TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
1. ACCOUNTING POLICIES
1.16 Leases (continued)
ii) Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the
present value of lease payments to be made over the lease term. The lease payments include fixed
payments (including insubstance fixed payments) less any lease incentives receivable, variable
lease payments that depend on an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Company and payments of penalties for terminating the
lease, if the lease term reflects the Company exercising the option to terminate. Variable lease
payments that do not depend on an index or a rate are recognised as expenses (unless they are
incurred to produce inventories) in the period in which the event or condition that triggers the
In calculating the present value of lease payments, the Company uses its incremental borrowing
rate at the lease commencement date because the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a
change in the lease payments (e.g., changes to future payments resulting from a change in an
index or rate used to determine such lease payments) or a change in the assessment of an option
to purchase the underlying asset.
The Company’s lease liabilities are included in Interest-bearing loans and borrowings (see Note
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of
machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It also applies the lease of low-value
assets recognition exemption to leases of office equipment that are considered to be low value.
Lease payments on short-term leases and leases of low-value assets are recognised as expense on
a straight-line basis over the lease term.
Company as a lessor
The Company applies the short-term lease recognition exemption to its short-term leases of
machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It also applies the lease of low-value
assets recognition exemption to leases of office equipment that are considered to be low value.
Lease payments on short-term leases and leases of low-value assets are recognised as expense on
a straight-line basis over the lease term.
25
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
1. ACCOUNTING POLICIES
1.17 Changes in accounting policies
New and amended standards and interpretations
The Company applied IFRS 16 Leases for the first time. The nature and effect of the changes as a
result of adoption of this new accounting standard is described below.
Several other amendments and interpretations apply for the first time in 2019, but do not have an
impact on the consolidated financial statements of the Company. The Company has not early
adopted any standards, interpretations or amendments that have been issued but are not yet
effective.
IFRS 16 Leases
IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a
Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of
Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the
recognition, measurement, presentation and disclosure of leases and requires lessees to recognise
most leases on the balance sheet.
Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors will continue
to classify leases as either operating or finance leases using similar principles as in IAS 17.
Therefore, IFRS 16 does not have an impact for leases where the Company is the lessor.
The Company adopted IFRS 16 using the full retrospective method of adoption, with the date of
initial application of 1 January 2019. The Company elected to use the transition practical
expedient to not reassess whether a contract is, or contains, a lease at 1 January 2019. Instead, the
Company applied the standard only to contracts that were previously identified as leases applying
IAS 17 and IFRIC 4 at the date of initial application. The Company also elected to use the
recognition exemptions for lease contracts that, at the commencement date, have a lease term of
12 months or less and do not contain a purchase option (short-term leases), and lease contracts
for which the underlying asset is of low value (low-value assets).
The effect of adopting IFRS 16 is, as follows: R'000
Impact on the consolidated statement of financial position (increase/(decrease)): 83,572
Right-of-use assets 83,572
Total assets
Lease liabilities 83,572
Total liabilities 83,572
Impact on the consolidated statement of profit or loss (increase/(decrease)): 32,586
Operating lease expense (30,037)
Depreciation expense
Finance costs (5,946)
(3,397)
Profit before tax
26
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
1. ACCOUNTING POLICIES
1.18 Significant accounting judgements, estimates and assumptions
In preparing the financial statements, management is required to make estimates and assumptions
that affect reported income, expenses, assets, liabilities and disclosure of contingent assets and
liabilities. Use of available information and the application of judgement are inherent in the
formation of estimates. Actual results in the future could differ from these estimates which may
be material to the financial statements.
Judgements
Significant judgements made relate to the estimate of useful lives and residual values of property,
plant and equipment and intangible assets which are determined by management at acquisition
and subsequently adjusted as and when necessary. Management judgements also extend to the
allowance for doubtful debts which have been deducted in arriving at the trade receivables
amount. This judgement is usually based on expected write-offs.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation at the balance
sheet, that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial period, are discussed below.
Goodwill
In arriving at the goodwill value recorded on the statement of financial position, which is the
excess of the purchase price over the fair value of the assets purchased and liabilities and
contingent liabilities assumed, estimates and judgements were used by management in arriving at
these fair values.
The Company determines whether goodwill is impaired at least on an annual basis. The
impairment of goodwill was tested for each cash-generating unit in the Company using the
discounted cash flow method. Various assumptions pertaining to inflation rates and the discount
rate (Weighted Average Cost of Capital) had to be made based on the information available at the
time of doing the valuation.
27
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
1. ACCOUNTING POLICIES
1.18 Significant accounting judgements, estimates and assumptions (continued)
Leases - Estimating the incremental borrowing rate
The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its
incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that
the Company would have to pay to borrow over a similar term, and with a similar security, the
funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar
economic environment.
The IBR therefore reflects what the Company ‘would have to pay’, which requires estimation
when no observable rates are available (such as for subsidiaries that do not enter into financing
transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for
example, when leases are not in the subsidiary’s functional currency). The Company estimates
the IBR using observable inputs (such as market interest rates) when available and is required to
make certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating).
1.19 Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to
the date of issuance of the Company’s financial statements are disclosed below. The Company
intends to adopt these new and amended standards and interpretations, if applicable, when they
become effective.
Amendments to IFRS 3: Definition of a Business
In October 2018, the IASB issued amendments to the definition of a business in IFRS 3 Business
Combinations to help entities determine whether an acquired set of activities and assets is a
business or not. They clarify the minimum requirements for a business, remove the assessment of
whether market participants are capable of replacing any missing elements, add guidance to help
entities assess whether an acquired process is substantive, narrow the definitions of a business
and of outputs, and introduce an optional fair value concentration test.
Amendments to IAS 1 and IAS 8: Definition of Material
In October 2018, the IASB issued amendments to IAS 1 Presentation of Financial Statements and
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to align the definition of
‘material’ across the standards and to clarify certain aspects of the definition. The new definition
states that, ’Information is material if omitting, misstating or obscuring it could reasonably be
expected to influence decisions that the primary users of general purpose financial statements
make on the basis of those financial statements, which provide financial information about a
specific reporting entity.’
These amendments are not expected to have a significant impact on the Company’s financial
statements.
