| Wed 11 Aug 2010, 8:20 | | TLM - Telemasters Holdings Limited - Unaudited interim results for the nine |
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TLM
TLM
TLM - Telemasters Holdings Limited - Unaudited interim results for the nine
month period ended 30 June 2010
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")
UNAUDITED INTERIM RESULTS FOR THE NINE MONTH PERIOD ENDED 30 JUNE 2010
CONDENSED STATEMENT OF COMPREHENSIVE Unaudited Restated
INCOME And
Unaudited
9 months 9 months
ended ended
30 June 30 June
2010 2009
R R
Revenue 174 719 213 170 379 404
Cost of sales (146 512 449) (138 776 061)
Gross profit 28 206 764 31 603 343
Loss on disposal of assets (375 188) -
Auditors` remuneration (313 500) (473 400)
Depreciation and Amortisation (3 694 091) (4 013 753)
Directors` remuneration (2 420 535) (1 600 531)
Operating lease (551 980) (378 344)
Employee costs (7 816 094) (7 489 160)
Operating expenses (4 395 931) (3 984 652)
Operating profit 8 639 445 13 663 503
Investment income 621 064 882 534
Finance costs (422 498) (394 885)
Profit before taxation 8 838 011 14 151 152
Taxation (3 818 774) (4 242 543)
Profit for the period 5 019 237 9 908 608
Total comprehensive income for the 5 019 237 9 908 608
period
Basic earnings per share (cents) 11.95 23.59
Diluted earnings per share (cents) 11.95 23.59
Headline earnings reconciliation:
Profit for the period 5 019 237 9 908 608
Adjustments:
Loss on disposal of assets 375 188 -
Headline earnings for the period 5 394 425 9 908 608
Headline earnings per share (cents) 12.84 23.59
Diluted Headline earnings per share 12.84 23.59
(cents)
Weighted average shares in issue (`000) 42 000 000 42 000 000
Dividends declared per share (cents) 8.0 4.0
Dividends paid per share (cents) 8.0 4.0
Capital distributions declared per 2.0 8.0
share (cents)
Capital distributions paid per share - 4.0
(cents)
CONDENSED STATEMENT OF FINANCIAL
POSITION
Unaudited Restated
at And
Unaudited
at
30 June 30 June
2010 2009
R R
ASSETS
Non-current assets
Property plant and equipment 16 996 146 14 805 312
Intangible assets 2 791 485 4 778 937
Investments 1 800 000 -
Deferred tax 183 831 814 767
21 771 462 20 399 016
Current assets
Trade and other receivables 12 439 242 19 773 708
Cash and cash equivalents 20 270 173 13 514 598
32 709 415 33 288 306
Total assets 54 480 877 53 687 322
EQUITY AND LIABILITIES
Equity and reserves
Issued capital 1 308 059 2 148 059
Retained earnings 27 644 203 23 170 146
28 952 262 25 318 205
Non-current liabilities
Finance lease liabilities 2 715 520 3 283 175
2 715 520 3 283 175
Current liabilities
Trade and other payables 17 704 939 16 894 631
Current portion of finance lease 2 435 303 1 806 435
liabilities
Current tax payable 1 602 258 4 656 710
Dividend payable 1 003 333 1 684 241
Bank overdraft 67 262 43 925
22 813 095 25 085 942
Total equity and liabilities 54 480 877 53 687 322
Number of shares in issue 42 000 000 42 000 000
Net asset value per share (cents) 68.93 60.28
Net tangible asset value per share 62.29 48.90
(cents)
CONDENSED STATEMENT OF CASH FLOWS
Unaudited Restated
at And
Unaudited
at
30 June 30 June
2010 2009
R R
Cash flows from operating activities
Cash generated from operations 22 962 189 15 513 790
Finance costs (422 498) (394 885)
Tax paid (9 568 066) (6 383 200)
Net cash inflow from operating 12 971 625 8 735 705
activities
Cash flows from investing activities
Interest received 399 332 548 500
Dividends received 221 732 334 034
Property, plant and equipment acquired (2 710 543) (6 388 512)
Proceeds from the sale of property, 1 019 091 96 131
plant and equipment
Intangible assets acquired (27 215) (2 926 988)
Investments acquired (1 800 000) -
Net cash outflow from investing (2 897 603) (8 336 835)
activities
Cash flows from financing activities
Dividends and capital distributions (4 877 260) (4 615 759)
paid
Borrowings received 1 800 000 -
Repayment of borrowings (1 700 162) (876 926)
Repayment of instalment sale agreements (1 959 717) (4 090 924)
Proceeds from instalment sale 700 348 5 654 657
agreements
Net cash outflow from financing (6 036 791) (3 928 952)
activities
Net increase / (decrease) in cash and 4 037 231 (3 530 082)
cash equivalents
Cash and cash equivalents at the 16 165 680 17 000 755
beginning of the period
Cash and cash equivalents at the end of 20 202 911 13 470 673
the period
CONDENSED STATEMENT OF CHANGES IN EQUITY
Issued Share Total share
capital Premium capital
Balance at 30 September 4 200 5 503 859 5 508 059
2008
Profit for the period - - -
ended 30 June 2009
Dividends declared - - -
Capital distributions - (3 360 000) (3 360 000)
Balance at 30 June 2009 4 200 2 143 859 2 148 059
