| Wed 25 Nov 2009, 17:47 | | VOX - Vox Telecom Limited - Audited Results For The Year Ended 31 August 2009 |
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VOX - Vox Telecom Limited - Audited Results For The Year Ended 31 August 2009
VOX TELECOM LIMITED
(Registration Number: 1998/016433/06)
("Vox Telecom" or "the Company" or "the Group")
JSE Code: VOX
ISIN Code: ZAE000097234
AUDITED RESULTS FOR THE YEAR ENDED 31 AUGUST 2009
Condensed Consolidated Audited Audited
Balance Sheet As at As at
31 Aug 2009 31 Aug 2008
R`000 R`000
ASSETS
Non-current assets 1 450 595 1 459 272
Plant and equipment 131 340 104 524
Goodwill 599 358 597 296
Other intangibles 701 174 733 766
Finance lease receivable 1 943 2 902
Deferred taxation 16 780 20 784
Current assets 401 580 449 143
Inventories 41 481 52 859
Trade and other 266 008 306 566
receivables
Tax receivable 1 975 1 441
Cash and bank balances 92 116 88 277
Total assets 1 852 175 1 908 415
EQUITY AND LIABILITIES
Capital and reserves 1 165 352 1 085 270
Share capital 1 109 1 101
Share premium 1 018 876 1 002 384
Reserves 8 230 5 428
Retained earnings 137 137 76 357
Total equity 1 165 352 1 085 270
Non-current liabilities 285 746 296 934
Borrowings - interest 118 982 123 550
bearing
Borrowings - interest free 758 502
Deferred taxation 166 006 172 882
Current liabilities 401 077 526 211
Trade and other payables 292 070 363 090
Provisions 14 173 2 342
Taxation 12 010 15 107
Current borrowings 82 824 145 672
Total equity and 1 852 175 1 908 415
liabilities
Ordinary shares in issue 1 108 502 1 101 327
at period end (`000)
Net asset value per share 105.1 98.5
(cents)
Condensed Consolidated Audited Audited
Income Statement Year ended Year ended
31 Aug 09 31 Aug 08
R`000 R`000
Revenue 2 082 533 1 846 749
Cost of sales (1 559 576) (1 392 909)
Gross profit 522 957 453 840
Other income 7 636 1 523
Depreciation and (69 460) (44 474)
amortisation
Employment costs (184 227) (144 460)
Occupancy costs (21 245) (14 087)
Other operating costs (123 664) (115 581)
Operating profit 131 997 136 761
Finance costs (40 437) (33 955)
Finance income 8 433 10 185
Net finance costs (32 004) (23 770)
Profit before taxation and 99 993 112 991
exceptional item
Exceptional item (11 585) (60 841)
Profit before taxation 88 408 52 150
Taxation (27 628) (14 135)
Profit for the year 60 780 38 015
Attributable to equity 60 780 38 015
holders of the parent
Earnings per share ("EPS")
(cents)
Basic EPS 5.49 3.78
Diluted basic EPS 5.49 3.70
Additional information:
Reconciliation of profit
for the year to headline
earnings
Profit for the year 60 780 38 015
Adjustments for:
Impairment of assets 9 749 3 654
Loss on sale of assets 869 66
Tax effect (2 973) (1 041)
Headline earnings 68 425 40 694
Headline EPS (cents) 6.18 4.04
Diluted headline EPS 6.18 3.95
(cents)
Weighted average number of
shares
In issue 1 108 502 1 101 327
Weighted average 1 107 244 1 004 899
Share options granted - 16 630
Outstanding vendor issue - 5 381
Diluted weighted average 1 107 244 1 026 910
Consolidated Audited Audited
Cash Flow Statement Year Year
ended ended
31 Aug 09 31 Aug 08
R`000 R`000
Cash flow from operating
activities
Operating cash before 209 318 187 828
working capital movements
Working capital movements (24 241) (39 277)
Cash generated from 185 077 148 551
operations
Net interest paid (32 004) (23 770)
Taxation paid (34 128) (49 313)
Net cash inflow from 118 945 75 468
operating activities
before exceptional item
Loss on collapse of - (60 841)
Dealstream
Net cash inflow from 118 945 14 627
operating activities
Cash flow from investing
activities
Additions to plant and (62 430) (71 018)
equipment to expand (2 719) (18 822)
operations
Additions to other
intangibles to expand
operations
Proceeds on disposal of 2 817 2 249
plant and equipment
Proceeds from finance 204 711
lease receivables
Acquisition of - (472 141)
