Wrap Text
Unaudited Consolidated Results for the 3 Month Period Ended 30 September 2016 & 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 THE THREE MONTH PERIOD ENDED
30 SEPTEMBER 2016 AND DIVIDEND DECLARATION
UNAUDITED UNAUDITED
CONDENSED CONSOLIDATED For the 3 month
STATEMENTS OF COMPREHENSIVE For the 3 month period period ended 30
INCOME ended 30 September September
2016 2015
R R
Revenue 29 621 540 27 240 517
Cost of sales (20 246 914) (17 804 507)
Gross profit 9 374 626 9 436 010
Operating expenses (8 641 914) (8 615 820)
Operating profit/(loss) 732 712 820 190
Investment revenue 60 497 144 853
Finance costs (99 972) (42 470)
Profit before tax 693 237 922 573
Taxation (194 106) (262 933)
Profit for the period 499 131 659 640
Comprehensive income for the period - -
Total comprehensive income for the
period 499 131 659 640
Profit and total comprehensive
income attributable to the owners of
the company 499 131 659 640
EARNINGS PER SHARE
Basic earnings per share (cents) 1.19 1.57
Dilutive earnings per share (cents) 1.19 1.57
Headline earnings per share (cents) 1.19 1.57
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 499 131 659 640
HEADLINE EARNINGS:
Earnings attributable to owners of the
Company 499 131 659 640
Adjusted for:
Headline earnings for the period 499 131 659 640
Weighted number of ordinary shares Number of shares Number of shares
Shares as at 30 September 2016 42 000 000 42 000 000
Shares as at 30 September 2015 42 000 000 42 000 000
Dividends declared per share (cents) 0.50 1.00
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL
POSITION
UNAUDITED AUDITED UNAUDITED
As at 30 September As at 30 June As at 30 September
2016 2016 2015
R R R
ASSETS
Non-current assets
Property plant & equipment 21 442 811 21 449 451 16 632 331
Intangible assets 910 872 962 532 797 509
Goodwill 2 686 779 2 686 779 2 686 779
Deferred tax 651 773 845 879 1 349 648
25 692 235 25 944 641 21 466 267
Current assets
Inventories 612 751 633 165 267 773
Current tax receivable - - 33 126
Trade and other receivables 23 320 691 21 212 291 14 571 790
Cash and cash equivalents 2 411 256 3 614 713 6 604 667
26 334 698 25 460 169 21 477 356
Total assets 52 036 933 51 404 810 42 943 623
EQUITY AND LIABILITIES
Total equity
Issued capital 48 059 48 059 48 059
Retained earnings 33 321 445 33 032 313 32 518 697
33 369 504 33 080 372 32 566 756
Non-current liabilities
Finance lease liabilities 3 139 547 2 651 125 608 682
Deferred income 719 416 722 541
3 858 963 3 373 666 608 682
Current liabilities
Other financial liabilities 3 194 721 2 494 721 3 380 805
Finance lease liabilities 2 083 316 2 434 603 1 181 561
Trade and other payables 9 191 870 9 689 878 5 115 063
Deferred income 255 973 260 329 -
Bank overdraft 82 586 71 241 90 756
14 808 466 14 950 772 9 768 185
Total liabilities 18 667 429 18 324 438 10 376 867
Total equity and liabilities 52 036 933 51 404 810 42 943 623
Number of shares in issue 42 000 000 42 000 000 42 000 000
Net asset value per share (cents) 79.45 78.76 77.54
Net tangible asset value per share
(cents) 70.89 70.07 69.24
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
UNAUDITED UNAUDITED
For the 3 months ended For the 3 months
30 September ended 30 September
2016 2015
R R
Cash flows from operating activities
Cash generated/(utilised) by operations (973 607) 589 171
Finance cost (99 972) (42 470)
Income taxes refunded/(paid) - -
Net cash generated/(utilised) from
operating activities (1 073 579) 546 701
Cash flow from investing activities
Investment revenue received 60 497 144 853
(Additions)/disposal to plant and
equipment - (788 548)
Net cash used in investing activities 60 497 (643 695)
Cash flow from financing activities
Dividends paid (210 000) (420 000)
Proceeds from other finance liabilities 700 000 -
Repayment of borrowings (691 720) (90 245)
Net cash used in financing activities (201 720) (510 245)
Total cash movement for the period (1 214 802) (607 239)
Cash and cash equivalents at the
beginning of the year 3 543 472 7 121 150
