1. Annual Report Lecture # 1 Jan H. Jansen jan.jansen@han.nl

2. Financial Management / Spring 2008 Resume / CV Jan H. Jansen HAN University of Applied Sciences – Arnhem Business School (1985 – 2008)  Senior lecturer International Finace & Management Accounting  Placement & GA co-ordinator BBA BLM  Academic supervisor Dissertation Master International Business (MIB)  Etc. – Faculty of Engineering (2008 - )  Programme director of Bachelor in Engineering Programme: Industrial Engineering & Management (Business Engineer)

3. Financial Management / Spring 2008 Analysis Annual report Objective: An over-all analysis of an annual report of a company listed on the stock exchange in an industry (e.g. telecommunication industry)

4. Financial Management / Spring 2008 Financial Management Textbooks – Finance, Brealy & Myers – Financial Management, Brigham cs,

5. Financial Management / Spring 2008 Company KPN Annual report 2006 Analysis: 1. Liquidity 2. Solvency 3. Profitability 4. Economic activities 5. DuPont formula Assignment for week 1 (in class)

6. Financial Management / Spring 2008 Structure of the balance sheet Fixed assets: Fixed assets: – Property, Plant & Equipment – Intangible assets – Financial noncurrent assets Current assets: Current assets: – Inventories – Debtors / AR – Cash & Cash equivalents Equity: Equity: – Issued Capital – Retained earnings / Reserves Long Term Liabilities Long Term Liabilities – Provisions – Loans – Bonds Current liabilities: Current liabilities: – Creditors / AP – Bank overdraft – Taxes – Dividend

7. Financial Management / Spring 2008 Structure of the income statement / profit & loss account Costs – Costs of Sales:  Cost of raw materials  Cost of (manufacturing) labour  Costs of depreciation of equipment – Overhead costs:  Selling expenses  R&D expenses  General expenses  Administrative expenses  Other expenses  Incidentals  Financial charges Operating income Revenues / Sales

8. Financial Management / Spring 2008 Liquidity: – The ability of an asset to be converted into cash without a significant price concession Current ratio: – Current Assets / Current Liabilities – Industrial average: 1.5 Quick ratio: – { Current Assets -/- Inventories } / Current Liabilities – Industrial average: 1.1 Performance of the company: Liquidity

9. Financial Management / Spring 2008 Benchmark the ratios of KPN to: 1. Vodafone (http://www.vodafone.com ) 2. British Telecom (http://www.btplc.com ) 3. Deutsche Telekom (http://www.telekom.com ) 4. Alcatel (http://www.alcatel-lucent.com ) 5. AT&T (www.att.com ) – Look at investor relations section of the website Benchmarking of performance indicators