Analysing and Interpreting Financial Statements Dr. Christoph Stork
Quiz What is the difference between Net Income and Net Profit? What is the difference between Revenue, Sales and Turnover? What I the difference between: Cash received Income Profit What is the difference between: Money paid Cost Loss
Introduction Analysing financial statements is important for investors, creditors, regulators as well as managers running the company Similar to a GPS on open sea. It tells you where you are and the direction the company is going
Financial Statement Balance Sheet Income Statement Cash Flow Statement
Balance Sheet
Balance Sheet Financial snapshot taken at a point in time of all the assets the company owns and all the claims against those assets Shareholder s equity = assets - liabilities (equals the value of the shareholder s investment) Assets Liabilities Shareholder equity
Balance Sheet 2011 2012 Change Assets Cash + Accounts Receivable + Other current assets = Total current assets + Property, plant, equipment + other assets Listed by decreasing liquidity, i.e.speed item can turned into cash = Total Assets Liabilities Accounts payable + Other current liabilities = Total current liabilities + Long term debt + other long-term liabilities = Total liabilities Shareholder s equity Common stock Retained earnings Total liabilities and shareholder s equity
Quiz How does the shareholder s equity change if: The company takes a loan ZAR 1 million The company receives ZAR 10,000 payment from customer
Income & Cash Flow Statement
Income & Cash Flow Statement If balance sheet equals a snapshot then income and cash flow statements equal a video recording of two accounts of the balance sheet. Income statement: displays revenues and expenses for the financial year (Revenues - expenses = net income) Cash flow statement provides detailed look at the changes of the companies cash balance over time
Accrual Accounting 1) Identify the revenues for a period 2) Match the corresponding costs Revenue is not the same as cash received! Revenue is recognised as soon as the effort required to generate the sale is substantially complete...and payment certain... Example: an increase in accounts receivable from one year to the next implies that more revenue was made than cash received.
Depreciation Fixed assets often last longer than 1 year, i.e. they contribute to revenue generation for longer than 1 year Example: a newly purchased Taxi. Treating the purchase as an expense in the year the taxi was bought would mean that in this year the net profit would be lower and in subsequent years higher Distortion can be avoided by using depreciation: spreading the cost of the Taxi over its expected life
Taxes Often companies file two financial statements, 1 for the shareholders and 1 for Ministry of Finance Shareholders: accurately portray the company s financial performance Tax: minimise taxes Example: depreciation - using the most rapid method of depreciation over the shortest useful life that the tax authority allows
Cash Flow Cycle
Cash Flow Timely conversion of cash into inventory, accounts receivable and back into cash is the lifeblood of any company If severely interrupted, company might become insolvent Cash flow does not equal profit Cash in does not equal revenues Cash out does not equal expenses
Quiz A company can make a profit in a financial year and still be insolvent: How?
Cash Flow Definitions Net Cash Flow = Net Income (Profit)+ Non-cash items Also known as cash earnings More or less net income + depreciation (both taken from income statement) Cash Flow from Operating Activities = Net Cash Flow +/- changes in current assets and liabilities Companies have to report this in most countries Avoids changes in current assets and liabilities to distort the picture Remember! Net Income= Revenues -Expenses, increase in current assets (inventory e.g.) are expenses, so one would slap that on top.
Value Problem Market vs. Book Value Property bought 50 years ago is more worth than it is in the book for e.g. Value of a brand name and consumer loyalty Shareholder s equity does not refer to the future but the end of the last financial year Market value= shares(outstanding)* share price Economic Income vs. Accounting income Difference between realized and unrealized income Example: shares bought and dividends accountant - only dividend is income; economist-also change in value of shares is income Imputed Costs Income statement does not take into account the cost of equity (dividends)
Analysing the Income Statement How did the company do in the last period? How might it do in the future?
