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Abridged Condensed Unaudited Consolidated Results for the 3 Month Period Ended 30 September 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 THE THREE MONTH PERIOD ENDED
30 SEPTEMBER 2014
UNAUDITED UNAUDITED
CONDENSED CONSOLIDATED For the 3 month
STATEMENTS OF COMPREHENSIVE For the 3 month period period ended 30
INCOME ended 30 September September
2014 2013
R R
Revenue 25 045 956 25 108 508
Cost of sales (16 665 697) (19 049 064)
Gross profit 8 380 259 6 059 444
Operating expenses (6 715 135) (4 618 104)
Operating profit/(loss) 1 665 124 1 441 340
Investment revenue 107 556 31 466
Finance costs (227 958) (74 955)
Profit before tax 1 544 722 1 397 851
Taxation (362 980) (391 498)
Profit for the year 1 181 742 1 006 535
Comprehensive income for the period - -
Total comprehensive income for the
period 1 181 742 1 006 535
Profit and total comprehensive
income attributable to the owners of
the company 1 181 742 1 006 535
EARNINGS PER SHARE
Basic earnings per share (cents) 2.81 2.40
Dilutive earnings per share (cents) 2.81 2.40
Headline earnings per share (cents) 2.81 2.40
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 1 181 742 1 006 535
HEADLINE EARNINGS:
Earnings attributable to owners of the
Company 1 181 742 1 006 535
Adjusted for:
(Gain)/loss on disposal of property plant
and equipment – net of tax - -
Headline earnings for the period 1 181 742 1 006 535
Weighted number of ordinary shares Number of shares Weighted average
issued number of shares
issued
Shares as at 30 September 2014 42 000 000 42 000 000
Shares as at 30 September 2013 42 000 000 42 000 000
Dividends declared per share (cents) 2.00 0.50
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL
POSITION
UNAUDITED AUDITED UNAUDITED
As at 30 September As at 30 June As at 30 September
2014 2014 2013
R R R
ASSETS
Non-current assets
Property plant & equipment 16 559 121 16 139 662 16 298 762
Intangible assets 1 127 860 1 241 942 843 750
Goodwill 2 686 779 2 686 779 2 686 779
Deferred tax 2 171 242 2 534 222 3 263 963
22 545 002 22 602 605 23 093 254
Current assets
Inventories 53 883 260 547 1 862 520
Current tax receivable - 33 126 33 126
Trade and other receivables 14 912 387 15 821 191 17 308 781
Cash and cash equivalents 8 596 382 7 115 824 3 273 387
23 562 653 23 230 688 22 477 814
Total assets 46 107 655 45 833 293 45 571 068
EQUITY AND LIABILITIES
Total equity
Issued capital 48 059 48 059 48 059
Retained earnings 32 388 633 32 046 891 31 435 996
32 436 692 32 094 950 31 484 055
Non-current liabilities
Finance lease liabilities 854 445 1 120 222 1 959 342
854 445 1 120 222 1 959 342
Current liabilities
Other financial liabilities 4 064 946 4 600 000 6 110 122
Trade and other payables 6 916 729 5 977 650 4 052 088
Finance lease liabilities 1 759 834 1 961 401 1 839 425
Bank overdraft 75 009 79 070 126 036
12 816 518 12 618 121 12 127 671
Total liabilities 13 670 963 13 738 343 14 087 012
Total equity and liabilities 46 107 655 45 833 293 45 571 068
Number of shares in issue 42 000 000 42 000 000 42 000 000
Net asset value per share (cents) 77.23 76.42 74.96
Net tangible asset value per share
(cents) 68.04 67.06 66.56
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
UNAUDITED UNAUDITED
For the 3 months For the 3 months
ended 30 September ended 30 September
2014 2013
R R
Cash flows from operating activities
Cash generated/(utilised) by operations 4 374 915 352 133
Finance cost (227 958) (74 955)
Income taxes refunded/(paid) 33 126 -
Net cash generated/(utilised) from
operating activities 4 180 083 277 178
Cash flow from investing activities
Investment revenue received 107 556 31 466
(Additions)/disposal to plant and
equipment (960 622) (74 143)
Net cash used in investing activities (853 066) (42 677)
Cash flow from financing activities
Dividends paid (840 000) (210 000)
Proceeds from borrowings 644 761 95 264
Repayment of borrowings (1 647 159) (1 523 241)
Net cash used in financing activities (1 842 398) (1 637 977)
Total cash movement for the period 1 484 619 (1 403 476)
Cash and cash equivalents at the
beginning of period 7 036 754 4 550 827
Cash and cash equivalents at the end
of period 8 521 373 3 147 351
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 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 - - - 1 660 895 1 660 895
Total comprehensive income - - - 1 660 895 1 660 895
Transaction with owners
- Dividends - - - (1 050 000) (1 050 000)
Total transactions with owners - - - (1 050 000) (1 050 000)
Balance at 30 June 2014 4 200 43 859 48 059 32 046 891 32 094 950
Comprehensive income
- Profit for the period - - - 1 181 742 1 181 742
Total comprehensive income - - - 1 181 742 1 181 742
Transaction with owners
- Dividends - - - (840 000) (840 000)
Total transactions with owners - - - (840 000) (840 000)
Balance at 30 September 2014 4 200 43 859 48 059 32 388 633 32 436 692
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:
Un-Audited 3 Un-Audited
Months 3 Months
ended 30 ended 30
September September
2014 2013
R R
Revenue by Nature
Sale of fixed cellular airtime 13 729 286 15 508 769
Sale of fixed line airtime 11 229 748 9 512 817
Other 86 922 86 922
Total revenue 25 045 956 25 108 508
Major customers
No Revenues from transactions with a single external customer amounting
to 10 percent or more of the Groups revenue exist.
