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TCS
TCS
TCS - Total Client Services - Commencement of Listing on AltX
TOTAL CLIENT SERVICES LIMITED
(Formerly Labat Traffic Solutions (Proprietary) Limited)
Incorporated in the Republic of South Africa
(Registration number 1998/025018/06)
Share code: TCS & ISIN: ZAE000116208
("TCS" or "the company")
Commencement of Listing on AltX
The directors of TCS are pleased to announce that the company listed on the
alternative exchange of the JSE yesterday, 7 April 2008.
In terms of the private placement of ordinary shares in the issued share capital
of the company at an issue price of 47 cents, details of which are contained in
the prospectus issued on 27 February 2008 ("the prospectus"), 6 565 659 ordinary
shares were subscribed for and allotted.
The financial effects of the allotment and placement of 6 565 659 ordinary
shares in terms of the private placement are detailed below.
FORECAST INCOME STATEMENTS
The summarised forecast financial information of TCS for the financial years
ending 29 February 2008 and 28 February 2009, the preparation of which is the
responsibility of the directors, is set out below. The forecast financial
information is contained in the prospectus and has been reviewed and reported on
by the reporting accountants. Such report is contained in the prospectus and
will be available for inspection.
Save for the Pro forma weighted average number of ordinary shares in issue, the
Pro forma earnings per ordinary share, the Pro forma adjusted earnings per
ordinary share and the Pro forma dividends per ordinary share no information
differs between what was published in the prospectus and the information
presented below.
Extracts from the forecast income statements
Forecast Forecast
February February
2008 2009
R`000 R`000
Revenue 118 629 161 660
Cost of sales (1 299) (1 546)
Gross profit 117 330 160 114
Other income 87 96
Operating costs (84 904) (111 648)
IFRS 2 charge (16 100) -
Operating profit 16 413 48 562
Interest received 377 2 200
Finance costs (3 367) (4 592)
Profit before taxation 13 423 46 170
Taxation (14 167) (13 927)
Consolidated group (744) 32 243
profit/(loss) after tax
Dividends paid 5 000 5 342
Profit after tax attributable
to:
Equity holders of the company (7 312) 32 243
Minority interest 6 568 -
Reconciliation of adjusted
earnings
Earnings attributable to (7 312) 32 243
ordinary equity holders
Adjustments:
IFRS 2 charge 16 1001 -
Management contract 3 6532 -
cancellation costs
STC on share repurchase 2 6003 -
STC on special dividend 1 8004 -
Adjusted earnings attributable 16 841 32 243
to ordinary equity holders
Pro forma weighted average
number of ordinary shares in 383 670 389 649
issue (`000)
Pro forma earnings per ordinary (0.2) 8.3
share (cents)2
Pro forma adjusted earnings per 6.1 8.3
ordinary share (cents)2
Pro forma dividends per 1.3 1.4
ordinary share (cents)
The adjustments detailed above are comprised of the following:
1. IFRS 2: Share Based Payments charge relating to the acquisition of
shares in TCS by Mvela and the subsequent issue of preference shares
in settlement of the specific repurchase;
2. the impact of costs incurred on the cancellation of the management
contracts;
3 STC on the share repurchase from Mvela; and
4. STC on the dividend of R18 million declared.
Notes:
1. The pro forma weighted average number of ordinary shares in issue at
28 February 2007 is based on the increase in and the sub-division of
the ordinary shares in issue at the last practicable date as set out
in paragraph 23.3 of the prospectus after taking into account the
repurchase of shares from Mvela and issue of new shares to Labat,
Mvela and the vendors, as set out in paragraph 23 of the prospectus.
2. The pro forma earnings per share are based on the consolidated profit
of the group, consequently including the minority interest.
3. The assumptions on which the forecast income statements are based are
set out in paragraph 12.2 of the prospectus.
4. The above forecast income statements take into account the effects of
the anticipated issue of ordinary shares detailed in paragraph 12.3 of
the prospectus.
5. The acquisition of the minority interests took place during the 2008
financial year in terms of the restructuring and listing. The dividend
payable is in terms of the shareholders and listing agreements.
6. The anticipated dividend policy of TCS will initially be to maintain a
dividend cover of 6.
Unaudited pro forma income statement and balance sheet assuming
The unaudited pro forma income statement and balance sheet are provided for
illustrative purposes only to provide information about how, subsequent to the
LTS transaction, the acquisition and the regional partner agreement, the
subscription of 6 565 659 ordinary shares in terms of the private placement may
impacted on TCS` results and financial position. Due to the nature of the
unaudited pro forma financial information, it may not give a fair presentation
of the company`s results and financial position after the private placement. The
unaudited pro forma income statement and balance sheet are based on the reviewed
interim results of TCS at 31 August 2007 as set out in Annexure 3 of the
prospectus and reported on by the independent reporting accountants` report in
Annexure 5 of the prospectus subsequent to the LTS transaction, the acquisition
and the regional partner agreement. The unaudited pro forma income statement and
balance sheet are presented in a manner consistent with the basis on which the
historical information has been prepared in terms of accounting policies. The
unaudited pro forma income statement and balance sheet should be read in
conjunction with the independent reporting accountants` report thereon as set
out in Annexure 7 of the prospectus. The directors of TCS are responsible for
the preparation of the unaudited pro forma financial information of TCS.
