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 CONDENSED CONSOLIDATED PROVISIONAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME % Change Note Reviewed Year ended 28 Feb 2015 Reviewed Year ended 28 Feb 2014 Revenue (32) 19 232 28 293 Cost of sales 36 (8 157) (12 681) Gross Profit (29) 11 075 15 612 Other Income 1 7 380 15 Operating Expenses 23 (22 513) (29 423) Loss from operations 71 (4 058) (13 796) Finance costs 57 (1 817) (4 227) Loss before taxation 67 (5 875) (18 023) Taxation 216 448 (387) Loss for the period 71 (5 427) (18 410) Other comprehensive income Revaluation of equipment 1 602 - Deferred tax on revaluation (448) - Total comprehensive loss for the year 77 (4 273) (18 410) Loss attributable to: Equity holders of the company 71 (5 427) (18 410) Non-controlling interest - - Total comprehensive loss attributable to: Equity holders of the company 77 (4 273) (18 410) Non-controlling interest - - Reconciliation of loss to headline loss Loss after tax 71 (5 427) (18 410) Adjusted for: Loans Written Off/Forgiven (5 000) - Insurance Refund (978) - Asset Impairment - 10 Loss on disposal of equipment 60 41 Tax effect of the above - (3) Headline loss for the period 38 (11 345) (18 362)
Basic loss per ordinary share attributable to the equity holders of the Company (cents) Weighted average number of ordinary shares in issue in thousands 71 (1.40) (4.76) 386 697 386 363 Headline loss per ordinary share (cents) 38 (2.93) (4.76) CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Notes Reviewed Year ended 28 Feb 2015 Reviewed Year ended 28 Feb 2014 ASSETS Non-current assets 3 864 2 621 Property, Plant and Equipment 2 2 653 2 621 Intangible Assets 4 1 211 - Current assets 4 737 5 905 Trade and other receivables 3 878 4 657 Cash and cash equivalents 859 1 248 TOTAL ASSETS 8 601 8 526 EQUITY AND LIABILITIES Capital and reserves (31 368) (39 468) Share Capital 3 19 122 18 122 BEE reserves (9 923) (9 923) Revaluation Reserve 1 829 1 044 Equity Portion of Loan Option 6 11 374 - Retained earnings (53 770) (48 710) Non-current liabilities 23 859 58 Borrowings 6 23 859 58 Current liabilities 16 111 47 936 Current tax payable 1 467 1 467 Borrowings 6 1 531 24 529 Trade and other payables 5 13 113 21 940 TOTAL LIABILITIES 39 969 47 994 TOTAL EQUITY AND LIABILITIES 8 601 8 526
Total number of ordinary shares in issue at the year-end (in thousands) 391 135 390 135 Treasury shares (in thousands) (3 771) (3 771) Total number of ordinary shares in issue excluding treasury shares (in thousands) 387 363 386 363 Net asset value per ordinary share (cents) (8.10) (10.22) Net tangible assets value per ordinary share (cents) (8.41) (10.22) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Reviewed Year ended 28 Feb 2015 Reviewed Year ended 28 Feb 2014 Net cash (outflow) / inflow from operating activities (3 290) (3 082) Net cash (outflow) / inflow from investing activities (1 419) (169) Net cash (outflow) / inflow from financing activities 5 098 (64) Net (decrease) / increase in cash and cash equivalents (389) (3 315) Cash and cash equivalents at the beginning of the period 1 248 4 563 Cash and cash equivalents at the end of the period 859 1 248
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share Capital Share Premium BEE Reserve Revaluation Reserve Equity portion of share options Retained Income Total Balance as at 1 March 2013 39 18 084 (9 923) 1 707 - (30 963) (21 058) Loss for the period - - - - - (18 410) (18 410) Realisation of revaluation reserve - - - (663) - 663 - Revaluation of equipment - - - - - - - Balance as at 28 February 2014 39 18 084 (9 923) 1 044 - (48 710) (39 468) Shares Issued 1 999 - - - - 1 000 Loss for the period - - - - - (5 427) (5 427) Realisation of revaluation reserve - - - (369) - 369 - Equity portion of share options - - - - 11 374-11 374 Revaluation of equipment - - - 1 154 - - 1 154 Balance as at 28 February 2015 40 19 083 (9 923) 1 829 11 374 (53 770) (31 368)
COMMENTARY ON THE GROUP RESULTS OPERATIONAL PERFORMANCE During the period under review, TCS continued to deal with the challenges at hand in order to take advantage of opportunities in the market. Management s focus during this period was to continue to consolidate the existing contracts, improve the service offering and secure new business. The aim was to move away from non-performing or unsustainable contracts and focus on sustainable business. Although there are notable losses in the period under review, it needs to be understood that these losses were compounded by the challenges brought about by the Business Rescue process in 2014. Although the Business Rescue process added value and enabled the restructuring of the Company, the impact it had on general operations should be taken into consideration