subsidiaries and business
units
Additional vendor payments (8 543) (12 004)
Net cash outflow from (70 671) (571 025)
investing activities
Cash flow from financing
activities
Proceeds from shares - 390 506
issued (net of costs)
(Repayments) proceeds from
long and short-term (44 435) 62 547
borrowings
Net cash outflow from - (2 642)
share buy back
Proceeds from share - 1 549
options exercised
Net cash (outflow) inflow (44 435) 451 960
from financing activities
Net increase (decrease) in 3 839 (104 438)
cash and cash equivalents
Bank balance at beginning 88 277 192 715
of year
Cash and cash equivalents 92 116 88 277
at end of year
Condensed Share Share Reserves Retained Equity
Statement of capital premium profits attributa
Changes in ble to
Equity equity
holders
of the
parent
R`000 R`000 R`000 R000 R`000
Balance as at 884 599 688 3 198 38 342 642 112
31 August
2007
Movement in - - (968) - (968)
FCTR
Profit for the - - - 38 015 38 015
year
Total
recognised - - (968) 38 015 37 047
income and
expense
Shares issued
(net of costs) 190 403 816 - - 404 006
Treasury 27 17 991 - - 18 018
shares issued (33) (64 921) - - (64 954)
Shares bought 33 62 279 - - 62 312
back
Shares re-
issued
Misappropriati
on of treasury - (16 469) - - (16 469)
shares
Share-based - - -
payment 3 198 3 198
expense
Balance as at 1 002 384
31 August 1 101 5 428 76 357 1 085 270
2008
Movement in - - (408) - (408)
FCTR
Profit for the - - - 60 780 60 780
year
Total
recognised - - (408) 60 780 60 372
income and
expense
Shares issued
(net of costs) 8 16 492 - - 16 500
Share-based
payment - - 3 210 - 3 210
expense
Balance at 1 165 352
31 August 1 109 1 018 876 8 230 137 137
2009
COMMENTARY
The condensed annual financial statements for the year ended 31 August 2009
for Vox Telecom, are presented above. These condensed audited financial
statements have been prepared in accordance with accounting policies and
methods of computation that are consistent with those of the prior year, and
with International Financial Reporting Standards. The annual financial
statements from which these results have been derived have been audited by
Deloitte & Touche. Their unmodified opinion is available for inspection at
the registered office of the company. This announcement has been prepared in
accordance with IAS 34 Interim Financial Reporting, the Companies Act and JSE
Limited ("JSE") listings requirements.
COMPANY PROFILE
Vox Telecom Limited, headquartered in Johannesburg, is a leading alternative,
independent telecom operator, providing voice and data services to the
Southern African market. The Group employs more than 780 people and competes
through its primary brands Vox Telecom, Vox DataPro, @lantic, Vox Orion, Vox
Amvia and Vox Telepreneur and has offices in Johannesburg, Durban, Cape Town
and Pretoria as well as in Windhoek, Namibia. Vox Telecom is a listed company
trading on the Alternative Exchange (AltX), a division of the JSE Limited.
Investor and shareholder information is available at www.voxtelecom.co.za
BUSINESS REVIEW FOR THE PERIOD
For the year under review revenues grew by 13% to R2,1 billion over the
previous year. Gross profit increased by 15% to R523 million whilst gross
margins were maintained at 25%. Operating profit levels were marginally lower
than the prior year at R132 million or 3% lower. On a like for like basis,
after taking into account the change in the amortisation rate of existing and
acquired customer bases from 1.98% to 4%, operating profit would have been
R15,1 million or 7% higher. Profit after taxation increased by 60% to R61
million and headline earnings by 68% to R68 million after adding back headline
adjustments of R7,6 million resulting from the impairment and disposal of
certain plant and equipment. Accordingly, earnings per share ("EPS") and
headline earnings per share ("HEPS") increased by 45% and 53%, respectively.
