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Abridged condensed un-audited consolidated results for the three and six month periods ended 31 December 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 UN-AUDITED CONSOLIDATED RESULTS FOR THREE AND SIX MONTH PERIODS
ENDED 31 DECEMBER 2013
UN-AUDITED UN-AUDITED AUDITED UN-AUDITED UN-AUDITED
CONDENSED
CONSOLIDATED For the 6 For the 3
STATEMENTS OF month period For the 3 month For the 9 For the 6 month month period
COMPREHENSIVE ended 31 period ended 31 month year period ended 31 ended 31
INCOME December December ended 30 June March December
2013 2013 2013 2013 2012
R R R R R
Revenue 55 092 550 29 984 042 98 674 734 70 749 554 33 331 439
Cost of sales (39 242 264) (21 357 848) (81 197 326) (56 306 451) (26 253 479)
Gross profit 15 850 286 8 626 194 17 477 408 14 443 103 7 077 960
Other gains - - 311 570 - -
Operating expenses (12 359 079) (6 576 327) (17 134 627) (14 336 075) (6 786 091)
Operating profit/(loss) 3 491 207 2 049 867 654 351 107 028 291 869
Gain on derecognition of
liability - - - - -
Investment revenue 60 618 29 152 188 925 158 165 89 145
Finance costs (201 397) (126 442) (337 597) (175 668) (94 813)
Profit before tax 3 350 428 1 952 577 505 679 89 525 286 201
Income tax expense (1 020 116) (628 800) (248 599) 25 067 80 136
Profit for the year 2 330 312 1 323 777 257 080 64 458 206 065
Comprehensive income for
the year
2 330 312 1 323 777 257 080 64 458 206 065
Total comprehensive
income for the year 2 330 312 1 323 777 257 080 64 4580 206 065
Profit and total
comprehensive income
attributable to the owners
of the company 2 330 312 1 323 777 257 080 64 458 206 065
EARNINGS PER SHARE
Basic earnings per share
(cents) 5.55 3.15 0.61 0.15 0.49
Dilutive earnings per share
(cents) 5.55 3.15 0.61 0.15 0.49
Headline earnings per
share (cents) 5.55 3.15 0.61 0.15 0.49
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 2 330 312 1 323 777 257 080 64 458 206 065
HEADLINE EARNINGS:
Earnings attributable to
owners of the Company 2 330 312 1 323 777 257 080 64 458 206 065
Adjusted for:
(Gain)/ loss on disposal of
property plant and
equipment – net of tax - - - - -
Headline earnings for the
period 2 330 312 1 323 777 257 080 64 458 206 065
Number of shares issued 42 000 000 42 000 000 42 000 000 42 000 000 42 000 000
Weighted average
number of shares issued 42 000 000 42 000 000 42 000 000 42 000 000 42 000 000
Dividends declared per
share (cents) 1.00 0.50 2.00 1.50 1.00
CONDENSED
CONSOLIDATED
STATEMENTS OF
FINANCIAL POSITION
UN-AUDITED AUDITED UN-AUDITED UN-AUDITED
As at 31 December As at 30 June As at 31 March As at 30 December
2013 2013 2013 2012
R R R R
ASSETS
Non-current assets
Property plant & equipment 15 927 969 17 071 370 18 333 868 16 804 306
Intangible assets 604 612 1 082 888 1 099 297 1 338 434
Goodwill 2 686 779 2 686 779 2 686 779 2 686 770
Deferred tax 2 635 345 3 655 462 3 878 996 3 823 927
21 854 705 24 496 499 25 998 940 24 635 437
Current assets
Inventories 1 857 902 2 233 771 3 262 889 4 191 953
Current tax receivable 33 126 33 126 - -
Trade and other receivables 16 569 676 17 690 979 15 085 264 13 674 456
Cash and cash equivalents 3 531 138 4 633 006 3 893 173 7 908 857
21 991 842 24 590 882 22 241 326 25 684 366
Total assets 43 846 547 49 087 381 48 240 266 50 337 803 918
EQUITY AND LIABILITIES
Total equity
Issued capital 48 059 48 059 48 059 48 059
Retained earnings 32 549 773 30 639 461 30 656 839 31 008 446
32 597 832 30 687 520 30 704 898 31 056 505
Non-current liabilities
Finance lease liabilities 1 525 183 2 384 318 2 626 517 1 361 042
1 525 183 2 384 318 2 626 517 1 361 042
Current liabilities
Other financial liabilities 5 202 083 7 010 123 - -
Trade and other payables 2 659 589 6 980 816 13 080 701 16 616 004
Finance lease liabilities 1 810 226 1 942 425 1 783 448 1 270 643
Current tax liabilities - - - -
Bank overdraft 51 634 82 179 44 702 33 609
Total Current liabilities 9 723 532 16 015 543 14 908 851 17 920 256
Total liabilities 11 248 715 18 399 861 17 535 368 19 281 298
