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Abridged Condensed Un-audited Consolidated Results for the Three and Six Month Periods Ended 31 December 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 SIX MONTH PERIODS
ENDED 31 DECEMBER 2014
UN-AUDITED UN-AUDITED UN-AUDITED UN-AUDITED
CONDENSED
CONSOLIDATED For the 6 month For the 3 month For the 6 month For the 3 month
STATEMENTS OF period ended 31 period ended 31 period ended 31 period ended 31
COMPREHENSIVE INCOME December December December December
2014 2014 2013 2013
R R R R
Revenue 49 173 694 24 127 738 55 092 550 29 984 042
Cost of sales (33 170 086) (16 504 389) (39 242 264) (21 357 848)
Gross profit 16 003 608 7 623 349 15 850 286 8 626 194
Operating expenses (12 879 744) (6 164 609) (12 359 079) (6 576 327)
Operating profit 3 123 864 1 458 740 3 491 207 2 049 867
Investment revenue 217 095 109 539 60 618 29 152
Finance costs (270 923) (42 965) (201 397) (126 442)
Profit before tax 3 070 036 1 525 314 3 350 428 1 952 577
Income tax expense (865 750) (502 770) (1 020 116) (628 800)
Profit for the year 2 204 286 1 022 544 2 330 312 1 323 777
Comprehensive income for the
year
2 204 286 1 022 544 2 330 312 1 323 777
Total comprehensive income
for the year 2 204 286 1 022 544 2 330 312 1 323 777
Profit and total
comprehensive income
attributable to the owners of
the company 2 204 286 1 022 544 2 330 312 1 323 777
EARNINGS PER SHARE
Basic earnings per share
(cents) 5.25 2.43 5.55 3.15
Dilutive earnings per share
(cents) 5.25 2.43 5.55 3.15
Headline earnings per share
(cents) 5.25 2.43 5.55 3.15
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 2 204 286 1 022 544 2 330 312 1 323 777
HEADLINE EARNINGS:
Earnings attributable to owners
of the Company 2 204 286 1 022 544 2 330 312 1 323 777
Adjusted for:
(Gain)/ loss on disposal of
property plant and equipment
– net of tax - - - -
Headline earnings for the
period 2 204 286 1 022 544 2 330 312 1 323 777
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) 4.00 2.00 1.00 0.50
CONDENSED
CONSOLIDATED
STATEMENTS OF
FINANCIAL POSITION
UN-AUDITED AUDITED AUDITED UN-AUDITED
As at 31 December As at 30 June As at 30 June As at 31 December
2014 2014 2013 2013
R R R R
ASSETS
Non-current assets
Property plant & equipment 17 464 953 16 139 662 17 071 370 15 927 969
Intangible assets 1 138 113 1 241 942 1 082 888 604 612
Goodwill 2 686 779 2 686 779 2 686 779 2 686 779
Deferred tax 1 666 494 2 534 222 3 655 462 2 635 345
22 956 339 22 602 605 24 496 499 21 854 705
Current assets
Inventories 102 872 260 547 2 233 771 1 857 902
Current tax receivable - - 33 126 33 126
Trade and other receivables 12 281 147 15 854 317 17 690 979 16 569 676
Cash and cash equivalents 7 622 122 7 115 824 4 633 006 3 531 138
20 006 141 23 230 688 24 590 882 21 991 842
Total assets 42 962 480 45 833 293 49 087 381 43 846 547
EQUITY AND LIABILITIES
Total equity
Issued capital 48 059 48 059 48 059 48 059
Retained earnings 32 571 177 32 046 891 30 639 461 32 549 773
32 619 236 32 094 950 30 687 520 32 597 832
Non-current liabilities
Finance lease liabilities 378 083 1 120 222 2 384 318 1 525 183
378 083 1 120 222 2 384 318 1 525 183
Current liabilities
Other financial liabilities 3 564 450 4 600 000 7 010 123 5 202 083
Trade and other payables 4 582 944 5 977 650 6 980 816 2 659 589
Finance lease liabilities 1 758 714 1 961 401 1 942 425 1 810 226
Bank overdraft 59 053 79 070 82 179 51 634
Total Current liabilities 9 965 161 12 618 121 16 015 543 9 723 532
Total liabilities 10 343 244 13 738 343 18 399 861 11 248 715
Total equity and liabilities 42 962 480 45 833 293 49 087 381 43 846 547
Number of shares in issue 42 000 000 42 000 000 42 000 000 42 000 000
Net asset value per share
(cents) 77.66 76.30 73.07 77.61
Net tangible asset value per
share (cents) 68.56 66.95 64.09 69.78
CONDENSED
CONSOLIDATED
STATEMENTS OF CASH
FLOWS
UN-AUDITED UN-AUDITED AUDITED UN-AUDITED UN-AUDITED
For the 6
For the 6 For the 3 For the 12 months For the 3
months ended months ended months year ended 31 months ended
31 December 31 December ended 30 June December 31 December
2014 2014 2014 2013 2013
R R R R R
Cash flows from
operating activities
Cash (utilised)/ generated
by operations 7 050 269 2 675 354 9 924 177 2 838 936 2 486 803
Finance cost (270 923) (42 965) (354 821) (201 397) (126 442)
Income taxes refunded/
(paid) 33 126 - - - -
Net cash
generated/(utilised) from
operating activities 6 812 472 2 632 389 9 569 356 2 637 539 2 360 361
Cash flow from investing
activities
Investment revenue
received 217 095 109 539 162 039 60 619 29 153
(Additions)/ disposal to
plant and equipment (2 842 876) (1 882 254) (2 156 874) (550 107) (475 964)
Proceeds from disposal of
plant and equipment - - 259 752 - -
Additions to intangible
assets - - (644 355) - -
Net cash used in
investing activities (2 625 781) (1 772 715) (2 379 438) (489 488) (446 811)
Cash flow from financing
activities
Dividends paid (1 680 000) (840 000) (1 048 748) (420 000) (210 000)
Proceeds from borrowings 644 761 - 680 407 - -
Repayment of borrowings (2 625 137) (977 978) (4 335 650) (2 799 374) (1 371 397)
Net cash used in
financing activities (3 660 376) (1 817 978) (4 703 991) (3 219 374) (1 581 397)
Total cash movement for
