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INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF DIMENSION DATA HOLDINGS PLC

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We have audited the financial statements of Dimension Data

Holdings plc for the year ended 30 September 2005 which comprise

the consolidated profit and loss account, the consolidated balance

sheet, the parent company balance sheet, the consolidated cash

flow statement, the consolidated statement of total recognised

gains and losses, the reconciliation of movements of reserves and

shareholders’ funds and the related notes 1 to 37. These financial

statements have been prepared under the accounting policies set

out therein. We have also audited the information in the part of the

Directors’ remuneration report that is described as having been

audited.

This report is made solely to the Company’s members, as a body,

in accordance with section 235 of the Companies Act 1985. Our

audit work has been undertaken so that we might state to the

Company’s members those matters we are required to state to

them in an auditors’ report and for no other purpose. To the fullest

extent permitted by law, we do not accept or assume responsibility

to anyone other than the Company and the Company’s members

as a body, for our audit work, for this report, or for the opinions we

have formed.

Respective responsibilities of directors and auditors

As described in the statement of Directors’ responsibilities, the

Company’s Directors are responsible for the preparation of the

financial statements in accordance with applicable United Kingdom

law and accounting standards. They are also responsible for the

preparation of the other information contained in the annual report

including the Directors’ remuneration report. Our responsibility

is to audit the financial statements and the part of the Directors’

remuneration report described as having been audited in accordance

with relevant United Kingdom legal and regulatory requirements and

auditing standards.

We report to you our opinion as to whether the financial statements

give a true and fair view and whether the financial statements and

the part of the Directors’ remuneration report described as having

been audited have been properly prepared in accordance with the

Companies Act 1985. We also report to you if, in our opinion, the

Directors’ report is not consistent with the financial statements, if

the Company has not kept proper accounting records, if we have

not received all the information and explanations we require for

our audit, or if information specified by law regarding Directors’

remuneration and transactions with the Company and other

members of the Group is not disclosed.

We also report to you if, in our opinion, the Company has not

complied with any of the four directors’ remuneration disclosure

requirements specified for our review by the Listing Rules of the

Financial Services Authority. These comprise the amount of each

element in the remuneration package and information on share

options, details of long term incentive schemes, and defined benefit

schemes. We give a statement, to the extent possible, of details of

any non-compliance.

We review whether the corporate governance statement reflects the

Company’s compliance with the nine provisions of the July 2003

FRC Combined Code specified for our review by the Listing Rules

of the Financial Services Authority, and we report if it does not. We

are not required to consider whether the Board’s statements on

internal control cover all risks and controls, or form an opinion on

the effectiveness of the Group’s corporate governance procedures

or its risk and control procedures.

We read the Directors’ report and the other information contained

in the annual report for the above year as described in the contents

section including the unaudited part of the Directors’ remuneration

report and consider the implications for our report if we become

aware of any apparent misstatements or material inconsistencies

with the financial statements.

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Basis of audit opinion

We conducted our audit in accordance with United Kingdom

auditing standards issued by the Auditing Practices Board. An audit

includes examination, on a test basis, of evidence relevant to the

amounts and disclosures in the financial statements and the part

of the Directors’ remuneration report described as having been

audited. It also includes an assessment of the significant estimates

and judgements made by the Directors in the preparation of the

financial statements and of whether the accounting policies are

appropriate to the circumstances of the Company and the Group,

consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the

information and explanations which we considered necessary

in order to provide us with sufficient evidence to give reasonable

assurance that the financial statements and the part of the Directors’

remuneration report described as having been audited are free

from material misstatement, whether caused by fraud or other

irregularity or error. In forming our opinion, we also evaluated the

overall adequacy of the presentation of information in the financial

statements and the part of the Directors’ remuneration report

described as having been audited.

Opinion

In our opinion:

▲ the financial statements give a true and fair view of the state of

affairs of the Company and the Group as at 30 September 2005

and of the profit of the Group for the year then ended; and

▲ the financial statements and part of the Directors’ remuneration

report described as having been audited have been properly

prepared in accordance with the Companies Act 1985.

An audit does not provide assurance on the maintenance and

integrity of the website, including controls used to achieve this,

and in particular on whether any changes may have occurred to the

financial statements since first published. These matters are the

responsibility of the Directors but no control procedures can provide

absolute assurance in this area.

Legislation in the United Kingdom governing the preparation and

dissemination of financial statements differs from legislation in other

jurisdictions

Deloitte & Touche LLP

Chartered Accountants and Registered Auditors

London

15 November 2005

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ANNUAL FINANCIAL STATEMENTS

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Consolidated Profit and Loss Account

For the year ended 30 September 2005

2005 2005 2005 2004

$’000 $’000 $’000 $’000

Pre- Exceptional Total Total

exceptional items

Note (Note 7)

Turnover

Group turnover 3,4 2,727,857 - 2,727,857 2,368,044

Associates turnover 99,052 - 99,052 115,990

Total turnover 3 2,826,909 - 2,826,909 2,484,034

Operating profit before goodwill amortisation,

impairment and exceptional items 3 61,692 - 61,692 25,666

Exceptional operating income/(costs) - 5,895 5,895 (27,632)

61,692 5,895 67,587 (1,966)

Goodwill amortisation (3,248) - (3,248) (366)

Goodwill and investment impairment - (42) (42) (8,402)

Group operating profit/(loss) 4,5 58,444 5,853 64,297 (10,734)

Share of operating profit in associates 7,921 - 7,921 7,343

Goodwill amortisation and impairment and investment

impairment - associates (1,177) (1,280) (2,457) (11,215)

Total operating profit/(loss) 3 65,188 4,573 69,761 (14,606)

(Loss)/profit on sale of fixed assets and investments - (1,027) (1,027) 4,900

Profit/(loss) on ordinary activities before interest 65,188 3,546 68,734 (9,706)

Income from other fixed asset investments 8 2,542 - 2,542 4,614

Net interest (payable)/receivable 9 (19,477) - (19,477) 705

Profit/(loss) on ordinary activities before taxation 48,253 3,546 51,799 (4,387)

Tax on profit/(loss) on ordinary activities 10 (22,682) - (22,682) (33,238)

Profit/(loss) on ordinary activities after taxation 25,571 3,546 29,117 (37,625)

Equity minority interests (11,353) - (11,353) (178)

Retained profit/(loss) for the year transferred to reserves 14,218 3,546 17,764 (37,803)

Earnings/(loss) per ordinary share US cents US cents

Basic before goodwill amortisation, impairment and

exceptional items 11 1.4 0.9

Basic and diluted 11 1.3 (2.8)

All amounts included above relate to continuing operations.

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As at 30 September 2005

2005 2004

Note $’000 $’000

Fixed assets

Intangible assets - goodwill 12 43,076 976

Tangible assets 13 225,167 92,467

Investments in associates 15 26,897 25,781

Other investments 16 35,935 39,013

331,075 158,237

Current assets

Stock 17 104,258 104,871

Debtors 18 637,185 547,205

Short term investments 19,28 12,528 10,946

Cash at bank and in hand 28 404,068 414,093

1,158,039 1,077,115

Creditors: amounts falling due within one year 20 (785,584) (670,245)

Net current assets 372,455 406,870

Total assets less current liabilities 703,530 565,107

Creditors: amounts falling due after more than one year 21 (272,358) (129,004)

Provisions for liabilities and charges 23 (16,755) (41,875)

Total net assets 414,417 394,228

Capital and reserves

Called up share capital 24 13,526 13,499

Share premium account 101,823 100,748

Other reserves 235,768 237,500

ESOP reserve - (219)

Profit and loss account (41,754) (61,677)

309,363 289,851

Equity minority interests 25 105,054 104,377

Equity shareholders’ funds 414,417 394,228

The financial statements were approved by the Board of Directors on 15 November 2005.

Brett Dawson

Chief Executive Officer

Dave Sherriffs

Chief Financial Officer

Consolidated Balance Sheet

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As at 30 September 2005

2005 2004

Note $’000 $’000

Fixed assets

Tangible assets 13 37 42

Investment in subsidiaries 14 342,391 340,931

342,428 340,973

Current assets

Debtors 18 1,760 2,025

Cash at bank and in hand 574 8,096

2,334 10,121

Creditors: amounts falling due within one year 20 (591) (1,405)

Net current assets 1,743 8,716

Total assets less current liabilities 344,171 349,689

Provisions for liabilities and charges 23 (5,137) (5,882)

Total net assets 339,034 343,807

Capital and reserves

Called up share capital 24 13,526 13,499

Share premium account 101,823 100,748

Special reserve 342,439 342,439

Other reserves (19,402) (17,027)

ESOP reserve - (219)

Profit and loss account (99,352) (95,633)

Equity shareholders’ funds 339,034 343,807

The financial statements were approved by the Board of Directors on 15 November 2005.

