this document is important and requires your...

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

The definitions and interpretations commencing on page 8 of this Circular apply to this entire document, including the cover page, except where the context indicates a contrary intention.

Action required by certificated and dematerialised shareholders

This document should be read with particular attention to the section entitled “Action Required by ConvergeNet Shareholders”, which commences on page 17 of this Circular.

If you are in any doubt as to what action you should take, please consult your stockbroker, banker, legal adviser, CSDP or other professional adviser immediately. If you have disposed of all your ConvergeNet shares, this Circular should be handed to the purchaser of such ConvergeNet shares or to the stockbroker, banker, CSDP or other agent through whom the disposal was effected.

ConvergeNet does not accept responsibility, and will not be held liable, for any action of, or omission by, any CSDP or stockbroker including, without limitation, any failure on the part of the CSDP or stockbroker of any beneficial owner of ConvergeNet shares to notify such beneficial owner of the Transactions set out in this Circular.

Shareholders are cautioned that the implementation of the Transactions will result in a reverse takeover for the purposes of the Listings Requirements, which stipulate that the Company can only retain its listing following the reverse takeover if the JSE is satisfied that the Company continues to qualify to be listed. The Board is satisfied that the Company will comply with all relevant requirements in this regard to maintain its Main Board listing as an investment entity.

Shareholders are advised that the listing of Stellar Capital Partners pursuant to the Transactions is dependent on (i) the Manco holding at least 10% in the issued ordinary share capital of Stellar Capital Partners and (ii) the appointment of a full-time CFO and CEO by no later than 31 January 2015.

ConvergeNet Holdings Limited(Incorporated in the Republic of South Africa)

(Registration number 1998/015580/06)

Share code: CVN ISIN: ZAE000182440

(“ConvergeNet” or the “Company”)

CIRCULAR TO CONVERGENET SHAREHOLDERS

regarding:

• the transfer of ConvergeNet’s listing from the “Computer Services” sub-sector to the “Investment Companies” sub-sector of the JSE;

• the proposed Category 1 disposal by ConvergeNet of 100% of ConvergeNet’s interest in Contract Kitting and SCS to Tellumat for R95.119 million and R5 million, respectively, the Contract Kitting Disposal constituting a disposal by ConvergeNet in terms of section 112 of the Companies Act;

• the proposed acquisition by ConvergeNet of 30% of Tellumat as a result of the settlement of the Contract Kitting Sale Consideration and the SCS Sale Consideration;

• the proposed Category 1 acquisition by ConvergeNet of 19.26% of Digicore from Titan Nominees (12.00% for R74 312 500), Titan Share Dealers (3.62% for R22 419 425), Dale International Trust Company (2.02% for R12 500 000), Pannar Group (0.10% for R625 000) and ClucasGray (1.52% for R9 375 000) for an aggregate amount of R119 231 925;

• the proposed Category 1 acquisition (based on aggregation with the Goliath Gold Acquisition) by ConvergeNet of an additional 30.32% of MRI from ASOF (29.78% for R24 822 664) and Titan Share Dealers (0.54% for R450 000) for an aggregate amount of R25 272 664;

• the proposed Category 1 acquisition by ConvergeNet of an additional 21.77% of Goliath Gold from ASOF (4.99% for R14 700 000), certain clients of Trinity Asset Management (8.67% for R25 597 876), Titan Share Dealers (2.13% for R6 268 780), Dale International Trust Company (4.93% for R14 518 628), Crater Valley Investments (0.93% for R2 736 418) and Mr W Geyer (0.12% for R3 48 040) for an aggregate amount of R64 169 742;

• the proposed specific issue of 75 million ConvergeNet shares for cash at a subscription price of R2.00 per share, amounting to an aggregate total consideration of R150 million, to the parties described in paragraphs 8.1.1.1 to 8.1.1.14 of this Circular, pursuant to the Private Placement;

• a specific authority to issue ConvergeNet shares to Stellar Advisers for cash in lieu of performance fees and termination fees payable in terms of the Management Agreement;

• the specific issue of 1 385 000 ConvergeNet shares at a subscription price of R2.00 per share, amounting to a total consideration of R2 770 000, to the Private Placement Underwriters in lieu of underwriting fees;

• a specific issue of 1 140 000 ConvergeNet shares at a subscription price of R2.00 per share, amounting to a total consideration of R2 280 000, to the parties described in paragraphs 8.1.1.2 and 8.1.1.3 of this Circular in lieu of commitment fees; and

• the proposed change of name of ConvergeNet to “Stellar Capital Partners Limited” and resulting amendment to the Memorandum of Incorporation;

and incorporating:

• a statement of shareholders’ Appraisal Rights in terms of section 164(2) of the Companies Act;

• extracts of section 115 of the Companies Act regarding the approval required for “fundamental transactions”, as defined in the Companies Act, and section 164 of the Companies Act regarding shareholders’ Appraisal Rights; and

• Revised Listing Particulars;

and enclosing:

• a notice of General Meeting;

• a form of proxy in respect of the General Meeting (for use by certificated shareholders and dematerialised shareholders with “own name” registration only) (pink); and

• a form of surrender for the Name Change (for use by certificated shareholders only) (yellow).

Independent Sponsor

Corporate Adviser and Transaction Sponsor

Legal Adviser Independent Expert to ConvergeNet

Independent Reporting Accountants

Date of issue: 15 December 2014

This Circular is only available in English. A copy hereof may be obtained from the registered office of ConvergeNet, the address of which

appears in the section “Corporate Information and Advisers” on page 1 of this Circular, from Monday, 15 December 2014 until Friday, 16 January 2015. This Circular is also available on the Company’s website at http://convergenet.com/investor-relations/circulars.

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CORPORATE INFORMATION AND ADVISERS

Company Secretary

Warwick van BredaUnit 4, Townsend Office Park, 1 Townsend Road Bedfordview, 2007(PO Box 2830, Bedfordview, 2007)

Business and Registered Address

Level P3, Oxford CornerCorner Jellicoe and Oxford RoadsRosebankJohannesburg, 2196(Suite 54, Dixon Street, Cape Town, 8001)

Place and date of incorporation

Incorporated in South Africa on 7 August 1998

Corporate Adviser and Transaction Sponsor

AfrAsia Corporate Finance Proprietary Limited(Registration number 2007/015289/07)Office 202, Cape Quarter, The Square27 Somerset RoadGreen PointCape Town, 8005(Suite 54, Dixon Street, Cape Town, 8001)

And at

Level P3, Oxford CornerCorner Jellicoe and Oxford RoadsRosebankJohannesburg, 2196(Suite 54, Dixon Street, Cape Town, 8001)


Grant Thornton Cape Incorporated(Registration number 2010/016204/21)119 Hertzog Boulevard ForeshoreCape Town, 8001(PO Box 7483/7498, Cape Town, 8000)

Independent Reporting AccountantsErnst & Young Incorporated(Registration number 2005/002308/21)Ernst & Young House, 35 Lower Long StreetCape Town, 8001(PO Box 656, Cape Town, 800 1)

Directors

DD Tabata (Chairman)*#

PJ van Zyl (Financial Director and Interim Chief Executive Officer)CE Pettit*#

L Mangope*#

J de Bruyn*#

CC Wiese*#

CH Wiese*#

* Non-executive# Independent

Attorneys

Cliffe Dekker Hofmeyr Incorporated(Registration number 2008/018923/21)11 Buitengracht StreetCape Town, 8001(PO Box 695, Cape Town, 8000)


PricewaterhouseCoopers Incorporated(Registration number 1998/012055/21)2 Eglin RoadSunninghill, 2157(Private Bag X36, Sunninghill, 2157)

Independent Expert to ConvergeNetBDO Corporate Finance Proprietary Limited(Registration number 1983/002903/07)22 Wellington RoadParktown, 2193(Private Bag X60500, Houghton, 2041)

Transfer Secretaries

Computershare Investor Services Proprietary Limited(Registration number 2004/003647/07)Ground Floor, 70 Marshall StreetJohannesburg, 2001(PO Box 61051, Marshalltown, 2107)

Independent Sponsor

PSG Capital Proprietary Limited (Registration number 2006/015817/07)1st Floor, Ou Kollege35 Kerk StreetStellenbosch, 7600(PO Box 7403, Stellenbosch, 7599)

And at

1st Floor, Building 8Inanda Greens Business Park 54 Wierda Road WestWierda ValleySandton, 2196(PO Box 650957, Benmore, 2010)

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TABLE OF CONTENTS

The definitions and interpretations commencing on page 8 of this Circular shall apply, mutatis mutandis, to this section.

Page

Corporate information and advisers 1

Table of contents 2

Salient dates and times 5

Important legal notes 7

Definitions and interpretations 8

Action required by ConvergeNet shareholders 17

Circular to ConvergeNet shareholders

1. Introduction 19

2. Purpose of this Circular 20

3. The transfer of ConvergeNet’s listing 20

4. The Contract Kitting and SCS Disposals and Tellumat Acquisition 23

5. The Digicore Acquisition 27

6. The MRI Acquisition 28

7. The Goliath Gold Acquisition 29

8. The Private Placement 30

9. The Name Change and amendment to the Memorandum of Incorporation 33

10. Adequacy of working capital 33

11. Exchange control regulations 34

12. Additional disclosure required by the JSE 35

13. Directors and senior management 39

14. Major beneficial shareholders 40

15. Directors’ interests in securities 41

16. Directors’ interests in transactions 42

17. Directors’ and management remuneration 42

18. Share capital 43

19. Share price history 44

20. Litigation statement 44

21. Pro forma financial effects of the Transactions 44

22. Directors’ responsibility statement 49

23. Material changes 49

24. Material and service contracts 50

25. Expenses relating to the Transactions 50

26. Advisers’ consents 51

27. Irrevocable undertaking 51

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Page

28. Additional disclosure required by the TRP 5 1

29. General Meeting 5 1

30. Documents available for inspection 5 2

31. Financial information incorporated by reference 5 2

Annexure 1.1 Extracts of the historical financial information of ConvergeNet for the years ended 31 August 2013, 31 August 2012 and 31 August 2011 59

Annexure 1.2 Reviewed condensed consolidated second interim financial information of ConvergeNet for the 12 months ended 31 August 2014 6 7

Annexure 2.1 Independent Expert’s opinion on the Contract Kitting Disposal 7 8

Annexure 2.2 Independent Expert’s opinion on the acquisition by ConvergeNet of an interest in MRI from ASOF 8 3

Annexure 2.3 Independent Expert’s opinion on the acquisition by ConvergeNet of an interest in Goliath Gold from ASOF 89

Independent Reporting Accountant’s reports

Contract Kitting

Annexure 3.1 Independent Reporting Accountants’ report on the historical financial information of Contract Kitting for the period ended 31 August 2012 9 6

Annexure 3.2 Independent Reporting Accountants’ report on the historical financial information of Contract Kitting for the period ended 31 August 2013 9 8

Annexure 3.3 Independent Reporting Accountants’ report on the interim financial information of Contract Kitting for the period ended 31 August 2014 10 0

Chrystalpine

Annexure 4.1 Independent Reporting Accountants’ audit report on the historical financial information of Chrystalpine for the period ended 31 Augus t 2012 10 2

Annexure 4.2 Independent Reporting Accountants’ audit report on the historical financial information of Chrystalpine for the period ended 31 Augus t 2013 10 4

Annexure 4.3 Independent Reporting Accountants’ report on the interim financial information of Chrystalpine for the period ended 31 August 2014 10 6

SCS

Annexure 5.1 Independent Reporting Accountants’ report on the historical financial information of SCS for the period ended 31 August 2012 10 8

Annexure 5.2 Independent Reporting Accountants’ audit report on the historical financial information of SCS for the period ended 31 August 2013 11 0

Annexure 5.3 Independent Reporting Accountants’ report on the interim financial information of SCS for the period ended 31 August 2014 11 2

Tellumat

Annexure 6 Independent Reporting Accountants’ report on the financial information of Tellumat for the periods ended 30 September 201 1, 30 September 2012, 30 September 2013 and 30 September 2014 11 4

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Page

Pro forma financial information

Annexure 7 Pro forma financial effects of the Transactions 11 7

Annexure 8 Independent Reporting Accountants’ limited assurance report on the pro forma financial effects of the Transactions 13 5

Annexure 9 Curricula vitae of the directors of ConvergeNet and senior management of major subsidiaries 13 7

Annexure 10 Investment management experience of the directors of Manco 14 0

Annexure 11 Share price history of ConvergeNet 14 2

Annexure 12 Corporate governance 14 3

Annexure 13 Previous issues of ConvergeNet shares 15 7

Annexure 14 Section 115 and section 164 of the Companies Act 1 59

Annexure 15 Salient terms of the Management Agreement 16 4

Revised Listing Particulars 1 68

Notice of General Meeting 192

Form of Proxy – General Meeting (for use by certificated shareholders and dematerialised shareholders with “own name” registration only) (pink) Attached

Form of Surrender – Name Change (for use by certificated shareholders only) (yellow) Attached

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SALIENT DATES AND TIMES


GENERAL MEETING

Record date in order to be eligible to receive the Notice of General Meeting Friday, 5 December 2014

Declaration data announcement released on SENS on Monday, 15 December 2014

Notice of General Meeting published on SENS on Monday, 15 December 2014

Circular and Notice of General Meeting posted to shareholders on Monday, 15 December 2014

Declaration data announcement published in the press on Wednesday, 17 December 2014

Last date to trade in ConvergeNet shares in order to be recorded in the register to vote at the General Meeting on 16 January 2015 Friday, 2 January 2015

Voting Record Date by close of trade on Friday, 9 January 2015

Last date to lodge forms of proxy in respect of the General Meeting by 10:00 on Wednesday, 14 January 2015

Last date and time for shareholders to give notice, in terms of section164 of the Companies Act, to ConvergeNet objecting to the special resolution approving the Contract Kitting Disposal by 10:00 on Friday, 16 January 2015

General Meeting to be held at 10:00 on Friday, 16 January 2015

Results of General Meeting released on SENS on Friday, 16 January 2015

If the Contract Kitting Disposal is approved by shareholders at the General Meeting:

Last date on which shareholders can make application to the court in terms of section 115(3) of the Companies Act Friday, 30 January 2015

Last date for ConvergeNet to send objecting shareholders notices of the adoption of the special resolution approving the Contract Kitting Disposal, in terms of section 164 of the Companies Act Friday, 30 January 2015

If no shareholders exercise their rights in terms of section 115 of the Companies Act:

Expected date for receipt of compliance certificate from the TRP Monday, 2 February 2015

Expected finalisation announcement in respect of the Contract Kitting Disposal released on SENS on Tuesday, 3 February 2015

Expected finalisation announcement in respect of the Contract Kitting Disposal published in the press on Wednesday, 4 February 2015

NAME CHANGE

Declaration data announcement released on SENS on Monday, 15 December 2014

Declaration data announcement published in the press on Wednesday, 17 December 2014

General Meeting to be held at 10:00 on Friday, 16 January 2015

If the Name Change is approved by shareholders at the General Meeting:

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GENERAL MEETING

Special resolutions in respect of the Name Change and amendment to the Memorandum of Incorporation lodged for registration with CIPC on or about Monday, 19 January 2015

Expected finalisation announcement in respect of the Name Change released on SENS on or about Friday, 6 March 2015

Expected finalisation announcement in respect of the Name Change published in the press on Monday, 9 March 2015

Last day to trade under the old name “ConvergeNet Holdings Limited” on Friday, 13 March 2015

Name Change effective on the JSE from commencement of trade on Monday, 16 March 2015

ConvergeNet shares trade under the new name “Stellar Capital Partners Limited” under the JSE share code “SCP”, abbreviated name “Stellar” and new ISIN “ZAE000198586” from commencement of trade on Monday, 16 March 2015

Record date for the Name Change (the “Name Change Record Date”) on Friday, 20 March 2015

New ConvergeNet share certificates, reflecting the Name Change, posted, by registered post in South Africa, to certificated shareholders who have surrendered their Documents of Title on or before 12:00 on the Name Change Record Date (see note 4 below) on or about Monday, 23 March 2015

ConvergeNet dematerialised shareholders’ accounts at their CSDP or broker updated with the new name on Monday, 23 March 2015

Notes:

1. All times indicated in this Circular are local times in South Africa.

2. The dates and times indicated in the table above are subject to change. Any such changes will be released on SENS and published

in the press.

3. In anticipation of the Name Change, certificated and dematerialised ConvergeNet shares will not be able to be dematerialised or

rematerialised after Friday, 6 March 2015.

4. To be valid, the completed forms of proxy must be lodged with the Transfer Secretaries by no later than Wednesday, 14 January 2015

at 10:00, alternatively, such forms of proxy may be handed to the company secretary or chairperson of the Company at the meeting

until the commencement of the General Meeting.

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IMPORTANT LEGAL NOTES


APPLICABLE LAWS

The release, publication or distribution of this Circular in certain jurisdictions may be restricted by law and therefore persons in any such jurisdictions into which this Circular is released, published or distributed should inform themselves about and observe such restrictions. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. This Circular does not constitute the solicitation of an offer to purchase shares or a solicitation of any vote or approval in any jurisdiction in which such solicitation would be unlawful.

The Transactions may be affected by the laws of the relevant jurisdictions of non-resident shareholders. Such non-resident shareholders should inform themselves about and observe any applicable legal requirements of such jurisdictions. It is the responsibility of any non-resident shareholder to satisfy himself as to the full observance of the laws and regulatory requirements of the relevant jurisdiction in connection with the Transactions, which is the subject of this Circular, including the obtaining of any governmental, exchange control or other consents or the making of any filings which may be required, the compliance with other necessary formalities, the payment of any issue, transfer or other taxes or other requisite payments due to such jurisdiction.

The Transactions are governed by the laws of South Africa and are subject to any applicable laws and regulations, including the Companies Act.

Any shareholder who is in doubt as to their position, including, without limitation, their tax status, should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.

FORWARD-LOOKING STATEMENTS

This Circular contains statements about the ConvergeNet group of companies that are, or may be, forward-looking statements. All statements, other than statements of historical fact, are, or may be deemed to be, forward-looking statements. These forward-looking statements are not based on historical facts, but rather reflect current expectations concerning future results and events, and generally may be identified by the use of forward-looking words or phrases such as “believe”, “aim”, “expect”, “anticipate”, “intend”, “foresee”, “forecast”, “likely”, “should”, “planned”, “may”, “estimated”, “potential” or similar words and phrases.

By their nature, forward-looking statements involve risks and uncertainties as they relate to events and depend on circumstances that may or may not occur in the future. ConvergeNet cautions that forward-looking statements are not guarantees of future performance. Actual results, financial and operating conditions, liquidity and the developments within the industry in which ConvergeNet operates may differ materially from those made in, or suggested by, the forward-looking statements contained in this Circular.

All of the forward-looking statements are based on estimates and assumptions, as regards ConvergeNet, made by ConvergeNet as communicated in publicly available documents by ConvergeNet, all of which estimates and assumptions, although ConvergeNet believes them to be reasonable, are inherently uncertain. Such estimates, assumptions or statements may not eventuate. Factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in those statements or assumptions include other matters not yet known to ConvergeNet or not currently considered material by ConvergeNet.

Shareholders should keep in mind that any forward-looking statement made in this Circular or elsewhere is applicable only at the date on which such forward-looking statement is made. New factors that could cause the business of ConvergeNet not to develop as expected may emerge from time to time, and it is not possible to predict all of them. Further, the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement are not known. ConvergeNet has no duty to, and does not intend to, update or revise the forward-looking statements contained in this Circular after the date of this Circular, except as may be required by law.

8

DEFINITIONS AND INTERPRETATIONS

In this document, unless the context indicates a contrary intention, a word or an expression which denotes any gender includes the other gender, a natural person includes a juristic person and vice versa, the singular includes the plural and vice versa and the following words and expressions bear the meanings assigned to them below:

“ Additional Digicore Acquisition Sale and Purchase Agreement”

means the agreement dated 23 October 2014 concluded between ConvergeNet, Pannar Group and ClucasGray in terms of which ConvergeNet will acquire 0.10% of Digicore for R625 000 from Pannar Group and 1.52% of Digicore for R9 375 000 from ClucasGray, which acquisitions form part of the Digicore Acquisition;

“ Additional Goliath Gold Acquisition Sale and Purchase Agreement”

means the agreement dated 23 October 2014 concluded between ConvergeNet, certain clients of Trinity Asset Management (whom are all public shareholders and no related parties of ConvergeNet as defined in the Listings Requirements) and Mr W Geyer (a public shareholder who is not a related party of ConvergeNet as defined in the Listings Requirements), in terms of which ConvergeNet will acquire an additional 5.35% of Goliath Gold for R15 779 900 from certain clients of Trinity Asset Management and 0.12% of Goliath Gold for R348 040 from Mr W Geyer, which acquisitions form part of the Goliath Gold Acquisition;

“AfrAsia Corporate Finance” or “Corporate Adviser” or “Transaction Adviser”

means AfrAsia Corporate Finance Proprietary Limited (registration number 2007/015289/07), an authorised financial services provider (FSP 32488), a private company incorporated in accordance with the laws of South Africa and a wholly-owned subsidiary of AfrAsia Investments Limited (a Mauritian investment holding company, which is in turn a wholly-owned subsidiary of AfrAsia Bank Limited, a Mauritian registered bank);

“Afriwiftcom” means Afriwiftcom Investment Holdings Limited (registration number 106509), a private company incorporated in accordance with the laws of the Republic of Mauritius, the shareholders of which are NinetyEast Trustees (Mauritius) Limited as trustee of the JP Trust (50%) and NinetyEast Trustees (Mauritius) Limited as trustee of the HA LNC Trust (50%);

“Appraisal Rights” means the rights afforded to shareholders in terms of section 164 of the Companies Act, an extract of which is set out in Annexure 14 to this Circular;

“ASOF” means AfrAsia Special Opportunities Fund (registration number 101312), a collective investment scheme incorporated in accordance with the laws of Mauritius and listed on the Stock Exchange of Mauritius, in which AfrAsia Corporate Finance (Africa) Limited holds 100% of the non-beneficial voting shares;

“ ASOF Sale and Purchase Agreement”

means the agreement dated 5 September 2014 concluded between ConvergeNet and ASOF in terms of which ConvergeNet will acquire:

– 29.78% of MRI from ASOF for R24 822 664, which acquisition forms part of the MRI Acquisition; and

– 4.99% of Goliath Gold for R14 700 000, which acquisition forms part of the Goliath Gold Acquisition;

“BDO” or “Independent Expert” means BDO Corporate Finance Proprietary Limited (registration number 1983/002903/07), a private company incorporated in accordance with the laws of South Africa, acting as the independent expert to the Independent Board;

9

“Belltower” means Belltower Financial Proprietary Limited (registration number 2005/037938/07), a private company incorporated in accordance with the laws of South Africa, the sole director and beneficial owner of which is J Bishop;

“beneficial owner” means a person on whose behalf any dematerialised share (not held in “own name” form) is held by a CSDP or stockbroker or a nominee of a CSDP or stockbroker in accordance with a custody agreement;

“Board” or “directors” means the directors of ConvergeNet as at the Last Practicable Date, whose names are set out in paragraph 13 of this Circular;

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

“cents” means South African cents, in the official currency of South Africa;

”CEO” means Chief Executive Officer;

”CFO” means Chief Financial Officer ;

“certificated shares” means shares that have not been dematerialised, the title to which is evidenced by a Document of Title;

“certificated shareholders” means shareholders who hold certificated shares;

“Chrystalpine” means Chrystalpine Investments 9 Proprietary Limited (registration number 2008/024785/07), a private company incorporated in accordance with the laws of South Africa, which Company is the 100% holding company of Contract Kitting;

“CIPC” means the Companies and Intellectual Property Commission;

“Circular” means all the documents contained in this bound document dated 15 December 2014, together with the annexures hereto, and including the Notice of the General Meeting, the form of proxy, the form of surrender in respect of the Name Change and the Revised Listing Particulars;

“ClucasGray” means ClucasGray Future Titans Prescient Fund, a fund managed by ClucasGray Proprietary Limited, the directors of which are Messrs P Carter, CL Clucas, JP Clucas and PLB Clucas;

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

“Companies Act” means the Companies Act, No. 71 of 2008, as amended, and where appropriate in the context includes a reference to the Companies Regulations;

“Companies Regulations” means the Companies Regulations 2011, promulgated in terms of section 223 of the Companies Act (which includes the Takeover Regulations);

“Company Secretary” means Mr Warwick van Breda;

“Competition Authorities” means the Competition Commission and/or the Competition Tribunal and/or the Competition Appeal Court, of South Africa created in terms of the Competition Act, No. 89 of 1998, and/or any other similar competition authorities in any other relevant jurisdiction;

“Contract Kitting” means Andrews Kit Proprietary Limited (registration number 2001/000793/07), a private company incorporated in accordance with the laws of South Africa and trading as Contract Kitting, a wholly-owned subsidiary of Chrystalpine;

10

“Contract Kitting Disposal” means the proposed disposal by ConvergeNet of 100% of ConvergeNet’s interest in Contract Kitting (through the sale of 100% of the shares in Chrystalpine, being the holding company of Contract Kitting) to Tellumat for R95.119 million in terms of the Tellumat Sale and Purchase Agreement, which transaction constitutes a disposal by ConvergeNet in terms of section 112 of the Companies Act;

“ Contract Kitting Sale Consideration”

means the sale consideration of R95.119 million payable by Tellumat in respect of the Contract Kitting Disposal, which amount is to be settled by Tellumat by way of the issue of ordinary shares in Tellumat;

“ConvergeCom” means ConvergeCom Proprietary Limited (registration number 2008/013750/07), a private company incorporated in accordance with the laws of South Africa, the purchaser in respect of the Telesto Disposal and the sole director and shareholder of which is DF Bisschoff;

“ConvergeNet” or “Company” means ConvergeNet Holdings Limited (registration number 1998/015580/06), a public company incorporated in accordance with the laws of South Africa, operating in conformity with its Memorandum of Incorporation and laws of South Africa, the shares of which are listed on the Main Board of the JSE;

“ConvergeNet Group” or “Group” means ConvergeNet and its subsidiaries from time to time;

“court” means any South African court with competent jurisdiction to approve the implementation of the special resolution in respect of the Contract Kitting Disposal set out in the notice of General Meeting pursuant to section 115 of the Companies Act and/or to determine the fair value of ConvergeNet shares pursuant to section 164(14) of the Companies Act;

“Crater Valley Investments” means Crater Valley Property Investments Proprietary Limited (registration number 1997/017023/07), a private company incorporated in accordance with the laws of South Africa, the sole shareholder of which is Kepaka Holdings;

“ Crater Valley Sale and Purchase Agreement”

means the agreement dated 5 September 2014 concluded between ConvergeNet and Crater Valley Investments in terms of which ConvergeNet will acquire 0.93% of Goliath Gold from Crater Valley Investments for R2 736 418, which acquisition forms part of the Goliath Gold Acquisition;

“CSDP” means a “Participant”, as defined in section 1 of the Financial Markets Act;

“custody agreement” means a custody mandate agreement between a person and a CSDP or stockbroker, regulating their relationship in respect of dematerialised shares held on ConvergeNet’s uncertificated securities register administered by a CSDP or stockbroker on behalf of that person;

“ Dale Sale and Purchase Agreement”

means the agreement dated 5 September 2014 concluded between ConvergeNet and Dale International Trust Company in terms of which ConvergeNet will acquire from Dale International Trust Company:

– 2.02% of Digicore for R12 500 000, which acquisition forms part of the Digicore Acquisition; and

– 4.93% of Goliath Gold for R14 518 628, which acquisition forms part of the Goliath Gold Acquisition;

“ Dale International Trust Company”

means Dale International Trust Company Limited (registration number B173213), a public company incorporated in accordance with the laws of Mauritius, acting as trustees of The Salty Portfolio Trust;

“dematerialised” means the process whereby paper share certificates or other Documents of Title are replaced with electronic records of ownership of shares or securities as contemplated in section 49(5) of the Companies Act under the Strate system with a CSDP or stockbroker;

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“dematerialised shares” means shares that have been dematerialised or have been issued in dematerialised form, and which are held in electronic form on ConvergeNet’s uncertificated securities register administered by a CSDP;

“dematerialised shareholders” means shareholders who hold dematerialised shares;

“Digicore” means Digicore Holdings Limited (registration number 1998/012601/06), a public company incorporated in accordance with the laws of South Africa on 2 July 1998, the shares of which are listed on the Main Board of the JSE, having its registered address at Regency Office Park, 9 Regency Drive, Route 21 Corporate Park, Irene;

“Digicore Acquisition” means the proposed acquisition by ConvergeNet of 19.26% of Digicore for an aggregate amount of R119 231 925, in terms of the Titan Sale and Purchase Agreement, the Dale Sale and Purchase Agreement and the Additional Digicore Acquisition Sale and Purchase Agreement;

“the Disposals” means, collectively, the Contract Kitting Disposal and the SCS Disposal;

“Dissenting Shareholders” means shareholders who validly exercise their Appraisal Rights by demanding, in terms of section 164(5) to 164(8) of the Companies Act, that the Company pays them the fair value of all their ConvergeNet shares;

“Documents of Title” means valid share certificates, certified transfer deeds, balance receipts or any other proof of ownership of ConvergeNet shares, reasonably acceptable to ConvergeNet;

“Exchange Control Regulations” means the Exchange Control Regulations, 1961, as amended, made in terms of section 9 of the Currency and Exchanges Act, 1933 (Act No. 9 of 1933), as amended;

“Financial Markets Act” means the Financial Markets Act, No. 19 of 2012, as amended from time to time;

“Future Cell” means Future Cell Proprietary Limited (registration number 2001/020946/07), a private company incorporated in accordance with the laws of South Africa;

“General Meeting” means the general meeting of ConvergeNet shareholders to be held at 10:00 on Friday, 16 January 2015 at Level P3, Oxford Corner, corner Jellicoe and Oxford Roads, Rosebank, Johannesburg, to consider and, if deemed fit, approve the resolutions required to implement the Transactions;

“Goliath Gold” means Goliath Gold Mining Limited (registration number 1933/004523/06), a public company incorporated in accordance with the laws of South Africa on 3 May 1933, the shares of which are listed on the Main Board of the JSE, having its registered address at Constantia Office Park, Bridgeview House, cnr 14th Avenue and Hendrik Potgieter Road, Weltevreden Park;

“Goliath Gold Acquisition” means the proposed acquisition by ConvergeNet of an additional 21.77% of Goliath Gold for an aggregate amount of R64 169 742 in terms of the ASOF Sale and Purchase Agreement, Trinity Sale and Purchase Agreement, Titan Sale and Purchase Agreement, Dale Sale and Purchase Agreement, Crater Valley Sale and Purchase Agreement and Additional Goliath Gold Acquisition Sale and Purchase Agreement;

“IFRS” means International Financial Reporting Standards;

“Independent Board” means, for purposes of the Contract Kitting Disposal, collectively the directors of ConvergeNet as at the Last Practicable Date, whose names are set out on page 19 of this Circular;

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“Independent Sponsor” or “PSG Capital”

means PSG Capital Proprietary Limited (registration number: 2006/015817/07), a private company incorporated in accordance with the laws of South Africa, acting as independent sponsor of ConvergeNet in respect of the Transactions;

“JSE” means the JSE Limited (registration number 2005/022939/06), a public company incorporated in accordance with the laws of South Africa and licensed as an exchange under the Financial Markets Act;

“Kepaka Holdings” means Kepaka Holdings Proprietary Limited (registration number 1998/002872/07), a private company incorporated in accordance with the laws of South Africa, being the sole shareholder of Crater Valley Property Investments, the shareholders of which are The Kate-Louise McCay Family Trust (33.3%), The Patrick McCay Family Trust (33.3%) and The Kezia McCay Family Trust (33.3%) and the sole director of which is Ms M McCay;

“King III Code” means the King Report on Corporate Governance for South Africa 2009;

“Last Practicable Date” means 1 December 2014, being the last practicable date prior to the finalisation of this Circular;

“Lavender Sky Investments” means Lavender Sky Investments 40 Proprietary Limited (registration number 2011/002794/07), a private company incorporated in accordance with the laws of South Africa, the sole shareholder of which is SJP Capital Limited, a company incorporated in the British Virgin Islands (incorporation number 1538858);

“Listings Requirements” means the Listings Requirements of the JSE in force as at the Last Practicable Date;

“Management Agreement” means the agreement dated 8 December 2014 between ConvergeNet and Stellar Advisers in terms of which Stellar Advisers will manage the portfolio of the Company in accordance with section 15 of the Listings Requirements, as detailed in paragraph 3.4 of this Circular, and the salient terms of which are included in Annexure 15 to this Circular;

“Memorandum of Incorporation” means the Memorandum of Incorporation of the Company;

“ Momentum Collective Investments”

means Momentum Collective Investments Proprietary Limited (registration number 1987/004287/07), a private company incorporated in accordance with the laws of South Africa,

“MRI” means Mine Restoration Investments Limited (registration number 1987/004821/06), a public company incorporated in accordance with the laws of South Africa on 5 October 1987, the shares of which are listed on the Main Board of the JSE, having its registered address at Route 21 Corporate Park, 45 Sovereign Drive, Ground Floor, Unit C, Irene X30;

“MRI Acquisition” means the purchase by ConvergeNet of an additional 30.32% of MRI for an aggregate amount of R25 272 664 in terms of the ASOF Sale and Purchase Agreement and Titan Sale and Purchase Agreement;

“Name Change” means the proposed change of name of ConvergeNet to “Stellar Capital Partners Limited”, as detailed in paragraph 9 of this Circular;

“net asset value” means the value of the total assets (non-current assets plus current assets) minus total liabilities (non-current liabilities plus current liabilities). Assets include financial assets and liabilities include financial liabilities;

“net tangible asset value” means the net asset value less the value of goodwill and other intangible assets;

“notice of General Meeting” means the notice of General Meeting forming part of this Circular;

“ordinary share(s)” means ordinary shares of no par value in the share capital of the Company, which shares are listed on the JSE Main Board;

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““ own name” dematerialised shareholders”

means dematerialised shareholders who/which have elected to have “own name” registration;

“Pannar Group” means Pannar Group Pension Plan (registration number 12/8/16525);

“Pepkor” Pepkor Limited (registration number 1965/007765/06), a public company incorporated in accordance with the laws of South Africa;

“Prime Rate” means the publicly quoted prime rate of interest (per cent per annum) as published by Standard Bank of South Africa Limited from time to time;

“Private Placement” means the specific issue of 75 million ConvergeNet shares for cash at a subscription price of R2.00 per share, amounting to an aggregate total consideration of R150 million, to the parties described in paragraphs 8.1.1 and 8.1.3 of this Circular;

“Private Placement Amount” means R150 million, being the amount to be raised pursuant to the Private Placement;

“Private Placement Underwriters” means the entities who will underwrite the balance of the Private Placement amount not subscribed for, as detailed in paragraph 8.1.3 of this Circular;

“Rand” or “R” means South African rand, the official currency of South Africa;

“register” means ConvergeNet’s share register, including all sub-registers;

“Revised Listing Particulars” means revised listing particulars in respect of the Stellar Group issued in accordance with sections 9.5(c) and 9.22 of the Listings Requirements and attached to this Circular;

“SCS” means Structured Connectivity Solutions Proprietary Limited (registration number 2002/001640/07), a private company incorporated in accordance with the laws of South Africa, a wholly-owned subsidiary of ConvergeNet;

“SCS Disposal” means the proposed disposal by ConvergeNet of 100% of ConvergeNet’s interest in SCS to Tellumat for R5 million in terms of the Tellumat Sale and Purchase Agreement;

“SCS Sale Consideration” means the sale consideration of R5 million payable by Tellumat in respect of the SCS Disposal, which amount is to be settled by Tellumat by way of the issue of ordinary shares in Tellumat;

“Sector Transfer” means the transfer of ConvergeNet’s listing from the “Computer Services” sub-sector to the “Investment Companies” sub-sector of the JSE, as

approved by the JSE on 15 December 2014;

“SENS” means the Stock Exchange News Service, the news service operated by the JSE;

“Share Consolidation” means the consolidation of the authorised and issued share capital of the Company on the basis of 1-for-10 shares held by the consolidation of every 10 shares with no par value into 1 share with no par value, which consolidation was approved by shareholders in general meeting on 22 October 2013;

“ shareholders” or “ConvergeNet shareholders”

means certificated and dematerialised registered holders of ConvergeNet shares;

“shares” or “ConvergeNet shares” means ordinary shares of no par value in the share capital of ConvergeNet;

“SIMAT Group” means SIMAT Group (registration number 106476), a private company incorporated in accordance with the laws of the Republic of Mauritius;

“SIMAT SA” means SIMAT Management Company Proprietary Limited (registration number 2006/032935/07), a private company incorporated in accordance with the laws of South Africa, in which ConvergeNet holds a 51% interest;

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“Sizwe” means Sizwe Africa IT Group Proprietary Limited (registration number 2000/020258/07), a private company incorporated in accordance with the laws of South Africa;

“Sizwe Acquisition” means the acquisition by ConvergeNet of 25% of the issued share capital of Sizwe from Yellow Star in terms of the Yellow Star Sale of Shares Agreement, as detailed in the circular 12 February 2013;

“Sizwe Disposal” means the disposal by ConvergeNet, as approved by shareholders on 22 October 2013, of 100% of ConvergeNet’s interest in Sizwe to Zaloserve for R120 million, which transaction constituted a disposal by ConvergeNet in terms of section 112 of the Companies Act, as approved by shareholders in general meeting on 22 October 2013;

“Sizwe Sale Shares” means 100% of the issued ordinary share capital of Sizwe that was disposed of by ConvergeNet to Zaloserve pursuant to the Sizwe Disposal;

“South Africa” means the Republic of South Africa;

“Speedwell Trust” means the Speedwell Trust (registration number 004650/1998);

“Stellar Advisers” or “Manco” means Thunder Securitisation Proprietary Limited, in the process of changing its name to Stellar Advisers Proprietary Limited registration number 2010/021751/07 , a private company incorporated in accordance with the laws of South Africa, established as the dedicated investment manager to manage the portfolio of the Company in accordance with section 15 of the Listings Requirements, the directors of which are Messrs CE Pettit, JD Wiese and PJ van Zyl and which company will be advised by AfrAsia Corporate Finance;

“Stellar Capital” or “Stellar Group” means the new name of ConvergeNet pursuant to the approval of the Name Change;

“stockbroker” means any person registered as a broking member (equities) in terms of the rules of the JSE made in accordance with the provisions of the Financial Markets Act;

“Strate” means Strate Limited (registration number 1998/022242/06), a private company incorporated in accordance with the laws of South Africa, a registered central securities depository which is responsible for the electronic settlement system used by the JSE;

“sub-register” means each of ConvergeNet’s sub-registers of members administered and maintained by CSDPs in electronic form;

“Subscription Agreements” means the agreements dated 5 September 2014 between ConvergeNet and the investors listed in paragraph 8.1.1 of this Circular in terms of which the Private Placement is proposed to be effected;

“subsidiary” means a subsidiary company, as defined in section 3 of the Companies Act;

“Takeover Regulations” means the Takeover Regulations, issued pursuant to sections 120 and 223 of the Companies Act;

“Telesto” means Telesto Communications Proprietary Limited (registration number 1999/002229/07), a private company incorporated in accordance with the laws of South Africa, a wholly-owned subsidiary of the Company;

“Telesto Disposal” means the disposal by ConvergeNet, as approved by shareholders on 22 October 2013, of 100% of ConvergeNet’s interest in Telesto to ConvergeCom for R7.3 million in terms of the Telesto Sale of Shares Agreement, as approved by shareholders on 22 October 2014;

“ Telesto Sale of Shares Agreement”

means the agreement dated 16 August 2013 concluded between ConvergeNet and ConvergeCom in terms of which the Telesto Disposal was effected;

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“Telesto Sale Shares” means 100% of the issued ordinary share capital of Telesto disposed of by ConvergeNet to ConvergeCom in terms of the Telesto Sale of Shares Agreement;

“Tellumat” means Tellumat Proprietary Limited (registration number 1996/000957/07), a private company incorporated in accordance with the laws of South Africa on 29 January 1996, having its registered address at 64 – 74 White Road, Retreat;

“Tellumat Consideration Shares” means convertible ordinary class “A” shares in the issued share capital of Tellumat, which shares: (i) comprise 30% of the total issued share capital of Tellumat, (ii) entitle the holder to a 30% equity interest in Tellumat and rank pari passu with the ordinary shares in Tellumat, save in respect of any entitlement to the net proceeds of the Tellumat Pension Fund employer surplus, and (iii) will automatically convert into ordinary shares in Tellumat on the distribution of the Tellumat Pension Fund employer surplus;

“Tellumat Acquisition” means the acquisition by ConvergeNet of the Tellumat Consideration Shares, by way of the issue by Tellumat of the Tellumat Consideration Shares in settlement of the Contract Kitting Sale Consideration and SCS Sale Consideration;

“Tellumat Option Agreement” means the agreement dated 13 November 2014 concluded between ConvergeNet, Tellumat and Plessey Holdings Limited in terms of which the Tellumat Option, as described in paragraph 4.6.4 of the Circular, is proposed to be effected;

“ Tellumat Sale and Purchase Agreement”

means the agreement dated 13 November 2014 concluded between ConvergeNet, Contract Kitting, SCS and Tellumat in terms of which the Contract Kitting Disposal, SCS Disposal and Tellumat Acquisition are proposed to be effected;

“Terms Announcement” means the announcement released on SENS and published in the press on 8 September 2014 and 9 September 2014, respectively, regarding, inter alia, the Transactions;

“Thunder Capital” means Thunder Capital Proprietary Limited (registration number 2007/028624/07), a private company incorporated in accordance with the laws of South Africa, which company is 100% held by Heritage Capital Assets Limited and the sole director of which is Mr PJ van Zyl;

“Titan” means, collectively, Titan Nominees and its associated entities, including Titan Premier and Titan Share Dealers;

“ Titan Sale and Purchase Agreement”

means the agreement dated 5 September 2014 concluded between ConvergeNet and Titan in terms of which ConvergeNet will acquire:

– 12.00% of Digicore from Titan Nominees for R74 312 500;

– 3.62% of Digicore from Titan Share Dealers for R22 419 425 (which acquisitions form part of the Digicore Acquisition);

– 0.54% of MRI from Titan Share Dealers for R450 000, which acquisition forms part of the MRI Acquisition;

– 2.13% of Goliath Gold from Titan Share Dealers for R6 268 780, which acquisition forms part of the Goliath Gold Acquisition;

“Titan Nominees” means Titan Nominees Proprietary Limited (registration number 1978/003570/07), a private company incorporated in accordance with the laws of South Africa, the directors of which are Dr CH Wiese and Messrs IHJ Visagie and JD Wiese and the controlling shareholder of which is Dr CH Wiese;

“Titan Share Dealers” means Titan Share Dealers Proprietary Limited (registration number 1969/003884/07), a private company incorporated in accordance with the laws of South Africa, the directors of which are Dr CH Wiese and Mr JD Wiese;

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“Transfer Secretaries” or “Computershare”

means Computershare Investor Services Proprietary Limited (registration number 2004/003647/07), a private company incorporated in accordance with the laws of South Africa and the Transfer Secretaries of ConvergeNet;

“Trinity Asset Management” means Trinity Asset Management Proprietary Limited (registration number 1996/010864/07), a private company incorporated in accordance with the laws of South Africa, the sole director of which is Q George;

“ Trinity Sale and Purchase Agreement”

means the agreement dated 5 September 2014 concluded between ConvergeNet and Trinity Asset Management in terms of which ConvergeNet will acquire 3.33% of Goliath Gold for R9 817 976, which acquisition forms part of the Goliath Gold Acquisition;

“Titan Premier Investments” means Titan Premier Investments Proprietary Limited (registration number 1979/000776/07), a private company incorporated in accordance with the laws of South Africa, the directors of which are Dr CH Wiese and Messrs IHJ Visagie and JD Wiese and the controlling shareholder of which is Dr CH Wiese;

“Transactions” means collectively, the Contract Kitting Disposal, SCS Disposal, Tellumat Acquisition, MRI Acquisition, Digicore Acquisition, Goliath Gold Acquisition, Private Placement, specific issues of shares for cash in lieu of fees (as detailed in paragraphs 3.4.2, 3.4.3, 8.1.3, 8.1.1.2 and 8.1.1.3) and Name Change, which transactions require the approval of shareholders at the General Meeting;

“TRP” means the Takeover Regulation Panel established in terms of section 196 of the Companies Act;

“Underwriting Agreement(s)” means the agreements dated 5 September 2014 between ConvergeNet and the Private Placement Underwriters in terms of which the Private Placement Underwriters will underwrite the balance of the Private Placement Amount not subscribed for, to be underwritten by Titan Premier Investments (or its nominee) in respect of 50% of the Company shares not placed by the Last Practicable Date, Lavender Sky Investments in respect of 25% of the Company shares not placed by the Last Practicable Date and Thunder Capital in respect of 25% of the Company shares not placed by the Last Practicable Date, for an underwriting fee of 5% of the amount underwritten, payable by way of the issue of new shares in the Company at R2.00 per share. The Underwriting Agreements will become irrevocable not later than 16:30 on 12 December 2014;

“VAT” means Value Added Tax, levied in terms of the provisions of the Value-Added Tax Act, No. 89 of 1991, as amended;

“Voting Record Date” means the date on which shareholders must be recorded in the register in order to attend, speak at and vote at the General Meeting, which date is expected to be Friday, 9 January 2015;

“VWAP” means volume weighted average price;

“X-DSL” means X-DSL Networking Solutions Proprietary Limited (registration number 2002/024167/07), a private company incorporated in accordance with the laws of South Africa in which ConvergeNet holds a 66% interest and D Fourie and M van Dyk hold the balance of 34% in equal portions;

“Yellow Star” means Yellow Star Group Holdings Proprietary Limited (registration number 2005/004789/07), a private company incorporated in accordance with the laws of South Africa and the directors of which are H van Dyk, CE Pettit and Q George;

“ Yellow Star Sale of Shares Agreement”

means the agreement dated 22 November 2012 concluded between Yellow Star and ConvergeNet in terms of which the Sizwe Acquisition was effected; and

“Zaloserve” means Zaloserve Proprietary Limited (registration number 2012/179283/07), a private company incorporated in accordance with the laws of South Africa, the purchaser in respect of the Sizwe Acquisition.

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ACTION REQUIRED BY CONVERGENET SHAREHOLDERS


This Circular is important and requires your immediate attention. The action you need to take is set out below. If you are in any doubt as to what action to take, you should consult your stockbroker, banker, legal adviser, CSDP, accountant, attorney or other professional adviser. If you have disposed of your ConvergeNet shares, this Circular should be handed to the purchaser of such ConvergeNet shares or the stockbroker, banker, CSDP or other agent through whom the disposal was effected.

Please take careful note of the following provisions regarding the action to be taken by shareholders:

A. GENERAL MEETING

A general meeting of shareholders will be held at 10:00 on Friday, 16 January 2015 at Level P3, Oxford Corner, corner Jellicoe and Oxford Roads, Rosebank, Johannesburg, to consider and, if deemed fit, to approve, with or without modification, the resolutions required to implement the Transactions. A notice convening the General Meeting is attached to, and forms part of, this Circular.

1. IF YOU HAVE DEMATERIALISED YOUR CONVERGENET SHARES AND DO NOT HAVE “OWN-NAME” REGISTRATION

1.1 Voting at the General Meeting

1.1.1 If you do not wish to, or are unable to, attend the General Meeting and you have not been contacted by your CSDP or stockbroker, it is advisable for you to contact your CSDP or stockbroker immediately and furnish your CSDP or stockbroker with your voting instructions in the manner and by the cut-off time stipulated by your CSDP or stockbroker in terms of the custody agreement between you and your CSDP or stockbroker.

1.1.2 If your CSDP or stockbroker does not obtain voting instructions from you, your CSDP or stockbroker will be obliged to act in accordance with the instructions contained in the custody agreement between you and your CSDP or stockbroker.

1.1.3 You must not complete the attached form of proxy (pink).

1.2 Attendance and representation at the General Meeting

1.2.1 In accordance with the custody agreement between you and your CSDP or stockbroker, you must advise your CSDP or stockbroker if you wish to:

1.2.1.1 attend, speak and vote at the General Meeting; or

1.2.1.2 send a proxy to represent you at the General Meeting.

1.2.2 Your CSDP or stockbroker should then issue the necessary Letter of Representation to you for you or your proxy to attend, speak and vote at the General Meeting.

2. IF YOU HAVE NOT DEMATERIALISED YOUR CONVERGENET SHARES OR IF YOU HAVE DEMATERIALISED YOUR CONVERGENET SHARES WITH “OWN-NAME” REGISTRATION

2.1 Voting, attendance and representation at the General Meeting

You may attend, speak and vote at the General Meeting in person (or, if you are a company or other body corporate, be represented by a duly authorised natural person). Alternatively, you may appoint a proxy to represent you at the General Meeting by completing the attached form of proxy (pink) in accordance with its instructions and returning it to the Transfer Secretaries at Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), to be received by them no later than 48 hours before the commencement of the General Meeting (or any adjournment of the General Meeting), excluding Saturdays, Sundays and official public holidays.

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If you wish to dematerialise your ConvergeNet shares, please contact your CSDP or stockbroker. Shareholders should note that it will take between 1 and 10 business day(s) to dematerialise their ConvergeNet shares through their CSDP or stockbroker. Shareholders that do not have a CSDP or stockbroker can contact any CSDP or stockbroker, or, alternatively, Computershare directly on (011) 370 5000, to dematerialise their ConvergeNet shares.

Shareholders are advised that no facilities for electronic participation in the General Meeting will be made available.

3. SHAREHOLDERS’ APPRAISAL RIGHTS

Shareholders who wish to exercise their rights in terms of section 164 of the Companies Act are referred to Annexure 14 to this Circular. Shareholders who wish to exercise their rights in terms hereof are required, before the resolution to approve the Contract Kitting Disposal is voted on at the General Meeting, to give notice to the Company in writing objecting to the resolution and to vote against the resolution at the General Meeting.

B. THE NAME CHANGE

1. If you hold certificated ConvergeNet shares

Holders of certificated shares are requested to complete the attached form of surrender (yellow), and return it, together with their share certificates, or other Documents of Title, to the Transfer Secretaries. New share certificates reflecting the change of name will be posted, by registered post in South Africa, to those certificated shareholders who have surrendered their documents of title on or before 12:00 on the Name Change Record Date, being Friday, 20 March 2015. Shareholders who surrender their existing documents of title after 12:00 on the Name Change Record Date, will have their new share certificates mailed (within five business days of receipt thereof) by the Transfer Secretaries, by registered post in South Africa, at the risk of the shareholders concerned.

2. If you hold dematerialised ConvergeNet Shares, dematerialised shareholders’ accounts will be updated with the new name by the CSDP or broker and no action needs to be taken.

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(Registration number 1998/015580/06)Share code: CVN ISIN: ZAE000182440


DD Tabata (Chairman)*#

PJ van Zyl (Financial Director and Interim Chief Executive Officer)CE Pettit*#

L Mangope*#

J de Bruyn*#

CC Wiese*#

CH Wiese*#

*Non-executive#Independent

CIRCULAR TO CONVERGENET SHAREHOLDERS

1. INTRODUCTION

1.1 Shareholders are referred to the Terms Announcement and the further announcement released on SENS and published in the press on 27 October 2014 and 28 October 2014, respectively(the “Further Terms Announcement”), which detailed, inter alia, the Board’s proposal that, subject to the fulfilment of certain conditions precedent:

1.1.1 ConvergeNet’s listing be transferred to the “Investment Companies” sub-sector of the JSE;

1.1.2 100% of ConvergeNet’s interest in Contract Kitting and SCS be disposed of;

1.1.3 ConvergeNet acquires the following strategic equity interests:

1.1.3.1 30% of Tellumat;

1.1.3.2 19.26% of Digicore;

1.1.3.3 an additional 30.32% of Mine Restoration Investments; and

1.1.3.4 an additional 21.77% of Goliath Gold.

1.1.4 ConvergeNet raises a maximum amount of R150 million of equity capital by way of a specific issue of 75 million new ordinary ConvergeNet shares for cash to identified investors at an issue price of R2.00 per share; and

1.1.5 ConvergeNet’s name be changed to “Stellar Capital Partners Limited”.

1.2 Following the Terms Announcement and the Further Terms Announcement, the Board has proposed that:

1.2.1 ConvergeNet shares be issued for cash to Stellar Advisers in lieu of performance fees and termination fees payable in terms of the Management Agreement;

1.2.2 1 385 000 ConvergeNet shares be issued at a subscription price of R2.00 per share, amounting to a total consideration of R2 770 000, to the Private Placement Underwriters in lieu of underwriting fees; and

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1.2.3 1 140 000 ConvergeNet shares be issued at a subscription price of R2.00 per share, amounting to a total consideration of R2 280 000, to the parties described in paragraphs 8.1.1.2 and 8.1.1.3 of this Circular in lieu of commitment fees .

2. PURPOSE OF THIS CIRCULAR

2.1 The purpose of this Circular is to:

2.1.1 provide shareholders with information regarding the Transactions;

2.1.2 provide shareholders with the Independent Expert’s opinion on the Contract Kitting Disposal, as contemplated in paragraph 4 of this Circular, in terms of section 90 of the Companies Regulations and section 10.4(f) of the Listings Requirements;

2.1.3 advise shareholders of the Independent Board’s opinion regarding the Contract Kitting Disposal (as supported by the Independent Expert’s opinion included in Annexure 2.1 to this Circular) as well as the Board’s opinions regarding the SCS Disposal, Tellumat Acquisition, Digicore Acquisition, MRI Acquisition, Goliath Gold Acquisition and Private Placement; and

2.1.4 convene the General Meeting to consider and, if deemed fit, approve, with or without modification, the resolutions required to implement the Transactions, as set out in the Notice of General Meeting.

2.2 The accompanying explanatory material, opinions and information provided in this Circular and the annexures thereto are, unless otherwise specifically set out to the contrary, or appears from the context, solely those of ConvergeNet. ConvergeNet takes full responsibility for the contents of this Circular, the proposed resolutions and the accompanying explanatory material, opinions and information contained in this Circular.

The directors have evaluated the rationale for, and the terms and conditions of, the Transactions, and are of the opinion that the Transactions are consistent with the Company’s strategy, as detailed in paragraph 3.1 below, and will enhance shareholder value. Accordingly, after due consideration, the directors, who are eligible to vote, unanimously recommend that shareholders vote in favour of all the resolutions necessary to approve and implement the Transactions, as set out in the Notice of General Meeting.

3. THE TRANSFER OF CONVERGENET’S LISTING

3.1 The Board has identified an opportunity to create an investment company which:

– leverages the Main Board listing of ConvergeNet;

– optimises the use of the Company’s existing assets;

– harnesses the deal-making experience of the Board and the Company’s corporate advisers in a cost-effective manner;

– facilitates the introduction of strong new shareholders; and

– establishes a platform to facilitate further capital raising and the growth of the initial investment portfolio.

3.2 To this end, the JSE has approved ConvergeNet’s application for the transfer of the Company’s listing from the “Computer Services” sub-sector to the “Investment Companies” sub-sector of the JSE.

3.3 The Company has appointed Stellar Advisers as the dedicated investment manager to manage the portfolio of the Company in accordance with section 15 of the JSE Listings Requirements. The Manco will be advised by AfrAsia Corporate Finance (an authorised financial services provider registered with the Financial Services Board of South Africa) to ensure that the Company is adequately advised on the implementation of its strategy. In this regard it is noted that the Manco will have wide-ranging powers to act on behalf of the Company in sourcing, negotiating, concluding and executing investment opportunities for the Company. However, all material decisions, including but not limited to the acquisition and disposal of investments, will require the approval of the majority of the Board. Although the Board reserves the right to delegate its investment decision making powers to an investment sub-committee, it is envisaged that the full Board will consider investment decisions until shareholders are advised otherwise. AfrAsia Corporate Finance will not retain any decision making authority in respect of the utilisation of the advice provided to the Manco. The Board will act independently of the Manco and none of the directors are employees of or professional advisers to the Manco or any other company in the same group as ConvergeNet. The investment management experience of the directors of Manco is included in Annexure 10 to this Circular.

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3.4 The Manco will, pursuant to the Management Agreement, manage the Company’s investment portfolio (the “AUM”) on the basis of a management fee structure comprising:

3.4.1 a base management fee on a sliding scale as follows:

– 2% of the AUM less than R500 million;

– 1.5% of AUM in excess of R500 million, but less than R1 billion;

– 1% of AUM above R1 billion,

calculated and payable quarterly;

3.4.2 a performance fee, calculated and payable quarterly in respect of the growth in AUM achieved during the previous period, subject to high-water mark provisions, payable in cash or new shares in the Company at the election of the Company. The calculation of the number of shares to be issued and the price at which such shares will be issued are detailed in paragraph 3.2 of Annexure 15 to this Circular. The issue of new shares in the Company for this purpose is subject to approval by shareholders in general meeting, which resolution is set out in the Notice of General Meeting as Ordinary Resolution Number 8; and

3.4.3 if the Management Agreement is terminated by the Company:

3.4.3.1 within the first 36 months after the signature date for any reason other than Stellar Advisers committing a material breach by or being wound up; or

3.4.3.2 automatically on the third anniversary of the signature date,

then the Company shall pay to Stellar Advisers a termination fee (the “Termination Fee”), equal to 1 5% of the market capitalisation of the Company (based on the 30-day VWAP as at the date of termination).

The Company shall pay the Termination Fee in cash (in the case of termination pursuant to paragraph 3.4.3.1 above) or shares in the Company (in the case of termination pursuant to paragraph 3.4.3.2 above) to Stellar Advisers within 10 business days of the effective date of the termination. The issue of new shares in the Company for this purpose is subject to approval by shareholders in general meeting, which resolution is set out in the Notice of General Meeting as Ordinary Resolution Number 8.

3.4.4 Following the termination referred in paragraph 3.4.3, the Board will be entitled, in its discretion, to negotiate a renewal of the Management Agreement, appoint a new investment manager or internalise the management function, subject to compliance at all times with the Listings Requirement.

3.4.5 The salient terms of the Management Agreement are included in Annexure 15 to this Circular.

3.4.6 The Manco has irrevocably agreed to acquire issued ordinary shares in the Company from ASOF (26 285 489 shares for a total consideration of R52 570 978, constituting 9.29% of the total ordinary issued shares of the Company) and Citygate Securities Limited (2 500 000 shares for a total consideration of R5 000 000 constituting 0.88% of the total ordinary issued shares of the Company) at a purchase consideration of R2.00 per share with effect from 30 January 2015, subject to the Transactions being approved by the requisite majorities of shareholders at the General Meeting. Following the conclusion of the aforementioned acquisition, the Manco will hold 10.17% of the issued ordinary shares of the Company. Shareholders are advised that the listing of Stellar Capital Partners pursuant to the Transactions is dependent on the Manco holding at least 10% in the issued ordinary share capital of Stellar Capital Partners.

