136 / 172
134
HSRC Annual Report 2016/17
PART E: Annual Financial Statements
22. Reconciliation of net cash flows from operating activities to surplus
2017
R ‘000
2016
R ‘000
(Deficit)/Surplus for the year
(19,643)
31,545
Adjustment for:
Depreciation and amortisation
11,253
6,996
Bad debts written off
525
1,179
Increase in provisions relating to employee cost
2,457
1,366
Losses on disposal of property, plant and equipment
1,207
1,012
Net foreign exchange loss/(gain)
44
(784)
Other adjustments
(608)
824
Items disclosed separately
Receipts of sales of assets
(10)
(164)
Operating (deficit)/surplus before working capital changes:
(4,775)
41,974
(Increase)/decrease in inventories
(631)
2,657
(Increase)/decrease in other receivables
(7,927)
995
Increase in VAT receivable
(1,658)
(3,280)
Decrease in post retirement medical benefit
(182)
(814)
(Increase)/decrease in trade receivables
(4,829)
610
(Increase)/decrease in prepayments
(3,775)
3,735
Increase in income received in advance
1,773
85
(Decrease)/increase in trade payables
(2,125)
5,476
Movement in lease accruals
1,350
(154)
Movement in lease commitments
85
(424)
Cash generated by operations
(22,694)
50,860
23. Contingent assets and liabilities
Pending claims
All the claims are being contested based on legal advice. The financial details of these claims are as follows:
2017
R ‘000
2016
R ‘000
Counter claim made by the HSRC (Possible contingent asset)
2,950
2,950
Claim against HSRC (Possible contingent liability)
(8,048)
(1,280)
Net claims
(5,098)
1,670
Case 1
The HSRC terminated a service provider contract as a result of non-delivery, and the service provider, Underhill Investment
Holdings, subsequently issued summons for the amount of R1,176,243.00. The HSRC filed a counterclaim to the value
of R2,949,914.69 claiming damages which were incurred due to the forced termination of the contract. This case is still
pending and may likely be settled.