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TELEMASTERS HOLDINGS LIMITED - Abridged Condensed Consolidated Results for the year ended 30 June 2013

Release Date: 30/09/2013 14:44
Code(s): TLM     PDF:  
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Abridged Condensed Consolidated Results for the year ended 30 June 2013

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”)

ABRIDGED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2013

                                                       AUDITED             AUDITED
CONDENSED CONSOLIDATED                          For the 9 month   For the 12 month
STATEMENTS OF COMPREHENSIVE                period ended 30 June    period ended 30
INCOME                                                                   September
                                                           2013               2012
                                                              R                  R

Revenue                                              98 674 734        171 296 606
Cost of sales                                       (81 197 326)      (151 517 776)
Gross profit                                         17 477 408         19 778 830

Other gains                                             311 570            176 969
Operating expenses                                  (17 134 627)       (25 474 514)
Operating profit/(loss)                                 654 351         (5 518 715)

Gain on derecognition of liability                            -          5 430 017
Investment revenue                                      188 925            449 151
Finance costs                                          (337 597)          (203 235)
Profit before tax                                       505 679            157 218
Taxation                                               (248 599)          (134 511)
Profit for the year                                     257 080             22 707
Comprehensive income for the year
                                                              -                  -
Total comprehensive income for the
year                                                    257 080             22 707

Profit and total comprehensive income
attributable to the owners of the
company                                                 257 080             22 707

EARNINGS PER SHARE

Basic earnings per share (cents)                           0.61               0.05
Dilutive earnings per share (cents)                        0.61               0.05
Headline earnings per share (cents)                        0.49               0.17
                                                                          

The earnings per share/ dilutive earnings
per share and headline earnings per share
were determined using the following
information:
Basic and dilutive earnings - used in the
calculation of basic and dilutive
earnings per share
Earnings attributable to owners of the
company                                                 257 080             22 707



HEADLINE EARNINGS:

Earnings attributable to owners of the
Company                                                 257 080             22 707
Adjusted for:
(Gain)/ loss on disposal of property plant
and equipment – net of tax                              (50 400)            48 947
Headline earnings for the period                        206 680             71 654

Weighted number of ordinary shares           Number of shares   Weighted average
                                                       issued   number of shares
                                                                          issued


Shares as at 30 June 2013                          42 000 000         42 000 000
Shares as at 30 September 2012                     42 000 000         42 000 000

Dividends declared per share (cents)                     2.00               4.00
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
                                                   AUDITED              AUDITED
                                             As at 30 June   As at 30 September
                                                      2013                 2012
                                                         R                    R
ASSETS
Non-current assets
Property plant & equipment                      17 071 370           17 314 281
Intangible assets                                1 082 888            1 577 573
Goodwill                                         2 686 779            2 686 779
Deferred tax                                     3 655 462            3 904 063
                                                24 496 499           25 482 696
Current assets
Inventories                                      2 233 771            1 451 828
Current tax receivable                              33 126                    -
Trade and other receivables                     17 690 979           13 029 493
Cash and cash equivalents                        4 633 006            8 461 901
                                                24 590 882           22 943 222
Total assets                                    49 087 381           48 425 918


EQUITY AND LIABILITIES
Total equity

Issued capital                                      48 059               48 059
Retained earnings                               30 639 461           31 222 381
                                                30 687 520           31 270 440


Non-current liabilities
Finance lease liabilities                        2 384 318            1 700 717
                                                 2 384 318            1 700 717
Current liabilities
Other financial liabilities                      7 010 123                    -
Trade and other payables                         6 980 816           13 869 753
Finance lease liabilities                        1 942 425            1 307 692
Current tax liabilities                                  -              202 628
Bank overdraft                                      82 179               74 688
                                                16 015 543           15 454 761
Total liabilities                               18 399 861           17 155 478
Total equity and liabilities                    49 087 381           48 425 918

