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TCS Prospectus – formal submission - 05022008

TOTAL CLIENT SERVICES LIMITED (Formerly Labat Traffic Solutions (Proprietary) Limited)

Incorporated in the Republic of South Africa (Registration number 1998/025018/06)

Share code: TCS ISIN: ZAE000116208 (“TCS” or “the company”)

PROSPECTUS

Prepared and issued in terms of the Listings Requirements (“the Listings Requirements”) of JSE Limited (“the JSE”) and the Companies Act, 1973 (Act 61 of 1973), as amended (“the Act”), relating to a private placement of TCS ordinary shares by way of an offer by the company for the subscription of 42 553 192 ordinary shares in the issued share capital of the company at an issue price of 47 cents per ordinary share thereby raising R20 million before expenses and an offer for sale by certain of the existing shareholders of the company, pro-rata to their shareholding in the company, of 42 553 192 ordinary shares in the issued share capital of the company at a price of 47 cents per ordinary share (collectively hereinafter, “the private placement”) and the subsequent listing of the ordinary shares of the company on the Alternative Exchange (“AltX”) of the JSE.

Opening date of private placement at 09:00 on Friday, 29 February 2008

Closing date of private placement at 12:00 on* Thursday, 27 March 2008

Anticipated listing date on AltX at commencement of trade on Monday, 7 April 2008

* Shareholders wishing to receive ordinary shares in dematerialised form must advise their Central Securities Depository Participant (“CSDP”) or broker of their acceptance of the offer to subscribe for or to purchase shares in the manner and within the cut-off time stipulated by their CSDP or broker.

This prospectus is not an invitation to the general public to subscribe for or to purchase ordinary shares in the company. This is an offer to selected private individuals, corporations and institutions, which are deemed to be public in terms of the Listings Requirements, to subscribe for or to purchase ordinary shares in the company and is issued in compliance with the Listings Requirements and the Act for the purpose of providing information to the public and investors with regard to TCS. This is a single primary listing on AltX. At the date of listing, the authorised share capital of TCS will comprise 500 000 000 ordinary shares having a par value of 0.01 cent each and 2 600 12% cumulative redeemable preference shares of 100 cents each. Prior to the private placement, the issued share capital of TCS will consist of 383 569 031 ordinary shares of 0.01 cent each with an ordinary share premium of R18 441 787 and 2 600 12% cumulative redeemable preference shares of 100 cents each with a preference share premium of R25 997 400. After the private placement and at the date of the listing, the issued share capital of TCS will consist of 426 122 223 ordinary shares of 0.01 cent each and 2 600 12% cumulative redeemable preference shares of 100 cents each. The ordinary share premium account will total R37 437 532 and the preference share premium account will total R25 997 400. The ordinary shares issued and sold in terms of the private placement will rank pari passu with all other ordinary shares issued by TCS. Applications for ordinary shares in TCS must be for a minimum of 5 000 ordinary shares and in multiples of 1 000 ordinary shares thereafter. Subject to the required spread of public shareholders in terms of the Listings Requirements being obtained pursuant to the private placement, the JSE has granted TCS a listing in respect of 426 122 223 ordinary shares on AltX under the abbreviated name “TCS”, share code “TCS” and ISIN ZAE000116208. It is anticipated that the listing of the shares on AltX will become effective from the commencement of business on Monday, 7 April 2008.


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The shares in TCS will only be traded in electronic form and, as such, all investors who elect to receive their ordinary shares in TCS in certificated form will have to dematerialise their certificated shares should they wish to trade therein. The directors of TCS whose names are set out in Annexure 1 to this prospectus, and the vendors whose names are set out in the definitions of this prospectus accept, collectively and individually, full responsibility for the accuracy of the information given herein and certify that, to the best of their knowledge and belief, no facts have been omitted which would make any statement false or misleading and that they have made all reasonable enquiries to ascertain such facts and that this prospectus contains all information required by law and the Listings Requirements. PricewaterhouseCoopers, whose reports are included in this prospectus, have given and have not, prior to registration of the prospectus, withdrawn their written consent to the inclusion of their reports in the form and context in which they appear. The Designated Adviser, auditors and reporting accountants, attorneys, commercial banker and transfer secretaries, whose names are set out in this prospectus, have given and have not, prior to registration, withdrawn their written consents to the inclusion of their names in the capacities stated. An English copy of this prospectus, accompanied by the documents referred to under “Documents available for inspection” as set out in paragraph 32 of this prospectus, was registered by the Registrar of Companies on Tuesday, 26 February 2008 in terms of Section 155(1) of the Act.

Designated Adviser Corporate adviser

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Merchant Sponsors

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Merchantec

Auditors and independent reporting accountants

Independent expert Attorneys

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PricewaterhouseCoopers

- Logo - Horwath Leveton Boner

- Logo - Fluxmans Attorneys

Date of issue: Friday, 29 February 2008


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CORPORATE INFORMATION

Registered office of TCS’ holding company Designated Adviser

Labat Africa Limited Merchant Sponsors (Proprietary) Limited

(Registration number 1986/001616/06) (Registration number 2003/005493/07)

23 Kroton Avenue 2nd Floor, North Block

Weltevreden Park Hyde Park Office Tower

Johannesburg, 1709 Corner 6th Road and Jan Smuts Avenue

(Private Bag X09-248, Weltevreden Park, 1715) Hyde Park, Johannesburg, 2196

(PO Box 41480, Craighall, 2024)

Company secretary and registered office of TCS Attorneys to the prospectus

Alison Britto, (Legal secretary diploma) Fluxmans Inc.

23 Kroton Avenue (Registration number 2000/024775/21)

Weltevreden Park 11 Biermann Avenue

Johannesburg, 1709 Rosebank, Johannesburg, 2196

(Private Bag X09-248, Weltevreden Park, 1715) (Private Bag X41, Saxonworld, 2132)

Auditors and independent reporting accountants Commercial banker

PricewaterhouseCoopers Inc Absa Bank Limited

Chartered Accountants (SA) (Registration number 1986/004794/06)

(Registration number 1998/012055/21) 9th and 10th Floor

2 Eglin Road 11 Diagonal Street

Sunninghill Newtown

Johannesburg, 2157 Johannesburg, 2001

(Private Bag X36, Sunninghill, 2157) (PO Box 42023, Fordsburg, 2033)

Transfer secretaries Independent expert

Computershare Investor Services 2004 Horwath Leveton Boner

(Proprietary) Limited Chartered Accountants (SA)

(Registration number 2004/003647/07) (Practice number 903787)

Ground Floor 3rd Floor, 72 Grayston Drive

Johannesburg, 2001 Sandown, Johannesburg, 2196

(PO Box 61051, Marshalltown, 2107) (PO Box 652550, Benmore, 2010)


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TABLE OF CONTENTS

Page

Corporate information

Salient features

Important dates and times

Definitions

Prospectus

1. Introduction

2. Incorporation and history

3. Industry background

4. Nature of business

5. Prospects

6. Major shareholders

7. Directors and executive management

8. Purpose of placement and listing on AltX

9. Details of the unbundling

10. Details of the private placement

11. Material changes

12. Profit history, forecasts, unaudited pro forma financial information and dividend policy

13. Amounts paid to promoters, brokerages and commissions

14. Preliminary expenses and issue expenses

15. Loans payable and borrowing powers

16. Capital commitments, lease payments and contingent liabilities

17. Loans receivable

18. Property and subsidiaries acquired or to be acquired

19. Property and subsidiaries to be disposed of

20. Subsidiaries

21. Principal immovable property owned and leased

22. Material intercompany transactions

23. Share capital

24. Adequacy of working capital

25. Options and preferential rights in respect of shares

26. Material contracts

27. Litigation statement

28. Advisers’ interests

29. Consents

30. Corporate Governance


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31. Directors’ and vendors’ responsibility statement

32. Documents available for inspection

33. Paragraphs of Schedule 3 to the Act which are not applicable

Annexure 1 Directors, executive management, appointment, qualification, remuneration and borrowing powers of directors

Annexure 2 Historical financial information of TCS for the years ended 28 February 2007, 28 February 2006 and 28 February 2005

Annexure 3 Reviewed interim financial information of TCS for the six months ended 31 August 2007

Annexure 4 Independent reporting accountants’ report on the consolidated historical financial information of TCS for the years ended 28 February 2007, 28 February 2006 and 28 February 2005

Annexure 5 Independent reporting accountants’ report on the reviewed interim financial information of TCS

Annexure 6 Independent reporting accountants’ report on the profit forecast of TCS

Annexure 7 Reporting accountants’ report on the pro forma financial effects, pro forma balance sheet and pro forma income statement

Annexure 8 Corporate governance statement of TCS

Annexure 9 Rights and privileges attaching to the preference shares

Annexure 10 Provisions of the articles of association of the company relating to dividends

Annexure 11 Independent expert valuation opinion to the shareholders of Total Client Services Limited in relation to the listing of the shares on the AltX of the JSE

Private placement application form Attached


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SALIENT FEATURES

The salient features are a summary only. For a full appreciation, this prospectus should be read in its entirety. The definitions commencing on page 14 of this prospectus apply mutatis mutandis to these salient features. 1. INTRODUCTION

TCS has been in operation for 28 years providing technology, proprietary application software and specialised services to the South African Government. The company has a national presence in the traffic management industry, currently providing complete solutions to its clients at over 112 sites. To date, no single competitor has been able to match the unique end-to-end solutions offered by TCS. TCS plans to extend its offering to include risk and revenue management services to both public and private sectors.

2. INCORPORATION AND HISTORY

Total Computer Services, a wholly owned subsidiary of TCS, was incorporated in 1979 and commenced business as a software house specialising in the development of unique applications and ERP business solutions. TCS was first incorporated on 14 December 1998 under the name Labat Traffic Solutions (Proprietary) Limited, as an unlisted subsidiary of Labat, to conduct business as providers of highly sophisticated, unique technology solutions and proprietary software to Government law enforcement departments, thereby enabling these departments to obtain state of the art systems and technology with which to maximise revenue and minimise the risks involved in debt collection.

In 1989, Total Computer Services was awarded the tender by CSIR / National Department of Transport for the development of the first Traffic Contravention System for traffic law enforcement. Following the installation of the Traffic Contravention System 18 years ago, the nature of Total Computer Services’ business evolved into that of a services business, dedicated largely to the Traffic Profession in Southern Africa. Following the acquisition by the company in 2002 of 51% of the entire issued share capital of Total Computer Services, the company has also been able to offer its clients a fully comprehensive back-office administrative function and a number of payment methods whereby traffic fines can be settled via various electronic channels, directly to the issuing authority, resulting in an end-to-end solution for its clients.

In 2007, the company’s BEE profile was increased by way of the LTS transaction which introduced Mvela as a strategic partner in the company, thus positioning the company for a separate listing on the JSE.

On 7 November 2007, the company changed its name to Total Client Services (Proprietary) Limited.

Subsequently, in line with the board of directors of Labat’s strategy of unlocking shareholder value through the restructuring of the group, the transaction to restructure the company and Total Computer Services under the leadership of one management team by way of a buy-out by the company of the minorities in Total Computer Services, was implemented. This positioned the restructured and amalgamated company for a separate listing on the AltX under the name ‘Total Client Services’ (“TCS”). On 14 February 2008, the company was converted to a public company.

The company intends to become the solutions provider of choice to all Local and Provincial Government law enforcement agencies following the coming into force of the AARTO legislation. It will also pursue other revenue streams, such as traffic flow management, both within the public and private sectors.

The listing will provide for the unbundling of the shares in the newly listed TCS to Labat shareholders and the delisting of Labat.


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3. NATURE OF THE COMPANY’S BUSINESS AND INDUSTRY

The company provides technology, proprietary application software and administration services as an integrated solution to Local Authorities and Provincial Administrations involved in the business of law enforcement. The company provides an end-to-end solution, which allows it to provide both effective delivery and support to its clients.

The technology products provided by TCS include road traffic equipment which is required to measure speed, traffic flow patterns and detect offender vehicles on the road. These products are sourced from local as well as international suppliers to ensure the best possible combination of products to satisfy the client’s requirements. TCS’ application software products have been developed following exhaustive in-house research and development to cater for a wide range of traffic management applications. Full Service Centre Contracts are also available from TCS, whereby the company provides various back-office solutions in addition to the above technology and software to clients with such contracts providing a complete end-to-end solution, where required by the client.

The company’s revenue is earned on a fixed fee basis, based on the number of offences that have been finalised. The end-to-end solution offered by the company creates a platform whereby the company’s clients have achieved finalisation rates of 50-65% which are well above the national average of 20%.

4. PROSPECTS The traffic law enforcement market, based on the number of fines issued, is presently worth approximately R5.4 billion per annum. The company currently holds a 57% share of the contracted market, with the intention of further capturing the remaining contracted and locally managed market through its supply of superior technology, services and support. The uncontracted market will be targeted by addressing the current processing inefficiencies that exist and improving these processes, thereby ensuring a higher volume throughput of transactions via the TCS system.

TCS is a strong cash generator and thus no additional outside funding is required to upgrade its existing technology and facilities. TCS believes that it will be able to fund all incidental capital expenses from cash resources generated from internal operations.

All start-up costs and historical capital expenditure associated with the implementation of tender contracts and new contracts have been completed, thus allowing TCS to shift focus to cash collection efficiencies in respect of traffic fines as well as the introduction and expansion of cost-effective and efficient payment methods such as via ATMs, the post office, supermarkets and the internet.

All TCS contracts with Local and Provincial Government authorities are now fully compliant with the rules and regulations of the Municipal Finance Management Act, 2003 (Act 52 of 2003), as amended, as well as the Public Finance Management Act, 1999 (Act 1 of 1999), as amended.

One of the greatest challenges currently facing South Africa is the requirement to significantly reduce the level of carnage on its roads. Government has therefore introduced, under the auspices of the Road Traffic Management Corporation, the AARTO project which is intended to combat this problem by, inter alia, requiring that certain law enforcement technology and sound administration management systems are in place. By virtue of its services and technology offering, TCS is well positioned to become the Government’s service provider of choice in order to implement the changes required by the AARTO project. The directors are very optimistic about the future prospects of TCS and have established a fully fledged “Marketing and Business Development” division to identify products and methods that may be used to convert existing clients to full Service Centre Contract clients as well as to service municipalities that are not currently utilising any of TCS’ current service offerings.


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The launch and roll-out of TCS’ X-Act Contravention System, which will be completed by the end of 2008, has been aligned to the National Government’s AARTO project and will be implemented and fully tested on clients of varying size. Added service offerings include a National database, which will register all offences that occur nationally, irrespective of jurisdiction, as well as a Habitual Offender’s database, both of which make provision for the “Demerit points system” that is to be implemented as part of the AARTO project. An in-house “Research & Development” division has also been established to evaluate and develop road traffic management and camera technology for the future requirements of the South African as well as international markets. TCS will begin to market its in-house camera, “Artemis”, during 2008.

The revenue and risk management market in the Government-run consumer sector is currently estimated at more than R50 billion rand (excluding utilities). TCS’ diversification strategy, to provide risk and revenue management solutions to assist National and Local Government as well as all utility providers in managing risk and revenue, will position TCS well for providing such solutions to National and Local Government. TCS will achieve this by leveraging off its existing back-office risk and revenue management expertise, low cost delivery systems and extensive databases. By maintaining its current market share in the traffic law enforcement market, increasing its involvement in revenue and risk management and exploring an international roll-out of its services, for which it has had several enquiries from neighbouring countries, the Middle East and Europe, TCS should achieve significantly higher margins while simultaneously improving its bottom line.

5. SUMMARY OF HISTORICAL AND FORECAST INCOME STATEMENTS

The summarised historical and forecast financial information of TCS for the financial year ended 28 February 2007 and the financial years ending 29 February 2008 and 28 February 2009, the preparation of which is the responsibility of the directors, is set out below. The financial information must be read in conjunction with the independent reporting accountants’ reports thereon reproduced in Annexures 4 and 5. 5.1 Extracts from the historical and forecast income statements

Audited

February 2007

R’000

Forecast February

2008 R’000

Forecast February

2009R’000

Revenue 114 696 118 629 161 660

Cost of sales (531) (1 299) (1 546)

Gross profit 114 165 117 330 160 114

Other income 332 87 96

Operating costs (83 881) (84 904) (111 648)

IFRS 2 charge - (16 100) -

Operating profit 30 616 16 413 48 562

Interest received 372 377 2 200

Finance costs (1 904) (3 367) (4 592)

Profit before taxation 29 084 13 423 46 170

Taxation (10 800) (14 167) (13 927)

Consolidated group profit/(loss) after tax 18 284 (744) 32 243Dividends paid 8 670 5 000 5 342

Profit after tax attributable to:


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Equity holders of the company 10 729 (7 312) 32 243

Minority interest 7 555 6 568 -

Reconciliation of adjusted earnings

Earnings attributable to ordinary equity holders 10 729 (7 312) 32 243

Adjustments:

IFRS 2 charge - 16 1001 -

Management contract cancellation costs - 3 6532 -

STC on share repurchase - 2 6003 -

STC on special dividend - 1 8004 -

Adjusted earnings attributable to ordinary equity holders 10 729 16 841 32 243Pro forma weighted average number of ordinary shares in issue (‘000) 383 722

383 670 426 122

Pro forma earnings per ordinary share (cents)2 4.8 (0.2) 7.6

Pro forma adjusted earnings per ordinary share (cents)2 4.8 6.1 7.6

Pro forma dividends per ordinary share (cents) 2.3 1.3 1.3

The adjustments detailed above are comprised of the following:

1. IFRS 2: Share Based Payments charge relating to the acquisition of shares in TCS by Mvela and the subsequent issue of preference shares in settlement of the specific repurchase;

2. the impact of costs incurred on the cancellation of the management contracts;

3. STC on the share repurchase from Mvela; and

4. STC on the dividend of R18 million declared.

Notes: 1. The pro forma weighted average number of ordinary shares in issue at 28 February 2007 is based on the increase

in and the sub-division of the ordinary shares in issue at the last practicable date as set out in paragraph 23.3 of this prospectus after taking into account the repurchase of shares from Mvela and issue of new shares to Labat, Mvela and the vendors, as set out in paragraph 23 of this prospectus.

2. The pro forma earnings per share is based on the consolidated profit of the group, consequently including the minority interest.

3. The assumptions on which the forecast income statements are based are set out in paragraph 12.2 of this prospectus.

4. The above forecast income statements take into account the effects of the anticipated issue of ordinary shares detailed in paragraph 12.3.

5. The acquisition of the minority interests took place during the 2008 financial year in terms of the restructuring and listing. The dividend payable is in terms of the shareholders and listing agreements.

6. The anticipated dividend policy of TCS will initially be to maintain a dividend cover of 6. . 6. PURPOSE OF THE PRIVATE PLACEMENT AND THE LISTING

6.1 The purpose of the private placement is: - to fund future growth which will be both organic and acquisitive; - to invest in additional infrastructure; and - to enhance TCS’ company profile, increase its brand recognition and illustrate a greater level of

credibility, transparency and trust, which will be advanced through a listing on the JSE.


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6.2 The private placement is made up of an offer by TCS for the subscription of 42 553 192 ordinary shares at an issue price of 47 cents per ordinary share and an offer for sale by the vendors, pro-rata to their shareholding in TCS, of 42 553 192 ordinary shares at a price of 47 cents per ordinary share. A total of R20 million, before issue and listing expenses, will be raised by the company in terms of the offer for subscription to selected private individuals, corporations and institutions which are deemed to be public in terms of the Listings Requirements. The proceeds of the private placement will be applied firstly to the offer for subscription (R20 million), which will allow the company to achieve its objectives as set out in paragraph 6.1 above. Thereafter, the proceeds of the private placement will be applied to the offer for sale (R20 million), which will allow the vendors to realise some of their investment in the company and improve the public spread of TCS’ ordinary shares.

6.3 Those private individuals, corporations and institutions who have been invited to apply should do so by completing the attached private placement application form in accordance with the provisions of this prospectus and the instructions contained in the attached private placement application form.

6.4 No offer will be made to the general public in terms of the private placement. The private placement will be made to selected applicants only.

6.5 Subject to the achievement of the required spread of public shareholders, the JSE has formally approved the listing of 426 122 223 ordinary shares in the share capital of TCS on AltX. It is anticipated that the listing of the TCS shares on AltX will become effective from the commencement of business on Monday, 7 April 2008. The shares will trade under the abbreviated name “TCS” with the JSE code “TCS” and ISIN ZAE000116208.

7. DETAILS OF THE UNBUNDLING

TCS will be unbundled from Labat to continue the process of unlocking shareholder value through the restructuring of the Labat group. The general meeting to vote on the unbundling will be held on Tuesday, 18 March 2008.

The unbundling will take the form of a distribution in specie by Labat to Labat shareholders of the TCS distribution shares in the ratio of one TCS share for every Labat share held. This unbundling will be effected in terms of section 90 of the Act and in accordance with section 46 on the Income Tax Act.

8. DETAILS OF THE PRIVATE PLACEMENT

8.1 Salient features

8.1.1 The salient features of the private placement are as follows:

Offer price per ordinary share (cents) 47Par value per ordinary share (cents) 0.01Premium per ordinary share (cents) 46.99

Number of ordinary shares offered by the company for subscription in terms of the private placement 42 553 192Issue consideration to be received by the company before expenses R20 million

Number of ordinary shares offered for sale by the vendors in terms of the private placement 42 553 192 Total consideration to be received by the vendors before expenses R20 million

8.1.2 The opening and closing dates of the private placement are as follows: 2008

Opening date of the private placement at 09:00 on Friday, 29 FebruaryClosing date of the private placement at 12:00 on Thursday, 27 March Anticipated listing date on AltX at commencement of trade on Monday, 7 April


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8.1.3 The placement will not be underwritten and is not subject to a minimum subscription being achieved. The proceeds received in terms of the private placement will be applied firstly to the offer for subscription and thereafter to the offer for sale. Applications for ordinary shares in TCS must be for a minimum of 5 000 ordinary shares and in multiples of 1 000 ordinary shares thereafter.

9. COPIES OF THE PROSPECTUS

Copies of this prospectus, in English, may be obtained during business hours, prior to the closing of the private placement from the registered office of TCS, the Designated Adviser and the transfer secretaries, details of which are set out in the “Corporate information” section of this prospectus.


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IMPORTANT DATES AND TIMES

2008

Abridged prospectus released on SENS on Friday, 29 February

Opening date of the private placement at 09:00 on Friday, 29 February

Closing date of the private placement at 12:00 on Thursday, 27 March

Payment to be received by 12:00 on Tuesday, 1 April

Listing of TCS on AltX at commencement of trade on Monday, 7 April

Accounts at CSDP or broker updated in respect of dematerialised shareholders on Monday, 7 April

Posting of share certificates in respect of certificated shareholders on or about Monday, 7 April

Notes:

1. The above dates are subject to change. Any such change will be released on SENS.

2. Shareholders wishing to receive ordinary shares in dematerialised form must advise their CSDP or broker of their acceptance of the offer to subscribe for or to purchase shares in the manner and within the cut-off time stipulated by their CSDP or broker.


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DEFINITIONS

In this prospectus, the Annexures and the private placement application form attached hereto, unless the context indicates otherwise, references to the singular include the plural and vice versa, words denoting one gender include the others, expressions denoting natural persons include juristic persons and associations of persons and vice versa, and the words in the first column hereunder have the meanings stated opposite them in the second column, as follows:

“AARTO” Administration Adjudication of Road Traffic Offences Act, 1998 (Act 46 of 1998), as amended, which Act comes into force on 1 February 2008;

“acquisition agreement” the written agreement governing the acquisition of Total Computer Services entered into on 29 September 2007;

“acquisition of Total Computer Services shares”

the acquisition by the company of the entire issued share capital Total Computer Services shares from the minority shareholders, being The Birkholtz Family Trust (Master’s reference IT/1974/00) and Jacobus Hermanus Taljaard (Identity number 5210025058082), the details of which transaction are set out in a circular to Labat shareholders dated 28 November 2007 and in paragraph 26.4 hereof, pursuant to which Total Computer Services was constituted as a wholly owned subsidiary of the company;

“Act” the Companies Act, 1973 (Act 61 of 1973), as amended;

“AltX” the Alternative Exchange of the JSE;

“applicants” selected private individuals, corporations and institutions, which are deemed to be public in terms of the Listings Requirements, who have been invited to subscribe for or purchase ordinary shares in terms of the private placement;

“auditors” or “independent reporting accountants”

PricewaterhouseCoopers, Registered Auditors (Registration number 1998/012055/21);

“BBBEE” the economic empowerment of all black people, including women, workers, youth, people with disabilities and people living in rural areas, through diverse but integrated socio-economic strategies as defined in the Broad-Based Black Economic Empowerment Act, 2003 (Act 53 of 2003);

“business day” any day other than a Saturday, Sunday or a public holiday in South Africa;

“certificated shareholders” holders of certificated ordinary shares;

“certificated shares” ordinary shares which have not yet been dematerialised, title to which is represented by physical documents of title;

“CIPRO” Companies and Intellectual Property Registration Office (formerly the Registrar of Companies);

“common monetary area” South Africa, the Republic of Namibia and the Kingdoms of Swaziland and Lesotho;

“CSDP” a Central Securities Depository Participant, accepted as a participant in terms of the Securities Services Act, 2004 (Act 36 of 2004), as amended, appointed by an individual shareholder for purposes of, and in regard to the dematerialisation of documents of title for purposes of incorporation into Strate;

“dematerialised shareholder”

a holder of dematerialised ordinary shares;

“dematerialised shares” ordinary shares which have been incorporated into Strate and which are no longer evidenced by physical documents of title, but the evidence of ownership of which is determined electronically and recorded in a sub-register maintained by a CSDP;

“Designated Adviser” Merchant Sponsors (Proprietary) Limited (Registration number 2003/005493/07),


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a company incorporated in accordance with the laws of South Africa, and a Designated Adviser as contemplated in the Listings Requirements;

“directors” or “board” the directors of the company whose details are set out in Annexure 1 to this prospectus;

“documents of title” share certificates, certified transfer deeds, balance receipts and/or any other acceptable form of documents of title in respect of shares;

“EBITDA” earnings before interest, tax, depreciation and amortisation;

“emigrant” an emigrant from South Africa whose address is outside the common monetary area;

“Exchange Control Regulations”

the Exchange Control Regulations, promulgated in terms of Section 9 of the Currency and Exchanges Act, 1933 (Act 9 of 1933), as amended;

“Government” the Government of South Africa;

“IFRS” International Financial Reporting Standards, which comprise standards and interpretations approved by the International Accounting Standards Board, International Financial Reporting Interpretations Committee and International Accounting Standards, and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee;

“incorporation” the date of incorporation of TCS, being 14 December 1998;

“JSE” JSE Limited (Registration number 2005/022939/06), a public company duly incorporated in accordance with the laws of South Africa and licensed as an exchange under the Securities Services Act, 2004 (Act 36 of 2004);

“Labat” Labat Africa Limited (Registration number 1986/001616/06), a public company duly incorporated in accordance with the laws of South Africa on 21 April 1986, and listed on the Venture Capital Market of the JSE;

“Labat management agreement”

the management agreement concluded between the company and Labat dated 1 March 2006 in terms whereof Labat provided certain management and advisory services to the company, including, inter alia, strategic management advice from B G van Rooyen and D J O’Neill, financial, sales and marketing advice, client liaison and troubleshooting (as required), and further allows for a representative of Labat to act as executive chairman of the board of directors, which management and advisory services were provided in exchange for payment of a management fee equal to R2 400 000 (excluding VAT) per annum;

Landers and Kent Landers and Kent (Proprietary) Limited (Registration number 1994/010329/07) formerly known as Labat Anderson SA (Proprietary) Limited, a private company duly incorporated in accordance with the laws of South Africa on 12 December 2004, which as at the last practicable date held 45.7% of the issued ordinary share capital of Labat;

“last practicable date” the last practicable date prior to the finalisation of this prospectus, being Friday, 22 February 2008;

“the listing” the proposed listing on AltX of the entire issued ordinary share capital of TCS, being 426 122 223 ordinary shares, on Monday, 7 April 2008;

“Listings Requirements” the Listings Requirements of the JSE, as amended from time to time by the JSE;

“LTS transaction” the acquisition by Mvela of a 49% shareholding in the company, the subscription for 2 600 preference shares in the company by Mvela and the repurchase by the company of 21,54% of its issued ordinary shares from Mvela, the details of which transaction are set out in a circular to Labat shareholders dated 27 September 2007;

“Mvela” Mvelaphanda Holdings (Proprietary) Limited (Registration number 1997/021524/07), a private company duly incorporated in accordance with the


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laws of South Africa on 12 October, 1997;

“Mvela management agreement”

the management agreement concluded between the company and Mvela dated 25 October 2007 in terms whereof Mvela provided certain management and advisory services to the company including, inter alia, strategic management advice, financial, sales and marketing advice, troubleshooting (as required) and client liaison, which management and advisory services were provided in exchange for payment of a monthly management fee of R110 000 (excluding VAT);

“non-resident” a person whose registered address is outside the common monetary area and who is not an emigrant;

“offer for sale” an offer forming part of the private placement, in terms of which the vendors are offering 42 553 192 ordinary shares for sale at a price of 47 cents per ordinary share;

“offer for subscription” an offer forming part of the private placement, in terms of which the company is offering 42 553 192 new ordinary shares for subscription at an issue price of 47 cents per ordinary share;

“the offers” collectively, the offer for sale and the offer for subscription;

“ordinary shares” ordinary shares with a par value of 0.01 cent each in the share capital of the company;

“own-name registration” shareholders who hold/will hold ordinary shares which have been dematerialised and are recorded by a CSDP on the sub-register kept by that CSDP in the name of such shareholder;

“preference shares” the 2 600 12% cumulative redeemable preference shares of 100 cents each in the company, having attached to them the rights and privileges set out in Annexure 9 to this prospectus;

“private placement” or “placement”

the private placement of 85 106 384 ordinary shares in terms of the offer for sale and the offer for subscription at 47 cents per ordinary share to selected institutions, corporations and individuals, which are deemed to be public in terms of the Listings Requirements for cash;

“private placement application form”

the application form in respect of the private placement, attached to and forming part of this prospectus;

“prospectus” this bound document, issued on Friday, 29 February 2008, including all Annexures and the private placement application form attached hereto;

“Rand” or “R” or “cents” the official currency of South Africa;

“regional partner agreement”

the agreement entered into between the company, Labat, Mvela, Tuscan and the vendors on 11 October 2007 pursuant to which: - the rights and obligations of Labat under the Labat management agreement

and the Tuscan agreement (following the implementation of the Tuscan assignment) were assigned to the company; and

- the rights and obligations of Mvela under the Mvela management agreement were assigned to the company,

thereby effectively cancelling the Labat management agreement, the Mvela management agreement and the Tuscan agreement;

“SAMES” South African Micro Electronic Systems (Proprietary) Limited (Registration number 1978/001964/07), a wholly owned subsidiary of Labat and a private company duly incorporated in accordance with the laws of South Africa on 7 June 1978;

“SARB” the South African Reserve Bank;

“SENS” Securities Exchange News Service of the JSE;

“shareholders” holders of ordinary shares in the company ;


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“South Africa” the Republic of South Africa;

“Strate” the settlement and clearing system used by the JSE, managed by Strate Limited (Registration number 1998/022242/06), a public company duly incorporated in accordance with the laws of South Africa;

“sub-register” the record of dematerialised shares administered and maintained by a CSDP and which forms part of the company’s register of members as defined in the Act, excluding any nominees;

“subscription agreement” the written agreement governing the issue of preference shares, entered into between Mvela, Labat and the company on 13 June 2007, and any addenda thereto;

“TCS” or “the company” Total Client Services Limited (Registration number 1998/025018/06), duly incorporated in accordance with the laws of South Africa on 14 December 1998 with the name Labat Traffic Solutions (Proprietary) Limited, which changed its name to Total Client Services (Proprietary) Limited on 7 November 2007 and was converted to a public company on 14 February;

“TCS distribution shares” TCS ordinary shares of 0.01 cent each distributed to each Labat shareholder in terms of the unbundling;

“Total Computer Services” Total Computer Services (Proprietary) Limited (Registration number 1979/005478/07) a private company duly incorporated in accordance with the laws of South Africa on 3 October 1979 and following the implementation of the acquisition agreement, a wholly owned subsidiary of the company;

“transfer secretaries” Computershare Investor Services 2004 (Proprietary) Limited (Registration number 2004/003647/07), a private company duly incorporated in accordance with the laws of South Africa;

“Tuscan” Tuscan Mood 242 (Proprietary) Limited (Registration number 2003/014270/07), a private company duly incorporated in accordance with the laws of South Africa;

“Tuscan agreement” the agreement concluded between the company and Tuscan dated 13 July 2004 in terms whereof Tuscan supplied certain services to the company including, inter alia, liaison with the City of Cape Town Metropolitan Municipality on behalf of the company, the maintenance of a local business presence within the City of Cape Town on behalf of the company and the responsibility for the management of stakeholder interests, which services were provided in exchange for an annual fee equal to R3 000 000 (excluding VAT). In terms of the Tuscan agreement, the company cooperated with Tuscan in the provision of electronic traffic enforcement facilities to the City of Cape Town including, inter alia, the supply, maintenance and support of traffic cameras, the provision of a centralised back office facility, and the support of the law enforcement operations of the City of Cape Town with licence plate recognition systems;

“Tuscan Assignment” the agreement concluded between Labat and Tuscan dated 23 October 2007 in terms whereof Tuscan assigned all of its rights under the Tuscan agreement to Labat in consideration for which Labat issued shares in itself to Tuscan;

“unbundling” the proposed unbundling of TCS by way of a distribution in specie by Labat to Labat shareholders of the TCS distribution shares in terms of section 90 of the Act and in accordance with section 46 of the Income Tax Act, 1962 (Act 58 of 1962), as amended, in the ratio of one TCS distribution share for every Labat share held at close of business on the record date, being Friday, 11 April 2008; and

“vendors” collectively, the trustees NNO of The Birkholtz Family Trust (Master’s reference IT/1974/00) and Jacobus Hermanus Taljaard (Identity number 5210025058082).


