iquad group limited - ShareData Online · Annual report 2011 iquad group limited ... tY\Jt\Ye oM o^neYsOPW ... audit committee member BCom (Hons)

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www. iquad.co .za

Annual report 2011

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�We�are�defined�by�our�pursuit�of�providing�mutual�value�for�

all�our�stakeholders.�

�We�are�dedicated�to�using�our�expertise�to�innovate�and�to�

promote�growth�and�profitability,�leading�to�superior�returns�

for�our�shareholders.�

�We�are�committed�to�building�enduring�partnerships�with�

our�clients�who�use�our�services�as�an�extension��

of�their�own�resources.�

�We�believe�in�equal�opportunity�and�development�for�all�

our�employees�and�fair�reward�according�to�their�effort,�

initiative,�responsibility�and�performance.�

�We�seek�to�develop�strategic�relationships�and�alliances�

that�will�benefit�all�our�stakeholders.�

�We�undertake�to�contribute�positively�to�the�wellbeing�

of�the�environment�and�the�communities�in�which�we�

operate.�

�We�employ�the�specialisation�of�our�subsidiary�companies�

as�well�as�the�combined�resources�of�the�Group�to�meet�

our�clients’�needs.

To�be�the�preferred�supplier�of�high-impact,�strategic�

outsource�and�compliance�services�to�business.

Va lues

V i s i on

GREYMATTER & F INCH # 5580

Overview 02

Financialhighlights 03

Structureofownership 03

Boardofdirectors 04

Executivemanagement 05

CEOandchairman’sreport 06

Corporatecitizenshipreport 14

Statementofcorporatepracticeandconduct 16

Approvalofconsolidatedfinancialstatements 20

Companysecretary’scertificate 20

Reportoftheauditandriskcommittee 20

Independentauditor’sreport 21

Annualfinancialstatements 22

Reportofthedirectors 22

Statementsoffinancialposition 26

Statementsofcomprehensiveincome 27

Statementsofchangesinequity 28

Statementsofcashflows 29

Notestotheconsolidatedannual

financialstatements 30

Annexuretotheconsolidatedannual

financialstatements 72

Noticeofannualgeneralmeeting 73

Proxy 81

Administration 83

ANNUAL REPORT 2011 1

Contents

IQuad Group, a diversified group of specialist financial

and business services companies listed on the

Alternative Exchange (AltX) of the JSE Limited, was

founded in 2005 on the conviction that successful

outsourcing relationships are collaborative partnerships

bringing mutual value to all stakeholders.

Ove r v i ew

2 IQUAD GROUP LIMITED

The Group operates nationally through its subsidiary

companies in Johannesburg, Cape Town, Durban, Port

Elizabeth,EastLondonandStellenbosch.

What the subsidiary companies have in common is a

dynamic entrepreneurial culture, a passion for innovation

andahistoryofconsistentlydeliveringvalue.

Thesummarybelowdescribestheoperationsineachofthe

Group’ssegments:

IQuad Investment Incentivesisthemarketleaderinthe

fieldofenablingclientstoobtainthemaximumbenefitsand

refunds from government and Department of Trade and

Industry(dti)incentiveprogrammes.

IQuad Global Trade Services assists importers and

exporters by providing business solutions relating to

currency riskmanagement,processautomation,customs

consulting, rebateadministration,duty recoveries, training

andinterestrateriskmanagement.

IQuad Business Development delivers management

systemsimplementationtoensurecompliancewithindustry

standards, technological solutions for third-partypayment

transactionsandcorporatefinanceconsultingservices.

IQuad Verification Services primarily focuses on

providing a range of BBBEE services, including BBBEE

consultingandverificationaswellasservicesrelatedtoVAT

andcustomscomplianceandqualityassuranceaudits.

F inanc i a l h i gh l i gh t s


St ruc tu re o f owne rsh ip

2011 2010 2009R000 R000 R000

Revenue 85 628 79970 80051

(Loss)/profitaftertaxationattributabletoequityshareholdersoftheCompany (15 569) 14159 10046

Headlineearnings 10 224 12928 14105

Totalassets 145 088 172244 175004

Weightedaveragenumberofsharesinissue,netoftreasuryshares(’000) 27 382 27979 27979

Sharesinissueatendofyear,netoftreasuryshares(’000) 27 382 27979 27979

Performance per share (cents)

Basic(loss)/earningspershare (56,9) 50,6 35,9

Headlineearningspershare 37,3 46,2 50,4

Dividends–declared 8 28 25

Netassetvalue 404 486 468

Nettangibleassetvalue 149 165 116

PaladinCapital–43%

Management–19%

Other–38%

Boa rd o f d i r ec to rs


David Edwards(42)13years’serviceBCom,MBLChiefexecutiveofficerDirectorships include:• IQuadGlobalTradeSolutions• IncentivesConsultantsAssociation• IQuadInvestmentIncentives• IQuadTreasurySolutions

Trevor Hayter(49)20years’serviceBComNon-executivechairmanDirectorships include:• DynamicCommodities• UbubeleHoldingsLimited• RGTSmartLimited• NuLeafFreshProduce• IQuadTreasurySolutions

Mohamed Shaik Amod(41)2years’serviceasboardandauditcommitteememberBScEng(UniversityofNatal)CharteredFinancialAnalyst(USA)DiplomainFinance(Damelin)Non-executivedirectorDirectorships include:• YekaniMultiMediaandTechnology• TharawaAfricanTerminalTrading

Frans Botha(39)4years’serviceBCompt(Hons),CA(SA)GroupfinancialdirectorDirectorships include:• IQuadInvestmentIncentives• IQuadTechnologies• NationalMoneyTransfer• IQuadIntegratedManagement

Systems

Alfred da Costa(46)3years’serviceasboardandauditcommitteememberBCom(Hons)(UWC)Non-executivedirectorDirectorships include:• Acoustex• BidvestGroupLimited• Dinatla• SADie&PatternCo.• UkuvulaInvestmentHoldings• UniversityofSouthAfrica(Unisa),

councilmember

Nico de Waal(36)Appointed12April2011BEng(Mech)(cumlaude),MBANon-executivedirectorDirectorships include:• Geologics,non-executivedirector

Morne Edas(34)Appointed12April2011BEng(Elec-Mech),MBANon-executivedirectorDirectorships include:• ThembekaCapital• MGKBusinessInvestments• BontebokLimeworks

Christopher Elfick(46)Appointed12April2011BCom(Hons),CA(SA),MBL(cumlaude)Non-executivedirectorDirectorships include:• LearningStrategies• LamdaHoldings• PrimeInvestmentManagement

Service• PrimeCollectiveInvestment

SchemesManagementCompany• FundaUkhule

Samara Totaram(32)2years’serviceBAcc,PGDip(Acc),CA(SA)Non-executivedirectorDirectorships include:• PSGCapital• ErbaconConstruction• DavgramConstruction• CivcontractCivils• CoalfieldsDrillingServices• ThembekaAdvisory

Back row, from left: AlfreddaCosta,NicodeWaal,MorneEdas,FransBotha

Front row, from left: ChristopherElfick,DavidEdwards,SamaraTotaram,TrevorHayter,MohamedShaikAmod

Execu t i ve managemen t


Gregory Billson

Managing director

IQuadInvestmentIncentives

Mark Bodley

Managing director

IQuadIntegratedManagement

Systems

Mike Smith

Managing director

IQuadTechnologies

Barry Wiseman

Managing director

IQuadFinanceSolutions

Rob Burton

Managing director

IDECConsultingServices

Allan Corbett

Managing director

IQuadGlobalTradeSolutions

Jeanique van der Mescht

Managing director

ITRISATraining

Frans Botha

Group financial director

IQuadGroupLimited

David Edwards

Chief executive officer

IQuadGroupLimited

Madelein Fourie

Managing director

ExportCreditExchange

Rory McCance-Price

Managing director

IQuadTreasurySolutions

Wade van Rooyen

Managing director

IQuadVerificationServices

IntroductIon

FollowingtheincorporationofKingIIIintotheJohannesburgStock Exchange (JSE) Listings Requirements, this is thefirstyearinwhichwearerequiredtoprepareanintegratedreportforourstakeholderstogainabetterinsightintoourbusiness.TakingourcuefromtheframeworkdocumentforintegratedreportingissuedinJanuary2011,thepurposeofanintegratedreportistoprovideforward-lookinginformationinorder toenablestakeholderstomoreeffectivelyassessthetotaleconomicvalueofanorganisation.

KingIIIdescribesanintegratedreportasa“reportthattellstheoverallstoryofanorganisationinamannerthatallowsstakeholders to assess the ability of the organisation tocreateandsustainvalueovertheshort,medium,andlongterm”.

The integrated report therefore needs to provide insightsintotheriskareasandopportunitiesfacingtheorganisationand into the strategy adopted in order to mitigate theserisksandcapitaliseontheopportunities.

IQuad Group has opted to incorporate the integratedreport into our annual reporting format by combining thechairman’s and chief executive officer’s reports into oneexpandeddocumentaddressingthefollowingbroadareas:

1. OverviewoftheGroup2. Assessmentoftherisksandopportunities3. Overview of past performance and key insights

with regard to social, environmental, economicandfinancialaspects

4. Futureperformanceobjectivesandstrategicactions5. Overviewofemployeewellbeing

In the framework document, it is acknowledged that theimplementation of integrated reporting is likely to be anevolutionaryprocessandweexpectthatthisprinciplewillalso apply to the Group in terms of its stakeholder valueincreasinginfutureyearsastheprocessisrefined.

overvIew of the Group

IQuad Group Limited is a diversified group of specialistfinancial and business services companies listed on theJSEAlternativeExchange (AltX).TheGroupspecialises inprovidingnicheoutsourcingservicesinthefollowingbroadcategories:

• Investment incentives where we assist clients inaccessing the various investment incentivesofferedbyGovernment

• Globaltradeserviceswherewesupportvariousareasof importandexportactivity, includingcurrencyriskmanagement,duty recoveries,processoptimisationandcustomsconsulting

• Businessdevelopmentservices,includingaccesstofinanceandISOmanagementsystemimplementationandmaintenance

• Verification services relating to BEE verification,consultingandtrainingaswellasVATreviews

The actual number of operating entities and subsidiariesthat fall within each segment is somewhat broader inordertomaintainthelevelofknowledgeandspecialisationrequiredwithinourvariousbusinessunits,refertable1formoredetail.

The Group was established in 2005 out of the mergerof the Indevco group of companies with PSG Treasury

King III describes an integrated report as a “report that tells the overall story of an organisation in a manner

that allows stakeholders to assess the ability of the organisation to create and sustain value over the short,

medium, and long term”. As part of the integration process we have combined the CEO and chairman’s report

into one expanded document.

CEO and cha i rman ’s r epo r t


David Edwards

Chief executive officer

Trevor Hayter

Non-executive chairman

Outsourcing and listed on the JSE AltX in August 2007.IQuad currently has a national geographic footprintwith offices in Johannesburg, Cape Town, Durban, PortElizabeth,EastLondonandStellenboschandemploysover150professionalsthroughouttheGroup.

IQuad is fortunate to count amongst its shareholders asignificant holding by the PSG Group through its privateequity investment company Paladin Capital and its BEEinvestment company Thembeka Capital, who collectivelyown51%of the equity in IQuad. Themanagement teamat PSG takes an active interest in the Group throughrepresentationatboardlevelandprovideskeyinputintothestrategicdirectionofthebusiness.

Theboardofdirectorsof IQuadoperateswithinadefinedgovernance framework, enabling the board to remaincommitted to business integrity, fairness, transparencyandaccountability.Theboardcomprisesamajorityofnon-executive directors, with the majority of these not beingindependent. Theboardhasa formalwrittencharter thatis reviewed annually and formalises policies regardingboard membership, composition, procedures, conductof directors, risk management, remuneration, boardevaluation and induction of new directors. The followingsubcommitteesassistedtheboardduringtheyear:

• Auditandriskcommittee• Remunerationcommittee


Table 1: IQuad Group entities by segment

Entity Main business

Percentage holding at 28 February 2011

Incentives business pillarIQuadInvestmentIncentives(Pty)Ltd –ProvideaccesstoGovernmentincentiveprogrammes

forneworexpansioninvestmentprojects100%

ExportCreditExchange(Pty)Ltd –TradingplatformforbuyingandsellingofMotorIndustryDevelopmentProgramme(MIDP)importrebatecreditcertificates

100%

IDECConsultingServices(Pty)Ltd –Incentivesconsulting–VATreviews–Accountingservices–Liquidations

50%

Global trade business pillarIQuadGlobalTradeSolutions(Pty)Ltd –Importdutyrecoveryservices

–MIDPclaimsprocessing–Exportandimportprocessoptimisation–Customsdutyconsulting

100%

IQuadTreasurySolutions(Pty)Ltdandsubsidiaries

–Forexriskmanagementandexecution–Moneymarketcurrencymanagement

100%

ITRISATraining(Pty)Ltd –Tradetraining 50%throughIQuadGlobalTradeSolutions(Pty)Ltd

Business development pillarIQuadIntegratedManagementSystems(Pty)Ltd

–ISOmanagementsystemimplementation 60%

IQuadFinanceSolutions(Pty)Ltd –Financeraisingandfacilitynegotiation–Businesssales–Feasibilitystudies

35%

IQuadTechnologies(Pty)Ltd –SpecialisedITdevelopment 50,1%NationalMoneyTransfer(Pty)Ltd –Moneytransferandretailpaymentsolutions 83%through

IQuadTechnologies(Pty)Ltd

Verification business pillarIQuadVerificationServices(Pty)Ltd –BEEverificationandconsulting 90%OtherIQuadGroupSupportServices(Pty)Ltd –Groupadministrationandmarketing 100%IQuadPropertyInvestment(Pty)Ltd –PortElizabeth-basedoffices 50%

Key OPPORTunITIes and sTaKehOldeR

RelaTIOnshIPs

TheIQuadlogocontainsfourcircles,eachonerepresentingourfourkeystakeholders:

• Shareholders who provide funding for the businessandexpectareturnonfundsinvested

• Staffmemberswhoprovidetheintellectualcapitaltoensureourbusinessdeliversvalue

• Strategic partners such as industry associations,auditfirmsandalliedserviceproviderswhorepresentavaluablepartofhowwesourceanddeliversolutionstoclients

• Our clients who are arguably the most importantstakeholders, because without them our businesswouldnotexist

Table 2 summarises the Group’s performance in relationtomanagingitsinteractionwithkeystakeholdersandalsohighlightswhereimprovementsarewarranted.Theseareaswillbeincorporatedintoourkeystrategicprioritiesintheyearaheadandwewillensurethatthemeasuresareimprovedoninordertoprovidemorevalueaddingfeedbackinfuture.

overvIew of past performance

IQuad experienced improved performance in the secondhalf of the year under review; however, full-year resultsremaindisappointingwithheadlineearningsofR10,2m,adeclineof20,9%fromtheR12,9machievedin2010.

Itisencouragingtonotethattherecenteconomicdownturnisshowingsignsofrecoveryandwhiletheturnaroundhasbeen slower than expected, we are seeing an increasedappetitefromclientstotakeonnewinvestmentprojects.

The key insights gained in reviewing our 2011 resultsare summarised below and are further explained in thesegmentalcommentarythatfollows:

• Our incentives business performed below 2010levels, achieving full-year profits of R7,2m (2010:R11,6m).Thisunderperformanceislargelyattributedtoareductioninrevenueinour incentiveconsultingservices division as a result of the transition fromthe old Small Medium Enterprise DevelopmentProgramme (SMEDP) to the new EnterpriseInvestmentProgramme(EIP).

• Our verification business, which is largely made upof black economic empowerment (BEE) consultingandverificationservices,experiencedawideningoflossesfromR1,2min2010toR1,9min2011,despiteasubstantialincreaseinrevenue.Wehaveembarked

IQuadGroupsupportssocialdevelopmentandeducationthroughvariouscontributionstocommunity-basedprojects.IQuad subsidiary companies contribute to these projectsand receive proportionate recognition on their respectivebroad-basedBEEscorecards.

The IQuad Group Schooling Assistance Programmeprovides financial assistance in the form of school fees,uniforms, books and pocket money to selected learnersat five schools in the Eastern Cape. The objective is toincrease access to quality education for students fromdisadvantaged communities, who display academicpotential. Participants commence at Grade 10 and willpotentiallybeassistedthroughtotertiarylevel.Theprojecthasbecome theprimary focusof thesocial responsibilitycommitteeinthebeliefthatcommittedfocusontheprojectwillcreateamoresustainableimpact.

IQuadGroupalsosupportsvariousnon-profitcommunity-basedorganisationsbymeansofcashandotherdonationsandassistance.

The Group supports broad-based black economicempowerment (BBBEE) initiatives and co-ordinates theverification of BBBEE contributions in all its subsidiaries.BBBEE certificates are issued at subsidiary level, withall IQuad subsidiaries being certified Level 4 BBBEEcontributorsatlastverificationdate.

Intermsofmanagementcontrol,blackparticipationwithinthe IQuadGroupatdirector level isat44% for2011, i.e.33%blackmalesand11%blackfemales.

assessment of rIsks and opportunItIes

RIsK mITIGaTIOn

The Group assesses risk at both operational and Grouplevel at each reporting date. The board is the ultimateevaluatorofourriskenvironmentandensuresthatsuitableriskmitigationstrategiesarebeingemployed.

Inviewoftheoutsourcenatureofourservices,thekeyriskarea identified by the Group involves business continuity.Althoughadocumentedrecoveryplanexistsforcriticalriskareas,theGrouphasretainedexternalbusinesscontinuityexpertsandisintheprocessofformalisingacomprehensivebusinessrecoveryplan.

Inadditiontotheriskmitigationactionsoutlinedabove,wehavealsoretainedKPMGtoperforminternalauditsonkeyoperationalprocesses.

CEO and cha i rman ’s r epo r t ( con t i nued )


ona restructuringofourbusinessmodel to reduceoperatingcosts.

• Ourglobaltradebusinessreportedexcellentgrowthwithfull-yearprofitofR9,1machieved(2010:R6,1m).Amajorportionof thisgrowthcame fromcustomsduty recovery services for clients combined with aconsistentperformancefromourtreasuryoperation.

• Groupcosts for theperiodunder reviewhavebeennegatively affected by restructuring and relocationcosts.


Duringtheperiodunderreviewwefinalisedtheacquisitionof100%oftheshareholdinginKagisoTreasurySolutions.Thisoperationisintheprocessofbeingintegratedintoourexistingtreasuryoutsourcingoperations.

Aftertheacquisition,IQuad’streasurydivisionisoneofthelargestindependenttreasuryoperationsinthecountry,bothintermsofclientsservicedandtransactionsprocessed.

TheGroupalsoacquiredtheremaining26%inExportCreditExchange (Pty) Ltd (“ECE”), taking its total shareholdingto100%.

Table 2: Key stakeholder interaction

Stakeholder

Key Performance Indicator Measures Key actions/ strategies

Assessment of interaction

Shareholders Soundcorporategovernance

–Integratedreport–Annualreport–Auditreportfindings

1.CompliancewithKing IIIandJSEListingsRequirements

Effective

ROE –Achievereturnonequityof15%perannum

–Shareprice

1.Referto‘strategicandfutureperformanceobjectives’belowforrevisedprioritiesandkeyactions

Noteffectivetodate,with2011ROEof8%(2010:10%)

Communication –JSESENSannouncements

–Mediaexposure–Shareholder

communication

1.AllrequiredinformationcommunicatedonSENS

2.Retaininvestorrelationsspecialist

3.Communicateregularupdatestoshareholders

Partiallyeffective

Employees Maintainstaffturnoverlevelbelowtheindustrynorm

–Staffturnoverbelow15,7%(Remchannelpublishedaverageforfinancialsector)

1.Createpositiveemploymentclimate

2.Formalappraisalsatleasttwiceayear

3.Improverecruitmentprocess

4.Trainingandstaffdevelopment

EffectiveCurrentstaffturnoverlevelof15%in2011

Ensuremarket-relatedremuneration

–Marketcomparisons–Jobenquirylevels

1.EmployTASKjobgradingsystemandsubscribetoRemchannelsalarydata

2.Ensurejobgradingsforallstaffarecorrect

3.Benchmarkremunerationtomarketaverages

EffectiveRegularcomparisonmadetosurveyaverages

Strategicpartners

Improveinteractionwithstrategicpartners

–Numberofstrategicalliances

–IQuadClientRelationshipManagement(CRM)System

1.Identifytop20strategicpartnersintermsofpotential

2.DrivelevelofinteractionthroughkeymeasuresonCRM

NotcurrentlyeffectiveduetoinabilitytodriveactionandmeasureresultsthroughCRM.Improvedstrategicallianceandcross-sellingmanagementpresentasubstantialopportunity

Clients Maintainclientsatisfactionindex(CSI)inexcessof80%

–EvaluateclientCSIfeedbackonrecurringservices

1.Conductregularclientsatisfactionreviews

2.Striveforzerodefectvalue-addingservices

EffectiveBEEindex–77%Incentives–86%GlobalTrade–85%

Global trade services – This business pillar returned anexceptionalperformanceduetorecordrevenuelevelsandreducedoverheadcostsinitsdutyrecoveryactivities.

Profitability from treasury outsourcing services wasconsistent with the previous year, despite reduced tradevolumes as a result of continued rand strength. We aresatisfied thatwehavemaintainedourexistingclientbaseand taken on new business despite the trying economicenvironment. Annuity income comprises 73% of totalincomeinthisbusinesspillarandismadeupoffixedandcommission-based fees. Performance income is directlylinkedtotheresultsthatweachieveonbehalfofourclientsand we have shown 19% growth in revenue in this areaof our business despite a reduction in currency undermanagement.

Business development – Our business developmentactivitiesareprimarilycentredonprovidingISOmanagementsystemsimplementationandconsulting,andspecialisedITsolutionsforthefinancialandretailsectors.

