AnnualReport2006complete - ShareData · PDF filecapabilities, cash and cash equivalents are a healthy R19,6 million, up from R12,6 million in 2005. As a result of these cash levels,

Compu-Clearing Outsourcing Limited

Annual

Report

2006

Annual Report 2006

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 23 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 serves, 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.

CORPORATE PROFILE

Financial review 1Key ratios and share statistics 3Value added statement 4Chairmanʹs report 5Directorate and senior management 9Corporate governance 12Directorsʹ responsibilities and approval of financial statements 14Declaration by the company secretary 14Report of the independent auditors 15Report of the directors 16Balance sheets 20Income statements 21Statements of changes in equity 22Cash flow statements 23Accounting policies 24Notes to the financial statements 29Segmental analysis 43Analysis of shareholders 44Shareholdersʹ diary 45Notice of annual general meeting 46Administration 53Form of proxy AttachedThe Compu‐Clearing team Inside back cover

Compu-Clearing believes in going the extra mile, and producing an excellent in-house job, for a fraction of the cost.

The in-house production of the 2006 annual report has saved shareholders 10’s of thousands of rand, yet we have still delivered excellence in the quality of the product and detail of its contents. We would be most grateful to receive your comments and suggestions at [email protected].

Contents

Our in-house produced Annual Report

compu-clearing outsourcing limited 2006 annual report

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Ordinary dividend Special dividendCapital distribution

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financial review

Page 1

Distributions per share - cents Net asset value per share - cents

Cash generated by operations – Rm Total revenue - Rm

Summary

Total revenue Rm 28.1 29.4 32.8 35.3 37.6 39.8 Operating profit Rm 7.1 7.1 7.6 7.7 7.9 9.5 Profit before tax Rm 8.0 7.8 9.4 9.0 9.4 11.1 Operating margin % 25.4 24.0 23.3 21.9 21.2 23.9 Attributable earnings Rm 5.5 5.2 6.4 6.0 5.8 7.6 Earnings per share cents 12.6 12.4 16.0 15.7 15.1 19.6 Ordinary dividend per share cents 2.5 3.0 6.0 8.0 10.0 11.0 Special dividend per share cents - - - 10.0 - - Capital distribution per share cents - - - - - 9.0 Net asset value per share cents 63.1 71.4 81.5 90.9 92.0 103.9 Cash generated by operations Rm 10.5 10.0 11.7 11.6 9.8 11.7

200520042003 2006

SA GAAP IFRS

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Segmental revenue

Total assets - RmEarnings per share - cents

Operating profit, profit before tax and attributable earnings – Rm

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101214161820

2001 2002 2003 2004 2005 2006


Ratios

Return on shareholders' funds %1 20.9 17.8 20.3 17.3 16.3 18.8Return on total assets %2 25.7 22.9 25.1 20.9 23.7 24.7Operating margin %3 25.4 24.0 23.3 21.9 21.2 23.9Quick ratio %4 5.0 8.6 5.6 4.4 10.0 10.0Price/earnings %5 10.0 11.5 9.7 9.6 16.2 12.8

Headline earnings per share cents 6 12.5 11.7 16.1 16.0 15.3 19.9Dividend per share cents 7 2.5 3.0 6.0 8.0 10.0 11.0Special dividend per share cents 7 - - - 10.0 - - Capital distribution per share cents 7 - - - - - 9.0Net asset value per share cents 63.1 71.4 81.5 90.9 92.0 103.9Share price high cents 180 150 165 170 245 385 low cents 100 100 100 110 105 225 closing (30 June) cents 125 135 155 150 245 250Market capitalisation R'000 56,324 54,974 62,060 60,058 98,094 100,096Volume traded '000 6,200 2,269 2,771 331 644 636Shares in issue '0008 41,832 40,721 38,307 38,117 38,461 38,836

2006SA GAAP IFRS

Share statistics

20052001 2002 2003 2004

1 Attributable earnings 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 Final dividend declared after the financial year-end. 8 The number of shares in issue have been reduced by the treasury shares held by a subsidiary company.

key ratios and share statistics

Page 3


2005

value-added statement for the year ended 30 june

Page 4

2006 2005 R'000 R'000

Total revenue 39,759 37,563 Net cost of products and services 8,807 8,019

Value added by operations 30,952 29,544 Interest received 1,843 1,741

Total value added 32,795 31,285

Applied as follows :

Employee benefits 19,247 18,466 Government - direct taxes 3,465 3,899 Providers of capital 4,042 6,904

Interest paid 195 42 Dividend paid 3,847 6,862

Total value distributed 26,754 29,269

Re-invested in the group 6,041 2,016

Depreciation and amortisation 2,303 3,092 Reserves retained/(utilised) 3,738 (1,076)

32,795 31,285

% %Employee benefits 58.7 59.0 Government - direct taxes 10.6 12.5 Providers of capital 12.3 22.1 Total value distributed 81.6 93.6 Re-invested in the group 18.4 6.4

100.0 100.0

2006

Employee costs

Retained forfuture

Capital providers

Taxation


Arnold GarberChairman

It gives me pleasure to report on the results of the company and the group for the year ended 30 June 2006.The past financial year has been one of pleasing growth, with headline earnings per share increasing by 30% to 19,9 cents per share. This was achieved largely as a result of improved operating margins, which benefited from the introduction of our business partner program and closure of our satellite branches. The business partner program has expanded our geographical footprint in South Africa, without committing the Group to any of the costs incurred with the running of a remote office. At the same time, service levels have improved in remote areas. The local success of the business partner strategy has prompted management to evaluate its efficacy in developing an international presence. Profit growth was further boosted by the reduction in the STC charge. Ignoring the impact of this, growth in headline earnings per share is still a pleasing 22%

INVESTMENT IN PROPERTY, PLANT AND EQUIPMENTNew investments in property, plant and equipment, increased from R2,5 million in 2005 to R4,2 million in 2006. R3 million of this relates to the renewal of hardware and improvement of the Group’s disaster recovery capabilities. We are of the opinion that this investment will satisfy our operational needs for many years to come and do not anticipate significant further investment in property, plant and equipment, in the short-term. As part of the implementation of IFRS, the Group has reviewed the residual values and useful lives of its property, plant and equipment. The revision of useful lives has resulted in a drop in the annual depreciation charge due to actual useful lives surpassing previous estimates.

CASH RESOURCES

Cash levels remain excellent and after the R3 million renewal of hardware and upgrade of our disaster recovery capabilities, cash and cash equivalents are a healthy R19,6 million, up from R12,6 million in 2005. As a result of these cash levels, the board of directors have resolved to distribute a total of 20 cents a share to shareholders, in the form of a dividend of 11 cents per share (2005 -10 cents) and, subject to shareholder approval, a capital distribution of 9 cents per share (2005 – Nil).

TAXATION

Our effective tax rate has decreased from 38,2% to 32,0% as a result of a decrease in STC from R857,000 to R480,000. This is due to the once-off payment of a special dividend in September 2004. The group remains committed to paying satisfactory levels of shareholder distributions.

Page 5

chairman’s report


INTERNATIONALOur international activities continue to progress and our two pilot customers are extremely satisfied with the product, after two years of operation. We are proud of obtaining approval from US Customs, for the use of Compu-Clearing software to relay air cargo manifest information to Customs and view it as another step forward in gaining a foothold in the international market.

CORPORATE GOVERNANCE & COMPLIANCECompu-Clearing continues to be committed to Corporate Governance and Compliance with all statutory requirements. As part of its commitment, Compu-Clearing voluntarily engages the services of KPMG every quarter, to review both its published interim results, as well as the Group’s management accounts.

BLACK ECONOMIC EMPOWERMENTThe 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 dignityof 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.

PROSPECTSThe Group expects further increases in turnover in the new financial year, as a result of winning contracts to supply services to a number of major clients. As mentioned in my previous report, Compu-Clearing has forged relationships with two niche banks to offer foreign exchange and trade finance services to importers, in a cost-effective, convenient manner. Rollout of this service will commence in the new financial year, with revenue from these initiatives likely to flow in the second half of the year.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.

Page 6

IAS16 – Property, plant and equipment

Deemed costThe cost of the Group’s property has been adjusted to recognise the fair value of the property at 1 July 2004, as deemed cost under IFRS.

Other adjustmentsResidual valuesIn calculating the depreciation charge, the Group has reduced the depreciable amount of its assets in each period by its estimated residual value. In previous years, under SA GAAP, the estimated residual value was not determined on recognition of the asset and was not subject to reassessment. The Group now reassesses the residual value of its property, plant and equipment at each reporting date.

Useful livesThe Group has reassessed the useful life of all property, plant and equipment, to correct any useful lives that were previously assessed incorrectly. In instances were the cost of items of property, plant and equipment was fully depreciated the carrying value of such assets have been adjusted to reflect the applicable useful life and residual value. In future, useful lives will be reassessed at each reporting date.

ComponentisationWhen parts of an item of property, plant and equipment have different useful lives or residual values, those components are accounted for as separate parts of items of property, plant and equipment.

Effects of IFRS adoptionThe adoption of IFRS has resulted in a 0,7 cent increase in earnings per share to 19,6 cents and a 0,8 cents increase in headline earnings per share to 19,9 cents.

Segmental analysisThe primary basis of preparation of the segmental report is geographical segments.