when considering the performance. The negative perception in the market had a definite impact on current and new business, and also allowed opportunity for competitors to take advantage of the situation. Following release from Business Rescue in August 2014, the Company faced further challenges in continuing with the internal restructuring process, the re-alignment of the basic business model and the restoration of faith amongst clients. FINANCIAL PERFORMANCE Revenue for the year under review compared to the previous year has decreased by 32% to R19.2 million. This can be largely attributed to the Limpopo and Gauteng contracts coming to an end during the period. The efforts by management to improve efficiency and the service offering started to deliver results with certain cost reductions noted. Earnings before, interest, tax, depreciation and amortisation ( EBITDA ) improved on the 2014 result, with a negative EBITDA of R2.0 million reported. After deducting depreciation and finance costs, a loss before tax of R5.9 million has been recorded compared to R18 million recorded in the prior year. Cost of sales reduced during the year by R4.5 million compared to the corresponding year, this change reflects the decline in revenue, the results of cost containment efforts and efficient deployment of resources. The headline loss per share reduced to 2.93 cents compared to a loss of 4.76 cents for the prior year ending 28 February 2014. The movement in non-current assets relates mainly to the valuation and addition of new developed software. The reduction in current assets reflects the reduced cash balances and trade receivables at year end. Trade and other payables of R13.1 million includes regular trade payables of R2.4 million and SARS liabilities of R7.5 million. These SARS liabilities are those accumulated debts recorded during the Business Rescue period (up to August 2014) and the accumulated taxes until year end. At the end of the year the Group s closing cash balance was R0.9 million. PROSPECTS The Administration Adjudication of Road Traffic Offences Project ( AARTO ) has been delayed and a new date has not as yet been announced. It is anticipated that AARTO will enhance the Company s revenue and growth prospects. TCS has aligned its business strategy, products and services in accordance with the requirements of AARTO and our systems are fully compliant. The Company introduced, and aims to continue with, a more focussed approach based on superior software, technology and equipment. The market provides sustainable targets for the TCS Group of companies with the potential to achieve measured growth.
Achievements in this regard already include the introduction of new products to the market, being: own reengineered Artimas fixed radar camera, own new TCS CAPTURE mobile camera, handheld devices, new Windows based Traffic Management System, the Pound Management System and the On Board Automatic Number Plate recognition systems. These products, together with other new innovations, will play a significant role in the re-focussed TCS. NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1. Other income: The other income of R7.4 million recorded for the period under review, included the following significant items: R5.0 million loan write-off in Total Client Services in accordance with the business rescue plan. R1.4 million recovery of doubtful debt in Total Computer Services R0.9 million related to an insurance refund received NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 2. Property, plant and equipment Opening Balance Additions Disposals Depreciation Impairment Revaluation Closing Balance Group 2015 Furniture and fittings 146 489 56 713 - (66 906) - - 136 296 Motor vehicles 242 143 - (48 995) (95 365) - - 97 783 Office equipment 78 830 - - (48 175) - - 30 655 IT equipment 454 308 109 212 (36 862) (224 116) - - 302 542 Camera Accessories 1 698 793 - - (1 215 116) - 1 601 707 2 085 384 Total 2 620 563 165 924 (85 857) (1 649 ) - 1 601 707 2 652 661 Group 2014 Furniture and fittings 217 500 - - (71 011) - - 146 489 Motor vehicles 340 974 - - (98 831) - - 242 143 Office equipment 128 184 - - (49 354) - - 78 830 IT equipment 497 872 169 486 - (213 050) - - 454 308 Camera Accessories 3 694 726 - (40 936) (1 954 997) - - 1 698 793 Total 4 879 256 169 486 (40 936) (2 387 243) - - 2 620 563 Revaluation assumptions: Management performed a revaluation at February 2015 year end on camera equipment that were still in use. The revaluation was based on the depreciated replacement cost approach, with the replacement cost obtained from external suppliers and taking cognisance of the camera s current and total expected useful lives. This resulted in a gross increase in the camera carrying value of R2.3 million.
