Wrap Text
Reviewed Condensed Consolidated results for the Interim period ended 31 August2013
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 2013
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Reviewed
six months six months Audited
% ended ended year ended
Change 31 Aug 2013 31 Aug 2012 28 Feb 2013
R’000 R’000 R’000
Revenue (40) 15 622 26 022 44 798
Cost of sales (25) (6 941) (9 250) (16 911)
Gross profit (48) 8 681 16 772 27 887
Earnings before interest, tax, depreciation
and amortisation (266) (4 581) 2 760 445
Depreciation (1 247) (2 034) (2 877)
Goodwill impairment - (1 796) (1 796)
Loss from operations (445) (5 828) (1 070) (4 228)
Finance costs (2 187) (2 009) (4 000)
Loss before taxation (160) (8 015) (3 079) (8 228)
Taxation (173) 44 (1 673)
Loss for the period (170) (8 188) (3 035) (9 901)
Other comprehensive income
Revaluation of equipment - - 2 370
Deferred tax on revaluation - - (663)
Total comprehensive loss
for the period (170) (8 188) (3 035) (8 194)
Loss attributable to:
Equity holders of the company (8 188) (3 035) (9 901)
Non-controlling interest - - -
Reconciliation of loss to headline loss:
Loss after tax (8 188) (3 035) (9 901)
Adjusted for:
Goodwill impairment - 1 796 1 796
Asset impairment - 352 352
Gain on disposal of equipment (15) - -
Tax effect of the above 4 (99) (99)
Headline loss for the period (731) (8 199) (986) (7 852)
Basic and diluted loss per ordinary share
attributable to the equity holders of the
Company (cents) (168) (2.12) (0.79) (2.56)
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) (715) (2.12) (0.26) (2.03)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Reviewed Audited
as at as at as at
31 Aug 2013 31 Aug 2012 28 Feb 2013
R’000 R’000 R’000
ASSETS
Non-current assets 4 506 5 469 5 617
Current assets 9 897 18 385 10 892
TOTAL ASSETS 14 403 23 854 16 509
EQUITY AND LIABILITIES
Capital and reserves (29 246) (15 899) (21 058)
Non-current liabilities 736 23 955 565
Current liabilities 42 913 15 798 37 002
TOTAL EQUITY AND LIABILITIES 14 403 23 854 16 509
Total number of ordinary shares in issue for the 390 134 390 134 390 134
period (in thousands)
Treasury shares (in thousands) (3 771) (3 771) (3 771)
Total number of ordinary shares in issue excluding 386 363 386 363 386 363
treasury shares (in thousands)
Net asset value per ordinary share (cents)
(7.57) (4.11) (5.45)
Net tangible assets value per ordinary share (cents)
(7.59) (4.26) (5.53)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Reviewed
six months six months Audited
ended ended year ended
31 Aug 2013 31 Aug 2012 28 Feb 2013
R’000 R’000 R’000
Net cash (outflow)/inflow from operating activities (2 923) (335) 3 724
Net cash (outflow) from investing activities (107) (187) (473)
Net cash (outflow)/inflow from financing activities (37) 459 (89)
Net (decrease)/increase in cash and cash
equivalents (3 067) (63) 3 163
Cash and cash equivalents at the
beginning of the period 4 563 1 401 1 401
Cash and cash equivalents at the end of the
period 1 496 1 338 4 563
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 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)
Total comprehensive loss for the period - - - - (6 866) (6 866)
Revaluation of equipment - - - 1 707 - 1 707
Balance as at 28 February 2013 39 18 083 (9 923) 1 707 (30 964) (21 058)
Total comprehensive loss for the period - - - - (8 188) (8 188)
Realisation of revaluation reserve - - - (446) 446 -
Balance as at 31 August 2013 39 18 083 (9 923) 1 261 (38 706) (29 246)
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 2013
Total Revenue 533 6 634 1 204 1 424 5 827 15 622
Total (loss)/profit before tax for
Reportable segment (228) 1 134 524 512 (9 957) (8 015)
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)
28 February 2013
Total revenue 1 724 29 821 2 569 4 099 6 584 44 797
Total (loss)/profit before tax for
Reportable segment (315) 6 280 1 319 1 946 (17 458) (8 228)
COMMENTARY ON THE GROUP RESULTS
OPERATIONAL PERFORMANCE
During the period under review, 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, improve the service offering and win new business. The performance of existing contracts has been
stable. Implementation of new contracts in a timely manner remained priority in this period. New clients have been
signed on E-pay as part of our service offering.
FINANCIAL PERFORMANCE
Revenue for the period under review compared to the previous corresponding period has decreased by 40% to
R15.6 million as the Ekurhuleni contract came to an end, as of December 2012. The efforts by management to
improve efficiency and our service offering have led to a reduction in costs. Earnings before, interest, tax,
depreciation and amortisation (“EBITDA”) have also declined during the period, with a negative EBITDA of
R4.6 million being reported.
