Tsebo - Mediclinic (Pre-Qualification) Submission

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020

2020 2019

R’000 R’000

8. TAXATION - -
South African normal taxation 215 (400)
187
Normal tax 620
- Current year (2 923)
- Prior year over / (under) provision (5 544) (2 312)
70
Foreign withholding tax (8 065)
(2 022)
Deferred tax
- Current year
- Prior year (under) / over provision

The Company does not have assessed losses to be set off against future taxable income.

Reconciliation of tax rate % %

Effective tax rate 1,12 2,07
Permanent differences 20,64 24,52
Foreign withholding tax 0,03
Prior year over / (under) provision for normal tax 0,03 0,64
Loss not recognised for deferred tax 6,95 (0,41)
Prior year (under) / over provision for deferred tax (0,77)
1,11
Standard tax rate 28,00 0,07

28,00

32

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

9. PROPERTY, PLANT AND EQUIPMENT

Investment at Land and Comput
units* buildings equipme
R’000
R’000 R’0
2020

Cost 124 498 54 458 54
13 906 3 621 58
At beginning of the year 3 482 (8 335) (1 39
Additions (65 402) (6 63
Transfers -
Disposals and assets scrapped 32
49 744
At end of the year 76 484

Accumulated depreciation (72 156) (19 573) (6 94
64 271 - 65
At beginning of the year 7 508 13
Disposals and assets scrapped 8 335
Transfers (31 740) (19 980) (5 99
Current charge

At end of the year (32 117) (31 218) (4 98

Net book value 44 367 18 526 (1 75

Included in Property, plant and equipment are Right-of-use assets. For the respective carrying value
Property, plant and equipment include fully depreciated assets that are still in use.

* Investment at units relates to capital expenditure on equipment when a new unit is opened.
** Work in progress relates to capital expenditure on assets which are not yet fully developed o
expenditure relates to all fixed assets which are not included in the other major asset classes.

33

ter Furniture Leasehold Motor WIP and
vehicles other**
ent and fittings improvements R’000 Total
R’000 R’000
000 R’000 R’000

418 4 323 5 369 26 882 12 903 233 851
838 319 - 2 848 23 063 49 595
96) - - (10 989) (17 238)
31) (1 157) - (76 746)
(783) (2 221) (552)
229 3 485 189 462
4 586 27 509 24 425

48) (312) (2 045) (10 536) -- 111 570
564 1 249 783 1 812 - 74 678
399 (4) - - - 17 238
95) (1 411) -- 70 943
(2 479) (9 338)
80) (478) -- 90 597
(3 741) (18 062)
51) 3 007 24 425 98 865
845 9 447
es, refer to Note 29.

or operational. These will be included in a specific asset category when in full use. Other capital

3

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

9. PROPERTY, PLANT AND EQUIPMENT

Investment at Land and Comput
units* buildings equipme
R’000
R’000 R’0
2019

Cost 99 529 - 8
29 281 - 30
At beginning of the year -
Additions 2 438 54 458 -
Transfers - - 45
Right-of-use assets (3 03
Disposals and assets scrapped (6 750)

At end of the year 124 498 54 458 54

Accumulated depreciation (43 254) - (4 29
1 424 - 29
At beginning of the year 1 996 - -
Disposals and assets scrapped - (19 573)
Transfers - (1 62
Right-of-use assets (32 323) (4 00
Current charge

At end of the year (72 156) (19 573) (6 94

Net book value 52 342 34 885 (1 53

* Investment at units relates to capital expenditure on equipment when a new unit is opened.
** Work in progress relates to capital expenditure on assets which are not yet fully developed o
expenditure relates to all fixed assets which are not included in the other major asset classes.

34

ter Furniture Leasehold Motor WIP and
vehicles other**
ent and fittings improvements R’000 Total
R’000 R’000
000 R’000 R’000

844 3 688 4 308 4 010 19 514 131 893
081 1 599 1 489 20 2 408 37 877
(5 663)
- - - (8 101) 83 572
528 - - 24 586 -
35) (964) (428) (1 733) (13 828)
(918)
418 4 323 5 369 26 882 233 852
12 903

94) 65 (953) (2 666) - (51 102)
977 964 428 1 639 - 7 433
- - - 1 996
- - -
27) - (8 836) - (30 037)
04) (1 341) (1 520) (672) (39 859)
-
48) (312) (2 045) (10 536) (111 569)
12 903
30) 4 011 3 324 16 347 122 283

or operational. These will be included in a specific asset category when in full use. Other capital

4

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED 2020 2019
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020 R’000 R’000

10. GOODWILL 879 404 879 404
Carrying value at beginning of period (270 564) -
Impairment of goodwill
Carrying value at end of year 608 840 879 404
The carrying value of goodwill can be reconciled as follows:

Cost Accumulated Net book
impairment value

R’000 R’000 R’000

2020 879 404 (270 564) 608 840

Goodwill

2019 879 404 - 879 404

Goodwill

Goodwill impairment testing
Goodwill acquired through business combinations have been allocated to three cash-generating units,
which are also reporting segments, for impairment testing as follows:

2020 2019

R’000 R’000

Catering Solutions cash generating unit 468 740 557 826
Cleaning Solutions cash generating unit 140 100 140 100
Facilities Solutions cash generating unit 181 478
-
Carrying value at end of year 879 404
608 840

The recoverable amount of the cash generating units has been determined based on a value in use
calculation using cash flow projections from financial budgets approved by the board of directors
covering a five-year period.

The post-tax discount rate applied to cash flow projections ranges from 12.82% - 14.71%, depending
on the cash generating unit.

35

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

10. GOODWILL (Continued)

Key assumptions used in value-in-use calculations

The calculation of value-in-use for all cash generating units is most sensitive to the following

• Budgeted and forecast turnover and EBITDA growth;
• Discount rates; and
• Growth rate used to extrapolate cash flows beyond the budget period.

Budgeted and forecast turnover growth

Budgeted and forecast turnover growth is based on historic levels of growth achieved in the individual
units, as well as management’s understanding of future development of the market and client base.

• For the catering division, the projected growth between periods one and five ranges between

8.5% and 17.5% and the EBITDA margins range between 2.8% and 6.2%.

• For the cleaning division it ranges between 12.1% and 16.3%, while EBITDA margin ranges

between 7.2% and 8.4%.

• For the facilities management division, the projected growth between periods one and five ranges

between -14.0% and 7.4%, while the EBITDA margin ranges between 0.4% and 2.8%.

Discount rate

Discount rates reflect the current market assessment of the time value of money and risks specific to
each cash generating unit. The discount rates were estimated based on the average percentage of a
weighted average cost of capital for the Company, taking the market into account. These rates were
further adjusted to reflect the market assessment of any risk specific to the cash generating unit for
which future estimates of cash-flows have not been adjusted.

Terminal growth rate

The terminal growth rate of 5% is based on management’s and the board of directors’ assessment of the
current state of the base of clients within the company as well as the position of the market at present.

Sensitivity analysis
A 1% increase on the discount rate might result in an additional impairment on Catering (R61,539,727).

Impairment of goodwill
An impairment test was performed and impairment of R270,564,273 was required for the period ended
31 December 2020.

36

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

11. INTANGIBLE ASSETS 2020 2019

Computer software R’000 R’000

Cost 32 161 19 693
Opening balance (9 864) 12 468
Movement during the period
Balance at end of year 22 297 32 161

Accumulated amortisation (15 241) 1 005
Opening balance (9 915) (16 246)
Amortisation
Other movements for the period 9 890 -
Balance at end of year
The carrying value of goodwill can be reconciled as follows: (15 266) (15 241)

Net book value 7 031 16 920
Balance at end of year *

* The amount of intangibles is restated and does not correspond to the figures in 2019 financial statements since
reallocations were made in respect of Computer software. The total balance relates to Computer Software which
were reallocated from Property, plant and equipment to Intangible assets.