Brett Dawson

Chief Executive Officer

Dave Sherriffs

Chief Financial Officer

Parent Company Balance Sheet

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2005 2004

Note $’000 $’000

Reconciliation of operating profit/(loss) to operating cash flows:

Group operating profit/(loss) 64,297 (10,734)

Depreciation 44,401 42,519

Goodwill amortisation and impairment and investment impairment 3,290 8,768

Loss on sale of tangible fixed assets 395 2,388

Increase in stock (2,449) (14,503)

Increase in debtors (85,108) (30,640)

Increase in creditors 86,578 52,198

Non-cash items - property leased asset impairment 15,755 -

- property onerous lease provision (21,205) 28,569

- retrenchments 4,749 -

- share incentive costs 3,762 -

- insurance captive cells (2,400) -

- other (1,177) (1,094)

Net cash inflow from operating activities 110,888 77,471

Returns on investments and servicing of finance 26 (8,487) 3,044

Taxation 26 (13,127) (21,975)

Capital expenditure and financial investment 26 (58,558) (31,410)

Acquisitions and disposals 26 (39,167) 1,083

Cash (outflow)/inflow before management of liquid resources and financing (8,451) 28,213

Management of liquid resources 26 (1,613) 8,461

Financing 26 (5,485) 2,922

(Decrease)/increase in cash in the year 28 (15,549) 39,596

Consolidated Cash Flow Statement

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Issued share

capital

Share premium account

Other reserves

ESOP reserve

Profit and loss account

2005 Total

2004 Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

Balance at 1 October 2004 13,499 100,748 237,500 (219) (61,677) 289,851 310,382

Profit/(loss) retained for the year - - - - 17,764 17,764 (37,803)

Sale of ESOP shares - - - 314 - 314 -

Currency adjustments - - 332 - - 332 16,798

Shares issued 27 1,264 - - - 1,291 662

Share issue expenses - (189) - - - (189) (188)

Transfers - - (2,064) (95) 2,159 - -

Balance at 30 September 2005 13,526 101,823 235,768 - (41,754) 309,363 289,851

The transfers between other reserves to the profit and loss account represent transfers required in terms of legislative requirements in

certain European subsidiaries.


Issued share

capital

Share premium account

Special reserve

Other reserves

ESOP reserve

Profit and loss account

2005 Total

2004 Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Balance at 1 October 2004 13,499 100,748 342,439 (17,027) (219) (95,633) 343,807 420,841

Loss retained for the year - - - - - (3,814) (3,814) (89,715)

Sale of ESOP shares - - - - 314 - 314 -

Currency adjustments - - - (2,375) - - (2,375) 12,207

Shares issued 27 1,264 - - - - 1,291 662

Share issue expenses - (189) - - - - (189) (188)

Transfers - - - - (95) 95 - -

Balance at 30 September 2005 13,526 101,823 342,439 (19,402) - (99,352) 339,034 343,807

Other reserves comprise translation reserves.

Consolidated Statement of Movement of Reserves and Shareholders’ Funds

Company Statement of Movement of Reserves and Shareholders’ Funds

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2005 2004

$’000 $’000

Profit/(loss) for the year 17,764 (37,803)

Currency translation differences on foreign currency net investments 332 16,798

Realised gain on sale of ESOP shares 95 -

Total recognised gains/(losses) relating to the year 18,191 (21,005)

Consolidated Statement of Total Recognised Gains and Losses

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1. Basis of PreparationThe Dimension Data group (‘the Group’) comprises Dimension

Data Holdings plc (‘the Company’) and its subsidiaries.

The accounts are prepared under the historical cost convention.

The accounts have been prepared in accordance with applicable

United Kingdom law and accounting standards.

The principal accounting policies are summarised below. They

have all been applied consistently throughout the year and the

preceding year.

Prior year comparatives

The comparative balance sheet and cash flow statement at 30

September 2004 have been reclassified to reflect the short term

portion of a long term creditor in creditors.

2. Accounting PoliciesBasis of consolidation

The consolidated financial statements include the financial

statements of the Company and all its subsidiaries and its share

of associated companies. The results of subsidiaries are included

from the effective dates of acquisition until the effective dates of

disposal and are accounted for under the acquisition method.

Accounting policies of subsidiaries that differ from the Group

accounting policies are adjusted on consolidation.

All significant intergroup transactions and balances have been

eliminated on consolidation.

In accordance with Section 230(3) of the Companies Act 1985

a separate profit and loss account for the Company is not

presented.

Turnover

Turnover comprises the aggregate amounts receivable for the sale

of equipment and the amounts receivable from customers for the

provision of services for installation, maintenance and call centre

operations. Turnover is recognised on transfer of risk and rewards

to the customer and when the Group’s obligations have been met.

Installation revenue

Installation revenue comprises both time and materials used on site

when performing work for customers on initial installations, adds,

moves, changes, redeployment and decommissioning. Additionally

installation revenue may include recoveries for disbursements.

Maintenance revenue and licence fees

Maintenance revenue and licence fees are recognised over the

relevant contract periods.

Call centre revenue

Turnover on contracts is recognised according to the stage of

completion of the contract by reference to the value of work

performed. The amount by which turnover differs from payments

on account is shown under debtors as accrued revenue, or under

creditors as deferred revenue, as appropriate.

Research and development

Research and development costs are recognised as an expense in

the period in which they are incurred.

Goodwill

Where an investment in a subsidiary, joint venture or associated

company is made, any difference between the purchase price

and the fair value of the attributable net assets is recognised as

goodwill. Goodwill arising on acquisitions prior to 1 October 1998

was set off against reserves in the year of acquisition. Goodwill

arising on acquisitions after 1 October 1998 is recognised within

intangible fixed assets in the year of acquisition, and amortised.

Amortisation is calculated on a straight line basis so as to write

off the goodwill over its economic life, depending on the nature

of the acquisition, for a period generally not exceeding five years.

The unamortised balance is reviewed on a regular basis, and, if an

impairment in value has occurred, it is written off in the period in

which the impairment has been identified.

NOTES TO FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

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Tangible fixed assets

Tangible fixed assets are stated at historical cost less accumulated

depreciation and any provision for impairment.

Depreciation is provided on a straight line basis at rates considered

appropriate to reduce their book values to estimated residual

values over the useful lives of the assets.

The following rates are generally applied:

Capitalised property finance lease Over 50 years

Leasehold land, buildings and improvements Over the lease term

Computer and workshop equipment 20 - 33% per annum

Motor vehicles 25% per annum

Office furniture and equipment 10% per annum.

Associated companies

Associated companies are those companies over which the

Group exercises significant influence and in which it holds a long

term equity interest. Investments in associated companies are

accounted for using the equity method, from the date they became

investees, whereby the Group’s share of the associated companies’

retained income for the year is included in the consolidated profit

and loss account. Attributable earnings or losses, less dividends

received, are included with the book value of the investment in the

consolidated balance sheet. Provision is made where there has

been an impairment in the carrying value of the investment.

Investments

Investments, other than investments in associated companies and

joint ventures, are reflected at the lower of cost and fair value in the

balance sheet. Fair value for unquoted investments represents the

Directors’ valuation after taking into account any impairment. Fair

value of quoted investments represents market value. Investments

held by Protocol are stated at valuation in terms of the standards

endorsed by the British Venture Capital Association. Valuations,

for unquoted investments, are based on arm’s length transactions

that took place and valuation surpluses or losses are included

in operating income. Where no such transaction took place, the

investment is assessed for impairment and any valuation losses

written off to operating income. No account is taken of valuation

surpluses indicated by the impairment review. In the case of listed

investments, the quoted share price at year end is used to value

the investment. All subsidiaries of Protocol are consolidated in

accordance with Group accounting policies.

Investments in subsidiaries are carried in the parent Company

balance sheet at cost less provisions for impairment.

Accounting for foreign investments

The balance sheets of consolidated foreign subsidiaries, together

with investments in overseas associated companies, are translated

into US dollars at the rates of exchange ruling at the balance

sheet date. The results of overseas subsidiaries and associated

companies are translated at the weighted average rates of exchange

for the year. The exchange differences arising on the retranslation

of the opening net investment, and profit for the financial year at

the closing rate, are taken to reserves.