28
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2019 2018
R’000 R’000
3. REVENUE
Set out below is the disaggregation of the Company’s revenue from contracts with customers:
Type of goods or service 2,243,824 2,277,671
- Catering 937,189 992,431
- Cleaning
- Facilities solutions 1,873,543 2,013,825
Total revenue from contracts with customers 5,054,556 5,283,927
Timing of revenue recognition 2,243,824 2,277,671
- Goods and services transferred at a point in time 2,810,731 3,006,256
- Goods and services transferred over time
5,054,556 5,283,927
Total revenue from contracts with customers
4. COST OF SALES 1,062,970 1,050,842
Included in cost of sales are the following: 1,307,614 1,331,630
79,005 82,334
Food costs and consumables used 12,055 12,451
73,494 68,712
Direct labour costs in respect of staff at contract sites: 10,950 7,606
- Salaries and wages 62,544 61,106
- Incentive bonuses
- Medical aid contribution 11,365 11,461
- Defined contribution plans 5,978 4,751
24,473
- Pension fund 25,190 23,288
- Provident fund 6,579 24,128
73,155
- Travel allowance 7,546
- Labour brokers 72,437
- Leave pay
- Payroll taxes
- Workman's compensation
- Other*
* Other direct labour costs are made up of long service awards, recruitment charges, staff welfare, commissions, annual
conferences, training, staff relocation, uniforms and severance pay.
29
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2019 2018
R’000 R’000
5. OTHER INCOME
SETA refund 1 583 1,625
Sundry income 2 986 427
Share of partnership profit 6,949
Profit on disposal of fixed assets 107 17,175
Rental income 863 9
ETI youth incentive 3 28,829
Dividends received 8,124 792
31,905
20,012
46,441 71,945
1 The SETA refund relates to government grant received for learnerships.
2 Sundry income is made up of immaterial items that occur in the normal course of business.
3 ETI youth incentive is a government incentive to employers to employ youth workers with little to no previous work
experience.
6. FINANCE COSTS
Bank overdraft and other 15,314 562
Finance leases - IFRS 16 5,946 -
Loans secured - Consortium of lenders 201,466 207,274
Interest rate swaps (incl MTM adjustments) 19,471 13,066
Receiver of revenue -
Loans to group companies 320 1,624
Finance raising and facility fees 85 12,409
19,931
262,533 234,935
7. FINANCE INCOME 3,456 9,222
- 19,084
Bank - 14,514
Interest rate swaps - MTM adjustments 36,278
Consortium debt modification 23,347
Loans to group companies 79,098
26,803
30
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
8. (LOSS) / PROFIT BEFORE TAX 2019 2018
(Loss) / profit before tax is arrived at after taking the following R’000 R’000
items into account:
Auditors’ remuneration 9,827 8,749
- Audit fees 9,827 8,742
- Other services
- 6
Fees for professional services
13,637 15,683
Operating lease payments
31,242 26,993
Depreciation
- Computer equipment 86,142 46,118
- Furniture and fittings 20,250 9,973
- Kitchen equipment 1,341 1,605
- Leasehold improvements 85
- Motor vehicles 93 1,227
- Investment at units 1,520 969
- Right-of-use assets
672 32,259
Expenses relating to once-off items and restructuring costs 32,230 -
30,037
Acquisition price adjusments 3,098
Thorburn Group 21,048
Shanela Cleaning Solutions (Pty) Ltd t/a Superclean (11,610)
Tsebo Leasing Solutions (Pty) Ltd 2,431 (7,398)
Backbone Management Services (Pty) Ltd - (4,369)
(24)
Donations 2,431 181
-
- 7,155
2,361
31
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
8. (LOSS) / PROFIT BEFORE TAX (continued) 2019 2018
Staff costs (excluding items disclosed under cost of sales) R’000 R’000
- Salaries and wages
- Contributions to pension and provident funds 301,395 267,134
- Medical aid contributions 233,074 210,091
- Staff recruitment 11,426
- Payroll taxes 11,935
- Travel allowances 6,150 5,980
- Incentive bonuses 1,011 2,204
- Leave pay 2,693 2,756
- Training costs 42,376 43,174
18,921 4,940
(22,898) (21,979)
8,135 8,543
9. TAXATION - 7,892
South African normal taxation (400) (258)
237
Normal tax 620
- Current year 5,047
- Prior year under provision (2,312) (1,241)
69
Foreign withholding tax 11,677
(2,022)
Deferred tax
- Current year
- Prior year over / (under) provision
The Company has estimated assessed losses of R3,875,742 to be set off against future taxable income.
Reconciliation of tax rate % %
Effective tax rate 2.07 15.71
Permanent differences 24.52 10.59
Foreign withholding tax 0.64 (0.32)
Prior year over provision for normal tax (0.41)
Loss not recognised for deferred tax 1.11 0.35
Prior year over / (under) provision for deferred tax 0.07 -
1.67
Standard tax rate 28.00
28.00
32
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
10. PROPERTY, PLANT AND EQUIPMENT
Investment Land and Computer Furn
at units** buildings equipment and fi
R’000 R’000 R’000
2019
Cost 99,431 - 20,537
29,254 - 11,883
At beginning of the year -
Additions 2,438 54,458 3,666
Transfers - - 4,528
Right-of-use assets (3,035)
Disposals (5,658)
At end of the year 125,466 54,458 37,579
Accumulated depreciation (43,399) - (3,289) (1
331 - 2,977
At beginning of the year - -
On disposals 1,996 (19,573)
Transfers - - (1,627)
Right-of-use assets (20,250)
Current charge (32,230) (19,573)
(22,189)
At end of the year (73,302)
Net book value 52,164 34,885 15,390
* Work in progress relates to capital expenditure on assets which are not yet fully developed or oper
use. Other capital expenditure relates to all fixed assets which are not included in the other major as
** Investment at units relates to capital expenditure on equipment when a new unit is opened.
33
niture Kitchen Leasehold Motor WIP and
ittings equipment improvements vehicles other* Total
R’000 R’000 R’000
R’000 R’000 R’000
3,688 97 4,308 4,010 19,514 151,587
1,599 27 1,489 20 2,408 46,679
- (1,996)
- - - - (8,101) 83,572
- (1,092) - 24,586 -
(964) (428) (1,733) (13,828)
(968) (918)
4,323 5,369 26,882 266,014
12,903
65 145 (953) (2,666) - (50,097)
964 1,093 428 1,639 - 7,433
- - - - 1,996
- - - - (30,037)
1,341) - (8,836) - (56,105)
(93) (1,520) (672)
(312) 1,146 (2,045) (10,536) - (126,811)
4,011 178 3,324 16,347 12,903 139,203
rational (e.g. computer software). These will be included in a specific asset category when in full
sset classes.