37

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED 2020 2019

NOTES TO ANNUAL FINANCIAL STATEMENTS R’000 R’000
AT 31 DECEMBER 2020
540 540
12. INVESTMENTS 4 998 3 790
3 790 3 749
Unlisted investments 4 731 6 949
Impilo Consortium (Pty) Ltd (3 523) (6 908)
9% interest
Lephalale Site Services Partnership 470 470
Opening Balance (Investment)
50% interest in partner's investment/capital 1 939 1 939
Drawings 7 947 6 739
Sethekgo Private Party (Pty) Ltd
15% interest
Tsela Tshwea (RF) (Pty) Ltd
10% interest

Total investments

These investments reflect the directors’ valuation of the fair value of the shares, are unlisted and not
actively traded and there is no intention to dispose of these investments in the near future.

13. LOANS RECEIVABLE 11 708 13 490
Non-current assets - 3 172
16 662
Tsela Tshwea (RF) (Pty) Ltd 11 708
Unsecured loan
Fedics Food Services Namibia (Pty) Ltd
Unsecured loan

Total non-current loans

Current assets 855 -
Fedics Food Services Namibia (Pty) Ltd
Unsecured loan - 1 958
855 1 958
DSFM Vuya Consortium (Pty) Ltd
Unsecured loan

The loan to DSFM Vuya Consortium (Pty) Ltd was settled in November 2020.
The loan to Fedics Food Services Namibia (Pty) Ltd was settled in January 2021.

The loan to Tsela Tshweu Private Company (RF) (Pty) Ltd is unsecured, bearing interest at 13% per
annum. The repayment terms are subject to available cash flows and lender approvals.

38

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

14. INVESTMENT IN SUBSIDIARY COMPANIES

Name of Company Incorporated Percentag Shares Shares
Unlisted e held
% 2020 2019

Thorburn Security Solutions (Pty) Ltd South Africa 100 R’000 R’000
DSVH Facilities Management South Africa 70
Consortium (Pty) Ltd 50 668 231 204
51 * *
Mpilisweni Facilities Services South Africa
65 51 51
Consortium (Pty) Ltd
80 * *
Fedics Ilembe Hospitality Services (Pty) South Africa 60
70 * *
Ltd * *
100 * *
DSFM Vuya Consortium (Pty) Ltd South Africa
100 29 454 29 454
Umongi Facilities Services (Pty) Ltd South Africa 100 * *
70 * *
Umongi Facilities Management (Pty) Ltd South Africa 50 1 1
70 * *
Tirasano Facilities Management 60 * *
* *
(Pty) Ltd South Africa
80 175 260 710
Blue Crane Holdings SA (Pty) Ltd South Africa

Equality Protection Services (Pty) Ltd South Africa

Ilithe Hospitality Services (Pty) Ltd South Africa

Lephalale Site Services Partnership South Africa

Nemus Trade and Invest (Pty) Ltd South Africa

Tsebo Smart (Pty) Ltd South Africa

Although a 50% shareholding is held in certain companies, they are consolidated as subsidiaries at the
ultimate holding company level due to the fact that Tsebo Solutions Group (Pty) Ltd has control.

Further details of the Company’s interest in unlisted subsidiary companies are disclosed in note 30.

* Less than R1 000

39

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

2020 2019

R’000 R’000

15. DEFERRED TAXATION 34 531 17 336
(10 793) (2 065)
Deferred tax assets
Deferred tax liabilities 23 738 15 271
Net deferred tax assets

The deferred tax assets are made up as follows: 12 219 4 871
7 675 11 340
Provisions (1 599) (1 891)
Leave pay provision
Prepayments 289 -
Donations 47 -
Property, plant and equipment 215 -
Income received in advance 22 -
Foreign exchange 3 883 -
Interest rate swaps 987 951
IFRS 16 lease and right-of-use
23 738 15 271

The movement on deferred tax is as follows: 15 271 13 029
Balance at beginning of the year 2 923 2 242
Statement of profit or loss 5 544
Prior year over provision -
23 738
Balance at end of the year 15 271

16. INVENTORIES 275 360
23 071 29 276
Spare parts and tools
Raw material 5 148
Uniform stock 11 066 18 512
Merchandise
34 417 48 296

There are no items included in inventory that are recorded at net realisable value. There was no
inventory written off during the current period.

40

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED 2020 2019

NOTES TO ANNUAL FINANCIAL STATEMENTS R’000 R’000
AT 31 DECEMBER 2020
320 741 414 362
17. TRADE AND OTHER RECEIVABLES 2 347 2 550
9 020 8 620
Trade receivables, net of impairment 36 832 63 421
Payments in advance 6 936 19 946
Deposits 82 1 138
Discount accrued 3 964 28 631
Income accrued
Prepaid insurance 379 922 538 668
Other receivables*

* Other receivables include inter alia prepayments, VAT recoverable, unbilled revenue and sundry debtors.

Allowance account for credit losses (individual and portfolio): (2 219) (1 916)
(4 560) (303)
Opening balance
Charge for the year (6 779) (2 219)

Trade receivables have been pledged as security for certain Group financing (refer Note 20). Both
trade and other receivables are receivable as analysed below and do not attract interest. The fair value
of the trade and other receivables approximates the carrying amount.

As at 31 December 2020, the ageing analysis of trade and other receivables is as follows:

Total Current Past due

30 - 60 60 - 90 > 90
days days days

2020 320 741 195 799 77 207 24 989 22 746
Trade receivables 59 181 20 859 14 565 7 394 16 363
Other receivables
379 922 216 658 91 772 32 383 39 109

41

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

17. TRADE AND OTHER RECEIVABLES (continued)
As at 31 December 2019, the ageing analysis of trade and other receivables is as follows:

Total Current Past due

30 - 60 60 - 90 > 90
days days days

2019 414 362 215 584 122 241 39 010 37 527
Trade receivables 124 306 43 763 32 011 14 959,14 33 573
Other receivables
538 668 259 347 154 252 53 969 71 100

2020 2019

R’000 R’000

18. CASH AND CASH EQUIVALENTS 51 097 143 255
(46 122) (39 260)
Cash and bank
Bank overdraft 4 975 103 995

Cash at bank and on call earn interest at floating rates based on the daily bank deposit rate. The cash
held in bank has been pledged as security for certain Group financing (refer Note 20). Cash and cash
equivalents approximates its fair value.

Investec Bank Limited has provided Tsebo Solutions Group (Pty) Ltd with guarantee facilities to the
extent of ZAR75,000,000, and Nedbank Limited has provided a working capital facility of
ZAR75,000,000. As at the amount drawn was ZAR 46,121,903.

