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TLM
TLM
TLM - Telemasters Holdings - Posting of Annual Report, Audited Abridged
Financial Information, Change Statement and Notice of Annual General
Meeting Company Profile
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")
POSTING OF ANNUAL REPORT, AUDITED ABRIDGED FINANCIAL INFORMATION, CHANGE
STATEMENT AND NOTICE OF ANNUAL GENERAL MEETING COMPANY PROFILE
TeleMasters is a specialist tele-management and business communication
strategy player operating exclusively in the South African market. It focuses
exclusively on the corporate market. The company will not commit funds to
building infrastructure in competition to its current and future suppliers but
will take on a senior role in providing current and future client access to
the most efficient and effective connectivity technologies.
ANNUAL REPORT
Pursuant to paragraph 3.21 of the Listings Requirements of the JSE Limited,
the company hereby informs shareholders that the Annual Report was posted on
10 March 2009.
ABRIDGED AUDITED FINANCIAL INFORMATION
BALANCE SHEET
Audited Audited
30 September 30 September
Figures in Rand Notes 2008 2007
ASSETS
Non-Current Assets
Property, plant and
equipment 1.2 11,881,179 7,206,663
Intangible assets 1.3 2,529,497 308,900
Other financial assets - 19
Deferred tax 248,440 -
14,659,116 7,515,582
Current Assets
Trade and other
receivables 14,913,537 10,782,100
Cash and cash
equivalents 17,025,662 19,352,863
31,939,199 30,134,963
Total Assets 46,598,315 37,650,545
EQUITY AND LIABILITIES
Equity
Share capital 5,508,059 5,508,059
Retained income 14,941,536 11,013,525
20,449,595 16,521,584
Liabilities
Non-Current Liabilities
Instalment sale
agreement obligations 1.4 2,254,981 469,672
Deferred tax - 70,520
2,254,981 540,192
Current Liabilities
Current tax payable 6,231,038 4,370,896
Trade and other 16,575,901 15,926,362
payables
Shareholder loan 185,881 -
Instalment sale
agreement obligations 1.4 876,012 269,573
Bank overdraft 24,907 21,938
23,893,739 20,588,769
Total Liabilities 26,148,720 21,128,961
Total Equity and
Liabilities 46,598,315 37,650,545
INCOME STATEMENT
Audited Audited
30 September 30 September
Figures in Rand Notes 2008 2007
Revenue
Services rendered 178,978,732 150,708,587
Cost of sales
Cost of services
rendered (143,887,490) (124,334,542)
Gross profit 35,091,242 26,374,045
Other income
Investment income 1,119,622 488,266
Profit on disposal of
property, plant and
equipment 8,941 -
1,128,563 488,266
Operating expenses
Auditors` remuneration (130,895) (68,130)
Depreciation and
amortisation (2,858,235) (2,468,199)
Directors` emoluments (2,561,870) (2,565,657)
Lease rentals on
operating lease (408,077) (274,950)
Employee costs (4,032,712) (3,201,050)
Other expenses (5,193,089) (2,775,266)
(15,184,878) (11,353,252)
Profit before finance
costs and taxation 21,034,927 15,509,059
Finance costs (207,431) (54,118)
Profit before taxation 20,827,496 15,454,941
Taxation (6,819,485) (4,441,416)
Profit for the year 14,008,011 11,013,525
Earnings and diluted
earnings per share 1.5 33.35 26.95
(cents)
Headline earnings and
diluted headline
earnings per share 1.5 33.33 26.95
(cents)
CHANGES IN EQUITY
Total share
Share Share capital Retained Total
Figures in capital Premium income Equity
Rand
Balance at 01
October 2006 - - - - -
Profit for the
year 11,013,525 11,013,525
Issue of 4,200 5,966,262 5,970,462 5,970,462
shares
Share issue
costs (462,403) (462,403) (462,403)
Balance at 30
September 2007 4,200 5,503,859 5,508,059 11,013,525 16,521,584
Profit for the
year 14,008,011 14,008,011
Dividends (10,080,000) (10,080,000
)
Balance at 30
September 2008 4,200 5,503,859 5,508,059 14,941,536 20,449,595
CASH FLOW STATEMENT
Audited Audited
30 September 30 September
Figures in Rand 2008 2007
Cash flows from operating
activities
Cash generated from operations 19,282,702 22,633,254
Finance costs (207,431) (54,118)
Taxation paid (5,278,302) -
Net cash generated from operating
activities 13,796,969 22,579,136
