Wrap Text
Abridged condensed un-audited consolidated results for three and six month periods ended 31 December 2016
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 2016 AND DIVIDEND DECLARATION
CONDENSED
CONSOLIDATED For the 6 months For the 6 months For the 3 months For the 3 months
STATEMENTS OF ended 31 December ended 31 ended 31 ended 31 December
COMPREHENSIVE INCOME 2016 December 2015 December 2016 2015
R R R R
Unaudited Unaudited Unaudited Unaudited
Revenue 60 321 831 51 739 768 30 700 291 24 499 251
Cost of Sales (40 863 316) (33 463 886) (20 616 402) (15 659 379)
Gross Profit 19 458 515 18 275 882 10 083 889 8 839 872
Other Income 148 976 - 148 975 -
Operating expenses (17 771 842) (17 341 472) (9 129 927) (8 725 652)
Operating profit 1 835 649 934 410 1 102 937 114 220
Investment revenue 127 095 251 426 66 598 106 573
Finance costs (417 941) (90 699) (317 969) (48 229)
Profit Before Tax 1 544 803 1 095 137 851 566 172 564
Taxation (420 595) (307 286) (165 836) (44 353)
Profit for the Year 1 124 208 787 851 685 730 128 211
Other Comprehensive Income
for the period - - -
Total comprehensive income
for the period 1 124 208 787 851 685 730 128 211
Profit & total comprehensive
income attributable to the
owners of the Group 1 124 208 787 851 685 730 128 211
EARNINGS PER SHARE
Basic earnings per share
(cents) 2.68 1.88 1.63 0.31
Diluted earnings per share
(cents) 2.68 1.88 1.63 0.31
Headline earnings per share
(cents) 2.68 1.88 1.63 0.31
Diluted headline earnings per
share (cents) 2.68 1.88 1.63 0.31
Basic and dilutive earnings – used in the basic and dilutive earnings per share:
Earnings attributable to owners
of group 1 124 208 787 851 685 730 128 211
Headline Earnings:
Earnings attributable to owners
of group 1 124 208 787 851 685 730 128 211
Adjusted for:
Headline earnings for the
period: 1 124 208 787 851 685 730 128 211
Number of issued ordinary
shares 42 000 000 42 000 000 42 000 000 42 000 000
Weighted number of shares 42 000 000 42 000 000 42 000 000 42 000 000
Dividends declared per share
(cents) 1.00 2.00 0.50 1.00
CONDENSED
CONSOLIDATED
STATEMENTS OF
FINANCIAL POSITION
UN-AUDITED AUDITED UN-AUDITED AUDITED
As at 31 December As at 30 June As at 31 December As at 30 June
2016 2016 2015 2015
R R R R
ASSETS
Non-current assets
Property plant & equipment 20 112 589 21 449 451 17 399 143 16 696 294
Intangible assets 977 633 962 532 745 851 894 170
Goodwill 2 686 779 2 686 779 2 686 779 2 686 779
Deferred tax 588 911 845 879 1 305 295 1 612 581
24 365 912 25 944 641 22 137 068 21 844 824
Current assets
Inventories 655 517 633 165 321 068 384 888
Current tax receivable - - - 33 126
Trade and other receivables 26 830 384 21 212 292 15 926 473 14 731 293
Cash and cash equivalents 1 451 363 3 614 713 6 727 078 7 180 029
28 937 264 25 460 170 22 974 619 22 329 336
Total assets 53 303 176 51 404 811 45 111 687 44 174 160
EQUITY AND LIABILITIES
Total equity
Issued capital 48 059 48 059 48 059 48 059
Retained earnings 33 736 522 33 032 314 32 226 908 32 279 057
33 784 581 33 080 373 32 274 967 32 327 116
Non-current liabilities
Finance lease liabilities 2 803 585 2 651 125 1 769 591 585 775
Deferred income 592 377 722 541 - -
3 395 962 3 373 666 1 769 591 585 775
Current liabilities
Other financial liabilities 3 990 000 2 494 721 3 600 000 3 600 000
Trade and other payables 9 834 082 9 689 878 6 526 092 6 526 872
Finance lease liabilities 1 792 010 2 434 603 858 451 1 075 518
Income Tax payable 163 627 - - -
Deferred income 260 328 260 329 - -
Bank overdraft 82 586 71 241 82 586 58 879
Total Current liabilities 16 122 633 14 950 772 11 067 129 11 261 269
Total liabilities 19 518 595 18 324 438 12 836 720 11 847 044
Total equity and liabilities 53 303 176 51 404 811 45 111 687 44 174 160
Number of shares in issue 42 000 000 42 000 000 42 000 000 42 000 000
Net asset value per share
(cents) 80.44 78.76 76.85 76.97
Net tangible asset value per
share (cents) 71.71 70.07 68.67 68.44
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
UN-AUDITED UN-AUDITED AUDITED
For the 6 months ended 31 For the 6 months For the year ended 30
