Wrap Text
Reviewed Provisional Condensed Consolidated results for the year ended 28 February 2013
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 PROVISIONAL CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED
28 FEBRUARY 2013
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
year ended year ended
28 February 29 February
2013 2012
% change R R
Revenue (9.0) 44 797 665 49 236 583
Costs of Sales 6.5 (16 910 866) (18 081 721)
Gross profit (10.5) 27 886 799 31 154 862
Earnings before interest,
taxation, depreciation and
amortization (87.2) 444 536 3 471 180
Depreciation (2 877 238) (4 878 188)
Goodwill impairment (1 795 590) (859 876)
Loss from operations (86.5) (4 228 291) (2 266 884)
Finance Costs (3 999 503) (4 427 079)
Loss before taxation (23.6) (8 227 794) (6 659 524)
Taxation (1 673 319) 730 598
Loss for the year (67.0) (9 901 113) (5 928 926)
Other comprehensive income :
Revaluation/(Devaluation) of
equipment 2 370 381 (220 203)
Deferred tax on
(revaluation)/devaluation of
equipment (663 707) 61 657
Total comprehensive loss for the
year (34.6) (8 194 439) (6 087 472)
Loss attributable to:
Equity holders of the company (9 901 113) (5 928 926)
Non- controlling interest _ _
Reconciliation of loss to headline
loss
Loss after tax (9 901 113) (5 928 926)
Adjusted for:
Goodwill impairment 1 795 590 859 876
Gain on disposal of property,
plant and equipment - (181 707)
Impairment of assets 352 472 -
Tax effects of the above (98 692) (50 878)
Headline loss for the year (51.0) (7 851 739) (5 199 879)
Basic and diluted loss per
ordinary share attributable to the
equity holders of the company
(cents) (67.3) (2.56) (1.53)
Weighted average number of
ordinary shares in issue 386 363 206 386 363 206
Headline and diluted headline loss
per ordinary share (cents) (50.4) (2.03) (1.35)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
year ended year ended
28 February 29 February
2013 2012
R R
ASSETS
Non-current assets 5 616 866 10 234 141
Current assets 10 892 255 17 813 777
TOTAL ASSETS 16 509 121 28 047 918
EQUITY AND LIABILITIES
Capital and reserves (21 057 946) (12 863 506)
Non-current liabilities 565 450 24 303 524
Current liabilities 37 001 617 16 607 900
TOTAL EQUITY AND LIABILITIES 16 509 121 28 047 918
Total number of ordinary shares in
issue at year end 390 134 690 390 134 690
Treasury shares (3 771 484) (3 771 484)
Total number of ordinary shares in
issue net of treasury shares 386 363 206 386 363 206
Net asset value per ordinary share
(cents)net of treasury shares (5.45) (3.33)
Net asset value per ordinary share
(cents) including treasury shares (5.40) (3.30)
Net tangible asset value per ordinary (5.53) (4.02)
Shares (cents)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
year ended year ended
28 February 29 February
2013 2012
R R
Net cash inflow/(outflow) from operating
activities 2 719 693 (155 240)
Net cash outflow from investing activities (473 290) (454 860)
Net cash inflow/(outflow) from financing
activities 916 172 (209 072)
Net increase/(decrease) in cash and cash
equivalents 3 162 575 (819 172)
Cash and cash equivalents at the beginning
of the year 1 400 745 2 219 917
Cash and cash equivalents at the end of the
year 4 563 320 1 400 745
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share BEE
capital premium Reserve
R R R
Audited balance as at 1 March
2011 38 637 18 083 508 (9 923 397)
Total Comprehensive loss for the
year - - -
Audited balance as at 29
February 2012 38 637 18 083 508 (9 923 397)
Total Comprehensive loss for the
year - - -
Realisation of revaluation - - -
Reviewed balance as at 28
February 2013 38 637 18 083 508 (9 923 397)
Revaluation Retained
reserve income Total
R R R
Audited balance as at 1 March
2011 2 084 123 (17 058 904) (6 776 033)
Total Comprehensive loss for the
year (158 546) (5 928 926) (6 087 472)
Realisation of revaluation (1 310 142) 1 310 142 -
Audited balance as at 29
February 2012 615 435 (21 677 688) (12 863 505)
Total Comprehensive loss for the
year 1 706 674 (9 901 113) (8 191 439)
Realisation of revaluation (615 435) 615 435 -
Reviewed balance as at 28
February 2013 1 706 674 (30 963 366) (21 057 946)
CONDENSED CONSOLIDATED SEGMENT REPORT FOR THE GROUP
North/
Southern Northern West Coastal Corporate Total
R R R R R R
2013 Reviewed
Total revenue 1 724 279 29 821 258 2 569 319 4 099 273 6 583 536 44 797 665
Total (loss)/
profit before
tax for reportable
segments (315 459) 6 279 808 1 319 045 1 945 960 (17 457 148) (8 227 794)
2012 Audited
Total revenue 2 786 635 30 078 863 5 180 459 5 207 515 5 983 111 49 236 583
Total profit/
(loss) before
tax for reportable
segments (1 959 505) 9 273 758 335 702 2 365 053 (16 674 532) (6 659 524)
OPERATIONAL PERFORMANCE
The year under review was not absent of challenges. Performance during the
financial year was satisfactory at major sites. However, there were some
sites which experienced challenges that affected performance. The effort
made to increase performance at our major sites proved fruitful. The
Gauteng project has been commissioned and has promising prospects. Our
payment channel (E-pay) was launched in the previous financial year and
has been very successful.
