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Compu-Clearing Outsourcing Limited

Annual Report 2007

Compu-Clearing Outsourcing Limited is South Africa’s industry leader in the provision of IT (Information Technology) products and services to the customs clearing, freight forwarding, air cargo and related industries. After 24 years of operation, the group continues to improve and expand its range of services to the industries it serves. In addition to its traditional range of services, it is also able to offer related solutions to South Africa and beyond.

The group’s objective is to enhance shareholder wealth, employee opportunities, and customer service. Its philosophy is to provide information technology solutions, rather than technology for its own sake, and to do so at practical, economically realistic costs, which are both profitable to the company and give real value to its customers. A philosophy of developing and maintaining long-term relationships with our customers is borne out by the fact that many of our early customers continue to use our systems.

The group is listed on the JSE Securities Exchange South Africa (JSE), Information Technology sector.

CORPORATEPROFILE

Compu-Clearing Outsourcing Limited

Annual Report 2007

Financial review…………………………………………………………………..……….. 1 Key ratios and share statistics…………………………………………………….. 3 Value-added statement…………………………………………………………….….. 4 Chairman's report……………………………………………………………….……….. 5 Directorate and senior management……………………………..…………….. 9 Corporate governance……………………………………………………..………….. 12 Directors' responsibilities and approval of financial statements…. 14 Declaration by the company secretary…………………………….………….. 14 Independent auditors’ report…………………………………………...………….. 15 Report of the directors…………………………………………………….………….. 16 Balance sheets………………………………………………………………..………….. 21 Income statements……………………………………………………….…………….. 22 Statements of changes in equity………………………….…………………….. 23 Cash flow statements……………………………………………………..………….. 24 Accounting policies………………………………………………………..………….. 25 Notes to the financial statements……………………………………………….. 30 Segmental analysis…………………………………………………………………….. 44 Analysis of shareholders……………………………………………..…………….. 45 Shareholders' diary………………………………………………………..………….. 46 Notice of annual general meeting……………………………..……………….. 47 Administration…………………………………………………….…………………….. 53 Form of proxy……………………………………………………………..…………….. 54

Contents

annual report 2007

1 compu-clearing outsourcing limited

financial review

Summary

Total revenue Rm 29.4 32.8 35.3 37.6 39.8 42.3 Operating profit Rm 7.1 7.6 7.7 7.9 9.5 9.1 Profit before income tax Rm 7.8 9.4 9.0 9.4 11.1 10.9 Operating margin % 24.0 23.3 21.9 21.2 23.9 21.6 Attributable earnings Rm 5.2 6.4 6.0 5.8 7.6 8.2 Earnings per share cents 12.4 16.0 15.7 15.1 19.6 20.6 Ordinary dividend per share cents 3.0 6.0 8.0 10.0 11.0 11.0 Special dividend per share cents - - 10.0 - - - Capital distribution per share cents - - - - 9.0 19.0 Net asset value per share cents 71.4 81.5 90.9 92.0 103.9 97.1 Cash generated by operations Rm 10.0 11.7 11.6 9.8 11.7 12.8

200520042003 2006 2007

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annual report 2007


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annual report 2007


key ratios and share statistics

Ratios

Return on shareholders' funds %1 17.8 20.3 17.3 18.8 18.8 21.0Return on total assets %2 22.9 25.1 20.9 24.7 24.7 24.9Operating margin %3 24.0 23.3 21.9 23.9 23.9 21.6Quick ratio %4 8.6 5.6 4.4 10.0 10.0 10.7Price/earnings %5 11.5 9.7 9.6 12.5 12.8 14.3

Headline earnings per share cents6 11.7 16.1 16.0 15.3 19.9 20.6Dividend per share cents7 3.0 6.0 8.0 10.0 11.0 11.0Special dividend per share cents7 - - 10.0 - - - Capital distribution per share cents7 - - - - 9.0 19.0Net asset value per share cents 71.4 81.5 90.9 92.0 103.9 97.1Share price high cents 150 165 170 245 385 310 low cents 100 100 110 105 225 235 closing (30 June) cents 135 155 150 245 250 295Market capitalisation R'000 54,974 62,060 60,058 98,094 100,096 120,709Volume traded '000 2,269 2,771 331 644 636 1,397Shares in issue '0008 40,721 38,307 38,117 38,461 38,836 40,380

Share statistics

20052002 2003 2004 2006

SA GAAP IFRS

2007

1 Attributable earnings expressed as a percentage of total equity at the end of the year. 2 Profit before tax expressed as a percentage of total assets at the end of the year. 3 Operating profit divided by total revenue. 4 Current assets, excluding inventories, divided by current liabilities. 5 The number of years current earnings per share represented by the closing share price at the end of the year. 6 Based on the weighted average number of shares in issue during the year. 7 Dividends and capital distributions declared and paid. 8 The number of shares in issue has been reduced by the treasury shares held by a subsidiary company.

annual report 2007


value‐added statement for the year ended 30 June

2007 2006 R'000 R'000

Total revenue 42,292 39,759 Net cost of products and services 10,345 8,807

Value added by operations 31,947 30,952 Interest received 1,740 1,843

Total value added 33,687 32,795

Applied as follows :

Employee benefits 19,886 19,247 Government - direct taxes 2,671 3,465 Providers of capital 4,308 4,042

Interest paid 1 195 Dividend paid 4,307 3,847

Total value distributed 26,865 26,754

Re-invested in the group 6,822 6,041

Depreciation and amortisation 2,911 2,303 Reserves retained 3,911 3,738

33,687 32,795

% %Employee benefits 59.0 58.7 Government - direct taxes 7.9 10.6 Providers of capital 12.8 12.3 Total value distributed 79.7 81.6 Re-invested in the group 20.3 18.4

100.0 100.0

0% 20% 40% 60% 80% 100%

2006

2007 Employee costs

Retained for future

Capital providers

Taxation

annual report 2007


chairman’s report

Arnold Garber Chairman

It gives me pleasure to report on the results of the company and the Group for the year ended 30 June 2007. The past financial year has been one of satisfactory revenue growth and continued excellent cash generation. Increased revenues and a lower effective tax rate of 24,5% contributed to a 7% increase in headline earnings. The earnings effect of the increase in revenue was softened by a 2% drop in operating margins to 22%. This was a result of the lengthy rollout at 2 major installations, at significant cost to the Group, with related revenue streams only commencing on completion of the rollout. A successful campaign designed to further strengthen relationships with existing customers and a new product launch was responsible for a significant increase in marketing spend. I do not envisage a repeat of these activities in the coming financial year. Cash generation continues to be excellent with cash generated by operations up a pleasing 10%. As a result, the Group has paid a total of R11,9 million, or 30 cents per share, to shareholders during the year under review. INVESTMENT IN PROPERTY, PLANT AND EQUIPMENT New investment in property, plant and equipment dropped from R4,2 million in 2006 to R1,6 million in 2007. We are of the opinion that the Group’s hardware resources satisfy its operational needs and do not anticipate significant further investment in property, plant and equipment in the short to medium term. Management review the estimated useful lives and residual values of property, plant and equipment on a regular basis. There has been no significant change in the estimates of management from the previous year. CASH RESOURCES Cash levels remain excellent at a healthy R17 million, a drop of R2,6 million from the previous year, after payment of R11,9 million back to shareholders by way of dividend and capital distribution. As a result of these cash levels, the board of directors have resolved to distribute a further 12 cents a share to shareholders, in the form of a capital distribution per share (2006 -9 cents), in terms of a general authority granted to the Board on 25 October 2006. TAXATION Our effective tax rate has decreased from 32,0% to 24,5%, primarily as a result of tax allowances relating to a learnership operated by the Group, under the auspices of the ISETT SETA. The learnership provided approximately 170 previously disadvantaged individuals with Visual Basic and VB.net skills, affording learners with the opportunity to pursue careers in the IT sector.

annual report 2007


INTERNATIONAL Compu-Clearing continues to supply customers with its systems internationally. Our software continues to function satisfactorily at our international installations. Nonetheless, our approach to international markets has been, and remains. conservative minimising our potential downside. We are proud of obtaining approval from US Customs, for the use of Compu-Clearing software to relay air cargo manifest information to Customs. CORPORATE GOVERNANCE AND COMPLIANCE Compu-Clearing continues to be committed to Corporate Governance and Compliance with all statutory requirements. BLACK ECONOMIC EMPOWERMENT The Group embraces the spirit of the Broad-Based Black Economic Empowerment Act of 2003 (“the Act”). In order to contribute to the upliftment of black people, as defined in the Act, we have implemented the following steps : • Development and publication of a non-discrimination policy that protects the human rights and dignity of all staff

members, regardless of race, religion, gender or disability;

• Development of a procurement policy that favours procurement from businesses that have achieved a high level of contribution to BEE, as well as directing portion of procurement spend towards Qualifying Small Enterprises and Exempt Micro Enterprises;

• Establishment of a learnership programme designed to create skills in the ICT sector; • Offering of recognised courses to uplift skills of staff, both in the critical and non-critical skills; • Compliance with the Employment Equity Act of 1998; • Supporting enterprise development through a combination of mentoring and financial support. PROSPECTS The Group expects further increases in turnover in the new financial year, as the revenue streams from new installations commence. The completion of these rollouts is expected to have a positive effect on operating margins. A software modernisation project is underway, which will result in increased development expenditure. While the project will not immediately result in improved revenues, it will secure present revenues and prepare a foundation for the Group to increase future revenues. Our relationships with two niche banks, offering foreign exchange and trade finance services to importers, in a cost-effective, convenient manner, continues to be an exciting source of potential revenue. We are excited by the prospects that lie in store for the Group and are confident that the coming financial year will see further growth.

annual report 2007


Commentary I am pleased to announce satisfactory results for the year ended June 2007. The year under review has been one of satisfactory revenue growth and once again, excellent cash generation, a hallmark of Compu-Clearing for many years. The Group’s principal business, that of software rental, has grown by an adequate 9%, driven mainly by an increase in customer volumes. Although there has been also an increase in our customer base, the consequential additional revenues, will only be reflected in the coming financial year. The Group’s policy of expensing development costs as and when incurred is a significant factor in expenditure growth, with costs incurred in new development projects and the commencement of a major modernisation of our legacy systems. Although the modernisation project will not result in immediate revenue growth, it is essential to the preservation of current revenues and will position the company for new developments and further growth. Cash flow generation continued to be strong which prompted Compu-Clearing’s board to decide to pay out exceptional cash distributions. Prospects for continued high cash generation appear to be excellent. Prospects Prospects for the coming year appear good with a stable client base, marginally increased volumes from our existing clients and moderate, but definite growth in the client base. Management remains committed to the introduction of a number of new products, although these may take time in resulting in additional revenues. Distributions to shareholders A dividend of 11 cents (2006 – 10 cents) per share, relating to the 2006 financial year, was declared during the period. In addition distributions of share premium amounting to 9 and 10 cents per share respectively were made to shareholders. Notice is hereby given that, in terms of a general authority granted on 25 October 2006, the board of directors has further resolved to distribute to ordinary shareholders a portion of the share premium account (`the distribution`). The distribution of 12 cents per ordinary share (2006: Nil), will amount to R4,845,563. The following salient dates to the distribution will apply: Last date to trade `cum` the distribution Friday, 14 September 2007 Trading commences `ex’ the distribution Monday 17 September 2007 Record date Friday, 21 September 2007 Date of payment Tuesday, 25 September 2007 Share certificates may not be dematerialised or rematerialised during the period Monday, 17 September to Friday, 21 September 2007, both days inclusive.

The following table illustrates the effect of the distribution of share premium and net asset value per Compu-Clearing ordinary share had the distribution taken place at the beginning of the year. These financial effects are prepared for illustrative purposes only, are the responsibility of the board and because of their nature, may not give a true indication of the company’s financial position and results of operations. The above table assumes a reduction in profit for the year, after applying the after tax average interest rate earned on cash and cash equivalents from the beginning of the financial year until the actual date the distributions were paid. Net tangible asset value per share per these reviewed results is reduced by the amount of the distribution payments and the adjustment to net profit for the year. Related party transactions The Group has entered into various transactions with related parties on an arm’s length basis and at market related rates. Basis of preparation The preliminary financial statements have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards and the presentation and disclosure requirements of IAS34. The accounting policies applied are consistent with those reflected in the financial statements for the year ended 30 June 2006. Review report The Group’s auditors KPMG Inc, have reviewed the financial information for the year ended 30 June 2007. Their unqualified review report is available for inspection at the registered office of the Company. For and on behalf of the Board Johannesburg A.Garber J. du Preez August 2007 (Chairman) (Chief Executive) Directors: A.Garber, J.du Preez, A.Katz*, M.Lutrin*, D. Rosevear*, Dr.T.M.Mogale*, M.Steele*, A. Webb*, C.P. Efthymiades, M.Acosta-Alarcon *(Non-executive) Transfer secretaries: Registered office: Computershare Investor Services 7 Drome Road 2004 Limited Lyndhurst, 2106 Ground Floor PO Box 890856 70 Marshall Street Lyndhurst, 2106 Johannesburg, 2001

Sponsor Auditors

Before (cents) After (cents) Change%Earnings per share 20.60 19.90 (3.4%)Headline earnings per share 20.60 19.90 (3.4%)Net tangible asset value per share 97.1 84.4 (13.1%)

annual report 2007


Year ended 30/6/2007 [reviewed]

Year ended 30/6/2006 [audited]

R'000 R'000

Profit before income tax 10,888 11,147 Adjustments for: 1,082 928 Non cash items 2,821 2,576 Net financial revenue (1,739) (1,648)

Cash generated by trading operations 11,970 12,075 (Decrease) / increase in post retirement medical obligations (20) 107

Decrease/ (increase) in working capital 855 (507) Cash generated by operations 12,805 11,675

