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Unaudited Condensed Consolidated Interim Results for the Six Month Period Ended 31 March 2013
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" or “the Group”)
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTH PERIOD
ENDED 31 MARCH 2013
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME
Unaudited 6 months Unaudited 6 months
ended 31 March 2013 ended 31 March 2012
R R
Revenue 70 749 554 99 613 756
Cost of sales (56 306 451) (87 449 475)
Gross profit 14 443 103 12 164 281
Operating expenses (14 336 075) (15 886 914)
Operating profit/ (loss) 107 028 (3 722 633)
Investment income 158 165 237 038
Finance cost (175 668) (98 060)
Profit (loss) before taxation 89 525 (3 583 655)
Taxation 25 067 668 858
Profit (loss) after taxation 64 458 (2 914 797)
Total comprehensive (loss) income for the period 64 458 (2 914 797)
Basic earnings (loss) per share (cents) 0.15 (6 94)
Diluted earnings (loss) per share (cents) 0.15 (6 94)
Headline earnings reconciliation:
Profit (Loss) for the period 64 458 (2 914 797)
Adjustment: Profit on disposal of property, plant & equipment - -
Headline earnings(loss) for the period 64 458 (2 914 797)
Headline earnings (loss) per share (cents) 0.15 (6 94)
Diluted headline earnings (loss) per share (cents) 0.15 (6 94)
Weighted average number of shares in issue 42 000 000 42 000 000
Dividends declared per share (cents) 1.5 2.00
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited at Audited at Unaudited at
31 March 2013 30 September 2012 31 March 2012
R R R
ASSETS
Non-current assets
Property, plant and equipment 18 333 868 17 314 281 16 129 398
Intangible assets 1 099 297 1 577 573 1 481 206
Goodwill 2 686 779 2 686 779 2 686 779
Deferred tax assets 3 878 996 3 904 063 4 705 630
Total non-current assets 25 998 940 25 482 696 25 003 013
Current assets
Trade and other receivables 15 085 264 13 029 493 12 034 712
Inventories 3 262 889 1 451 828 -
Cash and cash equivalents 3 893 173 8 461 901 12 593 009
Total current assets 22 241 326 22 943 222 24 627 721
Total assets 48 240 266 48 425 918 49 630 734
EQUITY AND LIABILITIES
Capital and reserves
Issued capital 48 059 48 059 48 059
Retained earnings 30 656 839 31 222 381 29 124 878
Total equity 30 704 898 31 270 440 29 172 937
Non-current liabilities
Finance lease liabilities 2 626 517 1 700 717 458 029
Total non-current liabilities 2 626 517 1 700 717 458 029
Current liabilities
Trade and other payables 13 080 701 13 869 753 18 600 750
Current portion of finance lease liabilities 1 783 448 1 307 692 1 149 657
Current tax payable - 202 628 201 726
Bank overdraft 44 702 74 688 47 635
Total current liabilities 14 908 851 15 454 761 19 999 768
Total liabilities 17 535 368 17 155 478 20 457 797
Total equity and liabilities 48 240 266 48 425 918 49 630 734
Number of shares in issue 42 000 000 42 000 000 42 000 000
Net asset value per share (cents) 73.11 74.45 69.46
Net tangible asset value per share (cents) 64.09 64.30 60.18
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited at Audited at Unaudited at
31 March 30 September 31 March
2013 2012 2012
R R R
Cash flows from operating activities
Cash generated from operations (2 143 248) (3 902 743) (1 169 282)
Finance costs (175 668) (203 235) (98 060)
Tax paid (202 628) 4 904 4 904
Net cash inflow from operating activities (2 521 544) (4 101 974) (1 262 438)
Cash flows from investing activities
Additions to plant and equipment (2 946 918) (6 763 915) (4 909 465)
Proceeds on disposal of plant and equipment - 297 185 -
Additions to Intangible assets - (534 197)
Investment income 158 165 449 151 237 038
Net cash outflow from investing activities (2 788 753) (6 551 776) (4 672 427)
Cash flows from financing activities
Proceeds from borrowings 1 949 802 2 608 809 351 000
Dividends paid (630 000) (1 680 000) (840 000)
Repayment of borrowings (548 247) (2 243 107) (1 386 021)
Net cash outflow from financing activities 771 555 (9 020 478) (1 875 021)
Total cash movement for the period (4 538 742) (11 968 048) (7 809 886)
Cash and cash equivalents at the beginning of the period 8 387 213 20 355 260 20 355 260
Cash and cash equivalents at the end of the period 3 848 471 8 387 213 12 545 374
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Issued Share Total share Retained Total
capital premium Capital Income Equity
Balance at 30 September 2011 4 200 43 859 48 059 32 879 675 32 927 734
Comprehensive income/ (loss) for the 6 month period
ended 31 March 2012 - - - (2 914 797) (2 914 797)
Transaction with owners - Dividends declared - - - (840 000) (840 000)
Balance at 31 March 2012 4 200 43 859 48 059 29 124 878 29 172 937
Comprehensive income - Profit for the remaining 6
month period ended 30 September 2012 - - - 2 937 503 2 937 503
Transaction with owners - Dividends declared - - - (840 000) (840 000)
Balance at 30 September 2012 4 200 43 859 48 059 31 222 381 31 270 440
Comprehensive income for the period ended 31 March
2013 - - - 64 458 64 458
Transaction with owners - Dividends declared - - - (630 000) (630 000)
Balance at 31 March 2013 4 200 43 859 48 059 30 656 839 30 704 898
SEGMENT REPORT
IFRS8 requires an entity to report financial and descriptive information
about its reportable segments, which are operating segments or
aggregations of operating segments that meet specific criteria. Operating
segments are components of an entity about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker. The Chief Executive Officer is the Chief Operating decision
maker of the group.
