:104)(cid:91)(cid:102)(cid:101)(cid:104)(cid:106)(cid:1)(cid:99)(cid:91)(cid:106)(cid:104)(cid:95)(cid:89)(cid:105)(cid:1)(cid:101)(cid:100)(cid:1)(cid:101)(cid:107)(cid:104)(cid:1)(cid:102)(cid:104)(cid:101)(cid:93)(cid:104)(cid:91)(cid:105)(cid:105)(cid:1)(cid:100)(cid:91)(cid:110)(cid:106)(cid:1)(cid:111)(cid:91)(cid:87)(cid:104)(cid:1)
(cid:95)(cid:100)(cid:1)(cid:87)(cid:89)(cid:89)(cid:101)(cid:104)(cid:90)(cid:87)(cid:100)(cid:89)(cid:91)(cid:1)(cid:109)(cid:95)(cid:106)(cid:94)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:77)(cid:101)(cid:104)(cid:97)(cid:102)(cid:98)(cid:87)(cid:89)(cid:91)(cid:1)(cid:61)(cid:91)(cid:100)(cid:90)(cid:91)(cid:104)(cid:1)
(cid:59)(cid:103)(cid:107)(cid:87)(cid:98)(cid:95)(cid:106)(cid:111)(cid:1)(cid:55)(cid:89)(cid:106)(cid:1)(cid:40)(cid:38)(cid:39)(cid:40)(cid:36)(cid:1)

(cid:63)(cid:100)(cid:92)(cid:101)(cid:104)(cid:99)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:101)(cid:100)(cid:1)(cid:90)(cid:95)(cid:108)(cid:91)(cid:104)(cid:105)(cid:95)(cid:106)(cid:111)(cid:34)(cid:1)(cid:95)(cid:100)(cid:89)(cid:98)(cid:107)(cid:90)(cid:95)(cid:100)(cid:93)(cid:1)
what diversity means at Telstra, why 
(cid:95)(cid:106)(cid:201)(cid:105)(cid:1)(cid:95)(cid:99)(cid:102)(cid:101)(cid:104)(cid:106)(cid:87)(cid:100)(cid:106)(cid:1)(cid:106)(cid:101)(cid:1)(cid:107)(cid:105)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:101)(cid:107)(cid:104)(cid:1)(cid:58)(cid:95)(cid:108)(cid:91)(cid:104)(cid:105)(cid:95)(cid:106)(cid:111)(cid:1)
Measurable Objectives can be found in 
(cid:106)(cid:94)(cid:91)(cid:1)(cid:57)(cid:101)(cid:104)(cid:102)(cid:101)(cid:104)(cid:87)(cid:106)(cid:91)(cid:1)(cid:61)(cid:101)(cid:108)(cid:91)(cid:104)(cid:100)(cid:87)(cid:100)(cid:89)(cid:91)(cid:1)(cid:73)(cid:106)(cid:87)(cid:106)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:1)
(cid:105)(cid:91)(cid:89)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:101)(cid:92)(cid:1)(cid:106)(cid:94)(cid:95)(cid:105)(cid:1)(cid:55)(cid:100)(cid:100)(cid:107)(cid:87)(cid:98)(cid:1)(cid:72)(cid:91)(cid:102)(cid:101)(cid:104)(cid:106)(cid:36)(cid:1)

EMPLOYEE VOLUNTEERING  
AND GIVING
This year Telstra people contributed more 
than 4,200 days volunteering their time 
(cid:87)(cid:100)(cid:90)(cid:1)(cid:91)(cid:110)(cid:102)(cid:91)(cid:104)(cid:106)(cid:95)(cid:105)(cid:91)(cid:1)(cid:106)(cid:101)(cid:1)(cid:87)(cid:1)(cid:104)(cid:87)(cid:100)(cid:93)(cid:91)(cid:1)(cid:101)(cid:92)(cid:1)(cid:89)(cid:101)(cid:99)(cid:99)(cid:107)(cid:100)(cid:95)(cid:106)(cid:111)(cid:1)
(cid:101)(cid:104)(cid:93)(cid:87)(cid:100)(cid:95)(cid:105)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:105)(cid:1)(cid:87)(cid:89)(cid:104)(cid:101)(cid:105)(cid:105)(cid:1)(cid:55)(cid:107)(cid:105)(cid:106)(cid:104)(cid:87)(cid:98)(cid:95)(cid:87)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)
beyond. We introduced dollar for dollar 
matched payroll giving this year, which 
provided an added incentive to give, 
resulting in a total contribution of 
$1.3 million in donations to 285 charities.

Telstra Annual Report 2013

25

SUSTAINABILITY
COMMUNITY IMPACT

WE USE OUR TECHNOLOGY, 
EXPERTISE, SCALE AND 
PRESENCE ACROSS 
THE NATION TO MAKE A 
POSITIVE CONTRIBUTION 
TO THE COMMUNITY

26

Telstra Annual Report 2013

DIGITAL LITERACY 
We established a partnership with the 
New South Wales Government to deliver 
the Tech Savvy Seniors program. The 
18 month program will deliver digital 
literacy training to around 15,000 
senior Australians through more than 
40 community colleges and 100 local 
libraries, particularly in regional and 
remote areas of NSW.

We also launched a partnership with 
Able Australia Services to help deafblind 
Australians better access technology. 
Communication difﬁculties associated 
with deafblindness can lead to social 
isolation, unemployment and the 
frustration of relying on support workers. 
The partnership will deliver digital literacy 
training and provide access to equipment 
such as tablets and Braille devices.

E-SMART LIBRARIES
In August 2012, we launched eSmart 
Libraries, a multi-year, $8 million 
partnership between the Telstra 
Foundation and The Alannah and 
Madeline Foundation. The initiative will 
better equip 1,500 public libraries across 
the country and support library users 
with the skills they need for smart, safe 
and responsible use of technology. To 
date, more than 140 library employees 
from 100 libraries across Australia have 
attended training sessions as part of the 
eSmart Libraries pilot. 

TELSTRA FOUNDATION
Through its social innovation 
program, the Telstra Foundation 
works in partnership with community 
organisations to bring ideas and 
technology together - unlocking digital 
potential. This year we committed  
$1 million in three new social innovation 
grants, including support for the MJD 
Foundation to deliver a digital inclusion 
program for Indigenous people living with 
Machado-Joseph Disease (MJD) in the 
Northern Territory. MJD is a hereditary 
neurodegenerative condition, life limiting 
and with no known cure. The project 
will use innovative tablet technology to 
deliver health services and support to 30 
Indigenous MJD clients and their carers 
across six Arnhem Land communities.

INDIGENOUS COMMUNITIES
We consulted widely this year to explore 
the digital inclusion potential for 
Aboriginal and Torres Strait Islander 
people. We will use the ﬁndings and work 
in partnership with the National Centre 
of Indigenous Excellence to develop a 
national strategy for Indigenous Digital 
Excellence. 

We renewed our partnership with One 
Laptop Per Child Australia (OLPCA) for 
another two years, committing an additional 
$200,000 to help deploy 50,000 laptops to 
disadvantaged schools, including many 
with a large Indigenous student population. 
Since 2010, Telstra has provided $900,000 
in seed funding to OLPCA.

This year we became one of the ﬁrst 
corporations in Australia to formally 
recognise the traditional owners of 
land and country, by installing signs of 
acknowledgement in every branded Telstra 
store and business centre across Australia.

SUSTAINABILITY

TOTAL VALUE OF SOCIAL AND COMMUNITY  
INVESTMENT IN FY13 - $231 MILLION

Sponsorship 5.96%

Employee community 
involvement 1.53%

Disaster relief 0.12%

Everyone Connected
92.39%

Telstra Annual Report 2013

27

DISASTER RELIEF & RECOVERY
In times of disaster, Telstra provides 
telecommunications services to 
evacuation centres, where we establish 
temporary internet and provide handsets 
with SIM cards and phone cards. We also 
provide relief assistance packages to 
affected residential and small business 
customers. In FY13, Telstra provided 
assistance following eight natural 
disasters across the country.

We further improved the Emergency 
Alert System (EA), creating a service that 
accurately sends emergency warning 
messages to the public based on their 
geographical location. The EA has the 
capacity to send potentially lifesaving 
messages to those at direct risk from 
natural disaster or emergency situations. 

WARRNAMBOOL
Other than the weather events that caused 
ﬂooding and elevated fault levels, the 
most signiﬁcant community impact for 
the year was caused by the ﬁre in our 
Warrnambool Exchange. The ﬁre caused 
signiﬁcant disruption to our network 
throughout south-western Victoria and 
resulted in a loss of telecommunication 
services across the region. We mobilised 
quickly and had more than 110 technicians 
on site working 24 hours a day to restore 
services. All customer services were up 
and running by 10 December, 19 days after 
the ﬁre. An internal review of the incident 
recommended 22 actions primarily aimed 
at reducing the risk of future occurrences 
and restoring services more quickly should 
a similar incident occur in future.

SUSTAINABILITY
ENVIRONMENTAL IMPACT

(cid:55)(cid:73)(cid:1)(cid:58)(cid:63)(cid:61)(cid:63)(cid:74)(cid:55)(cid:66)(cid:1)(cid:55)(cid:70)(cid:70)(cid:66)(cid:63)(cid:57)(cid:55)(cid:74)(cid:63)(cid:69)(cid:68)(cid:73)(cid:1)
(cid:56)(cid:59)(cid:57)(cid:69)(cid:67)(cid:59)(cid:1)(cid:63)(cid:68)(cid:57)(cid:72)(cid:59)(cid:55)(cid:73)(cid:63)(cid:68)(cid:61)(cid:66)(cid:79)(cid:1)
(cid:58)(cid:55)(cid:74)(cid:55)(cid:1)(cid:63)(cid:68)(cid:74)(cid:59)(cid:68)(cid:73)(cid:63)(cid:76)(cid:59)(cid:34)(cid:1)(cid:69)(cid:75)(cid:72)(cid:1)
(cid:57)(cid:62)(cid:55)(cid:66)(cid:66)(cid:59)(cid:68)(cid:61)(cid:59)(cid:1)(cid:63)(cid:73)(cid:1)(cid:74)(cid:69)(cid:1)(cid:63)(cid:67)(cid:70)(cid:72)(cid:69)(cid:76)(cid:59)(cid:1)
(cid:59)(cid:68)(cid:59)(cid:72)(cid:61)(cid:79)(cid:1)(cid:59)(cid:60)(cid:60)(cid:63)(cid:57)(cid:63)(cid:59)(cid:68)(cid:57)(cid:79)(cid:1)
(cid:55)(cid:68)(cid:58)(cid:1)(cid:67)(cid:63)(cid:68)(cid:63)(cid:67)(cid:63)(cid:73)(cid:59)(cid:1)(cid:57)(cid:55)(cid:72)(cid:56)(cid:69)(cid:68)(cid:1)
(cid:59)(cid:67)(cid:63)(cid:73)(cid:73)(cid:63)(cid:69)(cid:68)(cid:73)(cid:1)(cid:63)(cid:68)(cid:74)(cid:59)(cid:68)(cid:73)(cid:63)(cid:74)(cid:79)

28

Telstra Annual Report 2013

ENVIRONMENT STRATEGY 
This year, we reviewed our environmental 
capabilities, risks and opportunities. 
We also commissioned an independent 
review to assess the environmental 
issues that matter most to our 
stakeholders and have the potential for 
the biggest impact on the company.  
(cid:55)(cid:105)(cid:1)(cid:87)(cid:1)(cid:104)(cid:91)(cid:105)(cid:107)(cid:98)(cid:106)(cid:34)(cid:1)(cid:109)(cid:91)(cid:1)(cid:94)(cid:87)(cid:108)(cid:91)(cid:1)(cid:90)(cid:91)(cid:108)(cid:91)(cid:98)(cid:101)(cid:102)(cid:91)(cid:90)(cid:1)(cid:87)(cid:1)
framework for an enterprise-wide 
environmental strategy, which will focus 
on three key areas - improving the energy 
efﬁciency of our operations, reducing 
environmental impact in our supply chain 
and developing greener products and 
services. We will ﬁnalise the strategy and 
(cid:89)(cid:101)(cid:99)(cid:99)(cid:91)(cid:100)(cid:89)(cid:91)(cid:1)(cid:95)(cid:99)(cid:102)(cid:98)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:95)(cid:100)(cid:1)(cid:60)(cid:79)(cid:39)(cid:42)(cid:36)(cid:1)

ENERGY EFFICIENCY  
AND CARBON EMISSIONS
Our largest environmental impact is 
associated with our networks, which 
need large amounts of energy to power 
equipment and keep it at optimum 
(cid:101)(cid:102)(cid:91)(cid:104)(cid:87)(cid:106)(cid:95)(cid:100)(cid:93)(cid:1)(cid:106)(cid:91)(cid:99)(cid:102)(cid:91)(cid:104)(cid:87)(cid:106)(cid:107)(cid:104)(cid:91)(cid:36)(cid:1)(cid:63)(cid:100)(cid:1)(cid:60)(cid:79)(cid:39)(cid:41)(cid:34)(cid:1)(cid:100)(cid:91)(cid:106)(cid:109)(cid:101)(cid:104)(cid:97)(cid:1)
(cid:91)(cid:100)(cid:91)(cid:104)(cid:93)(cid:111)(cid:1)(cid:107)(cid:105)(cid:91)(cid:1)(cid:109)(cid:87)(cid:105)(cid:1)(cid:87)(cid:104)(cid:101)(cid:107)(cid:100)(cid:90)(cid:1)(cid:46)(cid:44)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)(cid:101)(cid:92)(cid:1)(cid:101)(cid:107)(cid:104)(cid:1)
total energy consumption.

(cid:63)(cid:100)(cid:1)(cid:60)(cid:79)(cid:39)(cid:41)(cid:34)(cid:1)(cid:89)(cid:87)(cid:104)(cid:88)(cid:101)(cid:100)(cid:1)(cid:91)(cid:99)(cid:95)(cid:105)(cid:105)(cid:95)(cid:101)(cid:100)(cid:105)(cid:1)(cid:95)(cid:100)(cid:106)(cid:91)(cid:100)(cid:105)(cid:95)(cid:106)(cid:111)(cid:1)(cid:109)(cid:87)(cid:105)(cid:1)
(cid:38)(cid:36)(cid:46)(cid:41)(cid:1)(cid:106)(cid:101)(cid:100)(cid:100)(cid:91)(cid:105)(cid:1)(cid:57)(cid:69)2e per terabyte of data, a 
33 per cent decrease on carbon emissions 
(cid:95)(cid:100)(cid:106)(cid:91)(cid:100)(cid:105)(cid:95)(cid:106)(cid:111)(cid:1)(cid:92)(cid:104)(cid:101)(cid:99)(cid:1)(cid:60)(cid:79)(cid:39)(cid:40)(cid:34)(cid:1)(cid:105)(cid:107)(cid:104)(cid:102)(cid:87)(cid:105)(cid:105)(cid:95)(cid:100)(cid:93)(cid:1)(cid:101)(cid:107)(cid:104)(cid:1) 
15 per cent reduction target.

(cid:77)(cid:91)(cid:1)(cid:91)(cid:110)(cid:102)(cid:91)(cid:89)(cid:106)(cid:1)(cid:89)(cid:101)(cid:100)(cid:106)(cid:95)(cid:100)(cid:107)(cid:91)(cid:90)(cid:1)(cid:95)(cid:99)(cid:102)(cid:104)(cid:101)(cid:108)(cid:91)(cid:99)(cid:91)(cid:100)(cid:106)(cid:105)(cid:1)(cid:95)(cid:100)(cid:1)
our carbon emissions efﬁciency due to 
better utilisation of network equipment 
and a continued dedicated investment  
in energy and carbon efﬁciency projects.  
We have set a target for a further 15 per 
cent reduction in emissions intensity  
(cid:95)(cid:100)(cid:1)(cid:60)(cid:79)(cid:39)(cid:42)(cid:36)

Total energy consumption (stationary and 
(cid:106)(cid:104)(cid:87)(cid:100)(cid:105)(cid:102)(cid:101)(cid:104)(cid:106)(cid:31)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:106)(cid:101)(cid:106)(cid:87)(cid:98)(cid:1)(cid:89)(cid:87)(cid:104)(cid:88)(cid:101)(cid:100)(cid:1)(cid:91)(cid:99)(cid:95)(cid:105)(cid:105)(cid:95)(cid:101)(cid:100)(cid:105)(cid:1)
(cid:30)(cid:73)(cid:89)(cid:101)(cid:102)(cid:91)(cid:1)(cid:39)(cid:34)(cid:1)(cid:40)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:41)(cid:31)(cid:1)(cid:90)(cid:91)(cid:89)(cid:104)(cid:91)(cid:87)(cid:105)(cid:91)(cid:90)(cid:1)(cid:88)(cid:111)(cid:1)(cid:39)(cid:36)(cid:45)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)
(cid:87)(cid:100)(cid:90)(cid:1)(cid:40)(cid:36)(cid:44)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)(cid:104)(cid:91)(cid:105)(cid:102)(cid:91)(cid:89)(cid:106)(cid:95)(cid:108)(cid:91)(cid:98)(cid:111)(cid:34)(cid:1)(cid:105)(cid:95)(cid:100)(cid:89)(cid:91)(cid:1)(cid:60)(cid:79)(cid:39)(cid:40)(cid:36)(cid:1) 

This reduction was driven by decreases 
in electricity consumption across several 
key areas of our business. 

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PRINT DIRECTORIES
(cid:74)(cid:94)(cid:91)(cid:1)(cid:79)(cid:91)(cid:98)(cid:98)(cid:101)(cid:109)(cid:1)(cid:70)(cid:87)(cid:93)(cid:91)(cid:105)® and White Pages® 
(cid:30)(cid:102)(cid:104)(cid:95)(cid:100)(cid:106)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:101)(cid:100)(cid:98)(cid:95)(cid:100)(cid:91)(cid:31)(cid:1)(cid:94)(cid:87)(cid:108)(cid:91)(cid:1)(cid:104)(cid:91)(cid:89)(cid:91)(cid:95)(cid:108)(cid:91)(cid:90)(cid:1)(cid:89)(cid:87)(cid:104)(cid:88)(cid:101)(cid:100)(cid:1)
(cid:100)(cid:91)(cid:107)(cid:106)(cid:104)(cid:87)(cid:98)(cid:1)(cid:89)(cid:91)(cid:104)(cid:106)(cid:95)(cid:210)(cid:89)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:106)(cid:94)(cid:104)(cid:101)(cid:107)(cid:93)(cid:94)(cid:1)(cid:66)(cid:101)(cid:109)(cid:1)(cid:57)(cid:87)(cid:104)(cid:88)(cid:101)(cid:100)(cid:1)
(cid:55)(cid:107)(cid:105)(cid:106)(cid:104)(cid:87)(cid:98)(cid:95)(cid:87)(cid:1)(cid:105)(cid:95)(cid:100)(cid:89)(cid:91)(cid:1)(cid:60)(cid:91)(cid:88)(cid:104)(cid:107)(cid:87)(cid:104)(cid:111)(cid:1)(cid:40)(cid:38)(cid:39)(cid:38)(cid:36)(cid:1)(cid:63)(cid:100)(cid:1)(cid:40)(cid:38)(cid:39)(cid:40)(cid:34)(cid:1)
we supported four carbon reduction 
(cid:102)(cid:104)(cid:101)(cid:96)(cid:91)(cid:89)(cid:106)(cid:105)(cid:1)(cid:95)(cid:100)(cid:1)(cid:57)(cid:87)(cid:99)(cid:88)(cid:101)(cid:90)(cid:95)(cid:87)(cid:34)(cid:1)(cid:63)(cid:100)(cid:90)(cid:95)(cid:87)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:57)(cid:94)(cid:95)(cid:100)(cid:87)(cid:1)
(cid:106)(cid:94)(cid:104)(cid:101)(cid:107)(cid:93)(cid:94)(cid:1)(cid:102)(cid:107)(cid:104)(cid:89)(cid:94)(cid:87)(cid:105)(cid:95)(cid:100)(cid:93)(cid:1)(cid:44)(cid:43)(cid:34)(cid:41)(cid:39)(cid:47)(cid:1)(cid:106)(cid:101)(cid:100)(cid:100)(cid:91)(cid:105)(cid:1)(cid:101)(cid:92)(cid:1)
(cid:57)(cid:69)2(cid:91)(cid:1)(cid:101)(cid:92)(cid:92)(cid:105)(cid:91)(cid:106)(cid:105)(cid:36)(cid:1)(cid:55)(cid:105)(cid:1)(cid:102)(cid:87)(cid:104)(cid:106)(cid:1)(cid:101)(cid:92)(cid:1)(cid:101)(cid:107)(cid:104)(cid:1)(cid:101)(cid:100)(cid:93)(cid:101)(cid:95)(cid:100)(cid:93)(cid:1)
commitment, we will be purchasing 
carbon offsets in late 2013 to certify  
(cid:101)(cid:107)(cid:104)(cid:1)(cid:90)(cid:95)(cid:104)(cid:91)(cid:89)(cid:106)(cid:101)(cid:104)(cid:95)(cid:91)(cid:105)(cid:1)(cid:92)(cid:101)(cid:104)(cid:1)(cid:60)(cid:79)(cid:39)(cid:41)(cid:36)

We are committed to using paper from 
environmentally and socially responsible 
sources and Telstra is a member of the 
(cid:60)(cid:101)(cid:104)(cid:91)(cid:105)(cid:106)(cid:1)(cid:73)(cid:106)(cid:91)(cid:109)(cid:87)(cid:104)(cid:90)(cid:105)(cid:94)(cid:95)(cid:102)(cid:1)(cid:57)(cid:101)(cid:107)(cid:100)(cid:89)(cid:95)(cid:98)(cid:1)(cid:30)(cid:60)(cid:73)(cid:57)(cid:31)(cid:36)(cid:1)(cid:77)(cid:91)(cid:1)(cid:94)(cid:87)(cid:108)(cid:91)(cid:1)
taken steps and transitioned to ensure we 
(cid:107)(cid:105)(cid:91)(cid:1)(cid:60)(cid:73)(cid:57)(cid:1)(cid:89)(cid:91)(cid:104)(cid:106)(cid:95)(cid:210)(cid:91)(cid:90)(cid:1)(cid:102)(cid:87)(cid:102)(cid:91)(cid:104)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:89)(cid:101)(cid:108)(cid:91)(cid:104)(cid:88)(cid:101)(cid:87)(cid:104)(cid:90)(cid:1)
and a number of our directories have 
(cid:104)(cid:91)(cid:89)(cid:91)(cid:95)(cid:108)(cid:91)(cid:90)(cid:1)(cid:92)(cid:101)(cid:104)(cid:99)(cid:87)(cid:98)(cid:1)(cid:60)(cid:73)(cid:57)(cid:1)(cid:89)(cid:91)(cid:104)(cid:106)(cid:95)(cid:210)(cid:89)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:36)

(cid:69)(cid:107)(cid:104)(cid:1)(cid:101)(cid:88)(cid:96)(cid:91)(cid:89)(cid:106)(cid:95)(cid:108)(cid:91)(cid:1)(cid:95)(cid:105)(cid:1)(cid:106)(cid:101)(cid:1)(cid:99)(cid:87)(cid:95)(cid:100)(cid:106)(cid:87)(cid:95)(cid:100)(cid:1)(cid:87)(cid:1)(cid:47)(cid:44)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:1)
national recycling and reuse rate for our 
(cid:90)(cid:95)(cid:104)(cid:91)(cid:89)(cid:106)(cid:101)(cid:104)(cid:95)(cid:91)(cid:105)(cid:1)(cid:196)(cid:1)(cid:95)(cid:100)(cid:1)(cid:60)(cid:79)(cid:39)(cid:41)(cid:1)(cid:95)(cid:106)(cid:1)(cid:109)(cid:87)(cid:105)(cid:1)(cid:47)(cid:46)(cid:1)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:91)(cid:100)(cid:106)(cid:36)(cid:1) 
We promote household recycling by 
providing information on recycling options 
and the associated environmental beneﬁts.

OFFICE, BILLING  
AND PRINTING PAPER
Paper usage fell by 24 per cent this year. 
(cid:56)(cid:95)(cid:98)(cid:98)(cid:95)(cid:100)(cid:93)(cid:1)(cid:102)(cid:87)(cid:102)(cid:91)(cid:104)(cid:1)(cid:89)(cid:101)(cid:100)(cid:106)(cid:95)(cid:100)(cid:107)(cid:91)(cid:105)(cid:1)(cid:87)(cid:1)(cid:90)(cid:101)(cid:109)(cid:100)(cid:109)(cid:87)(cid:104)(cid:90)(cid:1)(cid:106)(cid:104)(cid:91)(cid:100)(cid:90)(cid:1)
as more customers opt for online billing. 
Use of printing paper also decreases with 
the move to online advertising reducing 
(cid:101)(cid:107)(cid:104)(cid:1)(cid:100)(cid:91)(cid:91)(cid:90)(cid:1)(cid:106)(cid:101)(cid:1)(cid:102)(cid:104)(cid:95)(cid:100)(cid:106)(cid:1)(cid:95)(cid:100)(cid:92)(cid:101)(cid:104)(cid:99)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:211)(cid:111)(cid:91)(cid:104)(cid:105)(cid:36)(cid:1)
(cid:55)(cid:1)(cid:102)(cid:104)(cid:95)(cid:100)(cid:106)(cid:95)(cid:100)(cid:93)(cid:1)(cid:95)(cid:100)(cid:95)(cid:106)(cid:95)(cid:87)(cid:106)(cid:95)(cid:108)(cid:91)(cid:1)(cid:95)(cid:100)(cid:106)(cid:104)(cid:101)(cid:90)(cid:107)(cid:89)(cid:91)(cid:90)(cid:1)(cid:95)(cid:100)(cid:1)(cid:101)(cid:107)(cid:104)(cid:1)
(cid:89)(cid:101)(cid:104)(cid:102)(cid:101)(cid:104)(cid:87)(cid:106)(cid:91)(cid:1)(cid:94)(cid:91)(cid:87)(cid:90)(cid:103)(cid:107)(cid:87)(cid:104)(cid:106)(cid:91)(cid:104)(cid:105)(cid:1)(cid:95)(cid:100)(cid:1)(cid:58)(cid:91)(cid:89)(cid:91)(cid:99)(cid:88)(cid:91)(cid:104)(cid:1)
resulted in a 14 per cent decrease in 
(cid:101)(cid:92)(cid:210)(cid:89)(cid:91)(cid:1)(cid:102)(cid:87)(cid:102)(cid:91)(cid:104)(cid:1)(cid:107)(cid:105)(cid:91)(cid:36)(cid:1)(cid:77)(cid:91)(cid:1)(cid:91)(cid:110)(cid:102)(cid:91)(cid:89)(cid:106)(cid:1)(cid:106)(cid:94)(cid:91)(cid:105)(cid:91)(cid:1) 
trends to continue. 

SUSTAINABILITY

E-WASTE
In FY13, we reused or sent to recycling 
facilities around 99 per cent of our own 
e-waste, which is mostly end-of-life 
network equipment and batteries. There 
was a signiﬁcant increase in the amount 
of e-waste collected due to the number of 
batteries replaced at Telstra’s exchanges. 
We also assist our customers to deal 
more effectively with e-waste. In FY13 we 
collected 14 tonnes of mobile phones and 
accessories from Telstra retail stores, 
ofﬁces and repair centres for recycling 
through the MobileMuster program. 

TOTAL CARBON EMISSIONS  
(SCOPE 1, 2 & 3) 

CARBON EMISSIONS 
INTENSITY

Tonnes of carbon dioxide  
equivalent (tCO2e)

Tonnes of carbon dioxide  
equivalent per terabyte (tCO2e/TB)

1.93

1.24

0.83

,

4
1
7
9
5
6
1

,

,

5
2
9
6
7
6
1

,

,

2
1
7
3
3
6
1

,

FY11

FY12

FY13

FY11

FY12

FY13

WE REDUCED CARBON 
EMISSIONS  
INTENSITY BY 33%

Telstra Annual Report 2013

29

BOARD OF
DIRECTORS

Ms Livingstone has been a non-executive Director since 
November 2000, was appointed as Chairman in May 2009 
and last re-elected in 2011. She is the Chairman of the 
Nomination Committee, a member of the Audit and 
Remuneration Committees and served on the Technology 
Committee#. 

Ms Livingstone is a Chartered Accountant and has held 
several ﬁnance and general management roles primarily 
in the medical devices sector. Ms Livingstone was the 
Chief Executive of Cochlear Limited from 1994 to 2000. 
She was Chairman of CSIRO from 2001 to 2006 and has 
also served on the boards of Goodman Fielder Limited and 
Rural Press Limited. In 2008, Ms Livingstone was appointed 
an Ofﬁcer of the Order of Australia for service to the 

development of Australian science, technology and 
innovation policies to the business sector.

Other listed companies - past three years
Director, WorleyParsons Limited (from 2007), Macquarie 
Bank Limited (2003 - 2013) and Macquarie Group Limited 
(2007 - 2013).

Other directorships/appointments 
Member, Advisory Board for the John Grill Centre for 
Project Leadership at University of Sydney (from 2013) 
and New South Wales Innovation and Productivity Council 
(from 2007); President, Australian Museum Trust (from 
2012), Director, The George Institute (from 2012) and 
Saluda Medical Pty Ltd (from 2013).

CATHERINE B LIVINGSTONE AO 
BA (Hons), Hon DBus (Macquarie), 
Hon DSc (Murdoch), FCA, FTSE, 
FAICD

Mr Thodey became Chief Executive Ofﬁcer and an 
executive Director in May 2009.

Mr Thodey joined Telstra in April 2001 as Group 
Managing Director of Telstra Mobiles and in December 
2002 was appointed as Group Managing Director 
Telstra Enterprise and Government where he 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 
Executive Ofﬁcer of IBM Australia/New Zealand and 
previously held several senior executive positions in 
marketing and sales with IBM across Asia Paciﬁc.  

Mr Cousins has been a non-executive Director since 
November 2006. He is a member of the Nomination and 
Remuneration Committees and was last re-elected in 2012. 

Mr Cousins has more than 26 years experience as 
a company director. Mr Cousins was previously the 
Chairman of George Patterson Australia and is a 
former Director of Publishing and Broadcasting 
Limited, the Seven Network, Hoyts Cinemas group 
and NM Rothschild & Sons Limited. He was the ﬁrst 
Chief Executive of Optus Vision and before that held 
a number of executive positions at George Patterson, 
including Chief Executive of George Patterson Australia.  

Mr Higgins has been a non-executive Director 
since September 2009. He is a member of the Audit 
Committee and was last re-elected in 2012. 

Mr Higgins is an experienced company director who 
has worked at very senior levels of both government 
and private sectors. He has served on the boards of a 
wide range of listed companies, private companies, 
government business enterprises and international 
organisations, including as Chairman of the Snowy 
Mountains Hydro Electric Scheme and the Global 
Carbon Capture and Storage Institute. From 2003 to 
2004, he was Chairman of the then Prime Minister’s 

Mr Thodey holds a Bachelor of Arts in Anthropology and 
English from Victoria University in New Zealand and 
attended the Kellogg Post-Graduate School General 
Management Program at Northwestern University in 
Chicago.

In January 2013, Mr Thodey joined the Board of the GSM 
Association, the global body made up of carriers and 
related companies that supports the standardisation 
and deployment of mobile technology around the world. 
Mr Thodey was previously Chairman of TelstraClear 
New Zealand and Basketball Australia.

Mr Cousins was previously a consultant to the Prime 
Minister. He was also Chairman of Cure Cancer Australia 
and has served on the boards of the Insurance Australia 
Group Ltd, Globe International Limited and a number of 
cultural institutions and not for proﬁt foundations.

Other directorships/appointments
Chairman of the St James Ethics Foundation (from 2010).

Energy Task Force and prior to that he was Secretary of 
the Department of Industry, Science and Resources.

Other listed companies - past three years
Director, APA Group (from 2004), Argo Investments 
Limited (from 2011), Leighton Holdings Limited (from 
2013) and Ricegrowers Limited (SunRice) (2005 - 2012).

Other directorships/appointments
Director, St. James Ethics Foundation (from 2010).

Mr Mullen has been a non-executive Director since 
July 2008. He is the Chairman of the Remuneration 
Committee, a member of the Nomination Committee 
and was last re-elected in 2011.

Chief Executive Ofﬁcer of DHL Express Asia Paciﬁc in 
2002 and Joint Chief Executive Ofﬁcer, DHL Express 
in 2005. Mr Mullen was Global Chief Executive Ofﬁcer, 
DHL Express from 2006 to 2009. 

Mr Mullen is the Managing Director and Chief Executive 
Ofﬁcer of Asciano Ltd and has served in that role 
since 2011. He has worked for over two decades 
in a multitude of senior positions with different 
multinationals including 10 years with the TNT Group, 
with two years as its Chief Operating Ofﬁcer. From 1991 
to 1994, he held the position of Chief Executive Ofﬁcer 
of TNT Express Worldwide. Mr Mullen joined Deutsche 
Post World Net (DPWN) as an Advisor in 1994, becoming 

Other listed companies - past three years
Director, Asciano Ltd (from 2011), Brambles Limited 
(2009 - 2011), Embarq Corporation USA (2006 - 2009) 
and MAp Airports Limited (2010 - 2011).

Other directorships/appointments
Member, Australian Graduate School of Management 
(from 2005).

DAVID I THODEY 
BA, FAICD

GEOFFREY A COUSINS

RUSSELL A HIGGINS AO
BEc, FAICD

JOHN P MULLEN

30

Telstra Annual Report 2013

BOARD OF DIRECTORS

Dr Scheinkestel was appointed as a non-executive 
Director in August 2010 and elected in October 2010.  
She is Chairman of the Audit Committee.

Dr Scheinkestel is an experienced company director with a 
background as a senior banking executive in international 
and project ﬁnancing. She currently consults to 
government, corporate and institutional clients in areas 
such as corporate governance, strategy and ﬁnance. She 
is also an Associate Professor at the Melbourne Business 
School at Melbourne University and is a member of the 
Takeovers Panel. Dr Scheinkestel held a number of roles in 
the utility sector including Chairman of South East Water 
Limited from 2002 to 2005 and the Energy 21 and Stratus 

Gas Group from 1997 to 1999. She has also served on a 
range of public and private sector boards including, more 
recently, AMP Limited and its funds management and 
banking subsidiaries, Mayne Group Limited and Mayne 
Pharma Limited, Medical Beneﬁts Fund of Australia Ltd, 
Newcrest Mining Limited and North Limited. In 2003, Dr 
Scheinkestel was awarded a centenary medal for services 
to Australian society in business leadership.

Other listed companies - past three years
Director, Insurance Australia Group Limited (from 2013), 
Orica Limited (from 2006), Paciﬁc Brands Limited (2009 - 
2013) and AMP Limited (2003 - 2013).

Ms Seale was appointed as a non-executive Director in 
May 2012 and subsequently elected in October 2012. 
She is a member of the Audit Committee.

Ms Seale has over 20 years experience in senior 
executive roles in Australia and overseas, including 
in global publishing and the transition of traditional 
business models to adapt and thrive in a digital 
environment as well as sales and marketing. Most 
recently she was the Managing Director of Random 
House, Australia (with managerial responsibility for 
Random House New Zealand) and President, Asia 
Development for Random House Inc, the global company. 

Previously, she was Chief Executive Ofﬁcer for The 
Macquarie Dictionary and Lansdowne Publishing from 
1997 to 1999. Ms Seale was the Chief Executive Ofﬁcer 
for the Juvenile Diabetes Research Foundation from 
1994 to 1997. She also served on the boards of the 
Australian Publishers Association and the Powerhouse 
Museum, and on the Council of Chief Executive Women, 
chairing its Scholarship Committee from 2011 to 2012. 

Other directorships/appointments
Director, Random House Australia, New Zealand  
(from 2001) and Sydney Writers Festival (from 2011). 

Mr Vamos joined the Telstra Board as a non-
executive Director in September 2009 and was last 
re-elected in 2012. He is a member of the Nomination 
and Remuneration Committees and served on the 
Technology Committee#.

after spending 14 years in senior management roles 
at IBM Australia. He is the founding President of the 
Society for Knowledge Economics (SKE), a not-for-
proﬁt think tank that encourages new and better 
practices in leadership and management.

Mr Vamos has over 30 years experience in the 
information technology, internet and online industry. 
He led Microsoft Australia and New Zealand from 
2003 to January 2007 before moving to the United 
States to become the company’s online business head 
of worldwide Sales and International Operations. 
Previously, he was Chief Executive Ofﬁcer of ninemsn. 
Mr Vamos also worked for Apple Computer in the 1990s 

Other listed companies - past three years
Director, David Jones (from 2012).

Other directorships/appointments
President, Society for Knowledge Economics (from 
2005); Director, Medibank Private Limited (from 
2011), BDB Soti Pty Ltd (from 2012) and eGeneration 
Investments Pty Limited (from 1999).

Mr Zeglis has been a non-executive Director since May 
2006. He served as Chairman of the Technology Committee 
from 2009 to 2013# and was last re-elected in 2012.

Mr Zeglis has had a long and distinguished career in 
the US telecommunications sector. He joined AT&T in 
1984, and was elected as President of AT&T in 1998 
and Chairman and Chief Executive Ofﬁcer of the AT&T 
Wireless Group in 1999. He continued as CEO of AT&T 
Wireless until retiring in November 2004 following the 
company’s sale to Cingular Wireless. He has also served 
on the boards of Georgia Paciﬁc Corporation, Illinois 
Power Company and Sara Lee Corporation.

Mr Zeglis has a legal background, and became 
partner with the law ﬁrm Sidley & Austin in 1978. 
He was General Counsel of AT&T from 1986 to 1998. 
His qualiﬁcations include a BSc in Finance from the 
University of Illinois, and a JD in Law from Harvard.

Other listed companies - past three years
Director, Helmerich & Payne Corporation (from 1989).

Other directorships/appointments
Director, The Duchossois Group (including AMX) (from 
2011) and State Farm Automobile Insurance (from 2004).

NORA L SCHEINKESTEL 
LLB(Hons), PhD, FAICD 

MARGARET L SEALE
BA, FAICD

STEVEN M VAMOS 
BEng (Hons) 

JOHN D ZEGLIS 
BSc Finance, JD Law

# The Technology Committee ceased operation effective 14 June 2013.

Telstra Annual Report 2013

31

SENIOR 
MANAGEMENT TEAM

DAVID I THODEY
CHIEF EXECUTIVE OFFICER  
AND EXECUTIVE DIRECTOR

TRACEY GAVEGAN
GROUP MANAGING DIRECTOR,  
HUMAN RESOURCES

GORDON BALLANTYNE 
CHIEF CUSTOMER OFFICER,  
TELSTRA CUSTOMER SALES & SERVICE

Telstra Customer Sales & Service is 
responsible for providing sales and 
service to all of Telstra’s customer 
segments (Consumer, Business, and 
Enterprise and Government) through a 
range of channels, including call centres, 
Telstra Shops and Dealers, Business 
Centres, account managers and online 
through telstra.com.

TIMOTHY CHEN
PRESIDENT AND GROUP MANAGING 
DIRECTOR, TELSTRA INTERNATIONAL GROUP

Telstra International Group is responsible 
for Telstra’s international assets and 
connectivity, including Hong Kong’s 
leading mobile operator CSL, Telstra 
Global’s networks and managed services 
business and Telstra’s China-based 
search and advertising businesses.

RICK ELLIS
GROUP MANAGING DIRECTOR,  
TELSTRA MEDIA GROUP

The Telstra Media Group is responsible for 
Telstra’s end-to-end media capabilities, 
including Sensis, BigPond, Trading Post, 
IPTV, Foxtel and content agreements.

Human Resources is responsible for 
organisational design and change; 
implementation of people and culture 
initiatives; leadership development, 
talent and succession management; 
health, safety and wellbeing; workplace 
relations and all employment and 
remuneration policies.

STUART LEE
GROUP MANAGING DIRECTOR,  
TELSTRA WHOLESALE

Telstra Wholesale is responsible 
for the provision of a wide range of 
telecommunication products and 
services delivered over Telstra networks 
and associated support systems to non-
Telstra branded carriers, carriage service 
providers and internet service providers 
as well as NBN Co Limited. 

KATE MCKENZIE
GROUP MANAGING DIRECTOR,  
TELSTRA INNOVATION, PRODUCTS  
AND MARKETING

Telstra Innovation, Products and 
Marketing is responsible for innovation, 
product and pricing across Telstra, as 
well as the Telstra brand, sponsorship, 
promotion and advertising direction.

CARMEL MULHERN
GROUP GENERAL COUNSEL,  
TELSTRA LEGAL SERVICES

Telstra Legal Services provides 
operational and strategic legal support 
and advice across the company.

ROBERT NASON
GROUP MANAGING DIRECTOR,  
BUSINESS SUPPORT AND IMPROVEMENT

Business Support and Improvement 
is responsible for credit management, 
billing and procurement, as well as 
driving change that improves the 
customer experience and delivering 
Telstra-wide productivity improvements.

ANDREW PENN
CHIEF FINANCIAL OFFICER,  
FINANCE AND STRATEGY

Finance and Strategy is responsible 
for corporate planning and strategy, 
accounting and administration, treasury, 
risk management and assurance, 
corporate security, investor relations and 
mergers and acquisitions. 

BRENDON RILEY
CHIEF OPERATIONS OFFICER,  
TELSTRA OPERATIONS

Telstra Operations is responsible for the 
overall planning, design, engineering, 
construction, maintenance and 
restoration of Telstra’s ﬁxed and mobile 
networks, technology and information 
technology.

TONY WARREN
GROUP MANAGING DIRECTOR,  
CORPORATE AFFAIRS

Corporate Affairs is responsible 
for Telstra’s internal and external 
communications, government relations, 
regulatory affairs and sustainability 
(including the Telstra Foundation).

32

Telstra Annual Report 2013

CORPORATE GOVERNANCE 
STATEMENT 

CORPORATE GOVERNANCE STATEMENT

We are committed to excellence in corporate governance, 
transparency and accountability.  This is essential for the long 
term performance and sustainability of our Company, and to 
protect and enhance the interests of our shareholders and other 
stakeholders.  We regularly review our governance arrangements 
as well as developments in market practice, expectations and 
regulation. 

Throughout FY13, we have complied with the ASX Corporate 
Governance Council’s Corporate Governance Principles and 
Recommendations (‘ASX Recommendations’).  A checklist cross-
referencing the ASX Recommendations to the relevant disclosures 
in this section or other parts of our Annual Report is provided in the 
corporate governance section of our website at 
www.telstra.com.au/abouttelstra/company-overview/
governance/.  Supplementary detail on our governance 
arrangements, including copies of the Board and Board 
Committee Charters and key policies, can also be found in the 
corporate governance section of our website.

THE BOARD OF DIRECTORS

The Board

The Board is responsible, and is accountable to shareholders, for 
managing Telstra’s business. In addition to the matters required 
by law to be approved by the Board, the key responsibilities of the 
Board include:

• approving our strategy and corporate plan and monitoring the 
implementation of our strategy and performance against the 
corporate plan

• appointing, assessing the performance of and determining the 
remuneration of the CEO, as well as approving the appointment 
and remuneration of and overseeing the performance of the 
CEO’s Leadership Team

• overseeing our financial position and approving decisions 

concerning our capital management policy, including share buy 
backs, dividend policy and the payment of dividends

• overseeing our external and internal audit activities, internal 
control framework and reporting systems and strategic and 
operational risk management systems

• monitoring and influencing our culture, reputation, ethical 

standards and legal and regulatory compliance, and 
overseeing our corporate governance framework
• monitoring our work health and safety performance
• approving our overall remuneration framework, and
• approving certain matters relating to diversity.

The Board has adopted a Board Charter that details its role and 
responsibilities (a copy of which can be found in the corporate 
governance section of our website). 

The CEO, together with the senior management team, is 
responsible to the Board for the development and implementation 
of our strategy and overall management and performance of our 
Company. The Board has delegated responsibility for day-to-day 
management of Telstra to the CEO and there is a formal 
delegations structure in place which sets out the powers 
delegated to the CEO and those specifically retained by the Board.  
This is complemented by a formal delegations structure from the 
CEO to our employees.

Our Chairman

The role of our Chairman and CEO cannot be fulfilled by the same 
person and our Chairman must be an independent Director 
appointed by the Board. Our Chairman, Catherine Livingstone, is 
an independent non-executive Director. She has been a Director of 
Telstra since 2000 and was elected Chairman in 2009. The 
Chairman’s overarching responsibilities are to provide 
appropriate leadership to the Board and Telstra and to ensure the 
Board fulfils its obligations under its Charter. The Chairman’s 
responsibilities are set out in more detail in the Board Charter.

Board Composition and Director Appointment

There are currently nine Directors on the Board, comprising eight 
non-executive Directors and the CEO. Details of the Directors, 
including their qualifications and experience, together with 
details of the year of initial appointment and re-election (where 
applicable), can be found in the Board of Directors section of this 
Annual Report.  John Stocker retired as a non-executive Director 
at the conclusion of our 2012 Annual General Meeting (held on 16 
October 2012). Tim Chen retired as a non-executive Director with 
effect from 5 October 2012. There were no new Directors 
appointed to the Board during FY13.  

The Board actively seeks to ensure that it has an appropriate mix 
of diversity (including gender diversity), skills, experience and 
expertise to enable it to effectively discharge its responsibilities 
and to be well equipped to help our Company navigate the range of 
challenges we face. 

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

33

CORPORATE GOVERNANCE 
STATEMENT 

Matters relating to Board (and Board Committee) composition are 
considered by the Board and Nomination Committee in 
accordance with the framework set out in the Nomination 
Committee Charter and through processes implemented by the 
Board. To assist in identifying areas of focus and maintaining an 
appropriate experience mix, the Board developed a skills matrix 
which is reviewed by the Board on a regular basis.  It is an 
important, but not the only, basis of criteria applying to director 
appointments. 

The skills, experience and expertise areas which the Board 
currently considers to be particularly relevant include those in 
telecommunications, information technology, multimedia, 
marketing, retail and sales, infrastructure, government relations, 
Australian and international business, finance and legal. 
Information regarding Board diversity can be found in the 
“Diversity and Inclusion at Telstra” section below. 

Our process for the selection, nomination and appointment of 
Directors involves a formal selection process undertaken by the 
Board, and an executive search firm is generally engaged to assist 
in the process. As part of this process, the Board establishes 
criteria regarding the general qualifications and experience, as 
well as the specific qualifications, a candidate should possess.   

Formal letters are provided to all new Directors setting out the key 
terms and conditions of their appointment. Any new Director 
appointed by the Board during the year is required to stand for 
election at the next Annual General Meeting (AGM). 

Director Induction Training and Continuing Education

All new Directors participate in a formal induction process co-
ordinated by the Company Secretary. This induction process 
includes briefings on our financial, strategic, operational and risk 
management policies and processes, our governance framework 
(including key policies), culture and values and key developments 
in our Company and the sectors and environments in which we 
operate. 

We also have in place a continuing education program for 
Directors which is part of the annual Board cycle, with specific 
sessions scheduled around Board meeting dates. 

Board Tenure

In accordance with the ASX Listing Rules, we hold an election of 
Directors at our AGM each year. The Directors stand for re-election 
in accordance with the process set out in our Constitution, which 
provides that no non-executive Director may hold office for more 
than three years, or beyond the third AGM following their 
appointment, whichever is the later, without re-election. If no 
Director would otherwise be required by our Constitution to 
submit for election or re-election then, in accordance with the 
procedure in our Constitution, any non-executive Director who 
wishes to retire and offer himself or herself for re-election may 
stand, otherwise the non-executive Director who has been longest 
in office since their last election or appointment is required to 
retire and stand for re-election. The tenure of the CEO as a Director 
is linked to his or her executive office and therefore the CEO is not 
required to stand for re-election through this process. 

A recommendation to re-elect a Director at the end of his/her term 
is not automatic. Prior to each AGM, the Board determines if it will 
recommend to shareholders that they vote in favour of the re-
election of the Directors standing for re-election. This decision is 
made by the Board, having regard to the outcome of the annual 
Board performance review and any other matters it considers 
relevant.

In recognition of the importance of Board renewal and succession 
planning, the Board has adopted the following principles in 
relation to Board and Board Committee tenure:

• Director Positions - where a non-executive Director is 

approaching the end of his/her third 3-year term, a more formal 
review of his or her continuing directorship should take place, 
taking into account broader Board renewal and Board 
composition considerations and the requirements of the 
Telstra Corporation Act 

• Board Committee Chair Positions - the maximum term for a 
non-executive Director to hold the position of Chairman of a 
Board Committee is generally 5 years, and

• Board Committee Membership - Committee membership 

should rotate every 3-5 years, subject to considerations of 
Committee succession planning and the overall composition/
skills/experience of the Committee.

Director Independence

The Board recognises the important contribution independent 
Directors make to good corporate governance.  All Directors, 
whether independent or not, are required to act in the best 
interests of Telstra and to exercise unfettered and independent 
judgment. The Board intends that the CEO be the only executive 
Director and that all non-executive Directors should also be 
independent Directors. 

The Board assesses, at least annually, the independence of each 
Director. We consider that an independent Director is a non-
executive Director who is free of any business or other relationship 
that could materially interfere with or could reasonably be 
perceived to materially interfere with the exercise of his or her 
unfettered and independent judgement and ability to act in 
Telstra’s best interests. Materiality is assessed on a case-by-case 
basis from the perspective of both Telstra and the relevant 
Director, and consideration is given to both qualitative and 
quantitative factors. 

When assessing the independence of a Director, the Board 
considers the relationships potentially affecting the independent 
status of a director as described in Box 2.1 of the ASX 
Recommendations. The Board may determine that a Director is 
independent notwithstanding the existence of a relationship of 
the kind referred to above. However, in such a case, the Board will 
disclose the reasons for making its determination.

If at any time during the year a Director ceases or may have ceased 
to be independent, he/she is required to advise the Chairman 
immediately. Where the Board determines a Director is no longer 
independent, we will make an announcement to the market.

34

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

CORPORATE GOVERNANCE STATEMENT

With the exception of the CEO, all Directors are non-executive 
Directors and have been determined by the Board to be 
independent. During FY13, no non-executive Director had any 
relationship that could materially interfere with, or be perceived to 
materially interfere with, his or her unfettered and independent 
judgement and ability to act in Telstra’s best interests.

Conflicts of Interests

In accordance with the requirements of the Corporations Act and 
our Constitution, Directors must declare any conflict of interest 
they may have, and follow the procedures set out in our Directors’ 
Interests Policy including, in certain circumstances, to abstain 
from participating in any discussion or voting on matters in which 
they have a material personal interest. 

Review of Board and Director Performance 

The Board reviews its performance annually (including its 
performance against the requirements of its Charter), the 
performance of individual Committees and the performance of 
individual Directors, including the performance of the Chairman 
as Chairman of the Board. 

These performance reviews are conducted both internally and, on 
a periodic basis, externally with the assistance of a facilitator. In 
line with this approach and on the basis that the FY12 review was 
undertaken with the assistance of an external facilitator, the FY13 
review of Board, Committee and Director performance was 
conducted internally, led by the Chairman.  The process 
comprised:

(a) a whole of Board discussion in relation to what currently 

works well and areas for improvement

(b) one-on-one review meetings between our Chairman and each 

Director, and

(c) a review of the Chairman’s performance which was facilitated 

by the Chairman of the Audit Committee.

The review included consideration of matters relating to strategic 
settings, the Board’s agenda, papers and presentations, Board 
meeting processes and protocols and the relationship with 
management.

A review was also undertaken by each Board Committee in respect 
of its performance during FY13.

The findings and recommendations of the reviews were provided 
to the Board.  

The Board annually reviews the performance of the CEO against 
agreed performance measures and other relevant factors. The 
CEO undertakes a similar exercise in relation to the senior 
executives. The results of the CEO’s annual performance and 
review of the senior executives are then approved by the Board. 
Details regarding performance evaluations for the CEO and senior 
executives are set out in our Remuneration Report (which forms 
part of our Directors’ Report). 

Board Access to Management and Independent 
Professional Advice

Directors have complete access to our senior management 
through the Chairman, CEO or Company Secretary at any time. In 
addition to regular presentations by senior management at Board 
meetings, Directors may seek briefings from senior management 
on specific matters.

The Board has the authority to conduct or direct any investigation 
required to fulfil its responsibilities and has the ability to retain, at 
Telstra’s expense, such legal, accounting or other advisers, 
consultants or experts as it considers necessary from time to time 
in the performance of its duties.  All Committees of the Board have 
access to independent professional advice on this basis. In certain 
circumstances, each Director has the right to seek independent 
professional advice at Telstra’s expense within specified limits.

Company Secretary

The Company Secretary reports directly to the Board through the 
Chairman, and all Directors have access to the Company 
Secretary. The Board is supported in governance and 
administration by the Company Secretary whose responsibilities 
include coordinating all Board business (including meetings, 
agendas, board papers and minutes, and monitoring the 
completion of actions arising from Board meetings), retaining 
independent professional advisors at the request of the Board, 
Board Committee or as permitted under the Board Charter, and 
attending to certain statutory requirements relating to Telstra. 

BOARD COMMITTEES 

As at August 2013, the following three standing Committees assist 
the Board in carrying out its responsibilities:

• Audit Committee
• Nomination Committee, and
• Remuneration Committee.

Each Committee operates in accordance with a written Charter 
approved by the Board, copies of which can be found in the 
corporate governance section of our website. The role, Charter, 
performance and membership of each Committee are reviewed 
each year. 

Only independent, non-executive Directors can serve on Board 
Committees. The Board appoints the members and the Chairman 
of each Committee.  In addition to the membership requirements 
applying to each Committee as set out in its Charter, each 
Committee member must have the capacity to devote the required 
time and attention to prepare for, and attend, Committee 
meetings.  Following each Committee meeting, the Board receives 
a report from that Committee on its deliberations, conclusions 
and recommendations. 

An overview of the roles and responsibilities, composition, and 
membership as at 30 June 2013, of our three standing 
Committees is provided overleaf. 

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

35

CORPORATE GOVERNANCE 
STATEMENT 

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36

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CORPORATE GOVERNANCE STATEMENT

During FY13, the Technology Committee also assisted the Board. 
The purpose of the Committee was primarily educative and its role 
was to review technology developments which may be relevant to 
our business. All Directors were encouraged to attend Committee 
meetings, which were scheduled to coincide with Board meetings. 
In light of the fact that all Board members generally attended 

Technology Committee meetings, it was decided that from June 
2013 the matters that were previously considered by the 
Committee will now be considered by the Board at dedicated 
sessions to be held during scheduled Board meetings. The 
Committee formally ceased operation effective 14 June 2013 and, 
at its date of cessation, membership comprised John Zeglis 
(Chairman), Catherine Livingstone and Steven Vamos.

BOARD AND COMMITTEE MEETING ATTENDANCE 

Details regarding the number of meetings held by the Board and its Committees during FY13, and attendance by Board members, are set 
out below:

Board

Committees

 (1)

Audit

Nomination

Remuneration

Technology(6)

C B Livingstone. . . . . . . .

D I Thodey . . . . . . . . . . . .

T Y Chen(2). . . . . . . . . . . . .  

G A Cousins. . . . . . . . . . .

R A Higgins . . . . . . . . . . .

J P Mullen . . . . . . . . . . . .

N L Scheinkestel  . . . . . .

M L Seale(3). . . . . . . . . . .

J W Stocker(4) . . . . . . . . .

S M Vamos(5). . . . . . . . . .
   . . . . . . . . . . . .

J D Zeglis

a

13

13

5

13

13

13

13

13

5

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13

b

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13

3

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13

13

13

13

5

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a

6

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2

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Column a: number of meetings held while a member.
Column b: number of meetings attended.
(1)

Committee meetings are open to all Directors to attend.  Where a Director has attended a meeting of a Committee of which he or she was not a member, this is 
indicated by ( ).

Joined the Audit Committee effective 15 October 2012.

(2) Retired effective 5 October 2012.
(3)
(4) Retired effective 16 October 2012.
(5)
(6)

Joined the Technology Committee effective 6 December 2012.
As noted above, the Technology Committee ceased operation effective 14 June 2013. 

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

37

CORPORATE GOVERNANCE 
STATEMENT 

EXTERNAL AUDITOR

MANAGEMENT REPORTING ON RISK 

Our external auditor, Ernst & Young (E&Y), was appointed by 
shareholders at the 2007 AGM. During FY13, the Board, on the 
recommendation of the Audit Committee, extended E&Y’s 
appointment as auditor for a further two year period until the end 
of FY15.

In accordance with the Corporations Act 2001, the lead E&Y 
partner on the audit is required to rotate at the completion of a five 
year term. A rotation occurred after our FY11 half year accounts 
were signed as the lead partner retired from E&Y. The Board 
undertook a process with E&Y and agreed upon the new lead 
partner.

The Audit Committee oversees our relationship with E&Y, 
including:

•

reviewing and assessing the performance, independence and 
objectivity of E&Y

• monitoring management’s adherence to our policy on audit and 

•

•

non-audit services provided by E&Y
reviewing and agreeing on the terms of engagement and fees 
for E&Y, and 
reviewing E&Y’s proposed annual audit scope and audit 
approach, including materiality levels. 

During FY13, the Audit Committee was provided with regular 
formal, written reports detailing the nature and amount of any 
non-audit services rendered by E&Y and an explanation of how the 
provision of those non-audit services are compatible with auditor 
independence. Details of amounts paid or payable to E&Y for non-
audit services provided during the year are disclosed in Note 8 to 
our Financial Statements. 

The E&Y engagement partner for the Telstra audit attends our 
AGM and is available to answer shareholder questions about the 
conduct of our audit and the preparation and content of the 
auditor’s report.

INTERNAL AUDIT

Our internal audit activities are undertaken by Group Internal 
Audit, Telstra’s dedicated internal audit function. The role of 
Group Internal Audit is to provide the Board and management with 
independent and objective assurance on the effectiveness of our 
governance, risk management and internal control 
processes. Group Internal Audit has no direct operational 
responsibility or authority over any of our business or risk 
management activities, to maintain the necessary independence 
it needs to carry out its role.

Functional responsibility for Group Internal Audit resides with the 
Director Group Internal Audit, whose appointment is approved by 
the Board. The Director Group Internal Audit reports to the Audit 
Committee and the CFO.  Group Internal Audit has full and 
unrestricted access to all of our information systems, records, 
physical properties and employees in order to carry out its 
activities.  The work of Group Internal Audit is guided by The 
International Professional Practices Framework provided by the 
Institute of Internal Auditors. The Audit Committee monitors 
Group Internal Audit’s activities and performance, including its 
independence. 

A summary of our key strategic risks and how we manage them is 
provided in the Strategy and Performance (Managing our risks) 
section of this Annual Report.

In connection with our financial statements for the financial year 
ended 30 June 2013, our CEO and CFO have provided the Board 
with the certifications required by the Corporations Act and the 
ASX Recommendations. Specifically, the Board has received:

•

•

reports from management as to the effectiveness of our 
management of our material business risks
the declaration from our CEO and CFO required in accordance 
with section 295A of the Corporations Act, and

• assurance from our CEO and CFO that the section 295A 
declaration was 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.

PROMOTING RESPONSIBLE AND ETHICAL BEHAVIOUR

Our Telstra Values, Telstra Group Code of Conduct & Business 
Principles (Code of Conduct) and company policies provide 
guidance on responsible and ethical decision making and 
behaviour, and take into account our legal obligations and the 
reasonable expectations of our stakeholders. 

Our Code of Conduct underpins our Telstra Values.  It sets out the 
behaviours we expect of our Directors, employees and 
contractors, and articulates our commitment to good corporate 
governance, responsible business practice, our customers, our 
workforce, the communities in which we operate and the 
environment. Our company policies give effect to the principles 
embodied in our Code of Conduct and there is mandatory training 
for all employees on these policies.  All persons governed by our 
Code of Conduct are responsible for complying with the principles 
embodied in our Code of Conduct.

Our governance framework includes polices in the following key 
areas:

Health and Safety – which recognises our commitment to the 
health, safety and wellbeing of our staff, contractors and 
community.  The policy highlights the importance of workplace 
health and safety and sets out the priority, accountability, 
measurement and our commitment to compliance for health and 
safety at Telstra. 

Diversity – which sets out our strategy and principles in relation to 
diversity and provides the framework for the establishment of our 
diversity measurable objectives, and monitoring and reporting on 
diversity matters across Telstra. We discuss diversity at Telstra, 
including our measurable objectives and our progress in achieving 
them, in further detail below and in the Sustainability (Our people) 
section of this Annual Report.

Discrimination and Bullying – which aims to ensure we have a 
workplace free of all forms of unlawful discrimination, 
harassment, bullying and victimisation.

38

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

CORPORATE GOVERNANCE STATEMENT

Privacy - which sets out our commitment to the protection of our 
customers’ personal information. Our policy and privacy principles 
outline the ways we protect customer personal information, how 
and why we collect it, how we may use and disclose it, how we keep 
it secure and accurate, as well as how customers may access it. 
Further information on Privacy at Telstra is provided in the 
Sustainability (Customer experience) section of this Annual 
Report and on our website at www.telstra.com.au/privacy/
privacy-at-telstra/index.htm (including copies of Telstra’s Privacy 
Policy, Privacy Principles and Privacy Statement).

Telstra's 3Rs of Social Media Engagement (Representation, 
Responsibility and Respect) – which provides guidance to 
employees and contractors who use social media, either as part of 
their job or in a personal capacity, regarding our expectations 
when they talk online about us, our products and services, our 
people, our competitors and/or other business related individuals 
or organisations. 

Sustainability – which seeks to ensure we manage our business 
ethically to produce an overall positive impact on our customers, 
employees, shareholders and other stakeholders, as well as the 
wider community and the natural environment. Information 
regarding our approach to sustainability can be found in the 
Sustainability section of this Annual Report.  We make donations 
and contribute funds to community and non-profit organisations 
as part of our approach to community investment and 
sustainability. We do not make political donations. However, in 
line with other major publicly listed companies, we do pay fees to 
attend events organised by political parties where those events 
allow for discussion on major policy issues with key opinion 
leaders and policy makers. 

Anti Bribery & Anti Corruption – which aims to ensure we comply 
with applicable anti-bribery and anti-corruption laws and 
regulations.  Our Gifts, Prizes and Hospitality Policy also seeks to 
ensure that gifts, prizes and hospitality are not accepted in 
inappropriate circumstances, including where acceptance may (or 
may be perceived to) compromise independence or be construed 
as a bribe.

Conflicts of Interest and Outside Activities - which provides a 
process to manage conflicts of interest, and assist our employees, 
contractors and managers to understand what we consider to be 
a conflict of interest and how to deal with any actual or potential 
conflicts.

Securities Trading – which sets out the rules and restrictions 
relating to buying, selling and otherwise dealing in Telstra 
securities by our Directors, CEO, senior management and certain 
other designated employees (Designated Persons), through a 
trading windows approach. Designated Persons are also 
prohibited from using Telstra shares as collateral in financial 
transactions (including margin loan arrangements), and engaging 
in stock lending arrangements, short term trading and certain 
hedging arrangements in respect of our securities.

Market Disclosure - which outlines responsibilities and sets out 
the process for the approval of our ASX announcements, including 
where Board approval is required in respect of announcements 
that relate to certain significant matters. The policy also outlines 
the role of our CEO, CFO and our Continuous Disclosure Committee 
in relation to disclosure matters. Our continuous disclosure policy 
is reviewed and updated on a regular basis.  Our Investor Relations 
Communication Policy aims to ensure that we provide investors 
and the financial community with appropriate and timely 
information whilst ensuring that we fulfil our statutory reporting 
obligations under the Corporations Act and the ASX Listing Rules. 
We provide advance notification of significant group briefings, 
such as our results announcements, and make them widely 
accessible through the use of webcasting and placing all 
announcements made to the market on our website. 

Structural Separation Undertaking – which reflects our 
commitment to compliance with the Structural Separation 
Undertaking (SSU). The SSU includes our undertaking to 
structurally separate over time through migrating voice and 
broadband customers from Telstra’s copper and HFC networks to 
the National Broadband Network, and to delivering increased 
transparency as well as equivalence in the supply of regulated 
fixed network services to our wholesale customers. Our 
commitments under the SSU include the requirement to self-
report potential breaches of the SSU to the ACCC each month, and 
to report annually to the ACCC on our compliance, including 
details of any new or additional measures that have been 
undertaken by us to ensure compliance. The ACCC reports 
annually to the Minister of Broadband, Communications and the 
Digital Economy on our compliance with the SSU.

Whistleblowing - provides an avenue for anyone to report 
suspected unethical, illegal or improper behaviour. Our 
whistleblowing process is supported by an independent service 
provider and all disclosures are treated as confidential and can be 
made anonymously. Our Ethics Committee monitors all 
disclosures, investigations, recommendations and the 
implementation of actions, and our Audit Committee oversees the 
whistleblowing process.  

