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Abridged Condensed Unaudited Consolidated Results for the Three and Nine Month Periods Ended 31 March 2014
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 NINE MONTH PERIODS
ENDED 31 MARCH 2014 AND DIVIDEND DECLARATION
Shareholders are reminded that following a change in the Company’s year-end from 30 September to 30 June each year,
the comparative period for which the results for the period ended 31 March are required to be compared to for purposes of
this results announcement is the 6 month period ended 31 March 2013 and the 9 Month period ended 30 June 2013 and
that the results presented below are not always comparable to the prior period.
UN-AUDITED UN-AUDITED AUDITED UN-AUDITED
CONDENSED
CONSOLIDATED For the 9 For the 6
STATEMENTS OF month period For the 3 month For the 9 month period
COMPREHENSIVE ended 31 period ended 31 month year ended 31
INCOME March March ended 30 June March
2014 2014 2013 2013
R R R R
Revenue 79 779 823 24 687 273 98 674 734 70 749 554
Cost of sales (55 414 906) (16 172 642) (81 197 326) (56 306 451)
Gross profit 24 364 917 8 514 631 17 477 408 14 443 103
Other gains - - 311 570 -
Operating expenses (20 443 441) (8 084 362) (17 134 627) (14 336 075)
Operating profit/(loss) 3 921 476 430 269 654 351 107 028
Gain on derecognition of
liability - - - -
Investment revenue 92 410 31 792 188 925 158 165
Finance costs (295 512) (94 115) (337 597) (175 668)
Profit before tax 3 718 374 367 946 505 679 89 525
Income tax expense (1 134 104) (113 988) (248 599) 25 067
Profit for the year 2 584 270 253 958 257 080 64 458
Comprehensive income for
the year
2 584 270 253 958 257 080 64 458
Total comprehensive
income for the year 2 584 270 253 958 257 080 64 458
Profit and total
comprehensive income
attributable to the owners
of the company 2 584 270 253 958 257 080 64 458
EARNINGS PER SHARE
Basic earnings per share
(cents) 6.15 0.60 0.61 0.15
Dilutive earnings per share
(cents) 6.15 0.60 0.61 0.15
Headline earnings per
share (cents) 6.15 0.60 0.61 0.15
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 2 584 270 253 958 257 080 64 458
HEADLINE EARNINGS:
Earnings attributable to
owners of the Company 2 584 270 253 958 257 080 64 458
Adjusted for:
(Gain)/ loss on disposal of
property plant and
equipment – net of tax - - - -
Headline earnings for the
period 2 584 270 253 958 257 080 64 458
Number of shares issued 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
Dividends declared per
share (cents) 2.00 1.00 2.00 1.50
CONDENSED
CONSOLIDATED
STATEMENTS OF
FINANCIAL POSITION
UN-AUDITED AUDITED UN-AUDITED
As at 31 March As at 30 June As at 31 March
2014 2013 2013
R R R
ASSETS
Non-current assets
Property plant & equipment 15 546 373 17 071 370 18 333 868
Intangible assets 365 474 1 082 888 1 099 297
Goodwill 2 686 779 2 686 779 2 686 779
Deferred tax 2 521 357 3 655 462 3 878 996
21 119 983 24 496 499 25 998 940
Current assets
Inventories 1 457 700 2 233 771 3 262 889
Current tax receivable 33 126 33 126 -
Trade and other receivables 15 973 620 17 690 979 15 085 264
Cash and cash equivalents 4 210 680 4 633 006 3 893 173
21 675 126 24 590 882 22 241 326
Total assets 42 795 109 49 087 381 48 240 266
EQUITY AND LIABILITIES
Total equity
Issued capital 48 059 48 059 48 059
Retained earnings 32 383 731 30 639 461 30 656 839
32 431 790 30 687 520 30 704 898
Non-current liabilities
Finance lease liabilities 1 184 422 2 384 318 2 626 517
1 184 422 2 384 318 2 626 517
Current liabilities
Other financial liabilities 4 600 000 7 010 123 -
Trade and other payables 2 726 220 6 980 816 13 080 701
Finance lease liabilities 1 776 291 1 942 425 1 783 448
Current tax liabilities - - -
Bank overdraft 76 386 82 179 44 702
Total Current liabilities 9 178 897 16 015 543 14 908 851
Total liabilities 10 363 319 18 399 861 17 535 368
Total equity and liabilities 42 795 109 49 087 381 48 240 266
Number of shares in issue 42 000 000 42 000 000 42 000 000
Net asset value per share
(cents) 78.22 73.07 73.11
Net tangible asset value per
share (cents) 69.95 64.09 64.09
CONDENSED
CONSOLIDATED
STATEMENTS OF
CASH FLOWS
UN-AUDITED UN-AUDITED AUDITED UN-AUDITED
For the 6
For the 9 For the 3 For the 9 months months
months ended months ended year ended 30 ended 31
31 March 31 March June March
2014 2014 2013 2013
R R R R
Cash flows from
operating activities
Cash (utilised)/
generated by operations 5 417 988 2 579 052 (7 020 886) (2 143 248)
Finance cost (295 512) (94 115) (337 597) (175 668)
Income taxes
(paid)/refunded - - (235 754) (202 628)
Net cash
generated/(utilised)
from operating
activities 5 122 476 2 484 937 (7 594 237) (2 521 544)
Cash flow from
investing activities
Investment revenue