42

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED 2020 2019

NOTES TO ANNUAL FINANCIAL STATEMENTS R’000 R’000
AT 31 DECEMBER 2020
1 201 205 1 201 205
19. SHARE CAPITAL
872 434 -
Ordinary shares
Authorised 2 073 639 1 201 205
1 000 000 ordinary shares of no par value
1 482 382 1 482 382
Issued
Opening balance (1 482 382) -
500 000 ordinary shares of no par value
Increase in share capital - 1 482 382
100 ordinary shares of no par value
Closing balance
500 100 ordinary shares of no par value

Preference shares
Authorised
100 000 cumulative redeemable preference shares of no par value

Issued
Opening balance
100 000 cumulative redeemable preference shares of no par value
Redemption of preference shares
100 000 cumulative redeemable preference shares of no par value

Closing balance

43

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED 2020 2019

NOTES TO ANNUAL FINANCIAL STATEMENTS R’000 R’000
AT 31 DECEMBER 2020
1 594 709 1 738 273
20. SECURED LOANS
Consortium loan (872 434) (270 841)
At beginning of the period - -
Cash movements
Additional loans obtained (872 434) (270 841)
Repaid during the period
Non-cash movements 316 650 127 277
Prior period current portion 140 959 57 878
Commitment fees to be amortised over the loan term (1 369)
Interest charged - 201 466
Commitment fees amortised 164 025 10 261
Less: Current portion of interest bearing debt
At end of the period 11 666 (140 959)
-
1 594 709
1 038 925

Investec Bank Limited, Standard Chartered Bank, Nedbank Limited and Investec Asset Management
granted Tsebo Solutions Group (Pty) Ltd loan facilities of ZAR1,950,700,000 and USD16,600,000.

The revised terms of the loans are as follow:

Facility A:
ZAR925,000,000 drawn down on 31 January 2017, with a floating interest rate, which is the aggregate
of the JIBAR rate plus a margin of 3.75% nominal annual compounded quarterly in arrears. Capital
settlements were made in September 2017 and March 2018, and then bi-annually from March 2019
until the end of the loan term in March 2023. ZAR389,731,019 was settled on 21 December 2020. The
capital settlements due on 31 March 2020 and 30 September 2020 were deferred.

Facility B:
ZAR925,000,000 drawn down on 31 January 2017, with a floating interest rate, which is the aggregate
of the JIBAR rate plus a margin of 4.25% nominal annual compounded quarterly in arrears. This loan
has a 100% bullet facility, payable in March 2023. ZAR451,862,051 was settled on 21 December
2020.

Facility C:
ZAR100,700,000 was granted on 31 January 2017, and increased to ZAR500,000,000 on
21 August 2018. The loan carries a floating interest rate, which is the aggregate of the JIBAR rate plus
a margin of 4.75% nominal annual compounded quarterly in arrears. This loan has a 100% bullet
facility, payable in March 2023. ZAR30,841,099 was settled on 21 December 2020. The unutilised
portion of Facility C was cancelled effective 17 December 2019.

The quarterly interest payments for all the above Facilities were deferred during the 2020 financial

44

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

20. SECURED LOANS (continued)

The following is a list of security provided for all the Consortium loans which will be called upon in
the event of default:

South Africa

• Security Cession entered into between Tsebo Holdings SA Proprietary Limited ("Tsebo
Holdings"), Tsebo Intragroup Proprietary Limited ("Tsebo Intragroup"), Tsebo Solutions Group
Proprietary Limited ("Tsebo Solutions Group") and K2016433179 (South Africa) (RF) Proprietary
Limited (the "Security SPV")*;
• Cession and Pledge Agreement entered into between Tsebo Holdings, Tsebo Intragroup, Tsebo
Solutions Group and the Security SPV;
• Subordination Agreement entered into between Tsebo Holdings, Tsebo Intragroup, Tsebo Solutions
Group and Tsebo Solutions Group AME;
• Counter Indemnity Agreement between Tsebo Holdings, Tsebo Intragroup, Tsebo Solutions Group,
Tsebo Solutions Group Holdings SA, Tsebo Solutions Group AME and the Security SPV;
• Debt Guarantee given by the Security SPV in favour of Investec Bank Limited (acting through its
Corporate and Institutional Banking division) (“Investec”), Nedbank Limited (acting through its
Nedbank Corporate and Investment Banking division) (“Nedbank”), Standard Chartered Bank
(Mauritius) Limited and Standard Chartered Bank Johannesburg Branch;
• General Notarial Bond by Tsebo Holdings in favour of the Security SPV;
• General Notarial Bond by Tsebo Intragroup in favour of the Security SPV;
• General Notarial Bond by Tsebo Solutions Group in favour of the Security SPV;
• Security Cession, Pledge Agreement and Limited Guarantee entered into between the trustees for
the time being of the Tsebo ESOP Trust and the Security SPV;
• Security Cession, Pledge Agreement and Limited Guarantee entered into between Tsebo Solutions
Group Holdings (SA) Proprietary Limited and the Security SPV;
• Security Cession, Pledge Agreement and Limited Guarantee entered into between Jaxson 800
Proprietary Limited and the Security SPV;

Mauritius
• Floating Charge Agreement/s entered into between Tsebo Solutions Group AME and Investec Bank
Limited (acting though its Corporate and Institutional Banking division);
• Pledge of Accounts Agreement between the Security SPV and Tsebo Solutions Group AME;
• Pledge of Accounts Agreement entered into between Tsebo Solutions Group Mauritius and the
Security SPV;
• Pledge of Accounts Agreement entered into between Tsebo Solutions Group International and the
Security SPV;

* K2016433179 (SA) (RF) (Pty) Ltd is a Special Purpose Vehicle that was created to house all the security for the
debt as per the debt agreement.

45

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

20. SECURED LOANS (continued)

Mauritius
• Pledge of Accounts Agreement entered into between Tsebo Egypt Investments (Mauritius)
(formerly Tsebo Catering Mauritius) and the Security SPV;
• Share Pledge Agreement entered into between Tsebo Solutions Group AME, Tsebo Solutions
Group International and the Security SPV;
• Share Pledge Agreement between Tsebo Solutions Group AME, Tsebo Egypt Investments
(Mauritius) (formerly Tsebo Catering Mauritius) and the Security SPV;
• Share Pledge Agreement entered into between Tsebo Solutions Group AME, the Security SPV and
Tsebo Solutions Group Mauritius;
• Share Pledge Agreement entered into between Jaxson 800 Proprietary Limited and the Security
• Pledge of Receivables Agreement entered into between Tsebo Solutions Group AME and the
Security SPV;
• Pledge of Receivables Agreement entered into between Tsebo Solutions Group Mauritius and the
Security SPV;
• Pledge of Receivables Agreement entered into between Tsebo Solutions Group International and the
Security SPV;
• Pledge of Receivables Agreement entered into between Tsebo Egypt Investments (Mauritius)
(formerly Tsebo Catering Mauritius) and the Security SPV;

Sierra Leone
• Cession and Pledge Agreement entered into between Allterrain Services Inc, Martin Ryan and the
Security SPV;

Botswana
• Cession and Pledge Agreement entered into between Tsebo Solutions Group AME, Fedics Food
Services (Botswana) Proprietary Limited and the Security SPV;

BVI
• Equitable Share Mortgage in respect of the shares of Allterrain Services Inc entered into between
Tsebo Solutions Group AME and the Security SPV;
• Deed of Confirmation (relating to the Equitable Share Mortgage in respect of shares in Allterrain
Services Inc) entered into between Tsebo Solutions Group AME, Allterrain Services Inc and the
Security SPV;

Lesotho
• Cession and Pledge Agreement entered into between Tsebo Holdings and the Security SPV;

Swaziland
• Cession and Pledge Agreement entered into between Tsebo Holdings and the Security SPV.

46

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED 2020 2019

NOTES TO ANNUAL FINANCIAL STATEMENTS R’000 R’000
AT 31 DECEMBER 2020
65 477 66 315
21. AMOUNTS DUE TO GROUP COMPANIES

Non-current liabilities
Amounts due to:
- Subsidiaries and subsidiaries of holding companies

Amounts due to group companies include a loan of R91,171,967 which has been advanced by
Tsebo Holdings SA (Pty) Ltd. This loan carries interest at 13% per annum and is payable on demand.

