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creating value together

The group’s main subsidiary Business Connexion (Pty) Limited is a leading black empowered Information and Communications Technology (ICT) company, with a proud 25-year track record. An integrator of competitive, innovative business solutions based on ICT, Business Connexion has offices in all major centres throughout South Africa. The company has more than 4 000 employees. Of these, more than thirty percent are from previously disadvantaged backgrounds.

Clients are firmly positioned at the centre of the Business Connexion world. The group’s unique ‘Solutions Integration Model’ represents the way in which the integration of business solutions is configured. Solutions are developed and implemented by drawing on expertise from the Technology Infrastructure, Business Applications, Professional Services and Outsourcing competencies.

Business Connexion runs mission-critical ICT systems for many JSE-listed organisations and manages products, services and solutions for key public sector organisations, parastatal enterprises and a host of medium sized emergent companies.

The company boasts unrivalled expertise across a range of vertical industry sectors including financial services, telecommunications, healthcare, manufacturing, automotive, retail and the public sector.

Business Connexion nurtures strong relationships with many of the world’s leading ICT companies

including Actuate, Avaya, Cisco Systems, Citrix, Cognos, DataStage, DynamiQue, EAS, Egenera,

EMC2, GEAC, HP, IBM, Infosys, Microsoft SA, Nortel Networks, OpenText, Sage, SAP, SAS, Stratus Technologies, Sun Microsystems and TTI-Telecom. The group has attained top-level certification and has received awards from many of these partners.

In an on going quest to deliver innovative solutions that add real business value to clients,

Business Connexion combines its own expertise, tools, resources and vertical sector knowledge with that of its partners. The group believes that innovation will shape the sustainability of the 21st century enterprise and an innovation programme is a key element of the company’s internal business improvement strategy.

Business Connexion is a truly South African ICT company that understands the unique challenges of the African continent and that continually builds on its track record of delivering world-class services and solutions.

Company profile

2005R000

%change

2004R000

%change

2003R000

%change

2002R000

%change

2001R000

Operating resultsRevenueOperating profitProfit attributable to shareholdersHeadline earningsCash generated from operations

2 816 132 180 439290 628184 536156 147

4414111326

2 811 771125 695120 44886 617

123 877

4(12)

13(22)(56)

2 701 375142 049106 540111 407284 536

1(13)

16

87

2 667 752162 89492 176

151 762

2(14)(22)

(35)

2 617 415189 407118 042

232 419

Balance sheetTotal shareholders’ equityTotal assetsTotal liabilitiesInterest bearing liabilities

1 170 9512 287 9041 116 953

236 762

21111

(19)

965 8542 067 3161 101 462

293 843

7448307

555 7981 400 268

844 470273 969

339

(2)(2)

418 6511 279 630

860 979280 289

444

(8)

290 5561 225 485

934 929280 804

Ordinary share performanceWeighted average number of shares(000) Note 1Diluted weighted average number of shares (000)Earnings per share (cents)Diluted earnings per share (cents)Headline earnings per share (cents)Diluted headline earnings per share (cents)Number of shares in issue at year end (000)Net asset value per share (cents)

246 445

262 801117 ,9110,674,970,2

262 637445,9

148133119105

21

253 551

253 55147,547,534,234,2

262 637367,8

1313

(22)(22)

(1)

253 425

253 42542,042,044,044,0

149 521371,7

Financial ratiosOperating margin (%)Return on shareholders’ equity (%)Return on total assets (%)Shareholders’ equity to total liabilities (%)Interest bearing liabilities to equity (%)

6,415,88,1

104,820,2

4,59,04,2

87,730,4

5,320,08,0

65,849,3

6,1

48,667,0

7,2

31,196,6

Definitions

Total shareholders’ equity Shareholders’ equity and minority interests

Total assets Non-current assets and current assets

Total liabilities Non-current interest bearing liabilities, non-current interest free liabilities and current liabilities

Interest bearing liabilities Non-current interest bearing liabilities, short-term borrowings and bank overdrafts

Net asset value per share Shareholders’ equity divided by number of shares in issue

Operating margin Operating profit expressed as a percentage of revenue

Return on shareholders’ equity Headline earnings expressed as a percentage of shareholders’ equity

Return on total assets Headline earnings expressed as a percentage of total assets

Interest bearing liabilities to equity ratio Interest bearing liabilities as a percentage of shareholders’ equity

Note 1 The number of shares includes both ordinary and preference shares in the comparative numbers for 2003 as the preference shares were entitled to the same rights with respect to dividends as the ordinary shares. The preference shares were converted to ordinary shares on the basis of one for one in 2004. The comparatives for ordinary shares performance have only been included from 2003 as the company was not listed in earlier years.

Note 2 2004 and 2005 includes the adjustments for the adoption of AC 133, Financial Instruments: Recognition and Measurement. Comparative figures are not adjusted.2005 includes the adjustment for AC 501, Accounting for Secondary Tax on Companies (STC) and AC 140, Business Combinations. Comparative figures are not adjusted.

Financial highlights

Our “Solutions Integration Model”

Business Consultin

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Regio

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Solutions Delivery

Technology InfrastructureBusi

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App

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ations

Outsourcing

Programme Management

P R O D U C T S

S E R V I C E S

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Stratus TTI-Telecom HP Citrix SUN Infosys E

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c t ua t e S t r a t u s T T I - T e l e c o m H P C i t r i x S U N

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The model represents the way in which our integration of business solutions is configured around the client’s own business.

B u s i n e s s C o n n e x i o n > A n n u a l R e p o r t 2 0 0 56

Business Connexion footprint

South Africa

Head Office - Midrand Gauteng

Cape Town, Western Cape

Durban, KwaZulu-Natal

East London, Border Kei

Johannesburg, Gauteng

Port Elizabeth, Eastern Cape

Pretoria, Gauteng

Africa

Windhoek, Namibia

Dar es Salaam, Tanzania

Chingola, Zambia

Kitwe, Zambia

Lusaka, Zambia

Maputo, Mozambique

International

London, United Kingdom

Service Centres

Bethlehem

Bloemfontein

Cape Town

Durban

East London

George

Johannesburg

Kimberley

Kuruman

Mbabane

Middelburg

Mossel Bay

Nelspruit

Newcastle

Pietermaritzburg

Polokwane

Port Elizabeth

Port Shepstone

Potchefstroom

Pretoria

Richards Bay

Rustenburg

Secunda

Swakopmund

Upington

Vereeniging

Vredendal

Welkom

Windhoek

Worcester

Regional Offices

B u s i n e s s C o n n e x i o n > A n n u a l R e p o r t 2 0 0 5 7

Recognition, awards and certifications

• EMC2 Partner Award in the CLARiiON Volume Project category

for the most CLARiiON business within the Eastern Europe,

Middle East and Africa region.

• Best growth in HP services in the Corporate and Enterprise

Reseller category

• IBM Strategic Growth Alliance partner – the only IBM

business partner at this level in central and Southern Africa.

• Top South African Systems Integrator business partner in IBM

sales

• Top South African IBM business partner in small and medium

business cross brand sales

• Top South African business partner for its growth achievement

in IBM storage sales

• Top South African business partner for overall growth in IBM

sales within the storage and technology group

• Top South African business partner for its growth

achievement in IBM zSeries sales

• Only Nortel partner in South Africa to achieve Gold Solutions

partner certification in LAN, Meridian Voice and Customer

Interaction

• Symantec’s partner of the year – Investing in the Future

– Sales Skills award for the company’s efforts in sales training

• ISO 9001:2000 certificated

• “Investor in people” accreditation

• Corporate Research Foundation – Top 10 company in the

Information Communication Technology and Electronics

industry

• BMI-T - largest market share in SA in Outsourcing and

Integration

• Microsoft Advanced Infrastructure Solutions Competency

Award

• Cisco Customer Advocacy Award for Russia, Middle East and

Africa region

• Only triple Microsoft Gold partner in the country

• Microsoft Systems Integrator of the Year

• Largest EMC2 storage partner in South Africa

• SAP’s preferred partner for healthcare sector

• SAP’s number one partner in automotive sector

• Citrix Highest Productivity Award

• Citrix Best Solution Award

• EMC2 Best Storage Consolidation Project for the Eastern

Europe, Middle East and Africa Region - the only African

business partner to achieve an accolade

@ A Glance


Directorate

* Member of the Audit Committee

~ Member of the Remuneration Committee

Peter Anthony Watt (64)

BSc (Eng)

MBL

Chief Executive Officer

Appointed to the Board on 1 June 1999

Leetile Benjamin Mophatlane (32)

BCom (University of Pretoria)

Appointed to the Board on 2 February 2004

Reginald Selwyn Berkowitz (68)~

Law Certificate (Natal)

Chairman

Non-executive Director


David Morris Nurek (55)*~

Diploma in Law (UCT)

Graduate Diploma in Company Law (UCT)

Deputy Chairman



Business Connexion Group LimitedBoard of Directors >>

9 B u s i n e s s C o n n e x i o n > A n n u a l R e p o r t 2 0 0 5


Benjamin Mophatlane Peter Watt David Nurek Reginald Berkowitz


John Buchanan Alan Farthing Francois van der Merwe

Lionel Marran


Representing the company secretary


John Frederick Buchanan (61)*~

CA(SA)

BTh



Alan Charles Farthing (48) (British)

CA(SA)

Financial Director

Appointed to the Board on 2 December 2002

Francois Johannes van der Merwe (48)*

BA LLB (University of Stellenbosch)

MA (University of Oxford)




There were signs of an upturn in the global ICT industry during the period

under review. Business confidence strengthened as corporate IT strategy

shifted increasingly from utilising internal resources to seeking outsourced

solutions and services. Growing compliance and transparency issues also

heightened demands for additional outsourced services. This prompted

a number of high profile global ICT companies to review their business

models and to seek strategic partnerships and alliances that enable them to

effectively address the changing global ICT landscape.

These global factors provided stimulus for the South African ICT market, which

continued to grow. This growth will also be influenced by the appointment

of the Second Network Operator (SNO) and growing anticipation within

the industry that a measure of liberalisation is finally in sight. The various

players in this market intensified their efforts to prepare themselves for

this new order, which will hopefully be clarified and formalised via the

much anticipated Convergence Act that is expected to be promulgated by

Chairman’s report

Highlights

Upturn evident in ICT industry

Strong earnings growth

Dividend declared


Government in the near future. Pleasingly, the pace of transformation within the sector accelerated during the period

despite the continued absence of the much awaited ICT Charter.

During the year, management was able to deliver on its commitment to resolve the long outstanding SARS trademark

dispute on satisfactory terms, and to dispose of various non-core assets, leaving the Business Connexion Group as a lean,

highly liquid, unencumbered and clearly focused ICT services provider.

In the process of addressing these key issues, the group was still able to compete successfully in the market place,

maintaining its position as South Africa’s leading ICT services provider and securing a number of much sought

after outsourcing contracts. These included contracts with large corporates in the Financial Services, Mining and

Resources sectors. Most gratifying of all perhaps was that the group was able to offer new employment to 600 ICT

professionals.

Business performance in the rest of Africa was disappointing during the review period with revenue falling to less than half

of last year. There was an absence of large contracts, although smaller contracts continued to flow through. The benefits

envisaged from our acquisition of Intrinsic Technologies have still to be realised; however, we remain optimistic in this

regard and the region remains an integral part of our long-term growth strategy.

The Business Connexion merger process has been successfully concluded and on the BEE front Business Connexion has an

overall “A” rating from EmpowerDex. The group’s transformation strategy, which is aligned to the present draft ICT charter,

continues to be implemented and improved.

Financial performance

While revenue remained almost unchanged for the period at R2,8 billion, revenue from our South African operations rose

9,0% to R2,6 billion. Unfortunately, much of this growth was offset by the lower revenue generated in the rest of Africa.

That said, the group’s operating margin rose pleasingly from 4,5% to 6,4%, reflecting a 43,5% rise in operating profit to

R180,4 million (2004: R125,7 million).

“During the year, management was able to deliver on several of its commitments leaving the Business Connexion Group as a lean, highly

liquid, unencumbered and clearly focused ICT services provider.”


Attributable profit, which includes the once-off effects of the SARS trademark settlement and the proceeds of the sale

of non-core assets, more than doubled to R290,6 million (2004: R120,4 million), while headline earnings per share rose

commensurately to 74,9 cents (2004: 34,2 cents).

This commendable performance has enabled the board to declare a three times covered dividend and to approve an ordinary

dividend of 20 cents per share, plus a special dividend of 17 cents per share. This equates to a total dividend of 37 cents per

share for the year under review.

The board believes the three times cover is prudent given the group’s commitment to capital expenditure.

Corporate Governance

Corporate Governance remains a key focus and has resulted in Business Connexion’s strength and leadership within the

local ICT sector. In addition to the fundamental requirements of the King I and King II Reports, the board continually reviews

other global governance standards. It strives to be an early adopter of these standards and they should add meaningful

value to the group’s initiatives in this regard.

Future outlook

Management is mindful of the fact that revenue growth has been virtually static for the past two reporting periods. The

focus going forward will be to grow revenue, particularly on the back of the convergence opportunities that lie ahead,

and within the public sector and the rest of Africa. However, this growth will not be at the expense of profitability, and

management will seek to improve the group operating margin in future. The post balance sheet acquisition of Bidvest

Network Solutions (Bidnet) will round-off the services offering within the approaching era of convergence.

At the same time, the group’s client centric, solutions based, business model has stood the test of time and we will continue

to adhere to it, with regular refinements as and when necessary. While we will consider the various acquisitive business

opportunities that are likely to come before us, we expect most of our growth to be organic in the foreseeable future.

With all of the outstanding issues such as SARS, Corp Invest 40 and our disposal of the non-core assets now resolved, we

believe Business Connexion is well placed to continue to grow meaningfully in the year ahead.

Chairman’s report (continued)


Appreciation

I extend my warmest appreciation to all stakeholders who helped to make the past year the success it has been for Business

Connexion. The extent of our success is a direct reflection of the value of their support. In particular, I pay tribute to the

management and staff of the company who have delivered a sterling effort in the face of significant challenges; in particular

Peter Watt, the CEO, who has continued to show dedication to the company in carrying out his functions.

I thank my colleagues on the board of Business Connexion for their ongoing and valued counsel and support, which have

helped to make my Chairmanship a rewarding and pleasurable experience. I record my regret that Francois van der Merwe

is not making himself available for re-election to the board. I thank him for the contribution he made in the past and wish

him every success for the future.

In conclusion, I believe that we can collectively look forward to another year of success in 2006.

Reginald Berkowitz

“The commendable performance has enabled the board to announce a three times covered dividend.”


Corporate ServicesThe company’s Corporate Services

divisions provide support, monitoring,

guidance, policy frameworks and services

to the regions and competencies to

ensure sustainability and good corporate

governance. These divisions include:

Commercial Services, Human Resources,

Finance, Strategy, Marketing and

Communication

and Special

Projects.

RegionsAs the company continually strives

to integrate the strategic value of ICT

into clients’ business strategies, the

organisation’s regional offices provide a

single interface to clients.

In order to effectively service its extensive

and regionally diverse client base,

Business Connexion operates a network

of regional offices in Gauteng, KwaZulu-

Natal, the Western Cape and

the Eastern Cape. The

company also provides

services to a number

of African countries

through its Africa

division and its UK office

delivers ICT services to the

company’s multinational clients in the UK

and European territories.

Executive committee members

CEO and Deputy CEO

Peter Watt #*

CEO (Chairman)Benjamin Mophatlane #*

Deputy CEO

* Member of Business Executive Committee

# Member of Audit and Policy Executive Committee

19 B u s i n e s s C o n n e x i o n > A n n u a l R e p o r t 2 0 0 5


Corporate Services

Johann Burden #*

Group Executive Human Resources

Bridgman Sithole #*

Group Executive Strategic Relationships

Alan Farthing #*

Group Executive Finance

Willem van Rensburg #*

Group Executive Strategy

Matthew Blewett #*

Group Executive Special Projects

Diana de Sousa *Group Executive Marketing and Communication

Marius Schoeman #*

Group Executive Commercial Services


Regions

Will Heygate *Regional Chief Executive, KwaZulu-Natal

Andre Vermeulen *Group Executive International (UK)

Isaac Mophatlane *Group Executive Public Sector Regional Chief Executive, Pretoria

Gert Cronje *Regional Chief Executive, Eastern Cape

Philip Savides *Regional Chief Executive, Western Cape

Sydney Ramutla *Regional Chief Executive, Johannesburg

Competencies

Tim Schumann *Group Executive Technology Infrastructure

Marthinus Wissing *Group Executive Professional Services

Stuart Matthysen * Group Executive Sales

Mike Sewell *Group Executive Outsourcing (Infrastructure Services and SMC)

John Lagaay *Group Executive Business Applications

22B u s i n e s s C o n n e x i o n > A n n u a l R e p o r t 2 0 0 5


CompetenciesIn order to ensure that clients receive

a level of service and delivery

that surpasses that

offered by competitors,

the regional offices

are supported by a

network of competency

centres. These business

units employ some of the

country’s leading experts in

many fields of expertise.

Solutions that are designed to meet

clients’ strategic and operational business

needs are developed and implemented by

drawing on expertise from the Technology

Infrastructure, Business Applications,

Professional Services and Outsourcing

competencies.

Business Connexion (Pty) LimitedBusiness Connexion (Pty) Limited is the primary operating entity within Business Connexion Group Limited.


Group structure (main operating entities)

ECnet (Pty) Limited

Business Connexion Group Limited

Reg. No. 1988/005282/06

Business Connexion Technology Holdings

(Pty) Limited

Reg.No 1996/007425/07

Q Data Europe Limited

Business Connexion Investments (Pty) Limited

Reg. No. 1994/002507/07

Business Connexion Management Services

(Pty) Limited

Reg.No 1994/003844/07

Gadlex (Pty) Limited

Reg. No. 2001/016929/07

25,01%100%100%100%

100%

Business ConnexionNamibia (Pty) Limited75%

100%

Business ConnexionSolutions (Pty) Limited100%

Nanoteq (Pty) Limited100%

Comparex International

Trading (Pty) Limited100%

Business Connexion (Pty) Limited

Reg. No. 1993/003683/07

74,99%

Intenda (Pty) Limited29,85%

SIFA Systems Limited(Mauritius)100%

Business ConnexionMozambique, Limitada100%

83,5% Business ConnexionTanzania Limited

85% Multi Vendor Services Limited (Zambia)

innovative solutions

Company ProfileThe group’s leadership was confirmed in

BMI-T’s identification of Business Connexion

as having the highest market share in the

“services” sector of the local IT industry, while

the Corporate Research Foundation nominated

the group as one of the top 10 companies

in the Information Communication

Technology and Electronics (ICTE)

industry.

PROOF 8 – 15-11-2005

Review of operations

Introduction

The year under review was characterised by achievements across many

fronts:

• The merging of the businesses of Comparex Africa (Pty) Limited

and Business Connexion Solutions (Pty) Limited was completed

successfully, as was the re-branding of the merged operations under

the Business Connexion name

• The longstanding trademark dispute with the South African Revenue

Services was resolved satisfactorily

• Non-core investments in Digital Healthcare Solutions (Pty) Limited,

Mosaic Software Holdings Limited and Perago Financial System

Enablers (Pty) Limited were disposed of profitably

• Post balance sheet, the preference share investment in Corp Invest 40

Limited that facilitated the NITAC empowerment structure was

wound up

• The much anticipated R143 million investment in a new worldclass

data centre was given the green light

<< Peter Watt


Highlights

Business Connexion brand becoming synonymous with market leadership

Non-core investments disposed of

Growth in cash flow from operations


• The commencement of an internal SAP project in the group which will consolidate all Business Connexion’s ICT

systems on the mySAP enterprise resource planning platform

• More than 600 new jobs were created

All of this was achieved while the Group traded profitably in an improving ICT market. Notable and highly prized

outsourcing contracts were won in large corporate organisations in the Financial Services, Mining and Resources

industries. Central to this ongoing success was the group’s close adherence to and constant refinement of its client

centric solutions based business model. This model has enabled the group to continue to generate more than 75%

of its revenue from services and the provision of annuity based outsourced services and, in so doing, maintained its

leadership of this market in South Africa.

This leadership was confirmed in BMI-T’s identification of Business Connexion as having the highest market share in

the services sector of the local IT industry, while the Corporate Research Foundation nominated the group as one of

the top 10 in the Information Communication Technology and Electronics (ICTE) industry.

The group also continued to receive performance accolades from its many global partners. These included the following:

• Symantec Partner of the Year

• EMC2 Best Storage Consolidation Project (EEMEA)

• IBM Top South African Business Partner in five categories

• IBM Software Premier Status Business Partner

• IBM Only Strategic Growth Alliance Partner

• HP Best growth in services in Corporate and Enterprise Reseller category

• Cisco Services Partner of the Year (MEA)

The “New” Business Connexion

Following the launch of the “new” Business Connexion in April 2004, the group focused on building a truly African ICT brand

that has remained consistent and true to the merged organisation’s values, behaviour and intent. Management believes that

the brand has become a key enabler for the business vision.

The brand is becoming synonymous with market leadership and consistent delivery. Business Connexion is also known as

the home of the best talent in the ICT industry and as an organisation that offers specialised, pragmatic solutions, based

on client needs.