Additional information regarding our governance framework 
(including copies of our Code of Conduct, Securities Trading Policy 
and Diversity Policies) can be found in the corporate governance 
section of our website. 

OUR REMUNERATION FRAMEWORK

Information relating to our remuneration framework and policies 
can be found in our Remuneration Report (which forms part of our 
Directors' Report).

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

39

CORPORATE GOVERNANCE 
STATEMENT 

DIVERSITY AND INCLUSION AT TELSTRA

We know that diversity and inclusion helps us to improve business 
results, enhance our reputation, and attract, recruit, engage and 
retain a team of talented people. 

At Telstra, diversity and inclusion relates to differences in gender, 
age, ethnicity, race, cultural background, disability, religion and 
sexual orientation. It also includes differences in background and 
life experience, communication styles, interpersonal skills, 
education, functional expertise and problem solving skills.

Our programs target inclusion for all at Telstra, with some specific 
focus also on gender equality, Indigenous Australians, other 
culturally and linguistically diverse (CALD) employees, people with 
disability, and gay, lesbian, bisexual, transgender and intersex 
(GLBTI) employees. Diversity and inclusion is led by our Diversity 
Council, which is chaired by the CEO and comprises the full CEO 
Leadership Team. We know we have work to do to improve 
diversity and be more inclusive at all levels of the Company.

Being a diverse and inclusive employer is important to our 
employees because it means they can bring individuality and a 
rich variety of experiences to do their best work.  Our people value 
working in an organisation where differences are respected.  We 
also seek to make positive contributions to the communities in 
which we operate. Two such initiatives involve celebrating 
Indigenous culture and supporting campaigns to stop violence 
against women. 

We also believe the benefits of our activities and initiatives around 
diversity and inclusion accrue in many ways in our business.   
Having a diverse range of employees better enables us to provide 
the best in service to our customers. It also enables us to foster 
greater innovation, stronger problem solving capability, increased 
morale, motivation and engagement, and greater customer and 
community connection.

In accordance with the ASX Recommendations, our policies 
provide the framework for measurable objectives to be set by the 
Board.  Our measurable objectives for achieving diversity as set by 
the Board, and our progress towards achieving them, are as 
follows.

Measure

Objective and Progress/Result in respect of FY13

Women on the 
Board 

Objective - There will be 3 women on the Board, representing a 
female gender representation among non-executive Directors of 
at least 30%

Progress - As at 30 June 2013, there were 3 female Directors on 
the Board (including the Chairman of the Board), representing a 
female gender representation among non-executive Directors of 
37.5%

Female 
representation in 
graduate intake

Objective - 35% female representation in 2014 graduate intake, 
with an aspiration of 50% female representation by 2020

Result - 40% female representation in 2014 graduate intake

Promotion rates 
for women 

Objective - To exceed their representation at Business Unit level

Result - Promotion rates for women exceeded representation in 
Telstra overall and in 5 out of 10 Business Units, including the 
three largest Business Units

Engagement of 
identified groups* 

Objective - Equal to or greater than Telstra-wide engagement 
score, with any negative differences not statistically significant

Result - Engagement of Identified Groups exceeded Telstra-wide 
engagement score, except for Indigenous employees and 
employees with a disability.  These negative differences were not 
statistically significant

Objective in respect of FY14 
(or as otherwise stated)

There will be 3 women on the Board, 
representing a female gender representation 
among non-executive Directors of at least 
30%

FY14 - 45% female representation in 
graduate intake selected in 2015, with an 
aspiration of 50% female representation by 
2020

FY14 - To exceed their representation at 
Business Unit level

FY14 - Equal to or greater than Telstra-wide 
engagement score, with any negative 
differences not statistically significant

Objective - 32% (Telstra Total) and 25% (Executive Management)

Female 
representation** 
at 30 June

Result - 30.5% (Telstra Total) and 25.4% (Executive 
Management)

FY15 - 32% (Telstra Total) and 30% 
(Executive Management)

FY20 - 35% (Telstra Total) and 40% 
(Executive Management)

*

Identified Groups are female employees, Indigenous employees, CALD employees, employees with a disability, and GLBTI employees. FY13 result does not 
include staff in Telstra International Philippines, Inc (which was incorporated in April 2013) and Chief Entertainment Pty Ltd as they did not participate in our 
2013 Employee Engagement Survey.

**  Full time and part time staff in Telstra Corporation Limited and its wholly owned subsidiaries, excluding casual and agency staff.

40

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

CORPORATE GOVERNANCE STATEMENT

• Flexibility: we began a series of pilot projects on job sharing, 
employee connection during and after long term leave such as 
maternity leave, job design, proactive advertising of flexible 
work options, and a more systematic approach to change work 
practices to enable better balance between work and life 
outside work.

• Overall Inclusion: we reinforced expectations of all of our 
leaders, through performance planning and development 
processes, that they lead in an inclusive way and value 
differences within their teams.

SHAREHOLDER COMMUNICATIONS

We are committed to open, clear, accurate and timely 
communications with our shareholders about matters affecting 
the value of their investment in Telstra, and ensuring all 
communications are consistent with our continuous disclosure 
and other applicable legal obligations. We also value a direct, two-
way dialogue with shareholders and believe it is important not only 
to provide relevant information as quickly and efficiently as 
possible, but also to listen and understand our shareholders’ 
perspectives and respond to their feedback. 

Some of the specific initiatives we have put in place to encourage 
effective communication with our shareholders include:

• making appropriate use of technology to inform and engage our 
shareholders, including webcasting important events such as 
our financial results briefings and our AGM

• hosting a series of retail shareholder information briefings in a 
number of cities around Australia with the CEO and/or CFO in 
relation to our full year results, prior to our AGM

• writing directly to our shareholders on significant issues that 
affect their investment and using electronic communications 
to advise those shareholders who have provided us with their 
email address, and

• maintaining our investor relations website and placing all 

announcements made to the market, including transcripts of 
investor briefings and related information, on our website after 
this information has been released to the ASX.

As noted earlier, overall female representation across the Telstra 
Group remained flat this year, reflecting a challenge around over-
representation of women among departures from Telstra, an 
aspect which we will proactively address next year.

We have changed our approach to our measurable objective in 
relation to female representation, moving from having a one year 
horizon to establishing the objective with horizons to the end of 
FY15 and FY20.  We have made this change to introduce a longer-
term focus in this area and it will be supported internally with 
regular monthly monitoring of progress towards achievement of 
our representation objectives.

Information on the representation of women at various levels 
within Telstra at 30 June 2013 can be found in the Sustainability 
(Our people) section of this Annual Report.  A table setting out 
Telstra’s workforce gender profile as at 31 March 2013, as 
required by the Workplace Gender Equality Act 2012 and lodged 
with the Workplace Gender Equality Agency on 27 May 2013, is 
provided in the corporate governance section of our website at 
www.telstra.com.au/abouttelstra/company-overview/
governance/diversity-and-inclusion/index.htm.

Board Diversity

The Board has a number of initiatives in place to meet its strategic 
imperative of ensuring the Company has a diverse Board and to 
achieve its Board diversity measurable objective.  These include 
ensuring a diverse range of qualified candidates is considered for 
Board appointments, developing a pipeline of potential Board 
candidates, and participating in programs to assist in the 
development of a broader pool of skilled and experienced Board 
candidates, including support for the AICD ASX 200 Chairmen’s 
Mentoring Program.

Employee Diversity and Inclusion 

Our 2013 employee engagement survey showed that the 
engagement of all of our identified groups has improved since last 
year. The most significant improvement was seen in the 
engagement of our Indigenous employees.

During FY13, our initiatives to enhance diversity and inclusion at 
Telstra included the following:

• Gender Equality: our CEO continued his involvement in the 

“Male Champions of Change” group, convened by Australia’s 
Sex Discrimination Commissioner, Elizabeth Broderick. This 
group models effective leadership by male executives in 
relation to gender equality in some of Australia’s largest 
corporate and government organisations.

•

Indigenous: we established a team of Indigenous Employment 
Ambassadors and an Indigenous employee network, along with 
an online employee Indigenous cultural appreciation program 
(Connecting our Cultures) and signed a three-year 
memorandum of understanding with Jawun Indigenous 
Corporate Partnerships to place Telstra secondees in 
Indigenous communities.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

41

DIRECTORS'
REPORT

In accordance with a resolution 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 2013. Financial 
comparisons used in this report are of results for the year ended 
30 June 2013 compared with the year ended 30 June 2012.

On 8 August 2013, the Directors resolved to pay a final fully 
franked dividend of 14 cents per ordinary share ($1,738 million), 
bringing dividends per share for financial year 2013 to 28 cents per 
share. The record date for the final dividend will be 23 August 2013 
with payment being made on 20 September 2013. Shares will 
trade excluding entitlement to the dividend on 19 August 2013.

The historical financial information included in this Directors’ 
Report has been extracted from the audited Financial Report on 
pages 69 to 198 of the Annual Report accompanying this Directors’ 
Report.

Principal activity 

Our principal activity during the financial year was to provide 
telecommunications and information services for domestic and 
international customers. There has been no significant change in 
the nature of this activity during the year.

Review and results of operations

Information on the operations and financial position for the 
Telstra Group is set out in our Operating and Financial Review 
(OFR) consisting of Our Business, Chairman and CEO Message, 
Strategy and Performance and Full Year Results and Operations 
Review on pages 3 to 19 of the Annual Report accompanying this 
Directors’ Report. 

Dividends, investor returns and other key ratios 

Our basic earnings per share increased 11.6 per cent from 27.5 
cents per share to 30.7 cents per share in financial year 2013. 
Other relevant measures of return include the following:

•

•

return on average assets 18.1 per cent (2012: 16.7 per cent); 
and
return on average equity 31.7 per cent (2012: 28.9 per cent).

Return on average assets and return on average equity are higher 
in financial year 2013 primarily due to the increase in profit. The 
return on average equity has been partly offset by a favourable 
movement in actuarial gains/(losses), with the gain recorded 
directly in equity.

Dividends paid during the year were as follows:

Dividend

Date 
resolved

Date
paid

Fully 
franked 
dividend 
per share

Total 
dividend
($ million)

Final dividend for 
the year ended 
30 June 2012

Interim dividend 
for the year ended 
30 June 2013

9 Aug 
2012

21 Sep 
2012

14 cents

1,739

7 Feb 
2013

22 March 
2013

14 cents

1,741

Significant changes in the state of affairs 

There were no significant changes in the state of affairs of our 
company during the financial year ended 30 June 2013.  

Business strategies, prospects and likely 
developments 

The OFR sets out information on the business strategies and 
prospects for future financial years, and refers to likely 
developments in Telstra's operations and the expected results of 
those operations in future financial years (see Our Business, 
Chairman and CEO Message, Strategy and Performance and Full 
Year Results and Operations Review on pages 3 to 19 of the Annual 
Report accompanying this Directors' Report). Information in the 
OFR is provided to enable shareholders to make an informed 
assessment about the business strategies and prospects for 
future financial years of the Telstra Group. Detail that could give 
rise to likely material detriment to Telstra, for example, 
information that is commercially sensitive, confidential or could 
give a third party a commercial advantage has not been included. 
Other than the information set out in the OFR, information about 
other likely developments in Telstra's operations and the expected 
results of these operations in future financial years has not been 
included.  

42

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

DIRECTORS' REPORT

Details of Directors’ shareholdings in Telstra are shown in the 
table below. 

Directors’ Shareholdings in Telstra

As at 8 August 2013:

Director
Catherine B Livingstone
David I Thodey

Timothy Chen (2)
Geoffrey A Cousins
Russell A Higgins
John P Mullen
Nora L Scheinkestel
Margaret L Seale

John Stocker (2)
Steven M Vamos
John D Zeglis

Number of shares held (1)
150,000
1,009,652

-
81,765
88,404
26,159
66,815
30,000

181,728
40,000
103,993

Events occurring after the end of the financial year 

The Directors are not aware of any matter or circumstance that 
has arisen since the end of the financial year, apart from the final 
dividend for financial year 2013, that, in their opinion, has 
significantly affected or may significantly affect in future years, 
Telstra’s operations, the results of those operations or the state of 
Telstra’s affairs. 

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:

• Timothy Y Chen, resigned as non-executive Director effective 5 
October 2012. Mr Chen joined the Board as a non-executive 
Director in April 2012. He was a member of the Audit 
Committee; and

• John W Stocker, retired as non-executive Director effective 16 
October 2012. Dr Stocker joined the Board as a non-executive 
Director in October 1996. He was a member of the Audit and 
Technology Committees. 

With effect from 9 August 2013 Chin Hu Lim will be appointed as a 
non-executive Director. Mr Lim will stand for election at Telstra's 
Annual General Meeting in Sydney on 15 October 2013. 

Information about our Directors and senior executives is provided 
as follows:

(2)

(1)

The number of shares held refers to shares held either directly or indirectly 
by Directors as at 8 August 2013. Shares in which the Director does not 
have a relevant interest, including shares held by the Directors’ related 
parties (including relatives), are excluded. Refer to the Remuneration 
Report (Table 5.8) and note 28 of the financial statements for total shares 
held by Directors, representing those shares held directly, indirectly and 
beneficially as at 30 June 2013.
The number of shares disclosed is the number held as at the date of 
cessation as a Director. 

• names of our current Directors and details of their 

qualifications, experience, special responsibilities and 
directorships of other listed companies are given in Board of 
Directors on pages 30 to 31of the Annual Report accompanying 
this report; 
the number of Board and Committee meetings and attendance 
by Directors at these meetings is provided in the Corporate 
Governance Statement on page 37 of the Annual Report 
accompanying this report; and 

•

• details of Director and senior executive remuneration are set 
out in the Remuneration Report on pages 46 to 67 and forms 
part of this report. 

Company Secretary

Damien Coleman B. Ec, LLB (Hons), FCIS

Damien Coleman was appointed Company Secretary of Telstra 
Corporation Limited effective 1 January 2012. 

Mr Coleman joined Telstra in 1998 and has served in senior legal 
roles across the company including in Sensis, Mergers and 
Acquisitions, Telstra Operations. Most recently, he was General 
Counsel, Finance and Administration, Office of the Company 
Secretary and National Broadband Network (NBN). In that role he 
was responsible for Telstra’s continuous disclosure compliance, 
all legal aspects of the Annual Report preparation and Annual 
General Meeting, as well as annual financial results 
announcements. Mr Coleman also played a key role in the 
negotiation of the Definitive Agreements for Telstra’s participation 
in the rollout of the NBN. Before joining Telstra, Mr Coleman was a 
senior lawyer at a leading Australian law firm. He holds a Bachelor 
of Laws (Hons) and a Bachelor of Economics from the Australian 
National University. 

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

43

DIRECTORS'
REPORT

Directors’ and officers’ indemnity 

Constitution

Telstra’s constitution provides for it to indemnify each officer, to 
the maximum extent permitted by law, for any liability and legal 
costs incurred as an officer of Telstra or a related body corporate. 

If one of Telstra’s officers or employees is asked by Telstra to be a 
director or other officer of a company which is not related to it, 
Telstra’s constitution provides for it to indemnify the officer or 
employee for any liability he or she incurs. This indemnity only 
applies if the liability was incurred in the officer’s or employee’s 
capacity as an officer of that other company. This indemnity is to 
the maximum extent permitted by law, as if that liability had been 
incurred in the capacity as an officer of Telstra. Telstra’s 
constitution also allows it to indemnify employees and outside 
officers in some circumstances. The terms "officer", "employee" 
and "outside officer" are defined in Telstra’s constitution.

Deeds of indemnity in favour of directors, officers and 
employees 

Telstra has also executed deeds of indemnity in favour of 
(amongst others):

• Directors of Telstra (including past Directors);
• secretaries and executive officers of Telstra (other than Telstra 
Directors) and directors, secretaries and executive officers of 
Telstra’s wholly owned controlled entities;

• directors, secretaries and executive officers of a related body 
corporate of Telstra (other than a wholly owned controlled 
entity) while the director, secretary or executive officer was 
also an employee of Telstra or a director or employee of a wholly 
owned controlled entity of Telstra (other than Telstra 
Directors); and
the officers listed above (other than Telstra Directors) and 
certain employees of Telstra or a related body corporate of 
Telstra who are appointed as directors of a company which is 
not a related body corporate of Telstra, at the request of 
Telstra.

•

Each of these deeds provides an indemnity as permitted under 
Telstra’s constitution and the Corporations Act 2001. The term 
“executive officer” is defined in the relevant deed of indemnity. The 
deeds in favour of Directors of Telstra also give Directors certain 
rights of access to Telstra’s books and require it to maintain 
insurance cover for the Directors.

Additionally, Telstra has executed an indemnity in favour of 
employees (including officers other than Directors) in respect of 
certain liabilities incurred in the formulation, entering into or 
carrying out, of a Telstra Sale Scheme (as defined in the Telstra 
Corporation Act 1991 (Cth)). This indemnity is provided as 
permitted under Telstra’s constitution and the Corporations Act 
2001. Although all Telstra Sale Schemes conducted by the 
Commonwealth Government have been completed, the indemnity 
will remain in place while it is possible for claims to arise under a 
Telstra Sale Scheme. 

Telstra has also executed a deed of indemnity in favour of certain 
employees (including certain officers), in respect of liabilities and 
legal costs which may be incurred as part of the NBN transaction. 
The indemnity is to the maximum extent permitted by law and is 
subject to the employee performing his or her duties such as 
acting in good faith and complying with all applicable laws.

Directors’ and officers’ insurance

Telstra maintains directors' and officers' insurance policies that, 
subject to some exceptions, provide worldwide insurance cover to 
past, present and future directors, secretaries and officers and 
certain employees of Telstra and its controlled entities. Telstra 
has paid the premiums for the policies. The directors' and officers' 
insurance policies prohibit disclosure of the premiums payable 
under the policies and the nature of the liabilities insured.

Environmental regulation and performance 

Telstra’s operations are subject to significant environmental 
regulation under Commonwealth, State and Territory law, 
particularly with regard to:

•

the impact of the installation and maintenance of 
telecommunications infrastructure;

• energy and water efficiency;
• mandatory reporting of a range of environmental matters 
including energy use and greenhouse gas emissions;

• packaging of products;
• procurement of services;
• site contamination and pollution; and
• waste management.

Telstra is subject to the Energy Efficiency Opportunities Act 2006 
(Cth), requiring robust systems for the identification and 
evaluation of cost-effective energy saving opportunities. Telstra 
registered on 31 March 2007 and has submitted annual public and 
bi-annual government reports to the Department of Resources 
Energy and Tourism, meeting all legislative requirements. Telstra 
completed its first five year cycle in 2011 and has transitioned into 
the second five year cycle with the Assessment and Reporting 
Schedule approved in June 2013.  

Telstra is subject to the National Greenhouse and Energy 
Reporting Act 2007 (Cth), requiring annual reporting of 
greenhouse gas emissions, energy consumption and energy 
production for activities under Telstra’s control. Telstra registered 
prior to 31 August 2009, and has reported to the Department of 
Climate Change and Energy Efficiency/Clean Energy Regulator on 
an annual basis. The next report is due on 31 October 2013, and 
will be supported with an independent assurance audit to a 
reasonable assurance standard.

Telstra has well established systems and procedures to monitor 
and manage compliance with existing environmental regulations 
and new regulations as they come into force. Telstra keeps its 
systems and procedures under review and works with regulators 
and other relevant stakeholders to respond appropriately to 
environmental issues that arise across its operations, as it has 
done during the year in relation to the management of remediation 
of telecommunications pits, some of which contain asbestos fibre 
cement. Telstra has not been prosecuted for, or convicted of, any 
significant breaches of environmental regulation during the 
financial year. 

44

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

DIRECTORS' REPORT

EY is specifically prohibited from performing any of the following 
services: 

• bookkeeping services and other services related to preparing 

•

our accounting records or financial statements;
financial information system design and implementation 
services;

• operation or supervision of IT systems;
• appraisal or valuation services, fairness opinions, or 

contribution in kind reports;

• actuarial services;
•
• management or human resources functions including the 

internal audit services;

provision of advice and benchmarking services in relation to 
executive remuneration;
temporary staff assignments;

•
• broker or dealer, investment advisor, or investment banking 

services; 
legal services or expert services unrelated to the audit;
tax planning and strategy services; and
receiver/liquidation services.

•
•
•

A copy of the auditors’ independence declaration is set out in the 
“Auditor’s Independence Declaration to the Directors of Telstra 
Corporation Limited” on page 68 and forms part of this report.

Non-audit services

During financial year 2013, Telstra’s auditor Ernst & Young (EY) 
has been employed on assignments additional to its statutory 
audit duties. Details of the amounts paid or payable to EY for audit 
and non-audit services provided during the year are detailed in 
note 8 to the financial statements.

The Directors are satisfied that the provision of non-audit services 
during financial year 2013 is consistent with the general standard 
of independence for auditors imposed by the Corporations Act 
2001 (the Act), and that the nature and scope of each type of non-
audit service provided did not compromise the auditor 
independence requirements of the Act for the following reasons:

• all recurring audit engagements are approved by the Audit 

Committee each year through the Audit Committee’s approval 
of the annual audit plan;

• additional audit and non-audit services up to $100,000 require 

approval from the Chief Financial Officer;

• additional audit and non-audit services between $100,000 and 
$250,000 require approval from the Chairman of the Audit 
Committee and services greater than $250,000 require 
approval from the Audit Committee;

• where the nature or scope of an external engagement changes 

such that the prior approval obtained is insufficient, 
subsequent approval from the Chief Financial Officer must be 
obtained for the revised engagement as shown in the table 
below. Where the change is not covered in the following table, 
approval of the revised engagement must be obtained in 
accordance with the approval levels described above;

Type of Service
Additional audit work related 
to the half year review and full 
year audit
Other audit services

Other assurance services

Type of Change
Scope and / or fee variations

Scope increases of up to 10 per 
cent in total of the pre approved 
fee
Scope increases of up to 10 per 
cent in total of the pre approved 
fee

•

• all additional engagements approved as per the above points 
are reported to the Audit Committee at the next meeting;
fees earned from non-audit work undertaken by EY are capped 
at 1.0 times the total audit and audit related fees; and
the provision of non-audit services by EY is monitored by the 
Audit Committee via periodic reporting to the Audit Committee. 

•

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

45

REMUNERATION
REPORT

This report sets out the remuneration arrangements for Directors and other Key Management Personnel (KMP) of the Telstra Group for 
the year ended 30 June 2013 (FY13), and is prepared in accordance with section 300A of the Corporations Act 2001 (Corporations Act). 
The information in this report has been audited as required by section 308(3C) of the Corporations Act. 

The report is presented in five sections:

Section

What it covers

Page

1. Remuneration Snapshot 

1.1 Key Points

Provides a summary of the remuneration outcomes for FY13.

1.2 Changes in FY13

Details the key remuneration changes in FY13.

1.3 Key Management Personnel

Lists the names and roles of the KMP whose remuneration details are disclosed in 
this report. 

1.4 Actual Crystallised Pay

Lists the actual crystallised pay and benefits received by Senior Executives in FY13.

1.5 Looking Forward 

Provides an overview of remuneration changes proposed for FY14. 

2. Setting Executive Remuneration 

2.1 Remuneration Policy, Strategy 

and Governance

Explains Telstra’s remuneration policy and strategy, and how the Board and 
Remuneration Committee make decisions, including the use of external 
consultants. 

2.2 Remuneration Components 

2.3 Putting Policy into Practice 

Shows how executive remuneration is structured to support business objectives 
and how it aligns with company performance, and explains the Short Term Incentive 
(STI) and Long Term Incentive (LTI) grants made in FY13.

Provides examples of how we implement our policy in practice, explaining the 
executive remuneration mix as well as our shareholding, trading and hedging 
policies. 

3. Executive Remuneration Outcomes 

3.1 Financial Performance

3.2 Short Term Incentive 

Outcomes

Provides a breakdown of our performance, share price, and dividends over the past 
five years.

Details the STI outcomes for Senior Executives, including payments as a 
percentage of maximum, achievement by KPI and a comparison of payments to the 
previous year. 

3.3 Long Term Incentive Outcomes Details the LTI outcomes for plans with a test point at 30 June 2013. 

3.4 Senior Executive Contract 

Details

Lists the key contract terms governing the employment of Senior Executives 
(including termination entitlements where relevant). 

4. Non-executive Director Remuneration 

4.1 Remuneration Structure

Provides a detailed summary of the fee structure for Board and Committee roles.

4.2 Remuneration Policy and 

Strategy

Provides a summary of our approach to non-executive Director fees, together with 
a summary of our shareholding guidelines for non-executive Directors.

4.3 Remuneration Components

Describes how non-executive Directors can allocate their remuneration between 
cash and superannuation components.

5. Remuneration Tables

5.1-
5.8

Remuneration Tables and 
Glossary

Provides the remuneration disclosures required by the Corporations Act and the 
relevant Australian Accounting Standards.

47

47

48

48

49

49

50

53

54

54

55

56

57

57

57

58

46

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

REMUNERATION REPORT

1. REMUNERATION SNAPSHOT

1.1 Key Points

Telstra performed strongly in FY13, delivering growth in financial results and achieving a second successive year of Total Shareholder 
Return (TSR) of approximately 37 per cent. These results were underpinned by progress against our key strategic objectives, including 
continued strong growth in customer numbers and improvements in customer service and productivity, and serve to reinforce Telstra’s 
position as a leading telecommunications and information services company.

Remuneration outcomes in FY13 were consistent with the company’s positive performance against financial and customer objectives. 
The governance of these outcomes remains a key focus of the Board and Remuneration Committee, and we regularly review our policies 
to ensure that remuneration outcomes for our executives continue to be aligned with company performance.

The structure and layout of this year’s report is similar to the FY12 report.

Total Shareholder Return of 
36.9%

Telstra’s share price continued to rise in FY13, and with a full year dividend payment of 28c 
delivered a total shareholder return of 36.9% over the financial year. 

Chief Executive Officer (CEO) 
Remuneration

The CEO’s Fixed Remuneration (FR) increased by 8.7% effective 1 October 2012 to $2,650,000. This 
increase positioned his FR close to the median of the ASX 20 CEO positions and was an 
acknowledgement of David Thodey’s performance for the preceding year.

Total Remuneration for the CEO increased from $7.2m to $8.8m, primarily due to higher STI and LTI 
outcomes based on stronger financial and customer outcomes. 

Short Term Incentive Outcomes The STI outcome for Senior Executives was an average of 66.0% of the maximum opportunity based 
on the achievement of financial, customer and individual performance measures. This outcome is 
consistent with Telstra’s strong financial performance and progress in creating customer 
advocacy.

Long Term Incentive Outcomes 100% of the FY11 LTI Plan vested in the form of Restricted Shares as a result of top quartile 

performance in TSR relative to a peer group of global competitors, and the achievement of the Free 
Cashflow Return On Investment (FCF ROI) stretch target over the three year performance period. 
These shares are subject to a further Restriction Period ending August 2014. 

Effective 1 July 2012, Board fees for the Chairman and non-executive Directors were increased by 
3.7%. There was no increase in Committee fees. At the 2012 Annual General Meeting (AGM), 
shareholders approved an increase in the annual fee pool of $500,000 to a maximum of $3,500,000 
per annum.

Non-executive Director 
Remuneration

1.2 Changes During FY13

The overall structure and philosophy of Telstra’s approach to remuneration remained consistent throughout FY13. We have made some 
adjustments to aspects of our remuneration framework and practices to further align our remuneration structures with company 
strategy and enhance remuneration governance. The two principal changes were:

• we replaced the Customer Satisfaction measure with a Net Promoter Score (NPS) measure in the FY13 STI Plan during FY13. 

Improving customer service remains a key pillar of our strategy. By connecting people to the things they love, we aspire to make 
Telstra customers advocates of our company. The NPS measure was introduced in the STI plan to increase alignment to this strategy. 
Our results against this measure were encouraging and we are committed to ensuring that Telstra continues to make advancements 
in this area going forward. All other key terms of the FY13 STI Plan remained unchanged from the previous year; and

• we sought and obtained shareholder approval for David Thodey’s FY13 LTI allocation at our 2012 AGM, as foreshadowed in our 2012 
Remuneration Report. This was in response to shareholder feedback and in line with common market practice and we intend to 
continue this practice at our 2013 AGM.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

47

REMUNERATION 
REPORT

1.3 Key Management Personnel (KMP)

The Senior Executives disclosed in this report are:

KMP comprise the Directors of the company and Senior 
Executives. The term “Senior Executives” refers to the CEO and 
those executives with authority and responsibility for planning, 
directing and controlling the activities of the company and the 
Group, directly or indirectly.

For FY13, the role of the GMD Business Support and Improvement 
(held by Robert Nason) has been included as part of our KMP 
(Senior Executive) group. This change is a result of the expansion 
of the authority and responsibilities of this role from 1 July 2012, 
in particular his responsibility with respect to NPS which is critical 
to supporting Telstra’s strategy regarding customer service and 
advocacy. There were no other changes to the Senior Executive 
group during FY13.

 Name

Most Recent KMP Position Title

David Thodey

Chief Executive Officer

Gordon Ballantyne

Chief Customer Officer

Rick Ellis

Stuart Lee

Kate McKenzie

Robert Nason

GMD Telstra Media

GMD Telstra Wholesale

GMD Telstra Innovation, Products 
and Marketing

GMD Business Support and 
Improvement

Andrew Penn

Chief Financial Officer 

Brendon Riley

Chief Operations Officer

1.4 Actual Pay and Benefits Crystallised in FY13 for Senior Executives Employed at 30 June 2013

The following Table 1.4 details actual pay and benefits for Senior Executives which crystallised in FY13. This is a voluntary disclosure and 
we have included this table in our Remuneration Report as we believe it is helpful to assist shareholders in forming an understanding of 
the cash and other benefits actually received by Senior Executives from the various components of their remuneration during the 2013 
financial year.

As a general principle, the accounting standards require the value of share based payments to be calculated at the time of grant and 
accrued over the performance and Restriction Period and this may not reflect what Senior Executives actually receive or become entitled 
to at the end of the performance and Restriction Period.

The figures in this table, which has not been prepared in accordance with Australian Accounting Standards, provide additional and 
different disclosures to the table included in section 5 (which provides a breakdown of Senior Executive remuneration in accordance with 
statutory obligations and was prepared in accordance with Australian Accounting Standards). 

Name

Fixed 
Remuneration
($) (1)

Non-monetary 
Benefits 
($) (2)

Short Term 
Incentive 
payable as Cash 
($) (3)

Value of STI 
Deferred Shares 
that became 
Unrestricted 
($) (4)

Value of LTI that 
became 
Unrestricted
($) (5)

FY13 Total
Crystallised Pay
and Benefits
($)

David Thodey

Gordon Ballantyne

Rick Ellis

Stuart Lee

Kate McKenzie

Robert Nason

Andrew Penn

Brendon Riley

2,596,564

1,250,000

912,397

1,018,245

987,397

1,037,397

1,400,000

1,287,397

 9,568

  80,585

  21,265

  14,090

  14,297

  19,747

 4,357

 9,882

  2,637,413

  1,197,188

 729,825

 956,250

 957,750

  1,045,013

  1,393,350

  1,245,075

 935,702

 468,791

 82,535

 252,724

 318,588

 338,141

 123,362

 328,348

  3,459,557

 -

 -

 605,423

 908,136

 441,096

 -

 -

9,638,804

2,996,564

1,746,022

2,846,732

3,186,168

2,881,394

2,921,069

2,870,702

(1)  The sum of Salary and Fees and Superannuation as detailed in table 5.1.

(2) 

Includes the value of personal home security services provided by Telstra and the value of the personal use of products and services related to Telstra 
employment and the value of personal travel costs (as per the contractual arrangements for Gordon Ballantyne). These are not paid as cash.

(3)  Amount relates to the cash component (75 per cent) of STI earned for FY13, which will be paid in September 2013.  The remaining 25 per cent will be provided as 

Deferred Shares in October 2013.

(4)  Amount relates to the value of STI earned in prior financial years which has been deferred as shares and will be released in August 2013 i.e. 50 per cent of the 
deferred amounts relating to the FY11 and FY12 performance periods respectively. Equity has been valued based on the Telstra closing share price on 30 June 
2013 of $4.77.

(5)  Amount relates to Performance Rights which vested as Restricted Shares under the FY10 LTI Plan with a final test date of 30 June 2012 and which will be 

released from trading restrictions in August 2013. Equity has been valued based on the Telstra closing share price on 30 June 2013 of $4.77.

48

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

REMUNERATION REPORT

The amounts shown in Table 1.4 include Fixed Remuneration, STI 
payable as cash for the FY13 STI plan, as well as any deferred STI 
or LTI that has been earned as a result of performance in previous 
financial years but was subject to a restriction during FY13 that 
ends August 2013.

We believe that including amounts even though they may not be 
paid (or the relevant Restriction Period for equity may not end) 
until early FY14 in Table 1.4 is an effective way of showing the link 
between executive remuneration outcomes and the relevant 
performance year. It is also consistent with changes we propose to 
make to the structure of future STI Deferral and LTI plans to 
remove timing issues, as outlined in section 1.5 below.

1.5 Looking Forward

Looking forward, some of the key aspects of our approach to 
Senior Executive remuneration in FY14 are:

• CEO Remuneration: the CEO’s FR was increased last year to 
position him at the median of the ASX 20, and will not be 
increased in FY14 to maintain that position.

• STI and LTI Opportunities: there will be no change to the STI 
and LTI opportunities as a percentage of Fixed Remuneration 
for the CEO and Senior Executives.

• Wholesale STI Plan: an NPS measure will replace the Customer 

Satisfaction measure in the FY14 Wholesale STI Plan, 
consistent with the approach taken for the FY13 and FY14 STI 
Plans for the other Senior Executives.

• Clawback: clawback mechanisms will apply to future LTI 
grants, giving the Board discretion to clawback Restricted 
Shares if a clawback event occurs. These mechanisms will be 
consistent with mechanisms under the STI Deferral Plan. We 
will also broaden the scenarios in which the Board could 
consider applying a clawback to include significant 
reputational damage to Telstra as a result of a Senior 
Executive’s act or failure to act.

• Chief Customer Officer: Gordon Ballantyne was employed 

under a fixed term contract that was due to expire on 30 June 
2014. However from 1 July 2013 he will move to an ongoing 
employment contract and will participate in the LTI Plan for 
FY14.

• LTI and STI Deferred Shares: future grants will be structured 
so that the end of Restriction Periods are on 30 June to better 
align disclosure of executive remuneration outcomes with the 
relevant performance periods. Any dealings in these shares will 
be subject to Telstra’s Securities Trading Policy.

2. SETTING SENIOR EXECUTIVE REMUNERATION

2.1 Remuneration Policy, Strategy and Governance

Our remuneration policy and strategy is to: 

• provide market competitive remuneration to attract, motivate 

•
•

•

and retain highly skilled people;
reinforce Telstra’s values and cultural priorities; 
implement best practice programs to help drive the 
achievement of our strategic and financial objectives (including 
the use of deferral and clawback mechanisms); and
link a significant component of at risk remuneration to annual 
performance results and the creation of long term shareholder 
value. 

Our governance framework for determining Senior Executive 
remuneration includes the following aspects. 

The Remuneration Committee 

The Remuneration Committee monitors and advises the Board on 
remuneration matters, and consists only of independent non-
executive Directors. It assists the Board in its responsibilities by 
monitoring and advising on Board, CEO and Senior Executive 
remuneration, giving due consideration to law and corporate 
governance principles.

The Remuneration Committee also reviews and makes 
recommendations to the Board on Telstra’s overall remuneration 
strategy, policies and practices, and monitors the effectiveness of 
Telstra’s overall remuneration framework in achieving Telstra’s 
remuneration strategy.

Annual Remuneration Review

The Remuneration Committee reviews CEO and Senior Executive 
remuneration packages annually to ensure there is a balance 
between fixed and at risk pay, and that they reflect both short and 
long-term performance objectives aligned to Telstra’s strategy. 

The Board reviews the CEO’s remuneration based on market 
practice, performance against agreed measures and other 
relevant factors, while the CEO undertakes a similar exercise in 
relation to Senior Executives. The results of the CEO's annual 
review of Senior Executives performance and remuneration are 
approved by the Board.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

49

REMUNERATION 
REPORT

Incentive Design and Performance Assessment

Engagement With Consultants

The Remuneration Committee oversees the process of setting 
robust performance measures and targets that encourage strong 
Senior Executive performance and ethical behaviour. STI and LTI 
performance measures are set at the beginning of each year. At 
the end of each financial year, the Board reviews the company’s 
audited financial results and the results of the other non-financial 
measures. The Board then assesses performance against each 
measure to determine the percentage outcome of the STI and LTI 
plans. The Board considers that it is best positioned to assess 
whether the applicable measures have been met.

Each performance measure in the STI and LTI plans has been 
selected in the context of achieving our business strategy over the 
longer term and increasing shareholder value.

Attract, motivate and retain 
highly skilled people

Reinforce values and 
cultural priorities

FIXED

External consultants are required to engage directly with the 
Remuneration Committee Chairman as the first point of contact 
whenever market data for Senior Executive positions is scoped or 
supplied to Telstra. To assess market competitiveness in FY13, 
the Committee engaged Guerdon Associates for the provision of 
ASX 20 market data but did not require a remuneration 
recommendation. As a result, no disclosures are required under 
the Corporations Act.

2.2 Remuneration Components 

Our remuneration structure (detailed below) is designed to 
support our remuneration strategy and is consistent between the 
CEO and other Senior Executives in the KMP group. Some tailoring 
may occur to take into account unique circumstances of an 
individual role. Where this has occurred, we have specifically 
disclosed it in this Report.

Reward achievement of 
ﬁ  nancial and strategic 
objectives 

AT RISK

Align to long term 
shareholder value creation 

Fixed Remuneration

Short Term Incentive

Long Term Incentive

CASH

EQUITY

• 

• 

 Base salary and 
superannuation.

 Set based on market 
and internal relativities, 
performance, qualiﬁ cations 
and experience.

•   75% of STI outcome paid in 

September after the ﬁ nancial 
year end.

•   STI outcome based on 

Telstra’s ﬁ nancial, NPS 
and individual performance 
measures.

• 

• 

• 

 25% of the STI outcome  is 
deferred into Telstra shares.

 Half of the shares are 
deferred for 1 year and the 
other half for 2 years. 

 The shares are subject to 
clawback at the discretion 
of the Board. The shares are 
forfeited if employment ends 
unless departure is for a 
Permitted Reason.

• 

• 

• 

• 

 Performance Rights subject 
to performance conditions 
and Restriction Period over 
4 years.

 50% subject to Relative 
Total Shareholder Return.

 50% subject to Free Cash- 
ﬂ ow  Return on Investment.

 Performance is measured 
over 3 years with an 
additional restriction period 
of approximately 1 year 
before full ownership.

Base level of reward 
competitive with the market

Encourages sustainable performance in the medium to longer term 
and provides a retention element

Section 2.2 provides a summary of the STI and LTI plan structures including clawback provisions and Section 2.3 summarises the percentage mix of fixed and 
at-risk components.

50

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

REMUNERATION REPORT

2.2.1 FY13 STI Plan

For FY13, all of our Senior Executives participated in the same STI 
Plan with the exception of the GMD Telstra Wholesale (as 
explained below). The performance measures of this Plan were 
Free Cashflow, EBITDA, Total Income, NPS and individual 
performance measures. The Board selected these performance 
measures as it believes they are a critical link between achieving 
the outcomes of Telstra’s business strategy and increasing 
shareholder value. In relation to these performance measures: 

•

the financial measures were set in accordance with our FY13 
financial plan and strategy;

• we replaced Customer Satisfaction with NPS as the customer 
metric during FY13. The weighting of this metric remained the 
same and the move to NPS supports the shift in Telstra’s 
strategy from the goal of delivering outstanding customer 
satisfaction to creating customer advocates. The Net Promoter 
system was rolled out across Telstra during FY13 and an 
explanation of the way in which NPS is calculated is included in 
section 3.2.2; and
the individual performance measures were set at the beginning 
of FY13 and were based on each Senior Executive’s expected 
individual contribution to the achievement of our strategy.

•

The performance measures of the STI plan operate independently 
of each other. Each measure has a threshold, target and stretch 
level of performance. Where threshold performance is not 
achieved, there is no payment for that component of the incentive. 
Depending on the role they perform, each Senior Executive has a 
maximum STI opportunity ranging from 150 per cent to 200 per 
cent of their Fixed Remuneration where stretch targets are met.

The FY13 STI Plan for the GMD Telstra Wholesale must comply 
with the Structural Separation Undertaking (SSU) given by Telstra 
as part of the NBN Transaction. This provides that the GMD Telstra 
Wholesale may participate in incentive plans that reflect solely the 
objectives and performance of the Wholesale Business Unit. As a 
result, the performance measures applicable to his FY13 STI Plan 
were different. The performance measures for the FY13 STI Plan 
applicable to the GMD Telstra Wholesale were Wholesale Total 
Income, Wholesale EBITDA, Wholesale Customer Satisfaction and 
individual performance. 

The process of transitioning between Customer Satisfaction and 
NPS within Telstra Wholesale was not completed until the end of 
FY13. As a result, NPS will be included in the Wholesale STI Plan (in 
place of Customer Satisfaction) from FY14 onwards.

Details of the STI outcomes for Senior Executives for FY13 are 
provided in section 3.2.

2.2.2 STI Deferral

If a Senior Executive leaves Telstra for any reason, other than a 
Permitted Reason (STI), before the end of the relevant Restriction 
Period, the Deferred Shares are forfeited. 

Deferred Shares may also be forfeited if a clawback event occurs. 
A clawback event includes circumstances where a Senior 
Executive has engaged in fraud or gross misconduct, or where the 
financial results that led to the STI being earned or awarded are 
subsequently shown to be materially misstated. From FY14 the 
Board could also consider applying a clawback in situations where 
there is significant reputational damage to Telstra as a result of a 
Senior Executive’s act or failure to act. 

2.2.3 FY13 LTI Plan

Participation

All of our Senior Executives participated in the same FY13 LTI Plan, 
with the exception of the Chief Customer Officer and the GMD 
Telstra Wholesale (as explained below).

Performance Rights form the basis of the reward under this Plan. 
Senior Executives are not required to pay for the Performance 
Rights. However, for any Performance Rights to vest as Restricted 
Shares, threshold performance against the relevant measure 
must be satisfied.

The LTI plan has two separate performance measures, being 
Relative Total Shareholder Return (RTSR) and Free Cashflow 
Return On Investment (FCF ROI). 

Details of the Performance Rights granted on 22 October 2012 to 
Senior Executives in relation to the FY13 LTI Plan are provided in 
section 5. 

Plan Structure

Plan Component

Detail

Performance Measure 
Weighting

Performance Period

50% to RTSR
50% to FCF ROI

1 July 2012 to
 30 June 2015

Restriction Period End Date

Minimum Threshold for RTSR 
Vesting

RTSR Vesting Schedule

4 years after 17 August 2012 
(17 August 2016)

50th percentile of peer group

25% vests at 50th percentile, 
straight line vesting to 75th 
percentile where 100% vests

Twenty five per cent of Senior Executives’ actual STI payment is 
deferred into Telstra shares. Half of the shares are deferred for 
one year and the other half are deferred for two years.

Minimum Threshold for FCF 
ROI Vesting

19.3%

During the Restriction Period, Senior Executives are entitled to 
earn dividends on their Deferred Shares as all performance 
hurdles of the STI Plan have been met. They are, however, 
restricted from dealing with the shares during this period. 

FCF ROI Vesting Schedule

50% vests at target of 19.3%, 
straight line vesting to stretch of 
21.3% where 100% vests

Retesting

No

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

51

REMUNERATION 
REPORT

Relative Total Shareholder Return

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 comparator group over the same period.

The Board believes that RTSR is an appropriate performance 
hurdle because it links executive reward to Telstra’s share price 
performance relative to its global peers.

The comparator group for the FY13 LTI Plan included the following 
large market capitalisation telecommunication firms: AT&T Inc; 
Belgacom Group; Bell Canada Enterprises Inc; BT Group plc; 
Deutsche Telekom AG; Orange SA; Koninklijke KPN N.V.; KT 
Corporation; Nippon Telegraph & Telephone Corp; NTT DoCoMo 
Inc; Portugal Telecom SGPS SA; Singapore Telecommunications 
Ltd; SK Telecom Co Ltd; Sprint Nextel Corporation; Swisscom AG; 
Telekom Austria AG; Telecom Italia Sp.A.; Telecom Corporation of 
New Zealand Ltd; Telefonica S.A.; Telenor ASA; TeliaSonera AB; 
Verizon Communications Inc and Vodafone Group plc. 

During the performance period France Telecom SA changed its 
name to Orange SA.

The Board has discretion to change members of the comparator 
group under the Plan terms.

No amendments were made to the comparator group in FY13. 

Free Cashflow Return On Investment

FCF ROI as determined by the Board is calculated by dividing the 
average annual Free Cashflow (less finance costs) over the three 
year performance period by Telstra’s average investment over the 
same period.

The Board selected the FCF ROI measure as an absolute LTI target 
on the basis that cash generation by the business is central to the 
creation of shareholder value.

Vesting of Performance Rights as Restricted Shares

At the end of FY15, the Board will review Telstra’s audited financial 
results for FCF ROI and RTSR to determine the percentage of 
Performance Rights that vest as Restricted Shares under the FY13 
LTI Plan.

Until the Performance Rights vest as Restricted Shares, a Senior 
Executive has no legal or beneficial interest, no entitlement to 
receive dividends and no voting rights in relation to any securities 
granted under the FY13 LTI Plan.

If a Senior Executive leaves Telstra for any reason other than a 
Permitted Reason (LTI), any Performance Rights lapse. If they 
leave Telstra for a Permitted Reason (LTI) a pro rata number of 
Performance Rights will lapse based on the proportion of time 
remaining until 30 June 2016. The pro rata portion relating to the 
Senior Executive’s completed service may still vest as Restricted 
Shares subject to achieving the performance measures of the 
FY13 LTI Plan at the end of the applicable performance period.

In certain limited circumstances, such as a takeover event where 
50 per cent or more of all issued fully paid shares are acquired, the 
Board may exercise discretion to vest Performance Rights that 
have not lapsed as Restricted Shares.

Any Restricted Shares that are allocated based on the vesting of 
Performance Rights are subject to a further Restriction Period 
expiring in August 2016 which prevents a Senior Executive from 
dealing with their Restricted Shares. If a Senior Executive leaves 
Telstra for any reason other than a Permitted Reason (LTI) before 
the end of the Restriction Period, the Restricted Shares are 
forfeited.

Chief Customer Officer

An LTI Plan was put in place for the Chief Customer Officer in FY11, 
as described in section 3.3.2 and Table 5.1. The Chief Customer 
Officer does not participate in the FY13 LTI Plan, however will 
participate in the LTI Plan for FY14 coinciding with his move to a 
permanent contract from 1 July 2013.

GMD Telstra Wholesale

As disclosed in the 2012 Remuneration Report, due to SSU 
requirements the GMD Telstra Wholesale participated in a 
separate equity plan in lieu of the FY12 LTI Plan for other Senior 
Executives.

In FY13, the GMD Telstra Wholesale was allocated 116,371 
Restricted Shares based on performance against the FY12 STI 
measures. Dividends are available on the Restricted Shares and 
they are subject to a Restriction Period that will end in August 
2015, which is aligned with the conclusion of the FY12 LTI Plan for 
other Senior Executives.

If the GMD Telstra Wholesale leaves Telstra before the end of the 
three year Restriction Period for any reason, other than a 
Permitted Reason (STI), the Restricted Shares will be forfeited. If 
he leaves for a Permitted Reason (STI) he will retain the Restricted 
Shares.

The Restricted Shares may be forfeited if a clawback event occurs. 
A clawback event includes circumstances where a Senior 
Executive has engaged in fraud or gross misconduct, or where the 
financial results that led to the shares being awarded are 
subsequently shown to be materially misstated.

In lieu of participation in the Senior Executive FY13 LTI Plan the 
GMD Telstra Wholesale will be allocated Restricted Shares based 
on his performance against his FY13 plan measures, namely 
Wholesale Total Income, Wholesale EBITDA, Wholesale Customer 
Satisfaction and individual performance. Clawback provisions 
relating to these Restricted Shares will be aligned with the STI 
Deferral Plan for other Senior Executives.

52

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

REMUNERATION REPORT

2.3 Putting Policy Into Practice

2.3.1 Remuneration Mix of Senior Executives

The graph below shows the FY13 remuneration mix for Senior 
Executives as at 30 June 2013. The variable components of STI 
(including any potential deferred amounts) and LTI are expressed 
at target, which is 50 per cent of the maximum opportunities. 

The STI and LTI plans will only provide a reward to a Senior 
Executive if the performance measures of the relevant plans are 
met.

y
t
i
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E
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7
1
4

.

33.3%

8.3%

25.0%

y
t
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7
3

.

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26.8%

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t
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CEO

Other Senior 
Executives

GMD Telstra 
Wholesale

FR

STI

Deferred STI

LTI

Progress is monitored by the Board on an ongoing basis and Senior 
Executives are tracking well against this requirement. Details of 
Senior Executives’ interests in Telstra shares as at 30 June 2013 
are set out in Table 5.8 of this report, but do not include Restricted 
Shares from the FY10 and FY11 LTI plans. 

2.3.4 Restrictions and Governance

All KMP must comply with Telstra’s Securities Trading Policy and 
shares can only be traded during approved trading windows.

KMP are prohibited from using Telstra shares as collateral in any 
financial transaction (including margin loan arrangements) or any 
stock lending arrangement.

They are also prohibited from entering into arrangements which 
effectively operate to limit the economic risk of their security 
holdings allocated under Telstra’s equity plans during the period 
the securities are held on their behalf by the Trustee or prior to the 
date of exercise or lifting of the Restriction Period of the relevant 
securities. This ensures that KMP are not permitted to hedge 
against participation in Telstra’s equity plans.

KMP are also required to confirm on an annual basis that they 
comply with these policy restrictions, which enables Telstra to 
monitor and enforce our policy.

Note that the Chief Customer Officer currently participates in a cash LTI 
related to his fixed term contract, however will align to this structure from 
FY14 onwards as noted in section 1.5.

2.3.5 NBN and Remuneration

2.3.2 Plan Variation Guidelines

The Board may, in its absolute discretion, amend the terms of the 
LTI Plan or the targets of the STI Plan where an event occurs that 
means the targets of the relevant plan are no longer appropriate. 
Situations where this discretion can be applied include:

• Material change of the strategic business plan;
• Material regulatory or legislative change; and
• Significant out of plan business development such as 

acquisitions and divestments. 

Adjustments made in relation to the plans are outlined in sections 
2.2.1 and 3.2.2. 

2.3.3 Executive Share Ownership Policy

The intent of Telstra’s Executive Share Ownership Policy is to align 
a significant portion of executive remuneration to the creation of 
longer term shareholder value. Under the policy, Senior Executives 
are required to hold Telstra shares to the value of 100 per cent of 
their Fixed Remuneration by the later of 30 June 2015, or within 
five years of first appointment to Senior Executive level. 

Any Deferred Shares and Restricted Shares held by Senior 
Executives are included in calculating their shareholding for the 
purposes of this policy. Senior Executives must obtain Board 
approval before they sell shares if they have not yet met their 
share ownership requirements under the policy. 

From FY13 the NBN Transaction was incorporated into Telstra’s 
established corporate planning processes and Senior Executives 
continue to be accountable for achieving planned outcomes, 
including NBN cashflows. The value of the NBN Transaction to be 
received over the next 30 years is subject to a range of 
dependencies and assumptions. 

Performance measures for future STI and LTI plans will continue 
to be developed using the most up to date forecasts for the 
financial impacts of the NBN Transaction. 

The Board may use its discretion to amend STI and LTI plans based 
on Telstra’s Plan Variation Guidelines or how it determines the FCF 
ROI calculation to ensure the NBN Transaction impact is 
appropriately reflected. 

This may include prior LTI plans that have not fully incorporated 
the NBN Transaction. LTI and STI plans may also be adjusted if, 
due to external factors, the NBN roll-out does not proceed 
according to NBN Co’s published business plan at the time the 
measures are developed to avoid windfall gains and losses. 

The Board excluded the impact of the NBN in the FCF ROI 
calculation for the FY11 LTI Plan, as explained in section 3.3.

NBN adjustments made to the STI for FY13 are outlined in section 
3.2.2.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

53

 
 
 
REMUNERATION 
REPORT

3. EXECUTIVE REMUNERATION OUTCOMES

The table in section 3.1 provides a summary of the key financial 
results for Telstra over the past five financial years. The tables in 
sections 3.2 and 3.3 provide a summary of how those results have 
been reflected in the remuneration outcomes for Senior 
Executives.

3.1 Financial Performance

Details of Telstra’s performance, share price, and dividends over 
the past five years are summarised in the table below: 

Performance 
Measures

Earnings

FY13
$m

FY12
$m

FY11
$m

FY10
$m

FY09
$m

Total Income

25,980 25,503 25,304 25,029 25,614

EBITDA

10,629 10,234 10,151 10,847 10,948

Net profit (1)

3,813

3,405

3,231

3,883

4,073

Shareholder Value

Share price ($) (2)

4.77

3.69

2.89

3.25

3.39

Total dividends 
paid per share 
(cents)

28

28

28

28

28

In respect of the calculation of the NPS measure, NPS is based on 
asking Telstra’s customers to rate their likelihood of 
recommending Telstra, out of a score of 10. The overall NPS result 
for Telstra is the weighted average of the surveys from Telstra’s 
Consumer (50 per cent), Business (25 per cent), and Enterprise 
and Government (25 per cent) customers. The surveys are 
undertaken by third party research companies. The measurement 
period for the FY13 results is based on the three month average 
across 1 April 2013 to 30 June 2013 for Consumer and Business, 
and the six month consolidated result from 1 January 2013 to 30 
June 2013 for Enterprise and Government. The final result was 
audited by Telstra’s Group Internal Audit team.

In respect of determining the Wholesale Customer Satisfaction 
measure that applies to the GMD Telstra Wholesale, its 
calculation is based on a survey of Wholesale customers only, 
undertaken by a third party research company during February to 
April 2013. 

The Board believes the methods of calculating the financial and 
NPS outcomes, as well as the Wholesale Customer Satisfaction, 
are appropriate and provided a rigorous assessment of Telstra’s 
performance.

The Board exercised its discretion to amend the FY13 STI targets 
in accordance with the Variation Guidelines (as outlined in section 
2.3.2) during the final assessment of the results in August 
2013. The amendments pertained to the sale of TelstraClear, 
spectrum purchases and the NBN rollout. Overall the adjustments 
had a net positive impact on the FY13 STI outcome. 

Senior Executive STI (excluding GMD Telstra 
Wholesale)

(1) Net profit attributable to equity holders of the Telstra entity.

(2)

Share prices are as at 30 June for the respective year. The closing share 
price for FY08 was $4.24.

Measure

3.2 Short Term Incentive Outcomes

3.2.1 Average STI Payment as a Percentage of Maximum STI 

Opportunity

Total Income

EBITDA

Free Cashflow

NPS

The average STI payment for Senior Executives as a percentage of 
maximum STI opportunity is shown in the following table:

GMD Telstra Wholesale STI

Performance 
Year

FY13

FY12

FY11

FY10

FY09

STI received

66.0% 65.6% 48.4% 22.7% 50.9%

3.2.2 Overall FY13 STI Plan Outcomes

Measure

Wholesale Total Income

Wholesale EBITDA

Wholesale Customer Satisfaction

Outcome
(% of maximum)

90.5%

77.3%

43.5%

62.5%

Outcome
(% of maximum)

100.0%

100.0%

100.0%

At the end of FY13, the Board reviewed Telstra’s audited financial 
results and the results of other performance measures. On 7 
August 2013 the Board then assessed performance against each 
measure and determined the percentage of STI that was payable, 
of which 25 per cent will be provided through Deferred Shares.

Section 3.2.3 provides a summary of STI payments as a 
percentage of maximum for each Senior Executive.

Definitions for the STI financial measures of Total Income, EBITDA 
and Free Cashflow are provided in the Glossary at the end of the 
Remuneration Report.

54

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

REMUNERATION REPORT

3.2.3 FY13 STI Plan Payment Results 

3.3 Long Term Incentive Outcomes

STI payments for FY13, compared to FY12, as a percentage of the 
maximum STI opportunity were as follows:

Name

David Thodey

Gordon Ballantyne

Rick Ellis

Stuart Lee

Kate McKenzie

Robert Nason

Andrew Penn

Brendon Riley

KMP Average:

FY13

66.4%

63.9%

52.6%

85.0%

63.9%

66.4%

66.4%

63.9%

66.0%

FY12 (1)

66.1%

69.1%

66.1%

58.1%

67.1%

n/a

66.1%

67.1%

65.6%

(1)

The FY12 average of 65.6 per cent reflects the total disclosed in the 2012 
Remuneration Report. Not all Senior Executives in FY13 qualified as KMP in 
FY12.

The graph below shows STI payments as a percentage of the 
maximum STI opportunity have tracked closely to Total Revenue 
growth over the past five years. While this correlation is positive, 
Telstra’s incentive plans measure performance against a range of 
financial and non-financial metrics with varied weightings. 
Accordingly, the pay for performance relationship is based on the 
performance against these metrics as a whole and may not always 
align with revenue growth.

2.7%

h
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1.1%

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100%

80%

60%

40%

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m
u
m
i
x
a
m

f
o

I
T
S
%

FY09

FY10

FY11

FY12

FY13

Total Revenue % Growth

% of STI MAX

Note that in our 2012 Remuneration Report the total revenue growth 
percentage for FY11 was stated at a lower amount than the actual figure. 
This has been corrected in the graph above.

The performance periods for the FY11 LTI Plan and the Chief 
Customer Officer FY11 LTI Plan concluded on 30 June 2013. The 
plans included the same performance measures, being RTSR and 
FCF ROI. 

The results of Telstra’s RTSR was calculated by an external 
provider and audited by Telstra’s Group Internal Audit team. 

The FY11 LTI plan FCF ROI target included only preliminary 
projections for NBN. In accordance with the Board’s intent to 
ensure there are no unintended windfall gains or losses for Senior 
Executives, the final FCF ROI calculation took into account the 
impact of the NBN. This had a positive effect and the stretch level 
of 16.4 per cent was achieved resulting in 100 per cent of this 
component vesting as Restricted Shares. The result was reviewed 
by Telstra’s Group Internal Audit team and our external auditor 
Ernst & Young. 

The Board has determined that the vesting outcomes are in 
accordance with the results and the Plan rules. 

3.3.1 FY11 LTI Plan Testing as at 30 June 2013

The vesting table for the FY11 LTI Plan is detailed below, reflecting 
performance up to 30 June 2013 against the two performance 
measures of RTSR and FCF ROI. 

The RTSR vesting result was based on Telstra ranking at the 86th 
percentile of the global peer group.

Test Date

Measure

% of plan vested

30 June 2013 

Total

RTSR

FCF ROI

50.0%

50.0%

100.0%

Upon vesting, each participant was granted Restricted Shares 
which are subject to a Restriction Period (concluding August 
2014), during which Senior Executives are not permitted to trade 
or sell those shares. 

3.3.2 FY11 Chief Customer Officer LTI Plan 

Testing as at 30 June 2013

As disclosed in our 2011 Remuneration Report and noted earlier, 
the Chief Customer Officer participated in a cash based LTI in 
March 2011 to cover the period of his fixed term contract, in lieu of 
participation in the annual Telstra equity-based LTI plans. This 
plan was subject to the same terms and performance criteria as 
Telstra’s FY11 LTI Plan that applied to all other Senior Executives.

In accordance with the vesting table above for the FY11 Plan, the 
Chief Customer Officer’s LTI vested at 100 per cent. Amounts 
payable under the plan are subject to further restriction and will 
not be paid to Gordon Ballantyne until 30 June 2014.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

55

 
 
 
 
 
 
 
REMUNERATION 
REPORT

3.4 Senior Executive Contract Details

The key terms and conditions of service contracts for current 
Senior Executives are summarised in the table below. 

Upon notice being given, Telstra can require a Senior Executive to 
work through the notice period or may terminate employment 
immediately by providing payment in lieu of notice. Any 
termination payment is calculated based on the Senior 
Executive’s Fixed Remuneration as at the date of termination. 

There will be no payment if termination is a result of serious 
misconduct, or redundancy in those cases where Telstra’s 
redundancy policy overrides the termination provisions of a Senior 
Executive’s service contract.

Name

Fixed 
Remuneration 
at end of FY13

Notice
Period

Termination
Payment

David Thodey

2,650,000

6 months 12 months (1)

Gordon Ballantyne

1,250,000

6 months

6 months (2)

Rick Ellis

Stuart Lee

925,000

6 months

6 months

1,000,000

6 months

12 months

Kate McKenzie

1,000,000

6 months

6 months

Robert Nason

1,050,000

6 months

6 months

Andrew Penn

1,400,000

6 months

6 months

Brendon Riley

1,300,000

6 months

12 months

(1)

In relation to David Thodey’s contract, if the Board forms the view that the 
CEO is not performing to the standard required of a CEO, Telstra may 
terminate by providing four months’ written notice.

(2) Gordon Ballantyne was on a fixed term contract with an end date of June 

2014. These terms reflect Gordon Ballantyne’s new ongoing contract of 
employment which took effect on 1 July 2013, as noted in section 1.5.

56

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

REMUNERATION REPORT

4. NON-EXECUTIVE DIRECTOR REMUNERATION

4.2 Remuneration Policy and Strategy

4.1 Remuneration Structure

The Telstra Board and Committee fee structure (inclusive of 
superannuation) during FY13 was:

Board Fees

Board

Committee Fees

Audit Committee

Remuneration Committee

Nomination Committee

Technology Committee (1)

Chairman

Non-executive 
Director

705,000

235,000

Committee 
Chair

Committee 
Member

70,000

50,000

-

7,000

35,000

25,000

7,000

7,000

(1)

The Technology Committee ceased operation on 14 June 2013.

The Chairman of the Board does not receive Committee fees in 
respect of her role as a Chair or a member of any Board Committee. 
As disclosed in our 2012 Remuneration Report, effective 1 July 
2012 the annual Board fee for non-executive Directors was 
increased to $235,000, and to $705,000 for the Chairman 
(representing an increase of 3.7 per cent). There was no increase 
in Committee fees. No increase in Board or Committee fees is 
contemplated for FY14.

Telstra’s non-executive Directors are remunerated in accordance 
with Telstra’s Constitution, which provides for an aggregate fee 
pool which is set and varied only by approval of a resolution of 
shareholders at the annual general meeting (AGM). The current 
annual fee pool of $3.5 million was approved by shareholders at 
Telstra’s 2012 AGM. 

The total of Board and Committee fees, including superannuation, 
paid to non-executive Directors in FY13 remained within the 
approved fee pool. 

Telstra’s non-executive Directors are remunerated with set fees 
and do not receive any performance based pay. This enables non-
executive Directors to maintain independence and impartiality 
when making decisions affecting the future direction of the 
company.

To align the non-executive Directors’ interests with the interests 
of our shareholders, the Board has established guidelines to 
encourage non-executive Directors to hold Telstra shares 
equivalent to at least 50 per cent of their annual fees. Such shares 
are to be acquired over a five year period from the later of 1 July 
2009 or the date of appointment. 

Progress is monitored on an ongoing basis and non-executive 
Directors are tracking well against the guidelines. Details of non-
executive Directors’ interests in Telstra shares as at 30 June 2013 
are set out in Table 5.8 of this report.

4.3 Remuneration Components

Superannuation contributions, in accordance with legislation and 
Telstra policy, are included within each non-executive Director’s 
Total Remuneration. Non-executive Directors may choose to 
increase the proportion of their remuneration taken as 
superannuation, subject to legislative requirements.

Telstra does not provide retirement benefits for non-executive 
Directors other than superannuation contributions.

Table 5.7 provides full details of non-executive Director 
remuneration for FY13.