Performance Measures Net Income (bottom line): revenues - expenses Operating Income: profit from day-to-day operations excluding taxes, interest income and expenses, and what is known as extraordinary items (unusual in nature and infrequent in occurrence). EBIT (E-bit): Earnings before interests and taxes (measure free of financing) EBITDA (E-bit-da): Earnings before interests and taxes, depreciation and amortization (measure free of financing and accounting)
Ratios Return on Equity (ROE) Net Income / Shareholder s Equity Efficiency with which the company uses owner s capital Profit Margin Net Income / Sales Fraction of each ZAR of sales that trickles down the income statement to profits Asset Turnover Financial Leverage Sales / Assets Assets / Shareholder Equity Sales generated per ZAR of assets (ideal produce income without assets) Challenge: strike a prudent balance: debt is cheaper than equity, equity is safer ROE = NetIncome Sales Sales Assets Assets Shareholder' sequity
Ratios Profit Margin and Asset Turnover are inversely related - sell more cheap or sell less dear! Liquidity Ration=Current Assets / Current Liabilities (the lower, the riskier) P/E Ration = Price per share / Earnings per share P/E is not a good performance measure since price subject to expectations. It is the price for 1ZAR of current earnings = future earnings and the risk associated with those earnings
Return on Equity Telecom Namibia MTC 60% 50% 48% 45% 51% 51% 52% 46% 40% 30% 20% 10% 9% 7% 11% 15% 21% 13% 0% 2000 2001 2002 2003 2004 2005
Top 10 Telcos from S&P + MTC and Telecom Namibia 2005 Return on Equity Industry Average MTC BT Group Plc France Telecom Verizon Communcations Inc NTT Docomo Inc Telecom Namibia SBC Communications Inc Telefonica SA Nippon Telegraph & Telephone Telecom Italia SPA - NEW Vodafone Group Plc Deutsche Telekom -70.5% -7.4% 8.9% 46.1% 42.2% 23.9% 19.3% 16.2% 13.5% 12.3% 11.9% 9.3% 8.3%
Profit Margin Telecom Namibia MTC 40% 35% 30% 27% 30% 34% 34% 25% 20% 20% 21% 15% 12% 10% 5% 5% 3% 5% 7% 8% 0% 2000 2001 2002 2003 2004 2005
Top 10 Telcos from S&P + MTC and Telecom Namibia 2005 Profit Margins Industry Average MTC NTT Docomo Inc SBC Communications Inc Verizon Communcations Inc Telecom Namibia Telefonica SA BT Group Plc France Telecom Nippon Telegraph & Telephone Telecom Italia SPA - NEW Deutsche Telekom Vodafone Group Plc -26.9% 6.9% 34.0% 12.9% 12.2% 10.2% 8.0% 7.8% 7.7% 7.0% 5.8% 3.9% 2.2%
Financial Leverage Telecom Namibia MTC 3.50 3.00 2.50 2.00 1.50 3.0 2.7 2.8 2.8 2.8 2.2 2.7 1.9 2.4 1.6 2.0 1.4 1.00 0.50-2000 2001 2002 2003 2004 2005
MTC: Key Financial Indicators (Group) 2005 2006 2007 2008 2009 2010 2011 Revenue N$ million 769 937 1 113 1 232 1 390 1 407 1 453 Shareholders Equity N$ million 646 903 999 1 136 1 153 1 166 1 121 Taxation N$ million 146.5 171.3 177.0 180.7 198.8 187 160 Net profit after tax N$ million 293 337 340 358 388 397 319 Capital Expenditure in million N$ 160 188 340 286 260 410 237 Total assets N$ million 915 1 169 1 329 1 608 1 632 1 791 1 696 Dividend N$ million 110.0 80.0 245.0 220.8 369.5 383,6 364 Dividend as % of after tax profit 96,7% 114,2% Return on equity 45,4% 37,3% 34,0% 31,5% 33,6% 34,0% 28,4% Profit Margin 38,1% 36,0% 30,5% 29,0% 27,9% 28,2% 21,9% EBITDA margin 61% 60,2% 52,2% 50,9% 53,8% 55,8% 53,2% Active SIM cards in 1000 403,7 555,5 743,5 1 009 1 284 1 535 1854,7 Full-time Staff 276 272 296 397 416 395 407 Monthly ARPU in N$ 159 141 125 102 90 54 Source: MTC Annual Reports