Review of operations (continued)

The group will continue to focus on building its proudly South African brand that will remain a leader in its field creating

value together with its stakeholders.

The Solutions Integration Model (SIM)

This model provides an insight into how Business Connexion

harnesses the immense depth of skill, expertise and experience

within the group, to seamlessly deliver technology solutions that

best meet its clients’ business needs. The model has been at the

forefront of the group’s success in recent years and, whilst it is

closely adhered to, it is constantly and carefully refined to meet

changing market needs.

Delivering client centric business solutions

South Africa

Business Connexion delivers its client centric technology based

business solutions to a growing community of leading JSE-listed

and key Public Sector clients, as well as a host of medium-sized

emerging companies, through regional offices in Gauteng,

KwaZulu-Natal, the Western and Eastern Cape. Each of these

regions acts as a client gateway to the full spectrum of skills,

experience and expertise available within the group.

Rest of Africa

While revenues from business activities in this region declined over the past year, Business Connexion continues to regard

the rest of Africa as an important business development area. It continues to provide its services to a growing array of clients

in countries such as Ethiopia, Mozambique, Tanzania, Namibia and Zambia. Effective partnerships have been entered into

with local third party vendors in these countries to secure local contracts. During the year Business Connexion acquired the

business of Intrinsic Technology through which it will grow its business in sub-Saharan Africa and established an office in

Maputo, Mozambique.

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Solutions Delivery


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Europe

Business Connexion’s London-based office Q Data Europe provides ICT consulting and technical services to certain of the

group’s multinational clients in the UK and continental Europe. These services mirror those offered in South Africa and

include outsourcing, Service Management Centre (SMC) first line support, project management, infrastructure support and

application development. Despite the prevailing challenging economic conditions in Europe, Q Data Europe’s performance

was satisfactory during the year under review.

Operational review

To ensure that clients receive the full benefit of its integrated solutions based client service model, Business Connexion

supports its regional offices with a network of competency centres that employ some of the country’s leading ICT experts.

Using this infrastructure, Business Connexion is able to deliver across the entire client value chain. Each regional office

enjoys prompt and direct access to these competencies.

Business Consulting

The Business Consulting competency continues to grow its revenues and contributed considerably to the organisation securing

several large outsourcing contracts during the period. A highlight during the year was a project undertaken in the mining sector

that resulted in a medium-sized mining concern significantly improving its business. The company increased its throughput and

was transformed from a loss-making to a profit-making entity through the implementation of process management enhancements

across its supply chain.

Business Connexion will continue to capture a portion of the consulting and technology market share. A significant

opportunity exists to become the consulting industry experts in Business Process Outsourcing (BPO) – the analysis, design

and implementation, and enabling it with technology. In addition, training in process and technology to optimise investment

in solutions will represent a significant area for revenue growth.

A consistent, professional and mutually agreeable relationship with clients, partners and employees will be absolutely crucial

to ensure a sustained business in the consulting market and this is clearly substantiated in Business Connexion’s client centric

philosophy.

“The group will continue to focus on building a proudly South African brand that will remain a leader in its field creating value

together with stakeholders.”



Outsourcing

2005 2004

R000 R000

External revenue 1 826,0 1 726,1

Operating profit 174,9 154,6

This competency known as Outsourcing comprises three areas of focus

• Professional Services

• Infrastructure Services

• and the Service Management Centre

Infrastructure Services

Business Connexion remains the leading infrastructure outsourcing service provider in South Africa, providing services to

the government, manufacturing, mining, retailing, financial services, petrochemical and telecommunications industries.

This competency’s activities include distributed systems management; mainframe and data centre management and

consolidation; communication network outsourcing and management; and desktop management and hosting.

The last year has been very successful and the competency secured several large contracts with new name client accounts

in the financial services, mining and resources sectors. This was in addition to the renewal of several outsourcing contracts

and the competency centre continues to maintain a contract renewal rate of more than 90%.

Business Consultin

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Looking ahead, the company will be spending R143 million in building a new data centre environment in order to provide

increased capacity for this growing centre of our outsourcing business. The data centre will enable significant growth for

the Business Connexion Group and as such is a strategic investment.

The principal objective is to create a new “Worldclass” high availability data centre based on a tier 4 design. This classification

is based on the Uptime Institute – a recognised benchmark for data centre design and operating criteria. The data

centre provides a complete turnkey ICT infrastructure management capability and facilities services including floor

space, state of the art security, controlled power and air-conditioned environments.

Professional Services

During the past year, this competency maintained its market leadership and profitability met management’s

expectations. The growth achieved is expected to continue into the coming financial year, especially in its newer

market segments.

Major growth was achieved in the key Application Outsourcing market where Business Connexion now commands a

leading position and numbers several blue-chip companies among its clients.

This success is attributed to its ability to offer a comprehensive, end-to-end Application Management service that goes

far beyond just application development to ensuring effective application support for a client’s key business processes.

It includes total management and optimisation of all aspects of a client’s operational portfolio of applications, from

inception to ultimate obsolescence, decommissioning and replacement. In particular, this service stringently controls

how applications pass from the acquisition/development and maintenance/enhancement environments into the live

operating environment, thereby reducing the disruptive potential caused by any incompatibilities or application

defects.

In addition to Application Management, the competency also offers Project Management and Application Integration

services using best practice methodologies such as OGC’s ITIL for the system lifecycle and Prince2 for project management,

to achieve the highest standards of quality. Key service offerings to regional and local government include its LARA flagship

solution using its e-Venus ERP product, which has achieved a dominant position in these markets, and its Q LINK automated

electronic payroll deduction processing solution, which eliminates the administrative burden attached to automating the

“The group continues to generate more than 75% of its revenue from services and the provision of annuity based and outsource solutions.”



interfaces between service providers and employers. It was also awarded the renewal of the Persal government contract for

the next five years.

The Service Management Centre (SMC)

The year under review was a successful one for this competency, with the addition of several large corporates to its growing

client portfolio. The competency provides a single point of contact (SPOC) for clients using automated business processes for

problem, change, incident and configuration management. This SPOC is automated and flexible and falls into four distinct

areas:

• Call desk services

• Support desk services

• Command centre services

• Client service desk

A command centre enables clients to remotely manage their outsourced networking infrastructures using

sophisticated software tools. Major clients include large corporates across vertical industries and the SMC

has focused on providing clients with national and international competencies for all business processes and

procedures. Most processes have been designed around the internationally recognised ITIL framework. New call

centre technology, which includes both IVR and automated call flows, has been introduced into the ICT support

model.

As a cost centre, the SMC budget is based on a break-even approach. Any cost savings lead to an over-recovery

against revenue. Over the past year, the main cost savings achieved were in depreciation, software maintenance and

manpower. These were mainly due to delayed capital expenditure, improved exchange rates for capital purchases

and maintenance contracts, and delays in the appointment of new manpower or normal staff attrition.

The SMC’s ability to offer large national and multinational organisations substantial economies of scale augurs

well for its continued growth, particularly in high labour cost areas such as Europe. Its integrated service delivery

model offers existing and potential clients a total turnkey approach without sacrificing the flexibility needed to

meet individual business requirements.


Business Applications

2005 2004

R000 R000

External revenue 300,9 269,0

Operating profit/(loss) 13,9 (2,9)

Combined Design Engineers (CDE)

The financial year saw CDE focus strongly on aligning its SAP focused strategies with a challenging and rapidly changing

ERP market combined with an ever demanding client base.

One of the highlights of the year was the establishment of the CDE SAP support centre, resulting in a more sustainable

business model. The business established a comprehensive, flexible and cost effective SAP support model and competency

centre that boasts a team of highly skilled and experienced SAP consultants supporting over 10 000 SAP users locally and

globally.

One of the biggest challenges facing organisations using SAP is to optimise the utilisation of their SAP systems and realise

greater return on investment. CDE has the answer – it lies in its extensive SAP skills base and experience – driven by its

established Ongoing VALUE Optimisation (oVo) strategy and approach which is designed to provide quick returns and

maximum value, while managing cost and risk down. CDE is well positioned to assist companies in complying with the

International Financial Reporting Standard (IFRS).

“Clients are firmly positioned at the centre of the Business Connexion world.”

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During the period, the division successfully expanded its public sector presence and was accredited as a SAP Business

Partner for the mySAP All-in-One solution for the small to medium business sector.

The competency is able to meet the challenges of a tough and often aggressive ERP market having successfully embraced

the “Life-Cycle” approach to ERP and adopted a balanced set of SAP service offerings that cover implementation, support

and ongoing value optimisation for client in all sectors.

Enterprise Applications

Enterprise Application Solutions (EntAppS) is a newly formed competency born out of the successful amalgamation of the

former Customer Orientated Applications (COA) and Mainstream Tetra competencies.

It provides innovative end-to-end business solutions that enable managers to pro-actively drive their businesses in areas

such as Business Intelligence, Mail Management, Knowledge Management, Enterprise Resource Planning (ERP), Core

Banking, Enterprise Reporting and Enterprise Service Management. It employs around 100 staff countrywide, the majority

of whom are technical or professional practitioners.

EntAppS had a challenging yet profitable year with notable successes in knowledge Management and ERP. Business

Connexion was awarded the “ICT Excellence” award for the best project in Government for a Livelink implementation. The

competency is well placed to take advantage of the anticipated market upturn and is also increasing its penetration of

markets in the rest of Africa.

Microsoft

The past year has seen the Microsoft competency successfully integrated into Business Connexion. This has resulted in

a sharp increase in Microsoft derived revenue and along with it, the consolidation of the competency’s position as one

of the top Microsoft licensed revenue producers in the enterprise space. As such, Business Connexion was recognised as

Microsoft’s System Integrator of the Year at their annual Microsoft Partner Summit.

Coinciding with this, tweleve new service offerings have been created and introduced to the market in a relatively

short space of time. Many former Comparex Africa customers have benefited from the introduction of new Microsoft

skills to the group.


Noteworthy achievements during the past year included the first successful integration of Microsoft’s management

suite into Business Connexion’s SMC, and the first deployment of MOM 2005 in the mining sector at one of Business

Connexion’s mining clients and over eight new clients were added to the competency’s client list during the year.

The competency’s focus for the year ahead is to maintain its current positioning and alignment with Microsoft; to

grow the Microsoft Licensing customer base; to further develop the longstanding relationship between Microsoft and

Business Connexion; and to increase the services business in South Africa and the rest of Africa.

Q Data Dynamique (QDD)

QDD specialises in developing and implementing complete human resource management (HRM) solutions, including

integrated payroll and time and attendance functionality. The solutions are developed in South Africa for South

African businesses, and have been adapted to almost every local industry sector.

QDD also has a substantial footprint in Africa, and its products cater for the needs of other regulatory authorities. The

African market has been targeted for further growth in the coming years.

The competency centre once again exceeded its profit expectations due to its existing annuity revenue and new

sales of its DynamiQue 1.0 and Time & Attendance software solutions. This software is being constantly updated

and improved. It is aimed at the mid- to high-end market where managing the HRM function has become a critical

business requirement. QDD also offers web-based solutions to cover the diverse needs of its clients.

“We nurture strong, high level relationships with world leading ICT partners as a worldclass service demands

customisation, interactivity and teamwork.”



Technology Infrastructure

2005 2004

R000 R000

External revenue 689,2 816,7

Operating profit 18,5 14,7

Networks

This competency has a 20 year track record of designing and implementing innovative networking solutions, ranging from

traditional data to the latest convergence solutions. It has designed and implemented six of the ten largest networks

in South Africa. This track record has since been extended into Africa, with major projects such as the new broadband

multimedia network that forms part of the Ethiopian Government’s ICT capacity building programme.

During the past year, the competency made great strides with the deployment of solutions in contact centres that provide

a single point of contact for the implementation and management of critical contact centre components, and deliver

comprehensive services for management, maintenance, programme management and complex application development.

Networks has also been successful in offering services that span consultancy, design, engineering, integration, support and

sustenance of IP services and communication. The security offering, based on the Information Security Framework, is a

business enabler and offers clients a variety of best-of-breed technical security solutions. This ensures an optimum return

on security spending.

The wireless business continued to grow during the year, offering an integrated platform of mobile technologies at both the carrier

and enterprise levels, to provide enhanced and secure end-to-end wireless communication and messaging. The installed client base

has grown to more than 2 000 wireless links throughout Africa. Flexible and scalable Next Generation Networks BSS/OSS/NMS

solutions, which combine the best of telephony and enterprise management, continued to be deployed successfully in the service

provider market.

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Persetel Q Vector

Persetel Q Vector had a successful year by increasing its market share and gross profit percentage and by reducing overall expenses.

The bottom line was a healthy increase in operating profits. This is against a market segment that is still in a consolidation phase.

This competency centre represents Business Connexion in the enterprise systems market and is a true systems integrator for its

clients in providing world class data centre solutions. Persetel Q Vector received several accolades from its strategic partners during

the year which underlined its success.

Looking forward, Persetel Q Vector aims to grow its market share in Africa within the enterprise server and storage market. The

strategy is to have focused and dedicated sales and support teams for each business partner ensuring that Business Connexion

remains the largest provider of total enterprise systems solutions in southern Africa.

Support Services

This competency provides round-the-clock end-to-end maintenance services to clients nationwide via 31 service offices. Its wide

range of skills and well established structure enabled it to compete successfully for several large client contracts over the past year.

Business Connexion SAP project

Business Connexion’s growth by acquisition over a number of years has left a legacy of multiple ICT systems and platforms

from which it was often difficult to get timeous, accurate and reliable consolidated information. During the year under

review, the decision was taken to consolidate all Business Connexion’s ICT systems on the mySAP enterprise resource

planning platform from global business solutions leader SAP AG.

Business Connexion has successfully installed SAP solutions at many of its clients over the years, and firmly believes that mySAP is

one of the best ERP solutions on the market. The full mySAP ERP suite, including financials, payroll and human resources, ordering,

procurement, and sales and distribution, will be implemented. New dimension functionality such as portals and business warehousing

will also be implemented – along with SAP’s specially designed Exchange Infrastructure (XI), which provides a translation service

between different applications. This allows users to create documents or instructions in the software of their choice and communicate

them to other types of software without having to write code specific to the transaction or the software involved.

Extensive testing and user training will precede the go-live date in 2006. The total project cost, including planning, hardware,

software, implementation by Business Connexion employees, testing and training, will be in excess of R40 million.

“The acquisition of Bidnet will enable the group to offer an end-to-end converged data and voice solution.”


Acquisitions and disposalsTwo acquisitions were made, one during the review period and the other, post balance sheet. The first, of pan African

solutions integrator Intrinsic Technology, is the group’s first acquisition on the African continent outside South Africa and

will strengthen the organisation’s presence in this region. Intrinsic, which has been in existence since 1988, has offices in

Tanzania and Zambia. The company boasts a strong HP competency.

The second acquisition was that of the network business of Bidvest Network Solutions (“Bidnet”) which will enable Business

Connexion to operate as a Value Added Network service provider, offering an end-to-end converged data and voice solution

to its large outsource client base, without having to rely on third parties. The acquisition gives the company a foothold in

the R70 billion telecommunications market and complements its leadership status in the R40 billion IT market. The deal was

approved by the Competition Commission in October 2005.

The group’s non-core investments in Digital Healthcare Solutions (39,13%), Mosaic Software Holdings (37,17%) and Perago

Financial System Enablers (25%), were disposed of during the period at a profit of R116,8 million.

Post balance sheet, the preference share investment in Corp Invest 40 that facilitated the NITAC investment in Persetel Q Data

Africa Holdings was redeemed. The group received a cash payment of R22 million and a dividend in specie of 3,23 million

Business Connexion Group shares and 1,59 million Dimension Data shares. The latter have subsequently been sold.

Associates and joint venturesSubsequent to the sale of the non-core investment mentioned above, the group’s only remaining principal associate is

application software provider Intenda (Pty) Limited, in which it retains a 29,85% interest.

AppreciationI take this opportunity to thank my colleagues and employees for their unwaivering commitment to making Business

Connexion a leader in the ICT industry.

Peter Watt


driving operational excellence

PROOF 8 – 15-11-2005


Corporate governance

Business Connexion group applies the highest ethical standards in the

conduct of its business. In doing so, it endorses the principles of transparency,

integrity and accountability advocated in the Code of Corporate Practices

and Conduct set out in the second King Committee Report on Corporate

Governance (“the Code”). The group fundamentally complies with the

recommendations of the Code, as it recognises its responsibility to all

stakeholders to conduct itself with prudence and integrity, thereby

protecting the interests of all its stakeholders.

ResponsibilityThe directors of the company are responsible for the preparation, integrity

and reliability of the Business Connexion group’s financial statements and

all other information contained in the annual report. Certain responsibilities

have been delegated to sub-committees, but the board accepts that it

remains accountable for the performance and affairs of the group.

Board of Directors At the date of this report the board consisted of seven directors, four of

whom were non-executive directors. Of the non-executive directors, Reggie

Berkowitz, John Buchanan and Francois van der Merwe are currently

considered to be independent in terms of the definition contemplated in the

Focus on:

Transparency, integrity and accountability

Excellence and sustainability

Transformation


Code. It is acknowledged that the board does not reflect the demographics of South Africa and lacks a sufficient number of

independent non-executive directors. The appointment of additional independent non-executive directors remains a focus

and is currently being addressed. The directors collectively bring a wide range of experience and expertise to the board,

thereby providing objectivity to decision-making processes. All board members are aware of the requirements of the Code.

The roles of Chairman and Chief Executive Officer are separate; ensuring that there is an appropriate balance of power and

authority, so that no individual has unfettered powers of decision-making. Reginald Berkowitz is the independent non-

executive Group Chairman. Peter Watt is the Chief Executive Officer and a succession plan is in place for this position.

The board has delegated the responsibilities of a Nomination Committee to the Remuneration Committee. Procedures for

appointments to the board are formal and transparent, and nominees’ backgrounds are thoroughly investigated.

In terms of the articles of association, one third of the directors retire by rotation annually. Directors who are newly

appointed during the course of any financial year are required to stand down at the annual general meeting, when they

may be re-appointed. Directors have no fixed term of appointment and their contribution is subject to ongoing review. The

board has established a process of self-assessment to determine its effectiveness.

The non-executive directors receive no benefit other than directors’ fees, as follows:

• basic fee as remuneration

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

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

• a fee for services rendered as chairman of a board committee

These fees are recommended by the executive directors and approved at the annual general meeting.

In terms of its charter the board of directors is responsible for directing and controlling the activities of the group and provides

leadership and guidance to the executive management of the group. The directors ensure that matters of strategy, policy

and performance are attended to and appropriately acted upon. The board, either directly or through board committees:

• approves the annual budget and strategy

• continually assesses the quantitative and qualitative aspects of the group’s performance through reviews of the

management reporting, which includes financial and non-financial information, and strategic and operational

updates from management

• reviews key risk areas and key performance indicators

“Business Connexion continues to apply the highest ethical standards in the conduct of its business.”


• monitors the group’s compliance with all relevant legislation and codes of business practice

• oversees the monitoring of the procedures that ensure that the group maintains an effective system of internal

control and risk management

• reviews the group’s communications with its key stakeholders.

All directors have access to the services and advice of the company secretary and to senior management, and are entitled to

seek independent professional advice in connection with the group’s affairs at the group’s expense.

The board meets at least four times per year. Board members use their best endeavours to attend board meetings and are

expected to participate frankly and constructively in board discussions and other activities.

Board meeting attendance

Board member 10 August 04 10 November 04 10 February 05 18 May 05R S Berkowitz Y Y Y YJ F Buchanan Y Y Y YA C Farthing Y Y Y YL B Mophatlane Y Y Y YD M Nurek Y Y Y YF J van der Merwe Y Y Y YP A Watt Y Y Y Y

Y = Present

Board committees The board is authorised to establish board committees as and when necessary to facilitate efficient decision-making by the

board in the execution of its duties. Business Connexion Group has two standing committees, namely the Audit and Risk

Committee and the Remuneration Committee. Business Connexion (Pty) Limited has two standing committees namely the

Audit and Policy Committee and the Business Executive Committee. These committees all have specific terms of reference

that include roles and responsibilities and are accountable to the board. The board has established a process of evaluating

the performance and effectiveness of the Group committees on a regular basis. The purpose and membership of the

committees are as follows:

Audit and Risk Committee

The Audit and Risk Committee comprises three non-executive directors, one of whom serves as committee chairman.

The chairman is John Buchanan, who is an independent non-executive director. The other members are David Nurek and

Corporate governance (continued)


Francois van der Merwe. Various members of management are invited to attend committee meetings. These include the

chief executive officer and the heads of Finance, Commercial and Internal Audit. The committee meets formally at least

twice per annum to assist in the governance of Business Connexion Group. The terms of reference of the Audit and Risk

Committee have been formalised and approved by the board and in summary include 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 Securities Exchange regulations, South African Generally

Accepted Accounting Practice, International Financial Reporting Standards (IFRS), King II and other relevant business

practices

• review of the adequacy of internal control processes and improvement mechanisms thereto

• monitoring of risk management practices

• review of compliance with the group’s code of ethics

• monitoring and evaluation of the performance and independence of both the internal and external audit function

• approving the engagement of the external auditors for non-audit functions

The heads of Internal Audit and External Audit have unrestricted access to the chairman of the Audit and Risk Committee.

