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Johannesburg – Telkom [JSE:TKG] has reported a 73.2% decline in headline and diluted headline earnings per share to 87.0 cents for the year ended March 2013 from 310.8 cents a year ago.
Operating revenue was down 1.7% to R32.5bn.
The group said its fixed-line voice revenue decreased 4.7% to R16.3bn while fixed-line data revenue increased 3.6% to R10.4bn.
Mobile revenue increased 22.7% to R1.359bn and mobile data revenue increased 123.3% to R364m.
Its operating expenses‚ excluding the impairment‚ increased 2.2% o R32.0bn. The group announced earlier this week that it is to take a R12bn impairment on the carrying value of the legacy network.
The group generated free cash flow of R2.1bn‚ an 18.6% increase from the previous year.
Net debt decreased by 46.0% to R2.1bn.
Telkom said the 2013 financial results reaffirmed the need to act with urgency to turn the group's performance around. The Board decided to impair the carrying value of the group’s assets by R12bn.
The impairment review was prompted by the considerable period of time that Telkom's shares have been trading at significantly lower value compared to its net asset value. After the impairment the net asset value is R34 per share.
The impairment takes into account the impact on the financial returns of the group in light of technology changes‚ competition from mobile operators and evolving regulatory landscape over more than a decade. These factors have eroded the returns from legacy asset‚ it said.
Basic earnings per share from continuing operations‚ however‚ has been adversely impacted by the once off non-cash impairment charge and is therefore 2 286 cents per share lower than the comparative period.
The non-cash impairment charge is excluded from headline earnings per share from continuing operations‚ which is 237.7 cents per share‚ or 73.2%‚ lower than the prior year.
The decline in headline earnings is largely as a result of the cost of voluntary severance packages and a provision for the Competition Tribunal fine and other legal matters‚ it said.
“The Board is committed to taking the necessary steps to address the major challenges that have impacted the financial performance of the Group in recent years.
“To this end‚ management aims to strengthen customer relationships‚ improve operational efficiency and settle the outstanding Competition Commission claims.
“The Board is also currently reviewing the strategy and execution plans of the Group with a view to improving the return on invested capital. Shareholders will be informed of progress on these matters in due course‚” it added.
The group recorded a profit after tax of R501m excluding the impairment charge and an Ebitda of R7.109bn from 2012’s R8.546bn.
The results for the year include a provision of R592m for the settlement of the long-standing dispute with the Competition Commission and other legal matters and the cost of R434m for voluntary severance packages.
Operating revenue was down 1.7% to R32.5bn.
The group said its fixed-line voice revenue decreased 4.7% to R16.3bn while fixed-line data revenue increased 3.6% to R10.4bn.
Mobile revenue increased 22.7% to R1.359bn and mobile data revenue increased 123.3% to R364m.
Its operating expenses‚ excluding the impairment‚ increased 2.2% o R32.0bn. The group announced earlier this week that it is to take a R12bn impairment on the carrying value of the legacy network.
The group generated free cash flow of R2.1bn‚ an 18.6% increase from the previous year.
Net debt decreased by 46.0% to R2.1bn.
Telkom said the 2013 financial results reaffirmed the need to act with urgency to turn the group's performance around. The Board decided to impair the carrying value of the group’s assets by R12bn.
The impairment review was prompted by the considerable period of time that Telkom's shares have been trading at significantly lower value compared to its net asset value. After the impairment the net asset value is R34 per share.
The impairment takes into account the impact on the financial returns of the group in light of technology changes‚ competition from mobile operators and evolving regulatory landscape over more than a decade. These factors have eroded the returns from legacy asset‚ it said.
Basic earnings per share from continuing operations‚ however‚ has been adversely impacted by the once off non-cash impairment charge and is therefore 2 286 cents per share lower than the comparative period.
The non-cash impairment charge is excluded from headline earnings per share from continuing operations‚ which is 237.7 cents per share‚ or 73.2%‚ lower than the prior year.
The decline in headline earnings is largely as a result of the cost of voluntary severance packages and a provision for the Competition Tribunal fine and other legal matters‚ it said.
“The Board is committed to taking the necessary steps to address the major challenges that have impacted the financial performance of the Group in recent years.
“To this end‚ management aims to strengthen customer relationships‚ improve operational efficiency and settle the outstanding Competition Commission claims.
“The Board is also currently reviewing the strategy and execution plans of the Group with a view to improving the return on invested capital. Shareholders will be informed of progress on these matters in due course‚” it added.
The group recorded a profit after tax of R501m excluding the impairment charge and an Ebitda of R7.109bn from 2012’s R8.546bn.
The results for the year include a provision of R592m for the settlement of the long-standing dispute with the Competition Commission and other legal matters and the cost of R434m for voluntary severance packages.