Telkom SA Limited Group Annual Results for the year ended 31 March 2012 GROUP SALIENT FEATURES FOR THE YEAR ENDED 31 MARCH 2012 ADSL subscribers increased 10.0% to 827,091. Calling plan subscribers increased 4.6% to 819,019. Managed data network sites increased 13.9% to 38,902. Operating revenue down 0.7% to R33.1 billion. Mobile EBITDA loss of R2.2 billion after elimination. Group EBITDA margin decreased to 25.8% from 28.1%. Fixed-line EBITDA margin increased from 36.8% to 38.6%. Basic earnings per share decreased 97.8% to 10.4 cents. Free cash flow generated of R2.1 billion (2011: R2.2 billion). Net debt to EBITDA remains 0.5x. Active mobile subscribers increased 213.2% to 1,483,401 with a blended ARPU of R68.86. Fixed-line employee expenses decreased 15.0% to R6.6 billion. Headline earnings per share decreased 33.0% to 324.7 cents.
Financial highlights ZAR million 35 33,308 33,079 30 25 20 15 10 5 9,370 8,546 Operating revenue EBITDA 2011 2012
3. OPERATIONAL DATA Year ended 31 March 2011 2012 % Telkom South Africa ADSL subscribers 1 751,625 827,091 10.0 Calling plan subscribers 783,193 819,019 4.6 Closer subscribers 753,951 787,117 4.4 Supreme call subscribers 29,242 31,902 9.1 WiMAX subscribers 3,199 3,381 5.7 Internet all access subscribers 2 543,316 523,057 (3.7) Fixed access lines ( 000) 3 4,152 3,995 (3.8) Postpaid PSTN 2,552 2,499 (2.1) Postpaid ISDN channels 772 767 (0.6) Prepaid 703 623 (11.4) Payphones 125 106 (15.2) Fixed-line penetration rate (%) 8.3 7.9 Revenue per fixed access line (ZAR) 4,863 4,865 Total fixed-line traffic (millions of minutes) 20,545 19,372 (5.7) Local 5,563 4,513 (18.9) Long distance 2,806 2,683 (4.4) Fixed-to-mobile 3,563 3,785 6.2 Fixed-to-fixed 104 164 57.7 International outgoing 537 360 (33.0) Subscription based calling plans 3,988 3,636 (8.8) Interconnection 3,984 4,231 6.2 Mobile domestic 1,919 1,945 1.4 Mobile international 134 432 222.4 Fixed 951 1,055 10.9 International 980 799 (18.5) Managed data network sites 34,163 38,902 13.9 Telkom Company employees 22,884 20,939 (8.5) Fixed access lines per employee 4 182 191 4.9 Telkom Mobile Total subscribers 1,199,596 3,053,393 154.5 Active subscribers 5 473,604 1,483,401 213.2 Prepaid 440,775 1,039,448 135.8
5. FINANCIAL PERFORMANCE GROUP OPERATING REVENUE Year ended 31 March In ZAR millions 2011 2012 % Fixed-line 31,533 30,638 (2.8) Mobile 81 1,200 1,381.5 Other International iwayafrica 413 368 (10.9) Other South African Trudon 1,167 1,180 1.1 Swiftnet 127 128 0.8 Data Centre Operations 1,240 1,406 13.4 Corporate centre 83 78 (6.0) Eliminations (1,336) (1,919) 43.6 Total 33,308 33,079 (0.7)
Fixed-line operating revenue Year ended 31 March In ZAR millions 2011 2012 % Subscriptions and connections 6,763 6,900 2.0 Traffic 12,045 11,078 (8.0) Local 2,836 2,409 (15.1) Long distance 1,588 1,365 (14.0) Fixed-to-mobile 5,181 5,121 (1.2) Fixed-to-fixed 78 110 41.0 International outgoing 725 495 (31.7) Subscription based calling plans 1,637 1,578 (3.6) Interconnection 1,679 1,757 4.6 Mobile domestic 498 375 (24.7) Mobile international 186 630 238.7 Fixed 328 262 (20.1) International 667 490 (26.5) Data 10,699 10,517 (1.7) Data connectivity 5,325 5,365 0.8 Leased line facilities 2,182 2,310 5.9 Internet access and related services 1,814 1,689 (6.9) Managed data network services 1,243 1,101 (11.4) Multi-media services 135 52 (61.5) Other 347 386 11.2 Total 31,533 30,638 (2.8) Operating revenue from the fixed-line segment decreased by 2.8% to R30,638 million (2011: R31,533 million) primarily