Net financial revenue 1,419 1,417 - Financial income 1,420 1,612 - Financial expense (1) (195)

Income tax paid (3,834) (1,516) Distributions to shareholders (11,888) (3,847) - Dividend paid (4,307) (3,847) - Distribution of share premium (7,581) -

Cash flow from operating activities (1,498) 7,729 Cash flow from investing activities (3,710) (1,760) Utilsed to expand operationsAcquisition of property, plant and equipment (462) (2,920) Utilsed to maintain operationsAcquisition of property, plant and equipment (1,084) (1,320) Acquisition of intangible asset (164) (110) (Acquisition)/ disposal of other investment (2,000) 2,590

Cash flow from financing activitiesProceeds from the issue of shares and sale of treasury shares 2,628 1,059 Increase/ (decrease) in cash and cash equivalents (2,580) 7,028

Cash and cash equivalents at the beginning of the year 19,622 12,594

Cash and cash equivalents at the end of the year 17,042 19,622

PRELIMINARY CASH FLOW STATEMENT

30/06/2007 [reviewed]

R'000

% Increase / (decrease)

ASSETSNon current assets 14,657 15,879 Property, plant and equipment 13,540 14,370 Intangible asset 718 1,111 Deferred taxation asset 399 398Current assets 29,028 29,194 Inventory 102 75 Trade and other receivables 6,085 7,183 Taxation receivable 1,183 18 Investments 4,616 2,296 Cash and cash equivalents 17,042 19,622

Total assets 43,685 45,073

EQUITY AND LIABILITIESShareholders' funds 39,189 40,343 Share capital and premium 5,760 12,461 Treasury shares (601) (804) Reserves 34,030 28,686Non-current liabilities 1,804 1,824 Post retirement medical obligations 1,563 1,583 Deferred taxation liability 241 241Current liabilities 2,692 2,906 Trade and other payables 2,690 2,906 Taxation payable 2 -

Total equity and liabilities 43,685 45,073

Net asset value per share [cents] 97.1 103.9 (7)

PRELIMINARY BALANCE SHEET

30/06/2006 [audited]

R'000

Share capital

Share premium

Treasury shares

Retained earnings

Share-based

payment reserve Total

R'000 R'000 R'000 R'000 R'000 R'000Balance at 30 June 2005 400 12,061 (1,863) 24,380 418 35,396 Sale of treasury shares 1,059 1,059 Recognised income and expense - Profit for the year 7,585 7,585Dividends paid (3,847) (3,847)Share-based payment transaction 150 150Balance at 30 June 2006 400 12,061 (804) 28,118 568 40,343 Sale of treasury shares 203 1,545 1,748 New share allotments 9 871 880 Recognised income and expense - Profit for the year 8,218 8,218 Dividends paid (4,307) (4,307)Distribution of share premium (7,581) (7,581)Share-based payment transaction (112) (112)

Balance at 30 June 2007 409 5,351 (601) 33,574 456 39,189

STATEMENT OF CHANGES IN EQUITY




R'000 R'000

Rental and other revenue 42,292 39,759 6 Operating costs 33,143 30,260 - Distribution 23,886 21,961 - Administration 8,454 7,528 - Other 803 771

Operating profit 9,149 9,499 (4)Net finance revenue 1,739 1,648 - Financial income 1,740 1,843 - Financial expense (1) (195)

Profit before income tax 10,888 11,147 (2)Income tax - Normal and deferred 2,132 3,082 Income tax - STC (secondary tax on companies) 538 480 Profit for the year attributable to ordinary shareholders 8,218 7,585 8

Basic earnings per share [cents] 20.6 19.6 5 Diluted earnings per share [cents] 19.9 18.7 Special dividend per share [cents] - 10.0

PRELIMINARY INCOME STATEMENT




R'000 R'000

Profit for the year attributable to ordinary shareholders 8,218 7,585Adjusted for : Loss on disposal of property, plant and equipment 22 123

Taxation effect (6) (36)Headline earnings 8,234 7,672 7

Headline earnings per share [cents ] 20.6 19.9 Diluted headline earnings per share [cents ] 19.9 18.9 Actual number of shares in issue ['000] 40,380 38,836 Weighted average number of shares in issue ['000] 39,959 38,609 Diluted weighted average number of shares in issue ['000] 41,393 40,589

RECONCILIATION OF HEADLINE EARNINGS




R'000 R'000

Software rental revenue 30,984 28,537 9 Hardware rental revenue 8,895 9,064 (2) Other 2,413 2,158 12 Total revenue 42,292 39,759 6

Total segment result 9,149 9,499 (4)Operating margin 22% 24%

PRELIMINARY SEGMENTAL REPORT

annual report 2007


directorate

Arnold Garber

(Executive Chairman) Arnold has been actively involved with the “computer evolution” since the 1960’s. He was born in Buenos Aires, Argentina and attended his very first computer training school during November 1964, when the computer industry was still very much in its infancy. He was later trained by IBM, thereafter joining The Premier Milling Company as a computer programmer. In 1971, at the age of 24, Arnold was appointed as the IT manager of the Marine and Trade Insurance Company, with a staff of 20 people under him. In 1976, Arnold joined the administrative service division of Arthur Andersen and Company, the forerunner to Accenture. Three months after joining Arthur Andersen and Company, Arnold was transferred to Chicago and then to London where he was contracted to work for the London Branch. On returning to South Africa, in 1980, Arnold established his own software house and then in 1983 formed Compu-Clearing, together with his brother, Manuel.

Johan Du Preez

(Managing Director) Johan commenced his career in IT as a programmer with Delfos & Atlas Copco. He later joined the Marine and Trade Insurance Company, where he met and worked with Arnold. During the course of 1975, he joined ICL as a systems engineer, supporting fully integrated on-line systems within the motor industry. During this period, Johan twice attended overseas training sessions with BMW and Kerridge Computer Company, based in the United Kingdom. Johan later attended a system design and development course at the University of Cape Town’s Graduate School of Business. Johan joined Compu-Clearing in 1985.

Mario Acosta-Alarcon

(Technical Director) Mario holds a Masters degree in Computer Science, which he obtained in Spain. He has over 25 years experience in the computer industry, obtained during spells in South America and Europe. In 1980, Mario formed IBM Bolivia. He later joined New Hampshire Insurance Co, in Spain. In 1987, Mario joined AEG Argentina as IT manager. During 1990, Arnold met Mario in Buenos Aires and invited him to join the Compu-Clearing Group. Mario was promoted to the position of Development Manager in 1996 and then to Programme Development Director. He presently serves as Group Technical Director.

Costas Efthymiades

(Financial Director) After matriculating in 1973, Costas served three years articles of clerkship at auditors, Greenwood Poulton & Co. During the early 1980’s Costas joined United Building Society where he received management training. He gained further management experience within service-related industries. In August 1991, Costas was appointed as Compu-Clearing’s Group Financial Manager. In January 1998 he was promoted to the position of Administrative Director. Costas currently holds the portfolio of Financial Director.

Ari Katz

(Independent) Ari is a Chartered Accountant (SA), as well as a Certified Public Accountant (Israel). He graduated from the University of South Africa with the Degrees Bachelor of Commerce, Bachelor of Accounting (Honours) and Datametrics (with distinction). He then specialised in computer auditing and completed the CISA(USA). Ari was appointed a partner of the then Arthur Young & Co, which later merged to become Ernst & Young. Upon leaving Arthur Young & Co, Ari served as a visiting associate professor at the University of the Witwatersrand. In 1991, Ari founded Boston City Campus, which now operates 41 campuses throughout South Africa. In 2000 Ari was awarded Professor Extraordinary at Unisa. He was appointed to the board of the company in 1998.

annual report 2007


Milton Lutrin

(Non-executive) Milton practices as a Chartered Accountant (SA) and is a Fellow of the Association of Authorised Public Accountants in the United Kingdom. He has held appointments as Financial Consultant to various companies and also served on the board of directors of several listed companies. Milton has a close association with the Compu-Clearing Group as the Group’s company secretary and has served as a director of the company since 1998.

Thomas Mogale

(Independent) Dr Thomas Mathukhu Mogale lecturers at the University of the Witwatersrand’s Graduate School of Public and Development Management (P&DM) and holds the positions of Assistant Dean (Graduate Affairs; Faculty of Commerce, Law and Management) and Assistant Director (Academic) at the Graduate School of P&DM. He obtained his BA (Honours) through the University of the North (now University of Limpopo), and his MSc through the University of London (SOAS) in 1987. His PhD was awarded by the University of Pittsburgh’s Graduate School of Public and International Affairs (US). Dr Mogale sits on several government reference Groups, community organisations and on the Board of a development NGO as non-executive director.

Dave Rosevear

(Non-executive) Dave graduated from the University of the Witwatersrand with the degrees Bachelor of Commerce and Bachelor of Accounting. He served articles at Price Waterhouse, which later became Pricewaterhouse Coopers, where he qualified as a Chartered Accountant (SA). After two years with a merchant bank, Dave joined an industrial Group listed on the JSE, where he held executive positions for ten years prior to joining Bidvest

Mike Steele

(Non-executive) Mike is a Chartered Accountant (Zimbabwe). He is a director of a number of subsidiary companies within the Bidvest Group, primarily in the Bidfreight operations, as well as serving on the Boards of McCarthy Motor Holdings. Mike has considerable experience in senior financial positions in a diverse range of businesses.

Anthony Webb

(Non-executive) Anthony has a National Diploma in accounting and is a Member of the South African Institute for Professional Accountants. He began his career at Barclays Bank and has since then been employed by General Electric and Alfa-Laval and Boehringer-Ingelheim. Anthony presently serves as Financial Director of Premier Freight, a position he has held for 15 years. Throughout his career, Anthony has been closely involved in finance and IT systems.

annual report 2007


Andre Hofmeyr

(Account Manager) Andre began his working career as a management trainee at Gundelfingers in 1968 and was appointed as Import Manager after 4 years. When the CNA Group established a clearing and forwarding agency, he moved across to take up the position of assistant managing director, responsible for developing the commercial division, now known as Premier Freight. Andre was contracted as a consultant to Compu-Clearing for a few years, before joining the Group permanently in 1990. In January 1993 he was appointed as Cape Town Branch Manager. In May 2000, having returned to head office he headed up the helpdesk and currently heads the quality control division. Andre holds diplomas in S/36 system operations, MAST customer care and IATA dangerous goods (Gold).

Imran Mohammed

(Divisional Director) Imran began his career at Compu-Clearing in 1988 as a trainee programmer. He has subsequently worked his way up to development manager. Imran has several IT qualifications, including a diploma in RPGII, RPG400 and RPGILE development. He presently heads all development on IBM iseries (AS/400). During 2002 he was appointed as a divisional director of Compu-Clearing (Proprietary) Limited, the Group’s operating company

Melvin Narainsamy

(Operations Manager) After matriculating in 1987, Melvin enrolled for an Information Technology diploma in Cobol programming. Two years later he joined Compu-Clearing as an IBM iseries (AS/400) technician and has worked for the company ever since. In 2000, Melvin was promoted to Operations Manager, responsible for the Group’s 24/7 operations and technical division. A year later, Melvin was certified as an IBM Certified Specialist at a Common User Group Conference in New Orleans. He also has attended and completed Microsoft A+ and N+ courses. In addition to IBM iseries, Melvin has technical experience with firewalls, mail servers and routers.

Robert Wright

(Clearway Director) Robert is the developer and founder member of the Clearway system. He held several positions within the clearing and forwarding industry before joining Atlas Copco, where he was appointed shipping manager. Whilst at Atlas Copco, Robert designed and wrote a PC-based Bill of Entry system, Clearway. Robert sold Clearway to Compu-Clearing in 1999, and took up a management position within the Group. Robert serves on the board of directors of Compu-Clearing (Proprietary) Limited, the Group’s operating company

senior management

annual report 2007

compu-clearing outsourcing limited

corporate governance

The Board subscribes to the values of and accepts the inclusive approach to good corporate governance espoused in the King II Report. The Board and individual directors accept their duty and responsibility to ensure that the principles set out in the code of corporate practices and conduct, as defined in the King II Report, are observed. Corporate code of conduct Compu-Clearing is committed to:

• the highest standards of integrity and behaviour in all its dealings with its stakeholders and society at large;

• carrying on of business through fair commercial competitive practises;

• trading with customers and suppliers who subscribe to ethical business practice;

• removing discrimination in the workplace and the promotion of employees to realise their potential through training and development of their skills; and

• being proactive towards environmental and social issues.

Board of directors The board of directors comprises four executive and six non-executive directors, two of whom are independent. These directors have a range of differing skills and experience, which they bring to bear for the benefit of the Group. The board meets regularly to debate and deal with Group strategy, policy, operations, progress, and performance. As such, it retains full and effective control of the Group and monitors management through a structured approach of reporting and accountability. Arnold Garber serves as executive chairman and Johan Du Preez as managing director. Policy for the appointment of directors In circumstances where the board sees fit to appoint a new director, whether to fill a casual vacancy or to address areas of expertise not presently available on the board, the following procedures are applied:

• The board determine the skills, knowledge and experience required of the appointee, having regard to the competencies and qualifications of the other board members;

• The merits of prospective directors are considered and suitability assessed on the basis of:

• Competencies and qualifications; • Independence; • Other board appointments; • Time availability; • Their understanding of the role and legal obligations of a director; • Their ability to contribute to the overall effectiveness of the board and to the long-term

success of the Group. The chairman reviews the composition of the board on an ongoing basis, to ensure the board continues to possess the level of skills and experience required by the Group’s operations.