3.5 Investment strategy

3.5.1 The investment strategy of the Company, as included in the Company’s investment charter and which was formally approved by the Board on 3 December 2014 will entail the following:

– to grow a portfolio of equity, debt and hybrid securities, unconstrained by any particular market or sector, in listed and unlisted businesses, that will generate above average returns on capital for the Company’s shareholders;

– to apply a hands-on investment approach, in order to assist management teams and to provide strategic input, without assuming direct operational responsibility;

– to apply a flexible investment approach relating to the timing and duration of investments;

– to actively engage with investee companies in relation to their corporate activity and other strategic initiatives; and

– to leverage the existing network of Manco to create a unique, well-diversified investment vehicle which will be an attractive proposition for institutional investors.

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3.5.2 The implementation of the investment strategy referred in paragraph 3.5 above will be monitored by the Board, and any amendments thereto shall require approval by shareholders in general meeting.

3.6 To rapidly add value to the investment portfolio of the Company, the Disposals, the Tellumat Acquisition and the strategic investments detailed in this Circular will be implemented by ConvergeNet pursuant to its conversion to a listed investment entity, subject to fulfilment of the applicable conditions precedent, as detailed in this Circular.

3.7 Spread of portfolio risk

3.7.1 The initial portfolio of the Company, following completion of the Transactions, will comprise the following:

– cash and cash equivalents in the amount of approximately R175 million;

– vendor financed receivables in respect of the Sizwe Disposal in an amount of R50 million, the terms of which are fully described in note 13 of the audited integrated annual report of the Company for the year ended 31 August 2013 and updated in note 7 of the unaudited interim results of the Company for the six months ended 28 February 2014;

– investment in Tellumat fairly valued at R100.12 million, comprising an equity holding of 30% in a privately-held information and communication technology (“ICT”) business focusing on air traffic management, communications, defence and electronic manufacturing solutions; and

– strategic investments in less than 50% of the ordinary issued share capital of Digicore (19.26%) at value R119,231,925, MRI (34.5%) at value R25,272,664 and Goliath Gold (21.91%) at value R64,169,742 (the “Initial Portfolio”).

3.7.2 The Initial Portfolio will comprise listed and unlisted investments, comprising cash and cash equivalents, listed and unlisted equity and unlisted debt instruments (vendor finance receivables) with exposure to the ICT and mining sectors. The Board is satisfied that this provides the shareholders of the Company with an adequate spread of portfolio risk following the successful completion of the Transactions.

3.7.3 The cash component of the Initial Portfolio will be used for the acquisition of further investments and settlement of ongoing listing and management expenses.

3.7.4 The revenue of the Company will, pursuant to Sector Transfer, comprise:

– fair value gains on investments;

– interest earned on invested cash; and

– dividends (as and when declared by the investees at their sole discretion).

3.8 Limited speculation in securities

3.8.1 The intention of the Company, following successful completion of the Transactions, is to hold investments that will yield above average capital returns to shareholders predominantly through active investment in equity and equity-linked instruments in accordance with the strategy described in paragraph 3.5 above.

3.8.2 Negotiations in respect of any potential acquisitions and disposals of investments (including non-performing assets) will only be entered into after consultation with the Manco and all such decisions will be the subject of rigorous investigations based on a long-term capital appreciation strategy wherein pure speculation will play no part.

3.9 The initial investment portfolio of the Company will serve to benefit the shareholders of the Company and its investment strategy by:

– introducing immediate scale to the Company, enhancing the ability to attract further investment; and

– reducing risk through diversification of the investment portfolio.

3.10 Following the completion of the Tellumat Acquisition, Digicore Acquisition, MRI Acquisition and Goliath Gold Acquisition, as well as the Private Placement, Titan will become the largest investor in the Company, holding 28.41% of the ordinary shares in issue. Titan is an investment vehicle for the family of Dr Christo Wiese.

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3.11 The table below includes details of all the investments of ConvergeNet, pursuant to the Sector Transfer and implementation of the Tellumat Acquisition, Digicore Acquisition, MRI Acquisition and Goliath Gold Acquisition, as described in this Circular, with a value of greater than 5% of the Company’s investment portfolio:

JSE Disclosure Requirement Tellumat Digicore MRI Goliath Gold

Description of business

Refer paragraph 4.4of the Circular


Refer paragraph 6.2of Circular


Securities held by the investment entity listed/not listed

Unlisted Listed on the JSE(DGC:J)

Listed on the JSE(MRI:J)

Listed on the JSE(GGM:J)

Proportion of share capital owned

30% 19.26% 34.50% 21.77%

Cost of the investment

R100 119 000 R119 231 925 R 28 753 267 R64 569 742

Market value/valuation of investment

R100 119 000# R119,231,925# R28,753,267# R64,569,742#

Income received during the year

None None None None

Extraordinary items

None None None None

Proportionate underlying net assets attributable to the investment*

19% 23% 5% 12%

* As at last Annual Report date.

# Value determined by the Board as at 3 September 2014.

3.12 Prospects of the Group and its investees

The prospects for the Group are positive and the Board is optimistic about the future. Following the completion of the Transactions, the Group will have a strong liquidity position and a scalable balance sheet that will allow it to both secure additional capital and invest further into its investees as required.

The Board has considered all the information available to it in relation to Tellumat, MRI, Digicore and Goliath Gold, and believe that each investee has significant growth and/or turnaround potential. A detailed plan has been developed by the Group and the Manco for each entity in the Initial Portfolio. Accordingly, the Board is confident that significant value will be created for shareholders from the Initial Portfolio and from additional investments that will be made by the Group over time.

4. THE CONTRACT KITTING DISPOSAL, SCS DISPOSAL AND TELLUMAT ACQUISITION

4.1 Introduction

On 13 November 2014 ConvergeNet concluded the Tellumat Sale and Purchase Agreement with Contract Kitting, SCS and Tellumat in terms of which the Contract Kitting Disposal, SCS Disposal and Tellumat Acquisition are proposed to be effected. The Contract Kitting Disposal, SCS Disposal and Tellumat Acquisition will be concluded as one indivisible transaction.

4.2 Business of Contract Kitting

Contract Kitting was established in 2001 as an electronics engineering company with expertise

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in the telecoms industry, and specialises in the design, production, integration, testing and implementation of solutions in the areas of direct current power, operations management, cooling, hybrid power, cable assemblies and harnesses, and shelter solutions. Within these specialties Contract Kitting is able to offer services such as design, production, integration, testing and implementation. While in the past Contract Kitting has mainly serviced South African clients in the mobile network market, it is now fulfilling demand from a broader customer base.

4.3 Business of SCS

SCS was established in 2002 as a full solutions information technology company dedicated to the consultancy, design and turnkey project management of all ICT infrastructure projects and installations. These solutions include multi-service network solutions, facilities for ICT environments, environmental control and monitoring solutions for ICT facilities and their support and maintenance, as well as structured cabling installations, data and switching centre building, disaster recovery, mobile data and switching centers and express shelters and buildings.

4.4 Business of Tellumat

Plessey plc established a South African-based subsidiary company in the early 1960s. In 1989, Plessey plc was dissolved and the South African operation became an autonomous company listed on the JSE in 1995. Fragmented through disposals in 1998, Tellumat became a privately owned company. Tellumat is organised into the following divisions:

– Communications division, which offers multiple telecommunications solutions, services and products in the wireless and enterprise communication arenas, providing network design, RF planning and the implementation and support of key technologies;

– Defense division, which develops, supplies and supports advanced radar, navigational, avionics and naval systems for defense and civil system integrators, platform suppliers and end-users; and

– Electronic Contract Manufacturing division, which offers a full suite of design, engineering, manufacturing, logistics and post-manufacturing services to a wide range of customers in the electronics industry.

4.5 Rationale for the Disposals and the Tellumat Acquisition

4.5.1 The Contract Kitting Disposal is a strategic decision to diversify the Group’s exposure to the telecommunications sector whilst affording Contract Kitting an opportunity to leverage the economies of scale afforded by becoming part of a larger group of companies.

4.5.2 An operational and strategic review has also concluded that SCS requires the scalability afforded by a larger ICT group. The Board believes that Tellumat fits the correct strategic profile to be the owner of SCS.

4.5.3 Both Contract Kitting and SCS require improved BBBEE ownership credentials in order to operate effectively in their respective markets.

4.5.4 In light of the above, the Disposals and the Tellumat Acquisition will:

– afford the Group the opportunity to diversify its ICT exposure, while gaining access to the expertise of Tellumat’s strong management team to create a scalable ICT group;

– allow Tellumat access to the highly skilled technical teams of Contract Kitting and SCS;

– facilitate a cost-rationalisation strategy in the combined entity;

– provide a stronger platform from which to execute an acquisitive growth strategy; and

– provide the opportunity for SCS and Contract Kitting (as well as the larger group) to leverage the best in class BBBEE credentials of Tellumat.

4.6 Terms of the Disposals and the Tellumat Acquisition

4.6.1 The Contract Kitting Sale Consideration and SCS Sale Consideration will be settled by Tellumat by way of the issue of ordinary shares in Tellumat (which shares are to be retained by the Company), such that ConvergeNet will hold 30% of the total issued ordinary shares of Tellumat following the share issue by Tellumat.

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4.6.2 The number of shares to be issued by Tellumat to ConvergeNet (the “Tellumat Consideration Shares”) has been determined with reference to the proportion that the value of Contract Kitting Sale Consideration and SCS Sale Consideration collectively bear to the equity value of Tellumat (excluding any entitlement to the Tellumat Pension Fund employer surplus).

4.6.3 Both ConvergeNet and Tellumat have provided standard warranties for a transaction of this nature.

4.6.4 Tellumat Option

4.6.4.1 ConvergeNet will grant a call option to Tellumat, and its major shareholder, Plessey Holdings Limited (“Plessey”) (the “Tellumat Option”), to acquire the Tellumat Consideration Shares issued to ConvergeNet, should:

– a change of control of: (i) ConvergeNet, or (ii) the Manco occur, (“Change of Control”), in which case the purchase price shall be 75% of the fair market value of the Tellumat Consideration Shares; or

– the board of directors of Tellumat reasonably determine that it is commercially necessary for Tellumat to increase its BBBEE shareholding, and that the purchase of the Tellumat Consideration Shares is the best method to do so (“BEE Requirement”), in which case the purchase price shall be the fair market value of the Tellumat Consideration Shares; or

– the board of directors of the option holder otherwise resolve to acquire the Tellumat Consideration Shares (“Voluntary Repurchase”), in which case the purchase price shall be the fair market value of the Tellumat Consideration Shares.

– Each of the aforementioned disposals is subject to compliance with the Listings Requirements.

4.6.4.2 The Tellumat Option may only be exercised within the first three years following the Disposals, provided that the Voluntary Repurchase option may only be exercised (i.e. other than in the case of a Change of Control or the BEE Requirement) after the first anniversary of the Disposal.

4.6.4.3 In the event of a Change of Control or the BEE Requirement, 50% of the purchase price shall be payable upfront in cash and the balance shall be paid in cash, in equal monthly instalments over a period of 36 months, with the outstanding amounts from time to time bearing interest at Prime +3% and secured by a guarantee from Tellumat. In any other event purchase price shall be payable in full in cash.

4.6.4.4 In the event that the Tellumat Option is exercised by Tellumat or Plessey pursuant to the BEE Requirement or in terms of Voluntary Repurchase and within 18 months following the date on which the Tellumat Consideration Shares are acquired in terms of the Tellumat Option, Tellumat issues new shares at a premium to the purchase price paid by Tellumat for the Tellumat Consideration Shares, or the business of Tellumat is sold at a price which implies a premium to such purchase price, then Tellumat shall pay to ConvergeNet a cash amount equal to the amount by which it profited as a result of such premium or implied premiums.

4.6.4.5 In the event that the Tellumat Option is exercised by Plessey pursuant to the BEE Requirement or in terms of Voluntary Repurchase, and within 18 months following the date on which the Tellumat Consideration Shares are acquired in terms of the Tellumat Option, the Tellumat Consideration Shares are resold at a premium to the purchase price paid by them, or the business of Tellumat is sold at a price which implies a premium to such purchase price, then Plessey shall pay to ConvergeNet a cash amount equal to the amount by which they profited as a resulted of the resale of the relevant Tellumat Consideration Shares, or the sale of the business, at a premium or implied premium.

4.6.4.6 The Tellumat Option is American in nature, save for the fact that the Voluntary Repurchase may only be exercised after the first anniversary of the Disposals.

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4.6.4.7 ConvergeNet may dispose of the Tellumat Consideration Shares during the Tellumat Option period, during which time ConvergeNet will control the asset.

4.6.5 The Disposals and the Tellumat Acquisition will become effective on the first day of the month in which these transactions close, being on fulfilment of all the conditions precedent detailed in paragraph 4.8 below.

4.7 Application of the proceeds of the Disposals

The proceeds of the Disposals, being the Tellumat Consideration Shares, which comprises a 30% equity interest in Tellumat, will constitute an investment to be managed in accordance with the strategy of the larger Group.

4.8 Conditions precedent

The Disposals and the Tellumat Acquisition are subject to the fulfilment of the following outstanding conditions precedent on or before 28 February 2015 (or such later date as may be agreed between the parties):

4.8.1 in respect of the Contract Kitting Disposal:

4.8.1.1 the receipt of unconditional approval from the TRP in terms of a compliance certificate or exemption to be issued in terms of the Companies Act;

4.8.1.2 approval by the Competition Authorities; and

4.8.1.3 approval by way of a special resolution of ConvergeNet shareholders in general meeting; and

4.8.2 in respect of the Tellumat Acquisition, approval by ConvergeNet shareholders by way of an ordinary resolution in general meeting.

4.9 Categorisation and Regulatory Approvals

4.9.1 In terms of the Listings Requirements, the transaction values of the Disposals are to be aggregated for categorisation purposes. Accordingly, the Contract Kitting Disposal and the SCS Disposal, as well as the Tellumat Acquisition, are regarded as Category 1 transactions and therefore require approval by ConvergeNet shareholders. For the avoidance of doubt, none of the aforementioned transactions is regarded as a related party transaction.

4.9.2 The Contract Kitting Disposal also constitutes a disposal of the greater part of the assets of ConvergeNet as contemplated in section 112 of the Companies Act. As such, the Contract Kitting Disposal is also regarded as both a fundamental transaction and an affected transaction and will therefore require approval by the TRP and ConvergeNet shareholders by way of special resolution.

4.10 Fairness opinion by the Independent Expert

In terms of Companies Regulation 90 (as read with section 114(2) and section 114(3) of the Companies Act), the directors are required to obtain appropriate external advice as to how the Contract Kitting Disposal affects all shareholders. Accordingly, the Board appointed BDO as the Independent Expert to determine whether the terms and conditions of the Contract Kitting Disposal are fair and reasonable to shareholders in terms of the Companies Regulations. The Independent Expert has considered the terms and conditions of the Contract Kitting Disposal, and is of the opinion that such terms and conditions are fair and reasonable to shareholders on the basis set out in their fair and reasonable opinion included in Annexure 2.1 to this Circular.

4.11 Independent Board opinion and recommendation

4.11.1 The Independent Board (which constitutes all the directors of the Company) has considered the terms and conditions of the Contract Kitting Disposal, and, after taking into account the report of the Independent Expert, is of the opinion that the Contract Kitting Disposal is fair and reasonable to shareholders and that the proceeds from the Contract Kitting Disposal will be more optimally applied to the core business of the Group going forward.

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4.11.2 With due consideration to the prospects of the Group, following the transfer of ConvergeNet’s listing from the “Computer Services” sub-sector to the “Investment Companies” sub-sector of the JSE, as detailed in paragraph 3 above, and all material information relevant to the Contract Kitting Disposal, the Independent Board recommends to shareholders to vote in favour of the Contract Kitting Disposal. The directors, who are eligible to vote, intend voting in favour of the relevant resolutions.

4.11.3 Shareholders who wish to exercise their Appraisal Rights in terms of section 164 of the Companies Act are referred to Annexure 14 to this Circular.

5. THE DIGICORE ACQUISITION

5.1 Introduction

ConvergeNet concluded the Titan Sale and Purchase Agreement with Titan and the Dale Sale and Purchase Agreement with Dale International Trust Company on 5 September 2014, and the Additional Digicore Sale and Purchase Agreement with Pannar Group and ClucasGray on 23 October 2014 in terms of which the Digicore Acquisition is proposed to be effected.

The Digicore Acquisition is proposed to be effected in terms of the Titan Sale and Purchase Agreement and the Dale Sale and Purchase Agreement which ConvergeNet concluded with Titan and Dale International Trust Company, respectively, on 5 September 2014.

5.2 Business of Digicore

Digicore, a company established in 1985 and which is listed under the “Electronics & Electrical” sector on the JSE, provides its global client base with advanced mobile asset-tracking and management solutions. Digicore’s end-to-end research, design, development, manufacturing, sales and support of tailored solutions for customers is serviced by a global network of staff and team members in over 50 countries. The company’s technology and electronics division designs and develops a robust range of asset management and monitoring systems using GPS, GSM cellular communication systems and other advanced communication and sensory technologies. Products and services are sold to the market under the Ctrack brand.

5.3 Rationale for the Digicore Acquisition

Digicore has seen a substantial decrease in profits over the past five years and subsequently embarked on structural and management changes in 2012 which entailed a consolidation process including cost and operations rationalising, improved customer service, reprioritisation of growth strategies, more focused leadership and the implementation of a new technology platform. These changes in internal procedures and processes have seen an increase in earnings for the six months ended 31 December 2013. Following the implementation of the proposed Digicore Acquisition, the Company will be the single largest shareholder and as such will seek to support management to execute and enhance the current strategy.

5.4 Terms of the Digicore Acquisition

5.4.1 The Digicore purchase consideration of R119 231 925 (the “Digicore Purchase Consideration”) will be settled by ConvergeNet by way of the issue of 59 615 963 new ordinary shares (37 156 250 new ordinary shares issued to Titan Nominees, 11 209 713 new ordinary shares issued to Titan Share Dealers, 6 250 000 new ordinary shares issued to Dale International Trust Company, 312 500 new ordinary shares issued to Pannar Group and 4 687 500 new ordinary shares issued to ClucasGray) in ConvergeNet (the “Digicore Consideration Shares”) at R2.00 per share, such that ConvergeNet will hold 19.26% of the total issued ordinary shares of Digicore following the share issue by ConvergeNet.

5.4.2 The Digicore Acquisition will become effective on the date on which all the conditions precedent to the Digicore Acquisition are fulfilled.

5.4.3 If, within six months of the Effective Date, ConvergeNet disposes of the Digicore Consideration Shares acquired from Titan for a cash amount of more than R2.50 per Digicore share, then the Digicore Purchase Consideration payable to Titan will be adjusted upwards on a rand-for-rand basis. ConvergeNet will settle the difference owing by way of the issue of additional ConvergeNet shares to Titan at an issue price of R2.00 per share.

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The Digicore Acquisition is subject to the approval by ConvergeNet shareholders by way of an ordinary resolution in general meeting on or before 31 March 2015 (or such later date as may be agreed between the parties).

5.6 Categorisation

In terms of the Listings Requirements, the Digicore Acquisition is regarded as a Category 1 transaction and accordingly requires the approval from ConvergeNet shareholders by way of an ordinary resolution. For the avoidance of doubt, the Digicore Acquisition is not regarded as a related party transaction.

6. THE MRI ACQUISITION

6.1 Introduction

The MRI Acquisition is proposed to be effected in terms of the Titan Sale and Purchase Agreement and the ASOF Sale and Purchase Agreement which ConvergeNet concluded with Titan and ASOF, respectively, on 5 September 2014.

6.2 Business of MRI

MRI was listed on the Alternative Exchange of the JSE on 25 June 2012 after a reverse listing of Western Utilities Corporation Proprietary Limited (“WUC”) into MRI (then known as Capricorn Investment Holdings Limited) and a successful equity raise of R40 million. MRI is a holding company with its wholly-owned subsidiary, WUC, established to carry on the business of mine rehabilitation activities.

6.3 Rationale for the MRI Acquisition

The acquisition provides further diversification to the investment portfolio of the Company and secures the Company the position of largest shareholder in an innovative business that operates in an industry that is expected to see significant growth going forward, namely the environmental rehabilitation of mine sites. As a result of the networks of the Board and the Manco, it is expected that the Group will be able to add material value to MRI as it seeks new opportunities to deploy its technologies in Southern Africa.

6.4 Terms of the MRI Acquisition

6.4.1 The MRI Purchase Consideration will be settled by ConvergeNet by way of the issue of

12 636 332 new ordinary shares in ConvergeNet (the “MRI Consideration Shares”) at R2.00 per share, such that ConvergeNet will hold, in addition to its existing interest of 4.18%, 34.50% of the total issued ordinary shares of MRI following the share issue by ConvergeNet.

6.4.2 The MRI Acquisition will become effective the day on which all the conditions precedent detailed in paragraph 6.5 below are fulfilled.

6.4.3 In the event that the shares in MRI acquired from ASOF are sold for an amount of less than R0.10 per share, or in the event that MRI is liquidated or wound-up as a result of an insolvency event, within 12 months of the date of acquisition of such shares, ASOF shall be liable to ConvergeNet for an amount equal to 50% of the direct loss suffered by ConvergeNet as a result. ASOF may discharge that liability in cash or by way of the transfer to the Company of MRI Consideration Shares (or the relevant portion thereof).


The MRI Acquisition is subject to the fulfilment of the following outstanding condition precedent on or before 31 March 2015 (or such later date as may be agreed between the parties):

6.5.1 approval by ConvergeNet shareholders in general meeting by way of an ordinary resolution.

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6.6 Categorisation

6.6.1 In terms of the Listings Requirements, the MRI Acquisition and the Goliath Gold Acquisition are to be aggregated for categorisation purposes due to both these transactions having been entered into with common parties, being ASOF and Titan Share Dealers. Accordingly, based on such aggregation, the MRI Acquisition is regarded as Category 1 transaction and therefore requires approval by ConvergeNet shareholders.

6.6.2 In addition, ASOF is a related party of ConvergeNet as defined in the Listings Requirements. Accordingly, the proposed acquisition by ConvergeNet of 4.99% of Goliath Gold from ASOF is categorised as a related party transaction and requires a fairness opinion by an independent expert. The Board appointed BDO as the Independent Expert to determine whether the terms and conditions of the aforementioned acquisition are fair to shareholders. The Independent Expert has considered the terms and conditions of the aforementioned acquisition, and is of the opinion that such terms and conditions are fair to shareholders on the basis set out in their fairness opinion included in Annexure 2.2 to this Circular. The votes of ASOF will not be taken into account in calculating the percentage voting rights required to approve the MRI Acquisition.

7. THE GOLIATH GOLD ACQUISITION

7.1 Introduction

The Goliath Gold Acquisition is proposed to be effected in terms of:

– the ASOF Sale and Purchase Agreement with ASOF;

– the Trinity Sale and Purchase Agreement with Trinity Asset Management;

– the Titan Sale and Purchase Agreement with Titan;

– the Dale Sale and Purchase Agreement with Dale International Trust Company; and

– the Crater Valley Sale and Purchase Agreement with Crater Valley,

concluded on 5 September 2014; and

– the Additional Goliath Gold Sale and Purchase Agreement with certain clients of Trinity Asset Management (whom are all public shareholders and no related parties of ConvergeNet as defined in the Listings Requirements) and Mr W Geyer (a public shareholder who is not a related party of ConvergeNet as defined in the Listings Requirements), concluded on 23 October 2014.

7.2 Business of Goliath Gold

Goliath Gold is a South African incorporated mining exploration company that has been listed on the Main Board of the JSE in the ‘Mining: General Mining’ sub-sector since May 2011. Focused on identifying and exploring diversified resources across Southern Africa, the company currently holds gold prospecting rights and a mining right over several contiguous areas in South Africa’s East Rand Basin in the Gauteng Province as well as prospecting rights for heavy mineral sands over an area within South Africa’s Western Cape Province. The company’s current exploration portfolio comprises an established mineral gold resource base of 10.68 million ounces, compliant with the SAMREC Code and independently audited by SRK Consulting (South Africa) Proprietary Limited in March 2014.

7.3 Rationale for the Goliath Gold Acquisition

The acquisition provides further diversification to the investment portfolio of the Company and secures the Company the position of large minority shareholder in a portfolio of highly prospective gold assets with a significant proven resource base. The majority shareholder of Goliath Gold is well capitalised and has access to the funding required to further prove and develop the resource base. The Company is confident that the initial investment cost represents a material discount to the intrinsic value of this business.

7.4 Terms of the Goliath Gold Acquisition

7.4.1 The Goliath Gold purchase consideration of R64 169 742 will be settled by ConvergeNet by way of the issue of 32 084 871 new ordinary shares in ConvergeNet at R2.00 per share, such that ConvergeNet will hold, in addition to its existing interest of 0.14%, 21.77% of the total issued ordinary shares of Goliath Gold following the share issue by ConvergeNet.

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7.4.2 The Goliath Gold Acquisition will become effective on the day on which all the conditions precedent detailed in in paragraph 7.5 below are fulfilled.


The Goliath Gold Acquisition is subject to the fulfilment of the following outstanding conditions precedent on or before 31 March 2015 (or such later date as may be agreed between the parties):

7.5.1 approval of the Goliath Gold Acquisition by each of the sellers in respect of the Goliath Gold Acquisition (to the extent applicable); and

7.5.2 approval by ConvergeNet shareholders in general meeting by way of an ordinary resolution.

7.6 Categorisation

7.6.1 In terms of the Listings Requirements, the Goliath Gold Acquisition is regarded as a Category 1 transaction and accordingly requires the approval from ConvergeNet shareholders by way of an ordinary resolution.

7.6.2 In addition, ASOF is a related party of ConvergeNet as defined in the Listings Requirements. Accordingly, the proposed acquisition by ConvergeNet of 29.78% of MRI from ASOF is categorised as a related party transaction and requires a fairness opinion by an independent expert. The Board appointed BDO as the Independent Expert to determine whether the terms and conditions of the aforementioned acquisition are fair to shareholders. The Independent Expert has considered the terms and conditions of the aforementioned acquisition, and is of the opinion that such terms and conditions are fair to shareholders on the basis set out in their fairness opinion included in Annexure 2.3 to this Circular. The votes of ASOF will not be taken into account in calculating the percentage voting rights required to approve the Goliath Gold Acquisition.

8. THE PRIVATE PLACEMENT

8.1 Introduction

8.1.1 In order to provide ConvergeNet with balance sheet capacity for purposes of growing its investment portfolio and providing working capital headroom, the Company has raised an amount of R150 million of equity capital by way of a specific issue of 75 million new ConvergeNet shares for cash at a subscription price of R2.00 per share (the “Issue Price”) to investors as follows:

8.1.1.1 24 500 000 new ConvergeNet shares for a total consideration of R49 million to Titan Premier Investments (an existing but public ConvergeNet shareholder as defined in the Listings Requirements) pursuant to a subscription agreement dated 5 September 2014;

8.1.1.2 12 800 000 new ConvergeNet shares for a total consideration of R25 600 000 to Investec Asset Management Proprietary Limited (a new investor and a public shareholder as defined in the Listings Requirements), in equal proportions through the Investec Emerging Companies Fund and Investec IAL Special Focus Fund pursuant to a subscription agreement dated 5 September 2014. A commitment fee of 5% of the subscription value (R1 280 000) is payable in 640 000 shares of the Company at R2.00 per share;

8.1.1.3 10 000 000 new ConvergeNet shares for a total consideration of R20 million to Momentum Collective Investments Limited (a new investor and a public shareholder as defined in the Listings Requirements) pursuant to a subscription agreement dated 5 September 2014. A commitment fee of 5% of the subscription value (R1 000 000) is payable in 500 000 shares of the Company at R2.00 per share;

8.1.1.4 5 495 000 new ConvergeNet shares for a total consideration of R10 990 000 to Investec Wealth and Investment (c/o Investec Securities Proprietary Limited) (a new investor and a public shareholder as defined in the Listings Requirements) pursuant to a subscription agreement dated 2 October 2014;

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8.1.1.5 14 995 000 new ConvergeNet shares for a total consideration of R29 990 000 to Nedgroup Private Wealth Stockbrokers Proprietary Limited an existing but public ConvergeNet shareholder as defined in the Listings Requirements pursuant to a subscription agreement dated 2 October 2014;

8.1.1.6 2 100 000 new ConvergeNet shares for a total consideration of R4 200 000 to NGI Private Wealth Small and Mid-Cap Equity Fund (a new investor and a public shareholder as defined in the Listings Requirements) pursuant to a subscription agreement dated 2 October 2014;

8.1.1.7 1 125 000 new ConvergeNet shares for a total consideration of R2 250 000 to Vunani Capital Proprietary Limited (a new investor and a public shareholder as defined in the Listings Requirements) pursuant to a subscription agreement dated 2 October 2014;

8.1.1.8 5 000 new ConvergeNet shares for a total consideration of R10 000 to the Glacier Preservation Fund (a new investor and a public shareholder as defined in the Listings Requirements) pursuant to a subscription agreement dated 2 October 2014;

8.1.1.9 200 000 new ConvergeNet shares for a total consideration of R400 000 to Maxshell Investments 127 Proprietary Limited (an existing but public ConvergeNet shareholder as defined in the Listings Requirements) pursuant to a subscription agreement dated 2 October 2014;

8.1.1.10 1 650 000 new ConvergeNet shares for a total consideration of R3 300 000 to Barmont Nominees Proprietary Limited (a new investor and a public shareholder as defined in the Listings Requirements) pursuant to a subscription agreement dated 8 October 2014;

8.1.1.11 1 130 000 new ConvergeNet shares for a total consideration of R2 260 000 to Speedwell Trust (a new investor and a public shareholder as defined in the Listings Requirements) pursuant to a subscription agreement dated 13 November 2014;

8.1.1.12 500 000 new ConvergeNet shares for a total consideration of R1 000 000 to Titan Premier Investments (an existing ConvergeNet shareholder but a public shareholder as defined in the Listings Requirements) pursuant to the Underwriting Agreement;

8.1.1.13 250 000 new ConvergeNet shares for a total consideration of R500 000 to Lavender Sky Investments (a new investor and a public shareholder as defined in the Listings Requirements) pursuant to the Underwriting Agreement; and

8.1.1.14 250 000 new ConvergeNet shares for a total consideration of R500 000 to Thunder Capital (a non-public shareholder as defined in the Listings Requirements due to Mr PJ van Zyl being a director of this company) pursuant to the Underwriting Agreement.

8.1.2 The Issue Price represents:

8.1.2.1 a premium of 40.85% to the 30-day weighted average share price of R1.42 on 5 September 2014, being the date on which the Private Placement was agreed in writing between the Company and the investors referred in paragraphs 8.1.1.1 to 8.1.1.3 and paragraphs 8.1.1.12 to 8.1.1.14 above;

8.1.2.2 a premium of 0.21% to the 30-day weighted average share price of R1.9958 on 2 October 2014, being the date on which the Private Placement was agreed in writing between the Company and the investors referred in paragraphs 8.1.1.4 to 8.1.1.9 above;

8.1.2.3 a discount of 1.48% to the 30-day weighted average share price of R2.03 on 8 October 2014, being the date on which the Private Placement was agreed in writing between the Company and the investor referred in paragraph 8.1.1.10 above; and

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8.1.2.4 a discount of 16.50% to the 30-day weighted average share price of R2.33 on 13 November 2014, being the date on which the Private Placement was agreed in writing between the Company and the investor referred in paragraph 8.1.1.11 above.

8.1.3 The balance of the Private Placement Amount not subscribed for in terms of the Private Placement as at the date of the Terms Announcement (being 1 385 000 shares) has been underwritten by Titan Premier Investments (or its nominee) in respect of 50% of the Company shares not placed on the date of the Terms Announcement; Lavender Sky Investments, in respect of 25% of the Company shares not placed on the date of the Terms Announcement; and Thunder Capital (which is a non-public shareholder due to Mr PJ van Zyl being a director of this company), in respect of 25% of the Company shares not placed on the date of the Terms Announcement. An underwriting fee of 5% (amounting to an aggregated amount of R2 770 000) of the amount underwritten will be payable by the issue of shares for cash at a subscription price of R2.00 per share (the “Underwriting Issue Price”) as follows:

8.1.3.1 692 500 new shares in the Company to Titan Premier Investments (or its nominee) for a total consideration of R1 385 000;

8.1.3.2 346 250 new shares in the Company to Lavender Sky Investments for a total consideration of R692 500; and

8.1.3.3 346 250 new shares in the Company to Thunder Capital for a total consideration of R692 500.

The Underwriting Issue Price represents a premium of 40.85% to the 30-day weighted average share price of R1.42 on 5 September 2014, being the date on which the Private Placement Underwriting Agreements were agreed in writing between the Company and the respective Private Placement Underwriters.

8.1.4 The Board, after having made due and careful enquiry, is satisfied that the Private Placement Underwriters are able to meet their respective underwriting commitments in terms of the Private Placement.

8.1.5 The Private Placement is not an offer to the public as contemplated in the Companies Act and accordingly no prospectus will be issued or registered in respect thereof.

8.1.6 The Private Placement will exceed 30% of the issued share capital of ConvergeNet and therefore requires the approval of ConvergeNet shareholders by way of a special resolution in terms of section 41(3) of the Companies Act.

8.1.7 The Private Placement will not result in any participant acquiring an interest of 35% or more in the share capital of the Company and thereby triggering the requirement for a mandatory offer and/or an application for a waiver of such mandatory offer, as contemplated in section 123 of the Companies Act and Regulation 86(4) of the Companies Regulations.


The Private Placement is subject to the fulfilment of the following outstanding conditions precedent on or before 28 February 2015 (or such later date as may be agreed between the parties):

8.2.1 approval by ConvergeNet shareholders of the special resolutions required in terms of section 41(3) of the Companies Act (to the extent required) and section 5.51 of the Listings Requirements; and

8.2.2 the listing of the Private Placement shares by the JSE.

8.3 Categorisation of the Private Placement

In terms of the Listings Requirements, the Private Placement is regarded as a specific issue of shares for cash and therefore requires approval by way of an ordinary resolution with at least 75% of the votes of ConvergeNet shareholders to be cast in favour thereof in terms of section 5.51(g) of the Listings Requirements. The votes of any shareholders and their associates participating in the Private Placement will not be taken into account in calculating the percentage of voting rights required to approve the Private Placement. These shareholders include Titan Premier Investments, Nedgroup Private Wealth Stockbrokers Proprietary Limited and Maxshell Investments 127 Proprietary Limited (and their associates). In addition, in accordance with section 41(3) of the Companies Act, the Private Placement will also require support of at least 75% of the ConvergeNet shareholders

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present and entitled to vote at the General Meeting as more than 30% of ConvergeNet’s issued share capital will be issued.

9. THE NAME CHANGE AND AMENDMENT TO THE MEMORANDUM OF INCORPORATION

9.1 In light of the intended transfer of the Company’s listing from the “Computer Services” sub-sector to the “Investment Companies” sub-sector of the JSE (as detailed in paragraph 3 of this Circular), and in order to correctly describe the Group’s restructured nature, the Board proposes that the Company’s name be changed to “Stellar Capital Partners Limited”. ConvergeNet has successfully reserved the name “Stellar Capital Partners Limited” with CIPC in accordance with section 12 of the Companies Act.

9.2 The General Meeting will consider and, if deemed fit, pass the resolution necessary to approve the Name Change and make the necessary amendment to ConvergeNet’s Memorandum of Incorporation. In terms of section 16(5)(b)(i) of the Companies Act and the Listings Requirements, the Name Change is subject to the approval by special resolution passed by at least 75% of shareholders present or represented by proxy at the General Meeting and entitled to vote. Subject to obtaining shareholder approval for the special resolutions to approve the Name Change and amend the Memorandum of Incorporation to reflect such change, the special resolutions will be filed and registered with CIPC.

9.3 For a period of not less than one year, the Company will reflect the former name “ConvergeNet Holdings Limited” on all documents of title in brackets beneath the new name “Stellar Capital Partners Limited”. In addition, for a period of not less than three years, the Company will reflect the former name “ConvergeNet Holdings Limited” on all circulars beneath the new name “Stellar Capital Partners Limited”, in accordance with the Listings Requirements.

10. ADEQUACY OF WORKING CAPITAL

10.1 The directors of ConvergeNet have considered the impact of the Transactions and are of the opinion that:

(i) the ConvergeNet Group will be able, in the ordinary course of business, to pay its debts for a period of 12 months after the date of approval of this Circular;

(ii) the assets of the ConvergeNet Group will be in excess of its liabilities for a period of not less than 12 months after the date of approval of this Circular, where for this purpose, the assets and liabilities are recognised and measured in accordance with the accounting policies used in the latest audited consolidated annual financial statements of the Company;

(iii) the share capital and reserves of the ConvergeNet Group will be adequate for ordinary business purposes for a period of not less than 12 months after the date of approval of this Circular; and

(iv) the working capital of the ConvergeNet Group will be adequate for ordinary business purposes for a period of not less than 12 months after the date of approval of this Circular.

10.2 The working capital statement included in this paragraph 10 has been prepared on the ConvergeNet Group, as enlarged by the Tellumat Acquisition, Digicore Acquisition, MRI Acquisition and Goliath Gold Acquisition.

11. EXCHANGE CONTROL REGULATIONS

11.1 Foreign shareholders

The Transactions may be affected by the laws of the relevant jurisdiction of a foreign shareholder. A foreign shareholder should acquaint itself with and observe any applicable legal requirements of such jurisdiction in relation to all aspects of this Circular that may affect it. It is the responsibility of each foreign shareholder to satisfy itself as to the full observance of the laws and regulatory requirements of the relevant jurisdiction in connection with the Transactions, including the obtaining of any governmental, exchange control or other consents, the making of any filings which may be required, the compliance with other necessary formalities and the payment of any taxes or other requisite payments due in such jurisdiction.

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The Transactions are governed by the laws of South Africa and are subject to any applicable laws and regulations, including the Exchange Control Regulations.

Any shareholder who is in doubt as to its position, including, without limitation, its tax status, should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.

11.2 Exchange control regulations

The following is a summary of the Exchange Control Regulations. It is intended as a guide only and is not a comprehensive statement of the Exchange Control Regulations which apply to the Private Placement Participant (“Private Placement Participants”). Private Placement Participants who have any queries regarding the Exchange Control Regulations should contact their own professional advisers without delay.

11.2.1 Residents of the common monetary area

In the case of:

11.2.1.1 “Own name” Private Placement Participants holding shares whose registered addresses in the register are within the common monetary area and whose Documents of Title are not restrictively endorsed in terms of the Exchange Control Regulations, the consideration will be posted to such Private Placement Participants; or

11.2.1.2 Private Placement Participants whose shares are held by CSDPs or stockbrokers on their behalf as nominees and whose registered addresses in the sub-register managed by CSDPs or stockbrokers are within the common monetary area and whose accounts with their CSDP or stockbroker have not been restrictively designated in terms of the Exchange Control Regulations, the consideration will reflect in the account nominated for the relevant Private Placement Participants by their duly appointed CSDP or stockbroker in terms of the provisions of the custody agreement with their CSDP or stockbroker.

11.2.2 Emigrants from the common monetary area

11.2.2.1 The consideration is not freely transferable from South Africa and must be dealt with in terms of the Exchange Control Regulations.

11.2.2.2 The consideration due to an “own name” Private Placement Participant who is an emigrant from South Africa, whose registered address is outside the common monetary area and whose Documents of Title have been restrictively endorsed under the Exchange Control Regulations, will be deposited in a blocked account with the authorised dealer in foreign exchange in South Africa controlling the Private Placement Participant’s blocked assets in accordance with his instructions, against delivery of the relevant Documents of Title.

11.2.2.3 In terms of a recent relaxation to the exchange control rulings, emigrants may externalise the consideration by making application to the Financial Surveillance Department of the South African Reserve Bank via the requisite authorised dealer channel. Previously, a 10% levy would have been payable on externalisation. This is, however, no longer the position and the consideration may, on application, be externalised free of the levy.

11.2.3 All other non-residents of the common monetary area

The consideration due to an “own name” Private Placement Participant who is a non-resident of South Africa and who has never resided in the common monetary area, whose registered address is outside the common monetary area and whose Documents of Title have been restrictively endorsed under the Exchange Control Regulations, will be deposited with the authorised dealer in foreign exchange in South Africa nominated by such Private Placement Participant. It will be incumbent on the Private Placement Participant concerned to instruct the nominated authorised dealer as to the disposal of the consideration, against delivery of the relevant Documents of Title. It will be incumbent on the Private Placement Participant concerned to instruct the nominated authorised dealer as to the acceptance of the ConvergeNet shares (consideration), against delivery of payment.

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12. ADDITIONAL DISCLOSURE REQUIRED BY THE JSE

12.1 Nature of the business of ConvergeNet

ConvergeNet’s current business operates on a decentralised business model, focusing on providing innovative solutions to the problems associated with emerging markets including power and environmental constraints. There are presently two operating entities in the Group, namely Contract Kitting and SCS, a description of the business of each is included in paragraphs 4.2 and 4.3 of this Circular, respectively. The nature of the business of ConvergeNet pursuant to the Sector Transfer will be that of an investment entity (as defined in section 15 of the Listings Requirements) generating returns for shareholders. Details regarding the investment strategy of the Company are included in paragraph 3.5 of this Circular.

12.2 Borrowings

12.2.1 Contract Kitting has a debtors factoring facility of R30 million with Standard Bank, the salient features of which are as follows:

– R30 million;

– facility of up to 70% of book debts (debtors/accounts receivable);

– annual interest rate charged on advances is prime rate; and

– security: Unrestricted cession of book debts.

12.2.2 Other than the facilities detailed in paragraph 12.2.1 above and normal trade payables (to be financed from ongoing operations of the business, interest revenue on investments vendor financed disposal of Sizwe and existing cash resources), neither ConvergeNet nor any of its subsidiaries have any material borrowings.

12.2.3 The borrowing powers of the Company exercisable by the directors and the manner in which such borrowing powers may be varied are set out in clause 38 of the Memorandum of Incorporation, an extract of which is included in Appendix 5 to the Revised Listing Particulars. The borrowing powers have not been exceeded during the previous three years.

12.3 Change in control of ConvergeNet

First change in control

12.3.1 As announced on SENS on 22 February 2012, and following the revised announcement on 12 March 2012, a series of Yellow Star share transactions between concert parties (of which Yellow Star was party) resulted in a change of control in ConvergeNet (“First Change in Control”), which in turn triggered an obligation by the concert parties to extend a mandatory offer at 26 cents per share to the remaining shareholders in accordance with the requirements of section 123 of the Companies Act (the “First Mandatory Offer”). ConvergeNet did not have any controlling shareholders prior to the First Change in Control.

12.3.2 A circular regarding the First Mandatory Offer was posted to shareholders on 19 March 2012, which was followed by an updated offer posted on 3 May 2012. The Company issued its response circular on 19 April 2012. The First Mandatory Offer closed on 11 May 2012 and the results thereof were published on SENS by the concert parties and the Company on 14 May 2012 and 15 May 2012, respectively, as required in terms of Regulation 84(5) of the Companies Act.

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12.3.3 In addition to Yellow Star, the concert parties referred to above were:

“ Trinity Asset Management”

Trinity Asset Management Proprietary Limited (registration number 1996/010864/07), a private company incorporated in accordance with the laws of South Africa, the sole director of which is Q George (executive) .

“Titan Nominees” Titan Nominees Proprietary Limited (registration number 1978/003570/07), a private company incorporated in accordance with the laws of South Africa, the directors of which are CH Wiese and JD Wiese and the sole shareholder being Titan Premier Investments Proprietary Limited.

“ASOF” AfrAsia Special Opportunities Fund (registration number 101312), a public company incorporated in accordance with the laws of Mauritius, being a 100% subsidiary of AfrAsia Special Opportunities Fund Limited, a registered collective investment scheme regulated by the Financial Services Commission in Mauritius and the directors of which are MG Rivalland, K Padayachy, P Seepersand, CE Pettit and P van Zyl.

“Titantrade” Titantrade 306 Proprietary Limited (registration number 2002/017223/07), a private company incorporated in accordance with the laws of South Africa and the directors of which are H van Dyk and A van Dyk.

“Sheerprops” Sheerprops 156 Proprietary Limited (registration number 1997/019886/07), a private company incorporated in accordance with the laws of South Africa, with J Bishop as the sole director and Oxio Limited as the sole shareholder.

Subsequently, the abovementioned parties have declared to the TRP that they are no longer acting in concert.

Second change in control

12.3.4 Following the First Change in Control, which resulted in the Offeror (as defined in the circular dated 19 March 2012), becoming a controlling shareholder of ConvergeNet with an aggregate interest of 48.93%, it was announced on SENS on 23 November 2012 that the Company had entered into the Yellow Star Sale of Shares Agreement for the purchase of all of the ordinary shares in the issued ordinary share capital of Sizwe owned by Yellow Star,

constituting 25% of the issued ordinary share capital of Sizwe for an aggregate purchase price of R45 million (the “Sizwe Purchase Price”). The Sizwe Purchase Price was settled as set out in paragraph 3.10 of the circular dated 20 September 2013. The Sizwe Acquisition contained warranties usual for such a transaction.

12.3.5 The issue of 100 000 000 shares as a result of the Sizwe Acquisition resulted in Yellow Star triggering an affected transaction and change in control. In terms of section 123 of the Companies Act, Yellow Star was obliged to make a mandatory offer to the remaining shareholders at 32 cents (the “Second Mandatory Offer”). The majority of independent shareholders waived their entitlement to receive the Second Mandatory Offer at a shareholders meeting held on 12 March 2012. Accordingly, the TRP granted an exemption to Yellow Star from the obligation to make the Second Mandatory Offer in accordance with Regulation 86(4) of the Companies Regulations, as announced on SENS on 11 April 2013 and 16 May 2013, respectively.

Neither the Company nor any of its subsidiaries have had a change in trading objectives during the previous five years.

12.4 Vendors of material assets

The following tables detail the disclosure requirements relating to the vendors of material assets to ConvergeNet and its subsidiaries during the three years preceding the publication of this Circular:

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ConvergeNet

1. Asset Chrystalpine, being the 100% holding company of Andrews Kit Proprietary Limited (trading as Contract Kitting)

Full name of vendors

Noel Andrews and John Andrews

Address 3/5 Monza Close, Kyalami Business Park (PO Box 6285, Halfway House, 1685)

Amount paid and date of acquisition

On 12 March 2013, shareholders approved the acquisition of an additional 26% interest in Chrystalpine (an existing subsidiary of the Company), increasing its shareholding in Chrystalpine to 100%, for an acquisition price of R20 million which was settled in cash. There was no liability for accrued taxation, or any apportionment thereof, to the date of this acquisition.

Goodwill paid None

Warranties/Guaranteed book debts

Warranties usual for such a transaction were provided.

Restraints No agreements are in place which preclude Chrystalpine or Contract Kitting from carrying on business in competition with any other entity, or impose any other restrictions on Chrystalpine or Contract Kitting.

Name of promoter or director with a beneficial interest in the transaction

By virtue of the fact that the vendors (Noel Andrews and John Andrews) were directors on the Chrystalpine and Contract Kitting board of directors, this acquisition was deemed a related party transaction in terms of the Listings Requirements.

Promoter fees None

Transfer of assets The Contract Kitting Disposal requires the approval of shareholders in order for ConvergeNet’s interest in Contract Kitting to transfer to Tellumat. The existing shareholding of 100% of Contract Kitting by ConvergeNet was transferred to ConvergeNet.

Assets ceded or pledged

None

2. Asset Sizwe Africa IT Group Proprietary Limited

Full name of vendor Yellow Star Group Proprietary Limited

Address Sizwe House, 35 Waterloo Avenue, Samrand, Kosmosdal (PO Box 5687, The Reeds, 0158)

Amount paid and date of acquisition

On 12 March 2013, shareholders approved the acquisition of an additional 25% interest in Sizwe (an existing subsidiary of the Company), increasing its shareholding in Sizwe to 100%, for an acquisition price of R45 million which was settled as follows:

• R13 million was settled in cash; and

• R32 million was settled by the issue and allotment of 100 000 000 shares at an issue price of R0.32 per share.

There was no liability for accrued taxation, or any apportionment thereof, to the date of this acquisition.

Goodwill paid None

Warranties/Guaranteed book debts

Warranties usual for such a transaction were provided.

Restraints No agreements are in place which preclude Sizwe or its subsidiaries or the ConvergeNet Group from carrying on business in competition with any other entity, or impose any other Sizwe or its subsdiaires or the ConvergeNet Group.

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Name of promoter or director with a beneficial interest in the transaction

In terms of the Listings Requirements, the vendor was a material shareholder of ConvergeNet with 27.6% of the issued share capital of the Company at the time. In addition, Hanno van Dyk and Tim Modise, executive directors of ConvergeNet at the time, were also directors of Sizwe and Yellow Star as well as shareholders in Yellow Star. Charles Pettit, a non-executive director of ConvergeNet, was also a non-executive director of Yellow Star at the time. Accordingly, these directors and their associates were precluded from voting on the resolutions pertaining to this acquisition to the extent that they held shares in ConvergeNet.

Promoter fees None

Transfer of assets The existing shareholding of 100% of Contract Kitting by ConvergeNet was transferred to ConvergeNet.

Assets ceded or pledged

None of the assets held in Sizwe were ceded or pledged, save for:(i) the pledge of the Sizwe Sale Shares and claims and book debts as

security for the Sizwe Loan, as detailed in paragraph 3.3.4 of the circular dated 20 September 2013;

(ii) the encumberment of land and buildings as security for mortgage bonds; and

(iii) the encumberment of motor vehicles and certain IT equipment as security for finance leases.

12.5 Subsidiaries of ConvergeNet

As at the Last Practicable Date, ConvergeNet had the following subsidiaries, which are all unlisted:

Company nameDate of

incorporationRegistration

number Share capital Shareholder

Andrews Kit (Pty) Ltd

16/1/2001 2001/000793/07 Authorised: 1 000 shares of R1.00 each

Issued: 100 shares of R1.00 each

Chrystalpine (100%)

Chrystalpine 22/10/2008 2008/024785/07 Authorised: 1 000 shares of R1.00 each


ConvergeNet (100%)

ConvergeNet Management Services (Pty) Ltd



ConvergeNet (100%)

ConvergeNet SA (Pty) Ltd


Issued: 1 000 shares of R1.00 each

ConvergeNet (100%)

Navix Distribution (Pty) Ltd



ConvergeNet SA Limited (100%)

Northbound Communication Solutions (Pty) Ltd



ConvergeNet (100%)

SIMAT Management Company SA (Pty) Ltd



ConvergeNet ( 51%)

Matla Group (Pty) Ltd ( 49%)

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Company nameDate of

incorporationRegistration

number Share capital Shareholder

SCS 28/1/2002 2002/001640/07 Authorised: 2 000 shares of R1.00 each

Issued: 1 000 shares of R1.00 each

ConvergeNet (100%)

12.6 The Board has considered all the information available to it (which is also all publicly available) in relation to Tellumat, MRI, Digicore and Goliath Gold, and certify that, to the best of their knowledge and belief, there are no material loans, preliminary expenses or issue expenses or any other material contracts relating to Tellumat, MRI, Digicore or Goliath Gold which will have an adverse effect on the Board’s opinion on the prospects of the aforementioned investee companies. In addition, as at the Last Practicable Date, the Board is not aware of:

12.6.1 any legal or arbitration proceedings, including any proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 months, a material effect on the financial position of Tellumat, MRI, Digicore or Goliath Gold; nor

12.6.2 any material changes in the financial or trading position of Tellumat, MRI, Digicore or Goliath Gold and their subsidiaries that has occurred since the end of the last financial period for which either audited annual financial statements or unaudited interim reports have been published.

12.7 Appointment of fulltime CFO and CEO

Shareholders are advised that the listing of Stellar Capital Partners pursuant to the Transactions is dependent on the appointment of a full time CFO and CEO by no later than 31 January 2015.

13. DIRECTORS AND SENIOR MANAGEMENT

13.1 The directors of ConvergeNet are as follows:

Director Age Business address Occupation

Dumisani Dumekhaya Tabata*#$

(Chairman)

58 21B Impala Road, Chistlehurston, Sandton2196

Attorney and business person

Peter John van Zyl (Financial Director and Interim Chief Executive Officer)$~

37 Office 202, Cape QuarterThe Square, 27 Somerset Road, Green Point Cape Town, 8005

Financial Director and Interim Chief Executive Officer of ConvergeNet

Charles Edward Pettit#* 33 Office 202, Cape QuarterThe Square, 27 Somerset Road, Green Point, Cape Town, 8005

Chief Executive Officer of Torre Industries Limited

Lerato Mangope*# 50 19 Fredman Drive, Sandton 2196

Director of Industrial Development Corporation (“IDC”)

Janine de Bruyn*# 45 8 Windsor Road, Plumstead 7800

Business consultant

Caroline Clare Wiese*# 31 89 The Ridge, Fourth Beach Clifton, 8005

Business person

Christina Helmien Wiese*# 28 80A The Ridge, Fourth Beach Clifton, 8005

Business development consultant

* Non-executive

# Independent

$ Non-executive director of Contract Kitting

~ Non-executive director of SCS

A brief curriculum vitae for each of the ConvergeNet directors is set out in Annexure 9 to this Circular.

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13.2 The other directors and members of senior management of ConvergeNet’s major subsidiaries are as follows:

Name Business address Role

Ettiene Visser 3/5 Monza Close, Kyalami Business Park, 1685

Chief Executive Officer of Contract Kitting

Marinda van Heerden 383 Roan CrescentCorporate Park NorthMidrand, 1685

Financial Manager of Contract Kitting

Andrew Scheepers Unit 14A, Wild Fig Business Park 1494 Cranberry Street, Honeydew Extension 19, 2170

Managing Director of SCS

13.3 All the above directors, save for Charles Pettit who is British, are South African.

14. MAJOR BENEFICIAL SHAREHOLDERS

14.1 Shareholders beneficially holding more than 5% of the total issued share capital of the Company (excluding shares held in treasury), directly or indirectly, prior to the implementation of the Transactions are as follows:

ShareholderNumber of

shares held

% of issued share capital of

ConvergeNet

Citygate Securities Limited 29 406 711 29.13%

TIH Capital Partners Limited 20 862 204 20.67%

Green Tree Investments 301 Proprietary Limited 13 233 804 13.11%

Investec Wealth 6 600 000 6.54%

AfrAsia Special Opportunities Fund 6 524 157 6.46%

Total 76 626 876 75.91%

14.2 Shareholders beneficially holding more than 5% of the total issued share capital of the Company (excluding shares held in treasury), directly or indirectly, after the implementation of the Transactions are as follows:

ShareholderNumber of

shares held

% of issued share capital of

ConvergeNet

Titan Premier Investments 80 331 983 28. 41%

Citygate Securities Limited 29 406 711 10. 40%

TIH Capital Partners Limited 20 862 204 7.3 8%

AfrAsia Special Opportunities Fund 26 285 489 9.2 9%

Nedbank Private Wealth 17 095 000 6.0 4%

Dale International Trust Company Limited 14 495 629 5. 13%

Total 188 477 016 6 6. 65%

14.3 The information included in this paragraph 14 is based on the share register of the Company as per Strate and Computershare as at 5 December 2014, due to the share register closing on the last Friday of each month in line with Strate’s policies. Insofar as it is known to the directors of ConvergeNet, there is no controlling shareholder of ConvergeNet as defined in the Listings Requirements.

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15. DIRECTORS’ INTERESTS IN SECURITIES

15.1 None of the directors, whose names are set out in paragraph 13 of this Circular, or any of their associates, has any direct or indirect beneficial interests in ConvergeNet shares as at the Last Practicable Date.

15.2 The direct and indirect beneficial interests of the directors and their associates in ConvergeNet shares pursuant to the implementation of the Transactions are set out in the table below:

Beneficial

Director Direct Indirect Total Total %

DD Tabata – – – –

PJ van Zyl* – 596 250 596 250 0.21%

CE Pettit – – – –

L Mangope – – – –

J de Bruyn – – – –

CC Wiese – – – –

CH Wiese – – – –

Total – – 596 250 0.21%

* Held by Thunder Capital, an associate of PJ van Zyl.

15.3 Previous directors

Interests in ConvergeNet shares of those directors who have resigned in the last 18 months as at the Last Practicable Date are as follows:

Beneficial

Director Direct Indirect Total Total %

DF Bisschoff+ 485 000 – 485 000 0.48%

H van Dyk* – 5 000 5 000 0.00005%

Total 485 000 5 000 49 000 0. 48%

+ Resigned as a director with effect from 31 December 2013.

* Resigned as a director with effect from 19 December 2013. A van Dyk, an associate of H van Dyk, owns 50% of the shares

which are indirectly held by Titantrade 360 Proprietary Limited, totalling 5 000 shares.

15.4 Information relating to the directors’ dealings in securities for the period from the last preceding financial year to the Last Practicable Date was published on SENS in accordance with sections 3.63 to 3.74 of the Listings Requirements. For ease of reference, these are detailed as follows:

Director Nature of trade Trade date Trade priceNo. of shares

traded

Hanno van Dyk* Purchase 10/07/2012 35 cents 50 000

Change in interest (sale of shares in a shareholder of ConvergeNet) 26/11/2012 – 1 012 008

Change in interest (purchase of shares in a shareholder of ConvergeNet) 26/04/2013 – 2 024 008

Purchase 08/05/2013 18 cents 50 000

Purchase 09/05/2013 18 cents 25 000

Change in interest (purchase of shares in a shareholder of ConvergeNet) 04/06/2013 – 506 002

Change in interest (sale of shares by a shareholder of ConvergeNet in which director’s associate held an interest) 30/08/2013 7 cents 55 013 626

* Resigned as a director with effect from 19 December 2013.

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16. DIRECTORS’ INTERESTS IN TRANSACTIONS

16.1 None of the directors has any interest in any of the Transactions.

16.2 None of the directors has had a beneficial interest, whether directly or indirectly, in transactions that were effected by ConvergeNet in the last 18 months, save for two previous directors, namely, DF Bisschoff and H van Dyk, each of whom had personal financial interests in the conclusion and implementation of the Sizwe Disposal and the Telesto Disposal, respectively, by virtue of being the sole director and shareholder of Zaloserve and ConvergeCom, respectively.

