Wrap Text
Reviewed Condensed Consolidated Results For The Interim Period Ended 31 August 2012
Total Client Services Limited
Incorporated in the Republic of South Africa
(Registration number 1998/025018/06)
Share code: TCS ISIN: ZAE000116208
(“TCS” or “the Group” or “the Company”)
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE INTERIM PERIOD ENDED 31 AUGUST 2012
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Reviewed
six months six months Audited
% ended ended year ended
Change 31 Aug 2012 31 Aug 2011 29 Feb 2012
R’000 R’000 R’000
Revenue 16 26 022 22 462 49 237
Cost of sales (9 250) (686) (18 082)
Gross profit (23) 16 772 21 776 31 155
Earnings before interest, tax, depreciation
and amortisation 201 2 760 916 3 471
Depreciation (2 034) (2 590) (4 878)
Goodwill impairment (1 796) - (860)
Loss from operations 36 (1 070) (1 674) (2 267)
Net finance costs (2 009) (1 952) (4 393)
Loss before taxation 15 (3 079) (3 626) (6 660)
Income taxation 44 991 731
Loss for the period (15) (3 035) (2 635) (5 929)
Other comprehensive income
Revaluation of equipment - - (220)
Deferred tax on devaluation of equipment - - 62
Total comprehensive loss
for the period (15) (3 035) (2 635) (6 087)
Loss attributable to:
Equity holders of the company (3 035) (2 635) (5 929)
Non-controlling interest - - -
Reconciliation of loss to headline loss:
Loss after tax (3 035) (2 635) (5 929)
Adjusted for:
Goodwill impairment 1 796 - 860
Asset impairment 352 - -
Gain on disposal of equipment - (203) (182)
Tax effect of the above (99) 56 51
Headline loss for the period 65 (986) (2 782) (5 200)
Basic and diluted loss per ordinary share
attributable to the equity holders of the
Company (cents) 16 (0.79) (0.68) (1.53)
Weighted average number of ordinary
shares in issue (in thousands) 386 363 386 363 386 363
Headline and diluted headline loss
per ordinary share (cents) 65 (0.26) (0.72) (1.35)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Reviewed Audited
as at as at as at
31 Aug 2012 31 Aug 2011 29 Feb 2012
R’000 R’000 R’000
ASSETS
Non-current Assets 5 469 12 126 10 234
Current Assets 18 385 14 923 17 814
TOTAL ASSETS 23 854 27 049 28 048
EQUITY AND LIABILITIES
Capital and reserves (15 899) (9 410) (12 864)
Non-current liabilities 23 955 22 378 24 304
Current liabilities 15 798 14 081 16 608
TOTAL EQUITY AND LIABILITIES 23 854 27 049 28 048
Total number of ordinary shares in issue
for the period (in thousands) 390 134 390 134 390 134
Treasury shares (3 771) (3 771) (3 771)
Total number of ordinary shares in issue
excluding treasury shares (in thousands) 386 363 386 363 386 363
Net asset value per ordinary share (cents) (4.11) (2.44) (3.33)
Net asset value per ordinary share
including treasury shares (cents) (4.08) (2.41) (3.30)
Net tangible asset value per
ordinary share (cents) (4.26) (3.27) (4.02)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Reviewed
six months six months Audited
ended ended year ended
31 Aug 2012 31 Aug 2011 29 Feb 2012
R’000 R’000 R’000
Net cash (outflow)/inflow from operating activities (335) 69 (155)
Net cash (outflow) from investing activities (187) (359) (455)
Net cash inflow/(outflow) from financing activities 459 320 (209)
Net (decrease)/increase in cash from cash and cash
equivalents (63) 30 (819)
Cash and cash equivalents at the
beginning of the period 1 401 2 220 2 220
Cash and cash equivalents at the end of the
period 1 338 2 250 1 401
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share BEE Revaluation Retained
Capital Premium Reserves Reserve Income Total
R’000 R’000 R’000 R’000 R’000 R’000
Balance as at 1 March 2011 39 18 083 (9 923) 2 084 (17 059) (6 776)
Total comprehensive loss for the period (2 635) (2 635)
Realisation of revaluation reserve (915) 915 -
Balance as at 31 August 2011 39 18 083 (9 923) 1 169 (18 779) (9 411)
Total comprehensive loss for the period (158) (3 295) (3 453)
Realisation of revaluation reserve (396) 396 -
Balance as at 29 February 2012 39 18 083 (9 923) 615 (21 678) (12 864)
