Wrap Text
Unaudited Consolidated Results for the Nine Month Period Ended 31 March 2017 & 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 NINE MONTH PERIOD ENDED
31 MARCH 2017 AND DIVIDEND DECLARATION
CONDENCED
CONSOLIDATED For the 9 months For the 9 months For the 3 months
STATEMENTS OF ended 31 March ended 31 March ended 31 March For the 3 months
COMPREHENSIVE INCOME 2017 2016 2017 ended 31 March 2016
R R R R
Unaudited Unaudited Unaudited Unaudited
Revenue 90 440 713 79 048 871 36 118 882 27 681 381
Cost of Sales (68 775 596) (53 239 153) (27 912 280) (19 775 267)
Gross Profit 27 665 117 25 809 718 8 206 602 7 906 114
Other Income 140 689 500 361 (8 287) 128 083
Operating expenses (25 294 282) (25 334 268) (7 752 149) (7 992 796)
Operating profit 2 511 524 975 811 446 166 41 401
Investment revenue 169 809 340 646 42 714 89 220
Finance costs (528 235) (213 412) (110 294) (122 713)
Profit Before Tax 2 153 098 1 103 045 378 586 7 908
Taxation (602 885) (308 853) (182 290) (1 567)
Profit for the Year 1 550 213 794 192 196 296 6 341
Total comprehensive income
for the period 1 550 213 794 192 196 296 6 341
Profit & total comprehensive
income attributable to the
owners of the Group 1 550 213 794 192 196 296 6 341
EARNINGS PER SHARE
Basic earnings per share
(cents) 3.69 1.89 0.47 0.01
Diluted earnings per share
(cents) 3.69 1.89 0.47 0.01
Headline earnings per share
(cents) 3.69 1.89 0.47 0.01
Diluted headline earnings per
share (cents) 3.69 1.89 0.47 0.01
Basic and dilutive earnings – used in the basic and dilutive earnings per share:
Earnings attributable to owners
of group 1 550 213 794 192 196 296 6 341
Headline Earnings:
Earnings attributable to owners
of group 1 550 213 794 192 196 296 6 341
Adjusted for:
Headlines earnings for the
period 1 550 213 794 192 196 296 6 341
Number of issued ordinary 42 000 000 42 000 000 42 000 000 42 000 000
shares
Weighted number of shares 42 000 000 42 000 000 42 000 000 42 000 000
Dividends declared per share
(cents) 1.50 2.00 0.50 0.00
CONDENSED
CONSOLIDATED
STATEMENTS OF
FINANCIAL POSITION
UN-AUDITED AUDITED UN-AUDITED AUDITED
As at 31 March As at 30 June As at 31 March As at 30 June
2017 2016 2016 2015
R R R R
ASSETS
Non-current assets
Property plant & equipment 20 813 936 21 449 451 16 333 283 16 696 294
Intangible assets 948 754 962 532 1 054 191 849 170
Goodwill 2 686 779 2 686 779 2 686 779 2 686 779
Deferred tax 364 199 845 879 1 303 728 1 612 581
24 813 668 25 944 641 21 377 981 21 844 824
Current assets
Inventories 1 155 452 633 165 951 716 384 888
Current tax receivable - - 33 126
Trade and other receivables 25 897 109 21 212 291 17 760 819 14 731 293
Cash and cash equivalents 2 833 881 3 614 713 6 589 525 7 180 029
29 886 442 25 460 169 25 302 060 22 329 336
Total assets 54 700 110 51 404 810 46 680 041 44 174 160
EQUITY AND LIABILITIES
Total equity
Issued capital 48 059 48 059 48 059 48 059
Retained earnings 33 952 528 33 032 313 32 233 249 32 279 057
34 000 587 33 080 372 32 281 308 32 327 116
Non-current liabilities
Finance lease liabilities 2 406 650 2 651 125 749 288 585 775
Deferred income 475 101 722 541 - -
2 881 751 3 373 666 749 288 585 775
Current liabilities
Other financial liabilities 3 345 737 2 494 721 2 696 205 3 600 000
Trade and other payables 11 772 300 9 689 878 9 380 109 6 526 872
Finance lease liabilities 1 996 036 2 434 603 1 464 000 1 075 518
Income Tax payable 121 204 - - -
Deferred income 260 328 260 329 - -
Bank overdraft 82 586 71 241 82 586 58 879
Shareholders for dividends 239 581 - 26 545 -
Total Current liabilities 17 817 772 14 950 772 13 649 445 11 261 269
Total liabilities 20 699 523 18 324 438 14 398 733 11 847 044
