Total Client Services (TCS) expects the Administrative Adjudication of Road Traffic Offences (Aarto) Act to bolster its revenue when it finally comes into effect, but in the meantime it is in a negative equity position.
The company yesterday published its results for the six months to August and reported higher revenue, which grew 16%, to R26 million. However, its net loss widened 15%, to R3 million.
Aarto has been repeatedly delayed and a new implementation date is yet to be announced. TCS says it expects that Aarto will enhance its revenue and growth prospects, as it has aligned its business strategy, products and services in line with the requirements of the Act.
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.
Concerns
TCS says, during the first half, it continued to tackle the challenges "at hand" to take advantage of opportunities in the market. "Management's focus during the period has been to continue to consolidate the existing contracts and improve the service offering."
The group says performance improved over the period, and the impact is reflected in the financial results. TCS explains that it trimmed costs, which led to a 201% gain in earnings before tax, interest, depreciation and amortisation, which was R2.8 million.
Its headline loss per share improved 65%, to a loss of 0.26c a share, compared to 0.72c in the first half of 2011. The group ended the year with R1.3 million in cash.
However, as a result of its half-year loss, and carrying the loss from last year, it has a negative equity position of R15.9 million. While the board has prepared its results on a going concern basis, believing that the group will generate enough cash to pay its debts, auditor BDO SA issued an emphasis of matter relating to the going concern status.
TCS is also facing a claim from a former landlord, which has issued summons for an amount of R1 million. The matter will be heard next April in the North Gauteng High Court.
In addition, the South African Revenue Service has disallowed a R3.5 million loss and costs of R600 000 relating to an irregularity on a subsidiary's bank account. TCS believes the amounts are deductible and has appointed Webber Wentzel Attorneys to assist.
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