GROUP OPERATING EXPENSES Year ended 31 March In ZAR millions 2011 2012 % Employee expenses 9,716 8,636 11.1 Payments to other operators 5,567 5,484 1.5 Selling, general and administrative expenses 5,545 7,193 (29.7) Service fees 2,886 2,974 (3.0) Operating leases 764 825 (8.0) Depreciation, amortisation, impairments and write-offs 4,965 6,138 (23.6) Total 29,443 31,250 (6.1) Group operating expenses increased by 6.1% to R31,250 million (2011: R29,443 million) in the year ended 31 March 2012,
Fixed-line operating expenses Year ended 31 March In ZAR millions 2011 2012 % Employee expenses 7,810 6,641 15.0 Salaries and wages 5,761 5,618 2.5 Benefits 1,832 1,520 17.0 Workforce reduction expenses 650 8 98.8 Employee related expenses capitalised (433) (505) 16.6 Payments to other operators 5,193 4,839 6.8 Mobile network operators 3,704 3,218 13.1 International network operators 792 1,029 (29.9) Fixed-line network operators 404 306 24.3 Data commitments 293 286 2.4 Selling, general and administrative expenses 3,541 3,834 (8.3) Materials and maintenance 1,843 1,960 (6.3) Marketing 377 567 (50.4) Bad debts 361 245 32.1 Other 960 1,062 (10.6) Service fees 3,158 3,123 1.1 Property management 1,336 1,292 3.3 Security and other 779 663 14.9 Data centre operations intercompany transactions 1,043 1,168 (12.0) Operating leases 647 620 4.2 Buildings 164 162 1.2 Equipment 31 14 54.8 Vehicles 452 444 1.8 Depreciation, amortisation, impairments and write-offs 4,135 4,581 (10.8) Depreciation 3,396 3,837 (13.0) Amortisation 569 538 5.4 Impairments and write-offs 170 206 (21.2) Total 24,484 23,638 3.5 Fixed-line expenditure decreased 3.5% in the year ended 31 March 2012, to R23,638 million (2011: R24,484 million),
Mobile operating expenses Year ended 31 March In ZAR millions 2011 2012 % Employee expenses 140 195 (39.3) Payments to other network operators 161 449 (178.9) Selling, general and administrative expenses 769 2,536 (229.8) Service fees 87 397 (356.3) Operating leases 27 99 (266.7) Depreciation, amortisation, impairments and write-offs 46 219 (376.1) Total 1,230 3,895 (216.7) Mobile expenditure increased 216.7% in the year ended 31 March 2012 to R3,895 million (2011: R1,230 million), mainly
EBITDA PER SEGMENT Year ended 31 March In ZAR millions 2011 2012 % Fixed-line 11,593 11,813 1.9 EBITDA margin (%) 36.8 38.6 Mobile (1,103) (2,425) (119.9) EBITDA margin (%) (1,361.7) (202.1) Other International (116) (45) 61.2 EBITDA margin (%) (28.1) (12.2) Other South African (959) (917) 4.4 EBITDA margin (%) (36.6) (32.8) Eliminations (45) 120 366.7 Total 9,370 8,546 (8.8) FREE CASH FLOW Year ended 31 March In ZAR millions 2011 2012 % Cash generated from operations before dividends paid 6,778 6,704 (1.1) Less: Cash flows from investing activities (4,545) (4,570) (0.6) Free cash flow 2,233 2,134 (4.4) The Group s free cash flow decreased 4.4% to R2,134 million from R2,233 million as at 31 March 2011. The decrease in the
