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TLM
TLM
TLM - TeleMasters - Provisional Condensed Reviewed Results For The Year Ended
30 September 2009
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")
PROVISIONAL CONDENSED REVIEWED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2009
1. COMPANY PROFILE
TeleMasters is a specialist tele-management and business communication
strategy player operating exclusively in the South African market focussing
on the corporate market. The company provides current and future client
access to the most efficient and effective telecommunications technologies.
HIGHLIGHTS
- Revenue increased markedly by 29.19%.
- Headline earnings per share up by 9.69%.
- Net Asset Value per share after dividends and distributions up by 37.56%
to 66.98 cents per share from 48.69 cents per share and Net Tangible Asset
- Value per share up by 37.4% to 58.63 cents per share from 42.67 cents
per share.
- Earnings per share up by 2.82%.
- Dividends per share of 8 cents.
- Capital distribution per share of 8 cents.
BALANCE SHEET
Figures in Rand Note(s) 30 September 30 September
2009 2008
ASSETS
Non-Current Assents
Property, plant and
equipment 1.2 17,977,899 11,881,179
Intangible assets 1.3 3,509,518 2,529,497
Deferred tax 394,675 248,440
21,882,092 14,659,116
Current Assets
Trade and other
receivables 23,040,606 14,913,537
Cash and cash
equivalents 16,210,438 17,025,662
39,251,044 31,939,199
Total Assets 61,133,136 46,598,315
EQUITY AND
LIABILITIES
Equity
Share capital 2,148,059 5,508,059
Retained income 25,984,966 14,941,536
28,133,025 20,449,595
Liabilities
Non-Current
Liabilities
Instalment sale
agreement
obligations 1.4 3,984,781 2,254,981
3,984,781 2,254,981
Current Liabilities
Current tax payable 7,562,395 6,231,038
Trade and other
payables 19,405,264 16,575,901
Shareholder loan - 185,881
Instalment sale
agreement
obligations 1.4 2,002,913 876,012
Bank overdraft 44,758 24,907
29,015,330 23,893,739
Total Liabilities 33,000,111 26,148,720
Total Equity and
Liabilities 61,133,136 46,598,315
INOME STATEMENT
Figures in Rand Note(s) 30 September 30 September
2009 2008
Revenue
Services rendered 231,222,775 178,978,732
Cost of sales
Cost of services
rendered (191,287,718) (143,887,490)
Gross profit 39,935,057 35,091,242
Other income
Investment income 1,103,108 1,119,622
Profit on disposal
of fixed assets - 8,941
1,103,108 1,128,563
Operating expenses
Auditors`
remuneration (293,000) (130,895)
Depreciation and
amortisation (2,105,782) (2,858,235)
Impairment of
intangible assets (905,829) -
Directors`
emoluments (2,643,005) (2,561,870)
Lease rentals on
operating lease (506,643) (408,077)
Loss on disposal of
fixed assets (47,046) -
Employee costs (6,126,472) (4,032,712)
Other expenses (5,762,835) (5,193,089)
(18,390,612) (15,184,878)
Profit before
finance costs and
taxation 22,647,553 21,034,927
Finance costs (1,127,263) (207,431)
Profit before
taxation 21,520,290 20,827,496
Taxation (7,116,860) (6,819,485)
Profit for the year 14,403,430 14,008,011
Earnings and diluted
earnings per share 1.5
(cents) 34.29 33.35
Headline earnings
and diluted headline
earnings per share
(cents) 1.5 36.56 33.33
CHANGES IN EQUITY
Figures in Rand Share capital Share Premium
Balance at 01
October 2006 - -
Profit for the year - -
Issue of shares 4,200 5,966,262
Share issue costs - (462,403)
Total changes 4,200 5,503,859
Balance at 30
September 2007 4,200 5,503,859
Profit for the year - -
Dividends - -
Balance at 30
September 2008 4,200 5,503,859
Profit for the year - -
Distribution of share premium - (3,360,000)
Dividends - -
Balance at 30 September 2009 4,200 2,143,859
Total
share Retained Total
Figures in Rand capital income Equity
Balance at 01
October 2006 - - -
Profit for the year
- 11,013,525 11,013,525
Issue of shares 5,970,462 - 5,970,462
Share issue costs (462,403) - (462,403)
Total changes 5,508,059 11,013,525 16,521,584
Balance at 30
September 2007 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 5,508,059 14,941,536 20,449,595
Profit for the year
- 14,403,430 14,403,430
Distribution of
share premium (3,360,000) - (3,360,000)
Dividends - (3,360,000) (3,360,000)
Balance at 30
September 2009 2,148,059 25,984,966 28,133,025
CASH FLOW STATEMENT
Figures in Rand 30 September 30 September
2009 2008
Cash flows from operating
activities
Cash generated from operation 19,119,515 19,282,702
Finance costs (1,127,263) (207,431)
Taxation paid (5,931,738) (5,278,302)
