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TELSTRA GROUP LIMITED Annual Report 2004
65927_rns_2004-08-11_0b464b95-6fd6-42ae-ab03-16ffdc7618c3.pdf
Annual Report
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12 August 2004
Office of the Company Secretary
The Manager Company Announcements Office Australian Stock Exchange 10th Floor, 20 Bond Street SYDNEY NSW 2000
Level 41 242 Exhibition Street MELBOURNE VIC 3000 AUSTRALIA
Telephone 03 9634 6400 Facsimile 03 9632 3215
ELECTRONIC LODGEMENT
Dear Sir or Madam
Re: Full Year 2004 Results - Analyst Briefing
In accordance with the listing rules, I enclose an announcement for release to the market.
North brake
Douglas Gration Company Secretary
Telstra Corporation Limited ACN 051 775 556 ABN 33 051 775 556
Telstra Corporation Limited FY 2004R@SUITS
Dr Zigu Svysen Ché Executive Onicer
"Customer commitment drives shareholder value"
Previous Guidance and Outcomes in 03/04
Margin expansion
Strong growth in cash flows
\$2.9b domestic capex
On path to achieve 1 million Broadband SIOs in '06
Cost out consistent with \$800m underlying reductions by 06
Absolute costs, including D & A, below last year
Telstra's goals are achievable
Highlights of 2003/04
| Record Profit & Strong Free Cashflow |
$-NPATH 54.1b (+2%)$ - FCF (excluding asset sales / acquisitions) \$4.8b (+20%) |
|---|---|
| Capital Management Initiatives | - New financial parameters - Increased Ordinary Dividend (13cps final, +8.3%) - \$750m buyback & intention to pay 6cps special dividend |
| Improved Domestic Revenue Growth F-Stronger 2nd Half momentum | |
| Recent Acquisitions on Track | - TPG integration with Sensis proceeding smoothly - KAZ Group performing to expectations |
| REACH financial re-structure | - REACH on a stronger footing going forward |
| Telstra's fundamentals are strong |
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Effective Captial Management
Telstra
Improving Customer Satisfaction
Telstra
Telstra
John Ston Ston Chief Financial Officer
"Customer commitment drives shareholder value"
Financial Highlights
Business Growth
COSS Management
Contol Management
Domestic Sales Revenue 1 2.4% - H2 improvement Internet & IP Revenue 1 24%, Broadband SIOs 4 122% Mobile Services Revenue 1 7%, SIOs 4 16% Sensis Revenue (ex TPG) 1 7%
Underlying Operating Expenses V 1.4% Margin Growth: Underlying EBITDA margin 49.8% Investment in service and growth
Free Cash Flow 1 20% to \$4.8b Domestic Operating Capex \$2.9b Final Ordinary Dividend 1 8% to 13cps ETI 3 Yr \$1.5b p.a. Capital Management Program g
Strong free cash flows supporting capital management program
restro
Underpinned by Strong Free Cash Flows
Telstra
Free Cash Flow funding operations with modest movement in Net Debt
Free cash flow generation provides flexibility
Reported Results
Underlying Results
Karlstvo
| (Glollions except FSHDA Margin) | $\mathbb{Z} \times \mathbb{Z}$ | 96 A | |
|---|---|---|---|
| Sales Revenue | 20.5 | 207 | $\sqrt{2}$ |
| Underlying Domestic Sales Revenue | 45. 1 | $\sum_{i=1}^{n}$ | |
| Operating Expenses | 10.8 | 10.6 | (1.4) |
| EBITDA | 1920 | 30 | |
| EBIT | $\zeta$ | 67 | $\sum_{i=1}^{n}$ |
| NPAT | $\mathcal{I}$ | ||
| EBITDA Margin (%) | 48.8 | 49.8 | $\sqrt{2}$ |
| Domestic Operating Capex | WARA | (8.9) | |
| Free Cash Flow | 40 | 43 | 20.2 |
- . . . . . . . . . . . . . . . . . .