Cash and cash equivalents at the end
of period 2 328 670 6 513 911
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 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 - - - 1 353 617 1 353 617
Total comprehensive income - - - 1 353 617 1 353 617
Transaction with owners
- Dividends - - - (840 000) (840 000)
Total transactions with owners
Balance at 30 June 2016 4 200 43 859 48 059 33 032 314 33 080 373
Comprehensive income
- Profit for the period - - - 499 131 499 131
Total comprehensive income - - - 499 131 499 131
Transaction with owners
- Dividends - - - (210 000) (210 000)
Total transactions with owners
Balance at 30 September 2016 4 200 43 859 48 059 33 321 445 33 369 504
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+, our main technologies, 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 – Executive director
MB Pretorius – Executive director
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
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 Company Secretarial (Pty) Ltd
J Voigt PerfectWorx Consulting (Pty) Ltd
Contineo Virtual Communications (Pty) Ltd
30 30
September September
2016 2015
Related party balances
Loan accounts - Owing (to) by related parties
Maison D' Obsession Trust (3 194 721) (3 380 805)
Amounts included in Trade receivable regarding related parties
Telemasters (Pty) Ltd (14 409) 791 143
TAG Business Advisors (Pty) Ltd 1 905 -
Amounts included in Trade Payable regarding related parties - -
Related party transactions
Cost of Sales from related parties
PerfectWorx Consulting (Pty) Ltd 523 669 348 345
Contineo Virtual Communications (Pty) Ltd 1 385 165 313 856
Telemasters (Pty) Ltd 52 632 105 263
Rent paid to related parties
Snowy Owl Properties 82 (Pty) Ltd 344 724 344 724
Consulting fees paid to related parties
SEESA (Pty) Ltd - 54 000
TAG Business Advisors (Pty) Ltd - 76 209
Arbor Capital Corporate Finance (Pty) Ltd 30 000 -
Arbor Capital Company Secretarial (Pty) Ltd 30 000 60 000
TAG Consulting (Pty) Ltd 69 825 -
Sales to related parties
TAG Business Advisors (Pty) Ltd 4 856 7 409
Telemasters (Pty) Ltd 57 537 128 105
Compensation to key management
Short-term employee benefits – Key Management non-directors 232 887 232 887
Short-term employee benefits – Directors 474 750 365 849
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 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 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 that are consistent with those applied in the
audited annual financial statements for the period ended 30 June 2016.
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 for the first quarter is up by 8.74% compared to the previous quarter. The Gross margin percentage period
on period is down by 3% as a result of the costs of initialising new Service providers. The healthy gross margin
percentage of 31% is indicative of the greater profitability of the Digital platform making up a greater part of our
technology platform used to deliver services to customers.
EPS has fallen from 1.57 cents per share to 1.19 cents per share for the quarter as a result of the cost of additional
capacity in order to improve the quality of service to customers and for additional role out of services in the coming
periods. This is part of the Group’s investment decision to build capacity for the future.
We have invested R828 857 (2015: R788 548) in telecommunications equipment for new client installations. This
higher investment has resulted in a substantial change of how we operate and has necessitated a change in the
financing approach taken by the Group with a decision to finance equipment with long term finance. Our borrowing
approach will be impacted by this decision in the coming periods.
Included in Trade and other receivables are prepayments of R7 646 826 (Prior period R0) and R4 816 038 for 30 June
2016, which represent the expenditure paid upfront and matched to the period of Revenue generation relating to new
installations at customers.