Taxation

Current tax, including UK corporation tax and foreign tax, is

provided at amounts expected to be paid (or recovered) using the

tax rates and laws that have been enacted or substantially enacted

by the balance sheet date.

Deferred tax is provided in full on timing differences that result in

an obligation at the balance sheet date to pay more tax, or a right to

pay less tax, at a future date, at rates expected to apply when they

crystallise based on current tax rates and law. Timing differences

arise from the inclusion of items of income and expenditure in

taxation computations in periods different from those in which they

are included in the financial statements. Deferred tax assets are

recognised to the extent that it is regarded as more likely than not

they will be recovered. Deferred tax assets and liabilities are not

discounted.

NOTES TO FINANCIAL STATEMENTS

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Stock

Stock is valued at the lower of the weighted average cost and net

realisable value. Cost comprises the cost of materials, direct labour

and directly attributable overheads. Net realisable value is based

on estimated normal selling price less further costs expected to be

incurred to completion and disposal. Redundant and slow-moving

stocks are identified and written down to the lower of cost or net

realisable value.

Foreign currency transactions

Transactions denominated in foreign currencies are recorded

in the local currencies at actual exchange rates at the date of

the transaction or, where appropriate, at the rate of exchange of

a related forward exchange contract. As a result of this, gains

and losses arising on forward foreign currency contracts are

recognised in the profit and loss account when the hedged

transaction is recognised in the Group’s accounts. Monetary

assets and liabilities denominated in foreign currencies at the year

end are retranslated at the rates of exchange prevailing at the year

end or, where appropriate, at the rate of exchange of a related

forward exchange contract. Any gain or loss arising from a change

in exchange rates subsequent to the date of the transaction is

included as an exchange gain or loss in the profit and loss account,

unless hedged.

The results of overseas operations are translated at the average

rates of exchange during the period and their balance sheets at the

rates ruling at the balance sheet date. Exchange differences arising

on translation of the opening net assets and on foreign currency

borrowings, to the extent that they hedge the Group’s investment

in such operations, are recorded directly in reserves and are

reported in the statement of total recognised gains and losses.

This balance represents cumulative translation differences arising

from the translation of the net assets of foreign subsidiaries into US

dollars at differing exchange rates. All other exchange differences

are included in the profit and loss account.

Finance costs

Finance costs of debt are recognised in the profit and loss account

over the term of such instruments at a constant rate on the carrying

amount.

Operating leases

Rentals are charged to the profit and loss account on a straight line

basis over the minimum lease term.

Finance leases

Assets held under finance leases and other similar contracts, which

confer rights and obligations similar to those attached to owned

assets, are capitalised as tangible fixed assets and are depreciated

over the shorter of the lease terms and their useful lives. The capital

elements of future lease obligations are recorded as liabilities, while

the interest elements are charged to the profit and loss account

over the period of the leases to produce a constant rate of charge

on the balance of capital repayments outstanding.

Pensions

The Group maintains various defined contribution pension schemes

for the benefit of employees. The amount charged to the pension

costs in the profit and loss account comprise contributions payable

to the Group’s various defined contribution schemes.

Debt

Debt is initially stated at the amount of the net proceeds after

deduction of issue costs. The carrying amount is increased by the

finance cost in respect of the accounting period and reduced by

payments made in the period. Convertible debt is reported as a

liability until conversion occurs. No gain or loss is recognised on

conversion.

NOTES TO FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

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Derivative financial instruments

The Group uses derivative financial instruments to reduce

exposure to foreign exchange risk and interest rate movements.

The Group does not hold or issue derivative financial instruments

for speculative purposes.

For a forward foreign exchange contract to be treated as a hedge,

the instrument must be related to actual foreign currency assets or

liabilities or to a probable commitment. It must involve the same

currency or similar currencies as the hedged item and must also

reduce the risk of foreign currency exchange movements on the

Groups’ operations. Gains and losses arising on these contracts

are deferred and recognised in the profit and loss account, or as

adjustments to the carrying amount of fixed assets, only when the

hedged transaction has itself been reflected in the Group’s financial

statements.

For an interest rate swap to be treated as a hedge the instrument

must be related to actual assets or liabilities or a probable

commitment and must change the nature of the interest rate by

converting a fixed rate to a variable rate or vice versa. Interest

differentials under these swaps are recognised by adjusting net

interest payable over the periods of the contracts.

If an instrument ceases to be accounted for as a hedge, for

example because the underlying hedged position is eliminated,

the instrument is marked to market and any resulting profit or loss

recognised at that time.

Reporting currency

As permitted by UK Company law, the Group reports in US dollars,

the currency in which a significant amount of its business is

conducted.

NOTES TO FINANCIAL STATEMENTS

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2005 2005 2005 2004 2004 2004

$’000 $’000 $’000 $’000 $’000 $’000

TurnoverOperating

profit/(loss)Net operating

assets TurnoverOperating

profit/(loss)Net operating

assets

Continuing operations

Africa 482,871 42,501 251,829 445,172 27,560 89,603

Asia 455,977 17,470 178,161 362,280 6,897 174,427

Australia 598,738 18,580 71,244 481,078 14,014 81,858

Continental Europe 449,585 6,927 67,841 438,841 7,353 86,473

United Kingdom 247,053 11,741 76,269 218,260 12,744 51,182

United States 481,046 7,719 41,431 416,811 4,573 39,689

Centre* 12,587 (43,246) - 5,602 (47,475) -

Group 2,727,857 61,692 686,775 2,368,044 25,666 523,232

Associates 99,052 7,921 - 115,990 7,343 -

2,826,909 69,613 686,775 2,484,034 33,009 523,232

Goodwill amortisation (4,425) (1,520)

Operating exceptional items 4,573 (46,095)

Total 2,826,909 69,761 686,775 2,484,034 (14,606) 523,232

* Comprises net holding company costs, investment in global Solutions and Services development and Group share incentive costs.

Net operating assets are total net assets excluding convertible bonds, loans and the capitalised finance lease. The significant increase in

net operating assets is as a result of the fixed asset capitalisation of a property finance lease (Note 13).

Turnover by destination is not materially different to turnover by origin.

The Directors consider that they operate one generic class of business and that business is primarily managed regionally.

3. Segmental Analysis

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2005 2004

$’000 $’000

Group turnover 2,727,857 2,368,044

Cost of sales (2,171,872) (1,877,789)

Gross profit 555,985 490,255

Administrative expenses (491,688) (500,989)

Goodwill amortisation (3,248) (366)

Investments written down (42) (8,402)

Other operating expenses (494,293) (464,589)

Exceptional operating income/(costs) 5,895 (27,632)

Group operating profit/(loss) 64,297 (10,734)

4. Analysis of Continuing Operations

2005 2004

$’000 $’000

Group operating profit/(loss) is after charging:

Depreciation - owned 41,790 41,673

- leased 2,611 846

Goodwill amortisation 3,248 366

Investments written down 42 8,402

Loss on sale of tangible fixed assets 395 2,388

Rentals under operating leases

Hire of plant and machinery 1,408 5,718

Other operating leases 32,110 26,186

Property lease (now capitalised) 1,802 14,181

Foreign currency losses 424 3,921

Share incentive costs 3,762 -

Auditors’ remuneration

Audit fees 2,980 2,606

Other assurance services 570 343

Taxation - compliance 236 326

- advisory 816 1,129

Other 286 86

The depreciation on leased assets includes an amount of US$1.9 million relating to the capitalised property finance lease, for the period

commencing on 15 November 2004.

The Company auditors’ remuneration has been borne by the Group in both years.

5. Group Operating Profit/(Loss)

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Information regarding Directors and Employees

2005 2004

Average number of persons employed by the Group:

Africa 3,168 3,557

Asia 1,196 1,119

Australia 1,108 992

Continental Europe 1,056 977

United Kingdom 1,609 1,316

United States 558 602

8,695 8,563

2005 2004

$’000 $’000

Staff costs included in administrative expenses incurred during the year in respect of these employees were:

Wages and salaries 475,488 420,642

Social security costs 36,212 36,631

Pension costs 17,400 16,775

529,100 474,048

Disclosures on Directors’ remuneration, pension entitlements, shareholding and share options required by the Companies Act 1985, the

Directors’ Remuneration Report Regulations 2002 and those specified for audit by the Financial Services Authority, are set out in the

Remuneration Report on pages 38 to 45.