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TOTAL CLIENT SERVICES LIMITED

(Formerly Labat Traffic Solutions (Proprietary) Limited) Incorporated in the Republic of South Africa

(Registration number 1998/025018/06) Share code: TCS ISIN: ZAE000116208

(“TCS” or “the company”)

Directors

* Non-executive

PROSPECTUS

1. INTRODUCTION

TCS has been in operation for 28 years providing technology, proprietary application software and specialised services to the South African Government. The company has a national presence in the traffic management industry, currently providing complete solutions to its clients at over 112 sites. To date, no single competitor has been able to match the unique end-to-end solutions offered by TCS. TCS plans to extend its offering to include risk and revenue management services to both public and private sectors. With nearly 2 000 users countrywide within Municipalities and Provinces, the TCS professional team of management, developers and support personnel, are dedicated to the design, development, installation, training and supporting of traffic systems. The strategic direction of TCS is to be the leader in the industry, providing road traffic management technology on a diversified basis, to ensure that is caters for the present and future requirements of Local, Provincial and National Government. TCS’ head office is located in Irene, Pretoria and since 2004 the staff complement has increased by 50%. Currently, the group employs 234 staff placed on a national basis – most of whom come from previously disadvantaged communities.

2. INCORPORATION AND HISTORY

Total Computer Services, a wholly owned subsidiary of TCS, was incorporated in 1979 and commenced business as a software house specialising in the development of unique applications and ERP business solutions. The company was incorporated on 14 December 1998 with the name Labat Traffic Solutions (Proprietary) Limited, as an unlisted subsidiary of Labat, to conduct business as providers of highly sophisticated, unique technology solutions and proprietary software to Local and Provincial Government law enforcement departments, thereby enabling these departments to obtain state of the art systems and technology with which to maximise revenue and minimise the risks involved in debt collection.

In 1989, Total Computer Services was awarded the tender by CSIR/National Department of Transport for the development of the first Traffic Contravention System for traffic law enforcement. Following the

G N Sam* Non-executive Chairman A S Mohamed Chief Executive Officer M Reichenberg Financial Director B N Birkholtz J H Taljaard L Sipoyo*


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installation of the Traffic Contravention System 18 years ago, the nature of Total Computer Services’ business evolved into that of a services business, dedicated largely to the Traffic Profession in Southern Africa.

Subsequent to the acquisition by the company in 2002 of 51% of the entire issued share capital of Total Computer Services, the company has also been able to offer its clients a fully comprehensive back-office administrative function and a number of payment methods whereby traffic fines can be settled via various electronic channels, directly to the issuing authority, resulting in an end-to-end solution for its clients.

On 27 July 2007, it was announced on SENS that various agreements pertaining to the LTS transaction, the particulars of which are detailed in a circular to Labat shareholders dated 27 September 2007, had been concluded.The LTS transaction constituted the first step towards increasing the company’s BEE profile by introducing Mvela as a strategic partner in the company, thus positioning the company for a separate listing on the AltX. At a general meeting of Labat shareholders held on 12 October 2007, Labat shareholders voted in favour of the resolutions required to implement the LTS transaction. Subsequently, it was announced on SENS on 23 November 2007 that in order to restructure both the company and Total Computer Services under the leadership of one management team, an agreement had been reached between the company, Total Computer Services (a 51% owned subsidiary of the company) and the minorities in Total Computer Services, in terms of which the company would acquire all of the issued ordinary shares in Total Computer Services held by the minority shareholders, being 49% of the issued share capital of Total Computer Services. In exchange for their respective shareholdings in Total Computer Services, the minorities would each be allotted and issued such number of consideration shares in the company as would equate to 11,5% of the total issued ordinary share capital in the company after the issue of such consideration shares.

In terms of the regional partner agreement, the company effectively cancelled,the Labat management agreement and the Mvela management agreement, in exchange for the issue and allotment of shares in the company constituting 2,4% and 0,6%, respectively, of the total issued ordinary share capital in the company after the issue of such shares to Labat and Mvela. Further, following the cession and assignment by Tuscan to Labat of its rights under the Tuscan agreement pursuant to the Tuscan assignment, in terms of the regional partner agreement, the company effectively cancelled the Tuscan agreement in exchange for the issue and allotment of such number of ordinary shares in the company constituting 3% of the total issued ordinary share capital in the company to Labat after the issue of such shares, following which the company cancelled the Tuscan management agreement.

The acquisition of Total Computer Services and the effective cancellation of the management agreements, the full particulars of which are set out in a circular to Labat shareholders dated 28 November 2007 and in paragraphs 26.4 and 26.5 of the prospectus, is a continuation of the strategy of the board of directors of Labat to unlock shareholder value through the restructuring of the group, thus positioning the restructured and amalgamated company for a separate listing on the AltX under the name ‘Total Client Services’ (“TCS”). On 7th November, 2007 the company changed its name to Total Client Services (Proprietary) Limited and on 14 February 2008 the company was converted to a public company. The company intends to become the solutions provider of choice to all Local and Provincial Government law enforcement agencies following the coming into force of the AARTO legislation. It will also pursue other revenue streams, such as traffic flow management, both within the public and private sectors.

The listing will allow for the unbundling of the shares in the newly listed company to the Labat shareholders and the delisting of Labat from the JSE.

3. INDUSTRY BACKGROUND

The biggest driver in the traffic law enforcement industry is the willingness of offenders to pay their traffic fines. All clients insist that service providers such as TCS must be tied into performance management agreements as these clients are not satisfied with merely renting equipment and software from service providers. This is indicative of the lack of skills and resources in the municipal traffic departments. Service


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providers are accordingly required to share in the risk of recovering payment of fines. This also underlines the importance of TCS having control over the back office function so as to minimise risk and maximise revenue. Payment of traffic fines depends upon the offenders’ perceptions towards the matter. If it is perceived that offenders are not obliged to pay fines and can get away with the offences, payments drop drastically. This perception is heavily influenced by the media which is why one of the company’s ten key performance indicators is a comprehensive, integrated communication strategy. This approach is further reinforced by TCS in the form of visible policing in the form of regular road blocks, and effective summons serving. The most important external factor which will affect the industry in the foreseeable future is the advent of the AARTO project legislation, approved by parliament in 1998. The AARTO Act of 1998 has two important impacts on traffic law and fine enforcement:

- Traffic offences are decriminalised

This means that offenders will no longer be prosecuted under the Criminal Procedures Act with a prison sentence as the ultimate punishment. Traffic offences will result in commercial judgements in favour of law enforcement agencies, who can therefore move to attach property to settle outstanding fines; and

- The legislation comes with a penalty system with demerit points being applied to offenders for various infringements

Demerits may be rehabilitated every three months for good driving behaviour, but persistent infringements resulting in more than 12 demerits may lead to the suspension or loss of a driver’s licence.

Although not yet enacted, the implementation of the above measures is expected to result in a rush of payments of traffic fines, which will in turn impact favourably on TCS’ financial results. The commercialisation of the process further opens the door for TCS to participate in the industry. A pilot project relating to the legislation is expected to commence in Pretoria during 2008, but the legislation is not expected to be fully rolled out for at least 5 years. On Monday, 9 October 2007 the Advanced Traffic Management Systems was officially launched in Johannesburg. The primary purpose of the project is to use Intelligent Transportation Systems to assist the City in maximising the operational performance and reliability of all aspects of the road network with an emphasis on public transport through the modernisation of the current traffic management system. An estimated R116 million has been set aside by Government, over the next financial year, for the implementation of the project. Work being undertaken in order to implement the project includes: • the installation of 700 overhead light-emitting diodes around the city; • the roll-out of 160 controllers in February 2008 as part of the Remote Monitoring System; • variable message signs that have been set up on the N1, M1 and M2 highways; • the installation of 13 CCTV cameras along the M1 highway and 62 CCTV cameras along the M2

highway; and • the upgrading of the traffic signal system.

4. NATURE OF BUSINESS

The company provides technology, proprietary application software and administration services as an integrated solution to Local Authorities and Provincial Administrations involved in the business of law enforcement. The company provides an end-to-end solution, which allows it to provide both effective delivery and support. The technology products provided by the company include road traffic equipment which is required to measure speed, traffic flow patterns and detect offender vehicles on the road. These products are


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sourced from local as well as international suppliers to ensure the best possible combination of products to satisfy the client’s requirements. The company’s application software products have been developed following exhaustive in-house research and development to cater for a wide range of traffic management applications. These include, inter alia;

- Traffic Contravention Systems, which address all aspects of an offence, including the commission of the offence, the administration of the offence as well as all court related processes relating to the offence;

- Image databases which have been developed to store photo images of an offence for viewing by the public either at a Traffic Department or via electronic media;

- Accident Management Systems which were designed to maintain a register of offences within the client’s jurisdiction in order to analyse accidents to provide essential information to manage problem locations within given localities; and

- A Central National Database of outstanding fines which was developed so that fines could be paid through Banks, EasyPay and Post Offices.

Full Service Centre Contracts are also available from the company, whereby the company provides various back-office solutions in addition to the above technology and software to clients, such contracts providing a complete end-to-end solution, where required by the client. The solutions offered to Local and Provincial Government departments are such that the company eliminates the clients’ risk by bearing the total cost of the introduction and implementation of the solution, enabling municipalities to concentrate on their traffic law enforcement objectives, rather than the administration of the offences that result. The company’s revenue is earned on a fixed fee basis, when the traffic offence fine is settled, promoting its performance and commitment to the joint venture partnership process.

5. PROSPECTS

The traffic law enforcement market, based on the number of fines issued, is presently worth approximately R5.4 billion. The company currently holds a 57% share of the contracted market, with the intention of further capturing the remaining contracted and locally managed market through its supply of superior technology, services and support. The uncontracted market will be targeted by addressing the current processing inefficiencies that exist and improving these processes, thereby ensuring a higher volume throughput of transactions via the company’s system.

The company is a strong cash generator and thus no additional outside funding is required to upgrade its existing technology and facilities. The company believes that it will be able to fund all incidental capital expenses from cash resources generated from internal operations.

All start-up costs and historical capital expenditure associated with the implementation of tender contracts and new contracts have been completed, thus allowing the company to shift focus to cash collection efficiencies in respect of traffic fines as well as the introduction and expansion of cost-effective and efficient payment methods such as via ATMs, the post office, supermarkets and the internet.

All the company’s contracts with Local and Provincial Government authorities are now fully compliant with the rules and regulations of the Municipal Finance Management Act, 2003 (Act 52 of 2003), as amended, as well as the Public Finance Management Act, 1999 (Act 1 of 1999), as amended.

One of the greatest challenges currently facing South Africa is the requirement to significantly reduce the level of carnage on its roads. Government has therefore introduced, under the auspices of the Road Traffic Management Corporation, the AARTO project which is intended to combat this problem by, inter alia, requiring that certain law enforcement technology and sound administration management systems are in place. By virtue of its services and technology offering, the company is well positioned to become


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Government’s service provider of choice in order to implement the changes required by the AARTO project. The directors are very optimistic about the future prospects of the company and have established a fully fledged “Marketing and Business Development” division to identify products and methods that may be used to convert existing clients to full Service Centre Contract clients as well as to service municipalities that are not currently utilising any of the company’s current service offerings. In this regard, the company has recently commenced the rolling out of its Windows-based version of the back-office system in a number of pilot installations to aid in the conversion of existing clients and the servicing of new clients. The launch and roll-out of the company’s X-Act Contravention System, which will be completed by the end of 2008, has been aligned to the National Government’s AARTO project and will be implemented and fully tested on clients of varying size. Added service offerings include a National database, which will register all offences that occur nationally, irrespective of jurisdiction, as well as a Habitual Offender’s database, both of which make provision for the “Demerit points system” that is to be implemented as part of the AARTO project. An in-house “Research & Development” division has also been established to evaluate and develop road traffic management and camera technology for the future requirements of the South African as well as international markets. The company will begin to market its in-house camera “Artemis”, during 2008. The revenue and risk management market in the Government-run consumer sector is currently estimated at more than R50 billion rand (excluding utilities). The company’s diversification strategy, to provide risk and revenue management solutions to assist National and Local Government as well as all utility providers in managing risk and revenue will position it well for providing such solutions to National and Local Government. The company will achieve this by leveraging off its existing back-office risk and revenue management expertise, low cost delivery systems and extensive databases.

By maintaining its current market share in the traffic law enforcement market, increasing its involvement in revenue and risk management and exploring an international roll-out of its services, for which it has had several enquiries from neighbouring countries, the Middle East and Europe, the company should achieve significantly higher margins while simultaneously improving its bottom line.

6. MAJOR SHAREHOLDERS

6.1 Save as set out in the table below, there are no shareholders who were, directly and/or indirectly beneficially interested in 5% or more of the issued ordinary share capital of TCS at the last practicable date and who will, as far as the directors of TCS are aware, hold 5% or more of the issued ordinary share capital of TCS following the private placement:

Name of shareholder

Percentage held before unbundling

Percentage held after

unbundling

Percentage held before

private placement


private placement

Number of shares

after private

placement

Labat 51.4 0.0 0.0 0.0 0.0

Isingqi Investment Holdings (Proprietary) Limited1 20.5 20.5 20.5 18.4 78 554 938

Masazane Capital (Proprietary) Limited 5.1 5.1 5.1 4.6 19 638 734

Jacobus Hermanus Taljaard* 11.5 11.5 11.5 5.4 22 833 843

The Birkholtz Family Trust** 11.5 11.5 11.5 5.4 22 833 843

Landers and Kent 0.0 23.5 23.5 21.1 90 106 335

* Directors of the company. 1 L Sipoyo, a non-executive director of TCS, is a director of Isingqi Investment Holdings (Proprietary) Limited.


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** Brian Noel Birkholtz who is a director of the company, is a trustee and beneficiary of The Birkholtz Family Trust.

6.2 Pursuant to the private placement, the company will have a public shareholding of at least 100 shareholders that will hold a minimum of 10% of the ordinary shares on the day of listing. Labat is the current controlling shareholder. After the unbundling and listing, Landers and Kent will be the major shareholder. There will be no controlling shareholder after the unbundling and listing.

6.3 There will be no change in the major shareholding as a result of the private placement.

6.4 There have been no changes in the controlling shareholders and trading objects of TCS during the last five years subsequent to the unbundling.

7. DIRECTORS AND EXECUTIVE MANAGEMENT

Details of the directors and executive management, including the appointment, remuneration, borrowing powers of directors and directors’ interests and declarations are set out in Annexure 1.

8. PURPOSE OF PLACEMENT AND LISTING ON ALTX

8.1 The purpose of the private placement is: - to fund future growth which will be both organic and acquisitive; - to invest in additional infrastructure; and - to enhance TCS’ company profile, increase its brand recognition and illustrate a greater level of

credibility, transparency and trust, which will be advanced through a listing on the JSE.

8.2 An amount of R20 million, before share issue and listing expenses, will be raised by the company by the issue of 42 553 192 ordinary shares for cash and an amount of R20 million will be realised by the vendors from the sale of 42 553 192 ordinary shares, to selected private individuals, corporations and institutions which are deemed to be public in terms of the Listings Requirements. The proceeds of the private placement will be utilised to achieve TCS’ objectives as set out in paragraph 8.1 above and to allow the vendors to realise some of their investment in the company.

8.3 Subject to the achievement of the required spread of public shareholders, the JSE has formally approved the listing of 426 122 223 ordinary shares in the share capital of TCS on AltX. It is anticipated that the listing of the TCS shares on AltX will become effective from the commencement of business on Monday, 7 April 2008. The shares will trade under the abbreviated name “TCS”, with the share code TCS and ISIN ZAE000116208.

8.4 TCS has shareholders’ funds in excess of R2 million in its reserves. Pursuant to the unbundling only, if no shares are placed in terms of the private placement, the company will have a public shareholding of at least 100 shareholders that will hold a minimum of 10% of the ordinary shares on the day of listing.

9. DETAILS OF THE UNBUNDLING

TCS will be unbundled from Labat to continue the process of unlocking shareholder value through the restructuring of the Labat group. The general meeting to vote on the unbundling will be held on Tuesday, 18 March 2008.

The unbundling will take the form of a distribution in specie by Labat to Labat shareholders of the TCS distribution shares in the ratio of one TCS share for every Labat share held. This unbundling will be effected in terms of section 90 of the Act and in accordance with section 46 on the Income Tax Act.


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10. DETAILS OF THE PRIVATE PLACEMENT

10.1 Salient features

10.1.1 The salient features of the private placement are as follows:

Offer price per ordinary share (cents) 47

Par value per ordinary share (cents) 0.01

Premium per ordinary share (cents) 46.99Number of ordinary shares offered by the company for subscription in terms of the private placement 42 553 192

Issue consideration to be received by the company before expenses R20 millionNumber of ordinary shares offered for sale by the vendors in terms of the private placement 42 553 192

Total consideration to be received by the vendors before expenses R20 million

10.1.2 The opening and closing dates of the private placement are as follows: 2008

Opening date of the private placement at 09:00 on Friday, 29 FebruaryClosing date of private placement at 12:00 on Thursday, 27 MarchAnticipated listing date on AltX at commencement of trade on Monday, 7 April

10.1.3 Those private individuals, corporations and institutions who have been invited to apply should do so by completing the attached private placement application form in accordance with the provisions of this prospectus and the instructions contained in the attached private placement application form.

10.1.4 No offer will be made to the general public in terms of the private placement. The private placement will be made to selected applicants only.

10.1.5 The ordinary shares issued in terms of the private placement will rank pari passu with all other ordinary shares issued by TCS.

10.2 Procedure for acceptance of the offers and for subscription or purchase of ordinary shares in TCS

10.2.1 Applications for the private placement must be made on the attached private placement application form provided to selected applicants. Photocopies or reproductions will be accepted. Each application will be regarded as a single application.

10.2.2 The rights granted to selected applicants in terms of the private placement may not be ceded, renounced or assigned in favour of any third party by the applicant to whom it is addressed.

10.2.3 The private placement shares may not be applied for in the name of a minor, deceased estate or partnership. Executors, trustees and individual partners may apply for private placement shares in their own name or through nominee companies. No documentary evidence of capacity need accompany the private placement application form, but the directors of TCS reserve the right to call upon any applicant to furnish such evidence for noting.

10.2.4 Private placement applications are irrevocable once received by the Designated Adviser.

10.2.5 No receipts will be issued for applications and/or payments received.

10.2.6 Applications must be for a minimum of 5 000 ordinary shares and in multiples of 1 000 ordinary shares thereafter.


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10.2.7 Ordinary shares will only be traded in electronic form and accordingly, all shareholders who elect to receive certificated shares will first have to dematerialise their share certificates should they wish to trade their shares. Applicants are advised that it takes between one and ten days to dematerialise their certificated shares depending on the volumes being processed by Strate at the time of dematerialisation.

10.2.8 Once allotment has been confirmed to applicants, payment should be made by bank guaranteed cheque (crossed “not transferable”), banker’s draft or electronic transfer (followed by fax or electronic proof of payment in the case of electronic transfers). Postal orders, cash, or telegraphic transfers will not be accepted. Cheques must be made payable in favour of “TCS Private Placement”. All cheques and banker’s drafts will be deposited by the Designated Adviser, immediately upon receipt, in a designated account under the control of TCS with a registered South African bank.

10.2.10 Private placement allocations will only be regarded as complete once payment for the total amount of the allocation has been received and the monies cleared. Should any cheque or banker’s draft subsequently be dishonoured, the company may, in its sole discretion, regard the relevant allocation as invalid or take such other steps in regard thereto as it may deem fit.

10.2.10 “Blocked Rand” may be used by emigrants and non-residents of the common monetary area for payment in terms of the private placement. In this regard, reference should be made to paragraph 10.11 below dealing with Exchange Control Regulations.

10.3 Application for dematerialised shares

Applicants who elect to receive their allocated ordinary shares in dematerialised form may do so, in which case the private placement application form and particularly the section in respect of their CSDP or broker must be completed and stamped or signed by the relevant CSDP or broker, and returned to the Designated Adviser:

if delivered by hand or courier: if posted: if faxed:

Designated Adviser Designated Adviser Designated Adviser Merchant Sponsors (Proprietary) Merchant Sponsors Merchant Sponsors Limited (Proprietary) Limited (Proprietary) Limited 2nd Floor, North Block PO Box 41480 Fax: 011 325 6362 Hyde Park Office Tower Craighall Corner 6th Road and 2024 Jan Smuts Avenue Hyde Park, Johannesburg, 2196

so as to be received by no later than 12:00 on Thursday, 27 March 2008. No late applications will be accepted.

10.4 Application for certificated shares

Applicants who elect to receive their allocated ordinary shares in certificated form may do so, in which case the private placement application form must be completed and returned to the Designated Adviser:



so as to be received by no later than 12:00 on Thursday, 27 March 2008.


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No late applications will be accepted.

10.5 Disadvantages of holding shares in certificated form

10.5.1 The current risks associated with the holding of shares in certificated form, including the risk of loss, in respect of tainted scrip, remain.

10.5.2 When a shareholder, holding certificated shares wishes to transact on the JSE, such shareholder will be required to appoint a CSDP or broker to dematerialise the relevant ordinary shares prior to his broker being able to transact in such shares. Such dematerialisation can take up to ten days. A certificated shareholder will have no recourse in the event of delays occasioned by the validation process or the acceptance or otherwise of his certificated shares by a CSDP.

10.6 Payment in respect of allotment of ordinary shares

10.6.1 Payment by electronic transfer

Successful applicants who have been allotted ordinary shares and who wish to pay for their allocation by way of electronic transfer may do so, in which case the proof of such payment by electronic transfer must be delivered by hand, posted or faxed to the Designated Adviser (and not the transfer secretaries) to:



so as to be received by no later than 12:00 on Tuesday, 1 April 2008.

10.6.2 Payment by electronic transfer must be made into the following bank account: Bank: Absa Bank Branch: ABS BBs Sandton Branch code: 632005 Account name: TCS Private Placement Account number: 4070651190

10.6.3 TCS accepts no responsibility and will not be liable for the correctness of any allocation of private placement shares pursuant to payment being made or alleged to have been made by way of electronic transfer due to proof of such payment not being received or purported proof of such payment being insufficient or defective or TCS, for any reason, not being able to reconcile a payment or purported payment with a particular application for private placement shares.

10.6.4 Payment by bank guaranteed cheque or banker’s draft Successful applicants who have been allotted ordinary shares and who wish to pay for their allocation by way of bank guaranteed cheque or banker’s draft may do so, in which case payment in the form of a bank guaranteed cheque or banker’s draft (crossed “not transferable” and drawn in favour of “TCS Private Placement”) must be delivered in an envelope marked “TCS Private Placement” to the Designated Adviser (and not the transfer secretaries):

Designated Adviser Merchant Sponsors (Proprietary) Limited 2nd Floor, North Block Hyde Park Office Tower Corner 6th Road and Jan Smuts Avenue


26

Hyde Park, Johannesburg, 2196 so as to be received by no later than 12:00 on Tuesday, 1 April 2008.

10.7 Reservation of rights

10.7.1 The directors of TCS reserve the right to accept or refuse any application(s), either in whole or in part, or to pro-rate any or all application(s) (whether or not received timeously) in such manner as they may, in their sole and absolute discretion, determine.

10.7.2 The directors of TCS reserve the right to accept or reject, either in whole or in part, any applications should the terms and the instructions contained in this prospectus and the instructions contained on the private placement application form not be properly complied with.

10.8 No minimum subscription

The private placement is not subject to a minimum subscription being achieved and is not underwritten.

10.9 Oversubscriptions

Should the private placement be oversubscribed, the directors of TCS reserve the right to allocate shares at their sole and absolute discretion.

10.10 Issue and transfer of private placement shares

10.10.1 All private placement shares subscribed for will be issued at the expense of TCS, and all private placement shares purchased will be transferred at the expense of the vendors.

10.10.2 All private placement shares to be issued are subject to the provisions of the memorandum and articles of association of TCS and will rank pari passu in all respects with the existing ordinary shares in issue. Annexure 1 contains relevant extracts from the articles of association of TCS.

10.10.3 The ordinary shares will only be traded on the JSE in electronic form and as such, all shareholders will have to dematerialise their shares should they wish to trade them. Applicants are advised that it takes between one and ten days to dematerialise certificated shares, depending on volumes being processed by Strate at the time of the dematerialisation.

10.10.4 The principle features of the Strate system are as follows:

− trades executed on the JSE must be settled within five business days; − penalties are levied for late settlement; − electronic record of ownership replaces share certificates and physical delivery of

certificates; and − all investors are required to appoint either a broker or CSDP to act on their behalf and

to handle all settlement requirements.

10.11 Exchange Control Regulations

The following summary is intended as a guide and is therefore not comprehensive. If you are in any doubt hereto, please consult your professional adviser.

10.11.1 A former resident of the common monetary area who has emigrated from South Africa may use blocked Rand to subscribe for ordinary shares in terms of this prospectus.

10.11.2 All payments in respect of ordinary shares by non-residents using blocked Rand must be made through an Authorised Dealer in foreign exchange.

10.11.3 All payments in respect of subscriptions for or purchase of shares by an emigrant, using emigrant blocked funds, must be made through the Authorised Dealer in foreign exchange controlling the blocked assets.

10.11.4 Share certificates issued in respect of certificated shares applied for using blocked Rand in terms of this prospectus will be endorsed “non-resident”. Such share certificates will be placed under the control of the Authorised Dealer through whom the payment was made.


27

Statements issued to non-resident dematerialised shareholders will be restrictively endorsed as “non-resident”.

10.11.5 Any shares issued pursuant to the use of emigrant blocked funds, will be credited to their blocked share accounts at the CSDP controlling their blocked portfolios.

10.11.6 If applicable, refund monies payable in respect of unsuccessful applications, emanating from blocked Rand accounts will be returned to the Authorised Dealer administering such blocked Rand accounts for the credit of such unsuccessful applicants’ blocked Rand account.

10.11.7 If applicable, refund monies payable in respect of unsuccessful applications or partly successful applications, as the case may be, for shares in terms of this prospectus emanating from emigrant blocked accounts, will be returned to the Authorised Dealer in foreign exchange through whom the payments were made, for credit to such applicants blocked accounts.

10.11.8 Applicants resident outside the common monetary area

A person who is not resident in the common monetary area should obtain advice as to whether any Governmental, and/or legal consent is required and/or whether any other formality must be observed to enable an application to be made in terms of the private placement.

This prospectus accordingly does not constitute an offer in any area or jurisdiction in which it is illegal to make such an offer. In such circumstances, this prospectus and the attached private placement application form are provided for information purposes only. All share certificates issued to non-residents of South Africa will be endorsed “non-resident” in terms of the Exchange Control Regulations. Statements issued to dematerialised shareholders will be restrictively endorsed as “non-resident”.

11. MATERIAL CHANGES

The directors report that there have been no material changes in the financial or trading position of TCS that has occurred since the end of the last financial period other than as disclosed in this prospectus.

TCS has not acquired any material assets from any vendor during the three years preceding the publication of this prospectus save for the acquisition of 49% of the issued share capital of Total Computer Services from the vendors in exchange for 23% of the issued share capital of TCS.

In linked agreements the company cancelled management agreements it had in place with Labat and Mvela.

Furthermore, Tuscan ceded its rights in and to the Tuscan management agreement to Labat, and in turn, Labat has assigned the ceded rights acquired in and to the Tuscan management agreement to TCS. TCS has since cancelled the Tuscan management agreement. Details of the above transactions are set out in a circular to Labat shareholders dated 28 November 2007.

12. PROFIT HISTORY, FORECASTS, UNAUDITED PRO FORMA FINANCIAL INFORMATION AND

DIVIDEND POLICY

12.1 Audited income statements for TCS for the three financial years ended 28 February 2007, 28 February 2006 and 28 February 2005 and reviewed interim income statement for the six months ended 31 August 2007

The audited historical financial information for TCS, the preparation of which is the responsibility of the directors, is presented in Annexure 2. Annexure 4 contains the independent reporting accountants’ report on the historical financial information of TCS. The reviewed interim financial statements are presented in Annexure 3. Annexure 5 contains the independent reporting accountants’ report on the reviewed interim financial information of TCS.


28

Reviewed six month

interimsAugust 2007

R’000

Audited 12 months

February 2007

R’000

Audited12 months

February 2006

R’000

Audited12 months

February 2005

R’000Revenue 56 294 114 696 104 145 51 309Cost of sales (699) (531) (469) (1 275)

Gross profit 55 595 114 165 103 676 50 034 Other income 516 332 186 579 Operating costs (42 559) (83 881) (68 249) (39 212)Operating profit 13 552 30 616 35 613 11 401 Interest received 137 372 - - Finance costs (984) (1 904) (1 827) (1 705)Profit before taxation 12 705 29 084 33 786 9 696 Taxation (3 345) (10 800) (11 223) (3 719)Consolidated group profit after tax 9 360 18 284 22 563 5 977

Dividends paid - 8 670 7 100 510


Equity holders of the company 5 645 10 729 15 248 4 702

Minority interest 3 715 7 555 7 315 1 275

Pro forma weighted average number of ordinary shares in issue (‘000) 383 722 383 722 383 722 383 722

Pro forma earnings per ordinary share (cents) 2.4 4.8 5.9 1.6Pro forma dividends per ordinary share (cents) - 2.5 2.0 0.1

Notes: 1. The pro forma weighted average number of ordinary shares in issue at 28 February 2007 is based on

the increase in and the sub-division of the ordinary shares in issue at the last practicable date as set out in paragraph 23.3 of this prospectus after taking into account the repurchase of shares from Mvela and the issue of new shares to Labat, Mvela and the vendors, as set out in paragraph 23 of this prospectus.

2. The pro forma earnings per share is based on the consolidated profit of the group, consequently including the minority interest

3. The actual number of ordinary shares in issue, earnings per ordinary share and headline earnings per ordinary share calculations are set out in Annexure 2.

