Telkom will delay the publication of its annual results by almost a month as the telecommunications group will be unable to finalise these by 25 May, as previously anticipated, as a result of the national lockdown.
It now expects to publish the results on 22 June, with its annual report to follow on 7 August, it said in a statement to shareholders on Tuesday.
“Telkom will be utilising the two-month extension period afforded to issuers (listed companies) with year-ends of 31 December 2019, 31 January 2020, 29 February 2020 and 31 March 2020. The institution of the lockdown has impeded the company’s ability to complete the necessary work required to finalise the annual results by 25 May 2020 and, accordingly, the board of directors considers it prudent and in the best interests of the company to utilise the two-month extension period,” it said.It said that investors “should not draw undue adverse inferences as a result of the company making use of the extension period available to it”.
The detailed statement also provided an update on Telkom’s debt, its retrenchment programme and the measures it’s taken in light of the Covid-19 pandemic and the associated lockdown.
Eighty percent of its employees are working from home, it said, while its front-line staff and field service technicians continue to serve customers.
“Telecommunications has been declared an essential service in the country and we are able to continue to connect South Africans. During the lockdown, Telkom has seen a surge in fixed and mobile network traffic for our telco services from people working from home. Telkom has a scalable network and enough redundancy to manage the increase in demand,” it said.
It cautioned that its businesses are exposed to all sectors of the economy, including those that are in distress as a result of the lockdown, adding that the impact on its financial performance is still being assessed.
It said its market capitalisation has reduced below its net asset value in recent months because of a sharp decline in its share price. This suggests “grounds for impairment testing” in accordance with the relevant accounting standards. “This will be considered together with the impact of Covid-19 on our business.”
Preserving cash and maintaining a flexible balance has become of utmost importance and urgent during the Covid-19 pandemic as the economy is under strain, Telkom added. “Our conservative funding approach ensured that we continue to have a healthy balance sheet.”
Its net debt to Ebitda (earnings before interest, tax, depreciation and amortisation) was 1.2x (1.4x including lease liabilities) on 30 September 2019. In the second half of the year, it strengthened its balance sheet by repaying maturing commercial paper of R800-million. It also refinanced debt of R2.5-billion at “favourable interest rate levels”.
“We have extended the maturity profile of our debt to reduce the refinancing risk of the debt book. Telkom has sufficient existing committed facilities with banks that amount to R5.7-billion.”
Telkom also said cash outflow relating to its current restructuring process and an R875-million tax liability, which will be the decided by the constitutional court, will be funded out of cash balances. The cost of the restructuring process has reduced from R1.5-billion to R1.2-billion as a result of the postponement of retrenchments during the lockdown, it added. – © 2020 NewsCentral Media
Duncan McLeod is Editor of TechCentral
This article was first published on TechCentral, here.