REVIEW REPORTThe Group’s auditors KPMG Inc, have reviewed the financial information forthe year ended 30 June 2006. Their unqualified report is available for inspection at the registered office of the Company.

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERSNotice is hereby given of the declaration of an ordinary cash dividend of 11 cents per share (2005: 10 cents)(“the dividend”). The following salient dates apply to the dividend:

Last date to trade `cum` the distribution Friday, 1 September 2006 Trading commences èx` the distribution Monday, 4 September 2006 Dividend record date Friday, 8 September 2006 Date of payment Monday,11 September 2006

Share certificates may not be dematerialised or rematerialised during the period Monday,4 September 2006 to Friday, 8 September 2006, both days inclusive.

Notice is hereby given that the board of directors has further resolved to distribute to ordinary shareholders a portion of the share premium account in lieu of a dividend to ordinary shareholders (`the distribution`). The distribution will amount to 9 cents per ordinary share (2005: Nil). In terms of the company`s Articles of Association and the JSE Limited`s Listings Requirements, any such distribution is subject to the passing of an ordinary resolution by the company`s shareholders. It is accordingly proposed that the appropriate resolution will be put to shareholders at the Annual General Meeting of the company (ÀGM`) which will take place on 25 October 2006. Should such resolution be approved by the shareholders, the following salient dates to the distribution will apply:

Last date to trade `cum` the distribution Friday, 3 November 2006 Trading commences èx` the distribution Monday, 6 November 2006 Record date Friday, 10 November 2006 Date of payment Monday, 13 November 2006

Share certificates may not be dematerialised or rematerialised during the period Monday, 6 November 2006 to Friday, 10 November 2006, both days inclusive.

Basis of preparation

The Group has adopted IFRS for the first time in the preparation of these results and has applied IFRS 1 (First time adoption of International Financial Reporting Standards). The condensed financial statements have been prepared in accordance with IAS 34. The accounting policies set out below have been applied consistently to all periods presented in these condensed financial statements. They also have been applied in preparing an opening IFRS balance sheet as at 1 July 2004, for the purposes of the transition to IFRS, as required by IFRS 1.

In terms of IAS 1, investments in property instruments, previously included in cash and cash equivalents, are now disclosed separately, due to the different risk profile applicable to these investments.

IFRS 1 elections applicable 1 July 2004

Fair value deemed cost

The Group has elected to measure its property at fair value on 1 July 2004, the date of transition to IFRS. Hence fair value is deemed to be cost at that date.

Adoption of IFRS 2 Share-based payment transactions

The Group has elected to apply the share based payments exemption. In terms of this exemption, options granted before 7 November 2002, or granted thereafter but vested before 1 January 2005 are not subject to IFRS2.

Share based payment transaction accounting policy

The Group grants share options to employees, in terms of the Compu-Clearing Share Incentive Scheme. The options are subject to service vesting conditions. The Group recognises the fair value of the options granted (on grant date) as an employee benefit expense, over the vesting period. A corresponding amount is recognised in the share-based payment reserve in equity, as these are equity settled.

The expense is adjusted at the end of each period to reflect actual and anticipated levels of vesting.

Adjustments implemented with effect from 1 July 2004IFRS 2 - Share-based payments

An adjustment has been made to retained earnings at this date, in accordance with IFRS 2 and amounts are now expensed over the vesting period.

Tuesday, 15 August 2006

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Page 7

Commentary

It gives me pleasure to present our results for the year ended 30 June 2006. Growth in headline earnings per share of 30% have been achieved through increased revenues, improved cost control, and reduction in the STC charge. The introduction of our Business Partner program, and closure of our branches, towards the end of the previous financial year, have been catalysts in this regard. We will use the Business Partner strategy in our attempts to establish a geographical presence abroad and to improve service levels. Ignoring the once off impact of the reduced STC charge, growth in our headline earnings, is still a very acceptable 25%.

Compu-Clearing has recently invested close to R3 million in the renewal of hardware and improvement of the group’s disaster recovery capabilities. Nevertheless, cash levels remain excellent and as a result, the board has approved a dividend of 11 cents a share and, subject to shareholder approval, h, a capital distribution of 9 cents a share, resulting in total payments to shareholders of 20 cents per share. Notwithstanding the distribution of the entire earnings, the group will still maintain sufficient cash to fund future operations and expansion.

The group expects turnover for the next financial year to be boosted by winning contracts to supply systems to a number of major clients. The group’s banking and order planning systems, are gaining momentum and are likely to begin generating revenues in the second half of the next financial year.

Compu-Clearing’s international systems require some redevelopment, all of which will be done locally. As a result, no contribution is expected for the next 6 to 12 months from the international operations. Management, however, remain confident of the international division’s long-term feasibility.

“Compu-Clearing”, “The Company” or “The Group”(Incorporated in the Republic of South Africa)~Registration number 1998/015541/06~ Share code CCL~ ISIN ZAE 000016564

Reviewed results for the year ended 30 June 2006

30/06/2006 R'000

% Inc. /

(decr.) ASSETSNon current assets 15,879 13,959 Property, plant and equipment 14,370 11,931 Intangible asset 1,111 1,698 Deferred taxation asset 398 330Current assets 29,194 25,536 Inventory 75 16 Trade and other receivables 7,183 6,369 Taxation receivable 18 1,974 Investments 2,296 4,583 Cash and cash equivalents 19,622 12,594

Total assets 45,073 39,495

EQUITY AND LIABILITIESShareholders' funds 40,343 35,396 Share capital and premium 11,657 10,598 Reserves 28,686 24,798Non-current liabilities 1,824 1,552 Post retirement medical obligations 1,583 1,476 Deferred taxation liability 241 76Current liabilities 2,906 2,547 Trade and other payables 2,906 2,540 Taxation payable - 7

Total equity and liabilities 45,073 39,495

Net asset value per share [cents] 103.9 92.0 13

BALANCE SHEET IFRS

restated 30/06/2005

R'000

Year ended

30/6/2006

IFRS restated

year ended 30/6/2005

% Inc. /

(decr.) R'000 R'000

Profit for the year attributable to ordinary shareholders 7,585 5,786Adjusted for : Loss on disposal of property, plant and equipment 123 97

Taxation effect (36) (28)Headline earnings 7,672 5,855 31

Headline earnings per share [cents] 19.9 15.3 Diluted headline earnings per share [cents] 18.7 14.7

RECONCILIATION OF HEADLINE EARNINGS

Year ended

30/6/2006

IFRS restated


% Inc. /

(decr.) R'000 R'000

Rental and other revenue 39,759 37,563 Operating costs 30,260 29,618 - Distribution 21,961 21,880 - Administration 7,528 6,796 - Other 771 942 Operating profit 9,499 7,945 20 Branch closure expenses - (281) Profit before net finance revenue and taxation 9,499 7,664

Net finance revenue 1,648 1,699 - Financial income 1,843 1,741 - Financial expense (195) (42) Profit before taxation 11,147 9,363 19 Taxation- Normal and deferred 3,082 2,720 Taxation- STC (secondary tax on companies) 480 857 Profit for the year attributable to ordinary shareholders 7,585 5,786 31

Actual number of shares in issue ['000] 38,836 38,461 Weighted average number of shares in issue ['000] 38,609 38,296 Diluted weighted average number of shares in issue ['000] 41,013 39,845

Basic earnings per share [cents] 19.6 15.1 30 Diluted earnings per share [cents] 18.5 14.5 Ordinary dividend per share [cents] 10.0 8.0 Special dividend per share [cents] - 10.0

INCOME STATEMENT

Year ended

30/6/2006

IFRS restated

30/06/2005 R'000 R'000

Balance at beginning of year 35,396 35,763 Share capital 4 3 Share premium 1,055 547 Recognised income and expense 7,585 5,786 Profit before share-based payment 7,735 5,945 Share-based payment expense (150) (159) Dividend paid (3,847) (6,862) Share-based payment reserve 150 159 Balance at end of year 40,343 35,396

STATEMENT OF CHANGES IN EQUITY

www.compu-clearing.com Page 8

Johannesburg A.Garber J. du Preez15 August 2006 (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 2004 Limited 7 Drome RoadGround Floor Lyndhurst, 210670 Marshall Street PO Box 890856Johannesburg, 2001 Lyndhurst, 2106

For and on behalf of the Board

Year ended

30/6/2006

IFRS restated


% Inc. /

(decr.) R'000 R'000

Local sources Software rental revenue 28,454 26,212 9 Hardware rental revenue 9,064 8,885 2 Other 2,158 2,378 (9) Total revenue from local sources 39,676 37,475 6 Segment result from local sources 9,629 8,333 16 Operating margin from local sources 24% 22%

International sources Software rental revenue 83 88 Segment result from international sources (130) (388)

Total revenue 39,759 37,563Total segment result 9,499 7,945Operating margin from all sources 24% 21%

SEGMENTAL REPORT

Year ended

30/6/2006

IFRS restated

30/06/2005 R'000 R'000

Operating profit before net finance revenue and taxation 9,499 7,945 Non cash items 2,576 3,349 Cash generated by trading operations 12,075 11,294 Increase / (decrease) in post retirement medical obligations 107 (115) Branch closure costs - (281) Increase in working capital (508) (1,055) Cash generated by operations 11,674 9,843 Taxation paid (1,613) (6,797) Dividend paid (3,847) (6,862) Net financial revenue 1,648 1,699 Cash flow from operating activities 7,862 (2,117) Cash flow from investing activities (1,893) (7,768) Cash flow from financing activities 1,059 550 Increase/ (decrease) in cash and cash equivalents 7,028 (9,335)