6. Information Regarding Directors and Employees

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2005 2004

Note $’000 $’000

Exceptional operating income/(costs)

Property leased asset impairment (a) (15,755) -

Release/(provision) of property onerous lease (b) 21,205 (25,064)

Insurance captive cells (c) 2,400 -

Retrenchments (d) (5,180) -

Other (e) 3,225 (2,568)

5,895 (27,632)

Investments written down (42) (8,402)

Goodwill and investment impairment - associates (1,280) (10,061)

(1,322) (18,463)

Total exceptional operating income/(costs) 4,573 (46,095)

Other exceptional items

(Loss)/profit on sale of fixed assets and investments (f) (1,027) 4,900

Total other exceptional items (1,027) 4,900

Total exceptional items before taxation and equity minority interests 3,546 (41,195)

a) Impairment of land and buildings in South Africa subsequent to the capitalisation of the property lease obligation.

b) Release of the prior period onerous lease provisions in respect of the property lease obligation.

c) Recognition of insurance captive cell assets, previously expensed.

d) Retrenchment and restructuring expenses predominantly in Europe.

e) Other includes a write back of a prior year creditor of US$1.8 million in relation to the Proxicom acquisition and the release of a fair

value provision of US$3.2 million relating to the Comparex acquisition. It also includes a write down of long outstanding work in

progress and debtors balances of US$2.5 million in respect of the cabling business in the UK.

f) Includes an impairment of US$2.4 million of an endowment investment in South Africa. This endowment was part settled in October

2005, subsequent to year end (Note 35).

7. Exceptional Items

A N N U A L R E P O R T 2 0 0 5


0 6 9

2005 2004

$’000 $’000

Subsidiaries:

Interest receivable on bank balances and investments 12,929 10,938

Interest payable (32,864) (10,544)

Capitalised finance lease (20,002) -

Convertible bonds (6,158) (6,017)

Bank overdraft and other borrowings (6,704) (4,527)

Associates:

Interest receivable 458 418

Interest payable - (107)

Net interest (payable)/receivable (19,477) 705

The finance lease was capitalised on 15 November 2004.

2005 2004

$’000 $’000

Yield on endowment policy 1,734 3,373

Other 808 1,241

2,542 4,614

8. Income from Other Fixed Asset Investments

9. Net Interest (Payable)/Receivable

A N N U A L R E P O R T 2 0 0 5

0 7 0

2005 2004

$’000 $’000

Payable in respect of the current year

UK corporation tax - 2,833

Foreign 18,844 18,893

Share of associates’ taxation 2,137 2,584

Withholding taxes 594 270

21,575 24,580

Adjustments to prior years’ tax provision

UK corporation tax - (547)

Foreign (991) (4,177)

Total current tax 20,584 19,856

Deferred taxation

Current 3,401 (4,852)

Adjustments to prior years (1,303) 18,234

Total tax charge 22,682 33,238

Reconciliation of expected tax charge using the standard tax rate to the actual current tax charge

The differences between the Group’s expected tax charge, using the Group’s standard corporation tax rate of 29% in 2005 (2004: 30%),

and the Group’s current tax charge, were as follows:

2005 2004

$’000 $’000

Total profit/(loss) before taxation 51,799 (4,387)

Goodwill amortisation and impairment and investment impairment 5,747 19,983

Other non-operating exceptional items 1,027 (4,900)

Adjusted profit before goodwill amortisation and non-operating exceptional items 58,573 10,696

Expected tax charge at standard tax rate on profit before goodwill amortisation and

non-operating exceptional items 16,986 3,209

Expenses not deductible 12,192 2,484

Short term timing differences (1,977) (18,174)

Net tax losses created/utilised 7,145 44,468

Adjustments with respect to prior years (991) (4,724)

Non-taxable profits (16,821) (9,559)

International corporate tax differentials and other 4,050 2,152

Actual current tax charge 20,584 19,856

10. Tax on Profit/(Loss) on Ordinary Activities

A N N U A L R E P O R T 2 0 0 5


0 7 1

2005 2004

$’000 $’000

Profit before goodwill amortisation, impairment and exceptional items 18,643 11,434

Goodwill amortisation (4,425) (1,520)

14,218 9,914

Exceptional items (net of tax and minorities) 3,546 (47,717)

Profit/(loss) for the year 17,764 (37,803)

2005 2004

’000 ’000

Weighted average number of ordinary shares in issue 1,343,895 1,342,286

2005 2004

US cents US cents

Basic earnings per ordinary share before goodwill amortisation, impairment and exceptional items* 1.4 0.9

Basic loss per ordinary share on goodwill amortisation (0.3) (0.1)

Basic earnings/(loss) per ordinary share on exceptional items 0.2 (3.6)

Basic and diluted earnings/(loss) per ordinary share 1.3 (2.8)

* Basic earnings per ordinary share before goodwill amortisation, impairment and exceptional items is shown to reflect continuing trading

results.

Basic earnings/(loss) per share represents the net profit/(loss) attributable to ordinary shareholders, being the profit/(loss) on ordinary

activities after taxation and minority interests.

In the current year the Share Option Schemes, the Share Appreciation Rights Scheme, the Long Term Incentive Plan and the convertible

bonds had no impact on basic earnings per share, therefore diluted earnings per share is the same as basic earnings per share.

11. Earnings/(Loss) per Ordinary Share

A N N U A L R E P O R T 2 0 0 5

0 7 2

2005 2004

$’000 $’000

Cost

At beginning of the year 5,058,457 5,057,115

Acquisitions during the year 43,947 1,079

Fair value adjustments - (1,047)

Other movements 1,307 1,310

Cost at end of the year 5,103,711 5,058,457

Accumulated amortisation

At beginning of the year (5,057,481) (5,057,115)

Charge for the year (3,248) (366)

Other movements 94 -

At end of the year (5,060,635) (5,057,481)

Net carrying value at end of the year 43,076 976

12. Intangible Fixed Assets: Goodwill

A N N U A L R E P O R T 2 0 0 5


0 7 3

Group Leasehold land, buildings and

improvements

Computer and workshop

equipmentMotor

vehiclesOffice furniture and equipment Total

$’000 $’000 $’000 $’000 $’000

Cost

At 1 October 2004 41,931 194,098 1,363 74,771 312,163

Foreign exchange translation differences 2,074 1,108 10 593 3,785

Additions 137,633 46,911 313 7,262 192,119

Subsidiaries acquired 27 372 239 163 801

Disposals (including subsidiaries) (1,207) (18,447) (280) (1,776) (21,710)

At 30 September 2005 180,458 224,042 1,645 81,013 487,158

Accumulated depreciation

At 1 October 2004 (21,306) (141,110) (1,002) (56,278) (219,696)

Foreign exchange translation differences 108 (1,193) (7) (610) (1,702)

Charge for the year (4,989) (30,696) (183) (8,533) (44,401)

Asset impairments (15,793) - - (15) (15,808)

Subsidiaries acquired (6) (179) (163) (78) (426)

Disposals (including subsidiaries) 928 17,198 274 1,642 20,042

At 30 September 2005 (41,058) (155,980) (1,081) (63,872) (261,991)

Net book value

30 September 2004 20,625 52,988 361 18,493 92,467

30 September 2005 139,400 68,062 564 17,141 225,167

The carrying amount of the land and buildings, included in additions, in respect of assets held under finance lease amounts to US$114.1 million.

The land and buildings consist of the Dimension Data leased property, located in South Africa. The land portion of US$11.3 million is not depre-

ciated. The cost of the bare dominium was US$4.6 million. The land and buildings are encumbered as security for the finance lease.

A portion of the land and buildings, being the space occupied by third party tenants and the space not occupied, was subject to impairment

on capitalisation date, being 15 November 2004, and again at the year end. The market value used during the impairment consideration was

based on the current estimated realisable value of the land and buildings. The value used in the impairment calculation on capitalisation date

and at the 2005 financial year end has been determined based on a valuation completed by management. This valuation is comparable with

an offer received from an independent third party. The impairment loss amounted to US$15.8 million.

The buildings are depreciated over 50 years, with no residual value.

The Company has office furniture and fittings amounting to a net book value of US$37,000 (2004: US$42,000)

13. Tangible Fixed Assets

A N N U A L R E P O R T 2 0 0 5

0 7 4

Company Company

2005 2004

$’000 $’000

Shares in subsidiaries 235,101 227,609

Amounts due from subsidiary undertakings 107,290 113,322

342,391 340,931

Analysis of movements in shares in subsidiaries

Balance at beginning of the year 227,609 247,952

Net acquisitions and transfers - recapitalisation of subsidiary 11,059 860

Impairment - Dimension Data Network Services Ltd (3,567) (21,203)

Balance at end of the year 235,101 227,609

Investment in subsidiaries represents the investments in Spectrum Holdings Inc., Dimension Data (South Africa) (Pty) Ltd, Dimension Data

Network Services Ltd, Dimension Data Global Management Services (Pty) Ltd, Dimension Data (South Africa) Holdings (Pty) Ltd and the

preference share in Dimension Data Commerce Centre Ltd. Note 37 contains details of the principal subsidiaries.

