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Reviewed Provisional Condensed Consolidated Results for the Year Ended 30 September 2012
TELEMASTERS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 2006/015734/06
Share code: TLM ISIN Number: ZAE000093324
(“TeleMasters” or “the Company” or “the Group”)
REVIEWED PROVISIONAL CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED
30 SEPTEMBER 2012
REVIEWED AUDITED
CONDENSED CONSOLIDATED For the twelve For the twelve months
STATEMENTS OF COMPREHENSIVE months ended 30 ended 30 September
INCOME September
2012 2011
R R
Revenue 171 296 606 268 142 485
Cost of sales (151 517 776) (225 784 306)
Gross profit 19 778 830 42 358 179
Other gains and losses 176 969 4 670
Operating expenses (25 474 514) (27 942 621)
Operating (loss) profit (5 518 715) 14 420 228
Gain on derecognition of liability 5 430 017 -
Investment revenue 449 151 876 041
Finance costs (203 235) (482 418)
Profit before tax 157 218 14 813 851
Income tax (134 511) (4 813 500)
Profit for the year 22 707 10 000 351
Total comprehensive income for the
year 22 707 10 000 351
Profit and total comprehensive income
attributable to the shareholders of the
company 22 707 10 000 351
EARNINGS AND HEADLINE EARNINGS
PER SHARE
Earnings per share (cents) 0.05 23.81
Headline earnings and diluted headline
earnings per share (cents) 0.17 23.80
The Earnings per share and Headline
earnings per share were determined using
the following information:
Earnings - used in the calculation of
earnings per share and diluted earnings
per share
Profit attributable to shareholders of the
company 22 707 10 000 351
HEADLINE EARNINGS:
Profit attributable to shareholders of the
Company 22 707 10 000 351
Adjusted for:
Loss/ (Profit) on disposal of property plant
and equipment 48 947 (4 670)
Headline earnings for the period 71 654 9 995 681
Weighted number of ordinary shares Number of shares in Weighted average
issue number of shares in
issue
Shares as at 30 September 2012 42 000 000 42 000 000
Shares as at 30 September 2011 42 000 000 42 000 000
Dividends declared and paid per share
(cents) 4.00 17.00
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
REVIEWED AUDITED
As at 30 September As at 30 September
2012 2011
R R
ASSETS
Non-current assets
Property plant & equipment 17 314 281 14 008 539
Intangible assets 1 577 573 1 912 081
Goodwill 2 686 779 2 686 779
Deferred tax 3 904 063 3 962 210
25 482 696 22 569 609
Current assets
Inventories 1 451 828 -
Trade and other receivables 13 029 493 20 024 147
Cash and cash equivalents 8 461 901 20 420 572
22 943 222 40 444 719
Total assets 48 425 918 63 014 328
EQUITY AND LIABILITIES
Total equity
Issued capital 48 059 48 059
Retained earnings 31 222 381 32 879 675
31 270 440 32 927 734
Non-current liabilities
Finance lease liabilities 1 700 717 336 779
1 700 717 336 779
Current liabilities
Trade and other payables 13 869 753 27 256 316
Finance lease liabilities 1 307 692 2 305 928
Current tax liabilities 202 628 122 260
Bank overdraft 74 688 65 311
15 454 761 29 749 815
Total liabilities 17 155 478 30 086 594
Total equity and liabilities 48 425 918 63 014 328
Number of shares in issue 42 000 000 42 000 000
Net asset value per share (cents) 74.45 78.40
Net tangible asset value per share (cents) 64.30 67.45
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
REVIEWED AUDITED
For the twelve For the twelve months
months ended 30 ended 30 September
September
2012 2011
R R
Cash flows from operating activities
Cash (utilised)/generated by operations (3 856 757) 17 928 045
Finance cost (203 235) (482 418)
Income taxes refunded/(paid) 4 004 (6 836 590)
Net cash (utilised)/generated from
operating activities (4 055 988) 10 609 037
Cash flow from investing activities
Interest received 449 151 639 058
Dividends received - 236 982
Additions to plant and equipment (6 763 915) (2 765 418)
Proceeds from disposal of plant and
equipment 251 199 584 054
Additions to intangible assets (534 197) -
Net cash used in investing activities (6 597 762) (1 305 324)
Cash flow from financing activities
Dividends paid (1 680 000) (7 140 000)
Proceeds from borrowings 2 608 809 664 957
Repayment of borrowings (2 243 107) (2 545 435)