Cash generated from operations has improved by 25% to R185 million from R149
million in the prior year.
The key financial highlights of the past year were:
- Revenue up 13% to R2,1 billion
- Gross profit up 15% to R523 million
- EBITDA up 11% to R201 million
- Cash generated from operations up 25% to R185 million
- Profit after taxation up 60% to R61 million
- Earnings per share up 45% to 5.49 cps
- Headline earnings per share up 53% to 6.18 cps
The following is a summary of key aspects of operational performance :
- Slower growth across the group due to the recessionary environment, with
particular emphasis on margin enhancement, which in certain cases meant
the termination of low margin business;
- A focus on cashflow generation that allowed the Company to invest a
further R62 million into the network and related IT equipment but at the
same time reducing long term debt obligations by R44 million;
- Vox Telepreneur growing to over 9 300 customers (2008: 2 600) with 9 144
Vox ADSL phones in use (2008: 3 200) and 3 800 dealers (2008: 1 900).
Average Revenue Per User ("ARPU") approximates R272 (2008: R265). New
products are being added to enhance the Telepreneur offering, such as PBX
and ADSL offerings and the renewal rate of dealers remains in excess of
70%;
- Continued innovation with the successful launch of new products such as
"Eyeris", a video conferencing alternative and the "Fishbone" Line bonder
broadband solution allowing customers to combine multiple access lines
for increased speed and efficiency. Revenues on this product now exceed
R1 million per month from a standing start in November 2008 and
opportunities in the UK and further afield have emerged;
- The number of corporate customers in excess of 16 000;
- @lantic has experienced a contraction in the consumer base to just over
136 000 customers, primarily caused by churn and non payment from a
weakening economy;
- An increase in the staff complement from 698 employees as at 31 August
2008 to 783 employees to support future growth and new services
particularly in the Vox Service Centre;
- The opportunity to access bandwidth on the Seacom undersea cable at
preferential rates, which will enable Vox Telecom to provide products and
services to its customer base at a lower price; and
- the Company`s BEE shareholding has been maintained at 47.2%, with Vox
Telecom remaining the largest listed black owned telecommunications
company in South Africa.
The past year has been focused on the improvement and refinement of the
internal aspects of the business which has included inter alia:
- improvement in operational management and processes;
- eliminating low margin business;
- increasing Average Revenue Per User ("ARPU") across customer bases;
- improving internal controls and processes;
- enhancing and redefining business unit strategies where necessary; and
- the optimisation of cash flow management and collection.
FUTURE PROSPECTS
The environment in which we operate is experiencing dynamic changes, not only
from a technology point of view, but more recently by the proposed changes to
wholesale interconnect mobile termination rates. The Minister of
Communications announced on 12 November 2009 that interconnect termination
rates would be reduced to 89 cents effective from 1 February 2010 and then a
further reduction to 85 cents and 80c cents effective from 1 February 2011 and
1 February 2012, respectively ("the glide path").
What does this mean for Vox Telecom?
Vox Telecom strives to be the leading independent, alternative provider of
voice and data solutions to the southern African market with our key goals and
objectives remaining unchanged. We anticipated that interconnect rates would
change and in this regard have been building and developing our network. The
launch of Cristal Vox is in direct response to this change. Cristal Vox is the
result of four years of experience in the voice market and has resulted in the
launch of a telco grade quality voice solution.
Vox Telepreneur customers all utilize this product as well as those @lantic
customers who have subscribed for the ADSL VoIP handset product. Vox DataPro
also has a number of business customers using Cristal Vox. Vox Core is the
network that supplies the Cristal Vox product. The change in interconnect
rates will enhance the profitability of Vox Core and Vox Telepreneur as our
interconnect margins now improve with the `glide path` changes and will
continue to improve as these rates are lowered. The data product offerings
remain unaffected and gross product margins on average exceed 35%.