Condensed consolidated provisional statement of comprehensive income for the year ended 31 March 2012 Restated* 2011 2012 Notes Rm Rm Continuing operations Total revenue 4 33,879 33,668 Operating revenue 33,308 33,079 Other income 540 579 Operating expenses 29,443 31,250 Employee expenses 6.1 9,716 8,636 Payments to other operators 5,567 5,484 Selling, general and administrative expenses 6.2 5,545 7,193 Service fees 2,886 2,974 Operating leases 764 825 Depreciation, amortisation, impairment and write-offs 6.3 4,965 6,138 Results from operating activities 4,405 2,408 Investment income 213 238 Finance charges and fair value movements 1,068 1,872 Interest 898 765 Foreign exchange and fair value losses 170 1,107 Profit before taxation 3,550 774 Taxation 7 979 595 Profit from continuing operations 2,571 179 Loss from discontinued operations 8 1,229 269 Profit/(loss) for the year 1,342 (90) Other comprehensive income Exchange differences on translating foreign operations 30 (30) Available-for-sale investment (5) Defined benefit plan actuarial (losses)/gains (741) 65 Defined benefit plan asset limitations 584 Income tax relating to components of other comprehensive income 9 44 (18) Other comprehensive (loss)/income for the year, net of taxation (83) 12 Total comprehensive income/(loss) for the year 1,259 (78) Profit/(loss) attributable to: Owners of Telkom 1,222 (216) Non-controlling interests 120 126 Profit/(loss) for the year 1,342 (90) Total comprehensive income/(loss) attributable to: Owners of Telkom 1,139 (204) Non-controlling interests 120 126 Total comprehensive income/(loss) for the year 1,259 (78) Total operations Basic and diluted earnings/(loss) per share (cents) 10 239.9 (42.3) Continuing operations Basic and diluted earnings per share (cents) 10 481.2 10.4 * The amounts have been restated for the effect of the fixed-line business of Multi-Links Telecommunications Limited being
Condensed consolidated provisional statement of financial position Audited at 31 March 2012 2011 2012 Notes Rm Rm ASSETS Non-current assets 43,943 42,362 Property, plant and equipment 37,304 36,155 Intangible assets 3,965 3,555 Investments 2,103 2,260 Deferred expenses 83 47 Finance lease receivables 239 244 Deferred taxation 56 53 Other financial assets 193 48 Current assets 10,315 10,206 Inventories 1,121 993 Income tax receivable 105 26 Current portion of deferred expenses 10 Current portion of finance lease receivables 118 128 Trade and other receivables 5,503 5,696 Other financial assets 1,674 2,195 Cash and cash equivalents 12 1,784 1,168 Assets of disposal group classified as held for sale 8 89 Total assets 54,347 52,568 EQUITY AND LIABILITIES Equity attributable to owners of the parent 29,635 29,707 Share capital 5,208 5,208 Treasury shares (771) (771) Non-distributable reserves 1,764 1,887 Retained earnings 24,467 23,383 Reserves of disposal groups classified as held for sale 8 (1,033) Non-controlling interests 387 434 Total equity 30,022 30,141 Non-current liabilities 14,974 12,718 Interest-bearing debt 13 8,198 5,897 Other financial liabilities 69 26 Employee related provisions 14 4,711 4,880 Non-employee related provisions 14 29 36 Deferred revenue 1,073 1,132 Deferred