Cash flows from investing
activities
Purchase of property, plant and
equipment (7,348,801) (9,586,448)
Proceeds from sale of property,
plant and equipment 105,073 -
Purchase of intangible assets (2,500,680) (397,313)
Proceeds from sale of financial
assets 19 -
Purchase of financial assets - (19)
Interest income 662,062 323,886
Dividends received 457,560 164,380
Net cash used in investing
activities (8,624,767) (9,495,514)
Cash flows from financing
activities
Proceeds on share issue - 5,970,462
Reduction of share premium with
share issue costs - (462,403)
Proceeds from borrowings 3,173,113 867,774
Repayment of borrowings
(595,485) (128,530)
Dividends paid to Company`s
shareholders (10,080,000) -
Net cash from financing (7,502,372) 6,247,303
activities
Total cash movement for the year (2,330,170) 19,330,925
Cash at beginning of the year 19,330,925 -
Total cash at end of year 17,000,755 19,330,925
1. Commentary
1.1. Basis of preparation
The abridged financial information for the year ended 30 September 2008 has
been presented in accordance with, and containing the information required by,
IAS 34, Interim Financial Reporting. The financial information has been
prepared in terms of International Financial Reporting Standards and in the
manner required by the Companies Act of South Africa. The accounting policies
adopted in the preparation of the abridged financial information are
consistent with those used to prepare the financial statements for the year
ended 30 September 2007 except for the adoption of IFRS 7 - Financial
Instruments. This has had the effect of expanding disclosure of financial
instruments.
The financial information has been audited by BDO Spencer Steward and their
unmodified audit opinion is available for inspection at their offices.
1.2 Property, plant and equipment
Figures in Rand 2008
Accumulated Carrying
Cost depreciation value
Furniture and fixtures 96,210 (17,541) 78,669
Motor vehicles 1,711,023 (351,412) 1,359,611
Office equipment 60,527 (3,341) 57,186
IT equipment 251,147 (83,593) 167,554
Routers and handsets 14,688,168 (4,470,009) 10,218,159
16,807,075 (4,925,896) 11,881,179
Figures in Rand 2007
Accumulated Carrying
Cost depreciation value
Furniture and fixtures 53,328 (9,322) 44,006
Motor vehicles 825,494 (96,923) 728,571
Office equipment 4,572 (762) 3,810
IT equipment 107,919 (22,006) 85,913
Routers and handsets 8,595,136 (2,250,773) 6,344,363
9,586,449 (2,379,786) 7,206,663
Reconciliation of property, plant and equipment - 2008
Opening
Balance Additions Disposals Depreciation Total
Furniture
and
fixtures 44,006 42,882 - (8,219) 78,669
Motor
vehicles 728,571 1,013,704 (96,132) (286,532) 1,359,611
Office
equipment 3,810 55,954 - (2,578) 57,186
IT
equipment 85,913 143,228 - (61,587) 167,554
Routers
and 6,344,36 6,093,033 - (2,219,237) 10,218,15
handsets 3 9
7,206,66 7,348,801 (96,132) (2,578,153) 11,881,17
3 9
Reconciliation of property, plant and equipment - 2007
Opening
Balance Addition Disposal Depreciation Total
s s
Furniture
and
fixtures - 53,328 - (9,322) 44,006
Motor
vehicles - 825,494 - (96,923) 728,571
Office
equipment - 4,572 - (762) 3,810
IT
equipment - 107,919 - (22,006) 85,913
Routers
and - 8,595,13 - (2,250,773) 6,344,363
handsets 6
9,586,44 (2,379,786) 7,206,663
9
Pledged as security
Carrying value of assets pledged as security:
2008 2007
Motor vehicles 1,359,611 728,571
Routers and handsets 1,664,732 -
3,024,343 728,571
Pledged as security in terms of instalment sale agreement obligations set out
in note 1.4
1.3 Intangible assets
Figures in Rand 2008
Accumulated Carrying
Cost amortisation value
Other intangible assets
Computer software 627,493 (240,656) 386,837
Client base 2,270,500 (127,840) 2,142,660
2,897,993 (368,496) 2,529,497
Other intangible assets include client base contracts acquired from external
parties. These contracts are for the provision of Least-cost routing services
on terms similar to those provided by TeleMasters. They have expected
remaining amortisation periods of five to six years.