Total comprehensive loss for the period (3 035) (3 035)
Realisation of revaluation reserve (615) 615 -
Balance as at 31 August 2012 39 18 083 (9 923) - (24 098) (15 899)
CONDENSED CONSOLIDATED SEGMENT REPORT FOR THE GROUP
Southern Northern North/West Coastal Corporate Total
R’000 R’000 R’000 R’000 R’000 R’000
31 August 2012
Total Revenue 921 18 746 1 229 2 009 3 117 26 022
Total (loss)/profit before tax for
Reportable segment (104) 4 892 643 942 (9 452) (3 079)
31 August 2011
Total revenue 1 314 12 317 3 201 2 821 2 809 22 462
Total (loss)/profit before tax for
Reportable segment (208) 2 760 954 1 254 (1 134) (3 626)
29 February 2012
Total revenue 2 787 30 079 5 180 5 208 5 983 49 237
Total (loss)/profit before tax for
Reportable segment (1 960) 9 274 336 2 365 (16 675) (6 660)
COMMENTARY ON THE GROUP RESULTS
OPERATIONAL PERFORMANCE
During the period under review, Total Client Services Limited (“TCS”) continued to tackle the challenges at hand in
order to take advantage of opportunities in the market. Management’s focus during the period has been to continue
to consolidate the existing contracts and improve the service offering. Performance has improved over the period and
the impact has been reflected in the financial results. TCS’s E-pay channel has been successful, resulting in over R1.3
million being collected via this payment channel.
FINANCIAL PERFORMANCE
Revenue for the period under review compared to the previous corresponding period has improved by 16% to
R26 million. The efforts by management to improve efficiency and our service offering have led to a reduction in
costs which has contributed to the increase in earnings before tax, interest, depreciation and amortisation
(“EBITDA”). A positive EBITDA of R2.8 million has been reported, recording an increase of 201% from R0.9 million in
the previous corresponding period.
The movement in non-current assets is mainly due to a goodwill impairment of R1.8 million relating to the Emfuleni
contract. After deducting the goodwill impairment, depreciation and finance costs, a loss before tax of R3 million has
been recorded. This is an increase of 15% compared to the previous corresponding period.
The increase in cost of sales is as a result of management identifying operating costs that are now considered to be
more directly attributable to the cost of generating revenue.
Headline loss per share improved by 65% to a loss of 0.26 cents per share compared to 0.72 cents. The difference in
the loss and headline loss relate mainly to the goodwill impairment.
In spite of the losses incurred, the effective working capital management resulted in the group only utilising cash of
R0.3 million for operating activities and R0.2 million for investing activities. After the financing activities the cash
closing balance was R1.3 million compared to R1.4 million as at year end.
Clients adhering to their normal terms of trade have contributed positively to the cash balance.
PROSPECTS
Administration Adjudication of Road Traffic Offences Project (“AARTO”) has been delayed and a new date has not as
yet been announced. It is anticipated that AARTO will enhance the Company’s revenue and growth prospects. TCS
has aligned its business strategy, products and services in accordance with the requirements of AARTO and our
systems are fully compliant.
Production in the months subsequent to interim period year end has shown a slight improvement, particularly for
Emfuleni and Ekurhuleni. The Gauteng project is scheduled to be commissioned soon.
SEGMENT REPORTING
Regional Service Centres have been identified by TCS as operating segments as they engage in business activities
from which they earn revenue and incur expenses. In addition, operating results are regularly reviewed by the
Group’s chief operating decision makers in order to assess the segment’s performance and to allocate resources.
The Group’s reportable segments are:
- Southern region;
- Northern region;
- North/West region;
- Coastal region; and
- Corporate.