The group’s Internal Audit and Business Standards Management functions operate in conjunction with each other to ensure

that the group’s financial, operating and information technology policies and systems are adequately monitored, updated

and reviewed.

Audit and Risk Committee meeting attendance

Member 10 August 04 9 February 05J F Buchanan Y YD M Nurek Y YF J van der Merwe Y Y

Y = Present

Risk management is addressed by the Audit and Risk Committee, with the group’s exposure to risk being identified, assessed,

managed and monitored at operational level.

“The group strives to integrate the strategic value of ICT

into clients’ business strategies.”



Remuneration Committee

The Remuneration Committee is responsible for the remuneration and employment terms of senior management. It is

comprised of three non-executive directors, including the Chairman of the board. The members are Reginald Berkowitz

and David Nurek. Mr John Buchanan was appointed as member on 18 May 2005. The Chief Executive Officer may attend

meetings and provide input on the remuneration of senior management. However, he recuses himself from decisions

regarding his own remuneration.

Member 15 July 04 10 February 05R S Berkowitz Y YD M Nurek A YJ F Buchanan

Y = Present A = Apology

The Remuneration Committee’s philosophy is to ensure that the executive directors and senior management are rewarded

for their contribution to the group’s operating and financial performance, at levels which take account of both local and

international information technology market trends. In order to align management actions with shareholders’ interests, a

share incentive scheme is maintained.

The Remuneration Committee’s general responsibilities 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’s remuneration ensuring that an appropriate balance exists

between basic and performance based remuneration

• fulfilment of the role of a Nomination Committee, to ensure that suitably qualified persons are nominated to the

board for appointment as executive or non-executive directors

• ensuring that the group has a formalised induction programme to familiarise new board appointees with the affairs

of the group

The board has approved formal terms of reference for the Remuneration Committee, which meets formally at least twice

per annum.


Business Executive Committee

Business Connexion (Pty) Limited’s Business Executive Committee (BEXCO) comprises 16 members, three of whom are

executive directors of the group, responsible for the day-to-day running of the group. Peter Watt, the Chief Executive

Officer, is the chairman of the committee. The committee’s members are responsible for the primary competencies, regional

offices and corporate service functions within the group which includes:

Regional offices: Five South African regions and rest of Africa;

Competencies: Business Applications, Infrastructure Services, Technology Infrastructure, Professional Services and the

Service Management centre;

Corporate Services: Commercial, Finance, Human Resources, Marketing and Communication, Strategy, Strategic Relationships

and Special Projects.

The committee meets at least once a month. The members of the committee are indicated on pages 19 – 22 of this report.

The BEXCO is 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 that the

company should be in and those it should not be in;

• Ensuring that the executive management implements the company’s strategy as established from time to time;

• Managing the overall positioning of the brand in its chosen marketplace;

• Ensuring that the company has adequate systems of internal control both operational and financial;

• Monitoring the activities of the executive management;

• Ensuring that the company operates ethically;

• Addressing the adequacy of retirement and health care benefits and funding;

• Establishing and approving the corporate beliefs and values;

• Establishing and communicating a system of investment beliefs;

• Defining relevant risks and associated risk parameters;

• Considering and recommending audited financial statements;

“The policy on risk management encompasses all significant risks to the group including strategic, financial, business, operational and

compliance risks.”



• Approving the company objectives and monitoring the results through a performance assessment system;

• Communicating with stake holders focusing on strategic issues and policies; and

• Ensuring conformance and improvement to selected and approved international and national standards or

methodologies.

Risk management The board accepts responsibility for the entire process of risk management. This responsibility has been delegated to

Management who are accountable to the board for designing, implementing and monitoring the risk management

process and integrating this process into the day-to-day activities of the company. This has been formally documented

and accepted in the Risk Management Policy and Management Risk Committee “terms of reference”.

Risk management focuses on identifying, assessing, managing, monitoring and reporting strategic risks that could

possibly have either a positive or negative effect on the achievement of objectives across the group. The policy on risk

management encompasses all significant risks to the group including strategic, financial, business, operational and

compliance risks. Each level of management, from the board of directors downwards, is responsible for regular review

of the respective risk environment or profile in which they operate, and to ensure that significant risks are identified,

assessed, managed and reported on. This is established and executed through a network of Risk Coordinators within

all areas of the group. This function is primarily fulfilled by the financial executives within their respective areas. All

risks are categorised, collated and aggregated by different committees and functions within the group.

A formal risk assessment process has been initiated, with the majority of the business areas completed and the balance

to be completed by the end of the next financial year. The method utilised, assesses the level of the impact of the risk and

the likelihood of the risk occurring. All risks identified are logged and tracked on proprietary software which then drives

compliance to the selected methodologies. (These include COSO, COCO and King II.) This formalises the mechanisms and

measures used to monitor, manage and control those risks.

Enterprise risk management: future developments

The group continues to further refine its risk management methodology through:

• The ongoing monitoring of the process, as well as the risk profiles of business units and major capital projects.

• The establishment of the risk appetite for the group.

• At least biannually performing a group wide risk assessment.

• Continuously benchmarking current practices against worldclass practices.


Business Standards and Improvement Management (BSIM)BSIM’s purpose statement, in support of the group’s objectives is to be the “Enablers of Excellence” .

A kaleidoscope of skills ensures that improvement initiatives to best business practices are implemented through improved

value chain processes and their associated guides and templates. A conduit to all improvement initiatives is the main aim of

the BSIM function.

Process and people capability maturity models (CMM)As part of the group’s value chain the CMM framework provides Business Connexion with the requirement to improve

towards a next level of process and people maturity.

Idea WorxHaving set innovation as one of its objectives the group has deployed the Idea Worx concept as the conduit for the

monitoring of all innovation initiatives, thereby enabling the reduction of duplication of effort, synchronicity of minds

and the stretching of paradigms. The focus is both internal (where the programme was incubated) and to a client facing

programme where the company intends to sharply increase the innovation of itself and for the benefit of the client.

South African Excellence Model (SAEM)The group has adopted SAEM as a management philosophy to measure actual improvement within the group. Self

assessment, on a continual basis, using the business excellence model enables Business Connexion to examine our business

practices using an internationally recognised framework. The Excellence Model can play a key role in the baseline phase of

strategic improvement.

ISO 9001Business Connexion is certificated to ISO 9001:2000 which is an international standard containing requirements for

establishing and maintaining a Quality Management System (QMS).

This standard forms the basis of the Business Connexion Quality Management System (QMS) upon which all other internal

standards adopted are aligned and adhered to. Furthermore, continual improvement is afforded by the built-in mechanism

of utilising Corrective Actions (CAR’s), Document Change Requests (DCR’s), internal audits, process reviews and assessments

ensuring the sustainability of the company.

“The group’s innovation programme reduces duplication, synchronises minds and stretches paradigms.



Information Technology Infrastructure Library (ITIL)The group’s decision to align itself with the ITIL methodology essentially aims to familiarise business management

with the underlying components and architecture design of the Information and Communications Technology

infrastructure necessary to support their business processes and gain an understanding of Service Management

standards and better practice. ITIL provides a cohesive set of best practices and sets the foundation for quality IT

Services Management.

Company secretaryThe company secretary is suitably qualified and experienced and plays an important role in ensuring that the

board procedures are followed correctly and reviewed regularly. He ensures that each member of the board is

made aware of and provided with guidance as to their duties, responsibilities and powers. The company secretary

is appropriately empowered by the board to fulfil these duties.

The company secretary is responsible for the duties stipulated in section 268G (d) of the Companies Act and has

signed the appropriate declaration as contained elsewhere in this report.

Sustainability reporting The group is aware of the Code’s requirements that an enterprise focuses on non-financial aspects of corporate

practice, which influence the company’s ability to survive, prosper and add value to the communities within which it

operates. Prior to the publication of King II, the group had already developed policies and practices relating to certain

non-financial issues that were considered important to the future wellbeing of Business Connexion and to the country

as a whole. These are:

A code of ethics

The group subscribes to a corporate ethos, which requires directors and employees to adopt the highest personal

ethical standards in their dealings with all stakeholders in the conduct of the group’s affairs. The principles to

which each individual subscribes include integrity, openness, accountability, impartiality and honesty.

Fraud and illegal acts

The organisation is specifically supportive of the requirement for ethical behaviour in modern corporate society. It

therefore actively pursues and prosecutes perpetrators of fraudulent or other illegal activities. To further enhance

governance in this area, the group has procured the services of “Tip-offs Anonymous”, which allows employees to

report any incident of wrongdoing such as workplace dishonesty, unethical behaviour, fraud, theft or any other


crime. The “Tip-offs Anonymous” service will be made available to a greater user base during the next financial year by

extending the access to all through a web enabled portal in the public domain. This will ensure that the focus includes not

only the internal environment, but also external activities.

Health and safety

The group has a well-developed occupational health and safety programme in place, in terms of which health and safety

risks are identified and monitored in accordance with the Occupational Health and Safety Act. The programme aims to:

• provide a safe and healthy working environment for all employees and clients

• motivate and educate all levels of management and employees to assume personal ownership of health and safety

issues

• ensure that sub-contractors enforce standards and procedures that comply with healthy and safe conduct.

Environment

As an Information Communication and Technology services company, the group’s impact on the environment is minimal. It

does however contribute positively to a cleaner environment and seeks new opportunities to preserve the environment.

Projects include internal paper and printer cartridge recycling; safe disposal of electronic components; non toxic waste sorting,

separating recyclable and non-recyclable waste and the safe disposal of toxic waste such as batteries and fluorescent tubes.

In addition, the group joined forces with Sasol, Sappi and De Beers to promote conservation, study and understanding

of wild birds and their habitats. Through “Conservation through Participation”, the Johannesburg region assisted with a

Lion conservation operation and the GIS competency supported the “Freeme Wildlife” organisation in an Owl project. The

company is also a member of WWF-South Africa, a conservation organisation focusing on long-term management of South

Africa’s natural resources.

Transformation and black economic empowerment

The final draft of a black economic empowerment (BEE) charter for the Information Communication and Technology (ICT)

sector is expected to be in operation by the end of 2005. The charter stresses that business should focus on specific indicators

and will include a scorecard against which the empowerment credentials of a company will be weighted and measured.

Business Connexion embarked on a six point approach to transformation over six years ago (figure 1) and significant amounts of

time, effort, resources, and funds were channelled into a range of empowerment and economic enablement initiatives.

“A significant amount of time, effort, resources and funds are channelled into a range of empowerment and economic enablement initiatives.”



Business Connexion has achieved meaningful progress with its transformation initiatives and Benjamin Mophatlane

is chairman of the transformation committee. Under his guidance the group will continue to implement its long term

transformation strategy.

Corporate Social Investment (CSI)

Business Connexion continues to support a host of initiatives that take technology to the previously disadvantaged masses

as ICT has been recognised as an essential vehicle for social change and economic development and is a critical tool for

developing countries such as South Africa.

The group commits a specific percentage of its turnover to social investment annually and the corporate social investment

strategy supports:

1. ICT education and training

2. ICT infrastructure development

3. HIV/AIDS and other social investment causes

1. ICT education and training projects included:

• Business Connexion is involved in three

twelve-month learnership programmes

that will not only contribute to the

transformation of its business, but

also unleash greater ICT skills into the

industry. The programmes, registered

with the Isett SETA, are Systems Support

Engineering, Systems Development and

Desktop Support. One hundred and twenty

learners are involved and at the end of

the programme they will graduate with a

National Certificate on the NQF level 5.

• The Tshwane University of Technology (TUT)

project.

Figure 1

CorporateSocial

Investment

EmploymentEquity

EnterpriseDevelopment

Training & Development

PreferentialProcurement

EquityOwnership


• The group remains committed to its co-sponsorship of the Information Technology Banking Learnership Programme

(ITBLP) which provides talented young people with free technical ICT training and employment is offered on successful

completion of the course.

• The partnership with the Technology and Human Resources in Industry Programme (THRIP) and Telkom in the “Centre

of Excellence” continues at Rhodes and Fort Hare University.

• The company sponsors bursaries for ICT studies at Johannesburg, Pretoria, Wits and Namibia universities, the

Polytechnic of Namibia and the Germiston Computer College.

2. ICT infrastructure development projects included:

• Participation in the establishment of two additional school computer centres that were implemented this year as part

of the McCarthy Schools Project in the Durban region.

• Computer centres at Wylie House in Kwazulu-Natal and at Ngwenyane Higher Primary School Computer training

centre in Mpumalanga.

• Donation of PC and networking infrastructures to the Machakela Community School, a rural school in Hammanskraal.

• Sponsorship of the BEE Courtwise project.

• As part of its commitment to growing the skills base in South Africa, Business Connexion made a substantial

financial contribution to Vega, the Brand Communications School. The donation was used to purchase equipment

(PCs, scanners, CD writers, cabling and books) and furniture for Knowledge Centres in Johannesburg, Cape Town and

Durban and an Imagination Lab Digital Centre in Johannesburg. The improved facilities are used mainly by previously

disadvantaged learners and provide access to library facilities and international research databases.

3. HIV/AIDS and other social investment causes included:

• Sponsorship of the KFM 94.5 Red Ribbon Radiothon in support of HIV/AIDS.

• The group pledged its continued support for McCarthy’s skills development drive by participating in an initiative to

improve quality of education and literacy in rural areas through the McCarthy Rally to Read project.

• Participation in the SmartXchange, an incubator for the development of small and emerging information and

communication BEE companies

• The group also supported several other projects including the Cansa Shavathon, the Sakhumzi Youth Centre,

the Machakela School Building Renovations and Local Government Development in Africa as well as assisting

underprivileged children in soccer.

• The Western Cape Regional Office supports the Business Opportunities Network (BON), a section 21 company

dedicated to helping black owned small businesses. BON offers tender advice and business development services to

more than 2 000 companies in the Western Cape.

• The group sponsored the opening ceremony lunch at the United Cities and Local Governments of Africa (UCLGA)

founding congress. UCLGA aims to assist local governments in Africa to speak with one voice.

“ICT has been recognised as an essential vehicle for social change and economic development.”



Preferential procurement

Business Connexion recognises that if transformation and black economic empowerment in South Africa are to be successful,

large businesses must actively support the development of smaller enterprises. If successfully implemented preferential

procurement will drive the redistribution of incomes, skills development and transfer as well as job creation. Business

Connexion commits to spend a minimum of 40% of local discretionary procurement with black-owned enterprises in each

financial year and presently this expenditure is in excess of 44%.

Enterprise development

The company actively seeks to identify and make sub-contracting opportunities available for black-owned ICT enterprises on

a project-by-project basis. This supports the objectives of: increasing the number of previously disadvantaged people who

directly own and control ICT enterprises, substantially increasing participation by black entrepreneurs in the sector, creating

a supportive environment that ensures the development of a sustainable black entrepreneurial base and promoting better

co-operation between small enterprises and the private sector.

Employment equity

Diversity creates strength. This is part of the Business Connexion philosophy. Representation at all levels within the

organisation irrespective of race, colour, gender, religious affiliation, class or creed is critical to the future success of the

organisation and will in fact drive business growth.

The group has embraced diversity at all levels from senior management, through to technical employees and administrative

staff. It will continue to focus on creating equal opportunity in recruitment, training, promotion, development and

advancement of all employees with the intention of bolstering its current company-wide black ratio. The group’s five-year

plan is to achieve a 35% historically disadvantaged individual (HDI) ratio by 2006. The current ratio is 32%.

Business Connexion submitted its employment equity (EE) reports to the Department of Labour, as required by the EE Act.


Employee demographics in the group

May 2005 May 2004

Total % Total %

Total workforce 4 639 100 4 048 100

Employees outside South Africa 210 5 151 4

Employees in South Africa 4 429 95 3 897 96

Employee profile (South Africa)Race and gender profileNon-designated group 2 068 47 1 928 49

White females 951 21 928 24

Black males 885 20 647 17

Black females 525 12 394 10

Occupational level profileManagement 456 10 395 9

Non-management 3 973 90 3 502 90

Management profile by genderFemale 91 20 66 17

Male 365 80 329 83

Management profile by raceWhites 396 87 358 91

Designated groups 60 13 37 9

Non-management profile by genderFemale 1 385 35 1 256 36

Male 2 588 65 2 246 64

Non-management profile by raceAfrican 704 18 501 14

Indian 233 6 312 9

Coloured 413 10 191 5

White 2 623 66 2 515 72

Disability profileEmployees with disabilities in management 0 0

Employees with disabilities in non-management 10 6

Employees with disabilities by genderFemale 2 1

Male 8 5

“Diversity creates strength.”



Workforce movement in South Africa

2004 – 2005 2003 – 2004

Total employees before reporting cycle – May 2004 3 897 3 917Less: Resignations (484) (427)

Deaths/Disabilities (14) (17)

Dismissals/Retrenchments (82) (87)

Retirement/Pension (12) (14)

Contract end/Section 197 (359) (443)

Plus: Engagements 1 483 968

Total employees as on reporting cycle – May 2005 4 429 3 897

Employment Equity (EE) performance monitoring and evaluation:

Management performance

Business Connexion is pleased to report that its senior line managers continue to be measured on the achievement of their

individual regional and business unit EE targets in support of the group’s target. Each business unit manager has entered

into a personal performance agreement which measures their achievement against their employment equity goal.

Recruitment performance

Business Connexion has a preferred recruitment partner who is measured monthly on the ability to exceed the group’s

EE targets. For the period June 2004 to May 2005, 71% of the total number of employees that were recruited via the

recruitment partner, were HDI placements.

Employees

The group continues to be an Investor in People and a preferred employer in the Information, Communication and Technology

industry with an ongoing focus on investment in its people. Several programmes in the organisation attest to this commitment.

Training and development

Business Connexion’s training and development programme complies with the Skills Development Act. A divisional manager is

dedicated to ensuring the co-ordination and development of programmes that meet the needs of the entire organisation. During

the review period, Business Connexion continued with its Management Development Programme and Foundation Management

Programme to advance the skills of promising managers. Of the participants 32% are previously disadvantaged individuals.


HIV/AIDS in the workplace

The high prevalence of HIV/AIDS in South Africa has made it critical for every organisation to develop an effective and

sustainable response to the pandemic. Business Connexion has in place a definitive policy on HIV/AIDS which provides clear

direction on managing issues relating to HIV/AIDS.

Employee share incentive scheme

The organisation operates an employee share option scheme which allows employees to participate in share ownership.

Refer Annexure C for further details.

Employee workplace forums

Business Connexion has an established Employee Communication Forum (ECF) that is representative of all employees. It

holds monthly meetings and the general functions of the forum include:

• promoting the interests of all employees in the workplace;

• maximising efficiency in the workplace by advising management on the feelings and sentiments of employees, to

exchange information and discuss business-related issues, thereby also enhancing the quality of management decisions;

and

• reaching consensus on certain issues and participating in joint decision-making matters, in accordance with the

company’s business practices.

Stakeholder relations

Employee relations

Business Connexion is acutely aware that its expertise is reflected by its people. To this end, the company has a well-

established policy of investing in the education and development of its employees. A comprehensive, structured

internal communication programme, supported by an Employee Communication Forum, ensures open and transparent

communication with employees at all times.

The group believes that this commitment has helped to ensure that the company retains its “Investor in People” accreditation.

The group’s competitive advantage is derived largely from the exceptional quality of its people, and great emphasis is placed

on maintaining an internal environment where employees can prosper. The results of a 2005 climate study revealed that the

organisation demonstrated exceptional teamwork supported by outstanding leadership. In addition, employees were found

to be clearly supportive of the company mission and values.

“The group continues to be an investor in people and a preferred employer in the ICT industry.”


Investors In People (IiP)

Recognising “people” as the greatest asset of a company, the group regards “Investors in People” not only as a slogan but as

an effective business tool for harnessing the full potential of all employees by motivating and deploying them throughout

the company. Aligned with an effective human resource policy, employees are managed and developed to achieve their full

potential thereby effectively enhancing customer centricity and sustainability of the group.

Investor relations

The group ensures that it has meaningful and constructive dialogue with investors. Shareholders are invited to attend the

annual general meeting and any special general meetings that may be held. The group takes careful cognisance of the

regulatory and statutory obligations regarding the dissemination of information.

The investor relations team comprises Peter Watt (Chief Executive Officer), Alan Farthing (Group Financial Director) and Diana de

Sousa (Group Executive: Marketing and Communication). The team is pro-actively involved in communicating with the investor

community through financial results presentations, one-on-one meetings and road shows in South Africa.

The group’s website, www.bcx.co.za is a valuable source of information for investor relations purposes and an electronic

version of this annual report is published in the investor relations section.

Clients

Clients are firmly positioned at the centre of the Business Connexion world. The group’s unique “Solutions Integration

Model” model represents the way in which the integration of business solutions is configured. It ensures a client-centric

approach that facilitates the flexibility and close client relationships of a small and mobile organisation as well as the

strength, resilience, and diversity of a large organisation. The group strives to integrate the strategic value of ICT into clients’

business strategies.

Business solutions are developed and implemented by drawing on expertise from the group competencies and solutions are

designed to meet clients’ strategic and operational business needs.

Client satisfaction research is periodically undertaken to ensure that the group continues to improve its client service and

satisfaction levels. Following the successful merger of Comparex Africa and Business Connexion research findings indicated

that there was a strong baseline performance level from which the merger will allow significant opportunity and growth

potential.