22. TRADE AND OTHER PAYABLES

Trade payables 281 076 476 961
Accrued expenses 48 730 48 532
Payroll accruals 23 274 43 883
Sundry creditors 31 251 12 252
VAT 19 076 32 996
Other payables 6 416 37 554

409 823 652 178

The fair value of the trade and other payables approximates the carrying amount due to the short term
nature of these items.

23. CONTINGENT LIABILITIES

Performance guarantees 57 769 57 412

All performance guarantees have been issued by Investec Bank Limited on behalf of
Tsebo Solutions Group (Pty) Ltd. Guarantees are issued mainly in terms of contract obligations to
Facilities Solutions customers.

47

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

24. PROVISIONS

Payment against Charged to the

Opening balance provision income statement Closing balance

R’000 R’000 R’000 R’000

2020 40 498 (10 104) (3 057) 27 337
15 708 (59 409) 70 616 26 915
Leave Pay (4 877) 13 501
Bonus 98 8 722
Termination 5 423 (8 997) 9 709 6 135
Audit Fees
61 727 (83 387) 90 769 69 109

Payment against Charged to the

Opening balance provision income statement Closing balance

2019 41 865 (11 593) 10 226 40 498
11 164 (97 948) 102 492 15 708
Leave pay
Bonus - (71) 169 98
Termination 6 391 (11 689) 10 721 5 423
Audit Fees
59 420 (121 301) 123 608 61 727

The leave pay provision is raised in accordance with employment contracts. The leave pay provision
will be reversed as employees take leave.

The bonus provision is raised in accordance with employment contracts and with the bonus scheme of
the Group. It is expected that the bonus provision will be utilised by May 2021 whilst the leave pay
provision will reverse as employees take leave. This provision will reverse when the employee is paid.

The termination provision has been created to account for the costs incurred due to the imminent re-
tender process of contracts entered into by the Company. It is expected that this provision will be
utilised by June 2021.

Audit fees provision is raised in accordance with the decision taken by the Audit Committee. It is
expected that this provision will be utilised by May 2021.

Provisions are not discounted for the effect of passage of time.

48

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

25. INTEREST RATE SWAP 2020 2019
Current portion
R’000 R’000

55 326 19 957

The terms of the interest rate swaps are as follows:

Interest rate swaps held with Nedbank Limited:

Notional amount of ZAR308,333,333, effective date 31 March 2017 and termination date
31 March 2021, subject to adjustment in accordance with the Modified Following Business Day
Convention. The JIBAR variable portion was fixed with Nedbank at 7.69%. The re-set dates for
both the floating and fixed rates are 31 December, 31 March, 30 June and 30 September (quarterly)
with an expiry date of 31 March 2021.

Notional amount of ZAR308,333,333, effective date 31 March 2017 and termination date
31 March 2021, subject to adjustment in accordance with the Modified Following Business Day
Convention. The JIBAR variable portion was fixed with Nedbank at 7.75%. The re-set dates for
both the floating and fixed rates are 31 December, 31 March, 30 June and 30 September (quarterly)
with an expiry date of 31 March 2021.

Interest rate swaps held with Standard Chartered Bank:

Notional amount of ZAR308,333,333, effective date 31 March 2017 and termination date
31 March 2021, subject to adjustment in accordance with the Modified Following Business Day
Convention. The JIBAR variable portion was fixed with Standard Chartered Bank at 7.69%. The re-
set dates for both the floating and fixed rates are 31 December, 31 March, 30 June and 30 September
(quarterly) with an expiry date of 31 March 2021.

Notional amount of ZAR308,333,333, effective date 31 March 2017 and termination date
31 March 2021, subject to adjustment in accordance with the Modified Following Business Day
Convention. The JIBAR variable portion was fixed with Standard Chartered Bank at 7.75%. The re-
set dates for both the floating and fixed rates are 31 December, 31 March, 30 June and 30 September
(quarterly) with an expiry date of 31 March 2021.

Interest rate swaps held with Investec Bank Limited:

Notional amount of ZAR308,333,333, effective date 31 March 2017 and termination date
31 March 2021, subject to adjustment in accordance with the Modified Following Business Day
Convention. The JIBAR variable portion was fixed with Investec at 7.69%. The re-set dates for both
the floating and fixed rates are 31 December, 31 March, 30 June and 30 September (quarterly) with
an expiry date of 31 March 2021.

Notional amount of ZAR308,333,333, effective date 31 March 2017 and termination date
31 March 2021, subject to adjustment in accordance with the Modified Following Business Day
Convention. The JIBAR variable portion was fixed with Investec at 7.75%. The re-set dates for both
the floating and fixed rates are 31 December, 31 March, 30 June and 30 September (quarterly) with
an expiry date of 31 March 2021.

49

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

26. FINANCIAL RISK MANAGEMENT

The Company’s financial instruments consist mainly of deposits with banks, bank overdrafts, accounts
receivable and payable and secured loans from the Consortium.

Market risk

Foreign exchange rate exposure
The Company does not import or export goods, therefore their exposure to foreign exchange fluctuations
are insignificant.

Interest rate management
The Company's exposure to the risk of changes in market interest rates relates primarily to the
Company's long term debt obligations with floating interest rates. The Company uses interest rate swaps
to hedge its interest rate risk. Such derivative financial instruments are initially recognised at fair value
on the date on which the contract is entered into and are subsequently re-measured at fair value.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when
the fair value is negative.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates.

The interest rate profile of total borrowings is as follows:

Description Currencies Redemption and R’000
interest rate %
Secured loans ZAR 1 038 925
Bank overdrafts ZAR Refer Note 20 46 122
Refer Note 18

A 1% increase on the Consortium Loan interest rate will result in a R14.2m increase on annual finance
cost. The risk of interest rate fluctuations on the Consortium loan is however mitigated through the use
of interest rate swaps (refer Note 25).

The bank overdraft interest is managed by only drawing down on the overdraft facility as and when this
facility is required. A 1% increase in the interest rate would not result in a material increase in the
annual finance costs.

Other price risk

The catering division is highly susceptible to food price inflation. However, this is managed in most
instances by passing on the increase in food prices to clients in terms of the contracts entered into, after
clients have been informed of the price increase. This assists in maintaining the gross profit margins.

50

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

26. FINANCIAL RISK MANAGEMENT (continued)

Credit risk

Credit risk management
Potential areas of credit risk consist of trade accounts receivable and short-term cash investments.

Trade accounts receivable consist mainly of a large widespread customer base. The Company monitors
the financial position of their customers on an ongoing basis. Contracts are mainly entered into with
reputable corporate clients, government, hospitals, etc. The facilities management operations have a
concentration of their credit risk in the government sector.

Proper credit rating procedures are followed e.g. ITC checks and checking of trade references to
minimise the Company’s exposure to credit risk.

Provision is made for specifically impaired and non-collectible debts and at the year-end management
did not consider there to be any material credit risk exposure that was not already covered by such
impairments. In addition, a large number of minor receivables are grouped into homogenous groups and
assessed for impairment collectively. The calculation is based on actual incurred historical data.

It is Company policy to deposit short-term cash investments with the major banks.

Maximum credit exposure
The maximum credit exposure of the Company is limited to the loan receivable (refer Note 13), trade
and other receivables (refer Note 17) and cash and cash equivalents and its guarantee exposure (refer
Note 18).

