Telstra Ltd. Annual Report Analysis: Corporate Accounting Report

This report provides a detailed analysis of Telstra Ltd.'s financial performance based on its annual report. It begins with an executive summary and an overview of the company, its industry, and competitors. The report delves into Telstra's capital structure, including equity, retained earnings, and debt, along with its sources of finance. Key elements from the Director's Report, such as revenues, profits, operational efficiency, and dividend policies, are examined. The report also covers any reported events after the due date and changes in accounting policies. Furthermore, it provides an overview of the value of Property, Plant, and Equipment and intangible assets, along with their respective accounting policies. The analysis extends to accumulated impairment losses in both tangible and intangible assets. The report concludes with an analysis of Telstra's Corporate Social Responsibility (CSR) and sustainability initiatives, highlighting their importance. Overall, the report offers a comprehensive understanding of Telstra's financial position and operational strategies.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of Student
Name of the University
Authors’ note

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EXECUTIVE SUMMARY:
This report is providing complete idea about the Telstra Ltd. a telecommunicating
organization. In the first part of this report is providing the idea about company’s internal and
external financial resources and followed the directors report analyses the various key
elements of financial performance. Next to such analysis this report is providing the details of
Property, Plant, and Equipment and intangible assets and also the regarding accounting
policies of those assets. Next to such details this report is providing the analysis of Corporate
Social Responsibility and sustainability development including the importance of such
particulars

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Table of Contents
Introduction:...................................................................................................................3
Overview of the company:.............................................................................................3
Industry and the Competitors:........................................................................................3
Company’s capital structure and Finance Sources:.......................................................4
Key Elements relating to Directors’ Report:..................................................................5
Reported event after due date:........................................................................................6
Changes in Accounting Policies:...................................................................................6
Value of Property, Plant, and Equipment:.....................................................................7
Accounting policies relating to Property, Plant, and Equipment:..................................8
Intangible Assets:...........................................................................................................8
Accounting policies for Intangible Assets:....................................................................9
Accumulated impairment losses in Property, Plant, and Equipment:..........................10
Accumulated impairment losses in Intangible Assets:.................................................10
Key CSR and Sustainability Initiatives:.......................................................................10
Importance of Corporate Social Responsibility and sustainability development:.......11
Conclusion:..................................................................................................................12
References:...................................................................................................................13

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Introduction:
Overview of the company:
Telecommunication is one of the important factor in todays’ life. In Australia Telstra
is consider as one of the leading company, who mainly engaged in providing
telecommunication service and marketing voice plus internet accessing services. In the year
1993, OTC a government establishment in Australia was amalgamated with the Australian
Telecommunication cooperation and formed as Australian and overseas Telecommunications
Corporation, which was later renamed as Telstra Corporation Limited (Anon, 2019). This
company is providing mainly the telecommunicating services through mobile and Internet
accessing facilities. In the year 2018, this company earns a revenue of $29,124 million by
providing customer telecommunication services to the Australian public.
Industry and the Competitors:
Telstra Ltd. is mainly engaged in providing the telecommunicating and internet
accessing service facilities all over in Australia. Such company is containing the leading
position in between others company relating to telecom service providers. Many other
companies in Australia are also engaged in providing telecommunicating services
(Campopiano & De Massis, 2015). Based on the SWOT analysis different other companies
are; Optus, Vodafone and Virgin mobile. Those are the top three companies engaged in
providing telecom services in Australia.
OPTUS: The Singtel Optus Pty Ltd. or Optus is the second largest company in Australia,
which is engaged in providing telecommunicating services like Telstra Ltd. Generally the
company is providing the fixed telephonic services, mobile telephonic services, internet
accessing services and also the cable television services in Australia.