Profit for the period - - -
ended 30 September 2009
Dividends declared - - -
Balance at 30 September 4 200 2 143 859 2 148 059
2009
Profit for the period - - -
ended
30 June 2010
Dividends declared - - -
Capital distributions - (840 000) (840 000)
Balance at 30 June 2010 4 200 1 303 859 1 308 059
Retained Total
income equity
Balance at 30 September 2008 14 941 538 20 449 597
Profit for the period ended 30 June 9 908 608 9 908 608
2009
Dividends declared (1 680 000) (1 680 000)
Capital distributions - (3 360 000)
Balance at 30 June 2009 23 170 146 25 318 205
Profit for the period ended 4 494 820 4 494 820
30 September 2009
Dividends declared (1 680 000) (1 680 000)
Balance at 30 September 2009 25 984 966 28 133 025
Profit for the period ended 30 June 5 019 237 5 019 237
2010
Dividends declared (3 360 000) (3 360 000)
Capital distributions - (840 000)
Balance at 30 June 2010 27 644 203 28 952 262
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:
Unaudited Restated
and Unaudited
9 months 9 months
Ended ended
30 June 30 June
2010 2009
R R
Revenue by Nature
Sale of airtime 165 187 814 156 649 934
Connection incentive bonuses 5 602 737 10 828 638
Other 3 928 662 2 900 832
174 719 213 170 379 404
Major customers
Revenues from transactions with a
single external customer amounting to
10 percent or more of the Company`s
revenue, are disclosed below:
- Customer 1 42 895 056 48 818 265
- Other customers 131 824 157 121 561 139
174 719 213 170 379 404
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 clients
access to the most efficient and effective telecommunication technologies.
2. FINANCIAL RESULTS
2.1 Statement of compliance and basis of preparation
The interim financial statements for the nine months ended 30 June 2010 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 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.
2.2 Commentary
During the period, the regulatory changes in the interconnect rates have had
a direct impact on the profitability of the company. Due to this and
expected changes in Mobile Termination Rates, the company has decided not to
renew expired SIMs and did not earn Connection Incentive Bonuses. This
directly contributed to a decrease in gross profit of 11%.
Other factors that contributed to the drop in EPS of 11.64 cents per share to
11.95 cents per share are as follows:
- Legacy equipment and Motor vehicles were disposed during the period,
resulting in a loss of R375 188.
- Directors` remuneration increased with 51% due to the addition of two
directors to ensure the independence of the board of directors;
- An efficient staff policy resulted in an increase in Employee costs of
only 4% after adding staff and a new policy to pay full medical aid
contribution for all staff with service in excess of 5 years;
- Since the beginning of the current period, the Company rented additional
office space to accommodate the increased staff complement and
operations. This led to a total increase in occupancy costs of R173
636;
- A total amount of R1 767 011 (1.01% of Revenue) was written off and / or
provided for bad debts. R1.5 million thereof related to amounts owed by
the subsidiary of a listed financial company which stopped trading, as
previously disclosed in the 2009 Annual Report. No further effects on
earnings are expected;
- Total Finance cost increased by 7% as a result of the larger asset base
under instalment sale agreements;
- Investment income is linked to the lower prime lending rate and
fluctuated according to the amendments reported by the Regulator; and
- Income tax is a function of taxable profit. Secondary Tax on Companies
("STC") increased as a result of two dividend declarations in the
current period compared to one in the prior period. In the previous
period 2 capital distributions could be made versus a single
distribution for the current period. Capital distribution of share
premium were approved at the respective Annual General Meetings;
Despite the challenges in the industry, the company has managed to achieve a
Return on Equity ("ROE") of 17.3% and a Return on Assets ("ROA") of 15.9%.
This shows that the company remains profitable and is successfully managed by
the board of directors and all managers and staff.
The Net Asset Value (NAV) per share increased by 14.4% since the end of the
comparative period. Net Tangible Asset per share is up by 27.4% after the
total dividends and capital distributions to shareholders of 8 cents and 4
cents respectively per share.
The Company remains cash positive with a good liquidity position. The Company
improved its cash flows from operating activities compared to the previous
period.