3. Share Capital Figures in Rand Authorised 500 000 000 (2014: 500 000 000) Ordinary shares of R0.0001 (2014: R0.0001) each 2015 2014 50 000 50 000 Issued 391 134 690 (2014: 390 134 690) ordinary shares of R0.0001 each 39 114 39 014 Share premium 19 276 000 18 276 000 Treasury shares (192 869) (192 869) 19 122 245 18 122 145 All shares are fully paid. 3 771 484 (2014: 3 771 484) of the ordinary share capital of Total Client Services Limited were held by their subsidiary, Total Computer Services Proprietary Limited as at 28 February 2015. Reconciliation of number of shares issued: Shares in issue at the beginning of the year 390 134 690 390 134 690 Shares issued during the year 1 000 000 - Closing Balance 391 134 690 390 134 690 4. Intangible assets Reconciliation of Intangible Assets Additions Accumulated Amortisation Accumulated Impairment Carrying Value Group 2015 Computer software Internally generated 1 253 034 (41 768) - 1 211 266 Total 1 253 034 (41 768) - 1 211 266
5. Trade and other payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are initially recognised at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Group 2015 2014 Trade payables 2 647 341 2 722 183 Amounts received in advance 1 304 489 1 398 613 Preference shares dividends and interest accrual - 11 270 000 SARS liabilities 8 552 844 5 800 646 Other payables - 207 814 Accrued leave pay 607 856 540 702 13 112 531 21 939 958 The accrual for dividends and interest on the preferential shares were adjusted in accordance with the Business Rescue plan and now included in the Mvela borrowings balances (Refer note 6). SARS liabilities reflects VAT and PAYE, as well as interest and penalties on these amounts. According to the Business Rescue plan, repayment of this debt was due to start from 1 January 2015. The Company engaged SARS prior to January 2015 to start negotiations for a more favourable settlement of these debts. At the date of this report, settlement has been reached with SARS whereby the Company is required to pay an amount of R500k as settlement for all debt up to, and including March 2017. This settlement amount is payable before the end of June 2017. 6. Borrowings Borrowings are initially recognised at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Figures in Rand Group 2015 2014 Instalment sale agreements 29 062 87 013 Redeemable preference shares * - 24 500 000 Primary loan * 21 345 798 Other loans ** 4 014 888-25 389 748 24 587 013 Current Instalment sale agreements 29 062 28 760 Redeemable preference shares - 24 500 000 Primary loan 1 502 151 Other loans - - 1 531 213 24 528 760 Non-Current Instalment sale agreements - 58 253
Primary loan 19 843 647 - Other loans 4 014 888-23 858 535 58 253 * Redeemable preference shares / Primary loan The Group issued 2600 cumulative redeemable preference shares with a par value of R1 per share on 29 November 2007. 150 Cumulative preference shares with a par value of R1 per share were redeemed in March 2010 for R1 500 000. The remaining shares were mandatorily redeemable on 29 November 2013, and paid dividends at 12% annually. In November 2013, the company entered business rescue. In terms of the business rescue plan, the outstanding redeemable preference shares was dealt with as follows: R5 000 000 was written off Nominal Values R5 000 000 was converted to a senior loan, repayable over 3 years at 10% interest per annum. Repayment of capital and interest was scheduled to commence on 1 March 2015. The Company was not in a position to start with the repayments. Repayment of this loan remains suspended and the loan remains subordinated until the parties are in a position to renegotiate the terms. 5 000 000 The remaining amount owing was converted to a subordinated loan, subordinated in favour of other creditors. This loan was interest free for the first 12 months. After the first 12 months, the loan became convertible, at the option of the creditor, to ordinary shares at R0.01c per share. If not converted to ordinary shares, the loan became repayable over 3 years commencing only once the senior loan of R5 million has be repaid. Interest will accrue at the prime interest rate. 25 770 000 30 770 000 ** Other loans Nominal Values The Group required and received funding to support the recovery and stabilizing period during and following the business rescue process of 2014. This funding was provided in the form of loans with suspended repayment terms and which are subordinated to other creditors. The Company is not required to start repayments of these loans until it has sufficient cash to do so. The loans were provided by: Mvelaphanda through its subsidiary RHW Southern Africa Holdings (Pty) LTD Repayment of this, in terms of the original loans, have been suspended by the financier until the Company has the financial resources to start repayment or until an alternative agreement can be reached. This loan was interest free up to year end. 1 150 000 Slade Investments (Pty) Ltd 1 000 000 - As part of the business rescue plan This loan was interst free for the first 12 months, whereafter the provider of the loan would have the option to convert to ordinary shares at R0.01c per share. Should this option not be exercised, the loan became repayable over 12 months at the prime interest rate. - Additional loans 2 066 692 Repayment of this, in terms of the original loans, have been suspended by the financier until the Company has the financial resources to start repayment or until an alternative agreement can be reached. These loans accrues interest at the prime interest rate. 3 066 692