Section 2.3.4 of this Report provides details on the Telstra 
securities trading restrictions which apply to all KMP, including 
non-executive Directors.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

57

REMUNERATION 
REPORT

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Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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t

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

59

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REMUNERATION 
REPORT

5.2 STI Payments (Cash and Shares)

Name

David Thodey

Gordon Ballantyne

Rick Ellis

Stuart Lee

Kate McKenzie

Robert Nason

Andrew Penn

Brendon Riley

Maximum 
Potential STI 
($) (1)

Current Year Grant of STI ($)
 (2)

75% Cash 
Component

25% Deferred 
Shares 
Component (3)(4)

% of the 
Maximum 
Potential

% Forfeited

Total Grant 
of STI ($)

5,300,000

2,637,413

4,876,000

2,415,449

2,500,000

1,197,188

2,500,000

1,294,688

1,850,000

729,825

 798,497

395,556

1,500,000

956,250

1,432,080

623,492

2,000,000

957,750

1,900,000

955,463

2,100,000

1,045,013

  -

  -

 2,800,000

1,393,350

 1,193,443

591,202

 2,600,000

1,245,075

 2,500,000

1,257,188

879,137

805,150

399,062

431,563

243,275

131,852

318,750

207,831

319,250

318,488

348,337

  -

464,450

197,067

415,025

419,063

66.4%

66.1%

63.9%

69.1%

52.6%

66.1%

85.0%

58.1%

63.9%

67.1%

66.4%

  -

66.4%

66.1%

63.9%

67.1%

33.6% 3,516,550

33.9% 3,220,599

36.1% 1,596,250

30.9% 1,726,251

47.4%

973,100

33.9%

527,408

15.0% 1,275,000

41.9%

831,323

36.1% 1,277,000

32.9% 1,273,951

33.6% 1,393,350

 -

 -

33.6% 1,857,800

33.9%

788,269

36.1% 1,660,100

32.9% 1,676,251

Year

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

(1)  Represents the maximum potential STI specific to FY13 and FY12 respectively, where the Senior Executive was a KMP, adjusted for any variation in Fixed 

Remuneration throughout FY13 and FY12 that impacts the maximum potential STI available. If the minimum threshold performance is not met, the minimum 
possible STI payment is nil.

(2)

(3)

(4)

The STI for FY13 and FY12 was approved by the Board on 7 August 2013 and 8 August 2012 respectively. 

The grant date for the equity component of the FY13 STI will be subsequent to the date of this Remuneration Report.

The Deferred Shares are released from restriction in equal parts over one and two years on the anniversary of their allocation date, subject to the Senior 
Executive’s continued employment. Refer to note 27 of the financial statements for further details.

60

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

REMUNERATION REPORT

5.3 Summary of LTI Plans and Other Equity Plans as at 30 June 2013

Performance Period

End Date (1)

% of 
Total 
Plan 
Tested at 
30/06/13

% of Grant 
Forfeited/
Expired in 
Current 
Year (2)

Future 
Financial 
Dates in 
which 
Grants may 
Vest

Accounting Value Yet 
to Vest (3)

Min ($)

Max ($)

1/07/2010 - 30/06/2013

20/08/2014

100

-

30/06/2014

Name

Plan

FY11

David Thodey

FY12

FY13

Gordon Ballantyne 
(4)

-

Rick Ellis

Stuart Lee (5)

FY12

FY13

FY11

FY13

FY11

Kate McKenzie

FY12

FY13

FY11

Robert Nason

FY12

FY13

FY12

FY13

FY12

FY13

Andrew Penn

Brendon Riley

Total

Type of 
Instrument 
Granted

Performance 
Rights

Performance 
Rights

Performance 
Rights

Performance 
Rights

Performance 
Rights
Performance 
Rights

Restricted 
Shares

Performance 
Rights
Performance 
Rights

Performance 
Rights

Performance 
Rights
Performance 
Rights

Performance 
Rights

Performance 
Shares
Performance 
Rights

Performance 
Rights

Performance 
Rights

1/07/2011 - 30/06/2014

19/08/2015

n/a

1/07/2012 - 30/06/2015

17/08/2016

n/a

-

-

-

-

1/07/2011 - 30/06/2014

19/08/2015

n/a

1/07/2012 - 30/06/2015

17/08/2016

n/a

n/a

n/a

-

n/a

n/a

30/06/2015

30/06/2016

-

30/06/2015

30/06/2016

1/07/2010 - 30/06/2013

20/08/2014

100

-

30/06/2014

n/a

17/08/2015

n/a

n/a

17/08/2015

1/07/2010 - 30/06/2013

20/08/2014

100

-

30/06/2014

1/07/2011 - 30/06/2014

19/08/2015

n/a

1/07/2012 - 30/06/2015

17/08/2016

n/a

n/a

n/a

30/06/2015

30/06/2016

1/07/2010 - 30/06/2013

20/08/2014

100

-

30/06/2014

1/07/2011 - 30/06/2014

19/08/2015

n/a

1/07/2012 - 30/06/2015

17/08/2016

n/a

14/12/2011 - 14/12/2014 14/12/2014

n/a

1/07/2012 - 30/06/2015

17/08/2016

n/a

1/07/2011 - 30/06/2014

19/08/2015

n/a

1/07/2012 - 30/06/2015

17/08/2016

n/a

n/a

n/a

n/a

n/a

n/a

n/a

30/06/2015

30/06/2016

31/12/2014

30/06/2016

30/06/2015

30/06/2016

nil

nil

nil

-

nil

nil

nil

nil

nil

nil

nil

nil

nil

nil

nil

nil

nil

nil

nil

 591,525 

 1,881,415 

 2,827,362 

-

 270,096 

 789,529 

 135,756 

 296,358 

 131,985 

 586,495 

 853,544 

 128,214 

 617,362 

 896,219 

  94,570 

 1,194,960 

 771,703 

 1,109,607 

13,176,700 

(1)  End Date refers to end of the Restriction Period for Performance Rights or Restricted Shares to vest.

(2) Represents the percentage of the grant that expired or was forfeited by the person, as service or performance criteria were not satisfied in the financial year. Not 
applicable (n/a) relates to LTI and other equity plans that either will be performance tested in future financial years or have met the relevant performance hurdles 
but are subject to a Restriction Period. 

(3)  The values included in the table above have been calculated by applying option valuation methodologies as described in note 27 of the financial statements.

(4)  Gordon Ballantyne did not participate in any LTI for FY13 due to the fixed term nature (four years) of his initial employment contract. He participated in a cash based 
LTI beginning 7 March 2011 (details of which are included in Telstra’s 2011 Remuneration Report). The stretch levels of FCF ROI and RTSR were achieved in FY13 and 
provided his service conditions are met an amount of $4,579,548 will be paid to Gordon Ballantyne on 30 June 2014.

(5)  The FY13 Restricted Shares grant to Stuart Lee was made in lieu of participation in the FY12 LTI Plan. See section 2.2.3 for more information.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

61

REMUNERATION 
REPORT

5.4 Accounting Value of all LTI Instruments

Name

David Thodey 

Gordon Ballantyne

Rick Ellis

Stuart Lee

Kate McKenzie

Robert Nason

Andrew Penn

Brendon Riley

Year

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

Accounting Value of LTI Equity Allocations 
(1) (2) (3)

Options
($)

Performance 
Rights ($)

Performance 
Shares ($)

Restricted 
Shares ($)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 148,179

339,704

Total

($)

2,793,368

 2,006,135

 -

 -

Accounting Value 
as a % of Total 
Remuneration (4)

(%)

31.7%

27.8%

-

-

398,224

17.8%

61,620

 207,954

793,401

 525,549

 735,634

6.7%

13.2%

10.8%

26.1%

20.3%

23.4%

 -

-

506,078

14.0%

 53,879

4.5%

755,721

20.5%

385,852

9.5%

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 2,793,368

35,253

 1,970,882

 -

 -

 -

 -

 -

 -

 -

 398,224

61,620

 191,525

 7,280

200,674

 -

 793,401

13,459

512,090

 735,634

 -

 -

 -

 -

 -

 -

 -

 398,320

107,758

 -

53,879

 755,721

385,852

 -

 -

(1)  The value of each equity instrument is calculated by applying valuation methodologies as described in note 27 to the financial statements and is then amortised 
over the relevant vesting period. The values included in the table relate to the current year amortised value of all LTI instruments detailed in the Equity Settled 
Share-based Payments section in the remuneration Table 5.1. Refer to note 27 to the financial statements for details on employee share plans.

(2)  When a vesting scale is used, the table reflects the maximum achievable allocation.

(3)  As required under AASB 2, accounting expense that was previously recognised as remuneration has been reversed in FY12. For FY12, this occurred for the FY09 
LTI plan that failed to satisfy non-market (i.e. non-RTSR) performance targets at 30 June 2012, resulting in equity instruments lapsing. For market based hurdles 
(i.e. RTSR) an accounting value is recorded above, however the relevant KMP received no value from those equity instruments that lapsed in FY12. There was no 
accounting expense that was reversed in FY13. Refer to the section 3.3 on LTI outcomes for FY13 for further information.

(4)  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 5.1 of this Report.

62

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

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Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

63

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REMUNERATION 
REPORT

5.6 Value of Equity Instruments Granted, Exercised and Lapsed/Forfeited in FY13

Name

David Thodey

Gordon Ballantyne

Rick Ellis

Stuart Lee

Kate McKenzie

Robert Nason

Andrew Penn

Brendon Riley

Granted during Period ($) 
(1) (2)

Exercised ($) 
(3)

Expired/Forfeited 
Value Foregone ($) (4)

Performance Rights

Restricted Shares

Options

Equity Instruments

 3,769,816

 -

 1,052,705

 -

 -

 -

 -

 444,537

 1,138,059

 1,194,958

 1,593,279

 1,479,476

 -

 -

 -

 -

 55,478

 -

 -

 13,696

 27,391

 -

 -

 -

  -

  -

  -

  -

  -

  -

  -

  -

(1)  The grant date of the FY13 LTI plan was 22 October 2012. The fair value of the RTSR and FCF ROI Performance Rights granted in FY13 at the grant date is $2.14 
and $3.28 respectively. The fair value reflects the valuation approach required by AASB 2 using an option pricing model, as explained in note 27 to the financial 
statements.

(2)

(3)

The FY13 Restricted Shares grant to Stuart Lee was made in lieu of participation in the FY12 LTI Plan. See section 2.2.3 for more information. The fair value of 
Restricted Shares granted on 17 August 2012 was $3.82 and is based on the market value of Telstra shares on allocation.

The value of the equity instruments exercised reflects the market value at the date of exercise after deducting any exercise price paid. The exercise price for 
Options exercised was $4.34. 

(4)  The value of equity instruments that have lapsed during the year represents the value foregone and is calculated at the date the equity instruments lapsed using 

an option pricing model and after deducting any exercise price that would have been payable. No equity instruments lapsed during FY13. 

64

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

REMUNERATION REPORT

5.7 Non-executive Director Remuneration

Name

Catherine B Livingstone
Chairman

Timothy Y Chen (3)
Director

Geoffrey A Cousins
Director

Russell A Higgins 
Director

John P Mullen
Director

Nora L Scheinkestel
Director

Margaret L Seale
Director

John W Stocker (4)
Director

Steven M Vamos 
Director

John D Zeglis 
Director

Total

Year

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

Short Term Employee Benefits

Post-Employment 
Benefits

Salary and Fees ($) 
(1)

Non-monetary 
benefits ($) (2)

Superannuation ($)

Total 
Remuneration ($)

688,530

664,025

67,376

61,120

250,530

242,825

253,530

265,400

275,530

272,911

288,530

301,400

243,366

31,681

77,088

310,100

243,255

231,906

225,204

232,566

2,612,939

2,613,934

5,952

 4,641

 -

 -

 -

 -

388

333

1,013

1,153

 -

 -

 -

 -

 -

164

1,902

1,692

 1,590

 -

10,845

7,983

16,470

15,775

4,377

3,922

16,470

15,775

16,470

15,775

16,470

10,689

16,470

15,775

16,470

2,371

4,873

15,775

27,389

26,694

16,470

1,034

710,952

684,441

71,753

65,042

267,000

258,600

270,388

281,508

293,013

284,753

305,000

317,175

259,836

34,052

81,961

326,039

272,546

260,292

243,264

233,600

151,929

123,585

2,775,713

2,745,502

(1) 

Includes fees for membership on Board Committees. In FY12, the fees also included additional fees for services provided in relation to the NBN Due Diligence 
Committee. This amount includes $22,275 for John Stocker, $19,575 for Russell Higgins and $55,575 for Nora Scheinkestel.

(2)  These payments refer to the value of car parking, as well as telecommunications and other services and equipment provided to non-executive Directors to assist 

them in performing their duties. From time to time Telstra may also make products and services available to non-executive Directors without charge to allow 
them to familiarise themselves with Telstra’s products and services and with recent technological developments.

(3)  Timothy Chen qualifies as a KMP for the period 1 July 2012 to 5 October 2012.

(4) 

John Stocker qualifies as a KMP for the period 1 July 2012 to 16 October 2012. 

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

65

REMUNERATION 
REPORT

5.8 KMP Interests in Shares of the Telstra Entity

During FY13, our KMP and their related parties held share capital of the Telstra Entity directly, indirectly or beneficially as follows:

Non-Executive Directors

Catherine B Livingstone

Timothy Y Chen (4)

Geoffrey A Cousins

Russell A Higgins

John P Mullen

Nora L Scheinkestel

Margaret L Seale

John W Stocker (4)

Steven M Vamos

John D Zeglis

Total

Senior Executives

David Thodey

Gordon Ballantyne

Rick Ellis

Stuart Lee

Kate McKenzie

Robert Nason (5)

Andrew Penn

Brendon Riley

Total

Total shares 
held at 
30 June 2012
(1)

Equity 
instruments 
exercised

Deferred 
shares 
granted (3)

Net shares 
acquired or 
disposed of by 
other means

Total shares 
held at 
30 June 2013
(1)

Shares held 
nominally at 
30 June 2013 
(2)

165,816

-

31,765

88,404

26,159

59,450

224,141

212,238

40,000

103,993

951,966

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

10,000

175,816

175,816

-

50,000

-

-

27,847

11,614

-

-

-

-

81,765

88,404

26,159

87,297

235,755

212,238

40,000

103,993

-

21,765

83,084

26,159

87,297

235,755

108,652

40,000

37,493

99,461

1,051,427

816,021

786,117

252,174

86,568

10,000

265,503

167,698

78,786

74,232

183,417

-

-

48,913

91,304

-

-

-

1,652,321

392,391

211,325

109,990

34,607

54,549

83,593

87,992

51,724

109,990

743,770

(239,564)

1,010,052

-

12,000

(47,863)

(91,304)

-

12,953

-

196,558

56,607

321,102

251,291

166,778

138,909

293,407

997,442

153,274

42,607

176,044

141,725

139,885

110,524

275,536

(353,778)

2,434,704

2,037,037

2,604,287

392,391

743,770

(254,317)

3,486,131

2,853,058

(1)

Total shareholdings include shares held by our KMP and their related parties. Unless related to our employee share plans, shares acquired or disposed by our 
KMP during FY13 were on an arm’s length basis at market price. 

(2) Nominally refers to shares held either indirectly or beneficially, including (for non-executive Directors) those acquired under Directshare, as well as (for Senior 
Executives) certain Incentive Shares and Deferred Shares. These shares are subject to a Restriction Period, such that the non-executive Director or Senior 
Executive is restricted from dealing with the shares until after they are released from the Restriction Period. Refer to note 27 for further details.

(3) Deferred Shares granted during FY13 relate to the FY12 STI Plan which were allocated on 17 August 2012. However, the allocation of Deferred Shares under the 

FY13 STI Plan will be made subsequent to the reporting date of 30 June 2013, therefore they have not been included in the table above. 

(4)

For these non-executive Directors and Senior Executives who left Telstra/the Board during the year, represents shares held as at the date of cessation as a non-
executive Director or no longer qualified as KMP. 

(5) Robert Nason qualified as a KMP on 1 July 2012 and the balances above represent shares held as at the date he became KMP.

66

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

REMUNERATION REPORT

Glossary and Abbreviations used in Report 

Average Investment for LTI

Average investment over the period is the average of the sum of net debt and shareholders’ funds 
over the entire three year performance period

Customer Satisfaction

A non financial measure in Telstra’s FY12 STI Plan. Refer to section 2.2.1 for further information

Deferred Share

EBITDA

EBITDA for STI

FCF for LTI 

FCF ROI for LTI

FCF for STI

A Telstra share that is granted under an STI Deferral Plan and cannot be traded until the end of the 
Restriction Period

Earnings Before Interest, Tax, Depreciation and Amortisation 

Earnings Before Interest, Tax, Depreciation and Amortisation (excluding profit/loss on Land & 
Building disposals)

FCF for these purposes is annual Free Cashflow less interest paid and adjusting for non-recurring 
factors such as spectrum purchases, acquisitions and gains on the sale of assets 

A ratio of the average annual Free Cashflow over the entire three year performance period by 
Telstra’s average investment over the same period

Free Cashflow (excluding CAPEX for Investment and Spectrum; and proceeds from Land & Building 
disposals) 

Fixed Remuneration

Base salary plus company and private salary sacrificed superannuation contributions. Specifically 
defined as Total Fixed Remuneration in the CEO’s contract

Free Cashflow (FCF)

Cashflow from operating and investing activities

GMD

KMP

LTI

NBN

NBN Transaction

NPS

Performance Right

Group Managing Director

Key Management Personnel

Long Term Incentive

National Broadband Network

Agreements with NBN Co and the Government in relation to Telstra’s participation in the rollout of 
the NBN

Net Promoter Score. A non financial measure in Telstra’s FY13 STI Plan. Refer to section 2.2.1 for 
further information

A right to a Restricted Share at the end of a performance period, subject to the satisfaction of 
certain performance measures

Permitted Reason (LTI)

Death, total and permanent disablement, redundancy or separation by mutual agreement

Permitted Reason (STI)

Death, total and permanent disablement, redundancy or retirement where that notice of retirement 
is given more than six months after the actual allocation date

Restricted Share

A Telstra share that cannot be traded until the end of the Restriction Period

Restriction Period

A period during which a Telstra share cannot be traded and is subject to a service condition

RTSR

Senior Executive

Relative Total Shareholder Return

Refers to the Chief Executive Officer and those executives with authority and responsibility for 
planning, directing and controlling the activities of the company and Group, directly or indirectly

Service Agreement

A Senior Executive’s contract of employment

SSU

STI

STI Deferral Plan

Straightline Vesting

Structural Separation Undertaking

Short Term Incentive

A plan under which Senior Executives are provided with a percentage of their actual STI payment in 
the form of Deferred Shares

Describes the vesting calculation between target and stretch of an LTI plan, where the payout 
between two levels is based on equal increments determined by performance

Total Income

Total Telstra Income excluding profit/loss on Land & Building disposals

Total Remuneration

The sum of all the fixed and variable components of remuneration as detailed in Table 5.1 for Senior 
Executives, and all the remuneration components as detailed in Table 5.7 for non-executive 
Directors

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

67

DIRECTORS'
REPORT

Ernst & Young
8 Exhibition Street 
Melbourne  VIC  3000  Australia
GPO Box 67 Melbourne  VIC  3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au

Rounding of amounts 

The Telstra Entity is a company of the kind referred to in the 
Australian Securities and Investments Commission Class Order 
98/100, dated 10 July 1998 and issued pursuant to section 341(1) 
of the Corporations Act 2001. As a result, amounts in this report 
and the accompanying financial report have been rounded to the 
nearest million dollars ($m), except where otherwise indicated.

This report is made on 8 August 2013 in accordance with a 
resolution of the Directors.

Auditor’s Independence Declaration to the Directors of 
Telstra Corporation Limited

In relation to our audit of the financial report of Telstra 
Corporation Limited for the financial year ended 30 June 2013, 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.

Catherine B Livingstone AO
Chairman
8 August 2013

David I Thodey
Chief Executive Officer and Executive Director
8 August 2013 

Ernst & Young

SJ Ferguson
Partner
Sydney, Australia
8 August 2013

A member firm of Ernst & Young Global Limited 
Liability limited by a scheme approved under Professional Standards 
Legislation

68

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

TELSTRA CORPORATION LIMITED 
AND CONTROLLED ENTITIES

Australian Business Number (ABN): 33 051 775 556 

FINANCIAL REPORT

as at 30 June 2013

Financial Statements
Income Statement  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Statement of Comprehensive Income  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Statement of Financial Position   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Statement of Cash Flows.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Statement of Changes in Equity  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Notes to the Financial Statements
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Note 10
Note 11
Note 12
Note 13
Note 14
Note 15
Note 16
Note 17
Note 18
Note 19
Note 20
Note 21
Note 22
Note 23
Note 24
Note 25
Note 26
Note 27
Note 28
Note 29
Note 30
Note 31

-   Basis of preparation .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Summary of significant accounting policies, estimates, assumptions and judgements .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Earnings per share   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Dividends  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Segment information   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Income.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Expenses  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Remuneration of auditors  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Income taxes   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Trade and other receivables .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Inventories .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Non current assets held for sale.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Property, plant and equipment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Intangible assets.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Trade and other payables .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Provisions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Capital management and financial instruments .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Financial risk management  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Share capital.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Notes to the statement of cash flows  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Impairment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Expenditure commitments .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   Contingent liabilities and contingent assets .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
-   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 reporting date   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Page
 Number

70
71
72
73
74

75
76
93
94
95
100
101
103
104
106
108
109
110
112
115
116
118
127
144
145
147
149
151
152
157
165
170
185
191
194
196

Directors’ Declaration   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

197

Independent Auditor’s Report  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

198

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

69

INCOME 
STATEMENT
FOR THE YEAR ENDED 30 JUNE 2013

Telstra Group
Year ended 30 June
2012
$m

2013
$m

Note

Income
Revenue (excluding finance income).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   6
Other income .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   6

Expenses
Labour  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Goods and services purchased   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other expenses   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   7

Share of net loss from jointly controlled and associated entities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 26

Earnings before interest, income tax expense, depreciation and amortisation (EBITDA)  .  .  .  .  .  .  .  .  .  . 
Depreciation and amortisation  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   7
Earnings before interest and income tax expense (EBIT)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Finance income   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   6
Finance costs.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   7
Net finance costs .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

25,678
302
25,980

4,803
6,389
4,158
15,350

1
15,351

10,629
4,238
6,391

219
1,128
909

25,368
135
25,503

4,967
6,179
4,123
15,269

-
15,269

10,234
4,412
5,822

134
1,022
888

Profit before income tax expense  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

5,482

4,934

Income tax expense  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   9

1,617

1,510

Profit for the year .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

3,865

3,424

Attributable to
Equity holders of Telstra Entity .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Non-controlling interests  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

3,813
52
3,865

3,405
19
3,424

Earnings per share (cents per share)
Basic  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   3
Diluted  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   3

cents
30.7
30.6

cents
27.5
27.4

The notes following the financial statements form part of the financial report.

70

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

STATEMENT OF 
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2013

FINANCIAL STATEMENTS

Telstra Group
Year ended 30 June
2012
$m

2013
$m

Note

Profit for the year
Attributable to equity holders of Telstra Entity  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Attributable to non-controlling interests.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Items that will not be reclassified subsequently to the income statement
Retained profits:
- actuarial gain/(loss) on defined benefit plans attributable to equity holders of Telstra Entity .  .  .  .  .  .  . 24
- income tax on actuarial gain/(loss) on defined benefit plans .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- actuarial gain/(loss) on defined benefit plans attributable to non-controlling interests  .  .  .  .  .  .  .  .  .  . 24
Foreign currency translation reserve:
- translation differences of foreign operations attributable to non-controlling interests.  .  .  .  .  .  .  .  .  .  .  . 

Items that may be reclassified subsequently to the income statement
Foreign currency translation reserve:
- translation differences of foreign operations attributable to equity holders of Telstra Entity   .  .  .  .  .  .  .  . 
- income tax on movements in the foreign currency translation reserve .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- translation differences transferred to income statement on disposal of controlled entities .  .  .  .  .  .  .  .  . 
- income tax on translation differences transferred to income statement on disposal of controlled entities  . 
Cash flow hedging reserve:
- changes in fair value of cash flow hedges  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- changes in fair value transferred to other 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 cash flow hedging reserve .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Total other comprehensive income  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total comprehensive income for the year.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Total comprehensive income attributable to equity holders of Telstra Entity .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total comprehensive income attributable to non-controlling interests  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

The notes following the financial statements form part of the financial report.

3,813
52
3,865

3,405
19
3,424

676
(202)
2

23
499

101
21
112
18

365
(617)
12
236
-
(1)
247

746
4,611

4,534
77

(752)
222
(3)

11
(522)

68
9
9
-

(587)
204
7
263
9
31
13

(509)
2,915

2,888
27

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

71

STATEMENT OF 
FINANCIAL POSITION
AS AT 30 JUNE 2013

Telstra Group
As at 30 June

2013
$m

2012
$m

Note

Current assets
Cash and cash equivalents.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 20
Trade and other receivables  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 10
Inventories  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 11
Derivative financial assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 17(f)
Current tax receivables.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Prepayments .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Assets classified as held for sale .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 12
Total current assets.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Non current assets
Trade and other receivables  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 10
Inventories  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 11
Investments - accounted for using the equity method  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 26
Investments - other .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Property, plant and equipment .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 13
Intangible assets .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 14
Derivative financial assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 17(f)
Non current tax receivables   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Deferred tax assets.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   9
Defined benefit assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 24
Total non current assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Current liabilities
Trade and other payables   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 15
Provisions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 16
Borrowings .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   17(a)
Derivative financial liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 17(f)
Current tax payables .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Revenue received in advance  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Liabilities classified as held for sale  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 12
Total current liabilities   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Non current liabilities
Other payables .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 15
Provisions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 16
Borrowings .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   17(a)
Derivative financial liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 17(f)
Deferred tax liabilities   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   9
Defined benefit liability .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 24
Revenue received in advance  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total non current liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total liabilities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net assets .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

2,479
4,557
431
43
79
314
-
7,903

943
27
18
38
20,326
8,202
1,062
-
5
3
30,624
38,527

4,241
918
751
44
444
1,124
-
7,522

163
276
14,313
1,625
1,330
42
381
18,130
25,652
12,875

3,945
4,346
260
32
363
250
754
9,950

851
24
12
19
20,504
7,421
658
80
6
-
29,575
39,525

4,131
942
3,306
299
731
1,170
105
10,684

174
264
11,958
2,349
1,107
831
469
17,152
27,836
11,689

Equity
Share capital .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 19
Reserves .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Retained profits.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Equity available to Telstra Entity shareholders .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Non-controlling interests  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total equity  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

5,711
(619)
7,519
12,611
264
12,875

5,635
(867)
6,712
11,480
209
11,689

The notes following the financial statements form part of the financial report.

72

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

STATEMENT OF 
CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2013

FINANCIAL STATEMENTS

Telstra Group
Year ended 30 June
2012
$m

2013
$m

Note

Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax (GST))   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Payments to suppliers and to employees (inclusive of GST)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Government grants received .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net cash generated by operations .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Income taxes paid  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net cash provided by operating activities.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 20

28,585
(18,803)
77
9,859
(1,500)
8,359

28,188
(17,491)
176
10,873
(1,597)
9,276

Cash flows from investing activities
Payments for:
- property, plant and equipment   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- intangible assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Capital expenditure (before investments)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- shares in controlled entities (net of cash acquired) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 20
- payments for jointly controlled and associated entities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 26
- payments for other investments   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 17
Total capital expenditure  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Proceeds from:
- sale of property, plant and equipment   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- sale of intangible assets   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- sale of shares in controlled entities (net of cash disposed) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 20
- sale of businesses (net of cash disposed)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Proceeds from finance lease principal amounts  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Repayment of loans to jointly controlled and associated entities   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Loans to jointly controlled and associated entities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Interest received  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Settlement of hedges in net investments.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Dividends received .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Distributions received from FOXTEL Partnership  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   6
Net cash used in investing activities   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Operating cash flows less investing cash flows  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Cash flows from financing activities
Proceeds from borrowings .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Repayment of borrowings  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Repayment of finance lease principal amounts   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Proceeds from sale and finance lease back transactions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Staff repayments of share loans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Proceeds received from exercise of equity instruments  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Finance costs paid .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Acquisition of non-controlling interests .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 20
Dividends paid to equity holders of Telstra Entity   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   4
Dividends paid to non-controlling interests .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net cash used in financing activities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Net (decrease)/increase in cash and cash equivalents.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Cash and cash equivalents at the beginning of the year .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Effects of exchange rate changes on cash and cash equivalents  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Cash and cash equivalents at the end of the year  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 20

The notes following the financial statements form part of the financial report. 

(2,818)
(1,691)
(4,509)
(9)
(8)
(19)
(4,545)

57
12
693
4
64
-
(1)
236
(11)
1
155
(3,335)
5,024

2,074
(4,042)
(97)
52
4
29
(1,037)
(1)
(3,480)
(28)
(6,526)

(1,502)
3,945
36
2,479

(3,006)
(942)
(3,948)
-
(9)
(18)
(3,975)

17
2
(9)
(2)
54
3
(443)
117
49
-
108
(4,079)
5,197

3,049
(2,224)
(52)
-
3
-
(1,154)
(37)
(3,475)
(16)
(3,906)

1,291
2,637
17
3,945

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

73

STATEMENT OF 
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2013

Telstra Group

Reserves

Foreign
currency
transla- Cash flow

Consolid-
ation

tion
(a)
$m

hedging fair value

(b)
$m

(c)
$m

General
reserve Retained

(d)
$m

profits
$m

Total
$m

Non-
controll-
ing
interests
$m

Balance at 1 July 2011  .  
Profit for the year .  .  .  .  .  
Other comprehensive income
Total comprehensive income
for the year .  .  .  .  .  .  .  .  
Dividends .  .  .  .  .  .  .  .  .  
Transactions with non-
controlling interests.  .  .  .  
Non-controlling interests on 
disposals .  .  .  .  .  .  .  .  .  
Transfers to retained profits
Amounts repaid on share 
loans provided to employees
Share based payments.  .  
Balance at 30 June 2012  

Profit for the year .  .  .  .  .  
Other comprehensive income
Total comprehensive income
for the year .  .  .  .  .  .  .  .  
Dividends .  .  .  .  .  .  .  .  .  
Transactions with non-
controlling interests.  .  .  .  
Amounts repaid on share 
loans provided to employees
Additional shares purchased
Exercise of employee share 
options  .  .  .  .  .  .  .  .  .  .  
Share based payments.  .  
Balance at 30 June 2013  

Share
capital
$m

5,610
-
-

-
-

-

-
-

3
22
5,635

-
-

-
-

-

47
(42)

29
42
5,711

(837)
-
86

86
-

-

-
-

-
-
(751)

-
252

252
-

-

-
-

-
-
(499)

(14)
-
(73)

(73)
-

-

-
-

-
-
(87)

-
(5)

(5)
-

-

-
-

-
-
(92)

4
-
-

-
-

-

-
(4)

-
-
-

-
-

-
-

-

-
-

-
-
-

4
-
-

-
-

(32)

-
(1)

-
-
(29)

-
-

-
-

1

-
-

7,307
3,405
(530)

12,074
3,405
(517)

2,875
(3,475)

2,888
(3,475)

-

-
5

-
-
6,712

3,813
474

(32)

-
-

3
22
11,480

3,813
721

218
19
8

27
(16)

(5)

(24)
-

-
9
209

52
25

Total
equity
$m

12,292
3,424
(509)

2,915
(3,491)

(37)

(24)
-

3
31
11,689

3,865
746

4,287
(3,480)

4,534
(3,480)

77
(28)

4,611
(3,508)

-

-
-

1

47
(42)

-

-
-

1

47
(42)

-
-
(28)

-
-
7,519

29
42
12,611

-
6
264

29
48
12,875

(a) The foreign currency translation reserve is used to record 
exchange differences arising from the conversion of the non-
Australian controlled entities’ financial statements into Australian 
dollars.  This reserve is also used to record our percentage share of 
exchange differences arising from equity accounting our non-
Australian investments in jointly controlled and associated entities.

(d) The general reserve represents other items we have taken 
directly to equity.

The notes following the financial statements form part of the 
financial report.

(b) The cash flow hedging reserve represents the effective portion 
of gains or losses on remeasuring the fair value of the hedge 
instrument, where a hedge qualifies for hedge accounting.   These 
gains or losses are transferred to the income statement when the 
hedged item affects income, or, in the case of forecast transactions, 
are included in the measurement of the initial cost of property, plant 
and equipment or inventory.

(c) The consolidation fair value reserve represented our share of the 
fair value adjustments to TelstraClear Limited net assets upon 
acquisition of a controlling interest, which was amortised over the 
useful life of the underlying revalued assets.  The reserve balance 
was amortised in full in financial year 2012. 

74

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

We continually evaluate our judgements and estimates.  We base 
our judgements and estimates on historical experience, various 
other assumptions we believe to be reasonable under the 
circumstances and, where appropriate, practices adopted by 
international telecommunications companies.  Actual results may 
differ from our estimates.

1.2  Clarification of terminology used in our income statement

Under the requirements of AASB 101: “Presentation of Financial 
Statements“, we must classify all of our expenses (apart from any 
finance costs and our share of net profit/loss from jointly controlled 
and associated entities) according to either the nature (type) of the 
expense or the function (activity to which the expense relates).  We 
have chosen to classify our expenses using the nature classification 
as it more accurately reflects the type of operations we undertake.

Earnings before interest, income tax expense, depreciation and 
amortisation (EBITDA) reflects our profit for the year prior to 
including the effect of net finance costs, income taxes, depreciation 
and amortisation.  Depreciation and amortisation are calculated in 
accordance with AASB 116: “Property, Plant and Equipment“ and 
AASB 138: “Intangible Assets“ respectively.  We believe that 
EBITDA is a relevant and useful financial measure used by 
management to measure the company’s operating performance.

Our management uses EBITDA and earnings before interest and 
income tax expense (EBIT), in combination with other financial 
measures, primarily to evaluate the company’s operating 
performance before financing, income tax and non-cash capital 
related expenses.  In addition, we believe EBITDA is useful to 
investors because analysts and other members of the investment 
community largely view EBITDA as a key and widely recognised 
measure of operating performance.

EBIT is a similar measure to EBITDA, but it takes into account 
depreciation and amortisation.

1.3 Rounding

All dollar amounts in this financial report (except where indicated) 
have been rounded to the nearest million dollars ($m) for 
presentation.  This has been done in accordance with Australian 
Securities and Investments Commission (ASIC) Class Order 
98/100, dated 10 July 1998, issued under section 341(1) of the 
Corporations Act 2001.  Telstra is an entity to which this class order 
applies.

NOTES TO THE 
FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

In this financial report, we, us, our, Telstra, the Telstra Group and 
the Group - all mean Telstra Corporation Limited, an Australian 
corporation and its controlled entities as a whole.  Telstra Entity is 
the legal entity, Telstra Corporation Limited.  Telstra Entity, the 
Company, is a company limited by shares incorporated in Australia 
whose shares are publicly traded on the Australian Securities 
Exchange.

Our financial year ends on 30 June.  Unless we state differently the 
following applies:

• year or financial year means the year ended 30 June;
•
• 2013 means financial year 2013 and similarly for other financial 

reporting date means the date 30 June; and

years.

The financial report of the Telstra Group for the year ended 30 June 
2013 was authorised for issue in accordance with a resolution of the 
Telstra Board of Directors on 8 August 2013.  The Directors have 
the power to amend and reissue the financial report.  

The principal accounting policies used in preparing the financial 
report of the Telstra Group are set out in note 2 to our financial 
statements.

1.1 Basis of preparation of the financial report

This financial report is a general purpose financial report, prepared 
by a for-profit entity, in accordance with the requirements of the 
Australian Corporations Act 2001, Accounting Standards applicable 
in Australia and other authoritative pronouncements of the 
Australian Accounting Standards Board.  This financial report also 
complies with International Financial Reporting Standards and 
Interpretations published by the International Accounting Standards 
Board.  

Both the functional and presentation currency of the Telstra Entity 
and its Australian controlled entities is Australian dollars.  The 
functional currency of certain non Australian controlled entities is 
not Australian dollars.  As a result, the results of these entities are 
translated into Australian dollars for presentation in the Telstra 
Group financial report.

This financial report is prepared in accordance with historical cost, 
except for some categories of investments and some financial 
instruments which are recorded at fair value.  Cost is the fair value 
of the consideration given in exchange for net assets acquired.

In preparing this financial report, we are required to make 
judgements and estimates that affect:

•
•
•

income and expenses for the year;
the reported amounts of assets and liabilities; and
the disclosure of off balance sheet arrangements, including 
contingent assets and contingent liabilities.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

75

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS

2.1  Changes in accounting policies

The following accounting policy change occurred during the year 
ended 30 June 2013:

Non-controlling interests in the results and equity of controlled 
entities are shown separately in our income statement, statement of 
comprehensive income and statement of financial position.

(a) Presentation of labour substitution costs 

Labour substitution costs were reclassified from other expenses to 
labour costs in the income statement in order to align with the 
presentation of total labour expenses in our “Full Year Results and 
Operations Review”.  We believe this provides more relevant 
information to the users of the financial statements.  The 
reclassification has no impact on profit, equity or earnings per share 
calculations.  Comparatives have been adjusted accordingly as 
illustrated in the below table to present a like-for-like view:

Expenses line item

Telstra Group
 30 June 2012
Reported Adjustment Restated
$m

$m

$m

Labour  .  .  .  .  .  .  .  .  .  .  .  
Other expenses   .  .  .  .  .  . 

4,061
5,029

906
(906)

4,967
4,123

We have had no other changes in accounting policy during the year 
ended 30 June 2013.  However, we note the following new 
accounting standard, applicable in the current year:

(b) Deferred Tax: Recovery of Underlying Assets

AASB 2010-8: “Amendments to Australian Accounting Standards - 
Deferred Tax: Recovery of Underlying Assets” provides clarification 
regarding the measurement of deferred tax for investment property, 
where the fair value model is applied, and for property, plant and 
equipment and intangibles, where the revaluation model is applied.  
It provides that measurement of deferred tax should be determined 
under the assumption that the underlying asset will be recovered 
through sale (as opposed to use) unless otherwise rebutted.  

This new accounting standard does not have an impact on Telstra 
as we do not adopt a revaluation model for any of our property, plant 
and equipment or intangibles and we have no investment 
properties. 

2.2  Principles of consolidation

The consolidated financial report includes the assets and liabilities 
of the Telstra Entity and its controlled entities as a whole as at the 
end of the year and the consolidated results and cash flows for the 
year.  The effect of all intragroup transactions and balances are 
eliminated in full from our consolidated financial statements.

An entity is considered to be a controlled entity where we are able 
to dominate decision making, directly or indirectly, relating to the 
financial and operating policies of that entity so as to obtain benefits 
from its activities.

Where we do not control an entity for the entire year, results and 
cash flows for those entities are only included from the date on 
which control commences, or up until the date on which there is a 
loss of control.

We account for the acquisition of our controlled entities using the 
acquisition method of accounting.  This involves recognising the 
acquiree’s identifiable assets, liabilities and contingent liabilities at 
their fair value at the date of acquisition.  Any excess of the fair value 
of consideration over our interest in the fair value of the acquiree’s 
identifiable assets, liabilities and contingent liabilities is recognised 
as goodwill. 

The financial statements of controlled entities are prepared for the 
same reporting period as the Telstra Entity, using consistent 
accounting policies.  Adjustments are made to bring into line any 
dissimilar accounting policies.

2.3  Foreign currency translation

(a) Transactions and balances

Foreign currency transactions are converted into the relevant 
functional currency at market exchange rates applicable at the date 
of the transactions.  Amounts payable or receivable in foreign 
currencies at reporting date are converted into the relevant 
functional currency at market exchange rates at reporting date.  Any 
currency translation gains and losses that arise are included in our 
income statement.  Where we enter into a hedge for a specific 
expenditure commitment or for the construction of an asset, 
hedging gains and losses are accumulated in other comprehensive 
income over the period of the hedge and are transferred to the 
carrying value of the asset upon completion, or included in the 
income statement at the same time as the discharge of the 
expenditure commitment.

The consolidated financial statements are presented in Australian 
dollars, which is the functional and presentation currency of Telstra 
Corporation Limited. 

(b) Financial reports of foreign operations that have a functional 
currency that is not Australian dollars

Our operations include subsidiaries, associates, and jointly 
controlled entities, the activities and operations of which are in an 
economic environment where the functional currency is not 
Australian dollars. The financial statements of these entities are 
translated into Australian dollars (our presentation currency) using 
the following method:

• assets and liabilities are translated into Australian dollars using 

market exchange rates at reporting date;

• equity at the date of investment is translated into Australian 

dollars at the exchange rate current at that date.  Movements 
post-acquisition (other than retained profits/accumulated losses) 
are translated at the exchange rates current at the dates of those 
movements;
income statements are translated into Australian dollars at 
average exchange rates for the year, unless there are significant 
identifiable transactions, which are translated at the exchange 
rate that existed on the date of the transaction; and

•

• currency translation gains and losses are recorded in other 

comprehensive income.

76

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

 
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

FINANCIAL STATEMENTS

(CONTINUED)

2.3  Foreign currency translation (continued)

(b) Financial reports of foreign operations that have a functional 
currency that is not Australian dollars (continued)

Refer to note 2.22(c) for details regarding our accounting policy for 
derivative financial instruments and foreign currency monetary 
items that are used to hedge our net investment in entities which 
have a functional currency that is not in Australian dollars.

2.4  Cash and cash equivalents

Net realisable value of items expected to be sold is the estimated 
selling price in the ordinary course of business, less estimated costs 
of completion and the estimated costs incurred in marketing, selling 
and distribution.  It approximates fair value less costs to sell.  We 
calculate net realisable value of inventories by making certain price 
assumptions to project selling prices into the future and 
assumptions about technologies at reporting date.

Net realisable value of items expected to be consumed, for example 
used in the construction of another asset, is the net value expected 
to be earned through future use.

Cash and cash equivalents include cash at bank and on hand, bank 
deposits, negotiable certificates of deposit and bills of exchange 
that are held for the purposes of meeting short term cash 
commitments rather than investment purposes.

2.7  Construction contracts

(a) Valuation

Bank deposits are recorded at amounts to be received.  Negotiable 
certificates of deposit and bills of exchange are classified as 
“available-for-sale” financial assets and are held at fair value.  The 
carrying amount of these assets approximates their fair value due to 
the short term to maturity.

2.5  Trade and other receivables

Trade and other receivables are considered financial assets.  They 
are initially recorded at the fair value of the amounts to be received 
and are subsequently measured at amortised cost using the 
effective interest method.  These financial assets are derecognised 
when the rights to receive cash flows from the financial assets have 
expired or have been transferred and we have transferred 
substantially all the risks and rewards of ownership.

An allowance for doubtful debts is raised to reduce the carrying 
amount of trade receivables, based on a review of outstanding 
amounts at reporting date.  The allowance for doubtful debts is 
based on historical trends and management's assessment of 
general economic conditions.  An allowance for doubtful debts is 
raised when management considers there is a credit risk, 
insolvency risk or incapacity to pay a legally recoverable debt.  Bad 
debts specifically provided for in previous years are eliminated 
against the allowance for doubtful debts.  In all other cases, bad 
debts are eliminated directly against the carrying amount and 
written off as an expense in the income statement.

We record construction contracts in progress at cost (including any 
profits recognised) less progress billings and any provision for 
foreseeable losses.  Cost includes:

• both variable and fixed costs directly related to specific contracts;
• amounts that are attributable to contract activity in general and 
which can be allocated to specific contracts on a reasonable 
basis; and 

• costs expected to be incurred under penalty clauses, warranty 

provisions and other variances. 

Where a significant loss is estimated to be made on completion, a 
provision for foreseeable losses is brought to account and recorded 
against the gross amount of construction work in progress.

(b) Recognition of revenue and profit

Revenue and profit is recognised on an individual project basis 
using the percentage of completion method.  The percentage of 
completion is calculated based on estimated costs of completion.  
Refer to note 2.17(d) for further details. 

Profits are recognised when:

the stage of contract completion can be reliably determined;

•
• costs to date can be clearly identified; and
•

total contract revenues to be received and costs to complete can 
be reliably estimated.

2.6  Inventories

(c) Disclosure 

Our finished goods include goods available for sale, and material 
and spare parts to be used in constructing and maintaining the 
telecommunications network.  We value inventories at the lower of 
cost and net realisable value.

For the majority of inventory items, we assign cost using the 
weighted average cost basis.  For materials used in the production 
of directories the “first in first out” basis is used for assigning cost.

The construction work in progress balance is recorded in current 
inventories after deducting progress billings.  Where progress 
billings exceed the balance of construction work in progress, the net 
amount is shown as a current liability within trade and other 
payables.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

77

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

(CONTINUED)

2.8  Investments

(a) Jointly controlled and associated entities

(i) Jointly controlled entities

A jointly controlled entity is a contractual arrangement (in the form 
of an entity) whereby two or more parties take on an economic 
activity that is governed by joint control.  Joint control involves the 
contractually agreed sharing of control over an entity where two or 
more parties must consent to all major decisions.  Our interests in 
jointly controlled entities, including partnerships, are accounted for 
using the equity method of accounting in the Telstra Group financial 
statements.

Under the equity method of accounting, we adjust the initial 
recorded amount of the investment for our share of:

• profits or losses after tax for the year since the date of 

investment;
reserve movements since the date of investment;

•
• unrealised profits or losses;
• dividends or distributions received; and
• deferred profit brought to account.

Where the equity accounted amount of our investment in an entity 
falls below zero, we suspend the equity method of accounting and 
record the investment at zero.  When this occurs, the equity method 
of accounting does not recommence until our share of profits and 
reserves exceeds the cumulative prior years’ share of losses and 
reserve reductions.  Where we have long term assets that in 
substance form part of our investment in equity accounted interests 
and the equity accounted amount of the investment falls below zero, 
we reduce the value of these long term assets in proportion to our 
cumulative losses.

(ii) Associated entities

Where we hold an interest in the equity of an entity, generally of 
between 20 per cent and 50 per cent, and are able to significantly 
influence the decisions of the entity, that entity is an associated 
entity.  Associated entities are accounted for using the equity 
method of accounting in the Telstra Group financial statements.

(b) Jointly controlled assets

A jointly controlled asset involves the joint control of one or more 
assets acquired and dedicated for the purpose of a joint venture.  
The assets are used to obtain benefits for the venturers.  Where the 
asset is significant we record our share of the asset.  We record 
income and expenses based on our percentage ownership interest 
of the jointly controlled asset.

(c) Listed securities and investments in other corporations

Our investments in listed securities and 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 reporting date; and
for investments in unlisted entities whose securities are not 
traded in an organised financial market, we establish fair value 
by using valuation techniques, including reference to discounted 
cash flows and fair values of recent arm’s length transactions 
involving instruments that are substantially the same.

We remeasure the fair value of our investments in listed securities 
and other corporations at each reporting date.  Any gains or losses 
are recognised in other comprehensive income until we dispose of 
the investment or we determine it to be impaired, at which time we 
transfer all cumulative gains and losses to the income statement.  
Purchases and sales of investments are recognised on settlement 
date, being the date on which we receive or deliver an asset.

2.9  Impairment

(a) Non-financial assets

Our tangible and intangible assets (excluding inventories, assets 
arising from construction contracts, current and deferred tax assets, 
defined benefit assets and financial assets) are measured using the 
cost basis and are written down to recoverable amount where their 
carrying value exceeds recoverable amount.

Assets with an indefinite useful life are not subject to amortisation 
and are tested on an annual basis for impairment, or where an 
indication of impairment exists.  Assets that are subject to 
amortisation are reviewed for impairment whenever events or 
changes in circumstances indicate that the carrying amount may not 
be recoverable.

The recoverable amount of an asset is the higher of its fair value 
less costs to sell and its value in use.  Value in use represents the 
present value of the future amount expected to be recovered 
through the cash inflows and outflows arising from the asset’s 
continued use and subsequent disposal.  We recognise any 
reduction in the carrying value as an expense in the income 
statement in the reporting period in which the impairment loss 
occurs.

In determining value in use, we apply management judgement in 
establishing forecasts of future operating performance, as well as 
the selection of growth rates, terminal rates and discount rates.  
These judgements are applied based on our understanding of 
historical information and expectations of future performance. 

The expected net cash flows included in determining recoverable 
amounts of our assets are discounted to present values using a 
market determined, risk adjusted discount rate.  When determining 
an appropriate discount rate, we use the weighted average cost of 
capital (WACC) as an initial point of reference, adjusted for specific 
risks associated with each different category of assets assessed.

78

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

FINANCIAL STATEMENTS

(CONTINUED)

2.9  Impairment (continued)

2.10  Property, plant and equipment

(a) Non-financial assets (continued)

(a) Acquisition

For assets that do not generate largely independent cash inflows, 
the recoverable amount is determined for the cash generating unit 
(CGU) to which that asset belongs.  In addition, when goodwill is 
allocated to a CGU, the unit cannot be larger than an operating 
segment.  Our CGUs are determined according to the lowest level 
of aggregation for which an active market exists and the assets 
involved generate largely independent cash inflows.

We apply management judgement to establish our CGUs.  We have 
determined that assets forming part of our ubiquitous 
telecommunications network work together to generate net cash 
inflows.  No one item of telecommunications equipment is of any 
value without the other assets to which it is connected in order to 
achieve the delivery of products and services.  As a result, we have 
determined that the ubiquitous telecommunications network is a 
single CGU.  We have referred to this CGU as the Telstra Entity 
CGU in our financial report.  

The Telstra Entity CGU excludes the hybrid fibre coaxial (HFC) 
cable network, which we consider not to be integrated with the rest 
of our telecommunications network.  Refer to note 21 for further 
details.

(b) Financial assets

At each reporting date we assess whether there is objective 
evidence to suggest that any of our financial assets are impaired. 

For listed securities and investments in other corporations, we 
consider the financial asset to be impaired when there has been a 
significant or prolonged decline in the fair value of the financial asset 
below its acquisition cost.  At this time, all revaluation losses in 
relation to impaired financial assets that have been accumulated 
within other comprehensive income are recognised in the income 
statement.

For financial assets held at cost or amortised cost, we consider the 
financial asset to be impaired when there is objective evidence as a 
result of one or more events that the present value of estimated 
discounted future cash flows is lower than the carrying value.  Any 
impairment losses are recognised immediately in the income 
statement.

Items of property, plant and equipment are recorded at cost and 
depreciated as described in note 2.10 (b).  The cost of our 
constructed property, plant and equipment is directly attributable in 
bringing the asset to the location and condition necessary for its 
intended use and includes:

the cost of material and direct labour;

•
• an appropriate proportion of direct and indirect overheads; and
• where we have an obligation for removal of the asset or 

restoration of the site, an estimate of the cost of restoration or 
removal if that cost can be reliably estimated.  

Management judgement is required in the assessment of the types 
of costs that are directly attributable to the construction of our 
property, plant and equipment.  Satisfying the directly attributable 
criteria requires an assessment of those unavoidable costs that, if 
not incurred, would result in the property, plant and equipment not 
being constructed.  We capitalise borrowing costs that are directly 
attributable to the acquisition, construction or production of a 
qualifying asset.  

We review our property, plant and equipment assets and property, 
plant and equipment under construction on a regular basis to 
ensure that the assets are still in use and that the projects are still 
expected to be completed.  Refer to note 7 for details of impairment 
losses recognised on our property, plant and equipment. 

Where settlement of any part of the cash consideration is deferred, 
the amounts payable in the future are discounted to their present 
value as at the date of acquisition.  The unwinding of this discount 
is recorded within finance costs.

We account for our assets individually where this is practical, 
feasible and in line with commercial practice.  Where it is not 
practical and feasible to do so, we account for assets in groups.  
Group assets are automatically removed from our financial 
statements on reaching the group life.  Therefore, any individual 
asset may be physically retired before or after the group life is 
attained.  This is the case for certain communication assets as we 
assess our technologies to be replaced by a certain date.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

79

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

(CONTINUED)

2.10  Property, plant and equipment (continued)

(b) Depreciation

Items of property, plant and equipment, including buildings and 
leasehold property but excluding freehold land, are depreciated on 
a straight line basis to the income statement over their estimated 
service lives.  We start depreciating assets when they are installed 
and ready for use.  The service lives of our significant items of 
property, plant and equipment are as follows.

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   .  .  .  .  .  .  .  .  
Core network - switch   .  .  .  .  .  .  .  
Core network - transport  .  .  .  .  .  .  
Specialised premise equipment  .  .  
International connect .  .  .  .  .  .  .  . 
Managed service .  .  .  .  .  .  .  .  .  . 
Network control layer .  .  .  .  .  .  .  .  
Network product  .  .  .  .  .  .  .  .  .  .  

Other plant and equipment
IT equipment .  .  .  .  .  .  .  .  .  .  .  .  
Motor vehicles/trailer/caravan/huts .  
Other plant and equipment .  .  .  .  .  

Telstra Group
As at 30 June

2013
Service life
(years)

2012

Service life
(years)

52 - 53
10 - 20
4 - 40

10 - 58
3 - 52
4 - 30
3 - 16
4 - 10
3 - 10
2 - 26
 5 - 30
3 - 8
11 - 21
4 - 13
2 - 13
2 - 9

52
10 - 20
4 - 40

10 - 58
3 - 53
4 - 30
4 - 16
4 - 8
3 - 10
3 - 26
5 - 30
3 - 8
9 - 21
4 - 13
2 - 13
3 - 7

3 - 7
5 - 15
3 - 20

Hence, we have concluded that no further adjustments for financial 
year 2013 are required in addition to our normal service life 
reassessment, the results of which are noted below.  Refer to note 
21 for further discussion on the NBN.

The net effect of the reassessment of service lives for financial year 
2013 was a decrease in our depreciation expense of $224 million 
(2012: $248 million) for the Telstra Group.

Our major repairs and maintenance expenses relate to maintaining 
our exchange equipment and the customer access network.  We 
charge to operating expenses the cost of repairs and maintenance, 
including the cost of replacing minor items that are not substantial 
improvements.

2.11  Leased plant and equipment

We distinguish between finance leases, which effectively transfer 
substantially all the risks and benefits incidental to ownership of the 
leased asset from the lessor to the lessee, and operating leases 
under which the lessor effectively retains substantially all such risks 
and benefits.  The determination of whether an arrangement is, or 
contains, a lease is based on the substance of the arrangement at 
inception date, whether fulfilment of the arrangement is dependent 
on the use of a specific asset or assets or the arrangement conveys 
a right to use the asset, even if that right is not explicitly specified in 
an arrangement. 

(a) Telstra as a lessee

Where we acquire non current assets via a finance lease, the lower 
of the fair value of the asset and the present value of future 
minimum lease payments is capitalised as equipment under finance 
leases at the beginning of the lease term.  Capitalised lease assets 
are depreciated on a straight line basis over the shorter of the lease 
term or the expected useful life of the assets.  A corresponding 
liability is also established and each lease payment is allocated 
between the liability and finance charges. 

Operating lease payments are charged to the income statement on 
a straight line basis over the term of the lease.

3 - 5
5 - 15
3 - 20

Where we lease properties, costs of improvements to these 
properties are capitalised as leasehold improvements and 
amortised over the shorter of the useful life of the improvements and 
the term of the lease.

The service lives and residual values of our assets are reviewed 
each year.  We apply management judgement in determining the 
service lives of our assets.  This assessment includes a comparison 
with international trends for telecommunications companies and, in 
relation to communication assets, includes a determination of when 
the asset may be superseded technologically or made obsolete.  As 
part of our annual service lives review, we have noted no changes 
to asset service lives resulting from the National Broadband 
Network (NBN) transaction for the year ended 30 June 2013.  Our 
assessment continues to show that the weighted average remaining 
service life (WARSL) for the existing network assets impacted by 
the disconnection obligations that will apply under the NBN 
Definitive Agreements falls within the anticipated rollout period.  

(b) Telstra as a lessor

Where we lease non current assets via a finance lease, a lease 
receivable equal to the present value of the minimum lease 
payments receivable plus the present value of any unguaranteed 
residual value expected to accrue at the end of the lease term is 
recognised at the beginning of the lease term.  Finance lease 
receipts are allocated between finance income and a reduction of 
the lease receivable over the term of the lease in order to reflect a 
constant periodic rate of return on the net investment outstanding in 
respect of the lease.

Rental income from operating leases is recognised on a straight line 
basis over the term of the relevant lease.

80

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

FINANCIAL STATEMENTS

(CONTINUED)

2.12  Intangible assets

Intangible assets are assets that have value but do not have 
physical substance.  In order to be recognised, an intangible asset 
must be either separable or arise from contractual or other legal 
rights.

(a) Goodwill 

(c) Acquired intangible assets

We acquire other intangible assets either as part of a business 
combination or through separate acquisition.  Intangible assets 
acquired in a business combination are recorded at their fair value 
at the date of acquisition and recognised separately from goodwill.  
We apply management judgement to determine the appropriate fair 
value of identifiable intangible assets.

On the acquisition of investments in controlled entities, jointly 
controlled and associated entities, when we pay an amount greater 
than the fair value of the net identifiable assets of the entity, this 
excess is considered to be goodwill.  We calculate the amount of 
goodwill as at the date of purchasing our ownership interest in the 
entity.

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 that are considered to have an indefinite 
life are not amortised but tested for impairment in accordance with 
note 2.9(a) on an annual basis, or where an indication of impairment 
exists. 

When we purchase an entity that we will control, the amount of 
goodwill is recorded in intangible assets.  When we acquire a jointly 
controlled or associated entity, the goodwill amount is included as 
part of the cost of the investment.

Goodwill is not amortised but is tested for impairment in accordance 
with note 2.9(a) on an annual basis, or when an indication of 
impairment exists.

(b) Internally generated intangible assets 

Research costs are recorded as an expense as incurred.  

Management judgement is required to determine whether to 
capitalise development costs.  Development costs are capitalised if 
the project is technically and commercially feasible, we are able to 
use or sell the asset and we have sufficient resources and intent to 
complete the development.

(i) Software assets

We record direct costs associated with the development of business 
software for internal use as software assets if the development 
costs satisfy the criteria for capitalisation described above.

Costs included in software assets developed for internal use are:

• external direct costs of materials and services consumed; and
• payroll and direct payroll-related costs for employees (including 

contractors) directly associated with the project.

We capitalise borrowing costs that are directly attributable to the 
acquisition, construction or production of a qualifying asset.  

We review our software assets and software assets under 
development on a regular basis to ensure the assets are still in use 
and projects are still expected to be completed.  Refer to note 7 for 
details of impairment losses recognised on our intangible assets. 

Software assets developed for internal use have a finite life and are 
amortised on a straight line basis over their useful lives to us.   
Amortisation commences once the software is ready for use.

(d) Deferred expenditure

Deferred expenditure mainly includes costs incurred for basic 
access installation and connection fees for in place and new 
services, and direct incremental costs of establishing a customer 
contract.

Significant items of expenditure are deferred to the extent that they 
are recoverable from future revenue and will contribute to our future 
earning capacity.  Any costs in excess of future revenue are 
recognised immediately in the income statement.  Handset 
subsidies are considered to be separate units of accounting and are 
expensed as incurred.

We amortise deferred expenditure over the average period in which 
the related benefits are expected to be realised.

(e) Amortisation

The weighted average amortisation periods of our identifiable 
intangible assets are as follows.

Telstra Group
As at 30 June

2013
Expected 
benefit
(years)

2012

Expected 
benefit
(years)

9
5
5
15
17
6
3

9
6
5
14
18
13
4

Identifiable intangible assets

Software assets  .  .  .  .  .  .  .  .  .  .  .
Patents and trademarks .  .  .  .  .  .  .
Mastheads .  .  .  .  .  .  .  .  .  .  .  .  .  .
Licences .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Brand names   .  .  .  .  .  .  .  .  .  .  .  .
Customer bases (#)  .  .  .  .  .  .  .  .  .
Deferred expenditure  .  .  .  .  .  .  .  .

(#) Decrease due to the disposal of TelstraClear.

The service lives of our identifiable intangible assets are reviewed 
each year.  Any reassessment of service lives in a particular year 
will affect the amortisation expense through to the end of the 
reassessed useful life for both that current year and future years. 

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

81

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

(CONTINUED)

2.12  Intangible assets (continued)

(e) Amortisation (continued)

The net effect of the reassessment for financial year 2013 was a 
decrease in our amortisation expense of $34 million (2012: $32 
million) for the Telstra Group.

In relation to acquired intangible assets, we apply management 
judgement to determine the amortisation period based on the 
expected useful lives of the respective assets.  In some cases, the 
useful lives of certain acquired intangible assets are supported by 
external valuation advice on acquisition.  In addition, we apply 
management judgement to assess annually the indefinite useful life 
assumption applied to certain acquired intangible assets.

We calculate present values using rates based on government 
guaranteed securities with similar due dates to our liabilities.

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 (determined by reference to a State and 

Commonwealth blended 10-year Australian government bond 
rate).

Refer to note 16 for further details on the key management 
judgements used in the calculation of our long service leave 
provision.

2.13  Trade and other payables

(b) Workers’ compensation

Trade and other payables, including accruals, are recorded when 
we are required to make future payments as a result of purchases 
of assets or services.  Trade and other payables are carried at 
amortised cost.

2.14  Provisions

Provisions are recognised when the group has: 

• a present legal or constructive obligation to make a future 

sacrifice of economic benefits as a result of past transactions or 
events; 
it is probable that a future sacrifice of economic benefits will 
arise; and

•

We self insure our workers’ compensation liabilities.  We take up a 
provision for the present value of these estimated liabilities, based 
on an actuarial review of the liability.  This review includes 
assessing actual accidents and estimating claims incurred but not 
reported.  Present values are calculated using appropriate rates 
(determined by reference to a State and Commonwealth blended 
10-year Australian government bond rate) based on the risks 
specific to the liability with similar due dates.  

Certain controlled entities do not self insure but pay annual 
premiums to third party insurance companies for their workers’ 
compensation liabilities.  Refer to note 16 for further details.

• a reliable estimate can be made of the amount of the obligation.

(c) Redundancy and restructuring costs

The amount recognised as a provision is the best estimate of the 
consideration required to settle the present obligation at reporting 
date, taking into account the risks and uncertainties surrounding the 
obligation.  Where a provision is measured using the cash flows 
estimated to settle the present obligation, its carrying amount is the 
present value of those cash flows.

(a) Employee benefits

We accrue liabilities for employee benefits relating to wages and 
salaries, annual leave and other current employee benefits at their 
nominal amounts.  These are calculated based on remuneration 
rates expected to be current at the date of settlement and include 
related on costs.

Certain employees who have been employed by Telstra for at least 
10 years are entitled to long service leave of three months (or more 
depending on the actual length of employment), which is included in 
our employee benefits provision.

We accrue liabilities for other employee benefits not expected to be 
paid or settled within 12 months of reporting date, including long 
service leave, at the present values of future amounts expected to 
be paid.  This is based on projected increases in wage and salary 
rates over an average of 10 years, experience of employee 
departures and periods of service. 

We recognise a provision for redundancy costs when a detailed 
formal plan for the redundancies has been developed and a valid 
expectation has been created that the redundancies will be carried 
out in respect of those employees likely to be affected.  

We recognise a provision for restructuring when a detailed formal 
plan has been approved and we have raised a valid expectation to 
those affected by the restructuring that it will be carried out.  

2.15 Borrowings

Borrowings are included as non current liabilities except for those 
with maturities less than 12 months from the reporting date, which 
are classified as current liabilities.

Borrowing costs that are directly attributable to the acquisition, 
construction or production of a qualifying asset form part of the cost 
of that asset.  All other borrowing costs are recognised as an 
expense in our income statement when incurred.

We recognise borrowings initially on the trade date, which is the 
date on which we become a party to the contractual provisions of 
the instrument.  We derecognise borrowings when our contractual 
obligations are discharged or cancelled or expire.

82

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

FINANCIAL STATEMENTS

(CONTINUED)

2.15 Borrowings (continued)

(c) Statement of cash flows presentation

Our borrowings fall into two categories: borrowings in a designated 
hedging relationship and borrowings not in a designated hedging 
relationship.

(a) Borrowings in a designated hedging relationship

Our offshore borrowings that are designated as hedged items are 
either in fair value or cash flow hedges.  The method by which they 
are hedged determines their accounting treatment.

Borrowings subject to fair value hedges are recognised initially at 
fair value.  The carrying amount of our borrowings in fair value 
hedges is adjusted for fair value movements attributable to the 
hedged risk (being changes in value due to interest rate and 
currency movements).

Fair value is calculated using valuation techniques which utilise data 
from observable markets.  Assumptions are based on market 
conditions existing at each reporting date.  The fair value is 
calculated as the present value of the estimated future cash flows 
using an appropriate market based yield curve which is 
independently derived and representative of Telstra’s cost of 
borrowing.  These borrowings are remeasured each reporting 
period and the gains or losses are recognised in the income 
statement along with the associated gains or losses on the hedging 
instrument.  

Borrowings in cash flow hedges are recognised initially at fair value 
based on the applicable spot price plus any transaction costs that 
are directly attributable to the issue of the borrowing.  These 
borrowings are subsequently carried at amortised cost and 
translated at the applicable spot exchange rate at reporting date.  
Any difference between the final amount paid to discharge the 
borrowing and the initial borrowing proceeds (including transaction 
costs) is recognised in the income statement over the borrowing 
period using the effective interest method.

When currency gains or losses on the borrowings are recognised in 
the income statement, the associated gains or losses on the 
hedging instrument are also transferred from the cash flow hedging 
reserve to the income statement.

(b) Borrowings not in a designated hedging relationship

Borrowings not in a designated hedging relationship include 
offshore loans, Telstra bonds and domestic loans.

