Figures in tables provided by the Bureau for Financial Analysis (BFA) were calculated according to the definitions below.
Consolidated audited financial statements received before the end of February 2002 were used. For certain companies with financial year-ends towards the end of the calendar year, statistics may thus refer to financial years that ended in 2000.
Standardisation of financial data
The figures used in this publication differ from those published by the companies. The BFA standardises all the published financial statements. The reason is that the accounting conventions used by companies differ, making it practically impossible to rank companies using their data.
The JSE-listed companies to be compared are diverse. It is impossible to describe, in a few words, what is done with each financial item in the process of standardisation to achieve comparability, but basic accounting principles are followed.
Internal rate of return
The internal rate of return is a market-related return that takes into account both share price movements and dividends paid. It does this by way of a discounted cash flow calculation. The share price five years ago (end-December 1996) is taken as a cash outflow and all annual dividends for the next five years (both cash dividends and dividends in specie) as well as the share price at end-December 2001 are taken as cash inflows. The internal rate of return is then quantified by finding the discount rate that equates the present value of all dividends and the share price at end-December 2001 with the share price five years ago (end-December 1996). All data is adjusted for share splits and share consolidations.
Gold companies and financial companies
The structure of the financial statements in the database of the BFA differs between gold companies and all other companies. The changes make the meaning and quantification of ratios comparable with other companies.
Financial companies are also treated differently in defining the various ratios. Care has been taken to maintain the comparability of measures.
For example, some ratios are calculated before taking extraordinary and exceptional items into consideration. Naturally these items include the profit or loss on transactions in the financial markets. These transactions have been treated as "in the normal course of business" for financial companies but as extraordinary with all other companies. Second, as no turnover in the normal sense exists for banks, the total of interest received, commission earnings, currency exchange earnings and other fee earnings has been used in the place of turnover.
Total assets
Fixed assets and current assets are included. Investments are at market value or directors' valuation. Other assets, such as land , are at book value. Where revaluations are not taken into the balance sheet, these are ignored. Where cash balances are netted off against bank overdrafts, the cash balances are added back. Tax paid in advance is netted off against tax payable, and only the net amount included.
Cost of control and intangible assets, such as goodwill, patents and licences, are not included, but mining assets are included. Where amounts invoiced on contracts in progress exceed the value of the contracts in progress, the difference is included with retained income. If the amounts received consist of deposits, the difference is included with creditors. Inventories are adjusted to reflect average value.
Equity funds
Equity funds (ordinary shareholders' funds) consist of ordinary share capital, capital reserves and distributable reserves, adjusted for the same items as the total assets above. Provisions included with credit balances, such as warranty provisions, provisions for self-insurance and provisions for maintenance, are included with long-term loans or creditors in the case of short-term provisions. Deferred tax was regarded as retained profit.
As cost of control and intangible assets are not included with total assets, both these items are deducted from equity funds.
Net profit
Taxed profit attributable to ordinary shareholders, excluding extraordinary items where appropriate. Deferred tax and amounts transferred to reserves, is regarded as retained profit .
Also excluded are items like cost of control written off and prospecting expenditure. The pre-tax difference in profit between Lifo (last in first out valuation of inventory) and Fifo (first in first out) or average inventory values is added to net profit.
Pre-tax profit
The effect of extraordinary items is included in pre-tax profit (profit after interest paid but before tax ).
Earnings per share
Headline earnings per share as published by the company are used in all instances. Where historical EPS (as in the case of growth in EPS) are used, they are adjusted for stock splits and consolidations.
Dividend per share
Dividend per share consists of the total of cash dividends and stock dividends (as a proxy for cash dividends), declared in respect of the years under review.
Debt
Total debt (the sum of long-term debt, short-term debt and current liabilities) is used in all ratios with the exception of serviced debt to equity and serviced debt as a monetary figure.
Return on assets
Profit before interest but after tax, divided by total assets as defined above.
Return on equity
Net profit as defined above, except that extraordinary items are included in the profit figure, expressed as a percentage of equity as defined above.
Return on sales (operating profit margin)
Operating profit (earnings before interest and tax) expressed as a percentage of sales. Extraordinary items have been included in the operating profit figure.
Interest and financial lease cover
Profit before interest, financial lease charges, tax and extraordinary items divided by the total of interest and financial lease charges paid.
Debt cover
Profit after taxation but before extraordinary items and before all items not representing cash flow, expressed as a percentage of the total of all interest-bearing debt.
Market capitalisation
The market value of all fully paid and issued ordinary shares, calculated at the closing price of the last trading day of February 2002.
Annualisation
Financial statements not covering 12 months are annualised. If more than one financial period is reported in a calendar year, the results are consolidated and then annualised.