3
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
10. PROPERTY, PLANT AND EQUIPMENT
Investment Land and Computer Furn
at units** buildings equipment and fi
R’000 R’000 R’000
2018
Cost 76,288 - 18,016
At beginning of the year 37,770 - 5,496
Additions
Transfers (2,154) - 607
Disposals
(12,474) - (3,581)
At end of the year 99,431 - 20,537
Accumulated depreciation
At beginning of the year (23,607) - 3,506
On disposals
Transfers 10,631 - 3,546
Current charge
1,836 - (369)
(32,259) - (9,973) (1
At end of the year (43,399) - (3,289)
Net book value 56,032 - 17,248
* Work in progress relates to capital expenditure on assets which are not yet fully developed or oper
use. Other capital expenditure relates to all fixed assets which are not included in the other major as
** Investment at units relates to capital expenditure on equipment when a new unit is opened.
34
niture Kitchen Leasehold Motor WIP and
ittings equipment improvements vehicles other* Total
R’000 R’000 R’000
R’000 R’000 R’000
2,160 250 3,704 4,372 14,646 119,436
729 56 604 211 4,571 49,435
957 (62) - (2) 654 -
(147) - (357)
(157) (571) (17,287)
97 4,308 19,514
3,688 4,010 151,584
1,396 21 274 (544) - (18,953)
157 147 - 492 - 14,973
117 62 - (1,646) - -
1,605) (85) (1,227) (969) - (46,118)
65 145 (953) (2,666) - (50,098)
3,753 242 3,355 1,344 19,514 101,487
rational (e.g. computer software). These will be included in a specific asset category when in full
sset classes.
4
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED 2019 2018
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019 R’000 R’000
11. GOODWILL 879,404 879,404
Carrying value at beginning of period - -
Movement for the year
Carrying value at end of year 879,404 879,404
The carrying value of goodwill can be reconciled as follows:
Cost Accumulated Net book
R’000 impairment value
R’000 R’000
2019 879,404 - 879,404
Goodwill
2018 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:
2019 2018
R’000 R’000
Catering Solutions cash generating unit 557,826 557,826
Cleaning Solutions cash generating unit 140,100 140,100
Facilities Solutions cash generating unit 181,478 181,478
Carrying value at end of year 879,404 879,404
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 14.13% - 15.51%, depending on the
cash generating unit.
35
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
11. 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 assumptions:
• Budgeted and forecast turnover and EBIT 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 5.3% and
9.0% and the EBIT margins range between 4.4% and 6.1%;
• For the cleaning division it ranges between -27.2% and 17.0%, while EBIT margin ranges between
3.9% and 4.3%;
• For the facilities management division, the projected growth between periods one and five ranges
between 1.7% and 13.5%, while the EBIT margin is 5.7% and 8.3%.
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 8% 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
In the catering, cleaning and facilities management units, a 1.5% movement in the discount rate would not
result in a material adjustment to the carrying value of the unit.
36
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
2019 2018
R’000 R’000
12. INVESTMENTS
Unlisted investments 540 540
63,069 56,120
Impilo Consortium (Pty) Ltd 56,120 38,944
9% interest 17,175
6,949
Lephalale Site Services Partnership 470
Opening Balance (Investment) 470
50% interest in partner's investment/capital 1,939
1,939 59,069
Sethekgo Private Party (Pty) Ltd 66,018
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 - 2,700
Non-current assets 3,172 3,172
DSFM Vuya Consortium (Pty) Ltd 13,490 17,458
Unsecured loan
Fedics Food Services Namibia (Pty) Ltd
Unsecured loan
Tsela Tshwea (RF) (Pty) Ltd
Unsecured loan
Total non-current loans 16,662 23,330
Current assets 1,958 -
- 309
DSFM Vuya Consortium (Pty) Ltd
Unsecured loan
Mpilisweni Facilities Services Consortium (Pty) Ltd
Unsecured loan
1,958 309
The loan to DSFM Vuya Consortium (Pty) Ltd is unsecured and interest free but due to the current
retained losses being experienced in this Company, the Company will not claim repayment until the
Company has returned to profitability. The loan will be settled during 2020. The contract terminated in
March 2020.
The loan to Fedics Food Services Namibia (Pty) Ltd carries no interest and has no fixed repayment
terms. It is not expected that this loan would be called on in the next 12 months.
37
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
13. LOANS RECEIVABLE (Continued)
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.
The loan to Mpilisweni Facilities Services Consortium (Pty) Ltd is unsecured, bearing interest at 14%
per annum, repayable quarterly in equal instalments of R148 106, with the last instalment on 1 March
2019. The loan has been settled in full at the period ended 31 December 2019.
14. INVESTMENT IN SUBSIDIARY COMPANIES
Name of Company Incorporated Percentage Shares Shares
Unlisted held
% 2019 2018
Thorburn Security Solutions (Pty) Ltd South Africa 100 R’000 R’000
DSVH Facilities Management South Africa 70
Consortium (Pty) Ltd 231,204 231,204
51 * *
Mpilisweni Facilities Services South Africa
Consortium (Pty) Ltd 65 51 51
Fedics Ilembe Hospitality Services (Pty) South Africa 80 * *
Ltd 60
70 * *
DSFM Vuya Consortium (Pty) Ltd South Africa * *
100 * *
Umongi Facilities Services (Pty) Ltd South Africa
100 29,454 29,454
Umongi Facilities Management (Pty) Ltd South Africa 100 * *
70 * *
Tirasano Facilities Management 50 1 1
70 * *
(Pty) Ltd South Africa 70 * *
*
Blue Crane Holdings SA (Pty) Ltd South Africa -
260,710
Equality Protection Services (Pty) Ltd South Africa 260,710
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 a casting vote.
Further details of the Company’s interest in unlisted subsidiary companies are
* Less than R1 000
38
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
2019 2018
R’000 R’000
15. AMOUNTS DUE FROM GROUP COMPANIES - 87,133
Non-current assets
Amounts due from:
- Subsidiaries and subsidiaries of holding companies
16. DEFERRED TAXATION 17,336 15,623
(2,065) (2,594)
Deferred tax assets
Deferred tax liabilities 15,271 13,029
Net deferred tax assets
The deferred tax assets are made up as follows: 4,871 3,709
11,340 11,768
Provisions (1,891) (2,448)
Leave pay provision
Prepayments 951 -
IFRS 16 lease and right-of-use
15,271 13,029
The movement on deferred tax is as follows: 13,029 18,532
Balance at beginning of the year 2,242 (3,806)
Statement of profit or loss - (1,698)
Prior year over provision
15,271 13,029
Balance at end of the year
17. INVENTORIES 360 247
29,276 31,535
Spare parts and tools
Raw material 148 963
Uniform stock 18,512 11,387
Merchandise
48,296 44,132
There are no items included in inventory that are recorded at net realisable value. There was no inventory
written off during the current period.
