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Unaudited Condensed Consolidated Interim Results for the Quarter and nine Month period ended 30 June 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 NINE MONTH
PERIOD ENDED 30 JUNE 2012
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
3 months 3 months Unaudited Unaudited
ended ended 9 months ended 9 months ended
30 June 2012 30 June 2011 30 June 2012 30 June 2011
R’000 R’000 R’000 R’000
Revenue 41 248 63 899 140 862 221 896
Cost of sales (35 994) (55 32) (123 444) (187 006)
Gross profit 5 254 8 576 17 418 34 890
Operating expenses (6 959) (7 504) (22 845) (23 626)
Operating (loss) profit (1 705) 1 072 (5 427) 11 264
Investment revenue 99 223 336 641
Finance cost (24) (51) (122) (267)
(Loss) profit before taxation (1 630) 1 244 (5 213) 11 638
Taxation 382 (225) 1 051 (4 019)
(Loss) profit after taxation (1 248) 1 019 (4 162) 7 619
Total comprehensive (loss) income
for the period (1 248) 1 019 (4 162) 7 619
Basic (loss) earnings per share
(cents) (2.97) 2.43 (9.91) 18.14
Diluted (loss) earnings per share
(cents) (2.97) 2.43 (9.91) 18.14
Headline earnings reconciliation:
(Loss) profit for the period (1 248) 1 019 (4 162) 7 619
Adjustment: Loss on disposal of
property, plant & equipment - - - (19)
Headline (loss) earnings for the
period (1 248) 1 019 (4 162) 7 600
Headline (loss) earnings per share
(cents) (2.97) 2.43 (9.91) 18.09
Diluted headline earnings (loss) per
share (cents) (2.97) 2.43 (9.91) 18.09
Weighted average number of shares
in issue 42 000 000 42 000 000 42 000 000 42 000 000
Dividends declared per share
(cents) 2.00 5.00 2.00 13.00
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited at Audited at Unaudited at
30 June 2012 30 September 2011 30 June 2011
R’000 R’000 R’000
ASSETS
Non-current assets
Property, plant and equipment 17 554 14 009 14 923
Intangible assets 1 042 1 912 2 125
Goodwill 2 687 2 687 2 687
Deferred tax assets 5 106 3 962 4 732
Total non-current assets 26 389 22 570 24 467
Current assets
Trade and other receivables 13 316 20 024 15 979
Cash and cash equivalents 10 618 20 420 26 763
Total current assets 23 934 40 444 42 742
Total assets 50 323 63 014 67 209
EQUITY AND LIABILITIES
Capital and reserves
Issued capital 48 48 48
Retained earnings 27 878 32 880 32 178
Total equity 27 926 32 928 32 226
Non-current liabilities
Finance lease liabilities 2 123 337 674
Total non-current liabilities 2 123 337 674
Current liabilities
Trade and other payables 18 514 27 256 27 435
Current portion of finance lease
liabilities 1 496 2 306 2 632
Current tax payable 202 122 4 203
Bank overdraft 62 65 39
Total current liabilities 20 274 29 749 34 309
Total liabilities 22 397 30 086 34 983
Total equity and liabilities 50 323 63 014 67 209
Number of shares in issue 42 000 000 42 000 000 42 000 000
Net asset value per share (cents) 66.49 78.40 76.73
Net tangible asset value per share
(cents) 58.27 68.10 65.27
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited at Audited at Unaudited at
30 June 2012 30 September 2011 30 June 2011
R’000 R’000 R’000
Cash flows from operating activities
(Loss)/Profit for the year (4 162) 10 000 7 619
Income tax (credit)/expense (1 051) 4 814 4 019
Interest received (336) (639) (461)
Dividends received - (237) (180)
(Gain)/Loss on disposal of plant and equipment - (5) -
Depreciation 3 518 4 779 2 707
Amortisation 917 931 745
Finance cost 122 482 641
(992) 20 125 15 090
Movement in working capital:
Decrease/(Increase) in trade and other receivables 6 708 (1 298) 2 747
Decrease in trade and other payables (8 743) (899) (1 154)
Cash (utilised in)/generated by operations (3 027) 17 928 16 683
Finance cost (122) (482) (267)
Income tax paid (13) (6 837) (2 731)
Net cash (utilised in)/generated from operating activities (3 162) 10 609 13 685
Cash flows from investing activities
Interest received 336 639 468
Dividends received - 237 173
