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Provisional condensed consolidated results for the year ended 30 June 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”)
PROVISIONAL CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2014
Shareholders are advised 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 year ended 30 June 2014 are
required to be compared to for purposes of this results announcement is the nine month period ended
30 June 2013. As such, the results presented below will not be comparable in many instances to the
results for the comparative period.
CONDENSED CONSOLIDATED AUDITED AUDITED
STATEMENTS OF COMPREHENSIVE For the 12 month For the 9 month period
INCOME period ended 30 June ended 30 June
2014 2013
R R
Revenue 103 439 415 98 674 734
Cost of sales (77 325 970) (81 197 326)
Gross profit 26 113 445 17 477 408
Other gains 1 040 687 311 570
Operating expenses (23 172 680) (17 134 627)
Operating profit 3 981 452 654 351
Investment revenue 162 039 188 925
Finance costs (354 821) (337 597)
Profit before tax 3 788 670 505 679
Taxation (1 121 240) (248 599)
Profit for the year 2 667 430 257 080
Comprehensive income for the year
- -
Total comprehensive income for the
year 2 667 430 257 080
Profit and total comprehensive income
attributable to the owners of the
company 2 667 430 257 080
EARNINGS PER SHARE
Basic earnings per share (cents) 6.35 0.61
Dilutive earnings per share (cents) 6.35 0.61
Headline earnings per share (cents) 6.33 0.49
Dilutive headline earnings per share (cents) 6.33 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 2 667 430 257 080
HEADLINE EARNINGS:
Earnings attributable to owners of the
Company 2 667 430 257 080
Adjusted for:
(Gain)/ loss on disposal of property plant
and equipment – net of tax (8 717) (50 400)
Headline earnings for the period 2 658 713 206 680
Weighted number of ordinary shares Number of shares
issued
Shares as at 30 June 2014 42 000 000 42 000 000
Shares as at 30 June 2013 42 000 000 42 000 000
Dividends declared per share (cents) 3.00 2.00
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
AUDITED AUDITED
As at 30 June As at 30 June
2014 2013
R R
ASSETS
Non-current assets
Property plant & equipment 16 139 662 17 071 370
Intangible assets 1 241 942 1 082 888
Goodwill 2 686 779 2 686 779
Deferred tax 2 534 222 3 655 462
22 602 605 24 496 499
Current assets
Inventories 260 547 2 233 771
Current tax receivable 33 126 33 126
Trade and other receivables 15 821 191 17 690 979
Cash and cash equivalents 7 115 824 4 633 006
23 230 688 24 590 882
Total assets 45 833 293 49 087 381
EQUITY AND LIABILITIES
Total equity
Issued capital 48 059 48 059
Retained earnings 32 046 891 30 639 461
32 094 950 30 687 520
Non-current liabilities
Finance lease liabilities 1 120 222 2 384 318
1 120 222 2 384 318
Current liabilities
Other financial liabilities 4 600 000 7 010 123
Trade and other payables 5 977 650 6 980 816
Finance lease liabilities 1 961 401 1 942 425
Bank overdraft 79 070 82 179
12 618 121 16 015 543
Total liabilities 13 738 343 18 399 861
Total equity and liabilities 45 833 293 49 087 381
Number of shares in issue 42 000 000 42 000 000
Net asset value per share (cents) 76.30 72.95
Net tangible asset value per share (cents) 66.95 63.97
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
AUDITED AUDITED
For the 12 months For the 9 months
ended 30 June ended 30 June
2014 2013
R R
Cash flows from operating activities
Cash generated from/(utilised )by
operations 9 924 177 (7 020 886)
Finance cost (354 821) (337 597)
Income taxes (paid)/refunded - (235 754)
Net cash generated from/(utilised by)
operating activities 9 569 356 (7 594 237)
Cash flow from investing activities
Investment revenue received 162 039 188 925
Additions to plant and equipment (2 156 874) (3 360 485)
Proceeds from disposal of plant and
equipment 259 752 70 000
Additions to intangible assets (644 355) -
Net cash used in investing activities (2 379 438) (3 101 560)
Cash flow from financing activities
Dividends paid (1 048 748) (1 469 048)
Proceeds from finance leases and other
financial liabilities 680 407 9 732 155
Repayment of finance lease and other
financial liabilities (4 335 650) (1 403 696)
Net cash used in financing activities (4 703 991) 6 859 411
Total cash movement for the period 2 485 927 (3 836 386)
Cash and cash equivalents at the beginning
of year 4 550 827 8 387 213
Cash and cash equivalents at the end of
year 7 036 754 4 550 827
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 01 October 2012 4 200 43 859 48 059 31 222 381 31 270 440
Comprehensive income
- Profit for the year - - - 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
Comprehensive income
- Profit for the period - - - 2 667 430 2 667 430
Total comprehensive income - - - 2 667 430 2 667 430
Transaction with owners
- Dividends (1 260 000) (1 260 000)
Total transactions with owners (1 260 000) (1 260 000)
Balance at 30 June 2014 4 200 43 859 48 059 32 046 891 32 094 950
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 summary consolidated financial statements are prepared in accordance with the requirements of
the JSE Stock Exchange’s Listings Requirements for provisional reports, and the requirements of the
Companies Act applicable to summary financial statements. The Listings Requirements require
provisional reports to be prepared in accordance with the framework concepts and the measurement
and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum,
contain the information required by IAS 34 Interim Financial Reporting. The accounting policies
applied in the preparation of the consolidated financial statements from which the summary financial
statements were derived are in terms of International Financial Reporting Standards and are
consistent with those accounting policies applied in the preparation of the previous consolidated
annual financial statements, except for the adoption of new standards which became effective during
the current year.