39
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED 2019 2018
NOTES TO ANNUAL FINANCIAL STATEMENTS R’000 R’000
AT 31 DECEMBER 2019
414,362 397,244
18. TRADE AND OTHER RECEIVABLES 2,550 3,768
8,620 7,593
Trade receivables, net of impairment 78,822
Payments in advance 63,421 22,066
Deposits 19,946 1,877
Discount accrued 42,369
Income accrued 1,139
Prepaid insurance 28,631 553,739
Other receivables*
538,668
* Other receivables include inter alia prepayments, VAT recoverable, unbilled revenue and sundry debtors.
Allowance account for credit losses (individual and portfolio): (1,916) (2,007)
(303) (2,024)
Opening balance -
Charge for the year - 1,684
Utilised 429
Unused amounts reversed (2,219)
(1,916)
Trade receivables have been pledged as security for certain Group financing (note 21). 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 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 33,573
Other receivables
538,668 259,347 154,252 53,970 71,100
40
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
18. TRADE AND OTHER RECEIVABLES (continued)
As at 31 December 2018, the ageing analysis of trade and other receivables is as follows:
Total Current Past due
30 - 60 60 - 90 > 90
days days days
2018 397,244 170,047 139,258 43,692 44,247
Trade receivables 156,495 146,493 3,726 1,780 4,496
Other receivables 48,744
553,739 316,540 142,984 45,472
2019 2018
Estimated Loss Loss
gross allowance Estimated allowance
carrying (Lifetime gross carrying (Lifetime
amount at expected amount at expected
Expected credit loss rate: default credit loss) default credit loss)
Not past due: (0%) (2018: 0%) 259,347 - 316,540 -
30 - 60 days past due: (0%) (2018: 0%) 154,252 - 142,984 -
60 - 90 days past due: (0%) (2018: 0%) 53,970 - 45,472 -
> 90 days past due: (0.4%) (2018: 0.6%) 71,100 (284) 48,744 (284)
Total 538,668 (284) 553,739 (284)
The following table shows the movement in the loss allowance (lifetime expected credit losses) for trade
and other receivables:
2019 2018
R’000 R’000
Opening balance in accordance with IAS 39 Financial Instruments: (284) (284)
Recognition and Measurement
Opening balance in accordance with IFRS 9 (284) (284)
Amounts recovered - -
Provision raised on new trade receivables --
Closing balance (284) (284)
The fair value of trade and other receivables approximates their carrying amounts, given the short term
maturity of these financial instruments.
41
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
2019 2018
R’000 R’000
19. CASH AND CASH EQUIVALENTS 143,255 118,009
(39,260) (10,006)
Cash and bank
Bank overdraft 103,995 108,003
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 21). 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
31 December 2019 the amount drawn was ZAR 39,260,267.
20. SHARE CAPITAL 1,201,205 1,201,205
Ordinary shares
Authorised
1 000 000 ordinary shares of no par value
Issued
500 000 ordinary shares of no par value
Preference shares 1,482,382 1,482,382
Authorised
100 000 cumulative redeemable preference shares of no par value
Issued
100 000 cumulative redeemable preference shares of no par value
42
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED 2019 2018
NOTES TO ANNUAL FINANCIAL STATEMENTS R’000 R’000
AT 31 DECEMBER 2019
1,738,273 1,756,875
21. SECURED LOANS
Consortium loan (270,841) (212,607)
At beginning of the period
Cash movements - 29,355
Additional loans obtained (270,841) (241,962)
Repaid during the period
Non-cash movements 127,277 194,006
Prior period current portion
Commitment fees to be amortised over the loan term 57,878 60,774
Interest charged (1,369) (10,843)
Commitment fees amortised 201,466 207,274
Facility modification (Refer note 7) 10,261
Less: Current portion of interest bearing debt 9,193
- (14,514)
At end of the period (140,959) (57,878)
1,594,709 1,738,273
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.
During 2018, the Debt Agreement was amended whereby the capital repayment profile of Facility A
changed, the settlement dates were extended and lower interest rates were negotiated. The funds available
under Facility C increased, with the total loan facilities granted to TSG, after the amendment, amounting to
ZAR2,350,000,000 and USD20,000,000.
In addition to the above, an Accordion Facility was introduced. This consists of a term loan facility in an
aggregate amount equal to USD35,000,000 which was made available to the Borrowers in terms of the
Amendment and Restatement Agreement.
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.
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.
43
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
21. SECURED LOANS (continued)
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. ZAR22,554,606 was drawn on 22 October 2018 and ZAR6,799,437 was drawn on
30 October 2018. The unutilised portion of Facility C was cancelled effective 17 December 2019.
The debt will be restructured in 2020 (please refer to Note 32 Events after the Reporting Period).
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, Tsebo Solutions Group Holdings and the Security SPV;
• Subordination Agreement entered into between Tsebo Holdings, Tsebo Intragroup, Tsebo Solutions
Group, Tsebo Solutions Group Holdings and Tsebo Solutions Group AME;
• Counter Indemnity Agreement between Tsebo Holdings, Tsebo Intragroup, Tsebo Solutions Group,
Tsebo Solutions Group Holdings, 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), Nedbank Limited (acting through its Nedbank Corporate and
Investment Banking division), 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;
* 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.
44
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
21. SECURED LOANS (continued)
Mauritius
• Floating Charge Agreement entered into between Tsebo Solutions Group Holdings and Investec Bank
Limited (acting though its Corporate and Institutional Banking division);
• Floating Charge Agreement/s entered into between Tsebo Solutions Group AME and Investec Bank
Limited (acting though its Corporate and Institutional Banking division);
• Floating Charge Agreement entered into between Tsebo Solutions Group Holdings and Investec Bank
Limited (acting though its Corporate and Institutional Banking division);
• Pledge of Accounts Agreement between the Security SPV and Tsebo Solutions Group Holdings;
• 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;
• 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 Holdings, Tsebo Solutions Group
AME 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;
• 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;
45
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
21. SECURED LOANS (continued)
Sierra Leone
• Cession and Pledge Agreement entered into between Allterrain Services Inc and the Security SPV;
Botswana
• Pledge and Cession 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 and the Security SPV;
Lesotho
• Cession and Pledge Agreement entered into between Tsebo Holdings SA and the Security SPV;
Swaziland
• Cession and Pledge Agreement entered into between Tsebo Holdings SA and the Security SPV.
22. AMOUNTS DUE TO GROUP COMPANIES 2019 2018
R’000 R’000
Non-current liabilities 125,595 -
Amounts due to:
- Subsidiaries and subsidiaries of holding companies
Amounts due to group companies include a loan of R80,085,479 which was advanced by
Tsebo Holdings SA (Pty) Ltd on 24 December 2019. This loan carries interest at 13% per annum and is
payable on demand.