12

annual report 2007


corporate governance(continued) Audit committee The Audit Committee comprises executive and non-executive directors, with a non-executive appointed as the chairman. The Audit Committee has been established primarily to assist the board in overseeing:

• the quality and integrity of the company's financial statements and public disclosures thereof; • the scope and effectiveness of the external audit function; and

• the effectiveness of the company's internal controls and internal audit function. The board has delegated extensive powers to the audit committee to perform these functions. In line with these requirements the audit committee has, among other things, determined which categories of non-audit services provided by the external auditor should be preapproved by the audit committee and which could be approved by a designated member of the audit committee. The audit committee meets the Group's external auditors and executive management periodically to consider risk assessment and management to review accounting, auditing, financial reporting, corporate governance and compliance matters. The audit committee approves the external auditors' engagement letter and the terms, nature and scope of the audit function and the audit fee. Interim and annual results of the Group and trading statements of the company are reviewed by the audit committee before publication. Both the committee and the board are satisfied that the independence of the external auditors is not in any way impaired or compromised. Remuneration and human resources committee A Remuneration and Human Resources Committee has been appointed and is chaired by a non-executive director. The committee’s mandate is to assist the board in

• reviewing the compensation arrangements for senior executives and non-executive directors;

• reviewing management incentive schemes, share option schemes, termination entitlements and fringe benefit

policies;

The committee has determined the Group’s remuneration philosophy, which is to offer remuneration that will attract, retain and motivate employees with the skills required for the company to achieve its business goals. Internal controls The directors recognise their responsibility for the Group’s system of financial and internal controls. The board has established controls and procedures to ensure the accuracy and integrity of accounting records and monitors the Group’s business and its performance. Internal controls focus on critical areas and are designed to provide reasonable assurance that assets are safeguarded from loss or unauthorised use, and that financial records can be relied upon for preparing the annual financial statements, while complying with applicable laws and regulations. Employment equity The Group’s strategy regarding employment is aimed at the development of all its employees. It does not believe that the promotion of a select few individuals is appropriate. Compu-Clearing’s strategy centres on creating opportunities that will enable previously disadvantaged employees to prepare themselves to occupy more skilled and responsible positions within the organisation. The key aspect of this strategy is to promote education and training opportunities for all employees within the organisation and externally.

13

annual report 2007


directors’ responsibilities and approval of financial statements directors’ responsibility statement The company’s directors are responsible for the preparation and fair presentation of the Group annual financial statements and separate parent annual financial statements, comprising the balance sheets at 30 June 2007, and the income statements, the statements of changes in equity and cash flow statements for the year then ended, accounting policies, the notes to the financial statements and other explanatory notes, and the directors’ report, in accordance with International Financial reporting Standards and in the manner required by the Companies Act of South Africa. The directors’ responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. The directors’ responsibility also includes maintaining adequate accounting records and an effective system of risk management. The directors have made an assessment of the Group and company’s ability to continue as a going concern and there is no reason to believe the businesses will not be going concerns in the year ahead. The auditor is responsible for reporting on whether the Group annual financial statements and separate parent annual financial statements are fairly presented in accordance with the applicable financial reporting framework. approval of Group annual financial statements and annual financial statements The Group annual financial statements and the annual financial statements, set out on pages 16 to 44 were approved by the board of directors on 15 September 2007 and are signed on its behalf by-

A Garber Johan Du Preez Executive Chairman Managing Director

declaration by the company secretary In terms of Section 268G(d) of the Companies Act, No. 61 of 1973, as amended, I certify that the company has lodged with the Registrar of Companies, all such returns as are required of a public company, in terms of the Companies Act, and that all such returns are true, correct and up to date.

Lutrin, Abrams, Sklar Chartered Accountants (SA ) Company Secretary independent auditors’ report

14

annual report 2007


Report of the independent auditors to the members of Compu-Clearing Outsourcing Limited We have audited the Group annual financial statements and the annual financial statements of Compu-Clearing Outsourcing Limited, which comprise the balance sheets at 30 June 2007, and the income statements, the statements of changes in equity and cash flow statements for the year then ended and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, and the directors’ report as set out on pages 16 to 44. Directors’ Responsibility for the Financial Statements The company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, these financial statements present fairly, in all material respects, the consolidated and separate financial position of Compu-Clearing Outsourcing Limited at 30 June 2007, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa. KPMG Inc. Registered Auditor Per D. Thompson Chartered Accountant (SA) Registered Auditor Director 15 September 2007 85 Empire Road Parktown

15

annual report 2007


South Africa

report of the directors

To the members of Compu-Clearing Outsourcing Limited The directors have pleasure in presenting their report for the year ended 30 June 2007. Review of activities Compu-Clearing Outsourcing Limited (“Compu-Clearing”) is a holding and finance company whose major subsidiaries provide outsourced computer services to the customs clearing and freight forwarding industry. The results of the Group are reviewed in the chairman’s report. Share capital There has been no change in the authorised share capital during the year. On 10 May 2000 the shareholders authorised a change in the articles to allow the company to acquire its own shares. Compu-Clearing has not repurchased any of its own shares on the open market in terms of this authorisation, during the current or prior year. A wholly-owned subsidiary sold 663 534 treasury shares into the open market during the year (2006 – 374 189). Share incentive scheme The Compu-Clearing Share Participation Scheme and the Compu-Clearing Share Incentive Scheme have been established to facilitate the acquisition of shares by employees. The aggregate number of shares which may be made available for the purposes of the schemes shall not exceed 10% of the entire issued share capital of Compu-Clearing from time to time. In November 1998 options were granted to employees to acquire a total of 3 220 000 shares in tranches of 10% at a consideration of R1 each, contingent on their being in the employ of the Group on the specified dates between November 1999 and November 2008. In March 2003 additional options were granted to employees to acquire 2 200 000 shares in tranches of 10% at a consideration of R1 each, contingent on their being in the employ of the Group on the specified dates between March 2004 and March 2013.

At 30 June 2007 members of the schemes had cumulatively exercised 1 210 000 (2006 – 235 000) shares in terms of the Compu-Clearing Share Incentive Scheme. The follow ing share options w ere outstanding at 30 June 2007 :

Year of grant Option price

1999 1,00 820,000 2003 1,00 1,135,000

1,955,000

Movements for the year 2007 2006

Beginning of year 3,345,000 3,670,000 Lapsed (415,000) - Exercised (975,000) (325,000)

At end of year 1,955,000 3,345,000

Number of options

A total of 2,255,000 (2006 - 1,840,000) share options have lapsed since the commencement of the scheme.

Executive directors held 575,000 (2006 - 890,000) share options at year end as detailed below . There has beenno change in these holdings betw een 30 June 2007 and the date of this report.

16

annual report 2007


report of the directors (continued) Details of the directors' outstanding share options

Strike Price

Strike Price

R R

M Acosta-Alarcon 550,000 1 285,000 1 561,450 265,000 1C Efthymiades 340,000 1 30,000 1 40,500 310,000 1

These options are exercisable over the period 1 July 2007 to 30 November 2008.

Number

Share options at 30 June 2006

Share options exercised during the year

Share options at 30 June 2007

Name NumberExercise

Price R

Benef it arising Num ber

Your directors throughout the year and at the date of this report w ere:Directors SecretaryA Garber* Lutrin, JHP Du Preez*M Acosta-Alarcon*C Efthymiades* Registered address:A Katz Δ 1st Floor Block "A"M Lutrin Sandhavon Off ice ParkTM Mogale Δ 12 Pongola CrescentDK Rosevear Eastgate Ext. 17MJ Steele SandtonA Webb 2148

* executive directors Postal address:Δ independent PO Box 37172

Birnam Park2105

The directors' remuneration for the years ended 30 June 2006 and 2007 w as as follow s:2007

Directors' fees

Basic remuneration Bonus

Other allow ances

Retirement/ medical

Share-based payment expense Total

R'000 R'000 R'000 R'000 R'000 R'000 R'000ExecutiveA Garber - 835 - 62 201 - 1,098 J H P du Preez - 780 - 126 162 - 1,068 M Acosta-Alarcon - 578 49 729 121 12 1,489 C Efthymiades - 484 41 105 112 10 752 Non-executiveA Z Katz 12 - - - - - 12 M Lutrin 24 - - - - - 24 T M Mogale 12 - - - - - 12 D K Rosevear 1 - - - - - - - M J Steele 1 6 - - - - - 6 A Webb 12 - - - - - 12

66 2,677 90 1,022 596 22 4,473 1 Paid to the Bidvest group

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annual report 2007


Directors' fees

Basic remuneration Bonus

Other allow ances

Retirement/ medical

Share-based payment expense Total

R'000 R'000 R'000 R'000 R'000 R'000 R'000ExecutiveA Garber - 799 - 51 184 - 1,034 J H P du Preez - 723 - 123 142 - 988 M Acosta-Alarcon - 516 44 168 109 17 854 C Efthymiades - 438 37 53 102 14 644 Non-executiveA Z Katz 24 - - - - - 24 M Lutrin 24 - - - - - 24 T M Mogale 12 - - - - - 12 D K Rosevear 1 - - - - - - - M J Steele 1 6 - - - - - 6 A Webb 6 - - - - - 6

72 2,476 81 395 537 31 3,592 1 Paid to the Bidvest group

Directors do not have f ixed-term service contracts.

2006

Other allow ances comprise company car, travel allow ances and share compensation benefits. The remuneration ofthe executive directors is paid by Compu-Clearing (Proprietary) Limited, a w holly-ow ned subsidiary.

Subsidiary companies

2007 2006 2007 2006Subsidiary R R'000 R'000 R'000 R'000

Compu-Clearing (Proprietary) Limited 4 938 Computer services

1,680 1,849 836 6,452

Compu-Clearing Drome Road Property (Proprietary) Limited

100 Property ow ning

- - 3,018 3,018

Drome Road Share Block (Proprietary) Limited

600 Property ow ning

- - - -

Compu-Clearing Cape Tow n Property (Proprietary) Limited

100 Dormant - - - -

Three DX Property and Investments (Proprietary) Limited

100 Investment holding company

- - 2,575 2,652

Compu-Clearing Outsourcing Hardw are (Proprietary) Limited

150 Dormant - - - -

Compu-Clearing Outsourcing Netw orking (Proprietary) Limited

100 Dormant - - - -

Compu-Clearing Outsourcing Softw are (Proprietary) Limited

100 Dormant - - - -

1,680 1,849 6,429 12,122

The amounts advanced to subsidiaries are unsecured, interest-free and have no f ixed repayment date.

Details of the subsidiary companies, all of w hich are w holly ow ned and registered in the Republic of South Africaare set out below :

Cost of shares IndebtednessIssued share capital

Principal business

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annual report 2007


report of the directors (continued) Holding company Compu-Clearing is a public company with no holding company. Distributions An ordinary dividend of 11,0 (2006 – 10,0) cents per share, amounting to R4,404,229 (2006 – R4,003,845) and relating to the year ended 30 June 2006, was declared on 15 August 2006 and paid to company shareholders on 8 September 2006. A capital distribution in the amount of 9,0 cents per share amounting to R3,649,810 (Group - R3,576,067) was declared in lieu of a dividend on 15 August 2006, payable to shareholders registered in the books of the company on 10 November 2006. A capital distribution in the amount 10,0 cents per share amounting to R4,069,745 (Group – R4,004,923) was declared in lieu of a dividend on 28 February 2007, payable to shareholders registered in the books of the company on 23 March 2007. A capital distribution in the amount of 12,0 cents per share amounting to R4,845,563 was declared in lieu of a dividend on 21 August 2007. The salient dates are as follows: Last date to trade “cum” the distribution Thursday, 20 September 2007 Trading commences “ex” the distribution Friday, 21 September 2007 Record date Friday, 28 September 2007 Payment date Monday, 1 October 2007 Special resolution The following special resolution was passed and registered during the year: The granting to Compu-Clearing of a general authority to acquire its own shares. Litigation statement The directors are unaware of any pending or outstanding litigation, presently involving the Group. Borrowing powers The borrowing powers of the Group are unlimited. Results of subsidiaries

2007 2006R'000 R'000

Profits 8,217 7,388Losses - (209)

8,217 7,179

Directors' interests

2007 2006A Garber 14,212,286 13,870,936J H P du Preez 4,512,000 4,500,000Other directors 1,453,109 1,132,709

20,177,395 19,503,645

There w ere no non-benef icial holdings.

The attributable interest of the holding company in the after tax profit and loss of its subsidiaries is:

At 30 June 2007, the direct and indirect beneficial interests of the directors in the shares of the company w ere asfollow s:

There have been no material changes in the shareholdings of the directors betw een the year end and the date ofthis report.

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annual report 2007


Major shareholders

2007 2006% %

- The Arnold Garber Family Trust 33.9 35.2- The Johan du Preez Family Trust 11.1 11.6- The Bidvest Group Limited 24.5 25.5- Comshelf Limited 9.9 10.3- Barnun Investments (Proprietary) Limited 5.7 5.9

The company's shareholder spread does not comply w ith the public shareholder requirements of the JSE Limited.Management have advised the JSE of this non-compliance and continue to seek w ays to increase the company'spublic shareholding to the required levels.

Shareholders w ith a beneficial interest of more than 5% of the issued share capital of the group at 30 June w ere:

Post balance sheet events No material events, other than the distributions declared, have occurred between the balance sheet date and the date of approval thereof, knowledge of which would affect the ability of the users of these statements to make proper evaluations and decisions. Going Concern The directors are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparing the financial statements.