Our focus over the last year has been to stabilise thisbusinesssegmentandtocurtailhistoricallosstrends.Goodprogress has been made in our technologies business,mainly due to our involvement in a strategic paymentsolutionforoneofthemajorbanks.Thisprojectisexpectedtoprovidegoodlevelsofannuityincomeforthenexttwotothreeyearsandservesasaplatformtosolidifyandexpandthebusiness.

Audit and verification–OurBEEverificationbusinessunithas once again shown substantial growth, with full-yearrevenue increasing by more than 100% on the previousyear.Unfortunately,thisrevenuegrowthhascomewithoutaresultingimprovementintheprofitabilityofthebusiness,necessitatingare-evaluationofthebusinessstructure.

Wehaveembarkedonarestructuringprocesstoimproveefficiencyandreducefixedoverheads.Theserestructuringplansareintheprocessofbeingimplementedandwearepositive that the decisive action taken will see a markedimprovementintheprofitabilityofthisbusinesssegment.

Wecontinue toseeasteadydemand fornewverificationworkinspiteofthedifficulteconomicconditions.

Cash flOw

The Group generated R5,6m cash from its operatingactivitiesafterinvestingafurtherR1,95minworkingcapital.CashraisedfromthesaleofaportionofthePortElizabethproperty was mainly utilised for the Kagiso and ECEacquisitionsandreductioninthemortgagebond.

Ourobjectiveistobethepreferredsupplierofhigh-impact,strategicoutsourceandcomplianceservicestobusinessesand we will continue to seek out growth opportunitiesthroughsuitableacquisitionsthathaveagoodfitwithourcore strategy. The identification of suitable and sizeableacquisitions is one of our key objectives over the next12months.

The Group has accordingly decided not to pay a finaldividendfor2011andwillinsteadinvestsurplusfundsintocurrent and future business opportunities that meet ourinvestmentcriteria.TheGrouppresentlyhasanumberofinvestmentopportunitiesatvariousstagesofconsideration.

Giventheuncertaintysurroundingtherateofrecoveryoftheunderlying economy, management deemed it appropriateto review thecarryingvalueofourgoodwill.This resultedinagoodwill impairmentofR25,2mduringtheyearunderreview.Ourgoodwillcarryingvaluehasbeenreassessedatyear-endandnofurtheradjustmentswererequired.

seGmenT RePORT

Investment incentives – As noted above, this businesspillar achieved results lower than the prior year due to adeclineinrevenuefromourincentiveconsultingservices.

The reduction in revenue is largely attributable to theacceleratedSMEDPpaymentsbytheDepartmentofTradeandIndustry(dti)inthesecondhalfofthepreviousfinancialyear,whichcreatedarevenuegapbetweentheoldSMEDPandthenewEIPprogramme.

Despite the below par financial results, there were somenotablepositivedevelopmentsinthepast12months:

• The dti launched the Automotive Incentive Scheme(AIS), an incentive that targets the automotiveindustryandwhichformspartofthenewAutomotiveProductionandDevelopmentProgrammeduetobeimplemented in2013.Wehavesubmittedatotalof42 incentive applications under this scheme in thepastyearwhichawaitdtiapproval.

• The S12I tax incentive has been launched whichtargets large projects and provides additional taxallowancesofuptoR900mforinvestors.

• A total of 288 EIP incentive applications weresubmitted in the past year compared with 253in2010.

Results from our Export credit exchange division, whichis involved in the trading of MIDP Import Rebate CreditCertificates (IRCC), were in line with expectations. TheautomotiveindustryisshowingsignsofsustainedrecoverywhichshouldhaveapositiveimpactontheIRCCmarket.



DividendsofR8,5mwerepaidduring the yearcomparedwithR6,7min2010.

strateGIc and future performance objectIves

The key issue to be dealt with is how IQuad intends toproduce improved results in all facets of our stakeholderinterest.

Wehavemaintainedourstrategicpurposeandkeyobjective,whichistobethepreferredsupplierofhigh-impact,strategicoutsourceandcomplianceservicestobusiness.

Theadvantageofferedtoclientsisthatweareabletolowerriskandprovidecostbenefitsinournichefocusareas.

Thescopeofourserviceofferingwill includethoseclientswhostrategicallychoosetofocusoncoreoperationswhileoutsourcingspecialisedbusinesssupportservices.

Whilst our broad strategy remains unaltered, we haveidentified five strategic priorities which we believe arenecessary to take IQuad to thenext levelandensure theprosperityofallourstakeholders.

1. ensuRe The RIGhT Team Is In PlaCe TO

aChIeVe The GROwTh Plan

WebelievethatIQuadrequiresastreamlinedandmorefocusedmanagementstructuretoachieveourbudgetsandgrowthplans in theshort,mediumand longterm.This will require a smaller, more focused managementteam who meet regularly to evaluate progress andfine-tunestrategicactionswherenecessary.Wewillbeimplementing a restructured management committee(MANCO),consistingofsevenkeyseniormanagement:

a. Chiefexecutiveofficerb. Financialdirectorc. HeadoftheIncentivesBusinessPillard. Two representatives from Global Trade Business

Pillare. HeadoftheVerificationBusinessPillarf. HeadofStrategicGroupSalesbasedinGauteng

(newposition)

2. wIn In The GauTenG maRKeT

TheGautengmarkethastobeanobviouspriorityduetoitssheersizeandopportunity.Traditionally,IQuadhasand continues to underperform in this market relativetoitstotalpotential.AllotherregionsandIQuadofficesremaincritical,andindividualgrowthplansintheseareaswillbeconsideredandimplementedbasedonmerit.

We have maintained our

strategic purpose and key

objective, which is to be the

preferred supplier of high

impact, strategic outsource

and compliance services

to business.

The scope of our service

offering will include those

clients who strategically

choose to focus on core

operations while outsourcing

specialised business

support services.


employee wellbeInG

RemuneRaTIOn POlICyIt is the Group’s policy to ensure employees are fairlyremunerated in relation to their responsibilities andperformance. The Group has completed gradingevaluations for all staff members according to the TASKremuneration system and participate in the Remchannelsalary review system to ensure remuneration is marketrelated.TheGrouppolicyistopositionbasesalarylevelsforexecutivestaffatthe25thpercentileandforgeneralstaffatthe50thpercentile.Variableoutperformancecompensationiscalculatedaccordingtothefollowingbroadcriteria:

• Incentive bonuses are paid to junior employeessubjecttoachievementofsetkeyperformanceareas(KPAs)foreachposition.

• Senior management within each business unit areincentivised against KPAs and an outperformancebonuscanalsobeaccumulatedsubjecttoachievingasetratioofsalarycosttoprofitbeforetaxandalsobasedontheyear-on-yearprofitbeforetaxgrowth.

• Executivedirectors(CEO,outgoingCEOandFD)areincentivisedbasedontheyear-on-yearGroupprofitbeforetaxgrowth.

• Thereiscurrentlynoshareincentiveschemeofferedtoseniormanagement.

Table 4 at the top of the opposite page summarises thesalaries paid to executive directors and selected high-earningseniorexecutivesoverthelasttwoyears.

The Group is in the process of reviewing the rewardstructuresofallstaff toensurethatdesiredoutcomesareincentivised in line with the strategic objectives outlined

3. fIx OR exIT undeRPeRfORmInG BusInesses Our board has made it quite clear that loss-making

businesses will not be tolerated indefinitely. We needtodrawa linewithregardto fundingthesebusinessesandeitherfix themorexit.Wherenecessary,weneedtomaketoughdecisionslikewehavedoneinourBEEverificationbusinessunitandthenfocusalloureffortsinsupportoftheturnaround.

4. GROw InORGanICally ThROuGh sIGnIfICanT aCQuIsITIOns OR new BusIness OPPORTunITIes

We will be on the lookout for a reasonably sizedacquisition to bolster IQuad and we also have someexciting new business opportunities within the FXand global trade arena. We realise that acquisitionsinvolve considerable complexity and take time to beddownand realisevalue.Growingourexistingbusinessactivitiesisgenerallyfareasierandalwaysmorecertain.Nonetheless,wewillalsobeonthealert forasuitableacquisitioninthecomingyear.

Table 3 below summarises the key strategic prioritiesthatwillbetargetedintheshorttomediumterminordertoimprovetheoverallperformanceoftheGroup.

5. IdenTIfy COsT saVInGs Wewillconductacomprehensivereviewofallbudgeted

expenditurefor2011and2012toidentifycostsavingsof10%inthenextfinancialyear.Thecostsavingsmustnot,however,impactnegativelyonthemedium-to-long-termgrowthprospects.



Table 3: summary of strategic priorities

Key strategic prioritiesKey performance indicators Bold actions Accountability

Ensuretherightteamisinplacetoachievegrowthplan

Streamlinetheorganisationstructure

–ConsolidateeachofthefourbusinesspillarsunderasingleMD

CEO

WininGautengmarket GenerateadditionalR5mrevenuefromGautengin2012

–EmploymentofsalesmanagerinGauteng–incentivisedonnewbusinesstargets

–AllSBUstohavesignificantgrowthtargetsalignedtoGauteng

–ReinforceseniormanagementpresenceinGauteng

CEO/SBUMDs

Fixorexitunderperformingbusinesses

AllSBUstobecapableofachieving36%PBTratio

–ExitSBUsthatarenotontracktomeettarget

SBUMDs

Growinorganicallythroughsignificantacquisitionsand/ornewbusinessopportunities

Concludeacquisitionwithfull-yearPATcontributionofR5m

–AcquireR5mPATorsimilarbusiness–Investresourcestolaunch“total

outsource”solutionforimportersandexporters

CEO

Eliminatenon-valueaddcosts

Actualvs.budgetexpensesreducedby10%

–Reviewandstreamlineallbusinessprocesses

–Maintainscoresheettorecordandmonitorallcostreductions

FD

above. This review will take cognisance of the followingkeycriteria:

• Junior employees are to be rewarded based ondefined KPAs in cases where their business unitshaveshowngrowthinprofitability.

• SeniormanagementneedtoberewardedagainsttheresultsachievedatGrouplevelwhilstalsorecognisingthegrowthachievedwithinthespecificbusinesspillartheyareresponsiblefor.

• Senior management should also be incentivised tostriveforlong-termshareholdervaluecreationratherthanshort-termprofitmotives.Considerationwillbegiventoimplementinganappropriateshareincentiveschemeforseniormanagement.

emPlOyee ValuesWebelieveinequalopportunityanddevelopmentforallouremployeesandfairrewardaccordingtotheireffort,initiative,responsibilityandperformance.

The Group is heavily reliant on our employees to delivervaluetoourclients inareasofnicheexpertise.Thehighlyspecialised nature of the business means that trainingis critical. Training is driven at subsidiary level, and eachsubsidiary provides input into the overall Group Plan.External training costs over the past year was 3% ofheadlineearnings.

TheGroupusesbenefitsfromtheskillsdevelopmentleviespaid,andisamemberoftheFassetSeta(Setaforfinance).The Company pays for employees who wish to furthertheir studies at tertiary level and also funds courses forcontinuousprofessionaldevelopment.

Ourwell-qualifiedandtrainedteamofemployeesareablysupportedby rigorous internalprocessesandprocedurestoensurethatwedeliverconsistentvaluetoourclients.


We are fortunate in that we have a very dedicated andcompetentteamofemployeeswhoarefocusedonensuringthatwedeliveronourclientpromises.

emPlOyee PROfIleTable 5 below outlines the make-up of IQuad personnelin terms of race and gender classification. Apart from anoverallincreaseinthenumberofemployees,thebreakdownofstaffislargelyunchanged.

Staff turnover in the current year amounted to 23 staffmembers,with thebreakdownbeing twodismissals,oneretrenchment, one deceased and 19 resignations. Takenagainsttheaveragenumberof150staffemployedfortheyear, this equates to a staff turnoverpercentageof 15%,(2010: 7%) which is in line with current market normsestimatedtobe15,7%forthefinancialsectoroverthepast12months.

ThebulkofthestaffmovementaroseintheBEEverificationsegmentofourbusiness,withatotalof11ornearly50%of the movers coming from this business unit. The BEEindustry is currently very competitive and undergoingsignificant growth. This results in a limited pool of skilledemployees,anddemandfornewemployeeshasbeenhighwithin the industry inorder tomeetgrowth requirements.Thishascreatedaskillsretentionchallengewithinthisareaofourbusiness.

emPlOymenT COnTRaCTsAll members of executive management have duly signedemploymentcontractswithnofixedperiodofemployment.The contracts include an appropriate restraint of tradeeffective for a period of two years after termination ofemployment and enforceable in the Southern AfricanDevelopmentCommunity.

Table 4: senior executive remuneration and top three subsidiary earners

Name Position

Current year base earnings

R000

Current year

bonus R000

Total 2011 R000

Prior year base earnings

R000

Prior year bonus R000

Total 2010 R000

DMEdwards CEO 1376 – 1376 1143 441 1584FJBotha FD 885 – 885 831 – 831TBHayter OutgoingCEO 1372 – 1372 1275 – 1275SBUMD1 SBUHead 634 374 1008 505 200 705SBUMD2 SBUHead 977 – 977 907 – 907SBUMD3 SBUHead 903 – 903 792 150 942

Table 5: employee profile

Black White Asian Coloured Totalmale female male female male female male female

Total2011 6 15 38 59 4 14 5 15 156Total2010 7 18 35 54 2 13 4 12 145

The IQuad Student Assistance Programme continues toassist talented learners in disadvantaged communitiesto develop their potential. Other co-ordinated socialresponsibility initiatives focus on promoting the wellbeingof theenvironmentandofcommunitiesinwhichtheGroupoperates. The IQuad subsidiary companies contribute tothese projects and receive proportionate recognition ontheirrespectiveBroad-basedBEEscorecards.

A small decline in expenditure on social responsibilityprojects for the period under review, means that spendwasbelowthe1%targetoftheGroup’sheadlineearnings;however,thebalanceoffundshasbeenrolledovertothenew financial period and spend is budgeted for the firstquarterofthenewfinancialyear.

The IQuad Group Schooling Assistance Programmecontinues to provide financial assistance in the form ofschoolfees,uniforms,booksandpocketmoneytoselectedlearnersatfiveschools intheEasternCape.Theobjectiveofthisprogrammeistoincreaseaccesstoqualityeducationfor students from disadvantaged communities, whodisplayacademicpotential.Participants in theprogrammecommence at Grade 10 and will potentially be assistedthroughtotertiarylevel.Theprojecthasbecometheprimaryfocusofthesocialresponsibilitycommitteeinthebeliefthatcommittedfocusontheprojectwillcreateamoresustainableimpact.Newinitiativesforthelearnershavebeendevelopedbythiscommittee,includinganIQuadInternshipprogrammewhichcommencedinJune2010.TheprogrammeprovidesGrade12learnerswithemploymentwithintheGroupduringtheirschoolholidays,therebyhelpingthemtogainpracticalon-the-job work skills and to develop their understandingandbusinessexperience.

Foodhampersweregiventothestudentsandtheirfamiliesforthefestiveseason.

IQuad Group Limited also continues to support variousnon-profit community-based organisations by meansof cash and other donations and assistance. During theperiodunderreviewfundingwasprovidedtotheJabulaniFoundation and the Addo Langbos Community Project.These projects range from assisting with educationalprojectsrelatedtoearlychildhooddevelopmenttofundingfor community projects to develop vegetable gardens asa sustainable way to help alleviate poverty in the mostaffectedcommunities.

IQuad also supports Payroll Giving and has since 2006provided an opportunity for staff volunteerism andinvolvement in their communities. IQuad continues tomatch the monthly contributions made by employeeswithdonationsviaPayrollGivingdistributedevenlyby theSouthAfricanChildren’sCharityTrustamongtheselectedparticipating charities each month. The charities thatbenefitareCotlands,ReachforaDreamFoundation,ChocChildhood Cancer Foundation, The South African RedCrossSocietyandIthembaTrust.

In addition, IQuad Treasury Solutions provides annualfinancial assistance to Christel House South Africa, anorganisationwhich,byrunningholisticandcomprehensiveprogrammes including education, health and wellbeingandparentandcommunityoutreachprogrammes,aimstohelpchildrenbreakthecycleofpovertyandbecomeself-sufficient,contributingmembersofsociety.

bbbee InItIatIves

The Group supports broad-based black economicempowerment initiatives and co-ordinates the verificationof BBBEE contributions in all its subsidiaries. BBBEEcertificatesare issuedatsubsidiary level,since theGrouphas no direct customers. All IQuad subsidiaries werecertifiedLevel4BBBEEcontributorsatlastverificationdate.

manaGement control

BlackparticipationwithintheIQuadGroupatdirectorlevelisat44%for2011,comprising33%blackmalesand11%blackfemales.

employment equIty

IQuad comprises a diverse workforce and continuallystrives towards promoting equality in the workplace. Ona consolidated basis for the Group the percentage blackmanagement adjusted for gender recognition is 22%againstacompliancetargetof40%.IQuadiscompliantinsubmittingitsemploymentequityreportonanannualbasisasrequiredbytheEmploymentEquityAct.

IQuad Group supports social development and education through its financial and practical contributions to

various community-based projects.

Corpo ra te c i t i zensh ip repo r t


skIlls development

A Workplace Skills Plan is submitted annually, which iscompiled by the company’s skills development facilitator(SDF).Thehighlyspecialisednatureofthebusinessmeansthat training is critical, and that most training is internal.However, there isalsogreat valuegiven toattendanceofexternal courses on soft skills, computer skills and otherworkplaceskills toencourageandcontribute towards thedevelopmentofwell-roundedindividuals intheworkplace.Training is driven at subsidiary level, and each subsidiaryprovidesinputintotheoverallGroupplan.Externaltrainingcostoverthepastyearwas3%ofheadlineearnings.TheGroup uses benefits from the skills development leviespaid,andisamemberoftheFassetSeta(Setaforfinance,accounting, management consulting and other financialservices). IQuad is dedicated to developing its staff byprovidingcontinuousopportunitiesforinternalandexternaltraining. IQuadusesonlyaccredited trainingproviders forstafftraining.TheCompanypaysforemployeeswhowishto further their studies at tertiary level, predominantly inthe financial and accounting field, and also funds higherdiplomacoursesforcontinuousprofessionaldevelopment.

preferentIal procurement

AstheCompanyoperatesintheservicesindustrythemostsignificantexpensesaresalariesandwages.Procurementdecisionsaremadebyindividualsubsidiarieswhotakeintoaccountsuppliers’contributiontoBBBEEasafactorintheprocurementdecision.RecognisedspendfromcontributorstoBBBEEexceeds50%inselectedIQuadsubsidiaries.


The IQuad Student

Assistance Programme

continues to assist talented

learners in disadvantaged

communities to develop

their potential.

New initiatives for the

learners have been

developed, including an

IQuad Internship programme

helping them to gain

practical on-the-job work

skills and to develop their

understanding and business

experience.

IQuadendorses theprinciples incorporated in the codeofcorporatepracticesandconductoutlined in the thirdKingreport(KingIII),andintheListingsRequirementsoftheJSELimited.SincetheinceptionofKingIIIinMarch2010,IQuadhasendeavouredtoapplytheprinciplesofKingIIIandhasreviewed itspracticesagainst theseprinciples.WhereKingIIIpracticesorprinciplesarenotappliedwithinthebusiness,thisisclearlyexplainedtostakeholdersand,wherenecessary,othercontrolsputinplacetoensuregoodgovernance.

board of dIrectors and subcommIttees

BOaRd COmPOsITIOn

In linewiththerecommendationsofKingIII, IQuadGrouphasaunitaryboardstructure.Atthedateofthisreporttheboardcomprisesninedirectorsasfollows:

Independent non-executive directors (3)

AlfreddaCostaChrisElfickMohamedShaikAmod

non-executive directors (4)

MorneEdasNicodeWaalSamaraTotaramTrevorHayter(Chairman)

executive directors (2)

DavidEdwards(Chiefexecutiveofficer)FransBotha(Financialdirector)

Theboardcomprisesamajorityofnon-executivedirectors,withthemajorityofthesenotbeingindependent.Althoughthemajorityofnon-executivedirectorsarenotindependent,theboardissatisfiedthatconsideringtherelativesizeandmaturityoftheGrouptheboardhastheknowledge,skillsandresourcesrequiredforconductingthebusinessoftheboard.

ChaIRman and ChIef exeCuTIVe

In line with best practice the roles of chairman and chiefexecutiveareseparate.Thisensuresabalanceofauthorityand power so that no one individual has unrestricteddecision-makingpowers.AtthesametimetheboardandexecutivemanagementworkcloselytogetherindeterminingthestrategicobjectivesoftheGroup.

The chairman, Trevor Hayter, is a non-executive but notanindependentdirector,asdefinedinKingIII.Hewasthechief executive officer of the Group during the precedingthreeyears.

In recognitionand response to thisnon-adherence to theprinciples of King III, the board appointed Mr FrancoisSwart as lead non-executive director. Following hisresignation effective 28 February 2011, Mr Nico de Waalhasbeenappointedasleadnon-executivedirector.

BOaRd aPPOInTmenTs and eValuaTIOns

Board appointments and evaluations are conducted ina formalandtransparentmanner.Thisprocessisundertakenbytheboardasawhole.

Any appointments to the board are made with duecognisanceoftheneedtoensurethattheboardcomprisesa diverse range of skills, knowledge and expertise,the requisite independence, appropriate demographicrepresentation,anda relevantbalancebetweenskillsandexpertise and the professional and industry knowledgenecessarytomeettheGroup’sstrategicobjectives.

Reappointmentofnon-executivedirectorsisnotautomatic,andat leastone thirdofnon-executivedirectors retirebyrotationeveryyear.Anappraisalofthecollectiveboardandindividualboardmemberswasundertakenin2010.

The chief executive’s performance is evaluated accordingto his key performance indicators, which are approvedannuallybytheboard.

suCCessIOn PlannInG

Succession planning is an important focus area atboard,executiveandseniormanagementlevel.Thechiefexecutive is required to report regularly to the board ontheGroup’smanagementdevelopmentandemploymentequityprogrammes.

