Telecommunications group Telkom has deferred the release of its financial results for the year ended March 31 to June 22.

The group said that national Covid-19 lockdown has impeded its ability to complete the necessary work required to finalise the year-end results by May 25.

“The board of directors considers it prudent and in the best interests of the company to use the two-month extension period [afforded by the JSE],” Telkom said in an update to shareholders, referring to an April 3 JSE letter in respect of the extension of financial reporting periods and the accompanying market notice issued by the Financial Services Conduct Authority.

The integrated report, incorporating the full year financial statements and the notice of annual general meeting will be issued on August 7.

“The company reiterates that market participants should not draw undue adverse inferences as a result of the company making use of the extension period available to it.”

This comes as Telkom warns its portfolio of businesses is exposed to all sectors of the economy, including the sectors that are in distress.

“The extent of the lockdown and the effect of Covid-19 across our businesses is being assessed and business continuity plans are revised and executed accordingly,” Telkom added.

Telkom’s market capitalisation has reduced below net asset value over the past few months indicating grounds for impairment testing in accordance with International Accounting Standard 36.

“This will be considered together with the impact of Covid-19 on our business,” it continued.

“Preserving cash and maintaining a flexible balance sheet has become of utmost importance and urgent during the Covid-19 pandemic as the economy is under strain.”

Telkom’s conservative funding approach, however, ensured that its continued to have a healthy balance sheet.

“Our net debt to earnings before interest, tax, depreciation and amortisation was 1.2x (1.4x including lease liabilities) as at September 30, 2019.

“In the second half of the year, we strengthened our balance sheet by repaying maturing commercial paper of R800-million as our cash position improved in the period owing to our relentless focus on cash release initiatives,” Telkom noted.

The group also refinanced R2.5-billion in debt at favourable interest rate levels and extended the maturity profile of its debt to reduce the refinancing risk of the debt book.

Telkom has sufficient existing committed facilities with banks that amount to R5.7-billion.

Following the S&P Global Ratings downgrade of South Africa’s sovereign ratings from BB to BB- in April, Telkom expects, as a government-related entity, a review of its own rating.

“Any possible rating action by S&P and the Moody’s downgrade of Telkom’s credit rating in line with the sovereign rating’s downgrade on April 7, does not trigger any loan covenants,” Telkom pointed out.

Telkom also remains within its bank loan covenants.

Over and above the bank facilities, Telkom has a domestic medium-term note (DMTN) programme, with an increased limit to R15-billion.

“The funding under the DMTN is long-term in nature seeking to reduce short-term funding and increase long-term funding, to maintain sufficient liquidity. To date we have R6.2-billion available on the DMTN programme.”

The company further commented that cash outflow relating to Telkom’s restructuring process and the tax matter before the courts will be funded out of cash balances, including a liquidation of the short-term investment, resulting in not raising additional debt.

The cost of the restructuring process has reduced from about R1.5-billion to about R1.2-billion as a result of the postponement of the retrenchments in light of Covid-19 national lockdown.