The group 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.
All revenues from external customers originate in South Africa.
LCR and Digital Direct+ are two technologies which are fully integrated to
provide one telecommunications solution to our customers and are not
separately managed.
A breakdown of the groups revenue from external customers is set out as
follows:
Unaudited Unaudited
3 Months ended 3 Months ended
31 March 2013 31 March 2012
R R
Revenue by Nature
Sale of fixed cellular airtime 54 236 287 92 895 124
Sale of fixed line airtime 15 162 768 4 514 335
Other 1 395 499 2 204 297
Total revenue 70 749 554 99 613 756
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 B 11 497 456 31 470 309
- Other customers 59 252 098 68 143 447
Total revenue 70 749 554 99 613 756
COMMENTARY
1. COMPANY PROFILE
TeleMasters is a fully licensed fixed-line telecommunication service provider. It operates exclusively in the South African
corporate market. The group provides clients with 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 2013 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 2012. These results were prepared under the supervision of
Brandon Topham CA(SA) and have not been reviewed or audited by the Company's auditors.
2.2 Commentary on financial results
The Group has achieved a positive trading result for the 6 months under review and is the directors are pleased to once
again be able to report positive earnings per share of 0.15 cents per share compared with the previous year's loss for the
same period of 6.94 cents per share. As previously reported, the Group's conversion of customers from LCR technology to
our Digital technology is proceeding at a constant pace and each month which passes results in a higher margin operation.
Revenue remains down compared with the previous year as a result of the previously reported non-renewal of older LCR type
contracts with customers. During the previous year, less than 5% of total Revenue resulted from the sale of fixed line airtime
over our Digital platform compared with over 21% in the current 6 month period. This conversion assures the Group’s
profitability and sustainability over the long term on the back of lower Revenue figures, but with the higher anticipated and
currently realised gross and net profit percentages.
Trading conditions remain tight, but the overall financial position of the Group is sound with good current ratio. The Group
continues to invest large amounts into equipment, which is partially funded from operating revenues and in part by external
loan finance. A total of R2 946 918 has been invested in new equipment during this 6 month period. The net asset value for
the Group remains positive and well above the trading price of the listed share.
The results are in line with the expectations of the board which has anticipated a gradual return to profitability and higher
dividends with the passing of time.
2.3. Dividends paid and Notice of Dividend to be paid
On 18 December 2012, the board declared a final 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, 11 January 2013.
On 28 March 2013, the board declared an interim dividend of 0.5 cents per share, which was paid to all shareholders
recorded in the share register of the Company at the close of business on Friday, 26 April 2013.
Notice is hereby given that an interim cash dividend of 0.5 cent per share (gross) has been declared for the quarter. 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 0.5 cents per share for shareholders exempt from Dividends Tax;
- the net local dividend is 0.425 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, 19 July 2013. Shares will trade ex-dividend from
Monday, 22 July 2013. The record date will be Friday, 26 July 2013 and payment will be made on Monday, 29 July 2013.
Share certificates may not be dematerialised/ re-materialised between Monday, 22 July 2013 and Friday, 26 July 2013, both
days inclusive.
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 Group as reported.
4. CHANGES IN THE COMPOSITION OF THE BOARD & SHARE CAPITAL
There have been no changes to the composition of the board nor to the share capital of the Company since the publication of
the Integrated report for the year ended 30 September 2012.
5. LEGAL PROCEEDINGS
The Company was a supplier to Huge Group Ltd (“Huge Group”) until March 2013, at which time supply was terminated as a
result of the non-payment by Huge Group of its account. An amount of R 4 292 404 remains due by Huge Group to the
Company. Telemasters has referred this payment dispute to arbitration, which process is currently under way. The board is
confident that no adjustment will be required to the financial results as reported, as the Company holds 9 646 926 ordinary
shares in Huge Group, which shares were previously pledged as security for payment of Huge Group's obligations to the
Company.
For and on behalf of the Board:
MB Pretorius BR Topham
Chief Executive Officer Chief Financial Officer
1 July 2013
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: BR Topham
Auditors: Nexia SAB&T, 119 Witch-Hazel Avenue, Highveld Technopark, Centurion, Pretoria
Transfer secretaries: Link Market Services South Africa (Pty) Ltd, 13th floor, Ameshoff Street, Braamfontein, 2017
Designated Advisor: Arcay Moela Sponsors Proprietary Limited
Website: www.telemasters.co.za
Date: 02/07/2013 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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