Vodacom is expecting to turn in a solid financial performance for the financial year ended 31 March when it reports its results on 21 May. However, both basic and headline earnings per share have been dragged lower by a higher effective tax rate.
The company delivered an encouraging performance, with earnings before interest, tax, depreciation and amortisation expected to increase by about 10% for the year.
Basic and headline earnings were affected by a higher effective tax rate of 36%, mainly as a result of an increase in secondary tax on companies as a result of higher dividends payments to shareholders and the movement in net deferred tax assets “derecognised”.
Higher depreciation and amortisation from higher capital expenditure, including non-cash capital additions, have also impacted the numbers. Non-cash capital additions relate to the exchange on non-monetary assets for the radio access network renewal programmes as well as finance leases entered into for the self-provision of transmission infrastructure.
Headline earnings per share are expected to be between 5% and 10% higher than the prior year’s figure of R6,56. Basic earnings per share are expected to be between 20% and 25% higher than the previously reported 561c as a result of high impairment charges in the prior year’s figure.
In the past year, Vodacom’s share price has climbed by 34,6%.