Cash and cash equivalents at the beginning of the year 12,594 21,929 Cash and cash equivalents at the end of the year 19,622 12,594

CASH FLOW STATEMENT

A division of Sasfin Bank Limited

AuditorsSponsor

R'000 R'000IFRS EQUITY IMPACTEquity as previously reported - SA GAAP 34,225 34,638

IFRS and other adjustments 1,171 1,125

IFRS 2 share-based payment reserve 418 259

IFRS 2 share-based payment expense (418) (259)

IAS 16 Restatement of useful lives, residual values and components of property, plant and equipment 1,071 1,016

IAS 16 Deemed cost adjustment to property 579 591

Deferred taxation effect of above adjustments (479) (482)

Equity restated - IFRS 35,396 35,763

IFRS INCOME STATEMENT IMPACT

Profit as previously reported - SA GAAP 5,899

IFRS and other adjustments (113)

IFRS 2 share-based payment expense (159)

43

Deferred taxation effect of above adjustments 3

Profit restated - IFRS 5,786

IFRS transition

date 1 July 2004

RECONCILIATION BETWEEN IFRS AND SA GAAP

IAS16 Depreciation effect to reflect the changes in useful lives, residual values and components of property, plant and equipment

IFRS restated year ended

30 June 2005


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.

CostasEfthymiades

(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.

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.

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.

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.

directorate

Page 9

Compu-Clearing Outsourcing LimitedCompu-Clearing (Proprietary) LimitedAudit Committee memberRemuneration Committee member


Milton Lutrin

(Non-executive)

Milton practices as a Chartered Accountant (SA) and is a Fellow of the Association of AuthorisedPublic 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.

Tony Webb

(Non-executive)

Tony 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. Tony presently serves as Financial Director of Premier Freight, a position he has held for 15 years. Throughout his career, Tony has been closely involved in finance and IT systems.

Thomas Mogale

(Independent)

Dr Thomas MathukhuMogale 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 PricewaterhouseCoopers, 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 and NamsovFishing Enterprises in Namibia. Mike has considerable experience in senior financial positions in a diverse range of businesses.

Page 10



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.

Peter Curtis

(Divisional Director)

Peter began his working career as a customs officer in Zimbabwe. In 1983 he joined MicorMeadows Airfreight as the domestic Air Cargo manager. He has written the various IATA/FIATA Airfreight and Dangerous Goods handling examinations. During 1987, Peter joined the Compu-Clearing group and became involved in training support and design of the advanced clearing systems. Since the latter part of 1997, Peter has established and managed the Compu-Clearing helpdesk. During 2002, Peter was appointed as a Divisional Director of Compu-Clearing (Proprietary) Limited, the group’s operating company. In 2006, Peter was handed the responsibility for appointing and managing the group’s business partner programme, both locally and internationally.

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.

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).

senior management

Page 11


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.


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.

In 2004, Arnold Garber was appointed executive chairman and Johan Du Preez was appointed 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 successof 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.

Page 12

corporate governance


Audit committee

The Audit Committee comprises executive and non-executive directors, with a non-executive appointed as the chairman.

The committee meets periodically with management and the external auditors who have free access to this committee. The committee addresses appropriate policies, internal controls and external audit matters, reviews the annual financial statements and addresses any other issues referred to it by the board or external auditors.

Remuneration and human resources committee

A Remuneration and Human Resources Committee has been appointed and is chaired by a non-executive director. The committee is responsible for reviewing the compensation arrangements for senior executives and non-executive directors. The committee is also responsible for reviewing management incentive schemes, share option schemes, termination entitlements and fringe benefit policies.

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.

Page 13

corporate governance (continued)


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 and Associates (CA) SACompany Secretary

The directors are responsible for monitoring the preparation and the integrity of the financial statements and related information included in this annual report.

In order for the board to discharge its responsibilities, management has developed and continues to maintain a system of internal control. The board has ultimate responsibility for the system of internal control and reviews its operation, primarily through the audit committee.

The internal controls include a risk-based system of internal accounting and administrative controls designed to provide reasonable but not absolute assurance that assets are safeguarded and that transactions are executed and recorded in accordance with generally accepted business practices and the group’s policies and procedures. These controls are implemented by trained, skilled personnel with an appropriate segregation of duties, are monitored by management and include a comprehensive reporting system operating within an appropriate control framework.

The external auditors are responsible for reporting on the financial statements.

The financial statements are prepared in accordance with International Financial Reporting Standards and the South African Companies Act and incorporate disclosure in line with the accounting philosophy of the group. They are based on appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of internal controls and systems has occurred during the year under review.

The directors believe that the company and the group will be a going concern in the year ahead. For this reason they continue to adopt the going concern basis in preparing the annual financial statements.

The annual financial statements for the year ended 30 June 2006 set out on pages 16 to 43 were approved by the board of directors on 8 September 2006 and are signed on its behalf by-

A Garber Johan Du Preez

Executive Chairman Managing Director

Page 14

directors’ responsibilities and approval of financial statements


Report of the independent auditors to the members of Compu-Clearing Outsourcing Limited

We have audited the annual financial statements and group annual financial statements of Compu-Clearing Outsourcing Limited set out on pages 16 to 43 for the year ended 30 June 2006. These financial statements are the responsibility of the company’s directors. 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 plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the .financial statements. An audit also includes assessing the accounting principles used and significant estimates made by directors as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the company and of the group at 30 June 2006, and of the results of their operations and cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the South African Companies Act.

KPMG Inc.Registered AuditorChartered Accountants (SA)

Per K. VolschenkChartered Accountant (SA)Registered AuditorDirector

8 September 2006

Page 15

report of the independent auditors


To the members of Compu-Clearing Outsourcing LimitedThe directors have pleasure in presenting their report for the year ended 30 June 2006.

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 (2005 – Nil) any of its own shares on the open market in terms of this authorisation, during the current year. A wholly-owned subsidiary sold 374 189 treasury shares into the open market during the year (2005 – 344 800).

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 2006 members of the schemes had cumulatively exercised 235 000 (2005 – 235 000) shares in terms of the Compu-Clearing Share Incentive Scheme at R1.

report of the directors

Page 16

The following share options were outstanding at 30 June 2006 : Year of grant Option price Number of options

1999 1,00 1,445,000 2003 1,00 1,900,000

3,345,000

Movements for the year2006 2005

Beginning of year 3,670,000 3,710,000 Lapsed (325,000) - Exercised - (40,000)

At end of year 3,345,000 3,670,000

A total of 1,840,000 (2005 - 1,515,000) share options have lapsed since the commencement of the scheme.

Details of the directors' outstanding share options

Strike Price Strike Price

R R

M Acosta-Alarcon 550,000 1 - - 550,000 1C Efthymiades 340,000 1 - - 340,000 1

These options are exercisable over the period 1 July 2006 to 30 November 2008.

Name NumberExercise

Price R

Benefit arising

Number

-

Number

Share options exercised during the year

-

Executive directors held 890,000 (2005 - 890,000) share options as detailed below. There has been no change inthese holdings between 30 June 2006 and the date of this report.

Share options at 30 June 2005

Share options at 30 June 2006


Page 17

report of the directors (continued)Your directors throughout the year and at the date of this report were:

Directors SecretaryA Garber* Lutrin and Associates (CA) SAJHP Du Preez*M Acosta-Alarcon* Registered address:C Efthymiades* 1st Floor Block "A"A Katz Δ Sandhavon Office ParkM Lutrin 12 Pongola CrescentTM Mogale Δ Eastgate Ext. 17DK Rosevear SandtonMJ Steele 2148A Webb

Postal address:* executive directors PO Box 37172Δ independent Birnam Park

2105

The directors' remuneration for the years ended 30 June 2005 and 2006 was as follows:

Directors' fees

R'000

Basic remuneration

R'000Bonus R'000

Other allowances

R'000

Retirement/ medical R'000

Total R'000

ExecutiveA Garber - 799 - 51 184 1,034 J H P du Preez - 723 - 123 142 988 M Acosta-Alarcon - 516 44 168 109 837 C Efthymiades - 438 37 53 102 630 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 3,561

ExecutiveA Garber - 773 - 45 189 1,007 J H P du Preez - 680 - 113 125 918 M Acosta-Alarcon - 450 38 166 98 752 C Efthymiades - 405 34 86 98 623 Non-executiveA Z Katz 18 - - - - 18 M Lutrin 18 - - - - 18 T M Mogale 6 - - - - 6 D K Rosevear 1 6 - - - - 6 M J Steele 1 18 - - - - 18 A Webb 6 - - - - 6

72 2,308 72 410 510 3,372

1 Paid to the Bidvest group

2005

2006


Holding company

Compu-Clearing is a public company with no holding company.

Distributions

An ordinary dividend of 10,0 (2005 – 8,0) cents per share, amounting to R4,003,845 (2005 – R3,203,076) and relating to the year ended 30 June 2005, was declared on 15 August 2005 and paid to company shareholders on 9 September 2005.

In the prior year, a special dividend of 10,0 cents per share amounting to R4,003,845 was declared on 22 September 2004, payable to shareholders registered in the books of the company on 8 October 2004.