taxation 894 747 Current liabilities 8,899 9,709 Trade and other payables 4,782 4,291 Shareholders for dividend 21 23 Current portion of interest-bearing debt 13 157 1,289 Current portion of employee related provisions 14 1,932 1,652 Current portion of non-employee related provisions 14 86 240 Current portion of deferred revenue 1,771 1,995 Income tax payable 16 87 Other financial liabilities 123 129 Credit facilities utilised 12 11 3 Liabilities of disposal group classified as held for sale 8 452 Total liabilities 24,325 22,427 Total equity and liabilities 54,347 52,568
Exercise: Financial ratios for Telkom Group
Exercise: SAPO
Group financial overview Performance highlights Total assets 8.3% to R9,4 billion NAV 14.9% to R2,26 billion Postbank deposits 10.8% to R3,65 billion Cash and investments 10.0% to R6,66 billion Return on assets 1.6% to 4.02% Cash flow from operating activities 93.7% to R41,0 million 500 Financial performance for 2009/10 Profit before tax 7,000 Revenue* 6,000 Expenses 11 Profit margin 400 300 200 6,000 5,000 4,000 3,000 2,000 5,000 4,000 3,000 2,000 10 9 8 7 6 5 4 3 100 1,000 1,000 2 1 0 0 0 0 South African Post Office Annual Report 2010
Financial performance for 2009/10 Change 2009/10 2008/09 R 000 R 000 R 000 Revenue* down (0.4%) (22,073) 5,552,757 5,574,830 Expenses down (2.1%) (113,095) 5,347,569 5,460,664 Net fi nance revenue down (22.4%) (117,893) 407,417 525,310 Profi t before tax down (22.4%) (109,543) 378,698 488,241 Taxation down (34.5%) (43,231) (82,107) (125,338) Net profit down (18.3%) (66,312) 296,591 362,903 Total assets up 8.3% 725,056 9,416,285 8,691,229 NAV up 14.9% 293,130 2,255,954 1,962,824 Cash and investments up 10.0% 605,836 6,661,219 6,055,383 Depositors book up 10.8% 356,120 3,651,987 3,295,867 Employment benefits obligations up 10.3% 115,407 1,236,850 1,121,443 Cash flow from operating activities down (93.7%) (608,723) 41,094 649,817 Profit margin (PBT)** down (23.2%) (2.2%) 7.2% 9.3% Net profi t margin** down (19.1%) (1.3%) 5.6% 6.9% ROA (PBT) down (28.4%) (1.6%) 4.0% 5.6% ROA (NP) down (24.6%) (1.0%) 3.1% 4.2% *Revenue excludes fi nance income R219,503 (2009: R324,084) and other operating income R180,982 (2009: R139,336) **These calculations are based on revenue excluding Postbank interest income R274,985 (2009: R350,099)
Employee headcount Total headcount Permanent Temporary 2009/10 16,542 575 2008/9 17,964 906 2007/8 16,267 871 Total headcount by region Financial year Location 2009/10 2008/09 Head Offi ce 2,193 2,421 Witwatersrand 4,015 4,371 Northern Region 3,139 3,500 Eastern Region 1,506 1,649 Western Region 2,409 2,668 Central Region 1,800 1,993 KwaZulu-Natal 2,055 2,268
Statement of Financial Position at 31 March 2010 Group Company Figures in Rand Thousand Note(s) 2010 2009 2010 2009 Assets Non-current assets Property, plant and equipment 2 1,071,033 1,142,419 1,036,401 1,097,617 Non-current assets held for sale 3 105 105 Investment property 4 19,482 18,523 19,482 18,523 Intangible assets 5 62,213 55,104 61,111 54,149 Other fi nancial assets 6 439,395 371,427 439,395 371,427 Investments in subsidiaries 7 42,603 42,603 Deferred tax 9 363,558 289,167 357,095 283,701 1,955,681 1,876,745 1,956,087 1,868,125 Current assets Inventories 10 48,326 59,190 48,082 58,957 Other fi nancial assets 6 181,665 190,625 114,022 99,099 Investments 8 3,132,638 2,452,242 3,117,638 2,452,242 Trade and other receivables 11 569,394 509,286 524,311 451,943 Cash and cash equivalents 12 3,528,581 3,603,141 3,497,130 3,554,006 7,460,604 6,814,484 7,301,183 6,616,247 Total assets 9,416,285 8,691,229 9,257,270 8,484,372 Equity and liabilities