Liquidity risk

Liquidity risk management

The Company manages liquidity risk by monitoring forecast cash flows and ensuring that adequate
unutilised borrowings facilities are maintained. The Company’s liquidity is managed on a daily basis,
stock turnover is short and credit terms are managed optimally.

On demand Less than 1 1 - 5 years Beyond 5 Total
year years R'000

R'000 R'000 R'000 R'000

Interest bearing loans and borrowings - - 1 038 925 - 1 038 925
Trade and other payables (excl VAT) - 390 747
Lease liabilities (refer Note 29.) - 390 747 - - 39 348

- 27 575 11 773

Excessive risk concentration
The Company manages concentration risk by ensuring that their customer base is made up of a
diversified portfolio.

51

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

26. FINANCIAL RISK MANAGEMENT (continued)

Capital management
The primary objective of the Company’s capital management is to ensure that it maintains a strong credit
rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Covenanted Group consists of the South African, Mauritian, Botswana, Common Monetary Areas
scope entities and Egypt and are bound by its covenant targets which need to be achieved at each
measurement date in terms of which:
• The level of its adjusted net debt shall not exceed the earnings before interest, tax, depreciation and
amortisation (EBITDA) of the Covenanted Group plus all dividend income and cash receipts received by
associates, foreign subsidiaries and foreign joint ventures (so that no amount is added or deducted more
than once) (adjusted EBITDA) by 3.5 times for the measurement period ending 30 June 2020, and 3
times for the period ending 31 December 2020.
• The adjusted EBITDA divided by the Covenanted Group finance charges shall not be less than 2 times
for the measurement period ending 30 June 2020, and 2.25 times for the period ending 31 December
2020.
• The aggregate of the covenanted group cash flow, and the aggregate of all drawdowns under Facility C
and D for the measurement period, plus any net cash out for the measurement period plus any
shareholder injections divided by the Covenanted Group debt service for the measurement period shall
exceed 1.05.
• The aggregate of the covenanted group cash flow plus the average opening cash for the period, and the
aggregate of all drawdowns under Facility C and D for the measurement period, plus any net cash out for
the measurement period plus any shareholder injections divided by the Covenanted Group debt service
for the measurement period shall exceed 1.25.

The covenants were waived for the measurement periods ending 30 June 2020 and 31 December 2020.

The Company manages its capital structure and makes adjustments to it, in light of changes in economic
conditions. To maintain or adjust the capital structure, the Company have the discretion to make
dividend payments to shareholders, adjust the preference share rate, return capital to shareholders or
issue new shares. The Company redeemed the preference shares for Rnil on 21 December 2020. The
Company issued ordinary shares with no par value to the value of R872,434,168 on 21 December 2020
to its holding company, Tsebo Intragroup (Pty) Ltd.
No changes were made in the objectives, policies or processes during the period ended 31 December
2020.
The capital managed can be analysed as follows:

R’000

Share capital (refer Note 19) 2 073 639
Secured loans (refer Note 20) 1 038 925

52

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

27. NOTES TO THE STATEMENT OF CASH FLOWS 2020 2019
R’000 R’000
27.1 Reconciliation of loss before tax to cash generated by operations
(718 837) (97 471)
Loss before tax 743 240 312 435
Adjustments to reconcile loss before tax to net cash flows: 262 534
Finance costs 235 156 (26 803)
Finance income (9 298)
Depreciation property, plant and equipment and right-of-use assets 70 943 69 896
Amortisation of intangible assets 16 246
Non-cash impact of IFRS16 9 915
Acquisition price adjustments (2 431)
Fair value adjustments - -
Net foreign exchange differences 0 49
Impairment of investments -
Impairment of goodwill 33 -
Dividends received 180 536
Profit on disposal of fixed assets 270 564 (107)
Share of partnership profit (9 532) (6 949)

Operating profit before working capital changes (346) 214 964
Working capital changes (4 731) (90 742)

Decrease / (increase) in inventories 24 403 (4 164)
Decrease in trade and other receivables (62 349) 15 071
Decrease in trade and other payables and provisions (101 648)
13 879
Cash generated from operations 158 746 124 222
(234 974)
27.2 Taxation paid
(37 945)
Opening balance
Normal tax charge (refer Note 8) 13 470 19 883
Closing balance (402) (220)

27.3 Cash and cash equivalents (13 688) (13 470)

Cash and cash equivalents at year-end consist of: (620) 6 193
Cash at bank and float
Bank overdraft 51 097 143 255
(46 122) (39 260)

4 975 103 995

53

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

28. RELATED PARTY TRANSACTIONS

The financial statements of Tsebo Solutions Group (Pty) Ltd include the transactions with the

subsidiaries and related parties listed in the following table:

% Equity interest

Name 2020 2019

Allterrain Services Kenya Ltd **
Allterrain Services Inc **
Allterrain Services Cote D'ivoire Ltd **
Allterrain Services DRC Ltd **
Allterrain Services Gabon Ltd **
Allterrain Services Ghana Ltd **
Allterrain Services Mauritius Ltd **
Allterrain Services Senegal Ltd **
Allterrain Services Sierra Leone Ltd **
Allterrain Services Tanzania Ltd **
Allterrain Services Uganda Ltd **
Allterrain Services Zambia Ltd **
DSFM Vuya Consortium (Pty) Ltd 80 80
DSVH Facilities Management Consortium (Pty) Ltd 70 70
Fedics Food Services (Botswana) (Pty) Ltd **
Fedics Food Services (Lesotho) (Pty) Ltd **
Fedics Food Services (Swaziland) (Pty) Ltd **
Fedics Ilembe Hospitality Services (Pty) Ltd 65 65
Impilo Consortium (Pty) Ltd 99
Mpilisweni Facilities Services Consortium (Pty) Ltd 51 51
Nemus Trade and Invest (Pty) Ltd 70 70
Servco Catering Lda **
Sethekgo Consortium (Pty) Ltd 15 15
Thorburn Security Solutions (Pty) Ltd 100 100
Tirasano Facilities Management (Pty) Ltd 100 100
Tsebo Botswana **
Tsebo Cameroon **
Tsebo Egypt **
Tsebo Facilities Solutions Nigeria Ltd **
Tsebo Gambia **
Tsebo Intragroup (Pty) Ltd **
Tsebo Leasing Solutions (Pty) Ltd **
Tsebo Servcor Private Limited **
Tsebo Siyakhula Initiative (Pty) Ltd 49 49
Tsebo Smart (Pty) Ltd 60 70
Tsebo Solutions Group (Lesotho) (Pty) Ltd **
Tsebo Solutions Group AME **
Tsebo Solutions Group International **
Tsebo Solutions Group Mauritius **
Tsela Tshweu (RF) (Pty) Ltd 10 10
Umongi Facilities Management (Pty) Ltd 70 70
Umongi Facilities Services (Pty) Ltd 60 60

* Fellow subsidiary of ultimate holding company, Tsebo Solutions Group Holdings SA

54

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED

NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019

29. LEASES

Company as a lessee

The Company has lease contracts for various items of plant, machinery, vehicles and other equipment
used in its operations. Leases of buildings and machinery generally have lease terms between 3 and 15
years, while motor vehicles and other equipment generally have lease terms between 2 and 5 years. The
Company’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally,
the Company is restricted from assigning and subleasing the leased assets and some contracts require
the Company to maintain certain financial ratios.

The Company also has certain leases of machinery with lease terms of 12 months or less and leases of
office equipment with low value. The Company applies the ‘short-term lease’ and ‘lease of low-value
assets’ recognition exemptions for these leases.

