Telkom AR front.qxp

Notes to the annual financial statements (continued)
for the three years ended March 31, 2009
12. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
12.8. Capital management
Telkom Annual Report 2009 287
The Board’s policy is to maintain a strong capital base so as to sustain investor, creditor, market confidence and future development of the
business. Capital comprises equity attributable to equity holders of the Company. The Company monitors capital using net debt to EBITDA
ratio. The Company’s policy is to keep the net debt to EBITDA ratio of between 1 and 2 times. Included in net debt are interest-bearing
debts, credit facilities and other financial liabilities, less cash and cash equivalents and other financial assets.
Telkom plans on continuing its share buy-back strategy based on certain criteria, including market conditions, availability of cash and other
investment opportunities and needs.
All of Telkom’s issued and outstanding ordinary shares, including the class A ordinary share and the class B ordinary share, rank equal for
dividends. No dividend may be declared to a holder of the class A ordinary share or class B ordinary share, unless the same dividend is
declared to holders of all ordinary shares. Telkom’s current dividend policy aims to provide shareholders with a competitive return on their
investment, while assuring sufficient reinvestment of profits to enable us to achieve our strategy. Telkom may revise its dividend policy from
time to time. The determination to pay dividends, and the amount of the dividends, will depend upon, among other things, the earnings,
financial position, capital requirements, general business conditions, cash flows, net debt levels and share buy-back plans.
The Company has access to financing facilities, the total unused amount of which is R6,226 million at the balance sheet date.
There were no changes in the Company’s approach to capital management during the year.
The Company is not subject to externally imposed capital requirements.
The net debt to EBITDA ratio is as follows:
2007 2008 2009
Rm Rm Rm
Non-current portion of interest-bearing debt 3,308 7,336 10,193
Current portion of interest -bearing debt 5,775 6,026 7,511
Other financial liabilities 57 168 225
Less: Cash and cash equivalents (176) (483) (941)
Plus: Credit facilities utilised – 41 106
Less: Other financial assets (229) (443) (1,198)
Net debt 8,735 12,645 15,896
EBITDA 12,489 11,848 8,704
Net debt to EBITDA ratio 0.70 1.07 1.83