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TLM - Telemasters Holdings Limited and its subsidiary - Unaudited condensed

Release Date: 25/06/2012 17:48
Code(s): TLM
Wrap Text

TLM - Telemasters Holdings Limited and its subsidiary - Unaudited condensed consolidated interim results for the quarter and six month period ended 31 March 2012 TELEMASTERS HOLDINGS LIMITED AND ITS SUBSIDIARY (Incorporated in the Republic of South Africa) (Registration number 2006/015734/06) Share code: TLM & ISIN Number: ZAE000093324 ("TeleMasters" or "the Company") UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE QUARTER AND SIX MONTH PERIOD ENDED 31 MARCH 2012 UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited 3 Unaudited 3 Unaudited 6 Unaudited 6
months months months ended months ended ended 31 ended 31 31 March 31 March 2011 March 2012 March 2011 2012 R R R R
Revenue 43 650 581 71 765 702 99 613 756 157 996 272 Cost of sales (38 189 831) (58 690 803) (87 449 475) (131 682 599) Gross profit 5 460 750 13 074 899 12 164 281 26 313 673 Operating (7 788 431) (7 950 281) (15 886 914) (16 122 042) expenses Operating (loss) ( 2 327 681) 5 124 618 (3 722 633) 10 191 631 profit Investment 113 451 206 107 237 038 418 475 income Finance cost (46 474) (123 829) (98 060) (215 448) (Loss) profit (2 260 704) 5 206 896 (3 583 655) 10 394 658 before taxation Taxation 396 864 (1 987 245) 668 858 (3 794 689) (Loss) profit (1 863 840) 3 219 651 (2 914 797) 6 599 969 after taxation Total (1 863 840) 3 219 651 (2 914 797) 6 599 969 comprehensive (loss) income for the period Basic (loss) (4.44) 7.67 (6.94) 15.71 earnings per share (cents) Diluted (loss) (4.44) 7.67 (6.94) 15.71 earnings per share (cents) Headline earnings reconciliation: (Loss) profit (1 863 840) 3 219 651 (2 914 797) 6 599 969 for the period Adjustment: Loss - - - (19 315) on disposal of property, plant & equipment Headline (loss) (1 863 840) 3 219 651 (2 914 797) 6 580 654 earnings for the period Headline (loss) (4.44) 7.67 (6.94) 15.67 earnings per share (cents) Diluted headline (4.44) 7.67 (6.94) 15.67 earnings (loss) per share (cents) Weighted average 42 000 000 42 000 000 42 000 000 42 000 000 number of shares in issue Dividends 1.00 4.00 2.00 8.00 declared per share (cents)
Unaudited at Audited at Unaudited at 31 March 2012 30 September 2011 31 March 2011 R R R ASSETS Non-current assets Property, plant 16 129 398 14 008 539 15 435 884 and equipment Intangible assets 1 481 206 1 912 081 2 364 356 Goodwill 2 686 779 2 686 779 2 686 779 Deferred tax 4 705 630 3 962 210 4 875 188 assets Total non-current 25 003 013 22 569 609 25 362 207 assets Current assets Trade and other 12 034 712 20 024 147 19 625 201 receivables Cash and cash 12 593 009 20 420 572 24 829 129 equivalents Total current 24 627 721 40 444 719 44 454 330 assets Total assets 49 630 734 63 014 328 69 816 537
EQUITY AND LIABILITIES Capital and reserves Issued capital 48 059 48 059 48 059 Retained earnings 29 124 878 32 879 675 33 259 293 Total equity 29 172 937 32 927 734 33 307 352
Non-current liabilities Finance lease 458 029 336 779 1 120 284 liabilities Total non-current 458 029 336 779 1 120 284 liabilities Current liabilities Trade and other 18 600 750 27 256 316 28 920 471 payables Current portion of 1 149 657 2 305 928 2 482 927 finance lease liabilities Current tax 201 726 122 260 3 926 068 payable Bank overdraft 47 635 65 311 59 435 Total current 19 999 768 29 749 815 35 388 901 liabilities
Total liabilities 20 457 797 30 086 594 36 509 185 Total equity and 49 630 734 63 014 328 69 816 537 liabilities Number of shares 42 000 000 42 000 000 42 000 000 in issue Net asset value 69.46 78.40 79.30 per share (cents) Net tangible asset 60.18 68.10 67.28 value per share (cents) UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited at Audited at Unaudited at 31 March 30 September 31 March 2012 2011 2011