Set out below are the carrying amounts of right-of-use assets recognised during the period:

Buildings Equipment Motor Total
vehicles
R’000
As at 1 January 2020 R’000 R’000 R’000 53 535
Additions 11 399
Depreciation expense 34 885 2 901 15 749 (31 757)
Termination of leases 3 621 4 940 2 838
(19 980) (2 807) (8 970) (409)
(409)
- - 32 768

As at 31 December 2020 18 526 5 034 9 208

Set out below are the carrying amounts of lease liabilities (included under interest-bearing loans and
borrowings) and the movements during the period:

As at 1 January 2020 56 931

Additions 11 399
Accretion of interest 4 819
Payments (36 448)
Termination of leases (409)

As at 31 December 2020 36 292

Non-current portion 11 126
Current portion 25 165

The following are the amounts recognised in profit or loss: 36 449
Variable lease payments (included in other expenses) (31 757)
Depreciation expense of right-of-use assets (included in other expenses) (4 819)
Interest expense on lease liabilities (included in finance costs)
(127)
Total amount recognised in profit or loss

The Company had total cash outflows for leases of ZAR 36,448,971 in 2020.

55

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

30 EVENTS AFTER THE REPORTING PERIOD
Following the acquisition of Tsebo Holdings SA (Pty) Ltd and Tsebo Solutions Group AME by
TSGH SA at the end of December 2020, the secured debt (refer to Note 20) is being refinanced,
with the introduction of a Mezzanine finance facility of R675 million, which will be utilised to pay
down the senior debt to R450 million and favourably position the business for its next phase of
growth
The covenants and debt service requirements will consequently be reset to the lower level of senior
debt. Furthermore, a revolving credit facility of R100 million will be introduced.

56

TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020

APPENDIX
31. DIRECTORS’ EMOLUMENTS

This page of the AFS is available from the Company Secretary with the explicit approval of the Group
Financial Officer only.

57

four

WE DEVELOP PEOPLE, TO SERVE PEOPLE, TO UPLIFT SOCIETY





CHARLOTTE MAXEKE JOHANNESBURG ACADEMIC HOSPITAL (CMJAH)

Enquiries: Ms. M. Bodibe
Tel: 011 488 3798
Email:[email protected]

TO WHOM IT MAY CONCERN

LETTER OF RECOMMENDATION FOR TSEBO FEDICS CATERING

The matter above refers:

This letter serves to confirm that Tsebo Fedics Catering is rendering a service at the Charlotte
Maxeke Academic Hospital at the Folateng Private hospital for the past 16 years. Throughout the
years, the company has always been professional and agile to adapt to the frequently changing
environment within the Gauteng Department of Health.

Tsebo Fedics Catering is highly recommended, as they are capable to add value to any department.

I Hope that this is in order

____________________
Ms M.M Bodibe
Director: Finance and Patient Administration
Charlotte Maxeke Academic Hospital
13 August 2021

TERMINATION OF ACTING APPOINTMENT MS. C. VERAN

Page 1 of 1





five

WE DEVELOP PEOPLE, TO SERVE PEOPLE, TO UPLIFT SOCIETY





six

WE DEVELOP PEOPLE, TO SERVE PEOPLE, TO UPLIFT SOCIETY



ENVIRONMENTAL MANAGEMENT PLAN

(Applicable to all Catering Units of the Tsebo Group)

1. PURPOSE
Tsebo Catering recognizes that it has an ethical obligation to act responsibly and will make
every effort within its sphere of influence to enhance, respect and restore the integrity of the
work environment and apply professional practices that promote a constant improvement in our
knowledge, abilities, and skills in the field of environmental management.

To minimize Waste by evaluating operations and ensuring that they are as efficient as possible.

2. DEFINITIONS

TERM DEFINITIONS
Audit
Environment Systematic examination to determine whether activities
and related results conform to planned arrangements and
whether these arrangements are implemented effectively
and suitable for achieving the company’s policy and
objectives.

Surroundings in which Tsebo Catering operates including
air, natural resources (water, energy), flora, fauna,
humans and their interrelations.

3. RESPONSIBILITIES

All Unit Management and Staff are responsible to implement, facilitate and maintain compliance
to the Environmental Management Plan.

4. REQUIREMENTS

4.1. Targets and Method for Measurement

• Minimise toxic emissions through the selection and source of power emissions.
• Actively promote Recycling both internally and amongst customers and suppliers.
• Reduce the creation of waste by propagating the effective use of financially viable bio-

degradable packaging materials and environmentally friendly detergents and cleaning
chemicals.

• Reduce the consumption of electricity.
• Source and promote a product range to minimise the environmental impact of food

production and distribution.

• Strive to comply with and lead the way with the environmental legislation that relates to

our industry.

• Promote the conservation of natural resources.

4.2. Management System

4.2.1. ELECTRICITY CONSERVATION - TIP SHEET

Currently over 90% of our energy in South Africa comes from non-renewable
resources like coal, oil and gas and will eventually run out. The less energy we use,

Author: SHEQ Department Issue Date: 1 January 2022
Approved By: National SHEQ Manager Reviewed Date: 23 November 2022
Document No: Issue No:
TCS/OPS/EMP 03

Page 1 of 5

ENVIRONMENTAL MANAGEMENT PLAN

(Applicable to all Catering Units of the Tsebo Group)

the longer these resources will last and a lower demand for energy will have
beneficial effects on the environment. With the energy crisis in South Africa, not
wasting electricity means less power cuts. Reducing your energy consumption
levels assist in reducing your carbon footprint and means that you are saving
money and saving the planets resources. In our industry and at home much of our
equipment and appliances are electrically operated. Here are a few simple tips
about how to be smart with your equipment and appliance choices and how to
adopt energy efficient techniques.

Actions

• In most business environments about 10-15% of the electricity bill is for lighting.

Use energy saving light bulbs to cut costs considerably. Energy saving light bulbs
uses up to four times less energy.

• No matter what type of lighting you are using, always turn the lights off when

you leave a room.

• When using the dish washing machine, between 85-90% of energy is used just

to heat up the water. Ensure that the machine is only switched on for a full load.

• Efficient cooking methods and practices can save time, energy and costs. Ensure

that standard recipes and instructions are followed. Plan your cooking production
with energy saving in mind.

• Do not leave appliances on standby. Remember that appliances and equipment

with elements will consume the highest levels of energy to heat up to
temperature.

• Make sure that your fridge and freezer are regularly defrosted. An iced-up

freezer will make the freezer work harder, therefore wasting more energy than
needed.

• Never place warm or hot food into the fridge as this will make the fridge work

extra hard to operate properly.

• In many kitchens, the single biggest electricity expense is the heating of water.

This could account for up to 30 -40% of the electricity account. Don't set the
thermostat on the geyser too high. A setting of 50-60 degrees is recommended.
A geyser blanket may cost only R250, but the pay-back in electricity and
efficiency savings make it a good investment.

• We live in a country that has sun shine on most days. Explore the options of

using solar energy for geyser replacements and for generating standby lighting.

• Ensure that air conditioning units in dining rooms, public areas and offices are

switched off after use.

Remember - There are a few simple things that every individual can do every day
to have a part in conserving electricity.

• Did you know?
• Leaving a computer monitor on overnight wastes as much energy as making 800

A4 photocopies.

Author: SHEQ Department Issue Date: 1 January 2022
Approved By: National SHEQ Manager Reviewed Date: 23 November 2022
Document No: Issue No:
TCS/OPS/EMP 03

Page 2 of 5

ENVIRONMENTAL MANAGEMENT PLAN

(Applicable to all Catering Units of the Tsebo Group)

• Lighting an empty meeting room overnight can waste enough energy to make

1000 cups of tea.