20

annual report 2007


balance sheets at 30 June

2007 2006 2007 2006Note R'000 R'000 R'000 R'000

ASSETS

Non-current assets 14,657 15,879 8,109 13,971

Property, plant and equipment 1 13,540 14,370 - - Intangible assets 2 718 1,111 - - Interest in subsidiaries - - 8,109 13,971 Deferred taxation 3 399 398 - -

Current assets 29,028 29,194 10,065 9,551

Inventories 102 75 - - Other investments 4 4,616 2,296 4,616 2,296 Income tax receivable 1,183 18 12 - Trade and other receivables 5 6,085 7,183 77 49 Cash and cash equivalents 6 17,042 19,622 5,360 7,206

EQUITY AND LIABILITIES

EQUITYTotal equity and reserves 39,189 40,343 17,838 23,088

Share capital and premium 8 5,760 12,461 5,616 12,461 Treasury shares (601) (804) - - Reserves 9 34,030 28,686 12,222 10,627

LIABILITIESNon-current liabilities 1,804 1,824 79 76

Deferred taxation 3 241 241 79 76 Post retirement medical obligations 10 1,563 1,583 - -

Current liabilities 2,692 2,906 257 358

Trade and other payables 11 2,690 2,906 257 190 Income tax payable 2 - - 168

23,522 Total equity and liabilities

Total assets

43,685 45,073 18,174

Group Company

43,685 45,073 18,174 23,522

21

annual report 2007


income statements for the year ended 30 June

2007 2006 2007 2006Note R'000 R'000 R'000 R'000

Revenue 42,292 39,759 6,587 634

Operating costs 33,143 30,260 535 594 -Distribution 23,886 21,961 - - -Administration 8,454 7,528 - - -Other 803 771 535 594

Operating profit 12 9,149 9,499 6,052 40

Net f inancial income 13 1,739 1,648 824 1,155 -Financial income 1,740 1,843 824 1,155 -Financial expense (1) (195) - -

Profit before income tax 10,888 11,147 6,876 1,195

Income tax expense 14 2,670 3,562 765 789 SA normal taxation 2,132 3,082 227 309 Secondary Tax on Companies 538 480 538 480

8,218 7,585 6,111 406

Basic earnings per share (cents) 17 20.6 19.6

Diluted earnings per share (cents) 17 19.9 18.4

Group Company

Profit for the year attributable to ordinaryshareholders

22

annual report 2007


statements of changes in equity for the year ended 30 June

Share capital

Share premium

Treasury shares

Retained earnings

Share-based


Note R'000 R'000 R'000 R'000 R'000 R'000Balance at 30 June 2005 400 12,061 (1,863) 24,380 418 35,396 Recognised income and expense - profit for the year 7,585 7,585 Sale of treasury shares 1,059 1,059 Dividends paid 15 (3,847) (3,847)Share-based payment transaction 150 150

Balance at 30 June 2006 400 12,061 (804) 28,118 568 40,343 Recognised income and expense - profit for the year 8,218 8,218 Sale of treasury shares 1,748 1,748 Transfer to retained earnings (1,545) 1,545 - New share allotments 9 871 880 Dividends paid 15 (4,307) (4,307)Distribution of share premium 15 (7,581) (7,581)Share-based payment transaction (112) (112)

Balance at 30 June 2007 409 5,351 (601) 33,574 456 39,189

Share capital

Share premium

Retained earnings

Share-based


R'000 R'000 R'000 R'000 R'000Balance at 30 June 2005 400 12,061 13,657 418 26,536 Recognised income and expense - profit for the year 406 406 Dividends paid 15 (4,004) (4,004)Share-based payment transaction 150 150

Balance at 30 June 2006 400 12,061 10,059 568 23,088 Recognised income and expense - profit for the year 6,111 6,111 New share allotments 9 871 880 Dividends paid 15 (4,404) (4,404) Distribution of share premium 15 (7,725) (7,725) Share-based payment transaction (112) (112)

Balance at 30 June 2007 409 5,207 11,766 456 17,838

Group

Company

23

annual report 2007


cash flow statements for the year ended 30 June

2007 2006 2007 2006Note R'000 R'000 R'000 R'000

CASH FLOWS FROM OPERATING ACTIVITIES (1,498) 7,729 (6,476) (3,397)

Cash generated by trading operations 20 11,970 12,075 6,052 228 (20) 107 - -

Decrease/ (increase) in w orking capital 21 855 (507) 39 36 Cash generated from operations 12,805 11,675 6,091 264 Financial expense (1) (195) - - Financial income 1,420 1,612 504 924 Income taxes paid 22 (3,834) (1,516) (942) (581) Distribution of share premium (7,581) - (7,725) - Dividends paid (4,307) (3,847) (4,404) (4,004)

CASH FLOWS FROM INVESTING ACTIVITIES (3,710) (1,760) 3,750 5,829

Utilised to expand operations - -Acquisition of property, plant and equipment (462) (2,920)

Utilised to maintain operationsAcquisition of property, plant and equipment (1,122) (1,320) - - Acquisition of intangible asset (164) (110) - -

38 72 - -Acquisition of other investments (2,000) - (2,000) - Disposal of other investments - 2,518 - 2,518 Amounts advanced to subsidiaries - - - (6,749) Amounts repaid by subsidiaries - - 5,750 10,060

CASH FLOWS FROM FINANCING ACTIVITIES 2,628 1,059 880 - Proceeds on sale of treasury shares 1,748 1,059 - -Proceeds on issue of share capital 880 - 880 -

(2,580) 7,028 (1,846) 2,432 19,622 12,594 7,206 4,774

(Decrease)/ increase in post retirement medical obligations

Cash and cash equivalents at the end of the year 17,042

Proceeds on disposal of property, plant and equipment

Cash and cash equivalents at the beginning of the yearNet (decrease)/ increase in cash and cash equivalents

CompanyGroup

19,622 5,360 7,206

24

annual report 2007


accounting policies Compu-Clearing Outsourcing Limited (“the Company”) is a company domiciled in the Republic of South Africa. The financial statements comprise the Company and its subsidiaries (together referred to as the “Group”). 1. Statement of compliance The consolidated financial statements and Company separate financial statements are prepared in accordance with International Financial Reporting Standards (IFRSs) and the interpretations adopted by the International Accounting Standards Board (IASB) and the requirements of the South African Companies Act. 2. Basis of preparation The financial statements and Group financial statements are presented in Rands, which is the Company’s functional currency and Group presentation currency, rounded to the nearest thousand, unless otherwise indicated, and are prepared on the historical cost basis, except for other investments, which are reflected at fair value. The financial statements are prepared on the going concern basis. The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Although estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances (the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources), the actual outcome may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management in the application of IFRSs that have a significant effect and estimates with a risk of material adjustment in the next year, are discussed in note 25. The accounting policies set out below have been applied consistently, by Group entities, to all periods presented in these consolidated financial statements. 3. Basis of consolidation Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences to the date that control ceases. InterGroup balances and any unrealised gains and losses or income and expenses arising from interGroup transactions, are eliminated on consolidation. 4. Property, plant and equipment Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing such an item, when the cost is incurred, if it is likely that the future economic benefits embodied in the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense, as incurred. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The current estimated useful lives are as follows:

Freehold buildings 50 years

Computer equipment 4 – 10 years

Office furniture and equipment 5 years

Motor vehicles 3 - 9 years Freehold land is not depreciated. The useful lives, depreciation methods and residual values, if not insignificant, are reassessed annually.

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annual report 2007


5. Intangible assets 5.1 Internally generated software Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, and expenditure on internally generated goodwill and brands is recognised in the income statement as an expense as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible, development costs can be measured reliably, future economic benefits are probable, the Group intends to use or sell the asset and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate portion of normal overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses. The capitalised costs are amortised on a straight line basis, over the estimated useful lives, which is currently a period of five years. 5.2 Acquired software Computer software acquired by the Group, is stated at cost less accumulated amortisation and accumulated impairment losses, and is amortised on a straight line basis, over the estimated useful lives, which is currently five years. 5.3 Subsequent expenditure Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred. 6. Investment in subsidiaries The Company’s investment in subsidiary companies is stated at cost less accumulated impairment losses. 7. Financial instruments All financial instruments are recognised at fair value on initial recognition and, except for those items stated at fair value through profit and loss, include directly attributable transaction costs. Subsequent to initial recognition, financial instruments are recognised as set out below: 7.1. Investments Financial instruments held for trading are classified as current assets and are stated at fair value, with the resultant gain or loss recognised in the income statement. 7.2. Trade and other receivables Trade and other receivables are stated at amortised cost using the effective interest rate method, less impairment losses. 7.3. Cash and cash equivalents Cash and cash equivalents comprise cash balances, call deposits and money market investments. Cash and cash equivalents are stated at fair value with any fair value adjustments being recognised in the income statement. 7.4. Trade and other payables Trade and other payables are stated at amortised cost, using the effective interest rate method. 7.5. Recognition and derecognition Financial instruments are recognised on the balance sheet when the Company or Group become party to the contractual provisions of the particular instrument. Financial assets are derecognised when the Company or Group loses control of the contractual rights that comprise the asset, for instance where those rights are realised, expire or are surrendered 8. Inventories Inventories consist of consumable stores and are carried at the lower of cost and net realisable value. The cost of inventories is based on the first in, first out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. 9. Impairment 9.1 Financial assets A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of the asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

26

annual report 2007


accounting policies (continued) 9. Impairment (continued) 9.1 Financial assets (continued) Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognized in profit or loss. Any cumulative loss in respect of an available-for–sale financial asset recognized previously in equity is transferred to profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity. 9.2 Non-financial assets The carrying amount of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in profit or loss. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. 10. Share capital When share capital, recognised as equity, is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from in equity. Shares repurchased by a subsidiary company are classified as treasury shares and presented as a deduction from total equity. 11. Employee benefits Defined contribution retirement plans Current contributions to the retirement funds are based on current salary and are recognised in the income statement as incurred, on an undiscounted basis. Defined benefit plans The Group’s obligations for post retirement medical benefits accruing to past employees in terms of defined benefit schemes have been calculated by a qualified actuary, using the projected unit credit actuarial valuation method. The Group’s estimated liability in respect of post retirement medical benefits, have been fully provided for in the balance sheet. The value of future unfunded obligations is actuarially determined on an annual basis. Where there is a change in the assumptions underlying the actuarial valuation, such as the medical inflation rate, the change in the actuarially calculated value of the plan is recognised in the income statement. Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. The cost of all short-term employee benefits is recognized during the period in which the employee renders the related service. The accruals for employee entitlements to salaries, performance bonus and annual leave represents the amounts which the group has a present obligation to pay as a result of services provided by employees. These accruals have been calculated on undiscounted amounts based on current salary rates.

27

annual report 2007


11. Employee benefits (continued) Share-based payment transactions The share option programme allows Group employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the Black-Scholes-Merton model, a binomial model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest, except where forfeiture is only due to share prices not achieving the threshold for vesting. 12. Provisions A provision is recognised if, as a result of a past event, the Company or Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. 13. Revenue Group Revenue is defined as rentals and fees charged for computerised customs clearing and other services, excluding value-added tax. Rentals and fees are accounted for when the relevant activities are conducted, the benefits to be derived therefrom can be reliably measured and the future economic benefits will flow to the Group. No revenue is recognised if significant uncertainty exists regarding recovery of the consideration due, associated costs or requires continuing management involvement. Company Revenue comprises management fees, which are recognised when services are provided, and dividends received from subsidiaries, which are recognised when the Company’s right to receive payments is established. 14. Operating leases The Group enters into rental contracts with its clients. The leases operate on a month-to-month basis. Consequently, income arising on such transactions is recognised on a month-to-month basis and amounts received in terms of these contracts are not straight-lined. 15. Financial income and financial expense Financial income comprises interest receivable on funds invested and gains or losses on remeasurement of financial instruments at fair value through profit or loss. Interest income is recognised in the income statement as it accrues using the effective interest method. Financial expense comprises interest payable on borrowings calculated using the effective interest rate method. 16. Income tax expense Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable calculated on the taxable income for the year, using the tax rates enacted or substantively enacted at the reporting date and any adjustments of tax payable for previous years. Deferred taxation is recognised using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the forseeable future. The amount of deferred tax recognised is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent it is no longer probable that the related tax benefit will be realised. Secondary tax on companies (“STC”) that arises from the distribution of dividends is recognised at the same time as the liability to pay the related dividend.

28

annual report 2007


accounting policies (continued) 17. Dividends paid Dividends to shareholders are accounted for once they have been approved by the board of directors. 18. Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products within a particular economic environment (geographical segment), which is subject to risks and rewards that are different of those from other segments. A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products within a particular economic environment (geographical segment), which is subject to risks and rewards that are different of those from other segments. The Group is a provider of information technology products and services to the Customs clearing, freight forwarding, air cargo and related industries. On a primary basis, the Group is organised into two major operating divisions: Software rental, comprising the rental of freight clearing software to customers; and Hardware rental, comprising the rental of hardware to operate the above software. As the Group predominantly trades in South Africa at present, no geographical segments were identified on a secondary basis. Segment results include revenue and expenses directly attributable to a segment and the relevant portion of enterprise revenue and expenses that can be allocated on a reasonable basis to a segment, whether from external transactions or from transactions with other Group segments. Unallocated items comprise mainly corporate expenses. Segment assets and liabilities comprise those operating assets and liabilities that are directly attributable to the segment or can be allocated to the segment on a reasonable basis. Segment assets and liabilities do not include income tax balances. 19. Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Rand at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to rand at foreign exchange rates ruling at the dates the fair value was determined. 20. Financial guarantees A financial guarantee is a contract that requires the issuer to make specific payments to reimburse the holder for a loss it incurs due to the failure of the specific debtor to make payment when due, under the original or modified terms. The company accounts for such guarantees as insurance contracts. 21. Earnings per share The Group presents basic and diluted earnings per share (EPS) and headline earnings and diluted headline earnings per share data for its ordinary shares. Basic EPS is calculated by dividing the profit attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees. Headline earnings per share is calculated by dividing headline earnings attributable to the ordinary shareholders of the Company by the weighted average number of shares outstanding during the period. Diluted headline earnings is determined by adjusting the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise options granted to employees.