4. The anticipated dividend policy of TCS will initially be to maintain a dividend cover of 6.

12.2 Profit forecasts for the years ending 29 February 2008 and 28 February 2009

The profit forecasts of TCS for the years ending 29 February 2008 and 28 February 2009, the preparation of which is the responsibility of the directors, are set out below. The accounting policies applied in arriving at forecast income are consistent in all respects with IFRS and with those accounting policies applied in the historic information presented. The forecasts should be read in conjunction with the independent reporting accountants’ report thereon as set out in Annexure 6.


29

Forecast February

2008 R’000

Forecast February

2009R’000

Revenue 118 629 161 660 Cost of sales (1 299) (1 546)

Gross profit 117 330 160 114

Other income 87 96

Operating expenses (84 904) (111 648)

IFRS 2 charge (16 100) -

Operating Profit 16 413 48 562

Interest received 377 2 200

Finance costs (3 367) (4 592)

Profit before taxation 13 423 46 170

Taxation (14 167) (13 972)

Consolidated group (loss)/profit after tax (744) 32 243

Dividends paid 5 000 5 342


Equity holders of the company (7 312) 32 243

Minority interest 6 568 -

Reconciliation of earnings

Earnings attributable to ordinary equity holders (7 312) 32 243

Adjustments

IFRS 2 charge 16 1001 -

Management contract cancellation costs 3 6532 -

STC on share repurchase 2 6003 -

STC on special dividend 1 8004 -

Adjusted earnings attributable to ordinary equity holders 16 841 32 243

Pro forma weighted average number of ordinary shares in issue

383 670 426 122

Pro forma earnings per ordinary share (cents) (0.2)5 7.6

Pro forma adjusted earnings per ordinary share (cents)

6.15 7.6

Pro forma dividends per ordinary share (cents) 1.3 1.3

The adjustments detailed above are comprised of the following:

1. IFRS 2: Share Based Payments charge relating to the acquisition of shares in TCS by Mvela and the subsequent issue of preference shares in settlement of the specific repurchase;

2. the impact of costs incurred on the cancellation of the management contracts;

3. STC on the share repurchase from Mvela;


30

4. STC on the dividend of R18 million;

5. The pro forma earnings per share is based on the consolidated profit of the group, consequently including the minority interest

Main assumptions: 1. Revenue growth for 2008 and 2009 is primarily organic and revenues anticipated on contracts to be

concluded during the period , where the directors have a high degree of confidence in their success in being awarded the contract, are included on a conservative basis. The figures do however include the following: a annualised results of a new contract bedded down in July 2007 which is forecast to contribute

revenues of R13.825 million in 2008 and R27.206 million in 2009; b recognition in the 2009 year of the finalisation of a newly established service centre being completed

in the current year; and c actual revenues to 31 August 2007 have been included in the 2008 forecasts. The balance of the 2008

forecast revenue figure is calculated, based on the number of camera images expected to be captured and successfully processed. The 2009 revenue forecast is calculated utilising a growth rate which reflects the organic growth of the company, taking into account the new contract and service centre stated above.

2. All costs for 2008 and 2009, barring employee costs, have been calculated utilising financial ratios and are proportionate to revenues generated. Actual amounts for employee costs have been used for 2008 and an increase of 10% has been used in the calculation of the 2009 employee costs.

3. Depreciation accounts for planned acquisitions of new camera technology in both 2008 and 2009. These figures also include the reduction in depreciation relating to assets that are written off in full during those years.

4. Dividends payable on the preference shares were calculated utilising an interest rate of 12%. Interest payable on the leased assets was calculated utilising the actual rate stipulated in the lease agreements.

5. The discontinuing of the minority interest took place during the 2008 financial year due to the restructuring and proposed listing. The dividend payable is in terms of the shareholders and listing agreements.

6. The anticipated dividend policy of TCS will initially be to maintain a dividend cover of 6. Comments on the forecast financial information

The forecast financial information is based on the assumption that circumstances which affect the company’s business, but which are outside the control of the directors, will not materially alter in such a way as to affect the trading of the company. More specifically:

− trading conditions are not expected to be materially different in any of the forecast periods;

− costs will increase due to additional expenses attributable to a listed entity; and

− interest rates and the basis and rate of taxation, both direct and indirect, will not change materially.

In addition, the forecast financial information is based on the assumptions that:

− there will be continuity in existing management and trading policies; and

− there will be no change in the present accounting policies.

In the opinion of the directors, the above assumptions are significant to the forecasts as being key factors upon which the financial results of the company will depend. However, certain assumptions may not materialise and/or certain unforeseen events may occur or circumstances may arise subsequent to the forecasts being made. Accordingly, the results achieved for the periods referred to above may differ from those forecast and any such variations may be material.


31

12.3 Unaudited pro forma income statement and balance sheet assuming 42 553 192 ordinary shares in respect of the private placement are subscribed for

The unaudited pro forma income statement and balance sheet are provided for illustrative purposes only to provide information about how, subsequent to the LTS transaction, the acquisition and the regional partner agreement, the private placement may have impacted on TCS’ results and financial position assuming 42 553 192 ordinary shares in respect of the private placement are subscribed for. Due to the nature of the unaudited pro forma financial information, it may not give a fair presentation of the company’s results and financial position after the private placement. The unaudited pro forma income statement and balance sheet are based on the reviewed interim results of TCS at 31 August 2007 as set out in Annexure 3 and reported on by the independent reporting accountants’ report in Annexure 5 subsequent to the LTS transaction, the acquisition and the regional partner agreement. The unaudited pro forma income statement and balance sheet are presented in a manner consistent with the basis on which the historical information has been prepared in terms of accounting policies. The unaudited pro forma income statement and balance sheet should be read in conjunction with the independent reporting accountants’ report thereon as set out in Annexure 7. The directors of TCS are responsible for the preparation of the unaudited pro forma financial information of TCS.


Unaudited pro forma income statement reflecting the private placement adjustments

Reviewed

six months ended 31

August 2007 R’000

Reversal of management

fees and contract

cancellation R’0003

Accrual of STC on

share repurchase,

preference dividend

payable and STC thereon R’0004

Reversal of minority interests

R’0005

STC on

dividends paid

R’0006

Pro forma income

statement before private

placement R’000

Private placement

adjustments R’0007

Unaudited pro forma

income statement

after adjustments

31 August 2007

R’000 Revenue 56 294 - - - - 56 294 - 56 294

Cost of sales (699) - - - - (699) - (699)

Gross profit 55 595 - - - - 55 595 - 55 595

Other income 516 - - - - 516 - 516

Operating costs (42 559) (1 649) - - - (44 208) (3 000) (47 208)

IFRS 2 charge - - (16 100) - - (16 100) - (16 100)

Operating Profit 13 552 (1 649) (16 100) - - (4 197) (3 000) (7 197)

Interest received 137 - - - - 137 - 137

Finance costs (984) - (1 560) - - (2 544) - (2 544)

Profit before taxation 12 705 (1 649) (17 660) - - (6 604) (3 000) (9 604)

Taxation (3 345) (581) (2 756) - ( 500) (7 182) - (7 182)

Consolidated group profit/(loss) after tax 9 360 (2 230) (20 416) - (500) (13 786) (3 000) (16 786) Attributable to: Equity holders of the company 5 645 (2 230) (20 416) 3 715 (500) (13 786) (3 000) (16 786)

Minority interest 3 715 - - (3 715) - - - -

9 360 (2 230) (20 416) - (500) (13 786) ( 3 000) (16 786)

Reconciliation of headline earnings:

Profit attributable to ordinary shareholders 5 645 (2 230) (20 416) 3 715 (500) (13 786) (3 000) (16 786)


34

Headline earnings adjustments Profit on sale of fixed assets (63) - - - - (63) - (63) Headline earnings attributable to ordinary shareholders 5 582 (2 230) (20 416) 3 715 (500) (13 849) (3 000)

(16 849)

Shares in issue (‘000) 383 569 42 553 426 122 Earnings per share (cents) (3.6) (3.9)

Headline earnings per share (cents) (3.6) (4.0)

Adjusted headline earnings per share (cents)8 2.3 1.4

Notes: 1. The pro forma income statement has been prepared using the interim financial statements for the six months ended 31 August 2007.

2. The unaudited pro forma income statement was prepared on the basis that: 2.1 the private placement, in terms of the offer for subscription, was completed on 1 March 2007 and all 42 553 192 ordinary shares offered are subscribed for; and 2.2 the repurchase of 21.54% of the issued share capital in the company from Mvela, the subscription by Mvela for 2 600 preference shares in the company, the buy-out of the minorities

in Total Computer Services ands the cancellation of the rights in and to the management agreements were effective 1 March 2007; and 2.3 a total of R20 million less transaction costs of R4 million, as disclosed in paragraph 14 of this prospectus, is raised. R1 million of the transaction costs have been capitalised.

Adjustments

3. Represents the reversal of management fees and accrual of contract cancellation costs. The reversal of management fees net of taxation of R1.4 million has a recurring effect and the cancellation costs of R3.7 million has a once off effect;

4. Represents IFRS 2: Share Based Payments charge, accrual of STC on the share repurchase from Mvela and accrual for the dividend payable on the preference shares issued to Mvela and the STC thereon;

5. Represents the reversal of minority interests in earnings for the year as a result of the repurchase of 49% of Total Computer Services; 6. Represents STC on the dividends paid to shareholders of Total Computer Services of R5 million and the issuing of shares to existing shareholders at their par value in terms of an

agreement. A further dividend of R13 million has been declared by Total Computer Services payable to shareholders prior to the acquisition of the minority shares contingent upon its earnings for the 6 months to 29 February 2008, which further dividend has not been adjusted in the pro forma income statement. A total dividend of R6.6 million has been declared by TCS contingent upon its earnings for the 6 months to 29 February 2008, which is also not reflected above.

7. Represents estimated transaction costs to be expensed. No effect has been given to earnings attributable to funds raised in terms of private placement as such funds will be invested in growing the business and the return thereon cannot be determined with certainty; and

8. Adjusted headline earnings per share is adjusted for the following: - IFRS 2: Share Based Payments charge relating to the acquisition of shares in TCS by Mvela and the subsequent issue of preference shares in settlement of the specific

repurchase; - The impact of costs incurred on the management contracts; - STC on the share repurchase; and - STC on the special dividend of R5 million paid


35

Unaudited pro forma balance sheet reflecting the private placement adjustments

Reviewed six months ended

31 August 2007

R’000


fees and contract


Accrual of STC on share

repurchase, preference

dividend payable and STC thereon

R’0004

Reversal of minority interests R’0005

STC on dividends

paid R’0006

Pro forma balance

sheet before private

placement R’000

Private placement


Unaudited pro forma

balance sheet after

adjustments 31 August

2007 R’000

Assets

Property, plant and equipment 21 893 - - - - 21 893 - 21 893

Intangible assets 4 976 - - 4 985 - 9 961 - 9 961

Non current receivable 798 - - - - 798 - 798

Current assets 44 085 - - - (462) 43 623 16 000 59 623.

Total assets 71 752 - - 4 985 (462) 76 275 16 000 92 275

Equity and liabilities

Capital and reserves 37 722 - (28 600) 4 985 (5 462) 8 645 16 000 24 645

Non-current liabilities 4 699 - 26 000 - - 30 699 - 30 699

Deferred taxation 2 390 - - - - 2 390 - 2 390

Current liabilities 26 941 - 2 600 - 5 000 34 541 - 34 541

Total equity and liabilities 71 752 - - 4 985 (462) 76 275 16 000 92 275

Number of ordinary shares in issue (‘000) 383 569 42 553 426 122

Net asset value per ordinary share (cents) 2.3 5.8

Net tangible asset value per ordinary share (cents) (0.3) 3.5


36

Notes: 1. The reviewed interim financial information of TCS is set out in Annexure 3.

2. The unaudited pro forma balance sheet was prepared on the basis that:

2.1 the private placement was completed on 31 August 2007 and all 42 553 192 ordinary shares offered are subscribed for;

2.2 the repurchase of 21.54% of the issued share capital in the company from Mvela, the subscription by Mvela for 2 600 preference shares in the company, the buy-out of the minorities in Total Computer Services ands the cancellation of the rights in and to the management agreements were effective 31 August 2007; and

2.3 a total of R20 million less transaction costs of R4 million, as disclosed in paragraph 14 of this prospectus, is raised.

Adjustments

3. Represents the accrual of contract cancellation costs of R3.7 million and issue of equity in settlement thereof;

4. Represents the share repurchase from Mvela and accrual of STC thereon and issue of preference shares in settlement of the repurchase;

5. Represents the issue of equity in settlement for acquisition of minority interests in Total Computer Services. The transaction is treated adopting the economic entity model in terms of IFRS 3: Business combinations;

6. Represents:

- dividends paid to minority shareholders of Total Computer Services. A total dividend of R18 million was declared by Total Computer services. Of the amount declared, R5 million has been paid by Total Computer Services and the portion received by TCS has been declared on to its shareholders. No effect has been given to the unpaid dividend of R13 million declared to shareholders of Total Computer Services, prior to the acquisition of the minority shares, which is dependant upon income for the year to 29 February 2008. A total dividend of R6.6 million has been declared by TCS contingent upon its earnings for the six months to 29 February 2008, which is also not reflected above;

- accrual of STC on the dividend paid of R5 million; and - issue of shares to existing shareholders at par in terms of an agreement; and

7. Represents the funds raised in terms of the private placement of R20 million less estimated transaction costs of R4 million.


12.4 Unaudited pro forma income statement and balance sheet assuming no ordinary shares in respect of the private placement are subscribed for

The unaudited pro forma income statement and balance sheet are provided for illustrative purposes only to provide information about how the private placement may have impacted on TCS’ results and financial position assuming no ordinary shares in respect of the private placement are subscribed for. Due to the nature of the unaudited pro forma financial information, it may not give a fair presentation of the company’s results and financial position after the private placement. The unaudited pro forma income statement and balance sheet are based on the reviewed interim results of TCS at 31 August 2007 as set out in Annexure 3 and reported on by the independent reporting accountants’ report in Annexure 5, subsequent to the LTS transaction, the acquisition and the regional partner agreement. The unaudited pro forma income statement and balance sheet are presented in a manner consistent with the basis on which the historical information has been prepared in terms of accounting policies. The unaudited pro forma income statement and balance sheet should be read in conjunction with the independent reporting accountants’ report thereon as set out in Annexure 7. The directors of TCS are responsible for the preparation of the unaudited pro forma financial information of TCS.

TCS Prospectus – formal submission - 05022008 Unaudited pro forma income statement reflecting the private placement adjustments


31 August 2007

R’000


fees and contract




dividend payable and STC thereon R’0005

Reversal of minority interests

R’0006

STC on dividends

paid R’0007

Pro forma income

statement before private

placement R’000

Private placement


Unaudited pro forma

income statement after

adjustments 31 August 2007

R’000 Revenue 56 294 - - - - 56 294 - 56 294

Cost of sales (699) - - - - (699) - (699)

Gross profit 55 595 - - - - 55 595 - 55 595

Other income 516 - - - - 516 - 516

Operating costs (42 559) (1 649) - - - (44 208) (3 000) (47 208)

IFRS 2 charge - - (16 100) - - (16 100) - (16 100)

Operating Profit 13 552 (1 649) (16 100) - - (4 197) (3 000) (7 197)

Interest received 137 - - - - 137 - 137

Finance costs (984) - (1 560) - - (2 544) - (2 544)

Profit before taxation 12 705 (1 649) (17 660) - - (6 604) (3 000) (9 604)

Taxation (3 345) (581) (2 756) - ( 500) (7 182) - (7 182)

Consolidated group profit/(loss) after tax 9 360 (2 230) (20 416) - (500) (13 786) (3 000) (16 786) Attributable to: Equity holders of the company 5 645 (2 230) (20 416) 3 715 (500) (13 786) (3 000) (16 786)

Minority interest 3 715 - - (3 715) - - - -

9 360 (2 230) (20 416) - (500) (13 786) (3 000) (16 786) Reconciliation of headline earnings:

Profit attributable to ordinary shareholders 5 645 (2 230) (20 416) 3 715 (500) (13 786) (3 000) (16 786)


40

Headline earnings adjustments Profit on sale of fixed assets (63) - - - - (63) - (63) Headline earnings attributable to ordinary shareholders 5 582 (2 230) (20 416) 3 715 (500) (13 849) (3 000)

(16 849)

Shares in issue (‘000) 383 569 - 383 569 Earnings per share (cents) (3.6) (4.4)

Headline earnings per share (cents) (3.6) (4.4)

Adjusted headline earnings per share (cents)9 2.3 1.6

Notes: 1. The pro forma income statement has been prepared using the interim financial statements for the six months ended 31 August 2007.

2. The unaudited pro forma income statement was prepared on the basis that: 2.1 the private placement, in terms of the offer for subscription, was completed on 1 March 2007 and no shares are taken up in terms of the private placement; 2.2 the repurchase of 21.54% of the issued share capital in the company from Mvela, the subscription by Mvela for 2 600 preference shares in the company, the buy-out of the minorities

in Total Computer Services ands the cancellation of the rights in and to the management agreements were effective 1 March 2007; and 2.3 transaction costs of R3.5 million, excluding fund raising fees which will not be payable in this scenario, as disclosed in paragraph 14 of this prospectus are incurred. Transaction costs

of R0.5 million have been capitalised; 3. If the full allotment of shares is not subscribed for, the company will still achieve the required shareholder spread due to the unbundling of the company’s shares from Labat.

Adjustments 4. Represents the reversal of management fees and accrual of contract cancellation costs. The reversal of management fees net of taxation of R1.4 million has a recurring effect and

the cancellation costs of R3.7 million has a once off effect; 5. Represents IFRS 2: Share Based Payments charge, accrual of STC on the share repurchase from Mvela and accrual for the dividend payable on the preference shares issued to

Mvela and the STC thereon; 6. Represents the reversal of minority interests in earnings for the year as a result of the purchase of 49% of Total Computer Services; 7. Represents STC on the dividends paid to shareholders of Total Computer Services of R5 million and the issuing of shares to existing shareholders at their par value in terms of an

agreement. A further dividend of R13 million has been declared by Total Computer Services, payable to shareholders prior to the acquisition of the minority shares, contingent upon its earnings for the six months to 29 February 2008, which further dividend has not been adjusted in the pro forma income statement. A total dividend of R6.6 million has been declared by TCS contingent upon its earnings for the six months to 29 February 2008, which is also not reflected above.

8. Represents estimated transaction costs to be expensed. No effect has been given to earnings attributable to funds raised in terms of private placement as such funds will be invested in growing the business and the return thereon cannot be determined with certainty; and

9. Adjusted headline earnings per share is adjusted for the following: The impact of costs incurred on the management contracts; STC on the share repurchase; and STC on the special dividend of R5 million paid.


41

Unaudited pro forma balance sheet reflecting the private placement adjustments


31 August 2007

R’000


fees and contract




dividend payable and STC thereon

R’0004

Reversal of minority interests R’0005

STC on dividends

paid R’0006

Pro forma balance

sheet before private

placement R’000

Private placement


Unaudited pro forma

balance sheet after

adjustments 31 August

2007 R’000

Assets

Property, plant and equipment 21 893 - - - - 21 893 - 21 893

Intangible assets 4 976 - - 4 985 - 9 961 - 9 9618

Non-current receivable 798 - - - - 798 - 798

Current assets 44 085 - - - (462) 43 623 (3 500) 40 123

Total assets 71 752 - - 4 985 (462) 76 275 (3 500) 72 775

Equity and liabilities

Capital and reserves 37 722 - (28 600) 4 985 (5 462) 8 645 (3 500) 5 145

Non-current liabilities 4 699 - 26 000 - - 30 699 - 30 699

Deferred taxation 2 390 - - - - 2 390 - 2 390

Current liabilities 26 941 - 2 600 - 5 000 34 541 - 34 541

Total equity and liabilities 71 752 - - 4 985 (462) 76 275 (3 500) 72 775

Number of ordinary shares in issue (‘000) 383 569 - 383 569

Net asset value per ordinary share (cents) 2.3 1.34

Net tangible asset value per ordinary share (cents) (0.3) (1.3)


42

Notes: 1. The reviewed interim financial information of TCS is set out in Annexure 3.

2. The unaudited pro forma balance sheet was prepared on the basis that:

2.1 the private placement was completed on 31 August 2007 and no shares are taken up in terms of the private placement;

2.2 the repurchase of 21.54% of the issued share capital in the company from Mvela, the subscription by Mvela for 2 600 preference shares in the company, the buy-out of the minorities in Total Computer Services ands the cancellation of the rights in and to the management agreements were effective 31 August 2007; and

2.3 transaction costs of R3.5 million, excluding fund raising fees which will not be payable in this scenario, as disclosed in paragraph 14 of this prospectus are incurred.

Adjustments

3. Represents the accrual of contract cancellation costs of R3.7 million and issue of equity of settlement thereof;

4. Represents the share repurchase from Mvela and accrual of STC thereon and issue of preference shares in settlement of the repurchase.

5. Represents the issue of equity in settlement for acquisition of minority interests in Total Computer Services. The transaction is treated adopting the economic entity model in terms of IFRS 3: Business combinations;

6. Represents:

- dividends paid to minority shareholders of Total Computer Services. A total dividend of R18 million was declared by Total Computer services. Of the amount declared, R5 million has been paid by Total Computer Services and the portion received by TCS has been declared on to its shareholders. No effect has been given to the unpaid dividend of R13 million declared to shareholders of Total Computer Services, prior to the acquisition of the minority shares, which is dependant upon income for the year to 29 February 2008. A total dividend of R6.6 million has been declared by TCS contingent upon its earnings for the six months to 29 February 2008, which is also not reflected above;

- accrual of STC on the dividend paid of R5 million; and - issue of shares to existing shareholders at par in terms of an agreement; and

7. Represents estimated transaction costs of R3.5 million. No fund raising fees are payable.

8. The valuation report regarding the value of goodwill is set out in annexure 11.


12.5 Dividends

12.4.1 The anticipated dividend policy of TCS will initially be to maintain a dividend cover of 6 and periodically thereafter the company will reconsider this policy. Dividends will be declared at the discretion of the directors.

12.4.2 Any dividends not claimed for a period of not less than three years from the date on which such dividends became payable, may be forfeited for the benefit of the company.

12.4.3 There is no arrangement under which any future dividends will be waived or have been waived.

12.4.4 The provisions of the articles of association pertaining to dividends are contained in Annexure 10 to the prospectus.

13. AMOUNTS PAID TO PROMOTERS, BROKERAGES AND COMMISSIONS

13.1 Since incorporation, no payments have been paid or are payable by TCS in respect of promotion and brokerage.

13.2 TCS has not entered into any promoters’ agreements during the three years preceding this prospectus.

13.3 Since incorporation, no commission has been paid or is payable by TCS in respect of underwriting. 13.4 No commissions, discounts, brokerages or other special terms have been granted, during the three

years preceding the date of this prospectus in connection with the issue or sale of any securities or stock of the company, where this has not been disclosed in any audited annual financial statements.

14. PRELIMINARY EXPENSES AND ISSUE EXPENSES

14.1. The estimated expenses of the private placement and the listing are detailed in the table below:

R’000

Printing, publication, distribution and advertising expenses – Ince (Proprietary) Limited 150

JSE documentation fees 51

JSE listing fees 20

Share issue expenses, fiscal duties and taxes 25

Transfer secretaries – Computershare Investor Services 2004 (Proprietary) Limited 20

Investor relations – ChilliBush (Proprietary) Limited 60

Designated Adviser – Merchant Sponsors (Proprietary) Limited 455

Fund raising fees – Merchantec (Proprietary) Limited 500

PricewaterhouseCoopers 100

Fees relating to restructuring costs - September 2007 1 065

Fees relating to restructuring costs - November 2007 1 294

Attorneys – Fluxmans Inc. 200

Independent expert - Horwath Leveton Boner 60

Estimated total 4 000

All abovementioned amounts are stated exclusive of VAT. 14.2. The abovementioned estimated expenses, which will not exceed the share premium, will be written-

off against the share premium account to the extent permissible by the Act.


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15. LOANS PAYABLE AND BORROWING POWERS

15.1 Save as set out in the table below, there are no other loans, either secured or unsecured, payable by TCS as at 31 August 2007:

Lender

Loan amount

R’000

Interest rate %

Secured

Reason for loan

Maturity

Absa Bank Limited

10 145 12.46 - 13.04 Yes Asset finance 1-34 months

Less: Current portion included in short-term borrowings

(5 500)

Total

4 645

15.2 The borrowing powers of the company have not been exceeded during the three years preceding the date of this prospectus.

15.3 The borrowing powers of the directors are set out in paragraph 7 of Annexure 1 to this prospectus.

15.4 No loan capital is overdue or outstanding.

15.5 All the borrowings listed above have no conversion or redemption rights, unless specifically stated.

15.6 The repayment of the short-term portion of the borrowings will be financed from operating cash flow as such borrowings fall due for servicing and repayment from time to time.

16. CAPITAL COMMITMENTS, LEASE PAYMENTS AND CONTINGENT LIABILITIES

16.1 Save for the lease payments detailed in paragraph 26.2 below and the contingencies detailed in note 16 of Annexure 2, the company had no lease payments and no contingent liabilities at 31 August 2007. There have been no material changes to the contingent liabilities of the company between 31 August 2007 and the last practicable date.

16.2 The company has committed to the purchase of 10 new traffic cameras at a total cost of R2 500 000 excluding VAT. The acquisition thereof has been included for in the forecast figures for 2008 and 2009, accounting for both the capital acquisition and the related depreciation and commissioning costs.

16.3 Other than those mentioned in paragraph 16.2, the company has no material capital commitments at 31 August 2007 and on the last practicable date.

17. LOANS RECEIVABLE

17.1 Save as set out in the table below, TCS had no other loans receivable as at 31 August 2007:

Date of loan

To whom loan was made

Loan amount

R’000

Secured/ Unsecured

Directors

Business address

31 August 2007

Belstow Technologies (Proprietary) Limited

725 Unsecured G O Connell T Harper S Lamberg S Gray

11A, Trees Bank, De Waal Road, Diep River, Cape Town

Total 725 Notes:


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1. The reason for the loan was to allow for the disposal of a company owned by Labat to Belstow Technologies (Proprietary) Limited.

2. The loan was advanced on 31 August 2007 and is repayable in monthly installments of R50 000 each over the period from 1 September 2007 to 30 September 2008. No installments have been paid to date and following the implementation of the acceleration provisions, the full amount of R725 000 is currently due, owing and payable.

3. Interest is payable on all amounts in arrears. No interest on any arrear amounts has been provided, for due to the reasons stated in note 5 below.

4. The directors of TCS did not put any security in place for the repayment of the loan as the value of Belstow Technologies (Proprietary) Limited was in excess of the loan amount. At the time of signing the agreement, the agreement was ratified by the previous board with no security in place.

5. TCS proceeded with an application for the liquidation of Belstow Technologies (Proprietary) Limited which is being opposed by Belstow Technologies (Proprietary) Limited.

18. PROPERTY AND SUBSIDIARIES ACQUIRED OR TO BE ACQUIRED

Save for the acquisition of Total Computer Services in terms of the acquisition agreement, the company has not made any material acquisitions of any securities, business undertakings of any other companies or business enterprises, immovable property or other property or any option to acquire such property in the last 3 years preceding this prospectus.

No negotiations have been entered into by the company for the purchase of any securities, business undertakings of any other companies or business enterprises, immovable property, other property or subsidiaries as at the date of this prospectus.

19. PROPERTY AND SUBSIDIARIES TO BE DISPOSED OF

No material property, or subsidiaries have been disposed of within the last three years preceding the date of the prospectus, nor is it intended that any material property or subsidiary is to be disposed of following the listing.

20. SUBSIDIARIES

20.1 Subsidiaries

Set out below is the information relating to TCS’ only subsidiary:

Name of subsidiary, registration number, date and place of incorporation, and length of time in business

Date became a subsidiary

Issued share capital

Percentage held by TCS

Nature of business Directors

Total Computer Services (Proprietary) Limited

Registration number 1979/005478/07

03/10/1979 – South Africa

28 years

16/07/2002 450 ordinary shares of R1 each

100 Software development

B N Birkholtz

J H Taljaard

A S Mohamed

M Reichenberg

21. PRINCIPAL IMMOVABLE PROPERTY OWNED AND LEASED

The company does not own any immovable property. The principal immovable property leased by the company is detailed in paragraph 26.2 below.


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22. MATERIAL INTERCOMPANY TRANSACTIONS

Save as set out in note 20, in Annexure 2, there are no material inter-company balances or transactions at the last practicable date.

23. SHARE CAPITAL

23.1 Authorised and issued share capital

The authorised and issued share capital of TCS, taking into account the private placement and listing costs as set out in paragraph 14.1 above, which are to be offset against the share premium, are set out below:

RandAuthorised 2 600 12% cumulative, redeemable preference shares of 100 cents each 2 600500 million ordinary shares of 0.01 cent each 50 000

Issued, before the private placement 2 600 12% cumulative, redeemable preference shares of 100 cents each 2 600Preference share premium 25 997 400

383 569 031 ordinary shares of 0.01 cent each 38 357Ordinary share premium 18 441 787

Issued, after the private placement 2 600 12% cumulative, redeemable preference shares of 100 cents each 2 600Preference share premium 25 997 400

426 122 223 ordinary shares of 0.01 cent each 42 612Ordinary share premium 37 437 532 37 480 144

23.1.1 All the authorised and issued ordinary shares are of the same class and rank pari passu in every respect and all the authorised and issued preference shares are of the same class and rank pari passu in every respect. There are no preferential conversion and/or exchange rights of any ordinary shares.

23.1.2 Save as set out in paragraph 23.2 below, there have been no alterations to the authorised share capital of the company during the three years preceding the date of issue of this prospectus.

23.1.3 Save as set out in paragraph 23.2 below, there have been no offers for the subscription or sale of shares during the three-year period preceding the date of issue of this prospectus.

23.1.4 Save for the repurchase by the company of 2 154 ordinary shares of R0.01 from Mvela referred to in paragraph 23.3.2.2 the company has not repurchased any shares in the company.

23.2 Alterations to authorised share capital

23.2.1 TCS was incorporated with an authorised ordinary share capital of R4 000 divided into 4 000 ordinary shares having a par value of 100 cents each.

23.2.2 The shareholders of the company passed special resolutions to:

23.2.2.1 sub-divide its authorised share capital of 4 000 ordinary shares of 100 cents each into 400 000 ordinary shares of 1 cent each on 28 August 2007 which special resolution was registered on 18 September 2007;

23.2.2.2 increase the company’s authorised share capital of R4 000 divided into 400 000 ordinary shares of 1 cent each by the creation of 2 600 12% cumulative, redeemable preference shares of 100 cents each, having the rights and


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privileges attached to them set out in Annexure 9 of the prospectus, on 28 August 2007 which special resolution was registered on 18 September 2007;

23.2.2.3 sub-divide its authorised ordinary share capital of R4 000 divided into 400 000 ordinary shares of 1 cent each into 40 000 000 ordinary shares of 0.01 cent each on 21 January 2008, which special resolution was registered on 14 February 2008; and

23.2.2.4 increase the company’s authorised ordinary share capital from 40 000 000 ordinary shares of 0.01 cent each to R50 000 divided into 500 000 000 ordinary shares of 0.01 cent each, by the creation of 460 000 000 ordinary shares of 0.01 cent each on 21 January 2008 which special resolution was registered on 14 February 2008.

23.2.3 At the last practicable date, TCS had a total ordinary authorised share capital of R52 600, comprising 500 000 000 ordinary shares of 0.01 cent each and 2 600 12% cumulative redeemable preference shares of 100 cents each.

23.3 Issue of shares

Save as set out in this paragraph, no shares were issued or agreed to be issued by the company during the past three years, other than for cash. No assets were acquired out of the proceeds of any issue.

