for the six months ended 30 September 2016
| Reviewed Six months ended 30 September 2016 |
Reviewed Six months ended 30 September 2015 |
|
|---|---|---|
| Rm | Rm | |
| Operating Expenses | ||
| 5.1 Payments to other operators | 1 274 | 1 396 |
| The decrease is as a result of lower traffic carried for other operators. | ||
| 5.2 Cost of sales | 5 114 | 1 981 |
| The increase in the cost of sales is largely attributable to the inclusion of BCX for the full reporting period and the increase in the subscriber acquisition costs. | ||
| Change in 30 September 2015 comparatives | ||
| In order to achieve a more relevant presentation a decision was made to reclassify items from service fees to cost of sales amounting to R52 million. Refer to note 5.5 | ||
| 5.3 Employee expenses | 4 191 | 5 833 |
| The decrease in employee expenses is mainly due to the voluntary severance (VSP) and voluntary early retirement (VERP) that occurred only in the prior financial period and there were no salary increases in the current financial period. This was offset by a performance pay structure that was implemented for the bargaining unit with an average incentive payment of 6% in the current financial period. | ||
| 5.4 Selling, general and administrative expenses | 2 879 | 2 530 |
| The increase in selling, general and administrative expenses is mainly due to the inclusion of BCX for the full reporting period and outsourcing costs incurred by the Group. | ||
| Included in selling, general and administrative expenses is a write-down of inventories to the value of R21 million (30 September 2015: R51 million). | ||
| 5.5 Service fees | 1 404 | 1 471 |
| The decrease is largely due to effective property management and offset by the inclusion of BCX for the full reporting period. | ||
| Change in 30 September 2015 comparatives | ||
| In order to achieve a more relevant presentation a decision was made to reclassify items from service fees to cost of sales amounting to R52 million. Refer to note 5.2 | ||
| 5.6 Operating leases | 504 | 619 |
| The decrease is mainly attributed to the transition of the vehicle supply contract. | ||
| 5.7 Depreciation, amortisation, impairment, write- offs and losses | 2 680 | 2 615 |
| Depreciation of property, plant and equipment | 2 234 | 2 172 |
| Amortisation of intangible assets | 376 | 412 |
| Write-offs of property, plant and equipment and intangible assets | 70 | 31 |
Depreciation increased slightly due to accelerated depreciation as Telkom intensified its roll-out of fibre and LTE and higher asset write offs. The group reassessed the useful lives on certain technologies. The reassessment of useful lives had the effect of increasing the depreciation expense for the period ended 30 September 2016 by R165 million (2015: R98 million). The total depreciation for future periods of these assets will be lower due to the reassessment.