Vox Orion currently has the majority of it`s customers on cellular Least Cost
Routing (` LCR `) products as this has historically resulted in major savings
for its customers when making outbound calls from Telkom to one of the mobile
operator networks. The announced `glide path` will allow us to convert certain
Vox Orion customers to Cristal Vox but we do anticipate certain negative
impact on profitability of the Vox Orion business in the short to medium term
term. It will take time to convert our customers to this new voice product as
it requires technical changes at customer sites and only certain customers are
capable of being converted. Over the longer term Vox Orion will benefit from
margin improvements once these customers have been converted.
Historically LCR has only allowed Vox Telecom to compete on the `outbound`
portion of the voice communication service, approximating only 34% of total
customer voice traffic. The advent of Cristal Vox now allows us to provide
services on all of the voice communication service needs of our customers.
This will mean Vox Telecom can provide a full service for inbound and outbound
calls, reduce customers` communication costs and increase our overall margins.
Vox Telecom continues to be recognised as a leading aggregator of alternative
voice traffic and continues to dominate interconnect traffic passed between
the Vox Telecom network and the incumbent operators. We have and will continue
to lobby for further legislative liberalisation, including, but not limited to
local number portability, carrier pre-select and local loop unbundling, which
will lead to a more competitive telecommunications environment, which will be
to the benefit of all customers.
FINANCIAL OVERVIEW
This year has been characterised with an inwardly focused strategy of reducing
costs, improving margins and ARPU`s and an evaluation of all business units.
This `clean out` has resulted in an impairment to assets and inventory of R7,6
million which should be regarded as exceptional in nature. All of these
factors collectively, contributed to an increase in earnings to R61 million
and an increase in headline earnings to R68 million. This has resulted in a
corresponding increase in EPS and HEPS to 5.49 cents per share and 6.18 cents
per share respectively.
Revenue
Revenues grew by 13% over the same period from R1,8 billion to R2,1 billion
which now includes all acquisitions made in prior years for the full period
under review. Revenue in Vox Orion remained flat for the year with growth of
57% experienced in Vox Datapro. Encouragingly growth in revenues in Vox
Telepreneur and Vox Core (the wholesale Telco arm of the Company), continues
to improve, and we see these business units playing a key role in the future.
Gross Profit
Group profit margins have been maintained at 25% and are an improvement from
the interim margin of 22%. This has been achieved by a combination of improved
usage and breakage on the sale of Vox Telecoms own products such as "Fishbone"
and the Vox Telepreneur offerings and through cash incentive bonuses ("CIB"s)
received from the networks. The strategy to increase ARPU`s and reducing low
margin business across all customer bases also assisted in returning the
overall gross profit percentage to 25%. Gross profit margins in @lantic have
decreased by a percentage point to 36% in the current year.
Vox Orion has increased gross profit margins to 17% from 15% in the prior year
predominantly due to a greater amount of connection incentive bonus ("CIB"s)
received in the second half of the financial year and the cancellation of SIMS
arising from the Storm acquisition that were out of contract and impacting
profitability. Vox Datapro achieved gross profit margins of approximately 32%
and 18% on data and voice respectively. These margins are expected to improve
in the year ahead from a combination of greater usage on data and products
such as "Fishbone" and improved voice margins from inbound minutes,
particularly from the Cristal Vox product.
Operating Profit
Operating profit was 3% lower than the prior year at R131 million (2008: R136
million). The Company prospectively assessed the useful lives of the acquired
customer bases at the end of the 2008 financial year to better align the
accounting treatment with industry best-practice by applying a useful life of
25 years. This increased the amortisation rate from 1.98% to 4% or
approximately R15,1 million before taxation. On a like for like basis,
operating profit would thus have been 7% higher than the previous year.