23.3.1 Subsequent to its incorporation, TCS issued and allotted 100 ordinary par value shares of 100 cents each.

23.3.2 The company:

23.3.2.1 passed a special resolution on 28 August 2007 to sub-divide its issued share capital of 100 ordinary shares of 100 cents into 10 000 ordinary shares of 1 cent which special resolution was registered on 18 September 2007;

23.3.2.2 passed a special resolution on 21 October 2007 authorising the company to repurchase 2 154 ordinary shares with a par value of 1 cent each from Mvela for an aggregate repurchase consideration of R26 000 000, which special resolution was registered on 29 November 2007. Following the implementation of such repurchase, 2 154 ordinary shares with a par value of 1 cent each were repurchased by the company and the share capital of the company was reduced by R21,54;

23.3.2.3 issued 2 600 12% cumulative, redeemable preference shares to Mvela at the par value thereof plus a premium of R9 999 per preference share on 29 November 2007 in settlement of the repurchase consideration referred to in paragraph 23.3.2.2 above;

23.3.2.4 issued 2 530 ordinary shares of 1 cent each at par value thereof plus a premium of R5 854.54 per ordinary share on 18 January 2008 to the vendors in exchange for 49% of Total Computer Services, as detailed in paragraph 26.4 below;

23.3.2.5 issued 244 ordinary shares of 0.01 cent each at par value thereof plus a premium of R5 817 per ordinary share on 18 January 2008 to Labat in exchange for the effective cancellation of the Mvela management agreement pursuant to the implementation of the regional partner agreement;

23.3.2.6 issued 70 ordinary shares of 0.01 cent each at par value thereof plus a premium of R5 817 per ordinary share on 18 January 2008 to Mvela, in exchange for the effective cancellation of the Mvela management agreement,persuant to the implementation of the regional partner agreement;

23.3.2.7 issued 310 ordinary shares of 0.01 cent each at par value thereof plus a premium of R5 817 per ordinary share on 18 January 2008 to Labat in exchange for the effective cancellation of the Tuscan agreement pursuant to the implementation of the Tuscan assignment and the regional partner agreement;


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23.3.2.8 passed a special resolution on 21 January 2008 to sub-divide its issued ordinary share capital of R110 divided into 11 000 ordinary shares of 1 cents each into 1 100 000 ordinary shares of 0.01 cent each, which special resolution was registered on 14 February 2008; and

23.3.2.9 issued 382 469 031 ordinary shares of 0.01 cent each at par value following the registration of the special resolution referred to in paragraph 23.3.2.8 to the existing shareholders of thee company in proportion to their shareholding in the company.

23.3.3 At the date of issue of this prospectus, before the private placement, TCS had a total issued share capital (including share premium) of R44 480 144 made up of a total ordinary share capital (including share premium) of R18 480 144 a and a total preference share capital (including preference share premium) of R26 000 000.

23.4 The ordinary resolutions, necessary to approve the above issues of shares, were passed at the time of the issues. In terms of an ordinary resolution passed by a majority of 50% of shareholders passed on 21 January 2008, the directors have the power to allot and issue ordinary shares of the company for cash, subject to the following conditions:

− compliance with the provisions of the Act, the Listings Requirements and the memorandum and articles of association of TCS;

− that the securities be of a class already in issue;

− that securities be issued to public shareholders and not to related parties;

− that an announcement giving full details, including the impact on net asset value and earnings per share, be published at the time of any issue representing, on a cumulative basis within one financial year, 5% or more of the number of securities in issue prior to the issue/s;

− that issues in the aggregate in any one financial year shall not exceed 50% of the company's issued share capital of that class;

− that, in determining the price at which an issue of securities will be made in terms of this authority, the maximum discount permitted shall be 10% of the weighted average traded price of those securities over the 30 business days prior to the date that the price of the issue is determined or agreed by the directors; and

− that the approval will be valid until the next annual general meeting or for 15 months from the date of the resolution, whichever period is shorter.

23.5 Unissued shares

In terms of a resolution passed at a general meeting of TCS on 21 January 2008, it was resolved that after the allotment and issue of the private placement shares, the 73 877 777 authorised but unissued ordinary shares in the company will be placed under the control of the directors of TCS until its first annual general meeting, subject to the provisions of Sections 221 and 222 of the Act, the provisions of the articles of association of the company and the Listings Requirements.

23.6 Voting and variation of rights

The articles of association of the company provide that, subject to any special terms as to voting upon which any ordinary share may be issued, every person present in person or by proxy, and entitled to vote at any general meeting shall, on a show of hands, have only one vote but, upon a poll, each such person shall have one vote for every share held or represented by him. Any variation in rights attaching to the ordinary shares in the company will require the consent of the shareholders in a general meeting in accordance with the company’s articles of association. The rights and privileges attaching to the 2 600 12% cumulative redeemable preference shares of 100 cents each are setout in Annexure 9 to the prospectus.

23.7 Rights


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The company in general meeting or the directors, may from time to time, declare a dividend to be paid to shareholders in accordance with the provisions of the articles of association of the company in respect of all shares held by them. Dividends shall be payable to shareholders recorded as such on a date subsequent to the date of the declaration of the dividend. The provisions of the articles of association pertaining to dividends are set out in Annexure 10 to the prospectus.

The company in general meeting may, upon the recommendation of the directors, resolve that any surplus moneys in the hands of the company representing capital profits, be distributed amongst the ordinary shareholders.

If the company is wound up, the assets remaining after payment of the debts and liabilities of the company and the costs of the liquidation shall, subject to the rights of the holders of shares, if any, issued upon special terms, be applied as follows:

- to repay to the shareholders the amounts received on issue in respect of the shares held by each of them; and

- the balance, if any, shall be distributed among the shareholders in proportion to the number of shares held by each of them.

23.8 No other listings

The issued ordinary shares of TCS will be listed on AltX. No shares of TCS are listed on any other stock exchange.

23.9 Shares issued other than for cash

Save for the preference shares issued to Mvela referred to in paragraph 23.3.2.4 in settlement of the repurchase consideration referred to in paragraph 23.3.2.3 pursuant to the implementation of the LTS transaction, the ordinary shares issued to the vendors referred to in paragraph 23.3.2.4, the ordinary shares issued to Labat referred to in paragraph 23.3.2.5 and in paragraph 23.3.2.7 and the ordinary shares issued to Mvela referred to in paragraph 23.3.2.6, pursuant to the implementation of the regional partner agreement no shares by the company were issued or agreed to be issued during the last three years other than for cash.

24. ADEQUACY OF WORKING CAPITAL

The directors of TCS are of the opinion that the working capital available to the group, prior to the private placement, is adequate for the present requirements of the group, i.e. for a period of 12 months from the date of issue of this prospectus, and that:

− the group will be able in the ordinary course of business to pay its debts for a period of 12 months after the date of this prospectus;

− the assets of the group will be in excess of the liabilities of the group for a period of 12 months after the date of this prospectus. For this purpose, the assets and liabilities should be recognised and measured in accordance with the accounting policies used in the latest audited consolidated annual financial statements;

− the share capital and reserves of the group will be adequate for ordinary business purposes for a period of 12 months after the date of this prospectus; and

− the working capital of the group will be adequate for ordinary business purposes for a period of 12 months after the date of this prospectus.

25. OPTIONS AND PREFERENTIAL RIGHTS IN RESPECT OF SHARES

There are no other contracts or arrangements, either actual or proposed, whereby any option or preferential right of any kind has been or will be given to any person to subscribe for any shares in the company.


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26. MATERIAL CONTRACTS

26.1 Save for the service agreements with the directors setting out their remuneration referred to in Annexure 1, the lease contracts detailed in paragraph 26.2 below, the LTS transaction, the acquisition agreement and the regional partner agreement, and save for the Labat management agreement, the Mvela management agreement and the Tuscan management agreement, which have effectively been cancelled pursuant to the implementation of the Tuscan assignment and the regional partner agreement, there are no material contracts which have been entered into by TCS during the three years preceding the date of this prospectus, other than in the ordinary course of business conducted by the company.

26.2 Material leases

TCS has entered into the following lease contracts:

- in respect of premises situated at Building 3, Oxford Office Park, 5 Eighth Street, Houghton, comprising of offices of 446m2. The lessor is Recon Properties (Proprietary) Limited, who has no common directors with TCS. The lease period began 1 April 2003 and endures for a period of 60 months at a starting monthly rental of R36 000 and escalates at 10.5% per annum over the period of the lease;

- in respect of premises situated at Unit 1, Block B, Milestone Place, Sovereign Drive, Route 21, Corporate Park, Irene, comprising of offices of 155m2. The lessor is Xantium Trading 506 (Proprietary) Limited, who has no common directors with TCS. The lease period began 1 July 2007 and endures for a period of 36 months at a starting monthly rental of R10 075 and escalates at 10% per annum over the period of the lease; and

- in respect of premises situated at 20 Regency Drive, Route 21, Corporate Park, Irene, comprising of offices of 650m2. The lessor is Erf1 Centurion (Proprietary) Limited, who has no common directors with TCS. The lease period began 1 October 2005 and endures for a period of 60 months at a starting monthly rental of R41 900 and escalates at 9% per annum over the period of the lease

26.3 The LTS Transaction

Mvela, in line with its intention to facilitate an increase in the BEE profile of TCS, acquired all of the minority shareholdings in the company from Pharoah Limited and the Suikerbos Trust and subscribed for 2 600 preference shares in the company for an aggregate amount of R26 million.

In a linked transaction the company repurchased 21.54% of Mvela’s shareholding of the issued share capital of the company for a consideration of R26 million.

The details of the transactions contained in paragraph 26.3 above were disclosed in a circular to Labat shareholders dated 27 September 2007. The rights and privileges attached to the preference shares are set out in Annexure 9 to this prospectus.

26.4 The acquisition agreement

To further the position of TCS for a listing on the AltX, the company acquired 49% of the entire issued capital of Total Computer Services from the vendors, thereby constituting Total Computer Services as a wholly owned subsidiary of TCS. In consideration for their respective shareholdings in Total Computer Services, the vendors were each allotted and issued such number of consideration shares in TCS that equated to 11,5% of the total issued ordinary share capital in TCS after the issue of such consideration shares.

26.5 The regional partners agreement

In terms of the regional partners agreement, the company effectively cancelled the Labat management agreement and the Mvela management agreement, in exchange for the issue and allotment of shares in the company constituting 2,4% and 0,6%, respectively, of the total issued ordinary share capital in the company after the issue of such shares to Labat and Mvela. Further, following the cession and assignment by Tuscan to Labat of its rights under the Tuscan agreement pursuant to the Tuscan assignment in terms of the regional partner agreement, the company effectively cancelled the Tuscan agreement in exchange for the issue and allotment of such number of ordinary shares in the company constituting 3% of the total issued ordinary share capital in the


51

company to Labat after the issue of such shares, following which the company cancelled the Tuscan management agreement.

Details of the transactions contained in paragraph 26.5 above were set out in a circular to Labat shareholders dated 28 November 2007.

26.6 There are no material contracts, which have been entered into by the company at any time, which contain an obligation or settlement that is material to the company, other than the redemption of the preference shares detailed in paragraph 26.3 above.

26.7 Following the effective cancellation of the Labat management agreement, the Mvela management agreement and the Tuscan agreement pursuant to the implementation of the Tuscan assignment and the regional partner agreement, the company is not subject to any management or royalty agreements. The company has not paid any material technical or secretarial fees during the three years preceding the issue of this prospectus.

27. LITIGATION STATEMENT

Save for the matters mentioned below, there are no legal or arbitration proceedings, including proceedings that are pending or threatened, of which TCS is aware, that may have or have had, in the 12-month period preceding the date of this prospectus, a material effect on the financial position of TCS and its subsidiary. Matter Details

Income tax appeal:

Revenues that had accrued on an accounting basis but were not yet included in taxable income for the financial years of assessment 2005-2007 had incorrectly been raised in TCS’ income tax returns and corresponding assessments resulting in the revenues being recognised for tax purposes outside of the respective contract terms. This error created a tax liability in the accounts of TCS of approximately R3 722 512. The error was subsequently identified and in February 2007, TCS’ tax consultants lodged an objection with SARS, who have indicated that they will allow the objection and that, accordingly, a new assessment would be issued in due course.

Civil litigation: claim and counter-claim

A previous consultant of TCS is claiming a payment of R10 000 000 from the company for services rendered. TCS has deferred the action and has entered a counterclaim in the amount of R1 055 386. A court date has been set for the hearing. The company’s directors and its litigation attorneys are of the opinion that there is no basis for the consultant’s claim of R10 000 000.

Civil litigation: termination of a service contract

A service provider has indicated that it intends to institute legal action against TCS for the alleged unlawful termination of a service contract and/or breach thereof. The claim is estimated to be for an approximate amount of R1 000 000. The directors are of the opinion that there is no basis for the claim.

28. ADVISERS’ INTERESTS

28.1 Save as disclosed in paragraph 28.2 hereunder, none of the advisers, whose particulars are set out in the “Corporate information” section, hold any shares in the company or have agreed to acquire any shares in the company at the date of this prospectus.

28.2 The following directors of the Designated Adviser will acquire the following shares in the company as a result of the unbundling:


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Name and capacity Number of

shares

Percentage holding in

TCS Name of beneficial owner

D Truda – Director 1 696 429 0.4LFI Capital (Proprietary) Limited Merchantec (Proprietary) Limited

F Snyman – Director 114 285 0.03 High Frequency Investments

(Proprietary) Limited

28.3 Fifty percent of the ordinary shares in the table above will be held in trust by the attorneys to the prospectus as set out in paragraph 5.1.3 of Annexure 1.

29. CONSENTS

The Designated Adviser, auditors and reporting accountants, attorneys to the prospectus, commercial banker and the transfer secretaries have consented in writing to act in the capacities stated and to their names appearing in this prospectus and have not withdrawn their consents prior to the registration of this prospectus.

30. CORPORATE GOVERNANCE

The company’s Corporate Governance statement is set out in Annexure 8. 31. DIRECTORS’ AND VENDORS’ RESPONSIBILITY STATEMENT

The directors, whose names are set out in Annexure 1 to this prospectus, and the vendors whose names are set out in the definitions of the prospectus, 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 other facts the omission of which would make any statement false or misleading and that they have made all reasonable enquiries to ascertain such facts and that this prospectus contains all information required by law and the Listings Requirements.

32. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents which have been submitted to CIPRO will be available for inspection at the registered office of the company and at Merchant Sponsors (Proprietary) Limited, 2nd Floor, North Block, Hyde Park Office Towers, Corner 6th Road and Jan Smuts Avenue, Hyde Park, Johannesburg, 2196, at any time during normal business hours for a period of 21 days from the date of this prospectus:

− the memorandum and articles of association of the company;

− the signed reports by the independent reporting accountants, the texts of which are set out in Annexures 4, 5, 6 and 7;

− the written consents of the company’s advisers and transfer secretaries to act in those capacities, which consents have not been withdrawn prior to registration;

− a copy of the lease contracts referred to in paragraph 26.2;

− a copy of the LTS transaction;

− a copy of the acquisition agreement;

− a copy of the regional partners agreement;

− a copy of the Tuscan agreement;

− the directors’ service contracts referred to in Annexure 1;

− the audited annual financial statements of TCS for the years ended 28 February 2005, 28 February 2006 and 28 February 2007;

− the reviewed interim financial information of TCS for the period 31 August 2007; and


53

− a signed copy of this prospectus. 33. PARAGRAPHS OF SCHEDULE 3 TO THE ACT WHICH ARE NOT APPLICABLE

The numbers of the paragraphs in Schedule 3 to the Act, which are not applicable, are:

2(d), 6(a)(iii), 6(d), 6(e)(ii), 6(g), 6(h), 8(b), 8(d), 12, 13, 14, 17(b),17(c) 18(b), 20(b), 21, 24, 26 (accounting information provided in accordance with the Listings Requirements), 27, 28, 29 and 30.

Signed at Johannesburg by Mark Reichenberg as a director and on behalf of all the other directors of the company and on behalf of the vendors on Monday, 25 February, he being duly authorised in terms of powers of attorney granted to him by such directors and the vendors. SGD

Mark Reichenberg, a director SGD

For: Brian Noel Birkholtz, a director herein represented by Mark Reichenberg under and in terms of a power of attorney executed on 23 January 2008

SGD

For: Jacobus Hermanus Taljaard, in his capacity as a director herein represented by Mark Reichenberg under and in terms of a power of attorney executed on 23 January 2008

SGD

For: Abdul Shaheed Mohamed, a director herein represented by Mark Reichenberg under and in terms of a power of attorney executed on 23 January 2008

SGD

For: Lindikaya Sipoyo, a director herein represented by Mark Reichenberg under and in terms of a power of attorney executed on 23 January 2008

SGD For: Gideon Napoleon Sam, a director herein represented by Mark Reichenberg under and in terms of a power of attorney executed on 23 January 2008

SGD For: The Birkholtz Family Trust in its capacity as a vendor, herein represented by Mark Reichenberg in terms of a resolution passed by the trustees of The Birkholtz Family Trust on 23 January 2008

SGD For: Jacobus Hermanus Taljaard, in his capacity as a vendor, herein represented by Mark Reichenberg under and in terms of a power of attorney executed on 23 January 2008


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Annexure 1

DIRECTORS, EXECUTIVE MANAGEMENT, APPOINTMENT, QUALIFICATION, REMUNERATION AND BORROWING POWERS OF DIRECTORS

1. DETAILS OF DIRECTORS

The full names, ages and designations of the directors are as follows:

Name Age Designations

Gideon Napoleon Sam 58

Non-executive Chairman

Abdul Shaheed Mohamed 44 Chief Executive Officer

Mark Reichenberg 45

Financial Director

Brian Noel Birkholtz 57

Systems Director

Jacobus Hermanus Taljaard 55

Business and Marketing Director

Lindikaya Sipoyo 44

Non-executive Director

The business address of the directors is Top Floor, 20 Regency Drive, Route 21 Corporate Park, Irene, Pretoria

All directors are South African citizens.

Neither the business of TCS nor any part thereof is managed or proposed to be managed by a third party under a contract or arrangement.

2. EXPERIENCE OF DIRECTORS

A S Mohamed, 44 – Chief Executive Officer Diploma in Trusts Law, Diploma in Management Prior to joining Labat Traffic Solutions (Proprietary) Limited in 2002, Shaheed undertook various management functions within Western Cape entities. Shaheed joined Labat Traffic Solutions (Proprietary) Limited to facilitate the finalisation of the City Of Cape Town contract. In 2004, he was appointed the Cape Town Project Manager and the contract escalated to become the flagship project in South Africa. In March 2007 Shaheed was appointed as the Chief Executive Officer of Labat Traffic Solutions (Proprietary) Limited and now heads up the new TCS.

B N Birkholtz, 57 – Systems Director Having previously worked in the banking sector, Brian moved to the computer industry in 1973, when he joined NCR as an installation clerk in East London. He transferred to Port Elizabeth and then to Pretoria with NCR and in 1979 joined Perseus Computers as an Analyst/Programmer. After 12 years in the Systems Division of Perseus, Brian took up equity in Total Computer Services, where he started working in the Marketing Department, later moving to head up the Research & Development department. Brian became the Operations Director of TCS, responsible for all application products as well as overall responsibility for Service Centres. Following the formation of the new integrated company, Brian takes on the role of Systems Director, retaining responsibility for Research & Development, as well as camera technology.

J H Taljaard, 55 – Business and Marketing Director Diploma in cost accounting (Wits Technicon)


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Kobus began his IT career in 1980, having previously worked as a cost accountant following a three year diploma in the same subject. In 1982, Kobus became the IT Manager of Circuit Breaker Industries, joining Total Computer Services as Software Manager in 1998. In 1990, Kobus became the Managing Director of Total Computer Services and, following the formation of TCS in 2007, now heads up the business development and marketing division of TCS, while serving on as an executive director on the board.

M Reichenberg, 45 – Financial Director B.Acc (Wits), CA(SA) Mark graduated with his Bachelor of Accounting Degree in 1989 at the University of the Witwatersrand and wrote and passed the Board Exam to qualify as a Chartered Accountant later that same year. He then left the auditing profession and has held various roles within commerce in financial and executive management positions within the pharmaceutical, managed health care, retail and transport sectors. Mark undertook the position of Group financial executive within an associate of a listed Transport and Logistics organisation where he was responsible for the full financial and administration functions of the group, new systems development and implementation, strategic IT and operational development and group treasury management. In September 2007, Mark was appointed as the group financial director of Labat Traffic Solutions and Total Client Services, retaining the position of financial director of the group upon listing.

G N Sam, 58 – Non-executive Chairman BA(Hons.).B.Ed; BA(Hons) Diploma in Company Directorship Gideon’s business interests began when he chaired the Independent Business Enrichment Centre (IBEC) of South Africa. This led to his holding a number of commercial directorships, having completed the Graduate Diploma in Company Direction at the Graduate Institute of Management and Technology. As a qualified teacher, Gideon has undertaken headships at various schools, lectured at universities and served on a number of higher education councils. This led to his formation and participation on many non-Governmental organisations to improve the quality of education, business, sport and social issues in South Africa.

L Sipoyo, 44 – Non-executive BA Administration, Special MPA (University of Stellenbosch) Lindikhaya has more than ten years experience in financial management and project management in both the private and public sectors. He is the current Chief Operations Officer for Imbewu Mineral Resources, a mineral and mining company based in South Africa. Prior to joining Imbewu, Lindikhaya spent six years heading up the Information and Communications department in the Parliament of South Africa, focusing on provincial and municipal liaison. Lindikhaya has also served on various board committees including the Labour Negotiations and Management committee, Human Resources Management committee, Information, Communications and Technology committee and the Job Evaluation committee.

3. QUALIFICATION, APPOINTMENT, REMUNERATION AND BORROWING POWERS OF DIRECTORS

3.1 The relevant provisions of the articles of association of TCS relating to qualification, appointment, remuneration and borrowing powers of directors are set out in paragraph 7 below.

3.2 In terms of the declarations lodged by the directors in accordance with Schedule 21 of the Listings Requirements, none of the directors of TCS, other than those detailed in 3.3 below have:

− been sequestrated or have effected any voluntary arrangements with creditors;

− been director, with an executive function, of any company which has been liquidated (other than voluntarily) or reached a compromise of any nature with its creditors, been censured or publicly criticised by any statutory authorities or disqualified by a court from acting as a director of a company or from acting in the management of the affairs of any company;

− been convicted of any offence involving dishonesty, fraud or embezzlement, nor been found guilty in any disciplinary proceedings of any such conduct;


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− been barred from any entry into any profession or occupation; and/or

− been convicted in any jurisdiction of any criminal offence or offence under legislation relating to the Act, nor have any companies of which the directors are or have been involved in the capacity of director or alternate director been convicted of such an offence.

3.3 M Reichenberg was a director of Hakvir (Proprietary) Limited which was liquidated in 1996. At that time, he was sequestrated in his personal capacity. He was subsequently rehabilitated in terms of a court order on 15 July 2003.

4. DIRECTORS’ REMUNERATION

4.1 The directors’ remuneration in respect of the six months ended 31 August 2007 was as follows:

Director

BasicR’000

BonusesR’000

AllowancesR’000

Provident fund

R’000 Total

R’000

B N Birkholtz 418 - 80 - 498

J H Taljaard 406 - 92 - 498

824 - 172 - 996

4.2 The directors’ remuneration in respect of the year ended 28 February 2007 was as follows:

Director

BasicR’000

BonusesR’000

AllowancesR’000

Provident fund

R’000 Total

R’000

B N Birkholtz 688 82 209 - 979

J H Taljaard 665 83 254 - 1 002

1 353 165 463 - 1 981

4.3 A S Mohamed, M Reichenberg, L Sipoyo and G N Sam were appointed to the board subsequent to 31 August 2007. A S Mohamed and M Reichenberg’s remuneration as per their service agreements for their first year of appointment is as follows: Director

BasicR’000

TotalR’000

A S Mohamed 1 152 1 152

M Reichenberg 936 936

2 088 2 088

There will be no variation in the remuneration receivable by any of the directors as a direct consequence of the private placement and listing.

4.4 No payments were made, or accrued as payable, or were proposed to be paid within the three years preceding the date of this prospectus, either directly or indirectly, in cash or securities or otherwise to:

− the directors in respect of management, consulting, technical, secretarial fees or restraint payments;

− a third party in lieu of directors’ fees;

− the directors as fees; and/or

− the directors as an inducement to qualify them as directors.

4.5 None of the directors have any commission, gain or profit-sharing arrangements.


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4.6 No director or promoter has any material beneficial interest, direct or indirect, in the promotion of TCS and in any property to be acquired or proposed to be acquired by TCS out of the proceeds of the issue or during the three years preceding the date of this prospectus.

5. DIRECTORS’ SHAREHOLDINGS IN TCS

5.1 Save as set out below, there has been no change in the directors’ interests since the end of the preceding financial year and the date of the prospectus. After the private placement, the directors will hold, directly and indirectly, the following ordinary shares in TCS:

Director

Percentage held before

the private placement


the private placement

Beneficial

Direct Indirect Total

shares B N Birkholtz 11.5 5.4 22 833 843 22 833 843J H Taljaard 11.5 5.4 22 833 843 22 833 843A S Mohamed 2.8 2.5 10 739 933 10 739 933M Reichenberg - 0.5 2 127 660 2 127 660

Total 25.8 13.8 24 961 503 33 573 776 58 535 279

5.1.1 The change in the abovementioned directors’ interests since publication of the most recent annual financial statements as set out above, has been:

5.1.1.1 the subdivision of each of the ordinary issued shares of 100 cents each of the company, into 100 ordinary shares of 1 cent each on 18 September 2007;

5.1.1.2 the repurchase by the company of 2 154 ordinary shares of 1 cent each of the company from Mvela on 21 October 2007;

5.1.1.3 the issue of 2 530 ordinary shares of 1 cent each of the company at par value thereof plus a premium of R5 854.54 per ordinary share, in settlement for the 49% shareholding in Total Computer Services;

5.1.1.4 the subdivision of each of the ordinary issued shares of 1 cent each of the company, into 100 shares of 0.01 cent each on 21 October 2007;

5.1.1.5 the issue of 382 784 431 ordinary shares of 0.01 cent each, to the shareholders of the company pro-rata to their shareholding in the company at par value on 21 January; and

5.1.1.6 the offer by the directors listed in paragraph 5.1 above for the sale of 42 553 192 ordinary shares for a consideration of 47 cents each in terms of the offer for sale.

5.1.2 No director has or had any interest, directly or indirectly, in any transaction, which is, or was, material to the business of TCS and which was effected by the company since incorporation, which remains in any respect outstanding or unperformed.

5.1.3 The attorneys to the prospectus will hold in trust 50% of the shareholding of each director and the Designated Adviser (“the relevant securities”) from the date of listing and a certificate to that effect has been lodged with the JSE by the attorneys to the prospectus. The relevant securities are to be held in trust until the publication of the audited results for 28 February 2009, after which 50% may be released, and the balance one year thereafter. The shares will not be released before notification to the JSE.

5.1.4 No loans or securities were furnished by TCS or by any of its subsidiaries to or for the benefit of any director or manager or any associate of any director or manager of TCS.

5.2 Directors’ service agreements

Each of the executive directors has a service contracts with TCS.


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Directors’ service agreements, in respect of Messrs B N Birkholtz and J H Taljaard, provide for an employment period of 24 months beginning 10 October 2007 followed by consecutive periods of employment of 12 months each. The agreements further provide for a notice period of 3 calendar months and a restraint of trade period of 12 months. The terms relating to the remuneration of Messrs B N Birkholtz and J H Taljaard are set out in paragraph 4.1 above.

Directors’ service agreements, in respect of Messrs A S Mohamed and M Reichenberg, provide for an indefinite employment period, a notice period of 3 calendar months and a restraint of trade period of 12 months. The terms relating to the remuneration of Messrs A S Mohamed and M Reichenberg are set out in paragraph 4.3 above.

6. OTHER DIRECTORSHIPS HELD BY DIRECTORS OF TCS AND THE COMPANY

6.1 Set out below are the names of companies and partnerships to which the directors have been a director or partner at anytime in the five years preceding this prospectus:

Registration Director Current directorships/Memberships number

G N Sam Accelerate Sport South Africa (Proprietary) Limited 2003/030786/07

Great Force Investments 63 (Proprietary) Limited 2006/018207/07

In-Site Sports Holdings (Proprietary) Limited 2004/015003/07

Infront One Twenty Seven Investments (Proprietary) Limited 1996/017828/07

Sunset Bay Trading 490 (Proprietary) Limited 2006/010366/07

Team South Africa 2002/030392/08

Arengo 111 (Proprietary) Limited 2005/002971/07

Bouy Holdings (Proprietary) Limited 1998/017309/07

Dancor Projects 1993/014154/23

Eastern Cape Investment Corporation (Proprietary) Limited 1995/092755/07

Erongo Fishing (Proprietary) Limited 2004/010150/07

Hurdec SA (Proprietary) Limited 1999/008659/07

IBEC Holdings (Proprietary) Limited 1996/000188/07

IBEC Investments (Proprietary) Limited 1996/000120/07

IBEC Properties (Proprietary) Limited 1996/000570/07

Independent Business Enrichment Center 1990/006935/08

Nguni Heroes Park Foundation 2003/006810/08

Premier Hotels and Resorts (Proprietary) Limited 1991/000698/07

South African Commonwealth Games Association 1997/005792/08

Sports Magic Trading (Proprietary) Limited 1997/004468/07

Total Client Services Limited 1988/025018/06

Wine Et Al 2007/210702/23

Wolkberg 1992/012445/23

Zonke Sportsgate (Proprietary) Limited 2002/024316/07

Blue Canyon (One) Trading (Proprietary) Limited 2002/010441/07


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L Sipoyo Moneyweb Holdings Limited 1998/025067/06

Bhejula Logistics (Proprietary) Limited 2005/009657/07

Bizonsa Trading 2000/076102/23

Dertrade 110 (Proprietary) Limited 2002/022869/07

Gugulethu Social Housing 2000/008493/08

Imanyano Resources (Proprietary) Limited 2003/027663/07

Imbewu Mineral Holdings (Proprietary) Limited 2003/029230/07

Imbewu Mineral Resources (Proprietary) Limited 2000/010400/07

Imbewu Oceans (Proprietary) Limited 2005/002503/07

Isingqi Investment Holdings (Proprietary) Limited 2007/011917/07

JBB Development And Project Managers (Proprietary) Limited 2003/019972/07

JBB Holdings 2005/014103/07

Kompanjiestuin Development Company 2003/019354/07

NR And LW Consultants 1997/037055/23

Qhwesha Investment Holdings 2004/027542/07

Rapitrade 346 2004/011764/07

Total Client Services 1998/025018/07

Vingca Investment Holdings 2004/005254/07

B N Birkholtz Pribo 1990/029150/23


Total Computer Services (Proprietary) Limited 1979/005478/07

Total Computer Services Investments 1992/000637/23

Villa Chateau home Owners Association 2003/005662/08

Wesstroom Properties 2001/055856/23

J H Taljaard Brenchmore Properties (Proprietary) Limited 2005/029529/07


A S Mohamed Total Client Services Limited 1998/025018/06


Nutraffic Management (Proprietary) Limited 2007/020659/07

M Reichenberg Total Client Services Limited 1998/025018/06


Mirachem (Proprietary) Limited 2006/004170/07

6.2 The directors are still directors of all of the above mentioned companies. 7. RELEVANT PROVISIONS OF THE ARTICLES OF ASSOCIATION OF THE COMPANY PROVIDING FOR

THE APPOINTMENT, QUALIFICATION, REMUNERATION AND BORROWING POWERS OF DIRECTORS


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Extracts from the articles of association of TCS are set out below:

“DIRECTORS - NUMBER, QUALIFICATION AND REMUNERATION

89. The number of directors shall be not less than four.

90. A director shall not be obliged to hold any qualification shares.

91. The remuneration of the directors for their services as such shall be determined from time to time by a general meeting.

92 The directors shall be paid all travelling, subsistence, and other expenses properly incurred by them in

the execution of their duties in or about the business of the company and which are authorised or ratified by a disinterested quorum of the directors, which may be in addition to or in substitution for any other remuneration.