16.3 There are no other directors’ interests during the current or immediate preceding financial year or during an earlier financial year that remain in any respect outstanding or unperformed.

17. DIRECTORS’ AND MANAGEMENT REMUNERATION

17.1 The directors’ remuneration for the financial year ended 31 August 2013 was as follows:

Fees forservices

R’000

BasicsalaryR’000

Allowancesand fringe

benefitsR’000

Pensionand other

contri-butions

R’000Bonuses

R’000

Total 2013

R’000

Total 2012

R’000

Paid by subsidiaries

S Swana – 1 901 – 262 – 2 163 383

DF Bisschoff – 1 639 240 260 83 2 222 3 165

T Modise – 1 593 – 235 – 1 828 2 390

H van Dyk – 1 892 – 275 – 2 167 1 812

PWJ Bouwer* – – – – – – 3 062

GS Edwards* – – – – – – 2 587

KBJ Kekana* – – – – – – 748

– 7 025 240 1 032 83 8 380 14 147

Paid by the Company

DD Tabata 250 – – – – 250 254

L Mangope 154 – – – – 154 155

CE Pettit 185 – – – – 185 65

NG Nika 150 – – – – 150 –

S Swana** – – – – – – 251

SLL Peteni* – – – – – – 120

NR Macdonald* – – – – – – 50

M Scott* – – – – – – 97

M Krastanov* – – – – – – 144

739 – – – – 739 1 136

739 7 025 240 1 032 83 9 119 15 283

Share-based payment expense relating to directors 83 153

* Until date of resignation.

** Until date of appointment as CEO.

17.2 There are no options held by any directors. The Company has a forfeiture share plan. Other than an allocation of 5 870 000 shares (prior to the Share Consolidation) made on 1 September 2011 to key employees, one of which was DF Bisschoff who was allocated 2 million shares, which allocation has been included in his holding of 485 000 shares (after the Share Consolidation) in ConvergeNet, no further new shares were allocated to key employees up to the Last Practicable Date.

43

17.3 No amounts were paid to directors in respect of:

17.3.1 management, consulting, technical or other fees for such services rendered, directly or indirectly, including payments to management companies, a part of which is then paid to a director of ConvergeNet; or

17.3.2 commission, gain or profit-sharing arrangements.

17.4 No emoluments were received or are receivable by directors from ConvergeNet’s subsidiaries, associates, joint ventures or from entities that provide management or advisory services to ConvergeNet, its subsidiaries, associates or joint ventures.

17.5 As at the Last Practicable Date, no loans have been made or security furnished by ConvergeNet or by its subsidiaries to or for the benefit of any director or associate of any director.

17.6 As at the Last Practicable Date, no other loans have been made or security furnished by ConvergeNet or by any of its subsidiaries to or for the benefit of any director or associate of any director.

17.7 The Transactions will not affect the directors’ capacity or remuneration.

18. SHARE CAPITAL

18.1 The authorised and issued share capital, before and after the Transactions, as at the Last Practicable Date, is shown below:

Share capital before the Transactions Number of shares

Authorised share capital

1 000 000 000 ordinary shares of no par value*

Issued share capital

Stated capital 100 946 502

Treasury shares (432 221)

Total net issued share capital 100 514 281

Share capital after the acquisition of MRI, Digicore and Goliath Gold Number of shares

Authorised share capital

1 000 000 000 ordinary shares of no par value*


Stated capital 205 283 668


Total net issued share capital 204 851 447

Share capital after the acquisition of MRI, Digicore and Goliath Gold and the Private Placement and specific issue of shares in lieu of underwriting fees and commitment fees Number of shares

Authorised share capital*

1 000 000 000 ordinary shares of no par value


Stated capital 28 2 808 668


Total net issued share capital 28 2 376 444

* As announced on SENS on 11 November 2014, shareholders approved an increase in the Company’s authorised ordinary

share capital of 200 000 000 ordinary shares of no par value to 1 000 000 000 ordinary shares in accordance with section 60 of the Companies Act. The special resolution in this regard has been submitted to CIPC and shareholders will be advised once confirmation of filing has been received.

44

18.2 Conversion rights, voting rights, rights to distributions and variation of rights

18.2.1 In accordance with the Memorandum of Incorporation, at any general meeting every member present in person or by proxy shall have one vote on a show of hands, provided that a proxy shall, irrespective of the number of members he represents, have only one vote. On a poll, every member present in person or by proxy shall have that proportion of the total votes in the Company which the aggregate amount of the nominal value of the shares held by that member bears to the aggregate of the nominal value of all the shares issued by the Company.

18.2.2 All of the shares are of the same class and rank pari passu in every respect. There are no conversion or exchange rights attached to such shares. Any variation in the rights attaching to the shares will require a special resolution of the shareholders in general meeting in accordance with the Memorandum of Incorporation and the provisions of the Companies Act.

18.3 Sub-division or consolidation of ConvergeNet shares

Save for the Share Consolidation, as approved by shareholders in general meeting on 22 October 2013, no consolidations or sub-divisions have occurred in respect of ConvergeNet shares.

18.4 Options or preferential rights in respect of ConvergeNet shares

Save for the Tellumat Option as detailed in paragraph 4.6.4 of this Circular, there is no contract or arrangement, either actual or proposed, whereby any option or preferential right of any kind has been or will be given to any person to subscribe for any securities of ConvergeNet.

18.5 Issues and repurchases of shares

Details of the repurchase of shares by ConvergeNet in the three years preceding the Last Practicable Date are set out in Annexure 13 to this Circular.

19. SHARE PRICE HISTORY

The share price history of ConvergeNet’s shares on the JSE is summarised in Annexure 11 to this Circular.

20. LITIGATION STATEMENT

In terms of section 7.D.11 of the Listings Requirements, the directors, whose names appear under “Corporate Information and Advisers” on page 1 of this Circular, are not aware of any legal or arbitration

proceedings, including any proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 months, a material effect on the Group or any of its subsidiaries’ financial position.

21. PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTIONS

21.1 The table below sets out the pro forma financial effects of the Transactions on ConvergeNet.

21.2 The pro forma consolidated statement of comprehensive income for the twelve month period ended 31 August 2014 and pro forma consolidated statement of financial position at 31 August 2014 have been prepared for illustrative purposes only, based on current information available to management, in order to provide information about the financial results and position of the Company. Due to its nature, the pro forma financial information may not fairly present the Company’s financial position, changes in equity and results of operations or cash flows after the Transactions, and are based on the assumptions that:

• for the purpose of calculating earnings per share and headline earnings per share, the Transactions were implemented on 1 September 2013; and

• for the purpose of calculating net asset value per share and net tangible asset value per share, the Transactions were implemented on 31 August 2014.

45

21.3 The pro forma financial information has been prepared using the most recent financial period of the Company for the 12 month period ended 31 August 2014 in terms of the Listings Requirements and guidelines issued by the South African Institute of Chartered Accountants.

21.4 The accounting policies of ConvergeNet have been used in calculating the pro forma financial effects. Save for the accounting policy noted below, the accounting policies used are consistent with previous accounting policies used by ConvergeNet and the accounting policies have been applied on the same basis.

Accounting policy with respect to Investments in Associates

In accordance with paragraph 18 of IAS 28 “Investments in Associates and Joint Ventures”, the Company does not account for its investment in associates in the consolidated financial statements using the equity method. Instead, the Company has elected to measure its investments in these entities at fair value through profit and loss.

Refer note 1 below for the rationale for adoption of the aforementioned accounting policy.

21.5 The directors of the Company are responsible for the preparation of the pro forma financial information contained in this Circular.

21.6 The detailed pro forma financial information and notes thereto as a result of the Transactions are contained in Annexure 7 to this Circular. The Independent Reporting Accountants’ limited assurance report on the pro forma financial information is set out in Annexure 8 to this Circular.

46

Befo

re (1

)

Aft

er

SC

SD

isp

osal

an

d

Co

ntr

act

Kit

tin

gD

isp

osal

(2)

Ch

an

ge

(%)

Aft

er

MR

IA

cq

uis

itio

n (3

)

Ch

an

ge

(%)

Aft

er

Go

liath

G

old

Acq

uis

itio

n (4

)

Ch

an

ge

(%)

Aft

er

Dig

ico

reA

cq

uis

itio

n (5

)

Ch

an

ge

(%)

Basic

(lo

ss)/

pro

fit p

er

ord

inary

share

fr

om

continu

ing

op

era

tions (

cents

) (

2.9

4)

(2.9

4)

– (

2.8

8)

2.0

4 (

2.7

9)

5.1

0 (

2.7

6)

6.1

2

Dilu

ted

basic

(lo

ss)/

pro

fit p

er

ord

inary

share

fro

m c

ontinuin

g

op

era

tions (

cents

) (

2.9

4)

(2.9

4)

– (

2.8

8)

2.0

4 (

2.7

9)

5.1

0 (

2.7

6)

6.1

2

Head

line (

loss)/

pro

fit p

er

ord

inary

share

fro

m c

ontinuin

g o

pera

tions

(cents

) (

2.9

4)

11.5

6

493.2

0 9

.99

439.8

0 7

.22

345.5

8 4

.32

246.9

4

Dilu

ted

head

line (

loss)/

pro

fit p

er

ord

inary

share

fro

m c

ontinuin

g

op

era

tions (

cents

) (

2.9

4)

11.5

6

493.2

0 9

.99

439.8

0 7

.22

345.5

8 4

.32

246.9

4

Basic

(lo

ss)/

pro

fit p

er

ord

inary

share

fr

om

dis

con

tinued

op

era

tions (

cents

) (

89.3

5)

(74.8

6)

16.2

2 (

66.4

4)

25.6

4 (

51.6

8)

42.1

6 (

36.5

8)

59.0

6

Dilu

ted

basic

(lo

ss)/

pro

fit p

er

ord

inary

share

fro

m d

iscontinued

op

era

tions (

cents

) (

89.3

5)

(74.8

6)

16.2

2 (

66.4

4)

25.6

4 (

51.6

8)

42.1

6 (

36.5

8)

59.0

6

Head

line (

loss)/

pro

fit p

er

ord

inary

share

fro

m d

iscontinued

op

era

tions

(cents

) (

16.2

3)

2.7

8

117.1

3 2

.47

115.2

2 1

.92

111.8

3 1

.36

108.3

8

Dilu

ted

head

line (

loss)/

pro

fit p

er

ord

inary

share

fro

m d

iscontinued

op

era

tions (

cents

) (

16.2

3)

2.7

8

117.1

3 2

.47

115.2

2 1

.92

111.8

3 1

.36

108.3

8

Weig

hte

d a

vera

ge n

um

ber

of share

s

99

701 8

49

99 7

01 8

49

– 1

12 3

38 1

81

12.6

7 1

44 4

23 0

52

44.8

5 2

04 0

39 0

15

104.6

5

Dilu

ted

weig

hte

d a

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um

ber

of

share

s

99 7

01 8

49

99 7

01 8

49

– 1

12 3

38 1

81

12.6

7 1

44 4

23 0

52

44.8

5 2

04 0

39 0

15

104.6

5

Num

ber

of share

s in issue

– –

– –

12.5

2 –

44.3

0 –

103.3

6

100 9

46 5

02

100 9

46 5

02

–113 5

82 8

34

–145 6

67 7

05

–205 2

83 6

68

–

Net asset valu

e p

er

share

(cents

) 1

94.6

4

194.6

5

0.0

1 1

95.2

4

0.3

1 1

96.2

9

0.8

5 1

97.3

7

1.4

0

Tang

ible

net asset valu

e p

er

share

(c

ents

) 1

92.9

9

192.9

9

– 1

93.7

7

0.4

0 1

95.1

5

1.1

2 1

96.5

6

1.8

5

47

Aft

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Pri

vate

Pla

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t (6)

Ch

an

ge

(%)

Aft

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sh

are

issu

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in lie

u o

fu

nd

erw

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fees

(7)

Ch

an

ge

(%)

Aft

er

sh

are

issu

e in

lie

u

of

pri

vate

pla

cem

en

tco

mm

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tfe

es (8

)

Ch

an

ge

(%)

Aft

er

all

Tra

nsacti

on

sC

han

ge

(%)

Basic

(lo

ss)/

pro

fit p

er

ord

inary

share

fro

m

continuin

g o

pera

tions (

cents

) 0

.73

124.8

3 0

.73

124.8

3 0

.73

124.8

3 0

.73

124.8

3

Dilu

ted

basic

(lo

ss)/

pro

fit p

er

ord

inary

share

fro

m c

ontinuin

g o

pera

tions (

cents

) 0

.73

124.8

3 0

.73

124.8

3 0

.73

124.8

3 0

.73

124.8

3

Head

line (

loss)/

pro

fit p

er

ord

inary

share

fr

om

continu

ing

op

era

tions (

cents

) 5

.91

301.0

2 5

.88

300.0

0 5

.86

299.3

2 5

.86

299.3

2

Dilu

ted

head

line (

loss)/

pro

fit p

er

ord

inary

share

fro

m c

ontinuin

g o

pera

tions (

cents

) 5

.91

301.0

2 5

.88

300.0

0 5

.86

299.3

2 5

.86

299.3

2

Basic

(lo

ss)/

pro

fit p

er

ord

inary

share

fro

m

dis

continued

op

era

tions (

cents

) (

26.7

5)

70.0

6 (

26.6

1)

70.2

2 (

26.5

1)

70.3

3 (

26.5

1)

70.3

3

Dilu

ted

basic

(lo

ss)/

pro

fit p

er

ord

inary

share

fro

m d

iscontinued

op

era

tions

(cents

) (

26.7

5)

70.0

6 (

26.6

1)

70.2

2 (

26.5

1)

70.3

3 (

26.5

1)

70.3

3

Head

line (

loss)/

pro

fit p

er

ord

inary

share

fr

om

dis

con

tinued

op

era

tions (

cents

) 0

.99

106.1

0 0

.99

106.1

0 0

.99

106.1

0 0

.99

106.1

0

Dilu

ted

head

line (

loss)/

pro

fit p

er

ord

inary

share

fro

m d

iscontinued

op

era

tions

(cents

) 0

.99

106.1

0 0

.99

106.1

0 0

.99

106.1

0 0

.99

106.1

0

Weig

hte

d a

vera

ge n

um

ber

of share

s

279 0

39 0

15

179.8

7 2

80 4

24 0

15

181.2

6 2

81 5

64 0

15

182.4

1 2

81 5

64 0

15

182.4

1

Dilu

ted

weig

hte

d a

vera

ge n

um

ber

of

share

s

279 0

39 0

15

179.8

7 2

80 4

24 0

15

181.2

6 2

81 5

64 0

15

182.4

1 2

81 5

64 0

15

182.4

1

Num

ber

of share

s in issue

280 2

83 6

68

177.6

6 2

81 6

68 6

68

179.0

3 2

82 8

08 6

68

180.1

6 2

82 8

08 6

68

180.1

6

Net asset valu

e p

er

share

(cents

) 1

98.0

8

1.7

7 1

97.1

0

1.2

6 1

96.3

1

0.8

6 1

96.3

1

0.8

6

Tang

ible

net asset valu

e p

er

share

(c

ents

) 1

97.4

8

2.3

3 1

96.5

1

1.8

2 1

95.7

2

1.4

1 1

95.7

2

1.4

1

48

Notes and assumptions:

1. The amounts set out in the “Before” column have been extracted from the reviewed interim results of the Company for the twelve months ended 31 August 2014, as published on SENS on 4 December 2014.

Investments in Associates

IAS 28 Investments in Associates and Joint Ventures paragraph 18 provides that “When an investment in an associate or a joint venture is held by, or is held indirectly through, an entity that is a venture capital organisation, or a mutual fund, unit trust and similar entities including investment-linked insurance funds, the entity may elect to measure investments in those associates and joint ventures at fair value through profit or loss in accordance with IFRS 9 or where the Company has not yet adopted IFRS 9, in terms of IAS 39 [our addition]”.

As IAS 28 does not provide guidance on which entities qualify as “similar entities” to venture capital organisations, the Company took guidance from a previous version of IAS 28 wherein it was stated in paragraph BC 12 that “The Board decided not to define further those ‘venture capital organisations and similar entities excluded from the scope of the Standard. Apart from recognising the difficulties of arriving at a universally applicable definition, the Board did not want inadvertently to make it difficult for entities to measure investments at fair value. However, the Board decided to clarify that the reference to “similar entities in the scope exclusion includes investment-linked insurance funds.” The board of directors of the Company have additionally considered the key characteristics of a venture capital organisation and are satisfied that:

– investments will be held by the Company for short-to medium term. The directors do not interpret this requirement to mean that the Company should speculate in securities to comply with this requirement as it has been clearly stipulated in paragraph 3.8 of the Circular that the Company will only acquire of dispose of its investments in accordance with a long-term capital appreciation strategy. The Company, however, does not intend on holding any of the investments indefinitely which view is supported by its investment strategy to apply a flexible investment approach relating to the timing and duration of investments;

– the most appropriate point for exit is actively monitored. The Company will actively engage with investee companies in relation to their corporate activity and other strategic initiatives. It is this inorganic growth strategy which will differentiate the Company from other trading companies. The board of directors will actively monitor the performance of all investments and as such elect to exit investments, by way of implementation of corporate finance strategies, on optimal pricing terms, whether those are attained in the short or medium term; and

– the investments form part of a portfolio, which will be monitored and managed without distinguishing between investments that qualify as associates or joint ventures and those that do not.

The directors are comfortable that IAS 28 does not preclude the Company from accounting for investments in associates and joint ventures at fair value through profit and loss, as the board of directors of the Company is also satisfied that that the Company will measure and evaluate the performance of substantially all of its investments on a fair value basis following completion of the Transactions.

The Company will provide investors with fair value information in each set of annual and interim financial results and will measure substantially all of its investments at fair value in its financial statements whenever fair value is required or permitted in accordance with IFRSs as summarised above. Further, the Company will also report fair value information internally to the entity’s key management personnel (as defined in IAS 24), the board of directors, who will use such fair value as the primary measurement attribute to evaluate the performance of substantially all of its investments and to make investment decisions. This is evident from the fair valuation of the investment portfolio which will be conducted on a quarterly basis.

The investments in Tellumat (Associate), MRI (Associate), Goliath Gold (Associate) and Digicore (Investment designated as at fair value through profit and loss as the Company will not have significant influence over this investment), as described in notes 2 to 5 below, have therefore been accounted for at fair value in accordance with IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”) paragraph 14.

2. The Contract Kitting Disposal and SCS Disposal for a total purchase consideration of R95.119 million and R5 million, respectively, settled by way of the issue of new shares in Tellumat such that after the Contract Kitting Disposal and SCS Disposal the Company holds 30% of the issued ordinary shares of Tellumat. The investment in Tellumat has been accounted for at fair value of R100.119 million in terms of IAS 39

49

paragraph 14. This implies a valuation of R333.73 million for the combined entity incorporating Tellumat’s existing business, Contract Kitting and SCS. Transaction costs of R 3 300 000 have been expensed in the statement of comprehensive income.

3. The acquisition of an additional 30.32% of the issued ordinary shares of MRI by way of issuing 12 636 332 new shares in the Company. The investment in MRI has been accounted for fair value of R25.273 million in terms of IAS 39 paragraph 14. This implies a valuation of R0.10 per MRI share. Transaction costs of R 300 000 have been expensed in the statement of comprehensive income.

4. The acquisition of an additional 21.77% of the issued ordinary shares of Goliath Gold by way of issuing 32 084 871 new shares in the Company. The investment in Goliath Gold has been accounted for at fair value of R64.17 million in terms of IAS 39 paragraph 14. This implies a valuation of R2.00 per Goliath Gold share. Transaction costs of R 800 000 have been expensed in the statement of comprehensive income.

5. The acquisition of 19.26% of the issued ordinary shares of Digicore by way of issuing 59 615 963 new shares in the Company. The investment in Digicore has been accounted for at fair value of R119.23 million in terms of IAS 39 paragraph 14. This implies a valuation of R2.50 per Digicore share. Transaction costs of R 1 600 000 have been expensed in the statement of comprehensive income.

6. The issue of 75 000 000 new shares in the Company at R2.00 per share in respect of the Private Placement. Interest revenue of R7 674 000 has been accounted for in the statement of comprehensive income at an interest rate of 5% per annum, which represents the return currently earned by the Company on its call account with First National Bank. Cash will be utilised to acquire further investments and also deployed towards working capital requirements.

7. The issue of 1 385 000 new shares in the Company to settle underwriting fees in the amount of R2 770 000. This cost has been accounted for as a deduction from equity, net of any related income tax benefit in terms of IAS 32 Financial Instruments: Presentation paragraph 35.

8. The issue of 1 140 000 new shares in the Company at R2.00 per share to settle private placement commitment fees of R2 280 000. This cost has been accounted for as a deduction from equity, net of any related income tax benefit in terms of IAS 32 Financial Instruments: Presentation paragraph 35.

9. It has been assumed that the Transactions were implemented on 31 August 2014 for purposes of compiling the statement of financial position and on 1 September 2013 for purposes of compiling the statement of comprehensive income.

10. Tax consequences in relation to the Transactions have been taken into account.

11. All adjustments, other than transaction costs described above, will have a continuing effect.

22. DIRECTORS’ RESPONSIBILITY STATEMENT

The directors, whose names are set out on page 19 of this Circular, collectively and individually accept full responsibility for the accuracy of the information given in this Circular in relation to ConvergeNet and certify that, to the best of their knowledge and belief, no facts have been omitted which would make any statement in this Circular false or misleading, that all reasonable enquiries to ascertain such facts have been made and that this Circular contains all information required by law, the Listings Requirements and the Companies Regulations.

23. MATERIAL CHANGES

23.1 On 15 December 2014 the JSE approved ConvergeNet’s application for the transfer of the Company’s listing from the “Computer Services” sub-sector to the “Investment Companies” sub-sector of the JSE. Further details in this regards are included in paragraph 3 of this Circular.

23.2 As detailed in the Terms Announcement, the Board had resolved to amend the financial year-end of the Company from 31 August 2014 to 30 November 2014.

23.3 Save for the changes referred in this paragraph 23 and the proposed Name Change detailed in paragraph 9 of this Circular, there have been no known material changes in the financial or trading position of ConvergeNet and its subsidiaries since the end of the last financial year ended 28 February 2014 up to and including the Last Practicable Date.

50

24. MATERIAL AND SERVICE CONTRACTS

24.1 There are no known material contracts or transactions entered into by ConvergeNet or any of its subsidiaries over the past two years preceding the date of this Circular, save for the material contracts and transactions detailed in Appendix 1 to the Revised Listing Particulars.

24.2 Neither ConvergeNet nor any of its subsidiaries have entered into any agreement at any time which contains an obligation or settlement that is material to the Company or its subsidiaries at the date of this Circular. In addition, neither ConvergeNet nor any of its subsidiaries have entered into any agreements regarding restraint payments or technical fees.

24.3 Directors’ service contracts

There are no service contracts in place in respect of the executive director and non-executive directors of the Company.

24.4 Other service contracts

Warwick van Breda was appointed as company secretary to ConvergeNet with effect from 1 December 2013. A retainer arrangement is in place in relation to services rendered. No other service contracts have been entered into or amended within the six month period prior to the Last Practicable Date.

25. EXPENSES RELATING TO THE TRANSACTIONS

25.1 Other than the costs relating to the response circular, dated 19 April 2012, regarding the views of the independent board at the time in respect of the First Mandatory Offer, as detailed in paragraphs 12.3.1 and 12.3.2 of this Circular, the circular dated 17 October 2012 regarding the disposal of ConvergeNet’s remaining 15% interest in Future Cell, the circular dated 12 February 2013 regarding the acquisition by ConvergeNet of the remaining 25% and 26% interest in Sizwe and Contract Kitting, respectively, and the circular dated 20 September 2013 regarding, inter alia, the disposal of 100% of ConvergeNet’s interest in Sizwe and Telesto, the Share Consolidation and an odd-lot offer, the Company did not incur any transaction costs in the previous three years preceding the date of this Circular.

25.2 The costs (exclusive of Value Added Tax) relating to the Transactions are estimated as follows:

Description Name R’000

Corporate advisory and Transaction Sponsor fees AfrAsia Corporate Finance 3 500

Independent Sponsor fees PSG Capital 187

Independent Expert – Fairness opinion BDO 160

Reporting accountants’ reports Grant Thornton 905

Reporting accountants’ reports PricewaterhouseCoopers 369

Reporting accountants’ reports Ernst & Young 200

Legal fees Cliffe Dekker Hofmeyr Inc. 110

Printing, publication and distribution expenses INCE 164

Documentation fees TRP 75

Documentation fees JSE 100

Documentation fees Competition Authorities 100

Documentation fees – Exchange Control notification ABSA 2

Listing fees JSE 126

Transfer secretarial fees Computershare 2

Total 6 000

51

26. ADVISERS’ CONSENTS

The advisers whose names appear in the section “Corporate Information and Advisers” on page 1 of this Circular have all consented in writing to act in the capacities stated in this Circular and to their names being stated in this Circular and, in the case of the reporting accountants, reference to their reports in the form and context in which they appear, and have not withdrawn their consent prior to the publication of this Circular.

27. IRREVOCABLE UNDERTAKING

27.1 ConvergeNet has received an irrevocable undertaking from Green Tree Investments 301 Proprietary Limited, which holds 13 233 804 shares (constituting 13.10% of the issued share capital of ConvergeNet), to vote in favour of the Transactions and related resolutions to be proposed at the General Meeting in respect of its entire shareholding in ConvergeNet.

27.2 Green Tree Investments 301 Proprietary Limited has not traded in the securities of the Company during the six months preceding the publication of this Circular.

28. ADDITIONAL DISCLOSURE REQUIRED BY THE TRP IN RESPECT OF THE CONTRACT KITTING DISPOSAL

28.1 No set-off

The total consideration payable in respect of the Contract Kitting Disposal will be settled in full in accordance with the terms of the Tellumat Sale and Purchase Agreement without regard to any lien, right of set-off, counterclaim or other analogous right to which Tellumat may otherwise be, or claim to be, entitled against the Company.

28.2 Special arrangements, undertakings or agreements

Save for the Tellumat Sale and Purchase Agreement and the agreements incidental thereto, there are no arrangements, undertakings or agreements between the Company and Tellumat and persons acting in concert with either of them in relation to the Contract Kitting Disposal.

There are further no agreements, arrangements or understanding between Tellumat or any person acting in concert with it and any of the directors, or any persons who were directors of the Company in the 12 months preceding the Tellumat Sale and Purchase Agreement or with shareholders or persons who were shareholders in the 12 months preceding the Tellumat Sale and Purchase Agreement, which has a connection with or dependence upon the Contract Kitting Disposal.

29. GENERAL MEETING

29.1 The resolutions necessary to implement the Transactions will be put to a vote at the General Meeting to be held at Level P3, Oxford Corner, cnr Jellicoe and Oxford Roads, Rosebank, Johannesburg at 10:00 on Friday, 16 January 2015, or on any other date to which it may be postponed or adjourned.

29.2 Each certificated shareholder or “own name” dematerialised shareholder who is registered as such on the Voting Record Date, may attend, speak and vote at the General Meeting in person or be represented thereat by proxy. Forms of proxy (pink) must be received by the Transfer Secretaries by no later than 10:00 on Wednesday, 14 January 2015, in order to be valid.

29.3 Dematerialised shareholders, other than “own name” dematerialised shareholders, must give their instructions to their CSDP or stockbroker by the time and in the manner prescribed in the custody agreement concluded between the relevant dematerialised shareholder and their CSDP or stockbroker. If a dematerialised shareholder wishes to attend the General Meeting in person or be represented thereat by proxy, he must arrange with his CSDP or stockbroker to give him the necessary Letter of Representation to do so. Dematerialised shareholders, other than “own name” dematerialised shareholders, must not complete the form of proxy (pink).

29.4 If you are a shareholder who wishes to address the General Meeting, then you will be given the opportunity to do so.

52

29.5 Shareholders are advised that no facilities for electronic participation in the General Meeting will be made available.

29.6 In terms of the Companies Act and the Listings Requirements, the votes of treasury shares will not be taken into account in determining the results of the voting at the General Meeting.

30. DOCUMENTS AVAILABLE FOR INSPECTION

The following documents, or copies thereof, in addition to the information listed in paragraph 31 below, will be available for inspection by shareholders at ConvergeNet’s registered office (the address of which appears in the section “Corporate Information and Advisers” on page 1 of this Circular) during normal office hours from Monday, 15 December 2014 until Friday, 16 January 2015:

30.1 the Memoranda of Incorporation of ConvergeNet and its subsidiaries, Tellumat, Digicore, MRI and Goliath Gold;

30.2 the opinion of the Independent Expert on the Contract Kitting Disposal, as reproduced at Annexure 2.1 to this Circular;

30.3 the opinions of the Independent Expert on the acquisition by ConvergeNet of an interest in MRI and Goliath Gold from ASOF, as reproduced at Annexure 2.2 and Annexure 2.3;

30.4 the Tellumat Sale and Purchase Agreement;

30.5 the Tellumat Option Agreement;

30.6 the Management Agreement;

30.7 the Titan Sale and Purchase Agreement;

30.8 the Dale Sale and Purchase Agreement;

30.9 ASOF Sale and Purchase Agreement;

30.10 Trinity Sale and Purchase Agreement;

30.11 Crater Valley Sale and Purchase Agreement;

30.12 the Additional Digicore Acquisition Sale and Purchase Agreement;

30.13 the Additional Goliath Gold Acquisition Sale and Purchase Agreement;

30.14 the Subscription Agreements;

30.15 the Private Placement Underwriting Agreements;

30.16 the material contracts referred to in paragraph 24.1 of this Circular;

30.17 the signed consent letters of the advisers referred to in paragraph 26 of this Circular;

30.18 the irrevocable undertaking referred to in paragraph 27 of this Circular;

30.19 the letter of approval from the TRP in respect of this Circular; and

30.20 a signed copy of this Circular.

31. FINANCIAL INFORMATION INCORPORATED BY REFERENCE

In accordance with section 11.61 of the Listings Requirements, the following information can be accessed on ConvergeNet’s website at http://convergenet.com/investor-relations/historical-financial-information and

53

is also available for inspection at the registered office of the Company and the Independent Sponsor by shareholders and/or prospective investors at no charge, during normal office hours from Monday, 15 December 2014 until Friday, 16 January 2015.

31.1 Historical financial information

31.1.1 Historical financial information of ConvergeNet for the years ended 31 August 2013, 31 August 2012 and 31 August 2011, extracts of which are attached as Annexure 1.1 to this Circular (the full set of which can be accessed on the Company’s website at http:// convergenet.com/investor-relations/historical-financial-information);

31.1.2 Interim financial information of ConvergeNet for the 12 months ended 31 August 2014, an extract of which is attached as Annexure 1.2 to this Circular (the full set of which can be accessed on the Company’s website at http://convergenet.com/investor-relations/historical-financial-information;

31.1.3 Historical financial information of Contract Kitting for the financial years ended 31 August 2012 and the historical financial information of Contract Kitting for the financial year ended 31 August 2013;

31.1.4 Historical financial information of Contract Kitting for the 12 months ended 31 August 2014;

31.1.5 Historical financial information of Chrystalpine for the financial year ended 31 August 2012 and the historical financial information of Chrystalpine for the financial year ended 31 August 2013;

31.1.6 Historical financial information of Chrystalpine for the 12 months ended 31 August 2014;

31.1.7 Historical financial information of SCS for the financial year ended 31 August 2012 and the Historical financial information of SCS for the financial year ended 31 August 2013;

31.1.8 Historical financial information of SCS for the 12 months ended 31 August 2014;

31.1.9 Historical financial information of Tellumat for the years ended 30 September 2014, 30 September 2013, 30 September 2012 and 30 September 2011;

31.1.10 Annual financial information of Tellumat for the 12 months ended 30 September 2014.

31.1.11 Historical financial information of Digicore for the years ended 30 June 2014, 30 June 2013 and 30 June 2012.

31.1.12 Historical financial information of MRI for the years ended 28 February 2014, 28 February 2013 and 29 February 2012.

31.1.13 Interim financial information of MRI for the six months ended 31 August 2014.

31.1.14 Historical financial information of Goliath Gold for the years ended 31 December 2013, 31 December 2012 and 31 December 2011.

31.1.15 Interim financial information of Goliath Gold for the six months ended 30 June 2014.

31.2 In accordance with section 8.11 of the Listings Requirements, the tables below set out the financial information of SCS, Chrystalpine, Contract Kitting and Tellumat:

54

SC

S

31/8

/2011

R’0

00

SC

S

31/8

/2012

R’0

00

SC

S

31/8

/2013

R’0

00

SC

S

31/8

/2014

R’0

00

Ch

rysta

lpin

e

31/8

/2011

R’0

00

Ch

rysta

lpin

e

31/8

/2012

R’0

00

Ch

rysta

lpin

e

31/8

/2013

R’0

00

Ch

rysta

lpin

e31/8

/2014

R’0

00

Earn

ing

s p

er

sh

are

Basic

(lo

ss)/

earn

ing

s p

er

share

(c

ents

)

Fro

m c

ontin

uin

g o

pera

tions

186

873

(3 9

24 4

76)

(2 2

18 2

56)

(8 3

27 4

02)

(78 7

48)

(44 9

55)

6 9

08 3

21

(1 1

38)

Fro

m d

iscon

tinued

op

era

tions

–

–

–

–

–

–

–

–

Basic

(lo

ss)/

earn

ing

s for

the

period

186

873

(3 9

24 4

76)

(2 2

18 2

56)

(8 3

27 4

02)

(78 7

48)

(44 9

55)

6 9

08 3

21

(1 1

38)

Earn

ing

s p

er

sh

are

Dilu

ted

bas

ic (

loss)/

earn

ing

s

per

sh

are

(cen

ts)

Fro

m c

ontin

uin

g o

pera

tions

186

873

(3 9

24 4

76)

(2 2

18 2

56)

(8 3

27 4

02)

(78 7

48)

(44 9

55)

6 9

08 3

21

(1 1

38)

Fro

m d

iscon

tinued

op

era

tions

–

–

–

–

–

–

–

–

Dilu

ted

basic

(lo

ss)/

earn

ing

s for

the p

eriod

186 8

73

(3 9

24 4

76)

(2 2

18 2

56)

(8 3

27 4

02)

(78 7

48)

(44 9

55)

6 9

08 3

21

(1 1

38)

Head

lin

e (

loss)/

earn

ing

s p

er

sh

are

(cen

ts)

Fro

m c

ontin

uin

g o

pera

tions

182

228

(3 9

63 2

50)

(2 2

22 4

24)

(8 3

27 4

04)

(78 7

48)

(44 9

55)

6 9

08 3

21

(1 1

38)

Fro

m d

iscon

tinued

op

era

tions

–

–

–

–

–

–

–

–

Head

line (

loss)/

pro

fit fo

r th

e

period

182

228

(3 9

63 2

50)

(2 2

22 4

24)

(8 3

27 4

04)

(78 7

48)

(44 9

55)

6 9

08 3

21

(1 1

38)

Dilu

ted

hea

dlin

e (

loss)/

earn

ing

s p

er

sh

are

(cen

ts)

Fro

m c

ontin

uin

g o

pera

tions

182

228

(3 9

63 2

50)

(2 2

22 4

24)

(8 3

27 4

04)

(78 7

48)

(44 9

55)

6 9

08 3

21

(1 1

38)

Fro

m d

iscon

tinued

op

era

tions

–

–

–

–

–

–

–

–

Head

line (

loss)/

pro

fit fo

r th

e

period

182

228

(3 9

63 2

50)

(2 2

22 4

24)

(8 3

27 4

04)

(78 7

48)

(44 9

55)

6 9

08 3

21

(1 1

38)

Net asset valu

e p

er

share

(c

ents

) 2

145 8

50

(1 7

78 6

26)

(3 9

96 8

81)

(12 3

24 2

85 0

00)

(183 3

95)

(228 3

50)

(320 0

29)

(321 1

67)

Net ta

ng

ible

asset valu

e p

er

share

(cents

) 2

145 8

50

(1 7

78 6

26)

(4 0

12 1

88)

(12 3

24 2

94 8

13)

(183 3

95)

(228 3

50)

(320 0

29)

(321 1

67)

Net asset valu

e 2

146

(1 7

79)

(3 9

97)

(12 3

24 2

85)

(183)

(228)

(320)

(321)

Inta

ng

ible

assets

–

–

15

10

–

–

–

–

Good

will

–

–

–

–

–

–

–

–

55

Co

ntr

act

Kit

tin

g

31/8

/2011

R’0

00

Co

ntr

act

Kit

tin

g

31/8

/2012

R’0

00

Co

ntr

act

Kit

tin

g

31/8

/2013

R’0

00

Co

ntr

act

Kit

tin

g31/8

/2014

R’0

00

Earn

ing

s p

er

sh

are

Basic

(lo

ss)/

earn

ing

s p

er

share

(cents

)

Fro

m c

ontin

uin

g o

pera

tions

9 0

34 6

09

2 1

84 5

94

123 4

91

(10 9

77 7

76)

Fro

m d

iscon

tinued

op

era

tions

–

–

–

–

Basic

(lo

ss)/

earn

ing

s for

the p

eriod

9 0

34 6

09

2 1

84 5

94

123 4

91

(10 9

77 7

76)

Earn

ing

s p

er

sh

are

Dilu

ted

basic

(lo

ss)/

earn

ing

s p

er

share

(cents

)

Fro

m c

ontin

uin

g o

pera

tions

9 0

34 6

09

2 1

84 5

94

123 4

91

(10 9

77 7

76)

Fro

m d

iscon

tinued

op

era

tions

–

–

–

–

Dilu

ted

basic

(lo

ss)/

earn

ing

s for

the p

erio

d 9

034 6

09

2 1

84 5

94

123 4

91

(10 9

77 7

76)

Head

line (

loss)/

earn

ing

s p

er

share

(cents

)

Fro

m c

ontin

uin

g o

pera

tions

9 0

34 6

09

2 1

84 0

48

25 3

31

(11 6

59 5

07)

Fro

m d

iscon

tinued

op

era

tions

–

–

–

–

Head

line (

loss)/

pro

fit fo

r th

e p

eriod

9 0

34 6

09

2 1

84 0

48

25 3

31

(11 6

59 5

07)

Dilu

ted

head

line (

loss)/

earn

ing

s p

er

share

(cents

)

Fro

m c

ontin

uin

g o

pera

tions

9 0

34 6

09

2 1

84 0

48

25 3

31

(11 6

59 5

07)

Fro

m d

iscon

tinued

op

era

tions

–

–

–

–

Head

line (

loss)/

pro

fit fo

r th

e p

eriod

9 0

34 6

09

2 1

84 0

48

25 3

31

(11 6

59 5

07)

Net asset valu

e p

er

share

(cents

) 8

5 1

92 5

52

87 3

77 1

46

80 5

00 6

37

69 5

22 8

61

Net ta

ng

ible

asset valu

e p

er

share

(cents

) 8

5 1

92 5

52

87 3

77 1

46

80 5

00 6

37

69 5

22 8

61

Net asset valu

e 8

5 1

93

87 3

77

80 5

01

69 5

23

Inta

ng

ible

assets

–

–

–

–

Good

will

–

–

–

–

56

Tell

um

at

30/9

/2011

R’0

00

Tell

um

at

30/9

/2012

R’0

00

Tell

um

at

30/9

/2013

R’0

00

Tell

um

at

30/9

/2014

R’0

00

(Loss)/

incom

e a

ttrib

uta

ble

to:

Eq

uity h

old

ers

of th

e p

are

nt

57 6

78

(6 7

14)

(5 5

04)

4 1

26

Non-c

ontr

olli

ng

inte

rests

–

–

–

–

(Loss)/

Pro

fit

for

the p

eriod

fro

m c

ontinuin

g o

pera

tions a

ttrib

uta

ble

to:

Eq

uity h

old

ers

of th

e p

are

nt

(25 9

54)

(6 7

14)

(5 5

04)

383

Non-c

ontr

olli

ng

inte

rests

–

–

–

–

(Loss)/

Pro

fit

for

the p

eriod

fro

m d

iscontin

ued

op

era

tions a

ttrib

uta

ble

to:

Eq

uity h

old

ers

of th

e p

are

nt

83 6

32

–

–

3 7

43

Non-c

ontr

olli

ng

inte

rests

–

–

–

–

Tota

l com

pre

hensiv

e (

loss)/

incom

e for

the p

eriod

attrib

uta

ble

to:

Eq

uity h

old

ers

of th

e p

are

nt

57 9

22

(4 4

07)

908

9 9

68

Non-c

ontr

olli

ng

inte

rests

–

–

–

–

Earn

ing

s p

er

sh

are

Basic

(lo

ss)/

earn

ing

s p

er

share

(cents

)

Fro

m c

ontin

uin

g o

pera

tions

(21 1

63)

(5 4

75)

(4 4

88)

312

Fro

m d

iscon

tinued

op

era

tions

68 1

94

–

–

3 0

52

Basic

(lo

ss)/

earn

ing

s for

the p

eriod

47 0

31

(5 4

75)

(4 4

88)

3 3

64

Earn

ing

s p

er

sh

are

Dilu

ted

bas

ic (

loss)/

earn

ing

s p

er

sh

are

(cen

ts)

Fro

m c

ontin

uin

g o

pera

tions

(21 1

63)

(5 4

75)

(4 4

88)

312

Fro

m d

iscon

tinued

op

era

tions

68 1

94

–

–

3 0

52

Dilu

ted

basic

(lo

ss)/

earn

ing

s for

the p

erio

d 4

7 0

31

(5 4

75)

(4 4

88)

3 3

64

Head

lin

e (

loss)/

earn

ing

s p

er

sh

are

(ce

nts

)

Fro

m c

ontin

uin

g o

pera

tions

(20 7

57)

(5 6

03)

(4 4

90)

108

Fro

m d

iscon

tinued

op

era

tions

(7 0

33)

–

–

(9 7

23)

Head

line (

loss)/

pro

fit fo

r th

e p

eriod

(27 7

90)

(5 6

03)

(4 4

90)

(9 6

15)

Dilu

ted

hea

dlin

e (

loss)/

earn

ing

s p

er

sh

are

(cen

ts)

Fro

m c

ontin

uin

g o

pera

tions

(20 7

57)

(5 6

03)

(4 4

90)

108

Fro

m d

iscon

tinued

op

era

tions

(7 0

33)

–

–

(9 7

23)

Head

line (

loss)/

pro

fit fo

r th

e p

eriod

(27 7

90)

(5 6

03)

(4 4

90)

(9 6

15)

Weig

hte

d a

vera

ge n

um

ber

of share

s 1

22 6

39

122 6

39

122 6

39

122 6

39

Fully

dilu

ted

weig

hte

d a

vera

ge n

um

ber

of share

s 1

22 6

39

122 6

39

122 6

39

122 6

39

Tota

l num

ber

of share

s in issue

122 6

39

122 6

39

122 6

39

122 6

39

57

Tell

um

at

30/9

/2011

R’0

00

Tell

um

at

30/9

/2012

R’0

00

Tell

um

at

30/9

/2013

R’0

00

Tell

um

at

30/9

/2014

R’0

00

Reconcili

ation b

etw

een (

loss)/

earn

ing

s a

nd

head

line (

loss)/

earn

ing

s

Co

nti

nu

ing

op

era

tio

ns

Basic

pro

fit/

(loss)

attrib

uta

ble

to e

quity h

old

ers

of p

are

nt

(25 9

54)

(6 7

14)

(5 5

04)

383

(Pro

fit)

/Loss o

n d

isp

osal of assets

498

(158)

(2)

(251)

Head

line loss

(25 4

56)

(6 8

72)

(5 5

06)

132

Dis

co

nti

nu

ed

op

era

tio

ns

Basic

pro

fit/

(loss)

attrib

uta

ble

to e

quity h

old

ers

of p

are

nt

83 6

32

–

–

3 7

43

(Pro

fit)

/Loss o

n d

isp

osal of assets

(Pro

fit)

/Loss o

n d

isp

osal of associa

tes

(Pro

fit)

/Loss o

n d

isp

osal of sub

sid

iaries

(92 2

57)

(15 6

67)

Loss r

ecog

nis

ed

on the r

em

easure

ment of asset d

isp

osal g

roup

s to its

fair v

alu

e less c

ost to

sell

Head

line loss

(8 6

25)

–

–

(11 9

24)

Net asset valu

e p

er

share

(cents

) 1

88 6

92

185 0

99

185 8

39

195 8

24

Net ta

ng

ible

asset valu

e p

er

share

(cents

) 1

73 9

68

171 8

38

174 0

43

185 9

40

Net asset valu

e 2

31 4

10

227 0

03

227 9

11

240 1

57

Inta

ng

ible

assets

17 5

07

15 7

12

13 9

17

12 1

22

Good

will

550

550

550

–

58

31.3 The reports of the historical financial information referred in this paragraph 31 are the responsibility of the directors of the respective companies, and are prepared in accordance with the Listings Requirements, IFRS and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council.

32. REVERSE TAKEOVER

32.1 The Sector Transfer will be the result of a fundamental change in the business of ConvergeNet, as described in paragraph 3.1 of this Circular. Accordingly, in terms of section 9.5(c) of the Listings Requirements, the Company will be regarded as having undertaken a reverse takeover.

32.2 The JSE has approved the listing of 183 112 166 shares, in addition to the Company’s existing listing, on the Main Board of the JSE, subject to obtaining shareholder approval of the Tellumat Acquisition, MRI Acquisition, Digicore Acquisition, Goliath Gold Acquisition and Private Placement.

SIGNED AT ROSEBANK ON BEHALF OF THE BOARD ON 10 DECEMBER 2014 IN TERMS OF POWERS OF ATTORNEY GRANTED BY THE DIRECTORS.

By order of the Board

CONVERGENET HOLDINGS LIMITED

PJ van ZylFinancial Director and Interim Chief Executive Officer

59

ANNEXURE 1.1

EXTRACTS OF THE HISTORICAL FINANCIAL INFORMATION OF CONVERGENET FOR

THE YEARS ENDED 31 AUGUST 2013, 31 AUGUST 2012 AND 31 AUGUST 2011

BASIS OF PREPARATION

The consolidated statements of financial position, statements of comprehensive income, statements of changes in equity and cash flow statements of ConvergeNet for the years ended 31 August 2013, 31 August 2012 and 31 August 2011 have been extracted and compiled from the audited consolidated annual financial statements of ConvergeNet. The preparation of this Annexure 1.1 is the responsibility of the directors of ConvergeNet.

The annual financial statements of ConvergeNet w ere audited by PricewaterhouseCoopers Inc for the year ended 31 August 2013 and by Advoca Auditing Inc for the years ended 31 August 2012 and 31 August 2011, and were reported on without qualification for the aforementioned financial periods.

1. STATEMENT OF FINANCIAL POSITION AT 31 AUGUST

2013 R’000

Restated 2012

R’000

Restated 2011

R’000

ASSETS

Non-current assets

Property, plant and equipment 4 342 49 281 30 669Goodwill 34 822 171 199 184 816Intangible assets 2 910 13 100 19 222Investments in subsidiaries – – –Investments in associates – 6 001 36 155Loans to subsidiaries, associates, and other related parties – – –Other financial assets – 500 42 385Deferred taxation 9 777 26 326 26 002

51 851 266 407 339 249

Current assets

Inventories 56 688 100 172 85 981Loans to subsidiaries, associates and other related parties – 2 273 332Other financial assets 2 331 7 336 6 168Current tax receivable 883 1 394 3 410Trade and other receivables 62 644 253 351 252 566Cash and cash equivalents 14 689 66 998 66 961

137 235 431 524 415 418

Non-current assets held for sale 262 058 43 499 –

401 293 475 023 415 418

Total assets 453 144 741 430 754 667

EQUITY AND LIABILITIES

Total equity

Shareholders’ equity 219 113 424 145 481 541Non-controlling interest (8 605) 59 043 63 945

210 508 483 188 545 486

60

2013 R’000

Restated 2012

R’000

Restated 2011

R’000

LIABILITIES

Non-current liabilities

Interest-bearing loans and other financial liabilities – 16 730 21 124

Finance lease obligation – 6 975 1 039

Operating lease liability 1 251 1 806 1 738

Deferred taxation 106 5 309 6 165

1 357 30 820 30 066

Current liabilities

Loans from subsidiaries, associates and other related parties – – –

Interest-bearing loans and other

financial liabilities 29 241 9 638 1 652

Current tax payable 490 6 119 4 794

Finance lease obligation 126 6 968 841

Provisions 1 046 976 976

Deferred income – 1 351 908

Trade and other payables 56 062 192 723 169 504

Bank overdraft 15 066 502 440

Liabilities of disposal group held 102 031 218 277 179 115

for sale 139 248 9 145 –

241 279 227 422 179 115

Total liabilities 242 636 258 242 209 181

TOTAL EQUITY AND LIABILITIES 453 144 741 430 754 667

61

2. STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 AUGUST

2013 R’000

Restated 2012

R’0002011

R’000

Continuing operations

Revenue 283 007 251 657 1 029 363

Cost of sales (218 650) (191 525) (782 987)

Gross profit 64 358 60 133 246 376

Other income 12 495 19 747 1 749

Operating expenses (158 200) (128 974) –

Impairment of goodwill and other financial assets (58 667) (30 151) –

Fair value adjustments 5 646 (2 808) –

Other operating expenses (105 179) (96 015) –

Operating loss (81 347) (49 095) 27 320

Investment income 520 1 077 4 293

Share of profits of associates – 2 366 9 360

Impairment of goodwill and other financial assets – – (77)

Finance costs (815) (913) (2 284)

(Loss)/Profit before taxation (81 642) (46 565) 38 612

Taxation (5 980) (3 834) (7 720)

(Loss)/Profit for the year from continuing operations (87 623) (50 399) 30 892

Discontinued operations

Net (loss)/profit for the year from discontinued operations (138 644) 140 –

Loss for the year (226 267) (50 259) –

Other comprehensive income:

Exchange gains/(loss) on translation of foreign operations* 388 (388) –

Gains on revaluation of land and buildings 99 – –

Other comprehensive loss for the year net of tax 487 (388) –

Total comprehensive(loss)/income for the year (225 780) (50 647) 30 892

(Loss)/Profit for the year attributable to:

Equity holders of the parent (209 204) (45 547) 23 557

Non-controlling interests (17 063) (4 712) 7 335

(226 267) (50 259) 30 892

Loss for the year from continuing operations attributable to:

Equity holders of the parent (83 974) (49 539) –

Non-controlling interests (3 649) (860) –

(87 623) (50 399) –

Loss for the year from discontinued operations attributable to:

Equity holders of the parent (125 230) 3 992 –

Non-controlling interests (13 414) (3 852) –

(138 644) 140 –

* Recyclable.

62

2013 R’000

Restated 2012

R’0002011

R’000

Total comprehensive (loss)/income for the year attributable to:

Equity holders of the parent (208 949) (45 745) 23 557

Non-controlling interests (16 831) (4 902) 7 335

(225 780) (50 647) 30 892

Earnings per share

Basic and diluted loss per share (cents)

From continuing operations (9.44) (5.57)

From discontinued operations (14.08) 0.45

Basic loss for the year (23.51) (5.12) 2.66

The impact of the potential conversion of FSP shares to ordinary shares is anti-dilutive. As a result, the basic and diluted loss per share is equal and headline and diluted headline loss per share is equal.

Headline and diluted headline loss per share (cents)

From continued operations (3.01) (5.66)

From discontinued operations (5.93) 0.45

Headline loss for the year (8.94) (5.21) 2.65

63

3.

STA

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OF

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EQ

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R E

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31 A

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Sh

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Sh

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sh

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sh

are

-

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tal

att

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to

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ho

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rests

of

the p

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nt

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eq

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R’0

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00

R’0

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R’0

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Bala

nce a

t 1 S

ep

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2011

–435 5

32

(21 2

56)

7 3

80

–137

120 2

43

(59 7

98)

482 2

38

64 1

56

546 3

94

Prior

year

err

or

(refe

r to

note

38)

––

––

––

(697)

–(6

97)

(211)

(908)

Bala

nce a

t 1 S

ep

tem

ber

2011 a

s

resta

ted

–435 5

32

(21 2

56)

7 3

80

–137

119 5

46

(59 7

98)

481 5

41

63 9

45

545 4

86

Prior

year

err

or

––

––

––

(1 8

07)

–(1

807)

(2 1

10)

(3 9

17)

Loss for

the y

ear

(43 7

40)

(43 7

40)

(2 6

02)

(46 3

42)

Exchang

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/(lo

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on tra

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of fo

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––

––

(200)

––

(200)

(188)

(388)

Eq

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d s

hare

based

paym

ents

––

–2 1

80

––

––

2 1

80

–2 1

80

Share

s v

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d in term

s o

f

forf

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hare

pla

n–

–8 2

60

(8 2

60)

––

––

––

Issue o

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easury

share

s in term

s o

f

forf

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hare

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n–

1 4

19

––

––

––

1 4

19

–1 4

19

Share

s issued

in term

s o

f

forf

eitab

le s

hare

pla

n n

ot yet

veste

d–

–(1

350)

––

––

–(1

350)

–(1

350)

Share

s forf

eited

in term

s o

f

forf

eitab

le s

hare

pla

n–

–(1

44)

––

––

–(1

44)

–(1

44)

Div

idend

s p

aid

––

––

––

(13 5

16)

–(1

3 5

16)

–(1

3 5

16)

Transactions w

ith n

on-c

ontr

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share

hold

ers

––

––

––

–(2

38)

(238)

(2)

(240)

Bala

nce a

t 31 A

ug

ust

2012

–436 9

51

(14 4

90)

1 3

00

(20

0)

137

60 4

83

(60 0

36)

424 2

09

59 0

43

483 1

88

Loss for

the y

ear

––

––

––

(209 2

04)

–(2

09 2

04)

(17 0

63)

(226 2

67)

Exchang

e g

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/(lo

ss)

on tra

nsla

tion

of fo

reig

n o

pera

tions

––

––

200

––

–200

188

388

Revalu

ation

––

––

–55

––

55

44

99

Convers

ion o

f p

ar

valu

e s

hare

s to

no p

ar

valu

e s

hare

s436 9

51

(436 9

51)

––

––

––

––

–

Share

s issued

in term

s o

f

transaction w

ith n

on-c

ontr

olli

ng

share

hold

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15 8

88

––

––

––

–15 8

88

–15 8

88

Eq

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d s

hare

based

p

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––

–476

––

––

476

–476

64

Sh

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Sh

are

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an

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00

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Share

s v

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d in term

s o

f

forf

eitab

le s

hare

pla

n–

–876

(876)

––

––

––

–

Issue o

f tr

easury

share

s in term

s o

f

forf

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le s

hare

pla

n–

––

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––

––

––

Ow

n s

hare

s a

cq

uired

by

sub

sid

iaries, held

as tre

asury

share

s–

–(2

1 2

11)

––

––

–(2

1 2

11)

–(2

1 2

11)

Ow

n s

hare

s a

cq

uired

by

sub

sid

iaries, held

as tre

asury

share

s r

e-issued

––

29 5

21

––

–(6

382)

–23 1

39

–23 1

39

Transactions w

ith n

on-c

ontr

olli

ng

share

hold

ers

––

––

––

–(1

4 3

75)

(14 3

75)

(50 8

17)

(65 1

92)

Bala

nce a

t 31 A

ug

ust

2013

452 8

39

–(5

304)

90

0–

192

(155 1

03)

(74 4

11)

219 1

78

(8 6

05)

210 5

08

65

4. STATEMENT OF CASH FLOWS FOR THE YEARS ENDED 31 AUGUST

2013 R’000

Restated 2012

R’0002011

R’000

Operating activities

Cash generated from/(utilised in) operations (42 423) 1 405 25 277

Investment income 520 793 3 148

Finance costs (233) (834) (2 186)

Tax paid (840) 1 857 (13 704)

From discontinued operations 2 418 (9 769) –

Net cash (utilised in)/from operating activities (40 558) (6 548) 12 535

Investing activities

Additions to property and equipment (854) (2 379) (14 011)

Proceeds on disposal of property and equipment 57 32 583

Acquisition of subsidiaries and associates – – (2 268)

Proceeds on disposal of other financial assets 236 14 441 13 699

Own shares bought by subsidiaries – – (500)

Proceeds on disposal of associates – 936 1 820

Proceeds on disposal of investment 18 789 11 812 –

Other loans advanced – (3 651) (332)

Transaction with non-controlling shareholders – – –

By discontinued operations (19 207) (16 978) –

Net cash (utilised in)/from investing activities (979) 4 213 (1 009)

Financing activities

Proceeds from loans 12 572 18 –

Repayment of loans – (326) –

Transaction with non-controlling shareholders (21 920) (240) (968)

Repayment of vendor claims – – (4 161)

Repayment of interest-bearing loans and other financial liabilities – 117 (2 221)

Finance leases (142) (128) (344)

Proceeds on share issue 7 015 – –

Dividends paid – (11 506) –

By discontinued operations (8 758) 14 766 –

Net cash (utilised in)/from financing activities (11 233) 2 701 (7 694)

Net increase/(decrease) in cash and cash equivalents 52 770 366 3 832

Cash at the beginning of the year 66 496 66 521 62 689

Exchange losses – (391) –

Cash balances transferred to held-for-sale (14 103) – –

Total cash at end of the year (377) 66 496 66 521

66

Accounting policy: Goodwill

The Group accounts for business combinations using the acquisition method of accounting. The cost of the business combination is measured as the aggregate of the fair values of assets given, liabilities incurred or assumed and equity instruments issued. Costs directly attributable to the business combination are expensed as incurred, except the costs to issue debt which are amortised as part of the effective interest and costs to issue equity which are recognised in equity.

Contingent consideration is included in the cost of the combination at fair value as at the date of acquisition. Subsequent changes to the fair value of assets, liabilities or equity which are given as contingent consideration does not affect the consideration transferred, unless they are valid measurement period adjustments.

The acquiree’s identifiable assets, liabilities and contingent liabilities which meet the recognition conditions of IFRS 3 Business Combinations are recognised at fair value at acquisition date.

Contingent liabilities are only included in the identifiable assets and liabilities of the acquiree where there is a present obligation at acquisition date and are measured at fair value.

On acquisition, the Group assesses the classification of the acquiree’s assets and liabilities and reclassifies them where the classification is inappropriate for Group purposes. This excludes lease agreements and insurance contracts, whose classification remains as per their inception date.

Non-controlling interest arising from a business combination is measured either at their share of the fair value of the net assets acquired or at its fair value. The treatment of non-controlling interest is not an accounting policy choice but is selected for each individual business combination. In cases where the Group held a non-controlling shareholding in the acquiree prior to obtaining control, that interest is re-measured to fair value at acquisition date. Any gain or loss on the re-measurement is recognised in profit or loss.