Total equity and liabilities 54 700 110 51 404 810 46 680 041 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) 80.95 78.76 76.86 76.97
Net tangible asset value per
share (cents) 72.30 70.07 67.95 68.44
CONDENSED
CONSOLIDATED
STATEMENTS OF CASH
FLOWS
UN-AUDITED UN-AUDITED AUDITED
For the 9 months ended 31 For the 9 months ended For the year ended 30
March 31 March June
2017 2016 2016
R R R
Cash flows from operating
activities
Cash (utilised)/ generated by
operations 3 724 065 2 985 201 2 953 991
Finance cost (528 235) (213 412) (377 537)
Income taxes refunded - 33 126 -
Net cash generated from
operating activities 3 195 830 2 804 915 2 576 454
Cash flow from investing
activities
Investment revenue received 169 809 340 646 452 318
Additions to plant and
equipment (1 699 137) (975 347) (3 746 505)
Proceeds from disposal of
plant and equipment - - 188 333
Additions to intangible assets (101 200) (360 000) (360 000)
Net cash used in investing
activities (1 630 528) (994 701) (3 465 854)
Cash flow from financing
activities
Dividends paid (627 109) (813 455) (1 469 091)
Repayment of borrowings (1 730 370) (1 610 970) (1 219 187)
Net cash used in financing
activities (2 357 479) (2 424 425) (2 688 278)
Total cash movement for the
period (792 177) (614 211) (3 577 678)
Cash and cash equivalents at
the beginning of period 3 543 472 7 121 150 7 121 150
Cash and cash equivalents
at the end of period 2 751 295 6 506 939 3 543 472
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 - - - 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
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
Comprehensive income
- Profit for the period - - - 426 006 426 006
Total comprehensive income - - - 426 006 426 006
Transaction with owners
- Dividends - - - (210 000) (210 000)
Total transactions with owners - - - (210 000) (210 000)
Balance at 31 March 2017 4 200 43 859 48 059 33 952 528 34 000 587
SEGMENT REPORT
IFRS 8 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
M.B. 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
31 March 2017 31 March 2016
Related party balances
Loan Accounts – Owing (to)/ by related parties
Maison D’Obsession Trust (3 993 138) (2 696 205)
Amounts included in Trade receivables regarding related parties
Telemasters (Pty) Ltd 734 847 -
TAG Business Advisors (Pty) Ltd 1 743
Amounts included in Trade Payables regarding related parties
PerfectWorx Consulting (Pty) Ltd - 15 846
Snowy Owl Properties 82 (Pty) Ltd - 130 995
TAG Consulting (Pty) Ltd - 33 150
Rent paid to related parties
Snowy Owl Properties 82 (Pty) Ltd 1 034 171 1 034 171
Interest paid
Maison D’Obsession Trust 193 139 -
Purchases from related parties
Perfectworx (Pty) Ltd 1 788 166 1 201 430
Contineo Virtual Communications (Pty) Ltd 4 687 790 3 876 711
Telemasters (Pty) Ltd 157 894 178 895
Consulting fees paid to related parties
BRAT Trust - 38 150
TAG Business Advisors (Pty) Ltd - 108 400
TAG Consulting (Pty) Ltd 210 614 176 400
Arbor Capital Corporate Finance (Pty) Ltd 90 000 90 000
Arbor Capital Company Secretarial (Pty) Ltd 90 000 90 000
Sales to related parties
TAG Business Advisors (Pty) Ltd 15 837 19 686
Telemasters (Pty) Ltd 262 779 584 770
Compensation to Key management
Short-term employee benefits – Key Management non-directors 698 661 703 905
Short-term employee benefits – Directors 1 594 250 1 514 250
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 9 month period ended 31 March 2017, 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
by000000 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 Talana Smith CA (SA) and have been approved by the audit committee
and the Board of Directors. They have not been audited or reviewed by the Auditors of the Group.
