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Abridged Un-audited Consolidated Results for the 3 and 9 Month Periods Ended 31 March 2016 and Dividend Declaration
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 NINE MONTH PERIODS
ENDED 31 MARCH 2016 AND DIVIDEND DECLARATION
UN-AUDITED UN-AUDITED UN-AUDITED UN-AUDITED AUDITED
CONDENSED
CONSOLIDATED For the 9 For the 9 For the 3
STATEMENTS OF month period For the 3 month month period month period For the year
COMPREHENSIVE ended 31 period ended 31 ended 31 ended 31 ended 30
INCOME March March March March June
2016 2016 2015 2015 2015
R R R R R
Revenue 79 048 871 27 681 381 73 495 626 24 321 932 98 115 619
Cost of sales (53 239 153) (19 775 267) (49 888 753) (16 718 667) (68 845 119)
Gross profit 25 809 718 7 906 114 23 606 873 7 603 265 29 270 500
Other income 500 361 128 083 659 325 419 583 1 780 131
Operating expenses (25 334 268) (7 992 796) (21 081 953) (7 962 467) (27 532 236)
Operating profit 975 811 41 401 3 184 245 60 381 3 518 395
Investment revenue 340 646 89 220 306 095 89 000 399 743
Finance costs (213 412) (122 713) (374 434) (103 511) (244 331)
Profit
before tax 1 103 045 7 908 3 115 906 45 870 3 673 807
Taxation (308 853) (1 567) (872 454) (6 704) (921 641)
Profit for the period 794 192 6 341 2 243 452 39 166 2 752 166
Comprehensive income for
the year
794 192 6 341 2 243 452 39 166 2 752 166
Total comprehensive
income for the year 794 192 6 341 2 243 452 39 166 2 752 166
Profit and total
comprehensive income
attributable to the owners
of the company 794 192 6 341 2 243 452 39 166 2 752 166
EARNINGS PER SHARE
Basic earnings per share
(cents) 1.89 0.01 5.34 0.09 6.55
Dilutive earnings per share
(cents) 1.89 0.01 5.34 0.09 6.55
Headline earnings per
share (cents) 1.89 0.01 5.34 0.09 6.54
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 794 192 6 341 2 243 452 39 166 2 752 166
HEADLINE EARNINGS:
Earnings attributable to
owners of the Company 794 192 6 341 2 243 452 39 166 2 752 166
Adjusted for:
(Gain)/ loss on disposal of
property plant and
equipment – net of tax - - - - (5 969)
Headline earnings for the
period 794 192 6 341 2 243 452 39 166 2 746 197
Number of shares issued 42 000 000 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 42 000 000
Dividends declared per
share (cents) 2.00 0.00 5.00 1.00 6.00
CONDENSED
CONSOLIDATED
STATEMENTS OF
FINANCIAL POSITION
UN-AUDITED AUDITED UN-AUDITED
As at 31 March As at 30 June As at 31 March
2016 2015 2015
R R R
ASSETS
Non-current assets
Property plant & equipment 16 333 283 16 696 294 17 062 945
Intangible assets 1 054 191 849 170 1 086 454
Goodwill 2 686 779 2 686 779 2 686 779
Deferred tax 1 303 728 1 612 581 1 661 768
21 377 981 21 844 824 22 497 946
Current assets
Inventories 951 716 384 888 155 211
Current tax receivable - 33 126 -
Trade and other receivables 17 760 819 14 731 293 12 979 366
Cash and cash equivalents 6 589 525 7 180 029 6 980 536
25 302 060 22 329 336 20 115 113
Total assets 46 680 041 44 174 160 42 613 059
EQUITY AND LIABILITIES
Total equity
Issued capital 48 059 48 059 48 059
Retained earnings 32 233 249 32 279 057 32 190 343
32 281 308 32 327 116 32 238 402
Non-current liabilities
Finance lease liabilities 749 288 585 775 648 484
749 288 585 775 648 484
Current liabilities
Other financial liabilities 2 696 205 3 600 000 3 557 805