Goodwill arises on the acquisition of subsidiaries and associates and is determined as the difference between the consideration paid, plus the fair value of any shareholding held prior to obtaining control, plus non- controlling interest and less the fair value of the identifiable assets and liabilities of the acquiree.

Negative goodwill is recognised immediately in profit or loss.

Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash- generating units, or Groups of cash-generating units, that are expected to benefit from the synergies of the combination.

Each significant cash-generating unit or Groups of cash-generating units to which goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes.

Goodwill is not amortised but is tested on an annual basis for impairment. If goodwill is assessed to be impaired the impairment loss is recognised immediately in profit or loss and cannot subsequently be reversed.

Bargain purchase is determined when the fair value of the identifiable assets and liabilities of the acquiree exceeds the consideration paid, plus the fair value of any shareholding held prior the obtaining control, plus non-controlling assets. The resulting gain is recognised in profit or loss on the acquisition date.

The information included in this Annexure 1.1 have been extracted from the Company’s audited financial results as previously released on SENS and which, together with the accounting policies of ConvergeNet and the notes to the financial statements set out above can be accessed on ConvergeNet’s website at http:// convergenet.com/investor-relations/historical-financial-information and is also available for inspection at the registered office of the Company and its Independent Sponsor by shareholders and/or prospective investors at no charge, during normal office hours from Monday, 15 December 2014 until Friday, 16 January 2015.

67

ANNEXURE 1.2

REVIEWED CONDENSED CONSOLIDATED SECOND INTERIM FINANCIAL

INFORMATION OF CONVERGENET FOR THE 12 MONTHS ENDED 31 AUGUST 2014

INTRODUCTION

These reviewed consolidated second interim results of the Group are presented for the twelve months ended 31 August 2014 in accordance with section 3.15 (b) of the JSE Listings Requirements (“Listings Requirements”). As a result of the change in year-end from 31 August to 30 November, the Group is required, in terms of the aforementioned provision of the Listings Requirements, to publish the financial results of the Group for a second interim period covering twelve months of trading.

Shareholders are advised that the corporate actions announced by the Group on or about 8 September 2014 and 27 October 2014 (the “Announcements”) have not been incorporated into the results presented herein as those corporate actions are subject to shareholder approval and have not yet become unconditional.

The Announcements detailed, inter alia, the Group’s plans to sell its remaining two operating companies, Structured Connectivity Solutions (Pty) Ltd (“SCS”) and Andrews Kit (Pty) Ltd (“Contract Kitting”) and as a result of this firm intention to dispose of those entities, the cash generating units of SCS and Contract Kitting have been classified as disposal groups held for sale in terms of IFRS 5 “Non-current assets held for sale and discontinued operations”. In terms of the requirements of IFRS 5, the Group has presented the assets and liabilities of the disposal groups separately on the face of the statement of financial position and have accounted for these disposal groups by measuring the assets and liabilities of SCS and Contract Kitting at the lower of their carrying values and the fair value of those assets less cost to sell. In addition to the statement of financial position disclosures, the sum of the post-tax profit or loss of the discontinued operations, SCS and Contract Kitting for the 12 months ended 31 August 2014 and year ended 31 August 2013 (restated) is presented as a single amount on the face of the statement of comprehensive income.

Shareholders are advised to read these results with the Announcements.

68

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE 12 MONTHS ENDED 31 AUGUST 2014

Reviewed 12 months

ended 31 August

2014 R’000

Audited restated

year ended

31 August 2013

R’000


Revenue 755 19 896

Cost of sales (490) (18 264)

Gross profit 265 1 632

Other income 10 685 12 407

Operating expenses (12 042) (40 308)

Impairment of goodwill and other financial assets (304) (3 333)

Fair value adjustments (347) 6 672

Other operating expenses (11 391) (43 647)

Operating loss (1 092) (26 269)

Finance income 5 696 147

Finance costs (2 360) (528)

Profit/(Loss) before taxation 2 244 (26 650)

Taxation 66 (4 116)

Profit/(Loss) for the period from continuing operations 2 310 (30 766)


Net loss for the period from discontinued operations (89 084) (195 501)

Other comprehensive income:

Exchange gain on translation of foreign operations (recyclable) – 388

Gains on revaluation of land and buildings – 99

Other comprehensive income for the period net of taxation – 487

Total comprehensive loss for the period (86 774) (225 780)

(Loss)/Income attributable to:

Equity holders of the parent (92 014) (209 204)

Non-controlling interests 5 240 (17 063)

(Loss)/Profit for the period from continuing operations attributable to:



Loss for the period from discontinued operations attributable to:


Non-controlling interests – (13 414)

Total comprehensive (loss)/income for the period attributable to:



Earnings per share

Basic and diluted (loss)/earnings per share (cents)


From discontinued operations (89.35) (20.47)

Basic loss for the period (92.29) (23.51)

Headline and diluted headline (loss)/earnings per share (cents)


From discontinued operations (16.23) (6.10)

Headline loss for the period (19.17) (8.94)

Weighted average number of shares 99 701 849 889 726 462

Fully diluted weighted average number of shares 99 701 849 889 726 462

69

Reviewed 12 months

ended 31 August

2014 R’000

Audited restated

year

ended 31 August

2013 R’000

Total number of shares in issue 100 946 502 970 935 125

Reconciliation between (loss)/earnings and headline (loss)/earnings


Basic loss attributable to equity holders of parent (2 930) (82 451)

(Profit)/Loss on disposal of assets – 117

(Profit)/Loss on disposal of subsidiaries – 2 550

Tax effect of adjustments – (826)

Headline loss (2 930) (25 276)


Basic loss attributable to equity holders of parent (89 084) (182 087)

(Profit)/Loss on disposal of assets (947) 600

(Profit)/Loss on disposal of associates – 3 255

(Profit)/Loss on disposal of subsidiaries 70 286 (15 020)

Loss recognised on the remeasurement of asset disposal groups to its fair value less cost to sell – 786

Impairment of goodwill 3 561 127 494

Tax effect of adjustments – (1 348)

Portion of adjustments attributable to non-controlling interests – 12 037

Headline loss (16 184) (54 283)

Net asset value per share (cents) 193.81 22.57

Net tangible asset value per share (cents) 193.81 18.68

70

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST 2014

Reviewed as at

31 August 2014

R’000

Audited as at

31 August 2013

R’000

ASSETS

Non-current assets

Property, plant and equipment – 4 342

Goodwill – 34 822

Intangible assets – 2 910

Other financial assets 10 000 –

Deferred taxation 1 665 9 777

Current assets

Inventories 50 58 688

Other financial assets 69 648 2 331

Current tax receivable – 883

Trade and other receivables 2 334 62 644

Cash and cash equivalents 7 019 14 689

Non-current assets held for sale 158 943 262 058

Total assets 249 659 453 144


Total equity

Shareholders’ equity 195 646 219 113

Non-controlling interest (14 221) (8 605)


Other financial liabilities 238 –

Operating lease liability – 1 251

Deferred taxation – 106

Current liabilities

Other financial liabilities 7 000 29 241

Current tax payable 490 490

Finance lease obligation – 126

Provisions – 1 046

Trade and other payables 1 681 56 062

Bank overdraft – 15 066

Non-current liabilities held for sale 58 825 139 248

Total liabilities 68 234 242 636

Total equity and liabilities 249 659 453 144

71

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 12 MONTHS ENDED 31 AUGUST 2014

Reviewed as at

31 August 2014

R’000

Audited as at

31 August 2013

R’000

Balance at the beginning of the period as reported 210 508 483 188

Total comprehensive loss for the period (86 774) (226 267)

Exchange gain/(loss) on translation of foreign operation – 388

Revaluation – 99

Shares issued in terms of transactions with non-controlling shareholders – 15 888

Equity settled share based payments 3 420 476

Shares vested in terms of forfeitable share plan 1 350 –

Own shares acquired by subsidiaries, held as treasury shares (79) (21 211)

Own shares acquired by subsidiaries, held as treasury shares re-issued – 23 139

Transactions with non-controlling shareholders 53 000 (65 192)

Balance at the end of the period 181 425 210 508

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE 12 MONTHS ENDED 31 AUGUST 2014

Reviewed 12 months

ended 31 August

2014R’000

Audited year

ended 31 August

2013R’000

Net cash flow from operating activities 4 394 (40 558)

Net cash flow from investing activities (20 834) (979)

Net cash flow from financing activities 26 634 (11 233)

Total cash movement for the period 10 194 (52 770)

Cash at the beginning of the period (377) 66 496

Cash balances transferred to held for sale (2 798) (14 103)

Total cash at the end of the period 7 019 (377)

Notes to the financial statements

1. REPORTING ENTITY

ConvergeNet Holdings Limited is a company domiciled in the Republic of South Africa. The condensed consolidated second interim financial statements of the Group as at and for the year ended 31 August 2014 comprise the company and its subsidiaries (together referred to as the “Group”).

The Group currently consists of the company and its subsidiary companies:

– ConvergeNet Management Services (Pty) Ltd

– Structured Connectivity Solutions (Pty) Ltd (Disposal group held for sale)

– Chrystalpine Investments 9 (Pty) Ltd (holding company of Andrews Kit Proprietary Limited) (Disposal group held for sale)

– Andrews Kit (Pty) Ltd (Disposal group held for sale)

– ConvergeNet SA (Pty) Ltd (dormant since 30 June 2014)

– Navix Distribution (Pty) Ltd (dormant)

– Northbound Communication Solutions (Pty) Ltd (dormant)

– Simat Management Company (Pty) Ltd (dormant)

72

The consolidated financial statements of the Group as at and for the year ended 31 August 2013 are available on request from the Group’s registered office at Level P3, Oxford Corner, corner Jellicoe and Oxford Roads, Rosebank, Johannesburg, or at www.convergenet.com.

2. STATEMENT OF COMPLIANCE

These condensed consolidated second interim financial statements have been prepared in accordance with IAS 34, International Financial Reporting Standards, Interim Financial Reporting and the Financial Reporting Guides issued by the Accounting Practices Board of SAICA as well as section 29 of the Companies Act (No 71 of 2008). They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 August 2013.

These condensed consolidated second interim financial statements were approved by the Board of Directors on 3 December 2014.

3. ACCOUNTING POLICIES

All accounting policies applied by the Group in these condensed consolidated second interim financial statements are the same as those applied by the Group in the consolidated financial statements as at and for the year ended 31 August 2013.

4. FINANCIAL PREPARATION

These results have been prepared under the supervision of Peter van Zyl, the Group Chief Financial Officer.

5. COMPARATIVE FIGURES

Unless otherwise indicated, comparative figures refer to the year ended 31 August 2013.

6. USE OF ESTIMATES AND JUDGEMENTS

The preparation of these second interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing these condensed consolidated second interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 August 2013.

7. OTHER FINANCIAL ASSETS

Non-current other financial assets materially comprise:

– R10 000 000 investment in a loan arranged by AfrAsia Special Opportunities Fund (Pty) Ltd which accrues interest at 2% per month (serviced monthly) and which is repayable on or before 30 September 2015.

Current other financial assets materially comprise:

– R50 000 000 outstanding from Zaloserve (Pty) Ltd, the purchase of Sizwe Africa IT Group (Pty) Ltd, on the terms detailed in note 13 of the audited consolidated annual financial statement of the Group for the year ended 31 August 2013; and

– R15 116 787 investment in a loan arranged by AfrAsia Special Opportunities Fund (Pty) Ltd which accrues interest at 2% per month (serviced monthly) and which is repayable on or before, 20 August 2015.

8. OTHER FINANCIAL LIABILITIES

Other financial liabilities comprise the second tranche of the consideration, amounting to R7 million, for the acquisition of 26% in Contract Kitting, recognised at amortised cost and payable on 31 August 2013. The amount was subsequently settled on 1 September 2014.

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9. ASSETS AND LIABILITIES OF DISPOSAL GROUP HELD FOR SALE AND DISCONTINUED OPERATIONS

R’000

At 31 August

2014

At 31 August

2013

Assets of disposal group classified as held for sale

Property, plant and equipment 4 076 27 114

Goodwill and intangible assets 32 233 523

Other financial assets 641 28 447

Inventories 63 779 32 451

Trade and other receivables 50 368 164 211

Other assets 7 876 9 312

Financial assets as fair value through profit or loss – –

Investment in subsidiaries – –

158 943 262 058

Liabilities of disposal group classified held for sale

Interest-bearing loans and other financial liabilities 309 7 653

Finance lease obligation – 16 477

Trade and other payables 58 517 109 126

Other liabilities - 5 992

Financial liabilities at fair value through profit or loss – –

58 825 139 248

Profit/Loss from discontinued operations for the 12 months ended 31 August 2014

Sizwe Africa IT

Group

Telesto Communi-

cation Solutions

Structured Connectivity

Solutions

Chrystalpine Investments

9 Group (including

Contract Kitting) Total

R’000 2014 2014 2014 2014 2014

Revenue – – 35 864 210 939 246 803

Other income and investment revenue – – 133 1 677 1 810

Expenses – – (37 622) (226 122) (263 744)

Profit before taxation of discontinued operations – – (1 625) (13 507) (15 131)

Taxation – – (6 703) 2 528 (4 175)

(Loss)/Profit after tax of discontinued operations – – (8 327) (10 979) (19 306)

Post-tax (loss)/gain recognised on the sale of disposal groups (52 539) (18 839) 5 161 (66 217)

Post-tax loss recognised on the re-measurement of assets of disposal group (3 561) (3 561)

(Loss)/Profit for the year from discontinued operations (52 539) (18 839) (8 327) (9 379) (89 084)

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Profit/Loss from discontinued operations for the year ended 31 August 2013

R’000

Sizwe Africa IT Group

(Pty) Ltd

2013

SimatGroup

2013

TelestoCommu-nication

Solutions(Pty) Ltd

2013 2013 2013

Revenue 613 178 14 565 16 352 15 452 659 547

Other income, investment revenue and share of profits of associates 11 858 2 316 (593) 556 14 137

Expenses (673 827) (52 171) (16 857) (21 086) (763 941)

Profit before taxation of discontinued operations (48 791) (35 290) (1 097) (5 078) (90 257)

Taxation 2 849 (3 348) (165) (9) (673)

(Loss)/Profit after tax of discontinued operations (45 942) (38 638) (1 262) (5 088) (90 930)

Post-tax (loss)/gain recognised on the sale of disposal groups – 24 563 – (4 131) 20 432

Post-tax loss recognised on the re-measurement of assets of disposal group (50 959) – (17 187) – (68 146)

(Loss)/Profit for the year from discontinued operations (96 901) (14 075) (18 449) (9 219) (138 644)

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10. OPERATING SEGMENTS

As the Group have no continuing operations at 31 August 2014, pending completion of the corporate actions noted in the Announcements, no segmental reporting has been presented for the current reporting period as the key operating decision maker, Peter van Zyl, manages the continuing operations of the Group as a single segment. The Group does not manage the discontinuing operations, Structured Connectivity Solutions (Pty) Ltd and the Chrystalpine Investments 9 (Pty) Ltd group (incorporating Andrews Kit (Pty) Ltd), as segments during the interim period between the date of the release of the Announcements and the effective date of the corporate actions contained therein, as such segments are managed by Tellumat Proprietary Limited.

Segmental comparative information is presented based in respect of the Group’s organisational structure and reporting framework for the year ended 31 August 2013 as follows:

R’000

ITInfra-

structure Technology

solutions

Tele-com

Infra-structure

Tech-nology

sol-utions

Africa Site Main-

tenance Solutions Corporate

Consoli-dation

and other Total

Period ending 31 August 2013From continuing operations

Total revenue 42 457 257 328 1 068 20 293 – 321 146

Inter-segment sales (3 703) (12 626) – (20 293) (1 517) (38 139)

Reported revenue 38 754 244 702 1 068 – (1 517) 283 007

Segmental resultCore operating loss for the year (8 866) 12 392 (6 863) (30 264) 10 920 (22 681)

Impairment of goodwill and loans and receivables (58 667)

Investment income 520

Share of profits of associates –

Finance costs (815)

Taxation (5 980)

Net loss for the year after taxation (87 623)

11. OTHER INCOME

Other income materially comprises:

The write-back of a liabilities previously owed by Simat Management Group SA (Pty) Ltd, in the amount of R10 576 000, a wholly-owned subsidiary of the Group, to companies no longer forming part of the Group, which are no longer due and payable in terms of the sale agreements upon the disposal of the companies.

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12. INVESTMENT INCOME

Investment income materially comprise:

– R4 995 158 interest income earned on the vendor loan provided to the Purchaser of Sizwe Africa IT Group (Pty) Ltd on the terms detailed in note 13 to the audited consolidated financial statement of the Group for the year ended 31 August 2013.

13. FINANCE COST

Finance costs materially comprise:

– R542 297 interest in respect of the second tranche payable of the consideration, amounting to R7 million (refer note 8 ), for the acquisition of 26% in Contract Kitting, recognised at amortised cost; and

– R1 813 248 interest in respect of a bridge loan from Bell Tower Financial (Pty) Ltd amounting to R20 600 000 which accrued interest at a rate of prime plus 2% from 1 September 2013 to 20 November 2013 and prime plus 10% from 21 November 2013 to 19 March 2014 when the capital and accrued interest in the amount of R22 561 398 was settled.

14. FINANCIAL RISK MANAGEMENT

The Group’s financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 August 2013.

15. CHANGE IN BOARD OF DIRECTORS

Mr. DF Bisschoff resigned as Chief Financial Officer on 31 October 2013 and was subsequently appointed as interim Chief Financial Officer and CEO on a contract basis. This interim agreement terminated on 31 December 2013. Mr. P van Zyl was appointed as a director on 21 November 2013 and replaced Mr. Bisschoff as Chief Financial Officer from 1 January 2014. Janine de Bruyn was appointed as independent non-executive on 25 July 2014. On 8 September 2014, Christina Wiese and Clare Wiese were appointed as independent non-executive directors.

16. CORPORATE GOVERNANCE

Mr. Warwick van Breda was appointed as company secretary to ConvergeNet and its subsidiaries with effect from 1 December 2013, prior to which date the role was fulfilled by Juba Statutory Services Proprietary Limited.

17. CORPORATE ACTIVITIES AND SHARE CAPITAL

The Group issued 38 529 866 shares at 9 cents per share during November 2013 under the general authority to issue shares for cash. The shares were issued to settle operating expenses of the Group.

The Group completed the repurchase of 34 447 shares at 12 cents per share on 9 December 2013 under the Specific and Odd-lot Offers announced previously. The consolidation of the shares in issue on a 10- for-1 basis was completed on 23 December 2013 (“Share Consolidation”).

On 11 December 2013, the sale of Sizwe Africa IT Group Proprietary Limited (“Sizwe”) became unconditional. Payment of R40 million was effected during the reporting period in accordance with the provisions of the sale agreement. Other financial assets disclosed in the Statement of Financial Position include the remaining R70 million receivable from the Sizwe purchaser as at 31 August 2014. In the event that the outstanding purchase consideration in respect of Sizwe is settled prior to 31 December 2014, the acquirer will be eligible for a R20 million reduction in the face value of the R110 million receivable as an early settlement discount. Management have assessed the likelihood of early repayment and have concluded that the Purchaser will access all discounts available in terms of the sale agreements. This represents a conservative approach as the company has recognised the minimum payment due in terms of the sale agreement.

The sale of Telesto Communication Solutions Proprietary Limited (“Telesto”) became unconditional on 29 October 2013 and payment of R6 million was effected by the acquirer in accordance with the

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agreement terms described in the integrated annual reported issued on 31 March 2014 as well as a further payment of R1.25 million on 30 May 2014 in full and final settlement of the outstanding purchase consideration.

The current portion of other financial assets includes R0.3 million receivable from the purchasers of X-DSL as at 31 August 2014 of which R0.2 million has been received subsequent to the reporting date.

18. FORFEITABLE SHARE PLAN

During the period under review, 4 420 000 shares (pre-consolidation) vested at 10 cents per share under the Group’s forfeitable share plan. An expense of R0.4 million was recognised in profit and loss from discontinued operations. A further 145 000 shares (post consolidation on a 10-for-1 basis) vested on 31 August 2014 in respect of SCS at 165 cents per share and a further R0.24 million expense was recognised.

19. DIVIDEND

No dividend has been proposed for the period under review.

20. EVENTS AFTER THE REPORTING PERIOD

The directors are not aware of any subsequent events, not already disclosed above and in the Announcements that require further disclosure in this announcement.

21. REVIEW CONCLUSION

The consolidated second interim financial statements of ConvergeNet Holdings Limited for the twelve months ended 31 August 2014 have been reviewed by the Group’s auditors, Grant Thornton Cape Inc. (“Grant Thornton”). In its review report dated 3 December 2014, which is available for inspection at the Group’s Registered Office, Grant Thornton states that its review was conducted in accordance with the International Standard on Review Engagements 2410, “Review of the Interim Information Performed by the Independent Auditor of the Entity”, and has expressed an unmodified conclusion on the consolidated second interim financial statements.

The auditor’s report does not necessarily report on all of the information contained in this announcement/these financial results. Shareholders are therefore advised that, in order to obtain a full understanding of the nature of the auditor’s engagement, they should obtain a copy of the auditor’s report together with the accompanying financial information from the issuer’s registered office.

22. CHANGE OF NAME FROM CONVERGENET HOLDINGS LIMITED TO STELLAR CAPITAL PARTNERS LIMITED

Shareholders are advised that the Company’s proposed name change to “CQ Capital Partners Limited” was reconsidered by the board. In light of this, the company has reserved the name “Stellar Capital Partners Limited” with CIPC in accordance with section 12 of the Companies Act, 72 of 2008.

23. GROUP OUTLOOK

Shareholders are referred to the Announcements for further information regarding the Group outlook. Furthermore, the Group is currently finalising a detailed circular to shareholders (“Circular”) which will provide an overview of ConvergeNet’s intention to convert to an investment holding company and transfer from the “information and communication technology” sub-sector of the JSE to the “investment companies” sub-sector of the JSE. Shareholders are advised to consult the Circular, which is expected to be posted to shareholders on or about 15 December 2014, in order to consider the pro forma financial effects of each of the corporate actions contained in the Announcements.

For and on behalf of the board

D Tabata PJ van Zyl

Chairman Chief Financial Officer

3 December 2014

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ANNEXURE 2.1

INDEPENDENT EXPERT’S OPINION ON THE CONTRACT KITTING DISPOSAL

“The Independent BoardConvergeNet Holdings LimitedLevel P3Oxford CornerCorner Jellicoe and Oxford RoadsRosebankJohannesburg, 2196

11 December 2014

Dear Sirs

REPORT OF THE INDEPENDENT PROFESSIONAL EXPERT REGARDING THE PROPOSED DISPOSAL, BY CONVERGENET HOLDINGS LIMITED OF ANDREWS KIT PROPRIETARY LIMITED, TRADING AS CONTRACT KITTING AND STRUCTURED CONNECTIVITY SOLUTIONS PROPRIETARY LIMITED

INTRODUCTION

In the announcement by ConvergeNet Holdings Limited (“ConvergeNet”) published on the Stock Exchange News Service of the JSE Limited (“JSE”) (“SENS”) on 8 September 2014 and in the press on 9 September 2014, ConvergeNet shareholders were advised that on 5 September 2014 ConvergeNet concluded the terms of the sale of:

• 100% of ConvergeNet’s interest in Andrews Kit Proprietary Limited, trading as Contract Kitting (“Contract Kitting”) (a wholly owned subsidiary of Chrystalpine Investments 9 Proprietary Limited (“Chrystalpine”), a wholly owned subsidiary of ConvergeNet), for a consideration of R95.119 million (the “Contract Kitting Sale Consideration”) to Tellumat Proprietary Limited (“Tellumat”) (the “Contract Kitting Disposal”); and

• 100% of ConvergeNet’s interest in Structured Connectivity Solution Proprietary Limited (“SCS”), a wholly-owned subsidiary of ConvergeNet, for a consideration of R5 million (the “SCS Sale Consideration”) to Tellumat (the “SCS Disposal”).

• The Contract Kitting Sale Consideration and the SCS Sale Consideration, together are referred to as the “Sale Consideration” and the Contract Kitting Disposal and SCS Disposal as the “Disposals”. The Disposals will be concluded as one indivisible transaction.

The Sale Consideration will be settled by way of the issue of ordinary shares in Tellumat such that, subsequent to the Disposals, ConvergeNet will hold 30% of the total issued ordinary shares of Tellumat (“Tellumat Consideration Shares”).

Full details of the Disposals are contained in the circular to ConvergeNet shareholders (the “Circular”), to be dated on or about 15 December 2014, which will include a copy of this letter.

The pro forma financial effects of the Disposals are set out in section 21 and Annexure 7 of the Circular.

Copies of sections 115 and 164 of the Companies Act are set out in Annexure 14 of the Circular.

The material interest of the directors of ConvergeNet (“Directors” or “Board”) are set out in section 15 of the Circular.

The effects of the Disposals, details in the Circular, will also apply to the Directors.

FAIR AND REASONABLE OPINION REQUIRED IN TERMS OF THE COMPANIES ACT

The Disposals represent an affected transaction as defined in section 117(1)(c)(i) of the Companies Act which is subject to the provisions of the Companies Act Regulations, 2011 promulgated under the Companies Act (“the Companies Regulations”). In terms of Regulation 90(1)(a) (as read with section 114(2) and section 114(3) of the Companies Act), the Board is required to obtain appropriate external advice as to how the Disposals affect all holders of securities in ConvergeNet and whether the proposed terms and conditions of the Disposals are fair and reasonable insofar as the shareholders of ConvergeNet are concerned (“the Fair and Reasonable Opinion”).

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BDO Corporate Finance Proprietary Limited (“BDO”) has been appointed as the independent expert by the independent board constituted to assess the Disposals (the “Independent Board”) required in terms of section 114 of the Companies Act, in respect of the Disposals.

RESPONSIBILITY

Compliance with the Companies Act is the responsibility of the Directors. Our responsibility is to report to on the fairness and reasonableness of the terms of the Disposals.

EXPLANATION AS TO HOW THE TERMS “FAIR” AND “REASONABLE” APPLY IN THE CONTEXT OF THE PROPOSED TRANSACTION

The “fairness” of a transaction is based on quantitative issues. A transaction may be said to be fair if the benefits, as a result of the transaction, are equal to or greater than the value ceded.

The Disposals would be considered fair to the shareholders of ConvergeNet if the fair value of the Tellumat Consideration Shares is equal to or greater than the value of Contract Kitting and SCS.

An assessment of the reasonableness of a transaction is based primarily on factors other than quantitative issues.

DETAILS AND SOURCES OF INFORMATION

In arriving at our opinion we have relied upon the following principal sources of information:

• the binding term sheet with respect to the Disposals (the “Term Sheet”);

• the terms and conditions of the Disposals;

• an understanding of the structure of the Disposals;

• audited financial statements of Contract Kitting and SCS for the years ended 31 August 2012, 2011 and 2013;

• audited financial statements of Tellumat for the years ended 30 September 2011, 2012 and 2013;

• reviewed interim financial information of Contract Kitting and SCS for the six months ended 28 February 2014;

• management accounts of Contract Kitting and SCS for the year ended 31 August 2014;

• management accounts of Tellumat for the year ending 30 September 2014;

• forecast financial information of Contract Kitting for the years ending 31 August 2015 – 2019;

• budget of Tellumat for the year ending 30 September 2015 and management’s forecast growth rates in respect of revenue, costs of sales and operating expenses for the years ending 30 September 2016 – 2019;

• discussions with ConvergeNet directors and management regarding the rationale for the Disposals;

• discussions with ConvergeNet directors and management regarding the historical and forecast financial information of Contract Kitting and SCS;

• discussions with Tellumat directors and management regarding the historical and forecast financial information of Tellumat;

• discussions with ConvergeNet and Tellumat directors and management on prevailing market, economic, legal and other conditions which may affect underlying value;

• publicly available information relating to the industries in which ConvergeNet, SCS, Contract Kitting and Tellumat operate that we deemed to be relevant, including Company announcements and media articles.

The information above was secured from:

• Directors and management of ConvergeNet and their advisors; and

• Third party sources, including information related to publicly available economic, market and other data which we considered applicable to, or potentially influencing ConvergeNet or Tellumat.

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PROCEDURES

In arriving at our opinion we have undertaken the following procedures and taken into account the following factors in evaluating the fairness and reasonableness of the Disposals:

• reviewed the terms and conditions of the Disposals;

• reviewed the audited and unaudited financial information related to Contract Kitting, SCS and Tellumat, as detailed above;

• reviewed and obtained an understanding from management as to the budget and forecast financial information of Contract Kitting and Tellumat and assessed the achievability thereof by considering historic information as well as macro-economic and sector-specific data;

• held discussions with directors of ConvergeNet and Tellumat and considered such other matters as we consider necessary, including assessing the prevailing economic and market conditions and trends;

• compiled forecast cash flows for each of Contract Kitting and Tellumat by using the forecast financial information as detailed above. Applied BDO Corporate Finance’s assumptions of cost of capital to the forecast cash flows to produce a discounted cash flow valuations of Contract Kitting and Tellumat;

• performed a net assets valuation of SCS;

• performed a sensitivity analysis on key assumptions included in the discounted cash flow valuations, specifically related to cost of capital and growth in the businesses;

• assessed the long-term potential of Contract Kitting, SCS and Tellumat;

• evaluated the relative risks associated with Contract Kitting, SCS and Tellumat and the industries in which the companies operate;

• reviewed certain publicly available information relating to Contract Kitting, SCS and Tellumat and the Computer Services sector that we deemed to be relevant, including company announcements and media articles;

• where relevant, representations made by management and/or directors were corroborated to source documents or independent analytical procedures were performed by us, to examine and understand the industry in which Contract Kitting, SCS and Tellumat operate, and to analyse external factors that could influence the businesses of Contract Kitting, SCS and Tellumat; and

• held discussions with the directors and management of ConvergeNet as to their strategy and the rationale for the Disposals and considered such other matters as we considered necessary, including assessing the prevailing economic and market conditions and trends in the Information and Communications Technology (“ICT”) and Electronics sectors.

OTHER CONSIDERATIONS

In arriving at our opinion, we have considered, in addition to the procedures referred to above, other key qualitative factors, which may be difficult to quantify or are unquantifiable, as set out below:

• rationale for the Disposals, as set out in the Circular.

ASSUMPTIONS

We arrived at our opinion based on the following assumptions:

• that all agreements that are to be entered into in terms of the Disposals will be legally enforceable;

• that the Disposals will have the legal, accounting and taxation consequences described in discussions with, and materials furnished to us by representatives and advisors of ConvergeNet; and

• that reliance can be placed on the audited and unaudited financial information of Contract Kitting, SCS and Tellumat.

APPROPRIATENESS AND REASONABLENESS OF UNDERLYING INFORMATION AND ASSUMPTIONS

We satisfied ourselves as to the appropriateness and reasonableness of the information and assumptions employed in arriving at our opinion by:

• reliance on audit reports in the financial statements of Contract Kitting, SCS and Tellumat;

• conducting analytical reviews on the historical financial results and forecast financial information, such as key ratio and trend analyses; and

81

• determining the extent to which representations from management were confirmed by documentary evidence as well as our understanding of each of Contract Kitting, SCS and Tellumat and the economic environment in which they operate.

LIMITING CONDITIONS

This opinion is provided in connection with and for the purposes of the Disposals. The opinion does not purport to cater for each individual shareholder’s perspective, but rather that of the general body of ConvergeNet shareholders.

Individual shareholders’ decisions regarding the Disposals may be influenced by such shareholders’ particular circumstances and accordingly individual shareholders should consult an independent advisor if in any doubt as to the merits or otherwise of the Disposals.

We have relied upon and assumed the accuracy of the information provided to us in deriving our opinion. Where practical, we have corroborated the reasonableness of the information provided to us for the purpose of our opinion, whether in writing or obtained in discussion with management, by reference to publicly available or independently obtained information. While our work has involved an analysis of, inter alia, the annual financial statements, and other information provided to us, our engagement does not constitute an audit conducted in accordance with generally accepted auditing standards.

Where relevant, forward-looking information of Contract Kitting, SCS and Tellumat relates to future events and is based on assumptions that may or may not remain valid for the whole of the forecast period. Consequently, such information cannot be relied upon to the same extent as that derived from audited financial statements for completed accounting periods. We express no opinion as to how closely the actual future results of Contract Kitting, SCS and Tellumat will correspond to those projected. We have however compared the forecast financial information to past trends as well as discussing the assumptions inherent therein with management.

We have also assumed that the Disposals will have the legal consequences described in discussions with, and materials furnished to us by representatives and advisors of ConvergeNet and we express no opinion on such consequences.

Our opinion is based on current economic, regulatory and market as well as other conditions. Subsequent developments may affect the opinion, and we are under no obligation to update, review or re-affirm our opinion based on such developments.

INDEPENDENCE, COMPETENCE AND FEES

We confirm that we have no direct or indirect interest in ConvergeNet’s shares or the Disposals. We also confirm that we have the necessary qualifications and competence to provide the fair and reasonable opinion

on the Disposals.

Furthermore, we confirm that our professional fees of R160 000 (excluding VAT) are payable in cash and are not contingent upon the success of the Disposals.

VALUATION APPROACH

In considering the fairness of the Disposals BDO Corporate Finance performed an independent valuation of each of Contract Kitting, SCS and Tellumat.

The discounted cash flow methodology was employed as the primary valuation methodology in respect of Contract Kitting and Tellumat.

SCS has incurred operating losses which are funded via shareholder loans from ConvergeNet. Without shareholder support, the going concern assumption would no longer be applicable to SCS, without a material restructuring. As the Company is not considered sustainable in its current form, we applied the net asset valuation (“NAV”) approach, which provides an indicative value for the Company’s equity on a liquidation basis. This is the value of residual amounts available to equity holders after realising the company’s assets and settling its liabilities.

The valuations were performed taking cognisance of risk and other market and industry factors affecting each business and the industries within which they operate. Additionally, sensitivity analyses were performed considering key value drivers.

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Key internal value drivers to the discounted cash flow valuations included expected future growth in the businesses, the discount rate, working capital and capital expenditure requirements as well as respective operating margins.

External value drivers, including;, interest rates, headline inflation rates and prevailing market and industry conditions in respect of the sector were also considered in assessing the forecast cash flows and risk profile of each business.

VALUATION RESULTS

Based on the results of our procedures performed, our detailed valuation work and other considerations, we determined:

• a valuation range for Contract Kitting of R87.6 million to R95.1 million, with a most likely value of R91.2 million;

• a valuation range for SCS of R5.0 million;

• a valuation range for Tellumat of R201.1 million to R229.0 million, with a most likely value of R218.9 million;

Based on the above valuation ranges, the consideration for Contract Kitting and SCS would be 28.8% to 32.3% of Tellumat (including Contract Kitting and SCS). The Tellumat Consideration Shares falls within the suggested range calculated in terms of our valuations.

The valuation above is provided solely in respect of this Fair and Reasonable Opinion and should not be used for any other purposes.

OPINION

BDO Corporate Finance has considered the terms and conditions of the Disposals and, based on and subject to the conditions set out herein, is of the opinion that the terms and conditions of the Disposals, based on quantitative considerations, are fair to the ConvergeNet shareholders.

Based on qualitative factors, we are of the opinion that the terms and conditions of the Disposals are reasonable from the perspective of the ConvergeNet shareholders.

Our opinion is necessarily based upon the information available to us up to 5 December 2014, including in respect of the financial information as well as other conditions and circumstances existing and disclosed to us. We have assumed that all conditions precedent, including any material regulatory and other approvals or consents required in connection with the Disposals have been fulfilled or obtained.

Accordingly, it should be understood that subsequent developments may affect this opinion, which we are under no obligation to update, revise or re-affirm.

CONSENT

We consent to the inclusion of this letter and the reference to our opinion in the Circular to be issued to the shareholders of ConvergeNet in the form and context in which it appears.

Yours faithfully

N LazanakisDirector

BDO Corporate Finance Proprietary Limited22 Wellington RoadParktown2193”

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ANNEXURE 2.2

INDEPENDENT EXPERT’S OPINION ON THE ACQUISITION BY CONVERGENET OF AN

INTEREST IN MRI FROM ASOF

“The DirectorsConvergeNet Holdings LimitedLevel P3Oxford CornerCorner Jellicoe and Oxford RoadsRosebankJohannesburg, 2196

11 December 2014

Dear Sirs

REPORT OF THE INDEPENDENT PROFESSIONAL EXPERT TO CONVERGENET HOLDINGS LIMITED REGARDING THE ACQUISITION OF A 29.78% INTEREST IN MINE RESTORATION INVESTMENTS LIMITED FROM AFRASIA SPECIAL OPPORTUNITIES FUND

INTRODUCTION

In the announcement by ConvergeNet Holdings Limited (“ConvergeNet” or “the Company”) published on the Stock Exchange News Service of the JSE Limited (“JSE”) (“SENS”) on 8 September 2014 and in the press on 9 September 2014, ConvergeNet shareholders were advised that ConvergeNet concluded the terms of the purchase of an additional 30.32% of Mine Restoration Investments Limited (“MRI”) (the “MRI Acquisition”).

In terms of the MRI Acquisition, ConvergeNet will purchase, inter alia, a 29.78% interest in MRI from AfrAsia Special Opportunities Fund (“ASOF”) (the “ASOF MRI Shares”) for R24 822 664 (the “ASOF MRI Consideration”) (the “ASOF MRI Acquisition”). The ASOF MRI Consideration will be settled by way of the issue of 12 411 332 new ordinary shares in ConvergeNet (the “ASOF MRI Consideration Shares”) at R2.00 per share.

Full details of the MRI Acquisition are contained in the circular to ConvergeNet shareholders (the “Circular”), to be dated on or about 15 December 2014, which will include a copy of this letter.

FAIRNESS OPINION REQUIRED IN TERMS OF THE JSE LISTINGS REQUIREMENTS

ASOF is a related party to ConvergeNet in terms of section 10 of the JSE Listings Requirements.

The ASOF MRI Acquisition is a related party transaction in terms of section 10 of the JSE Listings Requirements and the board of directors of ConvergeNet (the “Board” or the “Directors”) is required to provide the JSE with written confirmation from an independent professional expert confirming that the terms of the ASOF MRI Acquisition are fair insofar as the shareholders of ConvergeNet are concerned (“the Fairness Opinion”).

BDO Corporate Finance has been appointed by the Board to provide an independent fairness opinion to the shareholders of ConvergeNet with regard to the ASOF MRI Acquisition.

RESPONSIBILITY

Compliance with the JSE Listings Requirements is the responsibility of the Directors. Our responsibility is to report to the Directors and shareholders of ConvergeNet on the fairness of the terms of the ASOF MRI Acquisition.

EXPLANATION AS TO HOW THE TERM “FAIR” APPLIES IN THE CONTEXT OF THE TRANSACTION

Schedule 5.7 of the JSE Listings Requirements states that the “fairness” of a transaction is based on quantitative issues. In the case of the acquisition of an asset from a related party, a transaction may be said to be fair if the value of the consideration paid is less than or equal to the value of the asset that is the subject of the transaction.

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The ASOF MRI Acquisition would therefore be considered fair to the shareholders of ConvergeNet if the ASOF MRI Consideration, being the value of the ASOF MRI Consideration Shares, is less than or equal to the value of the ASOF MRI Shares acquired, or unfair if the ASOF MRI Consideration is greater than the value of the ASOF MRI Shares acquired.



• the terms and conditions of the ASOF MRI Acquisition;

• an understanding of the structure of the ASOF MRI Acquisition;

• restated annual financial statements of MRI for the 14 months ended 28 February 2013 and audited financial statements of MRI for the year ended 28 February 2014;

• unaudited interim results of MRI for the six months ended 31 August 2014;

• monthly forecast financial information in respect of the Coal Briquetting Project up to 30 November 2027, being the first three phases of the Coal Briquetting Project, which comprises forecast financial information of MRI as well as its subsidiaries, namely WUC and Octavovox;

• audited financial statements of ConvergeNet for the years ended 31 August 2012 and 2013;

• reviewed condensed consolidated second interim results of ConvergeNet for the year ended 31 August 2014;

• statement of financial position of ConvergeNet as at 30 November 2014;

• management accounts of ConvergeNet for the year ended 31 August 2014 and the three months ended 30 November 2014;

• audited financial statements of Andrews Kit Proprietary Limited, trading as Contract Kitting (“Contract Kitting”) (a wholly owned subsidiary of Chrystalpine Investments 9 Proprietary Limited (“Chrystalpine”), a wholly owned subsidiary of ConvergeNet) and Structured Connectivity Solution Proprietary Limited (“SCS”), a wholly-owned subsidiary of ConvergeNet, for the years ended 31 August 2012, 2011 and 2013;



• budgeted financial information of Contract Kitting for the year ending 31 August 2015 and forecast financial information of Contract Kitting for the years ending 31 August 2016 to 2019;

• forecast financial information of ConvergeNet for the years ending 31 August 2015 – 2017;

• discussions with ConvergeNet directors and management regarding the strategic rationale for the ASOF MRI Acquisition;

• discussions with MRI and ConvergeNet directors and management regarding the historic and forecast financial information detailed above;

• discussions with MRI and ConvergeNet directors and management on prevailing market, economic, legal and other conditions which may affect underlying value; and

• publicly available information relating to MRI, Contract Kitting and SCS and the markets in which they operate.


• directors and management of MRI and ConvergeNet and their advisors; and

• third party sources, including information related to publicly available economic, market and other data which we considered applicable to, or potentially influencing MRI, ConvergeNet, Contract Kitting and SCS.

PROCEDURES

In arriving at our opinion we have undertaken the following procedures and taken into account the following factors in evaluating the fairness of the ASOF MRI Acquisition:

• reviewed the terms and conditions of the ASOF MRI Acquisition;

• reviewed the audited and unaudited financial information related to MRI, ConvergeNet, Contract Kitting and SCS as detailed above;

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• reviewed and obtained an understanding from management as to the budget and forecast financial information of MRI, ConvergeNet, Contract Kitting and SCS and assessed the achievability thereof by considering historic information as well as macro-economic and sector-specific data;

• held discussions with directors of MRI and ConvergeNet and considered such other matters as we consider necessary, including assessing the prevailing economic and market conditions and trends;

• compiled a discounted cash flow (“DCF”) valuation for the Coal Briquetting Project by using the forecast financial information as detailed above and by applying BDO Corporate Finance’s assumptions in respect of cost of capital to the forecast cash flows to produce a discounted cash flow valuations of the Coal Briquetting Project which incorporates the MRI’s corporate office, WUC and Octavovox;

• adjusted for MRI’s attributable interest in the Coal Briquetting Project and financial assets and financial liabilities to determine an equity valuation of MRI;

• performed a sensitivity analysis on key assumptions included in the DCF valuation of the Coal Briquetting Project, specifically related to cost of capital, revenue and operating costs;

• compiled forecast cash flows for Contract Kitting and ConvergeNet’s corporate office by using the forecast financial information as detailed above. Applied BDO Corporate Finance’s assumptions of cost of capital to the forecast cash flows to produce DCF valuations of Contract Kitting and ConvergeNet’s corporate office;


• aggregated the valuations of Contract Kitting, SCS and ConvergeNet’s corporate office as well as adjusting for financial assets and financial liabilities to determine a sum-of-the-parts (“SOTP”) valuation of ConvergeNet;

• performed a sensitivity analysis on key assumptions included in the DCF valuation of Contract Kitting, specifically related to cost of capital and growth in the business;

• assessed the long-term potential of MRI, Contract Kitting and SCS;

• evaluated the relative risks associated with MRI, Contract Kitting and SCS and the industries in which they operate;

• reviewed certain publicly available information relating to MRI, Contract Kitting and SCS and the industries in which they operate that we deemed to be relevant, including company announcements and media articles;

• where relevant, representations made by management and/or directors were corroborated to source documents or independent analytical procedures were performed by us, to examine and understand the industries in which MRI, Contract Kitting and SCS operate, and to analyse external factors that could influence them; and

• held discussions with the directors and management of ConvergeNet as to their strategy and the rationale for the ASOF MRI Acquisition and considered such other matters as we considered necessary, including assessing the prevailing economic and market conditions and trends.

ASSUMPTIONS


• that all agreements that are to be entered into in terms of the ASOF MRI Acquisition will be legally enforceable;

• that the ASOF MRI Acquisition will have the legal, accounting and taxation consequences described in discussions with, and materials furnished to us by representatives and advisors of ConvergeNet; and

• that reliance can be placed on the financial information of MRI, ConvergeNet, Contract Kitting and SCS.



• Determining the extent to which representations from management were confirmed by documentary evidence as well as our understanding of MRI, ConvergeNet, Contract Kitting and SCS and the economic environment in which they operate.

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LIMITING CONDITIONS

This opinion is provided to the Directors and shareholders of ConvergeNet in connection with and for the purposes of the ASOF MRI Acquisition. The opinion does not purport to cater for each individual shareholder’s perspective, but rather that of the general body of ConvergeNet shareholders.

Individual shareholders’ decisions regarding the ASOF MRI Acquisition may be influenced by such shareholders’ particular circumstances and accordingly individual shareholders should consult an independent advisor if in any doubt as to the merits or otherwise of the ASOF MRI Acquisition.

We have relied upon and assumed the accuracy of the information provided to us in deriving our opinion. Where practical, we have corroborated the reasonableness of the information provided to us for the purpose of our opinion, whether in writing or obtained in discussion with management, by reference to publicly available or independently obtained information. While our work has involved an analysis of, inter alia, production and financial information, and other information provided to us, our engagement does not constitute an audit conducted in accordance with generally accepted auditing standards.

Where relevant, forward-looking information of MRI, ConvergeNet, Contract Kitting and SCS relates to future events and is based on assumptions that may or may not remain valid for the whole of the forecast period. Consequently, such information cannot be relied upon to the same extent as that derived from audited financial statements for completed accounting periods. We express no opinion as to how closely the actual future results of MRI, ConvergeNet, Contract Kitting and SCS will correspond to those projected. We have however compared the forecast financial information to past trends as well as discussing the assumptions inherent therein with management.

We have also assumed that the ASOF MRI Acquisition will have the legal consequences described in discussions with, and materials furnished to us by representatives and advisors of ConvergeNet and we express no opinion on such consequences.


INDEPENDENCE

We confirm that we have no direct or indirect interest in MRI or ConvergeNet shares or in the ASOF MRI Acquisition. We also confirm that we have the necessary qualifications and competence to provide the fair and reasonable opinion on the ASOF MRI Acquisition.

Furthermore, we confirm that our professional fees, payable in cash, are not contingent upon the success of the ASOF MRI Acquisition.

VALUATION APPROACH

BDO Corporate Finance performed a valuation of both MRI and ConvergeNet to determine whether the ASOF MRI Acquisition represents fair value to the ConvergeNet shareholders.

Valuation of MRI

The valuation of MRI has been based upon an aggregation of the sum of the parts of:

• the value of MRI’s attributable interest in the Coal Briquetting Project which comprises forecast financial information of MRI as well as its subsidiaries, namely WUC and Octavovox; and

• net debt and cash of MRI as at 31 August 2014.

The Income Approach was the valuation methodology employed in respect of the Coal Briquetting Project. The Income Approach is based on net present value (“NPV”) that is derived using a DCF technique applied to the post-tax pre-finance cash flows. The valuation was performed taking cognisance of risk and other market and industry factors affecting MRI.

Key internal value drivers and assumptions to the discounted cash flow valuation included the weighted average cost of capital applied in the DCF valuation, total production capacity, expected capacity utilisation, production grade and operating costs per ton.

The key external value drivers to the DCF include forecast price per ton for the grades of briquettes. The prevailing market and industry conditions in the sector in which MRI operates were also considered in

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assessing the forecast cash flows and risk profile of MRI. The future cashflows of MRI are highly dependent on production volume, quality of briquettes produced and the price per ton for varying grades of briquettes.

The base case assumptions used for the DCF valuation are as follows:

• installed production capacity – 10 000 tons per month;

• capacity utilisation – steady state of 80% on a phased basis in July 2018;

• realisable price per ton for the varying grades of briquettes produced based on the quality of fines – R220 – R460/ton; and

• operating costs per ton – R262 per ton once steady state production is achieved.

A base case weighted average cost of capital (“WACC”) of 21.0% was utilised in the valuation of MRI.

In addition sensitivity analyses were performed in respect of revenue, operating expenses and the weighted average cost of capital by:

• increasing and decreasing the WACC range by a maximum of 1%;

• increasing and decreasing the capacity utilisation by a factor of 5%;

• increasing and decreasing realisable price per ton by a factor of 5%; and

• increasing and decreasing operating costs per ton by a factor of 5%.

The sensitivity analysis did not indicate a sufficient effect on the valuation of MRI to alter our opinion in respect of the fairness of the ASOF MRI Acquisition. Net debt and cash was added to the value of MRI’s attributable interest in the Coal Briquetting Project to determine the equity value of MRI, after confirming that such carrying values are in terms of International Financial Reporting Standards (“IFRS”) approximated fair market value.

Valuation of ConvergeNet

The valuation of ConvergeNet has been based upon an aggregation of the sum of the parts of:

• the value of Contract Kitting;

• the value of SCS;

• the value of ConvergeNet’s corporate office; and

• net debt and cash of ConvergeNet as at 30 November 2014.

Contract Kitting is an engineering company with expertise in the telecoms industry. The discounted cash flow methodology was employed as the primary valuation methodology in respect of Contract Kitting.

SCS has incurred operating losses which are funded via shareholder loans from ConvergeNet. Without shareholder support, the going concern assumption would no longer be applicable to SCS, without a material restructuring. As the Company is not considered sustainable in its current form, we applied the net asset

valuation (“NAV”) approach, which provides an indicative value for the Company’s equity on a liquidation basis. This is the value of residual amounts available to equity holders after realising the company’s assets and settling its liabilities.

The discounted cash flow methodology was employed as the primary valuation methodology in respect of the ConvergeNet corporate office. Corporate office expenses were grown by 6% per annum over the forecast period.

The valuations of Contract Kitting, SCS and ConvergeNet’s corporate office were performed taking cognisance of risk and other market and industry factors affecting each business and the industry within which they operate. Additionally, sensitivity analyses were performed considering key value drivers.

Key internal value drivers to the DCF valuation of Contract Kitting included expected future growth in the business, gross margins, operating profit margins, the discount rate and working capital requirements.

Key external value drivers, including interest rates, headline inflation rates and prevailing market and industry conditions in respect of the telecommunications sector were also considered in assessing the forecast cash flows and risk profile of Contract Kitting. Contract Kitting highly dependent on the demand for the products and services provided by Contract Kitting which is driven primarily by infrastructure spend on mobile communications networks.

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The base case assumptions used for the DCF valuation of Contract Kitting are as follows:

• Revenue growth – 16%

• Sustainable gross profit margin – 30%

• Sustainable operating profit margin – 10%

• Sustainable net working capital as % of revenue – 29%

(Note: Compound annual growth rate in forecast revenue after the budget year)

A base case weighted average cost of capital (“WACC”) of 18.6% was utilised in the valuation of Contract Kitting.

In addition sensitivity analyses were performed in respect of revenue growth and the weighted average cost of capital by increasing and decreasing the revenue growth rates by a maximum of 2% and the WACC range by a maximum of 1%. The revenue growth rate and WACC sensitivity analysis did not indicate a sufficient effect on the valuation of ConvergeNet to alter our opinion in respect of the fairness of the ASOF MRI Acquisition.

Net debt and cash was added to the value of ConvergeNet’s interest in Contrcat Kitting and SCS and the value of ConvergeNet’s corporate office to determine the equity value of ConvergeNet, after confirming that such carrying values are in terms of International Financial Reporting Standards (“IFRS”) approximated fair market value.

OPINION

BDO Corporate Finance has considered the terms and conditions of the ASOF MRI Acquisition and, based on and subject to the conditions set out herein, is of the opinion that the terms and conditions of the ASOF MRI Acquisition, based on quantitative considerations, are fair to the ConvergeNet shareholders.

Our opinion is necessarily based upon the information available to us up to 8 December 2014, including in respect of the financial information as well as other conditions and circumstances existing and disclosed to us. We have assumed that all conditions precedent, including any material regulatory and other approvals or consents required in connection with the ASOF MRI Acquisition have been fulfilled or obtained.


Yours faithfully

Nick LazanakisDirector


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ANNEXURE 2.3

INDEPENDENT EXPERT’S OPINION ON THE ACQUISITION BY CONVERGENET OF AN

INTEREST IN GOLIATH GOLD FROM ASOF

“The DirectorsConvergeNet Holdings LimitedLevel P3Oxford CornerCorner Jellicoe and Oxford RoadsRosebankJohannesburg, 2196

11 December 2014

Dear Sirs

REPORT OF THE INDEPENDENT PROFESSIONAL EXPERT TO CONVERGENET HOLDINGS LIMITED REGARDING ACQUISITION OF A 4.99% INTEREST IN GOLIATH GOLD MINING LIMITED FROM AFRASIA SPECIAL OPPORTUNITIES FUND

INTRODUCTION

In the announcement by ConvergeNet Holdings Limited (“ConvergeNet” or “the Company”) published on the Stock Exchange News Service of the JSE Limited (“JSE”) (“SENS”) on 8 September 2014 and in the press on 9 September 2014, ConvergeNet shareholders were advised that ConvergeNet concluded the terms of the purchase of an additional 16.30% of Goliath Gold Mining Limited (“Goliath Gold”) (the “Goliath Gold Acquisition”).

In terms of the Goliath Gold Acquisition, ConvergeNet will purchase, inter alia, a 4.99% interest in Goliath Gold from AfrAsia Special Opportunities Fund (“ASOF”) (the “ASOF Goliath Gold Shares”) for R14 700 000 (the “ASOF Goliath Gold Consideration”) (the “ASOF Goliath Gold Acquisition”). The ASOF Goliath Gold Consideration will be settled by way of the issue of 7 350 000 new ordinary shares in ConvergeNet (the “ASOF Goliath Gold Consideration Shares”) at R2.00 per share.

Full details of the Goliath Gold Acquisition are contained in the circular to ConvergeNet shareholders (the “Circular”), to be dated on or about 15 December 2014, which will include a copy of this letter.

FAIRNESS OPINION REQUIRED IN TERMS OF THE JSE LISTINGS REQUIREMENTS

ASOF is a related party to ConvergeNet in terms of section 10. of the JSE Listings Requirements.

The ASOF Goliath Gold Acquisition is a related party transaction in terms of section 10 of the JSE Listings Requirements and the board of directors of ConvergeNet (the “Board” or the “Directors”) is required to provide the JSE with written confirmation from an independent professional expert that the terms of the ASOF Goliath Gold Acquisition are fair insofar as the shareholders of ConvergeNet are concerned (“the Fairness Opinion”).

BDO Corporate Finance has been appointed by the Board of ConvergeNet to provide an independent fairness opinion to the shareholders of ConvergeNet with regard to the ASOF Goliath Gold Acquisition.

RESPONSIBILITY

Compliance with the JSE Listings Requirements is the responsibility of the Directors. Our responsibility is to report to the Directors and shareholders of ConvergeNet on the fairness of the terms of the ASOF Goliath Gold Acquisition.

EXPLANATION AS TO HOW THE TERM “FAIR” APPLIES IN THE CONTEXT OF THE TRANSACTION

Schedule 5.7 of the JSE Listings Requirements states that the “fairness” of a transaction is based on quantitative issues. In the case of the acquisition of an asset from a related party, a transaction may be said

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to be fair if the value of the consideration paid is less than or equal to the value of the asset that is the subject of the transaction.

The ASOF Goliath Gold Acquisition would therefore be considered fair to the shareholders of ConvergeNet if the ASOF Goliath Gold Consideration, being the value of the ASOF Goliath Gold Consideration Shares, is less than or equal to the value of the ASOF Goliath Gold Shares acquired, or unfair if the ASOF Goliath Gold Consideration is greater than the value of the ASOF Goliath Gold Shares acquired.



• the terms and conditions of the ASOF Goliath Gold Acquisition;

• an understanding of the structure of the ASOF Goliath Gold Acquisition;

• annual financial statements of Goliath Gold for the years ended 31 December 2012 and 2013;

• reviewed condensed consolidated interim financial results of Goliath Gold for the six months ended 30 June 2014;

• statement of financial position of Goliath Gold as at 30 October 2014;

• budgeted head office and administration costs for the years ending 31 December 2014 to 2019;

• resources statement in respect of Goliath Gold’s mineral assets;

• details of historical and projected exploration expenditure in respect of each of Goliath Gold’s projects;

• audited financial statements of ConvergeNet for the years ended 31 August 2012 and 2013;

• reviewed condensed consolidated second interim results of ConvergeNet for the year ended 31 August 2014;

• statement of financial position of ConvergeNet as at 30 November 2014;

• audited financial statements of Andrews Kit Proprietary Limited, trading as Contract Kitting (“Contract Kitting”) (a wholly owned subsidiary of Chrystalpine Investments 9 Proprietary Limited (“Chrystalpine”), a wholly owned subsidiary of ConvergeNet) and Structured Connectivity Solution Proprietary Limited (“SCS”), a wholly-owned subsidiary of ConvergeNet, for the years ended 31 August 201 1, 201 2 and 2013;



• budgeted financial information of Contract Kitting for the year ending 31 August 2015 and forecast financial information of Contract Kitting for the years ending 31 August 2016 to 2019;

• forecast financial information of ConvergeNet for the years ending 31 August 2015 – 2017;

• discussions with ConvergeNet directors and management regarding the strategic rationale for the ASOF Goliath Gold Acquisition;

• discussions with Goliath Gold and ConvergeNet directors and management regarding the historic and forecast financial information detailed above;

• discussions with Goliath Gold and ConvergeNet directors and management on prevailing market, economic, legal and other conditions which may affect underlying value; and

• publicly available information relating to Goliath Gold, ConvergeNet, Contract Kitting and SCS and the markets in which they operate.


• directors and management of Goliath Gold and ConvergeNet and their advisors; and

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• Third party sources, including information related to publicly available economic, market and other data which we considered applicable to, or potentially influencing Goliath Gold, ConvergeNet, Contract Kitting and SCS.