BOaRd ChaRTeR

Theboardhasaformalwrittencharterthatisreviewedonanannualbasis.Intermsofthischarterthemainfunctionsoftheboardareasfollows:

• DeterminingtheoverallobjectivesfortheGroup• Developing strategies to meet those objectives in

conjunctionwithmanagement• Ensuring that the Group’s ethics are managed

effectively

The board of directors of IQuad operates within a defined governance framework. The framework enables the

board to remain fully committed to business integrity, fairness, transparency and accountability in all its activities.

Statement of corporate practice and conduct


• ReviewingtheGroup’sperformance• Assumingoverallresponsibilityforriskmanagement• EvaluatingtheperformanceoftheGroup’sdirectors

andsubcommittees

The charter also formalises policies regarding boardmembership and composition, board procedures, theconduct of directors, risk management, remuneration,boardevaluationandinduction.

BOaRd COmmITTees

The board committee structure is designed to assist theboard in the discharge of its duties and responsibilities,and was largely unchanged during the year. Each boardcommittee has formal written terms of reference that arereviewed on an annual basis and effectively delegatedin respect of certain of the board’s responsibilities. Theboard monitors these responsibilities to ensure effectivecoverageof,andcontrolover,theoperationsoftheGroup.The chairperson of the subcommittee provides feedbacktotheboardontheactivitiesandkeyissuesdiscussedatsubcommitteemeetings.

The directors confirm that the committees functionedin accordance with these terms of reference during thefinancialyearunderreview.Thefollowingcommitteeswereassistingtheboardduringtheyear.

• Auditandriskcommittee• Remunerationcommittee

audIt and rIsk commIttee

memBeRs

MShaikAmod(chairman),AAdaCosta,CACElfick

COmPOsITIOn and meeTInG PROCeduRes

The committee comprises Mr M Shaik Amod, Mr AA daCosta and Mr CAC Elfick who was appointed on12April2011.Themembersareindependentnon-executivedirectors in termsof thedefinitionsofKing III.Before theappointmentofMrElfick,theauditcommitteeconsistedoftwoindependentnon-executivedirectors.TheprinciplesofKingIIIrequiretheauditcommitteetoconsistofaminimumof three members. In response to this non-complianceother non-executive board members attended the auditcommitteemeetingsduringtheyear.Refer table6 for theattendancematrix.

Thecommitteemeetsthreetimesayear.ThemeetingswereattendedbytheGroup’sexternalauditors.Thechiefexecutiveofficerandthefinancialdirectorarepermanentinviteestothemeetings.Thecommitteeprovides regular feedback to theboard on the committee’s activities. The board is satisfiedthattheGroup’sriskmanagementpolicyiseffective.

The independent auditors have unrestricted access tothe audit and risk committee, which ensures that theirindependenceisnotimpaired.


Table 6: Board and committee meeting attendance

Theattendanceofthedirectorsatboardandboardcommitteemeetingsforthefinancialyearwasasfollows:

BoardAudit and risk committee

Remuneration committee Note

Numberofmeetings 4 3 2FJBotha 4 3ZLCombi – – aAAdaCosta 4 3NdeWaal bMEdas 3 – cDMEdwards 4 3 2CElfick dTBHayter 4 3MShaikAmod 4 3FWSwart 4 3 2 eSTotaram 4 3

Notesa–MEdasrepresentedZLCombi,referalsonotec.MrZLCombiresignedeffective12April2011.b–NdeWaalwasappointedeffective12April2011.c–MEdasrepresentedZLCombiatboardmeetingsandwasappointedtotheboardeffective12April2011.d–CElfickwasappointedeffective12April2011.e–FSwartresignedeffective28February2011.

ArepresentativeofIQuad’sdesignatedadvisorsattendedallboardandauditcommitteemeetingsduringtheyear.

Thekeyfunctionsandresponsibilitiesofthecommitteeasoutlinedinthecharterareto:

• assist the board of directors in its evaluation of theadequacyandefficiencyoftheinternalcontrolsystems,accounting practices and auditing processes appliedwithintheGroup;

• nominateforappointmentasauditorsoftheCompanyregisteredauditors,who,intheopinionofthecommittee,areindependentoftheGroup;

• determinethefeestobepaidtotheauditorsandtheauditors’termsofengagement;

• ensurethattheappointmentoftheauditorscomplieswith the Companies Act and any other legislationrelatingtotheappointmentofauditors;

• determine the nature and extent of any non-auditservicestotheGroup;

• receive and deal appropriately with any complaintsrelatingeithertotheaccountingpracticesandinternalauditof theGroupor to thecontentsorauditingofitsfinancialstatements,oranyotherrelatedmattersthereto;and

• performsuchfurtherfunctionsasmaybeprescribed.

AccordingtotheJSEListingsRequirements,thecommitteemust consider the appropriateness of the expertise andexperience of the financial director of the Group on anannualbasis.

Inrespectoftheaboverequirement,thecommitteebelievesthat Frans Botha, the Group financial director, possessesthe appropriate expertise and experience to meet hisresponsibilitiesinthatposition.

Theauditcommitteehasreviewedtheintegratedreportandrecommendeditsapprovalbytheboard.

remuneratIon commIttee

memBeRsThe committee comprises Mr F Swart and Mr CA Otto.Mr DM Edwards is a permanent invitee to the meeting.FollowingtheresignationofMrFSwart,MrNdeWaalwasappointed.

COmPOsITIOn and meeTInG PROCeduResThe committee consists of one non-executive directorand Mr CA Otto, who is not a director of the Group buthas significant experience in executive remuneration. ThecommitteemeetsatleasttwiceayearandMrEdwardsisrecused from themeetingshouldhisperformanceand/orremunerationpackagebediscussed.

The principles of King III require that the remunerationcommittee consists of at least two non-executivedirectors, themajorityofwhomshouldbe independent.Although the IQuad remuneration committee does notcomplywiththisprinciple,theboardissatisfiedthatthe

committee has sufficient knowledge and experience toperformitsduties.

The committee has access to independent surveys andconsultants for best practice advice and informationconcerningcurrentandjob-specificremunerationlevels.

Schedulessettingouttheexecutivedirectors’equityinterestsandhistoricalremunerationaresetoutinthedirectors’report.

Internal audIt

The internalaudit functionoperatesasapart-timedivision(and will do so until the Group reaches a practical criticalmass)withdirectaccesstotheauditcommittee.Theinternalaudit function utilises resources from within the financedepartment,theinternalISO9001auditfunctionandemploysoutsourcedauditcapacityfortheauditofspecialisedareas.Anauditplanisdrawnupfortheyearwhichisapprovedbytheauditcommittee.AnadequatesystemofinternalcontrolisinplacetomitigatethesignificantrisksfacedbytheGrouptoanacceptablelevel.

code of ethIcs

The board has adopted a code of ethics which isincorporatedintotheGroup’shumanresourcepoliciesandprocedures.TheboardissatisfiedthattheGroup’sethicalstandardsarebeingadheredto,andaresupportedbytheethicalframeworkinplace.Theboardcontinuestorefinethecodeofethicsonanongoingbasisandsoundprocessesareinplacetomanageanydeviationsfromthiscode.

rIsk manaGement

The board is accountable for the process of riskmanagement and systems of internal control. The boardimplementedaproceduretoidentify,evaluateandmanagesignificant risks faced by the Group. The enterprise riskmanagementprocedureisreviewedbytheauditcommitteeonaregularbasis.Althoughadocumentedrecoveryplanexistsforcriticalriskareas,theGroupis intheprocessofformalisingacomprehensivebusinessrecoveryplan.

It Governance

IT governance remains a critical part of the Group’s riskmanagementprocess.DuringtheyeartheGroupestablishedan IT steering committeewith the specific responsibility toaddresstheGroup’sITriskandprocessoptimisation.

share dealInGs

The board complies with the requirements of the JSELimited in relationtorestrictionsonthetradingof IQuad’sshares by directors and employees during the defined

Statement of corporate practice and conduct (continued)


closedperiods.RestrictionsmayalsobeplacedonsharedealingsatothertimesiftheGroupisinvolvedincorporateactivityorsensitivenegotiations.

Details of directors’ share dealings are disclosed to thelistings division of the JSE Limited and communicatedthroughitselectronicnewsservices,SENS.Thesedealingsarealsodisclosedatboardmeetings.There isaprocessin place in terms of the requirements of the JSE Limitedfor directors to obtain prior clearance before dealing inthe Company’s shares. All transactions are conducted attherulingmarketpriceontheJSELimited.

Group secretary

Alldirectorshaveaccesstotheadviceandservicesofthecompanysecretary,whoprovidesguidancetotheboardasawholeandtoindividualdirectorswithregardtohowtheirresponsibilitiesshouldbedischargedproperly.

New directors are required to attend a formal Directors’InductionProgramme,aspresentedbytheWitsBusinessSchool, to ensure they are informed of their duties andresponsibilities.

Theboarddoesnothaveaformalcontinuousdevelopmentprogramme for directors as per the principles of King III.In responseto thenon-adherence, theboardencouragesmembers toattendvariousbriefingsandseminars,at theexpenseof theCompany, toenablemembers todevelopcontinuously.Boardmembers receive regularbriefingsonchangesinrisk,legislationandtheenvironment.

GoInG concern

The board has considered and recorded the facts andassumptionsonwhichitreliestoconcludethatthebusinesswillcontinueasagoingconcerninthefinancialyearahead.Theboardconsiders thisaspectatboth interim reportingand financial year-end. The directors are of the opinionthatthebusinesswillbeagoingconcernintheyearaheadand theirstatement in this regard isalsocontained in thestatement of directors’ responsibility for the consolidatedfinancialstatements.

Independent assurance of InteGrated report

The principles of King III require companies to obtainindependentassuranceontheirintegratedandsustainabilityreporting. The board has considered the relative sizeand complexity of the Group’s operations and the boardis satisfied that the additional assurance that would beobtainedfromanindependentreviewoftheintegratedandsustainabilityreporting,willnotjustifytheadditionalcost.


The board committee

structure is designed to

assist the board in the

discharge of its duties and

responsibilities, and was

largely unchanged during the

year. Each board committee

has formal written terms of

reference that are reviewed

on an annual basis.

Statement of corporate practice and conduct (continued)


The directors are responsible for the preparation, integrity and fair presentation of the financial statements and other financial information included in this report. In presenting the accompanying financial statements, International Financial Reporting Standards have been followed, applicable accounting assumptions have been used while prudent judgements and estimates have been made.

The directors’ responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these financial statements so as to be free from material misstatement, whether owing to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. The board is satisfied that an adequate system of internal control was effective during the year.

The going concern basis has been adopted in preparing the financial statements. The directors have no reason to believe that the Group will not be a going concern in the foreseeable future based on forecasts and available cash resources. The financial statements support the viability of the Group.

The financial statements have been audited by the independent auditor, PricewaterhouseCoopers Inc., which was given unrestricted access to all financial records and related data, including minutes of all meetings of the shareholders, board of directors and committees of the board. The directors believe that all representations made to the independent auditor during the audit were valid and appropriate.

Dave Edwards Frans BothaChief executive officer Financial director

Port Elizabeth24 May 2011

Company sec re ta r y ’s ce r t i f i ca te t o t he members o f IQuad Group L im i t ed

In accordance with the provisions of the Companies Act, No 61 of 1973 (as amended), of South Africa, being the Act in force at the time of the Company’s financial year-end, I certify that, in respect of the year ended 28 February 2011, the Company has lodged with the Registrar of Companies, all returns prescribed by the Act and that all such returns are true, correct and up to date.

Frans BothaCompany secretary

Repo r t o f t he aud i t and r i s k commi t t ee The audit and risk committee (“the committee”) reports that it has considered the matters set out in section 270A(5) of the Companies Act, 61 of 1973, as amended by the Corporate Laws Amendment Act, and is satisfied with the independence and objectivity of the external auditor, PricewaterhouseCoopers Inc. The committee has considered and recommended the fees payable to the external auditor and is satisfied with the extent of non-audit-related services performed.

The committee has satisfied itself that the financial function, including the financial director, has the appropriate experience and resources, and is satisfied that the internal financial controls of the Company are working effectively.

A board-approved audit and risk committee charter stipulating, inter alia, the committee’s composition, duties and responsibilities, has been adopted. The committee is satisfied that it complied with the responsibilities as set out in the charter as well as relevant legal and regulatory responsibilities.

Based on the information and explanations given by management and discussed with the independent external auditor regarding the results of their audit, the committee is satisfied that there was no material breakdown in the internal financial controls during the financial year under review.

The committee has evaluated the financial statements of IQuad Group Limited for the year ended 28 February 2011 and, based on the information provided to the committee, considers that the Group complies in all material respects with the requirements of the Companies Act, 61 of 1973, as amended, and International Financial Reporting Standards.

M Shaik AmodAudit committee chairman

Approva l o f conso l i da ted f i nanc i a l s t a temen ts f o r t he yea r ended 28 Feb rua r y 2011


We have audited the Group annual financial statements and annual financial statements of IQuad Group Limited, which comprise the consolidated and separate statements of financial position as at 28 February 2011, and the consolidated and separate statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes, and the directors’ report, as set out on pages 22 to 72.

DirEctorS’ rESponSiBility For thE FinAnciAl StAtEMEntSThe Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

AuDitor’S rESponSiBilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

opinionIn our opinion, the financial statements present fairly, in all material respects, the consolidated and separate financial position of IQuad Group Limited as at 28 February 2011, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa.

pricewaterhousecoopers inc. Director: MJ rudmanRegistered Auditor

Port Elizabeth24 May 2011

I ndependen t aud i t o r ’s r epo r t t o t he members o f IQuad Group L im i t ed


The directors have pleasure in presenting their report for the year ended 28 February 2011. This report forms part of the audited

consolidated financial statements.

nAturE oF BuSinESSThe IQuad Group (“Group”) is a diversified group of specialist financial and business services companies incorporated and domiciled

in South Africa.

Our products and services are grouped under the following four areas of specialisation which serve as the pillars upon which the

Group stands.

– Investment Incentives

– Global Trade Services

– Business Development

– Verification Services

The principal activities of the Group remained unchanged from the previous year.

Group rESultSThe results for the year are fully dealt with in the attached annual financial statements.

ShArE cApitAlThe authorised share capital of the Company at 28 February 2011 and 2010 was R100 000, divided into 1 000 000 000 ordinary

shares of R0,0001 each.

The issued share capital of the Company at 28 February 2011 and 2010 was R2 808, divided into 28 084 658 ordinary shares of

R0,0001 each.

The share premium account of the Company amounted to R104 412 550 (2010: R104 412 550).

The Company held 702 545 (2010: 105 325) treasury shares at 28 February 2011.

DiViDEnDSAn interim dividend of 8 cents (2010: 8 cents) per ordinary share was declared on 12 October 2010, and paid to ordinary shareholders

registered on 23 October 2010.

IQuad has not declared a final dividend for the year ended February 2011 and will utilise its cash resources for current and future

growth opportunities.

The total dividend relating to the year ended 28 February 2011 will therefore amount to 8 cents (2010: 28 cents) per share.

The dividend is in line with the Group’s dividend policy to pay at least 40% of headline earnings per share when the funds are not

required for growth.

Repo r t o f t he d i r ec to rs


DirEctorSThe directors of the Company during the year and up to the date of this report were as follows:

TB Hayter (Chairperson)

DM Edwards (Chief executive officer)

FJ Botha

FW Swarta,c

M Shaik Amoda,b

AA da Costaa,b

S Totarama

ZL Combia,d

CAC Elficka,b,e

MM Edasa.e

NP de Waala,e

DirEctorS’ intErEStS in ShArES

2011 2010Beneficial Beneficial

Direct Indirect Total Direct Indirect Total AA da Costaa,b 20 000 – 20 000 20 000 – 20 000 DM Edwards 15 000 448 450 463 450 11 000 448 450 459 450 FJ Botha 90 000 210 000 300 000 90 000 210 000 300 000 FW Swarta,c – – – – – – M Shaik Amoda,b – – – – – – S Totarama – – – – – – TB Haytera 513 154 1 500 000 2 013 154 498 313 1 487 428 1 985 741 ZL Combia,d – – – – – – CAC Elficka,b,e – – – – – – MM Edasa,e – – – – – – NP de Waala,e – – – – – –

638 154 2 158 450 2 796 604 619 313 2 145 878 2 765 191

a – Non-executiveb – Independentc – Resigned 28 February 2001d – Resigned 12 April 2011e – Appointed 12 April 2011

During the period after the statement of financial position date and up to the date of this report DM Edwards acquired 7 000 shares

in the Company.

Repo r t o f t he d i r ec to rs ( con t i nued )


DirEctorS’ EMoluMEntSThe following directors’ emoluments have been paid by the Company and its subsidiaries for the year ended 28 February 2011:

2011Consulting

feesFees as

directorsBasic

salaryPension benefits

Performance related Total 2010

Executive directors R000 R000 R000 R000 R000 R000 R000FJ Botha – – 852 33 – 885 831 DM Edwards – – 1 331 45 – 1 376 1 584 TB Hayter – – 1 349 23 – 1 372 1 275

– – non-executive directors – – AA da Costa – 85 – – – 85 101 TB Hayter 56 79 – – – 135 –FW Swart – – – – – – – S Totaram – – – – – – – ZL Combi – – – – – – – M Shaik Amod – 85 – – – 85 55

56 249 3 532 101 – 3 938 3 846

ShArEholDinG in thE coMpAnyThe issued share capital of the Company held by public and non-public entities as at 28 February 2011 was as follows:

Shareholders Shares heldNumber Percentage Number Percentage

non-publicDirectors 11 3,6 1 523 110 5,4Associates of directors 6 1,9 3 825 803 13,6Ceded as security for profit warrants 1 0,3 71 306 0,3Treasury shares 1 0,3 702 545 2,5Holder of right to nominate a director 1 0,3 2 290 000 8,2Shareholders holding more than 10% 1 0,3 12 042 344 42,9

21 6,7 20 455 108 72,9public 289 93,3 7 629 550 27,1

310 100,0 28 084 658 100,0

The following shareholders, other than directors, beneficially hold more than 5% of the issued share capital at 28 February 2011:

Shares heldNumber Percentage

Paladin Capital Limited 12 042 344 42,9Thembeka Capital Limited 2 290 000 8,2

14 332 344 51,1




SpEciAl rESolutionSAt the annual general meeting held on 22 July 2010 the following special resolutions were passed:

Share buyback

Special resolutions numbers 1 and 2 authorised the Company and its subsidiaries to acquire shares in the Company subject to the

provisions of the Companies Act 1973 and the Listings Requirements of the JSE Limited.

EVEntS AFtEr StAtEMEnt oF FinAnciAl poSition DAtEThere were no material events after the date of the statement of financial position that have not been reflected in these consolidated

financial statements.

BorroWinG poWErSThe directors may from time to time borrow for the purposes of the Company such sums as they see fit.

coMpAny SEcrEtAryFJ Botha acted in the capacity of company secretary for the year ended 28 February 2011.

AuDitorPricewaterhouseCoopers Inc. continued to act as auditor to the Company.