Unaudited pro forma income statement reflecting the private placement
adjustments
Accrual of
STC on share
Reversal of repurchase,
management preference
Reviewed six fees and dividend Reversal of
months ended contract payable and minority
31 August 2007 cancellation STC thereon interests
R`000 R`0003 R`0004 R`0005
Revenue 56 294 - - -
Cost of sales (699) - - -
Gross profit 55 595 - - -
Other income 516 - - -
Operating costs (42 559) (1 649) - -
IFRS 2 charge - - (16 100) -
Operating Profit 13 552 (1 649) (16 100) -
Interest 137 - - -
received
Finance costs (984) - (1 560) -
Profit before 12 705 (1 649) (17 660) -
taxation
Taxation (3 345) (581) (2 756) -
Consolidated 9 360 (2 230) (20 416) -
group
profit/(loss)
after tax
Attributable to:
Equity holders 5 645 (2 230) (20 416) 3 715
of the company
Minority 3 715 - - (3 715)
interest
9 360 (2 230) (20 416) -
Reconciliation
of headline
earnings:
Profit 5 645 (2 230) (20 416) 3 715
attributable to
ordinary
shareholders
Headline
earnings
adjustments
Profit on sale (63) - - -
of fixed assets
Headline 3 715
earnings 5 582 (2 230) (20 416)
attributable to
ordinary
shareholders
Shares in issue
(`000)
Earnings per
share (cents)
Headline
earnings per
share (cents)
Adjusted
headline
earnings per
share (cents)8
Unaudited
pro forma
income
Pro forma statement
income after
statement adjustments
STC on before Private 31 August
dividends private placement 2007
paid placement adjustments R`000
R`0006 R`000 R`0007
Revenue - 56 294 - 56 294
Cost of sales - (699) - (699)
Gross profit - 55 595 - 55 595
Other income - 516 - 516
Operating costs - (44 208) (3 000) (47 208)
IFRS 2 charge - (16 100) - (16 100)
Operating Profit - (4 197) (3 000) (7 197)
Interest received - 137 - 137
Finance costs - (2 544) - (2 544)
Profit before - (6 604) (3 000) (9 604)
taxation
Taxation (500) (7 182) - (7 182)
Consolidated group (500) (13 786) (3 000) (16 786)
profit/(loss) after
tax
Attributable to:
Equity holders of the (500) (13 786) (3 000) (16 786)
company
Minority interest - - - -
(500) (13 786) ( 3 000) (16 786)
Reconciliation of
headline earnings:
Profit attributable (500) (13 786) (3 000) (16 786)
to ordinary
shareholders
Headline earnings
adjustments
Profit on sale of - (63) - (63)
fixed assets
Headline earnings (500) (13 849) (3 000) (16 849)
attributable to
ordinary shareholders
Shares in issue 383 569 6 566 390 135
(`000)
Earnings per share (3.6) (4.3)
(cents)
Headline earnings per (3.6) (4.3)
share (cents) (3.4)
Adjusted headline 2.3 1.5
earnings per share
(cents)8
Notes:
1. The pro forma income statement has been prepared using the interim
financial statements for the six months ended 31 August 2007.
2. The unaudited pro forma income statement was prepared on the basis that:
2.1 the private placement, in terms of the offer for subscription, was
completed on 1 March 2007 and 6 565 659 ordinary shares offered are
subscribed for; and
2.2 the repurchase of 21.54% of the issued share capital in the company
from Mvela, the subscription by Mvela for 2 600 preference shares in
the company, the buy-out of the minorities in Total Computer Services
ands the cancellation of the rights in and to the management
agreements were effective 1 March 2007; and
2.3 a total of R3 085 860 less transaction costs of R3.8 million, as
disclosed in paragraph 14 of the prospectus, is raised. R0.8 million
of the transaction costs have been capitalised.
Adjustments
3. Represents the reversal of management fees and accrual of contract
cancellation costs. The reversal of management fees net of taxation of R1.4
million has a recurring effect and the cancellation costs of R3.7 million
has a once off effect;
4. Represents IFRS 2: Share Based Payments charge, accrual of STC on the
share repurchase from Mvela and accrual for the dividend payable on the
preference shares issued to Mvela and the STC thereon;
5. Represents the reversal of minority interests in earnings for the year as a
result of the repurchase of 49% of Total Computer Services;
6. Represents STC on the dividends paid to shareholders of Total Computer
Services of R5 million and the issuing of shares to existing shareholders
at their par value in terms of an agreement. A further dividend of R13
million has been declared by Total Computer Services payable to
shareholders prior to the acquisition of the minority shares contingent
upon its earnings for the 6 months to 29 February 2008, which further
dividend has not been adjusted in the pro forma income statement. A total
dividend of R6.6 million has been declared by TCS contingent upon its
earnings for the 6 months to 29 February 2008, which is also not reflected
above.
