JSE-listed telecoms group Telkom expects to report a decrease of between 30% and 40% in headline earnings per share (HEPS) to between 165c and 193c for the six months ended September 30.
This compares with the HEPS of 276c reported for the first half of 2018.
The company attributed the decrease in HEPS to a significant increase in net finance charges and fair value movement of between 120% and 130% from R443-million reported in the prior year, as a result of the International Financial Reporting Standards 16 (IFRS16) finance charges.
Excluding the impact of IFRS16, net finance charges and fair value movement increased by between 80% and 90%.
The increase in the finance charges largely relates to increased borrowing in support of the investment in the company’s mobile business and the cost of hedging increases as a result of the increase in the Forward Exchange Contracts order book.
Higher finance charges are also attributable to exchange and fair value movements as a result of foreign exchange adjustments owing to market conditions and the conversion of floating rate debt to fixed rate debt using interest rate swaps in line with the company’s guideline.
Overall, in the period under review, the net movement represents a loss versus a reported gain in the corresponding period of the prior year.
The impact of IFRS16 on profit after tax was immaterial at between R50-million and R60-million.
Telkom’s full results will be released on November 12.