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Provisional Condensed Consolidated Results for the Year Ended 30 June 2015
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 2015
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE
INCOME
AUDITED AUDITED
For the year ended For the year ended
30 June 30 June
2015 2014
R R
Revenue 98 115 619 103 439 415
Cost of sales (68 845 119) (77 325 970)
Gross profit 29 270 500 26 113 445
Other gains 1 780 131 1 040 687
Operating expenses (27 532 236) (23 172 680)
Operating profit 3 518 395 3 981 452
Investment revenue 399 743 162 039
Finance costs (244 331) (354 821)
Profit before tax 3 673 807 3 788 670
Taxation (921 641) (1 121 240)
Profit for the year 2 752 166 2 667 430
Comprehensive income for the year - -
Total comprehensive income for the
year 2 752 166 2 667 430
Profit and total comprehensive income
attributable to the owners of the
company 2 752 166 2 667 430
EARNINGS PER SHARE
Basic earnings per share (cents) 6.55 6.35
Dilutive earnings per share (cents) 6.55 6.35
Headline earnings per share (cents) 6.54 6.33
Dilutive headline earnings per share (cents) 6.54 6.33
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 2 752 166 2 667 430
HEADLINE EARNINGS:
Earnings attributable to owners of the
Company 2 752 166 2 667 430
Adjusted for:
(Gain)/ loss on disposal of property plant
and equipment – net of tax (5 968) (8 717)
Headline earnings for the period 2 746 198 2 658 713
Number of shares Number of shares
Weighted number of ordinary shares issued issued
Shares as at 30 June 2015 42 000 000
Shares as at 30 June 2014 42 000 000
Dividends declared per share (cents) 6.00 3.00
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
AUDITED AUDITED
As at 30 June As at 30 June
2015 2014
R R
ASSETS
Non-current assets
Property, plant & equipment 16 696 294 16 139 662
Intangible assets 894 170 1 241 942
Goodwill 2 686 779 2 686 779
Deferred tax 1 612 581 2 534 222
21 844 824 22 602 605
Current assets
Inventories 384 888 260 547
Current tax receivable 33 126 33 126
Trade and other receivables 14 731 293 15 821 191
Cash and cash equivalents 7 180 029 7 115 824
22 329 336 23 230 688
Total assets 44 174 160 45 833 293
EQUITY AND LIABILITIES
Total equity
Issued capital 48 059 48 059
Retained earnings 32 279 057 32 046 891
32 327 116 32 094 950
Non-current liabilities
Finance lease liabilities 585 775 1 120 222
585 775 1 120 222
Current liabilities
Other financial liabilities 3 600 000 4 600 000
Trade and other payables 6 526 872 5 977 650
Finance lease liabilities 1 075 518 1 961 401
Bank overdraft 58 879 79 070
11 261 269 12 618 121
Total liabilities 11 847 044 13 738 343
Total equity and liabilities 44 174 160 45 833 293
Number of shares in issue 42 000 000 42 000 000
Net asset value per share (cents) 76.97 76.30
Net tangible asset value per share (cents) 68.44 66.95
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
AUDITED AUDITED
For the year ended For the year ended
30 June 30 June
2015 2014
R R
Cash flows from operating activities
Cash generated from operations 8 451 090 9 924 177
Finance cost (244 332) (354 821)
Net cash from operating activities 8 206 758 9 569 356
Cash flow from investing activities
Investment revenue received 399 743 162 039
Additions to plant and equipment (3 729 199) (2 156 874)
Proceeds from disposal of plant and
equipment 212 551 259 752
Additions to intangible assets - (644 355)
Net cash used in investing activities (3 116 905) (2 379 438)
Cash flow from financing activities
Dividends paid (2 5218 470) (1 048 748)
Proceeds from finance leases and other
financial liabilities 935 115 680 407
Repayment of finance lease and other
financial liabilities (3 422 102) (4 335 650)
Net cash used in financing activities (5 005 457) (4 703 991)
Total cash movement for the period 84 396 2 485 927
Cash and cash equivalents at the beginning
of year 7 036 754 4 550 827
Cash and cash equivalents at the end of
year 7 121 150 7 036 754
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 30 June 2014 4 200 43 859 48 059 30 639 461 30 687 520
Comprehensive income
- Profit for the year - - - 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
Comprehensive income
- Profit for the period - - - 2 752 166 2 752 166
Total comprehensive income - - - 2 752 166 2 752 166
Transaction with owners
- Dividends - - - (2 520 000) (2 520 000)
Total transactions with owners
Balance at 30 June 2015 4 200 43 859 48 059 32 279 057 32 327 116
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. 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 Johannesburg 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. 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
These results were prepared under the supervision of Brandon Topham CA (SA).