All such instruments are initially recognised at fair value plus any 
transaction costs that are directly attributable to the issue of the 
instruments and are subsequently measured at amortised cost.  
Any difference between the final amount paid to discharge the 
borrowing and the initial borrowing proceeds (including transaction 
costs) is recognised in the income statement over the borrowing 
period using the effective interest method.

Where our short term borrowings are held for the purposes of 
meeting short term cash commitments, we report the cash receipts 
and subsequent repayments on a net basis in the statement of cash 
flows.

2.16 Share capital 

Issued and paid up capital is recognised at the fair value of the 
consideration received by Telstra Entity.

Any transaction costs arising on the issue of ordinary shares are 
recognised directly in equity, net of tax, as a reduction of the share 
proceeds received.

Where we undertake a share buy-back, contributed equity is 
reduced in accordance with the structure of the buy-back 
arrangement.  Costs associated with the buy-back, net of tax, are 
also deducted from contributed equity.  We also record the 
purchase of Telstra Entity shares by our employee share plan trusts 
as a reduction in share capital.

Share based remuneration associated with our employee share 
plans is recognised as additional share capital.  Non-recourse loans 
provided to employees to participate in these employee share plans 
are recorded as a reduction 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

Revenue from the provision of our telecommunications services 
includes telephone calls and other services and facilities provided, 
such as internet and data.

We record revenue earned from:

telephone calls on completion of the call; and

•
• other services generally at completion, or on a straight line basis 
over the period of service provided, unless another method 
better represents the stage of completion.

Installation and connection fee revenues that are not considered to 
be separate units of accounting are deferred and recognised over 
the average estimated customer life.  Incremental costs directly 
related to these revenues are also deferred and amortised over the 
customer contract life in accordance with note 2.12(d).  In relation to 
basic access installation and connection revenue, we apply 
management judgement to determine the estimated customer 
contract life.  Based on our reviews of historical information and 
customer trends, we have determined that our average estimated 
customer life is 5 years (2012: 5 years).

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

83

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

(CONTINUED)

2.17  Revenue recognition (continued)

(h) Revenue arrangements with multiple deliverables

(b) Sale of goods

Our revenue from the sale of goods includes revenue from the sale 
of customer equipment and similar goods.  This revenue is recorded 
on delivery of the goods sold.

(c) Rent of network facilities

We earn rent mainly from access to retail and wholesale fixed and 
mobile networks and from the rent of dedicated lines, customer 
equipment, property, plant and equipment and other facilities.  The 
revenue from providing access to the network is recorded on an 
accrual basis over the rental period.

(d) Construction contracts

We record construction revenue and profit on a percentage of 
contract completion basis.  The percentage of completion is 
calculated based on estimated costs to complete the contract.  Our 
construction contracts are classified according to their type.  There 
are two types of construction contracts, these being material 
intensive and short duration.  Revenue and profit are recognised on 
a percentage of completion basis using the appropriate measures 
as follows:

•

•

for material intensive projects: (actual costs divided by planned 
costs) multiplied by planned revenue, including profit; and
for short duration projects (those that are expected to be 
completed within a month), revenues, profit and costs are 
recognised on completion.

 (e) Advertising and directory services

Classified advertisements and display advertisements are 
published on a daily, weekly and monthly basis for which revenues 
are recognised when the advertisement is published.

All of our Yellow Pages® and White Pages® directory print revenues 
are recognised on delivery of the published directories to 
customers’ premises.  Revenue from online directories is 
recognised over the life of service agreements, which is on average 
one year.  Voice directory revenues are recognised at the time of 
providing the service to customers. 

(f) Royalties 

Where two or more revenue-generating activities or deliverables are 
sold under a single arrangement, each deliverable that is 
considered to be a separate unit of accounting is accounted for 
separately.  When the deliverables in a multiple deliverable 
arrangement are not considered to be separate units of accounting, 
the arrangement is accounted for as a single unit.

A separate unit of accounting exists where the deliverable has value 
to the customer on a stand-alone basis and any undelivered items 
cannot be terminated by the customer without incurring penalties if 
the delivered item was returned.

We allocate the consideration from the revenue arrangement to its 
separate units based on the relative selling prices of each unit.  If 
neither vendor specific objective evidence nor third party evidence 
exists for the selling price, then the item is measured based on the 
best estimate of the selling price of that unit.  When allocating 
revenue to the separate units within an arrangement, the amount 
allocated to a delivered item is limited to the amount that is not 
contingent upon the delivery of additional items or meeting other 
specified performance conditions (non-contingent amount). The 
non-contingent revenue allocated to each unit is then recognised in 
accordance with our revenue recognition policies described above.   

(i) Principal versus agency relationship (gross versus net revenue 
recognition)

Generally we record the full gross amount of sales proceeds as 
revenue.  However, if we are acting as an agent, revenue is 
recorded on a net basis (being the gross amount billed less the 
amount paid to the supplier acting as a principal in the 
arrangement).  We review the facts and circumstances of each 
sales arrangement to determine if we are acting as an agent or 
principal. Indicators which support that we are the principal include:

• Telstra is primarily responsible for the fulfilment of the customer 

order;

• Telstra has risks of ownership of the product or delivery of the 

services;

• Telstra is involved in price setting;
• Telstra is involved in determining the product or service 

specifications; and

• Telstra bears the credit risk.

(j) Sales incentives

Royalty revenue is recognised on an accrual basis in accordance 
with the substance of the relevant agreements. 

(g) Interest revenue

Sales incentives are provided by Telstra to customers either in the 
form of cash consideration or non-cash consideration and are 
accrued for up to the point where it is probable that the customer will 
earn the incentives.

We record interest revenue on an accruals basis.  For financial 
assets, interest revenue is determined by the effective yield on the 
instrument. 

84

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

FINANCIAL STATEMENTS

(CONTINUED)

2.17  Revenue recognition (continued)

(j) Sales incentives (continued)

2.18 Taxation 

(a) Income taxes

Cash consideration (for example, cash payments, credits and 
rebates) provided to a customer is generally recorded as a 
reduction in revenue.

A sales incentive provided to a customer in the form of non-cash 
consideration (for example, in the form of a free product or service 
or a gift voucher) is considered to be a separate deliverable in a 
multiple deliverable arrangement, regardless of whether it is 
provided to customers at the commencement of a contract or is an 
amount that can be used to purchase future products and services.  
A portion of the total revenue under the arrangement is allocated to 
the non-cash consideration in accordance with note 2.17(h) above.  
The sales revenue allocated to the incentive is recognised when the 
customer redeems or utilises the award (i.e. when Telstra provides 
the product or service).

Cash sales incentives are generally paid to customers where 
Telstra provides a number of different products and services to the 
customer under a single arrangement.  If this is the case then the 
reduction in revenue must be allocated to each product/service that 
contributed towards the customer earning the incentive.  The 
allocation should be based on the relative amounts of revenue 
earned for each product and service, unless a more appropriate 
methodology is available.

(k) Government grants

Grants from the government are recognised at their fair value where 
there is a reasonable assurance that the grant will be received and 
Telstra will comply with all attached conditions.

Government grants relating to costs are deferred and recognised in 
the income statement over the period necessary to match them with 
the costs that they are intended to compensate.  

Government grants relating to the purchase of property, plant and 
equipment are included in non current liabilities as deferred income 
and are credited to the income statement on a straight line basis 
over the expected lives of the related assets.

The benefit of a government loan at a below-market rate of interest 
is treated as a government grant.  The loan is measured at 
amortised cost.  The benefit of the below-market rate of interest is 
measured as the difference between the initial carrying value of the 
loan, which is measured at amortised cost, and the actual proceeds 
received.  The benefit is accounted for in accordance with our 
accounting policy for government grants described above.

Our income tax expense represents the sum of current tax and 
deferred tax.  Current tax is calculated on accounting profit after 
allowing for non-taxable and non-deductible items based on the 
amount expected to be paid to taxation authorities on taxable profit 
for the period.  Deferred tax is calculated at the tax rates that are 
expected to apply to the period 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 items directly debited or 
credited to other comprehensive income or equity, in which case our 
current and deferred tax is also recognised directly in other 
comprehensive income or equity.

We apply the balance sheet liability method for calculating our 
deferred tax.  Deferred tax is the expected tax payable or 
recoverable on all taxable and deductible temporary differences 
determined with reference to the tax bases of assets and liabilities 
and their carrying amount for financial reporting purposes as at the 
reporting date.

We generally recognise deferred tax liabilities for all taxable 
temporary differences, except to the extent that the deferred tax 
liability arises from:

•
•

the initial recognition of goodwill; or
the initial recognition of an asset or liability in a transaction that 
is not a business combination and affects neither our accounting 
profit nor taxable income at the time of the transaction.

In respect of our investments in subsidiaries, jointly controlled and 
associated entities, we recognise deferred tax liabilities for all 
taxable temporary differences, except where we are able to control 
the timing of our temporary difference reversal and it is probable 
that the temporary difference will not reverse in the foreseeable 
future. 

Management judgement is required to determine the amount of 
deferred tax assets that can be recognised.  Deferred tax assets are 
recognised to the extent that it is probable that taxable profit will be 
available against which the deductible temporary differences, and 
the carry forward of unused tax losses and tax credits, can be 
utilised.  

The carrying amount of our deferred tax assets is reviewed at each 
reporting date.  We reduce the carrying amount to the extent that it 
is no longer probable that sufficient taxable profit will be available to 
allow the benefit of part or all of the deferred tax asset to be utilised.  
At each reporting date, we subsequently reassess our 
unrecognised deferred tax assets to determine whether it has 
become probable that future taxable profit will allow this deferred tax 
asset to be recovered.  

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

85

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

(CONTINUED)

2.18  Taxation (continued)

(a) Income taxes (continued)

The Telstra Entity and its Australian resident wholly owned entities 
have formed a tax consolidated group.  The Telstra Entity is the 
head entity and recognises, in addition to its transactions, the 
current tax liabilities and the deferred tax assets arising from 
unused tax losses and tax credits for all entities in the tax 
consolidated group.  The Telstra Entity and the entities in the tax 
consolidated group account for their own current tax expense and 
deferred tax amounts arising from temporary differences.  These tax 
amounts are measured as if each entity in the tax consolidated 
group continues to be a separate taxpayer.

We offset deferred tax assets and deferred tax liabilities in the 
statement of financial position where they relate to income taxes 
levied by the same taxation authority and to the extent that we 
intend to settle our current tax assets and liabilities on a net basis.  
Our deferred tax assets and deferred tax liabilities are netted within 
the tax consolidated group, as these deferred tax balances relate to 
the same taxation authority.  We do not net deferred tax balances 
between controlled entities, apart from those within the tax 
consolidated group.

(b) Goods and Services Tax (GST) (including other value added 
taxes)

We record our revenue, expenses and assets net of any applicable 
GST, except where the amount of GST incurred is not recoverable 
from the Australian Taxation Office (ATO).  In these circumstances 
the GST is recognised as part of the cost of acquisition of the asset 
or as part of the expense item.

Receivables and payables balances include GST where we have 
either included GST in our price charged to customers or a supplier 
has included GST in their price charged to us.  The net amount of 
GST due, but not paid, to the ATO is included under payables. 

2.19  Earnings per share

Basic earnings per share is determined by dividing the profit 
attributable to ordinary shareholders after tax, excluding any costs 
of servicing equity other than ordinary shares, by the weighted 
average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated by dividing the profit 
attributable to 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

Our commitment to defined contribution plans is limited to making 
contributions in accordance with our minimum statutory 
requirements.  We do not have any legal or constructive obligation 
to pay further contributions if the fund does not hold sufficient assets 
to pay all employee benefits relating to current and past employee 
services.

Contributions to defined contribution plans are recorded as an 
expense in the income statement as the contributions become 
payable.  We recognise a liability when we are required to make 
future payments as a result of employee services provided.

(b) Defined benefit plans 

We currently sponsor a number of post employment benefit plans.  
As these plans have elements of both defined contribution and 
defined benefit, they are treated as defined benefit plans.

At reporting date, where the fair value of the plan assets is less than 
the present value of the defined benefit obligations, the net deficit is 
recognised as a liability.  If the fair value of the plan assets exceeds 
the present value of the defined benefit obligations, the net surplus 
is recognised as an asset.  We recognise the asset as we have the 
ability to control this surplus to generate future funds that are 
available to us in the form of reductions in future contributions or as 
a cash refund.  Fair value is used to determine the value of the plan 
assets at reporting date and is calculated by reference to the net 
market values of the plan assets.

Defined benefit obligations are based on the expected future 
payments required to settle the obligations arising from current and 
past employee services.  This obligation is influenced by many 
factors, including final salaries and employee turnover.  We engage 
qualified actuaries to calculate the present value of the defined 
benefit obligations.  These obligations are measured gross of tax.

The actuaries use the projected unit credit method to determine the 
present value of the defined benefit obligations of each plan.  This 
method determines each year of service as giving rise to an 
additional unit of benefit entitlement.  Each unit is measured 
separately to calculate the final obligation.  The present value is 
determined by discounting the estimated future cash outflows using 
rates based on government guaranteed securities with similar due 
dates to these expected cash flows.

We recognise all our defined benefit costs in the income statement 
with the exception of actuarial gains and losses that are recognised 
directly in other comprehensive income via retained profits.  
Components of defined benefit costs include current and past 
service cost, interest cost and expected return on assets.  Past 
service cost is recognised immediately to the extent that the 
benefits are already vested, and otherwise is amortised on a 
straight line basis over the average period until the benefits become 
vested.

86

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

FINANCIAL STATEMENTS

(CONTINUED)

2.20  Post employment benefits (continued)

2.22  Derivative financial instruments

(b) Defined benefit plans (continued) 

Actuarial gains and losses are based on an actuarial valuation of 
each defined benefit plan at reporting date.  Actuarial gains and 
losses represent the differences between previous actuarial 
assumptions of future outcomes and the actual outcome, in addition 
to the effect of changes in actuarial assumptions. 

We apply judgement in estimating the following key assumptions 
used in the calculation of our defined benefit liabilities and assets at 
reporting date: 

• discount rates (determined by reference to a State and 

Commonwealth blended 10-year Australian government bond 
rate); 

• salary inflation rate; and
• expected return on plan assets.

The estimates applied in the actuarial calculation have a significant 
impact on the reported amount of our defined benefit plan liabilities 
and assets.  If the estimates prove to be incorrect, the carrying value 
may be materially impacted in the next reporting period.  Additional 
volatility may also potentially be recorded in other comprehensive 
income to reflect differences between actuarial assumptions of 
future outcomes applied at the current reporting date and the actual 
outcome in the next 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 per cent of the equity of Telstra ESOP Trustee Pty Ltd, 
the corporate trustee for the Telstra Employee Share Ownership 
Plan Trust (TESOP97) and Telstra Employee Share Ownership 
Plan Trust II (TESOP99).  We consolidate the results, position and 
cash flows of TESOP97 and TESOP99. 

The Telstra Growthshare Trust (Growthshare) was established to 
allocate equity based instruments as required.  Current equity 
based instruments include options, performance rights, restricted 
shares, deferred shares, incentive shares, and Ownshares.  
Restricted shares, deferred shares and incentive shares are subject 
to a specified period of service.  Options and performance rights can 
be subject to performance hurdles or a specified period of service.

We own 100 per cent of the equity of Telstra Growthshare Pty Ltd, 
the corporate trustee for Growthshare.  We also include the results, 
position and cash flows of Growthshare.

We recognise an expense for all share based remuneration 
determined with reference to the fair value at grant date of the equity 
instruments issued.  The fair value of our equity instruments is 
calculated using a valuation technique that is consistent with the 
Black-Scholes methodology and utilises Monte Carlo simulations.  
The fair value is recognised in the income statement over the 
relevant vesting periods, adjusted to reflect actual and expected 
levels of vesting.

We use derivative financial instruments such as forward exchange 
contracts, cross currency swaps and interest rate swaps to hedge 
risks associated with foreign currency and interest rate fluctuations.  

The use of hedging instruments is governed by the guidelines set by 
our Board of Directors.  

Derivative financial instruments are included as non current assets 
or liabilities except for those with maturities less than 12 months 
from the reporting date, which are classified as current assets or 
liabilities.

Derivatives are initially recognised at fair value on the date on which 
a derivative contract is entered into and are subsequently 
remeasured to fair value.  Refer to note 17 for details on the basis 
used to estimate fair value.  The method of recognising the resulting 
remeasurement gain or loss depends on whether the derivative is 
designated as a hedging instrument, and, if so, the nature of the 
item being hedged.   Where we hold derivative financial instruments 
that are not designated as hedges, they are categorised as “held for 
trading” financial instruments.  All of our derivative financial 
instruments are stated at fair value. 

Derivative assets are derecognised when the rights to receive cash 
flows from the derivative assets have expired or have been 
transferred and we have transferred substantially all the risks and 
rewards of ownership.

The carrying value of our cross currency and interest rate swaps 
refers to the fair value of our receivable or payable under the swap 
contract.  We do not offset the receivable or payable with the 
underlying financial asset or financial liability being hedged, as the 
transactions are usually with different counterparties and are not 
generally settled on a net basis.

Where we have a legally recognised right to set off the derivative 
asset and the derivative liability, and we intend to settle on a net 
basis or simultaneously, we record this position on a net basis in our 
statement of financial position.  Where we enter into master netting 
arrangements relating to a number of financial instruments, have a 
legal right of set off, and intend to do so, we also include this position 
on a net basis in our statement of financial position.

Our derivative financial instruments that are held to hedge 
exposures can be classified into three different types, according to 
the reason we are holding them: fair value hedges, cash flow 
hedges and hedges of a net investment in a foreign operation.

Hedge accounting can only be utilised where effectiveness tests are 
met on both a prospective and retrospective basis.  For all of our 
hedging instruments, any gains or losses on remeasuring to fair 
value any portion of the instrument not considered to be effective 
are recognised directly in the income statement in the period in 
which they occur.  The extent to which gains or losses on the 
hedged item and the hedge instrument do not offset represents 
ineffectiveness which will create volatility in the income statement.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

87

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

(CONTINUED)

2.22  Derivative financial instruments (continued)

We formally designate and document at the inception of a 
transaction the relationship between hedging instruments and 
hedged items, as well as our risk management objective and 
strategy for undertaking various hedge transactions, together with 
the methods that will be used to assess the effectiveness of the 
hedge relationship.  We also document our assessment, both at 
hedge inception and on an ongoing basis, of whether the hedging 
instruments that are used in hedging transactions have been, and 
will continue to be, highly effective in offsetting changes in fair 
values or cash flows of hedged items.

Purchases and sales of derivative financial instruments are 
recognised on the date on which we commit to purchase or sell an 
asset or liability.

(a) Fair value hedges

We use fair value hedges to mitigate the risk of changes in the fair 
value of our foreign currency borrowings from foreign currency and 
interest rate fluctuations over the hedging period.

Where a fair value hedge qualifies for hedge accounting, gains or 
losses from remeasuring the fair value of the hedging instrument 
are recognised within finance costs in the income statement, 
together with gains and losses in relation to the hedged item where 
those gains or losses relate to the risks intended to be hedged. 

(b) Cash flow hedges

We use cash flow hedges to mitigate the risk of variability of future 
cash flows attributable to foreign currency fluctuations over the 
hedging period associated with our foreign currency borrowings and 
our ongoing business activities, predominantly where we have 
highly probable purchase or settlement commitments in foreign 
currencies.  We also use cash flow hedges to hedge variability in 
cash flows due to interest rate movements associated with some of 
our domestic borrowings.

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 are recognised directly in other 
comprehensive income in the cash flow hedging reserve until such 
time as the hedged item affects profit or loss, then the gains or 
losses are transferred to the income statement.  However, in our 
hedges of forecast transactions, when the forecast transaction that 
is hedged results in the recognition of a non-financial asset (for 
example, property, plant and equipment), the gains and losses 
previously deferred in other comprehensive income are transferred 
from other comprehensive income and included in the 
measurement of the initial cost or carrying amount of the asset.  
Gains or losses on any portion of the hedge determined to be 
ineffective are recognised immediately in the income statement.  
The application of hedge accounting will create volatility in equity 
reserve balances. 

When a hedging instrument expires or is sold or terminated, or 
when a hedge no longer meets the criteria for hedge accounting, 
any cumulative gains or losses existing in other comprehensive 
income at that time remain in other comprehensive income and are 
recognised when the hedged item is ultimately recognised in the 
income statement.

If a forecast hedged transaction is no longer expected to occur, the 
cumulative gains or losses on the hedging instrument that were 
reported in other comprehensive income are transferred 
immediately to the income statement.

(c) Hedges of a net investment in a foreign operation

Our investments in foreign operations are exposed to foreign 
currency risk, which arises when we translate the net assets of our 
foreign investments from their functional currency to Australian 
dollars.   We hedge our net investments to mitigate exposure to this 
risk by using forward foreign currency contracts, cross currency 
swaps and/or borrowings in the relevant currency of the investment.

Gains and losses on remeasurement of our derivative instruments 
designated as hedges of foreign investments are recognised in the 
foreign currency translation reserve in equity to the extent that they 
are considered to be effective.  

The cumulative amount of the recognised gains or losses included 
in equity is transferred to the income statement when the foreign 
operation is sold.

(d) Derivatives and borrowings that are de-designated from fair 
value hedge relationships or not in a designated hedging 
relationship 

Derivatives associated with borrowings de-designated from fair 
value hedge relationships or not in a designated hedge relationship 
for hedge accounting purposes are classified as “held for trading”.

For borrowings de-designated from fair value hedge relationships, 
from the date of de-designation the derivatives continue to be 
recognised at fair value and the borrowings are accounted for on an 
amortised cost basis consistent with a revised effective interest rate 
as at the de-designation date.  The gains or losses on both the 
borrowings and derivatives are included within finance costs on the 
basis that the net result primarily reflects the impact of movements 
in interest rates and the discounting impact of future cash flows on 
the derivatives.  The cumulative gains or losses previously 
recognised from the remeasurement of these borrowings as at the 
date of de-designation are unwound and amortised to the income 
statement over the remaining life of the borrowing.  This 
amortisation expense is also included within finance costs. 

For borrowings not in designated hedge relationships for hedge 
accounting purposes, the derivatives are recognised at fair value 
and the borrowings are accounted for on an amortised cost basis.  
The gains or losses on both the borrowings and derivatives are 
included within finance costs on the basis that the net result 
primarily reflects the impact of movements in interest rates and the 
discounting impact of future cash flows on the derivatives.

88

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

FINANCIAL STATEMENTS

(CONTINUED)

2.22  Derivative financial instruments (continued)

(d) Derivatives and borrowings that are de-designated from fair 
value hedge relationships or not in a designated hedging 
relationship (continued)

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 income statement in the period in which 
they occur within other expenses or other income.

(e) Embedded derivatives

Derivatives embedded in other financial instruments or other host 
contracts are treated as separate derivatives when their risks and 
characteristics are not closely related to those of the host contracts 
and the host contracts are not measured at fair value through profit 
or loss.

2.23  Contingent liabilities

A contingent liability is a liability of sufficient uncertainty that it does 
not qualify for recognition as a liability, or a liability whose existence 
will be confirmed only by the occurrence or non-occurrence of one 
or more uncertain future events not wholly within the control of 
Telstra.  In addition, the term contingent liability is used for liabilities 
that do not meet the recognition criteria.

We first determine whether an obligation should be recorded as a 
liability or a contingent liability.  This requires management to 
assess the probability that Telstra will be required to make payment 
as well as an estimate of that payment.  This assessment is made 
based on the facts and circumstances, factoring in past experience 
and, in some cases, reports from independent experts.  The 
evidence considered includes any additional evidence provided by 
events after the reporting date.

Refer to note 23, note 26 and note 30 for further details on Telstra’s 
contingent liabilities.

2.24  New accounting standards to be applied in future 

reporting periods

The accounting standards that have not been early adopted for the 
year ended 30 June 2013 but will be applicable to the Telstra Group 
in future reporting periods are detailed below.  Apart from these 
standards, we have considered other accounting standards that will 
be applicable in future periods but which are considered 
insignificant to Telstra.

(a) Financial Instruments - Classification, Measurement and 
Derecognition

AASB 9: “Financial Instruments” was re-issued in December 2010 
to include the accounting requirements for classifying and 
measuring financial liabilities and the derecognition requirements 
for financial assets and liabilities.  Two related omnibus standards 
AASB 2010-7: “Amendments to Australian Accounting Standards 
arising from AASB 9 (December 2010)” and AASB 2009-11: 
“Amendments to Australian Accounting Standards arising from 
AASB 9” make a number of amendments to other accounting 
standards as a result of the amendments to AASB 9 and must be 
adopted at the same time. 

Most of the added requirements on the classification and 
measurement of financial liabilities and all of the added 
requirements on the derecognition of financial instruments have 
been carried forward unchanged from the existing standard AASB 
139: “Financial Instruments - Classification and Measurement”.  The 
only change made relates to the requirements for the fair value 
option for financial liabilities, to address the issue of own credit risk.  

For financial liabilities designated at fair value, the portion of the 
change in fair value due to changes in own credit risk now generally 
must be presented in other comprehensive income, rather than 
within the income statement.

The amendments to AASB 9 are applicable to annual reporting 
periods beginning on or after 1 January 2015, with early adoption 
permitted (the previous effective date of 1 January 2013 was 
amended via the issue of AASB 2012-6: “Amendments to Australian 
Accounting Standards - Mandatory Effective Date of AASB 9 and 
Transition Disclosures”).

It is anticipated that this change will have minimal impact on Telstra 
as all of our financial liabilities are either classified at amortised cost 
or in a hedge relationship. 

(b) Consolidated Financial Statements

AASB 10: “Consolidated Financial Statements” was released in 
August 2011 by the AASB and replaces both the existing AASB 
127: “Consolidated and Separate Financial Statements” and AASB 
Interpretation 112: “Consolidation - Special Purpose Entities”.  
AASB 2011-7: “Amendments to Australian Standards Arising from 
the Consolidation and Joint Arrangement Standards” was also 
released by the AASB to update the requirements in other 
accounting standards as a result of the amendments to the entire 
suite of consolidation and related standards.

AASB 10 revises the definition of control and related application 
guidance so that a single control model can be applied to all entities. 

These standards will apply to Telstra from 1 July 2013 on a 
retrospective basis, with early adoption permitted provided that the 
entire suite of consolidation and related standards is adopted at the 
same time.  

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

89

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

(CONTINUED)

2.24  New accounting standards to be applied in future 
reporting periods (continued)

(b) Consolidated Financial Statements (continued)

Based on our assessments, it is anticipated that the revised 
definition of control will have no significant impact to Telstra's 
current accounting for investments held.  Investments currently 
accounted for as subsidiaries would continue to meet the revised 
definition of control and therefore continue to be consolidated in the 
group's financial statements.  Investments currently accounted for 
as associates have been assessed against the revised control 
definition and there would be no changes in the accounting 
treatment for these investments.  Therefore, Telstra will continue to 
equity account for them. 

(c) Joint Arrangements

AASB 11: “Joint Arrangements” was also released by the AASB in 
August 2011 and replaces the existing AASB 131: “Interests in Joint 
Ventures”.  This new standard has revised the definition types of 
joint arrangements, focusing on the rights and obligations of the 
arrangement, rather than its legal form.  The definition types have 
been consolidated into two joint ventures (currently referred to as 
jointly controlled entities) and joint operations (currently referred to 
as jointly controlled assets and jointly controlled operations).  
Furthermore, the accounting treatment options for joint venture 
arrangements have been removed to eliminate inconsistent 
treatments, where equity accounting is mandatory for joint ventures 
and proportionate consolidation can no longer be used. 

This standard is applicable to Telstra from 1 July 2013 on a 
retrospective basis, with early adoption permitted provided that the 
entire suite of consolidation and related standards is adopted at the 
same time. 

Based on management’s current assessments, the revised 
definition types of joint arrangements will have no impact on 
Telstra's current joint arrangement classifications.  The assessment 
of Telstra's material jointly controlled entities shows there are no 
jointly controlled entities that give Telstra direct rights over assets or 
obligations to settle liabilities, such that they should be classified as 
joint operations.  Therefore, all of these jointly controlled entities 
would be classified as joint ventures and given that Telstra's current 
accounting policy for jointly controlled entities is to use the equity 
accounting method, these joint ventures will remain equity 
accounted for under AASB 11.  Overall, we expect no impact on the 
measurement of any of Telstra's existing joint arrangements.   

(d) Disclosures of Interests in Other Entities

AASB 12: “Disclosure of Interests in Other Entities” was issued by 
the AASB in August 2011 and is a new standard on disclosure 
requirements for all forms of interests in investments, including 
subsidiaries, associates, joint arrangements and consolidated and 
unconsolidated structured entities.    

This standard is applicable to Telstra from 1 July 2013 on a 
retrospective basis, with early adoption permitted provided that the 
entire suite of consolidation and related standards is adopted at the 
same time.  

Based on our current assessments, we expect additional 
disclosures will be required by Telstra as a result of AASB 12, in the 
following areas:

• controlled entities with non-controlling interests that are material 

to Telstra;
interests in consolidated structured entities; and

•
• unconsolidated structured entities.

(e) Separate Financial Statements

AASB 127: “Separate Financial Statements” has been released by 
the AASB in August 2011 to replace the current AASB 127 
standard, now only containing the accounting requirements for 
preparation of separate financial statements of the parent.  

This standard is applicable from 1 July 2013, with early adoption 
permitted provided that the entire suite of consolidation and related 
standards is adopted at the same time.  There is no impact to 
Telstra’s financial statements as we already comply with the 
requirements in the standard.

(f) Investments in Associates and Joint Ventures

AASB 128: “Investments in Associates and Joint Ventures” was 
issued by the AASB in August 2011 and replaces the current AASB 
128 standard.  Limited amendments have been made to AASB 128, 
including the application of AASB 5: “Non current assets held for 
sale and discontinued operations” to interests in associates and 
joint ventures and how to account for changes in interests in joint 
ventures and associates.   

This standard is applicable from 1 July 2013, with early adoption 
permitted provided that the entire suite of consolidation and related 
standards is adopted at the same time.  

We have assessed that there will be no impact to Telstra’s financial 
statements as a result of this standard.  

(g) Fair Value Measurement

AASB 13: “Fair Value Measurement” was released by the AASB in 
August 2011 and is a new standard providing a single source of 
guidance for all fair value measurements and a precise definition of 
fair value.  It replaces all fair value measurement guidance in 
Australian Accounting Standards and Interpretations but does not 
replace existing standards requirements on when fair values should 
be used.  A related omnibus standard AASB 2011-8: “Amendments 
to Australian Accounting Standards Arising from AASB 13” makes 
a number of definition and guidance amendments to other 
accounting standards as a result of the amendments in AASB 13 
and must be adopted at the same time.

This standard is applicable to Telstra from 1 July 2013, with early 
adoption permitted. 

90

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

FINANCIAL STATEMENTS

(CONTINUED)

2.24  New accounting standards to be applied in future 
reporting periods (continued)

(i) Investment Entities

(g) Fair Value Measurement (continued) 

Based on our assessment of this new standard, the predominant 
impact will be additional disclosures required by Telstra, specifically 
in the following areas:

•

investments or assets held for sale, where the fair value less 
costs to sell is lower than the carrying amount;

• as part of a business combination, any assets and liabilities 

measured at fair value in the statement of financial position after 
initial recognition; and
financial instruments, where the carrying amount differs from the 
fair value.

•

(h) Employee Benefits

AASB 119: “Employee Benefits” was released by the AASB in 
September 2011 and replaces the existing employee benefits 
standard.  A related omnibus standard AASB 2011-10: 
“Amendments to Australian Accounting Standards Arising from 
AASB 119” makes a number of amendments to other accounting 
standards and an interpretation as a result of the amendments in 
AASB 119.

Both standards are applicable from 1 July 2013 on a retrospective 
basis, with early adoption permitted.

Based on management’s assessment, AASB 119 will have an 
impact on Telstra’s financial statements, specifically in the following 
areas:

•

the defined benefit expense will no longer contain the expected 
return on planned assets; instead this will be replaced by net 
interest income or expense, calculated using a discount rate 
(based on government bonds) applied to the net defined benefit 
asset or liability.  Had we adopted the new rules in the current 
reporting period, profit before income tax for the current period 
would have been approximately $106 million lower and other 
comprehensive income would have been approximately $106 
million higher than reported.  There would be no impact to both 
total comprehensive income for the current period and the 
statement of financial position as at 30 June 2013;

• presentation of the defined benefit cost will be disaggregated into 
three components; service cost to be presented in the income 
statement, net interest on the net defined benefit asset or liability 
in the income statement as part of finance costs and 
remeasurements to be presented in other comprehensive 
income; and

• additional disclosures about the characteristics and risks arising 

from our defined benefit plans.

Investment Entities (Amendments to IFRS 10: “Consolidated 
Financial Statements”, IFRS 12: “Disclosure of Interests in Other 
Entities” and IAS 27: “Separate Financial Statements”), issued by 
the International Accounting Standards Board (IASB) in October 
2012, introduces an exception to consolidating particular 
subsidiaries that meet the definition of “investment entities”.  
Investment entities are those whose business purpose is to invest 
funds solely for returns from capital appreciation, investment 
income, or both.  A subsidiary classified as an investment entity will 
be measured at fair value through profit or loss in accordance with 
IFRS 9: “Financial Instruments” in its consolidated and separate 
financial statements.  The amendments also introduce new 
disclosure requirements for investment entities in IFRS 12 and IAS 
27.

This standard is applicable to Telstra from 1 July 2014, with earlier 
adoption permitted.  This change is expected to have a minimal 
impact, as Telstra currently does not have any subsidiaries that 
meet the definition of investment entities.

(j) Transition Guidance and Other Amendments

AASB 2012-10: “Amendments to Australian Accounting Standards 
– Transition Guidance and Other Amendments” was issued by the 
Australian Accounting Standards Board in December 2012.

This standard amends 25 standards and one interpretation and is 
applicable to Telstra from 1 July 2013, in line with the effective dates 
of AASB 10: “Consolidated Financial Statements”, AASB 11: “Joint 
Arrangements” and AASB 12: “Disclosure of Interests in Other 
Entities.” 

AASB 2012-10 amends the retrospective application that was 
required in AASB 10 when it was issued in May 2011.  It also 
provides additional transitional relief in AASB 10, AASB 11 and 
AASB 12, limiting the requirement to provide adjusted comparative 
information to the preceding comparative period.  The proposal 
removes the requirement to present comparative information for 
periods before AASB 12 is first applied.

Based on our current assessments, we do not expect this standard 
to affect our financial results, as there will be no material impact on 
Telstra from the adoption of AASB 10 and AASB 11.

(k) Other

In addition to the above accounting standards which are applicable 
in future years, we note the following new accounting standards and 
interpretations also applicable in future years:

• AASB 1053: “The Application of Tiers of Australian Accounting 

Standards”;

• AASB 2011-4: “Amendments to Australian Accounting 

Standards to Remove Individual Key Management Personnel 
Disclosure Requirements”;

• AASB 2012-2: “Amendments to Australian Accounting 

Standards - Disclosures - Offsetting Financial Assets and 
Financial Liabilities”;

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

91

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, ASSUMPTIONS AND JUDGEMENTS 

(CONTINUED)

2.24  New accounting standards to be applied in future 
reporting periods (continued)

(k) Other (continued) 

• AASB 2012-3: “Amendments to Australian Accounting 

Standards - Offsetting Financial Assets and Financial Liabilities”; 

• AASB 2012-5: “Amendments to Australian Accounting 

Standards arising from Annual Improvements 2009-2011 Cycle”; 

• AASB 2012-9: “Amendments to AASB 1048 arising from the 

withdrawal of Australian Interpretation 1039”;

• AASB Interpretation 21: “Levies”;
• AASB 2013-3: “Amendments to AASB 136 - Recoverable 

Amount Disclosures for Non-Financial Assets”; and
• AASB 2013-4: “Amendments to Australian Accounting 

Standards - Novation of Derivatives and Continuation of Hedge 
Accounting”. 

We do not expect these accounting standards and interpretations to 
materially affect our financial results upon adoption.

92

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
3. EARNINGS PER SHARE

FINANCIAL STATEMENTS

Basic earnings per share .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Diluted earnings per share .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Earnings used in the calculation of basic and diluted earnings per share
Profit for the year attributable to equity holders of Telstra Entity .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Weighted average number of ordinary shares
Weighted average number of ordinary shares on issue  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Effect of shares held by employee share plan trusts (a)(b)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Weighted average number of ordinary shares used in the calculation of basic earnings per share .  .  .  .  . 
Effect of dilutive employee share instruments (c)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Weighted average number of ordinary shares used in the calculation of diluted earnings per share  .  .  .  . 

Telstra Group
Year ended 30 June
2012
cents

2013
cents

30.7

30.6

$m

27.5

27.4

$m

3,813

3,405

Number of shares
millions

12,443
(37)
12,406
38
12,444

12,443
(45)
12,398
8
12,406

(a) In order to underpin the equity instruments issued under the 
Growthshare plan, the Telstra Growthshare Trust purchases Telstra 
shares already on issue.  These shares are not considered to be 
outstanding for the purposes of calculating basic and diluted 
earnings per share.

(b) Share options issued under the Telstra Employee Share 
Ownership Plan Trust I (TESOP97) and II (TESOP99) are not 
considered outstanding for the purposes of calculating basic and 
diluted earnings per share.

(c) The following equity instruments are considered dilutive to 
earnings per share: 

•

incentive shares granted under the Growthshare short term 
incentive scheme;

• certain performance rights and restricted shares granted under 

the Growthshare long term incentive (LTI) scheme;

• share options issued under TESOP99 (for financial year 2013 

only); and 

• share options issued under TESOP97 (for financial year 2012 

only).  

The following equity instruments are not considered dilutive to 
earnings per share: 

• certain performance rights, restricted shares and options issued 

under the Growthshare LTI scheme; and

• share options issued under TESOP99 (for financial year 2012 

only). 

Refer to note 27 for details regarding equity instruments issued 
under the Growthshare and TESOP share plans.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

93

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
4. DIVIDENDS

Dividends paid
Previous year final dividend paid .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Interim dividend paid .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total dividends paid   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Dividends paid per ordinary share
Previous year final dividend paid .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Interim dividend paid .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total dividends paid   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Dividends paid are fully franked at a tax rate of 30%.

Dividends per share in respect of each financial year are detailed 
below.

Telstra Entity
Year ended 30 June
2012
$m

2013
$m

1,739
1,741
3,480

cents
14.0
14.0
28.0

1,738
1,737
3,475

cents
14.0
14.0
28.0

Telstra Entity
Year ended 30 June
2012
cents

2013
cents

Dividends per ordinary share
Interim dividend paid .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Final dividend to be paid (a)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total dividends  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

14.0
14.0
28.0

14.0
14.0
28.0

Franking credits available for use in subsequent reporting periods
Franking account balance  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Franking credits that will arise from the payment of income tax payable as at 30 June (b)  .  .  .  .  .  .  .  .  . 

Telstra Entity
Year ended 30 June
2012
$m

2013
$m

(85)
368
283

(54)
674
620

(a) As the final dividend for financial year 2013 was not determined 
or publicly recommended by the Board as at 30 June 2013, no 
provision for dividend has been raised in the statement of financial 
position.  The final dividend has been reported as an event 
subsequent to reporting date.  Refer to note 31 for further details.

(b) Franking credits that will arise from the payment of income tax 
are expressed at the 30% tax rate on a tax paid basis.  

We believe that our current balance in the franking account, 
combined with the franking credits that will arise on tax instalments 
expected to be paid, will be sufficient to fully frank our final 2013 
dividend.

94

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
5. SEGMENT INFORMATION

Operating segments

FINANCIAL STATEMENTS

We report our segment information on the same basis as our 
internal management reporting structure, which determines how our 
Company is organised and managed.

Segment results are reported according to the internal management 
reporting structure at the reporting date.  Segment comparatives are 
restated to reflect organisational changes that have occurred since 
the prior reporting period to present a like-for-like view.  

During the year ended 30 June 2013, the following changes were 
made to our operating segments: 

• TelstraClear, previously disclosed as a separate reportable 

segment, is now included in the “All Other” category, up to the 
date of disposal on 31 October 2012.  Refer to notes 12 and 20 
for further details;

• a new business unit, Telstra Health was created in April 2013 

reporting to the Chief Customer Officer; 

• Telstra Consumer and Country Wide changed its name to 

Telstra Consumer (TC); and

• Telstra Applications and Ventures Group changed its name to 

Telstra Operations (TOps) is responsible for:

• overall planning, design, engineering and architecture of Telstra 

networks, technology and information technology (IT);

• construction of infrastructure for our Company's fixed, mobile, 

internet protocol (IP) and data networks;

• delivery of customer services across these networks;
• operation, assurance and maintenance, including activation and 

restoration of these networks;

• supply and delivery of information technology solutions to 

support our products, services, customer support functions and 
our internal needs; and 

• delivery of network-centric professional services, managed 
services and outsourcing services for Telstra customers.  

Telstra Wholesale (TW) is responsible for the provision of a wide 
range of telecommunication products and services delivered over 
Telstra networks and associated support systems to non-Telstra 
branded carriers, carriage service providers and internet service 
providers. 

Telstra Ventures Group.

Telstra Media Group (TMG) is responsible for:

The Telstra Group for financial year 2013 is organised into the 
following reportable segments for internal management reporting 
purposes:

Telstra Consumer (TC) reports to the Chief Customer Officer and 
is responsible for providing the full range of telecommunication 
products, services and solutions (across Mobiles, Fixed and Mobile 
Broadband, Telephony and Pay TV) to consumer customers in 
metropolitan, regional, rural and remote areas of Australia.  This is 
achieved through inbound and outbound call centres, Telstra Shops 
(owned and licensed), Telstra Dealers and Telstra Digital.  Telstra 
Digital is responsible for delivering self service capabilities for all 
Telstra customers, across all phases of the customer experience 
from browsing to buying and bill and service requests.  

Telstra Business (TB) reports to the Chief Customer Officer and is 
responsible for providing Australia's small to medium enterprises 
with a full range of communication based products and solutions.

Telstra Enterprise and Government (TE&G) reports to the Chief 
Customer Officer and is responsible for the provision of network 
applications and services and integrated voice, data and mobile 
solutions via Telstra Next Generation Services® to Australia’s 
enterprise and government customers.  

•

•

the management and growth of the domestic directories and 
advertising business, including print, voice and digital 
directories, digital mapping and satellite navigation, digital 
display advertising and business information services.  This 
includes the management of leading information brands 
including Yellow Pages®, White Pages®, Whereis®, Citysearch®, 
1234 and Quotify®; and
the management of our investment in Digital Media content, 
services and applications, including Trading Post, Telstra 
Advertising Network, BigPond® content including music, movies, 
sport and games, IPTV, online portals and the FOXTEL 
Partnership.  

The majority of TMG non-advertising revenue is reported in the 
domestic retail segments, i.e. TC, TB and TE&G.   

Telstra International Group (TIG) is responsible for managing 
Telstra's assets outside Australia, including:

• CSL New World Mobility Limited, our 76.4 per cent owned 

subsidiary in Hong Kong, responsible for providing full mobile 
services including handset and device sales, mobile voice, and 
mobile data products to the Hong Kong market;

• Telstra China, our mainland China business providing digital 
media services in auto, IT and consumer electronics (this 
includes the Autohome and Sequel Media businesses); and

• Telstra Global, our managed services and international 

connectivity business, providing managed network services, 
international data and voice, and satellite across the Asia Pacific, 
China, India, EMEA, and the US.  Telstra Global also manages 
our submarine cable networks and other assets.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

95

Certain items of income and expense are recorded by our corporate 
areas, rather than being allocated to each segment.  These items 
include the following:

•

•
•

the adjustment to defer our basic access installation and 
connection fee revenues and costs in accordance with our 
accounting policy.  Our reportable segments record these 
amounts upfront;
the majority of redundancy expenses for the Telstra Entity; and 
rental costs associated with printers and other related equipment 
for the Telstra Entity.

In addition, the following narrative further explains how some items 
are allocated and managed, and as a result how they are reflected 
in our segment results:

• sales revenue associated with mobile handsets for TC, TB and 
TE&G are mainly allocated to the TC segment along with the 
associated costs of goods and services purchased; 

• ongoing prepaid and postpaid mobile revenues derived from our 
mobile usage is recorded in TC, TB and TE&G depending on the 
type of customer serviced;

• TOps recognise certain expenses in relation to the installation 

and running of the hybrid fibre coaxial cable network;

• domestic promotion and advertising expense for the Telstra 

Entity is recorded centrally in TIPM; and

• call centre costs associated with TB and TE&G are included in 

the TC segment.  

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
5. SEGMENT INFORMATION (CONTINUED)

Operating segments (continued)

In our segment results, the “All Other” category consists of various 
business units that do not qualify as reportable segments in their 
own right.  These include:

• Telstra Innovation, Products and Marketing (TIPM);
• Telstra Customer Sales and Services head office function, 

reporting to the Chief Customer Officer (excluding the domestic 
retail business units of TC, TB and TE&G);

• Telstra Health; 
• Telstra Ventures Group; 
• TelstraClear; and
• our corporate areas. 

Finance and Strategy in our corporate areas is the main contributor 
to the result for the “All Other” category, which is primarily 
depreciation and amortisation charges, as well as impairment of 
property, plant and equipment and software.  

Segment results

The measurement of segment results is in line with the basis of 
information presented to management for internal management 
reporting purposes.  The result of each segment is now measured 
based on its “earnings before interest, income tax expense, 
depreciation and amortisation (EBITDA) contribution”.  EBITDA 
contribution excludes the effects of all inter-segment balances and 
transactions (with the exception of transactions referred to in 
footnote (ii) below).  Therefore, only transactions external to the 
Telstra Group are reported.  

Historically, certain items of income and expense were excluded 
from the segment results to show a measure of “underlying” 
performance.  Such items included gains/losses on disposal of non-
current assets, controlled entities, associated entities, and 
businesses, the impairment of goodwill and intangibles, and 
revenue for the build of NBN related infrastructure.  In prior periods, 
these were separately disclosed in the reconciliation of segment 
results to Telstra Group reported EBITDA, earnings before interest 
and income tax expense (EBIT) and profit before income tax 
expense in the financial statements.

During financial year 2013, in accordance with the information 
presented to management for internal management reporting 
purposes, we have included these items in the measurement of 
segment results.  Therefore, we no longer have any reconciling 
items between segment results and Telstra Group’s reported 
EBITDA.  The reconciliation of segment results to Telstra Group’s 
reported EBIT and profit before income tax expense in the financial 
statements now includes only depreciation and amortisation 
expenses and net finance costs.  Segment comparatives have been 
updated accordingly to reflect these changes in the measurement of 
segment results to present a like-for-like view.

96

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
5. SEGMENT INFORMATION (CONTINUED)

Segment results (continued)

The following tables detail our segment results based on the 
reporting structure as at 30 June 2013:

FINANCIAL STATEMENTS

Telstra Group

Year ended 30 June 2013

TC
$m

TB
$m

TE&G
$m

TOps
$m

Revenue from external customers (ii)  .  .
Other income .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Total income.  .  .  .  .  .  .  .  .  .  .  .  .  .  .

10,595
61
10,656

Labour expenses .  .  .  .  .  .  .  .  .  .  .  .  .
Goods and services purchased (ii) .  .  .  .
Other expenses   .  .  .  .  .  .  .  .  .  .  .  .  .
Share of equity accounted profits   .  .  .  .
EBITDA contribution  .  .  .  .  .  .  .  .  .  .

798
3,678
603
-
5,577

4,710
4
4,714

122
880
81
-
3,631

4,344
2
4,346

252
654
40
-
3,400

92
64
156

1,915
160
1,792
-
(3,711)

Telstra Group

Year ended 30 June 2012

TC
$m

TB
$m

TE&G
$m

TOps
$m

Revenue from external customers (ii)  .  .
Other income .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Total income.  .  .  .  .  .  .  .  .  .  .  .  .  .  .

10,257
56
10,313

Labour expenses .  .  .  .  .  .  .  .  .  .  .  .  .
Goods and services purchased (ii) .  .  .  .
Other expenses   .  .  .  .  .  .  .  .  .  .  .  .  .
EBITDA contribution  .  .  .  .  .  .  .  .  .  .

800
3,373
696
5,444

4,660
5
4,665

124
917
58
3,566

4,296
(7)
4,289

232
592
32
3,433

62
12
74

1,995
202
1,621
(3,744)

TW
$m

2,097
18
2,115

70
72
31
-
1,942

TW
$m

2,091
-
2,091

68
74
16
1,933

TMG
$m

1,615
-
1,615

433
183
316
-
683

TMG
$m

1,741
-
1,741

450
174
311
806

TIG All Other (i)
$m
$m

Total
$m

1,871
12
1,883

299
886
313
-
385

354
141
495

25,678
302
25,980

914
(124)
982
1

4,803
6,389
4,158
1
(1,278) 10,629

TIG All Other (i)
$m
$m

Total
$m

1,645
22
1,667

270
790
327
280

616
47
663

1,028
57
1,062
(1,484)

25,368
135
25,503

4,967
6,179
4,123
10,234

(i) Following the sale of TelstraClear on 31 October 2012, the 
current period only includes four months of TelstraClear results, 
compared with 12 months in the comparative period.  The current 
period segment results also include a $127 million loss on sale of 
TelstraClear, which is recorded in Other expenses.  Refer to note 20 
for further details.

(ii) Revenue from external customers in TIG includes $130 million 
(2012: $136 million) of inter-segment revenue treated as external 
expenses in TC, TB, TE&G and TW which is eliminated in the “All 
Other” category.

External expenses in TIG also include $32 million (2012: $33 
million) of inter-segment expenses treated as external revenue in 
TW and eliminated in the “All Other” category.  

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

97

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
5. SEGMENT INFORMATION (CONTINUED)

Segment results (continued)

A reconciliation of EBITDA contribution for reportable segments to 
Telstra Group’s EBITDA, EBIT and profit before income tax 
expense is provided below:

Telstra Group
Year ended 30 June

2013
$m

2012
$m

11,907
(1,278)
10,629
(4,238)
6,391
(909)
5,482

11,718
(1,484)
10,234
(4,412)
5,822
(888)
4,934

Telstra Group
Year ended 30 June
2012
$m

2013
$m

23,774
1,904
25,678

27,896
1,658
29,554

23,231
2,137
25,368

26,875
2,036
28,911

                                                                                                                                                                   Note   

EBITDA contribution .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
All other  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Telstra Group EBITDA  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Depreciation and amortisation .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  7
Telstra Group EBIT .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net finance costs   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Telstra Group profit before income tax expense .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Information about our geographic operations (iii)

Revenue from external customers
Australian customers .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Offshore customers   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Carrying amount of non current assets (iv)
Located in Australia   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Located offshore  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

(iii) Our geographical operations are split between our Australian 
and offshore operations.  Our offshore operations include CSL New 
World (Hong Kong), Autohome, Sequel Media and SharpPoint 
(China) and our international business, including Telstra Europe 
(UK), which are all part of the TIG segment, and TelstraClear (New 
Zealand) up to the date of disposal.  No individual geographical area 
forms a significant part of our operations, apart from our Australian 
operations.

(iv) The carrying amount of our segment non current assets 
excludes derivative assets, defined benefit assets and deferred tax 
assets.

98

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
5. SEGMENT INFORMATION (CONTINUED)

Segment results (continued)

FINANCIAL STATEMENTS

Telstra Group
Year ended 30 June
2012
$m

2013
$m

Note

Income from our products and services

Fixed  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Mobile   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Data and IP.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Network applications and services .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Media .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
International businesses  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
TelstraClear.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other sales revenue (v)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other revenue (vi)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   6
Other income (vii)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   6
Total income (excluding finance income) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   6

7,303
9,200
3,041
1,487
2,191
1,739
164
377
176
302
25,980

7,508
8,680
3,108
1,263
2,377
1,496
501
299
136
135
25,503

(v) Other sales revenue includes revenue for the build of National 
Broadband Network (NBN) related infrastructure of $168 million 
(2012: $67 million) and late payment and miscellaneous fee 
revenue.

(vi) Other revenue primarily consists of distributions from our 
FOXTEL Partnership and rental income.  

(vii) Other income includes amounts received under the NBN 
Definitive Agreements, including Telecommunications Universal 
Services and Management Agency (TUSMA) receipts (which 
replaced the Universal Services Obligation (USO)) and grants 
received under the Retraining Fund Deed.  Also included are USO 
receipts, net gains on asset and investment sales and other 
miscellaneous items.  

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

99

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
6. INCOME

Telstra Group
Year ended 30 June
2012
$m

2013
$m

Note

Sales revenue
Rendering of services   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Sale of goods.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Rent of network facilities and access.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Construction contracts  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Advertising and directory services  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Other revenue (excluding finance income)
Distribution from FOXTEL Partnership .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 29
Rent from property .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Total revenue (excluding finance income)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Other income
Net gain on disposal of non current assets (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net gain on de-recognition of finance leases.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 20
Net foreign currency translation gains  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Government grants (b) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Gain from de-recognition of contingent consideration  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 20
Other miscellaneous income .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Total income (excluding finance income) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Finance income
Interest on cash and cash equivalents .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   17(e)
Interest on finance lease receivables   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   17(e)
Interest on loans to jointly controlled and associated entities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   17(e)
Interest on other receivables .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Total income.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

10,850
2,197
10,709
249
1,497
25,502

155
21
176
25,678

66
8
7
152
-
69
302
25,980

94
11
53
61
219
26,199

11,410
1,854
10,120
229
1,619
25,232

108
28
136
25,368

5
-
-
66
33
31
135
25,503

111
11
12
-
134
25,637

(a) Non current assets includes property, plant and equipment, 
intangibles and investments.

(b) The following government grants have been recognised as other 
income during the financial year:

• $124 million (2012: nil) under the Telecommunications Universal 

Services and Management Agency (TUSMA) National 
Broadband Network (NBN) Definitive Agreement, which 
replaced the Universal Services Obligation (USO);
• $6 million (2012: $58 million) related to the Australian 
Communications and Media Authority's (ACMA) USO;

• $11 million (2012: $2 million) under the Retraining Fund Deed 
NBN Definitive Agreement.  The grant, received last year, is 
being used to retrain certain employees over a period of eight to 
ten years; and 

• $11 million (2012: $6 million) related to other contracts 

accounted for as government grants.   

There are no unfulfilled conditions or other contingencies attaching 
to these grants.  

100

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

 
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
7. EXPENSES

FINANCIAL STATEMENTS

Telstra Group
Year ended 30 June
2012
$m

2013
$m

Note

Labour
Included in our labour expenses are the following
Employee redundancy  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Share based payments.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Defined benefit plan expense   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 24

189
47
223

162
31
223

Cost of goods sold  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

2,901

2,551

Other expenses
Impairment losses
- impairment in value of inventories   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- impairment in value of trade and other receivables.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- impairment in value of property, plant and equipment  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 13
- impairment in value of intangibles (a).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 14
- impairment in value of goodwill (a)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 14
- impairment in value of TelstraClear net assets (b)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 12
- impairment in value of amounts owed by joint ventures  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Reversal of impairment losses
- reversal of impairment in value of trade and other receivables .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 10

Net loss on disposal of TelstraClear (c)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 20
Rental expense on operating leases .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net foreign currency translation losses.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Service contracts and other agreements .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Promotion and advertising  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
General and administration.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other operating expenses  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Depreciation of property, plant and equipment .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 13
Amortisation of intangible assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Finance costs
Interest on borrowings  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   17(e)
Unwinding of discount on liabilities recognised at present value.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Loss on fair value hedges - effective (d) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Gain on cash flow hedges - ineffective .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Loss/(gain) on transactions not in a designated hedge relationship/de-designated from fair value
hedge relationships (e) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Less: interest on borrowings capitalised (f)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

29
251
15
5
3
28
16
347

(39)
(39)

127
618
-
1,382
309
1,009
405
4,158

3,073
1,165
4,238

1,017
18
95
-

89
5
1,224
(96)
1,128

37
346
21
8
182
-
-
594

(50)
(50)

-
583
5
1,229
327
985
450
4,123

3,305
1,107
4,412

1,132
18
9
(2)

(14)
7
1,150
(128)
1,022

Research and development expenses.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

2

5

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

101

 
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
7. EXPENSES (CONTINUED)

(a) We have recognised an impairment loss of $8 million (2012: 
$190 million) relating to impairment of goodwill ($3 million) and 
other intangible assets ($5 million).  Refer to note 14 for further 
details.

Although these borrowings and the related derivative instruments 
do not satisfy the requirements for hedge accounting, they are in 
effective economic relationships based on contractual face value 
amounts and cash flows over the life of the transaction. 

(f) Interest on borrowings has been capitalised using a capitalisation 
rate of 6.4 per cent (2012: 7.0 per cent). 

(b) We have recognised an impairment loss of $28 million relating 
to the impairment of TelstraClear net assets.  This was due to the 
operating results of TelstraClear increasing the net assets at the 
date of disposal, which were not recoverable through the disposal 
of TelstraClear.  Refer to note 12 for further details. 

(c) A $127 million loss on disposal of TelstraClear was recognised 
during the financial year 2013, which largely comprised foreign 
exchange losses.  Refer to note 20 for further details. 

(d) 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.  

The $95 million unrealised loss for the current year (2012: $9 
million) reflects the following valuation impacts:   

• movement in base market rates and Telstra’s borrowing margins 

•

between valuation dates;
reduction in the number of future interest flows as we approach 
maturity of the financial instruments; and

• discount factor unwinding as borrowings move closer to maturity.

It is important to note that in general it is our intention to hold our 
borrowings and associated derivative instruments to maturity.  
Accordingly, unrealised revaluation gains and losses will be 
recognised in our finance costs over the life of the financial 
instrument and for each transaction will progressively unwind to nil 
at maturity.

Refer to note 18 for further details regarding our hedging strategies.

(e) A combination of the following factors has resulted in a net 
unrealised loss of $89 million (2012: gain of $14 million) associated 
with financial instruments that are either not in a designated hedge 
relationship or were previously designated in a hedge relationship 
and no longer qualify for hedge accounting: 

•

•

the valuation impacts described at (d) above for fair value 
hedges;
the different measurement bases of the borrowings (measured at 
amortised cost) and the associated derivatives (measured at fair 
value); and

• a net loss of $21 million (2012: $21 million) for the amortisation 
impact of unwinding previously recognised unrealised gains on 
those borrowings that were de-designated from hedge 
relationships.

102

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
8. REMUNERATION OF AUDITORS

FINANCIAL STATEMENTS

Telstra Group
Year ended 30 June
2012
$m

2013
$m

Audit fees
EY has charged the following amounts for auditing and reviewing the financial reports .  .  .  .  .  .  .  .  .  .  . 

8.079

8.632

Other services
Audit related (a)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Non-audit services (b)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other services provided by EY .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

1.374
0.515
1.889

0.840
0.846
1.686

Other services

Other services comprise audit related fees and non-audit services.

(a) Audit related fees charged by EY are for services that are 
reasonably related to the performance of the audit or review of our 
financial statements and other assurance engagements.  These 
services include assurance services over debt raising 
prospectuses, additional control assessments, various accounting 
advice and additional audit services related to our controlled 
entities.  

(b) Non-audit services comprise the following: 

•

tax fees charged by EY that mainly relate to income tax return 
services; and

• other services that relate to all additional services performed by 
EY, other than those disclosed as auditing and reviewing the 
financial reports, audit related and tax.  These services include 
various reviews and non assurance services across the Group, 
including risk assessments and IT related projects. 

We have processes in place to maintain the independence of the 
external auditor, including the level of expenditure on non-audit 
services.  EY also has specific internal processes in place to ensure 
auditor independence.

The Audit Committee approves the recurring audit and non-audit 
fees.  The provision of additional audit and non-audit services by EY 
must be approved by either the Chief Financial Officer, the 
Chairman of the Audit Committee or the Audit Committee, 
depending upon the fees involved, if not covered by the Audit 
Committee pre-approval, subject to confirmation by both 
management and EY that the provision of these services does not 
compromise auditor independence.  Our auditor independence 
guidelines clearly identify prohibited services.  All additional EY 
engagements approved are reported to the Audit Committee at the 
next meeting.  

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

103

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
9. INCOME TAXES

Major components of income tax expense
Current tax expense  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Deferred tax resulting from the origination and reversal of temporary differences .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Under provision of tax in prior years  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Telstra Group
As at 30 June

2013
$m

2012
$m

1,588
28
1
1,617

1,826
(337)
21
1,510

Notional income tax expense on profit differs from actual income tax expense recorded as 
follows
Profit before income tax expense   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

5,482

4,934

Notional income tax expense calculated at the Australian tax rate of 30%   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

1,645

1,480

Which is adjusted by the tax effect of:
Different rates of tax on overseas income  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Non assessable and non deductible items .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Amended assessments.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Under provision of tax in prior years  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Income tax expense on profit.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

(24)
(2)
(3)
1
1,617

(15)
63
(39)
21
1,510

Income tax recognised directly in other comprehensive income or equity during the year   .  .  .  .  .  .  .  .  . 

164

(262)

(Deferred tax liability)/deferred tax asset

Deferred tax items recognised in the income statement (*)
Property, plant and equipment .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Intangible assets .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Borrowings and derivative financial instruments .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Provision for employee entitlements .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Revenue received in advance  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Provision for workers' compensation .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Allowance for doubtful debts .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Defined benefit liability/asset (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Trade and other payables   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other provisions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Income tax losses (b).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Deferred tax items recognised in other comprehensive income or equity (c)
Defined benefit liability/asset (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Derivative financial instruments   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Net deferred tax liability   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Our net deferred tax liability is split as follows
Deferred tax assets recognised in the statement of financial position .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Deferred tax liabilities recognised in the statement of financial position .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

(*) This includes the impact of foreign exchange movements in the 
deferred tax items recognised in the income statement.

Telstra Group
As at 30 June

2013
$m

2012
$m

(1,199)
(883)
(22)
297
139
18
48
65
153
31
2
(11)
(1,362)

(54)
91
37
(1,325)

(1,241)
(830)
(59)
292
194
20
57
98
111
49
39
(32)
(1,302)

148
53
201
(1,101)

5
(1,330)
(1,325)

6
(1,107)
(1,101)

104

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
9. INCOME TAXES (CONTINUED)

FINANCIAL STATEMENTS

Deferred tax assets not recognised (d)
Income tax losses   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Capital tax losses.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Deductible temporary differences   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Telstra Group
As at 30 June

2013
$m

2012
$m

98
202
307
607

46
161
307
514

(a) Our net deferred tax asset on our defined benefit liability for the 
Telstra Group is $11 million (2012: $246 million).

(b) We have recognised a deferred tax asset for the unused tax 
losses of our offshore controlled entities to the extent that it is 
probable that future taxable profit will be available against which the 
unused tax losses can be utilised.  We have prepared a 
management budget in line with our current knowledge of future 
events to support our view of sufficient future taxable profits being 
available to offset our unused tax losses.

Upon tax consolidation, the entities within the tax consolidated 
group entered into a tax sharing agreement.  The terms of this 
agreement specified the methods of allocating any tax liability in the 
event of default by the Telstra Entity on its group payment 
obligations and the treatment where a subsidiary member exits the 
group.  The tax liability of the group otherwise remains with the 
Telstra Entity for tax purposes.

A tax funding arrangement is also in place for entities within the tax 
consolidated group under which:

•

•

the Telstra Entity compensates its Australian resident wholly 
owned controlled entities for any current tax receivable 
assumed;
the Telstra Entity compensates its Australian resident wholly 
owned controlled entities for any deferred tax assets relating to 
unused tax losses and tax credits; and

• Australian resident wholly owned entities compensate the 

Telstra Entity for any current tax payable assumed. 

The funding amounts are based on the amounts recorded in the 
financial statements of the wholly owned entities. 

Amounts receivable by the Telstra Entity of $34 million (2012: $11 
million) and amounts payable by the Telstra Entity of $247 million 
(2012: $211 million) under the tax funding arrangements are due in 
the next financial year upon final settlement of the current tax 
payable for the tax consolidated group.

(c) When the underlying transactions to which our deferred tax 
relates are recognised directly in other comprehensive income or 
equity, the temporary differences associated with these 
adjustments are also recognised directly in other comprehensive 
income or equity.

(d) Our deferred tax assets not recognised in the statement of 
financial position may be used in future years if the following criteria 
are met:

• our controlled entities have sufficient future taxable profit to 

enable the income tax losses and temporary differences to be 
offset against that taxable profit;

• we have sufficient future capital gains to be offset against those 

capital losses;

• we continue to satisfy the conditions required by tax legislation to 

•

be able to use the tax losses; and
there are no future changes in tax legislation that will adversely 
affect us in using the benefit of the tax losses.

Tax consolidation

The Telstra Entity and its Australian resident wholly owned entities 
previously elected to form a tax consolidated group.  As a 
consequence of the election to enter tax consolidation, the tax 
consolidated group is treated as a single entity for income tax 
purposes.   