2.2 Commentary on operating results
The Revenue for the 9 month period ended 31 March 2017 is up by 22% from R79 048 871 (31 March 2016) to R96 440 713.
The Gross profit increased from R25 809 718 to R27 665 117. The Gross Profit percentage decreased from 32.7% to 28.7%.
This decrease is as a result of increased cost of sales, increased amortised prepaid commission (R2 548 496) and new
supplier costs. The operating expenses have been closely monitored and controlled and decreased from R25 334 268 to
R25 294 282.
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 connectivity
solutions remain of the highest quality. In the current nine-month period, we acquired equipment to the value of R3 706 997
compared with R2 429 950 in the previous year. This was financed through instalment sale agreements of R1 898 344 and
the balance from working capital generated by the business.
In many instances commissions payable on the sale of term revenue contracts (“Term Revenue Contracts”) are paid upfront
and capitalised to Prepaid Commission. The Prepaid Commission account is amortised to the Statement of Comprehensive
Income as Cost of Sales over the term of the Term Revenue Contracts as the Revenue from these contracts is realised in the
Statement of Comprehensive Income. An amount of R2 548 496 of amortised commission is included in the nine-month Cost
of Sales figure, matching with the revenue invoiced in terms of the Term Revenue Contracts. The prepaid commission
balance is expected to grow as the Term Revenue Contracts grow, the balance in the Statement of Financial Position
increasing from R4 679 043 (30 June 2016) to R9 989 091 during the period.
The Term Revenue Contracts to which the prepaid commission relates are signed for periods varying between 12 and 60
months at varying margins, depending on the products and services provided. Revenue from the Term Revenue Contracts is
recognised in the Statement of Comprehensive Income as it is earned on a monthly basis over the term of the contract. The
visible growth in Revenue in the Statement of Comprehensive Income represents the actual revenue earned for the reporting
period which is only a relatively small portion of the actual increase in future annuity revenue contracted for during the period.
At the date of this report the future revenues contracted by way of Term Revenue Contracts exceeded R182m.
During the nine-month period, cash of R3 724 065 was generated through the operating activities of the business compared
to the R1 632 690 of the comparative period to 31 March 2016. Current working capital ratios remain positive and gearing as
a 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 cents 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.
- 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 21 April 2017.
Notice is hereby given that a dividend of 0,5 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, 7 July 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 0.4 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, 4 July 2017. Shares will trade ex-dividend from
Wednesday, 5 July 2017. The record date will be Friday, 7 July 2017 and payment will be made on Monday, 10 July 2017.
Share certificates may not be dematerialised/re-materialised between Wednesday, 5 July 2017 and Friday, 7 July 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.
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 Hugh 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
The Board is pleased to note the increase in sales, profits and cash generated from operating activities and the reduction in
expenses. The Board is pleased with the contribution from recently appointed Talana Smith as CFO who brings a sharp
focus on matters affecting the strategy driving the business.
The expected growth in data connectivity sales confirms our vision of an increasingly interconnected world driven by an
increasing demand for data speed and bandwidth. At the same time, the number of landline minutes and the retail price
thereof remain under pressure reflecting a change in user communication habits, of which we take serious note of. This
change is affecting the industry in general and fixed-line operators specifically. Pricing remains a strong driver of customer
choices and the company strives to add value to our services in ways the customers perceive as favourable and valuable.
Revenue from term contracts is recognised in the results as it is earned on a monthly basis, the visible growth in revenue
being only a relatively small portion of the actual increase in annuity revenue contracted during the period. The Board is
pleased with the continued growth in future contracted revenues.
Fixed costs as a pro portion of revenues and operations will reduce with growth thereby allowing more flexible pricing
options should the market require changes.
For and on behalf of the Board:
MB Pretorius Talana Smith
Chief Executive Officer Chief Financial Officer
Corporate information
Directors: DS van Der Merwe*#, J Voigt*, MG Erasmus*, BR Topham*, MB Pretorius, T Smith
(*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) 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: 21/06/2017 09:43:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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