There were also a number of expenditures that were not budgeted for such as R4
million in legal fees resulting from various matters including Dealstream and
various corporate actions initiated by the company. In addition, the
recoverability of trade debtors has been impacted by the change in the
economic climate resulting in a net R4,4 million increase in the allowance for
doubtful debts. In the current year R12m was written off in bad debts (2008:
R700k) which was provided for in full as at 31 August 2008. The Group amended
the bad debt policy to provide for all amounts greater than 90 days unless
mitigated by specific circumstances. This has increased the provision for bad
debts to R23 million (2008: R18 million).
Nonetheless, the Group has adopted a strict credit policy and approximately
87% of trade and other receivable balances have been maintained at current and
30 days, which has had a noticeable improvement in working capital and
cashflow.
Operating costs as a percentage of revenue have reduced to 5.93% from the
6.26% as at 31 August 2008. Employment costs as a percentage of revenue
increased by a percentage point to 8.8% as the company grew from 698 to 783
employees or an average salary of approximately R19 600 per month, which is
14% higher than the R17 200 in the prior year.
Occupancy costs will continue to remain high specifically from the cost of
power, which is likely to increase in the future and a key input in the Vox
Core business unit. We will continue to reduce costs where possible across all
business units.
BUSINESS UNITS
Vox DataPro`s revenue has grown by 57% over the comparative period through a
combination of voice and data to R413 million. ARPU increased to R5 031 per
month from R3 772 per month as at end of August 2008, derived from a base of
over 7 870 corporate customers. The successful launch of Fishbone Linebonder
and Eyeris will continue to enhance revenue, margins and ARPU`s in a
meaningful way over the year ahead.
@lantic`s revenue grew by 18% to R199 million and ARPU across the base has
grown to R135 per month from R99 per month as at 31 August 2008. The strategy
remains to restore ARPU across the entire @lantic base to levels of
approximately R150 per month. Bad debt in the current economy and the
termination of unwanted business has resulted in some churn in the base to
approximately 136 000 customers but this has started to level out. @lantic
continues to be a leading reseller of iBurst and Vodacom 3G solutions with
encouraging sales growth in Vox ADSL phones.
Vox Orion`s revenue remained stable at R1,3 billion and there was a noticeable
improvement in gross profit margin to 17% at year end (2008: 15%). The number
of corporate customers approximates 7 600 which is lower than the 7 900 at 31
August 2008 but has resulted in better margins. The impact of changes in
interconnect rates on Vox Orion has been explained in the "Future Prospects"
section of this announcement.
Vox Telepreneur ARPU has remained stable at R272 per month from R262 per month
as at 31 August 2008. Vox Telepreneur continues to empower entrepreneurs with
growth in dealers to over 3 800, representing 9 300 customers. New products
are being added to this offering, such as PBX, ADSL and Fishbone which will
further enhance and strengthen Vox Telepreneurs` growing position in the
market. Revenue continues to increase at approximately 8% per month with gross
profit margins exceeding 30% (before adjusting for depreciation on ADSL
phones).
Vox Amvia`s gross profit margins have improved from 42% in the prior year to
57% with annuity revenue now compromising 70% of total revenue. A reduction in
corporate capital expenditure budgets has impacted budgeted revenues in the
current year with a notable drop in product sales. This cycle has begun to
reverse and there has been an improvement on product sales when compared to
the previous year.
Cashflow and capital expenditure
Cash generated from operations has improved by 25% from R149 million to R185
million at year end. This implies an EBITDA cash conversion rate of
approximately 95%. Considerable effort has been placed on the optimisation of
cash collection and the management of accounts receivable and working capital.
This has been applied in meeting capital expenditure commitments of R62
million of which approximately R53 million has been invested in network and
similar IT equipment. Debt repayments have also been met as scheduled to the
value of R44 million with total debt reducing to R202 million at year end
(2008: R 270 million). The debt to equity ratio was 17% at 31 August 2009 and
has reduced further at the date of this announcement with the total debt
outstanding having been reduced to R180 million.