the period 526 315 (958 304) 2 485 927 (1 071 323) 332 150
Cash and cash equivalents
at the beginning of period 7 036 754 8 521 373 4 550 827 4 550 827 3 147 351
Cash and cash
equivalents at the end of
year 7 563 069 7 563 069 7 036 754 3 479 504 3 479 504
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 - - - 1 323 777 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 - - - 337 118 337 118
Total comprehensive income - - - 337 118 337 118
Transaction with owners
- Dividends - - - (840 000) (840 000)
Total transactions with owners - - - (840 000) (840 000)
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
Comprehensive income
- Profit for the period - - - 1 022 544 1 022 544
Total comprehensive income - - - 1 022 544 1 022 544
Transaction with owners
- Dividends - - - (840 000) (840 000)
Total transactions with owners - - - (840 000) (840 000)
Balance at 31 December 2014 4 200 43 859 48 059 32 571 177 32 619 236
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 communication infrastructure and services. 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 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 the Group that are consistent with those applied in the audited annual financial
statements for the twelve months 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 increase of clients using our Digital Direct technology resulted in a decrease in revenue when compared with the
comparative period and an increase in the gross profit. As previously reported our new technology platform means lower
revenue but with increased margins. Operating costs remain stable but additional staff have been employed in the
technical and sales departments. These appointments did not result in increased earnings during this period and is
considered an investment into future periods. We have increased our redundancy capabilities and capacity for additional
clients. The new sales force is required to increase the pace in which our product is brought to market.
Despite the additional operating investment made we are satisfied with the almost stable earnings comparatively with
earnings per share marginally down from 5.55 cents to 5.25 cents per share.
The increase in new clients requires fixed capital expenditure and the six month period being reported on shows an
investment into equipment of R 2.8 million compared with R550K in the comparative period. Once again it must be
remembered that our new technology platform whilst having lower revenue and higher initial capital expenditure starts to
provide substantial improvements in operating profit after the first year of operation.
The cash flow continued to improve which resulted in lower financial charges and increased investment revenue. Our
Current and Liquidity ratios are all excellent and our gearing extremely low with only R378k in long term borrowing
compared with fixed assets including intangible computer software at over R18.5 million.
A core value of the Group lies in our focus on cash generation. In the six months under review, we generated over
R7 million in cash from operations when compared with R2.8 million in the comparative period. This enabled the Board to
pay dividends of 4.0 cents, an increase of 3.5 cents on the dividend paid in the comparative period.
Our Net asset value per share has increased from 77.61 to 77.66 despite the 4.0 cents per share paid to shareholders.
The board is happy with the results and looks forward to increased profitability as the focus on a faster role out of our
products to clients continues in the coming months.
2.3. Dividends Declared and Paid
The following dividends were declared during the financial period to date:
- A dividend of 2,00 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 October 2014;
- A dividend of 2,00 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, 16 January 2015.
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
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 Huge Group Ltd 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 investment in the past months into additional sales staff and distributor channels will continue. This is necessary in
order to grow the business of the Group organically to maximise the return on our current technical capacity. This
investment and expansion will assist in the continued growth in the client and revenue stream, with little impact on the
fixed costs going forward. The last six months of the financial year is expected to see an increase in net profitability in line
with higher customer usage during the next few months. The board remains confident of the continued growth of the
Company which bodes well for shareholder return.
For and on behalf of the Board:
MB Pretorius BR Topham
Chief Executive Officer Chief Financial Officer
13 March 2015
Corporate information
Directors: DS van Der Merwe*#, J Voigt*, MG 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 Techno Park, Centurion
th
Transfer secretaries: Link Market Services Proprietary Limited, 13 Floor, 19 Ameshoff Street, Braamfontein, 2017
Designated Advisor: Arbor Capital Sponsors Proprietary Limited
Website: www.telemasters.co.za
Date: 13/03/2015 05:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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