The Telstra Entity, as the head entity in the tax consolidated group, 
recognises, in addition to its own transactions, the current tax 
liabilities and the deferred tax assets arising from unused tax losses 
and tax credits for all entities in the group.  However, the Telstra 
Entity and its Australian resident wholly owned entities account for 
their own current tax expense and deferred tax amounts.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

105

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
10. TRADE AND OTHER RECEIVABLES

Current
Trade receivables (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Allowance for doubtful debts (a)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Note

Telstra Group
As at 30 June

2013
$m

2012
$m

3,515
(180)
3,335

3,377
(210)
3,167

Amounts owed by jointly controlled and associated entities - loans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 29

-

33

Finance lease receivable (b) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accrued revenue .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other receivables.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Non current
Trade receivables (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Amounts owed by jointly controlled and associated entities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 29
Allowance for amounts owed by jointly controlled and associated entities - loans .  .  .  .  .  .  .  .  .  .  .  .  . 29

Finance lease receivable (b) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other receivables.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

66
1,093
63
1,222
4,557

321

457
(6)
451

148
23
171
943

51
1,001
94
1,146
4,346

280

448
(5)
443

91
37
128
851

(a) Trade receivables and allowance for doubtful debts

The ageing of current and non current trade receivables is detailed 
below.

Not past due  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Past due 0 - 30 days .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Past due 31 - 60 days  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Past due 61 - 90 days  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Past due 91 - 120 days.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Past 120 days   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Telstra Group
As at 30 June

2013
Gross  Allowance
$m
(13)
(32)
(16)
(16)
(14)
(89)
(180)

$m
2,817
598
176
72
49
124
3,836

2012

Gross

$m
2,498
647
166
75
56
215
3,657

Allowance
$m
(21)
(20)
(13)
(13)
(15)
(128)
(210)

106

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
10. TRADE AND OTHER RECEIVABLES (CONTINUED)

(a) Trade receivables and allowance for doubtful debts 
(continued)

The movement in the allowance for doubtful debts in respect of 
trade receivables is detailed below:

 Opening balance .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
 - additional allowance  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
 - amount used .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
 - amount reversed .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
 - foreign currency exchange differences.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
 - transfer of TelstraClear’s balance to assets held for sale   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
 Closing balance   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Telstra Group
Year ended 30 June
2012
$m
(230)
(144)
111
50
(1)
4
(210)

2013
$m
(210)
(130)
123
39
(2)
-
(180)

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 from date of invoice.  
All credit and recovery risk associated with trade receivables has 
been provided for in the statement of financial position.

Our trade receivables include our customer deferred debt and White 
Pages® directory charges.  Our customer deferred debt allows 
eligible customers the opportunity to repay the cost of their mobile 
handset, other hardware and approved accessories monthly over 
12, 18 or 24 months.  The loan is provided interest free to our mobile 
postpaid customers.  Similarly, the White Pages® directory charges 
can be repaid over 12 months.

Trade receivables have been aged according to their original due 
date in the above ageing analysis, including where repayment terms 
for certain long outstanding trade receivables have been 
renegotiated. 

We hold security for a number of trade receivables, including past 
due or impaired receivables in the form of guarantees, letters of 
credit and deposits.  During financial year 2013, the securities we 
called upon were insignificant.  

We have used the following basis to assess the allowance for 
doubtful debts for trade receivables:

• a statistical approach to apply risk segmentation to the debt, and 
applying the historical impairment rate to each segment at the 
end of the reporting period;

• an individual account by account assessment based on past 

credit history; and

• any prior knowledge of debtor insolvency or other credit risk.

As at 30 June 2013, trade receivables with a carrying amount of 
$852 million (2012: $970 million) for the Telstra Group were past 
due but not impaired.  

These trade receivables, along with our trade receivables that are 
neither past due nor impaired, comprise customers who have a 
good debt history and are considered recoverable.

(b) Finance lease receivable

We enter into finance leasing arrangements predominantly for 
communication assets dedicated to solutions management and 
outsourcing services that we provide to our customers.  The 
average term of finance leases entered into is between 2 and 5 
years (2012: 2 and 5 years).

Amounts receivable under 
finance leases
Within 1 year.  .  .  .  .  .  .  .  .  .  .  .  .  . 
Within 1 to 5 years.  .  .  .  .  .  .  .  .  .  . 
After 5 years .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total minimum lease receivables  .  .  . 
Less unearned finance income  .  .  .  . 
Present value of minimum lease 
receivables   .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Included in the financial 
statements as
Current finance lease receivables .  .  . 
Non current finance lease receivables  

Telstra Group
As at 30 June

2013
$m

2012
$m

77
152
8
237
(23)

214

66
148
214

59
96
5
160
(18)

142

51
91
142

The interest rate inherent in the leases is fixed at the contract date 
for the entire lease term.  The average effective interest rate 
contracted is 7.7 per cent (2012: 7.8 per cent) per annum.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

107

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
11. INVENTORIES

Current
Finished goods recorded at cost .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Finished goods recorded at net realisable value .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total finished goods   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Raw materials and stores recorded at cost   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Construction contracts (a)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Non current
Finished goods recorded at net realisable value .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

(a) Construction contract disclosures are shown as follows
Contract costs incurred and recognised profits   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Progress billings  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Telstra Group
As at 30 June

2013
$m

2012
$m

276
64
340

11
80
431

27
27

144
60
204

9
47
260

24
24

592
(512)
80

479
(432)
47

108

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
12. NON CURRENT ASSETS HELD FOR SALE

FINANCIAL STATEMENTS

On 12 July 2012, we signed an agreement to dispose of our 100 per 
cent shareholding in TelstraClear Limited and its controlled entity 
(TelstraClear).  The disposal was subsequently completed on 31 
October 2012 following regulatory approval.  Refer to Note 20 for 
further details.

During financial year 2013, we also impaired $28 million of our 
TelstraClear net assets.  This was due to the operating results of 
TelstraClear increasing the net assets, which were not recoverable 
through the disposal of TelstraClear.  Refer to note 7 for further 
details.

TelstraClear is included in the “All Other” category in our segment 
information disclosures in note 5.

In accordance with AASB 5: “Non current Assets Held for Sale and 
Discontinued Operations”, the carrying value of assets and liabilities 
of TelstraClear, with the exception of cash balances which were 
excluded from the sale agreement, were classified as held for sale 
up to the date of sale.  On completion of the sale, included in our 
disposal values was $11 million of cash, which was recovered 
through additional proceeds on sale.  

As at 30 June 2012, a $130 million cumulative loss on foreign 
currency translation reserve arising from our investment in 
TelstraClear was recognised in other comprehensive income.  This 
was reclassified to the income statement on disposal of 
TelstraClear in financial year 2013. Refer to note 20 for further 
details. 

Telstra Group
As at 30 June

2013
$m

2012
$m

Note

Current assets
Trade and other receivables  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Inventories  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Prepayments .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total current assets.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Non current assets
Property, plant and equipment .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 13
Intangible assets .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 14
Total non current assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Current liabilities
Trade and other payables   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Provisions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Revenue received in advance  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total current liabilities   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Non current liabilities
Provisions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total non current liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total liabilities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net assets .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

-
-
-
-

-
-
-
-

-
-
-
-

-
-
-
-

73
2
8
83

516
155
671
754

70
6
26
102

3
3
105
649

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

109

 
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
13.  PROPERTY, PLANT AND EQUIPMENT 

Telstra Group
As at 30 June

2013
$m

2012
$m

Land and site improvements
At cost   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

52

38

Buildings (including leasehold improvements)
At cost   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accumulated depreciation and impairment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Communication assets
At cost   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accumulated depreciation and impairment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Other plant, equipment and motor vehicles
At cost   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accumulated depreciation and impairment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Total property, plant and equipment
At cost   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accumulated depreciation and impairment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

1,166
(586)
580

1,077
(536)
541

58,090
(38,911)
19,179

56,619
(37,178)
19,441

1,676
(1,161)
515

1,605
(1,121)
484

60,984
(40,658)
20,326

59,339
(38,835)
20,504

110

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
13. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Telstra Group

FINANCIAL STATEMENTS

Land and 
site
improve-
ments
$m

Buildings
(a)
$m

Comm-
unication
assets
(a)(b)
$m

Other plant, 
equipment
and motor 
vehicles
$m

Total property, 
plant,
and 
equipment
(c)
$m

Written down value at 1 July 2011 .  .  .  .  .  .  .  .  .  .  .
- additions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
- disposals  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- disposals through sale of business combinations   .  .  . 
- disposals through sale of businesses.  .  .  .  .  .  .  .  .  . 
- impairment losses.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- depreciation expenses  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- transfer to assets held for sale  .  .  .  .  .  .  .  .  .  .  .  .  . 
- net foreign currency exchange differences .  .  .  .  .  .  . 
- other   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Written down value at 30 June 2012 .  .  .  .  .  .  .  .  .  .
- additions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
- disposals  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- impairment losses.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- depreciation expenses  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- net foreign currency exchange differences .  .  .  .  .  .  . 
- other (d) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Written down value at 30 June 2013 .  .  .  .  .  .  .  .  .  .

40
-
(1)
-
-

-
-
(1)
-
-
38
14
-
-
-
-
-
52

499
117
(3)
-
(1)
(2)
(64)
(7)
3
(1)
541
119
(52)
-
(74)
6
40
580

20,643
2,293
(3)
-
-
(18)
(3,049)
(477)
23
29
19,441
2,625
(24)
(11)
(2,892)
40
-
19,179

608
139
(6)
(1)
-
(1)
(192)
(31)
2
(34)
484
140
(3)
(4)
(107)
5
-
515

21,790
2,549
(13)
(1)
(1)
(21)
(3,305)
(516)
28
(6)
20,504
2,898
(79)
(15)
(3,073)
51
40
20,326

(a) Includes leasehold improvements.

(b) Includes certain network land and buildings which are essential 
to the operation of our communication assets.

(c) Includes $60 million of capitalised borrowing costs (2012: $86 
million) directly attributable to qualifying assets.  

(d) $40 million is the net result of refinancing a property under a 
finance lease owned by Telstra Europe Limited, during financial 
year 2013.  Refer to note 22 for further details.

Work in progress

As at 30 June 2013, the Telstra Group has property, plant and 
equipment under construction amounting to $637 million (2012: 
$1,076 million).  As these assets are not installed and ready for use, 
there is no depreciation being charged on these amounts.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

111

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
14. INTANGIBLE ASSETS

Goodwill
At cost   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accumulated impairment .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Internally generated intangible assets
Software assets developed for internal use (a)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accumulated amortisation and impairment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Acquired intangible assets
Mastheads  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accumulated amortisation and impairment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Patents and trademarks  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accumulated amortisation and impairment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Licences  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accumulated amortisation and impairment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Customer bases  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accumulated amortisation and impairment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Brand names .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accumulated amortisation and impairment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Total acquired intangible assets .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Deferred expenditure
Deferred expenditure .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accumulated amortisation and impairment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Total intangible assets
At cost   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accumulated amortisation and impairment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Telstra Group
As at 30 June

2013
$m

2012
$m

1,650
(268)
1,382

1,554
(265)
1,289

8,882
(4,142)
4,740

8,201
(3,388)
4,813

447
(380)
67

30
(12)
18

1,426
(373)
1,053

107
(96)
11

179
(103)
76
1,225

447
(312)
135

34
(12)
22

770
(491)
279

171
(156)
15

161
(82)
79
530

1,450
(595)
855

14,171
(5,969)
8,202

1,286
(497)
789

12,624
(5,203)
7,421

112

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)

FINANCIAL STATEMENTS

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Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

113

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
14. INTANGIBLE ASSETS (CONTINUED)

(a) As at June 2013, we had software assets under development 
amounting to $345 million (2012: $509 million).  As these assets 
were not installed and ready for use, there is no amortisation being 
charged on the amounts. 

(b) During financial year 2013, we renewed our existing 800Mhz 
and 1800Mhz spectrum licences for $779 million.

(c) During financial year 2005, we entered into an arrangement with 
our jointly controlled entity, Reach Ltd (Reach), and our co-
shareholder PCCW, whereby Reach's international cable capacity 
was allocated between us and PCCW under an indefeasible right of 
use (IRU) agreement, including committed capital expenditure for 
the period until 2018. 

The IRU is amortised over the contract periods for the capacity on 
the various international cable systems, which range from 5 to 22 
years.  The IRU is deemed to be an extension of our investment in 
Reach.  The IRU has a carrying value of nil in the consolidated 
financial statements due to the recognition of equity accounted 
losses in Reach.

(d) The majority of the deferred expenditure relates to the deferral 
of direct incremental costs of establishing a customer contract, 
which are amortised to goods and services purchased and sold in 
the income statement. In addition, the deferred expenditure 
includes basic access installation and connection fees for in place 
and new services.

(e) Includes $36 million (2012: $42 million) of capitalised borrowing 
costs directly attributable to qualifying assets.

(f) We have recognised an impairment charge of $3 million against 
goodwill for the CitySearch CGU which is included in “Other” in note 
21. In financial year 2012, we recognised $189 million against 
goodwill and customer bases of $182 million and $7 million, 
respectively for the TelstraClear, LMobile Group and CitySearch 
CGUs.

(g) As at 30 June 2012, assets and liabilities of TelstraClear Limited 
were classified as held for sale.  Refer to note 12 for further details. 

114

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
15. TRADE AND OTHER PAYABLES

FINANCIAL STATEMENTS

Current
Trade creditors (a)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accrued expenses  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accrued capital expenditure  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accrued interest   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Deferred consideration for capital expenditure .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other creditors (a)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Non current
Deferred consideration for capital expenditure .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other creditors  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

(a) Trade creditors and other creditors are non interest bearing 
liabilities.  We generally process trade creditor payments once they 
have reached 30 days for electronic funds transfer payments, or 30 
days from the end of the month of invoice for other payments. 

Telstra Group
As at 30 June

2013
$m

2012
$m

1,297
1,690
400
365
30
459
4,241

104
59
163

1,228
1,656
343
347
31
526
4,131

112
62
174

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

115

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
16. PROVISIONS

Current
Employee benefits (a)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Workers' compensation (b) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Redundancy (b)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other (b)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Non current
Employee benefits (a)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Workers' compensation (b) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other (b)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

(a) Aggregate employee benefits

Current provision for employee benefits  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Non current provision for employee benefits .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Current provision for redundancy   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Accrued labour and on-costs (i)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

(i) Accrued labour and related on-costs are included within our 
current trade and other payables (refer to note 15 for further details).

Provision for employee benefits consist of amounts for annual leave 
and long service leave accrued by employees. 

Employee benefits for long service leave are measured at their 
present value.  The following assumptions were adopted in 
measuring this amount (refer to note 2.14 for further details).

Telstra Group
As at 30 June

2013
$m

2012
$m

853
23
6
36
918

131
126
19
276

856
24
6
56
942

110
131
23
264

Telstra Group
As at 30 June

2013
$m

2012
$m

853
131
6
555
1,545

856
110
6
456
1,428

 Telstra Group
As at 30 June

2013

2012

Weighted average projected increase in salaries, wages and associated on-costs .  .  .  .  .  .  .  .  .  .  .  .  .  .
Discount rates  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

4.7%
4.2%

4.7%
3.6%

116

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
16.  PROVISIONS (CONTINUED)

(b) Movement in provisions, other than employee benefits

FINANCIAL STATEMENTS

Workers' compensation (i)

Opening balance  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- additional provisions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- amount used  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- unwinding of discount on liabilities recognised at present value  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- effect of any change in the discount rate .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- reversal of amounts unused   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Closing balance .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Redundancy

Opening balance  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- additional provisions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- amount used  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Closing balance .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Other (ii)

Opening balance  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- additional provisions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- amount used  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- unwinding of discount on liabilities recognised at present value  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- effect of any change on discount rate.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- reversal of amounts unused   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- foreign currency exchange differences .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- transfer to non current assets held for sale .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- other   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Closing balance .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Telstra Group
Year ended 30 June
2012
$m

2013
$m

155
16
(22)
5
(5)
-
149

6
6
(6)
6

79
32
(54)
1
-
(4)
1
-
-
55

152
4
(23)
7
16
(1)
155

-
6
-
6

97
39
(53)
-
1
-
1
(5)
(1)
79

(i) Workers’ compensation

We self insure for our workers’ compensation liabilities.  We provide 
for our obligations through an assessment of accidents and 
estimated claims incurred.  The provision is based on a semi-annual 
actuarial review of our workers’ compensation liability.  Actual 
compensation paid may vary where accidents and claims incurred 
vary from those estimated.  The timing of these payments may vary, 
however the average time payments are expected for is 8 years 
(2012: 9 years).

Certain controlled entities do not self insure but pay annual 
premiums to third party insurance companies for their workers’ 
compensation.

(ii) Other

Other provisions include provisions for ACCC customer 
determinations and disputes, provision for lease incentives, 
provision for committed capital expenditure, provision for 
reinstatement costs, and other provisions.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

117

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)

17. CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS

This note provides information on our capital structure and our 
underlying economic positions as represented by the carrying 
values, fair values and contractual face values of our financial 
instruments. 

Agreement with lenders

During the current and prior years there were no defaults or 
breaches on any of our agreements with our lenders.

Section (a) includes details on our gearing.

Gearing and net debt 

Section (b) sets out the carrying values, fair values and contractual 
face values of our financial instruments.  The amounts provided in 
this section are prior to netting offsetting risk positions.  

Section (c) provides information on our net debt position based on 
contractual face values and after netting offsetting risks.  We 
consider this view of net debt based on our net contractual 
obligations to be useful additional information to investors on our 
underlying economic position, as it portrays our residual risks after 
hedging and excludes the effect of fair value measurements.  This 
is relevant on the basis that we generally hold our borrowings and 
associated derivatives to maturity and hence revaluation gains and 
losses will generally not be realised.  

Section (d) includes a reconciliation of movements in gross and net 
debt positions.

Section (e) includes details on our interest expense and interest rate 
yields.

Section (f) provides further details on our derivative financial 
instruments.

Section (g) provides information on the method for estimating fair 
value of our financial instruments.

Details regarding interest rate, foreign exchange and liquidity risk 
are disclosed in note 18.

(a)  Capital management

Our objectives when managing capital are to safeguard our ability 
to continue as a going concern, continue to provide returns for 
shareholders and benefits for other stakeholders and to maintain an 
optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, we may adjust the 
amount of dividends paid to shareholders, return capital to 
shareholders or issue new shares.

During financial year 2013, we paid dividends of $3,480 million 
(2012: $3,475 million).  Refer to note 4 for further details.

We monitor capital on the basis of the gearing ratio.  This ratio is 
calculated as net debt divided by total capital.  Net debt is calculated 
as total interest bearing financial liabilities and derivative financial 
instruments, less cash and cash equivalents.  Total capital is 
calculated as equity, as shown in the statement of financial position, 
plus net debt.  

Our comfort range for the net debt gearing ratio is currently 50 to 70 
per cent (2012: 50 to 70 per cent).  The gearing ratios and carrying 
value of our net debt are shown in Table A below: 

Table A

Telstra Group
As at 30 June

2013
$m

2012
$m

Note

Current
Short term debt
Promissory notes  .  .  .  .  .  .  .  .  .  .  . 

Long term debt-current portion
Offshore loans (i)   .  .  .  .  .  .  .  .  .  .  . 
Telstra bonds and domestic loans (ii)  . 
Finance leases   .  .  .  .  .  .  .  .  .  .  .22

Non current
Long term debt
Offshore loans (i)   .  .  .  .  .  .  .  .  .  .  . 
Telstra bonds and domestic loans (ii)  . 
Finance leases   .  .  .  .  .  .  .  .  .  .  .22

Short term debt  .  .  .  .  .  .  .  .  .  .  .  . 
Long term debt (including
current portion)   .  .  .  .  .  .  .  .  .  .  .  . 
Total debt .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net derivative financial liability.  .   17(f)
Gross debt  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Cash and cash equivalents  .  .  .  .  .20
Net debt .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

125
125

55
505
66
626
751

563
563

1,198
1,500
45
2,743
3,306

11,836
2,263
214
14,313
15,064

9,836
2,028
94
11,958
15,264

125

563

14,939
15,064
564
15,628
(2,479)
13,149

14,701
15,264
1,958
17,222
(3,945)
13,277

Total equity .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total capital.  .  .  .  .  .  .  .  .  .  .  .  .  . 

12,875
26,024

11,689
24,966

Gearing ratio  .  .  .  .  .  .  .  .  .  .  .  .  . 

%
50.5

%
53.2

118

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
17. CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS (CONTINUED)

FINANCIAL STATEMENTS

(a)  Capital management (continued)

(ii) Telstra bonds and domestic loans

Telstra bonds currently on issue total $238 million, mature up until 
the year 2020, and relate to wholesale investors.  Domestic 
borrowings as at 30 June 2013 total $2,530 million, with various 
maturity dates up until the year 2020.  Refer to Table E for details 
on debt issuance and maturities.

Gearing and net debt (continued)

Net debt included in Table A is based on the carrying values of our 
financial instruments which are provided in Table C in the following 
section (b).  For interest bearing financial instruments we adopt a 
‘clean price’ whereby the reported balance of our derivative 
instruments and borrowings excludes accrued interest.  Accrued 
interest is recorded in current “trade and other receivables” and 
current “trade and other payables” in the statement of financial 
position. 

Our borrowings are unsecured, except for finance leases which are 
secured, as the rights to the leased asset transfer to the lessor in the 
event of a default by us.  We have no assets pledged as security for 
our borrowings.  All our borrowings are interest bearing, except for 
some loans from wholly owned controlled entities.  Details of 
interest rates and maturity profiles are included in note 18.

We are not subject to any externally imposed capital requirements.

(i) Offshore loans 

Offshore loans comprise debt raised overseas.  The carrying 
amounts of offshore loans are denominated in the currencies in 
Table B.  Our policy is to swap foreign currency borrowings into 
Australian dollars, except where they are held to hedge translation 
foreign exchange risk associated with our offshore investments.  
Refer to Table D for the net contractual face values of our 
borrowings on a post hedge basis.  

 Refer to Table E for details on debt issuance and maturities.

Table B

Australian dollar   .  .  .  .  .  .  .  .  .  .  .  .  .
Euro   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
United States dollar   .  .  .  .  .  .  .  .  .  .  . 
British pounds sterling  .  .  .  .  .  .  .  .  .  .
Japanese yen   .  .  .  .  .  .  .  .  .  .  .  .  .  .
New Zealand dollar.  .  .  .  .  .  .  .  .  .  .  . 
Swiss francs  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Hong Kong dollar .  .  .  .  .  .  .  .  .  .  .  .  . 
Indian rupee  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Telstra Group
As at 30 June

2013
$m
190
9,054
1,225
329
566
214
262
47
4
11,891

2012
$m
190
7,193
1,701
306
595
198
804
45
2
11,034

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

119

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
17. CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS (CONTINUED)

(b)  Financial instruments

The carrying amounts, fair values and face values of each category 
of our financial instruments are shown in Table C.  The amounts 
disclosed are prior to netting offsetting risk positions of financial 
instruments in a hedge relationship.

We also have potential financial liabilities not included in the tables 
below which may arise from certain contingencies disclosed in note 
23 and note 30.  

Table C

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 derivative liability - hedging instrument   .  .  .  .  .  .  .  .
Promissory notes - hedged item (ii)   .  .  .  .  .  .  .  .  .  .  .  .
Offshore loans - hedged item (ii) .  .  .  .  .  .  .  .  .  .  .  .  .  .
In designated hedge relationships - at amortised 
cost
Offshore loans - hedged item   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra bonds and domestic loans - hedged item   .  .  .  .  .
Promissory notes - hedging instrument   .  .  .  .  .  .  .  .  .  .
Offshore loans - hedging instrument .  .  .  .  .  .  .  .  .  .  .  .
Not in designated hedge relationship - at fair value
Net derivative liability .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
De-designated from hedge relationship - at 
amortised cost
Offshore loans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Other financial liabilities - at amortised cost
Finance lease payable .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Promissory notes .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Offshore loans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra bonds and domestic loans  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra Group net debt  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

Other financial instruments
Interest bearing financial assets
Finance lease receivable .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Amounts owed by jointly controlled and associated entities
Other receivables.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Net interest bearing financial liabilities  .  .  .  .  .  .  .  .  .
Equity investments classified as available-for-sale
Listed and unlisted securities.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Loans and receivables at amortised cost
Trade/other receivables and accrued revenue (i)   .  .  .  .  .
Amounts owed by jointly controlled and associated entities
Financial liabilities at amortised cost
Trade/other creditors and accrued expenses (i)  .  .  .  .  .  .
Deferred consideration for capital expenditure .  .  .  .  .  .  .
Net financial liabilities   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

Telstra Group

As at 30 June 2013

As at 30 June 2012

Carrying 
amount

Fair value Face value

Carrying 
amount

Fair value Face value

Receivable/(payable)
$m

$m

$m

Receivable/(payable)
$m

$m

$m

295

295

295

362

362

362

2,184

2,184

2,195

3,583

3,583

3,634

(382)
(125)
(3,950)

(382)
(126)
(3,950)

(327)
(126)
(3,732)

(1,381)
(101)
(3,615)

(1,381)
(101)
(3,615)

(1,349)
(101)
(3,529)

(6,504)
(1,010)
-
-

(6,948)
(1,006)
-
-

(6,547)
(1,025)
-
-

(4,749)
(274)
(275)
(198)

(5,211)
(264)
(276)
(217)

(4,781)
(275)
(277)
(200)

(182)

(182)

(261)

(577)

(577)

(703)

(1,243)

(1,365)

(1,289)

(1,663)

(1,810)

(1,731)

(280)
-
(194)
(1,758)
(13,149)

(280)
-
(202)
(1,906)
(13,868)

(392)
-
(194)
(1,772)
(13,175)

(139)
(187)
(809)
(3,254)
(13,277)

(139)
(188)
(835)
(3,396)
(14,065)

(186)
(189)
(810)
(3,272)
(13,407)

214
451
7
(12,477)

214
451
7
(13,196)

237
451
7
(12,480)

142
443
24
(12,668)

142
443
24
(13,456)

160
443
24
(12,780)

38

38

38

19

19

19

4,828
-

4,828
-

5,008
6

4,555
33

4,555
33

4,765
38

(4,270)
(134)
(12,015)

(4,270)
(134)
(12,734)

(4,270)
(187)
(11,885)

(4,162)
(143)
(12,366)

(4,162)
(143)
(13,154)

(4,162)
(205)
(12,325)

(i) For financial assets and financial liabilities with a short-term to 
maturity, the carrying amount is considered to approximate fair 
value.

(ii) These borrowings are in fair value hedges.  The carrying amount 
of our borrowings in fair value hedges is adjusted for fair value 
movements attributable to the hedged risk.

120

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

  
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
17. CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS (CONTINUED)

FINANCIAL STATEMENTS

(c) Net position on a contractual face value basis 

The amounts disclosed in Table D represent the net contractual 
face values of our financial instruments on a post hedge basis.

Table D

Interest bearing financial assets included in net debt
Cash and cash equivalents  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Cash and cash equivalents held in foreign currencies   .  .  .  .  .  .  .  .  .  .  .  

Floating
Floating

Australian dollar
Various

Currency

Interest bearing financial liabilities included in net debt
Cross currency and interest rate swap liability (i)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Borrowings.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Borrowings (ii) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Cross currency and interest rate swap liability (i)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Borrowings.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Forward contract liability - net (iii)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Cross currency swap liability - net .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Borrowings (iv).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Fixed
Fixed
Fixed
Floating
Floating
Floating
Floating
Floating

Australian dollar
Australian dollar
Foreign
Australian dollar
Australian dollar
Australian dollar
Foreign
Foreign

Net interest bearing debt   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Non-interest bearing cash included in net debt  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Net debt - based on contractual face values .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Other interest bearing financial assets   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Net interest bearing financial liabilities - based on contractual face values

Various

Fixed

Australian dollar

Telstra Group
As at 30 June
Face value
2013
$m

2012
$m

2,076
336
2,412

3,591
338
3,929

(7,311)
(1,653)
(150)
(5,373)
(505)
(89)
(584)
-
(15,665)
(13,253)
78
(13,175)
695
(12,480)

(5,841)
(2,549)
(251)
(6,950)
(1,189)
(113)
(233)
(277)
(17,403)
(13,474)
67
(13,407)
627
(12,780)

(i) These amounts represent the end hedge position as described in 
our hedge relationships in note 18, Table H.

(ii) Includes offshore loans of nil (2012: $200 million) used to hedge 
our investment in TelstraClear Limited as described in note 18, 
Table K.  The balance also includes $146 million (2012: $49 million) 
relating to finance leases and $4 million (2012: $2 million) other 
loans.

(iii) Includes final pay legs $556 million (2012: $638 million) as 
described in note 18 Table J.  The balance also includes receive 
legs relating to hedges of forecast purchases, trade and other non 
interest bearing liabilities of $467 million (2012: $525 million).

(iv) Comprises promissory notes used to hedge our investment in 
TelstraClear Limited as described in note 18 Table K.  We disposed 
of TelstraClear on 31 October 2012.  Refer to note 20 for further 
details.  

The above table represents our economic residual position after 
netting offsetting risks of our derivative and non-derivative financial 
instruments in a hedge relationship.  

Accordingly, consistent with our policy to swap foreign currency 
borrowings into Australian dollars, only our Australian dollar end 
positions are included in the table above, except for a small 
proportion of financial instruments used to hedge translation foreign 
exchange risk associated with our offshore investments, and some 
cash balances and borrowings 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.

Total net debt in Table D agrees to the face value of our financial 
instruments included in net debt in Table C.  The face values differ 
from the statement of financial position carrying amounts.  The 
carrying amounts reflect a part of our borrowing portfolio at fair 
value with the remaining part at amortised cost, whereas the face 
values represent the undiscounted contractual liability at maturity 
date.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

121

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
17. CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS (CONTINUED)

(d) Movements in net debt

The decrease in the carrying amount (including net cash 
movements) of our net debt during the year of $128 million for the 
Telstra Group (30 June 2012: decrease of $318 million) is 
represented by the movements shown in Table E below. 

We have issued the following long term debt during the year 
(Australian dollar equivalent):

• $62 million Japanese yen private placement bond in July 2012, 

matures 24 July 2024; 

• $743 million domestic public bond in November 2012 ($750 

million face value), matures 15 November 2017; 

• $1,268 million Euro public bond in March 2013, matures 15 

September 2023; and

• $1 million under an existing Indian rupee bank loan facility 

entered into in December 2011, matures 22 December 2016. 

Our unsecured promissory notes are used principally to support 
working capital and short term liquidity, as well as hedging certain 
offshore investments.  Our short term unsecured promissory notes 
will continue to be supported by liquid financial assets and ongoing 
credit standby lines.

We repaid the following long term debt during the period (Australian 
dollar equivalent):

Telstra Group
Year ended 
30 June

2013
$m
2,074
(442)
(3,600)
(97)
(2,065)

2012
$m
2,801
60
(2,036)
(52)
773

4

57

103

89

• $271 million offshore Swiss franc public bond, matured 9 

October 2012;

• $1,000 million domestic syndicated bank loan, matured 26 

October 2012;

• $12 million offshore Japanese yen public bond, matured 9 

(15)

(9)

November 2012;

188
237
471

(18)
52
217

• $500 million domestic public bond, matured 15 November 2012;
• $859 million offshore Euro public bond, matured 8 April 2013; 
• $328 million offshore Swiss franc public bond, matured 19 April 

2013; and

• $630 million United States dollar syndicated bank loan, repaid 11 

(1,594)

990

June 2013 (original maturity 20 August 2013).

Table E

Debt issuance - offshore and domestic loans 
Net short term borrowings  .  .  .  .  .  .  .  .  .  . 
Repayment of offshore and domestic loans  . 
Finance lease repayments .  .  .  .  .  .  .  .  .  . 
Net cash (outflow)/inflow .  .  .  .  .  .  .  .  .  . 

Non-cash movements in gross debt before 
tax
Revaluation losses affecting cash flow hedging 
reserve .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Revaluation losses affecting foreign currency 
translation reserve  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Revaluation gains affecting other expenses in 
the income statement   .  .  .  .  .  .  .  .  .  .  .  . 
Revaluation losses/(gains) affecting finance 
costs in the income statement (i) .  .  .  .  .  .  . 
Finance lease additions   .  .  .  .  .  .  .  .  .  .  . 

Total (decrease)/increase in gross debt .  . 
Net decrease/(increase) in cash and cash 
equivalents (including foreign currency 
exchange differences)  .  .  .  .  .  .  .  .  .  .  .  . 
Total decrease in net debt  .  .  .  .  .  .  .  .  . 

1,466
(128)

(1,308)
(318)

(i) The net revaluation loss of $188 million (2012: gain of $18 million) 
includes:

•

•

loss of $185 million (2012: gain of $6 million) affecting other 
finance costs, comprising a loss of $95 million (2012: $9 million) 
from fair value hedges; a loss of $89 million (2012: gain of $14 
million) from transactions either not designated or de-designated 
from fair value hedge relationships; and a loss of $1 million 
(2012: gain of $1 million) relating to other hedge accounting 
adjustments; and
loss of $3 million (2012: gain of $12 million) affecting interest on 
borrowings, comprising a gain of $15 million (2012: $27 million) 
relating to cross currency swap proceeds on new borrowings, 
which will be amortised to interest in the income statement over 
the life of the borrowing; and a loss of $18 million (2012: $15 
million) comprising the amortisation of discounts.    

Long term debt of $564 million will mature during financial year 
2014. This represents the contractual face value amount after 
hedging.  Included in this amount is a Japanese Yen offshore 
borrowing which was swapped into Australian dollars at inception of 
the borrowing through to maturity using a cross currency swap, 
creating a synthetic Australian dollar obligation.  This post hedge 
obligation is reflected in our total contractual Australian dollar 
liability at maturity of $564 million.

The amount of $564 million is different to the carrying amount of 
$560 million that is included in current borrowings (along with 
promissory notes of $125 million and finance leases of $66 million) 
in the statement of financial position.  The carrying amount reflects 
the amount of our borrowings due to mature within 12 months prior 
to netting offsetting risk positions of associated derivative financial 
instruments hedging these borrowings.  The carrying amount 
reflects a mixed measurement basis with part of the borrowing 
portfolio recorded at fair value and the remaining part at amortised 
cost which is compliant with the requirements under Australian 
Accounting Standards.

122

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
17. CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS (CONTINUED)

FINANCIAL STATEMENTS

(e) Interest and yields

The net interest on borrowings is shown in Table F below.  Where 
applicable, finance costs are assigned to categories on the basis of 
the hedged item.

Table F

Telstra Group
As at 30 June

2013
$m

2012
$m

Note

Interest on borrowings (i)
Financial instruments in hedge relationships
Domestic loans in cash flow and fair value hedges (ii) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Offshore loans in cash flow hedges (ii).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Offshore loans in fair value hedges (ii) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Promissory notes in fair value hedges (ii)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Derivatives and borrowings hedging net foreign investments  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Other financial instruments
Promissory notes .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Offshore loans not in a hedge relationship or de-designated from fair value hedge relationships (ii)  .  .  .  .  . 
Telstra bonds and domestic loans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Other .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Finance leases .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
            7

Finance income on net debt
Interest on cash and cash equivalents .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  6
Interest on finance lease receivables   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  6
Interest on loans to jointly controlled and associated entities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  6
Net interest on interest bearing financial liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

37
452
207
9
(15)

5
150
153
7
12
1,017

94
11
53
859

19
481
180
8
3

7
191
218
13
12
1,132

111
11
12
998

(i) The interest expense as shown in Table F above is categorised 
based on the classification of financial instruments applicable as at 
30 June.

(ii) Interest expense is a net amount after offsetting interest income 
and interest expense on associated derivative instruments. 

The year-on-year decrease in net interest is due to a reduction in the 
average volume of our net interest bearing liabilities and a reduction 
in the net average interest yield.  The net average interest yield 
during the year was 6.4 per cent (2012: 7.0 per cent) for the Telstra 
Group.  The reduction in yield arises principally from a reduction in 
short-term market base interest rates in the current year compared 
with the prior year, resulting in lower costs on the floating rate debt 
component of our debt portfolio.    

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

123

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
17. CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS (CONTINUED)

(f) Derivative financial instruments

All of our derivatives are in designated hedge relationships which 
satisfy the requirements for hedge accounting, except for a number 
of derivatives classified as held for trading which are in economic 
relationships but not in a designated hedge relationship for hedge 
accounting purposes.  Refer to note 18 for details on hedging 
relationships. 

Derivative financial instruments for the Telstra Group as at 30 June 
are shown in Table G and Table H below.  For these derivative 
instruments the fair value equates to the carrying amounts in the 
statement of financial position which differs from the face values 
which are also provided in other tables within this note.

Table G

Telstra Group
As at 30 June 2013

Cross currency 
swaps

Asset
$m

Liability
$m

Interest rate swaps Forward contracts
Liability
$m

Liability
$m

Asset
$m

Asset
$m

Total
Asset
$m

Total
Liability
$m

Total
Net
$m

Current
Fair value hedge  .  .  .  .  .  .  .  .
Cash flow hedge (i).  .  .  .  .  .  .
Hedge of net investment in 
foreign operation .  .  .  .  .  .  .  .
Held for trading (ii)  .  .  .  .  .  .  .

Non current
Fair value hedge  .  .  .  .  .  .  .  .
Cash flow hedge (i).  .  .  .  .  .  .
Hedge of net investment in 
foreign operation .  .  .  .  .  .  .  .
Held for trading (ii)  .  .  .  .  .  .  .

Table H

Current
Fair value hedge  .  .  .  .  .  .  .  .
Cash flow hedge (i).  .  .  .  .  .  .
Hedge of net investment in 
foreign operation .  .  .  .  .  .  .  .
Held for trading (ii)  .  .  .  .  .  .  .

Non current
Fair value hedge  .  .  .  .  .  .  .  .
Cash flow hedge (i).  .  .  .  .  .  .
Hedge of net investment in 
foreign operation .  .  .  .  .  .  .  .
Held for trading (ii)  .  .  .  .  .  .  .

-
-

-
-
-

237
183

-
-
420
420

(4)
-

(37)
-
(41)

(13)
(737)

(27)
(261)
(1,038)
(1,079)

-
-

-
-
-

120
463

-
59
642
642

-
-

-
-
-

(7)
(580)

-
-
(587)
(587)

3
18

-
22
43

-
-

-
-
-
43

-
-

-
(3)
(3)

-
-

-
-
-
(3)

3
18

-
22
43

(4)
-

(37)
(3)
(44)

357
646

(20)
(1,317)

-
59
1,062
1,105

(27)
(261)
(1,625)
(1,669)

(1)
18

(37)
19
(1)

337
(671)

(27)
(202)
(563)
(564)

Telstra Group
As at 30 June 2012

Cross currency swaps Interest rate swaps
Liability
$m

Liability
$m

Asset
$m

Asset
$m

Forward contracts
Liability
Asset
$m
$m

Total
Asset
$m

Total
Liability
$m

Total
Net
$m

1
-

2
7
10

10
12

-
-
22
32

(14)
(20)

(5)
(245)
(284)

(192)
(1,050)

(5)
(426)
(1,673)
(1,957)

2
5

-
14
21

75
487

-
74
636
657

-
(7)

-
-
(7)

-
(676)

-
-
(676)
(683)

-
-

-
1
1

-
-

-
-
-
1

(2)
(4)

-
(2)
(8)

-
-

-
-
-
(8)

3
5

2
22
32

85
499

-
74
658
690

(16)
(31)

(5)
(247)
(299)

(13)
(26)

(3)
(225)
(267)

(192)
(1,726)

(107)
(1,227)

(5)
(426)
(2,349)
(2,648)

(5)
(352)
(1,691)
(1,958)

(i) Gains or losses recognised in the cash flow hedging reserve on 
cross currency swap and interest rate swap contracts will be 
continuously released to the income statement until the underlying 
borrowings are repaid.  Gains or losses recognised in the cash flow 
hedging reserve on forward exchange contracts will be released to 
the income statement when the underlying forecast transaction 
occurs and affects profit or loss.  However, where the underlying 
forecast transaction is a purchase of a non financial asset (for 

example property, plant and equipment) the gain or loss in the cash 
flow hedging reserve will be transferred and included in the 
measurement of the initial cost of the asset at the date on which the 
asset is recognised.

124

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
17. CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS (CONTINUED)

(f) Derivative financial instruments (continued)

Table J

FINANCIAL STATEMENTS

(ii) Derivatives which are classified as held for trading are in 
economic relationships but are not in designated hedge 
relationships for hedge accounting purposes.  Refer to note 18 for 
details on our hedging strategies.  Although these held for trading 
derivatives did not satisfy the requirements for hedge accounting, 
these relationships are in effective economic relationships based on 
contractual amounts and cash flows over the life of the transaction.  

(g) 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; 
• Level 2: the fair value is estimated using inputs other than quoted 
prices included in Level 1 that are observable for the asset or 
liability, either directly (as prices) or indirectly (derived from 
prices); and

Available for sale 
investments - other
Quoted securities  .  .  . 
Unlisted securities .  .  .  
Derivative assets
Cross currency swaps . 
Interest rate swaps   .  . 
Forward contracts .  .  . 

Derivative liabilities
Cross currency swaps . 
Interest rate swaps   .  . 
Forward contracts .  .  . 

Telstra Group 
As at 30 June 2012
Level 3
$m

Level 2
$m

Level 1
$m

1
-

-
-
-
1

-
-
-
-
1

-
-

32
657
1
690

(1,957)
(683)
(8)
(2,648)
(1,958)

-
18

-
-
-
18

-
-
-
-
18

Total
$m

1
18

32
657
1
709

(1,957)
(683)
(8)
(2,648)
(1,939)

• Level 3: the fair value is estimated using inputs for the asset or 

Available for sale investments - other - unlisted securities

liability that are not based on observable market data 
(unobservable inputs).

The level in the fair value hierarchy within which the fair value 
measurement is categorised in its entirety has been determined on 
the basis of the lowest level input that is significant to the fair value 
measurement in its entirety.  An unobservable valuation input is 
considered significant if stressing the unobservable input to the 
valuation model would result in a greater than 10 per cent change 
in the overall fair value of the instruments.

The fair value of the financial instruments and the classification 
within the fair value hierarchy are summarised in Tables I, J and K 
below, followed by a description of the methods used to estimate 
the fair value.

Table I

Available for sale 
investments - other
Unlisted securities  .  .  . 
Derivative assets
Cross currency swaps  . 
Interest rate swaps .  .  . 
Forward contracts   .  .  . 

Derivative liabilities
Cross currency swaps  . 
Interest rate swaps .  .  . 
Forward contracts   .  .  . 

Telstra Group 
As at 30 June 2013 

Level 1 Level 2 Level 3
$m

$m

$m

-

-
-
-
-

-
-
-
-
-

-

420
642
43
1,105

(1,079)
(587)
(3)
(1,669)
(564)

19

-
-
-
19

-
-
-
-
19

Total
$m

19

420
642
43
1,124

(1,079)
(587)
(3)
(1,669)
(545)

Table K shows the fair value of shares not listed on any stock 
exchange and where a quoted market price is not available.  
Accordingly, these unlisted securities have been classified within 
Level 3 of the fair value hierarchy.  

Table K

Opening balance 1 July 2012  .  .  .  .  .  .  .  .  .  .
Purchases (a)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Transfers out of Level 3 (b)  .  .  .  .  .  .  .  .  .  .  .  .
Closing balance 30 June 2013.  .  .  .  .  .  .  .  .  .

Unlisted
securities
Level 3
$m
18
19
(18)
19

(a) This relates to our investment in Kony Solutions Inc. which we 
acquired in June 2013 for a purchase price of $19 million which 
represents an amount exchanged between knowledgeable and 
willing parties in an arms’ length purchase transaction.  During the 
financial year, no gains or losses were recognised in other 
comprehensive income as the fair value of this investment as at 30 
June 2013 did not differ from the consideration paid.  

(b) Transfers out of the Level 3 fair value hierarchy relate to our 
investment in Ooyala, an unlisted security with no quoted market 
price in an active market and for which the fair value cannot be 
reliably measured.  As at 30 June 2013, this investment has been 
measured at its historical cost of $18 million as the range of 
reasonable fair value estimates for this business was significant and 
the probabilities of the various estimates could not be reasonably 
assessed.  We do not intend to dispose of this investment in the 
near future.  

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

125

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
17. CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS (CONTINUED)

(g) Fair value hierarchy (continued)

Cross currency and interest rate swaps

The net fair values of our cross currency and interest rate swaps are 
determined using valuation techniques that utilise data from 
observable and unobservable market data.  Assumptions are based 
on market conditions existing at each reporting date.  The fair value 
is calculated as the present value of the estimated future cash flows 
using an appropriate market based yield curve, which is 
independently derived and representative of Telstra’s cost of 
borrowing.  In particular, the following inputs are used to derive yield 
curves used in the calculation of fair value of our derivatives:

• base curves which are readily available market data and quoted 

for all major currencies; and

• pricing data reflecting Telstra’s borrowing margins obtained from 
selected market participants with whom Telstra has transacted 
or would transact in capital markets.  We generally use the mid 
point of the pricing data range in calculating the yield curve.  This 
pricing data used to estimate Telstra’s borrowing margins is not 
observable.  However, sensitivity analysis on changes to this 
input, by using the maximum point in the pricing range, does not 
result in a significant change to the fair value of our cross 
currency and interest rate swaps.  

We have therefore classified these derivatives based on the 
observable market inputs as Level 2.

Forward contracts

The fair value of our forward exchange contracts is calculated by 
reference to forward exchange market rates at reporting date for 
contracts with similar maturity profiles.  These market rates are 
observable and therefore these derivatives have been classified as 
Level 2.

126

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
18.  FINANCIAL RISK MANAGEMENT

FINANCIAL STATEMENTS

We undertake transactions using a range of financial instruments, 
including: 

(a)  Risk and mitigation

• cash assets; 
•
receivables; 
• payables; 
• negotiable certificates of deposits; 
• bank deposits;
• bills of exchange and promissory notes; 
listed investments and investments in other corporations; 
•
• various forms of borrowings, including medium term notes, 
promissory notes, bank loans and private placements; and

• derivatives.

Our activities result in exposure to operational risk and a number of 
financial risks, including market risk (interest rate risk and foreign 
currency risk), credit risk and liquidity risk. 

Our overall risk management program seeks to mitigate these risks 
and reduce volatility on our financial performance and support the 
delivery of our financial targets.  We manage our risks with a view 
to the outcomes of both our financial results and the underlying 
economic position.  Financial risk management is carried out 
centrally by our Treasury department, which is part of our corporate 
areas, under policies approved by the Board of Directors (the 
Board).  The Board provides written principles for overall risk 
management, as well as written policies covering specific areas, 
such as, foreign exchange risk, interest rate risk, credit risk, use of 
derivative financial instruments and non derivative financial 
instruments, and the investment of excess liquidity.

We enter into derivative transactions in accordance with Board 
approved policies to manage our exposure to market risks and 
volatility of financial outcomes that arise as part of our normal 
business operations.  These derivative instruments create an 
obligation or right that effectively transfers one or more of the risks 
associated with an underlying financial instrument, asset or 
obligation.  Derivative financial instruments that we use to hedge 
risks such as interest rate and foreign currency movements include:

• cross currency swaps; 
interest rate swaps; and
•
forward exchange contracts.
•

We do not speculatively trade in derivative financial instruments.  
Our derivative transactions are entered into to hedge the risks 
relating to underlying physical positions arising from our business 
activities.  

Section (a) of this note sets out the key financial risk factors that 
arise from our activities, including our policies for managing these 
risks.

Sections (b) and (c) provide details of our hedging strategies and 
hedge relationships that are used for financial risk management.  In 
particular, these sections provide additional context around our 
hedge transactions and the resulting economic and risk positions.

The risks associated with our main financial instruments and our 
policies for minimising these risks are detailed below.  These risks 
comprise market risk, credit risk and liquidity risk.

Market risk

Market risk is the risk that the fair value or future cash flows of our 
financial instruments will fluctuate because of changes in market 
prices.  Components of market risk to which we are exposed are 
discussed below.

(i) Interest rate risk

Interest rate risk refers to the risk that the value of a financial 
instrument or cash flows associated with the instrument will 
fluctuate due to changes in market interest rates.

Interest rate risk arises from interest bearing financial assets and 
liabilities.  Non derivative interest bearing assets are predominantly 
short term liquid assets.  Our interest rate liability risk arises 
primarily from long term foreign debt issued at fixed rates, which 
exposes us to fair value interest rate risk.  Our borrowings, which 
have a variable interest rate attached, give rise to cash flow interest 
rate risk.

Our debt is sourced from a number of financial markets covering 
domestic and offshore, short term and long term funding.  The 
majority of our debt consists of foreign currency denominated 
borrowings.  We manage our debt in accordance with targeted 
currency, interest rate, liquidity, and debt portfolio maturity profiles.  
Specifically, we manage interest rate risk on our net debt portfolio 
by:

• adjusting the ratio of fixed interest debt to variable interest debt 
to our target ratio, as required by our debt management policy;

• ensuring access to diverse sources of funding;
•

reducing risks of refinancing by establishing and managing in 
accordance with target maturity profiles; and

• undertaking hedging activities through the use of derivative 

financial instruments.

Under our interest rate swaps we agree with other parties to 
exchange, at specified intervals (mainly quarterly), the difference 
between fixed contract interest rates and floating rate interest 
amounts calculated by reference to the agreed notional principal 
amounts.  Refer to note 17,Table D, for our residual post hedge 
fixed and floating interest positions on a contractual face value 
basis.

We hedge interest rate and currency risk on most of our foreign 
currency borrowings by entering into cross currency principal swaps 
and interest rate swaps.  “Hedging strategies” and “Hedge 
relationships” contained in sections (b) and (c) of this note provides 
further information.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

127

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
18.  FINANCIAL RISK MANAGEMENT (CONTINUED)

(a)  Risk and mitigation (continued)

Market risk (continued)

(i) Interest rate risk (continued)

The weighted average interest rates on our fixed and floating rate 
financial instruments as at 30 June, which do not have offsetting risk 
positions, and the principal/notional amounts on which interest is 
calculated, are shown in Table A.  Interest rate positions on our 
foreign cross currency and foreign interest rate swaps and on the 
majority of our foreign borrowings are fully offset.  Accordingly, the 
majority of our instruments in the following table represent 
Australian dollar interest positions.  Principal/notional amounts 
shown are net of discounts and therefore differ from the face value 
disclosed in note 17 (Tables C and D).

128

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
18.  FINANCIAL RISK MANAGEMENT (CONTINUED)

(a) Risk and mitigation (continued)

Market risk (continued)

(i) Interest rate risk (continued)

Table A

Fixed rate instruments - Australian interest rate
Cross currency and interest rate swap payable  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Finance lease payable .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra bonds and domestic loans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Offshore loans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Fixed rate instruments - foreign interest rates
Finance lease payable .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Offshore loans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

Variable rate instruments - Australian interest rates
Contractual repricing or maturity 3 months or less
Cash and cash equivalents (^) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Cross currency swap receivable  (#) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Cross currency and interest rate swap payable  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra bonds and domestic loans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Promissory notes .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Contractual repricing or maturity 3 to 12 months
Telstra bonds and domestic loans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Forward contract liability - net  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Cross currency and interest rate swap payable  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Variable rate instruments - foreign interest rates
Contractual repricing or maturity 6 months or less
Cash and cash equivalents (^) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Cross currency swap payable (#)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Cross currency swap receivable (**) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Promissory notes (#) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

Net interest bearing debt .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Other interest bearing financial assets
Fixed rate instruments - Australian interest rates
Finance lease receivable .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Amounts owed by jointly controlled entities   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Floating rate instruments - Australian interest rate
Other receivables.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Floating rate instruments - foreign interest rate
Other receivables.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Net interest bearing financial liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

FINANCIAL STATEMENTS

Telstra Group

As at 30 June 2013

As at 30 June 2012

Principal/ 
notional 
receivable/ 
(payable)
$m

Weighted 
average
% (*)

Principal/ 
notional
receivable/ 
(payable)
 $m

Weighted 
average
% (*)

(7,311)
(226)
(1,253)
(140)

(54)
(4)
(8,988)

2,065
520
(5,893)
(5)
-

(500)
(89)
-

336
(584)
-
-
(4,150)
(13,138)

214
451

-

5.88
7.63
7.47
6.10

9.38
12.0

3.22
2.82
4.37
12.58
-

6.48
2.08
-

0.92
0.15
-
-

(5,841)
(123)
(1,754)
(140)

(16)
(201)
(8,075)

3,539
460
(7,082)
(1,000)
(187)

(500)
(113)
(328)

338
(468)
235
(275)
(5,381)
(13,456)

6.17
7.73
7.20
6.10

22.50
7.65

4.31
3.54
5.50
4.55
4.36

7.44
2.78
6.17

0.80
0.13
3.65
2.96

7.72
12.00

142
443

7.79
12.00

24

6.90

7
(12,466)

3.30

-
(12,847)

-

(*) The average rate is calculated as the weighted average (based 
on principal/notional value) effective interest rate, as at reporting 
date.  

(^) Rates on cash and cash equivalents represent average rates 
earned on net positive cash balances after taking into account bank 
set-off arrangements.  

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

129

It is important to note that this sensitivity analysis does not include 
the effect of movements in Telstra’s borrowing margins.  Whilst 
margins will be affected by market factors, this risk variable 
predominantly reflects Telstra specific credit risk and accordingly is 
not considered a market risk.  Furthermore, determining a 
reasonably possible change in this risk variable with sufficient 
reliability is impractical.  Therefore, the following sensitivity analysis 
assumes a constant borrowing margin and parallel shifts in interest 
rates across all currencies. 

The following sensitivity analysis is based on our interest rate 
exposures, comprising:

•

•

the revaluation impact on our derivatives and borrowings from a 
10 per cent movement in interest rates based on the net debt 
balances as at reporting date; and 
the effect on interest expense on our floating rate borrowings 
from a 10 per cent movement in interest rates at each reset date 
during the year. 

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
18. FINANCIAL RISK MANAGEMENT (CONTINUED)

(a) Risk and mitigation (continued)

Market risk (continued)

(i) Interest rate risk (continued)

(#) Relates to financial instruments used to hedge our net foreign 
investments.  

(**) Financial instruments used to hedge a loan from wholly owned 
controlled entity.  

(ii) Sensitivity analysis - interest rate risk

The sensitivity analysis included in this section is based on the 
interest rate risk exposures on our net debt portfolio as at reporting 
date.    

A sensitivity of plus or minus 10 per cent has been selected as this 
is considered reasonable given the current level of both short term 
and long term Australian dollar interest rates.  For example, a 10 per 
cent increase would move short term interest rates (cash) at 30 
June 2013 from 2.75 per cent (2012: 3.50 per cent) to 3.03 per cent 
(2012: 3.85 per cent) representing a 28 (2012: 35) basis point shift.  
This basis point shift is considered reasonable taking into account 
the absolute rates as at 30 June and current market conditions.  

The results in this sensitivity analysis reflect the net impact on a 
hedged basis, which will be primarily reflecting the Australian dollar 
floating or Australian dollar fixed position from our cross currency 
and interest rate swap hedges.  Therefore, the movement in the 
Australian dollar interest rates is a significant assumption in this 
sensitivity analysis.

Based on the sensitivity analysis, equity would be affected by the 
revaluation of our derivatives associated with borrowings 
designated in a cash flow hedge relationship and finance costs 
would be affected by the following:

•

•

•

the impact on interest expense being incurred on our net floating 
rate Australian dollar positions during the year;
the revaluation of our derivatives associated with borrowings de-
designated from a fair value hedge relationship or not in a hedge 
relationship; and
the ineffectiveness resulting from the change in fair value of both 
our derivatives and our borrowings that are designated in a fair 
value hedge.

The carrying value of borrowings de-designated from fair value 
hedge relationships or not in a hedge relationship is not adjusted for 
fair value movements attributable to interest rate risk.  Accordingly, 
the revaluation gain or loss on our foreign currency derivatives 
associated with these borrowings will not have an offsetting gain or 
loss attributable to interest rate movements on the underlying 
borrowing.  

130

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
18.  FINANCIAL RISK MANAGEMENT (CONTINUED)

(a)  Risk and mitigation (continued)

Market risk (continued)

(ii) Sensitivity analysis - interest rate risk (continued)

At 30 June, if interest rates had moved as illustrated in Table B 
below, with all other variables held constant and taking into account 
all underlying exposures and related hedges, profit and equity after 
tax would have been affected as follows.

Table B

Revaluation of derivatives and borrowings - fair value 
hedges of offshore loans    .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Revaluation of derivatives - borrowings de-designated 
from fair value hedges or not in a hedge relationship    
Revaluation of derivatives - cash flow hedges of offshore 
loans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Floating rate Australian dollar instruments .  .  .  .  .  .  

Telstra Group

+10%

-10%

Net profit or loss 
(*)
Year ended
30 June
Gain/(loss)
2013
$m

2012
$m

Equity (cash flow 
hedging reserve)

As at 30 June
Gain/(loss)
2013
$m

2012
$m

42

39

(1)

(1)

-
(33)
8

-
(39)
(1)

-

-

63
-
63

-

-

65
-
65

Net profit or loss 
(*)
Year ended
30 June
Gain/(loss)
2013
$m

2012
$m

(44)

(41)

2

-
33
(9)

1

-
39
(1)

Equity (cash flow 
hedging reserve)

As at 30 June
Gain/(loss)
2013
$m

2012
$m

-

-

(66)
-
(66)

-

-

(69)
-
(69)

(*) The before tax impact is included within finance costs.

We are exposed to foreign exchange risk from various currency 
exposures, including:

(iii) Foreign currency risk

Foreign currency risk refers to the risk that the value of a financial 
commitment, forecast transaction, recognised asset or liability will 
fluctuate due to changes in foreign currency rates.  Our foreign 
currency exchange risk arises primarily from:

• borrowings denominated in foreign currencies;
•

trade and other creditor balances denominated in foreign 
currencies;
firm commitments or highly probable forecast transactions for 
receipts and payments settled in foreign currencies or with prices 
dependent on foreign currencies; and
• net investments in foreign operations.

•

• Euros;
• United States dollars;
• British pounds sterling;
• New Zealand dollars;
• Swiss francs;
• Hong Kong dollars;
• Chinese renminbi; and
• Japanese yen.

Our economic foreign currency risk is assessed for each individual 
currency and for each hedge type, calculated by aggregating the net 
exposure for that currency for that hedge type.

We minimise our exposure to foreign currency risk by initially 
seeking contracts effectively denominated in Australian dollars 
where possible and economically favourable to do so.  Where this 
is not possible we manage our exposure as follows.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

131

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
18.  FINANCIAL RISK MANAGEMENT (CONTINUED)

(a) Risk and mitigation (continued)

Market risk (continued)

(iii) Foreign currency risk (continued)

Cash flow foreign currency risk arises primarily from foreign 
currency overseas borrowings.  We hedge this risk on the major part 
of our foreign currency denominated borrowings by entering into a 
combination of interest rate and cross currency swaps at inception 
to maturity, effectively converting them to Australian dollar 
borrowings.  Foreign currency borrowings are not swapped into 
Australian dollars where they are used as hedges for foreign 
exchange exposure such as translation foreign exchange risk from 
our offshore investments.  Refer to note 17, Table D, for our residual 
post hedge currency exposures on a contractual face value basis.

Foreign exchange risk that arises from transactional exposures 
such as firm commitments or highly probable transactions settled in 
a foreign currency (primarily United States dollars) are managed 
principally through the use of forward foreign currency derivatives.  
We hedge a proportion of these transactions (such as property, 
plant and equipment and inventory purchases settled in foreign 
currencies) in accordance with our risk management policy.

Foreign currency risk also arises on translation of the net assets of 
our foreign controlled entities which have a functional currency 
other than Australian dollars.  The foreign currency gains or losses 
arising from this risk are recorded through the foreign currency 
translation reserve.  We manage this translation foreign exchange 
risk with forward foreign currency contracts, cross currency swaps 
and/or borrowings denominated in the currency of the entity 
concerned.  We currently hedge our net investment in Hong Kong 
CSL Limited in the range of 40 per cent to 50 per cent (2012: 40 per 
cent to 50 per cent).      

In addition, our controlled entities may hedge foreign exchange 
transactions such as exposures from asset/liability balances or 
forecast sales/purchases in currencies other than their functional 
currency.  Where this occurs, external foreign exchange contracts 
are designated at the group level as hedges of foreign exchange 
risk on the specific asset/liability balance or forecast transaction.  

We also economically hedge a proportion of foreign currency risk 
associated with trade and other creditor balances using forward 
foreign currency contracts.  

Refer to section (b) “Hedging strategies” and section (c) “Hedge 
relationships” contained in this note for further information.

(iv) Sensitivity analysis - foreign currency risk

The sensitivity analysis included in this section is based on foreign 
currency risk exposures on our financial instruments and net foreign 
investment balances as at reporting date.    

The translation of our investments in foreign operations from their 
functional currency to Australian dollars represents a translation risk 
rather than a financial risk.  Nevertheless, in this sensitivity analysis 
we have included the translation impact on our foreign currency 
translation reserve from movements in the exchange rate.  In doing 
so, this sensitivity analysis reflects the impact on equity from a 
movement in the exchange rate associated with both the underlying 
hedged investment and the financial instruments hedging the 
translation currency risk.

Adverse versus favourable movements are determined relative to 
the underlying exposure.  An adverse movement in exchange rates 
implies an increase in our foreign currency risk exposure and a 
worsening of our financial position.  A favourable movement in 
exchange rates implies a reduction in our foreign currency risk 
exposure and an improvement of our financial position.

A sensitivity of 10 per cent has been selected as this is considered 
reasonable taking into account the current level of exchange rates 
and the volatility observed both on an historical basis and on market 
expectations for future movements.  For example, comparing the 
Australian dollar exchange rate against the Euro, the year end rate 
of 0.7096 (2012: 0.8089) would generate a 10 per cent favourable 
position of 0.7806 (2012: 0.8898) and an adverse position of 0.6386 
(2012: 0.7280).  This range is considered reasonable given the 
volatility that has been observed.

Foreign currency risk exposure from recognised assets and 
liabilities arises primarily from our long term borrowings 
denominated in foreign currencies.  There is no significant impact 
on profit or loss from foreign currency movements associated with 
these borrowings as they are effectively hedged.  

There is some volatility in profit or loss from exchange rate 
movements associated with our borrowings de-designated or not in 
hedge relationships and with our forecast transactions denominated 
in a foreign currency.      

We are exposed to equity impacts from foreign currency 
movements associated with our offshore investments and our 
derivatives in cash flow hedges of offshore borrowings.  This foreign 
currency risk is spread over a number of currencies and accordingly 
we have disclosed the sensitivity analysis on a total portfolio basis 
and not separately by currency.  Our foreign currency exposure 
associated with cash flow hedge derivatives is predominantly in 
Euros and our offshore investments mainly in Hong Kong dollars, 
British pounds sterling and Chinese renminbi (relating to our 
investments in Hong Kong CSL Limited, Telstra Limited, Autohome 
Inc. and Sequel Media Inc.).

132

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
18.  FINANCIAL RISK MANAGEMENT (CONTINUED)

a) Risk and mitigation (continued)

Market risk (continued)

(iv) Sensitivity analysis - foreign currency risk (continued)

The following sensitivity analysis is based on our foreign currency 
risk exposures comprising the revaluation impact on our derivatives 
and borrowings and net foreign investments from a 10 per cent 
adverse/favourable movement in foreign exchange rates based on 
our balances as at reporting date.  At 30 June, had the Australian 
dollar moved against all applicable currencies as illustrated in 
Table C, with all other variables held constant and taking into 
account identified underlying exposures and related hedges, net 
profit or loss and equity after tax would have been affected as 
follows.

Table C

Telstra Group

10% adverse movement
Equity (foreign 
currency 
translation 
reserve)

Equity (cash 
flow hedging 
reserve)

10% favourable movement
Equity (foreign 
currency 
translation 
reserve)

Equity (cash 
flow hedging 
reserve)

As at 30 June
Gain/(loss)
2013
$m

2012
$m

As at 30 June
Gain/(loss)
2013
$m

2012
$m

As at 30 June As at 30 June

Gain/(loss)
2013
$m

2012
$m

Gain/(loss)
2013
$m

2012
$m

Net profit or 
loss
Year ended 
30 June
Gain/(loss)
2013
$m

2012
$m

Net profit or 
loss
Year ended 
30 June
Gain/(loss)
2013
$m

2012
$m

Revaluation of derivatives 
and borrowings - 
de-designated from fair value 
hedges or not in a hedge 
relationship (*)  .  .  .  .  .  .  .  
Revaluation of derivatives 
and underlying exposure - 
cash flow hedges of forecast 
transactions (^) .  .  .  .  .  .  . 
Revaluation of derivatives - 
cash flow hedges of offshore 
loans  .  .  .  .  .  .  .  .  .  .  .  . 
Net foreign investments (**)

(8)

(10)

(19)

(19)

-

-

-

-

-

-

-

-

10

12

15

18

-

-

-

-

-
-
(27)

-
-
(29)

-
(72)
(72)

-
(106)
(106)

(33)
-
(33)

(32)
-
(32)

-
-
25

-
-
30

-
88
88

-
130
130

-

-

41
-
41

-

-

40
-
40

(*) The impact of some of our borrowings de-designated from fair 
value hedge relationships or not in a hedge relationship has 
resulted in some volatility to profit or loss.  The revaluation impact 
attributable to foreign exchange movements will largely offset 
between the derivatives and the borrowings.  However, there will be 
some profit or loss impact due to the fact that the derivatives are 
recorded at fair value and hence the foreign exchange movements 
are recognised at present value.  The borrowings, which are 
accounted for on an amortised cost basis, will reflect revaluation 
movements for changes in the spot exchange rate that are not 
discounted.  Therefore, the impact on profit or loss is primarily 
attributable to the discounting effect of the foreign exchange gains 
and losses on the hedging derivatives. 