Equity and liabilities Equity Share capital 13 200,940 200,940 200,940 200,940 Available-for-sale reserve 3,435 6,896 3,435 6,896 Funds received from Shareholder 14 750,000 750,000 750,000 750,000 Retained income 1,301,579 1,004,988 1,258,737 980,690 2,255,954 1,962,824 2,213,112 1,938,526 Liabilities Non-current liabilities Deferred lease liability 16 25,205 70,962 24,427 47,676 Employment benefi t obligations 17 1,018,405 942,854 1,013,639 937,434 Provisions 18 11,259 10,513 6,571 6,033 Deferred tax 9 113,117 105,629 112,177 105,152 1,167,986 1,129,958 1,156,814 1,096,295 Current liabilities Trade and other payables 19 1,051,785 1,089,669 968,340 953,556 Funds collected on behalf of third parties 22 236,125 272,853 236,125 272,853 Amount owing to Shareholder 20 206,395 185,130 206,395 185,130 Outstanding insurance claims 21 4,383 3,664 Deferred lease liability 16 5,667 9,756 5,632 9,723 Unearned revenue 24 320,848 253,658 309,859 249,158 Deposits from the public 23 3,651,987 3,295,867 3,651,987 3,295,867 Employment benefi t obligations 17 218,445 178,589 212,296 173,762 Interest bearing borrowings 15 7 7 Taxation 25 47,670 8,021 47,670 8,262 Subsidy unutilised 37.2 249,040 301,233 249,040 301,233 5,992,345 5,598,447 5,887,344 5,449,551 Total liabilities 7,160,331 6,728,405 7,044,158 6,545,846 Total equity and liabilities 9,416,285 8,691,229 9,257,270 8,484,372
Statement of Comprehensive Income for the year ended 31 March 2010 Group Company Figures in Rand Thousand Note(s) 2010 2009 2010 2009 Revenue 26 5,277,772 5,224,731 4,881,289 4,752,528 Postbank interest income 30 274,985 350,099 274,985 350,099 Add: Other operating income 27 180,982 129,336 214,918 158,808 5,733,739 5,704,166 5,371,192 5,261,435 Less: Consumables and inventory utilised (252,334) (274,930) (252,334) (274,930) Gross profit 5,481,405 5,429,236 5,118,858 4,986,505 Less: Employee benefi t expenditure (2,961,876) (2,899,448) (2,854,438) (2,796,512) Transport expenditure (526,576) (600,305) (377,134) (414,886) Property operating leases (200,213) (191,665) (207,942) (172,042) Vehicle operating leases (65,146) (64,397) (65,146) (64,397) Other expenses (1,284,497) (1,315,441) (1,186,529) (1,164,991) Postbank interest paid to customers 31 (56,927) (114,478) (56,927) (114 478) Operating profi t before employee costs 386,170 243,502 370,742 259,199 Less: Post-retirement medical benefi ts (196,831) (44,951) (197,737) (44,951) Operating profit before finance costs 28 189,339 198,551 173,005 214,248 Finance income 30 219,503 324,084 209,951 307,609 Finance costs 31 (30,144) (34,394) (28,979) (34,115) Profit before taxation 378,698 488,241 353,977 487,742 Taxation expense 32 (82,107) (125,338) (75,930) (120,902) Profit for the year 296,591 362,903 278,047 366,840 Other comprehensive income: Available-for-sale fi nancial assets adjustments 41 (3,461) 3,175 (3,461) 3,175 Total comprehensive income for the year 293,130 366,078 274,586 370,015