An ordinary dividend of 11,0 cents amounting to R4,404,229 and relating to the year ended 30 June 2006, was declared on 15 August 2006 and is payable to shareholders registered in the books of the company on 8 September 2006. Secondary tax on companies on the dividend is expected to amount to R536,779.

A capital distribution in the amount of 9,0 cents per share amounting to R3,603,460 was declared on 15 August 2006, payable to shareholders registered in the books of the company on 10 November 2006. Payment of this distribution is subject to shareholder approval.

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.

Page 18

Directors do not have fixed-term service contracts.

Subsidiary companies

2006 2005 2006 2005

Subsidiary R R'000 R'000 R'000 R'000

Compu-Clearing (Proprietary) Limited 4 938 Computer services

1,849 1,699 6,452 866

Compu-Clearing Drome Road Property (Proprietary) Limited

100 Property owning

- - 3,018 3,018

Drome Road Share Block (Proprietary) Limited

600 Property owning

- - - -

Compu-Clearing Cape Town Property (Proprietary) Limited

100 Dormant - - - 587

Three DX Property and Investments (Proprietary) Limited 100

Holding company investment

- - 2,652 1,489

Compu-Clearing Outsourcing Hardware (Proprietary) Limited

150 Dormant - - - 2,001

Compu-Clearing Outsourcing Networking (Proprietary) Limited

100 Dormant - - - 171

Compu-Clearing Outsourcing Software (Proprietary) Limited

100 Dormant - - - 7,489

1,849 1,699 12,122 15,621

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

Details of the subsidiary companies, all of which are wholly owned and registered in the Republic of South Africa areset out below:

Cost of shares IndebtednessIssued share capital

Principal business

Other allowances comprise company car, travel allowances and share compensation benefits. The remuneration ofthe executive directors is paid by Compu-Clearing (Proprietary) Limited, a wholly-owned subsidiary.


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.

report of the directors (continued)

Page 19

Litigation statementThe directors are unaware of any pending or outstanding litigation, presently involving the group.Borrowing powersThe borrowing powers of the group are unlimited.

Results of subsidiaries

2006 2005R'000 R'000

Profits 7,596 5,984

Losses (209) (127)

7,387 5,857

Directors' interests

2006 2005A Garber 13,870,936 13,870,936

J H P du Preez 4,500,000 4,500,000

Other directors 1,132,709 1,132,709

19,503,645 19,503,645

There were no non-beneficial holdings.

Major shareholders

2006 2005% %

- The Arnold Garber Family Trust 35.2 35.6- The Johan du Preez Family Trust 11.6 11.7- The Bidvest Group Limited 25.5 25.7- Comshelf Limited 10.3 10.4- Barnun Investments (Proprietary) Limited 5.9 6.0

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

The attributable interest of the holding company in the aggregate after tax profits and losses of its subsidiaries is:

At 30 June 2006, the direct and indirect beneficial interests of the directors in the shares of the company were as follows:

There have been no material changes in the shareholdings of the directors between the year end and the date of

Shareholders with a beneficial interest of more than 5% of the issued share capital of the group at 30 June were:


Page 20

balance sheets at 30 june

2006 2005 2006 2005Note R'000 R'000 R'000 R'000

ASSETS

Non-current assets 15,879 13,959 13,971 17,320 Property, plant and equipment 1 14,370 11,931 - - Intangible assets 2 1,111 1,698 - - Interest in subsidiaries 13,971 17,320 Deferred taxation assets 3 398 330 - -

Current assets 29,194 25,536 9,551 9,521 Inventories 75 16 - - Other investments 4 2,296 4,583 2,296 4,583 Taxation receivable 18 1,974 - 40 Trade and other receivables 5 7,183 6,369 49 124 Cash and cash equivalents 6 19,622 12,594 7,206 4,774

EQUITY AND LIABILITIES

EQUITYTotal equity and reserves 40,343 35,396 23,088 26,536 Share capital and premium 8 12,461 12,461 12,461 12,461 Treasury shares (804) (1,863) - - Reserves 9 28,686 24,798 10,627 14,075

LIABILITIESNon-current liabilities 1,824 1,552 76 76 Deferred taxation liabilities 3 241 76 76 76 Post retirement medical obligations 10 1,583 1,476 - -

Current liabilities 2,906 2,547 358 229 Trade and other payables 2,906 2,540 190 229 Taxation payable - 7 168 -

Group Company

45,073 39,495 23,522 26,841

26,841 Total equity and liabilities

Total assets

45,073 39,495 23,522


Page 21

income statements for the year ended 30 june

2006 2005 2006 2005

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

Revenue 39,759 37,563 634 18,170

Operating costs 30,260 29,618 594 375 -Distribution 21,961 21,880 - - -Administration 7,528 6,796 - - -Other 771 942 594 375

Operating profit 11 9,499 7,945 40 17,795

Branch closure costs - (281) - -

Profit before net financial income 9,499 7,664 40 17,795

Net financial income 12 1,648 1,699 1,155 857 -Financial income 1,843 1,741 1,155 860 -Financial expense (195) (42) - (3)

Profit before tax 11,147 9,363 1,195 18,652

Income tax expense 13 3,562 3,577 789 1,071

7,585 5,786 406 17,581

Basic earnings per share (cents) 15 19.6 15.1

Diluted earnings per share (cents) 15 18.7 14.5

Group Company

Profit for the year attributable to ordinary shareholders

Note


statements of changes in equity for the year ended 30 june

Page 22

Share capital

Share premium

Treasury shares

Retained earnings

Share-based

payment reserve Total

Note R'000 R'000 R'000 R'000 R'000 R'000Balance at 30 June 2004 24 400 12,061 (2,413) 25,456 259 35,763 Sale of treasury shares 550 550 Recognised income and expense 5,786 5,786 Dividends paid 14 (6,862) (6,862)Share-based payment transaction 24 159 159

Balance at 30 June 2005 24 400 12,061 (1,863) 24,380 418 35,396 Sale of treasury shares 1,059 1,059 Recognised income and expense 7,585 7,585 Dividends paid 14 (3,847) (3,847)Share-based payment transaction 150 150

Balance at 30 June 2006 400 12,061 (804) 28,118 568 40,343

Share capital

Share premium

Retained earnings

Share-based

payment reserve Total

R'000 R'000 R'000 R'000 R'000Balance at 30 June 2004 24 400 12,061 3,283 259 16,003 Recognised income and expense 17,581 17,581 Dividends paid 14 (7,207) (7,207)Share-based payment transaction 159 159

Balance at 30 June 2005 24 400 12,061 13,657 418 26,536 Recognised income and expense 406 406 Dividends paid 14 (4,004) (4,004) Share-based payment transaction 150 150

Balance at 30 June 2006 400 12,061 10,059 568 23,088

Group

Company


cash flow statements for the year ended 30 june

Page 23

2006 2005 2006 2005Note R'000 R'000 R'000 R'000

CASH FLOWS FROM OPERATING ACTIVITIES 7,729 (2,739) (3,397) 9,706

Cash generated by trading operations 19 12,075 11,013 228 17,795 107 (115) - -

(Increase)/ decrease in working capital 20 (507) (1,055) 36 105 Cash generated from operations 11,675 9,843 264 17,900 Financial expense (195) (42) - (3) Financial income 1,612 1,119 924 238 Income taxes paid 21 (1,516) (6,797) (581) (1,222) Dividends paid (3,847) (6,862) (4,004) (7,207)

CASH FLOWS FROM INVESTING ACTIVITIES (1,760) (7,146) 5,829 (7,254)

Acquisition of property, plant and equipment (4,240) (2,527) - -Acquisition of intangible asset (110) (834) - -

72 176 - -Acquisition of other investments - (3,961) - (3,961) Disposal of other investments 2,518 - 2,518 -Amounts advanced to subsidiaries (6,749) (9,661) Amounts repaid by subsidiaries 10,060 6,368

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds on sale of treasury shares 1,059 550 - -

7,028 (9,335) 2,432 2,452 12,594 21,929 4,774 2,322

Increase/ (decrease) in post retirement medical obligations

Cash and cash equivalents at the end of the year

Group

19,622

Proceeds on disposal of property, plant and equipment

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

Company

12,594 7,206 4,774


accounting policies

Page 24

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 are prepared in accordance with International Financial Reporting Standards (IFRSs) and the interpretations adopted by the International Accounting Standards Board (IASB). These are the Group’s first financial statements prepared in accordance with IFRS and IFRS1, First time adoption of IFRS, has been applied.

An explanation of how the transition to IFRSs has affected the reported financial position, financial performance and reported cash flows of the Group is provided in note 24.

2. Basis of preparation

The financial statements and group financial statements are presented in Rands, rounded to the nearest thousand 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 IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The 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. Actual results 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 26.

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements and in preparing an opening IFRS balance sheet at 1 July 2004 for the purposes of the transition to IFRSs.

The accounting policies have been applied consistently by Group entities.

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 intergrouptransactions, are eliminated on consolidation.

4. Property, plant and equipment

Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment losses.

Certain items of property, plant and equipment that have been revalued to fair value on 1 July 2004, the date of transitions to IFRSs, are measured on the basis of deemed cost, being the revalued amount at the transition date.

Where 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.


Page 25

accounting policies (continued)

4. Property, plant and equipment (continued)

The Group recognizes 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 recognized in the income statement as an expense, as incurred.