23. TRADE AND OTHER PAYABLES
Trade payables 476,961 524,859
Accrued expenses 48,532 89,500
Payroll accruals 43,883 43,848
Sundry creditors 12,252 32,346
VAT 32,996 27,400
Other payables 37,555 37,499
652,178 755,453
The fair value of the trade and other payables approximates the carrying amount due to the short term nature
of these items.
46
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
24. PROVISIONS
Payment against Charged to the
Opening balance provision income statement Closing balance
R’000 R’000
R’000 R’000
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) 123,607 61,727
Payment against Charged to the
Opening balance provision income statement Closing balance
2018 57,899 (16,766) 732 41,865
Leave pay 9,506 (86,676) 88,334 11,164
Bonus
Termination 385 (385) - -
Audit Fees 4,663 (5,593) 7,320 6,391
72,453 (109,420) 96,386 59,420
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 2020 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 2020.
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 2020.
47
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
2019 2018
R’000 R’000
25. COMMITMENTS
Operating lease commitments
The future lease payments on operating leases relate substantially to land and buildings and are:
Payable within one year 24,931 28,700
Payable after one year but not more than five years 23,456 42,696
48,387 71,396
26. CONTINGENT LIABILITIES 57,412 56,805
Performance guarantees
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.
48
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
27. INTEREST RATE SWAP 2019 2018
Current portion
R’000 R’000
19,957 12,156
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 2019
28. 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 interest R’000
rate %
Secured loans 1,594,709
Short-term liabilities ZAR Refer note 21 140,959
Bank overdrafts ZAR Refer note 21 39,260
ZAR Refer note 19
A 1% increase on the Consortium Loan interest rate will result in a R18.6m 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 27).
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 2019
28. 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 18) and cash and cash equivalents (refer note 19).
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 39,260 140,959 1,594,709 - 1,774,928
Trade payables - 476,961 - - 476,961
Other payables excluding VAT - 142,222 - - 142,222
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 2019
28. 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 4 times.
• The adjusted EBITDA divided by the Covenanted Group finance charges shall not be less than 2.00 times.
•
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 period ending 31 December 2019.
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 dividend rate of the preference shares was adjusted to 0.29% for the dividend period ending 31
December 2018.
No changes were made in the objectives, policies or processes during the period ended 31 December 2019.
The capital managed can be analysed as follows:
R’000
Share capital (refer note 20) 1,201,205
Preference share capital (refer note 20) 1,482,382
Secured loans (refer note 21) 1,594,709
52
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED 2019 2018
NOTES TO ANNUAL FINANCIAL STATEMENTS R’000 R’000
AT 31 DECEMBER 2019
(97,471) 74,330
29. NOTES TO THE STATEMENT OF CASH FLOWS 279,849 173,449
29.1 Reconciliation of loss before tax to cash generated by operations 262,534 234,935
(26,803) (79,098)
(Loss) / profit before tax
Adjustments for: 86,142 46,118
Finance costs (32,586) -
Finance income (2,431)
Depreciation property, plant and equipment and right-of-use assets (11,610)
Non-cash rentals (IFRS16) - 60
Acquisition price adjustments 49 228
Loss on disposal of investment (9)
Realised foreign exchange differences (107)
Profit on disposal of fixed assets (6,949) (17,175)
Share of partnership profit
182,377 247,778
Operating profit before working capital changes (90,742) (62,559)
Working capital changes
(4,164) 1,852
(Increase) / decrease in inventories 15,071 (38,590)
Decrease / (increase) in trade and other receivables (101,648) (25,821)
Decrease in trade and other payables and provisions
91,636 185,219
Cash generated by operations
19,883 15,955
29.2 Taxation paid (220) (7,872)
(19,883)
Opening balance (13,470)
Normal tax charge (refer note 9) (11,800)
Closing balance 6,193
29.3 Cash and cash equivalents 143,255 118,009
(39,260) (10,006)
Cash and cash equivalents at year-end consist of:
Cash at bank and float 103,995 108,003
Bank overdraft
53
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
30. 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 2019 2018
DSVH Facilities Management Consortium (Pty) Ltd 70 70
Umongi Facilities Services (Pty) Ltd 60 60
Umongi Facilities Management (Pty) Ltd 70 70
DSFM Vuya Consortium (Pty) Ltd 80 80
Mpilisweni Facilities Services Consortium (Pty) Ltd 51 51
Tirasano Facilities Management (Pty) Ltd 100 100
All Terrain Services Inc
Thorburn Security Solutions (Pty) Ltd **
Fedics Food Services (Botswana) (Pty) Ltd 100 100
Fedics Food Services (Lesotho) (Pty) Ltd
Fedics Food Services (Swaziland) (Pty) Ltd **
Tsebo Solutions Group (Lesotho) (Pty) Ltd **
Fedics Ilembe Hospitality Services (Pty) Ltd **
Tsebo Intragroup (Pty) Ltd **
Tsebo IPCO (Pty) Ltd 65 65
Tsebo Solutions Group AME **
Tsebo Leasing Solutions (Pty) Ltd **
Tsela Tshwea (RF) (Pty) Ltd **
Nemus Trade and Invest (Pty) Ltd **
Tsebo Siyakhula Initiative (Pty) Ltd **
Tsebo Smart (Pty) Ltd 70 70
Tsebo Facilities Solutions Nigeria Ltd 49 49
Allterrain Services Kenya Ltd 70 -
Allterrain Services Ghana Ltd **
Tsebo Botswana *-
Tsebo Cameroon **
Tsebo Servcor Private Limited **
Tsebo Gambia **
Allterrain Services Tanzania Ltd **
Allterrain Services Uganda Ltd **
Allterrain Services Mauritius Ltd *-
Allterrain Services Zambia Ltd *-
Allterrain Services Sierra Leone Ltd *-
Allterrain Services Cote D'ivoire Ltd *-
Allterrain Services DRC Ltd *-
Allterrain Services Gabon Ltd *-
Allterrain Services Senegal Ltd *-
Sethekgo Consortium (Pty) Ltd *-
Tsela Tshweu (RF) (Pty) Ltd *-
Impilo Consortium (Pty) Ltd 15 -
Tsebo Solutions Group International 10 -
Tsebo Egypt 9-
**
*-
* Fellow subsidiary of ultimate holding company, Tsebo Solutions Group Holdings.
