Comprehensive Financial Analysis of Telstra Corporation Limited

This report provides a comprehensive financial analysis of Telstra Corporation Limited, examining its core business activities, business segments, industry competitors, and financial structure. The analysis includes key elements of financial performance such as revenue, finance costs, profit, and property, plant, and equipment, with comparisons between 2016 and 2017. The report also covers Telstra's accounting policies regarding property, plant, equipment, and intangible assets, including impairment considerations. The company's performance is evaluated based on IFRS and AASB rules, with insights into events occurring after the balance sheet date and fund sources. The report highlights Telstra's position in the telecommunications industry, emphasizing its financial health and strategic decisions. The report also explores the financial statements prepared as per IFRS and AASB rules, including amendments applicable from July 1, 2016. The report also covers the impairment of assets and accumulated losses, and provides references to the sources used.

RUNNING HEAD: CORPORATE ACCOUNTING
CORPORATE ACCOUNTING

CORPORATE ACCOUNTING 1
Contents
TELSTRA CORPORATION LIMITED...............................................................................................2
INTRODUCTION.................................................................................................................................2
CORE BUSINESS ACTIVITIES...............................................................................................................2
BUSINESS SEGMENTS........................................................................................................................2
INDUSTRY AND COMPETITORS..........................................................................................................3
FINANCIAL STRUCTURE......................................................................................................................3
KEY ELEMENTS OF THE FINANCIAL PERFORMANCE...........................................................................4
EVENTS OCCUR AFTER BALANCE SHEET DATE...................................................................................5
ACCOUNTING POLICIES......................................................................................................................6
PROPERTY, PLANT AND EQUIPMENT.................................................................................................6
INTANGIBLE ASSETS...........................................................................................................................7
IMPAIRMENT ASSETS AND ACCUMULATED LOSSES..........................................................................8
REFERENCES..........................................................................................................................................9

CORPORATE ACCOUNTING 2
TELSTRA CORPORATION LIMITED
INTRODUCTION
The Telstra Corporation limited is the largest Australian based telecommunication and media
company which is publicly listed in Australian market (ASX: TLS). The head office is
located in Melbourne, Australia. Currently company is operating in nearly 20 nations with
manpower of 32, 000 staff (Telstra, 2018).
CORE BUSINESS ACTIVITIES
The company operates and builds telecom networks, voice, mobile, pay television, access of
internet, telephone lines to the corporates and houses, directory and other goods and services
(Financial Times, 2018). Further the company is providing approximately 17.6 million
mobile services, 3.5 million fixed broadband services and 5.1 million voice services (Telstra,
2018).
BUSINESS SEGMENTS
The company is operated through four business segments. These are as follows:
1. Global enterprise and service segment:
This segment offers contract and sale management for government and corporate
clients.
2. Wholesale Segment:
This segment offers wide varieties of wholesale telecom products and amenities
delivered over Network of Telstra and other support system to other importers,
carriage and internet service providers (Financial Times, 2018).
3. Operations Segment:
This segment offers planning, designing, engineering, construction etc. of Telstra
networks, IT solution.

CORPORATE ACCOUNTING 3
4. Retail Segment
This segment offers telecom services, products, etc. to fixed lines, mobile phones,
broadband, Pay television etc. (Financial Times, 2017).
The main objective of Telstra is to be a best class technology company that enables people to
connect and craft bright future for everyone (Telstra, 2018).
INDUSTRY AND COMPETITORS
Telstra Corporation limited is operating in Telecom and technology sector which is the
growing industry in the world. The company offers technology and communication services
in Australia with the objective of driving productivity through the best products and services
and network superiority (Bloomberg, 2018). The main competitor is: Optus.
Optus provides many services such as mobile services, national services, network services,
long distance services, internet services, satellite services, media services etc. The position of
this company is number two with the market share of nearly 18-23% (Bloomberg, 2018).
FINANCIAL STRUCTURE
The financial structure of the company in 2017 financial year is sound because company
discloses following items:
Particulars 2017 (million) 2016 (million) % change
Revenue $ 26013 $ 25911 +0.40%
Finance Costs $ 729 $ 796 -0.08%
Profit $ 3874 $ 3832 +1.09%

CORPORATE ACCOUNTING 4
Property, Plant and
Equipment
$ 21350 $ 20581 +0.04%
From the results of above table, it has been analysed that financial structure of Telstra
Corporation limited is satisfactory because in the financial year 2017, the company had
reported increment in profit by 1.09% with the decrement in finance costs by 0.08% from last
year (2016). Telstra had reported a rise in property, plant and equipment by $ 42 million that
is + 1.09%. Revenue had also increased to $ 26013 million from $ 25911 million from past
year. These highlights shows that the company’s overall performance is said to be acceptable
(Telstra, 2017; 2016).
Funds from internal sources:
Particulars 2017 ($m) 2016 ($m)
Contributed equity 4530 5284
(Telstra, 2017; 2016).
Funds from external sources:
Particulars 2017 ($m) 2016 ($m)
Domestic Borrowings 3455 2858
Loans from Banks 709 310
Finance Leases 341 389
(Telstra, 2017; 2016).
Thus from the above table, this indicated that the company had funded both from
internal and from external sources in 2016 and 2017.