received 92 410 31 791 188 925 158 165
(Additions)/ disposal
to plant and equipment (1 015 268) (465 161) (3 360 485) (2 946 918)
Proceeds from
disposal of plant and
equipment - - 70 000 -
Additions to intangible
assets - - - -
Net cash used in
investing activities (922 858) (433 370) (3 101 560) (2 788 753)
Cash flow from
financing activities
Dividends paid (840 000) (420 000) (1 469 048) (630 000)
Proceeds from
borrowings 95 265 95 265 9 732 155 1 949 802
Repayment of
borrowings (3 871 416) (1 072 042) (1 403 696) (548 247)
Net cash used in
financing activities (4 616 151) (1 396 777) 6 859 411 (771 555)
Total cash movement
for the period (416 533) 654 790 (3 836 386) (4 538 742)
Cash and cash
equivalents at the
beginning of period 4 550 827 3 479 504 8 387 213 8 387 213
Cash and cash
equivalents at the end
of year 4 134 294 4 134 294 4 550 827 3 848 471
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 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
Comprehensive income
- Profit for the period - - - 253 958 253 958
Total comprehensive income - - - 253 958 253 958
Transaction with owners
- Dividends - - - (420 000) (420 000)
Total transactions with
owners - - - (420 000) (420 000)
Balance at 31 March 2014 4 200 43 859 48 059 32 383 731 32 431 790
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 3 and 9 month periods ended 31 March 2014, 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 nine months ended 31 March 2014 of
R2 584 270. The profits were flat during this 3-month period which is typical of the cyclical nature of business in South
Africa with lower calls made by customers during the January period each year. In addition bad debt was written off and
an increase made in the bad debt provision of R750 000.
EPS is at 6.15 cents per share, which is up from the 9 month comparative period to June 2013 of 0.61 cents per share.
The current operating results reflect a substantial improvement in group profitability and ongoing sustainability of the
group when compared to the prior period results. This is as a result of the new technology adopted in the prior period but
which has had an expected long period to be rolled out to our customer base. This roll out is now well in place and
continues to grow with new customers being converted each month.
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 liabilities at R1 231 857 (2013 – R2 626 517) when compared with a
total depreciated plant and equipment balance of over R15 546 373 (2013 - R18 333 868) excluding all intangibles.
The net asset value per share amounts to 78.22 cents (2013: 73.07). The board remains committed to paying quarterly
dividends in line with profitability and working capital generation by the group. We will continue to focus on maintaining a
high Gross Margin and on cash generation. Over the past 9 months we have generated a positive cash flow in excess of
R5.1 million from operations.
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;
- A dividend of 1,0 cents per share was declared on 18 March 2014 and paid to all shareholders recorded in the
share register of the Company at the close of business on Friday, 11 April 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 July 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 July 2014. Shares will trade ex-dividend from
Monday, 7 July 2014. The record date will be Friday, 11 July 2014 and payment will be made on Monday, 14 July 2014.
Share certificates may not be dematerialised/ re-materialised between Monday, 7 July 2014 and Friday, 11 July 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
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 (“Huge
Group”), 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 was referred for
arbitration in May 2013 and Huge Group filed its statement of defence and a counterclaim in the amount of R2 674 105
on 12 June 2014. The board of TeleMasters is of the opinion that the alleged counterclaim is unsubstantiated. The board
is furthermore considering its options with regard to the Huge Group’s disclosure pertaining to this litigation as contained
in the company’s reviewed results for the year ended 28 February 2014, the wording of which the board considers to not
only be a potential misstatement by Huge Group of its results given the difference between the reported amount of its
counterclaim and the counterclaim actually filed, but is also intended to harm the good name that TeleMasters enjoys in
the market.
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
17 June 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: 17/06/2014 05:16:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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