Telstra 2008 Annual Report Download - page 26

23
Telstra Corporation Limited and controlled entities
Full year results and operations review - June 2008
Expenses
Labour
• Labour costs increased by $141 million or 3.5% to $4,158 million. Excluding redundancy, labour cost growth was only 1.3% to
$3,920 million
• Excluding the impact of acquisitions and divestments, the total workforce reduced by 2,677 in the year, amounting to an 8,784
reduction in workforce since 2005, exceeding our target of 6,000 to 8,000 at this point in the transformation
• Redundancy expenses for fiscal 2008 were up 59.7% to $238 million
(i) Our domestic full time employees include domestic full time staff, domestic fixed term contracted staff and expatriate staff in overseas subsidiary
entities.
(ii) Our full time employees and equivalents include domestic full time employees plus casual and part time employees and employees in our offshore
subsidiary entities.
(iii) Our total workforce includes full time employees and equivalents plus contractors and staff employed through agency arrangements measured on
an equivalent basis.
(iv) The reduction in total workforce against our 10,000 to 12,000 FTE (full time equivalent) 5 year reduction target excludes the impact in fiscal 2008 of
the June 2008 acquisition of the Chinese entities Norstar Media and Autohome/PCPop, our divestment of Telstra eBusiness Group and the ongoing
impacts of SouFun Holdings Ltd. Reductions prior to fiscal 2007 excludes our divestment in Australian Administration Services Pty Ltd, the ongoing
impact of our acquisition of SouFun Holdings Ltd and the impact of CSL’s merger with NewWorld PCS Mobility.
(v) The total workforce FTE reduction through to June 2007 has been restated to include the ongoing impact of our acquisition in SouFun Holdings Ltd
(1,555 at June 2007) as opposed to the workforce FTE taken as at the date of acquisition (1,194).
Our labour expense increased by 3.5% to $4,158 million mainly due to increased redundancy costs as a result of ongoing
transformation activities offset by productivity improvements being achieved especially within Telstra Operations in centralised
call centres and reductions in field service technicians through our Workforce Excellence transformation programs. Of note is that
service parameters have also improved. We incurred redundancy expenses of $238 million for the year ended 30 June 2008
compared with $149 million for the comparable period last year. In the second half, redundancy expenses were $72 million, 56.6%
lower than the $166 million incurred in the first half. Whilst approximately 73% of the workforce FTE redundancy activity took
place during the first half of the year, the benefits of this headcount reduction were offset, in part, by further recruitment of new
skilled resources as we progress through our transformation initiatives, particularly within Telstra Operations with new trainees
to support our new IP network and customer focussed retail channels within centralised call centres.
As part of the transformation, a provision for restructuring and redundancy was raised at the end of fiscal 2006 which included a
redundancy component amounting to $186 million of which a total of $176 million has been utilised in line with the level of
transformational redundancy activity that has taken place (fiscal 2008: $29 million; fiscal 2007: $147 million).
Labour
Year ended 30 June
2008 2007 Change 2008/2007
$m $m $m (% change)
Labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,158 4,017 141 3.5%
Domestic full time employees (whole numbers) (i) . . . . . . . . . . . . . . . . . . . . . . . . . 33,982 35,706 (1,724) (4.8%)
Full time employees and employed equivalents (whole numbers) (ii) . . . . . . . . . . . . . 42,784 43,411 (627) (1.4%)
Total workforce, including contractors and agency staff (whole numbers) (iii) . . . . . . . . 46,649 47,840 (1,191) (2.5%)
Current year reduction in total workforce excluding acquisition/divestment activity (iv) . (2,677)
Reduction in total workforce to June 2007 excluding acquisition/divestment activity against
November 2005 announcement (iv) (v) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,107)
Total 3 year reduction in workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,784)
Note: statistical data represents management's best estimates.