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VODAFONE: Vodafone Hutchison Australia Pty Ltd. is third largest telecommunicating and
internet service provider in Australia. It is generally the results of consolidation in between
the Vodafone (Australia) and Hutchison 3G Australia in the year of 2009. In the year 2018
the company earned a revenue amount of AU $ 3.5 billion with an approximate of 5.8 million
subscribers.
VIRGIN MOBILE: Virgin mobile Australia or VMA is consider as one of the growing
telecommunicating company, which is based in Sydney, Australia. Such company is normally
conduct their operation in Australia through over 73 retail outlets along with some flagship
stores and also via online services and telesales services. This company is mainly perform
their operations through using the network of Optus telecommunicated services.
Company’s capital structure and Finance Sources:
The financial structure of Telstra Ltd. is divided into three different parts. One is the
Equity capital of the company, the second is the amount of Retained earnings and the last one
is the amount of debt and the amount company generally borrowed from outside financial
institutions or others (Ferraris, Santoro & Dezi, 2017).
According to the Annual report 2018, of Telstra the company had total equity
amounted to $ 15,027 million, borrowings amounted to $1,635 million as current borrowings
and $15,316 as non-current borrowings (Anon, 2019).
According to the Annual report the company had total number of 11,893,297,855
authorised fully paid shares on issue. Each of the shares are carrying the rights of voting in a
meeting of this company. The company issued shares under employee share plans schemes,
the company issued around total of 5,040,872 shares of $3.50 per share. In case of
borrowings the company borrowed some amount from different sources those are like
domestic borrowings, offshored borrowings, bank loans and overdrafts, commercial papers

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and also the finance leases (Anon, 2019). As per the annual report 2018, the present amount
of borrowing of the company is as current borrowing $1,635 million and as non-current
borrowing amounted to $16,951 million.
Key Elements relating to Directors’ Report:
According to the Directors’ report, which is provided in the Annual report 2018 of the
Telstra Ltd., generally pointing 6 key elements regarding the financial performances. Those
key elements are normally used for analyse the overall performance of the company (Ketata,
Sofka & Grimpe, 2015).Those are as follows;
Revenues: It is generally consider as the important and probable sources of income for a
company. As per the Annual report the company earned an amount of $29,042 million as the
revenue for 2018.
Profits: Generally it is presenting the overall business performance of the company during a
particular period. According to the Annual report 2018, Telstra obtained a profit amounted to
$3,529 million during the year of 2018.
Operational Efficiency: It is generally representing the efficiency of the company in case of
using company’s overall resources. According to the director’s report Telstra’s is efficiently
managing the credit, which is extend to the customers.
Capital efficiency and Solvency: According to the Annual report the companies’ solvency
positions are in stable condition and the return abilities of the company from earning are also
in uniformity order.
Liquidity: Generally it is presenting the financial liquidity position during a particular period.
While the company’s current assets is greater than the current liability normally consider the

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company is having in the liquidity position. In case of Telstra Ltd. the financial condition is
presenting the same situation in the year 2018.
Dividend: As per the Annual report 2018 the company make some relevant change in their
dividend policy, which is implemented after the payment of final dividend for the financial
year 2017. According to the report the company was declared total dividend of $1,308
million in 29th February 2018.
Reported event after due date:
In case of Telstra Ltd., the Annual report of 2018 disclosing no such event, which is
occurred after the due date of 31st December 2018. As a relevant support posting the screen
shoot of such area from the Annual report.
Changes in Accounting Policies:
According to the Annual report of 2018 of Telstra Ltd. the company make some
relevant changes in its accounting policies during the period of 2018. Generally the AASB 15
provide the important changes regarding the accounting polices relating to revenues of the
company. In case of Telstra Ltd. such changes relating to accounting policies are given
below;
Accounting Head Changes in Accounting Policy
Trade and Other Receivables Generally the accrued revenues arising from
contract with individual customer has been

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presented in the current assets.
Inventories Right in case to recover the sold goods on
sale or return basis has been added with the
Inventories.
Inventories Prepayments Construction in work in progress for long-
term contracts constructing , generally
which is used to exceeded the billing
progress has been reclassified from the
Inventories to contract assets.
Intangible Assets Deferred expenditure of intangible assets
class relating to cost in case of obtaining or
fulfilling a contract has been reclassified to
deferred contract cost.
Trade and Other Payables Refund of such liabilities generally have
been added as a part of Trade and Other
Payables.
Revenue received in advance Revenues arising normally from the contract
with customers, which has been presented
generally in the contract liabilities.

