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Abridged condensed un-audited consolidated results for three and six month periods ended 31 December 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”)
ABRIDGED CONDENSED UN-AUDITED CONSOLIDATED RESULTS FOR THREE AND SIX MONTH PERIODS ENDED
31 DECEMBER 2015
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
2015 2015 2014 2014
R R R R
Revenue 51 739 768 24 499 251 49 173 694 24 127 738
Cost of sales (33 463 886) (15 659 379) (33 170 086) (16 504 389)
Gross profit 18 275 882 8 839 872 16 003 608 7 623 349
Operating expenses (17 341 472) (8 725 652) (12 879 744) (6 164 609)
Operating profit 934 410 114 220 3 123 864 1 458 740
Investment revenue 251 426 106 573 217 095 109 539
Finance costs (90 699) (48 229) (270 923) (42 965)
Profit before tax 1 095 137 172 564 3 070 036 1 525 314
Taxation (307 286) (44 353) (865 750) (502 770)
Profit for the period 787 851 128 211 2 204 286 1 022 544
Comprehensive income for the
period
787 851 128 211 2 204 286 1 022 544
Total comprehensive income
for the period 787 851 128 211 2 204 286 1 022 544
Profit and total
comprehensive income
attributable to the owners of
the company 787 851 128 211 2 204 286 1 022 544
EARNINGS PER SHARE
Basic earnings per share
(cents) 1.88 0.31 5.25 2.43
Dilutive earnings per share
(cents) 1.88 0.31 5.25 2.43
Headline earnings per share
(cents) 1.88 0.31 5.25 2.43
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 787 851 128 211 2 204 286 1 022 544
HEADLINE EARNINGS:
Earnings attributable to owners
of the Company 787 851 128 211 2 204 286 1 022 544
Adjusted for:
(Gain)/ loss on disposal of
property plant and equipment
– net of tax - - - -
Headline earnings for the
period 787 851 128 211 2 204 286 1 022 544
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 4.00 2.00
CONDENSED
CONSOLIDATED
STATEMENTS OF
FINANCIAL POSITION
UN-AUDITED AUDITED UN-AUDITED AUDITED
As at 31
As at 31 December As at 30 June December As at 30 June
2015 2015 2014 2014
R R R R
ASSETS
Non-current assets
Property plant & equipment 17 399 143 16 696 294 17 464 953 16 139 662
Intangible assets 745 851 894 170 1 138 113 1 241 942
Goodwill 2 686 779 2 686 779 2 686 779 2 686 779
Deferred tax 1 305 295 1 612 581 1 666 494 2 534 222
22 137 068 21 844 824 22 956 339 22 602 605
Current assets
Inventories 321 068 384 888 102 872 260 547
Current tax receivable - 33 126 - -
Trade and other receivables 15 926 473 14 731 293 12 281 147 15 854 317
Cash and cash equivalents 6 727 078 7 180 029 7 622 122 7 115 824
22 974 619 22 329 336 20 006 141 23 230 688
Total assets 45 111 687 44 174 160 42 962 480 45 833 293
EQUITY AND LIABILITIES
Total equity
Issued capital 48 059 48 059 48 059 48 059
Retained earnings 32 226 908 32 279 057 32 571 177 32 046 891
32 274 967 32 327 116 32 619 236 32 094 950
Non-current liabilities
Finance lease liabilities 1 769 591 585 775 378 083 1 120 222
1 769 591 585 775 378 083 1 120 222
Current liabilities
Other financial liabilities 3 600 000 3 600 000 3 564 450 4 600 000
Trade and other payables 6 526 092 6 526 872 4 582 944 5 977 650
Finance lease liabilities 858 451 1 075 518 1 758 714 1 961 401
Bank overdraft 82 586 58 879 59 053 79 070
Total Current liabilities 11 067 129 11 261 269 9 965 161 12 618 121
Total liabilities 12 836 720 11 847 044 10 343 244 13 738 343
Total equity and liabilities 45 111 687 44 174 160 42 962 480 45 833 293
Number of shares in issue 42 000 000 42 000 000 42 000 000 42 000 000
Net asset value per share
(cents) 76.85 76.97 77.66 76.30
Net tangible asset value per
share (cents) 68.67 68.44 68.56 66.95
CONDENSED
CONSOLIDATED
STATEMENTS OF CASH
FLOWS
UN-AUDITED UN-AUDITED AUDITED UN-AUDITED UN-AUDITED
For the 6
For the 6 For the 3 months For the 3
months ended months ended For the year ended 31 months ended
31 December 31 December ended 30 June December 31 December
2015 2015 2015 2014 2014
R R R R R
Cash flows from
operating activities
Cash (utilised)/ generated
by operations 1 632 690 1 043 519 8 451 090 7 050 269 2 675 354
Finance cost (90 699) (48 229) (244 332) (270 923) (42 965)
Income taxes refunded/
(paid) 33 126 33 126 - 33 126 -
Net cash
generated/(utilised) from
operating activities 1 575 117 1 028 416 8 206 758 6 812 472 2 632 389
Cash flow from investing
activities
Investment revenue
received 251 426 106 573 399 743 217 095 109 539
(Additions)/ disposal to
plant and equipment (2 429 950) (1 641 402) (3 729 199) (2 842 876) (1 882 254)
Proceeds from disposal of
plant and equipment - 212 551 - -
Additions to intangible
assets - - - -
Net cash used in
investing activities (2 178 524) (1 534 829) (3 116 905) (2 625 781) (1 772 715)
Cash flow from financing
activities
Dividends paid (840 000) (420 000) (2 518 470) (1 680 000) (840 000)
Proceeds from borrowings 1 259 170 1 259 170 935 115 644 761 -
Repayment of borrowings (292 421) (202 176) (3 422 102) (2 625 137) (977 978)
Net cash used in
financing activities 126 749 636 994 (5 005 457) (3 660 376) (1 817 978)
Total cash movement for
the period (476 658) 130 581 84 396 526 315 (958 304)
Cash and cash equivalents
at the beginning of period 7 121 150 6 513 911 7 036 754 7 036 754 8 521 373
Cash and cash
equivalents at the end of
period 6 644 492 6 644 492 7 121 150 7 563 069 7 563 069
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 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
Comprehensive income
- Profit for the period - - - 547 880 547 880
Total comprehensive income - - - 547 880 547 880
Transaction with owners
- Dividends - - - (840 000) (840 000)
Total transactions with owners - - - (840 000) (840 000)
Balance at 30 June 2015 4 200 43 859 48 059 32 279 057 32 327 116
Comprehensive income
- Profit for the period - - - 659 640 659 640
Total comprehensive income 659 640 659 640
Transaction with owners
- Dividends - - - (420 000) (420 000)
Total transactions with owners (420 000) (420 000)
Balance at 30 September 2015 4 200 43 859 48 059 32 518 697 32 566 756
Comprehensive income
- Profit for the period - - - 128 211 128 211
Total comprehensive income - - - 128 211 128 211
Transaction with owners
- Dividends - - - (420 000) (420 000)
Total transactions with owners - - - (420 000) (420 000)
Balance at 31 December 2015 4 200 43 859 48 059 32 226 908 32 274 967
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 2015, 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 2015.