December ended 31 December June
2016 2015 2016
R R R
Cash flows from operating
activities
Cash (utilised)/ generated by
operations (884 244) 1 632 690 8 451 090
Finance cost (227 941) (90 699) (244 332)
Income taxes refunded/ (paid) - 33 126 -
Net cash generated/(utilised)
from operating activities (1 112 185) 1 575 117 8 206 758
Cash flow from investing
activities
Investment revenue received 127 095 251 426 399 743
Additions to plant and equipment (10 234) (1 170 780) (3 729 199)
Proceeds from disposal of plant and
equipment - - 212 551
Additions to intangible assets (101 200) - -
Net cash used in investing
activities 15 661 (919 354) (3 116 905)
Cash flow from financing
activities
Dividends paid (210 000) (840 000) (2 518 470)
Proceeds from borrowings 1 495 279 - 935 115
Repayment of borrowings (2 363 450) (292 421) (3 422 102)
Net cash used in financing
activities (1 078 171) (1 132 421) (5 005 457)
Total cash movement for the period (2 174 695) (476 658) 84 396
Cash and cash equivalents at the
beginning of period 3 543 472 7 121 150 7 036 754
Cash and cash equivalents at the
end of period 1 368 777 6 644 492 7 121 150
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 - - - 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
Comprehensive income
- Profit for the period - - - 1 225 406 1 225 406
Total comprehensive income - - - 1 225 406 1 225 406
Transaction with owners
- Dividends - - - (420 000) (420 000)
Total transactions with owners - - - (420 000) (420 000)
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 (210 000) (210 000)
Balance at 30 September 2016 4 200 43 859 48 059 33 321 445 33 369 504
Comprehensive income
- Profit for the period - - - 625 077 625 077
Total comprehensive income - - - 625 077 625 077
Transaction with owners
- Dividends - - - (210 000) (210 000)
Total transactions with owners - - - (210 000) (210 000)
Balance at 31 December 2016 4 200 43 859 48 059 33 736 522 33 784 581
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.
Related Party Transactions
Subsidiary Skycall Networks (Pty) Limited
Members of Key Management
M.B. Pretorius Executive Director
T Smith (1 March 2017) Executive Director
M van der Walt Chief Operating Officer
Non-Executive Directors MG Erasmus
J Voigt
DS van der Merwe
BR Topham
Entities in which 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
The BRAT Trust
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
Cintineo Virtual Communications (Pty) Ltd
For the six month For the six month
period to period to
31 December 2016 31 December 2015
Related party balances
Loan Accounts – Owing (by) /to related parties
Maison D’Obsession Trust 3 990 000 3 600 000
Amounts included in Trade receivables regarding related
parties
Telemasters (Pty) Ltd 652 248 753 599
TAG Business Advisors (Pty) Ltd 1 775 -
TAG Consulting (Pty) Ltd - 22 950
Snowy Owl Properties 82 (Pty) Ltd - 130 995
Amounts included in Trade Payables regarding related parties
PerfectWorx Consulting (Pty) Ltd - 15 846
Related party transactions
Cost of sales from related parties
PerfectWorx Consulting (Pty) Ltd 809 499 730 665
Contineo Virtual Communications (Pty) Ltd 2 899 399 2 050 909
Telemasters (Pty) Ltd 105 263 105 263
Rent paid to related parties
Snowy Owl Properties 82 (Pty) Ltd 689 447 689 447
Consulting fees paid to related parties
SEESA (Pty) Ltd - 3 979
The BRAT Trust - 38 150
TAG Business Advisors (Pty) Ltd - 108 400
TAG Consulting (Pty) Ltd 173 509 95 900
Arbor Capital Corporate Finance (Pty) Ltd 60 000 60 000
Arbor Capital Company Secretarial (Pty) Ltd 60 000 60 000
Sales to related parties
TAG Business Advisors (Pty) Ltd 11 446 12 312
Telemasters (Pty) Ltd 190 324 283 767
Compensation to Key management
Short-term employee benefits – Key Management non-directors 465 774 480 960
Short-term employee benefits – Directors 1 009 500 1 009 500
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 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 the Group that are consistent with those applied in the audited annual financial statements for the twelve months
ended 30 June 2016.
