Ja well, no fine

Finweek English Edition - - Companies & Markets - MARC HASEN­FUSS

TO­TAL CLIENT SER­VICES (TCS), the ad­min­is­tra­tive soft­ware spe­cial­ist, was trad­ing at 38c on the AltX this time last year when spec­u­la­tors seemed quite en­am­oured with its traf­fic fine pro­cess­ing sys­tems. Last week TCS was bob­bing un­con­vinc­ingly around the 7c to 10c/share level.

Looking at the com­pany’s year endFe­bru­ary 2009 re­sults, you might be for­given for think­ing the mar­ket is overly scep­ti­cal of TCS. While turnover was down 12% to R100m, the drop in op­er­at­ing prof­its was re­stricted to just 4% to R13m. Head­line earn­ings came in at a some­what un­der­whelm­ing 1,21c/share, but TCS could at least claim strong net cash in­flows of R13m. In fact, its bank bal­ance of R16m pro­vides the ma­jor un­der­pin to its 6c/share net as­set value.

But there’s gear­ing. The com­pany’s bal­ance sheet is so abridged it’s dif­fi­cult to see the ex­act na­ture of the debt from the re­sults to end-Fe­bru­ary 2009. Non-cur­rent in­ter­est-bear­ing li­a­bil­i­ties stand at R27m, with an­other R24m listed un­der cur­rent li­a­bil­i­ties. While the an­nual re­port should cast more light on those num­bers, its in­ter­est bill of R4,5m sug­gests a fair por­tion of bor­row­ings.

While that R4,5m may not sound too ter­ri­ble mea­sured against op­er­at­ing prof­its of R13m, re­mem­ber TCS will in the near fu­ture have to ser­vice its debt without the re­as­sur­ing cash flows from its large Cape Town traf­fic ad­min­is­tra­tion con­tract (re­cently lost to HCI sub­sidiary, Syn­tell).

That means a fair chunk of its fu­ture prospects hinge on TCS quickly se­cur­ing new tenders from other mu­nic­i­pal­i­ties and cap­i­tal­is­ing on the Ad­min­is­tra­tion Ad­ju­di­ca­tion of Road Traf­fic Of­fences (AARTO) project – which is ex­pected to be im­ple­mented at least next year.

There’s some prom­ise. TCS – as part of an in­ter­na­tional con­sor­tium led by In­ter Toll SA – has been short-listed in the Gaut­eng Open Road Tolling ten­der and has a co­op­er­a­tion agree­ment with Gi­ji­maAst.

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