You’ll often see a company report a handful of different profit figures.

My colleague Michael Janda wrote a very handy explainer on this topic a couple of years ago, which I’ve attached below.

This is what he had to say that will be relevant to today’s report on Qantas.

Profit:

When there’s more than one profit figure — and there usually is — which one should you look at?

A lot of the analysts and some of the financial press follow the companies in highlighting “underlying” earnings, a form of which is sometimes known as “cash profit“.

When the big banks report, they will usually highlight their cash profit figure.

Qantas is often so focused on its underlying profit that it doesn’t even include the statutory net profit in its press release, forcing some of us journalists to trawl back through the ASX website to find its Appendix 4D (more on this later).

So what is the basic difference between an “underlying” or “cash” profit and the “net profit after tax attributable to shareholders” or “statutory net profit”?

The first is a creation of the company and its accountants. It excludes a number of one-off costs and gains — such as “write-downs” (more on this later as well) or the sale of a major asset — to give a sense of the ongoing earnings of the business.

Management and boards generally argue it’s a better reflection of the true, or underlying, performance of the business. Analysts often agree and many also focus on this number.

But while it will probably comply with some accounting conventions it is not a regulated figure — the company and its auditors can basically just agree on what should or shouldn’t be included.

Because it’s not a legally regulated number, it also isn’t completely comparable between firms or even across years for the same firm.

That’s why at the ABC we always report the statutory net profit, even if we also mention the underlying earnings.

Because there are strict rules in the accounting standards about what must be included or excluded from this number, it is comparable between companies and across years.