The investment in subsidiaries has been impaired to reflect the tangible net asset values. The investment in Dimension Data Network

Services Ltd has been impaired by US$3.6 million (2004: US$18.5 million).

14. Investment in Subsidiaries

A N N U A L R E P O R T 2 0 0 5


0 7 5

2005 2004

$’000 $’000

The carrying value consists of:

Unquoted - share of net assets 10,415 12,475

- goodwill 814 1,626

Loans, less provisions 7,310 3,901

18,539 18,002

Quoted - share of net assets 8,358 7,779

Total 26,897 25,781

Directors’ values

Unquoted 11,229 14,101

Loans, less provisions 7,310 3,901

18,539 18,002

Market value

Quoted 18,720 13,581

Analysis of movements in investments in associates:


Acquired 12 202

Share of current year profits 8,334 7,343

Tax on current year profits (2,137) (2,584)

Share of associates’ reserves - (3,020)

Current year amortisation of goodwill (1,177) (1,154)

Impairment of goodwill - (7,399)

Revaluation/(impairment) of loan to associate 307 (2,662)

Dividends received (2,597) (3,366)

Disposals and transfers (513) (4,793)

Currency movements (129) 5,882

Movement in loans to associates (984) (1,735)


Futher details of associates are included in Note 37.

15. Investments in Associates

A N N U A L R E P O R T 2 0 0 5

0 7 6

2005 2004

$’000 $’000

Unquoted 35,935 39,013

35,935 39,013

Other investments include an endowment policy of US$21.8 million (2004: US$22.4 million) and various

investments in the Group’s venture capital arm, Protocol. Part of the endowment was surrendered after

the year end (Note 35).

Directors’ values 35,935 39,013

Analysis of movements in other investments:


Acquired 195 1,522

Yield on endowment policy 1,734 3,373

Impairment of investments (3,844) (2,412)

Disposals (1,035) (1,261)

Transfers (117) 1,614

Currency movements (11) 3,041


16. Other Investments

2005 2004

$’000 $’000

Resale and demonstration 67,767 70,549

Work-in-progress 11,548 7,364

Maintenance 24,943 26,958

104,258 104,871

17. Stock

A N N U A L R E P O R T 2 0 0 5


0 7 7

Company Company Group Group

2005 2004 2005 2004

$’000 $’000 $’000 $’000

Trade debtors - - 474,176 421,593

Other debtors 1,743 2,025 49,898 27,955

Prepayments 17 - 74,218 59,521

Accrued income - - 12,522 12,556

Taxation authorities - - 17,057 15,606

Deferred taxation (Note 23) - falling due within one year - - 1,814 1,347

- falling due after more than one year - - 7,500 8,627

1,760 2,025 637,185 547,205

18. Debtors

2005 2004

$’000 $’000

Deposits 12,528 10,946

12,528 10,946

The deposits are short term cash deposits earning interest at interbank linked rates.

19. Short Term Investments

A N N U A L R E P O R T 2 0 0 5

0 7 8

Company Company Group Group

2005 2004 2005 2004

$’000 $’000 $’000 $’000

Bank loans and overdrafts - - 6,038 372

Trade creditors - - 244,424 262,596

Taxation and social security 117 - 96,057 98,926

Other creditors - 501 108,655 73,917

Accruals 474 904 177,465 126,195

Deferred income - - 139,419 104,093

Trading current liabilities 591 1,405 772,058 666,099

Deferred consideration - - 9,506 111

Current portion of convertible bonds (Note 21) - - 4,020 4,035

Other current liabilities - - 13,526 4,146

Total creditors 591 1,405 785,584 670,245

Deferred consideration relates to amounts due in respect of certain purchase agreements to be paid in cash. These amounts are interest

free and will, with the exception of US$4.2 million, be settled in the next financial year. This amount includes US$4.2 million in respect

of Dimension Data Limited (Nigeria), US$3.8 million in respect of Bellerephon Group Pty Ltd (Australia) and US$1.4 million in respect of

Euricom NV (Belgium). These amounts represent management’s current best estimate of the amounts to be paid and are based on future

profitability.

20. Creditors: Amounts Falling Due Within One Year

A N N U A L R E P O R T 2 0 0 5


0 7 9

2005 2004

$’000 $’000

Capitalised finance lease 142,805 -

Convertible bonds 105,405 104,941

Loan 28,168 28,098

276,378 133,039

Less: current portion of convertible bonds (Note 20) (4,020) (4,035)

272,358 129,004

The finance lease relates to land and buildings capitalised on 15 November 2004 (Note 13). The 15 year lease agreement was entered into

on 3 February 2003 and terminates on 31 January 2018. The lease incorporates interest at 16.79%. The current monthly lease payments

of US$1.08 million are payable in advance and escalate at 11% per annum. The Company acts as surety and guarantor against any default.

In addition, the obligation under the finance lease is secured by the lessor’s charge over the leased assets.

The minimum lease payments do not service the interest until 2010. Accordingly, no capital will be repaid for the first seven years.

21. Creditors: Amounts Falling Due After More Than One Year

Obligation under capitalised finance lease

Minimum lease payments

2005 2004

$’000 $’000

Amounts payable under finance lease agreement:

Within one year 17,517 -

Between one and five years 91,574 -

After five years 307,802 -

416,893 -

Less: finance charges allocated to future periods (274,088) -

142,805 -

The terms of the convertible bonds are set out in Note 22.

The loan of US$28.2 million, which was used to purchase equipment, is unsecured. Interest is payable semi-annually in arrears and is

linked to South African interbank rates. This loan was settled subsequent to the year end (Note 35).

A N N U A L R E P O R T 2 0 0 5

0 8 0

22. Terms of Convertible Bonds

On 31 December 2002 ten seven year unsecured convertible bonds

(‘the bonds’) of US$10 million each were issued to provide working

capital for the Group. The bonds were issued by Howper 266 Ltd

(a wholly owned subsidiary of Dimension Data) and unconditionally

and irrevocably guaranteed by the Company. The bonds were

purchased by R&V Technology Holdings (R&V), an associate of

VenFin Ltd, a quoted investment holding company incorporated

in South Africa and listed on the JSE Securities Exchange, South

Africa. If converted, the bonds will provide R&V with an additional

equity holding equivalent to about 12.3% of the enlarged share

capital of the Company. The maximum number of Dimenson Data

ordinary shares to be issued on conversion is 188,121,978 ordinary

shares.

The bonds’ principal amount is US$100 million with a coupon rate

of 5.375% per annum payable annually in arrears. The bonds

are unlisted and, if not previously redeemed or converted into

ordinary shares of the Company, will be redeemed at 103.125% of

the principal amount on 31 December 2009. The bonds’ yield to

maturity is 5.750%.

The bonds are convertible at the option of the bondholder at any

time. The conversion price equates to 53.157 US cents, being

34.075 UK pence converted at a fixed exchange rate of £1 equal

to US$1.56.

The issuer may redeem the bonds, together with a prorata portion

of the redemption premium and accrued interest, at any time after

31 December 2005, subject to the share price, translated into US

dollars at the ruling exchange rate, exceeding 79.736 US cents

(being 150% of 53.157 US cents), for each of not less than 20

trading days within a period of 30 consecutive trading days.

The bondholder may require the issuer to redeem the bonds,

together with a prorata portion of the redemption premium and

accrued interest, on 31 December 2007 or quarterly thereafter.

A N N U A L R E P O R T 2 0 0 5


0 8 1

Group

Restructuring and redundancy

Deferred taxation Other Total

$’000 $’000 $’000 $’000

Balance at 1 October 2004 4,115 6,387 31,373 41,875

Created 1,832 - 835 2,667

Released to the profit and loss account - (698) (20,396) (21,094)

Utilised (2,564) - (4,443) (7,007)

Other movements - 627 - 627

Currency movements (53) (2) (258) (313)

Balance at 30 September 2005 3,330 6,314 7,111 16,755

Restructuring and redundancy provisions relate to the US and Europe. These provisions are expected to be utilised in the next financial

year.

Other provisions include US$5.7 million in respect of onerous leases.