29

annual report 2007


notes to the financial statements for the year ended 30 june

2007 2006 2007 2006R'000 R'000 R'000 R'000

1.

Cost

900 900 - - 4,665 4,665 - -

17,256 16,690 - - 1,558 1,531 - - 1,260 1,260 - -

25,639 25,046 - -

Accumulated depreciation and impairment

491 425 - - 9,605 8,476 - - 1,385 1,311 - -

618 464 - -

12,099 10,676 - -

Carrying value

Freehold land 900 900 - - Buildings 4,174 4,240 - - Computer equipment 7,651 8,214 - - Furniture and off ice equipment 173 220 - - Motor vehicles 642 796 - -

13,540 14,370 - -

Freehold land Buildings

Computer Equipment

Furniture and office equipment

Motor vehicles Total

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

2007

900 4,240 8,214 220 796 14,370 Acquisitions - - 1,548 36 - 1,584 Disposals - - (59) - - (59)

- (66) (2,052) (83) (154) (2,355)

900 4,174 7,651 173 642 13,540

2006

900 4,318 5,813 273 627 11,931 Acquisitions - - 4,183 57 - 4,240 Disposals - - (145) (17) (12) (174)

- (78) (1,637) (93) 181 (1,627)

900 4,240 8,214 220 796 14,370

Group

Motor vehiclesFurniture and off ice equipment

Group Company

PROPERTY, PLANT AND EQUIPMENT

Computer equipmentFurniture and off ice equipmentMotor vehicles

Carrying value at end of year

Freehold land

Carrying value at beginning of year

Depreciation

Carrying value at beginning of year

Depreciation

Carrying value at end of year

Computer equipmentBuildings

Buildings

30

annual report 2007


notes to the financial statements (continued)

2007 2006 2007 2006R'000 R'000 R'000 R'000

1. PROPERTY, PLANT AND EQUIPMENT (continued)

900 900 - - 4,624 4,624 - -

41 41 - -

2. INTANGIBLE ASSETSCostInternally generated softw are 1,595 1,595 - - Purchased softw are 2,307 2,143 - -

3,902 3,738 - -

Accumulated amortisationInternally generated softw are 1,595 1,372 - - Purchased softw are 1,589 1,255 - -

3,184 2,627 - -

Carrying valueInternally generated softw are - 223 - - Purchased softw are 718 888 - -

718 1,111 - -

TotalR'000 R'000 R'000

Carrying value at beginning of year 223 888 1,111 Acquisitions - 164 164 Disposals - - - Amortisation (223) (334) (557)

Carrying value at end of year - 718 718

TotalR'000 R'000 R'000

Carrying value at beginning of year 535 1,163 1,698 Acquisitions - 110 110 Disposals - (21) (21) Amortisation (312) (364) (676) Carrying value at end of year 223 888 1,111

Internally generated softw are

CompanyGroup

Acquired softw are

2006

Group

Details of freehold land and buildingsFreehold land - Portions 1, 2 and 3 of Erf 14 FormainTow nship at costBuildings at cost

Internally generated softw are

Acquired softw are

2007

Timeshare units

31

annual report 2007


2007 2006 2007 2006R'000 R'000 R'000 R'000

3. DEFERRED TAXATION

Deferred tax assets 399 398 - - Deferred tax liabilities (241) (241) (79) (76)Net deferred taxation asset / (liability) 158 157 (79) (76)

Deferred taxation can be attributed to the follow ing :

Accelerated w rite off of trademarks 241 362 - - Accelerated capital allow ances (308) (373) - - Payments in advance (171) (193) (10) (7)Accruals 200 155 26 19Capital gains tax on fair value of other investments (95) (88) (95) (88)Deemed cost adjustment - freehold buildings (162) (165) - - Post retirement medical obligations 453 459 - -

158 157 (79) (76)

Balance at beginning of the year 157 254 (76) (76)Recognised in income 1 (97) (3) -

Balance at end of year 158 157 (79) (76)

2007 2006 2007 2006R'000 R'000 R'000 R'000

4. OTHER INVESTMENTS

4,616 2,296 4,616 2,296

4,616 2,296 4,616 2,296

5. TRADE AND OTHER RECEIVABLES

Trade receivables 5,362 6,369 - - Prepayments 618 642 77 - Other receivables 105 172 - 49

6,085 7,183 77 49

CompanyGroup

2,789,535.6212 units in the Liberty Life CompanyProperty Fund (2006 - 1,517,125.8703).

Liberty Life Multi Access Endow ment, comprising:

The income tax rate of 29% has been applied in measuring the deferred tax on all temporary dif ferences,except for the gain on fair value of investments, for w hich a capital gains tax rate of 14,5% has been used.

The expected manner of recovery of deferred tax is dependent on future taxable profits in excess of theprofits arising from the reversal of existing temporary dif ferences.

Group Company

Fair value of other investments is based on quoted unit prices at the financial year end.

The movement in deferred taxation can be analysed as follow s :

32

annual report 2007



2007 2006 2007 2006R'000 R'000 R'000 R'000

6.

3,442 5,440 3,442 5,440Bank balances 2,112 1,599 368 329Call Deposits 11,488 12,583 1,550 1,437

17,042 19,622 5,360 7,206

7.

8.

2,000 2,000 2,000 2,000

409 400 - - - - 409 400

5,351 12,061 5,207 12,061

5,760 12,461 5,616 12,461

388 384 400 400

9 - 9 - 7 4

404 388 409 400

Shares Shares2007 2006

538,750 1,202,824

The unissued shares are under the control of thedirectors until the next annual general meeting.

Balance at beginning of the year

Group

COMMITMENTS AND CONTINGENCIES

There w ere no material commitments or contingencies at the reporting date (2006 - Nil).

Authorised200 000 000 shares of 1 cent each

Shares held by the subsidiary company at the f inancial year end

Company

Share premium

- by a subsidiary company

SHARE CAPITAL AND PREMIUM

Issued

40 918 445 (2006 - 40 038 445) shares of 1 cent each

CASH AND CASH EQUIVALENTS

Money Market funds

- by the company

Reissued during the year

The group has authority, in terms of a special resolution passed on 19 January 2005, to repurchase its sharesin the open market. It did not repurchase any shares during current or prior year. During the year, a subsidiarycompany sold 664,074 (2006 - 374,189) shares into the open market at an average price of R2.77 (2006 -R2.83)

40 379 695 (2006 - 38 835 621) shares of 1 cent each

Reconciliation of group and company issued shares :

Balance at end of the year

33

annual report 2007


2007 2006 2007 2006R'000 R'000 R'000 R'000

9.

33,574 28,118 11,766 10,059456 568 456 568

34,030 28,686 12,222 10,627

10.

1,563 1,583 - -

1,583 1,476 - - 79 254 - -

119 139 - - - - - -

(40) 115 - - (99) (147) - -

1,563 1,583 - -

8.5% 8.5%6.3% 6.0%2.4% 2.5%5.3% 5.0%8.5% 8.5%

99 147 (99) (147)

- -

1,563 1,583 - -

1,563 1,583

11.

448 971 - - 2,242 1,935 257 190

- Salary increase rate - Pension increase rate

Company

- Discount rate

- General inf lation rate - Expected return on plan assets

Contributions paid

Group

TRADE AND OTHER PAYABLES

Balance at beginning of yearRecognised in the income statement as an expenseInterest cost

There are no unrecognised actuarial gains or losses.Actuarial valuations are performed annually.

Current service costActuarial (gain)/ loss recognised

Balance at end of year

257 190

The Group subsidises the medical aid contributions oftw o (2006 - tw o) retired employees. The amountsrecognised in the f inancial statements are as follow s:

POST RETIREMENT MEDICAL OBLIGATIONS

Trade payables due to third partiesNon-trade payables and accrued expenses

2,690 2,906

Key actuarial assumptions

Projected benefit obligationPlan assetsFunding liability

Change in plan assetsContributions by participantsBenefits paidClosing balance

Funding level

RESERVES

- Share-based payment reserve

consist of: - Retained earnings

The share-based payment reserve relates to theaccumulated cost for the future settlement of optionsgranted under the share option scheme (refernote18).

34

annual report 2007



2007 2006 2007 2006R'000 R'000 R'000 R'000

12.

557 676 - - 486 475 - - 345 324 - - 141 (1) - -

- 152 - - 2,354 1,627 - -

19,886 19,097 - - - - - 188

221 151 221 151 - 21 - -

22 102 - -

8 7 - - (112) 150 - -

6,000 34

13.Financial income 1,740 1,843 824 1,155

1,420 1,201 504 513 Fair value adjustment to other investments 320 642 320 642

Interest expense (1) (195) - - Net finance income and expense 1,739 1,648 824 1,155

14.

2,132 3,082 224 309 - current year 2,460 2,729 207 309 - prior year (327) 256 17 -

(1) 97 3 -538 480 538 480

2,670 3,562 765 789

% % % %

29.0 29.0 29.0 29.0 4.9 4.3 7.8 40.2 0.8 0.8 0.0 5.5

(7.2) (2.3) (26.0) (8.7)(3.0) 0.2 0.3 -24.5 32.0 11.1 66.0

Secondary tax on companies

IncomeDividend from subsidiaries

Tax rate reconciliation

INCOME TAX EXPENSE

Interest income

Secondary tax on companiesCompany tax rate

Exempt income

CompanyGroup

Current

FINANCE INCOME AND EXPENSE

Deferred

Financial expense

(Over)/ underprovision in prior yearEffective rate

Disallow ed expenditure

Listing fees

OPERATING PROFITIs stated after accounting for the follow ing :ChargesAmortisation of intangible assets Auditors' remuneration - Audit fee - current year

Loss on disposal of intangible assetsLoss on disposal of property, plant and equipmentOperating lease charges - PremisesShare-based payment expense

- Under/ (over) provision in prior year - Other servicesDepreciationEmployee costs, inclusive of directors' emolumentsImpairment of loan to subsidiary company

35

annual report 2007


2007 2006 2007 2006R'000 R'000 R'000 R'000

15. DISTRIBUTIONS PAIDDividend no. 8 declared 18 August 2006 (2006 - 15 August 2005) 4,307 3,847 4,404 4,004Distribution of share premium - 2 March 2007 3,576 - 3,650 - Distribution of share premium - 8 August 2007 4,005 - 4,075 - Total distributions 11,888 3,847 12,129 4,004

Executive directors

Non-executive directors

Executive directors

Non-executive directors

2007 2007 2006 2006R'000 R'000 R'000 R'000

16. DIRECTORS' EMOLUMENTSPaid by the company - for services as directors - 66 - 72Paid by subsidiary company - for management services 4,385 - 3,520 -

4,385 66 3,520 72

Details of directors remuneration are presented on pages 17 and 18 of this report.

17.

2007 2006Number of

sharesNumber of

shares

39,958,784 38,609,094

1,434,506 2,536,442Diluted w eighted average number of shares 41,393,290 41,145,536

2007 2006R'000 R'000

8,218 7,58522 102- 21

(6) (36)Headline earnings 8,234 7,672

2007 2006cents cents

Basic earnings per share

Basic 20.6 19.6Diluted 19.9 18.4

Headline earnings per shareBasic 20.6 19.9Diluted 19.9 18.6

Headline earnings is determined as follows:

Potential dilutive effect of outstanding share options

Loss on disposal of property, plant and equipmentProfit attributable to shareholders

Loss on disposal of intangible assetsTaxation effect

Group Company

Weighted average number of shares

EARNINGS PER SHARE

Earnings per share is derived by dividing attributable earnings by the w eighted average number of shares afteradjusting for treasury shares. Appropriate adjustments are made in calculating diluted and headline earnings pershare.

Group

36

annual report 2007


18. EMPLOYEE BENEFITS

Share-based payments

Number of instruments

Contractual life of

options

170,000 10 years405,000 10 years

220,000 10 years520,000 10 years

390,000 10 years250,000 10 years

1,955,000

Number of options

2007 2007 2006 2006

R1 3,345,000 R1 3,670,000(975,000) -(415,000) (325,000)

R1 1,955,000 R1 3,345,000

R1 895,000 R1 1,627,500

Fair value at measurement date 100 cents 100 cents 100 cents

Share price 115 cents 115 cents 115 centsExercise price 100 cents 100 cents 100 centsExpected volatility 9.84% 9.84% 9.84%Option life 4.2 years 4.5 years 2.8 yearsExpected dividends 2.45% 2.45% 2.45%Risk-free interest rate 10.96% 10.96% 10.96%

The terms and conditions of the grants, w hereby all options are settled by physical delivery of shares, are asfollow s:

Options granted to directors (key management)

The number and w eighted average exercise prices of share options is as follow s:

Number of options

Grant date/employees entitled

Directors

- November 1998

Options granted to senior management (keymanagement)

Options granted to other employees

- March 2003

2007

Lapsed during the period

The fair value of services rendered in return for share options granted is measured at the date of issue byreference to the fair value of share options granted. The estimate of the fair value of services received ismeasured based on the Black-Scholes-Merton option pricing model. The contractual life of the option (10years) is used as an input into the model.

The options outstanding at 30 June 2007 have an exercise price of R1 and a w eighted average contractual lifeof 4 years.

Outstanding at end of the period

Exercisable at end of the period

Exercised during the periodOutstanding at beginning of the period

Total share options

At 1 March 2003, the company established a share option programme that entitles key management and senioremployees to purchase shares in the company. In accordance w ith this programme options are exercisable atthe market price of the shares at the date of grant. An additional share option arrangement granted before 7November 2002 also exists. The recognition and measurement principles in IFRS 2 have not been applied to this grant, based on the IFRS 1 election available to the Group.