CORPORATE ACCOUNTING 5
KEY ELEMENTS OF THE FINANCIAL PERFORMANCE
The company had prepared the financial statements as per the IFRS and AASB rules.
 The Company is managed Episode Net Promoter Score by 3 points up from 2016
financial year.
 In 2017, Net profit after tax increased to $ 3874 million from $ 3832 million that is
1.09% increment in net profit (Telstra, 2017; 2016).
 In 2017, total income increased to $ 28205 million that is up by 4.3%.
 The final dividend for the year 2017 was $ 31 cents per share.
 Earnings per share has increased to 32.5 cents in FY 2017 from 31.6 cents in 2016.
Thus, it was resulted to rise by 2.8 cents for the year (Telstra, 2017; 2016).
 The net finance costs of the company had declined by $ 16.8 million in 2017.
 Total revenue increased by 0.4% from 2016 results (Telstra, 2017; 2016).
 Total assets decreased by 2.7 % (2017: $ 42133.0 million; 2016: $ 43286 million).
 Net assets decreased by 8.5% (2017: $ 14560.0 million; 2016: $ 15907 million).
 Telstra had reported a rise in property, plant and equipment by $ 42 million that is +
1.09% (Telstra, 2017; 2016).
 The company had purchased pay television services for $ 811 million in the year
2017.
 In 2017, the company had sold broadband system services of $ 103 million and
wholesale services of $ 58 million.
 Commitments acquired to Project Sunshine Pty Ltd for the advertising services for $
21 million in 2017 for two-year contract (Telstra, 2017; 2016).

CORPORATE ACCOUNTING 6
EVENTS OCCUR AFTER BALANCE SHEET DATE
There are no events or circumstances that has occurred after 30th June 2017 except payment
of dividends that has occurred on 28th September 2017. The dividend paid for the current year
(2017) is $ 31 cents per share (Telstra, 2017).
ACCOUNTING POLICIES
The following amendments which are applicable from July 1, 2016 are as follows:
1. AASB 2014-3 ‘Amendments to Australian Accounting Standards - Accounting for
Acquisition of Interests in Joint Operations’
2. AASB 2014-4 ‘Amendments to Australian Accounting Standards - Clarification of
Acceptable Methods of Depreciation and Amortisation’
3. AASB 2015-1 ‘Amendments to Australian Accounting Standards - Annual
Improvements to Australian Accounting Standards 20122014 Cycle’
4. AASB 2015-2 ‘Amendments to Australian Accounting Standards - Disclosure
Initiative: Amendments to AASB 101’
5. AASB 2015-9 ‘Amendments to Australian Accounting Standards - Scope and
Application Paragraphs’.
These alterations in Accounting policies and standards do not have any substantial influence
on the business results (Telstra, 2017).
PROPERTY, PLANT AND EQUIPMENT
Carrying Amount at 30th June 2017:
Particulars Land & Site
Improvements
Buildings Communication
Assets
Other Plant, Equipment
and motor vehicles
Carrying
Amount
($m)
52 620 20220 458

CORPORATE ACCOUNTING 7
(Telstra, 2017).
Accounting Policies relating to Property, Plant and Equipment:
The company had followed AASB 116 relating to property, plant and equipment. The rule of
this AASB 116 are as follows:
The property, plant and equipment will be recorded as an asset when:
 The cost of an asset is reliably measured, and
 The future economic benefits will flow to the company.
Thus in this case, property, plant and equipment covers the following assets: Land and site
improvements, Buildings, Communication assets and other plant, equipment and motor
vehicles. The company had recognised property, plant and equipment worth of $ 21350
million as at June 2017 and $ 20581 million as at June 2016.
Adjustments:
1. The property, plant and equipment are recognised at a cost less accumulated
depreciation less accumulated impairment losses.
where cost includes purchase cost + cost directly attributable for its proposed use.
2. In this case, borrowing costs that are directly related to acquisition of an asset are
capitalised (AASB 116, 2018).
3. Buildings, lease hold properties are depreciated on a SLM basis over estimated useful
lives.
INTANGIBLE ASSETS
Intangible assets are recognised in Statement of financial position as at 30 June 2017:
Particula
rs
Goodwill Softwar
e Assets
Licences Deferred
Expenditu
Other Intangibles

CORPORATE ACCOUNTING 8
re
Carrying
Amount
($m)
1269 4543 2325 1241 180
(Telstra, 2017).
Accounting Policies relating to Intangible assets:
The company had followed AASB 138 relating to intangible assets. The rule of this AASB
138 are as follows:
The intangible assets are those:
 which arises from contractual or other legal rights. or
 which can be separated from the entity and can be capable to sell, exchanged, rented
etc. either individually or together (AASB 138, 2018).
Thus in this case, intangible assets cover the following: Goodwill, Licences, Software assets,
deferred expenditure and other intangibles. The company had recognised property, plant and
equipment worth of $ 9558 million as at June 2017 and $ 9229 million as at June 2016
(Telstra, 2017; 2016).
IMPAIRMENT ASSETS AND ACCUMULATED LOSSES
Yes, the items of Property, Plant, and Equipment, and Intangible Assets of Telstra
Corporation limited are impaired (Telstra, 2017).
Property, Plant, and Equipment:
 Communication Assets and other plant, equipment and motor vehicles.
 The amount of total accumulated impairment losses and depreciation: $ 42962
million (as at 30th June 2017).

CORPORATE ACCOUNTING 9
Intangible Assets:
 Goodwill and Software Assets
 The amount of total accumulated impairment losses and depreciation: $ 8964 million
(as at 30th June 2017).