Depreciation is charged to the income statement on a straight-line basis over the anticipated useful lives of each part of an item of property, plant and equipment. The current estimated useful lives are as follows:

Freehold buildings 50 yearsComputer equipment 3 – 8 yearsOffice furniture, equipment and vehicles 5 – 7 years

Freehold land is not depreciated.

The useful lives, depreciation methods and residual values, if not insignificant, are reassessed annually.

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 and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate portion of overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitaliseddevelopment expenditure is stated at cost less accumulated amortisation and impairment losses. The capitalised costs are amortised 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 impairment losses, and is amortised over the estimated useful lives, which is currently five years.

5.3 Subsequent expenditure

Subsequent expenditure on capitalized intangible assets is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

6. 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 transaction costs. Subsequent to initial recognition, financial instruments are recognised as set out below :

6.1. Investments

Financial instruments held for trading are classified as current assets and are stated at fair value, with the resultant gain or loss recognized in the income statement. Investments in subsidiaries are stated at cost less impairment losses.

6.2. Trade and other receivables

Trade and other receivables are stated at amortised cost using the effective interest rate method, less impairment losses.


Page 26

6. Financial instruments (continued)

6.3. Cash and cash equivalents

Cash and cash equivalents comprise cash balances, call deposits, money market investments and for cash flow purposes, bank overdrafts. Cash and cash equivalents are stated at fair value with any fair value adjustments being recognised in the income statement.

6.4. Trade and other payables

Trade and other payables are stated at amortised cost, using the effective interest rate method.

6.5. Recognition and derecognition

Financial instruments are recognised on the balance sheet when the Group becomes party to the contractual provisions of the particular instrument. Financial assets are derecognised when the Group losses control of the contractual rights that comprise the asset, for instance where those rights are realised, expire or are surrendered. Financial liabilities are derecognised when the obligations under the contract are discharged, cancelled or expire.

7. Inventories

Inventories consist of consumable stores and are carried at the lower of cost, determined on a first in, first out basis and net realisable value. Cost 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.

8. Impairment

The carrying amounts of the group’s assets, other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

An impairment loss is recognized whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement.

8.1 Calculation of recoverable amount

The recoverable amount of the Group’s other investments is the market value thereof at the reporting date, less any costs anticipated in the realisation of the asset.

The recoverable amount of other financial assets is the greater of their net selling price and value in use. 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.

8.2 Reversals of impairment

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

9. Share capital

When share capital, recognised as equity, is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity.

Shares repurchased by a subsidiary company are classified as treasury shares and presented as a deduction from total equity.


Page 27

10. 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.

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.

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.

11. 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.

12. 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 amortised.

13. Net financial income

Net financial income comprises interest receivable on funds invested, gains or losses on remeasurement of financial instruments at fair value through profit or loss, and interest payable on borrowings calculated using the effective interest rate method.

Interest income is recognized in the income statement as it accrues using the effective interest method.

accounting policies


14. Income TaxIncome tax on the profit or loss for the year comprises current and deferred tax. Income tax 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 balance sheet date and any adjustments of tax payable for previous years.Deferred taxation is provided 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. The following temporary differences are not provided for: goodwill not deductible for tax purposes, 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 do they will probably not reverse in the forseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted at the balance sheet 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.

15. Dividends paidDividends to shareholders are accounted for once they have been approved by the board of directors.16. Segment reportingA 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; andHardware 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. 17. Foreign currency transactionsTransactions 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. 18. Financial guaranteesA 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.

Page 28


notes to the financial statements for the year ended 30 june

2006 2005 2006 2005R'000 R'000 R'000 R'000

1. PROPERTY, PLANT AND EQUIPMENTCost/ deemed costFreehold land 900 900 - -

4,665 4,665 - - 16,690 17,121 - - 2,791 2,793 - -

25,046 25,479 - -

Accumulated depreciation425 347 - -

8,476 11,308 - - 1,775 1,893 - -

10,676 13,548 - -

Carrying valueFreehold land 900 900 - -

4,240 4,318 - - 8,214 5,813 - - 1,016 900 - -

14,370 11,931 - -

Freehold land

Freehold buildings

Computer Equipment

Furniture, equipment

and vehicles Total

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

900 4,318 5,813 900 11,931 - - 4,183 57 4,240

Disposals - - (145) (29) (174)

- (78) (1,637) 88 (1,627)

900 4,240 8,214 1,016 14,370

900 4,396 6,293 542 12,131 Cost 900 4,665 18,424 2,336 26,325

Accumulated depreciation - (269) (12,131) (1,794) (14,194)

- - 1,727 800 2,527

Disposals - - (182) (92) (274)

- (78) (2,025) (350) (2,453)

900 4,318 5,813 900 11,931

Acquisitions

Depreciation and impairment

Carrying value at end of year

Group

Carrying value at beginning of year

Carrying value at end of year

2005

Carrying value at beginning of year

Depreciation and impairment

Acquisitions

Group Company

Freehold buildingsComputer equipmentFurniture, equipment and vehicles



2006

Page 29


Page 30

2006 2005 2006 2005R'000 R'000 R'000 R'000

1. PROPERTY, PLANT AND EQUIPMENT (continued)

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

41 41 - - 2. INTANGIBLE ASSETS

CostInternally generated software 1,595 1,595 - - Purchased software 2,143 3,103 - -

3,738 4,698 - -

Accumulated amortisation

Internally generated software 1,372 1,060 - - Purchased software 1,255 1,940 - -

2,627 3,000 - -

Carrying valueInternally generated software 223 535 - - Purchased software 888 1,163 - -

1,111 1,698 - -

TotalR'000 R'000 R'000

Carrying value at beginning of year 535 1,163 1,698 Acquisitions - 110 110 Disposals - (21) (21) Amortisation and impairment (312) (364) (676)

Carrying value at end of year 223 888 1,111

TotalR'000 R'000 R'000

Carrying value at beginning of year 854 649 1,503 Cost 1,595 2,269 3,864 Accumulated amortisation (741) (1,620) (2,361) Acquisitions - 834 834 Amortisation and impairment (319) (320) (639)

Carrying value at end of year 535 1,163 1,698

2006

2005

Internally generated software

Acquired software

CompanyGroup

Internally generated software

Acquired software

Group

Details of freehold land and buildings

Freehold land - Portions 1, 2 and 3 of Erf 14 FormainTownship at deemed costFreehold buildings at deemed costTimeshare units


Page 31


2006 2005 2006 2005R'000 R'000 R'000 R'000

3. DEFERRED TAXATIONDeferred taxation assets 398 330 - - Deferred taxation liabilities (241) (76) (76) (76)

Net deferred taxation asset / (liability) 157 254 (76) (76)

Deferred taxation can be attributed to the following :

Accelerated write off of trademarks for book purposes 362 483 - - Accelerated capital allowances for tax purposes (373) (429) - - Payments in advance (193) (95) (7) (7)Provisions 155 125 19 21Capital gains tax on fair value of other investments (88) (90) (88) (90)Deemed cost adjustment - freehold buildings (165) (168)Post retirement medical obligations 459 428 - -

157 254 (76) (76)

Balance at beginning of the year 254 (68) (76) (4)Recognised in income (97) 322 - (72)Movements in temporary differences (97) 320 - (72)Change in rate - 2 - -

Balance at end of year 157 254 (76) (76)

4. OTHER INVESTMENTS- 2,518 - 2,518

2,296 2,065 2,296 2,065

2,296 4,583 2,296 4,583

5. TRADE AND OTHER RECEIVABLESTrade receivables 6,369 5,868 - - Prepayments 642 328 - - Other receivables 172 173 49 124

7,183 6,369 49 124

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 follows :

CompanyGroup

1,517,125.8703 units in the Liberty Life CompanyProperty Fund (2005 - 2,065,550.5200).

Stanlib Classic Investment Plan, comprising:

Liberty Life Multi Access Endowment, comprising:

1,498,116.35 units in the Stanlib multimanagerproperty fund


Page 32

2006 2005 2006 2005R'000 R'000 R'000 R'000

6.5,440 2,085 5,440 2,085

Bank balances 1,599 2,309 329 366Call Deposits 12,583 8,200 1,437 2,323

19,622 12,594 7,206 4,7747.

8.

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

400 400 400 400

12,061 12,061 12,061 12,061

12,461 12,461 12,461 12,461

384 381 400 400

4 3

388 384 400 400

Shares Shares

1,202,824 1,577,013

Money Market funds

CASH AND CASH EQUIVALENTS

Authorised

Reissued during the year

COMMITMENTS AND CONTINGENCIES

There were no material commitments or contingencies at the reporting date (2005 - R139,000).

Shares held by the subsidiary company at the financialyear end

SHARE CAPITAL AND PREMIUM

Issued

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

Balance at beginning of the year

40 038 445 (2004 - 40 038 445) shares of 1 cent each38 835 621 (2005 - 38 461 432) shares of 1 cent each

Company

The group has authority, in terms of a specialresolution passed on 19 January 2005, to repurchaseits shares in the open market. It did not repurchaseany shares during the year (2005 - Nil). During theyear, a subsidiary company sold 374,189 (2005 -344,800) shares into the open market at an averageprice of R2.83 (2005 - R1.59)

Share premium

- held by subsidiary company

Balance at end of the year

200 000 000 shares of 1 cent each

Reconciliation of group and company issued shares :

Group



Page 33

2006 2005 2006 2005R'000 R'000 R'000 R'000

9.