4.2.2. WATER CONSERVATION - TIP SHEET.

South Africa faces a looming water crisis. It is becoming increasingly important for
all South Africans to conserve water. Water is one of our main natural resources
which we depend upon in every facet of our daily lives. A human being requires a
minimum of 5 liters of water per day just to stay alive. Modern lifestyles demand at
least 40 liters per person per day. We tend to take the supply of water for granted
mostly due to a lack of knowledge and education on how to manage this scarce
resource.

This tip sheet highlights a few important disciplines that should become part of your
daily

habit. By taking a-simple and common-sense approach to water conservation you
can save up to 30% of your water consumption.

Remember that if you are saving hot water, you will be saving the cost of heating it
as well as the water itself.

Actions

• Check for leaks and fix them or get them fixed. Most are dripping taps. A

dripping tap could waste as much as 90 liters a week.

• Place an object into the toilet cistern to displace water. This will reduce the size

of your flush. Save up to 3 liters a flush.

• Make sure that the tap is properly closed after hand washing.
• Fill a sink with enough water to wash dishes instead of having the water run

while you wash them.

• You can use less water by turning the hot tap down, rather than the cold tap

up, if you require cooler water.

• Rinse food in a bowl of water instead of under a running tap.
• Trigger nozzles on taps can save water by using only when needed.
• Ensure that your dishwashing machines are water efficient. You will find that

efficient equipment saves energy too. Don't use your dish washing machine
until you have a full load.

• Installing a water meter can save water by making you conscious of how much

water you are using and then putting plans in place to reduce the volume.
Remember that if you can't measure it you can't manage it.

• Don't hose down the kitchen. Use proper mop buckets with efficient bio-

degradable detergent.

Remember - There are a few simple things that every individual can do every day
to play a part in conserving our water.

4.2.3. HOW TO REDUCE WASTE - TIP SHEET

South Africa's National Waste Management Act went into effect during 2009

Author: SHEQ Department Issue Date: 1 January 2022
Approved By: National SHEQ Manager Reviewed Date: 23 November 2022
Document No: Issue No:
TCS/OPS/EMP 03

Page 3 of 5

ENVIRONMENTAL MANAGEMENT PLAN

(Applicable to all Catering Units of the Tsebo Group)

This law includes stiff penalties for industrial polluters and requires that each
municipality and provincial government to establish guidelines to meet with the
national law.

Primary to these requirements is the Reduction of waste by re-using selected
materials and increased recycling. Clearly the reduction of creating waste is the
core to all waste reduction plans.

Actions

• The immediate action in becoming waste conscious is to Separate at Source.

Ensure that you have the appropriate demarcated bins to separate waste. This
essential practice will require new disciplines and training of employees.

• Wherever possible separate your buildings organic wastes from non-

compostable waste.

• Print Greener. Reduce the use of office paper by encouraging double-sided

copying.

• An average office worker uses 10,000 sheets of copy paper per year. Waste

experts have calculated that paper and board accounts for 40% of all garbage.

• Paper is highly recyclable. Recycling 1 ton of paper (400 reams) saves 15 trees,

2.5 barrels of oil, 4132kW of electricity, 2.26 cubic meters of landfill space,
118555 Liters of water and prevents 26.8kg of air pollutants from reaching the
atmosphere.

• Use non-toxic and bio-degradable cleaning materials in the kitchens and in the

office that are available through the listed suppliers.

• Use cost effective bio-degradable and compostable food packaging for take

away meals that are available through the listed suppliers.

• Purchase products that are reusable, returnable or refillable. Buy with your

waste management plans in mind.

• Buy in bulk and save on packaging costs. Support suppliers who also commit to

environmentally friendly practices and who support our own Green Footprint.

• Unwanted food is an unplanned cost to the Company. Minimize waste by

effective menu planning, controlling wastage during production and effective
discipline in the kitchen.

• Recycle old cooking oil. Subscribe to the UCO program (Used Cooking Oil) to

create Green Diesel.

Remember - Put Green Plants into your work environment for a cleaner, healthier
environment. Plants absorb indoor air-pollution and increase the flow of oxygen,
making your work day a more "green" and efficient day.

4.3. System Evaluation

Auditing processes will be carried out in conjunction with the client’s environmental
management team audits which may be carried out on a quarterly basis.

Author: SHEQ Department Issue Date: 1 January 2022
Approved By: National SHEQ Manager Reviewed Date: 23 November 2022
Document No: Issue No:
TCS/OPS/EMP 03

Page 4 of 5

ENVIRONMENTAL MANAGEMENT PLAN

(Applicable to all Catering Units of the Tsebo Group)

5. REFERENCES

5.1. Occupational Health & Safety Act 85 of 1993 and regulations as amended.
5.2. National Environmental Management Act 107 of 1998
5.3. ISO 45001 – Occupational health and safety management systems
5.4. ISO 14001 – Environmental management systems

6. REVIEWS

No. Section / Paragraph Changed Change Made Date

0 First Issue N/A January 2020
January 2021
01 Annual review N/A January 2022

02 Format Change Entire document

03 Annual Review N/A

7. APPROVALS

Name: W.C Miller Signature: Designation: National S.H.E.Q. Manager

Name: W. Louw Signature: Designation: C. E. O. Catering.

Author: SHEQ Department Issue Date: 1 January 2022
Approved By: National SHEQ Manager Reviewed Date: 23 November 2022
Document No: Issue No:
TCS/OPS/EMP 03

Page 5 of 5

WASTE MANAGEMENT PLAN

(Applicable to all Catering Units of the Tsebo Group)

1. PURPOSE

Tsebo is ethically, socially, and morally committed to carry out our services in an
Environmentally Responsible manner so that we can contribute to the protection of human and
animal health, our natural resources, and the environment in which we live.

To comply with the goals and objectives of our clients and to cooperate with the local
Communities, Regulatory Agencies and Departments to implement a sound management
practice that will ensure that our operations are carried out in an environmentally protective
manner.

2. DEFINITIONS

TERM DEFINITIONS
Waste Management
The collection, transportation, and disposal of garbage,
wet waste, and other waste products. Waste management
encompasses management of all processes and resources
for proper handling of waste materials to ensure
compliance with health codes and environmental
regulations.

3. RESPONSIBILITIES

CEO 16.1 – Is overall accountable for Environmental compliance.

Managing Director 16.2 – Is charged with the responsibility for Environmental compliance.

Health & Safety Representative – Is responsible to assist management with Environmental
compliance.

HCSC 3(3) – Is responsible for ensuring cleaning chemicals are used as per manufacturer’s
specifications and dilution rates so as not to effect and pollute water resources.

4. REQUIREMENTS

4.1. Environmental Policy

Tsebo Environmental Policy is available on file and displayed in all our units.

4.2. Environmental Aspects and Impacts

ASPECTS

• Receiving and Storage
• Preparations and Cooking
• Serving
• Cleaning

All cleaning chemicals in use should be biodegradable or have a low environmental impact
which reduces pollution and is in line with the relevant environmental legislation,
regulations, and requirements. Certification is on file from our supplier.

Author: SHEQ Department Issue Date: 1 January 2022
Approved By: National SHEQ Manager Reviewed Date: 23 November 2021
Document No: Issue No:
TCS/OPS/WMP 03

Page 1 of 5

WASTE MANAGEMENT PLAN

(Applicable to all Catering Units of the Tsebo Group)

Material Safety Data Sheets (MSDS) are kept on file for each chemical in use.

