New Zealand Gazette – 1993 – No. 94

Page 1759

✨ Financial Statements



29 JUNE NEW ZEALAND GAZETTE 1759

TELECOM CENTRAL LIMITED AND SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS

(CONTINUED)

2 OPERATING EXPENSES

OTHER OPERATING EXPENSES

1993 1992
$000's $000's
Other operating expenses 329,272 346,373

Included in other operating expenses are:

  • Depreciation | 100,282 | 109,754 |
  • Audit fees | 229 | 200 |
  • Intercompany management fee| 23,730 | 18,816 |
  • Foreign exchange gains | - | (27) |
  • Lease and rental costs | 5,161 | 5,495 |

ABNORMAL REDUNDANCY AND RESTRUCTURING COSTS

A strategic restructuring of Telecom was announced towards the end of the financial year, aimed at rationalising the company structure, substantially improving service quality and reducing operating costs. For Telecom Central it is estimated that the cost of implementing this restructuring, which will take up to four years, is $82 million. This has been charged against earnings for the year ended 31 March 1993 as an abnormal restructuring cost. The estimate includes $59 million for employee redundancy costs associated with workforce reductions, with the balance related to the consolidation of both owned and leased premises, asset writedowns and costs incidental to the restructuring process.

Redundancy costs incurred in the first six months, prior to the announcement of the strategic restructuring, were included in the interim financial statements as normal operating costs, consistent with the treatment in prior years. These costs, along with redundancy costs incurred in the third quarter, have now been aggregated with the costs of the strategic restructuring and are reported as an abnormal charge amounting to approximately $94.4 million ($64.5 million after tax).

For comparative purposes, redundancy costs of approximately $13.0 million for the year ended 31 March 1992, previously reported as a normal operating cost, have been reclassified as an abnormal charge.

3 INVESTMENT INCOME/INTEREST EXPENSE

1993 1992
$000's $000's
Interest income:
- Intercompany 2,825 942
- Other 155 652
Total investment income 2,980 1,594
Interest expense:
- Intercompany (including finance lease charges) 37,209 41,660
- Other - 194
37,209 41,854
Less interest capitalised (568) -
Total interest expense 36,641 41,854


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✨ LLM interpretation of page content

🏭 Financial Statements under Telecommunications (Disclosure) Regulations 1990 (continued from previous page)

🏭 Trade, Customs & Industry
Telecommunications, Financial Statements, Operating Expenses, Depreciation, Audit Fees, Intercompany Management Fee, Foreign Exchange Gains, Lease and Rental Costs, Redundancy and Restructuring Costs, Investment Income, Interest Expense