ALTERNATE DIRECTORS

93. Each director shall have the power to appoint any person to act as alternate director in his place during his absence or inability to act as such, and at his discretion to remove such alternate director, and to appoint another in his stead, provided that the appointment of such alternate director shall be made in writing and approved by the directors. On such appointment being made and approved, the alternate director shall (except as regards the power to appoint an alternate and remuneration) in all respects be subject to the terms and conditions existing with reference to the other directors of the company and each alternate director, whilst so acting, shall be entitled to receive notice of all meetings of the directors or of any committee of the directors of which his appointer is a member, and to attend and vote at any such meeting at which his appointer is not personally present. The alternate shall generally be entitled to exercise and discharge all the functions, powers and duties of his appointer in such appointer's absence as if he were a director. The remuneration of an alternate director shall be payable only out of the remuneration payable to the director appointing him and he shall have no claim against the company for such remuneration.

94. The appointment of an alternate director shall be cancelled and the alternate director shall cease to

hold office on the happening of any event which, if he were a director, would cause him to cease to hold office in terms of these articles, or if the director who appointed him shall cease to be a director or shall give notice in writing to the secretary that the alternate director representing him shall have ceased to do so. In the event of the disqualification or resignation of any alternate director during the absence or inability to act of the director whom he represents, the vacancy so arising shall be filled by the chairman of the directors who shall appoint a person to fill such vacancy subject to the approval of the board. A director retiring at any general meeting and being re-elected shall not for the purposes of this article, be deemed to have ceased to be a director. However, any appointment of a director as an addition to the board shall be confirmed at the next annual general meeting.

95. A person may be appointed as alternate to more than one director and where a person is alternate to

more than one director, or where an alternate director is a director; he shall have a separate vote, on behalf of each director he is representing, in addition to his own vote, if any.

GENERAL POWERS OF DIRECTORS

96. The management of the business and the control of the company shall be vested in the directors who, in addition to the powers and authorities by these articles expressly conferred upon them, may exercise all such powers, and do all such acts and things as may be exercised or done by the company and are not hereby or by the Act expressly directed or required to be exercised or done by the company in general meeting, but subject nevertheless, to such management and control not being inconsistent with these articles nor with any resolution passed at any general meeting of the members in accordance therewith. No resolution passed by the company in general meeting shall invalidate any prior act of the directors which would have been valid if such resolution had not been


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passed. The general powers given by this article shall not be limited or restricted by any special authority or power given to the directors by any other article.

97. Although the directors shall have power, pursuant to section 228 of the Act, to enter into a provisional

contract for the sale or alienation of the whole or substantially the whole of the undertaking of the company, or the whole or the greater part of the assets of the company, such contract shall only become binding on the company in the event of the specific transaction proposed by the directors being authorised or ratified in terms of a resolution passed by a majority of the votes cast at a general meeting convened for that purpose. All the provisions of these articles as to general meetings shall apply mutatis mutandis to meetings convened under this article for such purposes.

PAYMENTS TO SHAREHOLDERS

98. Subject to the provisions of section 90 of the Act (and, if applicable, any relevant regulations and/or requirements of the JSE), the company is hereby authorised to make payments to its shareholders. Any such payment to shareholders shall not be made on the basis that the amount paid may be called up again by the company.

BORROWING POWERS

99. The directors may exercise all the powers of the company to borrow money and to mortgage or encumber its undertaking, property or any part thereof and to issue debentures or debenture stock, whether secured or unsecured, and other securities (with such special privileges, if any, as to allotment of shares or stock, attending and voting at general meetings, appointment of directors or otherwise as may be sanctioned by a general meeting) whether outright or as security for any debt, liability or obligation of the company or of any third party.

100. For the purpose of the provisions of article 99, the borrowing powers of the directors shall be unlimited. 101. Subject to article 105, the directors may give pensions, gratuities and allowances to and make

payments for or towards the insurance of any employees or ex-employees, including directors or ex-directors, of the company, or of any company which is or was a subsidiary of the company or is or was in any way allied to or associated with it or any such subsidiary, and the wives, widows, families and dependants of such persons and may establish and maintain any non-contributory pension, superannuation, provident and benefit funds for the benefit of any such persons and make contributions to any such funds and pay premiums for the purchase of any such gratuity, pension, allowance, life assurance or other benefit.

LOCAL BOARDS, AGENTS AND COMMISSIONS OF THE BOARD

102. The directors may establish any local boards, committees or agencies in the Republic or elsewhere for managing any of the affairs of the company and may –

102.1 appoint any persons to be members of such local boards or committees, or any managers or

agents;

102.2 fix the remuneration of the persons referred to in article 102.1;

102.3 delegate to any local board, committee, manager or agent any of the powers, authorities and discretions vested in the directors with power to sub-delegate; and

102.4 authorise the members of any local board or committee or any of them, to fill any vacancies

therein and to act notwithstanding vacancies.

Any such appointment or delegation may be made upon such terms and subject to such conditions as the directors may think fit, and the directors may remove any person so appointed, or annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby.


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103. The directors may by power of attorney appoint any company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the directors, to be the attorney or agent of the company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these articles) and for such period and subject to such conditions as they may think fit. Any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the directors think fit, and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions vested in him or them.

104. The directors may delegate any of their powers to an executive or other committee whether consisting

of a member of their body or not as they think fit. Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may from time to time be imposed on it by the directors and any such regulations may authorise the appointment of sub-committees.

MANAGING AND EXECUTIVE DIRECTORS

105. A disinterested quorum of directors may from time to time appoint one or more of their body to be managing director, assistant managing director, general manager or executive director (with or without specific designation) of the company or to any other executive office with the company for such period and, subject to the provisions of section 225 of the Act, at such remuneration (whether by way of salary, commission or participation in profits, or partly in one way and partly in another) and generally on such terms as they may think fit, and may, subject to any contract between him or them and the company, from time to time terminate his or their appointment and appoint another or others in his or their place or places.

106. A managing director may be appointed by a disinterested quorum of directors and he shall not be

subject to retirement by rotation or be taken into account in determining the rotation or retirement of directors, except during the period of any such appointment, provided that less than half of the directors may be appointed managing directors on the condition that they shall not be subject to retirement by rotation. Subject to the terms of his appointment, a managing director shall be subject to the same provisions as to removal as the other directors, and if he ceases to hold the office of director for any reason, he shall ipso facto cease to be a managing director.

107. A disinterested quorum of directors may from time to time entrust to and confer upon a director

appointed to any position or executive office under article 105 such of the powers exercisable under these articles by the directors as they think fit, and may confer such powers for such time, and to be exercised for such objects and purposes and upon such terms and conditions and with such restrictions, as they think expedient, and they may confer such powers either collaterally with or to the exclusion of and in substitution for all or any of the powers of the directors in that behalf, and may from time to time revoke, withdraw, alter or vary all or any of such powers.

CASUAL VACANCIES

108. Without prejudice to the powers of the company in general meeting to appoint any person to be a director, a disinterested quorum of directors shall have power at any time and from time to time to appoint any person to be a director, either to fill a casual vacancy or as an addition to the existing board, but so that the total number of directors shall not at any time exceed the maximum number, if any, fixed by or in accordance with these articles. Any director so appointed shall hold office only until the next following annual general meeting and shall then be eligible for re-election. The appointment of a director to fill a casual vacancy shall therefore be confirmed at the next annual general meeting.

DISQUALIFICATION AND PRIVILEGES OF DIRECTORS

109. The office of a director shall ipso facto be terminated and vacated if the director –

109.1 ceases to be a director by virtue of any of the provisions of the Act, or is disqualified from acting as, or becomes prohibited from being a director by reason of any order made under the Act; or


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109.2 files a petition for the surrender of his estate, or an application for an administration order, or if his estate is sequestrated, or if he commits an act of insolvency as defined in the insolvency law for the time being in force or if he makes any arrangement, compromise or composition with his creditors generally; or

109.3 is found to be lunatic or becomes of unsound mind; or

109.4 is removed by a resolution of the company in terms of section 220 of the Act with effect from the

date of, or such later date as is provided for in, such resolution; or

109.5 resigns his office by notice in writing to the company with effect from the date of, or such later date as is provided for in, such notice; or

109.6 absents himself from meetings of directors for six consecutive months without special leave of

absence from the other directors who resolve that his office shall be vacated, provided that this provision shall not apply to a director who is represented by an alternate who does not so absent himself; or

109.7 becomes retired in terms of articles 117 to 124 inclusive.

110. No director or prospective director shall be disqualified by his office from contracting with the company

either as vendor, purchaser, lender, underwriter, guarantor for commission or profit on any shares or securities or liability of the company, or of any company in which the company may be interested, or in any other manner whatsoever. No such contract or arrangement entered into by or on behalf of the company in which any director shall be in any way interested, nor any contract or agreement entered into with any company or partnership of or in which any director shall be a member, director or partner or otherwise interested, shall be or be liable to be invalidated or voided by any such reason or by reason of the board of directors of the company not constituting an independent executive or disinterested quorum.

111. Any director so contracting or being so interested or acquiring any benefit under any contract or

arrangement made or entered into by or on behalf of any person, company or partnership in relation to the affairs of the company shall not be liable to account to the company for any profits or benefits realised by or under such contract or arrangement by reason of such director holding that office or by reason of the fiduciary relationship thereby established.

112. Any director so interested or acquiring any such benefits shall not be entitled to vote at any board

meeting or otherwise in relation to such contract.

113. Notwithstanding the aforegoing, any director so interested or acquiring any such benefit shall disclose the fact of his possessing any interest, whether as director or member or otherwise, whether or not it appears on the face of the contract or arrangement, in accordance with the provisions of sections 234 and 240 of the Act. Subject to the provisions of section 234(3) of the Act and the Listing Requirements of the JSE, a general notice in writing given to the directors by a director to the effect that he is a member of a specified company or firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with that company or firm, shall be deemed to be a sufficient disclosure in relation to any contract or proposed contract so made or to be made.

114. Without detracting from the generality of articles 110 to 113 inclusive, a director (and, in the case of

article 113 any firm of which he is a member) may, subject to the provisions of the Act –

114.1 be employed by or hold any other office or place of profit in the company, or any holding or subsidiary company of the company or any company controlled by the company, other than that of auditor, in conjunction with his directorship, and upon such terms as to appointment, and subject to the provisions of section 225 of the Act, remuneration and tenure of office and otherwise as a disinterested quorum of directors may determine;


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114.2 act in a professional capacity for the company, and he or such firm shall be entitled to remuneration for those professional services as if he were not a director, provided that nothing herein contained shall authorise a director or any firm of which he is a member, to act as auditor of the company or of any holding or subsidiary company of the company;

114.3 be or become a director of any subsidiary or other company promoted by the company or in

which it may be interested as vendor, shareholder or otherwise;

114.4 represent the company in the management of any business operation or concern in which the company may be interested as a partner or otherwise.

115. Notwithstanding any such interest, any such director may be counted in the quorum present at any

meeting at which any such matter is being considered and vote thereon as though he had no interest therein, and no such director shall be accountable to the company for any remuneration, profit, gain or other benefit received in any capacity as aforesaid, subject to the Listings Requirements of the JSE.

116. Any voting power conferred by the shares in a company referred to in article 114.3, or exercisable by

the directors as directors of such company, may be exercised by the directors in such manner in all respects as they think fit, including the exercise thereof in favour of any resolution appointing themselves or any of them directors or other officers of such company. Any director may vote in favour of the exercise of such voting rights in such manner, notwithstanding that he may be, or about to be, appointed a director or other officer of such company and as such, or in any other manner, is or may become interested in the exercise of such voting rights in the manner aforesaid, save that any resolution relating to the payment of remuneration to the directors or officers of such company shall be voted on by a disinterested quorum of directors.

ROTATION OF DIRECTORS AND REMOVAL

117. At each annual general meeting of the company one-third of the directors, or if their number is not a

multiple of three then the number nearest thereto, but not less than one-third shall retire from office, provided that in determining the number of directors to retire no account shall be taken of any director who by reason of the provisions of article 106 is not subject to retirement. The directors so to retire at each annual general meeting shall, subject to any provision to the contrary in these articles, be the directors who have been longest in office. As between two or more directors who have been in office an equal length of time, the directors to retire shall, in default of agreement between them be determined by lot. The length of time a director has been in office shall be computed from the date of his last election or appointment. A retiring director shall hold office until the conclusion of the meeting at which he retires.

118. Notwithstanding the above, if a director is appointed a managing director, or as an employee of the

company in any other capacity, the contract under which he is appointed may provide that he shall not, while he continues to hold that position or office under contract for a term of rotation, be subject to retirement by such contract and he/she shall not in such case be taken into account in determining the rotation or retirement of directors, provided that less than half of the directors may be appointed to any such position.

119. Retiring directors shall be eligible for re-election. No person other than a retiring director shall be

eligible for election to the office of director at any annual general meeting unless he, or some member intending to propose him, has at least seven clear days before the meeting left at the office a notice in writing, duly signed, signifying his candidature for that office or the intention of such member to propose him. The power to elect directors at general meetings other than annual general meetings shall be exercisable only when special notice has been given of the intended resolution exercising such power.

120. Subject to article 116, the company in general meeting at which any directors retire in the manner

aforesaid may, subject to any resolution reducing the number of directors, fill the vacated offices by electing a like number of persons to be directors, and may fill any other vacancies.


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121. If, at any general meeting at which an election of directors ought to take place, the place of any retiring director is not filled, he shall continue in office until the dissolution of the annual general meeting in the next year, and so on from year to year until his place is filled, unless it shall be determined at such meeting to reduce the number of the directors.

122. Subject to the provisions of section 220 of the Act, the company may by ordinary resolution remove

any director and elect another person in his stead. 123. The company may by ordinary resolution in general meeting from time to time increase or reduce the

number of directors and may also determine in what manner or rotation such increased or reduced number is to go out of office. Whenever such increase is made the members at the said meeting, or failing them, the directors, may fill the new seats so created. The appointment of any director to fill a casual vacancy or as an addition to the board must be confirmed at the next annual general meeting.

124. No appointment of a director, except that of a retiring director, re-elected at an annual general meeting

or a general meeting, shall take effect until consent of such director to act as a director of the company has been lodged with the company.”


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Annexure 2

HISTORICAL FINANCIAL INFORMATION OF TCS FOR THE YEARS ENDED 28 FEBRUARY 2007, 28 FEBRUARY 2006 AND 28 FEBRUARY 2005

1. NATURE OF BUSINESS

Total Client Services Limited (“TCS”) previously traded under the name Labat Traffic Solutions (Proprietary) Limited (“LTS”). The change of name was effected and registered with CIPRO on 7 November 2007. The historical financial information presented in this Annexure has been modified to reflect the change of name.

TCS was established in December 1999, to provide customised IT and financial solutions and a high-tech traffic management system to municipalities and Provincial Governments. The unique solution offered by TCS enables its clients to obtain a state of the art system together with an experienced team to run back-office processing. TCS intends to become a prominent supplier to municipalities and Provincial Governments of various outsourced automated back-office systems.

TCS owns a 51% shareholding in Total Computer Services (Proprietary) Limited (“Total Computer Services”), a service business, targeting the development of products and services to the traffic management sector. Total Computer Services is dedicated to the design, development, installation, training and supporting of traffic systems.

2. RESPONSIBILITY The preparation and presentation of the historical financial information is the responsibility of the directors of the company.

3. BASIS OF PREPARATION The balance sheet, income statement, cash flow statement and statement of changes in equity financial information and related notes for the years ended 28 February 2007 and 28 February 2006 relating to TCS are extracted from the most recently audited financial results of TCS for the years ended 28 February 2007 and 28 February 2006. The financial results have been prepared in terms of International Financial Reporting Standards and have been audited by TCS’ auditors, PricewaterhouseCoopers, who have issued unqualified reports.

In respect of the audited financial results of TCS for the year ended 28 February 2005, the auditors of TCS, PricewaterhouseCoopers issued a qualified audit opinion stating that “except for any adjustment that might have been found necessary had it been possible for us to carry out satisfactory audit procedures on the revenue, in our opinion, the financial statements and group financial statements fairly represent, in all material respects, the financial position of the company and the group at 28 February 2005 and the results of its operations and cash flows for the year then ended in accordance with Statement of Generally Accepted Accounting Practice in South Africa, and in the manner required by the South African Companies Act.”

The company changed its accounting policy relating to revenue recognition in the 2006 financial year. The results of TCS for 2005 were restated in the 2006 financial statements. The historical information presented in the Annexure is the restated 2005 results. The non-compliance with General Accepted Accounting Practices in South Africa as stated in the qualified audited opinion for 2005 has been addressed by this change in accounting policy and the resultant restatement of the 2005 results.

4. COMMENTARY All major capital expenditure in respect of the initial contracts and tenders have been committed and implemented. The current focus of the business is to increase operational efficiencies in respect of the existing client base.


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TCS has a strong cash generative capacity and will accordingly be capable in the normal course to fund ongoing equipment maintenance and incidental capital expenditure requirements from its internal cash resources.

TCS will continue to substitute existing analogue installations with digital technology. This capital expenditure is not material and will be phased in on a gradual basis. It will be funded from internal cash resources. The cheaper operating expenditure base of the digital equipment will partially off-set the costs of its installation.

As the contracts of TCS are maturing and the capital investment requirement diminishes, the profitability of TCS is improving. In addition, the current management focus on operational efficiencies will further enhance the profitability profile of TCS.

An expansion in payment methodologies and the pro-active collection processes adopted will further enhance the success ratio of fine collections. To this end, the establishment of a dedicated call centre is in an advanced stage of planning by Total Computer Services.

The underlying 51% equity investment in Total Computer Services is also performing well and provides a platform to TCS to offer an integrated end-to-end solution to clients in relation to traffic flow management. Total Computer Services is in the process of rolling out its Windows-based back-office software solution. Pilot installations have performed satisfactorily.

Total Computer Services is also exploring the possibility of expansion following various approaches from potential business partners in the Middle East and Europe.

5. REVIEW OF THE BUSINESS FOR THE YEAR ENDED 28 FEBRUARY 2007 During the year ended 28 February 2007 turnover increased by 12.5%. Increased administrative expenses resulted in a decreased net profit after taxation figure of R11,5 million (2006: R12,8 million).

On a consolidated basis, TCS and its interest in Total Computer Services showed a 10% increase in turnover and a 19% decrease in profit after tax.

Dividends paid to shareholders amounted to R8 670 000. (2006: R7,1 million; 2005: R510 000).

It is the directors’ opinion that TCS and Total Computer Services are maturing businesses with established and proven solutions and processes and that the business strategies to enhance operational efficiencies will commence to reap rewards in the current financial year.

There are no material facts and no material circumstances that have occurred since the end of the last financial year and the last practicable date that has to be disclosed to shareholders.

6. YEARS ENDED 28 FEBRUARY 2007, 28 FEBRUARY 2006 AND FEBRUARY 2005 The audited financial statements reflect the results for the respective financial years and no further comments are required.


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CONSOLIDATED BALANCE SHEETS

Notes

Audited as at 28 February

2007R

Restated audited as at 28 February

2006 R

Restated audited as at 28 February

2005R

ASSETS Non-current assets 26 161 977 24 336 418 22 036 354Property, plant and equipment 22 20 916 872 20 869 952 18 569 888Intangible assets 23 4 446 660 3 466 466 3 466 466Investment in subsidiary 8 - - -Non-current receivables 9 798 445 - - Current assets 31 324 718 30 619 343 16 326 295Trade and other receivables 10 25 591 748 24 374 779 14 954 219Current tax receivable - 73 746 -Cash and cash equivalents 11 4 861 440 6 170 818 1 372 076Current portion of non-current receivables

9 350 000

- -

Amounts owing by related parties 20 210 515 - -Amounts owing by holding company 20 311 015 - - Total assets 57 486 695 54 955 761 38 362 649 EQUITY AND LIABILITIES Equity 22 663 247 21 379 333 10 816 793Share capital 18 100 100 100Retained earnings 19 344 418 17 286 018 9 138 165Minority interest 3 318 729 4 093 215 1 678 528 Non-current liabilities 7 404 200 6 512 204 8 235 001Interest-bearing borrowings 14 3 804 763 5 768 356 7 510 602Deferred tax liabilities 15 169 437 243 848 724 399Loans from shareholders 20 3 430 000 500 000 - Current liabilities 27 419 248 27 064 224 19 310 855Trade and other payables 12 8 670 306 8 740 753 5 195 665Deferred income 1 280 415 1 238 562 1 511 236Current tax liabilities 7 803 012 5 733 324 3 037 840Short term borrowings 13 69 898 - 736 730Current portion of borrowings 14 6 025 617 6 916 567 7 692 339Shareholders for dividends 3 570 000 1 979 600 -Amounts owing to holding company 20 - 59 626 350 626Amounts owing to related parties 20 - 2 395 792 786 419 Total equity and liabilities 57 486 695 54 955 761 38 362 649


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CONSOLIDATED INCOME STATEMENTS

Notes

Audited year ended 28

February 2007

R

Restated audited year

ended 28 February 2006

R


ended28 February

2005R

Revenue 2 114 695 508 104 144 929 51 308 868Cost of sales (530 842) (469 179) (1 275 058)Gross profit 114 164 666 103 675 750 50 033 810Other operating income 332 274 186 276 579 528Administrative expenses (47 326 738) (39 600 224) (26 634 164)Other operating expenses (36 553 924) (28 648 704) (12 578 029)Operating profit 3 30 616 278 35 613 098 11 401 145Investment income 372 093 - -Finance costs 5 (1 904 055) (1 827 078) (1 705 191)Profit before taxation 29 084 316 33 786 020 9 695 954Taxation 6 (10 800 403) (11 223 480) (3 719 017) Profit for the year 18 283 913 22 562 540 5 976 937 Dividends per share (cents) 7 8 670 000 7 100 000 510 000 Attributable to: Equity holders of the company 10 728 399 15 247 853 4 701 880Minority interest 7 555 514 7 314 687 1 275 057 18 283 913 22 562 540 5 976 937


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CONSOLIDATED CASH FLOW STATEMENTS

Notes

Audited year ended

28 February 2007

R


ended 28 February

2006 R


ended28 February

2005R

Cash flows from operating activities Cash receipts from customers 114 806 795 100 503 110 43 409 859Cash paid to suppliers and employees (82 062 730) (63 073 609) (31 962 820)Net cash flow from operating activities 19 32 744 065 37 429 501 11 447 039Interest paid (1 904 055) (1 827 078) (1 705 191)Interest received 442 448 172 477 104 925Dividends received - - -Dividends paid to all parties (15 409 600) (10 020 400) (1 000 000)Tax paid (8 731 379) (9 082 293) (2 281 644) Net cash flow from operating activities 7 141 479 16 672 207 6 565 129 Cash flows from investing activities Purchase of property, plant and equipment

22

(7 616 018)

(9 218 116) (12 489 370)

Proceeds from disposal of property, plant and equipment

-

99 399 474 873

Expenditure on product development 23 (980 194) - - Net cash flow from investing activities (8 596 212) (9 118 717) (12 014 497) Cash flows from financing activities Net (repayments)/proceeds of interest bearing borrowings

14 (2 854 543) (2 518 018) 4 766 266

Net (repayments) of other borrowings - - (704 407)Proceeds from shareholders loan 2 930 000 500 000 -Net cash flow from financing activities 75 457 (2 018 018) 4 061 859 Net increase/(decrease) in cash and cash equivalents

(1 379 276) 5 535 472 (1 387 509)

Cash and cash equivalents at beginning of the year

11 6 170 818 635 346 2 022 855

Cash and cash equivalents at end of the year

11 4 791 542 6 170 818 635 346


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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Issued share capital

R

Restated accumulated

profitR

Minority interest

R

Total

RBalance at 1 March 2004 100 4 946 285 893 471 5 839 856Share capital - - Profit for the year - 4 701 880 1 275 057 5 976 937Dividends (510 000) (490 000) (1 000 000)Balance at 28 February 2005 100 9 138 165 1 678 528 10 816 793 Balance at 1 March 2005 100 9 138 165 1 678 528 10 816 793Share capital - - Profit for the year - 15 247 853 7 314 687 22 562 540Dividends (7 100 000) (4 900 000) (12 000 000)Balance at 28 February 2006 100 17 286 018 4 093 215 21 379 333 Balance at 1 March 2006 100 17 286 019 4 093 215 21 379 334Share capital - - Profit for the year - 10 728 399 7 555 514 18 283 913Dividends (8 670 000) (8 330 000) (17 000 000)Balance at 28 February 2007 100 19 344 418 3 318 729 22 663 247


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NOTES TO THE ANNUAL FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

1.1 Basis of preparation

The consolidated financial statements of Total Client Services Limited have been prepared in accordance with International Financial Reporting Standards (IFRS). The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of land and buildings, available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 1.21 of the accounting policy notes.

Standards, amendments and interpretations effective in 2007 but not relevant

The following standards, amendments and interpretations are mandatory for accounting periods beginning on or after 1 January 2006 but are not relevant to the group's operations:

- IAS 19 (Amendment), Employee Benefits; - IAS 21 (Amendment), Net Investment in a Foreign Operation; - IAS 39 (Amendment), Cash Flow Hedge Accounting of Forecast Intragroup Transactions; - IAS 39 (Amendment), The Fair Value Option; - IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts; - IFRS 1 (Amendment), First-time Adoption of International Financial Reporting Standards and IFRS 6 (Amendment), Exploration for and Evaluation of Mineral Resources; - IFRS 6, Exploration for and Evaluation of Mineral Resources; - IFRIC 4, Determining whether an Arrangement contains a Lease; - IFRIC 5, Rights to Interests arising from Decommissioning, Restoration and Environmental

Rehabilitation Funds; - IFRIC 6, Liabilities arising from Participating in a Specific Market - Waste Electrical and

Electronic Equipment; and - IFRIC 7, Applying the Restatement Approach under IAS 29 - Financial Reporting in

Hyperinflationary Economies.

Interpretations to existing standards that are not yet effective and have not been early adopted by the group

The following interpretations to existing standards have been published that are mandatory for the group's accounting periods beginning on or after 1 May 2006 or later periods but that the group has not early adopted:

- IAS 23, Borrowing Costs (effective for annual periods beginning on or after 1 January 2009); - IFRS 7, Financial Instruments: Disclosures, and the complementary Amendment to IAS 1,

Presentation of Financial Statements - Capital Disclosures; - IFRIC 8, Scope of IFRS 2 (effective for annual periods beginning on or after 1 May 2006). IFRIC

8 requires consideration of transactions involving the issuance of equity instruments - where the identifiable consideration received is less than the fair value of the equity instruments issued - to establish whether or not they fall within the scope of IFRS 2. The group will apply IFRIC 8 from 1 March 2007, but it is not expected to have an impact on the group's accounts; and

- IFRIC 10, Interim Financial Reporting and Impairment (effective for annual periods beginning on or after 1 November 2006). IFRIC 10 prohibits the impairment losses recognised in an interim


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period on goodwill, investments in equity instruments and investments in financial assets carried at cost to be reversed at a subsequent balance sheet date. The group will apply IFRIC 10 from 1 March 2007, but it is not expected to have an impact on the group's accounts.

Interpretations to existing standards that are not yet effective and not relevant for the group's operations

The following interpretations to existing standards have been published that are mandatory for the group's accounting periods beginning on or after 1 May 2006 or later periods but are not relevant for the group's operations:

- IFRS 8, Operating Segments (effective for annual periods beginning on or after 1 January 2009);

- IFRIC 9, Reassessment of Embedded Derivatives (effective for annual periods beginning on or after 1 June 2006). IFRIC 9 requires an entity to assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative when the entity first becomes a party to the contract. Subsequent reassessment is prohibited unless there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract, in which case reassessment is required. As none of the group entities have changed the terms of their contracts, IFRIC 9 is not relevant to the group's operations;

- IFRIC 11, IFRS 2 - Group and Treasury Share Transactions (effective for annual periods beginning on or after 1 March 2007); and

- IFRIC 12, Service Concession Arrangements (effective for annual periods beginning on or after 1 January 2008).

In respect of the financial statements of Total Client Services Limited for the financial year ended 28 February 2005, the annual financial statements were prepared in accordance with and complied with South African Statements of Generally Accepted Accounting Practice. The financial statements were prepared under the historical cost convention. The restatement of these results upon conversion to IFRS on 1 March 2004, are fully explained in note 1.23 of the accounting policy notes.

1.2 Consolidation

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 de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated, but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

Transactions and minority interests


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The group applies a policy of treating transactions with minority interests as transactions with parties external to the group. Disposals to minority interests result in gains and losses for the group that are recorded in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary.

1.3 Foreign currency translation

Functional currency and presentation currency

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Rands, which is the group’s functional and presentation currency.

1.4 Property, plant, and equipment

All property, plant, and equipment is stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separated 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 the income statement during the financial period in which they are incurred.

Depreciation is calculated on the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Computer hardware 20% - 33.3%

Computer software 33.3%Computer equipment: Leased 20%Furniture and fittings 10% - 16.67%Office equipment 20%Vehicles 20%

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit.

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

1.5 Financial assets

The group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial assets classified in this category if acquired principally for the purpose of selling in the short term.


75

Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Loans and receivables are classified as trade and other receivables in the balance sheet (Note 9).

Available for sale financial assets

Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Interest on available for sale securities calculated using the effective interest method is recognised in the income statement as part of other income. Dividends on available for sale equity instruments are recognised in the income statement as part of other income when the group's right to receive payments is established.

The group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial 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 on that financial asset previously recognised in profit or loss - is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. Impairment testing of trade receivables is described in Note 8.

1.6 Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. 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 receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement. When a trade receivable is uncollectible it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited in the income statement.

1.7 Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

1.8 Share capital

Ordinary shares are classified as equity.

1.9 Trade payables


76

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

1.10 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement 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 balance sheet date.

1.11 Deferred income taxes

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. The deferred income tax is not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.

1.12 Employee benefits

Provident fund obligations

The group has a defined contribution plan. A defined contribution plan is a provident plan under which the group pays fixed contributions into 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.

For the defined contribution plan, the group pays contributions to a publicly administered provident fund plan on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Profit-sharing or bonus plans

The group recognises a liability and an expense for bonuses and profit-sharing. The group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

1.13 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents the amount receivable for services provided in the normal course of business net of value added taxation.


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The group's recorded revenue comprises of receipts from traffic authorities during the year, and an accrual for a portion of the revenue received after year end. Refer to accounting policy Note 21 (Significant accounting estimates and judgements) for further details.

Interest income is recognised on a time-proportion basis using the effective interest method.

Dividend income is recognised when the right to receive payment is established.

1.14 Leases

Leases of property, plant and equipment where the group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

1.15 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 company’s shareholders.

1.16 Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

1.17 Intangible assets

An intangible asset is recognised when:

- it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and

- the cost of the asset can be measured reliably.

Intangible assets are initially recognised at cost.

Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred.

An intangible asset arising from development (or from the development phase of an internal project) is recognised when:


78

- it is technically feasible to complete the asset so that it will be available for use or sale; - there is an intention to complete and use or sell it; - there is an ability to use or sell it; - it will generate probable future economic benefits; - there are available technical, financial and other resources to complete the development and to

use or sell the asset; and - the expenditure attributable to the asset during its development can be measured reliably.

Intangible assets are carried at revalued amount, being fair value at the date of revaluation less any subsequent accumulated amortisation and any subsequent accumulated impairment losses. Revaluations are made with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date.

Any increase in the carrying amount of an intangible asset, as a result of a revaluation, is credited directly to equity in the revaluation reserve. The increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss.

Any decrease in the carrying amount of an intangible asset, as a result of a revaluation, is recognised in profit or loss in the current period. The decrease is debited directly to equity in the revaluation reserve to the extent of any credit balance existing in the revaluation surplus in respect of that asset.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. Amortisation is not provided for on these intangible assets.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the group's share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

Computer software

Costs associated with developing or maintaining computer software programmes are recognised as an expense as 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 employee costs incurred as a result of developing software and an appropriate portion of relevant overheads.

Computer software development costs recognised as assets are amortised over their estimated useful lives (not exceeding three years).

1.18 Contingencies

Contingent assets and contingent liabilities are not recognised.