Net cash generated from
operating activities 12,060,514 13,796,969
Cash flows from investing
activities
Purchase of property, plant
and equipment (7,947,610) (7,348,801)
Proceeds from sale of
property, plant and equipment 739,200 105,073
Purchase of intangible assets (2,926,988) (2,500,680)
Interest income 687,563 662,062
Dividends received 415,545 457,560
Net cash used in investing
activities (9,032,290) (8,624,767)
Cash flows from financing
activities
Reduction of share premium by
capital distribution (3,360,000) -
Proceeds from borrowings 3,976,366 3,173,113
Repayment of borrowings (1,119,665) (595,485)
Dividends paid to company`s
shareholders (3,360,000) (10,080,000)
Net cash from financing
activities (3,863,299) (7,502,372)
Total cash movement for the
year (835,075) (2,330,170)
Cash at the beginning of the
year 17,000,755 19,330,925
Total cash at end of year 16,165,680 17,000,755
1.1 Basis of preparation
The reviewed provisional condensed financial statements for the year ended 30
September 2009 have been presented in accordance with IAS 34, Interim
Financial Reporting, and in the manner required by the Companies Act of South
Africa and the JSE Listings Requirements. The results have been prepared in
accordance with accounting policies of the company that comply with
International Financial Reporting Standards and are consistent with the
accounting policies from the prior year. These provisional condensed
financial results have been reviewed by the company`s auditors, BDO, who have
expressed an unmodified review opinion on the results. A copy of the review
report is available for inspection at the offices of BDO.
1.2 Property, plant and equipment
2009
Cost/ Accumulated Carrying
Figures in Rand Valuation depreciation value
Furniture and
fixtures 119,674 (33,264) 86,410
Motor vehicles 1,647,563 (418,926) 1,228,637
Office equipment 91,717 (11,743) 79,974
IT equipment 322,641 (159,909) 162,732
Routers and
handsets 21,371,304 (4,951,158) 16,420,146
23,552,899 (5,575,000) 17,977,899
2008
Cost/ Accumulated Carrying
Figures in Rand Valuation 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
Reconciliation of property, plant and equipment - 2009
Opening
Balance Additions Disposals Depreciation Total
Furniture
and
fixtures 78,669 23,464 - (15,723) 86,410
Motor
vehicles 1,359,611 613,285 (427,746) (316,513) 1,228,637
Office
equipment 57,186 31,190 - (8,402) 79,974
IT
equipment 167,554 71,495 - (76,317) 162,732
Routers
and
handsets 10,218,159 7,208,176 (358,500) (647,689) 16,420,146
11,881,179 7,947,610 (786,246) (1,064,644) 17,977,899
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
handsets 6,344,363 6,093,033 - (2,219,237) 10,218,159
7,206,663 7,348,801 (96,132) (2,578,153) 11,881,179
Pledged as security
Carrying value of assets pledged as security:
2009 2008
Motor vehicles 1,172,977 1,359,611
Routers and handsets 3,869,845 1,664,732
5,042,822 3,024,343
Pledged as security in terms of instalment sale agreement obligations set out
in note 1.4
1.3 Intangible assets
2009
Cost/ Accumulated Carrying
Figures in Rand Valuation amortisation value
Computer software 654,481 (454,514) 199,967
Customer base 5,170,500 (1,860,949) 3,309,551
5,824, 981 (2,315,463) 3,509,518
2008
Cost/ Accumulated Carrying
Figures in Rand Valuation amortisation value
Computer software 627,493 (240,656) 386,837
Customer base 2,270,500 (127,840) 2,142,660
2,897,993 (368,496) 2,529,497
Reconciliation of Intangible assets - 2009
Impairment
Opening &
Balance Additions Disposals Amortisation Total
Computer
software 386,837 26,988 - (213,858) 199,967
Customer
base 2,142,660 2,900,000 - (1,733,109) 3,309,551
2,529,497 2,926,988 - (1,946,967) 3,509,518
Reconciliation of Intangible assets - 2008
Opening
Balance Additions Disposals Amortisation Total
Computer
software 308,900 230,180 - (152,243) 386,837
Customer
base - 2,270,500 - (127,840) 2,142,660
308,900 2,500,680 - (280,083) 2,529,497
1.4 Instalment sale agreement obligations
30 September 30 September
Present value of minimum lease 2009 2008
payments due
- within one year 2,002,913 876,012
- in second to fifth year
inclusive 3,984,781 2,254,981
Present value of minimum lease
payments 5,987,694 3,130,993
Non-current liabilities 3,984,781 2,254,981
Current liabilities 2,002,913 876,012
5,987,694 3,130,993
It is company policy to acquire motor vehicles and certain larger telephony
routers under instalment sale agreements.
