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TCS waits on Aarto
Wednesday, 20 June 2012 00:00
Written by Nicola Mawson
JSE-listed Total Client Services (TCS) says the implementation of the Administration Adjudication of Road Traffic Offences (Aarto) Act will enhance its revenue and growth prospects.
TCS provides law enforcement solutions to traffic departments around the country. Its products have been designed to comply with Aarto, which will replace the current traffic law enforcement legislation in SA. The Aarto implementation has repeatedly been delayed.
TCS says the year to February “was a particularly difficult one for the group”. It experienced severe cash flow constraints, due to delayed payments and one of its major clients – Limpopo Province – being placed under administration.
The group’s revenue gained 3.6%, to R49.2 million, and its total comprehensive loss for the year narrowed 48.8%, to R6 million. Its headline loss improved from R9.6 million in 2011 to R5.2 million.
TCS says it continued to improve its systems and rolled out productivity improvements, such as handheld licence scanners. It successfully launched its payment channel in the latter part of the year and has already recorded R500 000 through the service. Since the start of the 2013 financial year, its strategy has been to extract as much value as possible from its Ekurhuleni and Emfuleni contracts and make sure the recently-won pilot project for the Gauteng Province is rolled out as planned.
However, its auditor, BDO SA, has issued an emphasis of matter around the company’s ability to continue to operate as a going concern. BDO points out that TCS’ landlord has issued summons against the company for R1 million.
In addition, the South African Revenue Service has disallowed losses of R2.5 million and associated costs of R600 000 relating to an irregularity on the bank account of a subsidiary company that took place in 2010, the auditing firm points out.
TCS’ directors do not believe that it owes anything to the former landlord and have not provided for the R1 million claim in its results. The group has also hired Webber Wentzel Attorneys to assist with the tax issue.
The directors prepared the results 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”.
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