Telemasters' Cautious Approach Pays Off in South Africa

Mergers, Acquisitions and Financial Results

Taking a conservative attitude in its pre-listing forecast has paid off for telecoms company Telemasters, allowing it to post maiden results that handsomely outstrip the expectations set by its directors.

Good trading conditions also helped to generate a net profit of R11m on revenue of R150m, instead of the forecast R7,2m profit on revenue of R129m. Headline earnings per share of 26,95c healthily exceeded the initial target of 17,28c, allowing the company to declare a dividend of 12c a share for the year to September.

A higher dividend was not declared as some of its cash may be needed to fund future acquisitions, the directors said yesterday.

The company offers tele- phony management services to corporate clients, including least-cost-routing services that divert calls on to the cheapest network.

The net profit was 51,74% higher than Telemasters forecast in a prelisting statement in March, while revenue was 16,1% higher. The figures were up because of better than expected trading conditions, a one-off incentive payment of R1,5m from a supplier, and cost saving measures within the company.

No figures were given for its past performance as Telemasters was incorporated only last year, and listed this year after a private placement of 2,9-million shares.

It has increased its sales force 25% in the past quarter and expects organic growth to boost its revenues about 20% in the coming year. Some opportunities for acquisitions have also been explored. The board is finalising those potential deals and expects at least three new lines of business to be brought in to diversify its offerings within the next few weeks.

Those deals also include black empowerment manoeuvres.

Business Day