(^) Represents the impact relating to the unhedged portion of 
forecast transactions that would affect profit or loss.  In financial 
year 2012, adverse and favourable impacts included $1 million 
relating to purchases of property, plant and equipment, which would 
affect the cost of the asset and profit or loss as the assets are 
depreciated over their useful lives.

(**) Relates to the translation of the net assets of our foreign 
controlled entities, including the impact of hedging.  The net gain or 
loss in the sensitivity analysis represents the impact relating to the 
unhedged portion of the net assets of our foreign controlled entities.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

133

 
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
18.  FINANCIAL RISK MANAGEMENT (CONTINUED)

a) Risk and mitigation (continued)

Credit risk

Credit risk is the risk that a contracting entity will not complete its 
obligations under a financial instrument and will cause us to incur a 
financial loss.  We have exposure to credit risk on all financial assets 
included in our statement of financial position, comprising cash and 
cash equivalents, trade and other receivables, loan receivables, 
available-for-sale financial assets, finance lease receivables and 
derivative financial instruments.  To help manage this risk:

• we have a policy for performing credit risk assessments on new 
and existing customers and, where required, establishing credit 
limits and payment terms for entities we deal with;

• we monitor exposure to high risk debtors on a predictive and 

proactive basis;

• we may require collateral where appropriate; and
• we manage exposure to individual entities we either transact with 
or enter into derivative contracts with, through a system of credit 
limits. 

Where entities have a right of set-off and intend to settle on a net 
basis, this set-off has been recognised in the financial statements 
on a net basis.   We may also be subject to credit risk for 
transactions not included in the statement of financial position, such 
as when we provide a guarantee for another party.  Details of our 
contingent liabilities are disclosed in note 23 and note 30.

Trade and other receivables consist of a large number of 
customers, spread across the consumer, business, enterprise, 
government and international sectors.  We do not have any 
significant credit risk exposure to a single customer or groups of 
customers.  Ageing analysis and ongoing credit evaluation are 
performed on the financial condition of our customers and, where 
appropriate, an allowance for doubtful debts is raised.  In addition, 
receivable balances are monitored on an ongoing basis so that our 
exposure to bad debts is not significant.  For further details 
regarding our trade and other receivables refer to note 10.

In relation to our transactions in money market instruments, forward 
foreign currency contracts and cross currency and interest rate 
swaps, there is only a credit risk where the contracting entity is liable 
to pay us in the event of a closeout (i.e. in-the-money).  We have 
policies that limit the amount of credit exposure to any financial 
institution.  These risk limits are regularly monitored.  Derivative 
counterparties and cash transactions are limited to financial 
institutions that meet minimum credit rating criteria in accordance 
with our policy requirements.  Our credit risk and financial 
instruments are spread amongst a number of financial institutions.   

One of the methods that we use to manage the credit risk exposure 
relating to these instruments is to monitor our exposure by country 
of financial institution based on a value at risk (VaR) methodology.  
VaR calculations are a technique that estimates the potential losses 
that could occur on risk positions in the future as a result of 
movements in market rates over a specified time horizon given a 
specified level of confidence which is statistically determined.  

The amounts included in Table D below include the in-the-money 
market values combined with a potential credit calculation and will 
therefore not equate to the accounting carrying value, fair value or 
face value of the transactions as disclosed in note 17.

In determining the potential credit limit factors to be used in these 
calculations, the following should be noted:

•

•

reference is made to the historical volatility factors relevant to the 
particular currencies/interest rates applicable to the instruments;
in determining the volatility factors, reference has been made to 
the maturity of the instrument.  In some cases, the transaction 
can have a maturity of up to 10 years and the potential volatility 
needs to reflect the possible movements over this time period 
given historical observations; and

• we have used 90 per cent (2012: 90 per cent) confidence levels 

to determine the applicable potential credit limit factors.    

The VaR based methodology employed has the following 
limitations:

•

•

the use of historical data as a proxy for estimating future events 
may not cover all potential events, in particular this is relevant 
when trying to estimate potential volatility over a long holding 
period such as 10 years; and
the use of a 90 per cent confidence level, by definition, may not 
take into account movements that may occur outside of this 
confidence threshold.

134

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

The contractual maturity of our fixed and floating rate financial 
liabilities and derivatives and the corresponding carrying values are 
shown in Table E.  The contractual maturity amounts (nominal cash 
flows) represent the future undiscounted principal and interest cash 
flows and therefore do not equate to the carrying values.  These 
amounts are reported in Australian dollars based on the applicable 
exchange rate as at 30 June.  We have also included derivative 
financial assets in the following table on the basis that these assets 
have a direct relationship with an underlying financial liability and 
both the asset and the liability are managed together.  

For floating rate instruments, the amount disclosed is determined by 
reference to the current market pricing for interest rates over the 
period to maturity.

Also affecting liquidity are cash and cash equivalents, available for 
sale financial assets and other interest and non-interest bearing 
financial assets.  Liquidity risk associated with these financial 
instruments is represented by the face values as shown in note 17, 
Table C.

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
18.  FINANCIAL RISK MANAGEMENT (CONTINUED)

(a) Risk and mitigation (continued)

Credit risk (continued)

Table D

Telstra Group
Credit risk concentrations (VaR based)
As at 30 June

2013
%
23.4
22.8
0.5
21.6
13.2
-
0.6
17.3
0.6
-
-
100.0

$m
2,521
2,454
54
2,329
1,417
-
67
1,864
68
-
4
10,778

2012
%
25.8
21.1
0.5
20.5
15.3
0.1
0.6
15.3
0.6
0.2
-
100.0

$m
3,188
2,616
63
2,530
1,889
11
70
1,892
71
27
2
12,359

Australia   .  .  .  .  . 
United States .  .  . 
Japan .  .  .  .  .  .  . 
Europe  .  .  .  .  .  . 
United Kingdom   . 
Canada .  .  .  .  .  . 
Switzerland .  .  .  . 
China/Hong Kong  
Singapore   .  .  .  . 
New Zealand .  .  . 
Other .  .  .  .  .  .  . 

Liquidity risk

Liquidity risk includes the risk that, as a result of our operational 
liquidity requirements:

• we will not have sufficient funds to settle a transaction on the due 

date;

• we will be forced to sell financial assets at a value that is less 

than what they are worth; or

• we may be unable to settle a financial liability or recover a 

financial asset at all.

To help reduce these risks we:

• have a liquidity policy which targets a minimum and average 

level of cash and cash equivalents to be maintained;

• have readily accessible standby facilities and other funding 

arrangements in place; 

• generally use instruments that are tradeable in highly liquid 

markets; and

• have a liquidity portfolio structure that requires surplus funds to 
be invested within various bands of liquid instruments ranging 
from ultra liquid to highly liquid and liquid instruments.

We monitor rolling forecasts of liquidity reserves on the basis of 
expected cash flow.  Our objective is to maintain a balance between 
continuity of funding and flexibility through the use of liquid 
instruments, borrowings and committed available credit lines.

At 30 June 2013, based on contractual face values, 4 per cent 
(2012: 18 per cent) of our debt (after hedging) comprising offshore 
borrowings, Telstra bonds and domestic loans and excluding 
promissory notes, will mature in less than one year.   

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

135

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)

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136

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
18.  FINANCIAL RISK MANAGEMENT (CONTINUED)

(a) Risk and mitigation (continued) 

Liquidity risk (continued)

Financing arrangements

Table F

FINANCIAL STATEMENTS

Telstra Group
As at 30 June 

2013
$m

2012
$m

We have access to the following lines of credit:

Credit standby arrangements
Unsecured committed cash standby facilities which are subject to annual review.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Amount of credit unused  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

662
662

759
759

We have limited promissory note facilities in place in the United 
States (limit US$4 billion) and unlimited facilities in Europe, 
Australia and New Zealand.  Under these facilities, in current market 
conditions, we would expect to be able to nominally issue between 
$4 billion to $5 billion (2012: $4 billion to $5 billion).  As at 30 June 
2013, we had on issue $125 million (2012: $563 million) under these 
facilities.  As at 30 June 2013, our subsidiary CSL Limited had a 
bank bill acceptance facility of $155 million (2012: $111 million) of 
which $84 million was issued (2012: $84 million).  These facilities 
are not committed or underwritten and we have no guaranteed 
access to the funds.  Generally, given that we retain suitable ratings, 
our facilities are available, subject to market conditions, unless we 
default on any terms applicable under the relevant agreements or 
become insolvent.  During the current and prior years there were no 
defaults or breaches on any of our facility agreements.

(b)  Hedging strategies

We hold a number of different financial instruments to hedge risks 
relating to underlying transactions.  Our major exposure to interest 
rate risk and foreign currency risk arises from our long term 
borrowings.  We also have translation currency risk associated with 
our offshore investments and transactional currency exposures 
such as purchases in foreign currencies.

We designate certain derivatives as either: 

Financial instruments de-designated from fair value hedge 
relationships or not in a designated hedge relationship

Our financial instruments de-designated from fair value hedge 
relationships or not in designated hedge relationships comprise:

• a number of offshore borrowings denominated in United States 
dollars, Euros and British pounds sterling which were in fair value 
hedges and were de-designated from the hedge relationship for 
hedge accounting purposes as they did not meet requirements 
for hedge effectiveness;

• an Australian dollar interest rate swap which is not in a 

designated hedge relationship for hedge accounting purposes 
used to economically hedge changes in fair value attributable to 
changes in market interest rates relating to an Australian dollar 
private placement bond; and

• some forward foreign currency contracts that are not in a 

designated hedge relationship for hedge accounting purposes, 
used to economically hedge fair value movements for changes 
in foreign exchange rates associated with trade creditors and 
other liabilities denominated in a foreign currency.

All our financial liabilities de-designated or not in designated hedge 
relationships are in effective economic relationships based on 
contractual face value amounts and cash flows over the life of the 
transaction.  

• hedges of the fair value of recognised liabilities (fair value 

hedges); 

All other hedge relationships met hedge effectiveness requirements 
for hedge accounting purposes at the reporting date.

• hedges of foreign currency risk associated with recognised 
liabilities or highly probable forecast transactions (cash flow 
hedges); or 

• hedges of a net investment in a foreign operation.   

The terms and conditions in relation to our derivative financial 
instruments are similar to the terms and conditions of the underlying 
hedged items to maximise hedge effectiveness.  

Refer to section (c) for details on our hedge relationships based on 
contractual face value amounts and cash flows.  Refer to note 7 for 
the impact on finance costs relating to borrowings de-designated or 
not in hedge relationships.  

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

137

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
18.  FINANCIAL RISK MANAGEMENT (CONTINUED)

(b) Hedging strategies (continued) 

Fair value hedges

We hold cross currency principal and interest rate swaps to mitigate 
our exposure to changes in the fair value of foreign denominated 
debt from fluctuations in foreign currency and interest rates.  The 
hedged items designated are a portion of our foreign currency 
denominated borrowings.  The changes in the fair values of the 
hedged items resulting from movements in exchange rates and 
interest rates are offset against the changes in the fair value of the 
cross currency and interest rate swaps.  The objective of this 
hedging is to convert foreign currency borrowings to floating 
Australian dollar borrowings.

The net impact on finance costs from remeasuring the fair value of 
the hedge instruments together with the gains and losses in relation 
to the hedged item where those gains or losses relate to the hedged 
risks largely represents ineffectiveness attributable to movements 
in Telstra’s borrowing margins.  

The remeasurement of the hedged items resulted in a loss before 
tax of $599 million (2012: loss of $208 million) and the changes in 
the fair value of the hedging instruments resulted in a gain before 
tax of $504 million (2012: gain of $199 million).  This results in a net 
loss before tax of $95 million and a net loss after tax of $67 million 
(2012: net loss before tax of $9 million and net loss after tax of $6 
million). 

Refer to note 7 for the impact on finance costs relating to borrowings 
in fair value hedges.

The effectiveness of the hedging relationship is tested 
prospectively, both on inception and in subsequent periods, and 
retrospectively by means of statistical methods using a regression 
analysis.  Regression analysis is used to analyse the relationship 
between the derivative financial instruments (the dependent 
variable) and the underlying borrowings (the independent variable). 
The primary objective is to determine if changes to the hedged item 
and derivative are highly correlated and, thus, supportive of the 
assertion that there will be a high degree of offset in fair values 
achieved by the hedge.  

Refer to note 17, Table G and Table H, for the value of our 
derivatives designated as fair value hedges.  

Cash flow hedges

Cash flow hedges are predominantly used to hedge exposures 
relating to our borrowings and our ongoing business activities where 
we have highly probable purchase or settlement commitments in 
foreign currencies.  

We enter into cross currency and interest rate swaps as cash flow 
hedges of future payments denominated in foreign currency 
resulting from our long term offshore borrowings.  The hedged items 
designated are a portion of the outflows associated with these 
foreign denominated borrowings.  The objective of this hedging is to 
hedge foreign currency risks arising from spot rate changes and 
thereby mitigate the risk of payment fluctuations as a result of 
exchange rate movements.

We also enter into forward exchange contracts as cash flow hedges 
to hedge forecast transactions denominated in foreign currency 
which hedge foreign currency risk arising from spot rate changes.  
The hedged items comprise a portion of highly probable forecast 
payments for operating and capital items primarily denominated in 
United States dollars.    

The effectiveness of the hedging relationship relating to our 
borrowings is tested prospectively, both on inception and in 
subsequent periods, and retrospectively by means of statistical 
methods using a regression analysis. The actual derivative financial 
instruments in a cash flow hedge are regressed against a 
hypothetical derivative.  The primary objective is to determine if 
changes to the hedged item and derivative are highly correlated 
and, thus, supportive of the assertion that there will be a high degree 
of offset in cash flows achieved by the hedge.

The effectiveness of our hedges relating to highly probable forecast 
transactions is assessed prospectively based on matching of critical 
terms.  As both the nominal volumes and currencies of the hedged 
item and the hedging instrument are identical, a highly effective 
hedging relationship is expected.  An effectiveness test is carried 
out retrospectively using the cumulative dollar-offset method.  For 
this, the changes in the fair values of the hedging instrument and the 
hedged item attributable to exchange rate changes are calculated 
and a ratio is created.  If this ratio is between 80 and 125, the hedge 
is effective.  

In relation to our offshore borrowings, ineffectiveness on our cash 
flow hedges is recognised in the income statement to the extent that 
the change in the fair value of the hedging derivatives in the cash 
flow hedge exceed the change in value of the underlying borrowings 
in the cash flow hedge during the hedging period.  During the year, 
there was no material ineffectiveness attributable to our cash flow 
hedges (refer to note 7).  Also during the year, there was no material 
impact on profit or loss as a result of discontinuing hedge 
accounting for forecast transactions no longer expected to occur.  

For hedge gains or losses transferred to and from the cash flow 
hedging reserve refer to the statement of comprehensive income.

Refer to note 17, Table G and Table H, for the value of our 
derivatives designated as cash flow hedges.

138

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

The effectiveness of the hedging relationship is tested using 
prospective and retrospective effectiveness tests.  In a retrospective 
effectiveness test, the changes in the fair value of the hedging 
instruments and the change in the value of the hedged net 
investment from spot rate changes are calculated and a ratio is 
created.  If this ratio is between 80 and 125 per cent, the hedge is 
effective.  The prospective effectiveness test is performed based on 
matching of critical terms.  As both the nominal volumes and 
currencies of the hedged item and the hedging instrument are 
identical, a highly effective hedging relationship is expected.

During the year, there was no material ineffectiveness attributable 
to our hedges of net foreign investments.  

In the statement of comprehensive income, net losses before tax of 
$69 million and after tax of $48 million (2012: losses before tax of 
$31 million and after tax of $22 million) on our hedging instruments 
were taken directly to equity during the year in the foreign currency 
translation reserve.   

Refer to note 17, Table G and Table H, for the value of our 
derivatives designated as hedges of net foreign investments.

(c) Hedge relationships

The following tables provide additional context around our hedge 
transactions and in particular describe how we arrive at our 
economic residual risk position as a result of the hedges executed.  
It should be noted that the economic residual position in each of the 
tables will not be equal to the carrying values.

Table H and Table I describe each of our hedge relationships which 
use cross currency and interest rate swaps as the hedging 
instruments.  These comprise effective economic relationships 
based on contractual face value amounts and cash flows, including 
hedge relationships that have been de-designated for hedge 
accounting purposes and offshore borrowings that are not in a 
designated hedge relationship for hedge accounting purposes.  
These hedging instruments are used to hedge our offshore 
borrowings, some domestic borrowings and our offshore 
investment in Hong Kong CSL Limited.  Outlined in the following 
tables is the pre hedge underlying exposure, each leg of our cross 
currency and interest rate swaps and the end post hedge position.  
This post hedge position represents our net final currency and 
interest positions and is represented in our residual economic 
position as described in note 17, Table D.

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
18.  FINANCIAL RISK MANAGEMENT (CONTINUED)

(b) Hedging strategies (continued) 

Cash flow hedges (continued)

Table G shows the maturities of the payments in our cash flow 
hedges (i.e when the cash flows are expected to occur).  These 
amounts represent the undiscounted cash flows reported in 
Australian dollars based on the applicable exchange rate as at 30 
June and represent the identified foreign currency exposures at 
reporting date in relation to our cash flow hedges.

Table G

Highly probable forecast transactions
Non-capital items (i)
Within 1 year .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Capital items (ii)
Within 1 year .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Borrowings (iii)
Within 1 year .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Within 1 to 5 years  .  .  .  .  .  .  .  .  .  .  .  .  
After 5 years  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Telstra Group
Nominal cash 
outflows
As at 30 June 

2013
$m

2012
$m

(431)

(541)

-
(431)

(11)
(552)

(264)
(3,768)
(4,465)
(8,497)

(527)
(3,235)
(2,653)
(6,415)

(i) These amounts will affect our income statement in the same 
period as the cash flows are expected to occur.

(ii) For purchases of property, plant and equipment, the gains and 
losses on the associated hedging instruments are included in the 
measurement of the initial cost of the asset.  The hedged assets 
affect profit or loss as the assets are depreciated over their useful 
lives.  Refer to note 2 for our depreciation policies for property, plant 
and equipment.  

(iii) The impact on our income statement from foreign currency 
movements associated with these hedged borrowings will affect 
profit or loss over the life of the borrowing, however the impact on 
profit or loss is expected to be nil as the borrowings are effectively 
hedged. 

Hedges of net investments in foreign operations

We have exposure to foreign currency risk as a result of our 
investments in offshore activities.  This risk is created by the 
translation of the net assets of these entities from their functional 
currency to Australian dollars.  We hedge a portion of our 
investments in foreign operations to mitigate exposure to this risk 
using forward foreign currency contracts, cross currency swaps 
and/or borrowings in the relevant currency of the investment.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

139

  
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)

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140

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)

FINANCIAL STATEMENTS

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Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

141

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 hedging 
instruments.  These relationships comprise effective economic 
relationships based on contractual face value amounts and cash 
flows, including relationships that are not in a designated hedge 
relationship for hedge accounting purposes.  These hedging 
instruments are used to economically hedge our promissory notes, 
forecast transactions denominated in foreign currency, and foreign 
currency trade and other liabilities.  

Outlined in the following table is the pre hedge underlying exposure, 
each leg of the forward foreign currency contract and the end post 
hedge position.  This post hedge position represents our net final 
currency positions and is represented in our residual economic 
position as described in note 17, Table D.  

Table J

Forward contracts hedging interest bearing 
debt
Promissory notes
United States dollars - contractual maturity nil 
(2012: 0-3 months) .  .  .  .  .  .  .  .  .  .  .  .  .  .
New Zealand dollars - contractual maturity 0-3 
months (2012: 0-3 months).  .  .  .  .  .  .  .  .  .
Loans from wholly owned controlled entities
British pounds sterling - contractual maturity 0-3 
months (2012: 0-3 months).  .  .  .  .  .  .  .  .  .
New Zealand dollars - contractual maturity 0-3 
months (2012: 0-3 months).  .  .  .  .  .  .  .  .  .
United States dollars - contractual maturity 0-3 
months (2012: 0-3 months).  .  .  .  .  .  .  .  .  .
Hong Kong dollars - contractual maturity 0-3 
months (2012: 0-3 months).  .  .  .  .  .  .  .  .  .
Japanese yen - contractual maturity 0-3 months 
(2012: nil).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Forward contracts hedging forecast 
payments and other liabilities
Forecast transactions
United States dollars - contractual maturity 0-12 
months (2012: 0-12 months) .  .  .  .  .  .  .  .  .
Euro - contractual maturity nil (2012: 0-12 
months).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Swedish krona - contractual maturity nil (2012: 
0-6 months).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
New Zealand dollars - contractual maturity nil 
(2012: 0-12 months)  .  .  .  .  .  .  .  .  .  .  .  .  .
Trade and other liabilities - non interest 
bearing
Japanese yen - contractual maturity 1 month 
(2012: nil).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
United states dollars - contractual maturity 0-12 
months (2012: 0-12 months) .  .  .  .  .  .  .  .  .

Telstra Group

Derivative hedging instruments 
- forward foreign currency contracts

Notional value

Average exchange 
rate

Forward contract 
receive/(pay)
Local currency

2013
$m

2012
$m

Forward contract 
(pay)/receive - final 
leg
Australian dollars
2012
$m

2013
$m

2013

2012

Face value
Pre hedge 
underlying 
exposure (payable)/
receive
Local currency

2013
$m

2012
$m

-

(103)

-

103

-

(104)

-

0.9904

(150)

-

150

-

(124)

-

1.2143

-

(56)

(10)

(1)

(155)

(64)

13

(54)

(19)

56

1

64

(13)

(125)

-

125

10

155

54

19

-

(81)

(15)

0.6839

0.6446

(1)

(122)

1.1981

1.2702

(62)

(53)

1.0323

1.0260

1

(1)

(2)

8.8780

7.9610

-

97.85

-

(400)

(540)

177

254

(175)

(257)

1.0114

0.9891

-

-

-

(5)

(8)

(19)

-

-

-

(542)

-

(102)

(65)

542

102

2

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19

-

65

-

-

-

(3)

(1)

(15)

-

-

-

0.7922

7.0442

1.2710

(6)

-

90.08

-

(107)
(556)

(66)
(638)

0.9441

0.9945

142

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

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.   
Outlined in the following table is the pre hedge underlying exposure, 
the face value of the hedging instruments and the end post hedge 
position and is represented in our residual economic position as 
described in note 17, Table D. 

Table K

Hedged amount (i)

New Zealand dollars

2013
$m

2012
$m

Non-derivative hedging instruments
Face value
Offshore loans and promissory notes (ii)

New Zealand dollars 
(payable)
2013
$m

2012
$m

Australian dollars (payable)
2012
$m

2013
$m

Net foreign investments
TelstraClear Limited (New Zealand 
dollars). .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

-

609

-

(609)

-

(477)

(i) Amount hedged represents portion of carrying value of net 
assets.

(ii) At 30 June 2013 the face value in Australian dollars of offshore 
loans hedging net foreign investments was nil (2012: $200 million) 
and the face value in Australian dollars of promissory notes hedging 
net foreign investments was nil (2012: $277 million).  We disposed 
of our investment in TelstraClear on 31 October 2012.  Refer to note 
20 for further details. 

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

143

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
19.  SHARE CAPITAL

Contributed equity  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Share loan to employees (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Shares held by employee share plans (a)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net services received under employee share plans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Telstra Group
As at 30 June

2013
$m

5,793
(20)
(129)
67
5,711

2012
$m

5,793
(67)
(145)
54
5,635

(a) During the financial year, 9,258,700 (2012: nil) loan shares, held 
by the TESOP Trust Trustee on behalf of former employees, who 
elected not to repay the loan until the share price is sufficient to 
recover the loan amount and associated sale costs, were sold as 
required under the terms of the TESOP99 Trust deed.  The sale was 
effected in an off market transaction at market price to the 
Growthshare Trust.  This resulted in a decrease in our share loan to 
employees account of $42 million and a corresponding increase in 
shares held by employee share plans.  There was no cash flow 
impact on the Telstra Group.  Refer to note 27(d) for further details.

Contributed equity

Our contributed equity represents our authorised and issued fully 
paid ordinary shares.  Each of our fully paid ordinary shares carries 
the right to one vote at a meeting of the Company.  Holders of our 
shares also have the right to receive dividends and to participate in 
the proceeds from sale of all surplus assets in proportion to the total 
shares issued in the event of the Company winding up.

We have 12,443,074,357 (2012: 12,443,074,357) authorised fully 
paid ordinary shares on issue.

Share loan to employees

The share loan to employees account represents the outstanding 
balance of the non recourse loans provided to our employees under 
the Telstra Employee Share Ownership Plan (TESOP) Trusts 
(TESOP97 and TESOP99).  Refer to note 27 for further details 
regarding these plans.

Shares held by employee share plans

The shares held by employee share plans represent the cost of 
shares held by the Telstra Growthshare Trust (Growthshare) in 
Telstra Corporation Limited.  The purchase of these shares has 
been fully funded with contributions and intercompany loans from 
Telstra Corporation Limited.  As at 30 June 2013, the number of 
shares totalled 26,774,268 (2012: 29,324,833).  These shares are 
excluded from the calculation of basic and diluted earnings per 
share.  Refer to note 3 for further details.

Net services received under employee share plans

The net services received under the employee share plans account 
is used to record the cumulative value of our options, performance 
rights, restricted shares, incentive shares, Directshare and 
Ownshare issued under Growthshare.  Contributions by Telstra 
Corporation Limited to Growthshare are also included in this 
account. 

144

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
20.  NOTES TO THE STATEMENT OF CASH FLOWS

FINANCIAL STATEMENTS

Telstra Group
Year ended 30 June
2012
$m

2013
$m

Note

Reconciliation of profit to net 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, plant and equipment.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net gain on disposal of intangibles .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net gain on de-recognition of finance leases   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 22
Net loss on disposal of controlled entities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net loss on sale of businesses .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Share of net loss from jointly controlled and associated entities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Impairment losses (excluding inventories and trade and other receivables) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Foreign exchange (gain)/loss   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Cash movements in operating assets and liabilities
(net of acquisitions and disposals of controlled entity balances)
Increase in trade and other receivables  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
(Increase)/decrease in inventories .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Increase in prepayments and other assets.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
(Decrease)/increase in trade and other payables  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
(Decrease)/increase in revenue received in advance  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Increase/(decrease) in net taxes payable  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
(Decrease)/increase in provisions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net cash provided by operating activities.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Cash and cash equivalents

3,865

3,424

4,238
(219)
1,128
(155)
47
223
(54)
(12)
(8)
127
-
1
68
(7)

(249)
(173)
(162)
(301)
(99)
116
(15)
8,359

4,412
(134)
1,022
(108)
31
223
(13)
(9)
-
17
1
-
211
5

(255)
15
(103)
168
334
(87)
122
9,276

Cash at bank and on hand .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Bank deposits, negotiable certificates of deposits and bills of exchange   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Cash and cash equivalents in the statement of cash flows  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

295
2,184
2,479

362
3,583
3,945

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

145

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
20.  NOTES TO THE STATEMENT OF CASH FLOWS (CONTINUED)

(a) Acquisitions

Current Year

iVision

iVision Pty Ltd (iVision) was acquired on 31 March 2011 for total 
consideration of $41 million, with $5 million of this contingent upon 
the entity achieving pre-determined integration targets by 31 
December 2012.

On 7 September 2012, Telstra Corporation Ltd paid the $5 million 
contingent consideration for the successful integration of iVision.

Truelocal

We acquired Australian Local Search Pty Ltd (TrueLocal) for net 
consideration of $4 million.  Refer to note 25 for further details.   

Telstra Technology Services

Telstra Holdings Pty Ltd acquired an additional 25 per cent in 
Telstra Technology Services (Hong Kong) Limited for a purchase 
consideration of $1 million, increasing its ownership from 75 per 
cent to 100 per cent.  Refer to note 25 for further details.   

Prior Year

Autohome

(b) Disposals

Current Year

On 31 October 2012, our controlled entity Telstra New Zealand 
Holdings Limited sold its 100 per cent shareholding in TelstraClear 
Limited and its controlled entity (TelstraClear).  The effect of the 
disposal is detailed below:

Consideration on disposal - net of cash 
disposed
Cash consideration on disposal .  .  .  .  .  .  .  .  .  . 
Cash and cash equivalents disposed  .  .  .  .  .  .  . 
Total proceeds and inflow of cash on disposal 

Assets/(liabilities) at disposal date
Assets classified as held for sale  .  .  .  .  .  .  .  .  . 
Liabilities classified as held for sale .  .  .  .  .  .  .  . 
Net assets classified as held for sale  .  .  .  .  .  .  . 
Foreign currency translation reserve disposed (net 
of income tax)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other adjustments .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Loss on disposal .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

TelstraClear
Year ended
 30 June

2013
$m

680
(11)
669

772
(98)
674

130
3
(127)

On 17 May 2012, Telstra Holdings Pty Ltd acquired an additional 11 
per cent interest in Autohome Inc for a purchase consideration of 
$37 million, increasing its ownership from 55 per cent to 66 per cent. 

Prior Year

LMobile (formerly Dotad Group)

On 27 March 2012, our controlled entity Telstra Robin Holdings 
Limited sold its 67 per cent shareholding in Dotad Media Holdings 
Limited (LMobile).  After cash disposed, this resulted in an outflow 
of cash of $3 million.

In financial year 2010, Dotad Media Holding Ltd was acquired with 
$67 million of the consideration contingent upon the entity achieving 
certain pre-determined revenue and EBITDA targets over the next 
three financial years.  In financial year 2011, the contingent 
consideration was reduced by $30 million with a corresponding gain 
recognised in the income statement.  We also recognised a $4 
million foreign exchange gain on the re-translation of the contingent 
consideration. In financial year 2012, the balance of the contingent 
consideration of $33 million was reduced as the pre-determined 
targets were not met.

Adstream

On 21 July 2011, we sold our 64.4 per cent shareholding in 
Adstream (Aust) Pty Ltd for a total deferred consideration of $24 
million.  Payment of this amount was received in financial year 
2013.  Cash disposed was $6 million. 

146

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
21.  IMPAIRMENT 

Cash generating units

For the purposes of undertaking our impairment testing, we identify 
cash generating units (CGUs).  Our CGUs are determined 
according to the smallest group of assets that generate cash inflows 
that are largely independent of the cash inflows from other assets or 
groups of assets. 

The carrying amount of our goodwill is detailed below:

CGUs

CSL New World Group*  .  .  .  .  .  .  .  .  .  .  . 
Telstra UK Group*  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Sensis Group (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Location Navigation   .  .  .  .  .  .  .  .  .  .  .  .  . 
1300 Australia Group .  .  .  .  .  .  .  .  .  .  .  .  .  
Autohome*  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Sequel Media*  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
LMobile Group* (b) .  .  .  .  .  .  .  .  .  .  .  .  .  .  
TelstraClear Group* (c) .  .  .  .  .  .  .  .  .  .  .  . 
Other .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Goodwill
As at 30 June

2013
$m

2012
$m

860
60
216
14
16
108
13
-
-
95
1,382

784
55
215
14
16
96
11
-
-
98
1,289

* These CGUs operate in overseas locations, therefore the goodwill 
allocated to these CGUs will fluctuate in line with movements in 
applicable foreign exchange rates during the period.

(a) During financial year 2013, Sensis Group acquired Australian 
Local Search Pty Ltd (TrueLocal) which resulted in additional 
goodwill allocated to Sensis Group CGU.  Refer to note 20 for 
further details.

(b) During financial year 2012, the carrying value of our assets in the 
LMobile Group CGU (included in the Telstra International Group 
reportable segment) was tested for impairment based on value in 
use.  This resulted in an impairment charge of $56 million against 
goodwill ($49 million) and other intangible assets ($7 million) being 
recognised in the Telstra Group financial statements.  The 
impairment arose as a result of competitive market pressure, which 
contributed to significant uncertainty around future cash flows from 
the LMobile Group.  Subsequent to the impairment on 27 March 
2012, our controlled entity Telstra Robin Holdings Ltd disposed of 
its entire ownership interest in the LMobile Group.  Refer to note 20 
for further details.

(c) As at 30 June 2012, assets and liabilities of TelstraClear Limited 
were classified as assets and liabilities held for sale and measured 
at the lower of carrying amount and fair value less costs to sell.  This 
resulted in an impairment charge of $130 million against goodwill 
being recognised in the Telstra Group financial statements.  
Goodwill allocated to the TelstraClear Group CGU (included in the 
“All Other” category in our segment information disclosures in note 
5) related to TelstraClear Limited.  Refer to note 12 for further 
details.

FINANCIAL STATEMENTS

Ubiquitous Telecommunications Network and Hybrid Fibre Coaxial 
(HFC) Cable Network

In addition to the aforementioned CGUs, we have two further 
significant CGUs that are reviewed for impairment.  These are: 

•
•

the Telstra Entity CGU, excluding the HFC cable network; and
the CGU comprising the HFC cable network.

The Telstra Entity CGU consists of our ubiquitous 
telecommunications network in Australia, excluding the HFC cable 
network as we consider it not to be integrated with the rest of our 
telecommunications network.  Assets that form part of the 
ubiquitous telecommunications network, comprising the customer 
access network and the core network, are considered to be working 
together to generate our cash inflows.  No one item of 
telecommunications equipment is of any value without the other 
assets to which it is connected in order to achieve delivery of our 
products and services.  

Impairment testing

Our impairment testing compares the carrying value of an individual 
asset or CGU with its recoverable amount as determined using a 
value in use calculation.

Our assumptions for determining the recoverable amount of each 
asset and CGU are based on past experience and our expectations 
for the future.  Our cash flow projections are based on a maximum 
five year management approved forecasts.  These forecasts use 
management estimates to determine income, expenses, capital 
expenditure and cash flows for each asset and CGU.

We have used the following key assumptions in determining the 
recoverable amount of our CGUs to which goodwill or indefinite 
useful life intangible assets has been allocated:

 Discount rate 
(d)
As at 30 June
2012
%

2013
%

 Terminal value 
growth rate (e)
As at 30 June
2012
%

2013
%

CSL New World Group   .  .  .  .
Telstra UK Group   .  .  .  .  .  .  .
Sensis Group  .  .  .  .  .  .  .  .  .
Location Navigation  .  .  .  .  .  .
1300 Australia Group  .  .  .  .  .
Autohome  .  .  .  .  .  .  .  .  .  .  .
Sequel Media  .  .  .  .  .  .  .  .  .

11.6
8.0
15.9
12.3
12.6
19.8
20.0

10.9
7.5
12.1
10.7
11.3
19.4
18.8

2.0
3.0
3.0
3.0
3.0
5.0
5.0

2.0
3.0
3.0
3.0
3.0
5.0
5.0

(d) Discount rate represents the pre tax discount rate applied to the 
cash flow projections.  The discount rate reflects the market 
determined, risk adjusted discount rate which is adjusted for specific 
risks relating to the CGU and the countries in which it operates.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

147

     
 
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
21.  IMPAIRMENT (CONTINUED)

Impairment testing (continued)

(e) Terminal value growth rate represents the growth rate applied to 
extrapolate our cash flows beyond the five year forecast period.  
These growth rates are based on our expectation of the CGUs’ long 
term performance in their respective markets.  

The discount rate would need to increase by 480 basis points (30 
June 2012: 350 basis points) or the terminal value growth rate 
would need to be negative growth of 3.5 per cent (30 June 2012: 
negative 2.2 per cent) before the recoverable amount of any of the 
CGUs would be equal to the carrying value.  Accordingly, 
management has determined there are no reasonably possible 
changes that could occur in these two key assumptions that would 
cause the carrying amount of these CGUs to exceed their 
recoverable amount. 

Ubiquitous telecommunications network and Hybrid Fibre Coaxial 
(HFC) cable network (“the networks”)

Our discounted expected future cash flows more than support the 
carrying amount of the networks.  This is based on: 

•

forecast cash flows from continuing to:  

-  use the core network; and
-  provide Pay TV services via the HFC cable network into the 

future; and 

•

the consideration we expect to receive under the National 
Broadband Network (NBN) Definitive Agreements (DAs) for: 

-  the progressive disconnection of copper-based Customer 

Access Network services and broadband services on our HFC 
cable network (excluding Pay TV services on the HFC cable 
network) provided to premises in the NBN fibre footprint;

-  providing access to certain infrastructure, including dark fibre 

links, exchange rack spaces and ducts; and

-  the sale of lead-in-conduits.

Given this, the results of our impairment testing for the networks 
show that the carrying amounts are recoverable at 30 June 2013.

148

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
22.  EXPENDITURE COMMITMENTS

FINANCIAL STATEMENTS

Capital expenditure commitments
Total capital expenditure commitments contracted for at balance date but not
recorded in the financial statements:
Property, plant and equipment commitments (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Intangible assets commitments (b)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Operating lease commitments
Future lease payments for non-cancellable operating leases not recorded in the
financial statements:
Within 1 year .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Within 1 to 5 years  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
After 5 years  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Description of our operating leases

Telstra Group
As at 30 June

2013
$m

2012
$m

1,272
1,524

611
130

502
1,301
1,175
2,978

460
1,200
935
2,595

We have operating leases for the following types of assets:
•
•

rental of land and buildings;
rental of motor vehicles, caravan huts and trailers, mechanical 
aids and heavy excavation equipment; and
rental of personal computers, laptops, printers and other related 
equipment that are used in non communications plant activities.

•

The weighted average lease term is:
• 6 years for land and buildings;
• 2 years for motor vehicles, 4 to 5 years for light commercial 

vehicles, and 7 to 12 years for trucks and mechanical aids and 
heavy excavation equipment; and

• 3 years for personal computers and related equipment.

The majority of our operating leases relate to land and buildings.  
We have several subleases with total minimum lease payments of 
$15 million (2012: $16 million) for the Telstra Group.  Our property 
operating leases generally contain escalation clauses, which are 
fixed increases generally between 3 per cent and 5 per cent, or 
increases subject to the consumer price index or market rate.  We 
do not have any significant purchase options.  

(a) This includes the Telstra Entity capital expenditure commitments 
of $1,222 million (2012: $572 million).  Refer to note 30 for further 
details.

(b) This includes commitments of $1,302 million for the 700MHz and 
2.5GHz spectrum licences won at auction, with the payments due in 
financial year 2015.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

149

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
22.  EXPENDITURE COMMITMENTS (CONTINUED)

Note

Finance lease commitments
Within 1 year .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Within 1 to 5 years  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
After 5 years  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total minimum lease payments   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Future finance charges on finance leases  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Present value of net future minimum lease payments .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

The present value of finance lease liabilities is as follows
Within 1 year .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 17
Within 1 to 5 years  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
After 5 years  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total finance lease liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 17

Telstra Group
As at 30 June

2013
$m

76
181
135
392
(112)
280

66
147
67
280

2012
$m

56
99
31
186
(47)
139

45
79
15
139

Description of our finance leases

We have finance leases for the following types of assets:
• property lease in our controlled entity, Telstra Europe Limited; 

and

• computer mainframes, computer processing equipment and 

other related equipment.

The weighted average lease term is:
• 25 years for the property lease with a remaining average life of 

24 years; and

• 5 years for computer mainframes and associated equipment.

Interest rates for our finance leases are:
• property lease interest rate of 9.5 per cent; and
• computer mainframes, computer processing equipment and 

associated equipment weighted average interest rate of 7.6 per 
cent.

We sublease computer mainframes, computer processing 
equipment and other related equipment as part of the solutions 
management and outsourcing services that we provide to our 
customers.  Refer to note 10 for further details regarding these 
finance subleases.

During financial year 2013, we acquired the head leases associated 
with a property in Telstra Europe Limited and extinguished these 
finance leases.  This resulted in a net gain of $8 million being 
recognised in the income statement.  We then sold the property and 
entered into a lease back transaction, whereby a finance lease 
asset and finance lease liability of $52 million was recognised.  The 
lease term is 25 years, with two 10 year options to extend.  There is 
no purchase option.  Rent is based on market prices, reviewed on 
an annual basis and subject to a cap and collar of 5 per cent and 2 
per cent respectively.  

Information regarding our share of our jointly controlled and 
associated entities’ commitments is included in note 26. 

150

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
23.  CONTINGENT LIABILITIES AND CONTINGENT ASSETS

We have no significant contingent assets as at 30 June 2013.  The 
details and maximum amounts (where reasonable estimates can be 
made) are set out below for our contingent liabilities.

Telstra Entity

Refer to note 30 for Telstra Entity contingent liabilities. 

Other

Other contingent liabilities identified for the Telstra Group are as 
follows:

ASIC deed of cross guarantee

A list of the companies that are part of our deed of cross guarantee 
appear in note 25.  Each of these companies (except Telstra 
Finance Limited) guarantees the payment in full of the debts of the 
other named companies in the event of their winding up.  Refer to 
note 25 for further details.

3GIS Dissolution

Upon dissolution of our 3GIS Partnership with Vodafone Hutchison 
Australia on 31 August 2012, we are no longer subject to contingent 
liabilities in relation to agreements entered into as part of the 
partnership where we were liable if our partner in this relationship 
failed to meet any of its obligations (2012: $96 million).

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

151

Measurement dates

For Telstra Super, actual membership data as at 30 April was used 
to value the defined obligations as at that date.  Details of assets, 
benefit payments and other cash flows as at 31 May were also used 
in relation to Telstra Super.  These April and May figures were then 
rolled forward to 30 June to allow for changes in the membership 
and actual asset return.  Contributions as at 30 June were used in 
relation to the defined benefit and defined contribution divisions.

Asset values as at 30 June were used to measure the defined 
benefit liability as at that date for the CSL Retirement Scheme.  
Details of membership data, contributions, benefit payments and 
other cash flows as at 30 June were also used in relation to the CSL 
Retirement Scheme.

The fair value of the defined benefit plan assets and the present 
value of the defined benefit obligations as at the reporting date are 
determined by our actuaries.  The details of the defined benefit 
divisions are set out in the following pages.

Other defined contribution schemes

A number of our controlled entities also participate in defined 
contribution schemes which receive employer and employee 
contributions based on a percentage of the employees’ salaries.  
We made contributions to these schemes of $24 million for 2013 
(2012: $19 million). 

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
24.  POST EMPLOYMENT BENEFITS

We participate in or sponsor defined benefit and defined 
contribution schemes.  It is our policy to contribute to the schemes 
at rates specified in the governing rules for defined contribution 
schemes or at rates determined by the actuaries for defined benefit 
schemes.

The defined contribution divisions receive fixed contributions and 
our legal or constructive obligation is limited to these contributions.

The present value of our obligations for the defined benefit plans are 
calculated by an actuary 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 Superannuation Scheme (Telstra Super)

On 1 July 1990, Telstra Super was established and the majority of 
Telstra staff transferred into Telstra Super.  The Telstra Entity and 
some of our Australian controlled entities participate in Telstra 
Super.   

Telstra Super has both defined benefit and defined contribution 
divisions.  The defined benefit divisions of Telstra Super are closed 
to new members.

The defined benefit divisions provide benefits based on years of 
service and final average salary.  Post employment benefits do not 
include payments for medical costs. 

Contribution levels made to the defined benefit divisions are 
designed to ensure that benefits accruing to members and 
beneficiaries are fully funded as the benefits fall due.  The benefits 
received by members of each defined benefit division take into 
account factors such as the employees’ length of service, final 
average salary and employer and employee contributions. 

An actuarial investigation of this scheme is carried out at least every 
three years.

CSL Retirement Scheme

Our controlled entity, CSL Limited (CSL), participates in a 
superannuation scheme known as the CSL Retirement Scheme. 
This scheme was established under the Occupational Retirement 
Schemes Ordinance and is administered by an independent 
trustee.  The scheme has three defined benefit sections and one 
defined contribution section.  Actuarial assessments are 
undertaken annually for this scheme.

The benefits received by members of the defined benefit schemes 
are based on the employees’ remuneration and length of service.

152

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
24.  POST EMPLOYMENT BENEFITS (CONTINUED)

(a) Net defined benefit plan (liability)/asset - historical 
summary

Our net defined benefit plan liability recognised in the statement of 
financial position for the current and previous periods is determined 
as follows:

Fair value of defined benefit plan assets (b) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Present value of the defined benefit obligation (c) .  .  .  .  .  .  .  .  .  .  .  .  .

Net defined benefit liability before adjustment for contributions tax  .  .  .  .
Adjustment for contributions tax  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Net defined benefit liability at 30 June   .  .  .  .  .  .  .  .  .
 .  .  .  .  .  .  .  .  .  .  .  .
Comprised of:
Defined benefit asset .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Defined benefit liability .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

Experience adjustments
Experience adjustments arising on defined benefit plan assets - gain/
(loss)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Experience adjustments arising on defined benefit obligations - gain  .  .  .

(b) Reconciliation of changes in fair value of defined benefit 
plan assets

FINANCIAL STATEMENTS

Telstra Group
As at 30 June

2013
$m

2,944
2,977

(33)
(6)
(39)

3
(42)
(39)

263
33

2012
$m

2,559
3,266

(707)
(124)
(831)

-
(831)
(831)

(207)
26

2011
$m

2,599
2,762

(163)
(31)
(194)

11
(205)
(194)

2010
$m

2,546
2,934

(388)
(69)
(457)

7
(464)
(457)

2009
$m

2,503
2,847

(344)
(62)
(406)

8
(414)
(406)

89
48

(56)
64

(593)
72

Fair value of defined benefit plan assets at beginning of year   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Expected return on plan assets   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Employer contributions .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Contributions tax .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Member contributions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Benefits paid (i).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Actuarial gain/(loss)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Plan expenses after tax   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Foreign currency exchange differences  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Fair value of defined benefit plan assets at end of year  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

The actual return on defined benefit plan assets was 15.5 per cent 
(2012: nil) for Telstra Super and 10.2 per cent (2012: (5.1 per cent) 
loss) for the CSL Retirement Scheme.

Telstra Group
As at 30 June

2013
$m

2,559
194
145
(22)
66
(244)
263
(23)
6
2,944

2012
$m

2,599
200
157
(24)
47
(202)
(207)
(13)
2
2,559

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

153

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
24.  POST EMPLOYMENT BENEFITS (CONTINUED)

(c) Reconciliation of changes in the present value of the wholly 
funded defined benefit obligation

Telstra Group
As at 30 June

2013
$m

3,266
125
125
36
(244)
(321)
(17)
7
2,977

2012
$m

2,762
107
146
15
(202)
429
7
2
3,266

Present value of defined benefit obligation at beginning of year  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Current service cost  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Interest cost   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Member contributions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Benefits paid (i).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Actuarial (gain)/loss   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Curtailment loss   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Foreign currency exchange differences  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Present value of wholly funded defined benefit obligation at end of year  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

(i) Benefits paid include $230 million (2012: $180 million) of 
entitlements to exiting defined benefit members which have been 
retained in Telstra Super and transferred to the defined contribution 
scheme.  

For financial year 2014, we expect to pay total benefit payments of 
$243 million (including benefits retained) to defined benefit 
members of Telstra Super.

(d)  Amounts recognised in the income statement and in other 
comprehensive income

Telstra Group
Year ended 30 June
2012
$m

2013
$m

Note

Components of the defined benefit plan expense recognised in the income statement within 
labour expenses
Current service cost  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Interest cost   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Expected return on plan assets   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Member contributions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Curtailment loss   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Plan expenses after tax   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Adjustment for contributions tax  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Employer contributions - defined contribution plan.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total expense recognised in the income statement  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   7

125
125
(194)
(30)
(17)
23
7
39
184
223

107
146
(200)
(32)
7
13
8
49
174
223

Actuarial gain/(loss) recognised directly in other comprehensive income  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

678

(755)

Cumulative actuarial losses recognised directly in other comprehensive income  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

(144)

(822)

154

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
24.  POST EMPLOYMENT BENEFITS (CONTINUED)

(d)  (e) Categories of plan assets

The weighted average asset allocation as a percentage of the fair 
value of total plan assets for defined benefit divisions as at 30 June 
are as follows:

Asset allocations
Equity instruments  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Debt instruments .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Property   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Cash  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Private equity .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Infrastructure .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
International hedge funds   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Opportunities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Telstra Super’s investments in debt and equity instruments include 
bonds issued by, and shares in, Telstra Corporation Limited.  Refer 
to note 29 for further details.

(f) Principal actuarial assumptions

We used the following major annual assumptions to determine our 
defined benefit plan expense for the year ended 30 June:

FINANCIAL STATEMENTS

Telstra Super
As at 30 June

2013
%

2012
%

CSL Retirement 
Scheme
As at 30 June

2013
%

2012
%

46
2
7
28
7
1
6
3
100

48
2
19
3
14
2
8
4
100

53
43
-
3
-
-
-
1
100

46
44
-
8
-
-
-
2
100

Telstra Super
Year ended  30 June
2012
%

2013
%

CSL Retirement 
Scheme
Year ended 30 June
2012
%

2013
%

Discount rate .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Expected rate of return on plan assets (i)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Expected rate of increase in future salaries  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

4.0
8.0
4.0

5.6
8.0
4.0

1.0
5.9
4.0 - 5.0

2.5
6.6
4.2 - 4.5

We used the following major annual assumptions to determine our 
defined benefit obligations at 30 June:

Telstra Super
Year ended  30 June
2012
%

2013
%

CSL Retirement 
Scheme
Year ended 30 June
2012
%

2013
%

Discount rate (ii)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Expected rate of increase in future salaries (iii)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

4.2
3.5

3.6
4.0

2.1
4.0 - 6.0

1.0
4.0 - 5.0

(i) The expected rate of return on plan assets has been based on 
historical and future expectations of returns for each of the major 
categories of asset classes over the subsequent 10 year period, or 
longer.  Estimates are based on a combination of factors including 
the current market outlook for interest rates, inflation, earnings 
growth and currency strength.  

To determine the aggregate return, the expected future return of 
each plan asset class is weighted according to the strategic asset 
allocation of total plan assets. 

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

155

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
24.  POST EMPLOYMENT BENEFITS (CONTINUED)

(f) Principal actuarial assumptions (continued)

(ii) The present value of our defined benefit obligation is determined 
by discounting the estimated future cash outflows using a discount 
rate based on government guaranteed securities with similar due 
dates to these expected cash flows. 

For Telstra Super we have used a blended 10-year Australian 
government bond rate as it has the closest term from the Australian 
bond market to match the term of the defined benefit obligations.  
We have not made any adjustment to reflect the difference between 
the term of the bonds and the estimated term of liabilities due to the 
observation that the current government bond yield curve is 
reasonably flat, implying that the yields from government bonds with 
a term less than 10 years are expected to be very similar to the 
extrapolated bond yields with a term of 12 to 13 years.

We will continue to monitor the performance of Telstra Super and 
reassess our employer contributions in light of actuarial 
recommendations.  We expect to contribute approximately $385 
million in financial year 2014, which includes contributions to the 
defined benefit divisions at a contribution rate of 16 per cent for 
financial year 2014.  This contribution rate could change depending 
on market conditions during financial year 2014.  This includes 
employer contributions to the accumulation divisions, payroll tax 
and employee pre and post tax salary sacrifice contributions.

CSL Retirement Scheme

The contributions payable to the defined benefit divisions are 
determined by the actuary using the attained age normal funding 
actuarial valuation method.

For the CSL Retirement Scheme we have extrapolated the 5, 7, 10 
and 15 year yields of the Hong Kong Exchange Fund Notes to 11 
years to match the term of the defined benefit obligations.

There were no employer contributions made to the CSL Retirement 
Scheme for financial year 2013 (2012: nil).  We do not expect to 
make any contributions to our CSL Retirement Scheme in financial 
year 2014.

(iii) Our assumption for the salary inflation rate for Telstra Super is 
3.5 per cent, which is reflective of our long term expectation for 
salary increases.  The salary inflation rate for the CSL Retirement 
Scheme is 5.0 per cent in 2013 to 2015, and 4.0 per cent thereafter 
which reflects the long term expectations for salary increases.

(g) Employer contributions

Telstra Super

The funding deed we have with Telstra Super requires contributions 
to be made when the average vested benefits index (VBI) in respect 
of the defined benefit membership (the ratio of defined benefit plan 
assets to defined benefit members’ vested benefits) of a calendar 
quarter falls to 103 per cent or below.  For the quarter ended 30 
June 2013, the VBI was 103 per cent (30 June 2012: 91 per cent).  
We have paid contributions totalling $435 million during the year 
(2012: $467 million).  This includes employer contributions to the 
accumulation divisions, payroll tax and employee pre and post tax 
salary sacrifice contributions, which are excluded from the employer 
contributions in the reconciliations above.  The current contribution 
rate for the defined benefit divisions of Telstra Super, effective June 
2013, is 16 per cent of defined benefit member’s salaries (June 
2012: 27 per cent).

The VBI, which forms the basis for determining our contribution 
levels under the funding deed, represents the total amount that 
Telstra Super would be required to pay if all defined benefit 
members were to voluntarily leave the fund on the valuation date.  
The VBI assesses the short term financial position of the plan.  On 
the other hand the liability recognised in the statement of financial 
position is based on the projected benefit obligation (PBO), which 
represents the present value of employees’ benefits assuming that 
employees will continue to work and be part of the fund until their 
exit.  The PBO takes into account future increases in an employee’s 
salary and provides a longer term financial position of the plan.

156

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
25. INVESTMENTS IN CONTROLLED ENTITIES

Below is a list of our investments in controlled entities.

Name of entity

Country of 
incorporation

Parent entity
Telstra Corporation Limited (a)    .  .  .  .  .  .  .  .  .  .  .  .  .  .
Controlled entities
Telstra Finance Limited (a)    .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra ESOP Trustee Pty Ltd   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra Growthshare Pty Ltd  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra Media Pty Ltd .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra Multimedia Pty Ltd (a)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra International (Aus) Ltd (a)   .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra Pay TV Pty Ltd (a)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Chief Entertainment Pty Ltd  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra 3G Spectrum Holdings Pty Ltd .  .  .  .  .  .  .  .  .  .  .
Telstra OnAir Holdings Pty Ltd .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra Business Systems Pty Ltd (a)   .  .  .  .  .  .  .  .  .  .  .
Telstra Plus Pty Ltd .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra Ventures Pty Ltd (formerly Applications and 
Ventures Group Pty Ltd) (a)(j)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Research Resources Pty Ltd .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
1300 Australia Pty Ltd  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Alpha Phone Words Pty Ltd .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra iVision Pty Ltd (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Integrated Vision Pty Ltd   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• iVision (QLD) Pty Ltd   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• iVision Investments Pty Ltd  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• iVision (Unify) Pty Ltd   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Unify Pty Ltd    .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Telstra Communications Limited (a)  .  .  .  .  .  .  .  .  .  .  .  .
• Telecom Australia (Saudi) Company Limited (b).  .  .  .
Telstra Holdings Pty Ltd (a)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Telstra International Holdings Limited .  .  .  .  .  .  .  .  .
• Telstra Technology Services (Hong Kong) Limited (g).
• Autohome Inc. (c)(d) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Cheerbright International Holdings Limited (c) .  .  .
• Beijing Cheerbright Technologies Co. Ltd (c) .  .
• Autohome (Hong Kong) Limited (c) .  .  .  .  .  .  .
• Sequel Media Inc. (c)(d) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• China Topside Limited (c)   .  .  .  .  .  .  .  .  .  .  .  .  .
• Beijing Topside Technologies Co. Ltd (c)  .  .  .  .
• Norstar Advertising Media Holdings Limited (c)   .  .

Australia

Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia

Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Saudi Arabia
Australia
Bermuda
Hong Kong
Cayman Islands
British Virgin Islands
China
Hong Kong
Cayman Islands
British Virgin Islands
China
Cayman Islands

• Shengtuo Shidai (Beijing) Information 

Technology Co. Ltd (c)   .  .  .  .  .  .  .  .  .  .  .  .  .
• Union Tough Advertisement Limited (c) .  .  .  .  .
• Haocheng Shidai (Beijing) Advertisement 

China
Hong Kong

Co. Ltd (c)(d) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

China

(continued over page)

FINANCIAL STATEMENTS

Telstra Entity’s 
recorded amount of 
investment (#)
As at 30 June

2013
$m

2012
$m

% of equity held by 
immediate parent
As at 30 June

2013
%

2012
%

-
-
-
393
2,678
2
-
-
302
478
50
-

-
-
20
-
41
-
-
-
-
-
29
-
7,474
-
-
-
-
-
-
-
-
-
-

-
-

-

-
-
-
393
2,678
2
-
-
302
478
50
-

-
-
20
-
41
-
-
-
-
-
29
-
7,474
-
-
-
-
-
-
-
-
-
-

-
-

-

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

100.0
100.0
85.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
-
100.0
100.0
100.0
66.0
100.0
100.0
100.0
55.0
100.0
100.0
100.0

100.0
100.0

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

100.0
100.0
85.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
50.0
100.0
100.0
75.0
66.0
100.0
100.0
100.0
55.0
100.0
100.0
100.0

100.0
100.0

30.0

30.0

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

157

Country of 
incorporation

Telstra Entity’s 
recorded amount of 
investment (#)
As at 30 June

% of equity held by 
immediate parent
As at 30 June

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
25.  INVESTMENTS IN CONTROLLED ENTITIES (CONTINUED)

Name of entity

Controlled entities (continued) 

• Willoughby (602) Limited   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Telstra International Philippines, Inc. (f) .  .  .  .  .  .  .  .
• Telstra Asia Holdings Limited (c).  .  .  .  .  .  .  .  .  .  .  .
• Telstra Octave Holdings Limited (c)   .  .  .  .  .  .  .  .
• Octave Investments Holdings Limited (c)(d)   .  .
• Sharp Point Group Limited (c) .  .  .  .  .  .  .  .
• Beijing Liang Dian Shi Jian Technology 

Company Limited (c)  .  .  .  .  .  .  .  .  .  .  .
• Telstra Robin Holdings Limited (c)  .  .  .  .  .  .  .  .  .
• Telstra Asia Limited (c).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Telstra SE Asia Holdings Limited (c)  .  .  .  .  .  .  .  .
• PT Reach Network Services Indonesia    .  .  .  .
• Telstra Asia Regional Holdings Limited (c) .  .  .  .  .

United Kingdom
Philippines
British Virgin Islands
British Virgin Islands
British Virgin Islands
British Virgin Islands

China
British Virgin Islands
British Virgin Islands
British Virgin Islands
Indonesia 
British Virgin Islands

• Telstra Malaysia Sdn. Bhd.  .  .  .  .  .  .  .  .  .  .  . Malaysia 
Thailand
• Telstra (Thailand) Ltd (d)   .  .  .  .  .  .  .  .  .  .  .  .
Thailand
• Telstra Network (Thailand) Ltd    .  .  .  .  .  .  .
Thailand
• Telstra Network (Thailand) Ltd   .  .  .  .  .  .  .  .  .
British Virgin Islands
• Telstra Philippines Holdings Limited (c) .  .  .  .  .
Philippines
• Incomgen Holdings Inc. (c)(d)(e).  .  .  .  .  .  .

• Telstra Web Holdings Inc. (formerly 

Reach Web Holdings Inc.) (c)(j)   .  .  .  .  .
• Telstra Philippines Inc. (c) .  .  .  .  .  .  .
• Telstra Philippines Inc. (c)  .  .  .  .  .  .  .  .  .  .
• Telstra Web Holdings Inc. (formerly Reach 

Philippines
Philippines
Philippines

Web Holdings Inc.) (c)(j) .  .  .  .  .  .  .  .  .  .  .
• Thai Cyber Web Co Limited (d) .  .  .  .  .  .  .  .  .
• Telstra Global Holdings Limited  .  .  .  .  .  .  .  .  .  .  .  .
• Telstra International Limited   .  .  .  .  .  .  .  .  .  .  .  .
• Telstra Services Korea Limited   .  .  .  .  .  .  .  .  .  .  .  .
• Reach Holdings Limited (c)  .  .  .  .  .  .  .  .  .  .  .  .  .  . Mauritius

Philippines
Thailand
British Virgin Islands
Hong Kong
Republic of Korea

• Reach Network India Private Limited (c) .  .  .  .  .  .
• Reach Data Services India Private Limited (c) .  .  .

India
India

• 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  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Hong Kong CSL Limited  .  .  .  .  .  .  .  .  .
• Big Bang Holdings Limited  .  .  .  .  .  .  .  .
• One2Free PersonalCom Limited  .  .  .  .  .
• Integrated Business Systems Limited   .  .
• New World PCS Limited   .  .  .  .  .  .  .  .  .
• New World Mobility Limited .  .  .  .  .  .  .  .
• New World 3G Limited .  .  .  .  .  .  .  .  .  .  .  .

China
Bermuda
Bermuda
Cayman Islands
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong

(continued over page)

2013
$m
-
-
-
-
-
-

2012
$m
-
-
-
-
-
-

-
-
-
-
-
-
-
-
-
-
-
-

-
-
-

-
-
-
-
-
-
-
-

-
-
-
-
-
-
-
-
-
-
-
-

-
-
-
-
-
-
-
-
-
-
-
-

-
-
-

-
-
-
-
-
-
-
-

-
-
-
-
-
-
-
-
-
-
-
-

2013
%
100.0
100.0
100.0
100.0
67.0
100.0

100.0
100.0
100.0
100.0
90.0
100.0
51.0
49.0
68.0
32.0
100.0
40.0

60.0
60.0
40.0

40.0
48.8
100.0
100.0
100.0
100.0
99.9
99.9

100.0
100.0
76.4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
60.0
100.0

2012
%
100.0
-
100.0
100.0
67.0
100.0

100.0
100.0
100.0
100.0
90.0
100.0
51.0
49.0
68.0
32.0
100.0
40.0

60.0
60.0
40.0

40.0
48.8
100.0
100.0
100.0
100.0
99.9
99.9

100.0
100.0
76.4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
60.0
100.0

158

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
25.  INVESTMENTS IN CONTROLLED ENTITIES (CONTINUED)

FINANCIAL STATEMENTS

Country of 
incorporation

Telstra Entity’s 
recorded amount of 
investment (#)
As at 30 June

% of equity held by 
immediate parent
As at 30 June

Name of entity

Controlled entities (continued)

Bermuda
Hong Kong
Japan

Singapore
United Kingdom
Indonesia
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Jersey
Jersey
Jersey
Jersey
United States
India
Papua New Guinea

• Telstra Holdings (Bermuda) No 1 Limited  .  .  .  .  .  .  .
• Telstra International HK Limited .  .  .  .  .  .  .  .  .  .  .  .
• Telstra Japan KK.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Telstra International Holdings No. 2 Limited (b) .  .  .  .  Bermuda
• Telstra Singapore Pte Ltd  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Telstra Global Limited  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• PT Telstra Nusantara    .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Telstra Limited  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Telstra (Cable Telecom) Limited.  .  .  .  .  .  .  .  .
• Telstra (PSINet)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Telstra (CTE) Limited  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Cable Telecommunications Limited .  .  .  .  .  .  .
• PSINet Datacentre UK Limited  .  .  .  .  .  .  .  .  .
• Inteligen Communications Limited   .  .  .  .  .  .  .
• PSINet Jersey Limited   .  .  .  .  .  .  .  .  .  .  .  .  .
• PSINet Hosting Centre Limited  .  .  .  .  .  .  .  .  .
• Cordoba Holdings Limited.  .  .  .  .  .  .  .  .  .  .  .
• London Hosting Centre Limited .  .  .  .  .  .  .  .  .
• Telstra Inc  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
• Telstra India (Private) Limited (c)   .  .  .  .  .  .  .  .  .  .  .
• Telstra International PNG Limited  .  .  .  .  .  .  .  .  .  .  .
• Telstra NZ Limited .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  New Zealand
New Zealand
• Telstra Network Services NZ Limited  .  .  .  .  .  .  .  .  .
New Zealand
• Telstra New Zealand Holdings Limited   .  .  .  .  .  .  .  .
New Zealand
• Telstra Network Services NZ Limited    .  .  .  .  .  .  .
New Zealand
• TelstraClear Limited (h)(i)   .  .  .  .  .  .  .  .  .  .  .  .  .
New Zealand
• CLEAR Communications Limited (h)(i)  .  .  .  .  .
India
• Telstra Telecommunications Private Ltd (c)  .  .  .  .  .  .
Australia
Network Design and Construction Limited (a)  .  .  .  .  .  .  .
Australia
• NDC Global Holdings Pty Limited .  .  .  .  .  .  .  .  .  .  .
Australia
• NDC Global Services Pty Limited  .  .  .  .  .  .  .  .  .  .  .
Australia
Telstra Services Solutions Holdings Limited (a)  .  .  .  .  .  .
Australia
Sensis Pty Ltd (a)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Australia
• Location Navigation Pty Ltd .  .  .  .  .  .  .  .  .  .  .  .  .  .
Australia
• Life Events Media Pty Limited .  .  .  .  .  .  .  .  .  .  .  .  .
Australia
• CitySearch Australia Pty Ltd    .  .  .  .  .  .  .  .  .  .  .  .  .
Australia
• Australian Local Search Pty Ltd (f)   .  .  .  .  .  .  .  .  .  .
Australia
• Sensis Holdings Pty Ltd (a)  .  .  .  .  .  .  .  .  .  .  .  .  .  .
China
• Telstra Sensis (Beijing) Co. Limited (b)(c)(e)   .  .  .  .  .
Investment in controlled entities  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Allowance for impairment in value  .  .  .  .  .  .  .  .  .  .  .  .  .
Total investment in controlled entities   .  .  .  .  .  .  .  .  .  .  .