We expect to restrict capital expenditure for the year ahead with current
commitments contracted for approximating R13 million (2008: Nil), and un-
contracted commitments to the value of R37 million (2008: R42 million).
Expenditure incurred will be driven by increased traffic on the Vox Core
network.
Working capital has been and will be further enhanced by tighter inventory
control and continued focus on the collection of accounts receivable balances.
The adjustment in respect of share based payments, in accordance with IFRS 2,
relates to options granted to key Vox Telecom management and employees in
2007, and amounted to R3,2 million for the full year. The charge relating to
the Casey Share incentive scheme has now been expensed in full and all
outstanding options are fully vested.
The Vox Telecom Limited 2009 Share Plan ("the Plan") was adopted by
shareholders at a general meeting held on 20 August 2009. In the current year
this has resulted in a small charge of R12 000 in terms of IFRS2. In the years
a head the following anticipated amounts in terms of IFRS2 will be charged to
the income statement for the years ending 31 August:
- 2010 : R4,5 million
- 2011 : R4,5 million
- 2012: R4,0 million
- 2013 : R2,2 million
- 2014 : R0,9 million
Goodwill and Other Intangibles
The value of goodwill and other intangibles, being acquired customer bases,
have been tested for impairment at reporting date as required by IAS 36 as
well as in the circumstances relating to the proposed changes in interconnect
rates. At the date of this announcement no impairment is required based on the
information that it is available. If this information changes then these
assumptions will be revisited.
Going concern
The Directors believe that the Group is well placed to manage its business
risks successfully. After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue to operate for
the foreseeable future, despite the current uncertain economic environment.
Accordingly, they continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
SEGMENTAL REPORTING
Primary business segments
The Group operates through its four main operating businesses, namely Vox
Orion, Vox DataPro, @lantic, and Vox Amvia. Other areas include corporate head
office and the other early stage businesses. The Group`s principal product
offerings are as follows:
Vox Orion - Corporate voice and data.
Vox DataPro - Corporate voice and data with the main focus on
the SME market.
@lantic - Consumer data and voice services.
Vox Amvia - Fax services and related products.
Other - includes Vox Telepreneur, Vox Core, Vox Exchange*, Vox Namibia
and corporate head office.
* the operations of Vox Exchange have been discontinued.
Total Orion Datapro @lantic Amvia Head
Office
and Other
R`000 R`000 R`000 R`000 R`000 R`000
2009
Revenue 2 082 533 1 309 834 413 189 199 446 31 358 128 706
Operatin 131 997 69 860 12 898 21 532 2 122 25 585
g profit
Net
finance (32 004) 4 971 1 368 604 232 (39 179)
(costs)
income
Profit 99 993
before
taxation
and
exceptio
nal
Exceptio (11 585)
nal
items
Profit 88 408
before
taxation
Taxation (27 628)
Profit 60 780
for the
year
Inventor 41 481 8 693 - 2 940 1 313 28 535
y
Goodwill 599 358 480 212 40 142 48 185 29 357 1 462
Intangib
le 686 364 532 100 28 018 81 370 15 401 29 475
assets
(excludi
ng
software
)
Other 559 402 288 751 78 604 27 495 15 037 149 516
segment
assets
Total 1 886 605 1 309 755 146 765 159 989 61 108 208 988
assets
Total 686 823 206 686 48 101 21 220 6 559 404 257
liabilit
ies
Deprecia 73 397 28 541 5 132 7 118 1 163 31 443
tion and
amortisa
tion
Total Orion Datapro @lantic Amvia Head
Office
and Other
R`000 R`000 R`000 R`000 R`000 R`000
2008
Revenue 1 846 749 1 336 525 261 927 169 097 34 220 44 980
Operatin 136 761 85 116 24 114 14 619 3 399 9 513
g profit
Net
finance ( 23 770) 18 648 ( 22 528) 2 931 173 ( 22 994)
(costs)
income
Profit 112 991
before
taxation
Exceptio (60 842)
nal
items
Profit 52 150
before
taxation
Taxation (14 135)
Profit 38 015
for the
year
Inventor 52 859 13 732 2 451 569 12 767 23 340
y
Goodwill 597 296 480 212 40 142 48 185 28 757 -
Intangib
le 718 694 554 949 29 225 86 851 16 147 31 522
assets
(excludi
ng
software
)
Other 539 566 327 354 94 613 16 014 19 110 82 476
segment
assets
Total 1 908 415 1 341 495 182 408 181 826 78 709 123 977
assets
Total 823 145 386 111 59 635 72 681 14 527 290 190
liabilit
ies
Deprecia 44 474 19 316 7 053 5 252 465 12 388
tion and
amortisa
tion
Secondary geographic segments
The Group`s businesses operate in two principal geographical areas - South
Africa and Namibia.