Group Company2011 2010 2011 2010

Notes R000 R000 R000 R000ASSEtSnon-currEnt ASSEtSInvestment property 4 14 434 13 091 – –Property, plant and equipment 5 14 163 12 694 – –Goodwill 6 65 524 87 006 – –Intangible assets 7 4 430 2 930 – –Investments in subsidiaries 8 – – 76 616 90 516Deferred tax assets 12 9 599 3 672 32 34Loans receivable 13 3 278 1 000 1 000 1 000

111 428 120 393 77 648 91 550

currEnt ASSEtSWork in progress 15 1 927 1 997 – –Amounts owing by subsidiaries 10 – – 48 563 32 969Current tax assets 676 496 – 10Trade and other receivables 16 26 408 25 150 14 3 015Loans receivable 13 – 584 – –Amounts owing by associates and joint venture 14 787 117 – –Dividend receivable – – 750 –Cash and cash equivalents 17 3 862 7 179 87 775

33 660 35 523 49 414 36 769

Non-current assets held for sale 18 – 16 328 – –totAl ASSEtS 145 088 172 244 127 062 128 319

Equity AnD liABilitiESEquityEquity AttriButABlE to Equity holDErS oF pArEntShare capital 19 101 200 103 867 104 415 104 415Share reserve 20 (369) (3 036) (369) (3 036)Accumulated profits 9 776 35 123 15 302 26 334Non-controlling interest (1 815) 2 013 – –

108 792 137 967 119 348 127 713

liABilitiESnon-currEnt liABilitiESOperating lease liability 421 606 – –Deferred tax liabilities 12 560 406 – –Borrowings 22 14 298 20 090 – –

15 279 21 102 – –

currEnt liABilitiESCurrent tax liabilities 304 129 80 –Trade and other payables 23 12 064 11 053 215 606Provisions 21 25 229 – –Dividend payable 750 – – –Current portion of borrowings 22 7 874 1 402 7 419 –

21 017 12 813 7 714 606

Liabilities of disposal groups 18 – 362 – –totAl liABilitiES 36 296 34 277 7 714 606totAl Equity AnD liABilitiES 145 088 172 244 127 062 128 319

Sta temen ts o f f i nanc i a l pos i t i onas a t 28 Feb rua r y 2011


Group Company2011 2010 2011 2010

Notes R000 R000 R000 R000rEVEnuE 25 85 628 79 970 – 1 439Cost of services rendered (38 625) (36 010) – (1 246)GroSS proFit/(loSS) 47 003 43 960 – 193Other operating income 601 166 – –Operating expenses (62 365) (26 167) (17 783) (1 273)opErAtinG (loSS)/proFit 26 (14 761) 17 959 (17 783) (1 080)Investment income 27 3 553 4 231 16 225 12 658Share of losses from associates and joint venture – (124) – –Finance costs 28 (2 099) (2 423) (453) (864)(loSS)/proFit BEForE tAxAtion (13 307) 19 643 (2 011) 10 714Taxation 29 (4 062) (6 315) (1 158) (830)(loSS)/proFit For thE yEAr (17 369) 13 328 (3 169) 9 884

other comprehensive loss:Exchange differences on translating foreign operations – (30) – –total comprehensive (loss)/income (17 369) 13 298 (3 169) 9 884

(loss)/profit attributable to:Owners of the parent (15 569) 14 159 (3 169) 9 884Non-controlling interest (1 800) (831) – –

(17 369) 13 328 (3 169) 9 884

total comprehensive (loss)/income attributable to:Owners of the parent (15 569) 14 129 (3 169) 9 884Non-controlling interest (1 800) (831) – –

(17 369) 13 298 (3 169) 9 884

Basic and diluted (loss)/earnings per share (cents) 35 (56,9) 50,6

Sta temen ts o f comprehens i ve i ncomef o r t he yea r ended 28 Feb rua r y 2011


Sta temen ts o f changes i n equ i t yf o r t he yea r ended 28 Feb rua r y 2011

Att

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27 0

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108

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123

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2 01

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7 96

7

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l com

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––

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–(2

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2 66

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–(7

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)(7

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)(1

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)(9

241

)B

alan

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t 28

Feb

ruar

y 20

113

104

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(3 2

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101

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–(3

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776

110

607

(1 8

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108

792

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Bal

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at

1 M

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93

104

412

–10

4 41

5–

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22 6

2912

7 04

4–

127

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9 88

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–(3

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–(6

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)(6

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)–

(6 1

79)

Bal

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at

1 M

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201

03

104

412

–10

4 41

5–

(3 0

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(3 0

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26 3

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7 71

3–

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713

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year

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–(3

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–2

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2 66

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2 66

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2 66

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Bal

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ary

2011

310

4 41

2–

104

415

–(3

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(369

)15

302

119

348

–11

9 34

8


Group Company2011 2010 2011 2010

Notes R000 R000 R000 R000Cash generated from operations 30 12 525 18 610 1 318 3 515Investment income 3 303 2 057 4 519 1 467Dividends received – – 10 956 10 820Finance costs (2 066) (2 632) (453) (864)Tax paid (8 144) (10 591) (1 066) (450)cASh FloWS FroM opErAtinG ActiVitiES 5 618 7 444 15 274 14 488Acquisition of property, plant and equipment 5 (1 987) (7 778) – (738)Proceeds on disposal of property, plant and equipment 51 250 – –Additions to investment property 4 (1 343) – – –Acquisition of intangible assets 7 (1 334) (1 429) – (67)Investment in subsidiaries 31 (3 583) (3 161) – –Investment in associates – (29) – –Cash (outflow)/inflow on disposal of subsidiary 31 (194) 2 344 – 2 000Additions to non-current asset held for sale (1 100) – – –Proceeds on disposal of non-current asset held for sale 11 800 10 000 – –Cash flow on consolidation of non-current asset held for sale 31 98 – – –Contingent consideration (paid)/received (265) 2 765 (265) 2 765cASh FloWS FroM inVEStinG ActiVitiES 2 143 2 962 (265) 3 960Non-current borrowings (repaid)/advanced (6 231) 10 425 – –Current borrowings advanced 6 472 – 7 419 –Amounts advanced to associates and joint venture (265) (330) – –Loans receivable advanced – (406) – –Non-controlling interests’ loans (repaid)/advanced (238) 1 064 – –Amounts (advanced to)/received from subsidiaries – – (12 929) 7 951Dividends paid (8 492) (6 695) (7 863) (6 179)Acquisition of additional shares in subsidiary from non-controlling interest (2 324) – (2 324) –cASh FloWS FroM FinAncinG ActiVitiES (11 078) 4 058 (15 697) 1 772nEt (DEcrEASE)/incrEASE in cASh AnD cASh EquiVAlEntS (3 317) 14 464 (688) 20 220cASh AnD cASh EquiVAlEntS At BEGinninG oF thE yEAr 7 179 (7 285) 775 (19 445)cASh AnD cASh EquiVAlEntS At EnD oF thE yEAr 17 3 862 7 179 87 775

Sta temen ts o f cash f l owsf o r t he yea r ended 28 Feb rua r y 2011


1. SuMMAry oF SiGniFicAnt AccountinG policiES The principal accounting policies applied in the preparation of these consolidated and separate financial statements are set

out below. These policies have been consistently applied to all years presented, unless otherwise stated.

1.1 Basis of preparation The consolidated and separate financial statements have been prepared in accordance with International Financial Reporting

Standards (IFRS) and under the historical cost convention, except as described in the notes below.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It

also requires management to exercise judgement in the process of applying the Group’s accounting policies. The areas

involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the

financial statements, are disclosed in note 1.22.

(a) Earlyadoptionofamendedstandard Amendment to IFRS 8, Operating Segments (effective for reporting periods beginning on or after 1 January 2010). The

amendment states that disclosure regarding segment assets need only be disclosed if such information is regularly

reported to the chief operating decision-maker. The Group early-adopted the amendment with effect 1 March 2009.

(b) Newandamendedstandardsadopted The Group has adopted the following new and amended standards as of 1 March 2010:

• IFRS 3, Business combinations – Revised (effective 1 July 2009). The new standard continues to apply the acquisition

method to business combinations, with some significant changes. For example, all payments to purchase a business

are to be recorded at fair value at the acquisition date, with some contingent payments subsequently remeasured at

fair value through income. Goodwill may be calculated based on the parent’s share of net assets or it may include

goodwill related to the minority interest. All transaction costs will be expensed. Management has applied the revised

standards to all business combinations occurring during the year, as detailed in note 31.

• Amendment to IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. A paragraph has been

added to IFRS 5 clarifying that disclosures in other standards do not apply to assets (or disposal groups) classified

as held for sale or discontinued operations unless other standards require specific disclosures or require disclosures

about the measurement of assets and liabilities within a disposal group that are not within the scope of the

measurement requirements of IFRS 5. This amendment to the standard does not have any impact on the financial

statements for the current year.

• Amendment to IAS 7, Statement of Cash Flows. The amendment clarifies that only expenditures that result in

the recognition of an asset in the statement of financial position can be classified as cash flows from investing

activities. The amendment is in line with the current treatment of the Group and is therefore not expected to have

a significant effect.

• IAS 27, Consolidated and Separate Financial Statements – Revised (effective 1 July 2009). This standard requires

the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control.

They will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is

lost. Any remaining interest in the entity is remeasured to fair value and a gain or loss is recognised in profit or loss.

The revised standard was applied to all transactions with non-controlling interests.

• Amendment to IAS 36, Impairment of Assets. The amendment clarifies that each unit or group of units to which

goodwill is to be allocated for the purposes of impairment testing, shall not be larger than an operating segment

per IFRS 8 before any aggregation permitted by paragraph 12 of IFRS 8. The amendment is in line with current

impairment practices of the Group and is therefore not expected to have a significant effect.

• Amendment to IAS 38, Intangible Assets. IAS 38 has been amended to clarify that when an intangible asset acquired

in a business combination is linked to a contract or identifiable asset, the intangible asset may be recognised

separately from goodwill, but together with the related item. In addition, the acquirer may recognise a group of

Notes to t he conso l i da ted annua l f i nanc i a l s t a temen tsf o r t he yea r ended 28 Feb rua r y 2011


complementary intangible assets as a single asset provided the individual assets in the group have similar useful

lives. The amendment to the standard does not have any impact on the financial statements for the current year.

• Amendment to IAS 38, Intangible Assets. Paragraphs 40 and 41 of IAS 38 have been amended to clarify the

description of valuation techniques commonly used to measure intangible assets at fair value when assets are not

traded in an active market. This amendment will be applied prospectively. The amendment to the standard was

applied to the valuation of intangibles acquired through business combinations during the year.

(c) StandardandamendmentstoexistingstandardsthatarenotyeteffectiveandhavenotbeenearlyadoptedbytheGroup

The following standard and amendments to existing standards have been published and are mandatory for the Group’s

accounting periods beginning on or after 1 March 2011 or later periods. These standards have not been early adopted.

• Amendment to IAS 1, Presentation of Financial Statements. The amendment clarifies that entities may present the

required reconciliations for each component of other comprehensive income either in the statement of changes

in equity or in the notes to the financial statements. The amendment is effective from 1 March 2011. As the

amendment only impacts presentation aspects, there will be no impact on the Group’s reported profits.

• Amendment to IAS 24, Related Parties. The amendment removes the requirement for government-related entities

to disclose details of all transactions with the government and other government-related entities and clarifies and

simplifies the definition of a related party. The amendments are effective from 1 March 2011. As the amendment

only impacts presentation aspects, there will be no impact on the Group’s reported profits.

• Amendment to IFRS 3, Business Combinations – Revised. The effective date and transition requirements of IFRS

7, IAS 32 and IAS 39 were amended to clarify that contingent consideration that arose from business combinations

prior to the application of IFRS 3 (Revised) are accounted for in accordance with the requirements of IFRS 3 (issued

2004). The amendments are effective from 1 March 2011. The Group does not anticipate a material effect from the

adoption of the amendments.

• Amendment to IFRS 3, Business Combinations – Revised. The amendment limits the choice of measuring non-

controlling interest at its proportionate share of the acquiree’s identifiable net assets to those components of non-

controlling interests that are present ownership instruments that entitle the holders to a pro rata share of the entity’s

net assets in the event of liquidation. All other components of non-controlling interest are measured at fair value or

another measurement basis required by IFRS. The amendments are effective from 1 March 2011. The Group does

not anticipate a material effect from the adoption of the amendments.

• Amendment to IAS 27, Consolidated and Separate Financial Statements. IAS 21, IAS 28 and IAS 31 were amended

with the release of IAS 27 (Revised) relating to the accounting for when control, joint control or significant influence

is lost. This amendment clarifies that those amendments should be applied prospectively. The amendments are

effective from 1 March 2011. The Group does not anticipate a material effect from the adoption of the amendments.

• Amendment to IAS 34, Interim Financial Reporting. The amendment emphasises the disclosure principles and the

fact that the interim report should include significant events and transactions. The disclosure should update the

equivalent information presented in the most recent annual report. The following additional disclosures are required

by the amendment: significant changes in the business that affect the fair value of the entity’s financial assets

and financial liabilities; significant transfers between levels in the fair value hierarchy; changes in the classification

of assets resulting from a change in the purpose or use of the assets; and changes in contingent assets and

contingent liabilities. The amendments are effective from 1 March 2011. The Group does not anticipate a material

effect from the adoption of the amendments.

Notes to t he conso l i da ted annua l f i nanc i a l s t a temen ts ( con t i nued )

fo r t he yea r ended 28 Feb rua r y 2011


• Amendment to IFRS 7, Financial Instruments – Disclosures. The amendment clarifies the intended interaction

between qualitative and quantitative disclosures of the nature and extent of risks arising from financial instruments

and removed some disclosure items which were seen to be superfluous or misleading. The amendments are

effective from 1 March 2011. As the amendment only impacts presentation aspects, there will be no impact on the

Group’s reported profits.

• Amendments to IFRS 7, Financial Instruments – Disclosures. The amendment requires additional disclosure on

transfer transactions of financial assets, including the possible effects of any residual risks that the transferring entity

retains. The amendments also require additional disclosures if a disproportionate amount of transfer transactions

are undertaken around the end of a reporting period. The standard is effective for year-ends commencing on or

after 1 July 2011. As the amendment only impacts presentation aspects, there will be no impact on the Group’s

reported profits.

• IFRS 9, Financial instruments. IFRS 9 replaces the multiple classification and measurement models in IAS 39

with a single model that has only two classification categories: amortised cost and fair value. Classification under

IFRS 9 is driven by the entity’s business model for managing the financial assets and the contractual characteristics

of the financial assets.

The new standard removes the requirement to separate embedded derivatives from financial asset hosts.

IFRS 9 classification principles indicate that all equity investments should be measured at fair value. However,

management has an option to present in other comprehensive income unrealised and realised fair value gains and

losses on equity investments that are not held for trading. Such designation is available on initial recognition on an

instrument-by-instrument basis and is irrevocable. There is no subsequent recycling of fair value gains and losses

to profit or loss; however, dividends from such investments will continue to be recognised in profit or loss.

IFRS 9 also removes the cost exemption for unquoted equities and derivatives on unquoted equities but provides

guidance on when cost may be an appropriate estimate of fair value.

Under the new standard, entities with financial liabilities designated at fair value through profit or loss recognise

changes in the fair value due to changes in the liability’s credit risk directly in other comprehensive income. There is

no subsequent recycling of the amounts in other comprehensive income to profit or loss, but accumulated gains or

losses may be transferred within equity.

The standard is effective for year-ends commencing on or after 1 January 2013. The Group is still assessing the

impact of this change in accounting policy on the Group’s financial statement, but does not believe this to have

a material impact.

(d) AmendmentsandinterpretationstoexistingstandardsthatarenotyeteffectiveandarenotrelevantfortheGroup’soperations

The following amendments and interpretations to existing standards have been published and are mandatory for the

Group’s accounting periods beginning on or after 1 March 2011 or later periods but are not relevant for the Group’s

operations:

• IFRIC 19 – Extinguishing financial liabilities with equity instruments (effective 1 July 2010);

• Amendment to IFRS 1, First-time Adoption of International Financial Reporting Standards – Limited exemption from

comparative IFRS 7 disclosures for first-time adopters (effective 1 July 2010);

• Amendments to IFRS 1, First-time Adoption of International Financial Reporting Standards – Hyperinflation and

fixed dates (effective 1 July 2011);

• Amendment to IAS 12, Income Taxes – Deferred tax accounting for investment property at fair value (effective

1 January 2012);




• Amendment to IFRIC 13, Customer Loyalty Programmes – Clarification on the intended meaning of the term “fair

value” in respect of award credits (effective 1 January 2011);

• Amendment to IFRIC 14, The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their

Interaction – Prepayments of a minimum funding (effective 1 January 2011);

• Amendment to IFRS 1, First-time Adoption of International Financial Reporting Standards – Accounting policy

changes in the year of adoption, revaluation basis as deemed cost and previous GAAP carrying amounts as

deemed cost for assets used in operations subject to rate regulations (effective 1 January 2011); and

• Amendment to IFRS 3, Business Combinations – Unreplaced and voluntarily replaced share-based payment

awards (effective 1 July 2010).

1.2 consolidation (a) Subsidiaries Subsidiaries are all entities (including special-purpose entities) over which the Group has the power to govern the

financial and operating policies generally accompanying a shareholding of more than one half of the voting rights.

The existence and effect of potential voting rights that are currently exercisable or convertible are considered when

assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control

is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group uses the acquisition method of accounting to account for business combinations. The consideration

transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the

equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting

from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets

acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair

values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest

in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration

arising from contingent consideration amendments. Cost also includes direct attributable costs of investment.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and

the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s

share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets

of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement

of comprehensive income.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.

Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to

ensure consistency with the policies adopted by the Group.

(b) Transactionswithnon-controllinginterests The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For

purchases from non-controlling interests, the difference between any consideration paid and the relevant share

acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-

controlling interests are also recorded in equity.

When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its

fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount

for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset.

In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted

for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously

recognised in other comprehensive income are reclassified to profit or loss.




If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of

the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

1.3 investments in associates and joint ventures An associate is an entity over which the Group has significant influence but not control, generally accompanying a shareholding

of between 20% and 50% of the voting rights. Significant influence is the power to participate in the financial and operating

policy decisions of the investee but is not control or joint control over those policies.

A joint venture is an entity over whose activities the Group has joint control, established by a contractual agreement and

requiring unanimous consent for strategic financial and operating decisions.

The results and assets and liabilities of associates and joint ventures are incorporated in these financial statements using

the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted

for in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. Under the equity method,

investments in associates and joint ventures are carried in the consolidated statement of financial position at cost, as adjusted

for post-acquisition changes in the Group’s share of the net assets of the associate or joint venture, less any impairment in

the value of individual investments. The Group’s share of its associates’ post-acquisition profits or losses is recognised in

the statement of comprehensive income, and its share of post-acquisition movements in reserves is recognised in reserves.

Losses of an associate or joint venture in excess of the Group’s interest in that associate or joint venture (which includes any

long-term interests that, in substance, form part of the Group’s net investment in the associate or joint venture) are recognised

only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate

or joint venture.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and

contingent liabilities of the associate or joint venture recognised at the date of acquisition is recognised as goodwill. The

goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment.

Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost

of acquisition, after reassessment, is recognised immediately in profit or loss.

Where a group entity transacts with an associate or joint venture of the Group, profits and losses are eliminated to the extent

of the Group’s interest in the relevant associate or joint venture.

Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by

the Group.

Investments in associates and joint ventures within the stand alone financial statements are accounted for in the same manner

as the Group financial statements above.

1.4 Goodwill Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the Group’s share

of the net identifiable assets recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and

is subsequently measured at cost less any accumulated impairment losses. Gains and losses on the disposal of an entity

include the carrying amount of goodwill relating to the entity sold.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit

from the synergies of the business combination. Cash-generating units to which goodwill has been allocated are tested for

impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount,

as defined in note 1.10, of the cash-generating unit is less than the carrying amount, the impairment loss is allocated first

to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on

the basis of the carrying amount of each asset in the unit. Impairment losses recognised for goodwill are not reversed in

subsequent periods.




1.5 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-

makers. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the

operating segments, has been identified as the board of directors that makes strategic decisions.

1.6 translation of foreign currencies The individual financial statements of each group entity are presented in the currency of the primary economic environment

in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and

financial position of each group entity are expressed in South African rand, which is the functional currency of the Company

and the presentation currency for the consolidated financial statements.

The results of foreign operations are translated at average rates, which approximate actual rates, of exchange for the year and

their assets and liabilities are translated at the closing rates. Goodwill and fair value adjustments arising on the acquisition of

a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rates. All resulting

exchange differences are recognised as a separate component of equity.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional

currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each

statement of financial position date, monetary items denominated in foreign currencies are retranslated at the rates prevailing

at the statement of financial position date. Non-monetary items carried at fair value that are denominated in foreign currencies

are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured

in terms of historical cost in a foreign currency are not retranslated. When a foreign operation is partially disposed of or sold,

exchange differences that were recorded in equity are recognised in the statement of comprehensive income as part of the

gain or loss on disposal.

Exchange differences are recognised in profit or loss in the period in which they arise except for:

– exchange differences deferred in equity, as for qualifying hedge instruments; and

– exchange differences on translation of net investments in foreign operations, which are recognised in a foreign currency

transaction reserve until such time as the foreign operation is disposed of.

1.7 investment property Investment property comprises non-owner-occupied buildings held to earn rentals and for capital appreciation. Investment

property is carried at cost less depreciation and any accumulated impairment losses.

Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of, or service a property

only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item

can be measured reliably. If a replacement part is recognised in the carrying amount of the investment property, the carrying

amount of the replaced part is derecognised.

Depreciation is provided to write down the cost, less estimated residual value over the useful life of the property which the

Group considers to be 30 years.

The residual values, useful lives and depreciation methods are reviewed annually and adjusted if appropriate. An asset’s

carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its

recoverable amount. Refer to note 1.10 below on impairment.

Each part of an item of investment property with a cost that is significant in relation to the total cost of the item is depreciated

separately.

The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of

another asset.




The gain or loss arising from the derecognition of an item of investment property is included in profit or loss when the item is

derecognised. The gain or loss arising from the derecognition of an item of investment property is determined as the difference

between the net disposal proceeds, if any, and the carrying amount of the item.

1.8 property, plant and equipment Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. Land is not

depreciated. Subsequent costs of assets are included in the carrying amount or recognised as a separate asset, as

appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the

cost of the item can be measured reliably. All other repairs and maintenance are charged to profit and loss when incurred.

Depreciation on other assets is provided to write down the cost, less the estimated residual value, over the useful life of the

property, plant and equipment on a straight-line basis as follows:

item useful life

Land Not depreciated

Buildings 30 years

Leasehold improvements Life of the lease agreement

Office equipment 5 – 10 years

Computer equipment 3 – 5 years

The residual values, useful lives and depreciation methods are reviewed annually and adjusted if appropriate. An asset’s

carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its

recoverable amount. Refer to note 1.10 below on impairment.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is

depreciated separately.

The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of

another asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss when the

item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined

as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

1.9 intangible assets (a) Intangibleassetsacquiredseparately Intangible assets acquired separately are reported at cost less accumulated amortisation and accumulated

impairment losses. The estimated useful lives and amortisation methods are reviewed at the end of each annual

reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Amortisation is charged on a straight-line basis over their estimated useful lives as follows:

item useful life

Computer software 5 – 10 years

Licences and other intangible assets 5 years

Customer contracts 1 – 5 years

(b) Internallygeneratedintangibleassets:researchanddevelopmentexpenditure Costs associated with developing and maintaining computer software programmes are recognised as expenses

when incurred. Costs that are directly associated with the development of identifiable and unique software products

controlled by the Group and that will probably generate economic benefits exceeding costs beyond one year, are

recognised as intangible assets. Costs include the software development employee costs and an appropriate

portion of relevant overheads. Amortisation is charged on a straight-line basis over their estimated useful lives of

five years.




(c) Intangibleassetsacquiredinabusinesscombination Intangible assets acquired in a business combination are identified and recognised separately from goodwill where

they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such

intangible assets is their fair value at the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less

accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired

separately.

1.10 impairment of assets The Group assesses at each end of the reporting period whether there is any indication that an asset may be impaired. If any

such indication exists, the Group estimates the recoverable amount of the asset.

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not

possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to

which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value

in use. If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced

to its recoverable amount. An impairment loss of assets carried at cost less any accumulated depreciation or amortisation

is recognised immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill

is recognised immediately in profit or loss. Any reversal of an impairment loss of a revalued asset is treated as a revaluation

increase.

1.11 non-current assets (or disposal groups) held for sale Non-current assets (or disposal groups) that are expected to be recovered primarily through sale rather than through continuing

use are classified as held for sale separately on the statement of financial position and stated at lower of their carrying amounts

and fair value less costs to sell.