The carrying values of these borrowings in the financial statements are different than the nominal values as a result of the initial recognition adjustments to reflect fair value of the options to convert the loans to equity. BASIS OF PREPARATION Statement of compliance The condensed consolidated financial statements are prepared in accordance with the Listings Requirements of the JSE Limited ( JSE Listings Requirements ) for provisional reports and the requirements of the Companies Act of South Africa, 2008 (Act 71 of 2008), as amended. The JSE Listings Requirements require reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of the condensed consolidated financial statements are in terms of IFRS and consistent with those of the annual financial statements for the year ended 28 February 2013 and the condensed results for the year ended 29 February 2014, except for the adoption of new, improved and revised standards and interpretations which became effective, which had no material effect on the financial results. The directors take full responsibility for the preparation of the financial information and the financial information has been correctly extracted from the underlying financial information. The reviewed condensed financial statements have been prepared under the supervision of the Financial Director, Mr C Els. Business rescue process and subsequent events As per the announcement released on SENS on 22 November 2013, the board of directors of TCS ( the Board ) deemed TCS to be financially distressed as contemplated in Chapter 6 of the Companies Act, 71 of 2008, as amended ( the Companies Act ) and accordingly, on 21 November 2013 resolved that business rescue proceedings commence, and that TCS be placed under supervision in terms of section 129 of the Companies Act. In this regard, Mr Piers Marsden of Matuson & Associates was appointed as the Company s business rescue practitioner ( Business Rescue Practitioner ) on 9 December 2013. An announcement was released on SENS on 2 May 2014, informing shareholders of the publication of a proposed business rescue plan ( Business Rescue Plan ) and included a notice of meeting of creditors, other holders of a voting interest and shareholders to be held on 19 May 2014 to consider the Business Rescue Plan. As per the announcement released on SENS on 19 May 2014, the Business Rescue Plan was approved by the requisite majority of creditors, other holders of a voting interest and shareholders. Subsequent to the announcement released on SENS on 19 June 2014, wherein shareholders were advised that the Company submitted its Schedule 13 application to the JSE to enable the Company to raise capital through the issue of new shares, the application was approved by JSE Limited. The Business Rescue Practitioner confirmed on 14 August 2014 that the Business Rescue Plan had been substantially implemented and that the control of the Company effectively reverted back to the Board. The Business Rescue Plan included the below restructuring of the Statement of Financial Position. The proforma financial effects of the specific issue of shares as part of the business rescue and subsequent restructuring was released in an announcement on 9 June 2016. Equity Injection - Slade Investments CC ( Slade )
The Company required a cash injection. The amount injected into the Company would be used as working capital. The Company s financial model indicated a cash requirement of R2million. Slade injected R2 million into the Company as follows: 1. R1 million by subscribing to 100 million shares at a fixed price of 1 cent per share. This constituted 20.4% of the issued share capital post the issues of the new shares. 2. R1 million loan, which will be interest free for the first twelve months. Slade has the option to convert the loan to ordinary shares at a fixed price of 1 cent per share after twelve months, subject to all the JSE Listing Requirements and Companies Act regulations being met at that date. Should the option to convert not be exercised the loan will become repayable over 12 months at the prime interest rate. Debt Restructuring and Forgiveness - Mvelapanda Holdings Proprietary Limited ( Mvela ) A total amount of R35.77 million was due and payable to Mvela relating to the preference shares and accrued interest thereon. The repayment/distribution of the preference shares were subject to section 46 of the Companies Act including the solvency and liquidity test. An amount of R5 million was written off. The remaining preference share capital and accrued interest were converted to loans as indicated below which are not subject to section 46 of the Companies Act requirements. Terms and Repayment of Remaining Debt The remaining debt of R30.77 million owing to Mvela was structured as follows: R5 million to be a senior loan repayable monthly over 3 years at 10% interest per annum with repayment of capital and interest commencing on 1 March 2015. R25.77 million loan subordinated in favour of all creditors. Interest free for the first 12 months commencing on adoption of the Business Rescue plan. After 12 months have the option to convert into ordinary shares at the fixed price of 1 cent per share, subject to all the JSE Listing Requirements and Companies Act regulations being met at that date. Should the option to convert not be exercised the loan will become repayable over 3 years commencing only once the senior loan has been repaid. Interest will accrue at the prime interest rate. South African Revenue Services (SARS) The tax debts of R7.9 million owing to SARS was addressed as follows: The amount, including interest but excluding penalties, plus all tax debts up to the date of release in August 2014, will be payable in equal instalments over 30 months starting on 1 January 2015. After release from Business Rescue in August 2014, the Company engaged with SARS to reach agreement on the final settlement amount and to seek relief on the payment terms. This process was ongoing and not concluded at the end of the period under review. At the date of this report the Company has received and accepted a final settlement offer from SARS, which requires payment of R500,000 to settle all SARS outstanding amounts up to and including March 2017. Going Concern During the term certain significant contracts came to an end which contributed to the Group making a loss after tax of R5.4 million for the year. As at the year ended 28 February 2015, the Group had a negative equity position of R31 million.
