Telkom Integrated Report 2017

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70 03 Performance
Dividend policy
During the year, the board amended our dividend policy to an annual dividend of 60 percent of headline earnings with
an interim dividend of 40 percent of interim headline earnings.
Declaration of dividend
In line with our dividend policy, the board declared a final ordinary dividend 20 of 290.75253 cents per share.
This follows an interim dividend of 131.23874 cents per share declared in the interim results, taking the annual
dividend in respect of the financial year to 421.99127 cents per share (FY2016: 270 cents per share). The declared
dividend is payable on Monday, 3 July 2017 to shareholders recorded in the register of the company at close of
business on Friday, 30 June 2017. The dividend will be subject to a local dividend withholding tax rate of 20 percent
which will result in a net final dividend of 232.60202 cents per ordinary share to those shareholders not exempt from
paying dividend withholding tax. The ordinary dividend will be paid out of cash balances.
The number of ordinary shares in issue at date of this declaration is 526 948 700.TelkomSouth Africa SOC Ltd’s tax
reference number is 9/414/001/710.
For full financial statements refer to
Deon Fredericks
Group chief financial officer
> Capex to revenue of 17 to 20 percent. We have accelerated our capex to revenue
as we continue to invest for the future. We will apply a success-based and
measured approach to capex. Our key focus areas will remain fibre and mobile.
Returns for fibre are long-term in nature while returns for mobile are medium-
term in nature. It is critical that we invest for the sustainability of our business.
We will continue our measured and responsible allocation of capital resources.
> Our target net debt ratio is ≤1 times. We expect to see an increase in our net
debt-to-EBITDA ratio as we gear up our balance sheet to fund growth areas
of our business. However, we do not expect our capex funding to breach our
target for FY2018.
We confirm our dividend policy of 60 percent of headline earnings as we
continue to invest for the future and address current competitive challenges.
We will remain disciplined in our cost allocation while focusing on generating
free cash flows.
Outlook
Financial
capital
* Includes VERP and VSP costs.
Annual dividend increased 56.3% to 422.0 cents per share
Guidance FY2017 FY2017 FY2018
Guidance Actual Guidance
Net revenue Modest growth 7.9% N/A
Operating revenue Mid-single digit
EBITDA margin 23%-25% 26.5%* 23% to 25%
Capex to revenue 15%-18% 21.1% 17% to 20%
Net debt to EBITDA ≤ 1 0.5 ≤ 1
Mobile EBITDA breakeven Achieve R660 million N/A
> Our guidance should be
considered in light of the
current difficult operating
environment and the recent
sovereign rating downgrade.
Furthermore, we continue
with our cost transformation
programme, while managing
challenges and investing
for the future through
our operating and capital
investments.
> Despite negative GDP growth
expectations for South Africa
and a continued decline in
voice revenue, we expect to
grow our operating revenue
by mid single digit.
> EBITDA margin of
23 to 25 percent implies
contraction in margins as
a result of an increase in
our operating expenditure
investment in new
subsidiaries such as Gyro,
VS Gaming and supporting
of our Mobile business. Our
benefit from the gain on sale
of assets will reduce from the
previous year, as we focus on
extracting long-term value
from the balance of
our property portfolio.
Group chief financial
officer’s report – continued