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Business Connexion Annual Report 2007 | Grow

ing business and growing transform

ation

Annual Report 2007Growing our business and growing transformation

Business Connexion Park North789 Sixteenth RoadRandjesparkMidrand1685South Africa

www.bcx.co.za

BCX Cover 37374 v4 22/11/07 15:00

VisionAs a truly South African companywe will be the leading integrator ofICT-based business solutions thatmake our clients more successful.

Contents1 Group financial highlights2 Company profile3 Group structure4 Board of directors6 Footprint8 Chairman’s statement

10 Chief Executive’s statement15 Executive Committee16 Review of operations24 Corporate governance33 Value added statement

Business Connexion boasts unrivalled expertise across a range of vertical industry

sectors including financial services, telecommunications, healthcare,

manufacturing, automotive, retail and the public sector.

Annual Report 07 | Business Connexion | 1

Restated2007 % 2006 % 2005 % 2004 % 2003R000 change R000 change R000 change R000 change R000

Operating resultsRevenue 3 551 125 11 3 207 679 14 2 816 132 2 811 771 4 2 701 375Operating profit 108 458 (25) 143 814 (22) 185 089 47 125 695 (12) 142 049Profit attributable to

parent shareholders 136 890 18 116 323 (59) 280 030 133 120 448 13 106 540Headline earnings 100 162 (11) 112 936 (35) 173 938 101 86 617 (22) 111 407Cash (utilised in)/generated

from operations (76 309) (136) 215 146 38 156 147 26 123 877 (56) 284 536

Balance sheetTotal shareholders’ equity 1 460 006 11 1 317 159 4 1 268 528 31 965 854 74 555 798Total assets 2 309 661 (3) 2 389 693 2 388 595 16 2 067 316 48 1 400 268Total liabilities 849 655 (21) 1 072 534 (4) 1 120 067 2 1 101 462 30 844 470Interest-bearing liabilities 68 093 (71) 231 870 (2) 236 762 (19) 293 843 7 273 969

Ordinary share performanceWeighted average number

of shares (000) (note 1) 251 601 247 867 246 445 253 551 253 425Diluted weighted average

number of shares (000) 260 327 260 758 262 801 253 551 253 425Earnings per share (cents) 54,4 16 46,9 (59) 113,6 139 47,5 13 42,0Diluted earnings per share (cents) 52,6 18 44,6 (58) 106,6 124 47,5 13 42,0Headline earnings per share (cents) 39,8 (13) 45,6 (35) 70,6 106 34,2 (22) 44,0Diluted headline earnings

per share (cents) 38,5 (11) 43,3 (35) 66,2 94 34,2 (22) 44,0Number of shares in issue

at year-end (000) 262 637 262 637 262 637 262 637 149 521Net asset value per share (cents) 555,9 11 501,5 4 483,0 31 367,8 (1) 371,7

Financial ratiosOperating margin (%) 3,1 4,5 6,6 4,5 5,3Return on shareholders’ equity (%) 6,9 8,6 13,7 9,0 20,0Return on total assets (%) 4,3 4,7 7,3 4,2 8,0Shareholders’ equity

to total liabilities (%) 171,8 122,8 113,3 87,7 65,8Interest-bearing liabilities

to equity (%) 4,7 17,6 18,7 30,4 49,3

DefinitionsTotal shareholders’ equity Equity attributable to parent shareholders and minority interestsTotal assets Non-current assets and current assetsTotal liabilities Non-current interest-bearing liabilities, non-current interest free liabilities and current liabilitiesInterest-bearing liabilities Non-current interest-bearing liabilities, short-term borrowings, bank overdrafts and

non-current liabilities held for saleNet asset value per share Total shareholders’ equity divided by number of shares in issueOperating margin Operating profit expressed as a percentage of revenueReturn on shareholders’ equity Headline earnings expressed as a percentage of total shareholders’ equityReturn on total assets Headline earnings expressed as a percentage of total assetsInterest-bearing liabilities to equity ratio Interest-bearing liabilities as a percentage of total shareholders’ equity

Note 1The number of shares includes both ordinary and preference shares in the comparative numbers for 2003 as the preference shares wereentitled to the same rights with respect to dividends as the ordinary shares. The preference shares were converted to ordinary shares onthe basis of one for one in 2004.

Note 22004 and 2005 includes the adjustments for the adoption of IAS39, Financial Instruments: Recognition and Measurement. Comparativefigures are not adjusted.

2005 includes the adjustment for AC501, Accounting for Secondary Tax on Companies (STC) and IFRS3, Business Combinations.Comparative figures are not adjusted.

2006 includes adjustments for the first-time adoption of International Financial Reporting Standards. Comparative figures for 2005 havebeen restated. No comparatives have been amended for the 2004 and 2003 years. In addition, the amended version of IAS39 was adoptedin 2006. The comparatives were not restated for this adoption in terms of the transitional provisions in the statement.

Group financial highlights for the years ended 31 May 2007

2 | Annual Report 07 | Business Connexion

Company profile

Clients are firmly positioned at the centre of the Business Connexionworld. The company runs mission-critical ICT systems for many JSE-listed organisations and manages products, services and solutions forkey public sector organisations, parastatal enterprises and a host ofmedium-sized emergent companies.

The group’s unique “Solutions Integration Model” represents the wayin which the integration of business solutions is configured.Solutions are designed to meet clients’ strategic and operationalbusiness needs. They are developed and implemented by drawing onexpertise from the Technology Infrastructure, Business Applications,Outsourcing, Communications and Asset Finance competencies.

Business Connexion boasts unrivalled expertise across a range ofvertical industry sectors including financial services,telecommunications, healthcare, manufacturing, automotive, retailand the public sector.

In an ongoing quest to deliver innovative solutions that add realbusiness value to clients, Business Connexion combines its ownexpertise, tools, resources and vertical sector knowledge with thatof its partners. The company nurtures strong relationships with manyof the world’s leading ICT companies including Actuate, Avaya, CiscoSystems, Citrix, Cognos, DataStage, EAS, Egenera, EMC2, GEAC, HP,IBM, Infosys, Microsoft SA, Nortel Networks, Novell, OpenText, Sage,SAP, SAS, Stratus Technologies, Sun Microsystems and TTI-Telecom.The group has attained top-level certification and has receivedawards from many of these partners.

Business Connexion is a truly South African ICT company thatunderstands the unique challenges of the African continent andthat continually builds on its track record of delivering world-classservices and solutions to Africa’s most successful corporations andpublic sector clients.

An integrator of competitive,innovative business solutions basedon ICT, Business Connexion hasoffices in all major centres throughoutSouth Africa and has more than4 500 employees.

Gadlex(Pty) Limited

Reg No. 2001/016929/07

25,01%

Group Limited

Group structure


BusinessConnexion

Technology Holdings(Pty) Limited

Reg No. 1996/007425/07

BusinessConnexionInvestment

(Pty) LimitedReg No. 1994/002507/07

BusinessConnexion


100% Q Data Europe Limited

75% Business Connexion Namibia (Pty) Limited

100% Business Connexion Communications (Pty) Limited

100% Business Connexion Solutions (Pty) Limited

100% SIFA Systems Limited (Mauritius)

83,5% Business Connexion Tanzania Limited

85% Business Connexion Zambia Limited

100% Business Connexion Mozambique Limitada

BusinessConnexion

ManagementServices


29,85% Intenda (Pty) Limited

100% Nanoteq (Pty) Limited

100% Comparex International Trading(Pty) Limited

100%

100%

74,99% 100%


Board of directors

Reginald Selwyn Berkowitz(70)Non-executive Chairman

Reggie obtained his Natal Law Certificateat the University of Natal. He is a seniorpartner in Berkowitz Kirkel Cohen WartskiGreenberg. He is a Director of InvestecBank Limited, where he heads up grouplegal activities, and is also Director ofInvestec Securities Limited and on theBoard of Investec Bank Limited, NatalRegion. He is Chairman and Director ofConduit Capital Limited, Chairman ofBeare Foundation, as well as a director ofseveral private companies. He wasappointed to the Board of Directors asChairman of Comparex Holdings Limitedwith effect from 24 June 2002, whichlater became known as BusinessConnexion Group Limited. Reggie’sinterests include golf and tennis, and heis a member of the Royal Durban GolfClub.

Leetile Benjamin Mophatlane(34)Chief Executive Officer

Benjamin was educated at the followingschools: Ikageng Primary School; TsogoHigh School; Christian Brothers College,Kimberley; and Kingswood College,Grahamstown. He holds a BCom(Accounting) degree from the Universityof Pretoria. Prior to starting BusinessConnexion, he worked for KPMG. AfterBusiness Connexion merged withComparex in 2004, Benjamin wasawarded the Deputy CEO seat as well as aseat on the Business Connexion GroupBoard. In 2007, he was appointed CEO ofBusiness Connexion. Benjamin is amember of Black Management Forum(BMF), Electronic Industries Federation ofSouth Africa (EIF), Black InformationTechnology Forum (BITF) and Wesgro(Western Cape Investment and TradePromotion). A brief list of Benjamin’saccomplishments follows:1991: Awarded South African Breweries

Bursary; Awarded the Boston CityCampus Scholarship/SowetanScholarship for Accounting

1995: Awarded KPMG Bursary forAccounting studies

1996: Started Business Connexion1998: Nominated by Tribute Magazine as

one of the top 100 Achievers ofthe Year

1999: BITF Black Achievers Award2000: Invited to join business delegation

– Presidential visit to the UnitedStates; Winner of the JuniorChamber South Africa – The FourOutstanding Young South Africans

2002: IT Personality of the Year2004: Laureate Award – Tuks Alumni

(University of Pretoria).

Appointed 1 July 2007.

Peter Watt(65)Executive Director

Peter was appointed chief executiveofficer of Comparex Africa and a directorof Comparex Holdings in 1999. InFebruary 2003, following the disposalof the European operations of Comparex,he was appointed chief executive officerof Comparex Holdings, now BusinessConnexion Group. His previousexperiences include serving as a seniorexecutive within the Afcol furnituremanufacturing arm of SAB; managingdirector of African Telephone & Cable(ATC; chief executive officer of PowerTechnologies (Powertech); deputychairman of Altron; and chairman andchief executive officer of DorbylAutomotive Technologies. At Altron, Peterled a major rationalisation within theSouth African cable manufacturingindustry, with the acquisition of Aseaand Scottish Cables under the Aberdareumbrella. He also guided a number of keystrategic initiatives that saw Powertechextend its participation in a growingnumber of markets in the lighting,automotive and domestic applianceindustries. Peter is a founder memberof the National Economic Forum andBusiness South Africa.

John Frederick Buchanan(63)Non-executive Director

John qualified as a chartered accountantin 1967. During his career he has held thepositions of group finance director atMetal Box (South Africa) Limited,executive director at Nampak Limited, aswell as group finance director at CadburySchweppes (South Africa) Limited. Johnwas appointed to the board of AspenPharmacare Holdings Limited as a non-executive director in May 2002, andbecame a non-executive director ofBusiness Connexion Group in January2003. John’s interests include wildlife,bird-watching, following sport andreading.


Nkenke Kekana (45)Non-executive Director

Nat Kekana has been involved incommunications for approximately23 years. He is currently the chiefexecutive officer of MsimaCommunications and, as an entrepreneur,he has invested in several companies.He sits on a number of boards, includingthat of Business Connexion GroupLimited. He has a wide range of skillsand experience in communications. Hisinvolvement in this field has includedformulating telecommunications andbroadcasting policies, laws andregulations; conducting public hearings;researching and producing videodocumentaries; authoring articles anddelivering speeches on information andcommunications industry issues. In hiscareer he has held the positions oftelevision technician at the SABC; filmmaker and journalist with Video NewsService and Afravision; group executiveregulatory and public policy at Telkom.He is a former political activist and wasMember of Parliament and chairman ofthe Parliamentary Portfolio Committee onCommunications. In 2003, Nat receivedthe Advertising Personality of the YearAward. He holds a post- graduatediploma in telecommunications andinformation policy (Unisa) and a diplomain computer programming (Globe).

Tony Ruiters (46)Non-executive Director

Tony studied for his Bachelor’s and HigherDiplomas at UCT. He went on to study foran Executive Diploma at StanfordUniversity, USA. Tony is co-founder ofJSE-listed financial services company,African Harvest Limited. Under hisleadership as Deputy CEO, the companygrew its assets to in excess of R15 billion,providing investment and managementservices to third parties, unit trusts andinstitutions.

Tony is known for his innovative thinkingand leadership style, often presenting themarket with differentiated propositions.Tony resigned from AHL as CEO in 2002following the sale of AHL to MetallonInvestments.

Appointed 21 September 2007.

Marius Schoeman (42)Financial Director

Marius Schoeman is Business Connexion’sgroup financial director. Marius is agraduate of the University of the OrangeFree State. He holds BCompt, BCompt(Hons) degrees, and a CTA from theUniversity. He is a registered member ofthe South African Institute of CharteredAccountants (SAICA). In 2006, hesuccessfully completed the HarvardBusiness School General ManagementProgramme (TGMP17) in Boston, USA.Marius joined Business Connexion, thenComparex Africa in March 2001 as groupexecutive: commercial and wasresponsible for the organisation’sCommercial Services Division (consistingof Legal Services, Project Management,Business Standards Management, RiskManagement and Internal Audit) for fiveyears. He was subsequently tasked withmanaging the company’s long-term IToutsource contract with the Sasol groupof companies, before being promoted tohis current position. He has been amember-elected trustee of the BusinessConnexion Pension and Provident Fundsince 2002 and serves on the boards ofvarious subsidiaries and executive forumswithin the organisation.

Appointed 1 August 2007.

Alan Farthing(49)Financial Director

Alan Farthing is a chartered accountantand has been in the IT industry for anumber of years, all of which have beenspent at Business Connexion.

Resigned 1 August 2007.


Footprint

4

2

3

5

1

Regional OfficesSouth Africa (1)Gauteng:JohannesburgPretoria

Western Cape:Cape Town

Eastern Cape:East LondonPort ElizabethGeorge

KwaZulu-Natal:Durban

Africa and EuropeNamibia (2):Windhoek

Tanzania (3):Dar es Salaam

Zambia (4):ChingolaKitwe Lusaka

Mozambique (5):Maputo

London:United Kingdom

Gauteng

KwaZulu-Natal

Eastern Cape

Western Cape

Northern Cape

Free State

North West

Limpopo

Mpumalanga


Service CentresBethlehemBloemfonteinCape TownDurbanEast LondonGeorgeJohannesburgKimberleyKurumanMbabaneMiddelburgMossel BayNelspruitNewcastlePietermaritzburgPolokwanePort ElizabethPort ShepstonePotchefstroomPretoriaRichards BayRustenburgSecundaSwakopmundUpingtonVereenigingVredendalWelkomWindhoekWorcester

Western CapeCape TownPhillip SavidesRegional Chief Executive

Eastern CapeEast London Port ElizabethGeorgeGert CronjéRegional Chief Executive

KwaZulu-NatalDurbanWilliam HeygateRegional Chief Executive

GautengJohannesburgSydney RamutlaGroup Executive Johannesburg

GautengPretoriaIsaac MophatlaneGroup Executive Public Sector and Pretoria Region

The past financial year was one of the mostchallenging in Business Connexion’s history,for several reasons, inter alia:• the bid by Telkom SA to acquire control

of the group, though eventually rejectedby the Competition authorities, createdan aura of uncertainty among clientsand staff, and occupied a considerableamount of management time;

• while the trend towards outsourcing ICTservices remains undiminished, theintensity of competition in this businessspace has eroded margins to the extentwhere some companies are concludingcontracts that are unprofitable and;

• the skills shortage in the ICT sectorcontinues to exert pressure onmanagement and human resourceplanners across the industry.

It is a credit to the strength and purpose ofour management team that we managed toincrease turnover by 10,7% to R3,6 billiongiven the enormity of the challenges faced.As far as the Telkom SA bid is concerned, weare grateful that this matter has now beenput to bed, as it adversely affected ourbusiness growth to some extent. The factthat no existing contracts were lost during

this period is a measure of the strength ofthe Business Connexion brand and theloyalty of its clients.

The Telkom SA bid, as spelled out more fullyin the chief executive’s review, had amaterial effect on management, staff andclients. The business most severely affectedwas Business Connexion Communications:understandably, some clients decided todefer any contractual decisions until theTelkom SA bid was settled one way or theother. Now that the Competition Tribunalhas made its ruling, we can focus anew onthe ample growth opportunities that lieahead. That said, Business Connexion has nocontrolling shareholder and we fullyanticipate that further such bids will bereceived in the future. While any bidsreceived will be dutifully considered with thebest interests of our shareholders in mind,the board and executive team willendeavour to manage any disruption fromsuch bids as effectively as possible.

One of the highlights of the year was themigration of clients to our two new datacentres in Midrand, erected at a cost ofR143 million (most of which was expended

Chairman’s statement

“I would also liketo extend my

appreciation toshareholders, clients

and suppliers, fortheir continued

support.”



in previous financial years). This world-classfacility further entrenches BusinessConnexion’s position as a market leader inthe ICT outsourcing space, and plans havealready been advanced for further expansionof this space to meet demand from clients.The demand for outsourcing of on-demandICT services will remain a feature of thebusiness environment for some time tocome, particularly in light of ever tighteningcorporate governance standards and theongoing national skills shortage. Weanticipated this trend several years ago andfast-tracked plans to establish the two newdata centres.

Management and board changesPeter Watt retired as chief executive officerat the end of June 2007, having given manyyears of dedicated service to the group.Peter remains a legend within the ICToutsource sector, and his legacy andenthusiasm for the business is deeplyimprinted on the organisation.

I would like to extend a warm welcome toBenjamin Mophatlane, who took over as CEOof the group on 1 July 2007. Benjamin wasone of the founders of the original BusinessConnexion back in 1996, and has served asits managing director from inception. He hasserved with distinction as deputy CEO and aboard director of Business Connexion forseveral years, and brings great passion andunderstanding of the business to his newposition. We wish him well.

We received the resignation of Alan Farthingas financial director during the past year.Alan left the group in August 2007 and wewish him every success in the future. Alanhas been succeeded by Marius Schoeman, achartered accountant who joined BusinessConnexion in 2001 as the group executive,Commercial Services. We are fortunate tohave a person of Marius’ business acumenin this position, and we wish him all the bestfor the future.

During the year David Nurek resigned as anon-executive director of BusinessConnexion. I would like to thank David forhis valued contribution to the group andfor the sound guidance and advice whichwas always available. We wish him wellin the future.

Financial performanceGiven the challenging business environmentover the review period, it is gratifying tonote that profit increased by a credible21,2% to R167,3 million, due in part tomanagement’s tight rein on costs, whichincreased by just 4,2% during the financialyear. The sale of properties alluded to in lastyear’s annual report was concluded duringthe year at a profit of R48,0 million.

Cash reserves dropped to R585,8 millionfrom R743,0 million the previous year due tothe capital expenditure on the data centres,the introduction of SAP and the acquisitionof Business Connexion Communicationsfrom Bidvest. The depreciation charge for theyear climbed 55,8% to R110,0 million due tothe commissioning of the data centres.

Headline earnings per share declined by12,7% to 39,8 cents over the year, and adividend of 15 cents, unchanged from 2006,has been declared. A positive aspect of thefinancial results is the 23,5% decline in theinterest bill to R26,0 million fromR34,0 million the previous year.

Corporate governanceManagement remains committed to andvigilant of the highest levels of soundcorporate governance. We believe thatBusiness Connexion remains a leader in thisregard within the local ICT sector. Inaddition to the fundamental requirementsof the King II report, we continue to reviewopportunities to improve the effectivenessof our endeavours in this important area.

Future outlookWith the new leadership in place, I amconfident that they will focus their energieson future growth opportunities. We expectto increase our share of public sectorbusiness, which currently accounts for17,9% of our revenue. Our new data centresgive us a clear competitive edge in anincreasingly competitive ICT outsourceservices sector, and plans to expand the datacentres are already at an advanced stage.

AppreciationI thank management and staff who haveshown incredible loyalty and dedicationduring this difficult time. I would also like toextend my appreciation to shareholders,clients and suppliers, for their continuedsupport.

As mentioned this financial year has beena particularly challenging one. It is withthis in mind that I would like to thank mycolleagues on the board who have beenrequired to devote considerably more timeto board matters than would normally berequired. Their close cooperation and thesound advice they have always given hasbeen invaluable.

Having reached the age of 70 and in line withthe company’s Articles of Association, I willstand down as chairman and director at thenext annual general meeting. I express myappreciation for having had the privilege tohave served on the Board and wish thecompany and my successor all the very bestfor the future.

RS BerkowitzChairman

Highlights of the year• The Competition Tribunal rejected Telkom

SA’s attempted acquisition of BusinessConnexion, thereby removing uncertaintyover the future of Business Connexion inthe eyes of clients and staff

• BMI-T ranks Business Connexion as themarket leader in information systemoutsourcing and network consultingand integration

• SiloFX Enterprise Integrators wasacquired

• Technology Infrastructure and BusinessApplications returned to profitability asdid the rest of our Africa business

• SAP implemented• Strong second half marks a return to

growth• Conclusion of agreement with KPIT

Cummins of India strengthens BusinessConnexion’s delivery capability in keybusiness areas

It is with great pleasure that I present the2007 annual report for Business Connexion.

A key milestone of the year under reviewwas the decision by the CompetitionTribunal to reject Telkom SA Limited’s offer

to acquire 100% of the ordinary shares ofBusiness Connexion on the grounds thatthis would lead to “a substantial lesseningor prevention of competition in themanaged network services market.”

We accepted the decision of the Tribunaland we are pleased that this matter hasnow been brought to a close. Wenevertheless believe the industry in whichwe operate, given the competitive natureand continued margin pressure, is overduefor consolidation. It was our belief that theTelkom SA bid was perhaps a catalysttowards consolidation in the industry,which would be to the ultimate benefit ofall concerned: such a trend should translateinto wider margins and better service levelsfor clients. It is concerning to note thatsome competitors are securing IToutsourcing contracts at rates that areclearly unsustainable in the long term.

The uncertainty generated by the Telkom SAbid had a negative effect on certain parts ofthe business, notably Business ConnexionCommunications, which suffered a materialloss during the year. This is one part of ourbusiness that overlapped with that of Telkom

Chief Executive’s statement

Business Connexion remainsAfrica’s leading integrator ofcompetitive, innovative and

practical business solutions basedon information and communication

technology. The company has aproven track record in designing

and implementing businesssolutions for many of the

continent’s most successful publicand private sector organisations.



SA, and some clients chose not to renewcontracts pending the outcome of theCompetition Tribunal proceedings. Theoriginal offer from Telkom SA was receivedin March 2006, and the final CompetitionTribunal decision was handed down in June2007 – a period of 15 months. The prolongednature of these proceedings, thoughunavoidable, nevertheless created uncertaintyin the minds of some staff and clients. Withthis uncertainty now out of the way, we canrefocus our attention on pursuing our growthstrategy, as outlined below. It is worth notingthat the overwhelming majority of clientsopted to retain our services during thisperiod, which is an endorsement of ourservice levels and speaks volumes of theloyalty of our clients. To them, we owe a deepdebt of gratitude. In view of the fact thatBusiness Connexion has no dominantshareholder, or block of shareholders, thecompany remains a potential takeover target.

Despite the uncertainties mentioned above,Business Connexion managed to secure newbusiness and renew existing business.According to BMI-T, the authoritative ITresearch agency, Business Connexionremains the market leader in informationsystem outsourcing and network consultingand integration.

If there was one single theme that describedthe past financial year, it was “investing forgrowth”. In August 2006 clients weremigrated to our two new state-of-the-artdata centres in Midrand without a singleinstance of downtime reported. The twodata centres, completed at a total capitalcost of R143 million, encompass the world’slatest technology in data centre design andcreate new capacity for the expansion of thegroup’s outsourcing capabilities. Thefacilities have been designed in such a wayas to allow for expansion at relatively lowadditional capital cost without disruptingour existing activities. They have theadditional benefit of centralising our data

centre activities, with all the economies ofscale this implies. One of the advantages oflocating clients in the new data centres isthe ability to optimise equipment andimprove efficiencies for clients, therebyhaving reduced space requirements.