2.3. Dividends and Capital distributions
During the first quarter the board declared a first quarterly dividend of 4
cents per share, which was paid to all shareholders recorded in the share
register of the Company at the close of business on Friday, 15 January 2010.
During the second quarter the board declared a second quarterly dividend of 4
cents per share, which was paid to all shareholders recorded in the share
register of the Company at the close of business on Friday, 23 April 2010.
The board has recently declared a third quarterly capital distribution from
share premium of 2 cents per share, which was payable to all shareholders
recorded in the share register of the Company at the close of business on
Friday, 23 July 2010.
Due to the flux in the market and the cessation of Commission Incentive
Bonuses, the board of directors deemed it to be prudent to decrease the
distribution per share by 2 cents per share compared to the previous quarter
to see the Company through its transition to a full telecommunications
provider. However, the board will continue with the policy of declaring
quarterly dividends and, over the course of the year, intends maintaining a
high dividend policy.
During the comparative period ended 30 June 2009, the Company declared a
first quarterly dividend of 4 cents and did two capital distributions of 4
cents each during the second and third quarters.
2.4. Reclassification of comparative period figures
The following restatements and reclassifications were made to the comparative
figures:
- The prior year Cost of Sales as previously reported included commission
paid to employees of R2 718 868. This was reclassified to employee
costs to be in line with the 2009 Annual Report and subsequent quarterly
reporting;
- The prior year Cost of Sales as previously reported included the
depreciation charge on asset category of Routers and handsets of R3 063
668. This was reclassified to Depreciation & Amortisation to be in line
with the 2009 Annual Report and subsequent quarterly reporting;
- The prior year Operating expenses as previously reported included agent
call out fees to the value of R648 864. This was reclassified to Cost
of Sales to be in line with the 2009 Annual Report and subsequent
quarterly reporting;
- The prior year Operating expenses as previously reported included a
portion of Finance cost to the value of R168 323. This was reclassified
to Finance cost to be in line with the 2009 Annual Report and subsequent
quarterly reporting;
- The prior year Petty cash balance of R4 526 was incorrectly included
with Bank overdraft on the Statement of Financial Position. This was
reclassified to Cash and cash equivalents to be in line with the 2009
Annual Report and subsequent quarterly reporting;
- Incidental Loans receivable to the value of R113 259 was reclassified
from Trade and other payables to Trade and other receivables on the
Statement of Financial Position to be in line with the 2009 Annual
Report and subsequent quarterly reporting;
- The Allowance for doubtful debt was incorrectly shown separately under
Provisions on the Statement of Financial Position as previously
reported. This was reclassified to Trade and other payables to be in
line with the 2009 Annual Report and subsequent quarterly reporting;
- During the current period the company acquired a 100% interest in a
subsidiary Skycall Networks (Pty) Ltd for R1.8 million. The subsidiary
was not consolidated as the purchase price allocation has not been
finalised.
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
The directors are not aware of any matter or circumstance arising since the
reporting date which would have an effect on the Company.
5. SHARE CAPITAL
During the third quarter the Company declared a Capital distribution from
Share premium of 2 cents per share, which was payable to all shareholders
recorded in the share register of the Company at the close of business on
Friday, 23 July 2010.
No further changes to share capital occurred during the period.
6. OPERATIONAL REVIEW AND PROSPECTS
The company is optimistic about its new product roll-out and the subsequent
positive impact on its performance.
7. CHANGES IN THE COMPOSITION OF THE BOARD
As previously announced, on 18 January 2010, Ms Nolene Owen was appointed as
Financial Director. The role of Mr Brandon Topham changed from Financial
Director to non-executive director on this same date.
For and on behalf of the Board:
MB Pretorius N Owen
Chief Executive Officer Chief Financial Officer
11 August 2010
Corporate information
Directors: DS van Der Merwe*, MB Pretorius, IG Bekker, N Owen, BR Topham*, J
Voigt*, VI Beck*
(* non-executive)
Registered address: Equity Estate Building 2, Masters House, Charles de
Gaulle Crescent, Highveld Park Ext 9, Centurion, (P.O. Box 68255, Highveld
Park, 0169)
Company secretary: Brandon Topham Inc.
Auditors: BDO, Block C, Riverwalk Office Park, 41 Matroosberg Avenue, Ashlea
Gardens, Pretoria
Transfer secretaries: Computershare Investor Services (Proprietary) Limited,
70 Marshall Street, Johannesburg, 2001 (P.O. Box 61051, Marshalltown, 2107)
Designated Advisor: Arcay Moela Sponsors (Proprietary) Limited
Website: www.telemasters.co.za
Date: 11/08/2010 08:20:01 Produced by the JSE SENS Department.
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