Wrap Text
Abridged Condensed Unaudited Consolidated Results for the Six Months Ended 31 December 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 SIX-MONTH PERIOD ENDED
31 DECEMBER 2017 AND DIVIDEND DECLARATION
For the 6 months ended For the 6 months ended 31
31 December 2017 December 2016
R R
Unaudited Unaudited
Revenue 60 058 276 60 321 831
Cost of Sales (38 344 565) (40 863 316)
Gross Profit 21 713 711 19 458 515
Other Income 200 688 148 976
Operating expenses (18 109 561) (17 771 842)
Operating profit 3 804 838 1 835 649
Investment revenue 242 182 127 095
Finance costs (420 351) (417 941)
Profit Before Tax 3 626 669 1 544 803
Taxation (1 556 508) (420 595)
Profit for the period 2 070 161 1 124 208
Other Comprehensive Income for the period - -
Total comprehensive income for the period 2 070 161 1 124 208
Profit & total comprehensive income attributable
to the owners of the Group 2 070 161 1 124 208
EARNINGS PER SHARE AND DIVIDEND
Basic earnings per share (cents) 4.93 2.68
Diluted earnings per share (cents) 4.93 2.68
Dividends declared per share (cents) 2.00 1.00
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL
POSITION
UN-AUDITED AUDITED UN-AUDITED
As at 31 December As at 30 June As at 31 December
2017 2017 2016
R R R
ASSETS
Non-current assets
Property plant & equipment 19 168 307 20 081 413 20 112 589
Intangible assets 1 057 984 913 762 977 633
Goodwill 2 686 779 2 686 779 2 686 779
Deferred tax - - 588 911
Prepayments 6 373 524 6 462 727 6 037 942
29 286 594 30 144 681 30 403 854
Current assets
Inventories 494 765 660 142 655 517
Trade and other receivables 10 101 219 14 991 947 16 596 584
Prepayments 4 713 195 4 703 906 4 195 858
Cash and cash equivalents 6 986 180 4 269 126 1 451 363
22 295 359 25 625 121 22 899 322
Total assets 51 581 953 54 769 802 53 303 176
EQUITY AND LIABILITIES
Total equity
Issued capital 48 059 48 059 48 059
Retained earnings 35 879 868 34 649 707 33 736 522
35 927 927 34 697 766 33 784 581
Non-current liabilities
Finance lease liabilities 3 305 441 2 369 347 2 803 585
Deferred income 332 048 462 213 592 377
Deferred tax 1 714 828 199 521 -
5 352 317 3 031 081 3 395 962
Current liabilities
Other financial liabilities 1 673 668 2 995 385 3 990 000
Finance lease liabilities 1 608 427 2 943 066 1 792 010
Trade and other payables 6 693 926 10 634 503 9 834 081
Deferred income 260 328 260 328 260 328
Bank overdraft 24 160 84 648 82 586
Current Tax payable 41 200 123 024 163 627
Total Current liabilities 10 301 709 17 040 955 16 122 633
Total liabilities 15 654 026 20 072 036 19 518 595
Total equity and liabilities 51 581 953 54 769 802 53 303 176
Number of shares in issue 42 000 000 42 000 000 42 000 000
Net asset value per share (cents) 85.54 82.61 80.44
Net tangible asset value per share
(cents) 76.63 74.04 71.71
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
UN-AUDITED UN-AUDITED
For the 6 months ended For the 6 months ended
31 December 2017 31 December 2016
R R
Cash flows from operating activities
Cash generated/(utilised) by operations 7 129 688 (884 244)
Finance cost (420 351) (227 941)
Income taxes refunded/ (paid) (123 024) -
Net cash generated/(utilised) from operating activities 6 586 313 (1 112 185)
Cash flow from investing activities
Investment revenue received 242 182 127 095
Disposal/ (Additions) to plant and equipment (1 784 236) (10 234)
Proceeds from disposal of plant and equipment - -
Disposal/ (Additions) to intangible assets (315 000) (101 200)
Net cash used in investing activities (1 857 054) 15 661
Cash flow from financing activities
Dividends paid (630 000) (210 000)
Proceeds from borrowings - 1 495 279
Repayment of borrowings (1 321 717) (2 363 450)
Net cash used in financing activities (1 951 717) (1 078 171)
Total cash movement for the period 2 777 542 (2 174 695)
Cash and cash equivalents at the beginning of period 4 184 478 3 543 472
Cash and cash equivalents at the end of period 6 962 020 1 368 777
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 - - - 787 851 787 851
Total comprehensive income - - - 787 851 787 851
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 - - - 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 - - - 1 124 208 1 124 208
Total comprehensive income - - - 1 124 208 1 124 208
Transaction with owners
- Dividends - - - (420 000) (420 000)
Total transactions with owners - - - (420 000) (420 000)
Balance at 31 December 2016 4 200 43 859 48 059 33 736 522 33 784 581
Comprehensive income
- Profit for the period - - - 1 333 185 1 333 185
Total comprehensive income - - - 1 333 185 1 333 185
Transaction with owners
- Dividends - - - (420 000) (420 000)
Total transactions with owners - - - (420 000) (420 000)
Balance at 30 June 2017 4 200 43 859 48 059 34 649 707 34 697 766
Comprehensive income
2 070 161 2 070 161
- Profit for the period - -
2 070 161 2 070 161
Total comprehensive income
Transaction with owners
- Dividends - - (840 000) (840 000)
Total transactions with owners - - (840 000) (840 000)
Balance at 31 December 2017 4 200 43 859 48 059 35 879 868 35 927 927
SEGMENT REPORT
IFRS 8 requires an entity to report financial and descriptive information about its reportable segments, which are operating s
segments that meet specific criteria. Operating segments are components of an entity about which separate financial info
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 central
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 o
managed.