Additions to plant and equipment (7 064) (2 765) (1 447)
Proceeds from disposal of plant and equipment - 584 49
Additions to intangible assets (47) - -
Net cash used in investing activities (6 775) (1 305) (757)
Cash flow from financing activities
Dividends paid (840) (7 140) (5 059)
Proceeds from borrowings 2 884 665 665
Repayment of borrowings (1 906) (2 546) (1 882)
Net cash generated by/(used in) financing activities 138 (9 021) (6 276)
Total cash movement for the period (9 799) 283 6 652
Cash and cash equivalents at the beginning of year 20 355 20 072 20 072
Cash and cash equivalents at the end of the year 10 556 20 355 26 724
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Issued Share Total share Retained Total
capital premium capital income equity
R’000 R’000 R’000 R’000 R’000
Balance at 30 September 2010 4 44 48 30 019 30 067
Comprehensive income - Profit for
the 9 month period ended 30
June 2011 - - - 7 619 7 619
Transaction with owners -
Dividends declared - - - (5 460) (5 460)
Balance at 31 March 2011 4 44 48 32 178 32 226
Comprehensive income - Profit for
the remaining 3 month period
ended 30 September 2011 - - - 2 382 2 382
Transaction with owners -
Dividends declared - - - (1 680) (1 680)
Balance at 30 September 2011 4 44 48 32 880 32 928
Comprehensive income - Loss for
the period ended 30 June 2012 - - - (4 162) (4 162)
Transaction with owners -
Dividends declared - - - (840) (840)
Balance at 31 March 2012 4 44 48 27 878 27 926
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 Unaudited Unaudited
3 Months 3 Months 9 Months 9 Months
ended ended ended ended
30 June 30 June 30 June 30 June
2012 2011 2012 2011
R’000 R’000 R’000 R’000
Revenue by Nature
Sale of airtime 37 668 63 027 130 563 220 833
Sale of fixed line airtime 3 580 - 8 606 -
Connection incentive bonus - - - 5
Other - 872 1 693 1 058
Total 41 248 63 899 140 862 221 896
Major customers
Revenue from transactions with a single external
customer amounting to 10% or more of the
group’s revenue is disclosed below:
Customer A - - - 16 858
Customer B 16 951 22 990 48 421 74 229
Other 24 297 40 909 92 441 130 809
Total 41 248 63 899 140 862 221 896
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 nine months ended 30 June 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 third quarter results reflects management’s continued expectations as voiced earlier in the year that 2012 will
be a tough transitional year. The traditional least-cost routing (LCR) turnover decreased substantially 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. We have seen a large increase in billing of fixed line airtime using this new
technology during this quarter, as compared to the first 6 months of this financial year, which indicates that our
efforts are paying off. We expect that this trend will begin to accelerate towards the end of the calendar year.
The cost cutting exercise has started to pay off with a 7% decrease in current quarter operating expenses when
compared to the previous year same quarter. These efforts will increase in the last quarter of the year.
R7.1 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. Only R2.8 million of this
has been financed over a period of 24 months the balance being paid out of free cash flow of the group.
We remain positive on the outlook of the group.
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 in the first quarter.
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.
A third quarter dividend of 1 cent per share was declared and announced on 18 September 2012 after the quarter
ended 30 June 2012 and will be paid to all shareholders recorded on the register on 26 October 2012.
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)
28 September 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: 28/09/2012 12:19:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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