| Tue 30 Nov 2010, 17:31 | | TCS - Total Client Services Limited - Reviewed group results for the six |
|
TCS
TCS
TCS - Total Client Services Limited - Reviewed group results for the six
months ended 31 August 2010
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 GROUP RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2010
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Reviewed six Unaudited Audited
months ended six months year ended
31 August ended 28 February
2010 31 August 2009 2010
% change R`000 R`000 R`000
Revenue (55.3) 21 460 47 975 71 735
Gross profit (56.5) 20 149 46 377 34 449
Net finance costs (1 799) (1 687) (1 796)
(Loss)/Profit before (2 497.8) (8 656) 361 (15 076)
taxation
Income tax expense 2 092 (708) 2 442
Loss after tax (1 791.6) (6 564) (347) (12 634)
Other comprehensive - 2 453 - -
income for the
period (net of
income tax)
TOTAL COMPREHENSIVE (1 084.7) (4 111) (347) (12 634)
LOSS FOR THE PERIOD
Loss attributable
to:
Owners of the (6 564) (347) (12 634)
company
Non-controlling - - -
interest
Earnings per share
Basic and diluted (1 788.9) (1.70) (0.09) (3.27)
loss per ordinary
share (cents)
Headline and diluted (1 230) (1.33) (0.10) (1.38)
headline loss per
ordinary share
(cents)
Total weighted 386 364 386 368 386 368
average number of
shares in issue
(`000)
Reconciliation of
headline earnings
Loss after tax (6 564) (347) (12 634)
Adjusted for:
Goodwill impairment 1 385 - 6 752
(Gain)/Loss on 75 (55) (6)
disposal of
property, plant and
equipment
Scrapping of assets - - 777
Taxation effect (21) 15 (216)
Headline loss for (1 224.3) (5 125) (387) (5 327)
the period
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Reviewed Unaudited Audited
six months six months year
ended ended ended
31 August 31 August 28
2010 2009 February
2010
R`000 R`000 R`000
ASSETS
Non-current assets 17 373 25 953 15 468
Current assets 17 323 37 292 26 580
TOTAL ASSETS 34 696 63 245 42 048
EQUITY AND LIABILITIES
Capital and reserves 997 17 394 5 108
Non-current liabilities 20 858 30 210 23 724
Current liabilities 12 841 15 641 13 216
Total Liabilities 33 699 45 851 36 940
TOTAL EQUITY AND LIABILITIES 34 696 63 245 42 048
Ordinary shares in issue (`000) 390 135 390 135 390 135
Treasury shares in issue (`000) (3 771) (3 771) (3 771)
Total number of shares in issue 386 364 386 364 386 364
excluding treasury shares (`000)
Net asset value per ordinary share 0.26 4.50 1.31
(cents)
Net asset value per ordinary share 0.26 4.46 1.30
(cents) including treasury shares
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
Reviewed Unaudited Audited
six months six months year ended
ended ended 28
31 August 31 August February
2010 2009 2010
R`000 R`000 R`000
Net cash (outflow)/inflow from (1 098) 1 841 2 083
operating activities
Net cash (outflow) from investing (2 343) (673) (736)
activities
Net cash (outflow) from financing (3 426) (1 763) (7 029)
activities
Net decrease in cash and cash (6 867) (595) (5 682)
equivalents
Cash and cash equivalents at the 10 414 16 096 16 096
beginning of the period
Cash and cash equivalents at the end 3 547 15 501 10 414
of the period
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share BEE Retained
R`000 capital premium reserve earnings
Balance as at 1 March 2009: 39 18 276 (9 923) 9 543
Treasury shares * (194) - -
Total comprehensive loss for - - - (347)
the period
Balances as at 31 August 39 18 082 (9 923) 9 196
2009
Total comprehensive loss for - - - (12 286)
the period
39 18 082 (9 923) (3 090)
Balance as at 28 February
2010
Total comprehensive loss - - - (6 564)
for the period
Balance as at 31 August 2010 39 18 082 (9 923) (9 654)
* Less than R1 000
Revaluation Attributable Minority Total
R`000 Reserve to holders interest Equity
of company
Balance as at 1 March - - 17 935
2009: 17 935
Treasury shares - - (194)
(194)
Total comprehensive loss - (347) - (347)
for the period
Balances as at 31 August - - 17 394
2009 17 394