Even though borrowings to the value of R22.5 million has been subordinated in favour of other creditors, the Group s Statement of Financial Position still reflects a technical insolvent position with liabilities exceeding assets. The Company was also not able to settle its borrowing repayments as they became due, but is was able to renegotiate and extend the repayment of the borrowings with the financiers so that these loans have been subordinated in favour of other creditors and that repayment would only be required once the Company has sufficient cash resources to be able to settle the loan repayments as they become due. Ekhurhuleni and Emfuleni contracts historically contributed revenue of approximately R20 million per annum and the loss of these contracts during 2013, largely contributed to the reported drop in revenue. During the 2015 financial period, revenue declined further, mainly due to the negative effects of the Business Rescue process and the contracts for Limpopo Province and Gauteng Province coming to an end. These contracts contributed approximately R10.8 million in annual revenue. These losses, together with the operating restrictions experienced during, and after, the Business Rescue process, continued to have a severe effect on the trading during the year from March 2014 until the date of this report. Restrictions mainly relate to limited cash for operations, as well as reservations amongst existing clients and new clients in the market to engage in, or increase business activities with the Company. However, since the discharge from Business Rescue, as announced on SENS on 29 August 2014, the Company has managed to restructure the business to a sustainable level. The Company also managed to secure new profitable contracts, including full service contracts for Polokwane (September 2014), Tlokwe (May 2015) and Buffalo City (December 2015). It also includes a relationship with the Namibian Police, whereby TCS will be providing services and equipment to support the traffic law enforcement expansion in Namibia over the next few years. Focus also remains on equipment technology advances and service delivery to improve income from existing contracts and confidently pursue new markets and contracts. In addition to the revenue initiatives, the cost saving processes started during the Business Rescue period continued during 2015 and 2016, and will continue as part of an ongoing profitability improvement process. The Board believes that as a result of the above, positive operating cash flows will be realised in the foreseeable future. The Board determined the future cash flows of the Group when it assessed the going concern status. Although due care has been exercised in the preparation of these forecasts, any forecast is based on certain assumptions which may or may not materialise in future. Any forecast financial information contained in the year end results has not been reviewed and reported on by the Group s auditors in accordance with paragraph 8.40(a) of the Listings Requirements. However, the Board is of the opinion that the mentioned positive developments combined with management processes and initiatives implemented, makes the forecasts realistic and achievable. The Group has come through an extremely difficult trading period and cash flow remains under constant pressure. The key components of the Group continuing as a going concern is the ability to provide sophisticated management systems and equipment to the market, maintain a low cost base, selectively approach new tenders, considering strategic partnerships and co-operation agreements and ensuring existing contracts are profitable. The forecasts are based on the following assumptions: - no deterioration in the current market conditions; - municipalities continue to outsource the administration of traffic violations; - the Company is able to reduce and maintain its operational expenses in line with sales levels; - no deterioration in the payment and collection cycle; - the Company continues to have the ongoing support of all its stakeholders, especially key staff and financiers; - no repayment of loans is required during the foreseeable future; and - the Company s JSE listing to be re-instated. Significant negative change in these areas of assumptions will require swift action and adjustment by the Company in order to continue as a going concern.