- November 1998 - March 2003

10 percent per year fromgrant date

Vesting Conditions

- November 1998

10 percent per year fromgrant date - March 2003

10 percent per year fromgrant date

37

annual report 2007


notes to the financial statements (continued) 18.

Fair value at measurement date 100 cents 100 cents 100 cents

Share price 115 cents 115 cents 115 centsExercise price 100 cents 100 cents 100 centsExpected volatility 9.84% 9.84% 9.84%Option life 4.6 years 5.5 years 3.9 yearsExpected dividends 2.45% 2.45% 2.45%Risk-free interest rate 10.96% 10.96% 10.96%

2006 2007 2006R'000 R'000 R'000

19.

1,100 1,020 - -

20.

8,218 7,585 6,111 406Income tax expense 2,670 3,562 765 789

1,082 928 (824) (967)

2,821 2,576 - 188 - Depreciation 2,354 1,627 - - - Amortisation of intangible assets 557 676 - - - Impairment of loans to subsidiaries - - - 188

- 21 - - - Loss on disposal of property, plant and equipment 22 102 - -

(112) 150 - - Financial expense 1 195 - - Financial income (1,740) (1,843) (824) (1,155)

11,970 12,075 6,052 228

21.

(27) (59) - -1,098 (814) (28) 75(216) 366 67 (39)

855 (507) 39 36

- Share option expense

- Loss on disposal of intangible assets

Decrease/ (increase) in trade and other receivables(Decrease)/ increase in trade and other payables

Adjustments

Increase in inventories

EMPLOYEE BENEFITS (continued)2006

2007Group

The expected volatility has been estimated by calculating the standard deviation of the volume w eighted monthlyprice of the shares over the 12 month period prior to 31 March 2003.

The risk-free rate is based on the yield on the R150, the government bond w ith a maturity date closest to theexpiry of the option scheme.

R'000

Company

DECREASE/ (INCREASE) IN WORKING CAPITAL

Profit for the year

POST RETIREMENT BENEFITS

The group contributes to a defined contribution planw hich is governed by the Pension Funds Act. 92% ofthe 59 permanent employees w ere members of thefund (2006 - 96% of 67). The group makes the fullcontribution as the members are all non-contributorymembers. These costs are included in employee costsin note 12.

CASH GENERATED BY TRADING OPERATIONS

Items not affecting the f low of funds

38

annual report 2007


Company2007 2006 2007 2006R'000 R'000 R'000 R'000

22.

18 1,967 (168) 40(2,671) (3,465) (762) (789)(1,181) (18) (12) 168(3,834) (1,516) (942) (581)

23. RELATED PARTY TRANSACTIONS

23.1 Key management personnel compensation

2007 2006 2007 2006R'000 R'000 R'000 R'000

Short-term employee benefits 6,777 6,158 - - Benefit on exercise of share options 1,226 - Termination benefits - - - -

8,003 6,158 - -

23.2 Related party transactions

Directors’ emoluments are set out in the directors’ report and note 16.

Balance due /

( bl )R’000 R’000

Paid (21) - Received 4,327 499Received 801 76

Paid 2,125 -

Key management are those persons having authority and responsibility for planning, directing and controllingthe activities of the company, directly or indirectly, including any director (w hether executive or otherw ise) ofthe company as w ell as close members of the family of any of these individuals.

The Bidvest GroupLutrin, Abrams, Sklar

Name

Details of transactions w ith related parties and outstanding balances at 30 June 2007 and 30 June 2006 are asfollow s:

Lutrin, Abrams, Sklar (CA) SA are corporate advisors to the Group. M Lutrin is a partner of Lutrin, Abrams,Sklar and a non-executive director of Compu-Clearing. Fees paid to Lutrin, Abrams, Sklar during the year w ereat market related rates.

Group

INCOME TAXES PAID

Taxation receivable / (payable) at beginning of the yearIncome statement charge

The Bidvest Group Limited ow ns 24.5% of the shares in the Group and tw o members of its management teamare non-executive directors of Compu-Clearing. The follow ing transactions took place during the year :

Company

Group

Group

Taxation (receivable)/ payable at end of the year

(Paid/Received)

- The Bidvest Group is a major player in the freight industry and accordingly several of its subsidiariesare customers of Compu-Clearing and transact w ith the company at market related rates.

A non-executive director, Mr. A. Katz is the chief executive off icer of Boston Technology Campus, w hichsupplies training services to the Group, in terms of its contract w ith the ISETT SETA.

2007

Premier Freight

A non-executive director, Mr. A. Webb, is f inancial director of Premier Freight (Proprietary) Limited, w hich is acustomer of Compu-Clearing. All transactions w ith Premier Freight are at market related rates.

Boston Technology Campus

39

annual report 2007


notes to the financial statements (continued) 23. RELATED PARTY TRANSACTIONS (continued)

R’000

Paid (30) - Received 4,090 1,262Received 808 161

Paid (2,125) -

The company is a holding and investment company and has advanced amounts to subsidiary companies asreflected on page 18 of this report. There are no guarantees are provided. An impairment loss has beenrecognised in respect of the irrecoverable portion of loans to subsidiary companies, as set out in note 12.

Transactions w ith all the above related parties are on an arm's length basis and balances are settled inaccordance w ith the Group's standard credit terms.

Lutrin, Abrams, Sklar

Company

Boston Technology Campus

2006 (Paid/Received)

Balance due /

(payable)

The Bidvest groupPremier Freight

24. FINANCIAL INSTRUMENTS The Company and Group are exposed to credit risk, liquidity risk and market risk in the normal course of business. The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The Board has established the Risk Committee, which is responsible for developing and monitoring the Group's risk management policies. The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The Risk Committee interacts regularly with management to assess the efficacy of the Group’s risk management policies. The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables and other investments. Trade and other receivables The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group’s largest single customer is responsible for approximately 9,7% of the Group’s revenue. Management has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. At balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. The Group establishes an allowance for impairment that represents its estimated losses in respect of trade and other receivables and investments. The impairment allowance comprises a specific loss component that relates to individual exposures. Other investments The Group limits its exposure to credit risk by only investing in assets comprising cash or convertible into cash within a 24 hour notice period. In all cases investments are placed with reputable financial institutions. Management does not expect any counterparty to fail to meet its obligations, in terms of existing investments.

40

annual report 2007


24. FINANCIAL INSTRUMENTS (continued) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to discharge its liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or loss of reputation. The Group manages liquidity risk by effectively managing its working capital, capital expenditure and cash flows. The Group finances its operations through retained earnings and does not have any debt.

Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will effect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on risk. Currency risk The Group incurs currency risk as a result of transactions which are denominated in a currency other than the Group’s functional currency. The value of these transactions is not significant and is not hedged. Interest rate risk Exposure to interest rate risk on financial assets and liabilities is monitored on a continuous and proactive basis. Fair value The fair values of all financial instruments are substantially identical to the carrying values reflected on the balance sheet. 25. ESTIMATION AND JUDGEMENT APPLIED BY MANAGEMENT IN APPLYING ACCOUNTING POLICIES The following estimations or judgements, which could have a significant effect on the 2007 results were made by management in applying the accounting policies at 30 June 2007. Impairment of trade receivables Management identifies impairment of trade receivables on a continuing basis. The estimation of the requirement for impairment is based on the current collectibility of the trade receivables, as well as taking into account the historical factors with regard to impairment of trade receivables. Management believe that there are no significant trade receivables that are doubtful and have not been provided for. Property, plant and equipment Management reviews the useful lives of the different categories of property, plant and equipment and the residual values of items thereof, at least twice a year. In conducting such a review, management make use of estimates based on their experience, as well as historical data.

41

annual report 2007


notes to the financial statements (continued) 26. RELEVANT STANDARDS AND INTERPRETATIONS BECOMING EFFECTIVE FOR YEARS ENDING AFTER 30

JUNE 2007

Standard/Interpretation Effective date

IAS 23 Borrowing Costs Annual periods commencing on or after 1 January 2009

IFRS 7 Financial Instruments: Disclosures (including amendments to IAS , Presentation of Financial Statements: Capital Disclosures)

Annual periods commencing on or after 1 January 2007

IFRS 8 Operating Segments Annual periods commencing on or after 1 January 2009

IFRIC 10 Interim Financial Reporting and Impairment Annual periods commencing on or after 1 November 2006

IFRIC 11 IFRS 2 – Group and Treasury Share Transactions Annual periods commencing on or after 1 March 2007

IFRIC 12 Service Concession Arrangements Annual periods commencing on or after 1 January 2008

IFRIC 13 Customer Loyalty Programmes Annual periods commencing on or after 1 July 2008

IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

Annual periods commencing on or after 1 January 2008

All standards will be adopted at their effective date, except for those standards that are not applicable to the entity. IAS 23, IFRIC 11, IFRIC 12, IFRIC 13 and IFRIC 14 are not applicable to the business of the Group and will therefore have no impact on future financial statements. The Directors are of the opinion that the impact of the application of the remaining standards and interpretations will be as follows: IFRS 7 The disclosures provided in respect of financial instruments in the financial statements of the period ending 30 June 2008, as well as comparative information, will be compliant with IFRS 7 and the amendments to IAS 1. Since the group does not issue any insurance contracts the consequential amendments to IFRS 4 will not have any impact.

The disclosure requirements of IFRS 7 and the amendments to IAS 1 require additional disclosure in respect of capital objectives and policies as well is financial instruments. The adoption of IFRS 7 and the amendments to IAS 1 will not have any impact on the accounting policies adopted for financial instruments.

42

annual report 2007


26. RELEVANT STANDARDS AND INTERPRETATIONS BECOMING EFFECTIVE FOR YEARS ENDING AFTER 30 JUNE 2007 (continued) IFRS 8 IFRS 8 will be adopted by the Group the first time for its financial reporting period ending 30 June 2010. Segment reporting will be based on the components of the group that management monitors in making decisions about operating matters. Such components (operating segments) would be identified on the basis of internal reports that the group’s chief operating decision maker reviews regularly in allocating resources to segments and in assessing their performance. Operating segments would become reportable based on threshold tests related to revenue, results and assets. The statement also requires more qualitative disclosures such as the types of products and services offered by each segment, geographical areas covered and major customers. IFRIC 10 This Interpretation is effective for the group for the year ending 30 June 2008 and clarifies that an entity shall not reverse an impairment loss recognised in a previous interim period in respect of an investment in either an equity instrument or a financial Instrument carried at cost. The requirements do not have a significant impact on the group.

43

annual report 2007


2006

R'0

00

39,5

79

9,9

46

(447

)

9,4

99

(195

)

1,84

3

11,1

47

44,6

57

4

16

45,0

73

4,4

89

2

41

4,7

30

4,3

50

2,3

03

-

2007

R'0

00

42,2

92

9,6

74

(525

)

9,1

49

(1)

1,7

40

10,8

88

41,9

42

1,58

2

43,5

24

4,25

3

2

43

4,49

6

1,74

8

2,91

1

-

2006

R'0

00

(362

)

(359

)

-

(359

)

-

-

(359

)

5

23

5

23

-

-

-

-

-

(1

88)

2007

R'0

00

(7

30)

(7

30)

-

(7

30)

-

-

(7

30)

(4,0

24)

(4,0

24)

(184

)

(184

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-

-

-

2006

R'0

00

2,5

20

(7,5

24)

(447

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(7,9

71)

(195

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1,84

3

(6,3

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34,9

18

34,9

18

3,0

04

3,0

04

57

(

10)

1

88

2007

R'0

00

1,6

51

(7,6

94)

(525

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(8,2

19)

(1)

1,7

40

(6,4

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34,5

64

34,5

64

2,01

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2,01

9 36 321

-

2006

R'0

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9,0

64

3,6

14

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3,6

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-

-

3,6

14

8,2

14

8,2

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1,3

67

1,3

67

4,1

83

1,6

37

-

2007

R'0

00

10,2

51

3,0

77

-

3,0

77

-

-

3,0

77

9,26

6

9,2

66

1,77

6

1,77

6

1,54

8

2,10

7

-

2006

R'0

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28,3

57

14,2

15

-

14,2

15

-

-

14,2

15

1,0

02

1,0

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1

18

1

18

1

10

6

76

-

2007

R'0

00

31,1

20

15,0

21

-

15,0

21

-

-

15,0

21

2,13

6

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642

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164

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44

annual report 2007


analysis of shareholders 30 june

No. of shareholders

% of shareholders in group

% of shareholders in company

No. of Shares

% of shares issued

in group

% of shares issued in company

173 64.3 64.1 1 5,000 319,652 0.8 0.8 32 11.9 11.9 5,001 10,000 274,800 0.7 0.7 44 16.4 16.3 10,001 100,000 1,398,434 3.5 3.4 15 5.6 5.6 100,001 500,000 4,013,873 9.9 9.8 1 0.3 0.4 500,001 1,000,000 1,122,950 2.8 2.7 4 1.5 1.5 1,000,001 and over 33,249,986 82.3 81.3

269 100.0 99.8 40,379,695 100.0 98.7 1 0.3 538,750 1.3

270 100.1 40,918,445 100.0

% of shareholders in company

No. of shareholders

No. of shares% of total

shares held in group

% of total shares held in company

4.1 11 20,177,395 50.0 49.3

14.2 38 18,151,838 45.0 44.481.3 217 2,050,462 5.1 5.00.4 1 538,750 - 1.3

100.0 267 40,918,445 100.1 100.0

92.9 262 10,298,100 25.27.1 20 30,620,345 74.8

100.0 282 40,918,445 100.0

60.0 12 20,423,295 49.925.0 5 292,850 0.7

5.0 1 20,000 -

10.0 2 9,884,200 24.2

100.0 20 30,620,345 74.8

Subsidiary company

Shareholding

Held in groupSubsidiary company holding

Held in company

Directors

Financial institutions, other corporates and trusts

Shareholder spread

Individuals

Total company shareholding

Total

Publicly heldNon-publicly held

Associates of directors and subsidiariesDirectors and subsidiary company

Any person w ith an interest of 10% or more

Trustees of any share schemes for directors or employees of the company

45

annual report 2007


analysis of shareholders (continued)