Net cash used in financing activities (1 314 298) (9 020 478)
Total cash movement for the period (11 968 048) 283 235
Cash and cash equivalents at the beginning
of year 20 355 261 20 072 026
Cash and cash equivalents at the end of
year 8 387 213 20 355 261
CONDENSED CONSOLIDATED
STATEMENTS OF CHANGES IN
EQUITY
Total
Share Share share Retained Total
capital premium capital income Equity
Balance at 30 September 2010 4 200 43 859 48 059 30 019 323 30 067 383
Comprehensive income
- Profit - - - 10 000 351 10 000 351
Total comprehensive income - - - 10 000 351 10 000 351
Transaction with owners
- Dividends - - - (7 140 000) (7 140 000)
Total transactions with owners - - - (7 140 000) (7 140 000)
Balance at 30 September 2011 4 200 43 859 48 059 32 879 674 32 927 733
Comprehensive income
- Profit - - - 22 707 22 707
Total comprehensive income - - - 22 707 22 707
Transaction with owners
- Dividends - - - (1 680 000) (1 680 000)
Total transactions with owners - - - (1 680 000) (1 680 000)
Balance at 30 September 2012 4 200 43 859 48 059 31 222 381 31 270 440
SEGMENT REPORT
The group does not have different operating segments. The business is conducted in South Africa and
is managed centrally with no branches. The group is managed as one operating unit. Accordingly
there is no meaningful segmental information to report.
1. COMPANY PROFILE
TeleMasters is licensed to provide Voice, Data and Cloud-based corporate communication. It supplies
Fixed-line, Fixed cellular, Fixed data and Virtual PBX services countrywide.
2. FINANCIAL RESULTS
2.1 Statement of compliance and basis of preparation
The provisional reviewed financial information for the year ended 30 September 2012 has 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.
These results were prepared under the supervision of Brandfon Topham CA (SA) and have been
reviewed by Nexia SAB&T whose unmodified review opinion is open for inspection at the Company’s
registered office.
2.2 Commentary on operating results
The operating results for the financial year were in line with expectations as stated in the previous
annual report. The revenues from the dwindling fixed cellular base (using Least Cost Routing “LCR”
technology) has declined 36% in part due to the expiration of tenders. The group is converting clients
and new clients onto the new technology platform, which is called Digital Direct. Over the past year
the group has tested and amended this technology to the point that it is now satisfied that this
technological offering is of the highest quality for voice communications.
The result of the decrease in Revenue had an impact on the Gross Profit and Margin. To counter this
lower Gross Profit the Group undertook cost cutting in the Company, including retrenchments and
voluntary cuts in the directors’ salaries. The business has been re-alligned for a change in how it
operates as many skills needed to embrace the Digital Direct communications solution are different
from those applied in the past. The down side of Digital direct is that it requires a far higher capital
installation cost. This is reflected in the fact that the Group has invested R7.3 million in equipment
and software over the past year when compared with the R2.7 million in the 2011 financial year.
Despite the lower operating margin and operating loss the board is pleased to reflect a net profit for
the year of R22,7 million , significantly lower than the R10 million reported in previous year. The net
profit includes a gain on derecognition of a liability of R5.4 million before tax. As reported previously, a
subsidiary of the company, Skycall Networks (Pty) Ltd, had a potential claim against it by a supplier
which existed at acquisition date and which was provided for at the time of acquisition. This potential
liability has not been realised and the legal basis for the claim, which was and remains disputed, has
now prescribed.
The net asset value per share amounts to 74.45 (2011: 78.40) The earnings per share was 0.05
cents (2011: 23.81). At balance sheet date the cash reserves were at R8.4 million with a Current
Asset ratio of 1.48:1 (2011: 1.36:1). The board considers the working capital satisfactory in the current
markets to maintain operations in the coming year.