On the job training on correct chemical use and refresher training is done through our
accredited chemical suppliers. All such training is documented and kept on file.

IMPACTS

Tsebo catering operations impacts on the following environmental areas.

• Landfill sites through the generation of dry and wet (food) waste. Separate

coloured bins are used for dry and wet (food) waste to promote recycling. Bin liners
are used to ensure that no littering occurs when transporting waste from the bins.
Bins are emptied on a regular basis to prevent them from overflowing. All waste
bins must have lids.

• Water Resources

All kitchens should be fitted with fat traps to ensure that fats and other harmful
wastage products do not pollute water resources. Floor drains should be equipped
with a straining system to ensure solid materials does not end up in the drains and
so contribute to blockages.

• Hazardous Waste Generation (Used Cooking Oil)

Used cooking oil must never be disposed of in a drain. Used oil is collected in a
suitable sealed container, stored in a bund area and removal from the unit by an
approved service provider for safe disposal.

• Air Pollution through Extraction Systems

All kitchens should be fitted with extraction systems that have filters which prevent
smoke, steam, and oil from polluting the air.

All canopies and filters should be cleaned on a quarterly basis by an accredited
company and records kept of such cleaning.

4.3. Monitoring and Measurement

General Waste (including dry and wet (food) waste

Waste generation is measured and monitored at unit level through recording waste
streams on the Waste / Swill Room Control Sheet.

Used Cooking Oil

Cooking oil is monitored by using oil test strips that help determine whether the oil is still
fit for use (QA04).

Author: SHEQ Department Issue Date: 1 January 2022
Approved By: National SHEQ Manager Reviewed Date: 23 November 2021
Document No: Issue No:
TCS/OPS/WMP 03

Page 2 of 5

WASTE MANAGEMENT PLAN

(Applicable to all Catering Units of the Tsebo Group)

Diagram 1: Oil Quality Test Criteria

Used oil is stored separately in a distinct and visibly marked (Used Oil) area. The used oil
is then collected by a certified company for recycling or safe disposal.

Internal Audits will be conducted by management to ensure that staff are conforming to
the environmental policy and that the system is being maintained.

Training, awareness, and communication are an integral part of this waste management
plan, and it will be a Tsebo focus to train all staff including management on all aspects of
the plan.

4.4. Records keeping
Records are kept and filed at unit level.

4.5. Emergency Preparedness and Response

In the unlikely event of used oil spillages SOP47 should be followed.

In the unlikely event of a waste removal services interruption Tsebo unit managers should
revert to the local municipal services emergency plan.

In the unlikely event of large quantities of food becoming contaminated or spoilt GMP03
will be actioned.

Also, hazardous substances such as used cooking oil, detergents and etc. must be cleaned
immediately and waste safely disposed in accordance with SDS and local legislative
requirements.

4.6. Operation Control

Waste generated in the units must be separated in the units between dry and wet waste
and placed in the correct waste bins i.e., Bins that are clearly and distinctly marked “Wet
Waste” and “Dry Waste”.

Author: SHEQ Department Issue Date: 1 January 2022
Approved By: National SHEQ Manager Reviewed Date: 23 November 2021
Document No: Issue No:
TCS/OPS/WMP 03

Page 3 of 5

WASTE MANAGEMENT PLAN

(Applicable to all Catering Units of the Tsebo Group)

Full waste bins must be wheeled with a closed lid to the waste collection area and handed
over to the person responsible for the waste collection area.
Only a clean, disinfected, and empty waste bin may be transported back to the catering
unit.

5. REFERENCES

5.1. Legal and General Compliance
Tsebo is committed to abide by and to comply with all the requirements of the National
Environmental Waste Management Act 59 of 2008, pertaining to our specific operations.
We are also committed to adhere to the following Policies and Directives.

Documents / Acts References Title
Tsebo Tsebo Green Footprint
GMP03 Waste Disposal Procedure
GMP11 Oil Management Procedure
Environmental Management System
ISO 14001: 2015

5.2. Legal and Statutory Appointments

Tsebo will appoint the following personnel as a minimum requirement but will also align
our appointments to our client’s requirements.

OHS Act Reference Appointment
16(1)
16(2) Chief Executive Officer
17
Person assigned to assist the CEO in
HCS 3(3) his/her functions

Health & Safety Representatives

Hazardous Chemical Substances
Coordinators

Author: SHEQ Department Issue Date: 1 January 2022
Approved By: National SHEQ Manager Reviewed Date: 23 November 2021
Document No: Issue No:
TCS/OPS/WMP 03

Page 4 of 5

WASTE MANAGEMENT PLAN

(Applicable to all Catering Units of the Tsebo Group)

6. REVIEWS

No. Section / Paragraph Changed Change Made Date
January 2020
0 First Issue N/A January 2021
January 2022
01 Annual review N/A

02 Format Change Entire document

4.3. Monitoring and Measurement Inclusion of Diagram 1

4.5. Emergency Preparedness and Inclusion of hazardous
Response chemical spillage and safe
disposal.

03 Annual Review N/A

7. APPROVALS

Name: W.C Miller Signature: Designation: National S.H.E.Q. Manager

Name: W. Louw Signature: Designation: C. E. O. Catering.

Author: SHEQ Department Issue Date: 1 January 2022
Approved By: National SHEQ Manager Reviewed Date: 23 November 2021
Document No: Issue No:
TCS/OPS/WMP 03

Page 5 of 5

QUALITY MANAGEMENT PLAN

(Applicable to all Catering Units of the Tsebo Group)

1. PURPOSE
Since we are committed to providing safe, wholesome, nutritious food of an excellent quality to
our customers, all processes of food production and the premises where food is handled will be
operated in such a way that the best possible hygiene standards are maintained at all times.
This will be achieved through regular self-managed audits and the implementation of systems
that are progressive, sustainable and measurable. In planning and preparation of meals the
nutritional value of food will be considered at all times to ensure the correct balance of
nutrients.

Our Quality Management Plan ensures that our organizations products or services are and
remain consistent. Our Quality Management Plan is not only focused on our products and
services, but also on the means to achieve it.

To ensure that all food prepared is safe for human consumption and to show compliance with
applicable food safety regulations and national standards and company documents as follows:

• R638 of the Foodstuffs, cosmetics and disinfectants act (Act 54 of 1972)

• SANS 10049:2019 (Food Safety Management System)

• SANS 10330:2020 (Hazard Analysis and Critical Control Points)

• Regulation R908 (Section 9, Food preparation and catering)

• Consumer Protection Act (Act No. 68 of 2009)

• Regulation R146:2010 (Labelling and Advertising of Foodstuffs)

• Tsebo Diet Manual

Food Safety standards and procedures, as well as the Tsebo Diet Manual, are being reviewed as
and when required or at least annually in accordance with the respective legislative
requirements, to ensure that they are up to date. In this way we can meet the expectations of
our clients and customers and thereby demonstrate that all reasonable precautions are taken
and due diligence is exercised during food preparation.

This Quality Management Plan sets the parameters to encourage, guide and facilitate our teams
to achieve our objectives.

2. DEFINITIONS

TERM DEFINITIONS
Audit
Environment Systematic examination to determine whether activities
and related results conform to planned arrangements and
whether these arrangements are implemented effectively
and suitable for achieving the company’s policy and
objectives.

Surroundings in which Tsebo Catering operates including
air, natural resources (water, energy), flora, fauna,
humans and their interrelations.

Author: SHEQ Department Issue Date: 1 January 2022
Approved By: National SHEQ Manager Reviewed Date: 23 November 2021
Document No: Issue No:
TCS/OPS/QMP 03

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