Total comprehensive loss (12 286) - (12 286)
for the period
- - 5 108
Balance as at 28 5 108
February 2010
Total comprehensive loss 2 453 (4 111) - (4 111)
for the period
Balance as at 31 August 2 453 - 997
2010 997
* Less than R1 000
COMMENTARY ON THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX
MONTHS ENDED 31 AUGUST 2010
Basis of preparation and accounting policies
The reviewed condensed interim financial information for the six months ended
31 August 2010 has been prepared in accordance with IAS 34, `Interim
Financial Reporting` and in the manner required by the Companies Act of South
Africa and the Listings Requirements of JSE Limited. The reviewed interim
condensed financial report should be read in conjunction with the annual
financial statements for the year ended 28 February 2010. During the year the
accounting policy for camera accessories was changed from the cost model to
the revaluation model. Except for the above, the accounting policies adopted
are consistent with those of the annual financial statements for the year
ended 28 February 2010.
Going concern
Management has performed a cash flow analysis based on forecasts of the
Profit and Loss account for the remainder of the current financial period. In
preparing the forecasts, certain assumptions were made. The most significant
of these assumptions is that cash flow from new contracts entered into will
be realised as expected and that cost savings implemented will result in
decreased operating costs. Management is however confident that the
assumptions are realistic and have been based on historical data and the
actual results of the first six months of the current financial period. Based
on this cash flow analysis, management is of the view that there is no going
concern constraints for the period under review.
Independent review
BDO South Africa Incorporated, independent auditor to Total Client Services
Limited, has reviewed the condensed financial statements contained in this
interim report and has expressed an unmodified review conclusion on the
results for the six months ended 31 August 2010. Their review report is
available for inspection at the company`s registered office.
Operating segments
The group has five reportable segments as reflected below. Operating segments
have been determine by management based on 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.
CONDENSED SEGMENT REPORT OF THE GROUP
Southern Northern North/West Coastal Total
Corporate
R`000 R`000 R`000 R`000 R`000 R`000
31 August 2010
Total revenue 4 309 8 034 3 970 2 515 2 632 21 460
Total (1 459) 1 276 1 289 541 (10 303) (8 656)
(loss)/profit
before tax for
reportable
segments
31 August 2009
Total revenue 34 036 3 455 4 114 3 147 3 223 47 975
Total 16 688 806 1 190 652 (18 975) 361
profit/(loss)
before tax for
reportable
segments
28 February 2010
Total revenue 43 326 8 992 9 544 5 891 3 981 71 735
Total 11 727 2 386 1 834 2 172 (33 194) (15 076)
profit/(loss)
before tax for
reportable
segments
FINANCIAL PERFORMANCE
TCS continues to experience a decrease with regards to the finalisation of
income on traffic offences, which affects revenues. The industry has been
somewhat affected with the delays of the 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. In addition, production and finalisation of traffic offences were
further hampered during the FIFA 2010 World Cup period due to officers being
redeployed and offender disposable income being channelled to other areas.
The consolidated turnover of the group decreased by 55.3% to R21.46 million
over the reporting period (August 2009: R47.98 million). The total
consolidated loss after tax for the reporting period increased to R6.56
million (August 2009: R0.35 million). Included in this loss was a further
impairment of goodwill relating to the City of Cape Town contract of R1.385
million.
Loss per share increased to 1.70 cents per share (August 2009: 0.09 cents).