FINANCIAL PERFORMANCE
Revenue decreased by 9% from the previous corresponding financial year.
The decrease included the reversal of revenue accrued relating to the
Ekurhuleni contract, which ended in December 2012.
Costs containment remained management’s focus in the financial year.
Operating expenses and cost of sales reflect a combined decrease of 8%
compared to the previous financial period. Positive EBITDA of R0.4 million
was recorded, however, after deducting depreciation and accounting for a
goodwill impairment relating to the Emfuleni contract, a loss from
operations of R4.2 million was recorded for the year. The loss from
operations increased in the current financial year.
Headline loss per share has increased by 50.4% to 2.03 cents per share and
basic loss per share has increased by 67% to a loss of 2.56 cents per
share. The difference in headline loss per share and loss per share
relates predominantly to the impairment of goodwill and assets.
Notwithstanding the loss incurred, effective working capital management
resulted in the group generating R2.7 million of cash from operating
activities during the period. After investing and financing activities,
the cash movement for the year was an inflow of R3.2 million resulting in
a closing cash balance of R4.6 million at year-end. The cash position
improvement was because of strict adherence to credit terms.
The movement in non-current asset relates mainly to impairment of goodwill
in its entirety, the write down of deferred tax assets and depreciation of
assets.
The decrease in current assets was mainly as a result of a decrease in
trade and tax receivables. Refer to the contingent liabilities below.
The non-current liabilities declined mainly as a result of the preference
share moving to current liabilities as it is due for redemption in
November 2013.
PROSPECTS AND FUTURE PERFORMANCE
Since the start of the 2013 financial year the group’s strategy has been
to ensure that maximum value is extracted from existing contracts and
leveraged from existing relationships. Gauteng Province has been
commissioned as planned.
The group has developed solutions and entered into joint venture
agreements with reputable organisations in order to increase its offering
to both new and existing clientele. This will enable the group to
penetrate into other markets and thus diversify from a risk point of view.
The group is well positioned to deliver on this strategy.
The Administration Adjudication of Road Traffic Offences Project (“AARTO”)
was planned to be implemented with effect from 1 April 2012, however this
has once again been delayed. 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.
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 OF THE REVIEWED RESULTS
Statement of Compliance
The accounting policies applied in the preparation of these reviewed
provisional condensed consolidated results (“results”), which are based on
reasonable judgements 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 SAICA Financial Reporting guides as
issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council, the
Companies Act, 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 directors are not aware of any material events that have occurred
between the end of the financial year and the date of this report.
Going concern
Given the significant losses reported in the prior year and the current
year, the group had a negative equity position of R21 million at year end.
The directors 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 directors 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 materialize in future. The most
significant assumptions are that cash flow from new contracts entered into
will be realized 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
consolidated results of the group for the year ended 28 February 2013.
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 matter was argued on 22nd of April 2013 in the North
Gauteng High Court in Pretoria. Judgement is expected in due course.
The directors do not believe that any amounts are due to the former
landlord and have not provided for this amount in the results.
- Previously the South African Revenue Service (“SARS”) disallowed a
deduction relating to the irregularity on the bank accounts. The
directors no longer believe that this amount is recoverable. The tax
assets relating to this matter has been reversed.
Preparation of Reviewed results
The reviewed provisional condensed consolidated results have been prepared
under the supervision of the Acting Financial Director Mr OML Ramagaga,
B.Com (Hons), CA(SA).
DIRECTORATE
The following changes have been made to the board of directors of TCS:
Director Detail Date
Elaine Page Contract not renewed 15 March 2013
Lucas Ramagaga Appointment as acting financial 31 May 2013
director
By order of the board
Dumisani Mafu
Independent non-executive chairman
31 May 2013
Directors
L Sipoyo, (CEO), V Zitumane*, D Mafu**, N Chonco*, L Ramagaga (Acting FD)
(*Independent Non-executive)
(**Independent non-executive chairman)
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
22 Wellington Road
Parktown, 2193
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: 31/05/2013 05:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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