This summarised report is extracted from audited information, but is not itself audited. The annual
financial statements were audited by Nexia SAB&T, who expressed an unmodified opinion thereon.
The audited annual financial statements and the auditor’s report thereon are available for inspection
at the company’s registered office. The auditor’s report does not necessarily report on all of the
information contained in this announcement. Shareholders are therefore advised that in order to
obtain a full understanding of the nature of the auditor’s engagement they should obtain a copy of the
auditor’s report together with the accompanying financial information from the issuer’s registered
office.
These results were prepared under the supervision of Brandon Topham CA (SA). The directors take
full responsibility for the preparation of the provisional report and that the financial information has
been correctly extracted from the underlying annual financial statements
2.2 Commentary on operating results
The Board is pleased with the operating results for the financial year which are in line with
expectations of a gradual increase in operating profit as older customers are converted to the Digital
Direct technology. The result of the conversion of clients to the Digital Direct technology platform
resulted in a massive impact to the gross profit margin of 7.5%. The increase in the gross profit
percentage from 17.71% to 25.24% of the Group is in line with the Board’s concentration on striving
for greater margins rather than the pursuit of low margin revenue.
With the increase in the operating margin and operating profit, the board is pleased to reflect a net
profit for the year of R2 667 430 (2013: R257 080). The net profit has increased ten times despite
35% higher operating costs, mainly to the employment of and scale up on our sales and technical
people to deliver the Digital Direct solution.
The net asset value per share amounts to 76.30 cents (2013: 72.95 cents). The earnings per share is
6.35 cents (2013: 0.61 cents). At balance sheet date, the cash reserves were at R7 million with a
current asset ratio of 1.84:1 (2013: 1.53:1). The Board is happy with the working capital available in
the current market to maintain and grow operations in the coming year and are proud of the increase
in cash flows from operations, increasing from a negative of R7 594 237 in 2013 to a positive of
R9 569 356 in the 2014 year.
2.3. Dividends paid and notice of declaration of a dividend
The board increased the dividends paid from R0.84 million in 2013 to R1.26 million in the 2014 year.
The board does not primarily link the payment of dividends to the current year’s operating results but
considers the dividends in relation to the Groups’ reserves of over R32 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 why shareholders 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 0.5 cents per share was declared and payable to all shareholders recorded in
the share register of the Company at the close of business on 25 October 2013;
- A dividend of 0,5 cents per share was declared and payable to all shareholders recorded in
the share register of the Company at the close of business on 17 January 2014;
- A dividend of 1 cent per share was declared and payable to all shareholders recorded in the
share register of the Company at the close of business on 11 April 2014;
- A dividend of 1 cent per share was declared and payable to all shareholders recorded in the
share register of the Company at the close of business on 11 July 2014
Notice is hereby given that a final cash dividend of 2 cents 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 2 cents per share for shareholders exempt from Dividends Tax;
- the net local dividend is 1.7 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, 17 October 2014. Shares
will trade ex-dividend from Monday, 20 October 2014. The record date will be Friday, 24 October 2014
and payment will be made on Monday, 27 October 2014.
Share certificates may not be dematerialised/ re-materialised between Monday, 20 October 2014 and
Friday, 24 October 2014, both days inclusive.
2.4. Acquisition of property plant and equipment
Property, plant and equipment acquired during the year comprise mostly investments in IT equipment
and routers and handsets to assist with the expansion of the Digital Direct product.
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 arbitration proceedings of which the Group is aware, which may have or has had
in the 12 months preceding the date of this report a material effect on the consolidated position of the
Group other than as mentioned below:
- The Company 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 a cession of shares held against the debt owed to the Group. The previous client has
lodged a counter claim against the Company for a similar amount as the claim the Company
has against it. The matter has been referred for arbitration, which is in process.
- The Company is currently involved in litigation with a previous supplier relating to disputes
over amounts billed by the suppler to the value of R1.6 million.
The estimated legal fees to continue pursuing these legal matters are approximately R500 000.
5. GOING CONCERN
The board of directors is of the opinion that, having regard to the current status and the future strategy
of the Group, the Group has sufficient resources to continue as a going concern.
6. SHARE CAPITAL
No changes to share capital occurred during the past financial year.
7. CORPORATE GOVERNANCE
The Group subscribes to the values of good corporate governance at all levels and is committed to
conducting business with discipline, integrity and social responsibility.
8. FUTURE PROSPECTS
The Group is converting clients and adding new clients onto the new technology platform at a steady
pace. We remain convinced that our Telephony solution provides the highest quality solution for
South African users at a market competitive price.
The sales force has been quadrupled and new emphasis is placed on re-developing the indirect sales
channel through wholesale partners. The growth of virtual services that complement the voice
services is growing apace. The growth of the margin is testament to the quality of the sales achieved.
TeleMasters is well ahead of the competition on its innovation. A ViPN service of voice over cellular
data was successfully launched. Data products including ISP services are being integrated and will
form a substantial differentiation of the services in the future.
Expenditure on new fixed assets is anticipated to increase in the coming year to accommodate the
continuing increase in customer demands which will translate into improved profitability as a result of
the healthy gross profit margin which is expected to be maintained.
For and on behalf of the Board:
MB Pretorius BR Topham
Chief Executive Officer Chief Financial Officer
30 September 2014
Corporate information
Directors: BR Topham, DS van Der Merwe#, MB Pretorius, J Voigt* M Erasmus*
(* 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 Technopark, Centurion
Transfer secretaries: Link Market Services Proprietary Limited 13th Floor 19 Ameshoff Street
Braamfontein 2017
Designated Advisor: Arcay Moela Sponsors Proprietary Limited trading as Arbor Capital Sponsors
Website: www.telemasters.co.za
Date: 30/09/2014 05:19:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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