BASIS OF PREPARATION
Statement of compliance
The accounting policies applied in the preparation of these reviewed condensed consolidated interim results
(“results”), which are based on reasonable judgment and estimates, are in accordance with International Financial
Reporting Standards (“IFRS”). The accounting policies adopted are consistent with those of the annual financial
statements for the year ended 29 February 2012. These results as set out in this report have been prepared in
accordance with the framework concepts and the measurement and recognition requirements of IFRS and the AC500
standards as issued by the Accounting Practices Board, the Companies Act 71 of 2008, and the Listings Requirements
of JSE Limited (“JSE Listings Requirements”) and contain the information as required by IAS 34 – Interim Financial
Reporting.
Subsequent events
The board of directors of TCS (“the Board”) are not aware of any material events that have occurred between the
end of the interim period and the date of this report.
Going Concern
Given the losses reported in the prior year and the current year, the Group had a negative equity position of R15.9
million at end of the interim period. The Board have prepared the financial information on a going concern basis
which presumes that the Group will generate sufficient cash flows to enable it to service its debts in the normal
course of business as and when they become payable.
The Board determined the future cash flows of the Group when it assessed the going concern status. Although due
care has been exercised in the preparation of these forecasts, any forecast is based on certain assumptions which
may or may not materialise in future. The most significant assumptions are that cash flow from new contracts
entered into will be realised as expected and the continued support of the preference shareholder will be provided to
the company.
Modified review report
BDO South Africa Inc. has issued a modified review report on the reviewed condensed consolidated results of the
company for the interim period ended 31 August 2012. They have drawn attention to the disclosure made by the
directors regarding the ability of the Group to continue as a going concern. Their review was conducted in
accordance with ISRE 2410 “Review of Interim Financial Information performed by the independent auditor of the
Company”. The modified review report is available for inspection at the Company’s registered office.
The emphasis of matter paragraph as contained in the review report is set out below:
Emphasis of matter
“Without qualifying our conclusion above we draw attention to the disclosure made by the directors regarding the
ability of the Group to continue as a going concern.”
Contingent liabilities
- The former landlord has issued summons against the Company for R1 million. The Company has defended the
action and the matter has been set down for hearing on 22 April 2013 in the North Gauteng High Court in
Pretoria. The Board do not believe that any amounts are due to the former landlord and have not provided for
this amount in the results.
- South African Revenue Service (“SARS”) has disallowed the loss of R3.5 million plus associated costs of R0.6
million relating to the irregularity on the bank account of the subsidiary company which occurred during the
2010 financial year. The directors believe that these amounts are deductable and have appointed Webber
Wentzel Attorneys to assist in this regard. The results have been prepared on the basis that these amounts are
deductable for tax purposes. We are following the Alternative Dispute Resolution (“ADR”) process with SARS and
await feedback from SARS as to a date for this hearing.
PREPARATION OF THE REVIEWED INTERIM RESULTS
The reviewed interim financial statements have been prepared under the supervision of the Acting Chief Financial
Officer Mr OML Ramagaga, B.Com (Hons), CA (SA).
DIRECTORATE
There have been no changes to the Board during the period under review, up to and including the date of this report.
By order of the Board
Lindikhaya Sipoyo
Executive Chairman
28 November 2012
Directors
L Sipoyo, (CEO and Executive Chairman), E Page (Executive) , V Zitumane*, D Mafu*, N Chonco*
(*Independent Non-executive)
Registered office:
1st Floor, River Falls Office Park
Bushwillow Building, No.3, Rose Ave,
Doringkloof, Centurion, 0157
Company Secretary:
Merchantec Proprietary Limited
2nd Floor, North Block
Hyde Park Office Towers
Cnr 6th Rd & Jan Smuts Ave
Hyde Park, 2196
Auditors:
BDO South Africa Incorporated
Building C, Riverwalk Office Park
41 Matroosberg Road, Ashlea Gardens
Designated Adviser:
Merchantec Capital
2nd Floor, North Block
Hyde Park Office Towers
Cnr 6th Rd & Jan Smuts Ave
Hyde Park, 2196
Transfer secretaries:
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61763, Marshalltown, 2107)
Company website:
www.tcsonline.co.za
www.viewfines.net
Date: 28/11/2012 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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