1989 - Johann Stoff, Amerikaansk politiker (d. 1989)
a de la componeción de la componeción de la componeción de la componeción de la componeción de la componeción
Steady improvement
across key financial metrics
Underlying Results - Half Year Trends
| (S billions except EBITDA Marqin) | AHO | $%$ $\triangle$ | RANCH | $\%$ $\Lambda$ | $\%$ $\Lambda$ | |
|---|---|---|---|---|---|---|
| Sales Revenue | 10.5 | (0.1) | 10.2 | $\mathcal{L}$ | $\gamma$ ar | $\sqrt{2}$ |
| Underlying Domestic Sales Rev | 9.7 | 12 | 30 | y ang | $\mathcal{I}$ $\mathcal{L}$ | |
| Operating Expenses | $\sim$ | (4.1) | $\mathcal{L}_{\mathbf{a}}$ | $\mathcal{L}$ | 10.6 | (1,4) |
| EBITDA | B, 21 | 3 o | $20 - 12$ | $\mathbb{R}^{\mathbb{Z}}$ | 3.0 | |
| FBIT | 1. | $\mathcal{L}$ | 4. | 1 | $\sqrt{ }$ | $\mathcal{L}$ |
| BBITDA Margin (%) | 304 | 20 | The William | jan. | KO M | 10 |
| Operating Exp excl REACH | $\mathcal{L}_{\mathcal{L}}$ | (1.5) | $\mathcal{L}$ | $\mathcal{L}$ | 10.6 | $\Omega$ |
Margin stability as we invest in customer service and drive revenue growth
Mobiles Inclusive of Terminating Revenues
Solid performance in increasingly competitive market SIS TANANG TAN
Strong growth in CDMA
Increased Prepaid focus
Telstra
Mobiles Subscriber Base Changing
Telstra
Indreasing portion of prepaid base
- Lower blended ARPUs
- Algnmentof W deddivdilon ddierio, additional 202,000 SIOs Included in Prepaid
- Mobile Data ARPU +18%
Mix changing from penetrating lower end of market
Strong Growth in Broadband
W.
stimulating take up
PSTN Rebalanced Products
Continuing to grow PSTN revenues in an evolutionary environment
- Rebalanding
- Buind line U
- Feature penetration
- Call completion en de la populación de la contrada de la contrada de la contrada de la contrada de la contrada de la contrada
Contrada de la contrada de la contrada de la contrada de la contrada de la contrada de la contrada de la contr
Underlying Operating Expenses
Continued cost focus allowing investment in service and growth
investing in service and growth
Cost Savings
| Commentary Commentary of the Commentary Commentary Commentary Commentary Commentary Commentary Commentary Comm | |
|---|---|
| NDGRIGGBORGA | Gerdal van die Grootse van die Grootse van die 1970 van die 1970 van die 1970 van die 1970 van die 1970 van di Van die 1970 van die 1970 van die 1970 van die 1970 van die 1970 van die 1970 van die 1970 van die 1970 van di |
| HOWARD THE TABLE | |
| ISPIGGUCIMILI | SALETER |
| l ang ang mga pag | 230. |
(an Drivers
TBG Customer Care labour efficiencies CSL productivity
Lower volumes and integration savings
Contract management
Area management Fürst se de Metro/Network services
IS-labour, fleet, rent TCM-billing, mobiles initiatives
Making room for service improvement and growth while maintaining margins
Upward Cost Drivers
04/05 focus on controlling cost pressures
Increased FOH volumes leading to increased staff numbers
Pay TV bundling
Increased selesforce Increased volumes Donesic NetworkFinis Indreased marketing Hendset subsidy 2H
Increased energy cosis Currency costs OVEREGGES
Qaqabada
Investigasewice
Growth in line with KA SATE Linked to revenue
No further growth, contained at 03/04
kayakt
Key International Operations
Increasingly competitive market One-offs impacting FY 03 EBITDA HK\$234m
Hong Kong's most profitable mobile business
Ikadajaship trillin EBIT positive
Corporate customer wins
on standalone basis
Shareholders buy bank deby of USS 1.2b for USS311 Euliy provided for US\$155.5m Loan to REAGH $\blacktriangleright$ A stronger footing – but environment remains difficult
Copital Expanditure
driving targeted capex spend
Capital Management Program
Sustainable medium term program in place
enna
D
Target Financial Parameters
Telstra Corporation Limited FY 2004 Res Ulles
Dr Zigu Svysen Cher Executive Drugs
"Customer commitment drives shareholder value"
Telecommunications is a Growth Industry
- If the consumer market (approx \$14b) grows by 5% next year (\$700m), Telco share of HDI would only grow 0.1%
- Equivalent to each household hiring 1 extra DVD per month
Offering customers value will grow our share of wallet
Telstra
Our Strategy
Optimise traditional revenues
- Customer service
- Increase utilisation Q
- Value Added Services W.
- Price innovation I.
- Reduce costs / W. improve margin
Transformation 21SICentury IP Network
Services + Relationships + Efficiency $=$ Profitable Growth
Maria Ma
Telstra
Broadband Wireless
Advenising
profitable revenue, margin & cash flow
