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TLM
TLM
TLM - Telemasters Holdings Limited and its subsidiary - Unaudited condensed
consolidated interim results for the quarter and six month period ended 31 March
2012
TELEMASTERS HOLDINGS LIMITED AND ITS SUBSIDIARY
(Incorporated in the Republic of South Africa)
(Registration number 2006/015734/06)
Share code: TLM & ISIN Number: ZAE000093324
("TeleMasters" or "the Company")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE QUARTER AND SIX
MONTH PERIOD ENDED 31 MARCH 2012
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited 3 Unaudited 3 Unaudited 6 Unaudited 6
months months months ended months ended
ended 31 ended 31 31 March 31 March 2011
March 2012 March 2011 2012 R
R R R
Revenue 43 650 581 71 765 702 99 613 756 157 996 272
Cost of sales (38 189 831) (58 690 803) (87 449 475) (131 682 599)
Gross profit 5 460 750 13 074 899 12 164 281 26 313 673
Operating (7 788 431) (7 950 281) (15 886 914) (16 122 042)
expenses
Operating (loss) ( 2 327 681) 5 124 618 (3 722 633) 10 191 631
profit
Investment 113 451 206 107 237 038 418 475
income
Finance cost (46 474) (123 829) (98 060) (215 448)
(Loss) profit (2 260 704) 5 206 896 (3 583 655) 10 394 658
before taxation
Taxation 396 864 (1 987 245) 668 858 (3 794 689)
(Loss) profit (1 863 840) 3 219 651 (2 914 797) 6 599 969
after taxation
Total (1 863 840) 3 219 651 (2 914 797) 6 599 969
comprehensive
(loss) income
for the period
Basic (loss) (4.44) 7.67 (6.94) 15.71
earnings per
share (cents)
Diluted (loss) (4.44) 7.67 (6.94) 15.71
earnings per
share (cents)
Headline
earnings
reconciliation:
(Loss) profit (1 863 840) 3 219 651 (2 914 797) 6 599 969
for the period
Adjustment: Loss - - - (19 315)
on disposal of
property, plant
& equipment
Headline (loss) (1 863 840) 3 219 651 (2 914 797) 6 580 654
earnings for the
period
Headline (loss) (4.44) 7.67 (6.94) 15.67
earnings per
share (cents)
Diluted headline (4.44) 7.67 (6.94) 15.67
earnings (loss)
per share
(cents)
Weighted average 42 000 000 42 000 000 42 000 000 42 000 000
number of shares
in issue
Dividends 1.00 4.00 2.00 8.00
declared per
share (cents)
Unaudited at Audited at Unaudited at
31 March 2012 30 September 2011 31 March 2011
R R R
ASSETS
Non-current assets
Property, plant 16 129 398 14 008 539 15 435 884
and equipment
Intangible assets 1 481 206 1 912 081 2 364 356
Goodwill 2 686 779 2 686 779 2 686 779
Deferred tax 4 705 630 3 962 210 4 875 188
assets
Total non-current 25 003 013 22 569 609 25 362 207
assets
Current assets
Trade and other 12 034 712 20 024 147 19 625 201
receivables
Cash and cash 12 593 009 20 420 572 24 829 129
equivalents
Total current 24 627 721 40 444 719 44 454 330
assets
Total assets 49 630 734 63 014 328 69 816 537
EQUITY AND
LIABILITIES
Capital and
reserves
Issued capital 48 059 48 059 48 059
Retained earnings 29 124 878 32 879 675 33 259 293
Total equity 29 172 937 32 927 734 33 307 352
Non-current
liabilities
Finance lease 458 029 336 779 1 120 284
liabilities
Total non-current 458 029 336 779 1 120 284
liabilities
Current
liabilities
Trade and other 18 600 750 27 256 316 28 920 471
payables
Current portion of 1 149 657 2 305 928 2 482 927
finance lease
liabilities
Current tax 201 726 122 260 3 926 068
payable
Bank overdraft 47 635 65 311 59 435
Total current 19 999 768 29 749 815 35 388 901
liabilities
Total liabilities 20 457 797 30 086 594 36 509 185
Total equity and 49 630 734 63 014 328 69 816 537
liabilities
Number of shares 42 000 000 42 000 000 42 000 000
in issue
Net asset value 69.46 78.40 79.30
per share (cents)
Net tangible asset 60.18 68.10 67.28
