New Zealand Gazette – 1993 – No. 94

Page 1795

✨ Financial Statements Notes



29 JUNE
NEW ZEALAND GAZETTE
1795

TELECOM SOUTH LIMITED

NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)

2 OPERATING EXPENSES

1993 1992
OTHER OPERATING EXPENSES $000's $000's
Other operating expenses 300,533 317,450

Included in other operating expenses are:

  • Depreciation 97,719 105,767
  • Audit fees 205 200
  • Intercompany management fee 20,238 17,148
  • Lease and rental costs 3,746 4,316

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 South it is estimated that the cost of implementing this restructuring which will take up to four years, is $69 million. This has been charged against earnings for the year ended 31 March 1993 as an abnormal restructuring cost. The estimate includes $52 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 $82.7 million ($56.8 million after tax).

For comparative purposes, redundancy costs of approximately $12.6 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 2,257 1,097
- Other 12 460
Total investment income 2,269 1,557
Interest expense:
- Intercompany (including finance lease charges) 36,121 37,558
- Other - (14)
- Less interest capitalised (836) (6,606)
Total interest expense 35,285 30,938


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🏭 Notes to the Financial Statements for Telecom South Limited (continued from previous page)

🏭 Trade, Customs & Industry
Financial Statements, Operating Expenses, Restructuring Costs, Redundancy Costs, Investment Income, Interest Expense