A n n u a l R e p o r t 2 0 0 4

The power of X = creating value together

C o n t e n t s

3 Group Financial Highlights

4 Chairman’s Report

8 Directorate

10 Executive Committee

12 Business Connexion’s Footprint

13 Group Structure

14 Review of Operations

26 Corporate Governance

40 Value Added Statement

42 Administration

43 Annual Financial Statements

92 Directors’ Summary Curriculum Vitae

93 Shareholders’ Analysis

94 Shareholders’ Diary

95 Notice of Annual General Meeting

Form of Proxy

visionx

xA s a t r u l y S o u t h A f r i c a n c o m p a n y , t o b e t h e l e a d i n g

i n t e g r a t o r o f I C T b a s e d b u s i n e s s s o l u t i o n s t h a t

m a k e o u r c l i e n t s m o r e s u c c e s s f u l .

x

valuesx

T h e f o l l o w i n g v a l u e s u n d e r p i n t h e p u r s u i t o f o u r

m i s s i o n :

C l i e n t C e n t r i c i t y :

L o o k a t b u s i n e s s t h r o u g h t h e c l i e n t s ' e y e s !

F o r e s i g h t :

L o o k f o r w a r d a n d o u t w a r d t o c r e a t e t h e f u t u r e !

P o s i t i v e A t t i t u d e :

F o c u s o n s o l u t i o n s , n o t p r o b l e m s !

S y s t e m s T h i n k i n g :

U n d e r s t a n d t h a t y o u ' r e p a r t o f a b i g g e r p i c t u r e !

T r u s t w o r t h i n e s s :

T r u s t o t h e r s a n d k n o w t h a t o t h e r s r e l y o n y o u !

I n d i v i d u a l V a l u e :

T r e a t o t h e r s a s y o u w a n t t o b e t r e a t e d !

R e c o g n i t i o n :

R e w a r d s w i l l c o m e f r o m d o i n g t h e r i g h t t h i n g s r i g h t !

D e s c r i p t i o n o f B u s i n e s s

PG2

De

sc

rip

tio

n o

f B

us

ine

ss

x

Business Connexion Group Limited is one of the largest black empowered ICT

companies on the African continent with a proud 25-year track record. A leading

integrator of competitive, innovative business solutions based on Information and

Communications Technology (ICT), Business Connexion has offices in all major centres

throughout South Africa. The company employs more than 4 000 employees, 27% of

whom 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. Business solutions are developed and

implemented by drawing on expertise from the Technology Infrastructure, Business

Applications and Professional and Outsourcing Services competencies.

Solutions are designed to meet clients’ strategic and operational business needs.

Business Connexion runs mission-critical ICT systems and manages products, services

and solutions for many JSE listed companies, 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

such as financial services, telecommunications, petrochemical, healthcare, automotive

and the public sector among others.

In our ongoing quest to deliver innovative solutions that add real business value to

our clients, Business Connexion combines our own expertise, tools, resources and

vertical sector knowledge with that of our partners. We nurture strong relationships

with many of the world’s leading ICT companies including Actuate, Avaya, Citrix,

Cisco Systems, Cognos, EMC2, GEAC, HP, IBM, Microsoft SA, Nortel Networks, Oracle,

Opentext, SAP, Sage, Stratus, Sun Microsystems, TTI-Telecom and Verity. Business

Connexion has attained top-level certification and received awards from many of

these 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.

2004 % 2003 % 2002 % 2001 % 2000R000 change R000 change R000 change R000 change R000

Operating results

Revenue 2 811 771 4 2 701 375 1 2 667 752 2 2 617 415 9 2 410 486

Operating profit 125 695 (12) 142 049 (13) 162 894 (14) 189 407 >100 (8 774)

Profit/(loss) attributable to shareholders 120 448 13 106 540 16 92 176 (22) 118 042 >100 (73 901)

Headline earnings 86 617 (22) 111 407

Cash generated from operations 123 877 (56) 284 536 87 151 762 (35) 232 419 12 207 302

Balance sheet

Shareholders’ equity 965 854 74 555 798 33 418 651 44 290 556 58 184 360

Total assets 2 067 316 48 1 400 268 9 1 279 630 4 1 225 485 6 1 157 970

Total liabilities 1 101 462 30 844 470 (2) 860 979 (8) 934 929 (4) 973 610

Interest bearing liabilities 293 843 7 273 969 (2) 280 289 280 804 (1) 283 514

Ordinary share performance

Weighted number of shares in issue (000) Note 1 253 551 253 425

Earnings per share (cents) 47,5 13 42,0

Headline earnings (cents) 34,2 (22) 44,0

Number of shares in issue at year endless treasury shares (000) 242 810 149 521

Net asset value per share (cents) 380,9 74 219,3

Financial ratios

Operating margin (%) 4,5 5,3 6,1 7,2 (0,4)

Return on shareholders’ equity (%) 9,0 20,0

Return on total assets (%) 4,2 8,0

Shareholders’ equity to total liabilities (%) 87,7 65,8 48,6 31,1 18,9

Interest bearing debt to equity (%) 30,4 49,3 67,0 96,6 153,8

DefinitionsShareholders’ equity Total 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

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

Interest bearing liabilities Non-current interest bearing liabilities and short-term borrowings

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

Note 1

The number of shares includes both ordinary and preference shares in the comparative numbers as the preference shares are 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 the current year. The comparatives have only been included for 2003 as

the company was not listed in earlier years.

Note 2

2004 includes the adjustments required for the adoption of AC133. Comparative figures are not adjusted. PG3

Gro

up

Fin

an

cia

l H

igh

lig

hts

G r o u p F i n a n c i a l H i g h l i g h t s for the years ended 31 May

C h a i r m a n ’ s R e p o r t

PG4

Ch

air

ma

n’s

Re

po

rt

xW i t h t h e m e r g e r s u c c e s f u l l y c o m p l e t e d , m a n a g e m e n t

c a n n o w f o c u s o n r e a l i s i n g t h e c o n s i d e r a b l e

p o t e n t i a l t o b e d e r i v e d f r o m i t .

looking aheadx

The challenging business climate that prevailed

within the ICT industry for most of the previous

financial year, continued during the year under

review. In fact, it would be true to say that trading

conditions deteriorated somewhat and that the

last six months of the reporting period were amongst

the worst ever experienced within the local industry.

While these adverse conditions impacted on the

financial results for the period, I am happy to say

that they did not divert the company from its

plans to restructure the group and to transform it

into Africa’s leading black empowered ICT company.

Our longstanding search for an empowerment

partner was rewarded in October 2003, when

Business Connexion Investments was identified as

such a partner. The transformation process

then took a giant stride forward in January 2004,

when the businesses of Comparex Africa (Pty)

Limited and Business Connexion Solutions (Pty)

Limited were merged. Four months later, the

merged businesses adopted the Business Connexion

brandname, further reflecting management’s

commitment to transformation within the company.

In April 2004, Comparex Holdings Limited share-

holders approved the Board’s proposal to restructure

the group. The proposal was aimed at simplifying

the group’s structure and facilitating the promised

return to shareholders of R1,57 billion in surplus

cash, via a special dividend of R5,50 per share. As

part of the restructuring process, Comparex Holdings

Limited was liquidated and a further R1,00 a share

was paid to Comparex Holdings Limited shareholders

by way of a final liquidation dividend.

This paved the way for the listing of Business

Connexion Group Limited on the JSE Securities Exchange

on 24 May 2004, as the holding company of a 74,99%

interest in Business Connexion (Pty) Limited; the

holder of minority interests in Digital Healthcare

Solutions (Pty) Limited, Perago Financial System

Enablers (Pty) Limited and Mosaic Software Holdings

Limited; and the holder of cash reserves totalling

R782 million. Comparex Holdings Limited was

delisted from the JSE Securities Exchange on

1 June 2004.

The merger satisfied the demanding criteria set at

the outset of our search for an empowerment partner,

namely to identify one that would add value to the

intellectual capital and expertise within the business,

as well as assist us materially in transforming the

business fully over time.

Whilst the merger is still in its infancy, the positive

contribution from the management and staff of

our new partners has already made an impact.

They have filled key positions on the Boards of

Directors as well as several positions on our

executive management teams, not to mention many

important roles in the operational areas.

Their presence, together with other empowerment

initiatives underway within the business, has already

been recognised by the independent BEE research

company EmpowerDex, who has accorded us an

“A” rating as a black empowered enterprise.

Our resulting ability to meet the anticipated

requirements of the forthcoming ICT Charter, is already

proving advantageous to us in securing new business

within both the public and private sectors.

PG5

Ch

air

ma

n’s

Re

po

rt

C h a i r m a n ’ s R e p o r t (continued)

PG6

Ch

air

ma

n’s

Re

po

rt

Financial Performance

As mentioned earlier, the year under review was

one of the toughest on record for the local ICT

industry. In the face of a depressed local market

and an export dependent sector that was challenged

by a strong Rand, significant orders for ICT products,

solutions and services were scarce.

However, despite these difficult operating conditions

as well as the formidable task of restructuring and

re-branding the group in the wake of the merger,

revenue remained virtually unchanged at R2,8 billion

(2003: R2,7 billion). While competitive market

pressures constrained margins, management

maintained a tight rein on operating costs to

achieve a very creditable, albeit reduced, operating

profit of R125,7 million (2003: R142,1 million).

The reduction in operating profit for the year was

reflected in a commensurate decline in headline

earnings per share to 34,2 cents (2003: 44,0 cents).

Other than the funding for its properties, the

group has minimal debt funding its operating

activities. This remains a distinguishing factor

within the local ICT industry, where most competitors

are encumbered – some heavily – by debt.

It is important to note, however, that these results

are not directly comparable with those of Comparex

Holdings Limited for the previous financial year.

This is largely because interest earned on the

surplus cash prior to its distribution, together with

the results of Mosaic, Perago and Nanoteq for the

11 months prior to their acquisition by Business

Connexion from Comparex Holdings Limited,

were part of the results of Comparex and not of

Business Connexion.

Corporate Governance

This remains at the forefront of management’s

agenda and the group continues to pursue the

highest tenets of sound corporate governance, as

embodied in the King I and II Reports, and other

leading standards of ethical business excellence.

Future Outlook

With the merger successfully completed, manage-

ment can now focus on realising the considerable

potential to be derived from it. Not least of these

are the growing opportunities within the public

sector, where we believe there will be considerable

demand for ICT related solutions.

At the same time, we remain firmly committed to

our proven solutions orientated and client centric

business model. Founded on this model, more than

70% of our business continues to be services and

annuity based. In particular, we see our Outsourcing

business as an important growth area within the

private sector, as the business climate improves.

The impending introduction of the ICT Charter will

provide clarity with regard to the future outlook for

the local industry. We are fortunate to have

concluded a merger with our BEE partner of choice

and, with a road map towards transformation at all

levels of our business, we are positioned to meet or

exceed the anticipated requirements of the Charter.

Against this background, Business Connexion can

take advantage of any improvement in the general

business climate, and grow in line with the

improvement in market conditions.

Welcome and Appreciation

I welcome to the Board of Directors of Business

Connexion Group Limited, Mr Benjamin Mophatlane,

who joined as Deputy Chief Executive Officer. He

was formerly Chief Executive Officer of our merger

partner Business Connexion Solutions (Pty) Limited.

In the short time since his appointment, Mr

Mophatlane has made an important contribution to

the management of the group.

I would also like to express my thanks to Mr Jack

Mitchell, who served on the Board of Comparex

Holdings Limited until December 2003. I wish him

every success in his future endeavours.

I would like to express my personal appreciation to

all our stakeholders – our clients for their support

and loyalty; our suppliers and strategic partners

for their invaluable contribution to our success;

and our management and staff for their unwavering

commitment to achieving beyond the ordinary and

to maintaining the group’s position at the forefront

of the ICT sector in Africa.

Finally, I would like to thank my fellow directors

for their unstinting support during this difficult

year. I have no doubt that, as a team, we will

continue to rise successfully to the challenges and

opportunities that will undoubtedly confront us in

the year ahead.

Reginald Berkowitz

PG7

Ch

air

ma

n’s

Re

po

rt

D i r e c t o r a t e

PG8

Dir

ec

tora

tae

John Frederick Buchanan (60)*CA(SA)

Non-executive Director

Appointed to the Board on 2 February 2004

Francois Johannes van der Merwe (47)*BA LLB (University of Stellenbosch), BA MA(University of Oxford)

Non-executive Director

Appointed to the Board on 2 February 2004

David Morris Nurek (54)*~Diploma in Law (UCT)Graduate Diploma in Company Law (UCT)

Deputy Chairman

Non-executive Director

Appointed to the Board on 2 February 2004

Reginald Selwyn Berkowitz (67)~Law Certificate (Natal)

Chairman

Non-executive Director

Appointed to the Board on 2 February 2004.

PG9

Dir

ec

tora

te

*Member of the Audit Committee~Member of the Remuneration Committee#Member of the Executive Committee

Peter Anthony Watt (63)#BSc (Eng), MBL

Chief Executive Officer

Appointed to the Board on 1 June 1999

Leetile Benjamin Mophatlane (31)#BCom (University of Pretoria)

Deputy Chief Executive Officer

Appointed to the Board on 2 February 2004

Alan Charles Farthing (47)# (British)CA(SA)

Financial Director

Appointed to the Board on 2 December 2002

E x e c u t i v e C o m m i t t e e

PG10

Ex

ec

uti

ve

Co

mm

itte

e

Chairman of the Executive Committee and Chief Executive Officer

Peter Watt

Deputy Chief Executive Officer

Benjamin Mophatlane

Group Executive:Special Projects

Matthew Blewett

Group Executive:Human Resources

Johann Burden

Group Executive:Marketing and Communication

Diana de Sousa

Group Executive:Finance

Alan Farthing

Group Executive:Business Applications

John Lagaay

Group Executive:Sales

Stuart Matthysen

Group Executive:Public Sector

Isaac Mophatlane

Group Executive:Technology Infrastructure and Africa

Tim Schumann

Group Executive:Strategic Positioning

Bridgman Sithole

Group Executive:International (UK)

Andre Vermeulen

Group Executive:Commercial

Marius Schoeman

Group Executive:Infrastructure Services and SMC

Mike Sewell

Group Executive:Strategy

Willem van Rensburg

Group Executive:Professional Services

Marthinus Wissing

PG11

Ex

ec

uti

ve

Co

mm

itte

e

Regional Offices

South AfricaHead Office – Midrand, Gauteng

Cape Town, Western Cape

Durban, KwaZulu-Natal

East London, Border Kei

Johannesburg, Gauteng

Port Elizabeth, Eastern Cape

Pretoria, Gauteng

AfricaWindhoek, Namibia

InternationalLondon, United Kingdom

Service CentresBethlehem

Bloemfontein

Cape Town

Durban

East London

George

Johannesburg

Kimberley

Klerksdorp

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

B u s i n e s s C o n n e x i o n F o o t p r i n t

PG12

Bu

sin

es

s C

on

ne

xio

n F

oo

tpri

nt

Business Connexion Investments (Pty) LtdReg. No. 2001/016929/07

Gadlex (Pty) Ltd

PG13

Gro

up

Str

uc

ture

G r o u p S t r u c t u r e (Main operating entities)

Comparex International (Pty) LtdReg. No. 1996/007425/07

Business Connexion Technology Holdings (Pty) Ltd

Comparex Africa Investments (Pty) LtdReg. No. 1994/002507/07

Business Connexion Investments (Pty) Ltd

Comparex Africa (Pty) LtdReg. No. 1993/003683/07

Business Connexion (Pty) Ltd

Comparex Africa Group LimitedReg. No. 1988/005282/06

Business Connexion Group Limited

Old name

Key

New name

74,99%

100%

75%

100%

39,13%

29,85%

37,17%

25,0%

100%

100%

100%100% 25,01%

Mosaic SoftwareHoldings Ltd

Perago Financial System Enablers

(Pty) Ltd

Nanoteq (Pty) Ltd

Digital HealthcareSolutions (Pty) Ltd

Intenda (Pty) Ltd

Q Data EuropeLimited

Business ConnexionNamibia (Pty) Ltd

Business ConnexionNamibia (Pty) Ltd

Comparex Namibia(Pty) Ltd

ECnet (Pty) Ltd

Business ConnexionSolutions (Pty) Ltd

xT h e “ P o w e r o f X ” p h i l o s o p h y e m b o d i e s t h e g r o u p ’ s

c o m m i t m e n t t o c r e a t e e x p o n e n t i a l r e a l b u s i n e s s

v a l u e f o r i t s c l i e n t s b y i n t e g r a t i n g t h e s t r a t e g i c

v a l u e o f I C T i n t o t h e i r b u s i n e s s s t r a t e g y .

solutionsx

R e v i e w o f O p e r a t i o n s

PG14

Re

vie

w o

f O

pe

rati

on

s

Introduction

In October 2003, Comparex Holdings Limited

announced that it had identified a potential

BEE partner in the form of Business Connexion

Investments (Pty) Limited, and that negotiations

were in progress to formalise a relationship between

the two companies. These negotiations were

concluded successfully in December 2003 and,

following the necessary shareholder and regulatory

approval, the businesses of Comparex Africa

(Pty) Limited and Business Connexion Solutions

(Pty) Limited, were merged with effect from

2 January 2004.

In terms of the merger, Business Connexion

Investments (Pty) Limited acquired a 25,01% interest

in the merged businesses, while Comparex Holdings

Limited via its subsidiary, Comparex Africa Group

(Pty) Limited, retained a 74,99% interest.