value per share
(cents)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited at Audited at Unaudited at
31 March 30 September 31 March
2012 2011 2011
R R R
Cash flows from operating
activities
Cash generated from operations (1 169 282) 17 928 045 12 648 801
Finance costs (98 060) (482 418) (215 448)
Tax paid 4 904 (6 836 590) (2 926 950)
Net cash (outflow) inflow from (1 262 438) 10 609 037 9 506 403
operating activities
Cash flows from investing
activities
Property, plant and equipment (4 909 465) (2 765 418) (943 730)
acquired
Proceeds on sale of property, - 584 054 19 315
plant and equipment
Investment income 237 038 876 040 418 475
Net cash outflow from investing (4 672 427) (1 305 324) (505 940)
activities
Cash flows from financing
activities
Proceeds from borrowings 351 000 664 957 251 994
Dividends paid (840 000) (7 140 000) (3 382 822)
Repayment of borrowings (1 386 021) (2 545 435) (1 171 966)
Net cash outflow from financing (1 875 021) (9 020 478) (4 302 794)
activities
Total cash movement for the (7 809 886) 283 235 4 697 669
period
Cash and cash equivalents at the 20 355 260 20 072 025 20 072 025
beginning of the period
Cash and cash equivalents at the 12 545 374 20 355 260 24 769 694
end of the period
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Issued Share Total Retained Total
share
capital premium capital income equity
Balance at 30 4 200 43 859 48 059 30 019 324 30 067 383
September 2010
Comprehensive income - - - 6 599 969 6 599 969
- Profit for the 6
month period ended 31
March 2011
Transaction with - - - (3 360 000) (3 360 000)
owners - Dividends
declared
Balance at 31 March 4 200 43 859 48 059 33 259 293 33 307 352
2011
Comprehensive income - - - 3 400 382 3 400 382
- Profit for the
remaining 6 month
period ended 30
September 2011
Transaction with - - - (3 780 000) (3 780 000)
owners - Dividends
declared
Balance at 30 4 200 43 859 48 059 32 879 675 32 927 734
September 2011
Comprehensive income - - - (2 914 797) (2 914 797)
- Loss for the period
ended 31 March 2012
Transaction with - - - (840 000) (840 000)
owners - Dividends
declared
Balance at 31 March 4 200 43 859 48 059 29 124 878 29 172 937
2012
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 Unaudited
6 Months 6 Months
ended ended
31 March 2012 31 March
2011
R R
Revenue by Nature
Sale of fixed cellular airtime 92 895 124 157 806 804
Sale of fixed line airtime 4 514 335 -
Connection incentive bonuses - 5 150
Other 2 204 297 184 318
Total revenue 99 613 756 157 996 272
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 A - 16 857 955
- Customer B 31 470 309 50 317 998
- Other customers 68 143 447 90 820 319
Total revenue 99 613 756 157 996 272
1. COMPANY PROFILE
TeleMasters is a fully licenced fixed-line telecommunication service provider.
It operates exclusively in the South African corporate market. The company
provides clients access to the most efficient and effective telecommunication
technologies and services.
2. FINANCIAL RESULTS
2.1 Statement of compliance and basis of preparation
The interim financial statements for the six months ended 31 March 2012 have
been presented in accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting Standards, the
information required by IAS 34: Interim Financial Reporting, the South African
Companies Act, as amended, the AC500 Standards as issued by the Accounting
Practices Board and the JSE Listings Requirements. The results have been
prepared in accordance with accounting policies of the Company that are
consistent with those applied in the audited annual financial statements for the
year ended 30 September 2011.