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Value of Property, Plant, and Equipment:
Assets Amount (Cost- Depreciation)
Land and site improvement (52-3) = $49 million.
Building (1,381-769)= $612 million.
Communication Assets (62,111- 41046)= $21,065 million.
Other plant, equipment and motor
vehicles
(1,405-1023)= $382 million.
Total value $22,108 million.
Accounting policies relating to Property, Plant, and Equipment:
Telstra Ltd. normally in case of non-current tangible assets are reviewed using
impairment basis, in case of some certain changes relating to circumstances, which is
normally indicated that the carrying amounts are may not be properly recoverable. The
company generally using cash generated units for its tangible assets. In case of recoverable
amount of a tangible assets is higher comparing to its fair value less cost of disposal.
Generally the fair value less scrap value of such assets is evaluated with references to market
quoted price. In case of present value of the future amount, which is expected to be recovered
through the inflows of cash and also with the outflows arising from the assets’ after
continuous using and subsequent disposals. For any carrying value, which is generally
consider as an nominal expenses relating to such tangible assets is posting in the income
statement of the company (Laing & Perrin, 2014).
This particular assets including the work-in-progress is generally recorded at cost less
accumulated depreciation and impairment. The cost is generally includes the purchase price

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and cost, which is directly attributed to bringing the assets to the required locations and also
in required conditions in case of its intended use.
The provisions in case of depreciation generally used by the company is straight line
basis and which is charged in the income statement over such assets’ estimated useful life.
The depreciation method is generally start to use after the completion of installation
procedures and once such assets are ready to use.
Intangible Assets:
Telstra Ltd. is one of the leading companies in Australia relating to
telecommunicating services (Anon, 2019). The company having the following intangible
assets;
Goodwill: According to the Annual report 2018 it was valued to $1,571 million. It is one of
the core asset of the company as the goodwill is generally used to measures the company
value in front of public and other outside stakeholders (Anon, 2019).
Software assets: Telstra is one of the telecommunicating company in Australia. It is mainly
performed their operations through the using of various software. According to the Annual
report such asset is valued to $4,543 million.
Licences: the Licences is normally representing the rights to use any particular assets. In case
of Telstra such asset is valued to $2,325 million.
Deferred expenditure: the value of such particular expenditure is valued to $1241 million as
per the Annual report 2018.
Other intangible assets: the other intangible assets are valued to $332 million as per the
Annual report 2018.

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Accounting policies for Intangible Assets:
Generally the company is using capitalisation development cost if the project is
assessed to be technically and commercially feasible. In case determine the fair value the
judgement provided by the management is required. This is generally involved the estimated
timing and amounts of future cash inflows derived from the use of these assets and also
include an appropriate discounting rate, which is to be applied to the forecast cash flows. In
case of weighted average amortisation the period is given as; Software assets for 8 years,
Licences for 14 years, Deferred expenditure for 4 years and Other intangible assets for 10
years.
Accumulated impairment losses in Property, Plant, and Equipment:
Accumulated impairment losses in Intangible Assets:

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Key CSR and Sustainability Initiatives:
Corporate Social Responsibility (CSR) is generally the concepts of responsibility
relating to the corporate sector, which is normally disclosed in the report of a business. Every
organization has, a policy relating to its CSR and a duty to produces a report annually
detailing its activity. In case of each course of an organization need to recognize the
individual corporate activity which is socially responsible and activity which is not socially
responsible.
Sustainability in case of a business is also known as corporate sustainability. It is the
coordination between management and the environmental, social and financial demands and
concerns to ensure responsible, ethical and ongoing success.
The company Telstra Ltd. is need to develop their CSR and the sustainability in case
of overall development and business success. Through the CSR the company can able to
implementing such new policies regarding their business operations. Using the proper
sustainability the company can able to proper co-ordination between their performances and
the social responsibility. Through the implementations of proper sustainability the company
can able to complete their financial demands and the responsibility that need to be complete
towards management and society (Wang et al., 2015)
Importance of Corporate Social Responsibility and sustainability development:
The general importance of Corporate Social Responsibility and sustainability is are as
follows;
 Through the using of Corporate Social Responsibility the company Telstra Ltd. is able
to make improved business image in front public and outside stakeholders.