The new centres meet the highestinternational standards for outsourced ITservices. In the wake of the 9/11 terrorattacks, corporations everywhere have beencompelled to re-examine the potential risksof disruption to their IT services, and manyhave opted to outsource their IT functionsto secure, off-site data centres such as thatwhich we now provide. The full benefits ofour investment in these facilities have yetto be realised. These will come in the formof improved cost efficiencies, stronger clientretention and new client acquisition. Wehave now established a sound foundationfor growth. While we are able toaccommodate substantial client growthwithin the new data centres, the majorityof our clients are serviced by BusinessConnexion on client premises.

Another milestone was the implementationof the SAP enterprise system, at a cost ofR78 million, spread over two years. Thebenefits of this in terms of improvedmanagement reporting and greaterfunctionality were immediately evident.SAP allowed us to consolidate 27 differentfinancial systems into one so we now havea single view of the client. It further allowsfor timeous financial and managementreporting, with a far greater depth ofinformation than was previously the case.

Yet another important development duringthe year was the conclusion of an agreementwith KPIT Cummins of India, whichsubstantially strengthens our deliverycapability in the application services andbusiness process outsourcing (BPO) fields.The global KPIT Cummins is supported byLehman Brothers and Cummins Engine of

the United States as strategic investors. KPITCummins has been recognised as one of the50 fastest growing organisations in India,and is rated one of the Fast 500 in AsiaPacific by Deloitte Consulting. Therelationship with KPIT Cummins enablesBusiness Connexion to continue its growthin the application services environment bydrawing on the Indian talent pool. More thanthis, it will advance Business Connexion’stransformation objectives by meeting short-term staffing needs, while facilitating skillstransfer between South African and Indiannationals. The agreement includes mutualinternship programmes to facilitate offshoretraining for the development of employeesof both companies.

Financial performanceRevenue increased by 10,7% over thefinancial year to R3,6 billion (2006:R3,2 billion), though gross margins declinedto 28,6% from 30,5% the prior year due toa change in the mix of hardware andoutsourced services.

A particularly pleasing aspect of the resultswas the inflation-beating 4,2% increasein costs to R796,2 million (2006:R763,9 million). The depreciation chargeclimbed 55,8% to R110,0 million (2006:R70,6 million) due to the aforementionedcommissioning of the two data centres ata capital cost of R143 million.

This was more than offset by a 23,5% fallin the interest bill to R26,0 million (2006:R34,0 million) and a R48,0 million profitfrom the sale of properties during theperiod. As a result, headline earning pershare declined by 12,7% to 39,8c (2006:45,6c) or 38,5c (2006: 43,3c) on a fullydiluted basis.

The balance sheet remains robust withcurrent assets net of liabilities increasing toR939,9 million (2006: R858,7 million).

Cash accounted for R585,8 million, downfrom R743,0 million the prior year, due tocapital expenditure on the data centres, theimplementation of SAP, the investment inBusiness Connexion Communicationsnetwork infrastructure, and the buying outof contracts from Bidvest.

A segmental analysis shows Services is stillthe largest contributor to revenue andoperating profits. The Services businesscontinues to anchor the group and remainsresilient in the face of fierce competition andthe enormous number of RFPs (Request forProposals), at considerable cost, submittedover the year. It is gratifying to note that thebusiness as a whole weathered someturbulent updrafts over the period and theimprovement in performance in the secondhalf of the year over the first half shows weare once again on the growth path.

Our Business Applications and TechnologyInfrastructure businesses had a particularlydifficult year, though there was a markedimprovement in the second half of the year,and both have now returned to profitability,as has our business in the rest of Africa.

Growth strategyThe trend towards IT outsourcing remainsintact, and Business Connexion haspositioned itself as a major player in thisspace.

The business case for outsourcing is morecompelling than ever: corporate clients areseeking ways to contain IT spend withoutcompromising on critical service levels.Outsource providers are better able toattract and retain IT skills in an increasinglycompetitive marketplace. The national skillsshortage is particularly acute in the IT sector,and Business Connexion has the advantageof being able to offer an attractive careerpath to IT professionals who mightotherwise face limited advancementopportunities in corporate IT departments.

Elevated corporate governance standardscontinue to require corporate executives tore-examine key risks within the business,such as the security and sustainability ofcritical IT functions. This is another factordriving the trend towards IT outsourcing.

While the public sector accounted for just17,9% of group revenues over the lastfinancial year, we anticipate much fastergrowth from this source than hastraditionally been the case. There is clearevidence of increased spending onoutsourced IT services from the publicsector over the last year, due togovernment’s heightened focus on servicedelivery. This, in part, accounts for theacceleration in tender approval processesat national, provincial and local governmentlevels. Business Connexion has a teamdedicated to building relationships with thevarious tiers of government, and we areconfident of winning a greater number ofpublic sector contracts over the comingfinancial year.

We are also confident of improved growthin Africa, where all of our operations, otherthan in Tanzania (which suffered fromcurrency devaluation), are now tradingprofitably. The commercial logic of IToutsourcing has taken root across thecontinent, and we are well positionedto benefit from this trend.

We are also on the lookout for selectedacquisitions that are earnings enhancing,and over the last year concluded thepurchase of SiloFX Enterprise Integrators,a specialist integration consultingcompany in the field of enterprisearchitecture and integration. Theacquisition became effective on 1 July2007 and improves Business Connexion’sapplication integration capabilities. It alsoexpands our implementation capacity toinclude integration technologies from allmajor vendors including BEA, IBM,

Microsoft, Oracle, SAP and SunMicrosystems. According to Gartner,application integration is a fast growingarea of specialisation both globally andlocally. It is also a major growth area forBusiness Connexion. Over the last fouryears we have seen a huge growth inclient demand in this area. At the sametime we have borne the brunt of asignificant shortage of applicationintegration skills in South Africa. We aretherefore extremely excited to haveconcluded this agreement which willbolster our own skills pool and willentrench our position in the local market.Increasingly businesses are striving toimprove their legacy solutions, automatebusiness processes and create compositebusiness applications and re-usableservices. This, coupled with increasingconsumption of information, has createdhuge demand for an offering that thenewly bolstered Business Connexionprofessional services team can fulfil.

We will continue to seek out appropriateacquisitions that enhance our serviceoffering and earnings capability. To thisextent it is notable that Business Connexionhas been shortlisted as a potential buyer forArivia.kom, the parastatal IT servicesoutsourcing group owned by Eskom andTransnet.

We are currently reviewing our growthstrategy and business mix. We believe ourgrowth strategy – focusing on organicopportunities for the most part, augmentedby selected acquisition opportunities thatenhance our earnings – is the right one.However, we recognise the need to stayabreast of market developments and toadjust our market focus accordingly. Ourinvestment in service facilities and skills isessential to retaining a competitive edge,and our efforts to provide a comprehensiveservice to clients is the best guarantee offuture growth and client retention.


Chief Executive’s statement (continued)


Black economic empowermentBusiness Connexion is one of the fewInformation and CommunicationsTechnology (ICT) companies to be led by anexecutive leadership team. The relationshipwith our 25% BEE shareholder Gadlex hassettled into a strong and positive workingrelationship, the benefits of which areevident in many parts of the business,both in terms of new business gains andorganisation-wide transformation.

Altogether 50% of the board of theBusiness Connexion operating company isblack. Of the executive committee four ofthe 11 members are black.

The first draft of a black economicempowerment (BEE) charter for the ICTsector was released in March 2004. Severalupdates have since been published and theICT Charter Steering Committee is currentlyaligning the charter with the BEE Codes ofGood Practice. The BEE Codes of GoodPractice were recently approved byParliament and gazetted by the Departmentof Trade and Industry.

To advance broad-based BEE in the country,the charter and the codes stress thatbusiness should focus on the followingindicators: equity ownership, managementand control, employment equity, skillsdevelopment, preferential procurement,enterprise development and corporatesocial investment.

The final charter and the codes include ascorecard against which the empowermentcredentials of a company will be weightedand measured.

Business Connexion embarked on aprogramme of transformation nearly 10 yearsago. Management recognised immediatelythat the company’s competitiveness andongoing success would depend upon itsability to carve a niche in the market. Black

economic empowerment, tackled withpassion and creativity, could create aplatform for business growth, which wouldenhance stakeholder value. Management alsorecognised that empowerment would helpthe company attract and retain qualityemployees from all cultural backgrounds.

It is worth mentioning that BusinessConnexion, and its predecessor PersetelQ Data Africa, played a pioneering role inempowerment in the ICT industry in 1997,when it sold control of Persetel Q DataAfrica to the National IT AcquisitionConsortium (Nitac), led by Don Ncube ofReal Africa Holdings. Nitac, comprisingmore than 900 000 previouslydisadvantaged individuals, includedrepresentatives from labour unions,women’s groups and several small ICTcompanies. Persetel Q Data Africasubsequently became Comparex, and adecision was made to expand the BEEequity ownership of the group. This wasachieved when Gadlex, formed in 1996 byBenjamin Mophatlane and his brother Isaac,acquired 25,01% of Comparex, which wassubsequently rebranded as BusinessConnexion.

Over the years significant amounts of time,effort, resources, and funds were channelledinto a range of empowerment andeconomic enablement initiatives.

The BEE scorecard shows excellent progressin terms of equity ownership, boardrepresentation and executive management.Our focus over the last year has been onaddressing historical inequalities at thelower levels of the organisation throughskills development and employment equity.We are particularly proud of our learnershipprogrammes which have enrolled some250 learners in the last two years, many ofwhom have since been employed within thegroup. Over the last year we enrolled139 learners, 130 of whom were placed

with client companies upon graduation. It isgratifying to note that those graduatingfrom this programme have, for the mostpart, been able to secure employmentwithin the industry.

Business Connexion directed approximatelyone-third of its discretionary procurementspend with BEE enterprises over thefinancial year under review, up from 31,4%the prior year. This is a vital component ofsector-wide transformation. At the sametime the group was involved in theestablishment and development of severalblack-owned and operated companies inthe ICT sector, including:• Business Opportunities Network, a

Section 21 company dedicated tohelping black-owned small businesses;

• Inathi Technology Holdings, a companyproviding hardware support at one ofour client’s largest sites;

• Intenda (Pty) Limited, a companyfocusing on software development andconsulting around the inbound supplychain;

• Mars Technologies, with which BusinessConnexion has a strategic alliance inthe Eastern Cape;

• Mthombo IT Services (MIT) whichprovides outsourced IT services;

• Phambili, in partnership with GijimaTechnologies, provides ICT solutions toGovernment’s justice cluster.

Skills developmentAttracting, motivating and rewarding staffis a key challenge faced by all companies inthe ICT sector. Our philosophy, in commonwith other progressive companies in the ICTspace, is to assist in training a pool of skillsas part of an industry-wide programme toaddress the skills shortage. While many ofthose on our learnership programmeeventually obtain employment with clientsor even competitors, we believe it is in ourlong-term interests to assist in solving theskills shortage in the industry, since this

creates a larger pool from which to recruitas we expand.

A range of training programmes weresuccessfully implemented during the yearto raise skills levels across the group. Theseincluded management and sales training,specific skills development programmes(such as SAP), as well as Adult BasicLiteracy and Education. This latter trainingprogramme ensures all staff have theNational Qualifications Framework Level 1qualification.

Corporate governanceThe Board of Directors continue torecognise its responsibilities in terms ofrisk management and sound corporategovernance practices. The practices havebeen tabled and approved by the Board, andcirculated to all staff. The group’s corporategovernance standards adhere to theprinciples outlined in the King Code onCorporate Governance. The Board comprisesa majority of non-executive andindependent directors, with subcommitteesresponsible for audit, risk and remuneration– which include independentrepresentatives – reporting to the Board.The recommendations of the King Codehave been fully incorporated into BusinessConnexion’s risk management proceduresand controls, at all levels of the business.

ProspectsWe enter the new financial year withimproved growth prospects. The removal ofthe uncertainty generated by the Telkom SAbid provides greater clarity to staff andclients in terms of our ownership structure,and allows us to focus our attention fullyon growth opportunities. BusinessConnexion secured a significant volume ofnew business over the past financial year,the benefits of which will be more fullyrealised in the coming year. The group is inthe process of refining its service offeringand go-to-market strategy to prepare forgrowth. Given the experiences of the pastyear in respect of the Telkom SA bid, we willremain vigilant in the coming year withregard to potential acquisitions. We expectmost of our growth over the comingfinancial year to be organic, and we areconfident of maintaining a positive trendin revenue and profit growth.

As I vacate my post, it gives me greatpleasure to handover the reins to mydeputy, Benjamin Mophatlane.

Peter A WattChief Executive Officer


Chief Executive’s statement (continued)


Executive Committee

Benjamin MophatlaneChief Executive Officer

Andy BrauerChief Technology Officer

Johann BurdenGroup Executive Human Resources

John JenkinsGroup Executive Services

Isaac MophatlaneGroup Executive Public Sector andPretoria Region

Marius SchoemanFinancial Director; Group ExecutiveFinance

Mike SewellGroup Executive Africa, UK and CoastalRegions

Pamela SamuelGroup Executive Marketing andCommunication

Sydney RamutlaGroup Executive Johannesburg andIndustry Expertise

Tim SchumannGroup Executive TechnologyInfrastructure Group

Victor AntezanaGroup Executive Strategic Initiatives

The solutions integrationmodel (SIM)We believe that our clients are looking formore than a technology partner andBusiness Connexion’s disciplined yet flexibleand strategic approach to solutions designand delivery aims to provide just that. Wecombine products, services andcompetencies to integrate and implementinnovative solutions that will improve theclient’s bottom line.

Our Solutions Integration Model (SIM)represents the way in which our integrationof business solutions is configured aroundthe client.

The Solutions Integration Model illustrateshow Business Connexion integrates thevariety of services and solutions offered toensure the maximum value to clients. The

company’s approach places the client’sneeds at the centre of the relationship,while SIM is designed to offer clients theflexibility of a small, mobile organisation,backed by the strength, resilience anddiversity of a large organisation.

Geographical performanceSouth Africa

Revenues: R3 288,5 million(2006: R2 987,1 million)Operating profit: R95,4 million(2006: R159,8 million)

Business Connexion’s growing client baseranges from JSE-listed and key public sectororganisations to medium-sized emergingcompanies, serviced through regionaloffices in Gauteng, KwaZulu-Natal, theWestern and Eastern Cape. Each of theseregions acts as a client gateway to the full

spectrum of skills, experience and expertiseavailable within the group.

Rest of AfricaRevenues: R226,3 million(2006: R185,6 million)Operating profit: R13,6 million (2006: lossof R18,0 million)

Business Connexion regards the rest ofAfrica as an important businessdevelopment area. The business provides itsservices mainly on a project basis to a broadspectrum of clients throughout thecontinent. The group has established officesin Mozambique, Namibia, Tanzania andZambia and has entered into effectivepartnerships with local third-party vendorsto secure local contracts. Annuity-basedrevenue is also targeted in these countriesto sustain the future viability of thebusiness.

Growth over the last year within theBusiness Connexion African subsidiaries ofMozambique, Tanzania and Zambia hasbeen extremely strong. Each country hasincreased its services business dramaticallyfrom the previous fiscal year and newprojects won during the year will continueto promote this strong growth in servicesrevenue. The Zambian operation achieveda number of key milestones by winningseveral large projects within the mining andgovernment sectors. The Tanzanianoperation secured service contracts in boththe financial and government sectors, andBusiness Connexion is now in the processof opening an office in Nigeria. The growthprospects across the continent remain verypositive for the year ahead.

Q Data EuropeRevenues: R36,3 million (2006: R35,0 million)Operating loss: R0,5 million (2006: profit ofR2,0 million).


Review of operations

“The group anticipated this change andresolved to accommodate the changingmarket conditions.”


Business Connexion’s London-based office,Q Data Europe Limited, provides ICTconsulting and technical services to certainof the group’s multinational clients in theUK and continental Europe. These servicesmirror those offered in South Africa andinclude outsourcing, global servicemanagement centre (GSMC) first linesupport, project management,infrastructure support and applicationdevelopment.

Despite the loss of a key account, Q DataEurope performed well during the yearunder review. During the past six months,Q Data concluded three long-term contracts(36 months) and expanded its serviceoffering to include communications andapplication development to clients.

Looking ahead, Q Data Europe will remainfocused on higher margin services ratherthan product sales, particularly in thenetworking, infrastructure support, GSMCand application development spaces. Highlymotivated staff are looking forward to theplanned move to our newly acquiredfreestanding office in Stevenage,Hertfordshire, England.

Divisional reviewServicesDivisional head: John JenkinsRevenues: R1 819,9 million(2006: R1 743,1 million)Operating profit: R148,6 million(2006: R182,0 million)

The services division comprises three majoroperational units:• Outsourcing• Professional services• Business Connexion Communications

OutsourcingThis area is focused on controlling andmanaging the provision of clients’ ICTsystems and services on an ongoing basis.The group builds strong relationships withclients, providing quality service atcompetitive prices, and is recognised byresearch house BMI-T as the leading playerin the Information Systems Outsourcingmarket.

The business has two principal areas offocus:• Infrastructure Management• The Global Service Management Centre

The outsource division was reorganisedinto a solution development team which isresponsible for the “plan and build” phaseof new solutions and an operationalservices team responsible for theoperational “run” of existing business.

The outsource division successfully renewedsome existing contracts that came up fortender, and also won some exciting newbusiness.

The investment that the organisation hasmade in its data centres and in the GlobalService Management Centre (GSMC)provides a unique competitive advantagefor the business.

Infrastructure managementBusiness Connexion is the leadinginfrastructure outsourcing service providerin South Africa, providing services to thefinancial, government, manufacturing,mining, petrochemical, retail and

The Solutions Integration Model illustrates howBusiness Connexion integrates the variety of servicesand solutions offered to ensure the maximum valueto clients.

telecommunications sectors. The unit ownsthe largest and most technologicallyadvanced data centre in southern Africa,enabling it to offer clients greater savingsas a result of economies of scale.

This investment has provided the base fromwhich to launch new infrastructure serviceson demand including storage andcomputing-on-demand and has placedBusiness Connexion in a position to launchthe first services on demand service, thecentralised hosted exchange and messagingservice. This has been well received byclients. Business Connexion is now in linewith the global trend of moving towardscommercialised services, where possiblewithin the service stack. The company isnow well positioned to move with its clientstowards this model.

In response to the strong demand fromclients for data centre space, we will expandthe existing facility by an additional 1 000square metres during the next financialyear. This data centre expansion isscheduled for completion by end April 2008.

The relocation of all the Business Connexionclients from the Sandton data centres to theNew Road data centres in Midrand wascompleted with great success, and withouta single instance of unscheduled downtimerecorded during the move. Client demandfor the new data centres has exceededexpectations and the data centres haveattracted interest from a number ofcompanies including a large internationalfinancial institution. Existing clients whotraditionally used their own data centres arenow relocating and consolidating to the newdata centres due to the state-of-the-arttechnology and high level of security offered.

Global Service Management Centre(GSMC)The Global Service Management Centre(GSMC) provides world-class service

management outsourcing, offering end-to-end support for all ICT assets from desktopsto servers and applications to networkinginfrastructure. A large and diverse groupof skilled technicians and service deskoperators provide clients worldwide with a24/7 service through a single point ofcontact. The GSMC manages over 200 000infrastructure assets and controls in excessof 155 000 events in a month. This businessbenefited substantially from growth indemand from clients for processing andstorage services during the year underreview. The investment in this capability isassisting Business Connexion to manage theincreasing shortage of skills by allowing usto locate key skills centrally and to remotelymanage many of the functions that used tobe done on-site at client premises.

Professional ServicesThe Professional Services team providescustomers with a broad range of ICT andconsulting services to support and enhancetheir value chains and business processes,promote the attainment of strategic andoperational goals, leverage the diverse skillsof employees to deliver effective solutionsand exploit the team’s unique ability tounderstand clients’ businesses andstrategies. Services include applicationmanagement, project management services,application integration services and specificskills resourcing.

Key offerings include:

Business Consulting, Programme andProject Management, Q Link an electronicdeductions solution for payrolls, andQDC Lara (Local and Regional Authorities),providing ICT services and applications toprivatised entities (utilities), metropolitanmunicipalities, district municipalities andlocal municipalities in South Africa.

During the year several crucial strategicobjectives were achieved which augur wellfor the future. In the past 12 months, this

business consolidated its leadership positionin its flagship outsourced ApplicationManagement market segment andmaintained and extended its strong positionin the Project Management services arena.Our long-term dominance of the localgovernment application segment was alsofurther strengthened. Likewise, the businesshad a good year in respect of the centralgovernment application services segment.Our specialised electronic payroll deductionservice, Q Link, maintained the solid growthof the previous year due to newfunctionalities and excellent service delivery.

In pursuit of our strategic objectives,Professional Services further refined andimproved its capability to provide world-class services to blue-chip applicationManagement clients. It concluded anagreement with a leading overseas globalservices partner, KPIT Cummins. This willbring the following exciting benefits:• It provides us with the ability to offer

offshore application developmentservices where appropriate;

• Improves our resource availability tomeet local application developmentneeds;

• Provides a global services supportfootprint aligned with our key clientswho have multinational operations; and

• Enhances our capabilities via exposureto new methods and technical skills inthe application development arena.

During the year we launched a new offeringwhich provides manufacturing executionsystems (MES) service level agreement (SLA)support services to selected clients. Thisoffering is aimed at satisfying identifieddemand for such services from SouthAfrica’s growing industrial sector. We alsomade progress in the development of thenew version of e-Venus, our EnterpriseResource Management (ERM) applicationoffering for local government, which willoffer significant new functionality andcapability to our clients.


Review of operations (continued)


The acquisition of SiloFX – a businessintegration solutions specialist company –was completed shortly after year-end. Thisacquisition is set to substantially enhanceour capability in this key market and willbroaden our existing offerings in thisregard.

Another achievement was the improvementin our ability to meet major governmentrequirements for mission critical, integratedquality management information systemsacross disparate applications and platforms.This initiative included increasing ourcollaboration with SAS in the businessintelligence area.

Professional Services experienced solidgrowth in its key business markets duringthe year under review. The businessperformance achieved in 2007, togetherwith the improved capabilities discussedabove, provide a sound basis to ensure thatProfessional Services not only continues tolead in its existing markets, but is alsoexpected to show significant penetrationinto new lucrative business segments.

Business ConsultingBusiness Consulting provides clients withbusiness and ICT advice, thought-leadership,innovative and differentiated valuepropositions and services. Its businessmodel is designed around three Centres ofExcellence and other value-add services,including:• Business Advisory Services,

encompassing Enterprise PerformanceImprovement, Value Realisation andStrategic Research;

• ICT Planning and Management, whichoffers Enterprise Architecture and ICTstrategy and master systems planning;and

• Risk and Service Management, coveringservice life cycle management, riskmanagement and identity and accessmanagement.

The Business Consulting business madesubstantial progress in advancing itstransformation objectives in line with thegroup’s strategic direction. It operates incoordination with Business Connexion’sregional teams to provide business and ICTadvice, thought-leadership, innovative anddifferentiated value propositions andservices to our clients. Besides continuedcontribution to improve service delivery tooutsource clients, a number of majoradvisory contracts were secured in both thepublic and private sectors, creating a solidplatform for future growth.

To complement our business process, riskmanagement and compliance valuepropositions, European and Indianpartnerships were established. These businessrelationships further expand our capabilityand reach to provide advisory services tomultinational and international clients.

Business Consulting is a key growthcatalyst for Business Connexion, ensuringthat our clients’ business and ICT valueexpectations are appropriately aligned andmanaged.

Programme and ProjectManagementBusiness Connexion understands thecomplexities of managing large-scale ICTprojects and has built its programme andproject management competencies to meetthe growing need for effective projectmanagement. Clients have access toBusiness Connexion’s depth of skill, provenmethodologies and certified employees.Project Management serves as the group’sstrategic project office and has a long-standing track record of superior projectdelivery to a number of blue-chipcompanies.

Business ConnexionCommunicationsRevenues: R55,4 million(2006: R36,7 million)Operating loss: R24,3 million(2006: R4,7 million)

Business Connexion Communications haspositioned itself as a hybrid betweena Virtual Network Operator (VNO) and aNetwork Operator. The business boasts anadvanced Next Generation Network (NGN),

which extends into neighbouring countriesand is capable of carrying data, voice andvideo traffic on behalf of clients. The use ofinternational partnerships, together withBusiness Connexion’s internal skills base,provides clients with unsurpassed security,performance, reliability and availability interms of data and voice convergencerequirements.

The past year was extremely challenging forBusiness Connexion Communications. Thiswas primarily due to the uncertainty andspeculation surrounding the potentialacquisition by Telkom SA of BusinessConnexion and the potential effect thatthis would have on the business. Theuncertainty surrounding the potentialacquisition dented the confidence ofpotential clients and resulted in manysignificant business opportunities beinglost to competitors.