With the publication of the group’s interim results,

the Board announced its intention to restructure

the group and declared a dividend in anticipation

of liquidation of R5,50 per share.

The restructure was considered necessary to

simplify the group structure, eliminate unnecessary

consolidation layers in the group and facilitate

the repayment of surplus cash to shareholders.

The proposed restructuring of the group was

approved by Comparex Holdings Limited share-

holders at a general meeting on 30 April 2004.

This approval included the distribution of a final

dividend of R1,00 a share; a dividend in specie

of Business Connexion Group Limited (formerly

Comparex Africa Group (Pty) Limited) shares; the

liquidation and delisting from the JSE of Comparex

Holdings Limited; the listing of Business Connexion

Group Limited; and the amendment and creation

of share trusts.

Business Connexion Group Limited was listed

on the “IT – Software and Computer Services”

sector of the JSE Securities Exchange on Monday,

24 May 2004 and Comparex Holdings Limited was

delisted on 1 June 2004.

While the transformation initiative and the

restructuring of the group, which facilitated the

return of R1,57 billion to Comparex Holdings

Limited shareholders, were highlights of the past

financial year, management’s attention remained

firmly focused on the group’s operations. Sound

progress was made on all fronts, not least of which

was the ongoing refinement of the group’s client-

centric business solutions model and the growth of

business activities into Africa north of our borders.

These will be dealt with in greater detail further on

in this review. It is, however, appropriate at this

juncture to elaborate on the group’s re-branding

that commenced in April 2004.

The Re-branding of the Group

and the “Power of X” Philosophy

In April 2004, the group announced that it had

decided to adopt the “Business Connexion” brand,

which was launched on 28 April 2004.

The decision to adopt the name of the black

empowerment partner reaffirmed management’s

commitment to embrace transformation. The brand

PG15

Re

vie

w o

f O

Pe

rati

on

s

R e v i e w o f O p e r a t i o n s (continued)

PG16

Re

vie

w o

f O

pe

rati

on

s

was already established in the IT industry, had

commercial viability and was synonymous with

empowerment. It was also highly regarded in both

private and public sectors.

The brand was launched concurrently with the

“Power of X” campaign which has become a

philosophy, an approach and a way of working

that differentiates the company in the marketplace.

The ”X” symbolises a multiplier as the group believes

that the merger of the two companies was more

than a plus. The benefits are multiple as expressed

in the equation: (client-centric focus) x (unique

people) x (empowerment) x (innovative solutions)

= exponential value.

The philosophy embodies the group’s commitment

to create exponential real business value for its

clients by integrating the strategic value of ICT

into their business strategy.

The Solutions Integration Model

Clients are firmly positioned at the centre of the

Business Connexion world, and the group’s unique

and proven “Solutions Integration Model” represents

the way in which the group harnesses its depth

of skills, expertise and experience and configures

them in a way that delivers technology solutions

that best meet a client’s strategic business

requirements. It ensures a client-centric approach

that provides a unique blend of the flexibility and

close client contact of a small and mobile enterprise,

with the strength, resilience and diversity of a

large enterprise.

This disciplined yet flexible and proven approach to

solutions design and delivery is what sets Business

Connexion apart from its competitors.

The Business Connexion’s Strategic Solutions (SES)

team provides focus and co-ordination to define

Our “Solutions Integration Model” represents the way our integration of business solutions is configured around the client’s own business.

clients’ business problems and accesses and

integrates key competencies within Business

Connexion to provide thought leading solutions to

those business challenges.

Business Consulting

By definition, business consulting forms an integral

part of the SES team’s activities. Typically, these

activities range from solving the problem of

exchanging business critical information between

incompatible business software suites, to helping

businesses respond to competitive market pressures

by re-engineering and re-aligning their businesses.

Recognising that ICT deployment is conventionally

separated into three broad disciplines – planning,

building and running – the Business Consulting

unit operates within the planning phase, designing

processes and defining business practices to be

implemented within the building phase in order to

support business growth.

The Business Consulting unit also offers clients

support with the application of a number of other

global best practices. These include Information

Technology Infrastructure Library (ITIL), which specifies

ICT best practices; Total Cost of Ownership (TCO),

which takes a comprehensive, holistic view of

an organisation’s TCO issues; Theory of Constraints

(TOC), which looks at improving an organisation’s

productivity and revenues by eliminating

inefficiencies; and enterprise architecture, aligning

business requirements to IT enablement.

Looking back over the past year, market demand

was driven by cost-benefit procurement and value

sensitivity. IT suppliers responded by consolidating

their activities in the face of the heightened

competitiveness within the market. The IT consulting

industry responded similarly.

As a result, industries experienced a loss in revenue

during the review period as the market contemplated

the “perceived versus real benefits” gained from

previous investments in consulting, projects and

technology.

Looking forward, opportunity exists to capture

significant portions of the consulting and

technology market share – product and projects –

that will become available as a result of the

shift by IT consulting firms away from traditional

consulting to value delivery.

Management is confident that the company will

leverage on these opportunities, particularly in

the area of business improvement through

optimisation of business processes and enabling

technologies.

PG17

Re

vie

w o

f O

pe

rati

on

s

R e v i e w o f O p e r a t i o n s (continued)

PG18

Re

vie

w o

f O

pe

rati

on

s

Outsourcing

2004 2003R000 R000

External revenue 1 726,1 1 782,8

Operating profit 154,6 118,9

This competency, previously referred to as Managed

Services, comprises three separate focus areas:

Professional Services;

Infrastructure Services; and

Service Management Centre (SMC).

Professional Services

Business Connexion’s professional services competency

focuses on strategic, tactical, technical and

operational solutions using its broad skills base to

assist clients in extracting the best value from their

ICT investments. Skills offered include analysis and

design, project management and application

programming, amongst others.

The competency consolidated its leadership position

during the past year by acquiring more than 20 new

accounts. Many of these were secured by the

Local and Regional Authorities (LARA) business,

which has shown major growth during the review

period. Revenue is largely annuity based with

acceptable margins.

Although the market remains highly competitive,

management expects to maintain market leadership

during the year ahead.

The group’s UK office, Q Data Europe, provides

professional services based solutions to the

group’s multinational clients in the European

Union. A multi-lingual service management centre

was established during the year for a large petro-

chemical client, and further growth opportunities

exist in the telecommunications, financial services

and petrochemical industries. The office operated

profitably during the review period.

Infrastructure Services

Business Connexion is 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 past year was a challenging one for the

competency centre’s major clients, particularly those

in the manufacturing, mining and petrochemical

industries, who were adversely affected by a strong

Rand/US dollar exchange rate. Clients looked towards

Business Connexion for superior service and

reduced costs and this placed considerable pressure

on margins.

During the year, the competency centre implemented

ITIL processes and improved its internal systems to

produce an enhanced desktop services model.

Management expects business conditions to improve

in the new financial year. Several outsourcing

contracts have been renewed and the competency

centre continues to maintain a contract renewal

rate of more than 90%.

Focus will continue to be on industries with which

it is familiar and in which it has an established

track record.

The Service Management Centre (SMC)

The SMC is a world-class service management

outsourcing provider, offering end-to-end support

for all IT assets from desktops to servers and

applications to networking infrastructure. By auto-

mating the process of responding to and resolving

customer problems, and through strict compliance

with internationally recognised best practices

(ITIL), the SMC is able to service the demanding IT

environments of South Africa’s biggest corporations.

The competency centre introduced various new

technologies during the year to enhance service

levels and refine processes. This had a positive

influence on profitability.

Specific achievements in this regard included the

implementation of a world class IVR system;

implementation of ITIL processes for service desk

operations; WEB access for clients; and satellite

SMCs in the UK and USA linked directly to the central

systems processes and policies in Midrand, to provide

a consistent approach to service delivery for all clients.

Call volumes doubled compared to the previous

financial year and management expects this trend

to continue in the year ahead.

Business Applications

2004 2003R000 R000

External revenue 269,0 167,3

Operating profit (2,9) 21,9

The Business Applications Competency is a high-end

reseller that implements supports and maintains

business applications software. The division partners

with leading local and global product vendors

such as SAP, Cognos and Actuate to provide a

comprehensive IT solution.

The competency comprises:

Combined Design Engineers, a service alliance

partner to SAP Africa;

Customer Orientated Applications, a business

intelligence, knowledge and CRM specialist;

Q Data Dynamique, a human resources and

payroll solutions provider;

Mainstream Tetra, a financial solutions service

provider;

Geographic Information Systems, a data and

analysis service provider;

Nanoteq, an ICT security solutions provider;

and

Microsoft, a licencing, infrastructure architecture

and design and integration specialist.PG19

Re

vie

w o

f O

pe

rati

on

s

Combined Design Engineers (CDE)

Most of this competency centre’s clients are

multinationals who derive the bulk of their revenues

and profits from offshore operations. The robustness

of the Rand impacted severely on their businesses

over the past year, resulting in cost pressures

which curtailed their demand for CDE’s services.

Fortunately, its ability to deliver innovative value-

adding SAP solutions enabled it to achieve several

important client successes. It developed and launched

its SAP Support Centre and has formed alliances to

deliver optimal solutions to meet the International

Financial Reporting Standard (IFRS) requirements,

which will become mandatory by 2005. CDE is able

to support businesses that have to comply with this

requirement.

Customer Orientated Applications (COA)

COA focuses on providing Business Connexion clients

with business intelligence and knowledge manage-

ment solutions. The competency centre experienced

a challenging year but sustained its revenue through

existing client support contracts.

The Remedy product set was discontinued and an

exclusive reseller agreement was concluded with

Zantaz to distribute their Exchange Email Archiving

Solution. The competency centre is well positioned

for the new financial year, based on the annuity

income provided by a significant number of

client service contracts, and on the major growth

opportunities in business intelligence and knowledge

management solutions available to it from Microsoft.

Q Data Dynamique (QDD)

QDD specialises in developing and implementing

complete human resources management (HRM)

solutions, including time keeping and payroll

functions. All solutions are developed in South

Africa for South African businesses, and QDD

solutions have been adapted to almost every

local industry sector. Nearly 40% of all local

pay-slips generated in South Africa are produced

using QDD products.

For the second year running, the competency centre

substantially exceeded its profit target based on its

existing annuity revenue and on securing new annuity

revenue due to sales of the UniQue and DynamiQue

1.0 software suites. Substantial additional HRM

functionality was successfully incorporated into

the DynamiQue 1.0 suite during the past year. This

allowed QDD to aggressively attack the high-end

market, where managing the HRM function has

become a critical business requirement. It will

continue to do so in the year ahead.

Mainstream Tetra

Mainstream Tetra provides its clients with best-of-

breed business management tools such as enterprise

R e v i e w o f O p e r a t i o n s (continued)

PG20

Re

vie

w o

f O

pe

rati

on

s

resource planning, financial reporting and business

intelligence. Profitability was curtailed significantly

over the past year due to high selling costs and a

reduction in new licence sales. However, major client

wins were achieved in Africa with new SmartStream

licence sales in Zimbabwe and Malawi, and an

annuity services contract at a financial institution.

The strategy for growth in the new financial year

will include a continued emphasis on introducing

SmartStream into the rest of Africa; introduction

of the Finacle Core Banking application – a product

from Infosys, an Indian consulting and software

development company; marketing of Sales Logix,

a CRM application; and a more aggressive

selling strategy in the mid-tier ERP sector. The

competency centre believes it is positioned to take

advantage of any upturn in the market, based to a

significant degree on its SmartStream reference

sites in Africa and its partnership with Infosys in

the banking sector.

Nanoteq

This competency provides ICT security solutions

designed to mitigate IT risks throughout the client

enterprise and across the Intranet, Extranet, IT

infrastructure and database applications. Nanoteq

also designs, develops and supplies custom encryption

products for use by government agencies, both

locally and abroad.

Tough trading conditions saw Nanoteq’s revenues

decline during the year, resulting in a trading loss

for the period.

Microsoft

The merger added this important competency to

the Business Connexion Group’s extensive offering

of ICT-related resources. During the year under

review, the competency met its financial targets

and maintained its position as the country’s top

revenue producer for Microsoft in the corporate

environment.

Several major achievements were recorded during

the year including installations at a number of

leading clients. As a result, Business Connexion

received the prestigious “Systems Integrator of the

Year Award” for 2003/2004 from Microsoft SA.

Looking to the year ahead, this competency aims to

improve its services to licence revenue ratio. As the

major supplier of Microsoft products in SA, it is in

an excellent position to grow its services revenue.

The focus will be in assisting clients to maximise

the value of their Microsoft investment by building

business solutions using their Microsoft technology,

thereby eliminating the need for additional “bolt

on” packages.

PG21

Re

vie

w o

f O

pe

rati

on

s

Technology Infrastructure

2004 2003R000 R000

External revenue 816,7 751,3

Operating profit 14,7 30,3

Business Connexion partners with the most

successful global and local ICT companies to provide

clients with the foundation for their technology

infrastructure. The solutions it provides include

servers, storage, networking and the related services.

Networks

The Networks competency centre has a unique

blend of skills which, during the past year, were

instrumental in allowing it to gain an advantage

over its competitors, particularly in Africa where

growth arising out of the roll out of large

telecommunication networks was significant. The

competency centre increased its revenue while

making the transition from selling traditional

network infrastructure to providing fully converged

ICT solutions. New offerings include convergence,

broadband multimedia networking, IP telephony

and video conferencing.

Awards won during the year under review included:

Cisco Best First Tier Partner of the Year 2003; Cisco

IP Telephony Partner of the Year for Africa; Cisco

Customer Advocacy Award for Russia, Middle East

& Africa region (the only Cisco African partner to

achieve a regional award); the only Cisco solution

implementer and partner in Africa to obtain

Cisco IQ partnership (the highest level possible);

and the Top VCON audio and video conferencing

solutions provider.

Networks is positioned for growth in the next

financial year based on its extensive ICT skills,

strategic vendor relationships, specialisation, ability

to adapt to a changing market, and increased

focus on the public sector.

Persetel Q Vector

The Persetel Q Vector competency centre, which

focuses on enterprise systems, had a challenging

year in the wake of slow IT spending in the US

economy. This prompted their business partners

EMC2, IBM and SUN Microsystems, to dramatically

reduce their US dollar based prices to gain market

share. This resulted in an increase in hardware unit

sales but a decrease in turnover and profits due to

price erosion. Services growth continually adds to

the turnaround in the local market and management

expects this to take place in the year ahead.

The division was awarded the Top Systems Integrator

and Services Business Partner for IBM for 2003 in

South Africa; the EMC2 Sustained Income Partner in

Africa for 2003 and received a SUN Microsystems

High Volume Product Revenue Award.

R e v i e w o f O p e r a t i o n s (continued)

PG22

Re

vie

w o

f O

pe

rati

on

s

In the year ahead, Persetel Q Vector’s main focus

will be to grow its technology solutions business

through the successful introduction of new

product lines such as Stratus, HP and Egenera,

which have broadened its solution offering.

Through this competency centre, Business Connexion

remains the largest provider of total enterprise

systems solutions in southern Africa.

Support Services (SS)

This competency centre provides an end-to-end

year round 24X7 maintenance service to Business

Connexion clients. It performed well during the

year winning several major accounts and exceeding

its target. Competitive pricing, together with high

service level agreement performance levels, were

key success factors in winning these accounts.

SS expects to continue its growth into the new

year based on its competitive advantage, which

lies in its wide range of skills that are successfully

deployed in 31 service offices nationwide.

Growth into Africa

Business Connexion grew its revenues in Africa by

107% during the review period. Building on the

success of previous projects in Ethiopia, Business

Connexion was awarded a number of smaller

contracts plus two more major contracts. These

included a nationwide multimedia communications

network contract (including IP telephony and

video-conferencing) and a core optical backbone

network contract in Ethiopia (the first of this type

of technology on the African continent). It also

implemented an IP telephony solution for a major

mining company in Angola and installed a billing

management systems for a major cellular operator

in Mozambique and in Tanzania.

As a result of the increased workload in Africa, the

Business Connexion Africa team has since been

expanded to accommodate further growth in this

territory. It is management’s intention to establish

footprints in the countries in collaboration with

local partners where the company has already

achieved sustainable revenues. While the past year

has shown very rapid growth of our African

business, we expect to maintain the current level

of business into the coming year.

Business Connexion’s Namibian business continued

to prosper although revenues declined marginally

due to the strong Rand. The business initiated the

first Livelink implementation in Namibia and

secured a reseller relationship with Dell and SUN

Microsystems. The primary focus for growth in

Namibia in the year ahead will be to ensure the

stability and continuity of recurring income.

Associates and Joint Venture

Digital Healthcare Solutions (Pty) Limited

– (DHS)

DHS, in which Business Connexion holds a

39,13% interest, specialises in the automation of

administrative and office processes, and leads the

healthcare market in electronic claims conveyance

and medical practice management software. Its

PG23

Re

vie

w o

f O

pe

rati

on

s

products and services enable better cash flows,

improve efficiencies and reduce administration costs

for some 2 400 retail pharmacies, over 8 000 medical

practitioners and specialist businesses, and the two

largest private hospital groups.

DHS has over the past year consolidated its position

as the largest solutions provider in southern

Africa’s healthcare IT and e-commerce market.

Solid performances from all operations and

disciplined control of operating expenses enabled

the company to record a meaningful improvement

in operating profit for the year.

Achievements by DHS during the past year include:

Med-e-Mass growing its customer base by

over 10%.

introduction of a new flagship practice

management product, Elixir, at 350 practices

and a large primary healthcare network.

adding an average of 150 new switching

customers per month to the Digital Healthcare

Switch.