These conditions underline the ever-present uncertain and variable circumstances in the market. Failure by the Company to effectively operate under these conditions, will give rise to a material uncertainty which may cast significant doubt about the Company s ability to continue as a going concern and, therefore that it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial information has been prepared 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. Modified review report The condensed consolidated financial statements for the year ended 28 February 2015 have been reviewed by the Company's auditor, BDO South Africa Incorporated, who has expressed a modified review conclusion on the results. A copy of their review report is available for inspection at the Company s registered office. The auditor s report does not necessarily report on all of the information contained in these financial results. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor s engagement they should obtain a copy of the auditor s report together with the accompanying financial information from the issuer s registered office. The Disclaimer of Opinion and Report on Other Legal and Regulatory Requirements paragraphs as contained in the review report are set out below: Basis for Disclaimer of Opinion As indicated in the going concern section, the Group incurred a net loss for the year ended 28 February 2015 of R5.4 million (2014: loss of R18.4 million) and, as at that date its total liabilities exceeded its total assets by R31.4 (2014: R39.5 million). The Business Rescue Plan was approved and substantially implemented by the Business Rescue Practitioner. The going concern of the Group is significantly dependent on a number of factors. The going concern note also indicates that these conditions indicates the existence of a material uncertainty which may cast significant doubt on the Group s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. In these circumstances and as a result of the significance thereof, we have not been able to obtain sufficient appropriate audit evidence to confirm or dispel whether it is appropriate to prepare the financial statements on the going concern basis. Disclaimer of opinion Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an opinion. Accordingly we do not express an opinion on the financial statements. Report on Other Legal and Regulatory Requirements In accordance with our responsibilities in terms of sections 44(2) and 44(3) of the Auditing Profession Act, we report that we have identified certain unlawful acts or omissions committed by persons responsible for the management of the Company which constitute reportable irregularities in terms of the Auditing Profession Act, and have reported such matters to the Independent Regulatory Board for Auditors. The matters pertaining to the reportable irregularities are as follows: The entity has submitted Income Tax returns (IT14), Value Added Tax returns (VAT 201) and Employees Tax returns (EMP 201) to the South African Revenue Services but no payment has been made to settle the outstanding liability. Contravention of Section 30 of the Companies Act, 2008 by failing to prepare annual financial statements within six months after its financial year end.
Contravention of Listing Requirement 3.19 of the JSE Limited Listing Requirements which requires issuers to distribute a notice of the annual general meeting and annual financial statements to all holders of securities and to submit to the JSE Limited within six months after its financial year end. Contravention of Section 66(2)(b) of the Companies Act, 2008 by failing to have the minimum number of directors as prescribed. Contravention Section 94 (6) of the Companies Act by failing to appoint a person to fill any vacancy on the audit committee within 40 business days after the vacancy arises. Potential contravention of Section 22 and Section 29 of the Companies Act, 2008 as the company was unable to settle liabilities as it became due and is technically insolvent. Contingent liabilities There are no contingent liabilities at the end of the reporting period. DIRECTORATE The following changes to the Board occurred during the year under review, up to and including the date of this report: Director Detail Date Lucas Ramagaga Resignation 2 May 2014 (last working date) Christo Els Appointment 8 May 2014 Nathi Chonco Resignation 11 December 2014 Piet Nieman Appointment 9 December 2015 Francois Smit Appointment 9 December 2015 Dumisani Mafu Passed away 9 July 2016 By order of the Board P Nieman Acting Non-Executive Chairman 22 May 2017 Directors L Sipoyo, (CEO), C Els (Executive: Financial Director), P Nieman**, F Smit* (*Independent Non-executive) (** Non-executive) Registered office: Futurum Office Park, Units C1A and D2A Lenchen Avenue Centurion, 0157 (P.O. Box 863, Wingate Park, 0153) Company secretary: Merchantec Proprietary Limited 2nd Floor, North Block Hyde Park Office Towers Cnr 6th Road & Jan Smuts Ave Hyde Park, 2196
Auditors: BDO South Africa Incorporated Summit Place Office Park 221 Garsfontein Road Ashlea Gardens Pretoria 0181 Designated Adviser: Merchantec Capital 2nd Floor, North Block Hyde Park Office Towers Cnr 6th Road & Jan Smuts Ave Hyde Park, 2196 Transfer secretaries: Computershare Investor Services Proprietary Limited Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196 (PO Box 61051, Marshalltown, 2107) Company website: www.tcsonline.co.za www.viewfines.net