2.2 Commentary on operating results
The Group recorded a slight increase in earnings for the year of R 2 752 166 (2014: R2 667 430),
increasing earnings per share to 6.55 cents (2014 6.35 cents), despite an extremely competitive
price-driven economy. The Group considers its Telephony offering to be of the highest quality offering
in the South African market and the directors are pleased with the results achieved.
The price competition in the industry has resulted in a slight decline of 4,8% in revenue from
R103 439 415 to R98 115 619. The average price per minute sold decreased by 9,6% mainly due to
the market pressure from the reduction in termination rates. Due to the better utilisation of technology
and efficiency gains TeleMasters was able to increase its gross profit margin from 25% to 30%.
The Group has invested in additional technical and sales employees to capacitate and increase its
pace of growth in the coming year and this has resulted in an increase in operating expenses.
Operating cash flow continues to be positive and this cash was invested in additional equipment to
continually improve the quality of our product and to capacitate future growth. The Group invested
R3 729 199 in new equipment compared with R2 156 874 in the previous financial year.
The liquidity and working capital ratios remain excellent with a current ratio of 1:1.98, up from the prior
year’s 1:84. The long term obligation has decreased from R1 120 222 to R585 775, leaving the Group
with extremely low gearing when compared with plant and equipment of R16 696 294.
The Board is satisfied with the results for the 2015 year achieved in a difficult trading environment and
are expectant of improvement in the coming year due to the investments made which will facilitate
further growth.
2.3. Dividends paid and notice of declaration of a dividend
The board increased the dividends paid from R1.26 million in 2014 to R2.52 million in the 2015 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 2 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 October 2014;
- A dividend of 2 cents per share was declared and payable to all shareholders recorded in the
share register of the Company at the close of business on 16 January 2015;
- 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 17 April 2015;
- 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 17 July 2015.
Notice is hereby given that a dividend of 1 cent per share has been declared in respect of the quarter
commencing 1 July 2015 and ending 30 September 2015 and is payable to all shareholders recorded
in the share register of the Company at the close of business on Friday, 23 October 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 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, 16 October 2015. Shares
will trade ex-dividend from Monday, 19 October 2015. The record date will be Friday, 23 October
2015 and payment will be made on Monday, 26 October 2015.
Share certificates may not be dematerialised/ re-materialised between Monday, 19 October 2015 and
Friday, 23 October 2015, both days inclusive.
2.4. Acquisition of property plant and equipment
Property, plant and equipment acquired during the year is comprised mostly of 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 are currently no arbitration proceedings of which the Group 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, other than as disclosed below:
- The Company is currently involved in litigation with a previous client pertaining to outstanding
receivables to the value of R4.1 million. These receivables are, however, 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 R600 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 industry is in turmoil. A number of acquisitions and proposed mega-acquisitions will change the
ability of participants to shape the pricing and product mix. The Average Revenue per User, a metric
to calculate usage growth, is deteriorating. The ICASA Mobile and Fixed termination rates are
scheduled to decrease in 25% chunks through 2016. “Free call” entrants are threatening the
traditional cellular market. These factors place downward pressure on retail prices. We expect our
effective price for all minutes sold to decrease by another 10% in the coming period. The investment
which we have, and will continue to make in our services, will ensure our competitive positioning to
exploit the lower pricing in the industry and enable our bottom line to grow.
Fibre is being laid and lit at an astonishing rate. The wider availability, more reasonable prices and
acceptance of licenced bandwidth microwave as a stable carrier medium, means that the race to own
the customer’s voice and internet usage is an obvious strategy. In the coming period, TeleMasters will
roll out DSL ISP offerings, expand its cellular data offering and introduce and promote cellular
integration from office to personal handsets and offer complete secure data services. The margins on
these products are less than those on voice services, but the impact of full customer service to
enterprise-sized customers is compelling.
TeleMasters is constantly pursuing a wider distribution of its services and has tripled its sales
management staff. The re-introduction of cellular least-cost routing as a service is on the cards – to
cover the SMME market. With a substantial range of services and widely accepted value-adds in the
way we offer these, TeleMasters is geared to win a much larger share of the telecommunications and
data market.
For and on behalf of the Board:
MB Pretorius BR Topham
Chief Executive Officer Chief Financial Officer
30 September 2015
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: Arbor Capital Sponsors Proprietary Limited
Website: www.telemasters.co.za
Date: 30/09/2015 12:27:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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