1.19 Comparatives

The comparative figures have been adjusted to conform to changes in presentation in the current period.

1.20 Financial risk management


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Financial risk factors

The group’s activities expose it to a variety of financial risks: market risk (including fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group’s financial performance.

Market risk

(i) Price risk The group is exposed to equity securities price risk because of investments held by the group and classified on the consolidated balance sheet either as available-for-sale or at fair value through profit or loss. The group is not exposed to commodity price risk. (ii) Cash flow and fair value interest rate risk As the group has no significant interest-bearing assets, the group’s income and operating cash flows are substantially independent of changes in market interest rates. The group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the group to cash flow interest rate risk. Borrowings issued at fixed rates expose the group to fair value interest rate risk.

Credit risk

The group has no significant concentrations of credit risk. It has policies in place to ensure that sales are made to customers with an appropriate credit history. Derivative counterparties and cash transactions are limited to high-credit-quality financial institutions. The group has policies that limit the amount of credit exposure to any financial institution.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions.

Capital risk management

The group's objectives when managing capital are to safeguard the group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, issue new shares or sell assets to reduce debt.

Fair value estimation

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments.

1.21 Significant accounting estimates and judgements

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 assets and liabilities within the next financial year are discussed below.

Revenue recognition

The group has accrued for revenue amounting to R 12 600 795 (2006: R 11 366 555; 2005: R 5 728 132). Refer to Note 9 of the annual consolidated financial statements for further information.


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The accrual of revenue is appropriate as in terms of the agreement between the group and its customers, the group may only invoice amounts to their customers once their customers have received payment from the various traffic offenders.

The recognition of revenue on this basis is incorrect as the date at which the traffic offence is committed and the date at which the amounts are invoiced may fall within different periods. The company therefore calculates a work in progress adjustment using a 3 year historical payment aging history and applying a 4 month invoicing average (December to March) to that history. The adjustment then reflects amounts received after year end relating to revenue generated before year end.

Estimated impairment of goodwill

The group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 1.17. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates. No impairment for goodwill has been recognised.

1.22 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 reliable estimate of the amount of the obligation can be made.

1.23 Transition

Basis of transition to IFRS

(i) Application of IFRS 1

The consolidated financial statements for the year ended 28 February 2006 were be the first annual financial statements and annual consolidated financial statements that comply with IFRS. These financial statements and consolidated financial statements have been prepared as described in accounting policy note 1.1. The company has applied IFRS 1 in preparing these financial statements and consolidated financial statements.

Total Client Services Limited and its subsidiary’s transition dates is 1 March 2004. The Group prepared its opening IFRS balance sheet at that date. The reporting date of these financial statements and consolidated financial statements is 28 February 2006. The Group’s IFRS adoption date is 1 March 2005.

In preparing these financial statements and consolidated financial statements in accordance with IFRS 1, the Group has applied the mandatory exceptions and certain of the optional exemptions from full retrospective application of IFRS.

(ii) Exemptions from full retrospective application – elected by the Group

Total Client Services Limited and its subsidiary has elected to apply the following optional exemptions from full retrospective application.

(a) Business combinations exemptions

Total Client Services Limited and its subsidiary has elected not to apply IFRS3 Business Combinations retrospectively to business combinations that occurred prior to March 2004.

(b) Fair value as deemed cost exemptions Total Client Services Limited and its subsidiary did not elect to use the fair value as the deemed cost of property, plant and equipment on the date of transition to IFRS. The useful lives and residual values were adjusted for retrospectively from the date of acquisition of the particular assets of the company.

(c) Employee benefits exemption


81

The Group has not entered into any defined benefit plans; this exemption is not applicable.

(d) Cumulative translation differences exemption

This exemption is not applicable to the preparation of the financial statements and consolidated financial statement of the Group as the functional currency and presentation currency of the companies in the group is the same.

(e) Compound financial instruments exemption

The Group has not issued any compound instruments; this exemption is not applicable.

(f) Assets and liabilities of subsidiaries, associates and joint venture exemption

This exemption is not applicable as it relates to the preparation of the individual financial statements and consolidated financial statements of the group only when such company adopts IFRS later than its parent company.

(g) Exemption from restatement of comparatives for IAS 32 and IAS 39

The Group elected to apply this exemption. It applies previous GAAP rules to derivatives, financial assets and financial liabilities and to hedging relationships for the 2005 comparative information. The adjustments required for differences between GAAP and IAS 32 and IAS 39 are determined and recognised at 1 March 2005. The adjustments are not material.

(h) Designation of financial assets and financial liabilities exemption

The Group has elected not to re-designate financial instruments as available-for-sale investments and as financial assets at fair value through profit and loss.

(i) Share-based payment transaction exemption

The Group has not entered into any share-based payment transactions. The exemption is therefore not applicable.

(j) Insurance contracts exemption

The Group has not entered into any share-based payment transactions. The exemption is therefore not applicable.

(k) Decommissioning liabilities included in the cost of property, plant and equipment exemption

The Group does not have any decommissioning liabilities; this exemption is not applicable.

(l) Fair value measurement of financial assets or liabilities at initial recognition

The Group has not applied the exemptions offered by the revision of IAS 39 on the initial recognition of the financial instruments measured at fair value through profit and loss where there is no active market. This exemption is therefore not applicable.

(iii) Exceptions from full retrospective application followed by the Group

Total Client Services Limited and its subsidiary has elected to apply the following mandatory exceptions from retrospective application.

(a) Derecognition of financial assets and liabilities exception

Financial assets and liabilities derecognised before 1 March 2004 are not re-recognised under IFRS. The application of the exception from restating comparatives for IAS 32 and IAS 39 means that the Group recognised from 1 March 2005 any financial assets and financial liabilities derecognised since 1 March 2004 that do not meet the IAS 39 derecognition criteria. Management did not choose to apply the IAS 39 derecognition criteria to an earlier date. The application of this exception at the opening balance sheet date of 1 March 2005 is not material.


82

(b) Hedge accounting exception

This exception is not applicable as the Group does not apply hedge accounting.

(c) Estimates exception

Estimates under IFRS at 1 March 2004 should be consistent with estimates made for the same date under previous GAAP, unless there is evidence that those estimates were in error. Refer to note 19 to the annual financial statements and annual consolidated financial statements for additional disclosures on material prior period errors.

(d) Assets held for sale and discontinued operations exception

The Group does not have any assets that are held for sale or discontinued operations; this exception is not applicable.

Reconciliations between IFRS and GAAP

The following reconciliations provide a quantification of the effect of the transitions to IFRS, resulting prior errors and the change in accounting policy. The first reconciliation provides an overview of the impact on equity of the transition at 1 March 2004, and 28 February 2005. The following reconciliation provides details of the impact of the transaction on profit and loss for the period ending on 28 February 2005:

(i) Summary of equity

1 March 2004

R

Note 28 February 2005

R

Note

Total equity under local GAAP 6 648 346 12 546 589

Change in useful life of property, plant and equipment (2 370 635) b (1 581 316) b

Work in progress adjustment 668 576 a (1 838 323) a

Other items (2) 11 215

Total equity under IFRS 4 946 285 9 138 165

(ii) Reconciliation of net profit for the year ended 28 February 2005

Note

GAAPR

Restatement R

RestatedR

Revenue a 53 815 767 (2 506 899) 51 308 868

Cost of Sales (1 275 058) - (1 275 058)

52 540 709 (2 506 899) 50 033 810

Other operating income c 475 526 104 002 579 528

Administrative and other operating expenses

b

(39 922 570)

710 377

(39 212 193)

Operating profit 13 093 665 (1 692 520) 11 401 145

Finance cost c (1 601 189) (104 002) (1 705 191)

Profit/(loss) before tax 11 492 476 (1 796 522) 9 695 954

Taxation (3 809 176) 90 159 (3 719 017)


83

Net profit/(loss) 7 683 300 (1 706 363) 5 976 937

(a) Work in progress

The adjustments made are not considered to be IFRS adjustments, the adjustments related to a voluntary change in accounting policy with respect to revenue recognition. Refer to note 20 for further disclosure thereof.

(b) Change in useful lives of property, plant and equipment

Management have re-assessed the useful lives of certain items of property, plant and equipment. Depreciation was influenced by taxation requirements under the previous GAAP, but under the IFRSs reflects the useful life of the assets. Refer to note 20 for further disclosure thereof.

(c) Reallocation of interest income

Finance costs have been reallocated to other income.

NOTES TO THE FINANCIAL STATEMENTS

2. Revenue

Analysis of sales 2007 2006 2005 R R R Services rendered 114 695 508 104 144 929 51 308 868

114 695 508 104 144 929 51 308 868

3. Operating profit

The following items have been included in arriving at profit from operations: Depreciation on property, plant and equipment (Note 21)

7 569 098

6 823 898

5 835 397

- Owned assets 5 380 042 3 967 099 2 732 265- Leased assets under finance leases 2 189 056 2 856 799 3 103 132

(Profit) on disposal of property, plant and equipment

- (5 245)

(153 897)

Impairment charge relating to intangible assets

-

-

530 000

Operating lease rentals 1 534 848 1 308 275 898 659- Land and buildings 628 994 392 128 297 145- Office equipment 142 727 34 361 41 778- Computer equipment 763 127 881 786 559 736

Staff costs (Note 3) 25 680 479 19 820 369 12 667 810

Professional fees 15 024 502 16 080 699 7 765 709- Group 2 400 000 1 200 001 909 792- Startrap 9 304 148 11 168 909 5 114 908- Secretarial and other 3 320 354 3 711 789 1 741 009


84

2006R

2005 R

2005R

- Audit fees - current year 609 354 230 477 232 700- Other services 18 466 19 635 -

4. Staff costs

Salaries and wages 24 548 804 19 097 838 12 076 956Contribution to provident fund - Defined contribution plans 724 680 370 850 373 994Other short term employee benefits 406 995 351 681 218 860

25 680 479 19 820 369 12 669 810

5. Finance costs

Interest expense

- Bank borrowings 151 509 231 449 87 829- Finance leases 1 351 850 1 495 216 1 407 682- Group - - 61 275- Other 400 696 100 413 148 405

1 904 055 1 827 078 1 705 191

6. Taxation

Current tax 8 749 814 10 043 649 3 443 218Deferred tax current year charge (31 248) (10 149) 100 402Effect of changes in tax rate - (24 147) -Current tax prior year adjustment - 160 382 29 736Secondary tax on companies 2 125 000 1 500 000 125 000Deferred tax prior year adjustment (43 163) (446 255) 20 661 10 800 403 11 223 480 3 719 017

The tax on the company’s profit before tax differs from the theoretical amount that would arise using the South African tax rate as follows: Profit before tax 29 084 316 33 786 020 9 695 954Tax calculated at a tax rate of 29% (2006: 29%; 2005: 30%).

8 434 452

9 797 946

2 908 786

Effect of changes in tax rate - (24 147) -Income not subject to tax - - -Expenses not deductible for tax purposes 284 115 235 554 102 494Prior year over provision - (446 255) -Secondary tax on companies 2 125 000 1 500 000 125 000Tax effect WIP adjustment - - 551 496 2007 2006 2005 R R R Prior year under provision - 160 382 31 241Adjustment deferred tax (43 163) - -Tax charge 10 800 404 11 223 480 3 719 017


85

7. Dividends per share

The dividends per share is calculated off a total dividend declared of R 8 670 000 (2006: R 7 100 000; 2005: R 510 000) and a total of 100 (2006: 100; 2005: 100) issued ordinary shares.

8. Investment in subsidiary

The following information relates to the company’s investment in its subsidiary:

Name Number of

shares held Listed/

unlisted Nature of business

Directors' valuation /

market value Total Computer Services (Pty) Ltd 230 Unlisted Software 85,000,000

9. Non-current receivables

2007 2006 2005 R R RCurrent

Belstow Technologies (Pty) Ltd 350 000 - -Non-current Belstow Technologies (Pty) Ltd 798 445 - -Total receivables 1 148 445 - - Maturity of receivables: Not later than 1 year 350 000 - -Later than 1 year and not later than 5 years 798 445 - - 1 148 445 - -

10. Trade and other receivables

Trade receivables 12 101 902 12 213 189 8 571 370Less: provision for impairment of receivables (131 506) - -Trade receivables - net 11 970 396 12 213 189 8 571 370Prepaid expense 528 720 727 599 584 744Other receivables 486 347 51 080 51 080Accrual for revenue receivable 12 600 795 11 366 555 5 728 132Short term loans receivable 5 490 16 356 18 893

25 591 748 24 374 779 14 954 219The fair values of the trade and other receivables balances are equal to their carrying values at the balance sheet date. Trade and other receivables have been ceded to the bank as security for banking facilities. Refer to note 12 for further information.


86

11. Cash and cash equivalents

2007R

2006 R

2005R

Cash at bank and in hand 4 861 440 6 170 818 1 372 0764 861 440 6 170 818 1 372 076

For the purposes of the cash flow statement, the year-end cash and cash equivalents comprise the following: Cash and cash equivalents 4 861 440 6 170 818 1 372 076Bank overdrafts (Note 12) (69 898) - (736 730)

4 791 542 6 170 818 635 346

12. Trade and other payables

Trade payables 3 992 601 6 393 090 4 149 576Regional Services Council levy and other taxes - 86 735 9 765

Accrued expenses 1 953 698 1 204 559 858 959Other payables 2 724 007 1 056 369 177 365 8 670 306 8 740 753 5 195 665

Further information on trade and other payables to related parties is shown in note 19.

13. Short term borrowings

Bank overdrafts (69 898) - (736 730)(69 898) - (736 730)

The company has the following facilities available:

Overdraft 2 000 000

Credit card 50 000

AVAF 13 339 669

The above facilities are secured as follows: - Limited suretyship by Labat Africa Ltd for an amount of R11 000 000, supported by a cession

of its loan account in Total Client Services Limited - Negative pledge over the assets - Cession of the following service agreement contracts: - Cape Town Municipality - Kwadukuza Municipality - Ekurhuleni Municipality - Kungwini Municipality - Nelson Mandela Metropolitan Municipality - Potchefstroom Municipality - Cession of accounts receivable

Vehicle asset finance: - Articles finance - Cross reference to security held by ABSA Bank


87

- Cession of income streams from the following contracts: - Mogale City - Hibiscus Coast

14. Interest bearing borrowings

2007 2006 2005R R R

Current Finance lease agreements 401 834 2 030 035 4 004 787Instalment sale agreements 5 623 783 4 886 532 3 687 552 6 025 617 6 916 567 7 692 339Non-current Finance lease agreements - 400 171 2 436 823Instalment sale agreements 3 804 763 5 368 185 5 073 779

3 804 763 5 768 356 7 510 602Total borrowings 9 830 380 12 684 923 15 202 941

Total borrowings: - At fixed rates 9 830 380 12 684 923 15 202 941

9 830 380 12 684 923 15 202 941

The borrowing agreements have been entered into with reputable financial institutions. The effective interest rates of the agreements are therefore the market related rates, resulting in the carrying values being equal to the fair values of the instruments. Group borrowings Interest rate (%) Monthly instalment Secured by Book value of

assetFinance lease agreements 2007

12.46% - 13.04%

R 14 578 - R 161 612

PPE Note 21

R 2 460 434 2006 10,45% - 11,01% R 4 376 – R 114 036 PPE Note 21 R 4 649 490

Refer to note 21 for assets leased under finance leases.

Maturity of non-current borrowings (excluding finance lease liabilities): 2007 2006 2005

R R RNot later than 1 year 6 025 617 4 886 532 3 687 552

Later than 1 year and not later than 5 years 3 804 763 5 368 185 5 073 7799 830 380 10 254 717 8 761 331

Finance lease liabilities - minimum lease payments: Not later than 1 year 425 099 2 177 448 4 507 822Later than 1 year and not later than 5 years - 419 988 2 612 025

425 099 2 597 436 7 119 847


88

Future finance charges (23 265) (167 230) (678 237)Present value of finance lease liabilities 401 834 2 430 206 6 441 610

The present value of finance lease liabilities may be analysed as follows: Not later than 1 year 401 834 2 030 035 4 004 787Later than 1 year and not later than 5 years - 400 171 2 436 823

401 834 2 430 206 6 441 610

15. Deferred income taxes

Deferred income taxes are calculated in full on temporary differences under the liability method using a principal tax rate of 29% (2006: 29%, 2005: 30%). Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The offset amounts are as follows:

2007 2006 2005R R R

Deferred income tax assets: - Deferred income tax asset to be recovered

after more than 12 months (580 886) (465 679)

(167 849)Deferred income tax liabilities: - Deferred income tax liability to be recovered

after more than 12 months 750 323 709 527

892 248169 437 243 848 724 399

Deferred income tax liabilities (net):

At beginning of the year 243 848 724 399 623 997Change in accounting policy - (446 255) -Income statement charge (Note 5) (74 411) (10 149) 100 402Change in tax rate - (24 147) -At end of the Year 169 437 243 848 724 399

The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

28 February

2005Charged/

(credited) to Profit / Loss

28 February 2006

Charged/ (credited) to Profit / Loss

28 February 2007

R R R R R Deferred income tax liabilities

Leased assets 663 359 ( 28 590) 634 769 (37 776) 596 993 Prepaid expenses 175 423 (100 665) 74 758 78 572 153 330Other timing differences 53 466

(53 466)

-

-

-


89

892 248 (182 721) 709 527 40 796 750 323

28 February 2005


28 February 2006


28 February 2007

R R R R R Deferred income tax assets

Provisions (42 742) (206 470) (249 212) (132 855) (382 067)Operating leases (50 026) (6 592) (56 618) 21 308 (35 310)Decelerated tax depreciation (75 081)

(84 768) (159 849)

(3 660)

(163 509)

(167 849) (297 830) (465 679) (115 207) (580 886)Net deferred income tax liability 724 399 (480 551)

243 848

(74 411) 169 437

16. Contingencies

- Pending litigation A previous consultant of Total Client Services Limited is claiming an amount of R 10 million from the company. The company has in turn issued summons on the consultant for an amount of R 1,055,386. Subsequent to year-end a court date has been set for the hearing to take place. The company's directors and lawyers are of the opinion that there is no basis for the claim of R 10 million by the consultant and therefore no provision has been raised in the annual financial statements for the year ended 28 February 2007, in respect of both the claim and the counterclaim. - Other A service provider has indicated that it intends to institute legal action against Total Client Services Limited for the unlawful termination of a service contract and breach thereof. The claim is estimated to be approximately R 1 million. The directors are of the opinion that the service agreement has been terminated by agreement between the two parties and that there is no basis for the aforementioned claim. No provision has been raised for the alleged claim in the annual financial statements as at 28 February 2007.

17. Commitments

Operating lease commitments The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

2007 2006 2005R R R

Not later than 1 year 1 434 746 1 099 908 523 306Later than 1 year and not later than 5 years 1 807 090 2 970 599 1 270 895

3 241 836 4 070 507 1 794 201

18. Ordinary shares

Number of

shares

Share premium

R

Ordinary Shares

R Total

R At 29 February 2005 100 - 100 100 At 28 February 2006 100 - 100 100 At 28 February 2007 100 - 100 100


90

The total authorised number of ordinary shares is 4,000 shares (2006: 4,000 shares; 2005: 4,000) with a par value of R 1 per share (2006: R 1 per share; 2005: R1 per share). All issued shares are fully paid.

Cash generated from operations

Reconciliation of profit before tax to cash generated from operations:

2007 2006 2005R R R

Profit before tax 29 084 316 33 786 020 9 695 954Adjustments for: Depreciation (Note 21) 7 569 098 6 823 898 5 835 397Impairment charge - - 530 000Loss/(profit) on sale of property, plant and equipment (Note 2)

- (5 245)

(153 897)

Dividends received - - -

Interest income (442 448) (172 477) (104 925)

Interest expense 1 904 055 1 827 078 1 705 191

38 115 021 42 259 274 17 507 720

Changes in working capital (5 370 956) (4 829 773) (6 060 681)

Trade and other receivables (2 365 414) (9 420 560) (7 899 009)Trade and other payables (70 447) 3 545 088 2 594 927Deferred income 41 853 (272 674) (32 874)

Amounts owing to/from related party (2 606 307) 1 609 373 -

Amounts owing to/from holding company (370 641) (291 000) (723 725) Cash generated from operations 32 744 065 37 429 501 11 447 039

Non-cash transactions The principal non-cash transactions relates to the depreciation of property, plant and equipment (Note 21).

19. Related party transactions

The company is controlled by Labat Africa Limited (incorporated in South Africa) which owns 51% of the company's shares. The following entities are related parties of the company: Entity: Relationship: Total Computer Services (Pty) Ltd Subsidiary Suikerbos Trust Shareholder Pharoah Limited Shareholder Labat Africa Limited Shareholder Labat Africa Management Consulting (Pty) Ltd Fellow subsidiary Labat Card Technologies (Pty) Ltd Fellow subsidiary Labat Projects (Pty) Ltd Fellow subsidiary


91

South African Micro Electronics (Pty) Ltd Fellow subsidiary Integrated Circuit Design Centre (Pty) Ltd Fellow subsidiary Sames Properties (Pty) Ltd Fellow subsidiary Brian van Rooyen Director MJ Shabangu Director R Stumpf Director JH Taljaard Member of key management personnel Director & shareholder of subsidiary BN Birkholtz Member of key management personnel Director & shareholder of subsidiary O' Connell Traffic Solutions Employer of former COO (Geoff o' Connell)

Kuyalunga Consultants (Pty) Ltd Director has a controlling interest and directorship in this company

The directors of the company exercise control over the following companies: Total Computer Services (Pty) Ltd

2007 2006 2005 R R R Expenses Interest

Suikerbos Trust 396 628 87 555 70 996Labat Africa Limited - - 61 275 396 628 87 555 132 271

2007 2006 2005 R R R Receiving of services

Labat Africa Limited 2 400 000 1 200 000 900 000O' Connell Traffic Solutions (Pty) Ltd 1 315 789 1 348 684 -Labat Africa Management Consulting (Pty) Ltd - 4 267 -Kuyalanga Consultants (Pty) Ltd 600 000 600 000 -

4 315 789 3 152 951 900 000

Suikerbos Trust 4 248 300 2 499 000 249 900Labat Africa Limited 4 421 700 2 601 000 260 100

8 670 000 5 100 000 510 000

The above transactions were carried out on commercial terms and conditions. Outstanding balances arising from related party transactions

Payables to related parties: O' Connell Traffic Solutions (Pty) Ltd (75 000) (22 418) -

(75 000) (22 418) -


92

Amounts advanced from/(to) related parties Loan from/(to) Labat Africa Ltd

Balance at the beginning of the period

59 626

350 626

1 074 351Loans advanced/(repaid) during the period (370 641) (291 000) (723 725)Balance at the end of the period (311 015) 59 626 350 626

Loan from/(to) Suikerbos Trust

Balance at the beginning of the period 2 373 374 786 419 1 148 880Loans advanced/(repaid) during the period (2 583 889) 1 586 955 (362 461)Balance at the end of the period (210 515) 2 373 374 786 419

The loans bear interest ranging from nil to prime + 1%, are usually unsecured and have no fixed terms of repayment.

Loan from Birkholtz Family Trust

Balance at the beginning of the period

250 000

- -Loans advanced/(repaid) during the period 1 465 000 250 000 -Balance at the end of the period 1 715 000 250 000 -

Loan from JH Taljaard Balance at the beginning of the period 250 000 - -Loans advanced/(repaid) during the period 1 465 000 250 000 -Balance at the end of the period 1 715 000 250 000 -

The loans are unsecured, interest is payable as determined from time to time and repayable by agreement between shareholders. Directors' remuneration Salary Bonuses Allowances

Provident fund Total

28 February 2007 R R R R R

M J Shabangu 841 878 - - 67 200 909 078B Birkholtz 688 500 81 911 208 538 - 978 949K Taljaard 664 740 83 611 253 795 - 1 002 146Total 2 195 118 165 522 462 333 67 200 2 890 173

Salary Bonuses AllowancesProvident

fund Total 28 February 2006 R R R R R

M J Shabangu 869 047 94 787 - 67 200 1 031 034


93

B Birkholtz 441 200 30 000 187 597 658 797K Taljaard 412 160 30 850 227 546 670 556Total 1 722 407 155 637 415 143 67 200 2 360 387

Salary Bonuses AllowancesProvident

fund Total 28 February 2005 R R R R R

M J Shabangu 867 550 133 333 - 11 664 1 012 547B Birkholtz 391 264 - 148 576 539 840K Taljaard 358 800 - 165 240 524 040Total 1 931 430 133 333 313 816 11 664 2 076 427

20. Prior period restatement: 2007

Previously, the company over invoiced the City of Cape Town Municipality. During 2007 the company performed a reconciliation with the City of Cape Town Municipality and came to the conclusion that amounts relating to revenue had been over invoiced in the prior period. The error has been adjusted for retrospectively in terms of IAS 8 Accounting policies, changes in accounting estimates and errors. The effect of the prior period restatement is summarised below.

Profit

2006 Periods prior to 2006

R R Increase / (Decrease) in profit for the year (2 722 111) - Taxation effect 789 412 - Net effect (1 932 699) -

In respect of the financial year ended 28 February 2006: change in accounting policy

Work in progress adjustment

In terms of the agreements between Labat and the various municipalities Labat may only invoice the municipalities upon receipt by the municipalities of the monies from the traffic offenders. Labat will only record the invoice and thereby recognise the revenue in the period in which they invoiced the municipality.

The problem with recognising revenue on this basis is that the date upon which the traffic offender commits the offence and the date upon which the payment is received by the municipality will not necessarily fall within the same period. As a result Labat accrues for “WIP”, i.e. revenue that relates to the accounting period under review due to the offence being committed in this period that will only be invoiced in a subsequent accounting period.

During the year management voluntarily changed the accounting policy in respect of the recognition of revenue from a method which was based on an accrual for two months to an accrual as described in note 1.13 and note 1.21 of the accounting policy notes. The relating adjustments have been made retrospectively. Revenue is now accrued for on the basis as described in the accounting policy notes 1.13 and 1.21. The effect of the change in accounting policy on the financial statements is summarised below.

GrossDeferred taxation

Minority interest Net

Decrease in net profit due to recognition of (2 506 899) - - (2 506 899)


94

work in progress – 2005

Restatement of opening retained earnings in respect of prior year adjustment – 2005 668 576 - - 668 576

The deferred tax impact of the error has not been adjusted for in deferred taxation. Refer to the tax rate reconciliation note 5.

Additional disclosures have been presented in note 1.21 to the accounting policy notes.

Transition to IFRS

Change in useful lives of property, plant and equipment

The company and the groups depreciation methods and rates under previous GAAP are considered as unacceptable under IFRS as they were adopted solely for tax purposes and did not reflect a reasonable estimate of the asset’s useful life. These differences have a material effect on the financial statements, as such, the company has adjusted the accumulated depreciation in its opening IFRS balance sheet retrospectively so that it complies with IFRS. The effect of the restatement on the financial statements in summarised below.

GrossDeferred taxation

Minority interest Net

Decrease in net profit due to reduction in the depreciation expense– 2005 789 319 (236 796) - 552 523

Restatement of opening retained earnings in respect of prior year adjustment– 2005 (2 370 635) 711 191 - (1 659 444) Deferred taxation has been adjusted refer to note 5 for further information. Additional disclosures have been presented in note 1.23 to the accounting policy notes.

TCS Prospectus – formal submission - 05022008 21. Property, plant and equipment (R)

Property, plant and equipment

Office

equipment Fixtures and fittings Computer accessories Motor

vehicles Computer equipment

Total

Owned Owned Leased Owned Leased Owned Owned Leased Year ended 28 February 2007

Opening carrying amount 92 608 374 447 44 861 13 523 244 4 503 479 306 831 1 923 332 101 150 20 869 952

Additions 40 291 133 654 - 6 460 920 - 144 247 836 906 - 7 616 018

Effect of change in estimate -

504

27 623

(15 589)

-

-

127 039

-

139 577

Depreciation charge (50 517) (45 293) (22 303) (4 346 448) (2 093 226) (39 461) (1 010 277) (101 150) (7 708 675)

Closing carrying amount 82 382 463 312 50 181 15 622 127 2 410 253 411 617 1 877 000 - 20 916 872

At 28 February 2007

Cost or valuation 284 022 553 331 133 817 27 286 492 12 206 364 490 771 11 107 233 2 458 965 54 520 995

Accumulated depreciation (201 640) (90 019) (83 636) (11 664 365) (9 796 111) (79 154) (9 230 233) (2 458 965) (33 604 123)

Carrying amount 82 382 463 312 50 181 15 622 127 2 410 253 411 617 1 877 000 - 20 916 872

Year ended 28 February 2006 Opening carrying amount 99 337 91 030 67 164 9 154 857 6 944 752 206 516 1 511 859 494 373 18 569 888

Additions 41 844 327 025 - 7 568 769 - 128 541 1 151 937 - 9 218 116

Disposals - (27 487) - (40 298) - - (26 369) - (94 154)

Depreciation charge (48 573) (16 121) (22 303) (3 160 084) (2 441 273) (28 226) (714 095) (393 223) (6 823 898)

Closing carrying amount 92 608 374 447 44 861 13 523 244 4 503 479 306 831 1 923 332 101 150 20 869 952


96

At 28 February 2006



Carrying amount 92 608 374 447 44 861 13 523 244 4 503 479 306 831 1 923 332 101 150 20 869 952

Year ended 28 February 2005 Opening carrying amount 116 872 31 151 89 467 764 861 8 184 857 - 1 091 754 1 279 423 11 558 385

Additions 20 400 74 125 - 10 517 605 1 055 674 217 983 1 282 089 - 13 167 876

Disposals - - - (314 386) - - (6 590) - (320 976)

Depreciation charge (37 935) (14 246) (22 303) (1 813 223) (2 295 779) (11 467) (855 394) (785 050) (5 835 397)

Closing carrying amount 99 337 91 030 67 164 9 154 857 6 944 752 206 516 1 511 859 494 373) 18 569 888

At 28 February 2005



Carrying amount 99 337 91 030 67 164 9 154 857 6 944 752 206 516 1 511 859 494 373 18 569 888


97

22. Intangible assets (R)

Computer

software Goodwill

Other intangible

assets TotalYear ended 28 February 2007

Opening carrying amount - 3 466 466 - 3 466 466 Additions 980 194 - - 980 194 Closing carrying amount 980 194 3 466 466 - 4 446 660

Computer software Goodwill

TotalYear ended 28 February 2006 - Opening carrying amount - 3 466 466 - 3 466 466 Closing carrying amount - 3 466 466 - 3 466 466

Computer software Goodwill

Other intangible

assets TotalYear ended 28 February 2005

Opening carrying amount - 3 466 466 530 000 3 996 466Impairment charge - - (530 000) (530 000)Closing carrying amount - 3 466 466 - 3 466 466

Goodwill

Goodwill is allocated to the Group's cash-generating units (CGU's) identified according to business segment. The single cash-generating unit is defined as Total Computer Services (Pty) Ltd.

The recoverable amount of the CGU is determined using dividend streams as identified future cashflows. A dividend yield of 10% was used in the calculation. The recoverable amount was assessed as being higher than the carrying amount of goodwill with no need for impairment. Internally generated computer software Amortisation of the computer software will only be accounted for when the product is available for use.


