TOTAL CLIENT SERVICES LIMITED - Quarterly Progress Report2020/06/30 08:36:00
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Quarterly Progress Report TOTAL CLIENT SERVICES LIMITED Incorporated in the Republic of South Africa (Registration number 1998/025018/06) Share code: TCS ISIN: ZAE000116208 (“TCS” or “the Company”) QUARTERLY PROGRESS REPORT In terms of paragraph 1.10(c) of the JSE Listings Requirements pertaining to the continuing obligations of suspended companies, shareholders are hereby provided with a quarterly progress report on the current state of affairs of the Company. The rectification of all outstanding compliance matters remains a priority for the Company, and the completion and publication of all outstanding financial statements is the most important area of focus. The Company and the auditors are still focused on the completion of the 2017 annual financial statements, as well as the 2018, 2019 and 2020 annual financial statements. While settlement was reached with SARS in April 2017, with the Company having fulfilled all its obligations in terms of such agreement, since June 2017 the Company has been unable to get SARS to fulfil its obligations in terms of said agreement. During April 2018, the Company unexpectedly received an indication from SARS that they were subsequently querying the legitimacy of the 2017 settlement agreement and reviewing matters internally. However, during August 2018, the Company managed to meet with SARS and agree on certain processes to resolve the tax matters. Although SARS initially indicated that they could conclude the matter by the end of September 2018, the process proved to be more challenging than expected and SARS could only manage to finally complete the required tax adjustments during January 2020. As agreed with SARS, the parties would start a process to reach final conclusion on any remaining matters. Although the Company is preparing debt compromise and final settlement submissions, SARS can only receive and consider such submissions once all outstanding audited financial statements and tax returns has been filed. There have been numerous previously reported completion timelines, which the Company believed to be realistic based on the information available at that time. However, the information, specifically provided by SARS and the auditors, was not always accurate or forthcoming. As a result, the Company has failed to meet its reported deadlines and has had to adjust its completion targets on a regular basis. The Company has completed the 2017 draft annual financial statements and the first draft of these statements was submitted for auditors’ review in February 2019. This auditors have indicated that they are only prepared to complete the review and release the statements once the Company has settled its account. The Company is currently not in a position to make such payment, and the auditors are unwilling to compromise. As a result of the aforementioned delays and current circumstances, the Company had to adjust its planning. Whilst the Company is still committed to complete the outstanding matters as soon as possible, it is currently unable to confirm the conclusion date of the 2017 audit or the starting date for the next audit process, which now needs to cover the 2018, 2019 and 2020 financial periods. Furthermore, while the Company is currently participating in, and fully supports the ongoing national lockdown (“Lockdown”) to curb the spread of COVID-19 in South Africa, as well as any further measures that may be imposed by the Government, the aforementioned processes are impacted by further delays as a result thereof. Although the Company is doing everything within its power to complete and publish all outstanding financial statements, and continues to work with its auditors and all other parties to expedite matters where possible, it cannot commit to a fixed timeline of completion at this point. Once all outstanding annual financial statements and annual reports have been published and distributed, as the case may be, the Company will attend to the necessary shareholder general meetings to, inter alia, ratify the annual financial statements. Given the aforementioned circumstances, the Board has had to reconsider its initial planning, but remains hopeful to have the shareholder meetings scheduled and concluded in due course. Operational update Although the issue with SARS remains unresolved and continues to have a negative impact on the Company, SARS has been willing to assist by providing temporary tax clearance certificates to support operations and cash flow. Regardless of the remaining constraints, the operational focus remains on improving performance and creating a stable and sustainable business. The Company is constantly increasing and adjusting its marketing activities to raise awareness of its products and services. The focus is not only on traditional government clients, but also on potential applications in the private sector. Centurion 30 June 2020 Designated Adviser Merchantec Capital Date: 30-06-2020 08:36:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. 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