The average instalment sale agreement term is 3 to 5 years and the average
effective borrowing rate is between 8,5% to 10,0% (2008 - 13.5% to 15,5%).
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 Headline earnings and diluted headline earnings per share
Reconciliation between earnings and headline earnings:
30 September 30 September
2009 2008
Profit attributable to ordinary
shareholders of the company 14,403,430 14,008,011
Adjusted for:
Loss (Profit) on disposal of
property, plant and equipment 47,046 (8,941)
Tax rate change - (2,426)
Impairment of intangible assets 905,829 -
Headline earnings 15,356,305 13,996,644
Weighted number of ordinary shares outstanding:
Weighted
Number of average number
Shares issued of shares
Shares as at 30 September
2009 42,000,000 42,000,000
Shares as 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 2009 2008
Revenue by nature
Sales of airtime 211,417,665 161,375,331
Connection Incentive Bonuses 16,130,918 15,159,260
Other 3,674,192 2,444,141
Total 231,222,775 178,978,732
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 A
- 17,525,775
Sales of airtime - Customer B
53,370,045 25,229,813
Sales of airtime, commission
earned on airtime and
Connection incentive Bonuses -
Other 177,852,730 136,223,144
231,222,775 178,978,732
2. Commentary
The directors are pleased to report a successful year with excellent growth
in the business operations of the company with a 29.19% growth in Revenue.
Our business model continues to ensure annuity revenue with a commitment to
clients to provide the most efficient telecommunications solution for their
business.
We have continued to focus on maintaining margins and increasing our
operational efficiency. This has served us in good stead with a growth in
Headline earnings of 9.69% during one of the worse financial markets in a
long time. During the last quarter we were forced to write off a large debt
of a subsidiary of a listed financial company which stopped trading. This bad
debt affected our Earnings growth by 7%. This resulted in our full year
financial results ending with a 2.82% increase in our Earnings per Share. The
Headline Earnings were higher due to the add back of the impairment which
resulted from this closed client. This impairment of R905,829 has the effect
of accelerating the write off of the customer base acquired.
Our business growth has remained cash positive and the company has continued
with our practice of paying quarterly dividends or distributions. During the
year we paid out 8 cents per share in dividends and a further 8 cents in
capital distributions in line with a special resolution passed by the company
at our last AGM. This practice will be continued in the future.
Due to our operational efficiencies our net asset value grew by 37.65% to
66.98 cents per share. This was after the total payments to shareholders of
16 cents per share which represents a further 32.86% value per share if not
paid out to shareholders.
3. Dividends
The following dividends were declared during the year:
- Dividend of 4 cents per share paid to shareholders registered on 16
January 2009 and declared on 18 December 2008.
- Dividend of 4 cents per share paid to shareholders registered on 9
October 2009 and declared on 15 September 2009 by the board.
- In addition a further 8 cents capital distribution of Share premium was
made during the year.
The directors intend to continue with a generous, though not fixed, dividend
policy.
4. 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 position of the Company
5. Subsequent events
There have been no significant events after year end.
6. Share Capital
No changes to Share Capital occurred during the period other than the capital
distribution of share premium of 8 cents per share to Shareholders in terms
of a special resolution passed at the last AGM.
7. Operational review and outlook
Despite the continued general decline in the South African economy our
business operations have and are set to continue to grow. The
telecommunications solution which we offer will continue to add value to
business operations in South Africa. The effect of changes to the
interconnect fee between telecommunications operators is unknown but presents
exciting business opportunities. As changes in the market become known our
business offerings will be adapted in order to ensure the most effective
communications solutions for our clients. Our close relationship with our
clients and agents will ensure that our operations continue to deliver
superior returns to shareholders.
For and on behalf of the Board:
17 December 2009
MB Pretorius
Chief Executive Officer
BR Topham
Chief Financial Officer
Corporate information
Directors: DS van Der Merwe*, 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, (P.O. Box 2887, Montana
Park, 0159)
Auditors: BDO, Block C, Riverwalk Office Park, 41 Matroosberg Avenue, Ashlea
Gardens, Pretoria
Transfer secretaries: Computershare Investor Services Limited, 70 Marshall
Street, Johannesburg, 2001 (P.O. Box 61051, Marshalltown,2107)
Website: www.telemasters.co.za
Designated Advisor:
Arcay Moela Sponsors (Proprietary) Limited
Date: 17/12/2009 09:40:01 Produced by the JSE SENS Department.
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