2013
$m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20
-
-
303
851
-
-
-
-
-
-
12,641
(8,190)
4,451

2012
$m
-
-
-
-
-
 -
 -
-
-
-
-
-
-
-
-
-
-
-
 -
 -
 -
-
-
-
 -
 -
-
-
20
-
-
313
851
-
-
-
-
-
-
12,651
(7,683)
4,968

2013
%
100.0
100.0
100.0
-
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
-
-
-
74.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

2012
%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
-
100.0
100.0
100.0
100.0
74.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
-
100.0
100.0

(#) The amounts recorded are before any provision for reduction in value.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

159

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
25.  INVESTMENTS IN CONTROLLED ENTITIES (CONTINUED)

(a) ASIC deed of cross guarantee financial information

A deed of cross guarantee was entered into on 17 May 2010, as 
defined in ASIC Class Order 98/1418 (Class Order). 

The following entities form part of the deed of cross guarantee:

• Telstra Corporation Limited;
• Telstra Multimedia Pty Ltd;
• Telstra International (Aus) Ltd; 
• Telstra Pay TV Pty Ltd;
• Telstra Ventures Pty Ltd;
• Telstra iVision Pty Ltd;
• Telstra Communications Limited;
• Telstra Holdings Pty Ltd;
• Network Design and Construction Limited;
• Telstra Services Solutions Holdings Limited;
• Sensis Pty Ltd; and
• Sensis Holdings Pty Ltd. 

Telstra Business Systems Pty Ltd was released from its obligations 
from the deed by way of a revocation deed on 18 December 2012. 

Telstra Finance Limited is trustee of the closed group.  However, it 
is not a group entity under the deed.

The relevant group entities under the deed:

•

form a closed group and extended closed group as defined in the 
ASIC Class Order 98/1418 (Class Order);

• do not have to prepare and lodge audited financial reports under 

the Corporations Act 2001; and

• guarantee the payment in full of the debts of the other parties to 

the deed in the event of their winding up. 

160

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
25.  INVESTMENTS IN CONTROLLED ENTITIES (CONTINUED)

(a) ASIC deed of cross guarantee financial information 
(continued)

The consolidated income statement and statement of financial 
position of the closed group is presented according to the Class 
Order 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

Current assets
Cash and cash equivalents.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Trade and other receivables  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Inventories  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Derivative financial assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Current tax receivables.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Prepayments .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total current assets.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Non current assets
Trade and other receivables  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Inventories  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Investments - accounted for using the equity method  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Investments - other .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Property, plant and equipment .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Intangible assets .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Derivative financial assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Non current tax receivables   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total non current assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Current liabilities
Trade and other payables   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Provisions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Borrowings .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Derivative financial liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Current tax payables .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Revenue received in advance  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total current liabilities   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Non current liabilities
Other payables .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Provisions   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Borrowings .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Derivative financial liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Deferred tax liabilities   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Defined benefit liability .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Revenue received in advance  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total non current liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total liabilities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net assets .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Closed group
As at 30 June

2013
$m

2012
$m

2,121
4,340
421
43
79
269
7,273

935
27
15
2,008
19,558
6,762
1,062
-
30,367
37,640

3,687
911
1,346
44
367
1,044
7,399

53
267
14,259
1,625
1,277
42
369
17,892
25,291
12,349

3,582
4,136
246
32
363
211
8,570

1,923
24
10
2,818
19,812
6,122
658
80
31,447
40,017

3,607
934
4,044
299
675
1,103
10,662

55
257
11,951
2,349
1,045
825
469
16,951
27,613
12,404

Equity
Share capital .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Reserves .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Retained profits.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Equity available to the closed group   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

5,711
(87)
6,725
12,349

5,635
(84)
6,853
12,404

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

161

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
25.  INVESTMENTS IN CONTROLLED ENTITIES (CONTINUED)

(a) ASIC deed of cross guarantee financial information 
(continued)

Closed group statement of comprehensive income

Income
Revenue (excluding finance income).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other income .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Expenses
Labour  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Goods and services purchased   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other expenses   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Share of net profit from jointly controlled and associated entities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Earnings before interest, income tax expense, depreciation and amortisation (EBITDA)  .  .  .  .  .  .  .  .  .  . 
Depreciation and amortisation  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Earnings before interest and income tax expense (EBIT)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Finance income   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Finance costs.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net finance costs .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Closed group
Year ended 30 June
2012
$m

2013
$m

23,936
273
24,209

4,471
5,630
4,842
14,943

1
14,944

9,265
3,993
5,272

298
1,134
836

23,681
114
23,795

3,717
5,392
4,704
13,813

-
13,813

9,982
4,007
5,975

205
1,035
830

Profit before income tax expense  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

4,436

5,145

Income tax expense  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

1,552

1,488

Profit for the year available to the closed group  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

2,884

3,657

Items that will not be reclassified subsequently to the closed group income statement
Retained profits:  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- actuarial gain/(loss) on defined benefit plans .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- income tax on actuarial gain/(loss) on defined benefit plans .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Items that may be reclassified subsequently to the closed group income statement
Cash flow hedging reserve:   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- changes in fair value of cash flow hedges  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
- changes in fair value transferred to other 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 cash flow hedging reserve .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

668
(200)
468

365
(617)
12
236
-
(1)
(5)

(740)
222
(518)

(587)
204
7
263
9
31
(73)

Total other comprehensive income for the closed group  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total comprehensive income for the year for the closed group .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

463
3,347

(591)
3,066

Retained profits reconciliation
Retained profits at the beginning of the financial year available to the closed group   .  .  .  .  .  .  .  .  .  .  .  . 
Total comprehensive income recognised in retained profits  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Dividends .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Retained profits at the end of the financial year available to the closed group   .  .  .  .  .  .  .  .  .  .  .  . 

6,853
3,352
(3,480)
6,725

7,189
3,139
(3,475)
6,853

162

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
25.  INVESTMENTS IN CONTROLLED ENTITIES (CONTINUED)

FINANCIAL STATEMENTS

We have no direct equity interest in the following entities within the 
Sequel Media Inc. Group:

• Beijing Haochen Domain Information Technology Co. Ltd;
• Lianhe Shangqing (Beijing) Advertisement Co. Ltd;
• Beijing POP Information Technology Co. Ltd; and
• Shijiazhuang Xinrong Advertising Co. Ltd.

In addition, our controlled entity Union Tough Advertisement Limited 
has a 30 per cent direct interest in Haocheng Shidai (Beijing) 
Advertisement Co. Ltd.

The purpose of these entities is to hold the licences and approvals 
required to operate Sequel Media Inc.’s internet content provision 
and advertising business respectively.  Sequel Media Inc. has the 
decision-making powers to control these entities.  Sequel Media Inc. 
is one of our controlled entities, therefore we have consolidated the 
financial results, position and cash flows of these entities into our 
Telstra Group financial report.

We have no direct equity interest in the following entities within the 
Octave Investments Holdings Limited Group:

• Beijing Xunjie Yingxiang Network Technology Company Ltd;
• Beijing Rui Xin Zai Xian System Technology Company Limited;
• Guangzhou Rui Yin Digital Technology Company Limited;
• Shijiazhuang Ruixin Yin Shang Digital Technology Company 

Limited; and

• Wuhan Rui Yin Zai Xian Digital Technology Company Limited.

The purpose of these entities is to hold the licences and approvals 
required to operate Octave Investments Holdings Limited’s internet 
content provision and mobile 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, therefore we have consolidated the 
financial results, position and cash flows of these entities into our 
Telstra Group financial report.

(b) Liquidations 

During 2013, the following entities were liquidated:

• Telecom Australia (Saudi) Company Limited; and
• Telstra International Holdings No. 2 Limited.

At 30 June 2013, the following entity was in voluntary liquidation:

• Telstra Sensis (Beijing) Co. Limited.

(c) Controlled entities with different reporting dates

The following companies have reporting dates that differ from our 
reporting date of 30 June for financial year 2013:

• Autohome Inc. and its controlled entities - 31 December;
• Sequel Media Inc. and its controlled entities - 31 December;
• Telstra Asia Holdings Limited and its controlled entities - 31 

December;

• Telstra Asia Limited - 31 December;
• Telstra SE Asia Holdings Limited - 31 December;
• Telstra Asia Regional Holdings Limited - 31 December;
• Telstra Philippines Holdings Limited and its controlled entities - 

31 December;

• Reach Holdings Limited - 31 December;
• Reach Network India Private Limited - 31 March;
• Reach Data Services India Private Limited - 31 March;
• Beijing Australia Telecommunications Technical Consulting 

Services Company Limited - 31 December;
• Telstra India (Private) Limited - 31 March; 
• Telstra Telecommunications Private Ltd - 31 March; and
• Telstra Sensis (Beijing) Co Limited - 31 December.

Financial reports prepared as at 30 June are used for consolidation 
purposes.

(d) Controlled entities in which our equity ownership is less 
than or equal to 50 per cent

We have no direct equity interest in the following entities within the 
Autohome Inc. Group:

• Beijing Autohome Information Technology Co. Ltd;
• Shanghai Youcheyoujia Advertising Co. Ltd; and 
• Guangzhou You Che You Jia Advertising Co. Ltd.  

The purpose of these entities is to hold the licences and approvals 
required to operate Autohome Inc.’s internet content provision and 
advertising business respectively, for which Autohome Inc. has the 
decision-making powers to control these entities. Autohome Inc. is 
one of our controlled entities, therefore we have consolidated the 
financial results, position and cash flows of these entities into our 
Telstra Group financial report.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

163

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
25.  INVESTMENTS IN CONTROLLED ENTITIES (CONTINUED)

(d) Controlled entities in which our equity ownership is less 
than or equal to 50 per cent (continued)

We have effective control over the following entities through 
economic dependency and contractual arrangements with the 
majority shareholders and have consolidated them into our group:

• Telstra (Thailand) Ltd;
•
Incomgen Holdings Inc.; and
• Thai Cyber Web Co Limited.

(e) Controlled entities not individually audited by EY

These companies are not audited by EY, our Australian statutory 
auditor.

(f) New incorporations and business combinations 

On 3 April 2013, a new controlled entity Telstra International 
Philippines, Inc. was incorporated.

On 29 April 2013, our controlled entity Sensis Pty Ltd acquired 100 
per cent of the issued share capital of Australian Local Search Pty 
Ltd for consideration of $4 million.  Refer to note 20 for further 
details.

(g) Purchase of additional interest

On 18 June 2013, Telstra Holdings Pty Ltd increased its ownership 
in Telstra Technology Services (Hong Kong) Limited from 75 per 
cent to 100 per cent for consideration of $1 million.  Refer to note 20 
for further details.

(h) Non current assets held for sale

On 30 June 2012, the carrying value of the assets and liabilities of 
TelstraClear Limited and its controlled entity were classified as held 
for sale.  The sale was completed on 31 October 2012.  Refer to 
note 12 for further details.

(i) Sales and disposals

On 31 October 2012, we sold our 100 per cent shareholding in 
TelstraClear Limited and its controlled entity for a total consideration 
of $669 million.  Refer to note 20 for further details on our disposal.

(j) Name change

The following entities changed their names during financial year 
2013:

• Application and Ventures Group Pty Ltd changed its name to 

Telstra Ventures Pty Ltd; and

• Reach Web Holdings Inc. changed its name to Telstra Web 

Holdings Inc.

164

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
26.  INVESTMENTS IN JOINTLY CONTROLLED AND ASSOCIATED ENTITIES

FINANCIAL STATEMENTS

Investments in jointly controlled entities
Investments in jointly controlled entities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Allowance for impairment in value  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Carrying amount of investments in jointly controlled entities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Investments in associated entities
Investments in associated entities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Allowance for impairment in value  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Carrying amount of investments in associated entities.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Our investments in jointly controlled and associated entities are listed below. 

Name of Entity

Principal activities

Jointly controlled entities
FOXTEL Partnership (h)(i)
FOXTEL Television Partnership (h)(i)
Customer Services Pty Limited (h)(i)
FOXTEL Management Pty Ltd (h)(i)
FOXTEL Cable Television Pty Ltd (a)(h)(i)
Reach Ltd (incorporated in Bermuda) (f)(h)(i)
TNAS Limited (incorporated in New Zealand) (d)(h) Toll free number portability in New Zealand
3GIS Pty Ltd (d)(f)(h)
3GIS Partnership (d)(h)
Bridge Mobile Pte Ltd 
(incorporated in Singapore) (b)(f)(h)
HealthEngine Pty Ltd (b)(d)(h)

Pay television 
Pay television
Customer service
Management services
Pay television
International connectivity services

Management of former 3GIS Partnership
3G network services

Regional roaming provider
Online healthcare booking

Associated entities
Australia-Japan Cable Holdings Limited 
(incorporated in Bermuda) (f)(h)(i)
Telstra Super Pty Ltd (a)(i)
Telstra Foundation Ltd (a)(h)
Mandoe Pty Ltd (e)(h)
IPscape Pty Ltd (h)
Dimmi Pty Ltd (h)
Whispir Limited (c)(d)(h)
IP Health Pty Ltd (d)(h)

Network cable provider
Superannuation trustee
Charitable trustee organisation
Signage software provider
Cloud based call centre solution
Online restaurant reservation
Software as a solution provider
Software development

Unless otherwise noted, all investments have a reporting date of 30 
June, are incorporated in Australia and our voting power is the same 
as our ownership interest.

Telstra Group
As at 30 June

2013
$m

2012
$m

5
-
5

38
(25)
13
18

2
-
2

34
(24)
10
12

Ownership interest
As at 30 June

2013
%

2012
%

50.0
50.0
50.0
50.0
80.0
50.0
-
50.0
-

10.0
25.0

46.9
100.0
100.0
25.0
31.3
23.4
18.0
32.9

50.0
50.0
50.0
50.0
80.0
50.0
33.3
50.0
50.0

10.0
-

46.9
100.0
100.0
25.0
31.3
23.4
-
-

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

165

 
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
26.  INVESTMENTS IN JOINTLY CONTROLLED AND ASSOCIATED ENTITIES (CONTINUED)

(a) Jointly controlled and associated entities in which we own 
more than 50 per cent equity

• We own 80 per cent of the equity of FOXTEL Cable Television 
Pty Ltd. This entity is disclosed as a jointly controlled entity as the 
other equity shareholders have participating rights that prevent 
us from dominating the decision-making of the board.  Effective 
voting power is restricted to 50 per cent and we have joint 
control.

• We own 100 per cent of the equity of Telstra Super Pty Ltd, the 
trustee for the Telstra Superannuation Scheme (Telstra Super).  
We do not consolidate Telstra Super Pty Ltd as we do not control 
the Board of Directors.  We have equal representation with 
employee representatives on the board.  Our voting power is 
limited to 44 per cent, which is equivalent to our representation 
on the board.  The entity is therefore classified as an associated 
entity as we have significant influence over it.

• We own 100 per cent of the equity of Telstra Foundation Ltd 
(TFL).  TFL is limited by guarantee (guaranteed to $100) with 
Telstra Corporation Limited being the sole member.  We did not 
contribute any equity to TFL on incorporation.  TFL is the trustee 
of the Telstra Community Development Fund and manager of 
the Telstra Kids Fund.  We do not consolidate TFL as we do not 
control the board.  Our voting power on the board is limited to 38 
per cent, which is equivalent to our representation on the board.

(b) Jointly controlled entities in which we own less than or 
equal to 50 per cent equity

We own 10 per cent of Bridge Mobile Pte Ltd and we have joint 
control over Bridge Mobile Pty Ltd through our decision making 
ability on the board.

We own 25 per cent of HealthEngine Pty Ltd and we have joint 
control over HealthEngine Pty Ltd through our decision making 
ability on the board.

(c) Associated entities in which we own less than or equal to 20 
per cent equity

We own 18 per cent of Whispir Limited and we have significant 
influence over this entity through our decision making ability on the 
board.

(d) Other changes in jointly controlled and associated entities

During financial year 2013, we acquired interests in the following 
entities for a total consideration of $8 million:

IP Health Pty Ltd;

•
• HealthEngine Pty Ltd; and
• Whispir Limited.

On 31 October 2012, we disposed of our 100 per cent shareholding 
in TelstraClear Limited and its controlled entity.  The disposal 
included the investment in TNAS Limited.

Telstra and Vodafone Hutchison Australia concluded the 3GIS 
Partnership on 31 August 2012.  We still retain our ownership 
interest in 3GIS Pty Ltd, which has been non-operating since that 
date.

(e) Dividends received

A $1 million dividend was received from Mandoe Pty Ltd during the 
year (2012: nil).

(f) Jointly controlled and associated entities with different 
reporting dates

The following jointly controlled and associated entities have 
different reporting dates from our reporting date of 30 June for 
financial year 2013:

• Reach Ltd - 31 December; 
• 3GIS Pty Ltd - 31 December;
• Bridge Mobile Pte Ltd - 31 March; and
• Australia-Japan Cable Holdings Limited - 31 December. 

Financial reports prepared as at 30 June are used for equity 
accounting purposes.  Our ownership interest in jointly controlled 
and associated entities with different reporting dates is the same at 
that reporting date as at 30 June unless otherwise noted.

(g) Share of net profits/(losses)

In financial year 2013, there was $1 million (2012: nil) share of 
losses from jointly controlled and associated entities.

166

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
26.  INVESTMENTS IN JOINTLY CONTROLLED AND ASSOCIATED ENTITIES (CONTINUED)

FINANCIAL STATEMENTS

(h) Other disclosures for jointly controlled and associated 
entities

The movements in the consolidated equity accounted amount of our 
jointly controlled and associated entities are summarised as follows:

Jointly controlled
entities
Telstra Group
Year ended/As at
30 June

2013
$m

2012
$m

Associated entities
Telstra Group
Year ended/As at
30 June

2013
$m

2012
$m

Carrying amount of investments at beginning of year .  .  .  .  .  .  .  .  .  .  .  .  .  
Additional investments made during the year   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Share of net loss for the year.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Dividends received .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Carrying amount of investments at end of year   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Our share of contingent liabilities of jointly controlled and associated entities .  .  .  

Our share of capital commitments contracted for by our jointly controlled
and associated entities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

2
3
5
-
-
5

10

1

2
-
2
-
-
2

9

9

10
5
15
(1)
(1)
13

-

-

-
10
10
-
-
10

-

1

Other commitments

Our jointly controlled entity FOXTEL has other commitments 
amounting to approximately $3,950 million (2012: $4,045 million).  
The majority of our 50 per cent share of these commitments relate 
to minimum subscriber guarantees (MSG) for pay television 
programming agreements.  These agreements are for periods of 
between 1 and 25 years and are based on current prices and costs 
under agreements entered into between the FOXTEL Partnership 
and various other parties.  These minimum subscriber payments 
fluctuate in accordance with price escalation, as well as foreign 
currency movements.  In addition to our MSG, FOXTEL has other 
commitments, including obligations for satellite transponder costs 
and digital set top box units.

On 31 August 2012, we concluded our 3GIS Partnership with 
Vodafone Hutchison Australia.  Our property lease commitments 
have continued as both parties have been assigned their share of 
leases. 

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

167

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
26.  INVESTMENTS IN JOINTLY CONTROLLED AND ASSOCIATED ENTITIES (CONTINUED)

(h) Other disclosures for jointly controlled and associated 
entities (continued)

Summarised presentation of all of our jointly controlled and 
associated entities’ assets, liabilities, revenue and expense items 
(including jointly controlled and associated entities where equity 
accounting has been suspended):

Jointly controlled
entities
Telstra Group
Year ended/As at
30 June

Associated entities
Telstra Group
Year ended/As at
30 June

Current assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Non current assets .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Total assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Current liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Non current liabilities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Total liabilities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Net liabilities.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Total income  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Total expenses .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Profit before income tax expense  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Income tax expense  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Profit for the year .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Summarised presentation of our share of all our jointly controlled and 
associated entities' revenue and expense items (including jointly controlled 
and associated entities where equity accounting has been suspended):

2013
$m

592
3,010
3,602

795
3,283
4,078
(476)

5,886
5,592
294
28
266

2012
$m

450
3,405
3,855

765
3,544
4,309
(454)

4,808
4,635
173
4
169

Total income  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Total expenses .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Profit before income tax expense  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Income tax expense  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Profit for the year .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

2,941
2,795
146
14
132

2,953
2,868
85
2
83

2013
$m

38
183
221

58
287
345
(124)

78
57
21
3
18

32
23
9
1
8

2012
$m

27
176
203

15
327
342
(139)

54
31
23
1
22

25
14
11
-
11

168

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
26.  INVESTMENTS IN JOINTLY CONTROLLED AND ASSOCIATED ENTITIES (CONTINUED)

FINANCIAL STATEMENTS

(i) Suspension of equity accounting

Our unrecognised share of (profits)/losses for the period and 
cumulatively, for our entities where equity accounting has ceased 
and the investment is recorded at zero due to losses made by these 
entities and/or reductions in the equity accounted carrying amount, 
is shown below:

Telstra Group
Year ended 30 June

Period Cumulative
2013
$m

2013
$m

Period
2012
$m

Cumulative
2012
$m

4
(2)

(11)
(9)

166
558

126
850

30
1

(11)
20

162
560

137
859

Jointly controlled entities
FOXTEL (*) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Reach Ltd   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

Associated entities
Australia-Japan Cable Holdings Limited  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

Equity accounting has been suspended for Telstra Super Pty Ltd. 
There is no significant unrecognised profits/losses in this entity.

(*) FOXTEL includes FOXTEL Partnership and its controlled 
entities, FOXTEL Television Partnership, Customer Services Pty 
Limited, FOXTEL Cable Television Pty Ltd and FOXTEL 
Management Pty Limited and its controlled entities. 

A $155 million distribution was received from FOXTEL during the 
year (2012: $108 million).  This has been recorded as revenue in the 
income statement and has increased our cumulative share of 
unrecognised losses in FOXTEL to $166 million after taking into 
account Telstra’s share of FOXTEL’s profit for the year of $130 
million and other adjustments of $21 million.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

169

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 Trust; and 
• Telstra Employee Share Ownership Plan Trusts (TESOP99 and 

TESOP97).

The nature of each plan, details of plan holdings, movements in 
holdings, and other relevant information is disclosed below.

Telstra Growthshare Trust 

The Telstra Growthshare Trust commenced in financial year 2000.  
Under the trust, Telstra operates a number of different equity plans, 
including:
• short term incentive plans;
•
long term incentive plans; 
• Ownshare; and
• other equity plans.

The trustee for the trust is Telstra Growthshare Pty Ltd.  This 
company is 100 per cent owned by Telstra.  Funding is provided to 
the Telstra Growthshare Trust to purchase Telstra shares to 
underpin the equity instruments issued.

In financial year 2013, we recorded an expense of $42 million for our 
share based payment plans operated by the Telstra Growthshare 
Trust (2012: $19 million).  As at 30 June 2013, we had an estimated 
total expense yet to be recognised of $26 million (2012: $36 million), 
which is expected to be recognised over a weighted average of 1.6 
years (2012: 1.5 years). 

(a) Short term incentive (STI) plans

The purpose of the STI is to link key executives’ rewards to 
individual key performance indicators and to Telstra's financial 
performance.   The STI is delivered in cash and incentive shares 
and the executive is paid an annual STI only when the threshold 
targets are met or exceeded.

number of circumstances, for example because of death, total and 
permanent disablement or redundancy (in each case subject to 
applicable law relating to the provision of benefits).

Applicable only to allocations from August 2012, deferred shares 
may also be retained if the CEO or a senior executive ceases 
employment due to retirement, expiry of a fixed term contract or 
country relocation, where that notice of retirement, fixed term 
contract expiry or request and agreement to relocate is more than 
six months after the actual allocation date. The CEO and senior 
executives are able to vote and receive dividends as and from the 
actual allocation date.  Performance hurdles are applied in 
determining the number of deferred shares allocated and therefore 
deferred shares are not subject to any performance hurdles.

Deferred shares for other executives (previously referred to as 
deferred incentive shares) 

For financial years 2013 and 2012, the Board approved 25 per cent 
of executives’ (other than the CEO and senior executives) short 
term incentive to be allocated as deferred shares. The effective 
allocation date for the financial year 2013 plan will be 16 August 
2013 and was 17 August 2012 for the financial year 2012 plan.  
These shares will vest on the three year anniversary of their 
allocation date, subject to the executive’s continued employment 
with any entity that forms part of the Telstra Group.  However, the 
executives may retain the shares if they cease employment in a 
number of circumstances, for example because of death, total and 
permanent disablement or redundancy (in each case subject to 
applicable law relating to the provision of benefits).  Deferred shares 
may also be retained if the executive ceases employment due to 
retirement, expiry of a fixed term contract or country relocation 
where that notice of retirement, fixed term expiry or request and 
agreement to relocate is more than six months after the actual 
allocation date.  The executive is able to vote and receive dividends 
as and from the allocation date.  Performance hurdles are applied 
in determining the number of deferred shares allocated and 
therefore the deferred shares are not subject to any performance 
hurdles.

(i) Description of equity instruments

Incentive shares

Deferred shares for the Chief Executive Officer (CEO) and other 
senior executives (previously referred to as deferred incentive 
shares)

For financial years 2013, 2012 and 2011, the Board approved 25 
per cent of the CEO and other senior executives’ STI to be allocated 
as deferred shares.  The effective allocation date will be 16 August 
2013 for financial year 2013, and was 17 August 2012 and 19 
August 2011 for financial years 2012 and 2011, respectively.  These 
shares vest in equal parts over one and two years on the 
anniversary of their effective allocation date, subject to the CEO or 
a senior executive’s continued employment with any entity that 
forms part of the Telstra Group.  However, the CEO or a senior 
executive may retain the shares if they cease employment in a

In relation to the financial year 2008 and 2007 allocations of 
incentive shares, the incentive shares vested immediately, and the 
executive is able to use the incentive shares to vote and receive 
dividends from the vesting date.  However, the executive is 
restricted from dealing with the vested incentive shares until after 
they are released from the restriction period.

Vested incentive shares are released from trust on the earliest of:

five years from the date of effective allocation;

•
• when the minimum level of executive shareholding has been 
achieved and the Board approves removal of the five year 
restriction period;

• upon the ceasing of employment by the executive; or 

170

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
27.  EMPLOYEE SHARE PLANS (CONTINUED)

Telstra Growthshare Trust (continued)

(a) Short term incentive (STI) plans (continued)

(i) Description of equity instruments (continued)

Incentive shares (continued)

• a date the Board determines (in response to an actual or likely 

change of control).

Once the vested incentive shares are released from trust, they will 
be transferred to the executive.

(ii) Summary of movements and other information

Allocations of Telstra’s shares have been made in the form of 
incentive and deferred shares under our STI plans and are detailed 
in the following table.

Incentive and deferred 
shares 
(^)

Weighted 
average fair 
value (*)

$4.35
$3.11
$3.11
 $4.35
$3.67
$3.05
$3.24
$3.79
$3.10

Number

980,491
893,678
(206,734)
(416,965)
1,250,470
3,763,365
(208,856)
(756,327)
4,048,652

Outstanding as at 30 June 2011  .  .  .
Granted.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Forfeited  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Exercised .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Outstanding as at 30 June 2012  .  .  .
Granted.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Forfeited  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Exercised .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Outstanding as at 30 June 2013 (#)  .

Exercisable as at 30 June 2013   .  .  .

-

-

(^) The weighted average share price for incentive shares exercised 
during the financial year was $3.95 (2012: $3.11). 

(*) The fair value of incentive shares and deferred shares granted 
for the CEO and other senior executives, is based on the market 
value of Telstra shares on allocation date. The fair value of deferred 
shares for executives (other than the CEO and other senior 
executives), is based on the market value of Telstra shares on grant 
date.

(#) The number outstanding includes incentives shares and 
deferred shares that are subject to a restriction period. These 
amount to 4,048,652 as at 30 June 2013.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

171

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
27.  EMPLOYEE SHARE PLANS (CONTINUED)

Telstra Growthshare Trust (continued)

(b) Long term incentive (LTI) plans

The purpose of LTI plans is to align key executives’ rewards with 
shareholders’ interests, and reward performance improvement 
whilst supporting business plans and corporate strategies. The 
Telstra Growthshare Trust Board administers the plans, and the 
Remuneration Committee and the Telstra Board determine who is 
invited to participate in these plans.

Performance of the LTI plans is measured with respect to the 
relevant performance period and subject to subsequent verification, 
ratification and sign off by the Remuneration Committee and 
approval by the Board.

(i) Outstanding equity based instruments

Allocations have been made over a number of years in the form of 
performance rights, restricted shares and options under our LTI 
plans.  These represent a share or a right to acquire a share in 
Telstra subject to certain conditions.  Further information regarding 
each type of LTI plan that was outstanding during the year is 
detailed in the following table:

Allocation date

Performance 
period

from

to

Exercise
 price

End date (#)

Growthshare 2006 - Feb 2006 allocation

RG & NT performance rights .  .  .  .  .  .  .  .  . 

19 Aug 2005

1 Jul 2005

30 Jun 2010

19 Aug 2005

1 Jul 2005

30 Jun 2008

$1 per parcel
exercised
$1 per parcel
exercised

19 Aug 2012

19 Aug 2012

ROI performance rights   .  .  .  .  .  .  .  .  .  .  .
 .  . 
Growthshare 2008
ESOP options   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
ROI options.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Growthshare 2009
ESOP options   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
US ESOP options   .  .  .  .  .  .  .  .  .  .  .  .  .  . 
RTSR options   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
ROI performance rights   .  .  .  .  .  .  .  .  .  .  . 
Growthshare 2010
ESRP performance rights   .  .  .  .  .  .  .  .  .  .
RTSR performance rights   .  .  .  .  .  .  .  .  .  . 
FCF ROI performance rights .  .  .  .  .  .  .  .  . 
Growthshare 2011
ESRP performance rights   .  .  .  .  .  .  .  .  .  .
RTSR performance rights   .  .  .  .  .  .  .  .  .  . 
FCF ROI performance rights .  .  .  .  .  .  .  .  . 
Growthshare 2012
ESP restricted shares   .  .  .  .  .  .  .  .  .  .  .  .
RTSR performance rights   .  .  .  .  .  .  .  .  .  . 
FCF ROI performance rights .  .  .  .  .  .  .  .  . 
Growthshare 2013
ESP restricted shares   .  .  .  .  .  .  .  .  .  .  .  .
RTSR performance rights   .  .  .  .  .  .  .  .  .  . 
FCF ROI performance rights .  .  .  .  .  .  .  .  . 
GMD Telstra Wholesale restricted shares  .  . 

17 Aug 2007
17 Aug 2007

n/a
1 Jul 2008

n/a
30 Jun 2011

$4.34
$4.34

17 Aug 2012
30 Jun 2013

21 Aug 2008
21 Aug 2008
21 Aug 2008
21 Aug 2008

n/a
n/a
1 Jul 2008
1 Jul 2009

n/a
n/a
30 Jun 2012
30 Jun 2012

21 Aug 2009
21 Aug 2009
21 Aug 2009

n/a
1 Jul 2009
1 Jul 2009

n/a
30 Jun 2012
30 Jun 2012

20 Aug 2010
20 Aug 2010
20 Aug 2010

n/a
1 Jul 2010
1 Jul 2010

n/a
30 Jun 2013
30 Jun 2013

19 Apr 2012
19 Aug 2011
19 Aug 2011

n/a
1 Jul 2011
1 Jul 2011

n/a
30 Jun 2014
30 Jun 2014

21 Feb 2013
17 Aug 2012
17 Aug 2012
17 Aug 2012

n/a
1 Jul 2012
1 Jul 2012
n/a

n/a
30 Jun 2015
30 Jun 2015
n/a

$4.36
$4.25
$4.36
nil

21 Aug 2013
21 Aug 2013
30 Jun 2014
21 Aug 2014

nil
nil
nil

nil
nil
nil

nil
nil
nil

nil
nil
nil
nil

21 Aug 2012
21 Aug 2013
21 Aug 2013

20 Aug 2013
20 Aug 2014
20 Aug 2014

19 Apr 2015
19 Aug 2015
19 Aug 2015

21 Feb 2016
17 Aug 2016
17 Aug 2016
17 Aug 2015

(#) End date refers to expiry date of options, end of the restriction 
period for ESP restricted shares or the end of the service period for 
performance rights and GMD Telstra Wholesale restricted shares to 
vest.

Refer to section (b)(ii) for a description of the above equity 
instruments.

172

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
27.  EMPLOYEE SHARE PLANS (CONTINUED)

FINANCIAL STATEMENTS

Telstra Growthshare Trust (continued)

Employee share rights plan (ESRP) performance rights

(b) Long term incentive (LTI) plans (continued)

(i) Outstanding equity based instruments (continued)

In relation to these executive LTI plans, the Board may, in its 
discretion, reset the hurdles governing the financial year 2013, 
2012, 2011, 2010 and 2009 equity instruments to make them 
consistent with the changed circumstances resulting from the 
occurrence of factors including:

• a material change in the strategic business plan; 
• a material regulatory change; or 
• a significant out-of-plan business development (this could 

include a major acquisition outside the current business plan, 
resulting in a significant change to the business of Telstra or the 
Telstra Group, that means that (in the reasonable opinion of the 
Board) the targets for that class of equity instruments are no 
longer appropriate).

In financial year 2013, the Board did not reset the hurdles governing 
the equity instruments issued in financial years 2013, 2012, 2011, 
2010 or 2009.

(ii) Description of equity instruments

Performance rights

Executive LTI performance rights (previously referred to as 
restricted shares)

In respect of performance rights, an executive has no legal or 
beneficial interest in the underlying shares, no entitlement to 
dividends received from the shares and no voting rights in relation 
to the shares until the performance rights become restricted trust 
shares.  

In relation to performance rights issued, except for the 2006 
financial year, if the performance hurdle is satisfied during the 
applicable performance period, a specified number of performance 
rights, as determined in accordance with the trust deed and terms 
of issue, will become restricted trust shares.  Although the trustee 
holds the shares in trust, the executive will retain beneficial interest 
(dividends, voting rights, bonuses and rights issues) in the shares 
until they vest and are transferred to them or sold on their behalf, at 
the end of the restriction period (unless forfeited).

In respect of performance rights allocated in financial year 2006, if 
the performance hurdle is satisfied during the applicable 
performance period, a specified number of performance rights, as 
determined in accordance with the trust deed and terms of issue, 
will become vested performance rights. The exercise price for these 
rights is $1 in total for all of the performance rights exercised on a 
particular day.

For ESRP performance rights allocated in financial years 2011 and 
2010, there is no exercise price payable. Once the performance 
rights have vested, the rights will be automatically exercised and 
Telstra shares will be transferred to the employee. Until this time, 
the employee cannot use the performance rights (or vested 
performance rights) to vote or receive dividends

A description of each type of performance right that existed in 
financial year 2013 is set out below:

Executive LTI performance rights:

•

revenue growth (RG) performance rights - the performance 
hurdle for these rights is based on increases in Telstra’s 
revenue;

• network transformation (NT) performance rights - the 

•

•

•

performance hurdle for these rights is based on completion of 
certain elements in Telstra’s network transformation program;
return on investment (ROI) performance rights - the performance 
hurdle for these rights is based on an increase in the earnings 
before interest and tax for Telstra divided by the average 
investment;
relative total shareholder return (RTSR) performance rights - the 
performance hurdle for these rights is based on growth in 
Telstra's total shareholder return relative to the growth in total 
shareholder return of the companies in a peer group; and
free cashflow return on investment (FCF ROI) performance 
rights - the performance hurdle for these rights is based on 
Telstra’s annual free cashflow (less finance costs) over the 
performance period divided by the average investment over the 
performance period.

Employee performance rights:

• employee share rights plan (ESRP) performance rights - the 

vesting condition for these rights is based on the completion of 
three years continuous service by the participant (and once 
granted are not subject to any performance conditions).

Restricted shares

GMD Telstra Wholesale restricted shares

Due to the Structural Separation Undertaking (SSU) arising from the 
NBN transaction, the GMD of Telstra Wholesale is prohibited from 
participating in the financial year 2013 and 2012 LTI plans. As a 
result, an alternative remuneration arrangement has been provided 
in financial year 2013, which is a restricted share plan where the 
number of restricted shares allocated is based on the same 
performance measures as his financial year 2012 STI plan.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

173

 
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)

Restricted shares (continued)

Employee Share Plan (ESP) restricted shares 

Restricted shares provided under the ESP in financial years 2013 
and 2012 were allocated at no cost to certain eligible employees 
(excluding executives).  The shares are held by the Trustee on 
behalf of employees until the restriction period ends.  During the 
restriction period, employees are entitled to exercise the voting 
rights attached to the shares and to receive dividends on the 
shares.  The shares are released from trust on the earlier of three 
years from the date of allocation or the date the participating 
employee ceases relevant employment.

A description of each type of restricted share that existed in financial 
year 2013 is set out below:

Executive LTI restricted shares

• GMD Telstra Wholesale restricted shares - performance hurdles 
are applied in determining the number of restricted shares 
allocated and therefore the restricted shared are not subject to 
any performance hurdles.

Employee restricted shares

•

Telstra's total shareholder return relative to the growth in total 
shareholder return of the companies in a peer group; and
return on investment options (ROI options) - the performance 
hurdle for these options is based on an increase in the earnings 
before interest and tax for Telstra relative to the average 
investment. 

Employee options

• ESOP options - the vesting condition for these options is based 
on the completion of three years continuous service by the 
participant (and once granted are not subject to any performance 
conditions); and

• US ESOP options - the vesting condition for these options is 

based on the completion of three years continuous service by the 
participant (and once granted are not subject to any performance 
conditions).

(iii) Performance hurdles

Performance rights

Details of the relevant performance hurdles in relation to 
performance rights, are set out below:

Relative Total Shareholder Return (RTSR) performance rights

For financial years 2013, 2012, 2011 and 2010 RTSR performance 
rights, the single performance period is the three year period ending 
on 30 June 2015, 30 June 2014, 30 June 2013 and 30 June 2012 
respectively.

• Employee Share Plan (ESP) restricted shares - there are no 

performance hurdles for these restricted shares.

If Telstra achieves a result placing it in at least the 50th percentile 
for the performance period, then:

Options

An employee or executive is not entitled to Telstra shares unless the 
options initially vest (subject to the achievement of the relevant 
performance hurdles) and then are exercised.  This means that the 
employee or executive cannot use options to vote or receive 
dividends until they have vested and been exercised.  If the 
performance hurdles are satisfied in the applicable performance 
period, options must be exercised at any time before the expiry 
date, otherwise they will lapse.  Once the options are exercised and 
the exercise price paid, Telstra shares will be transferred to the 
eligible employee or executive.

A description of each type of option that existed in financial year 
2013 is set out below:

Executive LTI options

•

relative total shareholder return options (RTSR options) - the 
performance hurdle for these options is based on growth in 

•

the number of RTSR performance rights that will meet the hurdle 
for that performance period is scaled proportionately from the 
50th percentile (which equates to 25 per cent of the allocation) to 
the 75th percentile (which equates to 100 per cent of the 
allocation); and

• any performance rights that do not meet the hurdle will lapse.

If Telstra does not reach the 50th percentile, all of these RTSR 
performance rights will lapse.

Any RTSR performance rights that meet the hurdle become 
restricted trust shares and are held by the Trustee until the 
restriction period ends (four years after the effective allocation date 
of the restricted shares) at which point they then vest.

Free Cashflow Return on Investment (FCF ROI) performance rights

For financial years 2013, 2012, 2011 and 2010 FCF ROI 
performance rights, the single performance period is the three year 
period ending on 30 June 2015, 30 June 2014, 30 June 2013 and 
30 June 2012 respectively.

174

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

 
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
27.  EMPLOYEE SHARE PLANS (CONTINUED)

FINANCIAL STATEMENTS

Telstra Growthshare Trust (continued)

Employee Share Rights Plan (ESRP) performance rights

(b) Long term incentive (LTI) plans (continued)

(iii) Performance hurdles (continued)

Performance rights (continued)

The number of FCF ROI performance rights that will meet the hurdle 
is calculated as follows:

•

•

•

•

if the threshold target is achieved, then 50 per cent of the 
allocation of FCF ROI performance rights will meet the hurdle;
if the result achieved is between the threshold and stretch 
targets, then the number of FCF ROI performance rights that will 
meet the hurdle is scaled proportionately between 50 per cent 
and 100 per cent;
if the stretch target is achieved or exceeded, then 100 per cent 
of the FCF ROI performance rights will meet the hurdle; and
if the threshold target is not achieved, all of these FCF ROI 
performance rights will lapse.

Any FCF ROI performance rights that meet the hurdle become 
restricted trust shares and are held by the Trustee until the end of 
the restriction period (four years after the effective allocation date of 
the performance rights) at which point they then vest.

Return on Investment (ROI) performance rights

For ROI performance rights for financial year 2009, there are three 
performance periods as follows:

first performance period - 1 July 2009 to 30 June 2010;

•
• second performance period - 1 July 2010 to 30 June 2011; and
•

third performance period - 1 July 2011 to 30 June 2012.

For each of the performance periods, the number of performance 
rights that will vest is calculated as follows:

•

•

•

if the threshold target is achieved, then 50 per cent of the 
allocation of performance rights for that period will vest;
if the result achieved is between the threshold and stretch target, 
then the number of performance rights for that period that will 
vest is scaled proportionately between 50 per cent and 100 per 
cent; and
if the stretch target is achieved or exceeded, then 100 per cent 
of the performance rights for that period will vest.

Any performance rights that vest become restricted trust shares.  
Any performance rights which do not vest in their respective 
performance periods will lapse.

As part of the employee share rights plan for financial years 2011 
and 2010, certain eligible employees were provided performance 
rights that vest upon completing certain employment requirements. 
If an eligible employee continues to be employed by an entity that 
forms part of the Telstra Group three years after the effective 
allocation date of the performance rights (and in certain other 
circumstances) the performance rights will vest. These 
performance rights are not subject to any performance hurdles.

Options

Details of the relevant performance hurdles in relation to options are 
set out below:

ESOP options and US ESOP options

As part of the employee share option plan for financial years 2009 
and 2008, certain eligible employees were provided options that 
vest upon completing certain employment requirements. If an 
eligible employee continues to be employed by an entity that forms 
part of the Telstra Group three years after the effective allocation 
date of the options (and in certain other circumstances), the options 
will vest. These options are not subject to any performance hurdles.

Relative Total Shareholder Return (RTSR) options

For RTSR options for financial year 2009, the applicable 
performance hurdle is based on comparing the TSR growth of 
Telstra against other companies in the peer group. Telstra is then 
given a score to determine its rank in comparison to the peer group. 
The RTSR options vest only if Telstra achieves a rank of at least the 
50th percentile.

The Board has the discretion to amend the members in the peer 
group, as well as make necessary adjustments to the calculation of 
the TSR amount, TSR growth or rank.

For RTSR options, there are three performance periods as follows:

first performance period - 1 July 2008 to 30 June 2010;

•
• second performance period - 1 July 2008 to 30 June 2011; and
•

third performance period - 1 July 2008 to 30 June 2012.

The result for each performance period is separately measured. If 
Telstra achieves a rank greater than or equal to the 50th percentile 
for the performance period, then:

•

the number of TSR options that will vest for that performance 
period is scaled proportionately from the 50th percentile (at 
which 25 per cent of the allocation becomes exercisable) to the 
75th percentile (at which 100 per cent of the allocation becomes 
exercisable); and

• 25 per cent of any unvested options for that performance period 

will lapse.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

175

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
27.  EMPLOYEE SHARE PLANS (CONTINUED)

Telstra Growthshare Trust (continued)

Restricted shares

(b) Long term incentive (LTI) plans (continued) 

Details of the relevant performance hurdles in relation to restricted 
shares are set out below:

(iii) Performance hurdles (continued)

Options (continued)

GMD Telstra Wholesale restricted shares

If Telstra achieves a rank of less than the 50th percentile for the 
performance period, then none of the options allocated for that 
performance period will vest and 25 per cent of the options will 
lapse.

As part of the financial year 2013 GMD Telstra Wholesale restricted 
share plan, the GMD of Telstra Wholesale was provided restricted 
shares. Performance hurdles were applied in determining the 
number of restricted shares allocated and therefore the restricted 
shares are not subject to any performance hurdles.

In addition, for the third performance period, if Telstra's rank meets 
or exceeds:

Employee Share Plan (ESP) restricted shares

As part of the financial year 2013 and 2012 ESP, certain eligible 
employees were provided restricted shares. There are no 
performance hurdles for these restricted shares.

• both the 50th percentile and the rank achieved in the first 

performance period, the remaining unvested options from the 
first performance period will vest; and/or

• both the 50th percentile and the rank achieved in the second 
performance period, the remaining unvested options from the 
second performance period will vest. 

The number of additional unvested options which may vest is also 
determined by using a linear scale.

If Telstra achieves a rank of less than the 50th percentile for the third 
performance period, then no options will vest for the third 
performance period. Furthermore, any remaining unvested options 
will lapse following the end of the third performance period.

Return on Investment (ROI) options

The ROI hurdle for financial year 2008 has been measured over the 
following three performance periods:

• First performance period - 1 July 2008 to 30 June 2009;
• Second performance period - 1 July 2009 to 30 June 2010; and
• Third performance period - 1 July 2010 to 30 June 2011.

For each of the performance periods, the number of options that will 
vest is calculated as follows:

•

•

•

if the threshold target is achieved in the applicable performance 
period, then 50 per cent of the allocation of options will vest;
if the result achieved is between the threshold and stretch 
targets, then the number of vested options is scaled 
proportionately between 50 per cent and 100 per cent; and
if the stretch target is achieved, then 100 per cent of the options 
will vest.

Any options which do not vest in their respective performance 
period lapse.

176

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

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

Outstanding 
at 

30 June 2012 Granted Forfeited (*) Exercised

Expired (^)

40,517
18,313

10,133,145
3,337,162

11,653,546
36,000
4,992,832

1,555,645
3,848,717
2,346,779

1,076,385
5,639,238
5,639,238

2,358,700
2,749,267
2,749,267

Growthshare 2006 - Feb 2006 allocation
RG performance rights .  .  .  .  .  .  .  . 
NT performance rights  .  .  .  .  .  .  .  . 
Growthshare 2008
ESOP options   .  .  .  .  .  .  .  .  .  .  .  . 
ROI options.  .  .  .  .  .  .  .  .  .  .  .  .  . 
Growthshare 2009
ESOP options   .  .  .  .  .  .  .  .  .  .  .  . 
US ESOP options   .  .  .  .  .  .  .  .  .  . 
RTSR options   .  .  .  .  .  .  .  .  .  .  .  . 
Growthshare 2010
ESRP performance rights   .  .  .  .  .  . 
RTSR performance rights   .  .  .  .  .  . 
FCF ROI performance rights .  .  .  .  . 
Growthshare 2011
ESRP performance rights   .  .  .  .  .  . 
RTSR performance rights   .  .  .  .  .  . 
FCF ROI performance rights .  .  .  .  . 
Growthshare 2012
ESP restricted shares   .  .  .  .  .  .  .  . 
RTSR performance rights   .  .  .  .  .  . 
FCF ROI performance rights .  .  .  .  . 
Growthshare 2013
ESP restricted shares   .  .  .  .  .  .  .  . 
RTSR performance rights   .  .  .  .  .  . 
FCF ROI performance rights .  .  .  .  . 
GMD Telstra Wholesale restricted 
shares   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

-
-

-
-

-
-
-

-
-
-

-
-
-

-
-
-

(22,398)
(9,166)

(18,119)
(9,147)

(10,132,395)
(540,941)

(750)
(2,796,221)

(960,028)
(2,000)
(196,958)

(1,523,821)
(5,000)
(2,466,215)

(212,652)
(174,001)
(229,885)

(1,342,993)
-
-

(93,480)
(569,659)
(579,892)

-
-
-

-
(295,408)
(295,408)

(218,500)
-
-

- 2,556,700
- 2,664,516
- 2,664,516

-
(194,912)
(194,912)

(72,800)
-
-

-

116,371

-

-

Outstanding 
at 
30 June 2013

Exercisable 
at 
30 June 
2013

-
-

-
-

-
-

-
-

9,169,697
29,000
2,329,659

9,169,697
29,000
2,329,659

-
3,674,716
2,116,894

982,905
5,069,579
5,059,346

2,140,200
2,453,859
2,453,859

2,483,900
2,469,604
2,469,604

116,371

-
-
-

-
-
-

-
-
-

-
-
-

-

-
-

-
-

-
-
-

-
-
-

-
-
-

-
-
-

-
-
-

-

(*) Forfeited refers to either instruments that lapsed on cessation of 
employment or the instrument lapsing unexercised.

(^) Expired refers to the performance hurdle not being met.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

177

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 instruments

Outstanding 
at 

30 June 2011 Granted

Forfeited (*)

Exercised

Expired (^)

Growthshare 2002 - Sept 2001 allocation
TSR Options  .  .  .  .  .  .  .  .  .  .  .  .  . 
Growthshare 2006 - Feb 2006 allocation
RG performance rights (#)  .  .  .  .  .  . 
NT performance rights (#)  .  .  .  .  .  . 
Growthshare 2008
ESOP options   .  .  .  .  .  .  .  .  .  .  .  . 
ROI options.  .  .  .  .  .  .  .  .  .  .  .  .  . 
Growthshare 2009
ESOP options   .  .  .  .  .  .  .  .  .  .  .  . 
US ESOP options   .  .  .  .  .  .  .  .  .  . 
RTSR options   .  .  .  .  .  .  .  .  .  .  .  . 
ROI performance rights   .  .  .  .  .  .  . 
Growthshare 2010
ESRP performance rights   .  .  .  .  .  . 
RTSR performance rights   .  .  .  .  .  . 
FCF ROI performance rights .  .  .  .  . 
Growthshare 2011
ESRP performance rights   .  .  .  .  .  . 
RTSR performance rights   .  .  .  .  .  . 
FCF ROI performance rights .  .  .  .  . 
Growthshare 2012
ESP restricted shares   .  .  .  .  .  .  .  . 
RTSR performance rights   .  .  .  .  .  . 
FCF ROI performance rights .  .  .  .  . 

8,337,000

57,462
22,823

11,274,721
4,491,914

12,576,618
45,000
11,080,943
1,663,709

1,696,020
5,661,481
5,661,481

1,158,901
6,858,590
6,858,590

-

-
-

-
-

-
-
-
-

-
-
-

-
-
-

Outstanding 
at 
30 June 2012

Exercisable 
at 
30 June 
2012

-

-
-

-
-

-

-

40,517
18,313

40,517
18,313

10,133,145 10,133,145
3,337,162

3,337,162

-
-
(4,557,459)
(1,450,269)

11,653,546 11,653,546
36,000
-
-

36,000
4,992,832
-

(8,337,000)

-

-
-

(16,945)
(4,510)

(1,141,576)
(1,154,752)

(923,072)
(9,000)
(1,530,652)
(213,440)

-
-

-
-
-
-

(86,327)
(994,023)
(994,023)

(54,048)
-
-

-
(818,741)
(2,320,679)

1,555,645
3,848,717
2,346,779

(82,516)
(1,219,352)
(1,219,352)

-
-
-

- 2,375,300
- 3,019,272
- 3,019,272

-
(270,005)
(270,005)

(16,600)
-
-

-
-
-

-
-
-

1,076,385
5,639,238
5,639,238

2,358,700
2,749,267
2,749,267

-
-
-

-
-
-

-
-
-

(*) Forfeited refers to either instruments that lapsed on cessation of 
employment or the instrument lapsing unexercised.

(^) Expired refers to the performance hurdle not being met.

(#) The performance rights outstanding and exercisable at 30 June 
2012 are those performance rights that satisfied the RG and NT 
performance hurdles for the final performance period.  The 
Growthshare 2006 plan reached its final testing point as at 30 June 
2010. 

178

Telstra Annual Report 2013

 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)

FINANCIAL STATEMENTS

Options (*) 

Performance rights (^)

Restricted Shares (#)

Outstanding 
as at 30 June 2011   .  .  .  .  .  .
Granted.  .  .  .  .  .  .  .  .  .  .  .  . 
Forfeited  .  .  .  .  .  .  .  .  .  .  .  . 
Exercised (^^)   .  .  .  .  .  .  .  .  . 
Expired .  .  .  .  .  .  .  .  .  .  .  .  . 
Outstanding 
as at 30 June 2012   .  .  .  .  .  .
Granted.  .  .  .  .  .  .  .  .  .  .  .  . 
Forfeited  .  .  .  .  .  .  .  .  .  .  .  . 
Exercised (##)  .  .  .  .  .  .  .  .  . 
Expired .  .  .  .  .  .  .  .  .  .  .  .  . 
Outstanding 
as at 30 June 2013   .  .  .  .  .  .

Exercisable 
as at 30 June 2013   .  .  .  .  .  .

Weighted 
average fair 
value (**)

$0.45
-
$0.84
-
$0.16

$0.32
-
$0.42
$0.35
-

Number

47,806,196
-
(13,096,052)
-
(4,557,459)

30,152,685
-
(11,832,322)
(6,792,007)
-

Number

29,639,057
6,038,544
(5,349,043)
(75,503)
(4,589,689)

25,663,366
5,329,032
(2,871,773)
(1,370,259)
-

Weighted 
average fair 
value (**)

Weighted 
average fair 
value (***)

Number

$4.51
$2.40
$1.91
$2.97
$2.39

$1.95
$2.71
$2.16
$2.89
-

-
2,375,300
-
(16,600)
-

2,358,700
2,673,071
-
(291,300)
-

-
$3.36
-
$3.36
-

$3.36
$4.55
-
$3.66
-

$4.03

11,528,356

$0.21

26,750,366

$2.03

4,740,471

11,528,356

$0.21

-

-

-

-

(*) Options include RTSR, ROI, ESOP and US ESOP options. The 
options “exercised” includes those participants that have been 
made redundant and are then consequently entitled to the Telstra 
shares.

(^) Performance rights include RG, NT, ROI, RTSR, FCF ROI and 
ESRP performance rights.

(##) The weighted average share price for instruments exercised 
during financial year 2013 was $4.65 for the financial year 2008 and 
2009 allocation of options, $3.73 for the financial year 2006 and 
2010 allocation of performance rights, and $4.41 for financial year 
2012 and 2013 allocation of ESP restricted shares respectively. 
These share prices were based on the closing market price on the 
exercise dates.

(#) Restricted shares relate to GMD Telstra Wholesale and ESP 
restricted shares.

(**) The fair value of these instruments is calculated using an option 
pricing model that takes into account various factors, including the 
exercise price and expected life of the instrument, the current price 
of the underlying share and its expected volatility, expected 
dividends, the risk-free rate for the expected life of the instrument, 
and the expected average volatility of Telstra’s peer group 
companies. 

(***) The fair value of these instruments is based on the market 
value of Telstra shares at the allocation date. 

(^^) The weighted average share price for instruments exercised 
during financial year 2012 was $3.25 for financial year 2006 and 
2010 allocation of performance rights, and $3.59 for financial year 
2012 allocation of ESP restricted shares respectively. These share 
prices were based on the closing market price on the exercise 
dates.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

179

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 instruments granted during the financial year 
was calculated using a valuation technique that is consistent with 
the Black-Scholes methodology and utilises Monte Carlo 
simulations. The following weighted average assumptions were 
used in determining the valuation:

Share price .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Risk free rate .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Dividend yield   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Expected stock volatility  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Expected life  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Expected rate of achievement of TSR performance hurdles .  .  .  

(*) The date the instruments become exercisable.

For financial year 2013 LTI FCF ROI and RTSR performance rights, 
the fair value has been measured at a grant date of 22 October 2012 
and has been allocated over the period for which the service is 
received which commenced 1 July 2012.

The expected stock volatility is a measure of the amount by which 
the price is expected to fluctuate during a period.  This was based 
on historical daily and weekly closing share prices. 

The fair value of financial year 2013 ESP restricted shares is $4.58 
based on the market value of Telstra shares at the allocation date 
of 21 February 2013 and has been allocated over the period for 
which the service is received which commenced 1 July 2012.

The fair value of financial year 2013 GMD Telstra Wholesale 
restricted shares is $3.82 and is based on the market value of 
Telstra shares at the allocation date of 17 August 2012.

Growthshare 
LTI FCF ROI 
performance 
rights
Oct 2012
$4.03
2.51%
8.0%
19%
(*)
n/a

Growthshare 
LTI RTSR 
performance 
rights
Oct 2012
$4.03
2.51%
8.0%
19%
(*)
44%

Growthshare 
LTI FCF ROI 
performance 
rights
Dec 2011
$3.33
3.13%
9.0%
22%
(*)
n/a

Growthshare 
LTI RTSR 
performance 
rights
Dec 2011
$3.33
3.13%
9.0%
22%
(*)
71%

180

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
27.  EMPLOYEE SHARE PLANS (CONTINUED)

FINANCIAL STATEMENTS

Telstra Growthshare Trust (continued)

(ii) Instruments granted during the financial year

(c) Telstra Directshare and Ownshare

(i) Nature of Telstra Directshare and Ownshare

Telstra Directshare

The Directshare plan, previously operated by the Company, was 
cancelled with effect from August 2012 as it is no longer in use. 
Under the Directshare plan, non-executive Directors could 
nominate to receive a percentage of their total remuneration 
package as Telstra shares (allocated to participating Directors at 
market price).  As a result of its cancellation, no new grants may be 
made under the Directshare plan.  Existing grants under the plan 
will remain on foot and under the terms of the Directshare plan and 
the relevant trust deed will continue to apply to such grants. 

The restriction period on Directshares already allocated continues 
until the earliest of:

The fair value of the instruments granted under the Ownshare plan 
is determined by the remuneration foregone by the participant.  On 
the grant of Ownshares, the participants in the plan are not required 
to make any payment to the Telstra Entity.  The 23 October 2012 
grant of Ownshares relates to shares acquired through salary 
sacrifice by employees.

For the Ownshare plan, the weighted average fair value of fully paid 
shares granted to participants as at 30 June 2013 was $4.03 (2012: 
$3.15) and the total fair value of shares granted was $632,808 
(2012: $553,637).

• 10 years from the date of allocation of the shares;
•

the participating Director is no longer a Director of, or is no longer 
employed by, a company in the Telstra Group; and
the Trustee determines that an ‘event’ under the terms of 
Directshare has occurred.

•

Telstra Ownshare 

The Ownshare plan has been cancelled with effect from October 
2013.  Under the Ownshare plan, certain eligible employees could, 
at their election, be provided part of their remuneration in Telstra 
shares.  Shares were acquired by the trustee from time to time and 
allocated to these employees at the time their application was 
accepted.  Although the trustee holds the shares in trust, the 
participant retains the beneficial interest in the shares (dividends, 
voting rights, bonuses or rights issues) until they are transferred at 
the expiration of the restriction period. 

The restriction period continues until the earliest of:

•
•
•

three years from the date of allocation;
the participant ceases employment with the Telstra Group; and 
the Board of Telstra determines that an ‘event’ has occurred.  

At the end of the restriction period, the Ownshares will be 
transferred to the participant (unless the participant directs the 
trustee to sell the Ownshares on the participant’s behalf).  The 
participant is not able to deal in the shares until this transfer has 
taken place.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

181

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 Directshare and 
Ownshare plans.

Outstanding 
at 30 June 
2011

Granted 
(*)

Number of equity instruments
Outstanding 
at 30 June 
2012

Distributed 
(^)

Granted 
(*)

Directshares
5 September 2003 allocation .  .  .  .  .  .  
20 February 2004 allocation  .  .  .  .  .  .  
20 August 2004 allocation  .  .  .  .  .  .  .  
19 February 2005 allocation  .  .  .  .  .  .  
19 August 2005 allocation  .  .  .  .  .  .  .  
17 February 2006 allocation  .  .  .  .  .  .  
18 August 2006 allocation  .  .  .  .  .  .  .  
23 February 2007 allocation  .  .  .  .  .  .  
17 August 2007 allocation  .  .  .  .  .  .  .  
29 February 2008 allocation  .  .  .  .  .  .  
21 August 2008 allocation  .  .  .  .  .  .  .  
6 March 2009 allocation  .  .  .  .  .  .  .  .  
21 August 2009 allocation  .  .  .  .  .  .  .  
19 February 2010 allocation  .  .  .  .  .  .  

Ownshares
15 September 2008 allocation  .  .  .  .  .  
24 October 2008 allocation.  .  .  .  .  .  .  
24 December 2009 allocation   .  .  .  .  .  
5 November 2010 allocation  .  .  .  .  .  .  
21 October 2011 allocation .  .  .  .  .  .  .  
23 October 2012 allocation.  .  .  .  .  .  .  

9,525
10,233
2,755
7,911
5,248
8,230
12,343
14,522
15,343
24,968
36,358
63,181
6,313
6,809
223,739

315,741
189,846
124,218
170,664
-
-
800,469

-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

-
-
-
-
-
-
-
-
-
-
(2,909)
(6,122)
-
-
(9,031)

-
-
-
-
175,836
-
175,836

(315,741)
(189,846)
(14,096)
(24,599)
-
-
(544,282)

9,525
10,233
2,755
7,911
5,248
8,230
12,343
14,522
15,343
24,968
33,449
57,059
6,313
6,809
214,708

-
-
110,122
146,065
175,836
-
432,023

(*) The number of Directshares granted is based on the monthly 
volume weighted average price of a Telstra share in the six months 
prior to allocation, in conjunction with the remuneration foregone.  
The number of Ownshares granted is based on the weighted 
average price of a Telstra share in the week ending on the day 
before the allocation date, in conjunction with the remuneration 
foregone.  

(^) Directshares and Ownshares are not required to be exercised. 
The fully paid shares held by the Telstra Growthshare Trust relating 
to these instruments are transferred to the participants at the 
completion of the restriction period (unless an Ownshare participant 
directs the trustee to sell the Ownshares on the participant’s behalf).

Distributed 
(^)

Outstanding 
at 30 June 
2013

-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

(7,648)
(8,216)
(2,212)
(5,911)
(2,875)
(4,499)
(5,697)
(5,061)
(4,836)
(9,283)
(14,082)
(15,152)
-
-
(85,472)

1,877
2,017
543
2,000
2,373
3,731
6,646
9,461
10,507
15,685
19,367
41,907
6,313
6,809

129,236

-
-
-
-
-
157,149
157,149

-
-
(110,122)
(7,683)
(10,923)
(2,356)

(131,084)

-
-
-

138,382
164,913
154,793

458,088

182

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

The loan shares, extra shares and, in the case of TESOP99, the 
loyalty shares were subject to a restriction on the sale of the shares 
or transfer to the employee for three years or until the relevant 
employment ceased.  This restriction period has now been fulfilled 
under each plan.  

If a participant ceases to be employed by an entity within the Telstra 
Group or, in the case of TESOP97 only, the company that was their 
employer when the shares were acquired the employee must repay 
their loan within two months of leaving to acquire the relevant 
shares.  This is the case except where the restriction period has 
ended because of the employee’s death or disablement (in which 
case the loan must be repaid within 12 months).

If the employee has ceased employment and does not repay the 
loan when required, the trustee must sell the shares if the sale 
proceeds (after deducting the costs of sale) will be enough to repay 
the loan.  The sale proceeds must then be used to pay the costs of 
the sale and any amount outstanding on the loan, after which the 
balance will be paid to the employee.  The Telstra Entity’s recourse 
under the loan is limited to the amount recoverable through the sale 
of the employee’s shares. 