The company was clearly rated as having a significant advantage over the competition with a significantly strong performance

in providing effective and flexible support services. These factors, when supported with the highly-rated responsiveness and

accessibility of senior management, contributed to the perceptions of the organisation as excelling. In addition, 80% of the

respondents closely associated the organisation with being client centric.

Partnerships and alliances

In order to deliver a world class service Business Connexion nurtures strong relationships with many of the world’s leading

ICT companies including Actuate, Avaya, Cisco Systems, Citrix, Cognos, DataStage, DynamiQue, EAS, Egenera, EMC2, GEAC,

HP, IBM, Infosys, Microsoft SA, Nortel Networks, OpenText, Sage, SAP, SAS, Stratus Technologies, Sun Microsystems and

TTI-Telecom.

Business Connexion has attained top-level certification and received awards from many of these partners.

Partner relationships are nurtured in an environment of long-term mutual gain and shared fundamental business objectives.

Through these partnerships, Business Connexion draws on best-of-breed industry strengths to offer clients unsurpassed

solutions.

One of the group’s differentiators is its ability to harness its own, and its alliance partners’ expertise, tools, resources and

vertical sector knowledge to deliver superior client solutions allowing it to “create value together”.

“The group strives to integrate the strategic value of ICT into clients’ business strategies.”


Value added statementFor the year ended 31 May 2005

2005 2004

Notes R000 % R000 %

Revenue 2 816 132 2 811 771

Cost of services and products 1 175 977 1 402 881

Value added 1 640 155 87 1 408 890 95

Investment income 70 267 4 45 023 3

Exceptional and operational exceptional

gains and losses 162 303 9 32 482 2

Total wealth created 1 872 725 100 1 486 395 100

Distributed as follows:

Employees

– Employee costs 1 1 269 005 68 1 188 068 80

Providers of capital

– Interest paid 52 275 3 42 732 3

Governments 2 213 521 11 40 434 3

Retained in the group for future growth

– Depreciation and amortisation 68 410 4 65 814 4

– Profit attributable to shareholders 290 628 15 120 448 8

– Trademark tax benefit reserve (94 132) (5) 30 856 2

– Foreign currency translation reserve (703) — (2 776) —

– Deferred tax movement 73 721 4 819 —

Total wealth distributed 1 872 725 100 1 486 395 100

Value added ratios

Average number of employees for the year 4 331 3 949

Revenue per employee (R000) 650 712

Wealth created per employee (R000) 432 376

Wealth created per employee before

exceptional and operational exceptional

gains and losses (R000) 395 368


2005 2004

R000 R000

Notes

1. Employee costs

Paid to employees 1 168 757 1 090 351

Contributions paid on behalf of employees 100 248 97 717

1 269 005 1 188 068

2. Governments

Tax 196 996 14 581

Regional service levies and skills development levies 2 950 12 263

Rates and taxes paid to local authorities 4 203 4 278

Customs duties, import surcharges and excise taxes 9 372 9 312

213 521 40 434

South African government 211 113 36 853

Other governments 2 408 3 581

213 521 40 434

3. Additional amounts collected on behalf of governments

Value added tax 201 747 159 549

Employee tax deducted from remuneration paid 273 982 265 295

475 729 424 844

South African government 452 609 395 515

Other governments 23 120 29 329

475 729 424 844

Administration

Postal addressPrivate Bag X48Halfway House1685

AuditorsDeloitte & ToucheDeloitte PlaceThe WoodlandsWoodmeadSandton 2196Private Bag X6Gallo Manor 2052

Principal bankersABSA Bank LimitedFirst National Bank of South Africa LimitedNedcor Bank LimitedThe Standard Bank of South Africa Limited

SponsorRand Merchant BankA division of Firstrand Bank Limited1 Merchant PlaceCnr Fredman Drive and Rivonia RoadSandton2196

Corporate information

Name of companyBusiness Connexion Group LimitedIncorporated in the Republic of South AfricaRegistration number: 1988/005282/06

SecretaryBusiness Connexion Management Services (Pty) LimitedRegistration number: 1994/003844/07

Registered officeBusiness Connexion Park North789 Sixteenth RoadRandjesparkMidrand1685

Internet addresshttp://www.bcx.co.za

Transfer office and transfer secretariesUltra Registrars (Pty) Limited11 Diagonal StreetJohannesburg2001


annual financial statements

Company Profile

68 - Directors’ approval

68 - Certificate by company secretary

69 - Report of the independent auditors

70 - Directors’ report

74 - Accounting policies

80 - Balance sheets

81 - Income statements

82 - Statement of changes in equity

83 - Cash flow statements

84 - Notes to the cash flow statements

87 - Notes to the annual financial statements

113 - Annexure A: Principal subsidiaries

113 - Annexure B: Principal associates

114 - Annexure C: Details of share incentive scheme options

117 - Annexure D: Details of directors’ emoluments

118 - Annexure E: Details of directors’ share options

119 - Directors’ summary curriculum vitae

120 - Shareholders’ analysis

121 - Shareholders’ diary


The directors of the company are responsible for the integrity and objectivity of the financial statements and other information contained in this

report. The financial statements have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice and

in the manner required by the Companies Act, 1973 and are based on appropriate accounting policies consistently applied except for the adoption

of AC 128, AC 129 as revised, AC 140 and AC 501 during the current financial year. The group maintains suitable internal control systems to

provide reasonable assurance that assets are safeguarded and transactions are executed and recorded in accordance with group policies. Nothing

has come to the attention of the directors to indicate that any material breakdown 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 in operation in the foreseeable future and the annual financial statements

appearing on pages 70 to 116, have therefore been prepared on the going concern basis.

These financial statements were approved by the Board of Directors on 7 November 2005 and are signed on its behalf by:

R S Berkowitz P A Watt A C Farthing

Chairman Chief Executive Officer Financial Director

Certificate by company secretary

I hereby certify that, in accordance with section 268G(d) of the Companies Act, 1973, as amended, the company has lodged with the Registrar of

Companies, 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.

L C Marran

For and on behalf of

Business Connexion Management Services (Pty) Limited

7 November 2005

Directors’ approval


Report of the independent auditors

To the members of Business Connexion Group LimitedWe have audited the annual financial statements and group annual financial statements of Business Connexion Group Limited set out on

pages 70 to 116 for the year ended 31 May 2005. These financial statements are the responsibility of the company’s directors. Our responsibility

is to express an opinion on these financial statements based on our audit.

ScopeWe conducted our audit in accordance with statements of South African Auditing Standards. Those standards require that we plan and perform

the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes:

• examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,

• assessing the accounting principles used and significant estimates made by management, and

• evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

Audit opinionIn our opinion, the financial statements fairly present, in all material respects, the financial position of the company and the group at 31 May 2005

and the results of their operations and cash flows for the year then ended in accordance with South African Statements of Generally Accepted

Accounting Practice, and in the manner required by the Companies Act in South Africa.

Deloitte & Touche

Chartered Accountants (SA)

Registered Accountants and Auditors

Sandton

7 November 2005


The board of directors hereby presents its report on the company and the group for the year ended 31 May 2005.

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

The principal activity of the group is that of an integrator of business solutions.

Corporate activityCorporate activity in the group during the past year consisted mainly of the selling off of the group’s non-core investments in certain of its

associate companies.

During November 2004 the group disposed of its 37,17% interest in Mosaic Software Holdings Limited to S1 Corporation, a company listed on the

Nasdaq stock market. The disposal realised a profit of R95,0 million.

In February 2005, the group also disposed of its 39,13% interest in Digital Healthcare Solutions (Pty) Limited to Bytes Technology Group South

Africa (Pty) Limited for R45,0 million realising a profit on disposal of R34,4 million.

The sale of the group’s 25% interest in Perago Financial System Enablers (Pty) Limited to management during May 2005 for R11,7 million realised

a profit of R7,7 million.

Business Connexion (Pty) Limited purchased certain assets and liabilities and African subsidiaries of Intrinsic Technology (Pty) Limited effective

from 1 December 2004 for R4,0 million. The acquisition increases the group’s direct presence in the rest of Africa and supplements the number of

experienced professionals that represent Business Connexion (Pty) Limited in Africa. Intrinsic has an established infrastructure in Angola, Tanzania

and Zambia.

Operating resultsThe group’s revenue remained static for the year under review. Lower revenues were achieved due to fewer contracts being awarded to the group in

Africa. This was offset by revenue growth in the local market, especially in the Services and Business Applications environments. This was achieved

mainly because of the inclusion of Business Connexion Solutions’ revenue following the merger in January 2004 and new business won at two

clients in the mining and resources sector.

Gross margin as a percentage increased from 29,1% to 31,5% as these environments traditionally have a higher margin than the Technology

Infrastructure business.

Operating expenses increased by 10,4% as a consequence of acquisitions during the past two years and continued strengthening of corporate

governance within the group.

Investment income increased in the current year as a result of higher average cash balances and dividends received from unlisted investments.

Interest paid includes an amount of R16,2 million paid to the South African Revenue Services (“SARS”) on the trademark settlement resulting in

a higher interest charge in the current year.

Directors’ report31 May 2005


Exceptional gains resulted mainly from the sale of the group’s investment in Mosaic Software Holdings Limited, Digital Healthcare Solutions (Pty) Limited

and Perago Financial System Enablers (Pty) Limited which amounted to R137,1 million. This was partially offset by the impairment of goodwill

arising on the acquisition of SIFA Systems Limited and the business of Intrinsic Technology (Pty) Limited of R7,9 million. The repayment of capital on

the loans owing by Intenda (Pty) Limited and the agreement by Newshelf to repay the amount owing by them as a result of the sale of Perago Financial

Systems Enablers (Pty) Limited led to a reversal of previous impairments of R7,7 million. A fair value gain of R10,0 million for Corp Invest 40 Limited

is also included in exceptional gains.

Settlement of dispute with SARSIn March 2005 Business Connexion (Pty) Limited reached an agreement with the SARS on the value of the Persetel and Q Data trademarks claimed

as a deduction from its taxable income for the financial years 1995 to 2004. An amount of R159,1 million was paid to SARS in full and final

settlement of the tax liabilities relating to the trademark deductions up to 31 May 2004. No tax liability was provided for in previous years because

management, supported by legal opinion, believed that the deductions were appropriate.

The settlement resulted in an under-provision for current tax in Business Connexion (Pty) Limited of R142,9 million.

A deferred tax asset of R36,5 million was raised for the future tax deductions on these trademarks directly against distributable reserves in

accordance with AC 102, Income Taxes, as the trademarks were set-off against share premium in previous years. R12,2 million of this asset was

utilised in the current year and charged to the income statement.

Following the settlement a deferred tax asset of R45,0 million was raised in Business Connexion (Pty) Limited as the uncertainty regarding future

taxable profits has been eliminated.

Share capitalAuthorised share capital

The 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 capital

The 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

premium amounted to R4,6 billion. This has remained unchanged at year end.

DividendsSubsequent to year end, the board declared an ordinary dividend of 20 cents and a special dividend of 17 cents per share. No dividend was declared

in the prior year.

Subsidiaries and associatesAnnexure A and B to this report set out the principal subsidiaries and associates that the directors consider appropriate for the shareholders to

gain a proper appreciation of the group’s affairs. A full list of the companies forming the group will be made available to shareholders on written

request to the company secretary.

The attributable interest of the group’s profits and losses of the subsidiaries, joint venture and associates for the year ended 31 May 2005 is as follows:

2005 2004

R000 R000

Subsidiaries and joint venture profits 197 953 281 845

Subsidiaries and joint venture losses (211 524) (4 394)

Associates 10 452 5 411


Directors’ report31 May 2005 (continued)

AcquisitionsDuring the year, the company acquired the following subsidiaries and businesses:

Effective Percentage CostName Method date holding R000

Business of Intrinsic Technology (Pty) Limited ~ Purchase 1 December 2004 1 496 Sifa Systems Limited * Purchase 1 December 2004 100% 2 504~ The assets and liabilities were purchased from this entity and

incorporated into Business Connexion (Pty) Limited. * Sifa Systems Limited is situated and incorporated in Mauritius.

Consolidated profit for six months has been included in the results.

As a result of this purchase the following indirect holdings in Africa were purchased:

PercentageName holding Location

SubsidiariesBusiness Connexion (Tanzania) Limited 83,5% TanzaniaMulti Vendor Services Limited 85,0% ZambiaAssociatesIntrinsic Technology (Angola) # % AngolaJEDI Development Limited # % Tanzania# Sifa Systems Limited has a proxy with an option to acquire

50% plus one share in Intrinsic Technology (Angola) and

49% in JEDI Development Limited.

The book value of the assets and liabilities acquired in the above acquisitions together with the fair value thereof were:

Sifa Systems Limited

Business of Intrinsic Technology

(Pty) Limited Book value Book value

prior to prior toFair value acquisition Fair value acquisition

R’000 R’000 R’000 R’000Non-current assetsProperty, furniture and fittings, equipment and vehicles 847 769 793 793Capitalised leased assets 435 435Other intangible assets 876 290Goodwill 285Current assetsInventories 3 633 3 037 594 594Trade and other accounts receivable * 6 445 6 592 17 510 17 510Bank balances and cash 1 341 1 341Non-current liabilitiesLong-term liabilities (459) (459)Deferred tax liabilities (429)Current liabilitiesTrade and other accounts payable * (13 900) (13 900) (21 503) (21 503)Tax (133) (133)Embedded derivative liabilities (151)Bank overdrafts (73) (73)Net liabilities acquired (1 471) (2 009) (2 413) (2 703)Goodwill 3 975 3 909Cost 2 504 1 496

* Included in these amounts is an inter-company balance of R11,654.


The investment was purchased to enhance Business Connexion’s growth into the rest of Africa. Based on the estimated future cash flows related

to the businesses acquired, the goodwill of R7,9 million has been fully impaired in the current year. These entities will receive the required focus

to enable Business Connexion to realise the envisaged benefits from the investment.

Directorate and secretaryThe names of the directors and secretary in office at the date of this report are set out on pages 9 to 12.

The company secretary remains Business Connexion Management Services (Pty) Limited represented by L C Marran.

Interests of the directorsOn 31 May 2005, the directors beneficially held in aggregate 32 500 ordinary shares in Business Connexion Group Limited (2004: 25 000). The directors

have an interest in 2 637 333 options (2004: 2 746 000) relating to Business Connexion Group Limited shares. For details refer to Annexure E.

Mr L B Mophatlane has a significant interest in Gadlex (Pty) Limited, which in turn holds 25,01% of Business Connexion (Pty) Limited.

Messrs R S Berkowitz, J F Buchanan and D M Nurek are trustees of the staff share purchase trust but have no beneficial interests in the trust.

Details of the trust are set out 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

above beneficial and non-beneficial interests between 31 May 2005 and the date of this report.

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

the company. Currently there are options outstanding in one of the trusts.

The trustees of the operational trust are Messrs R S Berkowitz, J F Buchanan, R S Hislop and D M Nurek who were appointed trustees of this trust

effective from 21 August 2003. The total number of shares available to these schemes is limited to 15% of the issued share capital of Business Connexion

Group Limited. The trusts are entitled to acquire shares, which they require to meet their commitments, either by purchasing those shares on the open

market or by subscribing for new shares. At 31 May 2005, the trust held 13 145 303 shares (2004: 19 826 542) in order to fufill 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 the issued share capital of the company.

Post balance sheet eventsAfter the financial year end Real Africa Holdings Limited announced that an agreement had been reached with all the outside shareholders of

Persetel Q Data Africa Holdings Limited (“PQAH”) and their financiers in terms of which the dispute relating to PQAH has been resolved. Following

this agreement the group’s investment in Corp Invest 40 Limited was realised and the group received a cash distribution of R22,2 million and

a distribution of 3,2 million Business Connexion Group Limited shares and 1,6 million Dimension Data Holdings plc shares. These shares were

purchased by the share purchase trust from Business Connexion Technology Holdings (Pty) Limited.

The group acquired the business of Bidvest Network Solutions (Pty) Limited (Bidnet). The acquisition will allow the group to provide worldclass

end-to-end ICT solutions that combines Bidnet’s deep expertise in Value Added Network service provision (VANS) and Internet Service Provision

(ISP) with Business Connexion’s experience in outsourcing, professional services, technology infrastructure and business applications.

The group has issued a guarantee up to a maximum amount of R67 million to the funders of a transaction whereby Gadlex Holdings (Pty) Limited acquired

the remaining 32,09% of Gadlex (Pty) Limited from the minority shareholders in Gadlex (Pty) Limited. The guarantee expires on 15 January 2007.


The principal accounting policies of the group and the company are set out below. These accounting policies are consistent with those applied in the previous year except for the adoption of the South African Statements of Generally Accepted Accounting Practice AC 140, AC 128, AC 129 as revised, Business Combinations, and AC 501, Accounting for Secondary Tax on Companies (“STC”). The adoption of these standards has resulted in changes to the group’s accounting policies and modifications to the presentation of the financial statements. Details of these changes are set out in note 34.

1. Basis of preparation The financial statements are prepared on the historical cost basis of accounting as modified by the fair valuation of certain financial

instruments and assets and liabilities acquired in a business combination in terms of AC 140. The financial statements are prepared using the accounting policies set out below and are in accordance with the applicable South African Statements of Generally Accepted Accounting Practice.

2. Basis of consolidation Entities in which the group, directly or indirectly, has the power to exercise control over the operations are considered to be subsidiaries.

Control is achieved where an entity in the group has the power to govern the financial and operating policies of another entity to obtain the benefits of its activities.

The investment in subsidiaries in the holding company’s 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 and contingent liabilities of a subsidiary are measured at fair value at the date of acquisition.

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 is less 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 subsidiaries disposed of are included up to the effective date of disposal.

All significant inter-company transactions and balances are eliminated. Where necessary, accounting policies of subsidiary companies are amended to 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 minority shareholders proportion of losses is limited to the minority interest. Minority interests are separately disclosed.

Goodwill is reviewed for impairment in terms of the policy for intangible assets.

3. Business combinations involving entities under common control A business combination involving entities or businesses under common control is a business combination in which the same parties ultimately

control 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 at the carrying amount at the date of the combination. The excess (deficiency) of the cost of such combination over the carrying amount of the net assets (liabilities) is recognised in the income statement at the effective date of the combination.

4. Property, furniture and fittings, equipment and vehicles Property, furniture and fittings, equipment and vehicles not acquired in a business combination are stated at cost to the group less accumulated

depreciation and accumulated impairment costs. Depreciation is calculated on cost over the estimated useful lives of the assets on the straight-line basis. Minor assets under R2 000 are written off to the income statement immediately.

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

Computer equipment purchased for specific projects is depreciated over the shorter of the contract or useful life.

Accounting policies31 May 2005


The depreciation periods applicable are as follows: Buildings 50 years Furniture and fittings 6 years Equipment 3 to 6 years Vehicles 4 to 5 years

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 the date of sale and are taken into account in operating profit.

5. Leased assets Where the group is a lessee, leases of property, equipment and vehicles where the group assumes substantially all the benefits and risks of

ownership are classified as finance leases. Finance leases are capitalised using the fair value of the leased assets or if lower, the net present value of the future minimum lease payments. The lease payments are allocated between the liability and finance charges to achieve a constant rate of return on the balance outstanding. The outstanding lease obligation, net of finance charges and the following year’s liability, is included as a non-current long-term interest bearing liability. Lease finance costs are charged against income as they become due.

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

The depreciation periods used are the same as per the policy for property, furniture and fittings, equipment and vehicles.

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

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

Where the group is the lessor, the rental income from the operating leases is recognised as income on a straight-line basis over the term of the relevant 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 for greater than one year, the receivable is treated as long-term with the current portion reflected in trade receivables.

6. Intangible assets Goodwill Goodwill represents the excess of the cost of acquisition over the group’s interest in the fair value of the identifiable assets, liabilities and

contingent liabilities of a subsidiary, associate or joint venture at date of acquisition. Goodwill on acquisition of associates is included in the investment 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 where there is an indication of impairment. Any impairment is recognised immediately in profit and loss and is not subsequently reversed. Goodwill is allocated to cash-generating units for the purpose of impairment testing.

On disposal of a subsidiary, associate or joint venture, the attributable amount of goodwill is included in determining the profit and loss on disposal.

Any difference which arises because the cost of acquisition is less than the fair value of the identifiable net assets acquired and relates to acquisitions before financial years commencing after 31 March 2004 has been adjusted against opening distributable reserves in terms of AC 140.


Other intangible assets Expenditure on acquired patents, trademarks and licences is capitalised and amortised over their expected lives using the straight-line

method and disclosed as part of depreciation as per the income statement. The expected life never exceeds 20 years.

7. Investments Investments are initially measured at cost, including transaction costs.

At subsequent reporting dates, debt securities that the group has the expressed intention and ability to hold to maturity are measured at amortised cost, less any impairment loss recognised to reflect irrecoverable amounts. The annual amortisation of any discount or premium on the acquisition of a held-to-maturity security is aggregated with other investment income receivable over the term of the instrument so that the revenue recognised in each period represents a constant yield on the investment.

Listed investments are valued at market rates at the balance sheet date.

Investments other than held-to-maturity instruments are classified as either held-for-trading or available-for-sale and are measured at subsequent reporting dates at fair value. Gains and losses on held for trading and available-for-sale investments arising from changes in fair value are included in the net profit or loss for the period.