Current development projects are aimed at further

improving the efficiency of connectivity software

to create better flexibility and to make provision

for wireless and mobile communication technologies.

An innovative claims conveyance and adjudication

service, which will redefine the expectations of

customers for claims delivery, will be launched

during 2004.

In respect of the Competition Commission issue,

negotiations are currently under way with the

Commission to establish a plan that will ensure

compliance with the DHS merger conditions set

down in April 2001 and in this regard a satisfactory

resolution is anticipated. A consequence of this

plan is to allow a competing switch operator access

to the Med-e-Mass customer base on reasonable

terms. The DHS management team is well aware

of the fact that this increased competition may

impact its business and are well advanced in

formulating strategies to counter this.

Having analysed the market environment in some

detail, management is confident that the company

will be able to sustain and strengthen its leadership

position, and continue to produce good returns for

its shareholders.

Mosaic Software Holdings Limited (Mosaic)

Mosaic Software is a global EFT company providing

leading-edge software solutions to financial

institutions, mobile operators, retailers, portals, and

processors worldwide. Mosaic drives payments and

other financial transactions through ATMs, POS

terminals, phones, and Internet access points.

This multi-channel architecture provides EMV

enablement, debit card management, and loyalty

software solutions. It also enjoys a favourable cost

of ownership.

R e v i e w o f O p e r a t i o n s (continued)

PG24

Re

vie

w o

f O

pe

rati

on

s

The company increased its revenue and earnings

before interest, tax and depreciation during the

year under review. Major successes included the

addition of 46 new clients worldwide, of which 26

were in the USA.

The primary strategy for growth for the year ahead

is to build on the new markets (both territories and

verticals) that were opened in the past year. Mosaic

is positioned to take advantage of the market as it

is the EFT software vendor that has added the

highest number of new clients in the past year. The

company now has more open systems installed

worldwide than all its competitors combined.

Perago Financial System Enablers

(Pty) Limited (Perago)

Perago is a provider of financial infrastructure

solutions and services that enable central banks

and other stakeholders in the financial system to

transform their financial infrastructures on an

organisational, national and regional level, thereby

enabling economies and financial system participants

to obtain optimal benefit. Business Connexion has

an effective 25% interest in Perago.

Despite the unprecedented and unexpected

strengthening of the Rand, Perago produced

positive results for the review period. In line with

its strategic objectives for the year, Perago

successfully broadened its revenue base and made

significant progress in building a new annuity

based revenue stream alongside its software

maintenance and support contracts.

Disposals

During the past year, the group disposed of its

interests in Q Data USA Inc, The Smartshed (Pty)

Limited and Phambili Information Technologies

(Pty) Limited.

The decision to dispose of Q Data USA was based

on the group’s inability to expand the operation’s

presence in the USA, the difficulties in managing a

small operation from a distance and the lack

of alignment between their business model and

the group’s business model. The investment in The

Smartshed was disposed of to one of the joint

venture partners following the discontinuation

of the project. Phambili, having been established

originally as an SMME, was sold to the joint

venture partner following the merger with Business

Connexion Solutions.

Peter Watt

PG25

Re

vie

w o

f O

pe

rati

on

s

xT h e B u s i n e s s C o n n e x i o n G r o u p r e m a i n s f u l l y

c o m m i t t e d t o t h e p r i n c i p l e s o f e f f e c t i v e c o r p o r a t e

g o v e r n a n c e a n d a p p l i c a t i o n o f t h e h i g h e s t e t h i c a l

s t a n d a r d s i n t h e c o n d u c t o f i t s b u s i n e s s .

governancex

C o r p o r a t e G o v e r n a n c e

PG26

Co

rpo

rate

Go

ve

rna

nc

e

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.

Responsibility

The directors of the company are responsible for the

preparation, integrity and reliability of the Business

Connexion financial statements and all other infor-

mation 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,

John Buchanan and Francois van der Merwe are

currently considered to be independent in terms of

the definition contemplated in the 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. 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 non-executive Group Chairman.

Peter Watt is the Chief Executive Officer, and the

Board has ensured that 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.

an additional fee for services rendered as

Chairman and Deputy Chairman of the Board.

an additional fee for services rendered as a

member of a Board committee.

These fees are recommended by the Remuneration

Committee and approved at the annual general

meeting.

PG27

Co

rpo

rate

Go

ve

rna

nc

e

C o r p o r a t e G o v e r n a n c e (continued)

PG28

Co

rpo

rate

Go

ve

rna

nc

e

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.

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 manage-

ment, 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 7 Aug 03 9 Oct 03 4 Dec 03 12 Feb 04 12 May 04

R S Berkowitz Y Y Y Y Y

J F Buchanan Y Y Y Y Y

A C Farthing Y Y Y Y Y

W J C Mitchell Y Y Y

D M Nurek Y Y Y Y Y

F J van der Merwe Y Y Y Y Y

P A Watt Y Y Y Y Y

Key:

Y – Present

The above table reflects attendance at Board meetings of Comparex Holdings Limited and Board meetings of

Business Connexion Group Limited from the date the Board members served during the financial year.

review of suggested improvements to

disclosure.

review of compliance with applicable legislation,

JSE Securities Exchange regulations, South

African Generally Accepted Accounting Practice,

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 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.

Risk management is addressed by the Audit

Committee, with the group's exposure to risk being

identified, assessed, managed and monitored at

operational level.

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 has

three standing committees, namely the Audit

Committee, the Remuneration Committee, and the

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 each

committee on a regular basis. The purpose and

membership of the committees are as follows:

Audit Committee

The Audit Committee is comprised of 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 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 Audit Committee

meets formally at least twice per annum to assist

in the governance of Business Connexion. The terms

of reference of the Audit 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.

PG29

Co

rpo

rate

Go

ve

rna

nc

e

Audit Committee meeting attendance

Member 5 Aug 03 11 Feb 04

J F Buchanan Y Y

D M Nurek Y Y

F J van der Merwe Y Y

Key: Y – Present

The above table reflects attendance at AuditCommittee meetings of Comparex Holdings Limitedand Audit Committee meetings of Business ConnexionGroup Limited from the date the Board membersserved during the financial year.

C o r p o r a t e G o v e r n a n c e (continued)

PG30

Co

rpo

rate

Go

ve

rna

nc

e

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.

There is currently one vacancy on this committee.

The members are Reginald Berkowitz and David

Nurek. 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.

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 responsi-

bilities 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.

Remuneration Committee meeting attendance

Member 7 Aug 03 9 Oct 03 3 Oct 03 12 Feb 04 7 Apr 04

R S Berkowitz Y Y Y Y Y

D M Nurek A Y Y Y Y

W J C Mitchell Y Y Y

Key:

Y – Present A – Apology

The above table reflects attendance at Remuneration Committee meetings of Comparex Holdings Limited and

Remuneration Committee meetings of Business Connexion Group Limited from the date the Board members

served during the financial year.

Executive Committee

The group’s Executive Committee (EXCO) comprises

16 members, three of whom are Executive Directors,

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

within the group including Business Applications:

Commercial, Finance, Human Resources, Infrastructure

Management and the Service Management Centre,

International, Marketing and Communication,

Professional Services, Public Sector, Sales, Strategy,

Strategic Positioning and Technology Infrastructure

and Africa. The committee meets at least once a

month. The members of the committee are

indicated on page 10 and 11 of this report.

The EXCO’s responsibilities include:

contributing to, evaluating, approving,

implementing and monitoring core business

strategies and policies and ensuring procedures

are in place pertaining to risk management,

internal controls, compliance and public

reporting.

monitoring agreed performance measures

linked to business strategies and comparing

these with those of other business units.

formulating annual budgets for each business

unit in terms of group budget guidelines, and

assumptions for submission to the Business

Connexion Board for approval.

managing the business and affairs of the

company and, so doing, enhancing the reputation

of the company in the marketplace and the

community.

prioritising the allocation of resources (capital,

technical and human).

reviewing business plans and proposals/tenders

for material transactions.

establishing the best management practices

and functional standards.

Risk Management

The Board accepts responsibility for the entire process

of risk management. Management is accountable

to the Board for designing, implementing and

monitoring the risk management process and

integrating it into the day-to-day activities of the

company. A Corporate Risk Co-ordinator has been

appointed during the year who will be primarily

responsible to assist management to implement a

risk management architecture, and then to ensure

that it is suitably reviewed and updated. The

Corporate Risk Co-ordinator will monitor the

company’s entire risk profile, ensuring that major

risks are identified and reported to the Board.

Company Secretary

The 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 of the Companies Act

and has signed the appropriate declaration as

contained elsewhere in this report.

PG31

Co

rpo

rate

Go

ve

rna

nc

e

C o r p o r a t e G o v e r n a n c e (continued)

PG32

Co

rpo

rate

Go

ve

rna

nc

e

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 businesses’

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. As such, it 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.

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

The group’s impact on the environment is minimal

in comparison with most other industries. However,

it recognises that it can contribute positively to a

cleaner environment by considering power

consumption, paper consumption, water usage,

waste management and by sponsoring other

environmental initiatives.

The group has several internal initiatives such as a

paper recycling project and a printer cartridge

recycling project. The KwaZulu-Natal regional

office has also worked closely with eThekwini

Municipality and the Umhlanga branch of the

Wildlife and Environment Society to restore forest

land in La Lucia.

Transformation and Black Economic

Empowerment (BEE)

Business Connexion believes that successful

transformation is not about concepts – it is about

action. To this end, the group embarked on

a programme of transformation over five years

ago. This programme included the identification

of a black empowered equity party and the merger

during the year under review with Business

Connexion Solutions (Pty) Limited to form Business

Connexion achieved this objective. The group is

committed to channelling significant amounts of

time, effort, resources and funds into a range of

empowerment and economic enablement initiatives.

Business Connexion has a six-point approach to

transformation.

Business Connexion will continue to play a role in

addressing the huge social and economic challenges

that confront South Africa. New programmes

will be aimed at transforming the organisation to

reflect the demographics of the South African

society. The overview below summarises several

of Business Connexion’s initiatives illustrated in

the diagram.

Corporate Social Investment (CSI)

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.

Our government has recognised the potential

benefits to be gained from harnessing the power

of ICT and has noted that it is the application and

diffusion of digital technologies that can drive

South Africa to achieve considerably higher levels

of social development and strong sustainable and

equitable growth.

To this end Business Connexion supports a host

of initiatives that take technology to the

previously disadvantaged masses.

PG33

Co

rpo

rate

Go

ve

rna

nc

e

Creating value together

EQUITYOWNERSHIP

CORPORATESOCIAL

INVESTMENT

EMPLOYMENTEQUITY

ENTERPRISEDEVELOPMENT

TRAINING &DEVELOPMENT

PREFERENTIALPROCUREMENT

The company has twice been awarded an

“Impumelelo Top Company Award” for its contribution

to Corporate Social Investment. Business Connexion

commits a specific percentage of its turnover to

social investment annually.

Business Connexion’s Corporate Social Investment

Strategy continues to support and focus on three

specific areas:

ICT Education and Training;

ICT Infrastructure; and

HIV/AIDS.

These projects include:

Training

The Tshwane University of Technology (TUT)

advises Business Connexion on how best to

implement the Skills Development Act. In

return Business Connexion helps the TUT to

match curricula to corporate requirements

and the group places technology students

within the company during the practical

internship part of the programme.

The group has remained committed to its co-

sponsorship of the Information Technology

Banking Learnership Programme (ITBLP), that

was accredited by the Department of Labour

and the Bank Seta as the first IT and banking

learnership in the country. The programme

provides talented young people with free

technical ICT training and the estimated value

of this project is R2,6 million per annum.

The company continues to partner with the

Technology and Human Resources in Industry

Programme (THRIP) and Telkom to support

growth of telecommunications and information

technology skills in South Africa through the

Telkom Centre of Excellence at Rhodes and

Fort Hare University. The programme has been

recognised as a shining example of collaboration

between Telkom, the telecommunications

industry, universities and government, to help

ensure that South Africa’s brightest young

minds achieve their potential. Business

Connexion is a member of the steering

committee and offers high quality graduates

from the programme employment opportunities.

Business Connexion has partnered with SUN

Microsystems SA to offer black graduates a

sponsorship at the IT CoachLab Leadership

Programme. A joint venture between EPI-USE

Systems and The Innovation Hub, a Blue IQ

project of the Gauteng Government, provides

students invaluable working experience as

part-time EPI-USE employees. The students

will actively participate in mission-critical EPI-

USE projects, including offshore development

projects. These projects are aligned with the

Government’s export vision.

The group continues to offer ICT bursaries to

top Matric students from under-privileged

schools. Students are awarded bursaries

for achievement in Matric Higher Grade

mathematics and science so that they can

pursue ICT-related studies.

ICT Infrastructure Development

Business Connexion has targeted disadvantaged

schools and communities in Gauteng, KwaZulu-Natal

and the Eastern and Western Cape as recipients of

computer centres. Through the partnership with

C o r p o r a t e G o v e r n a n c e (continued)

PG34

Co

rpo

rate

Go

ve

rna

nc

e

READ, McCarthy’s and Unilever, Business Connexion

supplied previously disadvantaged schools in

KwaZulu-Natal with computer centres.

HIV/AIDS Sponsorships

Business Connexion recognises that HIV/AIDS is one

of the most important CSI initiatives and the group

therefore continues to sponsor several initiatives

which include the Lambano Babies Sanctuary

(sponsorship of baby goods) and Ethembeni Place

of Hope (contribution to the fundraising effort).

Preferential Procurement

Currently, this expenditure is in excess of 40%

of discretionary spending. Business Connexion

recognises that if transformation and black

economic empowerment in South Africa is to be

successful, large businesses must actively support

the development of smaller enterprises. If successfully

implemented, preferential procurement will drive

the redistribution of income, develop skills and

assist with job creation. Business Connexion

commits to spend a minimum of 40% of its

discretionary spending with black-owned

enterprises in each financial year.

Enterprise Development

The group believes that project-specific sub-

contracting is based on the principle of partnering

where all parties apply their specific value

propositions to a project without duplication. On

this basis, the overall cost of a project remains

competitive and ensures that the partnership

delivers a best-of-breed solution.

Business Connexion continuously endeavours to

pro-actively identify and make available sub-

contracting opportunities to SMME companies to

participate in its core business.

Employment Equity

In line with the recommendations of the

Black Economic Empowerment Commission, the

Government’s broad-based BEE Strategy and

the Employment Equity Act of 1998, Business

Connexion has quantified its employment equity

aims and objectives in measurable terms. The

group’s five-year plan is to achieve a 35%

Historically Disadvantaged Individual (HDI) ratio by

2006. The current ratio is 27%.

Business Connexion has submitted its Employment

Equity (EE) reports to the Department of Labour, as

required by the EE Act, in October 2002. The report

reflected the progress made by the group in HDI

employment and skills development since the

previous submission in June 2000.

EE performance monitoring and evaluation:

Management Performance

Business Connexion is pleased to report that its

senior line managers are committed to meeting

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.

PG35

Co

rpo

rate

Go

ve

rna

nc

e

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

2003 to May 2004, 68% of the total number of

employees that were recruited via the recruitment

partner, were HDI placements.

Employees

The group believes that it continues to be an

“employer of choice” in the Information,

Communication and Technology industry and has

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 Advancement

Programme to advance the skills of promising

managers. 32% of the participants 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 D for further

details.

Employee Workplace Forums

Business Connexion has established an Employee

Communication Forum (ECF) that is representative

of all employees. It holds monthly meetings and

the general functions of the forum include:

promoting the interest 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.

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

C o r p o r a t e G o v e r n a n c e (continued)

PG36

Co

rpo

rate

Go

ve

rna

nc

e

in the education and development of its employees.

A comprehensive, structured internal communi-

cation 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 establish the company as an “employer

of choice" in the ICT sector. 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.

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.

Clients

The group’s structure includes several regional

offices that provide a single interface to the client

base. Business Connexion believes that every

business is as unique as a fingerprint and responds

to this uniqueness through a client-centric

integrated solutions business model, which offers

the flexibility and personal attention of a small and

mobile company, as well as the strength, resilience

and diversity of a large organisation.

Management and employees are wholly committed

to the group’s client-centric approach which

ensures that the client is placed at the centre of

the organisation. Several Client Satisfaction Surveys

are undertaken annually to ensure that the

organisation continues to improve its client service

and satisfaction levels.

Partnerships and Alliances

Business Connexion builds world-class ICT solutions

through its partnerships and alliances. These

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”.

PG37

Co

rpo

rate

Go

ve

rna

nc

e

C o r p o r a t e G o v e r n a n c e (continued)

PG38

Co

rpo

rate

Go

ve

rna

nc

e

The chart below details the employee demographics of the group.

May 2004 May 2003

Total % Total %

Total Workforce 4 048 100 4 107 100

Employees outside South Africa 151 4 190 5

Employees in South Africa 3 897 96 3 917 95

Employee Profile (South Africa)

Race and Gender Profile

White Males 1 928 49 1 923 49

White Females 928 24 1 008 26

Black Males 647 17 607 15

Black Females 394 10 379 10

Occupational Level Profile

Management 395 10 388 10

Non-management 3 502 90 3 529 90

Management Profile by Gender

Female 66 17 58 15

Male 329 83 330 85

Management Profile by Race

Whites 385 91 355 91

Designated Groups 37 9 33 9

Non-Management Profile by Gender

Female 1 256 36 1 329 38

Male 2 246 64 2 200 62

Non-Management Profile by Race

African 501 14 499 14

Indian 312 9 274 8

Coloured 191 5 180 5

White 2 515 72 2 576 73

Disability Profile

Employees with disabilities in Management — —

Employees with disabilities in Non-management 6 7

Employees with Disabilities by Gender

Female 1 2

Male 5 5

Note: Comparatives include Nanoteq which was not a subsidiary of Business Connexion Group Limited in the prior year.