PROCEDURES

In arriving at our opinion we have undertaken the following procedures and taken into account the following factors in evaluating the fairness of the ASOF Goliath Gold Acquisition:

• reviewed the terms and conditions of the ASOF Goliath Gold Acquisition;

• reviewed the audited and unaudited financial information related to Goliath Gold and ConvergeNet, as detailed above;

• reviewed and obtained an understanding from management as to the budget and forecast financial information of ConvergeNet, Contract Kitting and SCS and assessed the achievability thereof by considering historic information as well as macro-economic and sector-specific data;

• held discussions with directors of Goliath Gold and ConvergeNet and considered such other matters as we consider necessary, including assessing the prevailing economic and market conditions and trends;

• performed a valuation of Goliath Gold’s mineral resources by considering recent comparable arm’s length transactions, where available, with relation to financing constraints and capital expenditure cost escalations as well as analyst consensus commodity and currency exchange rate forecasts;

• assessed the long-term potential of Goliath Gold’s various projects;

• performed a valuation of all other exploration assets of Goliath Gold (represented by prospecting rights) on the basis of costs incurred to date;

• determined the net present value (“NPV”) of Goliath Gold’s head office and administration function;

• aggregated the valuations of Goliath Gold’s mineral assets and its head office and administration function, as well as adjusting for financial assets and financial liabilities to determine a sum-of-the-parts (“SOTP”) valuation of Goliath Gold;

• conducted appropriate sensitivity analyses on the declared resources of Goliath Gold;

• compiled forecast cash flows for Contract Kitting and ConvergeNet’s corporate office by using the forecast financial information as detailed above. Applied BDO Corporate Finance’s assumptions of cost of capital to the forecast cash flows to produce DCF valuations of Contract Kitting and ConvergeNet’s corporate office;


• aggregated the valuations of Contract Kitting, SCS and ConvergeNet’s corporate office as well as adjusting for financial assets and financial liabilities to determine a SOTP valuation of ConvergeNet;

• performed a sensitivity analysis on key assumptions included in the DCF valuation of Contract Kitting, specifically related to cost of capital and growth in the business;

• assessed the long-term potential of Goliath Gold, Contract Kitting and SCS;

• evaluated the relative risks associated with Goliath Gold, Contract Kitting and SCS and the industries in which they operate;

• reviewed certain publicly available information relating to Goliath Gold, Contract Kitting and SCS and the industries in which they operate that we deemed to be relevant, including company announcements and media articles;

• where relevant, representations made by management and/or directors were corroborated to source documents or independent analytical procedures were performed by us, to examine and understand the industries in which Goliath Gold, Contract Kitting and SCS operate, and to analyse external factors that could influence them; and

• held discussions with the directors and management of ConvergeNet as to their strategy and the rationale for the ASOF Goliath Gold Acquisition and considered such other matters as we considered necessary, including assessing the prevailing economic and market conditions and trends.

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ASSUMPTIONS


• that all agreements that are to be entered into in terms of the ASOF Goliath Gold Acquisition will be legally enforceable;

• that the ASOF Goliath Gold Acquisition will have the legal, accounting and taxation consequences described in discussions with, and materials furnished to us by representatives and advisors of ConvergeNet; and

• that reliance can be placed on the financial information of Goliath Gold, ConvergeNet, Contract Kitting and SCS.



Determining the extent to which representations from management were confirmed by documentary evidence as well as our understanding of Goliath Gold, ConvergeNet, Contract Kitting and SCS and the economic environment in which they operate.

LIMITING CONDITIONS

This opinion is provided to the Directors and shareholders of ConvergeNet in connection with and for the purposes of the ASOF Goliath Gold Acquisition. The opinion does not purport to cater for each individual shareholder’s perspective, but rather that of the general body of ConvergeNet shareholders.

Individual shareholders’ decisions regarding the ASOF Goliath Gold Acquisition may be influenced by such shareholders’ particular circumstances and accordingly individual shareholders should consult an independent advisor if in any doubt as to the merits or otherwise of the ASOF Goliath Gold Acquisition.

We have relied upon and assumed the accuracy of the information provided to us in deriving our opinion. Where practical, we have corroborated the reasonableness of the information provided to us for the purpose of our opinion, whether in writing or obtained in discussion with management, by reference to publicly available or independently obtained information. While our work has involved an analysis of, inter alia, production and financial information, and other information provided to us, our engagement does not constitute an audit conducted in accordance with generally accepted auditing standards.

Where relevant, forward-looking information of Goliath Gold, ConvergeNet, Contract Kitting and SCS relates to future events and is based on assumptions that may or may not remain valid for the whole of the forecast period. Consequently, such information cannot be relied upon to the same extent as that derived from audited financial statements for completed accounting periods. We express no opinion as to how closely the actual future results of Goliath Gold, ConvergeNet, Contract Kitting and SCS will correspond to those projected. We have however compared the forecast financial information to past trends as well as discussing the assumptions inherent therein with management.

We have also assumed that the ASOF Goliath Gold Acquisition will have the legal consequences described in discussions with, and materials furnished to us by representatives and advisors of ConvergeNet and we express no opinion on such consequences.


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INDEPENDENCE

We confirm that we have no direct or indirect interest in Goliath Gold or ConvergeNet shares or in the ASOF Goliath Gold Acquisition. We also confirm that we have the necessary qualifications and competence to provide the fair and reasonable opinion on the ASOF Goliath Gold Acquisition.

Furthermore, we confirm that our professional fees, payable in cash, are not contingent upon the success of the ASOF Goliath Gold Acquisition.

VALUATION APPROACH

BDO Corporate Finance performed a valuation of both Goliath Gold and ConvergeNet to determine whether the ASOF Goliath Gold Acquisition represents fair value to the ConvergeNet shareholders.

Valuation of Goliath Gold

The valuation of Goliath Gold has been based upon an aggregation of the sum of the parts of:

• its individual projects and mineral assets derived using appropriate methodologies for exploration assets;

• the NPV of Goliath Gold’s head office and administration function; and

• net debt and cash of Goliath Gold as at 30 October 2014.

Goliath Gold’s exploration projects comprise:

• Far East Gold:

The majority of the Company’s exploration projects are located in the East Rand Basin. Goliath Gold holds contiguous prospecting rights over the West Vlakfontein, Vlakfontein, Spaarwater and Wit Nigel areas, which jointly total 32 369 30 hectares, as well as a new order mining right for the Sub Nigel area and a portion of Spaarwater, which includes an additional 3 013.31 hectares;

• Phoenix:

Two additional prospecting rights have been granted over the Cons Modder and Nigel areas, contributing an additional 11 192.45 hectares and 15 964.99 hectares respectively, totalling a consolidated region of approximately 62 540 hectares;

• Elephant:

Project Elephant comprises eight contiguous prospecting rights in the Western Cape in the District of Vredendal for heavy minerals and rare earths, which were granted to the company in August 2012. The rights were granted for a period of two years to allow Goliath Gold to carry out non-invasive prospecting activities; and

• Etendeka:

Goliath Gold applied for an exclusive prospecting licence in December 2012 for the greenfield Etendeka project in Namibia. Application for the prospecting licence was filed with the Namibian Ministry of Mines and Energy on 13 December 2012 and payment of the prescribed fee was made, however, the application remains pending.

The valuation methodology employed in respect of the Far East Gold and Phoenix projects was the Market Approach. The valuation approach and methodology adopted is in compliance with the South African Code for the Reporting of Mineral Asset Valuation.

The Market Approach takes into account comparable transactions relating to the sale, joint venture or farm-in/farm-out of mineral assets. Such transactions may be used as a guide to, or means of, valuation. For a transaction to be considered comparable it should be similar to the asset being valued in terms of location, timing and commodity, and the transaction must be regarded as being of “arm’s length”. Key external value drivers of the Market Approach valuation included the range of values in respect of comparable transactions.

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The principal assumptions included in the valuation were as follows:

• 7.899 Moz contained gold (being 74% of the total declared Resource attributable to Goliath Gold as indicated in the Goliath Gold Resources statement); and

• transaction comparative values of $3.72/oz to $4.70/oz.

Additionally, the sensitivity analysis was performed by applying the comparative value range.

All other mineral asset were valued using the cost approach. The valuation of the Goliath Gold head office has been determined based upon the Income Approach. The head office NPV is considered to be equal to Goliath Gold’s forecast pre-finance head office costs for a period of five years, which is deemed sufficient to further develop and dispose of the assets, discounted at a rate equal to Goliath Gold’s cost of equity.

Net debt and cash was added to the attributable value of Goliath Gold’s mineral assets and the value of Goliath Gold’s head office to determine the equity value of Goliath Gold, after confirming that such carrying values are in terms of International Financial Reporting Standards (“IFRS”) approximated fair market value.

Valuation of ConvergeNet

The valuation of ConvergeNet has been based upon an aggregation of the sum of the parts of:

• the value of Contract Kitting;

• the value of SCS;

• the value of ConvergeNet’s corporate office; and

• net debt and cash of ConvergeNet as at 30 November 2014.

Contract Kitting is an engineering company with expertise in the telecoms industry. The discounted cash flow methodology was employed as the primary valuation methodology in respect of Contract Kitting.

SCS has incurred operating losses which are funded via shareholder loans from ConvergeNet. Without shareholder support, the going concern assumption would no longer be applicable to SCS, without a material restructuring. As the Company is not considered sustainable in its current form, we applied the net asset valuation (“NAV”) approach, which provides an indicative value for the Company’s equity on a liquidation basis. This is the value of residual amounts available to equity holders after realising the company’s assets and settling its liabilities.

The discounted cash flow methodology was employed as the primary valuation methodology in respect of the ConvergeNet corporate office. Corporate office expenses were grown by 6% per annum over the forecast period.

The valuations of Contract Kitting, SCS and ConvergeNet’s corporate office were performed taking cognisance of risk and other market and industry factors affecting each business and the industry within which they operate. Additionally, sensitivity analyses were performed considering key value drivers.

Key internal value drivers to the DCF valuation of Contract Kitting included expected future growth in the business, gross margins, operating profit margins, the discount rate and working capital requirements.

Key external value drivers, including interest rates, headline inflation rates and prevailing market and industry conditions in respect of the telecommunications sector were also considered in assessing the forecast cash flows and risk profile of Contract Kitting. Contract Kitting highly dependent on the demand for the products and services provided by Contract Kitting which is driven primarily by infrastructure spend on mobile communications networks.

The base case assumptions used for the DCF valuation of Contract Kitting are as follows:

• revenue growth – 16%

• sustainable gross profit margin – 30%

• sustainable operating profit margin – 10%

• sustainable net working capital as % of revenue – 29%

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(Note: Compound annual growth rate in forecast revenue after the budget year)

A base case weighted average cost of capital (“WACC”) of 18.6% was utilised in the valuation of Contract Kitting.

In addition sensitivity analyses were performed in respect of revenue growth and the weighted average cost of capital by increasing and decreasing the revenue growth rates by a maximum of 2% and the WACC range by a maximum of 1%. The revenue growth rate and WACC sensitivity analysis did not indicate a sufficient effect on the valuation of ConvergeNet to alter our opinion in respect of the fairness of the ASOF MRI Acquisition.

Net debt and cash was added to the value of ConvergeNet’s interest in Contract Kitting and SCS and the value of ConvergeNet’s corporate office to determine the equity value of ConvergeNet, after confirming that such carrying values are in terms of International Financial Reporting Standards (“IFRS”) approximated fair market value.

OPINION

BDO Corporate Finance has considered the terms and conditions of the ASOF Goliath Gold Acquisition and, based on and subject to the conditions set out herein, is of the opinion that the terms and conditions of the ASOF Goliath Gold Acquisition, based on quantitative considerations, are fair to the ConvergeNet shareholders.

Our opinion is necessarily based upon the information available to us up to 8 December 2014, including in respect of the financial information as well as other conditions and circumstances existing and disclosed to us. We have assumed that all conditions precedent, including any material regulatory and other approvals or consents required in connection with the ASOF Goliath Gold Acquisition have been fulfilled or obtained.


Yours faithfully

Nick LazanakisDirector


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ANNEXURE 3.1

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE HISTORICAL

FINANCIAL INFORMATION OF CONTRACT KITTING FOR THE PERIOD ENDED

31 AUGUST 2012

“ The DirectorsConvergeNet Holdings LimitedLevel P3, Oxford CornerCorner Jellicoe and Oxford RoadsRosebank

11 December 2014

Dear Sirs

INDEPENDENT REPORTING ACCOUNTANTS’ AUDIT REPORT ON THE HISTORICAL FINANCIAL INFORMATION

INTRODUCTION

ConvergeNet Holdings Limited (“ConvergeNet”) is issuing a circular to its shareholders (“the Circular”) regarding the proposed disposal of 100% of its shareholding in Andrews Kit Proprietary Limited (“Contract Kitting”).

At your request and for the purpose of the Circular to be dated on or about 15 December 2014, we have audited the historical financial information of Contract Kitting, which comprises the statement of financial position as at 31 August 2012 and the Statements of comprehensive income, Statement of changes in equity and Statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information (“the Historical Financial Information”), as included by reference in paragraph 31.1.3 to the Circular, in compliance with the JSE Limited (“JSE”) Listings Requirements.

RESPONSIBILITY

Directors’ responsibility

The directors of ConvergeNet are responsible for the preparation, contents and presentation of the Circular and are responsible for ensuring that Converge complies with the JSE Listings Requirements. The directors of Contract Kitting are responsible for the preparation and fair presentation of the Historical Financial Information in accordance with International Financial Reporting Standards, and for such internal controls as the directors of Contract Kitting determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.

Reporting accountants’ responsibility

Our responsibility is to express an opinion on the Historical Financial Information based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance whether the Historical Financial Information of Contract Kitting is free from material misstatement.

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

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

OPINION

In our opinion, the Historical Financial Information of Contract Kitting included by reference in the Circular, presents fairly, in all material respects, the financial position of Disposal Entity at 31 August 2012, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the JSE Listings Requirements.

PricewaterhouseCoopers Inc. Director: Deon Storm Registered Auditor

2 Eglin Road Sunninghill, 2157”

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ANNEXURE 3.2


FINANCIAL INFORMATION OF CONTRACT KITTING FOR THE PERIOD ENDED

31 AUGUST 2013

“The DirectorsConvergeNet Holdings LimitedLevel P3, Oxford CornerCorner Jellicoe and Oxford RoadsRosebank

11 December 2014

Dear Sirs


INTRODUCTION

ConvergeNet Holdings Limited (“ConvergeNet”) is issuing a circular to its shareholders (“the Circular”) regarding the proposed disposal of 100% of its shareholding in Andrews Kit Proprietary Limited (“ Contract Kitting”).

At your request and for the purpose of the Circular to be dated on or about 15 December 2014, we have audited the historical financial information of Contract Kitting, which comprises the statement of financial position as at 31 August 2013 and the Statements of comprehensive income, Statement of changes in equity and Statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information (“the Historical Financial Information”), as included by reference in paragraph 31.1.3 in the Circular, in compliance with the JSE Limited (“JSE”) Listings Requirements.

RESPONSIBILITY


The directors of ConvergeNet are responsible for the preparation, contents and presentation of the Circular and are responsible for ensuring that Converge complies with the JSE Listings Requirements. The directors of Contract Kitting are responsible for the preparation and fair presentation of the Historical Financial Information in accordance with International Financial Reporting Standards, and for such internal controls as the directors of Contract Kitting determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.


Our responsibility is to express an opinion on the Historical Financial Information based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance whether the Historical Financial Information of Contract Kitting is free from material misstatement.

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

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Opinion

In our opinion, the Historical Financial Information of Contract Kitting included by reference in the Circular, presents fairly, in all material respects, the financial position of Contract Kitting at 31 August 2013, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the JSE Listings Requirements.

PricewaterhouseCoopers Inc.Director: Deon StormRegistered Auditor

2 Eglin RoadSunninghill, 2157”

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ANNEXURE 3.3

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE INTERIM FINANCIAL

INFORMATION OF CONTRACT KITTING FOR THE PERIOD ENDED 31 AUGUST 2014

“The DirectorsAndrews Kit Proprietary Limited t/a Contract KittingOffice 202, Cape Quarter, The Square27 Somerset RoadGreen PointCape Town8001

1 1 December 2014

Dear Sirs

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE INTERIM FINANCIAL INFORMATION OF ANDREWS KIT PROPRIETARY LIMITED T/A CONTRACT KITTING (“CONTRACT KITTING”) FOR THE PERIOD ENDED 31 AUGUST 2014

At your request and for the purposes of the circular to be dated on or about 15 December 2014 (“the Circular”), we present our report on the interim financial information of Contract Kitting for the period ended 31 August 2014 in compliance with the JSE Limited Listings Requirements.

We have reviewed the interim financial information of Contract Kitting, as set out in paragraph 31 of the Circular, which comprise the statement of financial position as at 31 August 2014, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the 12 month period then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

RESPONSIBILITIES

Directors’ responsibility for the annual financial statements

The Company’s directors are responsible for the preparation, contents and presentation of the Circular and the fair presentation of the interim financial information in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.


Our responsibility is to express a conclusion on the interim financial information of Contract Kitting for the period ended 31 August 2014 included in the Circular, based on our review conclusion on the interim financial information for the year ended 31 August 2014.

SCOPE OF REVIEW

We conducted our review of the interim financial information for the period ended 31 August 2014 in accordance with International Standards on Review Engagements ISRE 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity.” This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial information is free of material misstatement. A review of financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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REVIEW CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information of Contract Kitting for the period ended 31 August 2014 is not fairly presented, in all material respects, for the purposes of the Circular, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa and the JSE Limited Listings Requirements.

CONSENT

We consent to the inclusion of this report and the reference to our opinion in the Circular in the form and context in which it appears.

Yours faithfully

Grant Thornton Cape Inc.I HashimDirector

Registration number 2010/016204/21Registered AuditorsChartered Accountants (SA)”

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ANNEXURE 4.1

INDEPENDENT REPORTING ACCOUNTANTS’ AUDIT REPORT ON THE HISTORICAL

FINANCIAL INFORMATION OF CHRYSTALPINE FOR THE PERIOD ENDED

31 AUGUST 2012


11 December 2014

Dear Sirs


INTRODUCTION

ConvergeNet Holdings Limited (“ConvergeNet”) is issuing a circular to its shareholders (“the Circular”) regarding the proposed disposal of 100% of its shareholding in Chrystalpine Investments 9 Proprietary Limited (“Chrystalpine”).

At your request and for the purpose of the Circular to be dated on or about 15 December 2014, we have audited the historical financial information of Chrystalpine, which comprises the statement of financial position as at 31 August 2012 and the Statements of comprehensive income, Statement of changes in equity and Statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information (“the Historical Financial Information”), as included by reference in paragraph 31.1.5 to the Circular, in compliance with the JSE Limited (“JSE”) Listings Requirements.

RESPONSIBILITY


The directors of ConvergeNet are responsible for the preparation, contents and presentation of the Circular and are responsible for ensuring that Converge complies with the JSE Listings Requirements. The directors of Chrystalpine are responsible for the preparation and fair presentation of the Historical Financial Information in accordance with International Financial Reporting Standards, and for such internal controls as the directors of Chrystalpine determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.


Our responsibility is to express an opinion on the Historical Financial Information based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance whether the Historical Financial Information of Chrystalpine is free from material misstatement.

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

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Opinion

In our opinion, the Historical Financial Information of Chrystalpine included by reference in the Circular, presents fairly, in all material respects, the financial position of Disposal Entity at 31 August 2012, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the JSE Listings Requirements.

PricewaterhouseCoopers Inc. Director: Deon Storm Registered Auditor

2 Eglin Road Sunninghill, 2157”

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ANNEXURE 4.2


FINANCIAL INFORMATION OF CHRYSTALPINE FOR THE PERIOD ENDED

31 AUGUST 2013


11 December 2014

Dear Sirs


INTRODUCTION

ConvergeNet Holdings Limited (“ConvergeNet”) is issuing a circular to its shareholders (“the Circular”) regarding the proposed disposal of 100% of its shareholding in Chrystalpine Investments 9 Proprietary Limited (“Chrystalpine”).

At your request and for the purpose of the Circular to be dated on or about 15 December 2014, we have audited the historical financial information of Chrystalpine, which comprises the statement of financial position as at 31 August 2013 and the Statements of comprehensive income, Statement of changes in equity and Statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information (“the Historical Financial Information”), as included by reference in paragraph 31.1.5 to the Circular, in compliance with the JSE Limited (“JSE”) Listings Requirements.

RESPONSIBILITY


The directors of ConvergeNet are responsible for the preparation, contents and presentation of the Circular and are responsible for ensuring that Converge complies with the JSE Listings Requirements. The directors of Chrystalpine are responsible for the preparation and fair presentation of the Historical Financial Information in accordance with International Financial Reporting Standards, and for such internal controls as the directors of Chrystalpine determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.

Reporting accountant’s responsibility

Our responsibility is to express an opinion on the Historical Financial Information based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance whether the Historical Financial Information of Chrystalpine is free from material misstatement.

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

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OPINION

In our opinion, the Historical Financial Information of Chrystalpine included by reference in the Circular, presents fairly, in all material respects, the financial position of Disposal Entity at 31 August 2013, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the JSE Listings Requirements.



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ANNEXURE 4.3


INFORMATION OF CHRYSTALPINE FOR THE PERIOD ENDED 31 AUGUST 2014

“The DirectorsChrystalpine Investments 9 Proprietary LimitedOffice 202, Cape Quarter, The Square27 Somerset RoadGreen PointCape Town8001

1 1 December 2014

Dear Sirs,

INDEPENDENT REPORTING ACCOUNTANT REPORT ON THE INTERIM FINANCIAL INFORMATION OF CHRYSTALPINE INVESTMENTS 9 PROPRIETARY LIMITED (“CHRYSTALPINE”) FOR THE PERIOD ENDED 31 AUGUST 2014

At your request and for the purposes of the circular to be dated on or about 15 December 2014 (“the Circular”), we present our report on the interim financial information of Chrystalpine for the period ended 31 August 2014 in compliance with the JSE Limited Listing’s Requirements.

We have reviewed the interim financial information of Chrystalpine, as set out in paragraph 31 of the Circular, which comprise the statement of financial position as at 31 August 2014, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the 12-month period then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

RESPONSIBILITIES


The company’s directors are responsible for the preparation, contents and presentation of the Circular and the fair presentation of the interim financial information in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.


Our responsibility is to express a conclusion on the interim financial information of Chrystalpine for the period ended 31 August 2014 included in the Circular, based on our review conclusion on the interim financial information for the year ended 31 August 2014.

SCOPE OF REVIEW

We conducted our review of the interim financial information for the period ended 31 August 2014 in accordance with International Standards on Review Engagements ISRE 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity.” This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial information is free of material misstatement. A review of financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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REVIEW CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information of Chrystalpine for the period ended 31 August 2014 is not fairly presented, in all material respects, for the purposes of the Circular, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa and the JSE Limited Listings Requirements.

CONSENT


Yours faithfully



108

ANNEXURE 5.1


FINANCIAL INFORMATION OF SCS FOR THE PERIOD ENDED 31 AUGUST 2012

“The DirectorsStructured Connectivity Solutions Proprietary LimitedOffice 202, Cape Quarter, The Square27 Somerset RoadGreen PointCape Town8001

11 December 2014

Dear Sirs,

INDEPENDENT REPORTING ACCOUNTANT REPORT ON THE HISTORICAL FINANCIAL INFORMATION OF STRUCTURED CONNECTIVITY SOLUTIONS PROPRIETARY LIMITED (“SCS”) FOR THE PERIOD ENDED 31 AUGUST 2012 AND 31 AUGUST 2011 COMPARATIVES

At your request and for the purposes of the circular to be dated on or about 15 December 2014 (“the Circular”), we present our report on the historical financial information of SCS for the period ended 31 August 2012 and 2011 in compliance with the JSE Limited Listings Requirements.

We have reviewed the historical financial information of SCS, as set out in paragraph 31 of the Circular, which comprise the statement of financial position as at 31 August 2012, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial year ended 31 August 2012, and the notes, comprising a summary of significant accounting policies and other explanatory information. The 31 August 2012 and 31 August 2011 financial statements were previously audited and reported upon by Advoca Auditing Incorporated, CA(SA). An unqualified audit report was issued for the financial year ended 31 August 2012 and 31 August 2011.

RESPONSIBILITIES


The company’s directors are responsible for the preparation, contents and presentation of the Circular and the fair presentation of the historical financial information in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.


Our responsibility is to express a conclusion on the historical financial information of SCS for the financial year ended 31 August 2012 and 31 August 2011 comparatives included in the Circular, based on our review conclusion on the historical financial information for the financial year ended 31 August 2012.

SCOPE OF REVIEW

We conducted our review of the historical financial information for the period ended 31 August 2012 in accordance with International Standards on Review Engagements ISRE 2400 (Revised) “Engagements to Review Historical Financial Statements.” This Standard requires us to conclude whether anything has come to our attention that causes us to believe that the financial statements, taken as a whole, are not prepared in all material respects in accordance with the applicable financial reporting framework. This Standard also requires us to comply with relevant ethical requirements. A review of financial statements in accordance with

109

ISRE 2400 (Revised) is a limited assurance engagement. The practitioner performs procedures, primarily consisting of making inquiries of management and others within the entity, as appropriate, and applying analytical procedures, and evaluates the evidence obtained. The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit opinion on these financial statements.

REVIEW CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the historical financial information of SCS for the financial year ended 31 August 2012 and 31 August 2011 comparatives are not fairly presented, in all material respects, for the purposes of the Circular, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa and the JSE Limited Listings Requirements.

CONSENT


Yours faithfully



110

ANNEXURE 5.2


FINANCIAL INFORMATION OF SCS FOR THE PERIOD ENDED 31 AUGUST 2013


11 December 2014

Dear Sirs


INTRODUCTION

ConvergeNet Holdings Limited (“ConvergeNet”) is issuing a circular to its shareholders (“the Circular”) regarding the proposed disposal of 100% of its shareholding in Structured Connectivity Solutions Proprietary Limited (“SCS”).

At your request and for the purpose of the Circular to be dated on or about 15 December 2014, we have audited the historical financial information of SCS, which comprises the statement of financial position as at 31 August 2013 and the Statements of comprehensive income, Statement of changes in equity and Statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information (“the Historical Financial Information”), as included by reference in paragraph 31.1.7 to the Circular, in compliance with the JSE Limited (“JSE”) Listings Requirements.

RESPONSIBILITY


The directors of ConvergeNet are responsible for the preparation, contents and presentation of the Circular and are responsible for ensuring that Converge complies with the JSE Listings Requirements. The directors of SCS are responsible for the preparation and fair presentation of the Historical Financial Information in accordance with International Financial Reporting Standards, and for such internal controls as the directors of SCS determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.


Our responsibility is to express an opinion on the Historical Financial Information based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance whether the Historical Financial Information of SCS is free from material misstatement.

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


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OPINION

In our opinion, the Historical Financial Information of SCS included by reference in the Circular, presents fairly, in all material respects, the financial position of Disposal Entity at 31 August 2013, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the JSE Listings Requirements.



112

ANNEXURE 5.3


INFORMATION OF SCS FOR THE PERIOD ENDED 31 AUGUST 2014

“The DirectorsConvergeNet Holdings LimitedLevel P3, Oxford CornerCorner Jellicoe and Oxford RoadsRosebankJohannesburg, 2196

10 December 2014

Dear Sirs,

INDEPENDENT REPORTING ACCOUNTANT REPORT ON THE INTERIM FINANCIAL INFORMATION OF STRUCTURED CONNECTIVITY SOLUTIONS PROPRIETARY LIMITED (“SCS”) FOR THE PERIOD ENDED 31 AUGUST 2012 AND 31 AUGUST 2011 COMPARATIVES

At your request and for the purposes of the circular to be dated on or about 15 December 2014 (“the Circular”), we present our report on the historical financial information of SCS for the period ended 31 August 2012 and 2011 in compliance with the JSE Limited Listings Requirements.

We have reviewed the historical financial information of SCS, as set out in paragraph 31 of the Circular, which comprise the statement of financial position as at 31 August 2012, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial year ended 31 August 2012, and the notes, comprising a summary of significant accounting policies and other explanatory information.

The 31 August 2012 and 31 August 2011 financial statements were previously audited and reported upon by Advoca Auditing Incorporated, CA(SA). An unqualified audit report was issued for the financial year ended 31 August 2012 and 31 August 2011.

RESPONSIBILITIES


The company’s directors are responsible for the preparation, contents and presentation of the Circular and the fair presentation of the interim financial information in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.


Our responsibility is to express a conclusion on the historical financial information of SCS for the financial year ended 31 August 2012 and 31 August 2011 comparatives included in the Circular, based on our review conclusion on the historical financial information for the financial year ended 31 August 2012.

SCOPE OF REVIEW

We conducted our review of the historical financial information for the period ended 31 August 2012 in accordance with International Standards on Review Engagements ISRE 2400 (Revised) “Engagements to Review Historical Financial Statements.” This Standard requires us to conclude whether anything has come to our attention that causes us to believe that the financial statements, taken as a whole, are not prepared in all material respects in accordance with the applicable financial reporting framework. This Standard also requires us to comply with relevant ethical requirements. A review of financial statements in accordance with ISRE 2400 (Revised) is a limited assurance engagement. The practitioner performs procedures, primarily consisting of making inquiries of management and others within the entity, as appropriate, and applying

113

analytical procedures, and evaluates the evidence obtained. The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit opinion on these financial statements.

REVIEW CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the historical financial information of SCS for the financial year ended 31 August 2012 and 31 August 2011 comparatives are not fairly presented, in all material respects, for the purposes of the Circular, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa and the JSE Limited Listings Requirements.

CONSENT


Yours faithfully



114

ANNEXURE 6

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE FINANCIAL

INFORMATION OF TELLUMAT FOR THE PERIOD ENDED 30 SEPTEMBER 2011,

30 SEPTEMBER 2012, 30 SEPTEMBER 2013 AND 30 SEPTEMBER 2014

“The DirectorsConvergeNet Holdings Limited (the “Company”)Office 202, Cape Quarter, The Square27 Somerset RoadGreen PointCape Town8001

11 December 2014

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE TELLUMAT (PROPRIETARY) LIMITED HISTORICAL FINANCIAL INFORMATION

Scope of our engagement

Ernst & Young Incorporated (South Africa) (“we”) have undertaken a reasonable assurance engagement to report on:

1. whether the consolidated historical financial information of Tellumat (Proprietary) Limited (“Tellumat”) for the years ended 30 September 2011, 30 September 2012, 30 September 2013 and 30 September 2014 (“the Consolidated Historical Financial Information of Tellumat”) to be referenced in the circular to be dated on or about 15 December 2014 (“the Circular”) has been consistently compiled from the audited financial statements of Tellumat for the years ended 30 September 2011, 30 September 2012, 30 September 2013 and 30 September 2014 which were prepared in terms of International Financial Reporting Standards (IFRS) upon which Ernst & Young Inc. issued an unmodified audit report; and

2. whether the Earnings per Share (EPS), Headline Earnings per Share (HEPS), Net Asset Value per Share (NAV) and Net Tangible Asset Value per Share (TNAV) per Tellumat (Proprietary) Limited (“Tellumat”) share disclosures (“the JSE LR 8.11 disclosures”) contained in the Circular to Shareholders of ConvergeNet Holdings Limited (“the Circular”) in respect of the years ended 30 September 2011, 30 September 2012, 30 September 2013 and 30 September 2014 have been prepared, in all material respects, in accordance with the basis of measurement as described below (“measurement bases”):

• HEPS calculated in accordance with the SAICA circular 2/2013 on Headline Earnings

• EPS per share calculated in accordance with IAS 33 – Earnings Per Share.

• NAV and TNAV per Tellumat share calculated in accordance with the basis described in the Circular.

Directors’ responsibility for the Circular

The directors of ConvergeNet Holdings Limited are responsible for the preparation and presentation of the JSE LR 8.11 disclosures in the Circular in accordance with the measurement bases described above.

Our independence and Quality Control

We have complied with the Code of Conduct issued by the Independent Regulatory Board for Auditors, which includes independence and other requirements founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

In accordance with International Standard on Quality Control 1, Ernst & Young maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

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Our responsibility is to express a reasonable assurance opinion about whether

1. the Consolidated Historical Financial Information of Tellumat referenced in the circular has been consistently compiled, in all material respects, from the audited financial statements of Tellumat which were prepared in terms of IFRS; and

2. whether the JSE LR 8.11 disclosures contained in the Circular in respect of the years ended 30 September 2011, 30 September 2012, 30 September 2013 and 30 September 2014 have been prepared, in all material respects, in accordance with the basis of measurement as described under the scope of our engagement paragraph above based on our procedures performed.

Basis of work and limitations

We conducted our assurance engagement in accordance with International Standard on Assurance Engagements ISAE 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information. This standard requires that we comply with ethical requirements and plan and perform our procedures to obtain reasonable assurance based on our procedures performed.

A reasonable assurance engagement in accordance with ISAE 3000 involves performing procedures to obtain evidence about whether the Consolidated Historical Financial Information of Tellumat referenced in the circular has been consistently compiled from the audited financial statements of Tellumat and whether the JSE LR 8.11 disclosures are prepared, in all material respects, in accordance with the measurement bases as described under the scope of our engagement paragraph above.

The nature, timing and extent of procedures selected depend on the auditor’s judgement, including the assessment of the risks of non-compliance with the JSE Listings Requirements, whether due to fraud and error. In making those risk assessments we considered internal control relevant to the circumstances of the engagement.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any consolidated historical financial information referenced in the Circular.

Summary of work performed

Set out below is a summary of the procedures performed:

1. pertaining to the Consolidated Historical Financial Information of Tellumat:

• We inspected that the information has been consistently compiled from the audited financial statements of Tellumat which were prepared in terms of IFRS.

2. pertaining to the JSE LR 8.11 disclosures:

• We inspected that the HEPS of Tellumat disclosed in the Circular was accurately calculated in accordance with the SAICA circular 2/2013 on Headline Earnings.

• We inspected that the EPS per share disclosed in the Circular was accurately calculated in accordance with IAS 33 – Earnings Per Share.

• We inspected that the NAV and TNAV per Tellumat share disclosed in the Circular w ere correctly calculated in accordance with the basis described in the Circular.

We believe that our work performed and evidence obtained is sufficient and appropriate to provide a basis for our reasonable assurance expressed below.

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Opinion

In our opinion, the Consolidated Historical Financial Information of Tellumat referenced in the circular has been consistently compiled, in all material respects, from the audited financial statements of Tellumat which were prepared in terms of IFRS; and based on the work performed and subject to the limitations described above, in our opinion the specified JSE LR 8.11 disclosures are prepared, in all material respects, in accordance with the measurement bases as described above.

Ernst & Young Inc.Director: Anthony Cadman CARegistered Auditor

Reporting Accountant Specialist

11 December 2014”

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ANNEXURE 7

PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTIONS

• The pro forma consolidated statement of comprehensive income for the 12-month period ended 31 August 2014 and pro forma consolidated statement of financial position at 31 August 2014 have been prepared for illustrative purposes only, based on current information available to management, in order to provide information about the financial results and position of the Company. Due to its nature, the pro forma financial information may not fairly present the Company’s financial position, changes in equity and results of operations or cash flows after the Transactions, and are based on the assumptions that:

– for the purpose of calculating earnings per share and headline earnings per share, the SCS Disposal, Contract Kitting Disposal, Tellumat Acquisition, MRI Acquisition, Goliath Gold Acquisition, Digicore Acquisition and Private Placement (collectively, the “Transactions”) were implemented on 1 September 2013; and

– for the purpose of calculating net asset value per share and net tangible asset value per share, the Transactions were implemented on 31 August 2014.

• The pro forma financial information has been prepared using the most recent financial period of the Company for the 12-month period ended 31 August 2014 in terms of the Listings Requirements and guidelines issued by the South African Institute of Chartered Accountants.

• The accounting policies of ConvergeNet have been used in calculating the pro forma financial effects. Save for the accounting policy noted below, the accounting policies used are consistent with previous accounting policies used by ConvergeNet and the accounting policies have been applied on the same basis.

Accounting policy with respect to Investments in Associates

In accordance with par 18 of IAS 28 “Investments in Associates and Joint Ventures”, the Company does not account for its investment in associates in the consolidated financial statements using the equity method. Instead, the Company has elected to measure its investments in these entities at fair value through profit and loss.

Refer note 1 below for the rationale for adoption of the aforementioned accounting policy. The accounting policies of ConvergeNet have been used in calculating the pro forma financial effects. The accounting policies used are consistent with previous accounting policies used by ConvergeNet and the accounting policies have been applied on the same basis.

• The directors are responsible for the preparation of the pro forma financial information contained in this Circular.

• The Independent Reporting Accountants’ limited assurance report on the pro forma financial information is set out in Annexure 8 to this Circular.

118

PRO FORMA STATEMENT OF COMPREHENSIVE INCOME OF CONVERGENET FOR THE 12 MONTHS ENDED 31 AUGUST 2014

The pro forma statement of comprehensive income set out below presents the pro forma financial effects of the results of ConvergeNet for the 12 months ended 31 August 2014 based on the assumption that the Transactions were effective on 1 September 2013.


12 months

ended

31 August

2014

Before1

Actual

R’000

SCS

Disposal

Adjustments

Actual

R’000

Contract

Kitting

Disposal

Adjustments

Actual

R’000

After the SCS

Disposal

and Contract

Kitting

Disposal

Pro forma

R’000

MRI

Acquisition

Pro forma

R’000

After the

MRI

Acquisition

Pro forma

R’000

Revenue 755 – – 755 – 755

Cost of sales (490) – – (490) – (490)

Gross profit 265 – – 265 – 265

Other income 10 685 – – 10 685 – 10 685

Operating expenses (11 391) (100)2 (3 200)4 (14 691) (300)8 (14 991)

Operating loss (441) (100) (3 200) (3 741) (300) (4 041)

Investment income 5 696 – – 5 696 – 5 696

Fair value adjustments (347) – – (347) – (347)

Gain/(Loss) on sale of

subsidiary – – – – – –

Impairment of goodwill and

other financial assets (304) – – (304) – (304)

Finance costs (2 360) – – (2 360) – (2 360)

Profit before taxation 2 244 (100) (3 200) (1 056) (300) (1 356)

Taxation 66 – – 66 – 66

Profit for the period from

continuing operations 2 310 (100) (3 200) (990) (300) (1 290)


Net loss for the period from

discontinued operations (89 084) 8 3723 9 3795 (71 333) – (71 333)

Other comprehensive

income – – – – – –

Total comprehensive profit

for the period (86 774) 8 272 6 179 (72 323) (300) (72 623)

(Loss)/Profit attributable to:

Equity holders of the parent (92 014) 8 2723 6 1795 (77 563) (300)8 (77 863)

Non-controlling interests 5 240 – – 5 240) – 5 240

(86 774) 8 272 6 179 (72 323) (300) (72 623)


continuing operations attributable to:

Equity holders of the parent (2 930) – – (2 930) (300)8 (3 230)

Non-controlling interests 5 240 – – 5 240 – 5 240

2 310 – – 2 310 (300) 2 010

Loss for the period from discontinued operations attributable to:

Equity holders of the parent (89 084) 8 2723 6 1795 (74 633) – (74 633)

Non-controlling interests – – –

(89 084) 8 272 6 179 (74 633) – (74 633)

119


12 months

ended

31 August

2014

Before1

Actual

R’000

SCS

Disposal

Adjustments

Actual

R’000

Contract

Kitting

Disposal

Adjustments

Actual

R’000

After the SCS

Disposal

and Contract

Kitting

DisposalPro forma

R’000

MRI

AcquisitionPro forma

R’000

After the

MRI

AcquisitionPro forma

R’000

Reconciliation between

basic and headline (loss)/

profit from continuing

operations

Basic (loss)/profit attributable to equity holders of parent (2 930) 8 2723 6 1795 11 521 (300)8 11 221

(Profit)/Loss on disposal of

assets – – – – – –


subsidiaries – – – – – –


other financial assets – – – – – –

(Profit)/Loss on sale of other

financial assets – – – – – –

Tax effect on adjustments – – – – – –

Headline (loss)/profit from

continuing operations (2 930) 8 272 6 179 11 521 (300) 11 221


basic and headline loss from

discontinued operations

Basic loss attributable to

equity holders of parent (89 084) 8 2723 6 1795 (74 633) – (74 633)


assets (947) – 9476 – – –

(Profit)/lLoss on disposal of

subsidiaries 70 286 – – 70 286 – 70 286

Loss recognised on the

remeasurement of assets of

disposal groups to its fair

value less cost to sell – – – – – –


other financial assets 3 561 – 3 5617 7 122 – 7 122



discontinued operations (16 184) 8 272 10 687 2 775 – 2 775

Basic (loss)/profit per ordinary

share from continuing operations (cents) (2.94) – – (2.94) – (2.88)

Diluted basic (loss)/profit per

ordinary share from continuing

operations (cents) (2.94) – – (2.94) – (2.88)

Headline (loss)/profit per ordinary share from continuing

operations (cents) (2.94) – – 11.56 – 9.99

Diluted headline (loss)/profit per ordinary share from

continuing operations (cents) (2.94) – – 11.56 – 9.99


share from discontinued

operations (cents) (89.35) – – (74.86) – (66.44)

Diluted basic (loss)/profit

per ordinary share from

discontinued operations (cents) (89.35) – – (74.86) – (66.44)

120


12 months

ended

31 August

2014Before1

Actual

R’000

SCS

Disposal Adjustments

Actual

R’000

Contract

Kitting


Actual

R’000

After the SCS

Disposal

and Contract

Kitting Disposal

Pro forma

R’000

MRI Acquisition

Pro forma

R’000

After the

MRI Acquisition

Pro forma

R’000

Headline (loss)/profit



(cents) (16.23) – – 2.78 – 2.47

Diluted headline (loss)/profit



(cents) (16.23) – – 2.78 – 2.47

Weighted average number of

shares 99 701 849 – – 99 701 849 12 636 3329 112 338 181

Diluted weighted average

number of shares 99 701 849 – – 99 701 849 12 636 3329 112 338 181


Goliath Gold

Acquisition

Pro forma

R’000

After

Goliath Gold

Acquisition

Pro forma

R’000

Digicore

Acquisition

Pro forma

R’000

After

Digicore

Acquisition

Pro forma

R’000

Private

Placement

Pro forma

R’000

After

Private

Placement

Pro forma

R’000

Revenue – 755 – 755 – 755

Cost of sales – (490) – (490) – (490)

Gross profit – 265 – 265 – 265

Other income – 10 685 – 10 685 10 685

Operating expenses (800)10 (15 791) (1 600)12 (17 391) – (17 391)

Operating loss (800) (4 841) (1 600) (6 441) – (6 441)

Investment income – 5 696 – 5 696 7 67414 13 370

Fair value adjustments – (347) – (347) – (347)

Gain/(Loss) on sale of

subsidiary – – – – – –


other financial assets – (304) – (304) – (304)

Finance costs – (2 360) – (2 360) – (2 360)

Profit before taxation (800) (2 156) (1 600) (3 756) 7 674 3 918

Taxation – 66 – 66 – 66


continuing operations (800) (2 090) (1 600) (3 690) 7 674 3 984


Net loss for the period from discontinued operations – (71 333) – (71 333) – (71 333)

Other comprehensive

income – – – – – –

Total comprehensive profit

for the period (800) (73 423) (1 600) (75 023) 7 674 (67 349)

(Loss)/Profit attributable

to:

Equity holders of the parent (800)10 (78 663) (1 600)12 (80 263) 7 67414 (72 589)

Non-controlling interests – 5 240 – 5 240 – 5 240

(800) (73 423) (1 600) (75 023) 7 674 (67 349)

Profit for the period from continuing operations

attributable to:

Equity holders of the parent (800)10 (4 030) (1 600)12 (5 630) 7 674 2 044

Non-controlling interests – 5 240 – 5 240 – 5 240

(800) 1 210 (1 600) (390) 7 674 7 284

121


Goliath Gold

Acquisition

Pro forma

R’000

After

Goliath Gold

Acquisition

Pro forma

R’000

Digicore

Acquisition

Pro forma

R’000

After

Digicore

Acquisition

Pro forma

R’000

Private

Placement

Pro forma

R’000

After

Private

Placement

Pro forma

R’000

Loss for the period from


attributable to:

Equity holders of the parent – (74 633) – (74 633) – (74 633)

Non-controlling interests – – – – – –

– (74 633) – (74 633) – (74 633)


basic and headline (loss)/

profit from continuing

operations

Basic (loss)/profit

attributable to equity

holders of parent (800)10 10 421 (1 600)12 8 821 7 67414 16 495


assets – – – – – –


subsidiaries – – – – – –


other financial assets – – – – – –

(Profit)/Loss on sale of other

financial assets – – – – – –



continuing operations (800) 10 421 (1 600) 8 821 7 674 16 495


basic and headline

loss from discontinued

operations

Basic loss attributable to

equity holders of parent – (74 633) – (74 633) – (74 633)


assets – – – – – –


subsidiaries – 70 286 – 70 286 – 70 286

Loss recognised on the

remeasurement of assets of disposal groups to its fair

value less cost to sell – – – – – –


other financial assets – 7 122 – 7 122 – 7 122



discontinued operations – 2 775 – 2 775 – 2 775

Basic (loss)/ profit per

ordinary share from

continuing operations

(cents) – (2.79) – (2.76) – 0.73

Diluted basic (loss)/profit per ordinary share from


(cents) – (2.79) – (2.76) – 0.73




(cents) – 7.22 – 4.32 – 5.91

122


Goliath Gold

Acquisition

Pro forma

R’000

After

Goliath Gold

Acquisition

Pro forma

R’000

Digicore

Acquisition

Pro forma

R’000

After

Digicore

Acquisition

Pro forma

R’000

Private

Placement

Pro forma

R’000

After

Private

Placement

Pro forma

R’000

Diluted headline (loss)/

profit per ordinary share

from continuing operations

(cents) – 7.22 – 4.32 – 5.91

Basic (loss)/profit per

ordinary share from


(cents) – (51.68) – (36.58) – (26.75)




(cents) – (51.68) – (36.58) – (26.75)




(cents) – 1.92 – 1.36 – 0.99




(cents) – 1.92 – 1.36 – 0.99

Weighted average number

of shares 32 084 87111 144 423 052 59 615 96313 204 039 015 75 000 00014 279 039 015


number of shares 32 084 87111 144 423 052 59 615 96313 204 039 015 75 000 00014 279 039 015

123


Share

issue

in lieu of

underwriting

fees

Pro forma

R’000

After

share

issue

in lieu of

underwriting

fees

Pro forma

R’000

Share

issue

in lieu of

private

placement

commitment

fees

Pro forma

R’000

After

share

issue

in lieu of

private

placement

commitment

fees

Pro forma

R’000

After all

Transactions

Pro forma

R’000

Revenue – 755 – 755 755

Cost of sales – (490) – (490) (490)

Gross profit – 265 – 265 265

Other income – 10 685 – 10 685 10 685

Operating expenses – (17 391) – (17 391) (17 391)

Operating loss – (6 441) – (6 441) (6 441)

Investment income – 13 370 – 13 370 13 370

Fair value adjustments – (347) – (347 (347)

Gain/(Loss) on sale of subsidiary – – – – –

Impairment of goodwill and other financial

assets – (304) – (304) (304)

Finance costs – (2 360) – (2 360) (2 360)

Profit before taxation – 3 918 – 3 918 3 918

Taxation – 66 – 66 66

Profit for the period from continuing operations – 3 984 – 3 984 3 984


Net loss for the period from discontinued

operations – (71 333) – (71 333) (71 333)

Other comprehensive income – – – – –

Total comprehensive profit for the period – (67 349) – (67 349) (67 349)

(Loss)/Profit attributable to:

Equity holders of the parent – (72 589) – (72 589) (72 589)

Non-controlling interests – 5 240 – 5 240 5 240

– (67 349) – (67 349) (67 349)

Profit for the period from continuing

operations attributable to:

Equity holders of the parent – 2 044 – 2 044 2 044

Non-controlling interests – 5 240 – 5 240 5 240

– 7 284 – 7 284 7 284

Loss for the period from discontinued

operations attributable to:

Equity holders of the parent – (74 633) – (74 633) (74 633)

Non-controlling interests – – – – –

– (74 633) – (74 633) (74 633)

Reconciliation between basic and headline (loss)/profit from continuing

operations

Basic (loss)/profit attributable to equity holders of parent – 16 495 – 16 495 16 495

(Profit)/Loss on disposal of assets – – – – –

(Profit)/Loss on disposal of subsidiaries – – – – –


assets – – – – –

(Profit)/Loss on sale of other financial assets – – – – –

Tax effect on adjustments – – – – –

Headline (loss)/profit from continuing

operations – 16 495 – 16 495 16 495

124


Share

issue

in lieu of

underwriting

fees

Pro forma

R’000

After

share

issue

in lieu of

underwriting

fees

Pro forma

R’000

Share

issue

in lieu of

private

placement

commitment

fees

Pro forma

R’000

After

share

issue

in lieu of

private

placement

commitment

fees

Pro forma

R’000

After all

Transactions

Pro forma

R’000

Reconciliation between basic and

headline loss from discontinued

operations

Basic loss attributable to equity holders of

parent – (74 633) – (74 633) (74 633)

(Profit)/Loss on disposal of assets – – – – –

(Profit)/Loss on disposal of subsidiaries – 70 286 – 70 286 70 286

Loss recognised on the remeasurement of

assets of disposal groups to its fair value

less cost to sell – – – – –


assets – 7 122 – 7 122 7 122

Tax effect on adjustments – – – – –

Headline (loss)/profit from discontinued

operations – 2 775 – 2 775 2 775

Basic (loss)/profit per ordinary share from

continuing operations (cents) – 0.73 – 0.73 0.73

Diluted basic (loss)/profit per ordinary share

from continuing operations (cents) – 0.73 – 0.73 0.73

Headline (loss)/profit per ordinary share from

continuing operations (cents) – 5.88 – 5.86 5.86

Diluted headline (loss)/profit per ordinary

share from continuing operations (cents) – 5.88 – 5.86 5.86

Basic (loss)/profit per ordinary share from

discontinued operations (cents) – (26.61) – (26.51) (26.51)

Diluted basic (loss)/profit per ordinary share

from discontinued operations (cents) – (26.61) – (26.51) (26.51)

Headline (loss)/profit per ordinary share from

discontinued operations (cents) – 0.99 – 0.99 0.99

Diluted headline (loss)/profit per ordinary

share from discontinued operations (cents) – 0.99 – 0.99 0.99

Weighted average number of shares 1 385 00015 280 424 015 1 140 00016 281 564 015 281 564 015

Diluted weighted average number of shares 1 385 00015 280 424 015 1 140 00016 281 564 015 281 564 015


1. The amounts set out in the “Before” column have been extracted from the reviewed interim results of the Company for the 12 months ended 31 August 2014, as published on SENS on 4 December 2014. Structured Connectivity Solutions (Pty) Ltd (“SCS”) and Chrystalpine Investments 9 (Pty) Ltd, incorporating Andrews Kit (Pty) Ltd (“Contract Kitting”), have been classified as disposal groups held for sale in terms of IFRS 5 “Non-current assets held for sale and discontinued operations” (“IFRS 5)” par 38. In terms of the requirements of IFRS 5, the Group has presented the assets and liabilities of the disposal groups separately on the face of the statement of financial position and have accounted for these disposal groups by measuring the assets and liabilities of SCS and Contract Kitting at the lower of their carrying values and the fair value of those assets less cost to sell. In both the instances of SCS and Contract Kitting, the disposal groups’ carrying values are less than the fair value less cost to sell. In addition to the statement of financial position disclosures, the sum of the post-tax profit or loss of the discontinued operations, SCS and Contract Kitting for the 12 months ended 31 August 2014 has been presented as a single amount on the face of the statement of comprehensive income in terms of IFRS 5 par 33.

125

Investments in Associates:

IAS 28 Investments in Associates and Joint Ventures par 18 provides that “When an investment in an associate or a joint venture is held by, or is held indirectly through, an entity that is a venture capital organisation, or a mutual fund, unit trust and similar entities including investment-linked insurance funds, the entity may elect to measure investments in those associates and joint ventures at fair value through profit or loss in accordance with IFRS 9 or where the Company has not yet adopted IFRS 9, in terms of IAS 39 [our addition]”.

As IAS 28 does not provide guidance on which entities qualify as “similar entities” to venture capital organisations, the Company took guidance from a previous version of IAS 28 wherein it was stated in par BC 12 that “The Board decided not to define further those ‘venture capital organisations and similar entities’ excluded from the scope of the Standard. Apart from recognising the difficulties of arriving at a universally applicable definition, the Board did not want inadvertently to make it difficult for entities to measure investments at fair value. However, the Board decided to clarify that the reference to ‘similar entities’ in the scope exclusion includes investment-linked insurance funds.” The board of directors of the Company have additionally considered the key characteristics of a venture capital organisation and are satisfied that:

– Investments will be held by the Company for short-to medium term. The directors do not interpret this requirement to mean that the Company should speculate in securities to comply with this requirement as it has been clearly stipulated in paragraph 3.8 of the Circular that the Company will only acquire of dispose of its investments in accordance with a long-term capital appreciation strategy. The Company, however, does not intend on holding any of the investments indefinitely which view is supported by its investment strategy to apply a flexible investment approach relating to the timing and duration of investments;

– The most appropriate point for exit is actively monitored. The Company will actively engage with investee companies in relation to their corporate activity and other strategic initiatives. It is this inorganic growth strategy which will differentiate the Company from other trading companies. The board of directors will actively monitor the performance of all investments and as such elect to exit investments, by way of implementation of corporate finance strategies, on optimal pricing terms, whether those are attained in the short or medium term; and

– The investments form part of a portfolio, which will be monitored and managed without distinguishing between investments that qualify as associates or joint ventures and those that do not.

The directors are comfortable that IAS 28 does not preclude the Company from accounting for investments in associates and joint ventures at fair value through profit and loss, as the board of directors of the Company is also satisfied that that the Company will measure and evaluate the performance of substantially all of its investments on a fair value basis following completion of the Transactions.

The Company will provide investors with fair value information in each set of annual and interim financial results and will measure substantially all of its investments at fair value in its financial statements whenever fair value is required or permitted in accordance with IFRSs as summarised above. Further, the Company will also report fair value information internally to the entity’s key management personnel (as defined in IAS 24), the board of directors, who will use such fair value as the primary measurement attribute to evaluate the performance of substantially all of its investments and to make investment decisions. This is evident from the fair valuation of the investment portfolio which will be conducted on a quarterly basis.

The investments in Tellumat (Associate), MRI (Associate), Goliath Gold (Associate) and Digicore (Investment designated as at fair value through profit and loss as the Company will not have significant influence over this investment), as described in notes 2 to 5 below, have therefore been accounted for at fair value in accordance with IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”) par 14.

SCS Disposal

2. Transaction expenses of R100 000 recognised in respect of the SCS Disposal.

3. The SCS Disposal adjustments have been extracted from the reviewed results of SCS for the 12 months ended 31 August 2014, available at http://convergenet.com/investor-relations/historical-financial-information. The table below shows the reconciliation of the SCS Disposal adjustments to the results of SCS for the 12 months ended 31 August 2014:

126

R’000 2014

Revenue 35 864

Other income and investment revenue 133

Expenses (37 622)

Profit before taxation of SCS (1 625)

Taxation (6 703)

(Loss)/Profit after tax of SCS (8 327)

Disposal of Chrystalpine (incorporating Contract Kitting)

4. Transaction expenses of R3 200 000 recognised in respect of the Contract Kitting Disposal.

5. The Contract Kitting Disposal adjustments have been extracted from the reviewed results of Chrystalpine and Contract Kitting for the 12 months ended 31 August 2014, available at http://convergenet.com/investor-relations/historical-financial-information. The table below shows the reconciliation of the Contract Kitting Disposal adjustments to the results of Chrystalpine and Contract Kitting for the 12 months ended 31 August 2014:

ChrystalpineContract

Kitting Total

R’000 2014 2014 2014

Revenue – 210 939 210 939

Other income and investment revenue – 1 677 1 677

Expenses (1) (226 121) (226 122)

Profit before taxation of discontinued operations (1) (13 506) (13 507)

Taxation – 2 528 2 528

(Loss)/Profit after tax of Chrystalpine and Contract Kitting (1) (10 978) (10 979)

Post-tax (loss)/gain recognised on the sale of disposal groups – 5 161& 5 161

Post-tax loss recognised on the re-measurement of assets of disposal group – (3 561)# (3 561)

(Loss)/Profit for the year from Chrystalpine and Contract Kitting (1) (9 378) (9 379)

& Adjustment for R3 000 000 management fees paid by Contract Kitting to the Company and impairment of R2 161 000 of an inter-company loan owing by ConvergeNet SA (Pty) Ltd, a subsidiary of the Company to Contract Kitting on disposal.

# Adjustment for impairment of goodwill attributable to Contract Kitting recognised on disposal of Contract Kitting.

6. The removal of the loss on sale of property, plant and equipment of Contract Kitting from headline earnings per share in terms of Circular 2/2013 issued by the South African Institute of Chartered Accountants.

7. The removal of the loss recognised on the impairment of goodwill related to Contract Kitting from headline earnings per share in terms of Circular 2/2013 issued by the South African Institute of Chartered Accountants.

MRI Acquisition

8. Transaction expenses of R 300 000 recognised in respect of the MRI Acquisition.

9. The acquisition of an additional 30.32% of the issued ordinary shares of MRI by way of issuing 12 636 332 new shares in the Company at R2.00 per share. The investment in MRI has been accounted for fair value of R25.273 million in terms of IAS 39 par 14. This implies a valuation of R0.10 per MRI share. The table below shows the impact of the recovery of 50% of the direct loss suffered by the Company, in the event of the liquidation of winding-up of MRI, from ASOF as described in 6.4.3 of the Circular above (“MRI Agterskot”). The liquidation value has been assumed to be negligible. The Before column reflects the position after implementation of all Transactions, but before the liquidation or winding-up of MRI.

127

BeforeAfter MRIAgterskot

Change %

Basic (loss)/profit per ordinary share from continuing operations (cents) 0.73 (3.76) (618.13)

Diluted basic (loss)/profit per ordinary share from continuing operations (cents) 0.73 (3.76) (618.13)

Headline (loss)/profit per ordinary share from continuing operations (cents) 5.86 1.37 (76.61)

Diluted headline (loss)/profit per ordinary share from continuing operations (cents) 5.86 1.37 (76.61)

Basic (loss)/profit per ordinary share from discontinued operations (cents) (26.51) (26.51) –

Diluted basic (loss)/profit per ordinary share from discontinued operations (cents) (26.51) (26.51) –

Headline (loss)/profit per ordinary share from discontinued operations (cents) 0.99 0.99 –

Diluted headline (loss)/profit per ordinary share from discontinued operations (cents) 0.99 0.99 –

Weighted average number of shares 281 564 015 281 564 015 –

Diluted weighted average number of shares 281 564 015 281 564 015 –

Number of shares in issue 282 808 668 282 808 668 –

Net asset value per share (cents) 196.31 191.83 (2.28)

Tangible net asset value per share (cents) 195.72 191.24 (2.29)

Goliath Gold Acquisition

10. Transaction expenses of R 800 000 recognised in respect of the Goliath Acquisition.

11. The acquisition of an additional 21.77% of the issued ordinary shares of Goliath Gold by way of issuing 32 084 871 new shares in the Company at R2.00 per share. The investment in Goliath Gold has been accounted for at fair value of R64.17 million in terms of IAS 39 par 14. This implies a valuation of R2.00 per Goliath Gold share.