The Net Asset Value per share increased from 78.76 cents at the beginning of the period to 79.45 cents after paying a
dividend of 0.5 cents per share.
2.3. Dividends paid and notice of declaration of a dividend
The following dividends were declared during the year to date:
- A dividend of 0.5 cents per share was declared and payable to all shareholders recorded in the share register
of the Company at the close of business on 28 October 2016.
Notice is hereby given that a dividend of 0.5 cents per share has been declared and is payable to all shareholders
recorded in the share register of the Company at the close of business on Friday, 13 January 2017.
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, 10 January 2017. Shares will trade ex-
dividend from Wednesday, 11 January 2017. The record date will be Friday, 13 January 2017 and payment will be
made on Monday, 16 January 2017.
Share certificates may not be dematerialised/ re-materialised between Wednesday, 11 January 2017 and Friday,
13 January 2017, both days inclusive.
2.4. Acquisition of property plant and equipment
Property, plant and equipment acquired during the year was comprised mostly of investments in IT equipment and
routers and handsets to assist with the expansion of the Digital Direct product.
2.5 Reclassification
The comparative period cash flow statement has been reclassified as follows:
Restated Previously stated Difference
Additions to plant &
equipment (788 548) (743 548) (45 000)
Net cash used in
Investing Activities (643 695) (598 695) (45 000)
The restatement of the 2016 first quarter figures were identified following a review of prior period disclosure as a result
of findings of the Johannesburg Stock Exchange (“JSE”) pro-active monitoring process whereby the 2015 AFS were
selected for review. This restatement is as a result of a casting error in the published quarterly results.
No changes to the statement of Financial Position, Statement of Comprehensive Income or to the total cash
movement for the period as a result of the above restatement, occurred.
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 legal 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 Company in excess of the R4.3 million outstanding receivable. The previous
client has lodged a counter claim against the Company for a similar amount to the claim the Company has
against them. The matter has been referred for arbitration, which is in process. Due to the technical nature of
the claim, progress has been slow.
- The Company is currently involved in litigation with a previous supplier relating to contractual disputes over
amounts billed by the suppler to the value of R1.4 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. FINANCIAL INSTRUMENTS
The carrying amount of all significant financial instruments approximates the fair value.
9. FINANCIAL RISK MANAGEMENT AND FAIR VALUE
There has been no material change in the Group's financial risk management objectives and policies compared to
those disclosed in the consolidated annual financial statements as at and for the year ended 30 June 2016.
The Group does not currently carry any assets or liabilities at fair value which required any disclosure on its fair value
measurement.
10. FUTURE PROSPECTS
The Company’s strategy to keep investing in technology upgrades impacted the short term results as reflected in this
quarter. The sales trend is positive and the Company continues to generate profits with pressure on cash resources
due to the rate of capital investment. The uptake of the newest offering is very encouraging and is a basis to expand
from. Some rationalization of the resources took place with short term positive cost impact. The rate of price
reductions in the telecoms market is slowing down and at the same time the medium term cost of data provisioning is
set to decline; both factors impact positively on expectations. A 6 month advertising and awareness campaign on
electronic media brought thousands of business visitors. We remain positive of the slower, but constant future growth
prospects for the Group focussing on the use of a digital backed service platform for client solutions.
For and on behalf of the Board:
MB Pretorius BR Topham
Chief Executive Officer Chief Financial Officer
21 December 2016
Corporate information
Directors: DS van Der Merwe# , MB Pretorius, BR Topham, J Voigt* MG 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: TAG Consulting (Pty) Ltd
Auditors: Nexia SAB&T, 119 Witch-Hazel Avenue, Highveld Technopark, Centurion
Transfer secretaries: Link Market Services Proprietary Limited, 13th Floor, Rennie House, 19 Ameshoff Street,
Braamfontein, 2017
Designated Advisor: Arbor Capital Sponsors Proprietary Limited
Website: www.telemasters.co.za
Date: 21/12/2016 05:21:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