54
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
31. 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 plant and machinery generally have lease terms between 3 and 15
years, while motor vehicles and other equipment generally have lease terms between 3 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:
As at 1 January 2019 Buildings Equipment Motor Total
Additions vehicles
Depreciation expense R’000 R’000 R’000
52,928 2,888 R’000 63,123
As at 31 December 2019 1,529 1,641 20,449
(19,573) (1,627) 7,307 (30,037)
17,279
34,885 2,901 (8,836) 53,534
15,749
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 2019 63,123
Additions 20,449
Accretion of interest
Payments 5,946
(32,586)
As at 31 December 2019
56,931
Current portion 29,800
Non-current portion 27,131
The following are the amounts recognised in profit or loss: 32,586
Variable lease payments (included in other expenses) (30,037)
Depreciation expense of right-of-use assets (included in other expenses) (5,946)
Interest expense on lease liabilities (included in finance costs) (3,397)
Total amount recognised in profit or loss
The Company had total cash outflows for leases of ZAR 32,586,000 in 2019.
55
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
32. EVENTS AFTER THE REPORTING PERIOD
COVID-19
On 11 March 2020 the World Health Organisation officially declared the novel corona virus a
pandemic, triggering various government interventions to stem the spread.
On 15 March 2020 a National State of Disaster was declared in South Africa due to the COVID-19
pandemic, with the country going into lockdown at end March 2020. Most restrictions were
subsequently lifted, but economic activity remains depressed with most businesses within the
Corporate sector opting for their employees to work from home.
Although the company’s service offerings are diversified across many industries, trading in the
sectors which were considered as non-essential services were impacted, especially during the
lockdown in April, with the Catering division bearing the brunt of it due to the nature of its services
and clients. The company however continued to operate at client sites in industries which are
considered to be essential services. The duration of the pandemic, and the pace at which
containment measures are relaxed or possibly reinstated is unknown, which makes it a challenge to
reliably assess the impact across our markets and our business.
The company is doing what is required to ensure the safety and wellbeing of our customers and
employees and has applied for TERS-benefits for qualifying employees.
The company has assessed the impact including the related risks that the pandemic will have on its
performance and liquidity. The company expects its operating results to be impacted negatively for
the short term, however in the medium to long term management expect to resume normal trading
levels. No significant impairments of the company’s assets are expected to arise except for a
potential impairment of Goodwill due to lower trading, the impact of which will only be able to be
quantified once a formal assessment is done at the 2020 year end.
The company has taken action to protect its financial position. Cost saving initiatives have been
implemented and capital expenditure have been delayed, together with prudent cash and working
capital management, enabling the company to remain liquid and able to settle its current liabilities.
As part of these cost saving initiatives, the company has also decided to restructure some of its
business activities within certain business units. This is anticipated to cost R25 million.
CHANGE IN SHAREHOLDERS AND CAPITAL STRUCTURE
The recent COVID-19 pandemic induced uncertainty felt across markets, and has resulted in many
organisations re-adjusting their priorities. In line with this, Tsebo’s international shareholders,
Wendel SE (Wendel) and Capital Group, jointly decided on a strategic consolidation of their
investment portfolio that has seen them reducing their African exposure.
56
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
32. EVENTS AFTER THE REPORTING PERIOD
CHANGE IN SHAREHOLDERS AND CAPITAL STRUCTURE (continued)
The controlling shareholders of Tsebo Solutions Group Holdings (Tsebo) are concluding a
transaction with a consortium of financial investors and management, which will result in a change
in ownership of the company. The consortium is led by Investec and Nedbank Private Equity. The
transaction remains subject to the finalisation of relevant documentation and South African Reserve
Bank approval.
The new shareholding consortium will preserve Tsebo’s strong B-BBEE credentials and retain a
management shareholding element. Significantly, the transaction will strengthen the company’s
balance sheet by introducing R959 million of fresh equity as well as a Mezzanine finance facility of
R675 million, both of which will be utilised to pay down the senior debt, which will reduce 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.
57
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
NOTES TO ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2019
APPENDIX
33. DIRECTORS’ EMOLUMENTS
This page of the AFS is available from the Company Secretary with the explicit approval of the Group
Financial Officer only.
58
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
AUDITED ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
AUDITED ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020
DIRECTORS Non-executives Date of appointment Date of cessation
P P Z Mbele 2 November 2020
N V Mokhesi 6 November 2020 13 November 2020
F N Khanyile 6 November 2020 20 January 2021
M D Hlophe
S C H Nkabinde
Executives 31 January 2017
C R Jardine 31 January 2017
T G Walters 8 December 2020
N Sheik
NATURE OF BUSINESS Catering, facilities management, energy solutions and
cleaning service providers
AUDITOR Ernst & Young Inc
ATTORNEYS Cliffe Dekker Inc.
BANKERS Standard Bank of South Africa Limited
HOLDING COMPANY Tsebo Intragroup Proprietary Limited
ULTIMATE HOLDING COMPANY Tsebo Solutions Group Holdings SA Proprietary Limited
COMPANY REGISTRATION NUMBER 2016/224394/07
COUNTRY OF INCORPORATION Republic of South Africa
DATE OF INCORPORATION 31 May 2016
REGISTERED OFFICE
Tsebo House
7 Arnold Road
Rosebank
Johannesburg
2196
The annual financial statements were prepared under the direct supervision of Mr T G Walters CA (SA), the
Chief Executive Officer of the Company.
1
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
AUDITED ANNUAL FINANCIAL STATEMENTS
AT 31 DECEMBER 2020
CONTENTS Page
Report of the directors 3-5
Report of the independent auditors 6-8
Statement of profit or loss and other comprehensive income
Statement of financial position 9
Statement of changes in equity 10
Statement of cash flows 11
Notes to annual financial statements 12
Appendix - Directors' emoluments 13 - 56
57
APPROVAL OF ANNUAL FINANCIAL STATEMENTS
The annual financial statements set out on pages 9 to 57 were approved by the board of directors on
and are signed on its behalf by:
Timothy Garrett Walters
CHIEF EXECUTIVE OFFICER
14 July 2021
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
REPORT OF THE DIRECTORS
AT 31 DECEMBER 2020
The directors have pleasure in presenting their report for the period ended 31 December 2020.
Statement of directors’ responsibility
The directors of the Company are responsible for the maintenance of adequate accounting records and the
preparation and integrity of the Company annual financial statements and related financial information in this
report.
The Company annual financial statements are prepared in accordance with International Financial Reporting
Standards and incorporate full and reasonable disclosure in line with the accounting policies of the Company.
The directors are also responsible for the Company’s systems of internal control. These are designed to
provide reasonable, but not absolute, assurance as to the reliability of the financial statements, and to
adequately safeguard, verify and maintain accountability of assets, and to prevent and detect material
misstatement and loss.
These financial statements have been prepared on the going concern basis.