Total equity and liabilities 43 846 547 49 087 381 48 240 266 50 337 803
Number of shares in issue 42 000 000 42 000 000 42 000 000 42 000 000
Net asset value per share
(cents) 77.61 73.07 73.11 73.94
Net tangible asset value per
share (cents) 69.78 64.09 64.09 64 36
CONDENSED
CONSOLIDATED
STATEMENTS OF CASH
FLOWS
UN-AUDITED UN-AUDITED AUDITED UN-AUDITED UN-AUDITED
For the 3
For the 6 For the 3 For the 9 months months
months ended months ended year ended 30 For the 6 months ended 31
31 December 31 December June ended 31 March December
2013 2013 2013 2013 2012
R R R R R
Cash flows from
operating activities
Cash (utilised)/ generated
by operations 2 838 936 2 486 803 (7 020 886) (2 143 248) 946 746
Finance cost (201 397) (126 442) (337 597) (175 668) (94 813)
Income taxes
(paid)/refunded - - (235 754) (202 628) (202 628)
Net cash
generated/(utilised) from
operating activities 2 637 539 2 360 361 (7 594 237) (2 521 544) 649 305
Cash flow from investing
activities
Investment revenue
received 60 619 29 153 188 925 158 165 89 145
(Additions)/ disposal to
plant and equipment (550 107) (475 964) (3 360 485) (2 946 918) (453 691)
Proceeds from disposal of
plant and equipment - - 70 000 - -
Additions to intangible
assets - - - - -
Net cash used in
investing activities (489 488) (446 811) (3 101 560) (2 788 753) (364 546)
Cash flow from financing
activities
Dividends paid (420 000) (210 000) (1 469 048) (630 000) (420 000)
Proceeds from borrowings - - 9 732 155 1 949 802 -
Repayment of borrowings (2 799 374) (1 371 397) (1 403 696) (548 247) (376 724)
Net cash used in
financing activities (3 219 374) (1 581 397) 6 859 411 (771 555) (796 724)
Total cash movement for
the period (1 071 323) 332 150 (3 836 386) (4 538 742) (511 965)
Cash and cash equivalents
at the beginning of period 4 550 827 3 147 351 8 387 213 8 387 213 8 387 213
Cash and cash
equivalents at the end of
year 3 479 504 3 479 504 4 550 827 3 848 471 7 875 248
CONDENSED
CONSOLIDATED
STATEMENTS OF CHANGES
IN EQUITY
Share Share Total share Retained Total
capital premium capital Earnings equity
R R R R R
Balance at 30 June 2012 4 200 43 859 48 059 27 877 674 27 925 733
Comprehensive income
- Profit for the period - - - 4 184 707 4 184 707
Total comprehensive income - - - 4 184 707 4 184 707
Transaction with owners
- Dividends - - - (840 000) (840 000)
Total transactions with
owners - - - (840 000) (840 000)
Balance at 30 September 2012 4 200 43 849 48 059 31 222 381 31 270 440
Comprehensive income
- Profit for the period - - - 206 065 206 065
Total comprehensive income - - - 206 065 206 065
Transaction with owners
- Dividends - - - (420 000) (420 000)
Total transactions with
owners - - - (420 000) (420 000)
Balance at 31 December 2012 4 200 43 859 48 059 31 008 446 31 056 505
Comprehensive income
- Profit (Loss) for the period - - - (141 607) (141 607)
Total comprehensive income - - - (141 607) (141 607)
Transaction with owners
- Dividends - - - (210 000) (210 000)
Total transactions with
owners - - - (210 000) (210 000)
Balance at 31 March 2013 4 200 43 859 48 059 30 656 839 30 704 898
Comprehensive income
- Profit for the period 192 622 192 622
Total comprehensive income 192 622 192 622
Transaction with owners
- Dividends (210 000) (210 000)
Total transactions with
owners (210 000) (210 000)
Balance at 30 June 2013 4 200 43 859 48 059 30 639 461 30 687 520
Comprehensive income
- Profit for the period - - - 1 006 535 1 006 535
Total comprehensive income - - - 1 006 535 1 006 535
Transaction with owners
- Dividends - - - (210 000) (210 000)
Total transactions with
owners - - - (210 000) (210 000)
Balance at 30 September 2013 4 200 43 859 48 059 31 435 996 31 484 055
Comprehensive income
- Profit for the period - - - 1 323 777 1 323 777
Total comprehensive income - - - 1 323 777 1 323 777
Transaction with owners
- Dividends - - - (210 000) (210 000)
Total transactions with
owners - - - (210 000) (210 000)
Balance at 31 December 2013 4 200 43 859 48 059 32 549 773 32 597 832
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.