Notwithstanding the business challenges,Business Connexion Communicationsinvested in excess of R35 million in theupgrading of both its MPLS Virtual PrivateNetwork infrastructure and its wirelessinfrastructure. This investment haspositioned Business ConnexionCommunications with the potential forsignificant business expansion over theperiod to May 2008.

The time delays experienced from Telkom SAto provide “last-mile” connectivitycontinued to frustrate the business, thoughthis prompted a more aggressive search fornovel alternatives such as the 3G “Branch-in-a-Box” and other innovative wirelesssolutions. These are cost-effective, reliable,and rapidly deployed alternatives to TelkomSA’s fixed line offerings and growth in thisarea of the business was impressive.

The merger of Business Connexion’straditional Managed Networks Division withBusiness Connexion Communications hasproven to be particularly beneficial,resulting in a doubling of the size of thetotal business to around 160 staff andeconomies of scale in critical technicalskills. The disciplines and methodologiespractised for many years by BusinessConnexion have been transferred toBusiness Connexion Communications,resulting in significant improvements inclient service levels and client satisfaction.

Technology GroupDivisional head: Tim SchumannThis division comprises two main areas:• Technology Infrastructure• Business Applications

The business focuses on the supply of:• technology platforms to run

communication systems;• server/storage systems for data centres;• applications that deliver financial, ERP

and payroll systems



Business Consulting provides clients with businessand ICT advice, thought-leadership, innovative anddifferentiated value propositions and services.


Technology InfrastructureRevenues: R1 228,2 million(2006: R1 002,0 million)Operating profit: R9,4 million (2006: loss ofR10,9 million)

NetworksThrough strategic partnerships with leadingsuppliers, Networks is able to provide acomprehensive range of networkingsolutions, from traditional data, voice, videoand contact centres to state-of-the-artconvergence solutions. Networks also offersclients best-of-breed security solutions toguarantee a total security offering.

Networks provide strategic planning, thoughtleadership, network architecture, design,configuration and implementation skills.

This financial year saw significant successand growth in the following areas:

Unified CommunicationsOur converged solutions included providingfull operational and managerial control ofcontact centre and back office technologyinfrastructure and applications. Thisprovided a single point of contact for theimplementation and management of criticalcontact centre components and delivered acomprehensive set of services formanagement, maintenance, programmemanagement and complex applicationdevelopment.

The Unified Communications business unitprovides clients with value addedcustomisation and integration services for alltheir unified communication requirements.The Business Connexion advantage is in theprovision of fully integrated IP telephonyapplications that deliver tangible businessbenefits to our clients.

Network security and wirelessBusiness Connexion’s security and wirelessoffering continued to flourish, forming akey element of our overall strategy toprovide a total security offering to ourclients. Our focused approach to securityhas driven market awareness andpositioned Business Connexion to takesignificant market share in the future.

Next Generation NetworkThe award of SITA’s Next GenerationNetwork (NGN) to Business Connexion wasa significant win for networks. The NGN willreplace the current government commoncore network (GCCN) and will be the largestpublic sector deployment of NGN services insub-Saharan Africa.

AwardsThe following awards were won during thepast year:• 2007 Cisco Global Partner Summit –

Cisco Security Partner of the year forEmerging Markets: Middle East andAfrica Region

• 2006 Cisco Security Partner of the yearSouth Africa

• 2006 Nortel Gold Partner of the yearSouth Africa

Persetel Q VectorPersetel Q Vector (PQV) is the specialiseddata centre business unit within BusinessConnexion. The PQV business unit focuseson unlocking the business potential of thedata centre for clients by providing highquality enterprise class server and storagesystems. It integrates best-of-breedhardware and relevant software fromleading software providers. The unit boasts a28-year history of installing reliable, scalableand sustainable data centre solutions.

PQV achieved substantial year-on-yearrevenue growth of 20%. This is the thirdconsecutive year that it has achieved amarket share increase of this size. Grossprofit margins were maintained in a toughmarket and, operating from a reduced costbase, profit before interest and taximproved substantially.

PQV saw growth across most marketsegments and central, provincial and localgovernments in particular. This growth wasunderpinned by PQV’s continued focus onBusiness Partner Brands and wascomplemented by investments made in newsoftware technologies that supported thegross margin performance.

Awards:From IBM: Top Revenue Award for SystemZ Mainframe sales.

From SUN Microsystems: Champion forfinancial year 2006 in the South Europeanand EMEA (Europe, Middle East and Africa)region.

Support ServicesThe Support Services business unit addsvalue to clients through its sustainable,high-quality support by monitoring andservicing a wide range of hardware andsoftware in their organisations. Each servicecentre across southern Africa is staffed withhighly qualified engineers with access tovast stocks of spare parts and replacementhardware. Stringent service levelagreements, tailored to the needs of eachclient, ensure that this unit delivers on itspromise of service excellence.

Support Services has remained an excellent24 x 7 x 365 service provider, covering awide national footprint. In spite of good

revenue growth, there were stumblingblocks as a result of the implementation ofa new operating system, which was not yetfully bedded down. New areas of businessinclude VOIP/Convergence andimplementation in several call centres.

The market continues to invoke pressurefor further “value-adds” with static or evendiscounted pricing. Industry trends indicatethat clients are moving from fixed line towireless solutions. This will become agreater part of our support in future.

As far as rewards are concerned, SupportServices won the “Cisco Customer AdvocacyPartner of the Year – financial year 2006”from Cisco.

Business ApplicationsRevenues: R447,6 million(2006: R425,9 million)Operating profit: R17,7 million (2006: lossof R9,0 million)

Business Applications was developed tosupport clients’ business requirements,using a range of software solutions.

Due to consolidation in the softwaremarket, where many smaller softwarevendors were acquired by the big players,Business Connexion decided to focus mainlyon the larger vendor offerings such as SAP,Microsoft and Northgate for humanresource and payroll software. Theenterprise applications business was splitinto functional components and positionedin those parts of the business where theylogically belong. For example, BusinessIntelligence (BI) has been incorporated intothe Microsoft competency, since Microsoftdominates the growth in this sector.

SAP Competency (previously CDE)CDE business unit is a specialist businessthat cultivates convergence, partnershipand system integration in the client’sbusiness by offering a full spectrum ofbusiness solutions. The unit offers SAPconsulting, implementation, update andsupport services.

This business offers a world-class SAPconsultancy and is one of the longeststanding SAP southern Africa servicealliance partners.

Its service offering reflects its corestrengths in the following areas:• SAP support• Implementations• Upgrades

The SAP consultancy was involved in anumber of upgrades and selectedimplementations during the past year,contributing to significant growth in its clientbase, primarily in the area of support services.

The core strategy is to offer SAP clientsgreater economies of scale through thededicated SAP support centre. Growthin the year ahead is expected to comeprimarily from providing SAP supportservices in an increasingly buoyantSAP market.

Q Data DynamiQue (QDD)The QDD business unit specialises inimplementing complete human resourcemanagement solutions covering timemanagement, human resource (HR)management and payroll functions.

QDD secured a significant licenceagreement for a new HR/payroll solutionfrom Northgate HR (UK). This is a perpetual

licence to the globally competitiveResourceLink product, which is a fullyweb-enabled system with comprehensivefunctionality, and which is now beingmarketed in Africa as DynamiQueResourceLink. This new offering hasgenerated intense interest in the marketfrom both new and existing clients.

In addition, plans are well under way togrow the hosting and outsourcing business,which is expected to generate stronggrowth in the coming years.

The time management side of the businesscontinues to grow strongly, with a numberof major clients having been added duringthe year.

A new line of business (financial systems)has been moved into QDD during the year,which includes products such asSmartStream and Analyst Financials, as wellas a support operation for Sage ERP.

Microsoft SolutionsThis business was created from the mergerof Business Connexion and ComparexAfrica. Business Connexion currently holdsroughly 30% of the Microsoft licensingcustomer base and has dedicated productspecialists and product managers focusingexclusively on Microsoft products in theenterprise space.

It was a year of exceptional results forMicrosoft Solutions, with a growth in profitof 150% over the previous year. Thebusiness also achieved organic growththrough the incorporation of a BusinessIntelligence and Reporting Division.

This unit remains the market leader in theresale of Microsoft products, and hasaligned itself uniquely to provide softwareas a service and hosted solutions.




The unit received an award from Microsoftas the Partner of the Year in “BusinessProcess and Orchestration”, enhancing itsposition within the market.

In addition to strong management ofinternal operational expenses, the unitmanaged to further enhance their serviceofferings to customers by establishing acertified training business (MicrosoftCompetency in Learning Solutions).

As one of the largest providers of MicrosoftSolutions in the outsource space, BusinessConnexion is strongly positioned to deliverworld class, cost-effective solutions usingMicrosoft technology.

NanoteqNanoteq provides custom high-gradestrategic security services, solutions andproducts for use by both local andinternational government departments.

Better-than-expected financial results forthe year under review validates the strengthand viability of the Nanoteq businessmodel, and proves that the formalisation ofkey internal processes are delivering results.

During the year, the first significant projectfor a client outside South Africa wasconcluded successfully. It led to the start ofa multiyear follow-up project for the sameclient and all indications are that this is the

start of a long-term involvement in thatparticular market. At the end of thefinancial year negotiations with twoadditional offshore clients were under wayfor similar projects.

In order to make the services offered to ourclients more effective, some of the keyinternal processes were formalised andrefined to reflect the structural changes inNanoteq as well the changes in the localstrategic security business environment.

This year has strengthened the foundationfrom which Nanoteq’s business can betaken forward to exploit both local andoffshore business opportunities.

Business Connexion group applies thehighest ethical standards in the conductof its business. In doing so, it endorses theprinciples of transparency, integrity andaccountability advocated in the Code ofCorporate Practices and Conduct set outin the second King Committee Report onCorporate Governance (“the code”). Thegroup fundamentally complies with therecommendations of the code, as itrecognises its responsibility to allstakeholders to conduct itself withprudence and integrity, thereby protectingthe interests of all its stakeholders.

ResponsibilityThe directors of the company areresponsible for the preparation, integrityand reliability of the group’s financialstatements and all other informationcontained in the annual report. Certainresponsibilities have been delegated tosubcommittees, but the board accepts thatit remains accountable for the performanceand affairs of the group.

Board of directorsAt the date of this report the boardconsisted of seven directors, four of whomwere non-executive directors. Of the non-executive directors, Reggie Berkowitz, JohnBuchanan, Nkenke Kekana and Tony Ruitersare currently considered to be independentin terms of the definition contemplated inthe code. The appointment of additionalindependent non-executive directorsremains a focus and is being addressed. Thedirectors collectively bring a wide range ofexperience and expertise to the board,thereby providing objectivity to decision-making processes. All board members areaware of the requirements of the code.

The roles of Chairman and Chief ExecutiveOfficer are separate, ensuring that there isan appropriate balance of power andauthority, such that no individual hasunfettered decision-making powers. ReggieBerkowitz is the independent non-executiveGroup Chairman. Benjamin Mophatlane isthe newly appointed Chief Executive Officer,having been appointed after Peter Wattretired at the end of June 2007.

The board has delegated the responsibilitiesof a Nomination Committee to theRemuneration Committee. Procedures forappointments to the board are formal andtransparent, and nominees’ backgrounds arethoroughly investigated.

In terms of the articles of association, one-third of the directors retire by rotationannually. In addition, directors who arenewly appointed during the course of anyfinancial year are required to stand down atthe annual general meeting, when they maybe reappointed. Directors have no fixedterm of appointment and their contributionis subject to ongoing review. The board hasestablished a process of self-assessment todetermine its effectiveness.

The non-executive directors receive nobenefit other than directors’ fees, as follows:• A basic fee as remuneration.• A fee for services rendered as chairman

and deputy chairman of the board.• A fee for services rendered as chairman

of a board committee.• A fee for services rendered as a member

of a board committee.

These fees are recommended by the executivedirectors and approved at the annual generalmeeting.

In terms of its charter, the board ofdirectors is responsible for directing andcontrolling the activities of the group andprovides leadership and guidance to theexecutive management of the group. Thedirectors ensure that matters of strategy,policy and performance are attended to andappropriately acted upon. The board, eitherdirectly or through board committees:• approves the annual budget and

strategy;• assesses the quantitative and

qualitative aspects of the group’sperformance through reviews of themanagement reporting, which includesfinancial and non-financial information,and strategic and operational updatesfrom management;

• reviews key risk areas and keyperformance indicators;

• monitors the group’s compliance withall relevant legislation and codes ofbusiness practice;

• oversees the monitoring of theprocedures that ensure that the groupmaintains an effective system ofinternal control and risk management;and

• reviews the group’s communicationswith its key stakeholders.

All directors have access to the services andadvice of the company secretary and tosenior management, and are entitled toseek independent professional advice inconnection with the group’s affairs at thegroup’s expense.

The board meets at least four times peryear. Board members use their bestendeavours to attend board meetings andare expected to participate frankly andconstructively in board discussions andother activities.


Corporate governance


Board committeesThe board is authorised to establish boardcommittees as and when necessary tofacilitate efficient decision-making by theboard in the execution of its duties. BusinessConnexion Group has two standingcommittees, namely the Audit and RiskCommittee and the RemunerationCommittee. Business Connexion (Pty) Limitedhas two standing committees, namely theAudit and Policy Committee, and theExecutive Committee. These committees allhave specific terms of reference that includeroles and responsibilities and are accountableto the board. The board has established aprocess of evaluating the performance andeffectiveness of the group committees on aregular basis. The purpose and membershipof the committees are as follows:

Audit and Risk CommitteeThe Audit and Risk Committee comprisesthree non-executive directors, one of whomserves as committee chairman. Thechairman is John Buchanan, who is anindependent non-executive director. Theother members are Nkenke Kekana andReginald Berkowitz who was appointed tothe committee in February 2007 followingDavid Nurek’s resignation from the board inDecember 2006.

Various members of management are invitedto attend committee meetings. These include

Board meeting attendance

Board member 10 Aug 06 12 Oct 06 30 Nov 06 12 Dec 06 15 Feb 07 5 Mar 07 12 Apr 07

RS Berkowitz Y Y Y Y Y A YJF Buchanan Y Y Y Y Y Y YAC Farthing Y Y Y Y Y Y YNN Kekana Y Y Y Y Y Y YLB Mophatlane Y Y Y Y Y Y YDM Nurek Y Y Y Y – – –PA Watt Y Y Y Y Y Y A

Y = present A = apology

the Chief Executive Officer and the groupexecutives of Finance, Commercial andInternal Audit. The committee meets formallyat least twice per annum to assist in thegovernance of the Business ConnexionGroup. The terms of reference of the Auditand Risk Committee have been formalisedand approved by the board and in summaryinclude the following responsibilities:• Review of accounting policies and

changes thereto.• Review of interim and annual financial

statements.• Review of suggested improvements to

disclosure.• Review of compliance with applicable

legislation, JSE Limited regulations,South African Generally AcceptedAccounting Practice, InternationalFinancial Reporting Standards (IFRS),King II and other relevant businesspractices.

• Review of the adequacy of internalcontrol processes and improvementmechanisms.

• Monitoring of risk managementpractices.

• Review of compliance with the group’scode of ethics.

• Monitoring and evaluation of theperformance and independence of boththe internal and external audit function.

• Approving the engagement of theexternal auditors for audit andnon-audit functions.

The heads of Internal Audit and ExternalAudit have unrestricted access to thechairman of the Audit and Risk Committee.

The group’s Internal Audit and BusinessProcess Management functions operate inconjunction with each other to ensure thatthe group’s financial, operating andinformation technology policies andsystems are adequately monitored, updatedand reviewed.

Audit and Risk Committee meetingattendance

Member 3 Aug 2006 13 Feb 2007

RS Berkowitz – YJF Buchanan Y YNN Kekana Y YDM Nurek Y –

Y = present

Risk management is addressed by theAudit and Risk Committee, with the group’sexposure to risk being identified, assessed,managed and monitored at operational level.

Remuneration CommitteeThe Remuneration Committee is responsiblefor the remuneration and employmentterms of senior management. It consists oftwo non-executive directors, including theChairman of the board. The members areReginald Berkowitz and John Buchanan.

The Chief Executive Officer may attendmeetings and provide input on theremuneration of senior management.However, he recuses himself from decisionsregarding his own remuneration.

Member 10 Aug 2006

RS Berkowitz YDM Nurek AJF Buchanan Y

Y = presentA = apology

The Remuneration Committee’s philosophyis to ensure that the executive directors andsenior management are rewarded for theircontribution to the group’s operating andfinancial performance, at levels which takeaccount of both local and internationalinformation technology market trends. Inorder to align management actions withshareholders’ interests, a share incentivescheme is maintained.

The Remuneration Committee’s generalresponsibilities include:• review of principal matters relating

to employment practices;• review of remuneration trends;• succession planning for senior

management;• annual review of executives and senior

management remuneration ensuringthat an appropriate balance existsbetween basic and performance-basedremuneration;

• fulfilment of the role of a NominationCommittee, to ensure that suitablyqualified persons are nominated to theboard for appointment as executive ornon-executive directors; and

• ensuring that the group has aformalised induction programme tofamiliarise new board appointees withthe affairs of the group.

The board has approved formal terms ofreference for the Remuneration Committee,

which meets formally at least twice perannum.

Audit and Policy CommitteeBusiness Connexion (Pty) Limited’s Auditand Policy Committee comprises fourmembers which include the two executivedirectors and executives responsible forcentral service functions within the group.The committee meets once every twomonths and has similar responsibilities tothose of the Audit and Risk Committee.

Business Connexion’s ExecutiveCommitteeBusiness Connexion (Pty) Limited’sExecutive Committee (EXCO) comprises11 members, three of whom are executivedirectors of the group, responsible for theday-to-day running of the group. BenjaminMophatlane, the Chief Executive Officer,is the chairman of the committee. Thecommittee members are responsible for theprimary competencies, regional offices andcorporate service functions within thegroup which include:• Regional offices: five South African

regions, one in the United Kingdom andfour subsidiaries in Africa.

• Competencies: business applications,infrastructure services, technologyinfrastructure, professional services,service management centre andcommunications.

• Corporate services: commercial, finance,human resources, marketing andcommunication, strategy and strategicrelationships.

The committee meets at least once a month.

The EXCO is conferred with all the powersconferred upon the members by the BCXBoard and shall be responsible for, inter alia:• directing the company both as to

strategy and structure;• establishing from time to time a

strategy for the company, including a

determination of the businesses thatthe company should be in and those itshould not be in;

• ensuring that the executivemanagement implements thecompany’s strategy as established fromtime to time;

• managing the overall positioning ofthe brand in its chosen marketplace;

• ensuring that the company hasadequate systems of internal control,both operational and financial;

• monitoring the activities of theexecutive management;

• ensuring that the company operatesethically;

• establishing and approving thecorporate beliefs and values;

• establishing and communicating asystem of investment beliefs;

• defining relevant risks and associatedrisk parameters;

• considering and recommending auditedfinancial statements;

• approving the company objectives andmonitoring the results through aperformance assessment system;

• agreeing the performance objectivesand measures of fellow EXCO members;

• communicating with stakeholdersfocusing on strategic issues and policies;and

• ensuring conformance andimprovement to selected and approvedinternational and national standards ormethodologies.

Risk management• The board accepts responsibility for the

entire process of risk management. Thisresponsibility has been delegated tomanagement who are accountable tothe board for designing, implementingand monitoring the risk managementprocess and integrating this processinto the day-to-day activities of thecompany. This has been formallydocumented and accepted in the Risk


Corporate governance (continued)


Management Policy and Audit and RiskCommittee “Terms of Reference”.

• Enterprise risk management focuseson identifying, assessing, managing,monitoring and reporting strategic risksthat could possibly have either apositive or negative effect on theachievement of objectives across thegroup. Four new elements have beenadded to the model to enhance theoutcomes and commitment to theenterprise risk management process.These are management commitment,change management, consistency andwillingness to disclose. (Figure 1.)

• The policy on risk managementencompasses all significant risks to thegroup, including strategic, financial,business, operational and compliancerisks. Each level of management, fromthe board of directors downwards, areresponsible for regular review of therespective risk environment/profile inwhich they operate, and to ensure thatsignificant risks are identified, assessed,managed and reported on. This isestablished and executed through anetwork of risk coordinators within allareas of the group. (Figure 2.) Thisfunction is primarily fulfilled by the

Chan

geM

anag

emen

t

Will

ingn

esst

oDi

sclo

se

Consistency

Management Commitment

RiskManagement

StakeholderAssurance

Enterprise Risk

Management

BusinessEthics

CorporateGovernance

Risk Forum

Operational Risk Management Structure

Service UnitsCompetencies

Regional Risk Coordinator








Competency Risk Coordinator





Commercial Services

Financial Services

Human Resources

Marketing & Communications

Special Projects

SPO and Programme RiskRepresentative

Operational RiskRepresentative (IS & MC)

Audit Committee

Management Risk Committee

Chief Risk Coordinator

Figure 1

Figure 2

financial executives and financialmanagers within their respective areas.All risks are categorised, collated andaggregated by different committeesand functions. These include theManagement Risk Committee, andAudit and Risk Committee.

• Risk assessments are constantly executedwithin the total business. The methodutilised, assesses the level of the impactof the risk and the likelihood of the riskoccurring. All risks identified are loggedand tracked on proprietary softwarewhich then drives compliance to theselected methodologies. (These includeCOSO, COCO and King II.) This formalisesthe mechanisms and measures used tomonitor, manage and control those risksaccording to the approved risk appetiteof the organisation.

• Enterprise Risk Management: Futuredevelopments.

• The group continues to further refineits risk management methodologythrough:– the integration of operational risk

management practices into theenterprise risk managementframework; and

– the institutionalising of riskmanagement practices within theoperational business and outsourcemethods.

Internal audit and internal controlsThe board accepts ultimate responsibilityfor the group’s system of internal controlwhich is designed to provide reasonableassurance regarding the achievement ofobjectives in the categories of:• economy, efficiency and effectiveness

of operations;• internal financial controls; and• compliance with applicable laws and

regulations.

The effectiveness of internal controls ismonitored by senior management with the

utilisation of internal control checklists,systems to formally report incidences ofnon-compliance and/or improvement andan independent internal audit function.

The purpose, authority and responsibilityof the internal audit function is formallydefined in the function’s terms of reference– as approved by the Audit and RiskCommittee. The internal audit departmentreports directly to the chairman of theAudit and Risk Committee, andadministratively to the Group Executive,Commercial Services.

Business Process Management(BPM)BPM’s purpose statement, in support of thegroup’s objectives, is to be the “Enablers ofExcellence”.

A kaleidoscope of skills ensures thatimprovement initiatives to best businesspractices are implemented throughimproved value chain processes and theirassociated guides and templates. A conduitto all improvement initiatives is the mainaim of the BPM function.

Continuous improvement of both, themanner in which we deliver value to ourclients, as well as the manner in which wemanage our operations, is one of theprimary focus areas of BPM. The conceptsand practices associated with businessprocess management have been employedin Business Connexion with great success.Frameworks such as the Capability MaturityModel (CMM) and Deming’s model forcontinuous improvement have beenincorporated into a comprehensive businessprocess management practice unique toBusiness Connexion. The execution of thispractice has been enabled by the successfuldeployment of a new business processmanagement application, Control ES, thathas been embraced by the management ofBusiness Connexion as a mechanism that

will support the delivery of real andsustainable business value for the groupand its stakeholders.

InnovationInnovation is defined by the group as theability to use experience, creativity andinspiration to design and implementalternative methods and mechanisms thatwill: make our clients more successful; createnew solutions for existing markets; developnew and viable income streams; increaseinternal productivity; and improve ourprocesses and people. As part of theinnovation strategy, an online mechanismwas implemented to encourage allemployees to log their innovation andimprovement ideas for both the internal andexternal clients. The mechanism providesemployees with the opportunity to sharetheir ideas on how to develop and grow thebusiness while at the same time providingtransparency and knowledge sharing withinthe company. The establishment of theInnovation Forum and the Innovate Awardare additional initiatives to furtherencourage innovation for both internal andexternal clients of the group and to entrenchinnovation in the fabric of the company.

ISO 9001Business Connexion is certified toISO 9001:2000, which is an internationalstandard containing requirements forestablishing and maintaining a BusinessStandards and Improvement Managementsystem (BSIM). ISO 9001:2000 standardscontribute to making the development,manufacturing and supply of products andservices more efficient, safer and cleaner.

