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Updated trading statement

Shareholders of Telkom are referred to the trading statement released on the Stock Exchange News Service of the JSE Limited on 10 October 2014 whereby Shareholders were advised that the results to be reported on for the six months ended 30 September 2014 would be at least 20% lower than those of the prior corresponding period.

The results to be reported on include the following items that are not part of the results from normal business operations:

  • Provision for retrenchment and voluntary severance and retirement packages of approximately R234 million after tax in the current period; and
  • The net curtailment gain recognised on the post retirement medical aid liability of R2 173 million in the prior period.

Reported and normalised earnings for the six months ended 30 September 2014 are expected to differ from the prior corresponding period as indicated below:

 
30 September 2013 Reported
30 September 2014 Expectation
Basic earnings per share      
Reported 566.2 55%-65% lower 311cps - 368cps lower
Normalised 140.6 80%-90% higher 112cps - 127cps higher3
Headline earnings per share      
Reported 649.8 60%-70% lower 390cps - 455cps lower
Normalised 224.2 10%-20% higher 22cps - 45cps higher

The increase in normalised basic earnings for the six months ended 30 September 2014 are mainly as a result of:

  • Lower payments to mobile operators resulting from the reduction in termination rates;
  • lower asset impairments and write offs; and
  • a decrease in expenses relating to the post retirement medical aid liability due to the curtailment and settlement of part of the liability in the prior period.

This was partially offset by:

  • lower foreign exchange gains as a result of the implementation of hedge accounting from 1 October 2013, which results in certain foreign exchange gains and losses not being recognised in earnings in the current period.; and
  • higher taxation.

The main reason for the higher increase in normalised basic earnings per share (80% - 90% higher) when compared to the increase in normalised headline earnings per share (10% - 20% higher) is the asset impairments and write offs in the prior period which are excluded from the calculation of headline earnings per share.

Telkom will release its results for the six months ended 30 September 2014 on 17 November 2014.

This updated trading statement has neither been reviewed nor reported on by the Group's external auditors.

Pretoria

03 November 2014

Sponsor
The Standard Bank of South Africa Limited