Total South Namibi Total South Namibia
year Africa a year Africa year
ended year year ended year ended
Aug 09 ended ended Aug 08 ended Aug 08
Aug 09 Aug 09 Aug08
R`000 R`000 R`000 R`000 R`000 R`000
Sales 2 082 533 2 051 834 30 699 1 846 749 1 822 292 24 457
Segment 1 886 605 1 858 349 28 256 1 908 415 1 885 803 22 612
assets
ISSUE OF SHARES DURING THE YEAR
A further 7 173 913 ordinary shares were issued to Amvia vendors at 230 cps on
5 November 2008 based on the attainment of certain profit warranties. As a
result of these profit warranties being exceeded as at 31 August 2008, a
further cash consideration of R7,8 million has been paid to the Amvia vendors
during the course of the current financial year.
A final amount of R2 million in cash was paid to the ODS vendors in February
2009 in terms of the sale agreement with them.
The total number of shares in issue as at 31 August 2009 is 1 108 501 698
after the issue of the 7 173 913 Amvia shares on 5 November 2008. No share
options have been exercised by employees as at 31 August 2009.
The total number of shares in issue on a weighted average fully diluted basis
as at 31 August 2009 is now 1 107 243 806.
GENERAL UPDATE
New Share Incentive Scheme - "Vox Telecom Limited 2009 Share Plan"
The Vox Telecom Limited 2009 Share Plan ("the Plan") was adopted by
shareholders at general meeting held on 20 August 2009. The Plan incorporates
the following elements: share appreciation rights ("SAR"), performance shares
and bonus shares. The Plan serves to align shareholder interest and long-term
sustained performance. The Plan allocation will initially only consist of SAR.
Provision is made for the award of performance and bonus shares which could be
awarded in the future.
The SAR economic interest is equivalent to 77 595 119 Vox Telecom shares. The
first SAR award representing 38 797 559 SAR was effected on 31 August 2009
("grant date"). The second SAR award of 38 797 559 SAR is anticipated to be
effected not earlier than 31 August 2010 or such later date as determined by
the Remuneration Committee.
In terms of the Plan, executive directors and senior employees of Vox Telecom
and its subsidiaries are awarded rights to receive shares in Vox Telecom. This
is based on the value of these awards when the time and performance conditions
have been met and the awards have vested. Termination of employees
participation in the Plan is based on "No Fault" and "Fault" as defined in the
Plan.
The primary intent of the Plan is to incentivise, motivate and retain
executives and senior management for long term sustained performance
achievements which are aligned to shareholder value and at the same time to
ensure optimal positioning in terms of the accounting and regulatory
environment.
It is envisaged that the rewards will be settled in shares but there is an
option for the Company to settle in cash should it be required.
Update on Dealstream Events
Dealstream was placed in final liquidation on 20 February 2009. The Company
and its legal advisors continue to assist and engage with the liquidators, but
other than the meeting of creditors where the Company`s claims were registered
and approved there has been no further progress on this matter. The Company
may continue to incur legal expenses as a result of interaction with the
liquidator, which will be expensed in full as incurred.
Interrupted Transaction
As announced in the SENS of 19 November 2008, the Dealstream collapse, the
consequent effect on the Company`s traded share price and the general price
deflation in public markets caused the interruption of a certain transaction.