PG39

Co

rpo

rate

Go

ve

rna

nc

e

Workforce Movement 2003 – 2004 2002 – 2003

Total Employees before Reporting Cycle – May 2003/2002 3 917 3 880

Less: Resignations (427) (420)

Deaths/Disabilities (17) (16)

Dismissals/Retrenchments (87) (103)

Retirement/Pension (14) (11)

Contract termination (443) (174)

Engagements 968 761

Total Employees as on Reporting Cycle – May 2004/2003 3 897 3 917

Note: Comparatives include Nanoteq which was not a subsidiary of Business Connexion Group Limited in the prior year.

Value added is a measure of the wealth created by the group and its employees by purchasing, processing and selling services and products.This statement shows how this wealth was distributed.

2004 2003Notes R000 % R000 %

Revenue 2 811 771 2 701 375

Cost of services and products 1 402 881 1 275 917

Value added 1 408 890 95 1 425 458 100

Investment income 45 023 3 35 496 2

Exceptional gains/(losses) 32 482 2 (29 168) (2)

Total wealth created 1 486 395 100 1 431 786 100

Distributed as follows:

Employees– Employee costs 1 1 188 068 80 1 169 615 82

Providers of capital– Interest paid 42 732 3 42 123 3

Governments 2 40 434 3 33 419 2

Retained in the group for future growth 215 161 14 186 629 13

– Depreciation 65 814 49 149

– Retained surplus 120 448 106 540

– Non-distributable reserve 30 856 30 856

– Foreign currency translation reserve (2 776) (797)

– Deferred tax 819 881

Total wealth distributed 1 486 395 100 1 431 786 100

Value added ratios

Average number of employees for the year 3 949 4 027

Revenue per employee (R000) 712 671

Wealth created per employee (R000) 376 356

Wealth created per employee before exceptional gains/(losses) (R000) 369 363

PG40

Va

lue

Ad

de

d S

tate

me

nt

V a l u e A d d e d S t a t e m e n t for the year ended 31 May

PG41

No

tes

to

th

e V

alu

e A

dd

ed

Sta

tem

en

t

2004 2003R000 R000

Notes

1. Paid to employees 1 090 351 1 096 850

Contributions paid on behalf of employees 97 717 72 765

1 188 068 1 169 615

2. Governments

Current taxes 14 581 4 931

Regional service levies and skills development levies 12 263 13 182

Rates and taxes paid to local authorities 4 278 3 799

Customs duties, import surcharges and excise taxes 9 312 11 507

40 434 33 419

South African government 36 853 31 343

Other governments 3 581 2 076

40 434 33 419

3. Additional amounts collected on behalf of governments

Value added tax 159 549 168 466

Employee tax deducted from remuneration paid 265 295 264 586

424 844 433 052

South African government 395 515 389 915

Other governments 29 329 43 137

424 844 433 052

A d m i n i s t r a t i o n

PG42

Ad

min

istr

ati

on

Name of CompanyBusiness Connexion Group Limited(formerly Comparex Africa Group (Pty) Limited)

Incorporated in the Republic of South Africa

Registration number: 1988/005282/06

Share code: BCX

ISIN code: ZAE000054631

SecretaryBusiness Connexion Management Services (Pty) Limited(formerly Comparex Management Services (Pty) Limited)

Registration number: 1994/003844/07

Registered OfficeBusiness Connexion Park North

789 16th Road, Randjespark

Midrand 1685

Postal AddressPrivate Bag X48

Halfway House 1685

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

Transfer Office and Transfer SecretariesComputershare Investor Services 2004 (Pty) Limited

9th Floor, 70 Marshall Street

Johannesburg 2001

Postal AddressPO Box 61051

Marshalltown 2107

Telephone (+27 11) 496-2222

Fax (+27 11) 496-1244

AuditorsDeloitte & Touche

Deloitte Place

The Woodlands

Woodmead

Sandton 2196

Private Bag X6

Gallo Manor 2052

Principal BankersABSA Bank Limited

First National Bank of Southern Africa Limited

Nedcor Bank Limited

The Standard Bank of South Africa Limited

SponsorRand Merchant BankA division of FirstRand Bank Limited

1 Merchant Place

Cnr Fredman Drive and Rivonia Road

Sandton 2196

Corporate Information

44 Directors’ Approval

44 Certificate by Company Secretary

45 Report of the Independent Auditors

46 Directors’ Report

52 Accounting Policies

60 Balance Sheets

61 Income Statements

62 Statements of Changes in Equity

63 Cash Flow Statements

64 Notes to the Cash Flow Statements

67 Notes to the Financial Statements

87 Annexure A – Principal Subsidiaries

87 Annexure B – Principal Associates

88 Annexure C – Details of Share Incentive

Scheme Options

90 Annexure D – Details of Directors’

Emoluments

91 Annexure E – Details of Directors’ Share

Options

PG43

An

nu

al

Fin

an

cia

l S

tate

me

nts

A n n u a l F i n a n c i a l S t a t e m e n t s

D i r e c t o r s ’ A p p r o v a l

C e r t i f i c a t e b y C o m p a n y S e c r e t a r y

PG44

Dir

ec

tors

’ A

pp

rov

al

an

d C

ert

ific

ate

by

Co

mp

an

y S

ec

reta

ry

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 AC133. 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 for the foreseeable

future and the annual financial statements appearing on pages 46 to 91 have, therefore been prepared on the

going concern basis.

These financial statements were approved by the Board of Directors on page 8 and 9 on 10 November 2004

and are signed on its behalf by:

R S Berkowitz P A Watt A C Farthing

Chairman Chief Executive Officer Financial Director

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

10 November 2004

To the members of Business Connexion Group Limited

We have audited the annual financial statements and group annual financial statements of Business

Connexion Group Limited set out on pages 46 to 91 for the year ended 31 May 2004. 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.

Scope

We 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 opinion

In our opinion the financial statements fairly present, in all material respects, the financial position of the

company and the group at 31 May 2004, 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

10 November 2004

PG45

Re

po

rt o

f th

e I

nd

ep

en

de

nt

Au

dit

ors

R e p o r t o f t h e I n d e p e n d e n t A u d i t o r s

D i r e c t o r s ’ R e p o r t

resultsx

PG46

Dir

ec

tors

’ R

ep

ort

The Board of Directors hereby presents the results

of the company and of the group for the year

ended 31 May 2004.

Nature of business

The company is an Information Communication

Technology (ICT) investment holding company listed

on the JSE Securities Exchange South Africa.

The principal activities of the company’s subsidiaries,

joint ventures and associated companies are those

of an integrator of business solutions.

Corporate activity

The past year has been highlighted by the black

empowerment transaction concluded with the

former Business Connexion Investments group,

and the restructuring of Comparex Holdings Limited

(Comparex) which resulted in the liquidation of that

entity and the return of R1,57 billion (R6,50 per

share) of the surplus cash to shareholders.

Following receipt of the unconditional approval of

the Competition Authorities, the proposed merger

between Comparex Africa and Business Connexion

Solutions was concluded with an effective date of

2 January 2004. The merger has been well received

by all stakeholders.

Concurrently with the restructuring of Comparex,

it was announced that Comparex Africa would

adopt the brand of its BEE partner, and the group

was re-branded as Business Connexion Group

Limited during May 2004. The BEE partner has

re-named its investment holding company as

Gadlex (Pty) Limited (Gadlex).

The restructuring of Comparex was approved by

shareholders on 30 April 2004. Since that date

Comparex has:

declared and paid a dividend of R1,00 per share

in anticipation of liquidation. This follows the

R5,50 per share declared in February 2004;

transferred the remaining assets of Comparex

to Business Connexion, namely Business

Connexion Technology Holdings (BCTH), which

owns the interests in Mosaic, Perago, Corp

Invest 40 and Nanoteq;

increased the number of issued shares in

Business Connexion to facilitate a one for one

distribution of Business Connexion shares to

shareholders of Comparex. This was achieved

by the conversion of preference shares, a

share split and a subscription for new shares

by Comparex;

distributed as a dividend in specie the shares

in Business Connexion to shareholders of

Comparex;

listed Business Connexion in the “Information

Technology – Software and Computer Services”

sector of the JSE Securities Exchange; and

delisted and liquidated Comparex.

Due to the restructuring, the results of Business

Connexion are not comparable with the results of

Comparex for the previous year. Interest earned on

the surplus cash prior to its distribution, as well as

the results of Mosaic, Perago and Nanoteq for the

11 months prior to their acquisition by Business

Connexion, formed part of the results of Comparex

and not of Business Connexion.

The group has disposed of its interests in Q Data

USA, The Smartshed and Phambili Information

Technologies.

Operating results

Business Connexion reported a 4,1% increase in

revenue which is due to the expansion into Africa,

the merger with Business Connexion Solutions and

adoption of AC133. The group’s strategy of growth

into Africa has been successful with revenue

growth of 107% during the period. This was largely

due to contracts secured in Ethiopia for the supply

and installation of equipment. The revenue gained inPG47

Dir

ec

tors

’ R

ep

ort

D i r e c t o r s ’ R e p o r t (continued)

PG48

Dir

ec

tors

’ R

ep

ort

Africa mitigated declining revenue in the depressed

South African market. Business Connexion’s revenue

in the South African market has been impacted by

the strengthening of the Rand versus the US dollar.

Imported products were landed at reduced prices

and this benefit was passed on to clients. In addition,

clients who are dependent on US dollar based

revenues have cut back on their local spending.

The expansion into Africa has had a dilutionary

effect on operating margins as the profit earned is

shared with local partners in the countries where

the business is conducted. Operating costs were

satisfactorily contained notwithstanding increased

spending on training and accreditation programs,

strengthening corporate governance and the re-

branding of Business Connexion. Operating profit

reduced to R125,7 million from R142,0 million in

the previous year for the above reasons.

Depreciation increased due to amortisation of

goodwill arising on the merger with Business

Connexion Solutions. This amounted to R9,8 million

for the five months since the merger.

To ensure that shareholders received a final dividend

of R1,00 per share from the liquidation of Comparex,

the selling price of BCTH was determined by Comparex

prior to the publication of its circular regarding the

restructuring of Comparex. This resulted in Business

Connexion acquiring BCTH for a value which was

R35,0 million less than its net asset value. This

amount has been included as an exceptional item

and excluded from headline earnings.

The significant increase in the tax charge is mainly

due to Digital Healthcare Solutions recognising a

deferred tax asset in respect of its assessed loss in

2003, thereby reducing the tax charge in that year.

Headline earnings per share of 34,2 cents were

achieved for the year (2003: 44,0 cents). The reduction

is due to lower operating profit as referred to above,

increased tax and an increase in the minority interests.

Business Connexion’s balance sheet has remained

strong with R782 million of cash resources. Cash

flow for the year was positive with R100,8 million

generated from operating activities.

Long-term loans and advances in 2003 represented

the advance made to Comparex International Trading,

the treasury company of Comparex. This would have

been represented as cash by Comparex and is now

represented in the cash balance of Business

Connexion in 2004.

With effect from 28 May 2004, Business Connexion

included the share purchase trusts in the consolidated

results, as the trusts are now effectively controlled

by the group. The 19,8 milion shares in Business

Connexion held by the trusts have been treated as

treasury stock.

Business Connexion has experienced a substantial

increase in the value of performance guarantees

issued during the past year. These relate mainly to

the contracts awarded in Ethiopia and will terminate

upon conclusion of the contracts which generally do

not extend beyond one year.

Other significant matters

Tax issue

As previously reported, the South African Revenue

Services (SARS) disallowed a trademark deduction

by a subsidiary company (“The Persetel Trademark”)

in the sum of R26,1 million in the 1995 year of

assessment. The company has lodged an appeal

to the Special Court against the disallowance of

the objection and the hearing of the matter in the

Appeal Court has again been postponed and a new

date is yet to be scheduled.

The same subsidiary has also objected to the

disallowance of a trademark deduction claimed

in the same amount with regard to the same

trademark, in respect of the 1996 to 2001 years of

assessment. To date, there has been no response

to this objection from SARS. SARS has also disallowed

the deduction made in the 1998 to 2001 tax

returns in respect of the Q Data trademark and has

reassessed these tax years. It is anticipated that

SARS will deal with subsequent years according to

the outcome of the hearing in respect of the 1995

assessment. Taking into account both the reasons

advanced by SARS for disallowing the objection in

the 1995 assessment and the opinion expressed by

Senior Counsel, the directors remain of the view

that the deduction will ultimately be allowed in

respect of the assessments mentioned above.

The subsidiary company involved has claimed

deductions totalling R889,4 million (May 2003:

R786,5 million) resulting in a reduction of tax of

R277 million to May 2004 (May 2003: R246,0 million).

Any amounts required to be paid to SARS will be

interest bearing.

Share capital

Authorised share capital

The company commenced the year with authorised

share capital of 127 868 850 ordinary shares of

one cent each and 63 114 760 redeemable convertible

preference shares of one cent each.

The company converted the 63 114 760 redeemable

convertible preference shares into the same number

of ordinary shares of one cent each. The ordinary

shares were increased by 309 016 390 to 500 000 000

in terms of a special resolution on 25 February 2004.

On 8 April 2004, the nominal value of the ordinary

shares was altered from one cent per share to 0,59

cents per share by way of special resolution. This

resulted in the closing authorised share capital being

847 457 627 ordinary shares of 0,59 cents per share.

Issued share capital

The company commenced the year with issued

share capital of 127 868 850 ordinary shares

of one cent each and 21 651 723 redeemable

convertible preference shares of one cent each.

On 25 February 2004, the 21 651 723 preference

shares were converted to the same number of

ordinary shares. On 8 April 2004, the nominal

value of the ordinary shares was amended from

one cent per share to 0,59 cents per share resulting

in the issue of a further 103 904 127 shares. On

26 May 2004, a futher 9 212 212 shares were

issued for R36,9 million. These changes resulted in

262 636 912 ordinary shares of 0,59 cents each

being in issue.

The changes in both the authorised and issued

share capital were undertaken to facilitate the

Comparex Holdings Limited shareholders receiving

Business Connexion Group Limited shares on a one

for one basis as agreed by the shareholders.

Dividends

No dividend will be declared in respect of the past

financial year. The Board’s intention is to implement

a dividend policy for the future.

Subsidiaries and associates

Annexures A and B to this report set out the

companies which 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 company in the profits

and losses of the subsidiaries, joint venture and

associates for the year ended 31 May are as follows:

2004 2003R000 R000

Subsidiaries and joint venture profits 281 845 109 408

Subsidiaries and joint venture losses (4 394) (3 583)

Associates 5 411 715

PG49

Dir

ec

tors

’ R

ep

ort

Acquisitions

During the year, the group acquired the following subsidiaries:

Effective Percentage CostName Method date holding R000s

Business Connexion Technology Holdings (Pty) Limited Purchase 1 May 2004 100 601 645

This acquisition included the following subsidiaries:

– Nanoteq (Pty) Limited

– Comparex International Trading (Pty) Limited

– Q Muzik (Pty) Limited

– Comparex Technology Services (Pty) Limited

Business Connexion Solutions Holdings (Pty) Limited Purchase 1 Jan 2004 100 107 071

This acquisition included the following subsidiaries:

– Business Connexion Solutions (Pty) Limited

– Unibis (Pty) Limited (Dormant)

– Atlantec (Pty) Limited (Dormant)

– Strathprop Nurseries (Pty) Limited (Dormant)

– Plantprop Farms (Pty) Limited (Dormant)

– Uni-Applications (Pty) Limited (Dormant)

D i r e c t o r s ’ R e p o r t (continued)

PG50

Dir

ec

tors

’ R

ep

ort

Directorate and secretary

The names of the directors and secretary in office

at the date of this report are set out on pages 8, 9

and 42 respectively.

Messrs R S Berkowitz, J F Buchanan, N N Kekana,

L B Mophatlane, D M Nurek and F J van der Merwe

were all appointed on 2 February 2004.

Messrs R S Berkowitz, J F Buchanan, D M Nurek

and F van der Walt had previously served on the

Board of Comparex Holdings Limited.

Messrs M W Schoeman and N N Kekana resigned

on 3 February 2004 and 9 June 2004 respectively.

The company secretary remains Business Connexion

Management Services (Pty) Limited (formerly

Comparex Management Services (Pty) Limited)

represented by L C Marran.

Interests of the directors

On 31 May 2004, the directors beneficially held in

aggregate 25 000 ordinary shares in the company

(2003: 12 500). The directors have interests in

2 746 000 options (2003: 2 046 000) options relating

to Comparex Holdings Limited shares which were

converted to options in Business Connexion Group

Limited shares). For details refer Annexure E.

Messrs R S Berkowitz, J F Buchanan and D M Nurek

are trustees of the staff share purchase trust but

have no beneficial interest in the trust. Details of

the trust are set out in Annexure C.

Messrs R S Berkowitz and D M Nurek , both being

associated with the Investec Group, have declared

their interests in the contract whereby Investec

Corporate Finance assisted the group in regard to

the BEE deal and restructuring.

Mr L B Mophatlane has a significant interest in

Gadlex (Pty) Limited, which in turn holds 25,01%

of Business Connexion (Pty) Limited.

No director of Business Connexion Group 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 2004 and the date of this report.

