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TCS
TCS
TCS - Total Client Services - Unaudited group results for the six months ended
31 August 2009
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")
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2009
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX
MONTHS ENDED 31 AUGUST 2009
Unaudited Unaudited Audited
six months six months year ended
ended ended 28 February
31 August 2009 31 August 2008 2009
% change R`000 R`000 R`000
Revenue (13.42) 47 975 55 415 99 771
Operating profit (85.36) 2 048 13 995 7 849
before net finance
costs and tax
Net finance costs (1 687) (2 197) (4 628)
Profit before (96.94) 361 11 798 3 221
taxation
Income tax expense (708) (2 654) (3 813)
Profit after tax (103.79) (347) 9 144 (592)
Other comprehensive
income for the -
period (net of income - - -
tax)
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD (103.79) (347) 9 144 (592)
Profit/(Loss)
attributable to:
Owners of the company (347) 9 144 (592)
Non-controlling - - -
interest
Earnings per share
Basic earnings/(loss) (103.83) (0.09) 2.35 (0.15)
per share (cents)
Headline (104.26) (0.10) 2.35 1.20
earnings/(loss) per
ordinary share
(cents)
Total weighted 386 368 388 856 388 674
average number of
shares in issue
(`000)
Reconciliation of
headline earnings
Profit/(Loss) (347) 9 144 (592)
attributable to
ordinary share
holders
Adjusted for:
Goodwill impairment - - 5 149
(Gain)/Loss on (55) 18 156
disposal of property,
plant and equipment
Taxation effect 15 (5) (44)
Headline (104.23) (387) 9 157 4 669
earnings/(loss) for
the period
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST
2009
Unaudited Unaudited Audited
six months six months year ended
ended ended 28 February
31 August 2009 31 August 2009
2008
R`000 R`000 R`000
ASSETS
Non-current assets 25 953 37 443 29 153
Current assets 37 292 48 983 44 654
TOTAL ASSETS 63 245 86 426 73 807
EQUITY AND LIABILITIES
Capital and reserves 17 394 29 073 17 934
Non-current liabilities 30 210 33 155 31 517
Current liabilities 15 641 24 198 24 356
Total Liabilities 45 851 57 353 55 873
TOTAL EQUITY AND 63 245 86 426 73 807
LIABILITIES
Ordinary shares in issue 390 135 390 135 390 135
(`000)
Treasury shares in issue (3 771) - (2 771)
(`000)
Total number of shares in 386 364 390 135 387 364
issue excluding
treasury shares (`000)
Net asset value per 4.50 7.45 4.63
ordinary share (cents)
Net asset value per 4.46 7.45 4.60
ordinary share (cents)
including treasury
shares
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOW FOR THE SIX MONTHS ENDED
31 AUGUST 2009
Unaudited Unaudited Audited
six months six months year ended
ended ended 28 February
31 August 2009 31 August 2009
2008
R`000 R`000 R`000
Net cash inflow from operating 1 841 8 081 14 381
activities
Net cash (outflow) from (673) (938) (1 993)
investing activities
Net cash (outflow)/inflow from (1 763) 447 690
financing activities
Net (decrease)/increase in cash (595) 7 590 13 078
and cash equivalents
Cash and cash equivalents at 16 096 3 018 3 018
the beginning of the period
Cash and cash equivalents at 15 501 10 608 16 096
the end of the period
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS
ENDED 31 AUGUST 2009
Shar Share BEE Retaine Attributa Minority Total
e premium reserve d ble to interest Equity
capi earning holders
tal s of
company
Balance as at 38 17 382 (9 923) 10 135 - 17 632
1 March 2008: 17 632
Share issue - (827) - - - (827)
expenses (827)
written off
against equity
Share issue 1 3 123 - - 3 124 - 3 124
Profit for the - - - 9 144 9 144 - 9 144
period
Other - - - - - -
comprehensive -
income for the
year
Balances as at 39 19 678 (9 923) 19 279 - 29 073
31 August 2008 29 073
Share issue - (794) - - - (794)
expenses (794)
written off
against equity
Share issue * (38) - - (38) - (38)
Loss for the - - - (9 736) (9 736) - (9 736)
period
Other - - - - - -
comprehensive -
income for the
year
Treasury * (570) - - (570) - (570)
shares
39 18 276 (9 923) 9 543 - 17 935
Balance as at 17 935
28 February
2009
Treasury * (194) - - (194) - (194)
shares
Loss for the - - - (347) (347) - (347)
period
Other - - - - - -
comprehensive -
income for the
year
Balance as at 39 18 082 (9 923) 9 196 - 17 394
31 August 2009 17 394
* Less than R1 000
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX
MONTHS ENDED 31 AUGUST 2009
Basis of preparation and accounting policies
The accounting policies applied in the preparation of these condensed financial
statements, which are based on reasonable judgments and estimates, are in
accordance with International Financial Reporting Standards ("IFRS") and are
consistent with those applied in the annual financial statements for the year
ended 28 February 2009. These condensed financial statements as set out in this
report have been prepared in terms of IAS 1 - Presentation of Financial
Statements, IAS 34 - Interim Financial Reporting, the Companies Act, 1973 (Act
61 of 1973), as amended, and the Listings Requirements of JSE Limited.
The interim results have not been audited or reviewed by the group`s auditors.
Operating segments
The group has three reportable segments as reflected below. Management has
determined the operating segments based on the monthly reports reviewed by
the management committee of TCS. Financial and personnel resources are allocated
according to the needs of the various segments in order to implement the
strategy and operating plans of the company, as agreed upon during the budgeting
process. Comparative segment information has been presented in conformity with
the transitional requirements of IFRS 8 - Operating Segments. Since the change
only impacts on presentation and disclosure aspects, there is no impact on
earnings per share.