8. Joint ventures Joint ventures are those entities where there is a contractual agreement, in terms of which the group and one or more other venturers

undertake an economic activity subject to joint control.

Joint ventures are accounted for by means of the proportionate consolidation method. The share attributable to the group of assets, liabilities, income and expenses of the joint venture are incorporated in the financial statements by line item. Inter-group transactions are eliminated to the extent of the group’s interest in the joint venture.

Goodwill is reviewed for impairment in terms of the policy for intangible assets.

9. Associates Associates are entities in which the group exercises a significant influence through participation in the financial and operating policy

decisions of the entity, 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 reviewed for impairment in terms of the policy for intangible assets.

Losses of the associates in excess of the group’s equity interest 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.

10. Accounting for foreign entities The balance sheets of consolidated foreign subsidiaries are translated into South African rand at the rates of exchange ruling at 31 May.

The income statements are translated at the weighted average rates of exchange for the year. Gains and losses on the translation of foreign subsidiaries are taken directly to reserves. On disposal of foreign subsidiaries such translation differences are recognised as part of the gain or loss on the sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the holding entity and are translated at the historic rate.

11. Foreign currency transactions Monetary assets and liabilities denominated in foreign currencies are translated into South African rand at rates of exchange ruling at

31 May. Transactions in foreign currency are accounted for at the rate of exchange ruling on the date of the transaction. Gains or losses on foreign currency transactions are included in the income statement.

Accounting policies31 May 2005 (continued)


12. Financial instruments Financial 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 policy statement associated with the item.

Disclosure of the financial instruments that the group is party to is provided in note 42 to the financial statements.

Derivative financial instruments The group uses derivative financial instruments (primarily foreign currency forward exchange contracts) to manage its risks associated

with foreign currency fluctuations. Such derivatives are initially recorded at cost, if any, and are re-measured to fair value at subsequent reporting dates with changes 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 and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value with unrealised gains or losses reported in the income statement.

Borrowings Interest bearing loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums

payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis to the income statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

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

13. Deferred tax Deferred tax is provided using the balance sheet liability method.

Deferred tax assets and liabilities are recognised for all taxable temporary differences. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in business combinations) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax assets are recognised for all deductible temporary differences where there is reasonable certainty as to deductibility and to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can 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 on company credits can be utilised.

Deferred tax liabilities are recognised for taxable temporary differences arising from investments in subsidiaries, associates and joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

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

Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the 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 settle its current tax assets and liabilities on a net basis.


Accounting policies31 May 2005 (continued)

14. Inventories Inventories are stated at the lower of cost and estimated net realisable value.

• 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. • The basis for determining net realisable value is the selling price in the ordinary course of business less selling costs. • Slow-moving inventory in excess of requirements or obsolete inventory is fully provided for when identified. • Parts inventory used in respect of maintenance contracts is written off over the useful lives of the inventory concerned.

15. Trade accounts receivable Trade accounts receivable are carried at anticipated realisable value on the amortised cost basis. An estimate is made of the realisable value

at the year end after a review of all outstanding amounts. Bad debts are written off during the year in which they are identified.

16. Retirement obligations The group operates a number of defined contribution retirement schemes in the territories in which it operates. The assets of these schemes

are generally held in separate trustee administered funds. The schemes are generally funded by payments from employees and the relevant group entities, taking into account the recommendations of independent actuaries. The group’s contributions to these schemes are charged to the income statement when due.

17. Post retirement healthcare obligations For post retirement healthcare obligations, the cost of providing benefits is determined using the projected unit credit method. All costs in

respect of past service are recognised in the income statement, as are any adjustments required in terms of the actuarial valuations.

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

18. Other accounts payable A 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 the obligation. The group accrues for employee entitlements to annual leave and long service awards. Audit fees are accrued for based on an estimate of the costs in relation to the year to which the work relates. Other accounts payable are stated at nominal value.

19. Provisions A provision is recognised when there is a present obligation for a past event for which it is probable that an outflow of economic benefits will

be required to settle the obligation and a reliable estimate of the amount can be made.

20. Revenue recognition Revenue comprises net invoiced sales which excludes value added tax. Revenue is recognised as follows: • Products – upon delivery of products and, where necessary, customer acceptance; • Installation – upon customer acceptance; • Services – upon performance; • Licence income and maintenance contracts – over the period of the contracts; • Rental income – on a straight line basis over the term of the relevant lease; 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

and costs are recognised by reference to the stage of completion of the contract activity at the reporting date as measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract cost. Variations in contract work are included to 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 that probably will be recovered. Contract costs are recognised as expenses in the period that they are incurred.


21. Other income recognition Other income not included in revenue is recognised as follows: • Interest income – as it accrues, taking the effective yield into account; and • Dividend income – when the shareholder’s right to receipt is established.

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

23. Tax The income 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 because it 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.

24. Research and development costs Research and development costs are written off to operating profit, except for costs incurred on development projects which are recognised

as intangible 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 recognised as capital improvements and added to the original cost of the software and the useful life is reassessed. Computer software development costs recognised as assets are depreciated using the straight-line method over their useful lives, not exceeding three years.

Research and development costs incurred in terms of a contract from a customer are treated as work-in-progress up to the agreed contract value.

25. 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 may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Where it is not possible to estimate the recoverable amount for an individual asset, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If the recoverable amount of an asset or cash-generating unit is estimated to be less than the carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. The impairment losses are recognised as an expense immediately.

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

26. Exceptional items Items of income and expense, which are of such a size, nature or incidence that their separate disclosure is relevant to explain the performance

of the group for the period under review, are treated as exceptional.

Depending on their nature, exceptional items are included or excluded from operating profit.

27. Dividends Dividends to equity holders are included in the statement of changes in equity in the year in which they are declared. Tax costs incurred on

dividends are dealt with in the income statement in the year in which the related dividend is declared.


Balance sheetsas at 31 May 2005

COMPANY GROUP

2004R000

2005R000 Notes

2005R000

2004R000

ASSETSNon-current assetsProperty, furniture and fittings, equipment andvehicles 1 145 707 134 726Capitalised leased assets 2 173 135 181 877Rental assets 3 111Goodwill 4 103 987 103 987Other intangible assets 5 674

2 050 668 2 040 495 Investment in subsidiaries 7Investment in associates 8 20 28 811

133 002 133 002 Other long-term investments 9 177 978 167 988Long-term loans and advances 10 10 062 17 168Deferred tax assets 11 75 315 1 264

2 183 670 2 173 497 686 878 635 932Current assetsInventories 12 52 591 42 708Trade accounts receivable 13 534 567 438 644

4 580 11 737 Other accounts receivable 14 122 943 77 607Derivative and embedded derivative assets 15 60 921 25 846Prepayments 49 424 59 769Tax prepaid 4 299 4 416

299 298 Bank balances and cash 776 281 782 3944 879 12 035 1 601 026 1 431 384

2 188 549 2 185 532 TOTAL ASSETS 2 287 904 2 067 316

EQUITY AND LIABILITIESCapital and reserves

1 550 1 550 Share capital 16 1 438 1 5384 595 728 4 595 728 Share premium 320 444 249 080

Trademark tax benefit reserve 94 132Foreign currency translation reserve (880) (177)

(2 411 726) (2 411 767) Distributable reserves 809 528 571 8792 185 552 2 185 511 Shareholders’ equity 1 130 530 916 452

Minority interests 17 40 421 49 402Non-current interest bearing liabilitiesLong-term liabilities 18 209 642 226 654Non-current interest free liabilitiesLong-term liabilities 19 150 752 124 517Post retirement obligations 20 8 307 6 229Deferred tax liabilities 11 699 369

369 400 357 769Current liabilitiesShort-term borrowings 21 27 113 67 189Trade accounts payable 210 396 181 557

20 Other accounts payable 449 975 419 291Provisions 22 15 596 38 644Embedded derivative liabilities 23 26 920 26 102

2 997 1 Tax 17 546 10 910Bank overdrafts 7

2 997 21 747 553 743 6932 188 549 2 185 532 TOTAL EQUITY AND LIABILITIES 2 287 904 2 067 316


Income statementsfor the year ended 31 May 2005

COMPANY GROUP

2004R000

2005R000 Notes

2005R000

2004R000

Revenue 24 2 816 132 2 811 771

Cost of sales 1 928 378 1 992 196

Gross profit 887 754 819 575

2 311 Operating expenses 660 652 598 326

Foreign exchange and derivative gains/(losses) 25 6 321 (24 810)

Operational exceptional gains/(losses) 26 15 426 (4 930)

(2 311) Operating profit/(loss) before depreciation and amortisation 248 849 191 509

Depreciation and amortisation 68 410 65 814

(2 311) Operating profit/(loss) 27 180 439 125 695

14 570 28 509 Investment income 28 70 267 45 023

Share of associates’ profits 8 10 452 8 142

14 570 26 198 Profit before interest paid 261 158 178 860

Interest paid 29 52 275 42 732

14 570 26 198 Profit before exceptional items 208 883 136 128

(341 621) (26 235) Exceptional gains/(losses) 30 146 877 37 412

(327 051) (37) Profit/(loss) before tax 355 760 173 540

2 997 4 Tax 31 68 106 45 625

(330 048) (41) Profit/(loss) after tax 287 654 127 915

Minorities 17 (2 974) 7 467

(330 048) (41) Profit/(loss) attributable to shareholders 290 628 120 448

Earnings per share (cents) 32 117,9 47,5

Diluted earnings per share (cents) 32 110,6 47,5

Headline earnings per share (cents) 33 74,9 34,2

Diluted headline earnings per share (cents) 33 70,2 34,2


Statement of changes in equityfor the year ended 31 May 2005

Sharecapital

R000

Sharepremium

R000

Sharecapital

andpremium

R000

Trademarktax

benefitreserve

R000

Foreign currency

translationreserve

R000

Distri-butablereserves

R000

Shareholders’

equityR000

GROUPBalance at 31 May 2003 1 495 283 598 285 093 63 276 2 599 202 910 553 878

Effect of adoption of accounting policies (3 188) (3 188)

Restated balance at 31 May 2003 1 495 283 598 285 093 63 276 2 599 199 722 550 690

Share capital issued 55 36 938 36 993 36 993

Share issue costs (92) (92) (92)

Treasury shares held by share purchase trusts (12) (71 364) (71 376) (71 376)

Reserves of share purchase trusts 251 709 251 709

Deferred tax transferred as a result of deductions in respect of trademark related items 30 856 30 856

Foreign exchange reserve released ondisposal of subsidiary (1 573) (1 573)

Foreign exchange loss arising on consolidation (1 203) (1 203)

Attributable profit per the income statement 120 448 120 448

Balance at 31 May 2004 1 538 249 080 250 618 94 132 (177) 571 879 916 452

Effect of adoption of accounting policies 4 624 4 624

Treasury shares held by share purchasetrusts reallocated from share premium todistributable reserves 71 364 71 364 (71 364)

Restated balance at 31 May 2004 1 538 320 444 321 982 94 132 (177) 505 139 921 076

Treasury shares and related reserves held bya subsidiary (34) (34) (28 676) (28 710)

Treasury shares and related reserves held byshare purchase trusts (66) (66) 7 271 7 205

Deferred tax transferred as a result of deductions in respect of trademark related items to 30 November 2004 11 513 11 513

Change in estimate of trademark tax benefit reserve (107 019) (107 019)

Transfer of reserves 1 374 (1 374)

Foreign exchange loss arising on consolidation (703) (703)

Charge to deferred tax for trademarksettlement 36 540 36 540

Attributable profit per the income statement 290 628 290 628

Balance at 31 May 2005 1 438 320 444 321 882 (880) 809 528 1 130 530

COMPANY Balance at 31 May 2003 1 495 4 558 882 4 560 377 (2 081 678) 2 478 699

Share capital issued 55 36 938 36 993 36 993

Share issue costs (92) (92) (92)

Attributable loss per the income statement (330 048) (330 048)

Balance at 31 May 2004 1 550 4 595 728 4 597 278 (2 411 726) 2 185 552

Attributable loss per the income statement (41) (41)

Balance at 31 May 2005 1 550 4 595 728 4 597 278 (2 411 767) 2 185 511


Cash flow statementsfor the year ended 31 May 2005

COMPANY GROUP

2004R000

2005R000 Notes

2005R000

2004R000

Cash flow from operating activities

Cash receipts from customers 2 726 006 2 791 486

(2 291) Cash paid to suppliers and employees (2 569 859) (2 667 609)

(2 291) Cash generated from/(utilised in) operations A 156 147 123 877

21 338 Dividends received 5 326 102

9 990 14 Interest received 53 429 39 041

Interest paid (52 275) (39 982)

Dividends paid to minorities (6 007) (685)

(3 000) Tax paid B (187 399) (21 557)

9 990 16 061Net cash flow (utilised in)/from operating activities (30 779) 100 796

Cash flow from investing activities

(550 715) Acquisition and disposal of subsidiaries and businesses C (2 732) 772 086

(620 000) Investment in subsidiaries

Advances to group companies (81 028)

(133 002) Investment in preference shares (133 002)

Dividends received from associates 6 261 5 870

Advances to associates (3 896) (488)

Repayment of advances by associates 7 218

Proceeds from sale of associates 103 908

Additions to property, furniture and fittings, equipment and vehicles D (69 399) (88 668)

Goodwill acquired (129)

Proceeds from sale of property, furniture and fittings, equipment and vehicles, rental and leased assets 1 479 2 403

(1 303 717) Net cash flow from/(utilised in) investing activities 42 839 477 044

Cash flows from financing activities

36 901 Proceeds on issue of share capital E 36 901

Proceeds from long-term liabilities 42 493 2 703

Repayments of long-term liabilities (7 016) (7 134)

Proceeds from long-term loans and advances 18 605 1 235

Repayments of long-term loans and advances (11 807)

Repayments of short-term borrowings (38 194) (15 617)

Proceeds from short-term borrowings 37 291

1 257 125 Amounts received from previously related group companies

Repayment of capital element of finance leases (29 434) (5 575)

(16 062) Advances from group companies

Proceeds from share options exercised during the year 7 173

1 294 026 (16 062) Net cash flow (utilised in)/from financing activities (18 180) 49 804

299 (1) Net changes in cash and cash equivalents (6 120) 627 644

299 Cash and cash equivalents at beginning of year 782 394 154 750


COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

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

(327 051) (37) Profit/(loss) before tax 355 760 173 540

(4 580) (28 492) Dividends received (12 480) (4 682)

(9 990) (17) Interest received (57 787) (40 341)

Interest paid 52 275 42 732

Adjustments for noncash itemsDepreciation and amortisation 68 410 65 814

Profit on disposal of property, furniture and fittings, equipment and vehicles (219) (1 258)

Movement in provisions (23 048) 6 981

168 301 Impairment of loans and advances, investments and goodwill (9 812) 4 102

Impairment of property, furniture and fittings, equipment and vehicles 736Share of associates’ profits (10 452) (8 142)

173 320 26 235 (Profit)/loss on disposal of businesses and associates (116 842) (6 476)

Share of partnership profits (1 738)

Post retirement obligations provided 2 078 5 068

Release of negative goodwill (35 038)

Unrealised foreign exchange gains (199) (3 233)

Fair value adjustment for Mosaic derivative asset (20 223)(2 311) Operating cash flow before working capital changes 228 197 197 329

Working capital changes(Increase)/decrease in inventories (6 030) 10 074

Increase in trade accounts receivable (83 284) (18 532)

Increase in other accounts receivable (1 269) (3 273)

Decrease in prepayments 10 368 2 712

Increase/(decrease) in trade accounts payable 22 145 (59 531)

20 (Decrease)/increase in other accounts payable (13 980) (4 902)

(2 291) Cash generated from/(utilised in) operations 156 147 123 877

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

(2 997) Amounts unpaid and accrued for at beginning of year (6 494) (1 417)

Accrued in respect of acquisition and disposal of subsidiaries (133) (14 785)

(2 997) (4) Income statement charge (68 106) (45 625)

Deferred tax income statement charge (128 890) 31 044

Share of associates’ tax 3 002 2 732

Currency translation difference (25)2 997 1 Amounts unpaid and accrued for at end of year 13 247 6 494

(3 000) (187 399) (21 557)

Notes to the cash flow statementsfor the year ended 31 May 2005


COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

C. Analysis of acquisitions and disposals of subsidiaries and businessesAcquisitions

(601 645) Acquisition of investments

Property, furniture and fittings, equipment and vehicles (1 640) (3 161)

Capitalised leased assets (435)Goodwill (7 884) (113 687)

Other intangible assets (1 166)Investments (37 390)

Associates (17 551)

Long-term loans and advances (6 723)

Deferred tax assets (1 276)

Inventories (4 227) (510)

Trade accounts receivable (11 963) (29 645)

Other accounts receivable (315) (7 195)

Prepayments (23)Long-term liabilities 459 (27 404)

Deferred tax liabilities 429Short-term borrowings 4 407

Trade accounts payable 6 693 23 130

Other accounts payable 17 056 52 418

Provisions 709

Embedded derivative liabilities 151Tax 133 14 788

Negative goodwill 35 038

Bank balances and cash (1 341) (774 997)

Bank overdrafts 73Disposals

224 250 Disposal of investments

Property, furniture and fittings, equipment and vehicles 417

Advance to associate 1 681

Trade accounts receivable 2 769

Other accounts receivable 861

Prepayments 32

Trade accounts payable (316)

Other accounts payable (3 539)

Tax (3)

Deferred tax assets 254

Bank and cash 10 088

(173 320) Profit/(loss) on sale net of foreign currency reserve release 4 903

(550 715) Gross acquisitions/disposals (4 000) (871 902)

Non-cash settlement of inter-group loans 601 645

Treasury shares held by share purchase trusts (71 376)

Reserves of share purchase trusts 251 709

Profit on sale of subsidiary 56 389

Minority interests 40 712

Bank balances and cash acquired 1 268 774 997

Cash relinquished (10 088)

(550 715) (2 732) 772 086


Notes to the cash flow statementsfor the year ended 31 May 2005 (continued)

COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

D. Additions to property, furniture and fittings, equipment and vehicles

Replacement (49 170) (73 361)

Expansion (20 229) (15 307)

(69 399) (88 668)

E. Proceeds on issue of share capital

36 993 Proceeds on share capital issued 36 993

(92) Share issue costs (92)

36 901 36 901

F. Cash and cash equivalents

Cash and cash equivalents consist of bank balances and cash on hand.

299 298 Bank balances and cash 776 281 782 394

Bank overdrafts (7)

299 298 776 274 782 394

The group has the following unutilised banking facilities: Hard facilities R96,2 million (2004: R100,2 million)Soft facilities R464,4 million (2004: R162,6 million)


PropertyR000

Furnitureand

fittingsR000

EquipmentR000

VehiclesR000

TotalR000

1. Property, furniture and fittings, equipment and vehicles

GROUP

Cost

Cost at 31 May 2003 32 210 262 291 147 294 648

Additions 7 515 81 153 88 668

Acquisition of subsidiaries 841 2 267 53 3 161

Transfer from inventories 240 240

Disposals (773) (10 355) (11 128)

Disposal of joint venture and subsidiary (276) (1 025) (1 301)

Currency translation differences (343) (333) (676)

Cost at 31 May 2004 39 174 334 238 200 373 612

Additions 6 008 63 387 4 69 399

Acquisition of subsidiaries 484 955 201 1 640


Transfer from capitalised leased assets 5 455 60 339 5 854

Disposals (1 086) (10 479) (36) (11 601)

Currency translation differences 54 129 28 211

Cost at 31 May 2005 5 455 44 694 388 600 736 439 485

Accumulated depreciation

Depreciation at 31 May 2003 18 166 180 060 79 198 305

Depreciation 5 739 46 217 16 51 972

Disposals (671) (9 312) (9 983)

Disposal of joint venture and subsidiary (104) (780) (884)

Currency translation differences (222) (302) (524)


Depreciation 6 295 58 015 87 64 397

Disposals (742) (9 567) (32) (10 341)

Impairment 736 736

Currency translation differences 54 41 5 100


Net book value 2004 16 266 118 355 105 134 726

Net book value 2005 5 455 16 179 123 492 581 145 707

Certain computer equipment with a cost of R35,6 million (2004: R35,6 million) which is fully depreciated is encumbered as per note 18.The insurable value of the group’s property, furniture and fittings, equipment and vehicles at 31 May 2005 is R871,6 million (2004: R482,8 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.

Notes to the annual financial statementsfor the year ended 31 May 2005


Land and

buildingsR000

Furnitureand

fittingsR000

EquipmentR000

VehiclesR000

TotalR000

2. Capitalised leased assets

GROUP

Cost

Cost at 31 May 2003 206 255 21 493 227 748

Transfer to property, furniture and fittings, equipment and vehicles (7 179) (7 179)

Cost at 31 May 2004 206 255 14 314 220 569

Acquisition of business 65 370 435

Transfer to property, furniture and fittings, equipment and vehicles (10 455) (65) (370) (10 890)

Cost at 31 May 2005 195 800 14 314 210 114

Accumulated depreciation

Depreciation at 31 May 2003 21 093 20 967 42 060

Depreciation 3 286 525 3 811

Transfer to property, furniture and fittings, equipment and vehicles (7 179) (7 179)


Depreciation 3 287 5 31 3 323

Transfer to property, furniture and fittings, equipment and vehicles (5 000) (5) (31) (5 036)


Net book value 2004 181 876 1 181 877

Net book value 2005 173 134 1 173 135

Leased assets are encumbered as reflected in note 18.The insurable value of the group’s leased assets at 31 May 2005, is R276,7 million (2004: R318,5 million).A list of land and buildings is available to shareholders, on written request, from the registered office of the company.