Comparex Holdings Limited shareincentive schemes

The company operates a number of trusts whose

objective is to incentivise employees of the group

by enabling them to acquire shares in Business

Connexion Group Limited. These trusts are

empowered to operate a credit purchase scheme, a

cash purchase scheme and a share option scheme.

The trustees of the operational trust are Messrs

R S Berkowitz, J F Buchanan, R S Hislop and

D M Nurek, who were appointed as trustees of this

trust effective 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. Three of the trusts are

currently dormant and new trustees are in the

process of being appointed. These trusts are entitled

to acquire shares, which they require to meet their

commitments from time to time either by

purchasing those shares on the open market or by

subscribing for new shares. At 31 May 2004, the

trusts held 19 826 542 shares (2003: 25 074 444)

in order to fulfil their obligations.

Details of options granted in terms of the schemes

are set out in Annexure C.

Special resolutions

Special resolutions were passed during the period

with regard to:

the conversion of convertible redeemable

preference shares into ordinary shares in the

company;

an amendment to the company’s Articles of

Association to increase the authorised share

capital;

the conversion of the company from a

proprietary limited company to a public company

and changing the name of the company;

the cancellation of the Articles of Association

of the company in its entirety and the

replacement thereof with new Articles of

Association;

the sub-division of the authorised and issued

share capital of the company; and

effecting a change in the name of the company.

In respect of special resolutions passed by

subsidiaries, these were to effect name changes to

incorporate the brandname of Business Connexion

and to liquidate the subsidiary Comparex Technologies

(Pty) Limited.

Post balance sheet events

Business Connexion Group together with the other

shareholders in Mosaic Software Holdings Limited

(Mosaic), have entered into an agreement to

dispose of their shareholding in Mosaic to S1

Corporation, a company listed on the NASDEQ

Stock Market. The group has disposed of its

effective 37,17% shareholding for a maximum

potential purchase price of US$19,3 million,

subject to a number of conditions precedent.

The sale proceeds consist of a payment of US$10,5

million receivable within three days after the

conditions precedent have been fulfilled, an escrow

payment of US$3,25 million placed in an interest

bearing escrow account until 31 December 2005 to

cover potential claims against the warranties and a

potential earn out payment of US$5,57 million

based on the performance of Mosaic during the

year ending 31 May 2005. The investment in

Mosaic was carried at a value of R14,7 million at

31 May 2004.

PG51

Dir

ec

tors

’ R

ep

ort

A c c o u n t i n g P o l i c i e s f o r t h e G r o u p a n d t h e C o m p a n y for the year ended 31 May 2004

PG52

Ac

co

un

tin

g P

oli

cie

s

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 Statement of Generally Accepted Accounting

Practice AC133, Financial Instruments: Recognition

and Measurement. The adoption of this standard

has resulted in changes to the group’s policies and

modifications to the presentation of the financial

statements. Details of these changes are set out

in note 38.

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. 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 its holding

entities’ financial statements are carried at

cost.

On acquisition, the assets and liabilities of a

subsidiary are, where possible, measured at

their fair value at the date of acquisition.

If fair value cannot be reasonably measured,

the historical cost of assets and liabilities are

used. Any excess (deficiency) of the cost of

acquisition over (below) the fair value or

cost of the identifiable net assets acquired is

recognised as goodwill (negative goodwill).

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 subsidiaries are amended

to ensure consistency with group policies.

Minority interests are separately disclosed.

3. Business combinations involvingentities 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. 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. PG53

Ac

co

un

tin

g P

oli

cie

s

A c c o u n t i n g P o l i c i e s f o r t h e G r o u p a n d t h e C o m p a n y (continued) for the year ended 31 May 2004

PG54

Ac

co

un

tin

g P

oli

cie

s

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 amortised in terms of the policy

for intangible assets.

5. 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 amortised in terms of

the policy for intangible assets.

Where the associate’s year end does not

coincide with the group’s year end, the

associate’s most recent unaudited results

are used.

6. 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.

7. Foreign currency transactions

Monetary assets and liabilities denominated

in foreign currency are translated into South

African Rands 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.

8. Financial instruments

Financial instruments carried by the group

on the balance sheet include cash and bank

balances, 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 37

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.

9. Property, furniture and fittings,equipment and vehicles

Property, furniture and fittings, equipment

and vehicles 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.

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.

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.

10. 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 net present value of the future 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.

The cost of the assets is depreciated over

the shorter of the lease period or the useful

life of the asset. The useful life, when longer

than the 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 for property, furniture and fittings,

equipment and vehicles policy.PG55

Ac

co

un

tin

g P

oli

cie

s

A c c o u n t i n g P o l i c i e s f o r t h e G r o u p a n d t h e C o m p a n y (continued) for the year ended 31 May 2004

PG56

Ac

co

un

tin

g P

oli

cie

s

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

when payments are due. 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 for the remaining lease

payments is raised. 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

to income on a straight-line basis over the

term of the relevant lease.

Amounts due from the lessee under finance

leases 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 as trade receivables.

11. Investments

Investments are intially 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.

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.

Listed investments are valued at market rates

at the balance sheet date.

12. Intangible assets

– Goodwill

Goodwill, being the excess of cost of shares

acquired over the fair value of identifiable

assets net of liabilities assumed, of each entity

at the date of acquisition, is written off over

its estimated useful life on a straight-line

basis as determined by the directors with

a maximum of 20 years. Amortisation is

included with depreciation in the income

statement. Where the net assets of a

subsidiary at date of acquisition exceeds the

cost of the shares acquired, the excess is

treated as negative goodwill.

– Other intangible assets

Expenditure on acquired patents, trademarks

and licences is capitalised and amortised

over their expected lives using the straight-

line method as depreciation in the income

statement. The period never exceeds 20 years.

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 negative goodwill) or from the

initial recognition (other than in business

combinations) of other assets and liabilities

in a transaction that effects 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.

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.

14. Inventories

Inventories are stated at the lower of cost or

estimated net realisable value. 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.

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 the net realisable

value is the selling price in the ordinary

course of business less selling costs.

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 the

employees and by 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.

– Post retirement healthcare obligations

For post retirement healthcare obligations,

the cost of providing benefits is determined

using the projected unit credit method.PG57

Ac

co

un

tin

g P

oli

cie

s

A c c o u n t i n g P o l i c i e s f o r t h e G r o u p a n d t h e C o m p a n y (continued) for the year ended 31 May 2004

PG58

Ac

co

un

tin

g P

oli

cie

s

All costs in respect of past services are

recognised immediately 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.

17. Provisions

A provision is recognised when there is a

present obligation for a past event for which

it is probable that a transfer of economic

benefits will be required to settle the

obligation and a reliable estimate of the

amount can be made.

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 leave. Audit fees are

accrued for based on an estimate of the

costs in relation to the year in which the

work relates. Other accounts payable are

stated at nominal value.

19. Impairments

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.

20. 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.

21. 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 contract;

rental income – when the rental is due

and payable; and

profits on long-term contracts:

– where the long-term contract falls

over a financial period end and the

outcome of the contract can be

estimated reliably, revenue 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 it is

probable will be recovered. Contract

costs are recognised as expenses in

the period that they are incurred.

22. 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.

23. 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 the transaction, exceptional

items are included or excluded from operating

profit.

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 costs 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 contracted value.

25. Tax

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. PG59

Ac

co

un

tin

g P

oli

cie

s

B a l a n c e S h e e t s as at 31 May

PG60

Ba

lan

ce

Sh

ee

ts

ASSETSNon-current assetsFurniture and fittings, equipment and vehicles 1 134 726 96 343Capitalised leased assets 2 181 877 185 688Rental assets 3 111 285Intangible assets – goodwill 4 103 987

2 478 699 2 050 668 Investment in subsidiaries 6Investment in associates 7 28 811 13 413

133 002 Other long-term investments 8 167 988Long-term loans and advances 9 17 168 374 337Deferred tax assets 10 1 264 473

2 478 699 2 183 670 635 932 670 539

Current assetsInventories 11 42 708 52 540Trade accounts receivable 12 438 644 393 566

4 580 Other accounts receivable 13 77 607 65 872Embedded derivative assets 25 846Prepayments 59 769 62 516Tax prepaid 4 416 485

299 Bank and cash balances 782 394 154 750

4 879 1 431 384 729 729

2 478 699 2 188 549 TOTAL ASSETS 2 067 316 1 400 268

EQUITY AND LIABILITIESCapital and reserves

4 560 377 4 597 278 Share capital and premium 250 618 285 093Trademark tax benefit reserve 94 132 63 276Foreign exchange reserves (177) 2 599

(2 081 678) (2 411 726) Distributable reserves 571 879 202 910

2 478 699 2 185 552 Total shareholders’ equity 14 916 452 553 878Minority interests 15 49 402 1 920

Non-current interest bearing liabilitiesLong-term liabilities 16 226 654 240 010Non-current interest free liabilitiesLong-term liabilities 17 124 517Post retirement obligations 18 6 229 1 161Deferred tax liabilities 10 369 397

357 769 241 568

Current liabilitiesShort-term borrowings 19 67 189 33 959Trade payables 181 557 218 274Other payables 419 291 317 813Provisions 20 38 644 30 954Embedded derivative liabilities 26 102

2 997 Tax 10 910 1 902

2 997 743 693 602 902

2 478 699 2 188 549 TOTAL EQUITY AND LIABILITIES 2 067 316 1 400 268

Company Group

2003 2004 2004 2003R000 R000 Notes R000 R000

PG61

Inc

om

e S

tate

me

nts

I n c o m e S t a t e m e n t s for the year ended 31 May

Revenue 21 2 811 771 2 701 375

Cost of sales 1 992 196 1 914 333

Margin 819 575 787 042

Administrative expenses 598 326 572 684

Foreign exchange and derivative losses 22 24 810 2 531

Operational exceptional losses 23 4 930 20 629

Operating profit before depreciation 191 509 191 198

Depreciation 65 814 49 149

Operating profit 24 125 695 142 049

14 570 Investment income 25 45 023 35 496

Associates’ share of profits 7 8 142 8 226

14 570 Profit before interest paid 178 860 185 771

Interest paid 26 42 732 42 123

14 570 Profit before exceptional items 136 128 143 648

(2 081 678) (341 621) Exceptional gains/(losses) 27 37 412 (8 539)

(2 081 678) (327 051) Profit/(loss) before tax 173 540 135 109

2 997 Tax 28 45 625 27 547

(2 081 678) (330 048) Profit/(loss) after tax 127 915 107 562

Minorities 15 7 467 1 022

(2 081 678) (330 048) Profit/(loss) attributable to shareholders 120 448 106 540

Earnings per share (cents) 29 47,5 42,0

Headline earnings per share (cents) 30 34,2 44,0

Company Group

2003 2004 2004 2003R000 R000 Notes R000 R000

S t a t e m e n t o f C h a n g e s i n E q u i t y for the year ended 31 May 2004

PG62

Sta

tem

en

t o

f C

ha

ng

es

in

Eq

uit

y

GroupBalance at 31 May 2002 1 495 283 598 285 093 32 420 3 396 96 370 417 279

Foreign exchange loss arising on consolidation (797) (797)

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

Attributable profit per the income statement 106 540 106 540

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

Adoption of AC133 (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

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

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

Foreign exchange reserve released on disposalof subsidiary (1 573) (1 573)

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

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

CompanyBalance at 31 May 2002 1 495 4 558 882 4 560 377 4 560 377

Attributable loss per the income statement (2 081 678) (2 081 678)

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

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

Share Trademark Foreign TotalShare Share capital and tax benefit exchange Distributable shareholders’

capital premium premium reserve reserves reserves equityR000 R000 R000 R000 R000 R000 R000

PG63

Ca

sh

Flo

w S

tate

me

nts

C a s h F l o w S t a t e m e n t s for the year ended 31 May

Cash flow from operating activities

Cash receipts from customers 2 791 486 2 788 172

Cash paid to suppliers and employees (2 667 609) (2 503 636)

Cash generated from operations A 123 877 284 536

9 990 Interest received 39 041 35 457

Dividends received 102 39

Interest paid (39 982) (39 470)

Dividends paid to minorities (685) (474)

Tax paid B (21 557) (1 873)

9 990 Net cash flow from operating activities 100 796 278 215

Cash flows from investing activities

(550 715) Acquisition/(disposal) of subsidiaries and entities C 772 086

(620 000) Investment in subsidiaries

Advances from group companies (81 028)

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

Dividends from associates 5 870 16 000

Advances to associates (488) (2 000)

Additions to furniture and fittings, equipment and vehicles D (88 668) (74 193)

Intangible assets purchased (129) (1 737)

Proceeds from long-term loans and advances 7 842

Proceeds from sale of investment in associates 695

Proceeds from sale of furniture and fittings, equipment and vehicles, rental and leased assets 2 403 6 405

(1 303 717) Net cash flow from investing activities 477 044 (46 988)

Cash flows from financing activities

36 901 Proceeds from share capital E 36 901

Proceeds from long-term liabilities 2 703

(65 669) Repayments of long-term liabilities (7 134) (6 578)

Receipt of long-term loans and advances 1 235

Repayments of short-term borrowings (15 617)

Proceeds from short-term borrowings 37 291 672

1 257 125 Amounts received from/(paid to) previously related group companies (153 739)

Repayment of capital element of finance leases (5 575) (5 211)

1 294 026 Net cash flow from financing activities 49 804 (164 856)

299 Net changes in cash and cash equivalents 627 644 66 371

Cash and cash equivalents at begining of year 154 750 88 379

299 Cash and cash equivalents at end of year F 782 394 154 750

Company Group

2003 2004 2004 2003R000 R000 Notes R000 R000

N o t e s t o t h e C a s h F l o w S t a t e m e n t s for the year ended 31 May

PG64

No

tes

to

th

e C

as

h F

low

Sta

tem

en

ts

A. Reconciliation of profit/(loss) before tax to cash generated from operations:

(2 081 678) (327 051) Profit/(loss) before tax 173 540 135 109

(4 580) Dividends received (4 682) (39)

(9 990) Interest received (40 341) (35 457)

Interest paid 42 732 42 123

Adjustments for non cash items:

Depreciation and amortisation 65 814 49 149

Profit on disposal of furniture and fittings, equipment and vehicles (1 258) (899)

Movement on provisions 6 981 18 623

2 081 678 168 301 Impairments of loans and advances, investments and intangible assets 4 102 8 044

Associates’ share of profits (8 142) (8 226)

173 320 (Profit)/loss on disposal of investments (6 476) (457)

Share of partnership profits (1 738)

Post retirement obligations provided 5 068 476

Release of negative goodwill (35 038)

Unrealised foreign exchange losses (3 233) 983

Operating profit before working capital changes 197 329 209 429

Working capital changes:

Decrease in inventories 10 074 37 920

(Increase)/decrease in trade accounts receivable (18 532) 86 797

Increase in other accounts receivable (3 273) (9 539)

Decrease/(increase) in prepayments 2 712 (13 766)

(Decrease)/increase in trade payables (59 531) 14 027

Decrease in other payables (4 902) (40 332)

Cash generated from operations 123 877 284 536

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

Amounts unpaid and accrued at beginning of year (1 417) 1 641

Accrued in respect of acquisition and disposal of subsidiaries (14 785)

(2 997) Income statement charge (45 625) (27 547)

Deferred tax movement 31 044 31 197

Share of associates’ tax 2 732 (8 581)

2 997 Amounts unpaid and accrued at end of year 6 494 1 417

(21 557) (1 873)

Company Group

2003 2004 2004 2003R000 R000 R000 R000

PG65

No

tes

to

th

e C

as

h F

low

Sta

tem

en

ts

C. Analysis of acquisitions and disposals of subsidiaries and entities

Acquisitions:

(601 645) Purchase of investment

Furniture and fittings, equipment and vehicles (3 161)

Investments (37 390)

Intangible assets (113 687)

Associates (17 551)

Long-term loans and advances (6 723)

Inventories (510)

Trade accounts receivable (29 645)

Other accounts receivable (7 195)

Deferred tax assets (1 276)

Long-term liabilities (27 404)

Short-term borrowings 4 407

Trade payables 23 130

Other payables 52 418

Provisions 709

Tax 14 788

Negative goodwill 35 038

Bank and cash balances (774 997)

Disposals:

224 250 Investments

Advance to associate 1 681

Furniture and fittings, equipment and vehicles 417

Trade accounts receivable 2 769

Other accounts receivable 861

Prepayments 32

Trade payables (316)

Other payables (3 539)

Tax (3)

Deferred tax liabilities 254

Bank and cash balances 10 088

(173 320) Profit/(loss) on sale net of foreign currency reserve release 4 903

(550 715) Gross acquisitions/disposals (871 902)

Non-cash settlement of inter-group loans and purchases 601 645

Treasury shares held by share purchase trusts (71 376)

Profit on sale of share of subsidiary 56 389

Minority interests 40 712

Bank and cash balances acquired 774 997

Cash relinquished (10 088)

Reserves of share purchase trusts 251 709

(550 715) 772 086

Company Group

2003 2004 2004 2003R000 R000 R000 R000

N o t e s t o t h e C a s h F l o w S t a t e m e n t s (continued)

for the year ended 31 May

PG66

No

tes

to

th

e C

as

h F

low

Sta

tem

en

ts

D. Additions to furniture and fittings, equipment and vehicles

Replacement (73 361) (52 757)

Expansion (15 307) (21 436)

(88 668) (74 193)

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, and investment in money market instruments. Cash and cash equivalents included in the cash flow statement comprise the following balance sheet amounts:

299 Bank and cash balances 782 394 154 750

299 782 394 154 750

The group has undrawn facilities amounting to R502 million( 2003: R475 million).