R R R Cash flows from operating activities Cash generated from operations (1 169 282) 17 928 045 12 648 801 Finance costs (98 060) (482 418) (215 448) Tax paid 4 904 (6 836 590) (2 926 950) Net cash (outflow) inflow from (1 262 438) 10 609 037 9 506 403 operating activities Cash flows from investing activities Property, plant and equipment (4 909 465) (2 765 418) (943 730) acquired Proceeds on sale of property, - 584 054 19 315 plant and equipment Investment income 237 038 876 040 418 475 Net cash outflow from investing (4 672 427) (1 305 324) (505 940) activities Cash flows from financing activities Proceeds from borrowings 351 000 664 957 251 994 Dividends paid (840 000) (7 140 000) (3 382 822) Repayment of borrowings (1 386 021) (2 545 435) (1 171 966) Net cash outflow from financing (1 875 021) (9 020 478) (4 302 794) activities Total cash movement for the (7 809 886) 283 235 4 697 669 period Cash and cash equivalents at the 20 355 260 20 072 025 20 072 025 beginning of the period Cash and cash equivalents at the 12 545 374 20 355 260 24 769 694 end of the period UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Issued Share Total Retained Total share
capital premium capital income equity Balance at 30 4 200 43 859 48 059 30 019 324 30 067 383 September 2010 Comprehensive income - - - 6 599 969 6 599 969 - Profit for the 6 month period ended 31 March 2011 Transaction with - - - (3 360 000) (3 360 000) owners - Dividends declared Balance at 31 March 4 200 43 859 48 059 33 259 293 33 307 352 2011 Comprehensive income - - - 3 400 382 3 400 382 - Profit for the remaining 6 month period ended 30 September 2011 Transaction with - - - (3 780 000) (3 780 000) owners - Dividends declared Balance at 30 4 200 43 859 48 059 32 879 675 32 927 734 September 2011 Comprehensive income - - - (2 914 797) (2 914 797) - Loss for the period ended 31 March 2012 Transaction with - - - (840 000) (840 000) owners - Dividends declared Balance at 31 March 4 200 43 859 48 059 29 124 878 29 172 937 2012 SEGMENT REPORT The Company does not have different operating segments. The business is conducted in South Africa and is managed centrally with no branches. The company is managed as one operating unit. Accordingly there is no meaningful segmental information to report other than the following information: Unaudited Unaudited 6 Months 6 Months ended ended
31 March 2012 31 March 2011 R R Revenue by Nature Sale of fixed cellular airtime 92 895 124 157 806 804 Sale of fixed line airtime 4 514 335 - Connection incentive bonuses - 5 150 Other 2 204 297 184 318 Total revenue 99 613 756 157 996 272 Major customers Revenues from transactions with a single external customer amounting to 10 percent or more of the Company`s revenue, are disclosed below: - Customer A - 16 857 955 - Customer B 31 470 309 50 317 998 - Other customers 68 143 447 90 820 319 Total revenue 99 613 756 157 996 272
1. COMPANY PROFILE TeleMasters is a fully licenced fixed-line telecommunication service provider. It operates exclusively in the South African corporate market. The company provides clients access to the most efficient and effective telecommunication technologies and services. 2. FINANCIAL RESULTS 2.1 Statement of compliance and basis of preparation The interim financial statements for the six months ended 31 March 2012 have been presented in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards, the information required by IAS 34: Interim Financial Reporting, the South African Companies Act, as amended, the AC500 Standards as issued by the Accounting Practices Board and the JSE Listings Requirements. The results have been prepared in accordance with accounting policies of the Company that are consistent with those applied in the audited annual financial statements for the year ended 30 September 2011. 2.2 Commentary on financial results and future prospects The second quarter results reflects management`s continued expectations as voiced earlier that 2012 will be a tough transitional year. The traditional least-cost routing (LCR) turnover decreased by 41% over the corresponding previous period due to the loss of 2 large clients that reached the end of tender periods. As reported previously the LCR model no longer makes sense as the new interconnect rates have squeezed the margins out of the old technology. We have chosen to move the manner in which we offer telecommunications solutions to clients and have developed a highly innovative service offering which has a built-in redundancy giving us a very competitive edge over similar type but inferior offerings