Total Client Services (TCS), which hopes to grow revenue when the much-delayed Administrative Adjudication of Road Traffic Offences (Aarto) law finally comes into effect, is now looking to grow its client base.
On Friday, it reported revenue down 9% for the year to February, while its loss widened, noting that the "year under review was not absent of challenges".
TCS said performance during the year was satisfactory at major sites, although there were some sites which experienced challenges that affected performance. The listed group supplies road traffic equipment to traffic officials to measure speed, traffic flow patterns and detect law-breakers.
Since the start of the 2013 financial year, it has been focused on trying to extract maximum value from its current contracts, and TCS has developed solutions and entered into joint venture agreements with "reputable organisations" to grow its offering to new and existing clients, it says.
"This will enable the group to penetrate into other markets and thus diversify from a risk point of view. The group is well positioned to deliver on this strategy."
TCS also expects Aarto to enhance its 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."
Aarto has been repeatedly delayed and a new implementation date is yet to be announced. With the Aarto system, drivers earn demerit points when they commit traffic offences, and this will be reflected on the National Contravention Register on eNatis. After 12 demerits are gained, a driver's licence will be suspended. Pilot projects are being run in Johannesburg and Pretoria.
Cost containment
TCS reported revenue 9% lower, at R44.8 million, in the year to February off the back of a contract with Ekurhuleni coming to an end. Its loss widened 67%, to R9.9 million, although its operations were cash-generative, and it ended the year with cash and cash equivalents of R4.6 million.
TCS was spun out of Labat and listed separately in April 2008. It provides integrated traffic law enforcement solutions, including technology, proprietary application software and administration services to local authorities and provincial administrations.
During the year, TCS focused on containing costs, and cost of sales and operating expenses dropped 8%. "The effort made to increase performance at our major sites proved fruitful. The Gauteng project has been commissioned and has promising prospects. Our payment channel (ePay) was launched in the previous financial year and has been very successful."
Writing in the 2012 annual report, chairman Lindikhaya Sipoyo explains that TCS has officially registered as a debt collector and launched its direct online payment facility, ePay.
Cause for concern
However, auditor BDO SA issued a modified review report on TCS's results and included an emphasis of matter as TCS was sued for R1 million by a former landlord, and judgment on the issue is expected in "due course".
TCS does not believe the amount is due and has not provided for it.
In addition, the South African Revenue Service disallowed a R3.5 million loss and costs of R600 000 relating to irregularities on a subsidiary's bank accounts, which TCS does not believe can be recovered and the tax asset has been reversed.
Its shares closed flat at 2c on Friday.
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