General review of the business of Tsebo Solutions Group Proprietary Limited
Overview
The recent COVID-19 pandemic induced uncertainty felt across markets an resulted in many organisations re-
adjusting their priorities. In line with this, the shareholders of Tsebo Solutions Group (Pty) Ltd's ('TSG')
holding company (Tsebo Solutions Group Holdings (incorporated in Mauritius) ('TSGH Mru')), Wendel SE
('Wendel') and Capital Group, jointly decided on a strategic consolidation of their investment portfolio that
has seen them reducing their African exposure.
As a result TSGH Mru concluded a transaction with Tsebo Solutions Group Holdings SA (Pty) Ltd
('TSGH SA') on 21 December 2020, which resulted in the acquisition by TSGH SA of all the assets of TSGH
Mru. The shareholders of TSGH SA consist of Investec Bank Ltd, Nedbank Ltd, Ninety One SA (Pty) Ltd,
Standard Chartered Bank Johannesburg, Standard Chartered Bank (Mauritius) Ltd and management through
the Tsebo RSA Management Trust. Jaxson 800 (Pty) Ltd, a direct 100% owned subsidiary of TSGH SA,
acquired the shares in Tsebo Holdings SA (Pty) Ltd and Tsebo Solutions Group AME (incorporated in
Mauritius) for a nominal amount. All the operations of the Group therefore continues under the ownership
of TSGH SA.
Following the above, Khulasande Restructure Partners (Pty) Ltd acquired 40% of the shares of Tsebo
Holdings SA (Pty) Ltd, and the shares in Tsebo Intragroup (Pty) Ltd held by WDB Investment Holdings (Pty)
Ltd were sold to Tsebo Holdings SA (Pty) Ltd for a nominal consideration.
Following the subscription by the consortium to additional shares in TSGH SA for R964,177,000, Tsebo
Intragroup (Pty) Ltd subscribed for additional shares in TSG for R872,434,168. These funds were used to
settle senior debt in TSG.
Operational review
The company’s holding company, TSGH SA, is domiciled in South Africa. TSGH SA holds 60% of the
shares (indirectly) in Tsebo Holdings SA (Pty) Ltd ('THSA'), which in turn holds 97% of the shares
(indirectly) in Tsebo Solutions Group (Pty) Ltd (effective shareholding of 58%). TSG provides catering,
cleaning and facilities management services through its operations in South Africa.
3
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
REPORT OF THE DIRECTORS
AT 31 DECEMBER 2020
SUBSEQUENT EVENTS
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.
AUTHORISED AND ISSUED SHARE CAPITAL
The authorised and issued share capital of the Company is set out in Note 19 to these annual financial
statements. The preference shares issued by TSG to Tsebo Intragroup (Pty) Ltd were redeemed for Rnil on
21 December 2020.
DIVIDENDS
The Company did not declare any ordinary or preference share dividends during the financial period under
review.
BORROWING FACILITIES
At 31 December 2020 the amount outstanding to a consortium of lenders consisting of Investec Bank
Limited, Standard Chartered Bank and Nedbank Limited was R1,038,924,856. These loans were provided to
TSG on 31 January 2017. On 21 December 2020 R872,434,168 was settled in total on Facility A, B and C.
The quarterly interest payments were deferred for the 2020 financial year. The covenants were waived for
the measurement periods ending 31 December 2019, 30 June 2020 and 31 December 2020.
Details of long-term and short-term borrowings are set out in Note 20 to the financial statements.
Investec has provided TSG with guarantee facilities to the extent of R75,000,000, and Nedbank has provided
a working capital facility of R75,000,000.
DIRECTORS
The latest board of directors is comprised of three executive directors and two shareholder appointed non-
executive directors.
A register of interests of directors and other employees in the shares of the Company is available to
shareholders.
SOLVENCY AND LIQUIDITY TEST
The directors have performed the solvency and liquidity tests required by the Companies Act of South Africa.
4
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
REPORT OF THE DIRECTORS
AT 31 DECEMBER 2020
GOING CONCERN
The lender group have provided the company with a capital and interest service holiday until September 2021
and furthermore, a revolving credit facility of R100 million will be introduced.
The directors have reviewed all available information about the future, including the Group and company's
budget and cash flow forecast. In the light of this review, we believe that the Group and company is and will
continue to remain commercially solvent for the foreseeable future but at least twelve months from approval
of these financial statements and will be able to realise their assets and discharge their liabilities in the normal
course of operations.
The going concern assumption for preparing the company annual financial statements is therefore considered
to be appropriate.
FINANCIAL REPORTING AND CONTROLS
The systems of internal control are based on established organisational structures and written policies and
procedures, including budgeting and forecasting disciplines. These systems and procedures are implemented
and monitored by suitably trained personnel with an appropriate segregation of authority and duties. Nothing
has come to the attention of the directors to indicate that any material breakdown in the functioning of these
controls, procedures and systems has occurred during the period under review.
The directors’ responsibilities regarding the financial statements are disclosed in the Independent Auditors
Report on page 6 - 8.
COVID-19
On 11 March 2020 the World Health Organisation officially declared the novel corona virus a pandemic,
triggering various government interventions to stem the spread.
On 15 March 2020 a National State of Disaster was declared in South Africa due to the COVID-19
pandemic, with the country going into lockdown at end March 2020. Most restrictions were subsequently
lifted, but economic activity remains depressed with most businesses within the Corporate sector opting for
their employees to work from home.
Although the company’s service offerings are diversified across many industries, trading in the sectors which
were considered as non-essential services were impacted, especially during the lockdown in April, with the
Catering division bearing the brunt of it due to the nature of its services and clients. The company however
continued to operate at client sites in industries which are considered to be essential services. The duration of
the pandemic, and the pace at which containment measures are relaxed or possibly reinstated is unknown,
which makes it a challenge to reliably assess the impact across our markets and our business.
The company is doing what is required to ensure the safety and wellbeing of our customers and employees
and has applied for Temporary Employment relief scheme (TERS) benefits for qualifying employees.
The company has assessed the impact including the related risks that the pandemic will have on its
performance and liquidity. The company expects its operating results to be impacted negatively for the short
term, however in the medium to long term management expect to resume normal trading levels.
The company has taken action to protect its financial position. Cost saving initiatives have been implemented
and capital expenditure have been delayed, together with prudent cash and working capital management,
enabling the company to remain liquid and able to settle its current liabilities. As part of these cost saving
initiatives, the group has also decided to restructure some of its business activities within certain business
units.