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 Revenue for the six month period ended 31 December 2015 is up by 5.22% from R49 173 694 to R51 739 768. The Gross
profit increased from R16 003 608 to R18 275 882. The Gross Profit percentage has thus gone up from 32.55% to 35.32%. This
increase is as anticipated as the margins generated using our Digital Direct technology is higher than what was previously
achieved using traditional lease cost routing and each month we add customers onto this platform.
Management has taken a conscious decision to apply the increased margin and additional cash flows to increase our
investment in direct sales and sales support staff in our drive towards regional and sectoral organic growth. It is believed that
over time this will increase the rate of growth in the company. This also gives the company more direct control over the sales
process versus the traditional channel-based sales model. The majority of our revenues are generated by way of term contracts
which render a strong annuity revenue stream to be realised over time. Given that revenue from term contracts are recognised
as it is earned on a monthly basis, the visible growth in revenue is only a relatively small portion of the actual increase in annuity
revenue contracted during the period. This bodes well for future cash flows in the company. This accelerated growth program,
which increases both our operating revenue as well as the future annuity revenues, will, in future, place us in a more competitive
position as our Fixed costs portion of operations will reduce with growth thereby allowing more flexible pricing options should the
market require changes.
We incurred a once-off charge of R300k as the usage terms of a major supplier was altered
We have continued to invest in additional hardware to cater for the growth in customers and thus ensure our telephony solution
remains of the highest quality. In the current six month period, we acquired R2 429 950 worth of equipment compared with
R2 842 876 in the previous year. This was largely financed from working capital generated by the business, with only R1 259 170
being financed from long term borrowings.
During the six month period, we generated positive cash flows from operating activities of R1 575 117 compared with R6 812
472 in the comparative period. The decrease was as a result of a decrease in operating profits due to the investments made in
the expansion activities detailed above and an increase in current working capital requirements. Current working capital ratios
remain positive and gearing as percentage of fixed assets remains low.
2.3. Dividends Declared and Paid
The following dividends have been declared during the year to date:
- A dividend of 1 cents per share was declared on 30 September 2015 and payable to all shareholders recorded in
the share register of the Company at the close of business on 23 October 2015;
- A dividend of 1 cents per share was declared on 31 December 2015 and payable to all shareholders recorded in
the share register of the Company at the close of business on 29 January 2016.
Notice is hereby given that a dividend of 0,50 cents per share is declared and will be paid to all shareholders recorded in the
share register of the Company at the close of business on Friday, 13 May 2016.
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 0.5 cents per share for shareholders exempt from Dividends Tax;
- the net local dividend is 0.425 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, 6 May 2016. Shares will trade ex-dividend from
Monday, 9 May 2016. The record date will be Friday, 13 May 2016 and payment will be made on Monday, 16 May 2016.
Share certificates may not be dematerialised/re-materialised between Monday, 9 May 2016 and Friday, 13 May 2016, 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. The majority of items acquired falls into the category of 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 R4.1 million. 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;
- 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. SHARE CAPITAL
No changes were made to the share capital during the period under review.
6. FUTURE PROSPECTS
As is evidenced from the operating results, TeleMasters is accelerating its move from low margin legacy service products to
higher margin cloud-based services in line with its 'FutureProof' strategy to customers
We have secured solid credit lines to ensure liquidity for the rapid funding of new customer equipment requirements as we
increase the numbers of customers through our growth strategy.
The industry remains extremely competitive, with price being a major purchasing requirement. Whilst we are price competitive,
our strategy remains focused on providing a high quality telephony product as we remain of the opinion that poor quality calls
will lose customer loyalty and result in high levels of maintenance and technical support. Our growth strategy, as supported by
our increased investment in our resources and assets, is expected to start yielding results as our fixed overheads are
recovered from increased margins derived from new customers.
For and on behalf of the Board:
MB Pretorius BR Topham
Chief Executive Officer Chief Financial Officer
14 April 2016
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
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: 14/04/2016 02:14:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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