7. Represents estimated transaction costs to be expensed. No effect has been
given to earnings attributable to funds raised in terms of private
placement as such funds will be invested in growing the business and the
return thereon cannot be determined with certainty; and
8. Adjusted headline earnings per share is adjusted for the following:
- IFRS 2: Share Based Payments charge relating to the acquisition of
shares in -TCS by Mvela and the subsequent issue of preference shares
in settlement of the specific repurchase;
- The impact of costs incurred on the management contracts;
- STC on the share repurchase; and
- STC on the special dividend of R5 million paid
Unaudited pro forma balance sheet reflecting the private placement adjustments
Accrual of
Reversal STC on
Reviewed of share
six management repurchase,
months fees and preference
ended 31 contract dividend
August cancellati payable and Reversal of minority
2007 on STC thereon interests
R`000 R`0003 R`0004 R`0005
Assets
Property, 21 893 - - -
plant and
equipment
Intangible 4 976 - - 4 985
assets
Non current 798 - - -
receivable
Current 44 085 - - -
assets
Total assets 71 752 - - 4 985
Equity and
liabilities
Capital and 37 722 - (28 600) 4 985
reserves
Non-current 4 699 - 26 000 -
liabilities
Deferred 2 390 - - -
taxation
Current 26 941 - 2 600 -
liabilities
Total equity 71 752 - - 4 985
and
liabilities
Number of
ordinary
shares in
issue (`000)
Net asset
value per
ordinary
share (cents)
Net tangible
asset value
per ordinary
share (cents)
Unaudited
pro forma
balance
sheet after
adjustments
Pro forma 31 August
balance 2007
sheet R`000
STC on before Private
dividends private placement
paid placement adjustments
R`0006 R`000 R`0007
Assets
Property, - 21 893 - 21 893
plant and
equipment
Intangible - 9 961 - 9 961
assets
Non current - 798 - 798
receivable
Current (462) 43 623 (714) 42 909
assets
Total (462) 76 275 (714) 75 561
assets
Equity and
liabilities
Capital and (5 462) 8 645 (714) 7 931
reserves
Non-current - 30 699 - 30 699
liabilities
Deferred - 2 390 - 2 390
taxation
Current 5 000 34 541 - 34 541
liabilities
Total (462) 76 275 (714) 75 561
equity and
liabilities
Number of 383 569 6 566 390 135
ordinary
shares in
issue
(`000)
Net asset 2.3 2.0
value per
ordinary
share
(cents)
Net (0.3) (0.5)
tangible
asset value
per
ordinary
share
(cents)
Notes:
1. The reviewed interim financial information of TCS is set out in Annexure 3
of the prospectus.
2. The unaudited pro forma balance sheet was prepared on the basis that:
2.1 the private placement was completed on 31 August 2007 and 6 565 659
ordinary shares offered are subscribed for;
2.2 the repurchase of 21.54% of the issued share capital in the company
from Mvela, the subscription by Mvela for 2 600 preference shares in
the company, the buy-out of the minorities in Total Computer Services
ands the cancellation of the rights in and to the management
agreements were effective 31 August 2007; and
2.3 a total of R3 085 860 less transaction costs of R3.8 million, as
disclosed in paragraph 14 of the prospectus, is raised.
Adjustments
3. Represents the accrual of contract cancellation costs of R3.7 million and
issue of equity in settlement thereof;
4. Represents the share repurchase from Mvela and accrual of STC thereon and
issue of preference shares in settlement of the repurchase;
5. Represents the issue of equity in settlement for acquisition of minority
interests in Total Computer Services. The transaction is treated adopting
the economic entity model in terms of IFRS 3: Business combinations;
6. Represents:
- dividends paid to minority shareholders of Total Computer Services. A
total dividend of R18 million was declared by Total Computer services.
Of the amount declared, R5 million has been paid by Total Computer
Services and the portion received by TCS has been declared on to its
shareholders. No effect has been given to the unpaid dividend of R13
million declared to shareholders of Total Computer Services, prior to
the acquisition of the minority shares, which is dependant upon income
for the year to 29 February 2008. A total dividend of R6.6 million
has been declared by TCS contingent upon its earnings for the six
months to 29 February 2008, which is also not reflected above;
- accrual of STC on the dividend paid of R5 million; and
- issue of shares to existing shareholders at par in terms of an
agreement; and
7. Represents the funds raised in terms of the private placement of R3 085 860
less estimated transaction costs of R3.8 million.
8 April 2008
Designated Adviser
Merchant Sponsors (Proprietary) Limited
Date: 08/04/2008 11:15:16 Produced by the JSE SENS Department.
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