MELBOURNE, Australia -- Telstra today announced a record net profit after minorities of A$4.118 billion for the 2003/2004 financial year, an increase of A$689 million or 20.1 per cent, on the prior corresponding period.

The reported net profit which reflected a continued focus on margins and the impact of the Telstra share buy back enabled underlying earnings per share to grow by nearly three per cent to 32.6 cents per share.

Underlying sales revenue was A$20.693 billion, up 1.0 per cent for the Telstra Group with the company seeing growth across mobiles, internet and IP solutions, PSTN products and advertising and directories. Underlying domestic sales revenue was A$19.165 billion, an increase of A$451 million or 2.4 per cent, excluding revenue from construction activity and cable recovery.

Telstra's domestic revenue grew by 3 per cent in the second half of the financial year, demonstrating a solid two quarters of growth.

Underlying earnings before interest and tax (EBIT) was up A$135 million or 21 per cent to A$6.692 billion with reported EBIT increasing by A$837 million or 14.6 per cent to A$6.560 billion. This comparison is affected by Reach-related adjustments in both years. Underlying net profit after minorities grew by A$80 million or 2.0 per cent to A$4.154 billion.

Reported return on equity increased by 3.6 per cent points to 26.8 per cent.

The Telstra Board of Directors declared a final ordinary dividend of 13 cents per share, bringing the total ordinary dividend declared for the year to 26 cents, a total of A$3.28 billion, up 8.3 per cent excluding special dividends on last year.

As part of the recently announced three year A$1.5 billion per year capital management program, Telstra plans to conduct its second off-market share buy back of around A$750 million.

This is expected to further improve both the company's earnings per share and to increase returns to shareholders. Details of the buy back are planned to be announced towards the end of September.

Telstra also plans to pay a fully franked special dividend of 6 cents per share with the 2004/2005 interim dividend scheduled for payment on Friday, 29 April 2005.

The combined effect of the company's ordinary dividends and the first instalment of the capital management program mean that total cash returns to shareholders in respect of the 2004 financial year will be in excess of 6.6 percent of the company's market capitalisation, before franking credits.

CEO, Dr Ziggy Switkowski said the full year result, the share buy back and the special dividend payment announcement reflected Telstra's very sound financial settings and confidence in solid future performance.

"Telstra has one of the strongest financial positions of any corporation in Australia. The indication of its free cash flow strength is demonstrated by the fact that Telstra spent A$636 million on Trading Post, A$3.2 billion on dividends, A$1 billion on the share buy back and increased net debt by only A$195 million," he said.

"Importantly, Telstra's commitment to customer service has been reinforced with additional capital and operating expenditure being dedicated to the customer access network to ensure ongoing improvement in customer service, as well as an additional commitment to its email platforms.

"Resourcing and training have also been increased in call centres to meet sharp rises in broadband and other product demand and enquiries," he said.

Telstra Corp.