Number of shares in issue                       42 000 000           42 000 000
Net asset value per share (cents)                    72.95                74.45
Net tangible asset value per share (cents)           63.97                64.30
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
                                                      AUDITED               AUDITED
                                             For the 9 months     For the 12 months
                                                ended 30 June    ended 30 September
                                                         2013                  2012
                                                            R                     R
Cash flows from operating activities


Cash utilised by operations                       (7 020 886)            (3 902 743)
Finance cost                                        (337 597)              (203 235)
Income taxes (paid)/refunded                        (235 754)                 4 004
Net cash utilised from operating
activities                                        (7 594 237)            (4 101 974)

Cash flow from investing activities

Investment revenue received                          188 925                449 151
Additions to plant and equipment                  (3 360 485)            (6 763 915)
Proceeds from disposal of plant and
equipment                                             70 000                297 185
Additions to intangible assets                             -               (534 197)
Net cash used in investing activities             (3 101 560)            (6 551 776)

Cash flow from financing activities

Dividends paid                                    (1 469 048)            (1 680 000)
Proceeds from borrowings                           9 732 155              2 608 809
Repayment of borrowings                           (1 403 696)            (2 243 107)
Net cash used in financing activities              6 859 411             (1 314 298)



Total cash movement for the period                (3 836 386)           (11 968 048)
Cash and cash equivalents at the beginning
of year                                            8 387 213             20 355 261
Cash and cash equivalents at the end of
year                                               4 550 827              8 387 213
CONDENSED CONSOLIDATED
STATEMENTS OF CHANGES IN
EQUITY
                                                         Total
                                  Share        Share     share      Retained         Total
                                 capital     premium    capital     earnings        equity
                                       R           R          R            R             R
Balance at 30 September 2011       4 200      43 859     48 059   32 879 674    32 927 733
Comprehensive income
- Profit for the year                  -           -          -       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

Comprehensive income
- Profit for the period                -           -          -      257 080       257 080
Total comprehensive income             -           -          -      257 080       257 080
Transaction with owners
- Dividends                                                         (840 000)     (840 000)
Total transactions with owners                                      (840 000)     (840 000)
Balance at 30 June 2013           4 200      43 859     48 059    30 639 461    30 687 520
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:



                                                                      Audited 9       Audited 12
                                                                         Months     Months ended
                                                                       ended 30     30 September
                                                                      June 2013             2012

                                                                              R               R

Revenue by Nature

Sale of fixed cellular airtime                                        74 547 038     152 879 852

Sale of fixed line airtime                                            16 663 483      11 045 217

Other                                                                  7 464 213       7 371 537

Total revenue                                                         98 674 734     171 296 606

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      50 734 607

- Other customers                                                     87 177 278     120 561 999

Total revenue                                                         98 674 734     171 296 606
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 audited abridged condensed financial results comprise a condensed statement of financial
position, condensed statement of comprehensive income, condensed statement of changes in equity
and condensed statement of cash flow for the 9 month period ended 30 June 2013 which have been
presented in accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards (“IFRS”), the information required by
IAS 34: Interim Financial Reporting, the South African Companies Act as amended, SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by Financial Reporting Standards Council and the JSE Listings
Requirements. The results have been prepared in accordance with accounting policies of group 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 been
audited by Nexia SAB&T whose unmodified audit report is open for inspection at the Company’s
registered office. This summarised report is extracted from the audited information, but is not itself
audited. The directors take full responsibility for the preparation for this provisional report and are
satisfied that the financial information has been correctly extracted from the underlying financial
statements.

2.2 Commentary on operating results

The board is pleased to reflect a net profit for the nine months of R257 080, being fifteen times higher
than the previous 12 month result of R22 707 when annualised. These results have been achieved
despite a lowering of Revenue of 42% as a result of the conversion of customers from an older
technology platform to our latest industry leading telecommunications solution. This new technology
allowed our Gross margin to grow from 11.54% to 15.48% which resulted in the Gross margin
remaining almost unchanged when compared to the lowered Revenue of the prior period and if
annualised to reflect a twelve month period would have exceeded the prior year margin.