These results were prepared under the supervision of Brandon Topham CA (SA) and Talana Smith 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 2016 is up by over 16% from R51 739 769 to R60 321 821. The
Gross profit increased by 6,5%. The Gross Profit percentage declined by 3%. This decrease is as a result of a resurgence in
lower GP services. The revenue from term contracts is recognised monthly as the revenue is earned and 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 has shown signs of early success. The company uses
its own cash with limited term financing to invest in the equipment needed for services but initiatives to expand the use of
external capital are afoot.
We incurred a once-off charge of R300 000 as the usage terms of a major supplier were 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 R1 912 301 worth of equipment compared with
R2 429 950 in the previous year. This was largely financed through instalment sale agreements of R1 873 317 and the balance
from working capital generated by the business. Commission on sales are paid upfront, the balance of the Prepaid
Commission capitalised to the balance sheet rose to an amount of R10 355 976, compared to a balance of R4 679 043 at the
end of June 2016.
During the six month period, cash of R1 112 185 was utilised in the operating activities of the business compared to the
R1 575 117 generated from operating activities in the comparative period to 31 December 2015. This is mainly due to the
increased commission paid out during the 6 months from 30 June 2016 to 31 December 2016. 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 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
- A dividend of 0.5 cent per share was declared on 21 December 2016 and payable to all shareholders recorded in
the share register of the Company at the close of business on 13 January 2017.
Notice is hereby given that a dividend of 0,50 cent per share is declared and will be paid to all shareholders recorded in th e
share register of the Company at the close of business on Friday, 21 April 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 20%;
- the gross local dividend is 0.5 cents per share for shareholders exempt from Dividends Tax;
- the net local dividend is 0.40 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, 18 April 2017. Shares will trade ex-dividend from
Wednesday, 19 April 2017. The record date will be Friday, 21 April 2017 and payment will be made on Monday, 24 April 2017.
Share certificates may not be dematerialised/re-materialised between Wednesday, 19 April 2017 and Friday, 21 April 2017,
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.
2.4.1 Reclassifications
The comparative period cash flow statement has been reclassified as follows:
Restated Previously stated Difference
Amounts disclosed at 30
December 2016
Additions to plant and (1 170 780) (2 429 950) (1 259 170)
equipment
Cash outflow from (919 354) (2 178 524) (1 259 170)
Investing Activities
Proceeds from borrowings - 1 259 170 1 259 170
Cash Flow used in
financing activities (1 132 421) 126 749 1 259 170
The restatement of the 2016 second quarter figures were identified following the Johannesburg Stock Exchange (“JSE”) pro-
active monitoring process whereby the 2015 AFS were selected for review. This restatement is as a result of an error relating
to the interpretation of IAS 7 relating to the cash flows of instalment sale agreements classified as capitalised finance leases.
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 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 additional credit lines to ensure liquidity for the rapid funding of new customer equipment requirements as we
increase the number 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 high quality telephony products as we remain of the opinion that poor quality calls
will impact negatively on 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 continue to yield positive results as our
fixed overheads are recovered from increased margins derived from new customers.
7. CHANGES TO THE BOARD
Mr Brandon Topham resigned as Chief Financial Officer with effect from 28 February 2017. Mr Topham remains a director on
the Board, but his role has changed from that of an Executive Director to a Non-executive Director.
Mrs Talana Smith was appointed to the Board in the capacity of Chief Financial Officer with effect from 1 March 2017.
For and on behalf of the Board:
MB Pretorius T Smith
Chief Executive Officer Chief Financial Officer
31 March 2017
Corporate information
#
Directors: DS van Der Merwe* , J Voigt*, MG Erasmus*, MB Pretorius, T Smith, 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 (Pty) Ltd
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: 31/03/2017 04:32:00 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 