1.12 Work in progress The cost of work in progress comprises all direct costs and attributable overheads incurred in work performed which

relates to revenue which has not yet met the Group’s revenue recognition criteria. The costs are realised in the statement of

comprehensive income in the period that related revenue is recognised.

1.13 Financial instruments The significance of financial instruments on the Group’s financial position and performance, and the nature and extent of the

risk exposure arising from those instruments during the year and at statement of financial position date, is disclosed in note 2.

Offsettingoffinancialinstruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position only when there is

a legally enforceable right to do so and there is an intention to settle on a net basis, or to realise the asset and settle the liability

simultaneously.

Classificationasfinancialasset,financialliabilityorequityinstrument Instruments are classified as either financial assets, financial liabilities or equity instruments in accordance with the substance

of the contractual arrangement.

Effective-interestmethod The effective-interest method is a method of calculating the amortised cost of a financial asset or liability and of allocating

interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash

receipts through the expected life of the financial asset or liability, or, where appropriate, a shorter period. Interest on financial

assets is recognised in investment income on an effective-interest basis for debt instruments other than those financial assets




designated as at fair value through profit or loss. Dividends are recognised in investment income when the Company’s right

to receive payment has been established.

(a) Non-derivativefinancialinstruments Non-derivative financial instruments comprise investments in equity and debt securities, trade and other

receivables, cash and cash equivalents, loans and borrowings, and trade and other payables. Non-derivative

financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss,

any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are

measured as described below.

Available-for-sale financial assets The Group’s investments in equity securities are classified as available-for-sale financial assets. Subsequent to

initial recognition at cost, they are measured at fair value and changes therein, other than impairment losses, are

recognised directly in other comprehensive income. When an investment is derecognised, the cumulative gain

or loss in equity is transferred to profit or loss. Available-for-sale financial assets are included in non-current

assets unless management intends to dispose of the investment within 12 months of the statement of financial

position date.

The fair value of financial instruments traded in active markets is based on quoted market prices at the statement

of financial position date. The fair value of financial instruments that are not traded in an active market is determined

by using valuation techniques.

Loans and receivables Other non-derivative financial assets are initially measured at fair value and subsequently at amortised cost using

the effective-interest method, less any impairment losses. Loans and receivables are included in current assets,

except for maturities greater than 12 months after the statement of financial position date. These are classified as

non-current assets.

Impairment of financial instruments The Group assesses at each statement of financial position date whether there is objective evidence that a financial

asset or group of assets is impaired.

In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of

the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists

for available-for-sale financial assets, the cumulative loss measured as the difference between the acquisition cost

and the current fair value, less any impairment loss already recognised in profit or loss is removed from equity and

recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments are not reversed

through profit and loss.

A provision for impairment of trade receivables is established when there is objective evidence that the Group will not

be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of

the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in

payment (more than 90 days overdue) are considered indicators that the trade receivable is impaired. The amount

of the provision is the difference between the assets carrying amount and the present value of estimated future cash

flows, discounted at the original effective interest rate.

Trade and other payables Trade and other payables are classified as current liabilities if payment is due within 12 months. If due after

12 months, they are presented as non-current liabilities.

Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently stated

at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is

recognised in profit or loss over the period of the borrowings using the effective-interest method.




Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the

liability for at least 12 months after the statement of financial position date.

(b) Ordinarysharecapital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are

recognised as a deduction from equity, net of any tax effects.

1.14 taxation Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the

extent that it relates to items recognised directly in other comprehensive income or equity, in which case it is recognised in

other comprehensive income or equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted

at the reporting date, and any adjustment to tax payables in respect of previous years. Taxable profit may differ from profit as

reported in the consolidated and separate statement of comprehensive income as it may exclude items of income or expense

that are taxable or deductible in other years and it further may exclude items that will never be taxable or deductible.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation

is subject to interpretation. Provisions are established where appropriate on the basis of amounts expected to be paid to

tax authorities.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the

related dividend is recognised.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts

of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not

recognised for the following temporary differences:

– Initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting

nor taxable profit;

– Differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will

not reverse in the foreseeable future; and

– Differences relating to initial recognition of goodwill.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the

temporary differences, including tax losses carried forward, can be utilised. The carrying amounts of such assets are reviewed

at every statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits

will be available to allow all or part of the asset to be recovered.

Deferred tax is measured at the tax rates expected to be applied to the temporary differences when they reverse, based on

the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to do so and they relate to income taxes

levied by the same authority on the same taxable entity, or for different tax entities, but the intention is to settle current tax

liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

South African resident companies are subject to a dual corporate tax system, one part of the tax being levied on taxable

income and the other, a secondary tax (STC), on distributed income. A company incurs STC charges on the declaration or

deemed declaration of dividends, as defined under tax law, to its shareholders. STC is not a withholding tax on shareholders,

but a tax on companies.

The STC tax consequence of dividends is recognised as a taxation charge in the statement of comprehensive income in the

same period that the related dividend is accrued as a liability. This STC liability is reduced by dividends received during a cycle.

Where dividends declared exceed the dividends received during a cycle, STC is payable at the current STC rate on the net

payment. Where dividends received exceed dividends declared within a cycle, there is no liability to pay STC. The potential




tax benefit related to excess dividends is carried forward to the next dividend cycle as an STC credit and a deferred tax asset

is recognised to the extent that it is probable that the Group will declare future dividends in order to use such STC credits.

1.15 leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is

classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Financeleases–lessee Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value

of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor

is included in the statement of financial position as a finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.

The lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is

allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.

Operatingleases–lessor Operating lease income is recognised as income on a straight-line basis over the lease term. The difference between the

amounts recognised as income and the contractual income is recognised as an operating lease asset. This asset is not

discounted.

Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset

and recognised as an expense over the lease term on the same basis as the lease income.

Operatingleases–lessee Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between

the amounts recognised as an expense and the contractual payments is recognised as an operating lease liability. This liability

is not discounted.

1.16 Share capital and equity An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its

liabilities.

Ordinary shares are classified as equity. Mandatorily redeemable preference shares are classified as liabilities.

If the Group reacquires its own equity instruments, the consideration paid, including any directly attributable incremental costs

(net of income taxes) on those instruments, is deducted from equity until the shares are cancelled or reissued. No gain or loss

is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Consideration

paid or received shall be recognised directly in equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,

from the proceeds.

1.17 Employee benefits Profitsharingandbonusplans The Company recognises a liability and an expense for bonuses and profitsharing, based on a formula that takes into

consideration the profit attributable to the Company’s shareholders after certain adjustments. The Group recognises

a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

Defined-contributionschemes The Company administers contributions to a defined-contribution plan on behalf of its employees. A defined-contribution plan

is a pension plan under which the Group pays fixed contributions to a separate entity. The Group has no legal or constructive




obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to

employee service in the current and prior periods. Contributions to defined-contribution pension schemes are charged to the

statement of comprehensive income as they fall due.

1.18 cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks and other short-term highly liquid

investments with original maturities of three months or less.

1.19 provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is

probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable

estimate of the obligation can be made.

The amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the

reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity

settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement

shall not exceed the amount of the provision.

Provisions are not recognised for future operating losses.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 32.

1.20 revenue Revenue is measured at the fair value of the consideration received or receivable for the rendering of services in the ordinary

course of the Group’s activities. Revenue is shown net of value added tax, returns, rebates and discounts and after eliminating

sales within the Group.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can

be measured reliably. Revenue comprises net invoiced sales for services rendered.

Group revenue comprises mainly amounts received for advisory services and for performance-related services.

Revenue arising from advisory services, training, verifications and incentive application fees is recognised in profit or loss in

the accounting period in which the services are rendered.

Performance-related services include mainly government incentives and treasury risk management performance fees.

Revenue from performance-related services is recognised only if and when the performance of the service results in

successful outcomes.

Company revenue comprises management fees received, calculated on a cost-recovery basis.

Management fee income is recognised as the service is rendered.

1.21 Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised

as part of the cost of that asset until such time as the asset is ready for its intended use. The amount of borrowing costs

eligible for capitalisation is determined as follows:

– Actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualifying asset less any temporary

investment of those borrowings.

– Weighted average of the borrowing costs applicable to the entity on funds generally borrowed for the purpose of obtaining

a qualifying asset. The borrowing costs capitalised do not exceed the total borrowing costs incurred.




The capitalisation of borrowing costs commences when:

– expenditures for the asset have occurred;

– borrowing costs have been incurred, and

– activities that are necessary to prepare the asset for its intended use or sale are in progress.

Capitalisation is suspended during extended periods in which active development is interrupted. Capitalisation ceases when

substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. All other

borrowing costs are recognised as an expense in the period in which they are incurred.

1.22 Accounting estimates and judgements Keysourcesofestimationuncertainty The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,

seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material

adjustment to the carrying amounts of the assets and liabilities in the next financial year are discussed below.

Goodwillimpairmenttests The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in

note 1.4. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. The

value-in-use calculation requires an estimate to be made of the timing and amount of future cash flows expected to arise from

the cash-generating unit, and a suitable discount rate in order to calculate a present value. Further detail regarding the Group’s

impairment test is disclosed in note 6.

Criticaljudgementsinapplyingtheaccountingpolicies Judgements made by management are continually evaluated and are based on historical experience and other factors

including expectations of future events that are believed to be reasonable under the circumstances.

Workinprogress Management uses estimation to measure the extent to which costs relate to revenue not yet recognised using

a customer management system. The management system enables management to arrive at an accurate measurement

of unrecognised revenue by statistically determining the probability of the revenue materialising.

Deferredtaxation Management relies on board-approved budgets to forecast the extent to which the deferred tax assets recognised for tax

losses will probably be utilised.

1.23 Dividend distribution Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the

period in which the dividends are approved by the board of directors.




2. FinAnciAl riSK MAnAGEMEnt2.1 Financial risk factors In the course of the Group’s business operations it is exposed to the following risks from its use of financial instruments:

– credit risk

– market risk

– liquidity risk

The board has established the audit and risk committee which is responsible for monitoring the Group’s risk management

policies, including risk related to financial instruments. The committee reports regularly to the board of directors on its activities.

Quantitative disclosures are made throughout these consolidated financial statements.

Creditrisk The Group’s principal financial assets are bank balances and cash, trade and other receivables, loans receivable and

investments. Its credit risk is primarily attributable to its trade receivables.

Trade receivables consist of a large number of customers spread across diverse industries and geographical areas. Trade

receivables are carefully monitored for impairment at subsidiary level. The Group does not have significant concentration

of credit risk in respect of trade receivables, with exposure spread over a large number of customers. No individual trade

receivable represents a significant risk to the Group.

Loans are advanced to associates and subsidiaries from time to time. These loans are closely monitored by executive

management and where appropriate, the Group obtains collateral to mitigate risk. The Group deposits cash surpluses with

reputable institutions.

Marketrisk Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and equity prices will have

an impact on the Group’s financial performance and position. The objective of market risk management is to manage and

control market risk exposures within acceptable parameters while optimising the return.

Cashflowinterestraterisk Fluctuations in interest rates impact the value of short-term investments and financing activities, giving rise to interest rate risk.

The Group policy is to borrow/invest funds at variable rates of interest. The Group has largely centralised its cash management

function to optimise interest rate exposure, where possible. The after-tax effect on Group profits of a hundred basis points

(2010: hundred basis points) increase/decrease in interest rates would be a R145 597 (2010: R91 000) decrease/increase.

For the Company a hundred basis points (2010: hundred basis points) increase/decrease in interest rates would lead to

a R422 314 (2010: R14 000) increase/decrease in after-tax profits.

Currencyrisk The Group has no material direct exposure to currency risk as it does not normally trade in foreign currency.

Liquidityrisk The Group ensures that there are sufficient committed loan facilities in order to meet short-term business requirements, after

taking into account cash flows from operations and its holding of cash and cash equivalents, as well as any group distribution

restrictions that exist.

Subsidiaries with non-controlling interests in general will arrange and maintain their own financing and funding requirements.

In most cases the financing will be non-recourse to the Group. In addition, certain projects are financed by means of limited

recourse project finance, if appropriate.




2.2 capital management The board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to

sustain future development of the business. The board monitors the return on capital, headline earnings per share and level

of dividends paid to ordinary shareholders.

The board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and

the advantages and security offered by a sound capital position.

From time to time the Group purchases its own shares on the market. The timing of these purchases depends on market

prices. Primarily the shares are intended to be used for investment acquisitions. Buy and sell decisions are made by the board

in terms of the mandate given by shareholders. There were no changes in the Group’s approach to capital management

during the year.

Certain of the Group’s subsidiaries have overdraft facilities and are required to maintain a minimum equity level.

2.3 Fair value estimation The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The

Group uses a variety of methods and makes assumptions that are based on market conditions existing at each statement of

financial position date.

The carrying value less impairment provision of trade receivables and payables and amounts owing to/by associate and

subsidiary companies are presumed to approximate their fair value.




3. SEGMEnt rEportThe Group has four reportable segments within which the Group’s strategic business units (SBUs)/operating units fall.

The SBUs offer different services and are managed separately as they require different technology and marketing strategies,

and are reported separately to the board of directors.

InvestmentincentivesRender consulting services aimed at enabling clients to obtain the maximum benefits and refunds from Government and

Department of Trade and Industry (dti) incentive programmes.

GlobaltradeservicesOffer import and export business solutions, including customs consulting, rebate administration, financial market analysis

and interest rate and forex risk management.

BusinessdevelopmentProvide consulting services and management tools to optimise business systems and processes and technological solutions

for third-party payment transactions.

VerificationservicesConduct quality assurance, VAT and customs audits and verify BEE compliance.

operating segmentsInvestment incentives

Global trade services

Business development

Verification services Total

2011 R000 R000 R000 R000 R000Revenue – internal 192 – 1 113 – 1 305Revenue – external 31 711 37 916 5 320 8 926 83 873Investment income 979 2 302 134 5 3 420Finance costs (174) (729) (861) (385) (2 149)Staff costs (12 398) (15 486) (2 686) (7 550) (38 120)Depreciation and amortisation (321) (729) (29) (178) (1 257)Impairment (expense)/reversal (12) (30) (2 934) 159 (2 817)Segment profit/(loss) before tax 10 508 12 912 (3 620) (2 604) 17 196Taxation (3 356) (3 821) 1 055 738 (5 384)

Investment incentives

Global trade services

Business development

Verification services Total

2010 R000 R000 R000 R000 R000Revenue – internal 360 – 993 182 1 535Revenue – external 39 892 26 695 8 580 4 234 79 401Investment income 1 133 766 451 8 2 358Finance costs (333) (647) (192) (191) (1 363)Staff costs (13 047) (9 363) (4 779) (3 683) (30 872)Depreciation and amortisation (175) (404) (115) (20) (714)Impairment expenses – (296) (128) (212) (636)Share of profits/(losses) of associates and joint venture – (77) (50) 3 (124)Segment profit/(loss) before tax 16 077 8 722 (1 736) (1 587) 21 476Taxation (4 432) (2 634) 305 415 (6 346)




3. SEGMEnt rEport (continued)Transactions with individual clients did not amount to 10% or more of the Group’s total revenue.

2011 2010Segmental reconciliations R000 R000revenue reconciliationTotal revenue for reportable segments 85 178 80 936Revenue from unallocated segments 7 081 6 891Elimination of intersegment revenue (2 370) (2 343)Elimination of corporate revenue (4 261) (5 514)Group revenue as per statement of comprehensive income 85 628 79 970investment income reconciliationTotal interest income for reportable segments 3 420 2 358Investment income from unallocated segments 20 297 14 943Elimination of intersegment and corporate investment income (20 414) (14 641)Add profit on disposal of subsidiary 250 1 571Group investment income as per statement of comprehensive income 3 553 4 231Finance costs reconciliationTotal finance costs for reportable segments (2 149) (1 363)Finance costs from unallocated segments (8 580) (4 825)Elimination of intersegment and corporate finance costs 8 630 3 765Group finance cost as per statement of comprehensive income (2 099) (2 423)Staff cost reconciliationTotal staff costs for reportable segments (38 120) (30 872)Staff costs from unallocated segments (6 478) (5 035)Staff costs capitalised to intangible assets 85 681Group staff costs as per financial statements (44 513) (35 226)Depreciation and amortisation reconciliationTotal depreciation and amortisation for reportable segments (1 257) (714)Depreciation and amortisation from unallocated segments (595) (697)Group depreciation and amortisation as per financial statements (1 852) (1 411)impairment expenses reconciliationTotal impairment expenses for reportable segments (2 817) (636)Impairment expense (refer to note 6) (25 213) (234)Group impairment expense (28 030) (870)profit reconciliationTotal profit before tax for reportable segments 17 196 21 476Profits from unallocated segments 5 574 7 639Elimination of intersegment and corporate profits (36 077) (9 472)Group (loss)/profit before tax as per statement of comprehensive income (13 307) 19 643




4. inVEStMEnt propErty2011 2010

GroupCostR000

Accumulated depreciation

R000

Carrying valueR000

CostR000

Accumulated depreciation

R000

Carrying valueR000

Investment property 14 434 – 14 434 13 091 – 13 091

reconciliation of investment property

Group – 2011

Opening balance

R000Additions

R000

Closing balance

R000Investment property 13 091 1 343 14 434

Group – 2010

Opening balance

R000

Transfer from land

and buildings

R000

Transfer to non-current assets held

for saleR000

Closing balance

R000Investment property – 25 384 (12 293) 13 091

A register containing the information required by paragraph 22(3) of Schedule 4 of the Companies Act is available for

inspection at the registered office of the Company.

The fair value is estimated to be equal to the cost. During the previous financial year, the residual value was determined by an

independent valuer who holds a recognised and relevant professional qualification with recent relevant experience in valuing

similar properties in the area. During the current financial year the residual value was determined by an employee of the Group

with relevant experience. The residual value was determined not to be materially different from the carrying value.

No depreciation on investment property has been charged to profit and loss as the residual value of the building exceeds

the carrying amount.

A portion of the investment property was transferred to non-current assets held for sale at the end of the prior financial year.

The property was disposed of during the current financial year at a Group profit of R268 563. Refer to note 18 for further

information on the disposal of the portion of investment property.

Together with land and buildings classified as property, plant and equipment, investment property is held as security for the

Absa mortgage bond referred to in note 22.

Rental income of R1 740 357 (2010: R540 963) and direct operating expenses of R468 948 (2010: R250 829) from rental-

generating property have been recognised in profit and loss for the year.




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5. propErty, plAnt AnD EquipMEnt (continued)reconciliation of property, plant and equipment

company – 2010

Opening balance

R000Additions

R000

Transfers within Group

R000Depreciation

R000TotalR000

Office equipment 545 719 (1 244) (20) –Computer equipment 171 19 (183) (7) –Leasehold improvements 246 – (231) (15) –

962 738 (1 658) (42) –

A register containing the information required by paragraph 22(3) of Schedule 4 of the Companies Act is available for

inspection at the registered office of the Company.

Certain items of office equipment with a total carrying amount of R69 721 (2010: R93 809) are held as security for finance

leases referred to in note 22.

As part of a restructuring within the Group the operating assets of the Company were transferred to a wholly owned

subsidiary during the previous financial year.

Depreciation expense of R364 344 (2010: R254 040 for the Group, R25 979 for the Company) has been charged in ‘cost of

services rendered’. The remaining depreciation of R487 260 (2010: R382 825 for the Group, R15 587 for the Company) has

been expensed in administrative expenses.

The residual value of the building, determined by an independent valuer during the previous financial year, exceeds the

carrying amount and accordingly no depreciation on buildings has been charged to profit and loss.

6. GooDWill2011 2010

GroupCostR000

Accumulated impairment

lossesR000

Carrying valueR000

CostR000

Accumulated impairment

lossesR000

Carrying valueR000

Goodwill 93 919 (28 395) 65 524 90 188 (3 182) 87 006

reconciliation of goodwill

Group – 2011

Opening balance

R000

Additions through

businesscombinations

R000

Adjustments to purchase

price consider-

ationsR000

Impairment loss

R000TotalR000

Goodwill 87 006 3 472 259 (25 213) 65 524

Group – 2010

Opening balance

R000

Disposals of shares in subsidiaries

R000

Adjustments to purchase

price consider-

ationsR000

Impairment lossR000

TotalR000

Goodwill 95 746 (1 815) (6 692) (233) 87 006




6. GooDWill (continued)Goodwill is allocated to the Group’s cash-generating units which are defined as the operating segments of the Group.

The recoverable amount of a cash-generating unit is determined based on value-in-use calculations. In performing these

value-in-use calculations management estimated average long-term growth rates based on historical trends, taking into

account inherent industry risk and specific management knowledge. Adjustments were made for the current prolonged

market conditions.

The value-in-use calculations use pre-tax cash flow projections based on financial budgets approved by management,

discounted at pre-tax interest rates after taking into account past trends, specific risks and current market conditions in

each cash-generating unit. The period over which the projected cash flows were forecasted is five years.

Given the uncertainty in the rate of recovery of the global economy, management deemed it appropriate, as at the interim

reporting date, to reassess the assumptions that were used in the impairment testing done of goodwill.

The impairment losses that arose and were reported in the interim results were ascertained by value-in-use calculations as

described above and pertain to the cash-generating units in the table below.Group

2011 2010Goodwill impairment losses R000 R000IQuad Investment Incentives (Pty) Ltd 6 520 –IQuad Treasury Solutions (Pty) Ltd 10 518 –Other cash-generating units 8 175 233

25 213 233

Further impairment tests were done at year-end using pre-tax discount rates that generally range between 28% and 32%.

No further impairments were considered necessary.

A summary of the carrying amount of the goodwill allocated to the significant cash-generating units and the key assumptions

for value-in-use calculations are presented in the tables below.

Group2011 2010

Goodwill allocation R000 R000IQuad Investment Incentives (Pty) Ltd 18 259 24 779IQuad Treasury Solutions (Pty) Ltd 27 741 35 854Other cash-generating units 19 524 26 373

65 524 87 006

Key assumptions in the current year

Growth rate

%

Discount rate

%

Terminalvalue

growth rate%

IQuad Investment Incentives (Pty) Ltd 14 32 5IQuad Treasury Solutions (Pty) Ltd 16 28 5




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8. inVEStMEntS in SuBSiDiAriESThe carrying amounts of subsidiaries are shown net of impairment losses.