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Annexure 3

REVIEWED INTERIM FINANCIAL INFORMATION OF TCS FOR THE SIX MONTHS ENDED 31 AUGUST 2007

Basis of preparation

The reviewed interim financial statements for TCS for the period of 31 August 2007 are prepared in terms of International Financial Reporting Standards and IAS 34. The independent reporting accountants’ report on the reviewed financial information of TCS for the interim period of 31 August 2007, issued without qualification by PricewaterhouseCoopers, is set out in Annexure 5 to this document. CONSOLIDATED BALANCE SHEETS Reviewed

31 August 2007

R’000

Audited 28 February 2007

R’000

ASSETS Property plant and equipment 21 893 20 917Intangible assets 4 976 4 447Non current receivable 798 798Current assets 44 085 31 324Total assets 71 752 57 486 EQUITY AND LIABILITIES Capital and reserves 37 722 22 663Non-current liabilities 4 699 7 235Deferred taxation 2 390 169Current liabilities 26 941 27 419Total equity and liabilities 71 752 57 486Pro forma weighted average number of ordinary shares

100 100Net asset value per pro forma ordinary share (cents) 37 722 000 22 663 000Net tangible asset value per pro forma ordinary share (cents)

32 746 000 18 216 000


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CONSOLIDATED INTERIM INCOME STATEMENTS Reviewed six

months ended31 August

2007R’000

Unreviewed six months ended

31 August2006

R’000Revenue 56 294 55 231Cost of sales (699) (11 897)Gross profit 55 595 43 334Other income 516 -Operating costs (42 559) (29 828)Operating profit 13 552 13 506Interest received 137 87Finance costs (984) (771)Profit before taxation 12 705 12 822Taxation (3 345) (3 718)Profit after taxation 9 360 9 104Attributable to: Equity holders of the company 5 645 4 955 Minority interest 3 715 4 149 9 360 9 104Earnings per share in cents attributable to equity holders of the company

5 645 000

4 955 000

Headline earnings per share in cents attributable to equity holders of the company

5 645 000

4 641 000

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY Share

CapitalR’000

MinorityInterest

R’000

Distributable Reserve

R’000 Total

R’0002007 Audited Balance at 1 March 2006 * *1 4 093 17 286 21 379Net profit for the period - 7 556 10 728 18 284Dividends declared - (8 330) (8 670) (17 000)Balance at 28 February 2007 * 3 319 19 344 22 6632007 Reviewed As previously reported * 3 319 19 344 22 663Change in accounting policy - 2 793 2 906 5 699As restated * 6 112 22 250 28 362Net profit for the period - 3 715 5 645 9 360Balance at 31 August 2007 * 9 827 27 895 37 722* Less than R1 000 *1 Restated 28 February 2006


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CONSOLIDATED INTERIM CASH FLOW STATEMENTS Reviewed six months

ended31 August

2007R’000

Unreviewed six months ended

31 August2006

R’000Cash flow from operating activities 6 309 11 848Cash flow from investing activities (1 505) (2 117)Cash flow from financing activities (2 536) (1 534)Increase/(Decrease) in cash and cash equivalents 2 268 8 197Cash and cash equivalents at beginning of the period 4 792 6 171Cash and cash equivalents at end of the period 7 060 14 368 Remuneration of directors Remuneration and benefits paid to the directors for the six month interim periods ended 31 August 2007 and 31 August 2006 were as follows:

Six month interim

period ended 31 August 2006

Basic Salary R’000

MotorAllowance

R’000BonusR’000

Retirement/ Medical

R’000 Total

R’000B N Birkholtz 340 74 - 29 443J H Taljaard 329 93 - 29 451J M Shabangu 295 126 - 30 451Total 964 293 - 88 1 345

Six month interim

period ended 31 August 2007

Basic Salary R’000

MotorAllowance

R’000BonusR’000

Retirement/ Medical

R’000 Total

R’000B N Birkholtz 418 48 - 32 498J H Taljaard 406 60 - 32 498J M Shabangu 196 84 140 20 440Total 1 020 192 140 84 1 436

Change in accounting policy During the interim period under review the subsidiary company changed its accounting policy relating to revenue recognition to align it with the revenue recognition policy applied by the holding company. It was impracticable to determine period specific effects of this change in accounting policy on comparative information for the periods prior to 28 February 2007. The effect of the application of the new policy has been applied to the carrying value of the assets and liabilities at the beginning of the interim review period and a corresponding adjustment to the opening balances of each affected component of equity for the period. The effect of the change in accounting policy can be summarised as follows: R’000Effect on Assets Increase in current assets 8 026Effect on liabilities Increase in deferred tax 2 327Effect on retained earnings Attributable to equity holders 2 906Attributable to minorities 2 793


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Reviewed31 August

2007R’000

Unaudited28 February

2007R’000

Intangible assets Goodwill Computer software

3 467 1 509

3 467980

4 976 4 447Non current liabilities Shareholders loans - 3 430Interest bearing borrowings 10 145 9 830Other non current liabilities 54 - 10 199 13 260Less: Short term portion of interest bearing borrowings (5 500) (6 025) 4 699 7 235

The interest bearing loans consist of amounts due in terms of finance lease agreements and instalment sale agreements for the acquisition of fixed assets. These loans bear interest at interest rates linked to the prime overdraft rate and are secured by the fixed assets under finance. The shareholders loans are unsecured, interest is determined from time to time and repayable by agreement between the parties. Basis of preparation The financial statements are prepared in accordance with International Financial Reporting Standards effective 31 August 2007 as well as the Companies Act in South Africa. The independent reporting accountants’ report on the interim financial information of TCS for the interim period ended 31 August 2007 is set out in Annexure 5 to this document. The condensed interim financial statements have been prepared in accordance with IAS 34. There has been no major change in the nature of property, plant and equipment, nor any change in policy regarding the use thereof. There were no material changes in the nature of the business. There has been a change in accounting policy between this period and the periods previously reported on, as explained above. There have not been any fundamental errors during the period. Subsequent events The following facts or circumstances of a material nature have occurred between and the issue of these statements. On 12 October 2007 the members of the holding company of TCS approved the following transaction:

- The acquisition by Mvelaphanda Holdings (Pty) Ltd of a 49% shareholding in TCS. - The subscription by Mvelaphanda Holdings (Pty) Ltd for 2 600 preference shares in TCS for a

consideration of R26 million. - A share buy back by TCS of 21,54% of its issued shares from Mvelaphanda Holdings (Pty) Ltd for a

cash consideration of R26 million. On 14 December 2007 the members of the holding company of TCS approved the following transaction:

- The acquisition by TCS of 49% of the shareholding in Total Computer Services (Pty) Ltd having the effect that Total Computer Services becomes a wholly owned subsidiary of TCS.

- - The change of the name of LTS to Total Client Services (Pty) Ltd.


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Annexure 4

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE CONSOLIDATED HISTORICAL FINANCIAL INFORMATION OF TCS FOR THE YEARS ENDED 28 FEBRUARY 2007, 28 FEBRUARY 2006 AND 28 FEBRUARY 2005

“6 February 2008

The Directors Total Client Services Limited Top Floor 20 Regency Drive Route 21 Corporate Park Irene Pretoria Dear Sirs

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE HISTORICAL FINANCIAL INFORMATION OF TOTAL CLIENT SERVICES LIMITED (“TCS”)

INTRODUCTION

Total Client Services Limited (“TCS”), is issuing a prospectus relating to a private placement of TCS ordinary shares by way of an offer by the company for subscription of 42 553 192 ordinary shares in the issued share capital of the company and an offer for sale of 42 553 192 ordinary shares in the issued share capital of the company by existing shareholders, and the subsequent listing of the ordinary shares of TCS on the Alternative Exchange (“AltX”) of JSE Limited (“JSE”).

At your request and for the purposes of the prospectus to be dated on or about 27 February 2008 (“the Prospectus”), we present our report on the historical consolidated financial information of TCS presented in Annexure 2 to the Prospectus.

RESPONSIBILITIES

Directors' Responsibility for the Financial Statements

The company's directors are responsible for the preparation, contents and presentation of the Prospectus and the fair presentation of the Report of Historical Financial Information in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Reporting Accountant’s Responsibility

Our responsibility is to express an opinion on the consolidated financial information presented in the Report of Historical Financial Information, included in the Prospectus 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 about whether the consolidated financial information is free from material misstatement.


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SCOPE

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial information. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial information, 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 consolidated financial information 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 consolidated financial information.

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

OPINION

In our opinion, the consolidated financial information of TCS as set out in Annexure 2, presents fairly, in all material respects, and for the purposes of the Prospectus, the consolidated financial position of TCS at 28 February 2007, 28 February 2006 and 28 February 2005, and the consolidated results of its operations and consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards and the JSE Listing Requirements.

PRICEWATERHOUSECOOPERS INC DIRECTOR: A VENTER REGISTERED AUDITOR”


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Annexure 5

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE REVIEWED INTERIM FINANCIAL INFORMATION OF TCS “6 February 2008

The Directors Total Client Services Limited Top Floor 20 Regency Drive Route 21 Corporate Park Irene, Pretoria

Dear Sirs

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE REVIEWED INTERIM FINANCIAL INFORMATION OF TOTAL CLIENT SERVICES LIMITED (“TCS”)

INTRODUCTION

Total Client Services Limited (“TCS”), is issuing a prospectus relating to a private placement of TCS ordinary shares by way of an offer by the company for subscription of 42 553 192 ordinary shares in the issued share capital of the company and an offer for sale of 42 553 192 ordinary shares in the issued share capital of the company by existing shareholders, and the subsequent listing of the ordinary shares of TCS on the Alternative Exchange (“AltX”) of JSE Limited (“JSE”).

At your request and for the purposes of the prospectus to be dated on or about 27 February 2008 (“the Prospectus”), we present our report on the interim financial information of TCS presented in Annexure 3 to the Prospectus.

RESPONSIBILITIES

Directors' Responsibility for the Financial Statements

The company's directors are responsible for the preparation, contents and presentation of the Prospectus and the fair presentation of the Report on the Reviewed Interim Financial Information in accordance with International Financial Reporting Standards (“IFRS”), and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Reporting Accountant’s Responsibility

Our responsibility is to express an opinion on the financial information presented in the Report on The Reviewed Interim Financial Information, included in the Prospectus.

We conducted our review for the six months ended 31 August 2007 in accordance with the International Standard on Review Engagements 2400. This standard requires that we plan and perform the review to obtain moderate assurance that the condensed financial information relating to the six months ended 31 August 2007 is free of material misstatement. A review is limited primarily to enquiries of company personnel and analytical procedures applied to financial data and this provides less assurance than an audit.

We have not performed an audit of the financial information for the six months ended 31 August 2007, included in Annexure 3 of the Prospectus, and accordingly we do not express any audit opinion thereon.

Without qualifying our opinion we draw attention to the fact that the interim results for the period ended 31 August 2006 have not been reviewed and we therefore do not express a review opinion on the interim financial information of TCS for the period ended 31 August 2006.


105

REVIEW OPINION

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information of TCS for the period ended 31 August 2007 presented in Annexure 3 to the Prospectus is not fairly presented in all material respects, for purposes of the Prospectus, in accordance with International Financial Reporting Standards, IAS 34 and the Listings Requirements of the JSE.

PRICEWATERHOUSECOOPERS INC DIRECTOR: A L VENTER REGISTERED AUDITOR”


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Annexure 6

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE PROFIT FORECAST OF TCS

“6 February 2008


Dear Sirs

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE PROFIT FORECAST OF TOTAL CLIENT SERVICES LIMITED ("TCS")

We have examined the profit forecast of TCS for the periods ending 28 February 2009 and 29 February 2008 (“the Forecast”) as set out in paragraph 12.2 of the prospectus of TCS to be dated on or about 27 February 2008 (“the Prospectus”).

DIRECTORS’ RESPONSIBILITY

The directors of TCS are responsible for the Forecast, including the assumptions as set out in paragraph 12.2 of the Prospectus, on which it is based, and for the financial information from which it has been prepared.

REPORTING ACCOUNTANTS’ RESPONSIBILITY

Our responsibility is to provide a limited assurance report on the Forecast. We conducted our assurance engagement in accordance with the International Standard on Assurance Engagements applicable to the Examination of Prospective Financial Information and the Revised Guide on Forecasts issued by The South African Institute of Chartered Accountants, except where otherwise indicated. This standard requires us to obtain sufficient appropriate evidence as to whether or not:

management’s best-estimate assumptions on which the Forecast is based are not unreasonable and are consistent with the purpose of the information;

the Forecast is properly prepared on the basis of the assumptions;

the Forecast is properly presented and all material assumptions are adequately disclosed; and

the Forecast is prepared and presented on a basis consistent with the accounting policies of the company in question for the period concerned.

In a limited assurance engagement, the evidence – gathering procedures are more limited than for a reasonable assurance engagement and, therefore, less assurance is obtained than in a reasonable assurance engagement. We believe our evidence obtained is sufficient and appropriate to provide a basis for our limited assurance conclusion.

CONCLUSION

Based on our examination of the evidence obtained, nothing has come to our attention that causes us to believe that:

i) the assumptions, barring unforeseen circumstances, do not provide a reasonable basis for the preparation of the Forecast;

ii) the Forecast has not been properly compiled on the basis stated;

iii) the Forecast has not been properly presented and all material assumptions are not adequately disclosed; and


107

iv) the Forecast is not presented on a basis consistent with the accounting policies of TCS.

Actual results are likely to be different from the Forecast, since anticipated events frequently do not occur as expected and the variation may be material; accordingly no assurance is expressed regarding the achievability of the Forecast.

Yours faithfully

PRICEWATERHOUSECOOPERS INC DIRECTOR: P MCCRYSTAL”


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Annexure 7

REPORTING ACCOUNTANTS’ REPORT ON THE PRO FORMA FINANCIAL EFFECTS, PRO FORMA BALANCE SHEET AND PRO FORMA INCOME STATEMENT

“6 February 2008


Dear Sirs

INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE PRO FORMA FINANCIAL INFORMATION OF TOTAL CLIENT SERVICES LIMITED (“TCS”)

INTRODUCTION

We have performed our limited assurance engagement in respect of the pro forma financial information of TCS set out in paragraphs 12.3 and 12.4 of the prospectus of TCS, to be dated on or about 27 February 2008, (“the Prospectus”) to be issued in connection with the proposed private placement of 42 553 192 ordinary shares in the issued share capital of the company and an offer for sale of 42 553 192 ordinary shares in the issued share capital of the company by existing shareholders (“the private placement) and the subsequent listing of the ordinary shares of TCS on the Alternative Exchange (“AltX”) of JSE Limited (“JSE”).

The pro forma financial information has been prepared in accordance with the requirements of the JSE Listings Requirements, for illustrative purposes only, to provide information about how the proposed listing might have affected the historical financial information presented, had the corporate action been undertaken at the date of the pro forma financial information being reported on.

DIRECTORS’ RESPONSIBILITY

The directors are responsible for the compilation, contents and presentation of the pro forma financial information contained in the Prospectus and for the financial information from which it has been prepared. Their responsibility includes determining that: the pro forma financial information has been properly compiled on the basis stated; the basis is consistent with the accounting policies of TCS; and the pro forma adjustments are appropriate for the purposes of the pro forma financial information disclosed in terms of the JSE Listings Requirements.

REPORTING ACCOUNTANT’S RESPONSIBILITY

Our responsibility is to express our limited assurance conclusion on the pro forma financial information included in the Prospectus. We conducted our assurance engagement in accordance with the International Standard on Assurance Engagements applicable to Assurance Engagements Other Than Audits or Reviews of Historical Financial Information and the Guide on Pro Forma Financial Information issued by the South African Institute of Chartered Accountants.

This standard requires us to obtain sufficient appropriate evidence on which to base our conclusion.

We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

SOURCE OF INFORMATION AND WORK PERFORMED

Our procedures consisted primarily of comparing the unadjusted financial information with the source documents, considering the pro forma adjustments in light of the accounting policies of TCS, considering the evidence supporting the pro forma adjustments and discussing the adjusted pro forma financial information


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with the directors and management of the company in respect of the corporate action that is the subject of this Prospectus.

In arriving at our conclusion, we have relied upon financial information prepared by the directors and management of TCS and other information from various public, financial and industry sources.

While our work performed has involved an analysis of the historical and projected financial information and other information provided to us, our assurance engagement does not constitute an audit or review of any of the underlying financial information conducted in accordance with International Standards on Auditing or International Standards on Review Engagements and accordingly, we do not express an audit or review opinion.

In a limited assurance engagement, the evidence-gathering procedures are more limited than for a reasonable assurance engagement and therefore less assurance is obtained than in a reasonable assurance engagement. We believe our evidence obtained is sufficient and appropriate to provide a basis for our conclusion.

CONCLUSION

Based on our examination of the evidence obtained, nothing has come to our attention, which causes us to believe that:

• The pro forma financial information has not been properly compiled on the basis stated,

• Such basis is inconsistent with the accounting policies of TCS, and

• The adjustments are not appropriate for the purposes of the pro forma financial information as disclosed in terms of the section 8.17 and 8.30 of the JSE Listings Requirements.

Yours faithfully

PRICEWATERHOUSECOOPERS INC DIRECTOR: P MCCRYSTAL”


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Annexure 8

CORPORATE GOVERNANCE STATEMENT OF TCS

The definitions commencing on page 12 of this prospectus apply, mutatis mutandis, to this section. CORPORATE GOVERNANCE STATEMENT

The directors of TCS fully support the principles of good corporate governance as advocated by the Second King Report on Corporate Governance (Code of Corporate Practices and Conduct). The directors are committed to the implementation of, and have complied with the principles to the following extent: FINANCIAL STATEMENTS

In terms of the Companies Act, 1973 (Act 61 of 1973), as amended, (“the Act”) the directors are responsible for the preparation, integrity and fair representation of the Annual Financial Statements of TCS. The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and in the manner required by the Act.

To enable the directors to fulfil their responsibility, management sets standards and implements systems of internal control designed to provide certainty that assets are safeguarded, and that transactions are performed and recorded in accordance with the company’s policies and procedures. These standards and controls include proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties. BOARD OF DIRECTORS

TCS retains a unitary board structure. The board consists of four executive directors and two non-executive directors. The non-executive directors are experienced professionals who make a significant contribution towards the board’s deliberations and decisions. The composition of the board of directors is as follows:

Executive Non-executive

A S Mohamed Chief Executive Officer G N Sam Non-executive Chairman

M Reichenberg Financial Director L Sipoyo

B N Birkholtz

J H Taljaard

Full details of the directorate are set out in Annexure 1 to this prospectus.

In accordance with the articles of association, one-third of the directors retire by rotation at every annual general meeting and their re-appointment is subject to shareholders’ approval. Notwithstanding the above, if a director is appointed as managing director, his contract may provide that, as long as he is employed as managing director, he shall not be subject to retirement by rotation and as such, shall not be taken into account in determining the rotation or retirement of directors. All directors are subject to re-election by shareholders at the first opportunity after their initial appointment.

The Chairman, provides leadership and guidance to the board and encourages proper deliberation on all matters requiring the board’s attention while obtaining input from the other directors. New appointments to the board are submitted to the board for approval prior to appointment.

The board is responsible for effective control over the affairs of the company, including: strategic and policy decision-making, financial control, risk management, communication with stakeholders, internal controls and the asset management process. Although there was no specific committee tasked with identifying, analysing and reporting on risk during the financial year, this was nevertheless part of the everyday function of the directors and was managed at board level. Directors are entitled, in consultation with the chairman to seek independent professional advice about the affairs of the company, at the company’s expense. BOARD AND BOARD COMMITTEE MEETINGS

The board retains overall accountability for the day-to-day management and strategic direction of the company, as well as for attending to relevant legislative, regulatory and the best practice requirements. The


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board has delegated to the managing director and the executive management authority to run the day-to-day affairs of the company. Accountability to shareholders remains paramount in board decisions, and this is balanced against the demands of the regulatory environment in which the company operates and the concern of its other stakeholders. To assist the board in discharging its collective responsibility for corporate governance, an audit committee has been established, to which certain of the board’s responsibilities have been delegated. Although the board delegates certain functions to the audit committee, it retains ultimate responsibility for audit committee activities. AUDIT COMMITTEE

The chairperson, G N Sam, is an independent non-executive director. The members of the audit committee are L Sipoyo, an independent non-executive director, and the Designated Adviser. The company’s external auditors will attend meetings by invitation. The audit committee meets at least twice a year to assist the board by performing an objective and independent review of the company’s finance and accounting control mechanisms. The company maintains accounting and administrative control systems required for the current levels of operations. The audit committee will review and monitor the following: − the effectiveness of the company’s information systems and other systems of internal control; − the effectiveness of the internal audit function; − the reports of both the external and internal auditors; − the Annual Report and specifically the Annual Financial Statements included therein; − the accounting policies of the company and any proposed revisions thereto; − the external audit findings, reports and fees and the approval thereof; and − compliance with applicable legislation and requirements of regulatory authorities.

The audit committee sets the principles for recommending the external auditors for non-audit services use.

By virtue of the fact that the company’s external auditors will attend all audit committee meetings, they will have unrestricted access to the audit committee and its chairperson with a view to ensuring that their independence is not impaired. REMUNERATION COMMITTEE

The company currently does not have a remuneration committee, as this is not an AltX requirement. EMPLOYMENT EQUITY

The company upholds and supports the objectives of the Employment Equity Act 1998 (Act 53 of 1998). The company’s employment policies are designed to provide equal opportunities, without discrimination, to all employees. CODE OF ETHICS

All employees of the company are required to maintain the highest ethical standards in ensuring that the company’s business practices are conducted in a manner which in all circumstances is above reproach. COMMUNICATION WITH STAKEHOLDERS

The company is committed to ongoing and effective communication with its stakeholders. It subscribes to a policy of sound corporate governance and open and timeous communication in line with JSE guidelines. DEALINGS IN SECURITIES

In respect of dealings in securities of the company as applies to the directors and the company secretary, the chairman is required to authorise such dealings in securities, prior to deals being executed. An independent non-executive director is required to authorise the chairman’s dealings in securities, prior to deals being executed. All of the directors and the company secretary are aware of the legislation regulating insider trading. A record of dealings by directors and the company secretary is retained by the company secretary.

In accordance with the Listings Requirements of the JSE, the company’s directors and company secretary are prohibited from dealing in securities during closed periods.


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Annexure 9

RIGHTS AND PRIVILEGES ATTACHING TO THE PREFERENCE SHARES

177 RIGHTS, PRIVILEGES AND CONDITIONS ATTACHING TO THE 2,600 CUMULATIVE

REDEEMABLE PREFERENCE SHARES

The rights and privileges of the 12% Cumulative, Redeemable Preference Shares of R1 each shall be as follows:

The rights, privileges and conditions set out below shall attach to the 2,600 cumulative redeemable preference shares of R1.00 each subscribed for by Mvelaphanda Holdings (Pty) Ltd in the company in terms of the provisions of a subscription agreement entered into between Mvelaphanda Holdings (Pty) Ltd, the company and Labat Africa Limited dated on or about 15 June 2007 ("the subscription agreement").

177.1 Definitions

In this article 177, unless clearly inconsistent with the context –

177.1.1 references to clauses are to those clauses in this article 177;

177.1.2 words and expressions defined in the subscription agreement and used in this article 177 shall have the meanings ascribed to those terms in the subscription agreement;

177.1.3 the following words and expressions shall bear the following meanings and related words and expressions shall bear corresponding meanings:

177.1.3.1 "accumulated dividends" means, in respect of each preference share, any and all preference dividends or portions thereof which ought, in terms of 177.3.1 to have been paid on a payment date/s, but which were for any reason whatsoever (including the fact that the full amount thereof may not have been declared), not paid in full on that payment date and which remain unpaid at that time;

177.1.3.2 "additional preference dividend” means the dividends which the holder has a right to be declared and paid in accordance with the provisions of clause 177.7.2;

177.1.3.3 "adjustment event" shall occur if there is –

177.1.3.3.1 any change in, or the interpretation or application of, any law of the Republic of South Africa or the introduction of any new law of the Republic of South Africa which –

177.1.3.3.1.1 increases or reduces the cost of subscribing for, holding and/or funding the preference shares;

177.1.3.3.1.2 increases or reduces the net after-tax dividend receipt to the holder; or

177.1.3.3.1.3 increases or reduces the net after-tax return to the holder;

177.1.3.3.2 any change in the Income Tax Act to the effect that the preference dividends and/or additional preference dividends are not fully taken into account in determining the holder’s liability for STC (if applicable); or

177.1.3.3.3 any compliance by the holder with any reserve, cash ratio, special deposit or liquidity requirement (or any other similar requirement) in respect of the preference shares,

177.1.3.4 "board" means the board of directors of the company for the time being;

177.1.3.5 "business day" shall be any day other than a Saturday, Sunday or public holiday as gazetted by the government of the Republic of South Africa from time to time;

177.1.3.6 "distributable profits" means the profits of the company which are, in accordance with the Companies Act, distributable to the holder and/or other


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holders of shares in the capital of the company (after making provisions for all amounts payable to the holder and all taxes payable in respect of such payment);

177.1.3.7 "dividend period" means the period from the issue date to the first payment date and, thereafter, each period from one payment date to the next payment date;

177.1.3.8 "dividend rate" means a fixed coupon rate of 12% (twelve per cent) per annum compounded annually, subject to adjustment in terms of 177.7;

177.1.3.9 "entity" includes any person, association, business, close corporation, company, concern, enterprise, firm, partnership, joint venture, trust, undertaking, voluntary association, body corporate, juristic person and any similar entity;

177.1.3.10 "the group" means the company and/or any subsidiary thereof;

177.1.3.11 "holder" means, in respect of any preference share, the registered holder of that preference share from time to time;

177.1.3.12 "holder group company" means the holder, its ultimate holding company and any subsidiary of such ultimate holding company;

177.1.3.13 "Income Tax Act" means the Income Tax Act, 1962 (Act No. 58 of 1962), as amended;

177.1.3.14 "issue date" means the date on which the preference shares are issued;

177.1.3.15 "issue price" means, in respect of each preference share, a par value of R1.00 (one rand) per preference share plus a premium of R9,999.00 (nine thousand nine hundred and ninety nine rand), being the aggregate price payable in consideration for the issue of each preference share;

177.1.3.16 "material adverse effect" means, in respect of any entity, an event, circumstance or matter or combination of events, circumstances or matters which would have –

177.1.3.16.1 a material adverse effect on the business, operations, assets or financial condition of that entity; or

177.1.3.16.2 a material impairment of the ability of that entity to perform any of its obligations under the subscription agreement, any of the transaction agreements or to any of its material creditors; or

177.1.3.16.3 any adverse effect on the validity or enforceability of any of that entity’s obligations in terms of the subscription agreement or any of the transaction agreements;

which for purposes of this paragraph shall mean any act/s or event/s which individually or in the aggregate has or have or may result in a reduction of 10% or more of the earnings before in interest, tax, depreciation and amortisation of the company when compared to the equivalent period during the previous financial year of the company;

177.1.3.17 "minimum period" means the period of three years and one day commencing on the issue date;

177.1.3.18 "payment date" means, for so long as any of the preference shares remain in issue -

177.1.3.18.1 the last day of May in the financial year following the financial year end of the company in respect of which payment of any preference dividend is to be paid; and

177.1.3.18.2 irrespective of whether the redemption date occurs on such a last day of May, the redemption date;

177.1.3.19 "preference dividend" means a cumulative preferential cash dividend payable annually on each preference share which shall be calculated on each payment date in accordance with the following formula -

D = C x DR


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Where

177.1.3.19.1 D means the dividend to be calculated;

177.1.3.19.2 C means the sum of the issue price plus, for so long as they remain unpaid, all accumulated dividends;

177.1.3.19.3 DR means the dividend rate which applied for the dividend period immediately prior to the payment date on which the dividend is calculated; provided that if the dividend rate has changed during such dividend period then this formula shall be applied to calculate an amount (“dividend portion”) using each dividend rate which applied during that dividend period for the portion of the dividend period during which such dividend rate applied and the dividend payable at the end of such period shall be the aggregate of all such dividend portions; provided further that the preference dividend shall be calculated on a daily basis and compounded monthly in arrear on the last day of each and every month;

177.1.3.20 "preference share" means the 2,600 (two thousand six hundred) cumulative redeemable preference shares of R1,00 (one rand) each in the capital of the company, having the rights, privileges and restrictions contained in this article 177;

177.1.3.21 "prime rate" means the prime overdraft rate of interest as charged (and calculated) by ABSA Bank Limited to its most favoured corporate customers in respect of unsecured overdraft facilities from time to time, calculated and compounded monthly in arrear, as certified by any manager of that bank whose appointment, designation or authority it shall not be necessary to prove;

177.1.3.22 "redemption date" means, in respect f any preference share, the earlier of –

177.1.3.22.1 the date of receipt of a notice from the holder demanding redemption thereof for any reason whatever, provided that such notice may riot be given before the expiry of the minimum period; or

177.1.3.22.2 the date of receipt of a notice from the company indicating its intention to redeem the preference shares; or

177.1.3.22.3 the date of receipt of a notice from the holder demanding redemption thereof on the occurrence of a redemption event, provided that such notice shall be given by the holder within three months of it becoming aware of the redemption event;

177.1.3.23 "redemption event" means, in respect of any preference share, any one of the following events –

177.1.3.23.1 the company fails to declare a preference dividend in accordance with 177.3.2 and such failure is not remedied within three days of the holder demanding that such failure be remedied;

177.1.3.23.2 the company fails to pay a preference dividend on the date on which it is payable and such failure is not remedied within three days of the holder demanding that such failure be remedied; or

177.1.3.23.3 the company falls to comply with any provision hereof and such failure is not remedied within fourteen days of the holder demanding that such failure be remedied; or

177.1.3.23.4 any person brings an application for the winding-up or judicial management of any member of the group, whether provisional or final, compulsorily or voluntarily; or

177.1.3.23.5 any member of the group is placed in liquidation or judicial management, whether provisionally or finally, at the instance of any creditor or otherwise, compulsory or voluntarily; or

177.1.3.23.6 any asset/s of any member of the group is/are attached under a writ of execution issued out of any court, and the relevant member of the group fails, within twenty days of the date upon which such attachment came to the notice of the relevant member of the group,


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to take the steps necessary to have such attachment set aside or thereafter fails to pursue such steps expeditiously and diligently; or

177.1.3.23.7 any member of the group gives any notice, or takes any steps, to convene a meeting of its shareholders to adopt a resolution placing that member of the group in liquidation or under judicial management, whether provisional or final; or

177.1.3.23.8 any member of the group makes or attempts to make or recommends a general offer of compromise with any or at] of its creditors; or

177.1.3.23.9 the directors of any member of the group request the appointment of a liquidator or judicial manager for the relevant member of the group; or

177.1.3.23.10 any member of the group has any material judgment or other award ("judgment") made against it and it fails to –

177.1.3.23.10.1 appeal against such judgment (if such judgment is appealable) or to apply for the rescission thereof (if such judgment is a default judgment) within the prescribed time limits or thereafter fails to prosecute such appeal or application expeditiously and diligently or ultimately tails in such appeal or application; or

177.1.3.23.10.2 satisfy such judgment within twenty days after the date upon which it becomes aware thereof or, if it lodges an appeal or application referred to in 177.1.3.23.10.1 within the prescribed time limits, within three days of any other event referred to in 177.1.3.23.10.1; and

177.1.3.23.10.3 the satisfaction of such judgment will have a material adverse effect on the company; or

177.1.3.23.11 any member of the group is insolvent or is, or is deemed for the purposes of any applicable law to be unable to pay its debts as they fall due; or

177.1.3.23.12 any member of the group breaches any material provision of (including any material warranty or representation given in relation to) the subscription agreement and, if such breach is capable of remedy, it is not remedied (if capable of being remedied) within the time period (if any) afforded to it for that purpose by that agreement; or

177.1.3.23.13 any event, circumstance or matter, or series of events, circumstances or matters occurs which have a material adverse effect on any member of the group and the position is not rectified to the satisfaction of the holder within 15 (fifteen) days of receipt by the company of written notice from the holder requiring the position to be rectified; or

177.1.3.23.14 by reason of any event It becomes unlawful for the holder to hold a preference share or to claim and recover all or pare of a preference dividend;

177.1.3.24 "redemption payment” means, in respect of each preference share, an amount equal to the sum of –

177.1.3.24.1 the issue price; plus

177.1.3.24.2 all accumulated dividends, additional preference dividends plus interest thereon at the rate of 12%;

177.1.3.25 "STC" means secondary tax on companies levied in tents of the Income Tax Act;

177.1.3.26 "tax" means any tax, duty, levy, surcharge or imposition of any nature whatever and any penalties or interest payable in respect thereof which maybe lawfully imposed under the laws of the RSA; and


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177.1.3.27 "transaction agreements" means the –

177.1.3.27.1 articles of association of the company;

177.1.3.27.2 shareholders agreement between the company, Mvela and Labat dated on or about the signature date; and

177.1.3.27.3 subscription agreement.