in the market. The challenge is to exceed the loss of revenue with the conversion of 600 long-standing current clients and the acquisition of new clients to the company`s new Digital Direct service. The conversions on to the new platform remain slower than expected due to reliance on third party fixed line service providers interconnect implementation and delays with the porting of telephone numbers to TeleMasters. The increase in revenue over our new Digital Direct platform has increased 100% when compared to the comparative period and continues to grow. Our added value services which we implemented in the last 6 months of the previous year have provided additional revenue of approximately 2% of our total Revenue when compared to the prior year. A further R4,9 million has been invested since year end in capital acquisitions in order to convert our clients on to the new platform which requires a greater investment than the previous LCR solution required. As a result of our interconnect agreements having now been concluded, we will see in the medium term an improvement in margins as our clients are converted on to the new platform. This offers better margins at the expense of the larger initial investment in hardware. Our operating expenditure has remained constant and our efforts to reduce the fixed operating costs will be evident in our next quarter`s results. We have successfully completed a retrenchment process to reduce staff to be in line with our lower Revenue streams whilst we rebuild our customer service offering. As part of the efforts to drive down our operating expenditure the Board of Directors has decreased executive and non-executive Directors remuneration by 33% until such time as we return the company to profitability. We remain confident of our ability to do so in the shorter term despite the fact that for all practical purposes we have had to re-invent the company to adapt to changes in the way in which business communicates. 2.3. Dividends On 21 December 2011 the Board declared a first quarter interim dividend of 1 cent per share, which was paid to all shareholders recorded in the share register of the Company at the close of business on Friday, 20 January 2012. In the previous year a dividend of 4 cents per share was paid. The Board declared a second quarter interim dividend of 1 cent per share on 30 March 2012, which was paid to all shareholders recorded in the share register of the Company on 4 May 2012. During the second quarter of the prior financial year, which ended on 31 March 2011, the Company declared an interim dividend of 4 cents per share for that quarter. 2.4. Acquisition of property, plant and equipment Property, plant and equipment acquired during the quarter comprise various items of Furniture and fittings, Motor vehicles, Office equipment, IT equipment and Routers and handsets. 3. SUBSEQUENT EVENTS The directors are not aware of any matter or circumstance arising since the reporting date which would have a material effect on the consolidated results or the consolidated financial position of the Company as reported. 4. CHANGES IN THE COMPOSITION OF THE BOARD AND SHARE CAPITAL There have been no changes to the composition of the Board nor to the share capital of the Company since the Integrated Report of 30 September 2011 was issued. For and on behalf of the Board: MB Pretorius BR Topham Chief Executive Officer Chief Financial Officer (Preparer) 25 June 2012 Corporate information Directors: DS van Der Merwe*#, J Voigt*, VI Beck*#, MB Pretorius, BR Topham (* non-executive, # independent) Registered address: 90 Regency Drive, Route 21 Corporate Office Park, Irene, 0157, Pretoria (P.O. Box 68255, Highveld Park, 0169) Company secretary: Brandon Topham Inc. Auditors: BDO South Africa Inc., Block C, Riverwalk Office Park, 41 Matroosberg Avenue, Ashlea Gardens, Pretoria Transfer secretaries: Computershare Investor Services (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001 (P.O. Box 61051, Marshalltown, 2107) Designated Advisor: Arcay Moela Sponsors (Proprietary) Limited Website: www.telemasters.co.za Date: 25/06/2012 17:48:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). 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