Company Group

2003 2004 2004 2003R000 R000 R000 R000

PG67

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

N o t e s t o t h e F i n a n c i a l S t a t e m e n t s for the year ended 31 May

1. Furniture and fittings, equipment and vehicles

Cost

Cost – 31 May 2002 32 051 204 823 304 237 178

Additions 3 449 70 641 103 74 193

Transfer from inventories 21 21

Disposals (3 379) (14 099) (260) (17 738)

Currency translation differences 89 905 994

Cost – 31 May 2003 32 210 262 291 147 294 648

Subsidiaries purchased 841 2 267 53 3 161

Transfer from inventories 240 240

Additions 7 515 81 153 88 668

Joint venture and subsidiary sold (276) (1 025) (1 301)

Disposals (773) (10 355) (11 128)

Currency translation differences (343) (333) (676)

Cost – 31 May 2004 39 174 334 238 200 373 612

Accumulated depreciation

Depreciation – 31 May 2002 15 736 149 975 254 165 965

Depreciation 5 489 37 904 85 43 478

Disposals (3 239) (8 733) (260) (12 232)

Currency translation differences 180 914 1 094

Depreciation – 31 May 2003 18 166 180 060 79 198 305

Depreciation 5 739 46 217 16 51 972

Joint venture and subsidiary sold (104) (780) (884)

Disposals (671) (9 312) (9 983)

Currency translation differences (222) (302) (524)

Depreciation – 31 May 2004 22 908 215 883 95 238 886

Net book value – 2004 16 266 118 355 105 134 726

Net book value – 2003 14 044 82 231 68 96 343

Certain computer equipment with a cost of R35,6 million (2003: R35,6 million) which is fully depreciated is encumbered as reflected in note 16.

The insurable value of the group’s furniture and fittings, equipment and vehicles at 31 May 2004 is R483 million (2003: R337,8 million). The value is basedon the cost of replacement, except for vehicles which are at book value.

Group FurnitureR000 and fittings Equipment Vehicles Total

N o t e s t o t h e F i n a n c i a l S t a t e m e n t s (continued)

for the year ended 31 May

PG68

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

2. Capitalised leased assets

Cost

Cost – 31 May 2002 and 31 May 2003 206 255 21 493 227 748

Transfer to furniture and fittings, equipment and vehicles (7 179) (7 179)

Cost – 31 May 2004 206 255 14 314 220 569

Accumulated depreciation and impairment

Depreciation – 31 May 2002 17 807 18 703 36 510

Depreciation 3 286 2 264 5 550

Depreciation – 31 May 2003 21 093 20 967 42 060

Depreciation 3 286 525 3 811

Transfer to furniture and fittings, equipment and vehicles (7 179) (7 179)

Depreciation - 31 May 2004 24 379 14 313 38 692

Net book value – 2004 181 876 1 181 877

Net book value – 2003 185 162 526 185 688

Leased assets are encumbered as reflected in note 16.

The insurable value of the group’s leased assets at 31 May 2004, is R318,5 million (2003: R262,3 million).

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

Group Land andR000 buildings Equipment Total

PG69

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

3. Rental assets

Cost

Opening cost 1 526 1 405

Transfer from inventories 28 280

Disposals (62) (159)

1 492 1 526

Accumulated depreciation

Opening depreciation 1 241 1 279

Depreciation 202 121

Disposals (62) (159)

1 381 1 241

Net book value 111 285

The insurable value of the group’s rental assets at 31 May 2004 and 2003is R0,8 million.

4. Intangible assets – goodwill

Cost

Opening cost 3 317 1 580

Additions 113 816 1 737

117 133 3 317

Accumulated amortisation and impairment

Opening amortisation 3 317 214

Amortisation 9 700

Impairment 129 3 103

13 146 3 317

Net book value 103 987

Goodwill is amortised over a period of five years.

Negative goodwill of R35 million arose on the purchase of Business ConnexionTechnology 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.

Company Group

2003 2004 2004 2003R000 R000 R000 R000

N o t e s t o t h e F i n a n c i a l S t a t e m e n t s (continued)

for the year ended 31 May

PG70

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

5. Joint ventures

The 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 44 618

Attributable profit 2 377 4 191

6. Investment in subsidiaries (Annexure A)

Investment value

3 161 878 3 161 878 Opening cost

620 000 Additional investment in subsidiaries

601 645 Acquisition of subsidiaries

(498 823) Disposal

3 161 878 3 884 700 Closing cost

Impairment of investment in subsidiaries

(2 081 678) Opening impairment

274 573 Disposal

(2 081 678) (168 301) Current year impairment

(2 081 678) (1 975 406) Closing impairment

1 080 200 1 909 294 Carrying value of investment in subsidiaries

1 398 499 373 351 Advances to subsidiaries

(231 977) Advances from subsidiaries

2 478 699 2 050 668

The increase in the impairment in the current year arises from the dilution in the shareholding in Business Connexion (Pty) Limited following the BlackEmpowerment transaction with Gadlex (Pty) Limited. The carrying value of the subsidiary reduced to R1,3 billion as valued by the directors.

Company Group

2003 2004 2004 2003R000 R000 R000 R000

PG71

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

7. Investment in associates (Annexure B)

Investment value

Cost 8 045 8 283

Disposals (1 409) (238)

Additions 17 551

24 187 8 045

Share of results since acquisition

Opening balance 3 687 2 880

Associates’ share of profits 8 142 8 226

Tax (2 732) 8 581

Disposals 1 409

Dividends received (5 870) (16 000)

4 636 3 687

Carrying value of associates 28 823 11 732

Advances to associates 10 917 20 629

Interest accrued 1 383 573

Impairment of advances and interest (12 300) (19 521)

Advances from associates (12)

28 811 13 413

Directors’ valuation 55 496 24 946

The group’s share of unrecognised losses in associates amounts to R7,1 million(2003: R6,6 million).

The advances to/(from) associates carry interest at normal commercial rates, except a loan of R5,9 million which is interest free, are unsecured and repayable on demand.

Aggregate of associate companies:

Total assets 144 200 59 660

Total liabilities 84 623 85 035

Profit after tax 25 042 34 875

Company Group

2003 2004 2004 2003R000 R000 Notes R000 R000

N o t e s t o t h e F i n a n c i a l S t a t e m e n t s (continued)

for the year ended 31 May

PG72

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

8. Other long-term investments

Listed investments:

Dimension Data Holdings Plc 857234 862 ordinary shares at a market value of R3,65.

The listed investments are held by the share purchase trust in order to fulfil the obligations of the share purchase trust.

Unlisted investments:

Cost 5 664 5 664

133 002 Additions 169 535Impairments (8 068) (5 664)

133 002 167 131

133 002 167 988

Details of unlisted investmentsAvailable for sale investments:

Preference shares in a member of National Information Technology Acquisition Consortium (Nitac) 36 53370 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 Gadlex (Pty) Limited – “A” preference shares 117 19215 810 Gadlex (Pty) Limited – “B” preference shares 15 810

133 002 175 199 5 664

Less impairments (8 068) (5 664)

133 002 167 131

The directors value the investments at cost less any impairment except for the investment in Nitac which is valued at the market value of the underlying investments. 167 131The terms of the preference shares in Gadlex (Pty) Limited include various “putoptions” and may be redeemed by Gadlex (Pty) Limited in a number of alternative ways. These alternatives have the effect of creating 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. The group has not recognised the gain of R56,4 million on the disposal of 11,82% of Business Connexion (Pty) Limited to Gadlex (Pty) Limited. This amount is included in other payables and will be released upon redemption of the preference shares.

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.

Interest accrued of R4,6 million has been included in other accounts receivable.

Company Group

2003 2004 2004 2003R000 R000 R000 R000

PG73

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

9. Long-term loans and advances

Long-term trade accounts receivable 5 696 5 676

These amounts are repayable over periods not exceedingthree years and bear interest at 18,5%.

Loan to Indibano Business Services (Pty) Limited 2 989 2 989

Interest accrued 765 379

Impairment (3 754) (3 368)

This loan is repayable by 31 August 2004 and bears interest atthe South African prime lending rate.

Loan to Kumwe Information Technology (Pty) Limited 3 011The loan bears interest at the South African prime lending rate and is secured by a pledge of the shares in the Namibian subsidiary.

Loan to Gijima Support Services (Pty) Limited 8 461Initial funding loan and accrual of share of partnership results. The amount is interest free and repayable on demand.

Loans to Comparex International Trading (Pty) Limited 368 476

The loan was unsecured, had no fixed date of repayment and boreinterest at a rate linked to the South African prime lending rate.

Other minor interest free loans 185

17 168 374 337

10. Deferred tax

Total opening balance 76 (805)

Deferred tax assets 473 1 133

Deferred tax liabilities (397) (1 938)

Total movement 819 881

Charged in income statement (31 044) (31 197)

Charged in foreign exchange reserves (15) 1 447

Charged against trademark tax benefit reserve 30 856 30 856

Acquisition of subsidiaries 1 276Disposal of subsidiaries (254)Impairment of Q Data USA Inc deferred tax asset (225)

Total closing balance 895 76

Deferred tax assets 1 264 473

Deferred tax liabilities (369) (397)

Deferred tax balances consists of:Capital allowances (99) (93)

Provisions 603 488

Payments in advance (40) (20)

Consumables written off (238)Income received in advance 726 30

Allowances against income in advance (411)Tax losses 252 88

Other 102 (417)

895 76

Company Group

2003 2004 2004 2003R000 R000 R000 R000

N o t e s t o t h e F i n a n c i a l S t a t e m e n t s (continued)

for the year ended 31 May

PG74

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

10. Deferred tax (continued)

As at the balance sheet date, the group has unused tax losses of R218,9 million(2003: R239,9 million) available for offset against future pofits. A deferred tax asset has been recognised in respect of R0,8 million (2003: R0,3 million) of such losses. No deferred tax asset has been raised on R218,1 million (2003: R239,6 million) due to the unpredictability of future profit streams and the uncertainty of the outcome of the court case involving the deductibility of the trademarks.

11. Inventories

Cost

Maintenance parts, components and consumables 98 947 92 699

Merchandise 40 448 47 512

Work in progress 5 110 5 090

144 505 145 301

Impairments

Maintenance, components and consumables (78 920) (72 556)

Merchandise (19 983) (18 605)

Work in progress (2 894) (1 600)

(101 797) (92 761)

Net realisable value 42 708 52 540

12. Trade accounts receivable

Trade accounts receivable 446 769 408 077

Trade accounts receivable – associates 129 120

Inter-group receivables 220

Current portion of long-term trade accounts receivable 9 086 10 948

455 984 419 365Impairments (17 340) (25 799)

438 644 393 566

13. Other accounts receivable

Included in other accounts receivable is loans to employees amounting to R0,5 million (2003: R0,6 million).

Company Group

2003 2004 2004 2003R000 R000 R000 R000

PG75

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

14. Share capital

Authorised share capitalOrdinary shares

127 868 850 1 279 31 May 2002 and 31 May 2003 – ordinary shares of one cent each 127 868 850 1 27963 114 760 631 Preference 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 910Increase in authorised ordinary shares to

309 016 390 3 090 500 000 000 of 1 cent each 25 February 2004 309 016 390 3 090

500 000 000 5 000 500 000 000 5 000Conversion of authorised shares of 1 cent each to

347 457 627 ordinary shares of 0,59 cents each 8 April 2004 347 457 627

847 457 627 5 000 31 May 2004 – ordinary shares of 0,59 cents each 847 457 627 5 000

Preference shares31 May 2002 and 31 May 2003 – 63 114 760 redeemable

63 114 760 631 covertible preference shares of 1 cent each 63 114 760 631Peference shares converted to ordinary shares –

(63 114 760) (631) 63 114 760 preference shares of 1 cent each 25 February 2004 (63 114 760) (631)

31 May 2004

There were no changes in the authorised share capital in the previous year.

Issued share capitalOrdinary shares

127 868 850 1 279 31 May 2002 and 31 May 2003 – ordinary shares of 1 cent each 127 868 850 1 279Preference shares converted to ordinary shares

21 651 723 216 of 1 cent each (for no consideration) 25 February 2004 21 651 723 216

149 520 573 1 495 149 520 573 1 495Conversion of issued shares of 1 cent each to ordinary

103 904 127 shares of 0,59 cents each 8 April 2004 103 904 127

253 424 700 1 495 253 424 700 1 4959 212 212 55 Issued ordinary shares of 0,59 cents per share 26 May 2004 9 212 212 55

262 636 912 1 550 31 May 2004 – ordinary shares of 0,59 cents each 262 636 912 1 550

Preference shares31 May 2002 and 31 May 2003 – 21 651 723 redeemable covertible

21 651 723 216 preference shares of 1 cent each 21 651 723 216Preference shares converted to ordinary shares –

(21 651 723) (216) 21 651 723 preference shares of 1 cent each (21 651 723) (216)

31 May 2004

There were no changes in the issued share capital in the previous year.The preference shares were redeemable at any time before 31 May 2008 at their negotiated market value.Preference shares not redeemed shall be converted to ordinary shares on a one for one basis on 31 May 2008 or on liquidation.The preference shares rank pari passu with the ordinary shares in terms of dividends.

Number of shares in issue 262 636 912 1 550Less shares held by the share trust as treasury shares representing 7,5% 19 826 542 12

242 810 370 1 538

Company Group

Number Numberof shares R of shares R

N o t e s t o t h e F i n a n c i a l S t a t e m e n t s (continued)

for the year ended 31 May

PG76

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

15. Minority interests

Opening balance 1 920 1 372

Arising due to partial disposal of subsidiary 40 712Minority interest in subsidiary income 7 467 1 022

Minority interest in subsidiary dividends (685) (474)

Share of foreign currency translation reserve (12)

49 402 1 920

16. Long-term liabilities

Interest bearing loansSASOL Limited

The loan is repayable by 30 June 2006 in equal instalments and bears interest at a fixed rate of 10,7%. It is secured by equipment with a cost of R25,5 million as shown in note 1 15 819 20 066

Rentworks (Pty) Limited

The loan is repayable by 31 December 2004 and bears interest at a fixed rate of 22%. It is secured by equipment with a cost of R10,1 million as shown in note 1 3 262 5 156

Kumwe Information Technology (Pty) Limited

The loan is repayable in two to five years. It bears interest at the South African prime lending rate 1 072 1 072

IBM Global Finance (a division of IBM South Africa (Pty) Limited)

The loan is unsecured and repayable in December 2004 and bears interest at a fixed rate of 7,4%. 2 879

ABSA Bank Limited

The loan was repaid by 31 August 2003 and bore interest at a fixed rate of 14,5%. 119

Getronics Holdings EMEA B.V.

The loan is unsecured and bears interest at bank call rates currently 6,9% and is repayable on demand 4 536

Liabilities under finance leases Less than Between one one year and five years

R000 R00028 995 215 606 244 601 247 556

Minimum lease payments 61 008 302 242 363 250 398 963

Lease finance charges (32 013) (86 636) (118 649) (151 407)

These liabilities are repayable at fixed interest rates ranging between 11,77% and 17,27%. The liabilities in respect of the leased assets are secured by assets as shown in note 2. The group has an option to purchase these assets at the end of the lease.

Total long-term liabilities 272 169 273 969

Less amount transferred to short-term 45 515 33 959

226 654 240 010

Repayable within five years 226 654 121 128

Thereafter 118 882

226 654 240 010

Company Group

2003 2004 2004 2003R000 R000 R000 R000

PG77

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

Company Group

2003 2004 2004 2003R000 R000 R000 R000

17. Long-term liabilities

Interest free loans

Gadlex (Pty) Limited shareholder’s loan to Business Connexion (Pty) Limited 124 517

The loan is unsecured and interest free with no fixed date of repayment.

124 517

18. Post-retirement obligations

Post-retirement healthcare benefits

Opening balance 1 161 686

Amendment to accrual based on changes in assumptions and known increases in medical aid rates 659 578

Interest cost 487

Current service accruals for current year 124

Additional liabilities identified in current year relating to past acquisitions 4 122

Payments made on behalf of beneficiaries (324) (103)

6 229 1 161

It is not the group’s policy to provide post-retirement healthcare benefits.At 31 May 2004, 43 individuals have the right to post-retirement healthcare as a result of terms and conditions applicable in their service contracts priorto becoming part of the group through acquisition.

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 wherethe individul 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 7,5% 9,8%

Discount rate 9,5% 11,5%

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

19. Short-term borrowings

IBM Global Finance (a division of IBM South Africa (Pty) Limited) 21 674

Interest free loan repayable within one year.