Trade and other payables 9 380 109 6 526 872 4 846 723
Finance lease liabilities 1 464 000 1 075 518 1 248 764
Shareholder’s for dividend 26 545 - -
Bank overdraft 82 586 58 879 72 881
13 649 445 11 261 269 9 726 173
Total liabilities 14 398 733 11 847 044 10 374 657
Total equity and liabilities 46 680 041 44 174 160 42 613 059
Number of shares in issue 42 000 000 42 000 000 42 000 000
Net asset value per share
(cents) 76.86 76.97 76.76
Net tangible asset value per
share (cents) 67.95 68.44 67.77
CONDENSED
CONSOLIDATED
STATEMENTS OF CASH
FLOWS
UN-AUDITED UN-AUDITED AUDITED UN-AUDITED UN-AUDITED
For the 9 For the 3
For the 9 For the 3 months months
months ended months ended For the year ended 31 ended 31
31 March 31 March ended 30 June March March
2016 2016 2015 2015 2015
R R R R R
Cash flows from
operating activities
Cash (utilised)/ generated
by operations 2 985 201 1 352 511 8 451 090 7 544 186 460 791
Finance cost (213 412) (122 713) (244 332) (374 434) (103 511)
Income taxes
(paid)/refunded 33 126 - - -
Net cash
generated/(utilised) from
operating activities 2 804 915 1 229 798 8 206 758 7 169 752 357 280
Cash flow from investing
activities
Investment revenue
received 340 646 89 220 399 743 306 095 89 000
(Additions)/ disposal to
plant and equipment (975 347) 195 433 (2 794 084) (2 897 555) (435 500)
Proceeds from disposal of
plant and equipment - - 212 551 - -
Additions to intangible
assets (360 000) (360 000) - - -
Net cash used in
investing activities (994 701) (75 347) (2 181 790) (2 591 460) (346 500)
Cash flow from financing
activities
Dividends paid (813 455) 26 545 (2 518 470) (2 100 000) (420 000)
Repayment of finance
lease liabilities (1 610 970) (1 318 549) (3 422 102) (2 607 391) (246 194)
Net cash used in
financing activities (2 424 425) (1 292 004) (5 940 572) (4 707 391) (666 194)
Total cash movement for
the period (614 211) (137 553) 84 396 (129 099) (655 414)
Cash and cash equivalents
at the beginning of period 7 121 150 6 644 492 7 036 754 7 036 754 7 563 069
Cash and cash
equivalents at the end of
year 6 506 939 6 506 939 7 121 150 6 907 655 6 907 655
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 - - - 39 166 39 166
Total comprehensive income - - - 39 166 39 166
Transaction with owners
- Dividends - - - (420 000) (420 000)
Total transactions with
owners - - - (420 000) (420 000)
Balance at 31 March 2015 4 200 43 859 48 059 32 190 343 32 238 402
Comprehensive income
- Profit for the period - - - 508 714 508 714
Total comprehensive income - - - 508 714 508 714
Transaction with owners
- Dividends - - - (420 000) (420 000)
Total transactions with
owners
Balance at 30 June 2015 4 200 43 859 48 059 32 279 057 32 327 116
Comprehensive income
- Profit for the period - - - 787 851 787 851
Total comprehensive income - - -
Transaction with owners
- Dividends - - - (840 000) (840 000)
Total transactions with
owners (840 000) (840 000)
Balance at 31 December 2015 4 200 43 859 48 059 32 226 908 32 274 967
Comprehensive income
- Profit for the period - - - 6 341 6 341
Total comprehensive income 6 341 6 341
Transaction with owners
- Dividends - - - - -
Total transactions with
owners - - - - -
Balance at 31 March 2016 4 200 43 859 48 059 32 233 249 32 281 308
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.