ISO 9001:2000 provides Business Connexionwith a technical base for health, safety andenvironmental legislation. BusinessConnexion uses the ISO standards also tosafeguard consumers, and users in general,of products and services. This standardforms the basis of the Business Connexion




BSIM System upon which all other internalstandards adopted are aligned and adheredto. Furthermore, continual improvement isafforded by the built-in mechanism ofutilising Corrective Actions (CARs),Document Change Requests (DCRs), internalaudits, process reviews and assessmentsensuring the sustainability of the company.

Information TechnologyInfrastructure Library (ITIL)The group’s decision to align itself withthe ITIL methodology essentially aims tofamiliarise business management with theunderlying components and architecturedesign of the information andcommunications technology infrastructurenecessary to support their businessprocesses and gain an understanding ofservice management standards and betterpractice. ITIL provides a cohesive set of bestpractices and sets the foundation forquality IT services management.

Company secretaryThe company secretary is suitably qualifiedand experienced and plays an importantrole in ensuring that the board proceduresare followed correctly and reviewedregularly. He ensures that each member ofthe board is made aware of and providedwith guidance as to their duties,responsibilities and powers. The companysecretary is appropriately empowered bythe board to fulfil these duties.

The company secretary is responsible forthe duties stipulated in section 268G(d) ofthe Companies Act and has signed theappropriate declaration as containedelsewhere in this report.

Sustainability reportingThe codes require that an enterprise focuseson non-financial aspects of corporatepractice, which influence the company’sability to survive, prosper and add value to the

communities within which it operates. Thegroup has developed policies and practicesrelating to certain non-financial issues thatare considered important to the future well-being of Business Connexion and to thecountry as a whole. These are as follows:

A code of ethicsThe group subscribes to a corporate ethos,which requires directors and employees toadopt the highest personal ethical standardsin their dealings with all stakeholders in theconduct of the group’s affairs. The principlesto which each individual subscribes includeintegrity, openness, accountability,impartiality and honesty.

Fraud and illegal actsThe organisation is specifically supportiveof the requirement for ethical behaviour inmodern corporate society. As such, itactively pursues and prosecutes perpetratorsof fraudulent or other illegal activities. Tofurther enhance governance in this area, thegroup has procured the services of "Tip-offsAnonymous”, which allows employees toreport any incident of wrongdoing, such asworkplace dishonesty, unethical behaviour,fraud, theft or any other crime.

To enhance the value of this exercise, thescope of this area has been expanded to afully ethical focus.

Health and safetyThe group has a well-developedoccupational health and safety programmein place, in terms of which health andsafety risks are identified and monitored inaccordance with the Occupational Healthand Safety Act. The programme aims to:• provide a safe and healthy working

environment for all employees;• motivate and educate all levels of

management and employees to assumepersonal ownership of health andsafety issues; and

• ensure that subcontractors enforcestandards and procedures that complywith healthy and safe conduct.

EnvironmentAs an information communication andtechnology services company, the group’simpact on the environment is minimal. Itdoes, however, contribute positively to acleaner environment and seeks newopportunities to preserve the environment.

Projects include internal paper and printercartridge recycling; safe disposal ofelectronic components; non-toxic wastesorting, separating recyclable and non-recyclable waste and the safe disposal oftoxic waste, such as batteries andfluorescent tubes.

The group continues to work withorganisations like Sappi, sponsoring projectsto promote conservation study andunderstanding of wildlife.

Transformation and BlackEconomic EmpowermentThe Black Economic Empowerment (BEE)Codes of Good Practice published on9 February 2007 outline BEE targets andmeasurement for organisations seeking BEEaccreditation for the purposes of doingbusiness in South Africa. The BEE Charterfor the information communication andtechnology (ICT) sector is yet to be gazetted.The draft charter stresses that businessshould focus on specific indicators and willinclude a scorecard against which theempowerment credentials of a companywill be weighted and measured.

Business Connexion commenced with itstransformation over 10 years ago andsignificant amounts of time, effort,resources and funds have been channelledinto a range of empowerment andeconomic enablement initiatives.

Business Connexion has achieved meaningfulprogress with its transformation initiatives andBenjamin Mophatlane is chairman of theTransformation Committee. Under his guidancethe group will continue to implement its long-term transformation strategy.

Corporate social investment (CSI)Management believes in the philosophythat the group needs to contribute to thewell-being and upliftment of the society inwhich it conducts its business. The groupinvolves itself in projects that improve thequality of life of disadvantaged and lessprivileged communities by making a truecontribution where it is most needed.

CSI, in its most fundamental form, is aboutbeing a responsible corporate citizen andcontributing to the reconstruction anddevelopment of the country. The groupsupports CSI not as a “nice to do”, but as abusiness imperative. All CSI initiatives arealigned with the group’s core business goalsand objectives to build sustainablerelationships among communities,government and business.

As one of the leading ICT solution providersin South Africa, the group is committed toplaying a meaningful role in bridging thedigital divide in our country and thereforethe group focuses on ICT-related CSIprogrammes that provide assistance to allSouth African communities, particularlypreviously disadvantaged communities.

To ensure continued solid results andsuccessful CSI outcomes, the strategy is tocommit a specific percentage of its turnoverto quality projects that focus on three areas.

ICT education and training projects included:• An eight (8)-month internship

programme that will not onlycontribute to the transformation of itsbusiness, but also unleash greater ICTskills into the industry. The programme

is registered with the ISETT SETA, and139 interns are enrolled in variouspositions within the group. Theinternship programme focused on final-year IT graduates and diplomats fromvarious South African universities.Vacant entry-level positions in thegroup were identified for the purposeof the internship programme andinterns were appointed, amongst other,in positions such as Junior CustomerEngineer, Junior Support Engineer,Junior Call Desk Agent and JuniorConsultant.

• In 1998 Business Connexion and severalmajor South African bankinginstitutions combined their resources todevelop an ICT training programme. Asa result of this process, the InformationTechnology Business LearnershipProgramme (ITBLP) was successfullyaccredited and registered in 2001 bythe Department of Labour. Over 500learners have been trained since theinception of ITBLP. Business Connexionremains committed to its sponsorshipof the ITBLP. This programme providestalented young people from previouslydisadvantaged backgrounds with freetechnical ICT training, and employmentis offered on successful completion ofthe course.

ICT infrastructure development projectsincluded:• the donation of a payroll system to the

Avril Elizabeth Home;• the Western Cape region, donated a

number of computers to Heart ofHealing, a registered section 21 company,whose mandate is to uplift, empower andenrich non-profit organisations (NPOs)that serve local communities. The Heartof Healing embarked on a campaignwhich Business Connexion supported interms of which they obtained redundantcomputers which were refurbished andplaced with the relevant NPOs;

• the installation of a networking portalat ITWeb;

• McCarthy’s Schools project in thepreparation, installation and technicalsupport of equipment; and

• installation and maintenance of acomputer centre at Wylie House.

HIV/Aids initiatives and other socialinvestment causes included:• Supporting the Sakhumzi Orphanage/

Care Centre for children affected byAids, which included regular donationsof clothing and toys for the children.A Christmas party and Easter Bunnyparty for the children was also hosted.

• Involvement in the fight againstHIV/Aids comprised social investmentsbeing made to the Hospice Associationof the Witwatersrand and the SOSChildren’s Village for orphaned andabandoned children.

• The African Children’s Feeding Scheme(ACFS).

• Mgcawezulu School upliftment project.

A number of sponsorships were undertakenduring the year that included:• The Annual Freedom Day Cup, an

initiative by the “On the Ball”foundation who develop and promotesoccer in the underprivileged areas andmainly to underprivileged children. Eachyear 20 of the top players are taken toBrazil on a two-month training campand two of the best students receive afully paid scholarship to train in Brazilfor one to three years. The AnnualFreedom Day Cup invites allgovernment schools in Gauteng toparticipate. Business Connexionsponsored the prizes of a full soccertraining kit to the winning teams in allfour categories as well as medals for allchildren who participated in the event.

• Business Connexion sponsored disabledthird-term students through the Actionfor Blind and Disabled Children initiative.




• Business Connexion continued itssponsorship of students at theUniversity of Johannesburg coveringaccommodation and learning materialscosts.

• Supporting the WWF South Africa –Nature Conservation, BusinessConnexion attained associatemembership.

• The continued support and sponsorshipof the Alexandra Crisis Youth Centreduring the period under review.

• Business Connexion has participated inthe McCarthy Holdings “Rally to Read”initiative for the past five consecutiveyears, which involves the transportationand distribution of educational booksand gifts to underprivileged schools inremote areas, covering all provinceswithin South Africa.

• The Thuthukani Communal Crecheupliftment project in Ivory Park.

• Business Connexion sponsored theGeneral Assembly 2005.

• Sponsorships were also given to theArgus Cycle Tour and the Western CapeBusiness Opportunities Forum (WECOF).

Preferential procurementBusiness Connexion recognises that iftransformation and black economicempowerment in South Africa are to besuccessful, large businesses must activelysupport the development of smallerenterprises. If successfully implemented,preferential procurement will drive theredistribution of incomes, skillsdevelopment and transfer as well as jobcreation.

Enterprise developmentThe company actively seeks to identify andmake subcontracting opportunities availablefor black-owned ICT enterprises on aproject-by-project basis. This supports theobjectives of: increasing the number ofpreviously disadvantaged people who

directly own and control ICT enterprises,substantially increasing participation byblack entrepreneurs in the sector, creating asupportive environment that ensures thedevelopment of a sustainable blackentrepreneurial base and promoting bettercooperation between small enterprises andthe private sector.

Employment equityDiversity creates strength. This is part ofthe Business Connexion philosophy.Representation at all levels within theorganisation, irrespective of race, colour,gender, religious affiliation, class or creed,is critical to the future success of theorganisation and will in fact drive businessgrowth.

The group has embraced diversity at alllevels from senior management, through totechnical employees and administrativestaff. It will continue to focus on creatingequal opportunity in recruitment, training,promotion, development and advancementof all employees with the intention ofbolstering its current company-wideblack ratio.

Business Connexion is pleased to reportthat its senior line managers continue to bemeasured on the achievement of theirindividual regional and business unit EEtargets in support of the group’s target.Each business unit manager has enteredinto a personal performance agreementwhich measures their achievement againsttheir employment equity targets.

As required by the Employment Equity Actof 1998, Business Connexion submitsemployment equity (EE) reports to theDepartment of Labour annually.

Recruitment performanceA strategic decision was made to establishrecruitment in-house to ensure a focused

sourcing of IT skills that will address thespecific needs within the group. For theperiod June 2006 to May 2007, in excess of56% of the total number of employees thatwere recruited was HDI placements.

EmployeesThe group continues to prescribe to the“investor in people” principles and strives tobe a preferred employer in the information,communication and technology industrywith an ongoing focus on investment in itspeople. Several programmes in theorganisation attest to this commitment.

Training and developmentBusiness Connexion’s training anddevelopment programme complies with theSkills Development Act. A group manager isdedicated to ensuring the coordination anddevelopment of programmes that meet theneeds of the entire organisation. During thereview period, Business Connexioncontinued with its ManagementDevelopment Programme and FoundationManagement Programme to advance theskills of promising managers. Of theparticipants, more than 50% are previouslydisadvantaged individuals.

HIV/Aids in the workplaceThe high prevalence of HIV/Aids in SouthAfrica has made it critical for everyorganisation to develop an effective andsustainable response to the pandemic.Business Connexion has in place a definitivepolicy and information guide which provideclear direction and principles for managingHIV/Aids in the workplace.

Employee share incentive schemeThe organisation operates an employeeshare option scheme which allowsemployees to participate in shareownership. Refer to Annexure C forfurther details.

Employee workplace forumsBusiness Connexion has an establishedEmployee Communication Forum (ECF) thatis representative of all employees. It holdsmonthly meetings and the generalfunctions of the forum include:• promoting the interests of all

employees in the workplace;• maximising efficiency in the workplace

by advising management on thefeelings and sentiments of employees,to exchange information and discussbusiness-related issues, thereby alsoenhancing the quality of managementdecisions; and

• reaching consensus on certain issuesand participating in joint decision-making matters, in accordance with thecompany’s business practices.

Stakeholder relationsEmployee relationsBusiness Connexion is acutely aware thatits expertise is reflected by its people. Tothis end, the company has a well-established policy of investing in theeducation and development of itsemployees. A comprehensive, structuredinternal communication programme,supported by an Employee CommunicationForum, ensures open and transparentcommunication with employees at all times.

The group believes that this commitment hashelped to ensure that the company retainsits “investor in people” accreditation. Thegroup’s competitive advantage is derivedlargely from the exceptional quality of itspeople, and great emphasis is placed onmaintaining an internal environment whereemployees can prosper. The results of a 2005climate study revealed that the organisationdemonstrated exceptional teamworksupported by outstanding leadership. Inaddition, employees were found to be clearlysupportive of the company mission andvalues. Subsequent business area surveyscontinue to support this view.

Investors in people (IiP)Recognising “people” as the greatest assetof a company, the group regards “investorin people” principles not only as a sloganbut as an effective business tool forharnessing the full potential of allemployees by motivating and deployingthem throughout the company. Alignedwith an effective human resource policy,employees are managed and developed toachieve their full potential, therebyeffectively enhancing customer centricityand sustainability of the group.

Investor relationsThe group ensures that it has meaningfuland constructive dialogue with investors.Shareholders are invited to attend theannual general meeting and any specialgeneral meetings that may be held. Thegroup takes careful cognisance of theregulatory and statutory obligationsregarding the dissemination of information.

The investor relations team comprises ofthe Chief Executive Officer and the GroupFinancial Director. The team is proactivelyinvolved in communicating with theinvestor community through financialresults presentations, one-on-one meetingsand roadshows in South Africa.

The group’s website, www.bcx.co.za is avaluable source of information for investorrelations purposes, and an electronicversion of this annual report is published inthe investor relations section.

ClientsClients are firmly positioned at the centre ofthe Business Connexion world. The group’sunique “Solutions Integration Model”represents the way in which the integrationof business solutions is configured. Itensures a client-centric approach thatfacilitates the flexibility and close clientrelationships of a small and mobile

organisation as well as the strength,resilience and diversity of a largeorganisation. The group strives to integratethe strategic value of ICT into clients’business strategies.

Business solutions are developed andimplemented by drawing on expertise fromthe group competencies, and solutions aredesigned to meet clients’ strategic andoperational business needs.

Client satisfaction research is periodicallyundertaken to ensure that the groupcontinues to improve its client service andsatisfaction levels.

Partnerships and alliancesIn order to deliver a world-class service,Business Connexion nurtures strongrelationships with many of the world’sleading ICT companies including Actuate,Avaya, Cisco Systems, Citrix, Cognos,DataStage, DynamiQue, EAS, Egenera, EMC2,GEAC, HP, IBM, Infosys, Microsoft SA, NortelNetworks, OpenText, Sage, SAP, SAS, StratusTechnologies, Sun Microsystems andTTI-Telecom.

Business Connexion has attained top-levelcertification and received awards frommany of these partners.

Partner relationships are nurtured in anenvironment of long-term mutual gain andshared fundamental business objectives.Through these partnerships, BusinessConnexion draws on best-of-breed industrystrengths to offer clients unsurpassedsolutions.

One of the group’s differentiators is itsability to harness its own, and its alliancepartners’ expertise, tools, resources andvertical sector knowledge to deliver superiorclient solutions allowing it to “create valuetogether”.




2007 2006Notes R000 % R000 %

Revenue 3 551 125 3 207 679Cost of services and products 1 781 751 1 659 629

Value added 1 769 374 94 1 548 050 95Investment income 59 296 3 56 028 4Exceptional and operational exceptional gains 56 966 3 18 339 1

Total wealth created 1 885 636 100 1 622 417 100

Distributed as follows:

Employees– Employee costs 1 1 571 356 84 1 483 706 91

Providers of capital– Interest paid 25 953 1 34 086 2

Governments 2 61 164 3 37 360 2Retained in the group for future growth– Depreciation and amortisation 109 992 6 70 561 5– Profit attributable to parent shareholders 136 890 7 116 323 7– Dividend paid (37 626) (2) (97 176) (6)– Foreign currency translation reserve 3 945 (1 758)– Deferred tax movement 13 962 1 (20 685) (1)

Total wealth distributed 1 885 636 100 1 622 417 100

Value added ratiosAverage number of employees for the year 4 846 4 708Revenue per employee (R000) 733 681Wealth created per employee (R000) 389 345Wealth created per employee before exceptional

and operational exceptional gains (R000) 377 341

Value added statement


2007 2006R000 R000

Notes

1. Employee costsPaid to employees 1 457 747 1 372 122Contributions paid on behalf of employees 113 609 111 584

1 571 356 1 483 706

2. GovernmentsTax 48 194 25 345Regional service levies and skills development levies 6 998 6 802Rates and taxes paid to local authorities 4 845 4 188Customs duties, import surcharges and excise taxes 1 127 1 025

61 164 37 360

South African government 54 382 35 242Other governments 6 782 2 118

61 164 37 360

3. Additional amounts collected on behalf of governmentsValue added tax 235 497 212 980Employee tax deducted from remuneration paid 333 286 337 309

568 783 550 289

South African government 537 982 526 442Other governments 30 801 23 847

568 783 550 289

Value added statement (continued)


Financial contents36 Directors’ approval36 Certificate by Company Secretary37 Report of independent auditors38 Directors’ report40 Accounting policies46 Balance sheets47 Income statements48 Statements of changes in equity49 Cash flow statements50 Notes to the cash flow statements52 Notes to the annual financial statements70 Annexure A: Principal subsidiaries70 Annexure B: Principal associates71 Annexure C: Details of share incentive

scheme options73 Annexure D: Details of directors’ emoluments74 Annexure E: Details of directors’

share options75 Shareholder information76 Notice of annual general meeting78 Administration79 Form of proxy

The directors of the company are responsible for the integrity and objectivity of the financial statements and other information contained in this report. Thefinancial statements have been prepared in accordance with International Financial Reporting Standards and in the manner required by the Companies Act,No 61 of 1973 and are based on appropriate accounting policies which have been consistently applied and are supported by reasonable and prudentjudgements and estimates. The group maintains suitable internal control systems to provide reasonable assurance that assets are safeguarded andtransactions are executed and recorded in accordance with group policies. Nothing has come to the attention of the directors to indicate that any materialbreakdown in the functioning of these controls, procedures and systems has occurred during the year under review.

The directors believe that the group has adequate resources to continue operations in the foreseeable future and the annual financial statements appearingon pages 38 to 74, have therefore been prepared on the going-concern basis.

These financial statements were approved by the Board of Directors on 14 November 2007 and are signed on its behalf by:

RS Berkowitz PA Watt MW SchoemanChairman Chief Executive Officer Financial Director

I hereby certify that, in accordance with section 268G(d) of the Companies Act, No 61 of 1973, as amended, the company has lodged with the Registrar ofCompanies, all such returns as are required of a public company in terms of this Act and that all such returns are, to the best of my knowledge and belief,correct and up to date.

LC MarranFor and on behalf ofBusiness Connexion Management Services (Pty) Limited

14 November 2007

Directors’ approval

Certificate by Company Secretary


Report of the independent auditors

To the members of Business Connexion Group Limited

We have audited the annual financial statements and group annual financial statements of Business Connexion Group Limited, which comprise the balancesheet and consolidated balance sheet as at 31 May 2007, and the income statement and consolidated income statement, statement of changes in equity andconsolidated statement of changes in equity and cash flow statement and consolidated cash flow statement for the year then ended, and a summary ofsignificant accounting policies and other explanatory notes, and the directors’ report, as set out on pages 38 to 74.

Directors’ responsibility for the financial statementsThe company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International FinancialReporting Standards, and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing andmaintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether dueto fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with InternationalStandards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurancewhether the financial statements are free from material misstatement.

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

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

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of the company and the group as at 31 May 2007 andtheir financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the mannerrequired by the Companies Act of South Africa.

Deloitte & ToucheRegistered Auditors

Per BL EscottPartner

14 November 2007

Buildings 1 and 2, Deloitte PlaceThe Woodlands Office Park Woodlands DriveSandton

National executive: GG Gelink Chief Executive, AE Swiegers Chief Operating Officer, GM Pinnock Audit, DL Kennedy Tax, L Geeringh Consulting, L Bam Strategy, CR Beukman Finance, TJ Brown Clients and Markets, NT Mtoba Chairman of the Board, J Rhynes Deputy Chairman of the Board

A full list of partners and directors is available on request.


The Board of Directors hereby presents its report on the company and the group for the year ended 31 May 2007.

Nature of businessThe company is an Information Communication Technology (ICT) investment holding company listed in South Africa on the JSE Limited.

The principal activities of the group are that of an integrator of business solutions.

Corporate activityFor the entire period under review, Business Connexion has operated with uncertainty regarding its future ownership. The impact on the business of TelkomSA’s offer to shareholders to acquire the entire issued share capital of Business Connexion and the subsequent delays in obtaining a decision from theCompetition Authorities cannot be underestimated. On 28 June 2007 the Competition Tribunal finally announced its decision to prohibit the transaction andthe group can now refocus on growing the business. The effect of the delay in obtaining a decision is impossible to quantify in monetary terms. The Boardof Directors are pleased that this matter has been finalised irrespective of the outcome.

The group disposed of seven of its eight commercial properties to Growthpoint Properties Limited during the year. Transfer of the remaining property isexpected in the new financial year.

Operating resultsThe group has achieved a 10,7% increase in revenue due to a good second half. The growth has mainly occurred in the technology infrastructurecompetencies. The services business has suffered during the period of uncertainty and limited growth has been reported. In addition, key outsource clientshave been in a renewal phase, which has limited the awarding of secondary spin-off business. The group is pleased to report that no existing outsourcecontracts have been lost during the year. The group has been successful in winning new business with government, particularly SITA and the local authorities.

Business conducted in the rest of Africa has grown by 21,9% and the region has been restored to profitability. The group is currently investigating theestablishment of an operation in Nigeria to pursue opportunities identified in that area.

Due to the Telkom SA transaction, the group has been unable to grow the business of BCX Communications, which was acquired in the middle of theprevious year, and has sustained significant losses during the year.

Gross margins continue to be under pressure with amongst other factors, the cost of scarce IT skills growing at a greater rate than the group is able torecover from clients. In addition, R24 million of the costs, which previously would have been reported as operating expenses, have been reallocated to costof sales. The group has been able to grow EBITDA by 1,9% to R218,5 million, but due to higher depreciation and amortisation, operating profit reduced fromR143,8 million in the previous year to R108,5 million. The group has invested substantially in the past financial year in its data centre, a “next generationnetwork” at BCX Communications and the implementation of the SAP ERP system. It is too soon to realise any significant returns from these projects tooffset the higher depreciation cost.

Headline earnings of 39,8 cents per share, showed some improvement in the second half of the financial year, but were reduced in the second half to12,7% lower than the previous financial year. Earnings per share improved to 54,4 cents per share (2006: 46,9 cents per share) due to the R48,0 million gainrealised on the sale and leaseback transaction of the group’s properties with Growthpoint.

The group retains a strong balance sheet, although the introduction of the new SAP system has had a material adverse impact on the collection of tradedebtors which had been not been rectified by year-end. Action plans are in place to reduce the debtors to acceptable levels. The group had R585,8 million(2006: R743 million) of cash available at year-end.

Share capitalAuthorised share capitalThe company commenced the year with authorised share capital of 847 457 627 ordinary shares of 0,59 cents each. This has remained unchanged at year-end.

Issued share capitalThe company commenced the year with issued share capital of 262 636 912 ordinary shares of 0,59 cents each amounting to R1,5 million. Share premiumamounted to R4,6 billion. This has remained unchanged at year-end.

DividendsThe Board declared an unchanged normal dividend (number 3) of 15 cents per share which was paid on 25 September 2007.

Subsidiaries and associatesAnnexures A and B to this report set out the principal subsidiaries and associates that the directors consider appropriate for the shareholders to gain aproper appreciation of the group’s affairs. A full list of the companies forming the group will be made available to shareholders on written request tothe Company Secretary.

The attributable interest of the group’s profits and losses of the subsidiaries and associates for the year ended 31 May 2007 is as follows:

2007 2006R000 R000

Subsidiaries’ profits 46 383 61 458Subsidiaries’ losses (69 999) (27 271)

Directors’ report


AcquisitionsThe group made no material acquisitions during the year.