No single customer makes up more than 10% of the Group’s Revenue.
RELATED PARTY TRANSACTIONS
Subsidiary Skycall Networks (Pty) Limited
Members of Key Management
M.B. Pretorius Executive Director to 31 December 2017 – now Non-Executive Chairman
J Voigt Executive Director from 1 January 2018
T Smith Executive Director to 31 August 2017
BR Topham Executive Director from 1 March 2018
M van der Walt Chief Operating Officer
Non-Executive Directors MG Erasmus
J Voigt Non-Executive Until 31 December 2017
DS van der Merwe
BR Topham Non-Executive Until 28 February 2017
MB Pretorius from 1 January 2018
M Tappan from 1 February 2018
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
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
31 December 2017 31 December 2016
Related party balances
Loan Accounts – Owing to/(by) related parties
Maison D’Obsession Trust 1 673 668 3 990 000
Amounts included in Trade receivables regarding related
parties
Telemasters (Pty) Ltd 474 033 652 248
TAG Business Advisors (Pty) Ltd 1 594 1 775
Amounts included in Trade Payables regarding related
parties
Snowy Owl Properties 82 (Pty) Ltd 67 835 -
Related party transactions
Cost of sales from related parties
PerfectWorx Consulting (Pty) Ltd 629 265 809 499
Contineo Virtual Communications (Pty) Ltd 3 732 882 2 899 399
Telemasters (Pty) Ltd 120 000 105 263
Rent paid to related parties
Snowy Owl Properties 82 (Pty) Ltd 748 952 689 447
Consulting fees paid to related parties
TAG Consulting (Pty) Ltd 137 500 173 509
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 8 243 11 446
Telemasters (Pty) Ltd 262 601 190 324
Compensation to Key management
Short-term employee benefits – Key Management non- 486 162 465 774
directors
Short-term employee benefits – Directors 1 125 671 1 009 500
1. COMPANY PROFILE
TeleMasters is licensed to provide voice, data and cloud-based communication infrastructure and services. The
Company supplies fixed-line, mobile, 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 2017, which have been presented in accordance with the framework
concepts and the measurement and recognition requirements of the 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 2017.
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 remained static over the period but the gross profit percentage increased from 32% to 36% as a result of
the conversion of customers from LCR technology to the Digital direct platform and the maintenance of a policy of only
doing business where the margins make business sense. Operating costs increased marginally by 1.9% as a result of
the restructuring completed by the company during later part of the previous financial year. The combined effect of this is
an increase in earnings per share from 2.68 cents per share to 4.93 cents, an increase of 84%.
Cash generation from operations benefited and the net cash from operating activities increased from a negative of
R1 112 185 in the comparative period to a positive of R6 587 313. This was used to repay borrowings of R1 321 717 and
to acquire additional assets for expansion of new services to customers. Assets acquired increased from R11 434 to
R2 099 236. These additional assets generate additional revenue in subsequent periods and bode well for the future
operations of the group.
The current ratio is positive being 2.16 to 1 thus reflecting a positive working capital position with non-current assets of
R29 286 594 compared with non-current liabilities of only R5 352 317. The balance sheet allows for increased gearing
and capital raising as the need to expand the operations of the group realises.
After dividends of two cents have been declared in this period there has been an increase in the net asset value from
82.61 cents per share to 85.54 cents per share, which is far in excess of the current trading price of the share.