No single customer makes up more than 10% of the group’s Revenue.
1. COMPANY PROFILE
TeleMasters is licensed to provide voice, data and cloud-based corporate communication. The Company 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 un-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 6 month period ended 31 December 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 nine months ended 30 June 2013.
These results were prepared under the supervision of Brandon Topham CA (SA) and have not been audited or reviewed
by the Auditors of the group.
2.2 Commentary on operating results
The board is pleased to advise that the results reflect a net profit after tax for the six months ended 31 December 2013 of
R2 330 312. These results have been achieved with lower revenue when compared with the comparative period and is in
line with the expected improvement in margins achieved as a result of the reported change over in part of the
technological platform used, from LCR to our Digital Direct offering. The newer offering and innovations applied to our
business solution resulted in a higher gross margin of 29% when compared with the prior period’s 14.8% gross margin.
The group is converting and re-capturing market share which was lost as a result of the changes to the interconnect
pricing model in previous years largely as a result of the fact that the our Digital Direct solution offers a superior quality
communications product with substantial savings when compared to a fixed line agreement with an incumbent fixed line
operator.
EPS is at 5.55 cents per share, which is down from the comparative period EPS of 10.45 cents per share, but
substantially up from prior period results if one takes into account that the operating profit in the prior period was achieved
as a result of an accounting gain on de-recognition of a liability of R 5 430 017. Thus it is clear that the current operating
results reflect a substantial improvement in group profitability and ongoing sustainability of the group.
Our working capital and balance sheet remains positive and all of our key ratios remain healthy. The board considers the
working capital satisfactory in the current market to maintain operations in the coming year and looks forward to increased
cash reserves in future.
The group has extremely low debt with long term and current portion of finance lease liabilities totaling R3 335 409 (2012
– R2 631 685) when compared with a total depreciated plant and equipment balance of over R15 927 969 (2012- R16
804 306) excluding all intangibles.
The net asset value per share amounts to 77.61 cents (2012: 73.94). The board remains committed to paying quarterly
dividends which should once again rise to higher levels in line with improved profitability and working capital generation
by the group.
2.3. Dividends Paid and Declared
The following dividends were declared during the financial period to date:
- 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 Friday, 25 October 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 Friday, 17 January 2014;
Notice is hereby given that a dividend of 1 cent per share is declared and paid to all shareholders recorded in the share
register of the Company at the close of business on Friday, 11 April 2014.
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, 4 April 2014. Shares will trade ex-dividend from
Monday, 7 April 2014. The record date will be Friday, 11 April 2014 and payment will be made on Monday, 14 April 2014.
Share certificates may not be dematerialised/ re-materialised between Monday, 7 April 2014 and Friday, 11 April, 2014,
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
Subsequent to the period end, the group acquired a new subsidiary, subject to certain suspensive conditions, for a
purchase price of R600 000. The acquisition is below the categorisation requirements of the JSE and does not require
shareholder approval. The purpose of the acquisition is to use this company’s brand to target a specific SME segment of
the market.
The directors are not aware of any matter or circumstance arising between the end of the period and 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
Other than that disclosed below, there are currently no legal or related proceedings against the group, of which the Board
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..
As previously disclosed, the group is currently involved in litigation with a previous customer, Huge Group Ltd, pertaining
to outstanding receivables to the value of R4 294 443. This receivable is, however, adequately secured through a
cession of 10 million shares held against the debt owed to the group. The matter has been referred for arbitration which is
currently in process.
5. SHARE CAPITAL
No changes were made to the share capital during the period under review.
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 transition to the new
technologies has brought a higher quality solution to clients and 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 believes 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
18 March 2014
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
Auditors: Nexia SAB&T, 119 Witch-Hazel Avenue, Highveld Techno park, 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: 18/03/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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