Details of the Company’s investments in subsidiaries are disclosed in the annexure to the consolidated financial statements.

During the year-end impairment test, management deemed it appropriate to impair the carrying value of investments in

subsidiaries by R16 491 369.

The impairment losses were ascertained by value-in-use calculations, using pre-tax cash flow projections based on financial

budgets approved by management, discounted at pre-tax interest rates after taking into account past trends, specific risks

and current market conditions. The forecast period is five years.

Company2011 2010

Impairment of investments in subsidiaries R000 R000Export Credit Exchange (Pty) Ltd 3 379 –IQuad Treasury Solutions (Pty) Ltd 7 934 –Other investments 5 178 233

16 491 233

Key assumptions in the current year

Growth

rate

%

Discount

rate

%

Terminal

growth rate

%Export Credit Exchange (Pty) Ltd 5 42 5IQuad Treasury Solutions (Pty) Ltd 16 28 5

9. inVEStMEntS in ASSociAtES AnD Joint VEnturE

name of company principal activities

Percentage holding

2011

Percentage holding

2010IQuad Finance Solutions (Pty) Ltd Business development 35 –Chase Management Systems (Pty) Ltd Information technology 26 26FX-Pro Software Solutions (Pty) Ltd Information technology 50 50ITRISA Training (Pty) Ltd Training 50 50

The carrying amounts of associates are shown net of impairment losses.

All associates are incorporated in South Africa.

The 50% shareholding in FX-Pro Software Solutions (Pty) Ltd is not consolidated as the Group does not have the power to

govern the financial and operational policies of the entity.

The Group holds 50% of the issue share capital of a joint venture, ITRISA Training (Pty) Ltd. The results of the investment are

equity-accounted.

During the current financial year the Group sold the controlling interest in IQuad Finance Solutions (Pty) Ltd. The entity is now

an associate investment and accordingly is equity-accounted. Refer to note 31 for more information on the disposal of IQuad

Finance Solutions (Pty) Ltd.






9. inVEStMEntS in ASSociAtES AnD Joint VEnturE (continued)The table below represents a reconciliation of the investments in associates and joint venture:

Group Company2011 2010 2011 2010R000 R000 R000 R000

Opening balance at beginning of the year – 426 – – Additions – 29 – – Equity-accounted losses – (124) – – Impairment losses – (331) – – Closing balance at end of the year – – – –

GroupSummary of Group’s interest in associates and joint venture

2011R000

2010R000

Assets 220 331Liabilities (576) (422)Revenue 330 316Equity-accounted losses – (124)

The reporting dates of associates and joint venture companies are 28 February 2011.

The Group’s share of losses incurred in the current year by equity-accounted investments but not recognised amounts to

R276 426 (2010: R52 861). Cumulative losses from associates not recognised are R329 287 (2010: R52 861).

The Group’s investment in associates and joint venture at the date of the statement of financial position in the current and

prior financial years does not include any goodwill.

10. AMountS oWinG By SuBSiDiAriESCompany

2011 2010R000 R000

IQuad Group Support Services (Pty) Ltd 48 563 32 783IQuad Property Investment (Pty) Ltd – 186

48 563 32 969

Loans to subsidiaries are unsecured and bear market-related interest rates (2010: loan to IQuad Group Support Services

(Pty) Ltd was interest-free, being its first year of trade).

The loan is repayable within the next 12 months and the carrying amounts approximate their fair values.




11. FinAnciAl ASSEtS By cAtEGoryThe accounting policies for financial instruments have been applied to the line items in the tables below. The line items

do not necessarily agree to the statement of financial position as not all constituent balances meet the definition of

a financial asset.

2011 2010Group loans and receivables R000 R000Trade and other receivables 24 615 22 971Loans receivable 3 278 1 584Amount owing by associates and joint venture 787 117Cash and cash equivalents 3 862 7 179

32 542 31 851

2011 2010company loans and receivables R000 R000Amounts owing by subsidiaries 48 563 32 969Trade and other receivables 764 2 993Loan receivable 1 000 1 000Dividend receivable 750 –Cash and cash equivalents 87 775

51 164 37 737

12. DEFErrED tAx ASSEt/(liABility)reconciliation of deferred tax

Group – 2011

Balance at beginning of

the yearR000

Acquisition through business

combinationsR000

Consoli-dation

of held-for-sale

subsidiaryR000

Disposal of subsidiary

R000

Credited/(charged)

to statement of compre-

hensive income

R000

Balance at end of the year

R000Accruals 450 163 – – 44 657Other temporary differences 124 – – (2) 92 214Unused tax losses 3 184 – 1 613 (93) 3 997 8 701Provisions 64 – – – (57) 7Work in progress (556) – – – 16 (540)

3 266 163 1 613 (95) 4 092 9 039

Group – 2010


the yearR000

Acquisition through business

combinationsR000

TransfersR000


R000

Credited/(charged)

to statement of compre-

hensive income

R000


R000Accruals 393 – (13) – 70 450Other temporary differences 227 – (21) – (82) 124Unused tax losses 2 385 – 42 (343) 1 100 3 184Provisions 77 – – – (13) 64STC credit 163 – – – (163) – Work in progress (1 141) – – – 585 (556)

2 104 – 8 (343) 1 497 3 266




12. DEFErrED tAx (continued)

company – 2011


the yearR000

Acquisition through

business combinations

R000Transfers

R000


R000

Charged to statement of compre-

hensive income

R000


R000Other temporary differences 34 – – – (2) 32

company – 2010


the yearR000

Acquisition through

business combinations

R000Transfers

R000


R000

Chargedto statement of compre-

hensive income

R000


R000Accruals 111 – (111) – – – Other temporary differences (5) – 67 – (28) 34Unused tax losses 189 – – – (189) – STC credit 163 – – – (163) –

458 – (44) – (380) 34

Group Company2011 2010 2011 2010

net deferred tax asset comprises the following R000 R000 R000 R000Deferred tax assets 9 599 3 672 32 40Deferred tax liabilities (560) (406) – (6)

9 039 3 266 32 34

timing of recovery of deferred taxWithin 12 months 2 591 585 – (6)After 12 months 6 448 2 681 32 40

9 039 3 266 32 34

The deferred tax rate applied to assets is determined by the expected manner of recovery. Where the expected recovery

is through sale, the capital gains rate of 14% (2010: 14%) is used. If the expected manner of recovery is through indefinite

use, the normal tax rate of 28% (2010: 28%) is used. If the manner of recovery is partly through sale and partly through use,

a combination of capital gains rate and normal tax rate is used.

Deferred tax on estimated assessed losses has been included in the deferred tax asset above. Management believes that

the asset will probably be utilised against future taxable profits in excess of profits arising from reversal of existing taxable

temporary differences in the related entities. The realisation of the related tax benefit is considered to be probable on the

basis of all available evidence indicating that it is more likely than not that there will be suitable taxable profits against which

the reversal of the deferred tax asset can be deducted.

Management used board-approved three-year budgets as well as forecasts beyond the three-year period, taking into

account tax planning strategies, to satisfy themselves that the deferred tax assets would be utilised.

At the date of the statement of financial position there were no unutilised tax losses for which deferred tax assets had not

be recognised (2010: R1 151 743). R899 801 of the unutilised tax losses not recognised in the prior year was utilised during

the current financial year.




13. loAnS rEcEiVABlEGroup Company

2011 2010 2011 2010R000 R000 R000 R000

non-current loansDWMB Investments CC 1 000 1 000 1 000 1 000Sonar Trust 2 278 – – –current loanLoan to JT Jacobson and WJ Powel – 584 – –

3 278 1 584 1 000 1 000

The DWMB Investments CC loan relates to the sale of the subsidiary Entrepreneurs Survival Solutions (Pty) Ltd (ESS) during the prior financial year, and is secured by a cession of 20% of the ESS equity, a cession of shareholders’ loan accounts and a moratorium on dividend distributions. The loan is repayable by 29 February 2012, failure upon which 20% equity will revert toIQuad Group.

The Sonar Trust loan arose on disposal of the investment property held for sale in the prior reporting period. Refer to note 18 for more information regarding the disposal. The loan is repayable on or before 27 May 2015.

The loan to JT Jacobson and WJ Powel, shareholders of an associate disposed of in the previous financial year, has been fully impaired in the current year.

The fair value of the loans receivable approximates the carrying amount. The maximum exposure to credit risk at year-end is the carrying amount of the loans.

The loans bear interest at market-related rates.

14. AMountS oWinG By ASSociAtES AnD Joint VEnturEGroup Company

2011 2010 2011 2010R000 R000 R000 R000

IQuad Finance Solutions (Pty) Ltd 358 – – –ITRISA Training (Pty) Ltd 259 117 – –FX-Pro Software Solutions (Pty) Ltd 170 – – –

787 117 – –

The loans are unsecured and bear interest at a market-related rate. The loans are repayable over the next 12 months and their carrying amounts approximate their fair values.

The loans are not past due and are shown net of impairments.

The maximum exposure to credit risk is the carrying amount of the loans.

15. WorK in proGrESSInformation regarding the methods and estimates involved in the calculation of work in progress is disclosed in notes 1.12 and 1.22 above.




16. trADE AnD othEr rEcEiVABlESGroup Company

2011 2010 2011 2010R000 R000 R000 R000

Trade receivables 12 262 12 775 14 1 851Incentives receivables 11 488 10 269 – –Other receivables 2 658 2 106 – 1 164

26 408 25 150 14 3 015

The carrying amounts of trade and other receivables are denominated in South African rands.

Refer to note 33 for related-party disclosures.

Trade debtors of R5 527 550 were pledged as security for overdraft facilities of the Group at year-end (2010: R7 516 521). The Group’s overdraft at year-end was R7 418 788 (2010: nil). Refer to note 22 for further information on borrowings.

The maximum exposure to credit risk is R26 407 609 (2010: R25 148 236) and R14 150 (2010: R3 015 292) for the Group and the Company respectively, which consists of the carrying amounts of the above balances. The concentration of credit risk is limited due to the Group’s customer base being large and unrelated. The Group does not hold any collateral as security for trade and other receivables.

The carrying amounts of trade and other receivables approximate their fair values.

Trade and other receivables which are less than three months past due are not considered to be impaired unless specific indicators exist. Trade receivables which are three months and over past due but not impaired at year-end are not considered to be impaired as the relevant debtors either historically do not default; have since settled their debts; terms of repayment have been renegotiated or the debt has been guaranteed. There were no debtors with renegotiated repayment terms at 28 February 2011 (2010: R344 197).

Included in amounts 120 days past due but not impaired, are amounts related to liquidation debtors which arise in the Group’s normal business activities within a subsidiary in their capacity as liquidators. These debtors, by their nature, may take an extended period of time to settle, pending the finalisation of court liquidation proceedings.

The ageing of trade debtors past due but not impaired is as follows:Group Company

2011 2010 2011 2010R000 R000 R000 R000

1 month 477 508 – –2 months 737 191 – –3 months and over 2 669 1 034 – 12

3 883 1 733 – 12

Reconciliation of provision for impairment of trade and other receivables:


Opening balance 1 267 740 – –Provision for impairment 2 241 964 – –Amounts written off as uncollectable (434) (211) – –Unused amounts reversed (594) (226) – –

2 480 1 267 – –

In determining the provision for doubtful debts, debtors are considered individually taking into account each debtor’s circumstances. The primary indicator for impairment is when the debt is 90 days or more overdue for that category of debtor. The remaining debts owed not yet past due are considered recoverable and accordingly no further provision for doubtful debts is necessary. Provisions raised and unutilised provisions released are recognised within administrative expenses in the statement of comprehensive income.

No other receivable is past due and not impaired and are considered recoverable.




17. cASh AnD cASh EquiVAlEntSGroup Company

2011 2010 2011 2010R000 R000 R000 R000

Cash on hand 27 20 – –Bank balances 3 835 7 159 87 775

3 862 7 179 87 775

The credit quality of cash at bank and short-term deposits, excluding cash on hand that are neither past due nor impaired can be assessed by reference to external credit ratings. The maximum exposure to credit risk at year-end is the carrying amount.

The Group has an agreement in place with Absa Bank that certain of its wholly owned subsidiaries, together with the holding company, can aggregate the bank balances of these entities to attract the best interest rate possible. The net favourable balance or overdraft is disclosed under cash and cash equivalents or borrowings, as applicable.

The fair value of cash and cash equivalents approximates its carrying amount.

18. non-currEnt ASSEtS hElD For SAlE AnD DiScontinuED opErAtionSDuring the previous financial year, the Group acquired National Money Transfer (Pty) Ltd (“NMT”) with the intention to resell and as a result the investment and its related liabilities were disclosed as held for sale.

The proposed disposal of NMT did not materialise and the subsidiary has consequently been consolidated on the full method as prescribed in IAS 27 in the current reporting period.

Refer to note 31 for more information on the full consolidation of this subsidiary.

The Group disposed of a portion of the investment property for R14m at a profit of R268 563. The purchase consideration was settled by the transfer of R11,8m in cash and the balance remains as a loan of R2,2m owing to the Group. Transfer of the property took place on 27 September 2010.

Non-current assets held for sale and liabilities of disposal groups:Group Company

2011 2010 2011 2010non-current assets held for sale R000 R000 R000 R000Investment property – 12 293 – –Investment in subsidiary – 4 035 – –

– 16 328 – –

liabilities of disposal group (nMt)Loans from group companies – 362 – –

19. ShArE cApitAlGroup Company

2011 2010 2011 2010R000 R000 R000 R000

Authorised1 000 000 000 Ordinary shares of R0,0001 each – – 100 100issuedOrdinary 3 3 3 3Share premium 104 412 104 412 104 412 104 412Treasury shares held by subsidiaries (3 215) (548) – –

101 200 103 867 104 415 104 415

The Group held 702 545 treasury shares at year-end (2010: 105 325). The Company has the right to reissue these shares. The increase in treasury shares in the current year relates to a share buyback in the prior year. Refer to note 20 for more information on these treasury shares.

All issued shares are fully paid up.




20. ShArE rESErVEGroup Company

2011 2010 2011 2010R000 R000 R000 R000

Treasury shares receivable reserve (369) (3 036) (369) (3 036)

The treasury shares receivable reserve was created due to the profit warranties of a subsidiary not being met in the prior

year. As a result, treasury shares used as part payment in the business combination accrued back to the Group. The share

reserve was created in anticipation of shareholders’ approval of the buyback after 2010 financial year-end. The subsidiary,

Entrepreneurs Survival Solutions (Pty) Ltd, was disposed of in the prior year.

In addition, due to the likely breach of the profit warranty agreement with IQuad Integrated Management Systems (Pty) Ltd,

a similar adjustment to the reserve was effected, representing the probable buyback of the treasury shares in a future period.

21. proViSionSreconciliation of provisions

Group – 2011

Opening balance

R000

Provisions raisedR000

Reversed during

the yearR000

TotalR000

Restructuring provision – 25 – 25Provision for client claims 229 – (229) –

229 25 (229) 25

Group – 2010

Opening balance

R000

Reversed during

the yearR000

TotalR000

Provision for client claims 276 (47) 229

The provision for client claims represents management’s best estimate of amounts that may have been claimed against the

Group as a result of client losses.

The provision for restructuring relates to a restructure plan within the Group. The provision is expected to be utilised in the

first four months of the next financial year.

There is no expected reimbursement in respect of these provisions.


22. BorroWinGSGroup Company

2011 2010 2011 2010R000 R000 R000 R000

non-current borrowingsFinance lease liabilities 91 130 – –Mortgage bond liabilities 13 236 19 960 – –Other non-current borrowings 971 – – –

14 298 20 090 – –current borrowingsBank overdraft 7 419 – 7 419 –Mortgage bond liability 307 538 – –Finance lease liabilities 39 21 – –Shareholders’ loans – 116 – –Other current borrowings 109 727 – –

7 874 1 402 7 419 –total borrowings 22 172 21 492 7 419 –

An unlimited cross-suretyship exists between IQuad Group Ltd, IQuad Investment Incentives (Pty) Ltd, IQuad Global Trade Solutions (Pty) Ltd, IQuad Treasury Solutions (Pty) Ltd and Decillion Treasury Management Solutions (Pty) Ltd in respect of their bank balances at Absa Bank.

IQuad Group Ltd has provided security for any bank overdrafts of Export Credit Exchange (Pty) Ltd limited to R1 000 000 (2010: R740 000) as well as 50% of the mortgage bond of IQuad Property Investment (Pty) Ltd. Export Credit Exchange (Pty) Ltd is not currently in an overdraft situation.

The carrying amounts of borrowings approximate their fair values.

22.1 Finance lease liabilitiesLease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default. Refer to note 5 for disclosure on the leased asset.


Gross finance lease liabilities – minimum lease paymentsNo later than 1 year 72 63 – –Within 2 – 5 years 112 185 – –

184 248 – –Future finance charges on finance leasesNo later than 1 year 33 42 – –Within 2 – 5 years 21 55 – – 54 97 – –present value of finance lease liabilitiesNo later than 1 year 39 21 – –Within 2 – 5 years 91 130 – – 130 151 – –




22. BorroWinGS (continued)22.2 Mortgage bond liability

Secured over land and buildings. The bond is repayable over a period of 10 years commencing 30 November 2011 at

a monthly payment of R160 762. The bond bears interest at a rate of prime less 1,5%.

22.3 other non-current liabilitiesGroup Company

2011 2010 2011 2010R000 R000 R000 R000

Forex Assist (Pty) Ltd 559 – – –Grincourt (Pty) Ltd 412 – – –

971 – – –

These loans are unsecured and do not bear interest.

The loan from Forex Assist (Pty) Ltd arose on a business combination and is repayable in 24 equal monthly instalments of R27 350 beginning 1 April 2012.

The Grincourt (Pty) Ltd loan is repayable out of future profits from National Money Transfer (Pty) Ltd.

22.4 Bank overdraftTrade and other receivables of R5 527 550 have been ceded to the bank (2010: R7 516 521) for the overdraft at the date of the statement of financial position (2010: there was no overdraft).

The tables below summarise the maturity analysis of contractual undiscounted borrowings and the available and undrawn facilities at year-end.


Maturity analysis of borrowingsNo later than 1 year 8 243 2 163 – –Within 2 – 5 years 8 897 12 594 – –Later than 5 years 10 932 17 397 – –

28 072 32 154 – –Available facilitiesAbsa Bank 20 000 40 615 20 000 20 000Standard Bank 1 000 1 000 – – 21 000 41 615 20 000 20 000undrawn facilitiesAbsa Bank 14 063 22 071 12 581 20 000Standard Bank 1 000 1 000 – – 15 063 23 071 12 581 20 000

After year-end the Group reduced its bank overdraft facility with Absa Bank to R15 000 000.




23. trADE AnD othEr pAyABlESGroup Company

2011 2010 2011 2010R000 R000 R000 R000

Accruals 9 744 9 026 162 463Value-added taxation 1 215 1 476 53 143Deferred revenue 923 432 – –Rental deposits received 182 119 – –

12 064 11 053 215 606Maturity analysis of financial liabilities within trade and other payables3 months 4 225 3 185 22 3806 months 621 470 136 7912 months 1 196 643 – – 6 042 4 298 158 459

The Group has procedures in place to ensure that all payables are paid within the credit time frame. There were no breaches

in settlement during the year.

The carrying amount of trade and other payables approximate their fair values.

Refer to note 33 for related-party disclosures.

24. FinAnciAl liABilitiES By cAtEGoryThe accounting policies for financial instruments have been applied to the line items in the table below. The line items do not necessarily agree to the statement of financial position as not all constituent balances meet the definition of a financial liability.

Group Company2011 2010 2011 2010

Financial liabilities at amortised cost R000 R000 R000 R000Finance lease liability 130 151 – –Borrowings, excluding finance lease liabilities 22 042 21 341 7 419 –Trade and other payables 6 042 4 298 158 459Dividend payable 750 – – –

28 964 25 790 7 577 459

25. rEVEnuEGroup Company

2011 2010 2011 2010R000 R000 R000 R000

Rendering of services 83 887 79 429 – 1 439Rental Income 1 741 541 – –

85 628 79 970 – 1 439




26. opErAtinG (loSS)/proFitOperating (loss)/profit for the year includes the following expenses disclosed according to nature:


Loss on disposal of property, plant and equipment – (40) – –Depreciation of property, plant and equipment (852) (637) – (42)Amortisation of intangible assets (1 000) (774) – (16)Impairment of goodwill (25 213) (233) – –Impairment of intangible asset (2 369) – – –Property lease rentals: (4 655) (3 821) – 246

Straight-line rental amounts (4 729) (4 263) – (130)Recovered from sublease 74 442 – 376

Impairment of investment in subsidiaries – – (16 491) (233)Impairment of investment in associates – (331) – –Loan written off – (26) – (26)Impairment of loans to associates (62) (306) – –Impairment of loan receivable (584) – – –Employee costs, excluding defined-contribution costs (41 693) (34 255) (250) (958)Employee costs: defined-contribution costs (2 820) (971) – (232)Provision for impairment of trade receivables (2 241) (964) – –Provisions charged (25) (47) – –Auditors’ remuneration: (859) (707) (57) (131)

Current year fees (824) (707) (57) (131)Adjustment for previous year 11 – – –Other services (46) – – –

Other operating expenses (18 617) (19 065) (985) (1 127)(100 990) (62 177) (17 783) (2 519)

operating (loss)/profit also includes the following:Profit on disposal of property, plant and equipment 1 6 – –Profit on disposal of non-current asset held for sale 269 – – –Reversal of impairments 198 – – –

468 6 – 371

27. inVEStMEnt incoMEGroup Company

2011 2010 2011 2010R000 R000 R000 R000

Local dividends from subsidiaries – – 11 706 10 820Interest income from associates and joint venture 82 10 – –Interest income from subsidiaries – – 4 478 1 172Interest income from financial institutions 654 933 13 259Profit on disposal of subsidiaries 250 1 942 – 371Other interest income, including from trade advances 2 567 1 235 28 36Fair value adjustment on remeasurement of disposal group held for sale – 111 – –

3 553 4 231 16 225 12 658




28. FinAncE coStSGroup Company

2011 2010 2011 2010R000 R000 R000 R000

Group companies – – – 108Shareholders – 20 – – Finance leases 42 46 – – Bank 1 959 2 355 438 756Other interest paid 98 2 15 –

2 099 2 423 453 864

29. tAxAtionTax expense/(credit) recognised in profit or loss


currentCurrent tax – current year 7 069 7 284 561 –Current tax – prior years 78 73 – (5)Secondary tax on companies 1 007 455 595 455

8 154 7 812 1 156 450DeferredOriginating and reversing temporary differences (4 096) (1 491) 3 380Arising from prior period adjustments 4 (6) (1) –

(4 092) (1 497) 2 380Taxation expense for the year 4 062 6 315 1 158 830

Reconciliation between applicable tax rate and average effective tax rate:

Group Company2011 2010 2011 2010

% % % %Applicable tax rate 28,0 28,0 28,0 28,0Exempt income – (0,2) 163,0 (28,4)Capital gains/(losses) (0,3) (2,4) – –Deferred tax not provided – 2,3 – 2,4Utilisation of assessed losses previously not recognised 1,9 – 12,5 –Non-deductible expenses, including impairment losses (51,9) 1,3 (231,5) –Secondary tax on companies credit utilised/(recognised) – 0,8 – 1,5Secondary tax on companies (7,6) 2,3 (29,6) 4,2Prior year adjustments (0,6) – – –

(30,5) 32,1 (57,6) 7,7

No income tax was charged directly to equity during the year (2010: nil).