28,118 24,380 10,059 13,657568 418 568 418

28,686 24,798 10,627 14,075

10.

1,583 1,476 - - 1,476 1,591 - -

254 - - - 139 155 - -

- - - - 115 (155) - -

(147) (115) - - - -

1,583 1,476

7.5% 8.5%4.5% 5.5%7.5% 7.5%

11.

676 639 - - 475 396 - - 324 249 - - (1) 2 - -

152 145 - - 1,627 2,453 - -

19,247 18,466 - - Impairment of loan to subsidiary company - - 188 -

151 30 151 30 21 - - -

102 98 - -

7 220 - -

34 17,570 Dividend from subsidiariesIncome - Premises

Loss on disposal of intangible assets

Employee costs, inclusive of directors' emoluments

Listing fees

Loss on disposal of property, plant and equipmentOperating lease charges

Depreciation ……………………………………………………

Is stated after accounting for the following :ChargesAmortisation of intangible assets

- (Over)/ underprovision in prior year - Other services

Auditors' remuneration

Company

OPERATING PROFIT

- Discount rate - Inflation rate (CPI) - Healthcare cost inflation

Contributions paid

Group

RESERVES

- Audit fee - current year

Key actuarial assumptions

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

- Share-based payment reserve

The Group subsidises the medical aid contributions of two(2005 - three) retired employees. The amounts recognisedin the financial statements are as follows:

consist of: - Retained earnings

POST RETIREMENT MEDICAL OBLIGATIONS

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

Current service costActuarial loss recognised

Present value of unfunded obligations recognised as a liability at end of yearThere are no unrecognised actuarial gains or losses.Actuarial valuations are performed annually.


Page 34

2006 2005 2006 2005R'000 R'000 R'000 R'000

12. 1,201 1,119 513 238

Fair value adjustment to other investments 642 622 642 622 (195) (42) - (3)

1,648 1,699 1,155 857

13. 2,985 3,042 309 142

97 (322) - 7297 (320) - 72- (2) - -

480 857 480 857

3,562 3,577 789 1,071

% % % %

29.0 29.0 29.0 29.0 4.3 9.2 40.2 4.6 1.5 1.2 5.5 -

(2.3) (1.2) (8.7) (27.9)- - - -

32.5 38.2 66.0 5.7

14.

3,847 3,050 4,004 3,203- 3,812 - 4,004

3,847 6,862 4,004 7,207

15. EARNINGS PER SHARE

2006 2005Number of

sharesNumber of

shares

38,609,094 38,287,874

1,979,694 1,548,613

Diluted weighted average number of shares 40,588,788 39,836,487

2006 2005R'000 R'000

7,585 5,786102 98

Loss on disposal of intangible assets 21 - (36) (28)

Headline earnings 7,672 5,856

Current

Financial expense

NET FINANCE REVENUEInterest income

- Current year - Change in rate

Company

Total Dividend

Deferred

Secondary tax on companies

INCOME TAX EXPENSE

Special dividend declared 22 September 2004

Dividend no. 7 declared 15 August 2005 (2005 - 22 September 2004)

Change in rate

Group

Tax rate reconciliation

Disallowed expenditureExempt income

Effective rate

Company tax rateSecondary tax on companies

DIVIDENDS PAID

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

Group

Profit attributable to shareholdersLoss on disposal of property, plant and equipment

Taxation effect

Weighted average number of shares

Headline earnings is determined as follows:

Potential dilutive effect of outstanding share options


15. EARNINGS PER SHARE (continued)2006 2005cents cents

Basic earnings per shareBasic 19.6 15.1 Diluted 18.7 14.5

Headline earnings per shareBasic 19.9 15.3 Diluted 18.9 14.7

Executive directors

Non-executive directors

Executive directors

Non-executive directors

2006 2005 2006 2005R'000 R'000 R'000 R'000

16. DIRECTORS' EMOLUMENTS

- 72 - 723,489 - 3,300 -

3,489 72 3,300 72

Details of directors remuneration are presented on page 17 of this report.

17. EMPLOYEE BENEFITSShare-based payments

Number of instruments

Contractual life of

options

440,000 10 years450,000 10 years

450,000 10 years1,150,000 10 years

555,000 10 years300,000 10 years

3,345,000Total share options

- November 1998 10 percent per year from - March 2003 10 percent per year from

Options granted to other employees

- November 1998 10 percent per year from - March 2003 10 percent per year from

- March 2003 10 percent per year from Options granted to senior management (keymanagement)

Options granted to directors (key management)

- November 1998 10 percent per year from

The terms and conditions of the grants, whereby all options are settled by physical delivery of shares, are asfollows:

Grant date/employees entitled Vesting Conditions

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 with this programme options are exercisable atthe market price of the shares at the date of grant.

An additional share option arrangement granted before 7 November 2002 also exists, The recognition andmeasurement principles in IFRS2 have not been applied to this grant, based on the IFRS 1 election available tothe Group.

For services as directorsFor management services


Page 35


17.

Number of options

2006 2005

3,670,000 3,710,000- (40,000)

(325,000) - 3,345,000 3,670,000

1,627,500 1,385,000

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%

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 5.6 years 6.5 years 4.7 yearsExpected dividends 2.45% 2.45% 2.45%Risk-free interest rate 10.96% 10.96% 10.96%

2006Directors

Other employees

Senior management

Weighted average exercise

price

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 (10 years)is used as an input into the model.

The options outstanding at 30 June 2006 have an exercise price of R1 and a weighted average contractual life of5 years.

Number of options

2005

R1

R1

R1

2006

R1Outstanding at beginning of the period

Weighted average exercise

price

2005

The expected volatility has been estimated by calculating the standard deviation of the volume weighted 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 with a maturity date closest to theexpiry of the option scheme.

EMPLOYEE BENEFITS (continued)

R1

R1

Outstanding at end of the period

Exercisable at end of the period

The number and weighted average exercise prices of share options is as follows:

Exercised during the period

Page 36


Page 37


2005 2005R'000 R'000

18.

940 -

19.11,147 9,363 1,195 18,652

928 1,650 (967) (857)2,576 3,349 188 -

- Depreciation 1,627 2,453 - - - Amortisation of intangible assets 676 639 - - - Impairment of loans to subsidiaries - - 188 -

21 - - - - Loss on disposal of property, plant and equipment 102 98 - -

150 159 - - Financial expense 195 42 - 3 Financial income (1,843) (1,741) (1,155) (860)

12,075 11,013 228 17,795

20.(59) 5 - -

(814) (182) 75 5366 (878) (39) 100

(507) (1,055) 36 105

21.

1,967 (931) 40 (183)(3,465) (3,899) (789) (999)

(18) (1,967) 168 (40)

(1,516) (6,797) (581) (1,222)

22. RELATED PARTY TRANSACTIONS22.1 Key management personnel compensation

2005 2006 2005R'000 R'000 R'000

Short-term employee benefits 6,158 5,752 - - Termination benefits - - - -

6,158 5,752 - -

Group2006R'000

Company2006R'000

Key management are those persons having authority and responsibility for planning, directing and controlling the activities of the company, directly or indirectly, including any director (whether executive or otherwise) of the company as well as close members of the family of any of these individuals.

Items not affecting the flow of funds

INCOME TAXES PAID

(INCREASE) / DECREASE IN WORKING CAPITAL

Increase/ (decrease) in trade and other payables

CASH GENERATED BY TRADING OPERATIONSProfit before taxAdjustments

(Increase)/ decrease in inventories(Increase)/ decrease in trade and other receivables

2006Company

R'000

Group

Taxation receivable / (payable) at beginning of the year

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

The group contributes to a defined contribution planwhich is governed by the Pension Funds Act. 96% ofthe 67 permanent employees were members of thefund (2005 - 90% of 71). The group makes the fullcontribution as the members are all non-contributorymembers. These costs are included in employee costs 1,020 -

- Share option expense

POST RETIREMENT BENEFITS

- Loss on disposal of intangible assets


Page 38

22. RELATED PARTY TRANSACTIONS (continued)22.2 Related party transactions

(Paid/Received R’000Paid (30) -

Received 4,090 1,262Received 808 161

Paid (30) - Received 3,684 549Received 795 80

23.

Lutrin & Associates (CA) SA are corporate advisors to the Group. M Lutrin is proprietor of Lutrin & Associatesand a non-executive director of Compu-Clearing. Fees paid to Lutrin & Associates during the year were atmarket related rates.

The Bidvest Group Limited owns 25.7% of the shares in the Group and two members of its management teamare non-executive directors of Compu-Clearing. The following transactions took place during the year :

A non-executive director, Mr. Tony Webb, is financial director of Premier Freight (Proprietary) Limited, which is acustomer of Compu-Clearing. All transactions with Premier Freight are at market related rates.

Details of transactions with related parties and outstanding balances at 30 June 2006 and 30 June 2005 are asfollows:

Lutrin & Associates

Exposure to currency, interest rate and credit risk arises in the normal course of the group’s business.

The group incurs currency risk as a result of transactions which are denominated in a currency other than thegroup’s functional currency. The value of these transactions is not significant and is not hedged.

Currency risk

The Bidvest group

FINANCIAL INSTRUMENTS

Premier Freight

Fair values

The group adopts a policy of ensuring that its borrowings are at floating market related rates to address itsinterest rate risk.