No. of Shares

% shareholding

of group

% shareholding of company

13,688,736 33.9 33.5 4,500,000 11.1 11.0 9,300,000 23.0 22.7 4,000,000 9.9 9.8 2,300,000 5.7 5.6

33,788,736 83.6 82.6

538,750 1.3

34,327,486 83.9

The Johan du Preez Family TrustThe Arnold Garber Family Trust

Barnun Investments (Proprietary) Limited

Company total

Total shares held in the groupHeld by subsidiary company - Three DX Property and Investments (Proprietary) Limited

Major shareholders in the group and company are

The Bidvest Group LimitedComshelf Limited

shareholders’ diary Financial year end 30 June 2007 Annual general meeting 25 October 2007 Reports Preliminary report and dividend announcement 21 August 2007 Interim profit announcement February / March Annual financial statements September Capital Distribution Last day to trade cum distribution Thursday, 20 September 2007 Compu-Clearing securities trade ex-distribution Friday, 21 September 2007 Record date for the distribution Friday, 28 September 2007 Distribution payable Monday, 1 October 2007

46

annual report 2007


notice of annual general meeting

Compu-Clearing Outsourcing Limited (Registration number 1998/015541/06); Share code: CCL; ISIN: ZAE000016564 Notice is hereby given that the annual general meeting of Compu-Clearing Outsourcing Limited will be held in the boardroom, North Building, 7 Drome Road, Lyndhurst, Johannesburg on Wednesday, 24 October 2007 at 14h00 for the following purposes: 1. To receive and adopt the audited financial statements for the year ended 30 June 2007; 2. To approve the non-executive directors’ remuneration for the year ended 30 June 2007; 3. To confirm the remuneration and appointment of KPMG Inc. as auditors for the ensuing year; 4. To consider and, if deemed fit, to pass, with or without modification, the following ordinary resolutions: 4.1 Ordinary resolution number 1 “Resolved that in terms of section 221 of the Companies Act 1973 as amended (“the Act”), the company hereby extends, until the next annual general meeting, the directors’ authority to allot and issue, at their discretion and in terms of the regulations of the JSE Limited (“the JSE”), the unissued shares of the company.” 4.2 Ordinary resolution number 2 “Resolved that the following directors, retiring in terms of the company’s articles of association and offering themselves for re-election, be re-elected: A.Garber J. DuPreez M. Acosta-Alarcon C. Efthymiades A. Katz M. Lutrin T. Mogale D. Rosevear M. Steele T. Webb” Details of the directors standing for re-election appear on pages 9-10 of the annual report. 4.3 Ordinary resolution number 3 “Resolved that the directors have the powers to allot and issue any shares of any class already in issue in the capital of the company for cash when the directors consider it appropriate in the circumstances, subject to the following:

• this authority shall not endure beyond the earlier of the next annual general meeting of the company or beyond 15 (fifteen) months from the date of passing of this ordinary resolution;

• there will be no restrictions in regard to the persons to whom the shares may be issued, provided that

such shares are to be issued to public shareholders as defined by the JSE in its Listings Requirements) and not to related parties;

• upon any issue of shares which, together with prior issues during any financial year, will constitute

5% (five percent) or more of the number of shares of the class in issue, the company shall, by way of a paid press announcement in terms of 11.22 of the JSE Listings Requirements, give full details thereof, including the effect on the net asset value of the company and earnings per share, the number of securities issued and the average discount to the weighted average traded price of the securities over the 30 days prior to the date that the price of such issue was determined or agreed by the company’s directors;

• that issues in the aggregate in any one financial year may not exceed 15% (fifteen percent) of the

number of that class of the company’s issued shares (including instruments which are compulsorily convertible into shares of that class) at the date of application less any shares of that class issued, or to be issued in the future arising from options / convertible securities issued during the current financial year, plus any shares to be issued pursuant to an announced, irrevocable and fully underwritten rights offer or to be issued pursuant to any acquisition for which final terms have been announced;

47

annual report 2007


notice of annual general meeting (continued)

• the maximum discount at which securities may be issued is 10% (ten percent) of the weighted average traded price of those securities over the 30 (thirty) business days prior to the date that the price of the issue is determined or agreed by the directors; and

• a 75% (seventy-five percent) majority is required of votes cast by the shareholders present or

represented by proxy at the general meeting to approve the resolution.” 4.4 Ordinary Resolution number 4 “Resolved that, in terms of article 13.2 of the company’s Articles of Association and subject to the company obtaining a declaration of the directors that:

• the company as well as the company and its subsidiaries (“the Group”) would be able, after the proposed repayments, to pay its debts as they become due in the ordinary course of business; and

• the consolidated assets of the company and the Group, fairly valued would, after the proposed

repayments, not be less than the consolidated liabilities of the company and the Group

the directors of the company shall be entitled, from time to time, to pay by way of a reduction of share premium, capital distributions pro-rata to all shareholders of the company in lieu of a dividend. Such distributions shall be the amounts which the directors would have declared and paid out of the profits of the company as interim and final dividends in respect of the financial year ended 30 June 2007. This authority shall not extend beyond the earlier the date of the annual general meeting following the annual general meeting at which this resolution is being proposed or 15 months from the date of the resolution.”

In terms 5.86 of the Listings Requirements of the JSE any general payment(s) may not exceed 20% (twenty percent) of the company’s issued share capital, including reserves but excluding minority interests, and revaluations of assets and intangible assets that are not supported by a valuation by an independent professional expert acceptable to the JSE prepared within the last six months, in any one financial year, measured as at the beginning of such financial year.

4.5 Ordinary Resolution Number 5 “Resolved that, the resolution of the directors passed on 21 August 2007 to make a capital distribution out of share premium of 9 cents per share to ordinary shareholders recorded in the register at the close of business on 1 October 2007, be and is hereby ratified and confirmed.”

As announced on Monday, 27 August 2007, the board has resolved to make a distribution to ordinary shareholders from the company’s share premium account amounting to 12 cents per ordinary share (“the capital distribution”). The directors have considered the terms and conditions of the capital distribution and are of the opinion that Compu-Clearing shareholders should vote in favour of the resolutions necessary to implement the capital distribution. The directors, who directly and indirectly hold Compu-Clearing shares intend to vote or to procure the voting of such shares in favour of the resolutions proposed to implement the capital distribution. The table below illustrates the effect of the capital distribution on the earnings and net asset value per Compu-Clearing ordinary share and is based on the audited results for the year ended 30 June 2007. These financial effects which have been reviewed by the company’s auditors, KPMG Inc., are prepared for illustrative purposes only, are the responsibility of the board, and because of their nature, may not give a true indication of the company’s financial position and results of operations.

Before (cents) After (cents) Change (%) Earnings per share 20.6 19.9 (3.4%) Headline earnings per share 20.6 19.9 (3.4%) Net tangible asset value per share 97.1 77.6 (20.1%)

Notes to the financial effects: It is assumed that the capital distribution had been paid to shareholders on 1 July 2006; and based on a reduction of R4 845 563 and an after tax interest rate earned on cash resources of 5.5%.

48

annual report 2007


Pursuant to and in terms of the Listings Requirements of the JSE, the directors of the company hereby state: 1. that the intention of the company and/or any of its subsidiaries is to utilise the general authority to make capital payments to shareholders if at some future date the cash resources of the company are in excess of its requirements. In this regard the directors will take account, inter alia, of an appropriate capitalisation structure for the company, the long-term cash needs of the company, and will ensure that any such utilisation is in the interest of shareholders; 2. that the method by which the company intends to make capital payments to shareholders in terms of a general authority and the date on which such payments will take place and has been stated in the paragraph below; and 3. that after considering the effect of a maximum permitted general capital payment, the company and its subsidiaries are, as at the date of this notice convening the annual general meeting of the company, able to fully comply with the Listings Requirements of the JSE:

● the share capital and reserves of the company and the Group will be adequate for ordinary business purposes for a period of 12 months after the date of the notice of the annual general meeting;

● the working capital of the company and the Group will be adequate for ordinary business purposes for a

period of 12 months after the date of the notice of the annual general meeting; and

● the company will provide its sponsor and the JSE with all documentation as required in Schedule 25 of the Listings Requirements of the JSE, and will not commence any repurchase programme or capital payment until the sponsor has signed off on the adequacy of its working capital, advised the JSE accordingly and the JSE has approved this documentation.

Should the capital distribution of 12 cents per ordinary share be approved by shareholders the following salient dates will be applicable thereto : Finalisation information of the capital distribution announced on SENS Wednesday, 12 September 2007 Last date to trade “cum” the capital distribution Friday, 21 September 2007 Trading commences “ex” the capital distribution Tuesday, 25 September 2007 Record date Friday, 28 September 2007 Date of payment Monday, 1 October 2007 The above dates are subject to change. Any change will be announced on SENS and in the press. Share certificates may not be dematerialised or rematerialised between Tuesday, 25 September 2007 and Friday, 28 September 2007. The 2007 capital distribution is subject to the South African Exchange Control Regulations of the South African Reserve Bank. The following is a summary of certain of the South African Exchange Control Regulations insofar as they are applicable to shareholders in relation to this document. Shareholders should consult their professional advisors in this regard. Emigrants from the common monetary area Certificated shares The capital distribution due to shareholders who have not dematerialised their shares, who are emigrants from the common monetary area and whose documents of title have been restrictively endorsed under the South African Exchange Control Regulations, will be deposited in a blocked rand account with the authorised dealer in foreign exchange in South Africa controlling the shareholders’ blocked assets in accordance with his instructions, or failing such nomination, with the company to be held in trust as an interim measure until such time as an authorised dealer is appointed and shall not bear interest. Dematerialised shares The capital distribution due to shareholders who are emigrants from the common monetary area and have dematerialised their shares will be credited directly to the blocked rand bank account of the duly appointed Central Securities Depository Participant (“CSDP”) of the shareholders and will be held to the order of the authorised dealers in foreign exchange in South Africa controlling such shareholders’ blocked accounts.

49

annual report 2007


notice of annual general meeting (continued) Other non-residents of the common monetary area The capital distribution due to shareholders whose registered addresses are outside the common monetary area controlled in terms of the Exchange Control regulations will be dealt with as follows: Certificated shares

● any share certificates that might be issued to non-resident shareholders will be endorsed “Non-Resident” ; ● In the case of shareholders who have not dematerialised their shares the capital distribution, dividend and

residual payments will be forwarded to the Authorised Dealer in foreign exchange controlling their blocked assets. The election by emigrants for the above purpose must be made through the Authorised Dealer in foreign exchange controlling their blocked assets. It will be incumbent on the shareholders concerned to instruct the nominated Authorised Dealer as to the disposal of the amount concerned. Any new share certificates will be endorsed “Non-Resident” : and

● Dividend, capital distribution and residual cash payments due to non-residents are freely transferable from

the Republic. Dematerialised shares

● In the case of shareholders who have dematerialised their shares, the capital distribution will be credited directly to the bank account with an Authorised Dealer in foreign exchange controlling their blocked assets, by their duly appointed CSDP. If the information regarding the Authorised Dealer is not supplied, the cash consideration will be held in trust by the company for the shareholders concerned pending receipt of the necessary information and instruction. No interest will accrue or be paid on any capital distributions so held in trust. And

● Dividend, capital distribution and residual cash payments due to non-residents are freely transferable from

the Republic. 5. To consider, and if approved, to pass, with or without modification, the following special resolution 5.1 Special Resolution number 1 “Resolved that the company hereby approves, as a general approval contemplated in sections 85(2), 85(3) and 89 of the Companies Act, 1973 (Act 61 of 1973), as amended (“the Act”), and in terms of the company’s articles of association the acquisition of the company or any of its subsidiaries from time to time of the issued ordinary shares of the company, upon such terms and conditions and in such amounts as the directors of the company may from time to time determine, but, subject to the articles of association of the company, the provisions of the Act and the Listings Requirements of the JSE, as presently constituted and which may be amended from time to time, and provided:

• that any such acquisition of ordinary shares shall be effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement between the company or any of its subsidiaries and the counter party;

• that this general authority shall only be valid until the company’s next annual general meeting provided

that it shall not extend beyond 15 (fifteen) months from the date of passing of this Special Resolution;

• that a paid press announcement will be published as soon as the company or its subsidiaries has/have acquired ordinary shares constituting, on a cumulative basis, 3% (three percent) of the number of ordinary shares in issue, prior to the acquisition pursuant to which the 3% (three percent) threshold is reached, and in respect of every 3% (three percent) thereafter, which announcement shall contain full details of such acquisitions;

● that acquisitions by the company and its subsidiaries of ordinary shares in any one financial year may not

exceed 20% (twenty percent) of the company’s issued ordinary share capital from the date of the grant of this general authority;

● that no subsidiary of the company will acquire more than 10% of the company’s issued ordinary share

capital at any one time;

50

annual report 2007


● that in determining the price at which the company’s ordinary shares are acquired by the company or any of its subsidiaries in terms of this general authority, the maximum price at which such ordinary shares may be acquired will be at a premium of no more than 10% (ten percent) of the weighted average of the market price at which such ordinary shares are traded on the JSE, as determined over the 5 (five) business days immediately preceding the date of repurchase of such ordinary shares by the company or any of its subsidiaries;

● that the company may at any point in time only appoint one agent to effect any repurchase(s) on its behalf;

● that the company or any of its subsidiaries may only undertake a repurchase if, after such a repurchase it

shall still comply with the spread requirements of the JSE Listings Requirements; and

● that the company or any of its subsidiaries may not repurchase securities during a prohibited period, as defined in the JSE Listings Requirements.”