30. cASh GEnErAtED FroM opErAtionSGroup Company

2011 2010 2011 2010R000 R000 R000 R000

(Loss)/profit before taxation (13 307) 19 643 (2 011) 10 714Adjustments for non-cash transactions 27 781 556 719 (11 682)

Depreciation of property, plant and equipment 852 637 – 42Amortisation of intangible assets 1 000 774 – 16Loss on foreign exchange transactions 13 – – –Losses from equity accounted investments – 124 – –Dividends received – – (11 706) (10 820)Investment income (3 303) (2 289) (4 519) (1 467)Finance costs 2 099 2 423 453 864Impairment of goodwill 25 213 233 – –Impairment of intangible asset 2 369 – – –Impairment of loan receivable 584 – – –Impairment of investment in subsidiaries – – 16 491 233Impairment of investment in associate 62 331 – –Impairment of loan to associate – 306 – –Reversal of impairments (198) – – –Loan written off – 26 – 26Operating lease straight-line adjustment (186) (60) – (205)Provisions charged to profit and loss (204) (47) – –(Profit)/loss on disposal of property, plant and equipment (1) 40 – –Profit on disposal of investment in subsidiary (250) (1 942) – (371)Profit on disposal of non-current asset held for sale (269) – – –

changes in working capital (1 949) (1 589) 2 610 4 483Work in progress 70 2 086 – –Trade and other receivables 151 (5 130) 3 001 4 874Trade and other payables (2 170) 1 455 (391) (391)

12 525 18 610 1 318 3 515




31. chAnGES in inVEStMEntS AnD SuBSiDiAriESOn 1 March 2010, the Group acquired the remaining 26% non-controlling interest in Export Credit Exchange (Pty) Ltd for

R2 324 000 in cash. This transaction did not result in a change in control and must be accounted for as an equity transaction

as per IAS 27 (Revised).

On 1 December 2009 the Group increased its shareholding in National Money Transfer (Pty) (“NMT”) Ltd from 17% to 83%.

The fair values of the net assets acquired in the NMT business combination on the date control was obtained, 1 December 2009,

were as follows:Group

Fair valuesFair values of assets acquired R000Property, plant and equipment 1Intangible assets 2 733Deferred tax asset 1 492Trade and other receivables 60Cash and cash equivalents 140Non-current liabilities (109)Trade and other payables (213)

4 104Non-controlling interests (698)Net assets acquired 3 406Gain on bargain purchase (105)purchase price 3 301

The subsidiary was acquired with the intention to resell and accordingly met the criteria to be consolidated on the basis

of recording the fair value of the assets and liabilities of the held-for-sale disposal group as a single investment during the

previous year.

Accordingly the subsidiary was disclosed as a non-current asset held for sale as at 28 February 2010.

The proposed sale did not materialise and the subsidiary has subsequently been consolidated on the full method as

prescribed in IAS 27 for the full year.

The resulting business combination gave rise to negative goodwill of R104 704 which has already been taken into account in

the prior year financial results when the non-current asset held for sale was adjusted to its fair value.




31. chAnGES in inVEStMEntS AnD SuBSiDiAriES (continued)The Group believes that NMT’s information technology services offers significant opportunities for growth. NMT provides

a suite of financial service and payment platforms for the retail, banking and third-party payment sectors.

The following net assets were fully consolidated into the Group:Group

Carryingvalues

net assets consolidated R000Property, plant and equipment 1Intangible assets 2 350Deferred tax asset 1 613Trade and other receivables 23Cash and cash equivalents 98Non-current liabilities (80)Trade and other payables (332)Net assets 3 673

Non-current asset held for sale in prior financial year (4 035)Liabilities of disposal group 362Cash and cash equivalents 98cash inflow on full consolidation of subsidiary held for sale in previous financial year 98

On 1 September 2010, the Group acquired a 100% interest in Kagiso Treasury Solutions (Pty) Ltd (“Kagiso”) for R4 792 539.

Kagiso offers treasury management and advisory services to corporate clients.

The purchase price was partly settled in cash of R3 582 987. The balance of the purchase price is payable when a critical

contract has been secured by Kagiso. This contingent consideration has been valued by Group management using statistical

probabilities and is included in the purchase price allocation below.

The range of the possible amount of the contingent consideration is between R0 and R1 209 552. There was no change in

the fair value of the contingent consideration between the business combination date and year-end.

Goodwill of R3 471 557 arose on the transaction which relates to the future synergies that will result from the business

combination.

The Group believes that the Kagiso business combination will enhance the growth of the global trade business pillar through

cost synergies.

Kagiso’s year-end date is 30 June. The Group is in the process of changing it to 28 February. For the purposes of these

financial statements, reviewed results for the period 1 September 2010 to 28 February 2011 were used.




31. chAnGES in inVEStMEntS AnD SuBSiDiAriES (continued)The fair values of the net assets acquired in the business combination are as follows:

GroupFair values

Fair values of assets acquired R000Property, plant and equipment 391Intangible assets 1 188Deferred tax asset 163Trade and other receivables 1 457Non-current liabilities (526)Trade and other payables (1 594)Net assets 1 079Goodwill 3 472Purchase consideration 4 551Contingent consideration (968)cash outflow on acquisition 3 583

Revenue of R4 989 000 and losses of R356 000 have been included in the Group’s results. Total revenue of R10 137 000 and

losses of R70 000 would have been included had the Group acquired the subsidiary on 1 March 2010.

On 1 September 2010 the Group disposed of a 35% interest in IQuad Finance Solutions (Pty) Ltd at a profit of R250 343.

Group2011

carrying amounts of assets disposed of R000Property, plant and equipment 8Intangible assets 3Deferred tax asset 95Trade and other receivables 167Cash and cash equivalents 194Loan from holding company (467)Shareholder’s loan (200)Trade and other payables (50)Net assets (250)Group profit on disposal of subsidiary 250Cash and cash equivalents 194cash outflow on disposal of subsidiary 194




32. coMMitMEntS AnD continGEnciES

Group Company2011 2010 2011 2010

Authorised capital expenditure R000 R000 R000 R000Already contracted for but not provided for:Investment property – 2 886 – –

This committed expenditure relates to buildings and was financed by available funds.

Group Company2011 2010 2011 2010

operating leases – as lessee (expense) R000 R000 R000 R000Minimum lease payments dueWithin 1 year 2 222 3 358 – 3 146In 2 – 5 years inclusive 2 848 5 051 – 5 050

5 070 8 409 – 8196Future minimum sublease payments under non-cancellable subleases –Within 1 year – 163 – 951In 2 – 5 years inclusive – 18 – 1 811

– 181 – 2 762

Operating lease payments represent rentals payable by the Group for certain of its office properties. Leases are negotiated

for an average term of three years.

Group Company2011 2010 2011 2010

operating leases – as lessor (income) R000 R000 R000 R000Minimum lease payments dueWithin 1 year 968 2 026 – –In 2 – 5 years inclusive 643 3 197 – –

1 611 5 223 – –

Group Company2011 2010 2011 2010

tax consequences of undistributed reserves R000 R000 R000 R000Secondary tax on companies on remaining reserves 889 3 193 1 391 2 394

contingent assetFuture revenue to the value of R10 001 043 to be earned from incentive applications submitted to regulatory authorities but

still awaiting approval for payment as at financial year-end has not been recognised as income in these financial statements

in accordance with the Group’s accounting policy on revenue recognition (2010: R12 961 807).




33. rElAtED pArtiES Group Company

2011 2010 2011 2010related-party transactions R000 R000 R000 R000Interest income – subsidiaries – – 4 478 1 172Interest income – associates and joint venture 82 10 – –Dividend income – subsidiaries – – 11 706 10 820Interest expense – subsidiaries – – – (108)Management fee income – subsidiaries – – – 1 431Management fee income – associates and joint venture 15 29 – 8Other administrative expenses – subsidiaries – – – (41)Other administrative expenses – associates – (11) – –Management fees paid – major shareholders 241 – 241 –

Key personnel compensation has been disclosed in the directors’ report.

Group Company2011 2010 2011 2010

related-party balances R000 R000 R000 R000Receivables from subsidiaries – – 12 1 838Receivables from associates 5 345 – –Payables to subsidiaries – – – 138Amounts owing by subsidiaries – – 48 563 32 969Amounts owing by associates and joint venture 787 117 – –

34. EVEntS AFtEr thE rEportinG pErioDNo material events have been identified subsequent to the statement of financial position date of the Group up to the date

of this report, other than as disclosed in these financial statements.

35. EArninGS AnD DiViDEnDS pEr ShArEBasic earnings per shareBasic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted

average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Group and held as

treasury shares.

The calculation of the weighted average number of shares is as follows:2011 2010

Number NumberBalance at beginning of year 27 979 333 27 979 333Treasury shares acquired (597 220) –Weighted average number of shares at end of year 27 382 113 27 979 333

Basic (loss)/earnings per share (cents) (56,9) 50,6

headline earnings per shareHeadline earnings per share is calculated by adjusting basic earnings attributable to ordinary shareholders for non-trading

and non-recurring items, net of related tax and non-controlling interest.






35. EArninGS AnD DiViDEnDS pEr ShArE (continued)The reconciliation of basic earnings to headline earnings:

2011 2010Gross Net Gross NetR000 R000 R000 R000

Earnings attributable to ordinary shareholders – (15 569) – 14 159Impairment of goodwill 25 213 25 213 233 233Impairment of intangible assets 2 350 977 – –(Profit)/loss on disposal of property, plant and equipment (1) (1) 44 27Profit on disposal of investments (270) (232) (1 942) (1 670)Profit on disposal of non-current asset held for sale (269) (164) – –Fair value adjustment on remeasurement of disposal group held for sale – – (111) (95)Impairment of investment in associate – – 331 274headline earnings 10 224 12 928

2011 2010cents cents

headline earnings per share 37,3 46,2

Diluted earnings per shareDiluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume

the conversion of all potentially dilutive ordinary shares.

The Company has no potential dilutive ordinary shares at year-end and diluted earnings per share equals basic earnings

per share.

Dividends per shareDividends on ordinary shares for the year were as follows:

2011 2010

proposed dividendscents

per share R000cents

per share R000Interim – current year 8 2 189 8 2 206Final – current year – – 20 5 596 8 2 189 28 7 802recognised dividendsFinal – prior year 20 5 596 14 3 917Interim – current year 8 2 189 8 2 206

28 7 785 22 6 123

The interim dividend of 8 cents was paid on 12 October 2010.

The Company has not declared a final dividend for the year ended February 2011 and will utilise its cash resources for current

and future growth opportunities.


Annexu re to t he conso l i da ted annua l f i nanc i a l s t a temen tsf o r t he yea r ended 28 Feb rua r y 2011

CostR000

Issuedcapital

R Percentage held 2011 2010 Principal activities

Direct subsidiaries

Export Credit Exchange (Pty) Ltd 9 435 100 100 74 Facilitation of trading in credit instruments

Indevco Business Consultants (Customs) (Pty) Ltd 2 526 100 50 50 Audits of Customs dutiesIndevco Business Consultants (Human Capital) (Pty) Ltd – 120 100 100 Human resourcesIQuad Investment Incentives (Pty) Ltd) 24 912 200 100 100 Investment incentivesIQuad Global Trade Solutions (Pty) Ltd 13 150 120 100 100 Investment incentivesIQuad Business Improvement Solutions (Pty) Ltd – 120 100 100 Business developmentIQuad Treasury Solutions (Pty) Ltd 40 108 100 100 100 Treasury risk managementIQuad Verifications Services (Pty) Ltd – 120 90 90 BEE verification servicesIQuad Global Finance Solutions (Pty) Ltd – 120 100 100 Treasury risk management

IQuad Group Support Services (Pty) Ltd 1 300 100 100 Group administration and marketing

IQuad Property Investment (Pty) Ltd – 120 50 50 Property investmentIQuad Finance Solutions (Pty) Ltd – 120 – 70 Business developmentIQuad Technologies (Pty) Ltd 6 120 50.1 94.9 Information technologyIDEC Consulting Services (Pty) Ltd 1 703 100 50 50 Financial services

IQuad Integrated Management Systems (Pty) Ltd 1 499 100 60 60

Development, implementation and auditing of management systems

Less accumulated impairment losses (16 724)76 616

indirect subsidiariesKagiso Treasury Solutions (Pty) Ltd 4 551 100 100 – Treasury risk managementDecillion Treasury Management Solutions (Pty) Ltd 2 071 120 100 100 Treasury risk managementNational Money Transfer (Pty) Ltd – 4 000 83 83 Information technology

6 622

The Group has the option, at its discretion, to acquire a further 30% in IDEC Consulting Services (Pty) Ltd. On this basis

the Company has been consolidated in the Group.

Control is exercised over Indevco Business Consultants (Customs) (Pty) Ltd as the director appointed by the Group has the majority

voting rights.

The Group has the option to purchase the remaining 50% interest in IQuad Property Investment (Pty) Ltd. On this basis the

Company has been consolidated into the Group.

All subsidiaries are incorporated in South Africa and are not listed on the JSE.


Not i ce o f annua l gene ra l mee t i ng

IQuad Group Limited (Incorporated in the Republic of South Africa)(Registration number: 2004/025177/06)JSE share code: IQG ISIN code: ZAE000101622

Notice is hereby given of the annual general meeting of shareholders of IQuad Group Limited (“IQuad” or “the Company”) to be

held at 56 Mangold Street, Newton Park, Port Elizabeth, on Thursday, 21 July 2011 at 15:00.

purpoSE oF thE MEEtinGThe purpose of this meeting is to transact the business set out in the agenda below. For the avoidance of doubt, the memorandum

and articles of association of the Company is now referred to as the “memorandum of incorporation” in accordance with

the terminology used in the Companies Act, 71 of 2008, as amended, which became effective on 1 May 2011.

AGEnDA 1.1 Presentation of the audited annual financial statements of the Company, including the reports of the directors and the

audit committee for the year ended 28 February 2011.

1.2 To note the retirement of Mr Trevor Hayter as director, who retires by rotation in terms of the memorandum of

incorporation of the Company and who does not offer himself for re-election.

2. To consider and, if deemed fit, approve the following ordinary resolutions with or without modification:

Note: For any of the ordinary resolutions contained in numbers 2.1 to 2.7 to be adopted, more than 50% of the voting rights

exercised on each individual resolution must be exercised in favour thereof. For the ordinary resolution in number 2.8 to be

adopted more than 75% of the voting rights exercised must be exercised in favour thereof.

2.1 ordinary resolution number 1

“Resolved that the following director who retires by rotation in terms of the Company’s memorandum of incorporation

and, being eligible, offers himself for re-election, be re-elected as a director of the Company:

2.1.1 AlfreddaCosta

Summary curriculum vitae of Alfred da Costa

Alfred da Costa holds a BCom (Hons) degree obtained from the University of the Western Cape.

Alfred has a broad range of experience in the commercial arena, having owned and operated various businesses

in the Eastern Cape. His career began as chief business advisor for the Small Business Development Corporation

(SBDC) in 1991. From 1998 until 2006, Alfred served as chief executive officer of the Port Elizabeth Regional

Chamber of Commerce and Industry (PERCCI), where he currently holds the position of president. Alfred is also

a director of numerous other listed and unlisted companies, including Bidvest Group Limited.

The reason for the re-election of the abovementioned director is that the memorandum of incorporation

of the Company and, to the extent applicable, the Companies Act, 71 of 2008, as amended, require that

a component of the non-executive directors rotate at the annual general meeting.


“Resolved that the following directors, appointed to the board of the Company on 12 April 2011, having retired in terms

of the memorandum of incorporation of the Company and being eligible, have offered themselves for re-election, each

be re-elected by separate vote as non-executive directors of the Company:”


Not i ce o f annua l gene ra l mee t i ng ( con t i nued )

2.2.1 NicodeWaal

SummarycurriculumvitaeofNicodeWaal

Nico holds a BEng (Mech) (cum laude) degree from the University of Stellenbosch as well as an MBA from

IESE Business School of the University of Navarre (Spain). Nico started his career as an engineer with Baker

Hughes Inc. (USA) in Scotland and the Middle East in the oil and gas exploration industry (1998-2000). He then

specialised in strategy and operations work as a management consultant at McKinsey & Co. (2001-2007) and

also at SABMiller (2008-2010). He recently transitioned to the private equity sector when he joined Paladin

Capital Limited in 2011, a subsidiary of PSG Group Limited.

2.2.2 ChrisElfick

SummarycurriculumvitaeofChrisElfick

Chris joined Coopers & Lybrand and qualified as Chartered Accountant in 1989. He completed an MBL degree

(cum laude) in 1994 and has been consulting and particularly providing strategic facilitation assistance for more

than 20 years. Until September 2002, Chris was a partner in PricewaterhouseCoopers Consulting where he

led numerous strategic and business planning initiatives and was responsible for a number of divisions in the

consulting group. In October 2002, Chris formed Learning Strategies to focus on strategic consulting and

business development. Chris is also the founder of the Fido Investment Fund and together with two partners

established the Lamda Financial Services group which includes fund administration, private equity and property

development activities.

2.2.3 MornéEdas

SummarycurriculumvitaeofMornéEdas

Morné holds a BEng (Elec-Mech) degree, as well as an MBA, both from the University of Cape Town. He began

his career with Eskom as a nuclear component engineer at Koeberg Nuclear Power Station in Cape Town.

Here he gained experience in the nuclear engineering field through various engineering roles within the nuclear

engineering operations and reliability business units. He subsequently joined Cadiz Asset Management as an

equity analyst where he was responsible for performing investment evaluations and recommendations across

a number of sectors and industries during a three-year tenure. Morné is at present an executive director at

Thembeka Capital Limited and serves as a non-executive director on the boards of various Thembeka Capital

Limited investee companies. He is a CFA charterholder.

The reason for this ordinary resolution is that the memorandum of incorporation of the Company requires that

new directors that have been appointed by the board of the Company, retire at the following annual general

meeting of the Company.


“Resolved that Messrs PricewaterhouseCoopers Inc. be reappointed as auditors of the Company for the ensuing

financial year on the recommendation of the IQuad Group audit and risk committee.”

The reason for the reappointment of the auditors is that the Company, being a public listed company, must have its

financial results audited and such auditor must be appointed or reappointed each year at the annual general meeting

of the Company as required by the Companies Act, 71 of 2008, as amended.


“For the avoidance of any doubt and in terms of the memorandum of incorporation of the Company, it is herewith

resolved that the authority of the IQuad Group audit and risk committee to determine the remuneration of the

auditors be confirmed.”

The reason for this ordinary resolution follows from the fact that although the Companies Act, 71 of 2008, as amended,

specifies that the audit and risk committee is required to determine the remuneration of the auditors, the memorandum

of incorporation of the Company requires that the remuneration of the auditors be dealt with at the annual general

meeting of the Company.



“Resolved that the members of the IQuad Group audit and risk committee, as set out below, be and are hereby

reappointed in accordance with the recommendations of King III. The members, as proposed by the board of directors,

are Messrs Mohamed Shaik Amod (Chairman), Alfred da Costa and Chris Elfick, all of whom are independent non-

executive directors.”

Summary curricula vitae of Alfred da Costa and Chris Elfick are included in 2.1.1 and 2.2.2 above and the curriculum

vitae of Mohamed Shaik Amod is as follows:

SummarycurriculumvitaeofMohamedShaikAmod

Mohamed holds various internationally recognised degrees, including a BSc (Eng-Electronic) from the University of

Natal, is a chartered financial analyst (USA) and has a Diploma in Finance (Damelin). Mohamed is currently employed

at the Industrial Development Corporation (IDC) as a senior manager. He has been with the IDC since 1996 and has

experience across several financial disciplines and economic sectors.

The reason for this ordinary resolution is that the Company, being a public listed company, must appoint an audit

committee and the Companies Act, 71 of 2008, as amended requires that the members of such audit committee be

appointed, or reappointed as the case may be, at each annual general meeting of the Company.


“Resolved to approve the directors’ remuneration, as disclosed in the annual financial statements, for the year ended

28 February 2011.”

The reason for this ordinary resolution is to request shareholders to approve the remuneration paid to the directors

of the Company.