Management has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. Creditevaluations are performed on all customers requiring credit over a certain amount. Reputable financialinstitutions are used for investing and cash handling purposes. At balance sheet date, there were no significantconcentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount ofeach financial asset in the balance sheet.

Interest rate risk

Company

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

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 11.

The fair values of all financial instruments are substantially identical to the carrying values reflected on thebalance sheet.

Credit risk

Group

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

Name

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

Balance due / (payable)

2005

2006Value

TransactedR’000

The Bidvest GroupLutrin & Associates

Premier Freight


Page 39

24. EXPLANATION OF TRANSITION TO IFRSs AND OTHER ADJUSTMENTS

Reconciliation of equity

Note R'000 R'000 R'000 R'000 R'000 R'000 ASSETSNon-current assets 12,445 1,189 13,634 12,788 1,171 13,959 Property, plant and equipment a,b 12,027 104 12,131 11,979 (48) 11,931 Intangible assets b - 1,503 1,503 - 1,698 1,698 Deferred taxation assets d 418 (418) - 809 (479) 330

Current assets 30,865 - 30,865 25,536 - 25,536 Inventories 21 21 16 16 Trade and other receivables 6,187 6,187 6,369 6,369 Taxation receivable 2,728 2,728 1,974 1,974 Other investments g - - - 4,583 4,583 Cash and cash equivalents g 21,929 21,929 17,177 (4,583) 12,594

Total assets 43,310 1,189 44,499 38,324 1,171 39,495

EQUITYEquity and reserves 34,638 1,125 35,763 34,225 1,171 35,396 Share capital and premium 10,048 10,048 10,598 10,598 Reserves 24,590 1,125 25,715 23,627 1,171 24,798

LIABILITIESNon-current liabilities 1,595 64 1,659 1,552 - 1,552 Deferred taxation liabilities d 4 64 68 76 76 Post retirement medical obligations 1,591 1,591 1,476 1,476

Current liabilities 7,077 - 7,077 2,547 - 2,547 Trade and other payables 3,418 3,418 2,540 2,540 Taxation payable 3,659 3,659 7 7

Total equity and liabilities 43,310 1,189 44,499 38,324 1,171 39,495

Notes to the reconciliation of equitya. At 1 July 2004, the Group's owner-occupied buildings were revalued to a deemed cost of R5 million. The

effect is to increase Property, plant and equipment by R591,000 at 1 July 2004 and R579,000 at 30 June2005 and to increase administration expenses by R12,000 for the year ended 30 June 2005.

The accounting policies set out on pages 24 - 28 have been applied in preparing the financial statements for theyear ended 30 June 2006, the comparative information presented in these financial statements for the year ended30 June 2005 and in preparing an opening IFRS balance sheet at 1 July 2004, the Group's transition date.In preparing its opening balance sheet, the Group has adjusted amounts previously reported in financialstatements prepared in accordance with its old basis of accounting, being South African Statements of GenerallyAccepted Accounting Practice ("previous GAAP"). An explanation of the effect of the transition from previousGAAP on the Group's financial position and financial performance is set out in the following tables and the notesthat accompany the tables.

Previous GAAP IFRSs

Previous GAAP

As stated in note 1 to the accounting policies, these are the Group's first financial statements prepared inaccordance with IFRSs.

Effect of transition to IFRSs and

other adjustments 1 July 2004

Effect of transition to IFRSs and

other adjustments 30 June 2005



24. EXPLANATION OF TRANSITION TO IFRSs AND OTHER ADJUSTMENTS (continued)b.

Property plant and equipment Effect of transition to IFRSs and other adjustments 1 July 2004 30 June 2005

R'000 R'00012,027 11,979

591 591(1,503) (1,698)

- (12)1,016 1,071

12,131 11,931

In terms of IFRS, computer software has been reclassified as an intangible asset.

Income statement impactProfit for the year as previously reported - SA GAAP 5,899IFRS adoption and other adjustments (113)IFRS 2 Share-based payment expense1 (159)

Deferred taxation effect of above adjustments, including rate change 3

5,7861 IFRS adjustments

c.

d. 1 July 2004 30 June 2005

R'000 R'000Property, plant and equipment 482 12 Share-based payments - - Change in rate - (15)Increase in deferred tax liability 482 (3)

e.

f. The transition to IFRS and other adjustments have not had an effect on the Group's cash flow statement.g. In terms of IAS 1, investments in property instruments, previously included in cash and cash equivalents,

are now disclosed separately, because of the difference in risk profile applicable to these investments.

The effect of the transition to IFRS and other adjustments, in the previous financial year, was to reduceearnings per share and headline earnings per share by 0,3 cents per share, to 15.1 cents and 15.3 cents

Reflected under previous GAAP

Depreciation on deemed cost adjustment1Reclassification of computer software as an intangible asset1

Depreciation adjustment for change in useful lives

43

In terms of IAS 16, the Group reassess the useful lives of items of Property, plant and equipment at theend of each six monthly reporting period. When a change in useful life is established, an appropriateadjustment is made to the carrying value of the relevant asset, retrospective to the transition date.Depreciation charges, subsequent to the transition date are amended accordingly.

Freehold land and buildings were valued at 30 June 2004, by Mills Fitchett, registered valuers.

The financial effect of the changes in a. and b. is summarised in the below table:

The above adjustments increased the deferred tax liability as follows, based on a tax rate of 29%.

Adjustment to recognise deemed cost of property at transition date1

IAS 16 Restatement of accumulated depreciation to reflect the useful lives of property, plant and equipment

The Group applied IFRS 2 in respect of its employee share option scheme, except for share optionsgranted before 7 November 2002. The Group did not previously recognise an expense in respect of shareoptions granted, but not exercised. In terms of IFRS 2, the Group recognises the fair value of the optionsgranted as an expense to be written off over the life of the options (10 years).The effect of accounting for share options at fair value is to increase employee costs by R159,000, for theyear ended 30 June 2005 and R259,000 for financial years ended prior to 1 July 2004. The charges to theincome statement have served to reduce attributable earnings in prior periods and to increase the IFRSreserve by an equivalent amount. Consequently, there has been no effect on the equity of the Group.

Page 40


Page 41

25. RELEVANT STANDARDS AND INTERPRETATIONS BECOMING EFFECTIVE FOR YEARS ENDING AFTER 30 JUNE 2006At the date of authorisation of the financial statements of the group for the year ended 30 June 2006, the following Standards and Interpretations were in issue but not yet effective:Standard/Interpretation Effective dateIFRS 6 Exploration for and Evaluation of Mineral Resources Annual periods commencing

on or after 1 January 2006*IFRS 7 Financial Instruments: Disclosures (including Annual periods commencing

amendments to IAS 1 Presentation of on or after 1 January 2007*Financial Statement: Capital Disclosures)

IAS 19 Employee Benefits (December 2004) Annual periods commencingAmendment on or after 1 January 2006*IAS 39 Financial Instruments: Recognition and Measurement Annual periods commencingAmendment (April 2005) – Cash flow hedge accounting of forecast on or after 1 January 2006*

intragroup transactionsIAS 39 Financial Instruments: Recognition and Measurement Annual periods commencingAmendment (June 2005) – Fair value option on or after 1 January 2006*IAS 39 Financial Instruments: Recognition and Measurement Annual periods commencing& IFRS 4 (August 2005) on or after 1 January 2006*amendment Insurance Contracts – Financial Guarantee ContractsIAS 21 The Effects of Changes in a Foreign Operations Annual periods commencingAmendment (December 2005) on or after 1 January 2006*IFRIC 4 Determining whether an Arrangement Annual periods commencing

contains a Lease on or after 1 January 2006*IFRIC 5 Rights to Interests arising from Decommissioning, Annual periods commencing

Restoration and Environmental Rehabilitation Funds on or after 1 January 2006*IFRIC 6 Liabilities arising from Participating in a Specific Annual periods commencing

Market – Waste Electrical and Electronic Equipment on or after 1 December 2005*IFRIC 7 Applying the Restatement Approach under IAS 29 Annual periods commencing

Financial Reporting in Hyperinflationary on or after 1 March 2006*Economies

IFRIC 8 Scope of IFRS 2 Annual periods commencingon or after 1 May 2006*

IFRIC 9 Reassessment of Embedded Derivatives Annual periods commencingon or after 1 June 2006*

* All standards will be adopted at their effective date (except for the effect of those standards that are not applicable to the entity)IFRS 6, IAS 21, IFRIC 5, IFRIC 6, IFRIC 7, IFRIC 8 and IFRIC 9 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 will be as follows:



Page 42

25. RELEVANT STANDARDS AND INTERPRETATIONS BECOMING EFFECTIVE FOR YEARS ENDING AFTER 30 JUNE 2006 (continued)IFRS 7The 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. The disclosure requirements of IFRS 7 require additional disclosure compared to that required in terms of existing IFRSs in respect of capital objectives and policies.

The adoption of IFRS 7 will not have any impact on the accounting policies adopted for financial instruments.

IFRIC 4IFRIC 4 will be adopted by the Group for the first time for its financial reporting period ending 30 June 2007. In terms of IFRIC 4, the entity is required to examine outsourcing arrangements, take-or-pay and similar contracts to identify if these arrangements contain leases that are required to be accounted for in terms of IAS 17, Leases. No such arrangements existed as at 1 July 2005.