Headline losses per share increased to 1.33 cents per share (August 2009:
0.10 cents). Net asset value per share decreased by 94.2% to 0.26 cents per
ordinary share (August 2009: 4.50 cents).
OPERATIONS
The largest contributor to the decline in revenues during the period related
to the City of Cape Town contract. This contract was extended in order for
TCS to finalise all offences that were in the system up to 30 June 2009 and
comes to an end on 31 December 2010. In addition, the roll-out of the
Ekurhuleni Metropolitan Police Department tender has progressed slower than
anticipated due to delays in the granting of site approvals.
As announced in TCS` 2010 Annual Report, the company secured the tender to
supply and fit camera equipment to 20 police vehicles for the Limpopo
province. Revenues from the fitment of equipment to five vehicles were
included in the results for the period under review.
New contracts were rolled out during the period including Cederburg, Khara
Hais and Overstrand. Management is pleased with the progress and
contributions being made from these contracts to date.
As announced in our 2010 Annual Report, the contracts for Mogale City and
Emfuleni Municipality were extended for 18 months and 12 months respectively.
The rationalisation and re-alignment process of TCS is nearing completion,
with the objective being to ensure that our business model and strategy is
aligned to achieve maximum profitability, effectiveness, and cost savings.
The fair value of the preference share was recalculated at the amortised
cost, using an effective interest rate of 17.45%. The group successfully
negotiated repayment terms for an additional 3 years. In terms of the new
agreement the group has an obligation to retain the first R8 million profit
after tax for repayment.
PROSPECTS
The board of directors of TCS have taken steps to improve the equity
situation of the group. These include :
- Relocation of the head office with resultant cost savings;
- Reduced head count;
- Rationalisation of regional service centres;
- Aggressive roll-out of the Ekurhuleni contract;
- Minimise loss-making contracts; and
- Aggressive cost-saving initiatives
The benefits of the above initiatives are expected to be realised within the
next few months and the directors believe the group will have an improved
equity position at year-end.
SUBSEQUENT EVENTS
Further to the announcement on SENS on 30 June 2010 wherein it was announced
that the company entered into an agreement with Mvelaphanda Holdings
(Proprietary) Limited ("Mvelaphanda") to extend the redemption date of the 2
600 cumulative, redeemable preference shares issued to Mvelaphanda on 27
November 2007 for a further three years. The board of directors of TCS are
pleased to announce that the restructuring fee has been significantly
reduced. Of the R3 million which was paid to Mvelephanda, R1.5 million was
used to settle a portion of the capital balance and the remaining R1.5
million represents the restructuring fee. These adjustments are reflected in
these reviewed condensed interim financial results. The directors are not
aware of any other material events that have occurred between the end of the
interim period and the date of this report.
CONTINGENCIES
The company is currently in dispute with Syntell (Proprietary) Limited
("Syntell") regarding the fee to be paid by the company to Syntell for the
use of two cameras on the City of Cape Town contract. The amount being
claimed by Syntell is R1.8 million (inclusive of VAT). The directors are of
the view that the fee due is R0,3 million (inclusive of VAT) and have
provided for this amount. An arbitration hearing has been set for December
2010 where the quantum of the fee payable by the company to Syntell will be
determined.
The directors are not aware of any other significant subsequent events that
occurred between the date of authorisation of the results and the reporting
date.
CHANGE TO THE BOARD OF DIRECTORS
At the annual general meeting of the company held on Friday, 29 October 2010,
Mr Jacobus Hermanus Taljaard retired by rotation.
By order of the board
Lindikhaya Sipoyo
Executive Chairman
30 November 2010
Directors
L Sipoyo, (Chairman), JMO Smit (Financial Director), E Page, V Zitumane*, D
Mafu*
(*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
Transfer secretaries:
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61763, Marshalltown, 2107)
Company website:
www.tcsonline.co.za
Date: 30/11/2010 17:31:01 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.