2.3 Headline Earnings and Per Share Information
Headline earnings per share (cents) 4.93 2.68
Diluted headline earnings per share (cents) 4.93 2.68
Earnings attributable to owners of group 2 070 161 1 124 208
Adjustments: -- --
Headline earnings attributable to owners of the group 2 070 161 1 124 208
Issued and weighted number of shares 42 000 000 42 000 000
2.4 Dividends Declared and Paid
The following dividends were declared during the year to date:
• A dividend of 1.0 cents per share was declared on 29 September 2017 and payable to all shareholders recorded
in the share register of the Company at the close of business on Friday, 20 October 2017.
• A dividend of 1.0 cents per share was declared on 13 December 2017 and payable to all shareholders recorded
in the share register of the Company at the close of business on Friday, 12 January 2018.
Notice is hereby given that a dividend of 1.0 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, 20 April 2018
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 1.0 cents per share for shareholders exempt from Dividends Tax;
- the net local dividend is 0.80 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, 17 April 2018. Shares will trade ex-dividend
from Wednesday, 18 April 2018. The record date will be Friday, 20 April 2018 and payment will be made on Monday, 23
April 2018.
Share certificates may not be dematerialised/ re-materialised between Wednesday, 18 April 2018 and Friday, 20 April
2018, both days inclusive.
2.5 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.
2.5.1 Reclassifications
The comparative period cash flow statement as at 31 December 2016 has been reclassified as follows:
Restated Previously stated Difference
Amounts disclosed at 31 December 2016
Non-current assets - Pre-payments 6 037 942 - 6 037 942
Current assets – Pre-payments 4 195 858 - 4 195 858
Trade and other receivables 16 596 584 26 830 384 (10 233 800)
This reclassification was made in order to enhance disclosure of this growing significant category of asset. This results in
the separate disclosure of the pre-payments balance from trade receivables and will aid users in better understanding
the operations of the Group.
No changes to the Statement of Comprehensive Income, Retained Earnings or to the Total Cash Movement for the
Period in the Statement of Cash Flow occurred because of the above reclassification.
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.
- The Company is involved in the final process of litigation with a previous client, Huge Group Limited (“Huge”)
pertaining to outstanding receivables to the value of R4.3 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 receivables. An agreement was reached between the parties to the dispute to separate the most
contentious issues in the dispute for adjudication by the appointed arbitrator. The arbitrator ruled on these
issues and found in TeleMasters favour in respect of two of the three issues. The Company has approached the
arbitrator for a date for the final adjudication of the matter.
- The Company is currently involved in litigation with a previous supplier relating to disputes over amounts billed
by the suppler to the value of R1.4 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, that
the Group has sufficient resources to continue as a going concern.
6. SHARE CAPITAL
No changes were made to the share capital during the period under review.
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 2017.
The Group does not currently carry any assets or liabilities at fair value which require any disclosure on its fair value
measurement.
10. FUTURE PROSPECTS
The focus on maintaining good margins and generating cash from operations will remain core to the business. We have
identified Unified Communications and Digital transformation, underpinned by managed analytics and reporting, as key
focus areas for future growth. The Telemasters product stack has been expanded to service our direct sales effort of
making Digital Transformation real and easy to use to our clients. The Company strives to be a trusted provider to its
diverse corporate base and to offer a host of unique and valuable value propositions on its world-class transmission
network.
11. CHANGES TO THE BOARD
Mrs Talana Smith resigned as Chief Financial Officer (“CFO”) with effect from 31st August 2017. Mr Brandon Topham, a
former CFO prior to becoming a Non-executive director was re-appointed as CFO with effect 1 March 2018.
With effect from 1 January 2018:
- Mr Mario Pretorius retired as Chief Executive Officer of the Company (“CEO”), but continues to serve on the
Board in the capacity of Non-executive Chairman;
- the role of the current Independent Non-executive Chairman, Mr Stephen van der Merwe, changed to that of
Lead Independent Director; and
- Mr Jaco Voigt, a Non-executive director of the Company for the past 9 years, was appointed as CEO.
12. CHANGES TO REPORTING PERIODS
The group has applied a quarterly reporting of results since it listed in 2007. The board has decided to discontinue this
practice and only report every six months as is required by the rules of the Johannesburg Stock Exchange. The practice
of paying quarterly dividends will however not be affected by this decision and this practice is anticipated to continue
into the future, cash flow and operating results remaining positive.
For and on behalf of the Board:
J Voigt BR Topham
Chief Executive Officer Chief Financial Officer
29 March 2018
Corporate information
Directors: DS van Der Merwe*#, J Voigt, MG Erasmus*, MB Pretorius*, M Tappan*#, 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: S Victor
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: 29/03/2018 05:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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