The existing accounting policies applicable to operating leases will not change. The policies will, in future, be applied to any IFRIC 4 arrangements, that may be entered into.

IAS 19The Group currently recognises its post retirement medical fund obligation at the actuarial valuation of unfunded benefits. The adoption of the amendment to IAS 19, will not result in any change to the method of recognition of such obligations.

IAS 39

The Group currently measures its investments at fair value, with the resulting change in value being recognised in the income statement. The adoption of the fair value option amendment to IAS 39 will not result in any change in manner of accounting for the fair value adjustment.

27. 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 2006.

Impairment of trade receivablesManagement 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 equipmentManagement 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.


2005

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Page 44

No. of shareholders

% of shareholders in group

% of shareholders in company

No. of Shares

% of shares issued

in group

% of shares

issued in company

182 64.8 64.5 1 - 5,000 318,179 0.8 0.8 39 13.9 13.8 5,001 - 10,000 311,364 0.8 0.8 42 14.9 14.9 10,001 - 100,000 1,305,219 3.4 3.3 12 4.3 4.3 100,001 - 500,000 2,527,923 6.5 6.3 1 0.3 0.4 500,001 - 1,000,000 584,200 1.5 1.4 5 1.8 1.8 1,000,001 and over 33,788,736 87.0 84.4

281 100.0 99.7 38,835,621 100.0 97.0 1 0.3 1,202,824 3.0

282 100.0 40,038,445 100.0

% of shareholders in company

No. of shareholders

No. of shares

% of total shares held in group

% of total shares held in company

3.5 10 19,515,745 50.9 49.4

15.6 44 17,377,021 45.4 44.080.5 227 1,416,205 3.7 3.60.4 1 1,202,824 - 3.0

100.0 282 39,511,795 100.0 100.0

92.2 260 5,080,826 12.77.8 22 34,957,619 87.3

100.0 282 40,038,445 100.0

52.4 11 20,718,569 51.733.3 7 294,850 0.7

4.8 1 60,000 0.1

9.5 2 13,884,200 34.7

100.0 21 34,957,619 87.2

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

Shareholder spread

Total company shareholding

Total

Publicly heldNon-publicly held

Associates of directors and subsidiaries

Any person with an interest of 10% or more

Shareholding

Held in groupSubsidiary company holding

Held in company

DirectorsFinancial institutions, other corporates and trustsIndividuals

Directors and subsidiary company

Subsidiary company

analysis of shareholders 30 june


Major shareholders in the group and company are : No. of Shares

% shareholding

of group% shareholding

of company

13,688,736 35.2 34.64,500,000 11.6 11.49,884,200 25.5 25.04,000,000 10.3 10.02,300,000 5.9 5.8

Total shares held in the group 34,372,936 88.5 86.8Held by subsidiary company

1,202,824 3.0Company total 35,575,760 89.8

The Arnold Garber Family TrustThe Johan du Preez Family Trust

- Three DX Property and Investments (Proprietary) Limited

The Bidvest Group LimitedComshelf LimitedBarnun Investments (Proprietary) Limited

Page 45

analysis of shareholders (continued) 30 june

Financial year end 30 June Annual general meeting 25 October 2006 Reports - Preliminary report and dividend announcement 15 August 2006 - Interim profit announcement

February / March - Annual financial statements

September Dividends Last day to trade cum dividend Friday, 1 September 2006 Compu-Clearing securities trade ex-dividend Monday, 4 September 2006 Record date for the dividend Friday, 8 September 2006 Dividend payable Monday, 11 September 2006 Capital Distribution Last day to trade cum distribution Friday, 3 November 2006 Compu-Clearing securities trade ex-distribution Monday, 6 November 2006 Record date for the distribution Friday, 10 November 2006 Distribution payable Monday, 13 November 2006

shareholders’ diary 30 june


Page 46

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, 25 October 2006 at 14h00 for the following purposes:1. To receive and adopt the audited financial statements for the year ended 30 June 2006;2. To approve the non-executive directors’ remuneration for the year ended 30 June 2006;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.GarberJ. DuPreezM. Acosta-AlarconC. EfthymiadesA. KatzM. LutrinT. MogaleD. RosevearM. SteeleT. 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;


Page 47

notice of annual general meeting (continued)

• 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;

• 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 adeclaration 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 2006. 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 8 August 2006 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 10 November 2006, be and is hereby ratified and confirmed.”

As announced on Tuesday, 15 August 2006, the board has resolved to make a distribution to ordinary shareholders from the company’s share premium account amounting to 9 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 2006. 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.


Monday, 13 November 2006Date of payment

Friday, 10 November 2006Record date

Monday, 6 November 2006Trading commences “ex” the capital distribution

Friday, 3 November 2006Last date to trade “cum” the capital distribution

Wednesday, 25 October 2006Finalisation information of the capital distribution announced on SENS

Notes to the financial effects:

It is assumed that the capital distribution had been paid to shareholders on 1 July 2005; and based on a reduction of R3 474 818 and an after tax interest rate earned on cash resources of 5.0%.

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 afterthe 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 9 cents per ordinary share be approved by shareholders the following salient dates will be applicable thereto :

Page 48

(9.0%)94.5103.9Net tangible asset value per share

(2.5%)19.419.9Headline earnings per share

(2,0%)19.219.6Earnings per share

Change (%)After (cents)Before (cents)

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 Monday, 6 November 2006 and Friday, 10 November 2006.


Page 49


The 2006 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 sharesThe 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 sharesThe capital distribution due to shareholders who are emigrants from the common monetary area and have dematerialisedtheir 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.

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:


Page 50

• 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;

● 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


Page 51


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 nofacts 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 2006.

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;

● 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.

5.2 Special Resolution Number 2“Resolved that paragraph 35.1 of the articles of association be amended to read as follows:

“Unless otherwise determined by a general meeting, the number of directors shall not be less than four and no more than fifteen.”

The purpose of this resolution is to increase the minimum number of directors in line with the minimum prescribed by the listings requirements and to increase the maximum number of directors to allow for future appointments.


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, 25 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, 24 October 2006.

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, ComputershareInvestor 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 & Associates (CA) SA Group Secretary8 September 2006

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administration

Page 53

Compu-Clearing Outsourcing Limited

(Registration number 1998/015541/06) Share code: CCL ISIN code: ZAE 000016564 Registered office

7 Drome Road Lyndhurst, 2192 P O Box 890856, Lyndhurst, 2106 Internet Address

http://www.compu-clearing.com Company Secretary Lutrin & Associates (CA) SA 1st Floor Block “A” Sandhavon Office Park 12 Pongola Crescent, Eastgate Ext. 17 Sandton, 2148 P O Box 37172, Birnam Park, 2105 Commercial Bankers Nedcor Bank Limited Hollard House Kruis Street Johannesburg, 2000 P O Box 1076, Johannesburg, 2000

Auditors

KPMG Inc. Registered Auditor KPMG Crescent 85 Empire Road Parktown 2193 Private Bag 9, Parkview, 2122 Attorneys

Werksmans 155 5th Street Sandown Sandton Private Bag 10015, Sandton, 2146 Sponsor

Sasfin Bank Limited (Registration number 1951/002280/06) Sasfin Place 13 –15 Scott Street Waverley, 2090 P O Box 95104, Grant Park, 2051

Transfer Secretaries

Computershare Investor Services 2004 Limited70 Marshall Street Johannesburg, 2001 P O Box 61051, Marshalltown, 2107


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, 25 OCTOBER 2006, 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 25 October 2006 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 5.2 Special resolution 2 – To increase the minimum number of directors. 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, 24 OCTOBER 2006. 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 2006. Signature Assisted by me (where applicable)

form of proxy

Page 54


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 initialled 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 initialled 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 24th day of October 2006.

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

notes

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OperationsJack NaickerJohan Van Buren -SchelleMelvin NarainsamyPhanuel VumaRaveen Moonsamy Richard NkwanaRoy NaickerSabelo DlaminiThiresh MoodleyUven VengothasamyWesley Saayman

HelpdeskDrizel BurgerOnkgopotse SibandeRoasane ParsonsSean De WelzijnWaldo CoetseeWerner PretoriusCall centre

Claudia LejeuneJo-deen EngelbrechtMarlon HackenburgNeil Bindeman

Clearway SystemsHennie BuysNatalie HabanaRobert Wright

Tariff bookDru Van DiggelenShulamit Chackelsonas

StoresJimmy MuhlariPhilemon MongwatoRobert Pele

ReceptionColleen BadenhorstThys Smit

Finance and administrationEdward LetshediFay AbaderJonathan DavisLovis EfthymiadesLesley GreenbergRobert PeleRungi PillaySue Martin

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

SecretarialDiane WolpertOrma Mphuthi

VB & Internet developmentGary DyksmanHristo TzatchevLeon MoolmanValery Goldis

Quality controlAndre HofmeyerLouis BuysMiguel VieraSheldon Vorster

TransportRichard MapilokoVivian Mogale

Business partner managerPeter Curtis

Business DevelopmentJohn Dickson

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

Travel Desk Doris Temba

ProgrammingAdriaan CronjeAudaine GovenderCharles GoldmanFrances De SousaHenry WallaceImran MohamedOmar MookadamRod GourlieTrevor Thompson

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

Documents

AnnualReport2006complete - ShareData · PDF filecapabilities, cash and cash equivalents are a healthy R19,6 million, up from R12,6 million in 2005. As a result of these cash levels,