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TLM
TLM
TLM - Telemasters - Interim Results For The Three Month Period Ended 31 December
2008
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")
INTERIM RESULTS FOR THE THREE MONTH PERIOD ENDED 31 DECEMBER 2008
INCOME STATEMENTS Unaudited Unaudited
3 months 3 months
ended Ended
31 December 31
December
2008 2007
R R
Revenue 57,101,383 41,257,911
Cost of sales (48,878,226) (35,975,91
0)
Gross profit 8,223,157 5,282,001
Operating expenses (3,745,709) (3,207,551
)
Operating profit 4,477,448 2,074,450
Investment income 366,344 369,194
Finance costs (102,039) (49,910)
Profit before taxation 4,741,753 2,393,734
Taxation (1,565,915) (1,141,317
)
Net profit for the period 3,175,838 1,252,417
Reconciliation of headline earnings:
Net profit for the period 3,175,838 1,252,417
Adjustments: - -
Headline earnings for the period 3,175,838 1,252,417
Weighted average shares in issue (`000) 42,000,000 42,000,000
Headline earnings per share (cents) 7.56 2.98
Earnings per share (cents) 7.56 2.98
Dividends paid per share (cents) 4.00 12.00*
* This represents the dividend payment for the full prior year
BALANCE SHEETS Unaudited at Unaudited
at
31 December 31
December
2008 2007
R R
ASSETS
Non-current assets
Intangible assets 6,226,406 275,791
Property, plant and equipment 13,254,593 8,069,719
Deferred tax 248,440 -
19,729,439 8,345,510
Current assets
Trade and other receivables 17,162,109 10,040,33
1
Cash and cash equivalents 16,960,277 19,105,84
3
34,122,386 29,146,17
4
Total assets 53,851,825 37,491,68
4
EQUITY AND LIABILITIES
Total equity
Share capital 5,508,059 5,508,059
Retained earnings 16,437,374 7,225,942
21,945,433 12,734,00
1
Non-current liabilities
Deferred tax - 81,287
Installment sale agreements 3,087,655 824,887
3,087,655 906,174
Current liabilities
Bank overdraft 28,966 -
Current portion of long term liabilities 1,747,406 516,240
Current tax payable 7,796,953 5,011,512
Dividend payable 1,661,502 80,799
Provisions 66,743 -
Trade and other payables 17,517,167 18,223,91
3
28,818,737 23,851,50
9
Total equity and liabilities 53,851,825 37,491,68
4
Number of shares in issue (`000) 42,000,000 42,000,00
0
Net asset value per share (cents) 52.25 30.32
Net tangible asset value per share (cents) 37.43 29.66
CASH FLOW STATEMENTS Unaudited at Unaudited
at
31 December 31
December
2008 2007
R R
Cash flows from operating activities
Cash generated from operations 4,464,260 5,684,699
Finance costs (102,039) (49,910)
Tax paid - (489,934)
Net cash from operating activities 4,362,221 5,144,855
Cash flows from investing activities
Property, plant and equipment acquired (2,483,579) (1,400,85
7)
Investment income 366,344 369,194
Intangible assets acquired (4,000,000) -
Net cash from investing activities (6,117,235) (1,031,66
3)
Cash flows from financing activities
Installment sale agreements obtained 1,990,263 750,000
Dividends paid (18,498) (4,959,20
1)
Repayment of installment sale agreements (286,195) (148,118)
Net cash from financing activities 1,685,570 (4,357,31
9)
Total cash movement for the period (69,444) (244,127)
Cash at beginning of period 17,000,755 19,330,92
5
Total cash at end of the period 16,931,311 19,086,79
8
STATEMENT OF CHANGES IN SHAREHOLDERS`
EQUITY
Share Share Total Retained Total
share
capital premium capital income Equity
Balance at 30 September 2007 4,200 5,503,8 5,508,05 11,013,5 16,521,
59 9 25 584
Net profit for the period - - - 1,252,41 1,252,4
ended 31 December 2007 7 17
Dividends paid during period - - - (5,040,0 (5,040,
ended 31 December 2007 00) 000)
4200 5,503,8 5,508,05 7,225,94 12,734,
59 9 2 001
Net profit for the three - - - 12,755,5 12,755,
remaining periods to 30 94 594
September 2008
Dividends paid 1 January 2008 - - - (5,040,0 (5,040,
to 30 September 2008 00) 000)
Balance at 30 September 2008 4,200 5,503,8 5,508,05 14,941,5 20,449,
59 9 36 595
Net profit for the period - - - 3,175,83 3,175,8
ended 31 December 2008 8 38
Dividends paid 18 December - - - (1,680,0 (1,680,
2008 00) 000)
Balance at 31 December 2008 4,200 5,503,8 5,508,05 16,437,3 21,945,
59 9 74 433
SEGMENT REPORT
The company 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. Accordingly there is no
meaningful segmental information to report
other than the following information:
Unaudite Unaudite
d d
3 months 3 months
Ended ended
31 31
December December
2008 2007
R R
Revenue by Nature
Commissions earned on airtime 52,471,5 39,599,6
59 11
Connection incentive bonuses 3,699,30 1,658,30
1 0
Other 930,523 -
57,101,3 41,257,9
83 11
Major customers
Revenues from transactions with a single
external customer accounting to 10 percent or
more of the company`s revenue, are disclosed
below:
- Commission - Customer A - 9,973,44
7
- Commission - Customer B 13,548,8 -
72
- Commission and connection incentive bonus 43,552,5 31,284,4
with other customers 11 64
57,101,3 41,257,9
83 11
1. FINANCIAL RESULTS
1.1 Statement of compliance and basis of preparation
The consolidated interim financial statements for the three months ended 31
December 2008 have been presented in accordance with IAS 34, Interim Financial
Reporting. The results have been prepared in accordance with accounting
policies of the company that are consistent with the prior period and comply
with International Financial Reporting Standards. These results have not been
reviewed or audited by the Company`s auditors.
