The consolidated net profit after tax and minorities was 10.4 percent higher than the previous year. Earnings per share grew by 10.4 percent to 31.5 cents.

Chief Executive Officer, Dr Ziggy Switkowski, said the results reflected two different operating environments, with a strong first half followed by a flat second half as the industry slowed.

Dr Switkowski noted that when profit was normalised to take into account one-off items that included asset sales, investment writedowns, superannuation writeback and accounting changes in revenue recognition, it represented an underlying growth of 5.5 percent in earnings before interest and tax (EBIT) to $6.4 billion. Key EBIT drivers included wholesale, mobiles, data and the Internet.

The result saw Telstra continue to improve its customer service, pricing options, product range and cost structure and hold margins despite intense competition and an industry slowdown.

Telstra made significant progress on cost reduction with normalised operating expense growth (before depreciation, amortisation and interest) contained to 0.8 percent.

Dr Switkowski said: Telstra is a growing company, investing in the future, rigorous in managing costs, yet focused on improving customer service levels in a very competitive industry. Our current performance, financial strength and the range of offerings for our customers position us well for future success.

The company has an exceptionally strong balance sheet, with excellent ratings from the key agencies, which augurs well for the future.

Telstra grew its core business domestically despite the absorption of the GST into its local call cost, and has stabilised its market shares.

We served our customers better and we managed aggressive competition. We are now positioned to succeed through any period of industry rationalisation.

Our underlying sales revenue was $18.9 billion, representing growth of 3.2 percent for the full year. This top line result was impacted by slowing growth in the mobile sector, market share losses in the fixed line business and intense price-based competition in general.

However, more customers are sending SMS messages, installing FOXTEL, using our Yellow Pages® and joining Telstra BigPond. They are choosing our packages and bundled services, using our valued added services such as Easycall and Calling Number Display and relying on our GSM and CDMA mobile networks.

As the rate of growth slowed in the industry Telstra took decisive action on costs and is well poised to take advantage of any upswing.

Our cost reduction efforts have been a key driver in delivering our overall result. Cost reduction has been achieved while at the same time our service performance has been at the highest level in Telstra’s history.

We could not have achieved this without the tremendous focus our staff have on customer service and their work commitment, he said.

Telstra also reduced its operational capital expenditure by 11.9 percent to $4.2 billion, reflecting the completion of major projects such as CDMA and excluding the $302 million spent on buying 3G spectrum.

Telstra’s offshore strategy in Asia and the performance of its Asian investments are tracking to plan except for a write down of the Regional Wireless Company (RWC) value by $A1 billion. This adjustment was necessary because of lower valuations worldwide and the need to have a fair, contemporary value of the asset on Telstra’s books. The revaluation was foreshadowed to media and analysts recently at an Asian venture briefing.

With the $852 million profit on the sale of Telstra’s Global Wholesale assets to Reach, the net impact of the RWC writedown and the Reach transactions on Telstra’s EBIT was a one-time $147 million loss.

Telstra Directors have declared a final ordinary dividend of 11 cents per share fully-franked at a 30 percent tax rate bringing the full year dividend to 19 cents per share. This represents a total payout of $2.445 billion for the year, demonstrating the confidence the Directors have in the company’s future and the strength of its balance sheet.

The record date of payment for the final dividend is 21 September and the dividend will be paid on 26 October. Shares begin trading ex-dividend on 17 September.

SOURCE: COMPANY PRESS RELEASE