Transfer from long-term liabilities (note 16) 45 515 33 959

67 189 33 959

20. Provisions

Balance 31 May 2002 12 331 4 871 5 716 6 1 738

Utilised (6 698) (3 228) (2 288) (6) (1 176)

Charged/released to income statement 25 321 21 865 1 871 1 585

Balance 31 May 2003 30 954 23 508 5 299 1 585 562

Utilised (5 281) (844) (2 885) (1 335) (217)

Increase due to purchase of entities 709 709

Released to income statement (6 755) (4 985) (1 423) (347)

Charged to income statement 19 017 820 6 795 9 093 2 309

Balance 31 May 2004 38 644 18 499 8 495 9 343 2 307

Group

2004 2003R000 R000

21. Revenue

For rendering of services 2 068 380 2 028 528

Arising on sale of goods 743 391 672 847

2 811 771 2 701 375

Continuing operations 2 667 888 2 701 375

Acquisitions of subsidiaries in current year 107 207

Disposals of subsidiaries in current year 36 676

2 811 771 2 701 375

Revenue has been increased as a result of the adoption of AC133 in the amount of (refer note 38) 37 678

22. Foreign exchange and derivative losses

Foreign exchange (gains)/losses (8 370) 3 606

Derivative losses/(gains) 1 043 (1 075)

Embedded derivative losses 32 137

24 810 2 531

N o t e s t o t h e F i n a n c i a l S t a t e m e n t s (continued)

for the year ended 31 May

PG78

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

Company

2003 2004 Onerous Closure R000 R000 Total Legal Warranties leases costs

PG79

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

23. Operational exceptional losses

Re-branding costs 9 503

Provisions (released)/raised (4 573) 21 255

Restructuring costs (626)

4 930 20 629

24. Operating profit

– Continuing operations 123 154 142 144

– Acquisitions of subsidiaries in current year (852)

– Disposal of subsidiaries and joint venture in current year 3 393 (95)

125 695 142 049

Operating profit is stated after:

Administration, management and other fees 13 195 16 096

Auditors’ remuneration

– Audit fees 3 727 4 234

– Fees for other services 6 324 3 748

10 051 7 982

Depreciation

Furniture and fittings, equipment and vehicles

– Furniture and fittings 5 739 5 489

– Equipment 46 217 37 904

– Vehicles 16 85

51 972 43 478

Capitalised leased assests

– Buildings 3 286 3 286

– Equipment 525 2 264

Rental equipment 202 121

Intangible assets 9 829

65 814 49 149

Directors’ emoluments

Emoluments for services as directors

3 639 7 195 – the company

– subsidiaries

3 639 7 195

(3 639) (7 195) – Less paid by subsidiaries

— —

Company Group

2003 2004 2004 2003R000 R000 R000 R000

N o t e s t o t h e F i n a n c i a l S t a t e m e n t s (continued)

for the year ended 31 May

PG80

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

24. Operating profit (continued)

Made up as follows:

2 576 3 857 – Salaries

1 063 3 338 – Bonuses and performance-related payments

3 639 7 195

Profit on disposal of furniture and fittings, equipment and vehicles 1 258 899

Operating lease charges

– Land and buildings 27 251 19 941

– Equipment and vehicles 170 628 183 178

197 879 203 119

Employee costs

– Paid to employees 1 090 351 1 096 850

– Contributions paid on behalf of employees 97 717 72 765

1 188 068 1 169 615

Average number of employees 3 949 4 027

25. Investment income

Interest received

9 990 – Banks 13 274 5 902

– Loan advances and trade accounts receivable 1 279 6 998

– From subsidiaries of Comparex Holdings Limited 25 788 22 557

4 580 Dividends from unlisted investments 4 682 39

14 570 45 023 35 496

26. Interest paid

Interest paid on short-term liabilities 7 300 5 596

Interest paid on long-term liabilities 2 663 3 312

Interest paid on finance leases 32 769 33 215

42 732 42 123

27. Exceptional gains/(losses)

(2 081 678) (168 301) Impairment of investments (2 404) (4 117)

Impairment of loans and advances (1 698) (2 952)

(173 320) Profit/(loss) on sale of businesses 6 476 457

Release of goodwill 35 038 1 176

Impairment of goodwill (3 103)

(2 081 678) (341 621) 37 412 (8 539)

Company Group

2003 2004 2004 2003R000 R000 R000 R000

PG81

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

28. Tax

2 997 South African tax 41 818 25 471

Foreign tax 3 807 2 076

2 997 45 625 27 547

Comprising

Tax

2 997 – Current 7 687 4 450

– Prior years 2 129 379

Deferred tax

– Current year movement 31 044 31 197

Share of associates’ tax 2 732 (8 581)

Withholding tax 220 102

Secondary tax on companies 250

Foreign tax credits 1 563

2 997 45 625 27 547

% Reconciliation of tax rate % %

(0,9) Effective rate of tax 26,3 20,4

Prior year tax (1,6) (0,3)

Share of associates’ tax (1,6) 6,4

Other corporate tax (1,2) (0,1)

Foreign tax paid (0,2) (0,2)

Reduction in tax charge due to exempt income, allowances 30,9 and estimated tax losses 8,3 3,8

30,0 South African normal tax rate 30,0 30,0

29. Earnings per share

Number of ordinary shares in issue – 31 May 127 868 850 127 868 850

Number of preference shares in issue– 31 May 21 651 723 21 651 723

149 520 573 149 520 573

Conversion of issued shares of 1 cent each to ordinary shares of 0,59 cents each (comparative restated) 103 904 127 103 904 127

253 424 700 253 424 700

9 212 212 ordinary shares issued on 26 May 2004 126 195

Weighted number of shares 253 550 895 253 424 700

Profit attributable to shareholders 120 448 106 540

Earnings per share (cents) 47,5 42,0

The preference shares rank pari passu with the ordinary shares in termsof dividends and were thus considered equivalent to ordinary shares for the purposes of earnings per share.

Company Group

2003 2004 2004 2003R000 R000 R000 R000

N o t e s t o t h e F i n a n c i a l S t a t e m e n t s (continued)

for the year ended 31 May

PG82

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

30. Headline earnings

Profit attributable to shareholders 120 448 106 540

Impairments of assets, loans and investments 120 4 117

Goodwill impairments and amortisation 9 829 1 927

Profit on sale of furniture and fittings, equipment and vehicles (1 258) (899)

Profit on sale of investments (6 476) (457)

Recognition of negative goodwill (35 038)

Associate adjustment 1 301 179

Tax effect on disposal of investment 425

Minority effect of headline earnings adjustments (2 734)

Headline earnings 86 617 111 407

Weighted average number of shares 253 550 895 253 424 700

Headline earnings per share (cents) 34,2 44,0

31. Commitments

Capital

– Contracted 4 115

– Authorised and proposed 466

4 581

Capital commitments will be financed out of existing group resources.

Operating lease commitments

Group >1 year 2 to 4 years >4 years

R000 R000 R000

Land and buildings 14 434 26 546 13 169 54 149 27 683

Equipment and vehicles 95 666 65 477 308 161 451 292 057

Total 101 100 92 023 13 477 215 600 319 740

32. Contingent liabilities

Guarantees

– Performance guarantees 84 162 12 222

– Other 1 514 3 917

85 676 16 139

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

Company Group

2003 2004 2004 2003R000 R000 R000 R000

PG83

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

33. Related party transactions

The group operations 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 543 936

Purchases of services and goods 121

Net amounts due by related parties 109 120

The group operations 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 directors have certified that they were not materially interested in any transaction of any significance with the company or any of its subsidiaries, other than as set out in the directors’ report.

34. Borrowing powers

The Articles of Association of the company provide the following in relation to the borrowing powers:

The directors may from time to time:

– borrow for the purpose of the company such sums as 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 chargeupon all or any of the property or assets of the company.

35. Retirement information

All eligible permanent employees, other than those required to join a fund established by statute, are required to join the Comparex Pension and ProvidentFunds as a condition of employment. The employees become members of both funds simultaneously. Business Connexion Group and certain of itssubsidiaries contribute to the Comparex Holdings Provident Fund and employees contribute to the Comparex Holdings Pension Fund. These Funds areregistered in the Republic of South Africa in terms of the Pension Funds Act, 1956 and are approved by the South African Revenue Services and aredefined contribution funds.

The Comparex Holdings Pension and Provident Funds are reviewed annually by an actuary at the Fund’s year end. At the last review date 29 February2004, the Funds were certified financially sound.

At the financial year end of the Funds, being 29 February 2004, the Funds had a membership of 2 634 (2003: 2 527) members. During the period the companycontributions to the Comparex Holdings Provident Fund amounted to R34 672 970 (2003: R33 128 861). The combined asset size of the ComparexHoldings Pension and Provident Funds at the end of the year was approximately R437 million (2003: R324 million).

The duties and responsibilities of administering the Comparex Holdings Funds are adequately segregated. Alexander Forbes Financial Services, a leadingfirm of benefit administrators, consultants and actuaries is responsible for the administration of the Funds. Investment Solutions Limited is primarilyresponsible for managing the assets of the Funds.

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

On 7 December 2001, the Pension Funds Second Amendment Act was promulgated. In terms of the Act (known as the surplus legislation) all pension andprovident funds having surpluses at their surplus apportionment date will be required to undertake a surplus apportionment investigation anddistribution. The surplus apportionment date is defined as the next statutory valuation of the Fund.

In the case of the Funds, the next statutory valuation was at 29 February 2004. 29 February 2004 thus becomes the Funds’ surplus apportionment date.The surplus apportionment scheme is currently in progress.

The Funds are in the process of being renamed as the Business Connexion Group Provident Fund and Business Connexion Group Pension Fund.

Company Group

2003 2004 2004 2003R000 R000 R000 R000

N o t e s t o t h e F i n a n c i a l S t a t e m e n t s (continued)

for the year ended 31 May

PG84

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

36. Segmental analysis (R million)

Business groupings analysis External revenue Depreciation Operating profit

2004 2003 2004 2003 2004 2003

Services 1 726,1 1 782,8 47,9 45,6 154,6 118,9

Technology infrastructure 816,7 751,3 2,4 3,4 14,7 30,3

Business applications 269,0 167,3 3,2 2,2 (2,9) 21,9

Central functions 12,3 (2,1) (40,7) (29,0)

Total 2 811,8 2 701,4 65,8 49,1 125,7 142,1

Capital expenditure Assets Liabilities

2004 2003 2004 2003 2004 2003

Services 94,0 72,4 580,8 570,3 537,3 536,2

Technology infrastructure 2,1 2,0 308,0 327,0 287,9 303,0

Business applications 3,2 1,8 129,0 86,5 141,8 71,8

Central functions (10,6) (2,0) 1 049,5 416,5 134,5 (66,5)

Total 88,7 74,2 2 067,3 1 400,3 1 101,5 844,5

Share of Associates’ (Impairments)/associates’ investment reversal of

profits impairments

2004 2003 2004 2003

Services 7,4 8,2 10,6 13,4

Business applications 0,7 18,2

Central functions 30,9 (9,0)

Total 8,1 8,2 28,8 13,4 30,9 (9,0)

Geographic segmental analysis Revenue Operating profit

2004 2003 2004 2003

South Africa 2 408,4 2 425,9 99,1 130,5

Rest of Africa 349,8 169,3 26,2 14,9

Other, principally the United Kingdom 53,6 106,2 0,4 (3,3)

2 811,8 2 701,4 125,7 142,1

Note: The income statement for the geographic segmental analysis is based on where the customer is situated.

Assets Liabilities Capital expenditure

2004 2003 2004 2003 2004 2003

South Africa 2 030,0 1 346,0 1 077,7 810,2 88,1 73,5

Rest of Africa 24,2 27,9 15,5 20,5 0,4 0,4

Other, principally the United Kingdom 13,1 26,4 8,3 13,8 0,2 0,3

2 067,3 1 400,3 1 101,5 844,5 88,7 74,2

Note: The balance sheet for the geographic segmental analysis is based on where the assets or liabilities are situated.

37. Financial risk management

The group’s financial instruments consist of cash and bank balances, 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 provide group entities with the benefits of bulk financing anddepositing.

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 treasury. In this regard the group has entered into certain forward exchangecontracts which do not relate to specific items appearing in the balance sheet, but were entered into to cover known future foreign commitments. Therisk of having to close out the contracts is considered low and the amounts and currencies involved are set out below. There are no FECs for periodsbeyond 90 days:

2004 2003

Foreign currency Foreign currency Details of forward exchange contracts at year end rates: R000 value R000 value

United States Dollars 9 239 1 349 56 875 6 978

Euros 292 37 590 62

9 531 57 465

These financial instruments are designed to address exchange exposures and will be renewed on a revolving basis as required.

There are no significant uncovered foreign monetary items.

1< year 2 – 5 years >5 years TotalR000 R000 R000 R000

Maturity profile of financial instuments including finance lease liabilities2004Financial assetsNon-current assets 185 156 185 156Current assets 542 097 542 097Bank and cash balances 782 394 782 394

1 324 491 185 156 1 509 647

Financial liabilitiesNon-current liabilities 351 171 6 229 357 400Current liabilities 626 950 626 950Short-term borrowings 67 189 67 189

694 139 351 171 6 229 1 051 539

2003Financial assetsNon-current assets 5 861 368 476 374 337Current assets 459 438 459 438Bank and cash balances 154 750 154 750

614 188 5 861 368 476 988 525

Financial liabilitiesNon-current liabilities 17 803 103 325 118 882 240 010Current liabilities 536 087 536 087Short-term borrowings 33 959 33 959

587 849 103 325 118 882 810 056 PG85

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

N o t e s t o t h e F i n a n c i a l S t a t e m e n t s (continued)

for the year ended 31 May

PG86

No

tes

to

th

e F

ina

nc

ial

Sta

tem

en

ts

37. Financial risk management (continued)

The following are the methods and assumptions used by the group in determining fair value:

Financial assetsThe book value of bank and cash balances, trade and other accounts receivable approximates fair value.

Financial liabilitiesThe book value of short-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 constantly monitors the customer base on an ongoing basisand where considered appropriate or where necessary, provision or write-off is made against the debtor. At the year end management do not considerthere to be any material exposure that has not been covered by an impairment. The risk of doing business in Africa is mitigated through advancepayments and the use of letters of credit.

It is group policy to deposit short-term cash with major banks.

Liquidity risk managementThe group manages liquidity risk by monitoring forecast cash flows and ensuring that untilised borrowing facilities are monitored. The group has R502 million unutilised facilities as opposed to R475 million in the previous year.

38. Adoption of accounting standard AC133

The accounting policies used in the preparation of these financial statements are consistent with those used in the annual financial statements for theyear ended 31 May 2003, with the exception of the adoption of AC133: Financial Instruments – Recognition and Measurement, by the group. Theadoption of this accounting standard has resulted in the following adjustments been made to the results:

CurrentOpening entry period effect

Rm RmOther receivables 28,9 25,9

Other payables (32,1) (26,1)

Derivative losses 3,2 32,1

Revenue (37,7)

Cost of sales 5,8

Comparative figures have not been restated for the adoption of AC133.

39. Comparative figures amended

The following comparative figures have been altered in the group column:

Balance sheetOther payables have been reduced by R1,1 million and the amount disclosed as post retirement obligations, with a corresponding adjustment to thecash flow statement. Prepayments have been reduced by R0,485 million and the amount disclosed as tax prepaid.

Income statement– The exceptional losses in the previous year have been amended to distinguish between operational and other exceptional gains/(losses). This has

resulted in the operating profit for the previous year being reduced by R20,7 million.

– The group was not a listed entity in the previous year and therefore was not required to reflect earnings per share nor headline earnings per share. Thesehave therefore been calculated as indicated in the notes above and inserted.

Cash flow statementNon-cash items representing interest capitalised of R2,7 million has been excluded from interest paid on the face of the cash flow statement. This waspreviously separately disclosed in the notes of the cash flow statements.

Notes– In note 21, revenue analysis between goods and services has been restated.

– In note 24, audit fees for other services include recruitment services.

PG87

An

ne

xu

re A

– P

rin

cip

al

Su

bs

idia

rie

s a

nd

An

ne

xu

re B

– P

rin

cip

al

As

so

cia

tes

A n n e x u r e A – P r i n c i p a l S u b s i d i a r i e s

Direct holdings

South Africa

Business Connexion (Pty) Limited(formerly Comparex Africa (Pty) Limited) 74,99 100 43 371 200 1 307 595 1 080 146 271 479 1 383 808

Business Connexion Investments (Pty) Limited(formerly Comparex Africa Investments (Pty) Limited) 100 100 100 100 54 54 (11 107) 14 691

Business Connexion Technology Holdings (Pty) Limited(formerly Comparex International (Pty) Limited) 100 100 601 645 (118 998)

Indirect holdings through Business Connexion(Pty) Limited

South Africa

ECnet (Pty) Limited* 100 100

Business Connexion Solutions (Pty) Limited 100

Namibia

Business Connexion Namibia (Pty) Limited*(formerly Comparex Nambia (Pty) Limited) 75 75

United Kingdom

Q Data Europe Limited* 100 100

Indirect holdings through Business Connexion Technology Holdings (Pty) Limited

South Africa

Nanoteq (Pty) Limited 100

*Held by Business Connexion Investments (Pty) Limited at the same percentage in the previous year.

A full list of subsidiaries is available to shareholders, on written request, from the registered office of the company.

The group disposed of its 100% interest in Q Data USA Inc during the financial year.

A n n e x u r e B – P r i n c i p a l A s s o c i a t e sEffective

% holding

Name of associate Nature of business 2004 2003

South Africa

Perago Financial System Enablers (Pty) Limited# Application software provider 25,00

The Smartshed (Pty) Limited Service hub provider 30,00

Intenda (Pty) Limited Application software provider 29,85 29,85

Digital Healthcare Solutions (Pty) Limited Medical service hub provider 39,13 39,13

United Kingdom

Mosaic Software Holdings Limited# Application software provider 37,17

#Held as part of Comparex Holdings Limited in the previous year.

Percentage Number Amount Net amountholding of shares invested advanced

2004 2003 2004 2003 2004 2003 2004 2003% % R000 R000 R000 R000

A n n e x u r e C – D e t a i l s o f S h a r e I n c e n t i v eS c h e m e O p t i o n s

PG88

An

ne

xu

re C

– D

eta

ils

of

Sh

are

In

ce

nti

ve

Sc

he

me

Op

tio

ns

In terms of the JSE rules and 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 Business Connexion Group Limited shares were substituted for Comparex Holdings 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 the 31 May 2004no activity has taken place in this trust.

