Profit Recovery Solutions
Industry Case Studies
Profit Recovery Solutions has provided VAT Recovery Services for clients across a variety of industries:
Retail and Wholesale
Needless to say, retailers operate on very thin margins and cash recovered from historical oversights together with improvements in efficiencies can have a lasting impact.
We at PRS have extensive knowledge of the retail industry, having performed profit recovery reviews for some of the worlds largest retailers.
1) Large retail-led healthcare group.
The group has over 795 stores and is a leader in the healthcare market. It has a large retail pharmacy chain with over 473 in-store pharmacies. One of its divisions is a leading full-range national pharmaceutical wholesaler.
We received 5 years of financial data, containing 750 million transactions.
We identified deficiencies in how SAP was set up to deal with point of sales tax and rounding. This led to the client being able to recover a substantial amount.
We also identified and enabled the client to rectify various other processing errors and system errors.
2) Large grocery retailer.
Our client is a retailer that serves 35 million customers through 2689 stores in 15 countries. It employs 144,000 people.
The sheer volume of transactions coupled with the client’s satisfaction with our work, resulted in our engagement becoming part of the continuous business processes. To date we have recovered substantial amounts for the client.
We have been able to highlight deficiencies in their processes and have assisted the client in implementing system enhancements.
Energy and Resources
The energy and resources sector is in a phase of cost cutting and cash preservation.
PRS helps businesses to firstly recover cash hidden in the historical data and secondly to ensure improvements in efficiency and compliance going forward.
1) Gold Mining
Our client is a mid-tier, unhedged gold producer and a world leader in surface gold tailings retreatment. In 2016 the company produced 143 457oz of gold.
PRS met with the accounting and IT staff to obtain the data necessary for the review.
The PRS analyst then used the custom-written proprietary DataTherapist Software to carry out a series of standard tests in these categories:
- Cash discounts
- Invoice errors
- Duplicate payments
- Credit memos
The chief financial officer was more than satisfied by the result. A material amount of money had been made, and for every dollar the company kept, it only had to pay out 28 cents with minimal staff effort. The exercise had proved that the company’s internal controls were working very well, as the recoveries were lower than expected but still a valuable exercise for all interested parties.
2) Diversified Mining Company
Our client mines manganese ore and iron ore. The client also produces manganese alloys. It employs 6 567 permanent employees and operates as three divisions, namely iron ore, manganese and chrome.
The bulk of the client’s production is exported to the Asia, Europe, India and the United States of America.
We were engaged to perform a review of historical data with a specific scope to identify VAT recoverable.
Having performed a detailed review of the historical financial data, we discovered substantial savings ($6m). The failure to claim valid input tax credits were as a result of various factors, including processing errors, inexperienced staff and the incorrect treatment of one off and “out of the ordinary” transactions.
The shifting demands of consumers and the ever increasing need for immediacy in product delivery has resulted in increasing complexity that manufacturing companies now have to deal with; this complexity is reflected in their financial data.
On top of this, the government is not helping to facilitate manufacturing companies. Complexity is the enemy of transactional certainty; we are dedicated to recovering profit that has fallen victim to this complexity, as well as providing you with strategies to increase the robustness of your financial machinery.
International Rubber Manufacturer
We identified serious shortcomings in how the client dealt with settlement discounts at branch level. There were also missed input tax credits with regards to account payable transactions and cashbook transactions.
Market orientated production and profitability will always be the biggest challenge for the agriculture industry in order to ensure the sustainability of production and food security. Therefore, producers will still have to do everything in their power to improve the price ratio between the prices they pay for production inputs and the prices they receive for their products as far as possible.
PRS can play a valuable part in the enhancement of profitability by recovering cash and identifying inefficiencies.
Financial and Insurance
As disruptive newcomers and innovation redefine the marketplace, insurers and finance companies remain focused on growing sales and bottom-line profitability.
PRS can add great value to the bottom line profitability by recovering cash by identifying past errors and current inefficiencies.
Leisure and Entertainment
Technological advances are driving a rapidly shifting entertainment / leisure landscape. This changing environment brings with it many new opportunities, as well as challenges faced by established companies.
We can assist in extracting extra cash to fund solutions to these challenges.
1) Large Cinema Group
Our client boasts some 54 movie complexes with more than 400 screens and 63000 seats.
Our client had been engaged recently by another service provider. We were given the opportunity to have a “second go” at the data. We never doubted that our superior software and highly skilled analysts would still be able to add value and discover additional savings.
We identified almost 10,000 processing errors and enabled the client to recoup a substantial amount in unclaimed input tax credits.
2) Hotel and Casino Group
Our client is an award-winning hospitality and entertainment company which operates 13 hotels and 10 casinos.
1) Iron Mine
The mine is a large iron mine located in central South Africa in the Northern Cape. They represent one of the largest iron ore reserves in South Africa and in the world having estimated reserves of 709 million tons of ore grading 64.2% iron metal.
We completed a VAT review based on the last five year’s transactions. The process was easy to follow with minimum interruption seeing that most of the work was done off-site.
Documentation that was missing from the client’s side was obtained by PRS at our cost from their suppliers to substantiate our findings. PRS added significant shareholder value to the client, not only in the identification of the past issues but for them to receive all future benefits by implementing new controls to prevent future leakage.
2) Platinum Mine
This platinum mine is an independent integrated PGM producer listed on the JSE. The primary operations are centered on their two wholly owned mines, Zondereinde and Booysendal, and the additional metallurgical operations at Zondereinde including a smelter and base metals removal plant. The three main products mined are platinum, palladium and rhodium and are consumed by industries such as the motor manufacturing, jewellery and other industrial sectors.
Profit Recovery Solutions (PRS) was contacted to do an analysis and review of the client’s Value Added Tax (VAT). This was specifically for overpayments and unclaimed benefits due to various reasons.
The PRS team was highly professional and efficient in our approach with minimal interruptions to the client’s staff. The fact that all line items were included in our analysis was outstanding for them.
Our team had a high level of success and through that added significant shareholder value in rectifying the past aspects and also ensuring that the client will receive the future benefits.
Every business, irrespective of industry, faces constant challenges to protect and enhance its bottom line profitability. This can be done by increasing sales and/or reducing costs and inefficiencies.
PRS can assist with the second part. We are experts at recovering cash that was lost due due historical errors. We also identify inefficiencies that will have a lasting benefit for your company.