The profitability and sustainability of the group has been ensured by the increase of the gross margin
and the decrease of operating costs.

EPS is up from 0.05 cents per share to 0.61 cents per share an increase of 1220% with Headline
Earnings per share up by 188%.

Due to an error on the part of the South African Revenue Services with the Company VAT account,
we have been unable to obtain a Tax Clearance certificate and this has negatively effected our cash
collection. In addition the Arbitration dispute with a former customer owing R4.1 million has also
impacted on our debtors’ book. Our debtor days have thus increased with Trade debtors increasing
from R13 029 493 to R17 690 979 despite the lower Revenue figures. This position we believe will
shortly be addressed.

Our Working capital and balance sheet remains positive and all our key ratios remain healthy. At
balance sheet date the cash reserves were at R4.5 million with a Current Asset ratio of 1.53:1 (2012:
1.48:1). The board considers the working capital satisfactory in the current markets to maintain
operations in the coming year.

The group has extremely low debt with long term and current portion of finance lease liabilities
totalling R4 326 743 when compared with a total depreciated plant and equipment balance of
R17 071 370.

The net asset value per share amounts to 72.95 (2012: 74.45), the decrease arising as a result of the
dividends paid for the year being higher than the Earnings in the current year which was in line with
the boards view that the profitability of the group will continue to improve and that dividends are not
directly related to a specific financial period’s results.

The group at its last Annual General Meeting approved the bringing forward of the financial year end
by three months in order that it ends on 30 June 2013.

2.3. Dividends paid and dividend declaration

The following dividends were declared during the financial period to date:
    -   A dividend of 1 cents per share was declared and paid to all shareholders recorded in the
        share register of the Company at the close of business on Monday 11 January 2013;
    -   A dividend of 0,5 cents per share was declared and paid to all shareholders recorded in the
        share register of the Company at the close of business on Monday 19 April 2013;
    -   A dividend of 0,5 cents per share was declared and paid to all shareholders recorded in the
        share register of the Company at the close of business on Monday 19 July 2013;

Notice is hereby given that a dividend of 0,5 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,
25 October 2013.

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, 18 October 2013. Shares
will trade ex-dividend from Monday, 21 October 2013. The record date will be Friday, 25 October
2013 and payment will be made on Monday, 28 October 2013.

Share certificates may not be dematerialised/ re-materialised between Monday, 21 October 2013 and
Friday, 25 October 2013, both days inclusive.

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 is currently no legal or related proceedings against the group other than mentioned below, of
which the group is aware which may have or have had in the 12 months preceding the date of this
report a material effect on the consolidated position of the group.

The group is currently involved in litigation with a previous client pertaining to outstanding receivables
to the value of R4.1 million, however these receivables are adequately secured through cession of
shares held against the debt owed to the group. The matter has been referred for arbitration which is
currently taking place.

5. SHARE CAPITAL

No changes to share capital occurred during the past financial year.

6. FUTURE PROSPECTS

The group continues with its transition from a fixed cellular agency to a fully ICASA licensed fixed line
Telco.

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. As reported
previously our anticipated transition would and these results confirm that the new technologies bring a
higher quality solution to clients with higher margins to the group when compared to that earned when
only using Lease Cost Routing as we did in the past.

The Board remains positive about the future and believe that the profitability will continue to grow to
higher levels in the coming periods.

For and on behalf of the Board:

MB Pretorius                              BR Topham
Chief Executive Officer                   Chief Financial Officer
30 September 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 (PO Box
68255 HighveldPark 0169)
Company secretary: Brandon Topham Inc.
Auditors: Nexia SAB&T, 119 Witch-Hazel Avenue, Highveld Technopark, Centurion
Transfer secretaries: Link Market Services Proprietary Limited 13thFloor 19 Ameshoff Street
Braamfontein 2017
Designated Advisor: Arcay Moela Sponsors Proprietary Limited
Website: www.telemasters.co.za

Date: 30/09/2013 02:44:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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