The Company concluded an agreement whereby a BEE investor committed to a
subscription for shares in Vox Telecom which was not completed. The Company
has decided to cease pursuing the completion of this transaction and is
evaluating it`s rights regarding certain costs incurred.
DIRECTOR CHANGES
Mr Pierre Joubert was appointed as a non-executive director on 27 October
2008, to represent the shareholding of RMB, following the Dealstream Events.
Messrs. Vulindlela (Vuli) Cuba and Douglas Wallace have been appointed as
independent non-executive directors of the Company with effect from 1 August
2009. The appointments have been made to align the composition of the Board
with the provisions of the Corporate Laws Amendment Act No. 24 of 2006 and the
revised corporate governance requirements as contemplated in the King III
Report on Corporate Governance.
Vuli Cuba will act as non-executive Chairman of the Board. Tony van Marken`s
designation has changed from Executive Chairman to Chief Executive Officer,
with Doug Reed assuming the responsibilities of Group Managing Director.
Shareholders are further advised that Messrs. Jacques du Toit and Gary Sweidan
have resigned as main board directors of the Company with effect from 1 August
2009, but will remain executive committee members and executive directors of
Vox Orion and Vox Datapro respectively. The Board wishes to thank Jacques and
Gary for their valuable contributions. We look forward to their continued
operational leadership and contribution to the Vox Telecom group of companies.
In addition, shareholders are advised that Dr. N (Lulu) Gwagwa has resigned as
a main board director, with effect from 1 August 2009, but will act as an
alternate director to Mr. RT Dalais. The Board wishes to thank Lulu for her
considerable support to the Company, and looks forward to her continued
assistance to the Vox Telecom group of companies.
Subsequent to yearend, Mr T Matiwaza has resigned as a non-executive director
of the company with effect from 31 October 2009. Mr T Matiwaza represented the
shareholding interest of the Mvelaphanda Group Limited ("Mvelaphanda"). The
board wishes to thank Mr Matiwaza for his contribution and wishes him well for
the future. Mr Ernst Roth, currently CFO of Mvelaphanda, has been appointed as
a non-executive director of the board effective from 31 October 2009 to
represent Mvelaphanda`s interest.
The new board has been reconstituted as follows:
Independent non-executive directors:
- V Cuba (Chairman)
- D Wallace
Non-executive directors:
- RT Dalais
- P Joubert
- E Roth#
Executive directors:
- AP van Marken (Chief Executive Officer)
- DG Reed (Group Managing Director)
- CM von Holdt (Chief Financial Officer)
The Audit, Risk, Remuneration and Nominations Committees have been re-
organised as
follows:
Audit and Risk Committee:
- D Wallace (Chairman)
- V Cuba
Remuneration Committee:
- D Wallace (Chairman)
- V Cuba
- RT Dalais
Nominations Committee:
- V Cuba (Chairman)
- D Wallace
- P Joubert
#German
DIVIDENDS
With the application of cash generated from operations being focused on the
repayment of debt and further anticipated investment in network infrastructure
and the new initiatives, the directors have decided not to declare a dividend
for the period under review.
SUBSEQUENT EVENTS
Save for the changes to the board of directors as detailed above, no events
material to the understanding of this report have occurred in the period
between the period-end date and the date of this report.
GENERAL
The board of directors would like to thank the management and all employees
for the contribution they have made to the continued growth in the Company
over the past year.
By order of the Board
AP van Marken CM von Holdt
Chief Executive Officer Chief Financial Officer
and Company Secretary
25 November 2009
Johannesburg
Registered Office
Block D, Rutherford Estate,1 Scott Street, Waverley, 2090
Directors
AP van Marken, DG Reed, CM von Holdt, VW Cuba*, D Wallace*, RT Dalais*, NN
Gwagwa*, E Roth*, P Joubert*
* Non-executive
Alternate
Designated Advisor Transfer Office
PSG Capital (Pty) Ltd Computershare Investor Services Pty) Ltd
Date: 25/11/2009 17:47:36 Produced by the JSE SENS Department.
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