1.2 Commentary
The first quarter has been excellent for TeleMasters as is shown by our increase
of 154% in our earnings per share from 2.98 cents per share to 7.56 cents per
share for the current quarter.
We can attribute this increase to the continued efforts by all in TeleMasters,
which efforts have contributed to our fundamental basic business model showing
such an increase.
The Revenue indicates an increase of 38% compared with the comparative three
month period. The increase in Revenue is in part due to the acquisitions made
by the company towards the end of the last financial year and at the start of
the current financial period. In addition our focus on taking care of our
existing clients and the optimisation of our Revenue streams through our revenue
enhancement program, has contributed the balance of this increase. This increase
has had the direct effect of increasing our gross margin. Our gross profit
percentage has increased from 12.8% to 14.4% quarter on quarter.
We are continually reducing inefficiencies and our ISO 20000 certification
process has assisted us to optimally structure our company to reduce operating
costs. This is evident from the fact that despite growth in our operating
capacities our operating costs have only increased by 16.7%.
The company remains cash positive with a good liquidity position. The Net Asset
Value (NAV) per share increased by 72.3% since the end of the comparative
quarter. The company has during the last quarter invested a further R6,483,579
into fixed assets and business operations acquired. 70% of these acquisitions
have been financed through the operations of the company and only 30% through
instalment sale agreements over capital assets.
1.3. Dividends
The board has recently declared a quarterly interim dividend of 4 cents per
share ("the dividend"), which was paid to all shareholders recorded in the share
register of the company at the close of business on Friday, 16 January 2009.
The dividend per share of 4 cents per share for the quarter reflects an increase
from the previous years 3 cents per quarter paid which amount to an increase of
33.3% in dividend payments being made to our investors.
The board will continue with our policy of declaring quarterly dividends and,
over the course of the year, intends maintaining the high dividend policy.
2. LITIGATION
There are currently no legal or arbitration proceedings against the Company
(including any proceedings which are pending or threatened) of which the Company
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 Company
3. SUBSEQUENT EVENTS
There have been no significant events after the period end.
4. SHARE CAPITAL
No changes to Share Capital occurred during the period.
5. ACQUISITIONS AND ISSUES OF SHARES
During October 2008, TeleMasters acquired the business of African Paradigm
Communications (Pty) Ltd trading as One Communications relating to its least-
cost routing operations. This acquisition was in line with the TeleMasters
strategy to grow our least-cost routing business both organically and through
acquisitions.
No shares were issued during the period under review.
6. OPERATIONAL REVIEW AND PROSPECTS
The company is slowly reaping the benefits of its implemented decisions to
combat an expected slowdown in the economy. A trend of businesses getting
liquidated is noted but this is offset by a new trend towards higher usage per
client. The re-evaluation of procedures in the ISO certification has shown up
opportunities to cut time and cost. The remuneration of all sales staff was
changed to salaries instead of commission-only, and the number of Sales
management complement has more than doubled to 12 managers. The successful
integration of the cash acquisition of the One Communications business boosted
the turnover by 6%. TeleMasters is confident that it will maintain a growth
trend in both sales and EPS in the face of economic uncertainties. The mainstay
of income is still annuity based and will remain so for the foreseeable future.
For and on behalf of the Board:
MB Pretorius BR Topham
Executive Chairman Chief Financial Officer
05 February 2009
Designated Advisor:
Arcay Moela Sponsors (Proprietary) Limited
Date: 05/02/2009 07:33:02 Produced by the JSE SENS Department.
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