Figures in Rand 2007
Other intangible Accumulated Carrying
assets Cost depreciation value
Computer software 397,313 (88,413) 308,900
Reconciliation of Intangible assets - 2008
Additions
Opening acquired
Balance separately Disposals Amortisation Total
Computer
software 308,900 230,180 - (152,243) 386,837
Customer
base - 2,270,500 - (127,840) 2,142,66
0
308,900 2,500,680 - (280,083) 2,529,49
7
Reconciliation of Intangible assets - 2007
Additions
Opening acquired
Balance separately Disposals Depreciation Total
Computer
software - 397,313 (88,413) 308,900
1.4 Instalment sale agreement obligations
Figures in Rand 2008 2007
Minimum lease payment due
- within one year 1,289,278 349,072
- in second to fifth year
inclusive 2,858,131 518,808
4,147,409 867,880
Less: Future finance charges
- within one year (413,266) (79,499)
- in second to fifth year
inclusive (603,150) (49,136)
Present value of minimum
lease payments 3,130,993 739,245
Minimum lease payment due
- within one year 876,012 269,573
- in second to fifth year 2,254,981 469,672
inclusive
Present value of minimum
lease payments 3,130,993 739,245
Non-current liabilities 2,254,981 469,672
Current liabilities 876,012 269,573
3,130,993 739,245
It is company policy to acquire motor vehicles and certain larger telephony
routers under instalment sale agreements.
The average instalment sale agreement term is 36 months (2007: 36) and the
average effective borrowing rate is 13,5% to 15,5% (2007 - 10% to 12,4%).
Interest rates are linked to prime at the contract date. All instalment sale
agreements have fixed repayments and no arrangements have been entered into
for contingent rent.
The company`s obligations under instalment sale agreements are secured by the
lessor`s charge over the financed assets. Refer note 1.2.
1.5 Earnings and headline earnings per share
2008 2007
Earnings and diluted earnings per
share (cents) 33.35 26.95
Headline earnings and diluted
headline earnings per share 33.33 26.95
(cents)
The above calculations were determined using the following information:
Figures in Rand 2008 2007
Earnings
Profit attributable to ordinary
shareholders of the company 14,008,011 11,013,525
Headline earnings
Profit attributable to ordinary
shareholders of the company 14,008,011 11,013,525
Adjusted for:
IAS 16 gains on disposal of
property, plant and equipment (8,941) -
Total tax effects of adjustments 2,503 -
Headline earnings 14,001,573 11,013,525
Weighted number of ordinary shares outstanding
Weighted
Number of average
Shares number of
issued shares
Shares as at 1 October 2006 4,620,000 4,620,000
Effect of shares issued in
October 2006 34,440,000 34,440,000
Effect of shares issued in
February 2007 2,940,000 1,793,000
Shares at 30 September 2007
42,000,000 40,853,000
Shares at 30 September 2008 42,000,000 42,000,000
There are no instruments in issue or other obligations that have a dilutive
effect on earnings
1.6 Segment Report
The company does not have different operating segments. The business is
conducted in South Africa and is managed centrally and has no branches. The
company is managed as one operating unit. Accordingly there is no meaningful
segmental information to report other than the following:
Figures in Rand 2008 2007
Revenue by nature
Sales of airtime 161,375,331 139,052,707
Connection Incentive 15,159,260 11,569,990
Bonuses
Other 2,444,141 85,890
Total 178,978,732 150,708,587
Major customers
Revenue from transactions
with a single external
customer amounting to 10%
or more of the Company`s
revenue are disclosed
below:
Sales of airtime - Customer 17,525,775 33,250,830
A
Sales of airtime - Customer 25,229,813 -
B
Sales of airtime,
commissions earned on
airtime and Connection
incentive bonuses - Other 136,223,144 117,457,757
178,978,732 150,708,587
CHANGE STATEMENT
The following re-classifications were made to the audited abridged financial
information in comparison to the reviewed abridged financial information
published on 8 December 2008.