Directorate and secretaryThe names of the directors and secretary in office at the date of this report are set out on pages 4 and 5 respectively.

The Company Secretary remains Business Connexion Management Services (Pty) Limited represented by LC Marran.

Interests of the directorsOn 31 May 2007, the directors beneficially held in aggregate 35 500 ordinary shares in Business Connexion Group Limited (2006: 75 500). The directorshave an interest in 1 160 001 options (2006: 1 393 366) relating to Business Connexion Group Limited shares. For details refer to annexure E.

Messrs LB Mophatlane and NN Kekana have a significant interest in Gadlex (Pty) Limited, which in turn holds 25,01% of Business Connexion (Pty) Limited.

Messrs RS Berkowitz and JF Buchanan are trustees of the staff share purchase trust, but have no beneficial interests in the trust. Details of the trust are setout in annexure C.

No director of the company holds directly or indirectly 1% of the issued share capital of the company. There have been no major changes in the abovebeneficial and non-beneficial interests between 31 May 2007 and the date of this report.

Share incentive schemeThe company operates two trusts whose objectives are to incentivise the employees of the group by enabling them to acquire shares in the company.

The trustees of these trusts are Messrs RS Berkowitz, JF Buchanan and RS Hislop who were appointed trustees effective from 21 August 2003. The total numberof shares available to these schemes is limited to 15% of the issued number of shares of Business Connexion Group Limited. The trusts are entitled to acquireshares, which they require to meet their commitments, from time to time either by purchasing those shares on the open market or by subscribing for newshares. At 31 May 2007, the trusts held 3 842 773 shares (2006: 6 404 379) in order to fulfil its obligations.

Details of options granted in terms of the schemes are set out in annexure C.

Special resolutionsA special resolution was passed during the year to grant the company, or a subsidiary of the company, a general authority to acquire ordinary shares in theissued share capital of the company.

Post-balance sheet eventsWith effect from 1 July 2007 the group acquired the business of SiloFX Enterprise Integrators for a consideration of R19 million. This business has nicheexpertise in integration methodologies primarily in the power utility sector.


The principal accounting policies of the group and the company are set out below. These accounting policies are consistent with those applied in theprevious year.

1. Basis of preparationThe financial statements are prepared under the historic cost convention as modified by the fair valuation of certain financial instruments, assets andliabilities acquired in a business combination in terms of IFRS 3, capitalised leased assets and investment properties. The financial statements areprepared using the accounting policies set out below and are in accordance with the applicable International Financial Reporting Standards.

At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue, but not yet effective:• IAS 1 (revised) Presentation of Financial Statements• IFRS 7 Financial Instruments: Disclosure• IFRS 8 Operating Segments• IFRIC 8 Scope of IFRS 2• IFRIC 9 Reassessment of Embedded Derivatives• IFRIC 10 Interim Financial Reporting and Impairment• IFRIC 11 IFRS 2 – Group and Treasury Share Transactions• IFRIC 12 Service Concession Arrangements• IFRIC 13 Customer Loyalty Programmes• IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction• Amendments to IAS 1 Capital• Amendments to IAS 23 Borrowing Costs

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financialstatements of the company. There will, however, be additional disclosure requirements as a result of the adoption of IFRS 7 and IAS 1 amendments inthe company’s 2008 financial year when the standards become effective. The revisions to IAS 1 will affect the presentation requirements of thecompany’s annual financial statements in its 2010 financial year.

2. Basis of consolidationEntities (including special purpose entities) in which the group, directly or indirectly, has the power to exercise control over the operations areconsidered to be subsidiaries. Control is achieved where an entity in the group has the power to govern the financial and operating policies ofanother entity to obtain the benefits of its activities.

The investment in subsidiaries in the holding entities’ financial statements is carried at cost less any impairment losses.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. On acquisition, the assets, liabilities andcontingent liabilities of a subsidiary are measured at fair value at the date of acquisition except for non-current assets held for sale which arecarried at fair value less costs to sell.

The excess of the cost of acquisition over the fair value of the identifiable net assets acquired is recognised as goodwill. If the cost of acquisition isless than the fair value of the identifiable net assets acquired, the difference is recognised directly in the income statement.

Operating results of subsidiaries acquired are included from the date effective control is transferred to the group. Operating results of subsidiariesdisposed of are included up to the effective date of disposal.

All significant intercompany transactions and balances are eliminated. Where necessary, accounting policies of subsidiary companies are amendedto ensure consistency with group policies.

The interest of minority shareholders is stated at the minority’s proportion of the fair value of assets and liabilities recognised. The minorityshareholders’ proportion of losses is limited to the minority interest unless the minority has a binding obligation and is able to make good on theobligation. Minority interests are disclosed as part of equity.

3. Business combinations involving entities under common controlA business combination involving entities or businesses under common control is a business combination in which the same parties ultimatelycontrol all of the combining entities or businesses before and after the business combination.

In accounting for business combinations under common control, the assets and liabilities of the entities or businesses involved are measured atthe carrying amount at the date of the combination. The excess/(deficiency) of the cost of such combination over the carrying amount of the netassets/(liabilities) is recognised in the income statement at the effective date of the combination.

4. Segment reportingA business segment is a distinguishable component of the entity that is engaged in providing individual products or services that are subject to risksand returns that are different from those of other business segments.

A geographical segment is a distinguishable component of the entity that is engaged in providing products and services within a particular economicenvironment that is subject to risks and returns that are different from those segments in other economic environments.

5. Property, furniture and fittings, equipment and vehiclesFurniture and fittings, equipment and vehicles are stated at cost to the group less accumulated depreciation and any accumulated impairment costs.Depreciation is calculated using the straight-line method to write off cost less residual value over their expected useful lives.

Accounting policies31 May 2007


5. Property, furniture and fittings, equipment and vehicles (continued)The assets’ residual value and useful life are reviewed and adjusted if appropriate at each balance sheet date.

Leasehold improvements are depreciated over their lease period or useful life whichever is the shorter.

Land and buildings held for use in production or supply of goods or services, or for administrative purposes are stated in the balance sheet at theirrevalued amounts, being the fair value at the date of revaluation, less any subsequent depreciation and subsequent impairment losses. Revaluationsare performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fairvalues at the balance sheet date.

Any revaluation increase arising on the revaluation of such land and buildings is credited to the property’s revaluation reserve, except to the extentthat it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit orloss to the extent that the decrease was charged. A decrease in the carrying amount arising on the revaluation of such land and buildings is chargedto profit and loss to the extent that it exceeds the balance held in the property’s revaluation reserve relating to a previous revaluation of that asset.Depreciation on buildings is charged to profit and loss. Land is not depreciated as it is deemed to have an indefinite useful life.

Gains and losses on disposals of property, furniture and fittings, equipment and vehicles are determined by reference to their net book value at thedate of sale and are taken into account in operating profit.

The depreciation periods applicable are as follows:Furniture and fittings 6 yearsEquipment 3 to 6 yearsVehicles 4 to 5 yearsProperty 50 years

6. Investment propertyInvestment property, which is property held to earn rentals and/or capital appreciation, is stated at fair value at the balance sheet date. Gains orlosses arising from changes in the fair value of investment property are included in profit and loss for the period in which they arise.

7. Leased and rental assetsWhere the group is a lessee, leases of property, equipment and vehicles where the group assumes substantially all the benefits and risks and rewardsof ownership, are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased property or the net presentvalue of the minimum lease payments. The lease payments are allocated between the liability and finance charges to achieve a constant rate ofreturn on the outstanding finance balance. The outstanding lease obligation, net of finance charges and the following year’s liability, is included asa non-current long-term interest-bearing liability. The following year’s liability is included in short-term borrowings. Lease finance costs are chargedagainst income as they become due.

The cost of the assets is depreciated over the shorter of the lease period or the useful life of the asset. The useful life, when longer than the leaseperiod, is used where there is a reasonable prospect that ownership of the asset will pass to the group.

Leased assets where the benefits and risks remain the owner’s are classified as operating leases. Payments made under operating leases are chargedto the income statement on a straight-line basis over the term of the lease. When an operating lease is terminated before the expiry of the lease anypenalty due is recognised immediately in the income statement.

Where a lease contract is deemed to be onerous, a provision for the lower of the cost of fulfilling the lease and any compensation or penaltiesarising from failure to fulfil it, is raised. A lease is considered to be onerous when the future costs are substantially greater than the benefitsreceivable.

Where the group is the lessor, the rental income from the operating leases is recognised to income on a straight-line basis over the term of therelevant lease.

Amounts due from the lessee are recorded as receivables. The receivable is raised using the net present value of the amount. If the period is forgreater than one year, the receivable is treated as long-term with the current portion reflected as trade receivables.

8. Intangible assetsGoodwillGoodwill represents the excess of the cost of acquisition over the group’s interest in the fair value of the identifiable assets, liabilities and contingentliabilities of a subsidiary, associate or joint venture at date of acquisition. Goodwill on acquisition of associates is included in investments in associates.

Goodwill is recognised as an asset and carried at cost less accumulated impairment losses. It is reviewed for impairment at least annually or wherethere is an indication of impairment. Any impairment is recognised immediately in profit and loss and is not subsequently reversed. For the purposeof impairment testing, goodwill is allocated to each of the group’s cash-generating units expected to benefit from the synergies of the acquisition.If the carrying amount of the cash-generating units is less than that of the carrying amount of the unit, the impairment loss is allocated to the unitand then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit.

On disposal of a subsidiary, associate or joint venture, the attributable amount of goodwill is included in determination of the profit and loss ondisposal except when the goodwill was recognised against share premium.

If the fair value of assets, liabilities and contingent liabilities of a subsidiary, associate and joint venture exceeds the cost of acquisition, thedifference is recognised immediately in the income statement.


8. Intangible assets (continued)Goodwill (continued)Any negative goodwill arising on acquisitions before financial years commencing after 31 March 2004 in terms of IFRS 3, has been adjusted againstopening retained income.

Other intangible assetsExpenditure on acquired patents, trademarks and licences is capitalised and amortised over their expected lives using the straight-line method toallocate their cost less residual values as part of depreciation as per the income statement. The residual values and useful lives are reviewed andadjusted if appropriate at each balance sheet date. The expected useful life never exceeds 20 years.

9. InvestmentsInvestments are classified into the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturityinvestments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Managementdetermines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date.

Financial assets at fair value through profit or lossThis category has two subcategories: financial assets held for trading, and those designated at fair value through profit or loss. A financial asset isclassified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for tradingunless they are designated as hedges.

Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of thebalance sheet date.

Loans and receivablesLoans and receivables are non-derivative assets with fixed or determinable payments that are not quoted in an active market. They arise when thegroup provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, exceptfor maturities greater than 12 months after balance sheet date. These are classified as non-current assets. Loans and receivables are included intrade and other accounts receivables in the balance sheet.

Held-to-maturity investmentsHeld-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the group’smanagement has the positive intention and ability to hold to maturity.

Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of thecategories above. They are included in non-current assets unless management intends to dispose of the investment within 12 months of balancesheet date.

Purchases and sales of investments are recognised on trade date, being the date on which the group commits to purchase or sell the asset.Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit and loss.Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the grouphas transferred substantially all risks and rewards of ownership.

Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivablesand held-to-maturity investments are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses fromchanges in the fair value of “financial assets through profit and loss” category are included in the income statement in the period in which theyarise. Unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognisedin equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the incomestatement as gains and losses from investment securities.

The fair value of quoted securities is based on bid prices. If the market for a financial asset is not active (as for example unlisted securities), the groupestablishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments thatare substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances.

The group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired.In the case of equity securities classified as available-for-sale, a significant or prolonged decline of the fair value of the security below cost isconsidered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulativeloss – measured as the difference between acquisition cost and the current fair value, less any impairment loss on that financial asset previouslyrecognised in profit or loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the incomestatement on equity instruments are not reversed through the income statement.

10. AssociatesAssociates are entities in which the group exercises a significant influence through participation in the financial and operating policy decisions of theentity, but in which it does not exercise control.

Associates are accounted for on the equity method. The group’s investment comprises the original cost, including any goodwill on acquisition,and a proportionate share of the associates’ distributable reserves after accounting for dividends payable by those associates. Goodwill is assessedfor impairment in terms of the policy for intangible assets.

Accounting policies (continued)31 May 2007


10. Associates (continued)Losses of the associates in excess of the group’s interest (which includes any long-term interests that, in substance, form part of the group’s netinvestment in the associate), in the associates are not recognised.

Where the associate’s year-end does not coincide with the group’s year-end, the associate’s most recent unaudited results are used.

11. Accounting for foreign entitiesThe results and financial position of all group entities that have a functional currency different from the presentation currency, are translated intothe presentation currency as follows:• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;• income and expenses for each income statement are translated at an average exchange rate; and• all resulting exchange differences are recognised as a separate component of shareholders’ equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currencyinstruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is sold, such exchangedifferences are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translatedat the closing rates.

12. Foreign currency transactionsFunctional and presentation currencyItems included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environmentin which the entity operates (the functional currency). The consolidated financial statements are presented in South African rand, which is thecompany’s functional currency and selected as the group’s presentation currency.

Transactions and balancesForeign currency transactions are translated into functional currency using the exchange rate prevailing at the dates of the transactions. Foreignexchange gains and losses resulting from settlement of such transactions and from the translation at year-end exchange rates of monetary assetsand liabilities denominated in foreign currency are recognised in the income statement.

13. Financial instrumentsFinancial instruments carried by the group on the balance sheet include bank balances and cash, long- and short-term investments, receivables,payables and long- and short-term liabilities. The particular recognition and measurement policies adopted are disclosed in the accounting policystatement associated with the item.

Disclosure of the financial instruments that the group is party to, is provided in note 41 to the financial statements.

Derivative financial instrumentsThe group uses derivative financial instruments (primarily foreign currency forward exchange contracts) to manage its risks associated with foreigncurrency fluctuations. Such derivatives are initially recorded at cost, if any, and are remeasured to fair value at subsequent reporting dates withchanges reflected in the income statement. Where the fair value of such derivatives cannot be reliably measured, they are measured at cost.

Derivatives embedded in other financial instruments or non-derivative host contracts are treated as separate derivatives when their risks andcharacteristics are not closely related to those of host contracts and the host contracts are not carried at fair value with unrealised gains orlosses reported in the income statement.

Derivatives are governed by the group’s policies approved by the board of directors and are not used for speculative purposes.

BorrowingsInterest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently measured at amortised cost, using the effectiveinterest rate method.

Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of theborrowings in accordance with the group’s accounting policy for borrowing costs.

Equity instrumentsEquity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

14. Deferred taxDeferred tax assets and liabilities are recognised on all temporary differences arising between the tax bases of assets and liabilities and theircarrying amounts in the consolidated financial statements. Such assets and liabilities are not recognised if the temporary difference arises fromgoodwill (or negative goodwill) or from the initial recognition (other than in business combinations) of other assets and liabilities in a transactionthat affects neither the tax profit nor the accounting profit.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differencescan be utilised. A deferred tax asset is recognised to the extent that it is probable that an entity will declare a dividend for which secondary tax oncompany credits can be utilised.

Deferred tax assets are recognised for capital losses to the extent that future gains against which the loss can be offset will be available.


14. Deferred tax (continued)Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which casethe deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the group intends to settleits current tax assets and liabilities on a net basis.

15. InventoriesInventories are stated at the lower of cost or estimated net realisable value. Slow-moving inventory in excess of requirements or obsolete inventoryis fully provided for when identified.

Cost is determined using the average method.

The values of merchandise and work in progress include direct costs and, where appropriate, a proportion of overhead expenditure (based on normaloperating capacity). It excludes borrowing costs.

The basis for determining the net realisable value is the selling price in the ordinary course of business less selling costs.

16. Trade accounts receivableTrade accounts receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method,less provision for impairment. A provision for impairment of trade accounts receivables is established when there is objective evidence that the groupwill not be able to collect all amounts due according to the original terms of receivables. The amount of provision is the difference between theasset’s carrying amount and the present value of estimated cash flows, discounted at the original effective interest rate. The amount of the provisionis recognised in the income statement.

17. Non-current assets held for saleNon-current assets classified as held for sale are disclosed at the lower of the carrying amount and fair value less costs to sell if the carrying amountis recovered primarily through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highlyprobable and the assets (or disposal group) is available for immediate sale which should be expected to qualify for recognition as a completed salewithin one year from date of classification.

18. Retirement obligationsThe group operates a number of defined contribution retirement schemes in the territories in which it operates. The assets of these schemes aregenerally held in separate trustee-administered funds. The schemes are generally funded by payments from the employees and by the relevantgroup entities, taking into account the recommendations of independent actuaries. The group’s contributions to these schemes are charged to theincome statement when due.

19. Post-retirement healthcare obligationsFor post-retirement healthcare obligations, the cost of providing benefits is determined using the projected unit credit method. All costs in respectof past service are recognised in the income statement, as are any adjustment, required in terms of the actuarial valuations.

The post-retirement obligations, in the balance sheet, represent the present value of future obligations.

20. Other accounts payableA liability is raised when there is a present obligation for a past event for which a transfer of future economic benefits will be required to settle theobligation. Other accounts payable are discounted to present value where the effect is material.

21. ProvisionsA provision is recognised when there is a present legal or constructive obligation for a past event for which it is probable that a transfer of economicbenefits will be required to settle the obligation and a reliable estimate of the amount can be made.

Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discountedto present value where the effect is material.

22. Revenue recognitionRevenue comprises the fair value for the sale of products and services, net of value added tax, and other rebates and discounts, after the eliminationof sales within the group. Revenue is recognised as follows:• products – where significant risks and rewards of ownership have passed to the customer;• installation – upon customer acceptance;• services upon performance;• licence income and maintenance contracts – over the period of the contract;• rental income – when the rental is due and payable; and• profits on long-term contracts:

– Where the long-term contract falls over a financial period-end and the outcome of the contract can be estimated reliably, revenue andcosts are recognised by reference to the stage of completion of the contract activity at the reporting date as measured by the proportionthat contract costs incurred for work performed to date bear to the estimated total contract cost. Variations in contract work are includedto the extent they have been agreed with the customer.

– Where the outcome of a contract cannot be reliably estimated, contract revenue is recognised to the extent of contract costs incurred thatis probable will be recovered. Contract costs are recognised as expenses in the period that they are incurred.

Accounting policies (continued)31 May 2007


23. Other income recognitionOther income not included in revenue is recognised as follows:• Interest income – on a time-proportioned basis using the effective interest method.• Dividend income – when the shareholder’s right to receipt is established.

24. Borrowing costsBorrowing costs are recognised in the income statement in the period in which they are incurred.

25. TaxIncome tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the income statement becauseit excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.The group’s liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date.

26. Research and development costsResearch and development costs are written off to operating profit, except for costs incurred on development projects, which are recognised asintangible assets if:• a separately identifiable asset is created;• it is probable that such expenditure has definite future economic benefits; and• the development cost can be reliably measured.

Development costs initially written off as an expense are not recognised as an asset in a subsequent period.

Expenditure that enhances and extends the benefits of computer software programmes beyond their original specifications and lives, is recognisedas capital improvements and added to the original cost of the software and the useful life is reassessed. Computer software development costsrecognised as assets are depreciated using the straight-line method over their useful lives, not exceeding three years. Research and developmentcosts incurred in terms of a contract from a customer are treated as work-in-progress up to the agreed contracted value.

27. Impairments (excluding goodwill)At each balance sheet date, the group reviews the carrying amounts of its assets to determine whether there is any indication that those assets maybe impaired. If any such indication exists, the recoverable amount of the asset is estimated. The recoverable amount is the higher of fair value lesscost to sell and the value in use. The value in use is determined using the estimated future cash flows discounted using a pretax discount rate thatreflects the market assessments of the time value of money and the risks specific to the asset. Where it is not possible to estimate the recoverableamount for an individual asset, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If the recoverableamount of an asset or cash-generating unit is estimated to be less than the carrying amount, the carrying amount of the asset or cash-generatingunit is reduced to its recoverable amount. The impairment losses are recognised as an expense immediately unless the relevant asset is carried at arevalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit is increased to the revised estimate of itsrecoverable amount, but the increased carrying amount does not exceed the carrying amount that would have been determined had no impairmentloss been recognised for the asset or cash-generating unit in prior years. A reversal of impairment is recognised as income immediately.

28. Employee share optionsThe group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value(excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settledshare-based payments, is expensed on a straight-line basis over the vesting period, based on the group’s estimate of the shares that will eventuallyvest and is adjusted for the effect of non-market based vesting conditions. Fair value is measured using the Black-Scholes method pricing model.The expected life used in the model has been adjusted, based on the management’s best estimate, for the effects of non-transferability, exerciserestrictions and behavioural considerations.

29. Exceptional itemsItems of income and expense, which are of such a size, nature or incidence that their separate disclosure is relevant to explain the performance ofthe group for the period under review, are treated as exceptional.

Depending on the transaction, exceptional items are included or excluded from operating profit.

30. DividendsDividends to equity holders are included in the statement of changes in equity in the year in which they are declared. Tax costs incurred on dividendsare dealt with in the income statement in the year in which the related dividend is declared.