2.2 Commentary on financial results and future prospects
The second quarter results reflects management`s continued expectations as
voiced earlier that 2012 will be a tough transitional year. The traditional
least-cost routing (LCR) turnover decreased by 41% over the corresponding
previous period due to the loss of 2 large clients that reached the end of
tender periods. As reported previously the LCR model no longer makes sense as
the new interconnect rates have squeezed the margins out of the old technology.
We have chosen to move the manner in which we offer telecommunications solutions
to clients and have developed a highly innovative service offering which has a
built-in redundancy giving us a very competitive edge over similar type but
inferior offerings in the market. The challenge is to exceed the loss of revenue
with the conversion of 600 long-standing current clients and the acquisition of
new clients to the company`s new Digital Direct service. The conversions on to
the new platform remain slower than expected due to reliance on third party
fixed line service providers interconnect implementation and delays with the
porting of telephone numbers to TeleMasters. The increase in revenue over our
new Digital Direct platform has increased 100% when compared to the comparative
period and continues to grow. Our added value services which we implemented in
the last 6 months of the previous year have provided additional revenue of
approximately 2% of our total Revenue when compared to the prior year.
A further R4,9 million has been invested since year end in capital acquisitions
in order to convert our clients on to the new platform which requires a greater
investment than the previous LCR solution required. As a result of our
interconnect agreements having now been concluded, we will see in the medium
term an improvement in margins as our clients are converted on to the new
platform. This offers better margins at the expense of the larger initial
investment in hardware. Our operating expenditure has remained constant and our
efforts to reduce the fixed operating costs will be evident in our next
quarter`s results. We have successfully completed a retrenchment process to
reduce staff to be in line with our lower Revenue streams whilst we rebuild our
customer service offering. As part of the efforts to drive down our operating
expenditure the Board of Directors has decreased executive and non-executive
Directors remuneration by 33% until such time as we return the company to
profitability. We remain confident of our ability to do so in the shorter term
despite the fact that for all practical purposes we have had to re-invent the
company to adapt to changes in the way in which business communicates.
2.3. Dividends
On 21 December 2011 the Board declared a first quarter interim dividend of 1
cent per share, which was paid to all shareholders recorded in the share
register of the Company at the close of business on Friday, 20 January 2012. In
the previous year a dividend of 4 cents per share was paid.
The Board declared a second quarter interim dividend of 1 cent per share on 30
March 2012, which was paid to all shareholders recorded in the share register of
the Company on 4 May 2012. During the second quarter of the prior financial
year, which ended on 31 March 2011, the Company declared an interim dividend of
4 cents per share for that quarter.
2.4. Acquisition of property, plant and equipment
Property, plant and equipment acquired during the quarter comprise various items
of Furniture and fittings, Motor vehicles, Office equipment, IT equipment and
Routers and handsets.
3. SUBSEQUENT EVENTS
The directors are not aware of any matter or circumstance arising since the
reporting date which would have a material effect on the consolidated results or
the consolidated financial position of the Company as reported.
4. CHANGES IN THE COMPOSITION OF THE BOARD AND SHARE CAPITAL
There have been no changes to the composition of the Board nor to the share
capital of the Company since the Integrated Report of 30 September 2011 was
issued.
For and on behalf of the Board:
MB Pretorius BR Topham
Chief Executive Officer Chief Financial Officer (Preparer)
25 June 2012
Corporate information
Directors: DS van Der Merwe*#, J Voigt*, VI Beck*#, MB Pretorius, BR Topham
(* non-executive, # independent)
Registered address: 90 Regency Drive, Route 21 Corporate Office Park, Irene,
0157, Pretoria (P.O. Box 68255, Highveld Park, 0169)
Company secretary: Brandon Topham Inc.
Auditors: BDO South Africa Inc., 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: 25/06/2012 17:48:01 Produced by the JSE SENS Department.
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