The Company has a deferred tax liability of US$5.1 million (2004: US$5.9 million) relating to foreign exchange differences. The Company

has an unprovided deferred tax liability of US$37.2 million (2004: US$30.0 million), relating to translation differences on loan accounts

included in equity. Tax is not provided on these differences as this tax is unlikely to arise as the loans are equity in nature and will not be

repaid.

The amounts of deferred taxation and timing differences provided and unprovided in the Group accounts are as follows:

Group

Provided Unprovided Provided Unprovided

2005 2005 2004 2004

$’000 $’000 $’000 $’000

Provisions (9,043) (9,431) (3,407) (11,353)

Assets 15 (115,458) - (68,373)

Losses (1,007) (215,247) (4,244) (293,994)

Foreign exchange differences 5,132 37,227 5,877 30,000

Other 1,903 (15,643) (1,813) 577

(3,000) (318,552) (3,587) (343,143)

Analysed as:

Deferred tax asset (Note 18) (9,314) (9,974)

Deferred tax provision 6,314 6,387

(3,000) (3,587)

23. Provisions for Liabilities and Charges

A N N U A L R E P O R T 2 0 0 5

0 8 2

Group and Company

Number of shares $’000

Number of shares $’000

2005 2005 2004 2004

Authorised:

Deferred shares of £1 each 50,000 75 50,000 75

Ordinary shares of 1 US cent each 3,000,000,000 30,000 3,000,000,000 30,000

30,075 30,075

Called up, allotted and fully paid:

Deferred shares of £1 each 50,000 75 50,000 75

Ordinary shares of 1 US cent each 1,345,050,505 13,451 1,342,437,229 13,424

13,526 13,499

Ordinary shares issued during the year ended

30 September 2005

Nominal Value

Number $’000

Opening balance 1,342,437,229 13,424

Employee share option schemes 2,613,276 27

Closing balance 1,345,050,505 13,451

2,598,125 ordinary shares were issued in terms of the Share Option Scheme, for a total consideration of US$1.3 million.

In terms of the agreement for the acquisition of the oustanding interests in Dimension Data Australia Pty Ltd (‘DD Australia’) in 2000, DD

Australia option holders are entitled to Dimension Data shares, on an agreed ratio, when their options vest. During the year 15,151 ordinary

shares were issued in terms thereof. There are no further options outstanding as at the year end.

The terms of the deferred shares appear in the Directors’ Report on page 28.

24. Called Up Share Capital

A N N U A L R E P O R T 2 0 0 5


0 8 3

2005 2004

$’000 $’000


Share of current year profits (excluding associates) 11,307 151

Subsidiaries acquired (6,270) 106

Share of reserves and changes in holdings (4,390) 5,537

Dividends paid - (1,561)

Exchange differences 30 1,092


The subsidiaries acquired includes an amount of US$10.3 million representing the 20% increase in the Group’s interest in Internet

Solutions (Pty) Ltd.

25. Equity Minority Interests

Employee Incentive Schemes

2005 2004

Number of options on ordinary shares in the Company outstanding in terms of the Option Schemes

Opening balance 153,018,535 140,900,490

Granted - 37,663,165

Exercised and paid (2,598,125) (382,875)

Lapsed (21,891,648) (25,162,245)

Closing balance 128,528,762 153,018,535

Prior to the Company’s listing on the LSE, options related to shares in Dimension Data Holdings Ltd. Subsequent to the listing the options

were varied to enable participants to acquire shares in the Company in place of Dimension Data Holdings Ltd.

Details of the Employee Incentive Schemes appear in Note 36.

24. Called Up Share Capital (Continued)

A N N U A L R E P O R T 2 0 0 5

0 8 4

2005 2004

Note $’000 $’000

Returns on investments and servicing of finance

Interest and other investment income received 13,909 11,060

Interest paid (24,993) (9,935)

Dividends received from associates 2,597 3,480

Dividends paid to minority shareholders - (1,561)

(8,487) 3,044

Taxation

Reconciliation to taxation paid:

Taxation charge (18,447) (17,272)

Movement in taxation payable 5,436 (4,703)

Taxation acquired with subsidiaries 27 (116) -

(13,127) (21,975)

Capital expenditure and financial investment

Payments to acquire tangible fixed assets (59,709) (32,893)

Receipts from sales of fixed assets 312 635

Sale of fixed asset investments 839 848

(58,558) (31,410)

Acquisitions and disposals

Purchase of subsidiary undertakings - current acquisitions 27 (43,175) (1,249)

- other acquisitions (461) (4,761)

Deferred consideration paid (55) (5,702)

Net cash acquired with subsidiaries 1,210 94

Sale of subsidiaries 2,468 7,115

Movement in investment in associates 846 5,586

(39,167) 1,083

Management of liquid resources

Purchase of short term investments (1,614) (5)

Sale of short term investments 1 8,466

(1,613) 8,461

Financing

Issue of ordinary share capital net of expenses 1,291 191

Changes in minority shareholdings (6,776) 2,731

(5,485) 2,922

26. Notes to the Cash Flow Statement

A N N U A L R E P O R T 2 0 0 5


0 8 5

Total

$’000

Net assets acquired:

Tangible fixed assets 375

Stock 51

Debtors 4,474

Cash at bank and in hand 1,210

Creditors (3,687)

Taxation (116)

Deferred tax 81

Equity minority interests 6,270

8,658

Goodwill 43,947

52,605

Satisfied by:

- Cash 43,175

Deferred consideration

- Cash 9,430

52,605

Acquisitions include a 20% increase in Internet Solutions (Pty) Ltd (effective 19.48%), a 50% increase in Pebbletree Consulting (Pty) Ltd,

a 51% interest in Bellerephon Group Pty Ltd, a 100% interest in Euricom NV and a 51% interest (effective 50%) in Dimension Data Ltd

(Nigeria).

All the above acquisitions were accounted for on the acquisition basis.

27. Acquisitions

A N N U A L R E P O R T 2 0 0 5

0 8 6

At 1 October

2004Cash flow

Reclassi-fication

Other non-cash changes

Exchange movements

At 30 September

2005

$’000 $’000 $’000 $’000 $’000 $’000

Cash at bank and in hand 414,093 (9,883) - - (142) 404,068

Bank overdraft (372) (5,666) - - - (6,038)

413,721 (15,549) - - (142) 398,030

Short term investments 10,946 1,613 - - (31) 12,528

424,667 (13,936) - - (173) 410,558

Debt due within two to five years (28,098) 5,390 (100,906) (5,836) (103) (129,553)

Debt due more than five years (100,906) - 100,906 (140,058) (2,747) (142,805)

Total 295,663 (8,546) - (145,894) (3,023) 138,200

Other non-cash changes include an amount of US$133.7 million, being the capitalisation of the finance lease, the capitalised interest

amounting to US$20.0 million and the interest paid of US$13.7 million.

2005 2004

$’000 $’000

Reconciliation of net cash flow to movement in net funds

(Decrease)/increase in cash in the year (15,549) 39,596

Cash outflow from decrease in debt 5,390 5,375

Cash outflow/(inflow) from increase/(decrease) in liquid resources 1,613 (8,461)

Change in net cash resulting from cash flows (8,546) 36,510

Non-cash movement in debt - interest and

premium accrued on convertible bonds (5,836) (6,157)

Non-cash movement in debt - capitalised finance lease (140,058) -

Non-cash movement in short term investments - (9,070)

Translation differences (3,023) 14,617

Movement in net cash for the year (157,463) 35,900

Net cash at beginning of the year 295,663 259,763

Net cash at end of the year 138,200 295,663

28. Analysis of Net Funds

A N N U A L R E P O R T 2 0 0 5


0 8 7

At the end of the year the Group was committed to making the following payments during the next year in respect of:

2005 2004

$’000 $’000

Within one year 17,456 31,968

Within two to five years 29,037 112,921

After five years 3,802 337,414

50,295 482,303

The Company has no operating lease commitments (2004: nil).

29. Operating Lease Commitments

A N N U A L R E P O R T 2 0 0 5

0 8 8

30. Financial Instruments

The Group’s funding, liquidity and exposure to interest rate and

foreign exchange rate risks are managed by the Group’s treasury

operations. Treasury operations are conducted within a framework

of policies and guidelines authorised by the Board. The Group

uses derivative instruments for risk management purposes only,

and these are transacted by specialist treasury personnel. The

internal control environment is reviewed regularly.

The Group hedges its transactional foreign exchange rate risk, using

forward exchange contracts as soon as there is a firm contractual

commitment. The gain or loss on the hedge is recognised at the

same time as the underlying transaction. The Group also uses

interest rate swaps to manage its interest rate profile.