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
27.  EMPLOYEE SHARE PLANS (CONTINUED)

(d) Other equity plans

In exceptional circumstances, Telstra has put in place structured 
retention incentive plans.  These are designed to protect Telstra 
from the loss of employees who possess specific skill sets 
considered critical to the business and where Telstra is vulnerable 
to losing key personnel.  Such retention plans are not restricted to 
senior executives.  The plans are granted on an ad hoc basis and 
the participants receive Telstra shares deferred for a certain amount 
of time.

As part of his Service Agreement negotiated upon appointment, the 
Chief Financial Officer (CFO) was allocated 96,500 performance 
shares of which 50 per cent are eligible to vest after two years and 
the remaining 50 per cent are eligible to vest after three years from 
the date of commencement of his employment.  Vesting is subject 
to an assessment of performance by the Board and performance 
shares are forfeited in the event of resignation before vesting.  In the 
event of redundancy or termination of employment for no reason, a 
pro rata entitlement of the performance shares as at the time of 
cessation of employment vest. 

TESOP99 and TESOP97

As part of the Commonwealth’s sale of its shareholding in financial 
years 2000 and 1998, Telstra offered eligible employees the 
opportunity to buy ordinary shares of Telstra.  These share plans 
were:

•
•

the Telstra Employee Share Ownership Plan II (TESOP99); and 
the Telstra Employee Share Ownership Plan (TESOP97).

Although the Telstra ESOP Trustee Pty Ltd (wholly owned 
subsidiary of Telstra) is the trustee for TESOP99 and TESOP97 and 
holds the shares in the trust, the participating employee retains the 
beneficial interest in the shares (dividends and voting rights).

Generally, employees were offered interest free loans by the Telstra 
Entity to acquire certain shares, and in some cases the employees 
became entitled to certain extra shares and loyalty shares as a 
result of participating in the plans.  All shares acquired under the 
plans were transferred from the Commonwealth either to the 
employees or to the trustee for the benefit of the employees. 

While a participant remains an employee of an entity within the 
Telstra Group or, in the case of TESOP97 only, the company that 
was their employer when the shares were acquired, there is no date 
by which the employee has to repay the loan.  However, a 
participant may, at any time:

• elect to repay the loan and have the shares transferred into their 

name; or

• arrange through the trustee the sale of the shares where the 
proceeds of the sale (after deducting the costs of sale) will be 
enough to repay the loan. 

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

183

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
27.  EMPLOYEE SHARE PLANS (CONTINUED)

TESOP99 and TESOP97 (continued)

The Telstra ESOP Trust Trustee continues to hold loan shares 
where the employee ceased employment and elected not to repay 
the loan, until the share price is sufficient to recover the loan amount 
and associated costs of sale.  The Trustee is then required to sell 
the shares.  In financial year 2013, 9,258,700 TESOP99 shares 
held for this purpose were sold in an off market transaction at 
market price to the Growthshare Trust.  As at 30 June 2013, there 
were 73,000 shares held for this purpose (2012: 9,204,900). 

The following table provides information about our TESOP99 and 
TESOP97 share plans.

TESOP97

Weighted 
average 
fair value 
(*)

Total fair 
value
$m

TESOP99
Weighted 
average 
fair value 
(*)

Total fair 
value
$m

Number

Number

Equity instruments outstanding and exercisable as at 
30 June 2011.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Exercised (#) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Equity instruments outstanding and exercisable as at 
30 June 2012   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Exercised (#) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Sold (^) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Equity instruments outstanding and exercisable as at 
30 June 2013   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

15,000
(12,500)

2,500
(2,500)
-

$2.89
$3.10

$3.69
$3.85
-

-

-

-
-

-
-
-

-

13,789,000
(34,600)

13,754,400
(77,500)
(9,527,100)

$2.89
$3.15

$3.69
$4.38
$4.68

4,149,800

$4.77

40
-

51
-
45

20

(*) The fair value of these shares is based on the market value of 
Telstra shares at reporting date and exercise date. 

(#) The amount exercised relates to the shares released from trust 
as a result of the interest free loan to employees being fully repaid 
during the year.

(^) The amount sold relates to loan shares disposed of to the 
Growthshare Trust and external third parties during the year.

The employee share loan balance as at 30 June 2013 is $20 million 
(2012: $67 million).  The weighted average loan still to be repaid for 
TESOP97 is nil per instrument (2012: $0.14) and for TESOP99 is 
$4.64 per instrument (2012: $4.85).

184

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
28.  KEY MANAGEMENT PERSONNEL COMPENSATION

In accordance with AASB 124: “Related Party Disclosures”, key 
management personnel (KMP) have authority and responsibility for 
planning, directing and controlling the activities of the Telstra Group.  
Hence, KMP are deemed to include the following:

the non-executive Directors of the Telstra Entity; and

•
• certain executives in the Chief Executive Officer’s (CEO’s) senior 
leadership team, including the CEO, referred to as a “senior 
executive” in this note.

Directors

During financial years 2013 and 2012, the Directors of the Telstra Entity were:

Name

Position

Current Directors

Catherine B Livingstone

Chairman, non-executive Director

David I Thodey

Executive Director and Chief Executive Officer

Geoffrey A Cousins

non-executive Director

Russell A Higgins

John P Mullen

non-executive Director

non-executive Director

Nora L Scheinkestel

non-executive Director

Margaret L Seale

Steven M Vamos 

John D Zeglis

Former Directors

non-executive Director

non-executive Director

non-executive Director

Timothy Y Chen, resigned as non-executive Director on 5 October 2012
John W Stocker, retired as non-executive Director on 16 October 2012

Senior executives

The senior executives who qualified as KMP for financial years 2013 and 2012 were:

Name

Position

Current Senior Executives

David I Thodey

Executive Director and Chief Executive Officer

Gordon Ballantyne

Chief Customer Officer, Group Managing Director, Telstra Customer Sales and Service

Rick Ellis

Stuart Lee

Kate McKenzie

Robert Nason

Andrew Penn

Brendon Riley

Group Managing Director, Telstra Media

Group Managing Director, Telstra Wholesale

Group Managing Director, Telstra Innovation Products and Marketing

Group Managing Director, Business Support and Improvement (KMP effective from 1 July 2012)

Chief Financial Officer

Chief Operations Officer

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

185

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
28.  KEY MANAGEMENT PERSONNEL COMPENSATION (CONTINUED)

KMP aggregate compensation

During financial years 2013 and 2012, the aggregate compensation 
provided to our KMP was as follows. 

Short term employee benefits  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Post employment benefits  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Other long term benefits  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Termination benefits  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Share-based payments.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Telstra Group
As at 30 June

2013
$

2012
$

23,215,153 20,104,442
418,627
226,353
744,751
6,318,874
32,781,703 27,813,047

385,612
261,494
-
8,919,444

We have made the detailed remuneration disclosures in the 
Remuneration Report, which is part of the Directors’ Report.  Please 
refer to the Remuneration Report for further details.

Other transactions with our KMP and their related entities

Our KMP have telecommunications services transactions with the 
Telstra Group, which are not significant and are both trivial and 
domestic in nature.  The KMP related entities also have 
telecommunications services with us on normal commercial terms 
and conditions.

Our KMP are provided with telecommunications and other services 
and equipment to assist them in performing their duties.  From time 
to time, we also make products and services available to our KMP 
without charge to enable them to familiarise themselves with our 
products, services and recent technological developments.  To the 
extent that this is considered a benefit to a KMP, it is included in 
their compensation.  

186

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
28.  KEY MANAGEMENT PERSONNEL COMPENSATION (CONTINUED)

KMP interests in shares of the Telstra Entity

During financial year 2013, our KMP and their related parties held 
share capital of the Telstra Entity directly, indirectly or beneficially 
as follows:

Non-Executive Directors
Catherine B Livingstone  .  .  .  .  .  .  .  .  .  .  .  .  
Timothy Y Chen (b).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Geoffrey A Cousins.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Russell A Higgins.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
John P Mullen   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Nora L Scheinkestel  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Margaret L Seale .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
John W Stocker (b) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Steven M Vamos .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
John D Zeglis.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Senior Executives
David I Thodey .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Gordon Ballantyne  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Rick Ellis  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Stuart Lee   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Kate McKenzie .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Robert Nason (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Andrew Penn .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Brendon Riley   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Total shares held 
at 
30 June 2012
Number

Equity 
instruments 
exercised
Number

Net shares 
acquired or 
disposed of by 
other means (c)
Number

Total shares 
held at 
30 June 2013 
Number 

Shares held 
nominally at
30 June 2013 
(d)
Number 

165,816
-
31,765
88,404
26,159
59,450
224,141
212,238
40,000
103,993
951,966

786,117
86,568
10,000
265,503
167,698
78,786
74,232
183,417
1,652,321
2,604,287

-
-
-
-
-
-
-
-
-
-
-

252,174
-
-
48,913
91,304
-
-
-
392,391
392,391

10,000
-
50,000
-
-
27,847
11,614
-
-
-
99,461

(28,239)
109,990
46,607
6,686
(7,711)
87,992
64,677
109,990
389,992
489,453

175,816
-
81,765
88,404
26,159
87,297
235,755
212,238
40,000
103,993
1,051,427

1,010,052
196,558
56,607
321,102
251,291
166,778
138,909
293,407
2,434,704
3,486,131

175,816
-
21,765
83,084
26,159
87,297
235,755
108,652
40,000
37,493
816,021

997,442
153,274
42,607
176,044
141,725
139,885
110,524
275,536
2,037,037
2,853,058

Total shareholdings include shares held by our KMP and their 
related parties.  Unless related to our employee share plans, shares 
acquired or disposed by our KMP during financial year 2013 were 
on an arm’s length basis at market price. 

(a) Robert Nason qualified as KMP during the year and this balance 
represents shares held as at the date on which he became KMP.

(b) For these non-executive Directors who left Telstra/the Board 
during the year, represents shares held as at the date on which they 
retired or no longer qualified as KMP. 

(c) Also includes deferred shares granted to senior executives 
which are subject to a restriction period.

(d) Nominally refers to shares held either indirectly or beneficially, 
including (for non-executive Directors) those acquired under 
Directshare, as well as (for senior executives) certain incentive 
shares and deferred shares.  The Directshares, incentive shares 
and deferred shares are subject to a restriction period, such that the 
non-executive Director or senior executive is restricted from dealing 
with these shares until after they are released from the restriction 
period.  Refer to note 27 for further details.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

187

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
28.  KEY MANAGEMENT PERSONNEL COMPENSATION (CONTINUED)

KMP interests in shares of the Telstra Entity (continued)

During financial year 2012 our KMP and their related parties held 
share capital of the Telstra Entity directly, indirectly or beneficially, 
as follows.

Total shares held 
at 
30 June 2011
Number

Equity 
instruments 
exercised
Number

Net shares 
acquired or 
disposed of by 
other means (c)
Number

Total shares held 
at 
30 June 2012 
Number 

Shares that are 
held nominally 
(d)
Number 

Non-Executive Directors
Catherine B Livingstone  .  .  .  .  .  .  .  .  .  .  .  .  
Timothy Y Chen (a).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Geoffrey A Cousins.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Russell A Higgins.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
John P Mullen   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Nora L Scheinkestel  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Margaret L Seale (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  
John W Stocker   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Steven M Vamos .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
John D Zeglis.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
John M Stewart (b) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  

Senior Executives
David I Thodey .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Gordon Ballantyne  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Rick Ellis (a)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Stuart Lee (a).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Kate McKenzie .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Andrew Penn (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Brendon Riley   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
Bruce Akhurst (b).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  
John V Stanhope (b) .  .  .  .  .  .  .  .  .  .  .  .  .  .  

150,816
-
31,765
40,513
26,159
30,000
224,141
212,238
40,000
103,993
34,031
893,656

605,113
-
10,000
214,087
117,710
-
5,735
177,306
446,545
1,576,496
2,470,152

Total shareholdings include shares held by our KMP and their 
related parties.  Unless related to our employee share plans, shares 
acquired or disposed by our KMP during financial year 2012 were 
on an arm’s length basis at market price. 

(a) For those non-executive Directors and senior executives who 
qualified as KMP during the year, represents shares held as at the 
date on which they became KMP.

(b) For those non-executive Directors and senior executives who 
left Telstra during the year, represents shares held as at the date on 
which they retired or no longer qualified as KMP. 

(c) Also includes deferred shares granted to senior executives 
which are subject to a restriction period.

-
-
-
-
-
-
-
-
-
-
-
-

-
-
-
-
-
-
-
-
-
-
-

15,000
-
-
47,891
-
29,450
-
-
-
-
-
92,341

181,004
86,568
-
51,416
49,988
74,232
177,682
94,330
3,383
718,603
810,944

165,816
-
31,765
88,404
26,159
59,450
224,141
212,238
40,000
103,993
34,031
985,997

786,117
86,568
10,000
265,503
167,698
74,232
183,417
271,636
449,928
2,295,099
3,281,096

165,816
-
21,765
83,084
26,159
59,450
224,141
194,124
40,000
37,493
9,031
861,063

667,594
86,568
8,000
149,443
122,009
58,800
179,387
263,856
7,410
1,543,067
2,404,130

(d) Nominally refers to shares held either indirectly or beneficially, 
including (for non-executive Directors) those acquired under 
Directshare, as well as (for senior executives) certain incentive 
shares and deferred shares.  The Directshares, incentive shares 
and deferred shares are subject to a restriction period, such that the 
non-executive Director or senior executive is restricted from dealing 
with these shares until after they are released from the restriction 
period.  Refer to note 27 for further details.

188

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
28.  KEY MANAGEMENT PERSONNEL COMPENSATION (CONTINUED)

KMP interests in rights, options and restricted shares of the 
Telstra Entity

The following details the balances and changes in instruments 
issued for our KMP during financial year 2013.

Total held 
at 30 June 2012 
(a)
Number

Granted 
during the 
year
Number

Exercised 
during the 
year
Number

Total held 
at 30 June 
2013
Number

Vested as at 
30 June 2013
Number

Vested and 
exercisable 
at 30 June 
2013
Number

Instrument type (*)
Senior Executive

Options
David I Thodey .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Stuart Lee   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Kate McKenzie .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Performance rights
David I Thodey .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Rick Ellis  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Stuart Lee   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Kate McKenzie .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Robert Nason.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Andrew Penn .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Brendon Riley   .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Performance shares
Andrew Penn .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Restricted shares
Stuart Lee   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
TESOP99
Stuart Lee   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

641,721
130,468
240,024

3,649,052
225,080
438,111
981,675
900,841
-
643,086

1,391,076
388,452
-
419,948
440,944
587,926
545,932

96,500

-

-

116,371

400

-

-
-
-

(252,174)
(48,913)
(91,304)

389,547
81,555
148,720

389,547
81,555
148,720

389,547
81,555
148,720

-
-
-
-
-
-
-

-

-

-

5,040,128
613,532
438,111
1,401,623
1,341,785
587,926
1,189,018

96,500

116,371

-
-
-
-
-
-
-

-

-

-
-
-
-
-
-
-

-

-

400

400

400

(*) Each vested equity instrument is convertible into one ordinary 
share.

(a) For those senior executives who qualified as KMP during the 
year, represents equity instruments held as at the date on which 
they became KMP.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

189

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
28.  KEY MANAGEMENT PERSONNEL COMPENSATION (CONTINUED)

KMP interests in rights, options and restricted shares of the 
Telstra Entity (continued)

The following details the balances and changes in instruments 
issued for our KMP during financial year 2012.

Instrument type (*)
Senior Executive

Options
David I Thodey .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Stuart Lee   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Kate McKenzie .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Bruce Akhurst   .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
John V Stanhope .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Performance rights
David I Thodey .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Rick Ellis  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Stuart Lee   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Kate McKenzie .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Brendon Riley   .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Bruce Akhurst   .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
John V Stanhope .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Performance shares
Andrew Penn .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
TESOP99
Stuart Lee   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Bruce Akhurst   .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
John V Stanhope .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Total held 
at 30 June 2011 
(a)
Number

Granted during 
the year
Number

Other 
 changes (b)
Number

Total held 
at 30 June 
2012 (c)
Number

Vested as at 
30 June 2012 
(c)
Number

Vested and 
exercisable 
at 30 June 
2012 (c)
Number

1,535,305
393,751
377,304
1,695,687
1,035,137

2,566,575
-
526,890
633,667
-
1,565,313
1,621,538

-
-
-
-
-

1,567,846
225,080
-
488,746
643,086
700,552
-

(893,584)
(263,283)
(156,964)
(617,000)
(1,035,137)

(485,369)
-
(88,779)
(140,738)
-
-
(1,621,538)

-

96,500

400
400
400

-
-
-

-

-
-
-

641,721
130,468
240,024
1,078,687
-

3,649,052
225,080
438,111
981,675
643,086
2,265,865
-

96,500

400
400
400

641,721
130,468
240,024
1,078,687
-

252,174
48,913
91,304
271,739
-

-
-
-
-
-
-
-

-

400
400
400

-
-
-
-
-
-
-

-

400
400
400

(*) Each vested equity instrument is convertible into one ordinary 
share.

(a) For those senior executives who qualified as KMP during the 
year, represents equity instruments held as at the date on which 
they became KMP.

(b) During financial year 2012, other changes for our performance 
rights and options are a result of instruments expiring due to the 
specified performance hurdles not being achieved or instruments 
forfeiting due to KMP retiring during the year. 

(c) For those senior executives who left Telstra during the year, 
represents equity instruments held as at the date on which they 
retired or no longer qualify as KMP.

190

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

FINANCIAL STATEMENTS

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
29.  RELATED PARTY DISCLOSURES

Transactions involving our controlled entities

Interests in controlled entities are set out in note 25.  Our 
transactions with our controlled entities recorded in the income 
statement and statement of financial position are as follows.

Income from controlled entities
Sale of goods and services (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Dividend revenue (b) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Expenses to controlled entities
Purchase of goods and services (a)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Finance costs.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Total amounts receivable at 30 June
Current
Controlled entities - receivables (a)(d) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Controlled entities - loans (e)(f)(g)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Allowance for amounts owed by controlled entities (e).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Non current
Controlled entities - loans (g).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Movement in allowance for amounts owed by controlled entities
Opening balance .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Impairment loss (c) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Closing balance (e).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Total amounts payable at 30 June
Current
Controlled entities - payables (a)(d)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Controlled entities - loans (e)(h)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Telstra Entity
Year ended/As at
30 June

2013
$m

2012
$m

789
635

746
24

892
668

602
33

1,119
3,387
(3,163)
1,343

985
3,331
(2,948)
1,368

-

1

(2,948)
(215)
(3,163)

(2,773)
(175)
(2,948)

250
1,936
2,186

214
1,492
1,706

(a) The Telstra Entity sold and purchased goods and services and 
received and paid interest to its controlled entities.  These 
transactions are in the ordinary course of business and are on 
normal commercial terms and conditions.

Details of our individual significant transactions involving our 
controlled entities during financial year 2013 are detailed as follows:

•

•

the Telstra Entity paid management fees to its controlled entity 
Sensis Pty Ltd amounting to $329 million (2012: $334 million) for 
undertaking agency and contract management services for the 
national directory service; and
the Telstra Entity paid for international connectivity and 
management services to Telstra International Limited amounting 
to $221 million (2012: $136 million).

•

•

the Telstra Entity received procurement fees from its controlled 
entity Sensis Pty Ltd for the use of Yellow Pages® and White 
Pages® trademarks amounting to $263 million (2012: $355 
million).  As at 30 June 2013, the Telstra Entity recorded revenue 
received in advance amounting to $136 million (2012: $90 
million) for the use of these trademarks;
the Telstra Entity received income from its controlled entity 
Telstra Multimedia Pty Ltd amounting to $367 million (2012: 
$356 million) for access to ducts that store the hybrid fibre 
coaxial (HFC) cable network;

(b) During financial year 2013, the Telstra Entity recorded dividend 
revenue mainly from the following entities:

• $518 million (2012: $64 million) from Telstra Holdings Pty Ltd; 

and

• $114 million (2012: $50 million) from Telstra Media Pty Limited.

In financial year 2012, $550 million from Sensis Pty Ltd was 
recorded as dividend revenue.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

191

 
NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
29.  RELATED PARTY DISCLOSURES (CONTINUED)

(

Transactions involving our controlled entities (continued)

(c) The profit before income tax expense of the Telstra Entity 
includes an impairment loss of $215 million (2012: $175 million) 
relating to a movement in allowance for amounts owed by a 
controlled entity.

(d) The Telstra Entity and its Australian controlled entities have 
formed a tax consolidated group, with a tax funding arrangement 
currently in place.  The amounts receivable or amounts payable to 
the Telstra Entity under this arrangement are 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 
controlled entities, being an internal group bank account used to 
settle transactions with these controlled entities or between two 
controlled entities.  Cash deposit balances in the current account 
owed to these controlled entities are recorded as loans. All loan 
balances with our controlled entities are unsecured, with settlement 
required in cash.  As at 30 June 2013, $3,244 million (2012: $3,181 
million) related to loans owed by, and $1,936 million (2012: $1,258 
million) related to, loans payable to controlled entities.  We also 
have an allowance for amounts owed by controlled entities of 
$3,163 million (2012: $2,948 million) as at 30 June 2013.  

(f) As at 30 June 2013, the Telstra Entity had a loan of $142 million 
(2012: $150 million) with Telstra OnAir Holdings Pty Ltd.   This loan 
is an interest free loan. 

(g) As at 30 June 2013, $2 million (2012: $1 million) related to a loan 
provided to Life Events Media Pty Limited.  The loan is interest 
bearing and matures in March 2014.

(h) As at 30 June 2012, the Telstra Entity had a $234 million loan 
from TelstraClear Limited.  The loan was interest bearing and was 
repaid upon the sale of TelstraClear.

Transactions involving our jointly controlled and associated 
entities

Interests in our jointly controlled and associated entities are set out 
in note 26.  Our transactions with our jointly controlled and 
associated entities recorded in the income statement and 
statement of financial position are as follows.

Income from jointly controlled and associated entities
Sale of goods and services (i)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Distribution from FOXTEL Partnership (j)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Interest on loans to jointly controlled and associated entities (k).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Expenses to jointly controlled and associated entities
Purchase of goods and services (i)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Total amounts receivable at 30 June
Current
Jointly controlled and associated entities - trade receivables (i) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Jointly controlled and associated entities - loans (k) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Non current
Jointly controlled and associated entities - loans (k) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Allowance for amounts owed by jointly controlled and associated entities (k) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Movement in allowance for amounts owed by jointly controlled and associated entities
Opening balance .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Amounts reversed  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Foreign currency exchange differences  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Closing balance   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Telstra Group
Year ended/As at
30 June

2013
$m

2012
$m

135
155
53

139
108
12

749

892

2
-
2

457
(6)
451

(5)
-
(1)
(6)

4
33
37

448
(5)
443

(5)
-
-
(5)

Total amounts payable at 30 June
Current
Jointly controlled and associated entities - payables (i)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

56

31

192

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
29.  RELATED PARTY DISCLOSURES (CONTINUED)

FINANCIAL STATEMENTS

Transactions involving our jointly controlled and associated 
entities (continued)

Transactions involving other related entities

Post employment benefits

(i) We sold and purchased goods and services, and received 
interest from our jointly controlled and associated entities.  These 
transactions were in the ordinary course of business and on normal 
commercial terms and conditions.

Details of our individual significant transactions involving our jointly 
controlled and associated entities during financial year 2013 are 
detailed as follows:

• we purchased pay television services amounting to $655 million 
(2012: $649 million) from our jointly controlled entity FOXTEL. 
The purchases were to enable the resale of FOXTEL services, 
including pay television content, to our existing customers as 
part of our ongoing product bundling initiatives.  In addition, we 
made sales to FOXTEL for our cost recoveries of $119 million 
(2012: $118 million); and

• purchases were made by the Telstra Group of $27 million (2012: 
$79 million) from our jointly controlled entity Reach Ltd (Reach) 
in line with market prices.  These were for the purchase of, and 
entitlement to, capacity and connectivity services.

As at 30 June 2013, the Telstra Superannuation Scheme (Telstra 
Super) owned 40,152,463 shares in Telstra Corporation Limited 
(2012: 38,383,958) at a cost of $136 million (2012: $118 million) and 
a market value of $192 million (2012: $142 million).  All of these 
shares were fully paid at 30 June 2013. In financial year 2013, we 
paid dividends to Telstra Super of $10 million (2012: $13 million). 
We own 100 per cent of the equity of Telstra Super Pty Ltd, the 
trustee of Telstra Super.

Telstra Super also holds bonds issued by Telstra Corporation 
Limited. These bonds had a cost of $6 million (2012: $11 million) 
and a market value of $6 million (2012: $11 million) at 30 June 2013. 

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 of Telstra Super. 

Key management personnel (KMP)

(j) A $155 million (2012: $108 million) distribution was received from 
our jointly controlled entity FOXTEL during the year.

For details regarding our KMP’s remuneration and interests in 
Telstra, as well as other related party transactions, refer to note 28 
for further details. 

(k) Loans provided to jointly controlled and associated entities relate 
to loans provided to Reach of $6 million (2012: $5 million) and 
FOXTEL Management Pty Ltd of $451 million (2012: $443 million).

The loan provided to Reach 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 is in a position to be able to repay the 
loan amount in the medium term. 

In April 2012, Telstra Corporation Limited provided a loan to 
FOXTEL Management Pty Ltd to fund the acquisition of shares in 
AUSTAR. The loan is interest bearing and it has a minimum term of 
just over 10 years and a maximum of 15 years. 

The $33 million loan provided to 3GIS represented interest free 
funding for operational expenditure purposes.  Telstra and 
Vodafone Hutchison Australia Pty Ltd concluded their joint venture 
agreement for the 3GIS network on 31 August 2012.  In accordance 
with the partnership agreement, the loan was partially recovered on 
dissolution of the partnership. 

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

193

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
30.  PARENT ENTITY INFORMATION

Statement of financial position
Total current assets.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total non current assets (a)   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total current liabilities   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total non current liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total liabilities .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Share capital .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Cashflow hedging reserve  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
General reserve   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Retained profits.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total Equity  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Statement of comprehensive income
Profit for the year (a) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Total comprehensive income .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

Telstra Entity
As at 30 June

2013
$m

2012
$m

8,145
31,870
40,015
8,707
17,857
26,564
5,711
(92)
194
7,638
13,451

9,399
31,551
40,950
11,451
16,942
28,393
5,635
(87)
194
6,815
12,557

Telstra Entity
Year ended 30 June
2012
$m

2013
$m

3,834
4,297

4,086
3,495

(a) Includes $722 million (2012: $307 million) of impairment losses 
relating to the value of our investments in, and amounts owed by, 
our controlled entities.  The impairment losses have been 
eliminated on consolidation of the Telstra Group.

Except for those noted below, our accounting policies for the Telstra 
Entity are consistent with those for the Telstra Group:

•

• under our tax funding arrangements, amounts receivable (or 
payable) recognised by the Telstra Entity for the current tax 
payable (or receivable) assumed from our wholly owned entities 
are booked as current assets or liabilities;
investments in controlled entities, included within non current 
assets above, are recorded at cost less impairment of the 
investment value.  Where we hedge the value of our investment 
in an overseas controlled entity, the hedge is accounted for in 
accordance with note 2.22.  Refer to note 25 for details on our 
investments in controlled entities; and

• our interests in associated and jointly controlled entities; 

including partnerships, are accounted for using the cost method 
of accounting and are included within non current assets in the 
table above.

Property, plant and equipment commitments

Telstra Entity
As at 30 June

2013
$m

2012
$m

Total property, plant and equipment 
expenditure commitments contracted for at 
balance date but not recorded in the 
financial statements   .  .  .  .  .  .  .  .  .  .

1,222

572

Contingent liabilities and guarantees

Common law claims

Asbestos-related claims

For asbestos claims made under common law, we assess each 
claim on a case by case basis.  Asbestos liabilities are inherently 
difficult to estimate due to the extremely long term nature of 
asbestos claims and the risk of significant changes in case law, 
legislation, litigation processes and medical developments.  
Therefore, arriving at any estimate will inevitably involve significant 
judgement about assumptions used and actual amounts could be 
considerably different from initial estimates.    

In light of the significant uncertainty associated with asbestos 
claims, the associated costs of resolution are not able to be 
measured with sufficient reliability and, as required by accounting 
standards, no provision has been made to cover these liabilities as 
at 30 June 2013.  These claims will continue to be assessed and 
where appropriate, settled on a case by case basis.  We have 
carefully reviewed the evidence available to us and we do not 
expect that the liability and costs associated with asbestos claims 
will have a material adverse effect on our financial position, results 
of operations or cash flows.  

194

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
30.  PARENT ENTITY INFORMATION (CONTINUED)

FINANCIAL STATEMENTS

Contingent liabilities and guarantees (continued)

• during financial year 1998, we resolved to provide IBM Global 

Services Australia Limited (IBMGSA) with guarantees issued on 
a several basis up to $210 million as a shareholder of IBMGSA.  
We issued a guarantee of $68 million on behalf of IBMGSA 
during financial year 2000.  During financial year 2004, we sold 
our shareholding in this entity.  The $68 million guarantee is 
provided to support service contracts entered into by IBMGSA 
and third parties, and was made with IBMGSA bankers, or 
directly to IBMGSA customers.   As at 30 June 2013, this 
guarantee remains unchanged and $142 million (2012: $142 
million) of the $210 million guarantee facility remains unused.

Upon sale of our shareholding in IBMGSA and under the deed of 
indemnity between shareholders, our liability under these 
performance guarantees has been indemnified for all 
guarantees that were in place at the time of sale.  Therefore, the 
overall net exposure to any loss associated with a claim has 
effectively been offset.

The guarantees we provided over the performance of third parties 
under defeasance arrangements, whereby lease payments were 
made on our behalf by the third parties over the terms of the finance 
leases, expired during the year (2012: $96 million (US$98 million)).

Common law claims (continued)

Other claims

Certain common law claims by employees and third parties are yet 
to be resolved.  As at 30 June 2013, management believes that the 
resolution of these contingencies will not have a significant effect on 
the Telstra Entity’s financial results.  The maximum amount of these 
contingent liabilities cannot be reliably estimated.

Indemnities, performance guarantees and financial support

We have provided the following indemnities, performance 
guarantees and financial support through the Telstra Entity:

•

•

•

•

indemnities to financial institutions to support bank guarantees to 
the value of $455 million (2012: $279 million) in respect of the 
performance of contracts;

indemnities to financial institutions in respect of the obligations of 
our controlled entities.  The maximum amount of our contingent 
liabilities for this purpose is $152 million (2012: $156 million);

indemnities to financial institutions in respect of the obligations of 
TelstraClear to third parties of $25 million (2012: $33 million).  
We have, however, received an indemnity for an equal amount 
from the acquirer as part of the TelstraClear disposal;

financial support for certain controlled entities to the amount 
necessary to enable those entities to meet their obligations as 
and when they fall due.  The financial support is subject to 
conditions including individual monetary limits totalling $134 
million (2012: $108 million) and a requirement that the entity 
remains our controlled entity;

• guarantee of the performance of a controlled entity under a lease 
contract for 25 years to the amount of $49 million (2012: nil);

• guarantees of the performance of jointly controlled entities under 
contractual agreements to a maximum amount of $11 million 
(2012: $10 million); and

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

195

NOTES TO THE 
FINANCIAL STATEMENTS 
(CONTINUED)
31.  EVENTS AFTER REPORTING DATE

We are not aware of any matter or circumstance that has occurred 
since 30 June 2013 that, in our opinion, has significantly affected or 
may significantly affect in future years:

• our operations;
•
•

the results of those operations; or
the state of our affairs; 

other than:

Final Dividend

On 8 August 2013, 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 final dividend will be 23 August 2013, 
with payment being made on 20 September 2013.  Shares will trade 
excluding the entitlement to the dividend on 19 August 2013.

A provision for dividend payable has been raised as at the date of 
resolution, amounting to $1,738 million.  The final dividend will be 
fully franked at a tax rate of 30 per cent.  The financial effect of the 
dividend resolution was not brought to account as at 30 June 2013. 

There are no income tax consequences for the Telstra Group 
resulting from the resolution and payment of the final ordinary 
dividend, except for $745 million of franking debits arising from the 
payment of this dividend that will be adjusted in our franking account 
balance.

The Dividend Reinvestment Plan continues to be suspended.

196

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

DIRECTORS'
DECLARATION

DIRECTORS' DECLARATION

This Directors’ Declaration is required by the Corporations Act 2001 
of Australia.

The Directors of Telstra Corporation Limited have made a resolution 
that declared:

(a) in the Directors’ opinion, the financial statements and notes of the 
Telstra Group for the financial year ended 30 June 2013 set out on 
pages 70 to 196:

(i) comply with the Accounting Standards applicable in Australia, 
International Financial Reporting Standards and Interpretations 
(as disclosed in note 1.1 to the financial statements), and 
Corporations Regulations 2001;

(ii) give a true and fair view of the financial position of Telstra 

Corporation Limited and the Telstra Group as at 30 June 2013 
and of the performance of Telstra Corporation Limited and the 
Telstra Group, for the year ended 30 June 2013; and

(iii) have been made out in accordance with the Corporations Act 

2001.

(b) they have received declarations as required by section 295A of the 

Corporations Act 2001;

(c) at the date of this declaration, in the Directors’ opinion, there are 

reasonable grounds to believe that Telstra Corporation Limited will 
be able to pay its debts as and when they become due and payable; 
and

(d) at the date of this declaration there are reasonable grounds to 

believe that the members of the extended closed group identified in 
note 25(a) to the financial statements, as parties to a Deed of Cross 
Guarantee, will be able to meet any obligations or liabilities to which 
they are, or may become subject to, under the Deed of Cross 
Guarantee described in note 25(a).  

For and on behalf of the board

Catherine B Livingstone AO
Chairman

David I Thodey
Chief Executive Officer and 
Executive Director

8 August 2013
Sydney, Australia

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

197

Ernst & Young
8 Exhibition Street 
Melbourne  VIC  3000  Australia
GPO Box 67 Melbourne  VIC  3001

Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TELSTRA CORPORATION LIMITED

Report on the Financial Report

Independence

We have audited the accompanying financial report of Telstra 
Corporation Limited, which comprises the consolidated statement 
of financial position as at 30 June 2013, the consolidated income 
statement and consolidated statement of comprehensive income, 
the consolidated statement of changes in equity and the 
consolidated statement of cash flows for the year then ended, notes 
comprising a summary of significant accounting policies and other 
explanatory information, and the Directors’ declaration of the 
consolidated entity comprising the Company and the entities it 
controlled at the year’s end or from time to time during the financial 
year. 

Directors’ Responsibility for the Financial Report

The Directors of the Company are responsible for the preparation of 
the financial report that gives a true and fair in accordance with 
Australian Accounting Standards and the Corporations Act 2001 
and for such internal controls as the Directors determine are 
necessary to enable the preparation of the financial report that is 
free from material misstatement, whether due to fraud or error.  In 
note 1, the Directors also state, in accordance with Accounting 
Standard AASB 101 Presentation of Financial Statements, that the 
financial statements comply with International Financial Reporting 
Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report 
based on our audit.  We conducted our audit in accordance with 
Australian Auditing Standards.  Those standards require that we 
comply with relevant ethical requirements relating to audit 
engagements and plan and perform the audit to obtain reasonable 
assurance about whether the financial report is free from material 
misstatement.  

An audit involves performing procedures to obtain audit evidence 
about the amounts and disclosures in the financial report.  The 
procedures selected depend on the auditor’s judgment, including 
the assessment of the risks of material misstatement of the financial 
report, whether due to fraud or error.  In making those risk 
assessments, the auditor considers internal controls relevant to the 
entity’s preparation and fair presentation of the financial report in 
order to design audit procedures that are appropriate in the 
circumstances, but not for the purpose of expressing an opinion on 
the effectiveness of the entity’s internal controls.  An audit also 
includes evaluating the appropriateness of accounting policies used 
and the reasonableness of accounting estimates made by the 
Directors, as well as evaluating the overall presentation of the 
financial report.

We believe that the audit evidence we have obtained is sufficient 
and appropriate to provide a basis for our audit opinion.

In conducting our audit we have complied with the independence 
requirements of the Corporations Act 2001.  We have given to the 
Directors of the Company a written Auditor’s Independence 
Declaration, a copy of which is included in the Directors’ report.

Opinion

In our opinion: 

a.  the financial report of Telstra Corporation Limited is in 
accordance with the Corporations Act 2001, including:

i     giving a true and fair view of the consolidated entity’s financial 
position as at 30 June 2013 and of its performance for the year 
ended on that date; and

ii  complying with Australian Accounting Standards and the 

Corporations Regulations 2001; and

b.  the financial report also complies with International Financial 
Reporting Standards as disclosed in note 1.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 46 to 
67 of the Directors’ Report for the year ended 30 June 2013.  The 
Directors of the Company are responsible for the preparation and 
presentation of the Remuneration Report in accordance with 
section 300A of the Corporations Act 2001.  Our responsibility is to 
express an opinion on the Remuneration Report, based on our audit 
conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion the Remuneration Report of Telstra Corporation 
Limited for the year ended 30 June 2013, complies with section 
300A of the Corporations Act 2001. 

Ernst & Young

SJ Ferguson
Partner
Sydney, Australia
8 August 2013

198

Telstra Annual Report 2013

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

 
SHAREHOLDER 
INFORMATION

Listing Information

Markets in which our shares are traded

SHAREHOLDER INFORMATION

We are listed, and all our issued shares are quoted on the Australian Securities Exchange (ASX) and the New Zealand Stock Exchange 
(NZX).

Markets on which our debt securities are listed

We also have debt securities listed on the ASX, the London Stock Exchange, the Singapore Stock Exchange and the Swiss Stock 
Exchange.   

Distribution of securities and security holdings

The following table shows the number of listed shares on issue at 26 July 2013:

Title of class

Identity of 
person or group

Amount owned

%

Listed Shares

Listed shareholders

12,443,074,357

100.00

Distribution of shares 

The following table summarises the distribution of our listed shares as at 26 July 2013:

Size of Holding

Number of Shareholders

%

Number of Shares

1-1,000

1,001-5,000

5,001-10,000

10,001-100,000

100,001 and over

Total

673,205

506,768

119,950

96,867

3,585

48.07%

36.19%

8.57%

6.92%

0.26%

375,912,566

1,209,594,084

 850,320,930

2,304,559,076

7,702,687,701

%

3.02%

9.72%

6.83%

18.52%

61.90%

1,400,375

100.00%

12,443,074,357

100.00%

The number of shareholders holding less than a marketable parcel of shares was 30,050 holding 1,762,108 shares.

Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

199

SHAREHOLDER 
INFORMATION

Substantial shareholders

As at 26 July 2013, we are not aware of any substantial shareholders.

Twenty largest shareholders as at 26 July 2013

The following table sets out the Top 20 holders of our shares (when multiple holdings are grouped together):

Shareholders

Number of Shares % of Issued Capital

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

J P MORGAN NOMINEES AUSTRALIA LTD  

NATIONAL NOMINEES LIMITED

CITICORP NOMINEES PTY LIMITED

BNP PARIBAS NOMS PTY LTD

RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD

AMP LIFE LIMITED

UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD

AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED

UBS NOMINEES PTY LTD

ARGO INVESTMENTS LIMITED

NEWECONOMY COM AU NOMINEES PTY LIMITED

QUESTOR FINANCIAL SERVICES LIMITED

NAVIGATOR AUSTRALIA LTD

TELSTRA GROWTHSHARE PTY LTD

NULIS NOMINEES (AUSTRALIA) LIMITED

NETWORK INVESTMENT HOLDINGS PTY LTD

EQUITAS NOMINEES PTY LTD

MILTON CORPORATION LIMITED

DJERRIWARRH INVESTMENTS LTD

Total for Top 20

Voting Rights

1,914,810,894

1,624,714,180

1,581,137,463

539,070,317

 300,003,415

194,088,079

116,318,718

64,484,116

52,595,000

48,436,757

38,954,800

36,418,851

28,731,046

24,454,493

23,081,832

22,347,348

17,309,017

16,018,179

13,280,253

10,914,291

15.39%

13.06%

12.71%

4.33%

2.41%

1.56%

0.93%

0.52%

0.42%

0.39%

0.31%

0.29%

0.23%

0.20%

0.19%

0.18%

0.14%

0.13%

0.11%

0.09%

6,667,169,049

53.58%

Shareholders (whether residents or non-residents of Australia) may vote at a meeting of shareholders in person, directly or by proxy, 
attorney or representative, depending on whether the shareholder is an individual or a company.

Subject to any rights or restrictions attaching to our shares, on a show of hands each shareholder present in person or by proxy, attorney 
or representative has one vote and, on a poll, has one vote for each fully paid share held. Presently, we have only one class of fully paid 
ordinary shares and these do not have any voting restrictions. If shares are not fully paid, on a poll the number of votes attaching to the 
shares is pro-rated accordingly.

200

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

REFERENCE  
TABLES

FIVE YEAR SUMMARY – FINANCIAL RESULTS

FY13
$m 

FY12
$m

FY11
$m

FY10
$m

FY09
$m

Sales revenue

 25,502

25,232

24,983

24,813

25,371

EBITDA(1)

EBIT(2)

 10,629

10,234

10,151

10,847

10,948

 6,391

5,822

5,692

6,501

6,558

Proﬁt after tax

 3,865

3,424

3,250

3,940

4,076

PROOF 
MON 05.08.13

REFERENCE TABLES

(1)   Operating proﬁt before interest, depreciation 
and amortisation and income tax expense. 
EBITDA is used as a measure of ﬁnancial 
performance by excluding certain variables 
that affect operating proﬁts but which may 
not be directly relate to all ﬁnancial aspects 
of the operations of the company. EBITDA is 
not a measure of operating income, operating 
performance or liquidity under A-IFRS. Other 
companies may calculate EBITDA in a different 
manner to us.

Dividends declared per share 
(cents)

Total assets

Gross debt

Net debt

Total equity

 28.0

28.0

28.0

28.0

28.0

(2)   EBITDA less depreciation and amortisation.

 38,527

39,525

37,913

39,282

39,962

15,628

17,222

16,232

16,031

17,036

 13,149

13,277

13,595

13,926

15,655

 12,875

11,689

12,292

13,008

12,681

Accrued capital expenditure

 3,792

3,591

3,410

3,471

4,598

(cid:60)(cid:104)(cid:91)(cid:91)(cid:1)(cid:89)(cid:87)(cid:105)(cid:94)(cid:211)(cid:101)(cid:109)

 5,024 

5,197

5,477

6,225

4,365

Earnings per share (cents)

Dividend payout ratio (%)

30.7

91

27.5

102

26.1

107

31.4

89

32.9

85

NON-FINANCIAL RESULTS 

Key performance indicator

FY13

FY12

FY11

Employee engagement
Score (%)

Health and safety
Lost Time Injury Frequency Rate (LTIFR)

Gender equality
Women in executive management (%)

Volunteering during Telstra time
Total (days)

Payroll Giving 
Participation rate (%)

Social and community investment
Value ($m)

Everyone Connected 
Targeted community programs  
(people impacted)

79

77

75

1.36

1.32

1.30

25

25

23

4,248

1,375

3.58

1.56

-

-

231.0

239.8

248.0

145,800

101,500

-

Carbon emissions 
Tonnes of carbon dioxide equivalent (tCO2e) ('000s)
Carbon emissions intensity 
tCO2e per terabyte of data
e-waste 
Mobile phones (tonnes collected)

1,634

1,677

1,660

0.83

1.24

1.93

14.0

14.3

17.3

Telstra Annual Report 2013

201

 
REFERENCE  
TABLES

(cid:61)(cid:75)(cid:63)(cid:58)(cid:55)(cid:68)(cid:57)(cid:59)(cid:1)(cid:76)(cid:59)(cid:72)(cid:73)(cid:75)(cid:73)(cid:1)(cid:72)(cid:59)(cid:70)(cid:69)(cid:72)(cid:74)(cid:59)(cid:58)(cid:1)(cid:72)(cid:59)(cid:73)(cid:75)(cid:66)(cid:74)(cid:73)

(cid:74)(cid:94)(cid:95)(cid:105)(cid:1)(cid:105)(cid:89)(cid:94)(cid:91)(cid:90)(cid:107)(cid:98)(cid:91)(cid:1)(cid:90)(cid:91)(cid:106)(cid:87)(cid:95)(cid:98)(cid:105)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:87)(cid:90)(cid:96)(cid:107)(cid:105)(cid:106)(cid:99)(cid:91)(cid:100)(cid:106)(cid:105)(cid:1)(cid:99)(cid:87)(cid:90)(cid:91)(cid:1)(cid:106)(cid:101)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:104)(cid:91)(cid:102)(cid:101)(cid:104)(cid:106)(cid:91)(cid:90)(cid:1)(cid:104)(cid:91)(cid:105)(cid:107)(cid:98)(cid:106)(cid:105)(cid:1)(cid:92)(cid:101)(cid:104)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:89)(cid:107)(cid:104)(cid:104)(cid:91)(cid:100)(cid:106)(cid:1)(cid:111)(cid:91)(cid:87)(cid:104)(cid:1)(cid:106)(cid:101)(cid:1)(cid:104)(cid:91)(cid:211)(cid:91)(cid:89)(cid:106)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:102)(cid:91)(cid:104)(cid:92)(cid:101)(cid:104)(cid:99)(cid:87)(cid:100)(cid:89)(cid:91)(cid:1)(cid:101)(cid:92)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:88)(cid:107)(cid:105)(cid:95)(cid:100)(cid:91)(cid:105)(cid:105)(cid:1)
on the basis which we provided guidance to the market. Our guidance assumed wholesale product price stability, no impairments 
(cid:106)(cid:101)(cid:1)(cid:95)(cid:100)(cid:108)(cid:91)(cid:105)(cid:106)(cid:99)(cid:91)(cid:100)(cid:106)(cid:105)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:91)(cid:110)(cid:89)(cid:98)(cid:107)(cid:90)(cid:91)(cid:105)(cid:1)(cid:87)(cid:100)(cid:111)(cid:1)(cid:102)(cid:104)(cid:101)(cid:89)(cid:91)(cid:91)(cid:90)(cid:105)(cid:1)(cid:101)(cid:100)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:105)(cid:87)(cid:98)(cid:91)(cid:1)(cid:101)(cid:92)(cid:1)(cid:88)(cid:107)(cid:105)(cid:95)(cid:100)(cid:91)(cid:105)(cid:105)(cid:91)(cid:105)(cid:36)(cid:1)

REPORTED

ADJUSTMENTS

GUIDANCE BASIS

FY13

FY12

FY13
$m

FY12
$m

Growth
%

TClear (i)
$m

Spectrum (ii)
$m

TClear (iii)
$m

FY13
$m

FY12
$m

Growth
%

(cid:73)(cid:87)(cid:98)(cid:91)(cid:105)(cid:1)(cid:104)(cid:91)(cid:108)(cid:91)(cid:100)(cid:107)(cid:91)

Total revenue

25,502

25,232

25,678

(cid:40)(cid:43)(cid:34)(cid:41)(cid:44)(cid:46)

1.1%

1.2%

Total income  
(excl. ﬁnance income)

25,980

25,503

1.9%

(cid:66)(cid:87)(cid:88)(cid:101)(cid:107)(cid:104)

4,803

(cid:42)(cid:34)(cid:47)(cid:44)(cid:45)

(3.3%)

(cid:61)(cid:101)(cid:101)(cid:90)(cid:105)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:105)(cid:91)(cid:104)(cid:108)(cid:95)(cid:89)(cid:91)(cid:105)(cid:1)
purchased

6,389

(cid:44)(cid:34)(cid:39)(cid:45)(cid:47)

3.4%

(cid:69)(cid:106)(cid:94)(cid:91)(cid:104)(cid:1)(cid:91)(cid:110)(cid:102)(cid:91)(cid:100)(cid:105)(cid:91)(cid:105)

4,158

4,123

Operating expenses

15,350

(cid:39)(cid:43)(cid:34)(cid:40)(cid:44)(cid:47)

(cid:73)(cid:94)(cid:87)(cid:104)(cid:91)(cid:1)(cid:101)(cid:92)(cid:1)(cid:100)(cid:91)(cid:106)(cid:1)(cid:98)(cid:101)(cid:105)(cid:105)(cid:91)(cid:105)(cid:1)
from jointly controlled 
and associated entities

EBITDA

1

0

10,629

10,234

0.8%

0.5%

n/a

3.9%

(cid:58)(cid:91)(cid:102)(cid:104)(cid:91)(cid:89)(cid:95)(cid:87)(cid:106)(cid:95)(cid:101)(cid:100)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)
amortisation

4,238

4,412

(3.9%)

EBIT

6,391

5,822

9.8%

(cid:68)(cid:91)(cid:106)(cid:1)(cid:210)(cid:100)(cid:87)(cid:100)(cid:89)(cid:91)(cid:1)(cid:89)(cid:101)(cid:105)(cid:106)(cid:105)

909

888

2.4%

Proﬁt before income  
tax expense

(cid:63)(cid:100)(cid:89)(cid:101)(cid:99)(cid:91)(cid:1)(cid:106)(cid:87)(cid:110)(cid:1)(cid:91)(cid:110)(cid:102)(cid:91)(cid:100)(cid:105)(cid:91)

Proﬁt for the period

(cid:55)(cid:106)(cid:106)(cid:104)(cid:95)(cid:88)(cid:107)(cid:106)(cid:87)(cid:88)(cid:98)(cid:91)(cid:1)(cid:106)(cid:101)(cid:48)

(cid:59)(cid:103)(cid:107)(cid:95)(cid:106)(cid:111)(cid:1)(cid:94)(cid:101)(cid:98)(cid:90)(cid:91)(cid:104)(cid:105)(cid:1)(cid:101)(cid:92)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)
(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:1)(cid:59)(cid:100)(cid:106)(cid:95)(cid:106)(cid:111)

(cid:68)(cid:101)(cid:100)(cid:35)(cid:89)(cid:101)(cid:100)(cid:106)(cid:104)(cid:101)(cid:98)(cid:98)(cid:95)(cid:100)(cid:93)(cid:1)
interests

5,482

(cid:42)(cid:34)(cid:47)(cid:41)(cid:42)

11.1%

1,617

3,865

1,510

3,424

7.1%

12.9%

3,813

3,405

12.0%

52

(cid:39)(cid:47)

173.7%

(cid:30)(cid:39)(cid:44)(cid:42)(cid:31)

(cid:30)(cid:39)(cid:44)(cid:42)(cid:31)

(cid:30)(cid:39)(cid:44)(cid:42)(cid:31)

(cid:30)(cid:41)(cid:43)(cid:31)

(cid:30)(cid:46)(cid:39)(cid:31)

(cid:30)(cid:39)(cid:45)(cid:43)(cid:31)

(cid:30)(cid:40)(cid:47)(cid:39)(cid:31)

0

127

0

127

0

127

0

127

127

 0

(cid:30)(cid:43)(cid:38)(cid:40)(cid:31)

(cid:30)(cid:43)(cid:38)(cid:40)(cid:31)

25,338

24,730

25,514

(cid:40)(cid:42)(cid:34)(cid:46)(cid:44)(cid:44)

2.5%

(cid:40)(cid:36)(cid:44)(cid:27)

(cid:30)(cid:43)(cid:38)(cid:40)(cid:31)

25,816

25,001

3.3%

(cid:30)(cid:39)(cid:38)(cid:38)(cid:31)

4,768

(cid:42)(cid:34)(cid:46)(cid:44)(cid:45)

(cid:30)(cid:40)(cid:36)(cid:38)(cid:27)(cid:31)

(cid:30)(cid:40)(cid:40)(cid:44)(cid:31)

6,308

(cid:43)(cid:34)(cid:47)(cid:43)(cid:41)

(cid:44)(cid:36)(cid:38)(cid:27)

(cid:30)(cid:40)(cid:38)(cid:44)(cid:31)

(cid:30)(cid:43)(cid:41)(cid:40)(cid:31)

3,983

(cid:41)(cid:34)(cid:47)(cid:39)(cid:45)

15,059

14,737

1.7%

2.2%

0

30

1

0

10,756

(cid:39)(cid:38)(cid:34)(cid:40)(cid:44)(cid:42)

n/a

4.8%

(cid:30)(cid:39)(cid:38)(cid:47)(cid:31)

4,238

4,303

(cid:30)(cid:39)(cid:36)(cid:43)(cid:27)(cid:31)

(cid:39)(cid:41)(cid:47)

6,518

(cid:43)(cid:34)(cid:47)(cid:44)(cid:39)

(cid:47)(cid:36)(cid:41)(cid:27)

1

909

(cid:46)(cid:46)(cid:47)

2.2%

138

0

138

5,609

5,072

(cid:39)(cid:38)(cid:36)(cid:44)(cid:27)

1,617

3,992

1,510

(cid:41)(cid:34)(cid:43)(cid:44)(cid:40)

7.1%

12.1%

138

3,940

3,543

11.2%

0

52

(cid:39)(cid:47)

173.7%

0

0

0

0

0

0

(cid:60)(cid:104)(cid:91)(cid:91)(cid:1)(cid:89)(cid:87)(cid:105)(cid:94)(cid:211)(cid:101)(cid:109)

5,024

(cid:43)(cid:34)(cid:39)(cid:47)(cid:45)

(3.3%)

(cid:30)(cid:44)(cid:44)(cid:47)(cid:31)

821

(cid:30)(cid:42)(cid:46)(cid:31)

5,176

(cid:43)(cid:34)(cid:39)(cid:42)(cid:47)

0.5%

This table has been subject to review by our auditors.

Note:
(cid:63)(cid:100)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:106)(cid:87)(cid:88)(cid:98)(cid:91)(cid:1)(cid:87)(cid:88)(cid:101)(cid:108)(cid:91)(cid:34)(cid:1)(cid:109)(cid:91)(cid:1)(cid:94)(cid:87)(cid:108)(cid:91)(cid:1)(cid:87)(cid:90)(cid:96)(cid:107)(cid:105)(cid:106)(cid:91)(cid:90)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:104)(cid:91)(cid:105)(cid:107)(cid:98)(cid:106)(cid:105)(cid:1)(cid:92)(cid:101)(cid:104)(cid:48)

(cid:30)(cid:95)(cid:31)(cid:1)(cid:1) (cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:57)(cid:98)(cid:91)(cid:87)(cid:104)(cid:1)(cid:87)(cid:90)(cid:96)(cid:107)(cid:105)(cid:106)(cid:99)(cid:91)(cid:100)(cid:106)(cid:105)(cid:1)(cid:92)(cid:101)(cid:104)(cid:1)(cid:87)(cid:105)(cid:105)(cid:91)(cid:106)(cid:105)(cid:1)(cid:94)(cid:91)(cid:98)(cid:90)(cid:1)(cid:92)(cid:101)(cid:104)(cid:1)(cid:105)(cid:87)(cid:98)(cid:91)(cid:48)
(cid:1)

(cid:1)(cid:55)(cid:90)(cid:96)(cid:107)(cid:105)(cid:106)(cid:99)(cid:91)(cid:100)(cid:106)(cid:105)(cid:1)(cid:104)(cid:91)(cid:98)(cid:87)(cid:106)(cid:95)(cid:100)(cid:93)(cid:1)(cid:106)(cid:101)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:57)(cid:98)(cid:91)(cid:87)(cid:104)(cid:1)(cid:106)(cid:104)(cid:87)(cid:90)(cid:95)(cid:100)(cid:93)(cid:1)(cid:104)(cid:91)(cid:105)(cid:107)(cid:98)(cid:106)(cid:105)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:105)(cid:87)(cid:98)(cid:91)(cid:1)(cid:106)(cid:101)(cid:1)(cid:76)(cid:101)(cid:90)(cid:87)(cid:92)(cid:101)(cid:100)(cid:91)(cid:1)(cid:68)(cid:91)(cid:109)(cid:1)(cid:80)(cid:91)(cid:87)(cid:98)(cid:87)(cid:100)(cid:90)(cid:36)(cid:1) 
(cid:74)(cid:94)(cid:95)(cid:105)(cid:1)(cid:95)(cid:100)(cid:89)(cid:98)(cid:107)(cid:90)(cid:91)(cid:105)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:100)(cid:91)(cid:106)(cid:1)(cid:98)(cid:101)(cid:105)(cid:105)(cid:1)(cid:101)(cid:100)(cid:1)(cid:90)(cid:95)(cid:105)(cid:102)(cid:101)(cid:105)(cid:87)(cid:98)(cid:1)(cid:101)(cid:92)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:57)(cid:98)(cid:91)(cid:87)(cid:104)(cid:1)(cid:95)(cid:100)(cid:1)(cid:210)(cid:100)(cid:87)(cid:100)(cid:89)(cid:95)(cid:87)(cid:98)(cid:1)(cid:111)(cid:91)(cid:87)(cid:104)(cid:1)(cid:40)(cid:38)(cid:39)(cid:41)(cid:1)(cid:101)(cid:92)(cid:1)(cid:26)(cid:39)(cid:40)(cid:45)(cid:1)(cid:99)(cid:95)(cid:98)(cid:98)(cid:95)(cid:101)(cid:100)(cid:36)(cid:1)

(cid:30)(cid:95)(cid:95)(cid:31)(cid:1)(cid:1)(cid:1)(cid:73)(cid:102)(cid:91)(cid:89)(cid:106)(cid:104)(cid:107)(cid:99)(cid:1)(cid:102)(cid:107)(cid:104)(cid:89)(cid:94)(cid:87)(cid:105)(cid:91)(cid:105)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:104)(cid:91)(cid:100)(cid:91)(cid:109)(cid:87)(cid:98)(cid:105)(cid:48)
(cid:1)

(cid:1)(cid:55)(cid:90)(cid:96)(cid:107)(cid:105)(cid:106)(cid:99)(cid:91)(cid:100)(cid:106)(cid:105)(cid:1)(cid:104)(cid:91)(cid:98)(cid:87)(cid:106)(cid:95)(cid:100)(cid:93)(cid:1)(cid:106)(cid:101)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:95)(cid:99)(cid:102)(cid:87)(cid:89)(cid:106)(cid:1)(cid:101)(cid:92)(cid:1)(cid:92)(cid:104)(cid:91)(cid:91)(cid:1)(cid:89)(cid:87)(cid:105)(cid:94)(cid:211)(cid:101)(cid:109)(cid:1)(cid:87)(cid:105)(cid:105)(cid:101)(cid:89)(cid:95)(cid:87)(cid:106)(cid:91)(cid:90)(cid:1)(cid:109)(cid:95)(cid:106)(cid:94)(cid:1)(cid:101)(cid:107)(cid:104)(cid:1)(cid:105)(cid:102)(cid:91)(cid:89)(cid:106)(cid:104)(cid:107)(cid:99)(cid:1)(cid:102)(cid:107)(cid:104)(cid:89)(cid:94)(cid:87)(cid:105)(cid:91)(cid:105)(cid:1)(cid:87)(cid:100)(cid:90)(cid:1)(cid:104)(cid:91)(cid:100)(cid:91)(cid:109)(cid:87)(cid:98)(cid:105)(cid:1)(cid:92)(cid:101)(cid:104)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:111)(cid:91)(cid:87)(cid:104)(cid:1) 
(cid:30)(cid:26)(cid:44)(cid:41)(cid:45)(cid:36)(cid:39)(cid:99)(cid:1)(cid:46)(cid:38)(cid:38)(cid:1)(cid:67)(cid:62)(cid:112)(cid:34)(cid:1)(cid:26)(cid:39)(cid:42)(cid:40)(cid:36)(cid:40)(cid:99)(cid:1)(cid:39)(cid:46)(cid:38)(cid:38)(cid:1)(cid:67)(cid:62)(cid:112)(cid:1)(cid:39)(cid:105)(cid:106)(cid:1)(cid:106)(cid:104)(cid:87)(cid:100)(cid:89)(cid:94)(cid:91)(cid:1)(cid:28)(cid:1)(cid:26)(cid:42)(cid:39)(cid:36)(cid:42)(cid:99)(cid:1)(cid:57)(cid:73)(cid:66)(cid:1)(cid:42)(cid:61)(cid:1)(cid:105)(cid:102)(cid:91)(cid:89)(cid:106)(cid:104)(cid:107)(cid:99)(cid:31)(cid:36)

(cid:30)(cid:95)(cid:95)(cid:95)(cid:31)(cid:1)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:57)(cid:98)(cid:91)(cid:87)(cid:104)(cid:1)(cid:64)(cid:107)(cid:100)(cid:39)(cid:40)(cid:1)(cid:87)(cid:90)(cid:96)(cid:107)(cid:105)(cid:106)(cid:99)(cid:91)(cid:100)(cid:106)(cid:48)
(cid:1) (cid:55)(cid:90)(cid:96)(cid:107)(cid:105)(cid:106)(cid:99)(cid:91)(cid:100)(cid:106)(cid:105)(cid:1)(cid:104)(cid:91)(cid:98)(cid:87)(cid:106)(cid:95)(cid:100)(cid:93)(cid:1)(cid:106)(cid:101)(cid:1)(cid:74)(cid:91)(cid:98)(cid:105)(cid:106)(cid:104)(cid:87)(cid:57)(cid:98)(cid:91)(cid:87)(cid:104)(cid:1)(cid:101)(cid:102)(cid:91)(cid:104)(cid:87)(cid:106)(cid:95)(cid:100)(cid:93)(cid:1)(cid:104)(cid:91)(cid:105)(cid:107)(cid:98)(cid:106)(cid:105)(cid:1)(cid:106)(cid:101)(cid:1)(cid:64)(cid:107)(cid:100)(cid:91)(cid:1)(cid:40)(cid:38)(cid:39)(cid:40)(cid:36)(cid:1)(cid:74)(cid:94)(cid:95)(cid:105)(cid:1)(cid:95)(cid:100)(cid:89)(cid:98)(cid:107)(cid:90)(cid:91)(cid:90)(cid:1)(cid:106)(cid:94)(cid:91)(cid:1)(cid:26)(cid:39)(cid:41)(cid:38)(cid:99)(cid:1)(cid:95)(cid:99)(cid:102)(cid:87)(cid:95)(cid:104)(cid:99)(cid:91)(cid:100)(cid:106)(cid:1)(cid:88)(cid:101)(cid:101)(cid:97)(cid:91)(cid:90)(cid:1)(cid:95)(cid:100)(cid:1)(cid:64)(cid:107)(cid:100)(cid:91)(cid:1)(cid:40)(cid:38)(cid:39)(cid:40)(cid:36)

202

Telstra Annual Report 2013

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Telstra Corporation Limited and controlled entities

Telstra Annual Report 2013

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204

Telstra Annual Report 2013

 Telstra Corporation Limited and controlled entities

CONTACT  
DETAILS

REGISTERED OFFICE
Level 41, 242 Exhibition Street
Melbourne Victoria 3000 Australia
Damien Coleman
Company Secretary
email: companysecretary@team.telstra.com

GENERAL ENQUIRIES – REGISTERED OFFICE
Australia: 1300 368 387
All Other: +61 (8) 8308 1721

SHAREHOLDER ENQUIRIES
AUSTRALIAN SHARE REGISTER
Australia: 1300 88 66 77
All Other: +61 1300 88 66 77
Fax: +61 (2) 9287 0303
email: telstra@linkmarketservices.com.au
website: www.linkmarketservices.com.au/telstra
Link Market Services Limited
PO Box A942
Sydney South NSW 1234 Australia

NEW ZEALAND SHARE REGISTER
New Zealand: 0800 835 787
All Other:) +64 9 375 5998
Fax: +64 (9) 375 5990
email: enquiries@linkmarketservices.co.nz
website: www.linkmarketservices.co.nz
Link Market Services Limited
PO Box 91976
Auckland 1142
New Zealand

INVESTOR RELATIONS
Level 32, 242 Exhibition Street
Melbourne Victoria 3000 Australia
Australia: 1800 880 679
All Other: +61 (3) 8647 4954
email: investor.relations@team.telstra.com

SUSTAINABILITY
Level 37, 242 Exhibition Street
Melbourne Victoria 3000 Australia
email: sustainability@team.telstra.com

TELSTRA CORPORATION LIMITED
ABN 33 051 775 556
Incorporated in the Australian Capital Territory
Telstra is listed on Stock Exchanges in
Australia and in New Zealand (Wellington)

WEBSITES
Telstra Investor Centre:
www.telstra.com.au/investor

Telstra’s Sustainability home page:
www.telstra.com.au/sustainability

Indicative Financial Calendar*

Final dividend paid

Friday 20 September 2013

Annual General Meeting

Tuesday 15 October 2013

Half Year Results Announcement

Thursday 13 February 2014

Ex-dividend share trading commences

Monday 24 February 2014

Record date for interim dividend

Friday 28 February 2014

Interim dividend paid

Friday 28 March 2014

Annual Results Announcement

Thursday 14 August 2014

Ex-dividend share trading commences

Monday 25 August 2014

Record date for ﬁnal dividend

Friday 29 August 2014

Final dividend paid

Friday 26 September 2014

Annual General Meeting

Tuesday 14 October 2014

* Timing of events may be subject to change.  
  Any change will be notiﬁed to the Australian Securities Exchange (ASX).

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