Telkom shares surge 5% on expected earnings

·29 May 2014

Telkom says its expects headline earnings per share from continuing operations for the year ended March 2014, to be between 772 to 789 cents higher than its restated HEPS in 2013.

The group pointed to a number of main drivers for the increase in earnings including:

The net curtailment gain recognised on the post retirement medical aid liability of R2.169 billion and the associated tax benefit of R246 million;
The net positive impact of the decrease in mobile termination rates;
Lower selling, general and administrative expenditure as a result of cost saving initiatives implemented; and
Lower depreciation as a result of the R12 billion impairment in the previous year.

The following items included in the 2013 financial year also contributed to the increase:

The R12 billion non-cash impairment of assets;
The provision for the Competition Commission fines of R592 million; and
The R434 million relating to the cost of voluntary severance and early retirement packages.

Basic earnings per share from continuing operations for the 2014 financial year are expected to be between 2,972 and 3,428 cents higher than the restated BEPS for the 2013 financial year.

Shares in Telkom advanced 5% to R38.20 in midday trade on the JSE, with the group showing a 52 week return of 168%, and a market cap of R19 billion.

Telkom noted in a SENS announcement, that basic earnings per share and headline earnings per share for the year ended March 2013 were restated after adopting new accounting standards and after discontinuing operations of subsidiary, iWayAfrica.

Basic earnings per share from continuing operations for the 2013 financial year have been restated to indicate the loss of 2 282.6 cents per share and HEPS from continuing operations to a profit of 86.2 cents per share.

Telkom says its expects to publish its results on about 13 June 2014.