Balance sheet
Current liabilities
Trade and other 156,875 Provision for leave pay has
payables - Current been re-classified as a
year (2008) leave pay accrual and is
included under Trade and
other payables.
Provisions - (156,875) Reclassified to be included
Current year (2008) under Trade and other
payables
Trade and other 122,939 Provision for leave pay has
payables -Prior been re-classified as a
year (2007) leave pay accrual and is
included under Trade and
other payables.
Provisions - Prior (122,939) Reclassified to be included
year (2007) under Trade and other
payables
Income statement
Employee costs - 4,032,712 Reclassified from Other
Current year (2008) expenses
Other expenses - (4,032,712) Reclassified to disclose
Current year (2008) Employee costs separately
Other expenses - (4,084,688) Reclassified to Directors`
Prior year (2007) emoluments and employee
costs
Employee costs - 3,201,050 Reclassified from Other
Prior year (2007) expenses
Directors` 883,638 The prior year figure was
emoluments - Prior reclassified to include
year (2007) statutory
deductions included
previously under Other
expenses.
Segment report
Revenue by nature - (479,192) Reclassified revenue by
Sales of airtime nature between Other and
Sales of airtime
Revenue by nature - 479,192 Reclassified revenue by
Other nature between Other and
Sales of airtime
Notes to the
abridged financial
statements
Headline earnings 4,929 The calculation of Headline
attributable to Earnings was corrected to
shareholders reflect tax effects of
adjustments. No change
resulted in Headline
Earnings per share (cents)
NOTICE OF THE ANNUAL GENERAL MEETING
The Annual General Meeting of the shareholders of TeleMasters will be held at
the Auditorium, JSE Limited, One Exchange Square, No. 2 Gwen Lane, Sandown,
Johannesburg, at 09:30 on 1 April 2009. Details of the proceedings and
resolutions are contained in the aforementioned Annual Report.
2. Dividends
The following dividends were declared during the year:
- Dividend 1 of 12 cents per share declared on 7 November 2007, payable to
shareholders registered on 30 November 2007;
- Dividend 2 of 6 cents per share declared on 6 May 2008 payable to
shareholders registered on 30 May 2008;
- Dividend 3 of 3 cents per share declared on 30 July 2008 payable to
shareholders registered on 22 August 2008;
- Dividend 4 of 3 cents per share declared on 30 September 2008 payable to
shareholders registered on 17 October 2008
The directors intend to continue with a generous dividend policy.
3. 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
4. Subsequent events
4.1 On 23 October 2008 the company acquired a portion of the customer base
operating least cost routers of African Paradigm Communications (Pty) Ltd
trading as One Communications together with the property, plant and
equipment utilised by the client base.
Details of the net assets acquired are as follows:
Purchase consideration: R 4,000,000
Made up as follows:
Property plant and equipment acquired: R 1,100,000
Intangible asset - Client base acquired: R 2,900,000
4.2 During the course of the normal business operations the Company acquired
additional property, plant and equipment at cost as follows:
Motor vehicles R680,969
Routers and handsets R2,826,006
4.3 On 17 December 2008, the Board declared a further interim dividend no 5
of 4 cents per share which was paid to shareholders on 16 January 2009.
5. SHARE CAPITAL
No changes to share capital occurred during the period.
By order of the Board:
MB Pretorius BR Topham
Executive Chairman Chief Financial Officer
11 March 2009
Corporate information
Directors: ME Moji*, MB Pretorius, BR Topham, IG Bekker, J Voigt*, VI
Beck*(*non-executive)
Company secretary: Brandon Topham Inc.
Registered address: Equity Estate Building 2, Masters House, Charles de Gaulle
Crescent, Highveld Park Ext 9, Centurion, (PO Box 2887, Montana Park, 0159)
Transfer secretaries: Computershare Investor Services (Proprietary) Limited,
70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Website: www.telemasters.co.za
Designated Advisor: Arcay Moela Sponsors (Proprietary) Limited
Registered Auditors: BDO Spencer Steward, BDO Place, 457 Rodericks Road,
Lynnwood, Pretoria
Date: 11/03/2009 10:46:01 Produced by the JSE SENS Department.
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