Digicore Acquisition

12. Transaction expenses of R 1 600 000 recognised in respect of the Digicore acquisition.

13. The acquisition of 19.26% of the issued ordinary shares of Digicore by way of issuing 59 615 963 new shares in the Company at R2.00. The investment in Digicore has been accounted for at fair value of R119.23 million in terms of IAS 39 par 14. This implies a valuation of R2.50 per Digicore share.

Share Issues for Cash


15. The issue of 1 385 000 new shares in the Company to settle underwriting fees in the amount of R2 770 000. This cost has been accounted for as a deduction from equity, net of any related income tax benefit in terms of IAS 32 Financial Instruments: Presentation par 35.

16. The issue of 1 140 000 new shares in the Company at R2.00 per share to settle private placement commitment fees of R2 280 000. This cost has been accounted for as a deduction from equity, net of any related income tax benefit in terms of IAS 32 Financial Instruments: Presentation par 35.

128

General

17. All adjustments, save for the transaction expenses, will have a continuing effect on the Company’s results.

18. Shareholders are referred to paragraph 4.6.4 which describes the terms of the Call Option granted to Tellumat, or its shareholders, to acquire the Tellumat shares issued to ConvergeNet. The table below details the pro forma financial effects on the assumption that the Call Option has been exercised on 1 September 2013 in respect of the statement of comprehensive income and on 31 August 2014 in respect of the statement of financial position. The pro forma financial effects are based on the further assumption that the shares held by ConvergeNet in Tellumat are fairly valued at R100.119 million. The impact of the exercise of the Call Option triggered by a BEE event or Voluntary Repurchase is zero, as the option is exercised at fair market value. Should the Call Option be exercised in the event of a Change of Control, a loss on the sale of investment in Tellumat of R25.03 million will be incurred, net of taxation. The amounts set out in the “Before” column have been extracted from the reviewed interim results of the Company for the 12 months ended 31 August 2014, as released on SENS on 4 December 2014.

Before

After Exercise of Call Option

– Change of Control

Change %

After Exercise of Call Option

– BEE eventChange

%

After Exercise of Call Option – Voluntary repurchase

Change %

Basic (loss)/profit per ordinary share from continuing operations (cents) (2.94) (2.91) 0.85 (2.94) – (2.94) –



continuing operations (cents) (2.94) (2.91) 0.85 (2.94) – (2.94) –



continuing operations (cents) (2.94) (2.94) – (2.94) – (2.94) –



continuing operations (cents) (2.94) (2.94) – (2.94) – (2.94) –


share from discontinued

operations (cents) (89.35) (89.35) – (89.35) – (89.35) –




(cents) (89.35) (89.35) – (89.35) – (89.35) –

Headline (loss)/profit per ordinary share from discontinued operations

(cents) (16.23) (16.23) – (16.23) – (16.23) –

Diluted headline (loss)/profit per ordinary share from


(cents) (16.23) (16.23) – (16.23) – (16.23) –

Weighted average number of shares 99 701 849. 99 701 849 – 99 701 849 – 99 701 849 –


number of shares 99 701 849. 99 701 849 – 99 701 849 – 99 701 849 –

Number of shares in issue 100 946 502 100 946 502 – 100 946 502 – 100 946 502 –

Net asset value per share

(cents) 194.64 194.62 (0.01 ) 194.64 – 194.64 –

Tangible net asset value per

share (cents) 192.99 192.96 (0.01 ) 192.99 – 192.99 –

129

PRO FORMA STATEMENT OF FINANCIAL POSITION OF CONVERGENET AT 31 AUGUST 2014

The pro forma statement of financial position set out below presents the pro forma financial effects of ConvergeNet as at 31 August 2014 based on the assumption that the Transactions were effective on 31 August 2014.

12 months

ended

31 August

2014

Before1

Actual

R’000

SCS

Disposal

Adjustments

Actual

R’000

Contract

Kitting

Disposal

Adjustments

Actual

R’000

After the

SCS

Disposal

and Contract

Kitting

Disposal

Pro forma

R’000

MRI

Acquisition

Pro forma

R’000

After MRI

Acquisition

Pro forma

R’000

ASSETS

Non-current assets

Property, plant and equipment – – – – – –

Goodwill – – – – – –

Intangible assets – – – – – –

Investments in associates – – – – – –

Other financial assets 10 000 – – 10 000 – 10 000

Deferred taxation 1 665 – – 1 665 – 1 665

Investments at fair value through

profit and loss – 5 0002 95 1192 100 119 25 2735 125 392

11 665 5 000 95 119 111 784 25 273 137 057

Current assets

Inventories 50 – – 50 – 50

Loans to group companies – – – – – –

Other financial assets 69 648 – – 69 648 – 69 648

Current tax receivable – – – – – –

Trade and other receivables 2 334 – – 2 334 – 2 334

Cash and cash equivalents 7 019 – – 7 019 – 7 019

79 051 – – 79 051 – 79 051

Non-current assets held for sale 158 943 (4 599)3 (154 344)3 – – –

237 994 (4 599) (154 344) 79 051 – 79 051

TOTAL ASSETS 249 659 401 (59 225) 190 835 25 273 216 108


Total equity

Shareholders’ equity 195 646 5 1574 (5 156)4 195 647 25 2735 220 920

Non-controlling interest (14 221) – – (14 221) – (14 221)

181 425 5 157 (5 156) 181 426 25 273 206 699

Liabilities


Other financial liabilities 238 – – 238 – 238

Finance lease obligation – – – – – –

Operating lease liability – – – – – –

Deferred taxation – – – – – –

238 – – 238 – 238

Current liabilities

Other financial liabilities 7 000 – – 7 000 – 7 000

Current tax payable 490 – – 490 – 490


Provisions – – – – – –

Trade and other payables 1 681 – – 1 681 – 1 681

Bank overdraft – – – – – –

9 171 – – 9 171 – 9 171

130

12 months

ended

31 August

2014 Before1

Actual

R’000

SCS


Actual

R’000

Contract

Kitting


Actual

R’000

After the

SCS

Disposal

and Contract

Kitting Disposal

Pro forma

R’000

MRI Acquisition

Pro forma

R’000

After MRIAcquisition

Pro forma

R’000

Non-current liabilities held for sale 58 825 (4 756) (54 069) – – –

Total liabilities 68 234 (4 756) (54 069) 9 409 – 9 409

TOTAL EQUITY AND LIABILITIES 249 659 401 (59 225) 190 835 25 273 216 108

Number of shares in issue 100 946 502 – – 100 946 502 12 636 3325 113 582 834

Treasury (432 221) – – (432 221) – (432 221)

Net shares 100 514 281 – – 100 514 281 – 113 150 613

Net asset value per share (cents) 194.64 – – 194.65 – 195.24

Tangible net asset value per share

(cents) 192.99 – – 192.99 – 193.77

Goliath Gold

Acquisition

After

Goliath Gold

Acquisition

Digicore

Acquisition

After

Digicore

Acquisition

Private

Placement

After

Private

Placement

Pro forma Pro forma Pro forma Pro forma Pro forma Pro forma

R’000 R’000 R’000 R’000 R’000 R’000

ASSETS

Non-current assets

Property, plant and equipment – – – – – –

Goodwill – – – – – –

Intangible assets – – – – – –

Investments in associates – – – – – –

Other financial assets – 10 000 – 10 000 – 10 000

Deferred taxation – 1 665 – 1 665 – 1 665

Investments at fair value through

profit and loss 64 1706 189 561 119 2327 308 793 – 308 793

64 170 201 226 119 232 320 458 – 320 458

Current assets

Inventories – 50 – 50 – 50

Loans to group companies – – – – – –

Other financial assets – 69 648 – 69 648 – 69 648

Current tax receivable – – – – – –

Trade and other receivables – 2 334 – 2 334 – 2 334

Cash and cash equivalents – 7 019 – 7 019 150 0008 157 019

– 79 051 – 79 051 150 000 229 051

Non-current assets held for sale – – – – – –

– 79 051 – 79 051 150 000 229 051

TOTAL ASSETS 64 170 280 277 119 232 399 509 150 000 549 509


Total equity

Shareholders’ equity 64 1706 285 089 119 2327 404 321 150 0008 554 321

Non-controlling interest – (14 221) – (14 221) – (14 221)

64 170 270 868 119 232 390 100 150 000 540 100

131

Goliath Gold

Acquisition

After

Goliath Gold

Acquisition

Digicore

Acquisition

After

Digicore

Acquisition

Private

Placement

After

Private

Placement

Pro forma Pro forma Pro forma Pro forma Pro forma Pro forma

R’000 R’000 R’000 R’000 R’000 R’000

Liabilities


Other financial liabilities – 238 – 238 – 238


Operating lease liability – – – – – –

Deferred taxation – – – – – –

– 238 – 238 – 238

Current liabilities

Other financial liabilities – 7 000 – 7 000 – 7 000

Current tax payable – 490 – 490 – 490


Provisions – – – – – –

Trade and other payables – 1 681 – 1 681 – 1 681

Bank overdraft – – – – – –

– 9 171 – 9 171 – 9 171

Non-current liabilities held for sale – – – – – –

Total liabilities – 9 409 – 9 409 – 9 409

TOTAL EQUITY AND LIABILITIES 64 170 280 277 119 232 399 509 150 000 549 509

Number of shares in issue 32 084 8716 145 667 705 59 615 9637 205 283 668 75 000 0008 280 283 668

Treasury – (432 221) – (432 221) – (432 221)

Net shares – 145 235 484 – 204 851 447 – 279 851 447

Net asset value per share (cents) – 196.29 – 197.37 – 198.08

Tangible net asset value per

share (cents) – 195.15 – 196.56 – 197.48

Share issue

in lieu of

underwriting

feesPro forma

R’000

After share

issue

in lieu of

underwriting

fees

Pro forma

R’000

Share issue

in lieu of

private

placement

commitment fees

Pro forma

R’000

After share

issue in lieu

of private

placement

commitment

fees

Pro forma

R’000

After all

TransactionsR’000

ASSETS

Non-current assets

Property, plant and equipment – – – – –

Goodwill – – – – –

Intangible assets – – – – –

Investments in associates – – – – –

Other financial assets – 10 000 – 10 000 10 000

Deferred taxation – 1 665 – 1 665 1 665

Investments at fair value through profit and loss – 308 793 – 308 793 308 793

– 320 458 – 320 458 320 458

132

Share issue

in lieu of underwriting

fees

Pro forma

R’000

After share

issue

in lieu of underwriting

fees

Pro forma

R’000

Share issue

in lieu of

private

placement commitment

fees

Pro forma

R’000

After share

issue in lieu

of private

placement commitment

fees

Pro forma

R’000

After all

Transactions

R’000

Current assets

Inventories – 50 – 50 50

Loans to group companies – – – – –

Other financial assets – 69 648 – 69 648 69 648

Current tax receivable – – – – –

Trade and other receivables – 2 334 – 2 334 2 334

Cash and cash equivalents – 157 019 – 157 019 157 019

– 229 051 – 229 051 229 051

Non-current assets held for sale – – – – –

– 229 051 – 229 051 229 051

TOTAL ASSETS – 549 509 – 549 509 549 509


Total equity

Shareholders’ equity – 554 321 – 554 321 554 321

Non-controlling interest – (14 221) – (14 221) (14 221)

– 540 100 – 540 100 540 100

Liabilities


Other financial liabilities – 238 – 238 238

Finance lease obligation – – – – –

Operating lease liability – – – – –

Deferred taxation – – – – –

– 238 – 238 238

Current liabilities

Other financial liabilities – 7 000 – 7 000 7 000

Current tax payable – 490 – 490 490

Finance lease obligation – – – – –

Provisions – – – – –

Trade and other payables – 1 681 – 1 681 1 681

Bank overdraft – – – – –

– 9 171 – 9 171 9 171

Non-current liabilities held for sale – – – – –

Total liabilities – 9 409 – 9 409 9 409

TOTAL EQUITY AND LIABILITIES – 549 509 – 549 509 549 509

Number of shares in issue 1 385 0009 281 668 668 1 140 00010 282 808 668 282 808 668

Treasury – (432 221) – (432 221) (432 221)

Net shares – 281 236 447 – 282 376 447 284 126 447

Net asset value per share (cents) – 197.10 – 196.31 196.31

Tangible net asset value per share (cents) – 196.51 – 195.72 195.72


1. The amounts set out in the “Before” column have been extracted from the reviewed interim results of the Company for the 12 months ended 31 August 2014, as realised on SENS on 4 December 2014.

133

SCS Disposal and Contract Kitting Disposal

2. The SCS Disposal and Contract Kitting Disposal for a total purchase consideration of R5 000 000 and R95 119 000 respectively, settled by way of the issue of new shares in Tellumat such that after the Contract Kitting Disposal and SCS Disposal the Company holds 30% of the issued ordinary shares of Tellumat. The investment in Tellumat has been accounted for at fair value of R100 119 000 million in terms of IAS 39 par 14. This implies a valuation of R333.73 million for the combined entity incorporating Tellumat’s existing business, Contract Kitting and SCS.

3. Derecognition of the assets and liabilities of SCS and Contract Kitting respectively as detailed in the table below, extracted from the reviewed results of SCS, Chrystalpine and Contract Kitting for the 12 months ended 31 August 2014, available at http://convergenet.com/investor-relations/historical-financial-information .

R’000 SCS

SCS

Adjust-

ments

SCS

Total

Chrystal-

pine

Chrystal-

pine

Adjust-

ments

Contract

Kitting

Contract

Kitting

Adjust-

ment

Contract

Kitting

Total

Assets of disposal group

classified as held for sale

Property, plant and equipment 237 – 237 – – 3 840 – 3 840

Goodwill and intangible assets – 972& 972 852 – – 30 409^ 31 261

Other financial assets – – – – 1 334 (702)$ 632

Inventories 276 – 276 – – 63 504 – 63 504

Trade and other receivables 2 644 – 2 644 – – 47 724 – 47 724

Other assets 470 – 470 7 – 7 376 – 7 383

Financial assets as fair value

through profit or loss – – – – – – – –

Investment in subsidiaries – – – – – – – –

3 627 972 4 599 859 – 123 778 29 707 154 344

Liabilities of disposal group

classified held for sale

Interest-bearing loans and

other financial liabilities – – – 1 181 (1 181)$ 494 (185)$ 309

Finance lease obligation – – – – – – – –

Trade and other payables 4 756 – 4 756 – – 53 760 – 53 760

Other liabilities – – – – – – – 309

Financial liabilities at fair value

through profit or loss – – – – – – – –

4 756 – 4 756 1 181 (1 181) 54 254 (185) 54 069

& Adjustment to recognise SCS brand name asset on consolidation.

$ Elimination journals relating to inter-company loans:

– R702 000 owed by Chrystalpine to Contract Kitting.

– R479 000 owed by Chrystalpine to other Group companies.

– R185 000 owed by Contract Kitting to other Group companies.

4. Recognition of profit on disposal of SCS of R5 157 000 and loss on disposal of Contract Kitting of R5 156 000.

MRI Acquisition

5. The acquisition of an additional 30.32% of the issued ordinary shares of MRI by way of issuing 12 636 332 new shares in the Company at R2.00 per share. The investment in MRI has been accounted for fair value of R25.273 million in terms of IAS 39 par 14. This implies a valuation of R0.10 per MRI share.

134

Goliath Gold Acquisition

6. The acquisition of an additional 21.77% of the issued ordinary shares of Goliath Gold by way of issuing 32 084 871 new shares in the Company at R2.00 per share. The investment in Goliath Gold has been accounted for at fair value of R64.17 million in terms of IAS 39 par 14. This implies a valuation of R2.00 per Goliath Gold share.

Digicore Acquisition

7. The acquisition of 19.26% of the issued ordinary shares of Digicore by way of issuing 59 615 963 new shares in the Company at R2.00. The investment in Digicore has been accounted for at fair value of R119.23 million in terms of IAS 39 par 14. This implies a valuation of R2.50 per Digicore share.

Share Issues for Cash


9. The issue of 1 385 000 new shares in the Company to settle underwriting fees in the amount of R2 770 000. This cost has been accounted for as a deduction from equity, net of any related income tax benefit in terms of IAS 32 Financial Instruments: Presentation par 35.

10. The issue of 1 140 000 new shares in the Company at R2.00 per share to settle private placement commitment fees of R2 280 000. This cost has been accounted for as a deduction from equity, net of any related income tax benefit in terms of IAS 32 Financial Instruments: Presentation par 35.

135

ANNEXURE 8

INDEPENDENT REPORTING ACCOUNTANTS’ LIMITED ASSURANCE REPORT ON THE

PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTIONS

“The DirectorsConvergeNet Holdings LimitedOffice 202, Cape Quarter, The Square27 Somerset RoadGreen PointCape Town8001

10 December 2014

Dear Sirs,

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF THE PRO FORMA FINANCIAL INFORMATION OF CONVERGENET HOLDINGS LIMITED (“CONVERGENET HOLDINGS” OR “THE COMPANY”)

We have completed our assurance engagement to report on the compilation of the pro forma financial information of ConvergeNet Holdings by the directors. The pro forma financial information, as set out in paragraph 21 and Annexure 7 of the circular to ConvergeNet Holdings’ shareholders to be issued on or about 15 December 2014 (“the circular”), consists of the pro forma statement of financial position, the pro forma statement of comprehensive income and related notes. The pro forma financial information has been compiled on the basis of the applicable criteria specified in the JSE Limited (“JSE”) Listings Requirements.

The pro forma financial information has been compiled by the directors to illustrate the impact of the following transactions:

• disposal of Structured Connectivity Solutions Proprietary Limited and Andrews Kit Proprietary Limited t/a Contract Kitting and acquisition of Tellumat Proprietary;

• acquisitions of Mine Restoration Investments Limited, Digicore Holdings Limited and Goliath Gold Mining Limited;

• the specific issue of 1 385 000 ConvergeNet shares at a subscription price of R2.00 per share, amounting to a total consideration of R2 770 000, to the Private Placement Underwriters in lieu of underwriting fees;

• a specific issue of 1 140 000 ConvergeNet shares at a subscription price of R2.00 per share, amounting to a total consideration of R2 280 000; and

• the Private Placement,

as described in the circular (“the Transactions”), on the company’s financial position as at 31 August 2014, and the company’s financial performance for the period then ended, as if the transactions had taken place at 31 August 2014 for purposes of the pro forma statement of financial position and at 1 September 2013 for the purposes of the pro forma statement of comprehensive income. As part of this process, information about the company’s financial position and financial performance has been extracted by the directors from the company’s published interim financial information for the 12 months ended 31 August 2014.

Responsibilities

Directors’ responsibility for the Pro Forma Financial Information

The directors are responsible for compiling the pro forma financial information on the basis of the applicable criteria specified in the JSE Listings Requirements and described in paragraph 22 and Annexure 7 of the circular.

136


Our responsibility is to express an opinion about whether the pro forma financial information has been compiled, in all material respects, by the directors on the basis specified in the JSE Listings Requirements based on our procedures performed. We conducted our engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Circular which is applicable to an engagement of this nature. This standard requires that we comply with ethical requirements and plan and perform our procedures to obtain reasonable assurance about whether the pro forma financial information has been compiled, in all material respects, on the basis specified in the JSE Listings Requirements.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the pro forma financial information.

As the purpose of pro forma financial information included in a circular is solely to illustrate the impact of a significant corporate action or event on unadjusted financial information of the entity as if the corporate action or event had occurred or had been undertaken at an earlier date selected for purposes of the illustration, we do not provide any assurance that the actual outcome of the event or transaction would have been as presented.

A reasonable assurance engagement to report on whether the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used in the compilation of the pro forma financial information provides a reasonable basis for presenting the significant effects directly attributable to the corporate action or event, and to obtain sufficient appropriate evidence about whether:

• the related pro forma adjustments give appropriate effect to those criteria; and

• the pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

Our procedures selected depend on our judgment, having regard to our understanding of the nature of the company, the corporate action or event in respect of which the pro forma financial information has been compiled, and other relevant engagement circumstances.

Our engagement also involves evaluating the overall presentation of the pro forma financial information.

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

Opinion

In our opinion, the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria specified by the JSE Listings Requirements and described in paragraph 21 and Annexure 7 of the circular.

Consent

This report on the pro forma financial information is included solely for the information of the ConvergeNet Holdings shareholders. We consent to the inclusion of our report on the pro forma financial information, and the references thereto, in the form and context in which they appear in the circular.

Yours faithfully


Registration number 2010/016204/21

Registered Auditors

Chartered Accountants (SA)”

137

ANNEXURE 9

CURRICULA VITAE OF THE DIRECTORS OF CONVERGENET AND SENIOR

MANAGEMENT OF MAJOR SUBSIDIARIES

ConvergeNet

Dumisani Dumekhaya Tabata (BProc, LLB)

Dumisani is an admitted attorney and director and founding partner and director of Smith Tabata Inc. in King William’s Town. In 1996, he was an Acting Judge of the High Court and served in this position for three terms. In April 1999 he was appointed by the Premier of the Eastern Cape as one of the Joint Liquidators of the Transkei Agricultural Corporation (TRACOR). After the advent of democracy, Dumisani regularly acted as attorney for Government Departments, local authorities and parastatals.

Dumisani has served as Deputy Chairman of Absa Bank’s regional board (Eastern Cape), and was a member of its Advisory Board. He is a member of Absa Bank’s Divisional Board and chairman of Afrifresh, Budget Van and Truck Rentals (Eastern Cape) and Budget Office Furniture. He is also a director of Tabata Buchanan Boyes (STBB), Cape Town and Johannesburg.

Peter John van Zyl (BCom)

Peter has wide-ranging operational experience in finance and general management roles and has investment management experience with a particular focus on the Information and Communication Technology industry where he led investment consortiums that acquired controlling interests in Synergy Computing (Pty) Ltd and Saratoga Software (Pty) Ltd in 2003.

Peter was one of the initial investors and founding executives of the Saratoga Group, an International Private Equity Investment Group focusing on investment in the ICT, Financial services and Property sectors. The Saratoga Group expanded from its beginnings in South Africa in the late 90s into the United Kingdom and the United States where it has successfully grown its investments in ICT, Financial service and Property. Saratoga Technologies, an ICT subsidiary of the Group, was ranked in the top 100 fastest growing ICT businesses in the entire United States for five consecutive years.

Peter was also involved in the acquisition and restructure of Synergy Business Intelligence, a software and services business focused on Business intelligence for large corporate clients. The Saratoga Group and Synergy concluded Black Empowerments deals with Sekunjalo Investment Limited in 2003/2004 at which time Peter moved into a role within the Sekunjalo Group which began with assisting the Group in implementing its acquisitions into the listed financial environment and evolved into the Commercial Director role at Sekunjalo Investments Limited, where he managed a portfolio of the underlying businesses in ICT (Software development, software distributions and professional services) and Financial Services (Life companies, short-term insurance, corporate finance and private equity) as well as managing a wide range of new corporate and private equity transactions, including acquisitions, disposals, debt raising and public company rights issues, and included investments for the Sekunjalo Group in British Telecom (Empowerment deal), Marine Growers (Acquaculture deal from Transnet), as well as the restructuring and disposal of a number of Financial Services Businesses.

In 2009, Peter left Sekunjalo to join up with Charles Petit at Afrasia Corporate Finance to focus on the provision of independent advisory services to clients in the SADC region. AfrAsia Corporate Finance now provides a range of advisory, structuring and lending solutions to corporate and financial institutions clients across SADC from its offices in Johannesburg, Cape Town and Mauritius. Peter also established the AfrAsia Special Opportunities Fund and acted as the fund manager until 30 June 2013. Peter remains a member of the credit committee on the fund.

In 2012/2013, Peter established the Thunder Investment Group which focuses on international private equity investments in ICT, financial services and property.

Peter is currently the Chairman of Torre Industrials Limited, the JSE listed industrial group and the Interim CEO and CFO of ConvergeNet Limited.

138

Charles Edward Pettit (BCom (Hons), CFA)

Charles graduated from the University of Cape Town with a First Class Honours degree in Finance and subsequently qualified as a CFA charter holder while working in London for Close Brothers Corporate Finance. At Close Brothers Charles worked on a wide range of M&A and Restructuring transactions and following his return to South Africa in 2008 he established AfrAsia Corporate Finance to focus on the provision of independent advisory services to clients in the SADC region. AfrAsia Corporate Finance now provides a range of advisory, structuring and lending solutions to corporate and institutional clients across SADC from its offices in Johannesburg, Cape Town and Mauritius.

Charles advised on the balance sheet restructuring of formerly-known SA French Limited from 2010 and led the 2011 rights issue for that company as well as its delisting and sale to Torre Industries Limited (“Torre”) in November 2013. He was appointed as the Chief Executive Officer of Torre in August 2012 and now serves in this position on a permanent basis.

Lerato Mangope (BA Economics)

Lerato holds a Bachelor of Arts in Economics degree from Vista University and is in the final stages of completing her MBA. In addition, she has a PDM from the University of Natal as well as a Diploma in Investments Liability Management from the University of Johannesburg (formerly RAU). She is currently the head of the Asset and Liability Management and Corporate Funding (ALMU) division of the Industrial Development Corporation of South Africa Limited (“IDC”). In her present position, she deals with the planning and implementation of the borrowing plan for the IDC on an annual basis, manages the cost of debt as well as the tender procurement process relating to the funding of the IDC and covenants.

Previously, Lerato was a Senior Risk Manager with the IDC for eighteen months where she proactively promoted risk awareness whilst monitoring and overseeing the management of key risks facing the IDC on the basis of Enterprise-Wide Risk Management. She also worked as a Risk Manager for Transnet for seven years where she dealt with the analysis of the Transnet portfolio, the management and reporting of liquidity reports to the Strategic Committee, as well as reviewing the Transnet financial instrument policies.

Janine de Bruyn (BCom (Hons), BCompt)

Janine completed a BCom (Hons) degree in financial analysis and portfolio management at the University of Cape Town and obtained a BCompt degree through UNISA, while completing her articles at PriceWaterhouseCoopers. Janine has consulted to various black empowerment groups and financial services companies over the last ten years, specialising in the analysis of private equity opportunities, valuations, corporate finance advice, corporate actions, socially responsible focused private equity as well as financial management. Janine gained invaluable experience in empowerment, development finance and private equity at Sanlam Investment Management and Futuregrowth Asset Management and has held a number of directorships. She is a member of the Institute of Directors of Southern Africa.

Caroline Clare Wiese (LLB, BA (Journalism))

Clare holds an LLB degree from the University of Cape Town and a BA degree in Journalism from the University of Westminster. After having worked as a magazine journalist at House & Leisure (Associated Magazines), she completed her postgraduate law degree after which she worked at Bowman Gilfillan as a litigation attorney for three years, before founding Sloane & Madison, a company which specialises in the manufacturing of Fine Jewellery.

Christina Helmien Wiese (BA(Value and Policy Studies), Masters (Management))

Christina graduated from the University of Stellenbosch with a BA degree in Value and Policy Studies, after which she did volunteer work at the Red Cross War Memorial Children’s Hospital in Cape Town. She also attended a global leadership program at the Iacocca Institute at Lehigh University in the USA. She subsequently completed her Masters degree in Management from at the London School of Economics during which time she also completed an internship program at Credit Suisse in London. She has worked in the micro-finance industry and currently consults for an online retailer in South Africa.

139

Major subsidiaries

Contract Kitting

Ettiene Visser (Managing Director)

Ettiene started his career at Telkom. With degrees in Engineering, Commerce and Business Administration, a strong management acumen has seen him serve in executive management positions for the last 15 years at Aberdare Cables, Tyco (where he was based in Belgium) and most recently TIS before taking the reins at CK Solutions. He has been involved in the successful planning and execution of company turnaround, diversification and growth strategies.

Marinda van Heerden (Financial Manager)

Marinda obtained her BAcc (Hons) and CTA degree from the University of the Free State in 2006 and qualified as a Chartered Accountant in 2007 whilst at PriceWaterhouseCoopers (“PWC”). She left PWC in 2012 and entered the IT industry. She gained extensive experience within the ICT industry in all facets, including financial reporting, financial management, business and executive management. She joined CK Solutions in October 2013 where she currently acts as the financial manager.

SCS

Andrew Scheepers (Managing Director)

Andrew started his ICT career with International Computers Limited, or ICL as it was known, which was a large British computer hardware and services company that operated from 1968 until 2002 when it was acquired and renamed Fujitsu Services Limited after its parent company, Fujitsu. Andrew ran his own business “Professional System Integrators” for years until he sold the business to New Africa Investments Limited – Cyril Ramaphosa who was then the Chairman for the group. Andrew then joined Hewlett Packard and remained with them until they became Siltek Distribution Dynamics where he was appointed as Sales Director. Andrew joined ConvergeNet Group in 2008 as the National Sales Manager for Sizwe Africa IT Group and took over SCS as Managing Director in 2012.

140

ANNEXURE 10

INVESTMENT MANAGEMENT EXPERIENCE OF THE DIRECTORS OF MANCO

Charles Pettit (CFA)

Charles graduated from the University of Cape Town with a First Class Honours degree in Finance and subsequently qualified as a CFA charter holder while working in London for Close Brothers Corporate Finance. At Close Brothers Charles worked on a wide range of M&A and Restructuring transactions and following his return to South Africa in 2008 established AfrAsia Corporate Finance to focus on the provision of independent advisory services to clients in the SADC region. AfrAsia Corporate Finance now provides a range of advisory, structuring and lending solutions to corporate and financial institutions clients across SADC from its offices in Johannesburg, Cape Town and Mauritius. Charles also established the AfrAsia Special Opportunities Fund and acted as the fund manager until 30 June 2014. He also previously served on the board of directors of White Water Resources Limited (a mining resources company and the corporate predecessor of Goliath Gold), before resigning in September 2010.

Charles advised on the balance sheet restructuring of SA French from 2010 and led the 2011 rights issue for that company as well as its delisting and sale to Torre in 2012. He was appointed as the Chief Executive Officer of Torre in August 2012 and now serves in this position on a permanent basis.

Peter van Zyl (non-executive) (BCom)

Peter has significant experience in restructuring, managing and concluding transactions in the ICT and financial services sectors, in addition to having served on the board of White Water Resources Limited (the corporate predecessor of Goliath Gold Limited, which will be one of the Company’s investments following the conclusion of the transactions) (2010 to 2011). In addition to having been integrally involved in the establishment of AfrAsia Corporate Finance, a licensed financial service provider and investment manager, which provides advice in connection with mergers and acquisitions, capital raising and restructuring, and the investment management of AfrAsia Special Opportunities Fund before his departure in 2013, Peter was previously the Commercial Director at the subsidiary of JSE-listed Sekunjalo Investment Limited, Sekunjalo Capital (2005 – 2009), an investment holding company. In this role, Peter was responsible for negotiating the disposal of certain financial services entities and the investment in a number of ICT businesses including the multi-national BT Telecoms. Whilst at Sekunjalo, Peter served on numerous boards overseeing Sekunjalo’s investment in sectors as diverse as healthcare (Sekunjalo Healthcare (2008)), property (Sekunjalo Properties (2005 – 2006)) and asset management (Sekunjalo Asset Management (2005 – 2007)).

Peter currently serves as Chairman of JSE-listed Torre Industries Limited as well as managing Thunder Capital (Pty) Limited, a private equity investment vehicle and serves on the board of Saratoga Private Equity (Pty) Limited, a private equity investment vehicle.

Given Peter’s significant experience in the establishment of corporate and investment advisory (at AfrAsia Corporate Finance), and his significant experience in managing investments in the ICT sector (which constitutes the vast majority of the Company’s assets) and financial services (an area identified by the Board as a potential investment area), as well as familiarity with the mining sector (though his role at White Water Resources), amongst other sectors, the Board and the Manager of the view that Peter has sufficient expertise to act as an investment manager. Below is a summary of Peter’s most relevant experience:

Company Nature of company Role Period

AfrAsia Corporate Finance Investment advisor and manager

Board and Investment Committee member

2009 – 2013

Sekunjalo Investments Group Investment Holding Company Board member Commercial Director

2005 – 2009

Saratoga Private Equity Private Equity Board member Since 2005

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Jacob Wiese (BA, MIEM (Italy), LLB)

Adv Jacob Wiese serves on the investment committee of the Titan group of companies (director since 2011), the investment holding companies through which the Wiese family hold significant investment stakes in several of South Africa’s largest companies. Adv Wiese also sits on the boards of numerous listed companies in his role as investment manager of the Wiese family’s investment, including Shoprite Holdings Limited (since September 2005), Pepkor Holdings Limited (since February 2010), Invicta Holdings Limited (since July 2010), Tradehold Limited (since 2010), Premier Foods PLC (since 2010) and Digicore Holdings Limited (Since February 2011, which is also one of the subjects of the transaction). In addition, Mr Wiese currently serves, and has served for over three years (since May 2011) of the board of Brait South Africa (Pty) Limited (since May 2011), a licensed financial services provider and the investment advisor to Brait SE, one of South Africa’s leading investment holding companies which has dual listings on the Euro MTF Market of the Luxembourg Stock Exchange and the JSE. Adv Wiese also served as a director of the board of Paladin Capital (now PSG Private Equity), the JSE-listd PSG Group’s private equity business.

Given Adv Wiese’s extensive experience as an investment manager, both at the Titan Group and Brait, as well as his roles on the boards of numerous of South Africa’s leading companies, the Manager and the Company are satisfied that Mr Wiese has sufficient experience and expertise to advise the Board of the Company and act as an investment manager. Below is a summary of Adv Wiese’s most relevant experience:

Company Nature of company Role Period

Titan Group Investment Holding Companies Board and Investment Committee member

Since June 2011

Brait South Africa Investment Manager to Brait SE Board member Since May 2011

Paladin Capital Private Equity Board member During 2009

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ANNEXURE 11

SHARE PRICE HISTORY OF CONVERGENET

The share price history of the Company’s shares traded on the JSE for the past three years up until the Last Practicable Date are given below:

DATE CLOSE HIGH LOW VOLUME

10-Nov 23 25 23 1 154 000

11-Nov 23 24 19 94 957 083

12-Nov 22 25 20 3 151 229

01-Dec 23 23 21 7 504 082

02-Dec 25 29 22 16 944 029

03-Dec 26 29 24 7 611 703

04-Dec 26 29 26 6 333 092

05-Dec 27 34 24 32 136 035

06-Dec 32 32 25 12 521 007

07-Dec 37 37 30 10 297 718

08-Dec 30 37 27 2 273 846

09-Dec 27 33 22 13 181 539

10-Dec 23 27 22 1 158 277

11-Dec 24 24 18 7 265 817

12-Dec 20 24 18 12 204 067

Jan-13 22 24 19 11 239 609

Feb-13 19 24 16 6 008 439

Mar-13 22 22 14 63 984 712

Apr-13 18 21 16 3 584 949

May-13 15 19 10 10 571 826

Jun-13 13 16 11 4 492 112

Jul-13 11 14 10 14 107 524

Aug-13 10 12 6 51 050 775

Sep-13 13 15 7 136 605 450

Oct-13 12 15 11 20 745 508

Nov-13 13 13 9 80 754 063

Dec-13 101 128 12 7 421 922

Jan-14 116 150 99 6 168 738

Feb-14 121 139 100 2 189 422

Mar-14 118 130 114 2 761 566

Apr-14 120 130 110 3 069 094

May-14 105 120 90 686 197

Jun-14 82 100 80 345 749

Jul-14 119 119 83 670 646

Aug-14 165 165 119 6 746 950

Sep-14 237 275 146 19 180 500

Oct-14 235 250 201 8 118 978

Nov-14 240 245 207 1 494 512

Source: www.sharenet.co.za

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ANNEXURE 12

CORPORATE GOVERNANCE

PART A: COMMITMENT

The Company and its subsidiaries (“Group”) endorses the principles contained in the King III report on corporate governance and confirms its commitment to the principles of fairness, accountability, responsibility and transparency as advocated therein. The Board strives to ensure that the Group is being ethically managed according to prudently determined risk parameters and in compliance with generally accepted corporate practices and conduct.

THE BOARD OF DIRECTORS

Structure and responsibilities of the Board

ConvergeNet retains a unitary board structure. The Board is assisted in fulfilling its duties by an audit and risk committee and a remuneration committee. The non-executive directors are of sufficient calibre for their views to carry significant weight in the Board’s decisions. The Board, which is chaired by a non-executive chairman, is scheduled to hold at least four times a year; however, it meets more frequently if circumstances require it to do so. The Board discloses the number of meetings held each year in its annual report, together with the attendance at such meetings. A formal record is kept of all conclusions reached by the Board on matters referred to it for discussion. Should the Board require independent professional advice, a policy has been put in place by the Board for such advice to be sought at the Company’s expense.

Directors are expected to maintain their independence when deciding on matters relating to strategy, performance, resources and standards of conduct. After appointment, all directors are provided with an information pack and are expected to familiarise themselves with the Company’s business, strategic plans and objectives and other relevant laws and regulations. This is performed on an ongoing basis to ensure that directors remain abreast of changes in regulations and the commercial environment.

The Board is responsible for relations with stakeholders, as well as being accountable to them for the performance of the Company, and reporting thereon in a timely and transparent manner.

The Board includes both executive and non-executive directors in order to maintain a balance of power and ensure independent unbiased decisions.

Management supplies the Board with the relevant information needed to fulfil its duties. Directors shall make further enquiries where necessary, and thus have unrestricted access to all company information, records,

documents and property. Not only will the Board look at the quantitative performance of the Company, but also at issues such as customer satisfaction, market share, environmental performance and other relevant issues. The chairman or chief executive officer ensures that all directors are adequately briefed prior to board meetings.

Independence of the Board

The roles of chairman and chief executive officer are separated. The non-executive directors are not appointed under service contracts and their remuneration is not tied to the Group’s financial performance.

The current non-executive directors offer independent judgment and there are no extraneous factors that could materially affect their judgment. If there is an actual or potential conflict of interest, the director (executive or non-executive) concerned, after declaring his interest in terms of the Companies Act, is excluded from the related decision-making process.

Appointment and re-election of the Board

The Company does not currently have a nomination committee due to the stage of development of the Company and the size of its operations. However, the remuneration committee is in the process of being reconstituted as a remuneration and nomination committee for the forthcoming year. Appointments to the Board are currently based on the needs of the Company as assessed from time to time and consideration of the relevant qualifications of the nominee concerned.

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Role and function of the Board

The Board adopted a Board charter which governs the directors’ role and responsibilities. The Board retains full, effective control over the Group, provides strategic direction and delegates certain powers to management. The day-to-day management of the Group is vested in the executive directors.

The Board determines the Company’s purpose and values, ensures that the Group complies with codes of sound business practice and has unrestricted right of access to all Company information, records, documents, property and independent legal advice when required.

The directors recognise that they are responsible for the Group’s system of financial and internal controls. The executive directors are responsible for identifying, analysing, reporting and managing Group risk which forms part of their everyday functions.

Board committees

The Company has three committees, namely an audit and risk committee, remuneration and nomination committee and social and ethics committee, and it intends forming an investment committee in due course. These committees report to the Board. The Board meets on a regular basis at least every three months. The directors are properly briefed in respect of special business prior to board meetings and information is timeously provided to enable them to give full consideration to all the issues being dealt with. The directors do make further enquiries where necessary. Minutes are kept of all board and committee meetings.

Audit and risk committee

The audit and risk committee meets at least three times a year and a partner of the external auditor is invited to attend meetings. The majority of the members of the audit and risk committee are financially literate. The Board has unrestricted access to the committee.

The audit and risk committee mandate provides for, inter alia, the reviewing of financial information, the effectiveness of the internal controls, considering the expertise and competency of the financial director and the company secretary, assessment of risk relating to the business and industry, accounting policies, the code of ethics, compliance procedures, auditor independence, audit fees and reporting thereon to the Board. The audit and risk committee has approved its responsibilities in terms of its charter. The composition of the audit and risk committee conforms with the provisions of the Companies Act in that it consists of three independent non-executive members.

As reported in the Company’s last Annual Report for the year ended 31 August 2013, the audit and risk committee has satisfied itself that the financial director has appropriate expertise and experience.

The Company outsources its company secretarial responsibilities, which ensures independence. The audit and risk committee is of the opinion that Mr Warwick van Breda, who was appointed as company secretary to ConvergeNet with effect from 1 December 2013, has the requisite attributes, experience and qualifications to fulfil its commitments effectively.

Remuneration and nomination committee

The committee is responsible for considering the remuneration of the executive directors and making recommendations to the Board in this regard. In determining the remuneration of directors, the committee takes heed of issues such as market norms, staff retention, the performance of directors, balance scorecard issues, share incentive scheme considerations and incentives and have access to outside consultation if necessary. The chief executive officer is also consulted. The remuneration and nomination committee meets at least once a year.

As at the Last Practicable Date, ConvergeNet has not entered into any service contracts with its executive or nonexecutive directors. The executives’ remuneration has been brought into parity with both the market salaries as well as certain of its subsidiaries. All non-executive directors are subject to retirement by rotation and re-election by shareholders at least once every three years in accordance with the Memorandum of Incorporation.

Social and ethics committee

A meeting of the social and ethics committee was held in the current financial year and the Terms of Reference and a work plan for the committee were confirmed. The committee meets at least twice a year and its mandate includes the duties and responsibilities set out in the Companies Regulations and include, inter alia,

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compliance with employment equity, broad-based black economic empowerment, skills development, social investment and community involvement.

The Company continues to promote a culture that provides all employees with opportunities to advance to their optimal levels of career development. The Company has introduced a group share incentive scheme to promote employee participation and consultation.

The Company upholds and supports the objectives of the Employment Equity Act, No. 55 of 1998, and intends implementing various initiatives that provide opportunities for all levels of staff within its various developments as they become established and will seek to position itself as an employer of choice, whilst at the same time enhancing its participation in making South Africa more internationally competitive. The Company’s employment policies are designed to provide equal opportunities, without discrimination, to all employees.

Investment committee

The investment committee will be established in due course in the interest of effective assessment of investment opportunities, proper and effective reporting to the Board and good corporate governance.

Access to company secretary

All directors have access to the advice and services of the company secretary. The appointment or dismissal of the company secretary will be decided by the Board as a whole and not by one individual director. The company secretary is required to provide the members of the Board with guidance and advice regarding their responsibilities, duties and powers and to ensure that the Board is aware of all legislation relevant to or affecting the Company. The company secretary is required to ensure that the Company complies with all applicable legislation regarding the affairs of the Company, including the necessary recording of meetings of the Board, board committees and shareholders of the Company.

External auditors and audit

The financial statements are prepared in terms of the International Financial Reporting Standards. The audit and risk committee reviews the audit fees for the audit. The auditors have unrestricted access to the audit and risk committee and are invited to all audit and risk committee meetings. The re-appointment of the auditors or appointment of new auditors is reviewed by the audit and risk committee.

An audit and risk committee has been established, which primary objective is to ensure that the auditors are considered independent and to provide the Board with additional assurance regarding the efficacy and reliability of the financial information used by the directors, to assist them in discharging their duties. The committee is required to provide comfort to the Board that adequate and appropriate financial and operating controls are in place, that significant business, financial and other risks have been identified, and are being suitably managed and that satisfactory standards of governance, reporting and compliance are in operation. The committee has set principles for recommending the use of the external auditors for non-audit services. No material non-audit services have been performed by the auditors during the current financial year in line with the non-audit services policy that was adopted. The audit and risk committee is satisfied as to the independence of the auditors.

Accounting and internal controls

The Board is responsible for the Company’s systems of internal financial and operational control, as well as for maintaining an appropriate relationship with the Company’s auditors. The Board is responsible for presenting a balanced and understandable assessment of the Company’s financial position with respect to all financial and price sensitive reports on the Company.

The Board has established controls and procedures to ensure the accuracy and integrity of the accounting records and monitors the Group’s businesses and their performance. The controls are designed to provide reasonable assurance that assets are safeguarded from loss or unauthorised use and that the financial records may be relied upon for maintaining accountability for assets and liabilities and preparing the financial statements.

Internal audit

The executive directors conduct an annual review of the Company’s internal controls, and report their findings to the audit and risk committee. This review covers financial, operational and compliance controls, as well as a review of the risk management policies and procedures of the Company. The directors are assisted in this task by the Group auditors as well as its appointed corporate adviser.

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After thorough review of the Company’s internal control processes and the reorganisation of the Group’s operations, the Board identified the need to establish a formal internal audit process, which would require appointment of an external function due to the constrained resources to facilitate the function internally.

Communications with stakeholders

The Group is committed to ongoing and effective communication with stakeholders. It subscribes to a policy of open and timeous communication in line with JSE guidelines and sound corporate governance and will manage these through an investor relations programme.

Closed and prohibited periods

A closed period is exercised by the Group’s directors from the date of the reporting period until the Group’s results are released on SENS. Additional closed or prohibited periods are enforced as required in terms of any corporate activity or when directors are in possession of price sensitive information. All the directors are aware of the legislation regulating insider trading. A record of dealings by directors in the Company’s securities is retained by the company secretary at the company secretary’s office of the Company. A trading in shares policy was adopted by the Board.

Sustainability reporting

The Group is committed to high moral, ethical and legal standards and expects all representatives of the Group to act in accordance with the highest standards of personal and professional integrity in all aspects of their activities and to comply with all applicable laws, regulations and the Group’s policies.

The overall well-being of employees is regarded as important and the Company encourages its employees to raise any issues with the executive directors as well as at subsidiary level. From a business perspective, the Group is actively involved in reduction of energy consumption for certain of its telecommunications customers, which are expected to have a sustainable positive impact on the environment, its customers and the Group. In the ensuing year, the Group will also be focusing on energy efficient power solutions and products. Furthermore, in the Company’s office environment, systems aimed at reducing resource consumption over time are in place and the Company is continuously exploring ways in which to reduce paper, energy and water usage.

Principles contained in King III not complied with and the reasons for non-compliance

The Board endorses the principles contained in the King III Code and confirms its commitment to those principles where, in the view of the Board, they apply to the business. Compliance is monitored regularly and the Board has undertaken an internal review process in determining compliance. Where areas of non-compliance or partial compliance have been identified, such items are listed below, together with the reasons therefore:

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PART B – APPLICATION OF PRINCIPLES IN THE KING III CODE

Preamble

ConvergeNet accepts the obligation to apply the practices prescribed by the King III Code and has resolved as a business philosophy to adopt and pursue the same. It therefore strives to meet those objectives in accordance with the content of the table below.

1 – Not applied/will not be applied

2 – In process/partially applied

3 – Full application

PrincipleStage of maturity Comments

1. Ethical leadership and corporate citizenship

1.1 The Board should provide effective leadership based on an ethical foundation

3 The Board observes the highest standards of ethical conduct in discharging its responsibilities. The Board has established a social and ethics committee, as detailed in Part A above, in this regard.

1.2 The Board should ensure that the company is, and is seen to be, a responsible corporate citizen

3 The Board acknowledges the importance of the Company being seen as a responsible citizen. The Board has established a social and ethics committee, as detailed in Part A above, in this regard.

1.3 The Board should ensure that the company’s ethics are managed effectively

3 The Board, together with executive management, observes the highest standards of ethical conduct in discharging its responsibilities. The Board has established a social and ethics committee, as detailed in Part A above, in this regard.

2. Board and Directors

2.1 The Board should act as the focal point for and custodian of

corporate governance

3 The Board is committed to and endorses the application of the principles of transparency,

integrity and accountability as recommended in the King III Code.

2.2 The Board should appreciate that strategy, risk, performance and sustainability are inseparable

3 The Board has established committees, as recommended by the King III Code, in ensuring that strategy, risk, performance and sustainability are integrated, as detailed in Part A above.

2.3 The Board should provide effective leadership based on an ethical foundation

3 The Board observes the highest standards of ethical conduct in discharging its responsibilities. The Board has established a social and ethics committee, as detailed in Part A above, in this regard.

2.4 The Board should ensure that the company is and is seen to be a responsible corporate citizen

3 The Board acknowledges the importance of the Company being seen as a responsible citizen. The Board has established a social and ethics committee, as detailed in Part A above, in this regard.

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2.5 The Board should ensure that the company’s ethics are managed effectively

3 The Board, together with executive management, observes the highest standards of ethical conduct in discharging its responsibilities. The Board has established a social and ethics committee, as detailed in Part A above, in this regard.

2.6 The Board should ensure that the company has an effective and independent audit and risk committee

2 The composition of the audit and risk committee conforms with the provisions of the Companies Act in that it consists of three independent non-executive members.

2.7 The Board should be responsible for the governance of risk

3 The audit and risk committee is specifically mandated by the Board to address this matter, and reports to the Board on a quarterly basis.

2.8 The Board should be responsible for information technology (IT) governance

2 The IT Governance and responsibility has been delegated to the audit and risk committee. Refer to the Terms of Reference of the audit and risk committee which address IT Governance. The Company has not yet established an IT governance framework given the size and nature of the IT environment of the Group and no significant IT investments or expenses have been incurred to date.

2.9 The Board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards

3 The audit and risk committee is mandated to ensure that the Company complies with applicable laws and considers adherence to non-binding rules, codes and standards, as assisted and advised by the company secretary and external advisers to the extent required.

2.10 The Board should ensure that there is an effective risk-based internal audit

3 The executive directors conduct an annual review of the Company’s internal controls, and report their findings to the audit and risk committee. This review covers financial,

operational and compliance controls, as well as a review of the risk management policies and procedures of the Company. In addition the Company has appointed an external firm to fulfill the role of Internal Auditors and they are in the process of developing an Integrated Assurance model for the Group.

2.11 The Board should appreciate that stakeholders’ perceptions affect the company’s reputation

3 The Board has procedures in place to ensure that all material matters are communicated to its stakeholders in an effective and responsible manner. Executive management is tasked to implement this policy in conjunction with Board-appointed advisers.

2.12 The Board should ensure the integrity of the Company’s integrated report

3 ConvergeNet has formulated and implemented processes to ensure the integrity of the Company’s integrated report, the contents whereof will be consistent with the size and nature of ConvergeNet’s business.

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2.13 The Board should report on the effectiveness of the company’s system of internal controls

3 The directors recognise that they are responsible for the Group’s system of financial and internal controls. The executive directors are responsible for identifying, analysing, reporting and managing Group risk which forms part of their daily functions. The Terms of Reference of the Audit and risk committee includes the need to report to the Board annually on the effectiveness of the Company’s internal financial controls.

2.14 The Board and its directors should act in the best interests of the company

3 Directors are required to declare their interest at every Board meeting.

2.15 The Board should consider business rescue proceedings or other turnaround mechanisms as soon as the company is financially distressed as defined in the Act.

3 In the event that business rescue proceedings are contemplated, same will be implemented within the framework of the Companies Act.

2.16 The Board should elect a chairman of the Board who is an independent non-executive director. The CEO of the company should not also fulfill the role of chairman of the Board

2 The roles of the interim CEO and Chairman are fulfilled by separate individuals. The current chairman, Mr Dumisani Tabata, is an independent non-executive member.

2.17 The Board should appoint the chief executive officer and establish a framework for the delegation of authority

The Company appointed its current Chief Financial Officer, PJ van Zyl, as Chief Executive Officer of the Group on an interim basis, which interim appointment will terminate on 31 December 2014. The Company is already in discussions with potential candidates in this regard.

2.18 The Board should comprise a balance of power, with a majority of non-executive directors. The

majority of non-executive directors should be independent.

3 The Board comprises a majority of non-executive directors, of which six members are independent.

2.19 Directors should be appointed through a formal process

3 The appointment of directors is a matter considered by the Board as a whole, as assisted by the remuneration committee. A formal Appointments to the Board Policy was adopted by the Board.

2.20 The induction of and ongoing training and development of directors should be conducted through formal processes

2 New directors will have unlimited access to the Company’s resources in order to familiarise themselves with all matters related to the Company. They are also provided with induction packs but no formal training currently exists.

2.21 The Board should be assisted by a competent, suitably qualified and experienced company secretary

3 An independent company fulfills the role as company secretary to the Company. This function will be reviewed annually.

2.22 The evaluation of the Board, its committees and the individual directors should be performed every year

3 Due to the number of Board changes, no formal evaluation of the Board has taken place; however, a self-evaluation is scheduled and the results discussed in November 2014.

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2.23 The Board should delegate certain functions to well-structured committees without abdicating its own responsibilities

3 The Board has established committees, as detailed in Part A above, which report to the Board. The Board comprises a majority of non-executive directors, of which six members are independent.

2.24 A governance framework should be agreed between the Group and its subsidiary Boards


2.25 Companies should remunerate directors and executives fairly and responsibly

3 The remuneration committee is mandated to establish and assess the remuneration policy of the Group.

2.26 Companies should disclose the remuneration of each individual director and certain senior executives

3 The remuneration of the Company’s directors is disclosed in its Annual Financial Statements, as required.

2.27 Shareholders should approve the company’s remuneration policy

3 The remuneration of the Company’s directors is subject to approval by shareholders at the Company’s annual general meetings.

3. Audit and risk committees

3.1 The Board should ensure that the company has an effective and independent audit and risk committee (private company exception)

3 The audit and risk committee is constituted by non-executive directors.

3.2 Audit and risk committee members should be suitably skilled and experienced independent, non-executive directors (subsidiary exception)

3 The members of the audit and risk committee, which is constituted by non-executive directors, all have financial backgrounds and extensive business experience.

3.3 The audit and risk committee should be chaired by an independent non-executive director

3 The audit and risk committee is chaired by an independent non-executive director.

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3.4 The audit and risk committee should oversee the integrated reporting (integrated reporting, financial, sustainability and summarised information)

The audit and risk committee should be responsible for evaluating the significant judgments and reporting decisions affecting the integrated report.

The audit and risk committee’s review of the financial reports should encompass the annual financial statements, interim reports, preliminary or provisional result announcements, summarised integrated information, any other intended release of price-sensitive financial information, trading statements, circulars and similar documents.

3 Processes in this regard are in place for the compilation of an integrated report, the contents whereof are appropriate for the size and nature of ConvergeNet’s business, and forms part of the audit and risk committee’s mandate.

3.5 The audit and risk committee should ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activities

3 The audit and risk committee is mandated to establish a combined assurance model and to apply same in providing a coordinated approach to all assurance activities.

3.6 The audit and risk committee should satisfy itself of the expertise, resources and experience of the company’s finance function

3 The audit and risk committee evaluates the performance of the finance function on an annual basis and makes appropriate recommendations to the Board in this regard.

3.7 The audit and risk committee should be responsible for overseeing of internal audit

3 The audit and risk committee conduct an annual review of the Company’s internal controls, and report their findings to the executive Committee. This review covers financial, operational and compliance controls, as well as a review of the risk management policies and procedures of the Company. Internal audit function has been implemented and the audit and risk committee has reviewed and approved the internal audit charter.

3.8 The audit and risk committee should be an integral component of the risk management process

3 The audit and risk committee is mandated by the Board to establish policies and procedures in respect of the risk management process.

3.9 The audit and risk committee is responsible for recommending the appointment of the external auditor and overseeing the external audit process

3 The audit and risk committee considers the appointment of the external auditor on an annual basis and manages the relationship throughout the financial year.

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3.10 The audit and risk committee should report to the Board and shareholders on how it has discharged its duties

3 The audit and risk committee’s report to the Board and shareholders is included in the Company’s annual financial statements.

4. The governance of risk

4.1 The Board should be responsible for the governance of risk


4.2 The Board should determine the levels of risk tolerance


4.3 The risk committee or audit and risk committee should assist the Board in carrying out its risk responsibilities


4.4 The Board should delegate to management the responsibility to design, implement and monitor the risk management plan


4.5 The Board should ensure that risk assessments are performed on a continual basis

3 The audit and risk committee meets and reports to the Board on a quarterly basis to ensure its mandate is carried.

4.6 The Board should ensure that frameworks and methodologies are implemented to increase the probability of anticipating unpredictable risks

3 The audit and risk committee is mandated by the Board to establish and implement frameworks and methodologies to increase the probability of anticipating unpredictable risks.

4.7 The Board should ensure that management considers and implements appropriate risk responses

3 The audit and risk committee is mandated to establish risk management policies and procedures, which is in turn implemented by executive management in responding to various risks. A risk register was adopted and risks mitigated by management.

4.8 The Board should ensure continual risk monitoring by management

3 The audit and risk committee is mandated to establish risk management policies and procedures, which is in turn implemented by executive management in monitoring and responding to various risks. The risk register and responses is discussed at each meeting.

4.9 The Board should receive assurance regarding the effectiveness of the risk management process

3 The audit and risk committee is mandated to establish risk management policies and procedures, which is in turn communicated to and implemented by executive management. The audit and risk committee reports to the Board in this regard on a quarterly basis.

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4.10 The Board should ensure that there are processes in place enabling complete, timely, relevant, accurate and accessible risk disclosure to stakeholders

3 The audit and risk committee is mandated to establish policies and procedures to ensure risk areas are identified and monitored continuously and timeously. The Board in turns ensures complete, timely, relevant, accurate and accessible communication to stakeholders in this regard.

5. The governance of Information Technology

5.1 The Board should be responsible for information technology (IT) governance

3 As per the Board charter the executive Board is responsible that technology and systems used in the organisation are adequate. The audit and risk committee assists the Board to consider IT as it relates to financial reporting, IT risk management and related controls.

5.2 IT should be aligned with the performance and sustainability objectives of the Company

3 As per the Board charter the executive Board is responsible that information technology and systems used in the organisation are adequate to run the business properly for it to compete through the efficient use of its assets, processes and resources.

5.3 The Board should delegate to management the responsibility for the implementation of an IT governance framework

3 The audit and risk committee assists the Board to consider IT as it relates to financial reporting, IT risk management, related controls and IT Governance. It should specifically oversee IT risk and controls, business continuity and data recovery and IT security.

5.4 The Board should monitor and evaluate significant IT investments and expenditure

3 The audit and risk committee is mandated to establish policies and procedures to ensure significant IT investments and expenditure are monitored and evaluated on a continuous basis.

5.5 IT should form an integral part of the Company’s risk management

3 The audit and risk committee assists the Board in reviewing its IT responsibilities and does form an integral part of the Company’s risk management.

5.6 The Board should ensure that information assets are managed effectively

3 The audit and risk committee is mandated to establish policies and procedures to ensure significant IT investments and expenditure are monitored and evaluated on a continuous basis.