177.1.4 When the day for performance of any obligation of the company in relation to the preference shares is not a business day, the company shall perform such obligation on the immediately preceding business day on the basis that such early performance shall not affect any calculation required to be made in respect of the preference shares.

177.2 Subscription, allotment and issue

177.2.1 Each preference share shall have a par value of R1.00 (one Rand) each and shall be allotted and issued, credited as fully paid up, at par plus a premium in the aggregate equal to the issue price per preference share.

177.2.2 Upon payment of the issue price by the holder, the company shall:

177.2.2.1 credit the amount of R1.00 (one rand) per preference share to its share capital account; and

177.2.2.2 credit an amount of R9,999.00 (nine thousand nine hundred and ninety nine rand) per preference share to its share premium account.

177.3 Preference dividends

177.3.1 The holders shall have the right to receive and be paid, in priority to the holders of any other class of shares in the share capital of the company, the preference dividend.

177.3.2 The company shall be obliged to declare each preference dividend prior to the payment date on which it shall, in terms of 177.3.1, be payable; provided that if the distributable profits of the company at any time are less than the aggregate preference dividends payable in terms of 177.3.1 at that time then the company shall, notwithstanding anything to the contrary herein contained, only be obliged to declare the amount of such distributable profits as preference dividends and the shortfall of the actual preference dividend so declared below the amount payable in terms of 177.3.1 shall be an accumulated dividend referred to in 177.1.3.1.

177.4 Redemption

177.4.1 The company shall redeem each preference share on the redemption date by paying the redemption payment to the holder thereof against the surrender to the company of the share certificate in respect of that preference share (or, if such certificate has been lost or destroyed, such proof of loss or destruction and such indemnity as the company would be entitled to require in terms of 177.9.6.1.3).

177.4.2 In the event of a winding up of the company, the holders shall be paid in priority to the holders of all other classes of shares in the share capital of the company as if the preference share were being redeemed on the day immediately preceding the date of winding-up; provided that, if the company has shares constituting the preference interest and/or cash derived from the realisation of the preference interest which are insufficient to discharge the redemption payment, the holders shall be entitled only to receive payment Of such shares and/or cash which the company has,

177.4.3 Save as set out herein, the preference shares shall not be entitled to any participation in the profits or assets of the company.

177.5 Meetings

The holders of the preference shares shall be entitled to receive notice of and to be present at any general meeting of holders of any class of shares of the company but shall only be entitled to vote, either in person or by proxy, at such a meeting if a redemption event has occurred and has not been remedied at the date of that meeting and/or unless any one or more of the following circumstances prevail at the date of the meeting:-


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177.5.1 the preference dividend or any part thereof whether declared or not, remains in arrear and unpaid after 1 month from the due date thereof;

177.5.2 any redemption payment remains in arrear and unpaid after 1 month from the due date thereof;

177.5.3 a resolution of the company is proposed which affects the rights attached to the preference shares or the interests of the holders thereof, including, but not limited to, a resolution for the winding-up of the company or for the reduction of its share capital or share premium account or a resolution pursuant to Section 228 of the Companies Act, 1973 (except for any reduction which does not involve a distribution to shareholders or for the redemption of any preference shares originally issued as redeemable by the company);

177.5.4 the company proposes or purports to encumber or dispose of the whole or substantially the whole of the undertaking of the company or any of the assets of the company or enter into any other undertaking or activity or sign guarantees or any similar obligations for the indebtedness of a third party.

At every general meeting of the company at which the holders of preference shares are entitled to vote, a holder of preference shares shall, on the basis of the provisions set out in section 195(4)(b) of the Act, be entitled to that proportion of the total votes in the company which the aggregate amount of the nominal value of the preference shares held by him/her/it bears to the aggregate amount of the nominal value of all shares issued by the company; provided that if at a general meeting the aggregate votes exercisable by all the holders present or represented at the meeting exceed 25% less one vote of the total votes exercisable by all members present or represented at that meeting, a holder shall be entitled to the aforesaid proportion of the total votes at that meeting in respect of one quarter only of his/her/its preference shares and, in respect of the other three quarters, such lower proportion as will result in the total number of votes exercisable by all the holders being reduced to 25% less one vote of the aggregate votes exercisable at the meeting concerned.

At every meeting of preference shareholders, the provisions of the articles of association of the company relating to general meetings of ordinary shareholders shall apply mutatis mutandis.

Any holder of preference shares shall by giving written notice to that effect to the company at any time after a redemption event has occurred, be entitled to require the company, which shall thereupon be obliged, to call a general meeting of its shareholders, or any class of them, to consider any matter (including, without limitation, a resolution requiring the company to comply with its obligations to that holder, and any such resolution adopted at a meeting of all shareholders of the company shall be binding upon and be given effect to by the company and the board).

177.6 Prohibitions and undertakings Notwithstanding the provisions of any other article in these articles of association, the

terms of this article 177 and article 178 relating to the terms and conditions of the preference shares may not be varied, without the prior written consent of all the holders of the preference shares or without the prior sanction of a resolution passed at a separate class meeting of the holders of the preference shares in the same manner, mutatis mutandis, as a special resolution.


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177.7 Adjustments to dividend rate or redemption payment

177.7.1 If an adjustment event occurs at any time prior to the redemption in full of a preference share and the result thereof is that –

177.7.1.1 any preference dividend or redemption payment receivable by or accruing to the holder in respect of that preference share is subjected to any tax; and/or

177.7.1.2 the net after-tax return to the holder in respect of that preference share is reduced; and/or

177.7.1.3 the provisions of 177.7.4 apply,

and the holder gives written notice to the. company thereof then, subject to the provisions of the Companies Act, the dividend rate and/or redemption payment, as the case may be shall be increased with effect from the date on which the adjustment event causing such subjection, reduction and/or increase (as the case may be) becomes effective, so that the holder’s net after-tax return on that preference share after such adjustment event shall be the same as his net after-tax return prior to such adjustment event (or, if the provisions of 177.7.4 apply, then the dividend rate shall be increased in accordance with 177.7.4). Any such increase in the dividend rate shall not prevent the company from electing to redeem the preference shares in terms of 177.4, but any such redemption shall not affect the company’s obligations in terms of this 177.7.1 (nor the holder’s right in terms of 177.7.2 to rely on such obligations) in respect of the period up to the date of such redemption. Any such notice from the holder shall specify the increase in the dividend rate and/or redemption payment, as the case may be required by this 177.7.1.

177.7.2 Should an adjustment event occur, but the holder not be liable to pay any tax that would have resulted therefrom only because it has the benefit of an assessed loss or an STC credit, or a credit in respect of any similar tax, the holder shall not thereby be deprived of the benefit of article 177.7.1, and the provisions of article 177.7.1 shall apply, mutatis mutandis, as if such assessed loss, STC credit or other credit did not exist and as if the holder was liable to pay such tax.

177.7.3 The holder’s rights in terms of 177.7.1 shall survive the redemption of a preference share. Accordingly, notwithstanding anything to the contrary contained in this agreement, any person who was a preference shareholder shall be entitled to give any notice contemplated in 177.7.1 in respect of any preference share even after redemption of that preference share; provided that in these circumstances the redemption payment shall be increased retrospectively in accordance with such notice by such amount as will afford the same net after-tax return on the preference shares as if the adjustment event referred to in that notice had not occurred. The company shall be obliged within thirty business days after having received such notice to pay to such preference shareholder the difference between the increased redemption payment so payable and the actual redemption payment originally paid by the company.

177.7.4 The company shall, at the cost of tile holder, be entitled to require any increase in the dividend rate or in the redemption payment in terms of this 177.7.4 to be verified by the auditors of the holder and the costs of such verification shall be borne and paid by the company if such verification indicates that the holder’s calculations are substantially correct. Such verification shall not however delay the implementation of the provisions of 177.7.1 or 177.7.2.

177.7.5 The provisions of 177.7.2 shall continue to apply until the date of expiry of a period of 3 (three) years after the date of receipt by the holder of its tax assessment in respect of the financial year during which the last of the preference shares were redeemed, notwithstanding the provisions relating to extinctive prescription as contained in the Prescription Act, 1969.

177.7.6 The provisions of this 177.7.1 and 177.7.3 shall apply to any adjustment event which operates in favour of the company which shall then on notice to the holder be entitled to effect the relevant changes to the dividend rate and/or redemption amount as the case may be.

177.8 Liability for tax on redemption


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177.8.1 Should any liability for tax be raised on the holder as a result of the redemption of the preference shares as a result of a redemption event then the company shall, immediately upon notice in writing from the holder to the company, pay to the holder an amount per preference share equal to the amount required to place the holder in the same net after-tax position as if the liability for tax had not been raised (taking into account any interest and/or penalty levied on the holder). Such amount shall be paid by the company to the holder within 15 (fifteen) days after the date of notice by the holder to the company, without deduction or setoff.

177.8.2 After payment of the amount as envisaged in 177.8.1, the company and the holder shall consult forthwith as to whether to object to the assessment in terms of which the liability was raised and to decide on the appropriate steps to be taken, provided that nothing herein contained shall be construed as placing any obligation on the holder to take any steps in accordance with the aforegoing. Any objection and other steps shall be for the sole account of the company which shall indemnify the holder in respect thereof on demand. It is specifically recorded that no objection shall be made or other steps taken unless the holder has first been given adequate security for the costs so to be incurred.

177.8.3 Any marketable securities tax and/or stamp duties payable on the redemption of the preference shares shall be borne and paid by the company. To the extent that the holder becomes obliged to pay any such marketable securities tax and/or stamp duties, the company shall immediately upon notice in writing from the holder, pay to the holder an amount equal to the marketable securities tax and/or stamp duties paid by the holder.

177.9 General

177.9.1 Any payment due by the company to any holder shall be made without set-off, deduction or any form of withholding whatsoever and shall be made in accordance with any written instructions given to the company by that holder. In the absence of any such instructions the company shall deliver a cheque in the amount of such payment to that holder at its address in the register of members. Should any cheque in respect of a preference dividend, accumulated dividend or redemption payment not be cashed, the company shall retain that amount until it is claimed by the person entitled thereto.

177.9.2 The company shall have no right to defer, withhold or adjust any payment due to the holder.

177.9.3 The holder will be entitled with the consent of the company to dispose of or transfer all or any of the preference shares to another holder group company.

177.9.4 The holder will be entitled, subject to the written consent of the company, to dispose of or transfer all or any of the preference shares to any third party which is not a holder group company.

177.9.5 All notices given by the company or any holder in terms hereof or otherwise in connection with the preference shares shall be in writing.

177.9.6 If any certificate issued in respect of a preference share is defaced, lost or destroyed, it shall be replaced by the company upon receipt by the company of –

177.9.6.1 either-

177.9.6.1.1 the defaced certificate; or

177.9.6.1.2 an affidavit by a director of the holder to the effect that such certificate has been lost or destroyed; and

177.9.6.1.3 a written undertaking by the holder concerned to indemnify the company against any loss, liability, damage, cost or expense which the company may suffer as a result of issuing such replacement certificate.


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Annexure 10

PROVISIONS OF THE ARTICLES OF ASSOCIATION OF THE COMPANY RELATING TO DIVIDENDS

137 The company in general meeting or the directors may, from time to time, declare a dividend to be paid to the members in accordance with the provisions of these articles in respect of all shares held by them. Dividends shall be payable to members recorded as such on a date subsequent to the date of the declaration of the dividend. The date upon which a member must be recorded in the books in order to participate in a dividend declared in respect of a share shall be known as "the record date". No larger dividend shall be declared by the company in general meeting than is recommended by the directors but the company in general meeting may declare a smaller dividend. Dividends shall be declared at least 15 (fifteen) days prior to the record date.

138 Where any share is issued on terms providing that it shall rank for dividend as from a particular dividend date or for all dividends declared after a particular date, such share shall rank for dividend accordingly.

139 Subject to any special rights as to dividends upon which any share may have been issued, every member shall, in respect of every share held by him on any relevant dividend date, be entitled, in the case of shares having a par value, to a dividend which bears the same proportion to the total dividend declared in respect of all the shares of the class of which it forms part as the par value of that share bears to the nominal value of all the issued shares of that class, and, in the case of shares not having a par value, to a dividend which bears the same proportion to the total dividend declared in respect of all the shares of the class of which it forms part as the number of shares owned by such member bears to the total number of shares issued in that class. For purposes of this article a share shall not be deemed to belong to the same class as another share unless it ranks, as at any particular dividend date, pari passu in all respects with such other share.

140 The directors may, from time to time, pay to the members on account of the next forthcoming dividend, such interim dividend as in their judgment the position of the company justifies. The directors may also pay the fixed dividend payable on any preference share of the company half-yearly or otherwise on fixed dates whenever such a course seems in the opinion of the directors justified.

141 Any dividend so declared may be paid and satisfied, either wholly or in part, by the distribution of specific assets, and in particular of paid-up shares, debentures or other securities of the company, or of any other company, or in cash, or in any one or more of such ways as the directors may at the time of declaring the dividend determine and direct. Where any difficulty arises in regard to the distribution they may settle the same as they think expedient, and in particular may fix the value of such specific assets or any part thereof, for which purpose any appreciation of any investment of such assets, whether realised or not, shall be regarded as profits. The directors may determine that cash payments shall be made to any members on the basis of the value so fixed in order to secure equality of distribution and may vest any such assets in trustees upon such trusts for the persons entitled to the dividend as may seem expedient to them.

142 No dividend shall be payable except out of the profits of the company and, except as otherwise provided under the terms of issue of the shares in respect of which such dividend is payable, no dividends shall carry interest as against the company. The declaration by the directors as to the amount of the profits of the company shall be conclusive. Dividends may be declared either free of or subject to the deduction of income tax and any other tax or duty in respect of which the company may be charged. All unclaimed dividends may be invested or otherwise made use of by the directors for the benefit of the company until claimed, provided that dividends unclaimed for a period of three years from the date they were declared may be forfeited for the benefit of the company. Notwithstanding the aforegoing, the company may deposit the amount of any unclaimed dividend that has remained unclaimed for a period of not less than three years from the date on which such amount became payable into the Guardian’s Fund, or it may deposit same into an interest-bearing call account with a bank or financial institution. Any such depositing of any unclaimed dividend with a bank or financial institution shall be interpreted as being a payment by the company to the person entitled to the dividend subject to and upon the terms and conditions contained in this article. If at any time prior to the expiry of a period of three years from the date upon which the dividend was declared the person entitled to such dividend shall request payment of the dividend, the company shall be entitled to withdraw the amount of the dividend to be paid out of the deposit which it will have made and to pay that amount to the person entitled to the dividend. If the person entitled to the dividend has not


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demanded payment of the dividend within a period of three years from the date when the dividend was declared, the company shall be entitled to withdraw from the deposit the amount of the dividend and that amount shall be deemed to have been forfeited by the person entitled thereto to the company. The company shall be entitled to payment of all interest earned on the deposit from the date of depositing thereof to the date of withdrawal thereof. The company shall not be required to make a separate deposit in respect of each unclaimed dividend paid into the bank or other financial institution and shall be entitled to use one single deposit account for any and all of such payments.

143 Any dividend, interest or other sum payable in cash to a member, may be paid by cheque marked "not negotiable" and "not transferable" or otherwise, as the directors may, from time to time determine, and shall either be personally delivered to or be sent through the post addressed to the member entitled thereto at his registered address or, in the case of joint holders, addressed to the holder whose name stands first on the register (or sub-register in the case of uncertified securities) in respect of the share at his registered address, or addressed to such person and at such address as the member or joint holders may in writing direct. Every such cheque shall, unless the member or joint holders otherwise direct, be made payable to the order of the person to whom it is addressed and shall be sent at the risk of the member or joint holders. The company shall not be responsible for the loss in transmission of any cheque or of any document (whether similar to a cheque or not) sent through the post as aforesaid whether or not it was so sent at his request. A member or any one or two or more joint holders, or his or their agent duly appointed in writing, may give effectual receipts for any dividends or other moneys payable in respect of a share held by such member or joint holders. Payment of any such cheque to whomsoever effected shall be a good discharge of the company. The aforementioned provisions shall apply, mutatis mutandis, in respect of the holders of uncertified securities, unless such holder shall have directed in writing that payment be made to his CSDP.

144 The directors may from time to time make such regulations as they think fit regarding the payment of dividends to members having registered addresses outside the Republic, and such regulations may provide for the payment of such dividends in any foreign currency, the rate of exchange at which such payment shall be made and such other matters as the directors may think fit.

145 The directors shall be entitled to delegate liability for the payment of any dividends previously declared by the company out of distributable reserves but which have not been claimed or forfeited by the ordinary shareholders entitled thereto, to any deposit-taking institution registered as such in accordance with the laws of the Republic.


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Annexure 11

INDEPENDENT EXPERT VALUATION OPINION TO THE SHAREHOLDERS OF TOTAL CLIENT SERVICES LIMITED IN RELATION TO THE LISTING OF THE SHARES ON THE ALTX OF THE JSE

19 February 2008 The Shareholders Total Client Services Limited Dear Sirs VALUATION OPINION TO THE SHAREHOLDERS OF TOTAL CLIENT SERVICES LIMITED IN RELATION TO THE LISTING OF THE SHARES ON THE ALTX OF THE JSE INTRODUCTION We have been appointed by the Financial Director of Total Client Services Limited (“the Issuer”) and Merchant Sponsors (Proprietary) Limited to prepare an opinion on the value of the goodwill attributed to the Issuer. Assumptions We arrived at our opinion based on the following assumptions: • That there are no material contingencies, being assets or liabilities. other than those disclosed in the

financial statements, which could affect the future of the Issuer and/or its existing value; • That there are no material legal proceedings being undertaken, other than those disclosed in the financial

statements, that relate to the Issuer or parties related to the Issuer • That there are no material legal outstanding disputes with the South African Revenue Services, other than

those disclosed in the financial statements, in respect of tax affairs; • That reliance can be placed on the audited and reviewed figures of the Issuer during the course of this

assignment; and • Where relevant, representations made by management and/or directors were corroborated to source

documents prepared by third parties; independent analytical procedures performed by us; examining and understanding the industry in which the Issuer operates and analysing external factors that influence the business of the Issuer.

COMPANY PROFILES Total Client Services Limited Total Client Services Limited (Registration Number 1998/025018/06) was incorporated on 14 December 1998 with the name Labat Traffic Solutions (Proprietary) Limited, which changed its name to Total Client Services (Proprietary) Limited on 7 November 2007 and was converted to a public company on 14 February 2008. The principal activities of the group include the development of software and back office support to municipalities and camera maintenance. The Issuer provides technology, proprietary application software and administration services as an integrated solution to Local Authorities and Provincial Administrations involved in the business of law enforcement. The Issuer provides an end-to-end solution, which allows it to provide both effective delivery and support to its clients. The technology products provided by the Issuer include road traffic equipment which is required to measure speed, traffic flow patterns and detect offender vehicles on the road. These products are sourced from local as well as international suppliers to ensure the best possible combination of products to satisfy the client’s requirements.


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The Issuer’s application software products have been developed following exhaustive in-house research and development to cater for a wide range of traffic management applications. Full service centre contracts are also available from the Issuer, whereby the company provides various back-office solutions in addition to the above technology and software to clients with such contracts providing a complete end-to-end solution, where required by the client. The Issuer’s revenue is earned on a fixed fee basis, based on the number of offences that have been finalised. The end-to-end solution offered by the company creates a platform whereby the Issuer’s clients have achieved finalisation rates of 50-65% which are well above the national average of 20%. The billing to the Issuers customers is only done once the municipality has been paid by the offender, in other words, the Issuer only invoices their client once they have been paid. DETAILS AND SOURCES OF INFORMATION In arriving at our valuation, we considered the following information:

• Consolidated reviewed annual financial statements for the Issuer for the years ended 28 February 2006 and 2007;

• interim financial statements of the Issuer for the 6 months ended 31st August 2007 • discussions with the executive directors of the Issuer • other publicly available information relating to the Issuer; • the circumstances and history of the transaction in discussion with management and given due

consideration to all relevant factors having a bearing on the transaction; • the general economic, market and other conditions impacting on the Issuer; • We did not separately value the software intangible assets. • The Issuers profit forecast for the years 28 February 2008 and 2009

We obtained the information through:

• conducting interviews with the executive directors; • extracting information from the internet and the press; and • examining the financial statements of the Issuer

LIMITING CONDITIONS AND RELATED PARTY RELATIONSHIPS We have relied upon the accuracy of information provided to us or otherwise reviewed by us, for the purposes of this opinion, whether in writing or obtained in discussion with the management of the Issuer. We express no opinion on this information. There were no limiting conditions, or any restrictions of scope imposed by the client whilst this opinion was being prepared. Our opinion is based on current economic, regulatory, market as well as other conditions. Subsequent developments may affect this opinion, which we are under no obligation to update, review or re-affirm.

This letter and opinion is provided solely for the benefit of the shareholders of the Issuer There is no relationship between Horwath Leveton Boner and any other parties involved in this transaction. Horwath Leveton Boner have no shares in the Issuer or any other party involved in the transaction. Horwath Leveton Boner’s fees are not payable in shares. CONFIRMATION OF PERFORMANCE OF VALUATION AND VALUATION METHODOLOGY The primary valuation technique adopted to value the goodwill of the Issuer was the systematic cash flow method of valuation. The key value drivers of the systematic cash flow valuation model include: • A calculation of the maintainable earnings of the Issuer; • A projection of the growth in revenue which is influenced predominantly by market conditions;


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• A calculation of the fair rate of return; • A calculation of the amount of earnings that are required to sustain fixed assets and working capital

requirements; and • Period of time to discount the future cash flows. PROCEDURES In order to assess the value of the goodwill, we have performed, the following procedures: • Reviewed the methodologies available for performing valuations of businesses operating in this industry

sector; • Performed an indicative valuation of the goodwill of the Issuer using the systematic cash flow model,

whereby the outcome of the valuation resulted in a value in excess of the stated capital; • Evaluated the relative risks associated with the Issuer and the industry in which it operates; • Held discussions with and obtained representations from executive directors and management of the

Issuer; • Reviewed general economic, market and related conditions in which the Issuer operate;

OPINION Our opinion is based upon the market, regulatory and trading conditions as they currently exist and can only be evaluated at the date of this letter. It should be understood that subsequent developments may affect our opinion, which we are under no obligation to update, revise or re-affirm. We have considered the state and profit history of the Issuer and based upon and subject to the aforegoing, we are of the opinion that the value of the goodwill of the Issuer is in excess of R8 400 000. CONSENT We hereby consent to the inclusion of this letter in its entirety in the circular to shareholders to be dated on or about 27 February 2008. Yours faithfully HORWATH LEVETON BONER REGISTERED AUDITORS CHARTERED ACCOUNTANTS (SA) JOHANNESBURG Per: M.L. MITTEL


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TOTAL CLIENT SERVICES LIMITED (Formerly Labat Traffic Solutions (Proprietary) Limited)

Incorporated in the Republic of South Africa (Registration number 1998/025018/06)

Share code: TCS ISIN: ZAE000116208 (“TCS” or “the company”)

PRIVATE PLACEMENT APPLICATION FORM

In respect of the private placement by way of an offer for subscription of 42 553 192 TCS ordinary shares at an issue price of 47 cents per ordinary share and an offer for sale by certain of the existing shareholders of the company pro-rata to their shareholding in the company of 42 553 192 ordinary shares at a price of 47 cents per ordinary share in terms of the prospectus, registered by the Registrar of Companies on 26 February 2008 and issued on 29 February 2008 (“the prospectus”)

No payment should be submitted with this private placement application form to the Designated Adviser, Merchant Sponsors (Proprietary) Limited. Successful applicants who are allotted ordinary shares will be required to make payment in respect of such ordinary shares so as to be received by no later than 12:00 on Tuesday, 1 April 2008. Please refer to the instructions overleaf before completing this private placement application form.

1. Application for ordinary shares

Applicants should complete the private placement application form and deliver by hand, post or fax it to:



so as to be received by no later than 12:00 on Thursday, 27 March 2008

1.1 Application for dematerialised shares

Applicants who elect to receive their allocated ordinary shares in dematerialised form may do so, in which case this private placement application and the section on their CSDP or broker must be completed and stamped or signed by the relevant CSDP or broker, and returned to the Designated Adviser. Applicants, who wish to receive their allocated ordinary shares in dematerialised form, can also complete and return this private placement application form to their duly appointed CSDP or broker by the time and date stipulated in the agreement governing their relationship with their CSDP or broker, together with the method of payment as stipulated in such agreement.

1.2 Application for certificated shares

Applicants who elect to receive their allocated ordinary shares in certificated form may do so, in which case this private placement application form must be completed and returned to the Designated Adviser.

2. Payment in respect of allotment of ordinary shares

Successful applicants who are allocated shares may elect to make payment by way of electronic transfer or by way or bank guaranteed cheque or banker’s draft.


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2.1 Payment by electronic transfer

Applicants who have been allotted ordinary shares and who wish to pay for their allocation by way of electronic transfer may do so, in which case proof of such payment by electronic transfer must be delivered by hand, posted or faxed to the Designated Adviser (and not the transfer secretaries) at:

if delivered by hand or courier: if posted: if faxed: Designated Adviser Designated Adviser Designated Adviser Merchant Sponsors (Proprietary) Merchant Sponsors Merchant Sponsors Limited (Proprietary) Limited (Proprietary) Limited 2nd Floor, North Block PO Box 41480 Fax: 011 325 6362 Hyde Park Office Tower Craighall Corner 6th Road and 2024 Jan Smuts Avenue Hyde Park, Johannesburg, 2196

so as to be received by no later than 12:00 on Tuesday, 1 April 2008.

Payment by electronic transfer must be made into the following bank account: Bank: Absa Bank Branch: ABS BBs Sandton Branch code: 632005 Account name: TCS Private Placement

Account number: 4070651190 TCS accepts no responsibility and will not be liable for the correctness of any allocation of private placement shares pursuant to payment being made, or alleged to have been made, by way of electronic transfer due to proof of such payment not being received, or purported proof of such payment being insufficient or defective, or TCS, for any reason, not being able to reconcile a payment or purported payment with a particular application for private placement shares.

2.2 Payment by bank guaranteed cheque or banker’s draft

Applicants who have been allotted ordinary shares and who wish to pay for their allocation by way of bank guaranteed cheque or banker’s draft may do so, in which case payment in the form of a bank guaranteed cheque or banker’s draft (crossed “not transferable” and drawn in favour of “TCS Private Placement”) must be delivered in an envelope marked “TCS Private Placement” to the Designated Adviser (and not the transfer secretaries) at:

Designated Adviser Merchant Sponsors (Proprietary) Limited 2nd Floor, North Block Hyde Park Office Tower Corner 6th Road and Jan Smuts Avenue

Hyde Park, Johannesburg, 2196

so as to be received by no later than 12:00 on Tuesday, 1 April 2008. AT THE DISCRETION OF THE DIRECTORS, LATE APPLICATIONS MAY NOT BE CONSIDERED FOR ACCEPTANCE. Reservation of rights The directors of TCS reserve the right to accept or refuse any application(s), either in whole or in part, or to pro rate any or all application(s) (whether or not received timeously in such manner as they may, in their sole and absolute discretion, determine. The directors of TCS reserve the right to accept or reject, either in whole or in part, any private placement applications should the terms contained in this prospectus of which this private placement application form forms part and the instructions herein not be complied with.


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Applications must be for a minimum of 5 000 ordinary shares and in multiples of 1 000 ordinary shares thereafter. To the directors Total Client Services Limited

1. I/We, the undersigned, confirm that I/we have full legal capacity to contract and, having read the prospectus, hereby irrevocably apply for and request you to accept my/our application for the undermentioned number of ordinary shares in TCS at 47 cents per share or any lesser number that may, in your absolute discretion, be allotted to me/us, subject to the articles of association of TCS.

2. I/We wish to receive my/our allocated ordinary shares in dematerialised form and will hand this private placement application form to the Designated Adviser, Merchant Sponsors (Proprietary) Limited, and will provide appropriate instructions to my/our appointed CSDP or broker, as the case may be, with regard to the application herein and the payment thereof, as stipulated in the agreement governing my/our relationship with my/our CSDP or broker, as the case may be. I/We accept that payment in respect of the application will be, in terms of the custody agreement entered into between me/us and my/our CSDP or broker, on confirmation of allotment.

or

3. I/We wish to receive my/our allocated ordinary shares in certificated form and commit to accept the physical share certificate.

4. I/We understand that the subscription for ordinary shares in terms of the prospectus is conditional on the granting of a listing of the ordinary shares of TCS, by Monday, 7 April 2008 or such later date as the directors may determine, on the Alternative Exchange (“AltX”) of JSE Limited.

Dated 2008 Telephone number ( ) Signature

Assisted by (where applicable) This section must be completed using BLOCK LETTERS ONLY IN BLACK INK

Surname of individual or Name of entity

Mr

Mrs

Miss

Other title

First names (in full)

To be completed by all applicants

Postal address (Preferably PO Box address)

Share certificate, if applicable, will be sent to this address

Telephone number ( ) E-mail address Total number of ordinary shares applied for

Note: Minimum number of 5 000 ordinary shares and thereafter in multiples of 1 000 ordinary shares (Enter figures only – not words)


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This section must be completed if ordinary shares are required in dematerialised form. Required information must be completed by CSDP or broker using BLOCK LETTERS ONLY IN BLACK INK.

CSDP name

CSDP contact person

CSDP contact telephone number ( )

CSA or Bank CSD account number

Scrip account number

Settlement bank account number

CSDP signature or stamp This application will constitute a legal contract between TCS and the applicant. The issuer of the ordinary shares is TCS. Application forms for certificated or uncertificated ordinary shares will not be accepted unless the above information has been furnished. Instructions: 1. No payment should be submitted with this private placement application form to the Designated Adviser,

Merchant Sponsors (Proprietary) Limited. Successful applicants who are allocated shares must ensure that payment is paid into the bank account detailed in paragraph 2.1 of this private placement application form so as to be received by no later than 12:00 on Tuesday, 1 April 2008.

2. Applications must be made on this private placement application form. Photocopies or reproductions of this private placement application form will be accepted.

3. Applications are irrevocable and may not be withdrawn once submitted to the Designated Adviser. 4. All CSDPs and brokers will be required to retain this private placement application form for presentation to the

directors if required. 5. Please refer to the terms and conditions of the private placement set out in paragraph 10 of the prospectus.

Applicants should consult their brokers, bankers, or other professional advisers in case of doubt as to the correct completion of this private placement application form.

6. Applications must be for a minimum of 5 000 ordinary shares and thereafter in multiples of 1 000 ordinary shares.

7. Applicants who wish to receive their ordinary shares in dematerialised form must advise their CSDP or broker in terms of the custody agreement entered into between them and their CSDP or broker.

8. Applicants who wish to receive their ordinary shares in certificated form must submit only one private placement application form. To the extent that more than one application is submitted, the first private placement application form received will be the one in respect of which TCS ordinary shares will be allocated in terms of the prospectus and further private placement application form(s) may be ignored, at the sole and absolute discretion of the directors of TCS.

9. No receipts will be issued for private placement application forms. 10. All alterations on this private placement application form must be authenticated by full signature. 11. TCS will use the “certified transfer deeds” and other temporary “documents of title” procedure approved by

JSE Limited and therefore will issue only a “block” certificate for the ordinary shares allotted in terms of this private placement application for an applicant who requests a share certificate.

12. Blocked Rand may be used by emigrants and non-residents of the common monetary area (comprising the Republics of South Africa and Namibia and the Kingdoms of Swaziland and Lesotho) for payment in terms of this private placement application and reference should be made to paragraph 10.11 of the prospectus, which deals with South African Exchange Control Regulations.

13. If any cheque or banker’s draft is dishonoured, the company may, in its sole discretion, regard the relevant allocation as invalid or take such other steps in regard thereto as it may deem fit.