Company Group

2006 2007 2007 2006R000 R000 Notes R000 R000

ASSETSNon-current assetsProperty, furniture and fittings, equipment and vehicles 1 218 758 218 525Investment property 2 19 100 10 455Capitalised leased assets 3 43 786 9 146Rental assets 4 2 565 2 423Goodwill 5 112 505 113 505Other intangible assets 6 97 258 91 093

1 909 294 1 909 294 Investment in subsidiaries 7Investment in associates 8 28

128 702 128 702 Other long-term investments 9 130 956 130 389Long-term loans and advances 10 2 353 2 867

1 486 1 535 Deferred tax assets 11 49 751 35 441

2 039 482 2 039 531 677 032 613 872

Current assets404 843 372 715 Intercompany loans and advances 12

Inventories 13 95 144 49 596Trade accounts receivable 14 746 851 544 573

10 764 12 282 Other accounts receivable 15 110 745 106 307105 Prepayments 61 572 51 330

Tax prepaid 544 1 542364 394 Bank balances and cash 585 843 743 307

Non-current assets held for sale 16 31 930 279 166

415 971 385 496 1 632 629 1 775 821

2 455 453 2 425 027 Total assets 2 309 661 2 389 693

EQUITY AND LIABILITIESCapital and reserves

1 550 1 550 Share capital 17 1 492 1 4784 595 728 4 595 728 Share premium 320 444 320 444

Foreign currency translation reserve 1 484 (2 461)(2 385 023) (2 370 705) Distributable reserves 1 020 214 912 039

2 212 255 2 226 573 Equity attributable to parent shareholders 1 343 634 1 231 500Minority interests 116 372 85 659

2 212 255 2 226 573 Total shareholders’ equity 1 460 006 1 317 159

Non-current interest-bearing liabilitiesLong-term liabilities 18 26 008 6 034Non-current interest-free liabilitiesLong-term liabilities 19 120 999 133 921Post-retirement obligations 20 8 617 9 659Provisions 23 901 5 603Deferred tax liabilities 11 496 148

157 021 155 365

Current liabilities242 624 198 330 Intercompany liabilities 21

Short-term borrowings 22 22 813 21 832Trade accounts payable 311 035 217 584

573 117 Other accounts payable 337 982 468 852Provisions 23 1 532 627

1 7 Tax 4 270Bank overdrafts 320Non-current liabilities held for sale 16 19 272 203 684

243 198 198 454 692 634 917 169

2 455 453 2 425 027 Total equity and liabilities 2 309 661 2 389 693

Balance sheets as at 31 May 2007


Company Group

2006 2007 2007 2006R000 R000 Notes R000 R000

Income statementsfor the year ended 31 May 2007

Revenue 24 3 551 125 3 207 679Cost of sales 2 536 463 2 229 381

Gross profit 1 014 662 978 2982 297 1 815 Operating expenses 792 188 767 290

Foreign exchange and derivative(losses)/gains 25 (1 272) 3 284

Operational exceptional (losses)/gains 26 (2 752) 83

(2 297) (1 815) Operating profit/(loss) before depreciation and amortisation 218 450 214 375Depreciation and amortisation 27 109 992 70 561

(2 297) (1 815) Operating profit/(loss) 27 108 458 143 814118 610 51 702 Investment income 28 59 296 56 028

116 313 49 887 Profit before interest paid 167 754 199 842Interest paid 29 25 953 34 086

116 313 49 887 Profit before exceptional items 141 801 165 756Exceptional gains 30 59 718 18 256

116 313 49 887 Profit before tax 201 519 184 012(1 478) (42) Tax 31 34 232 46 040

117 791 49 929 Profit for the year 167 287 137 972

117 791 49 929 Profit attributable to parent shareholders 136 890 116 323Profit attributable to minority interests 30 397 21 649

117 791 49 929 Profit for the year 167 287 137 972

Dividend per share (cents) 15,0 37,0Earnings per share (cents) 32 54,4 46,9Diluted earnings per share (cents) 32 52,6 44,6


EquityShare Foreign attributable Total

capital currency Distri- to parent share-Share Share and share translation butable share- Minority holders’

capital premium premium reserve reserves holders interests equityR000 R000 R000 R000 R000 R000 R000 R000

GROUPRestated balance at 31 May 2005 1 438 320 444 321 882 (703) 883 241 1 204 420 64 108 1 268 528Adoption of IAS 39 (revised) 2 154 2 154 718 2 872Net movement not recognised through

the income statement 40 40 (1 758) 7 497 5 779 (816) 4 963

Treasury shares and related reserves held bya subsidiary and by a share purchase trust 40 40 4 320 4 360 4 360

IFRS 2, share-based payments 3 177 3 177 3 177Foreign exchange loss arising on

consolidation (2 574) (2 574) (2 574)Minority interest on foreign exchange loss 816 816 (816)

Net movement recognised through the income statement

Attributable profit per the income statement 116 323 116 323 21 649 137 972Dividend paid (97 176) (97 176) (97 176)

Balance at 31 May 2006 1 478 320 444 321 922 (2 461) 912 039 1 231 500 85 659 1 317 159Net movement not recognised through

the income statement 14 14 3 945 8 911 12 870 316 13 186

Foreign exchange loss arising on consolidation 5 261 5 261 5 261

IFRS 2, share-based payments 3 785 3 785 3 785Treasury shares and related reserves held by

a subsidiary and by a share purchase trust 14 14 5 126 5 140 5 140Minority interest on foreign exchange gain (1 316) (1 316) 1 316Minority interest on dividends received

from subsidiaries (1 000) (1 000)


Attributable profit per the income statement 136 890 136 890 30 397 167 287Dividend paid (37 626) (37 626) (37 626)

Balance at 31 May 2007 1 492 320 444 321 936 1 484 1 020 214 1 343 634 116 372 1 460 006

COMPANYBalance at 31 May 2005 1 550 4 595 728 4 597 278 (2 408 815) 2 188 463 2 188 463Net movement not recognised through

the income statementIFRS 2, share-based payments 3 177 3 177 3 177


Attributable profit per the income statement 117 791 117 791 117 791Dividend paid (97 176) (97 176) (97 176)

Balance at 31 May 2006 1 550 4 595 728 4 597 278 (2 385 023) 2 212 255 2 212 255

Net movement not recognised through the income statement

IFRS 2, share-based payments 3 785 3 785 3 785


Attributable profit per the income statement 49 929 49 929 49 929Dividend paid (39 396) (39 396) (39 396)

Balance at 31 May 2007 1 550 4 595 728 4 597 278 (2 370 705) 2 226 573 2 226 573

Statements of changes in equity for the year ended 31 May 2007


Company Group

2006 2007 2007 2006R000 R000 Notes R000 R000

Cash flow statementsfor the year ended 31 May 2007

Cash flows from operating activitiesCash receipts from customers 3 320 020 3 196 595

(1 745) (3 893) Cash paid to suppliers and employees (3 396 329) (2 981 449)

(1 745) (3 893) Cash (utilised in)/generated from operations A (76 309) 215 146109 063 51 678 Dividends received 10 876 11 935

10 491 Profit distribution from liquidated share purchase trusts29 24 Interest received 45 362 46 345

Interest paid (25 953) (34 086)(97 176) (39 396) Dividends paid (37 626) (97 176)

(8) (1) Tax paid B (51 466) (35 871)

20 654 8 412 Net cash flow (utilised in)/from operating activities (135 116) 106 293

Cash flows from investing activitiesAcquisition of subsidiaries and businesses C (2 000) (36 555)Investment in treasury shares by a subsidiary (28 710)

4 300 Redemption of preference shares 4 300Advances to associates (8)Repayment of advances to associates 1 280 3 150Proceeds from sale of associates 65 942Proceeds from sale of investment 1 307 22 252Shares from sale of investment 22 952Additions to property, furniture and fittings, equipment and

vehicles, rental assets, leased assets and other intangible assets D (178 711) (195 898)Proceeds from sale of property, furniture and fittings, equipment

and vehicles, rental, leased assets and other intangible assets 332 899 1 905

4 300 Net cash flow from/(utilised in) investing activities 154 775 (140 670)

Cash flows from financing activities Proceeds from long-term liabilities 52 716 36 896Proceeds from long-term loans and advances 21 651Repayments of long-term loans and advances (35 642) (306)Repayments of short-term borrowings (174 379) (47 965)Repayment of capital element of finance leases (19 498) (13 546)

(24 888) (8 382) Advances from group companiesProceeds from share options exercised during the year 4 360

(24 888) (8 382) Net cash flow (utilised in)/from financing activities (176 803) 1 090

66 30 Net changes in cash and cash equivalents (157 144) (33 287)298 364 Cash and cash equivalents at beginning of year 742 987 776 274

364 394 Cash and cash equivalents at end of year E 585 843 742 987


Company Group

2006 2007 2007 2006R000 R000 R000 R000

A. Reconciliation of profit before tax to cash (utilised in)/generated from operations

116 313 49 887 Profit before tax 201 519 184 012(108 090) (51 678) Dividends received (12 394) (10 965)

(10 491) Profit distribution from liquidated share purchase trusts(29) (24) Interest received (46 902) (45 063)

Interest paid 25 953 34 086Adjustments for non-cash itemsDepreciation and amortisation 109 992 70 561(Profit)/loss on disposal of property, furniture and fittings,

equipment and vehicles and other intangible assets (48 008) 484Movement in provisions (5 124) (11 489)Impairment of loans and advances, investments and goodwill 5 277 (16 497)Post-retirement obligations movement (1 042) 1 352Unrealised foreign exchange gains 3 799 (660)Fair value adjustment for derivative asset from sale of associateShare-based payment expense 3 785 3 177

(2 297) (1 815) Operating cash flow before working capital changes 236 855 208 998Working capital changesIncrease in inventories (57 208) (886)Increase in trade accounts receivable (200 951) (11 082)

(1 518) Increase in other accounts receivable (496) (11 758)(105) Increase in prepayments (10 242) (1 741)

Increase in trade accounts payable 93 451 6 569552 (455) (Decrease)/increase in other accounts payable (137 718) 25 046

(1 745) (3 893) Cash (utilised in)/generated from operations (76 309) 215 146

B. Tax paid is reconciled to the amount shown in the income statement as follows:

(1) (1) Amounts unpaid and accrued for at beginning of year (2 728) (13 247)1 478 42 Income statement charge (34 232) (46 040)

(1 486) (49) Deferred tax income statement charge (13 962) 20 695Currency translation difference (7)

1 7 Amounts (overpaid)/unpaid and accrued for at end of year (544) 2 728

(8) (1) (51 466) (35 871)

Notes to the cash flow statementsfor the year ended 31 May 2007


Company Group

2006 2007 2007 2006R000 R000 R000 R000

C. Analysis of acquisition of subsidiaries and businessesAcquisitions:Property, furniture and fittings, equipment and vehicles (6 101)Capitalised leased assets (2)Goodwill 1 000 (9 518)Other intangible assets (21 192)Inventories (188)Trade accounts receivable (8 684)Other accounts receivable (197)Prepayments (165)Trade accounts payable 8 872Other accounts payable 620At acquisition reserves (3 000)Bank balances and cash (1 957)

Gross acquisitions (2 000) (38 512)Bank balances and cash acquired 1 957

(2 000) (36 555)

D. Additions to property, furniture and fittings, equipment and vehicles, rental assets, leased assets and other intangible assets

Replacement (32 838) (68 033)Expansion (145 873) (127 865)

(178 711) (195 898)

E. Cash and cash equivalentsCash and cash equivalents consist of:

364 394 Bank balances and cash on hand 585 843 743 307Bank overdrafts (320)

364 394 585 843 742 987

The group has the following unutilised bank facilities:Hard facilities: R111,1 million (2006: R111,1 million)Soft facilities: R245,6 million (2006: R369,2 million)


FurnitureProperty and fittings Equipment Vehicles Total

R000 R000 R000 R000 R000

1. Property, furniture and fittings, equipment and vehiclesGroupCost at 31 May 2005 – restated 42 620 302 423 735 345 778Additions 62 711 6 221 78 274 20 147 226Acquisition of subsidiaries and businesses 281 5 704 116 6 101Transfer from inventories 153 153Transfer to inventories (7) (7)Reclassified as non-current assets held for sale (11 348) (11 348)Disposals (3 215) (52 087) (220) (55 522)Currency translation differences 188 253 23 464

Cost at 31 May 2006 62 711 34 747 334 713 674 432 845Additions 15 110 10 792 60 096 480 86 478Transfer (to)/from inventories 121 (3 544) 555 (2 868)Transfer from capitalised leased asset 6 986 6 986Disposals (2 328) (12 634) (95 637) (110 599)Currency translation differences 362 251 4 617

Cost at 31 May 2007 82 479 33 388 295 879 1 713 413 459

Accumulated depreciation and impairmentAccumulated depreciation at 31 May 2005 – restated 25 877 201 344 227 221Depreciation 6 034 40 086 187 46 307Transfers to inventories (2) (2)Reclassified as non-current assets held for sale (6 393) (6 393)Disposals (2 972) (50 054) (138) (53 164)Currency translation differences 170 174 7 351

Accumulated depreciation at 31 May 2006 22 716 191 548 56 214 320Depreciation 750 4 244 60 991 227 66 212Transfers (to)/from inventories (209) 551 626 968Transfer from capitalised leased asset 6 986 (175) 6 811Disposals (2 321) (3 836) (88 067) (94 224)Currency translation differences 360 249 5 614

Accumulated depreciation at 31 May 2007 5 415 23 275 165 097 914 194 701

Net book value – 2006 62 711 12 031 143 165 618 218 525

Net book value – 2007 77 064 10 113 130 782 799 218 758

The insurable value of the group’s property, furniture and fittings, equipment and vehicles at 31 May 2007 is R596,5 million (2006: R311,6 million).The value is based on cost of replacement except for vehicles that are at book value.

A list of land and buildings is available to shareholders, on written request, from the registered office of the company.

2007 2006R000 R000

2. Investment propertyGroupFair value of investment property at beginning of year 10 455 5 455Increase in fair value during the year 8 645 5 000

Fair value of investment property at end of year 19 100 10 455

The fair value of the group’s investment property at 31 May 2007 has been arrived at on the basis of a valuation carried out by independent propertyconsultants not connected to the group, with appropriate qualifications and recent experience in the valuation of properties in the relevant locations.The valuation was arrived at by reference to market evidence of transaction prices for similar properties. The investment property does not generateany rental income.

Notes to the annual financial statements for the year ended 31 May 2007


Land and Furniturebuildings and fittings Equipment Total

R000 R000 R000 R000

3. Capitalised leased assetsGroupCostCost at 31 May 2005 – restated 274 211 14 314 288 525Acquisition of subsidiaries and business 2 2Additions 573 10 430 11 003Reclassified as non-current assets held for sale (274 211) (274 211)Disposals (9 066) (9 066)

Cost at 31 May 2006 2 573 15 678 16 253Additions 12 752 29 868 42 620Transfer to property, furniture and fittings, equipment and vehicles (6 986) (6 986)Disposals

Cost at 31 May 2007 12 754 573 38 560 51 887

Accumulated depreciationAccumulated depreciation at 31 May 2005 – restated 14 313 14 313Depreciation 2 118 1 738 1 858Disposals (9 064) (9 064)

Accumulated depreciation at 31 May 2006 2 118 6 987 7 107Depreciation 1 275 202 6 328 7 805Transfer to property, furniture and fittings, equipment and vehicles (6 811) (6 811)

Accumulated depreciation at 31 May 2007 1 277 320 6 504 8 101

Net book value – 2006 455 8 691 9 146

Net book value – 2007 11 477 253 32 056 43 786

Leased assets are encumbered as reflected in note 18.

2007 2006R000 R000

4. Rental assetsGroupCostCost at beginning of year 2 965Additions 2 176 807Transfer from inventories 2 158Disposals (198)

Cost at end of year 4 943 2 965

Accumulated depreciationAccumulated depreciation at beginning of year 542Depreciation 1 980 542Disposals (144)

Accumulated depreciation at end of year 2 378 542

Net book value 2 565 2 423


2007 2006R000 R000

5. GoodwillGroupCostCost at beginning of year 121 389 111 871Acquisition of subsidiaries (1 000) 9 518


ImpairmentImpairment at beginning and end of year 7 884 7 884


Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units that are expected to benefit from that business combination. The carrying amount of goodwill had been allocated as follows:

Communications 8 518 9 518Services 103 987 103 987Technology Infrastructure 7 884 7 884

120 389 121 389Impairment of goodwill (7 884) (7 884)


Goodwill in the communications segment arose from the purchase of the business of Bidvest Network Solutions (Pty) Limited. The goodwill was based on the expectation that the business would significantly expands the group’s ability to offer value-added network services to the client base.

The goodwill attributable to Technology Infrastructure has been fully impaired based on the estimated future cash flows related to the businesses acquired.

Fair valueSoftware of contracts Total

R000 R000 R000

6. Other intangible assetsGroupCostCost at 31 May 2005 – restated 70 709 1 289 71 998Additions 49 458 49 458Acquisition of subsidiaries and businesses 495 20 697 21 192Disposals (676) (676)Currency translation differences (2) 14 12

Cost at 31 May 2006 119 984 22 000 141 984Additions 37 461 37 461Disposals (7 222) (1 231) (8 453)

Cost at 31 May 2007 150 223 20 769 170 992

Accumulated amortisationAccumulated amortisation at 31 May 2005 – restated 29 027 615 29 642Amortisation 15 173 6 681 21 854Disposals (649) (649)Currency translation difference 44 44

Accumulated amortisation at 31 May 2006 43 551 7 340 50 891Amortisation 25 627 10 348 35 975Transfer to property, furniture and fittings, equipment and vehicles (4 679) (4 679)Disposals (7 222) (1 231) (8 453)

Accumulated amortisation at 31 May 2007 57 277 16 457 73 734

Net book value – 2006 76 433 14 660 91 093

Net book value – 2007 92 946 4 312 97 258

Intangible assets relating to fair value of contracts are contracts acquired on acquisition and is amortised as and when the contract revenues are realised.

The insurable value of the group’s software at 31 May 2007 is R92,8 million (2006: R589,1 million).The value is based on replacement cost.

Notes to the annual financial statements (continued)for the year ended 31 May 2007


Company Group

2006 2007 2007 2006R000 R000 R000 R000

7. Investment in subsidiaries (annexure A)3 884 700 3 884 700 Shares at cost

(1 975 406) (1 975 406) Impairment of investment in subsidiaries

1 909 294 1 909 294 Carrying value of investment in subsidiaries

The directors valuation of the investment in subsidiaries is the carrying value above.

8. Investment in associates (annexure B)Carrying value of investment in associatesAdvances to associates 5 316 7 849Interest accrued for the year 153Reversal/(impairment) of advances and interest 2 505 (2 505)Repayments (2 057)Transfers to other accounts receivables (5 917) (5 316)

28

Directors’ valuation 28

The group’s share of unrecognised losses in associates amounts to R1,5 million (2006: R2,5 million).

9. Other long-term investmentsListed investmentsDimension Data Holdings plc 1 931 1 364257 424 ordinary shares at a market value of R7,50

(2006: 257 424 shares at a market value of R5,30).The shares are held by the share purchase trust in

order to fulfil its obligations.Unlisted investments

133 002 128 702 Cost at beginning of year 129 025 177 016Disposals (45 204)

(4 300) Redemption of preference shares (4 300)Fair value adjustments in current year 1 513

128 702 128 702 Cost at end of year 129 025 129 025

128 702 128 702 130 956 130 389

Details of unlisted investmentsAvailable for sale investments:70 cumulative, zero rated compulsorily, redeemable, convertible,

preference shares in Bridging Technologies International (Pty) Limited 5 341 5 341322 500 ordinary shares of R1 each in Business Partners Limited 323 323Originating loans and receivables:

113 492 113 492 Gadlex (Pty) Limited – “A” preference shares 113 492 113 49215 210 15 210 Gadlex (Pty) Limited – “B” preference shares 15 210 15 210

128 702 128 702 134 366 134 366Fair value adjustments (5 341) (5 341)

128 702 128 702 129 025 129 025

The directors value the investments at cost less accumulated impairment.


The terms of the preference shares in Gadlex (Pty) Limited (“Gadlex”) include various “put options” and may be redeemed by Gadlex in a number ofalternative ways. The following “put options” are in place on the “A” preference shares:• On redemption, Business Connexion Group Limited may be required to acquire 13,19% of the minority shareholding in Business Connexion (Pty)

Limited. The purchase price is to be determined at an amount equal to seven times the average consolidated audited headline earnings of BusinessConnexion (Pty) Limited for the two years completed before the redemption date. This consideration would then be used by Gadlex to settle the balanceof the “A” preference shares; or

• On redemption date, Gadlex may put the 13,19% of their shareholding in Business Connexion (Pty) Limited back to Business Connexion Group Limitedfor settlement of the “A” preference shares; or

• Where Gadlex does not agree with a decision taken by the shareholders or directors of Business Connexion Group Limited that affects BusinessConnexion (Pty) Limited, Gadlex may put the 13,19% of their shareholding in Business Connexion (Pty) Limited back to Business Connexion GroupLimited. The price that Business Connexion Group Limited would have to pay is the “A” preference share redemption price plus an annual internal rateof return of 25% plus an amount equal to 50% of the above two amounts.

The following “put options” are in place for the “B” preference shares:• On redemption date Gadlex may put the 2,94% of their shareholding in Business Connexion (Pty) Limited back to Business Connexion Group Limited

for settlement of the “B” preference shares, or• Where Gadlex does not agree with a decision taken by the shareholders or directors of Business Connexion Group Limited that affects Business

Connexion (Pty) Limited, Gadlex may put the 2,94% of their shareholding in Business Connexion (Pty) Limited back to Business Connexion GroupLimited. The price that Business Connexion Group Limited would have to pay is the “B” preference share redemption price plus an annual internal rateof return of 25% plus an amount equal to 50% of the above two amounts.

The redemption price for the “B” preference shares will be increased by an amount equal to 50% of the amount by which the fair value of the 2,94% ofGadlex’s shareholding in Business Connexion (Pty) Limited exceeds the subscription price.

The alternatives listed above gives rise to derivative instruments. Given the number of alternatives available and the length of time before anticipatedredemption, it is currently not possible to reliably measure the value of these derivative instruments. Therefore the derivative instruments are carriedat no value in the balance sheet, however, the group has not recognised the gain of R30,7 million (2006: R30,7 million) on the disposal of 11,82% ofBusiness Connexion (Pty) Limited to Gadlex. This amount is included in other payables and will be released as soon as the derivative instruments can bereliably measured.

Gadlex (Pty) Limited – “A” preference shares

10 000 “A” preference shares with a nominal value of R0,01 (one cent) each. The shares are redeemable, cumulative and have a coupon rate of 80% of theSouth African prime rate. The redemption date is approximately 31 March 2009.

Gadlex (Pty) Limited – “B” preference shares

1 000 “B” preference shares with a nominal value of R0,01 (one cent) each. The shares are redeemable, cumulative and have a coupon rate of 80% of theSouth African prime rate and rank after the “A” preference shares. The redemption date is approximately 31 March 2009.

Preference dividend accrued on the “A” and “B” preference shares of R12,3 million (2006: R10,8 million) has been included in other accounts receivable.

Company Group

2006 2007 2007 2006R000 R000 R000 R000

10. Long-term loans and advancesLong-term trade accounts receivable 307Loan to Kumwe Information Technology (Pty) Limited 2 353 2 560The loan bears interest at the South African prime-lending

rate and is secured by a pledge of the shares in the Namibian subsidiary. The repayment terms are conditional upon the terms contained in the shareholders’ agreement.

2 353 2 867



Company Group

2006 2007 2007 2006R000 R000 R000 R000

11. Deferred tax1 486 Deferred tax assets at beginning of year 35 441 56 677

Deferred tax liabilities at beginning of year (148) (699)

1 486 Net opening balance 35 293 55 9781 486 49 Credited/(charged) to income statement 13 962 (20 695)

Credited to foreign currency translation reserves 10

1 486 1 535 Net closing balance 49 255 35 293

1 486 1 535 Deferred tax assets at end of year 49 751 35 441Deferred tax liabilities at end of year (496) (148)

1 486 1 535 49 255 35 293

The following are the major deferred tax assets and liabilities recognised by the group and the movements in the current and prior years:

Accelerated Capitalised Embeddedtax leased derivative Income

Trade- depre- Prepay- assets and assets and received STC credits mark ciation ments liabilities Provisions liabilities in advance Total

R000 R000 R000 R000 R000 R000 R000 R000 R000

GroupBalance at 31 May 2005– restated 5 937 24 360 (3 240) (4 586) (2 811) 24 739 837 10 742 55 978(Charged)/credited to

income statement (4 181) (12 180) (11 134) (460) (3 423) 8 240 (837) 3 280 (20 695)Currency translation

differences 10 10

Balance at 31 May 2006 1 756 12 180 (14 364) (5 046) (6 234) 32 979 14 022 35 293Credited/(charged) to

income statement (104) (12 180) 37 271 10 990 9 749 (36 031) 4 267 13 962

Balance at 31 May 2007 1 652 22 907 5 944 3 515 (3 052) 18 289 49 255

At balance sheet date, the group had unutilised tax losses of R134,5 million (2006: R100,1 million) available for offset against future profits. No deferred taxasset has been raised on the unutilised tax losses due to the unpredictability of future profit streams. If a deferred tax asset was to be raised, an amount ofR34,1 million (2006: R24,1 million) would be credited to the income statement.

Company Group

2006 2007 2007 2006R000 R000 R000 R000

12. Intercompany loans and advances404 843 372 715 Business Connexion (Pty) Limited

The loan is unsecured, interest free and has no fixed repayment terms

404 843 372 715

13. InventoriesCostMaintenance, components and consumables 180 352 115 522Merchandise 29 084 38 395Work in progress 3 757 9 794


ImpairmentsMaintenance, components and consumables 99 884 98 004Merchandise 14 796 12 337Work in progress 3 369 3 774

Impairment at end of year 118 049 114 115

95 144 49 596


Company Group

2006 2007 2007 2006R000 R000 R000 R000

14. Trade accounts receivableTrade accounts receivable 764 048 560 443Impairments (17 197) (15 870)

746 851 544 573

Impairments are based on objective evidence that the group will not be able to collect all the amounts due according to the original terms of receivables.

15. Other accounts receivableIncluded in other accounts receivable:Loans to employees 2 804 457Loan to associates 5 917 5 316

The loan to associates is interest-free, unsecured and repayable on demand.

16. Non-current assets and liabilities held for saleBalance at 31 May 2006 279 166Properties sold (247 236)Net transfer from property, furniture and fittings equipment

and vehicles 4 955Transfer from capitalised leased assets (note 3) 274 211

Non-current assets held for sale 31 930 279 166

Balance at 31 May 2006 203 684Repayment of liabilities (184 412)Transfer from long-term liabilities (interest bearing) (note 18) 203 684

Net current liabilities held for sale 19 272 203 684

The group disposed of seven of its eight commercial properties to Growthpoint Properties Limited during the year.

A list of land and buildings is available to shareholders, on written request, from the registered office of the company.

Number Numberof shares R000 of shares R000

17. Share capitalAuthorised share capitalOrdinary shares

847 457 627 5 000 31 May 2006 and 31 May 2007 ordinary shares of 0,59 cents each 847 457 627 5 000

Issued share capitalOrdinary shares

262 636 912 1 550 31 May 2006 and 31 May 2007 ordinary shares of 0,59 cents each 262 636 912 1 550

262 636 912 1 550 Number of shares in issue 262 636 912 1 550Treasury shares held by the share purchase trusts at 31 May 2006 (6 404 379) (38)Treasury shares held by a subsidiary at 31 May 2006 (5 831 741) (34)

262 636 912 1 550 Number of shares in issue at 31 May 2006 250 400 792 1 478Movement in treasury shares held by the share purchase trusts

during the year 2 561 606 14

262 636 912 1 550 Number of shares in issue at 31 May 2007 252 962 398 1 492

Shares held by the share purchase trusts as treasury shares at 31 May 2007 is 3 842 773 (2006: 6 404 379) representing 1,5% (2006: 2,4%) of the issued share capital.