The Comparex Holdings Share Purchase TrustThe Comparex Holdings Share Purchase Trust (“the Trust”) was formed in 1995, the object of which was to incentivise employees of the Comparex Group by enablingthem to acquire shares in Comparex Holdings Limited. In 1997, the share incentive schemes previously operated by the Q Data Limited Securities Purchase and OptionTrust 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 atpresent only the share option scheme is in use. No futher 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 to reflect the amount of the dividends paid outby Comparex Holdings Limited totalling R6,50 per share.

The total number of options which may be granted by the schemes operated by the Comparex Holdings Trust and the Business Connexion Group 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 shares which they need to meet theircommitments from time to time either by purchasing those shares on the market or by subscribing for new shares in Business Connexion Group.

Options in issue as at 31 May 2004Options at Dimension Data

Option Amended Effective Expiry 31 May Additional Holdings plcIssue No price price option price Offer date Vesting dates date 2004 options shares

Issue 3/3B R32,07 R3,47 R0,79 16 Jul 97 One third July 1998,1999, 2000 Jul 07 439 752 1 496 893Issue 3D* R32,07 R25,57 R25,57 16 Jul 97 20% July 1999, 2000, 2001, 2002, 2003 Jul 07 265 294 132 652Issue 4/4B R24,90 (R3,70) (R0,84) 13 Jan 98 One third Jan 1999, 2000, 2001 Jan 08 1 489 828 5 065 150Issue 4D* R24,90 R18,40 R18,40 13 Jan 98 One third Jan 2001, 2002, 2003 Jan 08 127 214 63 607Issue 6/6B R40,85 R12,25 R2,78 01 Jun 99 One third June 2000, 2001, 2002 Jun 09 191 217 650 138Issue 7/7B R26,64 (R1,96) (R0,45) 13 Aug 99 One third Aug 2000, 2001, 2002 Aug 09 836 000 2 842 400Issue 8/8B* R53,44 R24,84 R5,65 01 Jun 99 One third June 2000, 2001, 2002 Jun 09 72 680 247 112Issue 8D* R53,44 R46,94 R53,44 01 Jun 99 One third June 2002, 2003, 2004 Jun 09 69 200 34 600Issue 9 R8,01 R1,51 R1,51 17 Apr 00 One third June 2001, 2002, 2003 Apr 10 4 055 200Issue 9.1 R8,01 R1,51 R1,51 17 Apr 00 One third June 2002, 2003, 2004 Apr 10 300 000Issue 9.2 R8,01 R1,51 R1,51 17 Apr 00 All 30 November 2000 Apr 10 75 000Issue 12 R8,68 R2,18 R2,18 31 Jan 01 One third Nov 2001 Nov 04 3 333

Nov 2002 Nov 05 3 333Nov 2003 Nov 06 3 334

Issue 14.1 R8,64 R2,14 R2,14 31 Jan 01 One third June 2002 Jun 05 33 333June 2003 Jun 06 33 333June 2004 Jun 07 33 334

Issue 14 R8,64 R2,14 R2,14 31 Jan 01 One third June 2002 Jun 05 33 333June 2003 Jun 06 33 333June 2004 Jun 07 33 334

Issue 15 R8,82 R2,32 R2,32 29 Mar 01 One third Aug 2002 Aug 05 1 681 418Aug 2003 Aug 06 1 681 418Aug 2004 Aug 07 1 681 418

Issue 18 R9,44 R2,94 R2,94 02 Feb 04 One third Aug 2005 Aug 08 2 128 333Aug 2006 Aug 09 2 128 333Aug 2007 Aug 10 2 128 334

Issue 18A R9,58 R3,08 R3,08 05 Mar 04 One third Aug 2005 Aug 08 233 333Aug 2006 Aug 09 233 333Aug 2007 Aug 10 233 334

Total options granted 20 260 639 10 301 693 230 859 Less options at prices above market value* (534 388) (247 112) (230 859)

Total options 19 726 251 10 054 581 —Add swop shares 10 054 581

29 780 832Shares on hand in Trusts 19 826 542

Shortfall to requirements 9 954 290

2004 2003

PG89

An

ne

xu

re C

– D

eta

ils

of

Sh

are

In

ce

nti

ve

Sc

he

me

Op

tio

ns

Movement in the Trusts:Opening balance of options granted 29 075 251 56 582 319

Options forfeited (955 777) (12 198 704)

Options lapsed as a result of the sale of Comparex Europe (14 187 980)

Options exercised (5 097 142) (1 120 384)

New options granted 7 540 000

Total options outstanding to Business Connexion Group employees 30 562 332 29 075 251

Number of shares on hand in Trusts (19 826 542) (25 074 444)

Number of options not covered by shares held by the Trust 10 735 790 4 000 807

Details of options exercised during the year:Issue 2 110 000Issue 3/3B 702 624Issue 4/4B 2 395 870Issue 7/7B 586 960Issue 9 697 100Issue 9.2 75 000Issue 15 529 588

5 097 142

NotesB = 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 swopped for additional Comparex Holdings Limited options.

Closing price 31 May:Business Connexion Group (BCX) R3,60Comparex Holdings Limited (CPX) R5,71

Dimension Data Holdings Plc (DDT) R3,65 R3,35

Total fair value of shares held by the Trusts 71 375 551 143 175 075

Loan from the share trust to Business Connexion Technology Holdings (Pty) Limited amounts to R167 million.

Remunerat ion pa id to execut ive d i rectors

Performance Allowances Pension Total Rand Total Rand Name Period Basic salary bonuses and benefits contributions 2004 2003

A n n e x u r e D – D e t a i l s o f D i r e c t o r s ’ E m o l u m e n t s

PG90

An

ne

xu

re D

– D

eta

ils

of

Dir

ec

tors

’ E

mo

lum

en

ts

A C Farthing June 2003 – May 2004 655 364 880 485 311 048 67 228 1 914 125 865 057

L B Mophatlane* Jan 2004 – May 2004 291 206 520 583 81 531 38 955 932 275

M W Schoeman June 2003 – Jan 2004 274 756 250 000 238 030 30 630 793 416 661 332

P A Watt June 2003 – May 2004 1 246 798 1 686 660 458 103 163 653 3 555 214 2 112 841

Total 2 468 124 3 337 728 1 088 712 300 466 7 195 030 3 639 230

*Mr L B Mophatlane’s performance bonus includes amounts due from prior to his appointment with the group.

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.

Remunerat ion pa id to non-execut ive d i rectors

Directors’ Deputy Chairman of Member of TotalName Period fees Chairman Chairman Committee Committee Rand

R S Berkowitz~ June 2003 – May 2004 50 000 300 000 25 000 25 000 400 000

D M Nurek~* June 2003 – May 2004 50 000 150 000 50 000 250 000

J F Buchanan* June 2003 – May 2004 50 000 25 000 25 000 100 000

L Lambrechts* June 2003 – July 2003 4 167 4 167

W J C Mitchell~ June 2003 – Dec 2003 25 000 12 500 37 500

F J van der Merwe* June 2003 – May 2004 50 000 25 000 75 000

229 167 300 000 150 000 50 000 137 500 866 667

Note these payments were not borne by Business Connexion Group Limited but were paid by Comparex Holdings Limited. The previous year’s directors’ emoluments of Comparex

Holdings Limited amounted to R904 169.

*Member of the Audit Committee

~Member of the Remuneration Committee

PG91

An

ne

xu

re E

– D

eta

ils

of

Dir

ec

tors

’ S

ha

re O

pti

on

s

A n n e x u r e E – D e t a i l s o f D i r e c t o r s ’ S h a r eO p t i o n s

Executive directors:

A C Farthing 9 100 000 100 000

9 300 000 300 000

15 200 000 200 000

18A 200 000 200 000

600 000 200 000 800 000

P A Watt 7 300 000 300 000

7* 1 020 000 1 020 000

15 126 000 126 000

18A 500 000 500 000

1 446 000 500 000 1 946 000

Total 2 046 000 700 000 2 746 000

* Additional options arising from the dividend in specie on 13 March 2000 as per Annexure C.

BalanceBalance Options 31 May 2004

Name Issued 31 May 2003 granted carried forward

Reginald Selwyn Berkowitz (67)

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

advisor and a director of certain of Investec's

subsidiaries. He was the chairman and non-executive

director of Comparex Holdings Limited.

David Morris Nurek (54)

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

Comparex Holdings Limited.

Peter Anthony Watt (63)

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 officer 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.

John Frederick Buchanan (60)

CA(SA)

John Buchanan qualified as a Chartered Accountant

in 1967 and completed the Executive Development

Programme at 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.

Alan Charles Farthing (47)

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

(formerly Comparex Africa).

Francois Johannes van der Merwe (47)

BA LLB (University of Stellenbosch)

BA MA (University of Oxford)

Francios van der Merwe practises as an attorney

in Stellenbosch. He received a Rhodes Scholarship

to Oxford University and has a BA and a MA

(Jurisprudence) and a BA (Law) and LLB from

Oxford University and Stellenbosch University

respectively. He is curently serving as non-

executive director of several companies including

certain JSE listed companies.

Leetile Benjamin Mophatlane (31)

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 managing director of the

company since inception. He is currently a member

of 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 Computor Society of

South Africa in association with the ITWeb and

Meta Group for his and the company’s contribution

to the transformation of the IT sector.

D i r e c t o r s ’ S u m m a r y C u r r i c u l u m V i t a e

PG92

Dir

ec

tors

’ S

um

ma

ry C

urr

icu

lum

Vit

ae

SHAREHOLDER SPREAD1 – 1 000 shares 5 362 57,85 1 703 562 0,65

1 001 – 10 000 shares 2 992 32,28 11 447 728 4,36

10 001 – 100 000 shares 716 7,73 20 596 763 7,84

100 001 – 1 000 000 shares 149 1,61 47 763 744 18,19

1 000 001 shares and over 49 0,53 181 125 115 68,96

9 268 100,00 262 636 912 100,00

DISTRIBUTION OF SHAREHOLDERSBanks 70 0,76 18 057 244 6,88

Close Corporations 158 1,70 1 609 993 0,61

Endowment Funds 21 0,23 1 397 898 0,53

Individuals 7 147 77,12 18 647 182 7,10

Insurance Companies 11 0,12 11 532 612 4,39

Investment Companies 22 0,24 12 755 373 4,86

Medical Aid Schemes 5 0,05 1 103 047 0,42

Mutual Funds 114 1,23 56 139 830 21,38

Nominees and Trusts 1 102 11,89 9 273 573 3,53

Other Corporations 153 1,65 3 624 273 1,38

Pension Funds 129 1,39 72 773 616 27,71

Private Companies 304 3,28 6 064 941 2,31

Public Companies 31 0,33 29 830 788 11,36

Share Trust 1 0,01 19 826 542 7,54

9 268 100,00 262 636 912 100,00

Number of Numbershareholdings % of shares %

PUBLIC/NON-PUBLIC SHAREHOLDERSNon-public shareholders 6 0,06 49 359 737 18,79

Directors of the Company 4 0,04 25 000 0,01

Strategic Holdings (more than10%) 1 0,01 29 508 195 11,24

Share Trust 1 0,01 19 826 542 7,54

Public shareholders 9 262 99,94 213 277 175 81,21

9 268 100,00 262 636 912 100,00

BENEFICIAL SHAREHOLDERS HOLDING 3% OR MOREPublic Investment Commissioner 29 731 113 11,32

Persetel Q Data Africa Holdings Limited 29 508 195 11,24

Comparex Holdings Share Purchase Trust 19 826 542 7,54

Investec 17 882 382 6,81

Sanlam 10 949 542 4,17

Investment Solutions 10 787 976 4,11

Number of Numbershareholders % of shares %

PG93

Sh

are

ho

lde

rs’

An

aly

sis

S h a r e h o l d e r s ’ A n a l y s i s

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

PG94

Sh

are

ho

lde

rs’

Dia

ry

S h a r e h o l d e r s ’ D i a r y

PG95

No

tic

e o

f A

nn

ua

l G

en

era

l M

ee

tin

g

N o t i c e o f A n n u a l G e n e r a l M e e t i n g

Notice is hereby given that the first Annual

General Meeting of the members of the company

will be held in the Business Connexion Auditorium,

Business Connexion Park North, 789 16th Road,

Randjespark, Midrand 1685, on Thursday, 13 January

2005 at 10:00 for the following purposes:

1. To receive and adopt the annual financial

statements for the year ended 31 May 2004.

2. To approve the remuneration to be paid

to non-executive directors for the year

commencing 1 June 2004, details of which

are as follows:

2.1 Chairman R300 000

2.2 Deputy Chairman R150 000

2.3 Chairman of the Audit Committee R28 000

2.4 Member of the Audit Committee R28 000

2.5 Chairman of the Remuneration

Committee R28 000

2.6 Member of the Remuneration

Committee R28 000

2.7 Fees for services as a

Non-executive Director R56 000

3. To re-elect the following directors in 4 by

way of a single resolution.

4.1 To re-elect Mr R S Berkowitz who retires in

accordance with the company’s Articles of

Association and being eligible, offers himself

for re-election.

4.2 To re-elect Mr J F Buchanan who retires in

accordance with the company’s Articles of

Association and being eligible, offers himself

for re-election.

4.3 To re-elect Mr A C Farthing who retires in

accordance with the company’s Articles of

Association and being eligible, offers himself

for re-election.

4.4 To re-elect Mr L B Mophatlane who retires in

accordance with the company’s Articles of

Association and being eligible, offers himself

for re-election.

4.5 To re-elect Mr D M Nurek who retires in

accordance with the company’s Articles of

Association and being eligible, offers himself

for re-election.

4.6 To re-elect Mr F J van der Merwe who retires

in accordance with the company’s Articles of

Association and being eligible, offers himself

for re-election.

4.7 To re-elect Mr P A Watt who retires in

accordance with the company’s Articles of

Association and being eligible, offers himself

for re-election.

5. To fix the remuneration of the auditors for

the past year’s audit.

6. To place the unissued shares under the control

of the directors – in order to achieve this

members are requested to consider and, if

deemed fit, to pass with or without modification

ordinary resolution number 1 set out below.

7. To transact such other business as may be

transacted at an Annual General Meeting.

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”)

Ordinary resolution number 1

Resolved that the authorised but unissued shares

in the capital of the company be and are hereby

placed under the control and authority of the

directors of the company and that the directors of

the company be and are hereby authorised and

empowered to allot, issue and otherwise dispose of

such shares to such person or persons on such

terms and conditions and at such times as the

directors of the company may from time to time

and in their discretion deem fit, subject to the

provisions of the Companies Act (Act 61 of 1973)

as amended (“the Act”), the Articles of Association

of the company and the Listings Requirements

of the JSE Securities Exchange South Africa,

where applicable.

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 Computershare Investor Services 2004

(Pty) Limited, 70 Marshall 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

are also obtainable from the company secretary,

Business Connexion Management Services (Pty)

Limited, Business Connexion Park North, 789 16th

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 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

10 November 2004

Business Connexion Park North, 789 16th Road

Randjespark, Midrand 1685

Republic of South Africa

N o t i c e o f A n n u a l G e n e r a l M e e t i n g (continued)

PG96

No

tic

e o

f A

nn

ua

l G

en

era

l M

ee

tin

g

PG81

Fo

rm o

f P

rox

y

F o r m o f P r o x y

For use at the first Annual General Meeting of Business Connexion which will be held in the Business Connexion Auditorium, Business

Connexion Park North, 789 16th Road, Randjespark, Midrand 1685 on Thursday, 13 January 2005 at 10:00 and at any adjournment thereof.

Only for use by members who have not dematerialised their shares or who have dematerialised their shares and registered them intheir 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 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 approve the remuneration to be paid to non-executive directors

2.1 Chairman R300 000

2.2 Deputy Chairman R150 000

2.3 Chairman of the Audit Committee R28 000

2.4 Member of the Audit Committee R28 000

2.5 Chairman of the Remuneration Committee R28 000

2.6 Member of the Remuneration Committee R28 000

2.7 Fees for services as a Non-executive Director R56 000

Continued overleaf

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”)

F o r m o f P r o x y (continued)

Fo

rm o

f P

rox

y

*I/We desire my/our proxy to vote on the resolutions to be proposed, as follows:

3. To re-elect the directors in 4 by way of a single resolution

4.1 Resolution to re-elect retiring director R S Berkowitz

4.2 Resolution to re-elect retiring director J F Buchanan

4.3 Resolution to re-elect retiring director A C Farthing

4.4 Resolution to re-elect retiring director L B Mophatlane

4.5 Resolution to re-elect retiring director D M Nurek

4.6 Resolution to re-elect retiring director F J van der Merwe

4.7 Resolution to re-elect retiring director P A Watt

5. Resolution to approve the remuneration of the auditors

6. Ordinary resolution number 1

Resolution to place the unissued shares under the control of the directors

Signed by me/us this day of 2004/2005

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.

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 Computershare Investor Services 2004 (Pty) Limited, 70 Marshall 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).

B u s i n e s s C o n n e x i o n G r o u p L i m i t e d [ 1 9 8 8 / 0 0 5 2 8 2 / 0 6 ]

B u s i n e s s C o n n e x i o n P a r k N o r t h | 7 8 9 1 6 t h R o a d | R a n d j e s p a r k | M i d r a n d | 1 6 8 5

P r i v a t e B a g X 4 8 | H a l f w a y H o u s e | 1 6 8 5

w w w . b c x . c o . z a

T e l e p h o n e ( + 2 7 11 ) 2 6 6 - 1 0 0 0 / 5 111 | F a x ( + 2 7 11 ) 2 6 6 - 5 5 3 7