CONDENSED INTERIM SEGMENT REPORT OF THE GROUP FOR THE SIX MONTHS ENDED 31 AUGUST
2009
Cape Town Other Total
Corporate
R`000 R`000 R`000 R`000
31 August 2009
Total revenue 12 3 224 47
32 054 697 975
Total profit/(loss) before 17 167 2 169 (18 975)
tax for reportable segments 361
31 August 2008
Total revenue 34 652 17 958 2 805 55 415
Total profit/(loss) before 19 170 7 282 (14 654) 11 798
tax for reportable segments
28 February 2009
Total revenue 67 207 27 231 5 333 99 771
Total profit/(loss) before 30 826 10 227 (37 832) 3 221
tax for reportable segments
FINANCIAL PERFORMANCE
TCS is still experiencing the effects of the decrease in disposable income in
the economy, resulting in the deterioration in the finalisation of income on
traffic offences, which affects the revenues projected. The industry has been
somewhat affected with the communication of the intended national roll-out of
the Administrative Adjudication of Road Traffic Offences Act ("AARTO") which has
resulted in uncertainty within the sector in enforcing the finalisation of
tenders, which also affected the performance of the local authorities.
The consolidated turnover of the group decreased by 13.42% to R47.98 million
over the reporting period (August 2008: R55.42 million). The total consolidated
loss after tax for the reporting period increased by 103.79% to a loss of R347
thousand (August 2008: Profit of R9.14 million).
Earnings per share decreased by 103.83% to a loss of 0.09 cents per share
(August 2008: Profit of 2.35 cents). Headline earnings per share decreased by
104.25% to a loss of 0.10 cents per share (August 2008: Profit of 2.35 cents).
Net asset value per share decreased by 39.60% to 4.50 cents per ordinary share
(August 2008: 7.45 cents).
Significant events during the reporting period
The group`s bid to continue to provide traffic contravention systems and
services to the City of Cape Town was unsuccessful due to pricing. However, the
existing contract was extended for an 18-month period to 31 December 2010 in
order for TCS to finalise all offences that were in the system up to 30 June
2009.
A summons was issued against TCS by Labat Africa Limited in respect of dividends
outstanding. A full and final settlement agreement was reached subsequent to
year-end. The full amount of the settlement was provided for as a liability in
the 2009 financial year and was paid in the current reporting period.
A further settlement agreement has been reached between TCS and a former
consultant subsequent to the year-end in terms of which TCS agreed to settle the
former consultant`s claim against the company. The full amount that has been
provided for as a liability at 28 February 2009 was settled in full in the
current reporting period.
On 12 August 2009, shareholders were advised on SENS that the forensic
investigation conducted by PricewaterhouseCoopers Forensic Services regarding
the irregular transactions in the bank account of the wholly owned subsidiary,
Total Computer Services (Proprietary) Limited, had been concluded. It is
suspected that an external syndicate was involved in misappropriating an amount
of R4.96 million, of which R3.66 million has not yet been recovered.
A related party loan receivable to the value of R1.66 million was impaired as at
28 February 2009. Legal guidance is being sought in this respect to recover the
loan.
OPERATIONS
The awarding of the Ekurhuleni Metropolitan Police Department tender, the
largest metropolitan municipality in South Africa, to TCS will enhance the
performance and sustainability of the company. This tender involves the supply
of a traffic contravention management system, including the supply of camera
equipment, to the municipality.
The rationalisation and re-alignment process in the organisation is nearing
completion, the objective being to ensure that our business model and strategy
is aligned to achieve maximum profitability, effectiveness, and ultimate cost
saving. Revenue enhancement strategy to collect and finalise outstanding
offences has been escalated to drive income generation.
PROSPECTS
The National Governments` AARTO project was directed through a project
definition phase that has been formulated to ensure that a strategic
implementation is achieved encompassing all the role players within the
industry. The development of our systems and products takes a strategic path, as
we understand the deliverables and definitions of the ultimate roll out of
AARTO.
This bodes well for the industry as clients will now plan their objectives and
requirements, and the tender specifications will be streamlined and consistent,
which has been a major problem in the past.
We anticipate that the next six months will set the path for the future and we
are very enthusiastic on the anticipated prospects and benefits of the imminent
implementation of AARTO.
SUBSEQUENT EVENTS
The board of directors of TCS are not aware of any material events that have
occurred between the end of the interim period and the date of this report.
CHANGE TO THE BOARD OF DIRECTORS
At the annual general meeting of the company held on Friday, 30 October 2009, Ms
Francina E Jonker, who retired by rotation, was not re-elected as financial
director of the company. The necessary steps are being taken to fill the role of
the financial director as soon as possible.
By order of the board
Shaheed Mohamed
Chief Executive Officer
17 November 2009
Directors
L Sipoyo*, (Chairman), AS Mohamed (Chief Executive Officer), JH Taljaard (Chief
Operating Officer), E Page, V Zitumane*
(*Non-executive)
Registered office:
20 Regency Drive, Route 21 Corporate Park, Irene, Pretoria, 0153
(PO Box 853, Wingate Park, 0157)
Company Secretary:
Probity Business Services (Proprietary) Limited
Third Floor, The Mall Offices, 11 Cradock Avenue
Rosebank, 2196
Auditors:
PricewaterhouseCoopers Inc. Chartered Accountants (SA)
2 Elgin Road, Sunninghill, 2157
(Private Bag X36, Sunninghill, 2157)
Designated Adviser:
Merchantec Capital
Transfer secretaries:
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61763, Marshalltown, 2107)
Company website:
www.tcsonline.co.za
Date: 17/11/2009 13:01:28 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.
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