Credit risk: a number of major international financial institutions

are counterparties to the foreign exchange contracts and deposits

transacted by the Group. The Group continually monitors its

position and the credit ratings of its counterparties and credit

exposure to each counterparty.

Speculative use of financial instruments or derivatives is not

permitted and none has occurred during any period presented.

The Group has transactional currency exposures arising from sales

or purchases by an operating unit in currencies other than the unit’s

functional currency. Under the Group’s foreign exchange policy,

such transaction exposures are hedged once they are known,

mainly through the use of forward foreign exchange contracts.

The Group has undrawn borrowings facilities of US$6.9 million

(2004: US$12.6 million).

Short term debtors and creditors have been omitted from all

disclosures.

30(a) Maturity Profile of Financial Liabilities

2005 2005 2005 2004 2004 2004

Bank borrowings, convertible bonds and

loans Other Total

Bank borrowings, convertible bonds and

loans Other Total

$’000 $’000 $’000 $’000 $’000 $’000

Within one year or less or on demand 6,038 9,506 15,544 372 111 483

Within two to five years 129,553 - 129,553 28,098 - 28,098

More than five years 142,805 - 142,805 100,906 - 100,906

Gross financial liabilities 278,396 9,506 287,902 129,376 111 129,487

Included in the US$278.4 million are guaranteed convertible bonds of US$101.4 million (2004: US$100.9 million), the terms of which are

detailed in Note 22, a capitalised finance lease of US$142.8 million (2004: nil) and a US$28.2 million loan (2004: US$28.1 million) (Note 21).

The amount in Other relates to deferred consideration (Note 20).

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30(b) Interest Rate and Currency Profiles

The main functional currency of the Group is the US dollar, being the currency in which the majority of purchases are denominated and to

which most of the selling prices are linked. Other major currencies are the South African rand, Sterling, Australian dollar, Singapore dollar

and the Euro. Monetary assets and liabilities are generally economically hedged and therefore there are limited transactional exposures

that would give rise to net currency gains or losses in the profit and loss account.

The interest rate and currency profiles of the Group’s financial liabilities are as follows:

Financial Liabilities

2005 2005 2005 2005 2004 2004 2004 2004

Fixed

rate

financial

liabilities

Floating

rate

financial

liabilities

Non-interest

bearing

financial

liabilities Total

Fixed

rate

financial

liabilities

Floating

rate

financial

liabilities

Non-interest

bearing

financial

liabilities Total

Currency $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

US dollars 101,385 42 4,313 105,740 100,906 7 111 101,024

South African rand 142,805 34,128 - 176,933 - 28,343 - 28,343

Euro - 36 1,384 1,420 - 120 - 120

Australian dollars - - 3,809 3,809 - - - -

Gross financial liabilities 244,190 34,206 9,506 287,902 100,906 28,470 111 129,487

The fixed rate financial liability relates to the convertible bonds, which bear interest at 5.375%, and the capitalised finance lease, as

detailed in Notes 21 and 22. Floating rate balances relate to bank loans, overdrafts and loans. Interest is based on the relevant interbank

rate. The non-interest bearing financial liabilities relate to deferred consideration.

30. Financial Instruments (Continued)

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30(b) Interest Rate and Currency Profiles (continued)

Financial Assets

2005 2005 2005 2004 2004 2004

Floating rate financial assets

Equity investments Total

Floating rate financial assets

Equity investments Total

Currency $’000 $’000 $’000 $’000 $’000 $’000

US dollars 180,928 1,080 182,008 160,799 1,104 161,903

South African rand 85,279 30,226 115,505 88,258 33,020 121,278

Australian dollars 86,976 - 86,976 77,419 - 77,419

Euro 43,553 4,629 48,182 68,470 2,880 71,350

Sterling 13,531 - 13,531 23,204 2,009 25,213

Swiss Francs 4,286 - 4,286 5,190 - 5,190

Other 2,043 - 2,043 1,699 - 1,699

Gross financial assets 416,596 35,935 452,531 425,039 39,013 464,052

Floating rate financial assets comprise cash at bank and in hand of US$404.1 million (2004: US$414.1 million) and deposits of

US$12.5 million (2004: US$10.9 million). Interest on floating rate bank deposits is based on the relevant interbank rate.

The equity investments are unquoted equities, as detailed in Note 16.

30(c) Fair Values of Financial Assets and Liabilities

Gross Financial Liabilities

The estimated fair value of the gross financial liabilities amounting to US$287.9 million (2004: US$129.5 million) equates to the carrying

amount.

The fair value of the capitalised finance lease is deemed to be the same as the carrying value, as the lease has been capitalised at a fixed

interest rate, which was market related at the time of entering into the lease, based on the credit risk rate of the Group.

The fair value of the convertible bonds is deemed to be the same as the carrying value as it is not practical to estimate the fair value with

sufficient reliability due to the uncertainty of the future cash flows of the various options contained in the terms of the convertible bonds

(Note 22).

Gross Financial Assets

The estimated fair value of the gross financial assets amounting to US$452.5 million (2004: US$464.1 million) approximates the carrying

amount.

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30(c) Fair Values of Financial Assets and Liabilities (continued)

Estimated fair value Estimated face value

Derivative financial instruments held to manage the Group’s currency profile

2005 2004 2005 2004

$’000 $’000 $’000 $’000

US dollars 1,013 (324) 67,505 49,846

South African rand 70 35 19,650 16,008

Australian dollars (20) - 2,506 -

Euro (60) (425) 1,770 916

Sterling 65 2 1,637 407

Forward exchange contracts 1,068 (712) 93,068 67,177

The carrying value of derivative financial instruments at each year end is nil.

The Group has entered into certain forward foreign exchange contracts that do not relate to specific items appearing in the balance sheet.

These contracts were entered into to cover foreign commitments not yet due. Market values have been used to determine the fair values of

these forward foreign exchange contracts.


30(d) Hedging

The Group’s policy is to hedge all material transactional currency exposure.

An analysis of the unrecognised hedging gains and losses is as follows:

Gains Losses

Total net gains/(losses)

$’000 $’000 $’000

Unrecognised gains and losses on hedges at 1 October 2004 414 (1,126) (712)

Gains and losses arising in previous years that were recognised this year (414) 1,126 712

Gains and losses arising before 1 October 2004 that were not recognised in the year - - -

Gains and losses arising in the year to 30 September 2005 that were not recognised in that

year 2,121 (1,053) 1,068

Unrecognised gains and losses on hedges at 30 September 2005 expected to be

recognised in the year to 30 September 2006 2,121 (1,053) 1,068

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Group 2005 2004

$’000 $’000

Guarantees 14,386 8,038

Other 15,739 9,583

30,125 17,621

Other includes US$5.3 million (2004: US$1.4 million) in respect of contract performance and US$7.7 million (2004: US$1.0 million) in respect

of bills under discount.

31. Pension Schemes

In most countries, the employing company provides either defined

contribution or insured retirement plans to their employees. The relevant

company, and in some cases the employees, pay regular contributions

to the plans. Once contributions are made, the relevant company has no

liability in respect of these plans. Pension costs are disclosed in Note 6.

Employees in France, Japan and Korea are entitled to lump-sum

termination indemnity payments upon leaving. Provisions have

been established in respect of these liabilities.

32. Related-party Transactions

Related parties are entities with common direct or indirect

shareholders and/or directors. The principal shareholders of the

Group are listed on page 50. The Group and its subsidiaries, in the

ordinary course of business, enter into various sale, purchase, service

and investment transactions with associates and others in which the

Group has an interest. These transactions are under terms that are no

more favourable than those arranged with third parties.

The Company has taken advantage of the exemption under

Financial Reporting Standard 8 from disclosing transactions with

entities that are part of the Group.

There were no significant related-party transactions during the

current year that require disclosure.

33. Contingencies

Group 2005 2004

$’000 $’000

Authorised, contracted for 11,952 3,099

Authorised but not yet contracted 42,052 16,757

54,004 19,856

Capital commitments for 2006 include computer equipment amounting to US$34.9 million and office furniture and fittings amounting to

US$4.4 million.