After deducting depreciation and finance costs, a loss before tax of R8.0 million has been recorded compared to
R3.1 million recorded in the corresponding period. Cost of sales was reduced during the period by R2.3 million
compared to the corresponding period, this improvement is as a result of cost containment and efficient deployment
of resources.
The headline loss per share declined to a loss of 2.12 cents compared to a loss of 0.26 cents for the previous
corresponding period which ended 31 August 2012.
The movement in non-current assets relates mainly to depreciation recorded during the period. The current portion
of interest bearing borrowings increased significantly compared to the previous corresponding period which ended 31
August 2012. This is mainly due to the cumulative redeemable preference shares of R24.5 million that are
redeemable at the end of November 2013. Management are currently negotiating with holder of the cumulative
redeemable preference shares.
In spite of the effort put into debt collection, some clients did not adhere to their terms. This had an impact on
Trade and other payables at the end of the period. The group utilized cash of R2.9 million from operations and
invested R0.1 million in existing operations. At the end of the period the Group’s closing cash balance was R1.5
million.
PROSPECTS
The 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.
The new contracts commissioned included Mandeni, Mnquma and Sundays River. The performance of the Gauteng
contract is expected to increase in the next few months with production increasing and E-pay being added.
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 28 February 2013. These results as set out in this report have been prepared in terms
of IAS 34 – Interim Financial Reporting, the Companies Act, 2008 (Act 71 of 2008), as amended, the SAICA Financial
Reporting Guides, as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as
issued by Financial Reporting Standards Council and the Listings Requirements of JSE Limited.
Subsequent events
As announced on SENS on 22 November 2013, the board of directors of TCS passed a resolution on the 21st
November 2013 to place TCS in business rescue. This is primarily due to 2450 preference shares that are
mandatorily redeemable on 29 November 2013. The Emfuleni contract came to an end at the end of November 2013.
Even though management believes that the Company is financially distressed they also believe that the Company has
good prospects and can turn around.
Going Concern
Given the losses reported in the prior year and the current year, the Group had a negative equity position of
R29 million at end of the interim period. Notwithstanding the excess of liabilities over assets, included in current
liabilities is R34 million in respect of cumulative redeemable preference shares and accrued dividends thereon. In
terms of IFRS these are classified as liabilities, but in terms of Section 4 of the Companies Act their redemption and
payment are subject to the solvency and liquidity tests. The financial information have been prepared 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 Group has reduced operation costs and expect revenues to grow at some of its major contracts. TCS has been
robust in marketing its products and responding to needs of clients. Management believes that future prospects of
potential business give reason to believe that the company has a future and can turn around. The Board believes
that as a result of the above, positive cash flows will be realised in the foreseeable future. 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.
Modified review report
BDO South Africa Incorporated has issued a modified review report on the reviewed condensed consolidated results
of the Company for the six months ended 31 August 2013. 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 Disclaimer of opinion and Report on Other Legal and Regulatory Requirements paragraphs as contained in the
review report are set out below:
Basis for Disclaimer of Opinion
As indicated in the going concern note , the company incurred a net loss for the period ended 31 August 2013
of R8.2 million and, as at that date its total liabilities exceeded its total assets by R29 million. The company
continues to incur losses. Subsequent to year-end, the company has applied for voluntary business rescue.
These conditions give rise to material uncertainty which may cast significant doubt about the company’s ability
to continue as a going concern and, therefore that it may be unable to realise its assets and discharge its
liabilities in the normal course of business and whether further impairments are required to the company’s
assets. In these circumstances, we were unable to obtain sufficient appropriate audit evidence to confirm or
dispel whether it is appropriate to prepare the financial statements on the going concern basis
Disclaimer of opinion
Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we have not
been able to obtain sufficient appropriate audit evidence to provide a basis for an opinion. Accordingly we do not
express an opinion on the financial statements.
Report on Other Legal and Regulatory Requirements
In accordance with our responsibilities in terms of sections 44(2) and 44(3) of the Auditing Profession Act, we report
that we have identified certain unlawful acts or omissions committed by persons responsible for the management of
the Company which constitute reportable irregularities in terms of the Auditing Profession Act, and have reported
such matters to the Independent Regulatory Board for Auditors. The entity has submitted the Value Added Tax
returns (VAT 201) and Employees Tax returns (EMP 201) to South African Revenue Services but no payment has
been made to settle the outstanding liability.
Contingent liabilities
The former landlord has issued summons against the Company for R1.0 million. The Company has defended the
action. The Board do not believe that any amounts are due to the former landlord and have not provided for this
amount in the results.
PREPARATION OF THE REVIEWED INTERIM RESULTS
The reviewed interim financial statements have been prepared under the supervision of the Acting Financial Director
Mr OML Ramagaga, B.Com (Hons), CA (SA).
DIRECTORATE
Subsequent to the year end, Mrs V Zitumane was not re-elected at the Annual General Meeting and as such is no
longer a director of TCS.
By order of the Board
D Mafu
Non-Executive Chairman
2 December 2013
Directors
D. Mafu* (Chairman), L Sipoyo, (CEO), L Ramagaga (Executive), 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 Road & 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 Road & 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: 02/12/2013 09:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