Shares held by a subsidiary as treasury shares at 31 May 2007 is 5 831 741 (2006: 5 831 741) representing 2,2% (2006: 2,2%) ofthe issued capital.



Company Group

2006 2007 2007 2006R000 R000 R000 R000

18. Long-term liabilitiesInterest-bearing loansLiabilities under finance lease

BetweenLess than one andone year five years

R000 R000Minimum lease payments 16 487 19 912 36 399 213 106Lease finance charges (48) (203) (251) (595)

16 439 19 709 36 148 212 511

These liabilities are repayable at fixed interest rates ranging between 8,5% and 13,62%. (2006: 11,77% and 17,27%).The liabilities are in respect of the leased assets as shown in note 3. The group has an option to purchase these assets at the end of the lease.

Sasol Limited 5 843

Kumwe Information Technology (Pty) Limited 1 072

Stanbic Tanzania 7 103The loan bears interest at 9,5%, is secured by a guarantee from

Business Connexion (Pty) Limited and is repayable over 60 months.

Getronics Holdings EMEA B.V. 5 570 5 145The loan is unsecured, bears interest at bank call rates currently

8,5% (2006: 6,0%) and is repayable on demand.

Total long-term liabilities 48 821 224 571Less amount transferred to short-term borrowings (note 22) 22 813 14 853Less amounts transferred to non-current liabilities held for

sale (note 16) 203 684

26 008 6 034

19. Long-term liabilitiesInterest-free loansGadlex (Pty) Limited 120 999 132 976Shareholder’s loan to Business Connexion (Pty) Limited. The loan is unsecured and interest-free with repayments conditional

upon terms contained in the shareholders agreement.

IBM Global Finance (a division of IBM South Africa (Pty) Limited) 6 979The loan was repaid during the current financial year.

Long-term trade accounts payable 945

Total long-term liabilities 120 999 140 900Less amount transferred to short-term borrowings (note 22) 6 979

Repayable between two and five years 120 999 133 921


Company Group

2006 2007 2007 2006R000 R000 R000 R000

20. Post-retirement obligationsPost-retirement healthcare benefitsOpening balance 9 659 8 307Amendment to accruals based on changes in assumptions and

known increases in medical aid rates (1 193) 1 147Interest cost 247 243Current year service accruals 120 133Payments made on behalf of beneficiaries (216) (171)

8 617 9 659

Amounts recognised in the income statementAmendment to accruals based on changes in assumptions and

known increases in medical aid rates (1 193) 1 147Interest cost 247 243Current year service accruals 120 133

(826) 1 523

It is not the group’s policy to provide for post-retirement healthcare benefits.

At 31 May 2007, 77 individuals (2006: 80) have the right to post-retirement healthcare as a result of terms and conditions applicable in their service contracts prior to becoming part of the group.

It is the group’s policy to provide in full for the future liabilities where the individual is already retired and over the remaining period of employment where the individual is currently employed.

The method used to value the liabilities is the projected unit credit method. The most significant assumptions are outlined below:

Healthcare cost inflation 5,8% 5,8%Discount rate 3,0% – 9,0% 7,8% – 9,0%Average retirement age for in-service members 63 63Assumed rates of mortality as follows:During employment SA85 – 90 (light) ultimate tablePost-employment PA(90) ultimate table

21. Intercompany liabilities32 180 30 725 Business Connexion Investments (Pty) Limited

The amount is unsecured, bears no interest and no repayment term has been established

210 444 167 605 Business Connexion Technology Holdings (Pty) LimitedThe amount is unsecured, bears no interest and no repayment

term has been established

242 624 198 330

22. Short-term borrowingsTransfer from long-term liabilities– Interest-bearing (note 18) 22 813 14 853– Interest-free (note 19) 6 979

22 813 21 832



OnerousLegal Warranties leases TotalR000 R000 R000 R000

23. ProvisionsGroupBalance at 31 May 2005 – restated 5 246 5 823 4 817 15 886Utilised (915) (805) (887) (2 607)Released to the income statement (3 886) (787) (3 164) (7 837)Charged to the income statement 750 750Present value adjustments (42) (42)Currency translation differences 80 80

Balance at 31 May 2006 525 4 939 766 6 230Charged to the income statement 699 699Utilised (133) (120) (766) (1 019)Released to the income statement (117) (3 360) (3 477)

Balance at 31 May 2007 275 2 158 2 433

The legal provision relates to possible claims on outstanding legal matters.

Warranties relate to possible claims on products sold. The amount is determined based on past experience.

Onerous leases at 31 May 2006 related to obligations outstanding on buildings no longer occupied.

Company Group

2006 2007 2007 2006R000 R000 R000 R000

23. Provisions (continued)Current liabilities 1 532 627Non-current liabilities 901 5 603

2 433 6 230

24. RevenueFor rendering services 2 500 321 2 447 926Arising on sale of goods 1 050 804 759 753

3 551 125 3 207 679

Continuing operations 3 551 125 3 185 139Acquisition of subsidiaries and businesses 22 540

3 551 125 3 207 679

25. Foreign exchange and derivative (losses)/gainsForeign exchange gains 306 4 167Derivative losses (1 578) (883)

(1 272) 3 284

26. Operational exceptional (losses)/gainsProvisions released 1 746Corporate activity cost incurred (2 752) (1 663)

(2 752) 83


Company Group

2006 2007 2007 2006R000 R000 R000 R000

27. Operating profit/(loss)(2 297) (1 815) – Continuing operations 108 458 144 240

– Acquisitions of subsidiaries and businesses (426)

(2 297) (1 815) 108 458 143 814

Operating profit is stated after:Administration, management and other fees 16 278 43 809

Auditors’ remuneration– Audit fees 6 951 7 195– Fees for other services 1 124 3 222

8 075 10 417

Depreciation and amortisationProperty, furniture and fittings, equipment and vehicles– Land and buildings 750– Furniture and fittings 4 244 6 034– Equipment 60 991 40 086– Vehicles 227 187

66 212 46 307

Capitalised leased assets– Land and buildings 1 275 2– Furniture and fittings 202 118– Equipment 6 328 1 738

7 805 1 858

Rental assets (included in cost of sales) 1 980 542

Intangible assets– Software 25 627 15 173– Fair value of contracts 10 348 6 681

35 975 21 854

Director’s emoluments11 315 9 253 Emoluments for services as directors of the company 9 253 11 315

11 315 9 253 9 253 11 315(11 315) (9 253) Less paid by subsidiaries (9 253) (11 315)

Made up as follows:4 254 6 455 Salaries and other benefits 6 455 4 2545 791 1 561 Bonuses and performance related payments 1 561 5 7911 270 1 237 Remuneration paid to non-executive directors 1 237 1 270

11 315 9 253 9 253 11 315

(Profit)/loss on disposal of property, furniture and fittings, equipment and vehicles and other intangible assets (48 008) 484

Operating lease charges– Land and buildings 11 483 23 771– Furniture and fittings 4– Equipment 3 624 56 804– Vehicles 2 487 1 482

17 594 82 061

Employee costs– Paid to employees 1 457 747 1 372 122– Contributions paid on behalf of employees 113 609 111 584

1 571 356 1 483 706

Average number of employees 4 846 4 708



Company Group

2006 2007 2007 2006R000 R000 R000 R000

28. Investment incomeInterest received

29 24 – Banks 40 864 44 366– Loans and advances 5 964 697– Other 74

10 914 12 282 Dividends received from unlisted investments 12 394 10 96597 176 39 396 Dividends received from listed investments10 491 Profit distribution from liquidated share purchase trusts

118 610 51 702 59 296 56 028

29. Interest paidShort-term liabilities 2 539 1 741Long-term liabilities 590Finance leases 23 414 31 755

25 953 34 086

30. Exceptional gainsReversal of impairment of loans and advances 2 505 10 195Fair value adjustments to investments 560 1 945Profit on sale of properties 47 961Profit on sale of furniture and fittings, equipment and vehicles 47Fair value adjustment of derivative asset from sale of associates 1 116Fair value adjustment of investment property 8 645 5 000

59 718 18 256

31. Tax(1 478) (42) South African tax 28 386 45 002

Foreign tax 5 846 1 038

(1 478) (42) 34 232 46 040

ComprisingNormal tax

8 7 – Current year 40 105 27 604– Prior year 109 (6 741)Deferred tax

(1 486) (49) – Current year movement (13 962) 20 695Withholding tax 4 811 148Secondary tax on companies 3 169 4 334

(1 478) (42) 34 232 46 040

% % % %

Reconciliation of tax rate(1,3) (0,1) Effective tax rate 17,0 25,0

Prior year (0,1) 3,7Deferred tax asset raised for first timeShare of associates’ tax

1,3 3,1 Deferred tax raised on secondary tax credits on companies (0,8) (2,3)Withholding tax and secondary tax on companies (4,0) (2,4)Foreign tax paid (0,3) (0,1)Reduction in taxes due to exempt income, allowances and

29,0 26,0 estimated tax losses 17,2 5,1

29,0 29,0 29,0 29,0

At balance sheet date, the group had unutilised capital gains tax losses of R1 144,7 million (2006: R1 144,7 million). A deferred tax asset has not been raised on this amount due to the uncertainty of future capital gains.


Group

2007 2006R000 R000

32. Earnings per shareTreasury shares reconciliationTreasury shares in subsidiary and share purchase trust at 31 May 14 769 855 16 191 980Options exercised during the year in the share purchase trust (3 733 700) (7 190 817)Treasury shares purchased by a subsidiary 5 768 692

Weighted average number of treasury shares 11 036 155 14 769 855

Weighted average number of shares reconciliationNumber of ordinary shares in issue 31 May 262 636 912 262 636 912Weighted average number of treasury shares (11 036 155) (14 769 855)

Weighted average number of shares 251 600 757 247 867 057

Dilutive weighted average number of shares reconciliationWeighted average number of shares 251 600 757 247 867 057Dilutive options at year-end 8 213 065 8 772 549Options issued and exercised during the year that were dilutive

for a portion of the year 513 176 4 117 965

Diluted weighted average number of shares 260 326 998 260 757 571

Profit attributable to parent shareholders 136 890 116 323Earnings per share (cents) 54,4 46,9Diluted earnings per share (cents) 52,6 44,6

33. Headline earnings per shareProfit attributable to parent shareholders 136 890 116 323Fair value adjustment to investment property (8 645) (5 000)(Profit)/loss on sale of property, furniture and fittings, equipment and vehicles (48 008) 484Tax effect on sale of land and buildings 6 706Minority effect of headline earnings adjustments 13 219 1 129

100 162 112 936

Weighted average number of shares 251 600 757 247 867 057Diluted weighted average number of shares 260 326 998 260 757 571Headline earnings per share (cents) 39,8 45,6Diluted headline earnings per share (cents) 38,5 43,3

34. Capital commitmentsCapital– Contracted 1 051 2 959– Authorised and proposed 78 000 76 459

79 051 79 418

Capital commitments will be financed out of existing group resources.The majority of the authorised and proposed capital commitments relates to the construction of the new data centre.

2 to<1 year 5 years >5 years 2007 2006

R000 R000 R000 R000 R000

35. Operating lease commitmentsGroupLand and buildings 38 008 143 148 35 112 216 268 84 786Equipment 1 605 2 443 27 4 075 36 210Vehicles 118 184 302 498

39 731 145 775 35 139 220 645 121 494

The operating lease commitments for land and buildings relate mainly to rentals of office space at all the regional locations.

There is no intention to purchase these items of equipment and vehicles under operating lease commitments.



Company Group

2006 2007 2007 2006R000 R000 R000 R000

36. Contingent liabilitiesGuarantees– Performance guarantees 10 731 34 698– Payment guarantee 70 896 67 000– Other 9 529 9 589– Asset finance recourse deals 22 510

113 666 111 287

The performance guarantees relate mainly to contracts awarded in Africa and will terminate upon conclusion of the contracts. Contracts generally do not extend beyond one year.

The payment guarantee relates to a guarantee provided to a funder of Gadlex (Pty) Limited, secured by Gadlex’s shareholding in Business Connexion (Pty) Limited.

37. Related party transactions The group entered into the following transactions with

subsidiaries and other related parties of the group:10 913 12 282 Dividends received from Gadlex (Pty) Limited 12 282 10 913

Dividends received from Business Connexion61 447 36 923 Technology Holdings (Pty) Limited

Dividends received from Business Connexion35 729 2 472 Investments (Pty) Limited

The directors have certified that they did not have a material interest in any transaction of any significance with the company or any of its subsidiaries, other than as set out in the directors’ report.

The related party transactions entered into are at an arm’s length price.

Remuneration paid to senior management

Basic Performance Allowances PensionYear salary bonuses and benefits contributions Total

R R R R R

2007 26 176 154 4 759 383 4 461 583 2 392 160 37 789 2802006 22 844 360 15 024 066 5 574 376 2 020 798 45 463 600

Senior management also participates in the group share purchase scheme and realised gains on options exercised of R5 213 766 (2006: R32 192 151)

38. Borrowing powersThe Articles of Association of the company provide that the directors may from time to time:– borrow for the purpose of the company such sums they think fit; or– secure the payment of any such sums or any other sums, as they think fit, whether by the creation and issue of debentures, mortgage bonds or

charge upon all or any of the properties of the company.

39. Retirement informationAll eligible permanent employees, other than those required to join a fund established by statute are required to join the Business Connexion GroupPension and Provident Funds as a condition of employment. The employees become members of both funds simultaneously. Business Connexion andcertain of its subsidiaries contribute to the Business Connexion Group Provident Fund and employees contribute to the Business Connexion GroupPension Fund. These funds are registered in the Republic of South Africa in terms of the Pension Funds Act, 1956 and are approved by the SouthAfrican Revenue Service. The funds are classified as defined contribution funds.

The Business Connexion Group Pension and Provident Funds are reviewed annually by an actuary at the funds’ year-end. At the last review date,28 February 2007, the funds were certified financially sound.

At their financial year-end, 28 February 2007, the funds had a membership of 3 546 (2006: 3 240) members. During the period the companycontributions to the Business Connexion Group Provident Fund amounted to R46 021 202 (2006: R41 327 223). The combined asset size of theBusiness Connexion Group Pension and Provident Funds at the end of the year was approximately R919 million (2006: R726 million).


39. Retirement information (continued)The duties and responsibilities of administering the Business Connexion Group Pension and Provident Funds are adequately segregated. AlexanderForbes Financial Services, a leading firm of benefit administrators, consultants and actuaries, is responsible for the administration of the funds.Investment Solutions (Pty) Limited is primarily responsible for managing the assets of the funds.

The funds have adequate fidelity guarantee insurance against negligence, theft, fraud and dishonesty on the part of any of the funds’ officers.The auditors of these funds are Deloitte & Touche.

On 7 December 2001, the Pension Funds Second Amendment Act was promulgated. In terms of this act (known as the “Surplus Legislation”) allpension and provident funds having surpluses at their surplus apportionment date will be required to undertake a surplus apportionment investigationand distribution. In terms of the Surplus Legislation, the surplus apportionment date is the date of the statutory actuarial valuation of the fundsfollowing the effective date of the legislation.

40. Segmental analysis (R million)Business Connexion’s primary segmental analysis is based on business segments. It is split into five categories namely:– Services relates to the control and management of clients systems and services on an ongoing basis.

It includes the service management centre, professional services and infrastructure services.– Technology infrastructure provides clients with hardware for their computing needs.

Hardware consists of servers, storage solutions and operating systems.– Business application is a competency developed specifically in order to support a client’s total spectrum of business requirements.– Communications provides networking solutions to its clients with unsurpassed security, performance, reliability and availability in terms of data

and voice convergence requirements.– Central functions include the central operations of the group.

Revenue and expenses is allocated to a segment based on the actual results of the business unit.Non-current assets and liabilities held for sale fall within the central functions segment in South Africa.

Business groupings analysis External revenue Intersegmental revenue Total revenue

2007 2006 2007 2006 2007 2006

Services 1 819,9 1 743,1 3,0 51,7 1 822,9 1 794,8Technology infrastructure 1 228,2 1 002,0 37,6 12,1 1 265,8 1 014,1Business applications 447,6 425,9 0,4 26,1 448,0 452,0Communications 55,4 36,7 21,5 3,3 76,9 40,0Central functions (62,5) (93,2) (62,5) (93,2)

3 551,1 3 207,7 3 551,1 3 207,7

Depreciation Operating profit

2007 2006 2007 2006

Services 70,4 49,2 148,6 182,0Technology infrastructure 4,9 5,3 9,4 (10,9)Business applications 2,7 1,9 17,7 (9,0)Communications 15,8 7,4 (24,3) (4,7)Central functions 16,1 6,8 (42,9) (13,6)

109,9 70,6 108,5 143,8

Capital expenditure Assets Liabilities

2007 2006 2007 2006 2007 2006

Services 75,2 71,4 725,3 601,4 336,6 300,5Technology infrastructure 5,8 4,1 522,4 357,4 255,0 233,7Business applications 5,1 2,6 142,8 94,8 73,1 86,5Communications 28,9 3,5 57,3 46,7 29,6 7,9Central functions 53,7 114,3 861,9 1 289,4 155,4 443,9

168,7 195,9 2 309,7 2 389,7 849,7 1 072,5



40. Segmental analysis (R million) (continued)Share of Reversal of impairment

associates’ profit and fair value adjustments

2007 2006 2007 2006

Central functions (2,1) 17,1

(2,1) 17,1

Geographical segmental analysis Revenue Operating profit

2007 2006 2007 2006

South Africa 3 288,5 2 987,1 95,4 159,8Rest of Africa 226,3 185,6 13,6 (18,0)United Kingdom 36,3 35,0 (0,5) 2,0

3 551,1 3 207,7 108,5 143,8

Note: The income statement for the geographical segmental analysis is based on where the customer is situated.

Capital expenditure Assets Liabilities

2007 2006 2007 2006 2007 2006

South Africa 164,2 195,7 2 178,3 2 323,6 737,4 1 012,9Rest of Africa 4,3 0,1 116,8 49,7 107,0 51,7United Kingdom 0,2 0,1 14,6 16,4 5,3 7,9

168,7 195,9 2 309,7 2 389,7 849,7 1 072,5

Note: The balance sheet for the geographical segmental analysis is based on where the assets or liabilities are situated.

41. Financial risk managementThe group’s financial instruments consist of bank balances and cash, long- and short-term investments and receivables, payables and long- andshort-term liabilities.

Treasury risk managementThe group’s treasury function provides the group with access to local money markets and provides the group entities with the benefits of bulkfinancing and depositing.

Foreign currency managementThe group’s policy is to cover forward all trade commitments where this is possible and if not, the treasury purchases currency to match theexposures. Each operation manages its own trade exposure in consultation with the group treasury. The risk of having to close out the contracts isconsidered low and the amounts and currencies involved are set out below. There are no forward exchange contracts for periods beyond 90 days.

Original Fair value Foreign contract at year-end currency value

R000 R000 000

Details of forward exchange contracts at 31 May 2007United States dollars 89 382 90 634 12 567

Details of forward exchange contracts at 31 May 2006:United States dollars 38 962 41 873 6 177

These financial instrument are designed to address exchange exposures and will be renewed on a revolving basis as required.


2 to<1 year 5 years Total

R000 R000 R000

41. Financial risk management (continued)Maturity profile of financial instruments including finance lease liabilities31 May 2007Financial assetsNon-current assets 133 309 133 309Current assets 857 596 857 596Bank balances and cash* 585 843 585 843

1 443 439 133 309 1 576 748

* An amount of R358,0 million is in money market accounts held at various banking institutions.

Financial liabilitiesNon-current liabilities 147 007 147 007Current liabilities 649 017 649 017Short-term borrowings and bank overdrafts 42 085 42 085

691 102 147 007 838 109

Maturity profile of financial instruments including finance lease liabilities31 May 2006Financial assetsNon-current assets 133 256 133 256Current assets 650 880 650 880Bank balances and cash* 743 307 743 307

1 394 187 133 256 1 527 443

* An amount of R607,0 million is in money market accounts held at various banking institutions.

Financial liabilitiesNon-current liabilities 139 955 139 955Current liabilities 683 959 683 959Short-term borrowings and bank overdrafts 225 836 225 836

909 795 139 955 1 049 750

The following are methods and assumptions used by the group in determining fair value:

Financial assetsThe book value of bank balances and cash, trade and other accounts receivable, other long-term investments and long-term loans and advancesapproximates fair value.

Financial liabilitiesThe book value of the short- and long-term financial liabilities approximates fair value.

Credit risk managementPotential areas of credit risk consist of trade accounts receivable, other accounts receivable and short-term investments.

Trade accounts receivable consist mainly of a large, widespread customer base. The group monitors the customer base on an ongoing basis andwhere considered appropriate or where necessary, provision for write-off is made against the trade receivable. At year-end management do notconsider there to be any material exposure that has not been covered by impairment. The risk of doing business in Africa is mitigated throughadvance payments and the use of letters of credit.

It is group policy to deposit short-term cash only at major banks.

Liquidity risk managementThe group manages liquidity risk by monitoring forecast cash flows and ensuring the unutilised borrowing facilities are monitored. The group has the following unutilised banking facilities: Hard facilities R111,1 million (2006: R111,1 million)Soft facilities R245,62 million (2006: R369,2 million).



42. Critical judgements in applying the accounting policiesIn the process of applying the entity’s accounting policies, management has made no critical judgements that have a significant effect on theamounts recognised in the financial statements.

43. Key sources of estimation uncertaintyThe key assumptions concerning the future, other key sources of estimation uncertainty at the balance sheet date, that have significant risk ofcausing material adjustment to the carrying amount of the assets and liabilities within the next financial year, are discussed below:

Impairment of goodwillDetermining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill is allocated.The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating units and a suitablediscount rate in order to calculate present value. The carrying value of goodwill of R112,5 million was not impaired in the current year.

Profit on sale of sharesIncluded in other accounts payable is an amount of R30,7 million on the disposal of 11,82% of Business Connexion (Pty) Limited to Gadlex. Thisamount will be released as soon as the derivative instruments can be reliably measured.


Percentage holding Number of shares Amount invested Net amount advanced

2007 2006 2007 2006 2007 2006 2007 2006% % R000 R000 R000 R000

Direct holdings South AfricaBusiness Connexion (Pty) Limited 74,99 74,99 43 371 43 371 1 307 595 1 307 595 372 715 404 843Business Connexion Investments

(Pty) Limited 100 100 100 100 54 54 (30 725) (32 180)Business Connexion Technology

Holdings (Pty) Limited 100 100 100 100 601 645 601 645 (167 605) (210 444)

Indirect holdings through Business Connexion (Pty) LimitedSouth AfricaBusiness Connexion Communications

(Pty) Limited 100 100 300 300 99 099 87 981Business Connexion Solutions

Holdings (Pty) Limited 100 100 354 676 354 676 107 071 107 071 14 564 6 935

NamibiaBusiness Connexion Namibia

(Pty) Limited 75 75 2 625 2 625 7 079 7 079 6 645 4 645

MauritiusSifa Systems Limited 100 100 2 2 2 504 2 504 (685) 13 587

United KingdomQ Data Europe Limited 100 100 2 100 2 100 4 062 4 062

TanzaniaBusiness Connexion Tanzania Limited 83,5 83,5

ZambiaBusiness Connexion Zambia Limited 85 85

MozambiqueBusiness Connexion Mozambique

Limitada* 100 100 2 2 548

Indirect holdings through Business Connexion Technology Holdings (Pty) LimitedSouth AfricaNanoteq (Pty) Limited 100 100 (2 956)

A full list of subsidiaries is available to shareholders, on written request, from the registered office of the company.

* Business Connexion Mozambique Limitada has a 31 December year-end.

Effective% holding

Name of associate Nature of business 2007 2006

South AfricaIntenda (Pty) Limited Application software provider 29,85 29,85TanzaniaJEDI Development Limited Information Technology consultants 49

During the course of the current year the group’s interest in JEDI Development Limited were sold.