The reason for the Special Resolution is to grant the company or any of its subsidiaries a general authority in terms of the Act for the acquisition by the company or any of its subsidiaries of shares issued by the company, which authority shall be valid until the earlier of the next annual general meeting of the company or the variation or revocation of such general authority by special resolution by any subsequent general meeting of the company, provided that the general authority shall not extend beyond 15 (fifteen) months from the date of this annual general meeting. The passing and registration of this special resolution will have the effect of authorising the company or any of its subsidiaries to acquire shares issued by the company. Information required in terms of the JSE Listings Requirements with regard to this general authority for the company or any of its subsidiaries to repurchase the company’s securities appears in the annual financial statements, to which this notice of annual general meeting is annexed as indicated below:

• Directors and senior management of the company: pages 9 – 11 • Major shareholders: page 45

• Directors’ interest in securities: page 19

• Share capital of the company: page 32

The directors, whose names are given on pages 9 – 10 of the annual report, collectively and individually accept full responsibility for the accuracy of the information given and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made in the annual report and that the annual report and notice of general meeting contains all information required by the JSE Listings Requirements. There has been no material change in the financial or trading position of the company or any of its subsidiaries that has occurred since 30 June 2007. There are no legal or arbitration proceedings, either pending or threatened against the company or its subsidiaries, of which the directors are aware, which may have, or have had in the last 12 months, a material effect on the financial position of the company or its subsidiaries. Pursuant to and in terms of the Listings Requirements of the JSE, the directors of the company hereby state : I. That the intention of the company and or any of its subsidiaries is to utilise the authority if at some future date the cash resources of the company are in excess of its requirements. In this regard the directors will take account, inter alia, an appropriate capitalisation structure for the company, the long-term cash needs of the company, and will ensure that any such utilisation is in the interest of shareholders; II. That the method by which the company and or any of its subsidiaries intends to re-purchase its securities and the date on which such repurchase will take place, has not yet been determined, and III. That after considering the effect of a maximum permitted re-purchase of securities, the company and its subsidiaries are, as at the date of this notice convening the annual general meeting of the company, able to fully comply with the Listings Requirements of the JSE. Nevertheless, at the time that the contemplated re-purchase is to take place, the directors of the company will ensure that:

● The company and the Group will be able in the ordinary course of business to pay its debts for a period of 12 months after the date of the notice of the annual general meeting;

51

annual report 2007


notice of annual general meeting (continued)

● The assets of the company and the Group will be in excess of the liabilities of the company and the Group for a period of 12 months after the date of the notice of the annual general meeting. For this purpose, the assets and liabilities will be recognised and measured in accordance with the accounting policies used in these audited annual Group financial statements;

● The share capital and reserves of the company and the Group will be adequate for ordinary business

purposes for a period of 12 months after the date of the notice of the annual general meeting;

● The working capital of the company and the Group will be adequate for ordinary business purposes for a period of 12 months after the date of the notice of the annual general meeting; and

● The company will provide its sponsor and the JSE with all documentation as required in Schedule 25 of

the JSE Listings Requirements, and will not commence any repurchase programme until the sponsor has signed off on the adequacy of its working capital, advised the JSE accordingly and the JSE has approved this documentation.

The directors, whose names are given on page 9-10 of the annual report collectively and individually accept full responsibility for the accuracy of the information given and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the annual report and notice of general meeting contains all information required by the JSE Listings Requirements. 6. To transact such other business as may be transacted at an Annual General Meeting. Shareholders who hold their shares in certificated form or who are own name registered dematerialised shareholders who are unable to attend the general meeting, which is to be held on Wednesday, 24 October 2006 at 14h00, but wish to be represented thereat, are required to complete and return the attached form of proxy so as to be received by the Transfer Secretaries, Computershare Investor Services 2004 (Proprietary) Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), by not later than 14:00 on Tuesday, 23 October 2007. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend, speak and, on a poll, vote in his stead. A proxy need not be a member of the company. Proxy forms must reach the transfer secretaries, Computershare Investor Services 2004 (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) by not less than 24 hours prior to the scheduled commencement of the meeting (excluding Saturdays, Sundays and public holidays). Shareholders who have dematerialised their shares through a CSDP or broker, other than with own name registration who wish to attend the General meeting should instruct their CSDP or broker to issue them with the necessary authority to attend the meeting, in terms of the custody agreement entered into between such shareholders and their CSDP or broker. Shareholders who have dematerialised their shares through a CSDP or broker, other than with own name registration who wish to vote by way of proxy, should provide their CSDP or broker with their voting instructions, in terms of the custody agreement entered into between such shareholders and their CSDP or broker. These instructions must be provided to their CSDP or broker by the cut-off time or date advised by their CSDP or broker for instructions of this nature. In respect of dematerialised shares, it is important to ensure that the person or entity (such as a nominee) whose name has been entered into the relevant sub-register maintained by the CSDP or broker completes the form of proxy in terms of which he appoints a proxy to vote at the Annual General Meeting. By order of the board

Lutrin, Abrams, Sklar Chartered Accountants (SA ) Group Secretary 18 September 2007

52

annual report 2007


administration

Auditors

Compu-Clearing Outsourcing Limited KPMG Inc Registration number 1998/15541/06 Registered Auditor Share code : CCL KPMG Crescent ISIN code : ZAE 000016564 85 Empire Road Parktown, 2193 Private Bag 9, Parkview, 2122 Registered office 7 Drome Road Lyndhurst, 2192 Attorneys P.O. Box 890856 Lyndhurst, 2106 Internet address

www.compu-clearing.com Werksmans 155 5th Street Sandown Sandton Company secretary Private Bag 10015, Sandton, 2146

Sponsor Lutrin, Abrams, Sklar 1st Floor Block B Sandhavon Office Park 12 Pongola Crescent Eastgate Ext 17 Sasfin Capital a division of Sandton, 2090 Sasfin Bank Limited (Registration number 1951/002280/06) Sasfin Place 13-15 Scott Street Commercial bankers Waverley, 2090

Transfer secretaries Nedcor Bank Limited Hollard House Kruis Street Johannesburg, 2000 Computershare Investor Services 2004 P.O. Box 1076, Johannesburg, 2000 Limited 70 Marshall Street Johannesburg, 2000 PO Box 61051, Marshalltown, 2107

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annual report 2007


form of proxy Compu-Clearing Outsourcing Limited (Incorporated in the Republic of South Africa) (Registration number 1998/015541/06)) (Share code: CCL) ISIN code: ZAE 000016564 (“The company”) For use ONLY by certificated shareholders and own name dematerialised shareholders at the annual general meeting of Compu-Clearing shareholders to be held at 14h00 on WEDNESDAY, 24 OCTOBER 2007, or such later time that may be applicable (“the annual general meeting”).

I/We of being the registered holder(s) of ordinary shares in the company do hereby appoint 1. or failing him/her 2. or failing him/her

the Chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the company to be held in the boardroom, New Building, 7 Drome Road, Lyndhurst, Johannesburg on 24 October 2007 at 14h00, for the purpose of and, if deemed fit, passing, with or without modification, the resolutions to be proposed thereat and at any adjournment thereof, and to vote for and/or against the resolutions and/or abstain from voting in respect of the shares registered in my/our name/s, in accordance with the following instructions:

Number of ordinary shares For Against Abstain 1. Adoption of annual financial statements 2. Approval of non-executive directors remuneration 3. Approval of auditors remuneration and appointment for ensuing year 4. Approval of resolutions 4.1 Ordinary resolution 1 - Control of issued and unissued shares 4.2 Ordinary resolution 2 - Re-election of directors 4.2.1 A. Garber 4.2.2 J. Du Preez 4.2.3 M. Acosta-Alarcon 4.2.4 C. Efthymiades 4.2.5 A. Katz 4.2.6 M. Lutrin 4.2.7 T. Mogale 4.2.8 D. Rosevear 4.2.9 M. Steele 4.2.10 A. Webb 4.3 Ordinary resolution 3 - General authority to issue shares for cash 4.4 Ordinary resolution 4 - General authority to pay capital distributions 4.5 Ordinary resolution 5 - Ratification of resolution to pay a capital distribution

5.1 Special resolution 1 – General authority to repurchase the shares Shareholders who hold their shares in certificated form or who are own name registered dematerialised shareholders who are unable to attend the annual general meeting but who wish to be represented thereat, are required to complete and return the attached form of proxy so as to be received by the transfer secretaries 70 Marshall Street, Johannesburg, 2001 (P O Box 61051, Marshalltown, 2107) by not later than 14h00 on TUESDAY, 23 OCTOBER 2007. Shareholders who have dematerialised their shares through a CSDP or broker, other than by own name registration who wish to attend the annual general meeting should instruct their CSDP or broker to issue them with the necessary authority to attend the meeting, in terms of the custody agreement entered into between such shareholders and their CSDP or broker. Shareholders who have dematerialised their shares through a CSDP or broker, other than by own name registration who wish to vote by way of proxy, should provide their CSDP or broker with their voting instructions, in terms of the custody agreement entered into between such shareholders and their CSDP or broker. These instructions must be provided to their CSDP or broker by the cut-off time or date advised by their CSDP or broker for instructions of this nature. Signed at on this day of 2007. Signature Assisted by me (where applicable)

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annual report 2007


notes 1. A Compu-Clearing shareholder may insert the name of a proxy or the names of two alternative proxies of the

Compu-Clearing shareholder’s choice in the space/s provided, with or without deleting “the chairperson of the annual general meeting”, but any such deletion must be initialed by the Compu-Clearing shareholder concerned. The person whose name appears first on the form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow.

2. Please insert an “X” in the relevant spaces according to how you wish your votes to be cast. However, if you wish

to cast your votes in respect of a lesser number of shares than you own in Compu-Clearing, insert the number of ordinary shares held in respect of which you desire to vote. Failure to comply with the above will be deemed to authorise the proxy to vote or to abstain from voting at the annual general meeting as he/she deems fit in respect of all the shareholder’s votes exercisable thereat. A Compu-Clearing shareholder or his/her proxy is not obliged to use all the votes exercisable by the Compu-Clearing shareholder or by his/her proxy, but the total of the votes cast and in respect whereof abstentions recorded may not exceed the total of the votes exercisable by the shareholder or by his/her proxy.

3. The date must be filled in on this proxy form when it is signed. 4. The completion and lodging of this form of proxy will not preclude the relevant Compu-Clearing shareholder from

attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof. Where there are joint holders of shares, the vote of the senior joint holder who tenders a vote, as determined, by the order in which the names stand in the register of members, will be accepted.

5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative

capacity must be attached to this form of proxy unless previously recorded by the transfer secretaries of Compu-Clearing or waived by the chairperson of the annual general meeting of Compu-Clearing shareholders.

6. Any alterations or corrections made to this form of proxy must be initialed by the signatories. 7. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal

capacity are produced or have been registered by the transfer secretaries of Compu-Clearing. 8. Forms of proxy must be received by the transfer secretaries, Computershare Investor Services 2004 (Pty) Ltd at

70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) by not later than 14h00 on 23th day of October 2007.

9. The chairperson of the annual general meeting may accept or reject any form of proxy, in his absolute discretion,

which is completed other than in accordance with these notes. 10. If required, additional forms of proxy are available from the transfer secretaries of Compu-Clearing. 11. Dematerialised shareholders, other than by own name registration, must NOT complete this form of proxy but

must provide their CSDP or broker with their voting instructions in terms of the custody agreement entered into between such shareholders and their CSDP or broker.

Jay Chetty Computershare Investor Services 2004 (Pty) Ltd P.O Box 61051 Marshalltown 2107

Jay Chetty Computershare Investor Services 2004 (Pty) Ltd 70 Marshall Street Johannesburg 2001

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OperationsJack NaickerJohan Van Buren -SchelleMelvin NarainsamyRaveen Moonsamy Roy NaickerSabelo DlaminiThiresh MoodleyTrevor Van Der SchyffUven Vengothasamy

HelpdeskRoasane ParsonsSandenie PillaySean De WelzijnThabo TshakaWaldo CoetseeWerner Pretorius

Call centreJo-deen EngelbrechtMalcom Van HeerdenNathan MarksNeil BindemanTabita Mokoena

Clearway SystemsHennie BuysNatalie HabanaRobert Wright

Tariff bookShulamit Chackelsonas

StoresJimmy MuhlariPhilemon MongwatoRobert Pele

ReceptionColleen BadenhorstThys Smit

Finance and administrationEdward LetshediFay AbaderLovis EfthymiadesLesley GreenbergRungi PillaySue Martin

Executive Directors: Arnold Garber (chairman); Johan Du Preez (managing director); Mario Acosta-Alarcon (Technical); Costa Ethymiades (Financial)

SecretarialDiane WolpertDee TembaOrma Mphuthi

VB & Internet developmentHristo TzatchevFanie ReyndersValery Goldis

Quality controlAndre HofmeyrJonathan DavisLouis BuysMiguel VieraSheldon Vorster

TransportVivian Mogale

Business DevelopmentJohn Dickson

Contact details available at http://www.compu-clearing.co.za/ccvmjb.htm

ProgrammingAdriaan CronjeAudaine GovenderCharles GoldmanFrances De SousaHenry WallaceImran MohamedOmar MookadamTrevor Thompson

Account managementAngela Saunders

Elizabeth Moller

Menachem Mendelow

Yigal Tepper

the compu‐clearing team

Reg. No. 1998/15541/06Tel. No. (011) 882-7300Fax No. (011) 882-9352

www.compu-clearing.co.za

SOUTH AFRICA’S LEADING IT SPECIALIST FOR THE FREIGHT INDUSTRYSOUTH AFRICA'S LEADING IT SPECIALIST FOR THE FREIGHT INDUSTRY

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