34. Capital Commitments

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36(a) Option Schemes

Options oustanding at year end:

Grant Price Latest expiry date Weighted average price

Number of share options

2005

R17.95 - R30.00 29/07/2007 - 03/11/2009 R23.41 35,343,903

R30.01 - R63.30 03/04/2008 - 05/06/2010 R40.39 516,845

£0.16 - £0.30 01/08/2012 - 03/08/2014 £0.25 39,430,679

£0.31 - £0.40 18/11/2013 - 24/05/2014 £0.36 29,483,970

£0.41 - £0.55 04/04/2012 - 01/07/2012 £0.52 290,000

£0.56 - £0.80 08/10/2006 - 03/05/2012 £0.70 17,503,802

£0.81 - £6.33 02/10/2010 - 22/08/2011 £2.61 5,959,563

128,528,762

36. Employee Incentive Schemes

35. Post Balance Sheet Event

On 28 October 2005 a South African loan amounting to US$28.2 million was settled. Simultaneously we part surrendered an endowment

policy in the amount of US$18.5 million.

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36(b) Share Appreciation Rights Scheme

Share Appreciation Rights (SARS) outstanding at year end:

Grant price Grant dateLatest

expiry date

Number of SARS

2005

£ 0.36 05/01/2005 05/01/2011 17,522,572

£ 0.39 15/02/2005 15/02/2011 2,300,000

£ 0.36 25/02/2005 25/02/2011 4,348,148

£ 0.36 07/03/2005 07/03/2011 5,700,890

£ 0.33 08/07/2005 08/07/2011 1,161,643

31,033,253

There is no amount payable by participants on exercise. They will receive an amount equal to the increase in value between the grant date

and the exercise date.

36(c) Long Term Incentive Plan

Long Term Incentive Plan awards (LTIPs) outstanding at year end:

Grant price Grant dateApproximate vesting date

Number of LTIPs

2005

£ 0.36 05/01/2005 December 2007 10,151,470

£ 0.39 15/02/2005 December 2007 2,300,000

£ 0.36 25/02/2005 December 2007 2,590,940

£ 0.36 07/03/2005 December 2007 3,253,390

£ 0.33 08/07/2005 December 2007 315,990

18,611,790

There is no amount payable by participants on vesting. They will be awarded rights to ordinary shares in the Company.

36. Employee Incentive Schemes (Continued)

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Subsidiary undertakings

Name

Country of incorporation/ registration and operation Activity

Effective interest

Effective interest

2005 2004

% %

Bellerephon Group Pty Ltd Australia IT Solutions and Services 51 -

Comtech Holdings SA Belgium Investment Holding and Management 100 100

Conscripti (Pty) Ltd South Africa IT Solutions and Services 77.91 77.91

Core People (Pty) Ltd South Africa IT Solutions and Services 56.10 42.07

Datacraft Asia Limited Singapore IT Solutions and Services 51.52 51.49

Dimension Data Ltd Nigeria IT Solutions and Services 50 -

Dimension Data (Pty) Ltd South Africa IT Solutions and Services 97.39 97.39

Dimension Data Advanced Infrastructure Ltd Great Britain IT Solutions and Services 100 100

Dimension Data Algeria Spa Algeria IT Solutions and Services 70 70

Dimension Data Australia Pty Ltd Australia IT Solutions and Services 100 100

Dimension Data Australian Holdings SA Belgium Investment Holding and Management 100 100

Dimension Data Belgium SA Belgium IT Solutions and Services 100 100

Dimension Data Botswana (Pty) Ltd Botswana IT Solutions and Services 97.39 97.39

Dimension Data Commerce Centre Ltd Isle of Man IT Solutions and Services 100 100

Dimension Data Deutschland Holdings GmbH Germany Investment Holding and Management 100 100

Dimension Data Espaňa SL Spain IT Solutions and Services 100 100

Dimension Data Facilities (Pty) Ltd South Africa IT Solutions and Services 97.39 97.39

Dimension Data Finance Ltd Isle of Man Investment Holding and Management 100 100

Dimension Data France SA France IT Solutions and Services 100 100

Dimension Data Germany AG & Co Germany IT Solutions and Services 100 100

Dimension Data Global Management Services Ltd Isle of Man Investment Holding and Management 100 100

Dimension Data Holdings France SA France Investment Holding and Management 100 100

Dimension Data Holdings Netherlands BV Netherlands Investment Holding and Management 100 100

Dimension Data International Ltd Malta Investment Holding and Management 100 100

Dimension Data Italia SRL Italy IT Solutions and Services 100 100

Dimension Data Luxembourg SA Luxembourg IT Solutions and Services 100 100

Dimension Data Management Services (Pty) Ltd South Africa Investment Holding and Management 100 100

Dimension Data Network Services Ltd Great Britain IT Solutions and Services 100 100

Dimension Data Nederland BV Netherlands IT Solutions and Services 100 100

Dimension Data North Africa Holdings Ltd Belgium Investment Holding and Management 70 70

Dimension Data North America Inc United States of America IT Solutions and Services 100 100

37. Principal Subsidiaries and Associates

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Subsidiary undertakings

Name

Country of incorporation/ registration and operation Activity

Effective interest

Effective interest

2005 2004

% %

Dimension Data Protocol BV Netherlands Protocol 100 100

Dimension Data (South Africa) (Pty) Ltd South Africa Investment Holding and Management 97.39 97.39

Dimension Data (South Africa) Holdings (Pty) Ltd South Africa Investment Holding and Management 100 100

Dimension Data Sverige AB Sweden IT Solutions and Services 100 100

Dimension Data Switzerland SA Switzerland IT Solutions and Services 100 100

Dimension Data (US) Inc United States of America Investment Holding and Management 100 100

Dimension Data (US) II Inc United States of America Investment Holding and Management 100 100

Dimension Data (Zurich) AG Switzerland IT Solutions and Services 100 100

Euricom NV Belgium IT Solutions and Services 100 -

GK Communications Group Ltd Great Britain Investment Holding and Management 100 100

Howper 266 Ltd Great Britain Investment Holding and Management 100 100

Internet Solutions (Pty) Ltd South Africa IT Solutions and Services 77.91 58.43

Linx Holdings (Pty) Ltd South Africa IT Solutions and Services 77.91 58.43

Merchants SA (Pty) Ltd South Africa IT Solutions and Services 100 100

Pebbletree Consulting (Pty) Ltd South Africa IT Solutions and Services 75 50

Planet CTI Belgium IT Solutions and Services 100 100

Plessey Corporation Ltd South Africa Investment Holding and Management 97.39 97.39

Protocol (A&NZ) Pty Ltd Australia Protocol 100 100

Protocol Venture Capital (Pty) Ltd South Africa Protocol 100 100

Spectrum Holdings Inc British Virgin Islands Investment Holding and Management 100 100

The Merchants Group Ltd Great Britain IT Solutions and Services 100 100

Associated undertakings

Dataflo SA (Pty) Ltd South Africa IT Solutions and Services 48.70 48.70

Automate Dealer Management Systems (Pty) Ltd

(formerly Dimension Data Messaging (Pty) Ltd) South Africa IT Solutions and Services 45 45

Paracon Holdings Ltd South Africa IT contracting and e-business solutions 26.68 26.68

Plessey (Pty) Ltd South Africa IT Solutions and Services 47.72 47.72

Plessey Solutions (Pty) Ltd South Africa IT Solutions and Services 68.17 68.17

37. Principal Subsidiaries and Associates (Continued)

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UK Company Secretary

JM Duck

[email protected]

Registered Office

Fleet Place House

2 Fleet Place

London EC4M 7RT

United Kingdom

Auditors

Deloitte & Touche LLP

London

United Kingdom

UK Transfer Secretaries

Computershare Investor Services PLC

P O Box 82, The Pavilions

Bridgwater Road

Bristol BS99 7NH

United Kingdom

UK Legal Advisers

Linklaters & Alliance

One Silk Street

London EC2Y 8HQ

United Kingdom

Investor Relations

Karen Cramér

[email protected]

+44 20 7651 7000

Dimension Data Holdings plc

(Incorporated in England and Wales under the Companies Act 1985 with registered number 3704278)

(Registered as an external company in the Republic of South Africa with registration number 2000/009053/10)

CONTACTS AND CORPORATE INFORMATION

South African Company Secretary

ML Taylor

[email protected]

Head Office

The Wanderers

The Campus

57 Sloane Street, Bryanston

Sandton 2191, South Africa

Telephone: +27 11 575 0000

Postal Address

Private Bag X127

Bryanston 2021, South Africa

South African Transfer Secretaries

Computershare Investor Services 2004 (Pty) Ltd

70 Marshall Street

Johannesburg 2001, South Africa

(P O Box 61051, Marshalltown, 2107)

South African Legal Advisers

Routledge Modise Moss Morris

2 Pybus Road (Cnr Rivonia Road)

Sandton, South Africa

Dimension Data Website

www.dimensiondata.com

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