5.7 A risk committee and audit and risk committee should assist the Board in carrying out its IT responsibilities.

3 As stipulated in its Terms of Reference the audit and risk committee assists the Board in reviewing its IT responsibilities.

6. Compliance with laws, codes, rules and standards

6.1 The Board should ensure that the company complies with applicable laws and considers adherence to nonbinding rules, codes and standards.

3 The company secretary advises the Board on all laws, rules, codes and standards applicable to the Company. The directors are well-versed in this regard, and where required, appoint external advisers to assist on specific matters.

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6.2 The Board and each individual director should have a working understanding of the effect of the applicable laws, rules, codes and standards on the Company and its business

3 The company secretary advises the Board on all laws, rules, codes and standards applicable to the Company. The directors are well-versed in this regard, and where required, appoint external advisers to assist on specific matters.

6.3 Compliance risk should form an integral part of the company’s risk management process

3 The audit and risk committee is mandated to identify areas of compliance risk, in conjunction with the company secretary, and to establish policies and procedures to mitigate same.

6.4 The Board should delegate to management the implementation of an effective compliance framework and processes

3 The audit and risk committee is mandated to establish an effective compliance framework and related processes, which are then implemented by executive management throughout the Group.

7. Internal Audit

7.1 The Board should ensure that there is an effective risk-based internal audit

3 The audit and risk committee conducts an annual review of the Company’s internal controls, and report their findings to the executive Board. This review covers financial, operational and compliance controls, as well as a review of the risk management policies and procedures of the Company. Internal audit function has been implemented and the audit and risk committee has reviewed and approved the internal audit charter. An external firm has been appointed to fulfill the Internal Audit function and they are in the process of developing an Integrated Assurance model for the Group.

7.2 Internal audit should follow a risk-based approach to its plan

3 As per the Terms of Reference of the audit and risk committee it should satisfy itself that the internal audit coverage plans and approach are informed by and addresses the strategy and risks of the Company. An external firm has been appointed to fulfill the Internal Audit function and they are in the process of developing an Integrated Assurance model for the Group.

7.3 Internal audit should provide a written assessment of the effectiveness of the Company’s system of internal control and risk management.

3 The audit and risk committee considers the written results of the work performed by and the conclusion of the internal audit function and reports it to the Board.

7.4 The audit and risk committee should be responsible for overseeing internal audit

3 As per the Terms of Reference of the audit and risk committee it is responsible for assessing the work performed by the external firm appointed as Internal Auditors.

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7.5 Internal audit should be strategically positioned to achieve its objectives

3 The audit and risk committee considers whether the objectives, organisation resources and staffing plans, financial budgets, audit plans and standing of the internal audit function provide adequate support to enable the committee to meets its objective. It satisfies itself that the internal audit coverage plans and approach are informed by and addresses the strategy and risks of the Company.

8. Governing stakeholder relationships

8.1 The Board should appreciate that stakeholders’ perceptions affect a company’s reputation

3 The Board is ultimately responsible for determining the Company’s interactions with its stakeholders and for overseeing the development of a formal stakeholder engagement plan. The Board has procedures in place to ensure that all material matters are communicated to its stakeholders in an effective and responsible manner. Executive management is tasked to implement this policy in conjunction with Board-appointed advisers.

8.2 The Board should delegate to management to proactively deal with stakeholder relationships


8.3 The Board should strive to achieve the appropriate balance between its various stakeholder Groupings, in the best interests of the company

3 The Board has procedures in place to ensure that all material matters are communicated to its stakeholders in an effective and responsible manner. In doing so, the Company is able to achieve an appropriate balance between its various stakeholders and the Company’s best interest.

8.4 Companies should ensure the equitable treatment of shareholders (only applicable to companies and state owned companies)

3 The Board has procedures in place to ensure that all material matters are communicated to its stakeholders in an effective and responsible manner. All shareholders, minorities included, are treated equitably.

8.5 Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence


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8.6 The Board should ensure that disputes are resolved as effectively, efficiently and expeditiously as possible

2 Resolution of disputes is not always achieved effectively or timeously and the Company is seeking to improve in this area.

9. Integrated reporting and disclosure

9.1 The Board should ensure the integrity of the company’s integrated report.

3 The Company’s annual report, which consists of an integrated report, is reviewed by the Board to ensure integrity thereof prior to its approval.

9.2 Sustainability reporting and disclosure should be integrated with the company’s financial reporting

1 ConvergeNet will not produce a separate sustainability report for the time being.

9.3 Sustainability reporting and disclosure should be independently assured

1 An assurance statement on ethics and sustainability reporting has not been obtained as yet. Consideration is currently being given as to how this recommended practice can best be implemented.

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ANNEXURE 13

PREVIOUS ISSUES OF CONVERGENET SHARES

Details of shares issued by ConvergeNet in the three years preceding the Last Practicable Date are set out below:

Number of shares

issued Par value DateIssueprice

Authorised Share Capital 200 000 000 No par value


31 August 2009 875 802 298 0.1 cent

Shares issued for acquisition of businesses 9 700 786 0.1 cent 08/02/2010 50 cents

Shares repurchased by subsidiaries (5 950 000) 0.1 cent 30/12/2009 49 cents

Shares repurchased by subsidiaries (120 712) 0.1 cent 31/12/2009 50 cents




Shares previously forfeited and held by 500 000

subsidiary, reissued (500 000) 0.1 cent 01/03/2010 34 cents

Shares acquired by subsidiary in terms of forfeitable share plan not yet vested (3 000 000) 0.1 cent 01/03/2010 34 cents

31 August 2010 869 123 084 0.1 cent

Shares vested in terms of forfeitable share plan 12 100 000 0.1 cent 01/03/2011 128 cents

Shares forfeited in terms of forfeitable share plan, held by subsidiary (3 887 756) 0.1 cent 01/03/2011 98 cents


31 August 2011 879 223 084 0.1 cent

Shares issued in terms of forfeitable share plan 6 170 000 0.1 cent 13/12/2011 23 cents

Shares vested in terms of forfeitable share plan 8 255 101 0.1 cent 01/03/2012 98 cents

Shares vested in terms of forfeitable share plan 500 000 0.1 cent 01/03/2012 34 cents

Shares forfeited in terms of forfeitable share plan, held by subsidiary (400 000) 0.1 cent 12/07/2012 36 cents

Shares issued in terms of forfeitable share plan not yet vested (5 870 000) 0.1 cent 13/12/2011 23 cents

31 August 2012 887 878 185 0.1 cent

Shares repurchased in terms of disposal of interest in Future Cell, as detailed in circular dated 17 October 2012 (71 478 594) 0.1 cent 26/11/2012 29.65 cents

Treasury shares sold by subsidiary 4 000 000 0.1 cent 18/12/2012 20 cents

Shares vested in terms of the forfeitable share plan 3 000 000 0.1 cent 01/03/2013 34 cents

Treasury shares sold by subsidiary 27 777 778 No par value 14/03/2013 18 cents

Shares and treasury shares issued in terms of the Sizwe Acquisition 100 000 000 No par value 01/05/2013 32 cents

Treasury shares sold by subsidiary 9 600 000 No par value 04/07/2013 13 cents

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Number of shares

issued Par value DateIssueprice

31 August 2013 960 777 369 No par value

Shares vested in terms of forfeitable shares plan 4 420 000 No par value 01/09/2013 10 cents

General issue of shares for cash 38 529 895 No par value 04/11/2013 8.87 cents

Odd-lot and specific offer (34 447) No par value 06/12/2013 12 cents

Share consolidation (903 323 536) No par value 23/12/2013

31 August 2014 100 369 281 No par value

Shares vested in terms of forfeitable shares plan 145 000 No par value 01/09/2014 160 cents

None of the share issues detailed above was in respect of the acquisition of assets.

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ANNEXURE 14

SECTION 115 AND SECTION 164 OF THE COMPANIES ACT

“Section 115: Required approval for transactions contemplated in Part A

(1) Despite section 65, and any provision of a company’s Memorandum of Incorporation, or any resolution adopted by its board or holders of its securities, to the contrary, a company may not dispose of, or give effect to an agreement or series of agreements to dispose of, all or the greater part of its assets or undertaking, implement an amalgamation or a merger, or implement a scheme of arrangement, unless:

(a) the disposal, amalgamation or merger, or scheme of arrangement:

(i) has been approved in terms of this section; or

(ii) is pursuant to or contemplated in an approved business rescue plan for that company, in terms of Chapter 6; and

(b) to the extent that Parts B and C of this Chapter and the Takeover Regulations, apply to a company that proposes to:

(i) dispose of all or the greater part of its assets or undertaking;

(ii) amalgamate or merge with another company; or

(iii) implement a scheme of arrangement,

the Panel has issued a compliance certificate in respect of the transaction, in terms of section 119 (4)(b), or exempted the transaction in terms of section 119(6).

(2) A proposed transaction contemplated in subsection (1) must be approved :

(a) by a special resolution adopted by persons entitled to exercise voting rights on such a matter, at a meeting called for that purpose and at which sufficient persons are present to exercise, in aggregate, at least 25% of all of the voting rights that are entitled to be exercised on that matter, or any higher percentage as may be required by the Company’s Memorandum of Incorporation, as contemplated in section 64(2); and

(b) by a special resolution, also adopted in the manner required by paragraph (a), by the shareholders of the Company’s holding company if any, if:

(i) the holding company is a company or an external company;

(ii) the proposed transaction concerns a disposal of all or the greater part of the assets or undertaking of the subsidiary; and

(iii) having regard to the consolidated financial statements of the holding company, the disposal by the subsidiary constitutes a disposal of all or the greater part of the assets or undertaking of the holding company; and

(c) by the court, to the extent required in the circumstances and manner contemplated in subsections (3) to (6).

(3) Despite a resolution having been adopted as contemplated in subsections (2)(a) and (b), a company may not proceed to implement that resolution without the approval of a court if:

(a) the resolution was opposed by at least 15% of the voting rights that were exercised on that resolution and, within five business days after the vote, any person who voted against the resolution requires the Company to seek court approval; or

(b) the court, on an application within 10 business days after the vote by any person who voted against the resolution, grants that person leave, in terms of subsection (6), to apply to a court for a review of the transaction in accordance with subsection (7).

(4) For the purposes of subsections (2) and (3), any voting rights controlled by an acquiring party, a person related to an acquiring party, or a person acting in concert with either of them, must not be included in calculating the percentage of voting rights:

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(a) required to be present, or actually present, in determining whether the applicable quorum requirements are satisfied; or

(b) required to be voted in support of a resolution, or actually voted in support of the resolution.

(4A) In subsection (4), ‘act in concert’ has the meaning set out in section 117(1)(b).

(5) If a resolution requires approval by a court as contemplated in terms of subsection (3)(a), the Company must either:

(a) within 10 business days after the vote, apply to the court for approval, and bear the costs of that application; or

(b) treat the resolution as a nullity.

(6) On an application contemplated in subsection (3)(b), the court may grant leave only if it is satisfied that the applicant:

(a) is acting in good faith;

(b) appears prepared and able to sustain the proceedings; and

(c) has alleged facts which, if proved, would support an order in terms of subsection (7).

(7) On reviewing a resolution that is the subject of an application in terms of subsection (5)(a), or after granting leave in terms of subsection (6), the court may set aside the resolution only if:

(a) the resolution is manifestly unfair to any class of holders of the Company’s securities; or

(b) the vote was materially tainted by conflict of interest, inadequate disclosure, failure to comply with the Companies Act, the Memorandum of Incorporation or any applicable rules of the company, or other significant and material procedural irregularity.

(8) The holder of any voting rights in a company is entitled to seek relief in terms of section 164 if that person:

(a) notified the Company in advance of the intention to oppose a special resolution contemplated in this section; and

(b) was present at the meeting and voted against that special resolution.

(9) If a transaction contemplated in this Part has been approved, any person to whom assets are, or an undertaking is, to be transferred, may apply to a court for an order to effect:

(a) the transfer of the whole or any part of the undertaking, assets and liabilities of a company contemplated in that transaction;

(b) the allotment and appropriation of any shares or similar interests to be allotted or appropriated as a consequence of the transaction;

(c) the transfer of shares from one person to another;

(d) the dissolution, without winding-up, of a company, as contemplated in the transaction;

(e) incidental, consequential and supplemental matters that are necessary for the effectiveness and completion of the transaction; or

(f) any other relief that may be necessary or appropriate to give effect to, and properly implement, the amalgamation or merger.

Section 164: Dissenting shareholders Appraisal Rights

(1) This section does not apply in any circumstances relating to a transaction, agreement or offer pursuant to a business rescue plan that was approved by shareholders of a company, in terms of section 152.

(2) If a company has given notice to shareholders of a meeting to consider adopting a resolution to:

(a) amend its Memorandum of Incorporation by altering the preferences, rights, limitations or other terms of any class of its shares in any manner materially adverse to the rights or interests of holders of that class of shares, as contemplated in section 37(8); or

(b) enter into a transaction contemplated in section 112, 113, or 114,

that notice must include a statement informing shareholders of their rights under this section.

(3) At any time before a resolution referred to in subsection (2) is to be voted on, a dissenting shareholder may give the Company a written notice objecting to the resolution.

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(4) Within 10 business days after a company has adopted a resolution contemplated in this section, the Company must send a notice that the resolution has been adopted to each shareholder who:

(a) gave the Company a written notice of objection in terms of subsection (3); and

(b) has neither:

(i) withdrawn that notice; or

(ii) voted in support of the resolution.

(5) A shareholder may demand that the Company pay the shareholder the fair value for all of the shares of the Company held by that person if:

(a) the shareholder:

(i) sent the Company a notice of objection, subject to subsection (6); and

(ii) in the case of an amendment to the Company’s Memorandum of Incorporation, holds shares of a class that is materially and adversely affected by the amendment;

(b) the Company has adopted the resolution contemplated in subsection (2); and

(c) the shareholder:

(i) voted against that resolution; and

(ii) has complied with all of the procedural requirements of this section.

(6) The requirement of subsection (5)(a)(i) does not apply if the Company failed to give notice of the meeting, or failed to include in that notice a statement of the shareholders rights under this section.

(7) A shareholder who satisfies the requirements of subsection (5) may make a demand contemplated in that subsection by delivering a written notice to the Company within:

(a) 20 business days after receiving a notice under subsection (4); or

(b) if the shareholder does not receive a notice under subsection (4), within 20 business days after learning that the resolution has been adopted.

(8) A demand delivered in terms of subsections (5) to (7) must also be delivered to the Panel, and must state:

(a) the shareholder’s name and address;

(b) the number and class of shares in respect of which the shareholder seeks payment; and

(c) a demand for payment of the fair value of those shares.

(9) A shareholder who has sent a demand in terms of subsections (5) to (8) has no further rights in respect of those shares, other than to be paid their fair value, unless:

(a) the shareholder withdraws that demand before the Company makes an offer under subsection (11), or allows an offer made by the Company to lapse, as contemplated in subsection (12)(b);

(b) the Company fails to make an offer in accordance with subsection (11) and the shareholder withdraws the demand; or

(c) the Company, by a subsequent special resolution, revokes the adopted resolution that gave rise to the shareholder’s rights under this section.

(10) If any of the events contemplated in subsection (9) occur, all of the shareholder’s rights in respect of the shares are reinstated without interruption.

(11) Within five business days after the later of:

(a) the day on which the action approved by the resolution is effective;

(b) the last day for the receipt of demands in terms of subsection (7)(a); or

(c) the day the Company received a demand as contemplated in subsection (7)(b), if applicable, the Company must send to each shareholder who has sent such a demand a written offer to pay an amount considered by the Company’s directors to be the fair value of the relevant shares, subject to subsection (16), accompanied by a statement showing how that value was determined.

(12) Every offer made under subsection (11):

(a) in respect of shares of the same class or series must be on the same terms; and

(b) lapses if it has not been accepted within 30 business days after it was made.

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(13) If a shareholder accepts an offer made under subsection (12):

(a) the shareholder must either in the case of:

(i) shares evidenced by certificates, tender the relevant share certificates to the company or the Company’s transfer agent; or

(ii) uncertificated shares, take the steps required in terms of section 53 to direct the transfer of those shares to the Company or the Company’s transfer agent; and

(b) the Company must pay that shareholder the agreed amount within 10 business days after the shareholder accepted the offer and:

(i) tendered the share certificates; or

(ii) directed the transfer to the Company of uncertificated shares.

(14) A shareholder who has made a demand in terms of subsections (5) to (8) may apply to a court to determine a fair value in respect of the shares that were the subject of that demand, and an order requiring the Company to pay the shareholder the fair value so determined, if the Company has:

(a) failed to make an offer under subsection (11); or

(b) made an offer that the shareholder considers to be inadequate, and that offer has not lapsed.

(15) On an application to the court under subsection (14):

(a) all dissenting shareholders who have not accepted an offer from the Company as at the date of the application must be joined as parties and are bound by the decision of the court;

(b) the Company must notify each affected dissenting shareholder of the date, place and consequences of the application and of their right to participate in the court proceedings; and

(c) the court:

(i) may determine whether any other person is a dissenting shareholder who should be joined as a party;

(ii) must determine a fair value in respect of the shares of all dissenting shareholders, subject to subsection (16);

(iii) in its discretion may:

(aa) appoint one or more appraisers to assist it in determining the fair value in respect of the shares; or

(bb) allow a reasonable rate of interest on the amount payable to each dissenting shareholder from the date the action approved by the resolution is effective, until the date of payment;

(iv) may make an appropriate order of costs, having regard to any offer made by the Company, and the final determination of the fair value by the court; and

(v) must make an order requiring:

(aa) the dissenting shareholders to either withdraw their respective demands or to comply with subsection (13)(a); and

(bb) the Company to pay the fair value in respect of their shares to each dissenting shareholder who complies with subsection (13)(a), subject to any conditions the court considers necessary to ensure that the Company fulfils its obligations under this section.

(15A) At any time before the court has made an order contemplated in subsection (15)(c)(v), a dissenting shareholder may accept the offer made by the Company in terms of subsection (11), in which case:

(a) that shareholder must comply with the requirements of subsection 13(a); and

(b) the Company must comply with the requirements of subsection 13(b).

(16) The fair value in respect of any shares must be determined as at the date on which, and time immediately before, the Company adopted the resolution that gave rise to a shareholder’s rights under this section.

(17) If there are reasonable grounds to believe that compliance by a company with subsection (13)(b), or with a court order in terms of subsection (15)(c)(v)(bb), would result in the Company being unable to pays its debts as they fall due and payable for the ensuing 12 months:

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(a) the Company may apply to a court for an order varying the Company’s obligations in terms of the relevant subsection; and

(b) the court may make an order that:

(i) is just and equitable, having regard to the financial circumstances of the Company; and

(ii) ensures that the person to whom the Company owes money in terms of this section is paid at the earliest possible date compatible with the Company satisfying its other financial obligations as they fall due and payable.

(18) If the resolution that gave rise to a shareholder’s rights under this section authorised the Company to amalgamate or merge with one or more other companies, such that the Company whose shares are the subject of a demand in terms of this section has ceased to exist, the obligations of that company under this section Are obligations of the successor to that company resulting from the amalgamation or merger.

(19) For greater certainty, the making of a demand, tendering of shares and payment by a company to a shareholder in terms of this section do not constitute a distribution by the Company, or an acquisition of its shares by the Company within the meaning of section 48, and therefore are not subject to:

(a) the provisions of that section; or

(b) the application by the Company of the solvency and liquidity test set out in section 4.

(20) Except to the extent:

(a) expressly provided in this section; or

(b) that the Panel rules otherwise in a particular case,

a payment by a company to a shareholder in terms of this section does not obligate any person to make a comparable offer under section 125 to any other person.”

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ANNEXURE 15

SALIENT TERMS OF THE MANAGEMENT AGREEMENT

The salient terms of the Management Agreement are detailed below. A copy of the Management Agreement, which includes full details of all the terms, will be available for inspection by shareholders at ConvergeNet’s registered office (the address of which appears in the section “Corporate Information and Advisers” on page 1 of this Circular) during normal office hours from Monday, 15 December 2014 until Friday, 16 January 2015.

1. APPOINTMENT

Stellar Advisers have been appointed as the management company of Stellar Capital pursuant to the Management Agreement in terms of which Stellar Advisers will manage the portfolio of Stellar Capital in accordance with Section 15 of the Listings Requirements, as detailed in paragraph 3.4 of this Circular.

2. SERVICES

In giving effect to its appointment as the management company of Stellar Capital, Stellar Advisers will provide, inter alia, the following services:

2.1 give general business management advice to the Board, and it is agreed, for the purposes of clarity, that the Board shall in good faith consider all advice given to it by Stellar Advisers in respect of the Company, but that the Board shall not be bound or obliged to follow such advice unless the Board in its own discretion so resolves;

2.2 appoint, for and on behalf of the Company and on terms and conditions acceptable to the Company, a suitably qualified financial services provider, as contemplated in the Financial Advisory and Intermediary Services Act, No 37 of 2002 (the “FAIS Act”) (the “Investment Adviser”) to provide financial advisory and intermediary services to the Company, and in particular to advise the Company on the following aspects:

2.2.1 identify and evaluate suitable investment opportunities consistent with the Company’s investment mandate and objective; and

2.2.2 consider the disposal of any investments and the encumbering of any of the investments and/or other assets of the Company;

2.3 ensure that the Investment Adviser from time to time:

2.3.1 identifies suitable investments consistent with the Company’s investment mandate and objective; and

2.3.2 makes recommendations to the Board in relation to (1) the disposal of any of the Company’s investments, and (2) the creation of any encumbrance over any of the assets of the Company in favour of any person;

2.4 ensure, by engaging with the Investment Adviser, that the Investment Adviser from time to time prepares proposals to the Board for:

2.4.1 the acquisition of any investment by the Company;

2.4.2 the disposal of any investment held by the Company; and/or

2.4.3 the creation of any encumbrance by the Company over any of its assets;

2.5 ensure that the Investment Adviser complies with the obligations of the mandate entered into between the Company and the Investment Manager;

2.6 conduct or manage appropriate technical, financial and legal due diligence investigations of any potential investments identified by the Company’s advisers and advise the Company of the results;

2.7 render investment research to the Company in respect of investments or potential investments, and provide such research to the Investment Adviser;

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2.8 subject to the FAIS Act, advise the Company on the appropriate vehicle for any investments to be made by the Company;

2.9 subject to the FAIS Act, advise the Company on the most appropriate method of structuring any investments made by the Company;

2.10 negotiate on behalf of, and advise, the Company on the terms of any agreements to be concluded by the Company pursuant to investments being made, and once such agreements have been concluded (1) use commercially reasonable endeavours to ensure that the Company complies with all its obligations under the applicable agreements, and (2) from time to time report to the Board (in such a manner as the Board may from time to time require) in relation to the extent to which the Company has complied with its obligations under the applicable agreements, and (3) monitor the performance of the applicable counterparty under the applicable agreements and report to the Board in relation to the counterparty’s performance;

2.11 if any person with whom the Company has concluded any agreement of any nature whatsoever fails to comply with its obligations under that agreement the Investment Manager shall:

2.11.1 take such steps as may be reasonably appropriate in the circumstances in order to protect the Investor’s interests under the applicable agreement;

2.11.2 report as soon as may be reasonably possible to the Board in relation to the circumstances which arose and the steps which the Manager has taken in order to deal with those circumstances;

2.11.3 obtain instructions from the Board in relation to the manner in which it must deal with the matter in the future; and

2.11.4 use commercially reasonable endeavours to implement any instructions thus given to it by the Board;

2.12 appoint directors to the board of directors of Investee Companies in which the Company invests, provided that if the Board (acting reasonably) is not satisfied with the appointees, the Board may request Stellar Advisers to appoint alternative directors and Stellar Advisers must comply with this request;

2.13 monitor the investments on an ongoing basis to determine the performance of the Company.

3. FEES

The basis on which, the manner in which and the intervals at which the Company will remunerate Stellar Advisers for the services rendered, as detailed in paragraph 2 above, are set out as follows:

3.1 Management fee

3.1.1 The management fee shall be paid quarterly in arrears, and shall be an amount determined in accordance with the following table:

Net asset valueManagement fee (as % of Net Asset Value (NAV)

First R500 000 000 (five hundred million Rand) of NAV

2% (two percent) on such R500 000 000 (five hundred million Rand) of NAV

Second R500 000 000 (five hundred million Rand) of NAV

1.5 (one point five percent) on such R500 000 000 (five hundred million Rand) of NAV

For NAV in excess of R1 000 000 000 (one billion Rand) (including cash and less any debt)

1% (one percent) on such excess over R1 000 000 000 (one billion Rand) of NAV

3.1.2 The management fee shall be calculated on each relevant measurement date, and based on the most recent valuation (as defined in the Management Agreement).

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3.2 Performance fee

3.2.1 In addition to the management fee referred in paragraph 3.1 above, Stellar Advisers will be entitled to a performance fee in respect of each quarter of the subsistence of the Management Agreement if the returns of the Company for the relevant quarter are positive.

3.2.2 The performance fee shall be calculated in accordance with the following formula:

A = 20/100 x (B – C)

where

A = the performance fee payable for the relevant quarter;

B = the net asset value (after adding back the management fee deducted in terms of paragraph 3.1 above); and

C = the previous highest net asset value, as recorded at the end of any particular quarter prior to the relevant quarter.

3.2.3 In the event that the determination of the performance fee yields a negative number, then:

3.2.3.1 no performance fee will be payable for that quarter; and

3.2.3.2 such negative number shall not be construed as giving rise to an obligation on the part of Stellar Advisers to make any payment to the Company.

3.2.4 The performance fee will be paid or settled, at the election of the Company:

3.2.4.1 in cash or by way of electronic funds transfer, free of deduction or set-off; or

3.2.4.2 by way of issuing to Stellar Advisers so many shares amount calculated in accordance with the following formula:

a = b ÷ c

where

a, is the number of shares to be issued to Stellar Advisers in settlement of the performance fee;

b, is the amount of the relevant performance fee, as reflected in the concomitant performance fee statement issued by Stellar Advisers; and

c, is the VWAP of the shares for the 30 (thirty) trading days immediately preceding the last day of the quarter to which the performance fee relates,

provided that, to the extent that:

(i) the number of shares to be issued by the Company pursuant to paragraph 3.2.4.2 in any financial year would exceed 15% of the issued share capital of the Company; and/or

(ii) the number of shares to be issued by the Company pursuant to paragraph 3.2.4.2 would result in Stellar Advisers holding in excess of 34.99% of the issued share capital of the Company, then the Company will issue shares up to the lower of the maximum number of shares permitted under paragraphs (i) and (ii) above, and the Company will pay Stellar Capital, in cash without deduction or set-off, the balance of the performance fee payable and not settled by way of the issue of shares.

4. EXCLUSIVITY

4.1 Stellar Advisers may not perform the management provided by it to the Company to any other person whose business is in competition with that of the Company.

4.2 The Company shall not procure the management services provided by to Stellar Advisers from any other person, save by prior agreement.

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5. DURATION AND TERMINATION

5.1 The Management Agreement will be in full force and effect:

5.1.1 until the third anniversary of the signature date thereof, when it shall automatically terminate; or

5.1.2 terminated by either party by giving the other party not less than six months’ notice in writing of such termination.

5.2 If the Management Agreement is terminated by the Company:

5.2.1 within the first 36 (thirty six) months after the Signature Date for any reason other than Stellar Advisers committing a material breach of the agreement by or being wound up or business rescue; or

5.2.2 automatically on the third anniversary of the Signature Date,

then the Company shall pay to Stellar Advisers a termination fee (the “Termination Fee”), equal to 1 5% of the market capitalisation of the Company (based on the 30-day VWAP as at the date of termination.

5.3 The Company shall pay the Termination Fee in cash (in the case of termination pursuant to paragraph 5.2.1.1) or shares in the Company (in the case of termination pursuant to paragraph 5.2.1.2) to Stellar Advisers within 10 business days of the effective date of the termination.

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Stellar Capital Partners Limited(formerly ConvergeNet Holdings Limited)

(Incorporated in the Republic of South Africa)(Registration number 1998/015580/06)

Share code: SCP ISIN: ZAE000198586

(“Stellar Capital” or the “Company”)

REVISED LISTING PARTICULARS

The definitions and interpretations commencing on page 8 of the Circular apply mutatis mutandis to this cover page. In addition, the corporate information on the inside cover of the Circular also applies to these Revised Listing Particulars.

These Revised Listing Particulars are not an invitation to the public to subscribe for the Company’s shares but is issued, in compliance with the Listings Requirements, for the purpose of providing information to the public with regard to the Company.

These Revised Listing Particulars have been prepared on the assumption that the special and ordinary resolutions proposed in the notice of General Meeting forming part of the Circular to which these Revised Listing Particulars are attached will be passed at the General Meeting of shareholders to be held at Level P3, Oxford Corner, cnr Jellicoe and Oxford Roads, Rosebank, Johannesburg at 10:00 on Friday, 16 January 2015 and registered as applicable.

Shareholders are cautioned that the implementation of the Transactions will result in a reverse takeover for the purposes of the Listings Requirements, which stipulate that the Company can only retain its listing following the reverse takeover if the JSE is satisfied that the Company continues to qualify to be listed. The Board is satisfied that the Company will comply with all relevant requirements in this regard to maintain its Main Board listing as an investment entity.

Shareholders are advised that the listing of Stellar Capital Partners pursuant to the Transactions is dependent on (i) the Manco holding at least 10% in the issued ordinary share capital of Stellar Capital Partners and (ii) the appointment of a full-time CFO and CEO by no later than 31 January 2015.

Prior to the Transactions, the stated capital of Stellar Capital is R 181 425 000, comprising of 100 946 502 ordinary shares of no par value. Following the Transactions, the authorised share capital of Stellar Capital will be 1 000 000 000 ordinary shares of no par value and the issued stated capital of Stellar Capital will be R 540 100 000 comprising 282 808 668 ordinary no par value shares. The ordinary certificated or dematerialised shares issued in terms of the Digicore Acquisition (59 615 963 shares), MRI Acquisition (12 636 332 shares), Goliath Gold Acquisition (32 084 871 shares) and Private Placement (75 000 000 shares) will rank pari passu with all other ordinary shares issued by Stellar Capital. The aforementioned share issue, which is not an offer to the public, will be effected at an issue price of R2.00 per share. There are 428 776 treasury shares in issue at the Last Practicable Date.

The Stellar Capital directors, whose names are given on the inside cover of the Circular, accept collectively and individually full responsibility for the accuracy of the information given in these Revised Listing Particulars and certify that, to the best of their knowledge and belief, no facts have been omitted which would make any statement false or misleading, and that they have made all reasonable enquiries to ascertain such facts and that these Revised Listing Particulars contain all information required by the Listings Requirements.

Independent Sponsor Corporate Adviser Transaction and Sponsor

Legal Adviser Independent Reporting Accountants to Stellar Capital

These Revised Listing Particulars are only available in English. A copy hereof may be obtained from the registered offices of Stellar Capital, the address of which appears in the section “Corporate Information and Advisers” on page 1 of the Circular, from Monday, 15 December 2014 until Friday, 16 January 2015. These Revised Listing Particulars is also available on the Company’s website at http://convergenet.com/investor-relations/circulars.

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TABLE OF CONTENTS

The definitions and interpretations commencing on page 8 of the attached Circular shall apply, mutatis mutandis, to this section.

Page

Revised Listing Particulars

1. Incorporation, history and prospects 17 0

2. Directors and senior management 17 0

3. Assets, liabilities and other financial information 17 1

4. Share capital 17 2

5. Major beneficial shareholders 17 3

6. Government protection and investment encouragement law 17 3

7. Royalties 17 3

8. Dividends 17 3

9. Code of corporate practice and conduct 17 3

10. Listing on other stock exchanges 17 3

11. Promoter and commissions 17 4

12. Interests of directors and promoters 17 4

13. Litigation statement 17 4

14. Material changes, contracts and transactions 17 4

15. Working capital statement 17 5

16. Expenses relating to the Transactions 17 5

17. Directors’ responsibility statement 17 5

18. Directors’ opinion 17 5

19. Consents 17 5

20. Documents available for inspection 17 5

Appendix 1 Material contracts and transactions 17 6

Appendix 2 Loans receivable 17 7

Appendix 3 Details of leasehold properties 18 0

Appendix 4 Other directorships held by Stellar Capital directors 18 1

Appendix 5 Extracts from Memorandum of Incorporation 18 5

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1. INCORPORATION, HISTORY AND PROSPECTS

1.1 ConvergeNet was established in 2005 to address the growing need for convergence solutions in the ICT industry. The Company identified the need for these solutions in emerging markets, specifically relating to multi-disciplinary products, solutions and services. In February 2007, the Company reverse listed into a cash shell, Vestor Investments Limited, which was listed on the JSE. Several strategic acquisitions were concluded which were reversed into the enlarged listed company. Details of these strategic acquisitions were included in a circular to shareholders dated 3 August 2007. The name of the Company was changed to ConvergeNet Holdings Limited to reflect the Company’s focus on ICT infrastructure and the industry’s driving force towards convergence.

1.2 Details regarding the vendors of material assets to ConvergeNet and its subsidiaries during the three years preceding the publication of these Revised Listing Particulars are included in paragraph 12.4 of the attached Circular.

1.3 On 8 September 2014 ConvergeNet announced that it had identified an opportunity to create an investment company which:

• leveraged the Main Board listing of ConvergeNet;

• optimised the use of the Company’s existing assets;

• harnessed the deal-making experience of the Board and the Company’s corporate advisers in a cost-effective manner;

• facilitated the introduction of strong new shareholders; and

• established a platform to facilitate further capital raising and the growth of the initial investment portfolio.

1.4 To this end, the JSE approved ConvergeNet’s application for the transfer of the Company’s listing from the “Computer Services” sub-sector to the “Investment Companies” sub-sector of the JSE on 15 December 2014. The Company appointed Stellar Advisers as the dedicated investment manager to manage the portfolio of the Company in accordance with Section 15 of the JSE Listings Requirements. The Manco will be advised by AfrAsia Corporate Finance to ensure that the Company is adequately advised on the implementation of its strategy. Full details in this regard are included in paragraphs 3.3 to 3.5 of the attached Circular.

1.5 In light of the transfer of the Company’s listing from the “Computer Services” sub-sector to the “Investment Companies” sub-sector of the JSE (as detailed in paragraph 2 of the attached Circular), and in order to correctly describe the Group’s restructured nature, the change of the Company’s name to “Stellar Capital Partners Limited” was approved by shareholders at the General Meeting.

1.6 Details regarding the investment strategy of Stellar Capital are included in paragraph 3.5 of the attached Circular.

1.7 To rapidly add value to the investment portfolio of the Company, the Disposals, the Tellumat Acquisition and the strategic investments detailed in the attached Circular were approved by shareholders at the General Meeting. The initial investment portfolio consists of investments in the Information and Communication Technology (“ICT”) and Mining Sectors.

1.8 Following the completion of the Tellumat Acquisition, Digicore Acquisition, MRI Acquisition and Goliath Gold Acquisition, as well as the Private Placement, Titan has collectively become the largest investor in Stellar Capital, holding 28.10% of the ordinary shares in issue. Titan is an investment vehicle for the family of Dr Christo Wiese.

1.9 Prospects

The opinion of the directors as to the prospects of the business of the Stellar Capital Group is included in paragraph 3.12 of the attached Circular.

2. DIRECTORS AND SENIOR MANAGEMENT

2.1 Directors of Stellar Capital

The name, age, qualification, nationality, occupation and business address of each of the directors of Stellar Capital, as well as their interest in Stellar Capital shares, have been included in paragraphs 13.1 and 15 of the attached Circular. Brief curricula vita of each of the Stellar Capital directors and senior management of major subsidiaries are included in Annexure 9 to the attached Circular.

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Peter van Zyl will fulfill the dual role of interim Chief Executive Officer and Chief Financial Officer until 31 January 2015, being the anticipated effective date of the Transactions. The board of directors of Stellar Capital has undertaken to appoint a full-time Chief Executive Officer and Chief Financial Officer from 1 February 2015. The listing of Stellar Capital is subject to these appointments being made no later than 1 February 2015, subject further to the approval of the audit committee in respect of the fit and proper requirements applicable to the Chief Financial Officer position which confirmation will be provided to the JSE.

2.2 Directors’ remuneration

Details of the remuneration of the Stellar Capital directors have been included in paragraph 17 of the attached Circular.

2.3 Further particulars regarding directors

None of the directors of Stellar Capital:

2.3.1 have been declared bankrupt, insolvent or have entered into any individual voluntary compromise arrangements;

2.3.2 have been directors with an executive function of any company put under, or proposed to be put under, any business rescue plans and/or where a resolution has been proposed by any entity to commence business rescue proceedings, or that is or was the subject of an application for any entity to begin business rescue proceedings, any notices in terms of section 129(7) of the Companies Act having been delivered, receiverships, compulsory liquidations, creditors voluntary liquidations, administrations, company voluntary arrangements or any compromise or arrangements with creditors generally or any class of creditors of any company, at the time of such event or within the 12 months preceding any such event;

2.3.3 have been partners in a partnership that was the subject of any compulsory liquidations, administrations or partnership voluntary arrangements of any partnership, at the time of such event or within the 12 months preceding any such event;

2.3.4 entered into any receiverships of any asset(s) or of a partnership where such director is or was a partner during the preceding 12 months;

2.3.5 have been publicly criticised by a statutory or regulatory authority, including recognised professional bodies, or been disqualified by a court from acting as a director of a company or from acting in the management or conduct of the affairs of any company;

2.3.6 been involved in any offence of dishonesty;

2.3.7 been removed from an office of trust, on the grounds of misconduct, involving dishonesty; or

2.3.8 been the subject of any court order declaring him delinquent or placing him under probation in terms of section 162 of the Companies Act and/or section 47 of the Close Corporations Act, 1984 or been disqualified by a court to act as a director in terms of section 69 of the Companies Act.

3. ASSETS, LIABILITIES AND OTHER FINANCIAL INFORMATION

3.1 Historical financial information

An extract of the three-year historical financial information pertaining to Stellar Capital, the preparation of which is the responsibility of the directors, are set out in Annexure 1.1 to the attached Circular.

3.2 Pro forma financial information

Details of the pro forma financial information for the Company in relation to the Transactions are set out in paragraph 21 of and Annexure 7 to the attached Circular.

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3.3 Material borrowings

Other than the loans and facilities detailed in paragraph 12.1.1 of the attached Circular, the Stellar Capital Group does not have any material borrowings. There is no loan capital outstanding.

3.4 Material commitments, lease payments and contingent liabilities

The Stellar Capital Group has no material commitments or contingent liabilities. Details of leasehold properties are included in Appendix 3 to these Revised Listing Particulars.

3.5 Loans receivable

Details of loans receivable as at the Last Practicable Date are set out in Appendix 2 to these Revised Listings Particulars.

3.6 Subsidiary companies and inter-company loans

Stellar Capital does not have any material inter-company financial or other transactions or any intercompany balances before elimination on consolidation.

3.7 Property acquired or disposed of

Save for as disclosed in Appendix 1 to these Revised Listing Particulars, there have been no material acquisitions or disposals of businesses, companies and properties or proposed acquisitions or disposals of businesses, companies and properties by the Company during the three years preceding the date of issue of these Revised Listing Particulars.

3.8 Share Price History

The share price history of Stellar Capital’s shares traded on the JSE is summarised in Annexure 11 to the attached Circular.

3.9 Principal Leasehold Properties

Details of the principal leasehold properties of the Company as at the Last Practicable Date are set out in Appendix 3 to these Revised Listing Particulars.

4. SHARE CAPITAL

4.1 Share capital

Details of the share capital of Stellar Capital post the implementation of the Transactions have been included in paragraph 18 of the attached circular.

4.2 Conversion rights, voting rights, rights to distributions and variation of rights

4.2.1 Details of conversion rights, voting rights, rights to distributions and variation of rights are set out in paragraph 18.2 of the attached Circular.

4.2.2 Extracts from the Memorandum of Incorporation relating to the voting rights attached to the shares are set out in Appendix 5 to these Revised Listing Particulars.

4.3 Subdivision or consolidation of ConvergeNet shares

Save for the Share Consolidation, as approved by shareholders in general meeting on 22 October 2013, no consolidations or sub-divisions have occurred in respect of ConvergeNet shares.

4.4 Options or preferential rights in respect of ConvergeNet shares

Save for the Tellumat Option as detailed in paragraph 4.6.4 of the attached Circular, there is no contract or arrangement, either actual or proposed, whereby any option or preferential right of any kind has been or will be given to any person to subscribe for any securities of ConvergeNet.

4.5 Issues and repurchases of shares

Details of the repurchase of shares by ConvergeNet in the three years preceding the Last Practicable Date are set out in Annexure 13 to the attached Circular.

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5. MAJOR BENEFICIAL SHAREHOLDERS

5.1 Insofar as is known to Stellar Capital, the major shareholders who will beneficially hold 5% or more (directly or indirectly) of the issued Stellar Capital shares pursuant to the Transactions are as follows:

Shareholder

Numberof shares

held

% ofissued share

capital ofStellar Capital

Titan Premier Investments 80 331 983 28.41%

Citygate Securities Limited 29 406 711 10.40%

TIH Capital Partners Limited 20 862 204 7.38%

AfrAsia Special Opportunites Fund 26 285 489 9.29%

Nedbank Private Wealth 17 095 000 6.04%

Dale International Trust Company Limited 14 495 629 5.13%

TOTAL 173 981 387 66.65%

5.2 The information included in this paragraph 5 is based on the share register of the Company as per Strate and Computershare as at 5 December 2014, due to the share register closing on the last Friday of each month in line with Strate’s policies. Insofar as it is known to the directors of ConvergeNet, there is no controlling shareholder of ConvergeNet as defined in the Listings Requirements, nor has there been a change in control of Stellar Capital since its incorporation up to the Last Practicable Date, save for the First Change in Control and Second Change in Control as detailed in paragraph 12.3 of the attached Circular.

6. GOVERNMENT PROTECTION AND INVESTMENT ENCOURAGEMENT LAW

There is no government protection or investment encouragement law in respect of the operations of the Stellar Capital.

7. ROYALTIES

There are no royalties or items of a similar nature payable to or receivable by Stellar Capital.

8. DIVIDENDS

A future dividend policy for Stellar Capital, as an investment entity, will be set by the Board from time to time. However, it is not anticipated that dividends to ordinary shareholders will commence until the 2016 financial year.

9. CODE OF CORPORATE PRACTICE AND CONDUCT

The Board endorses and has adopted and applied the Code of Corporate Practices and Conduct as set out in the King III Report. In supporting the Code, the directors of Stellar Capital are committed to conducting the business affairs of Stellar Capital with the utmost good faith, highest level of ethics and in accordance with generally acceptable practices within the constraints of industry norms, thus ensuring timely, relevant and meaningful reporting to Stellar Capital shareholders and other stakeholders. Further details regarding Corporate Governance are set out in Annexure 12 of the attached Circular.

10. LISTING ON OTHER STOCK EXCHANGES

10.1 As at the date of these Revised Listing Particulars, no securities of Stellar Capital are listed on any other stock exchange. All of Stellar Capital’s issued ordinary shares are listed on the JSE under the abbreviated name “Stellar”, share code “SCP” and ISIN ZAE000198586.

10.2 Details of the Company’s subsidiaries, as at the Last Practicable Date, are included in paragraph 12.5 of the attached Circular.

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11. PROMOTER AND COMMISSIONS

11.1 No amounts have been paid, or are accrued as payable, or is proposed to be paid by the Stellar Group to any promoter, partnership or syndicate, other than in the normal course of business, during the three years preceding the date of these Revised Listing Particulars.

11.2 No amounts in relation to commissions have been paid or are payable in respect of underwriting during the three years preceding the date of these Revised Listing Particulars.

11.3 No amounts have been paid, or have been agreed to be paid, within the three years preceding the date of these Revised Listing Particulars, to any director or to any company in which he is beneficially interested, directly or indirectly, or of which he is a director (“the associate company”) or to any partnership, syndicate or other association of which he is a member (“the associate entity”), in cash, securities or otherwise, by any person, either to induce him to become, or to qualify him as a director or otherwise for services rendered by him or by the associate company or the associate entity in connection with the promotion or formation of the Company.

12. INTERESTS OF DIRECTORS AND PROMOTERS

12.1 Insofar as it is known to the directors of Stellar Capital, no director or promoter, or any of their associates, has any or has had any material beneficial interest, direct or indirect, in the promotion of the Stellar Capital Group or in any property to be acquired or proposed to be acquired by the Stellar Capital Group during the three years preceding the date of these Revised Listing Particulars. None of the directors or any of their associates has any interest in any of the Transactions.

12.2 The direct and indirect beneficial interests of the directors and their associates in Stellar’s issued share capital, as at the Last Practicable Date and pursuant to the implementation of the Transactions, are detailed in paragraph 15 of the attached Circular.

13. LITIGATION STATEMENT

In terms of section 7.D.11 of the Listings Requirements, the directors, whose names appear under “Corporate Information and Advisers” on page 1 of the attached Circular, are not aware of any legal or arbitration proceedings, including any proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 months, a material effect on the Stellar Capital Group or any of its subsidiaries’ financial position.

14. MATERIAL CHANGES, CONTRACTS AND TRANSACTIONS

14.1 On 15 December 2014 the JSE approved ConvergeNet’s application for the transfer of the Company’s listing from the “Computer Services” sub-sector to the “Investment Companies” sub-sector of the JSE. Further details in this regards is included in paragraph 3 of the attached Circular.

14.2 As detailed in the Terms Announcement, the Board had resolved to amend the financial year-end of the Company from 31 August 2014 to 30 November 2014.

14.3 Save for the material contracts and transactions detailed in Appendix 1 to these Revised Listing Particulars and the proposed Name Change detailed in paragraph 9 of the attached Circular, there have been no other known material changes in the financial or trading position of ConvergeNet and its subsidiaries since the end of the last financial year ended 28 February 2014 up to and including the Last Practicable Date and no other known material contracts and transactions entered into over the past two years preceding this Circular. In addition, ConvergeNet and its subsidiaries have not entered into any restraint payments or technical fees.

14.4 In terms of the Tellumat Sale and Purchase Agreement, ConvergeNet will grant a call option to Tellumat, or its shareholders (other than ConvergeNet), to acquire the Tellumat shares issued to ConvergeNet subject to the provisions detailed in paragraph 4.6.4 of the attached Circular.

14.5 Details of material contracts entered into by the Stellar Capital are contained in Appendix 1 to these Revised Listing Particulars. Save for these contracts, there have been no material contracts or transactions entered into by the Stellar Capital Group during two years preceding these Revised Listing Particulars, other than in the ordinary course of business until the Last Practicable Date. In addition, the Stellar Capital confirms that, save for the contracts contained in Appendix 1 to these Revised Listing Particulars:

• it has not entered into any contracts which contain an obligation for settlement that is material to the Stellar Capital at the date of these Revised Listing Particulars;

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• no restraint payments or technical fees are payable by Stellar Capital;

• it has not entered into any promoters’ agreements during the three years preceding the date of these Revised Listing Particulars;

• there are no service contracts in place in respect of the executive director and non-executive directors of the Company; and

• no known material changes in the financial or trading position of Stellar Capital have taken place during the past five years preceding these Revised Listing Particulars until the Last Practicable Date.

14.6 On 8 December 2014 ConvergeNet conclude the Management Agreement in terms of which Stellar Advisers will manage the portfolio of the Company in accordance with section 15 of the Listings Requirements, details of which are set out in paragraph 3.4 of the attached Circular .

15. WORKING CAPITAL STATEMENT

The directors of Stellar Capital have considered the impact of the Transactions and provided their opinion on the working capital of the Stellar Capital Group in paragraph 10 of the attached Circular. The working capital statement was prepared on the Stellar Capital Group, as enlarged by the Tellumat Acquisition, Digicore Acquisition, MRI Acquisition and Goliath Gold Acquisition.

16. EXPENSES RELATING TO THE TRANSACTIONS

Details of the expenses relating to the Transactions are contained in paragraph 25 of the attached Circular.

17. DIRECTORS’ RESPONSIBILITY STATEMENT

The directors, whose names are set out on inside cover of the attached Circular, collectively and individually accept full responsibility for the accuracy of the information given in this Revised Listing Particulars in relation to Stellar Capital and certify that, to the best of their knowledge and belief, no facts have been omitted which would make any statement in this Revised Listing Particulars false or misleading, that all reasonable enquiries to ascertain such facts have been made and that the Revised Listing Particulars contains all information required by law and the Listings Requirements.

18. DIRECTORS’ OPINION

The Board has considered the terms and conditions of the Transactions detailed in the attached Circular and recommends to shareholders to vote in favour of the Transactions. The directors, who are eligible to vote, intend voting in favour of the relevant resolutions.

19. CONSENTS

Details of the consent provided by advisers relating to the Transactions are contained in paragraph 26 of the attached Circular.

20. DOCUMENTS AVAILABLE FOR INSPECTION AND FINANCIAL INFORMATION INCORPORATED BY REFERENCE

Details regarding the documents which are available for inspection and financial information incorporated by reference are contained in paragraphs 30 and 31, respectively, of the attached Circular.

Signed at Rosebank on behalf of the Board on 10 December 2014 in terms of powers of attorney granted by the directors.


CONVERGENET HOLDINGS LIMITED

PJ van ZylFinancial Director and Interim Chief Executive Officer

15 December 2014

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APPENDIX 1

MATERIAL CONTRACTS AND TRANSACTIONS

Save for the Tellumat Sale and Purchase Agreement, Titan Sale and Purchase Agreement, Dale Sale and Purchase Agreement, ASOF Sale and Purchase Agreement, Trinity Sale and Purchase Agreement, and Crater Valley Sale and Purchase Agreement, as well as the Subscription Agreements and Private Placement and Underwriting Agreements, Stellar Capital and its subsidiaries have entered into the following material contracts and transactions, which are out of the ordinary course of business, during the two years preceding this Circular:

• On 1 September 2011 Stellar Capital acquired: (i) an additional 10% interest in SCS for R239 519; and (ii) an additional 15% interest in X-DSL for R667 771. Following the aforementioned acquisitions, Stellar Capital held a 100% interest in SCS and a 66% interest in X-DSL.

• On 1 December 2011 Stellar Capital disposed of 5% of its interest in Future Cell for R11.812 million to Pepkor Limited (“Pepkor”), as detailed in the interim results announcement released on SENS on April 2012.

• On 22 November 2012 Stellar Capital entered into the Yellow Star Sale of Shares Agreement in terms of which the Sizwe Acquisition was effected.

• On 26 November 2012 shareholders approved the disposal by Stellar Capital of the remaining 15% of its interest in Future Cell for R40 million to Pepkor, as detailed in the announcement released on SENS on 10 September 2012.

• On 3 March 2013 Sizwe entered into an Acknowledgement of Debt agreement with ASOF in terms of which Sizwe, having previously provided a guarantee in terms of a loan agreement between a sub-contractor of Sizwe (the “Sub-Contrcator”) and ASOF (the “Subcontractor Loan Agreement”), and following a breach of the Sub-contractor Loan Agreement, became indebted to ASOF for an amount of R10 303 743, which amount has subsequently been settled in full. This was an arms-length transaction in terms of which the Sub-Contractor had provided civil construction services on a long haul fibre project on behalf of Sizwe. This was Sizwe’s first transaction with the Sub-Contractor and accordingly there was no contribution to group revenue in this regard.

• On 12 March 2013, shareholders approved:

– the acquisition by Stellar Capital of the remaining 26% interest in Contract Kitting for R20 million from N Andrews and J Andrews; and

– the acquisition by Stellar Capital of the remaining 25% interest in Sizwe for R45 million from Yellow Star, as detailed in the announcement released on SENS on 23 November 2012.

• On 7 August 2013 Stellar Capital entered into a loan agreement with Belltower in terms of which Belltower extended a loan in the amount of R20 million to ConvergeNet for purposes of discharging the advisory fees owed to AfrAsia Corporate Finance (R2 428 200), the cash consideration owed to Yellow Star in respect of the Sizwe Acquisition (R5 million), the aggregate indebtedness of SIMAT Group to AfrAsia Bank Limited (R12 million) and financing working capital requirements. This loan has been repaid in full.

• On 16 August 2013 Stellar Capital entered into a sale of shares agreement with ConvergeCom in terms of which the Telesto Disposal was effected.

• On 28 August 2013 SIMAT SA entered into a sale of shares agreement with Afriwiftcom in terms of which SIMAT SA disposed of 100% of its interest in SIMAT Group to Afriwiftcom for R1.00.

• On 28 August 2013 Stellar Capital entered into a sale of shares agreement with M van Dyk and D Fourie in terms of which Stellar Capital disposed of 100% of its interest in X-DSL (being 66%) and a shareholder loan account in the amount of R2 360 000 to M van Dyk and D Fourie for R1.00.

• On 29 August 2013 Stellar Capital entered into an agreement with Zaloserve in terms of which the Sizwe Disposal was effected.

• On 8 December 2014 ConvergeNet conclude the Management Agreement in terms of which Stellar Advisers will manage the portfolio of the Company in accordance with Section 15 of the Listings Requirements, details of which are set out in paragraph 3.4 of the attached Circular.

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APPENDIX 2

LOANS RECEIVABLE

Stellar Capital has the following loans receivable:

1. Name of the borrower Zaloserve (Pty) Ltd

Amount R70 million (the “Sizwe Loan”)

Date 13 December 2013

Term Term loan for up to 50 months commencing 11 December 2013

Conditions of repayment If Zaloserve has paid, in capital reduction of the Sizwe Loan:

• an amount of at least R17.5 million on or in the six-month period prior to the Sizwe Payment Date (each the “Relevant Period”), the outstanding balance of the Sizwe Sale Price will be reduced by an amount of R2.5 million on the applicable Sizwe Payment Date (i.e. if Zaloserve pays, in capital reduction of the Sizwe Loan, an amount of R17.5 million on or before 30 June 2014, the outstanding balance of the Sizwe Sale Price will be reduced by an amount of R2.5 million on 30 June 2014), provided that, if the outstanding balance of the Sizwe Loan is not settled in full by 31 December 2015, Zaloserve shall not be entitled to any of the capital reductions contemplated in this paragraph, and will, on 31 December 2015, pay an amount equal to any capital reductions granted in terms hereof together with any interest which would have accrued had such capital reductions not been granted; and provided further that, if by 31 of December 2015, Zaloserve has paid a total amount of R70 million in respect of capital reductions of the Sizwe Loan (irrespective of the actual amounts paid by Zaloserve on each of the Payment Dates) Zaloserve will be entitled to a capital reduction in respect of the Sizwe Loan in an amount of R10 million with effect from 31 December 2015;

• an amount of R30 million in a Relevant Period, the outstanding balance of the Sizwe Loan will be reduced by R10 million on the applicable Payment Date (i.e. if Zaloserve pays an amount of at least R30 million on or in the six-month period prior to 30 June 2014, the outstanding balance of the Sizwe Loan will reduce by R10 million on 30 June 2014), provided that if the outstanding balance of the Sizwe Loan is not settled in full by no later than 31 December 2014, Zaloserve will not be entitled to any of the capital reductions contemplated in this paragraph, and will, on 31 December 2014, pay an amount equal to any capital reductions granted in terms hereof together with any interest that would have accrued had such capital reductions not been granted, provided further that if by 31 of December 2014, Zaloserve has paid a total amount of R60 million in respect of capital reductions of the Sizwe Loan (irrespective of the actual amounts paid by Zaloserve on each of the payment dates), Zaloserve will be entitled to a capital reduction in respect of the Sizwe Loan in an amount of R20 million with effect from 31 December 2014.

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Average interest rate Prime rate less 2%

Security provided Secured

Details of security provided As security for the due, proper and timeous payment and performance in full of the Sizwe Loan, Zaloserve has ceded and pledged to and in favour of the Company (i) the Sizwe Sale Shares, (ii) rights to dividends and other distributions of whatsoever nature attaching to the Sizwe Sale Shares and (iii) any and all claims of whatsoever nature which Zaloserve may from time to time have against Sizwe.

Conversion or redemption rights None

Directors and business address of the Borrower

C Kan, SP Radebe and H van DykSizwe House, 35 Waterloo Avenue, Samrand, Kosmosdal

* This loan constituted “financial assistance” to Zaloserve, the purchaser in respect of the Sizwe Acquisition. Mr H van Dyk, a previous director of ConvergeNet, is the sole shareholder and director of Zaloserve.

2. Name of the borrower K2014018038 (Pty) Ltd

Amount* R12 million (“K Loan”)

Date 29 August 2014

Term Term loan repayable on or before 20 August 2015

Conditions of repayment • The borrower shall repay the loan in a single, bullet payment on or before 20 August 2015.

• The borrower shall be entitled to prepay the loan on seven days’ written notice.

• If prepayment is made within 75 days of the advance date (20 August 2014), the borrower must pay to the Lender one month’s interest over and above any interest payable.

Average interest rate 2% per month

Repayment On or before 20 August 2015


Details of security provided As security for the due, proper and timeous payment and performance in full of the K Loan, the borrower has ceded in securitatem debiti

listed shares at a share cover ratio of 3x the loan (R60 million in shares are formally ceded in terms of the Financial Markets Act). If the share cover ratio decreases to below 2x cover, the borrower must top up the share cover to at least 2.5x cover.

The current value of the security is more than 3x the value of the loan, valued on a 30-day VWAP of the share with top-up mechanisms in place if security cover drops to below 2x.


Purpose of loan An investment to generate high levels of current income for Stellar.

Directors and business address of directors of the Borrower

CD Dillon and GJ ShayneThe Terraces, Block E, Steenberg Office ParkSilverwood Close, TokaiCape Town

* Stellar is a participant in a syndicated loan.

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3. Name of the Borrower

Amount* R10 million (“RT Loan”)

Term Loan is repayable on 30 September 2017

Conditions of repayment The borrower shall repay the loan in a single, bullet payment on or before 30 September 2017. The Borrower may make prepayments in minimum amounts of R5 million on 30 days’ notice. If the Borrower prepays the loan within six months of the advance, the Borrower shall pay a prepayment penalty of 3% of the loan to the lender.

Average interest rate Prime plus 8.5% per month, payable quarterly

Repayment 30 September 2017


Details of security provided The Borrower has ceded its debtors book, insurance policies and bank accounts to the Lender. In addition, Bounty Wear (Pty) Ltd, the Borrower’s holding company, has guaranteed the obligations of the Borrower and ceded to the Lender in securitatem debiti its shares in the Borrower and another related company.


Purpose of loan An investment to generate high levels of current income for Stellar.

Directors and business address of directors of the Borrower

CD Dillon and GJ ShayneThe Terraces, Block E, Steenberg Office ParkSilverwood Close, TokaiCape Town

* ConvergeNet is a syndication party to the loan.