Annexure A: Principal subsidiariesfor the year ended 31 May 2007


Annexure B: Principal associatesfor the year ended 31 May 2007

Annexure C: Details of share incentive scheme optionsfor the year ended 31 May 2007

Business Connexion Group Share TrustIn terms of the interpretation of South African Statements of Generally Accepted Accounting Practice, the trust has been consolidated from 28 May 2004.The group assumed control of the trust with effect from this date, as this was the date from which Comparex Holdings Limited shares were substituted forBusiness Connexion Group Limited shares. In terms of a general meeting of shareholders held on 28 April 2004, the meeting voted to create a new trustcalled Business Connexion Group Share Trust. At 31 May 2007, 5 060 000 options were in issue in this trust.

The Comparex Holdings Share Purchase TrustThe Comparex Holdings Share Purchase Trust (“the Trust”) was formed in 1995, the object of which was to incentivise employees of the Comparex Group byenabling them to acquire shares in Comparex Holdings Limited. In 1997, the share incentive schemes previously operated by the Q Data Limited SecuritiesPurchase and Option Trust were incorporated into the scheme. The trust is empowered to operate a credit purchase scheme, a cash purchase scheme and ashare option scheme, but at present only the share option scheme is in use. No further issues in this trust will take place and the trust will remain in forceuntil the last options expire in August 2010.

In terms of the shareholders’ meeting on 28 April 2004, permission was sought and received to reduce the option price by the amount of the dividendspaid out by Comparex Holdings Limited totalling R6,50 per share.

The total number of options which may be granted by the Comparex Holdings Share Purchase Trust and the Business Connexion Group Share Trust islimited to 15% of the issued share capital of Business Connexion Group Limited. The trusts are entitled to acquire the Business Connexion Group Limitedshares which they need to meet their commitments from time to time either by purchasing those shares on the market or by subscribing for new shares inBusiness Connexion Group Limited.

Options in issue as at 31 May 2007Dimension

Effective Options at Data Option Amended option Offer Expiry 31 May Additional Holding

Issue number price price price date Vesting dates date 2007 options plc share

Business Connexion Group Share TrustIssue 1 R5,37 R5,37 7 Nov 2005 One-third Nov 2008 Nov 2011 1 686 666

One-third Nov 2009 Nov 2012 1 686 666One-third Nov 2010 Nov 2013 1 686 668

Comparex Holdings Share Purchase TrustIssue 3/3B R32,07 R3,47 R0,79 16 Jul 97 One-third July 1998, 1999, 2000 Jul 2007 88 626 301 328Issue 3D* R32,07 R25,57 R25,57 16 Jul 97 20% July 1999, 2000, 2001, Jul 2007 195 459 97 730

2002, 2003Issue 4/4B R24,90 (R3,70) (R0,84) 13 Jan 98 One-third Jan 1999, 2000, 2001 Jan 2008 250 500 851 700Issue 4D* R24,90 R18,40 R18,40 13 Jan 98 One-third Jan 2001, 2002, 2003 Jan 2008 117 914 58 957Issue 7/7B R26,64 (R1,96) (R0,45) 13 Aug 99 One-third Aug 2000, 2001, 2002 Aug 2009 500 000 1 700 000Issue 8/8B R53,44 R24,84 R5,65 1 Jun 99 One-third June 2000, 2001, 2002 Jun 2009 18 600 63 240Issue 8D* R53,44 R46,94 R53,44 1 Jun 99 One-third June 2001, 2002, 2003 Jun 2009 60 000 30 000Issue 9 R8,01 R1,51 R1,51 17 Apr 00 One-third June 2002, 2003, 2005 Apr 2010 1 150 333Issue 9.1 R8,01 R1,51 R1,51 17 Apr 00 One-third June 2002, 2003, 2005 Apr 2010 50 000Issue 15 R8,82 R2,32 R2,32 29 Mar 01 One-third Aug 2002, 2003, 2004 Aug 2007 229 784Issue 18 R9,44 R2,94 R2,94 2 Feb 04 One-third Aug 2005 Aug 2008 1 028 334

One-third Aug 2006 Aug 2009 718 528One-third Aug 2007 Aug 2010 1 713 334

Issue 18A R9,58 R3,08 R3,08 5 Mar 04 One-third Aug 2005 Aug 2008 66 666One-third Aug 2006 Aug 2009 66 666One-third Aug 2007 Aug 2010 233 336

Total options granted 11 548 080 2 916 268 186 687Less options at prices above market value (373 373) (186 687)

Total options 11 174 707 2 916 268Add additional options 2 916 268

14 090 975Shares on hand in trust (3 842 773)

Shortfall to requirements 10 248 202

NotesB = Additional Comparex Holdings Limited options which were offered to all participants in these issues

(including rights to Dimension Data Holdings plc shares) as a result of the dividend in specie declared to all shareholders registered on 17 March 2000 at a rate of 6,8 Comparex Holdings Limited options per Dimension Data Holdings plc share.

D = Dividend of Dimension Data Holdings plc shares, not swapped for additional Comparex Holdings Limited options.


2007 2006

Movement in the trustOpening balance of options granted 17 254 359 22 758 809Options forfeited (228 405) (716 614)Options exercised (2 561 606) (9 977 836)New options granted 5 190 000

Total options outstanding to Business Connexion Group employees 14 464 348 17 254 359Number of shares on hand in trust (3 842 773) (6 404 379)

Number of options not covered by shares held by the trust 10 621 575 10 849 980Less options at prices above market value (373 373) (378 134)

10 248 202 10 471 846

Details of options exercised during the yearIssue 3/3B 248 926 568 789Issue 4/4B 230 915 2 488 587Issue 6 841 354Issue 7/7B 1 386 000Issue 8 219 998Issue 8/8B 17 952Issue 9 470 000 1 126 667Issue 12 3 300Issue 15 444 044 2 364 775Issue 18 983 037 811 766Issue 18A 166 732 166 600

2 561 606 9 977 836

Closing price 31 MayBusiness Connexion Group Limited R7,60 R8,30Dimension Data Holdings plc R7,50 R5,30

Total fair value of Business Connexion Group Limited shares held by the trusts R29 205 075 R53 156 346

Loan to Business Connexion Technology Holdings (Pty) Limited R185 715 061 R179 902 390

Share-based payment expenseIssue 18 538 1 181Issue 18A 63 139Issue 1 3 184 1 857

3 785 3 177

Annexure C: Details of share incentive scheme options(continued) for the year ended 31 May 2007


Remuneration paid to executive directors

Basic Performance Allowances Pensionsalary bonuses and benefits contributions 2007 2006

Name Period R R R R R R

AC Farthing June 2006 – May 2007 1 350 206 246 114 219 188 99 776 1 915 284 2 786 014LB Mophatlane June 2006 – May 2007 1 662 013 432 289 94 121 2 188 423 1 996 429PA Watt June 2006 – May 2007 2 288 641 882 625 447 577 293 895 3 912 738 5 262 217

5 300 860 1 561 028 760 886 393 671 8 016 445 10 044 660

Gain on option exercised

2007 2006Name R R

AC Farthing 305 179 2 631 150PA Watt 636 916 10 829 744

942 095 13 460 894

Executive directors’ service contracts are the same as for all employees in the group with a notice period of 30 days and no predetermined retirement obligations.

Remuneration paid to non-executive directors

Directors’ Deputy Chairman of Member of Total rand Total randName Period fees Chairman chairman committee committee 2007 2006

RS Berkowitz ~ * June 2006 – May 2007 106 000 350 000 64 000 50 667 570 667 520 000DM Nurek ~ * June 2006 – Dec 2006 57 417 57 416 52 000 166 833 290 000JF Buchanan ~* June 2006 – May 2007 106 000 127 000 96 000 329 000 310 000NN Kekana* June 2006 – May 2007 106 000 64 000 170 000 46 667FJ van der Merwe 103 750

375 417 350 000 57 416 191 000 262 667 1 236 500 1 270 417

* Members of the Audit Committee~ Members of the Remuneration Committee

Annexure D: Details of directors’ emolumentsfor the year ended 31 May 2007


Balance Options Options BalanceName Issued 31 May 2006 exercised issued 31 May 2007

Executive directorsAC Farthing 9 93 333 93 333

15 66 633 (66 633)18A 200 000 200 000

1 200 000 200 000

559 966 (66 633) 493 333

LB Mophatlane 1 200 000 200 000

200 000 200 000

PA Watt 715

18A 333 400 (166 732) 166 6681 300 000 300 000

633 400 (166 732) 466 668

1 393 366 (233 365) 1 160 001

The following options were sold during the year by the directors:

Number of Share price at Gain on optionsName options exercised Option price date of sale exercised

AC Farthing 66 633 2,32 6,90 305 179PA Watt 166 732 3,08 6,90 636 916

Directors’ interest in securitiesDirect Beneficial indirect Total

Name 2007 2006 2007 2006 2007 2006

Ordinary sharesRS Berkowitz 15 000 15 000 15 000 15 000DM Nurek 40 000 40 000PA Watt 7 500 7 500 7 500 7 500AC Farthing 3 000 3 000 3 000 3 000JF Buchanan 10 000 10 000 10 000 10 000

25 500 25 500 10 000 50 000 35 500 75 500

Annexure E: Details of directors’ share optionsfor the year ended 31 May 2007



Number of Number ofshareholders % shares %

(1) Analysis of shareholdingsRange1 – 1 000 4 026 52,68 1 071 173 0,411 001 – 10 000 1 829 23,93 7 040 708 2,6810 001 – 100 000 517 6,77 16 522 524 6,29100 001 – 1 000 000 186 2,43 65 313 556 24,871 000 001 – and more 45 0,59 172 688 951 65,75

Totals 6 603 86,40 262 636 912 100

(2) Distribution of shareholdersBanks 41 0,62 9 524 333 3,63Close corporations 83 1,26 3 236 625 1,23Endowment funds 40 0,61 3 254 157 1,24Individuals 5 334 80,78 24 000 112 9,14Insurance companies 20 0,30 38 187 245 14,54Investment companies 33 0,50 11 528 973 4,39Medical aid schemes 3 0,05 2 816 759 1,07Mutual funds 160 2,42 38 662 471 14,72Nominees and trusts 281 4,26 13 897 145 5,29Other corporate bodies 136 2,06 3 587 108 1,37Pension funds 173 2,62 61 222 579 23,31Private companies 227 3,44 7 789 542 2,97Public companies 71 1,08 39 098 122 14,89Subsidiary 1 0,02 5 831 741 2,22

Totals 6 603 100 262 636 912 100

(3) Shareholder spreadNon-public 7 0,11 38 649 747 14,72Directors 5 0,08 80 500 0,03Subsidiary 1 0,02 5 831 741 2,22Holdings 10% + 1 0,02 32 737 506 12,46Public 6 596 99,89 223 987 165 85,28

Totals 6 603 100,00 262 636 912 100

(4) Beneficial shareholders owning 10% or morePublic investment commissioner 32 737 506 12,46

Shareholder information as at 31 May 2007

Notice of annual general meetingfor the year ended 31 May 2007

Notice is hereby given that the fourth annual general meeting of the members of the company will be held in the Business Connexion Auditorium,Business Connexion Park North, 789 Sixteenth Road, Randjespark, Midrand 1685, on Tuesday, 22 January 2008 at 14:00 for the following purposes:

1. To receive, consider and adopt the annual financial statements of the company for the financial year ended 31 May 2007.

2. To re-appoint Deloitte & Touche as the independent auditors of the company for the ensuing financial year.

3.1 To re-elect Mr JF Buchanan as a director, who retires by rotation in accordance with the company’s Articles of Association and being eligible, offershimself for re-election. A brief curriculum vitae in respect of Mr JF Buchanan appears on page 4 of the annual report of which this notice of annualgeneral meeting forms part.

3.2 To re-elect Mr AC Ruiters who retires in accordance with the company’s Articles of Association due to being appointed during the period and beingeligible, offers himself for re-election. A brief curriculum vitae in respect of Mr AC Ruiters appears on page 5 of the annual report of which this noticeof annual general meeting forms part.

3.3 Mr RS Berkowitz retires in terms of the Articles of Association due to having reached the age of 70 and is not eligible for re-election.

4. To approve the remuneration to be paid to the non-executive directors for the year commencing 1 June 2007, details of which are as follows:4.1 Chairman R378 0004.2 Deputy Chairman R114 4804.3 Chairman of the Audit Committee R137 1604.4 Member of the Audit Committee R69 1204.5 Chairman of the Remuneration Committee R69 1204.6 Member of the Remuneration Committee R34 5604.7 Fees for services as a Non-executive Director R114 480

5. As special business, to consider and, if deemed fit, to pass, with or without modification, the following special and ordinary resolutions:

5.1 Ordinary resolution number 1“Resolved that such number of ordinary shares as may be required for purposes of the Business Connexion Group Share Trust and the ComparexHoldings Share Purchase Trust (“Share Trusts”) (which in terms of the Share Trusts’ rules, collectively will not exceed 15% of the entire issued sharecapital of the company from time to time), be and are hereby placed under the control of the directors, who are hereby authorised to allot and issuethese shares from time to time in accordance with the provisions of the Share Trusts, subject to the provisions of the Companies Act No 61 of 1973,as amended (“Companies Act”), the Articles of Association of the company and the JSE Limited Listings Requirements (“the Listings Requirements”).”

5.2 Special resolution number 1“Resolved that the company, or a subsidiary of the company, be and is hereby authorised, by way of a general authority in terms of section 85(2)of the Companies Act, to acquire securities issued by the company, subject to compliance with the requirements of the Companies Act, the ListingsRequirements and the company’s Articles of Association, provided that:• the acquisition is authorised by the company’s articles of association;• this authority shall only be valid until the company’s next annual general meeting or 15 months from the date of passing of this special resolution,

whichever period is the shorter;• when the company, or a subsidiary of the company, has, cumulatively, repurchased 3% of the initial number of securities of a class of securities in

issue as at the date of passing of this special resolution (“initial number”), and for each 3% in aggregate of the initial number of securities of thatclass acquired thereafter, an announcement in compliance with the Listings Requirements must be published as soon as reasonably possible and bynot later than 08:30 on the business day following the day on which the relevant threshold is reached or exceeded;

• the acquisition will be effected through the order book operated by the JSE trading system and done without any prior understanding orarrangement between the company, or a subsidiary of the company, and the counter parties;

• the acquisition will only be undertaken if, after the acquisition, the company will still comply with sections 3.37 to 3.41 of the ListingsRequirements concerning shareholder spread requirements;

• the company’s sponsor shall, prior to the company, or a subsidiary of the company, entering into the market to acquire securities, provide theJSE with the written working capital statement required in terms of the Listings Requirements;

• acquisitions may not be made at a price greater than 10% above the weighted average of the market value of the securities for the five businessdays immediately preceding the date on which the acquisition is effected;

• any acquisition by the company, or a subsidiary of the company, of securities in aggregate in any one financial year will not exceed 20% of thecompany’s issued securities of that class as at the beginning of the financial year;

• at any point in time, the company, or a subsidiary of the company, may only appoint one agent to effect any acquisition on the company or asubsidiary’s behalf; and

• the company, or a subsidiary of the company, may not acquire securities during a prohibited period, as defined in 3.67 of the Listings Requirementsunless they have in place a repurchase programme where the dates and quantities of the securities to be traded during the relevant period arefixed (not subject to any variation) and full details of the programme have been disclosed in an announcement over SENS prior to the comments ofthe prohibition period.”



The directors intend to utilise this authority at such time or times, in respect of such number of securities, at such price and on such terms, as they mayconsider appropriate in the circumstances. Accordingly, the method by which the company, or a subsidiary of the company, will acquire securities issuedby the company, the maximum number of securities which will be acquired and the price(s) and date(s) at which the repurchase(s) is (are) to take placeare not presently known. In considering whether or not to act in terms of this general authority, the directors will ensure for a period of 12 monthsafter the date of this notice of annual general meeting that:• the company and its subsidiaries (“the group”) in the ordinary course of business will be able to pay its debts;• the assets of the company and the group, fairly valued in accordance with International Financial Reporting Standards, will exceed the liabilities of

the company and the group;• the share capital and reserves of the company and the group will be adequate in the ordinary course of business; and• the working capital of the company and the group will be adequate in the ordinary course of business.

Please refer to the annual report for the other disclosures required in terms of section 11.26 of the Listings Requirements:• directors (pages 4 and 5);• major shareholders (page 75);• directors’ interests in securities (page 74); and• share capital of the company (page 58).

There have been no material changes in the financial or trading position of the company and its subsidiaries since the interim reporting period and the dateof this notice.

In terms of section 11.26 of the Listings Requirements, the directors are not aware of any legal or arbitration proceedings, including proceedings thatare pending or threatened, that may have or have had in the recent past, being at least the previous 12 months, a material effect on the group’sfinancial position.

The directors collectively and individually accept full responsibility for the accuracy of the information given and certify that to the best of their knowledgeand belief there are no facts that have been omitted which would make any statement false or misleading and that all reasonable enquiries to ascertainsuch facts have been made and that the above special resolution and additional disclosure in terms of section 11.26 of the Listings Requirements pertainingthereto contain all information required by law and the Listings Requirements.

The reason for and the effect of the special resolution is to grant the company, or a subsidiary of the company, a general authority in terms of theCompanies Act, to acquire securities issued by the company. Such general authority will provide the Board with flexibility, subject to the requirements of theCompanies Act and the Listings Requirements, to acquire securities should it be in the interests of the company at any time.

Voting and proxiesA member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend, speak, and on a poll, vote in his/her stead. A proxyneed not be a member of the company. Nevertheless, any member who lodges a completed form of proxy will be entitled to attend and vote in person at themeeting should the member decide to do so. Forms of proxy must be completed and returned to Link Market Services South Africa (Pty) Limited, 5th Floor,11 Diagonal Street, Johannesburg 2001 (PO Box 4844, Johannesburg 2000), Republic of South Africa, not later than 48 (forty-eight) hours (excludingSaturdays, Sundays and public holidays) prior to the meeting. For the convenience of registered members of the company, a form of proxy is enclosedherewith and forms are also obtainable from the Company Secretary, Business Connexion Management Services (Pty) Limited, Business Connexion ParkNorth, 789 Sixteenth Road, Randjespark, Midrand 1685, telephone number +27 11 266 6630.

On a show of hands, every member of the company present in person or represented by proxy shall have one vote only. On a poll, every member of thecompany shall have one vote only for every share held in the company by such member.

The attached form of proxy is only to be completed by those members who are:• holding Business Connexion ordinary shares in certificated form; or• are recorded on the electronic subregister in “own-name” dematerialised form.

Members who have dematerialised their shares and registered them in the name of a Central Securities Depository Participant (CSDP) or broker shouldinstruct their CSDP or broker to provide them with a letter of representation, or they must provide the CSDP or broker with their voting instructions interms of the relevant custody agreement/mandate entered into between them and the CSDP or broker.

By order of the board

Business Connexion Management Services (Pty) LimitedSecretaries

14 November 2007

Business Connexion Park North789 Sixteenth RoadRandjespark, Midrand 1685Republic of South Africa


Administration

Corporate informationName of company

Business Connexion Group LimitedIncorporated in the Republic of South AfricaRegistration number: 1988/005282/06

Secretary

Business Connexion Management Services (Pty) LimitedRegistration number: 1994/003844/07

Registered office

Business Connexion Park North789 Sixteenth RoadRandjesparkMidrand1685

Internet address

http://www.bcx.co.za

Transfer office and transfer secretaries

Link Market Services South Africa (Pty) Limited11 Diagonal StreetJohannesburg2001

Postal address

Private Bag X48Halfway House1685

Auditors

Deloitte & ToucheDeloitte PlaceThe WoodlandsWoodmeadSandton 2196Private Bag X6Gallo Manor2052

Principal bankers

ABSA Bank LimitedFirst National Bank of South Africa LimitedNedcor Bank LimitedThe Standard Bank of South Africa Limited

Sponsor

Rand Merchant BankA division of FirstRand Bank Limited1 Merchant PlaceCnr Fredman Drive and Rivonia RoadSandton2196

Form of proxy

Business Connexion Group Limited(Incorporated in the Republic of South Africa)

(Registration number 1988/005282/06)ISIN: ZAE000054631 Share Code: BCX

(“the company” or “Business Connexion”)

For use at the third annual general meeting of the company which will be held in the Business Connexion Auditorium, Business Connexion Park North,789 Sixteenth Road, Randjespark, Midrand 1685 on Tuesday, 22 January 2008 at 14:00 and at any adjournment thereof. Only for use by members who have not dematerialised their shares or who have dematerialised their shares and registered them in their own name.

I/We

(Name/s in block letters)

of

(Address in block letters)

being a member/s of Business Connexion Group Limited, and entitled to vote, do hereby appoint (refer to note 1):

1. or, failing him/her,

2. or, failing him/her,

the chairman of the meeting, as my/our proxy/ies to vote on a poll on my/our behalf at the annual general meeting of the company for the purpose ofconsidering and, if deemed fit, passing, with or without modification, the resolutions to be proposed thereat and at each adjournment thereof and to votefor and/or against the resolution and/or abstain from voting in respect of the ordinary shares registered in my/our name/s in accordance with theinstructions/notes overleaf.

Please indicate with an “X” in the spaces below how you wish your proxy to vote in respect of the resolutions to be proposed, as contained in the notice ofthe abovementioned annual general meeting.

*I/We desire my/our proxy to vote on the resolution to be proposed, as follows:

For Against Abstain

1. Resolution to adopt the annual financial statements

2. To reappoint Deloitte & Touche as auditors

3.1 To re-elect Mr JF Buchanan as a director

3.2 To re-elect Mr AC Ruiters as a director

4. To approve the remuneration to be paid to the non-executive directors for theyear commencing 1 June 2007, details of which are as follows:

4.1 Chairman R378 000

4.2 Deputy Chairman R114 480

4.3 Chairman of the Audit Committee R137 160

4.4 Member of the Audit Committee R69 120

4.5 Chairman of the Remuneration Committee R69 120

4.6 Member of the Remuneration Committee R34 560

4.7 Fees for services as a Non-executive Director R114 480

5.1 Resolution to grant authority to the directors to issue shares in terms of the share trust – Ordinary resolution number 1

5.2 Resolution to renew directors’ authority and that of subsidiaries to buy the company’s shares – Special resolution number 1

Signed by me/us this day of 2008

Signature

Assisted by me (where applicable) (refer to note 3)

Full name/s of signatory if signing in a representative capacity (refer to note 5)

* If this form of proxy is returned without any indication of how the proxy should vote, the proxy will exercise his/her discretion both as to how he/she votesand as to whether or not he/she abstains from voting.


Notes1. A member may insert the name of a proxy or the names of two alternative proxies of the member’s choice in the space/s provided overleaf, with or

without deleting “the chairman of the meeting”, but any such deletion must be initialled by the member. Should this space be left blank, the proxy willbe exercised by the chairman of the meeting. The person whose name appears first on the form of proxy and who is present at the annual generalmeeting will be entitled to act as proxy to the exclusion of those whose names follow.

2. A member’s voting instructions to the proxy must be indicated by the insertion of an “X”, or the number of votes exercisable by that member, in theappropriate spaces provided overleaf. Failure to do so will be deemed to authorise the proxy to vote or to abstain from voting at the annual generalmeeting, as he/she thinks fit in respect of all the member’s exercisable votes. A member or his/her proxy is not obliged to use all the votes exercisableby him/her or by his/her proxy, but the total number of votes cast, or those in respect of which abstention is recorded, may not exceed the total numberof votes exercisable by the member or by his/her proxy.

3. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are produced or have beenregistered by the transfer secretaries.

4. To be valid, the completed forms of proxy must be lodged with the transfer secretaries of the Company, Link Market Services South Africa (Pty) Limited,5th Floor, 11 Diagonal Street, Johannesburg 2001, (PO Box 4844, Johannesburg, 2000) Republic of South Africa, to reach the company at least 48 hoursbefore the meeting.

5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form ofproxy unless previously recorded by the transfer secretaries or waived by the chairman of the meeting.

6. The completion and lodging of this form of proxy will not preclude the relevant member from attending the annual general meeting and speaking andvoting in person thereat to the exclusion of any proxy appointed in terms hereof, should such member wish to do so.

7. The completion of any blank spaces need not be initialled. Any alterations or corrections to this form of proxy must be initialled by the signatory/ies.

8. The chairman of the meeting shall be entitled to decline or accept the authority of a person signing the proxy form:

a. under a power of attorney; or

b. on behalf of a company

unless his power of attorney or authority is deposited at the offices of the company or that of the transfer secretaries not later than 48 hours beforethe meeting.

Form of proxy (continued)


G R A P H I C O R 3 7 3 7 4

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