Related Party Relationships
Subsidiary SkyCall Networks (Pty) Ltd
Members of key management BR Topham
MB Pretorius
M van der Walt
Non-executive directors MG Erasmus
J Voigt
DS Van Der Merwe
Entities in which a member of key management and/ or non-executive directors have a beneficial interest
BR Topham SEESA (Pty) Ltd
TAG Consulting (Pty) Ltd
BRAT Trust
TAG Business Advisors (Pty) Ltd
MB Pretorius Snowy Owl Properties 82 ( Pty) Ltd
Maison D' Obsession Trust
Telemasters (Pty) Ltd
MG Erasmus Arbor Capital Corporate Finance (Pty) Ltd
Arbor Capital Sponsors (Pty) Ltd
J Voigt Perfect Worx Consulting (Pty) Ltd
Contineo Virtual Communications (Pty) Ltd
31 March 2016 30 June 2015
Related party balances
Loan accounts - Owing (to) by related parties
Maison D' Obsession Trust (2 696 205) (3 600 000)
Amounts included in Trade Payable regarding related parties
SEESA (Pty) Ltd - 3 979
Perfectworx (Pty) Ltd 15 846 -
TAG Business Advisors (Pty) Ltd - 36 822
TAG Consulting (Pty) Ltd 33 150 -
Snowy Owl Properties 82 ( Pty) Ltd 130 995 130 995
Amounts included in Trade receivable regarding related parties
Telemasters (Pty) Ltd - 808 104
Related party transactions
Purchases from related parties
Perfectworx Consulting (Pty) Ltd 1 201 430 1 800
Contineo Virtual Communications (Pty) Ltd 3 876 711 70 543
Telemasters (Pty) Ltd 178 895 842 149
Rent paid to (received from) related parties
Snowy Owl Properties 82 (Pty) Ltd 1 034 171 1 378 895
Consulting fees paid to related parties
TAG Consulting (Pty) Ltd 176 400 -
SEESA (Pty) Ltd - 108 342
TAG Business Advisors (Pty) Ltd 108 400 375 369
BRAT Trust 38 150 2 100
Arbor Capital Corporate Finance (Pty) Ltd 90 000 130 800
Arbor Capital Company Secretarial (Pty) Ltd 90 000 120 000
Sales to related parties
TAG Business Advisors (Pty) Ltd 19 686 25 388
Telemasters (Pty) Ltd 584 770 738 727
Compensation to other key management
Short-term employee benefits - Non Directors 703 905 689 072
Short-term employee benefits - Directors 1 514 250 1 514 250
1. COMPANY PROFILE
TeleMasters is licensed to provide voice, data and cloud-based corporate communication solutions 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 3 and 9 month periods ended 31 March 2016, 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 group that are consistent with those applied in the audited annual financial
statements for the year 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
Revenue has increased by 7.55% from R73 495 626 to R79 048 871 in the 9 months ended March 2016. Earnings per
share has reduced from 5.34 cents per share to 1.89 cents per share. The reason for the decrease has been reported in
previous quarters and is a direct result of an increase in operating expenses as a result of an increase in employees in
sales and technical departments in order to build capacity to grow. This has resulted in current Revenue growth despite a
very competitive trading environment with pressure on pricing. Our gross profit percentage of 32.6% (2015: 32.1%) allows
our business to be sustainable despite the competition in the market, which, in time, will remove many smaller players
who provide inferior quality of products and services.
Cash generated from operating activities remains positive at R2 804 915, though down from R8 206 758, as a result of
the increased operating expenditure and increase in trade receivables. The current asset ratio remains positive with total
current assets of R25 302 060 compared with total Current liabilities of R13 649 445.
Gearing remains low with a continued cash investment of R975 347 made in fixed assets during the current period.
2.3. Dividends Paid and Declared and Dividend Declaration
The following dividends were 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;
- A dividend of 0.50 cents per share was declared on 14 April 2016 and payable to all shareholders recorded in the
share register of the Company at the close of business on 13 May 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, 22 July 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 Tuesday, 19 July 2016. Shares will trade ex-dividend
from Wednesday, 20 July 2016. The record date will be Friday, 22 July 2016 and payment will be made on Monday,
25 July 2016.
Share certificates may not be dematerialised/re-materialised between Wednesday, 20 July 2016 and Friday, 22 July
2016, both days inclusive.
2.4. Acquisition of property plant and equipment
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
Other than that disclosed below, 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 company has launched 5 new products to supplement its connectivity services and this has been received extremely
well by its sales channel partners. The push into data products has been very successful from a zero base a year ago.
TeleMasters strategy is to find and dominate niches and it is succeeding with this. The 15% growth in total airtime
minutes sold year on year comes partially from its resuscitation of its least-cost routing service to small and micro
enterprises but at a lower price per second due to the competition on pricing in the market. It is expanding its sales
partner channel and has opened 3 regional offices to support growth and customer service levels. The Virtual PBX
service has grown and is finding traction at larger enterprises. The company expects an easing of pressure on prices. The
pressure over the past few quarters has had the effect of an almost 30% reduction on the gross profit achieved for the
period despite the increase in minutes billed. The Directors are confident that the investment in capacity building over
past quarters has positioned it well for future growth.
For and on behalf of the Board:
MB Pretorius BR Topham
Chief Executive Officer Chief Financial Officer
30 June 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: TAG Consulting Proprietary Limited
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: 30/06/2016 05:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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