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APPENDIX 3

DETAILS OF LEASEHOLD PROPERTIES

Details of ConvergeNet’s leasehold properties as at the Last Practicable Date is set out below:

Contract Kitting

Leasehold payments relate to this company’s new premises:

• Landlord: Capital Property Fund Proprietary Limited (“Capital Property Fund”)

• Premises: 383 Roan Cresent, Corporate Park North, Randjespark Ext 22, Midrand

• Operating lease for five years: 01/09/2014 – 31/08/2019

• Rent at R296 736 per month (excluding VAT) escalating at 9% per annum

• Lease guarantee (provided by Contract Kitting) of R955 017 in favour of Capital Property Fund (expiry date: 30 November 2019)

SCS

• Landlord: Swartland Eiendomme Proprietary Limited

• Premises: Unit 14A, Wild Fig Business Park, 1494 Cranberry Street, Honeydew Ext. 19, 2170

• Operating lease for two years: 01/12/2012 to 30/11/2014, with a renewal period of 01/12/2014 to 30/11/2015

• Rent at R37 595.10 (excluding VAT) escalating at 10% per annum

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APPENDIX 4

OTHER DIRECTORSHIPS HELD BY STELLAR CAPITAL DIRECTORS

Insofar as is known to Stellar Capital, the following directorships were held by the directors of Stellar Capital during the previous five years:

Director Directorship in the preceding five years Status

Janine de Bruyn Afrasia Corporate Finance Director – active

African Pioneer Group Resigned

Afripalm Brands Resigned

Afripalm Horizons Resigned

Convergenet Holdings Director – active

Dream World Investments 506 Director – active

Kingsley Technologies Resigned

Kutana Resources Director – active

Malesela Investments No. 1 Resigned




Micawber 469 Resigned

North Oaks No. 10 Director – active

Nozala Investments Resigned

Pamodzi Spice 1 Resigned

Prowess Investment Managers Director – active

Salt Capital Director – active

Sarhwu Investment Holdings Resigned

Sekunjalo Private Equity Resigned

Ticapax Director – active

Trans African Concessions Resigned

Unipalm Investment Holdings Resigned

West Coast Capital Resigned

Lerato Mangope Alumni Trading 225 Resigned

Alumni Trading 252 Director – active


Coral Lagoon Basadi Investment Holdings Director – active

Lionshare Properties Director – active

Mollo Holdings Director – active

Rikhweru Trading Director – active

Rowan Tree 61 Director – active

Sizwe Africa IT Group Resigned

UBank Director – active

Charles Edward Pettit Torre Industries Ltd Director – active

Torre Automotive (Pty) Ltd Director – active

Torre Holdings (Pty) Ltd Director – active

Torre South Africa Holdings (Pty) Ltd Director – active

Torre Capital (Pty) Ltd Director – active

Control Instruments Group Ltd Director – active

Control Instruments Automotive Plastics (Pty) Ltd Director – active

Manhand SA (Pty) Ltd Director – active

Manhand Materials Handling Holdings (Pty) Ltd Director – active

Kanu Equipment (Pty) Ltd Director – active

182


Convergenet Holdings Ltd Director – active

Transport Lighting and Fleet Products (Pty) Ltd Director – active

Tractor and Grader Supplies Copperbelt Ltd (Zambia) Appointment in process

Afrasia Capital Management Ltd Resigned

Afrasia Corporate Finance (Africa) Ltd Resigned

Afrasia Corporate Finance (Pty) Ltd Resigned

Afrasia Special Opportunities Fund (Pty) Ltd Resigned

Afrasia Special Opportunities Fund Ltd Resigned

Dale Capital Holdings SA (Pty) Ltd Resigned

Dale Capital Private Equity (Pty) Ltd Resigned

Dale Risk Management Services (Pty) Ltd Resigned

Goliath Gold Mining Ltd Resigned

Imagination Advisory and Distribution Services (Pty) Ltd Resigned

Lavender Sky Investments 40 (Pty) Ltd Resigned

Mine Restoration Investments Ltd Resigned

Rapid Fire Investments Ltd Resigned

Sekunjalo Asset Finance (Pty) Ltd Resigned

Sekunjalo Asset Management (Pty) Ltd Resigned

Sekunjalo Life Assurance Ltd Resigned

Sekunjalo Medical Aid Administrators (Pty) Ltd Resigned

Sekunjalo Private Equity (Pty) Ltd Resigned

Sharenet (Pty) Ltd Resigned

Sharenet CFD’s (Pty) Ltd Resigned

Sharenet Financial Solutions (Pty) Ltd Resigned

Sharenet Views (Pty) Ltd Resigned

Sheerprops 156 (Pty) Ltd Resigned

Silvertree Properties (Pty) Ltd Resigned

Thunder Capital (Pty) Ltd Resigned

Thunder Properties (Pty) Ltd Resigned

Thunder Securitisation (Pty) Ltd Resigned

Trinity Asset Management (Pty) Ltd Resigned

West Coast Capital (Pty) Ltd Resigned

Workers Life Assurance Company (Pty) Ltd Resigned

Workers Life Medical Aid Administrators (Pty) Ltd Resigned

Yellow Star Group Holdings (Pty) Ltd Resigned

Dumisani Dumekhaya 8 Mile Investments 207 Resigned

Tabata Afrifresh Group Resigned

Afriglass Director – active

Amatola Green Power Resigned

Andrews Kit Director – active

Bowes Loon and Connellan Resigned

Brooklyn Automotive Director – active

Brooklyn V3 Investments Director – active

Buildmax Aggregates Resigned

Buildmax Equipment and Services Director – active

Burcron Trade 61 Resigned

Capraway Director – active

Catwalk Investments 300 Director – active

Chrystalpine Investments 9 Director – active


Cresta Motor Lab Director – active

Delve In Capital Director – active

183


East Rand Motor Lab Director – active

HK Automotive Spares Director – active

Honey Silk Trading and Investments 1031 Director – active

Komver Investments Director – active

Labonte 24 Director – active

Lamacs Solutions Resigned

Matlosana Medical Health Services Director – active

Micawber 809 Director – active

Mulcris Aviation Resigned

Nciba Solutions Resigned

New Heights 368 Director – active

Platinum Budget Office Furniture Director – active

PMG Motors Amanzimtoti Resigned

Putuma Investments Director – active

Ramsay Webber Resigned

Razor Mechanical Centre Director – active

Riverside Motor Lab Director – active

Rowan Tree 11 Director – active

Royal Anthem Investments 54 Director – active

Sizwe Africa IT Group Resigned

Smith Tabata Director – active

Smith Tabata Buchanan Boyes Director – active

Smith Tabata Loon and Connellan Director – active

Soilon Investments Director – active

South Rand Motor Lab Director – active

STBB Smith Tabata Buchanan Boyes Director – active

Super 5 Media Resigned

Telkom SA Resigned

Transaction Capital Director – active

Uqilima Investments Director – active

Vuwa Capital Director – active

Vuwa Fleet Services Director – active

Vuwa Investments Director – active

Zamindlela Motor Group Resigned

Peter John van Zyl Afrasia Corporate Finance Resigned

Afrasia Special Opportunities Fund Director – active

Amrichprop 27 Properties Director – active

Consolidated Resources Resigned

Control Instruments Group Director – active

Emergent Energy Director – active

FIOS Resigned

First Light Administration Resigned

Goliath Gold Mining Resigned

Imagination Advisory and Distribution Resigned

Imagination Capital Management Resigned

Kilomix Investments Resigned

LAN Solutions Director – active

Octigon (SA) Resigned

Preparatory Play and Learning Centre Director – active

Saratoga Private Equity Director – active

Saratoga Software Resigned

Sekunjalo Asset Finance Resigned

Sekunjalo Asset Management Resigned

184


Sekunjalo Capital Resigned

Sekunjalo Corporate Services Resigned

Sekunjalo Financial Services Resigned

Sekunjalo Fund Administrators Resigned

Sekunjalo Health Care Resigned

Sekunjalo Private Equity Resigned

Sekunjalo Properties Resigned

Sekunjalo Technology Resigned

Silvertree Properties Director – active

Synbi Resigned

TDF Fund Administrators Resigned

The Centre for Play and Learning Resigned

Thunder Capital Director – active

. Thunder Properties Director – active

Thunder Securitisations Director – active

Torre Holdings Director – active

Torre Industries Director – active

West Coast Capital Resigned

Workers Life Assurance Company Resigned

Workers Life Medical Aid Resigned

Caroline Clare Wiese Capstone 597 Director – active

Incapoint Investments Director – active

Metcap 14 Director – active

Sloane and Madison Director – active

Wiese Dini Property Development Member – active

Christina Helmien Wiese Cool Ideas 225 Director – active

Cream Magenta 140 Director – active

Incarite Investments Director – active

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APPENDIX 5

EXTRACTS FROM MEMORANDUM OF INCORPORATION

This Appendix 5 details various provisions of the Memorandum of Incorporation of Stellar Capital, as required in terms of the Listings Requirements. In each case, the numbering and wording below matches that of the applicable provisions in the Memorandum of Incorporation.

“10. ISSUE OF SHARES AND VARIATION OF RIGHTS

5.3 The Company is authorised to issue:

5.3.1 Ordinary Shares with no par value, of the same class, each of which ranks pari passu in respect of all rights and entitles the holder to

5.3.1.1 vote on any matter to be decided by the Shareholders and to 1 (one) vote in the case of a vote by means of a poll;

5.3.1.2 participate proportionally in any distribution made by the Company; and

5.3.1.3 receive proportionally the net assets of the Company upon its liquidation;

5.3.2 such number of each of such further classes of Shares, if any, as are set out in Schedule 1 hereto subject to the preferences, rights, limitations and other terms associated with each such class set out therein.

5.4 All Securities in each class for which a listing on the JSE is applied shall rank pari passu (as this term is understood in paragraph 3.29 of the JSE Listings Requirements).

5.5 The Board shall not have the power to:

5.5.1 create Shares of any class; or

5.5.2 convert one class of shares into one or more other classes; or

5.5.3 increase or decrease the number of authorised Shares of any class of the Shares; or

5.5.4 consolidate and reduce the number of the Company’s issued and authorised Shares of any class; or

5.5.5 subdivide its Shares of any class by increasing the number of its issued and authorised Shares of that class without an increase of its capital; or

5.5.6 reclassify any classified Shares that have been authorised but not issued; or

5.5.7 classify any unclassified Shares that have been authorised but not issued; or

5.5.8 vary the preferences, rights, limitations or other terms of any Shares; or

5.5.9 change the name of the Company,

and such powers shall only be capable of being exercised by the Shareholders by way of a special resolution of the Shareholders.

5.6 Each Share issued by the Company has associated with it an irrevocable right of the Shareholder to vote on any proposal to amend the preferences, rights, limitations and other terms associated with that Share as contemplated in clause 27.2.

5.7 The authorisation and classification of Shares, the number of authorised Shares of each class, and the preferences, rights, limitations and other terms associated with each class of Shares as set out in this Memorandum of Incorporation may be changed only by an amendment of this Memorandum of Incorporation by special resolution of the Shareholders and in accordance with the JSE Listings Requirements, and such amendments shall not be implemented without a special resolution adopted by the holders of Shares of that class at a separate meeting.

5.8 If a fraction of a Share comes into being as a result of any corporate action such fraction will be subject to compliance with the JSE Listings Requirements’ rounding convention.

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5.9 No Shares may be authorised in respect of which the preferences, rights, limitations or any other terms of any class of Shares may be varied in response to any objectively ascertainable external fact or facts as provided for in sections 37(6) and 37(7) of the Act.

5.10 The Company may only issue Shares which are fully paid up and freely transferable, unless otherwise required by statute, and only within the classes and to the extent that those Shares have been authorised by or in terms of this Memorandum of Incorporation. The JSE will not list shares that are not fully paid for upon listing.

5.11 The Board has control over all unissued shares per class and may, subject to clause 5.14 and the further provisions of this clause 5.11, resolve to issue Shares of the Company at any time and, where applicable, list such Shares on the applicable JSE market (“listing”) if:

5.11.1 the issue is within the classes and to the extent that those Shares have been authorised by or in terms of this Memorandum of Incorporation, but not yet issued; and

5.11.2 all requisite and applicable approvals of the JSE in relation to corporate actions, circulars and application letters have been obtained;

5.11.3 all issues of Shares for cash, including grants/issues of options and/or convertible securities must, in addition, be in accordance with the JSE Listings Requirements.

5.12 All Securities of the Company for which a listing is sought on the JSE and all Securities of the same class as Securities of the Company which are listed on the JSE must, notwithstanding the provisions of section 40(5) of the Act, only be issued after the Company has received the consideration approved by the Board for the issuance of such Securities and must be freely transferable.

5.13 Subject to what may be authorised by the Act, the JSE Listings Requirements and at meetings of Shareholders in accordance with clause 5.15, and subject to clause 5.14, the Board may only issue unissued “Equity Securities” (as defined in the JSE Listings Requirements)to raise cash or to settle outstanding liabilities or expenses if such Securities are issued in terms of a JSE approved rights offer or issue of shares for cash to existing shareholders on a pro-rata basis, unless the Equity Securities are to be issued for the acquisition of an asset.

5.14 Notwithstanding the provisions of clauses 10.3, 10.11 and 10.13, any issue of Shares, Securities convertible into Shares, or rights exercisable for Shares in a transaction, or a series of integrated transactions shall, in accordance with the provisions of section 41(3) of the Act, require the approval of the Shareholders by special resolution if the voting power of the class of Shares that are issued or are issuable as a result of the transaction or series of integrated transactions will be equal to or exceed 30% (thirty percent) of the voting power of all the Shares of that class held by Shareholders immediately before that transaction or series of integrated transactions.

5.15 Notwithstanding the provisions of clause 5.13, the Shareholders may at a general meeting authorise the Directors to issue Shares of the Company at any time and/or grant options to subscribe for Shares as the Directors in their discretion think fit, provided that such transaction(s) has/have been approved by the JSE and comply with the JSE Listings Requirements.

5.16 Except to the extent that any such right is specifically included as one of the rights, preferences or other terms upon which any class of Shares is issued or as may otherwise be provided in this Memorandum of Incorporation in accordance with the JSE Listings Requirements, no Shareholder shall have any pre-emptive or other similar preferential right to be offered or to subscribe for any additional Shares issued by the Company.”

32. COMPOSITION AND POWERS OF THE BOARD OF DIRECTORS

5.17 In addition to the minimum number of Directors that the Company must have to satisfy any requirement in terms of the Act to appoint an audit committee and a social and ethics committee, the Board shall not be less than 4 (four) nor more than 20 (twenty) Directors.

5.18 The composition of the Board shall, to the extent possible, be in accordance with the recommendations of the King Report on Corporate Governance for South Africa 2009, as updated, amended or replaced from time to time.

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5.19 Subject to the provisions of clause 32.5, all Directors shall be elected by an ordinary resolution of the Shareholders at a general or annual general meeting of the Company and no appointment of a Director in accordance with a resolution passed in terms of section 60 shall be competent.

5.20 Every person holding office as a Director, prescribed officer, Company Secretary or auditor of the Company immediately before the effective date of the Act will, as contemplated in item 7(1) of Schedule 5 to the Act, continue to hold that office.

5.21 In any election of Directors:

5.21.1 the election is to be conducted as a series of votes, each of which is on the candidacy of a single individual to fill a single vacancy or as an addition to the Board, with the series of votes continuing until all vacancies on the Board have been filled; and

5.21.2 in each vote:

5.21.2.1 each vote entitled to be exercised may be exercised once; and

5.21.2.2 the vacancy is filled only if a majority of the votes exercised support the candidate.

5.22 Subject to the power of the Directors to fill a vacancy or to add Directors to the Board in terms of clause 32.10.1, the Company shall only have elected Directors and there shall be no appointed or ex offıcio Directors appointed or any person named in this Memorandum of Incorporation able to nominate any person for appointment as a Director as contemplated in section 66(4) of the Act.

5.23 Apart from satisfying the qualification and eligibility requirements set out in section 69 of the Act, a person need not satisfy any eligibility requirements or qualifications to become or remain a Director or a prescribed officer of the Company.

5.24 No Director shall be appointed for life or for an indefinite period and the Directors shall rotate in accordance with the following provisions of clause 32.8:

5.24.1 at each annual general meeting referred to in clause 25.3.1, 1/3 (one third) of the Directors for the time being, or if their number is not 3 (three) or a multiple of 3 (three), the number nearest to 1/3 (one third), but not less than 1/3rd 1/3 (one third), shall retire from office, provided that if a Director is appointed as managing Director or as an employee of the Company in any other capacity, he or she shall not, while he or she continues to hold that position or office, be subject to retirement by rotation and he or she shall not, in such case, be taken into account in determining the rotation or retirement of Directors;

5.24.2 the Directors to retire in every year shall be those who have been longest in office

since their last election, but as between persons who were elected as Directors on the same day, those to retire shall, unless they otherwise agree among themselves, be determined by lot;

5.24.3 a retiring Director shall be eligible for re-election, subject to him not being ineligible or disqualified from being a Director under the Act, other law or the JSE Listings Requirements;

5.24.4 the Company, at the general meeting at which a Director retires in the above manner, or at any other general meeting, may fill the vacancy by electing a person thereto, provided that the Company shall not be entitled to fill the vacancy by means of a resolution passed in accordance with clause 31;

5.24.5 if at any meeting at which an election of Directors ought to take place the offices of the retiring Directors are not filled, unless it is expressly resolved not to fill such vacancies, the meeting shall stand adjourned and the further provisions of this Memorandum of Incorporation, including clauses 25.8 to 25.11 (inclusive) will apply mutatis mutandis to such adjournment, and if at such adjourned meeting the vacancies are not filled, the retiring Directors, or such of them as have not had their offices filled, shall be deemed to have been re-elected at such adjourned meeting.

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5.25 The Board, or through its nomination committee constituted in terms of clause 30, shall provide the Shareholders with a recommendation in the notice of the meeting at which the re-election of a retiring Director is proposed, as to which retiring Directors are eligible for re-election, taking into account that Director’s past performance and contribution.

5.26 The Board has the power:

5.26.1 to at any time from time to time appoint any person as a Director either to fill a casual vacancy or as an addition to the Board, but so that the total number of directors shall not at any time exceed the maximum number fixed and as set out in section 68(3) of the Act, provided that such appointment must be confirmed by the Shareholders, in accordance with clauses 32.3 and 29.4, at the next annual general meeting of the Company, as required in terms of section 70(3)(b)(i) of the Act; and

5.26.2 exercise all of the powers and perform any of the functions of the Company, as set out in section 66(1) of the Act, and the powers of the Board in this regard are only limited and restricted as contemplated in this clause 32.

5.27 Subject to the provisions of the Companies Act, the Company may by Ordinary Resolution remove any Director before the expiration of his period of office and by an Ordinary Resolution elect another Person in his stead. The Person so elected shall hold office until the next following Annual General Meeting of the Company and shall then retire and be eligible for re-election.

5.28 The Company may.by Ordinary Resolution in General Meeting from time to time increase (or reduce, but not below 4 (four)) the number of Directors and may also determine in what manner or rotation such increased (or reduced) number is to go out of office. Whenever such increase is made the members at the said Meeting or failing them the Board may fill the new seats so created.

5.29 The Directors may at any time and from time to time by power of attorney appoint any person or persons to be the attorney or attorneys and agent(s) of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors in terms of this Memorandum of Incorporation) and for such period and subject to such conditions as the Directors may from time to time think fit. Any such appointment may, if the Directors think fit, be made in favour of any company, the shareholders, directors, nominees or managers of any company or firm, or otherwise in favour of any fluctuating body of persons, whether nominated directly or indirectly by the Directors. Any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorneys and agents as the Directors think fit. Any such attorneys or agents as aforesaid may be authorised by the Directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in them.

5.30 Save as otherwise expressly provided herein, all cheques, promissory notes, bills of exchange and other negotiable or transferable instruments, and all documents to be executed by the Company, shall be signed, drawn, accepted, endorsed or executed, as the case may be, in such manner as the Directors shall from time to time determine.

5.31 All acts performed by the Directors or by a committee of Directors or by any person acting as a Director or a member of a committee shall, notwithstanding that it shall afterwards be discovered that there was some defect in the appointment of the Directors or persons acting as aforesaid, or that any of them were disqualified from or had vacated office, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director or member of such committee.

5.32 If the number of Directors falls below the minimum number fixed in accordance with this Memorandum of Incorporation, the remaining Directors must as soon as possible and in any event not later than 3 (three) months from the date that the number falls below such minimum, fill the vacancy/ies in accordance with clause 5.26.132.10.1 or convene a general meeting for the purpose of filling the vacancies, and the failure by the Company to have the minimum number of Directors during the said 3 (three) month period does not limit or negate the authority of the board of Directors or invalidate anything done by the board of Directors while their number is below the minimum number fixed in accordance with this Memorandum of Incorporation.

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5.33 The Directors in office may act notwithstanding any vacancy in their body, but if after the expiry of the 3 (three) month period contemplated in clause 32.16, their number remains below the minimum number fixed in accordance with this Memorandum of Incorporation, they may, for as long as their number is reduced below such minimum, act only for the purpose of filling vacancies in their body in terms of section 68(3) of the Act or of summoning general meetings of the Company, but not for any other purpose, provided that if there is no director able or willing to act, then any Ordinary Shareholder may convene a General Meeting for that purpose.

5.34 A Director may hold any other office or place of profit under the Company (except that of auditor) or any subsidiary of the Company in conjunction with the office of Director, for such period and on such terms as to remuneration (in addition to the remuneration to which he may be entitled as a Director) and otherwise as a disinterested quorum of the Directors may determine.

5.35 A Director of the Company may be or become a director or other officer of, or otherwise interested in, any company promoted by the Company or in which the Company may be interested as shareholder or otherwise, provided that the appointment and remuneration in respect of such other office must be determined by a disinterested quorum of Directors.

5.36 Each Director and each alternate Director, prescribed officer and member of any committee of the Board (whether or not such latter persons are also members of the Board) shall, subject to the exemptions contained in section 75(2) of the Act and the qualifications contained in section 75(3) of the Act, comply with all of the provisions of section 75 of the Act in the event that they (or any person who is a related person to them) has a personal financial interest in any matter to be considered by the Board.

5.37 A decision by the Board, or a transaction or agreement approved by the Board is valid despite any Personal Financial Interest of a Director or person related to the Director, if the provisions of this clause 32.21 have been complied with or if the transaction or agreement has been ratified by an Ordinary Resolution of the Shareholders, subject to the JSE Listings Requirements.

5.38 Nothing in this clause shall be construed so as to prevent any Director as a Shareholder from taking part in a General Meeting whether or not such Director shall be personally interested or concerned in such matters. It is hereby declared pursuant to the provisions of the Companies Act that although the Board shall have power to enter into a provisional contract for the sale or alienation of the undertaking of the Company, or the whole or the greater part of the assets of the Company, such provisional contract shall become binding on the Company only in the event of the specific transaction proposed by the Board complying with the requirements of the Companies Act.

5.39 Without in any way derogating from the obligations of a Director in terms of section 72(3) of the Companies Act, the Board shall have power to delegate to any Person or Persons any of their powers and discretions and to give to any such Person or Persons power of sub-delegation.

5.40 The proposal of any resolution to Shareholders in terms of sections 20(2) and 20(6) of the Act, to permit or ratify an act of the Directors that is inconsistent with any limitation or restriction imposed by this Memorandum of Incorporation, or the authority of the Directors to perform such an act on behalf of the Company, must be prohibited in the event that such a resolution would lead to the ratification of an act contrary to the JSE Listings Requirements.”

38. BORROWING POWERS

5.41 Subject to the provisions of clause 38.2 and the other provisions of this Memorandum of Incorporation, the Directors may from time to time:

5.41.1 borrow for the purposes of the Company such sums as they think fit; and

5.41.2 secure the payment or repayment of any such sums, or any other sum, as they think fit, whether by the creation and issue of Securities, mortgage or charge upon all or any of the property or assets of the Company.

5.42 The Directors shall procure (but as regards subsidiaries of the Company only insofar as by the exercise of voting and other rights or powers of control exercisable by the Company they can so procure) that the aggregate principal amount at any one time outstanding in respect of moneys so borrowed or raised by:

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5.42.1 the Company; and

5.42.2 all the subsidiaries for the time being of the Company (excluding moneys borrowed or raised by any of such companies from any other of such companies but including the principal amount secured by any outstanding guarantees or suretyships given by the Company or any of its subsidiaries for the time being for the indebtedness of any other company or companies whatsoever and not already included in the aggregate amount of the moneys so borrowed or raised),

shall not exceed the aggregate amount at that time authorised to be borrowed or secured by the Company or the subsidiaries for the time being of the Company (as the case may be).

42. DISTRIBUTIONS

5.43 Subject to the provisions of the Act, and the JSE Listings Requirements applicable to dividends and payments to shareholders, and particularly section 46 of the Act, the Company may make a proposed distribution, being dividends or capital payments, as defined and contemplated in the Act and the JSE Listings Requirements, if such distribution:

5.43.1 is pursuant to an existing legal obligation of the Company, or a court order; or

5.43.2 is authorised by resolution of the Board, in compliance with the JSE Listings Requirements, including the declaration and payment of dividends and that capital shall be repaid upon the basis that it may not be called up again.

5.44 No distribution shall bear interest against the Company, except as otherwise provided under the conditions of issue of the Shares in respect of which such distribution is payable.

5.45 Distributions shall be declared in the currency of South Africa.

5.46 Distributions may be declared either free of or subject to the deduction of income tax and any other tax or duty in respect of which the Company may be chargeable.

5.47 The Directors may from time to time declare and pay to the Shareholders such interim distributions as the Directors consider to be appropriate.

5.48 Dividends are declared by the Directors in accordance with the Act.

5.49 All unclaimed dividends may be invested or otherwise made use of by the Directors for the benefit of the Company until claimed, provided that dividends unclaimed for a period of 3 (three) years from the date on which they were declared may be declared forfeited by the Directors for the benefit of the Company. The Directors may at any time annul such forfeiture upon such conditions (if any) as they think fit. All unclaimed monies, other than dividends, that are due to any Shareholder/s shall be held by the Company in trust for an indefinite period (but subject to the laws of prescription) until lawfully claimed by such Shareholder/s.

5.50 Any distribution, interest or other sum payable in cash to the holder of a Share may be paid by cheque or warrant sent by post and addressed to:

5.50.1 the holder at his registered address; or

5.50.2 in the case of joint holders, the holder whose name appears first in the Securities Register in respect of the share, at his registered address; or

5.50.3 such person and at such address as the holder or joint holders may in writing direct.

5.51 Every such cheque or warrant shall:

5.50.1 be made payable to the order of the person to whom it is addressed; and

5.50.2 be sent at the risk of the holder or joint holders.

5.52 The Company shall not be responsible for the loss in transmission of any cheque or warrant or of any document (whether similar to a cheque or warrant or not) sent by post as aforesaid.

5.53 A holder or any one of two or more joint holders, or his or their agent duly appointed in writing, may give valid receipts for any distributions or other moneys paid in respect of a Share held by such holder or joint holders.

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5.54 When such cheque or warrant is paid, it shall discharge the Company of any further liability in respect of the amount concerned.

5.55 A distribution may also be paid in any other way determined by the Directors, and if the directives of the Directors in that regard are complied with, the Company shall not be liable for any loss or damage which a Shareholder may suffer as a result thereof.

5.56 Without detracting from the ability of the Company to issue capitalisation Shares, any distribution may be paid wholly or in part:

5.56.1 by the distribution of specific assets; or

5.56.2 by the issue of Shares, debentures or securities of the Company or of any other company; or

5.56.3 in cash; or

5.56.4 in any other way which the Directors or the Company in general meeting may at the time of declaring the distribution determine.

5.57 Where any difficulty arises in regard to such distribution, the Directors may settle that difficulty as they think expedient, and in particular may fix the value which shall be placed on such specific assets on distribution.

5.58 The Directors may:

5.58.1 determine that cash payments shall be made to any Shareholder on the basis of the value so fixed in order to secure equality of distribution; and

5.58.2 vest any such assets in trustees upon such trusts for the benefit of the persons entitled to the distribution as the Directors deem expedient.

5.58 Any distribution must be made payable to Shareholders registered as at a date subsequent to the date of declaration thereof or the date of confirmation thereof, whichever is the later date.

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NOTICE OF GENERAL MEETING

NOTICE IS HEREBY GIVEN that a General Meeting of shareholders will be held at 10:00 on Friday, 16 January 2015 at Level P3, Oxford Corner, corner Jellicoe and Oxford Roads, Rosebank, Johannesburg.

Purpose

The purpose of the General Meeting is to consider and, if deemed fit, to approve, with or without modification, the resolutions set out in this notice of General Meeting.

Notes:

1. The definitions and interpretations commencing on page 8 of the circular to which this notice is attached (the “Circular”), apply,

mutatis mutandis, to this notice and to the resolutions set out below.

2. For an ordinary resolution to be approved by shareholders, it must be supported by more than 50% of the voting rights exercised on

the resolution.

3. For a special resolution to be approved by shareholders, it must be supported by at least 75% of the voting rights exercised on the

resolution.

4. Quorum requirement for resolutions to be approved: Sufficient persons being present to exercise, in aggregate, at least 25% of all

voting rights that are entitled to be exercised on the respective resolutions.

Please note that the Company will not provide for electronic participation at the General Meeting.

1. SPECIAL RESOLUTION NUMBER 1 – APPROVAL OF THE CONTRACT KITTING DISPOSAL IN TERMS OF SECTION 112 AND 115(2)( b) OF THE COMPANIES ACT

“RESOLVED THAT, subject to the passing of Ordinary Resolution Number 1 and Ordinary Resolution Number 2, and in accordance with section 112 and 115(2)(b) of the Companies Act, article 32.22 of the Memorandum of Incorporation and the provisions of section 9.20 of the Listings Requirements, the

disposal of ConvergeNet’s 100% interest in Contract Kitting to Tellumat for R95.119 million, pursuant to and in terms of the Tellumat Sale and Purchase Agreement (a copy of which was made available to shareholders for inspection prior to the date of the General Meeting), be and is hereby approved.”

Information and explanatory material with respect to Special Resolution Number 1 as contemplated in section 65(4)(b) of the Companies Act

Shareholders are referred to paragraph 4.5 of the Circular for more information relating to the reason for and effect of Special Resolution Number 1.

In terms of section 112 of the Companies Act, the Contract Kitting Disposal is regarded as both a fundamental transaction and an affected transaction and will therefore require approval by way of special resolution by all shareholders present or represented by proxy at the General Meeting, excluding any parties and their associates participating in the Contract Kitting Disposal.

In terms of section 65(9) of the Companies Act, for Special Resolution Number 1 to be adopted, it must be supported by at least 75% of the voting rights exercised on the resolution. In addition, in accordance with the Listings Requirements, the Contract Kitting Disposal is regarded as a Category 1 transaction and requires the approval of 50% plus 1 of the voting rights exercised on the resolution.

193

2. SPECIAL RESOLUTION NUMBER 2 – ISSUE OF MORE THAN 30% OF CONVERGENET’S ISSUED SHARE CAPITAL

“RESOLVED THAT, in accordance with section 41(3) of the Companies Act, the Company be and is hereby authorised to issue up to 75 million new ConvergeNet shares, representing 74.30% of the issued share capital of ConvergeNet prior to the Private Placement, in terms of the Private Placement as detailed in the Circular.”


This resolution is required to be approved in accordance with section 41(3) of the Companies Act if and to the extent that the sum of the ConvergeNet shares to be issued in terms of the Private Placement equal or exceed 30% of the total issued shares held by shareholders of ConvergeNet prior to the Private Placement. The resolution requires at least 75% of the voting rights exercised on the resolution.

3. SPECIAL RESOLUTION NUMBER 3 – APPROVAL OF THE NAME CHANGE AND AMENDMENT TO THE MEMORANDUM OF INCORPORATION

“RESOLVED THAT, in accordance with section 16 of the Companies Act and section 11.36 of the Listings Requirements, the name of the Company be and is hereby changed from “ConvergeNet Holdings Limited” to “Stellar Capital Partners Limited”, with effect from the date of registration of this special resolution with CIPC, and that the Memorandum of Incorporation be amended accordingly.”


Shareholders are referred to paragraph 9.1 of the Circular for more information relating to the reason for and effect of Special Resolution Number 3.

This resolution is required to be approved in accordance with section 16 of the Companies Act. The approval of this Special Resolution Number 3 requires at least 75% of the voting rights exercised on the resolution.

4. ORDINARY RESOLUTION NUMBER 1 – APPROVAL OF THE SCS DISPOSAL

“RESOLVED THAT, subject to the passing of Special Resolution Number 1 and Ordinary Resolution Number 2, and in accordance with the provisions of section 9.11 of the Listings Requirements, the disposal of ConvergeNet’s 100% interest in SCS to Tellumat for R5 million, pursuant to and in terms of the Tellumat Sale and Purchase Agreement (a copy of which was made available to shareholders for inspection prior to the date of the General Meeting), be and is hereby approved.”

Information and explanatory material with respect to Ordinary Resolution Number 1 as contemplated in section 65(4)(b) of the Companies Act

Shareholders are referred to paragraph 4.5 of the Circular for more information relating to the reason for and effect of Ordinary Resolution Number 1.

In accordance with the Listings Requirements, the SCS Disposal, when aggregated with the Contract Kitting Disposal, is regarded as a Category 1 transaction and requires the approval of 50% plus 1 of the voting rights exercised on the resolution.

5. ORDINARY RESOLUTION NUMBER 2 – APPROVAL OF THE TELLUMAT ACQUISITION

“RESOLVED THAT, subject to the passing of Special Resolution Number 1 and Ordinary Resolution Number 1, and in accordance with the provisions of section 9.20 of the Listings Requirements, the acquisition by ConvergeNet of 30% of the total issued ordinary shares of Tellumat in settlement of the Contract Kitting Sale Consideration and SCS Sale Consideration (“Tellumat Consideration Shares”), pursuant to and in terms of the Tellumat Sale and Purchase Agreement (a copy of which was made available to shareholders for inspection prior to the date of the General Meeting), be and is hereby approved.”


194


In accordance with the Listings Requirements, the Tellumat Acquisition is regarded as a Category 1 transaction and requires the approval of 50% plus 1 of the voting rights exercised on the resolution.

6. ORDINARY RESOLUTION NUMBER 3 – APPROVAL OF THE TELLUMAT OPTION

“RESOLVED THAT, subject to the passing of Special Resolution Number 1 and Ordinary Resolution Number 1 and 2, in accordance with the provisions of section 9.20 of the Listings Requirements, the Tellumat Option, as described in paragraph 4.6.4 of the Circular, pursuant to and in terms of the Tellumat Option Agreement (a copy of which was made available to shareholders for inspection prior to the date of the General Meeting), be and is hereby approved.”


Should the Tellumat Option be exercised as described in paragraph 4.6.4 of the Circular, the sale of the Tellumat Consideration Shares pursuant to the exercise of the Tellumat Option may be regarded as a Category 1 transaction in terms of section 9 of the Listings Requirements. The effect of Ordinary Resolution Number 3, if passed by shareholders, is that the Company would be authorised to effect the sale of the Tellumat Consideration Shares arising as a result of such exercise, as contemplated in paragraph 4.6.4 of the Circular.

In accordance with the Listings Requirements, Ordinary Resolution Number 3 requires the approval of 50% plus 1 of the voting rights exercised on the resolution.

7. ORDINARY RESOLUTION NUMBER 4 – APPROVAL OF THE DIGICORE ACQUISITION

“RESOLVED THAT, the acquisition of an effective 19.26% interest in Digicore from Titan Nominees (12.00% for R74 312 500), Titan Share (3.62% for R22 419 425) and Dale International Trust Company (2.02% for R12 500 000) for an aggregated amount of R119 231 925, pursuant to and in terms of the Titan Sale and Purchase Agreement and Dale Sale and Purchase Agreement, respectively (a copy of which was made available to shareholders for inspection prior to the date of the General Meeting), be and is hereby approved.”



In accordance with the Listings Requirements, the Digicore Acquisition is regarded as a Category 1 transaction and requires the approval of 50% plus 1 of the voting rights exercised on the resolution.

8. ORDINARY RESOLUTION NUMBER 5 – APPROVAL OF THE MRI ACQUISITION

“RESOLVED THAT, the acquisition of an additional 30.32% of MRI from ASOF (29.78% for R24 822 664) and Titan Share Dealers (0.54% for R450 000) for an aggregate amount of R25 272 664 pursuant to and in terms of the ASOF Sale and Purchase Agreement and Titan Share and Purchase Agreement, respectively (a copy of which was made available to shareholders for inspection prior to the date of the General Meeting), be and is hereby approved.”



In accordance with the Listings Requirements, the MRI Acquisition is regarded as a Category 1 transaction and requires the approval of 50% plus 1 of the voting rights exercised on the resolution.

195

9. ORDINARY RESOLUTION NUMBER 6 – APPROVAL OF THE GOLIATH GOLD ACQUISITION

“RESOLVED THAT, the acquisition of an additional 21.77% of Goliath Gold from ASOF (4.99% for R14 700 000), certain clients of Trinity Asset Management (3.33% for R9 817 976), Titan Share Dealers (2.13% for R6 268 780), Dale International Trust Company (4.93% for R14 518 628) and Crater Valley Investments (0.93% for R2 736 418) for an aggregated amount of R64 169 742, pursuant to and in terms of the ASOF Sale and Purchase Agreement, Trinity Sale and Purchase Agreement, Titan Sale and Purchase Agreement, Dale Sale and Purchase Agreement and Crater Valley Sale and Purchase Agreement, respectively (a copy of which was made available to shareholders for inspection prior to the date of the General Meeting), be and is hereby approved.”



In accordance with the Listings Requirements, the Goliath Gold Acquisition is regarded as a Category 1 transaction and requires the approval of 50% plus 1 of the voting rights exercised on the resolution.

10. ORDINARY RESOLUTION NUMBER 7 – APPROVAL OF THE PRIVATE PLACEMENT

“RESOLVED THAT, subject to the passing of Special Resolution Number 2, and as a specific issue in accordance with section 5.51 of the Listings Requirements, the Company be and is hereby authorised to issue 75 million new ordinary shares of no par value, ranking pari passu with existing issued ordinary shares in the Company, at an issue price of R2.00 per new ConvergeNet share to those investors detailed in paragraph 8.1.1 of the Circular in accordance with the terms and subject to the conditions set out in the Circular.


Shareholders are referred to paragraph 8.1.1 of the Circular for more information relating to the reason for and effect of Ordinary Resolution Number 7.

Shareholders are requested to approve this Ordinary Resolution Number 7 to facilitate the Private Placement as detailed in the Circular. In accordance with the Listings Requirements, the approval of this ordinary resolution requires at least 75% of the voting rights exercised on the resolution, excluding any existing ConvergeNet shareholder that is participating in the Private Placement.

11. ORDINARY RESOLUTION NUMBER 8 – APPROVAL OF A SPECIFIC ISSUE OF SHARES TO STELLAR ADVISERS IN LIEU OF PERFORMANCE FEES AND TERMINATION FEES

“RESOLVED THAT, pursuant to the Management Agreement in terms of which Stellar Advisers will receive the performance fee as set out in paragraph 3.4.2 of the Circular (the “Performance Fee”), which fee will be settled in cash or new shares in the Company at the election of the Company, and only to the extent that the Company elects to issue new shares in lieu of the Performance Fee, the Company be and is hereby authorised by way of a specific authority in accordance with paragraph 5.51 of the Listings Requirements to allot and issue new ordinary shares of no par value, ranking pari passu with existing issued ordinary shares in the Company (which issue will not, in aggregate, exceed 15% of the total number of issued share capital of the Company in any one financial year), as and when the Performance Fee becomes due and payable, to Stellar Advisers at an issue price equal to the VWAP of ConvergeNet’s shares traded on the JSE measured over the 30 business days prior to the date on which the Performance Fee becomes due and payable.”

196



Shareholders are requested to approve this Ordinary Resolution Number 8 to facilitate the payment of the Performance Fee, to the extent that the Company elects to issue new shares in lieu of the Performance Fee, as detailed in the Circular. In accordance with the Listings Requirements, the approval of this ordinary resolution requires at least 75% of the voting rights exercised on the resolution , excluding the Manco.

12. ORDINARY RESOLUTION NUMBER 9 – APPROVAL OF THE SPECIFIC ISSUE OF SHARES IN LIEU OF UNDERWRITING FEES PAYABLE TO THE PRIVATE PLACEMENT UNDERWRITERS

“RESOLVED THAT the directors of ConvergeNet be and are hereby authorised by way of a specific authority in accordance with paragraph 5.51 of the Listings Requirements, to allot and issue 1 385 000 ConvergeNet shares at a subscription price of R2.00 per share, amounting to a total consideration of R2 770 000, to the Private Placement Underwriters in the proportions described in paragraph 8.1.3 of the Circular in lieu of underwriting fees in respect of the Private Placement”.



Shareholders are requested to approve this Ordinary Resolution Number 9 to facilitate the payment of underwriting fees to the Private Placement Underwriters in the proportions described in paragraph 8.1.3 of the Circular. In accordance with the Listings Requirements, the approval of this ordinary resolution requires at least 75% of the voting rights exercised on the resolution.

13. ORDINARY RESOLUTION NUMBER 10 – APPROVAL OF THE SPECIFIC ISSUE OF SHARES IN LIEU OF COMMITMENT FEES

“RESOLVED THAT the directors of ConvergeNet be and are hereby authorised by way of a specific authority in accordance with paragraph 5.51 of the Listings Requirements, to allot and issue 1 140 000 ConvergeNet shares at a subscription price of R2.00 per share, amounting to a total consideration of R2 280 000, to those investors detailed in paragraphs 8.1.1.2 and 8.1.1.3 of the Circular in lieu of commitment fees in respect of the Private Placement”.


Shareholders are referred to paragraphs 8.1.1.2 and 8.1.1.3 of the Circular for more information relating to the reason for and effect of Ordinary Resolution Number 10.

Shareholders are requested to approve this Ordinary Resolution Number 10 to facilitate the payment of commitment fees to those investors detailed in paragraphs 8.1.1.2 and 8.1.1.3 of the Circular. In accordance with the Listings Requirements, the approval of this ordinary resolution requires at least 75% of the voting rights exercised on the resolution.

14. ORDINARY RESOLUTION NUMBER 1 1 – AUTHORISING RESOLUTION

“RESOLVED THAT, subject to the passing of Special Resolutions Number 1 to 3 and Ordinary Resolutions Number 1 to 1 0 set out in this Notice of General Meeting, any director or the Company Secretary be and is hereby authorised, instructed and empowered to do all such things, sign all such documents and take all such actions as may be necessary for or incidental to the implementation of Special Resolutions Number 1 to 3 and Ordinary Resolutions Number 1 to 10.”

197


This resolution is necessary to give effect to any of the above resolutions which may be approved by shareholders.

In terms of the Listings Requirements, this Ordinary Resolution Number 1 1 requires the approval of more than 50% of the voting rights exercised on the resolution.

INDEPENDENT BOARD’S RECOMMENDATION

The Independent Board unanimously recommends that shareholders vote in favour of the special and ordinary resolutions contemplated herein.

RECORD DATES

The posting record date, being the date that shareholders must have been recorded in the register to be eligible to receive this notice of General Meeting, is Friday, 5 December 2014. The last day to trade in order to be eligible to vote at the General Meeting is Friday, 2 January 2015.

The Voting Record Date, being the date that shareholders must be recorded in the register to be eligible to speak and vote at the General Meeting, is Friday, 9 January 2015.

VOTING AND PROXIES

Section 63(1) of the Companies Act requires that meeting participants provide satisfactory identification. Accordingly, meeting participants will be required to provide proof of identification to the reasonable satisfaction of the chairman of the General Meeting and must accordingly bring a copy of their identity document, passport or drivers’ license to the General Meeting. If in doubt as to whether any document will be regarded as satisfactory proof of identification, meeting participants should contact the Transfer Secretaries for guidance.

A shareholder entitled to attend, speak and vote at the General Meeting is entitled to appoint one or more proxies to attend, speak and vote in his stead. A proxy need not be a shareholder of ConvergeNet. For the convenience of certificated shareholders and dematerialised shareholders with “own name” registration, a form of proxy (pink) is attached hereto. Completion of a form of proxy will not preclude such shareholder from attending and voting (in preference to that shareholder’s proxy) at the General Meeting.

Duly completed forms of proxy and the authority (if any) under which it is signed must reach the Transfer Secretaries at the address given below by no later than 10:00 on Wednesday, 14 January 2015.

Dematerialised shareholders without “own name” registration who wish to attend the General Meeting in person should request their CSDP or stockbroker to provide them with the necessary Letter of Representation in terms of their custody agreement with their CSDP or stockbroker. Dematerialised shareholders without “own name” registration who do not wish to attend but wish to be represented at the General Meeting must advise their CSDP or stockbroker of their voting instructions. Dematerialised shareholders without “own name” registration should contact their CSDP or stockbroker with regard to the cut-off time for their voting instructions.

APPRAISAL RIGHTS FOR DISSENTING SHAREHOLDERS

In terms of section 164 of the Companies Act, at any time before Special Resolution Number 1 as set out in this notice is voted on, a Dissenting Shareholder may give ConvergeNet a written notice objecting to Special Resolution Number 1.

Within 10 business days after ConvergeNet has adopted Special Resolution Number 1, the Company must send a notice that Special Resolution Number 1 has been adopted to each shareholder who:

• gave ConvergeNet a written notice of objection as contemplated above;

• has not withdrawn that notice; and

• has voted against Special Resolution Number 1.

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A shareholder may, within 20 business days after receiving ConvergeNet’s aforementioned notice of the adoption of Special Resolution Number 1, demand that ConvergeNet pay the shareholder the fair value for all of the shares of ConvergeNet held by that person if:

• the shareholder has sent ConvergeNet a notice of objection;

• ConvergeNet has adopted Special Resolution Number 1; and

• the shareholder voted against Special Resolution Number 1 and has complied with all of the procedural requirements of section 164 of the Companies Act.

The wording of section 164 of the Companies Act is set out in Annexure 14 to the attached Circular.

Signed at Rosebank on behalf of the Board on 10 December 2014 in terms of powers of attorney granted by the directors.


CONVERGENET HOLDINGS LIMITEDPJ van ZylFinancial Director and Interim Chief Executive Officer

Registered Office

Level P3, Oxford CornerCorner Jellicoe and Oxford RoadsRosebankJohannesburg, 2196

Transfer Secretaries

Computershare Investor Services Proprietary Limited70 Marshall StreetJohannesburg, 2001




FORM OF PROXY

The definitions and interpretations commencing on page 8 of the circular to which this form of proxy is attached apply, mutatis mutandis, to this section.

For use by certificated shareholders or “own name” dematerialised shareholders at the General Meeting of the Company to be held at Level P3, Oxford Corner, corner Jellicoe and Oxford Roads, Rosebank, Johannesburg at 10:00 on Friday, 16 January 2015.

If dematerialised shareholders, other than “own name” dematerialised shareholders, have not been contacted by their CSDP or stockbroker with regard to how they wish to cast their vote, they should contact their CSDP or stockbroker and instruct their CSDP or stockbroker as to how they wish to cast their vote at the General Meeting in order for their CSDP or stockbroker to vote in accordance with such instructions. If dematerialised shareholders, other than “own name” dematerialised shareholders, have not been contacted by their CSDP or stockbroker, it would be advisable for them to contact their CSDP or stockbroker, as the case may be, and furnish them with their instructions.

Dematerialised shareholders who are not “own name” dematerialised shareholders and who wish to attend the General Meeting must obtain their necessary Letter of Representation from their CSDP or stockbroker, as the case may be, and submit same to the Transfer Secretaries to be received by no later than 10:00, on Wednesday, 14 January 2015. This must be done in terms of the agreement entered into between dematerialised shareholders and their CSDP or stockbroker. If the CSDP or stockbroker, as the case may be, does not obtain instructions from such dematerialised shareholders, it will be obliged to act in terms of the mandate furnished to it, or if the mandate is silent in this regard, to abstain from voting. Such dematerialised shareholders, other than “own name” dematerialised shareholders, must not complete this form of proxy and should read note 11 of the overleaf.

I/We (please print)

of (address)

Telephone number ( ) Cellphone number

Email address

being the holder/s of ordinary shares of no par value in ConvergeNet, appoint (see note 1):

1. or failing him,

2. or failing him,

3. the chairperson of the General Meeting,

as my/our proxy to act for me/us and on my/or behalf at the General Meeting which will be held for the purpose of considering and, if deemed fit, approving, with or without modification, the resolutions to be proposed thereat and/or at any adjournment thereof; and to vote for and/or against the resolutions and/or abstain from voting in respect of the shares

registered in my/our name/s, in accordance with the following instructions (see note 2):

For Against Abstain

1. Special Resolution Number 1: Approval of the Contract Kitting Disposal

2. Special Resolution Number 2: Issue of more than 30% on ConvergeNet’s issued shares

3. Special Resolution Number 3: Approval of the Name Change and the amendment to the Memorandum of Incorporation

4. Ordinary Resolution Number 1: Approval of the SCS Disposal

5. Ordinary Resolution Number 2: Approval of the Tellumat Acquisition

For Against Abstain

6. Ordinary Resolution Number 3: Approval of the Tellumat Option

7. Ordinary Resolution Number 4: Approval of the Digicore Acquisition

8. Ordinary Resolution Number 5: Approval of the MRI Acquisition

9. Ordinary Resolution Number 6: Approval of the Goliath Gold Acquisition

10. Ordinary Resolution Number 7: Approval of the Private Placement

11. Ordinary Resolution Number 8: Approval of the specific issue of shares to the Manco

12. Ordinary Resolution Number 9: Approval of the specific issue of shares in lieu of underwriting fees

13. Ordinary Resolution Number 10: Approval of the specific issue of shares in lieu of commitment fees

14. Ordinary Resolution Number 11: Authorising Resolution

Signed at on 2015

Signature Assisted by me (where applicable)

Name Capacity Signature

NOTES TO THE FORM OF PROXY

A shareholder entitled to attend and vote at the General Meeting may appoint one or more persons as his proxy to attend, speak or vote in his stead at the General Meeting. A proxy need not be a shareholder.

On a show of hands, every shareholder shall have one vote (irrespective of the number of ConvergeNet shares held). On a poll, every shareholder shall have, for each share held by him, that proportion of the total votes in ConvergeNet which the aggregate amount of the nominal value of that share held by him bears to the aggregate amount of the nominal value of all the shares issued by ConvergeNet.

SUMMARY OF RIGHTS CONTAINED IN SECTION 58 OF THE COMPANIES ACT

In terms of section 58 of the Companies Act:

• a shareholder may, at any time and in accordance with the provisions of section 58 of the Companies Act, appoint any individual (including an individual who is not a shareholder) as a proxy to participate in, and speak and vote at, a general meeting on behalf of such shareholder;

• a proxy may delegate his authority to act on behalf of a shareholder to another person, subject to any restriction set out in the instrument appointing such proxy;

• irrespective of the form of instrument used to appoint a proxy, the appointment of a proxy is suspended at any time and to the extent

that the relevant shareholder chooses to act directly and in person

in the exercise of any of such shareholder’s rights as a shareholder;

• any appointment by a shareholder of a proxy is revocable, unless

the form of instrument used to appoint such proxy states otherwise;

• if an appointment of a proxy is revocable, a shareholder may revoke

the proxy appointment by: (i) cancelling it in writing, or making a later inconsistent appointment of a proxy; and (ii) delivering a copy of the revocation instrument to the proxy and to the relevant

company; and

• a proxy appointed by a shareholder is entitled to exercise, or

abstain from exercising, any voting right of such shareholder without direction, except to the extent that the Memorandum of

Incorporation, or the instrument appointing the proxy, provides otherwise.

Notes:

1. A shareholder may insert the name of a proxy or the names of two

alternative proxies of his choice in the spaces provided with or without deleting “the chairperson of the General Meeting”, but any such deletion must be initialled by the shareholder. The person whose name appears

first on the form of proxy and who is present at the General Meeting will

be entitled to act as proxy to the exclusion of those whose names follow.

2. Please insert the number of shares in the relevant spaces according to how you wish your votes to be cast. If you wish to cast your votes

in respect of a lesser number of ConvergeNet shares exercisable by

you, insert the number of ConvergeNet shares held in respect of which you wish to vote. Failure to comply with the above will be deemed

to authorise and compel the chairperson, if the chairperson is an

authorised proxy, to vote in favour of the resolutions, or to authorise any

other proxy to vote for or against the resolutions or abstain from voting as he deems fit, in respect of all the shareholder’s votes exercisable thereat. A shareholder or its/his proxy is not obliged to use all the votes exercisable by the shareholder or its/his proxy, but the total of the votes cast and in respect whereof abstention is recorded may not exceed the total of the votes exercisable by the shareholder or its/his proxy.

3. Forms of proxy must be lodged with the Transfer Secretaries, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), to be received by no later than 10:00 on Wednesday, 14 January 2015, in order to be effective.

4. Any alteration or correction made to this form of proxy must be initialled by the signatory/(ies).

5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the Transfer Secretaries or waived by the chairperson of the General Meeting.

6. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the General Meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such shareholder wish to do so.

7. The chairperson of the General Meeting may accept or reject any form of proxy which is completed and/or received other than in accordance

with these notes and instructions, provided that the chairperson is satisfied as to the manner in which the shareholder wishes to vote.

8. The appointment of a proxy shall remain valid until the end of the meeting contemplated in this appointment.

9. Joint holders – any such persons may vote at the General Meeting in respect of such joint ConvergeNet shares as if he were solely entitled

thereto; but if more than one of such joint holders are present or

represented at the General Meeting, that one of the said persons whose name stands first in the register in respect of such ConvergeNet shares or his proxy, as the case may be, is alone entitled to vote in respect

thereof.

10. Shareholders who hold ConvergeNet shares that have been

dematerialised, and are registered by the CSDP on the sub-register in their own name kept by that CSDP (““own name” dematerialised

shareholders”), will be entitled to attend the General Meeting in person or, if they are unable to attend and wish to be represented thereat,

must complete and return the attached form of proxy to the Transfer Secretaries in accordance with the time specified on the form of proxy.

11. Shareholders who hold ConvergeNet shares through a nominee should

advise their nominee or, if applicable, their CSDP or stockbroker timeously of their intention to attend and vote at the General Meeting or to be represented by proxy thereat in order for their nominee

or, if applicable, their CSDP or stockbroker to provide them with the

necessary Letter of Representation to do so or should provide their nominee or, if applicable, their CSDP or stockbroker timeously with their

voting instruction should they not wish to attend the General Meeting

in person, in order for their nominee to vote in accordance with their instruction at the General Meeting.




FORM OF SURRENDER FOR THE NAME CHANGE

For completion by certificated shareholders who have not dematerialised their shares

The definitions and interpretations commencing on page 8 of the Circular to which this form of surrender is attached apply, mutatis mutandis, to this section.

Instructions

1. Subject to the passing of Special Resolution Number 3 in respect of the Name Change, it is necessary to recall the share certificates from certificated shareholders in order to replace them with certificates reflecting the Name Change.

2. A separate form is required for each certificated shareholder. Shareholders who have dematerialised their shares must not complete the surrender form and any amendments or changes to their holding of shares will be handled automatically by the CSDP or broker through whom their shares were dematerialised.

3. Part A must be completed by all certificated shareholders who return this form.

4. Part B must be completed by all certificated shareholders who are emigrants from and non-residents of the Common Monetary Area (comprising the Republics of South Africa and Namibia and the Kingdoms of Lesotho and Swaziland).

5. If this form of surrender is returned with the share certificates or other documents of title, it will be treated as a conditional surrender which is made subject to the Name Change becoming effective. In the event of the Name Change not becoming operative for any reason whatsoever, the Transfer Secretaries will, within five business days of the date upon which it becomes known that the Name Change will not become operative, return the relevant share certificates to the shareholder concerned, by registered post, at the risk of such shareholder.

6. The new share certificates will not be sent to shareholders unless and until the share certificates or other documents of title in respect of the relevant shares have been surrendered to the Transfer Secretaries at the address indicated below.

7. In terms of the Financial Intelligence Centre Act (FICA) regulations, Computershare Investor Services Proprietary Limited will not be able to record your banking details for EFT payment, unless the following documents are submitted:

(a) Certified true copy of your identification document (“ID”) (in respect of change of address and payment mandate); and

(b) Certified true copy of your current bank statement (not older than three months) (in respect of bank mandate).

Computershare Investor Services Proprietary Limited(Registration number 2004/003647/07)

Ground Floor, 70 Marshall StreetJohannesburg, 2001(PO Box 61763, Marshalltown, 2107)

PART A – To be completed by all certificated shareholders in BLOCK CAPITALS

Surname Title (Mr/Mrs/Miss)

First names (in full)

Address to which new share certificate should be sent

Postal code

I/We hereby surrender and enclose the undermentioned Documents of Title, conditional upon the Name Change being implemented:

Document of Title

Name of registered holder(separate form for each holder) Certificate number(s)

Number of shares covered byeach certificate

Total

Signature of shareholder Stamp and address of agent lodging this form (if any)

Assisted by me (if applicable)

(State full name and capacity)

Date 2015

Telephone number (Home) ( )

Telephone number (Work) ( )

Cellphone number

Email address

Facsimilee number

PART B – To be completed by all emigrants from and non-residents of the common monetary area

Nominated authorised dealer in the case of a shareholder who is an emigrant from or a non-resident of the Common

Monetary Area (see note 2 below):

Name of authorised dealer/bank

Address

Account number

Postal code

Notes:

1. No receipts will be issued for share certificates lodged, unless specifically requested. In compliance with the requirements of the JSE, lodging agents

are requested to prepare special transaction receipts, if required. Signatories may be called upon for evidence of their authority or capacity to sign this form.

2. Persons whose registered addresses in the share register are outside the Common Monetary Area, or whose shares are restrictively endorsed, should nominate an authorised dealer in Part B of this form.

3. Any alteration to this form of surrender must be signed in full and not initialed.

4. If this form of surrender is signed under a power of attorney, then such power of attorney, or a notarially certified copy thereof, must be sent with this

form for noting (unless it has already been noted by the Company or its Transfer Secretaries).

5. Where the shareholder is a company or a close corporation, unless it has already been registered with the company or its Transfer Secretaries, a certified copy of the directors’ or members’ resolution authorising the signing of this form of surrender must be submitted if so requested by the Company.

6. Note 5 does not apply in the event of this form bearing a recognised JSE broker’s stamp.

7. Where there are joint holders of any shares in the company, only that holder whose name stands first in the register in respect of such shares need sign

this form of surrender.

PRINTED BY INCE (PTY) LTD REF. Job006206