1. Financial results
1.1 Statement of compliance and basis of preparation
The consolidated interim financial statements for the three months ended 31 December 2008 have been presented in accordance with IAS 34, Interim Financial Reporting.
The results have been prepared in accordance with accounting policies of the company that comply with International Financial Reporting Standards. These results have not been reviewed or audited by the company's auditors.
1.2 Commentary
The first quarter has been excellent for TeleMasters, as is shown by our increase of 154% in our earnings per share from 2.98 cents per share to 7.56 cents per share for the current quarter.
We can attribute this increase to the continued efforts by all in TeleMasters who have contributed to our fundamental basic business model showing such increase.
The revenue indicates an increase of 38% compared with the comparative three-month period. The increase in revenue is in part due to the acquisitions made by the company towards the end of the last financial year and at the start of the current financial period. In addition, our focus on taking care of our existing clients and the optimisation of our revenue streams through our revenue enhancement programme, has contributed the balance of this increase. This increase has had the direct effect of increasing our gross margin. Our gross profit percentage has increased form 12.8% to 14.4% quarter on quarter.
We are continually reducing inefficiencies and our ISO 20000 certification process has assisted us to optimally structure our company to reduce operating costs. This is evident from the fact that despite growth in our operating capacities, our operating costs have only increased by only 16.7%.
The company remains cash positive with a good liquidity position. The Net Asset Value (NAV) per share increased by 72.3% since the end of the comparative quarter. The company has during the last quarter invested a further R6 483 579 into fixed assets and business operations acquired. Seventy percent of these acquisitions have been financed through the operations of the company and only 30% through instalment sale agreements over capital assets.
1.3. Dividends
The board has declared that a further quarterly interim dividend of 4 cents per share (“the dividend”) be paid to all shareholders recorded in the share register of the company at the close of business on Friday, 16 January 2009. The dividend per share of 4 cents per share for the quarter reflects an increase from the previous year's 3 cents per quarter paid, which amount to an increase of 33.3% in dividend payments being made to our investors.
The board will continue with our policy of declaring quarterly dividends and, over the course of the year, maintaining a high dividend policy.
2. 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.
3. Subsequent events
There have been no significant events after the period end.
4. Share capital
No changes to share capital occurred during the period.
5. Operational review and outlook
The company is slowly reaping the benefits of its implemented decisions to combat an expected slowdown in the economy. A trend of businesses getting liquidated is noted, but this is offset by a new trend towards higher usage per client. The re-evaluation of procedures in the ISO certification has shown up opportunities to cut time and cost.
The remuneration of all sales staff was changed to salaries instead of commission-only, and the number of sales management complement has more than doubled to 12 managers. The successful integration of the cash acquisition of the One Communications business boosted the turnover by 6%. TeleMasters is confident it will maintain a growth trend in both sales and EPS in the face of economic uncertainties. The mainstay of income is still annuity based and will remain so for the foreseeable future.
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Designated Advisor:
Arcay Moela Sponsors (Proprietary) Limited
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