5
EY Ernst & Young Incorporated
102 Rivonia Road Co. Reg. No. 2005/002308/21
Sandton Tel: +27 (0) 11 772 3000
Private Bag X14 Fax: +27 (0) 11 772 4000
Sandton Docex 123 Randburg
2146 ey.com
Independent Auditor’s Report
To the Shareholders of Tsebo Solutions Group Proprietary Limited
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Tsebo Solutions Group Proprietary Limited set out on
pages 9-57, which comprise the statement of financial position as at 31 December 2020, and the
statement of profit or loss and other comprehensive income, statement of changes in equity and
statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies.
In our opinion, the financial statements present fairly, in all material respects, the financial position
of Tsebo Solutions Group Proprietary Limited as at 31 December 2020, and its financial performance
and cash flows for the year then ended in accordance with International Financial Reporting
Standards and the requirements of the Companies Act of South Africa.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the financial statements section of our report. We are independent of the company in
accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for
Registered Auditors (IRBA Code) and other independence requirements applicable to performing
audits of financial statements of the company and in South Africa. We have fulfilled our other ethical
responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements
applicable to performing audits of the company and in South Africa. The IRBA Code is consistent with
the corresponding sections of the International Ethics Standards Board for Accountants’
International Code of Ethics for Professional Accountants (including International Independence
Standards). We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the 57 pages document titled “Tsebo Solutions Group Proprietary Limited
Annual Financial Statements for the year ended 31 December 2020”, which includes the Directors’
Report as required by the Companies Act of South Africa. The other information does not include the
financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
an audit opinion or any form of assurance conclusion thereon.
6
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for Financial Statements
The directors are responsible for the preparation and fair presentation of the financial statements in
accordance with International Financial Reporting Standards and the requirements of the Companies
Act of South Africa, and for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee
that an audit conducted in accordance with ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional skepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
· Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control.
7
· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
· Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the company to cease to
continue as a going concern.
· Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
Ernst & Young Inc.
Director: Suren Naidoo
Registered Auditor
Chartered Accountant (SA)
Date: 14 July 2021
8
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
Revenue Notes 2020 2019
2 R’000 R’000
- Catering
- Cleaning 3 3 352 999 5 054 556
- Facilities solutions
4 1 502 842 2 243 824
Cost of sales 5 843 804 937 189
6
Gross profit 1 006 353 1 873 543
10
Other income 7 (2 967 672) (4 477 365)
Finance costs 8
Finance income 385 327 577 190
Other expenses 46 441
Impairment of investment 68 431
Impairment of goodwill (235 156) (262 534)
26 803
Loss before tax 9 298
Taxation (495 637) (485 371)
(180 536) -
Loss for the year (270 564) -
Other comprehensive income
(718 837) (97 471)
Total comprehensive loss for the year, net of tax 2 022
8 065
(95 449)
(710 772) -
-
(95 449)
(710 772)
9
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2020
Notes 2020 2019 (Restated)*
R’000 R’000
9
ASSETS 10 838 304 1 317 988
Non-current assets 11
Property, plant and equipment 12 98 865 122 282
Goodwill 13 608 840 879 404
Intangible assets 14
Investments 15 7 031 16 920
Loans receivable 7 947 6 739
Investment in subsidiary companies 16 11 708
Deferred tax assets 17 80 175 16 662
18 23 738 260 710
Current assets 13
Inventories 479 979 15 271
Trade and other receivables 19
Cash and cash equivalents 19 34 417 745 647
Loan receivable 379 922
Taxation receivable 20 48 296
21 51 097 538 668
Total assets 30 855 143 255
EQUITY AND LIABILITIES 22 13 688 1 958
24 13 470
Capital and reserves 20
Share capital 30 1 318 283 2 063 635
Preference shares 18
Non-distributable reserves 25 (402 790) (568 401)
Accumulated loss 2 073 639 1 201 205
1 482 382
Non-current liabilities - (3 102 807)
Secured loans (1 616 476) (149 181)
Amounts due to group companies
IFRS 16 lease liability (859 953) 1 688 155
1 594 709
Current liabilities 1 115 528
Trade and other payables 1 038 925 66 315
Provisions 27 131
Short-term liabilities - secured loans 65 477
IFRS 16 lease liability 11 126 943 881
Bank overdraft 652 178
Interest rate swap 605 545
409 823 61 727
Total equity and liabilities 140 959
69 109
* Refer to Note 1.19 - 29 800
39 260
25 165 19 957
46 122
55 326 2 063 635
1 318 283
10
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
Share capital
R’000
Balance at 31 December 2018 1 201 205
Total comprehensive profit for the year -
Balance at 31 December 2019 1 201 205
Shares issued 872 434
Redemption of preference shares -
Other movements to NDR -
Total comprehensive loss for the year -
Balance at 31 December 2020 2 073 639
* Non-distributable reserves was created as a result of the revaluation of assets of subs
distributed in the form of dividends.
11
Preference Accumulated Non-distributable Total equity
share capital R’000
loss reserve
R’000
R’000 R’000
1 482 382 (53 733) (3 102 807) (472 952)
- (95 449) - (95 449)
1 482 382 (149 181) (3 102 807) (568 401)
- - - 872 434
- -
(1 482 382) - 1 482 382 3 949
- 3 949
- (710 772) - (710 772)
- (859 953) (1 616 476) (402 790)
sidiaries and are the portion of accumulated shareholders' equity which could not be
1
TSEBO SOLUTIONS GROUP PROPRIETARY LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
Net cash flows from operating activities Notes 2020 2019
27.1 R’000 R’000
Cash generated from operations 27.2
Finance costs (39 050) (91 569)
Finance income (37 945) 124 222
Income tax (paid) / received (2 101) (248 787)
26 803
Net cash flows from investing activities 9 1 616
4 (620) 6 193
Purchase of property, plant and equipment and intangible assets
Proceeds on disposal of property, plant and equipment (26 684) (32 052)
Purchase of intangible assets (38 605) (46 679)
Dividends received
2 414 6 502
Net cash flows from financing activities 20 (26)
19 8 124
Capital repayment of secured loans 12 9 532
Increase in share capital 13 119 614
Drawings on unlisted investments (33 285)
Decrease in loans receivable 21 (69 375)
Settlement of IFRS 16 lease liability (872 434) -
(Repayment of) / increase in amounts due to group companies 872 434
3 523 6 908
Net increase in cash and cash equivalents 27.3 7 648 8 848
Cash and cash equivalents at beginning of period (36 448) (32 586)
Cash and cash equivalents at end of period (8 009) 205 819
(99 019) (4 008)
103 995 108 003
103 995
4 976
12
The words you are searching are inside this book. To get more targeted content, please make full-text search by clicking here.
Tsebo - Mediclinic (Pre-Qualification) Submission
Discover the best professional documents and content resources in AnyFlip Document Base.
Search