“Resolved that the unissued shares in the Company, limited to 5% of the number of shares in issue at 28 February 2011,

be and are hereby placed under the control of the directors until the next annual general meeting and that they be and

are hereby authorised to issue any such shares as they may deem fit, subject to the extent applicable, the Companies

Act, 71 of 2008, as amended, the memorandum of incorporation of the Company, and the provisions of the Listings

Requirements of the JSE Limited, save that the aforementioned 5% limitation shall not apply to any shares issued

in terms of a rights offer.”

The reason for this ordinary resolution is that the board requires authority from shareholders in terms of its memorandum

of incorporation to issue shares in the Company. This general authority, once granted, allows the board from time

to time, when it is appropriate to do so, to issue ordinary shares as may be required, inter alia, in terms of capital-raising

exercises and to maintain a healthy capital adequacy ratio. The general authority is subject to the restriction that it is

limited to 5% of the number of shares in issue at 28 February 2011 on the terms more fully set out in ordinary resolution

number 7 above, and subject to further restrictions set out in ordinary resolution number 8 below.


“Resolved that, subject to ordinary resolution number 7 being approved, the directors of the Company be and are

hereby authorised by way of a general authority, to allot and issue any of its unissued ordinary shares for cash placed

under their control as they in their discretion may deem fit, without restriction, subject to the provisions of the Companies

Act, 71 of 2008, as amended, the memorandum of incorporation of the Company, and the Listings Requirements

of the JSE Limited (“JSE”) and subject to the proviso that the aggregate number of ordinary shares able to be

allotted and issued in terms of this resolution, shall be limited to 5% of the issued share capital of the Company as at

28 February 2011, provided that:




– the general approval shall be valid until the date of the next annual general meeting of the Company, or for

a period of 15 months from the date of this resolution in terms of this annual general meeting, whichever is

the shorter;

– a SENS announcement giving full details as required in terms of Rule 11.22 of the Listings Requirements of

the JSE, including the number of shares issued, the average discount to the weighted average traded price

of the securities over the 30-day period prior to the date that the issue price of the securities was agreed

between the issuer and the party(ies) subscribing for the securities, together with the impact on net asset value,

tangible net asset value, earnings per share and headline earnings per share (and, if applicable, diluted earnings

per share and headline earnings per share), will be published after any issue representing, on a cumulative basis

within any one financial year, 5% or more of the number of shares in issue prior to such issue;

– the general issues of shares for cash in the aggregate in any one financial year may not exceed 5% of the

applicant’s issued share capital (number of shares) (including instruments that are compulsorily convertible into

shares of that class) at the date of the application less any securities of that class issued, or to be issued in

the future arising from options/convertible securities issued during the current financial year, plus any securities

to be issued pursuant to an announced, irrevocable fully underwritten rights offer or to be issued pursuant

to any acquisition for which the final terms have been announced; The securities of a particular class will be

aggregated with the securities that are compulsorily convertible into securities of that class; and, in the case of

the issue of compulsorily convertible securities, aggregated with the securities of that class into which they are

compulsorily convertible;

– in determining the price at which an issue of shares will be made in terms of this authority the maximum discount

permitted will be 10% of the weighted average traded price of such shares, as determined over the 30 business

days prior to the date that the price of the issue is agreed between the issuer and the party subscribing for the

securities; The committee of the JSE should be consulted for a ruling if the applicant’s securities have not traded

in such 30 business day period;

– any such issue will only be made to public shareholders as defined in paragraph 4.25 of the Listings Requirements

of the JSE and not to related parties; and

– any such issue will only be securities of a class already in issue or, where this is not the case, must be limited to

such securities or rights that are convertible into a class already in issue.”

At least 75% of the shareholders present in person or by proxy and entitled to vote at the annual general

meeting, excluding the Designated Adviser of the Company and controlling shareholders and their associates,

must cast their vote in favour of this resolution.

The reason for this ordinary resolution is that the board requires authority to issue ordinary shares for cash as may be

required as part of the Company’s normal fund-raising exercises.

3. To consider and, if deemed fit, approve the following special resolutions with or without modification:

Note: For any of the special resolutions contained in numbers 3.1 to 3.4 to be adopted, more than 75% of the voting rights

exercised on each individual resolution must be exercised in favour thereof.

3.1 Special resolution number 1

“Resolved as a special resolution that the board of directors of the Company and/or any subsidiary of the Company

be and is hereby authorised, as a general approval, to repurchase any of the shares issued by the Company, or to

repurchase any of the shares issued by any subsidiary of the Company, upon such terms and conditions and in such

amounts as the directors may from time to time determine, but subject to the provisions of sections 46 and 48 of


the Companies Act, 71 of 2008, as amended, the memorandum of incorporation of the Company and/or subsidiary

company, the Listings Requirements of the JSE Limited (“JSE”) and the requirements of any other stock exchange on

which the shares of the Company and/or subsidiary company may be quoted or listed, namely that:

– the general repurchase of the shares may only be implemented on the open market through the order book

operated by the JSE and done without any prior understanding or arrangement between the Company and the

counterparty;

– this general authority shall only be valid until the next annual general meeting of the Company, or for a period of

15 months from the date of this resolution in terms of this annual general meeting, whichever is the shorter;

– a SENS announcement must be published as soon as the Company and/or subsidiary company has acquired

shares constituting, on a cumulative basis, 3% of the number of shares in issue (at the time that the general

authority from shareholders is granted) prior to the acquisition, pursuant to which the aforesaid 3% threshold

is reached, containing full details thereof; as well as for each 3% in aggregate of the initial number of shares

acquired thereafter;

– the general authority to repurchase is limited to a maximum of 20% in aggregate in any one financial year of

the Company’s issued share capital at the time the authority is granted;

– the general authority to repurchase is limited to a maximum of 10% in aggregate in any one financial year of

the Company’s issued share capital in the event of a repurchase of the Company’s shares by a subsidiary of

the Company;

– a resolution has been passed by the board of directors approving the purchase, that the Company/subsidiary

company has satisfied the solvency and liquidity test as defined in the Companies Act, 71 of 2008, as amended,

and that since the test was applied there have been no material changes to the financial position;

– the general repurchase is authorised by the Company and/or subsidiary company’s memorandum of

incorporation;

– repurchases must not be made at a price more than 10% above the weighted average of the market value

of the shares for five business days immediately preceding the date that the transaction is effected; The JSE

should be consulted for a ruling if the issuer’s securities have not traded for in such five business day period;

– the Company and/or subsidiary company will only effect a general repurchase if after the purchase is effected

it still complies with paragraphs 3.37 to 3.41 of the Listings Requirements of the JSE concerning shareholder

spread requirements; the Company and/or subsidiary company may at any point in time only appoint one agent

to effect any repurchase(s) on the Company’s behalf;

– the Company and its subsidiary/(ies) may not effect a repurchase during any prohibited period as defined in

terms of the Listings Requirements of the JSE unless they have a repurchase programme in place, and full

details thereof have been disclosed in a SENS announcement prior to the commencement of the prohibited

period; and

– the Company must ensure that its Designated Adviser provides the JSE with the required adequacy of working

capital letter before it commences to repurchase any shares.”

The reason for and effect of this special resolution number 1 is to grant the directors of the Company and/or any subsidiary

of the Company a general authority in terms of its memorandum of incorporation and the Listings Requirements of the

JSE for the acquisition by the Company and or subsidiary company of shares issued by it on the basis reflected in

the special resolution.





“Resolved, to the extent applicable in terms of section 66(9) of the Companies Act, 71 of 2008, as amended, that

directors of the Company be paid fees for services rendered as directors of the Company during the financial year

ending 28 February 2012, in accordance with the scale of remuneration as set out below:

Chairman of the board R99 000

Board membership R66 000

Chairman of a board committee R76 000

Committee membership R76 000

The memorandum of incorporation of the Company requires that shareholders approve directors’ fees. The Companies

Act, 71 of 2008, as amended, however, requires the directors’ fees to be authorised by shareholders by way of special

resolution.”

The reason for this special resolution number 2 is for the Company to obtain the approval of shareholders

for the payment of remuneration to its non-executive directors in accordance with the requirements of the

Companies Act, 71 of 2008, as amended. The effect of this special resolution is that the Company will be able to

pay its non-executive directors for the services they render to the Company as directors without requiring further

shareholder approval until the next annual general meeting.


“Resolved in terms of section 45(3)(a)(ii) of the Companies Act, 71 of 2008, as amended, as a general approval, that the

board of the Company be authorised to approve that the Company provides any direct or indirect financial assistance

(“financial assistance” will herein have the meaning attributed to it in section 45(1) of the Companies Act, 71 of 2008,

as amended) that the board of the Company may deem fit to any company or corporation that is related or inter-related

(“related” or “inter-related” will herein have the meaning attributed to it in section 2 of the Companies Act, 71 of 2008,

as amended) to the Company, on the terms and conditions and for amounts that the board of the Company may

determine.”

The reason for and effect of this special resolution number 3 is to grant the directors of the Company the authority until the

next annual general meeting to provide financial assistance to any company or corporation which is related or inter-related

to the Company. This means that the Company is authorised to grant loans to its subsidiaries and to guarantee the debt of

its subsidiaries.


(“financial assistance” will herein have the meaning attributed to it in section 45(1) of the Companies Act, 71 of 2008,

as amended)

“Resolved in terms of section 44(3)(a)(ii) of the Companies Act, 71 of 2008, as amended, as a specific approval, that the

board of directors of the Company be authorised to approve that the Company provides direct financial assistance to

Mr M Bodley by way of an secured loan of R128 265, attracting interest at the prime interest rate applicable from time

to time, currently 9% per annum, compounded monthly and to be repaid in full by 28 February 2013 in respect of the

acquisition of 71 306 ordinary shares in the Company at a price of R2,50 per share. All dividends accruing in respect

of the shares shall be utilised in the reduction of the balance owing on the loan, and the granting of the loan will also be

subject to the board being satisfied that the Company, immediately after providing the loan, satisfies the solvency and

liquidity test and that the terms of the loan are fair and reasonable to the Company.”

The reason for and effect of this special resolution number 4, is to grant the directors of the Company authority, as

a specific approval, to provide financial assistance by way of a loan to Mr M Bodley for the acquisition of 71 306

ordinary shares in the Company. These shares are subject to a profit warranty in favour of the Company and will be

held in an online account ceded in favour of the Company until the loan is settled in full.


3.5 other business

To transact such other business as may be transacted at an annual general meeting or raised by shareholders with or

without advance notice to the Company.

information relating to the special resolutions

1. The directors of the Company or its subsidiaries will only utilise the general authority to purchase shares of the Company

and/or the subsidiary as set out in special resolution number 1 to the extent that the directors, after considering the maximum

shares to be purchased, are of the opinion that the Company and its subsidiaries’ (“IQuad Group”) position would not be

compromised as to the following:

– IQuad Group’s ability 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 and for a period of 12 months after the purchase;

– the consolidated assets of the IQuad Group will be in excess of the consolidated liabilities of the IQuad Group; The

assets and liabilities should be recognised and measured in accordance with the accounting policies used in the latest

audited annual financial statements of IQuad;

– the ordinary capital and reserves of the IQuad Group after the purchase will remain adequate for the purpose of the

business of the IQuad Group for a period of at least 12 months after the date of the notice of the annual general meeting

and after the date of the share purchase;

– the working capital available to the IQuad Group after the purchase will be sufficient for the IQuad Group’s requirements

for a period of at least 12 months after the date of the notice of the annual general meeting

and the directors have passed a resolution authorising the repurchase resolving that the Company or the subsidiary, as the

case may be, has satisfied the solvency and liquidity test as defined in the Companies Act, 71 of 2008, as amended, and that

since the test was applied, there have been no material changes to the financial position.

2. Disclosure in terms of section 11.26 of the JSE limited listings requirements

General information in respect of directors (page 4), major shareholders (page 24), directors’ interest in securities and material

changes (page 23) and the share capital of the Company (page 22) is contained in the annual report to which this notice is

attached.

3. litigation statement

The Company is not involved in any legal or arbitration proceedings, nor are any proceedings pending or threatened of which

the Company is aware that may have or have had in the previous 12 months, a material effect on the Company’s financial

position.

4. Directors’ responsibility statement

The directors, whose names are on page 4 of the annual report to which this notice is attached, 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 that have been made and that the notice contains all information required by the JSE Listings

Requirements.

5. Special resolution number 1 is a renewal of a resolution taken at the previous annual general meeting on 22 July 2010.

VotinG

The date on which shareholders must be recorded as such in the register maintained by the transfer secretaries of the Company

for purposes of being entitled to attend and vote at this annual general meeting is Thursday, 7 July 2011, with the last day to trade

being Thursday, 30 June 2011.

Annual general meeting participants may be required to provide identification to the reasonable satisfaction of the chairman of the

annual general meeting.



Shareholders entitled to attend and vote at the annual general meeting may appoint one or more proxies to attend, speak and vote

thereat in their stead. A proxy need not be a member of the Company. A form of proxy, in which are set out the relevant instructions

for its completion, is enclosed for the use of a certificated shareholder or “own name” registered dematerialised shareholder who

wishes to be represented at the annual general meeting. Completion of a form of proxy will not preclude such shareholder from

attending and voting (in preference to that shareholder’s proxy) at the annual general meeting.

The instrument appointing a proxy and the authority (if any) under which it is signed must reach the transfer secretaries of the

Company at the address given below by not later than 15:00 on Tuesday, 19 July 2011.

Dematerialised shareholders, other than “own name” registered dematerialised shareholders, who wish to attend the annual general

meeting in person, will need to request their Central Securities Depository Participant (“CSDP”) or broker to provide them with the

necessary authority in terms of the custody agreement entered into between such shareholders and the CSDP or broker.

On a poll, ordinary shareholders will have one vote in respect of each share held. Dematerialised shareholders, other than “own

name” registered dematerialised shareholders, who are unable to attend the annual general meeting and who wish to be represented

thereat, must provide their CSDP or broker with their voting instructions in terms of the custody agreement entered into between

themselves and the CSDP or broker in the manner and time stipulated therein.

By order of the board

Frans Botha

Company secretary

Port Elizabeth

24 May 2011

registered office

IQuad Group Limited

56 Mangold Street

Port Elizabeth

6001

(PO Box 27253, Greenacres, Port Elizabeth, 6065)

transfer secretaries

Computershare Investor Services (Pty) Limited

70 Marshall Street

Johannesburg

2001

(PO Box 61051, Marshalltown, 2107)



ProxyIQuad Group Limited

(Incorporated in the Republic of South Africa)(Registration number: 2004/025177/06)

JSE share code: IQG ISIN code: ZAE000101622(“IQuad” or “the Company”)

ForM oF proxy – For uSE By cErtiFicAtED AnD oWn nAME DEMAtEriAliSED ShArEholDErS onlyFor use at the annual general meeting of ordinary shareholders of the Company to be held at 56 Mangold Street, Newton Park, Port Elizabeth, on Thursday, 21 July 2011 at 15:00.

I/We ___________________________________________________________________________________________________________(Full name in print))

of _____________________________________________________________________________________________________________(Address in print)

being the registered holder of __________________________________________________________ ordinary shares hereby appoint:

1 _________________________________________________ of _______________________________________________________or failing him/her,

2. _________________________________________________ of _______________________________________________________or failing him/her,

3. the chairman of the meeting,as my proxy to vote for me/us at the annual general meeting for purposes of considering and, if deemed fit, passing, with or without modification, the special resolutions and ordinary resolutions to be proposed thereat and at each 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 (see Notes):

Number of sharesIn favour of Against Abstain

1.1 To accept the presentation of the audited annual financial statements1.2 To note the retirement by rotation of Mr Trevor Hayter as director2. Ordinary resolutions2.1 Re-election of retiring director2.1.1 To re-elect Alfred da Costa as director2.2 Re-election of newly appointed directors2.2.1 To re-elect Nico de Waal as director2.2.2 To re-elect Chris Elfick as director2.2.3 To re-elect Morné Edas as director2.3 To reappoint the auditors, PricewaterhouseCoopers Inc.2.4 Confirmation of authority of the IQuad Group audit and risk committee to

determine remuneration of auditors2.5 Appointment of members of the IQuad Group audit and risk committee2.6 To confirm the directors’ remuneration2.7 Unissued shares placed under the control of the directors of the Company2.8 General authority to issue shares for cash3. Special resolutions3.1 Share buyback by IQuad Group Limited and/or any subsidiary of IQuad Group

Limited3.2 Approve the directors’ fees for the financial year ending on 28 February 20123.3 Authority to the board to authorise financial assistance to any company or

corporation that is related or inter-related to the Company3.4 Authority to the board to authorise direct financial assistance to Mr Bodley

Please indicate your voting instruction by way of inserting the number of shares or by a cross in the space provided.

Signed at _________________________________________ on this ______________ day of ___________________________ 2011

Signature(s) ____________________________________________________________________________________________________Assisted by (where applicable) (state capacity and full name)


Notes

Each IQuad shareholder is entitled to appoint one or more proxy(ies) (who need not be a shareholder(s) of the Company) to attend, speak and vote in his stead at the annual general meeting.

1. An IQuad shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space(s) provided, with or without deleting “the chairman of the annual general meeting”. The person whose name appears first on the form of proxy and who is present at the meeting will be entitled to act as proxy to the exclusion of those whose names follow.

2. An IQuad shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of shares to be voted on behalf of that shareholder in the appropriate box provided. Failure to comply with the above will be deemed to authorise the chairman of the annual general meeting, if he/she is the authorised proxy, to vote in favour of the resolutions at the meeting, or any other proxy to vote or to abstain from voting at the meeting as he/she deems fit, in respect of all the shares concerned. A shareholder or his/her proxy is not obliged to use all the votes exercisable by the shareholder or his/her proxy, but the total of the votes cast and in respect whereof abstentions are recorded may not exceed the total of the votes exercisable by the shareholder or his/her proxy.

3. When there are joint registered holders of any shares, any one of such persons may vote at the meeting in respect of such shares as if he/she was solely entitled thereto, but, if more than one of such joint holders be present or represented at any meeting, that one of the said persons whose name stands first in the register in respect of such shares or his/her proxy, as the case may be, shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased member, in whose name any shares stand, shall be deemed joint holders thereof.

4. Forms of proxy must be completed and returned to be received by the transfer secretaries of the Company, Computershare Investor Services (Pty) Limited 2000, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) by not later than 15:00 on Tuesday, 19 July 2011.

5. Any alteration or correction made to this form of proxy must be initialled by the signatory(ies).

6. 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 Company’s transfer secretaries or waived by the chairman of the annual general meeting.

7. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such shareholder wish to do so.


Adm in i s t r a t i on

company secretary and registered address

Mr Frans Botha CA(SA)

56 Mangold Street

Newton Park

Port Elizabeth, 6045

(PO Box 27253, Greenacres, Port Elizabeth, 6057)

Telephone: 041 391 0600

Facsimile: 041 365 5860

corporate adviser

PSG Capital (Proprietary) Limited

Registration number 2006/015817/07

1st Floor

Ou Kollege

35 Kerk Street

Stellenbosch, 7600

(PO Box 7403, Stellenbosch, 7599)

and

Ground Floor, DM Kisch House

Inanda Greens Business Park

54 Wierda Road West

Wierda Valley, Sandton, 2196

(PO Box 987, Parklands, 2121)

Telephone: 021 887 9602

Facsimile: 021 887 9624

Designated adviser

QuestCo Sponsor (Pty) Ltd

The Campus

57 Sloane Street

1st Floor

Wrigley Field

Bryanston, 2021

(PO Box 98956, Sloane Park, 2152)

Telephone: 011 575 3415

Facsimile: 011 575 3415

transfer secretaries

Computershare Investor Services 2004 (Proprietary) Limited


Ground Floor

70 Marshall Street

Johannesburg, 2001

(PO Box 61051, Marshalltown, 2107)

Telephone: 011 370 7700

Facsimile: 011 688 7716

Attorneys

Hofmeyr, Herbstein & Ghiwala is now: DLA Cliffe Dekker

Hofmeyr Inc.

11 Buitengracht Street

Cape Town, 8001

(PO Box 695, Cape Town, 8000)

Telephone: 021 481 6300

Facsimile: 021 481 6540

Auditors and reporting accountants

PricewaterhouseCoopers Inc. PE (Partner: Mike Rudman)

PwC Building

Ascot Office Park

1 Ascot Road

Port Elizabeth, 6045

(PO Box 27013, Greenacres, 6057)

Telephone: 041 391 4400

Facsimile: 041 391 4500.

commercial banker

Absa Bank Limited


Ground Floor

Corporate Place

72 Ring Road

Greenacres, 6057

(PO Box 27866, Greenacres, 6057)

Telephone: 041 396 5500

Facsimile: 041 363 2920


�We�are�defined�by�our�pursuit�of�providing�mutual�value�for�

all�our�stakeholders.�

�We�are�dedicated�to�using�our�expertise�to�innovate�and�to�

promote�growth�and�profitability,�leading�to�superior�returns�

for�our�shareholders.�

�We�are�committed�to�building�enduring�partnerships�with�

our�clients�who�use�our�services�as�an�extension��

of�their�own�resources.�

�We�believe�in�equal�opportunity�and�development�for�all�

our�employees�and�fair�reward�according�to�their�effort,�

initiative,�responsibility�and�performance.�

�We�seek�to�develop�strategic�relationships�and�alliances�

that�will�benefit�all�our�stakeholders.�

�We�undertake�to�contribute�positively�to�the�wellbeing�

of�the�environment�and�the�communities�in�which�we�

operate.�

�We�employ�the�specialisation�of�our�subsidiary�companies�

as�well�as�the�combined�resources�of�the�Group�to�meet�

our�clients’�needs.

To�be�the�preferred�supplier�of�high-impact,�strategic�

outsource�and�compliance�services�to�business.

Va lues

V i s i on

GREYMATTER & F INCH # 5580

www. iquad.co .za

Annual report 2011

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iquad group limited - ShareData Online · Annual report 2011 iquad group limited ... tY\Jt\Ye oM o^neYsOPW ... audit committee member BCom (Hons)