1. COMPANY PROFILE
TeleMasters delivers full telecommunication connectivity voice services across South Africa to SMEs and enterprise
clients. We acquired full ICASA ECS and ECNS telecommunication licenses and carry all call types to all destinations.
2. FINANCIAL RESULTS
2.1 Statement of compliance and basis of preparation
The unaudited 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 month period ended 30 September 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 that are consistent with those applied in the
audited annual financial statements for the year ended 30 June 2014.
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 first quarter revenue is on par with that of the previous period showing a major increase in revenue attributable to
our Digital Direct technology. The newer technology has produced the anticipated and promised increase in gross
margin with an increase in the gross profit percentage from 24% to 33%. This increased margin was applied to
increase our expenditure on predominantly sales representatives and, to a lesser extent, on additional technical
support staff. This is in line with the Board strategy to aggressively increase our market share once satisfied that our
technology and service offering delivers the best quality and reliable telephony solution of its type in the country. This
increase in our salaries bill accounts for the major increase in operating costs when compared with the prior period.
These results confirm the steady and continued improvement in the Group’s profitability with our earnings per share
increasing by 17% to 2.81 cents per share up from the prior period’s 2.40 cents per share. After a 2 cents per share
dividend declared in the first quarter, the net asset value per share increased to 77.23 cents up from 76.42 cents at
year end.
The working capital position continues to improve with a current asset ratio of 1.75:1. This is further evidenced by the
improvement in cash flow from operations. In the prior period, we reported a cash flow generated from operations of
R277 178 and in this quarter, we have generated R4 180 083, an improvement of fifteen times. Our liquidity
accordingly remains positive.
As our client base continues to expand, we will need to constantly fund additions to our assets. In the current period,
we had capital expenditure of R960 622 when compared with spending on fixed assets in the prior period of only
R74 173. This capital investment will contribute to continued revenue growth in coming years.
Our long term borrowings remain extremely low when compared to the value of our property, plant and equipment, but
will be managed to reduce the finance cost bill to the Group in the coming periods whilst continuing to invest in new
equipment to fund the growth of our revenue base.
2.3 Declaration of quarterly dividend
Notice is hereby given that a dividend of 2 cents per share in respect of the quarter ending 31 December 2014 is
declared and will be paid to all shareholders recorded in the share register of the Company at the close of business on
Monday, 26 January 2015.
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, 16 January 2015. Shares will trade ex-
dividend from Monday, 19 January 2015. The record date will be Friday, 23 January 2015 and payment will be made
on Monday, 26 January 2015.
Share certificates may not be dematerialised/ re-materialised between Monday, 19 January 2015 and Friday,
23 January 2015, both days inclusive.
2.4 Acquisition of property plant and equipment
Property, plant and equipment acquired during the period comprise various items of IT equipment, 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
Other than mentioned below, there is 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, besides the matter listed below.
The Group is currently involved in litigation with a previous customer, Huge Group Ltd pertaining to outstanding
receivables to the value of R4.1 million, however these receivables are adequately secured through cession of 10
million 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 period.
6. FUTURE PROSPECTS
The profitability of the first quarter is expected to continue through to the rest of the year regardless of the fact that our
first quarter results traditionally are high in comparison to the next quarters. This past trend is not expected to be
repeated this year.
For and on behalf of the Board:
MB Pretorius BR Topham
Chief Executive Officer Chief Financial Officer
22 December 2014
Corporate information
Directors: DS van Der Merwe*# , J Voigt*, M Erasmus*, 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 Technopark, Centurion
Transfer secretaries: Link Market Services Proprietary Limited 13th Floor, 19 Ameshoff Street, Braamfontein, 2017
Designated Advisor: Arbor Capital Sponsors Proprietary Limited
Website: www.telemasters.co.za
Date: 22/12/2014 03:48:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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