Notes to the annual financial statementsfor the year ended 31 May 2005 (continued)


COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

3. Rental assetsCostCost at beginning of year 1 492 1 526


Disposals (1 496) (62)

Cost at end of year 1 492

Accumulated depreciationDepreciation at beginning of year 1 381 1 241

Depreciation 115 202

Disposals (1 496) (62)

Accumulated depreciation at end of year 1 381

Net book value 111

4. GoodwillCostCost at beginning of year 117 133 3 317

Additions 113 816

Elimination of accumulated amortisation and impairmenton the adoption of AC 140 (see note 34) (13 146)Acquisition of subsidiaries 7 884Cost at end of year 111 871 117 133

Accumulated amortisation and impairmentDepreciation at beginning of year 13 146 3 317

Elimination of accumulated amortisation and impairment on the adoption of AC 140 (see note 34) (13 146)Amortisation 9 700

Impairment 7 884 129

Accumulated amortisation and impairment at end of year 7 884 13 146

Net book value 103 987 103 987

Goodwill in the prior year was amortised over a period of five years. Goodwill is no longer amortised as a result of the adoption of AC 140.Negative goodwill of R35 million arose in the prior year on the purchase of Business Connexion Technology Holdings (Pty) Limited, which was released to the income statement as an exceptional item in terms of the group’s policy on business combinations involving entities under common control.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:

Services 103 987 103 987

Technology Infrastructure 7 884 111 871 103 987

Impairment of goodwill (7 884)Net book value 103 987 103 987

The Technology Infrastructure goodwill has been fully impaired based on the estimated future cash flows related to the businesses acquired. The goodwill associated with the services regions has not been impaired based on the discounted cash flow analysis. Budgets for these segments with an expected four percent growth in perpetuity has been used in the cash flow projections.


COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

5. Other intangible assets CostAcquisition of subsidiaries and businesses 1 166Currency translation difference 123

1 289Accumulated amortisationAmortisation 575Currency translation difference 40

615Net book value 674The intangible asset relates to fair value of contracts acquired on acquisition and will be amortised in the following year as and when the contract revenues are realised.

6. Interest in joint venturesThe group had a 50% equity shareholding, with equivalent voting power, in Phambili Information Technologies (Pty) Limited, a joint venture established in South Africa. This equity holding was disposed of on 30 April 2004 to the joint venture partner.The following amounts are included in the group’s financial statements as a result of the proportionate consolidation of the joint venture:

Revenue 30 563

Attributable profit 2 377

7. Investment in subsidiaries (Annexure A)Shares at cost

3 161 878 3 884 700 Balance at beginning of year

620 000 Additional investment in subsidiary

601 645 Acquisition of subsidiaries

(498 823) Disposal of subsidiaries

3 884 700 3 884 700Impairment of investment in subsidiaries

(2 081 678) (1 975 406) Balance at beginning of year

274 573 Disposal of subsidiaries

(168 301) Current year impairment

(1 975 406) (1 975 406)1 909 294 1 909 294 Carrying value of investment in subsidiaries

373 351 452 012 Advances to subsidiaries

(231 977) (320 811) Advances from subsidiaries

2 050 668 2 040 495The increase in the impairment in the prior year arose from the dilution in the shareholding in Business Connexion (Pty) Limited following the black empowerment transaction with Gadlex (Pty) Limited. The carrying value of the investment in the shares of the subsidiary reduced to R1,3 billion as valued by the directors.



COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

8. Investment in associates (Annexure B)

Investment value

Balance at beginning of year 24 187 8 045

Acquisition of associates 17 551

Disposal of associates (24 187) (1 409)

24 187

Share of results since acquisition

Balance at beginning of year 4 636 3 687

Adoption of AC 140 in current year recognition of negative goodwill in distributable reserves 365

Share of associates’ profits 10 452 8 142

Tax (3 002) (2 732)

Disposal of associates (6 190) 1 409

Dividends received (6 261) (5 870)

4 636

Carrying value of investment in associates 28 823

Advances to associates 12 488 10 917

Interest accrued for the year 232 1 383

Impairment of advances and interest (12 700) (12 300)

Advances from associates (12)

20 28 811

Directors’ valuation 20 55 496

The group’s share of unrecognised losses in associates amounts to R5,7 million (2004: R7,1 million).The advances to associates carry interest at normal commercial interest rates, except for a loan of R5,9 million which is interest free. The loans are unsecured and repayable on demand.

Sifa Systems Limited has the option to purchase 50% plus one share in Intrinsic Technology (Angola) and 49% in JEDI Development Limited but has no legal ownership. Based on this these entities have not been equity accounted.

Aggregate of associates (based on our percentage share)

Total assets 3 168 144 200

Total liabilities 8 898 84 623

Profit after tax 913 34 875


COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

9. Other longterm investmentsListed investmentsDimension Data Holdings plc 962 857

243 446 ordinary shares at a market value of R3,95 (2004: 234 862 shares at a market value of R3,65).The listed investments are held by the share purchase trust in order to fulfil its obligations.

Unlisted investments133 002 Opening carrying value 167 131 5 664

133 002 Additions 169 535

Fair value adjustments 9 885 (8 068)

133 002 133 002 177 016 167 131

133 002 133 002 177 978 167 988

Details of unlisted investmentsAvailable for sale investments:

Preference shares in a member of National Information Technology Acquisition Consortium (“Nitac”) 36 533 36 533

70 cumulative, zero rated compulsorily, redeemable, convertible, preference shares in Bridging Technologies International (Pty) Limited 5 341 5 341

322 500 ordinary shares of R1 each in Business Partners Limited 323 323

Originating loans and receivables:

117 192 117 192 Gadlex (Pty) Limited “A” preference shares 117 192 117 192

15 810 15 810 Gadlex (Pty) Limited “B” preference shares 15 810 15 810

133 002 133 002 175 199 175 199

Fair value adjustments 1 817 (8 068)

133 002 133 002 177 016 167 131



The directors value the investments at cost less accumulated impairment except for the investment in Nitac that is valued at the market value of

the underlying shares in Business Connexion Group Limited and Dimension Data Holdings plc.

The terms of the preference shares in Gadlex (Pty) Limited (“Gadlex”) include various “put options” and may be redeemed by Gadlex in a number

of alternative 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 Business Connexion (Pty) Limited for the two years completed before the redemption date. This consideration would

then be used by Gadlex to settle the balance of 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 Limited for 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

Business Connexion (Pty) Limited, Gadlex may put the 13,19% of their shareholding in Business Connexion (Pty) Limited back to Business

Connexion Group Limited. The price that Business Connexion Group Limited would have to pay is the “A” preference share redemption

price plus an annual internal rate of 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 Group Limited. The price that Business Connexion Group Limited would have to pay is the “B” preference share redemption

price plus an annual internal rate of 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% of Gadlex’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

anticipated redemption, it is currently not possible to reliably measure the value of these derivative instruments. Therefore the derivative

instruments are carried at no value in the balance sheet, however, the group has not recognised the gain of R30,7 million (2004: R56,4 million)

on the disposal of 11,82% of Business Connexion (Pty) Limited to Gadlex. This amount is included in other payables and will be released as soon

as the derivative instruments can be reliably measured. The gain not recognised has decreased in the current year due to the settlement of the

trademark query with SARS. The shareholders agreement provided a warranty to Gadlex in terms of the trademark and any settlement thereto.

An amount ot R26,2 million was paid to Gadlex to settle this warranty. This was reinvested by Gadlex into Business Connexion (Pty) Limited

through an interest free shareholders loan. Business Connexion Group Limited increased their loan with Business Connexion (Pty) Limited by the

appropriate proportion based on the amount invested by Gadlex to ensure that the shareholders loans are in the same proportion to their equity

interest.

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 the South 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 the South African prime rate and rank after the “A” preference shares. The redemption date is approximately 31 March 2009.

Dividend accrued on the “A” and “B” preference shares of R11,7 million (2004: R4,6 million) has been included in other accounts receivable.


COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

10. Long-term loans and advances

Long-term trade accounts receivable 7 129 5 696

These amounts are repayable over periods not exceeding three years and bear interest at 18,5% (2004: 18,5%)

Loan to Indibano Business Services (Pty) Limited 2 989

Interest accrued 765

Impairment (3 754)

Loan to Kumwe Information Technology (Pty) LimitedThe loan bears interest at the South African prime lending rate and is secured by a pledge of the shares in the Namibian subsidiary.There are no repayment terms. 2 933 3 011

Loan to Gijima Support Services (Pty) LimitedInitial funding loan and accrual of share of partnership results. The amount is interest free and repayable on demand. 8 461

10 062 17 168

In the current year Indibano Business Services (Pty) Limited and Intenda (Pty) Limited entered into a cession agreement. The result of this is that the loan owed by Indibano Business Services (Pty) Limited will now be repaid by Intenda (Pty) Limited. The loan is now reflected in note 8 as part of the advances to associates.

11. Deferred tax

Deferred tax assets at beginning of year 1 264 473

Deferred tax liabilities at beginning of year (369) (397)

Net opening balance 895 76

Credited/(charged) to income statement 128 890 (31 044)

Adoption of AC 501 distributable reserves adjustment 4 259

Charged to foreign currency translation reserves (33) (15)

Released from/(charged to) trademark tax benefit reserve (95 506) 30 856

Charged to distributable reserves 36 540

Acquisition of subsidiaries (429) 1 276

Disposal of subsidiaries (254)

Net closing balance 74 616 895

Deferred tax assets at end of year 75 315 1 264

Deferred tax liabilities at end of year (699) (369)

74 616 895



STC credits

R000

Assessed loss

R000Trademark

R000

Accelerated tax

depreciationR000

Pre-payments

R000

Capitalisedleased

assets andliabilities

R000Provisions

R000

Embeddedderivativeassets andliabilities

R000

Incomereceived

in advanceR000

OtherR000

TotalR000

11. Deferred tax (continued)

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

GROUP

Balance at 31 May 2003 88 (93) (20) 488 30 (417) 76

Charged to income statement 24 (30 856) (229) (144) (63) (295) 519 (31 044)

Currency translation differences (15) (15)

Charged to trademark tax benefit reserve 30 856 30 856

Disposal of subsidiaries 5 (259) (254)

Acquisitions of subsidiaries and entities 140 119 437 580 1 276

Balance at 31 May 2004 252 (337) (40) 603 315 102 895

Credited to income statement 1 678 (252) 83 326 60 (54) (492) (33) (243) (102) 83 888

Deferred tax raised for the first time in current year 739 (4 492) 12 322 24 945 818 10 670 45 002

Released from trademark tax benefit reserve (95 506) (95 506)

Charged to distributable reserves 36 540 36 540

Adoption of AC 501 charged directly to distributable reserves 4 259 4 259

Currency translation differences (33) (33)

Acquisitions of subsidiaries and entities (529) 48 52 (429)

Balance at 31 May 2005 5 937 24 360 (100) (4 586) 12 322 25 104 837 10 742 74 616

As at balance sheet date, the group had unutilised tax losses of R49,9 million (2004: R218,9 million) available for offset against future profits. No deferred tax asset has been raised on the unutilised tax losses of R49,9 million (2004: R218,1 million) due to the unpredictability of future profit streams. If a deferred tax was to be raised an amount of R14,5 million (2004: R65,4 million) would be raised.


COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

12. InventoriesCostMaintenance, components and consumables 113 935 98 947

Merchandise 43 225 40 448

Work in progress 6 507 5 110

Cost at end of year 163 667 144 505

ImpairmentsMaintenance, components and consumables 92 518 78 920

Merchandise 15 480 19 983

Work in progress 3 078 2 894

Impairment at end of year 111 076 101 797

52 591 42 708

13. Trade accounts receivableTrade accounts receivable 546 386 446 769

Trade accounts receivable - associates 3 069 129

Current portion of long term trade accounts receivable 9 761 9 086

559 216 455 984

Impairments (22 067) (17 340)

Impairments associates (2 582)534 567 438 644

14. Other accounts receivableIncluded in other accounts receivable are loans to employees amounting to R0,6 million (2004: R0,5 million).

15. Derivative and embedded derivative assetsThird currency embedded derivative assets 24 048 25 846

Mosaic derivative asset 36 87360 921 25 846



COMPANY GROUP

Number of shares R000

Number of shares R000

16. Share capitalAuthorised share capitalOrdinary shares

127 868 850 1 279 31 May 2003 ordinary shares of 1 cent each 127 868 850 1 279

63 114 760 631Preference shares converted to ordinary shares of 1 cent each 25 February 2004 63 114 760 631

190 983 610 1 910 190 983 610 1 910

309 016 390 3 090Increase in authorised share capital to 500 000 000 shares of 1 cent each 25 February 2004 309 016 390 3 090

500 000 000 5 000 500 000 000 5 000

347 457 627Conversion of authorised shares of 1 cent each to ordinary shares of 0,59 cents each 8 April 2004 347 457 627

847 457 627 5 00031 May 2004 and 31 May 2005 ordinary shares of 0,59 cents each 847 457 627 5 000

Issued share capitalOrdinary shares

127 868 850 1 279 31 May 2003 ordinary shares of 1 cent each 127 868 850 1 279

21 651 723 216Preference shares converted to ordinary shares of 1 cent each 25 February 2004 21 651 723 216

149 520 573 1 495 149 520 573 1 495

103 904 127Conversion of issued shares of 1 cent each to ordinary shares of 0,59 cents each 8 April 2004 103 904 127

253 424 700 1 495 253 424 700 1 495

9 212 212 55 Issued shares of 0,59 cents per share 26 May 2004 9 212 212 55

262 636 912 1 55031 May 2004 and 31 May 2005 ordinary shares of 0,59 cents each 262 636 912 1 550

Issued share capitalPreference shares

21 651 723 216 31 May 2003 ordinary shares of 1 cent each 21 651 723 216

(21 651 723) (216)Preference shares converted to ordinary shares of 1 cent each 25 February 2004 (21 651 723) (216)

31 May 2004 and 31 May 2005The preference shares were redeemable at any time before 31 May 2008 at their negotiated market value. Preference shares not redeemed were to be converted to ordinary shares on a one for one basis on 31 May 2008 or on liquidation. The preference shares ranked pari passu with the ordinary shares in terms of dividends.

262 636 912 1 550 Number of shares in issue 262 636 912 1 550

Shares held by the share trusts as treasury shares representing 7,5% at 31 May 2004 (19 826 542) (12)

262 636 912 1 550 242 810 370 1 538

Movement in treasury shares held by the share purchase trusts during the year 6 681 239 (66)

Treasury shares held by a subsidiary representing 2,2% at 31 May 2005 (5 831 741) (34)

262 636 912 1 550 243 659 868 1 438

Shares held by the share trusts as treasury shares at 31 May 2005 is 13 145 303 representing 5,0%.


COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

17. Minority interestsBalance at beginning of year 49 402 1 920Arising on partial disposal of subsidiary 40 712Minority interest in subsidiary (loss)/income (2 974) 7 467Minority interest in subsidiary dividends (6 007) (685)Share of foreign currency translation reserve (12)

40 421 49 402

18. Long-term liabilitiesInterest bearing loansLiabilities under finance lease

Less thanone year

R000

Between one and five years

R000Minimum lease payments 43 010 259 252 302 262 363 250Lease finance charges (30 700) (55 936) (86 636) (118 649)

12 310 203 316 215 626 244 601

These liabilities are repayable at fixed interest rates ranging between 11,77% and 17,27%. (2004: 11,77% and 17,27%).The liabilities are in respect of the leased assets as shown in note 2. The group has an option to purchase these assets at the end of the lease.SASOL Limited 11 096 15 819The loan is repayable by 30 June 2006 in equal instalments and bears interest at 10,7% (2004:10,7%). It is secured by equipment with a cost of R25,5 million (2004: R25,5 million) as shown in note 1.Rentworks (Pty) Limited 652 3 262The loan is repayable annually in arrears and bears interest at a fixed rate of 22,0% (2004: 22,0%). It is secured by equipment with a cost of R10,1 million (2004: R10,1 million) as shown in note 1.Kumwe Information Technology (Pty) Limited 1 072 1 072No repayment terms have been established. It bears interest at the South African Prime lending rate. It is unsecured.IBM Global Finance (a division of IBM South Africa (Pty) Limited) 3 470 2 879The loan is unsecured and repayable within the current year and bears interest at a fixed rate of 7,4% (2004: 7,4%).Getronics Holdings EMEA B.V. 4 839 4 536The loan is unsecured and bears interest at bank call rates currently 6,9% (2004: 6,9%) and is repayable on demand.Total long-term liabilities 236 755 272 169Less amount transferred to short-term borrowings 27 113 45 515Repayable within five years 209 642 226 654

19. Long-term liabilitiesInterest free loansGadlex (Pty) Limited 150 752 124 517This is a shareholder’s loan to Business Connexion (Pty) Limited. The loan is unsecured and interest free with no fixed date of repayment.Total long-term liabilities 150 752 124 517



COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

20. Post retirement obligations

Post retirement healthcare benefits

Opening balance 6 229 1 161

Amendment to accruals based on changes in assumptions and known increases in medical aid rates (1 239) 659

Interest cost 265 487

Current year service accruals 133 124

Additional liabilities identified relating to acquisitions 3 017 4 122

Payments made on behalf of beneficiaries (98) (324)

8 307 6 229

Amounts recognised in the income statement Note 27 employee costs

Amendment to accruals based on changes in assumptions and known increases in medical aid rates (1 239) 659

Interest cost 265 487

Current year service accruals 133 124

Additional liabilities identified relating to acquisitions 3 017 4 122

2 176 5 392

It is not the group’s policy to provide post retirement healthcare benefits. At 31 May 2005, 81 individuals (2004: 43) had 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 member 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 6,5% 7,5%

Discount rate 8,5% 9,5%

Average retirement age for in service members 63 63

Assumed rates of mortality as follows:

During employment SA85 90 (light) ultimate table

Post employment PA(90) ultimate table

21. Short-term borrowings

IBM Global Finance (a division of IBM South Africa (Pty) Limited) 21 674

The loan is interest free and is repayable within one year.

Transfer from long-term liabilities (note 18) 27 113 45 515

27 113 67 189


LegalR000

WarrantiesR000

OnerousleasesR000

ClosurecostsR000

TotalR000

22. Provisions

GROUP

Balance at 31 May 2003 23 508 5 299 1 585 562 30 954

Utilised (844) (2 885) (1 335) (217) (5 281)

Increase due to purchase of entities 709 709

Released to the income statement (4 985) (1 423) (347) (6 755)

Charged to the income statement 820 6 795 9 093 2 309 19 017

Balance at 31 May 2004 18 499 8 495 9 343 2 307 38 644

Utilised (642) (901) (4 399) (2 307) (8 249)

Released to the income statement (14 735) (1 820) (857) (17 412)

Charged to the income statement 576 1 307 730 2 613

Balance at 31 May 2005 3 698 7 081 4 817 15 596

The legal provision relates to possible claims on outstanding legal matters.Warranties relate to possible claims on products sold.Onerous leases relate to obligations outstanding on buildings no longer occupied.Closure costs related to a provision for retrenchment costs for the restructuring a few of the business units.

COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

23. Embedded derivative liabilities

Third currency embedded derivative liabilities 26 920 26 102

24. Revenue

For rendering services 2 229 323 2 068 380

Arising on sale of goods 586 809 743 391

2 816 132 2 811 771

Continuing operations 2 799 767 2 667 888

Acquisition of subsidiaries and businesses 16 365 107 207

Disposal of subsidiaries 36 676

2 816 132 2 811 771

25. Foreign exchange and derivative gains/(losses)

Foreign exchange gains 8 277 8 370

Derivative gains/(losses) 3 692 (1 043)

Embedded derivative losses (5 648) (32 137)

6 321 (24 810)

26. Operational exceptional gains/(losses)

Rebranding costs (1 274) (9 503)

Provisions released 14 000 4 573

Closure costs (96)

Reversal of restructure costs reflected in other accounts payable 2 796

15 426 (4 930)



COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

27. Operating profit/(loss)(2 311) Continuing operations 188 325 123 154

Acquisitions of subsidiaries and businesses (7 886) (852)

Disposal of joint venture and subsidiaries 3 393

(2 311) 180 439 125 695

Operating profit/(loss) is stated after:Administration, management and other fees 10 599 13 195

Auditor’s remuneration

Audit fees 7 017 3 727

Fees for other services 4 630 6 324

11 647 10 051

Depreciation and amortisationProperty, furniture and fittings, equipment and vehicles

Furniture and fittings 6 295 5 739

Equipment 58 015 46 217

Vehicles 87 16

64 397 51 972

Capitalised leased assets

Buildings 3 287 3 286

Furniture and fittings 5Equipment 525

Vehicles 313 323 3 811

Rental assets 115 202

Goodwill amortisation 9 700

Goodwill impairment 129

9 829

Other intangible assets 575Impairment of property, furniture and fittings, equipment and vehicles (included in cost of sales) 736Directors’ emoluments

8 062 9 959 Emoluments for services as directors the company

8 062 9 959(8 062) (9 959) Less paid by subsidiaries

Made up as follows:

3 857 4 502 Salaries and other benefits

3 338 4 587 Bonuses and performance related payments

7 195 9 089Profit on disposal of property, furniture and fittings, equipment and vehicles 219 1 258

Operating lease charges

Land and buildings 23 705 27 251

Equipment and vehicles 104 651 170 628

128 356 197 879

Employee costs

Paid to employees 1 168 757 1 090 351

Contributions paid on behalf of employees 100 248 97 717

1 269 005 1 188 068

Average number of employees 4 331 3 949


COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

28. Investment income

Interest received

9 990 17 Banks 52 013 13 274

Loans and advances 5 774 1 279

From previous group companies 25 788

4 580 12 128 Dividends received from unlisted investments 12 480 4 682

16 364 Dividends received from subsidiary

14 570 28 509 70 267 45 023

29. Interest paid

Short-term liabilities 2 408 7 300

Interest paid in respect of trademark settlement 16 180

Long-term liabilities 1 674 2 663

Finance leases 32 013 32 769

52 275 42 732

30. Exceptional gains/(losses)

Reversal of impairment/(impairment)

of loans and advances 7 738 (1 698)

(168 301) Fair value adjustments to investments 9 958 (2 404)

(173 320) (26 235) Profit/(loss) on sale of businesses and associates 116 842 6 476

Fair value adjustment of Mosaic

derivative asset 20 223

Negative goodwill released under

common control transactions 35 038

Impairment of goodwill (7 884)

(341 621) (26 235) 146 877 37 412



COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

31. Tax

2 997 4 South African tax 66 645 41 818

Foreign tax 1 461 3 807

2 997 4 68 106 45 625

Comprising

South Africa normal tax

2 997 4 - Current year 47 783 7 687

- Prior year 143 211 2 129

Deferred tax

- Deferred tax asset raised for first time in

current year (45 002)

– Current year movement 11 618 31 044

– Prior year: trademark settlement (95 506)

Share of associates’ tax 3 002 2 732

Withholding tax 261 220

Secondary tax on companies 2 728 250

Other corporate taxes 11

Foreign tax credits 1 563

2 997 4 68 106 45 625

% % Reconciliation of tax rate % %

(0,9) (10,8) Effective tax rate 19,1 26,3

Prior year (13,4) (1,6)

Deferred tax asset raised for first time 12,6

Share of associates’ tax (0,8) (1,6)

Deferred tax raised on secondary tax credits 0,5

Other corporate tax and secondary tax on companies (0,8) (1,2)

Foreign tax paid (0,2)

30,9 39,8Reduction in taxes due to exempt income, allowances and estimated tax losses 11,8 8,3

30,0 29,0 29,0 30,0

The statutory tax rate for South Africa changed in the current year to 29%.As at the balance sheet date, the group had unutilised capital gains tax losses of R1 121,0 million (2004: R1 127,1 million).


COMPANY GROUP

2004 2005 2005 2004

32. Earnings per share

Treasury shares reconciliation

Treasury shares in share trust at 31 MayIn the prior year the share purchase trusts were consolidated with effect from 28 May 2004 and thus 19 826 542 treasury shares were not included in the weighted average calculation at the end of the prior year. 13 145 303

6 681 239 options exercised during the year, weighted for the period that the shares were classified as treasury shares in the current year. 2 983 628

5 831 741 treasury shares purchased by a subsidiary during May 63 049

Weighted average number of treasury shares 16 191 980

Weighted average number of shares reconciliation

Number of ordinary shares in issue 31 May 262 636 912 127 868 850

Number of preference share in issue 31 May 21 651 723

262 636 912 149 520 573

Conversion of issued shares of 1 cent each to ordinary shares of 0,59 cents each 103 904 127

262 636 912 253 424 700

9 212 212 ordinary shares issued on 26 May 2004 126 195

262 636 912 253 550 895

Weighted average number of treasury shares (16 191 980)

Weighted average number of shares 246 444 932 253 550 895

Dilutive weighted average number of shares reconciliation


Dilutive options at year-endIn the prior year the share purchase trust was consolidated with effect from 28 May 2004 and thus the options had no dilutive effect on the weighted average number of shares calculation for the prior year. 13 896 975

Options exercised during the year that were dilutive for a portion of the year 2 459 153

Diluted weighted average number of shares 262 801 060 253 550 895

Profit attributable to shareholders (R000) 290 628 120 448

Earnings per share (cents) 117,9 47,5

Diluted earnings per share (cents) 110,6 47,5

The preference shares in the prior year ranked pari passu with the ordinary shares in terms of dividends and were thus considered equivalent to ordinary shares for the purpose of calculating earnings per share.



COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

33. Headline earnings per share

Profit attributable to shareholders 290 628 120 448

Impairment of assets and loans and advances 736 120

Goodwill impairments and amortisation 7 884 9 829

Profit on sale of property, furniture and fittings, equipment and vehicles (219) (1 258)

Profit on sale of businesses and associates (116 842) (6 476)

Recognition of negative goodwill (35 038)

Associate adjustment 1 301

Tax effect on disposal of investments 4 450 425

Minority effect of headline earnings adjustments (2 101) (2 734)

184 536 86 617


Diluted weighted average number of shares 262 801 060 253 550 895

Headline earnings per share (cents) 74,9 34,2

Diluted headline earnings per share (cents) 70,2 34,2

34. Effects of adoption of accounting policies

Adoption of AC 133 – Financial Instruments Recognition and MeasurementFor the year ended 31 May 2004, AC 133 was adopted. The main effect of this statement is in terms of foreign currency embedded derivatives where payments or receipts are denominated in a third currency other than the functional currencies of the parties involved.

Adoption of AC 140 – Business Combinations, AC 128 – Impairment of assets, AC 128 – Intangible assetsAC 140 has been adopted for business combinations for which the agreement date is on or after 31 March 2004. The first transaction to which the new statement has been applied is the acquisition of the business of Intrinsic Technology (Pty) Limited and its African subsidiaries effective from 1 December 2004. The principle impact of the statement on the transaction is the recognition of intangible assets for contracts purchased and the fair valuation of certain assets and liabilities. The total of these adjustments to goodwill was R1,2 million.

After initial recognition, AC 140 requires goodwill acquired in business combinations to be carried at cost less accumulated impairment losses. Under AC 128, Impairment of Assets, impairment reviews are required annually or more frequently if there are indications that goodwill may be impaired. AC 140 prohibits the amortisation of goodwill. Previously the group carried goodwill at cost less accumulated amortisation and impairment losses. Amortisation was charged over the useful life of the goodwill being five years.

In accordance with AC 140, the group has applied the revised accounting policy for goodwill prospectively from the beginning of its first annual period beginning on or after 31 March 2004. Therefore, the group has discontinued amortising goodwill and has tested goodwill for impairment in accordance with AC 128 (revised). At 1 June 2004, the carrying amount of accumulated amortisation and impairment before that date of R13,2 million has been eliminated with a corresponding decrease in the cost of goodwill. No amortisation has been charged in 2005. The charge was R9,8 million in 2004.

In addition, the statement requires all negative goodwill to be recognised immediately in the income statement. At 31 May 2004 there was R0,4 million negative goodwill relating to associates acquired. This has been adjusted for in distributable reserves.

Adoption of AC 501, Accounting for Secondary Tax on Companies (“STC”)AC 501 has been adopted from 1 June 2004. In terms of the new statement, a deferred tax asset should be raised on STC credits held on dividends received by the group to the extent of possible distributions. At 31 May 2004 a deferred tax asset of R4,3 million was recognised in distributable reserves and a current year charge of R1,7 million was recognised in the income statement.


COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

34. Effects of adoption of accounting policies (continued)Increase in distributable reserves at the beginning of the yearAttributable to shareholders:

Adoption of AC 133 (3 188)

Adoption of AC 140 365Adoption of AC 501 4 259Attributable to minoritiesAdoption of AC 133 797

Adoption of AC 140

Adoption of AC 501

Impact of adoption of accounting policies on earnings in year of adoptionAdoption of AC 133 (256)

Adoption of AC 140 (7 884)Adoption of AC 501 1 678Attributable to minoritiesAdoption of AC 133 64

Adoption of AC 140 1 972Adoption of AC 501

Impact of adoption of accounting policies on headline earnings in year of adoptionAdoption of AC 133 (256)

Adoption of AC 140

Adoption of AC 501 1 678Attributable to minoritiesAdoption of AC 133 64

Adoption of AC 140

Adoption of AC 501

cents cents

Impact of adoption of accounting policies on earnings per shareAdoption of AC 133 (0,1)

Adoption of AC 140 (2,4)Adoption of AC 501 0,7Impact of adoption of accounting policies on diluted earnings per shareAdoption of AC 133 (0,1)

Adoption of AC 140 (2,2)Adoption of AC 501 0,6Impact of adoption of accounting policies on headline earnings per shareAdoption of AC 133 (0,1)

Adoption of AC 140

Adoption of AC 501 0,7Impact of adoption of accounting policies on diluted headline earnings per shareAdoption of AC 133 (0,1)

Adoption of AC 140

Adoption of AC 501 0,6



COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

35. Capital commitments

Capital

– Contracted 586 4 115

– Authorised and proposed 148 975 466

149 561 4 581

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

36. Operating lease commitments

<1 yearR000

2 to5 years

R000>5 years

R0002005R000

2004R000

Land and buildings 7 621 12 655 1 312 21 588 54 149

Equipment and vehicles 57 472 22 386 40 79 898 161 451

65 093 35 041 1 352 101 486 215 600

The operating lease commitments for land and buildings relate mainly to rentals on the Rivonia property and Block F and G in the Midrand office park.Operating lease commitments for equipment and vehicles relates to rental agreements entered into for office equipment and vehicles. There is no intention to purchase these items.

GROUP

2005R000

2004R000

37. Contingent liabilities

Guarantees

– Performance guarantees 48 010 84 162

– Other 3 328 1 514

51 338 85 676

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.


COMPANY GROUP

2004R000

2005R000

2005R000

2004R000

38. Related party transactionsThe group entered into the following transactions with related parties who are not members of the group:

Associates of Comparex Holdings Limited

Sales of services and goods 543

Purchase of services and goods 121

Net amounts due by related parties 109

The group also entered into transactions with subsidiaries of Comparex Holdings Limited. The transactions were all carried out on an arm’s length basis at appropriate market related values.

Administrative recoveries 2 289

Administrative costs (3 300)

Interest received 25 788

The group entered into the following sales transactions with associates of the group:

Intrinsic Technology (Angola) 7726 235 Minority payment to Gadlex (Pty) Limited

12 128 Dividends received from Gadlex (Pty) Limited 12 128The 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 director’s report.

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

39. 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.

40. Retirement informationAll eligible permanent employees, other that those required to join a fund established by statute are required to join the Business Connexion Group Pension and Provident Funds as a condition of employment. The employees become members of both funds simultaneously. Business Connexion and certain of its subsidiaries contribute to the Business Connexion Group Provident Fund and employees contribute to the Business Connexion Group Pension Fund. These funds are registered in the Republic of South Africa in terms of the Pension Funds Act, 1956 and are approved by the South African 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 2005, the funds were certified financially sound.

At their financial year end, 28 February 2005, the funds had a membership of 2 987 (2004: 2 634) members. During the period the company contributions to the Business Connexion Group Provident Fund amounted to R34 355 829 (2004: R34 672 970).

The duties and responsibilities of administering the Business Connexion Group Pension and Provident Funds are adequately segregated. Alexander Forbes 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”) all pension and provident funds having surpluses at their surplus apportionment date will be required to undertake a surplus apportionment investigation and distribution. In terms of the Surplus Legislation, the surplus apportionment date is the date of the statutory actuarial valuation of the funds following the effective date of the legislation.



41. Segmental analysis (R million)Business Connexion’s primary segment is its business segment. It is split into four 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 the clients with hardware for the clients’ computing needs. Hardware consists of servers, storage solutions and operating systems.

• Business Applications is a competency developed specifically in order to support a client’s spectrum of business requirements.Central functions include the central operations of the group.

External revenueInter segmental

revenue Total revenue

Business groupings analysis 2005 2004 2005 2004 2005 2004

Services 1 826,0 1 726,1 11,3 13,6 1 837,3 1 739,7

Technology infrastructure 689,2 816,7 157,3 153,7 846,5 970,4

Business applications 300,9 269,0 131,4 99,7 432,3 368,7

Central functions (300,0) (267,0) (300,0) (267,0)

2 816,1 2 811,8 2 816,1 2 811,8

Depreciation and amortisation Operating profit

2005 2004 2005 2004

Services 55,7 47,9 174,9 154,6

Technology infrastructure 2,4 2,4 18,5 14,7

Business applications 2,8 3,2 13,9 (2,9)

Central functions 7,5 12,3 (26,9) (40,7)

68,4 65,8 180,4 125,7

Capital expenditure Assets Liabilities

2005 2004 2005 2004 2005 2004

Services 52,4 94,0 663,8 580,8 603,5 537,3

Technology infrastructure 2,6 2,1 368,1 308,0 347,9 287,9

Business applications 1,6 3,2 119,5 129,0 103,0 141,8

Central functions 12,8 (10,6) 1 136,5 1 049,5 62,6 134,5

69,4 88,7 2 287,9 2 067,3 1 117,0 1 101,5

Share of associates’ profit

Investment in associates

Reversal of impairment and

fair value adjustments

2005 2004 2005 2004 2005 2004

Services 8,6 7,4 10,6

Technology infrastructure

Business applications 1,9 0,7 18,2

Central functions 9,8 30,9

10,5 8,1 28,8 9,8 30,9

Revenue Operating profit

Geographical segmental analysis 2005 2004 2005 2004

South Africa 2 623,1 2 408,4 193,0 99,1

Rest of Africa 154,6 349,8 (13,3) 26,2

Rest of world, principally United Kingdom 38,4 53,6 0,7 0,4

2 816,1 2 811,8 180,4 125,7

Note: The income statement for the geographical segmental analysis is based on where the customer is situated.

Assets Liabilities Capital expenditure

2005 2004 2005 2004 2005 2004

South Africa 2 234,2 2 030,0 1 061,0 1 077,7 69,2 88,1

Rest of Africa 40,5 24,2 48,4 15,5 0,1 0,4

Rest of world, principally United Kingdom 13,2 13,1 7,6 8,3 0,1 0,2

2 287,9 2 067,3 1 117,0 1 101,5 69,4 88,7

Note: The balance sheet for the geographical segmental analysis is based on where the assets or liabilities are situated.



42. Financial risk management

The group’s financial instruments consist of bank balances and cash, long and short-term investments and receivables and long and short-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 bulk financing 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 the exposures. Each operation manages its own trade exposure in consultation with the group treasury. The risk of having to close out the contracts is considered low and the amounts and currencies involved are set out below. There are no forward exchange contracts for periods beyond 90 days.

Original contract

R000

Fair value at year end

R000

Foreign currency

value000

Details of forward exchange contracts at 31 May 2004:

United States dollars 9 239 8 566 1 349

Euro 292 291 37

9 531 8 857

Details of forward exchange contracts at 31 May 2005:

United States dollars 84 618 86 952 12 961

Euro 213 201 27

84 831 87 153

These financial instrument are designed to address exchange exposures and will be renewed on a revolving basis as required.


42. Financial risk management (continued)

Maturity profile of financial instruments including finance lease liabilities

<1 yearR000

2 to 5 yearsR000

>5 yearsR000

TotalR000

GROUP

31 May 2004

Financial assets

Non-current assets 185 156 185 156

Current assets 542 097 542 097

Bank balances and cash 782 394 782 394

1 324 491 185 156 1 509 647

Financial liabilities

Non-current liabilities 351 171 6 229 357 400

Current liabilities 626 950 626 950

Short-term borrowings 67 189 67 189

694 139 351 171 6 229 1 051 539

31 May 2005

Financial assets

Non-current assets 44 014 144 026 188 040

Current assets 718 431 718 431

Bank balances and cash* 776 281 776 281

1 538 726 144 026 1 682 752

* An amount of R624,0 million is in money market accounts held at the major banking institutions

Financial liabilities

Non-current liabilities 360 394 8 307 368 701

Current liabilities 687 291 687 291

Short-term borrowings and bank overdrafts 27 120 27 120

714 411 360 394 8 307 1 083 112

The following are methods and assumptions used by the group in determing fair value:

Financial assetsThe book value of bank balances and cash, trade and other accounts receivable approximates 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 and where considered appropriate or where necessary, provision for write-off is made against the trade receivable. At year-end management do not consider there to be any material exposure that has not been covered by impairment. The risk of doing business in Africa is mitigated through advance payments and the use of letters of credit.

It is group’s policy to deposit short-term cash with 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 R96,2 million (2004: R100,2 million)Soft facilities R464,4 million (2004: R162,6 million)



43. Adoption of International Financial Reporting Standards (“IFRS”)

As part of the listing requirements, Business Connexion Group Limited is required to adopt IFRS for the year ended 31 May 2006.

The following significant ares have been identified as having an impact on the group in terms of IFRS:

• IFRS 1, first-time adoption of International Financial Reporting Standards, allows an entity to set the cumulative translation

differences to nil. This exemption will be applied by Business Connexion Group.

• IFRS 2, Share based payments requires Business Connexion Group to assess the impact of the share options as an expense.

Currently only issue 18 and 18A would have an impact on the IFRS numbers.

• IAS 16, Property, plant and equipment, has resulted in Business Connexion reassessing the components of the assets, the

residual value and the useful lives to ensure that this statement is complied with.

• IAS 17, Leases has an effect on the finance leases. The finance leases on the properties will be fair valued in terms of the

optional exemption in IFRS 1.


Percentage holding Number of shares Amount invested Net amount advanced

2005%

2004%

2005 2004 2005R000

2004R000

2005R000

2004R000

Direct holdings

South AfricaBusiness Connexion (Pty) Limited 74,99 74,99 43 371 43 371 1 307 595 1 307 595 452 012 271 479

Business Connexion Investments (Pty) Limited 100 100 100 100 54 54 (67 025) (11 107)

Business Connexion Technology Holdings (Pty) Limited 100 100 100 100 601 645 601 645 (253 786) (118 998)

Indirect holdings through Business Connexion (Pty) LimitedSouth AfricaEC Net (Pty) Limited 100 100 300 300

Business Connexion Solutions Holdings (Pty) Limited 100 100 354 676 354 676 107 071 107 071 62 11 881

NamibiaBusiness Connexion Namibia (Pty) Limited 75 75 2 625 2 625 7 079 7 079 4 139 3 770

MauritiusSifa Systems Limited 100 2 2 504 13 654United KingdomQ Data Europe Limited 100 100 2 100 2 100 4 062 4 062

Indirect holdings through Business Connexion Technology Holdings (Pty) LimitedSouth AfricaNanoteq (Pty) Limited 100 100 100 100

Indirect holdings through Sifa Systems LimitedTanzaniaBusiness Connexion (Tanzania) Limited 83,5 1 700ZambiaMulti Vendor Services Limited 85 835A full list of subsidiaries is available to shareholders, on written request, from the registered office of the company.

Annexure A: Principal subsidiaries for the year ended 31 May 2005

Annexure B: Principal associatesfor the year ended 31 May 2005

Effective% holding

Name of associate Nature of business 2005 2004

South AfricaPerago Financial System Enablers (Pty) Limited Application software provider 25,00

Intenda (Pty) Limited Application software provider 29,85 29,85

Digital Healthcare Solutions (Pty) Limited Medical service hub provider 39,13

United KingdomMosaic Software Holdings Limited Application software provider 37,17

During the course of the current year Perago Financial System Enablers (Pty) Limited, Digital Healthcare Solutions (Pty) Limited and Mosaic Software Holdings Limited were sold.


In 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 for Business Connexion Group Limited shares. In terms of a general meeting of shareholders held on 28 April 2004, the

meeting voted to create a new trust called Business Connexion Group Share Trust. At 31 May 2005 no activity has taken place in this trust.

The Comparex Holdings Share Purchase Trust

The Comparex Holdings Share Purchase Trust (“the Trust”) was formed in 1995, the object of which was to incentivise employees of the Comparex

Group by enabling them to acquire shares in Comparex Holdings Limited. In 1997, the share incentive schemes previously operated by the Q Data

Limited Securities Purchase and Option Trust were incorporated into the scheme. The Trust is empowered to operate a credit purchase scheme, a cash

purchase scheme and a share 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 force until 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 dividends

paid 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

is limited to 15% of the issued share capital of Business Connexion Group Limited. The Trusts are entitled to acquire the Business Connexion Group

Limited shares 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 in Business Connexion Group Limited.