2.3. Dividends paid
As the operating results were expected to be low for the year, the board reduced the dividends paid
from R7.14 million in 2011 to R1.68 million in order to assist with the working capital requirements of
the Group. The board does not primarily link the payment of dividends to the current years operating
results, but considers the dividends in relation to the Group’s reserves of over R31 million. The board
considers the working capital requirements of the Group for the next 12 month period when
determining a dividend. The board considers that dividends are an important reason for shareholders
deciding to invest in a company and hence hold the principle of paying quarterly dividends highly.
The following dividends were declared during the year to date:
- A dividend of 1 cents (2011: 4 cents) per share was declared and paid to all shareholders
recorded in the share register of the Company at the close of business on Friday, 13 January
2012;
- A dividend of 1 cents (2011: 4 cents) per share is was declared and paid to all shareholders
recorded in the share register of the Company at the close of business on Friday, 25 April
2012;
- A dividend of 1 cents (2011: 5 cents) per share was declared and paid to all shareholders
recorded in the share register of the Company at the close of business on Friday, 19 October
2012;
- A dividend of 1 cents (2011: 4 cents) per share is hereby declared and payable to all
shareholders recorded in the share register of the Company at the close of business on
Friday, 2 November 2012;
A final dividend for the year ended September 2012 is declared below.
2.4. Acquisition of property plant and equipment
Property plant and equipment acquired during the year comprises 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
group as reported.
4. LITIGATION
There are currently no legal or arbitration proceedings against the Group of which the Group is aware
which may have or have had in the 12 months preceeding the date of this report a material effect on
the consolidated position of the Group.
5. SHARE CAPITAL
No changes to share capital occurred during the past financial year.
6. FUTURE PROSPECTS
The Company has completed a full year of transition from a fixed cellular agency to a fully ICASA
licensed fixed line Telco and is progressing positively towards operational profitability in this offering.
The Company has invested in a unique set of technologies that delivers the highest quality of Voice. It
has successfully implemented its Virtual PBX service and rolled this out profitably. A number of
restrictive technical hurdles were overcome and it is rolling out virtual uncontended access lines that
offer a remarkable increase in clarity and stability over existing lines. Its capacity to commission
installations and solve technical difficulties has reached the required standard for ramping-up
expansion.
The coming year is expected to see the fruits of the past year’s innovation and testing. Not only is the
Company able to bring a higher quality solution to clients but the margins to the Group utilising this
technology are far higher than what was earned in the past using LCR.
The Company has been successfully audited four times for its ISO 9001 status. It is implementing a
customised, integrated operations system to integrate the various processes to ensure the best
quality voice solution for clients. All indicators are such that the board is confident concerning the
prospects for the Group in the coming year.
7. NOTICE OF DECLARATION OF DIVIDEND
Notice is hereby given that a final cash dividend of 1 cent per share (gross) has been declared for the
year ended 30 September 2012.
The dividend will be subject to the Dividends Tax that was introduced with effect from 1 April 2012. In
accordance with the provisions of the Listings Requirements of the Johannesburg Stock Exchange,
the following additional information is disclosed:
- the dividend has been declared out of retained earnings;
- the local Dividends Tax rate is 15%;
- the gross local dividend is 1 cent per share for shareholders exempt from Dividends Tax;
- the net local dividend is 0.85 cents per share for shareholders liable for Dividends Tax;
- the Company has 42 000 000 ordinary shares in issue;
- the Company’s income tax reference number is: 9683978143.
The following dates are applicable to the dividend:
The last day to trade in order to be eligible for the dividend will be Friday, 11 January 2013.
Shares will trade ex-dividend from Monday, 14 January 2013.
The record date will be Friday, 18 January 2013 and payment will be made on Monday, 21 January
2013.
Share certificates may not be dematerialised/rematerialised between Monday, 14 January 2013 and
Friday, 18 January 2013, both days inclusive.
For and on behalf of the Board:
MB Pretorius BR Topham
Chief Executive Officer Chief Financial Officer
18 December 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: Nexia SAB&T, 119 Witch-Hazel Avenue, Highveld Technopark, Centurion
Transfer secretaries: Link Market Services Proprietary Limited, 13th Floor, 19 Ameshoff Street
Braamfontein, 2017
Designated Advisor: Arcay Moela Sponsors Proprietary Limited
Website: www.telemasters.co.za
Date: 18/12/2012 12:25:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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