Annexure C: Details of share incentive scheme optionsfor the year ended 31 May 2005


Options in issue as at 31 May 2005

Issue NoOption

priceAmended

price

Effectiveoption

priceOfferdate Vesting dates

Expirydate

Options at31 May

2005Additional

options

DimensionData

Holdingplc share

Issue3/3B R32,07 R3,47 R0,79 16 Jul 97 One third July 1998, 1999, 2000 Jul 2007 278 153 947 321

Issue 3D* R32,07 R25,57 R25,57 16 Jul 9720% July 1999, 2000, 2001, 2002, 2003 Jul 2007 266 264 133 132

Issue4/4B R24,90 (R3,70) (R0,84) 13 Jan 98 One third Jan 1999, 2000, 2001 Jan 2008 868 569 2 953 135

Issue 4D* R24,90 R18,40 R18,40 13 Jan 98 One third Jan 2001, 2002, 2003 Jan 2008 123 714 61 857

Issue 6/6B R40,85 R12,25 R2,78 1 Jun 99 One third June 2000, 2001, 2002 Jun 2009 191 217 650 138

Issue 7/7B R26,64 (R1,96) (R0,45) 13 Aug 99 One third Aug 2000, 2001, 2002 Aug 2009 836 000 2 842 400

Issue 8/8B* R53,44 R24,84 R5,65 1 Jun 99 One third June 2000, 2001, 2002 Jun 2009 72 680 247 112

Issue 8D* R53,44 R46,94 R53,44 1 Jun 99 One third June 2001, 2002, 2003 Jun 2009 69 200 34 600

Issue 9 R8,01 R1,51 R1,51 17 Apr 00 One third June 2002, 2003, 2004 Apr 2010 2 657 100

Issue 9.1 R8,01 R1,51 R1,51 17 Apr 00 One third June 2002, 2003, 2004 Apr 2010 300 000

Issue 12 R8,68 R2,18 R2,18 31 Jan 01 One third Nov 2001 Nov 2004

One third Nov 2002 Nov 2005 3 333

One third Nov 2003 Nov 2006 3 334

Issue 15 R8,82 R2,32 R2,32 29 Mar 01 One third Aug 2002 Aug 2005 869 009

One third Aug 2003 Aug 2006 1 105 394

One third Aug 2004 Aug 2007 1 249 736

Issue 18 R9,44 R2,94 R2,94 2 Feb 04 One third Aug 2005 Aug 2008 1 841 666

One third Aug 2006 Aug 2009 1 841 667

One third Aug 2007 Aug 2010 1 841 667

Issue 18A R9,58 R3,08 R3,08 5 Mar 04 One third Aug 2005 Aug 2008 233 333

One third Aug 2006 Aug 2009 233 333

One third Aug 2007 Aug 2010 233 334

Total options granted 15 118 703 7 640 106 229 589

Less options at prices above market value* (531 858) (247 112) (229 589)

Total options 14 586 845 7 392 994

Add additional options 7 392 994

21 979 839

Shares on hand in Trust 13 145 303

Shortfall to requirements 8 834 536


Annexure C: Details of share incentive scheme optionsfor the year ended 31 May 2005 (continued)

2005 2004

Movement in the Trust:

Opening balance of options granted 30 562 332 29 075 251

Options forfeited (1 122 284) (955 777)

Options exercised (6 681 239) (5 097 142)

New options granted 7 540 000

Total options outstanding to Business Connexion Group employees 22 758 809 30 562 332

Number of shares on hand in Trust (13 145 303) (19 826 542)

Number of options not covered by shares held by the Trust 9 613 506 10 735 790

Less options at prices above market value (778 970) (781 500)

8 834 536 9 954 290

Details of options exercised during the year:

Issue 2 110 000

Issue 3/3B 688 913 702 624

Issue 4/4B 2 733 272 2 395 870

Issue 7/7B 586 960

Issue 9 1 388 100 697 100

Issue 9.2 75 000 75 000

Issue 12 3 333

Issue 14 200 000

Issue 15 1 592 621 529 588

6 681 239 5 097 142

Notes

B = Additional Comparex Holdings Limited options 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.

Closing price 31 May:

Business Connexion Group Limited R4,80 R3,60

Dimension Data Holdings plc R3,95 R3,35

Total fair value of Business Connexion Group Limited shares held by the Trusts R63 097 454 R71 375 551

Loan to Business Connexion Technology Holdings (Pty) Limited R190 million R167 million


Annexure D: Details of directors’ emolumentsfor the year ended 31 May 2005

Remuneration paid to executive directors

Name Period

Basicsalary

R

Performance

bonusesR

Allowancesand

benefitsR

Pensioncontri

butionsR

2005R

2004R

A C Farthing June 2004 May 2005 743 233 1 357 027 310 558 70 282 2 481 100 1 914 125

L B Mophatlane June 2004 May 2005 898 475 586 870 312 336 1 797 681 932 275

P A Watt June 2004 May 2005 1 494 808 2 643 226 494 194 177 647 4 809 875 3 555 214

M W Schoeman # 793 416

3 136 516 4 587 123 1 117 088 247 929 9 088 656 7 195 030

Executive directors’ service contracts are the same as for all employees in the group with a notice period of 30 days and no pre determined retirement obligations.

# M W Schoeman resigned on the 3 February 2004.

Remuneration paid to non-executive directors

Name Period

Directors’fees

RChairman

R

Deputychairman

R

Chairmanof

committeeR

Memberof

committeeR

Total Rand2005

R

Total Rand2004

R

R S Berkowitz ~ June 2004 May 2005 56 000 300 000 28 000 28 000 412 000 400 000

D M Nurek ~ * June 2004 May 2005 56 000 150 000 56 000 262 000 250 000

J F Buchanan * ~ June 2004 May 2005 56 000 28 000 28 000 112 000 100 000

F J van der Merwe * June 2004 May 2005 56 000 28 000 84 000 75 000

L Lambrechts * # 4 167

W J C Mitchell # 37 500

224 000 300 000 150 000 56 000 140 000 870 000 866 667

# L Lambrechts resigned on 1 July 2003 and W J C Mitchell resigned on 4 December 2003.

The payments in the prior year were paid by Business Connexion Technology Holdings (Pty) Limited and related to services as Comparex Holdings directors and are shown for comparative purposes.

* Members of the Audit Committee~ Members of the Remuneration Committee


Annexure E: Details of directors’ share optionsfor the year ended 31 May 2005

Name IssuedBalance

31 May 2004Options

exercisedBalance

31 May 2005

Executive directors

A C Farthing 9 100 000 — 100 000

9 300 000 — 300 000

15 200 000 (66 667) 133 333

18A 200 000 — 200 000

800 000 (66 667) 733 333

P A Watt 7 300 000 — 300 000

7* 1 020 000 — 1 020 000

15 126 000 (42 000) 84 000

18A 500 000 — 500 000

1 946 000 (42 000) 1 904 000

2 746 000 (108 667) 2 637 333

* Additional options arising from dividend in specie on 13 March 2000 as per Annexure C.

The following options were sold during the year by the directors during the year:

Name

Number of options exercised

Option price

Share price at date of sale

Gain onoptions

exercised

A C Farthing 66 667 R2,32 R4,75 R162 001

P A Watt 42 000 R2,32 R4,55 R93 660

Directors’ interest in securities

Direct Beneficial indirect Total

Name 2005 2004 2005 2004 2005 2004

Ordinary shares

R S Berkowitz 15 000 7 500 15 000 7 500

P A Watt 7 500 7 500 7 500 7 500

A C Farthing 3 000 3 000 3 000 3 000

F J van der Merwe 7 000 7 000 13 000 20 000 7 000

32 500 25 000 13 000 45 500 25 000

Subsequent to the year end Mr J F Buchanan acquired 10 000 ordinary shares in an indirect beneficial capacity and Mr D M Nurek acquired 40 000 ordinary shares in an indirect beneficial capacity.

It has been ascertained that the 13 000 ordinary shares held in a non-beneficial capacity by Mr F J van der Merwe, were acquired, prior to him becoming a non-executive director.


Directors’ summary curriculum vitae31 May 2005

Reginald Selwyn Berkowitz (68)

Law certificate (Natal)

Reginald Berkowitz was admitted as an attorney, a notary public and

conveyancer of the Natal High Court. He was previously a partner

in Moss-Morris Greenberg Cohen & Berkowitz, and a senior partner

in Berkowitz Kirkel Cohen Wartski Greenberg. Currently he is a

consultant to Investec as a legal adviser and a director of certain

of Investec’s subsidiaries. He is the chairman and non-executive

director of Business Connexion Group Limited. He was previously

a non-executive director of Comparex Holdings Limited with effect

from 24 June 2002.

David Morris Nurek (55)

Diploma in Law (UCT)

Graduate Diploma in Company Law (UCT)

David Nurek is currently an executive of Investec and a non-executive

of a number of JSE listed companies and was previously chairman of

Sonnenberg Hoffmann & Galombik and the deputy chairman and a

non-executive director of Business Connexion Group Limited. He was

previously a non-executive director of Comparex Holdings Limited

with effect from 24 June 2002.

Peter Anthony Watt (64)

BSc (Eng), MBL

Peter Watt graduated from the University of the Witwatersrand in

1964, with a Bachelor of Science degree in Chemical Engineering and

has completed a Master of Business Leadership degree through the

University of South Africa. He has extensive managerial experience

and was appointed deputy chairman of Altron in 1993, a position

he held until 1997, when he was appointed chief executive officer

of Dorbyl Automotive Technologies. He held this position until 1999,

when he was appointed chief executive officer of Comparex Africa

and a director of Comparex Holdings Limited. In February 2003,

following the disposal of the European operations of Comparex, he

was appointed chief executive of Comparex. He is a founder member

of the National Economic Forum and Business South Africa and a

member of the Presidential National Commission for ITC. Peter Watt

is the CEO of Business Connexion Limited and Business Connexion

(Pty) Limited.

Alan Charles Farthing (48)

CA(SA)

Alan Farthing is a Chartered Accountant and has been in the IT

industry for a number of years, all of which have been spent at

Business Connexion. Alan is the Financial Director of Business

Connexion Limited and Business Connexion (Pty) Limited.

John Frederick Buchanan (61)

CA(SA), BTh

John Buchanan qualified as a Chartered Accountant in 1967 and

completed the Executive Development Programme in Columbia

University in 1982. He has extensive commercial experience at large

corporations, including Cadbury Schweppes (South Africa) Limited and

Nampak Limited. He is presently a non-executive director at Aspen

Pharmacare Holdings Limited and chairman of the Audit Committee

at Business Connexion Group Limited. John is the Non-Executive

Chairman of the Audit and Risk Committee. He was previously a non-

executive director of Comparex Holdings Limited with effect from

27 January 2003.

Francois Johannes van der Merwe (48)

BA LLB (University of Stellenbosch)

MA (University of Oxford)

Francois van der Merwe practises as an attorney in Stellenbosch. He

received a Rhodes scholarship to Oxford University and has a MA

(Jurisprudence) and a BA (Law) and LLB from Oxford University and

Stellenbosch University respectively. He is currently serving as non-

executive director of several companies including certain JSE listed

companies. He was previously a non-executive director of Comparex

Holdings Limited with effect from 24 June 2002.

Leetile Benjamin Mophatlane (32)

BCom (University of Pretoria)

In 1996, Benjamin Mophatlane founded the former Business

Connection, a computer reseller focused on Government and

parastatals. He holds a BCom (Accounting) degree from the University

of Pretoria. In 2001, the company merged with Seattle Solutions to

form Business Connexion, an integrator of business solutions focused

on Microsoft products. Benjamin has served as a managing director of

the company since inception. He is currently a member of the Black

Management Forum, Electronic Industries Federation of South Africa,

Black Information Technology Forum And the Western Cape Investment

and Trade Promotion. In 2000, he was invited to join the Presidential

visit to the United States and was the winner of the Junior Chamber

South Africa – For Outstanding Young South Africans. Benjamin was

named the IT personality of the year for 2002 by the Computer Society

of South Africa in association with the ITWeb and Meta Group for his

and company’s contribution to the transformation of the IT sector.


Shareholders’ analysisfor the year ended 31 May 2005

Analysis of shareholdings

Range Number of shares

Number of

shareholders % of total

Number of

shares held

% of

shares held

1 – 1 000 4 690 53,05 1 387 006 0,53

1 001 – 10 000 2 904 32,85 12 277 169 4,67

10 001 – 100 000 1 038 11,75 30 715 216 11,69

100 001 – 1 000 000 174 1,97 54 802 965 20,87

Over – 1 000 000 34 0,38 163 454 556 62,24

Totals 8 840 100,00 262 636 912 100,00

Distribution of Shareholders

Category of Shareholders

Number of


Number of

shares held

% of

shares held

Banks 39 0,44 8 964 907 3,41

Close corporations 86 0,97 2 604 560 0,99

Endowment funds 53 0,60 3 897 500 1,48

Individuals 7 281 82,36 17 997 866 6,85

Insurance companies 18 0,20 32 263 703 12,28

Investment companies 35 0,40 13 597 800 5,18

Medical aid schemes 4 0,05 980 700 0,37

Mutual funds 191 2,16 53 508 100 20,37

Nominees and trusts 366 4,14 8 288 805 3,16

Other corporate bodies 177 2,00 4 077 100 1,55

Pension funds 139 1,57 65 624 262 24,99

Private companies 411 4,66 5 799 250 2,21

Public companies 39 0,44 31 560 440 12,03

Share trust 1 0,01 13 471 919 5,13

Totals 8 840 100,00 262 636 912 100,00

Shareholders spread

Number of


Number of

shares held

% of

shares held

Non-public shareholders 7 0,08 72 365 405 27,55

Directors 4 0,05 32 500 0,01

Share trust 1 0,01 13 471 919 5,13

Holdings 10%+ 2 0,02 58 860 986 22,41

Public 8 833 99,92 190 271 507 72,45

Totals 8 840 100,00 262 636 912 100,00

Beneficial shareholders owning 3% or more

Number of

shares held % of total

Persetel Q Data Africa Holdings Limited 29 508 195 11,24

Liberty Life Association of Africa Limited 29 352 791 11,17

RMB Asset Managers 24 916 474 9,49

Stanlib Asset Managers 23 290 441 8,87

Comparex Holdings Share Purchase Trust 13 471 919 5,13

Standard Trust Company Limited 10 894 011 4,15


Shareholders’ diaryfor the year ended 31 May 2005

Financial year end May

Annual general meeting January

Reports Published

Interim for half-year to November February

Preliminary announcement of annual results August

Annual financial statements November


Notice of annual general meetingBusiness 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”)

Notice is hereby given that the second 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 12 January 2006 for the following

purposes:

1. To receive, consider and adopt the annual financial statements

of the company for the financial year ended 31 May 2005.

2. To re-appoint Deloitte & Touché as the independent auditors of

the company for the ensuing financial year.

3. To re-elect Mr D M Nurek as a director, who retires by rotation

in accordance with the company’s articles of association and

being eligible, offers himself for re-election. A brief curriculum

vitae in respect of Mr Nurek appears on page [117] of the

annual report of which this notice of annual general meeting

forms part. Mr F J van der Merwe who also retires by rotation

in accordance with the company’s articles of association has not

made himself available for re-election.

4. To transact such other business as may be transacted at an

annual general meeting.

5. As special business, to consider and, if deemed fit, to pass, with

or without modification, the following special and ordinary

resolutions:

Ordinary Resolution Number 1

“Resolved that such number of ordinary shares as may be required for

purposes of the Business Connexion Group Share Trust (“Share Trust”)

(which will not exceed 15% of the entire issued share capital 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 issue

these shares from time to time in accordance with the provisions

of the Share Trust, subject to the provisions of the Companies Act,

1973, the articles of association of the company and the Listings

Requirements of the JSE Limited.”

In addition, the granting, in accordance with the provisions of the

Share Trust, of options in respect of 5 200 000 (five million two

hundred thousand) ordinary shares in the company at a strike price

of R5,37 (five rands and thirty seven cents) per share, and the issue

of the underlying shares should any such options be exercised, be

and are hereby approved for purposes of Rule 19 of The Securities

Regulation Code and the Rules of the Securities Regulation Panel.”

The board of directors of the company resolved on 7 November 2005,

to issue further options in accordance with the provisions of the

Business Connexion Group Share Trust. However, as at the date of

issue of this notice of annual general meeting, the board of directors

of the company has reason to believe that a bona fide offer for shares

in the company might be imminent. The shareholders are therefore

required, in terms of Rule 19 of The Securities Regulation Code and

the Rules of the Securities Regulation Panel, to approve the issue

of any authorised but unissued secureties, and the issue or grant of

options in respect of unissued securities. Further information about

the anticipated offer was not available as at the date of issue of this

notice of annual general meeting.

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, 1973 (“Companies Act”), to

acquire securities issued by the company, subject to compliance with

the requirements of the Companies Act, the Listings Requirements

(“Listings Requirements”) of the JSE Limited (“JSE”) 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 that class acquired thereafter,

an announcement in compliance with the Listings Requirements

must be published as soon as reasonably possible and by not 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

or arrangement 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 Listings

Requirements 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 the JSE 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 business days 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 the company’s issued securities of that class at the date

of passing of this special resolution;

– 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 a subsidiary’s behalf; and

– the company, or a subsidiary of the company, may not acquire

securities during a prohibited period, as defined in the Listings

Requirements.”

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 may consider appropriate in the circumstances. Accordingly,

the method by which the company, or a subsidiary of the company,

will acquire securities issued by 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 place are 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 months after

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 consolidated assets of the company and the group, fairly

valued in accordance with South African Statements of Generally

Accepted Accounting Practice, will exceed the consolidated

liabilities of the company and the group;

– the ordinary capital and reserves of the company and the group

will not be inadequate in the ordinary course of business; and

– the working capital of the company and the group will not be

inadequate 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 (“Listings

Requirements”) of the JSE Limited:

• directors (pages 8 and 9);

• major shareholders (page 120);

• directors’ interests in securities (page 118); and

• share capital of the company (page 97)

There have been no material changes in the affairs or financial

position of the company and its subsidiaries since the date of

signature of the audit report and the date of 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 that are pending or threatened, that may have or have


Notice of annual general meeting(continued)

had in the recent past, being at least the previous 12 months, a

material effect on the company and the group’s financial position.

The directors collectively and individually accept full responsibility

for the accuracy of the information given and certify that to the

best of their knowledge and belief there are no facts that have

been omitted which would make any statement false or misleading

and that all reasonable enquiries to ascertain such facts have been

made and that the above special resolution and additional disclosure

in terms of section 11.26 of the Listings Requirements pertaining

thereto contain all information required by law and the Listings

Requirements.

The reason for and effect of the special resolution is to grant the

company, or a subsidiary of the company, a general authority in terms

of the Companies Act, 1973 (“Companies Act”), to acquire securities

issued by the company. Such general authority will provide the Board

with flexibility, subject to the requirements of the Companies Act

and the Listings Requirements, to acquire securities should it be in

the interests of the company at any time.

Voting and proxies

A 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 proxy need 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 the meeting should

the member decide to do so. Forms of proxy must be completed

and returned to Ultra Registrars (Pty) Limited, 11 Diagonal Street,

Johannesburg 2001, Republic of South Africa, not later than

48 (forty-eight) hours (excluding Saturdays, Sundays and public

holidays) prior to the meeting. For the convenience of registered

members of the company, a form of proxy is enclosed herewith and

forms are also obtainable from the company secretary, Business

Connexion Management Services (Pty) Limited, Business

Connexion Park North, 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 poll, every

member of the company 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

shareholders who are:

• holding Business Connexion ordinary shares in certificated form;

or

• are recorded on the electronic sub-register 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 should instruct their CSDP or broker to provide them with a

Letter of Representation, or they must provide the CSDP or broker

with their voting instructions in terms 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) Limited

Secretaries

7 November 2005

Business Connexion Park North, 789 Sixteenth Road

Randjespark, Midrand 1685

Republic of South Africa


Form of proxy

For use at the second annual general meeting of Business Connexion which will be held in the Business Connexion Auditorium, Business Connexion

Park North, 789 Sixteenth Road, Randjespark, Midrand 1685 on 12 January 2006 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

of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed thereat and at each adjournment thereof and

to vote for or and/or against the resolutions and/or abstain from voting in respect of the ordinary shares registered in my/our name/s, in accordance

with the instructions/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

of the abovementioned Annual General Meeting.

I/We desire my/our proxy to vote on the resolutions to be proposed, as follows:

For Against Abstain

1. Resolution to adopt the annual financial statements

2. To re-appoint Deloitte & Touche as auditors

3. To re-elect Mr D M Nurek as a director

4. Resolution to grant authority to the directors to issue shares in terms of the

Share Trust and approval to grant share options – ordinary resolution number 1

5. 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 2005/2006

Signature

Assisted by me (where applicable) (refer to note 4)

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

votes and as to whether or not he/she abstains from voting.

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”)


Notes

1. A member entitled to attend and vote at the abovementioned meeting is entitled to appoint one or more proxies to attend, speak and upon a poll,

vote in his stead or abstain from voting. The proxy need not be a member of the company.

2. To be valid this form of proxy must be completed and returned to Ultra Registrars (Pty) Limited, 11 Diagonal Street, Johannesburg 2001, Republic of

South Africa, not later than 48 (forty-eight) hours (excluding Saturdays, Sundays and public holidays) prior to the meeting.

3. In case of a joint holding, the first-named only need sign.

4. A minor must be assisted by his/her guardian, unless proof of competency to sign has been recorded by the company.

5. The authority of a person signing a proxy in a representative capacity must be attached to the proxy unless that authority has already been recorded

by the company.

6. Any alteration or correction made to this form of proxy must be initialled by the signatory/(ies).

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